A fiercely debated issue regarding the European Union (EU) is its budget and the allocation of funds, e.g. for agricultural subsidies. Every year one of the lesser-known European institutions, the European Court of Auditors (ECA), audits the Union’s revenue and expenditures. Furthermore ECA monitors if the annual facts and figures are reliable and if the transactions comply with the applicable European rules and regulations. This blog analyzes ECA’s legal position, formal tasks and its relationship with national Courts of Auditors.
As mentioned above it is formally required by European law that there is a European Court of Auditors. Article 287 Treaty on the Functioning of the European Union (TFEU) states that:
“1. The Court of Auditors shall examine the accounts of all revenue and expenditure of the Union. It shall also examine the accounts of all revenue and expenditure of all bodies, offices or agencies set up by the Union in so far as the relevant constituent instrument does not preclude such examination.
The Court of Auditors shall provide the European Parliament and the Council with a statement of assurance as to the reliability of the accounts and the legality and regularity of the underlying transactions which shall be published in the Official Journal of the European Union. This statement may be supplemented by specific assessments for each major area of Union activity.
- The Court of Auditors shall examine whether all revenue has been received and all expenditure incurred in a lawful and regular manner and whether the financial management has been sound. In doing so, it shall report in particular on any cases of irregularity.
- The Court of Auditors shall draw up an annual report after the close of each financial year. It shall be forwarded to the other institutions of the Union and shall be published, together with the replies of these institutions to the observations of the Court of Auditors, in the Official Journal of the European Union.
Quoting from the annual report of the ECA concerning the financial year 2015 European spending totaled €145.2 billion, or around €285 euro for every European citizen. This spending amounts to around 1% of EU gross national income and represents approximately 2% of total public spending in EU Member States. Ensuring that the budget is properly spent is primarily the responsibility of the European Commission, along with the other EU institutions and bodies. But for around 80% of spending – principally agriculture and cohesion – this responsibility is shared with the Member States.
The full annual report concerning the financial year 2015 can be found here.
As mentioned in art. 287 para 1. ECA needs to provide the European Parliament and the Council with a statement of assurance on the reliability of the accounts and on the legality and regularity of the transactions that underlie them. In the past years, this statement has always been negative as the margin of error exceeded the norm of two percent. Over the financial year 2015 the margin of error was 3.8%.
Dutch Court of Auditors
At every level of government (European, national and local) Courts of Auditors can be found. Courts of Auditors don’t necessarily communicate (or work together) with each other as their task is solely confined to auditing their ‘own’ (local) government. In the Netherlands, for example, the Court of Auditors is formally a ‘High Council of State’. This means that the organization can function independently of the Dutch government and doesn’t have a formal role to work together with the local Courts of Auditors in the Netherlands. The first and foremost task is to ensure that the democratic system works properly. The legal basis of the national Court of Auditors (Algemene Rekenkamer) is enshrined in the Dutch Constitution and the Government Accounts Act.
Relationship ECA- National Courts of Auditors
Although the aforementioned goal of the European Court of Auditors and the Dutch Court of Auditors is merely the same, namely monitoring the revenue and expenditures of the respectively government, there is no formal relationship between the two. The principal ‘customers’ of the Dutch Court of Auditors are the House of Representatives and the Government itself, whereas the ECA are the guardians of the EU’s finances. There is only cooperation in the field of the ‘shared responsibility’ of the budget where the European Union and the member states are both responsible for the spending of European money.
While there is no formal obligation to cooperate with the European Court of Auditors the Dutch Court of Auditors decided to produce a national declaration to assess the projects funded by the EU in the Netherlands in order to foster transparency and further European integration. Via this national declaration the Dutch Court of Auditors is setting a precedent which in future can be very beneficial to enhance communication about the contribution of the European Union in member states. Furthermore, the declaration promotes enhanced transparency of European spending. Hopefully other national Court of Auditors in EU member states will produce such a similar national declaration regarding the European financial resources distributed in their respective country!
 http://eca-publications.eu/audit-in-brief/2015-annual-reports/#chapter1-2 ,last accessed 20 October 2016.
 Art. 287 Treaty on the Functioning of the European Union, http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A12012E%2FTXT , last accessed 20 October 2016.
 http://www.eca.europa.eu/en/Pages/LegalFramework.aspx , last accessed 20 October 2016.[number of readers: 1006]
A selection of relevant publications from the Peace Palace Library collection
- Aden, H.,"The European Court of Auditors and its Relationship with National Independent Audit Institutions: the Evolving Audit Function in the EU Multilevel System", in Bauer, M.W. and Trondal, J. (eds.), The Palgrave handbook of the European administrative system, Basingstoke, Hampshire, Palgrave Macmillan, 2015, pp. 313-326.
- European Court of Auditors, European Court of Auditors: auditing the finances of the European Union, Luxembourg, Office for Official Publications of the European Communities, 1996.
- European Court of Auditors, EU assistance implemented through United Nations organisations: decision-making and monitoring: (pursuant to Article 248(4), second subparagraph, EC), Luxembourg, European Court of Auditors, 2009.
- Inghelram, J., "The European Court of Auditors: current legal issues", Common market law review, 37 (2000), No. 1, pp. 129-146.
- Skiadas, D., The European Court of Auditors, London, Kogan Page, 2000.
- Wooldridge, F. and Sassella, M., "Some recent legal provisions increasing the budgetary powers of the European parliament, and establishing a European court of auditors", Legal issues of European integration: law review of the Europa Instituut, University of Amsterdam, (1976), No. 2, pp. 13-52.