The general budget of the European Union is the instrument which sets out and authorises the total amount of revenue and expenditure deemed necessary for the European Community and the European Atomic Energy Community for each year.
The budget is established and implemented in compliance with the principles of unity, budgetary accuracy, annuality, equilibrium, unit of account, universality, specification, sound financial management and transparency.
The principle of unity and the principle of budgetary accuracy mean that all Community revenue and expenditure and that of the European Union when it is charged to the budget must be incorporated in a single document.
The principle of annuality means that the budget is adopted for one budgetary year at a time and that both commitment and payment appropriations for the current budgetary year must, in principle, be used in the course of the year.
The principle of equilibrium means that forecasts of revenue for the budgetary year must be equal to payment appropriations for that year: borrowing to cover any budget deficit which may arise is not compatible with the own resources system and will not be authorised.
In accordance with the principle of unit of account, the budget is drawn up and implemented in euros and the accounts shall be presented in euros.
The principle of universality means that total revenue is to cover total payment appropriations with the exception of a limited number of revenue items which are assigned to particular items of expenditure. All revenue and expenditure is entered in full in the budget without any adjustment against each other.
The principle of specification means that each appropriation must have a given purpose and be assigned to a specific objective in order to prevent any confusion between appropriations.
The principle of sound financial management is defined by reference to the principles of economy, efficiency and effectiveness.
The budget is established in compliance with the principle of transparency, ensuring sound information on implementation of the budget and the accounts.
The budget presents appropriations and resources by purpose (activity-based budgeting), with a view to enhancing transparency in the management of the budget with reference to the objectives of sound financial management and in particular efficiency and effectiveness.
The Union's budget consists firstly of a general statement of revenue. This revenue is made up of own resources, deriving mainly from customs duties, from a share of national VAT and from a national contribution based on GNP.
The statement of revenue and expenditure is divided into sections corresponding to the institutions.