Axel Volkery
Senior Fellow and Head Environmental Governance
5 September 2013
Committee of the Regions, Brussels www.ieep.eu
@IEEP_eu

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1. Review recommendations of relevance to local and regional authorities (LRAs) included in official EU reports on implementation of EU budget in the period 2007-2013
2. Analyse development of pending claims and Reste à
Liquider (RAL ) in the period 2007-2013 and their implications for LRAs

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• The following sources of information were utilised:
– Last five annual financial reports from European Court of Auditors
(ECA)
– Comments / requests from Parliament & Council as part of the discharge process for the same period
– Response from Commission as part of the discharge process for the same period
– Other relevant EU documents
• Note:
– ECA reports are factual documents
– Reports do seldom contain any statements or recommendations addressing LRAs directly

Error rates
• Budget implementation has been regularly found to be affected by material level error of legality and regularity
• Cohesion Policy stands out: > 5per cent for Cohesion, between 2 and 5 per cent for employment and social affairs
• Eligibility errors are the most frequent errors in ERDF, ESF, EMFF, but error rate is decreasing
• Accuracy errors are most frequent errors under EARDF
• Cohesion Policy is also affected by public procurement errors
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Withdrawal practice
• Eligibility errors should not result in new irregular expenditure being declared
Commitments
• High level of outstanding commitments is repeatedly criticised

Lack of sufficiency and transparency in information and evaluation systems
Difficult to apply eligibility rules
Root causes
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Lack of effective evaluation and audit systems (particularly for first level checks)
Lack of effective sanctioning systems
Incoherent requirements for reporting and monitoring

Improve feedback between authorities
Better guidance and training for managing and audit authorities
Simplify eligibility rules and ensure strict compliance
Improve withdrawal practice
Cohesion Policy
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Apply corrective mechanisms on operational programmes
Strengthening sanctions
(interruptions, suspensions)
Align reporting periods for annual control reports

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More rigorous administrative and on-the-spot checks
Better control of beneficiaries in terms of keeping obligations
Simplify rules and conditions
Rural development and EMFF
Take a more systemic approach towards addressing weaknesses in EMFF

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Parliament
• Reiterates many of ECA’s conclusions – emphasizes differences in Member
State management and control systems
• Criticises lack of incentives for norm compliance, part. Cohesion Policy
• Reiterates need for simplification, uniform auditing standards and greater cooperation between Commission and authorities
• Calls for greater supervisory role of Commission and strengthening of sanctions
Council
• Urges national authorities to apply ex-ante controls more effectively
• Improve management and control systems, simplify rules and apply correction mechanisms more rigorously
• Points to the relevance of supervision and action by European Commission

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Source: European Commission

A much larger than thought proportion of 2013 payment appropriations will need to be used to honour 2012 claims – already the additional EUR 11.2 bn claimed by the Commission were at risk of falling short but Council approved only EUR 7.3 bn so far
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Gap in meeting 2013 commitments remains present after draft amending budget 06/2013, putting greater pressure on annual budgets from 2014 onwards
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RAL is projected to grow to EUR 250 bn by 2020
Source: European Commission

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• RAL normally increased towards ends of MFF periods, but RAL in 2013 is much higher compared to RAL in 2006
• Underlines the need for greater flexibility, as discussed in budget negotiations

• Main implications arise under funds under shared management
– for example, support from Cohesion Policy amounts to – on average – around 55 per cent of expenditure on environment or 25 per cent on transport, energy, telecom .
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• RAL differs between Member States (MS )
• MS with largest pending claims are Poland, Italy, Spain
• Ireland, Denmark, Cyprus and Luxembourg have lowest amount
• Differences in RAL often have a specific domestic connotation
• Change in economic context conditions, administrative capacities, incoherence between programme planning and project selection
• Quality and capacity of authorities seem to be much more relevant influencing factors compared to other factors (level of decentralisation)

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Contact:
Axel Volkery avolkery@ieep.eu
T. +32 2111090
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