PURPOSE: to refuse to grant discharge to Council in respect of the implementation of the European Council's and the Council's budget for the financial year 2012.

NON-LEGISLATIVE ACT: Decision 2014/824/EU of the European Parliament and of the Council on discharge in respect of the implementation of the general budget of the European Union for the financial year 2012, Section II — European Council and Council.

CONTENT: with the present decision, the European Parliament refuses to grant the Secretary-General of the Council discharge in respect of the implementation of the European Council's and the Council's budget for the financial year 2012.

This decision is in line with the European Parliament's resolution adopted on 23 October 2014 and comprises a series of observations that form an integral part of the discharge decision (please refer to the summary of the opinion of 23/10/2014).

In accordance with Annex V, Article 5, paragraph. 2(b) of the European Parliament’s Rules of Procedure, Parliament decided by 623 votes to 7, with 2 abstentions, to refuse to grant the Secretary-General of the Council discharge in respect of the implementation of the European Council’s and the Council's budget for the financial year 2012 .

Parliament recalled that all Union institutions ought to be transparent and fully accountable to the citizens of the Union for the funds entrusted to them as Union institutions including the European Council and the Council.

It also noted that under Rule 94 of its Rules of Procedure, "the provisions governing the procedure for granting discharge to the Commission in respect of the implementation of the budget shall likewise apply to the procedure for granting discharge to [...] the persons responsible for the implementation of the budgets of other institutions and bodies of the European Union such as the Council (as regards its activity as executive)".

Irregularities in the management of public procurement : Parliament emphasised the fact that in the annual report concerning the financial year 2012, the Court of Auditors included observations on the European Council and the Council concerning errors in the design of procurement procedures. It shared the Court of Auditor's recommendations that the authorising officers of the European Council and Council should improve the design, coordination and performance of procurement procedures through appropriate checks and better guidance.

It noted that the Council did not provide any further reply to the Court of Auditor's recommendations.

Other pending issues : Parliament called on the Council to inform Parliament about the progress of construction and the final costs projection of the 'Europa' building as well as the cost incurred to date relating to the construction of the 'Residence Palace' building project (including information detailing the total amount of appropriations used in the purchase of the building).

It reiterated its call on the Council to provide information on its process of administrative modernisation, in particular on the concrete implementing measures of that process and on the anticipated impact on the Council's budget.

Discharge procedure : in general, Parliament regretted the difficulties repeatedly encountered in the discharge procedures to date, which were due to a lack of cooperation from the Council . It pointed out that Parliament refused to grant discharge to the Secretary-General of the Council in relation to the financial years 2009, 2010 and 2011 and that it postponed the decision on granting the Secretary-General of the Council discharge in relation to the financial year 2012 for the reasons set out in its resolution of 3 April 2014 (please refer to the summary of the resolution). It confirmed that it is unable to make an informed decision on granting discharge.

Parliament reminded the Council of the Commission's view that all institutions are fully part of the follow-up process to the observations made by the Parliament in the discharge exercise and that all institutions should cooperate to ensure the smooth functioning of the discharge procedure. It regretted that the Council continues to fail to provide answers to Parliament's questions which were sent in April 2014 and recalled the conclusions of the Parliament workshop on Parliament's Right to Grant Discharge to the Council held on 27 September 2012 at which the legal and academic experts largely agreed on the Parliament's right to information. According to the Parliament, it insisted that the expenditure of the Council must be scrutinised in the same way as that of other institutions. It took the view that failure to submit the requested documents to Parliament above all undermines the right of citizens of the Union to information and transparency and is becoming a cause for concern, reflecting as it does a certain democratic deficit within the Union institutions. Parliament urged the Council therefore not to treat its requests for access to information as a bid for institutional supremacy but to give priority to the right of the public to be fully informed .

Proposed solutions : Members considered that Parliament and the Council could make some progress by setting up a " modus vivendi " procedure together with a list of documents to be exchanged in order to fulfil their respective roles in the discharge process. They encouraged, in this respect, the Council to seek a political solution to the Council discharge regardless the different legal views which Parliament and the Council continue to hold. Parliament also considered that satisfactory cooperation between Parliament, the European Council and the Council as a result of an open and formal dialogue procedure can be a positive sign to be sent to the citizens of the Union.

The Committee on Budgetary Control unanimously adopted the report by Tamás DEUTSCH (EPP, HU), in which it called on the European Parliament to refuse to grant the Secretary-General of the Council discharge in respect of the implementation of the European Council’s and the Council's budget for the financial year 2012 .

Members recalled that all Union institutions ought to be transparent and fully accountable to the citizens of the Union for the funds entrusted to them as Union institutions including the European Council and the Council.

They also noted that under Rule 94 of its Rules of Procedure, "the provisions governing the procedure for granting discharge to the Commission in respect of the implementation of the budget shall likewise apply to the procedure for granting discharge to [...] the persons responsible for the implementation of the budgets of other institutions and bodies of the European Union such as the Council (as regards its activity as executive)".

In parallel, Members emphasised the fact that in the annual report concerning the financial year 2012, the Court of Auditors included observations on the European Council and the Council concerning errors in the design of procurement procedures. They shared the Court of Auditor's recommendations that the authorising officers of the European Council and Council should improve the design, coordination and performance of procurement procedures through appropriate checks and better guidance.

They noted that the Council did not provide any further reply to the Court of Auditor's recommendations.

Other pending issues : Members called on the Council to inform Parliament about the progress of construction and the final costs projection of the 'Europa' building as well as the cost incurred to date relating to the construction of the 'Residence Palace' building project (including information detailing the total amount of appropriations used in the purchase of the building)?

They reiterated their call on the Council to provide information on its process of administrative modernisation, in particular on the concrete implementing measures of that process and on the anticipated impact on the Council's budget.

Discharge procedure : in general, Members regretted the difficulties repeatedly encountered in the discharge procedures to date, which were due to a lack of cooperation from the Council . They pointed out that Parliament refused to grant discharge to the Secretary-General of the Council in relation to the financial years 2009, 2010 and 2011 and that they postponed the decision on granting the Secretary-General of the Council discharge in relation to the financial year 2012 for the reasons set out in its resolution of 3 April 2014 (please refer to the summary of the resolution).

They reminded the Council of the Commission's view that all institutions are fully part of the follow-up process to the observations made by the Parliament in the discharge exercise and that all institutions should cooperate to ensure the smooth functioning of the discharge procedure. They regretted that the Council continues to fail to provide answers to Parliament's questions which were sent in April 2014 and recalled the conclusions of the Parliament workshop on Parliament's Right to Grant Discharge to the Council held on 27 September 2012 at which the legal and academic experts largely agreed on the Parliament's right to information.

According to the Members, they insisted that the expenditure of the Council must be scrutinised in the same way as that of other institutions. They took the view that failure to submit the requested documents to Parliament above all undermines the right of citizens of the Union to information and transparency and is becoming a cause for concern, reflecting as it does a certain democratic deficit within the Union institutions. Members urged the Council therefore not to treat Parliament's requests for access to information as a bid for institutional supremacy but to give priority to the right of the public to be fully informed .

Proposed solutions : Members considered that Parliament and the Council could make some progress by setting up a " modus vivendi " procedure together with a list of documents to be exchanged in order to fulfil their respective roles in the discharge process. They encouraged, in this respect, the Council to seek a political solution to the Council discharge regardless the different legal views which Parliament and the Council continue to hold. They also considered that satisfactory cooperation between Parliament, the European Council and the Council as a result of an open and formal dialogue procedure can be a positive sign to be sent to the citizens of the Union.

The European Parliament decided to postpone its decision on granting the Secretary-General of the Council discharge in respect of the implementation of the European Council's and the Council's budget for the financial year 2012 .

In its resolution accompanying the discharge decision, adopted by 573 votes to 16 with 15 abstentions, Parliament recalled that all Union institutions ought to be transparent and fully accountable to the citizens of the Union for the funds entrusted to them as Union institutions. It indicated that in the absence of replies to Parliament's questions and lack of sufficient information, Parliament was not in the position to make an informed decision about granting the discharge.

While noting that the Court of Auditors had concluded that the payments as a whole for the year ended on 31 December 2012 for administrative and other expenditure of the institutions and bodies were free from material error, Parliament pointed out that the Court included observations on the European Council and the Council concerning errors in the design of procurement procedures. It concurred with the Court of Auditors' recommendations that authorising officers should improve the design, coordination and performance of procurement procedures by means of appropriate checks and better guidance. It recommended, furthermore, a stricter application of the procurement rules, with which all the Union institutions are bound to comply.

Reasons of postponement of the decision on granting discharge : recalling that Parliament refused to grant discharge to for the implementation of the Council’s budget for the financial years 2009, 2010 and 2011 for the reasons set out in its resolutions, Parliament sets out the reasons for calling for a postponement of the discharge this year:

increased cooperation : Parliament considered that effective supervision of the Union’s budget implementation required cooperation between Parliament, the European Council, and the Council through a working arrangement. To this effect, it regretted the difficulties encountered up to now with the discharge procedures. It reiterated that it was only possible to implement effective budgetary control with the cooperation of Parliament and the Council , the main elements of which must comprise formal meetings between representatives of the Council and Parliament’s Committee on Budgetary Control, answering questions asked by the committee’s members on the basis of a written questionnaire and submitting documents to serve as background material for budgetary controls on request. Without this cooperation, Parliament was not in the position to make an informed decision on granting discharge; follow-up to the observations made by Parliament : whilst welcoming the efforts of the Greek presidency to reopen the negotiations between the institutions, Parliament stressed that such negotiations did not bring expected results in the past. It stated that it fully endorsed the Commission's views in its letter of 23 January 2014 that all institutions were fully part of the follow-up process to the observations made by Parliament in the discharge exercise and that all institutions should cooperate to ensure the smooth functioning of the discharge procedure in full respect of the relevant provisions in the Treaty on the Functioning of the European Union and in the relevant secondary law; workshop on analysis of Parliament’s function : Parliament recommended organising a workshop focussing on the legal analysis of Parliament’s function of budgetary control and of the Council’s duty to cooperate as well as the drafting of an own initiative report focussing on possible amendments to the TFEU in order to prepare for the possibility of instigating legal proceedings , as well as the possibility of a change or clarification of the rules on granting discharge to other institutions stated in the TFEU; lack of transparency on the part of the Council : Parliament recalled that it granted discharge to the other institutions after considering the documents provided and the replies given to the questions, and it regretted that it repeatedly encounters problems in receiving answers from the Council. It considered it desirable for Parliament to exercise its power to grant discharge pursuant to Articles 316, 317 and 319 of the TFEU in line with current interpretation and practice, namely to grant discharge to each heading of the budget individually in order to maintain transparency and democratic accountability towards Union taxpayers. Parliament regretted that not all the Union institutions respect the same standards in relation to transparency and believed that the Council should make improvements in that regard. It was convinced that Parliament and the Council, as joint legislators, should apply the same standards of transparency. It called on the Court of Auditors, therefore, to conduct a thorough audit of the administrative and operational activities of the European Council , the Council, and the European External Action Service, without encroaching on the powers and responsibilities laid down in the Treaties, and to report on the findings to Parliament.

Implementation of the budget : Parliament noted that in 2012, the European Council and the Council had an overall budget of EUR 533.92 million (EUR 563.262 million in 2011), with an implementation of 91.8 %. It was concerned that the underspending rate continues to be high and called for the development of key performance indicators within the most critical areas, such as delegations' travel envelopes, logistics and interpretation. It took note that EUR 44 million of commitments were cancelled in 2012 due to underspending and a reduction in the use of facilities.

Separate budgets for the Council and the European Council : Parliament reiterated that the budget of the European Council and the Council should be separated in order to contribute to the transparency of the financial management of the institutions and to improve the accountability of both institutions.

Following last year’s request, it called on the European Council and the Council to send Parliament their annual activity report with a comprehensive overview of all human resources available to both institutions, broken down by category, grade, sex, nationality and vocational training. Parliament supported the establishment of an Audit Committee in the Council's General Secretariat and took special note of the internal audit recommendation to create a specific framework on anti-fraud policy , which was lacking at the Council's General Secretariat. Parliament called on the Council to act in accordance with the recommendation to include the measures taken to implement this recommendation in the annual activity report.

Buildings policy : Parliament took note that the ‘Europa’ building project continued to be closely monitored and that some of the audit recommendations were still lagging behind execution. It called on the Council to provide a thorough written explanation detailing the total amount of appropriations used in the purchase of the Résidence Palace building, the budget items from which these appropriations were drawn, the instalments that have been paid thus far, the instalments that remain to be paid and the purpose that the building will serve. Parliament invited the Council to inform the discharge authority about the construction progress and the final costs projection compared to the initial budget of EUR 240 million and to explain any cost increases incurred between the beginning of the construction works in 2008 and the projected completion in 2014.

Appointment of a Member of the Court of Auditors : lastly, Parliament considered that the Council acted disdainfully towards Parliament by appointing a Member of the Court of Auditors, despite the fact that Parliament gave a negative opinion. It urged the Council to pay attention to the opinions expressed by Parliament on the nomination of members of the Court of Auditors and to the declarations of prospective members of the Court of Auditors before they are nominated.

The Committee on Budgetary Control adopted the report by Bogusław SONIK (EPP, PL), and called on the European Parliament to postpone its decision on granting the Secretary-General of the Council discharge in respect of the implementation of the European Council's and the Council's budget for the financial year 2012.

Members recalled that all Union institutions ought to be transparent and fully accountable to the citizens of the Union for the funds entrusted to them as Union institutions. They indicated that in the absence of replies to Parliament's questions and lack of sufficient information, Parliament was not in the position to make an informed decision about granting the discharge, which was why the committee asked for postponement of the discharge.

While noting that the Court of Auditors had concluded that the payments as a whole for the year ended on 31 December 2012 for administrative and other expenditure of the institutions and bodies were free from material error, Members pointed out that the Court included observations on the European Council and the Council concerning errors in the design of procurement procedures. They concurred with the Court of Auditors' recommendations that authorising officers should improve the design, coordination and performance of procurement procedures by means of appropriate checks and better guidance. They recommended, furthermore, a stricter application of the procurement rules, with which all the Union institutions are bound to comply.

Reasons of postponement of the decision on granting discharge : recalling that Parliament refused to grant discharge to for the implementation of the Council’s budget for the financial years 2009, 2010 and 2011 for the reasons set out in its resolutions, the committee set out the reasons for calling for a postponement of the discharge this year.

· Increased cooperation: Members considered that effective supervision of the Union’s budget implementation required cooperation between Parliament, the European Council, and the Council through a working arrangement, and they regretted the difficulties encountered up to now with the discharge procedures. They reiterated that it was only possible to implement effective budgetary control with the cooperation of Parliament and the Council , the main elements of which must comprise formal meetings between representatives of the Council and Parliament’s Committee on Budgetary Control, answering questions asked by the committee’s members on the basis of a written questionnaire and submitting documents to serve as background material for budgetary controls on request. Without this cooperation, Parliament was not in the position to make an informed decision on granting discharge.

· Follow-up to the observations made by Parliament : Members fully endorsed the Commission's views in its letter of 23 January 2014 that all institutions were fully part of the follow-up process to the observations made by Parliament in the discharge exercise and that all institutions should cooperate to ensure the smooth functioning of the discharge procedure in full respect of the relevant provisions in the Treaty on the Functioning of the European Union and in the relevant secondary law.

Workshop on analysis of Parliament’s function : the committee recommended organising a workshop focussing on the legal analysis of Parliament’s function of budgetary control and of the Council’s duty to cooperate as well as the drafting of an own initiative report focussing on possible amendments to the TFEU in order to prepare for the possibility of instigating legal proceedings , as well as the possibility of a change or clarification of the rules on granting discharge to other institutions stated in the TFEU.

Lack of transparency on the part of the Council: Members recalled that Parliament granted discharge to the other institutions after considering the documents provided and the replies given to the questions, and they regretted that Parliament repeatedly encounters problems in receiving answers from the Council. They considered it desirable for Parliament to exercise its power to grant discharge pursuant to Articles 316, 317 and 319 of the TFEU in line with current interpretation and practice, namely to grant discharge to each heading of the budget individually in order to maintain transparency and democratic accountability towards Union taxpayers. They regretted that not all the Union institutions respect the same standards in relation to transparency and believed that the Council should make improvements in that regard. The committee was convinced that Parliament and the Council, as joint legislators, should apply the same standards of transparency. It called on the Court of Auditors, therefore, to conduct a thorough audit of the administrative and operational activities of the European Council, the Council, and the European External Action Service, without encroaching on the powers and responsibilities laid down in the Treaties, and to report on the findings to Parliament.

Implementation of the budget : the report noted that in 2012, the European Council and the Council had an overall budget of EUR 533.92 million (EUR 563.262 million in 2011), with an implementation of 91.8 %. Members were concerned that the underspending rate continues to be high and called for the development of key performance indicators within the most critical areas, such as delegations' travel envelopes, logistics and interpretation. They took note that EUR 44 million of commitments were cancelled in 2012 due to underspending and a reduction in the use of facilities.

Separate budgets for the Council and the European Council: Members reiterated that the budget of the European Council and the Council should be separated in order to contribute to the transparency of the financial management of the institutions and to improve the accountability of both institutions.

Following last year’s request, they called on the European Council and the Council to send Parliament their annual activity report with a comprehensive overview of all human resources available to both institutions, broken down by category, grade, sex, nationality and vocational training. The committee supported the establishment of an Audit Committee in the Council's General Secretariat and took special note of the internal audit recommendation to create a specific framework on anti-fraud policy , which was lacking at the Council's General Secretariat. Members called on the Council to act in accordance with the recommendation to include the measures taken to implement this recommendation in the annual activity report.

Buildings policy : Members took note that the ‘Europa’ building project continued to be closely monitored and that some of the audit recommendations were still lagging behind execution. They called on the Council to provide a thorough written explanation detailing the total amount of appropriations used in the purchase of the Résidence Palace building, the budget items from which these appropriations were drawn, the instalments that have been paid thus far, the instalments that remain to be paid and the purpose that the building will serve. The committee invited the Council to inform the discharge authority about the construction progress and the final costs projection compared to the initial budget of EUR 240 million and to explain any cost increases incurred between the beginning of the construction works in 2008 and the projected completion in 2014.

Appointment of a Member of the Court of Auditors: lastly, Members considered that the Council acted disdainfully towards Parliament by appointing a Member of the Court of Auditors, despite the fact that Parliament gave a negative opinion . They urged the Council to pay attention to the opinions expressed by Parliament on the nomination of members of the Court of Auditors and to the declarations of prospective members of the Court of Auditors before they are nominated .

In view of the observations made in the Court of Auditor's report, the Council called on the European Parliament to grant discharge to all of the Union’s institutions in regard to the implementation of their respective budgets for the financial year 2012 .

Overall, the Council’s remarks were positive in regard to the expenditure of the institutions since it noted that, again in 2012, the administrative expenditure of EU institutions and bodies remained free from material error with an estimated error rate of 0%, and that their supervisory and control systems continued to comply with the requirements of the Financial Regulation.

The Council welcomed the fact that, according to the Court's assessment, no serious errors were detected with regard to the effectiveness of the supervisory and control systems, in the individual institutions, except for a limited number of errors in the procurement procedures and the management of social allowances .

It welcomed the measures already taken and encouraged the institutions concerned to address the remaining weaknesses identified by the Court.

PURPOSE: presentation of the Report of the Court of Auditors on the 2012 budget (Analysis of the accounts of the European Council and the Council).

CONTENT: the Court of Auditors published its 36th Annual Report on the implementation of the EU budget for the 2012 financial year.

In accordance with the tasks and objectives conferred on the Court of Auditors by the Treaty on the Functioning of the European Union, it provides under the discharge procedure, for both the European Parliament and Council, a statement of assurance (“DAS”) about the reliability of the accounts and the legality and regularity of the transactions of each institution, body or agency of the EU, based on an independent external audit.

The audit also focuses on the budget implementation of the European Council and the Council.

On the basis of its audit work, the Court considers that payments for “Administrative and other expenditure” policy are, overall, significantly error-free . The estimated error rate is next to nothing.

Although the Court has observed some errors and weaknesses, the examined supervisory and control systems are likely to reduce the rate of error present in initial payment requests to an acceptable level. These systems are therefore assessed as effective.

The main risks regarding administrative and other expenditure are:

the non-compliance with the procedures for procurement; the implementation of contracts; recruitment issues; the calculation of salaries and allowances.

The Court makes a certain number of particular observations as regards each EU institution or body of the European Union. In the specific case of the European Council and the Council’s audit, the Court examined a number of procurement procedures . Overall, no serious errors or weaknesses were detected. However, due to errors in the design of the procedure, a weakness was identified, in one case, in the performance of a negotiated procedure and, in another case, in the application of a selection criterion.

These observations do not affect the positive overall appraisal given that they do not significantly affect overall administrative expenditure.