Parliament signed off the European Commission's accounts for 2012 on Thursday, with reservations over the high error rate in agriculture and regional policy spending by member states. It also postponed approving the 2012 accounts of the Council because of its lack of cooperation, and of the electronic communications regulatory body BEREC, in Riga, because of shortcomings in budgetary management.
All other EU institutions won the house's "budget discharge" seal of approval.
"Although 95% of expenditure is spent in an orderly way, the remaining spending has to be better controlled, especially as the bulk of the faults are concentrated in eight countries. Financial management in two well-delineated policy areas must be further improved, that is why we gave discharge with political reservations, giving a yellow card to the Commission," said Mr Markus Pieper, who steered the discharge of the Commission through Parliament.
Political reservations show Parliament's dissatisfaction with remedial measures proposed by the Commission in the field of agriculture and regional spending. The error rates there have hiked to 7.9% and 6.8%, respectively, significantly higher than the 4.7% average rate in 2012.
MEPs were highly critical of the slow improvement in the faulty land identification systems in France and Portugal, the long audit procedures threatening the efficiency of checks, the high level of errors in rural development expenditures and inefficient checks on organic production. In regional policy the main stumbling block was the poor quality of first-level audits at member state level. MEPs urged the Commission to carry out random checks to see whether member state authorities verify claims on the EU budget sufficiently rigorously.
Though most of the errors were made by national administrations, Parliament wants a binding commitment from designated members of the new Commission to deal with the causes of high error rates.
Parliament stressed that 80% of EU funds are managed by and in the member states, with most of the errors detectable already at that level. Yet, final responsibility for the regularity of spending lies with the Commission. This practice is called 'shared management'.
The President of the European Parliament was granted discharge by 458 votes to 102, with 49 abstentions. The final vote on the resolution containing observations relating to the decision to grant discharge was postponed to the next session because of concerns about the admissibility of paragraph 47 of the resolution.
Spending by all other institutions was also approved on Thursday.
Council and BEREC discharge postponed to autumn
The discharge for the Council was postponed owing to the member states' failure to cooperate with Parliament in performing its oversight role.
MEPs found the Body of European Regulators for Electronic Communications (BEREC), located in the Latvian capital Riga, lacking in quality in budgetary planning, public procurement and recruitment practices.
"With BEREC, it was not one big thing that led to the postponement but many small things. Postponing the grant of discharge is necessary to give it time to convince the European Parliament it can correct its shortcomings," argued Mr Petri Sarvamaa (EPP, FI), the MEP in charge of discharges for agencies.
The rapporteur noted that weaknesses in budgetary planning, recruitment procedures and public procurement as well as conflicts of interest had been recurring problems, albeit to a lesser degree, with several other agencies.
Parliament voted on a total of 51 reports, covering topics including the spending by the European Commission, the European Parliament, the Council and the European Council, the 31 agencies and the seven joint undertakings of the Union.
Parliament will decide whether or not to grant the Council and BEREC a discharge for their 2012 spending after drafting a second report, for debate in the autumn.
The European Parliament is the sole discharge authority vetting spending of the EU annual budget and the European Development Fund. At the end of each budgetary year it may grant, postpone or refuse discharge, which is required for the formal closure of institutional accounts.