This does not mean that the whole 3.9% of EU expenditure concerned was wrongly spent and errors do not mean fraud, which itself affects around 0.2% of the EU budget and always triggers tough legal and recovery measures.
When the Court of Auditors refers to an error rate, it means that an EU-funded activity did not fully meet all of the very detailed rules that it should have done. It does not mean the activity was not a success or that it did not as a whole represent value for taxpayers' money. Where errors do occur, solid mechanisms are in place to detect and correct them.
"Over the past few years, the Commission has delivered on its promise to ensure high quality management and control of EU funds. Our work is by no means finished, but now it is time for our partners to step up their game too," said Algirdas Šemeta, Commissioner for Taxation, Customs, Audit and Anti-fraud. "Member States can do this through two simple steps. First, they can endorse the simpler rules proposed by the Commission for the new programming period. Simpler rules are easier to respect and easier to control, and could help to drastically reduce the number of mistakes in EU spending. Secondly, I repeat my call for Member States to take their responsibilities more seriously when it comes to their role in protecting EU taxpayers' money. A little more effort by Member States to control projects properly and retrieve misused funds could go a long way, particularly in this time of economic difficulty."
What does the Court of Auditors mean by "an error"?
The definition of an error is very wide and many instances errors classified and quantified in the scrutiny of EU accounts would not be identified as errors in similar exercises scrutinising national accounts.
To be counted, an error must have a direct or indirect financial impact. But it does not mean that there was fraud or that the overall cost-effectiveness of a project was seriously compromised.
To give three examples:
- people not employed in the electronics sector participated at a training course organised by an EU funded project specifically for that sector;
- a company was contracted to maintain an IT system, which it had previously installed. This was done without publication of a contract notice (which is allowed, if justified). The Court classified the case as a 100% error because an appropriate justification had not been provided;
- in a small number of tendering procedures, errors were made. Such errors are a serious matter and the Commission is deeply committed to applying procedures correctly itself and to using all reasonable means to ensure that all those managing EU funds do the same. But the fact that there were errors in the application of a tendering procedure for, say, a bridge construction project does not mean that there was fraud, that the wrong company got the contract or that the new bridge should be dismantled or that it is of poor quality.
What is the Commission doing to iron out these errors?
The target is to reduce the error rate to below 2%. This means further reinforcing the effectiveness of the Commission's own controls, stepping up pressure on the Member States to improve theirs and simplifying the rules themselves to make them easier for beneficiaries of EU funding to follow.
The new EU Financial Regulation, proposed by the Commission and adopted by the Member States and the European Parliament on 25 October 2012, already contains substantial simplification measures, as well as provisions to improve controls on EU funds at every level.
The Commission's proposals for the next generation of funding programmes (2014-2020), which are currently being discussed by Council and Parliament, include a host of new measures to further improve the management of EU funds. These include stricter corrective measures if Member States fail to address irregularities on time; a new system for monitoring progress in achieving set targets; and a requirement for national management authorities to sign a statement of assurance on their accounts.