Communication: Root causes of errors and actions taken (Article 32(5) of the Financial Regulation)

According to Article 317 of the Treaty on the Functioning of the European Union (TFEU), it is primarily the responsibility of the Commission to ensure that the budget is properly spent. This Communication provides a thorough analysis of the root causes of errors in the context of the implementation of the EU budget and the actions taken, in line with Article 32(5) of the Financial Regulation. It responds to the requests of the European Parliament and the Council to present a report on 'persistently high levels of error and their root causes'.

Although the Commission is ultimately responsible for the implementation of the EU budget, around 80% of expenditure is actually executed directly by Member States under shared management. This is so notably for the Common Agricultural Policy and Structural and Investment Funds. In order to ensure sound financial management, the regulatory framework requires Member States to appoint implementing authorities and external audit bodies which perform around 19,000 audits annually. The remaining 20% of the EU budget is implemented under direct or indirect management, via third parties, notably European or international financial institutions, such as the European Investment Bank or the United Nations Agency for Refugees.

The European Commission produces an annual report on the implementation of the budget, the Annual Management and Performance Report, as well as detailed Annual Activity Reports in the various Commission services. Together they provide a comprehensive overview based on the information available to the Commission of the annual implementation of the budget and the contribution of public expenditure to results on the ground. Moreover, these reports contain an assessment by the relevant Director General of the functioning of management and control systems, reservations identifying possible weaknesses, and a detailed analysis demonstrating sound financial management.

The DGs implement targeted measures in order to strengthen the management and control systems at national, European and international levels; lessons learned from the previous programming periods have led to improvements in the design of successive generations of programmes, and the mid-term revision of the Multi-annual Financial Framework (MFF) 2014-2020 includes a significant package of legislative proposals for simplifying the rules applicable to the implementation of the EU budget.

The present Communication contains first a general description of the context under which the EU budget is implemented (including the Commission's supervision) so as to ensure the legality and regularity of expenditure. Then the different MFF Headings are examined in the light of the existence of persistently high levels of errors, their root causes and the remedial actions taken by the Commission services responsible. The Communication is based on information available to the Commission mostly covering payments for the 2007-2013 programming period.

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