EUROSAI. Magazine N21 - 2015

EUROPEAN ORGANISATION OF SUPREME AUDIT INSTITUTIONS Information on EU 41 www.eurosai.org · N.º 21 - 2015 by Member State administrations on behalf of the EU, provided 12 % of the revenue, with the remaining 10 % being from other sources. For the area of competitiveness for growth and jobs (€13.0 billion) the estimated level of error was 5.6 %. The objectives of this spending include improving research and innovation, enhancing education systems and promoting employment, ensuring a digital single market, promoting renewable energy and energy efficiency, modernising the transport sector and improving the business environment, especially for small and medium- sized enterprises (SMEs). Research and innovation accounts for about 60 % of spending. Expenditure is made through the seventh framework programme for research and development 2007-2013 (FP7) and Horizon 2020, the new framework programme covering the 2014-2020 period. Other major spending instruments support education, training, youth and sport, the development of transport infrastructure, projects in the energy sector and the Galileo satellite navigation programme. Almost 90 % of spending is in the form of grants to private and public beneficiaries, with the Commission reimbursing costs declared by the beneficiaries in project cost statements. In the area of research and innovation, the ECA found the same type and range of errors already detected throughout the course of the audit of FP7: incorrectly calculated personnel costs, other ineligible direct costs such as unsubstantiated costs for travel or equipment, as well as ineligible indirect costs based on erroneous overhead rates or including costs categories not linked to the project. Horizon 2020 has simpler funding rules than FP7 and the Commission has invested considerable effort in reducing administrative complexity. However, some elements in the new framework programme actually bring an increased risk of error. The ECA also detected errors in reimbursed costs in the other major spending instruments. These include unsubstantiated and ineligible costs, as well as cases of non-compliance with the rules on public procurement. The spending area of Economic, social and territorial cohesion (€55.7 billion) comprises two parts: regional and urban policy, which accounts for 80 %, and employment and social affairs, which covers the remaining 20 %. Overall, it was the most error prone area of EU spending with an estimated error rate of 5.7 % (6.1 % for regional and urban policy and 3.7 % for employment and social affairs). The main source of error for the spending on economic, social and territorial cohesion as a whole continues to be infringement of public procurement rules, accounting for nearly half of the estimated level of error. This is followed by the inclusion of ineligible expenditure in the beneficiaries’ cost declarations, infringement of state aid rules and the selection of ineligible projects. The impact of errors varies between these two parts of the spending area. Errors related to infringement of EU state aid rules accounted for around a fifth of the estimated level of error of spending. For a significant proportion of transactions affected by quantifiable errors, authorities in the Member States had sufficient information available to prevent, or detect and correct the errors before claiming reimbursement from the Commission. If all this information had been used to correct errors before declaring the expenditure to the Commission, the estimated level of error for expenditure under economic, social and territorial cohesion would have been 1.6 percentage points lower. In addition, the ECA found that for a number of cases, the error was made by national authorities. These contributed 1.7 percentage points to the estimated level of error. The spending area of Natural resources (€57.5 billion) covers the common agricultural policy – implemented through two funds: the European Agricultural Guarantee Fund (EAGF) and the European Agricultural Fund for Rural Development (EAFRD) –, common fisheries policy and environmental measures. The estimated level of error was 3.6 % overall (2.9 % for EAGF and 6.2 % for rural development, environment, climate action and fisheries). In EAGF many of the errors identified were the result of inaccurate or ineligible claims by beneficiaries, with the most frequent being the over-declaration of agricultural land surface or ineligible parcels of land. In several cases of quantifiable errors made by final beneficiaries, national authorities had sufficient information to prevent, or detect and correct the errors before declaring the expenditure to the Commission. If all the information had been used to correct errors, the estimated level of error would have been 0.6 percentage points lower. In addition, the ECA detected a considerable number of cases of errors made by the national authorities. These contributed 0.7 percentage points to the estimated level of error.