Europäischer Rechnungshof - European Court of Auditors
EU cohesion policy: financial corrections not always applied as they should be
- Photo Info
- Download
EU cohesion policy: financial corrections not always applied as they should be
- Financial corrections are meant to exclude irregular expenditure from EU funding, but have a complex legal framework
- Member states made financial corrections, but only one such decision was taken by the European Commission in 10 years for the 2014-2020 period
- The auditors note that the expected deterrent effect cannot be demonstrated
The European Commission does not apply financial corrections as it should to protect the EU budget from irregular expenditure in cohesion policy. This is the main conclusion of a report published today by the European Court of Auditors (ECA). Despite cohesion spending being affected year after year by a significant number of errors, it took more than a decade for the European Commission to adopt its first financial correction decision in September 2025 for the 2014-2020 period. The auditors point out weaknesses in the legal framework, and shortcomings in the way it is applied .
The EU cohesion policy budget for 2014-2020, including Recovery Assistance for Cohesion and the Territories of Europe (REACT-EU), totalled €404.8 billion. Member states have primary responsibility for recovering EU funds that have been disbursed in error. If they do not correct such expenditure themselves, the European Commission must take action, and this can result in a definitive reduction of EU funds allocated to the member state concerned. This is the case where the member state has not identified or corrected any irregularity demonstrating a serious deficiency in the effective functioning of its management and control systems. These corrections by the European Commission are referred to as “mandatory net financial corrections”.
“Any expenditure which is in breach of the applicable law must be excluded from EU financing, thereby helping to safeguard the budget of the Union”, said François-Roger Cazala, the ECA Member responsible for the audit. “It should be noted that the European Commission has not always applied financial corrections when and where necessary.”
The European Commission reported that its own checks have led to member states making over €1 billion in financial corrections (which can be reused) since the beginning of the 2014-2020 period. Further financial adjustments were made in response to the ECA’s audit findings, with EU countries implementing nearly €200 million in corrections. However, the auditors found that several proposed financial corrections were subsequently reduced, or even totally dropped, without proper justification.
The European Commission stated back in 2013 that its mandatory net financial corrections would become the standard response in the event of serious deficiencies. However, for the 2014-2020 period, it has adopted only one such decision in cohesion policy so far, in September 2025. The mechanism was intended to protect the EU budget and to have a greater deterrent effect, as the EU countries concerned lose part of their allocated funding. The auditors state that, more than 10 years later, it must be recognised that the constantly high error rates detected in cohesion policy expenditure suggest that any deterrent effect is insufficient.
The auditors consider that the legal framework governing the final correction mechanism is complex and not very straightforward. For instance, it specifies that irregularities can only result from an act or omission by an economic operator. In other words, national programme authorities are excluded from the scope of the European Commission’s mandatory net financial corrections, even though those authorities are most likely to make the most significant errors. Moreover, guidance and criteria for assessing serious deficiencies are not clear enough, and are not applied consistently. The auditors found that in 16 of the cases they examined that fulfilled the requisite conditions, by September 2025 the European Commission had launched the recovery procedure only twice, and that the mandatory net financial corrections had not been made yet.
The auditors also highlight the absence of a well-defined timeframe for the procedure. Their analysis of the Commission’s checks concerning 10 EU countries shows that, an average of 588 days were needed (partly to try to reach an agreement on the correction to be applied) before the procedure could even start. When the procedure is eventually launched, it takes more than two years. Given such a long period of time (between three and four years in total), a timely response and sound financial management are not possible, the auditors say. Unfortunately, the current 2021-2027 legal framework does not significantly improve the situation.
Background information
The EU’s cohesion policy is implemented under shared management, which means that member states and the European Commission are jointly responsible for protecting the EU budget. Member states are required to ensure that the expenditure they claim for reimbursement from the EU budget is free from material error. In order to exclude irregular expenditure from EU financing, both the member states and the European Commission are required to make financial corrections where necessary.
Special report 22/2025, “Financial corrections in cohesion policy: a complex framework and only one decision adopted by the Commission so far”, is available on the ECA website.
Contact:
ECA press office: press@eca.europa.eu