2020 EU Audit In Brief - Publications Office - European Union

President’s foreword

Our annual report on the 2020 financial year, the last one in the period for 2014‑2020, has been finalised during challenging times for the EU and its Member States. We, as the European Union’s external auditor, have done everything we can to continue providing an effective public audit service in the EU despite the particular operational issues arising from the COVID‑19 crisis.

As in previous years, we conclude that the EU accounts present a true and fair view of the EU’s financial position. We give a clean opinion on the reliability of the 2020 accounts of the European Union. The revenue for 2020 was legal and regular, and free from material error.

For 2020, our estimate for the overall error rate in the audited expenditure is 2.7 % (2019: 2.7 %).

Concerning the significant areas of EU spending for which we provide a specific assessment, the level of error is material for ‘Cohesion’ and ‘Competiveness’. For ‘Natural resources’, we find the estimated level of error to be close to materiality (2.0 %), whereby our results indicate that the level of error was not material for direct payments, representing 69 % of spending under this MFF heading, and that it was, taken as a whole, material for the spending areas we had identified as higher risk (rural development, market measures, fisheries, the environment and climate action). The level of error is below materiality in ‘Administration’.

For several years, we have audited the EU revenue and spending by differentiating between those budget areas where we consider the risks to legality and regularity high, and those where we consider them low. Due to the way the EU budget is composed and evolves over time, the proportion of high-risk expenditure in the audited population further increased compared to the previous years and represents around 59 % of our 2020 audit population (2019: 53 %). We estimate the level of error in this type of expenditure at 4.0 % (2019: 4.9 %). Against this background, we issue an adverse opinion on expenditure.

The estimated level of error for low-risk expenditure (which accounted for the remaining 41 % (2019: 47 %) of our audit population) was below our materiality threshold of 2 %.

The EU will spend significantly more than in the previous programming period. Over the next seven years, the Union will be able to spend €1.8 trillion. This includes the €750 billion for the recovery instrument, the ‘Next Generation EU’ initiative, as the EU’s response to the COVID‑19 crisis, on top of a revised 2021-2027 MFF worth €1.1 trillion. The 27 Member States also agreed to partly finance this recovery programme through the issuing of public debt. These decisions thus mark a truly historic shift in EU finances.

Managing the EU’s finances in a sound and effective manner will thus become even more important. This entails an increased responsibility for both the Commission and the Member States, but also for us at the European Court of Auditors.

Against this background, we have prepared a new strategy for the 2021-2025 period. In January 2021, we agreed on three strategic goals that will guide our efforts in auditing the EU’s finances in the coming years, notably to provide strong audit assurance, in a challenging and changing environment. In the years to come, we will thus continue contributing actively to accountability and transparency for all forms of EU finances, including the ‘Next Generation EU’ instrument.

Klaus-Heiner LEHNEPresident of the European Court of Auditors