Following the entry into force of the Lisbon Treaty, the European Parliament now shares the power to decide on the entire annual budget of the EU with the Council of the European Union and it has the final say.
Parliament and Council decisions about annual expenditure and revenue must fall within the annual spending limits laid down in the EU's long-term financial plan, the Multiannual Financial Framework, negotiated once every seven years.
Once the EU budget is adopted, the European Commission is responsible for its implementation (other institutions are in charge of their own administrative budgets).
As a directly-elected institution representing EU taxpayers, the European Parliament exercises democratic oversight to make sure that the Commission and the other institutions deal properly with European funds.
The Parliament, on a recommendation from the Council of the European Union, decides whether to grant the discharge, i.e. final approval of how the budget for a specific year has been implemented.
The Parliament takes the decision after careful examination by its Committee on Budgetary Control of the financial accounts of the Commission and the report on its activities for the year in question. It also takes into consideration the Court of Auditors' annual report and the responses of the Commission on specific questions that MEPs may have.
The Parliament may also make recommendations to the Commission on the execution of the budget. The Commission has to report, at the request of Parliament, on the measures taken in light of such observations and comments.
The procedure ends in the granting, postponement or refusal of the discharge.
The Parliament deals in a similar manner with the approval of the accounts of other institutions, including its own administrative budget.