EUROSAI. Magazine N24 - 2018

Magazine No. 24 - 2018 59 Information on EU The ECA looked at the Commission’s use of performance information in decision-making and concluded that the Commission should make better use of its own performance information and develop an internal culture more focused on performance. The ECA found 13 instances of suspected fraud in the 703 transactions that were audited for the statement of assurance and for other performance and/or compliance audits. The ECA reported these to the European Union’s anti-fraud office (OLAF). A closer look at revenue and spending areas Revenue was free from material error. The estimated level of error was 0.0 % (2016: 0.0 %). The audit covered the EU’s revenue ( €139.7 billion ), through which it finances its expenditure. The ECA examined certain key control systems for calculating and collecting own resources, and a sample of revenue transactions. Contributions from Member States based on their gross national income and revenue from value added tax (VAT) accounted for 56 % and 12 % respectively of the EU’s total revenue in 2017. These contributions are calculated using macroeconomic statistics and estimates provided by Member States. Traditional own resources, consisting mainly of customs duties on imports collected by Member State administrations on the EU’s behalf, contributed a further 15 % of EU revenue. The remaining 17 % of EU revenue came from other sources (e.g. contributions and refunds arising from EU agreements and programmes, the surplus from the 2016 financial year, fines imposed by the Commission and default interest). The revenue-related systems examined by the ECA were overall effective. For traditional own resources, however, the ECA considered that some controls were only partially effective. The ECA also found that there was room for improvement in the Commission’s actions to safeguard EU revenue in some areas. In particular, there were weaknesses in its management of the risk of under-valued imports in relation to traditional own resources and in its verifications on the VAT-based own resource. Weaknesses in both these areas may affect the Member States’ contributions to the EU budget. For the area of Competitiveness for growth and jobs the ECA audited expenditure for research and innovation, education systems and promoting employment, a digital single market, renewable energy and energy efficiency, modernising the transport sector and improving the business environment, especially for small and mediumsized enterprises. In 2017, expenditure subject to audit in this area was €14.9 billion . Most spending took the form of grants to public or private beneficiaries participating in projects. Research and innovation expenditure, which accounted for 53 % of spending in this area in 2017, is made through the seventh framework programme for research and technological development 2007-2013 and Horizon 2020, the framework programme for 2014-2020. The estimated level of error for the spending on Competitiveness for growth and jobs was 4.2 % (2016: 4.1 %). The principal risk to the regularity of transactions is that beneficiaries declare ineligible costs which are neither detected nor corrected before the Commission reimburses them. The ECA found that most errors related to the reimbursement of ineligible personnel costs, other ineligible direct costs (e.g. travel and equipment costs not related to the project) or ineligible indirect costs declared by beneficiaries. They included calculation errors, lack of supporting evidence for declared costs and costs incurred outside the allowed time period. Sufficient information was available to prevent, or to detect and correct, a significant proportion of errors. Had this information been used to correct errors, the estimated level of error for the overall spending on Competitiveness for growth and jobs would have been 1.5 percentage points lower. ©European Union – Source: ECA

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