Do you know who watches over the spending of EU public funds? Meet the ECA, EU’s supreme audit institution!

What are supreme audit institutions?

Supreme audit institutions are public oversight institutions that audit a government’s use of public funds and its compliance of public spending and revenue collection with the applicable rules. In Europe, every country has its national institution that handles this type of external audit, as well as a European one, the European Court Auditors (ECA), whose focus is on the way the EU’s money is handled by institutions, by national governments and by private companies who receive public EU funds.

The structure of these entities differs: they can be monocratic ( e.g., in Austria or Denmark) or collegiate (e.g., in Belgium or Germany). The ECA is a collegiate body made up of 27 members appointed by the Council of the EU, members who serve for a 6-year mandate which can be renewed.

Some SAIs have a special status as jurisdictional courts (e.g., Belgium or France), but the ECA does not have such status.

ECA’s activity

The ECA conducts financial, compliance, and performance audits. The financial audit involves checking documents, accounting, reports (including the ones resulting from an internal audit), and other records in order to verify that they accurately represent the financial activity. The compliance audit verifies that the economic and financial activity complies with the legal and regulatory provisions and the performance audit assesses the economic, effective, and efficient use of resources by the ones audited.

Importantly, the ECA does not deal with illegal activities: it does not prosecute or sanction, nor does it investigate them. If they have reason to suspect that illegal activity has taken place they must bring it to the attention of the European Anti-Fraud Office (OLAF) and the European Public Prosecutor’s Office (which we have written about here). This is because the ECA doesn’t have jurisdictional status.

The relationship between ECA and other EU institutions: The Discharge Process

Every year, the Commission draws up an account detailing the use of the EU budget. The ECA issues an audit opinion in its annual report on the reliability of the EU’s accounts (financial audit) and the legality and regularity of the underlying transactions (compliance audit). The ECA may also issue special reports on specific budgetary areas.

The EU Parliament takes into account ECA’s opinion when deciding whether to “grant discharge” to the Commission. “Grating discharge” refers to the European Parliament’s approval of the Commission’s management of the budget for that year, which is given during the “discharge process”.

Concretely, the Committee on Budgetary Control (CONT Committee) in the European Parliament reviews the ECA’s report and other relevant documents. The committee conducts hearings and discussions, often involving representatives from the Commission, ECA, and other bodies, to scrutinise how the budget was managed. The CONT Committee prepares a draft discharge report, which includes recommendations and potential requests for corrective actions. This report is debated and voted on within the committee.

Afterward, the draft discharge report, along with the committee’s recommendation, is presented to the full European Parliament during a plenary session. Members of the European Parliament debate the report and vote on whether to grant, postpone, or refuse discharge to the Commission.