DIRECTORATE GENERAL FOR INTERNAL POLICIES POLICY DEPARTMENT D: BUDGETARY AFFAIRS How do national parliaments supervise and control their own budgets? Practice and experience from selected Member States STUDY Abstract The study assesses the budget discharge procedures in ten EU Member States and one Third Country (Canada), in order to identify good practices to help the European Parliament to enhance its own budget discharge procedure. The focus is on the effectiveness of the national budget discharge procedures, in terms of achieving two objectives, i.e. to ensure sound financial management and to enhance transparency. The study takes the European Parliament’s budget discharge procedure as a point of reference in order to better understand the national parliaments’ procedures. The study findings identify best practices that might contribute to a further enhancement of the European Parliament’s budget discharge procedure in the following areas: a robust and trust instilling multi-facetted auditing framework; public transparency and accessibility of the budget; documentary basis; fostering accountability in Members of Parliament’s expenses; building skills; formalising the discharge procedure. IP/D/ALL/FWC/2009-056 24/10/2012 PE 490.662 EN This document was requested by the European Parliament's Committee on Budgetary Affairs. It designated Mr Gerben-Jan Gerbrandy to follow the study AUTHORS Blomeyer & Sanz c/cerezos 545b - cd 250 el clavin, es-19163 Guadalajara +34 650 480 051 [email protected] www.blomeyer.eu RESPONSIBLE ADMINISTRATOR Ms Beata Grzebieluch Policy Department D: Budgetary Affairs European Parliament B-1047 Brussels E-mail: [email protected] LINGUISTIC VERSIONS Original: EN Translation: FR and DE ABOUT THE EDITOR To contact the Policy Department or to subscribe to its newsletter please write to: [email protected] Manuscript completed in July 2012. Brussels, © European Union, 2012. This document is available on the Internet at: http://www.europarl.europa.eu/studies DISCLAIMER The opinions expressed in this document are the sole responsibility of the author and do not necessarily represent the official position of the European Parliament. Reproduction and translation for non-commercial purposes are authorized, provided the source is acknowledged and the publisher is given prior notice and sent a copy How do national parliaments supervise and control their own budgets? Practice and experience from selected Member States ____________________________________________________________________________________________ CONTENTS LIST OF ABBREVIATIONS 5 LIST OF PARLIAMENTS’ OFFICIAL NAMES 6 LIST OF TABLES 7 LIST OF FIGURES 8 EXECUTIVE SUMMARY 9 SYNTHÈSE 13 ZUSAMMENFASSUNG 18 1. INTRODUCTION 23 1.1. Objectives 23 1.2. Methodology 24 1.2.1. Approach 24 1.2.2. Concepts / definitions 25 1.3. Report structure 28 2. BUDGET DISCHARGE IN THE EUROPEAN PARLIAMENT 29 2.1. Legal framework 29 2.2. Nature of the EP’s specific budget discharge procedure 30 2.3. The actors involved in the procedure 32 2.3.1. Internal actors 32 2.3.2. External actors 34 2.3.3. Assessment 35 2.4. The procedure: formal and informal steps 35 2.4.1. Point of departure 36 2.4.2. Documentary basis 36 2.4.3. Exchanges of views 38 2.4.3.1. Formal meetings 38 2.4.3.2. Informal exchanges 38 2.4.4. Adoption of the draft report on budget discharge 38 2.4.5. Assessment 41 3. BUDGET DISCHARGE IN NATIONAL PARLIAMENTS 43 3.1. The actors involved in ex post budgetary control 43 3.1.1. Internal actors 43 3.1.2. External actors 49 3.1.2.1. The Supreme Audit Institutions (SAIs) 50 3.1.2.2. The role of executive government 52 3.1.2.3. Other external actors 53 3.2. The procedures 54 3.2.1. Relation between ongoing and ex post control 55 3.2.2. Formal approach 57 3.2.2.1. Legal basis 57 3.2.2.2. Implementation 58 3.2.3. Informal approach 61 3 Policy Department D: Budgetary Affairs ____________________________________________________________________________________________ 4. CONCLUSIONS AND RECOMMENDATIONS 64 4.1. Conclusions 64 4.1.1. Contribution to sound financial management 64 4.1.2. Contribution to transparency 67 4.2. Recommendations 69 4.2.1. Recommendations concerning a robust and trust instilling multi-facetted auditing framework 69 4.2.2. Recommendations to generate public transparency and accessibility of the budget 70 4.2.3. Recommendations regarding the documentary basis of the EP’s discharge procedure 70 4.2.4. Recommendations to foster accountability in MP’s expenses 71 4.2.5. Recommendations for building skills 71 4.2.6. Recommendations to formalise the discharge procedure 72 Annex 1 – Budget of the EP and case study parliaments 73 1. EP AND NATIONAL PARLIAMENTS BUDGETS: CATEGORIES OF EXPENDITURES AND RATIOS 73 2. COMPARATIVE ANALYSIS 89 Annex 2 - Stakeholders 91 Annex 3 - References 93 Annex 4 - Survey 96 4 How do national parliaments supervise and control their own budgets? Practice and experience from selected Member States ____________________________________________________________________________________________ LIST OF ABBREVIATIONS AEAC UK House of Commons Administration Estimate Audit Committee CJ Court of Justice of the European Union CoA Court of Auditors CONT Committee on Budgetary Control CSOEC French Conseil Supérieur de l’Ordre des Experts-Comptables DG Directorate-General of the European Parliament EC European Commission ECA European Court of Auditors EP European Parliament EU European Union FIIA Finnish Institute of International Affairs IPSA UK House of Commons Independent Parliamentary Standards Authority MEAC UK House of Commons Members Estimate Audit Committee MEP Member of the EP MS Member State NAO UK National Audit Office NAOD National Audit Office of Denmark NCA Netherlands Court of Audit OECD Organisation for Economic Cooperation and Development PC Parliamentary Committee PEC Public Expenditure Committee POO Finnish Parliamentary Ombudsman Office SAI Supreme Audit Institution SAO Estonian State Audit Office 5 Policy Department D: Budgetary Affairs ____________________________________________________________________________________________ LIST OF PARLIAMENTS’ OFFICIAL NAMES CZ Czech Republic Poslanecká sněmovna Parlamentu České republiky DE Germany Bundestag DK Denmark Folketing EE Estonia Riigikogu ES Spain Congreso de los Diputados FI Republic of Finland Eduskunta FR Republic of France Assemblée Nationale NL The Netherlands Tweede Kamer PL Republic of Poland Sejm UK United Kingdom House of Commons CN Canada House of Commons 6 How do national parliaments supervise and control their own budgets? Practice and experience from selected Member States ____________________________________________________________________________________________ LIST OF TABLES TABLE 1 Case study selection 25 TABLE 2 Discharge decisions for the 2009 budget discharge 26 TABLE 3 Timetable for EP 2009 budget discharge 39 TABLE 4 ECA observations concerning the EP 41 TABLE 5 Main characteristics of case study parliaments 43 TABLE 6 Budget discharge procedures’ legal basis 58 7 Policy Department D: Budgetary Affairs ____________________________________________________________________________________________ LIST OF FIGURES FIGURE 1 Eurobarometer - Opinion on corruption within the institutions of the EU (‘total agree on corruption within EU institutions’, in %) 32 FIGURE 2 Internal actors involved in EP Budget discharge 34 FIGURE 3 Overview of EP 2009 budget discharge 40 FIGURE 4 Internal actors in parliamentary budget discharge (% of survey respondents confirming participation of a specific actor) 44 FIGURE 5 Specific Committee (% of survey respondents confirming having a specific committee dealing with budget discharge) 47 FIGURE 6 External actors in parliamentary budget discharge (% of survey respondents confirming participation of a specific actor) 50 FIGURE 7 Formal or informal approach (% of survey respondents confirming having formal and/or informal steps in their budget discharge procedures) 54 FIGURE 8 Documentation (% of survey respondents specifying the different kind of documents reviewed in the context of the budget discharge procedure) 55 FIGURE 9 Exchanges of information (% of survey respondents specifying which exchanges of information among actors take place during the procedure) 55 FIGURE 10 Effectiveness (% of survey respondents confirming the (lack of) need of reform for their budget discharge procedures) 64 FIGURE 11 EP and national parliaments’ expenditure categories 89 8 How do national parliaments supervise and control their own budgets? Practice and experience from selected Member States ________________________________________________________________________________ EXECUTIVE SUMMARY The present study aims to provide an overview on the existing budget discharge procedures in ten selected Member States and one Third Country, namely Canada, in order to identify good practices that could inspire the European Parliament (EP) to enhance its own budget discharge procedure. The EP contracted the group Blomeyer & Sanz and One World Trust to conduct the study between November 2011 and June 2012. Objectives and methodology The study has two main objectives: Assessing the effectiveness of how Member State parliaments discharge their own budgets (including supervision and control of the budget); and contributing, on the basis of an analysis of existing data and case studies, to further improvement of the EP’s control and discharge of its own budget in the future. The methodology adopted for delivering this assessment