Debate: Presentation of the Court of Auditors' annual report
Date: WEDNESDAY, 18 OCTOBER 2023
Speaker: Tony Murphy
Language: EN

Also, they have a minimum error rate. This is one of the reasons why there’s such a big difference. They don’t do a random sample like we do, so they can’t extrapolate. And, as the Commissioner rightly pointed out, there is some corrective capacity which is available to the Commission, which may take years, but the problem is it does take years and sometimes the corrective capacity that’s announced is not the final one, so it can be very difficult to come to a final conclusion on that.  Another thing is that the Commission is basically relying on a bottom-up approach, that the national authorities are well-functioning. I would have a few concerns there, given that in our report, we report that for 61% of the other authorities that we sampled this year, we couldn’t rely on their work basically. We consider that they underreported the error rate. So that also was an area to be addressed I think going forward. There’s been a lot of focus on cohesion here, the error rate and cohesion, and obviously that’s the big figure, the big number in the report. But I think it’s important to take into account the context. I mean, one of the honourable Members already mentioned that, you know, at the end of an MFF, there’s normally pressure to absorb. That’s a contributing factor.  There’s also the fact that this is the first year that payments made under the cohesion policy during the COVID-19 period are in the sample. So that also has an impact because the other authorities were obviously affected by the changed working arrangements, not being able to go on the spot, which also may contribute to the reason why we couldn’t rely on 61% of their of their declarations let’s say.  I think a third point which can’t go unnoticed is – and it’s linked in a way to absorption again – under the CRI facility, there was a possibility for Member States to avail of 100% financing within a short time frame. I think they did this and 3%, over 6.4% error rate for cohesion, 3% relates to these type of projects. So I think there is a story behind this, it’s not just, there are reasons for why the cohesion error rate has increased. But I think going forward our worry would be – if I can now link it to the RRF – that the investment type expenditure on the RRF will be cohesion type expenditure. Now, having said that we have these issues now currently with cohesion expenditure, all we’re doing is raising the risk that going forward this could materialise, because, so far, most of the payments for the RRF relate to reforms where there is no actually directly relatable cost. The investments will come at a later stage. What we’re flagging is that, given the problems we have with cohesion now, there’s also within the regulation, the responsibility has been shifted more to the Member States to ensure compliance with EU and national rules. So, given that scenario, we would be worried that, you know, where it’s controlled to a bigger degree by the Commission we already have problems, if there is less control, there’s also, you know, a better chance of the error rate increasing. So I think there’s also been a few references to the fact that we cannot establish an error rate for RRF. I think it makes sense. I mean, this is not like the EU budget, where we have, you know, coherent rules across the different policy areas, even though they might be complex at times. Here we have individual recovery plans for Member States, which are completely different, and we cannot put them all in one box and make a calculation, let’s say. I think the issue as well is linked to the fact that there are no predefined price tags for all the milestones and targets. It’s a whole package. You basically delivered the whole plan and you get x amount of money. So it’s very difficult to quantify how much anything is actually worth within those plans because that wasn’t done at the start, even though there is a methodology which has been established now for the partial payments. But I mean, again, there are issues in terms of the room for interpretation and judgement.  We understand the flexibility which was given by this RRF instrument, but I think we need, what we’re saying, is that raising the risks going forward there is a need for balanced controls. It’s still early days, but there needs to be a complete audit trail from start to finish, which shows where this money eventually ends up, because no matter what, the money will be transferred to the Member States and there will be related expenditure, so I think that’s important to know. Then, in terms of absorption, this again, as someone pointed out, was a crisis response instrument, perhaps it was Ms Hohlmeier. But here what we’re saying, in September 2023, is that we have five Member States who have got absolutely no money so far, five, and four who have only drawn down their pre-financing, which was basically automatically payable once your RRP was approved. So, nine of the 27 Member States have got no real money, if you want to call it that. So, I think in terms of being a response instrument, it’s quite worrying how slow it has been. We are not saying that it should be absorbed just for the sake of absorption, and I would tend to agree with the Commission that it’s unlikely that the Member States will volunteer to hand it back if they don’t spend it.  So in a way, we see the risk is basically that we have all these competing fronts which are overlaps between them, you know, and we see that under 1420 there is still money to be absorbed by the end of this year, particularly for the bigger Member States who are benefiting from the RRF. The take-up of 21 to 27, as the Commissioner alluded to, is basically non-existent. So, I think, this is why we have these outstanding commitments building up, and it’s like a pressure cooker that will eventually burst if there’s not some progress made on actually either decommitments or making payments. Mr Wallace, on the Ukraine facility, yes, we did issue an opinion. I’m glad you liked it. We hope it’s a useful contribution to the debate and this is all it is. Basically, it’s a proposal which is on the table. The legislators have asked us for an opinion, this is an opinion we have given, whether they take it on board or not is basically up to them. But we can basically, when we audit the facility, we will obviously refer back to suggestions we made, if they’re not taken on board. Finally, if I may, I’d just like to take this opportunity to express my deep appreciation and thanks to the entire ECA team. Producing our annual report is really a collaborative effort. It represents the cornerstone of our work, requiring significant dedication, and the ECA staff’s unwavering commitment to transparency and accountability has played a pivotal role in advancing our mission.