The European Parliament is the discharge authority. Each year it must close the financial year on the basis of the recommendation of the Council and the Statement of Assurance (DAS) provided by the Court of Auditors. By granting a discharge Parliament approves the implementation of the budget in respect of the relevant financial year. It is well known that the European Court of Auditors for the 17th year in a row has not signed the EU accounts, nevertheless, on 23 February, the Economic and Financial Affairs Council, adopted a recommendation to the European Parliament on the discharge to be given to the Commission for implementation of the EU’s budget for 2010.
Last November the European Court of Auditors published its report on the implementation of the 2010 EU Budget. The Court has issued an unqualified opinion on the reliability of the 2010 EU accounts. However, unsurprisingly, the Court has refused to sign off on how the money from the EU's 2010 budget had been spent. Year after year and nothing has changed; in the meantime taxpayers' money is being spent in a system that does not work. In fact, as this report shows, there are serious errors and mistakes in the system. The EU spending continues to be affected by “material error.” The Court has estimated the error rate for payments from the €122.2 billion 2010 EU budget at 3.7%. There has been, therefore, an error rate increase from 3.3 % in 2009 to 3.7 % in 2010. This means that €4.6bn was spent against EU rules governing the spending, including, according to ECA “breaches of public procurement rules, ineligible or incorrect calculation of costs claimed to EU co-financed projects, or over-declaration of land by farmers.” The court has delivered, therefore, an adverse opinion on the correctness and regularity of payments underlying the accounts.
The EU monitoring and accounting system is inadequate. The ECA concluded, “The control systems tested across the EU budget were still only partially effective in ensuring the regularity of payments”.
The UK as well as the Netherlands and Sweden abstained, last year, on the vote but this year they voted against discharging the accounts for the 2010 EU budget, showing, in this way, their concerns over lack of accountability and transparency on how EU money is spent. Chloe Smith, the economic secretary to the Treasury told the House of Commons “We have not seen enough progress in reducing the level of errors in EU transactions, which is unacceptable.”
The UK, the Netherlands and Sweden said in a joint statement “that the current scarcity of public resources across the EU increases the importance of sound financial management of EU funds and that the credibility of EU spending depends crucially on orderly accounting of EU expenditure;” They also “regret strongly that, for the seventeenth year in succession, the European Court of Auditors has been unable to grant a positive unqualified statement of assurance on the EU budget as a whole and, furthermore, that it has not proven possible to sustain the recent year-on-year reductions in the overall error rate, which remains significantly above the acceptable threshold of 2 %;”
Hence, the UK, the Netherlands and Sweden have decided, for the first time, to vote against approving the EU accounts. They said, "In these challenging times, member states should uphold the same high standards for the EU budget as they would for national budgets. We should remember that national taxpayers stand behind the EU budget, and that's why we are calling for important and urgent improvements to the quality of EU financial management," Nevertheless, the Council recommended the European Parliament to give a discharge to the Commission in respect of the implementation of the 2010 budget. The UK, the Netherlands and Sweden could not block the approval of the EU’s accounts for 2010, as they were approved by qualified majority. The European Parliament is expected to vote on its discharge report in May.
Moreover, the Council also adopted recommendations on the discharge to be given for their 2010 budgets to the directors of 24 EU agencies, six EU executive agencies and seven joint undertakings. However, it is important to recall that according to the EUobserver an ECA’s report found that there are several issues in the way that 31 EU agencies manage their budgets. The Court found that several agencies “could not properly account for half the expenses they filed in 2010”. Monica Macovei MEP, rapporteur on the European Parliament position on granting a discharge to each agency, said "It is scandalous that at a time when governments are struggling to borrow money at high costs, these agencies do not return anything to the EU budget. It is as if they are living in a parallel world, untouched by the economic crisis,".
