This procedure is one of the special legislative procedures i that are used within the European Union. The discharge procedure is used to approve the discharge of the budget.
The procedure in short: the European Parliament (EP) checks the finances, supported by the annual report of the EU Court of Auditors and a recommendation from the Council of Ministers. The EP can ask the Commission for further information regarding the expenses of the EU. Then the European parliament either approves or disapproves discharge of the budget.
Step 1: Control of finances (Council)
The EU Court of Auditors sends its annual report to the Council of Ministers. The Court of Auditors evaluates the financial year. It may provide a separate assessment regarding income and expenditure in specific policy areas. Also included in the annual report are the statements of the European institutions in response to information requests by the Court of Auditors.
The Council of Ministers provides, partially based on the report of the Court, a positive or negative advice concerning the discharge of the budget.
Step 2: second control of finances (EP)
The European Parliament, too, analyses the report of the Court of Auditors.
The EP has the right to request the Commission to give further evidence of the expenditures and how these expenditures were checked. The Commission is obliged to answer the question as best as they can.
Step 3: decision on discharge
Based on their assessment of the financial year the EP decides by majority of votes cast to either approve or dissapprove discharge of the budget.
Step 4: consequences of not approving the discharge
The European treaties provide no stipulation of what happens should the European Parliament not discharge the budget. The European Parliament's rules of procedure state how the follow-up to this procedure is arranged.
In case the EP does not approve discharge of the budget the decision is postponed by half a year. During that time the budgetary control commission of the EP checks all annual reports and other financial documentation again.
The Parliament then takes a second vote concerning discharge of the budget. Whether the EP approves or dissapproves discharge of the budget, the discharge procedure is closed. Should the EP dissapprove discharge of the budget the Commission is required to make a statement at the next plenary session of the Parliament.
Step 5: improval of the controls after discharge
In every step of the procedure the European Parliament may, partially based on advice of the Council, issue recommendations to improve budgetary oversight. The EP monitors the implementation of its recommendations by the European institutions.
At each step of the procedure the EP decides by majority vote. The Council of Ministers decides by qualified majority of vote.
This procedure applies only to the discharge of the annual budget. The budget is also the only area where the EP has a stronger position in the decision-making process than the Council of Ministers.
The discharge procedure is based upon the Treaty on the Functioning of the European Union.
-general framework: part six TfEU title II chapter 4 (procedure: art. 319)
-rules of procedure European Parliament (annex VI)