Concept of legality and regularity
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Concept of legality and regularity

Concept of legality and regularity

The ECA reports on legality and regularity of transactions underlying the EU’s accounts. Expenditure in the EU context must have a double legal basis and a budgetary commitment.
Compliance audit
Concept
Ref: 42.200

Principles

Concept of legality and regularity

Legality

An act may be illegal on the grounds of lack of competence (of those adopting the act); infringement of an essential procedural requirement; infringement of the Treaties or of any rule of law relating to their application, or misuse of powers (Article 263 of the TFEU )

Regularity

Irregularity means any infringement of a provision of EU law resulting from an act or omission by an
economic operator
which has, or would have, the effect of reducing or losing revenue or including an unjustified item of expenditure (Regulation (EC, Euratom) No 2988/95 ). In view of the difficulty in the Union sphere of drawing a precise boundary between the concepts of legality and regularity, and given that the consequences of non-compliance with these rules are exactly the same for the
Statement of Assurance
, ECA does not make a distinction between the two concepts. Thus, ECA verifies that the transactions are both legal and regular and the term “regular” is used to represent both concepts.

Legal and regular

To be legal and regular, a transaction must comply in all material respects with:
  • Union legislation, comprising the financial rules (TFEU , Financial Regulation ), the basic legislation establishing the policy, programme or activity concerned, any rules or regulations established in accordance with that basic legislation, and the contractual framework.
  • Where Union legislation requires or empowers member states to draw up national laws or rules for the management of Union programmes, then conformity with these laws or rules is examined in the context of legality and regularity.
  • Legislation of a purely national nature is relevant in the context of an audit of the legality and regularity if this introduces compliance requirements on the EU funding. This is particularly relevant in shared management .
Expenditures in the European Union context must have a double legal basis (a basic act and a legal commitment) and a budgetary commitment.

Basic act

The basic act, adopted by the
legislative authority
, provides the legal foundation necessary for the Union measure and the related expenditure. Basic acts are the regulations, directives and decisions of the Council and of the Parliament, of the Council or of the Commission referred to in Article 288 of the TFEU .

Legal commitment

The legal commitment is the act whereby the authorising officer enters into or establishes an obligation which results in a charge. It may consist of a financing decision or contract.
  • Financing decisions, which are required for all operational expenditure, are taken by the Commission. These decisions specify the activities which will be undertaken to implement the budget for a given year. In order to be implemented, they must be followed by award decisions.
  • Award decisions (e.g. contracts) are separate implementation decisions generally taken by the responsible authorising officer, on the basis of a financing decision already adopted by the Commission. An award decision specifies to whom contracts or grants are awarded.

Budgetary commitment

The budgetary commitment is the operation reserving the appropriation necessary to cover subsequent payments to honour a legal commitment. It is based on an appropriation made available in the budget by the
budgetary authority
. Revenue and expenditure are shown in the budget in accordance with a binding nomenclature which reflects the nature and purpose of each item, as imposed by the
budgetary authority
. The requirement for a double legal basis and budgetary commitment is highlighted in the following diagram. Double legal basis

Related documents

Rules Art 263 , 287 and 288 TFEU
Art 2 FR
Regulation (EC, Euratom) No 2988/95
Last Modified: 04/11/2021 11:34   Tags: