What’s Financial Accountability?

There is a crisis of confidence among EU citizens in the democratic accountability of the EU and its institutions. There is uncertainty among many political actors about the added vale of EU policies paid for via the EU budget. More than ever, the EU must demonstrate the chains and mechanisms of accountability vis-à-vis its member states and their general publics as to the correct and effective use of taxpayers’ money.

The EU budget also remains a mystery to many Europeans, with ordinary citizens unclear about who is supposed to ‘give account’, for what and to whom. Reports in the media on audited expenditure often focuses on a percentage error rate, ignoring the bigger picture of who should be made accountable and how. Indeed, ex-post budgetary discharge has itself become a ‘short cut’ for accountability.

Financial accountability (a subset of administrative accountability) is at the heart of political accountability. It has come to rest on the effective auditing by the European Court of Auditors and national audit bodies of policy expenditure financed by the EU budget. The Court promotes accountability and transparency by assisting the European Parliament (EP) so it can ‘give discharge’ on budgetary expenditure.

The Court was set up with the Second Budgetary Treaty, also known as the Brussels Treaty (1975), at which time the European Parliament was conferred with ‘the power of the purse’. With the Maastricht Treaty, the European Court of Auditors became an official EU institution, while in 1999, OLAF was set up to investigate fraud against the EU budget, corruption and serious misconduct within the European institutions. It develops anti-fraud policy for the European Commission.

The Lisbon Treaty (in force 2009) recently underlined the Court’s role in promoting public accountability and assisting the EP and Council in overseeing the implementation of the EU budget, improving financial management, and protecting the financial interests of citizens. However, the architectural landscape of audit and control is becoming increasingly complex following the creation of new instruments and mechanisms such as the European Stability Mechanism, raising new questions about accountability in the EU.

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