The Role of External Audit in EU Budget Management
Explore key features of the EU Budget, why performance is a priority, and how the budget is focused on delivering results through efficient spending and rigorous assessment. Learn how scarce resources, legal requirements, and taxpayer obligations shape the budget's direction towards maximizing performance and value added.
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EU Budget Focused on Results Dr. Manfred Kraff, Deputy Director General DG Budget, EC Accounting Officer The Role of External Audit for Effective Public Sector Management 19 November 2015, Sofia
Outline 1. Key Features of the EU Budget 2. Why is performance a priority? 3. What is EU Budget Focused on Results? 4. Which are the key success factors? #EUBudget4Results
Key Features of the EU Budget The EU Budget is different from national budgets: Content mainly financing investments, not public services and related administration Hence, its small size (~ 1% EU GNI). Budget is expenditure driven andmust be in balance Multiannual nature Commission is responsible for budget implementation, but 80% is implemented together with Member States Tightly controlled by: 1) Budgetary Authority (European Parliament (EP) and Council) 2) European Court of Auditors (ECA) 3) Discharge Authority (EP) #EUBudget4Results
Why is performance a priority? Comparison of ceilings 2007-2020 EUR billion, 2011 prices 150 140 130 Contingency margin 120 2015 revision 110 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 #EUBudget4Results
Why is performance a priority? Scarce resources Previously focus mainly on compliance and absorption, rather than performance Better spending debate during negotiations for 2014-2020 MFF Image problems of the EU budget Obligation towards the taxpayers and citizens Legal requirements of the Treaty #EUBudget4Results
"Make sure that every action we take delivers maximum performance and value added" Jean-Claude Juncker #EUBudget4Results
What is EU Budget Focused on Results? 1. In WHICH areas do we spend? European public goods with higher EU added value of funds BFOR Relevant for: 4. HOW do we communicate? 2.HOW do we spend? More leverage of EU funds More simplification efforts Annual budget discharge Mid-term review Post 2020 MFF 3. How are we ASSESSED? Rigorous application and further development of our control framework #EUBudget4Results
1. In WHICH areas do we spend? European public goods with higher EU added value of funds Higher amounts in key growth and competitiveness areas Multiple objectives: example climate mainstreaming Flexibility of the EU Budget to respond to the emergencies ( i.e. migration) Performance-based budgeting at the EU level #EUBudget4Results
2. HOW do we spend? More leverage of EU funds More simplification efforts A system to measure and communicate past performance Higher leverage for EU money Performance improvements in the new MFF 2014-2020: Reinforced link to economic governance Programme performance framework + performance reserve Simplified delivery system #EUBudget4Results
3. How we are ASSESSED? Error rate trend Stopped the rising error rate trend, also Stable in the past 3 years thanks to effective application of financial corrections and preventive measures Source: ECA 2014 Source: ECA 2015 #EUBudget4Results
3. How we are ASSESSED? Managing legality and risks What if the level of error is still persistently high Further simplification Redesign programme Multiannual residual error rate still too high ??? Multiannual residual error rate too high Additional cost- effective controls Possible budgetary decisions on the basis of the assessment of the performance/error of the programme Deeper analysis of structural causes of errors in Member States #EUBudget4Results
3. How we are ASSESSED? Performance The European Court of Auditors Chapter on performance in Annual Report Special Reports on different issues Performance in the European Union is assessed on the basis of the sound financial management principles (economy, efficiency and effectiveness), and covers inputs financial, human, material, organisational or regulatory means needed for the implementation of the programme outputs the deliverables of the programme results the immediate effects of the programme on direct addressees or recipients impacts long-term changes in society that are, at least partly, attributable to the EU s action #EUBudget4Results
4. HOW do we communicate? EU Stakeholders Beneficiaries Citizens #EUBudget4Results
Which are the key success factors? Focus on results Simplification of the rules Financial corrections and recoveries Good cooperation with Member States Flexibility Leverage Accountability External auditors have an important role #EUBudget4Results
EU Budget EU Budget http://ec.europa.eu/budget/index_en.cfm Projects database http://ec.europa.eu/budget/euprojects/ Budget Focused on Results Conference http://ec.europa.eu/budget/budget4results/programme/index_en.cfm EU annual budget life-cycle http://ec.europa.eu/budget/annual/index_en.cfm EU Budget in my country http://ec.europa.eu/budget/mycountry/index_en.cfm #EUBudget4Results
Thank you! #EUBudget4Results
