Changes from plenary report to adopted text

The European Court of Auditors’ statement of assurance and budgetary and financial management

Reliability of the accounts

22. Welcomes the Court’s conclusion in its annual report on the implementation of the budget for the financial year 2024, that the consolidated accounts of the European Union for that year are reliable; notes that the Court has issued a clean opinion on the reliability of the accounts every year since 2007;

23. Notes that on 31 December 2024, total liabilities amounted to EUR 827,3 billion, and total assets amounted to EUR 518,5 billion; notes that the resulting difference of EUR 308,8 billion represents the Union’s negative net assets, which reflects the debt and the share of expenditure already incurred by 31 December 2024 that must be financed by future budgets; further notes that the negative economic result for 2024 totalled EUR 97,2 billion, with amounts expensed for NextGenerationEU (NGEU) contributing significantly both to the negative net asset position and to the economic result;

24. Notes that at the end of 2024, the estimated value of incurred but not yet claimed eligible expenses due to beneficiaries, recorded as accrued expenses, was EUR 160,7 billion (2023: EUR 155,2 billion), of which EUR 7,9 billion is related to RRF forecasted future payments;

25. Welcomes the Court’s conclusion that the assets, liabilities, revenue and expenses, including those related to 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

26. 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

27. Strongly regrets the adverse opinion on the legality and regularity of the Union budget expenditure issued by the Court for the sixth year in a row; recalls that the discharge authority continues to closely monitor developments and that it reassesses the situation in the context of the discharge procedure; underlines the importance of continued and sustained efforts to address the underlying weaknesses and to strengthen the financial management and the control mechanisms of both the Commission and Member States; notes the difficulties for the discharge authority when the Court of Auditors and the Commission apply different legal and methodological definitions;

28. Welcome the decrease in the Court’s estimation of the level of error to 3,6 % in 2024 expenditure, a two percentage point decrease from 5,6 % in 2023; notes with concern that the Court continues to detect substantial issues in reimbursement-based expenditure which are the biggest contributor to the overall error rate where the estimated level of error is 5,7 %; notes that the effect of the errors found by the Court is estimated to be both material and pervasive;

29. Notes that the Commission’s 2024 estimates of the risk at payment, covering all MFF headings except Heading 3, are consistently lower than the Court’s confidence intervals, particularly for Headings 2 and 6, considers that this also reflects the significant methodological and mandate-related differences between the two institutions;

30. Notes that, unlike the Court, which must report all errors regardless of whether a financial correction is possible, the Commission only reports irregularities for which it considers recoveries are legally justified; recalls that in accordance with the Common Provisions Regulation (CPR), the Commission considers by ‘irregularity’ any breach of applicable law, resulting from an act or omission by an economic operator, which has, or would have, the effect of prejudicing the budget of the Union by charging unjustified expenditure to that budget, whereas the Court’s definition of ‘error’ includes all payments made without meeting the required conditions; reiterates its concern that the Commission and the Court, owing to their distinct institutional roles, apply different legal interpretations and methodological definitions, which may create confusion; is concerned that the Commission may systematically underestimate the existing error level; expresses its support for the development of a common audit approach and methodology;

31. Stresses the importance of ensuring that public authorities effectively recover amounts unduly lost through fraud, evasion, irregularities and administrative fragmentation, as an essential element of protecting public finances; calls on the Commission to enhance transparency by publishing clear, annual information on recoveries, financial corrections and confiscations linked to Union spending and enforcement cooperation, presented in a coherent and accessible manner that supports accountability while avoiding an unnecessary administrative burden;

32. Reiterates its concern over the Court’s observation that the Commission’s risk assessment is likely to underestimate the actual level of risk in several areas; notes that weaknesses identified in certain management and control systems may affect the overall reliability of audit conclusions; highlights the need to ensure robust oversight across management modes; welcomes that, as of 2025, the Court will discontinue the practice of selecting audit samples from transactions already reviewed by the Commission or national audit authorities, a change rendered necessary because this approach, though expected to reveal few or no errors, has repeatedly proven unreliable; underlines that this development raises serious doubts about the effectiveness of the Union’s control systems and reinforces Parliament’s longstanding call for reliable assurance mechanisms across all management modes;

33. Urges the Commission to accelerate the deployment of interoperable anti-fraud and data-mining tools across management modes, enabling cross-checks on beneficial ownership, procurement risk indicators and double funding signals; urges the Commission to report annually to the discharge authority on the coverage and effectiveness of these tools including uptake by managing authorities; reiterates the urgent need for the mandatory use of data mining and artificial intelligence tools to effectively combat fraud and irregularities;

34. Underlines that the estimated level of error in the Union’s expenditure, as reported in the Court’s statement of assurance, reflects payments that, according to the Court’s assessment, did not fully comply with the applicable rules and conditions; considers that, although this is not an indicator of fraud or corruption and does not automatically imply a wasteful use of resources, rather it highlights areas where corrective measures can reinforce the proper application of rules and effectively protect the Union’s financial interest; regrets that persistent levels of error, while often technical in nature, may nevertheless undermine public confidence in the sound financial management of the Union budget;

35. Recalls that, as set out in the Treaties, 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;

36. Recalls that the Commission bears primary responsibility for preventing and detecting fraud affecting the Union’s financial interests; notes that the Court of Auditors, in line with its mandate, must report any cases of irregularity identified during its audit work; further notes that the Court refers suspicions of criminal offences falling under the competence of the EPPO and suspicions of fraud, corruption or other illegal activities to the European Anti-Fraud Office (OLAF); notes that in 2024 the Court reported 19 cases of suspected fraud to OLAF and, in parallel, transmitted seven of these cases to the EPPO, which have so far resulted in six OLAF investigations and seven EPPO investigations; commends the Court for its systematic reporting to OLAF and the EPPO, especially given that information stemming from audit activities carries a high degree of reliability; stresses that all cases of irregular expenditure identified by the Court should be reported to OLAF and the EPPO, leaving it to these competent bodies to assess whether there is fraudulent intent warranting further investigation; underlines the importance of continued coordination between the Commission, OLAF, EPPO and the Court to ensure timely and effective follow-up of all reported cases, in line with their respective mandates; reiterates the need for the Commission to equip these bodies with adequate resources to guarantee fully effective cross-border investigation and detection capabilities; recalls the importance of full operational independence of EPPO and OLAF;

Budgetary and financial management

37. Notes that the mid-term revision of the MFF, adopted in February 2024, introduced a revised technical adjustment which increased the 2024 ceiling for commitment appropriations from EUR 186,0 billion to EUR 186,8 billion, and raised the level of payment appropriations by EUR 7,1 billion, bringing the final payment appropriation budget to EUR 149,7 billion, while maintaining the overall payment ceiling at EUR 170,5 billion; further notes that the revision also established the Ukraine Reserve and the European Union Recovery Instrument (EURI) as new special instruments placed outside the MFF ceilings;

38. Notes that the budgetary authority initially approved a Union budget for 2024 of EUR 189,4 billion in commitment appropriations; notes that five amending budgets adopted during the year resulted in a net increase of EUR 5,9 billion, bringing total commitments to EUR 195,3 billion, thereby exceeding the MFF ceiling of EUR 186,8 billion; underlines that this was made possible through the use of MFF special instruments, which provide additional resources beyond the ceilings to address emerging or unforeseen needs;

39. Notes that the absorption of the 2014-2020 European Structural and Investment Funds (ESIF) has reached an advanced stage, with total payments amounting to EUR 475,2 billion, corresponding to 97,0 % of the EUR 489,9 billion available under the programmes; welcomes the fact that 21 Member States have exceeded a 95,0 % absorption rate for the 2014-2020 programming period, demonstrating strong implementation capacity as the period approaches closure;

40. Underlines that the cumulative absorption rates presented by the Commission, based on prefinancing and interim payments made to Member States, do not fully reflect the progress of project implementation on the ground, as they do not capture the total amounts disbursed by national authorities to final beneficiaries;

41. Notes with concern that, despite a notable increase in 2024 payments, absorption under the 2021–2027 Common Provision Regulation (CPR) remains low, with EUR 14,7 billion disbursed in 2024 compared to EUR 6,3 billion in 2023, which is still modest relative to overall allocations; further notes that RRF grant payments reached only EUR 55,9 billion in 2024, around half of the Commission’s June 2023 forecast, reflecting continued delays in submitting and processing payment requests;

42. Notes that in 2024 the Commission forecast decommitments of EUR 8,8 billion for the period 2025-2027, up from the EUR 8,1 billion estimated in 2023 for 2024-2027, with this increase driven primarily by cohesion policy programmes under the current MFF and by the European Agricultural Fund for Rural Development (EAFRD) as 2014-2020 programmes approach closure in 2026; the low implementation in 2024 puts important amounts at risk from 2025 onwards;

43. Notes with concern that for the Cohesion Fund (CF), European Regional Development Fund (ERDF) and ESF+ the Commission forecasts total decommitments of EUR 2,7 billion, a notable rise from the EUR 2,2 billion projected in 2023 and nearly seven times the EUR 0,4 billion forecast in 2022, despite the assumption of a sharp acceleration in implementation in 2026 and 2027; stresses that failure to achieve this accelerated implementation rate will further increase the amounts at risk of decommitment;

44. Warns that the different risks identified by the Court in the Union budget, including outstanding commitments, may jeopardise the achievement of Union objectives; calls on the Commission, in line with the Court’s recommendations, to act proactively to ensure that its mitigating risk tools (such as the Common Provisioning Fund) have sufficient capacity;

45. Notes that the outstanding nominal value of Union borrowing reached EUR 601,3 billion at the end of 2024, reflecting the use of capital markets to finance Union programmes, such as Support to mitigate Unemployment Risks in an Emergency (SURE) and NGEU; notes that by 2027 total outstanding borrowing could exceed EUR 900 billion, almost ten times the level recorded in 2020, prior to the launch of NGEU; notes that since December 2022 the Commission has applied a diversified funding strategy as its standard method for raising funds on capital markets, underlines the importance of transparent reporting, fiscal responsibility and sound financial management in the context of increased borrowing and interest rate risk in order to safeguard fiscal sustainability and ensure full accountability as well as democratic oversight by the discharge authority;

46. Notes that interest expenditure linked to the financing of the non-repayable NGEU support amounted to EUR 5,4 billion for the period 2021–2024, including EUR 3,4 billion in 2024 alone, nearly 50 % above the initial forecast of EUR 3,7 billion; observes that total interest expenditure in the current MFF could range between EUR 29,0 and EUR 30,4 billion, approximately double the Commission’s original estimate of EUR 14,9 billion; further notes that a 2024 briefing entitled ‘Management of debt liabilities in the EU budget under the post-2027 MFF’, requested by the Committee on Budgets, estimates that interest payments for non-repayable NGEU support in the next MFF could amount to EUR 70,9 and EUR 73,8 billion, highlighting the long-term budgetary implications of NGEU borrowing;

47. Notes that the Union budget’s exposure continued to increase in 2024, reflecting the growing volume of borrowing operations and associated guarantees; points out that the total exposure of the Union budget amounted to EUR 342,0 billion at the end of 2024, which amounts to an increase of 14,8 % compared with EUR 298,0 billion at the end of 2023; underlines that this trend underscores the importance of a robust system, fiscal responsibility and transparent reporting to ensure that the Union can meet its debt obligations under all circumstances; stresses that, in the context of rising debt levels, the development of genuine new own resources is essential to prevent debt servicing costs from crowding out priorities under future multiannual financial frameworks;

48. Notes with concern that, as highlighted by the Court in Special Report 18/2025 ‘EU budget flexibility’, the Commission’s proposal for the 2021-2027 MFF was not sufficiently grounded in a thorough identification and analysis of the needs and risks the Union budget should be able to address; notes that, although the existing flexibility arrangements enabled the Union to react to emerging priorities, several flexibility tools were depleted repeatedly in the early years of the MFF, thereby limiting the margin for manoeuvre for the remainder of the period; underlines that the flexibility framework is overly complex with no clearly defined sequence for activating margins below the ceilings and special instruments above them; notes furthermore that certain flexibility tools overlap with one another and with thematic programmes targeting the same needs, resulting in unnecessary complexity in financial management and decision-making;

Recommendations

49. Strongly supports the recommendations of the Court in its annual report on the implementation of the budget for the financial year 2024 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;

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

(i) strengthen the reliability and transparency of financial reporting; in particular by further improving the clarity of the presentation of negative net assets and accrued expenses, and by ensuring that the long-term budgetary implications of NGEU borrowing are communicated clearly and systematically to the budgetary authority;

(ii) take all necessary measures to address the persistent weaknesses in the legality and regularity of expenditure, including by improving and clarifying guidance to managing authorities, continuing efforts to address shortcomings identified in reimbursement-based spending and ensuring consistent application of the Rule of Law Conditionality Regulation where risks persist;

(iii) adjust its risk-at-payment methodology so that it ensures full alignment between its risk estimations and the control environment on which it relies;

(iv) strengthen monitoring of the implementation of 2021-2027 shared management funds including more active follow-up on low absorption rates, enhanced administrative support and targeted technical assistance to Member States, and the systematic identification of structural bottlenecks that slow down implementation;

(v) make full use of all available instruments to prevent decommitments and to ensure that allocated funds are fully and effectively absorbed;

(vi) clearly communicate the impact of expected interest expenditure on the Union’s borrowing operations, including its budgetary implications for future MFFs, and the sustainability of the current diversified funding strategy;

(vii) review and simplify the Union budget’s flexibility architecture for the next MFF, including by establishing a clear sequence for mobilising margins and special instruments, ensuring complementarity between flexibility tools, and enhancing transparency and predictability in their use while fully ensuring democratic oversight by the budgetary authority;

(viii) recommends that, in future MFF proposals, the Commission include a comprehensive analysis of needs, risks and crisis-response capacity, ensuring that flexibility instruments are sufficiently justified, adequately funded and capable of addressing unforeseen events without being depleted prematurely;

(ix) ensure that the Union’s anti-fraud architecture, notably OLAF and the EPPO, is provided with sufficient and appropriate resources, and that robust cooperation between them and with the Commission is facilitated; including through the timely transmission of suspected fraud cases and the strengthening of fraud-prevention strategies, in particular in high-risk expenditure areas and large-scale financial instruments;

(x) publish clear, user-friendly performance and spending summaries, including one-page overviews and interactive dashboards with machine-readable datasets;

Revenue

51. Welcomes that the overall audit evidence also for the financial year 2024 indicates that the level of error in revenue was not material; at the same time continues to point out that the problems with customs duties being incorrectly declared or not declared at all (the ‘customs gap’) leads to a shortfall in collected import duties, which has been a persistent problem for many years for the Union and for its Member States;

52. Underlines the importance of Member States’ responsibilities for the collection of value-added tax (VAT) and traditional own resources (TOR) in ensuring fair competition and fair taxation in the Single Market and in guaranteeing that the burden of financing Union expenditure is fairly shared among the Member States; notes with satisfaction that the revenue systems examined by the Court were generally effective; at the same time urges the Commission to intensify efforts to improve the collection of existing own resources, including by addressing the remaining weaknesses identified by the Court, especially those related to long-outstanding issues concerning VAT reservations and open points concerning TOR;

53. Underlines that reform of the Union customs system remains important for both the modernisation of own resources and for the effective fight against organised crime at European and national level; notes that the Court’s observation on the need for further implementation and operationalisation planning; underlines the importance of achieving agreed reform elements in a timely and coordinated manner;

54. Stresses that fast adoption and implementation of all elements of the proposal for a customs reform should remain a key priority; highlights that the establishment of the EU Customs Authority and the EU Data Hub should contribute to real-time risk assessment, fraud detection, and uniform application of customs rules, replacing fragmented national systems for a stronger digitalised Customs Union; underlines the importance of ensuring that reform helps to achieve a significant reduction of the customs gap and enhances the effectiveness of the Union’s customs controls; points to the importance of having real-time risk assessment and digitalised customs controls;

55. Commends the efforts of the EPPO and OLAF to combat the organised exploitation of weaknesses in Union customs controls; encourages the further strengthening of EPPO’s operational capacity and expertise in tackling organised crime patterns affecting Union revenues and expenditure, including through specialised joint tasking, enhanced intelligence-sharing and risk-analysis capabilities;

56. Underlines the importance of preventive and precautionary measures in combating VAT fraud; encourages the exploration of innovative approaches, such as risk-based sampling and statistical extrapolation of control results to wider transaction populations, in full respect of legal safeguards and proportionality;

57. Welcomes the proposals for new own resources presented by the Commission, including as part of the package of proposals for the next MFF, which should at the very least be able to cover the expenses related to the interest and repayment of loans under the RRF in order to ensure that such expenses do not limit Union funds available for regular Union spending programmes; recognises, that other revenue sources might also be considered should the existing proposals not materialise without compromising fiscal responsibility; considers that the revenue potential of a digital service tax and a financial transaction tax should be explored as possible solutions;

Recommendations:

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

(i) take the necessary steps to support the timely and effective implementation of the customs reform , including the establishment and initial operation of the EU Customs Authority and the development, implementation, and maintenance of the EU Customs Data Hub;

(ii) intensify cooperation on customs with other countries outside the Union in order to facilitate trade and increase the fight against cross-border tax and customs fraud;

(iii) intensify efforts to improve the collection of the Union’s existing revenue sources, including those from e-commerce by addressing the remaining weaknesses identified by the Court especially those which concern long-outstanding issues concerning VAT reservations and open points concerning traditional own resources (TOR);

(iv) continue work towards the introduction of additional new own resources;