2011 discharge: EU general budget, European Parliament

PURPOSE: presentation by the Commission of the consolidated annual accounts of the European Union for the financial year 2011, as part of the 2011 discharge procedure.

Analysis of the accounts of the EU Institutions: Section I - European Parliament.

Legal reminder: the consolidated annual accounts of the European Union for the year 2011 have been prepared on the basis of the information presented by the institutions and bodies under Article 129(2) of the Financial Regulation applicable to the general budget of the European Union. They were prepared in accordance with Title VII of the Financial Regulation and with the accounting principles, rules and methods set out in the notes to the financial statements.

The objective of the financial statements is to provide information about the financial position, performance and cashflow of a body that is useful to a wide range of users. The objective is to provide information that is useful for decision making, and to demonstrate the accountability of the entity for the resources entrusted to it.

1) Purpose: the document helps to bring insight into the EU budget mechanism and the way in which the budget has been managed and spent in 2011. It recalls that the European Union's operational expenditure covers the various headings of the financial framework and takes different forms, depending on how the money is paid out and managed. In accordance with the Financial Regulation, the Commission implements the general budget using the following methods: direct or indirect centralised management (by means of bodies or agencies of public law or other); decentralised management where the Commission delegates certain tasks for the implementation of the budget to third countries; and, thirdly, shared management where budget implementation tasks are delegated to Member States, in areas such as agricultural expenditure and structural actions.

The document also presents the different financial actors involved in the budget process (accounting officers, internal officers and authorising officers) and recalls their respective roles in the context of the tasks of sound financial management.

Amongst the other legal elements relating to the implementation of the EU budget presented in this document, the paper focuses on the following issues:

• accounting principles applicable to the management of EU spending (business continuity, consistency of accounting methods, comparability of information ...);
• consolidation methods of figures for all major controlled entities (the consolidated financial statements of the EU comprise all significant controlled entities –institutions, organisations and agencies, this being 50 controlled entities, 5 joint ventures and 4 associates. In comparison with 2010, the scope of consolidation has been extended by 7 controlled entities (one institution, 6 agencies);
• the recognition of financial assets in the EU (tangible and intangible assets, financial assets and other miscellaneous investments);
• the way in which EU public expenditure is committed and spent, including pre-financing (cash advances intended for the benefit of an EU organ);
• the means of recovery following irregularities detected;
• the modus operandi of the accounting system;
• the audit process followed by the European Parliament's granting of the discharge.

To recap, the final control is the discharge of the budget for a given financial year. The discharge represents the political aspect of the external control of budget implementation and is the decision by which the European Parliament, acting on a Council recommendation, "releases" the Commission from its responsibility for management of a given budget by marking the end of that budget's existence.

The document also details specific expenditure of the institutions, in particular: i) pensions of former Members and officials of institutions; ii) joint sickness insurance scheme and iii) buildings. For the Parliament, the outstanding contractual obligation relating to building contracts totalled EUR 434 million in 2011.

Lastly, the document presents a series of tables and detailed technical indicators on (i) the balance sheet; (ii) the economic outturn account; (iii) cashflow tables; (iv) technical annexes concerning the financial statements.

2) Implementation of appropriations under Section I of the budget for the financial year 2011: the document comprises a series of detailed tables, the most important concerning the implementation of the budget. Concerning the European Parliament's expenditure, the table on the financial and budgetary implementation of this institution is presented as follows (information drawn from the Report on budgetary and financial management - Section European Parliament.

• Revenue: total revenue entered in the accounts as at 31 December 2011 amounted to EUR 173 293 432, including EUR 23 815 077 in assigned revenue.
• Initial budget and amending budgets: authorised appropriations in Parliament’s initial budget for 2011 totalled EUR 1 685 829 393, a 4% increase over the 2010 budget (EUR 1 616 760 399).

• Carry-overs from 2011 to 2012: automatic carry-overs to the financial year 2012 totalled EUR 222 900 384, or 14% of appropriations committed (2010: 15%). Uncommitted appropriations at year-end that were carried over to the financial year 2012 (non-automatic carry-overs) totalled EUR 21 700 000 — or 1.3% of final appropriations (2010: 0.6 %) – essential building payments.

3) Budgetary implementation - conclusions: the main characteristics of the Parliament’s budgetary implementation for the financial year 2011 were chiefly marked by continued adjustments, started in 2010, to cope with the entry into force of the Treaty of Lisbon and thus enable Parliament to capitalise to the full on its enhanced institutional role.

Parliament also:

• made arrangements to accommodate the 18 additional Members provided for by the Treaty of Lisbon;
• began the preparations for the accession of Croatia;
• made beneficial changes in the area of information and communication policy (with a particular focus on visitors’ services and the opening of the new Centre, the "Parlementarium", as well as the pursuit of the project, "The House of European History");
• continued to implement multiannual programmes to rationalise and modernise key sectors of its Administration;
• continued its building projects (in particular, the purchase of the TREBEL building).