Who manages the budget?
Ultimate responsibility for implementing the budget lies with the European Commission. But in practice, some 80% of the budget is spent under what is known as 'shared management', with individual EU countries actually distributing funds and managing expenditure.
A set of checks and balances is in place to ensure the funds in question are managed properly and in accordance with the rules:
- The Commission must recover all unduly paid funds, whether resulting from error, irregularity or deliberate fraud.
- National governments are equally responsible for protecting the EU’s financial interests. This involves cooperation with the Commission and its Anti-Fraud Office (OLAF).
How is the budget managed?
Up to 80% of the EU budget expenditure is managed by Member States under so-called shared management in areas such as agriculture, growth and employment aid to EU regions (European Structural and Investment Funds).
In agriculture, national paying agencies give formal assurance for the EU money they spend through annual management declarations. This has helped reduce the scope for errors.
Under the new rules of the Financial Regulation, national fund managers for structural and other EU funds under shared management will also have to issue annual management declarations that will be subject to independent audit.
Budget implementation may be:
- direct (Commission, Union delegations, Executive Agencies)
- indirect with:
- third countries or the bodies they have designated
- international organisations and their agencies
- the European Investment Bank (EIB) and the European Investment Fund (EIF)
- Article 208 and 209 of the Financial Regulation: agencies, public-private partnership bodies (PPP) etc.
- public law bodies
- private law bodies with a public service mission
- bodies governed by the private law of a Member State that are entrusted with the implementation of a public-private partnership (PPP)
- persons entrusted with the implementation of specific actions in the Common Foreign and Security Policy (CFSP).
- shared (Member States).
What role does the EU Directorate-General for Budget (DG Budget) have?
DG Budget has an important role in budget adoption and implementation:
- helps define the rules for financial management (Financial Regulation), which are reviewed at least two years before the end of each Multiannual Financial Framework and whenever the need arises
- establishes internal control principles
- manages the accounting system and prepares the annual accounts
Its financial activities are closely supervised and monitored.