The Circularity Risk Matrix in EU Projects – An Approach by the Financial Auditor in Assessing a Cleaner Environment

The transition to a circular economy is one of the main strategic goals of the European Union. To support this, large amounts of money have been allocated to projects with environmental impact. In theory, these projects should show not only that the money was spent legally, but also that real sustainability results were achieved. In practice, things are different. Circular economy principles are often present only on paper, and financial auditors do not have clear tools to check whether they are actually followed. The academic literature mostly treats the circular economy as a public policy direction. The concrete risks that come with implementing it in publicly funded projects receive much less attention. Even less explored are the practical tools that would allow auditors to assess these risks in a systematic way.

This paper starts from exactly this gap. This paper treats circularity as a distinct source of auditable risk and builds a circularity risk matrix adapted to financial audit practice. The research is qualitative and exploratory, I analyzed project documents, audit reports, and applied professional judgment to a set of anonymized case studies. The result is a typology of circularity risks and a matrix that helps assess their likelihood and impact. The main contribution of this paper is to make circularity an auditable concept and to show that the financial auditor can play a real role in promoting a cleaner economic environment.