Cohesion policy will be one of the areas in the EU budget where discussions for major reforms can be expected due to profound changes in the EU’s strategic agenda. Some form of support for economic convergence is needed, yet two major issues have surrounded cohesion funds for a long time: whether it is able to deliver in terms of European added value, and – relatedly – whether its system for monitoring spending is reliable. This affects the legitimacy of cohesion funds. Deficiencies include the difficulties in establishing results (effectiveness) of projects and programs beyond input and output indicators, sometimes problematic error margins, a transparency deficit due to complexities in objectives as well as due to the multitude of tasks of the Commission, and persistent weaknesses in national institutions. In brief: a professional, depoliticised and transparent auditing culture has not emerged.
Cohesion is also typified by considerable resistance to change. A wide literature is available on the difficulties in managing and auditing the funds. Many reforms have been tried but the deficiencies have remained. These issues, and defence of the status quo, are not restricted to cohesion policy but are inherent to EU’s multilevel governance system. However, forced by crises, other policy areas have been successfully reformed. As one interviewee remarked about cohesion funds: “Actually, a crisis would be useful”.
The first conclusion is that many changes have been tried within the current distribution of competencies but, despite positive results in terms of single-loop learning, effective solutions to the auditing problems have not been found. Years of evaluations and implementation of reforms indicate that considerable efforts have been put in improving the current system. Such learning activities within the system as it is, have reached their limits. Solutions may have to be found by addressing the fundamental values of cohesion and by reconsidering the current organisation of its multilevel governance (double-loop learning).
The second conclusions is that cohesion policy does not live up to the good governance values of transparency, independence and subsidiarity. Other policy areas where comparable shortcomings existed were able to switch to subsidiarity-based networks of national and EU agencies. Cohesion policy is not in a recognised crisis (yet) so that it is likely that its deficiencies will remain.
The third conclusion is that, in the absence of a veritable crisis in the EU’s finances, change leadership is required to break the status quo.[32]
Fourthly, the institutions that can be targeted for pragmatic steps towards new ways of working (subsidiarity-based, transparent, and independent) are the Joint Auditing Directorate in the EU Commission, ECA and the SAIs. Points for considerations are:
Auditing bodies are supposed to be independent so that the location of the Joint Auditing Directorate (DAC) within the Commission is remarkable. Expecting national auditors to be at arms lengths, one would think the EU Commission would set an example with DAC. Moreover, if the principles of first- and second-line of control are adhered to, the question emerges what the added value is of the Joint Auditing Directorate if national auditing bodies function properly and if team-based auditing exists at the national level. Hence, a discussion on the position of the Joint Auditing Directorate is in order. DAC could be re-defined as network-based EU agency independent from the Commission.
The functioning of ECA could be redefined from the current stand-alone position in doing checks and writing reports, into an Authority[33] that works closely within a network of national audit bodies agency. Mirroring other tried and tested European monitoring networks, ECA could be transformed into a ‘European Budget Assurance and Performance Authority’ operating as hub of a European network of independent national budget authorities. This would imply creating a European auditing culture by involving staff from national agencies in producing ECA reports and by initiating mutual quality inspections. ECA will remain responsible for the auditing of the financial statements from the Commission and for writing Special Reports but that does not mean that ECA should operate without using the network of national auditors. It would imply more attestation type audit work and it would demand a serious upgrade of the quality of national audit bodies. This is precisely why incorporating national audit bodies in the work of ECA is advisable.
Moreover, it could be explored how national Supreme Auditing Institutions (SAIs) could be used in auditing and evaluating cohesion programs.
Finally, little use has been made of comparing the EU’s auditing systems to the governance of enforcement in other EU policy areas. Little effort is put in learning from other areas.
The problem with any of the recommended changes is that resistance can be expected to becoming part of a tightly organised European network. There is little interest in creating or even contemplating a truly independent and transparent auditing system in cohesion.
It is hard to see how cohesion can cope with the pressures from a new strategic European agenda and from the need to ensure durable public support for cohesion funds without structural reform of its governance. Moreover, if EU added value and good governance are the objectives, the current systems need to be scrutinised at a more fundamental level. Yet, any reform attempt without a veritable crisis in EU funding will face an uphill battle given the strength of the status quo. Unless somebody will assume change leadership, we should expect the continuation of single-loop learning even though double-loop learning is in order.