Budgetary control can be politically delicate but is necessary to ensure the effectiveness of public spending. The European Court of Auditors investigations have discovered misspending all over Europe. For instance, public money was used to build ports and airports which have never been frequented by any ship or airplane. In some member states European funds subsidised renovation works of public buildings to i m p r oveenergyefficiency. However, the European Court of Auditors found out later that there had been little progress made on energy efficiency.
Those examples show that budgetary control is more than simply checking the figures. It is above all three things: Indicating how policies and their spending can be more efficient in the future, protecting tax payers’ money, but also exercising democratic control. Spending public money needs to be bound to a purpose and have an effect that otherwise could not have been achieved by private investors. This applies for example to sectors where market failure occurs or where goods of general welfare are involved, such as water.
When public money is at play, the scope of auditing for a long time tended to be very limited to financial and compliance audit. The European Court of Auditors, however, also carries out a performance audit which verifies if the EU funds provide an added value and if policy objectives are met. An own-initiative-report I have drafted on behalf of the Committee for Budgetary Control deals with this very issue and how performance audit can be used as an instrument for the European Commission’s discharge procedure. Article 318 TFEU has introduced an evaluation report, here by providing an instrument which can serve for a performance-based audit. The report also suggests that the commission should base its reporting on the main objectives laid down in the Europe 2020 strategy and the flagship initiatives, rather than structuring their evaluations according to the budget headings. After all, a budget is drafted to meet policy targets. Otherwise, budgetary control measures should kick in to protect taxpayers’ money.
Fraud to the EU budget is also a problem which should not be underestimated. The annual damage caused by fraud is about 400 to 600 million Euros. The Committee for Budgetary Control therefore calls for a European Public prosecutor. Such an institution would need to be
independent and only responsible to protect the EU budget, supporting OLAF, the anti-fraud office which is already in place. Finally, budgetary control also means democratic control. Governments exercise their power by implementing a budget and spending it on priorities they have set. Consequently, controlling the budget by independent audit institutions and elected parliamentarians gives citizens the necessary instrument to control a government’s power. Effective and transparent budgetary control is furthermore the only instrument to prevent
and fight corruption. Yet, also on the European level, shadow budgets still exist. The European Solidarity Mechanism (ESM), for example, is not accountable to a parliament. In its opinion to the troika report of the Committee of Economic and Monetary Affairs, the Committee of
Budgetary Control clearly stated that there is a lack of democratic control within this structure and that the ESM should be made accountable to theEuropean Parliament to ensure democratic control. After all effectivebudgetary control is the best instrument for crisis prevention, especially to avoid a future sovereign debt crisis.