Changes from plenary report to adopted text

26. Notes that on 31 December 2023, total liabilities amounted to EUR 679,9 billion, and total assets amounted to EUR 467,7 billion; notes that the difference of EUR 212,2 billion represents the negative net assets, comprising debt and the portion of expenses already incurred by the Union up to 31 December 2023 that must be funded by future budgets;

27. Notes that at the end of 2023, the estimated value of incurred but not yet claimed eligible expenses due to beneficiaries, recorded as accrued expenses, was EUR 155,2 billion (2021: EUR 148,7 billion), of which EUR 7,4 billion is related to accrued RRF expenditure;

28. Welcomes the Court’s conclusion that the assets, liabilities, revenue and expenses, including those related to NextGenerationEU (NGEU), the estimate related to the UK’s withdrawal process, and the impact of Russia’s war of aggression against Ukraine, are presented fairly in the consolidated annual accounts;

Legality and regularity of Union revenue

29. Notes the Court’s conclusion that the Union’s revenue is free from material error and that the managing systems examined by the Court were generally effective;

Legality and regularity of Union expenditure

30. Strongly regrets the adverse opinion on the legality and regularity of the Union budget expenditure issued by the Court for the fifth year in a row; considers this increasingly problematic, as the Commission seems unable, or unwilling, to identify the cause and address the underlying issues; regrets the Commission is not accepting some recommendations of the Court of Auditors; notes in particular the importance of reinforcement of financial management of the Commission and Member States, that is considered as not reliable by the Court and therefore compromises the reliability of the Annual Management and Performance Report; calls on the Commission to present a clear action plan on reducing the error rate within the following four months; stresses that Parliament shall duly scrutinise such an action plan;

37. Notes the multi-annual perspective of the Commission’s risk at closure, as corrections and recoveries after year-end are not reflected in the Court’s estimate of the level of error; regrets, however, the confusion caused by the Commission’s presentation of the risk at payment;

38. Recalls the positions expressed in the 2022 discharge resolution and the exchanges of views in the discharge hearings for the financial year 2023 on the diverging methodologies and estimates between the Court and the Commission of errors made in Union expenditure; notes in particular that the Court’s error rate is based on a statistical sample, whereas the Commission’s risk at payment is to a large extent compiled from the error rates reported by national auditing authorities in Member States and calculated only after corrections and repayments; reminds that the Court’s error rate includes the errors that remained undetected by the Member States and the Commission, which demonstrates that the Commission’s error rates are an underestimation; notes with concern an even wider gap between the Court’s and Commission’s estimates; further notes that the Commission and the Court are organising joint workshops on this issue; notes that the Court recently aligned its methodology on procurement in the decentralised agencies with the methodology of the Commission; reiterates its support for the independent audit approach and methodology of the Court and invites the Commission to cooperate with the Court with a view to increasing harmonisation and providing for more comparable estimates of the level of error;

39. Recalls that the discharge authority needs a statement of assurance, provided by the Court, on the reliability of the accounts and the legality and regularity of the underlying transactions at year-end for its decision on discharge for that year; notes that Union spending programmes are multiannual and that their management and control systems cover multiple years, allowing for corrections and recoveries after year-end;

40. Recalls that the Commission is responsible for preventing and detecting fraud; notes that the Court, in the exercise of its mandate, is obliged to report any cases of irregularity; notes that the Court forwards to the EPPO suspicions of criminal offences falling under its competences and to OLAF suspicions of fraud, corruption or other illegal activity affecting the Union’s financial interests; notes that, in 2023, the Court reported 20 cases of suspected fraud to OLAF, and in parallel reported 12 of these cases to the EPPO, resulting so far in four OLAF investigations and nine EPPO investigations; commends the Court for its reporting of cases of irregularity to OLAF and the EPPO, as information resulting from audit engagements usually has a high degree of reliability; reminds in this framework of the key role played by the whole Union’s anti-fraud architecture and expresses some concerns about the refusal of some Member States to cooperate with one of its elements, the EPPO;

Budgetary and financial management

41. Notes that in 2023, 98,9 % of the available commitment appropriations were used (EUR 184,4 billion out of EUR 186,5 billion); notes that the available appropriations were higher than the MFF ceiling of EUR 182,7 billion due to the use of special instruments for new or unforeseen events; notes that 90,0 % of payment appropriations were used (EUR 162,0 billion of EUR 165,2 billion available);

42. Notes with concern that the total outstanding commitments, which represent future debts if not decommitted, reached an all-time high of EUR 543 billion (2022: EUR 450 billion); notes that the Commission foresees a decrease from 2025 to 2029 when committed amounts for both NGEU and the 2021-2027 programming period should be paid out; notes however that the actual amounts for 2023 (EUR 543 billion) are much higher than the forecasted amount (EUR 490 billion), calling the Commission’s estimates into question;

44. Notes that the latest long-term payment forecast produced by the Commission foresees substantial decommitments as of 2027 unless Member States undertake additional efforts and implement at a much faster pace than in the period 2014-2020; notes that for the CF, ERDF, and ESF+ cohesion policy funds, the Commission forecast total decommitments for 2024-2027 at EUR 2,2 billion, more than five times its 2022 forecast of EUR 0,4 billion; warns that for the Just Transition Fund (JTF), the low implementation in 2023 puts important amounts at risk from 2025 onwards; calls on the Commission and on the Member States to use all of the available possibilities to avoid decommitments;

45. Notes with concern that Union debt increased from EUR 344,3 billion in 2022 to EUR 458,5 billion in 2023, 60 % of which is related to NGEU; notes that only for the debt issued for NGEU, associated interest costs need to be paid directly from the Union Budget and that, due to increased interest rates, these costs for the current MFF (until the end of 2027) are estimated to be between EUR 17 billion and EUR 27 billion higher than the initially forecasted EUR 14,9 billion;

46. Notes with concern that the total exposure of the Union budget because of guarantees and contingent liabilities for loans rose to EUR 298,0 billion; notes that assumptions on capital-market interest should be made conservatively, both for existing debt and new debt and that for both categories a viable plan for its repayment is necessary; notes that the Court received information from the Commission that indicates that the exposure will steadily increase in the coming years, putting additional pressure on the headroom of the budget and further reducing the flexibility of the Union budget; supports the Court recommendations to the Commission to act more proactively to ensure that its mitigating tools (such as the Common Provisioning Fund) have sufficient capacity as well as to provide more transparent reporting on total annual budget exposure, making its estimate public;

47. Notes with concern that the Court in its Special Report 07/2024 observed that a significant share of recovery orders issued between 2014 and 2022 were still outstanding at the time of their audit; further notes that the Commission, in its replies to the Parliament’s Committee on Budgetary Control’s (CONT Committee) written questions for the 2023 discharge, mentioned that there are 1 357 overdue recovery orders for a total outstanding amount of approximately EUR 335 million for the period 2014-2023; calls on the Commission to prioritise collecting monies under overdue recovery orders and to keep the Committee on Budgetary Control informed about progress made;

48. Highlights that equality is a founding value of the Union and is enshrined in the Charter of Fundamental Rights of the European Union; recalls the commitment of the Union to gender mainstreaming in its policy-making and implementation of Union funds, including gender budgeting; encourages the Commission to continue the efforts made in gender budgeting and in tracking the impact of the Union budget to foster gender equality; recalls the obligation of the Commission to accompany all legislative proposals with an impact assessment when they are projected to have a significant economic, social, and environmental impact in order to guarantee, among other things, fair distribution of funds;

Recommendations

51. Strongly supports the recommendations of the Court in its annual report on the implementation of the budget for the financial year 2023 (annual report for the 2023 financial year) as well as in related special reports; calls on the Commission to implement them without delay and to keep the discharge authority informed on the progress of the implementation;

52. Calls on the Court to look for ways, together with the Commission, to align their methodologies for the general budget, as in the case of procurement for the decentralised agencies, while respecting the different roles;

53. Calls on the Commission, in particular, to:

(i) continue to engage with the Court in order to increase understanding, convergence and comparability of the two approaches to the diverging estimates of errors in Union expenditure;

(ii) qualify the impact of corrective measures on the overall level of error;

(iii) look for ways, together with the Court, to align their methodologies as regards the evaluation of procurement errors, and the estimation of the level of error for the general budget, as in the case of procurement for the decentralised agencies, while respecting the different roles;

(v) increase the reliability of the forecast of the outstanding commitments with a more realistic estimate of the absorption of Union funds to give the discharge authority a better forecast of the development of the RAL over the years and better protect the Union budget;

(vi) report on, and provide sufficient measures to, protecting the Union budget from the different risks identified beyond the RAL, such as decommitments in cohesion policy, the increasing debt, increased budget exposure and the impact of increasing inflation;

(vii) provide more transparent reporting on total annual budget exposure by presenting, in the Annual Management and Performance Report, a multi-annual outlook on the exposure of the Union Budget to budgetary guarantees;

(viii) substantially simplify rules and procedures and improve the assistance to, and ensure consistent and user-friendly guidelines for SMEs, new applicants, spin-offs, start-ups, administration and payment agencies, CSOs and all other relevant stakeholders, without compromising the quality of the controls;

(ix) make sure that the mitigation tools in place have sufficient capacity to effectively face the exposure risks of the Union budget;

(x) boost efforts to improve transparency in the use of funds, including as regards information on final beneficiaries, including on the funds that are allocated for the preparation of policy and legislative proposals;

(xi) put in place all necessary means for ensuring that all interest representatives that approach Union institutions are registered in the Transparency Register; further asks the Commission to set up an effective mechanism to ensure that entities funded by the Union in the Transparency Register are aligned with Union values and demand full transparency on their financing, providing a deeper insight into the financing of all entities registered and which should be the condition to approach all Union institutions, bodies and agencies;

(xii) together with Parliament and Council, guarantee adequate resources for the secretariat of the Transparency Register in order to ensure that the entries on the lobbying activities of all interest representatives can be checked for accuracy and that lobbying become more transparent as requested in the Court in Special Report 05/2024 on the EU Transparency Register; calls on the Commission to allocate adequate resources to identify irregularities to guarantee a wide range of search capabilities;

(xiii) require interest representatives in the Transparency Register to list their financial supporters by self-declaring that they are only representing their interests or the collective interests of their members and to propose an amendment to Annex II to the Interinstitutional Agreement of 20 May 2021 to require them to list their financial supporters in the EU Transparency Register, even if they state in that register that they are only representing the interests of their own members; urges entities already registered that have not listed their financial resources by self-declaration to declare them voluntarily before the interinstitutional agreement is amended;

(xiv) continue to support Member States in improving both the quality and the quantity of checks and to share best practices in the fight against fraud and corruption;

(xv) address the situation regarding late recovery orders and to take all necessary measures to recover the majority of the amount outstanding for the period 2014-2023, including implementation of corporate escalation mechanisms, and keep the discharge authority informed on the progress made in recovering the sums;

(xvi) reinforce the capacity of the Anti-fraud Architecture of the Union, including the provision of sufficient financial and human resources, and facilitate the cooperation between them;

Revenue

54. Welcomes that for 2023, the Court is also able to issue a clean opinion on the legality and regularity of revenue; at the same time, stresses that the problems with customs duties not being declared or being incorrectly declared (a customs gap) leading to a shortfall in collected import duties has been a persistent problem for many years and could potentially entail a loss of traditional own resources for the Union and for the Member States;