What changed between the draft committee report and the plenary report

Changed:F. whereas the ECA has identified numerous weaknesses in the design of the Recovery and Resilience Facility’s control system, including over-reliance on national bodies, incomplete audit trails, systemic failures and risks of inconsistent application across Member States; notes that these weaknesses are further aggravated by the fragmentation and incompatibility of national data systems, which hinder interoperability, timely risk detection and the effective protection of personal data in audit and control operations;

Added:G. whereas the control of performance-based instruments relies on the credibility of national monitoring mechanisms; whereas deficiencies in the rule of law amplify the risk to EU financial interests, as their protection is contingent on an independent judiciary and autonomous anti-fraud bodies;

Changed:1. ReaffirmsStresses thatthat, as provided in the Financial Regulation, performance-based instruments must respect the principles of legality, regularity, economy, efficiency and effectivenesseffectiveness, and that simplification should never come at the expense of sound financial management;management and transparency; calls for risk-based and proportionate controls, and insists that indicators for performance-based instruments should capture tangible results and the EU’s added value rather than just predefined outputs; stresses that, when properly designed, such instruments can enhance the focus on results, reforms and competitiveness;

Changed:2. Notes that the Recovery and Resilience Facility (RRF) with its focus on disbursement based on the satisfactory fulfilment of milestones and targets is the first major performance-based instrument at EU level that is exclusively based on financing not linked to costs (FNLC); further notes that the RRF model has been replicated in other financial instruments such as the Ukraine Facility and the Western Balkans Facility; takesis noteconcerned ofby the proposals of theCommission’s Commissionproposals to use a similar model in the next multiannual financial framework (MFF) for most EU financing programmes;programmes including for Heading 1; notes that the RRF has, to a certain extent, incentivised some national investments and reforms;

Changed:3. ReiteratesStresses itsthe concernimportance thatof thedrawing centralised,lessons performance-basedfrom deliverythe modelcritical ofweaknesses revealed by the Recoverycentralised andperformance-based Resiliencedelivery Facilitymodel hasof revealedthe criticalRRF, weaknesses,as acknowledged by the ECA and the Commission, including reduced accountability and limited EU-level oversight of compliance with rules and regulations; underlines that transparency regarding final recipients remainsmust insufficient,be andensured thatthrough a uniform, interoperable EU-wide reporting system accessible to the addedCommission, valuethe forECA, the EUEPPO hasand beenParliament; weakenedhighlights bythat the limitedEU’s added value can be reinforced by increasing the number of cross-border projects and theby inadequateensuring adequate decision-making powerpowers offor subnational entities, in particular local and regional authorities, in the design and implementation of the facility;

Changed:4. Considers that, although the RRF is intended to be a performance-based instrument, its financing isimplementation often notprioritises linkedoutputs toover performanceresults; sinceexpresses itits focusesregret morethat onthe vaguely defined milestones and targets, primarily emphasising inputs and outputs rather than onresults, results;risk undermining the achievement of the RRF’s objectives; believes that future performance-based instruments should establish more specific key performance indicators, ensuring that investments align with the objectives of the instrumentinstrument, and deliver a positive impact and clear added value for the EU; calls on the Commission to ensure that future performance-based instruments are harmonised across Member States, transparent in their design and stable over time to foster consistency, accountability and long-term effectiveness;

Changed:5. Stresses that reliance on ex ante cost estimates without verification of actual expenditure createsrisks creating a structural accountability gap, limitslimiting the possibility of assessing value for money,money and thus risks undermining the principles of economy and efficiencyefficiency; inunderlines the implementationnecessity of EUimplementing funds;risk- and materiality-based verification mechanisms with clearly defined thresholds for mandatory checks; calls on the Commission to systematically integrate data mining, cross-checking tools, and analytics into future performance-based instruments to detect irregularities and risks of corruption and conflicts of interest;

Changed:6. Is extremely concerned by the Commission’s proposals to make generalised use of FNLC in the next MFF, withoutand underlines the importance of establishing adequate safeguards to ensure sound financial management in the implementation of Union funding; stresseshighlights itsthe concernneed aboutto carefully assess such a majorsignificant shift towards a newthe modeluse of budget implementation without adequatelyFNLC addressingconsidering the shortcomings identified in previous or existing performance-based instrumentsinstruments, and withoutstresses the necessity of conducting a comprehensive evaluation of the Recovery and Resilience Facility;RRF;

Removed:7. Asserts that the generalised use of FNLC increases the risk of irregularities, double funding and fraud, thereby reducing transparency and traceability of EU funds; stresses that this could ultimately hinder Parliament’s scrutiny over the implementation of the EU budget and undermine its role as discharge authority;

Added:7. Expresses concern regarding the EU’s growing debt burden and borrowing costs; notes that the ECA’s 2024 Annual Report estimates that outstanding EU borrowing could exceed EUR 900 billion by 2027, nearly ten times the 2020 level prior to the introduction of the NextGenerationEU (NGEU) recovery package; warns that rising borrowing costs pose a risk to future budgets and constrain fiscal space for new priorities;

Removed:8. Notes with concern that, at the end of 2024, the EPPO was handling 311 active cases related to NextGenerationEU, all but four of which concerned the RRF, representing approximately 17 % of all active expenditure fraud investigations; notes further that the estimated damage to the EU’s financial interests amounts to EUR 2.8 billion, representing 30 % (2023: 25 %) of the total estimated damage resulting from all EU expenditure fraud;

Added:8. Asserts that the generalised use of FNLC, while potentially reducing the administrative burden, increases the risk of irregularities, double funding and fraud, thereby reducing the transparency and traceability of EU funds; stresses that a lack of link to costs may lead to the financing of non-viable projects designed to meet milestones, rather than value for money; highlights Parliament’s scrutiny role in overseeing the implementation of the EU budget, particularly its authority to grant discharge; calls for robust governance in the next MFF designed to ensure Parliament can fully exercise its role as the discharge authority;

Removed:9. Expresses concern that performance-based instruments using FNLC focus more on system audits rather than controls on actual expenditure incurred; warns that such system audits may not reveal underlying issues which can spill over and seriously undermine the sound financial management of the Union budget and the protection of the financial interest of the Union; believes that even under the current financial architecture and model of implementation for EU funding, control systems of several Member States have shown systemic weaknesses, resulting in a failure to detect and prevent fraud or other irregularities, such as for the OPEKEPE case in Greece or the cases involving rural development funds in Slovakia; calls therefore on the Commission to take decisive corrective measures, strengthen audit and accreditation procedures, and ensure that similar systemic failures cannot recur, while respecting the principle of proportionality regarding reporting and documentation duties;

Added:9. Takes note of the aspects related to the rule of law in the Commission proposal for the MFF for 2028-2034, and calls for a unified, coherent and comprehensive framework across all EU funding programmes under the umbrella of the Rule of Law Conditionality Regulation; calls, furthermore, for any application of FNLC to be fully compatible with the regulation;

Removed:10. Notes with concern the absence in the legislation of performance-based instruments, such as the RRF, and in the Commission proposals for the MFF 2028-2034 of clear standards and thresholds for when national management and control systems are considered insufficient or unreliable, thereby leaving corrective measures or suspensions to discretionary judgement;

Added:10. Notes with concern that, at the end of 2024, the EPPO was handling 311 active cases related to the NGEU, all but four of which concerned the RRF, representing approximately 17 % of all active expenditure fraud investigations and an increase of around 51 % in NGEU-related cases compared to 2023; notes, furthermore, that the estimated damage to the EU’s financial interests amounts to EUR 2.8 billion, representing 30 % (compared with 25 % in 2023) of the total estimated damage resulting from all EU expenditure fraud; highlights that the reporting of cases by EU institutions remains low, thereby raising further concerns about the Commission’s ability to effectively oversee the implementation of the RRF; recalls that out of the 27 EU Member States, 24 currently participate in the EPPO;

Removed:11. Underlines that the generalised use of FNLC requires the European Court of Auditors and national audit authorities to significantly adapt their activities and move towards a different auditing approach; warns that such a shift, without ensuring the readiness of audit authorities, will pose significant challenges and could create a structural gap in the audit trail with serious consequences for both the sound financial management of the Union budget and the discharge procedure;

Added:11. Expresses its concern that performance-based instruments using FNLC focus more on system audits than on controls on actual expenditure incurred; warns that such system audits may not reveal underlying issues that can spill over and seriously undermine the sound financial management of the Union budget and the safeguarding of the financial interests of the Union; believes that even under the current financial architecture and model of implementation for EU funding, control systems of several Member States have shown systemic weaknesses, resulting in a failure to detect and prevent fraud, or other irregularities, such as in the OPEKEPE case in Greece or the cases involving rural development funds in Slovakia, as well as other recent cases in several Member States, demonstrating the need for stronger EU oversight; calls, therefore, on the Commission to take decisive corrective measures, strengthen audit and accreditation procedures, and ensure that similar systemic failures cannot recur, while respecting the principle of proportionality regarding reporting and documentation duties;

Added:12. Notes with concern the absence in the legislation of performance-based instruments, such as the RRF, and in the Commission proposals for the MFF 2028-2034 of clear standards and thresholds for cases when national management and control systems are considered insufficient or unreliable, thereby leaving corrective measures or suspensions to discretionary judgement;

Added:13. Underlines that the generalised use of FNLC requires the ECA and national audit authorities to significantly adapt their activities and move towards a different auditing approach; warns that such a shift, without ensuring the readiness of audit authorities, will pose significant challenges and could create a structural gap in the audit trail with serious consequences for both the sound financial management of the Union budget and the discharge procedure;

Changed:13.15. Emphasises that heavy reliance on national authorities and external auditors, without strong safeguards and detailed Commission guidance, technical assistance and dedicated training on performance audit methodology, risks variability in the quality and independence of controls;controls, thereby exposing the EU to reputational risk; underlines that supporting national audit authorities will contribute to improved quality and greater consistency;

Removed:14. Insists that audit bodies in Member States comply with internationally accepted audit standards; warns that failure to do so undermines the reliability of their work and poses risks to the Single Audit approach; notes the ECA’s repeated findings of certain national audit authorities’ shortcomings in terms of scope, quality, documentation and reporting; stresses the need for a clear framework of responsibilities to guarantee quality and consistency;

Added:16. Highlights that fund absorption or disbursements are not by definition an indicator of success; regrets that in the latest amendments of the national recovery and resilience plans, the focus on absorption has led to a reduction in the initially envisaged ambition, specifically in relation to reforms;

Removed:15. Emphasises that fragmented IT and data systems across Member States increase the risk of errors, irregularities, double funding, delays and inconsistent reporting; recalls that, in order to ensure full traceability of EU funds, Parliament has repeatedly called for the establishment of a single, integrated and interoperable information and monitoring system, including a single data mining and risk-scoring tool, building on – but not limited to – existing tools and databases in the context of the recast of the Financial Regulation; regrets, however, the refusal of Member States to make the use of such a system compulsory from the beginning of the next MFF; welcomes the Commission’s ongoing effort to develop such an interoperable system, building on the ARACHNE tool and urges all Member States to make full use of this system; stresses that the effectiveness of any new funding model depends on the reliability and consistency of the underlying data and monitoring tools; underlines that such a system must provide accurate and timely information, minimise false positives, and function in a stable and dependable manner;

Added:17. Recalls that audit bodies in Member States must comply with internationally accepted audit standards; warns that failure to do so undermines the reliability of their work and poses risks to the single audit approach; notes the ECA’s repeated findings of certain national audit authorities’ shortcomings in terms of scope, quality, documentation and reporting; stresses the need for a clear framework of responsibilities to guarantee quality and consistency;

Removed:16. Stresses that shared management in the next MFF must involve regional and local authorities and stakeholders including in the case of performance-based instruments, both in the decision making and planning phase and in the implementation phase, to ensure the added value for the EU of cross-border projects and to focus on measurable results rather than outputs;

Added:18. Emphasises that fragmented IT and data systems across Member States increase the risk of errors, irregularities, double funding, delays and inconsistent reporting; recalls that, in order to ensure full traceability of EU funds, Parliament has repeatedly called for the establishment of a single, integrated and interoperable information and monitoring system, including a single data mining and risk-scoring tool, building on – but not limited to – existing tools and databases in the context of the recast of the Financial Regulation; regrets, however, the refusal of Member States to make the use of such a system compulsory from the beginning of the next MFF; welcomes the Commission’s ongoing effort to develop such an interoperable system, building on the ARACHNE tool and urges all Member States to make full use of this system; stresses that the effectiveness of any new funding model depends on the reliability and consistency of the underlying data and monitoring tools; underscores the importance of designing an interoperable system that adheres to the General Data Protection Regulation (GDPR); underlines that such a system must deliver accurate, timely information, minimise false positives and operate reliably;

Removed:17. Notes that combining grants and financial instruments in performance-based frameworks adds complexity and increases the risks of double funding, irregularities, fraud, over-compensation and weak accountability chains; stresses in particular that when financing is not linked to costs, the absence of cost verification further heightens the risk of overlaps between different funding streams and undermines assurance of sound financial management;

Added:19. Stresses that shared management in the next MFF must involve regional and local authorities and stakeholders including in the case of performance-based instruments, both in the design, decision-making and planning phase as well as in the implementation and delivery phase, through a multilevel governance approach, in order to ensure the added value for the EU of cross-border projects and to focus on measurable results rather than outputs;

Removed:18. Points out that performance-based monitoring does not necessarily reduce administrative burdens, but that, on the contrary, weak verification systems may create hidden costs without ensuring stronger assurance; considers that any shift to the use of performance-based delivery models requires capacity building at the EU level and in Member States as the monitoring, control and audit needs in the case of performance-based delivery models differ from those of instruments based on the reimbursement of eligible costs;

Added:20. Notes that combining grants and financial instruments in performance-based frameworks adds complexity and increases the risks of double funding, irregularities, fraud, over-compensation and weak accountability chains; stresses, in particular, that when financing is not linked to costs, the absence of cost verification further heightens the risk of overlaps between different funding streams and undermines assurance of sound financial management;

Removed:19. Warns that the growing use of performance-based instruments, without strengthening parliamentary scrutiny, risks shifting institutional balances in favour of executive discretion and away from democratic accountability; insists that any governance model for performance-based instruments must involve Parliament and the Council on equal terms; rejects any proposal to upset the institutional balance and undermine Parliament’s role as the budgetary and discharge authority;

Added:21. Points out that performance-based monitoring does not necessarily reduce administrative burdens, as weak verification systems may create hidden costs without enhancing assurance; calls on the Commission to streamline performance indicators, simplify reporting templates, eliminate redundant data requests and address the unnecessary complexity of payment requests; considers that any shift to the use of performance-based delivery models requires capacity building at the EU level and in Member States as the monitoring, control and audit needs in the case of performance-based delivery models differ from those of instruments based on the reimbursement of eligible costs;

Added:22. Warns that, in the current geopolitical context and given the increased budgetary pressure, the growing use of performance-based instruments, without addressing the weaknesses identified in the RRF, including by strengthening parliamentary scrutiny, risks shifting institutional balances in favour of executive discretion and away from democratic accountability; insists that any governance model for performance-based instruments must involve Parliament and the Council on equal terms; rejects any proposal to upset the institutional balance and undermine Parliament’s role as the budgetary and discharge authority;

Changed:20.23. Believes that the FNLC model for performance-based instruments should not be used as a generalised method of implementation or reimbursement between the Member States and beneficiaries, except for smaller beneficiaries implementing projects under certain financial thresholds;thresholds, underlinesenabling a simplified system of delivery while maintaining a robust control framework; underlines, in particularparticular, that large-scale and complex projects should remain cost-based, as their scope, duration and multi-levelmultilevel financing require detailed financial reporting and verifiable expenditure data to ensure proper monitoring and accountability; stresses the importance of establishing a mechanism for recoveries in cases where significant deviations arise between ex ante cost estimates and ex post checks, particularly when projects are delivered below the initially estimated cost; stresses that such adjustments must reflect actual expenditures to ensure financial integrity, value for money and accountability; calls for the continued and expanded use of lump sums and simplified cost options, in particular for smaller or medium-scale investments, as effective and proportionate tools to reduce administrative burdens, increase accessibility for smaller beneficiaries, and maintain accountability and traceability in the use of Union funds;

Removed:21. Stresses that Union financing should be granted only for measures directly linked to concrete, verifiable projects that demonstrate tangible progress, measurable results, contribute to Union policy objectives, and can be effectively monitored and audited;

Added:24. Insists that a simplified budget must also result in a transparent budget; urges the Commission to provide public access to procedural information, including the cost estimation methodology, and to provide Parliament with access to the estimated costs of national and regional partnership plans (NRPPs);

Added:25. Calls for a unified accountability system that enables the traceability of EU budget contributions to specific projects and their real final beneficiaries, including contractors and sub-contractors, as well as beneficial owners; emphasises the importance of ensuring the visibility of EU-funded projects for citizens; highlights the necessity of linking payments to the fulfilment of coherent, clearly defined milestones and targets to strengthen the alignment between reforms and investments; stresses the importance of introducing an ex post evaluation system based on the targets achieved by each instrument, as measured by their performance indicators;

Added:26. Stresses that Union financing should be granted only for measures directly linked to concrete, verifiable projects that demonstrate tangible progress, measurable results, contribute to Union policy objectives, and can be effectively monitored and audited, subject to transparent reporting, including on value for money and visibility requirements;

Changed:26.31. Calls for the establishment of a single, integrated andintegrated, interoperable information and monitoring system, including a single data mining and risk-scoring tool; demands that the use of this new interoperable system shouldmust be a precondition for accessing Union funding in the next MFF; demands that the Commission create publicly accessible dashboards, allowing citizens to assess the value generated by EU funding; calls on the Commission to deploy advanced data analytics and AI tools to enhance performance tracking, evaluation and reporting, alleviate manual workload and streamline reporting processes, and prevent double funding and other risks to protect the EU’s financial interests;

Changed:28.33. Insists that the assessments of the fulfilment of milestones and targets must be performedassessed by the CommissionCommission, andtaking notinto account the data provided by Member StatesStates, and must follow a transparent and standardised methodology, with documented scoring and substantiated justification for any deviations above the legal threshold; calls for all assessment files to be made available to Parliament and the ECA;

Changed:29.34. Demands greater transparency in the implementation of performance-based instruments, includingrequiring the timely publication of all Commission assessments, national reporting data,reports, audit summaries,summaries and recovery actions, in a formatformats that isare accessible, comparablecomparable, verifiable and verifiable,user friendly, ensuring that Parliament, the ECA and citizens can scrutinise the use of Union funds; stresses that access to information should follow a cascade approach –approach, ensuring full and unrestricted real-time access for the ECA, a guaranteed and unrestricted right for Parliament to pose questions and request information, and appropriate, transparent access for citizens followingin line with the rulings of the Court of Justice of the European Union; recalls that all transparency measures must comply with data protection requirements under the General Data Protection RegulationGDPR and other relevant Union legislation; emphasises that the publicpublicly available data must accurately reflect the actual implementation and progress of projects, rather than planned commitments or disbursements made solely for the fulfilment of milestones and targets under national plans, thereby providing a genuine picture of results achieved on the ground;

Changed:33.38. Demands that the Commission put in place robust safeguards to ensure consistent, independent and high-quality audit work across all Member States, including through detailed methodological guidance, sustainable technical assistance wherever audit authorities show persistent weaknesses, and dedicated training on performance audit standards; insists that reliance on national authorities and external auditors must be conditional on compliance with these safeguards to prevent variability in control qualityquality; calls on Member States to establish safeguards to ensure the independence of national audit authorities from the political and independence;administrative bodies responsible for fund management;

Changed:34.39. Calls for the introduction of predictive analytic tools powered by AI as well as machine learning capabilities that would enable auditors to conduct real-time risk assessmentsassessments, identify anomalies more effectively and perform value-for-money audits and targeted reviews in cases of consistent insufficiencies identified by the ECA; stresses the importance of leveraging automated data-mining tools and AI to identify anomalies morewhile effectively;avoiding additional reporting obligations on compliant beneficiaries; recalls that such AI technologies must be utilised in full compliance with EU data protection rules and supported by comprehensive training for national audit authorities;

Changed:36.41. Reiterates the need to enhance transparency by expanding the RRF Scoreboard model to all performance-based instruments, to improve the timeliness and comparability of national reporting, and ensure public access, traceability and accountability; urges the Commission to ensure full interoperability of EU and national data systems, to reduce manual inputs, improve data quality and enable real-time traceability down to the level of final beneficiaries; callscalls, in this contextcontext, on the Commission to ensure that data on the real, final recipients of performance-based instrument funding, including contractors and sub-contractors, is available in real-time to audit and discharge authorities as well as to the EPPO and the European Anti-Fraud Office;

Changed:B. whereas, whenif UnionEU financing takes the form of support not linked to the reimbursement of eligible costs but to results, outputs or other performance indicators, payments depend on the achievement of predefined milestones or targets, which must be verified before any disbursement is made;