THE European Union's auditor has said that several billion euros is still being wasted every year by the 27 member states and the executive commission.
The finding is particularly damning at a time when spending cuts are a key political issue during the economic crisis.
The report of the European Court of Auditors (ECA) said that errors in payments had risen to 3.9pc of the EU's €129.4bn 2011 budget and that there were "too many cases of EU money not hitting the target or being used sub-optimally."
ECA President Vitor Caldeira said that with richer members being increasingly reluctant to support increases in EU spending, it was essential for the region to disburse its current budget more efficiently.
Each member of the EU contributes about 1pc of its gross domestic product to the EU budget, which is then invested across Europe on various projects designed to bolster the region's economy -- on subsidies for essential industries such as agriculture or fishing, or on other joint projects such as border control and diplomacy. About 80pc of the budget is redistributed back to the member states for spending and 20pc is under control of the European Commission.
The EU will have a special summit on November 22-23 on setting the 2014-2020 budgets, and wealthy nations like Britain, Germany and the Netherlands are insisting the EU needs to reduce its spending as national governments are being forced to push through austerity measures at home.
The amount of money given to the EU is the subject of fierce debate in several member countries, such as the UK, which has a long-held hostility to the European project -- but which receives a rebate that many other EU members resent. Any deficiencies in EU spending are highlighted as an example of the organisation's inefficiency.
The ECA provided more ammunition for critics yesterday. "The court has found clear evidence where European union spending could be better managed," Mr Caldeira said as he spread the message for "improving accountability."
Mr Caldeira went on to criticise a lack of efficient controls on spending. But the commission pointed a finger at the member states for sloppy spending accounts.
"A little more effort by member states to control projects properly and retrieve misused funds could go a long way, particularly in this time of economic difficulty," Audit Commissioner Algirdas Semeta said.
European parliamentarian Marta Andreasen of Britain's eurosceptic UKIP party said it was the 18th year in a row that the ECA refused to give the EU "a clean bill of health".
"Worse still, the 'error rate', shorthand for unaccounted money, is on the rise," she said in a statement.