The Commission is proposing what it calls an ‘ambitious revision’ of the regulation as part of its mid-term financial review. The ECA says its review of the proposals has identified three issues warranting further consideration.

Firstly, the Commission is proposing to put together many existing reports into an ‘integrated financial reporting package’. The auditors warn that this would run to thousands of pages and would include significant duplication. They consider that the implications of the proposal have not been fully assessed, and says the Commission should consider an alternative proposal to simplify reporting and provide additional value to stakeholders.

Secondly, the auditors argue the Commission proposes detailed changes to budgetary management arrangements without questioning whether the existing mechanisms are still appropriate. The ECA argues there is scope for significant simplification and additional flexibility in the current arrangements.

Thirdly, the auditors point out that the proposal does not cover governance at the Commission. To be in line with international practice, the Commission should address the issues of integrated reporting, estimation of the level of error for irregular spending and the composition and remit of its audit committee.

Lazaros Lazarou, the ECA member responsible for the opinion, said: ‘These changes provide an important opportunity to improve the financial management of the EU. The proposal is a step in the right direction. But, as it stands, it does not go far enough.’

The ECA contributes to improving EU financial governance by publishing reports on EU finances and opinions on proposals for new or revised legislation with a financial impact. Its opinions are used by the legislative authorities -- the European Parliament and the Council of the EU -- in their work.

The ECA´s Opinion No 1/2017 concerning the proposal for a revision of the ‘Financial Regulation’ is here.