Digitalisation is supposed to be a strategic priority for the European Commission. Despite its big announcement in 2018 of a “truly digital European Commission” by 2022, the EU executive is nowhere close.
An updated strategy, with a deadline of the end of this year, may see more progress. Yet the European Court of Auditors considers the digitalisation process little more than a construction site. To get the project built, it is time to shift into high gear.
The European Court of Auditors is responsible for effective oversight of European Union finances. This is helped greatly by better digital infrastructure, which our review sees as lacking. The EU's IT landscape is far too complex – with an abundance of localised systems, overlapping databases and portals that hinder efficient financial management and auditing.
Waiting on better IT
One of the Commission's main challenges for digital transformation is completing flagship projects without further delays. This demands sufficient funding and resources, which is currently not the case for major IT financial and procurement management systems such as SUMMA, OPSYS and eProcurement.
These are supposed to replace and improve the current systems in use, but face considerable delays and budget overruns largely due to complex governance arrangements, conflicting priorities among various projects and the phasing out of local systems.
There has been some progress worth noting. The eGrants system, which comprises integrated IT tools that exchange data almost automatically, has been operational since 2014. By January 2022, nearly 90% of grants flowed through this platform.
It is essential that the Commission score parallel successes when it comes to indirect management of EU funds by partner organisations and other authorities inside or outside the EU. On the procurement side, the Commission uses a patchwork of IT solutions, some of which is analogue that lack any digital paper trail.
Member states also use a range of IT tools. Not all of them are integrated in EU systems, so there is no efficient means of exchanging useful information on those who receive EU funds. That opens the floodgates to mismanagement and misuse, which is why the Court of Auditors insists on improving interoperability between national and EU IT systems and databases.
This remains a major challenge, but there are positive examples to follow. Interoperability is high in Czechia, Estonia and Hungary. E-Cohesion systems in these countries are linked to national records, such as electronic procurement systems, tax registers, business registers and managing authorities’ accounting systems. Most of the 32 systems in Italy are linked to at least one national register.
Hundreds of transparency reporting systems
Via its Financial Transparency System (FTS), the Commission publishes information on contractors and funding beneficiaries under its direct and indirect management. However, the FTS does not report information on the end beneficiary of funds, the final recipients of funds managed by partner organisations, or other authorities inside or outside the EU. Member-state reporting in this regard is even more fragmented. At present, information is scattered among some 300 national, regional and interregional reporting systems.
There are many ways to improve transparency, which would ensure better oversight of EU funds and reduce the risk of fraud and waste. One is attaching a unique identifier to contractors and funding beneficiaries. There is also an opportunity to introduce a single database of all EU funds going to these recipients of public money.
Additionally, the Early Detection and Exclusion System (EDES), which prevents unreliable entities from receiving EU funding, must be extended to cover EU funds managed by EU member states. Arachne, a risk-scoring tool, is right now only optional; it must be mandatory.
The Auditor's role
It is the Commission’s responsibility to address the challenges and opportunities raised in our review. If the EU is to become “truly digital,” both the Commission and member states must take full advantage of the technologies that improve transparency, efficiency, reduce waste and weed out fraud.
The European Court of Auditors plays a pivotal role in safeguarding the integrity of EU finances, ensuring that institutions are held accountable and helping to foster transparency and trust in the bloc. As we carry out our mandate, we provide detailed reports on specific policy areas, including recommendations on how to enhance performance and ensure optimal use of EU funds.
With fewer overlapping systems at the local level and more streamlined processes to boost IT interoperability, our institution can do its job more effectively. Digital financial management is an essential part of European cohesion and delivering for its 450 million inhabitants.