European Parliament grants 2001 budget discharge, April 2003

After weeks of speculation, the European Parliament granted the 2001 budget discharge to the European Commission on 8 April 2003 but called on it 'to establish a modern, reliable and accurate accounting system for the financial year 2005'.

440 MEPs voted to adopt socialist Paul Casaca's report on the implementation of the 2001 budget whilst 67 MEPs voted against it and 14 abstained. The report, which was adopted by the Parliamentary Committee on Budgetary Control, on 24 March 2003 recommended that the European Parliament grant discharge to the 2001 budget but proposed a number of measures to be taken by the European Commission:

• A new computer software for various accounts should already be in place by the end of 2003
• The European Commission should report back to the budgetary control committee every 3 months on progress made on the reform of the accounting system
• Contracts between Eurostat and Eurogramme should be brought to an end as the first step in the 'cleaning up of Eurostat'
• The Commission's accounting officer should sign the accounts presented under his responsibility
• The Court of Auditors should publish the error rate for each individual Commission DG
• The European Commission should carry out an external audit of its treasury system
• New measures, such as a penalty mechanism, for the implementation and control of financial means for Member States to avoid the problem of unspent budget resources, especially in the Structural Funds

The European Commission's handling of the EU budget has been under Parliament scrutiny since Martha Andreasen, the chief accountant of the European Commission, was sacked after drawing attention to the vulnerability of the accounting system. This episode led some people to remind members of the Prodi Commission that their predecessors were forced to resign en masse in 1999 after the European Parliament failed to give its vote of confidence to the European Commission's handling of the budget. However, in this instance the question concerns the Commission's accounting system and its commitment to reform as opposed to allegations of corruption. But the controversy that has surrounded the 2001 budget did prompt Romano Prodi to order the publication of sensitive internal memos highlighting the scale of the problems in the EU budget department at the beginning of March, just weeks before the budget committee were due to vote on the discharge.

The smaller political groups had particularly sought to oppose the discharge, claiming that it was time the European Parliament took action to rectify the imperfections in the managements of the EU funds. However, the larger European political parties supported the discharge, arguing that to oppose it now would only hinder the European Commission's reform of the accounting process. Speaking after the vote, the European Liberal Democrats budget control committee spokesman, Jan Mulder, said:

"When it comes to granting discharge to the Commission budget, there are essentially two factions in Parliament: those who seek to bring down the Commission every year and at any cost, and those who believe our role is to ensure the executive carries out the necessary change. Today's vote marks a victory for the latter."

The discharge comes at a time when the European Parliament is embroiled in a row with the other key EU institution - the Council - over the financing of enlargement. The European Parliament has criticised the Council for attaching a deal on the financing of enlargement, which was agreed at the Copenhagen European Council, to the Treaty as Annex XV because the Parliament claims this infringes on the EP's budgetary rights and power of co-decision. Whilst the European Parliament has said that this will not stop it giving the formal go-ahead to the accession of ten new Member States, it is clear that the Parliament is determined to assert its role in the budgetary procedure.

Links:
European Parliament:
	08.04.03:	Daily Notebook: Budget discharge for Commission, with recommendations for improvements
	25.03.03:	News Report: Budget discharge for Commission, with recommendations for improvements
	Report concerning discharge in respect of the implementation of the general budget of the European Union for the 2001 financial year (Commission) - Committee for Budgetary Control
	Factsheets: Implementation of the Community budget
	Factsheets: Budgetary control
European Commission:
	08.04.03:	Press Release: Michaele Schreyer welcomes granting of the 2001 discharge and thanks the European Parliament for its support for reform [IP/03/518]
The Party of European Socialists :
	08.04.03:	Press Release: PES Group welcomes EP decision to grant Commission discharge for 2001
	26.03.03:	Press Release: Budgetary Control Committee grants discharge to the European Commission
The European Liberal Democrats :
	08.04.03:	Press Release: Eurosceptics isolated as Parliament grants budget discharge
	24.03.03:	Press Release: Discharge granted with conditions
European Sources Online: Financial Times:
	10.02.03:	Brussels to cut quarter of rules to simplify law
	19.03.03:	EU audit chief plays down leaked memorandum
	13.03.03:	Audit chief makes fierce attack on EU accounts
	13.03.03:	Figures in turmoil put Prodi in line of fire
The European Policy Centre
	The future of the EU budget [January 2002]
The Centre for European Reform
	Tackling Fraud and Mismanagement in the European Union [June 2000]
European Sources Online: Topic Guides
	The budget of the European Union

Helen Bower

Compiled: Wednesday, 9 April 2003

The European Parliament granted the 2001 budget discharge to the European Commission on 8 April 2003 but called on it 'to establish a modern, reliable and accurate accounting system for the financial year 2005'.