Historical background to the European Court of Auditors
Since the Treaty of Maastricht the European Court of Auditors has been recognised as one of the five institutions of the European Communities. The other institutions are: the European Parliament, the Council of the European Union, the European Commission and the Court of Justice of the European Communities.
Under the constitutional systems of modern States the auditing function is generally considered to be one of the elements ensuring that the activities of the public sector are conducted democratically. It normally takes two separate but complementary forms, known respectively as internal control and external auditing. Public-sector financial management cannot do without appropriate external auditing.
The setting-up of the European Court of Auditors followed this same reasoning and coincided with two particularly important events, i.e. the extension of the European Parliament's powers in the area of budgetary control and the full financing of the European Union's budget by own resources.
In view of these changes and the increase in the European Parliament's powers in the area of the implementation of the budget, it was essential that a qualitative change be made to the external auditing of the budget.
Thus, at the initiative of Mr Heinrich Aigner, the President of the European Parliament's Budgetary Control Committee, who since 1973 had strongly argued the case for a Community-level external audit body, the European Court of Auditors was established by the Treaty of Brussels of 22 July 1975. The Court started operating as an external Community audit body in October 1977, with its headquarters in Luxembourg.
The European Court of Auditors was promoted to the rank of an institution on 1 November 1993 with the entry into force of the Maastricht Treaty, thus enhancing its independence and authority as one among equals. Since then the Court has been required to publish a statement of assurance (DAS) as to the reliability of the EU accounts and the legality and reliability of the transactions underlying the EU budget.
Its role was confirmed and strengthened on 1 May 1999 with the entry into force of the Treaty of Amsterdam, which empowered the Court to carry out sound financial management audits, emphasised its role in the fight against fraud and allowed it to have recourse to the Court of Justice in order to protect its prerogatives with regard to the other EU institutions.
The Treaty of Nice of 1 February 2003 confirmed the principle that there should be one Member from each Member State, allowed the Court the option of being organised in chambers and highlighted the importance of the Court's cooperation with the national audit bodies.
The creation of the European Court of Auditors illustrated the Community's need for a financial conscience, as Mr Hans Kutscher, the then President of the Communities' Court of Justice, defined it at the time, in October 1977.
The Members of the Court of Auditors are appointed for a six-year term. The Council, acting by a qualified majority after consulting the European Parliament, adopts the list of Members drawn up in accordance with the proposals made by each Member State. The terms of office of the Court's Members may be renewed. The Members elect the President of the Court of Auditors from among their number for a term of three years. The President may be re-elected.