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DECISION OF THE EUROPEAN PARLIAMENT

of 19 January 1988

granting a discharge to the Commission in respect of the implementation of the budget of the European Communities for the 1985 financial year concerning Sections I - Parliament, II - Council, III - Commission, IV - Court of Justice, V - Court of Auditors

(88/79/ECSC/EEC/Euratom)

THE EUROPEAN PARLIAMENT,

- having regard to the Treaty establishing the ECSC, and in particular Article 78g thereof,

- having regard to the Treaty establishing the EEC, and in particular Article 206b thereof,

- having regard to the Treaty establishing the EAEC, and in particular Article 180b thereof,

- having regard to the budget for the 1985 financial year,

- having regard to the revenue and expenditure account and the balance sheet relating to the 1985 financial year (1),

- having regard to the report of the Court of Auditors concerning the 1985 financial year and the replies of the institutions (2),

- having regard to the recommendation of the Council (Doc. C 2-11/87),

- having regard to its resolution of 7 April 1987 (3) on the basis of the interim report of the Committee on Budgetary Control (OJ No C 125, 11. 5. 1987) and the working documents annexed to that report, together with the opinions of the Committee on Energy, Research and Technology, the Committee on External Economic Relations, the Committee on Social Affairs and Employment, the Committee on Transport, the Committee on the Environment, Public Health and Consumer Protection and the Committee on Women's Rights (Doc A 2-7/87),

1. Grants discharge to the Commission in the respect of the implementation of the 1985 budget on the basis of the following amounts:

(a) Revenue and expenditure for 1985

1.2 // 1. Revenue // (ECU) // Revenue for 1985 // 28 085 103 908,80 // Carryovers from 1984 which have lapsed // 127 331 029,93 // Appropriations from carryovers from 1984 // 1 000 000,00 // Total // 28 213 434 938,73 // . Expenditure // // Expenditure for 1985 // 28 222 659 290,62 // Exchange losses // 14 714 491,47 // Total // 28 237 373 782,09 // 3. Balance for the year (1 - 2) (Deficit) // 23 (3) OJ No C 125, 11. 5. 1987, p. 45.

(b) Balance sheet at 31 December 1985:

1,2.3,4 // // // ASSETS // LIABILITIES // // // // 1.2.3.4 // Fixed assets // 10 863 520 545 // Fixed capital // 11 039 402 947 // Inventories // 33 223 406 // Current liabilities // 4 317 155 454 // Current assets // 3 179 504 682 // Cash accounts // 54 700 333 // Cash accounts // 1 396 173 360 // Accrued expenses // 310 565 061 // Prepaid expenses // 249 401 802 // // // // // // // Total // 15 721 823 795 // Total // 15 721 823 795 // // // //

2. Records its comments in the resolution which forms part of this Decision;

3. Instructs its President to forward this Decision and the resolution embodying 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, 19 January 1988.

The President

PLUMB 938 843,36

(1) COM(86) 208 - 212 final (2) OJ No C 321, 15. 12. 1986.

RESOLUTION

on the action taken by the Commission in response to the resolution adopted by Parliament on 7 April 1987 deferring a discharge in respect of the implementation of the 1985 budget

THE EUROPEAN PARLIAMENT,

- having regard to its resolution of 7 April 1987 embodying its reasons for deferring the granting of discharge to the Commission in respect of the implementation of the budget for the financial year 1985 (1),

- having regard to the communication from the Commission of the European Communites on action taken in response to the comments made in that resolution (COM(87) 372 final),

- having regard to the report by the Commission to the Council and Parliament on the financing of the Community budget (COM(87) 101 final) and the related Commission documents (COM(87) 376 final, 400, 410 final, 420 final and 430 final),

- having regard to the report by the Commission on more effective action against fraud on the Community budget,

- having regard to its resolution of 18 November 1987 on the proposals from the Commission of the European Communities on the future financing of the Communities (Doc. A 2-200/87) (2),

- having regard to the report of the Committee on Budgetary Control (Doc A 2-259/87),

A. whereas, pursuant to the third paragraph of Article 85 of the Financial Regulation of 21 December 1977 the institutions of the Community shall take all appropriate steps to take action on the comments appearing in the Decisions giving discharge,

B. whereas Parliament deferred its discharge because of the Community's disastrous financial situation and because the soundness of the financial management and the completeness of the accounts were so much in doubt as to render impossible a favourable overall judgment,

C. whereas the chaotic and mismanaged state of the Community's finances, for which the Member States are also to blame, seriously threatens its ability to meet its responsibilities in full,

1. Notes that one reason for the grave financial crisis affecting the Community is that it has not managed to achieve financial independence from the Member States in respct of the shaping of its revenue and expenditure; is aware that the frequent failure to conduct financial management with the necessary rigour has been a factor; calls therefore for the assessments and recommendations of parliamentary budgetary control, financial control and the Court of Auditors to be given greater weight in future in the legislative and budgetary process;

2. Believes that another cause of the Community's financial crisis lies in a misguided and in part uncoordinated agricultural policy which was adopted without thought of its long-term financial consequences and has led to a squandering of the Community's already inadequate resources; takes the view that this persistent misspending can be brought to an end only by resolute political action to dispose of stocks, the economic wisdom of which needs to be properly brought home to the European taxpayer;

3. Acknowledges that the proposal made and the measures taken demonstrate the Commission's efforts to achieve rationalization of the Community's finances and sound financial management; acknowledges that accounting has improved but expects in future figures also to be given for the potential liabilities arising from guarantees; points out however that further substantial and sustained effort and detailed work will be required, by way of legislation, administrative orders and practical implementation, in order to bring about the required reforms;

4. Is prepared, despite the limited progress achieved so far, to grant the discharge as an indicatin of its support for the efforts made by the Commission in its dealings with the Council and its comprehensive proposals to improve the financing of the budget and its implementation; warns, however, against any departure from the blueprint adopted by Parliament for the reorganization of Community finances;

5. Calls on the Member States to give the Court of Auditors all the information it requires to monitor VAT revenue and to allow it to conduct the inspections this involves, and calls on the Commission to institute proceedings before the Court Justice of the European Communities against the Member States concerned, in the event of related breaches of Community law;

6. Welcomes the Commission's intention of setting up an administrative unit to strengthen the campaign against fraud; expects proposals to be submitted, however, for organizational and legislative measures to be undertaken jointly with the Member States for effective action against fraud;

7. Calls on the Commission to draw up provisions under which the valuation of agricultural stocks is adjusted according to verifiable rules at the beginning of each financial year;

8. Acknowledges that the introduction of budgetary 'stabilizers' may help control agricultural expenditure and may help bring agricultural markets closer to balance, but points out that sound financial management also requires clear goals, the best possible forecasting of the economic results of the use of funds and strict application of quantitiative and qualitative criteria;

9. Believes that the absence of figures and clear selection criteria for the macroeconomic goals to be achieved is a barrier to be efficient operation and effective control of the Funds; expects to see clear rules for coordination between the Funds, cooperation with the Member States and the evaluation of the activities of the Funds by means of a cost/benefit analysis laid down in the implementing Regulations;

10. Welcomes the Commission's efforts to ensure the annuality of the budget by aboslishing automatic carryovers, but calls for the budgetary authority to be given timely and comprehensive notification of approrpriations to be cancelled and the submission of proposals for appropriations to be carried forward to the following year;

11. Considers that the Commission has given an inadequate reply on the need for it to make a statement on the legality and practicability of the budget as adopted, and expects a clear statement when future budgetary procedures are concluded;

12. Considers that in future the Commission ought to submit its guideline proposals for financial and technical aid to developing countries and the Latin-American countries to the Council in sufficient time to allow Parliament to take the Council's decision into account in the budgetary procedure governing those appropriations; further recommends that in its budget appropriation for such aid, the Commission should respect the principle of budgetary classification, as specified in paragraph 10.21 of the Court of Auditors' report concerning the financial year 1985;

13. Recommends that the Commission make full use of its right of initiative under the Treaties to get Community business through the Council;

14. Considers it inappropriate that in practice a single Member of the Commission is responsible for all expenditure on agriculture and hence for 70 % of the Community budget; suggests that the Commission examine its internal organization with a view to involving the Member of the Commission responsible for the budget more closely in financial management in the agricultural sector.

(1) OJ No C 125, 11. 5. 1987, p. 45.

(2) See Minutes of that date, Part II, Item 2.