EN Official Journal of the European Union L 330/1

DECISION OF THE EUROPEAN PARLIAMENT

of 21 April 2004

concerning discharge to the Director of the European Agency for Reconstruction for the financial year 2002

(2004/707/EC)

THE EUROPEAN PARLIAMENT,

having regard to the Court of Auditors' report on the financial statements of the European Agency for Reconstruction for the financial year 2002, together with the Agency's replies (1) (C5-0632/2003),

having regard to the Council's recommendation of 9 March 2004 (C5-0149/2004),

having regard to the EC Treaty, and in particular Article 276 thereof,

having regard to Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities (2) and in particular Article 185 thereof, and to Council Regulation (EC) No 1646/2003 of 18 June 2003 amending Regulation (EC) No 2667/2000 on the European Agency for Reconstruction (3), and in particular Article 8 thereof,

having regard to Commission Regulation (EC, Euratom) No 2343/2002 of 19 November 2002 on the framework Financial Regulation for the bodies referred to in Article 185 of Council Regulation (EC, Euratom) No 1605/2002 on the Financial Regulation applicable to the general budget of the European Communities (4), and in particular Article 94 thereof,

having regard to Rule 93a of and Annex V to its Rules of Procedure,

having regard to the Report of the Committee on Budgetary Control and the opinion of the Committee on Foreign Affairs, Human Rights, Common Security and Defence Policy (A5-0212/2004),

1. Gives discharge to the Director of the European Agency for Reconstruction, in respect of the implementation of its budget for the financial year 2002;

2. Records its comments in the accompanying resolution;

3. Instructs its President to forward this Decision and the accompanying Resolution to the Director of the European Agency for Reconstruction, the Council, the Commission and the Court of Auditors and to have them published in the Official Journal of the European Union (L series).

The Secretary-General Julian PRIESTLEY The President Pat COX

(1) OJ C 319, 30.12.2003, p. 1.

(2) OJ L 248, 16.9.2002, p. 1.

(3) OJ L 245, 29.9.2003, p. 16.

(4) OJ L 357, 31.12.2002, p. 72.

EN Official Journal of the European Union L 330/2

RESOLUTION

of the European Parliament containing the comments accompanying the decision on the discharge to the Director of the European Agency for Reconstruction in respect of the implementation of its budget for the financial year 2002

THE EUROPEAN PARLIAMENT,

having regard to the Court of Auditors' report on the financial statements of the European Agency for Reconstruction for the financial year 2002, together with the Agency's replies (1) (C5-0632/2003),

having regard to the Council's recommendation of 9 March 2004 (C5-0149/2004),

having regard to the EC Treaty, and in particular Article 276 thereof,

having regard to Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities (2) and in particular Article 185 thereof, and to Council Regulation (EC) No 1646/2003 of 18 June 2003 amending Regulation (EC) No 2667/2000 on the European Agency for Reconstruction, and in particular Article 8 thereof (3),

having regard to Commission Regulation (EC, Euratom) No 2343/2002 of 19 November 2002 on the framework Financial Regulation for the bodies referred to in Article 185 of Council Regulation (EC, Euratom) No 1605/2002 on the Financial Regulation applicable to the general budget of the European Communities (4), and in particular Article 94 thereof,

having regard to Rule 93 a of and Annex V to its Rules of Procedure,

having regard to the Report of the Committee on Budgetary Control and the opinion of the Committee on Foreign Affairs, Human Rights, Common Security and Defence Policy (A5-0212/2004),

A. whereas the European Court of Auditors (ECA) stated in its abovementioned report that it had obtained reasonable assurances that the accounts for the financial year ended 31 December 2002 are reliable and that the underlying transactions, taken as a whole, are legal and regular,

B. whereas on 8 April 2003 Parliament gave discharge (5) to the Director of the Agency in respect of the implementation of its budget for the 2001 financial year, on the basis of the report of the ECA, and in so doing Parliament in its resolution, inter alia: — insisted that the Agency, in line with previous observations of the ECA on financial statements and accounts, take all necessary steps to avoid the risk of errors occurring as a result of using spreadsheets for the purpose of keeping its accounts, — called on the Commission to report back to Parliament on the results of an administrative investigation into possible liability for mismanagement, as well as on measures taken were any disciplinary measures to have been deemed appropriate, — invited the Agency, with the aim of securing the protection of the financial interests of the Community, to ensure the systematic monitoring of all projects in the energy sector financed by EU funds; to take all relevant measures, in cooperation with UNMIK, the Kosovo Power Corporation (KEK) and the external supervisory contractors, with a view to achieving the long-term sustainability of investment in the energy sector; and to establish an overall plan for monitoring projects financed and evaluating their consistency with EU policy in the region;

1. Notes the following figures for the accounts of the European Agency for Reconstruction for the financial years 2002 and 2001; Revenue and expenditure account for the financial years 2002 and 2001 (1000 euro) 2002 2001 Revenue Comission subsidies (6) 462 804 517 633 Financial revenue 5 978 2 915 Miscellaneous revenue 495 135 Couterpart funds 497 5 787 Earmarked revenue 500 0 Total revenue (a) 470 274 526 469 Expenditure Staff — Title I of the budget Payments 17 771 13 418 Appropriations carried over 206 337 Administration — Title II of the budget Payments 6 211 5 908 Appropriations carried over 2 037 1 217 Operating activities — Title III of the budget Payments 138 512 327 345 Appropriations carried over 293 106 176 863 Total expenditure (b) 475 844 525 088 Outturn for the financial year (a - b) (7) 12 430 1 328 Balance carried over from the previous financial year -73 127 -35 768 Payments on the Commission's behalf (6) -25 407 -70 050 2001 payment appropriations which lapse (Title III) 0 31 061 2001 appropriations carried over which lapse (Titles I and II) 135 254 Cancellations of 2001 appropriations carried over 5 463 0 Carry-overs of further 2001 appropriations -32 423 0 Exchange-rate differences 22 - 5 Balance for the financial year - 122 908 -73 127

Implementation of the budget

2. Notes the ECA recommendation that forecasts for administrative expenditure (Title II) should be given careful attention so as to ensure that carry-overs and appropriations which lapse do not account for too great a part of the total administrative budget; expects the Agency, in line with the principle of budget accuracy, to take the necessary steps to comply with that recommendation;

Financial statements

3. Welcomes the fact that the Agency gave a positive follow-up to previous ECA observations, making progress in strengthening its internal control system by the introduction of the SI2 accounting system;

4. Invites the Agency rapidly to give an equally positive follow-up to the ECA's and the Parliament's suggestion to introduce a reliable general accounting tool in all its centres and abandon the use of spreadsheets for its general accounts;

5. Expects the Agency to promptly respond to the ECA invitation to clarify the status of funds made available to specialised bodies for the financing of loan programmes in specific fields and to adopt appropriate solutions as regards the way in which these funds should be recorded in the Agency's financial statements;

6. Expresses its deep concern over the ECA's findings that a bank account had been opened in the Agency's name of whose existence the accounting officer had not been advised; notes the explanation provided by the Director of the Agency with regard to this matter; takes the view that in a complex decentralised environment, such as the one in which the Agency operates, matters relating to transactions with banks should be handled with the utmost care and transparency;

7. Notes the measures that the Agency has taken, stated in its replies to the questionnaire, to avoid such a situation occurring again; invites the Agency to improve coordination between its accounting officer and the delegated accountants in the operational centres; also invites the Agency and the Commission to improve coordination between the Agency's accounting officer and the Commission's accounting Directorate;

8. Invites the Commission's Internal Audit Service to look into this matter to identify potential systemic failures and make the necessary recommendations for remedying such problems;

Legality and regularity of the underlying transactions

9. Shares the concern expressed by the ECA in its report about the risk of a weakening of the Agency's internal control system which might come about through the proliferation of delegations issued by the Director for the implementation of the budget; stresses that cases such as the ones identified by the ECA, where commitments and payments were signed by employees not duly authorised to do so, are unacceptable as they are in breach of the financial rules; expects the Director to provide a full explanation of the circumstances in which this was allowed to happen and, further, to indicate the measures taken or initiated to prevent such incidents from occurring again;

10. Expects the Agency to fully comply with the procedures for implementing the budget laid down in both the new Financial Regulation and the Framework Financial Regulation for the Agencies; invites the Director to give assurances that delegations will be reduced to the strict minimum, which is indispensable for the smooth running of the Agency and the implementation of its budget in accordance with sound financial management;

11. Recalls that the European Parliament requested (8) the Commission to present, before June 2004, the evaluation report provided for in Article 14 of Regulation (EC) No 2667/2000 on the application of this regulation and a proposal on the status of the Agency;

Horizontal points on the Agencies and the Commission

Implementing the new Financial Regulation - Internal audit and control

12. Reiterates the position taken in its resolutions (9) accompanying the discharge given to the Agencies for 2001 as regards the implementation of the new Financial Regulation; invites the Commission and the Agencies to continue their cooperation, in particular in the areas of accounting, internal audit, management and control procedures, so as to ensure that a coherent harmonised framework for the functioning of the Agencies is established;

13. Recalls that it expressed concern in the discharge resolution for 2001 concerning the lack of controls on the agencies carried out by the internal audit service of the Commission (IAS); expresses grave concern that such controls do not seem to have been carried out this year; asks the Commission and the IAS to explain the reasons for this and to provide data about the number of staff available to the Internal Auditor to carry out controls in the agencies; expects the Commission to indicate how it can guarantee that sufficient and correct controls are carried out in the satellite bodies, in particular the IAS;

14. Stresses that it is essential that the Agencies be required to submit to the investigative powers of OLAF under the same conditions as the institutions (10); invites the ECA to provide information, in time for adoption of the discharge resolution, on whether the Community bodies which acceded to the Interinstitutional Agreement of 25 May 1999 (11) on internal investigations by OLAF did so in the same terms as those laid down in the Annex to this Agreement;

Financial Management

15. Notes that in some of the Agencies' replies to the questionnaire concerning the way in which the recurrent problem of substantial carry-overs might be addressed, mention is made of the possibilities offered by the new Financial Regulation, which provides for the use of ‘differentiated appropriations’; invites the Agencies to better explain their analysis and to indicate in particular which of their activities of a multi-annual nature might be financed by such appropriations;

16. Invites the Commission to present its position on such a solution and, should it consider that this solution is not feasible, to outline alternatives allowing for a substantial reduction in carry-overs;

Review of the agencies

17. Stresses that, prior to any decision to set up an agency, the Commission must make a rigorous analysis of the need for and added value of the functions that the agency will perform, with an eye to the principles of subsidiarity, budgetary rigour and procedural simplification;

18. Calls on the Commission to make a general study of activities currently carried out by various Community bodies that might overlap or serve the same goals, and to propose appropriate solutions, including the possible mergers of agencies;

19. Is concerned by the fact that there is an imbalance between administrative and operational expenditure in many Agencies, with administrative expenditure exceeding expenditure for operational purposes; calls therefore on the Commission and the Agencies to set targets and a timetable to reduce the level of administrative expenditure as a proportion of total expenditure; notes that many Agencies see opportunities in this regard, as listed in the questionnaire;

20. With reference to the replies to the questionnaire on interinstitutional cooperation, encourages the Agencies to improve cooperation between themselves in order to meet their needs in specific areas (for example, software development) and reduce costs, rather than adopt solutions which were initially designed for the purposes of the Commission but which often prove to be too cumbersome and complicated for the Agencies' specific needs;

21. Encourages the Agencies to organise and develop a close working relationship with the competent parliamentary committees; invites its standing committees with competence in the areas of activity of each of the Agencies to coordinate their action with the Committees of Budgets and Budgetary Control, with a view to ensuring efficient monitoring of the activity of the Agencies;

New sources of financing

22. Welcomes the responses and ideas that emerged from the questionnaire concerning the possibilities of other sources of financing; notes that many current sources and proposals concern the letting of buildings and facilities and the sale of publications and information; realises that for reasons of independence, among other things, not all agencies are to accept additional financial sources; stresses the economies of scale and financial benefits of the participation of non-EU countries in the activities of certain Agencies; calls on the Commission and the Agencies to come forward with constructive proposals with regard to further development of new sources of additional financing, which would increase the level of self-financing;

23. Welcomes the financial contributions of some Member States and regions to the agencies located on their area; considers it important for Council and the Commission to demand such contributions, especially when new agencies are set up;

Harmonised operating framework

24. Recalls its position (12) that the multitude of different forms in the existing agencies''structures was thought to be ‘neither transparent nor comprehensible, and, even bearing in mind the differences in tasks, not justified’; invites the Commission to conduct a review of all the existing agencies with a view to proposing, where appropriate, amendments to their basic instruments (13), so as to adapt them to the models that the future regulatory framework should encompass; instructs its competent committees to follow up this comprehensive review exercise, which should be conducted as soon as possible, and to take into consideration the horizontal issues mentioned in this discharge resolution;

25. Invites the Commission to present appropriate proposals, aimed at creating such a harmonised framework for the agencies, prior to or at least in parallel with the presentation of the legislative proposals for the new agencies; insists that an interinstitutional agreement spelling out common guidelines is a pre-condition for creating the harmonised framework;

Staff policy

26. Notes that, as a result of the new Financial Regulation, the organigrams of the agencies are established by the budgetary authority; stresses the importance of this change for the agency discharge procedure in the years to come as regards checking application of the Staff Regulation in matters of recruitment, promotion policy, vacancy rates and recruitment policy;

27. Notes that, in response to a questionnaire tabled in the course of the budgetary procedure for 2004, it was established that, on average, it took considerably fewer years to obtain promotion at several agencies than is the policy in the Commission, that vacancy rates were considerably higher compared to other institutions and that several of the requested new posts were not proposed at the lowest grade; considers that staff policy should form an important part of a review of the existing agencies;

28. Considers that the staff policy of the Agencies should comply with the Financial Regulation, the Staff Regulations and the best practice generally followed by the institutions; considers that the Commission has been requested to give, before the 2005 budgetary procedure, guidelines concerning staff policy, notably the rate of vacant posts, the rate of promotions, the level of recruitment and the standard career profile;

29. Recalls the principle that the Agencies should as far as possible employ staff on temporary contracts, in order to maintain flexibility and efficiency;

30. Is concerned about the serious anomalies detected in connection with the selection procedures of the European Monitoring Centre for Drugs and Drug Addiction, including: imprecise notice, incomplete selection committee minutes, criteria for assessing candidates not defined in advance (14); is very concerned that this might not be an isolated case but that Agencies in general might have difficulty in managing these rather complex procedures in a fair and transparent manner;

31. Is of the opinion that selection procedures organised by Agencies should meet the same standards as those organised by the European Personnel Selection Office (EPSO) and that they should not be perceived as a backdoor for easy entry into the European civil service;

32. Invites the Commission to make proposals in order to ensure that the Agencies benefit from appropriate support from the EPSO when organising selection procedures and that there is a mechanism in place to validate the outcome of such procedures externally before recruitment takes place.

(1) OJ C 319, 30.12.2003, p. 1.

(2) OJ L 248, 16.9.2002, p. 1.

(3) OJ L 245, 29.9.2003, p. 16.

(4) OJ L 357, 31.12.2002, p. 72.

(5) OJ L 148, 16.6.2003, p. 95.

(6) Includes payments made by the Commission for the Agency to make payments on its behalf.

(7) Calculated according to the principles laid down in Article 15 of Council Regulation (EC,Euratom) No 1150/2000 of 22 May 2000 (OJ L 130, 31.5.2000, p. 8).

(8) OJ C 272 E, 13.11.2003, p. 482.

(9) OJ L 148, 16.6.2003, p. 83 and OJ L 333, 20.12.2003, p. 53 (point 18).

(10) Texts adopted, 13.1.2004, P5_TA(2004) 0015.

(11) OJ L 136, 31.5.1999, p. 15.

(12) P5_TA(2004) 0015 (paragraphs 13 and 14).

(13) P5_TA(2004) 0015 (paragraph 24).

(14) See paragraph 13 of the Court of Auditors' specific report for 2002 (p. 64).