Real Costs or Real Simplification? Financial Management in Cohesion Policy

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Gal, Fabian and Kah, Stefan (2020) Real Costs or Real Simplification? Financial Management in Cohesion Policy. European Policies Research Centre, Delft.

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Abstract

The financial management of EU Cohesion Policy has long posed challenges for both EU institutions and Member States. While the EU must ensure funds are spent effectively and correctly, implementing authorities face an increasingly burdensome regulatory and audit framework. This burden is particularly high under traditional cost-based management, prompting the gradual introduction of Simplified Cost Options (SCOs) and Financing Not Linked to Costs (FNLTC) to ease administration. This IQ-Net thematic paper analyses programme managers’ experiences and plans to improve financial management and apply simplification measures in practice. SCOs are widely viewed as a major step towards real simplification, with strong uptake -especially under ESF programmes - though their share of total expenditure varies. Flat rates are most common, while lump sums remain limited but effective where used. SCOs are especially beneficial for staff and indirect costs, though challenges persist, including limited experience and audit-related concerns. Interest in FNLTC was limited in 2014-20, aside from a successful Austrian pilot. For 2021-27, financial management will remain broadly stable, with expanded use of SCOs and cautious exploration of FNLTC, alongside efforts to streamline audits and improve IT systems.

ORCID iDs

Gal, Fabian and Kah, Stefan ORCID logoORCID: https://orcid.org/0000-0002-8777-621X;
CORE (COnnecting REpositories)