Activities of Victor NEGRESCU related to 2022/2020(INI)
Shadow reports (1)
REPORT on possibilities to increase the reliability of audits and controls by national authorities in shared management
Amendments (23)
Amendment 3 #
Motion for a resolution
Subheading 1 b (new)
Subheading 1 b (new)
Shared management and Single Audit approach
Amendment 4 #
8a. Recalls that under shared management, the Commission retains ultimate responsibility for the implementation of the EU budget while Member States are required to set up effective national management and control systems of EU funded programmes in line with the applicable rules to prevent, detect and correct any irregularities or fraud cases in the EU expenditure and to provide reasonable assurance to the Commission that EU resources are being spent in accordance with the principle of sound financial management;
Amendment 5 #
Motion for a resolution
Paragraph 8 b (new)
Paragraph 8 b (new)
8b. Recalls that the Single Audit approach refers to an audit system in which each audit layer builds on work done by the preceding one provided that this is reliable and accurate; highlights that a correct implementation of the Single Audit approach prevents a duplication of audit work, reducing the overall cost of audit activities for the Member States and the Commission and decreasing the administrative burden on auditees; points out that, in practice, the application of the Single Audit approach depends, inter alia, on the robust and reliable audit work carried out by the audit bodies in the Member States;
Amendment 7 #
Motion for a resolution
Paragraph -1 (new)
Paragraph -1 (new)
-1. Welcomes that, notwithstanding the identified shortcomings, the work of the audit bodies in the Member States is perceived as reliable and robust, as well as the fact that the those shortcomings do not directly hinder the application of the Single Audit, according the study on the matter requested by the Committee on Budgetary Control; notes the general agreement on the fact that the audit practices in Member States are compliant with international standards for public- sector auditing and that only in very limited circumstances, potential sources of concern for the independence of the audit bodies have been identified;
Amendment 8 #
Motion for a resolution
Paragraph 2
Paragraph 2
2. Maintains that translation in the field of law is a complex and demanding procedure that adds an extra layer of difficulty to interpretation, as legal translation needs to be accurate and transpose the same ideas expressed in the source text, and legal terms reflect legal concepts that vary between different legal systems, particularly in the fields of management, control and audit, which might be very technical;
Amendment 9 #
Motion for a resolution
Paragraph 3
Paragraph 3
3. Recalls the observations of the discharge authority as regards the implementation of the Recovery and Resilience Facility and the involvement of regional and local authorities and other stakeholders who were not sufficiently involved in the setting-up of national programmes; acknowledges, likewise, the national ownership of the Recovery and Resilience Plans (RRPs) and the limited time-frame for launching the Facility, and underlines the different ways in which Member States have integrated regional and local authorities in the ongoing implementation of the national RRPs taking into account the different degrees of decentralisation;
Amendment 11 #
Motion for a resolution
Paragraph 4
Paragraph 4
4. Points out that errors and irregularities should be avoided, detected and corrected by the managing authorities in the first instance; recalls that the European Court of Auditors (ECA) found that controls currently in place do not yet sufficiently offset the high inherent risk of error in the implementation of the cohesion policy9 , particularly that the managing authorities’ verifications are still partly ineffective in preventing or detecting irregularities in the expenditure declared by beneficiaries; stresses that effective management control is indispensable to ensure both the performance of operations and their compliance with the legal framework; stresses that, in addition to protecting the Union's financial interests, the detection of errors shall serve to implement the necessary corrective measures and to make improvements to the legislation to prevent such errors in the future; _________________ 9 Annual report on the implementation of the EU budget for the 2021 financial year, p. 160.
Amendment 13 #
Motion for a resolution
Paragraph 4 a (new)
Paragraph 4 a (new)
4a. Notes the Court’s observations from past annual reports that in several cases examined by the Court the national authorities had sufficient information to prevent, or to detect and correct, the error before declaring the expenditure to the Commission, and if they had made proper use of all the information at their disposal, the estimated level of error would have been a few percentage point lower; calls on Member States to be more vigilant and use better the available information in order to avoid declaring expenditures containing errors and thus increase reliability of their control and audit work;
Amendment 15 #
Motion for a resolution
Paragraph 5
Paragraph 5
5. Insists that the audit bodies in Member States have to comply with internationally accepted standards on audits; states that failing to comply with them might undermine the reliability and quality of the audit work and thus pose a threat to the Single Audit approach; notes, in this regard, that the ECA has repeatedly identified shortcomings in the scope, quality, documentation and reporting of certain national audit authorities’ work10 ; points out that the ECA considers as the main reason for the shortcomings the fact that the documentation stored in audit files was not always sufficient to allow an experienced auditor with no previous connection to the audit to reach the same conclusions as the original auditor; considers that the weaknesses found in the work of several audit authorities covered by the ECA’s sample currently limit the reliance that can be placed on that work; stresses the importance for Member States to have a common basic framework with clear and detailed responsibilities for ensuring the quality of audits, in order to avoid misinterpretation of EU rules; insists that if the audit authorities are working in an effective way and deploying international standards, double audits should be avoided to reduce the bureaucratic burden and to make efficient use of audit capacities; _________________ 10 Annual report on the implementation of the EU budget for the 2021 financial year, pp. 163-168.
Amendment 18 #
Motion for a resolution
Paragraph 6
Paragraph 6
6. Stresses that in order to carry out verifications and audits of programmes financed with EU funds, it is essential to have competent human resources with adequate training, experience and institutional memory at different levels; regrets that, according to the feedback from a survey and interviews carried out for the aforementioned study on the Single Audit approach, the lack of sufficient resources, including capacity training dedicated to control functions, is a factor affecting the capacity of the managing authorities (in cohesion policy) and the paying agencies (in the common agricultural policy) to carry out effective and thorough checks and verifications of expenditure11 ; recalls, in this context, the necessity to improve the methods and implementation of technical assistance that the Commission can provide to Member States’ authorities; _________________ 11 ‘Single Audit Approach – Root Causes of the Weaknesses in the Work of the Member States’ Managing and Audit Authorities’, p. 57.
Amendment 19 #
Motion for a resolution
Paragraph 7
Paragraph 7
7. Underlines that having ethical and independent audit bodies and other bodies managing funds in Member States areis a key requirement for the reliability and quality of the audit results; recalls that in some Member States, state bodies with supervisory functions have seen arbitrary appointments leading to questions with regard to their impartiality in detecting and reporting corruption; highlights that deficient independent oversight mechanisms and illegal interconnections between political and oligarchical structures in the economic and societal spheres are conducive to corruption12 ; _________________ 12 https://commission.europa.eu/system/files/ 2022- 07/40_1_193993_coun_chap_hungary_en. pdf.
Amendment 22 #
Motion for a resolution
Paragraph 8
Paragraph 8
8. Reiterates its concern regarding the difference between the ECA’s and the Commission’s method for calculating errors, which creates confusion and reduces the sense of urgency neededmakes it difficult to tackle the root causes of errors; highlights that these divergences do not occur in all areas of expenditure; emphasises that adequate audit coverage is needed for a statistical representative sample that reflects the high degree of confidence needed for audit work to lead to reliable conclusions; calls on the Commission to improve itsnotes that the Commission carries out its own audits on the basis of a risk analysis and audits a larger number of operations across all operational programmes and Member States; calls on the ECA, as EU external auditor, and on the Commission, as responsible of the EU budget implementation and auditee, to find a compatible methodology and to cooperate with the ECA with a view to increasing harmonisation in order to provide more comparable figures and to continue with a risk-based approach if severe deficiencies appear in certain Member States or sectors;
Amendment 25 #
Motion for a resolution
Paragraph 8 a (new)
Paragraph 8 a (new)
8a. Calls on the Commission to contribute to improve the common understanding of the Single Audit approach in order to achieve a more uniform interpretation and implementation of this model across the Member States;
Amendment 26 #
Motion for a resolution
Paragraph 8 b (new)
Paragraph 8 b (new)
8b. Asks the Commission to continue simplifying rules and requirements applying to EU funds and programmes, while ensuring a balance with the necessary audits and controls and continuity between programming periods, as well as providing further clarification on their implementation to Member States competent bodies; encourages Member States to use Simplified Cost Options (SCOs) to address the complexity of EU rules and reduce the error rate while focusing on the achievement of policy objectives;
Amendment 28 #
Motion for a resolution
Paragraph 9 a (new)
Paragraph 9 a (new)
9a. Reiterates that the detection of irregularities and errors shall led to the implementation of corrective measures, the production of guidance for managing authorities and to improve the EU legislation in order to prevent such errors in the future;
Amendment 31 #
Motion for a resolution
Paragraph 10
Paragraph 10
10. Calls on the Commission and Member States to reduce gold-plating on one side, and to closely monitor the delayed, fragmented or incomplete implementation or transposition of European legislation on the other, as this disrupts harmonisation and leads to distortions in the EU, with contradictory standards applied in the spending of European funds;
Amendment 32 #
Motion for a resolution
Paragraph 10
Paragraph 10
10. Calls on the Commission and the Member States to reduce gold-plating on one side, and the delayed, fragmented or incomplete implementation or transposition of European legislation on the other, as this disrupts harmonisation and leads to distortions in the EU, with contradictory standards applied in the spending of European funds;
Amendment 36 #
Motion for a resolution
Paragraph 12 a (new)
Paragraph 12 a (new)
12a. Calls on the Commission to encourage and facilitate exchange of good practices among Member States and their audit and control authorities in order to improve their performance; calls further on the Commission and the Member States to implement the Court’s recommendations related to shortcomings in the audit and control practices and to report to the discharge authority;
Amendment 40 #
Motion for a resolution
Paragraph 14
Paragraph 14
14. Is of the opinion that digitalisation and the adoption of more sophisticated IT tools at national and EU levels would improve the management, control and audit of EU funds, and could contribute to prevent irregularities and to substantially reducing bureaucracy; considers that digitalisation allows easier and quicker access to important data during verifications and, therefore, to a reduction in the number of controls; highlights the importance of promoting and sharing national good practices across the EU of effective IT tools for data mining and avoidance of conflict of interest in the context of EU funds; highlights that, nevertheless, no IT system could ever completely replace the human factor; insists that well-trained staff continue to play an important role in the management and control system of the EU funds; calls on the Member States to ameliorate the digitalisation of administrative work with a view to a harmonised approach, and to ensure the proper training of staff involved in the implementation of EU funds, as well as in control and audits, allowing them to fully understand the capabilities of the IT tools, know what to expect in terms of the results produced and understand their role in the decision-making process;
Amendment 44 #
Motion for a resolution
Paragraph 14 a (new)
Paragraph 14 a (new)
14a. Recommends Member States to establish or use specific ‘ethics’ systems, measures and codes to preserve the good conduct, transparency and independence of the auditors' work in the Member States;
Amendment 46 #
Motion for a resolution
Paragraph 14 b (new)
Paragraph 14 b (new)
14b. Recalls the importance of ex ante controls and checks in order to prevent financial errors and irregularities, particularly conflict of interests, in addition to the ex post checks on the expenditure declared to the Commission, e.g. by paying more attention to the systems audits; insists on the importance of using IT tools for data mining and avoidance of conflict of interests; notes in this regard the systems audits performed by the Commission in the context of the Recovery and Resilience Facility;
Amendment 47 #
Motion for a resolution
Paragraph 16
Paragraph 16
16. Insists that good collaboration and feedback between the managing and audit authorities and the Commission is another important factor in the effectiveness of the assurance and control framework; welcomes the fact that overall, there is a good level of communication and exchange between Commission and the national audit authorities but points out that there is always room for improvement; calls on the Commission to proactively promote good communication and the exchange of good auditing practices between the audit authorities and the programme managing authorities at the EU, national and regional levels;
Amendment 49 #
Motion for a resolution
Paragraph 16 a (new)
Paragraph 16 a (new)
16a. Points out the importance at the national level of allocating adequate resources to the control and auditing of the EU expenditure as well as further enhancing the technical capacity of the audit authorities’ staff in order to avoid delays or risk of inefficiencies in the assurance process, on one side, to improve the audit quality and reliability of their audit work, on the other side;