The ECA, an independent audit institution, cautioned that the EU's budgetary system is overly focused on spending funds and that there is a need for more emphasis on achieving results. The ECA called for a change to the current 'use it or lose it' approach to spending.
Auditors identified an estimated error rate of 4.7 per cent in the 2007-2013 programming period and warned of the need for more "careful management and control of EU funds". The most error prone areas were regional policy and rural development.
Vítor Caldeira, president of the ECA said, "It is not a choice between spending the money, complying with the rules and achieving results. It is about achieving all three at once."
In a presentation of the ECA's annual report in parliament, Caldeira told MEPs that "significantly more could have been done by doing better checks before submitting claims for reimbursement".
"The correct use of EU funds must be guaranteed after more than 20 years of accounts which are not up to scratch" - Ingeborg Gräßle
Ingeborg Gräßle, chair of parliament's budgetary control committee (CONT) asked, "Why do we only talk about error rates? Why don't we examine what has been achieved with the funds in the past years?"
Gräßle cited the examples of Roma integration and youth unemployment as areas where there is evidently a mismatch between the amount spent and results achieved.
She said, "We have to go beyond the surface of the pure numbers to find out the underlying problems that caused the errors in the EU funds. The role of the ECA is crucial for better and smarter spending of European funds but we wonder about the lack of efficiency in the management and control systems of the member states."
Gräßle called on the commission to "impose sanctions for false reporting" of how EU funds are spent.
She concluded, "Data from member states on how they spend EU funds is too often unreliable. It is necessary that the European commission carries out further financial controls. The correct use of EU funds must be guaranteed after more than 20 years of accounts which are not up to scratch".
Derek Vaughan, first vice-chair of parliament's CONT committee, welcomed the ECA's finding that the EU's accounts were "legal and regular" and noted that the 4.7 per cent "error rate is lower than […] most member states' domestic budgets and slightly down on last year".
Vaughan called for improvements "in order to ensure every cent of EU funding is spent correctly" and highlighted that, "It is clear that most of the errors at are member state level, so we need to do more to ensure […] those who have been problematic in the past have systems in place to prevent errors in the future".
He concluded by endorsing the court's call for better efforts in measuring performance and said this must be a focus of future programmes to ensure EU spending has "a beneficial impact on our economy and our citizens".
"Countries should stop treating money coming from the EU differently than they treat their own budget" - Martina Dlabajová
Igor Šoltes, the second vice-chair of the CONT committee, said the report highlighted that "too many EU budget payments are still not in compliance with [the] rules".
Šoltes noted that the EU spent €148bn in 2013 or approximately €290 per citizen, resulting in an error rate that totals almost €7bn.
He added that there is "an imminent need to eliminate the causes of irregularities and assess the often too complex regulations that destroy the effectiveness and efficiency of EU fund absorption".
The Greens/EFA MEP, who presided over Slovenia's court of auditors for nine years, said the "mismanagement of European funds, corruption and fraud with our taxpayers' money" were a contributory factor in Euroscepticism. He concluded by reiterating the need for "consistent enforcement of accountability and sanctions" and calling for the EU to set an example in this regard.
Martina Dlabajová, third vice-chair of the CONT committee, said some aspects of the report "seem very worrying". She directed her criticism towards member states and their need "to get their own house in order".
Dlabajová continued, "Countries should stop treating money coming from the EU differently than they treat their own budget. Imagine taxpayers´ reaction if national auditors [presented] similar [reports] on the use of the state budget. The minister responsible would need to step down the same day."
She concluded by calling for member states with a poor track record to take the findings seriously and for the establishment of a more results orientated approach to be adopted.
The error rate outlined by the ECA is a measure of money paid from the EU budget that did not comply with EU rules on how funds are to be spent. It is not a measure of fraud, inefficiency or waste.
The European commission is legally responsible for expenditure, however, approximately 80 per cent of funds are managed at member state level.