What changed between the draft committee report and the plenary report

Changed:1. Grants the Director of the European Research Council Executive Agency discharge in respect of the implementation of the Agency’s budget for the financial year 2022 / Postpones its decision on granting the Director of the European Research Council Executive Agency discharge in respect of the implementation of the Agency’s budget for the financial year 2022;

Changed:1. Grants the Director of the European Health and Digital Executive Agency discharge in respect of the implementation of the Agency’s budget for the financial year 2022 / Postpones its decision on granting the Director of the European Health and Digital Executive Agency discharge in respect of the implementation of the Agency’s budget for the financial year 2022;year;

Changed:1. Grants the Director of the European Research Executive Agency discharge in relation to the implementation of the Agency’s budget for the financial year 2022 / Postpones its decision on granting the Director of the European Research Executive Agency discharge in respect of the implementation of the Agency’s budget for the financial year 2022;

Changed:1. Approves the closure of the accounts of the general budget of the European Union for the financial year 2022 / Postpones the closure of the accounts of the general budget of the European Union for the financial year 2022;

Changed:2. Highlights the importance of the Union budget for achieving the Union’s political priorities, as well as its role in assisting Member States in unforeseen circumstances such as the COVID-19 pandemic, international conflicts or crisiscrises and their consequences; notes in this regard the continuing relevance of investments and support from the Union budget for reducing disparities between Member States and regions, for promoting economic growth and employment, for combating poverty and social exclusion, and thus for improving the daily life of Union citizens;citizens and economic impact within the Union; urges the Commission not to water down the pace and ambition needed to achieve the climate-related goals set in the European Green Deal and stresses the need for increasing the necessary investments for this purpose; stresses the fact that in 2022 the Union has fallen muchshort of the level of efficiency needed to achieve the climate-related goals set for 2030, 2040 and 2050;

Changed:3. Stresses that the sound and timely implementation of the budget contributes to addressing more efficiently and effectively the needs and challenges in different policy areas;areas warnsmore efficiently and effectively; stresses that the simultaneous implementation of themultiple budgetinstruments with different rules under time constraints, in addition to the pressure of the final closure of the 2014 - 2020 MFF, may lead to a delay in implementation and an increase in errorserrors, irregularities and irregularities;fraud; recalls the role of the Commission as guardian of the treaties to protect the financial interests of the Union;

Changed:4. Stresses the contribution of the Recovery and Resilience Facility (RRF)'s contribution(RRF) toin supportsupporting Member States in recovering from the economic and social consequences of the COVID-19 pandemic and creating a resilient Union that can shoulder the challenges of the future; notes the contribution of the RRF and RePowerEU in addressing the energy-related challenges caused by the Russia’s war of agressionaggression against Ukraine; regrets that milestones have not been better defined and calls on the Commission andto themonitor Member StatesStates' toimplementation implementof the associated actions swiftly in accordance with the agreed milestones and targets;

Changed:5. Highlights the crucial role the Union budget played in 2022 in addressing the fall-outconsequences of Russia’s war of aggression against UkraineUkraine, namely to secure food supply chains, address energy-related challenges, support Member States in welcoming Ukrainian refugees, and provide assistance to Ukraine in caring for its citizens; notes that this has put pressure on the budget and that all available flexibility measures have been used; notes in that regard the proposals madeadoption byof the Commissionmid-term inreview of the Multi-annual Financial Framework (MFF) review to re-orient fundsthat andre-orients tofunds, raiseraises fresh funds,funds; andstresses callsthe onimportance the CouncilCommission topresents swiftlya moveclear forwardand withrealistic theroadmap adoptionto ofrepay theEU proposals;debt;

Removed:6. Recalls the importance of carrying out an ex-post evaluation of financial programmes created to respond to a crisis concerning their effectiveness, efficiency, relevance, coherence and Union added value;

Added:6. Recalls the importance of a strict application of the financial rules of the Union in all programmes and on all beneficiaries, in order to avoid all forms of fraud, conflicts of interest, corruption, double funding and money laundering; reminds in this framework of the key role played by the whole Union’s anti-fraud architecture and expresses some concerns about the refusal of some Member States to cooperate with one of its elements, notably the EPPO;

Removed:7. Emphasises the role of the European anti-fraud office (OLAF), the European Public Prosecutor's Office (EPPO), the European Union Agency for Criminal Justice Cooperation (Eurojust) and the European Union Agency for Law Enforcement Cooperation (Europol) in the fight against corruption; calls for the capacities of the EPPO and OLAF, as well as cooperation between them, to be strengthened further; calls for common anti-corruption rules applicable to all staff of Union bodies;

Added:7. Recalls the importance of carrying out ex-post and mid-term evaluations of financial programmes created to respond to crises, concerning their relevance, coherence and European added value on top of compliance and regularity, efficiency, effectiveness, performance and long-term economic impact; notes that decisions related to the COVID-19 response instruments were made under enormous time pressure, although such instruments will be implemented until 2026; stresses that a quick response should not be to the detriment of proper control over expenditure and calls, therefore, on the Commission to draw lessons from such instruments;

Changed:12.19. Welcomes that the Court finds in its Annual report on the implementation of the budget for the financial year 2022, , that the consolidated accounts of the European Union for the year 2022 are reliable; notes with satisfaction that the Court has given a clean opinion on the reliability of the accounts every year since 2007;

Changed:18.25. WelcomesRegrets the Court’sadverse conclusionopinion thaton the revenuelegality isand freeregularity fromof materialthe errorUnion andbudget thatexpenditure issued by the systemsCourt for managing the revenuefourth examinedyear byin thea Courtrow; wereunderlines generallythe effective;importance regretsof reinforcing the adversecontrol opinionmechanisms onof the legalityCommission and regularityMember States which are considered unreliable by the Court, therefore compromising the reliability of the UnionAnnual budgetManagement expenditureand issuedPerformance byReport (AMPR); notes the CourtCourt’s forconclusion that the fourthrevenue yearis infree afrom row;material error and that the managing systems examined by the Court were generally effective;

Changed:19.26. NotesIs concerned that the Court estimates the level of error for the 2022 expenditure to be 4,2 % (3 % in 2021),%, which is abovemore than double the materiality threshold; notes thethat Commission’sthis confidenceis thata thefurther riskdeterioration atcompared paymentto isthe estimatedprevious attwo 1.9years (3,0 % forin 20222021 (similarand to2.7 2020,% 2021in and2020); 2022),notes iswith representativeconcern ofthat the level ofCourt errordetected atsubstantial theissues timein ofreimbursement-based payment;expenditure, noteswhich thataccounts thefor Commission’s66 estimation% of the risk at closure,Court’s afteraudit ex-postpopulation, controlswhere andthe correctionsestimated havelevel beenof applied,error is 0.96 %; notes the divergence betweenthat the Court’s overall error rateeffects andof the Commission’s risk at payment, which iserrors observedfound forby the overallCourt Unionare budgetestimated expenditureas inboth 2022,material althoughand notpervasive into allthe expenditureyear's areas;accepted expenditure;

Removed:20. Underlines that the general estimate of the level of error in the Union budget, as presented in the Court’s Statement of Assurance, is an estimate of the money that should not have been paid out because it was not used in accordance with the applicable rules and regulations, and not a measure of fraud or of inefficiency or waste;

Added:27. Notes that the Commission´s own estimation of the risk at payment is 1.9 % for 2022 (similar to 2020 and 2021), which is below the materiality threshold; notes that the Commission’s estimation of the risk at closure, after ex-post controls and corrections have been applied, is 0,9 %; notes the divergence between the Court’s overall error rate and the Commission’s risk at payment, which is observed for the overall Union budget expenditure in 2022, although not in all expenditure areas, notes that this is particularly evident in headings 1 and 2 as in the past; and remarks the fact that the Commission’s estimates for risk at payment are consistently in the lower range or below the statistical estimations of the Court; welcomes the Court’s estimate of the level of error as important indicator for the existing risks; calls for a common understanding to be found to avoid such divergence between the Court’s overall error rate and the Commission’s risk at payment;

Removed:21. Recalls that the audit approach and methodology of the Court are based on international audit standards that require the testing of a random, representative sample of transactions that result in an estimate of the error rate; recalls that the Court differentiates between low-risk expenditure, i.e. entitlement-based payments under simplified rules, and high-risk expenditure, i.e. reimbursement-based payments subject to complex rules; notes that for the 2022 expenditure, the Court has selected 66 % of its audit population from the high-risk expenditure (63,2 % in 2021), amounting to EUR 110,1 billion, and 34 % from the low-risk expenditure, amounting to EUR 56,7 billion; notes that the Court’s estimated error rate for 2022 (4,2 %) is mainly driven by ‘Cohesion, resilience and values’ (2,5 % of the overall error rate), ‘Natural resources and environment (0,8 %), ‘Neighbourhood and the world’ (0,4 %), and ‘Single market, innovation and digital’ (0,3 %), all of them considered high-risk expenditure areas by the Court; notes that the Commission’s risk at payment for 2022 is 1,9 %;

Added:28. Reiterates the concerns about the Court observation that the Commission’s risk assessment is likely to underestimate the level of risk in several areas; is also concerned by recurrent weaknesses identified by the Court on Member States’ ex post checks in heading 2, limiting the reliance that can be placed on their work;

Changed:27.36. Notes that the Court, in the exercise of its mandate, does not investigate fraud but does take account of the risk of fraud; notes that the Court forwards to the EPPO suspicions of criminal offences falling in its competences and to OLAF suspicions of fraud, corruption or other illegal activity affecting the Union’s financial interests identified while performing its audits; notes that, in 2022, the Court reported 14 cases of suspected fraud to OLAF, and in parallel reported 6 of these cases to the EPPO, resulting so far in 26 OLAF investigations and 3 EPPO investigations;

Changed:28.37. WelcomesHighlights that in 2022, 98,5%98,5 % of the available commitment appropriations were used (EUR 179,4 billion out of EUR 182,2 billion); notes that the available appropriations were higher than the MFF ceiling of EUR 179,9 billion due to the use of special instruments, justified by unforeseen events, using all flexibility available under the MFF; notes that 98,1%98,1 % of payment appropriations were used (EUR 167,3 billion of EUR 170,6 billion available); commends the Commission and the budgetary authority for its decisive and flexible budgetary response to the challenges faced in 2022;

Changed:29.38. Notes with concern that the total outstanding commitmentscommitments, which represent future debts if not decommitted, reached an all-time high of EUR 450 billion in 2022, caused by both increased commitments related to NGEU (with all National Recovery and Resilience Plans adopted in 2022) and the slow start of the implementation of the 2021-2027 programming period; notes that the Commission expects this amount to further increase in 2023,2023 towards EUR 460 billion, and foresees a decrease from 2024 to 2027 when committed amounts for both NGEU and the 2021-2027 programming period should be paid out; notes that approximately EUR 90 billion of loans will not be used and recalls that the Commission and Member States are currently behind schedule for payments established in the implementing decision approving their national recovery and resilience plans (RRPs); notes that commitments under MFF are still increasing and will continue to rise in the coming years due to the slow start of the programming period with payments following even later;

Added:39. Highlights that the time available for implementing shared-management funds under the 2021-2027 MFF is shorter than under previous MFFs because of the n+2 rule for the last year of the period; is aware of the challenges in relation to managing and controlling the combined MFF and NGEU funds due to their volume and the different managing, programming, implementing and controlling mechanisms; notes with concern the significant differences in absorption rates per Member State; regrets the insufficient initiatives taken by the Commission, in conjunction with the Member States, to increase the absorption capacity of the programs and thus bring about a sharp and lasting reduction in outstanding commitments; demands the Commission takes all the necessary measures and administrative support to the Member States needed especially to improve their absorption capacity;

Added:40. Underlines that the Commission’s projections for the reduction of the outstanding commitments are based on the assumptions that Member States effectively make more efforts to accelerate the absorption of the 2021-2027 shared management funds and that automatic technical adjustments of payments ceiling are sufficient to cover the payments needs; is concerned that these two assumptions may not be fulfilled hence creating a very dangerous situation for the Union budget;

Removed:31. Notes that Union debt increased from EUR 236,7 billion in 2021 to EUR 344,3 billion in 2022; notes that of the entire debt, only the share of NGEU non-repayable support (EUR 185,6 billion, 53,9 %) creates interest rate risk for the Union budget; notes that, due to growing market interest rates, the cost of new NGEU funding rose from 0,14 % in the second half of 2021 to 1,24% in the first half of 2022, and a further increase to2.60% in the second half of 2022, resulting in EUR 0,5 billion of interest payments for NGEU in 2022, and a considerable increase was projected for 2023; recalls that the repayments of NGEU borrowing should start in 2028 and must be completed by 2058, which will require sufficient financial resources;

Added:42. Welcomes the vital role played by NGOs in representing civil society and in promoting and defending the values enshrined in the Treaties and the Charter of Fundamental Rights of the European Union (‘the Charter’) while implementing programmes and projects financed by the Union budget in full respect of the Union’s financial rules and the protection of the Union’s financial interests; calls to ensure that all Union funding beneficiaries, including NGOs, that have misused or misappropriated Union funds, or engaged in activities contrary to Union values, including inciting terrorism, hate speech, supporting or glorifying violence, political and religious extremism are listed in the Early Detection and Exclusion System (EDES) and blocked from access to Union institutions and funding programmes; considers that fraud, conflicts of interest, double funding, corruption and money laundering or embezzlement must be prevented and tackled in all situations and for all beneficiaries irrespective of their nature and legal status (as noted in Parliament resolution of 17 January 2024 on the transparency and accountability of non-governmental organisations funded from the Union budget ); calls on the Commission to implement the recommendations of that resolution;

Added:43. Notes with concern that Union debt increased from EUR 236,7 billion in 2021 to EUR 344,3 billion in 2022; notes that of the entire debt, only the share of NGEU non-repayable support (EUR 185,6 billion, 53,9 %) creates interest rate risk for the Union budget; notes that, due to growing market interest rates, the cost of new NGEU funding rose from 0,14 % in the second half of 2021 to 1,24% in the first half of 2022, and a further increase to2.60% in the second half of 2022, resulting in EUR 0,5 billion of interest payments for NGEU in 2022, and a considerable increase was projected for 2023; is concerned about the strong increase in interest rates since 2020 resulting in a higher financial burden for the annual budget; recalls that, in addition, the repayments of NGEU borrowing should start in 2028 and must be completed by 2058, which will require sufficient financial resources; notes that the maximum utilisation of the Union budget in 2022, using all available flexibility, does not allow any repayment of debts, unless cuts are made in other areas of Union expenditure; calls on the Members States to develop and agree on a repayment plan out of new own resources without damaging the new MFF;

Added:45. Supports the Court recommendation that the Commission should act more proactively to ensure the tools available to mitigate the exposure risks have sufficient capacity;

Removed:34. Notes that the exposure of the Union budget to Ukraine increased in 2022 to EUR 15,6 billion, with related provisions notes that for the MFA+ support to Ukraine with a value of EUR 18,0 billion, agreed at the end of 2022 and disbursed throughout 2023, no provisions were required in the CPF; draws attention that possible losses related to MFA+ will have to be covered by future Union budgets or by the budgetary ‘headroom’ between the MFF ceiling and the own resources ceiling;

Added:47. Notes that in 2022 the Commission changed the disclosure of contingent liability in its consolidated accounts, making the comparison of year by year extremely complex and long; invites the Commission to report more clearly on its annual account, in order to facilitate conclusions and analysis also in view of the discharge procedure;

Added:48. Notes that the exposure of the Union budget to Ukraine increased in 2022 to EUR 15,6 billion, with related provisions; notes with concern that for the MFA+ support to Ukraine with a value of EUR 18,0 billion, agreed at the end of 2022 and disbursed throughout 2023, no provisions were required in the CPF to cover the risks of default, posing a serious risk to the Union budget as expressed in the Opinion 07/2022; draws attention that possible losses related to MFA+ will have to be covered by future Union budgets or by the budgetary ‘headroom’ between the MFF ceiling and the own resources ceiling; invites the Commission to provide additional measures to protect the Union budget from future losses related to the MFA+;

Added:49. Notes that during 2022 consumer price inflation increased significantly, affecting the Union budget in several ways, by reducing the relative size of the Union budget and reducing the efficiency of the Union funds to achieve the objectives to the same extent as initially planned; considers that high inflation affects the proportion of revenue from different sources, with a net reduction of the share of the GNI-based own resources; strongly supports the Court recommendation to the Commission to assess the impact on the Union budget of increasing inflation in order to proactively apply mitigating measures;

Added:54. Calls on the Court of Auditors to:

Added:(i) differentiate the types of errors and to make more transparent the rate of errors caused by severe misuse, fraud or other criminal activities and the errors caused by administrative oversight or inaccurate application of rules;

Added:(ii) to assess more intensively also the quality, the European added value, the sustainability, the performance and the practicability of the implemented projects;

Changed:(i) continue its discussionsengage with the Court in order to increase understandingunderstanding, convergence and convergencecomparability of the way bothtwo dealapproaches withto theaddress irregularities;

Removed:(ii.) continue to simplify rules and procedures without compromising the quality of the controls;

Added:(ii) undergo an ex-post evaluation of the reliability of their own estimation of the risk at closure for the financial year for which the programs were closed and presents the results of such an evaluation to the Discharge authority;

Added:(iii) continue to simplify rules and procedures without compromising the quality of the controls; and continue to digitalise audit procedures;

Changed:(iv)(v) continue to support the administrative capacity of Member States’ authorities; identify ways to help member states accelerate the use of Union funds, and reducing the level of outstanding commitments, notably in shared management funds under the Common Provisions Regulation;

Changed:(v)(vi) report as part of its disclosure on contingent liabilities and what the annual exposure of the Union budget is, arising from budgetary guarantees and from financial assistance to third countries;countries, making public its estimate of total annual exposure;

Removed:(vi) continue monitoring the possible risk of corruption and fraud across all funds, using feedback from investigations by the EPPO and OLAF;

Added:(vii) provide sufficient measures to protect the Union budget from the different risks identified in particular the RAL, the increasing debt, the increased budget exposure including to Ukraine, the increasing inflation etc;

Added:(viii) continue monitoring the possible risk of corruption and fraud across all funds, using feedback from investigations by the EPPO and OLAF; and encourage the systematic use of Archane and EDES databases systems;

Added:(ix) ensure the protection of the Union budget by making general and systematic use of digital and automated systems for reporting, monitoring and audit and urgently establish a compulsory integrated and interoperable system building on, but not limited to, existing tools and databases in the context of the concluded recast of the Financial Regulation;

Changed:38.57. Notes that the Court has followed upfollowed-up on the implementation of 213 of its recommendations made in 2019, out of which 179 were addressed to the Commission; notes that four of the 179 recommendations were not yet due for implementation by the time the follow-up review was carried out and that, of the remaining 175 recommendations, the Commission has fully implemented 101 (58 %), 26 in most respects (15 %), 24 in some respects (13 %), and has not implemented 17 (10 %) of them at all, the Court being unable to conclude in 7 cases (4 %) where the auditee had not accepted them or it was too early to assess the implementation;

Changed:39.58. Considers the overview of special reports, which spans the largest part of chapter three of the Court’s Annual report, gives a good overview of reports presented by the Court that relate to 2022 strategic areas but is limited and incomplete in terms of the content of those reports and the replies provided by the auditees;areas; considers thata andeep analysis of the performance of the Union budget requirescould morebe thanan aadded follow-upvalue ofto the auditor recommendations, despite their undeniable value in termsfollow-up of budgetarythe control;auditor recommendations; notes the issue of timing concerning to the publication of the AMPR;

Changed:41.60. Notes the Court’s review 06/2023 on the Commission’s 2022 AMPR for the Union budget and its conclusion that Volume I of the 2022 AMPR followed the Commission’s corporate management board strategic guidance when it presented the facts and achievements concerning budgetary management for 2022, and notes that there was scope to improve the quality of performance data; notes the Commission’s replies to written questions on an IAS audit intoon datathe qualityCommission’s control system in relation to the reliability of performance information and the reassurance given that the identified issue is being dealt with;

Added:62. Recalls the findings of the Court’s Special Report 09/2022 “Climate Spending in the 2014-2020 EU budget”; notes in addition the Court’s Special Report 26/2023 on the Performance monitoring framework in the RRF; concludes that the Court identified in both Special Reports issues with the method the Commission presents performance information, both in the MFF and the RRF; notes in particular that disclosure about shortcomings in the performance monitoring methodologies show weaknesses in particular because of mixing estimates with actual numbers of achieved results and realised projects or blending budgeted amounts with actually paid amounts; considers that performance data presented by the Commission should not include estimations but only figures of realised actions; remains concerned about the Court’s finding that limited improvements are expected in the 2021-2027 climate reporting; regrets that the Commission has not yet addressed weaknesses in the reported figures of their new methodology;

Removed:45. Welcomes the Court’s conclusion in its Annual Report for 2022 that the level of error in revenue transactions was not material and that the systems for managing the revenue are generally effective; is worried by the weaknesses identified by the Court in certain Member States’ accounting and management of TOR, and in the Union action taken to reduce the customs gap and ensure that TOR is complete; welcomes the actions undertaken by the Commission and Member States in that regard;

Added:65. Notes that the Union budget needs to respond to multiple challenges with additional financial programmes, such as the NGEU recovery instrument; notes that for 2022, the revenue from traditional own resources remained relatively stable, while budgetary guarantees for borrowing and lending operations were a substantial part of revenue; recalls in that regard Parliament’s resolution of 10 May 2023 on own resources: a new start for Union finances, a new start for Europe;

Added:66. Welcomes the Court’s conclusion in its Annual Report for 2022 that the level of error in revenue transactions was not material and that the systems for managing the revenue are generally effective; is concerned by the weaknesses identified by the Court in certain Member States’ accounting and management of TOR, and in the Union action taken to reduce the customs gap and ensure that TOR is complete; welcomes the actions undertaken by the Commission and Member States in that regard;

Removed:48. Welcomes the developments that have resulted in lifting both the quantified and unquantified reservation in the area of textiles and shoes imported from China; notes with satisfaction that the United Kingdom has now paid the total amount due (final payment of EUR 1,57 billion in January 2023) including interest (EUR 1,4 billion in February 2023); notes that 26 Member States made significant provisional payments for their expected amounts due to the Union budget and that in line with the CJEU judgment in the case C-213/19 the Commission will apply the same quantification method for these Member States as for the United Kingdom, which will result in recalculated amounts, allowing the Commission to finalise the exercise completely;

Added:69. Calls the Commision to conduct a deep analysis of all amounts recovered on the basis of EPPO notfications and to inform the discharge authority about the results; recalls that the Commission plays the primary role in the follow up and recovery of damages to the EU budget, following EPPO notifications; regrets that EPPO until now is not aware of the mechanisms set up by the Commission to that effect; notes that the issue of EPPO notifications has been raised in the inter-institutional exchange of views on Regulation (EU, Euratom) 2020/2223 ); welcomes the EPPO Working Arrangement and the set up of a working group to ensure that EPPO notifications will enable the Commission to maximize recovery to the EU budget;

Added:70. Welcomes the developments that have resulted in lifting both the quantified and unquantified reservation in the area of textiles and shoes imported from China; notes with satisfaction that the United Kingdom has now paid the total amount due (final payment of EUR 1,57 billion in January 2023) including interest (EUR 1,4 billion in February 2023); notes that by the end of 2023, 27 Member States had made significant provisional payments for their expected amounts due to the Union budget and that in line with the CJEU judgment in the case C-213/19 the Commission will apply the same quantification method for these Member States as for the United Kingdom, which will result in recalculated amounts, allowing the Commission to finalise the exercise completely;

Changed:(i) take over the suggestions of the European Parliament in its resolutions on own resources in order to ensure sufficient resources to repay the investments made under NGEU;

Added:(v) provide detailed explanations to the discharge authority on reasons why the Commision only partially implemented 13 % of the Court’s recommendations from 2019 and has not implemented further 10 % of their recommendations;

Changed:54.76. Notes that the Court estimates that the level of error in spending on ‘Single Market, Innovation and Digital’ in 2022 was material at 2,7 % ; notes with satisfaction that this is a considerable decrease compared to 4,4 % in 2021; takes note ofnotes the Court’s observation that the research and innovation expenditure is most affected by error, particularly in the area of personnel costs; notesis concerned that the Commission calculated an error rate of 1,5 % for this heading;heading, which is in the lower half of the range of the Court estimation; is concerned that the Court’s observation of the underestimation of the rate by the commission has persisted for a number of years, with a specific weakness identified in the Commission’s ex post audits;

Changed:55.77. Notes that quantifiable errors relating to ineligible costs represent 98 % of the Court’s estimated level of error of 2,7 % in 2022; notes with concern, in particular, that the rules for declaring personnel costs under Horizon 2020 remain complex and that their calculation remains a significant source of error (67 % of the estimated error level in 2022); notes that the Commission has developed and promotes the use of the ‘Personnel Costs Wizard’ to help beneficiaries to declare their personnel costs correctly;

Changed:57.79. Notes the remarks made by the Director-General for Research and Innovation in his discharge hearing that the Commission intends to increase the disbursement of Horizon Europe funds through lump sums from 2 % in 2022 to 50 % in 2027; notes, in that context, the Court’s specific review of the Commission’s procedures and guidance on lump-sum funded grants in research; notes the Commission’s statement that the level of scrutiny in terms of economy, efficiency and effectiveness is higher in the evaluation of lump-sum proposals; emphasises the need to check the actual implementation of projects using lump sums;

Changed:58.80. Stresses the crucial role of the private sector in addressing the innovation gap in the Union and improving Union competitiveness and growth; believes, in particular, that it is imperative to keep promoting and facilitating as much as possible the participation of small and medium-sized enterprises (SMEs) in Union R&I funding programmes; notes the Court’s conclusion that SMEs and newcomers are more prone to errors than other beneficiariesbeneficiaries, since they lack the experience and resources to administer the funds, and welcomes the efforts made by the Commission to specifically support them, for example through information campaigns, contacts with the system of National Contact Points and the dedicated helpdesk of the Research Enquiry Service; considers that the simplification of rules and procedures are the most important driver for increased participation of SMEs;

Removed:59. Notes that the R&I Family Fraud Risk Assessment was updated in 2022 as work preceding the 2023 update of the Common Anti-Fraud Strategy; notes the drafting and adoption in 2022 of the ‘Guidance on Horizon Europe ex-ante anti-fraud checks’, which is part of the Horizon Europe ex-ante control strategy; notes that the main forum of the R&I Family on anti-fraud matters is the commitee for Fraud and Irregularities in Research (FAIR Committee)), that met two times in 2022; notes that DG RTD also updated its Anti-fraud Strategy in 2022;

Added:81. Stresses the importance of having transparent and clear rules applied to the selection procedure and to the public procurement procedures in all executive agencies; regrets the rise of complaints of researchers for non-transparency, notably for the Research Excutive Agency; recalls that under the 2021-2027 long-term Union budget, the REA manages several Union programmes and support services; calls for the Commission to conduct an assessment of all procedures and an ex-post evaluation of the added value of all their executive agencies in accordance with Article 3.1 of the Council Regulation (EC No 58/2003 of 19 December 2002 laying down the statute for executive agencies to be entrusted with certain tasks in the management of Community programmes (Official Journal L 011 , 16/01/2003 P. 0001 – 0008));

Added:82. Notes that the R&I Family Fraud Risk Assessment was updated in 2022 as work preceding the 2023 update of the Common Anti-Fraud Strategy; notes the drafting and adoption in 2022 of the ‘Guidance on Horizon Europe ex-ante anti-fraud checks’, which is part of the Horizon Europe ex-ante control strategy; notes that the main forum of the R&I Family on anti-fraud matters is the committee for Fraud and Irregularities in Research (FAIR Committee), that met two times in 2022; notes that DG RTD also updated its Anti-fraud Strategy in 2022; considers that a zero-tolerance policy for fraud is also necessary in the area of research; in light of the ongoing simplification efforts it is important to guarantee that all European grants and subsidies benefit the projected goals and to develop effective tools to identify fraud and fraud patterns in the context of lump sums; notes that one important element to avoid fraudulent misuse is the referral of respective cases to the Early Detection and Exclusion System panel;

Added:85. Stresses the independence and autonomy of the ERC when fulfilling its role in supporting excellent research in the Union; recalls that the ERC requires a unique set-up to host ERCEA staff, the ERC Scientific Council and the experts responsible for the panel evaluations and that this configuration is indispensable for its work; is astonished by the Commission's plan to move several executive agencies and the ERCEA into new buildings without proper consultation and their agreement, while disregarding their actual office needs and thus endangering business continuity; highlights that even some Commission services were not adequately informed about these plans; stresses that the ERCEA has the right to sign lease contracts on its own and without the Commission's approval to maintain its extraordinary business model; underlines that the Commission must plan and collaborate with the ERCEA in good time to find suitable office spaces that fulfil their requirements and do not endanger their activities;

Added:88. Acknowledges that, in 2022, CEF reached its full implementation phase and deems it an achievement; regrets the decrease, compared to 2021, in funding for calls for proposals under the CEF Transport 2022 funding instrument on projects targeting new, upgraded and improved European transport infrastructure; takes note that CEF Transport 2022 calls that were launched during the 3rd quarter of 2022 opened additional funding possibilities with an extra EUR 6 billion. of Union co-funding; insists that a sufficiently high CEF Transport budget line is key to ensuring implementation of the Trans-european Transport Network (TEN-T) network, including the enlargement in the Eastern region to provide connection to the Eastern partners such as Ukraine, greening of European transport, increased military mobility and offsetting the unprecedently high inflation rates;

Added:89. Applauds the initiative of the European Air Traffic Management Voluntary Solidarity Fund for Ukraine and Moldova under the responsibility of Eurocontrol, aiming to sustain staff/training costs and any other costs to ensure operational readiness when air traffic recovers; furthermore, welcomes another Eurocontrol solidarity mechanism to assist the front-line states struggling with the effects of a sharp drop in air traffic; points out that the Eurocontrol Member States decided to establish two specific funds: one in the form of a donation to Ukraine and Moldova of EUR 46.5 million. and one in the form of a loan of EUR 46,1 million. to Estonia, Latvia, Lithuania and Poland;

Changed:64.90. Notes the complexity of the energy policy framework in the Union and stresses that ensuring better interconnectivity is at the core of the Union energy market; welcomes the adoption of the new trans-European energy infrastructure Regulation Regulation (EU) 2022/869 (‘TEN-E Regulation’ );Regulation’); considers that the Union has, through TEN-E, CEF and the RRF/ RePowerEU Plan, made a robust legal framework available for investments in energy infrastructure, addressing the challenges of decarbonisation and decreasing dependency on imports of fossil fuel; notes the efforts made to coordinate the construction of high-priority electricity infrastructure across Member States, digitalise the Union energy system, and stimulate the grid investment with the right regularity environment, in particular through CEF Energy;

Changed:65.91. Notes that, in total, CEF Energy 1 and 2 (2014-2023)(2014-2022) provided EUR 6,36,24 billion of support to energy projects (EUR 5,85,74 billion works, EUR 0.5 billion studies) to more than 117118 Projects of Common Interest (PCIs) and by the end of 2022, 107123 actions that received support from CEF-1 Energy were completed;

Added:92. Notes that Russia’s war of aggression against Ukraine and weaponisation of energy upended energy markets in 2022, triggering price volatility and energy insecurity across the Union’s energy system; highlights the Commission’s response to the crisis by developing the REPowerEU Plan aiming to reduce dependence on Russian fossil fuels and phase out Russian energy imports before 2030; notes that the REPowerEU Plan mobilises close to EUR 300 billion, approximately EUR 72 billion in grants and EUR 225 billion in loans; notes that the REPowerEU Plan has additionally provided a legal basis for both Member States and the Commission to modify national RRPs and to check whether Milestones and Targets (M&Ts) are well defined to clarify them where necessary;

Added:(i) include extra funds needed for Horizon 2020 and Horizon Europe in the draft 2025 budget to improve on the current state where 7 out of 10 high-quality proposals still cannot be funded;

Added:(iii) continue to simplify rules and procedures in line with the new financial regulation, to support training sessions and practical information for applicants in member states, in particular for SMEs, spin-offs, start-ups, regional NGOs or local action groups;

Added:(viii) increase awareness, coherence, and sustainability of the support to SME internationalisation;

Added:(ix) check the actual implementation of projects using lump sums;

Added:(x) report to the discharge authority:

Added:a. how many cases of suspected fraud have been referred by the competent Commission departments to the EDES panel, for what exclusion grounds, and how many of these cases have resulted in 1. an early detection decision, 2. an exclusion decision of the panel;

Removed:69. Takes note that the absorption rate for cohesion policy funds under the programming period 2014-2020 reached 79,2 % at the end of 2022 (86 % at the end of 2023, including newly added Recovery assistance for cohesion and the territories of Europe (REACT-EU) in 2021-2022), having a similar level at the same point in time as in the period 2007-2013; notes that the 2014-2020 programmes account for over 1 million projects and that so far, they have supported 2,4 million businesses, created 370 000 new jobs, increased the energy performance of more than 540 000 households, created 6 000 megawatts of new renewable energy sources and that 6,3 million households benefited from broadband;

Added:96. Recalls that spending under the subheading “Economic, social and territorial cohesion” (Subheading 2a) focuses on reducing development disparities between the different Member States and regions of the Union; stresses the importance of Union cohesion policy in supporting the implementation of the European Pillar of Social Rights and achieving its headline targets and assisting Member States and regions to harness new opportunities and address challenges, such as globalisation, unemployment, poverty and social exclusion, industrial change, digitalisation and supporting up and re-skilling and lifelong learning;

Added:97. Recalls the Court’s Special Report 27/2021 “EU Support to tourism – Need for a fresh strategic orientation and a better funding approach”; recalls the Court’s recommendation to the Commission to set out a consolidated new strategy for the Union’s tourism ecosystem in cooperation with the Member States in order to develop an effective tourism agenda for 2030 and to apply selection procedures for ERDF-funded tourism investments to support this new strategic orientation; underlines the Commission’s responsibility to support the Member States in promoting tourism-related investments, in accordance with the strategic agenda;

Added:98. Notes that the absorption rate for cohesion policy funds under the programming period 2014-2020 reached 79,2 % at the end of 2022 (86 % at the end of 2023, including newly added Recovery assistance for cohesion and the territories of Europe (REACT-EU) in 2021-2022), having a similar level at the same point in time as in the period 2007-2013; is concerned that this level of absoption was only achieved through a temporary 100% Union co-financing rate waiving any requirement for national co-financing of projects that have been a long-established principle of Union finances; notes that the 2014-2020 programmes account for over 1 million projects and that so far, they have supported 2,4 million businesses, created 370 000 new jobs, increased the energy performance of more than 540 000 households, created 6 000 megawatts of new renewable energy sources and that 6,3 million households benefited from broadband; notes that absorption in 2022 improved for a large part because of CRII, CRII+, CARE, and FAST-CARE for the purpose of crisis response, diminishing projects to support the structural cohesion objectives of creating convergence and cohesion in the Union;

Changed:71.101. Notes that the Court has examined a sample of 260 transactions covering the full range of spending under MFF Heading 2; notes with concern that the Court’s estimated overall level of error in ‘Cohesion, resilience and values’ in 2022 wasincreased to 6,4 %, which is significantly above the materiality threshold;threshold, having already taken into account corrections with a total value of EUR 618 million applied by Member States in 2022; draws attention to the marked increase in the overall level of error estimated by the Court in 2022 compared to previous years (3,6 % in 2021, 3,5 % in 2020) while the CommissionCommission’s estimates of the payment risk for 2022 to beis between 1,9 % and 2,7 %, remaining stable comparedsimilar to previous years (1,9 %-2,5 % in 2021, 2,1 %-2,6 % in 2020); draws attention to the Court’s report that a significant part of errors (3 % out of 6,4 %) were made in expenditure originating from CRII and CRII+;

Changed:72.102. NotesIs concerned about the Court’s observation that approaching the end of the eligibility period for 2014-2020 programmes (31 December 2023) added absorption pressure and that during the COVID-19 period, the effectiveness of the checks and verifications by managing and audit authorities may have been reduced, potentially increasing the risk of undetected errors and irregularities; takes notenotes that the Commission acknowledges that the specific situation and flexibilities given during COVID-19 may have played a role in the risk of irregularities due to the need to find alternative (remote) ways to control expenditure; stresses, however, that according to the Commission the risks and irregularities identified are rather linked to the type of actions implemented during the COVID-19 period or to the implementation or understanding of the flexibility introduced in public procurement rules;

Changed:73.103. Notes the Court’s explanations that its error rate refers to the share of expenditure declared, for which it considers that the conditions for payment set out in Regulation (EU, Euratom) 2018/1046 (‘the Financial Regulation’) , the CPR and inDirectivein Directive (EU) 2017/1371on2017/1371 on the protection of the Union’s financial interests (‘PIF Directive’) have not been fully met, leading to a direct and measurable financial impact on the payment amount authorised at the time from the Union budget; takes note ofnotes the Court’s clarification that the error rate should not be interpreted as being equivalent to the potential amount of financial corrections the Commission can impose in accordance with the applicable rules; considers that the high error rate indicates a waste of resources, in particular in cohesion policy, where many managing authorities are confronted with the parallel implementation of the RRF;

Changed:74.104. Notes that in the annual activity reports, the Commission reports errorthe rates,risk at payment, for each programme and overall for the funds, that strictly refer to irregularities leading to financial corrections; notes that to impose financial corrections, the Commission needs to conclude that an irregularity within the meaning of the Article 2(36) of the CPR has occurred, while not all formal breaches and errors included by the Court as quantifiable errors in its estimated error rate lead to ineligible expenditure because they do not qualify as an irregularity as defined in Article 2(36) of the CPR; notes that it is helpful for the discharge authority to have a managerial perspective on errors identified;

Removed:75. Welcomes that the Commission accepts allrecommendations of the Court and its commitment to clarify applicable rules and audit work required with all stakeholders, including in close cooperation with the Court, to limit these divergences in future assessments and quantification of errors; encourages the two institutions, together with all relevant stakeholders, to work further to reduce divergences in order to ensure legal clarity and to ensure that audits do not lead to an excessive administrative burden on beneficiaries and, in this way, policy objectives are reached on the ground;

Added:105. Notes with concern that the Court identified an increase in the specific types of errors, such as ineligible costs and projects and infringements of internal market rules, including public procurement and state aid rules, stresses that these types of errors could be related to poor governance; notes that 3 % of the Court’s estimated 6,4 % error rate in Heading 2 is related to 100 % co-financed priorities under the Coronavirus Response Investment Initiative (CRII+) which allowed for more flexible spending; reiterates that more flexibility should never lead to compromising quality and controls; asks for a review from the Commission of the current situation in order to avoid similar situations in the future; notes that the Commission has not found audit evidence of a significant impact overall of the new types of measures and flexibilities introduced on the programme error rates and notes the fact that the Commission took measures to prevent such risk;

Removed:76. Notes that the Court identified an increase in the specific types of errors, such as ineligible costs and projects and infringements of internal market rules, including public procurement and state aid rules, which are the same categories of irregularities identified by the Commission and the audit authorities based on their common typology; notes that 3 % of the Court’s estimated 6,4 % error rate in Heading 2 is related to 100% co-financed priorities under the Coronavirus Response Investment Initiative (CRII+) which allowed for more flexible spending; notes that the Commission has not found audit evidence of a significant impact overall of the new types of measures and flexibilities introduced on the programme error rates and takes note of the fact that the Commission took measures to prevent such risk;

Added:106. Notes that the Court identified cases of projects for which ineligible expenditure was accepted, as well as their contribution to the overall estimated level of error; stresses the importance of remedying the systemic root causes and the need for audit authorities to effectively assess the eligibility criteria;

Changed:79.110. Notes that complementarity characterises the relation between the cohesion policy funds and the other Union funding instruments; recalls thatthat, although the cohesion policy funds and the RRF are different in terms of general objectives, timeline, management mode and financing, butcurrent experience shows that several RRPs foresee investments which would have been eligible for financing under cohesion policy; highlights that complementarity between themcohesion policy funds and RRF is possible and expected, provided that the RRF brings real added value and that the same costs are not covered twice; underlines that the risk of overlaps will increase towards the end of the RRF lifetime and points to the Commission to do its utmost to mitigate these risks;

Changed:80. Notes111. thatUrges the Commission is closelyto monitoringmonitor the situation, in particular when RRF national coordinating authorities are the same as for cohesion policy funds, and insisted on having sufficient additional administrative capacity and human resources allocated to the different strands of Union funding; nevertheless, points to the potential risks that this parallelism may lead to unidentified cases of double funding; calls on the Commission to draw lessons from the experiences out of two different funding models;

Changed:81.112. Welcomes that for the moment neither the Court nor the Commission identify any cases where the obligatory national co-funding of a cohesion project was paid for by RRF funds in the 2022 RRF disbursements; urges the Commission to continue to monitor the situation and prevent such financing from happening;

Removed:82. Notes that the Court considers that the Commission’s desk reviews and compliance audits have inherent limitations in confirming the validity of the residual total error rates reported by audit authorities; takes note of the Commission’s reply that its assessment, based on a combination of desk and on-the-spot audit work covering the different individual programmes and assurance packages, enables it to establish a reasonable and fair estimate of the error rates for each programme, every year, and cumulatively for cohesion policy funds;

Added:113. Is concerned by the Court’s persistent comments on the shortcoming identified in the way audit and managing authorities work notably weaknesses in the ex post checks by the audit authorities and in controls by the managing authorities that do not always effectively prevent or detect irregularities in expenditure declared by beneficiaries and the over-reliance of the Commission on the quality of programme authorities’ work, related to inherent limitations in the Commission’s desk reviews;

Removed:83. Notes the Court’s finding that the proportion of assurance packages with residual error rates of above 2 % reached a peak of 61 % of the expenditure in the Court’s sample in 2022 compared to 39 % in the previous year, reflecting the persistent shortcomings in the work of the audit authorities; stresses with concern that the Court’s audit results over the last six years demonstrate that the controls currently in place do not yet sufficiently offset the high inherent risk of error in cohesion, and that managing authorities do not always effectively prevent or detect irregularities in expenditure declared by beneficiaries; notes with concern that the errors found by the Court represent significant weaknesses in the audit authorities’ work on verifying the eligibility of expenditures and projects, and the compliance with internal market rules; notes that a part of the residual error rates recalculated by the Court above 2 % in the audited assurance packages are attributable to the aforementioned divergences;

Added:114. Notes the Commission’s reply that its assessment, based on a combination of desk and on-the-spot audit work covering the different individual programmes and assurance packages, enables it to establish a reasonable and fair estimate of the error rates for each programme, every year, and cumulatively for cohesion policy funds; agrees with the Court that the Commission’s desk reviews have inherent limitations in confirming the validity of the residual total error rates reported by audit authorities; notes that these weaknesses might also affect the Commission’s estimated risk at closure, as the Commission may not in all cases carry out the necessary corrections to bring the residual error rate below materiality;

Removed:88. Notes from the Annual Report on the Protection of the EU Financial Interests for the year 2022 (PIF Report) that from 2021 to 2022, the number of fraudulent irregularities relating to the Cohesion Policy increased by 4,2 %, while non-fraudulent irregularities increased by 10,2 %; notes that the Commission requested audit authorities to pay particular attention to new risks related to the multiplication of Funds and additional funding under NGEU, in particular, ‘double funding’, conflicts of interest, fraud or corruption; notes the efforts made by the Commission to promote the use of the ARACHNE risk scoring tool to the reluctant Member States, and to introduce improvements in the tool; notes that the audit authorities explicitly addressed the risk of fraud for 65 % of the audited operations in the 2014-2020 period, which is an improvement on the 38 % found in 2021 by the Court;

Added:122. Recalls that on 15 December 2022, based on a Commission proposal, the Council adopted Implementing Decision (EU) 2022/2506 on measures for the protection of the Union budget against breaches of the principles of the Rule of law in Hungary; stresses that the decision was based on the Commission’s concerns regarding severe issues related to the public procurement system in Hungary; welcomes the temporarily suspension of 55 % of commitments for certain cohesion policy programmes for the period 2021-2027; notes that the Commission has been monitoring the implementation of the remedial measures proposed by Hungary in the framework of the ‘Conditionality Regulation’; notes that in December 2023, the Commission reassessed on its own motion the situation in Hungary and concluded that the Union’s budget remains at the same level of risk as there are still commitments that were neither correctly nor timely fulfilled;

Added:123. Notes that in December 2022, the Commission concluded that Hungary was not fulfilling the horizontal enabling conditions under the CPR on the Charter with regard to judicial independence and the provisions of several laws posing serious risks to LGBTIQ+ rights, academic freedom and the right to asylum; strongly regrets the Commission decision of 13.12.2023 considering that Hungary has fulfilled the horizontal enabling condition related to the judiciary independence, thus enabling the Hungarian authorities to submit reimbursement claims of up to EUR 10.2 billion without adequate control mechanisms or public procurement procedures in place to guarantee sound financial management and the protection of the Union budget; believes that this decision politically contradicts the prolongation of the measures adopted under the Conditionality Regulation and expresses its disappointment that Parliament was not adequately informed during the process; reiterates its concerns regarding the judicial independence, even after the recent reforms, as expressed in its Resolution of 18 January 2024 on the situation in Hungary and frozen Union funds;

Added:124. Reiterates the need of treating as a single, integral package all the measures required for the release of Union funding under the Conditionality Regulation, the CPRs and the RRF Regulation; stresses the importance of the protection of the Union financial interests also for disbursement of pre-financing;

Changed:(i) proactively engage in constructive dialogue with the Court to overcome the growing number of situations where the Commission’s official response to the Court’s findings is to ‘agree to disagree’ and continue its cooperation with the Court in order to look for possible comparability ofalign the results of their estimated error rates, as well as torates alignand the interpretation of legal texts;

Removed:(ii) pay particular attention in its audits to the risks linked to the flexibilities introduced with the CRII/CRII+ amendments;

Added:(ii) match the Court’s findings concerning Member States’ declarations with the information coming from the Commission’s risk at payment and risk at closure exercise on managing authorities to identify error hotspots that need to be addressed with urgency;

Removed:(iii) continue its support to Member States given the completion of the 2014-2020 programming period and the implementation of the current one, in particular by supporting administrative capacity building;

Added:(iii) continue its close work with the audit authorities in order to strengthen their capacity to prevent and correct recurring errors, to better document their audit work and therefore to contribute to the assurance process;

Changed:90.138. Notes that the budget for the programmes under MFF heading 3 ‘Natural resources’ was EUR 58,158,3 billion (29,7 % of the Union budget) distributed as follows: 65,9 % for direct payments under the European Agricultural Guarantee fund (EAGF), 26,2 % for the Agricultural Fund for Rural Development (EARDF), 4,7 % for market-related expenditure under the EAGF, 1,8 % for Maritime and Fisheries, 0,9 % for Environment and Climate (LIFE), and 0,5 % for other areas; notes that as of 31 December 2022, under MFF heading 3 ‘Natural Resources and Environment’ the final adopted budget commitments appropriations were EUR 56 681,11 million and 98,92 % of them were implemented (EUR 56 069,86 million); notes further that the final adopted budget payment appropriations amounted to EUR 55 781,71826,77 million and 98,9598,89 % of them were implemented (EUR 55 197,56205,48 million);

Changed:91.139. Notes that 2022 was the second and last year of the transitional period during which funds from the Common Agricultural Policy (CAP) 2021-2027 budget allocation and an additional EUR 8 billion of externally assigned revenue from the NextGenerationEU funds for the European Agricultural Fund for Rural Development Fund (EAFRD) could be usedcommitted by Member States for continued payments to farmers and other CAP beneficiaries in anticipation of the entry into force of the new CAP on 1 January 2023;2023 and that the related payments by Member States to farmers and other CAP beneficiaries can be made until 31 December 2025;

Changed:92.140. Notes that, in the financial year 2022, there were more than 5,9million5,9 million beneficiaries of direct support schemes, around 3,5 million beneficiaries of rural development measures and some 0,11 million beneficiaries of market measures; stresses that the resilience of the Union farmers and food system has continued to ensure food security in the Union and beyond, despite the challenges they faced in 2022;

Changed:93.141. Notes that Russia-sRussia’s unprovoked war of aggression against Ukraine triggered, among other actions, the activation of the crisis reserve in the form of a support package that amounted to EUR 500 million, out of which EUR 350 million was made available for affected producers from the reserve and another EUR 150 million from the EAGF; welcomes the high execution rate (above EUR 492 million) and the fast implementation; notes that Member States were given flexibility in deciding on the sectors they considered most hit by the market disturbance and also the types of aid schemes, which determined the control system applied;

Changed:94.142. Notes that the Court has examined a sample of 218 transactions covering the full range of spending under this MFF heading; notes that the Court also examined the regularity information given in the annual activity reports of the Directorate-General for Agriculture and Rural Development (DG AGRI) and the Directorate-General for Climate Action (DG CLIMA), as well as selected systems in 17 Member States and the United Kingdom; notes that the Court estimates the level of error for ‘Natural Resources’ to be 2,2 % (1,8 % in 2022)2021) and that the majority of the errors found affected rural development transactions; notes that DG AGRI estimates a risk at payment of 1,76 %;

Changed:96.144. Notes that the majority of errors found by the Court were related to the provision of inaccurate information on areas or animals (42 %) and ineligible beneficiary, activity, and project, expenditure; notes with concern, as in 2022,2021, that the Court found in several cases that the Member State authorities and the Commission had sufficient information to prevent, or to detect and correct the error before accepting the expenditure and thatthat, thishad wouldthe haveMember resultedStates' inauthorities aand lowerthe errorCommission ratemade estimatedproper use of all the information at 1,3their %;disposal, the estimated level of error for this chapter would have been 1.3 percentage points lower;

Removed:97. Welcomes the Commission’s statement that the 2023-2027 CAP delivery model aims to simplify rules and to emphasise the use of new technologies, such as the Area Monitoring System, that will help reduce errors; notes that, together with errors made by the farmers, the Land Parcel Identification System (LPIS) is the basis for the geospatial aid application and recalls the significant potential benefits of technologies for monitoring area aid for farmers, administrations and the environment;

Added:145. Recalls that both the Commission and Member States are responsible for addressing fraud in CAP spending; Points out that anti-fraud measures should remain a high priority for the Union and Member States as fraud prevents Union resources from achieving the policy objectives.

Removed:98. Notes the example of an incorrect declaration of agricultural activity presented by the Court in its annual report, quoted in several media as the “lemon trees’ case”, where a farmer declared to cultivate permanent crop, where in reality the plot was not cultivated for several years; notes the financial impact of this error was EUR 8 349,06 as reported by the Commission, along with the corrective actions taken by the responsible national authorities, including the recovery of the claimed amount; commends the thorough audit work of the Court and the Commission and the swift follow-up by the paying agency concerned;

Added:146. Notes the Commission’s statement that the 2023-2027 CAP delivery model aims to simplify rules and to emphasise the use of new technologies, such as the Area Monitoring System, that will help reduce errors; notes that, together with errors made by the farmers, the Land Parcel Identification System (LPIS) is the basis for the geospatial aid application and recalls the significant potential benefits of technologies for monitoring area aid for farmers, administrations and the environment;

Changed:101.150. Welcomes the increased interest in and use of the integrated IT tool for data mining ARACHNE by the Member States, with 13 Member States using the tool for at least some measures, and five Member States participating in a general introduction workshop on ARACHNE; regrets the fact that the use of the integrated IT tool for data mining ARACHNE by the Member States, is not compulsory; notes the obstacles reported by Member States and the continued efforts of the Commission to improve ARACHNE; regrets the selective adoption of ARACHNE by Member States;

Changed:102.151. Notes that, in 2022, the Commission reported an implementation rate of 99,69 %, for commitments under the European Maritime, Fisheries and Aquaculture Fund (EMFAF), a marked improvement from the 15,98 % implementation rate of its predecessor, the European Maritime and Fisheries Fund (EMFF)EMFAF in 2021; notes, however, that 94,76 % from the EUR 1 135,74 million committed appropriations in 2022 and 97,06 % from EUR 148,12 million in 2021 remained unpaid at the end of the corresponding year; notes further that the implementation rate of the authorised payment appropriations for EMFAF in 2022 was 99,99 % and for EMFF in 2021 was 86,55 %;

Changed:103.152. Notes the Court’s Special reportReport 09/2023 on securing agricultural product supply chains during COVID-19 and its conclusion that the Commission’s response to the threat posed to agricultural product supply chains by the COVID-19 pandemic was appropriate in most respects but insufficiently targeted; recalls that direct support, with a budget of EUR 712 million, was implemented quickly through reallocation of unused funds from EAFRD, which resulted in this measure mostly being taken up by the Member States with a significant portion of the EAFRD budget unused at the end of 2019; recalls further that 5 of the 14 member states made the Union funding available to all farmers that suffered losses, whereas the other 9 targeted selected sectors and supported beneficiaries irrespective of whether they had suffered losses;

Added:153. Notes that preliminary estimates (based on commitment appropriations) of the climate contribution of the main programmes show that 34,8 % of the Union budget in 2022 was dedicated to climate action, in line with the Interinstitutional Agreement plans for at least 30 % of 2021-27 MFF to be used for this purpose;

Added:154. Notes the changes made to the Commission’s climate-tracking methodology in 2022 in response to the concerns expressed about the Court's finding in Special Report 09/2022, stating that the reported spending was not always relevant to climate action, that the amount reported as having been spent for that purpose had been overstated by at least EUR 72 billion, meaning that only around 13 % of the 2014-2020 budget was spent on climate related purposes; is of the opinion that this fact serves as a warning; urges the Commission to distinguish between climate mitigation and climate adaptation in the tracking methodology by breaking monitoring and reporting category into climate adaptation and climate mitigation;

Added:155. Underlines the importance of proper scrutiny of climate and biodiversity expenditure in the Union budget, and holds the Commission accountable for the implementation of a robust and reliable methodology, in line with the commitments undertaken in the MFF agreement and paragraph 16d of the IIA of 16 December 2020; calls on the Commission to avoid misleading approximation of the spending contribution to climate and biodiversity objectives, lack of explicit targets, as well as only partial coverage of potential negative or unclear climate and biodiversity impacts; acknowledges that there are the interventions with common benefits but underlines the need to avoid double counting;

Added:156. Calls on the Commission to provide Parliament with an annual report setting out in detail the contribution of each budget item to the climate mainstreaming and the biodiversity targets, in order to facilitate their monitoring; calls further on the Commission to report whether any budget item fails to respect the "do no significant harm" criterion as referred to in the Taxonomy Regulation;

Removed:(ii) explain to the discharge authority why the implementation rate of commitments under the EMFAF is so much higher than the implementation rate of its predecessor;

Added:(iii) continue to promote the use of ARACHNE to increase both the number of Member States using the system, and to increase the extent of use to include all programmes in the context of the concluded revision of the Financial Regulation;

Changed:(v) promote, provide incentives and support the Member States’ paying agencies in using IT tools like checksCopernicus bySatellite monitoringimagery and other imaging technologies in the field of agri-monitoring;

Added:(vi) make better use and encourage the use of AI and data from new technologies such as the Union owned Copernicus Sentinel satellites to monitor and control the correct use of CAP funds;

Changed:105.160. Notes that the budget for the programmes under MFF heading 4 ‘Migration and Border Management’ was EUR 3,4 billion (1,7 % of the Union budget) distributed as follows: 43,9 % for the Asylum, Migration and Integration Fund (AMIF), 23,1 % for the Integrated Border Management Fund (IBMF) and 33 % for three decentralised agencies: European Boarder Coast Agency (FRONTEX), European Union Agency for Asylum (EUAA) and European Union Agency for the Operational Management of Large-Scale IT Systems in the Area of Freedom, Security and Justice (EU- LISA); notes that, as of 31 December 2022, the final budget commitment appropriations adopted amounted to EUR 3 410,39 million and 99,54 % of them had been implemented (EUR 3 394,69 million); notes further that the final adopted budget payment appropriations amounted to EUR 3 372,54 million and 976197,61 % of them have been implemented (EUR 3 292,03 million);

Changed:108.163. Notes that the Court examined a sample of 23 transactionstransactions, thatwhich is not representative enough of the spending under MFF headings 4 and 5 and, therefore, cannot provide an estimate of the error rate; notesstresses with concern that the Court’s audit results show that the expenditure is affected by eligibility and procurement issues and that it is a high-risk area (11 out of 23 transactions audited, i.e. 48 %, were affected by errors);errors) and thus, invites the Court to provide a clear estimation of the error rate for this chapter; notes that the Court quantified nine errors which had an impact on the amounts charged to the Union budget and that it also found four cases of non-compliance with legal and financial provisions, which had no impact on the Union budget; notes that the Commission concludes that the risk at payment is below 2% for the expenditure on migration and border management, as well as for security and defence;

Changed:109.164. Welcomes the progress identified by the Court in its review of the work done by six Member States’ audit authorities in preparation for the 2021-2027 AMIF, the Border Management and Visa Instrument (BMVI) and ISF annual accounts; notes the Court’s observation that, at the time of its visits (between September 2022 and February 2023), the six Member States’ audit strategies had not yet been adopted, which is a prerequisite for submitting an ‘assurance package’; notes that, at the time of the Court’s visit, the IT systems to store information and documentation needed for audits of the six Member States’ managing authorities were either under development or yet to be developed;

Changed:111.166. Notes that in 2022 the funds under MFF heading 4 were instrumental in addressing the impact of theRussia’s war inof Ukraine;agression takesagainst noteUkraine; notes that more flexibility was introduced under the 2014-2020 funds to enhance Member States’ possibilities to channel funding towards new needs, and EUR 400 million of Emergency Assistance was triggered under the Thematic Facilities; notes that the adoption of the Member States’ programmes for 2021-2027 allowed them to access to more than EUR 10 billion under the new funds for the programming period;

Changed:112.167. Notes that more than 16 million people from Ukraine and Moldova have been recorded as having entered the Union since the beginning of theRussia’s war inof aggression against Ukraine, and over 4 million persons fleeing the war obtained protection in the Union; notes that the Commission provided financial support to the International Organisation for Migration to support the process, as part of a EUR 15 million project facilitating transfers offrom vulnerableMoldova personsof fromvulnerable Moldovapeople fleeing Ukraine; notes further that on 30 November 2022, the Commission announced the decision to award financial support of EUR 5,5 million to a project to be carried out by the International Federation of the Red Cross and Crescent Societies (IFRC) to support hosts and all those involved in providing private accommodation to displaced people, putting together good practices for future needs; takes notenotes that, in 2022, in the context of financing Ukraine, the Commission adopted decisions authorising the use of the funding not linked to costs amounting to EUR 248 million (May 2022) and EUR 137 million (August 2022), as well as for smaller grants, safe homes and psychosocial support amounting to EUR 15 million;

Changed:114.169. Welcomes that the participation of SMEs in the EDF (European Defence Fund) (in particular the cross-border participation of SMEs in industrial consortia) is being facilitated through targeted EDF calls, financial bonuses, specific award criteria, and the use of SCOs to decrease the administrative burden; notes that in the 2022 EDF calls, 38,2 % of the participating entities were SMEs, and 20 % of the total funding available through these calls will be for SMEs (EUR 166 million);

Added:(i) develop a longer-term strategy for the EDF, building on the experience with PADR and the Court’s recommendations;

Added:(iii) focus its controls on expenditure found by the Court to be highly affected by eligibility and procurement issues in 2022 and asks the Court to expand a sample of audited transactions to be able to provide an estimate of the error rate;

Changed:119.174. Notes that the Court examined a sample of 72 transactionstransactions, which is not representative enough of the spending under this MFF heading and, therefore, cannot provide an estimate of the error rate; notesconsidering that the Court’s audit results show that this is a high-risk area (34 out of 72 transactions audited, i.e. 47 %, were affected by errors);errors), invites the Court to provide a clear estimation of the error rate for this chapter; notes that the Court found 25 errors that had a financial impact on the Union budget, relating to ineligible costs, absence of supporting documents, public procurement and expenditure not incurred;incurred, areas that could point to risks of unreliable functioning of the national authorities’ control mechanism or even the administrative or political unwillingness to properly execute Union financial rules;

Added:180. Recognises the importance of NGOs in ensuring that the Union, as the largest donor of development aid in the world, continues to contribute to promoting stability and peace, overcoming poverty and advancing sustainable development; commends in particular the activity of NGOs in areas of conflict in ensuring that humanitarian aid reaches the civilian population in a rapid and effective manner; notes the control and audit, transparency and accountability requirements applicable to all Union funding and different stakeholders, but considers that there is always room for improvement, particularly by making the most of digitalisation;

Added:181. Stresses the role of local NGOs and partners in service delivery and support to local communities; underlines the importance of enhancing their capacity to manage and implement actions financed by the Union and invites the Commission to facilitate adequate training towards this aim; is concerned about the continued difficulties faced by small local organisations to access Union funding; encourages the Commission to improve these funding procedures and to systematically prioritise local organisations in order to provide better capacity-building on the ground; highlights the efficacy of local ownership in project implementation in terms of prioritisation, allocation of resources and building local know-how;

Added:182. Highlights the fact that the legitimacy and effectiveness of Union development cooperation hinges on the correct implementation of activities and their proper funding; recognises the work of the Commission in applying controls to make sure that transactions are made in a legitimate manner and that activities are implemented in accordance with the priorities set by the legislator; calls on the Commission to further improve controls in order to decrease the amount of transactional errors, to act upon ECA recommendations that have not been implemented and to redouble efforts to find eligible projects and to ensure a sufficient amount of payments under the current expenditure ceiling; welcomes the finding of the ECA report on the Union budget for 2022 that DG ECHO implemented ECA recommendation and established a procedure ensuring that partner organisations base their allocation of shared costs on expenditure actually incurred;

Added:183. Calls on the Commission to send clear signals to those candidate countries in which a backlash against rule of law standards - including limitations on the freedom of expression, the freedom of press, women’s and minority rights, the harassment of NGOs and human rights defenders - is jeopardising or delaying their accession to the Union; invites the Commission to examine the efficiency of the funds spent on the improvement of the state of the Rule of Law in the accession countries and report back to the AFET and CONT committees;

Changed:126.185. Notes with concern that the Court, in its Special Report 14/2023 “Programming the Neighbourhood, Development and International Cooperation Instrument – Global Europe” found that, although the Commission and the EEAS had merged funding into a single instrument, the NDICI-Global Europe Instrument, which covers more than 70 % of the Union funding allocated for external action in the 2021-2027 financing period, they followed two different fund allocation methodologies for Neighbourhood and non-Neighbourhood countries, and that the multiannual indicative programmes did not ensure that the selected sectors of intervention were those in which Union funding could achieve ana high impact;

Removed:127. Notes that, following the despicable terrorist attacks carried out by Hamas against Israel on 7 October 2023, the Commission announced on 9 October 2023 its decision to review the Union’s assistance for Palestine; welcomes that the review, finalised on 21 November 2023, has shown that the Commission has ex-ante and ex-post controls, and a system of safeguards in placethat work well and that no evidence has been found to date that money has been diverted for unintended purposes; highlights, furthermore, that according to the Commission’s reply, the current rules in tender procedures and calls for proposals “make the participation of entities, individuals or groups affiliated with terrorist organisations categorically incompatible with any Union funding”;

Added:186. Emphasises the significance of meeting all spending and program-related targets outlined in the NDICI-GE instrument and calls for comprehensive information to be provided on the progress achieved; expresses regret over the significant shortfalls in reaching the Instrument's 30% climate target, in contributing to the 10% biodiversity target in the MFF for 2026 and 2027, and in ensuring that the Union's global financial commitments under the UN framework are fulfilled, in particular as regards the contribution to the Loss and Damage Fund; highlights the increasing pressure climate change puts on food production and access, particularly in vulnerable regions, impacting food security and nutrition; reminds that biodiversity is key in combating climate change, and its loss undermines progress on approximately 80% of the assessed targets for the SDGs; calls on the Commission for a detailed plan outlining how it intends to meet spending and gender targets by the end of the MFF;

Added:187. Urges the Commission to increase transparency and accountabililty of the programming and implementation of Home Affairs funds in third countries, and NDICI funding, such as in countries like Tunisia and Libya; calls the Commission to generate a publicly available overview of all migration related spending in third countries, and urges for ex ante human rights impact assesments for migration related spending in third countries, and to share these assesments with the Parliament where required by rules;

Added:188. Stresses that, following the despicable terrorist attacks carried out by Hamas against Israel on 7 October 2023, the Commission announced on 9 October 2023 its decision to review the Union’s assistance for Palestine; notes that the review, finalised on 21 November 2023, has shown that the Commission applies adequate ex-ante and ex-post controls, that the safeguards in place are effective and that no evidence has been found to date that money has been diverted for unintended purposes; insists on the need for European funds to go only to beneficiaries that share Union values regarding Rule of law, democracy and human rights; recalls in this regard the Parliament’s report 2023/2122 INI adopted the 17 January 2024 on transparency and accountability of non-governmental organisations funded from the Union budget calling for a reinforcement of the Commission control mechanisms and the development of a harmonised monitoring system aiming to track Union funds up to final beneficiaries;

Added:200. Notes the Reform Growth Plan for the Western Balkans which was proposed by the Commission to further support convergence efforts in the region; stresses the need for a more clarity on the use of different financial instruments toward the region, primarily among IPA III, Economic and Investment Plan, and the Reform Growth Plan; urges the Commission to provide the sub-national level to have more direct access to Union funds;

Added:201. Welcomes that the Ukraine Facility lays out provisions to ensure effective controls; recalls that on 7 April 2022, the Parliament called for the confiscation of Russian assets owned by Russian individuals and entities, frozen as a result of Union restrictive measures, in order to finance Ukraine’s reconstruction;

Added:202. Welcomes the Global Gateway strategy as a concerted Union response to global challenges bringing together public and private investment; notes that 2022 was the first full year of the implementation of the Global Gateway strategy; stresses the need for more transparency, accountability and regular assessments of the Global Gateway implementation as well as for enhanced Parliament’s involvement in respect of its democratic scrutiny role;

Changed:(ii) continue ensuring that all contracts involving Union funding fully respect applicable Union values, Union legislation, including accountability, transparency and protection of Union funds; make the participation of entities, individuals or groups affiliated with terrorist organisations categorically incompatible withensure anythat Unionstrict funding;monitoring and ensureex thatante strictand monitoringex andpost control mechanisms make sure that all individuals involved in Union funded actions exclusively pursue the Union objectives and activities approved for Union funding;funding, request, where necessary, the restitution, or compensation for Union-funded assets that have been demolished, dismantled or confiscated;

Removed:(iii) put in place adequate control measures in unstable or conflict zones to ensure the proper control of spending of Union funds;

Added:(iii) to intensify its communication with international organizations in order to provide the ECA with complete, unlimited and timely access to documents necessary to carry out its task in accordance with the TFEU, and not just in read-only format;

Added:(iv) put in place adequate ex ante and ex post control measures in unstable or conflict zones to ensure the proper control of spending of Union funds and ways to recover the Union funds;

Added:(v) ensures the proper, timely and thorough audit, including with the inclusion of the EPPO and European Court of Auditors, of all funds provided under the Ukraine Facility and the upcoming Western Balkans facility;

Added:211. Notes the adoption and implementation of an action plan to increase the attractiveness of careers in Luxembourg; notes the Commission’s considerations against introducing a correction coefficient for Luxembourg at this stage in its report assessing the evolution of purchasing power of remuneration and pensions of Union officials (COM(2022) 180 final); recalls its reiterated requests to the Commission to find ways to mitigate the growing problem of the purchase power disparity suffered by the members of staff posted to Luxembourg, which is mainly due to the cost of living;

Added:213. Recalls the Court’s conclusion in its Special Report 13/2019 that “any unethical behaviour by staff and Members of EU institutions and bodies is unacceptable and, even if it is only alleged, attracts high levels of public interest and reduces trust in the EU”; regrets the two cases of potential conflicts of interests involving high-ranked officials in DG MOVE for missions and DG NEAR for ownership reported by the press in 2022; notes the Commission implements effective internal control system in matters of ethics management according to the Court in its 2019 report and the European Ombudsman in its decision on the revolving doors inquiry; points out that unethical behaviour also has a budgetary cost for the institution concerned and reiterates its position and expectations of the Union's Ethics Body;

Changed:138.214. Notes that the new central corporate financial system of the Commission, SUMMA, was planned to go into production by the end of 2023 and had progressed in line with the objective of going live at the beginning of 2024; notesregrets that the deadline for implementing the new accounting system was extended by one year because implementing the connections of operational programmes (shared management, e-grants, e-procurement, staff payments) with SUMMA simultaneously has proven to be a more complex exercise than expected; stresses with concern that the cost of the SUMMA programme since its inception at the beginning of 2018 until the end of 2022 was around EUR 95 million and that its timeline extension will require additional resources in 2024, estimated at around EUR 7 million euro;

Added:215. Notes the adoption on 5 April 2022 of the ‘Communication on greening the Commission’, which aims to achieve climate neutrality by 2030, including an action plan to reduce its greenhouse gas emissions; notes the Commission intends to achieve these objectives by acquiring more energy efficient and greener buildings, shifting to dynamic collaborative workspaces and reducing the number of offices, and reiterates its warning that staff wellbeing and satisfaction should be taken into account in all future decisions in this regard;

Added:217. Is concerned that the Commission has refused to provide records of the discussions with a pharmaceutical company and regrets the lack of transparency related to the text messages between the Commission’s President and the pharmaceutical companies regarding the purchase of COVID-19 vaccines; notes the European Ombudsman decision on the related case 1316/2021/MIG considering that not recording text messages in its document register constitutes “maladministration” and is concerned that the Commission has not followed up on the recommendation to conduct another search for relevant text messages; notes that, to date, the Commission has not made available to the Members of the European Parliament the non-redacted versions of the contracts signed; recalls the Parliament resolution of 13 July 2023 on public access to documents – annual report for the years 2019-2021;

Added:(v) address without further delay and in an efficient way the challenges faced by members of staff who are assigned to and reside in Luxembourg;

Removed:145. Furthermore, calls on the Commission and the European Schools to:

Added:(viii) follow up on the Ombudsman’s recommendation in case 1316/2021/MIG, as well as ensure that its internal guidelines on document registration are in line with Regulation (EC) No 1049/2001;

Added:223. Furthermore, calls on the Commission to continue to support the European Schools to:

Removed:(iii) feature the financial contributions from the Union to the European Schools as a separate budget line, in future Union budgets, in order to increase transparency, ensure strategic planning and facilitate parliamentary scrutiny under the discharge procedure;

Added:(iii) perform an in-depth review under an independent chairperson of the governance and management structures across the System of European Schools and involve the Directorate General for Education, Youth, Sports and Culture of the Commission;

Changed:149.227. Recalls that, under NGEU, the Commission can raise up to EUR 806,9 billion between mid-2021 and 2026 through the issuance of EU-bonds;Union-bonds; notes that in June 2022, the Commission announced a funding plan for the period June to end-December 2022 and raised an additional EUR 50 billion in long-term funding for NGEU, complemented by short-term EU-bills issuances, bringing the total outstanding amount of NGEU bonds to EUR 171 billion, of which EUR 36,5 billion were raised by issuing green bonds; notes that this debt consists of borrowed amounts with different maturities, ranging from 1 year to more than 25 years; notes that repayment of NGEU debt will only start after 2028;

Changed:150.228. Notes the efforts of the Commission to raise funds on the financial markets to provide the financial means for the RRF; notes that, in 2020, an amount of EUR 14,9 billion was planned in the MFF 2021-2027 to cover the interest payments for NGEU non-repayable support; is concerned about the impact of the higher interest rates on the purchasing power of the Union budget, with the interest rates on 10-year EU-Bonds increasing from 0,09 % in 2021 to 3,2 % in 2023; notes that Commission’s AAA borrowing costs are higher than some Member States with a lower rating; notes that borrowed amounts need to be repaid and borrowing activities remain needed not only to raise new funds, but also to replace existing debt; is concerned about the rising interest rates, particularly in 2022, and the resulting debts and uncertain capacity to repay the loans, taking into account the large amount of money that the Commission is borrowing in order to finance the RRF; notes however that the debt is currently EUR 90 billion less than initially forecasted; notes the Commission’s long-term plan for repayment of the debt and calls on the Commission to regularly update it and inform the discharge authority of any new risks that might influence its implementation; notes the Commission’s statement that the Union will meet its obligations towards bondholders in all circumstances and its proposal for a technical modification to the MFF to optimise the budgetary treatment of NGEU borrowing costs; notes that information on the EU debt and planned repayments are part of the regular reporting within the NGEU dialogue; requests that the Commission continues to provide more information to the European Parliament on how repayment will be made and from which institutions funds are being borrowed; emphasises that this debt burdens the EU budget;

Added:229. Welcomes the Commission’s estimate that the full implementation of quantifiable milestones and targets up until the end of 2026 funded by NGEU Green Bonds, corresponding to 57 % of the NGEU Green Bond eligible expenditure, can reduce Greenhouse gas (GHG) emissions by 44 million tonnes of CO2 per annum– equivalent to 1,2 % of the aggregate for the Union’s GHG emissions in 2022, and insists on proper implementation; stresses furthermore the importance that reforms and investments under the Recovery and Resilience Plans meet the climate targets of the regulation and fully respect the “do no significant harm” principle;

Changed:151.230. WelcomesNotes that the Court issued a qualified opinion on the legality and regularity of the RRF expenditure in 20222022; is legalconcerned andthat regularthe inCourt allconcluded materialthat aspects,11 exceptout forof the13 effectsRRF ofpayments themade in 2022 were affected by quantitative findings inand 11that 6 of these payments andwere theaffected by material errorerror; notes that in 6the paymentsCourt’s estimatedopinion, byexcept for those matters, the Court,RRF whichexpenditure areaccepted in the basisaccounts for itsthe qualifiedyear opinion2022 concerningis thelegal RRFand expenditure;regular in all material respects; notes that the nature of the RRF spending model relies on the judgementsassessments to be made by the Commission and thus, the Court does not provide an error rate but estimates the minimum financial impact of its findings to be below, but close to the materiality threshold;

Changed:152.231. Notes that the Court audited 244 out of 274 milestones and all 37 targets included in 2022 payment requests for grants; notesregrets that the Court considers that 15 of them were affected by regularity issues (below 5 % of the total); notes that the Court considers that the requirements had not been satisfactorily fulfilled for 8 M&Ts in 8 payments and that the Commission had made the corresponding payments; notes that the Court’sCourt's conclusions are based on itsextensive audit work and that the Commission contests the Court's interpretation of the legal requirements set by the Council or qualitative judgements different from the Commission; notes that all the RRF payments aremust be assessed against the framework communicated and applied by the Commission, who alsomust takestake into consideration for each payment the opinion of the Economic and Financial Committee and the scrutiny by Member State experts under the comitology procedure;

Removed:153. Notes that the Court considers that a case of double funding occurred in 2022, even though the measure in question does not have any costs attached to it under the RRF; notes the Commission’s observation that, according to the RRF Regulation, ‘double funding’ is explicitly linked to costs and thus, there can be no 'double funding' if the Member State has not submitted any cost estimate as part of its national plan; notes that the Commission underlines that reforms are essential criteria for the Commission's positive assessment of RRPs, but that the inclusion of no-cost reforms does not increase their financial envelope, although in this way the plans ensure their effective and timely implementation;

Added:232. Notes that the Court has identified what it considers to be two cases of continuation of a pre-existing project, that started before the eligibility period, and targets that were a substitution of recurring national budgetary expenditure; is concerned about such situations, although this conclusion does not agree with the Court’s own consideration that recurring actions refers to types of expenditure like staff and operating costs of government entities; recalls that the RRF shall not be used to finance recurring budgetary expenditure and calls for adequate measures to be taken, including partial payments, when such cases are identified by the Commission;

Removed:154. Notes that the Court also identified several cases of weak design in M&Ts and problems with the reliability of information that Member States included in their management declarations, although the effects of those findings are considered material but not pervasive by the Court; notes that the Commission agrees to review M&Ts provided there is a legal justification to change the elements of a Council Implementing Decision, namely that a Member State submits an amended plan and a legal basis justifies the changes;

Added:233. Recalls the Court’s observation in Special Report 21/2022 and its Annual Report for 2021 that milestones and targets often lack clarity and are not well defined and that the Court makes the same observation in its annual report 2022; calls on the Commission to draw on lessons learned when designing future performance based instruments;

Changed:157242. NotesUnderlines that the control framework is tailored to the unique nature of the RRF and built upon two types of controls, namely (i) controls by the Commission to provide reasonable assurance over the legality and regularity of commitments and payments, based on the satisfactory achievement of M&Ts as set in the Council Implementing Decisions approving the RRPs, and (ii) controls by the Member States to ensure adequate protection of the financial interests of the Union as provided in Article 22 of the RRF Regulation;

Changed:158243. WelcomesNotes that, based on the Court’s recommendations and the experience gained, the Commission presented its methodologies on (i) assessing the satisfactory fulfilment of M&Ts, (ii) calculating the suspended amounts in case of non-fulfilment of a milestone or target, and (iii) dealing with potential situations where M&Ts initially assessed as satisfactorily fulfilled by the Commission were subsequently reversed by the Member State; welcomes that the Commission accepts the recommendation to carry out a revision of its ex-post audit procedures to verify the potential reversal of targets after the payment, although is concerned that the methodology does not provide legal clarity in case a milestone or target is reversed after the implementation period of the RRF;

Removed:159. Notes that the Commission verified the adequacy of the control systems of Member States as a precondition for the positive assessment of the RRPs and, in some cases, specific M&Ts on audit and control were added in the RRPs to ensure the full adequacy of the systems to protect the financial interests of the Union; notes that the satisfactory fulfilment of audit and control M&Ts was, in turn, a precondition for the first payments and welcomes that the Court did not raise any issues related to their satisfactory fulfilment assessed during 2022; notes that afterwards, the Commission performed 16 system audits in 2022 and 11 in 2023, so all Member States’ control systems will have been audited at least once by the end of 2023;

Added:244. Notes that the framework for assessing M&Ts lacks explanations, including why the verification mechanism as described in the operation arrangement should not be considered for the assessment; notes that definitions of “satisfactory fulfilment” of the relevant M&Ts are defined through terms that lack a clear definition and contain discretionary elements, such as ‘minimal deviation from a requirement’ or ‘proportional delays’, and that the methodology for the determination of partial payment does not provide an explanation for the values chosen as coefficients; asks that further clarifications are given;

Added:245. Expresses concern that the Commission is dependent on the information provided by the Member States and recommends a more active communication to proactively identify any potential reversal of M&Ts; welcomes that the Commission accepts the recommendation to carry out a revision of its ex-post audit procedures to verify the potential reversal of M&Ts after the payment, although regrets that it does not foresee any post-2026 monitoring on potential reversals; is particularly concerned that there is no legal provision in Regulation (EU) 2021/241 establishing the Recovery and Resilience Facility (the ‘RRF Regulation’) that addresses the reversal of M&Ts after the last date for payments from the RRF and that the Commission’s methodology, consequently, does not provide legal clarity in case a M&T is reversed after the implementation period of the RRF once all payments have been made, especially given that some important M&Ts included in RRPs are probably to be fulfilled in the last part of the RRF lifetime;

Added:246. Notes that 12 national RRPs contain Rule of law or anti-corruption reforms in their milestones and targets; notes the recent case of a potential reversal of two milestones concerning the Rule of law in one Member State; emphasises the need for the Commission to pay more attention to the potential reversal of M&Ts in the area of the Rule of law as they are particularly vulnerable to arbitrary governmental decisions;

Changed:161.252. Notes that the Commission reports that the achievement of M&Ts is broadly on track, after the first year of the RRF's functioning was more focused on the necessary reforms to build the framework for subsequent investment projects to have a higher impact; notes that the Commission reports delays compared to the indicative calendar of payments, due to the process of revising the RRPs in the context of the REPowerEU Plan and implementation challenges Member States are facing, such as administrative capacity issues, investment bottlenecks, and consequences of the RussianRussia’s war of aggression against Ukraine, including the energy crisis, unexpected price shocks, shortages of certain materials and high inflation; notes that the Commission is supporting all Member States in accelerating the implementation and revision of their plans, including through the Technical Support Instrument; is concerned that according to the Commission’s RRF 2023 implementation report, 8 Member States have not yet submitted any payment request to the Commission;

Added:253. Notes that Member States may be overwhelmed administratively with the transfers of large RRF funds and cohesion funds at the same time, thus delaying implementation and potentially threatening transparency; notes the risk of double funding between the RRF and the European Structural and Investment Funds and encourages the Commission to actively check, including the relevant databases, and to communicate with Member States about their administrative capacities to ensure double funding does not occur;

Added:254. Notes that several Member States have proposed to use RRF funds through financial instruments implemented by the EIB and other national investment banks to incentivise private investments under certain conditions; is concerned about the possible use of these instruments with the goal of extending the use of RRF funds beyond 2026; recalls that the RRF is a crisis instrument and that funding should be implemented within its lifetime;

Added:255. Notes that the Commission is supporting all Member States in accelerating the implementation and revision of their plans, including through the Technical Support Instrument; stresses the importance of the Commission’s proactive role in supporting the Member States to best avoid the delays and under-implementation problem, as well as to ensure that Member States protect the financial interests of the Union and that EU taxpayers’ money is adequately spent; points out that, in particular, the countering of serious irregularities and double funding should receive appropriate resources and attention; notes concerns, as brought to the attention of the discharge authority, about the administrative capacity of the Member States to absorb the funds and the implementation of high quality projects, especially towards the end of the RRF period;

Added:256. Is concerned that according to the Commission’s RRF scoreboard, 3 Member States have not submitted any payment request to the Commission by end December 2023; calls for speedy implementation of RRPs, including an evaluation by the Commission regarding barriers and results; is concerned that under-implementation, unless swiftly mitigated, might result in a payment crisis;

Added:265. Recalls that the COVID-19 pandemic revealed structural weaknesses in health systems across the Union, such as lack of resilience and crisis response capacity; highlights that health is a policy area within one of the six pillars of the RRF, which make possible reforms and investments to strengthen their capacity, quality and resilience; notes that 531 M&Ts and 223 measures, as well as 48 % of the estimated contribution to this pillar is related to healthcare but regrets that some national RRPs have a health-related milestones or targets that do not contribute to strengthening the national health system; notes that an estimated 45 million people can use or be served by new or modernised health care facilities thanks to the RRF; urges the Commission to strengthen M&Ts related to preparedness and resilience in the health sector where possible when revising national RRPs and to report to the discharge authority;

Added:267. Stresses that the mere completion of projects financed by the RRF funds does not guarantee a positive economic and social impact as well as quality and sustainability; notes the Court’s observations highlighting some of the drawbacks of using a performance-based framework, in particular trying to quantify results as M&Ts rather measure outputs; urges the Commission to apply the lessons learned and the Court’s observations, and to ensure that the design of future performance-based instruments also measure results and not only outputs;

Added:269. Recalls that on 15 December 2022, the Council adopted an Implementing Decision on the approval of the assessment of the RRP for Hungary based on the Commission’s positive evaluation; recalls that 27 ‘super milestones’ were added to the national RRP with remedial and audit and control measures; notes that on 7 December 2023, the Council adopted the Implementing Decision approving Hungary’s amended RRP, including a REPowerEU chapter, which allows Hungary to receive EUR 0,9 billion in pre-financing of the REPowerEU funds; regrets that the mentioned pre-financing is not subject to the ongoing procedure under the rule of law conditionality mechanism;

Added:270. Notes that the RRF Scoreboard provides real-time information on the disbursements and progress made by Member States, as well as additional data, indicators and thematic analysis and welcomes the launch of the Union-wide interactive map showing RRF projects by geographical location and providing information on the state of play; is concerned, however, that the Court concluded that presented performance lacks transparency as regards inclusion of estimates and that aggregated information is not comparable, as well as that the information on the progress under the six pillars is misleading, i.e. when a measure is assigned to a primary and a secondary policy area belonging to the same pillar, the contribution of each measure is counted twice; highlights that transparency about limitations is of the utmost importance as it affects the (perceived) reliability of all presented information; calls on the Commission to immediately remedy the detected shortcomings and to proactively inform on the limitations of the data presented on the RRF Scoreboard;

Added:271. Notes that many purely national projects are listed as cross-border projects as soon as they have energy saving or energy reducing elements; criticises the overestimation of the published number of cross-border projects as misleading;

Added:272. Notes that the Court found that, concerning reporting on the common indicators, quality and underlying methodologies are not checked by national audit authorities in any visited Member State; is astonished that in a Member State, for expenditure under MFF heading 3, the indicated planting of trees did not exist when the Court made an on-the-spot check; notes that the Commission does not require supporting evidence or explanations on the reported data, except in cases where estimates are reported; notes that the Court concludes that this poses a risk to data reliability and comparability across member states; concludes that data reliability in the absence of audits might affect the performance information reported on common indicators to a larger extent than information based on milestones and targets; considers this, given the issues identified in the milestones and targets by the Court, a worrying situation and calls on the Commission to improve its assurance on the reporting on common indicators; notes the differing practices among audit authorities regarding the timing of the checks on the fulfilment of targets and reforms; believes that such checks should be better harmonised and should include a compulsory check on the reliability and accuracy of the data on milestones and targets before those milestones and targets are included in a payment request; points out the risks of an approach that uses mostly ex-post checks and calls on Member States to avoid such practices;

Changed:168.274. Notes that, following an explicit demand of the Parliament, the amended RRF Regulation requires Member States to publish information on the 100 final recipients receiving the highest amount of funding under the RRF; regrets the late publication of the lists by Member States and notes that all Member States but one have published the required list on the RRF Scoreboard andby December 2023; observes a large variety of the size of the payments both across the Member States and within each country, which is explained by the heterogeneous nature of RRPs; expresses concern over the interpretation of the Commission of the concept of “final recipient” under the RRF, as often they are listed only at the ministry level, and that the descriptions are extremely vague, with many examples available in almost all lists provided by Member States; reiterates its demand that the list of 100 largest final recipients provides the factual natural person or entity that is the last in a chain of money transfers; is concerned that otherwise it will be problematic to measure the impact and guarantee visibility of the RRF funds to the citizens;

Changed:169.275. WelcomesRecalls that transparency and accountability in the implementation of the Union budget are crucial and stresses, in this context, the need for further efforts by both the Commission and the Member States; welcomes the other initiatives undertaken by the Commission to increase transparency on the implementation of the RRF; notes that key documents governing the implementation, such as RRPs, Operational Arrangements, methodologies for assessment, and documents supporting or containing key decisions concerning Member States’ implementation are publicly available and easily accessible;

Added:276. Is concerned about reports from the Court regarding difficulties in accessing RRF data to perform its duties; urges the Commission to ensure full access to the Court to the relevant databases of the Member States and the Union; urges the Commission to guarantee that data in the FENIX database are updated in a timely manner for the purposes of audit and control; underlines that data should be accurate and transmitted in a standardised format;

Added:277. Recommends when implementing performance-based instruments in the future, that milestones and targets are clearly defined and linked in a timely manner to avoid accountability gaps and that the measuring of outputs and results is possible; recommends for performance based instruments to create a clear and precise verification mechanism from the beginning; notes that this is crucial in the context of transparency and accountability to the Union taxpayer;

Added:278. Is concerned about transparency and accountability towards the public; urges that the Commission communicates with Member States about appropriate labelling of projects including reference that a project received Recovery and Resilience Funds; regrets following the Court’s annual report 2022 that even at the Commission level there is no clear oversight what specific projects RRF funds are supporting; underlines that the European taxpayer has the right to see what projects EU funds are supporting, where the projects are occurring, and what their added value is; calls on the Commission to increase visibility to insist on clear labelling of projects whether in the form of plaques for physical buildings or renovations, notifications on websites, announcements at conferences or trainings, or labelled on printed documents;

Removed:(i) map different options to address the reversal of milestones after the end of the implementation period of the RRF and the relevant legal basis;

Added:(i) improve the ex-post monitoring of the continued satisfactory fulfilment of M&Ts, including in the area of the Rule of Law, and strictly apply the provisions of the RRF and the adopted guidelines to address concrete instances of reversal resorting to clear financial measures, including suspension of payments and recovery of funds when reversal of M&Ts occurs in accordance with the RRF Regulation and methodologies;

Removed:(ii) keep improving the clarity of the measures and the related M&Ts when the Member State submits a revision of the national plan;

Added:(ii) work in close cooperation with the discharge authority to map different options, and the relevant legal base, to address the reversal of milestones after the end of the implementation period of the the RRF;

Changed:(iv)(xi) keep working with the Court in order to bring the interpretation of M&Ts as close together as possible; and

Added:(xii) improve the transparency and presentation of the RRF Scoreboard by eliminating any possibility of misinterpretation of figures and to measure the contribution to resilience more accurately as part of the RRF’s ex-post evaluation;

Added:(xiii) consistently and accurately apply the provisions related to the “final recipients” of the RRF Regulation and to communicate with Member States on the correct application of the definition of “final recipients”;

Added:(xiv) grant the Court, OLAF and EPPO access to the RRF related data, including to FENIX, within the exercise of their respective competences;

Added:(xv) communicate actively with Member States on EPPO’s competence for criminal cases related to RRF funds since corruption or fraud using RRF funds constitutes a crime against the financial interests of the European Union;

Added:(xxii) ensure a comparable and proportionate level of precision in the assessment of milestones and targets and keep ensuring equal treatment to Member States when evaluating the satisfactory fulfilment of M&Ts;

Added:(xxiii) be more proactive in publishing documents and statistics regarding how they handle document access requests, as such information would help with assessing the institutions’ proactive approach to document access; calls that an application for access to a document must be handled promptly;