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The treaty of the European Community provides for 15 members to be appointed by a unanimous decision of the Council of the European Union in Consultation with the European Parliament, for a period of six years. They may run for a second term. Members are appointed taking into account three principles as provided for by the treaty: Competence, Autonomy, and Full time Exercise of Duties.
They are selected from among the persons who, in their respective countries would have worked or continue to work with institutions of external control or possess a special qualification for this function.
In the discharge of their duties, members shall not solicit or take instructions from any government or body. They shall abstain from acts incompatible with the nature of their duties.
During their tenure as members, they shall not accept any other work, paid or unpaid.
The President elected by his colleagues for a period of three years (which may be extended for another term), is primus inter pares; He shall ensure smooth functioning of the Audit services and progress in the work of the Audit Office. He represents the latter especially in its relations with the other European institutions and the National Audit Institutions.
The Audit Office has its own rules of Procedure. For purposes of audit verification Audit Groups are set up. Tasks are distributed among the embers who shall prepare the deliberations of the Audit Office.
The Audit Office is collegiate in nature. Distribution of tasks among members takes into account the multilingual context in which the European Audit Office functions.
Every member of the College, other than the President and the two members in charge of the Audit and Reports Development Sector and the Assurance Declaration Sector respectively, is also appointed as Counter Rapporteur for an Audit Sector other than his own. He shall give his views on plans for audit checkings, drafts of the chapter for annual report and drafts of observations or opinions which the rapporteur intends to submit to his Audit group and to the Audit Office.
In 1995, 52.1 Mio ECU, i.e. around 1.3% of the total operational expenditure of European institutions or 0.06% of the total general budget, were allocated to the European Audit Office.
The European Audit office which is entrusted with verifying the entire operational funds of the institutions shall carry out external verification of the utilisation of these funds. If required this verification shall find mention in the annual report.
In order to ensure utmost transparency in the implementation of the budget section an additional verification is done by a private auditing company every year. The results of this checking are communicated to the European Parliament and published in the Gazette of the European Community.
The annual report and special reports shall contain not only the observations of the Audit Office but also the responses of the audited institutions. The Audit Office takes into account these responses before finalizing its remarks.
The Audit office shall verify not only the General Budget of the Union but also borrowings and loans, revenue and expenditure shown in the budget of the CECA, the European Fund for development, European Centre for the development of professional training, European foundation for improving conditions of life and work, Joint European Torus, European Schools and other bodies.
The audit powers of the Audit office in matters of implementation of general budget also applies to supplementary funds.
As specified by the EC agreement, the Audit office can carry out verification on the basis of documents or an on the spot verification in the member states and other European Institutions.
In accordance with the provisions of the EC treaty, the European Audit Office verifies accounts related to revenue and expenditure of the Community, and checks if they are legal and regular in order to ensure good financial management.
The objective of audit checking is not only to ensure that what is due to the Union and what the Union owes are duly noted, recorded and accounted for, collected or paid but also to verify if all these operations are duly supported by documentary evidence and information available enables authorities to carry out their work thoroughly.
The accounting system shall conform to generally accepted norms and be based on appropriate measures and procedures which would guarantee proper recording of all the operations, protection of patrimony as well as prevention and detection of frauds.
Instead of imposing its own criteria, the auditing authority shall verify to what extent the administrative body in charge of management has equipped itself with appropriate instruments and takes steps to achieve the objectives.
The auditing authority shall identify drawbacks and obstacles which prevent it from obtaining optional result.
The Audit Office has opted for the method of verification through analysis of systems except where other methods seem more appropriate. Verification through analysis of systems is based on the idea that each organisation should generate its own internal control mechanisms, i.e. a structure alongwith manual or computerised procedures which will guarantee the smooth functioning of the system including conformity to law. As regards financial management the method of verification through analysis of systems is not limited to verifying how management data are generated and checked but extends to evaluating the procedures which lead to decision making. Verification therefore covers procedures related to decision, planning, implementation and control.
An Internal Audit Comptroller shall review the systems and procedures of check being followed within the European Audit Office.
The Audit Office is totally free to decide upon the schedule and modalities of verification. It can carry out its verifications within the European institutions on the basis of documentary evidence and also on the spot in institutions which generate/incur income/expenditure to be verified. In many cases, the verification procedures combine these aspects in keeping with the nature of the verification to be carried out.
The checking carried out by the Audit office is not limited only to European Institutions but extends to a number of organisations and national administrations which are responsible at different levels for collecting revenue and incurring expenditure.
Though the activities of the European Audit office are mainly concentrated in Europe, they also extend to areas covered by treaties of cooperation between the European Union and several developing countries.
In member countries of the Union the Audit office shall carry out verifications in collaboration with national audit institutions or with competent national services wherever the national audit institutions do not have the necessary competence.
The Audit Office is not empowered to take punitive action against erring parties.
The European Audit Office has several contacts with other audit institutions outside the European Union. It participates especially in the work of INTOSAI, the International Organisation of Higher Audit Institutions and the EUROSAI, of which is it one of the founder members.
The main task of the European Audit office is to verify the finances of the Union and point out areas where measures for improving management need to be taken.
The Audit office shall assist the European Parliament and the Council of the European Union in their task of implementing the budget. It may at any point of time present its observations on specific questions and give its opinion at the instance of any European institution. Thus it may present its views in the annual report or in the special reports.
Before taking any financial measures especially financial regulations, and allocating resources the Audit Office's opinion has to be taken into account.
Article 188 A
The Audit office carries out audit checking.
1. The Audit Office has twelve members.
2. They are selected from among personalities who in their own countries, belong to or belonged to external audit institutions or possess a special qualification for this task.
3. Members are appointed for six years by the Council, through unanimous decision and in consultation with the European Parliament.
However, four members of the Audit office appointed, through draw of lots, are initially appointed for a period of 4 years.
Members can be nominated for a second term.
Members nominate from amongst them a President for three years. The term of office of the President can be renewed.
4. Members have full autonomy in the discharge their duties in the interest of the Community.
In the discharge of their duties they shall neither solicit not take instructions from any government or body. They shall abstain from any act incompatible with their duties.
5. During their term as members of the Audit office, they shall not accept any other professional activity, paid or unpaid. At the time of being appointed, they take the solemn vow of respecting, during their term in office, and after ceasing to be a member, the obligations arising out of their responsibility, especially the duty of being honest and of not accepting certain jobs or advantages.
6. Apart from regular renewal of term of office, and cessation due to death, a member may voluntarily resign or be remitted by the Audit office in accordance with the provisions of paragraph 7.
The concerned member may be replaced for the remaining term of office by a fresh member.
Except in cases where a member is resigns of his own accord the members of the Audit office stay in office till they are replaced.
7. Members shall not be relieved of their duties nor denied pension and other advantages unless, at the instance of the Audit office, a court of law finds that they have ceased to satisfy the conditions, or obligations arising out of their responsibility.
8. Through a majority decision the Council fixes the conditions of employment especially salary, allowances and pensions of the President and the members of the Audit office. Similarly it fixes all allowances.
9. The provisions of the protocol on privileges and immunities of the European Community as applicable to the Judges of a Court of Law are applicable to members of the Audit office.
Article 188 C
1. The Audit Office shall check the entire revenue and expenditure accounts of the community as well as those of all bodies set up by the community as such a verification is permitted under the law.
2. The Audit Office verifies if the revenue and expenditure are regular and conform to Law. It ensure efficient financial management.
3. Audit Checking of revenue is done by verifying proof of remittances to the Community.
Audit checking of expenditure is done by verifying commitments such as payments. These verifications can be done before closing down of accounts of the financial year under consideration.
4. The Audit office adopts its annual and special reports by a majority of its members.
It assists the European Parliament and the Council in their task of supervision of budget implementation.
1. The Audit office may be assisted in its task by agents of the Audit Office. The Audit office or one of its members shall notify the authorities with whom the Agent has to carry out his work, the tasks to be entrusted to these agents.
2. The Institutions shall transmit to the Audit office, the internal rules governing finances that they would have decided upon.
Article 85
In carrying out its tasks, the Audit office may keep itself informed, as per the conditions set forth in article 87, of all documents and informations about financial management of the services or bodies under its jurisdiction. It is authorised to hear an agent whose responsibility is committed to an operation of expenditure or revenue and use all possible means of verification.
Article 86
Audit Office ensures that all deposit funds or cash funds are verified upon sight of attestations underwritten by trustees or of the minutes on cash or portfolio position. It may undertake such verifications upon its own initiative.
