European Court of Auditors

The European Court of Auditors is the EU institution responsible for independent external audit of the EU budget. Founded in 1975 and elevated to the status of an EU institution by the Maastricht Treaty, it examines whether all EU revenue has been received and all expenditure incurred in a lawful and regular manner, and whether the EU budget has been managed soundly. For procurement professionals, the Court is the primary body that identifies systemic weaknesses in how EU-funded contracts are awarded and managed.

What is the European Court of Auditors?

The Court of Auditors has 27 members, one from each EU member state, appointed by the Council for renewable six-year terms. It operates independently of the other EU institutions and reports its findings to the European Parliament and the Council.

The Court's work divides into two main categories:

Annual Statement of Assurance (DAS). Each year the Court examines a representative sample of EU budget transactions and issues a statement of assurance on the reliability of the accounts and the legality and regularity of underlying transactions. Procurement irregularities discovered in this sample are categorised as errors. The Court calculates an estimated error rate for each major spending area. When error rates exceed the materiality threshold of two percent, the Court issues a qualified or adverse opinion for that area. Procurement failures, such as inadequate competition, unjustified direct awards, and conflicts of interest, are consistently among the most common error types identified.

Special reports. In addition to the DAS, the Court publishes around 20 to 25 special reports per year on specific topics. Several of these address procurement directly, examining how well the Commission or member states are managing public contracts in areas such as infrastructure, cohesion policy, defence, or digital procurement. Special reports include concrete recommendations to the Commission and member states.

Performance audit. The Court also audits whether EU spending achieves its intended results. This includes reviewing whether procurement procedures were designed to deliver value for money, not just legal compliance.

Why it matters for bidders

Suppliers working on EU co-funded projects, such as those funded under the European Structural and Investment Funds (ESIF), the Cohesion Fund, or Horizon Europe, need to understand that their contracts may be subject to Court of Auditors scrutiny. A finding that a national managing authority awarded a contract irregularly can trigger financial corrections, meaning the EU claws back funding from the member state. In turn, the managing authority may seek to recover those costs from the contractor or withhold final payments.

Following the Court's special reports also helps suppliers understand where the Commission is likely to tighten oversight requirements in future funding rounds. A special report criticising single-source awards in a particular programme often leads to stricter prior approval requirements for non-competitive procurement in the next programme generation.

Example

The Court of Auditors' 2021 special report on public procurement in EU cohesion spending found that procurement remained the area with the highest error rate in EU expenditure. Common errors included splitting contracts to stay below thresholds, applying restrictive selection criteria, and inadequate documentation of evaluation decisions. Member state managing authorities responded by introducing additional procurement checklist requirements for project promoters.

Frequently Asked Questions

Does the Court of Auditors have the power to sanction contracting authorities?

No. The Court has no enforcement or sanctioning powers. It reports its findings to the Parliament and the Council. The Commission then decides whether to pursue financial corrections or refer matters to OLAF for investigation. The Court's influence is through transparency and recommendation.

Can a supplier access Court of Auditors audit reports?

Yes. All annual reports and special reports are published on the Court's website and in the Official Journal. They are freely accessible and frequently cited by national audit bodies, managing authorities, and procurement practitioners.

How does the Court differ from OLAF?

The Court is an auditor: it examines whether money was spent lawfully and efficiently and reports to the legislature. OLAF is an investigative body: it investigates suspected fraud, corruption, and serious irregularities and can refer findings to national prosecutors. The two institutions complement each other but have distinct mandates and powers.