The European Union’s cohesion funds are designed to reduce social and economic disparities between regions, but a recent report by the European Court of Auditors (ECA) highlights failures in oversight by both the Commission and member states. The report reveals that the control system over more than a third of the EU budget has not effectively curbed spending errors, leading to cohesion money being misused. Despite improvement in reducing the error rate from 6% to 4.8% in the 2014-2020 budget cycle, it still remains above the 2% threshold, indicating a need for significant improvements in cohesion policy oversight.
The three levels of control over EU cohesion funds include checks by national managing authorities, member states’ audit authorities, and the Commission. However, the ECA’s audit found 171 cases of errors, with 170 being preventable by audit authorities. Spain, Germany, and Portugal were highlighted for a disproportionate number of errors in relation to the funds received, calling for the strengthening of detection capacities by audit authorities with support from the Commission. The root causes of irregularities in cohesion spending were identified as inadequate management by member states, negligence by beneficiaries, and problems with interpreting rules.
While the EU Commission has pledged to simplify the budget, eliminate redundancies, and enhance efficiency, the ECA emphasizes the need for better tools to detect, prevent, and correct errors in cohesion spending. With cohesion funds amounting to €392 billion, clearer guidance to member states, rule simplification, and increased compliance checks are recommended by auditors. The focus on desk audits by the Commission was deemed insufficient for identifying erroneous spending, calling for more compliance audits to be conducted in order to make the funds more effective in achieving their intended goals.
The lead auditor stressed the importance of collaboration between the Commission and member states, as well as the involvement of all stakeholders, to improve the oversight system. While the EU executive is not required to provide an official response to the review, both the Commission and auditors acknowledge the need for improvements in the control system. The significance of error rates surpassing the 2% threshold highlights the urgency for action to enhance the effectiveness of cohesion funds and ensure they are spent according to EU and national rules.
Moving forward, the ECA’s recommendations for clearer guidance, simplified rules, and increased compliance checks emphasize the need for a more robust oversight system. By strengthening detection capacities, improving management by member states, and enhancing compliance audits, errors in cohesion spending can be minimized, ultimately ensuring that funds are utilized effectively to reduce disparities between regions. The collaboration between the Commission, member states, and all stakeholders will be crucial in implementing these recommendations and enhancing the efficiency of EU cohesion funds.
