DECISION OF THE EUROPEAN PARLIAMENT of 18 November 1992 giving discharge to the Commission in respect of the implementation of the general budget of the European Communities for the 1990 financial year as regards Sections I - Parliament, II - Council, III - Commission, IV - Court of Justice and V - Court of Auditors

(93/65/Euratom, ECSC, EEC)THE EUROPEAN PARLIAMENT

- Having regard to the Treaty establishing the European Coal and Steel Community, and in particular Article 78g thereof,

- Having regard to the Treaty establishing the European Economic Community, and in particular Article 206b thereof,

- Having regard to the Treaty establishing the European Atomic Energy Community, and in particular Article 180b thereof,

- Having regard to the budget for the 1990 financial year,

- Having regard to the revenue and expenditure accounts and the balance sheet of the European Communities for the 1990 financial year (SEC (91) 0508 to 0512 and SEC (91) 0512/Annex),

- Having regard to the report of the Court of Auditors for the 1990 financial year and the replies of the institutions (1),

- Having regard to the Council recommendation of 16 March 1992 (C3-0104/92),

- Having regard to its resolution of 8 April 1992 on postponement of the discharge to be granted to the Commission in respect of the implementation of the general budget of the European Communities for the 1990 financial year (2),

- Having regard to the letter dated 16 October 1992 from Commissioner Schmidhuber to the President of the European Parliament (C3-0421/92),

- Having regard to the report of the Committee on Budgetary Control, and the opinions of the Committee on Energy, Research and Technology, the Committee on External Economic Relations, the Committee on Transport and Tourism, the Committee on the Environment, Public Health and Consumer Protection, the Committee on Culture, Youth, Education and the Media, the Committee on Development and Cooperation, the Committee on Women's Rights, the Committee on Social Affairs, Employment and the Working Environment, the Committee on Regional Policy, Regional Planning and Relations with Regional and Local Authorities, and the Committee on Agriculture, Fisheries and Rural Development (A3-0109/92),

1. Notes that the authorized revenue and expenditure for the 1990 financial year amounted to:

/* Tables: see OJ */

3. Notes that the Financial Controller will henceforward, as a rule, withhold approval from commitment proposals not presented in advance, but will grant approval in exceptional cases where he judges, in all independence, that the reasons for a posteriori presentation were unavoidable; insists that the Financial Controller report all such cases to the discharge authority;

4. Notes the solemn undertakings given by the Commission, especially by its President, to propose measures aimed at restoring the Community's financial autonomy and recalls that two courses of action need to be envisaged to this end:

- re-establishing VAT as a genuine own resource;

- replacing those resources which have the character of a national contribution by Community fiscal resources;

5. Considers that the adjustments proposed by the Commission to Article 6 of the Council Decision (EEC) No 88/377 of 24 June 1988 on Budgetary Discipline (3) are, in their essentials, a restatement of the obligations clearly placed on the Commission by that Article, namely timely management of markets rather than mere financial engineering; takes it, therefore, that the Commission now shares Parliament's interpretation of Article 6;

6. Notes that the Commission has finalized proposals aimed at intensifying the fight against fraud on the Community budget, and will deal with this subject again in the 1991 discharge procedure;

7. Records its comments in the resolution which forms an integral part of this decision;

8. Instructs its President to forward this decision and the resolution containing its comments to the Commission, the Council, the Court of Justice, the Court of Auditors and the European Investment Bank and to have them published in the Official Journal of the European Communities (L series).

Done at Strasbourg, 18 November 1992.

The Secretary-General

Enrico VINCI The President

Dr Egon KLEPSCH

(1) OJ No C 324, 13. 12. 1991, p. 1.

(2) OJ No C 125, 18. 5. 1992, p. 151.

(3) OJ No L 185, 15. 7. 1988, p. 29.

RESOLUTION containing the comments which form part of the decision giving discharge to the Commission in respect of the implementation of the general budget of the European Communities for the 1990 financial year

THE EUROPEAN PARLIAMENT,

- Having regard to Article 206b of the Treaty estab-lishing the European Economic Community,

- Having regard to Article 89 of the Financial Regulation of 13 March 1990 under which each Community institution is required to take all appropriate steps to take action on the comments appearing in the decisions giving discharge,

- Whereas under the same Article the institutions are also required to report, at Parliament's request, on the measures taken in the light of these comments and, in particular, on the instructions given to those of their departments which are responsible for the implementation of the budget,

- Having regard to the Council recommendation of 16 March 1992 (C3-0104/92),

- Having regard to the report of the Committee on Budgetary Control and the other documents mentioned in the discharge decision (A3-0109/92),

Institutional issues

1. Welcomes the decision of the Maastricht European Council to confer upon the Court of Auditors the status of institution of the European Community as a reflection of the growing importance attached to public control of Community finances;

2. Calls upon the Court of Auditors to consult Par-liament when drawing up its annual work programmes, in order that the two institutions may fulfil their complementary roles to optimal effect;

3. Insists that, in accordance with Article 87 (1) of the Financial Regulation, the Commission grant the Court of Auditors access to all data created and stored within its computerized accounting system (Sincom) and thereby enable the Court and Parliament better to assess the quality of financial control within the institution;

4. Calls upon the European Investment Bank, the Court of Auditors and the Commission, in consultation with the European Parliament, to conclude a comprehensive agreement granting the Court of Auditors power to audit all EIB activities involving expenditure or guarantees under the Community budget, to the extent necessary to enable the Parliament to exercise effectively its role as budgetary and discharge authority;

5. Instructs its Committee on Budgetary Control, in the context of negotiations on the future financing of the Community, to assess the working of Article 11 of the Interinstitutional Agreement concerning the transfer of allocations provided in the financial per-spective for multiannual programmes which cannot be used in full during a given year;

Financial control and management

6. Stipulates that 'No expenditure shall be committed or paid in excess of the appropriations available under the budgetary heading to which it is charged for the financial year during which the expenditure is effected. The availability of appropriations shall be assessed in relation to the appropriations for the financial year. If the Financial Controller establishes that appropriations are not available, he is obliged to withhold his approval. The superior authority may not overrule this withholding of approval.';

7. Notes with concern that the Commission's Financial Controller has, in certain circumstances and on a systematic basis, approved operations which breached the Financial Regulation;

8. Insists that henceforward the Commission respect the division of responsibilities laid down in the Financial Regulation whereby the Financial Controller is obliged to withhold approval from any operation which does not comply with the Financial Regulation, while the institution's superior authority overrules such refusals where it deems fit;

9. Recommends that, for all institutions, the decision appointing the Financial Controller follow the model adopted by the Court of Justice and by the European Parliament which defines the responsibilities of the Financial Controller and thereby obviates potential ambiguities as to his or her role;

10. Asks that the independence of the Financial Controller be reflected in future in a procedure whereby he or she is solely responsible for replying to observations by the Court of Auditors which relate specifically to matters of financial control;

11. Reiterates its insistence on the need to respect the provisions of the Financial Regulation relating to the clear separation of the roles of authorizing officer, Financial Controller and accounting officer;

12. Calls on the institutions, in the interests of sound financial management, to ensure adequate mobility of authorizing officers;

13. Insists that it is essential for Community institutions and services dealing with the preparation, implementation and control of the budget to recruit personnel who have the appropriate financial, auditing or accounting qualifications of an internationally recognized standard as well as relevant subsequent profes-sional experience;

14. Welcomes the fact that the recruitment of a financial controller for the European Schools is underway;

15. Notes the Commission's unsatisfactory system of follow-up to comments made by the supervisory bodies and calls on it urgently to remedy the failings highlighted by the Court of Auditors;

Own resources

16. Recalls the goal of Community financial autonomy laid down in 1970;

17. Notes, on the one hand, that over time the rules re-lating to own resources have rendered increasingly void the notion of Community financial autonomy; and, on the other hand, that the decisions taken in 1988, which were presented as a temporary solution pending a definitive system to be set up in 1993, reinforced this trend;

18. Calls upon the Commission to manage the systems of traditional, VAT and GNP own resources in such a way as to avoid their de facto renationalization, by insisting that their application conform to the spirit and to the letter of the rules, thereby ensuring that these resources are calculated and collected in a harmonized and uniform manner;

19. Asks the Commission in particular to act upon the recommendations formulated in this respect by the Court of Auditors in its annual report for 1990;

20. Calls upon the Commission to ensure coordination of Member States' practices with respect to application of Community rules governing systems of exemption from customs duty, in order to prevent the distortion of competition which would otherwise add to in-equalities in the collection of Community revenue;

21. Also calls upon the Commission, at the level of budgetary management, to apply the rules relating to entry of surpluses in a politically neutral manner;

22. Instructs its Committee on Budgetary Control to undertake a comprehensive assessment of Community financial autonomy on the basis notably of the various reports which the Commission is to submit on the functioning of the own resources system;

23. Calls on the Commission to adopt all appropriate measures to restore the Community's financial autonomy and to report to the European Parliament on this subject at the earliest opportunity;

EAGGF Guarantee Section

Budgetary discipline in the farm sector

24. Notes that the obligation of budgetary discipline, laid down as a key component of the 1988 reforms, has still not been fulfilled;

25. Recalls the strict obligation placed on the Commission by Article 6 of the Council Decision on Budgetary Discipline to act to contain expenditure under the Guarantee Section not only at the global level but first and foremost at chapter level, in other words to engage in timely management of markets rather than mere financial engineering;

26. Stresses, moreover, that the requirement of sound financial management laid down by Article 2 of the Financial Regulation which came into force in March 1990 renders the legality of decisions to increase expenditure in certain markets questionable;

27. Notes in particular the shortcomings of the agricultural early warning system as reflected in the growing discrepancies between forecast and real expenditure under the EAGGF Guarantee Section;

28. Calls upon the Commission to take measures urgently with a view to improving the quality both of its own and of Member States' forecasting in this sphere and, thereby, the functioning of the agricultural early warning system;

29. Insists that the Commission honour strictly its obligations pursuant to Article 6 of the Decision on Budgetary Discipline, which explicitly requires the Commission to use its management powers to remedy the situation where expenditure within an individual EAGGF Guarantee chapter is exceeding, or risks exceeding, its forecast profile; and stresses that the Article is not conditional upon the view which the Commission then takes of the likelihood of the agricultural guideline being exceeded;

30. Also calls upon the Commission to submit proposals aimed at making the agricultural and financial years coincide;

31. Instructs its Committee on Budgetary Control, in the context of discussions on future financing of the Community, to assess the functioning of the early warning system;

Management of the beef sector

32. Notes that the expenditure overruns in the beef sector in 1990 and 1991 represented respectively 30 and 84 % of initial appropriations;

33. Notes also that the expenditure overruns in the beef sector, which the Commission attributes mainly to conjunctural factors and especially to the BSE epidemic, were foreseeable well before the budgetary procedure for 1991 was completed;

34. Expresses its disappointment, therefore, that the Commission did not take the opportunity to inform the Budgetary Authority during the budgetary pro-cedure of the likely budgetary impact in 1991 of developments in the beef sector;

35. Notes with regret that information supplied to Par-liament on the management of the beef sector from 1990 onward was not always sufficiently complete and clear, particularly as regards the measures taken or proposed by the Commission in application of budgetary discipline;

36. Asks the Commission to ensure that reports under the early warning system provide information on management of sectors where expenditure is ex-ceeding the forecast profile or risks doing so in a manner which is succinct but at the same time complete;

37. Notes that the measures taken by the Commission in 1990 to remedy the situation in the beef sector had the effect of increasing expenditure; notes further that the main measure proposed by the Commission in 1991, namely abolition of the safety net intervention system, might have yielded substantial savings, but that it was modified by Parliament and Council in such a way as to generate only relatively minor savings;

38. Remains as yet unconvinced that the Commission thereafter made adequate use of the powers still at its disposal to remedy the situation, as required by Article 6 of the Council Decision on Budgetary Discipline;

39. Calls upon the Commission henceforward to evaluate ex post the actual budgetary impact and cost-effectiveness of the management measures taken in application of budgetary discipline;

40. Also calls upon the Commission to undertake an analysis in this or any other relevant sector of the cost-effectiveness of its strategies for combating outbreaks of livestock disease;

Structural Funds

41. Stresses that the effectiveness of the substantial increases in financing under the Structural Funds since 1988 and for the future depends on the application of the Community principle of additionality, without which such financing constitutes no more than a cumbersome and unnecessary way of effecting fiscal transfers;

42. Calls upon the Commission to pursue its current efforts to assess whether additionality is being applied;

43. Insists, moreover, that the Commission insert in the relevant texts a clear, complete, verifiable and binding definition of additionality;

44. Is of the opinion that ex ante and ex post evaluation on the basis of the concrete goals set should be an essential part of the new programme-based approach of the reform of the Structural Funds;

45. Asks the Commission to ensure that national controls on measures financed under the Structural Funds are conducted in accordance with harmonized procedures and that they are backed up by a minimum level of Community sample checks, to be specified in the regulatory texts;

46. Calls upon the Commission also to conduct without delay an a posteriori evaluation, in respect not only of Community support frameworks but also of individual operational programmes, on the basis of adequate and harmonized national data and of the macroeconomic indicators already established; this evaluation should also take into account the combined effect of the Structural Funds and of the other instruments, as well as of legislation and priorities relating to the environment, on the production structure and on employment;

Development aid

47. Insists that the volume of aid for the developing countries, whose usefulness is proven, should not be allowed to stagnate in favour of increased assistance to the countries of central and eastern Europe;

48. Recognizes the positive work accomplished by co-financing non-governmental organizations, which the Court of Auditors itself acknowledges;

49. Calls on the Commission to apply strictly the eligib-ility criteria and the management and accounting standards which condition receipt of Community development funds by these organizations;

50. Recommends that the Commission improve the system of joint financing by establishing a programme of projects within a multiannual framework for those NGOs which demonstrate efficiency in management and effectiveness in project work, at the same time as ensuring that the system remains open to new entry;

Aid to central and eastern Europe

51. Stresses the rapid growth in the volume of aid to the countries of central and eastern Europe, the highly volatile context in which it is administered and the continuing uncertainty concerning the effectiveness and appropriateness of some of the aid;

52. Notes that more than half the payment appropriations allocated to the Phare programme were unused at year-end not only in its first year but also in 1991, which suggests serious problems in the planning of aid;

53. Calls upon the Commission:

(a) to programme aid to the countries of eastern and central Europe on the basis of thorough analyses of needs and to take measures to guarantee that aid is used as intended (for instance by means of clauses prohibiting re-export of aid deliveries);

(b) to define more clearly the roles of the Commission and of its Delegations in monitoring implementation of aid to these countries;

(c) to set an adequate lower limit on the number of controls to be carried out by it or on its behalf;

54. Further calls upon the Commission to take measures to enhance the effectiveness of aid to central and eastern Europe and in particular:

(a) to coordinate the work of the expert group responsible for proposing ways of improving project management;

(b) to step up efforts to coordinate financial aid, either by integrating all aid tools within multiannual programmes, or by establishing a procedure whereby the Commission is required to deliver an opinion on all Community and Group of 24 aid measures;

(c) to present annual reports assessing the effectiveness of aid to these countries;

55. Insists that the Commission ensure that counterpart funds are set up by beneficiary States as required by Community legislation, that the rules governing those funds are clear and that it monitor the use made of them;

56. Instructs its Committee on Budgetary Control to continue to monitor closely the management of aid to central and eastern Europe;

57. Considers it essential that such aid should also be monitored by the parliaments of the beneficiary countries;

58. Notes that hitherto the Community's contingent liability in respect of guarantees for loans to central and eastern Europe has been covered only by a 'token entry' in the budget;

59. Insists, in the interests of sound financial management, that the Community's future medium-term financial plans and annual budgets provide for a reserve to cover this growing liability, and that the endowment of the reserve be calculated on the basis of a rigorous analysis of the risks involved;

Administrative expenditure

60. Notes that outside staff now account for some 30 % of the Commission's total workforce and 40 % of all policy-making staff, that they are heavily concentrated in certain policy areas of particular interest to Parliament and that in several sectors they outnumber statutory staff;

61. Notes that the Commission's management of outside staff, of the relevant appropriations and even of in-formation on such staff is seriously deficient;

62. Considers that the present situation puts at risk the status of the European civil service and with it the proper development, implementation and monitoring of Community policy, and that it may also in practice undermine the powers of the European Parliament;

63. Insists therefore that the Commission take immediate steps to restore balance in its personnel policy, based on the following key principles:

(a) that the independence, competence and per-manence of the European civil service must be maintained;

(b) that tasks involving the exercise of Community authority must be performed by statutory staff only;

64. Calls upon the Commission in this connection to propose a budgetary presentation for all appropriations relating to staff designed to reconcile the Commission's need for flexibility in management of human resources with the imperative need for ob-servance of the Financial Regulation, for uniform management of all administrative appropriations and for transparency in the allocation of resources;

65. Urges that annual ceilings on administrative expend-iture be set in the light of rigorous analyses and planning of the needs of all the institutions;

Fight against fraud

66. Insists once again that the resources allocated to the fight against fraud on the Community budget be targeted at the areas of greatest known abuse, as identified on the basis of systematic and continuous risk analysis;

67. Is not persuaded that the Commission at the highest levels has always given its fullest support to the fight against fraud, notably in the most sensitive cases, and insists that henceforward it do so;

68. Asks that the Anti-Fraud Coordination Unit's (UCLAF) powers be defined, and that this be done in such a way as to maximize its role, authority and autonomy;

69. Intends to exercise to the full the new powers of budgetary control and enquiry conferred on Par-liament by the Treaty on European Union and, in this context, expects in future to work more closely with UCLAF;

70. Calls upon the Commission in future to devote sections in its annual reports on action against fraud to the use of budgetary appropriations and to UCLAF's staffing arrangements; also asks that, in its published statistics on fraud and irregularity, the Commission show recovery rates not just in aggregate but by sector;

Flow of information to the discharge authority

71. Calls upon the Commission to reorganize its ac-counting information system without delay in such a way that non-final operations can be identified quickly and further monitored, and that more accurate information is provided on the implementation of Community policies;

72. Asks the Court of Auditors to submit a report evaluating the use and management of Commission del-egations in third countries;

73. Also calls on the Commission to submit an annual activity report showing the use made of appropriations under each heading in the operating part of the budget;

74. Calls upon the Commission to submit a report to Parliament by 15 February 1993 on the criteria which determine when and to what extent execution of Community policies is sub-contracted to outside bodies, and on the controls it conducts on the quality of implementation by such bodies.