The EU finances its policies through its budget. The EU budget, and the policies it supports, are the main focus of the ECA’s audit work.
Through its budget, the EU aims to foster economic growth and prosperity while preserving Europe’s social, cultural and natural heritage. The EU also supports developing countries.
The annual expenditure of the European Union is equivalent to around 1% of the EU's economic wealth (GNI). By way of comparison, public expenditure in the 28 EU Member States accounts for between 40% and 60% of GNI.
What is the money spent on?
EU expenditure ceilings for broad policy areas are defined in seven-year plans known as multi-annual financial frameworks (MFFs). An MFF is decided unanimously by the EU Member States with the consent of the European Parliament. Spending takes place under the following headings:
|1. Smart and Inclusive Growth
|1a: Competitiveness for growth and jobs
|1b: Economic, social and territorial cohesion
|2. Sustainable Growth: Natural Resources
|3. Security and citizenship
|4. Global Europe
Further information about the spending areas of the EU budget is
available in a dedicated section: spending areas
For the 2014-2020 period, the MFF provides for payments totalling €908
billion, about €130 billion per year (in 2011 prices). An annual ceiling is set
for each heading, expressed in commitment appropriations (legally binding
promises to spend money which will not necessarily be paid out in the same year
but may be disbursed over several financial years). Furthermore, there are
annual overall ceilings for payment appropriations (the actual total amount
authorised for disbursement in a given year).
For each year, and within the limits of the MFF, the Commission proposes an annual budget that is (amended and) adopted by the European Parliament and the Council of the European Union.
The largest spending areas in the EU budget are expenditure covering natural resources (40% of budgeted payments in 2015), economic, social and territorial cohesion (36%), and competitiveness for growth (11%).
Where does the money come from?
The EU has its own resources. It is principally funded through the customs duties collected at the block’s trade borders and by EU taxpayers (through Member State contributions that are based on relative GNI and national VAT revenue).
Who manages the money?
The European Commission is responsible for implementing the annual budget. For a majority of funds, management is shared with Member State administrations. At the end of each year, the Commission prepares annual accounts to report on the implementation of the budget.
Who oversees the management of the money?
The Commission is accountable for the management of funds to the European Parliament, which represents the EU’s citizens. Based on the EU’s annual accounts, the European Parliament scrutinises implementation and discharges the Commission. An important basis for the discharge is the ECA’s Annual Report, which provides an audit opinion on the reliability of the EU’s annual accounts and the legality and regularity of the underlying transactions.
What money is audited by the ECA?
Every year, the ECA audits the revenue and expenditure of the EU budget and provides an opinion on the extent to which the annual accounts are reliable, and how far income and spending transactions comply with the applicable rules and regulations. The ECA also carries out performance audits of specific budgetary areas or management topics.