The success of any institution depends on the checks and balances in place to ensure that best practice is observed.

Audit is a systematic and documented process which seeks to assess the regularity and fairness of financial expenditure and the associated decision-making processes. This function assures that procedures have been adhered to. Such a process has the ability to strengthen the level of trust, accountability and the decision-making process itself.

The European Union’s decision-making process is often in the limelight. The financial crisis has highlighted an acute need for more effective public expenditure. The nature of the decisions taken at EU level require reliable auditing which can strengthen the sustainability of public finances and offer guidance on the management of such finances.

The European Court of Auditors is tasked with providing some of these functions in an impartial and independent manner. It was established in 1977 and it became an official EU institution in 1993.

The Treaty enables the Court of Auditors to carry out the Union’s audit by examining the revenue and expenditure of all entities set up by the European Union. It ensures that all expenditure and income are lawful and regular. The Court proceeds to provide the European Parliament and the Council with a statement relating to the reliability of the accounts under examinations and the regularity of the procedures undertaken. At the close of the financial year an annual report is published.

The European Court of Auditors is based in Luxembourg. It consists of 28 members; one from each member state of the European Union. Each member is appointed for a renewable term of six years. The members elect one member to serve as President for a renewable term of three years. The current President is Vitor Manuel da Silva Caldeira.

A Secretary-General is also appointed for a renewable period of six years to manage the administrative aspect of the Court including its finances, human resources, information technology and translation services.

The European Court of Auditors is divided into five chambers – each is responsible for the audit of a different sector. The first chamber is responsible for auditing the preservation and management of natural resources. The second chamber audits structural policies, transport and energy, while the third chamber looks at the financing of external action. The fourth chamber is responsible for auditing the EU’s institutions and bodies together with policies concerning revenue and research. The fifth chamber includes a representative from the aforementioned four chambers and is responsible for the coordination, evaluation, assurance and development of the Court of Auditors. Each chamber is headed by a Dean who also sits on the Administrative Committee together with the President of the Court of Auditors.

The European Court of Auditors has come under increasing criticism due to its size. Critics claim that a more streamlined organisational structure could help the Court function more effectively.

Such criticism may be valid, however, the effectiveness of the Court would be best ensured through strengthening its ability to independently assess the financial management of the Union and the strict adherence to its recommendations.

 

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