The EU's budget for the 2012 financial year has been signed off by the independent European Court of Auditors (ECA), but there continue to be problems with money which should not have been paid out because it was not used in accordance with the legislation concerned.

Looking at the EU budget as a whole, the ECA's estimate of the error rate for spending is 4.8 % for the 2012 financial year, compared to 3.9% in 2011. All operational spending areas were affected by material errors, which included payments for beneficiaries or projects that were ineligible or for purchases of services, goods or investments without proper application of public purchasing rules.

In 2012 the EU spent €138.6bn (£117bn), of which approximately 80% is jointly managed by the Commission and the member states. The ECA says authorities in the member states should have done more to detect and correct mistakes before claiming reimbursement from the EU budget.

The auditors say the rules for the current 2007-2013 spending period provide limited incentives for member states to use financial management systems more effectively, with no penalties for submitting erroneous claims which are subsequently amended.

The ECA wants to see a rethink of EU spending rules and recommends simplifying the legislative framework. It is concerned that the 2014-2020 programming period looks likely to remain expenditure oriented - designed for getting the EU budget allocated and spent - rather than focusing on the value it is intended to bring.

ECA President Vitor Caldeira said: 'Europe's citizens have a right to know what their money is being spent on and whether it is being used properly. They also have a right to know whether it is delivering value, particularly at a time when there is such pressure on public finances.'