Tackling fraud in EU cohesion spending: managing authorities need to strengthen detection, response and coordination

Summary:

The Commission and the Member States share the responsibility to counter fraud and any other illegal activities affecting the EU’s financial interests. In the field of EU cohesion policy, where there is a significant incidence of reported fraud compared to other spending areas, the bodies in the front line of the fight against fraud are the Member State authorities responsible for managing EU programmes.

In this audit, we assessed whether managing authorities have properly fulfilled their responsibilities at each stage of the anti-fraud management process: fraud prevention, fraud detection and fraud response.

We found that managing authorities have improved the way they assess fraud risks and design preventive measures, but they still need to strengthen fraud detection, response and coordination among different Member State bodies. In particular, they have made no significant progress towards proactive fraud detection and the use of data analytics tools. Managing authorities under-report fraud cases to the Commission, which affects the reliability of published fraud detection rates. Deterrence is limited to the threat of withdrawing EU funding, with no other dissuasive penalties or sanctions. Moreover, suspicions of fraud are not systematically communicated to investigation or prosecution bodies.

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