Debate: Presentation of the Court of Auditors' annual report
Date: WEDNESDAY, 19 OCTOBER 2022
Speaker: Johannes Hahn
Language: EN

First, I would really like to thank you and I can only reply to you, Tony Murphy and your team, for the excellent cooperation also in preparing this annual report and the very good cooperation not only on this subject, also on others. And I agree, sometimes we might have different views and analyses, but it’s always in a spirit of mutual respect, and this is something, which I consider crucial and important. 2021 was again an exceptional year for our budget. The European funds continued to play a critical role to help citizens, companies, regions, municipalities and Member States to overcome the coronavirus pandemic and its consequences. In June 2021, Next Generation EU started its borrowing with record demand. The Recovery and Resilience Facility, a brand new instrument, was also set up in record time in a couple of months. In 2021, the Commission assessed and endorsed 22 recovery and resilience plans following a very thorough assessment process. In 2021, the Commission disbursed already EUR 54 billion in pre—financing payments to 20 Member States, which helped kick start the implementation of the investment and reform measures. The Commission disbursed a first payment for milestones and targets of EUR 10 billion to Spain before the end of last year. In this exceptional context, I am pleased that the EU accounts have received again a clean opinion. Likewise, I am happy that the Court concludes, like last year, that the revenue side of the EU budget is free from material error. The Court audited for the first time this year the Recovery and Resilience Facility and concluded it was not affected by material error. Spending areas such as natural resources, which means primarily agriculture, and administrative expenditure continue to obtain excellent results. However, as you have heard, the Court has maintained its adverse opinion on the legality and regularity of expenditure. Some areas, essentially the ones with complex eligibility rules, remain more prone to errors. The share of expenditure considered by the Court as higher risk has increased in 2021 compared to 2020. This is normal at this stage of the 2014—2020 multiannual financial framework and that delayed implementation of a lot of programmes and projects. As a result, the overall level of error reported by the Court slightly increased compared to last year. Another way, I have to say, to look at the findings is that 97% of the Union budget is well—managed. I would also like to underline that the implementation of the EU budget is not homogenous across countries, regions, programmes or even types of measures. We are able to precisely identify and report transparently where the issues are and we take remedial measures or ask Member States and other partners to take actions. The Commission’s conclusion as manager of the Union budget is that the control systems are working effectively and the EU budget is effectively protected as a whole and over time. The multiannual nature of our approach with controls even after payments, allows the recoveries until the end of the programmes. As regards the Recovery and Resilience Facility, the Commission performs controls and audits throughout the spending cycle. When assessing the national recovery and resilience plan, by checking that Member States have put in place sound internal control systems, by assessing whether milestones and targets are fulfilled before payment and by performing risk—based ex—post controls after disbursements. Finally, the Commission reports annually on the way European funds are managed in its integrated financial and accountability reporting. Through this comprehensive reporting, the Commission assumes accountability and transparency on the management of the Union budget. At the same time, we are aware that areas of improvements remain and we are taking action. Firstly, simplifying rules remains the best way to prevent errors. This concerns especially the research programme and cohesion policy. In cohesion, 75% of the errors are related to different interpretations or lack of knowledge concerning what is eligible and what not. Secondly, by strengthening our control systems to make them more effective, the Commission continues to extensively cooperate with the national audit authorities to improve the quality of their work. Thirdly, by supporting beneficiaries, national authorities and other partners in the day—to—day management of Union funds. For example, the Commission is providing support to Horizon Europe applicants, through communication campaigns and workshops. All these efforts will continue as the current MFF programmes are now kicking off. Thank you for your interest.