31. 12. 83 Official Journal of the European Communities 1 
COURT OF AUDITORS 
In accordance with the provisions of the Treaties (Article 78 f (4) 
ECSC, Article 206 a (4) EEC and Article 108 a (4) EAEC) and 
the Financial Regulation of 21 December 1977 (Article 83), the 
Court of Auditors of the European Communities, at its meeting 
on 24 November 1983, adopted its 
ANNUAL REPORT 
concerning the financial year 1982 
The repcjrt, accompanied by the replies of the institutions to the 
comments of the Court, was transmitted to the authorities 
responsible for giving discharge and to other institutions on 
30 November 1983 in accordance with Article 84 of the Financial 
Regulation. 
Pierre LELONG 
(President) 
Michael N. MURPHY 
Paul GAUDY 
Aldo ANGIOI 
Marcel MART 
Andre MIDDELHOEK 
Keld BRIXTOFTE 
Lothar HAASE 
Stergios VALLAS 
Charles J. CAREY 
31. 12. 83 Official Journal of the European Communities 3 
CONTENTS 
Introduction ..., 5 
Chapter 1 — General matters 9 
Chapter 2 — Accounting matters 18 
Chapter 3 — Revenue 28 
Chapter 4 — European Agricultural Guidance and Guarantee Fund, 
Guarantee Section 34 
Chapter 5 — European Agricultural Guidance and Guarantee Fund, 
Guidance Section 51 
Chapter 6 — Regional aid expenditure 60 
Chapter 7 — The European Social Fund and other expenditure in the social 
sector 70 
Chapter 8 — Research, energy, etc 75 
Chapter 9 — Budgetary compensation to the Federal Republic of Germany 
and the United Kingdom . 88 
Chapter 10 — Cooperation with developing countries and non-Member States 92 
Chapter 11 — Staff expenditure 101 
Chapter 12— Operational expenditure Ill 
Chapter 13 — External bodies and other subsidies 119 
Chapter 14 — Loans, borrowings and interest rate subsidies 124 
Chapter 15 — The European Development Funds (EDF) 131 
4 Official Journal of the European Communities 31. 12. 83 
ANNEXES 
Annex I — Allocation of responsibilities among Members of the Court of 
Auditors at 30 November 1983 149 
Annex II — Reports and opinions adopted by the Court of Auditors during 
the five years to 30 November 1983 151 
Annex III — Financial information relating to the general budget of the 
European Communities and to the European Development 
Funds 159 
Annex IV — Replies of the institutions: 
Comments of a general nature 193 
Chapter 1 — General matters 194 
Chapter 2 — Accounting matters 199 
Chapter 3 — Revenue ... \... 205 
Chapter 4 — European Agricultural Guidance and Guarantee Fund, 
Guarantee Section 205 
Chapter 5 — European Agricultural Guidance and Guarantee Fund, 
Guidance Section 209 
Chapter 6 — Regional aid expenditure 211 
Chapter 7 — The European Social Fund and other expenditure in the 
social sector 214 
Chapter 8 — Research, energy, etc 215 
Chapter 9 — Budgetary compensation to the Federal Republic of Ger- • 
many and the United Kingdom 218 
Chapter 10 — Cooperation with developing countries and non-Member 
States 219 
Chapter 11 — Staff expenditure 224 
Chapter 12 — Operational expenditure 227 
Chapter 13 — External bodies and other subsidies 231 
Chapter 14 — Loans, borrowings and interest rate subsidies 232 
Chapter 15 — The European Development Funds (EDF) 233 
31. 12. 83 Official Journal of the European Communities 5 
INTRODUCTION 
Annual report on the 1982 accounts 
1. This is the sixth annual report of the European 
Court of Auditors, produced in accordance with the 
Treaties (') and the Financial Regulation (2), and 
covering the accounts of the financial year 1982. 
The Commission is required, by the Treaties (3) and 
the Financial Regulation (4), to draw up a revenue 
and expenditure account for the Communities for 
each financial year and a balance-sheet as at the end 
of that year, and to forward them to the Parliament, 
the Council and the Court of Auditors by 1 June of 
the following year. These financial statements are 
used by the Court in drawing up its annual report. 
The accounts together with the annual report of the 
Court and the replies of the institutions to the 
Court's observations, are to be examined by the Par­
liament and the Council in connection with the dis­
charge to be given by the Parliament to the Commis­
sion in accordance with the Treaties (5). 
2. General matters arising from the Court's work 
are covered in Chapter 1. Chapters 2 to 13 of the 
report relate to the general budget of the Communi­
ties. Chapter 14 deals with loans and borrowings 
operations under the EEC and EAEC Treaties and 
related interest subsidies financed by the budget. nions issued by the Court during the five years up to 
30 November 1983. 
5. Summaries and some detailed analyses of finan­
cial information relating to the general budget of the 
Communities and to the European Development 
Funds are presented in Annex III. 
6. The Court has issued separate reports to the rel­
evant discharge authorities on the 1982 accounts of 
JET (the Joint European Torus), the European 
Centre for the Development of Vocational Training 
(Berlin), the European Foundation for the Improve­
ment of Living and Working Conditions (Dublin) 
and the Euratom Supply Agency, and the 1981 
accounts of the European Schools. A summary of 
the JET report is included in Chapter 8 of this 
report and summaries of the comments made by the 
Court in the reports on the other bodies are included 
in Chapter 13. The Court has also made the separate 
annual report on the accounts of the functional 
activities of the ECSC as required by Article 78 f (5) 
of the ECSC Treaty. 
3. Chapter 15 is concerned with the five European 
Development Funds. These Funds, which provide 
aid to developing countries, are managed by the 
Commission but they are financed by specific con­
tributions by the Member States and do not form 
part of the general budget of the Communities. 
4. Annex I gives the allocation of responsibilities 
amongst the Members of the Court as at 30 Novem­
ber 1983 and Annex II is a list of all reports and opi-
(') ECSC Treaty, Article 78 f (4), EEC Treaty Article 
206 a (4) and EAEC Treaty, Article 180 a (4). 
(2) OJ No L 356, 31. 12. 1977, Article 83. 
(3) ECSC Treaty, Article 78 d, EEC Treaty, Article 205 a 
and EAEC Treaty, Article 179 a. 
(4) Articles 73 to 77. 
(5) ECSC Treaty, Article 78 g, EEC Treaty,' Article 206 b 
and EAEC Treaty, Article 180 b. Presentation of Community accounts 
and annual report of Court of Auditors 
7. The accounts for the financial year 1982 were 
rendered by the Commission on 26 May 1983. In 
conformity with the Financial Regulation, the 
Court's comments were sent to the institutions on 
15 July 1983. All the comments contained in this 
report were sent to the Commission. Relevant 
extracts of Chapters 1,2, 11 and 12 were also sent to 
the Parliament, the Council, the Court of Justice 
and the Economic and Social Committee. 
8. The Financial Regulation provides for each 
institution to address its reply to the Court by 
6 Official Journal of the European Communities 31. 12. 83 
31 October. In practice, the formal replies are 
preceded by discussions between the institutions 
and the Court which cover both the Court's com­
ments and draft replies which are provided on an 
informal basis. These arrangements enable changes 
to be made, where necessary, in both the comments 
and the replies, to ensure that the issues would be 
readily understood by the reader. This is more likely 
to be achieved if there is a full and confidential 
exchange of views with the audited body before the 
report is finalized and made available with the for­
mal reply. 11. With the agreement of the institutions their 
replies this year have been merged and are con­
tained in a single Annex IV. Replies of a general 
character which relate to observations in different 
chapters are presented first, institution by institu­
tion. After that the replies relating to a particular 
subject have been grouped, again institution by 
institution, and presented under the relevant chapter 
and item heading. 
9. The Court also notes that the Commission 
replies to Chapter 6 refer to discharge having been 
given for previous years without criticism by the dis­
charge authorities of action on which the Court has 
made observations. It seems to the Court that the 
selection by those authorities of certain points for 
specific comment should not be interpreted as 
implying their endorsement of the action of the 
Commission on other matters not specifically 
selected for comment. Nor does the absence of criti­
cal comment by the discharge authorities in any 
particular year inhibit the Court from making obser­
vations on the subject in question in a subsequent 
year. 12. This arrangement is intended to assist the 
reader in examining the replies to a particular obser­
vation and to meet as far as practicable a suggestion 
made to the Court in the past (and repeated in the 
general remarks of the Council in its reply) that the 
annual report should contain a separate section for 
each institution. Such a presentation cannot be fol­
lowed. For the subjects relating to all the institutions 
the Court's observations are often based on a com­
parison of their practices (as for example paragraphs 
12.7 to 12.26 of this report). The presentation of 
such observatibns would not be practicable if there 
were a separate section for each institution. In any 
case, the Court considers that freedom to present its 
reports in the manner it considers appropriate is an 
essential element of its independence enshrined in 
the Treaties ('). 
10. The formal replies were sent by the institutions 
by 31 October and, after studying them, the Court 
adopted the final text of the report on 24 November 
1983. The report, accompanied by the replies of the 
institutions, was sent to the institutions on 30 Nov­
ember 1983 in accordance with Article 84 of the 
Financial Regulation. Where, in the light of the 
replies, the Court has felt the need for some clarifi­
cation to give the reader a better understanding of 
the issues, this has been provided in the relevant 
paragraph of the report. The absence of remarks by 
the Court on the individual replies does not imply 
that it necessarily agrees with them. 13. For the 1982 financial year the Court has mod­
ified the practice for the audit of its own accounts. 
The Member responsible for the examination of a 
particular subject in other institutions also examines 
the use of corresponding appropriations in the 
Court's budget. Any observations arising are 
included in the relevant chapter of this report and 
the replies of the Court's Administration are 
included with the replies of the other institutions. 
(!) Article 78 e ECSC, Article 206 EEC, Article 180 
EAEC. 
31. 12. 83 Official Journal of the European Communities 7 
Special reports 
14. As mentioned earlier, Annex II is a list of 
reports and opinions adopted by the Court during 
the past five years; those adopted since the last 
annual report was presented are identified with an 
asterisk. The Court would draw attention in parti­
cular to the report it adopted on 6 October 1983 in 
response to the conclusions of the European Coun­
cil of 18 June 1983 ('). That Council invited the 
Court to review the sound financial management of 
Community activities arid to submit a report by the 
end of 1983. The Court was also invited to follow 
this up in its annual reports. This annual report was 
already in course of preparation when the request of 
the European Council was made, but that request 
will naturally be followed up in the Court's future 
annual reports. 
Membership and organization of the 
Court 
15. Mr Arne Johansen resigned as a Member in 
April 1983 and Mr Keld Brixtofte was appointed to 
complete the term of office up to October 1987. The 
six-year terms of six other Members expired on 
17 October. Three of them, Mr Pierre Lelong, Mr 
Marcel Mart and Mr Andre Middelhoek were 
re-appointed for a further six years. Mr Charles 
Carey, Mr Lothar Haase and Mr Stergios Vallas 
were appointed to succeed Sir Norman Price, Mr 
Albert Leicht and Mr Georges Vitalis who retired. On 17 October 1983, Mr Lelong's term of office as 
President expired and he was re-elected on 25 Octo­
ber 1983. 
16. There has been some reallocation of responsi­
bilities among Members during 1983; the position 
as at 30 November 1983 is given in Annex I. 
Court budget and staff 
17. The Court's expenditure in 1981, including 
carry-overs to 1982, amounted to some 12,8 million 
ECU, and in 1982, including carry-overs to 1983, 
amounted to some 14,1 million ECU. The main ele­
ment in these amounts is for salaries and allowances 
of Members and staff, namely 10,6 million ECU in 
1981 and 11,8 million ECU in 1982. 
18. The budgets for 1981 and 1982 provided for 
the following numbers of posts: 
1981 1982 
A category staff 100 101 
LA category staff 32 36 
B category staff 61 63 
C category staff 69 75 
D category staff 22 19 
Total 284 294 
(') OJ No C 287, 24. 10. 1983. 
31. 12. 83 Official Journal of the European Communities 
CHAPTER 1 
General matters 
1.0. TABLE OF CONTENTS Paragraph reference 
General budget of the European Communities 1.1 to 1.8 
Accounts for the year ended 31 December 1982 1.1 
Utilization of appropriations 1.2 
Year of account and balance sheet questions 1.3 to 1.8 
Refusal of approval by Financial Controllers 1.9 
Delegation of tasks by the Commission to the European 
Investment Bank (EIB) 1.10 and 1.11 
Summary of observations in this report 1.12 to 1.17 
Observations in special reports which are relevant for dis­
charge 1.18 
Follow-up of previous years'observations 1.19 and 1.20 
General budget of the European 
Communities 
Accounts for the year ended 31 December 
1982 for each of the institutions, together with the princi­
ples applied in drawing up the accounts. The Court 
welcomed the introduction of Volume V when it 
was first produced for the financial year 1980 and 
repeats the suggestion then made that it should be 
published in the Official Journal. 
1.1. The accounts of the general budget of the 
European Communities for the year ended 
31 December 1982 are contained in a five-volume 
document (COM(83) 223 to 225) which was sent by 
the Commission to the Court of Auditors on 26 May 
1983. Volume V (COM(83) 225) of the document 
includes the consolidated revenue and expenditure 
account and balance sheet. Volume V also provides 
certain other general summaries showing the outturn Utilization of appropriations 
1.2. The total final appropriations for commitment 
and payment authorized to be charged to the 
accounts in 1982 amounted to 24 550,5 million ECU 
and 21 994,3 million ECU respectively. The utiliza­
tion of these appropriations by the institutions is 
shown in Tables 1.1 and 1.2. 
10 Official Journal of the European Communities 31. 12. 83 
Table 1.1 — Amounts and utilization, by institution, of appropriations for commitment available in 1982 
(Mio ECU) 
Institution Budget 
appropriations 
1982 Final 
appropriations 
1982 (2) (3) Commitments 
entered into 
in 1982 Remaining 
available 
for 1983 Cancellations 
(1) (2) (3) .(4) (5) (6) 
Parliament 209,2 209,8 199,0 — 10,8 
Council (') 121,0 121,0 111,7 — 9,3 
Commission 22 885,6 24 175,4 21 973,9 687,9 1 513,6 
(of which: 
— non-differentiated appro­
priations 
— commitment appropria­
tions) (18 133,6) 
(4 752,0) (18 334,1). 
(5 841,3) (17 042,5) 
(4 931,4) (687,9) (1 291,6) 
(222,0) 
Court of Justice 28,0 28,0 25,8 — 2,2 
Court of Auditors 16,3 16,3 14,1 0,0 2,2 
Total 23 260,1 24 550,5(2) (3) 22 324,5 687,9 1 538,1 
(') Including Economic and Social Committee. 
(2) Including non-automatic carry-overs from 1981 (Parliament 0,6 Mio ECU; Commission 373,7 Mio ECU). 
(3) Including 908,5 Mio ECU remaining from previous years and 7,6 Mio ECU corresponding to receipts for services performed on behalf of 
outside bodies (research and investment). 
Table 1.2 — Amounts and utilization, by institution, of appropriations for payment available in 1982 
(Mio ECU) 
A. Appropriations of the financial year 1982 B. Carry-overs from 1981 
Institution Budget ap­
propriations 
1982 Final 
appropria­
tions 
1982 Payments 
made in 1982 Carry­
overs to 
1983 Cancella­
tions Carry­
overs from 
1981 Payments 
made in 
1982 Carry­
overs to 
1983 Cancella­
tions 
(1) (2) (3) ' (4) (5) (6) (7) (8) (9) (10) 
Parliament 209,2 209,2 162,0 36,7 10,5 16,4 11,3 — 5,1 
Council (') 121,0 121,0 103,2 8,5 9,3 10,9 6,5 — 4,4. 
Commission 21 609,9 21 619,8 (2) 19 017,7 1 337,8 1 264,3 ' 1 374,8 1 083,0 135,4 156,4 
(of which: 
— non-differentiated 
appropriations 
— payment appro­
priations) (18 133,6) 
(3 476,3) (17 960,4) 
(3 659,4) 0 (16 334,7) 
(2 683,0) (384,2) 
(953,6) (1 241,5) 
(22,8) (929,9) 
(444,9) (733,5) 
(349,5) (126,8) 
(8,6) (69,6) 
(86,8) 
Court of Justice 28,0 28,0 24,3 1,5 2,2 1,2. 1,1 — 0,1 
Court of Auditors 16,3 16,3 13,1 1,0 2,2 0,8 0,5 — 0,3 
Total 21 984,4 21 994,3 (2) 19 320,3 1 385,5 1 288,5 1404,1 1 102,4 135,4 166,3 
(') Including Economic and Social Committee. 
(2) Including 9,9 Mio ECU corresponding to receipts for services performed on behalf of outside bodies (research and investment). 
31. 12. 83 Official Journal of the European Communities 11 
Year of account and balance sheet questions 
1.3. Article 27 of the Financial Regulation (') pro­
vides that the balance from each financial year shall 
be entered in the budget of the subsequent financial 
year on the adoption of an amending budget. The 
draft amending and supplementary budget No 1 for 
the financial year 1982 which contained, inter alia, 
the surplus of 661 494 115 ECU available from 1981 
was rejected by the Parliament on 16 December 
1982. It was not therefore possible to take that 
amount into the budget for 1982 and it was intro­
duced as revenue in Article 301 of the 1983 budget 
on the occasion of amending and supplementary 
budget No 1 for 1983 adopted on 10 February 1983. finally established until the revenue and expendi­
ture account was drawn up. This must be done, 
under Article 73 of the Financial Regulation, by 
1 June of the following year and, as stated in para­
graph 1.1, the account was sent to the Court on 
26 May 1983. Before that happened, however, a 
large part of the balance was used 'on account' to 
finance the amending and supplementary budget 
No 1 for 1983. The Court: 
(a) is unaware of any provision in the relevant 
legislation for the balance to be used in this way 
before the actual amount available is deter­
mined, 
(b) notes that the financial analysis (para­
graph IIA 4 on page 106 of COM(83) 223) 
incorrectly refers to unused agricultural guaran­
tee appropriations being retained to cover the 
appropriations foreseen for the amending and 
supplementary budget No 1 of 1983 instead of 
being cancelled; this conflicts with the correct 
presentation in the revenue and expenditure 
account which shows that those appropriations 
were cancelled (see also Tables 1.1 and 1.2 of 
this chapter). 1.4. A surplus has the effect of reducing, on the 
occasion of an amending budget, the other revenue 
required to meet the expenditure for the following 
year. Such a reduction is then reflected in an adjust­
ment to the rate of value-added tax (VAT) payable 
to the Community budget as own resources. There 
was, however, no such adjustment in 1982 because 
there was no amending and supplementary budget. 
The practical effect of bringing the surplus for 1981 
to account in 1983 will be to reduce the requirement 
for other revenue for 1983 by a corresponding sum. 
1.5. One effect of the amending and supplemen­
tary budget No 1 of 1982 would have been to reduce 
the appropriations available for the EAGGF Guar­
antee Section in Titles 1 and 2 and Chapter 100 by 
some 1 100 million ECU. This was to take account 
of the fact that the amount then estimated as 
required for agricultural support measures in 1982 
had fallen in comparison with the original budget 
provision. With the rejection of the amending and 
supplementary budget, the original appropriations 
remained available. The consequent under-utiliza-
tion is the main factor in the unusually high level of 
cancellations (Tables 1.1 and 1.2) and large balance 
of the year shown in Table 1.4. That balance was not 
(') OJ No L 356, 31. 12. 1977. I.6. During the audit of the 1982 accounts, various 
questions have arisen relating to the regularity of 
transactions and consequently the amounts shown 
as revenue and expenditure in the accounts which 
are submitted to the discharge authorities in accord­
ance with the Treaties (2). These cases are described 
in general in this and in detail in subsequent chap­
ters. The principal cases in which the Court has 
been able to quantify the amounts involved are 
given in Table 1.3. There are a number of other 
cases which the Court has not been able to quantify 
(paragraphs 2.27, 2.33, 4.20 to 4.23, 6.60, 11.36, 
II.46, 11.50). It considers that the institutions con­
cerned should evaluate these. 
1.7. The Court pointed out in its annual report on 
the financial year 1981 (3) that the present regula­
tions contain no specific provisions for dealing with 
amounts relating to irregular transactions which are 
included in the Community accounts. The Court 
(2) ECSC Treaty Article 78 d and g; 
EAEC Treaty Articles 179 a, 180 b; 
EEC Treaty Articles 205 a, 206 b. 
0 OJ No C 344, 31. 12. 1982. 
12 Official Journal of the European Communities 31. 12. 83 
Table 1.3 — Summary of quantifiable cases in this report where the Court considers that amounts have been over- or understated in 
the revenue and expenditure account 
(ECU) 
Paragraph Revenue 1982 Payments against 1982 appropria­
tions Payments against carry-overs from 
1981 Commitments entered into in 1982 
Paragraph Amount 
understated Amount 
overstated Amount 
understated Amount 
overstated Amount 
understated Amount 
overstated Amount 
understated Amount 
overstated Paragraph 
(1) (2) (3) (4) (5) (6) (7) (8) 
2.7-2.10 and 2.40 5 342 293,99 5 342 293,99 
2.41 61 167 497,79 61 167 497,79 
4.25 33 837 252,07 33 837 252,07 
4.31-4.32 / 
2 104 940,54 624 528,71 2 104 940,54 
2 645 437,27(') 
4.38-4.39 88 176 307,75 88 176 307,75 
4.53a and 4.54 — 
4.58 9 635 924,00 (3) 
8.22 1 109 698,00 74 639,00 
8.23 420 752,00 73 731,00 2 170 212,00 
8.24 413 038,00 
8.27 1 074 123,00 
2 129 777,00 88 231,00 
23 038,00 
8.32 622 520,00 27 320,00 
8.43 17 280 559,00 
11.21 111 000,00 111 000,00 
11.22 776 000,00 776 000,00 
11.48 11 573,00 11 573,00(2) 11 573,00 
Total 9 635 924,00 66 521 364,78 42 186 062,61 89 099 368,46 66 521 364,78 147 514 746,63 
Net total 9 635 924,00 24 335 302,17 89 099 368,46 80 993 381,85 
(') Carry-over to 1983. 
(2) Pro forma entry to take account of the bookkeeping impact on financing for 1982. 
(3) This is the total amount regarded as irrecoverable; the Commission has not yet taken a decision as to how much, if any, should be borne 
by the Member States (see paragraphs 4.54-4.58). 
considers, however, that the discharge authorities 
should take account of these irregularities in the dis­
charge procedure by instructing the Commission in 
the resolution accompanying discharge to adapt the 
accounts and take the necessary measures (budget­
ary or otherwise) to regularize the situation. Accord­
ingly the Court is of the opinion that, for the pur­
poses of discharge, adjustments should be made as 
shown in Table 1.4. 
1.8. In previous annual reports and in its special 
report of 12 October 1982 ('), the Court has referred 
(') OJ No C 313, 29. 11. 1982. to the delays in the clearance of accounts. Para­
graphs^? and 10.13(c) of the present report 
explain that, during the 1982 financial year, there 
was no further clearance of any accounts for the 
European Agricultural Guidance and Guarantee 
Fund (EAGGF), Guarantee Section, or for food aid 
expenditure. These delays in the clearance of 
accounts and the fact that an average of some 70 % 
of expenditure shown in the accounts for the years 
1976 onwards remains provisional reduce substan­
tially the value of the information they give on the 
execution of the general budget for the purposes of 
discharge. 
31. 12. 83 Official Journal of the European Communities 13 
Table 1.4 — Advice concerning the amounts on which to give discharge to the Commission for the execution of the general budget 
of the European Communities for the financial year 1982 (') 
(ECU) 
1. Revenue for 1982 
1.1. Receipts of the financial year 
Adjustments (see Table 1.3, column 1) 
1.2. Carry-overs from 1981 unused and cancelled 
Adjustments (see Table 1.3, column 6) 
Total 1 (adjusted revenue) 21427 416 656,43 
+ 9 635 924,00 
21 437 052 580,43 
166 259 561,68 
+ 89 099 368,46 
255 358 930,14 
21692 411510,57 
2. Expenditure charged to 1982 
2.1. Payments against 1982 appropriations 
Adjustments (see Table 1.3, columns 3,4) 
2.2. 1982 appropriations carried over to 1983 
Adjustments (see Table 1.3, column 8 and 1st footnote) 
2.3. Exchange rate losses (2) 
Adjustment (2) 
2.4. Earmarked revenue to be repaid 
Total 2 (adjusted expenditure) 19 320 278 688,14 
+ 24 335 302,17 
19 344 613 990,31 
1 385 583 364,16 
-2 645 437,27 
1 382 937 926,89 
61 167 497,79 
-61167 497,79 
1 408 105,17 
20 728 960 022,37 
3. Balance of the financial year 1982 
(total 1 minus total 2) 963 451 488,20 
4. Commitments entered into in 1982 
Adjustments (see Table 1.3, columns 7, 8) 22 324 456 367,80 
-80 993 381,85 
22 243 462 985,95 
5. Payments against carry-overs from 1981 
Adjustments (see Table 1.3, column 6) 1 102 378 455,26 
-89 099 368,46 
1 013 279 086,80 
(') The adjustments only take account of the cases quantified by the Court and do not necessarily cover all irregularities. 
(2) This amount is included in the adjustments mentioned under point 2.1 of this table (see also Table 1.3, column 3). 
Financial Controller was overruled during 1982 and 
there was no such case at the Court of Auditors 
during the year. 
Delegation of tasks by the Commission 
to the European Investment Bank 
(EIB) 
1.10. In previous annual reports (') and in a 
special report of 19 July 1982 (2), the Court referred 
(') Annual report for the financial year 1980, paragraphs 
13.11 and 14.14 to 14.16, OJ No C 344, 31. 12. 1981. 
Annual report for the financial year 1981, paragraphs 
1.11 to 1.14, OJ No C 344, 31. 12. 1982. 
(2) Paragraphs 6.1 to 6.8, OJ No C 319, 6. 12. 1982. Refusal of approval by Financial 
Controllers 
1.9. Under the provisions of the Financial Regula­
tion, proposals for the commitment of expenditure 
and payment orders are subject to the prior approval 
of the Financial Controller. Such prior approval is 
also required for contracts with third parties for sup­
plies and services. A refusal of approval can be 
overruled (except where the availability of appro­
priations is in doubt) by a reasoned decision of the 
superior authority of the competent institution. The 
Financial Regulation provides for such cases to be 
notified to the Court of Auditors every three 
months. The Court has been informed that during 
1982 refusals of approval by Financial Controllers 
were overruled on five occasions by the Commis­
sion. The circumstances of two of these cases are 
described in paragraphs 8.36 to 8.41 and 12.34 to 
12.36 of this report. The other institutions have 
informed the Court that none of the decisions of the 
14 Official Journal of the European Communities 31. 12. 83 
to problems arising out of the performance of cer­
tain tasks by the EIB on behalf of the Commission. 
For the avoidance of doubt, the Court wishes to 
emphasize that these problems do not relate to the 
exercise by the Bank of its own functions under 
Title IV of Part Three of the EEC Treaty and the 
Statute annexed thereto. The Court is concerned 
only with: 
(a) borrowing and lending operations under the 
EEC and Euratom Treaties which are concluded 
in the name of the Community, guaranteed by 
Chapters 79 and 84 of the general budget and 
presented in the consolidated balance sheet; 
(b) appropriations provided in Chapters 52 and 69 
of the general budget for interest rate subsidies; 
(c) appropriations provided in Chapter 96 of the 
general budget for special loans, risk capital and 
interest rate subsidies; 
(d) European Development Fund special loans, risk 
capital and interest rate subsidies. 
1.11. Notwithstanding the Commission's replies to 
the annual report for the financial year 1981 and the 
special report, the Court has since found no signifi­
cant improvement in the situation (paragraph 14.5). 
The information available in the files which the 
Commission should keep in cases where the Bank 
exercises functions on its behalf has still been insuf­
ficient for the purposes of the Court's audit. Details 
are given in paragraphs 10.29 to 10.32 and 15.71 to 
15.80. Paragraph 15.73 explains that few difficulties 
are encountered with other international agencies 
which carry out similar operations on behalf of the 
Commission, which makes it all the more difficult to 
understand why problems should continue when a 
European Community body is involved. considers to be particularly significant and also to 
highlight certain features of a general character 
which are common to several observations. In each 
case it will be for the competent authorities to con­
sider what consequent action is called for. The spe­
cific cases are: 
(a) The Court has identified a number of irregular 
> transactions which call for particular attention 
by the discharge authorities (paragraphs 1.6 and 
1.7); 
(b) The programme of co-responsibility levies for 
milk production, which has produced a revenue 
of 1 513,1 million ECU in five years, has 
entailed specific expenditure of about 620 mil­
lion ECU, which is not clearly shown in either 
the budget or the accounts. The marginal char­
acter of the programme as compared with the 
normal system is illustrated by a measure to aid 
small producers. Furthermore, 88,2 million ECU 
of appropriations carried over from 1981 under 
the co-responsibility programme have been used 
in 1982 to finance the disposal of skimmed milk 
powder for animal feed (4.33 to 4.39); 
(c) The examination of the implementation of cer­
tain Community measures in the EAGGF Guid­
ance Section has revealed cases of delay and 
certain other problems (5.6 to 5.41); 
(d) The regional development programmes for 
1981-85 show little improvement over the pre­
vious ones, especially in the definition of objec­
tives regarding employment and the coordina­
tion of regional policy measures at national arid 
Community level (6.21 to 6.27) and some pro­
jects financed by the Community are hardly 
being utilized or can scarcely be justified in 
terms of the Community's objectives (6.39 to 
6.45); 
(e) The implementation of the agreement to limit 
the net United Kingdom contribution to the 
Community budget has given rise to two prob­
lems: 
Summary of observations in this report 
(i) the system established for the supplemen-
1.12. To provide readers and users with a general tary measures does not permit an assess-
guide to the contents of this report, the Court wishes ment of the management of the 1982 appro-
to draw attention to certain observations which it priations (6.56 to 6.60), 
31. 12. 83 Official Journal of the European Communities 15 
(ii) in order to reserve 1 092 million ECU in the 
Treasury of the United Kingdom, the Com­
mission purchased considerable amounts of 
sterling, without any legal basis or any 
particular urgency; the distribution of assets 
between the Member States was thereby dis­
torted (9.4 to 9.25); 
(f) The management of the agreement between the 
Italian Government and the Commission con­
cerning an extraordinary contribution to the 
Super-Sara project failed to protect the financial 
interests of the Community, and budgetary exe­
cution and control of the agreement were unsa­
tisfactory (8.28 to 8.35); 
(g) Many inadequacies remain in all stages of the 
management of food aid programmes by the 
Commission, particularly those concerning 
delivery delays, quality controls, packaging 
instructions and monitoring (10.13, 10.14, 
10.24); 
(h) In the personnel field the Court has found sev­
eral cases in which the actions of the institutions 
have contravened specific provisions of the 
Staff Regulations (11.12, 11.21, 11.22, 11.31, 
11.34, 11.41, 11.42 and 11.43, 1.1.46, 11.48); 
(i) The implementation of aid programmes in 
favour of numerous developing countries has 
encountered serious difficulties (15.18 to 15.47). 1.15. Another question which arises in a number of 
cases is whether the financial and management 
information available to the Commission in connec­
tion with its monitoring and supervision functions is 
adequate. The lack of sufficient information 
impedes the exercise of those functions and, in turn, 
the examination by the Court of the Commission's 
control over the execution of the budget. Examples 
of this problem are to be found in paragraphs 1.11, 
3.5, 4.59 and 4.60, 5.31 and 5.32, 6.18 to 6.20, 10.8. 
1.16. In several cases it was found by the Court 
that the arrangements for awarding contracts are not 
adequate. The rules for the placing and monitoring 
of contracts should therefore be improved. Exam­
ples are given in paragraphs 8.49, 8.53, 8.54 to 8.58, 
12.26, 13.9. 
1.17. Finally, the Court would point out that the 
foregoing common problems often result from a 
lack of, or imprecision in, governing regulations and 
internal rules. The inadequacy of internal rules leads 
to inconsistencies in the management of Com­
munity affairs in general. In addition, the impreci­
sion of the governing regulations gives rise to uncer­
tainty in the execution of Community policies; this 
often permits quite differing interpretations when 
the day-to-day administration is in the hands of 
national administrations or agencies (examples of 
this last point are in paragraphs 4.30, 4.36, 4.50, 6.14 
to 6.18, 6.21, 7.18). 
1.13. The first point of a general character to which 
the Court wishes to draw attention is that, although 
improvements have been made, the records of 
financial information of the various institutions and 
bodies still contain errors which are often reflected 
in the financial statements; they also indicate weak­
nesses in the operation of and control over the sys­
tems and procedures concerned or, in some cases, 
the systems themselves (see paragraphs 2.3 to 2.43, 
4.6 to 4.18, 4.40 to 4.46, 10.8, 14.10 to 14.26, 15.7 to 
15.17, 15.65 to 15.70). 
1.14. The Court has also noted weaknesses in the 
cash-management in certain institutions, e.g. the use 
of more bank accounts than necessary and insuffi­
cient control over the interest received on certain of 
these accounts (see paragraphs 2.11 and 2.12, 2.14, 
2.30, 9.4 to 9.25, 1.3.14, 15.14). Observations in special reports which 
are relevant for discharge 
1.18. The Court would also draw to the attention 
of the discharge authorities that, apart from matters 
mentioned in this report, certain subjects which are 
of interest in connection with discharge have been 
dealt with in special reports, the main points of 
which are summarized below. These reports, 
together with the Commission replies, have been 
published in the Official Journal (the references to 
which are given in each case). 
16 Official Journal of the European Communities 31. 12. 83 
(a) Sales of reduced-price butter within the Com­
munity ('): 
(i) The objective of encouraging additional 
consumption has not been achieved in 
spite of continuing increases in the cost of 
the measures concerned. 
(ii) The Commission does not have adequate 
information to assess the effectiveness of 
the measures. 
(iii) The limited information available suggests 
that there are considerable differences in 
the cost effectiveness of the different mea­
sures. 
(iv) It is doubtful whether there is adequate 
control over the observance of the legal 
conditions contained in the measures. 
(b) Budgetary management of the programme for 
supplying agricultural and food products to 
Poland (2): 
(i) The cost of the programme cannot be 
accurately assessed from the system of 
financial information established by the 
Commission. 
(ii) The Court has been unable to establish a 
completely reliable picture of the total cost, 
but it has identified expenditure totalling 
150 million ECU. 
(iii) This situation, and the fact that the Com­
mission is unable to produce a balance 
sheet for these operations, leads to the con­
clusion that it is impossible to check 
whether the envelope of financial limits 
imposed by the Council (96,4 million 
ECU) has been respected. 
(c) Skimmed milk processed for casein and casein-
ates (3): 
(i) Since aid was introduced production has 
become commensurate with European 
needs. 
(ii) Aid is allocated on the basis of skimmed 
milk being used at a flat rate in the process­ing, whereas the actual rates vary consider­
ably. 
(iii) Owing to the absence of a reliable informa- . 
tion system for the basic elements in the 
calculation of aid, it is not possible to 
check whether the aid properly reflects the 
needs of the economic environment. 
(iv) The conditions governing the allocation of 
aid seem to have led to a tendency to con­
centrate production units, as well as a 
standstill, since 1975, in the quality of the 
products. 
(v) To eliminate variations between Member 
States and facilitate control, certain provi­
sions of the regulations should be clarified, 
made more precise and better adapted to 
the conditions of production in all Member 
States. 
Follow-up of previous years' 
observations 
1.19. As part of the examination of subjects 
included in each year's programme of audit, the 
Court reviews action taken in response to observa­
tions on those subjects in previous annual or special 
reports. The Court is glad to report that these 
reviews have shown improvements in a number of 
areas. In other cases, however, action has not been 
taken, either fully or partly, to remedy the causes of 
earlier observation. The situation at 15 July in such 
cases is explained in paragraphs 2.26, 4.11 to 4.13, 
4.25, 4.28 and 4.29, 4.31 and 4.32, 8.44, 8.49, 8.51, 
12.54 and 12.55, 13.6, 13.17 to 13.23. 
1.20. The Court has also reviewed the situation 
relating to other observations in previous reports. It 
has found that little or no action has been taken in 
response to the Court's remarks in the following 
cases: 
General accounts 
(') OJ No C 143, 7. 6. 1982. 
0 OJ No C 278,17. 10. 1983. 
(3) Not yet published. (a) The Commission does not possess written docu­
mentation on accounting systems and proce­
dures (1977, 11.3). 
31. 12. 83 Official Journal of the European Communities 17 
(b) The Commission cash department has no job 
descriptions (1980, 2.5). 
(c) The appropriations carried over are not split 
into creditors and simple commitments (1980, 
2.15). development programmes and between national 
and Community objectives (1980, 7.14 to 7.18 
and 1981, 7.17 to 7.25). 
EA GGF Guarantee Section 
(d) The continued use of monetary compensatory 
amounts, and their upward movement in some 
cases, increase the risk of fraudulent profits 
(1981,4.9 to 4.11). 
(e) Certain intervention measures whose applica­
tion in the Member States is optional create dis­
parities and run counter to the principles of a 
single market and joint financial responsibility 
(1980,4.28 to 4.30). 
(0 The extent of non-automatic carryovers illus­
trates the inadequacy of the Guarantee Section 
financing system for managing programme 
measures, and, in the case of co-responsibilities, 
the disadvantages of allocating revenue in the 
absence of special rules (1981,4.28). Cooperation with developing and other non-member 
countries 
(j) The implementation of food aid programmes is 
not adequately recorded in the central accounts 
(1981,9.9 (b)). 
(k) There is insufficient monitoring of the use of 
food aid and of counterpart funds (1981,9.13). 
Staff expenditure 
(1) The results of the examination of overtime 
allowances to Commission drivers reveal that 
the system of fixed allowances does not operate 
satisfactorily (1980, 10.23 to 10.27). 
(m) The output of the institutions' typing pools 
appears to be low (19&0, 10.28 to 10.31). 
EA GGF Guidance Section 
(g) In the case of several of the projects financed, 
difficulties and delays, which are sometimes 
considerable, occur in respect of the implement­
ing measures and the commitment and payment 
of expenditure (1980, 5.10, 5.14, 5.17 and 1981, 
5.22,5.25). 
(h) There are still shortcomings in the gathering of 
information needed to ensure effective applica­
tion of the regulations (1981, 5.8, 5.9, 5.14 and 
5.15). 
European Regional Development Fund Administrative expenditure 
(n) The fact that the Commission now charges an 
entrance fee for the Fitness Centre has not 
solved the problem of the opening hours (1980, 
11.11 to 11.13). 
European Development Funds 
(o) A data bank containing details of past experi­
ence on projects should be made available to 
technical and delegation staff (1981, 15.7). 
(p) Progress reports on projects should be more fre­
quently and regularly forwarded by the delega­
tions, and should be prepared in a more rele­
vant format (1981, 15.72 to 15.75). 
(i) Better coordination is needed between the 
. choice of projects assisted and the regional (q) Completed projects should be regularly exam­
ined by the delegations (1981, 15.76). 
18 Official Journal of the European Communities 31. 12. 83 
CHAPTER 2 
Accounting matters 
2.0. TABLE OF CONTENTS Paragraph reference 
Introduction 2.1 
Summary of main financial information 2.2 
Parliament 2.3 to 2.22 
General comments 2.3 
Presentation of current assets in the balance sheet 2.4 to 2.10 
Management and control of cash accounts 2.11 to 2.21 
Monitoring of accounts 2.22 
Council 2.23 to 2.25 
Cash reimbursements to staff 
Commission 2.26 to 2.43 
Management and control of cash accounts 2.26 to 2.38 
Monitoring of accounts 2.39 
Allocation of expenditure to a suspense account 2.40 
Accounting methods applying to exchange differences 2.41 to 2.43 
Balance sheet and revenue and expenditure account of the 
Communities 2.44 to 2.48 
Inspection of tangible, fixed assets 2.45 to 2.47 
Inventories (office supplies) 2.48 
Introduction 
2.1. This chapter is concerned with two matters: 
questions relating to the general accounts (which 
provide a record of cash movements and are the 
basis for the balance sheets of the institutions), and 
examination of the balance sheets of the institutions 
and the (consolidated) balance sheet and revenue 
and expenditure account of the Communities at 31 
December 1982. Summary of main financial 
information 
2.2. Tables 2.1 and 2.2 summarize the balance 
sheets and revenue and expenditure accounts of the 
institutions, and the (consolidated) balance sheet 
and revenue and expenditure account of the Com­
munities. 
31. 12. 83 Official Journal of the European Communities 19 
Parliament 
General comments sheet under advances to be settled. The Court 
requests the Parliament to review the procedures for 
settling these items of expenditure, with a view to 
speeding up the process. 
2.3. Some of the comments which follow have 
already been made in the annual report on the 
financial year 1981 (') or in the special report on the 
Members' Cash Office of the European Parlia­
ment (2). In the meantime, the Parliament has taken 
a number of measures to improve the situation. The 
Court hopes that the Parliament will persevere with 
its efforts to find an appropriate solution to all the 
problems. 
Presentation of current assets in the balance 
sheet 
2.4. The amount of 8,9 million ECU entered under 
the heading 'current assets' includes: Expenditure to be charged 
2.7. The balance of 4,2 million ECU stated for this 
account is inaccurate because of errors made in 
three major imprest accounts in allocating certain 
amounts to the heading 'assets' (cash and bank bal­
ances) instead of to 'expenditure to be charged'. The 
balance for this account should have been given as 
5,2 million ECU, and the assets as only 4,1 million 
ECU instead of 5,1 million ECU (see paragraph 
2.13). The accounts department ought not to have 
accepted the amounts stated by the administrators 
of the imprest accounts without checking firstly the 
assets and secondly the supporting documents for 
the amount of expenditure to be charged. 
(a) advances to be settled totalling 2,8 million 
ECU, 
(b) expenditure to be charged totalling 4,2 million 
ECU. 
2.5. These two amounts basically represent 
expenditure not charged to the budget and are not 
current assets. 2.8. This account records the expenditure which 
was paid by certain imprest accounts and which still 
had to be settled at 31 December 1982 (5,2 million 
ECU). Settling the operations paid by the imprest 
accounts takes far too long as shown by the numer­
ous operations carried out in April, May, June and 
October 1982, or the operations of the previous 
financial year, which appear in this account. Here 
too the Court recommends that the procedures for 
adjusting these items of expenditure be reviewed. 
Advances to be settled 
2.6. The main constituent of this item is an 
amount of 2,5 million ECU representing advances 
on mission expenses and mission expenses to be set­
tled and charged to the budget. Appropriations for 
mission expenses for the financial year 1982 
amounted to around 6 million ECU. It is a depar­
ture from normal practice that over 40% of the 
expenditure for a financial year has not been 
charged to the budget and appears on the balance 
(') OJ No C 344, 31. 12. 1982. 
0 OJ No C 202, 5. 8. 1982. 2.9. Under the expenditure to be charged there 
appears an amount of 0,1 million ECU which repre­
sents a cash shortage in the Members' Cash Office. 
The Parliament has started disciplinary action on 
this matter, as laid down in Article 70 of the Finan­
cial Regulation (3), in order to recover the amount in 
question. 
2.10. The expenditure to be charged also includes 
0,2 million ECU of payments made without the 
approval of the financial controller, and 0,2 million 
ECU of payments made in excess of appropriations 
available (see paragraph 2.16). 
(3) OJ No L 356, 31. 12. 1977. 
! 
20 Official Journal of the European Communities 31. 12. 83 
Table 2.1 — Balance sheet of the institutions and bodies and balance sheet of the Communities at 31 December 1982 
(Mio ECU) 
Assets 
Balance-sheet items Parliament Council Commis­
sion Court of 
Justice Court of 
Auditors Economic 
and Social 
Com­
mittee Office for 
Official 
Publica­
tions Joint 
Research 
Centre Consoli­
dated 
balance 
sheet 
Fixed assets: 
Tangibles 18,4 7,2 231,0 2,2 0,8 2,1 — — 261,7 
Loans granted — — 3 523,2 — — — — — 3 523,2 
Other fixed assets 0,4 — 36,1 1,4 — — — — 35,5 
Inventories 0,4 — 2,0 — — — — — 2,4 
Current assets: 
Receivable from Member 
States — — 1,1 — — — — — 1,1 
Advances to Member States — — 1 711,7 — — — — — 1 711,7 
Institutions 1,4 2,7 67,2 — — — — — 0,5 
Community bodies — — • 59,3 — — — 7,4 — 18,2 
Sundry accounts receivable 3,3 0,3 67,7 — — 0,2 0,7 8,1 80,3 
Expenditure to be charged 4,2 — 1,1 — — — — — 5,3 
Cash accounts: 
Fixed-term deposit accounts 
(less than 12 months) — — 19,1 — — — 1,2 16,5 36,8 
Securities portfolio — — • 1,1 — — — — — 1,1 
Accounts with Treasuries of 
Member States — — 2 170,5 — — — — — 2 170,5 
Current accounts 40,9 6,0 734,6 3,9 1,6 2,1 1,6 38,6 829,3 
Imprest accounts . 5,1 — 8,6 — — — — — 13,7 
Cash in hand 0,2 0,1 0,1 — — — • — — 0,4 
Prepaid expenses — — 102,5 — — — — — 102,5 
Total 74,3 16,3 8 736,9 7,5 2,4 4,4 10,9 63,2 8 794,2 
Commitments not included in 
the balance sheet — — 6 307,5 — — — ' — — 6 307,5 
Management and control of cash accounts on the Parliament's deposits. These disparities 
should be borne in mind when reducing the number 
of bank accounts. 
Bank accounts 
2.11. At 31 December 1982 the Parliament had 24 
bank accounts, excluding those for the imprest 
accounts. This is far too many and leads to exces­
sive administrative and financial costs. The Parlia­
ment should substantially reduce the number of its 
bank accounts as soon as possible. 
2.12. There are significant and unwarranted differ­
ences between the rates of interest paid by the banks Imprest accounts 
2.13. This item, which amounts to 5,1 million ECU 
(whereas it ought to total only 4,1 million ECU), 
comprises 30 imprest accounts. Whilst the existence 
of nine of these accounts seems wholly justified, 
since they relate to the Parliament's nine informa­
tion offices, it is not as clear why all the other 21 
accounts exist. In view of paragraphs 2.14 to 2.21 in 
31. 12. 83 Official Journal of the European Communities 21 
(Mio ECU) 
Liabilities 
Balance-sheet items Parliament Council Commis­
sion Court of 
. Justice Court of 
Auditors Economic 
and Social 
Com­
mittee Office for 
Official 
Publica­
tions Joint 
Research 
Centre Consoli­
dated 
balance 
sheet 
Fixed capital: 
Own capital 18,8 7,2 376,7 3,5 0,8 2,0 ' — — 409,0 
Surplus for 1981 — — 661,5 — —- — — — 661,5 
Surplus for 1982 — , — 825,2 — — — — — 825,2 
Unallocated surplus from 
lending and borrowing 
operations — — 14,4 — — — — — 14,4 
Long-term debts: 
Loans raised — — 3 340,1 — — — — — 3 340,1 
Short-term debts: 
Payable to Member States — — 0,1 — — — — — 0,1 
Community bodies — — 1,7 — 0,9 — 10,6 — 9,4 
Appropriatipns for the year 
to be carried over — — 1 385,6 — — — — — 1 385,6 
Earlier appropriations to be 
carried over — — 135,4 — . — — — — 135,4 
Sundry accounts payable 0,4 0,4 279,8 — 0,1 0,1 0,1 6,9 287,8 
Revenue still to be entered 0,5 — 82,4 0,1 — — 0,2 7,8 91,0 
Payments in hand 0,5 — 1 529,5 — 0,2 — — — 1 530,2 
Inter-institutional accounts 54,1 8,7 — 3,9 0,4 2,3 — 48,5 — 
Accrued expenses — — 104,5 — — — — — 104,5 
Total 74,3 16,3 8 736,9 7,5 2,4 4,4 10,9 63,2 8 794,2 
Commitments not included in 
the balance sheet — — 6 307,5 — — — — — 6 307,5 
particular, the Court recommends that the Parlia­
ment reconsider the justification for the accounts 
currently in use. 
Members' imprest accounts 
2.14. These accounts, which in 1982 were the sub­
ject of a special report by the Court, consisted of 18 
bank accounts at 31 December 1982, which is an 
excessive number. The bank reconciliations, 
although constituting one of the essential controls, have not been made every month in 1982; moreover, 
at the end of April 1983, a number of reconciliations 
as at 31 December 1982 were still to be made. Also, 
the requisite checks have not been carried out on the 
bank interest rates. 
2.15. The accounting for the secretarial allowances 
account is unsatisfactory: 
(a) firstly, the double-entry method is not used, 
(b) secondly, it does not allow the necessary recon­
ciliations between the general accounts and the 
bank statements to be made easily. 
22 Official Journal of the European Communities 31. 12. 83 
Table 2.2 — Revenue and expenditure account of the institutions and bodies and consolidated revenue and expenditure account of 
the Communities for 1982 fMin pen 
Sector 
1 Parliament Council Commis­
sion Court of 
Justice Court of 
Auditors Economic 
and 
Social 
Committee Office 
for Official 
Publica­
tions Joint 
Research 
Centre Consoli­
dated 
account 
A. Actual revenue: 
Own resources 
Financial 
contributions 
Surpluses available 
Other revenue 18,9 9,6 21 043,6 
196,9 
-141,9 
274,1 3,6 1,8 2,0 1,0 17,8 21 043,6 
196,9 
-141,9 
328,8 
Total revenue 18,9 9,6 21 372,7 3,6 1,8 2,0 1,0 17,8 21 427,4 
B. Expenditure: 
Staff (1) 
(2) 
(3) 122,9 
7,9 
130,8 58,5 
0,3 
58,8 454,3 
6,4 
460,7 19.5 
0,1 
19.6 11,5 
0,2 
11,7 13.8 
0,1 
13.9 9,1 
0,2 
9,3 689,6 
15,2 
704,8 
Administration (1) 
(2) 
(3) 39,0 
28,9 
67,9 24,8 
7,4 
32,2 185,4 
51,7 
237,1 4,9 
1,5 
6,4 1,6 
0,7 
2,3 6,1 
.0,7 
6,8 5,6 
0,5 
6,1 267,4 
91,4 
358,8 
Agricultural 
market 
guarantees (1) 
(2) 
(3) 12 257,3 
2,7 
12 260,0 12 257,3 
2,7 
12 260,0 
Agricultural 
structures (1) 
(2) 
(3) 483,5 
277,2 
760,7 483,5 
277,2 
760,7 
Fisheries (1) 
(2) 
(3) 50,7 
30,4 
81,1 50,7 
30,4 
81,1 
Regional policy (1) 
(2) 
(3) 2 765,8 
174,4 
2 940,2 2 765,8 
174,4 
2 940,2 
Social policy (1) 
(2) 
(3) 910,0 
220,0 
1 130,0 910,0 
220,0 
1 130,0 
Research, 
energy, etc. (1) 
(2) 
(3) 28,0 
64,8 
92,8 317.7 
48,1 
365.8 345,7 
112,9 
458,6 
Repayments to 
Member States (1) 
(2) 
(3) 952,2 
116,0 
1 068,2 952,2 
116,0 
1 068,2 
Cooperation 
with 
non-member 
countries (1) 
(2) 
(3) 598,1 
345.3 
943.4 598,1 
345.3 
943.4 
Total 
expenditure (1) 
(2) 
(3) 161,9 
36,8 
198,7 83,3 
7,7 
91,0 18 685,3 
1 288,9 
19 974,2 24,4 
1,6 
26,0 13,1 
0,9 
14,0 19,9 
0,8 
20,7 14,7 
0,7 
15,4 317.7 
48,1 
365.8 19 320,3 
1 385,5 
20 705,8 
C. Outturn for the year 1982 (A —B) 721,6 
D. Cancellations of appropriations carried over from previous year 
Exchange differences for the year 1982 
Earmarked revenue to be repaid 166,2 
- 61,2 
- 1,4 
E. Balance for the year 1982 (C + D) 825,2 
(1) Payments against appropriations for the year 1982. 
(2) Appropriations for the year carried over to 1983. 
(3) Total (1+2) = expenditure charged to the financial year. 
31. 12. 83 Official Journal of the European Communities 23 
2.16. Better supervision of transactions would 
have made it possible to prevent the secretarial 
allowances account making some payments which 
exceeded the appropriations available for 1982 (see, 
paragraph 2.10). 
2.17. The transactions of two other imprest 
accounts are recorded in a single auxiliary account, 
a practice which is contrary to certain provisions of 
the Implementing Measures of the Financial Regu­
lation ('), and does not permit effective control of 
each imprest account. (c) receipt of revenue. 
2.20. Moreover, contrary to the provisions of the 
Financial Regulation, certain payments which are 
supposed to be made through this account were 
effected through other channels, without a valid 
reason. Lastly, it is surprising to note that a large 
number of invoices are paid by this account only 
after delays of several months. There are therefore 
valid grounds for questioning the need to keep this 
account. 
2.18. The procedures which are followed still fall 
short of acceptable standards: 
(a) payments made on the basis of documents 
which are sometimes incomplete or incorrect 
(no indication of the name of the payee, the 
date, the place, the amount paid, or amount of 
payment altered without the approval of an 
authorized person), Mission expenses account 
2.21. The entries made in the auxiliary accounts 
for this imprest account and those in the general 
accounts cannot be reconciled because they are not 
given in the same currency or at the same rate. The 
accounting procedures should be altered so that this 
essential reconciliation can be made every month. 
(b) supporting documents not numbered, 
(c) cash statements not giving the date or the name 
of the cashier, 
(d) payment documents prepared by the cashier res­
ponsible for payment, 
(e) bank transfers from one imprest account to 
another (contrary to the essential principle that 
an imprest account should only be replenished 
from central cash funds). Monitoring of accounts 
2.22. At 31 December 1982 the accounts 'sundry 
accounts receivable', 'advances to be settled' and 
'sundry accounts payable' show numerous old or 
anomalous amounts needing to be corrected or bal­
anced. The Court recommends that these accounts 
be monitored regularly. 
Imprest account for the operating costs of bars and 
restaurants 
2.19. This imprest account, by it£ very nature, can 
only be used to cover expenditure incurred for bars 
and restaurants managed by outside companies. 
This account presents a number of irregularities: 
(a) no auxiliary accounts, 
(b) no monthly proof of expenditure (only one sub­
stantiation was given for the entire period from 
June to November 1982), 
(') OJ No L 170, 1.7. 1975. Council 
Cash reimbursements to representatives 
2.23. The travel expenses of the representatives to 
the Council are reimbursed by bank transfer or in 
cash, at the payee's choice. For the financial year 
1982, over 10 000 reimbursements were thus made in 
cash, for an amount which nevertheless represented 
only 13% of the total sum of travel expenses reim-
24 Official Journal of the European Communities 31,12. 83 
bursed. These cash payments have a number of dis­
advantages : 
(a) the need to have large amounts of cash con­
stantly available, with all the attendant risks; 
(b) extra work (collecting the travel expenses claim 
forms, preparing and distributing the envelopes, 
collecting the receipted expenses forms) over 
short periods of time, requiring the services of 
staff who could be employed on other tasks. 
2.24. Moreover, these payments are made in a 
manner incompatible with the Financial Regula­
tion: this cash office is not an imprest account, and 
payments may not therefore be made without the 
prior approval of the Financial Controller. 
2.25. For this reason the Court recommends that 
representatives' travel expenses be reimbursed solely 
by transfer. The Commission ceased to make cash 
reimbursement of similar travel expenses several 
years ago, without encountering any problems. The 
Council would do well to adopt similar procedures 
to those introduced by the Commission. with the largest volume of transactions, were not 
completed until late May 1983; • 
(b) for six bank accounts the reconciliation at 
31 December 1982 had still not been completed 
by the end of the audit inquiries, on 1 June 
1983. 
This delay in preparing the reconciliations makes it 
more difficult to present all the banking transactions 
correctly. For example, sundry items of revenue (0,2 
million ECU) and payments (0,8 million ECU) still 
need to be analysed. 
2.28. In accordance with the Court's recommenda­
tions, the Commission has, with a few exceptions, 
correctly included the bank interest credited with a 
value date of 31 December 1982 in the revenue for 
the financial year 1982. It would be desirable to 
extend this principle to all bank revenue. For exam­
ple, a repayment of the principal and interest of 
special loans (1,3 million ECU) entered as revenue 
for 1983, should have been entered as revenue for 
the financial year 1982. 
Commission 
Management and control of cash accounts 2.29. The accounts for the banking operations are 
kept on an office computer. As this computer does 
not meet all its needs, the cash department keeps 
manual accounts for the day-to-day monitoring of 
operations. The Court would point out that, in its 
annual report on the financial year 1980 ('), it had 
already recommended the installation of a. suitable 
data-processing system. 
Bank accounts 
2.26. As the Court has pointed out on numerous 
occasions, the reconciliation at regular intervals 
between the balances of the bank accounts, as they 
appear in the general accounts, and the bank state­
ments of account constitute one of the essential con­
trols on cash operations. 
2.27. The frequency of the controls carried out by 
the Commission (about three per year and per 
account) still does not seem to be satisfactory. 
Moreover: 
(a) on the whole, these reconciliations have been 
made late; for example, the reconciliations at 
31 December 1982 for the two bank accounts 2.3Q. In view of all the problems described above, 
the Court finds it hard to understand why the num­
ber of bank accounts opened in the Commission's 
name has risen from 86 at the end of 1981 to 111 at 
the end of 1982. The Court recommends that the 
Commission investigate the need to hold so many 
bank accounts. 
2.31. Contrary to the practice of previous financial 
years, certain payments in respect of the financial 
year 1982, made between 1 and 15 January 1983, 
have been presented in the accounts by the Com­
mission as a direct reduction of the balance of the 
bank accounts. Consequently, the balance sheet at 
31 December 1982 gives the cash position for some 
banks at 15 January 1983 instead of at 31 December, 
(') OJ No C 344, 31. 12. 1981. 
/ 
31.12. 83 Official Journal of the European Communities 25 
thus understating the Commission's cash funds to 
the point of giving some bank accounts a credit bal­
ance. The account with the Treasury of the United 
Kingdom, for instance, appears to have a credit bal­
ance of over 9,5 million ECU, whereas it should 
have had a debit balance of 19,3 million ECU. Simi­
larly, the account with the Banca Commerciale Ital-
iana shows a credit balance of 0,4 million ECU 
whereas this should instead have been a debit bal­
ance of the same amount. The Court stresses the 
importance of the principle that the accounting 
methods used for the financial statements must be 
consistent, and notes that this presentation is unsuit­
able. bookkeeping for some operations, supporting docu­
ments altered without the approval of an authorized 
person, and delays in the recording of documents), 
which have been brought to the attention of the 
Commission. 
2.35. For several Directorates-General of the Com­
mission, supplementary cash offices have been 
opened for paying various items of expenditure. The 
basis on which they operate is not clear. Although 
these cash offices function as imprest accounts 
(since payments are made without prior approval of 
the Financial Controller), it seems that a decision to 
create such an account has not been taken in all 
cases. This has resulted in a number of anomalies, 
which have been brought to the attention of the 
Commission. 
Imprest accounts 
2.32. The imprest account for the payment of ad­
vances on mission expenses, with a monthly ceiling 
of BFR 5 million, was not entered in the books 
separately, contrary to the provisions of the Imple­
menting Measures of the Financial Regulation. As a 
result the payments made exceeded the permitted 
maximum. In order to prevent recurrence of this 
irregularity, the Commission abolished the monthly 
ceiling, contrary to the provisions of the Financial 
Regulation and its own internal rules. The Court 
would point out that keeping a separate account for 
this imprest would have made it possible to monitor 
the payments, and also to comply with the relevant 
provisions. 
2.33. The imprest accounts for the external delega­
tions and information offices were entered on the 
balance sheet for the total amount of the advance, 
without any distinction being made between on the 
one hand, the assets and on the other, the expendi­
ture incurred between 4 December 1982 (date of the 
last replenishment of the advance) and 31 December 
1982. Following the Commission's reply (Annex IV, 
paragraph 2.33), the Court maintains that it is never­
theless possible, when drawing up the balance sheet, 
to make this distinction between assets and expend­
iture incurred. 2.36. Even though the amounts involved are not 
very large, the Court recommends that all the provi­
sions regarding the Cash Office and the supplemen­
tary cash offices be reviewed in the light of the 
Regulations and be subjected to the necessary inves­
tigations and checks. 
Cash office controls 
2.37. Adequate checks do not appear to be made 
upon the Cash Office, the imprest accounts or the 
supplementary cash offices. For example, only two 
checks were made on the imprest accounts for the 
external delegations and information offices. More­
over, one of these two checks had no probative 
value since, in the absence of the administrator of 
the imprest account/ it was impossible to verify the 
funds. 
2.38. The Court recommends that, in accordance 
with the Financial Regulation, checks be carried out 
without warning at least once a year for each of the 
imprest accounts and cash offices, and that these 
checks be recorded in the cash book or in an appro­
priate register. 
Cash offices 
2.34. The audit of the Cash Office in Brussels 
revealed a number of shortcomings (such as: no Monitoring of accounts 
2.39. The 'sundry accounts receivable' and 'sundry 
accounts payable' accounts have not been moni­
tored regularly. The result has been an abnormally 
26 Official Journal of the European Communities 31.12.83 
long delay in checking these accounts, the existence 
of old, unsubstantiated balances and a number of 
inconsistencies which have not been corrected. The 
Court recommends that the Commission take the 
necessary steps without delay. 
Allocation of expenditure to a suspense 
account 
2.40. 'Expenditure to be charged' includes 
0,04 million ECU in payments made in excess of 
appropriations available. The Commission decided 
that this expenditure, for which the Financial Con­
troller had withheld approval, was to be recorded as 
'expenditure to be charged'. The Court has already 
criticized this use of a balance-sheet account (see 
annual reports on the financial years 1979 (') and 
1980) for recording irregular expenditure. In this 
instance, once everything had been done to prevent 
this irregularity, the Commission could have 
employed a clearer presentation, such as a special 
heading 'expenditure paid in excess of appropria­
tions' in the balance sheet and the revenue and 
expenditure account. request for a transfer and any subsequent such 
requests should have been granted, or else the Regu­
lations should have been amended.. 
2.42. Many debts payable or debts receivable 
accounts were shown in the balance sheet at an 
ECU rate different from the rate at 31 December 
1982. These accounts do not therefore give a true 
and fair view of the situation as to the debts payable 
or receivable by the Commission at 31 December 
1982. With regard to. the Commission's reply 
(Annex IV, paragraph 2.42), the Court would point 
out that the reference to the whole balance sheet, 
which makes it possible to quote the rate 0,76%, is 
not pertinent. The Court's observation applies to a 
well-defined category of items. Within this category 
the impact of the anomalies noted by the Court 
(short-term debts plus current assets entered at an 
exchange-rate other than that of 31 December 
1982/total short-term debts plus current assets) is 
62%.' 
2.43. Because of the increase in the number and 
value of exchange differences, the Court requests 
that the Commission take the necessary steps to: 
(a) record each kind of exchange difference in a 
separate account, 
(b) produce for each exchange difference a book­
keeping voucher explaining the difference and 
signed by an official responsible, or even by the 
Financial Controller in cases where these differ­
ences exceed certain fixed amounts, 
(c) thoroughly review the whole problem. 
Accounting methods applying to exchange 
differences 
2.41. The item 'exchange differences' is usually no 
more than a token entry, and the institutions have to 
obtain the necessary transfers to cover their net 
exchange losses. A Court of Justice proposal for a 
transfer was rejected by the budgetary authority on 
the grounds that the problem of exchange differ­
ences would arise for all the institutions and that a 
solution other than transfer could be contemplated. 
Moreover, the consolidated revenue and expendi­
ture account for the financial year 1982 shows a net 
exchange loss of 61,2 million ECU, representing the 
net exchange losses of all the institutions. In view of 
the Regulations currently in force, this presentation 
is irregular. In this instance, the Court of Justice's Balance sheet and revenue and 
expenditure account of the 
Communities 
2.44. Although the presentation of the consoli­
dated revenue and expenditure account and balance 
sheet has been improved since 1981, these financial 
statements nevertheless call for a number of com­
ments. The Court recommends that the Commis­
sion: 
(') OJ No C 342, 31. 12. 1980. (a) ensure greater coordination of the presentation 
of the various financial statements involved in 
31: 12. 83 Official Journal of the European Communities 27 
the preparation of the consolidated statements, 
whether these statements come from the differ­
ent Directorates-General of the Commission 
(IX, XVIII and XIX) or from the institutions 
(for example, in addition to the 5,3 million ECU 
entered as expenditure to be charged in the con­
solidated balance sheet, other items on the bal­
ance sheet also include expenditure of this 
kind); 
(b) include in the trial balance at 31 December 1982 
all the items which appear on the consolidated 
balance sheet; 
(c) record all the consolidating entries by means of 
which the institutions' accounts are converted 
into the consolidated accounts. 
Inspection of tangible fixed assets 
2.45. The Communities' capital assets (represented 
chiefly by the buildings, furniture and office equip­
ment owned by the institutions) appears on the con­
solidated balance sheet under the heading 'tangi­
bles' as an amount of around 261 million ECU. The 
institutions responsible have not carried out the 
checks on this property required by the Financial 
Regulation. 
2.46. The institutions have not carried out inspec­
tions to ascertain that the permanent inventories, in 
which the tangible fixed assets held by each institu­
tion are recorded, correspond to the facts. To date, 
only three institutions have undertaken to carry out 
such an inspection: the Parliament, the Court of 
Justice and the Court of Auditors. The Parliament 
did indeed begin listing its items of office equip­
ment (i.e. 2,4 million ECU of the 18,3 million ECU 
in tangible fixed assets held by the Parliament) but 
without any physical check. The Court of Justice is to carry out this task in 1983. Lastly, the Court of 
Auditors has checked the inventory but has not fin­
ished ensuring that it tallies with the facts. All the 
institutions should ascertain that the permanent 
inventories correspond to the facts as soon as possi­
ble. 
2.47. Even if there is no physical stocktaking, the 
value of the tangible fixed assets given in the bal­
ance sheet of an institution should tally with the 
figure stated in the permanent inventories. Neither 
the Parliament nor the Commission has kept the 
detailed calculations used for converting the figures 
in the permanent inventories into those in the bal­
ance sheet at 31 December. The Court was therefore 
not able to check their accuracy. The Council and 
the Economic and Social Committee for their part 
used estimates and not the figures given in the per­
manent inventories. 
Inventories (Office supplies) 
2.48. As a result of the Court's comments, the Par­
liament and the Commission have entered the value 
of their office supplies in stock at 31 December 1982 
(2,4 million ECU). The Commission's stocks, how­
ever, are theoretical stocks and not the actual stocks 
as determined by the physical stocktaking at the end 
of December 1982. It would have been preferable to 
enter the value of the actual stocks as determined by 
the physical stocktaking which was carried out at 
the end of December. Also, other far more signifi­
cant stocks do not yet appear under this heading: 
the Publications Office's stocks of paper and bro­
chures, and the stocks of the research institutes. No 
value has been put on the stocks of the research 
institutes for want of a suitable valuation method. 
The Commission should adopt the requisite valua­
tion methods for all the stock of consumables held 
by the Community bodies. 
28 Official Journal of the European Communities 31.12.83 
CHAPTER 3 
Revenue 
3.0. TABLE OF CONTENTS Paragraph reference 
Introduction 3.1 to 3.3 
Summary of financial information , 3.4 
Opinion on legislation for own resources 3.5 
Value-added tax 3.6 to 3.11 
Effect on calculation of own resources of the continua­
tion of transitional methods 
Customs duties 3.12 to 3.19 
Reintroduction of duty on reaching quotas and ceilings 
(for goods from developing countries) 3.12 to 3.17 
Examination of ex post facto control arrangement in Italy 3.18 and 3.19 
Agricultural levies 3.20 to 3.23 
Adequacy of supporting documentation for the calcula­
tion of levies 
Introduction 
3.1. This chapter relates to own resources and cer­
tain miscellaneous revenues of the European Com­
munities included in Part A of the general budget. It 
does not relate to revenues for either the European 
Development Fund or the European Coal and Steel 
Community. Nor does it include income from 
co-responsibility levies, this being treated as nega­
tive expenditure (Chapter 4). 
3.2. The revenue under consideration consists, for 
the most part, of the own resources assigned to the 
Communities by Council Decision (ECSC, EEC, 
Euratom) No 70/243 of 21 April 1970 ('), that is to 
(') OJ No L 94, 28. 4. 1970. say, Common Customs Tariff duties; agricultural 
levies, including sugar and isoglucose production 
and storage levies; and value-added tax (VAT) not 
exceeding 1% of a uniform Community-wide basis 
of assessment. Exceptionally, Greece continues to 
pay a financial contribution in lieu of VAT, based 
on its gross national product, in accordance with 
Article 4 (2) of the aforementioned decision and 
pending the introduction in that Member State of 
the common system for this tax. 
3.3. The general budget is also financed by certain 
items of miscellaneous revenue, including: 
(a) contributions by certain Member States to Eur­
atom research programmes; 
31. 12. 83 Official Journal of the European Communities 29 
(b) portion of the proceeds of ECSC levies paid in 
pursuance of Article 20 of the Merger Treaty of 
8 April 1965 towards the administrative expen­
ditures of the ECSC which are borne on the 
general budget of the European Communities; 
(c) pension and tax deductions from staff remuner­
ation; 
(d) fines, etc. 
Summary of financial information 
Analysis 
3.4. The revenue of the Communities for 1981 and 
1982 is set out in Table 3.1. Opinion on legislation for own 
resources 
3.5. In November 1982, the Court issued two opi­
nions (') on proposals to amend Council Regula-. 
tions (EEC, Euratom, ECSC) Nos 2891/77 and 
2892/77 of 19 December 1977 (2). In particular, the 
Court was in accord with three aspects in these pro­
posals, which were of material importance in the 
field of own resources: 
(a) the proceeds of customs dutiesj agricultural lev­
ies and VAT are credited by the Member States 
to the accounts of own resources kept by the 
Treasury of each Member State. Under Regula­
tion No 2891/77, these sums become available 
to the Commission only if the cash position 
(0 OJ No C 133, 20. 5. 1983, p. 3, and OJ No C 151,9.6. 
1983, p. 6. 
(2) OJ No L 336, 27. 12. 1977, p. 1. 
Table 3.1 —Total revenue 1981 and 1982 
(Mio ECU) 
1981 1982 
Type of revenue actual 
revenue Budget <2) Actual 
revenue Variation 
(3)-(2) 
(1) (2) (3) (4) 
Customs duties 6 392,4 6 939,0 6 815,3 -123,7 (- 1,8 %) 
Agricultural levies 1 264,9 1 899,1 1 522,0 -377,1 (-19,9 %) 
Sugar and isoglucose levies 482,5 786,0 705,8 - 80,2 (-10,2 %) 
VAT own resources 9 187,8 11 998,3 12 000,5 + 2,2 ( + 0,02%) 
Financial contributions (GNP) 151,4 197,5 197,0. - 0,5 (- 0,3 %) 
Subtotal 17 479,0 21 819,9 21 240,6 - 579,3 (- 2,7 %) 
Adjustment of 1981 VAT own 
resources -141,9 -141,9 
Adjustment of 1980 VAT own 
resources 558,2 , 60,9 + 60,9 _ 
Adjustment of 1979 VAT own 
resources -13,2 4,6 + 4,6 
Miscellaneous revenue 179,0 164,5 263,2 + 98,7 ( + 60,0%) 
Balance from previous year 246,1(0 — — — — 
Total 18 449,1 21 984,4 21 427,4 -557,0 (- 2,5%) 
(') Includes 1980 arrears of 165 Mio ECU paid in October 1981. 
(2) The 1982 budget was not amended. 
30 Official Journal of the European Communities 31. 12. 83 
requires it. Balances are therefore frequently left 
in the Member States' Treasuries. The new pro­
posal was that interest on these balances should 
be for the credit of the Community. 
(b) the Commission has in the past made a number 
of proposals to introduce a regular system of 
notification by Member States about frauds and 
irregularities in the own resources field, similar 
to that applying for EAGGF expenditure. So far 
it has met with little success and the supply of 
this information by Member States remains vol­
untary and erratic. The proposed amendment to 
Regulation No 2891/77 is a renewed attempt to 
obtain agreement. 
(c) at present, the Regulations permit the Commis­
sion to request that it be associated with Mem­
ber States' inspection activities, but to date it 
has had no autonomous powers in this respect. 
The proposals included a paragraph to the 
effect that the Commission may itself undertake 
on-the-spot inspections. own resources; Regulation No 2892/77 introduced 
as a transitional measure the alternative for Member 
States to pay on the basis of either Method A 
(returns) or B (revenue), and the Sixth Directive of 
17 May 1977 (2) allowed the continuation of several 
national practices where these were not in conform­
ity with the proposed uniform basis of assessment. 
Important consequences of these transitional 
arrangements are that: 
(a) there is no common system of determining the 
amounts of VAT own resources due from the 
Member States; 
(b) the method adopted, whether it be A or B, is 
subject to positive or negative financial com­
pensations for the exemptions allowed by the 
Sixth Directive; and 
(c) the complexity of these compensations is such 
that agreement between the Member States and 
the Commission may not be reached for several 
years after the base year, and only after material 
amendments to the amounts due. 
None of these proposals has yet been enacted. Until 
they are, there will be continuing weaknesses in the 
control of own resources due to the Communities. 
This is particularly true of (b) and (c). 3.7. In introducing these transitional arrange­
ments, Regulation No 2892/77 foresaw that they 
would continue in force until 31 December 1982 
when a uniform definitive system was to have been 
brought into effect. However, due to their late 
introduction and the consequent lack of experience 
in their working, it was decided to extend this transi­
tional choice between Methods A and B until 
31 December 1985 (Council Regulation (ECSC, 
EEC, Euratom) No 3550/82 of 28 December 
1982 (3)). 
Value-added tax 
Effect on calculation of own resources of the 
continuation of transitional methods 
3.6. Council Decision of 21 April 1970 (') intro­
duced the concept of financing the Community 
budget entirely from own resources, including a 
VAT element on a uniform base for all the Member 
States. However, it was not until 1977 that the 
necessary legislation was enacted to include VAT in 3.8. In the nature of the calculation of the VAT 
base for determining the amounts of own resources 
due, much of it has to depend upon statistical or 
other indirectly-derived data. This is also the case in 
the calculations made by the Member States of the 
financial compensations referred to in paragraph 
3.6 (b) above: compensations relating to 1981 
amounted to a net 18,7 million ECU (positive 13,1 
million ECU for exemptions applied by Member 
States and negative 31,8 million ECU for tax col-
(') OJ No L 94, 28. 4. 1970, p. 19. (2) Council Directive 77/388/EEC, OJ No L 145, 13. 6. 
1977, p. 1. 
(3) OJ No L 373, 31. 12. 1982. 
31. 12. 83 Official Journal of the European Communities 31 
lected by them over and above that on the Com­
munity base — these figures are indicative of the 
extent of the differences which still exist in the 
application by Member States of VAT as authorized 
by the Sixth Directive). 
3.9. The fact that Member States have the choice 
of methods was intended to facilitate administrative 
arrangements; in theory, the amount of VAT on 
resources due should be the same whether deter­
mined under Method A (returns) or Method B 
(revenue). However, as was also noted in the annual 
reports for the financial years 1980 (') and 1981 (2), 
the two methods are in practice fundamentally dif­
ferent, and each Member State is free to apply 
whichever method it prefers. The Commission has 
presented to the Council proposals, including those 
referred to in paragraph 3.5, aimed at reducing this 
lack of harmonization and will be reporting before 
31 December 1984 with a fuller appreciation on the 
transitional methods and the implementation of 
Regulation No 2892/77. 
3.10. The Court recognizes the difficulties in har­
monizing national arrangements in this field. It 
notes however that the continuing absence of a 
definitive uniform method of calculating own 
resources, together with the lack of harmonization in 
applying VAT, prejudices the accuracy and com­
pleteness of the amounts to be brought to account. made not only in 1980 to the amount of 7 258,5 mil­
lion ECU, but also in: 
(a) 1981, as adjusting balances on the basis of 
Member States' summary , accounts at 1 July 
1981, for 558,2 million ECU; 
(b) 1982, following adjustments agreed with the 
Commission, for 60,9 million ECU. 
Customs duties 
Reintroduction of duty on reaching quotas 
and ceilings (for goods from developing 
countries) 
3.12. An important part of own resources (32% in 
1982) derives from customs duties established on the 
importation of goods from non-Member States. 
Since 1971, the Communities have applied a gener­
alized system of preferences (GSP) as developed 
through the United Nations Conference on Trade 
and Development. This system aims to encourage 
developing countries to export their products to the 
Communities, one feature of which is the waiver of 
certain of the customs duties laid down in the Com­
mon Customs Tariff (CCT). The extent of such 
waivers is set out annually in Council Regulations, 
specifying the quotas or ceilings by product from 
each developing country. 
3.11. The Court also draws attention to the length 
of time which it takes to finalize any year under 
these transitional methods. Thus it notes that while 
VAT own resources are paid into the Treasury 
accounts on a monthly advances basis, final 
accounting on the VAT base for 1980 was being 
concluded in December 1982; and that for 1981 was 
still unsettled at 15 July 1983. Thus payments in res­
pect of the 1980 base of VAT own resources were 
(') OJ No C 344, 31. 12. 1981. 
(2) OJ No C 344, 31. 12. 1982. 3.13. These concessions represent a reduction of 
Community revenue. Accordingly, the Court exam­
ined the functioning of the GSP with a view to 
ensuring that the rules laid down in the legislation 
meet their objectives, and that the level of the con­
cessions, and thus the waiver of own resources, is 
kept within the limits set out in the Community 
Regulation. 
3.14. In carrying out its examination, the Court 
reviewed the operation of the administrative tasks 
for which the Commission is responsible, and 
undertook missions to Member States to assess how 
the GSP was functioning there. In the absence of 
accounts of the amount of customs duties waived 
under the GSP, the Commission has estimated that 
32 Official Journal of the European Communities 31. 12. 83 
for 1982 the amount involved was about 590 to 673 
million ECU. 
3.15. Some products are subject to 'quotas', for 
which the allocation of the total concession for each 
product from each developing country is made at 
Community level in terms of value of imports by 
Member States. The imposition of duties once the 
allocation is reached is then the responsibility of the 
Member State concerned. The Court found that the 
Member States were applying the quota tariff con­
cessions in accordance with the legislation. 
3.16. It noted, however, that the quotas fixed in 
Council Regulation (EEC) No 3601/81 of 7 Decem­
ber 1981 (') were calculated on the basis of a fixed 
scale for apportioning the Community tariff quotas 
among the Member States which has remained 
unchanged for years despite changing patterns of 
trade. For a given product, full CCT duties are 
sometimes charged in one part of the Community 
for which the national share of the Community 
quota , is exhausted, whereas they are waived on 
imports taking place at the same time in another 
Member State. The Commission is discussing the 
need to change this fixed-scale method. post facto control of customs duty vouchers exists. 
This control is performed by the Officio Centrale di 
Riscontro (UCR). Its work is centralized in its Rome 
office, where some 3 million import declarations 
were received in 1981 from all Italian customs 
houses for examination. Only about 3% of these 
vouchers were being examined, and even this was so 
far in arrears that, in October 1982, the vouchers 
being examined were those for January and Febru­
ary 1978. 
3.19. At the request of the Court, the Italian 
authorities have agreed to consider whether this 
situation can be improved, otherwise customs debts 
might prove to be irrecoverable under Council 
Regulation (EEC) No 1697/79 of 24 July 1979 (2) if 
not notified to the debtor within the prescribed 
time-limit of three years. 
Agricultural levies 
3.17. Certain other goods are subject to 'ceilings', 
above which the Commission may impose duties. 
The Court noted that in practice the Commission 
did not do so until the ceilings in question had been 
well exceeded. The reintroduction of duty on prod­
ucts exceeding their ceilings is not mandatory under 
the Regulation. The Council considers that CCT 
duties should be reintroduced immediately once the 
individual ceilings have been reached, if such imme­
diate reintroduction is necessitated by the situation 
on the Community market or on that in a Member 
State, or is requested by one or more Member States. 
It is doubtful whether these delays in the reintroduc­
tion of duty are in conformity with the objectives of 
the Commoii Customs Tariff and the system of own 
resources. Adequacy of supporting documentation for 
the calculation of levies 
3.20. Agricultural products imported into the 
Communities may usually be liable to duties in the 
form of agricultural levies. The purpose of these lev­
ies is to bring the cost of imported goods up to the 
Community target prices set annually by the Coun­
cil for each major agricultural product, at levels 
intended to protect Community producers and to 
maintain stable internal markets. These levies repre­
sent a material part of the Communities' own 
resources (7% in 1982). 
Examination o/ex post facto control 
arrangement in Italy 
3.18. During 1982, the Court carried out an audit 
mission in Italy where a centralized system of ex 3.21. The Court examined the system of determin­
ing these levies for cereals and cereal products as 
applied under Council Regulation (EEC) No 
2727/75 of 29 October 1975 (3). This requires the 
Commission to prepare annual target prices having 
regard to certain cost factors and to determine the 
most favourable daily cif prices offered at the Rot­
terdam import market on the basis of all offers made 
on the world market of which it has knowledge 
(') OJ No L 365, 21. 12. 1981, p. 1. (2) OJ No L 197, 3. 8. 1979, p. 1. 
(3) OJ No L 281, 1. 11. 1975, p. 1. 
31. 12. 83 Official Journal of the European Communities 33 
through the Member States or by its own means. It 
then sets levy rates for each of the main cereals in 
relation to these determined cif prices and the 
relevant target price. 
3.22. The Court carried out audit tests on the Com­
mission's calculating processes and the controls 
thereon. Having regard to the variability of factors 
which the above Regulation requires to be taken 
into account, and the effect which changes in the 
levy rate can have on own resources, the Court must 
take the view that these processes should be subject 
to clear guidelines in internal instructions, and be properly documented so that the reasoning and jus­
tification for the acceptance of the elements for cal­
culating levies should be on record, and thus avail­
able for internal control and the Court's audit. 
3.23. The Court obtained oral explanations for 
those levy rates and cost elements which were exam­
ined, but it found that many of the decision-making 
processes were not subjected to such expected stan­
dards^ documentation. It has therefore drawn the 
Commission's attention to this gap in the audit trail 
and is considering with it what improvements can 
be introduced. 
34 Official Journal of the European Communities 31. 12. 83 
CHAPTER 4 
European Agricultural Guidance and Guarantee Fund, 
Guarantee Section 
4.0. TABLE OF CONTENTS Paragraph reference 
Introduction 4.1 to 4.3 
Legislative framework 4.1 
Budget presentation 4.2 and 4.3 
Summary of financial information 4.4 and 4.5 
Principal financial data 4.4 
Non-automatic carryovers from 1981 to 1982 4.5 
Comments on the financial information 4.6 to 4.18 
Consequences of the new budgetary nomenclature 4.6 
Analysis of the accounts of the financial year 4.7 to ,4.10 
Entry of monetary compensatory amounts (MCAs) in the 
accounts 4.11 to 4.13 
Treatment of exchange differences 4.14 to 4.18 
Observations on the management of global appropriations 4.19 to 4.30 
Substantiation of special advances 4.19 
Treatment of applications for December advances 4.20 to 4.23 
Utilization of the funds made available to the Member 
States 4.24 to 4.30 
Observations on the management of detailed appropriations 4.31 to 4.39 
Expansion of direct management by the Commission 4.31 and 4.32 
Operation of the co-responsibility programmes 4.33 to 4.39 
Observations on storage operations 4.40 to 4.46 
Development of expenditure on storage operations 4.40 
Rise in the value of public stocks 4.41 to 4.45 
Entering of public stocks in the accounts 4.46 
Clearance of the accounts 4.47 
Observations on frauds and irregularities 4.48 to 4.60 
Notification of irregularities by the Member States 4.48 to 4.50 
Volume of sums due as a result of irregularities 4.51 to 4.60 
31. 12. 83 Official Journal of the European Communities 35 
Introduction 
Legislative framework 
4.1. In 1982 the management of the EAGGF, 
Guarantee Section, developed within a legislative 
framework that remained generally unchanged. This 
framework is more specific than the rules of the gen­
eral budget. None the less, the changes in the 
budget presentation referred to in the following para-1 
graph had a considerable effect on the presentation 
of the EAGGF, Guarantee Section. 
Budget presentation 
4.2. The appropriations of the EAGGF, Guarantee 
Section, continue to be entered as expenditure under 
Section III 'Commission'. Previously placed in 
Titles 6 and 7 of Section III, the EAGGF Guarantee 
Section appropriations are now in a newly-created 
Part B 'Operating Appropriations', under Titles, 1 
and 2. The appropriations are divided as before into 
chapters, with some slight modifications. The two 
chapters 'cereals' and 'rice' have been fused into a 
single chapter. A chapter 'olive oil' has been 
created, distinct from other oils and fats, as well as a 
chapter 'textile plants and silkworms'. 
4.3. The appropriations for intervention in the 
fisheries sector are not included under Titles 1 and 
2, but are to be found instead under Title 4 with the 
other fisheries sector appropriations. 
Summary of financial information 
Principal financial data 
4.4. The principal financial data on the manage­
ment of EAGGF Guarantee Section appropriations 
are assembled in Table 4.1. Total appropriations 
available for the management of the EAGGF, Guar­
antee Section in 1982 were 13 410,8 million ECU. 
Of this sum, 12 405,6 million ECU were actually used for the purposes of the EAGGF Guarantee 
Section, 90,7 million ECU were transferred else­
where and 914,5 million ECU were finally can­
celled. 
Non-automatic carryovers from 1981 to 
1982 
4.5. 161,7 million ECU were carried over from 
1981 to 1982 after approval of the budget authority. 
Out of this sum, 111,6 million were used in 1982, 
13,9 million of which originally were directly 
charged to the 1982 financial year. The payments 
against these carry-overs consisted of 23,4 million 
ECU for refunds on sales of products in public stor­
age to Poland, and 88,2 million ECU for marketing 
of skimmed-milk powder for use as feed for animals 
(cf. paragraph 4.38). 
Comments on the financial information 
Consequences of the new budgetary 
nomenclature 
4.6. The new budget presentation furnishes a num­
ber of improvements in budgetary transparency 
(consolidation of the appropriations concerning 
vegetable products under Title 1 and of those con­
cerning animal products under Title 2, separate 
identification of the operations financed in the olive 
oil sector, detailed breakdown of provisional appro­
priations). None the less, such a far-reaching reform 
of budget presentation should have been the logical 
moment to resolve a number of long-standing prob­
lems: 
(a) In order to facilitate examination of the global 
budgetary management of the EAGGF, Guar­
antee Section, the Section's total appropriations 
needed to be summarized under a single head­
ing, both in the budget and in the revenue and 
expenditure account. This form of presentation 
provides clear information. In particular, it 
36 Official Journal of the European Communities 31. 12. 83 
Table 4.1 — Summary of accounts 1982 ^io ECU) 
Expenditure of Member States 
Appropriations available Commitments (Regulation No 380/78, Charging as payments 
Article 3(2) (b)) 
Automatic carry-overs — — Payments against automatic 
from 1981: 0,7 carry-overs from 1981: 0,6 
Cancellations of appro­
priations: 0,1 
Appropriations used: 0,6 
Appropriations initially Balance of 
available appropriations available • i 
(Titles 1 and 2, in the Member States 
Chapter 40): 13 249,1 (') at 1.1.1982: 267,1 
Advances to Member States Expenditure declared by Charging as payments in 
for: Member States: respect of: 
Non-automatic • — January 805,6 — January 1 064,6 — January 1 061,3 (2) 
carry-overs — February 1 025,8 — February 1 012,8 — February 1 005,8 (2) 
from 1981: 161,7 — March 936,2 — March 1 067,8 — March 1 066,0 (2) 
Total 161,7 
— April 853,8 — April 850,7 — April 851,0 
available: 13 410,8 0 — May 1 086,4 — May 823,2 — May 828,5 
Transfers to: 
— Article 950 
— Article 690 
— Various 13 410,8 0 
— June 809,4 — June 853,0 — June 852,1 Transfers to: 
— Article 950 
— Article 690 
— Various -25,5 
-20,3 — July 674,0 
— August 999,0 
— September 924,1 — July 
— August 
— September 855,2 
896,5 
1 028,2 — July 824,8 
— August 859,5 
— September 1 068,0 Transfers to: 
— Article 950 
— Article 690 
— Various 
-44,9 — October 1 102,5 — October 1 130,3 — October 1 083,1 chapters -44,9 — November 1 252,0 — November 1 396',3 — November 1 109,3 
— December 1 408,9 — December 1 422,2 — December 1 658,1 
— Supplement — Supplement 
December 81,4 December 21,7 
11 959,1 12 289,2 0) 
Special advances for: Payments against 
— July (B) 20,0 non-automatic carry-overs 
— October (DK) 11,6 from 
— November (F) 15,0 1981 to 1982: 111,6 
— December (DK, D, 
GR, IRL, I) 107,7 
154,3 
Clearance of the 
accounts 1974/75: 161,0 
Appropriations Exchange difference: —9,8 
available after 
transfers: 13 320,1 (') 
Total advances: 12 531,7 Total: 12 400,8 (') Total: 12 400,8 
Expenditure committed Expenditure paid 
directly by the directly: 2,1 
Commission: 4,8 Total 
12 536,5 charged: 12 402,9 
Cancellations of appropria­ Decommitment of balance 
tions from Titles 1 and 2 and available in the ' 
Chapter 40: Member States 
— Appropriations of the at 31.12.1982: -130,9 
financial year: -864,3 
— Non-automatic carry­
overs from 1981: 
- 50,2 
-914,5 0) 
Automatic carry-overs 
Appropriations Total to 1983: 2,7 
used: 12 405,6 commitments: 12 405,6 Total: 12 405,6 
(') These amounts include those from Chapter 40 relating to the common organization of the fisheries market: initial appropriations (31,8); 
transfers (2,4); charging on the basis of the Member States' declarations of expenditure (34,0); cancellations (0,2). 
0 These amounts were obtained after the correction in respect of 13,9 Mio ECU mentioned in paragraph 4.5. 
0) Provisional appropriations of 454 Mio ECU were in addition entered in Chapter 100, being initially intended to finance operations under 
the EAGGF-Guarantee. 
31. 12. 83 Official Journal of the European Communities 37 
ensures that, when funds are provided to the 
Member States in the form of global advances, 
Article 96 of the Financial Regulation is 
observed by their remaining within the limits of 
the total appropriations available and that all 
the rules governing implementation of the 
budget are followed ('). 
(b) The concept of negative appropriations, which 
amounts to entering revenue as minus expendi­
ture under special headings in the expenditure 
chapters, should have been abandoned entirely. 
All levies would then be entered under 
revenue (2), the necessity for which is now 
recognized by the Commission itself in para­
graph 28 of its communication of 4 February 
1983 on 'The future financing of the Com­
munity' (3), in discussing the milk co-responsi-
bility levy. 
(c) Moreover, in cases where deductions are made 
from the aid paid, the practice of netting off 
these deductions and payments in the same item 
is contrary to Articles 3 and 22 of the Financial 
Regulation (4). With presentation of this kind, 
which has been noted since 1982, in the olive oil 
and fibre flax sectors, it is no longer possible 
even to identify the corresponding allocation of 
funds. 
(d) The Court considers that a more detailed pre­
sentation of the budget nomenclature could 
improve the quality of financial information if 
more use were made of the emerging distinction 
between authorization nomenclature and imple­
mentation nomenclature. The latter can be bro­
ken down in greater detail so as to provide 
information on the existence and development 
of certain categories of operations in the course 
of budget implementation and in the presenta­
tion of the revenue and expenditure accounts. A 
nomenclature of implementation by marketing 
year (campaign) could be adopted for measures 
where the distinction is necessary by reason of 
the scale of expenditure: this is the case in parti­
cular with production aid on olive oil. A 
nomenclature of implementation by product or 
market would be very useful in cases where it 
enabled an analysis of certain general items of 
(') cf. Opinion of the Court on a proposal for an amend­
ment to the Financial Regulation, OJ No C 232, 11.9. 
1981, p. 62. 
(2) cf. Opinion of the Court, ibid., p. 9. 
(3) Document (COM(83) 10 final, p. 18, paragraph 28. 
(4) OJ No L 356, 31. 12. 1977. expenditure or revenue. This applies in parti­
cular to the total of monetary compensatory 
amounts (cf. paragraph 4.13) and of refunds on 
exports to third countries of various kinds of 
cereals and milk products (5). 
(e) Budget headings without a specific object, of 
the 'other measures' type, should have been 
eliminated, insofar as they allow expenditure to 
be incurred which was never expressly author­
ized jby the budget authority, often after these 
headings have been allocated appropriations by 
transfer within the chapter. 
Analysis of the accounts of the financial year 
Utilization of appropriations 
4.7. The transfer of 90,7 million ECU away from 
the EAGGF, Guarantee Section, and the major can­
cellation of appropriations of 914,5 million ECU, 
give the impression that utilization of appropria­
tions was lower than initially estimated (—1 005,2 
million ECU). None the less, the 'savings' realized 
in this way are more apparent than real, since -
expenditure increased in 1982 by 1 423,5 million 
ECU (13%) compared with 1982 (10 979,4 million ' 
ECU). This development needs to be understood in 
terms of the distribution of the expenditure by mar­
ket, of the difference between this expenditure and 
the estimates, and of the assessment of the real cost 
of the budget. 
The pattern of change in EAGGF, Guarantee Section 
expenditure by market 
4.8. In 1982, the majority of markets saw a rise in 
expenditure over 1981 (cf. Table 4.2): 
(a) The markets which recorded the highest increase 
in both absolute terms and in percentage were 
(5) cf. paragraph 4.6 of the annual report on the financial 
year 1980, OJ No C 344, 31. 12. 1981, p.46. 
38 Official Journal of the European Communities 31. 12. 83 
Table 4.2 — Evolution and utilization of appropriations 
(Mio ECU) 
Budget 
heading Appropriations 1982 (') 
Initial 
appro­
priations Transfers Final 
appro­
priations Expenditure 1982 (2) 
Refunds 1st 
category 
mea­
sures 2nd 
category 
mea­
sures Miscel­
laneous Total 
1982 Expendi­
ture 
1981 
(2) 
(1) (2) <3) (4) = (2) 
+ (3) (5) (6) (7) (8) (9) = (5) 
+ (6) + 
(7) + (8) (10) 
A. Markets: 
— Cereals 
— Rice 
— Sugar 
— Olive oil 
— Oil seeds and pro­
tein plants 
— Textile plants and 
silkworms 
— Fruit and vegetables 
— Wine 
— Tobacco 
— Milk and milk prod­
ucts 
— Beef and veal 
— Sheepmeat and 
goatmeat 
— Pigmeat 
— Eggs and poultry-
meat 
— Other agricultural 
sectors or products 
— Non-Annex II 
products 
Total A 
B. Monetary measures: 
— Accession CA 
— MCA 
Total B 
Subtotal A + B 
C. Fisheries 2 043,8 
67,5 
1 225,5 
685,6 -127,4 
+ 18,0 
621,0 +'194,0 
114,0 
852,6 
416,0 
618,0 
4 063,3 
1 420,6 
224.0 
166.1 
116,0 
57,0 
410,0 
13 101,0 + 3,0 
+ 66,0 
+ 156,0 
+ 15,0 
-553,2 
- 13,0 
+ 28,0 
+ 5,5 
-208,1 1 916,4 
67,5 
1 243,5 
685,6 
815,0 
117,0 
918,6 
572,0 
633,0 
3 510,1 
1 407,6 
252.0 
166.1 
116,0 
57,0 
415,5 
12 892,9 1 064,9 379,5 380,1 
41,0 9,3 — 
744,0 497,8 — 
8,8 428,0 56,3 
3,8 800,1 -0,4 
116,4 
59,6 854,7 — 
31,9 538,7 — 
17,3 575,2 30,1 
1 521,3 1 568,0 238,4 
643,5 188,3 326,8 
251,7 
96,2 15,5 — 
103,9 — — 
— 53,4 — 
414,4 — — 
4 750,6 6 276,6 1 031,3 — , 1 824,5 
— 50,3 
— 1241,8 
— 493,1 
— 803,5 
— 116,4 
— 914,3 
— 570,6 
— 622,6 
— 3 327,7 
— 1 158,6 
— 251,7 
— 111,7 
— 103,9 
— 53,4 
— 414,4 
— 12 058,5 
3,0 — 3,0 — 
275,0 + 115,0 390,0 — — 
278,0 + 115,0 393,0 — — 
13 379,0 - 93,1 13 285,9 4 750,6 6 276,6 
31,8 + 2,4 34,2 13,8 20,2 
13 410,8 - 90,7 13 320,1 4 764,4 6 296,8 0,4 
312,7 0,4 
312,7 
313,1 313,1 
313,1 12371,6 
— 34,0 1 921,3 
21,7 
767,5 
442.7 
648.2 
72,2 
641,1 
459.4 
361.8 
3 342,8 
1 436,9 
191.5 
154.6 
83,9 
46,7 
282,4 
10 874,7 
0,1 
238.3 
238.4 
11 113,1 
28,1 
Total A + B + C 
Clearance 1974/75 
Net total A + B + C 13 410,8 - 90,7 13 320,1 4 764,4 6 296,8 1031,3 313,1 12 405,6 11 141,2 
-161,0 
10 980,2 
(') Including non-automatic carry-overs from 1981 to 1982. 
(2) Expenditure: amounts committed and charged in detail to the financial year concerned, including direct commitments by the Commission, 
which have given rise to automatic carry-overs to the following financial year. 
31. 12. 83 Official Journal of the European Communities 39 
sugar, tobacco, fruit and vegetables, oils and 
fats, wine, non-Annex II products and rice. One 
reason for the rise is the extension of these mar­
kets to Greece (olive oil, fruit and vegetables, 
tobacco). Greece disbursed in total 146,2 mil­
lion ECU in 1981 and 684,6 million ECU in 
1982 on EAGGF, Guarantee Section items. The 
increase for this country alone was thus 538,4 
million ECU, including a part of the 1981 
expenditure that was made behind schedule in 
1982. financial year the amounts charged negatively and/ 
or set off in the revenue and expenditure account 
(which are in fact revenue) and allocates to its ori­
ginal financial year expenditure which has either 
been anticipated or deferred, where identifiable as 
such (cf. for example paragraph 4.23). Table 4.3 
shows the assessment of real expenditure relating to 
the financial years 1978 to 1982. Real expenditure as 
assessed shows a considerably higher increase over 
the previous year (14,6%) than that evidenced by the 
revenue and expenditure account (13%). 
(b) The milk sector showed evidence of stability. 
(c) The principal animal product sectors, with the 
exception of sheepmeat, recorded a fall in 
expenditure (beef and veal, pigmeat). Entry of monetary compensatory amounts 
(MCAs) in the accounts 
The relation between estimates and expenditure 
4.9. In 1982, problems of adjustment between esti­
mates and actual expenditure led to a large number 
of transfers within the EAGGF, Guarantee Section: 
(a) The majority of these transfers were within 
chapters (totalling 1 904,5 million ECU). They 
are generally the result of switching of oper­
ations in the management of the markets 
between, for example, refunds and interven­
tions. The voluntary reduction of the one is 
often accompanied by the automatic growth of 
the other, and vice versa. 
(b) The transfers from chapter to chapter (totalling 
623,2 million ECU) represent, for each unit con­
stituted by a market, over- or under-estimates of 
expenditure. In practice the Court has. not 
found any notable case of persistent over- or 
under-estimation which would have revealed a 
true weakness in the quality of the estimates. 4.11. MCAs reflect the difference between the 
representative rates (green currencies) and the real 
exchange rates. They may be paid or collected on 
intra- or extra-Community exchanges. During the 
financial year 1982, there were two substantial 
changes in monetary parities, one on 21 February 
1982 and the other on 14 June 1982. These two inst­
ances caused a considerable increase in net MCA 
expenditure. For 1982 the MCA expenditure charge­
able to the EAGGF, Guarantee Section, amounted 
to 312,7 million ECU, i.e. a rise of 31% over 1981 
(238,3 million ECU). It therefore marked an abrupt 
end to the downward trend which had existed since 
1977. 
4.12. The continuation of heavy expenditure in 
this field leads the Court to recall its previous com­
ments (') on the entry of MCAs in the accounts. 
Entry in the accounts (in the chapters and some­
times even in the budget items) of the netted-off 
amounts of MCAs collected and MCAs granted is 
open to criticism insofar as it does not show the 
actual amount of collections and payments made 
and thus does not facilitate the checking of these 
operations. 
4.13. In addition, the accounting entries for the 
MCAs, being separated from those for the chapters 
Assessment of real expenditure 
4.10. To assess the real expenditure of the finan­
cial year, the Court adds to the expenditure of the (') cf. paragraph 2.11 of the annual report on the finan­
cial year 1978, OJ No C 326, 31. 12. 1979, p. 14 and 
paragraph 4.37 of the annual report on the financial 
year 1979, OJ No C 342, 31.12. 1980, p. 60. 
40 Official Journal of the European Communities 31. 12. 83 
Table 4.3 — Assessment of actual expenditure of the EAGGF-Guarantee for the financial years 1978 to 1982 
(Mio ECU) 
> 1978 1979 1980 1981 1982 
> Amount Amount Variation 
1978/79 
(%) Amount Variation 
1979/80 
(%) Amount Variation 
1980/81 
(%) Amount Variation 
1981/82 
(%) > 
(1) (2) (3) (4) (5) (6) (7) (8) (9) 
Payments according to the rev­
enue and expenditure account (') 8 672,8 10 434,5 +20,3% 11314,9 +8,4% 10 979,4 -3,0% 12 402,9 +13,0% 
Actual expenditure of the financial 
year (after corrections) 8 991,1 11 352,7 +26,3% 11609,9 +2,2% 12 044,1 +3,7% 13 801,7 +14,6% 
Corrections: 
(a) Negative appropriations: 
— milk co-responsibility levy 
— monetary compensatory 
amounts 
— olive oil deductions 
— flax and hemp deductions 
(b) Clearance of accounts 
(c) Reduction in value of stocks: 
— under Regulation No 
1883/78, Article 8 
— in respect of Poland 
(d) Excess of expenditure over 
appropriations 
(e) Recoveries 
Total corrections + 137,4 
+ 487,1 
-306,2 
+ 318,3 + 94,2 
+ 278,2 
+ 36,1 
+ 306,2 
+ 203,5 
+ 918,2 + 222,9 
+ 337,6 
+ 3,6 
+ 0,1 
- 65,7 
-203,5 
+ 295,0 + 478,5 
+ 453,0 
+ 3,4 
+ 0,2 
+ 161,0 
- 86,5 
+ 65,7 
- 18,1 
+ 7,5 
+1 064,7 + 537,3 
+ 740,5 
+ 2,6 
+ 1,1 
+ 86,5 
+ 18,1 
+ 12,7 , 
+1 398,8' 
(') This is expenditure made against appropriations available during the financial year concerned, i.e. payments against appropriations of.the 
financial year, and payments against non-automatic carry-overs from the previous year. 
pertaining to the Common Market Organizations 
(CMOs), could give the impression that this type of 
expenditure is not connected with management of 
the markets. The MCAs, although fixed on the basis 
of currency figures, still constitute corrections to the 
market prices, upon intra- or extra-Community 
exchanges. At present, the accounting system does 
not allow comparison, even by chapter, of MCA 
expenditure and market management expenditure. 
A comparison of this nature, which could be made 
by further detailing the implementation nomencla­
ture covering MCAs (cf. paragraph 4.6 (d)), would 
enable a better understanding of the real factors 
involved in management of the markets, enhance 
the value of the annual accounts as a source of 
information and facilitate the establishment of a relationship between the flow of goods and the 
monetary compensatory amounts. 
Treatment of exchange differences 
4.14. The financial effect of dual conversion — of 
the amounts fixed in ECU into national currencies 
at the representative rates, and of the expenditure of 
the Member States into ECU at the budgetary rates 
— still does not appear either in the budget or in the 
revenue and expenditure account for the financial 
31. 12. 83 Official Journal of the European Communities 41 
year 1982 ('). It appears only in the EAGGF finan­
cial report. 
4.15. Furthermore, it should be noted that the 
amounts accepted by the EAGGF to its account do 
not allow for exchange differences resulting from 
the conversion into ECU: 
(a) The EAGGF Guarantee Section expenditure 
and advances are converted into ECU at the 
rate prevailing on the 20th of the second month 
preceding the month concerned. The balances 
between advances and expenditure available in 
the Member States at the end of each month are 
revalued on the basis of the rate of the ECU on 
the 20th of the month preceding the month con­
cerned. It should be pointed out that this proce­
dure still has no statutory basis. 
(b) Subsequently, the advances are revalued for 
entry in the accounts using the accounting rate 
(the rate obtaining on the first of the month of 
entry). 
(c) This procedure is completed at year-end by a 
valuation of the funds available, this time on 
the basis of the rate obtaining on 31 December. 
4.16. All these differences between conversions are 
then entered in Account No 45.330 'Exchange dif­
ferences', where the exchange differences relating to 
transactions outside the EAGGF, Guarantee Sec­
tion, are also recorded. 
4.17. This method of accounting raises problems 
with regard to Articles 95, 96 and 97 of the Financial 
Regulation from which it is clear that all the 
expenditure arising from the management of the 
EAGGF, Guarantee Section, must be entered in the 
revenue and expenditure account under the Titles 
relating to the EAGGF, Guarantee Section, mainly 
so as to ensure that the expenditure does not exceed 
the total EAGGF-Guarantee appropriations. The 
entries in question, however, did not include 
exchange differences resulting from the revaluation 
of the monthly balances of advances, nor those 
resulting from the use of the accounting rate in 
granting the advances, nor even those resulting from 
the year-end valuation of liquid funds, which were 
entered in the accounts outside the EAGGF, Guar­antee Section, under Item 850, in the same way as 
exchange differences relating to other operations. 
4.18. The exclusion of these exchange differences, 
which are of a clearly budgetary nature, makes it 
impossible to verify that the above-mentioned statu­
tory provisions on monitoring the availability of 
EAGGF Guarantee Section appropriations have 
been observed. 
Observations on the management of 
global appropriations 
Substantiation of special advances 
4.19. During 1982, four series of special advances 
were granted in July, October, November and 
December for a total amount of 154,3 million ECU. 
The Court found that, following its previous com­
ments (2), all applications for special advances were 
now accompanied by supporting documents show­
ing the circumstances in which the additional finan­
cial needs of the Member States were identified and 
assessed. 
Treatment of applications for December 
advances 
4.20. The manner in which appropriations were 
made available to the Member States to cover their 
needs for the month of December seems surprising. 
Beginning on 20 October, 9 out of 10 Member States 
explicitly stated their financial needs for the month 
of December. By 10 November, the 10 Member 
States had, by telex, adjusted their requirements, 
generally raising them by a considerable margin. On 
19 November, the Commission decided to grant the 
Member States the appropriations requested, but 
inititally to pay only 90%, which was done on 22 
November. The Commission then decided to adjust 
the appropriations granted (in 7 cases: upwards; in 
(') cf. paragraph 4.12 of the annual report on the finan­
cial year 1981, OJ No C 344, 31. 12. 1982, p. 35. (:) , cf. in particular paragraph 4.14 of the annual report 
on the financial year 1981, OJ No C 344, 31. 12. 1982, 
p. 26. 
42 Official Journal of the European Communities 31. 12. 83 
3 cases: downwards) and to pay the balance of 10% 
on 7 December, in proportion to the adjustment. 
Finally, 5 Member States, of which 2 had been sub­
ject to an adjustment downwards, requested, and 
obtained on 22 December, special advances totall­
ing 107,7 million ECU. 
4.21. This practice does not comply with the rules 
governing the making available of appropriations, 
which only cover normal or special advances, and 
which do not provide for the possibility of partial 
payments or of adjustments being made after the 
advances have been decided upon. 
4.22. The background to these events was that the 
reduction of the payment to 90% of the advances 
decided upon took place at a time when the Com­
mission still hoped to see supplementary and 
amending budget No 1/82 adopted, the main pur­
pose of which was to allocate the 'savings' made on 
the EAGGF, Guarantee Section, to the financing of 
special measures in favour of the United Kingdom 
and the Federal Republic of Germany, whereas in 
practice inroads were about to be made on the 'sav­
ings' in question by reason of the increase in 
expenditure of the EAGGF, Guarantee Section, 
during the last months of the financial year. 
4.23. This unduly restrictive management of ad­
vances at the end of the financial year compelled 
some Member States to reduce artificially the rate of 
their year-end payments and thus led to a transfer of 
the expenditure to the following financial year, 
which it is impossible to quantify exactly. Table 4.4 — Rates of utilization of funds made available to 
the Member States 
(Mio ECU) 
Recipient Member State Total ad- -
vances 
made 
available Expendi­
ture 
declared Rates of 
utilization 
at 
31.12.1982 
(3) % — (2) 
(1) • (2) (3) (4) 
Belgium 537,3 535,5 99,7 % 
Denmark 560,0 558,7 99,8 % 
Germany 2 075,8 2 030,0 97,8 % 
Greece 687,5 684,6 99,6 % 
France 2 929,5 2 869,1 97,9 % 
Ireland 512,7 500,8 '97,7 % 
Italy 2 474,8 2 508,6 101,4% 
Luxembourg 2,7 2,6 96,3 % 
Netherlands 1 459,8 1 424,8 97,6 % 
United Kingdom 1 291,6 1 286,1 99,6 % 
Total 12 531,7 12 400,8 99,0 % 
Note: This table comprises advances from the Guarantee Section, 
and 60% of the advances granted as 'premiums for the non-
marketing of milk and milk products'. 
agement had allowed overspending in Italy of 33,8 
million ECU at year-end. The expenditure declared 
by Italy and accepted by the Commission amounted 
to 2 508,6 million ECU, whereas Italy in fact had 
received advances of only 2 474,8 million ECU for 
1982. 
4.25. This overspending calls for the following 
comments: 
Utilization of the funds made available to 
the Member States 
Annual utilization of funds (a) It can be explained in part by the fact that a 
transfer at nil price of products stored in the 
Federal Republic of Germany was decided in 
favour of Italy by Council Regulation (EEC) 
No 2099/82 of 20 July 1982 ('), and that Italy 
had calculated that the disposal on its market of 
these products would in December result in 
revenue that could be set off against its expend­
iture and had therefore taken account of this 
factor in its applications for advances. As the 
transfer operation was not carried out at the 
specified time, Italy found itself without the 
revenue in question and had a balance of 
expenditure higher than estimated. 
4.24. The Court's audit inquiries revealed, as can 
be seen from fable 4.4, that the Commission's man- (') OJ No L 223, 31. 7. 1982, p. 1. 
31.12.83 Official Journal of the European Communities 43 
(b) 33,8 million ECU in excess payments was 
charged to the financial year 1982, although the 
Commission had stated at the EAGGF Com­
mittee meeting of 16 December 1982 that the 
funds paid as advances for January 1983 might 
in no way be used to cover expenditure for the 
financial year 1982, and at the meeting of 14 
January 1983, that the fact that the amount of 
the advances had been exceeded was unaccept­
able and that the situation had to be rectified. 
(c) As the Court already stated in a previous annual 
report (') the system of financing the EAGGF, 
Guarantee Section, particularly with regard to 
second category expenditure, provides no abso­
lute assurance that such cases of overspending 
will not occur. monthly balances of funds available and in other 
cases, a sometimes considerable shortage of appro­
priations. These figures show that: 
(a) for several Member States the end-of-month 
balances remained high throughout the year, 
(b) conversely, for other Member States, the shor­
tage of appropriations recurred each month, as 
these Member States in fact began to consume 
the advances allocated for the following month 
as soon as they had obtained them on about the 
20th of the month. 
4.27. The considerable discrepancies between the 
funds allocated to each Member State and the 
expenditure incurred with the aid of these funds 
calls for the following comments: 
Utilization of funds during the year 
4.26. The balances of appropriations available in 
the Member States at the end of the month, as can 
be seen from Table 4.5, show a very variable situa­
tion, with the existence in some cases of large (a) Where they consist of persistent surpluses of 
liquid funds, they do not respect the general 
meaning of Article 4 (2) of Council Regulation 
(EEC) No 729/70 of 21 April 1970 (2) 
(b) Where they consist of expenditure in excess of 
the appropriations made available, they could 
in addition give rise^to year-end deficits which 
would have particularly serious consequences if 
they led to the overall appropriations being 
exceeded. 
(') cf. paragraph 4.30 of the annual report on the finan-
rial year 1979, OJ No C 342, 31. 12. 1980, p. 57. (2) OJ No L94, 28. 4. 1970, p. 13. 
Table 4.5 — Appropriations available at the end of the month in the Member States 
(Mio ECU) 
Balances during 1982 
State 
31.1. 28.2. 31.3. 30.4. 31.5. 30.6. 31.7. 31.8. 30.9. 31.10. 30.11. 31.12. 
Belgium + 15,9 + 26,0 + 20,2 + 11,0 + 26,8 + 12,2 + 6,3 + 8,2 + 8,9 + 7,1 + 6,4 + 1,8 
Denmark + 17,5 + 1,5 - 6,5 + 29,0 + 20,7 - 7,5 + 1,3 - 8,3 -13,6 - 13,0 - 17,8 + 1,3 
Germany + 25,4 + 82,4 + 43,9 + 40,8 + 59,0 + 60,0 + 84,4 + 90,3 + 66,1 + 111,8 + 73,2 + 45,8 
Greece + 15,0 + 28,6 + 41,2 + 72,2 + 35,6 + 46,0 - 50,4 + 8,1 + 8,1 + . 3,7 + 23,7 + 2,8 
France + 86,2 + 85,5 + 21,3 - 15,2 - 4,8 + 77,8 + 95,0 + 98,4 + 55,5 + 49,2 + 41,4 + 60,4 
Ireland + 25,7 + 21,7 + 20,8 + 13,1 + 30,9 + 10,9 + 15,4 - 1,5 -10,8 - 0,1 - 1,6 + 12,0 
Italy - 44,9 - 52,6 -85,7 -129,9 + 124,7 + 72,2 - 18,5 - 15,6 -22,4 - 4,1 -146,3 - 33,8 
Luxembourg -1- *0,4 - 0,2 + 0,1 + 0,2 + 0,2 - 0,1 + 0,1 + 0,2 + 0,3 + 0,2 + 0,2' + 0,0 
Netherlands - 13,1 - 27,4 -20,9 - 2,9 - 0,4 - 11,9 - 40,4 - 5,4 + 2,2 - 32,6 - 14,0 + 35,0 
United Kingdom + 38,9 + 9,5 + 8,6 + 27,2 + 15,2 + 5,5 .+ 8,5 + 26,6 + 5,0 - 39,3 - 11,8 + 5,6 
Total +167,0 +175,0 + 43,0 + 45,5 + 307,9 + 265,1 +101,7 + 201,0 + 99,3 + -82,9 - 46,6 +130,9 
\ 
44 Official Journal of the European Communities 31. 12. 83 
The cash position recorded by the Member States and 
by the Commission 
4.28. Since 1979, differences have been noted 
between the Community cash resources of certain 
Member States and the records kept in national cur­
rencies by the Commission. At the end of 1982, dif­
ferences still existed in the case of the Federal 
Republic of Germany, France and Italy. reports (2). It would moreover emphasize that such 
management, once employed, should at least obey 
the rules (particularly Article 50 et seq. of the Finan­
cial Regulation) which the Commission applies in 
similar fields of activity. For example, the payment 
orders for study contracts are not accompanied by 
an evaluation of the results. 
4.29. As far as Germany and Italy are concerned, 
the reasons for the discrepancy have now been iden­
tified and the Commission has requested the Mem­
ber States concerned to make the appropriate cor­
rections. The differences in the cash position of 
France (FF 28,3 million) will be subject to a detailed 
examination by the Commission. Operation of the co-responsibility 
programmes 
4.33. Five years after the entry into force of the 
co-responsibility levy in the milk and milk products 
sector, it appears that the management of the levy 
and of the specific measures laid down in conjunc­
tion with the levy, is still not entirely satisfactory. 
4.30. The Court would like to stress that, within 
the present legal framework, there is at any time a 
risk of differences in cash position, due in particular 
to year-end corrections made either by the Commis­
sion or by the Member States. It would be advisable 
to tighten the statutory rules by defining in greater 
detail in Regulation No 380/78 of 30 January 
1978 (') the procedures governing entry of these cor­
rections in the accounts. 4.34. As far as budgetary and. accounting clarity 
are concerned, the way in which the various aspects 
mentioned above are entered in the accounts should 
be improved: 
(a) Co-responsibility revenue, which represents 
1 513,1 million ECU since 1977, is still author­
ized and entered in the accounts as negative 
appropriations (cf. paragraph 4.6 (b)). 
Observations on the management of 
detailed appropriations 
Expansion of direct management by the 
Commission 
4.31. The amounts committed for direct manage­
ment in 1982, 4,8 million ECU, are five times greater 
than those committed in 1981, 0,9 million ECU. 
4.32. The Court can only reiterate the objections in 
principle which it expressed in its previous (b) As far as specific expenditure of about 620 mil­
lion ECU is concerned, which during the same 
period was totally or partially financed by 
means of the levy, it is not presented as such in 
the budget. Its presentation in the accounts does 
not enable it to be clearly identified, nor does it 
show which part of the expenditure is financed 
by the levy. The result is that it is impossible, 
when reading the budget, or the revenue and 
expenditure account, to assess what proportion 
of the revenue from the levy is used to finance 
the so-called co-responsibility programmes, in 
relation to that used to finance the rest of the 
chapter covering the milk sector (about 900 mil­
lion ECU from 1977 to 1982). 
4.35. The co-responsibility programme itself was 
marked in 1982 by the introduction of a new spe-
(') OJ No L 56, 27. 2. 1978, p. 1. O cf. paragraphs 4.25 to 4.27 of the annual report on the 
financial year 1980, OJ No C 344, 31. 12. 1981, p. 56, 
and paragraph 4.17 of the annual report on the finan­
cial year 1981, OJ No C 344, 31. 12. 1982, p. 38. 
31.12.83 Official Journal of the European Communities 45 
cific measure — aid to small-scale milk producers 
— which illustrates the numerous difficulties 
induced, from the point of view of financial man­
agement, by the adoption of an intervention 
mechanism such as the levy, outside the traditional 
intervention mechanisms. co-responsibility levy will result, due to the 
existence of several different area rates for the 
levy, in a situation where the real impact of the 
co-responsibility system taken overall becomes 
almost impossible to evaluate. 
4.36. Under Council Regulations (EEC) 
Nos 1189/82 and 1190/82 of 18 May 1982 (0, the 
Council decided in principle upon measures to sup­
port the income of small-scale milk producers, the 
cost of which for the year 1982/1983 could not 
exceed 120 million ECU. This amount was divided 
in advance between the Member States by specific 
quotas which resulted in sums varying from 0,3 mil­
lion ECU for Luxembourg to 39,6 million ECU for 
France. It was then the Commission's task to set 
objective criteria with a view to the division of these 
amounts between small-scale producers. In practice 
the Commission, by Commission Regulation (EEC) 
No 1759/82 of 30 June 1982 (2), was content to 
allow the Member States to fix the criteria them­
selves 'on the basis of the quantity of milk 
delivered ... up to a maximum quantity per prod­
ucer'. In 1982, 30,6 million ECU were expended 
under this measure, while remaining effectively 
within the limit of the quotas laid down for each 
Member State. 4.38. The amount of 100 million ECU carried over 
from 1981 to 1982 for the co-responsibility pro­
gramme was only partially used (88,2 million ECU) 
and was used for expenditure relating to the market­
ing of skimmed-milk powder for feedingstuffs for 
pigs and poultry. It was charged to the item 'Other 
measures' under Article 'Other measures in the milk 
and milk products sector'. 
4.39. This use calls for several objections: 
(a) The measure is of a purely short-term economic 
nature. It has no connection, or at least no more 
than any other specific marketing measure in 
the milk sector, with the co-responsibility pro­
gramme, the purpose of which is to promote the 
long-term expansion of milk products markets. 
4.37. The management of this new measure shows 
that with each development of the co-responsibility 
programme, a further departure is made from the 
original rules for financing the Guarantee Section: 
(a) In the light of the basic principles of the com­
mon agricultural policy (complete financing by 
the Community, financial solidarity, equal 
application of the Community rules in the 
Member States), Community aid that is paid 
according to different criteria, at different rates 
and under a quota system by Member State 
appears to be in all these respects little more 
than a series of unjustified derogations. 
(b) If the specific objective of the aid is to increase 
the income of small-scale producers, the combi­
nation of its effect with that of the application 
to these same small-scale producers of the 
(') OJ No L 140,20. 5. 1982, p. 8. 
(2) OJ No L 193,3. 7. 1982, p. 19. (b) The appropriations carried over from 1981 were 
used to cover expenditure actually chargeable to 
the financial year 1982. 
(c) The operation was entered in the accounts in an 
unclear manner, being charged against the same 
item as the aid to small-scale producers under 
the heading 'other measures' (cf. para­
graph 4.6 (e)). 
(d) Moreover, according to the nomenclature 
adopted by the budgetary authority, this 
expenditure on subsidies for specific purposes 
ought to have been charged to the item 'other 
public storage costs' under the Article 'interven­
tion storage of skimmed-milk powder'. 
(e) If these rules on entries had been followed, it 
would not then have been possible to utilize the 
appropriations which, carried over from the 
heading 'other measures', could be used only on 
this same heading, pursuant to Article 6 of the 
Financial Regulation. 
46 Official Journal of the European Communities 31. 12. 83 
Observations on storage operations 
Development of expenditure on storage 
operations 
4.40. Expenditure connected with the purchase, 
storage and sale of agricultural products amounted 
in 1982 to 1 817,0 million ECU, of which 1 031,3 
million ECU concerned second category interven­
tions (public stocks). Expenditure on public storage 
has decreased since 1979 by about 17% (1 247,0 mil­
lion ECU in 1979; 1 031,3 million ECU in 1982), 
whereas expenditure . on private storage has 
increased by about 93% (407,0 million ECU in 1979; 
786,7 million ECU in 1982). 
Rise in the value of public stocks 
4.41. The financial year 1982 was marked by a 
considerable influx of agricultural products for 
interventipn. Despite this, expenditure on public 
storage remained fairly low. On the other hand, the total value of stocks at year-end was 114% higher 
than at the end of 1981 (see Table 4.6). The high 
.value of the stocks resulted from the combination of 
several factors: 
(a) the level of stocks increased considerably in 
quantity, 
(b) the slight increase in intervention prices contri­
buted to an increase in the carryover prices at 
31 December 1982, 
(c) the Commission carried out a single technical 
reduction in the value of stocks, as provided for 
in Article 7 of Council Regulation (EEC) 
No 1883/78 of 2 August 1978 ('), and this was 
limited to beef and veal only, whereas, in 1981 it 
had also been applied to butter, 
(d) the Commission extended from eight to nine 
months the reference period used in calculating 
the carryover prices, 
(') OJ No L 216, 5. 8. 1978, p. 1. 
Table 4.6.— Quantity and value of products in public storage (') 
Position at 31.12.1981 Position at 31.12.1982 
Product 
Quantity (2) Value Quantity Value 
(tonnes) (Mio ECU) (tonnes) (Mio ECU) 
Common wheat 2 965,8 515,6 6 864,3 1 273,6 
Common wheat unsuitable for making bread 2,1 1 0,4 23,1 4,3 
Barley 847,8 130,1 1 680,8 304,9 
Rye 342,8 65,0 298,4 57,9 
Durum wheat. 309,1 . 59,2 800,7 199,2 
6live oil 140,1 220,6 181,3 287,8 
Colza 23,9 6,8 38,5 14,7 
Leaf tobacco — — 4,3 3,5 
Processed tobacco ' — — 4,2 3,9 
Baled tobacco 38,7 46,8 28,9 35,4 
Skimmed-milk powder 298,3 350,8 605,2 - 854,4 
Butter 13,8 30,5 138,9 467,0 
Beef and veal carcasses 145,9 289,1 155,8 337,7 
Boned beef and veal 64,2 159,8 61,3 166,3 
Total — 1 874,7 — 4 010,6 
(') The value in ECU was obtained by applying to the values in national currencies the budgetary rates obtaining for the conversion of ex­
penditure in the month of December (for 1982, rate of 20 October 1982). 
(2) Including the quantities of products made available to Poland. 
Source: Court of Auditors. 
31. 12. 83 Official Journal of the European Communities 47 
(e) in 1982, the Commission did not make the fur­
ther reduction in value provided for in 
Article 8 (2) of the same Regulation, which is 
designed to anticipate future losses on sales due 
to a foreseeable fall in the market. products in public storage would have to be sold at 
a reduced price in the following year. That degree of 
certainty could, for example, have been deduced 
from the existence of unusually high levels of 
stocks, of the persistence of excess production and 
of difficulties in marketing under the usual systems, 
which was the case at the end of 1982. 
) 
Reduction in value for realized loss 
4.42. In certain cases, where the products in stock 
lose value as a result of storage, the financial effect 
of this depreciation is noted and taken into account 
at the time of entry into intervention and the carry­
over price at the end of the financial year is in fact 
replaced by a price lower than the intervention 
price. This technical reduction in value continued to 
be carried out in 1982 for beef and veal whereas for 
other products, such as tobacco, there was no such 
reduction in value. 
Reference period 
4.43. The application of a reference period of nine 
months instead of eight months is clearly an 
improvement on the existing practice. It should 
nevertheless be pointed out that the method used 
must above all be regular and objective, particularly 
for the purposes of comparing the cost from one 
year to the next. A constant reference period, there­
fore, would ensure that the system is more objective. Entering of public stocks in the accounts 
4.46. The expenditure on public storage, which is 
shown in Table 4.7 is entered in the accounts on the 
basis of refunds, on the one hand from the proceeds 
from sales and on the other hand from financial and 
technical costs (against fixed amounts). The overall 
financing, i.e. the intervention purchase of agricul­
tural products, does not appear in the accounts for 
the financial year or in the balance sheet, since it is 
chargeable to the Member States. Two improve­
ments should be made: 
(a) Given that the financial risk connected with this 
investment should be borne by the Community 
budget at the time of sale, it would be necessary 
to indicate in an annex to the balance sheet at 
least the value of the stocks by means of explan­
atory notes giving details of this value. 
(b) It would be desirable to show separately the 
specific cost to the budget resulting either from 
subsidies in the form of price reductions, or 
from refunds in the case of sales to third coun­
tries. 
Reduction in value for anticipated loss 
4.44. As regards the Commission not making any 
reduction in value to anticipate future losses, the 
Court would stress that in previous years it criticized 
the Commission essentially because the latter had 
made such reductions in value on the basis of what 
appropriations remained available and, above all, 
because it had acted without using clear methods or 
criteria which would show whether its use of the dis­
cretionary power allowed it in this field reflected 
sound financial management. Clearance of the accounts 
4.47. Since the Commission did not adopt any 
decisions relating to the clearance of the accounts of 
the Member States in 1982, the accounts of ,the 
financial year did not record any operations in this 
regard, save for the recovery at the beginning of the 
financial year of 161 million ECU in connection 
with the clearance of the 1974 and 1975 accounts, 
following decisions taken at the end of 1981 ('). 
4.45. The criteria applied in this field should have 
included reference to the degree of certainty that (') cf. paragraph 4.27 of the annual report on the finan­
cial year 1981, OJ No C 344, 31. 12. 1982, p. 40. 
48 Official Journal of the European Communities 31. 12,83 
Table 4.7 — Distribution of measures in respect of storage expenditure in 1982 
(Mio ECU) 
Product A. 
Private 
storage B. Public storage 
Product A. 
Private 
storage Total Of which 
Product A. 
Private 
storage Total Technical 
costs Financing 
costs Difference between 
purchase price and 
sales price (') 
Cereals 380,1 134,9 90,2 155,0 
Sugar 489,9 — — — — 
Fats — 55,9 35,3 26,3 - 5,7 
Flax/hemp 1,7 — — — ——T— 
Wine 108,4 — — — 
Tobacco — 30,1 9,4 4,3 16,4 
Milk products 156,5 238,4 26,0 56,5 155,9 
Beef and veal 14,7 326,8 56,9 27,5 242,4 
Pigmeat 15,5 — — — — 
Total 786,7 1 031,3 262,5 204,8 564,0 
(') Part of this difference is due to sale by tender on the world market; thus the export refund factor is included in the sales price. 
Observations on frauds and 
irregularities 
Notification of irregularities by the Member 
States 
4.48. In 1982, the information provided under 
Article 3 of Council Regulation (EEC) No 283/72 
of 7 February 1972 (') (notification by the Member 
States of irregularities discovered) indicates that the 
activity has been considerably above the average for 
earlier years: 213 cases notified (cf. Table 4.8). 
4.49. The table showing the distribution by country 
of the eases notified in 1982 can be found in the 
12th financial report 'EAGGF 1982', document 
COM(83) 531 final. 
4.50. It was found that Regulation No 283/72 
above was not applied in a uniform manner by all 
the Member States: 
(a) Despite the existence of a statement by the 
Council and the Commission, recorded in the 
(') OJ No L 36, 10.2. 1972, p. 1. minutes of the Council meeting in which Regu­
lation No 283/72 was adopted, to the effect that 
an irregularity within the meaning of the Regu­
lation was any infringement, intentional or 
otherwise, of a legal provision, the Member 
States do not apply the same definition of the 
term 'irregularity'. 
Table 4.8 — Irregularities notified and recoveries effected (') 
Year Cases notified Recoveries 
Year 
Number Amounts 
(Mio ECU) Number Amounts 
(Mio ECU) 
1971 
1972 
1973 
1974 
1975 
1976 
1977 
1978 
1979 
1980 
1981 
1982 
Total 8 12,6 
20 2,3 
49 1,2 
87 4,2 
126 3,0 
' 223 5,9 
147 9,2 
104 3,0 
72 1,9 
181 19,6 
152 15,7 
213 35,0 
1382 113,7 7 12,4 
16 v 1,1 
43 0,7 
70 1,1 
104 1,4 
161 2,8 
90 2,7 
66 1,3 
68 1,3 
103 1,8 
85 3,9 
67 0,7 
880 31,2 
(') Notifications in respect of the premium for the non-marketing 
of milk (175 cases in 1982) are not included. 
Source: 12th EAGGF financial report 1982, document COM(83) 
531 final. 
31. 12. 83 Official Journal of the European Communities 49 
(b) Some Member States notify cases of attempt 
and some do not. ECU had been recovered. The sums not yet recov­
ered comprise: 
(c) Sometimes irregularities are only notified by 
means of procedures other than that under 
Article 3 (for example: quick notification proce­
dures provided for in Article 4 of Regulation 
No 283/72). (a) a total of 9,6 million ECU notified as being irre­
coverable by the Member States; 
(b) a total of 14,6 million ECU which appear as of 
this moment to be practically irrecoverable; 
(c) and a total of 58,3 million ECU remaining to be 
recovered. 
Volume of sums due as a result of 
irregularities 
Irrecoverable sums and Article 8 (2) 
Recovery of sums wrongly paid 
4.51. The machinery for the prevention and detec­
tion of frauds and irregularities, under which the 
Member States have prime responsibility for com­
bating irregularities, leaves to the Member States 
the task of recovering sums wrongly paid. The sums 
recovered are declared monthly, being set off 
against the expenditure of the Member State. By 
charging the resultant net expenditure figure as a 
payment, the Commission thereby credits the sums 
recovered to the EAGGF, Guarantee Section. 
Amounts which cannot be recovered in principle 
remain chargeable to the EAGGF, Guarantee Sec­
tion. 4.54. The amounts declared irrecoverable, 
although in principle borne by the Community, 
may, under Article 8 (2) of Regulation No 729/70, 
be charged to the Member States where they result 
from irregularities or negligence attributable to the 
Member States. 
4.55. The Court has already in its previous reports 
deplored the fact that the Commission has never 
been in a position to decide finally on the treatment 
of irrecoverable sums, leaving them in practice to be 
borne by the Community. The Commission's princi­
pal reply has been that this was due to the absence 
of rules which remain to be established. 
4.52. From the moment it commences the process 
of establishing an irregularity, a Member State 
creates a potential debt. And as soon as it accepts 
the existence of an irregularity, this amounts to the 
establishment of a debt owed to the EAGGF, Guar­
antee Section. At present, under Regulation 
No 283/72 the Member States are bound to notify 
the Commission of those cases of irregularity 
exceeding 1 000 u.a. (1 209 ECU) of which they are 
aware, and to inform the Commission quarterly of 
the state of their recovery work. 
4.53. The information available to the Commission 
from this system shows that at the beginning of 
1983, out of a total amount of 113,7 million ECU in 
irregularities notified by the Member States since 
the entry into force of the new system of financing 
the EAGGF, Guarantee Section, only 31,2 million 4.56. However, when examining files relating to 
sums declared irrecoverable long ago by the Mem­
ber States, the Court noted that, at the time of the 
adoption of Regulation No 283/72, the Council and 
the Commission had, in a joint declaration, agreed 
upon a simplified procedure for allocating responsi­
bility to the Member States or the Community in the 
case of irrecoverable amounts. Under this proce­
dure : 
(a) A Member State which accepted responsibility 
for an amount would declare this to the Com­
mission. 
(b) A Member State which held the contrary view 
would send the Commission an explanatory 
memorandum. 
(c) If the Commission could not accept the latter 
point of view, it would contact the Member 
50 Official Journal of the European Communities 31. 12. 83 
State concerned and arrange for an exchange of 
views in the EAGGF Committee. 
(d) If any problems remained, the Commission 
would submit to the Council proposals for solu­
tions appropriate to each unresolved case with a 
view to settling differences. 
4.57 It appears that none of the points in the 
abovementioned procedure has ever been imple­
mented. Moreover, the Court established that the 
routine information collected by the Commission in 
its follow-up of recovery procedures does not allow 
it to analyse the causes of non-recovery, and there­
fore to express an opinion on the allocation of res­
ponsibility. 
4.58 The Court would therefore conclude that, 
without prejudice to the possibility of a statutory 
amendment, which would not be inadvisable after 
10 years experience with a regulation, the Commis­
sion could: 
(a) improve its information on the conditions of 
recovery in the Member States, 
(b) activate the procedure agreed with the Council, 
initially by obtaining from the Member States 
an acceptance or denial of responsibility, then, 
in the event of disagreement, by itself deciding 
on the allocation of responsibility, after exami­
nation in the EAGGF Committee. 
Report by the Financial Controller under Article 24 
(3) of the Financial Regulation 
4.59. Article 24 (3) of the Financial Regulation 
provides as follows: 'when the Financial Controller 
finds that a document establishing a debt has not been drawn up, or that a sum due has not been 
recovered, he shall inform the institution thereof. 
Each year the Financial Controller of the Commis­
sion sends the latter a report in accordance with 
Article 24 (3). Sums due to the EAGGF, Guarantee 
Section, are never referred to in this report. 
4.60. Nevertheless, as was pointed out in para­
graph 4.52, any Member State which discovers an 
irregularity thereby establishes the existence of a 
sum due to the EAGGF, Guarantee Section. It 
would therefore have been desirable for the Finan­
cial Controller, in his report, to have drawn the 
Commission's attention to the recoveries made, the 
state of progress of the recovery procedures of which 
the Commission has been informed, the cases of 
non-recovery, problems of final assumption of res­
ponsibility for irrecoverable amounts which, when 
they are due to the negligence of a Member State, 
constitute direct debts owed to the Community, and 
the possible existence of numerous sums due of less 
than 1 000 u.a. which have not been notified to the 
Commission. This report, including points such as 
these, would have shown that the Financial Control­
ler, in carrying out his duties as internal controller, 
has scrutinized the way in which the authorizing 
officer and the accounting officer, each operating in 
their own particular sphere, have introduced and 
implemented suitable supervision procedures for 
ensuring that the sums due to the EAGGF, Guaran­
tee Section, are recovered as swiftly and as safely as 
possible. It is not clear from the Commission's reply 
(Annex IV, paragraphs 4.59 and 4.60) whether or not 
the latter considers that the amounts paid in error 
may under no circumstances constitute a sum due to 
the Community. Moreover, Article 24 (3) of the 
Financial Regulation specifically refers to cases 
where the documents establishing a debt have not 
been drawn up; this corresponds to the situation in 
which the Commission has placed itself by refrain­
ing from adopting a definite position on the Mem­
ber States' responsibility regarding the non-recovery 
of certain amounts. Lastly, it should be noted that 
the Commission has decided to give top priority to 
certain aspects of this problem, which the Court has 
been raising since 1978. 
31. 12. 83 Official Journal of the European Communities 51 
CHAPTER 5 
European Agricultural Guidance and Guarantee Fund 
Guidance Section 
5.0 TABLE OF CONTENTS Paragraph reference 
Introduction 5.1 and 5.2 
Summary of financial information 5.3 to 5.5 
Comments on the system of granting and management of the 
aid at Community and national level 5.6 to 5.48 
Regulation (EEC) No 1760/78 on the improvement of 
public amenities in certain rural areas 5.6 to 5.23 
Financing in the wine sector for vineyard restructuring or 
conversion operations 5.24 to 5.41 
Financing in the fisheries sector 5.42 to 5.48 
Introduction 
5.1. The EAGGF, Guidance Section, which was 
created by Council Regulations (EEC) No 25/62 of 
4 April 1962 (') and No 17/64 of 5 February 1964 (2), 
finances the common measures adopted for the ful­
filment of the objectives set out in Article 39 (') (a) 
of the EEC Treaty, including the structural modifi­
cations necessary for the proper working of the com­
mon market. Its interventions consist of 'project' 
measures — aid to individual beneficiaries for spe­
cific investments — and.'reimbursement' measures, 
whereby Member States can be reimbursed part of 
their expenditure for certain operations complying 
with the conditions laid down by Community provi­
sions. 
5.2. Council Regulation (EEC) No 929/79 of 
8 May 1979 (3) set an allocation of 3 600 million ECU for the operations of the EAGGF, Guidance 
Section, in the period 1980-1984, which was raised 
to 3 755 million ECU by Council Regulation (EEC) 
No 3509/80 of 22 December 1980 (4), due to the 
accession of Greece to the Community. 
Summary of financial information 
5.3. The commitments and payments of the finan­
cial year for the EAGGF, Guidance Section, are 
summarized in Table 5.1, wfrich also shows the 
amount of appropriations available. 
5.4. The 1982 budget had authorized commitment 
appropriations totalling 790,4 million ECU which 
were reduced during the financial year by a transfer 
of 9,5 million ECU to Chapter 95 in order to finance 
emergency aid to Poland. There was also a sum of 
149,3 million ECU of commitment appropriations. 
(') OJ No 30, 20. 4. 1962, p. 991. 
Q OJ No 34, 27. 2. 1964, p. 586. 
0 OJ No LI 17, 12. 5. 1979, p. 4. (4) OJ No L 367, 31. 12. 1980, p. 87. 
52 Official Journal of the European Communities 31. 12. 83 
Table 5.1 — EAGGF-Guidance: Appropriations available in 1982 and their utilization 
(Mio ECU) 
Budget heading Differentiated appropriations Non-differentiated appro­
priations from before 1977 (4) 
Budget heading Commitment appropriations Payment appropriations Non-differentiated appro­
priations from before 1977 (4) 
Budget heading 
Final appro­
priations 
available 
in 1982 (') Commit­
ments in 1982 Final appro­
priations 
available 
in 1982 (2) Payments 
in 1982 Appropria­
tions carried 
over Payments 
in 1982 
Chapter 30: 
Projects for the improvement of agricul­
tural structures 192,0 184,9 184,0 111,2 209,4(3) 84,4 
— 300 Individual projects 1,9 — 49,6 28,5 209,4 84,4 
— 301 Marketing 190,1 184,9 134,4 82,7 
Chapter 31: 
General socio-structural measures 118,4 92,5 120,2 92,5 
— 310 Modernization 112,4 86,8 114,2 86,8 
— 311 Cessation . 1,1 0,9 1,1 0,9 
— 312 Training 4,9 4,8 4,9 4,8 
Chapter 32: 
Measures to assist less-favoured areas 387,6 323,7 358,4 232,3 
— 320 Mountain and hill farming 150,8 144,5 150,8 144,5 
— 321 Mediterranean forests 91,9 82,2 81,2 42,2 
— 322 Regions — Italy 62,8 48,6 52,3 6,1 
— 323 Regions — France 29,2 15,9 29,0 16,4 
— 324 Regions — Ireland 37,9 22,1 37,9 22,1 
— 325 Regions — Denmark 0,5 0,0 0,5 0,0 
— 326 Regions — United Kingdom 3,5 1,4 3,4 1,0 
— 327 Regions — Belgium 2,0 — 0,3 — 
— 328 Regions — Germany 9,0 9,0 3,0 — 
— 329 Regions — Greece token — token — 
entry entry 
Chapter 33: 
Structural measures relating to the 
common organization of markets 180,9 132,5 172,8 117,7 
— 330 Producer organizations 3,7 2,2 3,7 2,2 
— 331 Milk and meat 105,7 86,3 105,7 86,3 
— 332 Wine 64,5 40,1 57,0 25,3 
— 333 Fruit 7,0 3,9 6,4 3,9 
Subtotal (Chapters 30 — 33) 878,9 733,6 835,4 553,7 209,4 84,4 
Chapter 46: 
Common measures in the fisheries sector 
— 460 Development of fishing indus­
try and aquaculture 
— 461 Producer groups 51,3 
51,2 
0,1 25,4 
25,4 
0,0 25,7 
25,6 
0,1 11,8 
11,8 
0,0 
Grand total 930,2 759,0 861,1 565,5 209,4 84,4 
(') Taking into account transfers, decommittals, adjustments and appropriations remaining from 1981. 
(2) Taking into account transfers and carry-overs from 1981. 
(3) In 1982t 23,2 Mio ECU were decommitted and re-utilized in accordance with Regulation (EEC) No 3171/75. These recommitments and 
payments are entered in the accounts against non-differentiated appropriations. 
(4) Chapter 80 of the old budgetary nomenclature. 
31.12.83 Official Journal of the European Communities 53 
remaining from 1981, thus bringing the total amout 
available for 1982 to 930,2 million ECU. Commit­
ments for the Guidance Section as a whole (Chap­
ters B 30 to B 33 and B 46) amounted to 759,0 mil­
lion ECU in 1982, i.e. 81,6% of the funds available. 
The corresponding figures for 1981 were 695,1 mil­
lion ECU and 85,3% respectively. 
5.5. With regard to payments, 486,0 million ECU 
were charged to 1982 payment appropriations and 
79,5 million ECU to those carried over from 1981, 
i.e. a total of 565,5 million ECU, to which must be 
added 84,4 million ECU charged to non-differen­
tiated appropriations carried over from financial 
years prior to 1977. Total payments therefore 
amounted to 649,9 million ECU for 1982 compared 
with 576,4 million ECU for the previous financial 
year. Of the 861,1 million ECU in differentiated 
payment appropriations available from the 1982 
budget and from carryovers from 1981 (after deduc­
tion of the 9,5 million ECU transferred to Chapter 
95), 565,5 million ECU (i.e. 65,7%) were utilized. 
The corresponding figures for 1981 were 490,8 mil­
lion ECU, representing 83,7% of funds. 
Comments on the system of granting 
and management of the aid at national 
and Community level 
Regulation (EEC) No 1760/78 on the 
improvement of public amenities in certain 
rural areas 
5.6. Council Regulation (EEC) No 1760/78 of 
25 July 1978 (') established a common measure to 
improve public amenities in the less-favoured agri­
cultural regions of Italy and southern France, within 
the meaning of Council Directive 75/268/EEC (2), 
and in the whole of the Mezzogiorno. 
5.7. The period envisaged for carrying out the 
common measure is five years as from 31 July 1978, the date of entry into force of the Regulation, and 
the estimated total cost to the EAGGF, Guidance 
Section, is 125 million ECU or 25 million ECU per 
year. The Fund finances up to 40% of the total cost 
of eligible projects for: 
(a) the provision of electricity and potable water 
supplies to villages or parts of villages whose 
inhabitants are dependent principally on agri­
culture, and to isolated farmsteads; 
(b) the construction and improvement of farm 
roads and local roads which are mainly used for 
agriculture and forestry. 
5.8. Under Article 7 of the Regulation, the projects 
to be financed must be included in outline pro­
grammes, which must themselves meet certain 
requirements. The Commission granted approval, 
on 13 July 1979 (3) and on 23 May 1980 (4), to the 
outline programmes which had been submitted by 
France, on 29 May 1979, and by Italy, on 10 March 
1980, respectively. 
5.9. Delays of this kind in the preparation of the 
programmes (one year for France, almost two years 
for Italy) prevent compliance with the general 
schedule for completion of the common measure, 
and have necessitated an amendment to the Regula­
tion to extend its period of application (5). 
5.10. The French outline programme provides for 
a total contribution from the EAGGF of FF 303,5 
million, or about 52,5 million ECU, corresponding 
to 42% of the total 125 million ECU; the Italian out­
line programme in turn provides for a total EAGGF 
subsidy of 106 million ECU, or 84% of the same 
amount of 125 million ECU. ' 
5.11. The two outline programmes, although 
approved by the Commission, are therefore based 
on the assumption that the total Community financ­
ing will exceed the estimated cost of the common 
measure, as laid down by the Regulation, by 26%. 
5.12. This over-expenditure is not in keeping with 
the idea of a planned common measure and there is 
0 Decision (EEC) 79/650 — OJ No L 186, 24. 7. 1979, 
p. 37. 
(4) Decision (EEC) 80/563 — OJ No L 145, 11. 6. 1980, 
p. 38. 
(!) OJ No L 204, 28. 7. 1978, p. 1. (5) Council Regulation (EEC) No 2003/83 of 18. 7. 1983 
0 OJ No L 128, 19. 5. 1975, p. 1. — OJ No L 198, 21. 7. 1983, p. 1. 
54 Official Journal of the European Communities 31. 12. 83 
reason to question the. advisability of a method 
which leads to financial estimates, which are the res­
ponsibility of the Commission and the budget 
authority, becoming part of a Council Regulation. unlike other measures ('), no supplementary provi­
sions have been included promoting better orienta­
tion of production, and the programmes make vir­
tually no mention of this aspect, except for some 
references in the part of the French document deal­
ing with Corsica. 
5.13. Despite the fact that the Italian programme 
did not contain some of the information required by 
Article 3 of the Regulation (exact areas eligible, 
other programmes, especially regional ones), and 
above all in view of the difficulties associated with 
the implementation of administrative devolution in 
Italy, the Commission preferred to approve an 
incomplete programme rather than delay the financ­
ing of the projects even further. . 5.15. The delays in getting the programmes under 
way are apparent in the implementation of the 
budget for the measure, summarized in Table 5.2. 
5.16. The audit inquiries carried out by the Court 
during the financial year 1982 in various regions of 
Italy have revealed a number of difficulties in plan­
ning or delays in implementation. 
5.14. Since this measure is concerned with public 
amenities (roads, water, electricity), the granting of 
subsidies is independent of any assessment of the 
effects on agricultural development. In particular, (') For example, Council Regulation (EEC) No 1362/78 
of 19 June 1978 on collective irrigation works in the 
Mezzogiorno (OJ No L 166, 23. 6. 1978) and Council 
Regulation (EEC) No 1820/80 of 24 June 1980 for the 
stimulation of agricultural development in the west of 
Ireland (OJ No L 180, 14. 7. 1980). 
Table 5.2 — Budgetary implementation of Regulation (EEC) No 1760/78 (1979-82) 
(Mio ECU) 
Budgetary implementation 1979 1980 1981 1982 
A. Commitment appropriations: 25,0 39,0 36,5 34,2 
— final appropriations of the financial 
year 25,0 14,0 25,0 25,0 
— remaining from the preceding 
financial year — • 25,0 11,5(') 9,2(') 
Commitments entered into: — 29,0 28,7 27,2 
— France (2) — 13,0 6,7 6,1 
— Italy 0 — 16,0 ' 22,0 21,1 
B. Payment appropriations: 15,0 17,0 13,0 31,5 
— final appropriations of the financial 
year 15,0 2,0 11,0 25,0 
— carried over from the preceding 
financial year — 15,0 2,0 6,5 
Payments made (4): — 1,3 6,5 9,2 
— France — 0,9 4,6 3,2 
— Italy — 0,4 1,9 6,0 
(') Including the appropriations initially committed for projects under Regulation (EEC) No 17/64 which became available for Regulation 
(EEC) No 1760/78 (Article 14), and also parity adjustments. 
(2) For a total of 245 projects—105 in 1980, 85 in 1981 and 55 in 1982. 
(3) For a total of 380 projects — 32 in 1980, 216 in 1981 and 132 in 1982. 
(4) Including the advances paid under Article 13 of the Regulation. 
31. 12. 83 Official Journal of the European Communities 55 
(a) In Calabria, it was not until the end of July 1982 
that the appropriations to cover the, regional 
share in the financing of the projects which were 
submitted to the Commission in 1980 and 
granted Community aid in 1981, became avail­
able at Rational level. Moreover, a commitment 
of expenditure for this financing had still not 
been entered in the accounts by the end of 
October 1982. No request for aid has been sub­
mitted for 1981 and 1982. 
(b) For the province of Basilicata, the first request 
for aid under Regulation No 1760/78 was made 
in September 1982 and it relates in fact to the 
provision of potable water supplies, for which 
projects under Regulation No 17/64 had 
already been approved but not carried out. 
(c) In the Marches, the projects submitted by the 
local bodies ('Communita montane') were 
drawn up without any specific plans as to the 
work to be carried out. For each of these local 
bodies the authorities in the region arbitrarily 
allocated 40% of the Community funds to the 
provision of electricity, 35% to potable water 
supplies and 25% to the construction and 
improvement of roads. None of the local bodies 
had projects ready for execution. The advances 
paid by the Community to the region in April 
1981, under Article 13 of the Regulation, were 
still for the most part unutilized in early 1982 
and in February 1982 the Commission adopted 
several decisions to recover these advances. 
5.17. The aid provided for under Regulation 
No 1760/78 can only be granted for public ameni­
ties which are mainly used for agriculture or by 
inhabitants dependent principally on agriculture 
(Article 2). It is difficult to fulfil this requirement or 
to verify the fact. In rural areas subject to permanent 
or seasonal increases in the population, it is not 
always easy to determine whether the rise in 
demand for electricity and potable water supplies is 
due to increased demand for agricultural purposes 
or rather to higher consumption, for example 
because of secondary residences or other uses. 
5.18. Since the Regulation, unfortunately, offers 
no guidance on this matter, the Commission consi­
ders that the conditions of Article 2 are being met when at least 35% of the population is dependent on 
agriculture, a rather low percentage in view of the 
way the Article is worded. 
5.19. Moreover, the information supplied by the 
Member States on the proportion of farmers is not 
always collected by reliable methods. In respect of 
various cases studied during on-the-spot checks in 
France by the Court, it was possible only at a later 
stage to ascertain that the amenities provided 
mainly served agriculture, on the basis of certificates 
which the national authorities requested from the 
mayors of the communes concerned. 
5.20. For the projects to supply electricity to rural 
areas in Italy, the aid granted by the EAGGF has, 
contrary to the provisions of the Regulation, not 
amounted to 40% of the total investment cost but 
only 32%. 
5.21. This is because the Commission considered 
that the share of the expenditure 'borne by the 
ENEL (Italian National Electricity Board), which is 
equivalent to 20% of the cost of the projects, should 
not be included in the basis of assessment used for 
calculating the amount of . aid to be granted by the 
Fund. 
5.22. The Commission has explained that the share 
financed by the ENEL is excluded because it does 
not constitute a direct, specific financial contribu­
tion from a Member State, but Father intervention by 
a third party in the financing of the projects in ques­
tion. 
5.23. A solution of this kind, consisting in the 
exclusion of certain parts of the investment from 
Community aid solely because of the source of the 
financing, has no legal basis. 
Financing in the wine sector for vineyard 
restructuring or conversion operations 
5.24. There are nine EAGGF Guidance Section 
measures providing financing for the wine sector. 
Three of these are general, covering the agricultural 
sector as a whole, including wine. They comprise 
the projects for the improvement of the structures of 
production, processing and marketing under Regu-
56 Official Journal of the European Communities 31. 12. 83 
lation No 17/64, the projects to improve processing 
and marketing structures under Council Regulation 
(EEC) No 355/77 of 15 February 1977 (') and the 
modernization of farms under Directive 72/159/ 
EEC of 17 April 1972 (2).The six other measures spe­
cifically concern vineyard restructuring or conver­
sion operations, in the Community as a whole or in 
one or more particular regions. cultural land register designed to provide full infor­
mation on the potential output of wine. The prepar­
ation, updating and use of such a register obviously 
entail lengthy and complex administrative tasks, 
expecially in "respect of the list of farms and vine­
yards and the description of their technical features 
such as composition, choice of vine varieties, age 
and yield. 
5.25. Table 5.3 summarizes, for the various reci­
pient countries, the subsidies borne by the EAGGF 
for all the measures in question at 31 December 
1982 with the exception- of Directive 72/159: no 
information is available on its application in the 
wine sector. 5.28. Because of these difficulties, no such land 
register was prepared, except in those Member 
States which, mainly for tax reasons, already kept 
one, and even they were able only to update their 
registers partially. 
5.26. Any measure that seeks to have a direct 
effect on production structures* by means of restruc­
turing or conversion operations, would appear to 
depend upon prior knowledge of the vineyards and 
their production. 
5.27. Under Article 1 of the first Community 
Regulation on wine (Council Regulation (EEC) No 
24/62 of 4 April 1962 (3)), Member States were 
required to prepare and then keep up to date a viti-
(') OJ No L 51, 23. 2. 1977, p. 1. 
(2) OJNoL96, 23.4. 1972, p. 1. 
O OJ No 30, 20. 4. 1962, p. 989. 5.29. In 1978 the Commission abandoned the land 
register system, since it was proving impossible to 
enforce, and, in the proposal which resulted in 
Council Regulation (EEC) No 357/79 of 5 February 
1979 (4), replaced it with a system of periodical surv­
eys (annual surveys on the areas under vines for the 
production of material for vegetative propagation of 
vines, basic statistical surveys every 10 years on the 
total area under vines, intermediate surveys on the 
areas under vines of wine grape varieties). For Italy 
and Greece, the first results will probably be avail­
able in 1984, since these two countries were not 
required to complete their initial surveys until 1982 
and a certain period of time is necessary for the 
work of processing and transmission. 
(4) OJNoL54, 5. 3. 1979, p. 124. 
Table 5.3 — EAGGF-Guidance: Financing in the wine sector 
(Mio ECU) 
Regulation/Directive Total esti­
mated ex­
penditure Aid granted up to 31 December 1982 
Regulation/Directive Total esti­
mated ex­
penditure Belgium Germany Greece France Italy Luxem­
bourg Total 
Regulation (EEC) No 17/64 (') (2) 245,0 
Regulation (EEC) No 355/77 (') — 17,5 1,5 55,0 66,0 0,5 140,5 
Regulation (EEC) No 1163/76 84,0 0,0 — — 30,8 11,6 — 42,4 
Directive 78/627/EEC 86,0 — — — 21,0 — — 21,0 
Directive 79/359/EEC 15,0 — .. — — 11,0 — — 11,0 
Regulation (EEC) No 456/80 128,8 . — — — 24,3 0,0 — 24,3 
Regulation (EEC) No 457/80 11,1 — — — — — — — • 
Regulation (EEC) No 458/80 188,9 — — — ' 14,2 1,9 — 16,1 
(') This Regulation applies to all the agricultural sectors and does not contain any specific forecasts for expenditure in the wine sector. 
(2) No figures available for the allocation of aid per Member State. 
31. 12. 83 Official Journal of the European Communities 57 
5.30. Council Regulation (EEC) No 454/80 of 
18 February 1980 (') introduced other changes con­
cerning the method by which the producers notify 
the national administrations (which in turn forward 
the information to the Commission) of the planting 
of new vines, replanting or grubbing-up which they 
have already carried out or are planning. 
5.31. As a result of these amendments, it is the 
Member States which decide the nature and the 
form of the information which the individual prod­
ucers should supply, and Council Regulation (EEC) 
No 3577/81 of 3 December 1981 (2) introduced a 
further modification by restricting the duty to 
inform the national administrations only to cases of 
operations actually carried out, thereby excluding 
planned operations. 
5.32. The declarations and surveys (already avail­
able or awaited) obviously help to provide the 
desired statistical information. On the other hand, 
they do not represent a means for ensuring that the 
current ban on extending the areas under vines is 
respected, and the lack of a proper viticultural land 
register makes any effective control of potential out­
put virtually out of the question. 5.35. Article 4 (4) of Regulation No 1163/76 states 
that the premium shall be paid in full not more than 
six months after the applicant has supplied proof 
that grubbing-up has in fact taken place. 
5.36. Audit inquiries by the Court in Italy dis­
closed that for the wine-growing year 1976-77, the 
first payments to entitled persons by the regional 
bodies were made in 1980. The premiums relating to 
the year 1978-79, and some of the premiums for the 
year 1977-78, were still outstanding in 1982. 
5.37. Similarly, the premiums under Regulation 
No 456/80 (Article 4 (6) of which contains provi­
sions analogous to those of Article 4 (4) of Regula­
tion No 1163/76) for the year 1980-81 had still not 
been paid at the time of audit visits during the 
second half of 1982. 
5.38. Delays of this kind in payment, apart from 
infringing the rights of the recipients concerned, 
inevitably tend to deter other wine-growers from 
considering grubbing-up, and therefore help to 
explain why so few grubbing-up operations are car­
ried out. 
5.33. In respect of conversion, the amount of the 
premiums per hectare (between 1 000 u.a. and 2 000 
u.a. in Council Regulation (EEC) No 1163/76 of 
7 May 1976 (3), and 1 813 ECU in Council Regula­
tion (EEC) No 456/80 of 18 February 1980 (4)) is set 
at a level which takes account of the cost of grub­
bing-up and to some extent of the future loss in 
income (see the recitals of Regulation No 1163/76). 
This amount may be sufficient to persuade farmers 
with low- or medium-yield vineyards to accept the 
restrictions upon which grant of the premium 
depends. 
5.34. The premium is hardly sufficient, however, to 
extend the conversion process to vineyards with 
above-average yield. The grubbing-up measures can 
therefore be considered to affect mainly the vine­
yards with low or average yield, with the result that, 
at least in the short term, the impact on production 
is only limited. 
(') OJ No L 57, 29. 2. 1980, p. 7. 
O OJ No L 359, 15. 12. 1981, p. 1. 
0 OJ No L 135, 24. 5. 1976, p. 34. 
0 OJ No L 57, 29. 2. 1980, p. 16. 5.39. From the Court's audit inquiries in France, in 
particular in the area where armagnac is produced, it 
appears that the Community's measures may have 
conflicting effects. Having financed projects involv­
ing renewing the stocks of vines on several thou­
sands of hectares under Regulation No 17/64, and 
the construction and extension of a distillery, the 
Community also helped to finance programmes of 
comparable size, in the same department involving 
grubbing-up and conversion (Regulations 
Nos 1163/76 and 456/80) and then restructuring 
(Council Regulation (EEC) No 458/80 of 18 Febru­
ary 1980 (5)). 
5.40. The cooperatives receiving grants for the first 
projects expressed their discouragement in the face 
of these conflicting effects, which led the national 
body responsible for the management of the grants 
altogether to avoid publicizing the premiums prov­
ided for in Regulation No 456/80. The Commission 
(5) OJ No L 57, 29. 2. 1980, p. 27. 
58 Official Journal of the European Communities 31. 12. 83 
has argued (') that it would be unable to reply to the 
Court's observation for want of sufficiently precise 
information. The Court does not consider itself 
under any obligation to disclose the sources of its 
information insofar as it has been able to ascertain 
the accuracy of the information supplied. 
5.41. The examination of certain statutory provi­
sions also gives rise to comments: 
(a) Under Article 4 of Regulation No 1163/76 and 
Article 4 of Regulation No 456/80, the prem­
iums are granted at a fixed rate for areas under 
vines of low productivity, and even for the grub-
bing-up of vines which are not normally tended. 
In France, the national authorities have placed 
a restriction on thesp provisions, in that the 
premium is not granted in cases where the vines 
have not been tended for over 12 years. It would 
appear necessary to re-examine the value for the 
Community of subsidizing the grubbing-up of 
vineyards which have not been tended for a 
considerable period of time, and to consider 
whether the current provisions in this field 
might not benefit from being re-drafted in more 
restrictive terms. 
(b) In an effort to lend some consistency to the 
Regulations concerning grubbing-up, the reci­
pient of grants for the grubbing-up of vines may 
not (under Article 3(2) of Regulation 
No 1163/76 and of Regulation No 456/80), 
before 31 March 1982, plant on the areas in 
question fruit trees of the varieties whose grub-
bing-up the Community already subsidized 
under the measures for reorganizing fruit pro­
duction (Council Regulation (EEC) No 794/76 
of 6 April 1976 (2)). No special arrangements 
have, however, been made to ensure compliance 
with this provision, particularly in France, 
which had received over 50% of the aid granted 
by the end of 1981 under Regulation No 794/ 
76. In that country, the body responsible for 
managing measures in the wine sector has no 
jurisdiction over matters concerning fruit trees 
and it cannot therefore ensure that this ban is 
enforced. 1981 (4), on the common organization of the market 
in fishery products, establishes a system of aid to 
encourage the formation and facilitate the operation 
of producers' organizations in the fisheries sector. 
According to Article 5 of these Regulations, the pur­
pose of these producers' organizations is to take 
such measures as will ensure that fishing is carried 
out along rational lines and that conditions for the 
sale of their products are improved. 
5.43. The audits carried out by the Court on three 
producers' organizations in the United Kingdom 
showed that their activities were chiefly directed 
towards the implementation of withdrawal opera­
tions for products withdrawn from the market and 
that virtually no specific measures were developed 
to ensure that fishing was carried out along rational 
lines or that the volume of supply was better 
adapted to market requirements. 
5.44. The said Article 5 requires members to dis­
pose, through the organization, of their total output 
of the products in respect of which they are mem­
bers. The organization may decide that this require­
ment can be waived if products are disposed of in 
accordance with common rules established in ad­
vance. 
5.45. It was apparent from examining the rules of 
12 of the 14 recognized producers' organizations in 
the United Kingdom that this requirement is usually 
expressed in such a way that it covers solely landed 
products, thus excluding any products which may be 
transferred at sea. In only one case did the require­
ment cover all the products in respect of which the 
producers were members of the organization. 
Financing in the fisheries sector 
5.42. Council Regulation (EEC) No 2142/70 of 
20 October 1970 (3), as last replaced by Council 
Regulation (EEC) No 3796/81 of 29 December 5.46. It was also found that provisions differed 
widely from one body to another regarding the fines 
incurred by members who failed to meet their com­
mitments. These fines can be as much as UKL 
10 000, with most of the association rules setting a 
maximum of UKL 150; thus, the extent to which the 
obligations assumed by the producers are binding 
varies considerably. 
(') cf. Annex IV, paragraphs 5.39 and 5.40. 
(2) OJ No L 93, 8. 4. 1976, p. 3. 
(3) OJ No L 236, 27. 10. 1970, p. 5. (4) OJ No L 379, 31. 12. 1981, p. 1. 
31. 12. 83 Official Journal of the European Communities 59 
5.47. Examination of various processing and mar­
ket preparation projects for fishery products, 
financed in the United Kingdom under Council 
Regulation (EEC) No 355/77, showed that, in many 
cases, the projects' viability and prospects for 
development were jeopardized by the difficulty of 
obtaining a regular supply of fish at a stable and 
realistic price. 5.48. Contrary to the forecasts made at the time the 
requests for aid were submitted, and for lack of any 
other source of supply, the majority of the products 
processed in several of the projects examined came 
from non-member countries, a fact which considera­
bly reduces the value of these projects. 
60 Official Journal of the European Communities 31. 12. 83 
CHAPTER 6 
Regional aid expenditure 
6.0. TABLE OF CONTENTS Paragraph reference 
Introduction 6.1 to 6.4 
Summary of financial information 6.5 to 6.11 
Comments on the system of granting and management of the 
aid at Community and national level 6.12 to 6.51 
Implementation of the non-quota measures 6.12 to 6.20 
The regional development programmes 6.21 to 6.27 
The procedures for screening the projects financed by the 
Fund 6.28 to 6.30 
Special agreements governing certain kinds of investment 
financing 6.31 to 6.38 
Use of the projects financed 6.39 to 6.45 
Need for better application of current provisions for 
reducing or cancelling a contribution from the Fund 6.46 to 6.51 
Supplementary measures in favour of the United Kingdom 6.52 to 6.60 
Introduction 
6.1. The European Regional Development Fund 
(ERDF) was established by Council Regulation 
(EEC) No 724/75 of 18 March 1975 (') (subse­
quently amended by Council Regulations (EEC) 
No 214/79 of 6 February 1979 (2) and No 3325/80 
of 16 December 1980 (3)) in order to correct the prin­
cipal regional imbalances resulting in particular 
from agricultural preponderance, industrial change 
and structural underemployment. The Fund com­
prises: 
(a) Community support for regional policy mea­
sures adopted by the Member States, which 
(') OJ No L 73, 21. 3. 1975, p. 1. 
0 OJ No L 35, 9. 2. 1979, p. 1. 
(3) OJ No L 349, 23. 12. 1980, p. 10. accounts for 95 % of its resources and is divided 
between the countries by quota. 
(b) Specific non-quota Community regional 
development measures, which account for the 
remaining 5 %. 
6.2. Article 22 of the European Regional Develop­
ment Fund Regulation required the Regulation to 
be re-examined by the Council, on a proposal from 
the Commission, before 1 January 1982; this review 
was to concentrate in particular on the quotas for 
distribution between the Member States, which had 
been fixed until 1981. 
6.3. A proposal for a new regulation was indeed 
submitted by the Commission . on 26 October 
1981 (4), but by the end of the financial year 1982 it 
(4) OJ No C 336, 23. 12. 1981, p. 60. 
31. 12. 83 Official Journal of the European Communities 61 
had still not resulted in a Council Decision. In order 
to ensure the implementation of the budget in the 
meantime, the Commission decided, for 1982, in 
respect of quotas, to continue to apply the provi­
sions of the Regulation in force for 1981. This solu­
tion, which admittedly has advantages in terms of 
continuity of management of the Fund, has never­
theless proved to be without legislative basis; 
6.4. In addition to the comments on the European 
Regional Development Fund, this chapter also con­
tains some observations on the supplementary 
measures in favour of the United Kingdom, estab­
lished by Council Regulation (EEC) No 2744/80 of 
27 October 1980 0. 
Summary of financial information 
6.5. Table 6.1 summarizes the evolution and utili­
zation of the commitment appropriations available 
to the Commission in 1982 for the ERDF (Chapters 
50 and 51 of the budget). 
(') OJ No L 284, 29. 10. 1980, p. 4. 6.6. 95,6 % of the appropriations for both these 
chapters were used, as against 95,4% in 1981 and 
92,7% in 1980. Commitments entered into in 1982 
amounted to 1 844,9 million ECU, an increase of 
208 million ECU over 1981. 
6.7. For the quota measures (Chapter 50), 99,7 % 
of the commitment appropriations were used 
(98,8% in 1981 and 97,3% in 1980); aid from the 
Fund was granted in 1982 for 3 277 projects (621 
projects in industrial, handicraft or service activities, 
2 648 infrastructure projects and 8 study projects), 
representing a total foreseeable investment of 
approximately 12 177 million ECU. The distribution 
by country of this aid is shown in Table 6.2, which 
also gives payments made in 1982 and the balances 
outstanding at 31 December 1982. At the same date, 
a total of 5,5 million ECU of commitment appro­
priations were still available for quota measures, i.e. 
0,3 % of the 1982 allocation. 
6.8. The payment appropriations available to the 
Commission in 1982 for the two ERDF chapters 
and their utilization are summarized in Table 6.3. 
Total payments amounted to 973,0 million ECU, as 
against 798,7 million ECU in 1981 and 726,7 million 
ECU in 1980. This represents a utilization rate of 
87,6 % of the payment appropriations for the two 
chapters, as against 95,7% in 1981 and 97,8% in 
1980, a trend which is partly attributable to the diffi-
Table 6.1 — Commitment appropriations available in 1982, evolution and utilization 
(Mio ECU) 
Chapter 1982 
budget Transfers Appropria­
tions 
remaining 
from 1981 Decommit-
tals Adjust­
ments 
(variations 
in ECU 
rate) Final 
appropria­
tions Commit­
ments 
entered 
into 
in 1982 Appropria­
tions 
remaining 
at end 
of 1982 
(1) (2) (3) (4) (5) (6) (7) = (2) + 
... + (6) ' (8) (9) = (7) 
-(8) 
Quota measures 
(Chapter 50) 1 520,0 + 188,4 19,0 48,6 41,7 1 817,7 1 812,2 5,5 
Non-quota measures 
(Chapter 51) 90,5 -39,4 60,7 111,8 32,7 79,1 
Provisional appropriations 
(Chapter 100) 149,0 -149,0 — — — — — — 
Total 1 759,5 — 79,7 48,6 41,7 1 929,5 1844,9 84,6 
62 Official Journal of the European Communities 31. 12. 83 
Table 6.2 — Commitments and payments in 1982 by Member State (quota measures — Chapter 50 of the budget) 
(Mio ECU) 
Beneficiary 
Member State Balance 
outstanding 
at 
31.12.1981 Commitments 
entered into in 1982 Payments in 1982 
Decommit-
tals Adjust­
ments to 
balance of 
commit­
ments for 
ECU rate 
variations Balance 
outstanding 
at 
31.12.1982 Beneficiary 
Member State Balance 
outstanding 
at 
31.12.1981 Commitments 
entered into in 1982 Of balance 
outstanding 
at 
31.12.1981 Of 1982 
commit­
ments Total Decommit-
tals Adjust­
ments to 
balance of 
commit­
ments for 
ECU rate 
variations Balance 
outstanding 
at 
31.12.1982 
(1) (2) (3) (4) (5) (6) = (4) 
+ (5) (7) (8) (9) = (2) 
+ (3)-(6) 
-(7)+ (8) 
Belgium 16,7 17,0 (0,9 %)' 7,1 3,5 10,6 1,1 -1,4 20,6 
Denmark 22,2 17,4 (1,0%) 12,4 2,2 14,6 0,2 -0,7 24,1 
Germany 100,2 58,3 . (3,2%) 53,1 8,6 61,7 3,0 + 4,9 98,7 
Greece 126,3 213,3 (11,8%) 63,6 88,7 152,3 — -5,5 181,8 
France 361,3 325,4 (18,0%) 66,3 59,9 126,2 3,8 -20,2 536,5 
Ireland 94,2 114,0 (6,3%) 44,0 47,5 91,5 14,4 -0,2 102,1 
Italy 1 070,2 604,9 (33,4 %) 255,7 21,3 277,0 22,9 -18,7 1 356,5 
Luxembourg 1,6 2,0 (0,1 %) — — — — -0,1 3,5 
Netherlands 41,2 18,3 (1,0%) 3,0 0,2 3,2 — +-2,0 58,3 
United Kingdom 413,8 441,5 (24,3%) 160,9 52,7 213,6 3,2 . -r-1,7 636,8 
Total 2 247,7 1812,1 (100,0%) 666,1 284,6 950,7 48,6 -41,6 3 018,9 
Table 6.3 — Payment appropriations available in 1982, evolution and utilization 
(Mio ECU) 
Chapter 1982 budget Carry-overs from 1981 Total 
Chapter Initial 
appro­
priations Transfers Final 
appro­
priations Payments Carry­
overs 
to 1983 Appro­
priations 
carried 
over Transfers Final 
appro­
priations Payments Total 
appro­
priations 
available Total 
payments 
(1) (2) (3) (4) = 
(2)+ (3) (5) (6) = 
(4)-(5) (7) (8) ' (9) = 
(7)+ (8) (10) (11) = 
(4)+ (9) (12) = 
(5)+ (10) 
Quota mea­
sures 
(Chapter 50) 
Non-quota 
measures 
(Chapter 51) 
Provisional 
appropria­
tions 
(Chapter 100) 
Total 890,0 +125,0 1015,0 917,0 98,0 
60,0 — 60,0 20,2 , 39,8 
125,0 — 125,0 — — — 
1075,0 — 1 075,0 937,2 137,8 15,8 +17,8 33,6 33,6 
20,0 -17,8 2,2 2,2 
35,8 — 35,8 35,8 1 048,6 950,6 
62,2 22,4 
1 110,8 973,0 
31. 12. 83 Official Journal of the European Communities 63 
culties encountered in implementing the non-quota 
measures (see paragraphs 6.9 et seq. below). 
6.9. In paragraphs 7.12 and 7.13 of its annual 
report on the financial year 1981 ('), the Court 
observed that in 1981 commitment appropriations 
totalling approximately 135 million ECU had been 
used in favour of several Member States, beyond the 
quotas fixed for each country. This utilization, 
which is inconsistent with the terms of the current 
Regulation, was intended to exhaust the allocations 
which, because of the lack of eligible requests for 
aid, were still available for other countries, and it 
was made on condition that a compensating adjust­
ment be made at a later date. 
6.10. Similar action was taken in 1982, involving a 
total amount of about 80 million ECU. Several 
countries submitted requests insufficient for the full 
amount of their annual quota of aid to be granted, 
leading to substantial underutilization over the two 
years, as shown in Table 6.4. Other Member States, 
on the other hand, received amounts of aid exceed­
ing their annual quota. 
(•) OJ No C 344, 31. 12. 1982, p. 64. 
Table 6.4 — Member States' utilization of their quotas at 31 December 1982 
(Mio ECU) 
Beneficiary Member State 1982 commitment 
appropriations distri­
buted on the basis of 
the quotas 
(Chapters 50 and 100) Commitments entered into in 1982 in excess 
of the quotas Commitment appropriations still available 
at 31.12.1982 as a result of underutilization 
of the quotas (') Beneficiary Member State 1982 commitment 
appropriations distri­
buted on the basis of 
the quotas 
(Chapters 50 and 100) Amount (3) 
%(2) Amount (5) % — ° (2) 
(1) (2) (3) (4) (5) (6) 
Belgium 18,5 29,2 158% 
Denmark 17,7 — — 2,1 12% 
Germany 77,6 — — 35,6 . . 46 % 
Greece 217,0 43,9 20% — — 
France 227,7 — ' V 12,1 5% 
Ireland 99,1 12,4 13% — — 
Italy 592,3 18,5 3% — — 
Luxembourg 1,2 0,6 50 % — 
Netherlands 20,7 — — 5,7 28 % 
United Kingdom 397,2 3,8 1 % — — 
Total 1 669,0 79,2(2) — 84,7 (2) — 
(') Including unutilized appropriations from before 1982. 
(2) The difference between the totals of columns (3) and (5) represents the appropriations remaining at the end of 1982 for Chapter 50 (5,5 
Mio ECU). 6.11. The assistance granted by the Fund for 
financing investments in infrastructures, which 
under Article 4 (b) of the ERDF Regulation should 
not exceed 70% of the Fund's aid, accounted for 
87,1 % in 1982, as against 87,3 % in 1981 and 72,4 % 
in 1980 (see comment in the annual report concern­
ing the financial year 1981, paragraph 7.16). 
Comments on the system of granting 
and management of the aid at 
Community and national level 
Implementation of the non-quota measures 
6.12. For the fourth successive year since the non­
quota section was introduced in 1979, only a small 
portion of the commitment appropriations available 
for specific Community regional development mea­
sures (Chapter 51 of the budget) was actually used 
64 Official Journal of the European Communities 31. 12. 83 
during the financial year. Under the existing Regu­
lations, the budget commitments for each of the 
non-quota measures are decided by annual tranche 
as the appropriate programme is executed. the transitional period of a devolution of powers to 
the regions. Inadequate coordination and lengthy 
procedures have contributed to slowing down the 
decision-making and the execution of the projects. 
6.13. Out of commitment appropriations totalling 
151,2 million ECU (90,5 million ECU granted in the 
1982 budget and 60,7 million ECU remaining from 
1981), commitments amounted to 32,7 million ECU, 
the balance being transferred to quota measures or 
remaining for 1983. The situation is similar for the 
payment appropriations, where only 28% of the total, 
initial appropriations for 1982 and of the appropria­
tions carried over from 1981 were utilized under 
Chapter 51 of the budget. 
6.14. The Court examined in particular the oper­
ations carried out in France under the special 
'enlargement' programme, provided for by Council 
Regulation (EEC) No 2615/80 of 7 October 1980 
instituting a specific Community regional develop­
ment measure contributing to the development of 
certain French and Italian regions in the context of 
Community enlargement ('). 
6.15. It was first of all found that the special 
'enlargement' programme made no reference to the 
regional development programmes for the regions in 
question, despite the fact that Article 3 (3) of Regu­
lation No 2615/80 expressly stipulates that the 
special programme must fall within the framework 
of the regional development programmes. 
6.16. There is some doubt about the exact comm­
encement date of the programme, which lasts five 
years. According to Article 3 (5) of Regulation 
No 2615/80 the date is 15 December 1980, but the 
budget allocations for the first year were not 
decided on at national level until 3 August 1981 and 
23 February 1982, indicating that, at the very least, 
the implementation of the measures was subject to 
some delay. 6.18. The checks carried out by the Court in 
France in connection with the special 'enlargement' 
programme revealed that establishing the position in 
the accounts of the amounts chargeable to the Com­
munity and assessing the progress of the projects 
presented real difficulties, despite the fact that the 
Commission, in its letter of June 1981 to the compe­
tent national authorities, had specified that the 
operations financed would be checked project by 
project. In particular, the Court has not yet been 
able to obtain from the national authorities a state­
ment itemizing the measures or operations and the 
projects, and specifying the sums involved. Its 
requests for such information have to date received 
only an incomplete answer, consisting of a state­
ment specifying the constituent operations of the 
programme, without reference to the amounts; 
furthermore, it has not been possible to establish the 
progress made in the projects on the basis of other 
available documents. 
6.19. A situation of this kind explains the difficul­
ties which have arisen in applying Article 6 of Regu­
lation No 2615/80, in particular in respect of the 
procedures to be followed by the Member State for 
certifying the amount of expenditure paid and the 
existence of detailed supporting documents; these 
problems have led to delays in new advance pay­
ments on Community funds being made available. 
6.20. The Court, for its part, has not been able to 
obtain exact accounting data on the distribution of 
expenditure within the framework of the various 
aims set by the Regulation, and therefore, as matters 
stand, it cannot express an opinion on the manage­
ment of the resources in question. 
6.17. Some of the reasons for this delay are the 
large number of authorities involved in executing 
the programme, and the complications inherent in 
(') OJ No L 271, 15. 10. 1980, p. 1. The regional development programmes 
6.21. Under Article 6 (1) and (2) of the Regulation 
establishing the ERDF, 'investments may benefit 
from the Fund's assistance only if they fall within 
the framework of a regional development pro­
gramme', established according to a joint plan. The 
fact that these programmes are vague in character 
31. 12. 83 Official Journal of the European Communities 65 
and of little use in assessing projects submitted for 
Fund assistance has already been pointed out by the 
Court on several occasions, most recently in para­
graph 7.17 of its annual report on the financial year 
1981, at least in respect of the 'first generation' 
documents, covering the period up until the end of 
the financial year 1980. each of the regions concerned together form a con­
sistent whole. -This aspect was emphasized in the 
joint plan adopted in 1975 by the Regional Policy 
Committee (3) and also in the Commission's 
Recommendation of 1979 on the regional develop­
ment programmes (4). 
6.22. "With regard to the 'second generation' pro­
grammes, which the Commission has not yet fin­
ished examining, the factors for assessment cur­
rently available offer no indication that these pro­
grammes represent any marked improvement, espe­
cially on employment, despite the importance 
attached to this issue by the joint plan. 
6.23. Point 6 of the Commission's recommenda­
tion of 23 May 1979 (') on the regional development 
programmes, which requests that the Member States 
provide quantified forecasts of job deficits in each 
region for the years 1981 and 1985, has only been 
applied very partially in the programmes available. 
The aims regarding employment, which reflect a 
tendency to be less ambitious in this sphere, have 
not been satisfactorily defined. In some cases, where 
there are no aims for a net increase in employment, 
the stated, more partial goal is to create jobs, a very 
vague notion in view of the possibility of some 
posts being eliminated at the same time as others are 
created. The resultant difficulties in making checks 
were explained in the Court's recent special report 
on job creation or maintenance in the granting of 
aid to regional investments ,(2). 6.26. It is apparent from examining the various 
programmes available, belonging to both the first 
and the second generation, that they tend to be 
limited to a narrow conception of regional develop­
ment measures. For the most part, the impact on the 
region of the various national and Community poli­
cies — agricultural, industrial or social — is men­
tioned for the record only, without any attempt to 
translate it into figures or indeed any precise indica­
tion of what results are envisaged or what effects are 
anticipated. 
6.27. The need for better integration of the projects 
submitted for Fund aid into the range of options 
adopted at national level, is illustrated by a grant of 
LIT 2 678 million made in December 1979 to 
finance the construction of a degasification station 
for ships in Messina (Sicily). Although this project 
was planned as part of the regional development 
programme, Messina is not one of the eight ports 
listed in Law No 203 of 8 April 1976, from which, 
under Law No 986 of 27 December 1977, the Mer­
chant Navy Minister was authorized to select those 
to be equipped with a degasification station (5). This 
is therefore an extra initiative, which has not been 
coordinated with the plans already made by the 
Member State in this respect. 
6.24. In 1982, Belgium (the Walloon region), Lux­
embourg, the Netherlands, France and the United 
Kingdom were granted aid from the Fund, even 
though these countries were not yet covered by the 
regional development programmes which the Com­
mission had finished examining and which could, 
on that account, have constituted a good reference 
framework. 
6.25. According to Article 5 of the ERDF Regula­
tion, the purpose of the regional development pro­
grammes drawn up by the Member States and noti­
fied by them to the Commission is to ensure that the 
national and Community actions undertaken in 
(') OJ No L 143, 12.6. 1979, p. 9. 
(2) OJ No C 345, 31. 12. 1982, p. 1. The procedures for screening the projects 
financed by the Fund 
6.28. The Community procedure for screening pro­
jects is also somewhat vague by reason of the very 
concise nature of the information sent by the Mem­
ber States in support of their global requests, i.e. 
requests for assistance for investments of an amount 
less than 10 million ECU, which in accordance with 
(3) OJ No C 69, 24. 3. 1976, p. 2. 
(4) OJ No L 143, 12.6. 1979, p. 7. 
(5) Law No 203 of 8. 5. 1976, Gazzetta Ufficiale della 
Repubblica italiana No 126 of 13.5. 1976, p. 3627; 
Law No 986 of 27. 12. 1977, Gazzetta Ufficiale della 
Repubblica italiana No 9 of 10. 1. 1978, p. 181, and 
Decree of the Merchant Navy Minister of 23. 12. 1981, 
Gazzetta Ufficiale della Repubblica italiana No 98 of 
9. 4. 1982, p. 2739. 
66 Official Journal of the European Communities 31. 12. 83 
Article 7 (2) of the ERDF Regulation are presented 
in global form and give rise to a single aid decision. 
For each of the investments in question, the current 
provisions do not require any indication of the share 
of expenditure to be borne by the public authorities 
nor even, in certain cases, of the anticipated cost of 
the project. ments and, usually, an option to purchase the asset 
upon expiry of the lease. In this case, the investor 
does not immediately bear the cost of that part of 
the investment covered by the lease and, since he 
has not yet incurred any expenditure, he is not eligi­
ble to receive the aid relating to that cost. 
6.29. The use of standard forms, drawn up by the 
Commission and requesting additional details, has 
not (as the Court has found in a significant number 
of cases, of which it has notified the Commission) 
prevented investments being subsidized even 
though they were below the eligibility threshold of 
50 000 ECU per project, fixed in Article 4 of the 
Fund Regulation. Two other projects received 
assistance from the Fund, even though the public 
aid exceeded the ceiling set by the Communication 
of the Commission on regional aid systems ('), i.e. 
75% net grant equivalent of initial investment. The 
Court also noted a number of cases in the context of 
global requests where the decision to grant assist­
ance to a project had mistakenly been taken twice. 6.32. In most of the Member States, the national 
aid for the part of the investment covered by the 
lease is therefore, as a rule, paid to the leasing com­
pany, which is thus obliged to pass on the benefits 
of this aid to the investor in the terms of the con­
tract. 
6.33. The ERDF documents do not usually men­
tion the role played by the leasing company. The 
decisions on Fund aid or payment make no refer­
ence to this company, which is consequently not 
seen to be a partial recipient of aid, the investor 
being considered the sole recipient of all the aid, 
including, therefore, that part of the national aid 
which he is not paid. 
6.30. The above findings show that the system of 
global aid decisions does not allow adequate scru­
tiny of the various projects aided, whether by the 
authorizing officer or in terms of internal control, at 
the time the aid is granted. 6.34. In this connection, the Commission consi­
ders that the Fund aid is of benefit to the investment 
in economic terms, and that the question of how the 
investor finances his investment and to whom it 
belongs, is not a determining factor for the manage­
ment of the ERDF. 
Special agreements governing certain kinds 
of investment financing 
Investments financed by leasing 6.35. It would appear to be inconsistent with the 
facts to state that the investor is the sole recipient, 
since the national aid is paid to two interested par­
ties. Moreover, a presentation of this kind limits 
awareness of cases of leasing, and ultimately creates 
difficulties for Community audit, for example in 
seeking to ascertain the real cost of the investment 
for which the Community aid was granted, real cost 
also being one of the factors used in calculating the 
aid. 
6.31. In most of the Member States a variable pro­
portion of the projects in the industrial or craft sec­
tor is sometimes financed by the leasing system. 
This system, which may involve movable or immov­
able property or industrial goods, is designed to 
allow the investor to have plant or equipment 
immediately at his disposal, with payment by instal-
(') OJ No C 31, 3. 2. 1979, p. 10, point 2 (i). Investments subject to onerous financing terms 
6.36. A large proportion of the investments in 
infrastructure financed by the ERDF in Ireland is 
devoted to telecommunications. Apart from certain 
exceptional cases, the supply and installation of the 
equipment for the investments in question are 
31. 12. 83 Official Journal of the European Communities 67 
governed by an outline contract made in 1972 by the 
Irish authorities with a Swedish firm and renewed 
upon its expiry in 1977 ('). with the Community's programmes or objectives, 
and it is obviously necessary at the audit stage to 
assess the extent to which the anticipated results 
have actually been achieved. 
6.37. Under the terms of this contract, the prices 
given in Irish pounds take into account the parity 
between this currency and the Swedish krona at the 
time the contract was made. Any fluctuation in this 
parity greater than 1% must lead to a corresponding 
change in the price expressed in Irish pounds. Since 
the Irish pound has depreciated in relation to the 
Swedish krona, application of these clauses has 
entailed payment of substantial exchange rate dif­
ferences, amounting in some cases to a 50% increase 
on the basic price. Moreover, the price variation 
clause in the contract for the same items of equip­
ment allows for 37,5% towards covering the escala­
tion in manpower costs in Ireland, a far more 
marked rise than in Sweden, where inflation has 
been relatively low. 
6.38. There is therefore on the one hand an obliga­
tion to convert the exchange value of the goods sup­
plied into a strong currency at a parity which has 
been fixed in advance, and on the other, an obliga­
tion to take account of 37,5% of the rise in labour 
costs in a country suffering a higher rate of inflation. 
The combination of such obligations cannot fail to 
affect expenditure and the final cost of the invest­
ments concerned. It may be questioned whether it 
was reasonable for the Community to assume res­
ponsibility for the financial consequences of clauses 
as onerous as those described above. 
Use of the projects financed 
6.39. In the course of the audit inquiries made by 
the Court, special attention was given to investigat­
ing the use of the projects financed. 6.41. In the case of several costly projects for con­
structing industrial zones, financed in Calabria 
during the early years of the Fund, and which, 
according to initial forecasts, should by now have 
been operational for several years, inquiries revealed 
that, because of difficulties in executing the pro­
jects, investments had still not been completed or 
investments which had been terminated were not 
being fully utilized. 
6.42. Work on the construction of the industrial 
zones of Marina di Maida and Saline Ioniche, for 
which the planned completion dates were 1976 and 
1978 (ERDF aid: LIT 2 800 and 8 800 million res­
pectively) was delayed by interruptions and changes 
of plan, caused by climatic and technical conditions 
and by the inadequate preparation of the projects 
(construction sites not available, incomplete sur­
veys, conflicts with the administrations responsible 
for road and rail communications). The projects 
were still only partially finished, four years after the 
initital completion date. A similar situation has 
been found for the Schiavonea industrial zone 
(ERDF aid: LIT 3 900 million), which was due for 
completion in 1981. 
6.43. The management procedures followed by 
certain local bodies also play a role here, and the 
Court even observed the case of a 'consorzio' (con­
sortium) which was deprived of the work for which 
it was the concessionnaire. Furthermore, mainly as a 
result of the general economic situation, even the 
completed parts of these industrial zones lay for the 
most part idle, and indeed in some cases continued 
to be used for farming. 
6.40. Article 5 of the ERDF Regulation states in 
particular that the Fund's assistance is decided tak­
ing special account of the investment's contribution 
to the development of the region and its consistency 
(') Invitations to tender were not issued prior to either the 
conclusion of the initial contract or its subsequent 
renewal. 6.44. Consequently, it seems doubtful whether the 
infrastructure in question makes any significant 
contribution to the development of the region, and 
whether the further amounts of aid, totalling LIT 
1 400 million, granted by the ERDF in 1980 for the 
Marina di Maida industrial zone, are justifiable. In 
the case of the Lametia Terme airport, which was 
intended to contribute to the tourist development of 
Calabria (ERDF aid: LIT 3 800 million), traffic has 
not even reached one tenth of the predicted volume, 
four years after the airport was opened in 1977. 
68 \ 
Official Journal of the European Communities 31. 12. 83 
6.45. The aim of the investments in tourism (two 
health resorts and three harbour quays) investigated 
in Schleswig-Holstein was to develop existing possi­
bilities for expansion in the sector concerned. It was 
apparent from the Court's enquiries that the low 
numbers of visitors to the health resorts were the 
cause of the operating deficits which were putting 
such a strain on the finances of the local bodies con­
cerned. The enquiries showed that the harbour 
quays were also used by the special boats engaged 
in 'butter-buying cruises', which the Court of Justice 
has already judged to be a violation of Community 
law ('). 6.48. The Court's audit inquiries during the finan­
cial year 1982 brought to light the case of a sum of 
UKL 7 million in aid granted by two Community 
decisions to an industrial investment in Northern 
Ireland in the textile products sector, which was 
supposed to involve around 1 500 new jobs. In all 
UKL 6,8 million, or 98% of the aid committed, was 
paid. Following the closure of the factory on 
10 June 1981, the competent national authority 
informed the Commission on 10 November 1981 
that the national subsidies relating to this invest­
ment would be recovered in early 1982. 
Need for better application of current 
provisions for reducing or cancelling a 
contribution from the Fund 
6.46. According to Article 9(1) of the ERDF 
Regulation, the contribution from the Fund may be 
reduced or cancelled, if the Commission so decides 
after consulting the Fund Committee, where an 
investment which has been the subject of a contribu­
tion from the Fund has not been made as planned, 
or if the conditions of this Regulation are not ful­
filled. Any sums which have been paid in error must 
be repaid to the Community by the Member State 
concerned within 12 months following the date on 
which the relevant decision has been communi­
cated. 
6.47. In its annual report for the financial year 
1980, paragraph 7.21 (2), the Court stressed the need 
for a strict application of the provisions in question 
where projects are not carried out as planned or do 
not fulfil the conditions of the ERDF Regulation. 
The Commission, however, in its reply to the same 
paragraph (2) of the annual report for 1980, consid­
ered that Article 9(1) of the ERDF Regulation 
covered more specifically those cases where the 
investment is made with total disregard for the 
plans, or where the provisions of the Regulation are 
not observed, but that it did not relate to cases 
where sums are released from commitment by the 
Commission when information received from the 
Member States or acquired during on-the-spot 
checks shows that a project has not been carried out 
or no longer justifies more than a part of the ERDF 
aid. 6.49. From January to March 1982 there was an 
exchange of correspondence between the Member 
State and the Commission, during which the latter 
drew the attention of the competent national 
authorities to the need to release the ERDF aid from 
commitment and reimburse the amount paid, since 
the investment had not been carried out as planned. 
The aid was repaid, as requested, in July 1983. 
6.50. Since the provisions of Article 9(1) of the 
Fund Regulation have not been applied, no deci­
sion to cancel the aid has been taken by the Com­
mission, which could therefore not have communi­
cated any decision of this kind to the Member State; 
the correspondence between January and March 
1982 cannot, of course, take the place of such notifi­
cation. This being so, the 12-month time-limit laid 
down by Article 9(1) has not begun to run and the 
Member State has not been obliged to repay the aid 
within a predetermined period of time. 
6.51. This case serves to confirm the validity of the 
comments made by the Court in its annual report 
on the financial year 1980 regarding the need to 
apply Article 9(1) when aid must be reduced or can­
celled because projects have not been carried out as 
planned or have not observed the conditions of the 
Regulation. 
Supplementary measures in favour of 
the United Kingdom 
6.52. Council Regulation (EEC) No 2744/80 of 
27 October 1980 (3) established supplementary mea-
(') Case 158/80 — Judgment of 7 July 1981, Reports of 
Cases before the Court 1981, p. 1805. 
0 OJ No C 344, 31. 12. 1981, p. 93 and 232. (3) OJ No L 284, 29. 10. 1980, p. 4. 
31. 12. 83 Official Journal of the European Communities 69 
sures in favour of the United Kingdom intended to 
limit that country's net contribution to the Com­
munity budget for 1980 and 1981 (')• into consideration in calculating the amount of the 
Community's financial contribution. 
6.53. The amount of these supplementary mea­
sures, as calculated in Annex II to Regulation 
(EEC) No 2744/80, was set at 1410 million ECU 
for 1981. This is a net sum, which was grossed up to 
1 804,2 million ECU in order to take account of the 
fact that the United Kingdom also contributes to the 
financing of the supplementary measures. The / 
entire sum of 1 804,2 million ECU was committed 
in 1982, part (150 million ECU) being charged 
against appropriations carried over from 1981 and 
the balance against appropriations under Chapter 53 
of the budget for 1982. 
6.54. A first series of decisions were taken during 
the financial year on 24 March 1982, involving a 
total of 1 617,8 million ECU. These were supple­
mented and modified on 14 December 1982 by a 
single decision which increased the Community's 
financial contribution by 186,4 million ECU and 
made various amendments to the earlier decisions in 
order to take account of the expenses aictually 
incurred by the United Kingdom. 
6.55 On the basis of the provisions of Article 5 (3) 
of Regulation No 2744/80, the total commitments 
of 1 804,2 million ECU were paid in 1982, the major 
part (1 642,4 million ECU) at the time the decisions 
were taken and the remainder (161,8 million ECU) 
as the balance. A sum of 15 million ECU still out­
standing in respect of the decisions taken in 1981, 
was also paid in 1982, and by 31 December 1982 the 
full amount of all the decisions had been paid. 
6.56. Article 2 of Regulation (EEC) No 2744/80 
provides that the supplementary measures be imple­
mented in the framework of special programmes last­
ing several years, drawn up by the United Kingdom. 
These special programmes are in turn to be broken 
down into sub-programmes. Article 4 (3) of the same 
Regulation, on the other hand, states that for 1980 
and 1981, the payments made and estimated by the 
public authorities in the United Kingdom as from 
the British budgetary years commencing 1 April 
1980 and 1 April 1981 respectively are to be taken 
(') See also Chapter 9 of this report. 6.57. Thus the very logic of the system established 
by the Regulation leads to the Community's finan­
cial contribution being granted on the basis of sim­
ple lists of expenditure relating to the current finan­
cial year and for the moist part paid at the date of. 
the decision, and not on the basis of genuine mul-
tiannual programmes stimulating certain categories 
of investment. 
6.58. The mechanism used for implementing the 
supplementary measures in favour of the United 
Kingdom is such that it is difficult to verify the 
regularity of the operations in question or assess 
their management. Thus, the final clause of Article 5 
of Regulation No 2744/80 states that the balance of 
the Community's financial contribution must be 
paid 'provided that implementation of the sub-pro-
gramme proceeds as planned'. It is of course easy to 
compare the planned and the actual amounts of 
expenditure. But a comparison of this kind has little 
meaning in terms of compliance with the pro­
grammes, since the effect of certain projects not 
being carried out is offset by the rise in the cost of 
other investments. 
6.59. It should also be borne in mind that, in so far 
as certain sub-programmes, such as those for the 
railways, have not used up the anticipated amount 
of global expenditure during their implementation, 
the corresponding Community decisions have been 
amended and the financial contribution has been 
transferred to other sub-programmes involving a suf­
ficient volume of investments. The Community con­
tribution has thus been paid in full, but sometimes 
on the basis of other types of investment than those 
decided on initially. 
6.60. According to Article 3 of Regulation 
No 2744/80, only capital expenditure is eligible for 
financial participation by the Community. No defi­
nition of capital expenditure is given, however, and 
the Court noted that as a result of the accounting 
methods customarily applied by the Member State 
in question, the 'railways' sub-programmes include a 
total of UKL 21,7 million in general administrative 
costs, which is equivalent on an average to 16% of 
the cost of the investments. 
/ 
70 Official Journal of the European Communities 31. 12. 83 
CHAPTER 7 
The European Social Fund and other expenditure in the social 
sector 
7.0. TABLE OF CONTENTS Paragraph reference 
Introduction 7.1 
Summary of financial information 7.2 to 7.22 
Implementation of the budget 7.2 to 7.10 
Rate of payments 7.11 to 7.14 
Settlement of commitments from 1975-78 7.15 to 7.20 
Date of decommittal 7.21 and 7.22 
Introduction 
7.1. Community expenditure in the social sector is 
charged to Title 6 of part B of the general budget. In 
addition to the expenditure of the European Social 
Fund (Chapters 60, 61 and 62), other expenditure 
for social purposes is entered in the budget, the. 
most important being expenditure linked with the 
social field, the contribution to the European Coal 
and Steel Community for social measures in con­
nection with the restructuring of the steel industry 
(Chapter 65) and aid to disaster victims in the Com­
munity (Chapter 69). 
Summary of financial information 
Implementation of the budget 
7.2. Table 7.1 shows details of the appropriations 
available to the European Social Fund and their 
utilization. For the other social policy measures 
(Chapters 63 to 69), non-differentiated appropria­
tions amounted to 112,3 million ECU. Commit­
ments entered into amounted to 111,6 million ECU, 68,8% of which were paid. 90% of the appropriations 
carried over, which amounted to 84,2 million ECU, 
were disbursed. In addition there were differentiated 
appropriations comprising 6,3 million ECU in com­
mitment appropriations and 2,7 million ECU in 
payment appropriations. 
7.3. The initial budget of the European Social 
Fund in commitment appropriations amounted to 
1 242,8 million ECU. To this were added transfers 
of appropriations (109,9 million ECU), the appro­
priations remaining from 1981 (112,2 million ECU) 
and the appropriations released by cancellation of 
commitments entered into in 1981 (98,0 million 
ECU). After corrections due to variations in the 
ECU in respect of commitments prior to 1981 
(14,9 million ECU), the commitment appropriations 
available in 1982 amounted to 1 577,8 million ECU, 
as against 1 108,4 million ECU in 1981. Commit­
ments entered into (1 510,2 million ECU) repre­
sented 96% of the appropriations available, as 
against 90% in 1981. The utilization rate of appro­
priations amounted to between 94% and 99% with 
the exception of Chapter 62, where it was 59%. 
7.4. The initial budget of the European Social 
Fund in payment appropriations amounted to 
911,3 million ECU. After transfers of appropriations 
amounting to 104,5 million ECU had been made, 
31. 12. 83 Official Journal of the European Communities 71 
Table 7.1 — Appropriations available in 1982 and their utilization 
(Mio ECU) 
Budget heading A. Commitment appropriations B. Payment appropriations 
Budget heading Final 
appro­
priations Commit­
ments en­
tered into 
in 1982 Appro­
priations 
remain­
ing at the 
close of 
1982 Payment appropriations of the 
1982 budget Carry-overs from 
1981 Total 
payments 
made in 
1982 Budget heading Final 
appro­
priations Commit­
ments en­
tered into 
in 1982 Appro­
priations 
remain­
ing at the 
close of 
1982 Final 
appro­
priations Payments 
made Carry­
overs 
to 1983 Appro­
priations 
carried 
over from 
1981 Payments 
made Total 
payments 
made in 
1982 
(1) (2) (3) (4) = 
(2)-(3) (5) (6) (7) = 
(5)-(6) (8) (9) (10) = 
(6)+ (9) 
Chapter 60: 
18,2 1,1 0,5 0,5 Agriculture and textiles 600 37,6 36,1 1,5 19,3 18,2 1,1 0,5 0,5 18,7 
Young people — training 6010 475,5 453,0 22,5 301,9 277,9 24,0 0,2 0,2 278,1 
Young people — employment 
98,4 97,8 0,6 0,1 0,1 6011 154,9 146,5 8,4 98,4 97,8 0,6 0,1 0,1 97,9 
Handicapped persons 602' -0,0 — — — — — 0,1 0,1 0,1 
Migrant workers 603 51,4 50,7 0,7 36,1 35,2 0,9 0,2 0,2 35,4 
Women 605 27,1 26,2 0,9 20,3 19,1 1,2 0,7 0,7 19,8 
Chapter 60 — T otal 746,5 712,5 34,0 476,0 448,2 27,8 1,8 1,8 450,0 
Chapter 61: < 
Improvement of employment 
292,9 151,3 69,2 69,2 362,1 situation 610 697,9 673,3 24,6 444,2 292,9 151,3 69,2 69,2 362,1 
Handicapped persons 611 128,8 121,7 7,1 91,6 91,1 0,5 0,0 0,0 91,1 
Industrial conversion 612 — — — • — — — — 
Chapter 61 — Total 826,7 795,0 31,7 535,8 384,0 151,8 69,2 69,2 453,2 
Chapter 62: 
Pilot schemes and preparatory 
3,6 2,0 2,0 2,4 studies 4,6 2,7 1,9 4,0 0,4 3,6 2,0 2,0 2,4 
Grand total 1 577,8 1 510,2 67,6 1 015,8 832,6 183,2 73,0 73,0 905,6 
the payment appropriations available in 1982 
amounted to 1 015,8 million ECU, as against 620,4 
million ECU in 1981. The payments made from the 
appropriations for the financial year amounted to 
832,6 million ECU, i.e. a utilization rate of 82%. The 
utilization rate of appropriations was between 92%7 
and 99%, with the exception of Article 610 and 
Chapter 62, where the rate was 66% and 10% respec­
tively. 
7.5. Payments in respect of commitments entered 
into in 1982 amounted to 437,4 million ECU (i.e. 
20%). Out of the total commitments outstanding at 
the beginning of the financial year 1982 
(1 395,7 million ECU) payment was made of 
468,2 million ECU (i.e. 34%). 7.6. As far as the settlement of commitments out­
standing from before 1981 is concerned, a total of 
101,7 million ECU in appropriations was decommit-
ted and cancelled. 
7.7. During the financial year 1982, 129,6 million 
ECU were decommitted and were able to be 
re-used. These appropriations were made available 
by releasing 98,0 million ECU from 1981 commit­
ments and 31,6 million ECU from 1982 commit­
ments. 
7.8. Table 7.2 shows the commitments and their 
settlement by Member State. 
72 Official Journal of the European Communities 31. 12. 83 
Table 7.2 — Situation of commitments in 1982, by Member State 
Recipient 
Member 
State . Commitments still to be settled 
at 1.1.1982 Commitments entered into 
in 1982 Balance 
outstand­
ing at 
31.12.1982 
0) Recipient 
Member 
State Balance 
outstand­
ing at 
1.1.1982 Settled in 1982 Commit­
ments in 
1982 0 Payments in 1982 Decom­
mittals in 
1982 Balance 
outstand­
ing at 
31.12.1982 
0) Recipient 
Member 
State Balance 
outstand­
ing at 
1.1.1982 Payments Decommittals Commit­
ments in 
1982 0 Payments in 1982 Decom­
mittals in 
1982 Balance 
outstand­
ing at 
31.12.1982 
0) Recipient 
Member 
State 
Mio 
ECU Mio 
ECU (3) 
% — /0 (2) Mio 
ECU (5) 
% — (2) Mio 
ECU Mio 
ECU (8) % — (7) Mio 
ECU Mio ECU 
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (H) = (2) 
-(3)-(5) 
+ (7)-(8) 
-(10) + 
ECU rate 
variation 
Belgium 44,7 12,6 28% 4,7 11 % 26,1 4,2 ' 16% 0,2 44,6 
Denmark 19,2 5,2 27% 2,5 13% 27,8 12,4 45% 0,3 25,7 
Germany 127,9 55,4 43% 8,3 7% 96,1 34,5 36% 0,1 133,9 
Greece 23,4 6,8. 29% 2,0 9% 62,1 16,6 27% 8,1 49,0 
France 222,3 81,3 37% 35,9 16% 273,4 38,0 14% 2,2 324,5 
Ireland 93,4 40,2 43% 22,0 24% 144,4 74,8 52% 2,1 99,9 
Italy 578,5 147,2 25% 56,3 10% 455,5 88,0 19% 15,6 711,4 
Luxembourg 2,3 1,1 48% 0,1 4% 0,7 0,0 0% 0,0 1,5 
Netherlands 23,4 7,1 30% 3,5 15% 16,1 1,9 12% 0,6 27,9 
United Kingdom 260,6 111,3 43% 64,4 25% 462,7 167,0 36% 2,4 367,3 
Total 1 395,7 468,2 34% 199,7 14% 1 564,9 437,4 28% 31,6 1 785,7 
(') Inclusive of differences due to variations in the exchange rate of the ECU. 
(2) The difference of 54,7 Mio ECU between the total of column (7) in this table and the total of column (3) in Table 7.1 is due to the 
decommittals carried out during 1982 and the variations in the ECU. 
7.9. Three countries received three-quarters of the 
commitments entered into in 1982 (France, Italy 
and the United Kingdom). Payments averaged 28% 
of these commitments in total, with a minimum of 
12-14% (the Netherlands and France) and a maxi­
mum of 52% (Ireland). 
7.10. As far as commitments outstanding at the 
beginning of 1982 are concerned, an average of 48% 
were settled, either by payment (34%) or by decom-
mittal (14%) with a minimum of 35% for Italy and a 
maximum of 68% for the United Kingdom. The bal­
ance outstanding at 31 December 1982 was 1 785,7 
million ECU. Of this amount, 79% concerned three 
countries — Italy (40%), the United Kingdom (21%) 
and France (18%). Rate of payments 
7.11. On the basis of commitments entered into in 
1978, 1979 and 1980 respectively, the Court exam­
ined the rate of payments and decommittals, and 
the results are shown in Table 7.3. 
7.12. A system for payment of advances came into 
operation at the beginning of 1978 following a 
reform of the European Social Fund. It was sup­
posed to simplify and accelerate payment to the 
beneficiaries (cf. paragraph 4.9 of the annual report 
on the financial year 1978 ('). Consideration of the 
(') OJ No C 326, 31. 12. 1979. 
31. 12. 83 Official Journal of the European Communities 73 
Table 7.3 — Cumulative total payments and decommittals as a percentage of initial commitments (') 
Analysis of payments and decom­
mittals by year Cumulative 
totals Breakdown of percentages by Member State 
Analysis of payments and decom­
mittals by year 
Mio 
ECU % Bel­
gium Den­
mark Ger­
many France Ireland Italy Luxem­
bourg Nether­
lands United 
King­
dom 
Payments in respect of com­
mitments entered into in 
1978: 
— 1 st year 28,2 5,0 0,6 16,4 17,1 ' 0,0 27,6 0,0 0,0 0,0 2,8 
— 2nd year 220,7 39,1 49,9 57,1 42,9 7,4 40,0 42,7 18,9 36,6 50,6 
— 3rd year 450,4 62,1 55,1 85,1 73,3 60,8 63,0 . 47,8 73,5 65,9 80,2 
— 4th year 513,4 74,1 55,4 86,3 86,2 73,2 69,1 67,4 78,6 66,1 83,3 
— 5th year 518,6 75,3 57,6 86,4 86,2 75,0 69,1 69,7 78,6 66,1 83,4 
Decommittals 1st to 5th year 99,3 17,9 39,6 13,2 13,8 21,6 30,4 14,8 21,4 12,0 16,5 
Balance outstanding at 
31.12.1982 37,7 6,8 2,8 0,4 — 3,4 0,5 15,5 — 21,9 0,1 
Payments in respect of com­
mitments entered into in 
1979: 
— 1st year 157,5 20,2 1,6 56,3 17,6 3,6 42,3 6,3 0,0 37,2 42,0 
— 2nd year 352,6 45,0 53,9 72,0 58,8 33,1 68,0 39,3 4,2 42,3 47,4 
— 3rd year 526,6 68,1 66,9 89,0 72,4 82,5 76,3 53,1 51,1 59,1 73,1 
— 4th year 583,4 75,6 67,6 90,2 91,5 84,9 85,8 66,3 96,0 60,9 74,9 
Decommittals 1st to 4th year 127,7 16,5 31,8 9,8 6,6 14,7 13,6 11,7 4,0 34,4 24,2 
Balance outstanding at 
31.12.1982 60,9 7,9 0,6 — 1,9 0,4' 0,6 22,0 — 4,7 0,9 
Payments in respect of com­
mitments entered into in 
1980: 
— 1st year 297,5 28,7 1,5 41,3 28,3 30,5 49,3 20,3 1,8 1,3 36,9 
— 2nd year 494,4 48,8 27,3 69,3 51,6 59,1 55,9 38,6 10,7 43,9 51,7 
— 3rd year 656,8 65,0 55,6 84,2 66,4 74,2 71,2 48,2 70,5 65,7 76,2 
Decommittals 1st to 3rd year 122,5 12,1 9,1 11,4 4,0 7,7 16,0 13,6 0,9 23,0 16,0 
Balance outstanding at 
31.12.1982 230,4 22,9 35,3 4,4 29,6 18,1 12,8 38,2 28,6 11,3 7,8 
(') Taking into account the ECU rate variations. 
first two years of the commitments shows on aver­
age an improvement in the rate of payments in the 
first year, which is then lost, however, in the second 
year. From the third year on payments stabilize at 
around 65%. These results are especially disappoint­
ing in view of the fact that the first advance of 30% 
is payable on the Member State simply certifying 
that the project has begun and the second, also of 
30%, after the same procedure when the measure 
financed has been half completed. 
7.13. The table also shows considerable differ­
ences from one country to another. While there are 
in a number of cases clear indications that the sys*-
tem of advances is being used, the fact remains that 
several countries have clearly not adapted their request procedures to take advantage of the new 
facilities. 
7.14. The Commission undertook to release all 
appropriations that proved surplus to requirements 
for the completion of the measures (cf. para­
graph 6.11 of the annual report on the financial year 
1979) ('). Decommittal occurs either upon closure of 
the file or at the initiative of the Member State. The 
differences found in the position of the various 
Member States are in general due to the rate of noti­
fication by the national authorities either of matters 
required for closure of files or of inaccurate esti­
mates. 
(') OJ No C 342, 31. 12. 1980. 
74 Official Journal of the European Communities 31. 12. 83 
Settlement of commitments from 1975-78 
7.15. Paragraphs 6.4 and 6.9 to 6.11 of the annual 
report on the financial year 1981 (') contained com­
ments on the settlement of commitments outstand­
ing from the financial years 1975, 1976 and 1977. of the efforts made to settle old commitments, inev­
itably a number of cases were found among the 
commitments outstanding at 31 December 1982 
which had benefited from this extension of the 
time-limit. 
7.16. In 1982, the Court established that commit­
ments from 1975, 1976, 1977 and 1978 were 415 in 
number and amounted on 1 January 1982 to 
123,6 million ECU (i.e. 8,8% of commitments out­
standing at the beginning of the year). Of this 
amount, about half (63,3 million ECU) was settled 
during 1982, largely by cancellations. There is still 
an amount of 59,1 million ECU outstanding on 
174 commitments. 
7.17. The commitments from these years concern 
projects which have long since been completed and 
the files should normally have been closed at the 
end of 1982. Under Article 4 (1) of Commission 
Decision 78/706/EEC of 27 July 1978 on certain 
administrative procedures for the operation of the 
European Social Fund (2), the Member States have 
only 18 months following the date of completion of 
operations to submit their requests for payment. 
7.18. A Commission decision rejecting a request 
for payment by the Federal Republic of Germany 
and the 'Bundesanstalt fur Arbeit' on the basis of 
the above Article was declared void by a decision of 
the Court of Justice of 26 May 1982 (3), on the 
grounds that the Article in question did not 
expressly preclude late requests. 
7.19. By Decision 82/541/EEC (4) of 26 July 1982, 
the Commission amended Article 4 so that the 
admissibility of such requests is expressly pre­
cluded. Date of decommittal 
7.21. An inspection of about 40 files relating to 
assistance approved before 1980 gave rise to the fol­
lowing comments: 
(a) In one case, the request for final payment was 
made in 1976 and only implemented in 1981 
and the decommittals only carried out in 1982. 
In two other cases, final payment was made in 
1979 but decommittal only in 1982. 
(b) In some cases the final payment had been made 
in 1981, while the decommittal had still not 
been made at the end of the enquiry in March 
1983. 
(c) In two cases, the commitment was made in 1979 
and the completion date of the operations was 
31 December 1979, but no request for payment 
had been made in March 1983. 
(d) The present system provides for notification to 
the Member States of the amount of final pay­
ments, stating the amounts to be released. The 
actual decommittal follows automatically, if the 
Member State does not respond within two 
months. In a number of cases decommittal took 
place six months or even a year after the final 
payment. 
7.20. In the same decision the Commission estab­
lished a new time-limit of six months within which 
Member States who had not yet done so, might sub­
mit their requests for payment in respect of oper­
ations completed before 1 August 1981. Thus in spite 7.22. The above-mentioned examples, which were 
all brought to the attention of the Commission, 
underline the importance of a regular and syste­
matic check by the latter on old files which have not 
been closed. 
(') OJ No C 344, 31. 12. 1982. 
(2) OJ No L 238, 30. 8. 1978. 
(3) OJ No C 164, 1.7. 1982. 
(4) OJ No L 236, 11.8. 1982. 
31. 12. 83 Official Journal of the European Communities 75 
CHAPTER 8 
Research, energy, etc. 
8.0. TABLE OF CONTENTS Paragraph reference 
Introduction 8.1 to 8.3 
Summary of financial information 8.4 
Budgetary preparation 8.5 
Direct action research — Joint Research Centre 8.6 to 8.42 
Audit approach 8.6 and 8.7 
Observations arising from the examination of the 
accounting and internal control systems 8.8 to 8.18 
Observations arising from examination of the accounts 8.19 to 8.27 
Observations relating to an extraordinary contribution of 
the Government of Italy 8.28 to 8.35 
Overruling of Financial Controller on 21 December 1982 8.36 to 8.41 
Evaluation of research results 8.42 
Indirect action research 8.43 to 8.45 
JET Joint Undertaking $.43 
Follow-up of observations on cost-sharing contracts 8.44 and 8.45 
Energy 8.46 to 8.61 
Introduction 8.46 and 8.47 
Observations on budgetary management and accounts 8.48 
Observations on legal and regulatory framework 8.49 to 8.53 
Observations on management control procedures 8.54 to 8.61 
Introduction 
8.1. This chapter is concerned with expenditure on 
research, energy and miscellaneous allied activities 
for which appropriations for commitment and pay­
ment are contained in Chapters 70 to 78 of the 
budget. 8.2. In its 1982 audit the Court concentrated on 
activities in the research and energy fields. Regard­
ing research, it examined direct action activities at 
the Joint Research Centre (see paragraphs 8.6 to 
8.42) and indirect action at the Joint European 
Torus (JET) Joint Undertaking at Culham (see para­
graph 8.43). In addition it considered action taken 
by the Commission in response to the Court's com-
76 Official Journal of the European Communities 31. 12. 83 
Table 8.1 — Research, energy, etc.: commitments and payments in 1982 
(Mio ECU) 
Expenditure area 
(chapter of budget) Commitments Payments 
Expenditure area 
(chapter of budget) Appropriations for 
commitment avail­
able in 1982(0 Commitments 
entered into in 1982 Appropriations for 
payment available 
in 1982 (2) Payments made in 
1982 
Energy (70) 
Research and investment: (73) 
— Direct action research 
— Indirect action research (3) 
Industry, transport: 
— Industry (77) 
— Transport (78) 
Other activities: 
— Nuclear safeguards (71) 
— Information market and 
innovation (75) 
— Miscellaneous (72) 
Total 136,7 83,9 
207,9 184,5 
300.3 258,6 
62,5 17,8 
11,5 1,5 
2,0 2,0 
14,4 6,9 
2,1 2,0 
737.4 557,2 78,9 44,0 
203,2 159,2 
226,7 208,5 
40,9 15,1 
2,2 1,1 
2,6 1,5 
12,5 6,6 
3,1 1,7 
570,1 437,7 
Note: Comparable figures for JET (4) 145,7 109,7 110,3 82,4 
(') Appropriations in the 1982 budget, plus appropriations remaining at the end of 1981, after transfers. 
(2) Appropriations in the 1982 budget, plus carry-overs from 1981, after transfers. 
(3) Including,contribution to JET. 
(4) Based on JETs budget (i.e. including Commission contribution). 
ments on indirect action contracts set out in its 
annual report on the financial year 1981 (see para­
graphs 8.44 and 8.45). 
8.3. Regarding energy, the Court examined 
demonstration and hydrocarbon projects concluded 
between the Commission and bodies within the 
Member States (see paragraphs 8.46 to 8.61). 
Summary of financial information 
8.4. Table 8.1 summarizes the use of appropria­
tions in 1982. 
Budgetary preparation 
8.5. The Court has commented in its previous 
reports on the underutilization of appropriations for 
payment in the budget year for which they were 
intended. As shown in Table 8.2, with the exception of Chapter 73, this comment remains valid for 1982. 
Such a low rate of utilization indicates that budget­
ary preparation procedures need to be adopted 
which result in more accurate forecasts of payments. 
Table 8.2 — Use of appropriations for payment in the 1982 
budget 
(Mio ECU) 
Budget heading 
(chapter) Appropria­
tions in 
1982 
budget Payments made against 
1982 appropriations Budget heading 
(chapter) Appropria­
tions in 
1982 
budget Amount (2) 
0) (2) (3) / 
(4) 
Energy (70) 47,2 16,8 35,6 % 
Industry (77) 29,9 4,5 15,0% 
Transport (78) 1,5 0,4 26,7 % 
Safeguards (71) 2,0 1,0 50,0 % . 
Information (75) 10,5 4,7 44,8 % 
Miscellaneous (72) 2,1 0,6 28,6 % 
31. 12. 83 Official Journal of the European Communities 77 
Direct action research -
Research Centre (JRC) Joint tions and administrative services). The Court 
accepts that such a system, properly used, is an 
essential part of financial control in the direct action 
field: the points which follow show, however, that 
the full potential of such a system is not being real­
ized. 
Audit approach 
8.6. The objectives of the Court's audit were to 
assess budgetary management and to carry out the 
financial audit, thus verifying the accuracy of the 
revenue and expenditure account and the legality 
and regularity of the transactions recorded therein. Procedural instructions and chart of accounts 
8.7. Assart of its audit, the Court planned to 
review official correspondence in 1982 between the 
Financial Controller and the authorizing officer. 
Neither, however, was prepared to grant access to 
this. The Court considers that, having regard to the 
Treaties (') and the Financial Regulation (2), this 
constitutes an unauthorized and unacceptable res­
triction of its audit scope. The Court is pleased, 
however, to note that the Commission now accepts 
the principle (Annex IV, point 8.7) that the Court 
should, have access to this correspondence, and 
trusts that it will be available for the 1983 audit and 
thereafter. 
Observations arising from the examination 
of the accounting and internal control 
systems 8.9. The system is complex. So that it may operate 
as an effective management tool, justify the consi­
derable resources needed to operate it, and produce 
useful information, it is essential that there are 
agreed principles and clear procedural instructions 
which delegated authorizing officers and adminis­
trative staff understand and can use consistently. 
8.10. A manual describing the objectives of the 
system and setting out budgetary, financial manage­
ment and accounting procedures, together with a 
comprehensive annotated chart of accounts would 
assist greatly in this. At present, the JRC does not 
have such documents. There is a set of internal rules 
for the implementation of the budget which supple­
ments the Financial Regulation and the Implement­
ing Measures (3) but which remains at a general 
level and is not a users' manual. In addition, service 
notes are issued from time to time detailing proce­
dures in particular areas, but they are issued from 
various directorates without coordination and with­
out forming a comprehensive or structured whole. 
Budgetary management and the functional accounting 
system 
8.8. For the management of its appropriations, the 
JRC uses a functional accounting system. One of 
the main purposes of this is to facilitate the record­
ing and control of costs not only of each research 
objective, but also of the departments for the reali­
zation of those objectives (i.e. operating units such 
as the workshops, laboratories, scientific installa-8.11. A chart of accounts is necessary to ensure 
that revenue and expenditure are correctly and con­
sistently coded and allocated. In the functional 
accounting system this needs to cover different lev­
els of coding. The JRC has a document which anno­
tates each type of operation in the accounts, but, for 
example, there is no document other than the finan­
cial plan provided for in Article 90 of the Financial 
Regulation — which is insufficient for this purpose 
— describing the principles to be followed in deter­
mining whether a particular operation should be 
(') EEC Treaty, Article 206 a (3), EAEC Treaty, Article 
180 a (3). 
O OJ No L 356, 31. 12. 1977, Article 82. f) OJ No L 170, 1.7. 1975. 
78 Official Journal of the European Communities 31. 12. 83 
allocated to an appropriation account or to a of the financial year. This means that balances 
research objective. remaining are apportioned across research objec­
tives, which must thus bear the costs of overbudget-
ing by the operational divisions. This requirement of 
the Financial Regulation militates directly against 
the objectives of determining real costs of research 
8.12. This lack of precise rules makes it difficult to activities. 
say that any particular allocation is wrong, and 
undermines certain general principles of the man­
agement of budgetary transfers. In its sample the 
Court identified over 20 cases relating to commit­
ments of 4,7 million ECU, payments against which 
in 1982 amounted to 1,3 million ECU where the 
allocation might be questioned. 
Activity sheets 
8.13. The Court urges the JRC to prepare a manual 
and chart of accounts as described in paragraph 8.10 
above. The intention to introduce a new computer­
ized budgetary and accounting system in 1984 pro­
vides an excellent opportunity to do this. 
Determining the real cost of research activities 8.16. The activity sheets are the basic financial 
management documents permitting those responsi­
ble for research activities to monitor the utilization 
of appropriations allocated to them. The Court 
identified a number of weaknesses in the informa­
tion contained in the activity sheets (for example, 
they contain only expenditure allocated directly, 
and not that allocated indirectly), and moreover, the 
Court noted that for certain users the sheets are of 
limited value. They are, however, the only means of 
monitoring budgetary execution at operational level, 
and the Court considers that urgent steps are 
required to develop a system that is comprehensive 
and meets user requirements. 
8.14. In order that the functional accounting sys­
tem should indicate the real cost of research objec­
tives, as much expenditure as possible should be 
directly allocated thereto, or, where it is necessary 
under the functional accounting system to pass 
expenditure initially thrpugh appropriation 
accounts, the extent to which it is thereafter allo­
cated to research objectives on a proportional or 
theoretical rather than on an actual basis should be 
minimized. Currently, personnel costs are first allo­
cated to an appropriation account, and, even when 
staff are working solely for a particular research 
activity, are then charged to research objectives on 
an average rather than actual basis. Mission expend­
iture and other items which could be directly allo­
cated to a research objective are first allocated to 
appropriation accounts before being apportioned 
across the objectives according to a set of predeter­
mined keys. The more this is done, the more diffi­
cult it becomes to ascertain the real cost of the parti­
cular activities. Supervision exercised by the Financial Controller 
8.17. The Court examined the level of supervision 
and control exercised by the staff of the Financial 
Controller at the JRC. It found that: 
(a) there are no written instructions or descriptions 
of tasks to be carried out by the Financial Con­
troller's staff at the JRC other than the general 
principles set out in the Financial Regulation 
and Implementing Measures; 
(b) there is no work programme prepared and 
agreed in advance; 
8.15. Further, the Financial Regulation requires 
the appropriation accounts to be cleared at the end (c) no report on the JRC's financial management as 
foreseen by Article 11 of the Implementing 
Measures has in recent years been addressed to 
the Commission by the Financial Controller. 
31. 12. 83 Official Journal of the European Communities 79 
8.18. While under the terms of the Financial Regu­
lation a prime task of the Financial Controller is to 
approve individual transactions, the Court considers 
that Articles 2, 23.2 and 34 (d) of the Financial 
Regulation and Article 11 of the Implementing 
Measures envisage that he should extend his work 
beyond this, and carry out in specific areas overall 
assessments of the soundness of financial manage­
ment. A review of the current organization and tasks 
of the function at the JRC, combined with -careful 
planning of work, should enable the Financial Con­
troller to devote more attention to assessing whether 
financial management systems are sound. majority of cases concern irregularities unrelated to 
the question of replacements, for absent officials. 
Specifically: 
(a) nine cases concern officials who authorized 
commitments in areas of the budget for which 
they had no authority; 
(b) three cases concern the breaking up of an indivi­
dual operation in order to avoid the limit of the 
signatory's sub-delegation; this is specifically 
forbidden by Article 4 of the Commission's 
Internal Rules for the execution of the General 
Budget; 
(c) one case concerns a commitment for an amount 
in excess of the limit of the signatory's sub-dele-
gation. 
Observations arising from examination of 
the accounts 
8.19. A number of procedural weaknesses were 
identified in the management of appropriations. 
The most important of these are discussed in para­
graphs 8.20 to 8.27 below. With regard to the other cases, which concern the 
exercising of an official's delegated powers of 
authorization during his temporary absence, the 
Court does not consider that the general rules set 
out in Article 26 of the Internal Rules of the Com­
mission are sufficient. JRC management, quite cor­
rectly and in order to maintain adequate internal 
control over the authorization of commitments by 
the large number of officials with delegated powers, 
has introduced a procedure which provides for a 
replacement to be given written authority on each 
separate occasion when senior officials are tempor­
arily absent. 
Delegation of signature 
8.20. The importance attached to the delegation of 
signature is evidenced by the many detailed provi­
sions in the Financial Regulation, the Implementa­
tion Measures, and the Commission Decision con­
cerning the reorganization of the JRC (')• 8.22. In none of the cases examined did the Finan­
cial Controller or the accounting officer draw the 
attention of the authorizing officer to the irregulari­
ties which occurred at the commitment stage. The 
Court recognizes that the amounts concerned were 
legally due to the JRC suppliers and therefore had 
to be paid, but the charging to the budget of pay­
ments amounting to 1,2 million ECU (8 % by value 
of the payments sampled), based on these commit­
ments, must be considered irregular in the terms of 
the Financial Regulation. 
8.21. The audit of payments made in 1982 showed 
that in more than 20 instances concerning approxi­
mately 2,5 million ECU, commitments were entered 
in the accounts without proper delegation of the 
authorizing officer's powers. The main causes were 
that the limit of the delegation was exceeded; or 
that the authorizing officer did not hold a delega­
tion for the budget post concerned; or that the tem­
porary subdelegation to the person signing could 
not be verified. Contrary to the statement in the 
reply of the Commission (Annex IV, point 8.20) the 
(') OJ No L 16,20. 1. 1971. Justification of commitments 
8.23. Sound management of budgetary resources 
requires that appropriations should not be frozen by 
committing amounts before they are needed. The 
examination of payments in 1982 showed that this 
was not always respected, especially for provisional 
80 Official Journal of the European Communities 31. 12. 83 
global commitments. Generally, such commitments 
were not supported by justifications of the amount 
committed. This contravenes Article 24 of the 
Implementing Measures. The Court found 4,8 mil­
lion ECU (') of commitments of this kind. Observations relating to an extraordinaryi 
contribution of the Government of Italy 
8.24. Further, at the end of the financial year, only 
those outstanding commitments exceeding 100 000 
ECU were examined by the JRC to determine 
whether the amounts carried forward corresponded 
to amounts effectively contracted. In addition to the 
observation made in paragraph 8.41 below, the 
Court identified that, at the end of 1982, 1,5 million 
ECU (2) on 18 commitments remained outstanding 
with insufficient evidence that future liabilities 
would mature in connection with them. This con­
travenes Article 32 (3) of the Financial Regulation. 
8.25. The Court considers that, in the future, it 
would be desirable for more attention to be paid by 
JRC management to the evaluation of commitments 
both during and at the end of the budget yeaf. 
Checks carried out on payments 
8.26. Before authorizing payments, the authorizing 
officer is required by the terms of Article 36 of the 
Financial Regulation to satisfy himself of the exist­
ence of the creditor's claim, the existence and the 
amount of the sum due, and the conditions under 
which the claim arises. Articles 34 to 40 of the 
Implementing Measures set out requirements con­
cerning supporting documents, including the evi­
dence of verification. 
8.27. In the sample examined by the Court, 85 
payments amounting to 3,4 million ECU (23 % by 
value of payments sampled) contained weaknesses 
relating to insufficient evidence of checks on 
invoices; insufficient information provided by the 
suppliers; or inadequate supporting documents. 
Nevertheless, the Financial Controller passed the 
payments in question. 
(') Of which 2,2 million ECU were commitments entered 
into in 1982. 
(:) Of which 0,4 million ECU were commitments entered 
into in 1982. The agreement 
8.28. During the Council's discussions in 1980 on 
the 1980-83 JRC multiannual programme, which 
included the reinsertion into the Community pro­
gramme of the Essor reactor, the Italian Govern­
ment agreed to make an extraordinary contribution 
to the JRC of 7 million ECU to finance the final 
part of the construction of the Sara loop. The contri­
bution was to be spread through the four year pro­
gramme as follows: 
1980 1,5 million ECU 
1981 2,0 million ECU 
1982 2,0 million ECU ' 
1983 1,5 million ECU 
8.29. The agreement was, however, made condi­
tional by the Italian Government in an exchange of 
letters on a positive decision of the Council to con­
tinue the Super-Sara project. The Court understands 
that both the Commission and the Italian Govern­
ment consider that this condition was removed in 
early 1981. The 1982 budget, following the example 
of the 1980 and 1981 budgets included the extraor­
dinary contribution both on the revenue and 
expenditure sides: that there was no objection to 
this from the Italian Government was taken by the 
Commission to imply an acceptance by the Italian 
Government of its liability to the Communities. 
8.30. Nevertheless, the withdrawal of the condition 
was not made explicit in a written form, nor was any 
written document setting out the objectives of the 
agreement, payment procedures, or any cancellation 
clauses signed by the two parties. 
Budget execution 
8.31. As far as receipts are concerned, at 
31 December 1982 three revenue orders issued by 
the Commission for the 1980, 1981 and 1982 
tranches of the contribution, totalling 5,5 million 
ECU, were outstanding. No payment had been 
received from the Italian Government. Several 
31. 12. 83 Official Journal of the European Communities 81 
reminders were sent from the Commission to var­
ious Italian Government services, but without result. 
No further action was taken to ensure payment of 
sums due to the Community, or to write them off. marizing the position at the end of each year have 
been prepared by the Commission, which the Court 
considers unsatisfactory from the viewpoint of 
sound financial management. 
8.32. As at 31 December 1982 expenditure from 
1980-82 was: 
Commitment appropriations 
entered in budgets 
Commitments entered in the 
accounts at 31. 12. 1982 
Payment appropriations 
entered in budgets 
Payments entered in the 
accounts at 31. 12. 1982 (includ­
ing carryovers) 5,5 Million ECU 
3,9 Million ECU 
5,5 Million ECU 
1,8 Million ECU Comments and conclusions 
8.35. The Court considers that: 
(a) the management of the agreement between the 
Italian Government and the Commission failed 
to protect the financial interests of the Com­
munity in that there was no written document 
detailing the terms of the agreement, nor was 
there written confirmation that the Italian 
Government's condition on its contribution had 
been met; 
The payments made in 1980, 1981 and 1982 (') (1,8 
million ECU) were executed without the related 
revenue having been received to cover them. The 
Financial Controller passed the payments without 
comment. (b) in the light of the derogation from the general 
principle of non-specificity of revenue in 
Article 3 of the Financial Regulation, i.e. that 
'revenue earmarked for a specific purpose 
shall not be used for any other purpose', it was 
irregular for the Commission to have made the 
payments of 1,8 million ECU (') entered into 
the accounts up to 31 December 1982 without 
having first received the revenue to cover them; 
Accounts presentation (c) the accounting treatment failed to show clearly 
what was the true situation; and 
8.33. Where receipts are earmarked to cover parti­
cular expenditure, the accounts should show them 
both clearly and separately. They should demon­
strate to the reader that the funds have been duly 
received, and that expenditure attributed to them 
has been incurred for the purpose originally speci­
fied. (d) the Financial Controller and accounting officer, 
in accordance with their responsibilities under 
the Financial Regulation, should have done 
more to highlight to the authorizing officer the 
unsatisfactory way in which this operation was 
proceeding. 
8.34. The accounting treatment of these operations 
was unsatisfactory. In 1980 the relevant expenditure 
recorded in the accounts was consolidated with that 
of other activities of the Essor complex. In 1981 
some of the expenditure was recorded in the 
accounts for payment appropriations carried for­
ward without appropriations being available in con­
travention of Article 1 of the Financial Regulation. 
Further, no cumulative financial statements sum-Overrtiling of Financial Controller on 
21 December 1982 
Movements in appropriations on Item 7300 during 
1982 
(') 0,6 million ECU in 1982. 8.36. At the beginning of 1982, 7,0 million ECU 
were transferred from Item 7300 to Article 269 in 
82 Official Journal of the European Communities 31. 12. 83 
part A of the Commission's section of the general 
budget to finance the monitoring by outside staff of 
the application of certain steel industry measures. 
The transfer decision (') stated that the appropria­
tions taken from Item 7300 would be replaced 
during the 1982 budget year. 
8.37. In October 1982, 8,0 million ECU were trans­
ferred (2) to Item 7300, 7,0 million ECU being the 
reimbursement of the earlier transfer from the Item, 
plus 1,0 million ECU attributed to the Super-Sara 
programme. This was supplemented in December 
1982 15 days before the end of the budget year by a 
transfer of 16,5 million ECU (3), justified by the 
Commission as being necessary to avoid prejudging 
the decisions which the Council was shortly to make 
on the JRC multiannual programme in general and 
Super-Sara in particular. Overruling of Financial Controller by the Commission 
8.39. On the same day as the refusal of his visa, the 
Commission overruled the Financial Controller. Its 
grounds were that, in a system of differentiated 
appropriations, the commitment proposal precedes 
the financial and contractual obligation which acti­
vates the expenditure, and that the Commission was 
bound to honour the political commitments made 
when the December 1982 transfer (3) was approved. 
Further, it stated that all steps had been taken to 
ensure that the Community would not be financially 
committed if Super-Sara were abandoned, and that 
the principles of sound financial management had 
therefore been applied. 
Comments and conclusions 
Withholding of approval by the Financial Controller 
8.38. On 21 December 1982 the Financial Control­
ler withheld his approval from four commitment 
proposals on Item 7300 amounting to 17,3 million 
ECU for the Super-Sara programme. His grounds 
for regarding these commitments as premature were 
that: 
(a) until a final decision was taken during the first 
quarter of 1983, the continuation of the pro­
gramme remained uncertain; 
(b) the orders covered by the commitments were 
not essential for the continued, normal develop­
ment of the programme at that time; 
(c) the orders addressed to suppliers contained can­
cellation clauses with no obligation to pay 
indemnities, which was evidence of the provi­
sional nature of the operations. 8.40. Concerning the Commission's grounds, it 
should be noted that a commitment proposal should 
follow 'every measure which, by its very nature, may 
involve expenditure, without any further decision 
being required' (4). As a decision of the Council was 
required to allow the operation to continue, the four 
commitment proposals must be considered to have 
been premature. 
8.41. During the first quarter of 1983, the Council 
decided finally that Super-Sara should be cancelled. 
The commitments entered in the accounts at the end 
of 1982 should be considered unjustified to the 
extent that contracts to which they relate have not 
been signed. In accordance with current auditing 
practice (5) a major event after the balance sheet 
date such as this should be taken into consideration 
when assessing whether the accounts on the 1982 
budget year give a true and fair view. Accordingly, 
the commitments entered in the 1982 accounts on 
Item 7300 were overstated by some 17,3 million 
ECU, as the Financial Controller observed when 
withholding his approval on 21 December 1982. 
(') No 1/82, COM(82) 8 final, 18. 1. 1982. 
(2) No 30/82, COM(82) 580 final, 31. 8. 1982. 
(3) 43/82, COM(82) 751 final, 12. 11. 1982. (4) Article 21, footnote, Implementing Measures OJ No L 
170, 1.7. 1975. 
(5) e.g. International Accounting Standards Committee 
Statement No 10 'Contingencies and events occurring 
after the balance sheet date', October 1978. 
31. 12. 83 Official Journal of the European Communities 83 
Evaluation of research results Follow-up of observations on cost-sharing 
contracts 
8.42. The examination of expenditure on scientific 
research must involve the question of whether the 
money is well spent, i.e. whether the outlay is justi­
fied in terms of the results obtained. In 1982, the 
Court commissioned a study from an expert on 
methods of the work carried out at JRC and has dis­
cussed his findings with the Commission with 
mutually beneficial results. The Court is glad to note 
that the Commission is paying increasing attention 
to the problem of evaluation by the appointment of 
a Committee of Experts, by staging conferences and 
by the means set out in its Communication to the 
Council and the European Parliament ('). 8.44. The Court has considered what action the 
Commission's services have taken in response to the 
Court's comments on the management of cost-shar­
ing contracts in paragraphs 8.8 to 8.32 of its annual 
report on the financial year 1981 (2). The Commis­
sion has informed the Court that it agrees that there 
is room for improvement in management proce­
dures, but that the review is slow and difficult. No 
further progress has been made beyond that indi­
cated in the replies made by the Commission and 
published with the Court's comments. 
8.45. With regard to the audit of contracts by exter­
nal audit firms, according to the Commission 46 
such audits have been carried out under their super­
vision since 1981 at a total cost of 297 533 ECU. 
Indirect action research Energy 
JET Joint Undertaking Introduction 
8.43. The JET financial statements show that pay­
ments in 1982 amounted to 82,4 million ECU of 
which 80% was financed by the Commission. The 
Court approved its report on these statements on 
28 April 1983. In the opinion of the Court the finan­
cial statements presented fairly the Joint Undertak­
ing's year-end financial position and income and 
expenditure for the year, except that creditors and 
provisions shown in the notes on the accounts were 
understated by at least 3,0 million ECU as a result 
of the omission of provisions for Title I liabilities 
which had arisen before 31 December 1982, but for 
which no invoice had been received. The basis on 
which such items will be shown in the notes in 
future is to be the subject of discussions between the 
management of JET and the Court. Background 
8.46. The energy action programmes financed 
under Chapter 70 of the budget mainly take a form 
of financial support granted by the Commission to 
projects carried out by bodies within the Member 
States. The financial support granted by the Com­
mission, — varying between 25% and 49% of the 
total cost of the project, — is repayable in the 
majority of cases if there is any commercial exploi­
tation of the project. The granting of financial sup­
port is mainly for: 
(a) technological development projects in the 
hydrocarbons sector (3) and, 
(b) demonstration projects relating to the exploita­
tion of alternative energy sources and energy-
saving (4). . 
0 OJ No C 344, 31. 12. 1982. 
(3) Council Regulation (EEC) No 3056/73 of 9 Novem­
ber 1973. 
^ (4) Council Regulations (EEC) No 1302/78 and (EEC) 
(•) COM(83) 18 final, 3. 3. 1983. No 1303/78 of 12 June 1978. 
84 Official Journal of the European Communities 31, 12. 83 
Audit approach 
8.47. The objectives of the Court's audit were to 
carry out a financial audit (see paragraph 8.6) and to 
assess budgetary management, including the Com­
mission's system for the management of contracts. 
The audit was based on contracts selected from 1982 
payments, unpaid commitments dormant since 1980 
and, in order to examine potential reimbursements, 
contracts approved prior to 1979. times by as much as five years, and in view of their 
nature and the obvious need for continuity this is 
not unreasonable. However there is doubt about the 
legal basis for this, and the Court drew attention to 
this matter in paragraph 8.17 of its annual report on 
the financial year 1981 in relation to indirect action 
research programmes. The Commission takes the 
view that the Financial Regulation and the contracts 
themselves constitute a sufficient legal basis but the 
Court considers that all doubt would be removed if 
the terms of each decision contained a covering 
authority for contracts which extend beyond the 
time specified in the Decision or Regulation. 
Observations on budgetary management 
and accounts 
8.48. The authorizing officer's financial manage­
ment of projects in the energy field includes moni­
toring and reporting to the budgetary authorities on 
the extent to which financial support granted to 
contractors has become repayable if commercial 
exploitation has occurred. For expenditure the 
accounting information essential for carrying out 
this task is based on the official accounting records 
of the Commission. However, for reimbursements 
the authorizing officer does not receive and has not 
asked for copies of the periodic official accounts but 
rather uses his own manual records. The Court 
recommends that the management of reimburse­
ment should also be based on the official account­
ing records of the Commission, the form of which 
should be adapted to meet the needs of the authoriz­
ing officer. 
Observations on legal and regulatory 
framework Projects commenced prior to approval 
8.50. One of the criteria for the selection of energy 
projects for subvention is that, without such assist­
ance, the projects would not have been undertaken 
or would have been subject to long delays. In 46% 
of the projects audited by the Court, however, sub­
stantial work had been carried out before the date of 
the Council or Commission decision approving the 
project for subvention. There is thus an implication 
that in about half the cases the above criterion is not 
respected. The Court has put this point to the Com­
mission which states that such cases arise as a result 
of the technical, financial and planning constraints 
necessary for the proper execution of the projects 
concerned which oblige them to be started during 
the sometimes protracted delays which take place 
between the tendering procedures and the Council 
or Commission decisions. The Commission has 
affirmed that, without public finance, many of these 
projects would not be realized. 
Duration of legal basis 
8.49. For both technical development and demon­
stration projects specific periods of duration are 
envisaged in the decisions and regulations govern­
ing them (3 and 4 or 5 years respectively). It is clear 
that in many cases contracts for work subsidized 
under these measures exceed these periods, some-8.51. The contracts audited by the Court showed a 
delay between the st^rt of work and contract signa­
ture of between 0 and 23 months. (A similar com­
ment was made by the Court on indirect action 
research contracts in paragraph 8.18 of its annual 
report on the financial year 1981.) Until a contract is 
signed, the execution of the work has no contractual 
basis, the Commission cannot legally control the 
work, and the reporting rhythm laid down may be 
disturbed. If, in practice, such a situation is una­
voidable, the Commission should add provisions to 
31. 12. 83 Official Journal of the European Communities 85 
the standard contracts so that it may formally 
approve pre-signature work. Court's comments and is examining its procedures 
in this area. 
8.52. The Court considers that the problem of pro­
jects commencing prior to approval is brought about 
by differences between the legal framework and the 
practicalities and that the Commission and the 
Council should take whatever steps are necessary to 
reconcile these differences. 
Financial annexes to contracts and reports from 
contractors 
Energy programming contracts 
8.53. The audit included a number of energy pro­
gramming studies funded through budgetary 
Item 7060 and planned to be carried out over a 
period of about three years. The contracts for these 
studies were found to be insufficiently precise in 
that they did not reflect the multiannual nature of 
the studies and did not specify clearly what the out­
put of the study should be, its work schedule and 
cost profile. The Commission has indicated that it 
will be possible to avoid these weaknesses in future 
in such contracts. 
Observations on management control 
procedures 8.55. The form of the financial annex to contracts, 
and of the expenditure report in which the contrac­
tor submits the costs to be subsidized is not obliga­
tory and the amount of information given is varia­
ble. Contractors tend to minimize the amount of 
financial detail they provide, which, for example, 
increases the risk of unacceptable provisions for 
profit being included in composite overhead totals. 
This reduces the extent to which the Commission 
can verify the composition of costs directly from the 
report, and increases the financial control work 
needed on the spot. Model standard contracts have 
been drawn up by the Commission for the various 
types of energy projects and the Court considers 
that this welcome practice should be made to 
include financial annexes to contracts and expendi­
ture reports. The Court understands that the Com­
mission is reluctant to impose such demands on 
contractors. However, the Court takes the view that 
some of the difficulties foreseen could be mitigated 
if contractors were made aware at the tendering 
stage of the information requirements. 
Financial verification by the Commission Approval of technical reports from contractors 
Financial soundness of contractors 
8.54. The basic regulations governing energy pro­
jects specify that, in selecting contractors, the cri­
terion of financial soundness should be applied. The 
Court's examination has revealed no evidence that a 
procedure was followed for making such an assess­
ment, for example, by reviewing company structure 
and accounts. The Commission has noted the 8.56. The standard contracts state that payments 
depend on the receipt of the appropriate expendi­
ture and technical reports. In practice, payments 
were made on the basis of expenditure reports only, 
without prior receipt and approval of interim tech­
nical reports. Further, the Court found final pay­
ments being made for year-end budgetary purposes 
without the Commission having duly received and 
approved the final technical reports. The Commis­
sion has agreed that, in future, all payments to con­
tractors (with the exception of advances) should be 
conditional on the receipt and approval of the tech­
nical reports required by the contract or, in certain 
86 Official Journal of the European Communities 31. 12. 83 
circumstances, on the satisfactory results of a tech­
nical control visit on the spot. 
Work programmes for financial verification 
8.57. The Court has received from the Commission 
an outline of the checks which it carries out on' 
expenditure reports in Brussels and during control 
missions on the spot. This is not, however, used as a 
programme to be completed for each expenditure 
report or control mission. A standard report is com­
pleted for each mission, but this is not supported by 
any record of the work done. The Court considers 
that the existing outline of work should be devel­
oped into a standard work programme to ensure 
that verification is carried out in a uniform and 
comprehensive manner. of unused advances. In some, of these cases either 
interest on the amounts outstanding has not been 
charged at all or, although charged, it has been cal­
culated from a date much later than the date of pay­
ment by the Commission of the advance. Thus an 
interest-free loan has been made to the contractors 
concerned for the amount of the advances unused. 
For the cases in its sample the Court estimates a loss 
to the Commission of some 900 000 ECU. The stan­
dard contract is ambiguous on the conditions under 
which interest can be calculated by the Commission 
and the Court recommends that it be amended to 
enable full interest to be charged from the date of 
payment of an advance if that advance is not fully 
used by the contractor. 
Project assessment and follow-up 
8.58. The present approach to control missions is 
generally on a contract-by-contract basis which is 
suitable for contractors with only one contract. 
However, there are several large contractors with a 
number of contracts in the energy field with the 
Commission at any one time. For these, the Court 
considers that each control mission should be global 
and should cover the totality of the contractor's rela­
tionship with the Commission. The largest contrac­
tor of all is a consortium set up to coordinate hydro­
carbon projects subsidized by the Communities. In 
this case, the Court suggests that a global control 
should include detailed examination of the contrac­
tor's financial relationship with its participating 
companies, particularly the basis used for passing 
on costs. 
Reimbursements 
Interest on repayable advances 
8.59. The Court noted cases where, for various rea­
sons, the work originally foreseen by the contract 
has not been completed and reimbursements have 
been made or are due to the Commission in respect 8.60. The Court has audited a number of older 
contracts which should normally have been com­
pleted by 1982 and in respect of which reimburse­
ment of contract costs might have been expected as 
a result of commercial exploitation of the results. 
For the majority of cases examined the Commission 
files contained no evidence of an overall evaluation 
of the technical and commercial outcome of the pro­
ject based on the contractor's final technical report 
and drawing together any references to potential 
commercial exploitation scattered throughout the 
file. Nor was there sufficient evidence of formal cor­
respondence between the Commission and the con­
tractor at the termination of the contract or thereaf­
ter to determine the exact position concerning com­
mercial exploitation. For many of the contracts the 
Commission has requested a critical examination by 
outside experts of the results achieved by the pro­
jects, but the terms of reference for this work do not 
include the assessment of potential commercial 
exploitation. 
8.61. The Court repeats the recommendation, it 
made in paragraph 8.12 of its annual report on the 
financial year 1979 (') that, before the final payment 
to the contractor and at regular intervals thereafter, 
the Commission should carry out its own formal 
(') OJ No C 342, 31. 12. 1980. 
31. 12. 83 Official Journal of the European Communities 87 
assessment of the outcome of each project. This 
assessment would approve the contractor's final 
report and record (in summary form) the technical 
outcome in terms of both the original work objec­
tives and the real prospects for short- and long-term commercial exploitation and, in consequence, mea­
sure the likelihood of reimbursement of subven­
tions. If technical success has been achieved but 
commercial exploitation is unlikely, the reasons 
should be given. 
88 Official Journal of the European Communities 31. 12. 83 
CHAPTER 9 
Budgetary compensation to the Federal Republic of Germany and 
the United Kingdom 
9.0. TABLE OF CONTENTS Paragraph reference 
Introduction 9.1 to 9.3 
Observations 9.4 to 9.25 
Treasury department operations in December 9.4 to 9.7 
Opening of special accounts 9.8 to 9.11 
Funds in the special accounts 9.12 
Consequences for the distribution of assets among Mem­
ber States 9.13 to 9.22 
Impact on the budget of the purchase of sterling 9.23 to 9.25 
Introduction 
9.1. On 30 May 1980 the Council agreed on 
arrangements to limit the net United Kingdom con­
tributions to the Community budget for the finan­
cial years 1980 and 1981. The compensatory mea­
sures for 1980, which were undertaken in the course 
of the 1981 Community budgetary year('), were 
examined in Chapter 14 of the annual report on the 
financial year 1981 (2). The operation of the mea­
sures for 1981 during the 1982 budgetary year are 
examined in paragraphs 6.52 to 6.60 above. 
(') Council Regulation No 2744/80 (OJ No L 284, 29. 10. 
1980) on the proposal for which the Court gave its 
opinion on 3 July 1980 (OJ No C 233, 11.9. 1980). The 
Court gave its opinion (OJ No C 160, 18. 6. 1983) on 
the Commission's proposal of 12 November 1982 for 
an amendment to this Regulation, but was not con­
sulted on the further proposal for amendment of 17 
January 1983 which was finally adopted by the Coun­
cil on 15 March 1983 (OJ No L 73, 19. 3. 1983). 
(2) OJ No C 344, 31. 12. 1982. 9.2. This chapter deals more specifically with the 
treasury operations intended to prepare for payment 
in 1982 of budgetary compensation to the United 
Kingdom and Germany in respect of that year 
(Council Decisions of 25 May and 26 October 1982) 
but which was not, in the event, given effect in 1982. 
9.3. The net compensation agreed for the United 
Kingdom was 850 million ECU, which was to bie 
grossed up to 1 092 million ECU to take account of 
the United Kingdom's share in financing it. It was 
further decided to grant Germany compensation of 
210 million ECU, in order to limit its net contribu­
tion to the budget. The total compensation to be 
paid was therefore 1 302 million ECU. The corres­
ponding budget entries were made in supplementary 
and amending budget No 1 for 1982, which was 
rejected by the Parliament on 16 December 1982. 
They were subsequently included in supplementary 
and amending budget No 1 for 1983, which was 
adopted on 10 February 1983. 
31. 12. 83 Official Journal of the European Communities 8? 
Observations 
Treasury department operations in 
December 
9.4. In the first half of December 1982, the Com­
mission arranged for the purchase of UKL 287,4 
million, which were transferred to the Commission's 
account with the United Kingdom Treasury — 
'Treasury Chambers EEC 1' — for the purpose of 
paying budgetary compensation to the United King­
dom at the appropriate time. Transactions of this 
kind were not necessary for the German mark, given 
the level of the Commission's account with the Ger­
man Treasury. 
9.5. This sterling was purchased from the central 
banks of the various Member States, in proportion 
to the share of each currency in the ECU. It was 
necessary to sell the following amounts of other cur­
rencies: 
BFR 2 204 million, 
DKR 125,9 million, 
DM 493,3 million, 
FF 667 million, 
IRL 4,4 million, 
LIT 63 220 million, 
HFL 249,2 million. 
9.6. The acquisition of sterling in this way seems 
surprising for several reasons. There was no legal 
basis for such large purchases of national currency, 
nor any urgent need. The fact that the United King­
dom is a net contributor should have led the Com­
mission to postpone its purchases of sterling in view 
of the likelihood of its having available most if not 
all of the sums necessary for these payments within 
a relatively short time. It should be recalled that 
these payments — under the supplementary and 
amending budget adopted on 10 February 1983 — 
did not commence until one and half months later, 
on 25 March. 
9.7. Moreover, even after the rejection by the Par­
liament on 16 December 1982 of the draft supple­
mentary and amending budget, the Commission 
continued to buy sterling, adding UKL 49 million to 
the Treasury Chambers account. This was although 
the sterling available at 17 December 1982 already equalled 92% of the draft budget, and only 90% of 
the measures provided for would have been payable 
in the first instance. 
Opening of special accounts 
9.8. On 22 December 1982 the Commission 
opened two special accounts: 
(a) a Treasury Chambers EEC 3' account with the 
British Treasury, 
(b) a 'Bundeskasse H3' account with the German 
Treasury. 
9.9. These two accounts in the name of the Com­
mission operated like the accounts used for collect­
ing own resources ('), i.e. without commission or 
charges, but equally without a return on the depos­
its. 
9.10. On 29 and 31 December 1982, the Commis­
sion ordered: 
(a) the Treasury Chambers to transfer UKL 630,9 
million from Account EEC 1 to Account EEC 
3; 
(b) the Bundeskasse to transfer DM 486,9 million 
from Account H1 to Account H3; 
with effect from 31 December 1982. 
9.11. These sums represented 1 092 million ECU 
and 210 million ECU respectively, at the prevailing 
rate of exchange, i.e. exactly the amounts allocated 
to compensation measures for the United Kingdom 
and Germany in the rejected draft budget. 
Funds in the special accounts 
9.12. After the rejection of the draft supplementary 
and amending budget by the Parliament, the proper 
course pursuant to Article 12 (3) of Council Regula* 
tion No 2891/77 would have been to distribute 
these assets among the Member States by the usual 
method. Instead, these sums (210 and 1 092 million 
(') Council Regulation No 2891/77 of 19 December 1977 
implementing the Decision of 21 April 1970 on the 
replacement of financial contributions from Member 
States by the Communities' own resources, OJ No L 
336,27.12.1977. 
90 Official Journal of the European Communities 
ECU) remained in the special accounts until 25 
March 1983, when 189 million ECU were trans­
ferred to Germany and 982,8 million ECU to the 
United Kingdom, i.e. 90% of the total compensation 
provided for. 
Consequences for the distribution of assets 
among Member States 
Usual method of distribution 
9.13. The Treasury department of the Commission 
is required to manage the financial assets in accord­
ance with Article 12 (3) of Council Regulation No 
2891/77, which states: 'The difference between the 
overall assets and the cash resource requirements 
shall be divided among the Member States, as far as 
possible, in proportion to the estimated budget 
revenue from each of them'. 
9.14. At the beginning of each month, the Treasury 
department of the Commission establishes an esti­
mate of cash movements by Member State. This 
estimate is based on the actual balance of assets 
remaining at the beginning of the month and the 
revenue and expenditure estimates for the month. 
The estimated end-of-month balance for each Mem­
ber State is then compared with the balance that it 
would hold if distribution were made according to 
its contribution to the budgetary revenue. The dif­
ferences then give rise to orders to transfer funds 
between the Commission's accounts with the Trea­
suries of the various Member States, up to the limit 
of available funds, so as to re-establish the equili­
brium laid down by Council Regulation No 2891/ 
77. 
Method followed in practice 
9.15. In establishing its estimate of the cash move­
ments of December 1982, the Commission consid­
ered the sums entered in the special accounts with 
the Treasuries of Germany and of the United King­
dom as funds to be disbursed. 
9.16. After rejection of the draft supplementary 
and amending budget and until March 1983, the 31. 12. 83 
/ 
Commission continued to establish estimates of 
cash movements on the basis that the funds trans­
ferred to these special accounts were funds already 
disbursed. 
9.17. Moreover, from November 1982 to February 
1983, the Commission made every effort to maintain 
the balance of assets on its ordinary account with 
the United Kingdom Treasury (Treasury Chambers 
EEC 1) above the 300 million ECU level (in addi­
tion to the 1 092 million. ECU in the special 
account). 
Effect on the distribution of assets and in financial 
terms 
9.18. The cumulative effect of entering these sums 
in the special accounts, the decision to consider 
these sums as expenditure in the cash resources esti­
mates and the decision to maintain the United 
Kingdom's asset balance at a certain level, was to 
alter the distribution of financial assets among the 
Member States in a manner contrary to the terms of 
Regulation No 2891/77. 
9.19. Further, the fact that large sums were main­
tained on these accounts without authorization from 
Parliament, did not involve payment of interest and 
the two Member States benefited from an influx of 
currency. 
Effects in figures 
9.20. Table 9.1 shows the impact of the application 
of the Regulation on the distribution of assets by 
Member State for the period from December 1982 to 
March 1983. These figures were determined on the 
basis of the distribution tables used by the Treasury 
department in 1982 and 1983. 
9.21. The table is to be read as follows: 
(a) the amounts in the columns headed 'normal dis­
tribution' represent distribution of the 210 and 
1 092 million ECU among all the Member States 
in accordance with the distribution tables for 
1982 and 1983, 
31. 12. 83 Official Journal of the European Communities 91 
Table 9.1 — Impact of the special accounts on the distribution of assets 
(Mio ECU) 
Member State Amount 
entered According to the 1982 scale According to the 1983 scale 
Member State Amount 
entered Normal 
distribution Impact Normal 
distribution Impact 
(1) (2) (3) = (2) — (1) (4) (5) = (4) — (1) 
Belgium 67,9 + 67,9 63,7 + 63,7 
Denmark 25,2 + 25,2 25,7 + 25,7 
Germany 210,0 340,7 + 130,7 358,8 . +148,8 
Greece — 17,8 + 17,8 21,7 - + 21,7 
France — 267,4 + 267,4 261,7 + 261,7 
Ireland — • 11,8 + 11,8 13,7 + 13,7 
Italy — 170,8 + 170,8 167,5 + 167,5 
Luxembourg — 1,6 + 1,6 1,8 + 1,8 
Netherlands — ' 93,2 + 93,2 95,0 + 95,0 
United Kingdom 1 092,0 305,6 -786,4 , 292,4 -799,6 
Total 1 302,0 1 302,0 0 1 302,0 0 
(b) the amounts in the columns headed 'impact' 
represent the sums that the Commission should 
have transferred from its account with the 
United Kingdom Treasury to its accounts with 
the Treasuries of the other Member States to 
re-establish equilibrium. 
9.22. It can therefore clearly be seen that normal 
distribution of these amounts would have improved 
the balance of the Commission's accounts with the 
Treasuries of all the Member States, except for the 
balance of its accounts with the United Kingdom 
Treasury, which would have had to be reduced by 
approximately 800 million ECU. 
Impact on the budget of the purchase of 
sterling 
9.23. The transfers of funds for the purchase of 
sterling in December 1982 resulted in an exchange 
profit of 9,8 million ECU for the financial year 
1982. 
9.24. The monthly revaluations (from December 
1982 to March 1983) of the assets held in these two 
special accounts reveal a net book exchange loss of 77,3 million ECU on the sums transferred in March 
1983. This loss was offset by a net book exchange 
profit of the same amount, due to the decision to 
use the rate of December 1982 and not that of 
March 1983 in executing the supplementary and 
amending budget (')• 
9.25. If the sterling specially purchased during the 
first half of December had been sold after the rejec­
tion of the supplementary and amending budget, 
there would have been some exchange loss on this 
series of transactions. On the other hand, the value 
of sterling had fallen by March 1983 when the 90% 
payment was made to the United Kingdom. The 
UKL 630,9 million needed (i.e. 1 092 million ECU 
at the exchange rate of December 1982 — 0,577728 
— specified in the supplementary and amending 
budget) could have been acquired for some 80 mil­
lion ECU less than it had cost in December. In the 
event therefore the Commission would have bene­
fited by an almost equivalent amount if it had dis­
posed of the sterling after the rejection of the budget 
and re-acquired it when needed. Be that as it may, 
the Court wishes to stress that the Commission 
acted contrary to current regulations. 
(') OJ No L 60, 7. 3. 1983. 
92 Official Journal of the European Communities 31. 12. 83 
CHAPTER 10 
Cooperation with developing countries and non-Member States 
10.0. TABLE OF CONTENTS Paragraph reference 
Introduction 10.1 and 10.2 
Summary of financial information 10.3 to 10.9 
Utilization of appropriations available 10.3 to 10.7 
Method of presenting financial data 10.8 
Justification of expenditure 10.9 
Food aid (Chapter 92) 10.10 to 10.24 
Budgetary position 10.10 
Observations on the execution of food aid programmes 10.11 to 10.14. 
Purchases of foodstuffs in the developing countries 10.15 
On-the-spot findings on the speed and quality of deliver­
ies 10.16 to 10.24 I 
Cooperation with Mediterranean countries (Chapter 96) 10.25 to 10.32 
Utilization of appropriations available for the financial 
year 1982 10.25 to 10.28 
Appropriations provided for in the protocols which are 
managed by the EIB 10.29 to 10.32 
Introduction Summary of financial information 
10.1. Title 9 of the general budget contains mainly 
appropriations to cover the financing of the follow­
ing operations: food aid and disaster aid, aid to 
non-associated developing countries and to Medi­
terranean countries and the subsidy for the opera­
tion of the European Association for Cooperation 
(EAC). 
10.2. The following comments result from an ana­
lysis of the accounts and records and from on-the-
spot findings in Tanzania, the Comoros, Mauritius, 
Morocco and Tunisia. Utilization of appropriations available 
10.3. In 1982, the appropriations for payment 
available under 'Cooperation with developing coun­
tries and non-Member States' and the payments 
made against these appropriations were as shown in 
Table 10.1. For a complete picture of Community 
expenditure on cooperation with developing coun­
tries, there should be added to the 786,2 million 
31. 12. 83 Official Journal of the European Communities 93 
Table 10.1 — Appropriations for payment available and payments made (Title 9) 
(Mio ECU) 
Chapter of the budget Appropriations for payment 
available in 1982 Payments made in 1982 
Carry-overs 
to 1983 Cancella­
tions Chapter of the budget 
Carried over 
from 1981 1982 
budget ('). Total Amount Rate of pay­
ment Carry-overs 
to 1983 Cancella­
tions 
(1) i (2) (3) (4) = (2)+ (3)' (5) . (6) = (5)/(4) (7) (8) 
Food aid 
(Chapter 92) 110,7 503,6 614,3 540,2 87,9 % 72,3 1,8 
Cooperation with non-associated 
developing countries 
(Chapter 93) 14,2 177,6 191,8 74,6 38,9 % 117,0 0,2 
Specific measures for cooperation 
with developing countries 
(Chapter 94) 0,9 29,4 30,3 19,8 65,3 % 10,3 0,2 
Exceptional measures to assist 
developing and non-member 
countries (disasters) -
(Chapter 95) 0,9 76,0 76,9 36,1 46,9 % 40,4 0,4 
Cooperation with Mediterranean 
countries 
(Chapter 96) 131,6 113,8 245,4 72,5 • 29,5 % 103,8 69,1 
Operating expenses of 
Commission delegations in 
developing countries 
(Chapter 98) 0,2 42,2 42,4 42,2 99,5% — 0,2 
Cooperation with non-member 
countries 
(Chapter 99) — 2,6 2,6 0,7 26,9 % 1,5 0,4 
Total 258,5 945,2 1 203,7 786,1 65,3 % 345,3 , 72,3 
(') Including transfers of appropriations. 
ECU which are charged to Title 9 of the budget, the 
payments charged to the European Development 
Fund (647,2 million ECU) and the proportion of 
expenditure incurred as refunds for Community 
food aid which is charged against the EAGGF, 
Guarantee Section appropriations (166,4 million 
ECU), — making a total financial contribution of 
1 599,8 million ECU in 1982, as against 1 704,1 mil­
lion ECU in 1981. 
10.4. In 1982, 65,3% of the appropriations for pay­
ment available were used, as opposed to 71,6% in 
1981. A slower rate of utilization was particularly 
evident in respect of: 
(a) Chapter 93 (aids for the benefit of the non-asso­
ciated developing countries): 38,9% of appro­
priations used in 1982 compared with 86,8% in 
1981; (b) Chapter 94 (mainly aids for the benefit of non­
governmental organizations): 65,3% of appro­
priations used in 1982 compared with 93% in 
1981; 
(c) Chapter 95 (disaster aid): 46,9% of appropria­
tions used in 1982 compared with 96,7% in 1981. 
10.5. Of the 417,6 million ECU in unutilized 
appropriations for payment, 117 million ECU con­
cerned projects that were not decided upon by the 
Council until the last quarter of 1982. 
10.6. Cancellations involved mainly appropria­
tions under Chapter 96 (cooperation with Mediterra­
nean countries). Of the appropriations from this 
chapter carried over from 1981 to 1982, 69,1 of the 
94 Official Journal of the European Communities 31. 12. 83 
131,6 million ECU in payment appropriations were 
cancelled on 31 December 1982. 
10.7. In addition, all the provisional appropria­
tions entered under Title 10 to cover possible trans­
fers to Chapter 96, i.e. 8 million ECU of appropria­
tions for payment and 130 million ECU of appro-
1 priations for commitment, remained unused. 
Method ofpresenting financial data 
10.8. The accounts currently produced by the 
Commission's central accounts department present 
the financial information in a form that limits its 
utility as an instrument of management: 
(a) The budget accounts, unlike the EDF accounts, 
do not give detailed information on the imple­
mentation of the various aids or projects. Food 
aid expenditure in 1982 (706,6 million ECU), 
although 9% greater than total EDF expendi­
ture, is for the most part only shown in the 
Community accounts by an indication of the 
total amount of monthly expenditure communi­
cated by each intervention body. It is therefore 
impossible to determine from the accounts the 
cost of each operation or the extent to which the 
aids granted to the beneficiaries have been 
implemented. Financial Regulation (') reveal that the documenta­
tion in support of payments is inadequate and that 
in one case, appropriations were misallocated. 
(a) There was no estimate or programme of activi­
ties to justify the payment of 250 000 ECU to a 
subsidized organization; 
(b) 50 000 ECU in expenditure (costs relating to 
transport, accommodation, reception, cultural 
excursions, etc.) resulting from a fact-finding 
visit to the Commission by 18 high-level offi­
cials who were nationals of associated or non-
associated Arab countries, were incorrectly 
charged to Item 9341 of the budget 'Information 
visits to the Commission for nationals of non-
associated developing countries'. 
Food aid (Chapter 92) 
Budgetary position 
10.10. In 1982, the Commission made direct, pay­
ments totalling 71,5 million ECU for food aid, and 
the balance (635,1 million ECU) was paid to the 
contractors by the intervention agencies of the 
Member States. In terms of value, 72% of the aid 
was mobilized by three Member States: the Federal 
Republic of Germany (27%), France (27%) and Bel­
gium (18%). 
(b) Similarly with regard to the other aid pro- -
grammes financed under Chapters 93, 94 and 
96, the accounts, unlike the EDF accounts, do 
not make a distinction between global and final 
commitments or contracts concluded. The 
accounts therefore contain no record of the 
extent to which the financial protocols and 
other aid programmes have been implemented 
nor any details of the amounts outstanding on 
the contracts. Observations on the execution of food aid 
programmes 
10.11. Deliveries under the 1982 food aid pro­
grammes and their allocation among the recipients 
were as shown in Table 10.2. 
10.12. As Table 10.3 illustrates, the quantities still 
to be delivered at 31 December 1982 have clearly 
increased in relation to the previous year, even 
excluding the 72 337 tonnes of cereals whose alloca­
tion to the campaign to eliminate hunger in the 
Justification of expenditure world was not decided upon until 3 December 1982. 
10.9. Certain documents sent by the Commission 
to the Court in. accordance with Article 79 of the (0 OJ No L 356, 31. 12. 1977. 
31. 12. 83 Official Journal of the European Communities 95 
Table 10.2 — Quantities available in 1982 and percentage delivered at 31 December 1982, by recipient 
Recipient Cereals Milk powder Butteroil 
Recipient 
tonnes % delivered 
in 1982 tonnes % delivered 
in 1982 tonnes % delivered 
in 1982 
(1) (2) (3) (4) (5) (6) (7) 
Bangladesh 150 000 93 — — 3 500 100 
Egypt 150 000 93 10 000 60 2 800 100 
Sri Lanka 55 000 67 — — 100 100 
Mozambique 40 000 63 750 100 200 100 
Tanzania 25 000 40 2 000 100 400 100 
Madagascar 20 000 75 — — — • ' — 
Ghana 15 000 67 2 000 100 600 100 
Kenya 15 000 100 — — — — 
Zambia 15 000 0 — — — — 
India — — • 31 000 100 12 700 24 
Pakistan — — 2 000 0 2 000 0 
ACP countries in Sahel 136 000 89 10 050 95 3 800 100 
Other ACP countries 66 500 41 8 550 63 ' 2 455 62 
Associated Mediterranean 
countries 20 000 100 3 800 74 1 545 78 
Other non-associated countries 28 000 32 10 200 71 1 500 93 
Organizations: 
10 — international 177 000 42 37 295 15 6 662 10 
— non-governmental 39 000 65 .31 200 64 3 500 76 
Reserve available 48 500 — 1 155 — 3 238 — 
Total 1982 programme 1 000 000 67 150 000 61 45 000 49 
10.13. There has been no significant improvement 
in respect of the following shortcomings, already 
noted by the Court in previous reports. 
(a) The appropriations entered under Title 9 and 
under the EAGGF Guarantee Section to cover 
the implementation of programmes prior to 
1982 had to be increased by 606% ( + 326,2 mil­
lion ECU) by drawing on the appropriations 
intended for implementation of the 1982 pro­
grammes (— 46%). 
(b) The Council did not adopt an initial distribu­
tion between recipients of food aid under the 
1982 programme until 26 April 1982. The distri­
bution of the 160 300 tonnes reserved in the 
1982 budget for the campaign to eliminate hun­
ger in the world was itself not decided upon 
until 3 December 1982 and only after the vol­
ume of this aid had been reduced to 72 337 
tonnes. (c) The delay in clearing the accounts of advances 
to the Member States for food aid measures 
continues to grow despite what was implied in 
the Commission's replies to the previous obser­
vations of the Court. On the contrary, the Com­
mission did not carry out audit visits to check 
the accounts of the intervention agencies in 
1982: the backlog was thus extended by a year. 
Since the decision of 22 November 1977 con­
cerning the financial year 1974, no further clear­
ance decisions have been taken in respect of the 
accounts. At 31 December 1982, expenditure to 
be cleared for the financial years 1975 to 1982 
amounted to 2 215,8 million ECU. The conse­
quences for Title 9 of the Commission's failure 
to act in this area are reflected in the discharge 
decisions, which for the financial years 1975 to 
1982 cover only 37% of the expenditure finally 
charged. Moreover, as was established in 1982 
during the audit of operations assigned to cer­
tain intervention agencies, these amounts con-
96 Official Journal of the European Communities 31. 12. 83 
Table 10.3 — Quantities delivered under the food aid programmes for cereals, milk powder and butteroil 
(Tonnes) 
State of deliveries Cereals Milk powder Butteroil 
(a) Still to be delivered at the close of 1981 182 232 39 821 17 057 
(b) 1982 programmes 1 000 000 150 000 45 000 
(c) Total available in 1982 (a+ b) 1 182 232 189 821 62 057 
(d) Delivered or in the course of delivery in 1982 843 047 124 148 36 965 
(e) Still to be delivered at 31.12.1982 (c —d) 339 185 65 673 25 092 
tinue to involve expenditure which is likely to 
be refused at the time of final clearance. There 
is a danger therefore that expenditure which is 
not recognized by the Commission will remain 
charged to the Community budget for many 
years, as was the case for example with 12,3 mil­
lion ECU that an intervention agency had had 
charged to the Community budget by mistake in 
1975. 
(d) The 1,1 million ECU of appropriations avail­
able for quality controls gave rise to virtually no 
payments; indeed, an amount of 0,8 million 
ECU from these appropriations was cancelled 
on 31 December 1982. The Commission's 
replies to the Council on a similar observation 
made by the Court in its annual report on the 
financial year 1981 (') are therefore without 
foundation. 
(e) In 1982, the Commission recovered only one 
debt from the recipients of food aid. 0,7 million 
ECU is still to be recovered for the expenses 
paid by the intervention agencies on their 
behalf. The most important debtors are Egypt 
(253 558 ECU) and Bangladesh (165 252 ECU). 
(f) Many recipients, including those who receive 
the largest quantity of aid each year, pay little or 
no attention to the commitments that they made 
(') OJ No C 344, 31. 12. 1982, p. 83. to the Community, in particular with regard to 
the amount and use of counterpart funds. The 
Commission has not made any systematic 
attempt to monitor observance of these obliga­
tions. 
10.14. Table 10.4 analyses the delivery periods of 
certain food aids supplied by the Community in 
1982. Comparison of the results with those of a simi­
lar analysis in a special report on Community food 
aid that the Court prepared for the European Parlia­
ment in 1979 shows no improvement in the situa­
tion. (The special report was not published in the 
Official Journal.) 
Purchases of foodstuffs in the developing 
countries 
10.15. Within the framework of the special project 
for the benefit of the least advanced countries, the 
department responsible in the Directorate-General 
for Development bought certain foodstuffs in the 
developing countries. Thus, for example, in June 
1982, the Commission bought 2 000 tonnes of white 
maize in Honduras for a total of 458 000 ECU. 
Since the purchase price has been negotiated with­
out an invitation to tender, it is difficult to view the 
contract concluded with the Honduran quasi-public 
organization as an example of sound financial man­
agement. In fact, the price paid by the Commission 
greatly exceeded the then prevailing world market 
price. 
31. 12. 83 Official Journal of the European Communities 97 
Table 10.4 — Average duration of stages in the supply of certain food aids shipped in 1982 (') 
Stage Number of days 
Stage 
Cereals Milk powder Butteroil 
Period between: 
(a) the beginning of the financial year and approval by the 
30 30 30 Commission of its proposal 30 30 30 
(b) submission of the proposal and its adoption by the Council 95 95 95 
(c) adoption of the programme and the request for mobilization 170 212 159 
(d) the request and the last publication of the regulation on 
57 50 mobilization 42 57 50 
(e) the above publication and shipment 91 75 61 
Subtotal 428 469 395 
Sea carriage according to destination 20-40 20-40 20-40 
Total duration to port of unloading 448-468 489-509 415-435 
(') This average was calculated on the basis of all the consignments shipped in 1982 for 9 major recipient countries in 3 continents who had 
received, directly or via international organizations, the 3 classical types of aid (cereals, milk powder and butteroil). 
On-the-spot findings on the speed and 
quality of deliveries 
10.16. In the Comoros, the losses in quantity regu­
larly noted mainly occur during unloading and are 
caused by inadequate port facilities. It is also 
regrettable that the local Commission representative 
was not informed of the arrival of the various aid 
deliveries. No details could be provided of the pro­
jects using counterpart funds or of how they were 
monitored. 
10.17. In Tanzania, the counterpart funds resulting 
from the sale of Community aid are subject to a tax 
of 16% from which the other sources of external aid 
are exempt. 10.19. Following cyclones which caused severe 
damage on Mauritius, on 25 March 1981. a Commis­
sion official responsible promised that country 
emergency food aid of 2 000 tonnes-of cereals. This 
emergency aid did not, however, reach the country 
until 15 months later. 
10.20. In 1982, Mauritius was informed that it was 
to be granted food aid of 500 tonnes of vitaminized 
milk powder. As the result of an administrative 
error, the Commission mobilized non-vitaminized 
milk powder. This milk, which is to be distributed 
free of charge to over 100 000 people is liable to 
cause gastric disorders by reason of not being vitam­
inized. Moreover, at the time of the Court's audit 
visit on 10 November 1982, neither the local Com­
mission delegate nor the local authorities were 
informed of the imminent arrival of this milk. 
10.18. From 1980 to 1982, Tunisia received 11 740 
tonnes of cereals, 3 264 tonnes of milk powder and 
170 tonnes of butteroil from the Community via the 
World Food Programme (WFP). The WFP requested 
for most of the deliveries made under its responsi­
bility that they be treated as urgent. There was 
usually, however, an interval of four to six months 
between the request for aid and delivery. 10.21. In Morocco, at the beginning of April 1983, 
the Court found that 500 out of 1 500 tonnes of 
vitaminized milk powder and 200 tonnes of butter­
oil delivered in 1982 (representing, at Community 
prices, approximately 1,5 million ECU) had been 
blocked since 21 September 1982, for administrative 
reasons, in the port of Casablanca. 
98 ' Official Journal of the European Communities 31.12. 83 
10.22. In addition, the Court found that: 
(a) since the vitaminized milk powder had been in 
storage for over six months, the vitaminization 
process, costing approximately 50 000 ECU, 
could be considered as wasted; 
(b) the bags had been damaged on handling 
because they had been unloaded individually 
instead of being kept on the pallets; 
(c) of the special instructions which the Commis­
sion had communicated to Morocco on 17 July 
1982, the following is worthy of note: 
'the (vitaminized) skimmed-milk powder is to 
be distributed either mixed with other foods or 
in the form of liquid milk, cheese, yoghurts, 
etc....' This encourages incorrect use of the 
product since the manufacture of certain 
cheeses destroys the vitamins contained in the 
milk powder; 
(d) many of the metal canisters containing the but-
teroil were badly damaged due to the inade­
quately sealed cardboard boxes in which they 
had been sent. 
10.23. The quality of the butteroil is checked by 
means of sampling when the butter is processed into 
butteroil. The aim of these checks is to ensure that 
the butteroil has not been replaced by vegetable oil 
— which costs considerably less than butter — 
during processing. The inspections carried out by 
the Court in Belgium revealed a considerable gap in 
the system of taking samples. This is only done 
during office hours, although butteroil is sometimes 
produced 24 hours a day at some manufacturers. (b) mark clearly on the packages of milk powder, in 
particular on those containing vitaminized milk 
powder, the date of manufacture and the date 
by which the product is to be used; 
(c) enclose with the deliveries of vitaminized milk 
powder instructions for use which are easy to 
understand; 
(d) ensure that the cartons containing the canisters 
of butteroil are adequately sealed; 
(e) improve the design of the butteroil canisters; 
(f) ensure that not only the beneficiary organ­
ization but also the local Commission delegate 
is informed of the time of delivery; 
I 
(g) revise the conditions to which the recipients of 
aid are subject, removing those that are unrealis­
tic and standardizing them, so that they no lon­
ger differ according to the Commission official 
who drafted them or the language used; 
(h) indicate in the proposal for supply which the 
Commission sends to the recipient country that 
the milk can be delivered in packages of less 
than 25 kg or on pallets, the bags and pallets 
being protected, where necessary, by a polyester 
sheet; 
(i) mention in the agreements concluded with the 
aid recipients the expected date of delivery 
(which would probably have been adopted 
beforehand by joint agreement between the 
Commission, the recipient country and the 
organization responsible for local distribution). 
10.24. Since 1978 the Court has brought a number 
of basic technical shortcomings to the attention of 
the budgetary authorities and of the Commission. 
The waste of resources would have been considera­
bly reduced had these shortcomings been elimi­
nated. The fact that these comments have to date 
not been heeded leads the Court to suggest that the 
discharge authorities call upon the Commission to 
carry out the following measures as soon as possi­
ble: 
(a) improve the quality of the bags containing the 
milk powder, which were designed to with­
stand public storage within the Community and 
not transport overseas or on rough tracks; Cooperation with Mediterranean 
countries (Chapter 96) 
Utilization of appropriations available for 
the financial year 1982 
10.25. The northern Mediterranean countries 
(Cyprus, Malta, Portugal, Turkey and Greece until 
its accession) and the southern Mediterranean coun­
tries (the Maghreb and Mashreq countries) receive 
financial assistance granted by the Community 
under the cooperation agreements concluded with 
31. 12. 83 Official Journal of the European Communities 99 
Table 10.5 — Financial position at 31 December 1982 of the cooperation agreements (') concluded with the Mediterranean 
countries 
(Mio ECU) 
A. Cumulative financial position 
at 31 December 1982 B. Implementation in 1982 
Recipient country Amounts 
granted 
charged to 
the 
general 
budget Total 
payments Rate of 
payment Appropria­
tions for pay­
ment avail­
able Payments in 
1982 Carried over 
to 1983 Cancella­
tions 
0) (2) (3) (4) = (3)/(2) (5) (6) (7) (8) 
A. Maghreb and Mashreq 
countries 
— Maghreb: 
Algeria 
Morocco 
Tunisia 44,0 
74,0 
54,0 4,8 
42,8 
18,3 11 % 
58% 
34 % 17,5 
22,9 
11,9 2,7 
17,4 
5,7 9,0 
5,5 
6,2 5,8 
— Mashreq: 
Egypt 
Jordan 
Lebanon 
Syria 77,0 
22,0 
10,0 
26,0 13,0 
9,5 
2,5 
6,2 17 % 
43% 
25% . 
24% 22,0 
6,9 
2,8 
9,5 2,3 
2,7 ' 
1,2 
3,3 12,0 
3,5 
1,5 
4,0 7,7 
0,7 
0,1 
2,2 
Total A ' 307,0 97,1 32% 93,5 35,3 41,7 16,5 
B. Northern Mediterranean 
countries 
Cyprus 
Greece 
Malta 
Portugal 
Turkey 10,0 
55,0 
10,0 
185,0 
295,0 1,5 
37,9 
6,2 
65,8 
82,2 15% 
69% 
62% 
36% 
28% 3,7 
7,7 
1,7 
40,6 
98,2 0,0 
6,3 
0,5 
10,1 
20,3 2,5 
1,4 
1,2 
15,0 
42,0 1,2 
15,5 
35,9 
Total B 555,0 193,6 35% 151,9 37,2 62,1 52,6 
Total Mediterranean countries 
(A + B) 862,0 290,7 34% 245,4 72,5 103,8 69,1 
(') Financial protocols, agreements and decisions which have entered into force between 1975 and 1982. 
each country and, where applicable, other aid 
decided upon by the budgetary authority. 
10.26. The cooperation agreements and other aid 
are implemented either in the form of loans from the 
European Investment Bank's own resources or 
non-refundable subsidies, special loans, risk capital 
and interest rate subsidies charged to the Com­
munity budget. The financial position of the aids 
charged to the budget and granted to these countries 
is shown in Table 10.5. This table reveals that at 
31 December 1982, i.e. a year after the expiry date of 
the financial protocols concluded with the Maghreb 
and Mashreq countries, total payments still only 
represented approximately 32% of the amounts to be 
financed from budgetary resources. 10.27. On 31 December 1982, a total of 26,4 mil­
lion ECU of the commitment appropriations 
entered for the Maghreb and Mashreq countries 
were cancelled. These cancellations concerned 
Algeria (8,3 million ECU), Egypt (9,1 million ECU), 
Jordan (2 million ECU), Lebanon (4,3 million 
ECU), Syria (2 million ECU) and Tunisia (0,7 mil­
lion ECU). 
10.28. The cancellations of commitment appro­
priations in respect of the northern Mediterranean 
countries amounted to 31 million ECU. 
(a) They concerned, in particular, the appropria­
tions for Turkey — mainly special aid totalling 
75 million ECU, where 29 million ECU in com-
100 Official Journal of the European Communities 31. 12. 83 
mitment appropriations were cancelled. After 
the immobilization of appropriations decided 
upon by the budgetary authorities during 1982, 
only payments relating to prior commitments 
were met. 
(b) In the case of Malta, 2 million ECU in commit­
ment appropriations were also cancelled. 
(c) With regard to the financial protocol of 30 mil­
lion ECU signed with Portugal in 1976 (which 
entered into force in 1978), no commitments or 
payments were recorded during the financial 
year 1982 due to the lack of projects to be 
financed. Only 24,7 million ECU have been 
used under this protocol, i.e. 82,5 %. The 
125 million ECU in 'accession' aid, on the other 
hand, were more heavily used: commitments 
and payments during the financial year 1982 
totalled 59,5 and 10,1 million ECU respectively. 
Nevertheless, at 31 December 1982, payments 
only covered 11,6 % of the aid, which had been 
authorized by a decision dating back to Decem­
ber 1980. 
Appropriations provided for in the protocols 
which are managed by the EIB 
10.29. As the Court pointed out in its previous 
annual report, the Commission has entrusted the 
EIB with the management of a considerable propor­
tion of the operations financed from the appropria­
tions of Chapter 96 of the Community budget. It 
represents nearly 420 million ECU out of the 
862 million provided for in the cooperation agree­
ments (see detailed figures in Table 10.5). 
10.30. In the absence of approval of the draft 
Financial Regulations on the application of the 
cooperation agreements with certain Mediterranean 
countries, which were submitted by the Commission 
as early as 1978, there are some doubts as to the 
legal basis upon which the Commission entrusts the 
EIB with the management of appropriations entered 
in the Community budget. As stated by the Court in 
its opinions on these proposed regulations, however, 
they could not result in the Court being divested of 
the powers conferred upon it by the Treaties. 10.31. The EIB manages, on behalf of the Com­
mission, not only budget appropriations but also 
appropriations from the European Development 
Funds. Since this delegation of powers raises the 
same problems whatever the origin of the appropria­
tions, the Court, in order to avoid repetition, has 
chosen to discuss the whole subject in Chapter 15, 
which concerns the European Development Funds. 
10.32. With regard specifically to the budget 
appropriations entrusted to the EIB, the Court 
noted the following points. 
(a) Loans at a low rate of interest are sometimes 
managed by the EIB and sometimes directly by 
the Commission. When managed by the Com­
mission, the projects financed from these loans, 
and therefore the local authorities concerned, 
are subject to numerous regular checks by the 
Commission and its on-the-spot representative. 
According to these authorities, they are subject 
to no particular controls when the loans are 
managed by the EIB. 
(b) At 31 December 1982, only part of the sums 
paid by the recipient countries into the special 
accounts held at the EIB had been transferred 
to the Commission's accounts and 1 276 861,36 
ECU remained in the EIB accounts. Moreover, 
this sum'was not included in the debts receiva­
ble shown in the Commission's balance sheet. 
(c) It was not until June 1982 that the Commission 
received any of these monies, although there 
had been credit balances in its favour since 
1981. 
(d) Moreover, contrary to Article 3 (1) of the Finan- . 
cial Regulation applicable to the general budget 
of the Communities, the Commission offset the 
interest on the loans collected by the EIB (2,2 
million ECU) against the administrative charges 
owed to the latter (0,8 million ECU) in the 
revenue and expenditure accounts and author­
ized only the net result of this operation. 
(e) Due to the delay in the transfer to the Commis­
sion accounts of the funds available in the 
special accounts held at the EIB, the Commis­
sion did not collect interest on these monies 
until July 1982. 
31. 12.83 Official Journal of the European Communities 101 
CHAPTER 11 
Staff expenditure 
11.0. TABLE OF CONTENTS Paragraph reference 
Introduction 
Summary of financial information 
Utilization of appropriations 
Staff 
General observations 
Supervision of invalidity pensions 
Grades ad personam 
European Parliament 
Reimbursement of staff mission expenses 
Council 
Lack of an organization chart 
Retroactive effect of promotions 
Discriminatory working hours 
Overtime remuneration 
Financial control of remunerations 
Court of Auditors 
Medical examination at recruitment 
Length of temporary servants' contracts 
Economic and Social Committee 
Procedures for management of remunerations 
, Charging of expenditure on overtime 
Payment arrangements for the education allowance 11.1 to 11.4 
11.5 to 
11.5 and 
11.7 to 
11.10 to 
11.10 to 
11.14 to 
11.18 to 
11.19 to 
11.25 to 
11.26 
11.27 to 
11.31 and 
11.33 to 
11.37 and 
11.39 to 
11.40 and 
11.42 and 
11.44 to 
11.45 to 
11.48 and 
11.50 and 11.9 
11.6 
11.9 
11.17 
11.13 
11.17 
11.24 
11.24 
11.38 
11.30 
11.32 
11.36 
11.38 
11.43 
11,41 
11.43 
11.51 
11.47 
11.49 
11.51 
Introduction 
11.1. In the new budgetary nomenclature adopted 
for the financial year 1982, the appropriations to 
cover staff expenditure appear under Title 1 of each 
section of the general budget and for the Commis­
sion (Section III) under Title 1 of Part A. Staff 
expenditure is also charged against research and investment appropriations under Title 7, Part B of 
the Commission budget. 
11.2. Staff expenditure is effected under the provi­
sions of the Staff Regulations of Officials of the 
European Communities and annexes and the Con­
ditions of Employment of Other Servants of the 
European Communities (temporary, auxiliary and 
102 Official Journal of the European Communities 31.12.83 
local staff, and special advisers). These provisions 
govern, in particular, the careers of staff, their work­
ing conditions, emoluments and social security ben­
efits. 
11.3. The 'crisis levy!, imposed on salaries, pen­
sions and severance grants, introduced by Council 
Regulation (EEC) No 3821/81 of 15 December 
1981 (') for a period of 10 years with effect from 
1 July 1981, amounts to 5,08% of the basic salary 
adjusted in accordance with the formula in the 
Regulation, for the period 1 July 1982 to 30 June 
1983. It will rise to 12,7% as from the fifth year. 11.4. In this chapter, the Economic and Social 
Committee is dealt with separately from the Coun­
cil, on the same basis as the other institutions, in the 
presentation of the accounts and statistical tables 
and in the comments. The financial information and 
observations on the Council relate solely to that 
institution, and do not include the Economic and 
Social Committee. The Commission's staff expendi­
ture, which accounts for 67% of the total for the 
institutions, was commented on in the annual report 
for the financial year 1980 (2), and no further refer­
ence is made in this report. 
(') OJ No L 386, 31. 12. 1981. (2) OJ No C 344, 31. 12. 1981. 
Table 11.1 — Utilization of staff appropriations — by budget chapter and institution 
(Mio ECU) 
Budget chapter and institution 1982 budget 
Final 
appropria­
tions Commit­
ments Payments Carry-overs 
to 1983 Carry-overs from 1981 
Appropria­
tions 
carried over 
from 1981 Payments 
(1) (2) (3) (4) (5) (6) (7) 
A. By budget chapter 
10 Members of the institutions (') 
11 Staff 
12 Allowances and expenses on enter­
ing and leaving the service and on 
transfer 
13 Expenditure relating to missions 
and duty travel 
14 Socio-medical infrastructure 
15 Graduate traineeships and further 
training of staff 
16 Expenditure on social welfare 
Total 41,2 
653,8 40,8 
618,7 36,2 
615,2 4,6 
3,5 1,0 
2,8 2,0 
20,5 19,7 18,2 1,5 1,2 0,9 
19,6 19,1 14,9 4,2 2,9 2,1 
2,2 2,1 1,3 0,8 0,6 0,5 
3,5 3,3 2,7 0,6 0,5 0,4 
1,4 1,2 1,1 0,1 — — 
742,2 704,9 689,6 15,3 9,0 5,9 
137,3 130,9 122,9 8,0 3,9 2,1 
62,1 58,8 58,5 0,3 0,5 0,4 
493,0 470,0 463,5 6,5 4,2 3,1 
21,0 19,5 19,4 0,1 — — 
13,5 11,8 11,5 0,3 0,3 0,2 
15,3 13,9 13,8 0,1 0,1 0,1 
742,2 704,9 689,6 15,3 9,0 5,9 B. By institution 
Parliament 
Council 
Commission (2) 
Court of Justice 
Court of Auditors 
Economic and Social Committee 
Total 
(') Parliament, Commission, Court of Justice, Court of Auditors, Economic and Social Committee. 
(2) Including Office for Official Publications. 
31. 12. 83 Official Journal of the European Communities 103 
Summary of financial information and temporary staff whose salaries may be paid 
from staff appropriations during the financial year. 
Utilization of appropriations 
11.5. Table 11.1 shows the distribution by budget 
chapter and by institution of the staff appropria­
tions and expenditure under Titles 1 of the budget. 
Total payments under these Titles amounted to 
695,5 million ECU. 
11.6. Added to this was staff expenditure out of 
the appropriations for research and investment (Part 
B, Chapter 73 of Section III, Commission) which 
comprised 88,5 million ECU for 'direct action' and 
16,9 million ECU for 'indirect action'. Total staff 
expenditure in 1982 thus amounted to 800,9 million 
ECU. 11.8. In respect of the financial year 1982, 
Table 11.2 shows that in each institution differences 
still exist between the posts authorized and the staff 
actually employed at the end of the financial year, 
but they are diminishing, except in the case of the 
Commission's administrative staff. At the Court of 
Auditors, this disparity represents a considerable 
number of the authorized posts because of the cum­
bersome nature of the Staff Regulations' recruitment 
procedures for a recently-established institution 
with a small staff. 
Staff 
11.7. The lists of posts contained in the general 
budget set an upper limit on the number of officials 11.9. In addition to staff in posts provided for in 
the budget, local and auxiliary staff and special 
advisers were also employed, divided among the 
institutions as shown in Table 11.3. At the Commis­
sion, the number of these staff in administration has 
risen by nearly 20%. 
Table 11.2 — Officials and temporary staff 
- 1981 1982 
Institution Posts Staff at 31 Difference Posts Staff at 31 , Difference 
authorized December (2)-(3) authorized December (5)-(6) 
(1) (2) (3) (4) (5) (6) (7) 
Parliament 2 927 2 409 518 2931 2 697 234 
Council 1 700 1 570 130 1 755 1 640 115 
Commission: 
(a) Administration, excluding Office 
8 906 659 for Official Publications 9 173 8 754 419 9 565 8 906 659 
(b) Office for Official Publications 284 255 29 288' 237 51 
(c) Research and investment: 36 — Direct action 2 260 2 206 54 2 260 2 224 36 
— Indirect action 493 439 54 487 448 39 
Court of Justice 452 390 62 474 424 50 
Court of Auditors 284 232 52 • 294 240 • 54 
Economic and Social Committee 374 361 13 378 377 1 
Total 17 947 16 616 1331 18 4320) 17 193 1 239 
(') This total does not include the 40 employees of the European Centre for the Development of Vocational Training and the 35 employees of 
the European Foundation for the Improvement of Living and Working Conditions. 
104 Official Journal of the European Communities 31. 12. 83 
Table 11.3 — Auxiliary staff, local staff and special advisers 
Institution 31 December 1981 31 December 1982 
Institution 
Auxiliary 
staff Local 
staff (') Special 
advisers Total Auxiliary 
staff Local 
staff (') Special 
advisers Total 
Parliament 142 • _ 142 57(2) 57 
Council 16 22 — 38 30 22 — 25 
Commission: 
— Administration 74 449 30 553 125 489 41 655 
— Research and investment 64 — — 64 44 — 44 
Court of Justice 37 6 1 44 8 8' 16 
Court of Auditors 7 6 — 13 8 5 13 
Economic and Social Committee 30 12 — 42 16(4) 12 — 28 
Total 370 495 31 896 261 536 41 838 
(') This total does not include local staff paid by extra-budgetary bodies (restaurants, creches, etc.). 
(2) 57 at 31 December 1982 but 206 during the financial year. 
(3) 3 at 31 December 1982 but 25 during the financial year. 
(4) 16 at 31 December 1982 but 41 during the financial year. 
General observations 
Supervision of invalidity pensions 
11.10. According to the provisions of Article 78 
and Annex VIII Article 13 of the Staff Regulations, 
an official aged less than sixty-five years, suffering 
from total permanent invalidity, is entitled to a pen­
sion. This pension is fixed at 70% of the basic salary 
of the official, where the invalidity arises from an accident at work, from an occupational disease or 
from a public-spirited act. Where the invalidity is 
due to some other cause, the pension is equal to the 
retirement pension to which the official would have 
been entitled at the age of 65 years if he had 
remained in the service until that age. Under no cir­
cumstances may the invalidity pension be less than 
120% of the minimum subsistence figure (BFR 
51 461, corresponding to the monthly salary at grade 
D4 step 1). Table 11.4, giving a breakdown of the 
total number of invalidity pensions, shows that 
those receiving a pension equal to 120% of the mini­
mum subsistence figure constitute the largest group 
(43%). 
Table 11.4 — Number of invalidity pensions granted to officials 
Institution Total number of 
invalidity 
pensions Pensions at the 
maximum rate of 
70% Pensions at the 
retirement 
pension rate Pensions at the min­
imum rate of 120% 
of the minimum 
subsistence figure 
(1) (2) = (3)+ (4)+ (5) (3) (4) (5) 
Parliament 
Council 
Commission 
Court of Justice 
Court of Auditors 
Economic and Social Committee 
Total 46 
31 
450 
6 
7 
540 (100 %) 21 
15 
133 
5 
2 
176 (33 %) 6 
3 
119 
1 
1 
130 (24 %) 19 
13 
198 
4 
234 (43 %) 
31. 12. 83 Official Journal of the European Communities 105 
11.11. Under Article 14 (8) of Annex VIII of the 
Staff Regulations, an official who ceases to satisfy 
the requirements for payment of the invalidity pen­
sion must be reinstated in a post corresponding to 
his career bracket. Article 15 of this Annex states 
that the institution may have an official drawing 
invalidity pension medically examined periodically 
to ascertain that he still satisfies the requirements for 
payment of the pension. 
11.12. Only the Economic and Social Committee 
makes use of this provision by carrying out biennial 
checks. The Commission, which until October 1982 
made no routine checks, is planning to introduce 
checks of this kind. The Parliament, the Council and 
the Court of Justice do not check whether the offi­
cials concerned still suffer from the invalidity. The 
Court of Auditors is not at present affected by this 
problem. 
11.13. The Court recommends that the institutions 
determine common rules for monitoring continuing 
eligibility for invalidity pensions. 
Grades 'ad personam' 
11.14. The institutions' lists of staff, contained in 
the budget, include several grades allocated to their 
holders 'ad personam 11.15. This feature has no basis in the Staff Regu­
lations, which make no provisions in this respect. 
The only statutory provision is Council Regulation 
(EEC, Euratom, ECSC) No 259/68 of 29 February 
1968 ('), adopted after the establishment of a single 
Commission and a single Council in 1967 in order 
to arrange for the necessary reduction in the number 
of posts, especially in administration, at the Com­
mission. A grade ad personam could be granted only 
to an official who accepted 'transfer to a post corres­
ponding to the career bracket immediately below 
that applicable to his grade'. The possibility was 
therefore very specific and was subject to a time 
limit. 
11.16. Between 1968 and 1982, the number of 
grades ad personam increased substantially in each 
institution, except the Court of Auditors and the 
Economic and Social Committee, which have no 
such grades. In all the number rose from 29 to 100, 
as shown in Table 11.5. 
11.17. Only a few of these grades owe their exist­
ence to Regulation No 259/68. The Staff Regula­
tions contain no provision for the creation of the 
other grades, whose sole existing basis is therefore 
the budget. The Court considers that this situation 
should be thoroughly reviewed. 
(') OJ No L 56, 4. 3. 1968. 
Table 11.5 — Number of grades ad personam in the institutions 
Institution 1968 1982 
Institution 
A1 A2 A3 Others Total A1 A2 A3 Others Total 
Parliament — — — — — — — 1 — 1 
Council 2 1 — — 3 6 7 5 . — 18 
Commission 7 2 9 — 18 21 27 21 2(') 71 
Court of Justice — 3 — 5(2) 8 — 9 1 — 10 
Court of Auditors — — — — — 
Economic and Social Com­
mittee — — —' — — — — — — — 
Total 9 6 9 5 29 27 43 28 2 100 
(') 1 BI grade and 1 B3 grade. 
(2) 1 LA3 grade and 4 B2 grades. 
106 Official Journal of the European Communities 31. 12. 83 
European Parliament 
11.18. The Parliament pays remunerations to 
around 2 700 officials and temporary staff. The cor­
responding expenditure amounted to about 130 mil­
lion ECU. 
Reimbursement of staff mission expenses 
11.19. Under the Staff Regulations, Annex VII, 
Section 3F, an official travelling on mission and 
holding an appropriate travel order is entitled on the 
one hand to reimbursement of actual travel expen­
ses and on the other, to a daily subsistence allow­
ance to cover all expenditure incurred by the official 
during the mission, except for hotel expenses for 
grades AI to A3, which are reimbursed according to 
the actual cost. The daily subsistence allowance, 
fixed in Belgian francs, varies in amount according 
to the country of destination. 
11.20. When missions are undertaken in a country, 
with a currency other than the Belgian franc, the 
currency conversion should be effected at the daily 
rates published in the Official Journal of the Euro­
pean Communities, in accordance with the principle 
laid down in Article 10 of the Financial Regulation 
of 21 December 1977 (')• of a rise in actual costs in that city. The total amount 
of allowances for exceptional costs in 1982 may be 
put at around BFR 35 million (776 000 ECU). 
11.23. The Parliament justifies this practice by 
reference to Article 13 (6) of Annex VII of the Staff 
Regulations. This Article does indeed authorize the 
reimbursement of additional costs, but only in cer­
tain specific instances and on presentation of sup­
porting documents. The additional amounts paid by 
the Parliament, however, take the form of a general 
fixed-rate allowance. In the Court's view, this prac­
tice has no basis in any provision of the Staff Regu­
lations and is contrary to the principle of equal 
treatment for Community staff. 
11.24. In short, the staff of the European Parlia­
ment receive two financial advantages simulta­
neously, frozen exchange rates and allowances for 
exceptional costs, and the institution should recon­
sider whether this situation is justifiable. By way of 
example, reimbursement by the Parliament of an 
official's travel from Luxembourg to Strasbourg for 
one day in November 1982 was 13,2% higher than 
by the other institutions for staff in Categories A 
and B and 18,5% higher for staff in Categories C 
and D. 
11.21. By decision of the Bureau of 9 March 1982, 
the exchange rates used at the European Parliament 
have been frozen at the level existing prior to the 
devaluation of the Belgian franc of 21 February 
1982. This measure, the financial effect of which 
may be valued at around BFR 5 million (111 000 
ECU) in 1982 to the advantage of the European Par­
liament staff, is contrary to the spirit of the Finan­
cial Regulation. Council 
11.25. The Council pays remunerations to around 
1 700 officials and temporary staff. The correspond­
ing expenditure amounted to about 60 million ECU. 
11.22. Despite the Court's previous criticisms (2), 
the Parliament continues to pay its staff an 'allow­
ance for exceptional costs' in addition to the statu­
tory daily allowance. This allowance has even been 
increased as from 1 November 1982 in the particular 
case of missions to Strasbourg, supposedly because 
(') OJ No L 356, 31. 12. 1977. 
(2) Paragraphs 8.14 to 8.16 of the annual report on the 
financial year 1970 (OJ No C 326, 31. 12. 1979); 
Paragraph 10.4 of the annual report on the financial 
year 1979 (OJ No C 342, 31.12. 1980); 
Paragraph 10.15 of the annual report on the financial 
year 1980 (OJ No C 344, 31, 12. 1981). Lack of an organization chart 
11.26. The Council has no full organization chart 
indicating the distribution of each category of staff 
by grade and administrative unit, as required by 
Article 12 of the Financial Regulation. There is thus 
the possibility of using budgetary posts according to 
the needs of officials' careers, especially transfers 
and promotions. The practice of granting internal 
promotions, for example, tends to reduce job mobil-
31. 12. 83 Official Journal of the European Communities 107 
ity, which is contrary to the Council's actual inten­
tions of not making the structures of the, institutions 
too rigid. 8 a.m. and 8.45 a.m., with the permission of the head 
of department, and finishes at 5 p.m. At least one 
hour is allowed for the lunch-break. The working 
week therefore varies between a maximum of 
40 hours and a minimum of 36 VA hours, since per­
mission to alter the time of starting work leads only 
to a reduction in working hours, and there is no pos­
sibility of making up lost time. 
Retroactive effect of promotions 
11.27. During the first six months of 1982, the 
Secretary-General of the Council, in his capacity as 
the appointing authority, granted 246 promotions, 
117 of which were within the same career bracket 
and 129 to ,a higher career bracket. All these promo­
tions were based on the same collective declaration 
of vacancy bearing a single date for the commence­
ment of the vacancies, 1 January 1982. In 183 cases, 
the date these promotions took effect was in every 
instance specified as 1 January 1981. For the other 
63 cases, later dates applied, depending upon the 
seniority of the staff concerned. 11.32. This situation, by establishing an arrange­
ment which is exceptional, discriminatory and left 
to the discretion of heads of department, conflicts 
with Article 55 of the Staff Regulations according to 
which the appointing authority alone may, after 
consulting the Staff Committee, determine the hours 
to be worked by certain groups of officials engaged 
on particular duties. Moreover, the reductions which 
are granted lead to overtime, since the time required 
for the Council's work cannot be shortened in the 
same way. 
11.28. Fixing the date at which most of the promo­
tions take effect as 1 January 1981 means that 
expenditure is being charged to the financial year 
1982 which relates mainly to the previous year. This 
practice constitutes a carrying-over of expenditure 
which is incompatible with the principle of the 
annual nature of the budget. It also gives rise to an 
artificial increase in staff expenditure. 
11.29. Furthermore, each official receives extra 
seniority in his new grade, which serves to bring for­
ward appreciably any future promotion. 
11.30. Promotions to higher career brackets should 
be made only on the basis of individual notices of 
vacancy, giving a detailed job description, issued as 
soon as the appointing authority has decided to fill 
the vacant post. They should not therefore take 
effect until after the completion of the procedure for 
filling the vacancy. Overtime remuneration 
11.33. Article 56 of the Staff Regulations and 
Annex VI thereof authorize the working of overtime, 
lay down rules for its application, in particular a 
maximum of 150 hours in any six months, and spe­
cify the conditions for compensatory leave or remu­
neration for such overtime, which apply to Catego­
ries C and D only. 
11.34. In order to apply these provisions, the 
Council has adopted internal rules which also pro­
vide for additional benefits: 
(a) all categories of staff are granted two days' com­
pensatory leave, in addition to annual leave, for 
work for a period exceeding 16 consecutive 
hours; 
(b) le&ve on health grounds is granted for all cate­
gories of staff who have worked overtime after 
10 p.m., and for staff in Categories A/LA and B 
who have worked overtime on a Saturday, a 
Sunday or a public holiday. 
Discriminatory working hours 
11.31. As agreed with staff representatives, the 
working day at the Council commences between 11.35. During the first six months of 1982, 42 000 
hours of overtime were recorded for officials in 
Categories C and D, which roughly corresponded to 
67 000 hours of compensatory leave or special remu-
108 Official Journal of the European Communities 31; 12. 83 
neration under the provisions of the Staff Regula­
tions. 
11.36. The Court notes that: Court of Auditors 
11.39. The Court of Auditors pays remunerations 
to around 250 officials and temporary staff. The cor­
responding expenditure amounted to about 12 mil­
lion ECU. 
(a) the Council has introduced rules derogating 
from the Staff Regulations, which forbid any 
kind of compensation for overtime worked by 
staff in Categories A/LA and B; 
(b) the joint benefits granted by the internal rules 
and the provisions of the Staff Regulations 
mean that officials and temporary staff in Cate­
gories C and D are entitled to compensatory 
leave which may amount to 4V2 hours for each 
hour of overtime worked; 
(c) in some cases, overtime is paid in accordance 
with the provisions of the Staff Regulations 
while still not preventing the granting of partial 
compensation under additional, non-statutory 
terms, in the form of leave on health grounds or 
extra annual leave. 
(d) in certain other cases concerning Category C 
and D staff, the statutory limit of 150 hours' 
overtime in any six months is not observed. Medical examination at recruitment 
11.40. An official of the Communities may only be 
appointed if he fulfils the conditions specified in 
Article 28 of the Staff Regulations, one of which 
(indent (e)) requires that he be physically fit to per­
form his duties. In order to ensure that this require­
ment is met, Article 33 provides that, before 
appointment, a candidate shall be medically exam­
ined by the institution's medical officer. Similar 
provisions, applying to the other categories of staff, 
are given in Articles 12 and 13 of the Conditions of 
Employment of Other Servants. 
11.41. In 1982 the Court appointed certain offi­
cials and recruited some temporary servants without 
first having them medically examined. In the event 
of the medical officer having reservations about or 
rejecting a candidate, this practice, which is contrary 
to the Staff Regulations, may lead to an awkward 
situation for the member of staff and cause extra 
expenditure for the institution. 
Financial control of remunerations 
11.37. For the monthly salaries, a global payment 
order is drawn up and forwarded, together with sup­
porting documents, to the Financial Controller for 
his approval. The latter finds himself obliged to 
check a considerable number of files which are sub­
mitted to him for the first time at this stage. His 
checks are therefore largely restricted to an exami­
nation of the figures. 
11.38. Although the principle of financial control 
is thus strictly speaking observed, doubts remain as 
to the quality of this control, especially as regards 
case-by-case examination to establish the rights of 
officials. Approval for the current month cannot 
validly be withheld, within the meaning of 
Article 35 of the Financial Regulation, since an 
operation has reached a virtually irreversible stage 
by the time it is referred to the Financial Controller. Length of temporary servants' contracts 
11.42. Under Article 8 of the Conditions of 
Employment of Other Servants, the contracts of 
temporary staff engaged to hold an established post 
on a temporary basis may not cover a period of 
more than three years in all, inclusive of any rene­
wal. On the expiry of their contracts such servants 
may be assigned to established posts in the institu­
tion only if they are appointed as officials. 
11.43. Contrary to these provisions, two temporary 
staff contracts for established posts, made at the 
beginning of 1981 after previous similar contracts, 
31. 12. 83 Official Journal of the European Communities 109 
remained in force until 31 December 1982, thus 
exceeding the maximum period of three years speci­
fied in the Staff Regulations ; on that date the situa­
tion was regularized by the termination of the con­
tracts in question. request of the personnel department. When this 
request is made, it has still to be signed by the 
authorizing officer and approved by the Finan­
cial Controller. The signature and approval are 
not added until after the remunerations have 
been paid by the accounting officer. 
Economic and Social Committee 
11.44. The Economic and Social Committee pays 
remunerations to around 375 officials and tempor­
ary staff. The corresponding expenditure amounted 
to about 14 million ECU. (d) The payment order, by which the authorizing 
officer should instruct the accounting officer to 
pay, is only signed by the authorizing officer 
after the accounting officer has made the pay­
ment. 
(e) The documents in support of the changes 
requested do not accompany the payment order. 
Neither the authorizing officer nor the Financial 
Controller is able to check the validity of the 
changes on the basis of the payment order pre­
sented. 
Procedures for management of 
remunerations 
11.45. In its provisions governing the implementa­
tion of the budget, the Financial Regulation esta­
blishes, under Title III, the principle that the author­
izing officers (who administer the appropriations), 
the accounting officers (who are responsible for 
operations of collection or payment) and the Finan­
cial Controller (who makes pre-payment audits) be 
different individuals. The Financial Regulation also 
lays down the degree and manner of intervention of 
these three authorities in the commitment, valida­
tion, authorization and payment of expenditure. The 
procedure thus established provides for a system of 
internal control, compliance with which is a condi­
tion of the regularity of expenditure. 
11.46. The following facts were noted 
Economic and Social Committee: at the 
(a) The authorizing officer does not make a propo­
sal for commitment of expenditure, as required 
by Article 32 of the Financial Regulation, for 
any of the expenditure making up the remunera­
tions. With the Financial Controller's assent, the 
final payments are charged directly to the 
budget appropriations. 
(b) Officials and temporary staff are informed of 
individual decisions relating to their salaries 
and other financial entitlements before these 
matters have been referred to the Financial 
Controller for approval. 
(c) Changes in monthly remunerations are made 
directly by the data processing department, 
which is part of the accounts department, at the 11.47. These practices, which do not comply with 
the provisions of the Financial Regulation, reverse 
the order in which the authorizing officer, the 
Financial Controller and the accounting officer 
intervene, and have the effect of confusing their res­
pective responsibilities. They do not fulfil the 
requirements of a good internal control system. 
Charging of expenditure on overtime 
11.48. Two amounts of'BFR 426 154 and BFR 
53 051 (10 292,23 ECU and 1 281,25 ECU) relating 
to overtime worked between January 1980 and 
October 1981 in the first case, and in November/ 
December 1981 in the second, were entered as payr 
ments against appropriations for the financial year 
1981. The payment order for BFR 426 154 (10 292,23 
ECU), which was paid in December 1981, was 
signed by the Financial Controller on 22 January 
1982 and by the authorizing officer on 26 January 
1982. The payment order for BFR 53 051 (1 281,25 
ECU) was signed by the accounting officer, the 
Financial Controller and the authorizing officer on 
the same day, 14 January 1982. The charging of this 
expenditure against 1981 appropriations had neces­
sitated a transfer of appropriations of 20 000 ECU. 
11.49. These operations give rise to the following 
comments: 
(a) Charging the remuneration for overtime worked 
over two years to a single financial year is con-
110 Official Journal of the European Communities 31. 12. 83 
trary to the principle of the annual nature of the 
budget. The fact that a single aggregate payment 
is made means that it is impossible to carry out 
regular checks on the utilization of budget 
appropriations. 
(b) The reimbursement in January 1982 of overtime 
worked in December 1981 is premature. Under 
Article 56 of the Staff Regulations, remunera­
tion may only be paid if the requirements of the 
service do not allow compensatory leave during 
the month following that in which the overtime 
was worked. 
(c) Charging this expenditure to the financial year 
1981 is contrary to the provisions of Article 5 of 
the Financial Regulation, according to which 
the expenditure of a financial year shall be 
entered in the accounts for that year on the basis 
of the expenditure for which authorization 
reached the Financial Controller not later than 
31 December. 
The Financial Controller therefore ought to have 
withheld his approval for the payment of these 
items of expenditure; indeed, he ought to have done this for all the expenditure on staff remuneration, 
because of the reversal of the order in which the 
authorizing officer, the Financial Controller and the 
accounting officer are supposed to intervene. 
Payment arrangements for the education 
allowance 
11.50. Under Article 62 and Annex VII, Articles 3 
and 16, of the Staff Regulations, the education 
allowance is paid as part of the monthly remunera­
tion and is equal to the costs incurred during the 
academic year. Under Article 38 of the Financial 
Regulation, it should be validated in accordance 
with collective statements drawn up by the adminis­
trative departments. 
11.51. Contrary to these provisions, the education 
allowance is paid once a year and covers the costs 
relating not to the academic year but to the current 
financial year. 
31. 12. 83 Official Journal of the European Communities 111 
CHAPTER 12 
Operational expenditure 
12.0. TABLE OF CONTENTS Paragraph referenc 
Introduction 12.1 to 12.5 
Summary of financial information 12.6 
Cleaning costs 12.7 to 12.26 
General 12.7 
Use of appropriations for purposes outside the scope of 
Article 203 of the budget 12.8 to 12.14 
Tendering procedure and award of contracts 12.15 to 12.18 
Use of indexation clauses for wage costs 12.19 
Frequency of cleaning and work schedules 12.20 to 12.25 
Need for standard contracts 12.26 
Parliament 12.27 to 12.33 
Purchase of a property in France 
Commission 12.34 to 12.50 
Overruling of the Financial Controller's refusal to grant 
approval 12.34 to 12.36 
Re-use of offices vacated by the computer centre 12.37 to 12.40 
Management and control of the libraries and of expendi­
ture on books, periodicals and newspapers 12.41 to 12.46 
Control of expenditure in the operation of the computer 
centre 12.47 to 12.50 
Court of Justice 12.51 to 12.55 
Organization of the library 12.51 to 12.53 
Application of the Financial Regulation in the manage­
ment of appropriations 12.54 and 12.55 
Introduction 
12.1. Operational expenditure covers the appro­
priations of Title 2 Part A of the budget of the Com­
mission and Titles 2 and 3 of the budgets of the 
other institutions. 12.2. Title 2 of the budget contains all expenditure 
necessary for the day-to-day operation of the Com­
munity institutions other than staff expenditure, 
which is under Title 1 (see Chapter 11 of this report). 
Title 2 also includes the expenses of meetings, stu­
dies, publications and information, and certain sub-
112 Official Journal of the European Communities 31. 12.83 
sidies, including those to external bodies (see Chap­
ter 13 of this report). 
12.3. Other operational expenditure consists 
mainly of expenditure under Title 3 of the budget of 
the European Parliament (interparliamentary insti­
tutions and committees provided for within the 
framework of conventions or associations, contribu­
tions to the secretarial expenses of the political groups, other political activities, contacts with the 
members of the parliaments of third countries) and 
under the same title of the budget of the Court of 
Justice (Court expenses). 
12.4. The operational expenditure of the Econo­
mic and Social Committee is included with staff 
expenditure in the total shown under Title 3 of the 
budget of the Council. 
Table 12.1 — Administrative expenditure: utilization of appropriations — by budget chapter and institution 
(Mio ECU) 
Budget chapter and institution 1982 budget 
Final 
appropria­
tions Commit­
ments Payments 
made Carry-overs 
to 1983 Carry-overs from 1981 
Appropria­
tions carried 
over from 
1981 Payments 
made 
(1) (2) (3) (4) (5) (6) (7) 
A. By budget chapter 
20 Immovable property investments, 
rental of buildings and associated 
expenditure 
21 Expenditure on data processing 
22 Movable property and associated 
expenditure 
23 Current administrative expenditure 
24 Entertainment and representation 
expenses 
25 Expenditure on formal and other 
meetings 
26 Expenditure on studies, surveys 
and consultations 
27 Expenditure on publishing and 
information 
28 Subsidies for balancing budgets (') 
29 Subsidies and financial contribu­
tions 
37 Expenditure relating to certain 
institutions ^nd bodies 
Total 115,0 110,1 91,0 19,1 11,4 9,0 
25,0 25,0 20,1 4,9 4,5 4,2 
19,4 18,1 12,2 5,9 6,1 5,0 
39,9 38,5 30,6 7,9 6,9 4,8 
1,5 1,4 1,1 0,3 0,3 0,3 
23,1 ' 21,6 19,4 2,2 1,2 0,9 
25,1 24,8 . 12,4 12,4 11,5 9,9 
52,8 48,8 29,4 19,4 16,5 11,6 
45,9 41,2 40,5 0,7 0,7 0,7 
5,4 4,8 4,1 0,7 0,7 0,4 
'24,4 24,4 6,5 17,9 1,1 0,6 
377,5 358,7 267,3 91,4 60,9 47,4 
B. By institution 
Parliament 
Council 
Commission (') 
Court of Justice 
Court of Auditors 
Economic and Social Committee 
Total 72,0 67,9 39,0 28,9 12,5 9,2 
35,4 32,2 24,8 7,4 9,3 5,3 
252,7 243,2 191,0 52,3 36,5 30,8 
6,7 6,3 4,9 1,4 1,1 1,0 
2,'7 2,3 1,6 0,7 0,5 0,4 
8,0 6,8 6,0 0,7 1,0 0,7 
377,5 358,7 267,3 91,4 60,9 47,4 
(') Including the administrative expenditure of the Office for Official Publications. 
31. 12. 83 Official Journal of the European Communities 113 
12.5. The Court's audit of operational expenditure 
included an examination of the use of appropria­
tions on cleaning expenses throughout the institu­
tions. In addition, expenditure on the Commission 
and Court of Justice libraries, expenditure by the 
Parliament and the Commission on immovable pro­
perty and construction, the Commission's computer 
centre and the management of appropriations by the 
Court of Justice were particular topics of inquiry., 
Summary of financial information 
12.6. Table 12.1 summarizes the appropriations 
available for operational expenditure in the finan­
cial year 1982 and their utilization by chapter and by 
institution. 
Cleaning costs 
General 
12.7. In 1982 appropriations of 15,1 million ECU 
were available under Article 203 of the budget: 
Cleaning and maintenance. Article 203 includes 
appropriations for the cleaning of buildings, for the 
special cleaning of fitted carpets, for special clean­
ing services of an occasional nature and for the cost 
of snow clearing and sanding or salting of icy sur­
faces. 12.10. At the Council one employee was paid out 
of cleaning appropriations but employed exclusively 
on other tasks in the cafeteria. Consequently, appro­
priations of more than BFR 150 000 (3 294 ECU) 
were used contrary to their intended purpose. 
12.11. In its Berlaymont building the Commission 
assigns one member of the cleaning staff every day 
exclusively to collecting used crockery. The cumu­
lative annual cost of the approximately 100 working 
hours per month involved is some BFR 360 000 
(7 905 ECU). 
12.12. At the Economic and Social Committee 
cleaning staff employed by the cleaning contractor 
were used exclusively as cloakroom attendants, at 
an annual cost of approximately BFR 1,4 million 
(30 743 ECU). In addition, some of the contractor's 
cleaning staff were employed in removal work. 
12.13. The above examples show that in many 
cases the appropriations of Article 203 of the budget 
have been used contrary to their intended purpose. 
12.14. The contracts entered into by the Council 
provide for a minimum number of hours' cleaning 
per day. If this minimum is not achieved, the clean­
ing firm must make up the time lost. At the time of 
the audit, the cleaning firm was over 5 000 hours in 
arrears, for which remuneration had already been 
paid. Calculated at an hourly wage of some BFR 
350 (around 8 ECU), this corresponds to approxi­
mately BFR 1 750 000 (38 428 ECU). Contracts' 
which oblige the institution to make such large adv­
ance payments are not compatible with sound 
financial management and should therefore be 
avoided. 
Tendering procedure and award of contracts 
Use of appropriations for purposes outside 
the scope of Article 203 of the budget 
12.8. Several institutions used cleaning appropria­
tions for purposes for which the appropriations of 
Article 203 are not intended. 
12.9. At the Parliament one employee who occa­
sionally served coffee, was paid from the appropria­
tions of Article 203. Another member of the clean­
ing staff collected crockery left by staff in their 
offices, a service which entails expenditure of more 
than BFR 310 000 a year (6 807 ECU). 12.15. The institutions do not have their own 
cleaning staff, but contract the work out to special­
ized firms. The contracts are usually for a three-year 
period. Contracts are, with few exceptions, awarded 
after an invitation to tender (Article 50 of the Finan­
cial Regulation ('))• Before conclusion of the con­
tract, the tenders are submitted for the opinion of 
the Advisory Committee on procurements and con­
tracts (Article 54 of the Financial Regulation). The 
Parliament, Commission, Court of Justice and 
(') OJ No L 356, 31. 12. 1977. 
\ 
114 Official Journal of the European Communities 31.12.83 
Court of Auditors have in all cases to date obtained 
tenders and submitted them to the Advisory Com­
mittee. 
12.16. The Council has not invited tenders for the 
cleaning of the Charlemagne complex and the 
Joseph II building since 1976. Consideration should 
be given to returning to use of the tendering proce­
dure. 
12.17. Following an invitation to tender, the Court 
of Justice failed to award the contract to the lowest 
bidder, although this had been recommended by the 
Advisory Committee on procurements and con­
tracts. Instead the Court of Justice entered into 
negotiations with a firm whose price was considera­
bly higher than the lowest bid and which had for 
years been cleaning the Court of Justice's premises. 
The contract was finally awarded to this firm, 
although the annual cost after negotiations was still 
LFR 327 000 (7 180 ECU) above the lowest bid. The 
Court of Justice justifies its decision by reference to 
the reliability of the firm chosen. This argument on 
its own i§ unconvincing. 
12.18. The Economic and Social Committee has 
not invited tenders for 15 years. This procedure 
should above all have been followed in 1973, when 
it moved into new premises. therefore be based on considerations of economy 
and efficiency. Thus account must be taken of 
rooms temporarily unoccupied and public holidays. 
At the different institutions, however, cleaning ser­
vices are performed at different intervals, often-
without apparent reason in comparable cases. Con­
siderable differences were found, for example, in 
the case of window-cleaning. Thus in the same off­
ice complex in Luxembourg the windows of the Par­
liament building were cleaned between three and six 
times a year, those of the Commission building six 
times a year and those of the Court of Justice twelve 
times a year. 
12.21. The Court found that the Commission has 
its fitted carpets cleaned more frequently than other 
institutions. Whereas the latter have their carpets 
specially cleaned only once every 18 months or as 
the need arises, in many buildings of the Commis­
sion this is undertaken twice a year under the terms 
of the contract. 
! 
12.22. For almost the whole of 1982 the Commis­
sion unnecessarily paid for the cleaning of part of 
the former computer centre in Luxembourg that is 
used by it, as the building stood partially empty (cf. 
paragraph 12.39). Only in December 1982 did the 
Commission conclude an agreement reducing the 
amount of cleaning. 
Use of indexation clauses for wage costs 
12.19. To prevent the cleaning firms from includ­
ing in their calculations at the outset the inevitable 
wage rises that will occur in the course of the con­
tract, most of the agreements with the undertakings 
include indexation clauses, whereby the proportion 
of cleaning costs represented by wages is pegged to 
the general wage trend. As wages account for some 
80% of cleaning costs, only that proportion of the 
costs should be index-linked. This principle was not 
observed by the Council, the Court of Auditors, and 
the Economic and Social Committee. These institu­
tions should therefore at the next opportunity res­
trict indexation to the wages element. 12.23. The work schedule used by the Court of 
Justice for its contractual cleaning services contains 
an unusually large number of items. The frequency 
of cleaning also appears too high: for example, 
waste-paper baskets and ash-trays are required to be 
cleaned 301 times a year, which is far above the 
number of working days in the year. No provision is 
made for reduction during Court vacations or holi­
day periods. 
12.24. The cleaning contract of the Court of Audi­
tors makes no provision for rebates for parts of its 
premises that are temporarily unoccupied. Thus ser­
vices were provided on a scale that was not alto­
gether necessary. 
Frequency of cleaning and work schedules 
12.20. Cleaning costs are especially influenced by 
the frequency of the cleaning rounds, which must 12.25. The above examples show that it should 
have been possible in a number of cases to reduce 
the frequency tof cleaning operations and improve 
the work schedules. 
31! 12. 83 Official Journal of the European Communities 115 
Need for standard contracts 
12.26. Since the contracts differ considerably in 
their terms, it would appear advisable to formulate a 
standard contract, which could then be adapted to 
the particular conditions of the individual institu­
tions. This contract should include in particular a 
uniform work schedule, rules for indexation, the fre­
quency of cleaning operations and rebate provisions 
for periods when the rooms are not being used or 
are only partly used. opinion from the Committee on Youth, Culture, 
Education, Information and Sport, which recom­
mended that the house be preserved as a family 
dwelling. 
12.30. The Bureau of the Parliament took the final 
decision to purchase in April 1982 although it did 
not have the necessary details concerning the value 
of the property. At the time, only the French public 
land authority's estimate of probable worth — FF 
1,8 million (274 600 ECU) — was available. 
Parliament 
Purchase of a property in France 
12.27. In 1982, the European Parliament acquired 
for a sum of FF 1,8 million (274 600 ECU) a pro­
perty at Bazoches sur Guyonne, about 50 km from 
Paris, consisting of a nine-room house with a floor 
area of approximately 320 m2 and a surrounding 
area of approximately 10 000 m2, which cannot be 
used for building. The reason for the purchase was a 
suitable offer and the fact that Jean Monnet had 
once lived in the house. 
12.28. The appropriations for the purchase were 
originally entered under Chapter 100 (Provisional 
appropriations) of the Parliament's budget for 1981. 
Reference was made to this in the Remarks. By a 
decision of the President of the European Parlia­
ment of 15 December 1981, 350 000 ECU were 
transferred from Chapter 100 to Chapter 20 
(Immovable property investments, rental of build­
ings and associated expenditure) and entered under 
Article 206 (Acquisition of immovable property). 
Commitment of 350 000 ECU likewise took place 
on 15 December 1981. This sum was automatically 
carried over to the financial year 1982. Out of the 
appropriations a sum of 277 652 ECU was disbursed 
on 2 December 1982 (purchase price including 
notarial fees). 
12.29. At the time the purchase was being nego­
tiated, the Bureau of the European Parliament had 
no clear idea of the future use of the property. When 
the final decision to purchase the house was made, 
the Bureau of the Parliament merely obtained an 12.31. The house was in very poor condition. Not 
until 21 June 1982 did the Parliament administra­
tion present an estimate of the cost of the most 
urgent repairs (the roof, heating system and sanitary 
installations). This estimate was approximately FF 
700 000 (106 790 ECU). The running costs have not 
been calculated in full. 
13.32. The house remains unused. The establish­
ment of a museum could not be considered, as it 
contains no items to commemorate the former 
owner. Use as a study centre or meeting place would 
not be possible without substantial expenditure, in 
view of its original purpose as a dwelling-house. 
12.33. The Court notes that the reasons for the pur­
chase of this property are not clear nor is the pur­
pose for which it will be used in future. 
Commission 
Overruling of the Financial Controller's 
refusal to grant approval 
12.34. In 1981 and 1982 the Commission con­
structed a building to house its delegation in Can­
berra. An official instructed the delegation on 23 
November 1981 to begin with the work, although a 
proposal of 9 September 1981 for commitment of 
526 000 ECU to cover the cost of construction had 
not yet received the approval of the Financial Con­
troller. There was no written contract. 
12.35. On 15 December 1981, the Financial Con­
troller finally refused approval on the above 
116 Official Journal of the European Communities 31. 12. 83 
grounds. On 26 January 1982, the Commission, 
which had already entered into a legal commitment 
with the Australian contractor, overruled that deci­
sion. Two of the reasons given by it were the favour­
able opinion on the contract of the Advisory Com­
mittee on procurements and contracts and the avail­
ability of the requisite appropriations in 1981. 
12.36. The Court once again feels bound to point 
out that contracts with third parties are only permis­
sible when the proposal for commitment has been 
approved. must the full rent continue to be paid, but the other 
costs related to the building have hardly changed 
since the departure of the computer centre. Only in 
the case of the cleaning costs was a reduction from 
BFR 139 271 (3 058 ECU) to BFR 81 176 (1 782 
ECU) per month negotiated with the cleaning firm 
as from December 1982, after the audit visit of the 
Court of Auditors had been announced in October 
1982 (cf. paragraph 12.22). Even the electricity costs 
remain relatively high, since the Commission has a 
contractual duty to the owner to maintain adequate 
air-conditioning (one third of the normal level) in 
the empty machine-room, in order to prevent dam­
age to the building. 
Re-use of offices vacated by the computer 
centre 
12.37. Until March of 1982 the Commission's 
computer centre in Luxembourg was accommodated 
in a special-purpose five-storey building with a total 
surface area of 9 097 m2 (including garages), before 
being transferred to the Jean Monnet building. The 
annual rent for the building that housed the old 
computer centre is LFR 26,6 million (584 109 ECU). 
The lease, signed on 29 July 1974, is for 25 years 
with an option to terminate earlier.^ In 1982 there 
were additional costs of approximately LFR 13,5 
million (296 446 ECU), including LFR 6,1 million 
(133 950 ECU) for surveillance, LFR 4,7 million 
(103 207 ECU) for electricity and LFR 1,8 million 
(39 526 ECU) for cleaning. By June of 1982 the of­
fices had almost entirely been vacated. 
12.38. At the beginning of 1983 one floor was used 
by the staff of the Commission's Sickness Insurance 
Scheme and occupied by temporary staff from the 
Commission. In addition, material for data process­
ing was stored in part of the basement. Otherwise 
the building was empty. 
12.39. Because of its special design, the building 
can only be fully used by departments or auxiliary 
departments of more than 130 persons which are 
equipped with extensive facilities for data process­
ing. At the time of audit in February 1983, the future 
purpose of the building had still not been finally 
decided. The various possibilities envisaged (use 
together with another institution, use by a Directo­
rate-General with simultaneous extension of the 
building) would probably not solve the problem 
either quickly or economically. In the meantime, 
considerable costs are being incurred, since not only 12.40. The Court acknowledges that the special 
features of the building do not allow full use of the 
premises for normal purposes. It is precisely for this 
reason that the Commission should have planned a 
new use for the premises before the departure of the 
computer centre, which was foreseeable long in adv­
ance. An economic solution to the problem should 
now be found without delay, and termination of the 
lease should be one of the possibilities considered. 
Management and control of the libraries 
and of expenditure on books, periodicals and 
newspapers 
12.41. The Commission has a central library in 
Brussels and one in Luxembourg and a number of 
specialized libraries in the individual Directorates-
General. In 1982 1 475 000 ECU were entered under 
Article 225 for documentation and libraries. The 
Commission, however, applied 1 733 745 ECU to 
those purposes, including only 1 466 745 ECU from 
Article 225. The extra expenditure was booked 
under Chapter 75: Information market and innova­
tion (235 000 ECU) and Items 6480: Radiation pro­
tection (22 000 ECU) and 6481: Public health stu­
dies and measures (10 000 ECU). Expenditure for 
documentation and libraries should in future be 
charged to Article 225 only. 
12.42. The Commission's central library in Brus­
sels has very little latitude for acquiring new works, 
as 958 692 ECU — 86,6% of the appropriations 
provided — are committed to current subscriptions 
for continuing series, repeat orders, newspapers and 
periodicals. In 1982 some 219 000 ECU alone was 
spent on the 1 246 individual newspaper subscrip-
31. 12. 83 Official Journal of the European Communities 117 
tions (including 1 000 individual subscriptions to 
daily newspapers). The subscription to one daily 
newspaper, for example, was for 110 copies, to a 
second for 93 copies and to a third for 46 copies. 
296 000 ECU was spent on subscriptions to some 
3 400 periodicals. The necessity for so many sub­
scriptions should be re-examined, bearing in mind 
that the interests of the service should be the sole 
criterion for a subscription. (c) the exchange of periodicals and works with 
other organizations (in particular statistical off­
ices) is not organized efficiently and lacks ade­
quate supervision, 
(d) no stocktaking is carried out at the library and 
no stock-lists made. 
12.43. In 1982 the reading rooms of the library in 
Brussels were used by some 80 000 persons, includ­
ing approximately 40 000 who are not employed in 
the institutions. No fee is payable by these outside 
users. The question may be raised whether the Com­
mission library should be open to all outside users. 
In view of the high expenditure on the library and 
the services provided (automated documentation 
search, approximately 300 000 free photocopies a 
year) the possibility should be examined of requir­
ing from outside users some contribution to the cost 
of making copies. 
12.44. Between 1958 and 1981 the central library in 
Brussels acquired approximately 336 000 works. In 
addition, between 1959 and 1981 some 148 000 per­
iodicals were bound. There are no routine checks of 
the stock or the long-term loans. Stock control 
through stock-lists, checks on loans and an orderly 
sorting system are necessary. 
12.45. At the Commission in Luxembourg the 
appropriations are managed not only by the library 
itself but also by Directorates-General V and XIII. 
In 73 cases several departments subscribed to the 
same periodicals. To prevent such overlapping in 
future, especially in subscription to periodicals, it 
would seem advisable in Luxembourg, where the 
Commission administration is not too complex for 
this purpose, to entrust management of the appro­
priations entirely to the library. 
12.46. The following are some of the shortcpmings 
apparent in the operation of the central library in 
Luxembourg: 
(a) The suppliers of periodicals are not selected on 
the basis of tender, 
(b) the acquisition policy is not always clear and 
should be restricted to works required for the 
activities of the Commission in Luxembourg, Control of expenditure in the operation of 
the computer centre 
12.47. The Commission runs a central computer 
centre in Luxembourg. At the end of 1982, 88 Com­
mission officials were employed there, and 38 out­
side staff on service contracts. A total of approxi­
mately BFR 110 million (2 415 490 ECU) was 
charged to Chapter 21 of the budget in 1982 for out­
side staff. The Commission calculates that outside 
staff are approximately 40% more expensive to 
employ (cf. Rapport annuel de l'informatique de la 
Commission 1982, Part A, Chapter 2, page 4). The 
Court wonders why, in the light of the Commis­
sion's own findings, it has not yet taken steps to 
reduce these costs. 
12.48. In more than 40 cases the management 
failed to ask staff terminating their service at the 
centre to return their magnetic entry card or to block 
the code numbers of these cards. The rules for the 
distribution of the cards are also not clear. The 
Commission should take the appropriate steps with­
out delay to ensure proper use of the magnetic 
cards. 
12.49. No check has ever been made to date as to 
the completeness of the stock of tapes. To enable 
stock control of the magnetic tape library, an inven­
tory would need to be taken. 
12.50. The computer centre has approximately 
69 000 magnetic tapes with a basic value of some 
BFR 30 million (658 770 ECU). In a very large num­
ber of cases neither the computer centre nor the 
users know whether a tape is still needed. A proce­
dure should therefore be introduced for erasing 
obsolete data, so that the tapes could then be 
re-used. 
\ 
118 Official Journal of the European Communities 31. 12. 83 
Court of Justice occupied. The Court of Justice should take steps to 
fill these posts as soon as possible. 
Organization of the library 
12.51. No invitations to tender were made for 
book-binding work worth 15 540 ECU. The provi­
sions of the Financial Regulation (Article 50 ff.) 
should in future be followed. 
12.52. Although the library is also open to the gen­
eral public, it lacks the necessary equipment, espe­
cially catalogues. The stock control and annual 
stock-taking required by Article 70 of the library's 
regulations of 19 February 1975 were not carried out 
at all in 1980 and 1981. The 1982 controls had still 
not been completed by the end of that year. The 
regulations should in future be followed. 
12.53. The running of the library was hampered by 
a shortage of staff, as two Category A posts and one 
Category B post in the organization plan were not Application of the Financial Regulation in 
the management of appropriations 
12.54. The management of appropriations at the 
Court of Justice in the financial year 1982 was again 
contrary to the provisions of the Financial Regula­
tion. In particular, there is — contrary to Article 19 
of the Financial Regulation — no Financial Con­
troller, as the Court pointed out in its annual reports 
on the financial years 1978 and 1980 ('). In consequ­
ence, the essential principles of Articles 32 to 45 of 
the Financial Regulation (separation of functions) 
are not all observed. 
12.55. The Court would point out that the manage­
ment 9f appropriations may not depart from the 
procedure laid down in the Financial Regulation. 
Accordingly, it is necessary both to appoint a Finan­
cial Controller and to alter the present management 
of appropriations so as to comply with the provi­
sions of the Financial Regulation. 
(') OJ No C 326, 31. 12. 1979, p. 142f., paragraph 9.3; 
OJ No C 344, 31. 12. 1981, p. 18, paragraph 1.26(p). 
31. 12. 83 Official Journal of the European Communities 119 
CHAPTER 13 
External bodies and other subsidies 
13.0. TABLE OF CONTENTS Paragraph reference 
Introduction 13.1 to 13.4 
Euratom Supply Agency 13.5 and 13.6 
Berlin Centre and Dublin Foundation 13.7 to 13.9 
Revision of Financial Regulations 13.8 
Results of the Court's audit . 13.9 
European Schools 13.10 to 13.16 
Follow-up of earlier observations 13.11 
Observations on the 1981 accounts 13.12 to 13.15 
Conclusions 13.16 
Other subsidies 13.17 to 13.23 
Observations on the supervision by the Commission 13.19 and 13.20 
Observations concerning specific beneficiaries 13.21 to 13.23 
Introduction 
13.1. The Court is charged with the audit of the 
accounts of all bodies set up by the European Com­
munities, insofar as the relevant constituent instru­
ment does not preclude this audit. Accordingly, 
annual audits are carried out in the following bod­
ies: 
(a) Euratom Supply Agency; 
(b) European Centre for the Development of Voca­
tional Training (Berlin Centre); 
(c) European Foundation for the Improvement of 
Living and Working Conditions (Dublin Foun­
dation); 
(d) European Schools,and the Office of the Board 
of Governors of the European Schools. pective governing and discharge authorities but are 
not published by the Court. The present chapter 
contains a summary of the most important points 
arising in these reports. 
13.3. This chapter also contains follow-up observa­
tions relating to subsidies, paid under Titles 2 and 6 
of the Commission's budget, which were dealt with 
in the annual report on the financial year 1980 (')• 
13.4. On 29 March 1982 the Council of Ministers 
adopted an Agreement establishing the European 
Foundation in Paris. The Agreement includes provi­
sion for audit by the Court and this will be under­
taken in due course. 
13.2. A separate report is prepared by the Court on 
each of these bodies. The reports are sent to the res- (') OJ No C 344, 31. 12. 1981. 
120 Official Journal of the European Communities 31. 12. 83 
Euratom Supply Agency 
13.5. In 1982 the appropriations available were 1,2 
million ECU of which 1,1 million ECU were spent 
and 0,1 million ECU were cancelled. 
13.6. The Court's previous reports on the Agency 
have drawn attention to a number of matters con­
nected with its financial structure and management, 
particularly the use and balance sheet presentation 
of the paid-up capital. The report for 1982 raises the 
additional question of the extent to which the finan­
cial autonomy required by the Agency's Statutes is a 
reality. The recent adoption by the Commission of a 
proposal to amend Chapter VI of the Euratom 
Treaty may lead to a resolution of these matters.,The 
Court is pleased to note improvements in the 
accounting presentation of the Agency's 1982 bal­
ance sheet. , 
Berlin Centre and Dublin Foundation 
13.7. For 1982 available appropriations totalled 4,7 
million ECU for the Berlin Centre and 4,2 million 
ECU for the Dublin Foundation. Payments were 3,9 
and 3,2 million ECU respectively, 0,6 and 0,9 mil­
lion ECU were carried over to 1983 and 0,2 and 0,1 
million ECU were cancelled. The management of 
budgetary funds is considered to be satisfactory. 
Revision of Financial Regulations 
13.8. During 1982 the Court considered four pro­
posed Council Regulations amending the financial 
provisions governing both organizations. In a for­
mal opinion (') it suggested that such revisions 
should be timed to coincide with the triennial 
re-examination of the Financial Regulation (2) 
applicable to the general budget of the European 
Communities which was then in progress. It also 
urged, inter alia, that the timetable and procedure 
for the audit reports should be brought into line 
with those of the general Financial Regulation. Results of the Court's audit 
13.9. A financial audit of the accounts and finan­
cial systems of both organizations was carried out. 
Financial audits are designed to verify the accuracy 
of the revenue and expenditure statements and the 
legality and regularity of the transactions recorded 
therein. Particular attention was paid to expendi­
ture on studies and contracts. In general the 
accounts were considered to be a true and fair 
reflection of the position. However, a number of 
weaknesses were found in the administrative and 
financial procedures, including those relating to the 
award and execution of study and research contracts 
and the dissemination of their results. These have 
been drawn to the attention of the governing bodies. 
European Schools 
13.10. During 1982 the Court carried out a finan­
cial audit of the accounts of the European Schools (3) 
for 1981. A preliminary report was issued in Decem­
ber 1982 and the final version was sent to the 
Schools, the Board of Governors, the Commission, 
the Council and the Parliament in May 1983. 
Follow-up of earlier observations 
13.11. The Court's suggestion that an internal aud­
itor be appointed for all the Schools was imple­
mented in September 1982. Computerization of the 
payroll of all the Schools should be completed by 
the end of 1983, and the salary system for teachers 
to which the Court has previously referred is being 
further examined in its current audit. 
Observations on the 1981 accounts 
13.12. In 1981 available appropriations were 52,7 
million ECU of which 51,3 million ECU were spent, 
(') OJ No C 32.4, 10. 12. 1982. 
(2) OJ No L 356, 31. 12. 1977. (3) The nine European Schools are: Bergen, Brussels I, 
Brussels II, Culham, Karlsruhe, Luxembourg, Mol, 
Munich and Varese. 
31. 12. 83 Official Journal of the European Communities 121 
1,2 million ECU were cancelled and 0,2 million 
ECU were carried over to 1982 ('). 
13.13. The Court's report criticized a lack of clarity 
and a diversity of approach between the different 
Schools in the presentation of the accounts with 
particular reference to content, lay-out, use of 
explanatory notes and inclusion of extra-budgetary 
items. It also expressed concern at the impossibility 
of drawing comparisons between the balance sheets 
of the nine Schools, partly because of this inconsis­
tent approach, but also because the five Schools not 
normally carrying out transactions in Belgian francs 
convert their balance sheets into Belgian francs at 
the rate prevailing 18 months previously. The Court 
recommended that the Board of Governors should 
lay down clear guidelines for the presentation of 
accounts and that the balance sheets should be con­
verted into Belgian francs at the rate applicable on 
31 December of the financial year in question. in expenditure falling outside the scope of the 
Financial Regulation. The Court considered that 
such problems pointed to a need for detailed budget 
implementation measures to be drawn up and it is 
pleased to note that the internal auditor of the Euro­
pean Schools has taken an initiative in this direc­
tion. 
Conclusions 
13.16. While many of its past criticisms continue 
to be valid, the Court recognizes that the majority of 
Schools administer an exceedingly complex set of 
financial rules and procedures in a satisfactory man­
ner. 
Other subsidies 
13.14. The Financial Regulation of the Schools of 
14 April 1962 provides for a reserve fund not 
exceeding 10% of budgetary appropriations. At 31 
December 1981 such funds totalled BFR 128,3 mil­
lion and it was stated that they had been used 
mainly to ease cash flow problems created by delays 
in the transmission of the Commission contributions 
to the Schools. The Court's report questioned the 
need for reserve funds of this magnitude and reiter­
ated the suggestions which it made in its 1978 and 
1979 reports that the Board of Governors should 
consider the advantages of holding funds centrally. 
It has been informed that the matter is under active 
consideration. 13.17. The Court examined the action taken by the 
Commission in response to the Court's comments in 
paragraph 12.34(b) of its annual report on the 
financial year 1980 on subsidies made to organiza­
tions under Articles 290 to 293, 299 and 254 and 
Items 6420 and 6421 of the 1982 budget. 
13.18. In 1982 the appropriations available on 
these budget lines were 2,8 million ECU of which 
2,5 million ECU were disbursed, and 0,3 million 
ECU were carried over to 1983. Table 13.1 sets out 
the grants approved by the Commission in 1982, 
and shows that, while there are a few substantial 
grants to individual organizations (International 
Press Club, Youth Forum and the European Trade 
Union Institute), most of the grants made were for 
small amounts. 
13.15. The report commented on a lack of preci­
sion in the Financial Regulation concerning 'com­
mitment and payment procedures which had 
resulted in a diversity of practice among the differ­
ent Schools. It also expressed concern at the extent 
of the use of extra-budgetary accounts which result Observations on the supervision by the 
Commission 
(') Exchange rate used: 1 ECU = BFR 40,2554 (accounts 
are published in Belgian francs). 13.19. In several respects, the various Commission 
services involved have improved their procedures 
for managing appropriations for subsidies. Those 
services now apply systematically a better written 
procedure by which the Commission approves sub-
122 Official Journal of the European Communities 31. 12. 83 
Table 13..1 — Subsidies approved by the Commission in 1982 (') 
Number of subsidies 
Budget article/item Total amount approved (ECU) Budget article/item Total amount approved (ECU) Budget article/item 
Total of which above 
10 000 ECU 
290 Subsidies to higher education institutions 29 3 195 750 
291 Subsidies to European movements 31 5 289 750 
292 Participation in the organization of congresses and 
occasional meetings 28 1 83 250 
293 Subsidies for certain activities of non-governmental 
organizations pursuing humanitarian aims and 
promoting human rights 8 \ 50 200 000 
299 Other subsidies 4 2 300 000(3) 
254 Youth Forum 1 1 480 000 
6420 European Trade Union Institute 1 1 825 000 
6421 Aid to European organizations of small and 
medium-sized undertakings for the provision of 
training and information for their representatives on 
the subject of European affairs 8 8 239 875 
(') Subsidies approved by the Commission concerning appropriations of 1982 budget year. 
(2) One subsidy of 130 000 ECU was made to a coordinating committee which distributed it to 29 separate organizations. 
(3) Of which 100 000 ECU for the International Press Centre and 186 500 ECU for 'Journalistes en Europe'. 
sidy requests, and a strengthened undertaking is 
signed by the beneficiary which includes provision 
for audit by the Commission and the Court. Several 
cases were noted where payment of a grant was 
delayed until such time as the beneficiary provided 
a satisfactory financial statement on a previous 
grant. 
13.20. In most cases, the beneficiaries submit ade­
quate financial statements of the use to which the 
grant has been put. The Commission does not, how­
ever, systematically file evidence that it has 
reviewed the financial statements submitted. The 
Court reiterates its comment in paragraph 12.34(b) 
of its annual report on the financial year 1980 that 
the Commission's services should record their 
review of financial information. A standard check 
list of points which should be checked on each 
financial statement should be completed on receipt 
of each statement and then filed. 
Observations concerning specific 
beneficiaries 
13.21. The Commission's services had taken spe­
cific action on all of the points concerning the indi­vidual beneficiaries mentioned previously by the 
Court. In some cases they have succeeded in obtain­
ing the necessary improvements, in others it has 
proved more difficult. The European Movement 
now submits regularly a complete set of accounts 
which are certified by an internal audit committee 
and the Commission is pressing for an external aud­
itor to be appointed. The Youth Forum's accounting 
systems have been improved and their operation is 
regularly checked by the Commission. There have 
been no additions (other than interest) to the salary 
reserve of the Forum since 1980. 
13.22. The Commission informed the European 
Trade Union Institute that it would not finance any 
increases in its salary reserve. No addition (other 
than interest) was made to it in 1981, but in 1982 the 
Institute added BFR 750 000 from other sources 
over and above interest accrued. The claim of the 
Institute that it was entitled to use revenue from 
sources other than the Commission in this way is 
not acceptable: the revenue of the Institute is not 
earmarked to particular expenditure. The Court con­
siders that the Commission should either take steps 
to recover the subsidy in respect of this increase in 
the reserve, or reduce its subvention in 1983 corres­
pondingly. 
31. 12. 83 Official Journal of the European Communities 123 
13.23. The least satisfactory situation concerns the 
International Press Centre. The deficit of the res­
taurant increased significantly in 1982, and despite 
discussions no progress has been made since 1980 in 
reducing the excessively high rent paid for the prem­
ises. The Court recognizes that the Commission has tried to resolve these problems with the Centre, but 
considers that very firm action is still required. The 
Court notes that, on the Commission's initiative, the 
Centre appointed an external auditor for 1981 and 
.1982. 
124 Official Journal of the European Communities 31. 12. 83 
CHAPTER 14 
Loans, borrowings and interest rate subsidies 
Paragraph reference 
14.1 to 14.5 
14.6 and 14.7 
14.8 to 14.18 
14.10 to 14.18 
14.19 to 14.26 
14.20 and 14.21 
14.22 to 14.26 14.0. TABLE OF CONTENTS 
Introduction 
Summary of financial information 
Observations on the financial information 
Financial statement and expenditure and revenue 
account 
Observations on the accounting procedures 
Conformity with generally accepted accounting princi­
ples 
Internal control on the validity of the figures 
Introduction 
14.1. This chapter deals with three Community 
loan mechanisms: 
(a) Balance of Payments (BP) loans; 
(b) European Atomic Energy Community (Eura-
tom) loans; 
(c) New Community Instrument (NCI) loans. 
14.2. This chapter also deals with interest rate sub­
sidies: 
(a) European Monetary System (EMS) interest rate 
subsidies, which may be granted on NCI loans, 
but also on loans by the European Investment 
Bank (EIB); 
(b) interest rate subsidies granted on the 'earth­
quake1 loans made to Italy and Greece. 
14.3. Table 14.1 summarizes the main features of 
these mechanisms, which were the subject of a 
> special report (') by the Court. The special report examined in particular the decision-making proce­
dures, the financial management arrangements and 
external audit responsibilities of the mechanisms, 
especially in relation to the EIB. 
14.4. These three loan mechanisms are financed 
not from the budget but by borrowings contracted 
by the Commission on behalf of the Community, 
whereas the interest rate subsidies are entered under 
Chapters 52 (Measures under the European Mone­
tary System to reduce economic disparities in the 
Community) and 69 (Aid to disaster victims in the 
Community) of the general budget (2). 
14.5. Under the cooperation agreements made 
between the EIB and the Commission, the EIB is 
responsible for administering the Euratom and NCI 
loans, and also for pre-selecting projects that might 
qualify for interest rate subsidies and submitting 
them to the Commission for a decision. These coop­
eration agreements were commented on by the 
Court in its special report ('). The Commission 
(') OJ No C 319, 6. 12. 1982. (2) OJ No L 31, 8. 2. 1982. 
31. 12. 83 Official Journal of the European Communities 125 
Table 14.1 — Objectives and utilization of the various mechanisms at 31 December 1982 
(Mio ECU) 
Borrowing Loans granted within this limit 
Balance 
Mechanism Objective ceiling 
Disbursed Not disbursed available 
O (2) (3) (4) = 
(') —(2) —(3) 
NCI I: 
To promote investment in the infra­
structure, energy and industrial sectors 1 000 797,4 — 202,6 
NCI II: 
To finance projects in the fields of 
energy, infrastructure and the develop­
ment of small and medium-sized 
enterprises 1 000 226,9 318,3 454,8 
NCI NCI Italian earthquake: 
To reconstruct the means of produc­
tion and the economic and social 
infrastructure in the areas affected by 
the 1980 earthquake 1 000 (!) 481,8 32,1 486,1 
NCI Greek earthquake: 
To reconstruct the means of produc­
tion and the economic and social 
infrastructure in the areas affected by 
the 1981 earthquake 80 49,4 30,6 — 
Euratom To encourage the development of nuclear 
energy for the production of electricity 2 000 1 225 — 775 
Balance of pay­
ments To alleviate balance-of-payments diffi­
culties in the Member States 3 000 Mio 
USD(2) 
6 000 Mio 
ECU 2 547,8 Mio 
USD(2) 
— -0 
6 000 Mio 
ECU 
(') Including the EIB loans for the same purpose. 
(2) Capital and interest. 
(3) Balance not available because of the expiry of the measure. 
stated, in its replies of 2 July 1982, that solutions 
were being prepared with the EIB. The Court has to 
date received no further information (see para­
graph 1.11). the less prosperous Member States participating in 
the European Monetary System, and the annual ser­
vicing of the interest rate subsidies on the special 
loans to Greece and Italy, following the earthquakes 
in 1980 and 1981. 
Summary of financial information 
14.6. Table 14.2 shows the evolution of loans and 
borrowings during the financial year 1982. 
14.7. Table 14.3 shows the distribution for 1982 of 
interest rate subsidies on Community loans amongst Observations on the financial 
information 
14.8. In respect of the financial year 1982, the 
Court examined the accounting procedures and the 
126 Official Journal of the European Communities 31. 12. 83 
Table 14.2 — Evolution of loans and borrowings during 1982 
(Mio ECU) 
Mechanism Outstanding at 31.12.1981 Operations carried out in 1982 
Outstanding at 
31.12.1982(') 
Mechanism At the ECU 
exchange rate 
of 31.12.1981 At the ECU 
exchange rate 
of 31.12.1982 New loan 
or new 
borrowing (') Repayment or 
amortization (') Outstanding at 
31.12.1982(') 
Mechanism 
(1) (2) (3) ' (4) (5) = 
(2)+ (3)-(4) 
Loans: 
NCI 
Euratom 
Balance of payments 
Total 872,4 959,2 
886,1 907,6 
1045,4 1178,5 
2 803,9 3 045,3 631,1 — 
361.8 7,6 
— 651,1 
992.9 658,7 1 590,3 
1 261,8 
527,4 
3 379,5 
Borrowings: 
NCI 
Euratom 
Balance of payments 
Total 885,6 - 973,8 
901,2 917,5 
. 1 045,4 1 178,5 
2 832,2 3 069,8 767,6 — 
362,5 7,6 
— 651,1 
1 130,1 658,7 1 741,4 
1 272,4 
527,4 
3 541,2 
(') At the ECU exchange rate of 31.12.1982. 
Table 14.3 — Distribution of interest rate subsidies paid in 1982 
(Mio ECU) 
A. Appropriations of the 1982 budget B. Appropriations 
carried over from 1981 
Article 
of the Final Payments Carry-overs to 
1983 Cancel­
lations Appro­
pria­Payments 
budget Budget appropria­
tions Recipient 
Member State EIB 
loans NCI 
loans EIB 
loans NCI 
loans Cancel­
lations tions 
carried 
over EIB 
loans NCI 
loans 
Ireland 58,8 13,9 — • !— — — — 
Article 520 200,0 209,8 (') — 
Italy 101,5 — 19,8 15,8 41,1 41,1 — 
Total 160,3 13,9 19,8 15,8 41,1 41,1 — 
Article 691 20,0 3,2 0 Italy 0,9 2,2 — — 0,1 — — — 
Article 692 token entry token entry Greece — — 
(') After a transfer of 9,8 Mio ECU. 
(2) After two transfers of 16,5 and 0,3 Mio ECU. 
presentation of the financial information relating to 
Euratom and NCI loans and borrowings. 
14.9. DG XVIII of the Commission is responsible 
for keeping the accounts for the Euratom and NCI 
lending and borrowing operations, and for drawing up the financial statement and expenditure and 
revenue account at 31 December. This information 
is then transmitted to DG XIX of the Commission, 
which, after making the checks laid down by the 
Commission, incorporates it in the Communities' 
balance sheet. 
31. 12. 83 Official Journal of the European Communities 127 
Financial statement and expenditure and 
revenue account ment premiums. Because of this it was not possible 
to post these items of expenditure and revenue to 
the expenditure and revenue account in a, coherent 
manner. It is therefore necessary: 
Surplus to be allocated 
14.10. As a result df an accounting error in Bor­
rowing E25 (in United States dollars with a swap 
arrangement with Belgian francs), the surplus to be 
allocated for the Euratom lending and borrowing 
operations (4,7 million ECU) and the amount of 
outstanding loans were understated by 1,8 million 
ECU at 31 December 1982. (a) to analyse the account; 
(b) to post the loan disbursement premiums to the 
'surplus to be allocated' in a rational manner; 
(c) to post the issuing costs of borrowings to the 
'surplus to be allocated' in respect of each and 
every borrowing; 
(d) in future to record the issuing costs of borrow­
ings and the loan disbursement premiums in 
two separate series of accounts. 
14.11. The Euratom surplus to be allocated 
(4,7 million ECU) and the NCI surplus to be allo­
cated (9,4 million ECU) represent the balance of the 
operations carried out in connection with Euratom 
and NCI loans and borrowings from the outset. It 
would have been preferable to make up the balance 
of the operations each year and to allocate it to a 
reserve account, which could be used to cover 
exceptional costs arising from similar operations. 
The Court recommends that, once the anomalies 
described in this report have been corrected, a clos­
ing entry of this nature should be made every year at 
31 December. 
Unamortized issuing costs 
14.12. Since the lending and borrowing operations 
must balance, the issuing costs of borrowings are at 
present offset by revenue collected from the reci­
pients of loans in the form of loan disbursement 
premiums. These items of expenditure and revenue, 
like all the other expenditure and revenue, should 
be posted to the expenditure and revenue account 
and thus form part of the entries upon which the 
surplus to be allocated is based. Because of their 
special nature, moreover, usual accounting practice 
is to post these items of expenditure and revenue to 
the expenditure and revenue account in equal 
annual fractions calculated by a rational method. 
14.13. DG XVIII has used a single account headed 
'unamortized issuing costs' for recording both the 
issuing costs of borrowings and the loan disburse­These operations should alter the amount of the 
Euratom and NCI surpluses to be allocated. 
Value-added tax 
14.14. The value-added tax (VAT) included in the 
invoices for the issuing costs on certain borrowings 
is recorded together with the amount of issuing costs 
in the account 'Unamortized issuing costs on bor­
rowings', despite the fact that a 'VAT to be recov­
ered' account exists. This accounting method is 
incorrect and does not ensure that the VAT reim­
bursement requests are duly sent to the administra­
tion responsible in the Member State. 
14.15. A procedure should be introduced to ensure 
that: 
(a) all the approved invoices including VAT are 
actually sent to the accounting department; 
(b) the VAT is correctly entered in a 'VAT to be 
recovered' account; 
(c) reimbursement requests are regularly sent to the 
administration responsible in the Member 
State; 
(d) the Member State makes the reimbursements. 
The present procedure which neglects to use the 
accounts does not appear to allow satisfactory mon­
itoring of the VAT to be recovered. 
128 Official Journal of the European Communities 31. 12. 83 
Coupons to be paid 
14.16. In order to ensure payment of coupons and 
bonds on maturity, the Commission (DG XVIII) 
pays' the financial organizations the amount 
required to cover its debt. But, since the financial 
organizations entrusted with the payment of the 
coupons do not report fully and regularly on the 
payments made, the accounts 'Coupons and bonds 
due but not yet presented for payment' and 'Bank 
deposits for coupons and bonds due but not yet pre­
sented for payment' do not accurately reflect the 
true situation. Even though this does not affect the 
amount of the surplus to be allocated at 31 Decem­
ber 1982, the Commission (DG XVIII) ought to take 
steps to obtain from these financial bodies regular 
information enabling it to keep its accounts up to 
date (see paragraphs 14.17 and 14.18). DG XVIII and the Court. DG XVIII should have 
taken steps to correct the mistakes in some certifi­
cates and to investigate the absence of certificates in 
other cases. By the end of the audit, no such action 
had been taken. The Commission's failure to res­
pond to this situation is open to criticism on several 
accounts: 
(a) in certain cases (authorized signatories), the • 
information kept by the bank was obviously 
wrong; 
(b) in other cases (lack of bank statement), the 
bank's reply was essential in order to prove the 
balance at 31 December 1982; moreover, the 
bank's failure to reply leads to additional audit 
work for the Court; 
Bank certificates (c) lastly, it is a departure from usual practice, espe­
cially in view of the size of its operations, for 
the Commission not to require persons provid­
ing services to give accurate and immediate 
answers and to make any necessary corrections. 
14.17. Following the Court's requests to the Com­
mission's (DG XVIII) banks for bank certificates, it 
was found that: 
(a) in respect of 5 current accounts, 5 deposit 
accounts and 9 'coupon' accounts, no bank cer­
tificate whatsoever has been received; 
(b) for 1 of these 5 deposit accounts and for 6 of the 
9 'coupon' accounts, no bank statement at 
31 December 1982 was available in DG XVIII; Observations of the accounting 
procedures 
14.19. The accounting procedures followed by DG 
XVIII do not appear always to be entirely satisfac­
tory from the point of view of both the application 
of accounting principles and the organization, as 
shown in particular by the examples below. 
(c) for 4 bank accounts, the bank certificate did not 
correspond to the balance stated by DG XVIII 
to be the true bank balance. Nevertheless, for 2 
of the 4 accounts the bank statement at 
31 December 1982 was not available; Conformity with generally accepted 
accounting principles 
(d) for 15 banks, the list of authorized signatories at 
31 December 1982, transmitted by the bank, still 
included names of persons who had left the The rule against offsetting 
institution. 
14.20. One of the generally accepted accounting 
principles is the rule against offsetting, i.e. a transac­
tion must be entered in full in the accounts without 
14.18. The banks' replies (or bank certificates) any adjustment against a similar transaction on the 
were sent simultaneously, as is customary, to both opposite side of the balance sheet. This principle, 
31.12.83 Official Journal of the European Communities 129 
moreover, receives express mention in Article 3 of 
the Financial Regulation ('), dealing with the 
recording of budget expenditure and revenue. DG 
XVIII has not adhered to this principle in a number 
of cases: year). This process is not carried out in DG XVIII. 
The Court recommends that the Commission (DG 
XVIII) analyse and prove the balance forthwith. 
(a) the issuing costs of borrowings have been offset 
against the loan disbursement premiums (see 
paragraphs 14.12 and 1'4.13); Calculation of interest accrued but not yet due 
(b) interest owed has been offset against interest 
receivable instead of being entered in an 
'interest payable' account; 
(c)' a bank account, with a credit balance in 
Japanese yen, has been offset against other 
debit bank balances. 
Accounting corrections 
14.21. Certain corrections were made to the finan­
cial statement at 31 December 1982, without the 
accounts themselves being amended accordingly. 
Thus, the account which appears on the financial 
statement does not tally with the same account on 
the trial balance at 31 December 1982. This method 
of making corrections is unacceptable, firstly 
because it is contrary to generally accepted account­
ing principles, and secondly because it conflicts 
with the spirit of Article 76 of the Financial Regula­
tion. That Article states that the balance sheet of the 
Communities is to be accompanied by a trial bal­
ance at the same date. This implies that the balance 
in the trial balance will, without exception, corre­
spond to those in the balance sheet. 
Internal control on the validity of the figures 14.23. The interest accrued but not yet due is cal­
culated by means of a computer programme on the 
basis of the amount notified by the banks as paya­
ble, at the due date, and the number of days remain­
ing until the due date. The checks made on the 
interest calculated in this way by the programme 
have not revealed any significant errors. This pro­
gramme is open to criticism, however, in that it does 
not allow effective checks to be made on the due 
dates calculated by the banks, and it increases the 
likelihood of errors because the same data have to 
be input again at the end of each financial year. In 
view of the size of the operations carried out by DG 
XVIII, a suitable computer programme should be 
designed. 
Analysis and proof of the balances Bank reconciliations 
14.24. No bank reconciliations take place in DG 
XVIII, because the bank transactions are entered in 
the accounts on the basis of documents supplied by 
the bank. This accounting method is incorrect and 
should be discontinued since entering transactions 
in the books on the basis of bank documents does 
not enable any errors made by the banks to be 
traced. Only certain very specific operations (such 
as payment of coupons, agios, etc.) may by entered 
in the accounts on receipt of bank documents, fol­
lowing the necessary checks and authorizations. 
Other operations have to be entered in the accounts 
on the basis of internal documents, and written, for­
malized bank reconciliations should be prepared 
regularly and approved and signed by an authorized 
person. 
14.22. In order to ensure that all the transactions 
have been correctly entered in the accounts, all the 
accounts have to be analysed and proved regularly 
(and at the very least, at the end of every financial 
Adjusting entries 
(') OJ No L 356, 31. 12. 1977. 14.25. The entries for miscellaneous operations or 
adjusting entries are drawn up on standard forms 
130 Official Journal of the European Communities 31. 12. 83 
used for normal entries. These entries are not 
usually supported by documents substantiating the 
correcting entry and are not approved by a duly 
authorized person. All entries for miscellaneous 
operations or adjusting entries should be accompa­
nied by supporting documents and approved and 
signed by a properly authorized person. 
Supervision of the bookkeeping of operations 
14.26. The NCI operations, under the new terms 
(agreed between the Commission and the EIB and applicable as from early 1982) for the management 
of NCI lending operations by the EIB, were not 
entered in the accounts in a satisfactory manner 
until the third version of the financial statement, fol­
lowing intervention by the Court. The most substan­
tial correction amounted, by way of illustration, to 
138 million ECU. Other errors discovered were noti­
fied to DG XVIII and DG XIX. These errors in fact 
arose because of the lack of effective supervision of 
the operations recorded in the accounts department 
of DG XVIII. Such supervision, which is not neces­
sary for routine operations, is indispensable for 
special operations or when there is a change of 
methods. 
31. 12. 83 Official Journal of the European Communities 131 
CHAPTER 15 
The European Development Funds (EDF) 
15.0. TABLE OF CONTENTS Paragraph reference 
Introduction 15.1 to 15.6 
Financial aspects of the European Development Funds 15.7 to 15.17 
Preparation and presentation of the accounts 15.7 
Comments on the second and third EDF 15.8 
Comments on the fourth arid fifth EDF 15.9 to 15.11 
Financial accounts of the fourth EDF 15.12 
Member States' contributions 15.13 
Cash funding 15.14 arid 15.15 
Implementation of indicative programmes 15.16 and 15.17 
Examples of difficulties encountered in the implementation 
of projects financed by the EDF 15.18 to 15.47 
Sibiti-Niari Valley road project in the Congo 15.19 to 15.39 
Priority regional project in favour of Burundi and Zaire 15.40 to 15.44 
Participation in a trade fair in Europe 15.45 to 15.47 
Technical cooperation: Scholarships 15.48 to 15.60 
Introduction 15.48 and 15.49 
Observations on the management system governing scho­
larship holders studying in the EEC Member States 15.50 to 15.54 
Observations on the system of financial management in 
the Commission 15.55 to 15.60 
Trade promotion 15.61 to 15.64 
Introduction 15.61 
Observations on the adoption of the annual programme 
on financial management and on the follow-up of trans­
actions 15.62 to 15.64 
Industrial cooperation 15.65 to 15.70 
Observations on administrative and financial manage­
ment 15.65 to 15.70 
EDF resources managed by the European Investment Bank 
(EIB) 15.71 to 15.86 
Introduction 15.71 to 15.75 
132 Official Journal of the European Communities 31. 12. 83 
Apportioning of aids between beneficiaries 15.76 and 15.77 
Coordination between the Commission and the EIB 15.78 
Administrative procedures 15.79 and 15.80 
Remuneration of the EIB 15.81 to 15.86. 
Introduction 
15.1. During the financial year 1982, the work of 
the Court concerned mainly: 
(a) an analysis of the financial aspects of the EDF; 
(b) the selection of 61 capital projects (375 million 
ECU in total value), the examination of the 
related records, and of their progress on the 
spot. The on-the-spot visits were undertaken in 
the following countries: Gabon, Congo, Tanza­
nia, the Comoros, the Seychelles, Mauritius and 
the French overseas department of Reunion. 
After each visit, a detailed report was drawn up 
by the Court and sent to the Commission; 
(c) the analysis of certain areas which had hitherto 
not been examined in detail by the Court, namely 
technical cooperation with the ACP countries 
and, more specifically, training scholarships 
awarded to the nationals of these countries, 
trade promotion, and industrial cooperation, 
and also those EDF appropriations managed by 
the European Investment Bank (EIB). 
15.2. Since its first annual report, on the financial 
year 1977, the Court has noted and brought to light 
a certain number of weaknesses which are in vary­
ing degrees detrimental to the capital projects 
financed by the EDF. The criticisms made by the 
Court concern different stages of different projects: 
often the design stage, or the period when the pro­
ject is being studied, sometimes the implementation 
stage but most often the period when the project is 
in use. 
15.3. Rather than launching into a new and per­
haps tedious list of the many imperfections noted 
during its on-the-spot audit visits, which in the long 
run would sound more self-indulgent than construc­tive, the Court preferred, in this report, to concen­
trate on three projects which illustrate certain weak­
nesses inherent in the system of managing EDF-
financed projects. 
15.4. Under this system,, the central Community 
administration, which is highly specialized and hier­
archical, is made to participate to a considerable 
extent not only in the political choice, the prepara­
tion of the decision and the financial control, but 
also in the physical implementation of projects, 
which are usually highly complex and sometimes 
situated thousands of kilometers distant. 
15.5. This basically joint system, which is the prod­
uct of the express political will of the signatories to 
the Lome Conventions, leads to a proliferation of 
the bodies involved at each stage and dilutes the 
decision-making process so that ultimately it 
becomes very difficult to pinpoint individual res­
ponsibilities. 
15.6. In choosing to present only three cases, 
which are exceptional in many ways, the Court 
would not wish it to be forgotten that most of the 
other projects that it examined revealed only one or 
two of these weaknesses and that some contained 
virtually none. 
Financial aspects of the European 
Development Funds 
Preparation and presentation of the 
accounts 
15.7. There continues to be a considerable delay in 
the drawing up of the revenue and expenditure 
31. 12. 83 .Official Journal of the European Communities 133 
account and the balance sheet by the Commission: 
the accounts of the 1981 financial year were not 
adopted until 1 December 1982, eight months after 
the time-limit laid down by the Financial Regula­
tion. The comments of the Court concerning the 
financial year 1982 are based on the provisional 
accounts which were forwarded on 24 March 1983. 
Comments on the second and third EDF 
15.8. Of the 733,0 million ECU allocated to the 
second EDF, 2,9 million ECU remained unused at 
31 December 1982, compared to 4,0 million ECU at 
31 December 1981. Ten of the 18 projects not yet 
closed concerned Madagascar. Of the 913,8 million 
ECU allocated to the third EDF, 60,7 million ECU 
remained unused at 31 December 1982 compared 
with 71,3 million ECU at 31 December 1981. Of the 
unused appropriations, 9,4 million ECU concerned 
two projects in Zaire which, in financial terms, had 
hardly progressed since the time of their financing 
decisions in 1974 and 1978 
Comments on the fourth and fifth EDF 
15.9. The financial information relating to the 
fourth and fifth EDF, as at 31 December 1982, is 
shown in the financial annex III of this report. 
15.10. Certain unexpended balances remaining in 
the fourth EDF could be reallocated, such as for 
example 5,8 million ECU from the allocation 
reserved for microprojects, or 35,5 million ECU 
from the allocation reserved for interest subsidies. 
In effect, in the latter case it seems impossible to 
make further use of interest subsidies, as the EIB 
has exhausted its allocation in respect of loans from 
its own resources. 
15.11. In 1982, the Stabex allocation from the fifth 
EDF (112,1 million ECU) proved insufficient to 
cover the requests for transfer submitted amounting 
to 453 million ECU. In order partially to meet this 
shortage, on 14 May 1982, the Council decided to 
increase the Stabex allocation by 30,8 million ECU, by drawing on the reimbursements and interest on 
special loans from the first four EDF. On the same 
date, it also decided to grant those countries having 
agreed transfer rights a supplementary amount of 40 
million ECU, to be taken' from the sundry receipts 
of the fourth EDF. At the end of the financial year 
1982, no commitment or payment had been made in 
respect of these 40 million ECU. 
15.12. The balance sheet of the fourth EDF con­
tains some inaccurate data: 
(a) a part of the 12,1 million ECU of advances to 
the European Association for Cooperation 
(EAC) and the 19,6 million ECU of advances to 
the external organizations responsible for scho­
larship management are not 'readily convertible 
assets' as their presentation in the balance sheet 
leads one to suppose. Since a part of the adv­
ances had been disbursed by the organizations 
in question, they were no longer 'readily con­
vertible' in the accounting .sense of the term. In 
addition, the Commission's advances to the 
EAC included an amount of 0,7 million ECU 
for which there was no counterpart in the Asso­
ciation's accounts. 
(b) Similarly, from July 1981 to December 1982, 
there was no record in the EDF accounts'of the 
expenditure incurred by the scholarship man­
agement agencies in Belgium and France. Due 
to the lack of checking for many years, there are 
significant differences in the amount of these 
advances depending upon whether the EDF 
accounts are examined, or those of the agencies 
in receipt of the advances. It is therefore impos­
sible to check the accuracy of the figures pre­
sented. 
(c) At 31 December 1982, the balance sheet head­
ing 'unsettled items' contained numerous pay­
ments totalling 3,4 million ECU which had been 
awaiting entry in the accounts for over a year. 
Fifty-four of these transactions (1,9 million 
ECU) concerned one beneficiary, Mauritius. 
(d) Numerous Commission debtor balances do not 
appear in the balance sheet. These debts repre­
sent, for example, overspending of commit-Financial accounts of the fourth EDF 
134 Official Journal of the European Communities 31. 12. 83 
ments to be recovered from the beneficiary 
countries or certain payments made on behalf of 
organizations which co-finance projects with the 
EDF. As recovery orders are not issued when 
the debt is first established, and as the amounts 
to be recovered are not entered in the accounts, 
it is not possible to evaluate the Commission's 
debts or to monitor their recovery. Implementation of indicative programmes 
15.16. The implementation of the indicative pro­
grammes, the details of which also appear in the 
financial annex III of this report, remains slow for 
many countries: 
Member States' contributions 
15.13. There has hardly been any improvement in 
the time taken by certain Member States to pay their 
contributions since the observations made by the 
Court in its previous reports: 
(a) Certain, and sometimes all, of the transfers of 
quarterly contributions of five Member States 
(Belgium, France, Italy, Luxembourg and the 
United Kingdom) were delayed by up to three 
months. 
(b) The Commission has not proposed amending 
. the Financial Regulation applicable to the fifth 
EDF (') to rectify the financial consequences of 
late payment of contributions by certain Mem­
ber States. These late payments result in (some­
times sizeable) exchange profits or losses which 
in turn lead to an improper change in the total 
amount of appropriations available under the 
EDF. 
Cash funding 
15.14. Similarly, the calculation of the Commis­
sion's cash requirements has improved little com­
pared to 1981. In its note to the Council of 6 Nov­
ember 1981 summarizing its cash funding require­
ments, the Commission estimated that it needed a 
float of 130 million ECU at 31 December 1981. On 
that date it had, in reality, 128 million ECU in its 
bank accounts. 
15.15. Furthermore, the present practice of not 
recording payments until after receipt of the rel­
evant bank statements, compels the finance depart­
ments of the Commission to keep the balances in its 
bank accounts at an unnecessarily high level. 
(') OJ No L 101, 11.4. 1981. (a) three years after the expiry of the Lome I Con­
vention (fourth EDF), the proportion of the 
indicative programmes which had been dis­
bursed was lower than 65% for 28 countries, 14 
of which are among the least advanced. This 
proportion was even lower in the following 
countries: Tanzania (57,9%), the Comoros 
(47,6%), Zaire (46,6%), Uganda (33,2%), the 
Solonion Islands (31,2%), Suriname (27,2%) and 
Trinidad and Tobago (18,5%). 
(b) by the end of the second year of the Lome II 
Convention (fifth EDF), the Commission had 
planned to commit, on average, 38,6% of the 
allocations for the indicative programmes of the 
beneficiary countries. This proportion proved to 
be only 30,2% and for 24 countries, including 10 
less advanced, it was lower than 15%. At 
31 December 1982, for 37 of the 63 indicative 
programmes, less than 2% had been paid. 
15.17. The Court recommends that an effective 
system be set up to allow the responsible Commis­
sion officials to be rapidly informed when material 
delays occur in the implementation of indicative 
programmes or projects. Such a system would make 
it possible to analyse the causes of the delays and to 
take, where necessary, the appropriate steps. 
Examples of difficulties encountered in 
the implementation of projects 
financed by the EDF 
15.18. Most of the 61 projects of all types exam­
ined by the Court in seven associated countries in 
1982 had only one of the so-to-speak 'classic' short­
comings that the Court has listed in its previous 
reports. These shortcomings do not in general 
impair the intrinsic value of the projects for the 
development of the countries concerned. None the 
31. 12. 83 Official Journal of the European Communities 135 
less, the Court, in order to highlight deficiencies, 
especially in the system of management criticized in 
the introduction to this chapter, has chosen three 
particularly revealing examples of failure resulting 
from such a system. The Court must again stress that 
the results of these three projects can in no way be 
considered as a general reflection on all the overseas 
activities of the Commission. 
Sibiti-Niari Valley road project in the Congo 
Introduction 
15.19. The first project selected by the Court this 
year to illustrate the difficulties which may be 
encountered on the implementation of a capital pro­
ject, as noted in its general introduction to this chapter, is the 'Sibiti-Niari Valley' road project in 
the Congo. This road provides an outlet to the major 
Brazzaville to Port de Pointe Noire road, for the 
increasing lumber production in the region situated 
north of Sibiti (see map). This project may now be 
considered as a serious failure from three aspects: 
(a) the results achieved: instead of a road 75 km 
long, only a section of 20 km had been com­
pleted, and this section is already three-quarters 
ruined; 
(b) the implementation period: the appraisal, the 
studies, the construction of the road, the ack­
nowledgment of its rapid deterioration, fol­
lowed by its reconstruction still to come will 
have taken over 22 years (1962-85); 
(c) the cost: the Community has financed the study 
four times and the road construction and works 
supervision twice. Instead of the 3,7 million 
Sibiti - Niari Valley road T 
J 
SIBITI^^ Key 
Major road 
Secondary road 
Railway 
Joint 
section 
Existing track 
to be made up 
LOUDIMAj 
Km 77 BIHOUA 
Km 22 
Route initially 
planned' 
Sh 
MADINGOU ^ ^ 'A* To _ 
Brazzaville i 
136 Official Journal of the European Communities 31. 12. 83 
ECU initially foreseen for the studies and the 
works, the Sibiti-Niari Valley road will have 
absorbed a total of 34,3 million ECU in finance. 
15.20. The charge to the allocation of the fifth 
EDF for the investigation of the causes of the fail­
ure and then for building the road represents 74% to 
84% of the Congo's indicative programme ('), which 
has had to be modified to allow for such a prepon­
derance of a single project. Thus, the failure of the 
Sibiti-Niari Valley road will not only have deprived 
the Congo of an important road link during a good 
15 years, but will also have the effect of reducing to 
almost nothing the aid that this country was entitled 
to expect for other projects during the five years 
covered by the Lome II Convention. works despite opposition from the national adminis­
tration. At the time of this publication, the adminis­
tration was still not in possession of the draft special 
specifications and was, therefore, unable to judge 
them. The Commission itself was not in possession 
of the complete tendering documents. Hence the 
complaint made by the Administration on 10 March 
1976 to the local Commission delegate: 'following 
the publicity by your Directorate in Brussels, we 
have been placed in a ridiculous position vis-a-vis 
the tenderers who have come to buy documents 
which are still not in our possession.' 
At the design stage of the projects and studies 
15.21. The 'roads' section of the first study, 
delivered in March 1966 and carried out by consul­
tants A, was 'acceptable' according to the Commis­
sion departments. However, the consultants did not 
complete their work for the 'bridges' section until 
April 1972, and even then, this only amounted to 
simple sketches for the one bridge in Niari instead 
of detailed documents for five bridges. Study B 
resulted in works that were technically impossible, 
and remained at the preliminary design stage. 
Study C, that finally adopted, greatly underesti­
mated the volume of certain works. The clearing of 
the ground had to be carried out to a thickness of 
30 cm and not 10. The uprooting of trees was almost 
four times greater than expected. Instead of 
315 000 m3, the volume of the earthworks totalled 
almost 405 000 m3. The extra cost for these various 
tasks was approximately 232 000 ECU. 
At the stage of awarding the contracts 
15.22. On 21 February 1976, the Commission pub­
lished the notice of invitations to tender for the road 15.23. The EDF departments imposed the choice 
of firm D for the works, since its offer was the low­
est. The Congo administration favoured awarding 
the contract to the second lowest bidder (more 
expensive by 6,7%), particularly because the lowest 
bidder had no references in Africa, and had under­
estimated the plant required. Also, before beginning 
the work, he required four to five months to bring 
his plant which was not yet on the spot, unlike that 
of his competitor. The Administration's fears proved 
correct: the manager of firm D had no experience in 
roads, and the professional reports noted numerous 
technical errors committed by the undertaking (cf. 
paragraphs 15.26 and 15.27 below). The works actu­
ally commenced six and a half months after award 
of the contract (22 October 1976 to 3 May 1977). 
(!) Financial bracket of the indicative programme: 28 to 
32 million ECU. 15.24. The Congolese authorities had. at first 
imposed the 'Laboratoire National d'Etudes et des 
Travaux Publics' (LNETP —. National Laboratory 
for Studies and Public Works) to implement all the 
geotechnical checks, including both those effected on 
behalf of the Administration for supervision pur­
poses and those to be carried out for the contractor. 
On the Commission's insistence they finally left the 
contractor a free choice of laboratory. The contrac­
tor chose to subcontract its tests to the LNETP, 
which thereafter combined the duties of controller 
and controlled. This was therefore an unhealthy 
situation, and dangerous if the services rendered 
should be poor, which proved to be the case. To 
obtain freedom of choice for the undertaking was 
not sufficient: the two functions should have been 
declared incompatible. 
31. 12. 83 Official Journal of the European Communities 137 
Extent of the contractual guarantees 
15.25. The contract relating to study A was anom­
alous in that it provided for the automatic payment, 
in stages, of 90% of the amount stipulated in the 
contract. The balance was to be paid within 30 days 
of delivery' of the tender documents, without stipu­
lating that these should be 'approved documents'. 
Furthermore, Article 9 of the contract read as fol­
lows: 'The company shall be exempted from giving 
any form of security. No monies shall be retained.' 
On 13 March 1967, the consultants had received all 
of the remuneration promised under the initial con­
tract, even though the 'bridges' section had not been 
implemented. The sum finally retained, at the 
suggestion of the Commission's delegation on the 
spot, from the amounts outstanding under rider 
No 2 was absurdly low: 1 000 ECU, or less than 1% 
of the total amount paid under the initial contract. 15.27. Responsible for the choice of the 'bathtub' 
structure, the national administration also aban­
doned the stabilization of the roadbase with cement, 
as stipulated in the study, on account of the prob­
lems encountered in the supply of local cement. The 
use of cement could have corrected the defects in 
the materials used. The Laboratory of Public Works 
responsible for supervision let all these technical 
errors pass without reacting. One may also attribute 
to the officials responsible on the spot the fact that 
the works were stopped for 89 days in order to study 
an alternative route of some hundreds of meters 
(km 17,130 to km 17,624). According to the informa­
tion obtained by the Court, the study of such an 
alternative required 15 days at the most. This stop­
page of the works gave rise to a claim from the con­
tractor, of which half was finally agreed for appoxi-
mately 187 000 ECU. 
Comments relating to the audit 
At the stage of implementing the work (') 
15.26. The sub-base and the road verges were con­
structed with clayey impermeable materials that 
retained the water which seeped into the roadbase. 
Thus waterlogged and made fragile by such a 'bath­
tub' structure, the carriageway was bound to suffer 
serious deformation, all the more so as it had itself 
been built with a mixture of materials which were 
often clayey and therefore easily deformed. In gen­
eral, the road's drainage system was very inade­
quate. The thickness of the roadbase build by the 
contractor had varied between 4 to 15 cm, thus con­
travening the technical specifications which laid 
down a uniform thickness of 15 cm. The ungraded 
material of the roadbase was covered with a fine, 
clayey material before compaction and asphalting, 
which was considered a 'serious professional error' 
by the EDF departments (note of 2 March 1981) and 
which seems to have caused the shearing observed 
between the roadbase and the bituminous surfacing. 15.28. The Commission and its delegation on the 
spot share a significant part of the responsibility for 
the failure of the project. Indeed, as they did not 
perform adequate checks, the errors and shortcom­
ings could not be foreseen nor corrected. 
15.29.- At no time during the implementation of the 
work did the Commission delegation on the spot 
foresee the coming disaster nor was it aware of the 
errors committed. On the contrary, it affirmed confi­
dently that: 'The quality of the work may be consid­
ered to be satisfactory ... It may already be pred­
icted that the characteristics of the road will be 
good.' (Quarterly report of 10 November 1977, i.e. 
seven months after the beginning of the work.) In 
one of its reports the delegate stated that the civil 
engineering adviser visited the construction site 
every fortnight; the imprest accounts of the delega­
tion for the period of the works does not however 
contain any travel expenses for such journeys. The 
road was situated 300 km from Brazzaville. 
(') The technical findings in paragraphs 15.26 and 15.27 
were drawn by the Court from the Community files, 
and in particular, the experts's report prepared for the 
Commission in July 1982. 15.30. The Commission delegation is implicated in 
the responsibilities through its toleration of poor 
materials. It did not realize that it was endorsing a 
technical error when it wrote on 28 July 1979: 'the 
desire to economize in order to remain within the 
138 Official Journal of the European Communities 31. 12. 83 
limit of appropriations available, as recommended 
by the delegation, prompted the works supervisor to 
recommend using clayey sand when the transport of 
the laterite became too expensive due to the dist­
ance of the deposits.' 
15.31. The delegation has not passed on to the 
Commission the information that it had on the 
development of the project with sufficient frequency 
or completeness. The so-called 'half-yearly' reports 
were abnormally rare: there were only two — six 
months and 13 months after the entry into force of 
the contract — on 30 April 1977 and 10 November 
1977. Then nothing further was heard until the 
report after provisional acceptance granted on 
17 November 1978, the report on which was sent on 
10 May 1979, six months after the event. Payments 
15.34. Up until invoice number 6, the revised 
prices which were applied to the charges for materi­
als and for works were described in one line, with 
no explanation of their calculation. It is impossible 
to verify the justification of the price revision of 
CFAF 20,2 million (approximately 69 000 ECU) for 
supplies without knowing the basis of the calcula­
tion. 
Conclusions 
15.35. The Sibiti-Niari Valley road is an extreme 
case. The exceptionally slow pace of the project and 
the repeated financing of the same operations 
resulted in an exorbitant inflation of costs. 
15.32. The Commission did not understand the 
gravity of the situation until very late, in September 
1980, on the occasion of an on-the-spot visit. It had, 
however, in the end been alerted, albeit late in the 
day, by its delegation on the spot in July 1979 and 
again by a note of 6 September 1979. The latter note 
was accompanied by a detailed experts' report 
which stated that 4,3 km of the road was already 
very badly damaged. 15.36. In all, the periods required to effect the 
appraisals and studies, to deliver experts' opinions, 
and to carry out negotiations will have lasted some 
18 years. The two periods of works — supposing 
that the second construction, to be completed in 
June 1985, does not encounter delays — will have 
totalled some four years. 
Terms of reference of the 'ex post' evaluation 
15.33. The evaluation of July 1982 financed by the 
EDF was carried out like a purely technical on-the-
spot report. There was no consultation of the main 
persons responsible for the project at the time of the 
studies and, above all, of the work — the Commis­
sion delegate, the undertaking — and there was not 
sufficient examination of the Community archives' 
files. Contacts with the former head of the undertak­
ing's agency at Brazzaville would have been rela­
tively easy as at the time of the experts' report he 
had become an adviser in a Commission delegation 
in an ACP country. This omission is less the 
fault of the experts themselves than of the terms of 
reference assigned to them. With the very general 
objective of highlighting the causes of the deteriora­
tion of the road, these stipulated, as a means to 
achieve this goal, only the oij-the-spot examination 
of the damage, the taking of Samples and their ana­
lysis. 15.37. With regard to the expenditure, the cost of 
the first study had been estimated at 69 000 ECU 
and was initially financed for this amount. In the 
end, the EDF will have borne some 500 000 ECU in 
study expenses, or 7 times more. But these expenses 
will serve for the construction of 20 km only, i.e. a 
study cost per kilometre of almost 24 900 ECU, 
27 times higher than the cost per kilometre initially 
foreseen. To this should be added several experts' 
reports and studies not provided for at the outset, 
and borne by the Congo or by other sources of 
financing. 
15.38. The cost of the work had been estimated in 
the 1968 financing agreement at 3 646 000 ECU for 
74,5 km, i.e. 48 900 ECU/km. With the finance 
granted on 7 March 1983 for the second construc­
tion of the road, 33,8 million ECU will have been 
borne by the EDF for works on a road of 77,3 km, 
representing a cumulative cost per kilometre of 
31. 12. 83 Official Journal of the European Communities 139 
some 437 000 ECU, almost 9 times higher than in 
the initial estimates. 
15.39. As stressed in the experts' report of July 
1982, such a failure was only made possible by the 
multiplicity of errors committed at all the stages of 
the procedure by all the participants of the project. 
The Court, however, feels obliged to stress that it 
was the inadequacy of the contractual guarantees, 
the absence of sanctions, contractual or otherwise, 
which the Commission should have imposed and 
above all the serious shortcomings in monitoring 
which opened up the project to negligence by all 
parties. 
Priority regional project in favour of Burundi 
and Zaire 
15.40. The economies of Burundi and Eastern 
Zaire are largely dependent on the railway across 
Tanzania, which links Dar-es-Salaam to the port of 
Kigoma on Lake Tanganyika. When there is a break 
in this link, as is often the case for many reasons, 
the transport of these two countries' imports and 
exports is seriously disrupted. Thus, for example, 
the Community financed in 1979, at a cost of 2 mil­
lion ECU, an air lift between Dar-es-Salaam and 
Burundi in order to avoid the total economic stran­
gulation of this country. Amongst other things, it 
had been deprived of 24 000 tonnes of imports lying 
for many months at Dar-es-Salaam and of export 
earnings, particularly from coffee and tea. 
15.41. The ageing equipment of the port of 
Kigoma being frequently subject to long break­
downs, the Taiizanian authorities requested Com­
munity aid to finance a crash programme for the 
supply of spare parts for the existing equipment (aid 
of 0,5 million ECU approved by the Commission on 
8 May 1981). (b) drawing up of an expert's contract: July 1981; 
c) submission of estimates by the European sup­
pliers: September 1981; 
(d) drawing up and transmission to the Commis­
sion of the list of spare parts proposed for pur­
chase: October 1981; 
(e) approval by the Commission and placing of 
orders: January 1982; 
(f) constitution of the bank security guaranteeing 
the initial advance to the suppliers: March 
1982; 
(g) negotiation of the delivery date and of the mode 
of transport, payment of the initial advance: 
April to July 1982; 
(h) delivery of the parts ordered: as from October 
1982; 
(i) end of work on overhauling the port facilities: 
March 1983. 
15.43. If the Commission had followed the acce­
lerated procedures provided for in the Lome Con­
vention, it could well have carried out this operation 
within considerably shorter periods, thus clearing as 
quickly as possible the bottlenecks from which the 
foreign trade of Burundi and Zaire were suffering. 
The administrative temptation to keep to the same 
well-trodden path has stripped the salvage operation 
of its basic character. By following the usual proce­
dure, the Commission departments finally contri­
buted to prolonging the unhealthy economic situa­
tion which they had been instructed to eliminate. In 
fact, in accordance with Article 19 of the Lome I 
internal agreement, contracts could have been 
awarded by mutual agreement: thus, an engineer 
placed under the sole authority of the delegation 
could have placed the orders, accepted the equip­
ment and supervised its installation. The emergency 
action could thus have been completed in a very 
much shorter time. 
15.42. Despite numerous appeals from the Tanza-
nian authorities, this crash programme was con­
ducted extremely slowly, following the usual Com­
mission procedures, as is reflected in the following 
timetable: 
(a) financing decision: May 1981; 15.44. It should be noted, moreover, that this 
priority programme was a part of a normal project 
for the complete rebuilding of the quay and the 
equipping of Kigoma port, foreseen in the 5 million 
ECU financing agreement signed on 18 June 1980. 
The opening of the tenders for the construction of 
the quay did not take place until June 1983; as far 
as the supply of equipment is concerned, no con­
crete progress has been made. Due to inflation, the 
140 Official Journal of the European Communities 31. 12. 83 
estimate for the operation should already be 
increased by at least 50%. the financing of training projects and, in particular, 
the award of scholarships to the nationals of the 
ACP States for studies and for periods of in-service 
training. 
Participation in a trade fair in Europe 
15.45. Another example illustrating the cumber­
some nature of the Commission's administrative 
machinery may be drawn from its programme aimed 
at allowing the associated countries to participate in 
trade fairs. 15.49. For the first four EDF a global amount of 
170 million ECU was devoted to this purpose, 
which has made it possible to award each year, on 
average, 1 000 new training grants in the ACP States 
and from 150 to 350 new training grants in the 
Member States of the Community. 
15.46. A check on two documents which precede 
the decision to participate in a fair in Europe has 
highlighted the fact that: 
(a) a note drawn up by the department responsible 
for fairs, which was supposed to lead to the 
director-general's agreement to the programme 
for participation in the fair, took over two 
months to reach him, after having been signed 
by 24 officials of the Directorate-General for 
Development; 
(b) a proposal to allocate appropriations to cover 
participation in the same fair, issued on 
22 December 1982, required no less than 10 dif­
ferent signatures before being approved on 
1 March 1983, i.e. five days before the begin­
ning of the fair and thus at a time when most of 
the expenditure had already been effected. 
15.47. It is up to the Commission to draw its con­
clusions from this hardly satisfactory situation 
which gives rise to a considerable waste of time and 
money, and to see how much it would be advisable 
to amend the present system by reducing the num­
ber of procedural steps and by giving officials an 
increased feeling of responsibility. 
Technical cooperation: Scholarships 
Introduction 
15.48. The Lome I and II Conventions provide, 
within the framework of technical cooperation, for Observations on the management system 
governing scholarship holders studying in the 
EEC Member States 
15.50. In each Member State except for Denmark 
students in receipt of a Community scholarship who 
follow their studies in the Community are managed 
by a specialized agency with contractual ties to the 
Commission. These agencies are responsible for 
applying the directives and general implementing 
provisions adopted by the Commission relating to 
the administrative, educational and financial man­
agement of scholarships. 
15.51. The audits carried out by the Court at seven 
organizations participating in the management of 
scholarships have revealed that in several Member 
States special situations tend to develop, which may 
even last for a considerable time and that the Com­
mission does not ensure that its own rules are 
applied in a uniform manner. For example: 
(a) In Italy studies are frequently continued beyond 
the stipulated periods. Several students have 
studied engineering for 8 to 9 years although the 
normal period for these studies is 5 years. Cer­
tain students of medecine were only able to 
complete their studies by taking 3 to 4 years lon­
ger than the usual period. Despite the poor 
results obtained, the majority of the scholar­
ships are maintained for reasons which are most 
often alien to the strict necessities of training. 
(b)„ In four Member States (Federal Republic of 
Germany, Italy, Netherlands and the United 
Kingdom), the management agencies do not 
observe the principle that the Community scho-
31. 12. 83 Official Journal of the European Communities 141 
larship sum should be identical to the national 
grants or bilateral aid, but pay higher amounts. 
(c) In the Federal Republic of Germany, the Neth­
erlands and the United Kingdom, the scholar­
ship holders have various benefits not provided 
for in the regulation, as for example: payment 
of rent allowances, payment of city transport 
costs, purchase of bicycles, reimbursement of 
cost of school equipment above set limits, etc. 
(d) The majority of management agencies only 
gather in an irregular and fragmentary manner, 
the basic statistical data which would enable the 
Commission to exercise the right to monitor the 
progress of the studies financed, and to draw up 
a general survey of the training programmes 
implemented. 
15.52. Only the agreement concluded with the Bel­
gian agency provides for the reimbursement of the 
real administrative costs incurred. The services prov­
ided by the other management agencies, except 
for the Danish organization, were remunerated by 
the payment of various lump-sum amounts. From 
the analysis of expenditure in the Commission's accounts, it is possible neither to ascertain nor to 
follow the evolution of the costs of management of 
the scholarships in the Member States. The Belgian 
organization, however, has determined, for its own 
purposes, the relationship between the appropria­
tions managed annually and its real administrative 
costs: the ensuing percentage is always lower or 
equal to 6%. Since such data was not available at the 
other management agencies, Table 15.1 compares, 
by Member State, the relations between the various 
lump-sum amounts paid and the monthly allow­
ances received by the scholarship holders study­
ing at university. 
15.53. The diversity of the rates shown in this table 
reveals that the Commission has been unable to 
remunerate the services of the management agencies 
on a uniform or at least consistent basis. This is par­
ticularly reflected in the lump-sum amounts granted 
once only for opening a file. The latter vary from 
36,2 ECU to 152,6 ECU although the services 
requested from the management agencies are strictly 
identical in this area. 
15.54. The lump-sum remunerations of the man­
agement agencies are, except in the Netherlands, 
f 
Table 15.1 — Administrative costs and comparison with the monthly amount of the university scholarships 
Member State Monthly scholarship 
paid to students 
following 
university 
courses in that 
country (') Single payment of expen­
ses on opening a file (') Monthly administrative 
costs (') Monthly costs of 
organizing socio-cultural 
activities (') 
Member State Monthly scholarship 
paid to students 
following 
university 
courses in that 
country (') Amount 
(ECU) (3) 
% (2) Amount 
(ECU) (5) 
% — (2) Amount 
(ECU) (7) 
%(2) 
(1) (2) (3) • (4) (5) (6) (7) (8) 
Belgium (2) 362,2 — — — — — — 
Denmark (3) 320,3 -- — — — — — 
Germany 341,5 80,6 23,6 % 48,4 14,1 % 12,1 3,5 % 
Greece (4) — — — — — — — 
France 285,3 43,7 15,3% 42,0 14,7 % 8,4 2,9 % 
Ireland 308,3 73,4 23,8 % 44,0 14,3% 29,4(5) 9,5 % 
Italy 226,9 39,8 17,5% 27,9 12,3% 11,9 5,3 % 
Luxembourg (4) — — — — — — 
Netherlands 434,5 36,2 8,3 % 36,2 8,3 % 7,2 1,7% 
United Kingdom 407,0 152,6 37,5 % 42,4 10,4% 3,4 0,8 % 
(') Amounts applicable for the academic year 1981-82 and rate of exchange of 30 September 1981 for conversion into ECU (OJ No C 251, 
1.10.1981, p. 1). 
(2) Reimbursement of the actual administrative costs. 
(3) No reimbursement of administrative costs. 
(4) No management agency. 
(5) Maximum amount. 
142 Official Journal of the European Communities 31. 12. 83 
unjustifiably increased by the profits from placing 
their quarterly cash advances in bank deposit 
accounts. The income from these deposits is not 
known to the Commission, although the manage­
ment agencies admit that bank interest represents a 
substantial but uncalculated supplement to their 
resources. 
Observations on the system of financial 
management in the Commission 
15.55. Only the global expenditure by ACP State 
or by budget article is entered in the Commission's 
accounts. This global expenditure corresponds to 
the summary of expenditure by student which the 
management agencies declare annually. The 
accounting transactions and the supporting docu­
ments are recorded chronologically: there is there­
fore no statement which provides summaries for 
each training project, each management agency or 
each beneficiary country. It is, moreover, impossible 
to identify periodically the payments in suspense or 
the statements not yet received. 
15.56. Since the summaries of commitments which 
are analysed by scholarship holder are necessarily 
different from those of expenditure, which are by 
beneficiary State, it is impossible to trace the total of 
individual commitments to the global commitments, 
and to reconcile the expenditure with the individual 
commitments. 
15.57. The system of financial management imple­
mented by the Commission has serious shortcom­
ings. The checks made by the Court on a sample of 
invoices revealed differences between the Commis­
sion's balances and those of the management agen­
cies. This amount results from an accumulation of 
errors and of non-clearance of advances to the man­
agement agencies. Prior to the Court's on-the-spot 
audit visits, neither the Commission nor the man­
agement agencies had compared their respective 
accounts, so that both parties were, in fact, unaware 
of the extent of these differences. 
15.58. The management of the training projects is 
spread over several distinct units of various directo­rates of the Directorate-General for Development. 
The competences of the three officials responsible 
for dealing with the relevant financial matters 
depend on the origin of the appropriations to be 
managed (EDF or Chapters 93 and 96 of the 
budget). . Due to an inadequate presentation of 
expenditure by most of the management agencies 
and a lack of coordination between these three offi­
cials, however, many statements of account remain 
pending or only partially cleared. Expenditure 
totalling FF 85 000 incurred by the French manage­
ment agency has hence still not been cleared over 10 
years after a request for reimbursement had been 
submitted by it to the Commission. 
15.59. The management agencies are unaware of 
their real situation as per the Commission's books. 
The latter establishes, often belatedly, annual state­
ments of account on the basis of statements sent by 
the management agencies which are sometimes erro­
neous or incomplete. When the errors in the state­
ments of the management agencies are rectified by 
the Commission, they are not afterwards systemati­
cally informed of the corrections made, in order that 
they may correct their accounts. This explains how 
considerable differences have developed over the 
years. With some exceptions, the origin of these dif­
ferences may be found in the training projects 
financed from the general budget. In each of the 
management agencies visited, the Court found dis­
crepancies, or expenditure which had not been 
cleared: there is a serious need for the accounts to 
be put into order in this area. 
15.60. Given that certain management agencies 
have not been subjected to any check by the princi­
pal authorizing officer since they first began manag­
ing funds of Community origin, the Court reserves 
its judgment on the validity of the accounts submit­
ted to it relating to expenditure on training in the 
Member States. 
Trade promotion 
Introduction 
15.61. In 1982, the Court examined for the first 
time a number of projects for trade promotion for 
31. 12. 83 Official Journal of the European Communities 143 
Table 15.2 — Trade promotion: operations and global 
commitments at 31 December 1982 
Type of operation 4th EDF 5th EDF 
Type of operation Amount 
(Mio 
ECU) % Amount 
(Mio 
ECU) % 
(a) Trade promotion 
(general) 14,9 42,2 % 9,8 53,8 % 
(b) Commercial 
structures 2,1 5,9 % 2,5 13,8% 
(c) Fairs and exhibi­
tions 14,7 41,7% 3,5 19,2% 
(d) Marketing 3,6 10,2% 1,9 10,5% 
(e) Commercial 
training — — 0,1 0,5 % 
(f) Commercial 
information — — 0,4 2,2 % 
Total 35,3 100,0 % 18,2 100,0 % (a) Despite the rules in force, certain contracts for 
supplies or services rendered were not signed 
before the beginning of the fair. 
(b) It has been impossible for the Commission 
departments to negotiate a better price. More­
over, in the cases which it audited, the Court did 
not meet with a readiness on the part of the 
Commission departments to analyse the various 
items of the estimates submitted to it even when 
they were presented in sufficient time to allow a 
critical examination. 
Financial management and follow-up of transactions 
ACP States. At 31 December 1982, the financing 
decisions taken in this respect represented an 
amount of 35,3 million ECU under the fourth EDF 
and 18,2 million ECU under the fifth EDF. These 
decisions are broken down by type of operation in 
Table 15.2. 
Observations on the adoption of the annual 
programme on financial management and 
on the follow-up of transactions 
15.62. The audits of some 20 trade events, carried 
out by the Court on the basis of records and on the 
spot brought to light a certain number of deficien­
cies attributable to the Commission. 15.64. The Court noted a certain number of other 
shortcomings in the field of trade promotion: 
(a) Suppliers' bills are often settled over six months 
late. Since the persons providing the services are 
well aware of this situation which recurs yearly, 
it is to be feared that they will take the financial 
consequences into account in their estimates. 
In one specific case, a supplier declared to a 
representative of the Court that he would be 
able to reduce his prices by 10% if he could be 
sure of his invoice being settled within a com­
mercially reasonable period; 
(b) the Community subsidy towards the transport 
expenses incurred by exhibitors from an over­
seas country is not granted on the basis of the 
relevant supporting documents, but at a fixed 
rate (2 000 ECU per participant) irrespective of 
whether the country be situated at 2 000 or at 
20 000 km from Europe, and on the simple sub­
mission of a summary report of participation at 
the fair; 
Adoption of the annual programme 
15.63. The list of fairs and exhibitions to which 
they intend to make a contribution to facilitate the 
participation of the ACP States was adopted by the 
Commission at too late a stage. Thus in 1982, the 
programme was not adopted until during the finan­
cial year concerned instead of several months before 
the beginning of that year. This delay had several 
harmful consequences: (c) it sometimes happens that an exhibitor decides 
not to participate in a fair only a few days 
before its opening. The Commission had not, 
until 1982, developed any procedure which 
would allow the financial consequences of these 
cancellations to be borne by the defaulting 
country; 
(d) since 1975, the Commission has drawn up a 
questionnaire entitled 'contact note' that the 
144 Official Journal of the European Communities 31. 12. 83 
ACP participants at fairs or exhibitions 
financed by the EDF must complete after every 
contact with a potential customer, a copy of 
which should be sent to the Commission. The 
participants, moreover, must send the latter a 
report summarizing the results obtained from 
the fair or exhibition. The Commission has not 
made use of the information sent to it in this 
way and, in general, has never assessed the 
impact or utility of the trade promotion projects. iture (1,1 million ECU) continue, despite some 
improvement in 1982 over 1981, to use only a small 
share (40,6%) of the corresponding budget appro­
priations. It is becoming imperative that the inter­
vention expenditure which, in 1982, represented 
50% of the total budget of the CID and which is one 
of the main justifications for its existence, are used 
at a rate commensurate with the volume of the inter­
vention appropriations granted. 
15.68. The accounts are not kept with the neces­
sary care, which results in many deletions in the 
books, and in many year-end corrections. In 1982, 
15% of the total account entries comprised assorted 
amendments or corrections of allocation errors. 
Industrial cooperation 
Observations on administrative and 
financial management 
15.65. Title V of the Lome II Convention defines 
the objectives of industrial cooperation. Achieve­
ment of these objectives is the responsibility of three 
Community organizations, the European Invest­
ment Bank, the Commission and the Centre for 
Industrial Development (CID), each having a spe­
cific and complementary role to play. 
15.66. The CID's work is concentrated on promot­
ing and encouraging the entrepreneurs of the Com­
munity and the ACP States to take initiatives to 
implant industrial production units in the ACP 
States. The Lome II Convention reserved an alloca­
tion of 25 million ECU to finance the CID budget. 
For the first three years of its operation (1981-83), 
total EDF subsidies to the CID amounted to 15,17 
million ECU. 15.69. The criteria of regularity and legality are not 
sufficiently respected in the case of vouchers: the 
date and even the signature are often missing on the 
payments orders. The existing legislation has not 
been applied with the desired strictness and there 
are many material and arithmetical errors: for the 
mission expenses alone nearly one statement out of 
three was incorrect. 
15.70. There is one serious shortcoming in the 
present accounting system: it makes it impossible to 
detect or prevent double payments. The iatter often 
occur and, in 1982, approximately 40 000 ECU, i.e. 
1,2% of the total expenditure of the financial year, 
comprised amounts which had been overpaid but 
not recovered at 31 December 1982. 
EDF resources managed by the 
European Investment Bank (EIB) 
15.67. The Court examined the expenditure 
incurred by the CID since the entry into force of the 
Lome II Convention. In 1982 the CID used 58,6% 
of the appropriations entered in its budget 
(5 596 698 ECU) as payments. This still very low 
rate of payment nonetheless represents an increase 
in relation to that of the previous financial year, 
which was only 47,5%. However, payments to meet 
administrative requirements (2,1 million ECU) 
absorbed 76,9% of the appropriations provided, 
whereas payments to meet real intervention expend-Introduction 
15.71. Paragraphs 1.10 and 1.11 in this annual 
report explain that the general problems which have 
been mentioned in previous annual reports of the 
Court about the delegation of tasks by the Commis­
sion to the EIB have not been resolved. The prob­
lems concerning specifically the two Lome Conven-
31. 12. 83 Official Journal of the European Communities 145 
tions are dealt with in the following paragraphs; an 
analogous situation exists for budget appropriations 
managed by the EIB. Under these Conventions, the 
allocations for the EDF resources managed by the 
EIB, which comprise risk capital and interest subsi­
dies, total 673,2 million ECU, in respect of which 
the Commission had paid to the EIB 234,5 million 
ECU at 31 December 1982. Certain unsatisfactory 
results of this delegation of tasks have been men­
tioned in previous annual reports, in particular the 
inadequate level of reporting by the EIB to the 
Commission and the lack of right of inspection by 
the Court. Right of inspection by the Court 
15.74. The EIB financing agreements with benefi­
ciaries of Community aid appear not to mention the 
Court's right of inspection on the spot, whereas the 
World Bank and other regional development banks 
allow full access by the Court to documents and to 
the sites of projects they manage on behalf of the 
Commission. 
Reporting by the EIB 15.75. The Commission's stated intention, in reply 
to the annual report for the financial year 1981, that 
it will request more detailed reports and will exam­
ine the question of supporting documents, has not 
yet been followed by concrete agreements. The 
Court has further examined the available documen­
tation from which it appears that the following com­
ments are justified. 
15.72. The Commission's files regarding projects 
for which it has paid an EDF contribution to the 
EIB are inadequate to permit the Court to perform 
the duties imposed on it by the Treaties, which 
involve the examination of 'the accounts of all 
expenditure and revenue of the Community'. These 
files rarely contain a financing proposal, and when 
available this document is very summary; they con­
tain no loan contract, no information on the tender­
ing or allocation of contracts, no supporting docu­
ments relating to payments, no progress nor inspec­
tion reports, and no note of the use made of the 
completed investment by the beneficiary. Apportioning of aids between beneficiaries 
15.76. The EIB does not apportion in advance the 
aid it manages between the beneficiary countries, 
as does the Commission when agreeing the benefi­
ciaries' indicative programmes, but instead grants 
loans on a case by case basis. As a result, under 
Lome I, certain countries benefiting from similar 
indicative programme allocations received very dif­
ferent amounts of interest subsidies and risk capital. 
For example, Chad received 7,5 million ECU in risk 
capital but Burundi received only 0,5 million ECU. 
Five countries alone received in value over half the 
grants for interest subsidies. 
15.73. The EIB annual report addressed to the 
Council and the Commission comprises little more 
than the titles of the projects financed during the 
year. There is no mention of project progress. 
Furthermore, unlike the major development banks, 
the EIB does not make public its procedures for the 
technical and financial monitoring of project pro­
gress, nor for any ex post evaluation of the project it 
may perform. In contrast, the World Bank and other 
regional development banks provide the Commis­
sion with detailed information on the projects which 
they manage on its behalf, and publish a wealth of 
information on their administrative procedures. 15.77. Under Lome II, the Commission has the 
possibility of compensating for this inequality by 
allocating an imprecise sum to each beneficiary 
which may be later adjusted to take into account the 
value of EIB managed aids. The indicative pro­
gramme of one country is fixed at between 46 to 63 
million ECU for example. This lack of precision is 
contrary to Article 109 of Lome II Convention 
which requires that each beneficiary should have as 
clear an indication as possible of the amount of 
funds at its disposal. 
146 Official Journal of the European Communities 31. 12. 83 
Coordination between the Commission and 
the EIB 
15.78. The Commission delegations are rarely 
informed of EIB financing decisions and project 
progress. In Mauritius, it was only through the local 
press that the delegate learned of a decision to grant 
an EIB loan with EDF interest subsidy. would be equivalent to over 1,7 milion ECU per 
year, reducing as the advance is used, on the 58,1 
million ECU already advanced by the Commission 
for the fifth EDF interest subsidies alone. This 
apparent margin is over 20 times that which the EIB 
receives between its commercial borrowings and 
own resource lendings (0,15%), and eight times the 
fixed margin of 0,40% which it currently receives on 
advances under the interest subsidies for European 
Monetary System. 
Administrative procedures 
15.79. From such information as is available to the 
Court, it appears that administrative procedures 
applied by the EIB are very different from those fol­
lowed by the Commission. The national authorizing 
officer and the Commission delegate are no longer 
competent. It appears that even when bids concern 
projects financed by budget or EDF funds, they are 
open not only to tenderers in ACP and EEC coun­
tries but also to tenderers in countries in which the 
EIB obtains its own resources (e.g. United States 
and Japan). Moreover, since contractors are not 
paid directly by the Bank, the beneficiary must pre-
finance the payments. 15.82. Furthermore, the advance sum is paid to the 
EIB even before it disburses the corresponding 
loan; in many cases, the advance sum proves to be 
excessive or, if the EIB loan should be cancelled, 
unnecessary. In these cases, the EIB grants interest 
on the refund, but at rates which are much lower 
than the rates which it would have received from its 
investments: because the EIB allows the Commis­
sion only three-quarters of the interest to be charged 
to the borrower, an excessive payment of 0,3 million 
ECU interest subsidy on a loan granted at 8,1% in 
1978 was accorded only 6,1% interest by the EIB 
during 1982, when one month deposit rates on the 
ECU market averaged over 13%. 
15.80. This obligation to prefinance has also been 
applied to the special loans managed by the Com­
mission, which has resulted in excessive delays to 
project progress in some least developed countries 
in which severe foreign exchange restrictions apply. 
Remuneration of the EIB Collection of interest and repayments 
15.83. The EIB receives a commission of 0,40% of 
the loan balance each year for the collection of 
interest and repayments of special loans which are 
otherwise entirely managed by the Commission. 
Thus on a 10 million ECU special loan, it receives, 
for the collection of six-monthly interest, 40 000 
ECU each year for the first 10 years then a reducing 
sum during the following 30 years of loan repay­
ment, a total of approximately 1 million ECU over 
the life of the loan. 
Interest rate subsidies 
15.81. The EIB allows interest on the interest sub­
sidies paid to it in advance by the Commission at 
three-quarters of the rate of interest it receives from 
the borrower of the corresponding loan. In 1981 arid 
1982, the rate of interest charged on own resources 
loans exceeded 12%, so the EIB appears to benefit 
on the advances by three percentage points. This Project management 
15.84. When it manages the implementation of a 
project, the EIB receives 0,35% per year on the loan 
31. 12. 83 Official Journal of the European Communities 147 
balance due in addition to the commission men­
tioned above, and also, for risk capital, a file open­
ing fee of 1,5% of the loan. These two charges 
amount to approximately 6% of the total Com­
munity aid. When the World Bank manages projects 
on behalf of the Commission, it makes no charge 
and the Asian Development Bank and the Inter-
American Development Bank make one charge of 
1% of the Community aid. 
Special accounts Total of the above income 
15.86. Taking into account the above, the Court 
estimates that the Bank's income from the EDF and 
the Mediterranean protocols was approximately 
8,18 million ECU in 1982 ('). This is equivalent to 
20% of the EIB's administrative expenses in that 
year, when development aid operations both from 
own resources and on behalf of the Member States 
of the Community represented only 13% of the total 
loans outstanding at 31 December 1982. The total 
income from development aid will rise to a level of 
almost 20 million ECU over the next few years 
when Community allocations are fully disbursed. 
15.85. Special loan interest and repayments are 
collected by the EIB and held in special accounts in 
the name of the Community. The EIB allows only 
5% interest on these accounts irrespective of the pre­
vailing market rates of interest. (') i.e. 3,88 million ECU in charges relating to the man­
agement and opening of files (projects financed from 
special loans and risk capital) to which may be added 
4,30 million ECU representing the profit margin on 
the advances for interest subsidies. 
31.12. 83 Official Journal of the European Communities 149 
ANNEX I 
Allocation of responsibilities among 
Members of the Court of Auditors at 30 November 1983 
(a) Overall responsibility for the implementation of the Court's decisions and for the pro­
per conduct of the various activities of the Court and of its sectors. Secretariat of the 
Court including Court rules and regulations 
(b) Relations with other Community institutions, national audit bodies and other audit 
bodies. Public relations generally 
(c) Legal Service 
(d) Appointing authority within the meaning of the Staff Regulations of officials and 
other servants of the European Communities 
(e) Staff management and administration of the Court 
(f) Budget and accounting of the Court 
(g) Brussels office 
(h) Documentation and archives 
(a) Working methods and professional training Andre MIDDELHOEK 
(b) Studies 
(c) Editing annual and other reports 
(d) Work programme and coordination of missions in Member States 
(e) Translation Service 
Audit of Aldo ANGIOI 
(a) Intervention expenditure in the regional sector 
(b) European Agricultural Guidance and Guarantee Fund (Guidance Section, regional 
measures) 
Audit of • Keld BRIXTOFTE 
Own resources Pierre LELONG, 
President 
150 Official Journal of the European Communities 31. 12. 83 
Audit of 
(a) Research and investment, energy and industry expenditure 
(b) External bodies (including subsidies) Charles J. CAREY 
.Audit of 
(a) European Social Fund and related expenditure 
(b) European Agricultural Guidance and Guarantee Fund (Guidance Section, operations 
other than regional measures) 
(c) Fisheries Paul GAUDY 
Audit of 
(a) European Coal and Steel Community 
(b) General accounts 
(c) Borrowings and loans Lothar HAASE 
Audit of 
(a) Cooperation with States associated with the EEC (European Development Funds — 
European Association for Cooperation), cooperation with non-associated developing 
countries, cooperation with third countries 
(b) Food aid Marcel MART 
Audit of 
European Agricultural Guidance and Guarantee Fund (Guarantee Section) Michael N. MURPHY 
Audit of Stergios VALLAS 
Staff and operational expenditure of institutions, including Publications Office, press 
and information offices 
31. 12. 83 Official Journal of the European Communities 151 
ANNEX II 
Reports and opinions of the Court of Auditors 
The Court of Auditors is required by the terms of the Trea­
ties to produce an annual report. It is also required, by the 
Treaties and other regulations, to produce annual reports 
on certain Community bodies and activities. The Treaties 
further give the Court power to submit observations on specific questions and to deliver opinions at the request of 
one of the institutions. The reports and opinions adopted 
by the Court in the five-year period ending 30 November 
1983 are listed below; those adopted between 1 December 
1982 and 30 November 1983 are marked by an asterisk (*). 
Title Date of adoption Publication 
Opinion on the draft Regulations: 
• on the management of food aid, and 
• amending Regulations (EEC) No 2052/69, (EEC) No 1703/72 
and (EEC) No 2681/74 on Community financing of expenditure 
incurred in respect of the supply of agricultural products as food 
aid, and repealing Decision 72/335/EEC. 8 March 1979 OJ NoC 139, 
5.6. 1979 
Report on the 1978 JET financial statements. 19 April 1979 Not 
published 
Report on the 1978 accounts of the Euratom Supply Agency. 26 April 1979 
/ Not 
published 
Opinion on the proposal for a Council Regulation (EEC) on the 
measures to be taken in the event of irregularities affecting the own 
resources referred to in the Decision of 21 April 1970 and the organ­
ization of an information system for the Commission in this field. 17 May 1979 OJ NoC 187, 
25.7. 1979, 
p. 9 
Report on the 1978 accounts of the European Foundation for the 
Improvement of Living and Working Conditions (Dublin). 7 June 1979 Not published 
Report on the 1978 accounts of the European Centre for the 
Development of Vocational Training (Berlin). 7 June 1979 Not published 
Report on the accounts of the European Schools for 1977. 13 June 1979 Not published 
ECSC annual report 1978 (Balance sheet and accounts). 14June 1979 Not published 
Special report on accommodation policies of the institutions of the 
European Communities. 20 June 1979 OJ NoC221, 
3.9. 1979 
152 Official Journal of the European Communities 31.12.83 
Title Date of adoption Publication 
Special report made to Parliament at its request on the entertainment 
and representation allowances and expenses of the Members of the 
Commission and on their mission expenses for 1977 and 1978. 20 June 1979 Not published 
Observations on the operation of the export earnings stabilization 
system (Stabex). 19 July 1979 Not published 
Opinion on the draft Council Regulation (ECSC, EEC, Euratom) 
amending the Financial Regulation of 21 December 1977 applicable 
to the general budget of the European Communities. 19 July 1979 OJ No C 225, 
7. 9. 1979, 
p. 3 
ECSC annual report 1977 — Balance sheet and income and expend­
iture accounts. 13 September 1979 Not published 
Second annual report, concerning the financial year 1978. November 1979 OJ No C 326, 
31. 12. 1979 
Report on the accounts of the European Schools for 1978. 24 January 1980 Not published 
Opinion on a proposal for a Regulation to amend the Financial 
Regulation of 21 December 1977 and on proposals for amendments 
to, and a draft amendment of, related legislation. 21 February 1980 OJ No C 84, 
3.4. 1980, 
p. 7 
Report on the 1979 JET financial statements. 30 April 1980 Not published 
Special report on various measures affecting the management of the 
EAGGF Guarantee Section (financial year 1978). 30 April 1980 OJ No C 258, 
6. 10. 1980 
Report on the 1979 accounts of the Euratom Supply Agency. 30 April 1980 Not published • 
Opinion on the proposal for a Council Regulation on monetary 
compensatory amounts. 
Opinion on the proposal for a Council Regulation on the value of 
the unit of account and the conversion rates to be applied for the 
purposes of the common agricultural policy. 22 May 1980 
22 May 1980 OJ No C 165, 
5.7. 1980, p. 2 
OJ No C 165, 
5.7. 1980, 
p. 9 
Report on the 1979 accounts of the European Foundation for the 
Improvement of Living and Working Conditions (Dublin). 5 June 1980 Not published 
Report on the 1979 accounts of the European Centre for the 
Development of Vocational Training (Berlin). 19 June 1980 Not published 
31. 12. 83 Official Journal of the European Communities 153 
Title Date of adoption Publication 
Opinion on the proposal for a Council Regulation instituting sup­
plementary measures in favour of the United Kingdom. 3 July 1980 OJ No C 233, 
11.9.1980, 
p.7 
OJ No C 233, 
11.9. 1980, 
p. 6 Opinion on a proposal for a Council Regulation amending Regula­
tion (EEC) No 1172/76 of 17 May 1976 setting up a financial 
mechanism. 3 July 1980 OJ No C 233, 
11.9.1980, 
p.7 
OJ No C 233, 
11.9. 1980, 
p. 6 
Special report of the Court of Auditors with its observations on ac­
quisition and control over office supplies and equipment, etc. as ap­
plied by the institutions of the European Communities. 24 September 1980 OJ No C 326, 
15.12.1980 
ECSC annual report 1979 (Balance sheet and accounts). 24 September 1980 Not published 
Opinion on the proposal for a Council Regulation laying down gen­
eral rules for the supply as food aid of products other than cereals, 
skimmed-milk powder or butteroil to certain developing countries 
and specialized bodies. 2 October 1980 OJ No C 326, 
15. 12. 1980, 
p. 22 
Special report on the application of Council Directive 75/268/EEC 
on mountain and hill farming and farming in certain less-favoured 
areas. 30 October 1980 OJ No C 358, 
31.12.1980 
Special report on Community food aid. 30 October 1980 Not published 
Observations arising from an initial financial review of the Com­
puter Centre of the European Communities. 6 November 1980 Not published 
Third annual report, concerning the financial year 1979. 12 November 1980 OJ No C 342, 
31.12.1980 
Opinion on the proposal for a Council Regulation compensating 
Greece for its contribution to the cost of the financial mechanism 
and the supplementary measures for the United Kingdom. 9 December 1980 OJ No C 30, 
11.2. 1981 
Opinion on the draft financial regulation applicable to the fifth 
European Development Fund. 9 December 1980 OJ No C 45, 
4.3. 1981 
Opinion on the proposal for a Council Regulation introducing a tax 
on catches of salmon in the Baltic Sea by Community vessels. 18 December 1980 OJ No C 358, 
31.12.1980 
Special report concerning publishing, printing and reproduction 
practices of the institutions of the European Communities. 8 January 1981 OJ NoC 150, 
19. 6. 1981 
Observations on the proposal for a Council Regulation relating to 
the financing by the EAGGF Guarantee Section of certain interven­
tion measures, particularly those involving the buying-in, storage 
and sale of agricultural products by intervention agencies. 19 February 1981 Not published 
154 Official Journal of the European Communities 31.12.83 
Title Date of adoption Publication > 
Study on the European Centre for the Development of Vocational 
Training (Berlin). 5 March 1981 Not published 
Study on the development of the European Foundation for the Im­
provement of Living and Working Conditions (Dublin). 5 March 1981 Not published 
Report on the accounts of the European Schools for 1979. 9 April 1981 Not published 
Report on the 1980 accounts of the Euratom Supply Agency. 30 April 1981 Not published 
Report on the 1980 JET financial statements. 30 April 1981 Not published 
Opinion on the proposal for a Financial Regulation on the applica­
tion of the agreement in the form of an exchange of letters between 
the European Economic Community and the Portuguese Republic 
concerning the implementation of pre-accession aid for Portugal. 14 May 1981 OJ NoC 156, 
25.6.1981, 
p. 10 
Observations on the management of the ECSC for 1979. 21 May 1981 Not published 
Opinion on the Commission's proposal for a Council Regulation 
amending the Financial Regulation of 21 December 1977 applicable 
to the general budget of the European Communities. 21 May 1981 OJ No C 232, 
11.9. 1981 
Observations on the farm accountancy data network (FADN). 18 June 1981 Available from the Court 
of Auditors 
Special report on the securities, deposits and guarantees furnished in 
respect of operations that give rise to expenditure from the EAGGF, 
Guarantee Section. 18 June 1981 OJ No C 249, 
29.9.1981 
Report on the financial statements of the European Coal and Steel 
Community for the financial year 1980. 26 June 1981 Not published 
Report on the 1980 accounts of the European Foundation for the 
Improvement of Living and Working Conditions (Dublin). 26 June 1981 Not published 
Report on the 1980 accounts of the European Centre for the 
Development of Vocational Training (Berlin). 26 June 1981 Not published 
Opinion on the proposal for a Council Regulation compensating 
Greece for its contribution to the cost of the financial mechanism 
and the supplementary measures for the United Kingdom. 10 September 1981 OJ No C 282, 
5.11.1981, 
p. 15 
Fourth annual report, concerning the financial year 1980. 26 November 1981 OJ No C 344, 
31.12.1981 
31. 12. 83 Official Journal of the European Communities 155 
Title Date of adoption Publication 
Study of the financial systems of the European Communities (1981). 26 November 1981 OJ No C 342, 
31. 12. 1981 
Special report on expatriation and foreign residence allowances. 4 February 1982 Available from the Court 
of Auditors 
Opinion on a proposaj for a Council Regulation amending the 
Financial Regulation of 21 December 1977 applicable to the general 
budget of the European Communities. 18 February 1982 OJ NoC 122, 
13.5.1982 
Special report on sales of reduced-price butter within the Com­
munity. 18 March 1982 OJ NoC 143, 
7.6. 1982 
Report on the 1981 accounts of the Euratom Supply Agency. 29 April 1982 Not published 
Report on the 1981 JET financial statements. 29 April 1982 Not published 
Report on the financial statements of the European Coal and Steel 
Community for the financial year 1981 (Art. 78 f (5) ECSC). 27 May 1982 Not published 
Special report on the Members' Cash Office of the European Parlia­
ment. 6 July 1982 OJ No C 202, 
5.8. 1982 
Special report on EEC-Euratom loans and borrowings. 19 July 1982 OJ NoC 319, 
6. 12. 1982 
• 
Special report on job creation or maintenance in the granting of aid 
to regional investments. 30 July 1982 OJ No C 345, 
31.12.1982 
Report on the accounts of the European Schools for 1980. 30 July 1982 Not published 
Special report on the Community inward processing system. 16 September 1982 OJ No C 88, 
30.3. 1983 
Opinion 1/82 on: 
• a proposal for a regulation amending Regulation No 337/75 
establishing a European Centre for the Development of Voca­
tional Training 16 September 1982 OJ No C 324, 
10. 12. 1982 
• a proposal for a regulation amending Regulation No 1365/75 on 
the creation of a European Foundation for the Improvement of 
Living and Working Conditions , 
• a proposal for a regulation amending Regulation No 1416/76 oji 
the financial provisions applying to the European Centre for the 
Development of Vocational Training 
• a proposal for a regulation amending Regulation No 1417/76 on 
the financial provisions applying to the European Foundation 
for the Improvement of Living and Working Conditions. 
156 Official Journal of the European Communities 31. 12. 83 
Title Date of adoption Publication 
Special report on the 'Como' frauds. 16 September 1982 Not published 
Special report on the financial management of multiannual pro­
grammes of the Joint Research Centre. 7 October 1982 Available from the Court 
of Auditors 
Report on the 1981 accounts of the European Foundation for the 
Improvement of Living and Working Conditions (Dublin). 7 October 1982 Not published 
Report on the 1981 accounts of the European Centre for the 
Development of Vocational Training (Berlin). 7 October 1982 Not published 
Report (Annex to the annual report ECSC 1980) on loans — borrow­
ings — interest rebates. 12 October 1982 Not published 
Special report on the clearance of the accounts of the EAGGF — 
Guarantee Section, the structure and operation of the system. 12 October 1982 OJ No C 313, 
29.11. 1982 
Opinion 2/82 on a proposal for a Council Regulation amending 16 November 1982 OJNoC133, 
Regulation (EEC, Euratom, ECSC) No 2891/77 implementing the 20.5. 1983 
Decision of 21 April 1970 on the replacement of financial contribu­
tions from Member States by the Communities' own resources. 
Opinion 3/82 on a proposal for a Council Regulation amending and 16 November 1982 OJ No C 151, 
extending the terms of validity of Regulation (EEC, Euratom, 9.6.1983 
ECSC) No 2892/77 implementing in respect of own resources accru­
ing from value-added tax the Decision of 21 April 1970 on the re­
placement of financial contributions from Member States by the 
Communities' own resources. 
Report (Annex to the annual report ECSC 1981) on loans for hous- 25 November 1982 Not published 
ing. 
Fifth annual report, concerning the financial year 1981. 25 November 1982 OJ No C 344, 
31.12.1982 
* Opinion 4/82. on a draft Commission Regulation concerning finan- 9 December 1982 Not published 
cial provisions applicable to the European Agency for Cooperation 
and provisions relating to the Agency's relations with the Commis­
sion. 
* Opinion 5/82 on a proposal for a. Council Regulation amending 16 December 1982 OJN0CI6O, 
Regulation (EEC) No 2744/80 establishing supplementary measures 18.6. 1983 
in favour of the United Kingdom. 
* Opinion 6/82 on a proposal for a Council Regulation instituting a 16 December 1982 
special energy development programme. OJ No C 199, 
26.7.1983, . 
p. 7 
31. 12. 83 Official Journal of the European Communities 157 
Title Date of adoption Publication 
* Opinion 7/82 on a proposal for a Council Regulation amending 
Regulation (EEC) No 2779/78 on the procedure for applying the 
ECU to legal acts adopted in the customs sphere. 2 February 1983 OJNoC199, 
26.7. 1983, 
p. 8 
* Special report 1/83 on the expenditure of the European Parliament 
in connection with inter-parliamentary conferences. 10 March 1983 Available from the Court 
of Auditors 
* Special report 2/83 on the application of Regulations No 1078/77 
and No 1041/78 introducing a system of premiums for the non-mar-
keting of milk and milk products and for the conversion of dairy 
herds. 14 April 1983 OJ No C 278, 
17. 10. 1983 
* Report on the accounts of the European Schools for 1981. 28 April 1983 Not published 
* Report on the 1982 JET financial statements. 28 April 1983 Not published 
* Special report 3/83 on the restaurants, canteens, cafeterias and staff 
shops. 18 May 1983 Not published 
* Report on the 1982 accounts of the Euratom Supply Agency. 26 May 1983 Not published 
* Special report 4/83 on the budgetary management of the programme 
for supplying agricultural products and foodstuffs to Poland. 9 June 1983 OJ No C 278, 
17. 10. 1983 
* Special report 5/83 on aid to skimmed milk processed into casein 
and caseinates. 9 June 1983 Not yet published 
* Report on the financial statements of the European Coal and Steel 
Community for the financial year 1982 (Art. 78 f (5) -ECSC). 22 June 1983 Not published 
* Report on the 1982 accounts of the European Foundation for the 
Improvement of Living and Working Conditions (Dublin). 14 July 1983 Not published 
* Report on the 1982 accounts of the European Centre for the 
Development of Vocational Training (Berlin). 14 July 1983 t Not published 
* Opinion 1/83 on a draft Commission Regulation (EEC) relating to 
the operation of the system of advances for expenditure financed 
under the Guarantee Section of the European Agricultural Guidance 
and Guarantee Fund (EAGGF). 21 July 1983 Not published 
* Report in response to the conclusions of the European Council of 
18 June 1983. 6 October 1983 OJ No C 287, 
24. 10. 1983 
* Sixth annual report, concerning the financial year 1982. 24 November 1983 This edition 
31. 12. 83 Official Journal of the European Communities 159 
ANNEX III 
Preliminary remarks 
1. Source of financial data 
The financial data in this Annex have been drawn from the revenue and expenditure accounts and the balance-
sheets of assets and liabilities of the European Communities (1) and of the European Development Funds and 
from other detailed financial records provided by the Commission. 
2. Monetary unit 
For the general budget the financial data are given in the monetary unit in force during the financial years cov­
ered, i.e. from 1978 to 1980 in European units of account (EUA) and from 1981 in ECU (see § 1.5 for details). 
For the European Development Funds all financial data are given in ECU. 
The financial data are presented in millions (Mio) of monetary units, in Mio EUA or Mio ECU respectively, 
rounded to one decimal place. 
3. Change in nomenclature of the general budget from 1982 
In 1982 a new nomenclature was used for the general budget. 
This means that the financial data for the financial year 1982 are not directly comparable with those for previous 
years given in earlier annual reports. The Court has therefore used the budgetary nomenclature applicable to the 
financial year 1982 for the presentation of all the historical data in this annual report and has adapted the financial 
data of the financial years 1978 to 1981 in accordance with this new budgetary nomenclature. 
Thus the data given in § 14 to § 19 are comparable year by year. 
(1) For the financial year 1982: revenue and expenditure account and balance-sheet of assets and liabilities relating to operations under the 1982 
budget (Documents COM(83) 223, 224, 225). 
160 Official Journal of the European Communities 31. 12. 83 
4. Abbreviations and symbols 
EC European Community(ies) 
ECSC European Coal and Steel Community 
EEC European Economic Community 
EAEC or Euratom European Atomic Energy Community 
EAGGF European Agricultural Guidance and Guarantee Fund 
GNP Gross national product 
VAT Value-added tax 
BFR Belgian franc 
DKR Danish crown 
DM German mark 
DR Greek drachma 
FF French franc 
IRL Irish pound 
LIT Italian lira 
LFR Luxembourg franc 
HFL Dutch guilder 
UKL Pound sterling 
u.a. Unit of account (until 1977) 
Mio u.a. Millions of units of account 
EUA European unit of account (from 1978 to 1980) 
Mio EUA Millions of European units of account 
ECU European currency unit (as from 1 January 1981) 
Mio ECU Millions of European currency units 
DA Differentiated appropriations 
NDA Non-differentiated appropriations 
CA Commitment appropriations 
PA Payment appropriations 
AFC Appropriations for commitment 
AFP Appropriations fpr payment 
B Belgium 
DK Denmark 
D Federal Republic of Germany 
GR Greece 
F France 
IRL Ireland 
I Italy 
L Luxembourg 
NL The Netherlands 
UK United Kingdom 
EUR 9/10 Total of the 9/10 Member States of the European Communities 
EDF European Development Fund 
ACP African, Caribbean and Pacific States 
OCT Overseas Countries and Territories 
FOD French Overseas Departments 
Stabex Stabilization of export earnings 
Sysmin System of stabilization of export earnings from' mining products 
FR Financial Regulation of 21 December 1977 
OJ Official Journal of the European Communities 
S Budgetary section 
T Budgetary title 
Ch Budgetary chapter 
— Nil 
0,0 Data between zero and 0,05 
% Percentage 
§ Section referring within this annex to texts, diagrams and tables 
31. 12. 83 Official Journal of the European Communities 161 
Contents 
Part I: General budget of the European Communities 
Page 
§ 1. Background information on the general budget 162 
The financial year 1982: budget and out-turn 
§ 2. General budget 1982: estimated revenue 166 
§ 3. General budget 1982: estimated expenditure — appropriations for payment 167 
§ 4. General budget 1982: appropriations for commitment 168 
§ 5. Estimated and actual revenue 1982 169 
§ 6. Appropriations for commitment available in 1982 and their utilization 170 
§ 7. Appropriations for payment available in 1982 and their utilization 171 
§ 8. Actual own resources in 1982 172 
§ 9. Rate of utilization of appropriations available in 1982 173 
§10. The consolidated revenue and expenditure account and the balance of the financial year 1982 . . 174 
§11. Payments made in 1982 — by sector and by recipient Member State 175 
§ 12. EAGGF-Guarantee: payments made in 1982 — by market and by recipient Member State 176 
§13. The structural Funds: commitments entered into and payments made in 1982 — by recipient Member State 177 
Historical data relating to the implementation of the general budget (1978-82) 
§ 14. Utilization of the appropriations for payment for the period 1978-82 — by sector 178 
§15. Utilization rates of the appropriations for payment from 1978 to 1982 — by sector 179 
§ 16. Evolution of annual payments — by sector (1978-82) 180 
§ 17. Evolution of the ratio of 'annual payments by sector' to 'total of annual budgetary payments' (1978-82) 181 
§ 18 Annual payments to the Member States (1978-82) 182 
§19. Actual own resources — by Member State (1978-82) 183 
Part II: The European Development Funds (EDF) (position at 31 December 1982) 
§20. General information on the EDF 184 
§ 21. The 4th and 5th EDF: allocations, financing, distribution of aid, utilization rates 185 
§ 22. The 4th EDF: aid by type and by recipient country 186 
§23. The 4th EDF: financial implementation of aid by recipient country 187 
§ 24. The 5th EDF: aid by type and by recipient country 188 
§25. The 5th EDF: financial implementation of aid by recipient country 189 
§26. The 4th and 5th EDF: utilization of aid by economic sector 190 
§ 27. The five EDF: evolution of annual payments (1960-82) 191 
162 Official Journal of the European Communities 31. 12. 83 
Part I: General budget of the European Communities 
§ 1. Background information on the general budget 
1.1. Origin of the general budget 
The general budget was created by the Merger Treaty (1) (Article 20). It replaced, on 1 January 1968, the three separate EC 
budgets which existed before then: the ECSC administrative budget, the EEC budget and the Euratom operating budget. The 
Euratom research and investment budget was incorporated in the general budget as from 1971 by the Treaty of Luxem­
bourg (2) (Article 10). 
1.2. Legal basis 
The general budget is governed by the financial provisions of the Treaties of Paris (3) (Article 78 ECSC) and Rome (4) (5) 
(Articles 199 to 209 EEC and Articles 171 to 183 Euratom) and by amendments resulting from the Merger Treaty (1), the 
Council Decision on own resources (6), the Treaty of Luxembourg (2), the Treaty of Accession (7) and the Treaty of Brus­
sels (8). The Financial Regulation (9) governs the procedure for establishing and implementing the budget and for presenting 
and auditing the accounts. The Financial Regulation is supplemented by further specific enactments governing the details of 
budgetary implementation. 
1.3. Main budgetary principles prescribed by the Treaties and the Financial Regulation 
The budget is authorized in advance for one financial year (annuality). The budget presented must be in balance. Budgetary 
revenue is to be used without distinction to finance all expenditure entered in the budget (non-assignment). All items of 
Community revenue and expenditure are to be included in the budget (unity). All items of revenue and expenditure are to be 
entered in full in the budget and in the accounts without any adjustment against each other (universality). There are some 
exceptions to these general principles. 
1.4. Content and structure of the general budget 
The general budget comprises the estimates of administrative expenditure of the ECSC and corresponding revenue, of 
revenue and expenditure of the EEC and of revenue and expenditure of Euratom. 
The budget consists of five separate sections subdivided into statements of (estimated) revenue and expenditure: (I) Parlia­
ment; (II) Council (annexed: Economic and Social Committee); (III) Commission; (IV) Court of Justice; (V) Court of Audi­
tors. 
Within each section, revenue and expenditure are classified under budget headings (titles, chapters, articles and items) 
according to their type or the use to which they are to be applied. 
1.5. Monetary unit of the general budget 
Until 1977 the budget was established and implemented in units of account (u.a.): 1 u.a. = 0,88867088 g gold (= 1 US dollar 
between 1934 and 1972). 
From 1978 to 1980 the budget was established and implemented in European units of account (EUA): 1 EUA corresponds to 
the total of the following amounts of the currencies of the EC Member States: DM 0,828 + UKL 0,0885 -I- FF 1,15 + LIT 109 
+ HFL 0,286 + BFR 3,66 + LFR0,14 + DKR 0,217 + IRL 0,00759. 
As from 1981 the budget has been established and implemented in European currency units (ECU). Like the EUA, the ECU 
is a unit based on a basket of national currencies; for 1981 and for 1982 the value and composition of the ECU basket is the 
same as that of the EUA (the Greek currency, the drachma, was not included in the ECU basket). 
The rates of conversion at 31 December 1982 between the ECU and the national currencies were as follows: 1 ECU = BFR/ 
LFR 45,3207 = DKR 8,11485 = DM 2,30014 = DR 68,5398 = FF 6,52207 = IRL 0,692923 = LIT 1 325,70 = HFL 2,54206 = 
UKL 0,600289. 
1.6. Financing of the general budget (budgetary revenue) 
The general budget is mainly financed by the own resources of the Communities (6): customs duties, agricultural levies, 
sugar and isoglucose levies and VAT up to a maximum of 1% of a uniform EC assessment basis (io); there are also other 
smaller sources of revenue. 
As from 1 January 1971, pursuant to the Council Decision of 21 April 1970 (6), the system of own resources progressively 
replaced the former system of fixed percentage financial contributions by the Member States. Until it became possible to 
apply the uniform VAT basis, financial contributions continued to be paid by the Member States. As from 1975 these financial 
contributions were calculated on the basis of the gross national product (GNP) shares of Member States. In 1979 own 
resources included VAT for the first time. This was paid by Member States other than the Federal Republic of Germany, 
Ireland and Luxembourg, which continued to pay GNP-based financial contributions. In 1980 the VAT system was applied by 
all Member States. In 1981 and 1982 all the Member States paid VAT with the exception of Greece which paid a financial 
contribution based on the GNP. 
(1) Merger Treaty (8 April 1965): Treaty establishing a Single Council and Single Commission of the European Communities. 
(2) Treaty of Luxembourg (22 April 1970): Treaty amending certain budgetary provisions of the Treaties establishing the European Communities and of the 
Merger Treaty. 
(3) Treaty of Paris (18 April 1951): Treaty establishing the European Coal and Steel Community (ECSC). 
(4) Treaty of Rome (25 March 1957): Treaty establishing the European Economic Community (EEC). 
(5) Treaty of Rome (25 March 1957): Treaty establishing the European Atomic Energy Community (Euratom). 
(6) Council Decision 70/243/ECSC, EEC, Euratom of 21 April 1970 on the replacement of financial contributions from Member States by the Communities' own 
resources (OJ No L 94, 28. 4. 1970). 
(7) Treaty of Accession (22 January 1972): Act concerning the Conditions of Accession and the Adjustments to the Treaties. 
(8) Treaty of Brussels (22 July 1975): Treaty amending certain financial provisions of the Treaties establishing the European Communities and of the Merger 
Treaty. 
(9) Financial Regulation of 21 December 1977 (OJ No L 356, 31. 12. 1977). 
(10) See Sixth Council Directive of 17 May 1977, common system of VAT: uniform assessment basis (OJ No L 145, 13. 6. 1977). 
31.12.83 Official Journal of the European Communities 163 
1.7. Types of budget appropriations 
To cover estimated expenditure, the following types of budget appropriations are distinguished in the general budget: 
(a) Differentiated appropriations (DA) are used to finance multiannual activities in certain sectors. They comprise commit­
ment appropriations and payment appropriations: 
— commitment appropriations (CA) cover, for the current financial year, the legal obligations to be entered into for 
activities whose implementation extends over several financial years; 
— payment appropriations (PA) cover expenditure arising from commitments entered into in the current financial year 
and/or preceding financial years. 
(b) Non-differentiated appropriations (NDA) cover for annual activities both commitments and payments for the same finan­
cial year. 
Thus it is possible to establish the following two totals for the same financial year: 
— the total of appropriations for commitment (AFC) (1) = non-differentiated appropriations (NDA) 
+ commitment appropriations (CA) (1); 
— the total of appropriations for payment (AFP) (1) = non-differentiated appropriations (NDA) 
-(-payment appropriations (PA) (1). 
Revenue raised in the budget is to cover the total appropriations for payment. Commitment appropriations are not financed 
until the corresponding payment appropriations have been entered in the budget. 
The following simplified scheme (with illustrative amounts) shows the impact of these types of appropriations in each budget 
year: 
Appropriations for commitment: 
Amounts allocated in the budgets of years 
1. 2, 3 for commitments in those years 
Key. 
Appro-
priations 
for 
commitment 
(AFC) o Commitment 
appropriations 
(CA) 
/r-—i Non-differentiated 
I appropriations 
(NDA) 
year 1: 
year 2: 
year 3: I CA 50. 
-NDA 100-
AFC 180 
AFC 215 NDA 120. 
8 CA 65-
NDA 150-Commitment / 
appropriations (CA) ' 
of prior years y 
Summary of all types of appropriations: 
year 1 
year 2 
year 3 2 «o 
6 o 
I 2 
If £ a 5 a Z <o 
(1) 
100 
120 
150 Differentiated 
appropriations 
IDA) 
fi sU (2) 
50 
60 
65 £ 
(3) 
27 
38 
75 (D + (2) 
150 
180 
215 §~ 
II 
(1I + I3) 
127 
158 
225 Financial schedule: 
This shows in which year each part of the AFC allocated for years 1. 2. 
3 is to be financed NDA are financed in the year to which they are allo­
cated. the CA are financed over several years 
year 1 
T 
ol 100 10 year 2 Amounts financed in 
year 3 
J 
I 15 
ol 120 12 I 
1 30 
Ol The vertical totals of this schedule indicate for each year the 
appropriations for payment (AFP) which are necessary to finance the 
legal obligations resulting for this year from the AFC allocated For 
each year there are AFP - NDA + payment appropriations (PA), the 
PA of the year being the total of all CA to be financed in that year. 
^ ^ ^ Appropriations for payment 
year 1 year 2 
E5 mm 38 8 
$ JFlis 
NDA 
120 CL u. < year 3 
Key: 
Appro (KB priations \ZuA 
for 
payment /["" 
(AFP) \ I I Payment appropriations 
(PA) 
Non-differentiated 
appropriations (NDA) 
(') Note II is important to note the differences between appropriations tor commitment and commitment appropriations and between appropriations tor pay­
ment and payment appropriations The two terms commitment appropriations and payment appropriations are used exclusively in the context of differen­
tiated appropriations. 
164 Official Journal of the European Communities 31. 12. 83 
1.8. Establishment of the general budget 
Before 1 July of each year each institution draws up estimates of its expenditure for the following financial year (running from 
1 January to 31 December). The Commission enters these estimates in a preliminary draft budget, and, not later than 1 Sep­
tember, places this before the Council, which with Parliament constitutes the budgetary authority. The Council establishes 
the draft budget and forwards it to Parliament not later than 5 October of the same year. Parliament can propose modifica­
tions to the draft budget for compulsory expenditure (1) and make amendments for non-compulsory expenditure; these mod­
ifications and amendments are submitted to the Council. For compulsory expenditure the Council takes the final decision. For 
non-compulsory expenditure Parliament may, within the limits of a statistical maximum rate of increase, make amendments 
before taking the final decision. The President of Parliament declares that the budget has been finally adopted. However, 
Parliament may reject the draft budget and ask for a new draft to be submitted (2). 
If at the beginning of a financial year the budget has not been voted, particular provisions of the Treaties and the Financial 
Regulation relating to the authorization of expenditure are to be applied (3). 
Amending budgets (which do not alter the total amount of the annual budget) or supplementary budgets (which alter the total 
amount) can be adopted by the budgetary authority (4). 
The budgetary allocation to a specific budget heading can be modified by transfers (5) from other budget headings. 
1.9. Implementation of the general budget 
1.9.1. Responsibility for implementation 
The Commission implements the budget on its own responsibility in accordance with the Financial Regulation and within the 
limits of the appropriations allotted; it also confers upon the other institutions the requisite powers for the implementation of 
the sections of the budget relating to them (6). The Financial Regulation lays down the implementation procedures and, in 
particular, the responsibilities of the authorizing officers, accounting officers, administrators of advance funds and financial 
controllers of the institutions (7). 
1.9.2. Implementation of revenue 
The estimated revenue is entered in the budget subject to change by supplementary and amending budgets (4). 
The budgetary implementation of revenue consists in establishing the entitlements and recovering the revenue due to the 
Communities (own resources and other revenue); it is governed by special provisions (8). The actual revenue of a financial 
year is defined as the sum of recoveries upon entitlements established during the current financial year and recoveries upon 
entitlements still to be recovered from previous financial years. 
1.9.3. Implementation of expenditure 
The estimated expenditure is entered in the budget. According to the nature of the legal obligation involved, it is covered by 
appropriations for commitment or appropriations for payment. The budgetary implementation of expenditure, i.e. the evolu­
tion and utilization of appropriations, may be summarized as follows: 
(a) Appropriations for commitment. 
— Evolution of appropriations: The appropriations for commitment allocated in the initial budget can undergo certain 
modifications until the final appropriations for commitment are obtained: final appropriations for commitment = initial 
budget (NDA and CA) ± supplementary and amending budgets (4) + supplementary receipts (9) ± transfers (5) + 
commitment appropriations remaining from the preceding financial year (10) + non-automatic carry-overs (11) from the 
preceding financial year (uncommitted NDA) + released commitment appropriations from preceding financial years. 
— Utilization of appropriations: The final appropriations for commitment are available in the financial year for use in the 
form of commitments entered into (appropriations for commitment utilized = amount of commitments entered into). 
— Appropriations remaining available for the next financial year: Non-differentiated appropriations which have not been 
committed, may be carried over non-automatically to the next financial year after approval by the Council (11). Non-util-
ized commitment appropriations remain available for the next financial year (10). 
— Cancellation of appropriations: The balance is cancelled. 
(b) Appropriations for payment of the financial year. 
— Evolution of appropriations: Appropriations for payment may also undergo modifications leading to the final appropria­
tions for payment: final appropriations for payment = initial budget (NDA and PA) ± supplementary and amending 
budgets (4) + supplementary receipts (9) ± transfers (5). 
— Utilization of appropriations: The final appropriations for payment are available in the financial year for use as payments 
(utilized appropriations for payment of the financial year = amount of payments made from the appropriations of the 
financial year). 
— Carry-overs of appropriations to the next financial year: Appropriations not paid may be carried over to the next finan­
cial year in the form of automatic (12) or non-automatic (11) carry-overs. 
— Cancellation of appropriations: The balance is cancelled. 
(c) Appropriations for payment carried over from the preceding financial year (automatic and non-automatic carry-overs). 
In each financial year these appropriations (after possible transfers) are also available for use as payments. Carry-overs 
which remain unused during the year are cancelled, except in certain cases where carry-overs can be repeated (13). 
Amounts cancelled in this way are added to the result of the financial year in the consolidated revenue and expenditure 
account (see 1.9.4.). 
31. 12. 83 Official Journal of the European Communities 165 
With regard to actual expenditure, a distinction is made between: 
— actual expenditure during a {financial year = total payments during the financial year = payments against appropriations 
for payment of the financial year plus payments against appropriations for payment carried over from the preceding finan­
cial year. 
— actual expenditure charged to a financial year = expenditure charged to the consolidated revenue and expenditure 
account (see 1.9.4.) = payments against appropriations for payment of the financial year plus appropriations for payment 
of the financial year carried over to the following financial year. 
1.9.4. The consolidated revenue and expenditure account and the balance of the financial year 
After the closure of each financial year the consolidated revenue and expenditure account is drawn up. The balance of the 
year, which is to be entered in the budget of the next financial year on the occasion of an amending budget, is determined 
therein (14) (see § 10). 
1.10. Presenting the accounts 
Not later than 1 June of the year following the closure of the financial year, the Commission forwards to Parliament, the Coun­
cil and the Court of Auditors the accounts of that year: the accounts comprise a revenue and expenditure account and a 
balance-sheet, together with an analysis of the financial management (15). 
1.11. External audit 
As from 1977 the external audit of the general budget has been carried out by the Court of Auditors of the European Com­
munities (16). The Court of Auditors examines the accounts of all revenue and expenditure of the general budget, whether 
revenue has been received and expenditure incurred in a lawful and regular manner, and whether the financial management 
has been sound. The audits may be carried out before the close of the financial year in question. The audits are performed on 
the basis of records and, where necessary, on the spot in the institutions of the Communities and in the Member States. The 
Court of Auditors draws up an annual report for each financial year and may also, at any time, submit observations on specific 
questions and deliver opinions at the request of one of the institutions of the Communities. 
1.12. Discharge and follow-up 
As from 1977 the following provisions are applicable (17): Parliament, on the recommendation of the Council, gives, before 
30 April of the second year following the financial year in question, discharge to the Commission on the implementation of the 
budget. To this end the Council and Parliament in turn examine the accounts presented by the Commission and the annual 
report of the Court of Auditors. 
The institutions must take appropriate action on the comments appearing in the decisions giving discharge and report on the 
measures taken (18). 
Compulsory expenditure is that resulting necessarily from the Treaties or from acts adopted in accordance with them. 
For details concerning the budgetary procedure see Articles 78 ECSC, 203 EEC and 177 Euratom. 
Article 8 of the Financial Regulation. 
Article 1 (5) of the Financial Regulation. 
Article 21 of the Financial Regulation. 
Articles 78d ECSC, 205 EEC, 179 Euratom and Article 18 (2) of the Financial Regulation. 
Articles 17 to 49 and 68 to 72 of the Financial Regulation. 
Articles 23 to 31 of the Financial Regulation; Council Regulations (ECSC, EEC, Euratom) Nos 2891/77 and 2892/77 of 19 December 1977 (OJ No L 336 
27. 12. 1977). 
Article 87 of the Financial Regulation and Article 91 (2) of the modified Financial Regulation. 
Articles 6 (2) (a) and 88 (3) of the Financial Regulation. 
Article 6 (1) (b) of the Financial Regulation. 
Articles 6 (1) (c), 6 (2) (b) and 88 (4) of the Financial Regulation. 
Articles 6 (4) and 108 (3) (a), (b) of the Financial Regulation. 
Article 27 of the Financial Regulation and Articles 15 and 16 of Council Regulation (ECSC, EEC, Euratom) No 2891/77 (OJ No L 336, 27. 12. 1977). 
Articles 73 to 77 of the Financial Regulation. 
Articles 78e, 78f ECSC, 206 and 206a EEC, 180 and 180a Euratom and Articles 78 to 84 of the Financial Regulation. 
Articles 78g ECSC, 206b EEC, 180b Euratom. 
Article 85 of the Financial Regulation. 
166 Official Journal of the European Communities 31. 12. 83 
§ 2. General budget 1982: estimated revenue 
(see also § 5) 
Total 
estimated 
revenue: 
Key: 
r % Total own resources (by Member State) 
A a> iHH Customs duties 
3 O —i Agricultural levies 
© 
('—1 Sugar and isoglucose levies 
& T 1 VAT/financial contributions 
1 1 Other revenue Other revenue: 
164,5 Mio ECU (0,7 0/0) 
VAT and financial 
contributions 
12195,8 Mio ECU (55,5 Wo) 
Sugar and isoglucose levies: 
786,0 Mio ECU (3,6 %) 
Agricultural levies: 
1 899,1 Mio ECU (8,6%) 
Customs duties: 
6 939.0 Mio ECU (31.6 o/o) ^ J ^ * © 
to CM 
" O 
t: O uj 
31. 12.83 Official Journal of the European Communities 167 
§ 3. General budget 1982: estimated expenditure — appropriations for payment 
(for more detailed figures see § 7, column 3) 
Key: 
• Non-differentiated appropriations (NDA) 
WM, Sectors with differentiated appropriations: 
payment appropriations Sectors with differentiated appropriations: 
payment appropriations 
I Appropriations available to the Commission 
• Appropriations available to the other 
institutions Other institutions: 374,5 Mio ECU (1,7 <Vb) 
— Parliament 209,2 Mio ECU 
— Council ('): 121.0 Mio ECU 
— Court of Justice: 28,0 Mio ECU 
— Court of Auditors: 16,3 Mio ECU 
I1) Including Economic and Social Committee 23,4 Mio ECU. * 2.6 Tobacco: 618,0 Mio ECU (2.8%) 
»- 2.5. Wine: 416,0 Mio ECU (1.9 %) 
•*- 2.4. Fruit and vegetables: 849,0 Mio ECU (3.9 %| 
2.3. Fats and protein plants: 1 305,0 Mio ECU (5.9 %) 
»- 2.2. Sugar 1 225,5 Mio ECU (5,6 °/o) 
»- 2.1. Cereals and rice: 2 101,2 Mio ECU (9,5 <Vb) 10 Provisional appropriations and contingency reserve 636,1 Mio ECU (2,9 %) (incl NDA: 469,3 Mio ECU) 
9 Cooperation with developing countries: 803,3 Mio ECU (3,7 %) (incl NDA: 552,5 Mio ECU) 
*- 8 Repayments lo Member States: 1 120,9 Mio ECU (5.1 o/o) 
7 Research, energy, etc 410,4 Mio ECU (1,9 <Vo) (incl. NDA 14,5MioECU) 
6 Social policy 1 022,3 Mio ECU (4,7 (incl NDA: 108,3 Mio ECU) 
5. Regional policy: 2 823,0 Mio ECU (12,8 o/o) 
(incl. NDA 1 873,0 Mio ECU) 
2.10 Agri-monetary measures 278.0 Mio ECU (1,3 °/o| 
2.9. Other markets: 581,0 Mio ECU (2,6 °/o| 
1 Administration (all institutions): 
1 103.2 Mio ECU (5,0 <Vo) *- 2.8. Meat, eggs, poultry: 1 914.0 Mio ECU (8,7 <Vo) 
2.7 Milk products: 3 929,6 Mio ECU (17,9 o/0) 4 Fisheries 75.8 Mio ECU (0,3 0/fc) (incl NDA 37,6 Mio ECU) 
3 Agricultural structures 772,1 Mio ECU (3,5 o/o) 
(incl. NDA: 11,5 Mio ECU) 
Total 
estimated 
expenditure. 
Appropriations 
tor payment: 
21 984,4 
Mio ECU (') 
(') Sum ol non-differentiated 
appropriations 
(18 508,1 Mio ECU) 
and payment 
appropriations 
(3 476,3 Mio ECU). 
31. 12.83 Official Journal of the European Communities 168 
§ 4. General budget 1982: appropriations for commitment 
(for detailed figures see § 6, column 3) 
Sum of non-differentiated appropriations 
(18 508,1 Mio ECU) and commitment appro-Total 
appropriations 
for 
commitment: 
23 260.1 
Mio ECU (') Note: For the sectors to which differentiated appropriations are 
allocated, this diagram shows the amounts of the commitment 
appropriations rather than the payment appropriations shown in 
§ 3, the amounts ol the non-differentiated appropriations and 
their diagrammatical presentation being the same 
The total appropriations for commitment are not balanced by 
the budgetary revenue of 1982 as the commitment appropria­
tions also include amounts to be financed by budgetary revenue 
of subsequent years (see § 1.7). 
Key: 
J Non-differentiated appropriations (NDA) 
Sectors with differentiated appropriations: 
commitment appropriations 1 Administration (all institutions): 1 103,2 Mio ECU (4,7 o/o) 
(for the breakdown of these appropriations by institution, see § 3) 10 Provisional appropriations and contingency reserve: 827,4 Mio ECU (3,6 %) (incl. NDA: 469,3 Mio ECU) 
9 Cooperation with developing countries: 822,4 Mio ECU (3,5 %) (incl. NDA: 552,5 Mio ECU) 
8 Repayments to Member States: 1 120,9 Mio ECU (4,8 <Vo) 
*- 7. Research, energy, etc.: 485.7 Mio ECU (2,1 %) (incl. NDA: 14,5 Mio ECU) 
6. Social policy: 1 357,3 Mio ECU (5,8 0/0) (incl NDA 108,3 Mio ECU) 
5. Regional policy 3 483,5 Mio ECU (15,0 %) 
(incl NDA: 1 873,0 Mio ECU) 
4 Fisheries: 63,0 Mio ECU (0,3 o/o) (incl NDA: 37,6 Mio ECU) 
3 Agricultural structures: 779,4 Mio ECU (3,4 O/o) 
(incl NDA: 11,5 Mio ECU) 
(') 
priations (4 752,0 Mio ECU) 2 EAGGF-Guarantee: 13 217,3 Mio ECU (56.8 o/o) 
(for the breakdown of these appropriations 
by market, see § 3) 
169 Official Journal of the European Communities 31. 12. 83 
§ 5. Estimated and actual revenue 1982 
A. Estimated and actual revenue 1982: 
Estimated revenue Actual revenue 
of the 1982 budget 1982 
Mio ECU % Mio ECU o/o 
1. Own resources: 
— Customs duties 6 939,0 31,6 6 815,3 31,8 
— Agricultural levies 1 899,1 8,6 1 522,0 7,1 
— Sugar and isoglucose levies 786,0 3,6 705,8 3,3 
— VAT 1982 11 998,3 54,6 12 000,4 56,0 
— Financial contribution (GNP) 
1982 Greece 197,5 0,9 197,0 0,9 
— Balance of VAT and financial 
contributions before 1982 — -76,3 -0,3 
Total own resources 21 819,9 99,3 21 164,2 98,8 
2. Other revenue 164,5 0,7 263,2 1,2 
(ECSC contributions; financing of 
supplementary Euratom programmes; 
deductions from staff remuneration; 
miscellaneous revenue) 
Total revenue 21 984,4 100 21 427,4 100 
B. Estimated and actual own resources 1982 by Member State: 
(MioECU) 
Type of resource Bel­
gium Den­
mark FRof 
Germany Greece France Ireland Italy Luxem­
bourg Nether­
lands United 
King­
dom EUR 10 
Customs duties: 
— estimated 
— actual 415,0 
403,7 140,0 
142,6 1 890,0 
1 966,5 110,0 
108,7 1 150,0 
1 071,2 90,0 
87,8 725,0 
660,8 4,0 
4,3 615,0 
585,2 1 800,0 
1 784,5 6 939,0 
6 815,3 
Agricultural levies: 
— estimated 
— actual 190,0 
238,6 10,0 
7,5 255,0 
201,9 70,0 
63,5 140,0 
70,9 4,0 
6,0 435.0 
285.1 0,1 
0,1 245,0 
172,5 550,0 
475,9 1 899,1 
1 522,0 
Sugar and isoglucose levies: 
— estimated 
— actual 56,0 
44,4 25,0 
25,3 200,0 
190,2 17.0 
13.1 258,0 
211,0 11,0 
7,0 95,0 
83,5 — 57,0 
58,9 67,0 
72,4 786,0 
705,8 
VAT 1982 (1). 
— estimated 
— actual 471,6 
468,0 245,1 
244,5 3 338,5 
3 347,1 197,5 
197,0 2 913,1 
2 914,8 92,5 
92,4 1 595,3 
1 592,3 22,2 
22,0 638,1 
638,6 2 681,9 
2 680,7 12 195,8 
12 197,4 
Balance of VAT 
and financial contributions 
before 1982: 
— estimated 
— actual -6,4 -17,7 -7,2 -0,7 -42,0 15,3 -134,5 3,7 11,2 102,0 -76,3 
Total own resources: 
— estimated 
— actual 1 132,6 
(5,2 o/o) 
1 148,3 
(5,4 o/o) 420.1 
(1,9 0/o) 
402.2 
(1,9 0/o) 5 683,5 
(26,1 o/o) 
5 698,5 
(26,9 o/o) 394.5 
(1,8 0/o) 
381.6 
(1,8 0/o) 4 461,1 
(20,4 o/o) 
4 225,9 
(20,0 o/o) 197,5 
(0,9 o/o) 
208,5 
(1,0 0/o) 2 850,3 
(13,1 o/o) 
2 487,2 
(11,8 0/o) 26,3 
(0,1 o/o) 
30,1 
(0,1 o/o) 1 555,1 
(7,1 o/o) 
1 466,4 
(6,9 o/o) 5 098,9 
(23,4 o/o) 
5115,5 
(24,2 o/o) 21 819,9 
(100 o/o) 
21 164,2 
(100 o/o) 
(1) Greece paid a financial contribution based on its GNP. 
170 Official Journal of the European Communities 31. 12. 83 
§ 6. Appropriations for commitment available in 1982 and their utilization 
(Mio ECU) 
Sector 
(the sections (S), titles (T) and 
chapters (Ch) corresponding 
to the 1982 budgetary nomenclature 
are shown in brackets) .. o < 
in aiSi 
1 §• i g co "O fc O ~ Q) O 
Q- co .2 
2? ja 
ra a) z 9-a> o> "a Q.O) CM 00 CD 
U) c 
c o 
n a> 
n 
CO ™ C CO 
° m •— CO .—. 
.2 D)^ v> c o 
CO 
° ^ </> ™ 
® i c c 
(- c to E n 
CM 00 a> <0 (0 
II Li. CD E 2 
E ® 
O c O a> O C CO 
F 
<®o ai o c CO 
O 
(1) (2) (3) (4) (5) (6) (7) = 
(4)-(5)-(6) All 
institutions 1. Administration 
1.1. Parliament (S I) 
1.2. Council (S II) 
(of which: Economic and Social Committee) 
1.3. Commission (Sill, Part A) 
1.4. Court of Justice (S IV) 
1.5. Court of Auditors (S V) NDA 
NDA 
NDA 
(NDA) 
NDA 
NDA 
NDA 1 103,2 
209,2 
121,0 
(23,4) 
728,7(3) 
28,0 
16,3 1 121,8 
209,8 
121,0 
(23,4) 
746,7(3) 
28,0 
16,3 1 063,9 
199,0 
111,7 
(20,7) 
713,3 
25,8 
14,1 0,0 
0,0 57,9 
10,8 
9,3 
(2,7) 
33,4(3) 
2,2 
2,2 
2. EAGGF-Guarantee (T 1, 2) 
2.1. Cereals and rice (Ch 10) 
2.2. Sugar (Ch 11) 
2.3. Fats and protein 
plants (Ch 12,13) 
2.4. Fruit and vegetables (Ch 15) 
2.5. Wine (Ch 16) 
2.6. Tobacco (Ch 17) 
2.7. Milk products (Ch 20) 
2.8. Meat, eggs, poultry (Ch 21 -24) 
2.9. Other markets (Ch 14,18, 25) 
2.10. Agri-monetary measures (Ch 27, 28) NDA 
NDA 
NDA 
NDA 
NDA 
NDA 
NDA 
NDA 
NDA 
NDA 
NDA 13 217,3 
2 101,2 
1 225,5 
1 305,0 
849,0 
416,0 
618,0 
3 929,6 
1 914,0 
581,0 
278,0 13 286,0 
1 983,9 
1 243,5 
1 500,6 
918,6 
572,0 
633,0 
3 510,2 
1 941,7 
589,5 
393,0 12 371,6 
1 874,8 
1 241,8 
1 296,6 
914,3 
570,6 
622,6 
3 327,8 
1 625,9 
584,1 
313,1 — 914,4 
109,1 
1,7 
204,0 
4.3 
1.4 
10,4 
182,4 
315,8 
5,4 
79,9 
3. Agricultural structures (T 3) 
(of which: non-differentiated appropriations) 
3.1. EAGGF-Guidance (Ch 30-33) 
3.2. Specific measures (Ch 38) NDA + CA 
(NDA) 
CA 
NDA + CA 779,4 
(11.5) 
765,3 
14,1 894,0 
(12,5) 
878,9 
15,1 745,7 
(9,5) 
733,6 
12,1 142,1 
(—) 
142,1 
0,0 6,2 
(3,0) 
3,2 
3,0 
CD 
c CO 4. Fisheries (T 4) 
(of which: non-differentiated appropriations) 
4.1. Common organization of the market (Ch 40) 
4.2. Other measures (Ch 41,42,46) NDA + CA 
(NDA) 
NDA 
NDA + CA 63,0 
(37,6) 
31,8 
31,2 110,8 
(43,6) 
34,2 
76,6 68,8 
(43,2) 
34,0 
34,8 25,1 
(-) 
25,1 16,9 
(0,4) 
0,2 
16,7 
c o 
o <D 
CO 
c 5. Regional policy (T 5) 
(of which: non-differentiated appropriations) 
5.1. Regional Fund (Ch 50, 51) 
5.2. Measures in favour of the 
United Kingdom (Ch 53) 
5.3. Other measures (Ch 52, 54) NDA + CA 
(NDA) 
CA 
NDA 
NDA 3 483,5 
(1 873,0) 
1 610,5 
1 654,2 
218,8 3 962,3 
(2 032,8) 
1 929,5 
1 804,2 
228,6 3 860,0 
(2 015,2) 
1 844,8 
1 804,2 
211,0 84,7 
(-) 
84,7 17,6 
(17,6) 
17,6 
tn in 
E 
E o o 6. Social policy (T 6) 
(of which: non-differentiated appropriations) 
6.1. Social Fund (Ch 60-62) 
6.2. Other measures (Ch 63-69) NDA + CA 
(NDA) 
CA 
NDA + CA 1 357,3 
(108,3) 
1 242,8 
114,5 1 758,5 
(174,3) 
1 577,8 
180,7 1 689,6 
(173,6) 
1 510,2 
179,4 68,2 
(—) 
67,6 
0,6 0,7 
(0,7) 
0,0 
0,7 
7. Research, energy etc. (T 7) 
(of which: non-differentiated appropriations) 
7.1. Energy (Ch 70) 
7.2. Research and investment (Ch 73) 
7.3. Industry and transport (Ch 77, 78) 
7.4. Other measures (Ch 71,72,75) NDA + CA 
(NDA) 
NDA + CA 
CA 
NDA + CA 
NDA + CA 485,7 
(14,5) 
65,0 
345,6 
58,4 
16,7 737,4 
(21,6) 
136,7 
508,3 
74,0 
18,4 557,2 
(21,3) 
83,9 
443,1 
19,3 
10,9 173,3 
(-) 
51,6 
59,8 
54,5 
7,4 6,9 
(0,3) 
1,2 
5,4 
0,2 
0,1 
8. Repayments to Member States (T 8) 
8.1. Costs incurred in collecting 
own resources (Ch 80) 
8.2. Other repayments (Ch 82, 86) NDA 
NDA 
NDA 1 120,9 
962.4 
158.5 1 123,8 
962,4 
161,4 1 068,2 
907,6 
160,6 55,6 
54,8 
0,8 
9. Cooperation with developing countries (T 9) 
(of which: non differentiated appropriations) 
9.1. Food aid (Ch 92) 
9.2. Financial aid (Ch 93-96,98, 99) NDA + CA 
(NDA) 
NDA 
NDA + CA 822,4 
(552,5) 
499,6 
322,8 1 153,4 
(628,5) 
503,6 
649,8 899,5 
(626,6) 
502.7 
396.8 194,5 
(-) 
194,5 59.4 
(1,9) 
0,9 
58.5 
10. Provisional appropriations and contingency reserve 
(Ch 100,101) 
(of which: non-differentiated appropriations) NDA + CA 
(NDA) 827,4 
(469,3) 402,5 
(264,3) — — 402,5 
(264,3) 
Grand total NDA + CA 23 260,1 24 550,5 22 324,5 687,9 1 538,1 
(NDA) (18 508,1) (18 709,2) (17 393,1) (0,0) (1 316,1) 
(CA) (4 752,0) (5 841,3) (4 931,4) (687,9) (222,0) 
(') Budget appropriations amended after taking account of non-automatic carry-overs from 1981 (Parliament 0,6 Mio ECU; Commission 373,7 Mio ECU), commitment appropriations 
remaining from previous years (908,5 Mio ECU), appropriations corresponding to receipts for services performed on behalf of outside bodies (7,6 Mio ECU) and transfers between 
budget headings. 
(2) Non-differentiated appropriations not automatically carried over to 1983 and commitment appropriations remaining at the closure of the 1982 accounts. 
(3) Including amounts corresponding to provisional appropriations in Section III, Part A. 
31. 12. 83 Official Journal of the European Communities 171 
§ 7. Appropriations for payment available in 1982 and their utilization (Mio ECU) 
A. Appropriations of the financial year 1982 B. Carry-overs from 1981 
Sector 
(for the corresponding terms and 
budget headings see 
§ 6, column 1) o!< £ 
&|Sl to (U V) ~ t C n 
£?•£ 2 a c to a >< O 'C Q. 1- C Q. CO a> O) TJ D •O CM 00 
o> .2 
Q. 
8 CVJ 
Q_ 00 
Q.O) CD 
— CO 
™ c £ o UL '•= a> T3 CO 
E </> 
C 00 
S. £ CO 00 
CT> 
O 
CO 
0) > o 
£-
CO 
O </> c o 
o c CO O U) 
CD 
E to </> o c C ^ CO OLJ: ~ a> I_ CD > <l> C O C 
2 a> 
9-1 5 
<82 a> T3 co 
E 
co 
is 
CD _ Q_ £ CO CO 
o> 
o 
CO 
<u > o 
e-
CO o </) c 
.2 
JD 
0) O c CD 
o C. 
Total 
pay­
ments 
made in 
1982 
(1) (2) (3) (4) (5) (6) (7) = 
(4)-(5) 
-(6) (8) (9) (10) (11)= 
(8)-(9) 
-(10) (12) = 
(5)+ (9) All institutions 1. Administration 
1.1. Parliament 
1.2. Council 
(of which: Economic and Social 
Committee) 
1.3. Commission 
1.4. Court of Justice 
1.5. Court of Auditors NDA 
NDA 
NDA 
(NDA) 
NDA 
NDA 
NDA 1 103,2 
209,2 
121,0 
(23,4) 
728,7 (1) 
28,0 
16,3 1 121,2 
209,2 
121,0 
(23,4) 
746,7 (1) 
28,0 
16,3 957,0 
162,0 
103,2 
(19,9) 
654,4 
24,3 
13,1 106,6 
36,7 
8,5 
(0,8) 
58,9 
1,5 
1,0 57,6 
10,5 
9,3 
(2,7) 
33,4 (1) 
2,2 
2,2 69,9 
16,4 
10,9 
(1,1) 
40,6 
1,2 
0,8 53,3 
11,3 
6,5 
(0,7) 
33,9 
1,1 
0,5 — 16,6 
5,1 
4,4 
(0,4) 
6,7 
0,1 
0,3 1 010,3 
173,3 
109,7 
(20,6) 
688,3 
25,4 
13,6 
2. EAGGF-Guarantee 
2.1. Cereals and rice 
2.2. Sugar 
2.3. Fats and protein plants 
2.4. Fruit and vegetables 
2.5. Wine 
2.6. Tobacco 
2.7. Milk products 
2.8. Meat, eggs, poultry 
2.9. Other markets 
2.10. Agri-monetary measures NDA 
NDA 
NDA 
NDA 
NDA 
NDA 
NDA 
NDA 
NDA 
NDA 
NDA 13 217,3 
2 101,2 
1 225,5 
1 305,0 
849,0 
416,0 
618,0 
3 929,6 
1 914,0 
581,0 
278,0 13 124,3 
1 973,8 
1 243,5 
1 499,0 
915,0 
572,0 
633,0 
3 376,5 
1 929,0 
589,5 
393,0 12 257,3 
1 865,1 
1 241,8 
1 294,9 
912.5 
570.6 
622,6 
3 234,8 
1 618,8 
583,1 
313,1 2,7 
1,7 
1,0 864.3 
108,7 
1,7 
202.4 
2,5 
1,4 
10,4 
141,7 
310,2 
5,4 
79,9 162,4 
10,1 
1,8 
3,6 
133,7 
12,7 
0,5 112,2 
9.7 
0,1 
1.8 
93,0 
7,1 
0,5 — 50,2 
0,4 
1.7 
1.8 
40,7 
5,6 
0,0 12 369,5 
1 874,8 
1 241,8 
1 295,0 
914,3 
570,6 
622,6 
3 327,8 
1 625,9 
583,6 
313,1 
3. Agricultural structures 
(of which: non-differentiated appropriations) 
3.1. EAGGF-Guidance 
(of which: non-differentiated appropriations) 
3.2. Specific measures NDA + PA 
(NDA) 
NDA + PA 
(NDA) 
NDA + PA 772,1 
(11.5) 
758,7 
13,4 763,7 
(12,5) 
749,3 
14,4 483,5 
(5,0) 
478,3 
5,2 277,2 
(4,5) 
271,0 
6,2 3,0 
(3,0) 
3,0 302,7 
(215,9) 
295,6 
(209,4) 
7,1 162,6 
(86,5) 
159,9 
(84,4) 
2,7 120,1 
(120,1) 
120,1 
(120,1) 20,0 
(9,3) 
15,6 
(4,9) 
4,4 646.1 
(91,5) 
638.2 
(84,4) 
7,9 
CD 
c CO 4. Fisheries 
(of which: non-differentiated appropriations) 
4.1. Common organization of the market 
4.2. Other measures NDA + PA 
(NDA) 
NDA 
NDA + PA 75,8 
(37,6) 
31,8 
44,0 81,5 
(43,6) 
34.2 
47.3 50,7 
(42,8) 
34,0 
16,7 30,4 
(0,4) 
30,4 0,4 
(0,4) 
0,2 
0,2 4,1 
(0,0) 
4,1 4,1 
(0,0) 
4,1 — 0,0 
(0,0) 54,8 
(42,8) 
34,0 
20,8 
c O 
O 
a> CO 
c 5. Regional policy 
(of which: non-differentiated appropriations) 
5.1. Regional Fund 
5.2. Measures in favour of the United 
Kingdom 
5.3. Other measures NDA + PA 
(NDA) 
PA 
NDA 
NDA 2 823,0 
(1 873,0) 
950,0 
1 654,2 
218,8 2 957,8 
(1 882,8) 
1 075,0 
1 654,2 
228,6 2 765,8 
(1 828,6) 
937,2 
1 654,2 
174,4 174,4 
(36,6) 
137,8 
36,6 17,6 
(17,6) 
17,6 242,5 
(206,7) 
35,8 
165,0 
41,7 242,5 
(206,7) 
35,8 
165,0 
41,7 (—) 0,0 
(0,0) 
0,0 3 008,3 
(2 035,3) 
973.0 
1 819,2 
216.1 
'</) 
</) 
E 
E o O 6. Social policy 
(of which: non-differentiated appropriations) 
6.1. Social Fund 
6.2. Other measures NDA + PA 
(NDA) 
PA 
NDA + PA 1 022,3 
(108,3) 
911,3 
111,0 1 130,7 
(112,3) 
1 015,8 
114,9 910,0 
(76,9) 
832,6 
77,4 220,0 
(34,8) 
183,2 
36,8 0,7 
(0,6) 
0,7 159,4 
(84,2) 
73,0 
86,4 150,6 
(76,2) 
73,0 
77,6 6,7 
(6,7) 
6,7 2,1 
(1,3) 
2,1 1 060,6 
(153,1) 
905,6 
155,0 
7. Research, energy, etc. 
(of which: non-differentiated appropriations) 
7.1. Energy 
7.2. Research and investment 
7.3. Industry and transport 
7.4. Other measures NDA + PA 
(NDA) 
NDA + PA 
PA 
NDA + PA 
NDA + PA 410,4 
(14,5) 
47.3 
318,2 
31.4 
13.5 462,6 
(21,6) 
47.3 
369,4(2) 
31.4 
14.5 345,7 
(7,4) 
16,8 
317,6 
5,0 
6,3 112,9 
(13,8) 
30,4 
48,2 
26,2 
8,1 4,0 
(0,4) 
0,1 
3,6 
0,2 
0,1 107,5 
(10,3) 
31.6 
60,5 
11.7 
3,7 92,0 
(9,6) 
27.2 
50,0 
11.3 
3,5 8,6 
(-) 
8,6 6,9 
(0,7) 
4,4 
1,9 
0,4 
0,2 437,7 
(17,0) 
44,0 
367,6 
16,3 
9,8 
8. Repayments to Member States 
8.1. Costs incurred in collecting own 
resources 
8.2. Other repayments NDA 
NDA 
NDA 1 120,9 
962.4 
158.5 1 123,8 
962,4 
161,4 952,2 
836,1 
116,1 116,0 
71,5 
44,5 55,6 
54,8 
0,8 97.1 
73.2 
23,9 97.1 
73.2 
23,9 — 0,0 
0,0 
0,0 1 049,3 
909,3 
140,0 
9. Cooperation with developing countries 
(of which: non-differentiated appropriations) 
9.1. Food aid 
9.2. Financial aid NDA + PA 
(NDA) 
NDA 
NDA + PA 803,3 
(552,5) 
499.6 
303.7 945,3 
(628,5) 
503.6 
441.7 598,1 
(510,1) 
430,4 
167,7 345,3 
(116,5) 
72,3 
273,0 1,9 
(1,9) 
0,9 
1,0 258,5 
(112,7) 
110.7 
147.8 188,0 
(111,3) 
109,8 
78,2 — 70.5 
(1,4) 
0,9 
69.6 786.1 
(621,4) 
540.2 
245,9 
10. Provisional appropriations and 
contingency reserve 
(of which: non-differentiated appropriations) NDA + PA 
(NDA) 636,1 
(469,3) 283,4 
(264,3) — — 283,4 
(264,3) — — — — — 
Grand total NDA + PA 
(NDA) 
(PA) 21 984,4 
(18 508,1) 
(3 476,3) 21 994,3 (2) 
(18 334,9) 
(3 659,4) 19 320,3 
(16 637,3) 
(2 683,0) 1 385,5 
(431,9) 
(953,6) 1 288,5 
(1 265,7) 
(22,8) 1 404,1 
959,2 
(444,9) t 102,4 
(752,9) 
(349,5) 135,4 
(126,8) 
(8,6) 166,3 
(79,5) 
(86,8) 20 422,7 
(17 390,2) 
(3 032,5) 
(') Including amounts corresponding to provisional appropriations in Section III, Part A. 
(2) Including 9,9 Mio ECU corresponding to receipts for services performed on behalf of outside bodies. 
172 Official Journal of the European Communities 31. 12. 83 
§8. Actual own resources in 1982 
(for basic figures, see § 5) 
A. Actual own resources in 1982 — 
by type 
D O LU 
O 
5 
CO 
m* 3 O UJ CO 
CO 
D O 
O) < 
0 ? (/> 
Total: 21 164,2 Mlo ECU B. Actual own resources in 1982 — by Member State and by type 
GR F IRL I 
— Total: 21 164,2 Mlo ECU -
C. Shares ot Member States in each type ot own resources 
28.8 
3.8 
1.9 27.6 VAT and financial contributions (%) 
23.7 Customs duties (0/o) 
1.6 22.9 
12,0 
0.9 5,4 
0,2 
Agricultural levies |° o) B DK D GR F IRL I L NL UK 
29,9 
26.9 
6,3 
3.6 
1,9 Sugar and isoglucose 
levies (o/o) 
11.8 
1.0 8,3 10.3 
8,3 
B DK D GR F IRL I L NL UK B DK D GR F IRL I L NL UK 
31.12.83 Official Journal of the European Communities 173 
§ 9. Rate of utilization of appropriations available in 1982 
Final appropriations for 
commitment in 1982 
(see § 6. columns 4 to 7) 
D 
O 
HI 
o 
if 
fgs .9 .S Q 
fo Q.^ 
•= 2 
~ Q. 1 
3 a o 
o 
3°l II. Final 1982 appropriations 
for payment 
(see § 7. columns 4 lo 7) 
Total: 
21 994.3 Mlo ECU 
_ N CO — 
Is 
o? Total: 
24 550,5 Mio ECU 
M 11 6 E is 
90.9 °<o 
2,8 o/o Key: 
• Non-diflerenliated 
appropriations 
• " Commitment 
appropriations 
m - Payment appropriations 
H- Rate of commitment 
S — Rate of payment 
• Rate of unused 
appropriations remaining 
available for 1983 
(appropriations remaining 
and/or carried over) 
•" Cancellations 
III. Appropriations for payment 
carried over from 1981 
(see § 7, columns 8 to 11) 
Total: 1 404,1 Mio ECU 
jzCU-
6,3% 78 .5 o/o 
9.6% 
174 Official Journal of the European Communities 31. 12. 83 
§ 10. The consolidated revenue and expenditure account and the balance of the financial year 1982 
(application of Article 15 of Council Regulation (ECSC, EEC, Euratom) No 2891/77) 
Revenue: 
Funds 
actually available for 
Ihe linancial year 1982 
Total: 
21 593,7 Mio ECU Expenditure: 
Application of funds 
available for the 
financial year 1982 
Total: 
21 593,7 Mio ECU 
(3) Cancellations of carry­
overs from 1981(see 
§ 7, column 11) 
(2) Other actual revenue 
(see § 5) 166,3 Mio ECU 825.3 Mio ECU 
263,2 Mio ECU 
~L y 
(1) Total actual own resources 
in 1982: 
21 164,2 Mio ECU (see § 5) 
705,8 Mio ECU 
Customs duties 
6 815,3 Mio ECU VAT/financial 
contributions 
12 121,1 Mio ECU 
Agricultural 
levies 
1 522,0 Mio ECU A / 62,6 Mio ECU 
1 385.5 Mio ECU 
19 320,3 Mio ECU (7) Balance of 1982 to be 
entered in the 1983 
budget 
(6) Other expenditure: 
- Exchange rate losses 
61,2 Mio ECU 
- Earmarked revenue to 
be repaid 
1,4 Mio ECU 
(5) 1982 appropriations for 
payment carried over to 
1983 
(see § 7, column 6| 
(4) Payments made in 1982 
against appropriations of 
the 1982 budget 
(see § 7, column 5) 
Note: The result of the financial year 1982, defined as (1) + (2) - (4) - (5), is 721,6 Mio ECU, 
31.12.83 Official Journal of the European Communities 175 
Total: ^ 
20 422,7 
Mio ECU § 11. Payments made in 1982 — by sector and by recipient Member State 
Note: Payments made in 1982 = payments against 1982 appropriations plus payments against carry-overs from 1981 
A. Payments by sector (Mio ECU): 
(see also § 7, column 12) 
2. EAGGF-Guarantee: 12 369,5 
7. Research, energy, etc : 437.7 3 Agricultural structures 646,1 
4 Fisheries: 54,8 
5. Regional policy: 3 008,3 
6. Social policy: 1 060,6 8. Repayments 
to Member States: 1 049,3 1 Administration: 1 010,3 
9 Cooperation 
with developing 
countries: 786.1 
B. Payments to Member States: 
(for more detailed figures see § 12 and § 13) 
9 DK GR IRL £5/ 
Specific measures 
Costs incurred in 
collecting own 
resources 
EAGGF-Guidance 
Social Fund 
Regional Fund 
Fisheries 
EAGGF-Guarantee 
NL UK 7~ (Mio ECU) 
Uoctton 
MItvaMaMa EUR 10 
EAGGF-Guarantee 
(T 1-2) (') 535,1 556,7 2 027,5 684.6 2 866,2 496.5 2 502.6 2,6 1 416,7 1 278,3 2,7 12 369,5 
EAGGF-Guidance 
|Ch 30-33) 17,7 20,8 107,1 14,5 167,4 84.3 125,0 1.6 32,2 67,6 — 638,2 
Social Fund (Ch 60-621 16,8 17,6 89.9 23,5 119,3 115.0 235,1 1.1 9,0 278.3 905,6 
Regional Fund (Ch 50-51) 10,8 14,6 61,6 152,3 130,0 93.5 281,8 0,1 3,2 225.1 — 973,0 
Fisheries (Ch 40-42.46) 0,6 3,2 3,7 — 3,6 7,8 8.9 — 8,3 9,8 8.9 54,8 
Costs incurred in collecting 
own resources (Ch 80) 68,3 17,6 237,0 18,3 134,7 10,2 102,6 0.4 83,9 236,3 — 909,3 
Specific measures (Ch 52, 
53, 82, 86) — — — 92,7 — 72,7 142.6 1 866,5 2 174,5 
Total 649,3 630.5 2 526,8 985,9 3 421.2 880,0 3 398,6 5,8 1 553,3 3 961,9 11,6 18 024,9 
(3,6 o/o) (3,5 o/o) (14.0 o/o) (5.5 o/o) (19,0 O/o) (4,9 0/b) (18,8 0/0) (0,0 o/o) (8.6 o/b) (22,0 o/o) (0,1 O/o) (100 0/0) 
(') For the EAGGF-Guarantee these figures include adjusted monetary compensatory amounts (see § 12(D). footnote 1). 
176 Official Journal of the European Communities 31. 12. 83 
§ 12. EAGGF-Guarantee: payments made in 1982 — by market and by recipient Member State 
A. Payments made in 1982. by market: 
d 
f o> 
s 
3 O UJ 
CO fx." 
8 o 
«o 
2 
/ S 9 
II 
Total: 12 369,5 Mio ECU B. Payments made in 1982. by recipient Member State: 
Key: 
- for the colour 
corresponding 
lo each market. 
see A 
[—| remaining 
1—' ~ markets 
sulnuS <o uj m <D UJ 
:i=?IE 
Total: 12 369.5 Mio ECU MI 11v Allocation NL UK not 
available 
C. Share of payments received in 1982 by the Member States for the principal markets: 
Milk products (%) 
r M 24J >09 22J 
0.0 AZ 36.3 
Cereals and 
rice (<Vo) 
m 15,1 12.8 
l"W 6,9 
03 i o.ol 0 1 Meat. eggs, poultry (<>/o) 
21.5 
Fats and 35,9 
protein plants 
22£ 
16.7 
9,1 
Si 
rTl 00 o.ol I ] B OK D GR ..E—IRL I L NL UK Allocation B DK D GR F IRL I L NL UK not 
available 
Sugar (%) 
18.5 Fruit and vegetables (°to) 69,4 
B DK D GR F IRL I L NL UK Allocation B DK D GR F IRL I L NL UK not 
available 0.4 0,1. 
B DK D GR F IRL I L NL UK 
D. Record of payments made in 1982 — by recipient Member State and by market: (Mio ECU) 
Market B DK D GR F IRL 1 L NL UK Allocation 
not 
available 
<2> EUR 10 
2.1 Cereals and rice 90.7 40.3 300.1 129,3 680,8 5,4 282.4 0,1 103,9 240.8 1,0 1 874,8 
2.2. Sugar 166.7 44.9 229.9 11,7 508.5 5,2 92.7 0.0 87.2 95.0 — 1 241,8 
2.3 Fats and protein plants 16,3 21.6 295.7 77,6 216.3 0,5 465,2 0,0 82.4 118.2 1.2 1 295,0 
2 4 Fruit and vegetables 3.8 0,9 15.4 133,8 110,0 0,1 634.2 — 13.3 2.8 — 914,3 
2.5 Wine 0,0 4.0 20,7 157,7 387,8 — — 0.4 — 570,6 
2.6 Tobacco 3.8 — 35.9 205.5 87.8 — 289,3 — 0,3 — — 622,6 
2.7 Milk products 222.7 293.9 800.7 1,9 696.7 191.8 69.5 2.8 757.7 290.1 — 3 327,8 
2 8 Meat, eggs, poultry 16.7 113,1 199.6 3.1 350.3 273,4 253,2 0,1 80.7 335,7 — 1 625,9 
2 9 Other markets 17.2 35,1 45.1 100.7 50,8 19.1 37,8 0,1 76.6 200.6 0.5 583.6 
2.10. Agri-monetary 
measures (') -2.8 6,9 101,1 0,3 7.3 1.0 -9.5 -0.5 214,6 -5,3 — 313,1 
Total 535,1 556,7 2 027,5 684,6 2 866,2 496,5 2 502,6 2.6 1 416,7 1 278.3 2.7 12 369.5 
(') The agri-monetary measures include monetary compensatory amounts (MCAs) adjusted to cancel the effect of the application of Article 2 of Council Regulation (EEC) No 
974/71, under which exporting Member Slates themselves pay directly the MCAs due on import into certain importing Member States The MCA adjustment consists in 
allocating to these importing Member States the amounts which are chargeable to them 
(2) Direct payments by the Commission (0.6 Mio ECU against carry-overs from 1981 and 2.1 Mio ECU against 1982 appropriations) 
31.12.83 Official Journal of the European Communities 177 
§ 13. The structural Funds: commitments entered into and payments made in 1982 — 
by recipient Member State 
Note: 
The structural Funds (EAGGF-Guidance. Social Fund. Regional Fund) are prov­
ided with differentiated appropriations ('), which comprise both commitment 
appropriations and payment appropriations with different financial incidence 
(see § 1 7) The commitments entered into in 1982 relate to multiannual pro­
jects which are financed in 1982 and in subsequent years the payments made 
in 1982 relate to commitments entered into in 1982 and in previous years 
(') The only exception being that EAGGF-Guidance carry-overs from previous years also 
Include non-differentiated appropriations 
(a) Commitments 
(b) Payments Social Fund 
EAGGF-
» Guidance 
EUR 10 Regional Fund 
EAGGF-Guidance: 
(a) Commitments (') 
(b) Payments 13,7 
17.7 19,2 
20.8 95,1 
107,1 28,5 
14,5 192,1 
167,4 86,1 
84,3 226,7 
125.0 1.6 
1.6 26,9 
32,2 66,9 
67,6 (') 
756,8 
638,2 
Social Fund: 
(a) Commitments 
(b) Payments 24,9 
16.8 27.3 
17.6 97,9 
89.9 52,5 
23.5 265.5 
119.3 143,4 
115,0 434,8 
235,1 0,6 
1.1 16,1 
9.0 447.3 
278.3 1 510,3 
905,6 
Regional Fund: 
(a) Commitments 
(b) Payments 17,8 
10,8 17,4 
14,6 58.3 
61.6 213,3 
152.3 338.0 
130.0 114,0 
93,5 604,9 
281,8 2.0 
0,1 18,3 
3.2 460.8 
225,1 1 844,8 
973,0 
Total 
(a) Commitments 
(b) Payments 56,4 
45,3 63,9 
53,0 251,3 
258,6 294,3 
190,3 795,6 
416,7 343,5 
292,8 1 266,4 
641,9 4,2 
2,8 61,3 
44,4 975,0 
571,0 4 111,9 
2 516,8 
(') Including an amount of 23.2 Mio ECU representing the re-utilization of amounts released in accordance with Article 2 of Council Regulation (EEC) No 3171/75 of 3 Decem­
ber 1975 
178 Official Journal of the European Communities 31. 12. 83 
§ 14. Utilization of the appropriations for payment for the period 1978-82 — by sector 
(1978-80: Mio EUA) 
(1981-82: Mio ECU) 
A. Appropriations for the financial year B. Carry-overs from the previous financial year c. 
Sector 
and financial year Budget for 
the financial 
year (') Final appro­
priations (2) Payments Carry-overs 
to the follow­
ing financial 
year Cancella­
tions Final carry­
overs (3) Payments Carry-overs 
to the follow­
ing financial 
year Cancella­
tions (") Total pay­
ments made 
(1) (2) (3) (4) (5) = 
(2)-(3)-(4) (6) (7) (8) (9) = 
(6)-(7)-(8) (10) = 
(3)+ (7) 
General budget 
total (s) 1978 
1979 
1980 
1981 
1982 12 362,7 
14 447,0 
16 182,5 
18 434,0 
21 984,4 12 377,5 
14 488,3 
16 233,3 
18441,5 
21 994,3 10 733,9 
12 925,3 
14 866,7 
16 712,0 
19 320,3 1 527,7 
1 450,7 
1 108,4 
1 172,8 
1 385,5 115,9 
112,3 
258,2 
556,7 
1 288,5 2 007,0 
2 098,9 
1 869,8 
1 435,1 
1 404,1 1 239,2 
1 441,8 
1 423,7 
1 080,8 
1 102,4 601,2 
457,9 
329,4 
231.3 
135.4 166,6 
199.2 
116,7 
123,0 
166.3 11 973,1 
14 367,1 
16 290,4 
17 792,8 
20 422,7 
1. Administration 1978 768,0 770,7 640,3 52,8 77,6 42,1 35,2 6,9 675,5 
(ail institutions) 1979 858,7 860,8 726,9 56,2 77,7 52,8 44,7 — 8,1 771,6 
1980 929,6 896,8 771,5 66,3 59,0 56,2 48,2 — 8,0 819,7 
1981 1 015,7 1 037,7 886,1 69,9 81,7 66,2 56,8 — 9,4 942,9 
1982 1 106,2 1 121,2 957,0 106,6 57,6 69,9 53,3 — 16,6 1 010,3 
2. EAGGF-Guaran- 1978 8 677,3 8 665,2 8 634,8 30,4 633,8 629,8 4,0 9 264,6 
tee 1979 10 384,1 10 387,1 10 387,1 — — 30,4 30,4 — — 10 417,5 
1980 11 485,5 11 482,2 11 283,2 8,7 190,3 — — — — 11 283,2 
1981 11 580,0 11 538,0 10 951,5 162,4 424,1 8,7 8,7 — — 10 960,2 
1982 13 217,3 13 124,3 12 257,3 2,7 864,3 162,4 112,2 — 50,2 12 369,5 
3. Agricultural 1978 431,4 431,2 143,2 286,1 1,9 802,8 183,9 570,3 48,6 327,1 
structures 1979 326,7 300,2 93,6 205,4 1,2 856,3 314,5 434,9 106,9 408,1 
1980 320,1 324,2 285,6 38,5 0,1 648,4 316,3 305,2 26,9 601,9 
1981 518,9 553,0 457,0 93,3 2,7 343,7 117,7 209,4 16,6 574,7 
1982 772,1 763,7 483,5 277,2 3,0 302,7 162,6 120,1 20,0 646,1 
4. Fisheries 1978 18,3 35,7 14,1 21,6 1,6 0,0 1,6 14,1 
1979 36,1 53,6 27,4 25,9 0,3 23,3 17,9 0,5 4,9 45,3 
1980 50,7 58,0 29,8 28,1 0,1 17,0 13,9 0,1 3,0 43,7 
1981 49,3 49,9 37,7 4,1 8,1 12,7 12,2 — 0,5 49,9 
1982 75,8 81,5 50,7 30,4 0,4 4,1 4,1 — — 54,8 
5. Regional policy 1978 525,5 525,5 171,9 353,6 0,0 83,3 83,3 — 0,0 255,2 5. Regional policy 
1979 499,5 699,5 318,4 381,1 0,0 353,6 353,6 — 0,0 672,0 
1980 723,2 797,1 722,2 71,8 3,1 381,1 381,1 — — 1 103,3 
1981 1 797,9 2 416,9 2 164,6 242,5 9,8 71,8 71,8 — 0,0 2 236,4 
1982 2 823,0 2 957,8 2 765,8 174,4 17,6 242,5 242,5 — — 3 008,3 
6. Social policy 1978 564,4 565,0 254,2 307,7 3,1 83,2 52,5 29,3 1,4 306,7 6. Social policy 
1979 532,5 560,7 313,0 245,3 2,4 336,8 312,0 22,5 2,3 625,0 
1980 776,6 775,5 522,2 252,8 0,5 267,8 249,6 16,6 1,6 771,8 
1981 732,6 732,7 580,9 148,5 3,3 269,4 255,8 10,9 2,7 836,7 
1982 1 022,3 1 130,7 910,0 220,0 0,7 159,4 150,6 6,7 2,1 1 060,6 
7. Research 1978 263,3 304,1 129,4 173,9 0,8 119,5 73,2 46,3 202,6 
energy, etc. 1979 259,9 291,3 147,1 143,3 0,9 174,0 133,5 — 40,5 280,6 energy, etc. 
1980 371,9 384,9 195,4 188,6 0,9 125,8 116,1 7,5 2,2 311,5 
1981 309,0 318,0 214,3 96,5 7,2 193,5 162,9 11,0 19,6 377,2 
1982 410,4 462,6 345,7 112,9 4,0 107,5 92,0 8,6 6,9 437,7 
8. Repayments to 1978 689,6 689,6 607,5 60,8 21,3 56,2 54,6 1,6 662,1 
Member States 1979 721,1 766,5 681,1 85,4 — 60,9 60,5 — 0,4 741,6 
1980 847,8 847,8 761,0 86,8 — 85,4 85,4 — 0,0 846,4 
1981 1 431,9 969,1 869,5 97,1 2,5 86,8 86,8 — — 956,3 
1982 1 120,9 1 123,8 952,2 116,0 55,6 97,1 97,1 — — 1 049,3 
9. Cooperation 1978 380,6 381,7 138,5 240,8 2,4 184,5 126,7 — 57,8 265,2 
with 1979 494,6 541,6 230,7 308,1 2,8 210,8 174,7 — 36,1 405,4 
developing 1980 620,4 666,8 295,8 366,8 4,2 288,1 213,1 — 75,0 508,9 
countries 1981 791,3 816,2 550,4 258,5 7,3 382,3 308,1 — 74,2 858,5 
1982 803,3 945,3 598,1 345,3 1,9 258,5 188,0 — 70,5 786,1 
(1) After amending and supplementary budgets. 
(2) After supplementary receipts and transfers. 
(3) After transfers between budget headings and 'transfers' from previous financial years to the appropriations of the current financial year. 
(4) For certain sectors, including adjustments of balances of commitments due to variations in the EUA and ECU rates. 
(5) For columns (1), (2), and (5), including the amounts appearing in the provisional appropriations and contingency reserve. 
31.12.83 Official Journal of the European Communities 179 
§15. Utilization rates of the appropriations for payment from 1978 to 1982 — by sector 
Paymenl 
rale (WO) 
Key: Rate of 
carry-over to 
the following 
year(Oft) Cancellations 
A. Appropriations for the financial year 
(final appropriations — 100 o/o) B. Carry-overs from the previous financial year 
(appropriations carried over = 100%) 
For basic figures see § 14 
8 ® CTI S sis 001 19/8 86.7 % [12 
1979 89,2 OA 10.0% |. 
1980 91.6 90 680fti 
1981 90.6 OH) 6.4 <VD 
1982 87.80ft) 6.3 00 1 61.7 wo 
bo 7 0/0 
76.1 O/o 
75.3 o/o 
/B 5 to 
in? T3 ® C o 
• •> ii 1978 1 83.1 Oft) 6.9 % (• | 1978 83.6 0ft) 
1979 84 4 Oft) 6.5 % 1 1979 84,7 00 
1980 86.0% 7.4 Oft) |. 1980 85.8 00 
1981 85.4% 6 7 0/o L 1981 85,8 00 
1982 ; 85.4 Oft, 1982 76,3 % 
si UJ 5 
oiO 1978 
1979 
1980 
1981 
1982 99,6 00 0.4 O/o - 1978 99,4 90 
100 00 1979 100 90 
98.3 00 0.1 0« 1 1980 
94 9 00 1 4 90 IB 1981 100 O/o 
93 4 0ft) 1982 69.1 90 
•c "2 
<B1 ri m 1978 33,2 00 66.3 90 1978 
19/9 31.2 00 I 63.4 90 1979 36.7 90 50,8 0/o • 1980 88,1 90 111,8 90 1980 48.8 90 I 47.1 90 
1981 82.6 90 | 16,9 90 1981 34.2 90 60,9% 
1982 63.3 90 16,390 1982 53.7 0ft) I 39.7 90 
1978 1978 
19/9 51,1 90 48.3 00 1979 76 8 Oft) 2 1 
1980 51.400 48 4 90 1980 81.8 90 0.6 90 | 
1981 75.6 90 8.2 Oft) 1 1981 96,1 90 
1982 62,2 90 | 37,3 90 1982 100 90 
n 1978 32,7 90 67.3 90 1978 100 90 
1979 45,5 90 | 54.5 90 1979 100 0ft) 
1980 90.6 90 |9,0 Oft: 1980 100 90 
1981 89^6 Oft) 10.0 91 1981 100 o/o 
1982 93,5 00 5,9 90 (. 1982 100 90 
2 >. 
CO O 1978 45.0 0ft) 1978 63.1 o« 
19/9 55.8 90 r 43,7 0ft) 1979 92.6 0ft, 6./ 00 | 
1980 67.3 90 32,6 90 1980 93.2 90 6.2901 1 
1981 79,3 90 20.3 90 1981 95.0 90 4.0 9OT I 
1982 80,5 90 | 19.4 0/0 1982 94 5 90 4.2 0ft) j. 1 
? '978 42.6 90 57.290 
s5o 1979 
sis 1980 
2 S '98' 
„• '982 50.5 90 49.2 90 s5o 1979 
sis 1980 
2 S '98' 
„• '982 50.8 90 49.0 90 s5o 1979 
sis 1980 
2 S '98' 
„• '982 6/ 4 90 | 30.3 o/o s5o 1979 
sis 1980 
2 S '98' 
„• '982 Z4.Z90 24 4 90 1978 
1979 
1980 
1981 
1982 61.3 90 
76.7 90 
92.3 90 6.0 90 | 1 
84.2 90 5.7 9V 1 IHj 
85.6 90 8.0 00 |i J 
in* ft E 1 
"lia 1978 
1979 
1980 
1981 
1982 88.190 |8.80tfl 19/8 97,2 % 
88.9 90 | 1110o 19/9 99,3% 
89.8 0ft, M020O 1980 100% 
89./00 1981 100% 
84./% |l030oH 1982 100% 
H! 1978 1978 68,7 (Vo 
1979 42 6% 56,9% 1979 82.9 <V© 
1980 44 4% 55,0% 1980 74.0 <Vb 
1981 67.4% 31.7 <*0 1981 80.6 <VD 
1982 63,3% 1 36.5 Qto 1982 72.7 <Vb 
180 Official Journal of the European Communities 31. 12. 83 
§ 16. Evolution of annual payments — by sector (1978-82) 
Notes: 
1. Annual payments = payments against appropriations of the financial year plus payments against carry-overs from the previous financial 
year. 
2. For the budget headings corresponding to the 1982 budgetary nomenclature, see § 6, column (1). 
1978 1979 1980 1981 1982 
bector 
MioEUA % Mio EUA 0/0 Mio EUA o/o Mio ECU o/o Mio ECU O/o 
1. Administration 675,5 5,7 771,6 5,4 819,7 5,0 942,9 5,3 1 010,3 5,0 
1.1. Parliament 84,1 0,7 109,0 0,8 135,1 0,8 168,0 0,9 173,3 0,9 
1.2. Council 79,0 0,7 86,5 0,6 94,5 0,6 103,9 0,6 109,7 0,5 
(of which: the Economic and 
Social Committee) (14,1) (0,1) (15,5) (0,1) (16,8) (0,1) (20,0) (0,1) (20,6) (0,1) 
1.3. Commission 490,7 4,1 550,6 3,8 560,0 3,4 635,4 3,6 688,3 3,4 
1.4. Court of Justice 14,7 0,1 16,3 0,1 19,3 0,1 23,1 0,1 25,4 0,1 
1.5 Court of Auditors 7,0 0,1 9,2 0,1 10,8 0,1 12,5 0,1 13,6 0,1 
2. EAGGF-Guarantee 9 264,6 77,4 10 417,5 72,5 11 283,2 69,3 10 960,2 61,6 12 369,5 60,6 
2.1. Cereals and rice 1 196,6 10,0 1 608,3 11,2 1 719,0 10,6 1 951,8 11,0 1 874,8 9,2 
2.2. Sugar 770,2 6,4 939,8 6,5 575,2 3,5 767,5 4,3 1 241,8 6,1 
2.3. Fats and protein plants 583,0 4,9 668,2 4,6 747,8 4,6 1 090,7 6,1 1 295,0 6,3 
2.4. Fruit and vegetables 227,4 1,9 441,5 3,1 687,3 4,2 641,1 3,6 914,3 4,5 
2.5. Wine 89,0 0,7 61,3 0,4 299,5 1,9 459,4 2,6 570,6 2,8 
2.6. Tobacco 313,8 2,6 225,5 1,6 309,3 1,9 361,8 2,0 622,6 3,0 
2.7. Milk products 3 381,6 28,3 4 521,4 31,5 4 752,0 29,2 3 342,7 18,8 3 327,8 16,3 
2.8. Meat, eggs and poultry 695,4 5,8 931,6 6,5 1 617,9 9,9 1 867,0 10,5 1 625,9 8,0 
2.9. Other markets 228,0 1,9 310,5 2,2 276,6 1,7 400,8 2,3 583,6 2,9 
2.10. Agri-monetary measures 1 779,6 14,9 709,4 4,9 298,6 1,8 238,4 1,3 313,1 1,5 
2.11. Clearance of the accounts — — — — — — -161,0 -0,9 — — 
3. Agricultural structures 327,1 2,7 408,1 2,8 601,9 3,7 574,7 3,2 646,1 3,2 
3.1. EAGGF-Guidance 323,6 2,7 401,5 2,7 592,9 3,6 566,5 3,1 638,2 3,2 
3.2. Specific measures 3,5 0,0 6,6 0,1 9,0 0,1 8,2 0,1 7,9 0,0 
4. Fisheries 14,1 0,1 45,3 0,3 43,7 0,3 49,9 0,3 54,8 0,3 
4.1. Common organization of 
the market 14,0 0,1 17,0 0,1 23,3 0,2 28,0 0,2 34,0 0,2 
4.2. Other measures 0,1 0,0 28,3 0,2 20,4 0,1 21,9 0,1 20,8 0,1 
5. Regional policy 255,2 2,1 672,0 4,7 1 103,3 6,8 2 236,4 12,6 3 008,3 14,7 
5.1. Regional Fund 254,9 2,1 513,2 3,6 726,7 4,5 798,7 4,5 973,0 4,8 
5.2. Measures in favour of the 
United Kingdom — — — — 174,1 1,1 1 248,4 7,0 1 819,2 8,9 
5.3. Other measures 0,3 0,0 158,8 1,1 202,5 1,2 189,3 1,1 216,1 1,0 
6. Social policy 306,7 2,6 625,0 4,3 771,8 4,7 836,7 4,7 1 060,6 5,2 
6.1. Social Fund 284,8 2,4 595,7 4,1 735,2 4,5 745,8 4,2 905,6 4,4 
6.2. Other measures 21,9 0,2 29,3 0,2 36,6 0,2 90,9 0,5 155,0 0,8 
7. Research, energy, etc. 202,6 1,7 280,6 2,0 311,5 1.9 377,2 2,1 437,7 2,1 
7.1. Energy 18,6 0,2 28,8 0,2 40,3 0,2 63,1 0,3 44,0 0,2 
7.2. Research and investment 173,1 1,4 225,1 1,5 249,8 1,5 295,6 1,6 367,6 1,8 
7.3. Industry and transport 2,2 0,0 18,2 0,2 12,0 0,1 8,3 0,1 16,3 0,1 
7.4. Other measures 8,7 0,1 8,5 0,1 9,4 0,1 10,2 0,1 9,8 0,0 
8. Repayments to Member States 662,1 5,5 741,6 5,2 846,4 5,2 956,3 5,4 1 049,3 5,1 
8.1. Costs incurred in collect­
ing own resources 662,1 5,5 726,6 5,1 791,2 4,9 807,0 4,6 909,3 4,4 
8.2. Other repayments — — 15,0 0,1 55,2 0,3 149,3 0,8 140,0 0,7 
9. Cooperation with developing 
countries 265,2 2,2 405,4 2,8 508,9 3,1 858,5 4,8 786,1 3,8 
9.1. Food aid 236,0 2,0 259,0 1,8 318,8 1,9 601,7 3,4 540,2 2,6 
9.2. Financial aid 29,2 0,2 146,4 1,0 190,1 1,2 256,8 1,4 245,9 1,2 
Grand total 11 973,1 100 14 367,1 100 16 290,4 100 17 792,8 100 20 422,7 100 
31. 12. 83 Official Journal of the European Communities 181 
§ 17. Evolution of the ratio of 'annual payments by sector' to 'total of annual budgetary payments' (1978-82) 
(for detailed figures see § 16) 
100% A. General budget (all sectors): 
Total of annual budgetary payments = 100 Wo Log 
50 o/o -
10 o/o 
5 Oft -
1 oft 
0.5 a/o -
0.1 <Vo 
1978 1979 1980 1981 2. EAGGF-Guarantee 
5. Regional policy 
6 Social policy 
8 Repayments to Member States 
1 Administration 
9 Cooperation with developing countries 
3. Agricultural structures 
7. Research, energy, etc. 
4 Fisheries 
1982 
100 0ft 
50 Wo B. EAGGF-Guarantee (all markets): 
Total of annual budgetary payments = 100 o/o 
100ft 
5 0ft 
1 0ft 
0,5 0ft . 
0,1 o/o 2.7. Milk products 
2.1 
28 
2.3 
2.2 
2.4 
2.6 
2.9 
2.5 Cereals and rice 
Meat. eggs, poultry 
Fats and protein plants 
Sugar 
Fruit and vegetables 
Tobacco 
Other markets 
Wine 
2.10 Agri-monetary measures 
1978 1979 1980 1981 1982 
182 Official Journal of the European Communities 31. 12. 83 
§ 18. Annual payments to the Member States (1978-82) Notes: 
1. This table summarizes the annual payments to the Member States under the principal sectors. For the period under consideration these 
payments represent 88,8 % of total budgetary payments (= the aggregate of the totals in § 16). 
2. Annual payments = payments against appropriations for the financial year plus payments against carry-overs from the previous year. 
3. Payments under the EAGGF-Guarantee include adjusted monetary compensatory amounts (see § 12(D), footnote 1). 
Financial year/sector Bel­
gium Den­
mark FR of 
Germany Greece France Ireland Italy Luxem­
bourg Nether­
lands United 
Kingdom Allocation 
not 
available EUR 
9/10 
EAGGF-Guarantee (T 6-7) 558,5 567,4 2 313,6 _ 1 449,7 340,6 1 768,6 23,9 1 092,3 1 150,0 _ 9 264,6 
EAGGF-Guidance (T 8 without 
Art 830,894) 15,7 16,0 125,1 _ 60,5 16,8 31,3 1,4 16,3 40,5 _ 323,6 
Social Fund (Ch 50-52) 12,0 3,7 52,7 — 52,2 30,9 29,1 0,1 14,6 89,5 — 284,8 
3 Regional Fund (Ch 55) 6,0 1,4 42,2 — 40,6 20,5 78,5 0,2 6,5 59,0 — 254,9 
O 
2 Fisheries (Ch 47,71; Art 830, 
894) 0,3 0,4 2,5 1,3 0,7 2,9 _ 2,6 3,4 _ 14,1 
00 
£ Costs incurred in collecting 
own resources (Ch 40) 51,0 13,6 180,3 -90,8 5,4 96,1 0,3 86,5 138,1 -662,1 
Total 643,5 602,5 2 716,4 1 695,1 414,9 2 006,5 25,9 1 218,8 1 480,5 10 804,1 
(6,0 o/o) (5,6 o/o) (25,1 o/o) — (15,7 0/o) (3,8 o/o) (18,6 0/o) (0,2 o/o) (11,3 0/o) (13,7 0/o) (100 o/o) 
EAGGF-Guarantee (T 6-7) 755,8 639,3 2 326,5 _ 2 251,0 456,5 1 639,4 13,6 1 412,6 922,8 10 417,5 
EAGGF-Guidance (Ch 80-85) 17,1 15,1 118,5 — 98,2 27,9 34,7 0,6 25,3 64,1 — 401,5 
Social Fund (Ch 50-51) 7,8 24,5 61,4 — 93,7 38,8 156,3 0,3 11,0 201,9 — 595,7 
< Regional Fund (Ch 55-56) 3,1 9,1 46,0 — 103,6 32,9 143,7 0,3 8,7 165,8 — 513,2 
Fisheries (Ch 47, 86-89; item 
O 8300) 0,3 0,6 3,3 — 3,1 0,8 3,6 — 4,3 3,0 26,3(') 45,3 
Z Costs incurred in collecting 
S own resources (Ch 40) 58,8 14,9 197,5 — 98,9 6,3 96,3 0,4 84,9 168,6 — 726,6 a> Specific measures (Ch 57) — — — 66,1 92,2 — 15,0 173,3 
Total 842,9 703,5 2 753,2 2 648,5 629,3 2 166,2 15,2 1 546,8 1 541,2 26,3 12 873,1 
(6,5 o/o) (5,5 o/o) (21,4 0/o) — (20,6 o/o) (4,9 o/o) (16,8 0/o) (0,1 o/o) (12,0 0/o) (12,0 0/o) (0,2 o/o) (100 o/o) 
EAGGF-Guarantee (T 6-7) 571,1 614,5 2 451,4 2 827,6 563,6 1 824,0 11,6 1 538,8 880,5 0,1(2) 11 283,2 
EAGGF-Guidance (Ch 80-83) 25,2 24,5 142,1 — 133,0 39,8 97,0 1,0 26,4 103,9 — 592,9 
Social Fund (Ch 50-52) 12,1 14,7 80,5 — 195,8 72,5 194,4 0,4 5,1 159,7 — 735,2 
5" Regional Fund (Ch 55-56) 6,6 9,4 50,4 — 99,7 69,6 249,1 1,0 7,7 233,2 — 726,7 
UJ Fisheries (Ch 86-89) 0,7 1,3 3,1 — 2,5 6,3 4,6 - 6,2 6,7 12,3C) 43,7 o Costs incurred in collecting own 
resources (Ch 40) 61,5 15,7 212,7 — 113,8 7,6 106,7 0,5 82,9 189,8 — 791,2 
I Specific measures (Ch 57, 58) — — — 67,1 134,7 — 229,3 — 431,1 
Total 677,2 680,1 2 940,2 3 372,4 826,5 2 610,5 14,5 1 667,1 1 803,1 12,4 14 604,0 
(4,6 o/o) (4,7 o/o) (20,1 o/o) — (23,1 o/o) (5,7 o/o) (17,9 0/o) (0,1 o/o) (11,4 0/o) (12,3 0/o) (0,1 o/o) (100 o/o) 
EAGGF-Guarantee (T 6-7) 489,1 507,8 2 031,5 146,2 3 014,2 437,9 2 092,1 4,1 1 157,2 1 080,1 10 960,2 
EAGGF-Guidance (Ch 80-83) 21,7 20,7 134,1 — 120,8 57,6 78,5 2,3 21,9 108,9 — 566,5 
Social Fund (Ch 50-52) 15,3 18,5 72,3 6,6 155,3 60,4 207,1 0,6 14,3 195,4 — 745,8 
Regional Fund (Ch 55-56) 9,2 10,7 36,2 122,0 66,8 80,3 211,7 0,9 5,7 255,2 — 798,7 
o UJ Fisheries (Ch 86-89) 0,8 1,4 2,8 4,3 5,4 6,7 8,4 8,2 11.9C) 49,9 
o 
Z Costs incurred in collecting 
own resources (Ch 40) 61,8 16,2 225,4 8.9 123,1 8,8 94,9 0.4 77,3 190,2 807,0 
1 Specific measures (Ch 49,57, 
58) - -111,0 -66,6 122,3 -1 286,7 1 586,6 
Total 597,9 575,3 2 502,3 394,7 3 484,5 717,0 2 813,3 8,3 1 284,8 3 124,7 11,9 15 514,7 
(3,9 o/o) (3,7 o/o) (16,1 o/o) (2,5 o/o) (22,5 o/o) (4,6 o/o) (18,1 o/o) (0,1 o/o) (8,3 o/o) (20,1 o/o) (0,1 o/o) (100 o/o) 
EAGGF-Guarantee (T 1-2) 535,1 556,7 2 027,5 684,6 2 866,2 496,5 2 502,6 2,6 1 416,7 1 278,3 2,7R 12 369,5 
EAGGF-Guidance (Ch 30-33) 17,7 20,8 107,1 14,5 167,4 84,3 125,0 1.6 32,2 67,6 — 638,2 
Social Fund (Ch 60-62) 16,8 17,6 89,9 23,5 119,3 115,0 235,1 1.1 9,0 278,3 — 905,6 
3 Regional Fund (Ch 50-51) 10,8 14,6 61,6 152,3 130,0 93,5 281,8 0,1 3,2 225,1 973,0 
O UJ Fisheries (Ch 40-42, 46) 0,6 3,2 3,7 3,6 7,8 8,9 — 8,3 9.8 8.9 n 54,8 
o 
Z 
a Costs incurred in collecting o 
Z 
a own resources (Ch 80) 
Specific measures (Ch 52,53, 68,3 17,6 237,0 18,3 134,7 10,2 102,6 0,4 83,9 236,3 — 909,3 
G> 82,86) — — — 92,7 — 72,7 142,6 — 1 866,5 — 2 174,5 
Total 649,3 630,5 2 526,8 985,9 3 421,2 880,0 3 398,6 5,8 1 553,3 3 961,9 11,6 18 024,9 
(3,6 o/o) (3,5 o/o) (14,0 0/o) (5,5 o/o) (19,0 0/o) (4,9 o/o) (18,8 0/o) (0,0 o/o) (8,6 o/o) (22,0 o/o) (0,1 o/o) (100 o/o) 
(') Ch 87,89. 
(2) Amounts paid directly by the Commission. 
(3) Ch 41,42. 
31. 12. 83 Official Journal of the European Communities 183 
§19. Actual own resources — by Member State (1978-82) 
Bel­
gium Den­
mark FRof 
Germany Greece France Ireland Italy Luxem­
bourg Nether­
lands United 
Kingdom EUR 
9/10 
< 3 UJ Customs duties 
Agricultural levies 
Sugar and isoglucose levies 
Financial contributions (GNP) 295,6 
184,5 
22,2 
239,8 107,9 
9,7 
19,4 
138,2 1 376,0 
289,3 
146,0 
1 716,1 -649,5 
142,2 
117,5 
1 275,5 46,7 
5,1 
3,7 
32,2 400,8 
507,7 
46,3 
700,3 3,6 
0,2 
9,5 444,3 
395.3 
33,2 
320.4 1 066,5 
338,7 
22,3 
897,7 4 390,9 
1 872,7 
410,6 
5 329,7 
0 
1 
oo K Total 742,1 
(6,2 o/o) 275,2 
(2,3 o/o) 3 527,4 
(29,4 o/o) -2184,7 
(18,2 0/o) 87,7 
(0,7 o/o) 1 655,1 
(13,8 0/o) 13,3 
(0,1 o/o) 1 193,2 
(9,9 o/o) 2 325,2 
(19,4 0/o) 12 003,9 
(100 o/o) 
After extra-budgetary financial 
compensations between the Member 
States (') 776,2 
(6,5 o/o) 275,2 
(2,3 o/o) 3 737,6 
(31,1 o/o) — 2 315,0 
(19,3 0/o) 69,3 
(0,6 o/o) 1 734,5 
(14,4 0/o) 14,2 
(0,1 o/o) 1 238,1 
(10,3 0/o) 1 843,8 
(15,4 0/0) 12 003,9 
(100 o/o) 
Customs duties 335,7 124,4 1 586,6 754.2 57,1 497,2 3,8 485,6 1 344,5 5 189,1 
Agricultural levies 229,7 8,0 263,7 — 96,5 3,6 410,6 0,1 313,2 353,2 1 678,6 
Sugar and isoglucose levies 30,8 21,1 146,3 — 152,3 4,6 45,9 — 37,8 26,1 464,9 
« VAT 329,6 183,9 — — 1 720,4 — 747,6 — 453,6 1 302,6 4 737,7 
UJ Financial contributions (GNP) — 2 245,6 — — 41,6 — 14,9 — — 2 302,1 
Total 925,8 337.4 4 242,2 2 723,4 106,9 1 701,3 18,8 1 290,2 3 026,4 14 372,4 
§ O) (6,4 o/o) (2,4 o/o) (29,5 o/o) — (19,0 0/o) (0,7 o/o) (11,8 0/o) (0,1 o/o) (9,0 o/o) (21,1 o/o) (100 o/o) 
After extra-budgetary financial 
compensation between the Member 966,5 337,4 4 407,2 — 2 886,5 104,6 1 793,2 19,4 1 344,1 2 513,5 14 372,4 
States (1) (6,7 o/o) (2,4 o/o) (30,7 o/o) (20,1 o/o) (0,7 o/o) (12,5 0/o) (0,1 o/o) (9,3 o/o) (17,5 0/o) (100 o/o) 
Customs duties 392,6 130,2 1 799,1 900,0 67,1 636,9 4,3 535,5 1 440,1 5 905,8 
3 Agricultural levies 193,1 7,5 223,7 — 91,6 3,9 379,3 0,1 234,7 401,5 1 535,4 
o Sugar and isoglucose levies 27,2 19,1 130,7 — 158,0 4,6 54,4 — 40,8 32,1 466,9 
5 VAT (2) 337,7 189,4 2 456,7 — 1 842,4 63,7 858,7 15,2 461,6 1 294,1 7 519,5 
Total 950,6 346,2 4 610,2 2 992,0 139,3 1 929,3 19,6 1 272,6 3167,8 15 427,6 
(6,2 o/o) (2,2 o/o) (29,9 o/o) — (19,4 0/o) (0,9 o/o) (12,5 0/o) (0,1 o/o) (8,3 o/o) (20,5 o/o) (100 o/o) 
3 
O 
111 
' o 
2 Customs duties 
Agricultural levies 
Sugar and isoglucose levies 
VAT (2) (3) 408,4 
178,4 
27,8 
375,9 135,2 
10,1 
19,3 
189,8 1 943,8 
179,9 
126,9 
2 806,5 84,6 
17,4 
1,0 
151,5 977,3 
103,1 
154,5 
2 256,2 81,9 
4,3 
4,6 
68,1 633,0 
247,6 
62,5 
1 582,9 4,5 
0,1 
22,6 572,8 
175,4 
39,1 
499,8 1 550,9 
348,6 
46,9 
1 930,8 6 392,4 
1 264,9 
482,6 
9 884,1 
| Total 990,5 
(5,5 o/o) 354,4 
(2,0 o/o) 5 057,1 
(28,1 o/o) 254,5 
(1,4 0/o) 3 491,1 
(19,4 0/o) 158,9 
(0,9 o/o) 2 526,0 
(14,0 0/o) 27,2 
(0,1 o/o) 1 287,1 
(7,1 o/o) 3 877,2 
(21,5 0/o) 18 024,0 
(100 o/o) 
3 
0 UJ 
0 
1 Customs duties 
Agricultural levies 
Sugar and isoglucose levies 
VAT (=) (3) 403,7 
238,6 
44,4 
461,6 142,6 
7,5 
25,3 
226,8 1 966,5 
201,9 
190,2 
3 339,9 108,7 
63,5 
13,1 
196,3 1 071,2 
70,9 
211,0 
2 872,8 87,8 
6,0 
7,0 
107,7 660,8 
285,1 
83,5 
1 457,8 4,3 
0,1 
25,7 585,2 
172,5 
58,9 
649,8 1 784,5 
475,9 
72,4 
2 782,7 6 815,3 
1 522,0 
705,8 
12121,1 
1 Total 1 148,3 
(5,4 o/o) 402,2 
(1,9o/o) 5 698,5 
(26,9 o/o) 381,6 
(1,8 0/o) 4 225,9 
(20,0 o/o) 208,5 
(1,0 0/o) 2 487,2 
(11,8 0/o) 30,1 
(0,1 o/o) 1 466,4 
(6,9 o/o) 5115,5 
(24,2 o/o) 21 164,2 
(100 o/o) 
(') Under Article 131 of the Treaty of Accession concluded upon the entry of Denmark, Ireland and the United Kingdom. 
(2) Including the balances and adjustments of previous financial years. 
(3) Greece paid a financial contribution based on its GNP. 
184 Official Journal of the European Communities 31. 12. 83 
Part II: The European Development Funds (EDF) 
(position at 31 December 1982) 
§ 20. General information on the EDF 
THE FIRST THREE EDF 
20.1. General information and detailed financial information on the first three EDF, established under agreements in force 
between 1959 and 1976, has most recently been given in the annual report of the Court of Auditors on the financial year 
1980. Only a few small amounts still remain to be paid under the 2nd and 3rd EDF. 
A summary of the annual payments made under the first three EDF is given in § 27. 
THE 4th AND 5th EDF 
20.2. Legal provisions 
(a) Legal basis in respect of ACP States: 
— 4th EDF: ACP-EEC Convention signed in Lome on 28 February 1975 (Lome I), 
— 5th EDF: second ACP-EEC Convention signed in Lome on 31 October 1979 (Lome II). 
(b) Legal basis in respect of the OCT and FOD: 
— 4th EDF: Council Decision 76/568/EEC of 29 June 1976, 
— 5th EDF: Council Decision 80/1186/EEC of 16 December 1980 (no longer concerns the FOD). 
(c) Establishment of the EDF: 
— 4th EDF: internal agreement of 11 July 1975, 
— 5th EDF: internal agreement of 20 November 1979. 
(d)Financial Regulations: 
— 4th EDF: Council Decision 76/647/EEC of 27 July 1976, 
— 5th EDF: Council Decision 81/215/EEC of 17 March 1981. 
20.3. Allocations, financing, distribution and type of aid 
The EDF allocations after changes (1) by the Council are as follows: 
— 4th EDF: 3 155,9 Mio ECU, 
— 5th EDF: 4 802,3 Mio ECU. 
The EDF are financed by the EC Member States (with the exception of Greece for the 4th EDF) in proportions laid down in 
the internal agreements. 
The above-mentioned internal agreements provide for distribution of the allocations of the 4th and 5th EDF between the ACP 
States and the OCT/FOD and between grants, special loans, risk capital, Stabex (2) and Sysmin (3) for the 5th EDF. 
Part of the allocation in the form of grants is reserved for exceptional aid and for interest subsidies on loans granted by the 
European Investment Bank. The rest of the allocation in the form of grants and the allocation in the form of special loans are 
distributed among the recipient countries, with the exception of funds for the regional projects, administrative costs 
(4th EDF) and a contingency reserve. The amounts thus allocated to the recipient countries, called indicative programmes in 
the case of the ACP States, are used to finance the projects adopted. 
20.4. Monetary unit 
The EDF amounts are given in ECU; for conversion into ECU of the monetary units previously applied, it has been aqreed that 
1 u.a. = 1 EUA = 1 ECU. 
20.5. Date of entry into force 
— 4th EDF: 1 April 1976, 
— 5th EDF: 1 January 1981. 
20.6. Financial implementation 
The Commission draws up a timetable of requests for contributions, which in principle are to be paid quarterly by the Member 
States of the European Communities (4th EDF: six-monthly). The use of the EDF resources is shown in the accounts in three 
stages: (I) financing decision, (II) signing of contracts against funds allocated to national authorizing officers, (III) authoriza­
tion of payments to contractors. 
20.7. External audit 
The Court of Auditors is responsible for the audit of the EDF (in accordance with the Treaty). 
20.8 Authority giving discharge 
The European Parliament gives discharge of the financial management of the EDF, on the recommendation of the Council (in 
accordance with internal agreements). 
C) The initial allocations were altered by Council Decisions, and are increased by various receipts such as reconstitution of Stabex transfers and bank interest. 
(2) System designed to guarantee the stabilization of earnings from exports by the ACP States to the Community (Lome I, Article 16, and Lome II, Article 23). 
(3) System designed to aid ACP States whose economies are largely dependent on the mining sectors and in particular towards helping them cope with a 
decline in their capacity to export mining products to the Community (Lom6 II, Article 49). 
31. 12. 83 Official Journal of the European Communilies 185 
§ 21. The 4th and 5th EDF: allocations, financing, distribution of aid, utilization rates 
Allocation and financing Distribution of aid Utilization at 31.12.1982 
4th EDF: 
Allocation: 
3 155,9 Mio ECU 
Financing by 
DK 2.40 Oft 
IRL : 0,60 o/o-
L: 0.20 Ota B : 6,25 0ft 
D: 25.95 % 
F : 25.95 0ft 
1:12.00% 
NL : 7,95 o/o 
UK: 18.70 O/o Nature of aid: 
Special 
loans: 
469.5 
Grams: 
2 195.6 
I * <9 O, 
! 
t I 
• 101" 
Stabex: 
389,8 Programmable 
;» aid: 
2 419.7 a. 
u _ 
< CO at ~ 
EE 
gv, 
af 
11 Programming 
of aid: 
OCT/FOD: 67,5_i»^ ACP Slates: 
2 352,2 
J r-
o,o2! 
3 I 
0) a> »-
II £ n 5 S> 
i % i 
?! § : cc < O 
o 
Risk capital Non-
programmed 
aid 
736,2 Utilization: 
Payments: 
1 529,0 
(63,2 <V6) Not yet 
utilized 
Financing 
)- decisions: 
2 284,2 (94,4 Oft) 
Payments: 
676,8 (92,0 Wo) Not yet 
utilized 
Financing 
)> decisions: 
698.9 (94,9 Oft) 
5th EDF: 
DK: 
2.47 o/o 
GR 
1,34 O/o 
IRL: _ 
0,59 Oft 
L: 0,20 o/o Allocation: 
4 802.3 Mio ECU 
Financing by: 
B: 5,82 Oft 
0:27.92 Oft 
F :25,26 0ft 
I: 11,34 0ft 
NL: 7,30 Oft 
UK: 17,76 0ft Nature of aid: 
Special loans: 
545,0 
Grants 
3 037,0 
8 
£ > 
o> 1 
0 5» 
j 
1 1 
[ 
o 
205.2 
179,6 
Risk capital: 
Stabex: 647,3 
Sysmin: 282.0 Pro­
grammable 
aid 
3 197,2 -KT ' 
§ 
0-
O _ 
is 
E<S . 
E •«* « eg 
O><*> 
Q-o <D ~ 
?1 C T3 Programming of aid 
ACP States: 
3 137,0 
OCT : 60,2 of which 
Regional projects: 
631,5 
Contin reserve 176,8 
Non-programmed 
1 605,1 Utilization: 
Not yet 
utilized 
t Financing 
decisions: 
954,2 (29.8 Oft) 
Payments 101,2 (3.2 Q/o) 
Not yet 
utilized 
Payments: 
424,8 (26,5 «Vo) Financing 
decisions 
597.5 (37,2 Oft) 
186 Official Journal of the European Communities 31. 12. 83 
§ 22. The 4th EDF: aid by type and by recipient country 
(financial implementation at 31 December 1982) 
• (Mio ECU) 
A. Non-programmed aid B. Programmable aid (indicative 
programmes ACP and other aid) Total (A + B) 
Financing decisions Financing decisions 
Recipient country 
in _ <D — 
<2 a) tr 
fl) -Q 2 
I CD 
Q. CO o 
•X in 
ir c m 
o c ~ CO 
§• o> 
ID co X a> 
n CO 
CO LO 
+ 
+ 
52 
2 + 
o 5 a> T3 CO 
E 
</) 
c 0) 
E >> CO Q. V) c o 
CO o o 
< U) 
c CO 
0 U) c CO o 
15 
o o> 
a U) o 
+ 
2. 
"co 
o I-a> 
"O CO E 
to c a) 
E >. CO a. O) in c c 
o .2 c in eg 0 
.E a> 
u. "O a> T3 CO E 
in 
c a) 
E >> CO QL 
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) = 
(6)+ (11) (14) = 
(7)+ (12) 
I. ACP States 
including: 
Ethiopia 
Tanzania 
Zaire 
Sudan 
Uganda 
Mali 
Kenya 
Madagascar 
Niger 
Upper Volta 
Malawi 
Guinea 
Somalia 
Senegal 
Rwanda 
Burundi 
Cameroon 
Chad 
Ghana 
Zambia 
Benin 
Ivory Coast 
Central African Republic 
Togo 
Mauritania 
Sierra Leone 
Congo 
Liberia 
Lesotho 
Guinea-Bissau 
Jamaica 
Botswana 
Surinam*-
Mauritius 
Guyana 
Swaziland 
Gambia 
Papua 
New Guinea 
Fiji 
Gabon 
Solomon Islands 
Nigeria 61,9 
0,8 
9.0 
1.1 
1,6 
2,2 
0,6 
2,3 
4.2 
2,1 
1.7 
7,6 
0,4 
3,6 
1,2 
1.3 
2,2 
2,0 
1,1 
4,2 
9.8 91,2 
7,8 
5.3 
6.5 
0,3 
6.4 
1,2 
2.3 
0,8 
7.6 
1,2 
0,3 
0,3 
8.5 
3.0 
0,5 
4.6 
7.5 
0,2 
3.4 
0,3 
0,9 
3.1 
3.1 
0,3 
0,1 
1.7 
0,0 
3.2 
1,2 
2,4 
1.6 
0,2 130,0 
4.6 
0,3 
19.3 
4,9 
3.5 
1,0 
1,4 
1.7 
9.6 
2,6 
3.0 
13.4 
4.7 
6,0 
2.1 
2,3 
0,3 
2,7 
17,0 
0,0 
0,1 
1,1 
1,7 
0,2 
1,2 
0,5 
1,2 
2,7 
4,9 
0,0 
0,7 
3,6 377,5 
14,4 
20.7 
41.8 
20,6 
9,8 
5.8 
22,7 
7,3 
1.9 
65.1 
0,6 
1.5 
4,0 
7.3 
5,2 
20,4 
15,0 
7,8 
3.6 
37,0 
4.0 
7.4 
7.6 
11,3 
13.2 
7.5 
2.1 
6.7 660,6 
19.0 
29,6 
24,6 
53,2 
24.4 
17,2 
11,6 
9.8 
34.2 
16.5 
6,0 
3.9 
15.6 
80,6 
9.6 
4,1 
15.1 
15.1 
10.2 
22,1 
20.7 
23.6 
8,9 
7,1 
42.3 
4.0 
10.7 
9.1 
1,3 
11.8 
1.2 
5.7 
7.1 
3.2 
16.4 
10,6 
2,7 
10,1 
6.7 
9.8 641,5 
19,0 
29.4 
23.0 
53.1 
24.2 
16,6 
11,2 
9.5 
32.1 
16.5 
6,0 
3.6 
15,5 
77,7 
9.5 
3.8 
14,5 
14,7 
10.2 
21.3 
20.5 
23,2 
8,8 
7,1 
42.1 
4,0 
10.6 
9.0 
1,3 
11,7 
1.1 
5.6 
4.9 
2.5 
15.2 
8.6 
2.7 
10,0 
6.7 
9.8 1 934,2 
117,5 
103,4 
96.5 
90.6 
73,6 
73,5 
72,0 
69.2 
68.5 
68,0 
67,9 
64,0 
63.6 
59.0 
58.7 
58.1 
55.3 
51,9 
48.0 
45.1 
44,3 
40.0 
37,3 
35.7 
33,6 
31.1 
25,0 
25,0 
22,0 
20,0 
20,0 
19,0 
18,0 
15,3 
12.8 
12,0 
11,3 
10,0 
9,9 
9,5 
9,3 
9,0 1 501,0 
115,2 
69,3 
87.8 
74.9 
59.0 
69.2 
34.1 
62,6 
66.3 
60.4 
54,1 
37,1 
55,7 
39,4 
56.0 
47,9 
33.3 
44.4 
28.4 
27.1 
34,0 
16.5 
36.7 
33.3 
33.4 
27.2 
18.3 
19.8 
18,7 
18.7 
9,0 
17.8 
3.6 
4.7 
6,0 
8,4 
11,3 
5,6 
3.2 
2,0 
0,7 
8.3 338,5 
32,9 
8,0 
15,0 
9.7 
1,2 
37,8 
6,0 
7,0 
11.7 
25.4 
19,3 
2,6 
3,0 
17.5 
7.5 
19.6 
17,6 
0,4 
22.8 
2,3 
3.8 
6.7 
8.6 
0,6 
4,0 
7.6 
6.8 
3,5 
3,5 
6.7 
7,5 
6,0 1 839,5 
115,2 
102,2 
95.8 
89.9 
68.7 
70,4 
71,9 
68,6 
66.3 
67.4 
65.8 
62.5 
55,7 
58.7 
58.6 
50.9 
50.8 
51.9 
48,0 
44.7 
34,4 
39.3 
36.7 
35.6 
33.4 
31,0 
25,0 
19.8 
18.7 
18.7 
17,6 
18,4 
7.6 
12,3 
12.8 
11.9 
11,3 
9,1 
9,9 
9,5 
6.7 
8,3 1 244,1 
59.8 
59.9 
45,0 
51,9 
24.5 
62,0 
57,4 
43.2 
55,0 
47.3 
50,9 
49.4 
38,0 
43.7 
53,4 
36,0 
34.0 
35,3 
31.8 
33,7 
25.9 
21.1 
28,3 
28,0 
25,0 
19,3 
23.6 
13,0 
13,2 
16,0 
10.7 
13,7 
4,9 
7.7 
10,2 
9.8 
9,1 
1,8 
6,6 
7.1 
2.9 
3.2 2 500,1 
134.2 
131,8 
120.4 
143,1 
93.1 
87,6 
83.5 
78,4 
100.5 
83,9 
71.8 
66.4 
71.3 
139.3 
68.2 
55,0 
65.9 
67.0 
58.2 
66,8 
55.1 
62,9 
45.6 
42.7 
75,7 
35.0 
35.7 
28,9 
20,0 
30.5 
18.8 
24.1 
7.6 
19.4 
16,0 
28.3 
21,9 
11,8 
20,0 
16.2 
6.7 
18,1 1 885,6 
78,8 
89.3 
68,0 
105,0 
48,7 
78.6 
68,6 
52.7 
87,1 
63.8 
56.9 
53,0 
53,5 
121,4 
62,9 
39,8 
48.5 
50,0 
42,0 
55.0 
46.4 
44,3 
37.1 
35,1 
67.1 
23,3 
34.2 
22,0 
14.5 
27.7 
11.8 
19.3 
4,9 
12.6 
12,7 
25,0 
17.7 
4,5 
16.6 
13.8 
2,9 
13,0 
Other ACP States: 
Bahamas 
Barbados 
Cape Verde 
Comores 
Djibouti 
Dominica 
Grenada 
Equatorial Guinea 
Kiribati 
Sao Tome and Principe 
St Lucia 
St Vincent 
Western Samoa 
Seychelles 
Tonga 
Trinidad and Tobago 
Tuvalu 
Vanuatu 1,3 
1,6 3,6 
0,0 
1,0 
0,2 
0,6 0,0 
1,3 
2,9 
1,3 
3,9 
0,5 
0,3 
0,3 
1,0 
0,2 1,2 
2,8 
1,2 1,3 
6,1 
2,9 
2.3 
3,9 
0,5 
0,3 
0,3 
1,2 
2.8 
0,6 
1.4 
1,6 1,3 
6,1 
2,6 
2.3 
3,9 
0,5 
0,2 
0,3 
1,2 
2,8 
0,6 
1.4 
1.5 1,8 
2,6 
4,0 
6.3 
3,9 
2,5 
2,0 
7,0 
3.5 
1,8 
3,2 
4.6 
2.4 
3,2 
10,3 
0,6 0,7 
1,1 
4,0 
6.3 
2,2 
0,5 
2,0 
6,8 
3.4 
1,8 
0,8 
3,7 
2,2 
2,6 
2,9 
0,6 1,1 
0,9 
0,9 
0,1 
2,9 1,8 
2,0 
4,0 
6.3 
2,2 
0,5 
2,0 
6,8 
3.4 
1,8 
0,8 
4.6 
2,2 
2.7 
5.8 
0,6 0,6 
1,8 
3,2 
3.0 
1,7 
0,4 
1,4 
5.1 
0,3 
1,4 
0,7 
4,1 
2,0 
2,7 
1,9 
0,5 1,8 
3.3 
10,1 
9,2 
4,5 
4.4 
2.5 
7,1 
3,4 
2,1 
2,0 
7,4 
2,8 
4,1 
7,4 
0,6 0,6 
3,1 
9,3 
5.6 
4.0 
4,3 
1,9 
5.3 
0,3 
1.7 
1,9 
6,9 
2,6 
4.1 
3.4 
0,5 
(Total other countries) (2,9) (5,4) (11,7) (5,2) (25,2) (24,7) (59,7) (41,6) (5,9) (47,5) (30,8) (72,7) (55,5) 
II. Regional projects 
Administrative costs 
Contingency reserve 2,6 6,1 13,3 — 22,0 20,0 303,9 
101,4 
12,7 219,1 
101,4 69,6 288,7 
101,4 158,6 
92,1 310,7 
101,4 178,6 
92,1 
Total ACP (l + II) 64,5 97,3 143,3 377,5 682,6 661,5 2 352,2 1 821,5 408,1 2 229,6 1 494,8 2 912,2 2 156,3 
III. OCT/FOD 1,6 1,9 0,5 12,3 16,3 15,3 67,5 34,8 19,8 54,6 34,2 70,9 49,5 
Total 4th EDF 66,1 99,2 143,8 389,8 698,9 676,8 2 419,7 1 856,3 427,9 2 284,2 1 529,0 2 983,1 2 205,8 
31.12.83 Official Journal of the European Communities 187 
§ 23. The 4th EDF: financial implementation of aid by recipient country (31 December 1982) 
(for detailed figures see § 22) 
A. Non-programmed aid B. Programmable aid 
(indicative programmes ACP and other aid) 
-4 1 1 1 1 1 I | 1-
MioECU Recipient country 
Ethiopia 
Tanzania 
Sudan 
Uganda 
Mai 
Kenya 
Madagascar 
Niger 
Upper Volta 
Malaw 
Guinea 
Somalia 
Senegal 
Rwanda 
Burund 
Cameroon 
Ghana 
Zambia 
Benin 
Ivory Coast 
central f 
Republic 
Mauritania 
Sierra Leone 
Liberia 
Lesotho 
Guinea-Bissau 
Jamaica 
Botswana Allocations 
Suriname Financing 
decisions Financing 
decisions Mauritius 
Guyana 
Swaziland Payments Payments 
Gambia 
Papua New Guinea 
Gabon 
Solomon Islands 
Nigeria 
•mer 
ACP States Mio ECU 
Regional projects $ I N I & 
Administrative costs 
Contingency reserve 
OCT/FOD 
188 Official Journal of the European Communities 31. 12. 83 
§ 24. The 5th EDF: aid by type and by recipient country 
(financial implementation at 31 December 1982) 
(Mio ECU) 
A. Non-programmed aid B. Programmable aid (indicative 
programmes ACP and other aid) Total (A + B) 
Financing decisions Financing decisions 
Recipient country 
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(8)+ (13) 
I. ACP States 
including: 
Ethiopia 
Tanzania 
Zaire 
Sudan 
Uganda 
Mali 
Kenya 
Madagascar 
Niger 
Upper Volta 
Malawi 
Guinea 
Somalia 
Senegal 
Rwanda 
Burundi 
Cameroon 
Chad 
Ghana 
Zambia 
Benin 
Ivory Coast 
Central African Republic 
Togo 
Mauritania 
Sierra Leone 
Congo 
Liberia 
Lesotho 
Guinea-Bissau 
Jamaica 
Botswana 
Suriname 
Mauritius 
Guyana 
Swaziland 
Gambia 
Papua New Guinea 
Fiji 
Gabon 
Solomon Islands 
Nigeria 
Zimbabwe 61,1 
5,1 
3,6 
5.6 
6,8 
8,5 
4.7 
1,5 
4.1 
0,7 
1,9 
1,4 
4,0 
7.2 
3,9 101,8 
7,5 
6,0 
10,0 
1.5 
2,2 
3,0 
2.6 
4,2 
6,5 
6,0 
1,5 
3,0 
10,0 
0,7 
3,0 
5,0 
0,5 
13,8 
1,8 
0,4 
0,4 43.8 
2,0 
0,1 
2,8 
1,7 
3,4 
0,9 
0,7 
1,3 
1,1 
0,0 
0,6 
0,5 
15.9 
0,2 
2,0 
3.0 
0,2 
1.1 
0,4 
0,5 
0,1 
0,1 
0,0 
0,0 
0,1 
0,3 
0,2 
1,0 277,2 
0,8 
6.8 
21,9 
3,1 
26.5 
3,9 
1,8 
2,6 
59,1 
7.1 
11,0 
13.6 
2,5 
25,6 
46,8 
2.2 
1,8 
0,5 
1,5 
3.2 
8,5 
13,8 
1.3 
0,6 95,0 
40,0 
55,0 578,9 
2,8 
14,4 
48,8 
23,6 
13.4 
4.0 
33,8 
7,4 
4,7 
0,0 
5.4 
0,5 
21,1 
69,1 
9.1 
17.5 
20.4 
5.5 
31,8 
66,1 
0,4 
51.5 
2,7 
4.5 
0,1 
11,8 
0,7 
3.6 
1.5 
8.2 
4.1 
1.2 
1,9 
8.6 
29,0 
7,4 
7.2 
1,0 
0,2 
5.3 415,0 
2,0 
11,8 
5.0 
23.6 
2,8 
3.6 
33.3 
6,8 
4,3 
0,0 
2,0 
0,5 
15,2 
64,9 
9.1 
13,1 
20.4 
5,5 
25.7 
34,1 
0,4 
51.5 
2.7 
1,5 
1.8 
0,7 
1,3 
1.5 
3.2 
4.1 
0,8 
1.9 
8.6 
19,1 
5.3 
7.2 
0,6 
1,0 2 328,7 
125,0 
115,0 
100,0 
100,0 
85,0 
85,0 
74,0 
73,0 
73,0 
78,0 
76,0 
74,0 
73,0 
65,0 
72,0 
70,0 
65,0 
62,0 
55,0 
53,0 
52,0 
46,0 
49,0 
40,0 
40,0 
45,0 
28,0 
29,0 
26,0 
23,0 
24,0 
22,0 
18,0 
18,5 
13,0 
17,0 
13,0 
22,0 
12,0 
14,0 
11,0 
50,0 
40,0 713,1 
92.6 
50.3 
4.5 
43.8 
18,8 
25.1 
21.7 
13.9 
28.4 
40,4 
4,4 
12,9 
25.8 
23.9 
33,3 
9.1 
15,3 
7.7 
13,7 
23.2 
10.3 
11,0 
23,9 
19,9 
15.4 
16,0 
4,4 
1,0 
8,4 
10,9 
5.2 
7,2 
2.8 
9.4 
5,2 
3.6 
5,6 
3.5 
1,8 
7.5 
3,4 
1.6 
2,8 79,8 
5,0 
7,5 
6,3 
0,3 
13,4 
9,0 
10,3 
2,0 
8,0 
4.7 
2,3 
6.3 
2.4 
0,5 
1.8 792,9 
97.6 
57.8 
10,8 
44.1 
18,8 
38.5 
30.7 
13.9 
28,4 
40,4 
4,4 
12,9 
25.8 
34.2 
33.3 
9.1 
15,3 
7.7 
13,7 
25.2 
10.3 
19,0 
28.6 
22,2 
21,7 
18.4 
4,4 
1,0 
8,4 
11,4 
5.2 
7.2 
2.8 
9.4 
5.2 
3,6 
5,6 
3.5 
1,8 
9.3 
3.4 
1.6 
2,8 73,9 
0,4 
5,8 
0,2 
12,4 
0,7 
7,7 
0,9 
2.3 
2.4 
3,7 
0,5 
0,9 
11,1 
1,6 
4,4 
0,3 
0,0 
0,3 
0,4 
0,2 
0,8 
0,0 
1,3 
5,7 
0,5 
0,3 
0,6 
0,8 
0,2 
0,2 
0,2 
0,0 
1,3 
0,0 
0,4 
0,1 
0,7 
0,6 
0,0 
0,1 
0,3 1 371,8 
100,4 
72,2 
59.6 
67.7 
32.2 
42,5 
64.5 
21.3 
33.1 
40.4 
9,8 
13,4 
46,9 
103,3 
42.4 
26.6 
35,7 
13.2 
45.5 
91.3 
10,7 
70.5 
31.3 
26.7 
21.8 
30.2 
4.4 
1.7 
12,0 
12,9 
13.4 
11.3 
2.8 
10.6 
5,2 
5.5 
14,2 
32.5 
9,2 
16,5 
4,4 
1,8 
8,1 488,9 
2.4 
17,6 
5.2 
36,0 
3.5 
11,3 
34.2 
9,1 
6,7 
3,7 
2,5 
1.4 
26.3 
66,5 
13,5 
13.4 
20.4 
5.5 
26,0 
34.5 
0,6 
52,3 
2.7 
2.8 
5.7 
2.3 
0,3 
0,7 
1,9 
2.3 
3.4 
4,3 
0,2 
0,8 
1,3 
1,9 
9,0 
19,2 
6,0 
7.8 
0,6 
0,1 
1,3 
Other ACP States: 
Antigua and Barbuda 
Bahamas 
Barbados 
Belize 
Cape Verde 
Comoros 
Djibouti 
Dominica 
Grenada 
Equatorial Guinea 
Kiribati 
Sao Tome and Principe 
St Lucia 
St Vincent 
Western Samoa 
Seychelles 
Tonga 
Trinidad and Tobago 
Tuvalu 
Vanuatu 0,9 
1,2 1,8 
0,2 
2,3 
1,0 
0,2 
3,3 
1.0 
1,3 
0,1 
1,0 1,0 
0,2 
0,1 
0,5 
0,2 
0,2 
1,4 0,2 
1,1 
2,9 
0,2 
0,5 
0,8 
1,4 
2,9 
0,6 
0,1 -0,9 
3,0 
1,5 
2,4 
4,4 
0,2 
0,7 
0,8 
1,4 
0,2 
6,2 
1,2 
3,3 
1,2 
0,2 
1,0 0,9 
1,2 
1,5 
1.7 
3,4 
0,2 
0,5 
0,8 
1,4 
0,2 
2,9 
0,5 
2.8 
0,1 2.7 
2,0 
3,5 
5,5 
15,0 
13,0 
4.8 
3,2 
3,2 
8.5 
3.6 
3,6 
3,5 
3,5 
5.5 
3,2 
3.6 
10,0 
0,8 
4,5 0,1 
0,4 
1,8 
0,1 
1.2 
1.3 
1,3 
0,5 
0,6 
0,0 
0,3 
2,2 
1,5 
2,9 
5,1 
0,1 
0,1 
1,1 
0,4 
2,5 -0,1 
0,4 
1,8 
0,1 
1,2 
1,3 
1,3 
0,5 
0,6 
0,0 
0,3 
2.2 
1,5 
2,9 
5,1 
0,1 
0,1 
1,1 
0,4 
2,5 0,0 
0,2 
0,1 
0,2 
0,1 ' 
0,1 
0,0 
0,1 
0,2 
1,2 
0,9 
0,1 
0,0 
0,0 
0,2 
0,2 
0,0 0,1 
0,4 
2.7 
0,1 
4.2 
2.8 
3,7 
4,9 
0,8 
0,0 
1,0 
3.0 
2,9 
3.1 
11,3 
1.3 
3.4 
2,3 
0,6 
3.5 0,0 
1.1 
1,3 
1,7 
1.7 
3.5 
0,3 
0,0 
0,6 
1,0 
2.6 
1,1 
3,0 
0,5 
2.8 
0,2 
0,3 
0,0 
(Total other countries) (2,1) (12,2) (3,6) (10,7) (-) (28,6) (18,1) (103,2) (23,5) (-) (23,5) (3,6) (52,1) (21,7) 
II. Regional projects 
Contingency reserve 1,3 8,9 — 
-— 10,2 3,0 631,5 
176,8 138,2 17,9 156,1 26,9 166,3 29,9 
Total ACP (I + II) 62,4 110,7 43,8 277,2 95,0 589,1 418,0 3 137,0 851,3 97,7 949,0 100,8 1 538,1 518,8 
III. OCT 0,8 1,8 0,4 5,4 — 8,4 6.8 60,2 4,7 0,5 5,2 0,4 13,6 7,2 
Total 5th EDF 63,2 112,5 44,2 282,6 95,0 597,5 424,8 3 197,2 856,0 98,2 954,2 101,2 1 551,7 526,0 
31. 12. 83 Official Journal of the European Communities 189 
§ 25. The 5th EDF: financial implementation of aid by recipient country (31 December 1982) 
(for detailed figures see § 24) 
A. Non-programmed aid 
Mio ECU B. Programmable aid 
(indicative programmes ACP and other aid) 
H 1 1 1 1 1 1 1 1 1 1 1 
10 50 100 Mio ECU Recipient country 
Ethiopia 
Tanzania 
Sudan 
Uganda 
Madagascar 
Upper Volta 
Malawi 
Guinea 
Somalia 
Senegal 
Rwanda 
Burundi 
Cameroon 
Chad 
Ghana 
Zambia 
Benm 
Ivory Coast 
Central African 
Mauritania 
Sierra Leone 
Congo 
Liberia Allocations 
Financing 
decisions Lesotho Financing 
decisions Guinea-Bissau 
Jamaica 
Payments Botswana Payments 
Suriname 
Mauritius 
Guyana 
Swaziland 
Gambia 
Papua New Guinea 
Gabon 
Solomon Islands 
Nigeria 
Zimbabwe 
ACP States 
Regional projects 
Contingency reserve 
31 
OCT 
190 Official Journal of the European Communities 31. 12. 83 
§ 26. The 4th and 5th EDF: utilization of aid by economic sector (situation at 31 December 1982) 
Allocation and total utilization Financing decisions and payments by economic sector 
4th EDF: 
I! «/> E 
§1 
Allocation: 
3 155,9 Mio ECU (100 Ifo) 
n~ 
# O) 
8 
D (J 
f UJ 
in o 
SS 2 
CO 
o° 
73 .2 CM 
£3 (A 
C 
is 0) 
s £8 
U. CNJ Q. n> 
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i i 
i i © < 
ii Financing 
decisions 2 983.1 Mio ECU 
(100%) 703.3 
23.6 Wo) 702.1 
(23.5 %) 241,4 
(8.1 %) 163.5 
(5.5 <Wo) 17,5 
(0.6 %) 246,6 
(8.3 <Vto) 69.01 
(2.3 <V*>) 109.8 I 
(3,7 %) 35.3 
(1.2%) 143.8 
(4.8 <Vo) 389.8 I 
(13.1 <Vo) 55,6 I 
(1.8%) 105.4 
(3,5%) 
Payments 2 205.8 Mio ECU 
(100%) 461.1 
20.9 %) 450.0 
(20.4 %) 192.7 
(8.7 %) 135.8 15.5 
(6,2%) (0,7%) 157,0 
(7,1 %) 36.5 70.6 20,8 
(1.6%) | (3,2%) | (0,9%) 134,5 
(6,1 %) 389.8 45.4 96,1 
(17.7%) I (2,1%) | (4.4%) 
5th EDF: 
Allocation: 
4 802,3 Mio ECU (100 %) 
Financing 
decisions: 
1 551,7 Mio ECU 
(32.3 %) 
Payments 
526,0 Mio 
ECU 
(11,0 0ft) I 
Jm 
0 O 
a 
Financing 
decisions 1 551.7 Mio ECU 
(100%) 431.2 
27.8%) 1744 
(11.2%) 130,5 
(8.4 %) 74,0 140,3 1 88.0 1 18.61 129,4 1 18,2 
(4,8%) (9.0%) (5.7%) (1,2%) (8.3%) (1,2%) * 44,2 
(2.9 %) w 
282,6 
(18,2%) 20.3 
(1,3%) 
Payments 526,0 Mio ECU 
(100%) 52,6 
10,0 %) 21.5 
(4.1 %) 37,9 
(7.2%) 37,0 40.3 5.4 2.3 4.0 
(7,0%) (7,7%) | (1.0%) | (0,4 0/u) | (0.8%) | 2.6 
(0.5%) 36.1 
(6.9%) 282.1 
(53.6 %) 4,2 
(0.8 %) 
31.12.83 Official Journal of the European Communities 191 
§ 27. The five EDF: evolution of annual payments (1960-82) 
Mio ECU 
600 -i 
500 -Note: 
This presentation summarizes the annual payments made under all the European 
Development Funds. 
Detailed information on the first three Funds, particularly regarding the break­
down by type of aid and by recipient country, was most recently given in the 
Court's annual report for the financial year 1980 
400 Key: 
B 300 -5th EDF 
4th EDF 
3rd EDF 
2nd EDF 
1st EDF 
200 -
100 -
n 
JI (Mio ECU) 
1960 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 Total 
1st EDF 3.4 15.8 53.3 65.3 83.4 84.8 76,7 61,7 38.6 25.6 16.1 11.4 10,1 9,9 5,5 2.4 2.9 0.6 0.8 0.4 0.3 0.4 569.4 
2nd EDF 21.9 31,6 42.9 67.9 89,4 129.5 120.5 78.6 49.4 25.9 23.3 17.2 16.3 7.9 4.1 2.5 0.9 0.4 730.2 
3rd EDF 225 42.8 98.5 140.6 182.7 131.0 79.8 66.0 37.4 19.8 20.7 11.2 853,0 
4th EDF 97.5 148.0 326.3 423.4 459.3 445.8 305,5 2 205,8 
5th EDF 195.9 330.1 526.0 
Total 3,4 15,8 53,3 65,3 83,4 106,7 108,3 104,6 106,5 115,0 145,6 154,4 131,5 157,8 172,0 208,4 248,6 244,7 401,0 465,3 481,9 663,7 647,2 4 884.4 
31. 12. 83 Official Journal of the European Communities 193 
ANNEX IV 
Replies of the institutions to the observations of the Court concerning the 
financial year 1982 
The institution responsible for the replies is indicated either at the beginning of each chapter (if 
appropriate) or before the individual reply or series of replies within each chapter (see also para­
graph 1J of the introduction). 
Comments of a general nature 
European Parliament 
1. Parliament draws attention to the fact that during 1983 
it has already taken measures to comply with many of 
the explicit and implicit recommendations contained 
in the Court's comments concerning the financial year 
1982. 
The comments centre on two key observations: 
(i) the auxiliary accounting under the imprest 
accounts, the number of which should be further 
reduced, does not always come up to acceptable 
standards; 
(ii) the regularization, i.e. charging to the budget, of 
the payments made through imprest accounts, 
remains slow. 
These problems have not escaped the notice of the 
institution's authorities, who reaffirm their determina­
tion to speed up the finding of solutions. Nevertheless, 
while the payment of expenditure by imprest account 
is, according to the Financial Regulation, an excep­
tional arrangement, Parliament itself, with its three 
places of work, is in a fairly exceptional position. 
2. The year 1983 witnessed the introduction of 'quarterly 
reporting' whereby the authorizing officers take part in 
meetings with the Secretary-General on the state of 
utilization and regularization of appropriations. The 
Committee on Budgetary Control and the rapporteur 
of that committee, who is invited to these meetings, are 
kept regularly informed of the results. 
In his instruction to the authorizing officers of 9 June 
1983, the Secretary-General reminded them that 'it is 
the responsibility of the authorizing officers who arrange 
for the opening of imprest accounts to make sure that 
the amounts paid by imprest accounts are regularized 
within a reasonable period, in cooperation with the 
institution's accounting officer'. 
The accounts departments accordingly check that the 
deadline for submitting statements by the administra­
tors of advance funds has been observed and that sup-European Parliament (cont.) 
porting documents for the expenditure exist. The 
authorizing officers are informed by the above-men-
tioned departments of the amounts remaining to be 
settled after a prolonged period. 
3. The imprest accounts for the 'travel expenses, subsist­
ence allowances (of Members) and expenditure related 
to meetings' and for 'mission allowances' (of officials) 
are the most important imprest accounts. 
4. As far as the imprest account for MEP's missions is 
concerned, the following improvements were intro­
duced during 1983: 
(i) the time limit for authorizing payments paid 
through this account has been reduced to two and 
a half months; 
(ii) in order to facilitate reconciliation between the 
auxiliary accounting in the imprest accounts and 
the general accounts, the amounts to be settled, the 
amounts to be recovered and the amounts avail­
able in the imprest account are clearly distin­
guished in the auxiliary accounts and general 
accounts. 
5. As regards payment of mission allowances of officials, 
improvements already introduced in 1983 include: 
(i) computerized calculation of advances paid but not 
yet regularized; 
(ii) the logical presentation of the various stages of 
payment and the regularization of advances. 
6. These improvements, which have been introduced 
within a very short space of time, are far from neglig­
ible if one considers that the expenditure paid through 
these imprest accounts is usually related to meetings 
held not only in the three usual places of work but also 
in various other places both in and outside Europe. 
7. The Bureau has decided to intensify applications in the 
field of data processing. On 6 July 1983, the Bureau 
instructed the Administration to introduce computer-
194 Official Journal of the European Communities 31. 12. 83 
European Parliament (cont.) European Parliament (cont.) 
ized processing of the institution's budget by 1985. A 
working party chaired by the Director of Finance has 
already begun work on the basis of a draft prepared by 
the Financial Control department. 
The introduction of a computerized system for the 
implementation of the budget will lead to: 
— the rationalization of the administrative network, — more stringent monitoring of the implementation 
of the budget, 
— qualitatively better bookkeeping. 
Council 
The Council would reiterate its wish that the comments by 
the Court of Auditors on each institution should be 
brought together in a separate part of the Court's report. 
Replies of the institutions to Chapter 1 
General matters 
Commission 
Paragraph 1.5 
The explanatory memorandum to supplementary and 
amending budget No 1/1983 (') showed that the operation 
was fully justified and refuted the Court's comments from 
the outset: 
'The balance from a financial year is not established defin­
itively for accounting purposes until the accounts are fin­
ally closed in accordance with Article 15 of Regulation No 
2891/77; because of the supplementary perio,d for the 
EAGGF Guarantee Section, which ends on 31 March of 
year "n+1", the final calculation is first contained in the 
revenue and expenditure account which the Commission 
draws up by 1 June. 
In these circumstances, Article 27 of the Financial Regula­
tion states that the balance shall be entered "in the budget 
of the subsequent financial year upon adoption of the 
amending budget referred to in Article 16(2) of Regulation 
No 2891/77" (the amending budget which takes into 
account the adjustments to the VAT own resources of the 
previous year). 
If this Article were to be applied literally, the surplus from 
1982 would not be entered in the budget until autumn 
1983; however, in view of the present circumstances, it 
goes without saying that the estimated balance from 1982 
should be entered in the budget now as an advance for two 
reasons: Commission (cont.) 
— the possibility of covering supplementary expenditure 
for 1983 without having to increase the VAT rate 
(which would be superfluous at this stage). 
The Commission is therefore making a cautious estimate, 
as is evident from the figures contained in the table above. 
It feels obliged to propose this approach so that the budg­
etary authority is able, by adopting supplementary and 
amending budget No 1/1983, to produce the most objec­
tive and accurate instrument of authorization and estimate 
possible on the basis of the financial data known at this 
stage.' 
The budgetary authority, i.e. both Council and Parliament, 
was therefore right to consider that no other legal base was 
necessary or appropriate in the case in point. 
Paragraphs 1.6 and 1.7 
The Commission would refer the Court to its replies to the 
relevent chapters. These show that, contrary to what the 
Court claims, the operations referred to were not irregular. 
In any event, the Commission reserves the right to produce 
additional information during the course of the discharge 
procedure should this prove necessary. 
— the size of the surplus already known for 1982, made 
up mainly of lapsed EAGGF Guarantee appropria­
tions; 
(') COM(83) 23 final, p. 13. Paragraph 1.8 
Work on clearing EAGGF Guarantee accounts which has 
been carried out since the end of 1982 has reduced the 
backlog. The accounts for 1976 and 1977 were cleared on 
14 January 1983. Draft decisions for the clearance of 1978 
and 1979 accounts should be presented to the Commission 
31. 12. 83 Official Journal of the European Communities 195 
Commission (cont.) 
in 1983 and for the 1980 and 1981 accounts some time in 
the first half of 1984. 
Paragraphs 1.10 and 1.11 
Certain tasks, notably those connected with banking oper­
ations, are the responsibility of the EIB and not of the 
Commission. The legal provisions adopted by the Council 
for the NCI and financial cooperation with the ACP and 
Mediterranean countries, confirm and clarify this division 
of tasks, either by mandate or by direct assignment. The 
real problem therefore is one of delegation of certain tasks 
to the EIB. 
It is not on behalf of the Commission but on behalf of the 
Community that the Bank performs operations under the 
mandate given. The three basic NCI decisions and all the 
relevant provisions for financial operations concerning 
ACP and Mediterranean countries expressly state this. In 
order to give an accurate picture of the framework and of 
the institutional responsibility for the mandates given to 
the EIB, it is therefore essential to specify that the EIB 
'performs certain tasks ... on behalf of the Community'. 
The institutional and legal bases for the mandates given to 
the EIB are therefore so clear that there can be no doubts 
concerning their application by the, Commission (para­
graph 10.30 and paragraphs 15.72 to 15.75). 
Under these mandates the relations between the Bank and 
the Commission are those of agent and principal. The 
Bank is bound to the Community by all the obligations of 
the agent, notably that of rendering accounts to the princi­
pal as specified in the mandate. All documents sent to the 
Commission are available to the Court of Auditors for 
audit purposes. 
As the Commission stated in its replies to the 1981 annual 
report and to the special report of the Court of Auditors, 
the following measures have been introduced or proposed 
in response to specific requests made by the Court of Audi­
tors: 
(a) the basic decision for NCI III contains new provisions, 
notably concerning: 
— submission of applications for loans to the Com­
mission and the Bank simultaneously; 
— loan contracts signed by both the EIB and the 
Commission; 
— report to be made to the Council and Parliament 
every six months on the rate of utilization of 
tranches; 
— annual assessment of the operation of all aspects 
of the NCI; (this decision is in the Court's posses­
sion). ' 
(b) a new cooperation agreement between the Commission 
and the EIB was signed on 29 June 1983 when NCI III Commission (cont.) 
came into operation. The Commission's role under this 
agreement is substantially reinforced; 
(c) 'guidelines' for NCI III operations, established by the 
Commission in accordance with Article 5 of the coop­
eration agreement between the Commission and the 
EIB, were sent to the EIB on 25 July 1983 (the Court of 
Auditors has also received this document); 
(d) practical arrangements for the introduction and man­
agement of an NCI treasury, formally agreed between 
the Commission and the EIB and brought into force 
on 26 April 1982, have been sent to the Court of Audi­
tors ; 
(e) the method of discounting EMS interest subsidies was 
changed with effect from 1 January 1983, so that the 
gap between the actual interest rate for the loan and 
the discounted rate does not exceed 0,4 points (the 
Court of Auditors has received a copy of the amended 
EMS agreement dated 30 December 1982); 
(0 the supporting documents for the payment of interest 
subsidies which the EIB sends to the Commission will 
be equivalent to authentic deeds, since they will be 
signed by two persons authorized by the EIB, whose 
names will be communicated in advance to the Com­
mission once this procedure has been approved. 
Paragraph 1.12 
In the Court's summary of what it considers observations 
to which it wishes to draw attention, general conclusions 
are drawn from specific findings, some of which the Com­
mission accepts, others which it challenges. 
The Commission must therefore make the following com­
ments or clarifications: 
(a) The replies given to each of the points concerned show 
that the transactions are not irregular as the Court 
claims. 
(b) As it stated in the remarks column in the 1983 budget, 
the proceeds of the co-responsibility levy are not 
intended solely for specific measures but also contri­
bute to EAGGF Guarantee expenditure in this sector, 
including expenditure on certain existing disposal 
measures and aid for small producers. It was in res­
ponse to a Parliament resolution, that the Commission 
proposed and the Council agreed to the carryover of 
100 million ECU. The Commission explains how the 
88,2 million ECU was used in its reply to paragraph 
4.38. 
(c) Explanations are given in the Commission's replies to 
the corresponding paragraphs. 
(d) The Commission ensures that regional development 
programmes play a valid role in coordinating national 
196 Official Journal of the European Communities 31. 12. 83 
Commission (cont.) 
regional policies and Community regional policy and 
serve as a reference framework for projects submitted 
for ERDF assistance (paragraphs 6.21 to 6.27); it also 
checks that investments receiving ERDF assistance are 
justified, notably that they are consistent with Com­
munity programmes or objectives. 
(e) (i) The Court's comment relates to the arrangement 
adopted by the Council following the political agree­
ment of 30 May 1980, which involves the reimburse­
ment of national public expenditure which, when the 
decision to grant Community assistance is taken, has 
already been incurred for investments in progress or 
already completed and not for investments which are 
new or not already started (paragraph 6.57). 
(ii) The Commission was forced by events to take the 
necessary measures; it explains its reasons in its 
replies. It acted in the best interests of the Community. 
(f) The agreement with the Italian Government was suffi- . 
ciently explicit for the appropriations entered in the 
budget to be used. The appropriations to finance the 
Super Sara programme are appropriations like any 
others, to be used should the contributions of a Mem­
ber State have not yet been paid over to the Com­
munity. 
(g) The introduction of the new framework Regulation 
No 3331/82 should improve the mobilization of food 
aid. It should also be noted that the time that elapses 
between adoption of the programme and the .request 
for mobilization depends essentially on the wishes or 
the assiduity of the recipients, who take account of 
commercial imports and any food aid provided by 
other donors. 
Measures have been taken concerning packaging. 
Strict checks are carried out by packaging institutes. 
The Commission delegations on the spot have been 
instructed to keep a special watch on these matters. 
(h) On the one point concerning it (paragraph 11.12), the 
Commission has set up a control system to enable it to 
check that the specific provisions of the Staff Regula­
tions of Officials concerning invalidity are properly 
respected. The other nine points relate to the other 
institutions. 
(i) Of the 61 projects of all kinds which it checked, the 
Court of Auditors has chosen three which it admits 
itself are not good examples and do not produce find­
ings which can be generalized. It is therefore entirely 
wrong to conclude, as the Court does, that the imple­
mentation of aid programmes in favour of numerous 
developing countries has been delayed. 
The Commission would also point out that projects are 
implemented under the sole responsibility of each ACP Commission (cont.) 
State. The Commission's task is to ensure that no irre­
gularities occur and that operations are carried out in 
compliance with the provisions of the Lome Conven­
tion. 
Paragraphs 1.13 and 1.14 
These paragraphs, which are addressed indiscriminately to 
all the institutions, are worded in such a way that it is inap­
propriate if not impossible for individual institutions to 
exercise the right of reply properly. The Commission, for 
its part, would merely state that there is nothing in the par­
agraphs referred to which would justify the terms used by 
the Court. 
Paragraph 1.15 
The Court's comments do not take account of a number of 
improvements that the Commission is making in the areas 
to which these comments relate. These improvements are 
mentioned in the replies to paragraphs 3.5, 4.59 and 4.60 
and 10.8. 
As far as structural measures in the wine sector are con­
cerned, the Commission believes that the new approach, 
which replaces the compulsory vineyard register, will pro­
vide adequate information and assurances (reference to 
paragraph 5.32). 
Paragraph 1.17 
The Commission never fails to take whatever steps are in 
its power to make internal rules and regulations more pre­
cise and provide a better framework for financial manage­
ment. It has already done so in response to the comments 
from the Court which it considers justified. However, this 
vague and unduly general remark is so outrageously criti­
cal on fundamental matters that the Commission must 
express the most serious reservations. 
Paragraph 1.18 
The Commission would refer the Court to the replies it has 
given to the special reports quoted. 
The Commission regrets that these reports have been 
brought up again in the form of condensed extracts; the 
few lines chosen will inevitably give the reader an incom­
plete picture, especially as no reference is made to the 
Commission's replies which dismissed the comments, put a 
different light on them or limited their significance. The 
Commission is unable to give fully detailed replies here. It 
will merely outline its reactions: 
(a) Report on sales of reduced-price butter within the 
Community 
(i) Although no substantial increase in consumption 
was achieved, the measure under attack did help to 
halt the decline in domestic consumption; 
31. 12. 83 Official Journal of the European Communities 197 
Commission (cont.) 
(ii) and (iii) The Commission has an overall view of 
the cost of measures for disposing of butter. For in­
stance, considered as a means of disposing of addi­
tional quantities, exporting with refunds is highly 
effective and generally costs less than disposals on the 
internal market. 
(iv) Responsibility for implementing the measures lies 
primarily with the Member States; the Commission 
checks whether the controls meet the requirements of 
Community regulations. 
(b) Report on the special measures for Poland 
(i) In view of the urgency, the Council chose to have 
the operations for Poland carried out and financed by 
existing Community agricultural and financial 
mechanisms, even though it was aware that with these 
mechanisms the accounting details now sought by the 
Court of Auditors would not be available. 
(ii) The 159 million ECU identified in the accounts by 
the Court of Auditors is not representative of the oper­
ations in question, for it includes not only the special 
price reduction concerned by the overall amount of 
96,4 million ECU authorized by the Council, but also 
the normal refund. 
(iii) It is possible to check that the decisions were res­
pected, but this involves more work and is less accurate 
than the budget accounting system. 
(c) Report on skimmed milk processed for casein and cas-
einates 
(i) The priority objective of aid for skimmed milk pro­
cessed for casein and caseinates is the disposal of milk, 
of which there is a surplus in the Community, and the 
reduction of deliveries of skimmed-milk powder to 
public storage. 
(ii) The Commission can confirm that a system based 
on a flat-rate yield is used; this has advantages for con­
trol purposes and encourages' firms to improve their 
yields. 
(iii) The Commission has the informations and factors 
required for determining the amount of aid and adjust­
ing it regularly. In some cases, of course, the informa­
tion-is of a commercial nature with the inevitable mar­
gin of uncertainty. The Commission endeavours to 
reduce the influence of this margin on the determina­
tion of aid. 
(iv) The Commission can confirm the Court's finding 
that there has been a concentration, towards the more 
competitive firms; this is compatible with the prime 
objective of the measure, which is to dispose of 
skimmed milk at the lowest cost. The quality produced 
meets the needs of most users. Quality promotion must 
be examined in the light of the principal objective of Commission (cont.) 
the measure and in particular with regard to the cost 
and quantity aspects. 
(v) The Commission is continuing its efforts to har­
monize control and analysis methods and to make fur­
ther clarifications in Community regulations, notably 
to prevent distortion of competition between prod­
ucers. 
Paragraph 1.19 
The Commission would refer the Court to its replies to the 
comments concerning the various cases referred to in this 
paragraph. It should be noted that some of these cases are 
again referred to in paragraph 1.20. 
Paragraph 1.20 
The Commission replied to the Court's comments when 
they were made in its reports on previous years. It has also 
taken the most suitable measures in response to the dis­
charge decisions and resolutions and has informed all the 
institutions of the action taken. 
The Court's summary does not mention this action. It is 
not possible to repeat here the replies given on each point, 
nor to state the reactions of the other institutions. 
Wherever it considered it justified or useful, the Commis­
sion has acted in line with the Court's comments, the 
Council's recommendations and Parliament's resolutions. 
For instance: 
(a) The Commission has arranged a system of control of 
the responsibility of authorizing officers and account­
ing officers in accordance with the rules laid down in 
the Financial Regulation. 
(b) The Commission has reorganized its cash and accounts 
office. Officials in this department each have specific 
tasks. 
(c) Compliance with the Court's request would require 
additional technical resources and a re-ordering of 
priorities. This would not be in line with the Commis­
sion's current priorities. Moreover, the Court's request 
goes beyond the requirements of the Financial Regula­
tion. 
(d) Aware of the drawbacks of monetary compensatory 
amounts, which are applied pursuant to Council regu­
lations, the Commission is continuing its efforts to 
reduce or eliminate these amounts. 
(e) The measures in question are few in number and often 
temporary. They are generally intended to deal with spe­
cific situations such as the disposal of butter surpluses 
198 ' Official Journal of the European Communities 31. 12. 83 
Commission (cont.) 
or are introduced to facilitate the introduction of new 
measures such as the common organization of the mar­
ket in sheepmeat. The Commission therefore feels that 
these measures are not likely to harm the fundamental 
principle of the financing of the common agricultural 
policy. 
(f) From a legal point of view these programme measures 
count as intervention expenditure and hence come 
under the general rules governing the EAGGF Guaran­
tee Section. The introduction of differentiated appro­
priations for these measures, which make up only a 
tiny part of EAGGF expenditure, would mean that the 
financial rules for this sector were no longer uniform 
and would also complicate management. Moreover, in 
an endeavour to achieve more effective and transpar­
ent management of agricultural expenditure the Com­
mission, in proposals which it has just sent to the 
Council, has requested that EAGGF Guarantee appro­
priations not used during a budget year should be car­
ried over automatically to the EAGGF Guarantee Sec­
tion for the following budget year. 
The question of how to allocate revenue from the 
co-responsibility levy cannot be dealt with in isolation 
but will have, to be examined as part of the overall 
problem of the future financing of the Community and 
the adjustments to the CAP. Commission (cont.) 
(j) The Commission is prepared to examine the Court's 
request (paragraph 10.8). 
(k) The Commission is at present studying the complex 
problem of the monitoring of the use of counterpart 
funds. 
(1) The Commission, together with certain other institu­
tions, is at present examining the possibility of amend­
ing the rules governing overtime for drivers. Consulta­
tions are being held so that the new decisions will be 
applied simultaneously in the institutions concerned. 
Council 
(m) While challenging the figures in the analysis made by 
the Court of Auditors for its audit relating to the 1981 
financial year (see Council reply attached to the 
Court's report for that financial year), the Council will, 
as in the past, be sure to'take all the requisite steps to 
bring about an increase in the output of the typing 
pools. 
(g) The Commission's proposals for improvement are still 
on the table in Council. The Commission will shortly 
be making new proposals concerning the agricultural 
• structures policy as a whole. 
Firstly, as regards the problems arising from the plan­
ning of the projects, it should be noted that Regulation 
No 17/64 has been replaced by other more specific 
measures which do not suffer from the same draw­
backs. Secondly, as regards the winding-up of old pro­
jects, this has been proceeding apace, as shown by the 
following figures: 
Projects outstanding at the end of 1980 — 1 860; 1981 
— 1 234; 1982 — 709 (1980 — 5.17). 
As indicated in the Commission's replies to the 1981 
report, the Commission is engaged in an infringement 
procedure against Italy on this matter (1981 — 5.22). Commission 
(m)The monitoring of the work of the typing pools in 
Brussels has been improved by putting these pools 
under the direct authority of the head of each language 
division. The central typing pool has been disbanded. 
In Luxembourg functional coordination has been 
stepped up between the heads of the new language sec­
tions and the heads of the typing pools.. 
(n) It should be pointed out that a charge is made for 
admission to the Fitness Centre and a member of the 
Commission staff is on duty at the entrance. 
Moreover, staff may use the facilities only outside their 
working hours. These rules have been published in the 
staff Courrier. 
The measure has finished, so any action to speed up 
the initial stages of the projects would be pointless. As 
regards the winding-up of existing projects, the Com­
mission has cancelled aid to three projects which never 
got past the planning stage and is increasing pressure 
on the beneficiaries and on the Italian authorities to 
complete the remaining projects (1981 — 5.25). 
(h) In the three cases cited by the Court, the Commission 
disagreed with the Court's findings in the 1981 report. 
(i) The Commission scrupulously respects the provisions 
of the ERDF regulation. It has always been able to 
give the budgetary authority full justification for the 
investments carried out under these programmes. (o) As the Commission stated in its replies to the Court of 
Auditors' report for 1981, although it has no data bank, 
the rules which have been drawn up over time have 
always taken account of past experience. 
The mass of documentation made1 up of the technical 
reports of delegations, sectoral and project assessment 
reports, and internal and external control reports could 
be considered the foundation of what amounts to a 
data bank on which the Commission can draw in indi­
vidual cases depending on what the projects involve. 
(p) As provided in Lome Convention instruments, delega­
tions no longer submit progress reports every three 
31. 12. 83 Official Journal of the European Communities 199 
Commission (cont.) 
months but every six months in view of the increasing 
amount of work that the limited number of staff have 
to handle. Should any major difficulties arise when a 
project is in progress, the delegate must, of course, 
send in a report immediately without waiting until the 
six-monthly report is due. Commission.(cont.) 
(q) Generally speaking completed projects are examined 
by delegations on the basis of detailed instructions. 
These instructions will again be set out in the new 
instruction book which is at present being prepared 
and will be distributed to delegations probably around 
the middle of 1984. 
Replies of the institutions to Chapter 2 
Accounting matters 
European Parliament 
Paragraph 2.7 European Parliament (cont.) 
Paragraphs 2.11 and 2.12 
It is correct that the sum involved is 5,2 million ECU arid 
not 4,2 million ECU. Constructive measures have already 
been taken within the general accounts, where the amounts 
available in the imprest accounts and the amounts to be 
settled are now clearly identifiable. In future, advances to 
be settled and expenditure to be charged will be presented 
under a separate heading of the balance sheet. 
Paragraph 2.10 
(i) At the meeting with the Court of Auditors at adminis­
trative level, Parliament was informed that payments des­
cribed as 'made without the prior approval of the Financial 
Controller' related to standing orders made out to ensure 
rapid payment of current expenditure (e.g. electricity, tele­
phone, rent) where non-payment of bills within given 
time-limits can give rise to unpleasant consequences. The 
Financial Controller is always informed of these payments. 
(ii) As far as Members' secretarial allowances are con­
cerned, the amount of 0,2 million ECU, althpugh relating 
to expenditure incurred in 1982, was charged to the institu­
tion's budget for 1983 and not to the 1982 budget. The 
appropriations granted in respect of secretarial allowances 
in 1982 proved insufficient for the following reasons: 
(a) exchange losses due to the procedure for paying the 
allowances; 
(b) the secretarial allowances payable to the assistants of 
Members leaving the European Parliament before the 
end of their term of office. It is difficult to make a pre­
cise estimate of the amounts payable in such cases. 
(iii) In order to be able to form a better idea of the utiliza­
tion of appropriations, Members will be asked to submit 
their applications for secretarial allowances to the relevant 
department in good time before the end of the year. The officials responsible for the 'finance' section intend to 
entrust all the institution's banking transactions outside 
Luxembourg to a single European bank of international 
status. Reorganizing Parliament's banking relations in this 
way will mean: 
— the elimination of a large number of bank accounts; 
— the elimination of balances in foreign currencies with 
the concentration of funds in an ECU account; 
— maximization of interest payments made to Parlia­
ment; 
— transfers of funds between Member States at same-day 
value; 
— reduced risk of exchange losses. 
An announcement will be broadly publicized in the spe­
cialized European press within the next few weeks. 
Paragraphs 2.8 and 2.13 
(i) On instructions from the President on 3 January 1983, 
the accounts departments carried out an investigation of 
the justification of the imprest accounts. Further to this 
investigation, it was decided to eliminate the following 
three imprest accounts: 
— 'Members' secretarial allowances' which will be closed 
before the end of the year; 
— 'operating costs of bars and restaurants', the running of 
which is entrusted to companies from outside, was 
closed on 30 September 1983; 
— the account for the purchase of minor bar/restaurant 
equipment was closed on 30 September 1983. 
200 Official Journal of the European Communities 31. 12. 83 
European Parliament (cont.) 
(ii) Consequently, the permanent imprest accounts with 
funds which are 'active' at 30 August 1983 are as follows: 
— the nine imprest accounts administered by the nine 
Press Offices in the various capital cities, the justifica­
tion of which is accepted by the Court of Auditors; 
— the Audio-visual Service (ceiling 440 ECU); 
— visitors from non-member countries (ceiling 44 029 
ECU); 
— postal charges (ceiling 73 ECU); 
— urgent purchases for medical service (ceiling 132 
ECU); 
— welfare assistance (ceiling 1 100 ECU); 
— purchases of equipment for Bureau (ceiling 440 ECU); 
— purchase of library reply coupons (ceiling 110 ECU); 
— purchase of minor technical equipment (ceiling 220 
ECU); 
— training (ceiling 220 ECU); 
— Buildings and Infrastructure Division in Strasbourg 
(ceiling 293 ECU); 
— Mail Department (ceiling 110 ECU); 
— technicians (220 ECU); 
— supplies and maintenance, Brussels (330 ECU); 
— protocol (ceiling 440 ECU); 
— travel by President (ceiling 5 503 ECU); 
— customs clearance, Luxembourg railways (ceiling 110 
ECU); 
— travel and subsistence expenses of Members (with 
funds totalling 4,9 million ECU as at 31 July 1983, but 
now subject to a ceiling of 4,5 million ECU). 
(iii) The imprest accounts without funds are as follows: 
— study visits and journalists (ceiling 100 000 ECU); 
— journalists (ceiling 20 000 ECU); 
— security expenses — Strasbourg part-sessions (ceiling 
FF 20 000); 
— expenditure on taxis during part-sessions (ceiling BFR 
5 000 plus FF 2 000); 
— drivers (ceiling 30 000 ECU); 
— mail (ceiling BFR 5 000); 
— mission expenses of officials (ceiling 900 000 ECU);, 
— advances for installations and removals (ceiling BFR 
2 000 000). European Parliament (cont.) 
(iv) The justification of all the above imprest accounts and 
their ceilings will be re-examined. The Court has been 
informed of the outcome of the examination requested by 
the President (see paragraph (i) above). 
Paragraphs 2.14, 2.15,2.17 and 2.18 
(i) With a view to the imminent closing of the imprest 
accounts for Members' secretarial allowances, the bank 
reconciliations are up to date and were up to date at 31 
December 1982; since 1 January 1983 the auxiliary 
accounts have been kept partly by double entry. 
(ii) As regards the travel and subsistence allowances of 
Members, bank reconciliations deemed to have priority 
will be completed by the end of 1983. 
(iii) In response to the Court's criticism of the fact that the 
advances paid in respect of travel and subsistence expen­
ses for Members and the advances paid to meet expendi­
ture related to meetings (e.g. renting of rooms) come from 
two separate imprest accounts which were however 
recorded in a single auxiliary account (paragraph 2.17), the 
competent departments merged these two imprest accounts 
in 1983. 
(iv) Written instructions will be forwarded forthwith to the 
officials employed in the Members' Pay Office and the 
General Cash Office with a view to eliminating incomplete 
or incorrect statements or similar documents and ensure 
that cash statements are issued on a correct and systematic 
basis. 
Henceforth a distinction will be made in the Members' Pay 
Office between the officials responsible for drawing up the 
payment documents and those responsible for the actual 
payment of allowances. 
(v) The practice of bank transfers between the imprest 
account for travel expenses and subsistence allowances 
and the account for secretarial expenses has been used 
only on rare occasions (where an imprest account had a 
surplus in a currency in which another account was in very 
short supply). Henceforth such transactions, which never­
theless appeared in the general accounts, will no longer 
occur if Parliament, in rationalizing its bank accounts, no 
longer holds, as a general rule, accounts in foreign curren­
cies. 
Paragraphs 2.19 and 2.20 
As regards the imprest account for the operating costs of 
bars and restaurants arising from the running of the bars 
and restaurants in Strasbourg and Brussels by outside 
firms, an auxiliary account has been kept since 1 January 
1983, under which the method of collecting revenue from 
'customer' accounts has been improved. The formalities 
involved in a request for transfer of appropriations (Trans­
fer No C/4) have contributed to delays in the payment of 
31. 12. 83 Official Journal of the European Communities 201 
European Parliament (cont.) 
numerous invoices. After a series of payments in July 1982, 
the imprest account could not be reconstituted until No­
vember 1982. This imprest account was in fact closed on 
30 September 1983. 
Paragraphs 2.6 and 2.21 
The Administration has been instructed to investigate the 
feasibility of rationalizing payment procedures in order to 
ensure the rapid regularization of advances on officials' 
mission expenses in accordance with the following guide­
lines: 
— advances would be paid by bank transfer only; 
— the amount of the advance will be fixed in flat-rate 
terms according to the probable duration and the place 
of the mission; 
— where the mission order has not been duly completed 
at the end of the mission and returned within 30 days 
to the Pay and Allowances Section, the latter will take 
action to recover the advance paid. 
In order to effect reconciliation between the auxiliary 
accounts of the imprest account and the general account, 
the administrators in the two relevant departments have 
been meeting at regular intervals since 1 January 1983. 
Paragraph 2.22 
The Court of Auditors notes that in the accounts 'sundry 
accounts receivable', 'advances to be settled' and 'sundry 
accounts payable' there are numerous old or anomalous 
amounts. Instructions have been given in this connection 
to the effect that these accounts must be cleared by the end 
of the year and regular monitoring introduced. However, 
the amounts involved are often only small; since the, cost 
of recovery is sometimes higher than the amounts to be 
recovered, the institution reserves the right to invoke 
Article 24(2) of the Financial Regulation. 
Council 
Paragraphs 2.23 to 2.25 
On the question of cash reimbursements to representatives, 
the Council would point out that this accounts for only 
16% of total reimbursements. 
The Council is unable for the moment to act on the Court's 
comments as regards the extension of payments by transfer 
to all delegates insofar as such an extension might cause 
problems for certain delegations. It will give, further con­
sideration to this question, in particular as regards the 
checking of these expenses. Commission 
Paragraph 2.27 
Given the limited means at its disposal, the Commission 
considers that the control of bank accounts will soon be 
entirely satisfactory. 
On average, reconciliations were made at least three times 
during the year. The first covered a relatively long period 
because of the need to make up a backlog but the other 
two took place at shorter intervals. 
(a) For the accounts with the largest volume of operations, 
reconciliations are extremely complex and were per­
formed, very thoroughly. 
(b) For six accounts, a small number of well identified 
entries remained open pending further details 
requested from the bank concerned. The fact that these 
had still not been received at 1 June meant that the 
reconciliations could not be completed. 
Paragraph 2.28 
The amount referred to by the Court did not satisfy the 
conditions laid down in the first paragraph of Article 5 of 
the Financial Regulation in order to be considered revenue 
for the financial year. However, the Commission is pre­
pared to take up the Court's suggestion. 
Paragraph 2.29 
Implementation of the computerized system planned and 
requested will take time because of other priority require­
ments being met at present (it should be. operational by 
1988 — Bodart report). 
Paragraph 2.30 
The number of bank accounts has increased because more 
accounts are being kept in various currencies (10 Com­
munity currencies and three or four currencies of non-
member countries). The Commission needs these to be 
able to manage its current operations. 
The Commission also considers it vital to maintain keen 
competition between the various banks which hold its 
accounts. 
Paragraph 2.31 
It was felt that the new practice would improve the reliabil­
ity and transparency of accounting operations, given the 
considerable difficulties arising from the use of the ECU 
for accounting purposes. 
Since the Court does not consider this method of present­
ing the accounts to be suitable, the Commission has taken 
the necessary steps to revert to the former practice. 
202 Official Journal of the European Communities 31. 12. 83 
Commission (cont.) 
Paragraph 2.32 
In the light of the Court's comments, the Commission will 
re-examine the status and operation of the mission expen­
ses imprest account so as to bring it more closely into line 
with the rules now in force. It should be pointed out that 
separate accounts exist for these operations, although 
improvements are being sought. Commission (cont.) 
The Commission has already adopted additional provi­
sions and is contemplating a new procedure to overcome 
these problems and maintain satisfactory control over 
imprest accounts in delegations and external offices. 
The General Cash Office has been inspected regularly by 
its Head of Department. 
Paragraph 2.33 
The method of drawing up statements of imprest accounts 
is described in note 5.11 annexed to the consolidated bal­
ance sheet on page 24 of Volume V of the revenue and 
expenditure account and balance sheet of assets and liabil­
ities for 1982. 
The note explains that the Commission's imprest accounts 
are made up on 3 December so that the balance sheet can 
be prepared at 31 December. This means that all opera­
tions after 3 December are recorded in the accounts for the 
following year. Paragraph 2.39 
The Commission has issued reminders on the importance 
of regular monitoring. But it is aware that its existing com­
puter system is unsuitable for this purpose and makes it 
difficult to analyse certain accounts. It has therefore set up 
an interdepartmental working party to investigate the reor­
ganization of the computerized accounting system. Pro­
gress so far suggests that a new system designed wholly 
with the needs of a complex accounting system in mind 
and using modern management methods will be in use by 
the beginning of 1986. 
The external offices and delegations are so far away from 
headquarters that it would be impossible to book their 
expenditure before the accounts of the institution itself are 
closed. The Commission would ask the Court to re-exam­
ine this question. Meanwhile, the Commission will do its best to monitor 
these accounts with the very limited means at its disposal. 
Paragraph 2.40 
Paragraph 2.34 
The role of the General Cash Office is steadily diminishing 
with cash operations being increasingly conducted through 
the banks. The Office is soon to be closed altogether as 
part of a reorganization. 
All the other measures called for have been taken. The 40 000 ECU of expenditure in excess of appropria­
tions was entered by the Commission in a special account 
'expenditure to be regularized' to distinguish it clearly 
from other expenditure, covered by appropriations, which 
was still to be charged. This expenditure arose from the 
payment by some external offices of unavoidable expenses 
such as telephone, telex and postage charges. When these 
were converted into ECU to be charged to the budget, it 
was discovered, too late, that the available appropriations 
were inadequate. 
Paragraphs 2.35 and 2.36 
These cases involve small amounts and come under the 
third paragraph of Article 42 of the Financial Regulation. 
They are being re-examined as requested by the Court. 
Paragraphs 2.37 and 2.38 If such a situation should arise in future, the Commission 
will follow the Court's suggestion and open a special head­
ing in its balance sheet entitled 'expenditure paid in the 
absence of appropriations'. However, since the Court has 
expressly asked for the consolidated balance sheet to be 
expressed in million ECU to only one decimal place, the 
Commission would prefer to include this expenditure 
under the general heading of 'expenditure to be charged' 
with a note stating the amount of irregular expenditure 
involved. 
The number of imprest accounts, the distances from head­
quarters, and the shortage of staff in the accounting offi­
cer's department, together with the severe restrictions on 
mission expenses, make it very difficult to apply Arti­
cles 53 and 54 of the implementing rules of the Financial 
Regulation. Paragraph 2.41 
While the Commission does not dispute the fact that from 
a legal point of view the Court is right as regards the prin-
31. 12. 83 Official Journal of the European Communities 203 
Commission (cont.) 
ciple, it would refer in this regard to the various discus­
sions with the budgetary authority. In its 1982 accounts, 
the Commission,, like the other institutions, applied the 
method proposed in the revised Financial Regulation now 
being examined by Parliament. It would also point out that 
in none of the discussions has the budgetary authority 
challenged the principle of showing at the foot of the bal­
ance sheet and the revenue and expenditure account the 
net exchange differences resulting from the use of the 
ECU. Commission (cont.) 
Paragraph 2.44 
The Commission is pleased that the Court finds the pre­
sentation of the 1982 accounts to be an improvement. It 
will continue its efforts in this field and will, as the Court 
suggests, enter all the items which appear on the consoli­
dated balance sheet in the trial balance. 
Paragraphs 2.45 to 2.47 
Paragraph 2.42 
Some operations are entered directly in the accounts in 
ECU and so remain at the historical rates used for that 
operation. Since the currency involved is not entered in the 
computer system, it is impossible to revalue these opera­
tions at the rate obtaining on 31 December. If the Court's 
recommendation were to be followed, accounting proce­
dures and methods would have to be changed and all the 
accounts kept in different currencies. This would involve 
separate accounts for each currency and separate trial bal­
ances, which would only be converted into ECU for the 
purpose of producing statements of accounts. 
Since the computer programs used were not designed to 
enable accounts to be kept in different currencies, it would 
be impossible to do this at the moment. It might be feasi­
ble to introduce such a system when the computer system 
for accounts, which is currently being reviewed, is rede­
signed. Some items, however, are deliberately maintained 
at their historical rates (e.g. buildings, furniture and equip­
ment as well as appropriations to be carried over, the prin­
ciple behind which is specially described in note 2.2.3 on 
page 6 of Volume V of the revenue and expenditure 
account). 
Transactions between Community institutions and bodies 
are denominated in ECU and so are not subject to revalua­
tion when accounts are prepared. The Court's remarks bear 
only on part of certain items in the balance sheet totalling 
66,9 million ECU, about 0,76% of the total of 8 700 million 
ECU. 
Paragraph 2.43 
The Commission agrees with the Court and in order to 
improve the clarity of the accounts has given instructions 
that as from 1983 exchange differences should be entered 
in separate accounts according to type. European Parliament (2.45 to 2.47) 
In 1981 the relevant departments set up a data base con­
taining information relating to office machinery. At the 
same time a physical inventory of such machinery was car­
ried out. The results compared with the data base show 
only insignificant differences. In May and June 1983 the 
relevant departments carried out a general inventory of 
Parliament's fixed assets broken down into three categories 
(a) motor cars, (b) office machinery and (c) furniture. 
The results of this inventory are currently being computer­
ized and will subsequently be compared with the existing 
inventory records. 
TTie Court will be informed during 1984 of the outcome of 
this comparison. 
Council (2.45 and 2.46) 
The Council is aware of the problems referred to by the 
Court of Auditors in this area and it intends to resolve 
them by introducing automated management systems in 
the very near future. 
Commission (2.45 and 2.46) 
The methods used by the Commission to draw up its 
inventory and calculate its value are described in the 
instructions concerning inventories (XV/13131/1968 F). 
They may be summarized as follows: 
(a) An entry based on a certificate of receipt or invoice 
which has been certified correct is made in the inven­
tory book in respect of every item which meets the con­
ditions for being entered there (durable goods with a 
specific minimum value). For management reasons, 
certain durable goods of a lower value are also 
included. 
204 Official Journal of the European Communities 31. 12. 83 
Commission (cont.) 
In parallel with this entry various particulars are sent 
once a month to the Computer Centre (inventory num­
ber, date of receipt, order number, unit price, name of 
manufacturer or seller, serial number (if any), location, 
short description; etc.). 
(b) Changes of location and other amendments which 
occur during the life of the item are entered on the 
basis of information sent to the. inventory department 
or discovered during inspection. 
(c) Items are removed from the inventory by means of an 
appropriate decision signed by the authorizing officer 
responsible and approved by the Financial Controller. 
The entry in the computer memory is not deleted as a 
result but archived with a special code so that no fur­
ther changes can be made to it. 
(d) The Computer Centre sends to the inventory depart­
ment: 
— every month, check lists relating to the month in 
question; 
— half-yearly, complete print-outs showing the num­
ber of items, the total value of purchases and brief 
statistics. 
(e) In accordance with Article 59 of the Financial Regula­
tion, the Commission has inspections carried out to 
ensure that the inventory is correct. 
The inventory consists of almost 40 000 computer-
printed pages on microfilm and may be consulted in 
the appropriate department by the budgetary and con­
trol authorities. 
Court of Justice (2.46) 
The inspection to ascertain that the permanent inventories 
correspond to the facts will be completed by the end of the 
financial year 1983. 
Economic and Social Committee (2.45 and 2.46) 
To date, the Economic and Social Committee has had 
neither the staff nor the computer equipment required in 
order to carry out the checks called for by the Court of Economic and Social Committee (cont.) 
Auditors; moreover, we feel that the proposed checks are 
based on thinking applicable to private firms. 
As more sophisticated computer facilities will be in opera­
tion by 1984, however, the Committee will devise a pro­
gramme to carry out a number of checks. At the same time, 
it should be emphasized that partial or random checks are 
regularly carried out when drawing up budget estimates or 
replacing equipment. 
Court of Auditors (2.46) 
Instructions have already been given to the internal admin­
istration department to complete checking that the perma­
nent inventories correspond to the facts. 
Economic and Social Committee (2.47) 
The figures given by the Economic and Social Committee 
were based on estimates for insurance purposes; this 
method was held to be preferable in view of the large num­
ber of questions which arise, and which will have to be set­
tled by joint agreement of the Community institutions, 
namely: the rules on depreciation, the fixing of standards 
and definitions, and the establishing of an accounting plan 
(including statement of the original value or value in 
ECU). 
Commission 
Paragraph 2.48 
The value of 1 974 000 ECU put on the Commission's 
stock of office supplies in the balance sheet is derived in 
quantity and value from the permanent inventory held by 
the authorizing officer responsible for the appropriations. 
The size of the stocks makes it impossible to carry out a 
special count of every article on 31 December for the pur­
pose of producing the balance sheet. 
Attempts are being made at the Ispra Research Centre to 
ensure that the value of consumable items is available and 
entered in the balance sheet with effect from 1983. 
31. 12. 83 Official Journal of the European Communities 205 
Replies of the Commission to Chapter 3 
Revenue 
Paragraphs 3.5 to 3.11 
The Commission took a position on all these points in its 
reports to the Council and Parliament on the application 
of Regulations (EEC, Euratom, ECSC) No 2891 and 
No 2892/77, in its proposals for amending these two Regu­
lations and in the ensuing discussions in the Council and 
in Parliament. 
In implementing the current rules the Commission pays 
every attention to the points raised by the Court. Experi­
ence gained .during the first few years of applying the rules 
governing VAT own resources has done much to improve 
accuracy and speed in determining the base. 
Paragraphs 3.12 to 3.17 
The Commission would point out that the aspects of the 
generalized system of preferences highlighted by the Court 
are but one feature of an overall policy on trade with the 
developing countries. 
Paragraph 3.16 
On 13 July 1983 the Commission submitted a proposal to 
the Council (COM(83) 441 final) adjusting the allocation 
of tariff quotas between Member States. 
Paragraph 3.17 
The products covered by the generalized system of prefer­
ences fall into three different categories. The largest cate­
gory consists of products regarded as 'non-sensitive', since 
these products are not likely to cause problems for Com­
munity producers; generally speaking, this category enjoys the full benefit of the preferences. A second category com­
prises 'sensitive' products, whose importation in unlimited 
quantities could seriously harm the interests of Community 
producers; these products are subject to the individual tar­
iff quotas referred to at paragraph 3.15 of the report. 
A third category regarded as 'semi-sensitive' is subject to a 
system of individual 'ceilings'. Customs duties may be 
reimposed on these products when imports reach the 'ceil­
ing'. 
But the reimposition of duties, once the ceiling is reached, 
is by no means automatic. It should be noted that the GSP 
ceilings constitute a minimum guarantee for the recipient 
countries. Customs duties are rjeimposed in accordance 
with the genuine interests and risks of injury established in 
one or more Member States. This practice cannot be 
regarded as contrary to the objectives of the CCT or to the 
system of collecting own resources. 
Paragraphs 3.18 and 3.19 
The Commission attaches the greatest importance to the 
organization of national authorities responsible for the 
inspection measures referred to in Article 18 of Regulation 
No 2891/77. 
Through bilateral contacts with the Italian authorities the 
Commission is making sure that the time limits set in 
Article 2 of Regulation No 1430/79 (repayment) are 
observed. 
Paragraph 3.22 and 3.23 
Acting on the Court's suggestions the Commission will 
consider ways of tightening internal instructions, notably 
those on the presentation of files, to facilitate auditing. 
Replies of the Commission to Chapter 4 
European Agricultural Guidance and Guarantee Fund, Guarantee Section 
Paragraph 4.6 
(a) The existing arrangements for presenting and utilizing 
appropriations provide a satisfactory means for monitoring 
budgetary management operations. The totals for appro­priations in Titles 1 and 2 are given at the end of Title 2 as 
a footnote and on the remarks page. The accounting 
arrangements are that advances are paid as a provisional 
global commitment and entered in the ad hoc B 2999 
account, in full compliance with Article 96 of the Financial 
206 Official Journal of the European Communities 31. 12. 83 
Regulation. With this procedure the total appropriations 
available will not be exceeded. 
(b) The concept of negative appropriations for entering 
revenue from the milk co-responsibility levy was enshrined 
in Council Regulation (EEC) No 1079/77 instituting the 
levy, as a means of ensuring that the revenue involved was 
in fact used in this sector. This concept has economic 
advantages but also has disadvantages from the point of 
view of budgetary transparency. 
This issue cannot be dealt with on its own but should be 
re-examined in the overall context of the future financing 
of the Community and the review of the CAP. 
(c) The Commission considers that the techniques used for 
entering in the accounts expenditure in the olive oil and 
fibre flax sectors are the most appropriate. This deduction 
does not constitute revenue within the meaning of Article 3 
of the Financial Regulation but a reduction in aid granted 
provided that additional expenditure is made for specific 
purposes. 
(d) It should be noted, that a number of Member States 
already send in statements that go into more detail than 
the budgetary nomenclature. The advantage of having this 
implementation nomenclature with a finer breakdown than 
the authorization nomenclature is that the expenditure 
declared by Member States can then be analysed in greater 
detail. 
(e) Budget headings of the 'other measures' type were 
instituted so that the common market organizations would 
have the necessary flexibility in market management; the 
budget would not have to be amended before new mea­
sures could be implemented in a given sector. The Com­
mission shares the Court's view that these headings ought 
not to be used for measures involving heavy expenditure 
which are already in existence when the budget is estab­
lished. It could also envisage informing the budgetary 
authority whenever a new measure calls for use of such 
headings. 
Paragraph 4.10 
The Commission would refer to its replies to the Court's 
comments on the assessment of real expenditure, in partic­
ular negative appropriations, given in paragraphs 4.36 and 
4.37 of the annual report for the financial year 1979. It 
would also refer to the reply given to paragraph 4.6 (b) and 
(c) of the present report. 
Paragraph 4.12 
In response to the comments of the Court of Auditors, the 
budgetary nomenclature was amended so that there would 
no longer be netting-off of expenditure and revenue under 
the same budget heading. In addition, amounts paid and amounts received are in any case not netted-off in the 
statements submitted by the Member States. 
Paragraph 4.13 
The Commission would refer to its proposals and the 
efforts it has made to reduce monetary compensatory 
amounts, which have an adverse effect on the correct oper­
ation of the common market organizations. 
In view of the difficulties it has in obtaining from a num­
ber of Member States detailed statements by sector for 
amounts collected for trade in agricultural products, it is 
likely that similar difficulties will arise for amounts col­
lected as MCAs, which would make it impossible to ascer­
tain the overall effect for each sector. The Commission 
would point out in any event that current practice is in line 
with existing rules. 
Paragraph 4.14 
The Commission would refer to its replies on this point in 
previous reports. To show the effect of dual conversion 
rates under a budget heading would mean that different 
types of ECU had to be used in a single budget. The Com­
mission therefore prefers to give the dual rate effect in the 
EAGGF financial report. For 1982, it was estimated at 
180 million ECU. 
Paragraphs 4.15 to 4.18 
The Commission does not agree with the views expressed 
by the Court in these paragraphs. 
The EAGGF accounts should show expenditure in ECU at 
known rates without being influenced by amounts of ad­
vances to cover expenditure for a given month and not 
used for that purpose. 
The Commission would point out that these exchange dif­
ferences are of an accounting nature. This means that the 
positive and negative differences must be entered in a 
non-budget account and only the balance appears in the 
budget. 
The procedure which the Court appears to be suggesting 
would mean allowing the level of expenditure charged to 
the EAGGF Guarantee Section to be influenced by the 
degree of accuracy of expenditure forecasts prepared by 
the paying agencies in the Member States. 
The Commission believes that it is correctly applying both 
the spirit and the letter of the rules laid down in Arti­
cles 95, 96 and 97 of the Financial Regulation. 
31. 12. 83 Official Journal of the European Communities 207 
Paragraphs 4.19 to 4.23 
The manner in which the requirements for December were 
covered demonstrates the extreme caution exercised by the 
Commission in trying to find the best possible response to 
the sudden increase in Member States' requirements at a 
time when draft supplementary and amending budget 
No 1/82 was still being discussed by the budgetary auth­
ority. The Commission is responsible for managing advan­
ces in the best possible way within the framework of Coun­
cil regulations, particularly Articles 95 to 101 of the Finan­
cial Regulation. It enjoys a certain latitude, particuarly in 
exceptional situations, and it made use of this for the 
December advances. Paragraph 4.27 
The Commission takes steps to ensure that liquid funds 
held by the Member States are kept to a minimum. But it 
must also guard against the administrative and financial 
consequences for its own departments and those of the 
Member States of excessively restrictive rules. 
It considers the Court's allegation that Article 4 (2) of 
Regulation (EEC) No 729/70 has not been complied with 
and its claim that the practice of making advances during 
the year could lead to appropriations being exceeded at 
year-end to be unfounded. 
Paragraphs 4.24 and 4.25 
The transfer of cereals from Germany to Italy should have 
taken place before the end of December. Expenditure was 
forecast for Germany and revenue for Italy, to be entered 
in the EAGGF-Guarantee accounts. Because the operation 
was delayed until January there was a discrepancy between 
the forecast and the outturn, giving a positive balance for 
Germany and a negative balance for Italy. 
The Commission would point out that there can be no 
question of appropriations being allocated to individual 
Member States. The balance for Italy is more than offset 
by balances in the other Member States in general and 
Germany in particular. This being so, the expenditure was 
correctly charged to the 1982 budget. 
The Commission would point out that it is planning to 
adopt provisions by the end of 1983 which will obviate the 
risk of overspending inherent in the present system for 
financing public intervention expenditure. 
These provisions will also go some way towards meeting 
the requests contained in paragraph 4.30. 
Paragraph 4.26 
The Commission considers it normal that Member States 
should have end-ofrmonth balances under the system of 
financing the EAGGF. It would disagree with the Court's 
view that balances are large and persistent in certain Mem­
ber States. 
Since it is difficult to make forecasts in this area, the Com­
mission feels that the average rate of utilization (88,6%) 
and the rate of utilization on 31 December 1982 (99 %j (') 
are satisfactory. 
(') Twelfth financial report on the European Agricultural Guid­
ance and Guarantee Fund — 1982 — Guarantee Section and 
Food Aid Financing — COM(83) 531 Final of 15 September 
1983, pp. Band 35. Paragraph 4.32 
As it has stated in reply to the Court's comments in pre­
vious reports, the Commission does not share the Court's 
opinion that direct payments made by the Commission for 
a number of management tasks are incompatible with the 
provisions of the Financial Regulation. However, when the 
Financial Regulation is revised, the Commission will 
definitely take up Parliament's proposed amendment call­
ing for an explicit statement in the Regulation to the effect 
that, in specific cases, the Commission may make direct 
payments. In this event, such payments will be subject to 
the general rules of the Financial Regulation. 
Paragraphs 4.33 and 4.34 
With regard to the way in which revenue is entered in the 
accounts, see the reply to paragraph 4.6 (b). 
With respect to budget presentation, it should be noted 
that, in contrast to the 1982 budget, the 1983 budget carries 
a remark explaining the use to which funds from the 
co-responsibility levy are put, namely: 
(a) to finance, in whole or in part, specific measures in 
accordance with annual programmes (market develop­
ment measures, promotion and advertising and meas­
ures for the disposal of milk and butterfats); 
(b) contributions to EAGGF Guarantee Section expendi­
ture in the milk and milk products sector, including 
financing existing priority measures (improvement of 
export conditions, measures for disposal of butter, aids 
and special sales for skimmed-milk powder). 
The Commission also gives the figures for the implementa­
tion of the specific measures mentioned under (a) in the 
EAGGF financial report. 
Paragraphs 4.35 to 4.37 
The object of aid to small-scale milk producers is to bolster 
their income. 
208 Official Journal of the European Communities 31. 12. 83 
Since this is not a market measure calling for standard 
implementation and in order to allow for any specific 
regional difficulties it seemed preferable to allow Member 
States to establish the criteria for distributing this aid, sub­
ject to Commission approval. 
Paragraphs 4.38 and 4.39 
With a view to increasing the amounts of skimmed-milk 
powder disposed of when stocks were rising, the Commis­
sion reintroduced the aid for skimmed-milk powder to be 
fed to pigs and poultry. After the Advisory Committee on 
Milk and Milk Products had been consulted, it was agreed 
that up to 100 million ECU from the co-responsibility levy 
could be used to finance this measure (as indicated in par­
agraph 4.34 (b)). 
The non-automatic carryover of 100 million ECU under 
Article 6 (1) (b) of the Financial Regulation was proposed 
by the Commission in response to the explicit request 
made by Parliament in its resolution of 19 November 1981. 
The Commission indicated in its proposal that the amount 
involved would be used for measures aimed at reducing 
public stocks of skimmed-rrlilk powder. The carryover was 
approved by the Council and Parliament under the proce­
dure laid down in Article 6 (3). 
The fact that the appropriations were carried over to the 
'other measures' heading did create the charging problem 
mentioned by the Court. There will be no such problem in 
1983. 
The Commission cannot agree with the Court's comments 
on the operation itself, particularly since the budgetary 
authority was fully informed of the use to which the appro­
priations carried over would be put. 
Paragraphs 4.41 and 4.42 
The technical reduction in value is based on Article 7 of 
Council Regulation (EEC) No 1883/78 which provides 
that 'Where the products in question have experienced 
depreciation as a result of storage, the financial effect 
thereof shall be recorded and taken into account at the 
time of entry into intervention. To that end the coefficients 
of depreciation and the prices to which they apply shall be 
determined by the Commission, after examination by the 
Management Committee'. 
In Regulation (EEC) No 230/79, the Commission estab­
lished the reduction in value for bone in beef and veal at 
20% from 1 January 1979. 
-The possibility of applying a technical reduction in value 
for other products was also looked into. For butter, for 
example, the experts feel that, as a result of progress made 
in deep-freezing techniques, reductions in value of this 
type are no longer justified. With regard to tobacco the 
decline in quality only occurs after a long period of storage 
if at all. This is difficult to reconcile with a technical reduc­tion in value at the time of purchase, as laid down in 
Article 7 of Regulation No 1883/78. 
Paragraphs 4.44 and 4.45 
The Commission considered that in 1982 there was no 
need to make a reduction in value for anticipated loss with 
regard to intervention stocks of agricultural products as 
permitted by the second paragraph of Article 8 of Regula­
tion (EEC) No 1883/78. When it next uses this provision, 
it will pay particular attention to the methods for applying 
it, especially the need to sell products in public storage at 
reduced prices the following year. 
Paragraph 4.46 
(a) The Commission publishes in the financial report of 
the EAGGF Guarantee Section the value of the quanti­
ties of agricultural products in intervention storage at 
31 December of the reference year. 
(b) Under certain circumstances, the specific cost arising 
from special sales measures can be determined from 
Member States' statements. The feasibility of showing 
these costs separately could be examined in connection 
with the possible improvement to the implementation 
nomenclature (see paragraph 4.6 (d)). 
Paragraph 4.47 
On 14 January 1983 the Commission adopted its decisions 
on the clearance of the accounts for 1976 and 1977. 
It will be taking decisions on the clearance of the accounts 
for 1978 and 1979 during 1983 and for 1980 and 1981 
during the first half of 1984. Efforts to clear the backlog are 
therefore continuing. 
Paragraph 4.50 
The Commission has always kept a close watch on Mem­
ber States' interpretations of Regulation (EEC) No 283/72 
and has stepped up its efforts in this field. This probably 
accounts for the increase in notifications observed in 1982, 
which the Court rightly stresses in paragraph 4.48. 
The problem of notifications by other procedures referred 
to in subparagraph (c), which concerns only one Member 
State, is in the process of being settled. 
Paragraphs 4.51 to 4.58 
With regard to the basic problem, it should be noted that 
recovery of sums due in respect of established irregularities 
31. 12.83 Official Journal of the European Communities 209 
is the responsibility of the Member States and the amounts 
are deducted from EAGGF expenditure. 
Pending the introduction of the procedure for dividing 
responsibility between the Member States and the Com­
munity in the case of irrecoverable amounts (procedure 
referred to in paragraph 4.56), the larger sums are dealt 
with in the context of the clearance of accounts procedure. 
The cases referred to in paragraph 4.53 (b) and (c) are still 
being examined at administrative or legal level by each of 
the Member States concerned. The Commission is keeping 
an extremely close watch on each of these cases. 
The cases referred to in paragraph 4.53 (a) are to be closely 
scrutinized so that it ought to be possible in the near future 
to reach a decision on each of the amounts outstanding. 
In addition, the Commission is currently introducing tech­
niques to ensure effective monitoring in this field, includ­
ing a computerized catalogue of irregularities. ing of Article 24 of the Financial Regulation. In the first 
place they are undue payments which cannot be legally 
interpreted as sums due to the Community by the reci­
pients. 
Secondly Article 24 of the Financial Regulation refers to 
debts to be recovered by the Commission whereas Article 8 
(1) of Regulation (EEC) No 729/70 stipulates that it is for 
the Member States to recover sums lost as a result of irre­
gularities or negligence. 
However, Financial Control has taken action to deal with 
the shortcomings of existing arrangements for monitoring 
the recovery of undue payments relating to irregularities. 
In its 1981 report on application of the new guidelines for 
financial control (SEC(81)424) it recommended the compi­
lation of a central catalogue of irregularities of the kind 
discussed in the previous section. 
Paragraphs 4.59 and 4.60 
Sums due to the EAGGF Guarantee Section as a result of 
irregularities cannot be regarded as debts within the mean­It subsequently produced a report on the budgetary conse­
quences of irregularities and fraud in the EAGGF and own 
resources (SEC(82)854) which led the Commission to 
instruct the interdepartmental working party compiling the 
catalogue to treat this task as urgent. 
Replies of the Commission to Chapter 5 
European Agricultural Guidance and Guarantee Fund, Guidance Section 
Paragraph 5.9 \ 
The Commission is well aware of the problem raised by the 
Court and on 4 March 1983, in order not to jeopardize the 
schedule for the completion of the measure, it proposed an 
amendment of the Regulation, allowing the action to run 
for the full five years from the date of approval of the last 
outline programme. This proposal was adopted by the 
Council on 18 July 1983. budgetary procedure, the Commission exercises a choice 
amongst the projects submitted. 
It is clear that the acceptability of a given project should be 
judged not only by its inclusion in a programme but also 
on the basis of its specific merits. Moreover acceptance of 
a programme does not carry an obligation to finance all 
projects submitted under it. Indeed some projects may not 
be in conformity with the Regulation; others may be with­
drawn or cancelled. 
Paragraphs 5.10 and 5.11 
The estimated cost of the measure, to be borne by the 
Community budget, is 125 million ECU. This cost estimate 
is by no means a legally binding financial envelope. The 
budgetary authority is free to fix the amount in the annual 
budget, particularly as it concerns non-compulsory ex­
penditure. 
Within the limits of the appropriations established by the Paragraph 5.15 
The delays referred to by the Court result from the delay in 
submitting the programmes. 
Since the programmes were approved, commitments have 
gone ahead rapidly, as shown by the Court's figures in 
210 Official Journal of the European Communities 31. 12. 83 
Table 5.2. In 1983 the Commission has already committed 
22 million ECU and is preparing a second batch of pro­
jects with a view to using the remaining 10 million ECU of 
appropriations. 
Paragraph 5.16 
Although the Court of Auditors in this paragraph gives its 
approval to the Commission's action, the following infor­
mation may usefully be provided: 
(a) An administrative reorganization which has been car­
ried out in Calabria should prevent any recurrence of 
the problem of lack of budgetary appropriations. 
(b) It is true that certain projects in Basilicata which were 
granted aid under Regulation No 17/64 could not be 
carried out as planned. In agreement with the Commis­
sion these aids have now been cancelled and the cor­
responding commitment appropriations released. A 
new project has been submitted to the Commission in 
respect of certain parts of the works which were 
planned originally. 
(c) The Commission was aware of these deficiencies and, 
as indicated by the Court, the advances have been 
recovered. No new aid is being considered for the 
region concerned until the situation has improved. 
Paragraph 5.18 
A rural community will typically consist of: 
(a) the agriculturally active population (i.e. farmers and 
farm employees) and their direct dependents; 
(b) the population supplying local services and so indi­
rectly dependent on the first group; 
(c) the population whose economic activity is linked 
. neither to agriculture nor to supplying local services. Paragraphs 5.20 to 5.23 
The Commission's action in relation to electricity supply 
projects in Italy is in accordance with the provisions of the 
Regulation. The Regulation provides for an aid of 40% of 
the investment involved in the project. In this, as in other 
project measures, this is interpreted as eligible investment, 
meaning investment which may be aided by the Fund and 
excluding such costs as land purchase, administration 
costs and personnel costs of the Member State or of the 
beneficiary. 
In the case of rural electrification projects in Italy and, for 
that matter, in France the Commission has looked very 
carefully into the status of funds coming from the national 
electricity supply authorities (ENEL and EDF) and has 
concluded that they are neither national aids nor the bene­
ficiary's contribution. They are in fact a contribution by a' 
third party which expects to recover this through its operat­
ing revenue and it would not be appropriate for the Com­
munity to finance that part of the costs. 
Paragraph 5.32 
A complete vineyard register would make it easier to con­
trol the application of structural reform measures. However 
it is certainly not indispensable since vineyard plantings 
are governed by planting declarations which are subject to 
on-the-spot checks and, under national legislation, to pen­
alties in cases of illegal planting. The Court offers no-evi­
dence to justify its assertion that this system does not 
'represent a means for ensuring that the current ban on 
extending the areas' vines is respected'. 
Paragraph 5.34 
The premiums paid under Regulations No 1163/76 and 
No'456/80 vary in relation to the productivity of the vines 
which are grubbed. As a result the operations have not 
been restricted to low-productivity vines. In fact only 
about 20% of the operations carried out under Regulation 
No 1163/76 and 10% of those carried out to date under 
Regulation No 456/80 have involved low-productivity 
vines. 
The threshold of 35% quoted by the Court applies to the 
group under (a) only. If one also takes into account that 
part of the population under (b) which is serving the agri­
culturally active population the proportion of the popula­
tion which depends directly or indirectly on agriculture 
will be over 50%. It is also important to note that, whilst the grubbing of 
unproductive vines has only a small immediate impact, it 
does significantly reduce the potential production because 
the right to replant, possibly with more productive vines, is 
lost. 
Paragraph 5.19 
The Commission has asked the French authorities for clari­
fication in these cases and they have confirmed the agricul­
tural nature of the areas in question. Paragraph 5.38 
The Commission shares the Court's concern about the pay­
ment delays in Italy. Accordingly, it has already opened 
two infringement procedures under Regulation No 
1163/76 and Regulation No 456/80. 
31. 12. 83 Official Journal of the European Communities 211 
Paragraphs 5.39 and 5.40 
The Commission, while understanding that some people 
may have an interest in making such allegations, cannot 
comment on the supposed contradictions in the use of 
Community funds in the armagnac region without being in 
possession of precise details. 
In the reply sent to the Court on 18 April 1983 by the 
Directorate-General for Agriculture, the Commission 
stated that it needed to know the identity of the persons 
who spoke on behalf of the cooperatives, their precise, 
comments, the location of the vineyards and the project in 
question. So far, the Court has failed to let the Commis­
sion have the information which would enable it to eval­
uate the implications of the Court's questions. 
As regards publicity for the premiums available under 
Regulation No 456/80, the information which the Com­
mission received from the national authorities on 15 Feb­
ruary 1983 is that the usual methods of publicity were used, 
i.e. press releases and notices to the wine producers' organ­
izations. In this connection, any study of the relevant legal provi­
sions must take account of the fact that in reality it is a 
question of compensation for the loss of the right to 
replant, and not of a mere subsidy for grubbing; this right 
may be ceded separately from the land itself. Consequently 
it is in the interest of the Community, in most cases, to 
ensure that this right to replant is relinquished and thus to 
reduce production potential. 
(b) Member States have been reminded that they must 
carry out the required checks and send the results to the 
Commission. They have also been asked to inform the 
Commission of the measures they have taken to this end. 
This information will be forwarded to the Court. 
In Italy, these checks are carried out by the Ispettorato 
Provinciale dell'Agricoltura whose responsibilities are not 
limited to the wine sector. 
In France, the authorities are instituting checks on a sam­
ple basis, concentrating on those departments most at risk, 
i.e. those with a high rate of vine grubbing and an aptitude 
for fruit growing. 
Paragraph 5.41 
(a) Regulation No 456/80 is intended to deal primarily 
with the vines used for table wine production. It operates 
however in two stages: 
— the temporary premium, which is given to producers 
who grub category 2 or 3 vines and who abstain from 
further planting for eight seasons; 
— the permanent premium, which is paid as a compensa­
tion for permanently losing the right to replant, thus 
reducing the Community's overall potential for wine 
production (this premium may be granted to those who 
also receive the temporary premium or to certain other 
growers, such as those who grubbed their vines under 
Regulation No 1163/76). 
In the case of vines which have not been normally main­
tained or which are of very low productivity only the per­
manent premium is payable. FISHERIES 
Paragraph 5.46 
Following the Court's inquiries, the Commission has asked 
the national authorities to take immediate steps to ensure 
that the statutes and operating rules of producer organiza­
tions in the United Kingdom comply with Community 
rules. 
Paragraph 5.48 
The situation described by the Court should be regularized 
with implementation of the common fisheries policy 
adopted in principle by the Council at the beginning of 
1983. 
Replies of the Commission to Chapter 6 
Regional aid expenditure 
Paragraph 6.3 
The basis for the management of the ERDF in 1982 was 
still the ERDF Regulation of 18 March 1975 (as amended 
on 6 February 1979 and 16 December 1980): there is no 
time limit on the validity of this Regulation. In 1982 the 
Commission therefore managed the ERDF in accordance with the provisions of the Regulation. As regards the quo­
tas in particular, the fact that no quotas for 1982 were set in 
the Regulation left the Commission with the responsibility 
of committing the appropriations available as a matter of 
sound management. In doing so, it allocated ERDF funds 
along the lines provisionally decided upon by the Council 
for 1981. 
212 Official Journal of the European Communities 31. 12. 83 
Paragraphs 6.9 and 6.10 
The Commission maintains that its decision on the utiliza­
tion of the quotas is justified by the dictates of sound 
financial management and would refer to the. answer 
which it gave (paragraphs 7.10 to 7.13) to the same com­
ment which the Court of Auditors made in its 1981 
report ('). The Commission was granted a discharge in res­
pect of the implementation of the budget for 1981. the difficulties mentioned in paragraphs 6.16 to 6.20 
were discovered during an independent control con­
ducted by the Court of Auditors and will therefore 
have to be examined in detail with the Court as part of 
the information procedure agree upon in 1981 (3) and, 
if necessary, followed up by the Commission with the 
Member State in question. 
Paragraphs 6.21 to 6.27 
Paragraph6.il 
The Commission would refer to the answer which it gave 
(paragraph 7.16) to the same comment made by the Court 
of Auditors in its 1981 report (2). Parliament had no com­
ment to make on this reply in its discharge decision for 
1981. Article 4 (1) (b) of the ERDF Regulation provides 
that the 70% figure is to be complied with over a three-year 
period, in this case 1981 to 1983, and that it may be 
exceeded by decision of the Council acting on a proposal 
from the Commission. The Commission, referring also to its reply (para­
graphs 7.17 to 7.21) to the comments made by the Court of 
Auditors in its 1981 report (4), would point out: 
— that, as part of the responsibility given to it under the 
ERDF Regulation, it ensures that the regional develop­
ment programmes do actually link national regional 
policies and Community regional policy and constitute 
a frame of reference for the projects put forward for 
ERDF aid; 
Paragraphs 6.12 to 6.20 
Implementation of the first specific Community measures 
may indeed have been slow getting off the ground because 
of the Council's delay in adopting the requisite regulations 
and the novelty surrounding several aspects of these mea­
sures, as emerges from the Court's references to the special 
enlargement programme carried out in France. However, 
although the Commission was not therefore in a position 
to take the first decisions to grant non-quota ERDF aid 
until June 1981, thus releasing the budgetary commitments, 
it should be pointed out that implementation of these mea­
sures is now proceeding at a normal rate, at least overall. 
On 31 December 1982, 18 months after the Commission 
approved the first special programmes, 73,328 million 
ECU had been committed, 34% of the overall 216 million 
ECU in ERDF aid over five years, and 29,7 million ECU 
of commitments entered into had been paid, i.e. 40,5% of 
the appropriations committed. 
As regards the enlargement programme in France, the fol­
lowing points should be made: 
— the fact that the programme makes no reference to the 
regional development programmes referred to in 
Article 6 of the ERDF Regulation (paragraph 6.15) 
does not mean that the Commission has failed to 
assess whether or not it is consistent with these pro­
grammes as part of the responsibility placed on it by 
the ERDF Regulation; 
(') OJC 344, 31. 12. 1982, p. 194. 
(2) OJ C 344, 31. 12. 1982, pp. 194 and 195. — that failure to complete the assessment procedure 
required by the ERDF Regulation for some second-
generation programmes by the end of 1982 does not 
necessarily mean that there was no proper reference 
framework for ERDF aid (paragraph 6.24). 
The main responsibility for ensuring that investment deci­
sions are consistent with national legislation (para­
graph 6.27) lies with the Member State. As regards the 
Messina degasification station, which is taken as an exam­
ple by the Court of Auditors, it should be noted that this 
plant is expressly mentioned in the Italian regional 
development programme for 1977-80, i.e. covering the 
period during which the Commission took its decision. 
Paragraphs 6.28 to 6.30 
The vetting of the global requests for aid referred to by the 
Court of Auditors and, consequently, the assessment of the 
projects involved take place in accordance with the simpli­
fied procedure expressly introduced by the ERDF Regula­
tion for projects of less than 10 million ECU. 
The few rare cases among the 18 000 projects, so far granted 
ERDF aid which are mentioned by the Court of Auditors 
in paragraph 6.29 all concern aid granted before 1982, 
which should be the only year covered by the report; they 
have all been regularized in good time, where necessary. 
(3) See paragraph 7.3 in the Commission's replies to the Court of 
Auditors' comments relating to the 1980 financial year (OJ 
C 344,31. 12. 1981, p. 230). 
(4) OJ C 344, 31. 12. 1982, p. 195. 
31. 12. 83 Official Journal of the European Communities 213 
Paragraphs 6.31 to 6.38' been granted in respect of the implementation of the 1980 
budget. 
Under the ERDF Regulation, the fact that an investment is 
financed by means of a leasing system (paragraphs 6.31 to 
6.35) is not a determining factor for deciding whether it 
qualifies for ERDF aid. Leasing is only one method of 
finance — like, for instance, finance obtained by means of As the Commission intimated in its reply, the Article 9 (6) 
loan — and, besides, is not always known to be the source procedure has been followed in the case mentioned by the 
of finance when the request for aid is made. * Court of Auditors, and the matter has since been regular- • 
ized, as have all other similar cases. 
The fact that the request for aid does not specify that the. 
method of financing is by a leasing contract does not raise 
difficulties for Community audits on the spot, as past 
experience shows (paragraph 6.35). Although this procedure does not set a time limit for the 
recovery of ERDF aid, recovery usually takes place within 
a shorter period than the one year provided for in Article 9 
(1) of the Regulation. 
As for the outline contract between the Irish authorities 
and a Swedish firm for the supply of telecommunications 
equipment (paragraphs 6.36 to 6.38), the contents and, 
accordingly, the inclusion of an exchange rate guarantee 
for the firm in what is after all a long-term contract are a 
commercial matter falling under the responsibility of the 
Member State — which presumably negotiated the best 
terms possible. The outline contract also dates from 1972 
— before Ireland joined the European Community. Paragraphs 6.52 to 6.60 
The supplementary measures in favour of the United King­
dom are implemented by granting financial assistance to 
certain categories of investment forming part of the eight 
special programmes presented by the United Kingdom in 
1980, which consist of multiannual subprogrammes drawn 
up for the three British financial years 1980/81, 1981/82 
and 1982/83. 
Paragraphs 6.39 to 6.45 
Under the responsibilities placed on it by the ERDF Regu­
lation, the Commission must ensure that ERDF-backed 
investment satisfies the criteria laid down in Article 5, 
especially as regards its contribution to the development of 
the region and its consistency with the Community's pro­
grammes or objectives. As the Commission already stated in its reply to the 
Court's comments in 1981 (2), the purpose of the rules 
adopted following the political agreement of 30 May 1980 
was to reduce the United Kingdom's contribution to the 
Community budget. These rules involve the reimbursement 
of national public expenditure which has already been 
made on investments in progress or already completed and 
not on new or unstarted investments when the decision to 
grant Community assistance is taken (paragraph 6.57). 
Furthermore, the Court's comments all relate to aid deci­
sion made before 1982, which is the only year covered by 
the report. Since these are multinannual programmes and thus, by 
definition, are in the nature of estimates and should not be 
seen as fixed lists of specific projects, it is not surprising 
that the actual results differ somewhat from the forecasts 
(paragraphs 6.58 and 6.59). These differences have been 
offset by amending decisions taken in accordance with 
Article 3 of Regulation No 2744/80. 
Paragraphs 6.46 to 6.51 
The Commission stands by its reply to the Court's com­
ment in its 1980 report (') on application of Article 9 (1) 
and Article 9 (6) of the ERDF Regulation, which concern 
the procedure for recovering ERDF aid. Discharge has Since they formed part of the cost of investment, the Com­
mission considered that the costs referred to by the Court 
of Auditors in paragraph 6.60 were eligible under Article 3 
of Regulation No 2744/80., 
(') See paragraph 7.21 of the Commission's replies to the Court of 
Auditors' comments on the 1980 financial year (OJ C 344, 
31. 12. 1981, p. 232). (2) See paragraphs 14.12 to 14.14 of the Commission's replies to 
the Court's comments for the 1981 financial year (OJ C 344, 
31.12. 1982, pages 206 and 207. 
214 Official Journal of the European Communities 31. 12. 83 
Replies of the Commission to Chapter 7 
The European Social Fund and other expenditure in the social sector 
Paragraph 7.3 
The system of commitment used for appropriations in 
Chapter 62 is not the same as for Chapters 60 and 61. The 
Commission approved projects under Chapter 62 during 
1982 for a total of 4,18 million ECU, that is to say 91%, but 
the actual commitment in budgetary terms is only made 
when a contract is signed and approved in agreement with 
Financial Control. A proportion of these contracts are not 
signed during the course of the financial year in which 
Commission approval has been given. Paragraph 7.21 
(a) In view of the complexity of one dossier, which had many 
subprogrammes, one programme was not finalized, but in 
the last verification of the total dossier the outstanding 
amounts were paid or cancelled. Under the control system 
of payments now in preparation, a programme such as this 
would be finalized much earlier. In one other case, the 
Member State has asked by telex that the dossier be kept 
open but the Commission has now finalized matters and 
closed the dossier. In the third case, the Commission has 
received a claim on account. The Member State has not 
submitted the final claim and consequently the Commis­
sion has closed the dossier on the basis of existing infor­
mation. 
Paragraph 7.4 
It had been hoped to exhaust all the payment appropria­
tions.during 1982. However, the lateness of notification of 
the last batch of agreements prevented the presentation of 
advance payment claims (estimated at about 100 million 
ECU) before 31 December 1982. In addition, the budget­
ary authority allocated 40 million ECU in excess of the 
amount requested by the Commission towards the end of 
1982. 
As far as Chapter 62 was concerned, it should be noted 
that the carryover from 1981 represented 50% of the total 
allocation for 1982 and this amount of 2 million ECU was 
totally paid out during 1982. Of the total amount available 
in 1982 (6 million ECU) in Chapter 62, 40% was actually 
paid out. 
Paragraph 7.6 
The commitments totalling 101,7 million ECU which were 
cancelled cover a number of years prior to 1981 and parti­
cularly years prior to 1978 when the present system of 
refunds was established on the basis of the differentiated 
budget introduced in 1977. (b) In these cases there were a number of complications, 
including in one case the question of a refund. The work 
involved has taken some time, but these cases are now in 
the process of finalization. 
(c) In the two cases cited by. the Court, the Commission has 
not received a claim for final payment. However, in view 
of the decision of the Court of Justice (referred to in para­
graph 7.18 of the report) the Commission was obliged to 
extend the period for submission of these final claims. 
However, no claims were received before the new date 
(4 February 1983) set following >the Court of Justice deci­
sion and consequently the Commission has taken the 
necessary action to close the dossiers concerned. 
(d) As the report points out, the Commission notifies the 
Member States each month of final payments made during 
the month and indicates that any amount remaining will 
be cancelled, unless the Member State indicates the con­
trary, within the following two months. In many cases the 
programmes to be cancelled are part of global programmes 
which remain open and in some cases, because the dossiers 
are in circulation for payment, etc., it was not possible to 
make the necessary arrangements after the two-month 
period. Cancellations have now been made in all cases 
cited by the Court. 
On the other hand, savings are often made on the original 
estimated costs but because beneficiaries organize multiple 
operations throughout a Member State the final situation is 
not known until the final accounts have been abstracted, 
which is normally well after the date of notification of 
refunds for re-use. Paragraph 7.22 
The Commission is conscious of the need to check regu­
larly amounts outstanding and, as already stated (in reply 
to paragraph 7.21 (a)), the new system of payments control 
will improve the system. 
31. 12. 83 Official Journal of the European Communities 215 
Replies of the Commission to Chapter 8 
Research, energy, etc. 
Paragraph 8.5 
The Commission would point out that the regrettable 
under-utilization of Chapter 70 payment appropriations is 
due to the following difficulties: 
•— primarily, decisions which the Council takes late in the 
year, such as those on demonstration projects, jeopar­
dize the satisfactory implementation of the budget 
involved, since the Commission is left with no more 
than a few months to select projects, negotiate and 
conclude contracts and take all the steps which sound 
financial management demands; 
— the time taken to carry out projects varies from two to 
four years, during which the Commission depends on 
the progress made by the contractors when making 
payments; Paragraphs 8.14 and 8.15 
Since the organization of the JRC has been adapted to the 
functional budget, a large proportion of expenditure is 
charged to appropriation accounts and redistributed to 
research objectives (cost of staff for an objective; cost of 
technical support). Only administrative and technical 
infrastructure costs (around 28% of the total) are appor­
tioned at flat rates among the research objectives, mainly 
because they should be treated like all other staff expendi­
ture. Only some 18% of expenditure — external or primary 
expenditure — is charged to these objectives. 
The appropriation accounts are cleared at the end of the 
year as provided for by Article 91 (4) of the Financial 
Regulation. 
the possible withdrawal of firms in the course of the 
work. Paragraph 8.16 
The Commission is satisfied with the activity sheets as they 
stand, though it has nevertheless asked its departments to 
look into possible ways of improving them. 
Paragraph 8.7 
The Commission, together with the Member of the Court 
concerned, has sought a practical solution to permit ade­
quate control. 
The Commission considers that the Court should have 
access to any documents forming part of the authorizing 
officer's file on an item of budgetary expenditure (or 
revenue). These documents should be contained in the 
authorizing officer's file when this is made available to the 
Court. 
Paragraphs 8.8 to 8.13 
The Commission appreciates the merits of the functional 
budget system and the corresponding accounting system; 
like the Court, it recognizes that this system's potential 
could be tapped more extensively and in greater depth. 
The Commission is aware of the fact that the functional 
budget is also complex. It is true that the procedures are 
different from those applicable to a conventional budget; 
that is the only source of complexity. 
The Commission is willing to rearrange the information 
available from various sources (Financial Regulation, 
implementing measures, internal rules, budget, financial 
plan) in a form more suited to the Court's wishes. Paragraph 8.17 
As the Court states, Financial Control's main task is to 
check individual cases leading to the approval of commit­
ment proposals and payment orders. This is precisely what 
the Financial Regulation requires it to do, without allow­
ing any exceptions. 
Financial Control is very much aware of the need to focus 
its control activities on the problems of sound manage­
ment. However, its- work is largely taken up by the duties 
mentioned above and it is only by substantially changing 
methods that Financial Control has been able to take on 
other responsibilities. 
It has, for instance, initiated and taken part in a number of 
measures at the JRC in connection with staff management, 
modification of the system of accounts and management 
of the functional budget. 
Since JRC Financial Control undertakes a wide range of 
tasks in a large number of places, local Financial Control 
departments also have responsibility for deciding what 
measures are to be taken to adapt their activities most 
effectively to the situation and to the requirements of the 
JRC. 
The work programmes of the various administrative units 
of Financial Control are regularly discussed at departmen­
tal meetings without always being laid down in writing. 
216 Official Journal of the European Communities 31. 12. 83 
Paragraphs 8.31 to 8.35 Paragraph 8.18 
Financial Control is aware of the importance of the activi­
ties other than the checking of individual cases mentioned 
by the Court and, as in the past, will do its utmost to con­
trol management systems, assess the soundness of manage­
ment and help to improve it. However, because of the 
number of staff currently available, its activities will inevit­
ably be limited. 
Paragraph 8.20 
The apparent anomalies alluded to by the Court are mainly 
due to the normal operation of Article 26 of the Commis­
sion's provisional rules of procedure (deputization for ' 
absent officials). 
Paragraph 8.21 
A detailed check will be made when the new computerized 
system of accounts is introduced; this is scheduled for 
early 1984. 
Paragraph 8.22 
Each of the documents referred to by the Court of Auditors 
was duly authorized in accordance with Article 26 of the 
provisional rules of procedure. The Court's criticism that 
1,2 million ECU was irregular is therefore unfounded. The 
Financial Controller and the accounting officer were right 
to allow the$e payments to be made. 
Paragraphs 8.23 to 8.25 
Provisional commitments are, by definition, approximate. 
When the amount actually authorized is lower, the FinanT 
cial Regulation allows them to be.released; otherwise they 
are subject to the special rules applying to unused appro­
priations (appropriations remaining under the research 
appropriations system). 
Paragraphs 8.26 and 8.27 
The authorizing officers obey the rules contained in the 
Financial Regulation before authorizing payments and 
they assume the responsibility. The stamp 'approved for 
payment' shows that checks have been made. As far as the 
Commission is aware, no incorrect payments have been 
made sor far. 
Paragraph 8.30 
The Commission considers that the agreement with the 
Italian Government was explicit enough to permit the use 
of the appropriations entered in the budget. In the Commission's opinion, Italy's exceptional contribu­
tion is not 'revenue earmarked for a specific purpose' 
within the meaning of Article 3 of the Financial Regula­
tion but rather one of the resources for financing the 
budget. 
The appropriations entered in the budget for financing this 
operation are appropriations like any others and therefore 
enable the budget to be implemented even if Italy's contri­
bution to Community funds has not yet been received. 
The remarks to Item 7330 in the 1983 budget in fact state 
that additional revenue could increase the amount of 
appropriations in accordance with Article 91(2) of the 
Financial Regulation. 
Paragraph 8.32 
Even according to the interpretation that the whole of the 
operation constitutes work on behalf of outside bodies, the 
use of the appropriations is not conditional on receipt of 
revenue, since Article 90 of the Financial Regulation states 
that: 
'in the case of transfers or of additional amounts made 
available as a result of supplementary receipts from out­
side bodies and individuals, expenditure may be increased 
accordingly: 
— for commitments, up to the amount of the repayments 
provided for in the contracts concluded with request­
ing outside bodies and individuals, 
— for payments, up to the amount of the entitlements for 
such repayments.' 
Under the Commission's interpretation, which is shared by 
the budgetary authority, all the Court's comments are 
unfounded. 
Paragraph 8.37 
The competent authorities were fully aware of the situation 
when the transfer decisions were adopted. 
Paragraphs 8.38 and 8.39 
Parliament made the transfer conditional on these appro­
priations being committed in 1982. This was done and the 
overruling of the Financial Controller's decision to with­
hold approval must be seen in this light. 
Paragraphs 8.40 and 8.41 
In December 1982 Super Sara had to be regarded as a JRC 
programme. The decision to abandon the project was 
31. 12. 83 Official Journal of the European Communities 217 
taken in March 1983. The Commission considers that it 
observed the principles of sound management contained 
in the Financial Regulation by not formally concluding 
these contracts. Paragraph 8.57 
Each control visit is carefully prepared on the basis of the 
reports received and the contractual work programme. 
There appears to be no justification at all for a standar­
dized work programme. 
Paragraph 8.48 
The Commission accepts the Court's recommendation and 
will do its best to see that the information is supplied as 
soon as the new computerized system of accounts permits. The financial and technical reports resulting from the visit 
will be standardized in future to ensure that controls are as 
uniform as possible. 
Paragraph 8.49 
The period of validity of the regulations does not restrict 
the period for carrying out the projects. When a contract is 
concluded pursuant to a decision taken during the period 
of validity of a regulation, a legal basis exists. 
Paragraphs 8.51 and 8.52 
In order to reduce the time lag between the date of the 
decision and the date on which the contracts are con­
cluded, the Commission will now lay down binding time 
limits for the completion of negotiations with the contrac­
tors. The date on which contracts are concluded should 
then be closer to the date on which work begins and thus 
reduce the scale of the problem raised by the Court. Paragraph 8.58' 
Large contracts are verified whenever a project is com­
pleted. The Commission's checks are consequently con­
fined to the contractors, not the partners of a consortium of 
the subcontractors who, in the case in question, were sub­
ject to strict internal checks and cross-checks. 
The Court's suggestion that the contractor's financial rela­
tionship with its participating companies should be exam­
ined does not form part of the Commission's control mis­
sion, which relates only to expenditure on carrying out the 
projects. 
Any additional activities would entail extra staff and 
expenditure which the Commission does not consider jus­
tifiable. 
However, the Commission would point out that, in its rela­
tions with contractors, the Commission has never had any 
problem in controlling the technical or financial side of 
work carried out before the contracts were signed. Paragraph 8.59 
In new contracts the Commission has included a clause 
stating that the advance should be paid into an interest-
bearing bank account to cover the possibility of reimburse­
ment. 
Paragraph 8.55 ' 
The Commission verifies all the financial data referred to 
by the Court of Auditors. 
. Furthermore, it does not consider standardization of the 
financial annex to be either absolutely desirable or even 
feasible, since, there being no Community law governing 
this matter, various national laws apply. Paragraph 8.60 
The Commission is currently examining the problems 
relating to commercial exploitation and will take the 
necessary steps to ensure that the file contains an assess­
ment of the technical and commercial results. 
Paragraph 8.56 
To comply with the Court's recommendation, the Commis­
sion has already introduced a system involving formal 
approval of the periodical technical reports prior to pay­
ments. Paragraph 8.61 
The Commission can confirm that projects will be assessed 
before the final payment to the contractor. The marketing 
stage comes later, often several years later, than the end of 
the contract. In these circumstances, the Commission con­
siders that verification by correspondence will have to suff­
ice unless its staff and funds are increased beyond their 
current level. 
218 Official Journal of the European Communities 31. 12. 83 
Replies of the Commission to Chapter 9 
Budgetary compensation to the Federal Republic of Germany and the United Kingdom 
Paragraph 9.2 
The Council's decision of 25 May 1982 is irrelevant to pay­
ments made in 1982. The decision was only one of princi­
ple since it was not then expected that any expenditure 
would be charged to appropriations in the 1982 budget. It 
was not until some considerable time later, on 26 October 
1982, that the Council took the implementing decision. 
Hence no preparations for treasury operations could be 
made before that date (26 October 1982). 
Paragraph 9.4 Similarly, after Parliament had rejected draft supplemen­
tary and amending budget No 2/1982, when it also under­
took not to question the principle of refunds to the United 
Kingdom once the conditions for implementing the appro­
priations met with its approval, good financial manage­
ment dictated that funds should be kept available to imple­
ment supplementary and amending budget No 1/1983, 
which all the institutions expected to be adopted in the 
very near future. Since the political commitment was 
denominated in ECU, the Commission sought to take all 
possible precautions against exchange risks by proposing 
in preliminary draft supplementary and amending budget 
No 1/1983 that payments should be made at the December 
1982 rate. 
For this matter to be properly understood, it must be made 
clear that the account is in the name of the Commission of 
the European Communities, which alone decides what is 
to be done with the funds it contains. Paragraph 9.7 
Paragraph 9.5 
The transfer arrangements took account of the Commis­
sion's other currency requirements. The method adopted 
was the only way of avoiding exchange losses in the 
accounts (which are kept in ECU). Small amounts of sterling were purchased after the rejec­
tion of draft supplementary and amending budget No 2/ 
1982 to cover the other sterling payments which it was 
known the Community would have to make to the United 
Kingdom during that period (including a substantial 
EAGGF-Guarantee advance for January 1983). 
Paragraph 9.6 
The purchases of sterling should cause no surprise since 
the Member States meeting in the Council had given a 
binding political undertaking which required payments in 
sterling to be made before the end of 1982. Paragraph 9.17 
The Commission cannot accept the Court's claim about its 
'Treasury Chambers EEC 1' account. The end-of-month 
balances from December 1982 to March 1983 were much 
lower than the Court states, the maximum being 181 mil­
lion ECU at the end of January. 
It should also be borjie in mind that at no time had Parlia­
ment called into question either the principle or the 
amounts of the payments to be made to the United King­
dom and the Federal Republic of Germany. If, in accord­
ance with the decision of 26 October 1982 referred to by 
the Court and the budgetary principle of annuality, the 
payment had had to be made before 31 December 1982, 
the prior acquisition of sterling would have been justified 
for two reasons: \ 
1. the need to guard against exchange risks; 
2. the need to avoid disrupting the foreign exchange mar­
kets, which would have been suddenly thrown into 
considerable turmoil by a massive purchase of sterling 
during the Christmas period. All the transactions were 
carried out in consultation with the central banks of 
the Member States. Paragraphs 9.18 and 9.19 
The Court maintained in paragraph 9.12 that these sums 
should have been distributed among the Member States. 
Even if this had been done, no interest would have been 
payable and this will continue to be the case until Regula­
tion No 2891/77 is amended, as proposed by the Commis­
sion with Parliament's backing. 
The beneficial effects of an influx of currency stemmed 
directly from the decision taken by the 10 Finance Minis­
ters that 'the two countries concerned (Germany and the 
United Kingdom) should not be put in a worse position 
than intended under the conclusions of 26 October 1982'. 
It was also part of the political agreements between the 
Member States (Council Decision of 17 December 1982). 
31. 12. 83 Official Journal of the European Communities 219 
The weakness of the currency in question at the time 
means that the redistribution of currencies among the 
Member States desired by the Court would have involved 
the Community in considerable exchange losses. 
The way in which the Commission acted in response to the 
decision of the Ministers of Finance was in the Com­
munity's best interests as dictated by the requirements of 
sound financial management. If this placed two of the 
Member States at an advantage over the other eight, this 
was the course chosen by all the Ministers of Finance 
meeting in the Council on 17 December 1982. 
Table 9.1 and the Court's comments in paragraphs 9.10 to 
9.22 clearly show that an operation of the type it desired 
would have involved the sale of sterling totalling the equi­
valent of 799,6 million ECU. 
This would certainly have caused the Community very 
considerable losses. More importantly, it should always be 
borne in mind that, in the prevailing market conditions, 
such an operation would have caused serious instability 
quite at variance with the need to ensure good manage­
ment of the Community's financial resources. The Com­
mission considers this aspect to be of the utmost import­
ance. Paragraphs 9.24 and 9.25 
The decision by the budgetary authority to use the Decem­
ber 1982 exchange rate, which led to a profit of 77,3 mil­
lion ECU, was the logical consequence of the decision 
taken by the Council (Finance) on 17 December 1982 and 
the action taken by the Commission during December. The 
object had been to protect the Community from any large 
losses resulting from the sharp parity changes which 
affected a number of currencies, particularly sterling, 
during the period in question. 
It should be borne in mind that if the budget conciliation 
meeting of 15 and 16 December had reached a successful 
conclusion, as Parliament and the Commission endeav­
oured to ensure, the budget would have had to be executed 
before the end of the year (i.e. using the December 
exchange rates). 
The Court rather overlooks the considerable loss which the 
Commission avoided by not selling the sterling bought 
before rejection of draft supplementary and amending 
budget No 2/1982 while awaiting supplementary and 
amending budget No 1/1983. It argues that sterling could 
have been bought more cheaply in March, but this would 
have implied a speculative attitude which the Commission 
would not wish to adopt. What would have been the 
Court's reaction if sterling had moved the other way? 
Paragraph 9.23 
The considerable exchange profit of 9,8 million ECU 
referred to by the Court is the result of the transfer 
mechanism used by the Commission which the Court has 
criticized strongly elsewhere (paragraphs 9.4 to 9.7). With particular reference to paragraph 9.25, the Commis­
sion considers that the Court's reasoning ignores one vital 
factor namely that the Commission had to pay the United 
Kingdom 1 092 million ECU or, at the rate obtaining on 
1 December 1982, UKL 630,9 million. If the Commission 
had had to make the transaction in March at the rate 
obtaining on 1 March the amount to be paid would have 
been UKL 679,3 million (1 092 million x 0,622101). 
Replies of the Commission to Chapter 10 
Cooperation with developing countries and non-Member States 
Paragraph 10.4 
The delays in the utilization of the payment appropriations 
really concern only four budget articles (Articles 930, 933, 
941 and 950). The main reason is that for three of them the 
budgetary authority made the appropriations available 
very late in the year. 
The payment appropriations carried over to 1983 in these 
articles total some 165 million ECU. As the Court itself 
points out in paragraph 10.5 a sizeable proportion of this 
concerned additional appropriations granted by the budg­
etary authority during the last quarter of 1982. After the 
Council had rejected the preliminary draft supplementary budget presented by the Commission in June 1982, the fol­
lowing additional appropriations were granted by transfer 
No 30/82: 
Transfers Payment appropria­
tions carried over 
Article 930 + 58 115,3 
Article 941 + 8 9,6 
Article 950 + 35 40,4 
Total 101 165,3 
220 Official Journal of the European Communities 31. 12. 83 
Since these additional appropriations (101 million ECU) 
were obtained in mid-October, it was not possible, consi­
dering the nature of the operations involved, for payments 
to have been made by 31 December 1982. 
As regards Article 933 all the appropriations (1,5 million 
ECU) had been committed; but as the contracts provide 
for staggered payments, these are being made in instal­
ments in 1983, as the studies are completed. 
Generally speaking, all the old structural causes of under-
utilization of payment appropriations did not, of course, 
disappear during 1982. These causes, for which the Com­
mission is constantly trying to find remedies, may be sum­
marized as follows: 
— absence of any multiannual programming, which does 
not facilitate long-term identification of eligible pro­
jects ; 
— an increase in the number of recipient countries, which 
obliges the Commission to acquaint itself with condi­
tions in countries with which it did not already have 
regular relations; 
— slow and complex administrative procedures in the 
recipient countries; 
— the inadequacy of the Community's means of action 
on the spot in relation to the work to be done; 
— a political situation which hinders or in some cases 
completely blocks the project originally planned; 
— serious staff problems, the number of officials assigned 
to the increasing and more complex tasks still being 
largely inadequate despite requests for reinforcements. 
Paragraphs 10.6 and 10.7 
Maghreb and Mashreq: of the 69,1 million ECU in pay­
ment appropriations which lapsed in Chapter 96, only 16,4 
million ECU related to the Financial Protocols concluded 
with the Maghreb countries (Article 965: 5,8 million ECU 
lapsing) and the Mashreq countries (Article 966: 10,6 mil­
lion ECU lapsing). This reflects the slowness and the prob­
lems of implementing projects in those countries, which 
makes annual budgetary forecasting a particularly hazar­
dous exercise. 
Turkey (Article 963): 15 million ECU of appropriations 
under the third Financial Protocol lapsed because of the 
problems in implementing projects caused by the political 
and economic situation in Turkey. The provision of special 
aid (Item 9632) also suffered from the situation in Turkey 
and, as a result, 21 million ECU carried over from 1981 
lapsed. 
As regards the other appropriations, those of Item 9601 
(Pre-accession aid to Portugal) lapsed because of delays in 
identifying and appraising projects (see also para­
graph 10.28 (c)). In the case of Cyprus (Article 964) cancel­
lations amounting to 1,2 million ECU were due to difficul­
ties in fulfilling the conditions of the Financial Protocol, which stipulates that the funds must be used for the benefit 
of the whole population of the island. 
Provisional appropriations in Chapter 100: of the 130 mil­
lion ECU in commitment appropriations and the 8 million 
ECU in payment appropriations unused under Title 10, 50 
million ECU and 5 million ECU respectively had been 
entered as a reserve for launching the second Financial 
Protocol concluded with the Maghreb and Mashreq coun­
tries. 
As the programming missions for these Protocols were 
planned for the first half of 1982 the Commission had to 
assume that financial implementation, at least in commit­
ments, would start before the end of the year. 
The fact that this did not actually happen does not mean 
that the creation of this provisions was unjustified. 
As regards.the 3 million ECU in payment appropriations 
and the 80 million ECU in commitment appropriations not 
used under the fourth Financial Protocol with Turkey, 
these funds were entered on the assumption that this Pro­
tocol would be concluded and signed. As yet it still 
remains to be concluded. 
Paragraph 10.8 
To follow the Court's suggestions the accounting depart­
ments would have to have more staff and more equipment, 
particularly computers. The Commission is nevertheless 
willing to consider how it can best satisfy the Court. 
Paragraph 10.9 
(a) The Court is referring to the payment of a sum of 
250 000 ECU to the Centre for European Policy Studies 
made at the end of 1982 from Article 942 (Advisory Com­
mittee on Development Policies). 
It was in fact both a programme and an estimate that the 
CEPS presented in a letter from its Director to Mr Pisani 
on 29 October 1982. Attached to the overall estimate of the 
programme, i.e. 350 000 ECU a year for two years, was a 
paper describing the various facets of an international 
research programme in the field of development policies. 
Page 5 of this paper contained an estimated budget for 
implementing the programme over the first year. The Com­
mission was requested to provide just over 70% of this 
budget with a contribution of 250 000 ECU. 
Every facet of this research programme has subsequently 
been treated in more detailed papers submitted to the 
Commission departments for approval. 
31. 12. 83 Official Journal of the European Communities 221 
(b) It is true that Chapter 93 appropriations are in princi­
ple for financial cooperation with non-associated develop­
ing countries. However, the remarks to Item 9341 stipulate 
that it is an 'Appropriation for the organization of short 
training courses (two to three months) for officials from 
third countries'. (f) The Commission has begun to prepare a coordinated 
system to ensure greater transparency in the utilization of 
counterpart funds and to ensure that the recipient coun­
tries honour their obligations. 
Moreover, the financial statement appearing in Volume 7 
of the preliminary draft budget expressly mentions the 
training courses for senior Arab officials as a particular 
category of courses envisaged. 
The reason why this item is in Chapter 93 is that the bulk 
of the expenditure is actually disbursed for the benefit of 
nationals of non-associated developing countries. Even if 
the Court considers that the nomenclature is inappropriate 
and must be changed, nothing has been incorrectly 
charged to this item. Paragraph 10.14 
Table 10.4 
(c) The time that elapses between adoption of the pro­
gramme and the request for mobilization often varies 
according to the assiduity of the recipients, who take into 
account commercial imports and food aid granted by other 
donors. 
Paragraph 10.12 
The delays in mobilizing food aid are due to structural 
faults which should be corrected when the new framework 
Regulation No 3331/82 is applied. 
Paragraph 10.13 
(a) Once committed the appropriations in Chapter 92 can 
be carried over automatically whereas this is not the case 
for those under Title VI. 
From the budgetary angle only a structural reform of the 
dual financing of food, aid could improve the situation. A 
proposal to this effect was presented in the draft for the 
new framework Regulation but was rejected. 
(c) The Commission confirms the answer it gave to the 
same comment concerning 1981 (OJ C 344, 31. 12. 1982 — 
page 199 — paragraph 9.9 (c)). It also points out that the 
clearance decisions for 1975 will be taken by 31 December 
1983. Paragraph 10.15 
There are two separate reasons why food products are 
mobilized on the world market: 
— to mount an emergency food aid operation by buying 
in the region of the recipient country in order to shor­
ten delivery times; 
— to acquire products not available on the European 
market and at the same time Support the market of the 
developing countries. 
/ 
In the first case it is not always possible to hold formal 
consultations with various suppliers; bilateral contacts can 
allow comparisons to be drawn. 
Aware of this problem the Commission is now conducting 
various tests with a view to devising more structured 
arrangements for purchasing on the world market, notably 
by drawing up standard contracts and asking its delegate 
— where there is one — in the recipient country to discuss 
prices tentatively with potential suppliers in the region. A 
further point to note is that for any given region the world 
price may be of purely indicative value, since it does not 
determine market laws. 
It thinks it can catch up with clearance operations for 1976 
and subsequent years in the shortest possible time as a 
result of the steps taken: regrouping of financial years, 
limited on-the-spot missions and sample checks. 
(d) The new rules for the mobilization of milk products 
will allow greater use to be made of the funds available for 
quality controls in future. 
(e) The requests for the repayment of debts addressed to 
the countries which have received food aid yielded only 
one positive result in 1982. The Commission has initiated 
the procedure provided for in Article 24 (2) of the Finan­
cial Regulation in a number of justified cases. Paragraph 10.16 
The Commission is well aware of the unloading conditions 
at Moroni in the Comoros. When a recent consignment of 
100 tonnes of sugar bought in Mauritius was to be shipped 
as emergency aid, two contracts were signed: one with the 
seller for purchase and delivery cif unloaded and the other 
With a Comoran shipping agent for unloading and routing 
to destination. 
The Moroni office of the Commission delegate is men­
tioned in both contracts as signatory in order to ensure 
coordination of consignments, which implies adequate 
notification on the part of the Commission. On the matter 
222 Official Journal of the European Communities 31. 12. 83 
of the use of counterpart funds the Commission would 
refer the Court to paragraph 10.13 (f). its vitamin content, it is not unreasonable to allow the reci­
pient to use some of this powder to make fresh cheeses, the 
vitamin A and D content not being affected by the coagu­
lation of milk. 
Paragraph 10.17 
It is true that the sale to the dairy industry of milk products 
supplied as emergency aid from the Community and other 
donors is subject to the tax on commercial transactions. 
The Commission has told the Tanzanian Government that 
it will not pay these taxes in future and negotiations 
between the Commission delegation and the national 
authorities have now nearly produced a settlement. 
Paragraph 10.18 (b) The Commission knew about the damage mentioned 
by the Court. But it could neither be held responsible, 
since the packing was of regulation quality, nor intervene 
to settle the problem, since the dispute was between the 
recipient country and its shipping agent. 
(d) The packing was both adequate and in compliance 
with the regulations. Having received no systematic com­
plaints from other recipients the Commission considers 
that the prolonged bad storage and the handling condi­
tions must have been responsible ^for the damage. The 
Commission delegate has been instructed to pay special 
attention to this. 
The Commission is looking into ways and means of speed­
ing up the decision-making process for special allocations 
of food aid. However, the need to comply with the princi­
ple of fair competition means that the scope of this exer­
cise is limited. 
Paragraph 10.19 
It is true that a great deal of time was taken to complete 
this special food aid operation. The new framework Regu­
lation No 3331/82 should allow such operations to be car­
ried out much more swiftly. Paragraph 10.23 
When butter is processed into butteroil, the risk of vegeta­
ble oil being substituted for butteroil is prevented by the 
following measures contained in Regulations (EEC) 
Nos 262/79 and 1932/81 for the making of pastry and ice 
cream and in Regulation (EEC) No 1354/83 on food aid in 
milk products: 
(a) Incorporation of vegetable fat in butteroil is formally 
excluded. One of the conditions that a firm must 
satisfy in order to be approved as a manufacturer of 
butteroil is that any stocks of vegetable fats be kept 
apart in separate premises and identified as such. 
Paragraph 10.20 
All the appropriate measures were taken as soon as possi­
ble to rectify the situation mentioned by the Court. In view 
of the contra-indications to feeding non-vitaminized milk 
to young children, this milk was distributed solely to 
adults. (b) The Commission would remind the Court that it is for 
the Member States to make the necessary checks. This 
was, moreover, spelt out in Regulations (EEC) 
Nos 303/77 and 1354/83. The attention of the Member 
States was also drawn to the fact that these inspections 
should be on the lines of other inspections laid down 
for milk products. 
Paragraph 10.21 
For fob delivieries the recipient country must charter a 
means of transport at its own expense and, to do so, con­
cludes a contract with a shipping agent, a contract which 
in no way involves the Commission. The prolonged stor­
age of 500 tonnes of milk powder and 200 tonnes of butter­
oil in the port of Casablanca was due to difficulties con­
nected with such a contract. Paragraph 10.24 
(a) Vitaminized skimmed-milk powder is henceforth 
(Regulation (EEC) No 1354/83) to be packed in bags in 
which the thickness of the polyethylenes (0,12 mm) is suffi­
ciently resistant to meet the demands of sea or land trans­
port in difficult conditions. 
(b) The month and date of production are marked on the 
bags. It is not easy to add a 'use-by' date, since this 
depends on the conditions in which the product will be 
stored and therefore varies widely. 
Paragraph 10.22 
(a) and (c) Though it is true that after being stored for six 
months in the conditions existing in the port of Casa­
blanca, skimmed-milk powder may well have lost some of (c) The many different languages spoken by recipients of 
food aid as well as extensive illiteracy make it difficult to 
find an effective solution to this problem. Moreover, 
skimmed-milk powder is used in different ways (recon-
stitution of milk, addition to foodstuffs, etc.). 
31. 12. 83 Official Journal of the European Communities 223 
(d) and (e) The Commission has acted on the Court's 
suggestions and the new Regulation (EEC) No 1354/83 
should remedy the shortcomings mentioned. 
(f) Information channels are particularly long and tor­
tuous: intervention agency, Directorate-General for Agri­
culture, Directorate-General for Development (two distinct 
stages) and the delegation. Inevitably, there may be delays 
and omissions. The Commission is at present studying the 
type of document that could best carry and relay the infor­
mation. 
(g) Harmonization is not always desirable in this field 
since the particular ways in which recipients use aid very 
often impose specific conditions. 
(h) The new rules for mobilizing milk products will enable 
such a measure to be adopted. 
(i) The agreements with recipients take the form of an 
'official letter' laying down the conditions for granting 
food aid and the acceptance of these conditions by the 
recipient. According to the terms of delivery (fob, cif, or 
free at destination) it is explicitly stated in the official letter 
that the recipient country will agree on the period of deliv­
ery. This cannot be fixed long beforehand nor rigidly 
because it depends on many factors (existing stock, means 
of transport, tenders, and so on). It is therefore preferable 
to fix the actual delivery date separately from the official 
letter, at the moment that everything is ready for mobiliz­
ing and shipping the food. 
Paragraph 10.27 
The Financial Protocols concluded with the southern Med­
iterranean countries (Maghreb, Mashreq, Israel) expired on 
31 October 1981. 
Article 5 of these Protocols stipulated that 'The amounts to 
be committed each year for each of the various forms of 
aid shall be distributed as evenly as possible throughout 
the period of application of this Protocol'. The Commis­
sion had cbnsidered that execution of these Protocols in 
commitments could be finally closed at the end of the 
financial year 1982. That is why the balance of commit­
ment appropriations required had been entered under the 
appropriate headings in the 1981 budget. 
It is true that 26 million ECU in commitment appropria­
tions lapsed at the end of 1982, the adoption of many pro­
jects having been delayed. The Commission could in no 
way be held responsible. 
Paragraph 10.28 
(a) Turkey: the 29 million ECU representing the balance 
of special aid lapsed for the reasons given in the answer to 
paragraphs 10.6 and 10.7. (b) Malta: the first Financial Protocol was valid from 
1 November 1978 to 31 October 1983. In terms of budget­
ary funds the Protocol involved 10 million ECU, of which 
5 million ECU was for loans on special terms and 5 mil­
lion ECU in non-refundable aid. At 31 December 1980 the 
entire loan granted on special terms and 98% of the aid 
granted had been committed. 
The unexpected size of these commitments in 1980 
exceeded the appropriations provided in the 1980 budget 
for Malta and a transfer of 2 024 000 ECU had to be made 
from appropriations intended for Cyprus which were still 
unused. Such a transfer is permitted by Article 8 of the 
Financial Regulation. Since the budget estimates for 1981 
were already in preparation and could no longer be 
adjusted to accommodate this transfer, the 1981 commit­
ment appropriations for Malta were in excess of require­
ments. 
As these differentiated appropriations could not be used in 
1981, they were carried over to the 1982 budget and auto­
matically lapsed at the end of 1982. 
(c) Portugal: the appropriations provided by the 1976 
Financial Protocol, in the form of loans from the EIB's 
own funds, were entirely used up on 17 December 1981 
(when the last loan was signed); the corresponding interest 
subsidy was paid to the Bank (value as at 17 February 
1982) also in December 1981. The balance of the 30 mil­
lion ECU could not be used, as no more EIB appropria­
tions were available. Under the Protocol (Article 2 (2)), the 
sum of 30 million ECU constituted a ceiling not to be 
exceeded and could be used only for interest subsidies. 
The reference to the Protocol in the 1982 budget was a 
memorandum item with no practical relevance. 
As regards pre-accession aid, the agreement came into 
force on 1 January 1981; but the first financing convention 
was not signed until 16 December 19.81, largely because of 
the slow procedures, on both the Portuguese and Com­
munity side, and the time taken to present, examine and 
approve the projects. Other conventions were signed in 
1982 but the problem of cumbersome procedures persisted, 
even though improvements had been made to speed things 
up. The relatively slow pace of payments is first and fore­
most a direct result of these delays but also stems from the 
nature of the projects (which often involve a series of tech­
nical assistance operations), from the length of tendering 
procedures, particularly international ones, which are used 
for projects involving infrastructure operations, and from 
the nature of the payments made (reimbursement of 
expenditure already incurred). It is therefore to be expected 
that the pace of payments will not speed up appreciably 
until projects have reached the stage of final implements 
tion. 
These remarks obviously concern the 100 million ECU 
managed directly by the Commission, the matter of interest 
subsidies being dependent on the pace at which the EIB 
commits its loans. 
224 Official Journal of the European Communities 31. 12. 83 
Paragraph 10.30 
To date, the Council has not adopted the draft financial 
regulation on the application of the financial protocols 
with the northern Mediterranean countries (Turkey, Malta 
and Cyprus). As a result, an ad hoc procedure is used that 
requires unanimous decision rather than majority voting. 
Such a procedure has not contributed to efficiency and 
projects can be blocked or delayed by one Member State. 
The Commission takes the view that the Council should 
adopt the draft regulations proposed by the Commission at 
the earliest opportunity. 
The Commission considers that the Court's doubts are 
unfounded. The Commission is indisputably vested with 
the necessary powers to entrust the E1B with the manage­
ment of some appropriations. 
Point 10.32 
(a) As regards loans managed by the EIB for the Commis­
sion, the latter has been satisfied with the EIB's technical and financial expertise in the management of projects. 
According to the Commission's information, the EIB exer­
cises close supervision of the projects managed on its 
behalf. 
(b) and (c) At the present time, only interest on loans 
already made is being received. At the beginning of 1983 
the Commission came to an agreement with the Bank for 
the automatic half-yearly transfer of credit balances on the 
special accounts for all Mediterranean countries. On 
30 September the Bank, at the Commission's request, 
agreed to make these transfers quarterly. Transfers may be 
made at monthly intervals as soon as repayments of princi­
pal begin. There was inevitably some delay in setting up 
this system since a procedure had to be established that 
was acceptable to both the Commission and the Bank. 
(d) Article 9 of the Agreement between the Commission 
and the Bank concerning the management of financial aid 
granted within the framework of the Financial Protocols 
with Greece, Turkey, Portugal, Malta and Cyprus specifies 
that the EIB is entitled to a management fee for its services 
and allows the EIB to deduct this fee automatically from 
the Commission's special accounts with the Bank. In the 
Commission's view, this arrangement does not conflict 
with the Financial Regulation (Article 22). 
Replies of the institutions to Chapter 11 
Staff expenditure 
Paragraph 11.8 
Commission 
It is inevitable that each organization has a number of 
posts which are unfilled despite being provided for in the 
budget; this is the normal consequence of departures — 
resignation, retirement, invalidity, etc. — and recruitment. 
The number should, of course, be kept at the lowest possi­
ble level compatible with good financial management. 
A' combination of circumstances led to a particularly diffi­
cult situation in 1982. In 1983 the Commission has endeav­
oured to organize a large number of competitions to fill the 
reserve lists as soon as possible and the overall situation 
should be far more satisfactory towards the end of the year. Court of Auditors 
As stated by the Court, the cumbersome nature of the Staff 
Regulations' recruitment procedures did not make it possi­
ble to fill all the posts authorized in the budget. Neverthe­
less, a large number of vacant posts have already been 
filled to date and most of the budget posts will be filled by 
the end of the year. 
Paragraphs 11.10 to 11.13 
European Parliament (11.10 to 11.13) 
In line with the Court's recommendation in para­
graph 11.13, Parliament will raise this point at the meeting 
of the Heads of Administration with a view to the adop­
tion of common rules for monitoring applicable to all the 
institutions. 
The Commission is envisaging a new recruitment policy 
with better planning of recruitment needs, regular competi­
tions and greater rapidity in drawing from the reserve lists. 
The Commission is also continuing its efforts to achieve a 
harmonized approach by all the institutions. Council (11.10 to 11.13) 
The Council is prepared to study with the other institutions 
the introduction of common rules for monitoring continu­
ing eligibility for invalidity pensions. 
31. 12. 83 Official Journal of the European Communities 225 
Commission (11.12) 
The Commission has introduced a regular systfem of con­
trol to check whether the conditions for granting an inval­
idity pension are still satisfied. 
Court of Justice (11.12) 
The Court of Justice admits that the comment of the Court 
of Auditors is valid and will adopt measures permitting 
checks to be made. 
Economic and Social Committee (11.12 and 11.13) 
As the Court notes, the Committee checks whether its 
invalidity pensioners continue to satisfy the appropriate 
requirements. The Committee would have no objection to 
common rules. The problem is that the causes of invalidity 
vary and that the frequency of checks — and sometimes 
the need to carry them out at all — depends on the medical 
assessment. 
Commission (11.13) 
The Commission will also contact the other institutions 
with a view to drawing up common rules. 
Paragraphs 11.14 to 11.17 
European Parliament 
The Bureau has reserved the right exceptionally to grant 
an ad personam promotion on a proposal from the Secre-
tary-General. This practice was not criticized by the Court 
of Justice in its judgment in Case 4/79 Loebisch v Council 
(1979 ECR, p. 3679) which incidentally recognizes the 
Authority's power to grant 'discretionary promotion' on 
the basis of the 'personal merit' of officials. 
Moreover, the adoption of the budget," which endorses the 
Appointing Authority's proposal to grant ad personam 
promotions to particularly deserving officials, constitutes 
an adequate and essential legal basis. 
Council 
In view of the Court of Auditors' comments, the Council is 
able to state that since 1982 the initiative has been taken 
gradually to reduce the number of these grades where their 
operational necessity is no longer obvious; thus, two A/1 
grades ad personam were abolished in the 1982 and the 
1983 financial years respectively. Furthermore, the Council 
proposes to review the legal position regarding ad per­
sonam grades in the light of the Staff Regulations and 
other regulations in force. Commission 
Apart from the cases referred to in paragraph 11.15 of the 
Court of Auditors' report (application of Council Regula­
tion No 259/68), these ad personam posts are permanent 
posts subject to exactly the same rules as any other post. 
The fact that, in some cases, the provision in the list of 
posts is for a grade immediately below that of the official 
who occupies the post does not alter the permanent char­
acter of the post; it remains in existence for at least as long 
as it is occupied by the official in question. 
The distinction between a permanent post and an ad per­
sonam post is of importance only at budget level. These 
operations have been authorized by the budgetary auth­
ority without any facts being hidden. 
European Parliament 
Paragraph 11.21 
The institution undertakes to re-examine the Bureau's 
decision of 9 March 1982 fixing frozen exchange rates for 
the conversion of the Belgian franc into other national cur­
rencies during the rationalization of the system of payment 
of mission expenses referred to in the replies of the institu­
tion to paragraphs 2.6 and 2.21. 
Paragraphs 11.22 and 11.23 
The exceptional position in which Parliament finds itself 
(with 3 places of work and the holding of meetings 
throughout the Community and in non-European coun­
tries) makes it necessary for its officials to travel very fre­
quently on mission (approx. 25 000 missions per year). 
Moreover, the time lag between the date of the survey 
made by the Commission and the application of the statu­
tory rates finally fixed by the Council is about two years. 
The official rates are therefore always considerably out of 
date. 
Council 
Paragraph 11.26 
As regards the lack of an organization chart for the depart­
ments of the General Secretariat of the Council, the latter 
has already started preparatory work which will enable it to 
accede to the Court of Auditors' requests. 
Paragraphs 11.27 to 11.30 
The practice and the timetable at the Council General 
Secretariat as regards promotions and taking them into 
account in the budget are the end-result of a variety of cir­
cumstances — some of which are beyond the control of the 
i 
226 Official Journal of the European Communities 31. 12. 83 
Council (cont.) 
Appointing Authority — which have meant that up to now 
the Advisory Committees on Promotion have been able to 
begin their proceedings only at the end of the year, which 
explains the retroactive effect of some promotions. This 
was the case with the 1982 financial year and, to a lesser 
degree,' the 1983 financial year, for which the Advisory 
Committees on Promotion met in May and June. 
The General Secretariat of the Council has decided how­
ever that as from the 1984 financial year the promotion 
exercise and the budgetary year will coincide exactly, and 
this will have the effect of eliminating all retroactivity. 
Paragraphs 11.31 and 11.32 
As regards the Court of Auditor's comments on working 
hours, the Council would point out that the working week 
of the departments has not been shortened but that, on the 
other hand, modified working hours were introduced in 
1981 which took account of the specific conditions inher­
ent in its role as a conference centre. 
The Council also carried out a study on overtime. This 
study did not show that the new working hours gave rise to 
overtime and that, on the contrary, this largely resulted 
from the working conditions of the General Secretariat of 
the Council, for which there is no equivalent in the other 
institutions. 
Paragraphs 11.33 to 11.36 
As regards overtime remuneration, the Council would 
point out that as regards categories C and D, the simulta­
neous granting of the advantages laid down by the internal 
rules and the Staff Regulations is exceptional. It can be 
justified only by the interests of the service or the interests 
of the health of the staff in question. 
Concerning overtime by categories A, LA and B, the Coun­
cil is prepared to review the legal aspects complained of by 
the Court. 
Paragraphs 11.37 and 11.38 
The Council is currently examining possibilities for 
improving financial control along the lines suggested by 
the Court. 
Court of Auditors 
Paragraph 11.41 
This practice has ceased to be followed since the beginning 
of 1983. Economic and Social Committee 
Paragraph 11.46 
(a) Commitment of expenditure on remunerations, within 
the meaning of the Financial Regulation, is relatively 
unimportant in accounting terms. However, the Committee 
will in future comply scrupulously with the Financial 
Regulation and submit proposals for commitment of 
expenditure. 
(b) Some of the other comments in 11.46 relate to excep­
tional circumstances which arose in the personnel and 
accounts departments when new monthly pay sheets were 
introduced and when remunerations management was rad­
ically overhauled following introduction of a new com­
puter program. 
For some time, monthly pay sheets have in fact been 
signed by the authorizing officer before being sent to the 
calculations department. In general, all appropriate meas­
ures are taken to ensure that the authorizing officer, Finan­
cial Controller and accounting officer exercise their duties 
in the order laid, down by the Financial Regulations. 
In addition, supporting documents are attached to pay­
ment orders submitted to the authorizing officer and 
Financial Controller for signature. 
Paragraphs 11.48 and 11.49 
(a) The payment order for BFR 426 154, which was paid 
out in December 1981, covered: 
— adjustments resulting inter alia from Council pay deci-
• sions, which were substantially back-dated; 
— payment for overtime worked in 1980 by officials who 
had left the Committee in 1981 without having 
received time off in lieu. As the 1980 financial year had 
ended, the 'single financial year' rule could not be 
applied. 
(b) Committee staff who work overtime normally receive 
time off in lieu but it became clear in January 1982 that 
compensatory leave could not be given for overtime 
worked in December 1981. 
(c) As the Court notes, the decision to charge expenditure 
on December 1981 overtime against the 1981 appropria­
tions necessitated a transfer of 20 000 ECU. Council 
authorization was applied for on 16 September 1981 but 
was not granted till November 1981. 
To ensure that these appropriations did not lapse, pay­
ments were made when the individual accounts were 
drawn up (i.e. in December 1981) after these had been 
endorsed by the Financial Controller. 
It is therefore fair to say that payment and verification 
were made within the deadline laid down by the Financial 
Regulation, even though the relevant payment order was 
not signed by the Financial Controller and the authorizing 
officer until 22 and 26 January 1982 respectively. The 
31. 12. 83 Official Journal of the European Communities 227 
Economic and Social Committee (cont.) Economic and Social Committee (cont.) 
Economic and Social Committee will, however, endeavour 
to comply more closely with the Financial Regulation in 
this respect. 
Paragraphs 11.50 and 11.51 
A more sophisticated computer program for remunerations is scheduled for 1984. Education allowances — like the 
other remuneration components — will then be paid 
monthly. 
We felt that payment on the basis of the calendar year, 
rather than the academic year, was consistent with the rel­
evant budgetary and Staff Regulations' provisions. 
Replies of the institutions to Chapter 12 
Operational expenditure 
Paragraphs 12.7 to 12.26 
European Parliament (12.9) 
(i) The institution, while recognizing the justness of the 
Court's comment that expenditure should be strictly and 
correctly charged to the budget, points out that the 
employee of the office cleaning company hired devotes on 
average only 20 hours per month to 'restaurant-type work'. 
(ii) The collection of crockery left in the offices, which is 
in itself a form of cleaning, is carried out at the same time 
as the cleaning and by the same staff of the office cleaning 
company engaged by the Parliament. 
Council (12.10) 
In the last two months of 1980, an employee of the clean­
ing firm with which the Council had concluded a contract 
regularly worked for three hours a day in the cafeteria. 
Since then, it is only when restaurant staff have been 
absent that the firm in question has supplied replacements. 
As a follow-up to the comments of the Court of Auditors, 
the cost of these hours will henceforth be charged to Item 
1172 of the budget. 
Commission (12.11) 
The Commission will take the necessary steps to charge 
these costs to another budget item. 
Economic and Social Committee (12.12) 
The wages of the two cleaning-contractor employees work­
ing at the Committee as cloakroom attendants, amongst 
other things, amount to BFR 117 000 per month, at an 
hourly rate of BFR 385,50 (inclusive of all taxes). These 
persons are also responsible for some of the tasks involved 
in getting meeting rooms ready (water jugs and glasses, 
removing papers) which may be classified as cleaning 
operations. 
It would be far more costly to have this work done by peo­
ple from a temporary employment agency, and there can Economic and Social Committee (cont.) 
be no question of recruiting a permanent official or other 
servant. 
The staff of the cleaning contractor are not responsible for 
removal work. But it is accepted that they should shift fur­
niture if this is necessary for the thorough cleaning of an 
office. 
Council (12.14) 
The possibility of compensating hours not worked by the 
cleaning firm was introduced by the Council in order to 
meet the extensive cleaning requirements which greatly 
exceed the work covered by contract. In the case in point 
this is work which is done for meetings of the Council of 
Ministers, European Councils and other important meet­
ings and which generally has to be carried out under very 
difficult conditions (within a very short time, outside nor­
mal working hours). 
As regards the volume of hours in arrears, it should be 
pointed out that this is almost entirely due to hours not 
worked during August and not to bad planning of the work 
to be done on a daily basis. The General Secretariat, acting 
on behalf of the Council, agreed with the cleaning firm to 
limit the hours worked during this holiday month to 
approximately half of the normal hours worked in order to 
allow for the possibility of meeting the specific cleaning 
requirements referred to above while remaining within the 
overall limits of the contract. It is therefore quite natural 
that the number of hours in arrears should reach a maxi­
mum level immediately after August. 
However, the Council is prepared in future to make deduc­
tions from the monthly amounts for hours not worked. 
The Council will take account of the comments of the 
Court when preparing its estimates for the coming finan­
cial year. 
228 Official Journal of the European Communities 31. 12. 83 
Council (12.16) 
The Council has not invited tenders for the cleaning of its 
buildings since 1976 because the terms of the contract with 
the cleaning firm are very favourable as compared with 
current market conditions. Accordingly, the Council consi­
ders it inadvisable to invite tenders in the near future as 
this would involve a definite risk of costs rising. 
However, negotiations have begun with the cleaning firm 
in order to rationalize and cut down where necessary on 
certain cleaning operations included in the existing con­
tract with a view to reducing its overall cost. Economic and Social Committee (12.19) 
As the Court of Auditors states, the rise in cleaning costs 
must reflect only the rises in wages and wage-related costs 
and must exclude all other costs. The Committee will , 
ensure that this rule is observed in future. 
The fact remains that over the years, the Committee has 
made substantial savings because it has not been tied by 
the binding clauses normally laid down in a contract. 
Thus over the period 1972-82 the cleaning rate would have 
risen from 100 points to 281 points if the Committee had 
accepted all applications for increases; as the Committee 
was able to negotiate, the rate rose to only 205 points. 
Court of Justice (12.17) 
The cost of services is only one aspect of the analysis of 
tenders. The firm chosen, which undertook to provide a 
work force of 29 to 31 as opposed to 21 offered by the low­
est bidder, offers a better service on the basis of actual 
comparisons made by the Court of Justice in a single 
building. In Addition, many visitors and lawyers come to 
the Court and the building must be kept immaculate. It 
should be remembered that the Court is required to be 
open to the public. 
Economic and Social Committee (12.18) 
When the Secretariat of the Economic and Social Com­
mittee moved to the premises at 2, rue Ravenstein, vacated 
by the Council, a considerable amount of renovation was 
required. 
It was essential at that time to call in a cleaning firm to 
carry out specific tasks, on a cost plus basis, in the new 
premises. 
In October 1972 the Committee engaged a cleaning firm at 
a monthly rate which, in comparison with the rates paid by 
other institutions, was very advantageous. 
The Committee is aware of the need to invite tenders on 
the basis of specifications but would point out that this 
cannot be done until the alterations have been completed 
(probably by the end of 1983). 
In the meantime, the work will be commissioned by 
monthly order, with the value of a written contract. Court of Auditors (12.19) 
A rider to the contract was signed in June 1983 which takes 
into account the comments of the Court. 
Council (12.20) 
The Council considers that in principle the current level of 
cleaning should as far as possible be maintained. However, 
in view of the general economic situation and current 
budgetary constraints it will endeavour to find ways of cut­
ting down the cleaning operations contracted without 
adversely affecting the specific requirements of the institu­
tion in this area. In this connection, particular attention 
will be paid to the suggestions made by the Court. 
Court of Justice (12.20) 
The Court of Justice is prepared to examine the problem. 
Commission (12.21) 
The Commission will look into the Court's suggestion that 
carpets should be cleaned less frequently. 
Commission (12.22) 
Staff were gradually withdrawn from the old Computer 
Centre between June and November 1982. 
Council (12.19) 
The Council will draw the appropriate conclusions from 
the Court of Auditors' comments. Commission (12.23) 
A reduction in the cleaning, firm's services was negotiated 
in autumn 1982 and took effect on 1 December, the date 
by which all staff had left. 
31. 12. 83 Official Journal of the European Communities 229 
Court of Justice (12.23 to 12.25) 
The work schedule drawn up in 1972 after a detailed study 
will be reviewed by the Court in the light of comments of 
the Court of Auditors. 
Council (12.26) 
The Council is prepared to study with the other institutions 
the possibility of drawing up a joint standard contract 
which would take account of the requirements specific to 
the activities of each institution. 
Commission (12.26) 
Interinstitutional meetings have already taken place to har­
monize these contracts. These activities are continuing, 
particularly as regards the technical specifications. 
European Parliament 
Paragraphs 12.27 to 12.33 
The purpose of purchasing Jean Monnet's old house was 
primarily to honour the memory of a man to whom Europe 
owes so much. In giving the Commission authority to 
make the purchase, pursuant to Articles 211 EEC, 185 Eura-
tom and 6 ECSC, Mr Thorn, President of the Commission, 
wrote: 'this initiative is likely to contribute to the joint 
efforts of our two institutions to stimulate public aware­
ness of the European idea'. 
When it endorsed the proposed purchase, Parliament's 
Bureau was aware that the property could not be used in 
the immediate future. It therefore instructed its President, 
in conjunction with the other institutions, to consider the 
various possibilities; several suggestions have already been 
made. 
Parliament was not in a position to assess all the asso­
ciated costs (e.g. energy costs) in the absence of a decision 
as to the ultimate use of the building. 
The final purchase price of the house was determined on 
the basis of an estimate by the department responsible for 
land and property at the Directorate General for Taxes and 
the updated amount of 1,8 million French francs was also 
confirmed by an approved assessor who estimated the mar­
ket value of the property at between 1,8 and 2 million 
French francs. 
Commission 
Paragraphs 12.34 to 12.36 
Following a detailed enquiry into the circumstances in 
which the procedural error occurred in this case, the Com-, 
mission has instructed authorizing officers to see that there Commission (cont.) 
is no recurrence of this violation of the rule requiring a 
prior commitment. 
However, the Commission would point out that, by mak­
ing a commitment to its Australian partner before a spe­
cific date, it was possible to keep the contractor's fees 
down to a fixed amount and comply with the original 
building schedule. 
As a result, it has been possible to avoid all the cost 
increases for both labour and materials which would have 
occurred if building work had been delayed. 
Paragraphs 12.37 to 12.40 
The Commission considered the future use of the former 
Computer Centre in 1981, well before the Informatics 
Directorate moved to its new premises in the Jean Monnet 
building. 
The Commission intended to use this building to house the 
Euratom Safeguards Directorate since it was nearby and its 
layout was particularly well-suited to the specific features 
of the Directorate; meanwhile, the building can be used as 
an overspill for the now full Jean Monnet building. 
However, extra capacity and better safety facilities had to 
be considered since the former Computer Centre was too 
small to accommodate the staff of 180 and the large 
amount of scientific and technical equipment of the Eura­
tom Safeguards Directorate (one computer and several 
laboratories, all subject to specific safety rules). The owner 
was first contacted in March 1981. 
However, permission for this conversion work was delayed 
as the Court of Justice and the Commission discussed 
solutions to the two institutions' accommodation problems 
in accordance with the Council's request of April 1982. 
Given the Commission's requirements and the layout of 
the building, it has since been decided that the Commis­
sion should keep the former Computer Centre as originally 
planned. 
Paragraph 12.41 
Most'of the appropriations come from two different Arti­
cles (225 and 758) following the merger of the old EEC 
and Euratom libraries in 1974. The distinction referred to 
by the Court of Auditors has been maintained for practical 
reasons since there are still two distinct subscription lists, 
230 Official Journal of the European Communities 31. 12. 83 
Commission (cont.) 
scientific and non-scientific. The use of different items 
contributes to budget transparency by clearly identifying 
the origin of the appropriations. The Commission is pre­
pared to consider the Court's suggestions. 
Paragraph 12.42 
The total 958 692 ECU mentioned for Brussels includes 
not only books, periodicals and newspapers, but also sub­
scriptions to a number of very important press services: 
— information bulletins (e.g. Agence Europe) — Item 
2253 
— teleprinters (e.g. Reuter, Agence France-Presse) — 
Item 2253 
— viewdata services (e.g. Reuter) — Item 2255. 
As regards newspapers in particular, the Commission is 
well aware of the high number of subscriptions and is 
always trying to reduce it. It should be pointed out that 770 
of the 1 246 subscriptions for 1982 are for Members' Off­
ices and various departments which have a very specific 
need for up-to-date information. 
The number of subscriptions for other DGs is strictly 
limited (on average 16 per DG). Commission (cont.) 
in Luxembourg is explained by the fact that large numbers 
of officials need simultaneous access to certain scientific 
and technical periodicals. This means that several copies 
have to be obtained on subscription and has nothing to do 
with the fact that the appropriations are administered by 
different departments or not. 
The Commission is prepared to consider the Court's 
suggestion with a view to improving coordination. 
, Paragraph 12.46 
(a) The Commission will look into the feasibility of put­
ting the Court's suggestion into practice in the Central 
Library in Luxembourg. 
(b) New criteria were introduced at the beginning of the 
year. 
(c) This problem will be solved through the collaboration 
of the Library and the Directorates-General which have 
concluded exchange agreements with outside organiza­
tions. 
(d) Stocktaking has now been introduced, together with a 
more reliable system of stock-lists. 
The periodicals are largely selected on the basis of the 
requirements expressed by the departments themselves. 
Every year lists of periodicals are circulated in the depart­
ments with an indication of the ceiling on expenditure. 
The departments decide which subscriptions they want in 
line with this criterion and with their own requirements. 
The number of subscriptions fell by around 20% between 
1981 and 1983. Paragraph 12.47 
For several years an effort has been made to restrict the 
number of outside staff employed by the Computer 
Centre: there was a fall from 60 in 1980 to 36 at the begin­
ning of 1983. Despite the increase in the Centre's capacity 
and the number of configurations, this effort will be con­
tinued in future. 
Paragraph 12.43 
The Commission considers that the library plays an impor­
tant role by providing researchers with basic information; 
it would not be expedient to restrict this role by demanding 
payment. Paragraph 12.48 
The Computer Centre is now responsible for administering 
and updating the lists and the magnetic cards and pro­
gramming the control system. When persons leave the 
Centre without returning their cards, these are deleted from 
the memory of the security system. 
Paragraph 12.44 
A modern system for checking loans is envisaged in the 
plans to expand the library's current computerized systems. 
The other suggestions made by the Court are being exam­
ined. Paragraph 12.49 
The situation is due to a series of conversions and moves; 
an inventory has been started in recent months in collabor­
ation with users. This is a major task which will take some 
time. 
Paragraph 12.45 
The duplication found in the acquisition of periodicals by 
Directorates-General V and XIII and the Central Library Paragraph 12.50 
Measures to remedy this situation are being considered. 
31. 12. 83 Official Journal of the European Communities 231 
Court of Justice Court of Justice (cont.) 
Paragraph 12.51 
Although in the past there have been no formal invitations 
to tender for bookbinding work, nevertheless the bookbin­
der used at present was chosen on the basis of experience 
acquired by the library in relation to other bookbinders 
near the Court building whose work was not as satisfactory 
or as punctual. The Court intends, however, to regularize 
the situation so as to comply with the formalities. Finally, the reason why it was impossible to complete 
stocktaking by the end of 1982 was purely shortage of staff, 
which was, moreover, referred to by the Court of Auditors 
itself under paragraph 12.53. The official capable of under­
taking that work was not engaged until September 1982. 
Paragraph 12.53 
The recruitment procedure to remedy the shortage of staff 
is nearing completion. 
Paragraph 12.52 
The library was not open to the public until 1982; its 
equipment corresponded to its particular purpose and 
could not before that date be the same as that in libraries 
which are also used for research by the public. Moreover, 
the actual location of the library, which does not have a 
coherent area at its disposal but is spread over rooms 
situated on different floors without any direct internal 
communication between them, seriously complicates the 
necessary effective control and management of its collec­
tion. Paragraph 12.54 
The Court of Justice has commenced the procedure for the 
appointment of a Financial Controller. 
Paragraph 12.55 
The internal measures relating to the management of 
appropriations will be amended as soon as a Financial 
Controller has been appointed so as to comply with the 
provisions of the Financial Regulation. 
Replies of the Commission to Chapter 13 
External bodies and other subsidies 
Paragraph 13.6 
The point raised by the Court is dealt with in the Agency's 
replies to the Court's initial report. 
Paragraph 13.8 
The Commission understands the reasons which prompted 
the Court, in its opinion of 16 September 1982 on four pro­
posals for Council Regulations amending certain provi­
sions governing the European Centre for the Development 
of Vocational Training and the European Foundation for 
the Improvement of Living and Working Conditions, to 
suggest that changes to the two organizations' Financial 
Regulations should be timed to coincide with the three-
yearly reviews of the Financial Regulation. In practice, 
however, this procedure clearly has serious drawbacks. 
In the Regulations in question the provisions governing 
the discharge procedure are clearly obsolete and need to be 
reformed, as the Court itself suggests. 
Following the Court's opinion, Parliament's Committee on 
Budgets decided to defer consideration of this proposal for 
an interim updating pending completion of the review of the Financial Regulation and submission of a proposal for 
consequential adjustments for these two decentralized 
bodies. 
This means that seriously outdated texts will remain in 
force — which is not good for budgetary law — and that 
reform will be held up for a long time, possibly several 
years. 
Paragraphs 13.12 to 13.16 
It follows from the Statute of the European Schools that 
the Court's comments do not apply to the Commission. 
Paragraph 13.20 
The Commission reviews each case on the basis of the sup­
porting documents which vary from one recipient to 
another. The recipient is asked to repay the subsidy if he 
does not use it for the activity indicated. 
A standardized form for checking supporting documents 
supplied by recipients is currently being prepared and will 
shortly be tried out. 
232 Official Journal of the European Communities 31. 12. 83 
Paragraph 13.22 
The Commission has found that the expenditure in the bal­
ance sheet is greater than the Community subsidy and that the ETUI is receiving other revenue. Before the Commis­
sion decides whether it can accept the increase in the 
reserve, the Institute will be asked to supply further 
detailed information concerning the various revenue and 
expenditure items in its accounts. 
Replies of the Commission to Chapter 14 
Loans, borrowings and interest rate subsidies 
Paragraph 14.5 
Referring to funds managed by the EIB on behalf of the 
Commission, the Chairman of the Bank told the Com­
mittee on Budgetary Control on 24 June 1982 that the 
Bank, as the Commission's agent, was always willing to 
supply whatever information it required to keep Parlia­
ment fully informed, particularly about the implementa­
tion of budgetary funds. 
The Commission will continue its efforts to give satisfac­
tion to the Court in this regard. 
In the interests of efficient internal control, the Commis­
sion has in any case instructed the Financial Controller to 
examine current systems in conjunction with outside 
experts and to prepare a report with recommendations on 
future control measures for Community borrowing and 
lending activities. The Commission will have this report by 
the end of October. 
Paragraph 14.10 
The apparent understatement of 1,8 million ECU, which 
was adjusted in the accounts of 1 January 1983, was not 
the result of an accounting error but arose from the Com­
mission altering its established procedure in line with that 
recommended by the Court. 
Under the legal rules currently governing NCI and Eura-
tom loans, this adjustment has no effect on the balance 
from the financial year referred to in Article 27 of the 
Financial Regulation. Court and has given instructions for them to be imple­
mented. 
Paragraphs 14.14 and 14.15 
After discussions with its departments, the Commission 
has decided to accept the improvements proposed by the 
Court and has given instructions for them to be imple­
mented. 
Paragraph 14.16 
The Commission has pressed and will continue to press as 
vigorously as possible to ensure that financial organiza­
tions provide full and regular information on the payment 
of coupons and bonds as they mature. 
It will also consider whether a clause requiring financial 
organizations to provide information on coupons could be 
inserted in contracts with them. 
Paragraph 14.17 
(a) This comment concerns the banks, not the Commis­
sion. 
(b) Some banks issue statements only when a transaction 
has taken place. 
(c) The necessary steps are being taken. 
Paragraph 14.11 (d) All necessary corrections have been made to the lists of 
authorized signatories. Instructions have been given to 
ensure that these lists are continuously updated. 
The Commission has decided to accept the Court's recom­
mendation and, with effect from 31 December 1983, create 
a reserve account to cover payments due and any manage­
ment expenses. Paragraph 14.18 
The Commission forwards to the banks all the Court's 
requests concerning external verification, including those 
for further information. 
Paragraphs 14.12 and 14.13 
After discussions with its departments, the Commission 
has decided to accept the improvements proposed by the Everything possible has been done or will be done to 
check the replies from the banks by means of appropriate 
contacts between the Court and the Commission. This will 
not include direct approaches to the banks not requested 
31. 12. 83 Official Journal of the European Communities 233 
by the Court, which could be interpreted as meddling in its 
control function. 
Although it will continue to press the banks for a reply, the 
Commission cannot be held responsible for the absence of 
replies or for erroneous replies. 
Paragraph 14.19 
The Commission will continue its endeavours to improve 
its accounting procedures in line with the wishes of the 
Court and in consultation with it and will implement such 
proposals as are feasible. 
Paragraph 14.20 
The Commission accepts the suggestions made by the 
Court under paragraph 14.20. They have been applied with 
effect from the 1983 financial year, although this matter is 
not covered by the existing Financial Regulation. 
Paragraph 14.21 
The existing Financial Regulation does not apply to the 
cases referred to by the Court and there is no requirement 
to publish the overall trial balance of the accounts. The 
amendments made are clearly shown in the supporting 
documents. The Commission will, however, follow the 
Court's suggestion in future so as to ensure the consistency 
required. 
Paragraph 14.22 
The Commission regularly analyses and proves certain 
important types of account and carries out random checks 
on others at the end of the year. The more thorough analysis desired by the Court is impos­
sible unless more staff are provided. 
Paragraph 14.23 
The new computer system which the Commission is intro­
ducing by degrees will include the calculation of interest 
accumulated but not yet paid. 
Paragraph 14.24 
The Commission realizes that this is an important point 
and will try to improve matters in the course of the current 
review of procedures. 
Paragraph 14.25 
Most adjusting entries concern posting errors discovered 
during checks on entries. Supporting documents are 
always attached to the basic form and the reference num­
ber of the corrected document is entered on the one used 
to adjust the entry. These entries will henceforth be 
approved by a duly authorized official. 
Paragraph 14.26 
After discussions with the Court, the Commission reclassi­
fied the headings in the balance sheet. This cannot be con­
sidered' a correction of errors but a fresh interpretation of 
the content of the EIB current account which is more in 
keeping with the spirit of the agreement with the Bank. 
Replies of the Commission to Chapter 15 
\ 
The European Development Funds (EDF) 
Paragraphs 15.4 and 15.5 
The rules and principles underlying the management sys­
tem which the Commission applies quite scrupulously are 
derived from various sources such as international agree­
ments ratified by Parliaments or the Financial Regulations 
approved by the Council. For instance, it was not the 
Commission which elected that 'the political choice, the 
preparation of the decision and the financial control' be 
exercised centrally. 
Despite the fact that administration is centralized in Brus­
sels, the Lome Convention goes a long way in decentraliz­ing agencies and delegating powers to the national auth­
orities of the recipient countries and to the 45 Commission 
delegations on the spot and the 11 sub-offices, which are 
one stage further in the line of decentralization. 
Even if the Commission wanted to centralize and become 
involved in all details, it would be unable to do so with the 
staff available. There is no other development agency in 
the world administering a volume of aid which the Court 
itself puts at 1 600 million ECU for 1982 (see para­
graph 10.3 of Chapter 10) with 350 A and B grade staff in 
the Directorate-General for Development and 250 staff of 
the same grades in the overseas delegations. 
234 Official Journal of the European Communities 31. 12. 83 
Paragraph 15.7 
The Commission can only confirm the replies it has given 
previously (see replies to paragraph 15.11, third and fourth 
indents — preparation and presentation of the accounts — 
of the observations regarding the 1981 accounts. OJ C 344, 
31. 12. 1982, p. 208), namely that it is largely technical and 
administrative difficulties which are holding up the publi­
cation of these voluminous documents in the OJ and their 
official communication to the Court, Council and Parlia­
ment. 
The Commission would point out, however, that since it is 
anxious to comply with the provisions of the Financial 
Regulation (which are, it must be stressed again, inappro­
priate), it sent the draft EDF accounts for 1982 (balance 
sheets and revenue and expenditure accounts) to the Court 
on 24 March 1983, in other words within the time-limits 
laid down by the regulations. These accounts were defini­
tively adopted by the Commission on 20 July 1983. With 
the new technical arrangements it has made, the Commis­
sion will endeavour to further speed up the transmission of 
the documents for 1983. 
Paragraph 15.8 
The Commission is trying to close the second EDF opera­
tions as soon as possible and hopes to achieve this by the 
end of the 1983 financial year. As regards the outstanding 
projects in Madagascar, six of them were closed during the 
first half of 1983; the closure of the four remaining projects 
requires the clearance of advances or the recovery of cer­
tain doubtful debts. Decisions will be taken in the very 
near future. 
Under the third EDF, the 9,4 million ECU concerned two 
projects in Zaire which were indeed very slow starting up. 
However, one of them, which was financed by a special 
loan, was the continuation of a measure financed simulta­
neously under the fourth EDF by means of a grant com­
bined with a risk capital operation. The EIB has, however, 
just made a single1 call for funds for the special loan under 
the third EDF. Construction work on the second project, 
admittedly the larger (7,6 million ECU), began this year. 
Paragraph 15.11 
At the end of 1982, no commitment or payment had been 
made in respect of the 40 million ECU allocated to certain 
ACP countries as Stabex transfers for 1981 to finance pro­
jects for rapid implementation. 
In fact, once the Council had decided to grant these addi­
tional funds, the various recipient countries had to be 
informed and asked to submit promptly their financing 
requests for projects likely to be accepted by the EDF Committee. The first decisions were taken in January 1983. 
The Commission sent the EDF Committee a memo dated 
1 July 1983 showing commitments made and envisaged. 
Paragraph 15.12 
(a) Although the Commission considers that this is more a 
question of nomenclature than inaccuracy, it has no objec­
tion to using in future the terminology recommended by 
the Court for recording in the accounts the advances made 
to the EAC and external organizations responsible for 
scholarship management. 
The matter of the 0,7 million ECU advance which has no 
counterpart in the EAC's accounts can be explained by a 
time-lag between entry of the operations in the Commis­
sion's accounts and entry in the Association's accounts. 
The matter was cleared up, and entered in the accounts on 
17 March. 
(b) This point is dealt with in full in the replies to para­
graphs 15.55 to 15.60. 
(c) With the exception of ten payments which cannot yet 
be settled because of disputes, all the outstanding opera­
tions were settled at the beginning of 1983. In the case of 
Mauritius, the operations mainly concerned various excep­
tional aid projects for which certain supporting documents 
were missing. 
(d) The Commission debtor balances for which recovery 
orders were issued are recorded in the accounts under 
'other unsettled items'. Specific instructions were drawn up 
at the beginning of 1983 (in agreement with Financial Con­
trol) restating the rules and procedures to be followed for 
issuing recovery orders in accordance with Articles 13 
and 14 of the EDF Financial Regulations. 
Paragraph 15.13 
(a) The time taken by certain Member States to pay their 
contributions to the EDF is a constant source of concern 
for the Commission, which is waiting for a suitable 
occasion to propose that Member States making late pay­
ment be charged interest. 
(b) The Commission has not proposed a revision of the 
Financial Regulation. Such a proposal, especially on so 
specific a point, would be most unusual during the lifetime 
of a Convention. As for the exchange losses, they are offset 
by exchange gains and the interest yielded so that the over­
all amount available to the Fund has never been reduced, 
but has in fact been increased. 
Paragraph 15.14 
The Court repeats in its 1982 report the comment which it 
made in respect of 1981 on the cash situation at 31 Decem­
ber 1981. 
31. 12. 83 Official Journal of the European Communities 235 
The Commission would point out that since 1982 it calcu­
lates its cash requirements on the basis of two factors: the 
position regarding commitments and their foreseeable rate 
of implementation; and the development in EDF expendi­
ture from year to year since its inception, so that past 
trends can be extrapolated to the following year. 
As the Commission pointed out in its November 1982 
communication to the Council on the dates for calling in 
1983 contributions, its estimates are designed to reduce the 
cash balance to the appropriate level by the end of 1983. 
Paragraph 15.15 
I 
It is only when bank statements are received that the value 
dates of payments are known and hence the rates for deter­
mining amounts in ECU. 
In accordance with the agreement reached with the Mem­
ber States, the total bank balances at the end of the quarter 
never exceeds 100 million in Europe and 30 million ECU 
in the ACP States. 
As regards the overall cash position, bank statements are 
generally received no more than four or five days after the 
payment. This time-lag can therefore have little effect on 
the overall level of bank balances. 
Paragraph 15.16 
(a) At 31 December 1982 overall commitments for the fourth 
EDF indicative programmes totalled 96 %, i.e. almost all 
the available resources. At the same date, the rate of pay­
ments was 66 %, i.e. two-thirds of the available resources. 
This gap between commitments and payments can be con­
sidered normal in view of the fact that certain projects can 
extend over several years. 
In the case of the countries mentioned, other factors have 
added to the delays; the Commission is of course prepared 
to provide the Court with detailed explanations if it so 
requires. 
(b) At the end of 1982, some 32 % (one third) of the mini­
mum appropriations for the fifth EDF indicative pro­
gramme had been committed. In view of the time required 
to negotiate the indicative programmes with the ACP 
countries and to begin the programming, this seems to be a 
reasonable performance, even if the Commission had ini­
tially foreseen a slightly faster rate. Commitments did in 
fact pick up during the first half of 1983, and the rate at ^ 
31 July 1983 was around 50 %. 
It is not surprising that the rate of payments at the end of 
1982 was still very low, since the majority of projects 
financed under the fifth EDF and programmed at that time 
were still in the first stage of their implementation. 
The financing of EDF projects and programmes is carried 
out according to very strict procedures, which take some 
time in the early stages. Paragraph 15.17 
The Commission is aware of the serious consequences 
delays often have. It is promptly informed of the reasons 
and it takes the necessary measures where this is within its 
power;.but often there is nothing it can do since the power 
of action lies entirely in the hands of the recipient State. 
Paragraph 15.18 
It should be stressed once again that responsibility for 
implementing the projects lies primarily with the ACP 
State. The Commission's task is to see that monitoring 
operations until completion of the project are carried out 
correctly and in accordance with the provisions of the 
Lome Convention. 
Paragraph 15.19 
(a) At the outset, the financing requested by the Congolese 
authorities was for building an earth road on 75 km of the 
track linking Sibiti to Jacob via Bihoua. 
When the local authorities decided to abandon improve­
ments to the Sibiti-Bihoua-Jacob track in favour of the 
Sibiti-Bihoua-Loudima link, the Congolese Government 
concentrated its attention on the 20 km Sibiti-Bihoua sec­
tion common to the two projects. 
At the time, the Congolese were hoping to receive funds 
from the World Bank to rebuild an asphalt road linking 
Sibiti to the north in the direction of Zanaga. Aid from the 
World Bank was, however, conditional on work being first 
carried out on the southern section from Sibiti to Bihoua 
and beyond in the direction of the railway (Jacob or Lou-
dima). This condition imposed by the World Bank 
prompted the Congolese, authorities to ask the Commis­
sion to finance the surfacing of the 20 kilometre section 
(Sibiti-Bihoua), using the funds initially earmarked for 
making the Sibiti-Jacob track (75 km) into an earth road. 
(b) and (c) The first two studies, one of which was in fact 
an expert report, related to the Sibiti-Jacob road. The third 
study concerned the asphalting of the 20 km Sibiti-Bihoua 
section. The fourth study was the implementation dossier 
of the asphalted Bihoua-Loudima section and the Sibiti-
Bihoua improvement dossier. These were different studies 
concerning different roads and using different techniques. 
One of the reason for all these studies, some of which were 
more useful than others, was the Congolese Government's 
switch in favour of the Sibiti-Bihoua-Loudima road rather 
than the Sibiti-Jacob project, for which an expert report 
and a study had already been produced. 
The funds originally intended for the Sibiti-Bihoua-Jacob 
(75 km) earth road were finally used for surfacing the 
Sibiti-Bihoua section common to the two roads. In view of 
the topographical difficulties between Sibiti and Bihoua, 
inflation between 1966 and 1976 and the design for an 
236 Official Journal of the European Communities 31. 12. 83 
asphalted highway seven metres wide, the funds originally 
intended for the Sibiti-Jacob earth track were used for 
asphalting the 20 km section between Sibiti and Bihoua. 
Paragraph 15.20 
The Sibiti-Bihoua-Loudima link already existed in the 
form of an earth road, with the attendant constraints of all 
earth roads in a damp iropical region. It has therefore 
always been open to traffic provided the necessary mainte­
nance was carried out. 
The costs were those offered in the tenders. They were 
pushed up by a number of factors, one of the most impor­
tant being the length of time which passed, itself a result of 
the Congolese Government's change of mind. In the last 
analysis the only final choice possible was to build the 
road at the tender price or not at all. The Congolese 
Government chose to build it. 
Paragraph 15.21 
It is true that difficulties emerged during the studies on the 
Sibiti-Jacob road. 
The Court has concluded that Study C, the one which was 
undertaken after the Congolese Government had decided 
to abandon the Sibiti-Jacob road, greatly underestimated 
the volume of certain works. If such an assessment were to 
be meaningful, the works carried out would have had to be 
exactly as specified in the study and there would have had 
to be differences between the estimate and the actual 
quantities involved. However, the authorities amended the 
characteristics of the highway on their own initiative and 
the road followed a different course from that chosen by 
the consultants. 
Paragraph 15.22 
It is true that a certain amount of confusion surrounded 
publication of the invitation to tender. The Commission 
had followed the usual procedure but there was some mis­
understanding between the consultants who prepared the 
tendering documents and the national authorities as 
regards the dispatch of the copies of the dossier for sale to 
potential tenderers. 
Paragraph 15.23 
The Commission cannot reject all the lowest bids on the 
grounds of lack of experience abroad, otherwise, taken to 
its logical conclusion, this would mean that participation 
in EDF-financed work would be virtually beyond the reach 
of European firms with only European experience, which 
is contrary to the spirit of the Lome Convention. 
Nevertheless, all possible measures are taken to ensure 
that firms offer sufficient financial and technical guaran­
tees. This was the case for the successful bidder, who brought in a considerable amount of new equipment, well 
beyond the requirements of the job. 
On the other hand, it would seem that the site manager of 
the firm did not have the necessary experience in roads. It 
was for the authorities, under the terms of the contract, to 
request his replacement. 
Paragraph 15.24 
The Congolese authorities had finally told the Commission 
that the contractor cpuld have a free choice of laboratory. 
It was then obvious that the contractor's choice of labora­
tory for his own tests was the contractor's sole responsibil­
ity. The Commission had no reason to concern itself in this 
choice which was for the contractor to make. In addition, it 
was a question of supplying the contractor with objective 
analyses which the laboratory, receiving technical assistance 
from a Member State, was in theory perfectly capable of 
doing. 
Paragraph 15.26 
The Court of Auditor's comments come from various exist­
ing technical reports and are correct. 
Paragraphs 15.28 to 15.31 
The conditions for the project appeared extremely favoura­
ble to the Commission and the delegation on the spot; this 
made the delegation staff in particular over-optimistic 
about how the work would progress. 
The firm had a good reputation in Italy and had brought 
considerable new equipment to the site. 
The national public works laboratory in Brazzaville was 
run by staff provided under technical assistance arrange­
ments by one of the Member States. 
On top of all these confidence-inspiring factors, the rainy 
season during which the road works were carried out was 
unusually dry. Consequently, visitors to the site simply 
observed that the work was being ca'rried out correctly and 
failed to see what was really going wrong. On the other 
hand, the use of poor-quality materials should not have 
gone unnoticed in the geotechnical checks. 
In this respect, the technical role of a delegation is differ­
ent from that of monitoring or supervising the works. In 
view of the limited resources at his disposal, the length of 
his visits on site, and the exceptional weather at the time, 
the delegation adviser failed to spot certain shortcomings in 
the work. The one criticism that can be levelled at him is 
that he may have lacked a suspicious instinct. 
31. 12. 83 Official Journal of the European Communities 237 
Paragraph 15.32 
The first information received from the delegation in July 
1979 concering the bad state of three to four km of road 
did not give a final picture of the full extent of the damage. 
When a road begins to be damaged like this, a much longer 
period of examination is required, including at least one 
rainy season, together with a series of analyses and tests, in 
order to determine the causes and possible remedies. 
The Commission has taken note of the provisions adopted 
at the time with a view to drawing up a programme of 
repairs jointly agreed by the authorities and the firm. 
There was a lack of information between the end of the 
1979/80 rainy season (May 1980) and September 1980, 
when the full scale of the damage became apparent. 
Paragraph 15.33 
The Commission never considered the mission of experts 
sent in July 1982 as an ex-post evaluation. Its task was to 
draw up a report intended to establish the physical causes 
for the deterioration of the road, on the basis of on-the-
spot investigations and analyses of samples. In the circum­
stances, it was a perfectly routine mission. 
The mission established that the site supervision and geo-
technical checks had not functioned properly. It also 
helped to highlight the firm's responsibilities. 
The Congolese authorities have taken note of the report's 
conclusions and have intimated that the firm in question 
will not be allowed to work in the Congo again. However, 
the Congolese authorities have not brought an action 
against the firm. 
Paragraph 15.34 
The first request for payment in respect of a price revision 
was submitted and accepted with payment dossier No 4 of 
June 1977. It is true that this dossier contains only an 
index reference leading to a payment of CFAF 9 021 812. 
On the other hand, in all dossiers from invoice No 7 
onwards the calculations of works price revisions contain 
detailed indices and tables which appear credible and con­
scientiously prepared, including the final invoice of the 
price revision which totals CFAF 74 346 376. tinct: the time taken to produce the studies is not necessar­
ily a negative point in itself; the increase in costs is unfor­
tunately a fact of life; the expert report of July 1982 was 
only concerned with the strictly technical aspects of the 
20 km of asphalted road; conclusions cannot be drawn 
from the project's mishaps since 1968, especially as the 
project as initially conceived and ultimately carried out is 
entirely different. This project is very interesting as an 
example of the many difficulties that have to be contended 
with in development projects, particularly in a country 
where, by definition, the Commission is not in control of 
implementation. The Court itself has made the point that 
this is not a typical example. 
Paragraphs 15.42 to 15.44 
The criticisms regarding the extreme slowness with which 
the project was carried out must be examined in the light 
of the following considerations. 
Although the title of the project may have suggested — 
wrongly — that it was emergency aid, it is obvious from 
the nature of the operation that it cannot be considered as 
falling under Article 137 of Lome II. The Court's criticisms 
are no doubt based on this initital misunderstanding. 
The following facts clearly show that the repairs to the port 
installations at Kigoma could not have been carried out as 
quickly as the Court claims. 
(i) After the financing decision, a specialist firm of con­
sultants had to be called in to draw up a list of require­
ments. Five months elapsed between the date of the 
financing decision (May 1981) and the presentation of 
the list of supplies to the Commission (October 1981), 
the time needed to negotiate the expert contract, find 
suppliers and issue invitations to tender. 
(ii)The Commission acted rapidly on the consultant's pro­
posals, and all the contracts were drawn up,'signed and 
notified in January 1982, i.e. three months later. 
(iii)The spare parts began to arrive in October 1982, 
despite the time required for their manufacture, trans­
port and delivery to Kigoma. Meanwhile the whole 
study of the reconstruction of the port of Kigoma was 
completed, and the invitation to tender was issued in 
March 1983. 
Paragraphs 15.36 to 15.39 
The Court's conclusions bring together a series of points 
which in the Commission's opinion should remain dis­' (iv) The installations in question were operational again in 
March 1983, i.e. 22 months after the financing deci- \ 
sion. The Commission feels that the programme could 
not have been completed earlier, given its complexity, 
the distance and the problems involved in this kind of 
undertaking. 
238 Official Journal of the European Communities 31. 12. 83 
Paragraph 15.45 
The Court of Auditors visited ITB in Berlin in March 1983. 
This is not a typical trade fair from the administrative 
point of view. In 1983 it involved separate agreements with 
contractors for different geographical areas. It also has an 
unusually large and varied participation. the regulations had not appeared before in these estimates. 
A study is therefore being carried out with the management 
agencies to clear up this point. 
(d) It is indeed difficult for the Commission to obtain all 
the statistics it requires from the management agencies. 
This has been pointed out several times and was stressed 
again at the last meeting of management agencies in Octo­
ber 1982. 
Paragraph 15.46 
The administrative procedures are cumbersome but on this 
occasion they were affected by the reorganization of DG 
VIII at the end of 1982. The invitation to countries to sub­
mit their list of fairs was issued later than usual and the 
additional need to ask for the advice on each participation 
from desk officers caused further delays. 
In the case of ITB Berlin 1983, the fair came too early in 
the year to be included in the global financing proposal. 
For overseas territories, a proposal to allocate appropria­
tions was made while ACP countries were funded from the 
balance of the 1982 programme. 
Proposals to allocate appropriations require the approval 
of the department responsible for regional funds, the dif­
ferent geographical offices, and the financial department. 
The need to use separate proposals for the overseas territo­
ries and non-associated countries did not facilitate matters 
but is imperative for appropriation management purposes. Paragraph 15.52 
Scholarships in Belgium are managed by the European 
Association for Cooperation (EAC), which does not 
receive a lump sum to cover its administrative costs but is 
reimbursed according to the real costs incurred. 
On the other hand, the other management agencies receive 
the various lump-sum amounts referred to by the Court. 
It should be added that the virtual monopoly enjoyed by 
these management agencies considerably reduces the pos­
sibility of negotiation. 
Paragraph 15.53 
The diversity of the rates can be explained by the fact that 
although the services required of the agencies may be 
identical, the services rendered are by no means so. Certain 
agencies conduct a careful search to find a place for a stu­
dent and continue to watch over him throughout his stu­
dies. 
Paragraph 15.47 
It is agreed that the present procedures are cumbersome 
and that the Commission must seek improvements. 
Paragraph 15.51 
(a) The frequency with which studies are continued 
beyond the stipulated period can be explained by the edu­
cational systems in various Member States, including Italy. 
There is no limit to the number of years that can be taken 
to complete a course of studies. In order to obtain a parti­
cular diploma, the student must complete a certain number 
of years in several subjects, but not necessarily simulta­
neously. This explains why a period of training can be 
extended by several years. 
(b) The Commission is careful to ensure that the monthly 
allowances paid to EDF scholarship holders are identical 
overall with national grants or bilateral aid. Consequently, 
it is possible that certain components may vary considera­
bly and appear to be higher, but comparisons must be 
made in overall terms. 
(c) When scholarships are granted, the Commission com­
mits itself financially on the basis of an estimate submitted 
by the management agency. Advantages not provided by Paragraph 15.54 
The existing agreements between the Commission and the 
management agencies do not make provision for any 
interest accruing to the agencies' bank accounts to be 
added to the periodical cash advances. The reasons are 
that such interest is offset by banking charges incurred by 
these agencies and that since some of the agencies have so 
far refused to open separate accounts, they are unable to 
calculate the amount of the interest correctly. 
The Commission's planned remedy is to revise the above-
mentioned agreements and include new arrangements for 
paying into and controlling the various Commission 
accounts. 
Paragraphs 15.55 to 15.57 
The Court's description of the system of financial manage­
ment of scholarships in the Commission appears to be 
. based on a number of misunderstandings. 
First of all it should be said that the management of EDF 
scholarship holders is entirely separate from the manage­
ment of scholarship holders financed by the Commission 
budget (Mashreq, Maghreb, Israel and non-associated 
developing countries) at all stages, from appropriations to 
cash operations and expenditure accounts. As regards the 
commitment of funds, the procedure followed in both 
cases involves three stages: the first stage is to block in the 
31. 12. 83 Official Journal of the European Communities 239 
accounts a global amount taken from the indicative pro­
gramme of each country for the EDF, or from the appro­
priate budget heading for scholarship holders approved by 
Commission decision. 
On the basis of these earmarked funds, the competent 
departments of the Directorate-General for Development 
draw up, at the beginning of each academic or financial 
year, a commitment proposal based on the estimates of 
expenditure for the relevant period, which is then 
approved by Financial Control. This commitment proposal 
is then entered into the EDF or Commission accounts as a 
final commitment (second stage). 
For each scholarship awarded by the directorate competent 
for the country concerned the department responsible 
makes an entry — but not in the accounts — for the 
amount estimated in ECU and specified in each telex 
notifying the award; this amount is deducted from the 
final commitment (third stage). 
The cash operation takes the form of advances either 
granted to the management agencies, or paid into a special 
account in a bank in an ACP country on the basis of esti­
mates of quarterly expenditure, with allowance being made 
for balances remaining. 
At the end of each academic year, or on expiry of a short 
scholarship, the management agency must justify the 
expenditure incurred for each scholarship holder and for 
each country. A summary statement is sent to the Commis­
sion, which then checks on the spot whether the expendi­
ture is in order. 
It should be added that with a view to greater transparency 
in its accounts, from 1983 onwards the Commission will be 
entering the third-stage operations in the accounts for the 
fifth EDF, rather than recording them separately as it has 
done in the past in order not to overburden to computer­
ized accounting system. 
It is true that a certain backlog — though not an unduly 
large one — has built up in the clearance of accounts, an 
operation requiring prior verification of supporting docu­
ments. 
The Commission departments concerned hope shortly to 
receive the additional staff needed to be able to cope with ' 
this workload which is already heavy and constantly grow­
ing. 
Paragraph 15.58 
Since the reorganization of the Directorate-General for 
Development in 1982, responsibility for the operational 
management of the training operations has been shared by 
the directorates competent for the various countries. Gen­
eral planning of the operations, however, is the responsi­
bility of the department preparing cooperation policy with 
regard to human resources. financial matters relating to this field of cooperation. The 
division of responsibilities based on the origin of the funds 
to be administered within this department is perfectly logi-
The Commission cannot accept the comments about the 
lack of coordination and delays in clearing statements of 
account caused by these organizational arrangements. 
While it may be true that at the outset certain management 
agencies experienced difficulties in correctly allocating 
expenditure in the light of the origin of the funds, the 
Commission has taken measures to put matters right and 
has issued directives. Reminders concerning these direc­
tives have been given at several meetings, most recently at 
one with the management agencies on 25 and 26 October 
1982. 
The Court's claim that the Commission still had a 10-year 
old debt with a management agency of 15 332 ECU is 
unfounded. A closer inspection of the Commission 
accounts reveals that the debt was set off against a sum of 
17 153 ECU owed to the Commission by this management 
agency, which approved the operation. 
Paragraph 15.59 
The accounting and clearance arrangements enable man­
agement agencies to compare their accounts with the state­
ments sent to them by the Commission. In most cases, 
there have been no disagreements and the Commission is 
not aware of any specific case of discrepancy or of expend­
iture which has not been cleared. The Commission is, of 
course, ready to explain any accounts not considered in 
order by the Court. 
Paragraph 15.60 
Up to and including the academic year 1979/80, support­
ing evidence of expenditure was systematically sent to the 
Commission which checked it. Since then, it was agreed 
with the management agencies that they could retain the 
supporting documents and that Commission staff would 
conduct on-the-spot checks. This new procedure was 
established to cope with the growing number of scholar­
ships under the multiannual training programmes and 
because certain management agencies are required to keep 
their supporting documents for several years. 
The frequency of on-the-spot checks depends on staff 
availability; since there are shortages, checks are usually 
carried'out by sample surveys, which as a rule yield ade­
quate results. 
Paragraph 15.63 
The normal planning for fair participation starts in Sep­
tember with a view to placing a financing proposal before 
the EDF (') Committee in December so that funds are 
available in January. 
The specialized department for authorization of payments 
and accounting in the Finance Directorate handles all (') European Development Fund. 
240 Official Journal of the European Communities 31. 12. 83 
Apart from the special circumstances of 1982, even this 
programming timetable is regarded by many participants 
as premature. Thus beneficiaires often do not finalize 
requests until December or January, sending in only an 
indicative list by the prescribed date. Often changes are 
requested in the course of a programme. 
(a) The only fair where the contracts were not completed 
before the opening day was ITB Berlin. For all other 
fairs in 1982 contracts were signed before the opening 
of the fair. 
(b) This also refers to ITB Berlin. The reason for the delay 
in fixing contracts was caused principally by the wish 
to benefit from the more positive experiences of pre­
vious fairs. 
In. particular the German authorities who were paying for 
the rental of space for ACP participants to GTZ (') made it 
a condition that the participants should be organized in an 
African village and a Pacific village on the lines of the 
highly successful Caribbean village. The coordination of 
these villages was the responsibility of GTZ. 
However, unlike the Caribbean village, neither the partici­
pating States nor the GTZ appointed a coordinating agent 
and the various individuals who had been involved in 
advising on the participation of African and Pacific States 
withdrew their coordinating services at the last minute. As 
a consequence, the Commission was obliged to ask the fair 
organizers a few weeks before the fair to provide stands at 
a standard cost. This they did and the cost did not exceed 
the approved budget. 
On the other hand, economies were made in the original 
provision for the Caribbean village as far as space rental 
was concerned precisely because the Commission con­
trolled the different elements of the bills. In fact, with the 
staff available the Commission exercises considerable con­
trol and on several occasions had refused payment for 
unjustified items. At the beginning of 1983, additional 
instructions were given to tighten even further the stan­
dards of control. 
More generally, it must be made clear that contracts are 
accorded after tender and the industry is highly competi­
tive. 
Paragraph 15.64 
(a) It is surprising that the Court on the one hand com­
plains that the Commission does not control sufficiently 
the bills submitted and at the same time criticizes the 
delays which occur precisely because the Commission does 
exercise control. 
A bill submitted by a supplier must be checked and where 
necessary errors have to be corrected or eliminated. 
(b) The 2 000 ECU is a contribution towards transport 
costs and the costs of bringing samples, etc. It is paid 
ex-post on the submission of a report. The Commission does not intend to pay transport costs 
only because it believes that countries wishing to partici­
pate in fairs are doing so in order to find a commercial 
return. A contribution from the participant to his own costs 
of reaching the fair seems a reasonable price to ask. If the 
expected returns are likely to be less than the price of an 
air-ticket the question has to be asked why the country is 
participating. The suggestion that the payment of 2 000 
ECU is automatic is not borne out by the facts. There is 
correspondence in the 1982 programme files showing that 
the Commission does not pay out automatically and with­
out justification. 
(c) The Commission has already asked for the reimburse­
ment of the costs incurred by two countries which did not 
participate in fairs funded on the regional programme for 
1983. It is in the process of investigating other similar cases 
to see if similar action should be taken. 
(d) An evaluation of trade promotion is being carried out 
by external consultants and should be available early in 
1984. 
The difficulty of evaluating individual actions is that the 
follow-up is not within the control of the Commission. For 
example, an exhibitor at a fair may make many interesting 
contacts but the commercial returns may be many months 
in materializing and will depend on good management 
after the fair as well as on good presentation at the fair. 
For other trade promotion activities it is often very difficult 
to identify which action in a series of actions has been the 
principal cause of a commercial breakthrough. However, 
the Commission has received sufficient concrete evidence 
of immediate business concluded during or after a trade 
promotion action to allow departments to make judgments 
on what kind of actions are most likely to be successful 
and to advise against other less promising ones. As an 
example of such evidence we know that the 1982 Paris 
Leather Fair provided at "least 5,77 million ECU of busi­
ness, the Milan Fair 5,2 million ECU, the ITB Berlin 
12 million ECU and the Barcelona Fair a large volume of 
business (quantified in tonnages). 
In conclusion, the remarks on trade promotion are con­
cerned principally with the organization of the participa­
tion in fairs. 
However, Table 15.2 shows that 53,8% of trade promotion 
funds in the fifth EDF are committed for 'general' activi­
ties. The report, by highlighting fairs as the only specific 
trade promotion activity conceals the considerable pro­
gress made between the fourth and fifth EDF in diminish­
ing the importance of this activity and perpetuates the 
belief that fairs are what trade promotion is about. 
Paragraphs 15.68 to 15.70 
(') Gesellschaft fiir technische Zusammenarbeit. Since the Centre for Industrial Development (CID) is a 
joint agency coming under the ACP/EEC Committee for 
31. 12. 83 Official Journal of the European Communities 241 
Industrial Cooperation, the Commission has no power of 
control of its own. If, however, in view of the criticisms, 
which it has made regarding the financial management in 
particular, the Court were to request that some financial 
control be introduced, it would be up to the Member States 
to take action within the Industrial Cooperation Com­
mittee, which is the supervisory body, to demand that the 
CID be subjected to proper financial control. the Financial Internal Agreement. An extension of the 
Court's authority to operations financed with the Fund's 
resources and managed by the Bank would have been in 
direct contradiction with Article 29(4). 
This interpretation was moreover confirmed by the Coun­
cil's subordinate bodies in the reply to the opinion given 
by the Court of Auditors on the provisions of Article 67 of 
the EDF Financial Regulation. 
Paragraphs 15.72 to 15.75 
As far as the Commission is aware, the problems referred 
to by the Court arise from the following considerations: 
Article 29(2) of the Financial Internal Agreement, the 
instrument setting up the fifth EDF which was signed on 
29 November 1979 by the representatives of the Govern­
ments of the Member States and ratified by the national 
Parliaments at the same time as the second ACP-EEC 
Convention, provides that 'Without prejudice to para­
graph 4, the Court of Auditors established by Article 206 of 
the Treaty shall also exercise its powers in respect of the 
Fund's operations. The conditions under which the Court 
exercises its powers shall be laid down in the Financial 
Regulation referred to in Article 28'. 
Article 29(4) states that 'The operations financed from the 
resources of the Fund and managed by the Bank shall be 
subject to the control and discharge procedures laid down 
by the Statute of the Bank for all its operations. Each year 
the Bank shall send the Commission and the Council a 
report on the execution of operations financed from the 
resources of the Fund and managed by the Bank'. 
It can clearly be seen that according to Article 29(2) and 
(4) of the Financial Internal Agreement of 1979 establish­
ing the fifth EDF, the Member States intended that control 
and discharge powers in respect of Fund operations should 
be exercised by the Court of Auditors for operations man­
aged by the Commission and by the Bank's statutory bod-, 
ies for operations financed from Fund resources and man­
aged by the Bank. 
These operations, which are under the supervision of the 
Audit Committee set up pursuant to Article 14. of the 
Bank's Statute, are specified in Article 14 of the Financial 
Internal Agreement, which refers, in different words but 
quite unambiguously, to operations carried out with the 
Fund's resources, for which the Bank undertakes the 
'financial execution'; these are risk capital operations 
(Article 14(2)) and operations carried out with the Bank's 
resources, combined with interest rate subsidies from the 
Fund's resources (Article 14(3)). Article 14(1) distinguishes 
these operations from those carried out with the Fund's 
resources and for which the Commission undertakes the 
'financial execution' on behalf of the Community. 
Pursuant to Article 28 of the Financial Internal Agreement, 
the aim of the EDF Financial Regulation adopted by the 
Council is to determine the provisions for implementing 
this Agreement. In stipulating that the Court's audit 'shall 
be concerned solely with operations and projects financed 
from EDF resources managed by the Commission', 
Article 67(1) simply gives effect to Article 29(2) and (4) of With the exception of operations financed from the Bank's 
own resources, relations between the Bank and the Com­
mission are those of agent and principal. The Bank is 
bound to the Community by all the obligations of an 
agent, notably that of rendering accounts to the principal 
as specified in the mandate. 
The fact that the Court of Auditors enjoys powers of con­
trol over the Commission does not authorize it to audit 
projects carried out totally or partially with EDF resources 
managed by the Bank. If the Court wanted to undertake 
some additional form of control to that which the Commis­
sion, in its capacity of principal, can exercise over the 
Bank's operations carried out with EDF resources, it could 
only do so on the basis of documents which the Bank has 
to address to the Commission and to the Member States; 
requests for any additional information would have to be 
made to the Commission, which would then transmit them 
to the Bank. 
The Commission has accordingly requested that for the 
end-1981 and end-1982 documents the Bank should: 
— include the opinions given by the Article 22 Committee 
with the report addressed to the Commission and to 
the Council (under Article 31 of the 1979 Financial 
Internal Agreement); 
— include the condensed balance sheets of the borrowers 
or final recipients of special loans with the reports for 
each such loan sent to the Commission as required by 
the Community mandate, the Commission being entit­
led at all times to obtain from the Bank all available 
accounting documents. 
This information will be a major advance in providing a 
clearer picture of the projects managed by the EIB. With a 
view to greater transparency, the Commission intends to 
ask the Bank to provide certain additional information in 
its reports. 
It should be noted Article 25 of the 1979 Financial Internal 
Agreement requires the Bank to help draw up a report on 
the use made of Community aid granted under Lome II. 
This report, transmitted by the Commission to the Council, 
contains a certain amount of information on the Bank's 
practices as regards invitations to tender, the difficulties 
encountered in carrying out its projects, the methods for 
supervising the projects and administering the loans and 
problems involved in recovering certain loan repayments 
at due dates. 
Because of the particular characteristics of eligible projects 
in sectors for which the Bank has been made principally 
responsible under Lome II, the Commission, the Member 
242 Official Journal of the European Communities 31. 12. 83 
States and the ACP States have accepted that these opera­
tions cannot be programmed in the same way as some of 
the financial aid administered by the Commission. 
The geographical distribution among the ACP States of aid 
provided by the EIB either from its own resources or from 
the funds which it administers as an agent is determined by 
sectoral criteria and by the need to dovetail with Commis­
sion measures. The fact that projects exist only in certain 
countries and the varying debt capacity of those countries 
also influence the distribution. 
When the Commission, during programming work at the 
beginning of Lome II, produced indicative quotas for indi­
vidual countries covering a range to be specified during the 
lifetime of the Convention, it was certainly not seeking to 
compensate for the unequal amounts of risk capital aid 
received by ACP countries from the Bank under Lome I. 
The final ^mount of this quota will be determined accord­
ing to a number of criteria, including the amount of non­
programmable aid which the country will receive. This 
non-programmable aid includes aid administered by the 
Bank. 
Paragraph 15.78 
In connection with the specific and exceptional case 
reported by the delegate in Mauritius, the Commission has 
checked that each delegate receives. 
— a copy of the Bank's confidential report to the 
Article 22 Committee, direct from the Bank, as soon as 
the Board of Directors has decided on a project; 
— the text of the press release, by telex, as soon as the 
financing agreement has been signed: 
It is difficult to draw overall conclusions on the degree of 
coordination or the kind of cooperation between the Com­
mission and the Bank on the basis of one minor and local­
ized example. 
Paragraph 15.79 
The Bank has its own procedures adapted to its operating 
rules, which are those of a banking institution. It applies 
them to operations for which it has received decision-mak­
ing, management and supervisory powers (see point 1 
above). These procedures obviously differ in a number of 
respects from those applied by the Commission, particu­
larly as regards the EDF Financial Regulation, an impor­
tant number of whose provisions specifically apply only to 
projects financed by EDF funds administered by the Com­
mission. 
The Member States and the Commission are well aware of 
EIB practices as regards invitations to tender. The Bank has certain rules governing the disbursement of 
its loans which demonstrate its constant concern to moni­
tor, through its payments, the progress of the projects it is 
financing. The Commission knows of no cases where, these 
procedures might have created an unjustifiable delay in the 
progress of the project. 
. Paragraph 15.80 
Beginning in 1983 the procedures applicable to grants have 
been extended to the procedure for disbursing special 
expenses. 
Paragraphs 15.81 to 15.86 
The Commission, the Council and the Bank have never 
considered the system applied for the payment and calcu­
lation of the value of interest subsidies in the context of 
Lome II as indirect remuneration for services rendered by 
the Bank in its capacity as authorized agent for specialized 
projects. 
The calculation, payment and final settlement procedures 
in respect of interest subsidies are determined, pursuant to 
Article 104 of the Lom6 II Convention, in Article 53 of the 
Financial Regulation applicable to the fifth EDF adopted 
by the Council on 17 March 1981 and supplemented, as 
regards the fixing of the 'current value rate', by the 
exchange of letters of 27 November and 18 December 1980 
between the President of the Council and the President of 
the Bank, at the end of the work within the Council's 
subordinate bodies on this matter. 
The Commission can only confirm that the Bank has 
always strictly applied and observed the letter and spirit of 
the relevant provisions. It would also point out that when 
the system currently in force was adopted, account was 
taken of the limited lifetime of the Convention. 
The final results of the application of the system combin­
ing advance payments of interest subsidies and a final set­
tlement cannot be extrapolated from one particular case; 
they can only be determined once all the loans under a 
Convention have been reimbursed in full, with due allow­
ance being made for any exchange rate variations between 
the currencies in which the subsidies were paid and those 
in which loans were paid to recipients and in which they 
have to be reimbursed. 
Paragraphs 15.83 and 15.84 
The remuneration which the Bank receives under the 
Lome II Convention for the management and financial 
execution of risk capital assistance and the collection of 
capital and interest on EDF special loans was laid down in 
the exchange of letters referred to previously between the 
President of the Council and the President of the Bank, 
after a detailed examination of cost and revenue estimates 
submitted by the Bank to the Commission and the Coun­
cil's subordinate bodies. 
31. 12. 83 Official Journal of the European Commuriities 243 
The annual commission of 0,40% on EDF special loans is 
applicable to the amount of loans paid out (and not yet 
reimbursed) and these are usually disbursed over several 
years. 
In view of the deterioration in the economies of most ACP 
States receiving these loans and the impact this has on 
their foreign exchange holdings, the recovery of loan 
repayments at due date is becoming more and more diffi­
cult and the Bank is more and more frequently and at con­
siderable expense having to take steps to ensure recovery. 
In the case of risk capital operations the Bank as a rule is 
entirely responsible for identification, on-the-spot 
appraisal and financial arrangements. This type of aid is 
provided for projects presenting particular difficulties or 
located in countries with a very low debt capacity or with­
out the human resources to prepare the projects; such pro­
jects accordingly require even more careful appraisal. 
Lastly, the file-opening fee for risk capital assistance is 
charged only for project files which result in a financing 
contract being signed and constitutes a flat-rate payment 
for the work carried out by the Bank for all the other pro­
ject files which are abandoned for technical, economic or 
financial reasons. 
The remuneration received by the Bank for the manage­
ment of risk capital is thus adapted to the quality and 
amount of work involved in this kind of operation. 
The costs which the Bank incurred or is still incurring 
during the first years of its operations as authorized agent 
in the ACP States or under the Mediterranean budget pro­
tocols are for a long time so distinctly higher than the 
revenue yielded by management fees that overall the Bank 
has not yet managed to balance costs and revenue at cur­
rent values in respect of its operations as authorized agent 
for the Community in projects outside the Community. 
Paragraph 15.85 
Up to 1978, these accounts were regarded as current 
accounts, on which the Commission or the Member States could draw at any time. It was the Bank which proposed 
that interest might be paid on these assets once the 
accounts were denominated in ECU and came to be rather 
like deposit accounts at notice. 
The rate of interest offered reflects the short notice at 
which funds can be called up by the Commission follow­
ing a decision by the Member States, as happened in parti­
cular in 1982. However, provision is made for the rate to be. 
reviewed and discussions may be initiated. 
It should be noted that the Bank applies the same 5% rate 
of interest to accounts which are in debit (Lome II). 
Paragraph 15.86 
According to the Commission's information, the Bank 
received 3,88 million ECU in 1982 in file management and 
opening fees for the AASM and ACP Conventions and for 
the financial protocols financed by the Community budget 
for the Mediterranean countries. The Bank's total expendi­
ture and administrative costs for the same year were 
slightly in excess of 39 million ECU. 
The Commission would confirm the reply it has already 
made (see under paragraph 15.81, first subparagraph), 
namely that only the commissions for the management of 
projects financed by special loans and risk capital and 
file-opening fees, i.e. the 3,88 million ECU referred to 
above, can be regarded as remuneration for services ren­
dered by the Bank in its capacity as agent for special oper­
ations. 
All this would indicate, subject to further examination or 
revision, that the charges made by the Bank for the man­
agement of special projects under the EDF or the Com­
munity budget for the Mediterranean countries are not, in 
the present circumstances, disproportionate to the respon­
sibilities involved and the management costs incurred.