EUROSAI. Magazine N26 - 2021

Magazine No. 26 - 2021 67 Information on EU ANNUAL REPORTS OF THE EUROPEAN COURT OF AUDITORS FOR THE 2020 FINANCIAL YEAR European Court of Auditors On 26 October 2021, the European Court of Auditors (ECA) published its annual reports on the implementation of the EU budget and the European Development Funds for the 2020 financial year. The objective of the annual reports is to provide findings and conclusions that help the European Parliament, the Council and citizens to assess the quality of EU financial management, and to make useful recommendations for improvement. Central to the annual reports are the annual statements of assurance on the reliability of the EU accounts and the regularity of the transactions underlying them. Annual report on the implementation of the EU budget for the 2020 financial year The EU budget is adopted annually by the European Parliament and the Council within the framework of a longer-term budget agreed for a period of several years (known as the ‘multiannual financial framework’ or MFF). The 2020 audit covered the last year of the period that began in 2014 and ran until 2020, though amounts will continue to be disbursed. Ensuring that the budget is properly spent is primarily the responsibility of the European Commission. However, about two thirds of the budget are spent under what is known as ‘shared management’, with individual Member States distributing funds and managing expenditure in accordance with EU and national law. The ECA is required to provide a statement of assurance to the European Parliament and the Council under Article 287 of the Treaty on the Functioning of the European Union (TFEU). To this purpose, every year the ECA audits EU revenue and expenditure, examining whether the annual accounts are reliable and whether income and expenditure transactions comply with the applicable rules at EU and Member State level. In 2020, the EU spending totalled €173.3 billion. The ECA examines expenditure at the point when final recipients of EU funds have undertaken activities or incurred costs, and when the Commission has accepted the expenditure. The ECA did not examine advances paid in 2020 unless they were also cleared during the year. Therefore, the audit population for 2020 amounted to €147.8 billion. The spending area of ‘Natural resources’ made up the largest share of the overall audit population (40.8 %), followed by ‘Cohesion’ (32.8 %) and ‘Competitiveness’ (11 %). Overall results The ECA concluded that the EU accounts for 2020 were prepared in accordance with international public sector accounting standards and present, in all material respects, a true and fair view of the EU’s financial results for the year and its assets and liabilities at the end of the year. Therefore, as has been the case every year since 2007, the ECA gave a clean opinion on the reliability of the accounts. The EU balance sheet included a liability for pension and other employee benefits amounting to €116 billion at the end of 2020. The further increase of this estimate was mainly due to a decrease in the nominal discount rate, which reflects the reduction in global interest rates. On 1 February 2020, the United Kingdom ceased to be an EU Member State. On 31 December 2020, the EU accounts showed a net receivable due from the United Kingdom of €47.5 billion based on mutual obligations defined in the withdrawal agreement. Revenue (€174.3 billion) for 2020 was legal and regular, and free from material error. The error in expenditure for 2020 was material and pervasive. For expenditure as a whole, the ECA estimated the level of error to be between 1.8 % and 3.6 %. The mid-point of this range remained the same as last year at 2.7 %. Therefore, the ECA issued an adverse opinion on expenditure for the second consecutive year.