European Court of Auditors
The European Court of Auditors is an independent institution whose main role is to check that the funds available to the EU are used legally, efficiently and for the intended purposes. The court audits (inspects) the the EU’s income and spending accounts, which together form the EU budget. This role is especially important as part of the EU’s income comes from member states’ contributions; the court checks that the EU’s citizens are getting maximum value for their money.
How does the European Court of Auditors work?
The court has the power to audit any person or organisation handling EU funds, including national authorities in the member states, other EU institutions and even other countries that receive money from the EU. It then produces reports on its findings, which highlight any issues it has uncovered. The Court of Auditors also gives its opinion on proposals for EU financial laws and for EU action to fight fraud. However, the court itself has no powers – if it discovers that EU funds are being misused, it then passes this information to the European Anti-Fraud Office (OLAF).
The Court of Auditors is based in Luxembourg and is made up of one member from each EU member state. Members are appointed by the Council of the European Union for a renewable period of six years. The members then elect a president from among their number, who serves for a renewable period of three years. The members of the Court of Auditors have to be qualified as auditors in their country of origin, or to have worked for an auditing institution. They have to be entirely independent and are chosen for their competence. The members can sit in small groups called chambers, with only a few members making up each chamber, to increase the efficiency of the court, with the EU now consisting of 28 member states.
The Court of Auditors has approximately 800 staff, of which 250 are auditors. The auditors are divided into audit groups which prepare draft reports on which the court takes decisions.
The European Court of Auditors was created by the Treaty of Luxembourg, signed 22 July 1975, and took up its role as the external audit body of the European Community in October 1977. Originally, there were in fact five different budgets and the European Coal and Steel Community, EURATOM and the European Community, which had different mechanisms for auditing their different budgets. The Treaty of Brussels, signed 8 July 1965, created one set of institutions and one budget for the three communities. The Treaty of Maastricht (1992) elevated the court to the status of an institution alongside the European Parliament, the Commission, the Council of the European Union, and the European Court of Justice.
For the last 18 years, the court has noted substantial misspending in EU accounts. Errors were most prevalent in agricultural spending and structural funds. The 2010 report (released in 2011) found that 3.7% of the €122.2 billion EU budget was spent in error or against EU rules, although there are mechanisms for recollecting misspent money. The court often points out that member states, rather than central EU bureaucracy, are responsible for about 80% of EU spending.