Traceability in European Funds: Avoid Repayments

The management of NextGenerationEU funds has injected liquidity but has also introduced significant administrative complexity. Success is no longer just about awarding contracts; it is about justifying them.

In this article, we technically analyze how to bulletproof your files through document traceability and how GovTech technology is replacing spreadsheets to survive European audits.

Why EU fund audits fail: The real problem

According to historical data from the European Court of Auditors, a significant part of financial corrections is not due to fraud, but to administrative errors and a lack of clear audit trails.

In the current context of the Recovery and Resilience Facility (RRF), regulated by Regulation (EU) 2021/241, the burden of proof rests entirely on the executing entity. If you cannot documentarily demonstrate, years later, why a contract was chosen or how the environmental impact was validated, the expenditure is considered ineligible.

The 3 critical failure points in an audit:

1. Breach of the DNSH principle: Failure to documentarily prove that the investment respects the principle of "Do No Significant Harm" to the environment (green and climate tagging).
2. Lack of linkage with milestones and objectives: Spending funds on items that do not count towards the milestone (CID) committed to Brussels or that deviate from the initial justification report.
3. Conflict of Interest Management: Failure to perform the ex-ante conflict of interest analysis (DACI) or the mandatory data cross-check in CoFFEE (Minerva tool) prior to the award, as required by Order HFP/1030/2021.

Document Traceability: Beyond the PDF

Traceability in the public sector is not just saving PDFs in a shared network folder. Real traceability involves creating an unalterable audit trail that links three elements:

1. The Data: (e.g., Award amount).
2. The Source: (e.g., Administrative Terms and Conditions - PCAP).
3. The Decision: (e.g., Award proposal report).

The problem with traditional methods is disconnection. Manual fiscalization requires hours to verify, for example, if the contract's CPV code fits the green taxonomy required by the call, increasing the risk of human error in complex data cross-checks.

How specialized AI prevents repayments

To mitigate the risk of repayments, the most advanced administrations are transitioning from manual management to specialized artificial intelligence tools (GovTech).

We are not talking about generic tools, but platforms that understand the Public Sector Contracts Law (LCSP) and the regulatory bases of the funds. This is where solutions like Tendios mark the technical difference:

1. Automatic requirements validation (NGEU Checklist)

Instead of manually checking if a tender document complies with EU fund publicity requirements, autonomous agents (specialized software) scan the document and verify:

• Presence of logos and references to the Recovery Plan.
• Inclusion of mandatory anti-fraud clauses.
• Consistency between the contract object and climate/digital tags.

2. RAG Technology: The "digital auditor" without hallucinations

Unlike a generic chat that can invent regulations, RAG (Retrieval-Augmented Generation) technology used in secure environments functions as a digital auditor:

• It searches for current regulations (ministerial orders, OIRESCON instructions).
• Analyzes your file.
• Generates a validation report citing the exact article that is complied with or breached.

Comparison: Manual Management vs. Automated Management

Checklist: Minimum documentation to survive an audit

To ensure eligibility, your file must contain, traced and validated, at least these elements:

• Justification report with an explicit link to the PRTR component.
• Favorable DNSH self-assessment prior to tendering.
• Tender documents (PCAP/PPT) with solvency and award criteria aligned with the grant order.
• DACIs signed by all participants (board, contracting authority).
• Certificates of being up to date with tax and Social Security obligations at the exact moment of payment.

Frequently Asked Questions (FAQ) about European Funds

What happens if I do not comply with the DNSH principle? Non-compliance with the "Do No Significant Harm" principle automatically makes the expenditure ineligible. This exposes the entity to financial corrections which, depending on the severity, can lead to the total repayment of the aid plus default interest, regardless of whether the work or service was materially executed correctly.

How long must I keep the documentation? Be very careful with this: the period does not start when you pay the invoice. Regulation (EU) 2021/241 requires keeping the audit trail available for a minimum period of 5 years (3 years if the funding does not exceed €60,000) starting from the payment of the final balance from the European Commission to Spain. Given that the Recovery Plan extends over several years, in practice this obliges you to safeguard and guarantee digital accessibility of the files well beyond the contract execution date.

Can AI help me draft the justification of a report? Yes, but with nuances. A standard generative AI can make mistakes. A specialized AI with RAG architecture (like the one integrated into Tendios) will draft the justification based strictly on the data in your file and the applicable regulations, offering a solid draft for the technician to validate.

Conclusion: Technology as a legal shield

Managing European funds should not keep public officials awake at night. Regulatory complexity is high, but tools to manage it exist.

Adopting traceability and automatic validation systems is not a technological luxury; it is a measure of administrative prudence. It allows technicians to look up from the papers to focus on the value of the projects, knowing that the "legal plumbing" is secured against future inspections.

Do you want to check the risk level of your current files?