An annual appointment

Last Monday, the president of the European Court of Auditors (ECA) presented the Court's annual report to the Budgetary Control Committee of the European Parliament, more commonly known by its acronym COCOBU. The latest annual report covers the implementation of the EU's general budget for the 2003 financial year.

As a member of the ECA I attended the presentation, along with most of the other members. The presentation was held in the European Parliament building in Strasbourg, familiar territory for me given the many meetings I attended there during the one-year term I served as one of the Maltese MPs who were observers at the European Parliament. It was also very familiar ground for the current president of the European Court of Auditors, Juan Manuel Fabra Valles, himself a former MEP and even a member of the COCOBU before his appointment to the ECA.

The publication of the ECA's annual report is a very important annual appointment because it represents a crucial input within the budget discharge process. The presentation of the annual report by the Court of Auditors kicks off the budget discharge procedure by the European Parliament. It is primarily on the basis of the assessment made and opinion expressed by the ECA in its annual report that Parliament bases its decision on the discharge of the EU budget, meaning the approval for the implementation of the budget.

The granting of discharge indicates acceptance that the management of EU funds, by the Commission and by the other EU Institutions, has been sound, their expenditure legal and regular, the financial management adequately effective and that the use made of the appropriations granted has furthered EU policy as intended.

Parliament may postpone discharge until the Commission or other EU Institution has taken remedial action to rectify identified, serious weaknesses. Failure to give discharge is one of the strongest censor measures that the European Parliament could take and it would have very serious consequences, almost certainly leading to the resignation of the Commission.

The current Budget Control Committee was only appointed last June, following the European Parliament elections. It includes a number of experienced Euro-parliamentarians who have been members of the COCOBU for quite a few years, but also some new faces, among them the new chairman, Szabolcs Fazakas, a Hungarian who had served as Minister of Industry and Trade.

The president of the ECA is now scheduled to present the contents of the annual report to the Council of Ministers, at the next meeting of the Economic and Finance Ministers (ECOFIN) due on Thursday, and subsequently again to the European Parliament on December 2, this time meeting in plenary session. In addition, immediately following its presentation to the COCOBU, the annual report is made public and can be readily accessed through the ECA's Website.

Another speaker during the presentation of the ECA's annual report to the COCOBU was outgoing Commissioner Michele Schreyer. Her mandate should have been ended earlier but, due to the delay in the appointment of the new Barroso Commission, she found herself once again under the spotlight, her role during the presentation being to provide the Commission's first reaction to the ECA's annual report.

As expected, many of those attending the presentation have come to know each other quite well as a result of the different but interrelated roles that they cover within the budget discharge process. This was at times evident during the question-and-answer session that followed the introduction by the president of the ECA, when some of those present switched to first names when referring to points made by previous speakers.

However, notwithstanding this familiarity at a personal level, the presentation of the annual report actually serves to highlight and reinforce the clear and formal distinction that exists between the European Parliament, the European Commission and the European Court of Auditors, the independence of each of these institutions and the different role that each one of them is expected to cover.

This is an inescapable characteristic of the European Union where specific institutional solutions have had to be developed to address the particularly complex nature of the EU in what is, at the same time, a union of 25 sovereign states but also a coming together of more than 450 million individuals, all of whom can call themselves citizens of Europe. Within this complex equation the ECA has its own specific function, which it has been empowered to cover as a result of the successive treaties that have marked the evolution of the EU. This key function is reaffirmed in the EU Constitution.

The ECA is the external audit institution of the EU and its remit is to assist in improving all aspects of the management of EU funds. The ECA audits the accounts of all the revenue and expenditure of the EU. It examines whether all EU revenue and expenditure has been received or incurred in a lawful and regular manner and whether the financial management of these funds has been sound, with due regard for the principles of economy, efficiency and effectiveness.

The ECA's annual report includes a Statement of Assurance, better known by its French acronym DAS, on the reliability of the EU's accounts for that particular year and the legality and regularity of the underlying transactions. The ECA also submits observations on specific topics of its choice, particularly in the form of special reports. For example, this year's annual report was accompanied by six such special reports on very specific topics.

The ECA is also consulted and provides formal opinions on all proposals for EU legislation that are of a financial nature. It does not have judicial powers, i.e. its reports and opinions are not legally binding. However they certainly carry considerable weight and they are duly followed up by the other EU institutions.

The ECA carries out a very important and essential role for the benefit of EU citizens, a role which is rarely in the news given that most of the Court's work is of a precise, technical nature and is generally conducted away from the limelight. One exception is the presentation of the annual report although, even in this case, media coverage is generally quite subdued, unless it is particularly negative and highlights some major shortcomings.

Nevertheless, the publication of its annual report is the one time in the year when the ECA makes a concerted effort to put across its views to the broadest audience possible. Following the formal presentation to Parliament, it is customary for the individual members of the Court to visit their respective countries of origin to explain and publicise the contents of the annual report.

I am very happy to follow this particular practice which I judge to be very appropriate and I will be visiting Malta this week to give a press conference to describe and explain the workings of the ECA and the contents of its annual report. I am looking forward to this opportunity to explain in greater detail, to the Maltese public, the nature and significance of the ECA as one of the institutions of the EU, established specifically to safeguard the interests of its citizens.

The presentation of the ECA's annual report to the COCOBU coincided with the second round of hearings of the designate Commissioners. As a result, during my visit to the European Parliament building in Strasbourg, I was able to meet briefly Dr Joe Borg as well as most of the Maltese MEPs. In fact, it was quite natural for all of us to sit around the same table, our common Maltese origin being a more relevant factor than our different political extraction, as we focused on our new roles within the EU context. Different roles as pertaining to the specific institution to which we now belong (Parliament, Commission, ECA) but all in the service of the citizens of the EU.