Changes from plenary report to adopted text

The European Parliament,

– having regard to its decision on discharge in respect of the implementation of the general budget of the European Union for the financial year 2022, Section III – Commission,

– having regard to its decisions on discharge in respect of the implementation of the budgets of the executive agencies for the financial year 2022,

– having regard to Rule 99 of and Annex V to its Rules of Procedure,

– having regard to the opinions of the Committee on Foreign Affairs, the Committee on Development, the Committee on Employment and Social Affairs, the Committee on the Environment, Public Health and Food Safety, the Committee on Transport and Tourism, the Committee on Regional Development, the Committee on Culture and Education, the Committee on Civil Liberties, Justice and Home Affairs, the Committee on Women's Rights and Gender Equality,

– having regard to the letter from the Committee on Agriculture and Rural Development,

– having regard to the report of the Committee on Budgetary Control (A9-0139/2024),

– having regard to the inter-institutional agreement of 16 December 2020 on cooperation on budgetary matters and sound financial management, as well as on new own resources, including a roadmap towards the introduction of new own resources;

Political priorities

1. Recalls its strong commitment to the fundamental principles and values enshrined in the Treaty on European Union (TEU) and the Treaty on the Functioning of the European Union (TFEU), including sound financial management as set out in Article 317 of the TFEU and the combating of fraud and protecting the financial interests of the Union as set out in Article 325 of the TFEU;

4. Stresses the contribution of the Recovery and Resilience Facility (RRF) in supporting Member States in recovering from the economic and social consequences of the COVID-19 pandemic and creating a resilient Union that can shoulder the challenges of the future; notes the contribution of the RRF and RePowerEU in addressing the energy-related challenges caused by Russia’s war of aggression against Ukraine; regrets that milestones have not been better defined and calls on the Commission to monitor Member States' implementation of the associated actions in accordance with the agreed milestones and targets;

5. Highlights the crucial role the Union budget played in 2022 in addressing the consequences of Russia’s war of aggression against Ukraine, namely to secure food supply chains, address energy-related challenges, support Member States in welcoming Ukrainian refugees, and provide assistance to Ukraine in caring for its citizens; notes that this has put pressure on the budget and that all available flexibility measures have been used; notes in that regard the adoption of the mid-term review of the Multi-annual Financial Framework (MFF) that re-orients funds, raises fresh funds; stresses the importance the Commission presents a clear and realistic roadmap to repay EU debt;

6. Recalls the importance of a strict application of the financial rules of the Union in all programmes and on all beneficiaries, in order to avoid all forms of fraud, conflicts of interest, corruption, double funding and money laundering; 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, notably the EPPO;

7. Recalls the importance of carrying out ex-post and mid-term evaluations of financial programmes created to respond to crises, concerning their relevance, coherence and European added value on top of compliance and regularity, efficiency, effectiveness, performance and long-term economic impact; notes that decisions related to the COVID-19 response instruments were made under enormous time pressure, although such instruments will be implemented until 2026; stresses that a quick response should not be to the detriment of proper control over expenditure and calls, therefore, on the Commission to draw lessons from such instruments;

CHAPTER I - Multi-annual Financial Framework (MFF)

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

Reliability of the accounts

21. Welcomes that the Court finds in its Annual report on the implementation of the budget for the financial year 2022, that the consolidated accounts of the European Union for the year 2022 are reliable; notes with satisfaction that the Court has given a clean opinion on the reliability of the accounts every year since 2007;

22. Notes that at 31 December 2022, total liabilities amounted to EUR 577,2 billion, compared with EUR 445,9 billion of total assets; notes that the difference of EUR 131,3 billion represented the (negative) net assets, comprising reserves and the portion of expenses already incurred by the Union up to 31 December 2022 that must be funded by future budgets;

23. Notes that at the end of 2022, the estimated value of incurred but not yet claimed eligible expenses due to beneficiaries, recorded as accrued expenses, was EUR 148,7 billion (2021: 129,9 billion), of which EUR 22,6 billion is related to accrued RRF expenditure;

25. Notes that the Court has assessed the impact of Russia's unprovoked and unjustified war of aggression against Ukraine on the Union accounts; welcomes the Court’s conclusion that this impact has been appropriately accounted for and disclosed in the consolidated annual accounts;

26. Welcomes the Court’s conclusion that the assets, liabilities, revenue and expenses, including those related to the European Recovery Instrument 'NextGenerationEU' (‘NGEU’), are presented fairly in the consolidated annual accounts;

Legality and regularity of Union revenue and expenditure

27. Regrets the adverse opinion on the legality and regularity of the Union budget expenditure issued by the Court for the fourth year in a row; underlines the importance of reinforcing the control mechanisms of the Commission and Member States which are considered unreliable by the Court, therefore compromising the reliability of the Annual Management and Performance Report (AMPR); notes the Court’s conclusion that the revenue is free from material error and that the managing systems examined by the Court were generally effective;

28. Is concerned that the Court estimates the level of error for the 2022 expenditure to be 4,2 %, which is more than double the materiality threshold; notes that this is a further deterioration compared to the previous two years (3,0 % in 2021 and 2.7 % in 2020); notes with concern that the Court detected substantial issues in reimbursement-based expenditure, which accounts for 66 % of the Court’s audit population, where the estimated level of error is 6 %; notes that the effects of the errors found by the Court are estimated as both material and pervasive to the year's accepted expenditure;

29. Notes that the Commission´s own estimation of the risk at payment is 1.9 % for 2022 (similar to 2020 and 2021), which is below the materiality threshold; notes that the Commission’s estimation of the risk at closure, after ex-post controls and corrections have been applied, is 0,9 %; notes the divergence between the Court’s overall error rate and the Commission’s risk at payment, which is observed for the overall Union budget expenditure in 2022, although not in all expenditure areas, notes that this is particularly evident in headings 1 and 2 as in the past; and remarks the fact that the Commission’s estimates for risk at payment are consistently in the lower range or below the statistical estimations of the Court; welcomes the Court’s estimate of the level of error as important indicator for the existing risks; calls for a common understanding to be found to avoid such divergence between the Court’s overall error rate and the Commission’s risk at payment;

30. Reiterates the concerns about the Court observation that the Commission’s risk assessment is likely to underestimate the level of risk in several areas; is also concerned by recurrent weaknesses identified by the Court on Member States’ ex post checks in heading 2, limiting the reliance that can be placed on their work;

31. Underlines that the general estimate of the level of error in the Union budget, as presented in the Court’s Statement of Assurance, is an estimate of the money that should not have been paid out because it was not used in accordance with the applicable rules and regulations, and not an indicator of fraud or corruption; regrets that the general estimate of the level of error in the Union budget might give each year a negative impression to citizens;

32. Recalls that the audit approach and methodology of the Court are based on international audit standards that require the testing of a random, representative sample of transactions that result in an estimate of the error rate; recalls that the Court differentiates between low-risk expenditure, i.e. entitlement-based payments under simplified rules, and high-risk expenditure, i.e. reimbursement-based payments subject to complex rules; notes that for the 2022 expenditure, the Court has selected 66 % of its audit population from the high-risk expenditure (63,2 % in 2021), amounting to EUR 110,1 billion, and 34 % from the low-risk expenditure, amounting to EUR 56,7 billion; notes that the Court’s estimated error rate for 2022 (4,2 %) is mainly driven by ‘Cohesion, resilience and values’ (2,5 % of the overall error rate), ‘Natural resources and environment (0,8 %), ‘Neighbourhood and the world’ (0,4 %), and ‘Single market, innovation and digital’ (0,3 %), for the most part considered high-risk expenditure areas by the Court; notes that the Commission in its AMPR categorises the expenditure into higher, medium and lower risk segments; notes that the Court uses the risk categories in a large part to determine the sample size to ultimately support its opinion on the legality and regularity of expenditure, whereas the Commission’s use of risk categories serves to identify areas where additional managerial attention is needed to correct errors; emphasises that the use of different risk categories by the Court and the Commission hinders the possibility for the discharge authority to make a comparative analysis between clerical form errors and substantial administrative errors;

33. Recalls that the Court’s audit focuses on the year under review; considers, nevertheless, that the Court takes into account findings of several years in its annual report and deepens the focus on specific topics within its Special Reports; notes that in contrast to this method, the Commission takes into account the whole lifecycle of Union programmes and funds covering multiple years, as well as corrections and recoveries after the end of the year under review; is of the opinion, however, that these different approaches do not entirely explain the large difference in the estimation of the error rate;

34. Recalls that Union spending programmes are multiannual by design and consequently their related control systems and management cycles also cover multiple years; recalls that the Commission’s estimates of the risk at closure have a multiannual perspective that takes account of corrections and recoveries over several years; notes that the Commission’s approach is based on tests as defined in control strategies aiming to check compliance with Union rules to ultimately establish whether funds need to be recovered from beneficiaries; notes that the range of the risk at payment, determined as part of this approach, resembles most of the Court’s estimated error rate and is considered by the Commission as the best estimate to express the exposure to the Union budget;

37. Welcomes that the Commission improved its reporting on preventive and corrective measures to protect the Union budget from illegal and irregular expenditure; notes that the Commission clarified that the total amount reported in the Annual Management and Performance Report (AMPR) as financial corrections and recoveries (EUR 4,95 billion) includes preventive and corrective measures taken by the Commission and Member States; notes that the Commission reported EUR 734 million in net corrections and EUR 195 million in recovered undue payments from final recipients;

38. Notes that the Court, in the exercise of its mandate, does not investigate fraud but does take account of the risk of fraud; notes that the Court forwards to the EPPO suspicions of criminal offences falling in its competences and to OLAF suspicions of fraud, corruption or other illegal activity affecting the Union’s financial interests identified while performing its audits; notes that, in 2022, the Court reported 14 cases of suspected fraud to OLAF, and in parallel reported 6 of these cases to the EPPO, resulting so far in 6 OLAF investigations and 3 EPPO investigations;

Budgetary and financial management

39. Highlights that in 2022, 98,5 % of the available commitment appropriations were used (EUR 179,4 billion out of EUR 182,2 billion); notes that the available appropriations were higher than the MFF ceiling of EUR 179,9 billion due to the use of special instruments, justified by unforeseen events, using all flexibility available under the MFF; notes that 98,1 % of payment appropriations were used (EUR 167,3 billion of EUR 170,6 billion available); commends the Commission and the budgetary authority for its decisive and flexible budgetary response to the challenges faced in 2022;

40. Notes with concern that the total outstanding commitments, which represent future debts if not decommitted, reached an all-time high of EUR 450 billion in 2022, caused by both increased commitments related to NGEU (with all National Recovery and Resilience Plans adopted in 2022) and the slow start of the implementation of the 2021-2027 programming period; notes that the Commission expects this amount to further increase in 2023 towards EUR 460 billion, and foresees a decrease from 2024 to 2027 when committed amounts for both NGEU and the 2021-2027 programming period should be paid out; notes that approximately EUR 90 billion of loans will not be used and recalls that the Commission and Member States are currently behind schedule for payments established in the implementing decision approving their national recovery and resilience plans (RRPs); notes that commitments under MFF are still increasing and will continue to rise in the coming years due to the slow start of the programming period with payments following even later;

41. Highlights that the time available for implementing shared-management funds under the 2021-2027 MFF is shorter than under previous MFFs because of the n+2 rule for the last year of the period; is aware of the challenges in relation to managing and controlling the combined MFF and NGEU funds due to their volume and the different managing, programming, implementing and controlling mechanisms; notes with concern the significant differences in absorption rates per Member State; regrets the insufficient initiatives taken by the Commission, in conjunction with the Member States, to increase the absorption capacity of the programs and thus bring about a sharp and lasting reduction in outstanding commitments; demands the Commission takes all the necessary measures and administrative support to the Member States needed especially to improve their absorption capacity;