The European Commission has proposed to recast the EU’s Financial Regulation to make it better aligned with the Multiannual Financial Framework (MFF) package. The Commission has also proposed improvements and simplifications to better respond to crises, to protect the EU’s financial interests and to contribute to the achievement of EU policy objectives.

The auditors welcome several of the proposed changes. For example, further digitalisation will play an important role in fighting fraud and conflicts of interest affecting EU funds. They also welcome the Early Detection and Exclusion System being operated under shared management with Member States, as the ECA recommended in its recent special report on blacklisting. The proposed amendments will create a consistent legal basis to deal with serious misconduct flagged up at EU or national level. However, the scope for excluding untrustworthy counterparties will remain greater in direct management.

The auditors also agree with procurement procedures being made more flexible in times of crisis, a need which became particularly evident during the COVID-19 pandemic. However, they warn that care is needed when such flexibility could affect competition and also highlight the need for consistency in the Commission guidance. Other observations concern the need to justify the costefficiency and cost-effectiveness of EU contributions to multi-donor, pooled funds supporting global goals such as climate change, and the need for transparency when EU institutions accept donations.

The Opinion of The European Court of Auditors in its entirety