By Richard Johnstone | 25 November 2014
Auditors have warned that the failure of European Union spending to generate expected benefits represents the biggest risk to improving financial management across the economic bloc.
In a landscape review of spending across the union, the European Court of Auditors today set out for the first time the four key risks to good financial management in the EU.
In addition to the intended benefits not being realised, risks include money not being spent as intended, funding not being accounted for properly, or not being spent wisely.
Speaking to Public Finance International, Dr Igors Ludboržs, the ECA member responsible for the review, said the risk of projects and actions not realising the expected benefits was a key concern.
‘So far, much attention has been paid by the member states to how the money comes from EU budgets – and that happens in a way which the court provides a negative opinion on – but that is an old story.
‘Much attention has also been paid on spending money, and secondly spending it according to the rules.
The final [risk] is achieving results from expenditure coming from EU budgets. If you ask me, getting the results from EU budget money would be the biggest concern.'
He said there were a number of improvements that could be made to ensure that spending by the European Commission leads to what he called ‘EU added value’.
These include focusing on projects where the commission has sole competence, or which met agreed objectives or covered Europe-wide networks.
This will require greater clarity on the aims of EU spending, he added, to ensure expenditure led to clear and visible benefits that could not be achieved by spending at a national, regional or local level.
‘From the court’s point of view, the objectives of the EU budget should be formalised clearly into robust indicators, and there should be systematic monitoring so that the achievement of these objectives can be measured,’ Ludboržs told PF International.
Among possible indicators, auditors urged the commission to calculate benchmark costs for its activities and programmes across member states.
Such benchmarks would account for geographical differences across member states, but could identify cost differences to help improve financial management.
‘By doing so, public bodies could compare and monitor value for money of the spending programmes,’ Ludboržs added.
The Making the best use of EU money report called for the mid-term review of the EU’s 2012-2020 Multiannual Financial Framework, which is expected to take place in 2016, to be used to revisit both the priorities for EU spending and how to achieve the objectives.
Ludboržs said he hoped this could be agreed. ‘I believe that one of the objectives of the new commission is to introduce a stronger performance culture in terms of audit measures across the programmes.’
