Everything about The European Court Of Auditors totally explained
The
European Court of Auditors is the
fifth institution of the
European Union (EU). It was established in 1975 in
Luxembourg to
audit the accounts of EU institutions. The Court is composed of one member from each EU
member state and its current president (as of 2008) is
Vítor Manuel da Silva Caldeira.
History
The Court of Auditors was created by the
1975 Budgetary Treaty and was formerly established on
1977-10-18, holding its first session a week later. At that time the Court wasn't a formal institution, it was an external body designed to audit the finances of the
European Communities. It replaced two separate audit bodies, one which dealt with the finances of the
European Economic Community and
Euratom and one which dealt with the
European Coal and Steel Community.
The court didn't have a defined legal status until the
Treaty of Maastricht when it was made the fifth institution, the first new institution since the founding of the Community. By becoming an institution it gained some new powers, such as the ability to bring actions before the
European Court of Justice (ECJ). However its audit power related only to the
European Community pillar of the EU, but under the
Treaty of Amsterdam it gained the full power to audit finances of the whole of the EU. The Court's decision is the basis for the
European Commission decisions, for example: when the Court found problems in the management of EU funds in the
regions of England, the Commission suspended funds to those regions and prepared to fine those who didn't come back up to acceptable standards.
In this role the Court has to remain independent yet remain in touch with the other institutions, for example a key role is the presentation of the Court's annual report to the
European Parliament. It is based on this report that the Parliament makes its decision on whether or not to sign off the
European Commission's handling of the budget for that year. The Court, if satisfied, also sends assurances to the Council and Parliament that the taxpayers money is being properly used
Organisation
The Court is composed of one member from each EU state who are appointed by the
Council of the European Union for a renewable term of six years. As the body is independent they're free to decide their own organisation and rules of procedure, however they've to be ratified by the
Council of the European Union. Since the Treaty of Nice, the Court can set up "chambers" (with only a few Members each) to adopt certain types of reports or opinions.
The Court is supported by a staff of approximately 800 auditors,
translators and administrators. Auditors are divided into auditor groups which inspect and prepare draft reports for the Court to take decisions upon. Inspections take place not only of EU institutions but any state which receives EU funds given that 90% of
income and
expenditure is managed by national authorities rather than the EU. Upon finding a fault the Court has no legal powers of its own an instead informs
OLAF which is the EU's anti-fraud agency.
President
The members then elect one of their members as the President of the Court for a renewable three year term. The election takes place by a secret ballot of those members who applied for the presidency. The duties of the President (which may be delegated) are to convene and chair the meetings of the Court, ensuring that decisions are implemented and the departments (and other activities) and soundly managed. The president also represents the court and appoints a representative for it in contentious proceedings.
Criticism
Declaration of assurance
Since 1994 the Court has been required to provide a "declaration of assurance" (Cf.
positive assurance). This has proved a problem due as ever since then they've been unable to provide it due, refusing to endorse large parts of the budget despite on declaring the accounts to be "reliable". This has led to media reports of the EU accounts being "riddled with
fraud" where as the problems centre more on errors in paperwork despite correct spending. Hence the system has drawn criticism due to creating this perception. The Commission in particular have stated that the bar is too high and that only 0.09% of the budget is subject to fraud.
The EU had to issue a press release on 24 Oct 2006, to answer to the falsehood that "Annual accounts have not been certified by the external auditor since 1994": "Myths or facts – what do you prefer?"
Terry Wynn MEP who served on the Parliament's
Committee on Budgetary Control has also backed these calls stating that it's impossible for the Commission to fall within these standards. By comparison, the
Auditor General for the
United Kingdom stated that there were 500 separate accounts for the UK and "in the last year, I qualified 13 of the 500. If I'd to operate the EU system, then, because I qualify 13 accounts, I might have to qualify the whole
British central government expenditure". Despite the problems, the
Barroso Commission has stated that it aims to bring the budget within the Court's limits by the end of its mandate in 2009.
Further Information
Get more info on 'European Court Of Auditors'.
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