31. 12. 82 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 180 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 25 November 1982, adopted its 
ANNUAL REPORT 
concerning the financial year 1981 
The report, 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 1982 in accordance with Article 84 of the Financial 
Regulation. 
Pierre LELONG 
(President) 
Norman PRICE 
Michael N. MURPHY 
Paul GAUDY 
Albert LEICHT 
Arne K. JOHANSEN 
Aldo ANGIoi 
Marcel MART 
Andre MIDDELHOEK • 
Georges VITALIS 

31. 12. 82 Official Journal of the European Communities 3 
CONTENTS 
Introduction 5 
Part I 
Chapter 1 — General comments 7 
Chapter 2 — Accounting matters 12 
Chapter 3 — Revenue 18 
Chapter 4 — The European Agricultural Guidance and Guarantee Fund, 
Guarantee Section 28 
Chapter 5 — The European Agricultural Guidance and Guarantee Fund, 
Guidance Section 44 
Chapter 6 — The European Social Fund and other expenditure in the social 
sector 53 
Chapter 7 — The European Regional Development Fund 60 
Chapter 8 — Research, energy, industry, etc 70 
Chapter 9 — Cooperation with developing countries and non-member States 78 
Chapter 10 — Staff expenditure 91 
Chapter 11 — Operational expenditure 99 
Chapter 12 — External bodies 106 
Chapter 13 — Loans, borrowings and interest rate subsidies 109 
Chapter 14 — Measures to limit the United Kingdom net contributions to the 
Community budget 114 
Part II — The European Development Funds (EDF) 117 
4 Official Journal of the European Communities 31. 12. 82 
ANNEXES 
Annex I — Allocation of responsibilities among Members of the Court of 
Auditors at 30 November 1982 133 
Annex II — Reports and opinions adopted by the Court of Auditors during 
the five years to 30 November 1982 135 
Annex III — Financial information relating to the general budget of the 
European Communities and to the European Development 
Funds (1981) 143 
Annex IV — Replies of the European Parliament 175 
Annex V— Replies of the Council 178 
Annex VI — Replies of the Commission: 
Part I 
Chapter 1 — General comments 180 
Chapter 2 — Accounting matters 181 
Chapter 3 — Revenue 183 
Chapter 4 — The European Agricultural Guidance and Guarantee Fund, 
Guarantee Section 186 
Chapter 5 — The European Agricultural Guidance and Guarantee Fund, 
Guidance Section 189 
Chapter 6 — The European Social Fund and other expenditure in the 
social sector 191 
Chapter 7 — The European Regional Development Fund 194 
Chapter 8 — Research, energy, industry, etc 196 . 
Chapter 9 — Cooperation with developing countries and non-member 
States 198 
Chapter 10 — Staff expenditure 202 
Chapter 11 — Operational expenditure N 203 
Chapter 12 — External bodies 204 
Chapter 13 — Loans, borrowings and interest rate subsidies 205 
Chapter 14 — Measures to limit the United Kingdom net contributions to 
the Community budget 206 
Part II — The European Development Funds (EDF) 207 
Annex VII— Replies of the Court of Justice 216 
Annex VIII— Replies of the Economic and Social Committee 217 
31. 12. 82 Official Journal of the European Communities 5 
INTRODUCTION 
Annual report on the 1981 accounts 
1. This is the fifth 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 1981. 
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 account 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. The report is presented in two parts. Part I 
relates to the general budget of the Communities, 
including the budgets of the Parliament, the Coun­
cil, the Commission, the Court of Justice, the 
Economic and Social Committee, the Office for 
Official Publications and the administrative budget 
of the European Coal and Steel Community 
(ECSC). It also deals with loans and borrowing 
operations under the EEC and EAEC Treaties 
(Chapter 13). 
3. Part II concerns the five European Develop­
ment Funds. These Funds, which provide aid to 
developing countries, are managed by the Commis­
sion but do not form part of the general budget of 
the Communities. 
4. Chapter 1 deals with general matters arising 
from the Court's work. Annex I gives the allocation 
of responsibilities amongst the Members of the 
Court as at 30 November 1982 and Annex II is a list 
(') 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. of all reports and opinions issued by the Court from 
its inception to 30 November 1982. An analysis of 
financial information relating to the general budget 
of the Communities and to the European Develop­
ment Funds is presented in Annex III. 
5. The Court has issued separate reports to the rel­
evant discharge authorities on the 1981 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 1980 
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 12. 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. 
Presentation of Community accounts 
and annual report of Court of Auditors 
6. The accounts for the financial year 1981 were 
rendered by the Commission on 27 May 1982. In 
conformity with the Financial Regulation, the 
Court's comments were sent to the institutions on 
15 July 1982. All the comments contained in Parts I 
and II were sent to the Commission. Relevant 
extracts of Chapters 1,2, 10 and 11 of Part I were 
also sent to the Parliament, the Council, the Court 
of Justice and the Economic and Social Committee. 
7. The Financial Regulation provides for each 
institution to address its reply to the Court by 
31 October. Before the replies were sent, however, 
there were consultations between the institutions 
and the Court. In the introduction to its report on 
the 1980 accounts (6), the Court referred to certain 
difficulties which had arisen with the Commission 
over the implementation of the consultation proce-
(6) OJ No C 344, 31. 12. 1981, paragraph 9. 
6 Official Journal of the European Communities 31. 12. 82 
dure. The Court is glad to report that these difficul­
ties were resolved by bilateral discussions and the 
procedure has worked smoothly in relation to this 
report. 
8. In accordance with the agreed procedure, draft 
replies to the Court's comments on the financial 
year 1981 were sent to the Court on an informal 
basis and provided a sound basis for the consulta­
tions. These arrangements enabled changes to be 
made, where necessary, in both the Court's com­
ments and the replies,, in order to clarify the texts 
and thereby provide a more useful document for the 
reader. 
9. The period available for consultation effectively 
runs from mid-July to the end of October and this 
also provides the opportunity for the institutions to 
seek, where necessary, further information about the 
Court's observations. This should ensure that the 
institutions do not lack, as stated for example in the 
replies of the Commission on Chapter 6 (Annex VI, 
paragraph 6.16), any information which they may 
require in order to formulate their replies. 
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 25 November 
1982. The absence of remarks by the Court on the 
individual replies does not imply that it necessarily 
agrees with them. In accordance with Article 84 of 
the Financial Regulation the report, accompanied 
by the replies of the institutions which are given in 
Annexes IV to VIII, was sent to the institutions on 
30 November 1982. 
11. The Court would also like to place on record 
that the arrangements which are in operation for the 
annual report are to be applied, mutatis mutandis, to 
special reports produced by the Court in the exercise 
of its powers (!), to submit observations on specific 
questions. The present Financial Regulation does 
not deal with such matters and the Court and the 
Commission therefore decided to establish appro­
priate procedures by agreement. The same approach 
can naturally be extended to special reports relating 
to other institutions. 
12. The Court would emphasize that its aim is to 
present reports which provide a balanced and objec­
tive picture of the issues involved. This is more 
likely to be achieved if there is a full and confiden­
tial exchange of views with the audited body before the report is finalized and made available with the 
formal reply. 
13. It should also be mentioned that the differ­
ences which formerly existed between the Court and 
the Commission over the procedures relating to 
audit reports were reflected in the latter's propo­
sal (2) for amendments to the Financial Regulation. 
The agreement that has since been reached on these 
issues is consistent with the recommendations con­
tained in the Court's Opinion (3) on the Commis­
sion proposal. 
Membership and organization of the 
Court 
14. There have been no changes in membership 
since the fourth annual report was presented but 
there have been some changes in the allocation of 
responsibilities amongst the members (see Annex I 
for the position as at 30 November 1982). 
Court budget and staff 
15. The Court's expenditure in 1980, including car­
ryovers to 1981, amounted to some 10-9 million 
ECU, and in 1981, including carryovers to 1982, 
amounted to some 12 -8 million ECU. The main ele­
ment in these amounts is for salaries and allowances 
of members and staff, namely 8-8 million ECU in 
1980, 10-6 million ECU in 1981. 
16. The budgets for 1980 and 1981 provided for 
the following numbers of posts: 
1980 1981 
A category staff 96 100 
LA category staff 22 . 32 
B category staff 60 . 61 
C category staff 60 69 
D category staff 21 22 
Total , 259 284 
(') ECSC Treaty, Article 78 f (4), EEC Treaty, 
Article 206 a (4) and EAEC Treaty, Article 180 a (4). (2) COM(80)760 final. 
(3) OJ No C 232, 11.9. 198). 
31. 12. 82 Official Journal of the European Communities 7 
Part I 
CHAPTER 1 
General matters 
TABLE OF CONTENTS Paragraph reference 
Summary of principal comments 
Accounts for the year ended 31 December 1981 
Utilization of appropriations 
Year of account and balance sheet questions 
Irregularities in the agricultural sector 
Refusal of approval by Financial Controllers 
Delegation of tasks by the Commission to the European 
Investment Bank (EIB) 
Accounting regulations 1.0 
1.1 to 1.8 
1.2 and 1.3 
1.4 to 1.8 
1.9 
1.10 
1.11 to 1.14 
1.15 to 1.17 
SUMMARY OF PRINCIPAL COMMENTS 
1.0. The principal comments in this chapter are: 
(a) The lower level of differentiated payment appropriations 
carried over is due more to the introduction of acceler­
ated payments than to speedier progress, in the assisted 
projects. 1.3 
(b) The presentation in January 1982 of an amended revenue 
and expenditure account for 1980 had no basis in the 
Financial Regulation and the own resources in the 1981 
account are understated by 165 million ECU. 1.4 
(c) Questions as to the regularity of certain transactions con­
cern the amounts shown in the accounts which are sub­
mitted to the discharge authority. 1.6 
(d) Delays in the clearance of EAGGF accounts continue to 
give cause for concern. 1.8 
(e) The national administrations had not always provided 
information on irregularities in the EAGGF Guidance 
Section as required by the regulation. 1.9 
8 Official Journal of the European Communities 31. 12. 82 
(0 Refusals of approval by the Financial Controller involv­
ing sums totalling 166 million ECU were overruled by the 
Commission. 1.10 
(g) The delegation of tasks by the Commission to the EIB 
has restricted the information available for examination 
by the Court. 1.11 to 1.13 
(h) The Court urges that consideration of the draft new 
implementing measures and amendments to the 1977 
Financial Regulation be completed quickly. 1.16 and 1.17 
Accounts for the year ended 
31 December 1981 
1.1. The accounts of the general budget of the 
European Communities for the year ended 
31 December 1981 are contained in a five-volume 
document (CC)M(82)270 and 233-234) which was 
sent by the Commission to the Court of Auditors on 
27 May 1982. Volume V (COM(82)234) of the docu­
ment includes the consolidated revenue and 
expenditure account and balance sheet which are in 
the same form as those introduced for the financial 
year 1980. Volume V also provides certain other 
general summaries showing the outturn for each of 
the institutions, together with the principles applied 
in drawing up the accounts. Utilization of appropriations 
1.2. The total appropriations for payment author­
ized to be charged to the accounts in 1981 amounted 
to 18 434 million ECU made up as follows: / 
Original budget 19 327-6 
Amending budget No 1 -197-7 
Supplementary and amending 
budget No 2 — 695 -9 
18 434-0 
The utilization of appropriations by the institutions 
is shown in Table 1.1. 
Table 1.1 — 1981 appropriations for payment and their utilization 
(Mio ECU) 
Institution 1981 budget: 
final appropriations for 
payment Payments made 
in,1981 Carryovers 
to 1982 Charged to the consoli­
dated revenue and 
expenditure account 
(1) (2) (3) (4) (5) = (3) + (4) 
• Commission: 
Non-differentiated appropria­
tions 
Payment appropriations 
(differentiated) 15 564-7 
2 524-1 14 342-5 
2 084-2 709-6 
434-0 15 052-1 
2518-2 
Total Commission 18 088-8 16 426-7 1 143-6 17 570-3 • 
• Other institutions (non-dif-
ferentiated appropriations): 
Parliament 
Council (including the Econo­
mic and Social Committee) 
Court of Justice 
Court of Auditors 199-4 
113-1 
25-4 
14-8 155-6 
95-9 
21-8 
12-0 16-3 
10-9 
1-2 
0-8 171-9 
106-8 
23-0 
12-8 
Total 18 441.5(») 16 7120 1 172-8 17 884-8 
(') The difference between this total and the total of the final appropriations shown in para. 1.2 relates to payment by third parties for work 
carried out by the Joint Research Centre (4.8 million ECU) and to a transfer from 1980 to 1981 (2.7 million ECU). 
31. 12. 82 Official Journal of the European Communities 9 
1.3. The amount charged to the accounts for the 
year 1981 included, in the case of differentiated pay­
ment appropriations, 434 million ECU carried over 
to 1982, i.e. some 17% of such appropriations 
authorized for 1981. This compares with 600 million 
ECU (30%) carried over from 1980 to 1981 and 
1 000 million ECU (60%) from 1979 to 1980. The 
trend noted in paragraph 1.5 of the Court's report 
for the financial year 1980 (') has thus continued 
during 1981. In last year's report, the Court also 
commented that the reduction in the amount carried 
over at the end of 1980 was partly due to the intro­
duction of accelerated payments by the Commission 
towards the cost of assisted projects in the Member 
States (i.e. the Community share of the financing is 
being paid at an earlier stage in the life of the pro­
jects). This did not necessarily reflect, however, 
more rapid progress in the projects themselves. That 
last commenti appears to remain valid for the situa­
tion at the end of 1981. 1.5. The problem was caused initially by supple­
mentary and amending budget No 2 for 1981. This 
showed the balance for 1980 as having been retro­
spectively increased by the revenue received in Octo­
ber 1981. Consequently, the accounting treatment 
for the disputed sum was bound to be in conflict 
either with the budget presentation or the Financial 
Regulation (as stated in paragraph 1.4). The Court 
trusts that action will not again be taken during the 
preparation of the budget which will inevitably 
result in such a conflict. 
1.6. Various other 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 accordance with the Treaties (2). These 
cases are described in detail in this and subsequent 
chapters. The principal cases concerned and the 
amounts involved are as follows: 
Year of account and balance sheet questions 
1.4. Paragraph 3.6 of the Court's report for the 
financial year 1980 (!) and paragraphs 3.3 to 3.6 of 
this report describe the circumstances in which own 
resources of 165 million ECU, due in 1980, were 
1981. Article 5 of the Financial Regulation clearly 
required the sum in question to be brought to 
account on the date of receipt and, therefore, as 
revenue for 1981. Contrary to this provision, how­
ever, on 18 January 1982 the Commission produced 
an amended revenue and expenditure account for 
1980 in which the amount in question was shown as 
having been received in 1980. Furthermore, under 
Article 77 of the Financial Regulation the Commis­
sion is required to present the revenue and expendi­
ture account and balance sheet by 1 June; there is 
no provision in the regulation for the Commission 
to amend the account after it has been rendered to 
the authorities concerned. In the Court's opinion, 
therefore, the balance for 1980 was overstated by 
165 million ECU and the revenue shown in the 
accounts for the year 1981 was understated by a sim­
ilar sum. Amount (Mio ECU) 
Paragraph Paragraph 
Revenue Expenditure 
2.2 0-3 
2.4 0-5 
2.5 01 
1-8 0-2 
2.7 3-9 
2.11 27-8 
3.4 290 
3.22 12-5 
3.35 4-5 
4.14 135-2 
4.21 86-5 
4.22 181 
5.6 3-2 
1.7. In paragraph 1.10 of its report for the financial 
year 1980 (!), the Court drew attention to similar 
cases. The consequences for the discharge procedure 
for that year also arise for 1981 in relation to the 
cases mentioned above; it will be necessary for the 
discharge authorities to consider whether the 
amounts shown in the consolidated accounts and 
the balance for the year should be adjusted before 
(') OJ No C 344, 31. 12. 1981. (2) ECSC Treaty, Articles 78d, 78g; EAEC Treaty, Arti­
cles 179a, 180b; EEC Treaty, Articles 205a, 206b. 
10 Official Journal of the European Communities 31. 12. 82 
discharge is given. The Court would also point out 
that the present regulations contain no specific 
provisions for dealing with amounts relating to ir­
regular transactions which are included in the Com­
munity accounts (1). 
1.8. In its reports for the financial years 1979 (2) 
and 1980 (3), the Court referred to the delays in the 
clearance of accounts. Paragraphs 4.23 to 4.32 of 
this report refer to the clearance of the accounts for 
the European Agricultural Guidance and Guarantee 
Fund (EAGGF), Guarantee Section for 1974 and 
1975 and the financial consequences which are 
reflected in the 1981 revenue and expenditure 
account. The delays in the clearance of accounts 
continue to give cause for concern. 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 
1981 refusals of approval by Financial Controllers 
were overruled on six occasions by the Commission 
and once by the Economic and Social Committee. 
Paragraphs 3.4, 7.13 and 11.6 of this report explain 
the circumstances in three Commission cases 
involving amounts of 29 million ECU, 135-2 mil­
lion ECU and 0-6 million ECU respectively. 
Irregularities in the agricultural sector 
1.9. In previous reports the Court has referred to 
the operation of the regulations and procedures for 
the reporting and investigation of fraud and irregu­
larities involving expenditure out of the Guarantee 
Section of the EAGGF. The comments related in 
particular to the failure by some Member States to 
submit within the required time the information 
specified under Regulation No 283/72 (4) and diffi­
culties in the interpretation of the term 'irregulari­
ties'. Paragraphs 5.7 to 5.10 of this report describe 
similar problems in the case of the Guidance Sec­
tion. Other aspects arising out of the procedures in 
the Guarantee Section are dealt with in para­
graphs 4.33 to 4.36. 
Refusal of approval by Financial 
Controllers 
1.10. Under the provisions of the Financial Regu­
lation, proposals for the commitment of expenditure 
(') See also paragraph 4.6 of Part 1 of the Court's opinion 
on the Commission proposal to amend the Financial 
Regulation (OJ No C 232, 11.9. 1981). 
(2) OJ No C 342, 31. 12. 1980. 
(3) OJ No C 344, 31. 12. 1981. 
(4) OJ No L 36, 10.2. 1972. Delegation of tasks by the Commission 
to the European Investment Bank 
(EIB) 
1.11. Subsequent, chapters of this report (para­
graphs 9.31, 13.9 and 15.82) refer to arrangements 
between the Commission and the EIB under which 
the Bank carries out, on behalf of the Commission, 
certain tasks in the field of Community loans and 
interest subsidies. These arrangements have given 
rise to two related problems. 
1.12. Firstly, it appears to the Court that, in certain 
cases and contrary to the views of the Commission 
in its reply (Annex VI), the Commission has not 
received from the EIB (either at all or at the appro­
priate time) information which is needed for the 
exercise of its management functions. Secondly, as a 
result of this situation, such information is not avail­
able in Commission files for examination by the 
Court in connection with its audit of the activities in 
question. The adequacy of the information which is 
provided to the Commission by the EIB should 
therefore be reviewed. 
1.13. The Court has also noted that the bilateral 
agreements between the Commission and the EIB 
have provided for operations carried out by the 
Bank on behalf of the Commission to be audited 
under the Bank's arrangements. Such bilateral 
agreements cannot detract from the Court's rights and 
obligations under the Treaties with regard to the 
audit of Community funds. The agreements should 
31. 12. 82 Official Journal of the European Communities 11 
therefore make clear that they are entirely without 
prejudice to the audit provisions of the Treaties. 
1.14. The amounts involved total some 1 100 mil­
lion ECU made up as follows: 
(Mio ECU) 
Financial protocols with third coun­
tries (see paragraph 9.31) 410 
Community loans and interest subsi­
dies (see paragraph 13.12) 521 
EDF loans and interest subsidies (see 
paragraph 15.82) 202.6 
Accounting regulations 
1.15. In paragraphs 1.33 to 1.36 of its report for the 
financial year 1980 ('), the Court referred to the act­
ion being taken to bring the Financial Regulation of 
21 December 1977 (2) and implementing measures 
of 30 June 1975 (3) up to date. 
1.16. The Commission made a proposal in 1980 (4) 
for amendments to the 1977 Financial Regulation 
and the Court delivered its opinion on the proposal on 27 May 1981 (5). The proposal and the Court's 
opinion are currently under consideration in Parlia­
ment. The importance of the Financial Regulation 
to the management of the Communities' affairs and 
to the work of the Court was underlined in the opi­
nion and in the Court's report on the study of finan­
cial systems of the Communities (6). The Court 
urges all the institutions to give the highest priority 
to the finalization of this subject. 
1.17. A proposal for new implementing measures 
was transmitted by the Commission on 5 August 
1980 to all the institutions for comment. The Court 
submitted its opinion on the proposal on 6 February 
1981, but regrets that new measures had still not 
been adopted by 30 November 1982. Consequently, 
the 1975 measures are continuing to be used even 
though their legal status must be in question, as the 
1973. Regulation under which they were' made was 
repealed, with no saving provisions, in 1977. The 
Court therefore urges that the consideration of this, 
subject also be completed so that new implementing 
measures can be brought into operation quickly. 
Furthermore, the implementing measures should be 
reviewed in parallel with the Financial Regulation 
so that compatible and consistent documents can be 
introduced at the same time in future. 
(') OJ No C 344, 31. 12. 1981. 
(2) OJ No L 356, 31. 12. 1977. 
(3) OJ No L 170, 1.7. 1975. (5) OJ No C 232, 11. 9. 1981. 
(4) COM(80)760 final. (6) OJ No C 342, 31. 12. 1981. 
12 Official Journal of the European Communities 31. 12. 82 
CHAPTER 2 
Accounting matters 
TABLE OF CONTENTS Paragraph reference 
Summary of principal comments 
Introduction 
Parliament 
Council 
Commission 
Court of Justice 
Balance sheet of the Communities 2.0 
2.1 
2.2 
2.3 and 2.4 
2.5 to 2.12 
2.13 -
2.14 
SUMMARY OF PRINCIPAL COMMENTS 
2.0. The principal comments in this chapter are: 
Parliament 
(a) The presentation of the balance sheet as at 31 December. 
1981 is not satisfactory. 2.2 
Council 
(b) Improvements to the accounting systems and procedures 
have been suggested to the Secretariat of the Council. 2.3 
(c) Neither the fixed assets nor the advances paid to the Pub­
lications Office appear in the balance sheet"* as at 
31 December 1981. 2.4 
Commission 
(d) The bank reconciliations were made too late for the oper­
ations to be presented correctly. This has created certain 
anomalies and irregularities. 2.5 
31. 12. 82 Official Journal of the European Communities 13 
(e) An entry of 4-2 million ECU correcting a difference in 
the ECSC account is without documentary justification. 
The procedure for adjusting the contra accounts of the 
Community organizations should be followed more sys­
tematically. 2.6 
(0 Due to an accounting error of 3-8 million ECU, the 
EAGGF advances were overstated and the exchange 
losses understated. 2.7 
(g) Careful consideration needs to be given to the question 
of conversion rates, which are inconsistent. 2.10 
(h) Expenditure (exchange losses and bank charges) was 
incurred in the absence of appropriations, for lack of the 
necessary transfers. 2.11 
(i) Amounts shown as advances are, in fact, funds available 
or expenditure. 2.12 
Court of Justice 
(j) There has been no reconciliation of the inventory ledgers 
and the corresponding physical property. Expenditure 
which should have been charged to the financial year 
1981 was charged to the financial year 1982. 2.13 
Balance sheet of the Communities 
(k) The origin of the surplus of the financial year 1980, 
shown in Volume V of the revenue and expenditure 
account and the balance sheet of assets and liabilities, is 
not clear. The explanatory notes of Volume V could be 
improved. Proposals will be submitted to the Commis­
sion on this matter. The presentation of the consolidated 
balance sheet is not satisfactory. 2.14 
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 of the Commu­
nities. Parliament 
2.2. The balance sheet of the Parliament at 
31 December 1981 calls for the following comments : 
(a) There have been no reconciliations of fixed 
assets (approximately 4-2 million ECU) with 
physical property. 
14 Official Journal of the European Communities 31. 12. 82 
In addition, this item contains an amount of 0 - 5 
million ECU representing office supplies, which 
should therefore be under current assets. 
The value of office furniture is not shown separ­
ately in the balance sheet. 
Only if the inventory ledgers are checked 
against physical property — as the Financial 
Regulation requires — can their accuracy, and 
that of the figures given for fixed assets in the 
balance sheet, be guaranteed. 
The Court therefore requests the Parliament to 
undertake a reconciliation of inventory ledgers 
and physical property as soon as possible and to 
make the necessary corrections. 
(b) An amount of 307 801 - 86 ECU in exchange 
losses is included under assets in the balance 
sheet, in the absence of available appropria­
tions. This presentation is irregular and the 
transfers necessary to ensure that this exchange' 
loss be charged to the budget should have been 
made in good time. 
•v 
(c) By reason of irregularities (already brought to 
the attention of the Parliament (1)) the amount 
entered under the assets of the balance sheet as 
expenditure not yet brought to account cannot 
be justified. 
(d) Two accounts 'agent debtors' (balance approxi­
mately 52 000 ECU) and 'advances to be 
adjusted' (balance approximately 492 000 ECU) 
include sums owing to the Parliament, some of 
which date back as far as 1979. The Court 
requests that the necessary steps be taken at 
once to recover these amounts. dures. Suggestions for improvements to the systems 
and procedures were made to the Secretariat of the 
Council, which is studying ways of implementing 
them. 
2.4. The presentation of the Council's balance 
sheet as at 31 December 1981 also calls for the fol­
lowing comments: 
(a) The Council's fixed assets (4 192 741 -45 ECU at 
year-end 1976, last figure available) do not 
appear in the balance sheet. This amount 
should be included in the balance sheet, in the 
same form as is employed by the other institu­
tions. The Court would point out in this Connec­
tion the usefulness of recording the fixed assets 
in a separately identifiable form, by means of a 
control account, as an adjunct to the inventory 
ledgers. This control account would give the 
accounting department early access to up-to-
date information. 
(b) The advances paid to the Publications Office 
(463 606 • 84 ECU) as working capital needed 
for its operations are also not shown in the bal­
ance sheet. The advances to the Publications 
Office were, in fact, considered as expenditure 
and charged to the budget. These advances 
should be reconstituted by a procedure to be 
agreed upon with the Commission's Accounting 
Officer and entered as assets in the balance 
sheet. 
Commission 
The balance sheet of the Commission as at 
31 December 1981 calls for the following comments: 
Council 
2.3. As part of its examination of the balance sheet 
of the Council as at 31 December 1981, the Court 
studied the Council's accounting systems and proce- Bank accounts 
(') See special report (observations) on the Members' 
Cash Office of the European Parliament, OJ No C 
202,5.8.1982. 2.5 In its annual report concerning the financial 
year 1980, the Court noted that in respect of seven 
bank accounts, at 30 April 1981, there had been no 
reconciliation of the Commission's own accounts 
with the bank statements as at 31 December 1980. 
31. 12. 82 Official Journal of the European Communities 15 
This year, at 31 December 1981, all bank reconcilia­
tions had been effected. These reconciliations were, 
however, prepared too late to allow all the correc­
tions necessary for an accurate presentation of the 
transactions involved. 
Thus: 
(a) Receipts totalling 110 577 • 74 ECU in 13 bank 
accounts have still to be analysed and entered 
in the accounts. 
(b) Transactions relating to 1981 were wrongly 
entered under 1982, i.e.: 
— 184 499 • 70 ECU of sundry expenditure; 
— 1 758 971-04 ECU of receipts (interest pay­
ments). 
(c) Other transactions were incorrectly recorded in 
the accounts: 
— the treasury accounts and Member States' 
accounts were overstated by approximately 
205 million ECU (transactions completed in 
1981 but not recorded until 1982); 
— rent paid in 1981 for the first six months of 
1982 (approximately 12 900 000 ECU) was 
not entered in an advance payments 
account, thus overstating the cash balance; 
— approximately 1 900 000 ECU, paid in 1981 
to the Accounts of the EAC.O), were erro­
neously entered under 'payments in hand'. 
Only the transactions in (a) and (b) have budgetary 
repercussions. 
These examples illustrate the need for better prepar­
ation by the Commission of the year-end closure, 
without waiting until December. 
Contra accounts of Community bodies 
2.6. 
(a) In its annual report concerning the financial 
year 1980 the Court noted that there was an unexplained difference of approximately 
4.2 million ECU between the ECSC account in 
the Commission's books and the Commission 
account in the ECSC's books. This difference 
was taken as the contra item of a difference of 
an almost equal amount (4 248 205 04 ECU) 
affecting the Commission's bank accounts in 
European currency units. This balancing of one 
difference with another seems questionable, 
since no document has been produced by the 
accounts department to prove that it is justified. 
(b) In its annual report concerning the financial 
year 1980, the Court insisted on the need for the 
Commission to adopt as a practice the sys­
tematic adjustment of the contra accounts of the 
Community bodies. 
At 31 December 1981 this procedure had not 
been applied in the following cases: 
— the balance of the Restaurant and Staff 
Shop account in the Commission's books 
does not correspond to the balance of the 
Commission account in the books of the 
Restaurant and Staff Shop; 
— three amounts (approximately 11 000 ECU) 
which appeared in the balance of the Parlia­
ment account in the Commission's books, 
but not in the balance of the Commission 
account in the Parliament's books, were 
transferred by the Commission to another 
account — an operation which serves the 
contrary purpose. 
The Court again insists that this reconciliation pro­
cedure be applied systematically so that any errors 
may be rectified and the operations of the financial 
year presented as accurately as possible. 
EAGGF advances 
2.7. As a result of an accounting error (in converting 
into ECU) EAGGF advances to Germany and to 
France were overstated by 3 861 020-18 ECU. This 
error has budgetary repercussions, as exchange 
losses were understated by the same amount. 
'Holiday camps' account 
(*) European Association for Cooperation. 2.8. The 'holiday camps' account, in which 
16 Official Journal of the European Communities 31. 12. 82 
expenditure to be recovered from officials is 
entered, is not properly monitored: 
— a sum of 19 142-03 ECU included in the bal­
ance of this account remains unexplained; 
— recovery of the amounts advanced to officials 
takes far too long (approximately 9 months 
from the time of the advance). (b) Several different conversion rates are also used 
in recording day-to-day operations of the finan­
cial year, which creates artificial exchange dif­
ferences and makes accounting more difficult, in 
particular in the event of a cancellation in the 
month M of an operation recorded in M — 1. 
This inconsistency in the utilization of conversion 
rates was already noted in the annual report con­
cerning the financial year 1978. The Court requests 
the Commission to consider the whole question in 
depth. 
'Reallocated transfers' account 
2.9. Sometimes it is impossible for Commission 
bank transfers to third parties to be executed by the 
banks because of erroneous information as to the 
account number, etc. of the1 payee. Transfers not 
executed are then entered in a sundry personal 
account on the liabilities side of the balance sheet, 
in the 'reallocated transfers' account. This account 
(approximately 212 000 ECU) does not appear to be 
monitored with the necessary attention, considering 
both the number and size of these transactions and 
the existence of debit amounts in this account. 
Conversion rate 
2.10. 
(a) Several different conversion rates were used to 
draw up the balance sheet of the Commission as 
at 31 December 1981: 
— cash funds in Luxembourg in national cur­
rency were converted at the rate for Novem­
ber 1981; 
— EAGGF advances to the Member States 
were converted at the rate on 20 October 
1981; 
— food aid advances were converted at the 
rate on 20 November 1981; 
— debts owing to or due from the Member 
States, arising from supplementary and 
amending budget No 2, were converted at 
the rate for January 1982; 
— other items were converted at the rate for 
December 1981. Absence of available appropriations 
2.11. 
(a) As at 31 December 1981 exchange losses 
amounting to 27 753 851 07 ECU (see Chapter 
14, paragraph 14.7) appear in the revenue and 
expenditure account as a figure to be deducted 
from the result of the financial year. These 
losses were presented in this manner in the 
absence of appropriations in the 1981 budget 
for operations of this nature. 
(b) Bank charges amounting to 31 301-50 ECU 
were entered in the balance sheet as expenditure 
still to be charged in the absence of the appro­
priations necessary for charging it to the 1981 
budget. This expenditure without appropria­
tions is irregular. 
The lack of appropriations could have been made 
good by the Commission by means of transfers at 
the proper time. 
Advances 
2.12. A sum of 860 000 ECU for the financing of 
development projects under protocols with Mediter­
ranean countries was presented in the balance sheet 
of the Commission under the heading 'advances'. In 
reality, this amount, although entered as an adv­
ance, includes both available funds and expenditure 
not yet brought to account. It is therefore not correct 
to present these as advances; the funds available at 
31 December should be recorded as liquid funds 
and the payments made either as expenditure or 
expenditure not yet brought to account. 
31. 12. 82 Official Journal of the European Communities •17 
Court of Justice 
2.13. Examination of the balance sheet of the 
Court of Justice as at 31 December 1981 gives rise to 
the following comments: 
(a) There has not been a reconciliation of fixed 
assets (approximately 3 million ECU) in the 
inventory ledgers with physical property. Only 
this reconciliation, (which is required by the 
Financial Regulation) can, if made on a regular 
basis, guarantee the accuracy of the inventory 
ledgers and of the figures given for fixed assets 
in the balance sheet. The Court therefore recom­
mends that steps be taken as soon as possible to 
enable such reconciliations to be made. 
(b) A sum of 57 051 • 18 ECU representing interest 
received was entered in the bank account of the 
Court of Justice in January 1982, as at 
31 December 1981. It was wrongly credited to 
the 1982 budget. This sum should, in accord­
ance with the Financial Regulation, have been 
entered as revenue in the accounts of the finan­
cial year in which the interest was received, i.e. 
1981. 
(c) A part of the subscription expenses (21 235-03 
ECU) for reviews and periodicals paid in 1981 
for material to be received in 1982, was not 
charged to the 1981 budget but entered in an 
advance payments account, then cancelled in 
1982, to be charged to the 1982 budget. This 
method does not comply with the provisions of 
the Financial Regulation; the subscription 
expenses in question should have been charged 
to the financial year in which the payment was 
made, i.e. 1981 
Balance sheet of the Communities 
2.14. The consolidated revenue and expenditure 
account and balance sheet of the Communities, as 
they appear in Volume V of the revenue and 
expenditure account and balance sheet of assets and 
liabilities published by the Commission, call for the 
following comments: (a) The revenue of the revenue and expenditure 
account includes 791 million ECU of 'surplus 
available' from the financial year 1980. The 
reader is referred to explanatory note 3.5, which 
shows an amount of 246 million ECU as 'sur­
plus available from preceding year' while the 
amount given in Volume V of the revenue and 
expenditure account and balance sheet of assets 
and liabilities published by the Commission on 
1 June 1981 is 82 million ECU only. No refer­
ence is made either to the amending revenue 
and expenditure account or to the operations 
whereby a surplus of 82 million ECU for 1980 
managed to rise to 246 million ECU. 
(b) The explanatory notes of Volume V of the 
revenue and expenditure account and balance 
sheet of assets and liabilities could be improved. 
A number of proposals will be submitted to the 
Commission. 
(c) The presentation of the consolidated balance 
sheet of the European Communities at 
31 December 1981 is not satisfactory: 
— there is no heading of 'current assets' in this 
balance sheet although significant amounts 
(stocks of the research institutes, stocks of 
paper and brochures of the .Publications 
Office, office supplies) should appear under 
such a heading; 
— the heading 'sundry debtors' includes both 
real debts owing to the Community and 
expenditure to be adjusted, i.e. expenditure 
of the current year which is shown in the 
balance sheet for administrative reasons but 
which does not represent Community 
assets; 
— debts between institutions, which should 
have disappeared as a result of consolida­
tion, appear in this balance sheet; 
— no mention is made of contingent liabilities 
(building leases, financing operations 
spread over several years, guarantees and 
securities received, etc.); 
— the comments made upon the balance 
sheets of each of the institutions (para­
graphs 2.2 to 2.13 above) apply equally to 
the consolidated balance sheet. 
18 Official Journal of the European Communities 31. 12. 82 
CHAPTER 3 
Revenue 
TABLE OF CONTENTS • Paragraph reference 
Summary of principal comments 3.0 
Introduction 3.1 
Summary of financial information • .3.2 
Value-added tax 3.3 to 3.12 
Budget dispute 1980 and 1981 3.3 to 3.6 
Accounting for 1980 arrears 3.6 
Calculation of VAT base 3.7 to 3.11 
General 3.7 
Method B 3.8 
Method A 3.9 
Financial compensation 3.10 
Conclusions 3.11 
Member States' returns for 1980 3.12 
Customs duties 3.13 to 3.23 
Greece 3.13 to 3.15 
Dual system of levying duties 3.13 
Internal audit / 3.14 and 3.15 
Audit of EDP-based accounting 3.16 and 3.17 
Quty-free allowances 3.18 to 3.23 
Tax-free shops 3.20 and 3.21 
'Butterships' 3.22 
Legal aspects 3.23 
Agricultural levies 3.24. to 3.35 
General 3.24 
Coordination 3.25 to 3.28 
Italy 3.25 to 3.27 
Greece 3.28 
Notification of levy rates 3.29 
Return of licences 3.30 to 3.32 
Irregularities in the meat sector 3.33 to 3.35 
Sugar storage levies and sugar production levies 3.36 to 3.39 
General 3.36 
On-the-spot visits 3.37 to 3.39 
Miscellaneous revenues 3.40 and 3.41 
31.12.82 Official Journal of the European Communities 19 
SUMMARY OF PRINCIPAL COMMENTS 
3.0. The principal comments in this chapter are: 
(a) Interest amounting to 29 million ECU on the late pay­
ment of own resources was waived by the Commission. 3.3 to 3.5 
(b) Community rules for calculation of VAT resources are 
complex, and imprecise, leading to lack of uniformity in 
their application by Member States. - 3.7 to 3.11 
(c) There is a need for improvement in the methods of esti­
mating advance payments of VAT resources. 3.12 
(d) Internal audit of the Greek Customs Service is not yet 
covering Community own resources. 3.14 and 3.15 
(e) Member States have not yet taken steps to regularize 
duty-free allowances to Community travellers generally 
and'butterships'in particular. 3.18 to 3.23 
(f) Further examples are noted of lack of coordination in the 
administration of agricultural levies, between interven­
tion agencies.and customs authorities. 3.25 to 3.32 
(g) Extensive frauds have occurred in the meat sector in the 
Netherlands following insufficient control measures. 3.33 to 3.35 
(h) Little improvement has been noted in the Commission's 
collection machinery for miscellaneous revenue. 3.40 and 3.41 
Introduction 
3.1. This chapter relates to revenue of the Euro­
pean Communities included in Part A of the general 
budget. Such revenue consists, for the most part, of. 
the own resources assigned to the Communities by 
Council Decision 70/243/ECSC, EEC, Euratom of 
21 April 1970 (!), that is to say, Common Customs 
Tariff duties; agricultural levies, including sugar 
production and storage levies; and value-added tax 
(VAT) not exceeding 1% of a uniform Community-
wide basis of assessment. Pending the introduction 
by Greece of the common VAT system, that country 
pays instead a financial contribution based on its 
gross national product, as provided for in 
Article 4 (2) of the aforementioned decision. 
A small supplement to budget financing comes from 
miscellaneous revenues such as: — contributions by certain Member States to Eur­
atom research programmes; 
— portion of the proceeds of ECSC levies paid in 
pursuance of Article 20 of the Merger Treaty of 
8 April i965 towards the administrative expen­
ses of the ECSC which are borne on the general 
budget of the European Communities; 
— pension and tax deductions from staff remuner­
ation; 
— fines, etc. 
Summary of financial information 
(') OJ No L 94, 28. 4. 1970. 3.2. The revenue of the Communities for 1980 and 
1981 is set out in Table 3.1. 
20 Official Journal of the European Communities 31. 12. 82 
Table 3.1 —Total revenue 1980 and 1981 
(Mio ECU) 
Type of revenue 1980 
actual revenue 1981 
Type of revenue 1980 
actual revenue Original budget Final budget Actual revenue Variation 
(4)—(2) Type of revenue 
(1) (2) (3) (4) (5) 
Customs duties 5 905-7 6 274-0 6 366-0 6 392-4 + 118-4 (+ 1-9%) 
Agricultural levies 1 535-4 1 902-0 1 310-2 1 264-9 - 637-1 (-33-5%) 
Sugar and isoglucose levies 466-9 571-1 . 463-5 482-5 - 88-6 (-15-5%) 
Value-added tax resources 7 258-5(i) 10251-1 9 190-2 9 187-8 -1063-3 (-10-4%) 
Financial contributions (GNP) — 168-8 151-3 151-4 - 17-4 (-10-3%) 
Adjustment of 1980 VAT 
+ 558-2 resources — — 559-3 558-2 + 558-2 
Adjustment of 1979 VAT 
resources and financial contrib­
utions 261-1 — 13 -2( —) 13 -2( — ) - 13-2 
Miscellaneous revenue 
(including ECSC and Euratom 
+ 18-4 (+11-5%) contributions) 182-2 160-6 160-6 179-0 + 18-4 (+11-5%) 
Balance from previous year 455-9 — 246-1 246 • (•) + 246-1 
Total 16 065-7 19 327 -6 . 18 434 0 18 449-1 - 878-5 (- 4-5%) 
(l) Includes arrears of 165 million ECU paid in October 1981 (see paragraph 3.6). 
Value-added tax 
Budget dispute 1980 and 1981 
3.3. The dispute relating to the adoption of supple­
mentary budget No 2 of 1980 was described in para­
graph 3.6 of the annual report on the financial year 
1980 ('). France, the Federal Republic of Germany 
and Belgium had held back a total of 165 million 
ECU, basing their vVAT contributions, not on the 
supplementary budget as adopted, but on the draft 
budget approved by the Council. The dispute con­
tinued into the 1981 budget and, in the period up to 
and including September 1981, France and the Fed­
eral Republic of Germany (but not Belgium) held 
back further sums to a total of 11 million ECU. The 
sums held back were finally paid following the 
adoption, on 17 September 1981, of amending 
budget No 1. 3.4. The interest due under Article 11 of Council 
Regulation No 2891/77 (2) amounted to about 
29 million ECU. On the grounds that the dispute 
had been settled by a global compromise between 
the two branches of the budgetary authority, the lia­
bility for interest involved was waived by decision 
of the Commission, overriding the refusal of 
approval by the Financial Controller. This is in line 
with similar decisions of the Commission in pre­
vious years. 
3.5. These decisions are contrary to the clear provi­
sions of Council Regulation No 2891/77, which 
grants no discretion to the Commission to forego 
interest. Furthermore it tends to assure Member 
States in dispute with the Community that the 
financial penalty will not apply. Parliament, in its 
comments on the discharge on the accounts for 
1979 (3) expressed the opinion that, in principle, 
demands for interest should no longer be waived. 
Whereas Article 24 of the Financial Regulation of 
(i) OJ No C 344, 31. 12. 1981. (2) OJ No L 336, 27. 12. 1977. 
(3) OJ No C 172, 13.7. 1981, p. 82. 
31. 12. 82 Official Journal of the European Communities 21 
21 December 1977 does permit the authorizing offi­
cers to waive the recovery of any established debt, if 
this action is in order and is in conformity with the 
principles of sound financial management, the 
Court is of the opinion that these conditions were 
not applicable in this case. 
Accounting for 1980 arrears 
3.6. The arrears of 165 million ECU referred to in 
paragraph 3.3 were eventually paid by the three 
Member States involved in October 1981. In accord­
ance with Article 5 of the Financial Regulation (!) 
these sums should have been entered in the 1981 
accounts as they were received during that financial 
year. However, the Commission brought them to the 
account of the 1980 financial year by including 
them in the revised accounts for that year issued on 
18 January 1982. As a consequence, VAT resources 
have been understated by 165 million ECU in the 
revenue and expenditure accounts for 1981, and the 
item 'surplus available from the preceding financial 
year' has been correspondingly overstated. tations (the weighted average of the national rates of 
VAT) is derived from a detailed analysis of national 
accounts statistics. The reliability and comparability 
of these statistics have not been verified in depth by 
the Commission or the Court of Auditors because of 
legal problems related to statistical secrecy raised by 
the Member States. Indeed, in some cases, the VAT 
authorities themselves are forbidden access to the 
underlying data. However, it is known that the 
sophistication and age of the data used varies sub­
stantially in the Member States. Another factor 
which varies is the degree of collaboration between 
the national VAT and statistical authorities. Some 
work closely together, while others tend to operate 
in separate compartments. In the latter cases, the fis­
cal analysis of the basic statistics tends to suffer, 
and significant errors have in fact been discovered 
by the Commission in the Netherlands, the effects 
of which, on the VAT base, are being investigated. 
Because of the lack of full access by the audit auth­
orities to the basic data, other errors may have gone 
undiscovered. 
Calculation of VA Tbase 
General 
3.7. The system (2) laid down in Council Regula­
tion No 2892/77 (3) is both complex and, as regards 
certain important aspects, imprecise. 
Method B 
3.8. Under method B, adopted by most of the 
Member States, one essential element of the compu-
(') OJ No L 356, 31. 12. 1977. 
(2) Described briefly in the annual report on the financial 
year 1980 (paragraphs 3.9 to 3.15). 
(3) OJNoL336, 27. 12. 1977. Method A 
3.9. As regards method A, adopted by two Mem­
ber States, fewer problems arise in Denmark 
because of the simplicity of its tax system, but the 
problem of the retention of the part of its contribu­
tion, referred to in the annual report on the financial 
year 1980 (paragraph 3.16), remains unresolved. In 
Ireland, however, although the basis of assessment 
is derived basically from VAT returns of taxpayers, 
it was necessary to have recourse to statistical 
sources because of two factors. Firstly, since most 
farmers use a flat rate system which dispenses with 
VAT returns, the data for this sector (10% of the 
base) are, as provided for in the Regulation, derived 
from agricultural statistics. Secondly, as the figures 
relating to zero-rated sales (29 • 2% of the base) con­
tained in VAT returns were considered by the Irish 
authorities to be unreliable, the data used were in 
fact based on national statistics. 
22 Official Journal of the European Communities 31. 12. 82 
Financial compensation 
3.10. Statistical problems also arise in the calcula­
tion of financial compensation to which Member 
States are subject in respect of the many transitional 
derogations from the uniform basis of assessment. 
To the relative scarcity of harmonized statistics and, 
in some cases, their unreliability, must be added the 
lack of uniformity in the interpretation by Member 
States of some of the legal provisions. 
Conclusions 
3.11. The Court of Auditors considers that the revi­
sion of Council Regulation No 2892/77, currently in 
train by the Commission, should be used to bring 
about an improvement in the present unsatisfactory 
position. Member States' returns for 1980 
3.12. The returns designed to establish the final 
VAT base for 1980 and the financial adjustments to 
the provisional monthly payments made in that year 
were submitted by all Member States. The returns 
disclosed that the provisional monthly payments fell 
short of the final outturn by 7 • 7%. Details for each 
Member State are shown in Table 3.2. The corres­
ponding figure for 1979, which, however, did not 
include the Federal Republic of Germany, Ireland 
or Luxembourg, was 3 • 6%. The size of the variations 
for 1980, and the fact that the adjusting payments 
are only due on 1 August of the following year, 
underline the need to improve the estimation meth­
ods used by the Commission and the Member 
States. 
Table 3.2 —VAT for 1980 
(Mio ECU) 
Member State Total monthly 
instalments, 1980 Liability as per Member 
States' summary accounts Difference 
(2) —(1) 
Member State 
(1) (2) (3) 
Belgium 329-1 330-4 + 1-3 (+.0-4%) 
Denmark 189-9 167 • 3 (') - 22-6 (-11-9%) 
FR of Germany 2 373-9 2425-3 + 51-4 (+ 2-2%) 
France' 1 788-9 1823-6 + 34-7 (+ 1-9%) 
Ireland 62-1 59-5 - 2-6 (- 4-2%) 
Italy 789-1 1 034-4 + 245-3 ( + 31-1%) 
Luxembourg 14-6 17-60 + 3-0 ( + 20-5%) 
Netherlands 438-5 443-4 + 4-9 ( + 1-1%) 
United Kingdom 1 272-4 1 516-3 + 243-9 (+ 19-2%) (4) 
Total 7 258-5(3) 7817-8 + 559-3 (+ 7-7%) 
(•) Excludes 1 -5 million ECU established but not paid (see paragraph 3.9). 
(2) Includes 1 • 1 million ECU paid in January 1982. 
(3) Includes 165 million ECU arrears paid in October 1981 (see paragraph 3.6). 
(4) This difference is due mainly to exchange fluctuations. 
Customs duties 
Greece 
Dual system of calculating duties 
3.13. With its accession on 1 January 1981, Greece 
began to pay own resources to the Community. However, during a transitional period the system is 
governed by special provisions of the Accession 
Treaty. Thus, for example, Greece will continue to 
apply over a five year period, for a certain number 
of products, its own national tariff duties, although 
these will be gradually aligned on the Common 
Customs Tariff (CCT). However, the own resources 
to be paid by Greece are to be based, as from the 
beginning, on the rates laid down in the CCT. Con-
31. 12. 82 Official Journal of the European Communities 23 
sequently, import declarations for these products 
involve two duty calculations. 
Internal audit 
3.14. In its first audit of the Greek system the 
Court of Auditors paid special attention to the pro­
cedures for controlling and checking these complex 
arrangements. These included the initial verification 
of the import declaration and the accounting for the 
establishment of own resources within the Customs 
Office, verification and special enquiries of these 
operations by the Customs Inspectorate of the Min­
istry of Finance, and a posteriori checks carried out 
by the Audit Directorate of the Customs Directo­
rate-General; some of these procedures had been 
revised with effect from 1 January 1981 to take 
account of Community interests. The arrangements 
for levying and accounting appeared to the Court to 
be satisfactory. However, it was noted that the 
examinations being undertaken by the Audit Direc­
torate were seriously in arrear. (EDP) system used for centralizing own resources 
data. The system in its present form does not allow 
the Community resources established by the indivi­
dual customs-houses to be traced into the central­
ized accounts for the whole country. As a result, 
neither the Danish auditing authorities nor the 
Court can confirm the correctness of the central 
accounts. The Court has drawn the attention of the 
Danish authorities to this problem on two occasions 
in the past and expressed the view that measures 
should be taken in order to meet the audit require­
ments of the Court. The Danish authorities stated 
that administrative and budgetary constraints have 
prevented them from taking the necessary measures, 
but that they are currently considering their introd­
uction. 
3.17. The Court acknowledges the value of using 
advanced EDP systems, but insists that they should 
be conceived in such a way that an audit trail can be 
followed, enabling a clear distinction — on all lev­
els — between own resources and national revenue. 
3.15. At the time of the Court's audit (December 
1981), examination of the vouchers had not gone 
beyond those of 1977. This review was giving rise to 
significant sums of additional revenue. However, 
the Court is concerned that its value in relation to 
transactions giving rise to own resources will largely 
be discounted if the arrears position is not substan­
tially improved. This is additionally of concern as 
customs debts might prove to be irrecoverable under 
Council Regulation No 1697/79 (J) if not notified to 
the debtor within the prescribed time-limit of three 
years. 
The Court of Auditors will keep this matter under 
review. Duty-free allowances 
3.18. Since 1969, duty-free allowances for travel­
lers are governed by Community legislation cover­
ing both exemption from import duty on goods 
imported in their personal luggage by travellers 
coming from third countries (Council Regulation 
No 1544/69 (2) as amended) and relief from value-
added tax and excise duties on similar goods 
imported by travellers coming from third countries 
or from other Member States (Council Directive 
69/169/EEC (3) as amended). 
Audit of EDP-based accounting 
3.16. In Denmark, audit work was hampered by 
certain aspects of the electronic data processing 3.19. The exemptions and reliefs are subject to 
quantity or value limits which are less generous for 
travellers coming from third countries ('third coun­
try travellers') than for travellers within the Com­
munity ('Community travellers'). As far as Com­
munity travellers are concerned, the VAT and excise 
allowances should, in the normal course, apply only 
to goods which had been purchased subject to the 
(•) OJ No L 197, 3. 8. 1979. (2) OJ No L 191,9. 8. 1969. 
(3) OJ No L 133,4. 6. 1969. 
24 Official Journal of the European Communities 31. 12. 82 
tax regime of a Member State 0). However, where a 
Community traveller transits through a third country 
or begins his journey in a tax enclave of a Member 
State, for example, Campione d'ltalia, he is only 
entitled to the smaller VAT and excise allowances 
reserved for third country travel unless he can prove 
that the purchases were made under the normal tax 
conditions of the Member State. 
Tax-free shops sea trips from certain German ports in the Baltic 
and North Sea wholly or mainly with a view to mak­
ing duty-free sales on board. The ships either return 
without stopping at a third country port or make 
only a token stop there. Some of the goods, for 
example, butter and meat, are sold with the 
benefit of Community export refunds. On return, 
passengers are allowed to import their purchases 
within limits laid down by Council Regulation 
No 3023/77 (2). While complete statistics are not 
available, the annual sales of butter and meat are 
estimated to be of the order of 6 000 tonnes and 
1 000 tonnes respectively (3), implying a possible 
total of 12-5 million ECU in agricultural levy, for 
example, foregone. 
3.20. Article 6(1) of the Directive prohibits the 
remission of tax on the sale of goods to travellers 
whose domicile, habitual residence or place of work 
is situated in a Member State and who benefit from 
the foregoing arrangements. Despite this the Mem­
ber States continue to afford tax and duty-free pur­
chase facilities at certain ports and airports and on 
board ships and aircraft plying between Member 
States. With the exception of travel within the Bene­
lux countries, the customs authorities of all Member 
States operate the Community travel allowances 
without paying attention to these facilities. As a 
result, goods which have been purchased in tax-free 
shops free of VAT and excise duties and, as regards 
goods of third country origin, free of customs duty 
and agricultural levy, may be imported, within cer­
tain limits, into another Member State without pay­
ment of taxes and duties. Some Member States limit 
the quantities of duty-free goods to those reserved 
for third country travel, while others make no dis­
tinction. Legal aspects 
3.23. In July 1981 the Court of Justice, in a rul­
ing (4) which inter alia declared Council Regulation 
3023/77 to be invalid, clarified the legal situation. It 
declared, in effect, that exemption from customs 
duty and agricultural levy, within the prescribed lim­
its, could only be granted to travellers coming from 
third countries. A passenger whose journey com­
mences in a Member State and who does not visit a 
third country, or whose visit is only a token one, is 
not entitled to the exemption. 
At the time of this report, none of the Member 
States has taken steps to conform with the judgment 
of the Court of Justice, although the Commission 
has started infringement proceedings under 
Article 169 of the EEC Treaty. 
3.21. Neither the Commission nor the Court of 
Auditors has been able to quantify the amount of 
Community resources (customs duties, agricultural 
levies and a portion of the VAT) involved in this 
type of trade, but it is thought to be substantial. 
Agricultural levies 
'Butterships' 
General 
3.22. A variant of the duty-free shops is provided 
by the so-called 'butterships' which operate short 3.24. The Court of Auditors, in its annual report 
on the financial year 1979 (5) referred to problems 
(•) In certain cases, Member States may continue to (2) OJ No L 358, 31. 12. 1977. 
apply their national provisions to travellers having (3) Estimates made available to the Court of Justice by 
their residence outside Europe. Furthermore, Member the Commission. 
States may, in certain circumstances, apply lower lim- (4) Case No 158/80; OJ No C 191, 31. 7. 1981, p. 5. 
its than those laid down at Community level. (5) OJ No C 342, 31. 12. 1980 (paragraphs 3.26 to 3.33). 
31. 12. 82 Official Journal of the European Communities 25 
arising from the division of functions between inter­
vention agencies and customs services in the admin­
istration of agricultural levies. The annual report of 
the financial year 1980 (1) contains a description of 
the advance-fixing of agricultural levies and draws 
attention to the absence of systematic cross-checks 
(except in cases of obvious doubt) between the 
intervention agency and the customs offices 
designed to detect irregularities or counterfeiting. 
Further comments on the system, arising out of the 
Court's continuing examination, are set out below. 
Coordination 
Italy 
3.25. In Italy three administrations deal with 
import licences for advance-fixing of levies. These 
are the Ministry of Commerce, the Ministry of 
Finance and the customs administration. Requests 
for advance-fixing are presented by traders to the 
Ministry of Commerce which prepares the frame­
work of the licence. It then goes for completion of 
its essential part to the Ministry of Finance, where 
the rate of levy is entered and the licences, handed 
over to the trader. The conversion of the levy, -
expressed in ECU, into lire is done by the technical 
division of the Ministry of Finance but no internal 
control body checks this rate before the licence is 
issued. The licence is presented to the customs auth­
orities for their endorsement in respect of the vol­
ume of goods imported. 
3.26. The Ministry of Finance does not notify the 
rate to the Ministry of Commerce. On receiving the 
used licence back from the trader after importation 
has taken place, the Ministry of Commerce has no 
independent evidence of the rate initially fixed by 
the Ministry of Finance beyond that contained on 
the returned licences. There is no evidence that 
post-audit procedures include a cross-check 
between the pre-fixed rate and the rate actually 
applied by the customs offices. 3.27. The Court is of the opinion that a reliable 
exchange of information, at least on the basis of 
sample checks, between the three parties involved 
should exist. This would help to ensure that the 
financial and other data, contained in the original 
licences approved by the issuing authority are still 
the same as the data used for collection by the cus­
toms administration. 
Greece 
3.28. In Greece there would appear to be a need 
for closer coordination between the intervention 
agency and the customs service. The customs auth­
orities appeared to be insufficiently briefed on the 
complex agricultural regulations, especially in rela­
tion to commodities whose importation into Greece 
is, admittedly, not great. . 
The Court of Auditors has drawn the attention of. 
the Greek authorities to the need to ensure that the 
customs service is fully informed of all relevant 
Community provisions, even those whose applica­
tion might be relatively rare. 
Notification of levy rates 
3.29. In Ireland some examples of application of 
incorrect levy rate to imports of feedingstuffs were 
noticed. The error followed a change in the green 
rate (2) and, according to the Irish authorities, 
occurred in the following way. 
On receipt from the Commission of the rates of levy 
(expressed in ECU), the Department of Agriculture 
converts them into Irish currency. The figures are 
then checked and transmitted by telex to the various 
customs offices. The failure to apply the new levy 
rate in this case arose because the telex transmission 
to customs offices was confined to cases where the 
rate expressed in ECU had changed, i.e. the vast 
majority of cases. The limited number of cases 
where the ECU value remained the same was not 
included in the telex received from the Commission. 
A clerical error within the Department of Agricul-
(>) OJ No C 344,-31. 12. 1981 (paragraphs 3.23 to 3.27). (2) Representative rate of exchange used for the common 
agricultural policy. 
26 Official Journal of the European Communities 31. 12. 82 
ture resulted in a failure to reconvert these rates to 
Irish currency using the new green rate and to trans­
mit them to customs offices. 
Although the error did not give rise to significant 
losses in this case, and the Irish authorities have 
taken steps to prevent a recurrence, the Commission 
should, in view of the potentially serious nature of 
the matter, consider what additional information of 
an explanatory nature could be included in its tel­
exes to Member States on the occasion of changes 
in the factors determining levy rates. 
Return of licences was directed to the implementation of a Community 
Regulation (J) providing for exemption from agri­
cultural levy of frozen meat imported for processing 
in the canning industry. In order to qualify for 
exemption the processor must submit a security on 
importation. The security is released after it is veri­
fied that the meat has been duly processed. 
3.34. It was noted that insufficient resources were 
being devoted to the task of verifying the declara­
tions of processors and certifying the release of the 
security. When the dangers inherent in the concen­
tration of responsibility for verification were drawn 
by the Court to the attention of the Netherlands 
authorities, the Court was informed that the task of 
controlling the processors had been transferred to 
the general inspection service of the Ministry of 
Agriculture. 
3.30. In most cases import licences are subject to a 
guarantee which i$ released only when the licence is 
returned to the intervention agency after the impor­
tation has taken place. When a licence is not 
returned the security is forfeited. 
3.31. In most Member States it was learned that, 
when licences are not returned, no check is made to 
ensure that they have not been put to fraudulent 
use. 3.35. In its annual report for 1981, the Netherlands 
Court of Auditors gives some details of the outcome 
of the new control measures. In the first six months 
of operation, checks were made on 23 out of 45 
firms involved and frauds were discovered in 17 
cases, involving own resources estimated at between 
4 and 4-5 million ECU. The checks are being 
extended to all firms involved. The Court of Audi­
tors will keep the matter under review pending com­
pletion of the investigations. 
3.32. The Court of Auditors, as in previous reports, 
expresses its concern about the weaknesses in the 
system of licences arising from absence of cross­
checks. It understands that the possibility of sys­
tematic checks on the use of non-returned licences, 
to detect any fraudulent use, is under consideration 
within the Trade Mechanisms Experts Group of the 
Community, where it has already been agreed that 
Member States will provide the Commission with 
details of unreturned or lost licences. Sugar storage levies and sugar 
production levies 
General 
Irregularities in the meat sector 3.36. Sugar storage levies and sugar production 
levies are accounted for as own resources. The stor­
age levies, which are imposed on sugar delivered 
from individual sugar factories are designed -to 
finance the Community subsidy on sugar storage. 
The sugar production levies- are imposed on the 
3.33. During the course of an audit carried out by 
the Court of Auditors in one of the intervention 
agencies in the Netherlands, particular attention (') Commission Regulation No 572/78 (OJ No L 78, 
22.3.1978). 
31. 12. 82 Official Journal of the European Communities 27 
production of sugar in excess of the basic produc­
tion quota but within the maximum quota. Sugar 
produced above the maximum quota is required to 
be exported outside the Community. Failing this, it 
is subject to levy. The calculation of the levies is 
based on returns from the factories of the quantity 
of sugar produced and disposed of. campaign, the Court of Auditors considers it impor­
tant that more frequent stocktaking be required, and 
has drawn the matter to the attention of the German 
authorities. 
Miscellaneous revenues 
On-the-spot visits 
3.37. During 1981 visits to Member States were 
made in order to review the systems and procedures 
for levying sugar and isoglucose produced and dis­
posed of and to ensure that levies collected were 
properly centralized and made available to the 
Community. Following are the chief observations 
which arose. 
3.38. The Court found that, in two sugar factories 
in the Federal Republic of Germany, physical stock­
taking had taken place in 1975 and 1980 (in both 
cases). According to German law, stocktaking 
should be carried out at least every three years. The 
inventories showed that the difference between the 
physical stock held in 1980 and the stock records 
was about 4 000 tonnes in all. 3.40. In its 1980 report, the Court of Auditors drew 
attention (J) to certain weaknesses in the Commis­
sion's procedures for establishing and collecting 
miscellaneous revenues. These had been the subject 
of the seventh report (2) of the Commission's Finan­
cial Controller. The eighth report shows a general 
worsening of the position as far as numbers of cases 
are concerned, although amounts involved are 
lower, as Table 3.3 shows. 
3.41. Following suggestions made in earlier annual 
reports of the Court of Auditors, the Commission 
amended the practice whereby collection of fines 
was suspended pending the outcome of appeals to 
the Court of Justice. In future, the Commission will 
pursue collection in such cases, except where the 
appellant agrees in advance to pay interest on the 
final amount due and lodges a satisfactory guaran­
tee for the principal and interest. While welcoming 
this improvement, the Court of Auditors notes with 
concern that no further steps have been taken to 
bring about the necessary reform of the Commis­
sion's collection machinery. 
(') Annual report on the financial year 1980, para-
,, . , . . . graphs 3.36 to 3.43. 
3.39. Although the production levy on this surplus ^ Prepared pursuant to Article 24(3) of the Financial 
was accounted for as own resources in the 1980/81 Regulation. 
^able 3.3 — Extracts from Financial Controller's reports 
Type of case Number of cases Amounts(Mio ECU) 
Type of case 
7th report 8th report 7th report 8th report 
Receivable orders established but sums 
uncollected 
Receivable orders not established 
of which: legal fees 
food aid, etc. 
Sums received but no receivable order 283 412 
53 95 
36 38 
17 57 
213 187 8-0 8-5 
(') (*). 
11 0-4 
1-9 0-7 
{') Not computed. 
28 Official Journal of the European Communities 31. 12. 82 
CHAPTER 4 
European Agricultural Guidance and Guarantee Fund, Guarantee 
Section (EAGGF, Guarantee Section) 
TABLE OF CONTENTS Paragraph reference 
Summary of principal comments 4.0 
Introduction 4.1 
Summary of financial information ' 4.2 to 4.4 
Accounts of the financial year 4.5 to 4.12 
Changes in the level of EAGGF, Guarantee Section 
expenditure, by market 4.6 and 4.7 
Assessment of real expenditure of the EAGGF, Guaran­
tee Section 4.8 
Monetary compensatory amounts (MCAs) 4.9 to 4.11 
Monetary units 4.12 
Management of global appropriations (advances) 4.13 to 4.15 
Special advances 4.13 and 4.14 
Rate of utilization of advances by the Member States 4.15 
Cash position of the Member States 4-16 
Difference between the cash position recorded by the 
Member States and by the Commission 4.16 
Management of detailed appropriations • 4.17 to 4.19 
Direct management and automatic carryovers 4.17 
Non-automatic carryovers 4.18 
Management of aid to disaster victims in Italy 4.19 
Anticipated loss in value of public stocks in 1981 4.20 to 4.22 
Clearance of the accounts of the EAGGF, Guarantee Section 4.23 to 4.32 
Budgetary repercussions of the 1974-75 clearance deci­
sions on the 1981 accounts 4.24 to 4.27 
Justification for the amounts in the 1974-75 clearance 
decisions 4.28 and 4.29 
Clearance of the accounts and national aid 4.30 
Current litigation arising from clearance of the accounts 4.31 
Progress of clearance work 4.32 
31. 12. 82 Official Journal of the European Communities 29 
Frauds and irregularities 4.33 to 4.36 
Difficulty of access to important files and irrecoverable 
amounts 4.33 
The Commission statistics 4.34 
Implementation of the legislation to improve prevention 
and suppression of frauds and irregularities 4.35 and 4.36 
SUMMARY OF PRINCIPAL COMMENTS 
4.0. The principal comments in this chapter are as follows: 
(a) The revenue and expenditure account shows a decrease 
in global expenditure compared with 1980 but this 
mainly relates to the milk and milk products sector. 
Expenditure in respect of the other principal markets has 
increased. 4.5 to 4.7 
(b) Assessment of the actual expenditure of the financial 
year, after corrections to take account of negative appro­
priations in particular, once again shows an increase, 
albeit slight, over the preceding year. 4.8 
(c) The continued existence of monetary compensatory 
amounts, in some cases with an increase in the rates, pro­
vides opportunities for fraudulent profits. 4.9 to 4.11 
(d) The financial effect of the existence of budgetary rates 
different from the representative rates of the ECU is not 
always assessed in the proposals for decisions submitted 
outside the budgetary procedure. 4.12 
(e) Special advances were granted to certain Member States 
without justification. 4.13 and 4.14 
(f) Rates of utilization of the advances remained high, 
except in two Member States due to special circum­
stances. 4.15 
(g) Although some corrections have been made, there are 
still differences between the cash position as recorded by 
the Member States and by the Commission. 4.16 
(h) Direct management by the Commission of certain 
expenditure, contrary to the rules of management of the 
EAGGF, Guarantee Section, has led it to make auto­
matic carryovers of appropriations to the financial year 
1982. 4.17 
(i) The extent of non-automatic carryovers shows the inade­
quacy of the EAGGF, Guarantee Section, financing sys­
tem for managing programmed measures and, in the case 
of co-responsibility, the disadvantages of allocating 
revenue in the absence of special rules. 4.18 
30 Official Journal of the European Communities 31. 12. 82 
(j) Aid to disaster victims in Italy was financed initially from 
the resources of the EAGGF, Guarantee Section, and not 
through expenditure that could be charged to the appro­
priations for aid to disaster victims in the Community. 4.19 
(k) Discretionary application, with no regard to any uniform 
method, of the anticipated depreciation of stocks in 1981 
resulted in circumvention of the basic rule of the annual-
ity of the budget. 4.20 and 4.21 
(1) A transfer of beef to Poland free of charge was, by means 
of a de facto anticipated depreciation, financed from 
second category intervention appropriations intended for 
operations on the internal market. 4.22 
(m) The clearance decisions in 1981, relating to the financial 
years 1974-75, are entered as net amounts in the revenue 
and expenditure account without explanatory notes. The 
way in which amounts in question were recovered 
resulted in an artificial inflation of the funds available to 
the Member States in 1981. 4.23 to 4.27 
(n) There is no consistent method of presenting the clearance 
decisions, which makes them difficult to monitor, parti­
cularly where there are reservations capable of being 
withdrawn at a later date. 4.28 and 4.29 
(o) Taking national aid into consideration in clearance of the 
accounts implies close coordination of the procedures 
governing audit of the aid with those governing verifica­
tion for the purpose of clearance. 4.30 
(p) The delay in clearance decisions has not been made up 
and remains between five and six years. 4.31 and 4.32 
(q) In 1981, the Commission was still not able to take a deci­
sion on the final charging to the Community of sums 
wrongly paid and declared irrecoverable by the Member 
States. 4.33 to 4.36 
Introduction 
4.1. The entry of Greece into the European Com­
munity was a major factor in the management of the 
EAGGF, Guarantee Section, in the financial year 
1981. Some of the following comments, and particu­
larly those relating to changes in the level of appro­
priations or expenditure, should therefore be inter­
preted bearing in mind that there are now ten Mem­
ber States. By the same token, certain anomalies 
found by the Court are due to the inevitable 
teething troubles that occur in these circumstances. Subject to the above, in 1981 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 general budget and has been des­
cribed by the Court in detail in its previous 
reports ('). 
(') OJ No C 313, 30. 12. 1978, pp. 13 and 14; OJ No C 
326, 31. 12. 1979, p. 11; OJ No C 342, 31. 12. 1980, pp. 
47 and 48; OJ No C 344, 31. 12. 1981, p. 43. 
31. 12. 82 Official Journal of the European Communities 31 
Summary of financial information direct payments by the Commission, was 11 140-4 
million ECU, before deduction of the amounts aris­
ing from clearance of the accounts of earlier years. 
Appropriations available 
4.2. The initial appropriations of the EAGGF, 
Guarantee Section, which amounted to 12 702-5 
million ECU, were reduced by two successive 
amending budgets by 365 and 725 million ECU res­
pectively and by three transfers totalling 42 million 
ECU. 
The appropriations finally available thus amounted 
to 11 570-5 million ECU, a part of which (428-6 
million ECU) was cancelled. Accounts of the financial year 
4.5. The level of commitments made in 1981, i.e. 
11 141-9 million ECU, shows a considerable reduc­
tion in the use of the appropriations of the EAGGF, 
Guarantee Section. It is 173 million ECU less than 
the commitments of the financial year 1980 
(11 314-9 million ECU) and 1 560-6 million ECU 
less than the initial appropriations of the financial 
year 1981 (12 702-5 million ECU). 
Commitments This trend, however, needs to be seen in the light of 
the distribution of expenditure by market and an 
assessment of the real expenditure of the EAGGF, 
Guarantee Section. 
4.3. The difference between appropriations avail­
able and cancellations, i.e. 11 141-9 million ECU, 
represents the commitments of the financial year. It 
, comprises 11 408-1 million ECU made available to 
the Member States by means of provisional global 
commitments (advances), 0 -9. million ECU in com­
mitments made directly by the Commission, less 
267-1 million ECU in balances remaining in the 
Member States that were decommitted. Changes in the level of EAGGF, Guarantee Section, 
expenditure by market 
4.6. The changes in the level of EAGGF, Guaran­
tee Section expenditure by individual market (see 
Table 4.2) should not be interpreted solely by refer­
ence to the initial appropriations of the financial 
year. Comparison with the corresponding expendi­
ture in 1980 shows that some changes took the form 
of increases, and even considerable increases in the 
case of wine and oils and fats. 
Payments 
4.4. A total of 10 979-4 million ECU was charged 
as payments. The amounts committed but not 
charged were carried over. Automatic carryovers 
amounted to 0 -8 million ECU. A further 161-7 mil­
lion ECU were carried over in accordance with the 
terms of Article 6(3) of the Financial Regulation, 
after approval had been deemed to have been given 
by the budgetary authority (J) (100 million ECU in 
respect of the milk co-responsibility programme and 
61-7 million ECU in respect of sales to Poland). 
The total charged as payments, representing the 
expenditure declared by the Member States and 
(') See paragraph 4.18. The milk sector is the one which, in absolute terms, 
recorded the greatest reduction in expenditure 
(1 409-2 million ECU less than in 1980). It should 
be noted, however, that this was above all due to the 
economic situation. Prices on the world market 
developed favourably, which made it possible to 
reduce the refund rates and increase the quantities 
exported. This development was further encouraged 
by the performance of the dollar, which is the cur­
rency in which the prices of milk products are 
expressed on the world market. Thus, the increase in 
exports made it possible to relieve the internal mar­
ket, leading to a reduction in intervention expendi­
ture. 
4.7. It should also be pointed out that the rise in 
expenditure would have been slightly higher 
if Greece had in 1981 made all the normal payments 
relating to a current year. However, although 
32 Official Journal of the European Communities 31. 12. 82 
Table 4.1 — Summary of accounts 1981 
(Mio ECU) 
Appropriations available Commitments Expenditure of Member States 
(Regulation No 380/78, 
Art. 3 (2) (b)) Charging as payments 
and carryovers 
Automatic carryover from 
1980: 8-7 Payments against carryover from 
1980: 8-7 
Initial 
appropriations: 
Amending budget 
No 1: 
Amending budget 
No 2: 
Budget 
appropriations: 
Transfers to: 
— Article 950 
— Item 8312 
— Article 810 12 702-5 
-365 0 
-725-0 
11 612-5 
20-0 
9-0 
13-0 
Appropriations 
available: 11 570-5 
Appropriations 
cancelled: -428-6 
Appropriations 
used: 11 141 -9 Balance of 
appropriations 
available in 
the Member 
States at 
1.1.1981: 158 • 
Advances to Member 
States for: 
— January 1 028 
— February 889 
— March 906 
— April 906 
— May 935 
— June 733 
July 561 
— August 727 
— September 780 
— October 1 127 
— November 1 059 
— December 992 
10647-6 
Special advances for: 
— August (NL, UK) 199-5 
— September 
(UK, D) 172-4 
— November (F) 25 
— December (NL, GR, 
D, IRL, I, L) 
Exchange 
differences: 
Total advances: 
Directly 
committed by 
the Commission: 213 
610 
1 408 
0-9 
409-0 
Balance of appro­
priations available in 
the Member States 
at 31. 12.1981 
decommitted: -267-
Total 
commitments: 11 141-9 Expenditure declared by 
Member States: 
— January 927-7 
— February 954-3 
— March 926-9 
— April 872-7 
— May 730-5 
— June 799-7 
—July 852-1 
— August 807-6 
— September 993-3 
— October 1 095-3 
— November 1094-1 
— December 1 086-1 
Total expenditure of 
Member States: 11140-3 Charging as payments 
pect of: 
— January 
— February 
— March 
— April 
— May 
— June 
— July 
— August 
— September 
— October 1 
— November 1 
— December 1 925 
953 
925 
874 
728 
795 
695 
981 
993 
098 
093 
082 
Decommittal 
Italy: 
Total: 11 149 
-9 
11 140-3 
Directly paid by 
Commission: 
Gross total charged 
as payments: 
Clearance 
decisions on 
1974-75 
accounts: 
Net total charged 
as payments: 
Carryovers to 1982: 
— automatic 
— non-automatic 0-
11 140-4 
-161-0 
10 979-4 
0-8 
161 -7 
Total: 11 141-9 
31. 12. 82 Official Journal of the European Communities 33 
Table 4.2 — Development and utilization of appropriations of the financial year 
(Mio ECU) 
Budget 
heading Initial 
appro­
priations Amend­
ing 
budgets 
Nos 1 
and 2 Trans­
fers Final 
appro­
priations 1981 expenditure (') Variation in expendi­
ture compared to 1980 
Budget 
heading Initial 
appro­
priations Amend­
ing 
budgets 
Nos 1 
and 2 Trans­
fers Final 
appro­
priations 
Refunds 1st 
category 
mea­
sures 2nd 
category 
mea­
sures Mis­
cella­
neous 1981 total In absolute 
figures As a 
per­
cent­
age 
(1) (2) (3) (4) (5) = 
(2) + 
(3)+ (4) (6) (7) (8) ' (9) (10) = (6) 
+ (7) + (8) 
+ (9) (10 (12) 
Cereals 2 205-0 - 274-0 1 931-0 1 206-2 373-4 341-7 ' 1 921-3 + 252-4 + 15% 
Rice 62-7 - 30-7 - 7-0 25-0 17-2 4-5 — — 21-7 - 37-0 -63% 
Milk and milk 
products' 4312-9 - 637-9 —159-0 3 516-0 1 886-3 1 241-8 214-7 — 3 342-8 -1 409-2 -30% 
Oils and fats 976-1 - 18- + 70-0 1 028-0 8-3 971-4 45-7 — 1 025-4 + 338-1 + 49% 
Sugar 739-9 - 39-9 + 70-0 770-0 409-2 358-3 — — 767-5 + 192-3 + 13% 
Beef and veal 1 353-4 + 143-6 - 20-0 1 477-0 825-3 231-6 380-0 — 1 436-9 + 73-6 + 5% 
Pigmeat 127-4 + 34-6 162-0 132-6 22-0 — — 154-6 + 39-0 + 34% 
Sheepmeat 258-7 - 68-7 + 1-7 191 -7 — 191 -5 — • 191-5 + 138-0 — 
Eggs and 
poultrymeat 101 -9 + 2-1 - 13-0 91-0 83-9 — — — 83-9 1 -6 - 2% 
Fruit and 
vegetables • 730-1 - 15- - 40-0 675-0 42-8 598-3 — — 641-1 - 46-2 - 7% 
Wine 456-7 + 161-3 - 68-0 550-0 25-8 433-6 — — 459-4 + 159-9 + 53% 
Tobacco , 333-2 6-2 + 37-5 364-5 5-8 286-3 69-7 — 361-8 + 52-5 + 17% 
Fisheries 27-5 + 5-0 32-5 12-6 15-5 — — 28-1 + 5-1 + 22% 
Other market 
organizations .193-1 - 10- + 5-8 188-8 — 184-3 — — 184-3 + 68; 5 +40% 
Non-Annex 11 
products 294-0 + 66-0 — 360-0 282-5 — — — 282-5 + 61-2 + 28% 
Total markets 12 172-6 11362-5 4 938-5 4912-5 1051-8 10 902-8 - 113-4 - 1% 
Accession 
compensatory 
amounts 24-5 - 19-5 — 5-0 — — — 0 1 0-1. 
Monetary 
compensatory 
-20% amounts 250-9 - 87-9 + 80-0 243 0 — — — 238-3 238-3 - 60-2 -20% 
Total for the 
financial year 12 448 0 — — 11 610-5 4 938-5 4912-5 1051-8 238-4 11 141-2 - 173-6 - 2% 
Provisional 
appropriations/ 
clearance 254-5 - 294-5 — -40-0 — — — -161-0 -161-0 - 161-0 — 
Corrected total 12 702-5 -1090-0 - 42-0 11570-5 4 938-5 4912-5 1051-8 77-4 10 980-2 - 334-6(2) - 3% 
(') Expenditure = detailed commitments, including direct commitments by the Commission, namely payments + automatic carryovers. 
(2) This amount of -334-6 million ECU is made up of 4- } 380-6 million ECU in increased expenditure and —1 715-2 million ECU in 
decreased expenditure. 
expenditure relating to external trade (refunds, 
accession compensatory amounts) could be made 
from the very beginning of the financial year, cer­
tain intervention expenditure was deferred, in some 
cases (cereals, fruit and vegetables) for administra­
tive reasons, in others (olive oil, tobacco) due to the 
system of payment of the aid in instalments, in 
others still (tobacco, durum wheat) because it con­
cerned only the following years. The Commission had estimated the volume of 
expenditure in that Member State at 242 million 
ECU 0). However, in 1981, Greece disbursed only 
(') Commission Document No VI/90/80 rev. 3 (budget­
ary estimates of the EAGGF, Guarantee Section, for 
1981) p. 122. 
34 Official Journal of the European Communities 31. 12. 82 
146-2 million ECU (1 -3% of total EAGGF, Guaran­
tee Section expenditure), of which 43 -6 million 
ECU were for olive oil (9 • 8% of the total expendi­
ture for this product) and 54-9 million ECU for cot­
ton (100% of expenditure for this product). ing to the expenditure of the financial year the 
amounts charged negatively and/or set off in the 
revenue and expenditure account (which are in fact 
revenue) and allocating to its original financial year 
expenditure which has either been anticipated or 
deferred. 
Assessment of the real expenditure of the EAGGF, 
Guarantee Section 
4.8. The Court of Auditors assesses the actual 
expenditure of the financial year by using a method 
which is now well established (!) and involves add-
(') See annual reports on the financial year 1979, para­
graph 4.36, OJ No C 342, 31. 12. 1980 and on the 
financial year 1980, paragraph 4.4, OJ No C 344, 
31. 12. 1981. Table 4.3 shows the accounts thus adjusted for the 
financial years 1977 to 1981. The actual expenditure 
of the financial year 1981 as assessed once again 
shows a slight increase over the expenditure of the 
preceding financial year. 
Table 4.3 — Adjusted accounts of the EAGGF, Guarantee Section, for the financial years 1977 to 1981 
(Mio ECU) 
1977 1978 1979 1980 1981 
Variation Variation Variation Variation 
Amount Amount 1977/78 Amount 1978/79 Amount 1979/80 Amount 1980/81 
(%) (%) (%) (%) 
(1) (2) (3) (4) (5) (6) (7) (8) (9) 
Payments according to the 
revenue and expenditure 
account (against appro­
priations of the financial 
year and non-automatic 
carryovers) 6 830-4 8 672-8 + 27-0% 10 434-5 + 20-3% 11 314-9 + 8-4% 10979-4 -3-0%. 
Actual expenditure of the 
financial year (after correc­
tions) 7 262-9 8 991-1 + 23-8% 11 352-7 + 26-3% 11 609-9 + 2-2% 12 029-1 + 3-6% 
Corrections 
Negative appropriations: 
— milk co-responsibility 
levy + 24-0 + 137-4 + 94-2 + 222-9 + 478-5 
— monetary compensa­
tory amounts + 408-5 + 487-1 + 278-2 + 337-6 + 45^-0 
— olive oil deductions — — — + 3-6 + 3-4 
— flax and hemp deduc­
tions — — — + 0-1 + 0-2 • 
Clearance of accounts — — + 36-1 — + 161-0 
Depreciation of stocks 
— financial (Reg. 1883/ 
78) — -306-2 + 306-2 — - 86-5 — Poland - 6'5-7 (+ 65-7 
I- 18-1 Excess of expenditure over 
appropriations + 203-5 - -203-5 
-Recoveries 7-5 
Total + 432-5 + 318-3 + 918-2 + 295-0 + 1 049-7 
31. 12. 82 - Official Journal of the European Communities 35 
Monetary compensatory amounts (MCAs) 
4.9. Having reached high levels up to 1979, the 
MCAs were from 1980 onwards the subject of mea­
sures designed to abolish them in the long term. In 
1981, reductions in the rates were introduced in Bel* 
gium, in the Federal Republic of Germany and in 
Luxembourg. Nil rates were applied to Denmark, 
Greece, France and Ireland. 
Due to these measures and to the rise in the pound 
sterling (!), the expenditure to be charged to the 
EAGGF, Guarantee Section, decreased consider­
ably in 1980. There was a slowing of this trend in 
1981 when MCA expenditure reached 238-3 million 
ECU as a net amount entered in the revenue and 
expenditure account, compared with 298 -5 million 
ECU in 1980, i.e. 2 • 1 °/o of the total expenditure of 
the EAGGF, Guarantee Section. However, as a 
gross amount, i.e. after inclusion of receipts charged 
negatively, MCA expenditure amounted to 691-3 
million ECU, compared with 636 million ECU in 
1980. priate special legislative measures to exclude any 
' possibility of fraudulent profit. 
4.11. The high level of the pound sterling has had 
the effect of implementing positive MCAs in the 
United Kingdom, granted on export, and therefore 
added to the refunds granted in trade with third 
countries. The latter should be separately charged to 
item 7811 of the budget and therefore also be separ­
ately declared by the Member States. In 1981 (as has 
been the case since their introduction) the United 
Kingdom was unable to record these amounts separ­
ately in the accounts, for reasons connected with the 
programming of the computer of the paying agency. 
The expenditure of this Member State for 1981 thus 
had to be divided between the headings relating to 
refunds and item 7811 on the basis of an estimated 
figure, which, whatever the quality of the method 
used, will affect the accuracy of the amount entered 
in the revenue and expenditure account. 
4.10. It should be remembered that certain intra-
Community frontiers, particularly those between the 
Benelux countries and between Ireland and North­
ern Ireland, are more open than others and that 
when MCAs are only applicable to one of the bor­
dering countries, this situation is likely to cause spe­
culative import and export transactions with the 
goods subject to MCAs. These movements have the 
effect of provoking the disappearance of taxable 
goods where the MCAs take the form of taxes and 
an increase in goods eligible for subsidies where the 
MCAs take the form of aid. The result is thus a loss 
of potential revenue and an increase in the burden 
upon Community finances. 
Movements of this nature occurred in 1981, particu­
larly in respect of pigs and cattle. With regard to Ire­
land and the United Kingdom, several working 
meetings on the subject were held with the Commis­
sion, and the Member States decided to reinforce 
customs controls. On the other hand, the Com­
munity has not up to now been able to take appro-Monetary units 
4.12. The application of the ECU to the budget in 
1981 did not eliminate the existence of two conver­
sion rates, a budgetary rate applicable to revenue 
and expenditure of the budget and a representative 
rate (green rate) applicable to measures under the 
common agricultural policy. This means that the 
cost of a measure under the agricultural policy is 
different according to whether it is valued at one or 
other of the rates. The financial effect of dual con­
version — 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 — no longer appears either in 
the budget or in the revenue and expenditure 
account, since it is incorporated in the various items 
of expenditure. It is, however, still calculated by the 
Commission. When the budgetary estimates were 
made for the financial year 1981, it was estimated at 
202-6 million ECU (2). 
(!) Imports of agricultural products into the United King-' 
dom, which were previously subsidized, have since the 
recovery of the pound sterling given rise to budgetary 
revenue in MCAs. (2) Working document of the Commission No VI/90/80 
(budgetary estimates of the EAGGF, Guarantee Sec­
tion, for 1981). 
36 Official Journal of the European Communities 31. 12. 82 
The financial effect of the dual rate is not always 
calculated, however, in the agricultural policy mea: 
sures which have a financial impact and which are 
adopted outside the budgetary procedure. In such 
cases, the exact cost to the budget of the measure is 
not known, whereas it should be taken into consid­
eration for the final decision. Where the representa­
tive rates are above the budgetary rates, as has 
generally been the case since 1981, this cost proves 
to be higher than the estimated cost appearing in the 
financial statements. 
Management of global appropriations 
(advances) payment, special advances may be paid by the 
Commission, on the basis of a duly substantiated 
application by the Member State. 
4.14. In 1981, the Commission received and 
approved 17 applications for special advances, one 
of which was in fact added to the normal advance 
for the following month. According to the Commis­
sion, these applications were duly substantiated 
each time. Only 12 applications, however, were 
accompanied by supporting documents. In the case 
of 5 applications representing a total of 135-2 mil­
lion ECU (2) in special advances, decided upon on 
18 December, it is impossible in the absence of sup­
porting documents to determine how the needs of 
the Member States were identified and assessed. 
Special advances 
4.13. Under Article 5 of Commission Regulation 
(EEC) No 380/78 of 30 January 1978 (!), where the 
financial resources placed each month at the dis­
posal of the Member States are likely to be 
exhausted before the date laid down for the next Rate of utilization of advances by the Member States 
4.15. The rates of utilization of the advances for 
the financial year 1981 are given in Table 4.4. 
(') OJNoL56, 27.2. 1978, p. 51. (2) Details of the advances in question: 
Greece: 25 -3 million ECU, 
Ireland: 10-2 million ECU, 
Italy: 77-2 million ECU, 
Luxembourg: 0-2 million ECU, 
Netherlands: 22-3 million ECU. 
Table 4.4 — Rates of utilization of advances in 1981 
Recipient 
Member State Monthly average for the year 1981 
Average advances for one 
month 
Mio ECU National 
currency 
(Mio) Average balance 
remaining after 
month's expenditure 
Mio ECU National 
currency 
(Mio) Utilization 
rate 
(in %) 
(2) ~(4) 
' (2) As at 31. 12. 1981 
Total 
advances 
Mio ECU Expenditure 
declared 
Mio ECU Utilization 
rate at 
31. 12. 1981 
(in %) 
(8) 
%(7) 
(I) (2) (3) (4) (5) (6) (7) (8) (9) 
Belgium 
Denmark 
FR of Germany 
Greece 
France 
Ireland 
Italy 
Luxembourg 
Netherlands 
United Kingdom 
Total 52 
46 
195 
30 
301 
38 
174 
0 
122 
145 
1 108-3 (BFR) 2 142-8 10 
(DKR) 369-4 4 
(DM) 493-9 29 
(DR) 1 887-4 18 
(FF) 1 810-4 40 
(IRL) 28-9 5 
(LIT) 217 500 2 
(LFR) 130 0 
(HFL) 340-8 24 
(UKL) 80-5 57 
193 (BFR) 428-5 
(DKR) 38-2 
(DM) 74-0 
(DR) 1 
(FF) 
(IRL) 
(LIT) 
(LFR) 
(HFL) 138-6 
245-4 
3-8 
2 000 
, 1-0 
68-3 
(UK.L) 31-2. 
825 505 
534 
2 082 
161 
3 298 
460 
2 074 
4 
1 185 
1 101 
11 408-1 4 500 0 98 9 
5 513 6 96 1 
4 ' 2 058 0 98 8 
4 146 1 90 5 
5 3 146 8 95 4 
2 441 0 95 8 
2 2 065 1 99 6 
3 . 4 0 93 0 
6 1 179 5 99 5 
6 1 086 2 98 6 
1 11 140 3 97 6 
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'. 
31. 12. 82 Official Journal of the European Communities 37 
The average rate of utilization of advances at 31 
December 1981 was 97 -6%. For the financial year, 
no Member State exceeded the ceiling of advances 
placed at its disposal. The majority of Member 
States had an average monthly utilization rate vary­
ing between 80% and 98-9%. The exceptions were 
Greece and the United Kingdom. 
(a) The Greek case can be explained by an initial 
overestimate of the rate of payments. At 
30 April, .when Greece had already received at 
its own request 35 - 8 million ECU in advances, 
it had only made payments in respect of 3 • 1 
million ECU. A reduction in the amount of ad­
vances allocated was therefore made. The total 
financing placed at the disposal of Greece for 
1981 finally amounted to 161-4 million ECU 
whereas the expenditure incurred was 146-2 
million ECU. 
(b) The situation in the United Kingdom was 
caused by a strike by data-processing staff at the 
, paying department which led to the suspension 
of payments. Cash position of the Member States 
Difference between the cash position recorded by the 
Member States and by the Commission 
4.16. At the end of 1981, there were still some dis­
crepancies between the records of certain Member 
States and the records kept in national currencies 
by the Commission as to the Community cash 
resources at the disposal of the Member States. 
Table 4.5 gives details thereof. It appears that the 
remaining differences relate to the Federal Republic 
of Germany, France, Italy, Luxembourg and the 
Netherlands. The Commission has identified the 
reasons for the differences relating to the Federal 
Republic of Germany,. Luxembourg and the Nether­
lands, and it is anticipated that these Member States 
will make the necessary adjustments in 1982. The 
Commission is conducting enquiries to identify the 
cash position differences in respect of Italy and 
France. 
Table 4.5 — Difference between the cash position given by the Member States and by the Commission 
(in national currency: millions) 
Recipient 
Member State At 31 December 1980 At 31 December 1981 
Recipient 
Member State According to 
Member 
State (') According to 
Commission Difference According to 
Member 
State (') According to 
Commission Difference 
(1) (2) (3) (4) = (2)-(3) (5) (6) (7) = (5) — (6) 
Belgium (Mio BFR) 1 038-4 1 038-4 0 212-1 212-1 0 
Denmark (Mio DKR) 106-4 114-7 - 8-3 149-4 149-4 0 
FR of Germany (Mio DM) 138-0 82-8 55-2 87-4 56-0 31-4 
Greece (Mio DR) — — — 937-6 937-6 0 
France (Mio FF) 57-1 84-9 -27-8 865-8 894-1 ' -28-3 
Ireland (Mio IRL) 12-2 8-7 3-5 13-0 13-0 0 
Italy (Mio LIT) *(2) 41 841-9 *(2) v *(2) 11 695-9 *(2) 
Luxembourg (Mio LFR) 2-7 -1-6 4-3 14-1 11 -8 2-3 
Netherlands (Mio HFL) 60-4 62-7 - 2-3 14-5 16-8 - 2-3 
United Kingdom (Mio UKL) -11 -1-6 0-5 8-7 8-7 0 
(') Excluding the advance for the following January and including the corrections made by the Commission. 
(2) This' Member State did not submit a final statement of the cash position. 
38 Official Journal of the European Communities 31. 12. 82 
Management of detailed 
appropriations 
Direct management and automatic carryovers 
4.17. As in 1980 (see annual report on the financial 
year 1980, paragraphs 4.25 to 4.27 (!)) the Commis­
sion continued to perform acts of direct manage­
ment. They concern the olive oil and flax sectors, for 
which the Commission committed 299 323 and 
546 727 ECU respectively, for payment to private 
individuals. During the financial year, it did not 
make any payment in the flax sector and made only 
one partial payment of 141 514 ECU in the olive oil 
sector. This meant that 157 808 -95 ECU for olive oil 
and 546 727 ECU for flax were automatically car­
ried over. 
The existence of such automatic carryovers, which 
would not be possible under the normal conditions 
of EAGGF, Guarantee Section management, where 
the amounts committed in detail and the amounts 
charged as payments should be identical, is an addi­
tional illustrationv of the disadvantages resulting 
from the development of direct management in the 
EAGGF, Guarantee Section, which the Court has 
also criticized in principle, as this type of manage­
ment does not comply with the provisions of 
Title VIII of the Financial Regulation. 
These provisions do not only apply to the expendi­
ture of the EAGGF, Guarantee Section, made by the 
Member States, but, under Article 95, to all expendi­
ture financed by the EAGGF, Guarantee Section in 
accordance with Council Regulation (EEC) 
No 729/70 of 21 April 1970 (2). This clearly excludes 
any form of direct management. On the other hand, 
the Court would recall that operations in the agricul­
tural sector which, without being guarantee mea­
sures, are nevertheless connected with the manage­
ment of the EAGGF, Guarantee Section, may be 
directly financed under the rules of the general 
budget. In 1981, Chapter 31 of the budget was allo­
cated corresponding appropriations. > 
Non-automatic carryovers 
4.18. The total of appropriations for which the 
Commission on 26 March 1982 requested carryovers 
(') OJ No C 344, 31. 12. 1981. 
(2) OJ No L 94, 28. 4. 1970, p. 13. from the budgetary authority was 161 -7 million 
ECU. It comprises a carryover of 100 million ECU 
in respect of the co-responsibility programme in the 
milk sector and of another of 61 -7 million in respect 
of sales to Poland. The carryover of 100 million 
ECU for co-responsibility is based on a Resolution 
of the European Parliament of 9 November 1981 (3) 
in which a request was made that appropriations not 
used in 1981 be carried forward to 1982. On 1 April 
1982, the Parliament was consulted by the Council 
on these requests, for carryovers. As the Council, on 
the recommendation of Coreper of 23 April 1982, 
did not take a decision to the contrary, the Commis­
sion was able to consider the carryovers of appro­
priations as having been approved. These carry­
overs, the advisability of which is not in issue here, 
show how inadequate the EAGGF, Guarantee Sec­
tion financing system is for managing programmed 
measures, and, in the case of co-responsibility, the 
disadvantages of allocating revenue in the absence 
of special rules. 
Management of aid to disaster victims in Italy 
4.19. Following the earthquake of 23 November 
1980, the Commission decided to provide food from 
intervention stocks free to disaster victims in Italy. 
These measures were initially financed from the 
resources of the EAGGF, Guarantee Section (4), and 
not by expenditure under Article 590 'Aid to disaster 
victims in the Community'. The financial cost, 
amounting to 9 040 154 02 ECU, was therefore 
charged to items 6023, 6315 and 6513 of the budget. 
Subsequently, in October 1981, the Commission 
proceeded to rectify the budgetary situation by can­
celling the expenditure under the EAGGF, Guaran­
tee Section (by negative charging) and re-charging it 
to Article 590. 
Although this method allowed the Commission, as 
early as 26 November 1980, to act with the necessary 
speed, it was at the cost of failure to comply with 
the rules governing expenditure under Article 590 
and in the absence of appropriations under this 
heading at the time when the decisions were taken. 
(3) OJ No C 327, 14. 12. 1981, p. 34, paragraph 6. 
(4) Commission Decisions: No 80/1151/EEC of 28.11. 
1980, OJ No L 341, 16. 12. 1980, p. 38; No 80/1152/ 
EEC of 28. 11. 1980, OJ No L 341, 16. 12. 1980, p. 39; 
No 80/1162/EEC of 1. 12. 1980, OJ No L 343, 18. 12. 
1980, p. 48; No81/706/EEC of 18.9. 1981, OJ 
No L 254, 9. 9. 1981, p. 22. 
31. 12. 82 Official Journal of the European Communities 39 
Anticipated loss in value of public 
stocks in 1981 
4.20. The Court has already had occasion to 
express its strongest reservations 0) as to the use 
made by the Commission of the provisions of 
Article 8 of Council Regulation (EEC) No 1883/78 
of 2 August 1978 (2). The first paragraph of this 
Article lays down the general rule that the quantities 
of products in storage to be carried forward to the 
following financial year, shall, as a rule, be valued 
at their purchase price. Provision is made in the 
second paragraph for this price to be replaced 
within certain limits by another price if the esti­
mated price on leaving intervention is substantially 
lower than the value of the stocks to be carried for­
ward. anticipate expenditure chargeable to a given finan­
cial year and thus to evade the basic rule of the 
annuality of the budget, and of the erratic use made 
of it by the Commission during the past four years. 
4.22. In its previous annual report (3), the Court 
had already drawn attention to the questionable 
practice of charging amounts resulting from the val­
uation of stocks at 31 December 1980 at the special 
selling prices for Poland, for goods which had not 
yet been delivered. Notwithstanding the Commis­
sion's arguments to the contrary, this was an antici­
pation of loss in value designed to finance the food 
aid programme for Poland out of second category 
intervention appropriations intended for operations 
on the internal market. 
Examination of the valuation of stocks at 
31 December 1981 shows that the same operation 
was repeated, by the same procedure, for a transfer 
not ye* made on that date of 8 000 tonnes of beef at 
nil price (4) to Poland. The same criticisms can be 
applied, mutatis mutandis, to this new case of dis­
guised anticipation of loss in value. The sum 
involved is 18 1 million ECU. 
4.21. This facility was first used to anticipate and 
charge to the financial year 1978 expenditure up to 
the limit of the appropriations remaining available 
after the expenditure declared by the Member States 
for that year had been taken into account. This oper­
ation, termed by the Court as an anticipation of loss 
in value of stocks, was not repeated in 1979, nor 
(subject to the remarks below on aid to Poland) in 
1980. It was repeated in 1981, however, which had 
the effect of charging to that financial year an 
amount of 86 -5 million ECU representing market­
ing measures which will not become effective until 
1982. On a more general level, the Court has endeavoured 
to establish a financial statement of the costs of the 
aid operations to Poland charged to the EAGGF, 
Guarantee Section in 1980 and 1981.' Since, how­
ever, the financing mechanisms of the common agri­
cultural policy were used for these operations but no 
special budget headings were created, further inves­
tigation will be necessary. 
Clearance of the accounts of the 
EAGGF, Guarantee Section 
The Court can only reiterate its criticism both of the 
latitude given by Council Regulation No 1883/78 to 4.23. On 16 November 1981, the Commission 
adopted 18 decisions on clearance of the accounts 
submitted by the Member States for the expenditure 
of the financial years 1974 and 1975 financed by the 
EAGGF, Guarantee Section (5). Prior to this, on 9 
July 1981, the Commission had consulted the Fund 
Committee on the 18 draft decisions and on a separ­
ate document listing all the corrections that it 
intended to make. 
(3) OJ No C 344, 31. 12. 1981, paragraph 4.33. 
(4) Commission Regulation (EEC) No 3563/81 of 
(') OJ No C 326, 31. 12. 1979, pp. 24 and 25. 10. 12. 1981, OJ No L 356, 11. 12. 1981, p. 51. 
(2) OJNoL216, 5. 8. 1978, p. 1. (5) OJ No L 375, 30. 12. 1981, p. 5. 
40 Official Journal of the European Communities 31. 12. 82 
Budgetary repercussions of the 1974-75 clearance 
decisions on the 1981 accounts 
4.24. Article 99 of the Financial Regulation pro­
vides that any differences which may exist between 
the expenditure charged to the accounts of a finan­
cial year by the Member States and that recognized 
by the Commission as chargeable to the EAGGF, 
Guarantee Section, when clearing the accounts shall 
be charged as under- or ov?r-expenditure to the 
financial year during which the accounts are 
cleared. 
Until 1979, this accounting operation was effected 
by charging each type of correction concerning a 
category of expenditure to the corresponding budget 
heading. This method had already been criticized by 
the Court ('), since it was not thereby possible to 
identify clearly the effect of , the clearance on the 
budget, and it directly affected the volume of the 
different kinds of expenditure incurred during the 
financial year in which a clearance operation had 
taken place. 
Since 1980, a separate budget heading, Article 792 
in the 1981 budget, has been provided to ensure 
separate entry in the accounts of the results of clear­
ance. However, this heading does not appear to 
have been used in the most satisfactory manner. 
4.25. An entry of a 'partial estimate' of revenue in 
the form of a negative appropriation of 40 million 
ECU was introduced by the Council in the first 
amending budget. This estimate was renewed by the 
Commission on the adoption of the second amend­
ing budget on 21 December 1981. On 9 July, how­
ever, the date on which the EAGGF Committee had 
been consulted, the Commission services had 
already proposed the adoption of decisions as to 
corrections of nearly 160 million ECU, and when 
the amending budget was adopted on 21 December 
1981 these decisions had already been adopted over 
a month earlier. In the Court's view, since estimates 
of recoveries were involved, the logical procedure 
would have been, firstly, not to put these amounts into a proposed amending budget until they had 
become certain, and, secondly, to ensure that the 
budget amended accordingly did in fact record the 
final revenue. 
4.26. At the time that the corrections to the 
expenditure were entered in the accounts, the Com­
mission charged globally to Article 792 the sum of 
— 161 million ECU, representing the balance of all 
the corrections for the financial years 1974 and 1975. 
The use of a single article results in a net amount, 
which means that it is not possible to evaluate the 
proportions of over- or under-expenditure as men­
tioned in Article 99 of the Financial Regulation. 
Moreover, the absence of any detailed breakdown 
of these corrections in explanatory notes to the 
revenue and expenditure account (requested by the 
Court in its annual report for 1979 (2) means that no 
assessment can be made of the real impact of the 
results of the clearance by individual item and by 
Member State. 
The Court considers that charging should be to two 
separate items, one for all corrections of under-
expenditure and the other for all corrections of 
over-expenditure, and that explanatory notes should 
be added to the revenue and expenditure account to 
identify the different types of corrections by financial 
year, item and Member State. Furthermore, this 
information makes possible a direct reconstruction 
of the original financial year after clearance. 
4.27. The financial effect of the clearance deci­
sions taken on 16 November 1981 was applied to 
the advances decided on 18 December 1981 to cover 
the expenditure of January 1982. 
Recovery of the amount of 161 million ECU should 
have been made from the appropriations made 
available to the Member States for 1981, i.e. either at 
the time of payment in November of the advance 
for December, or by an ad hoc amending decision. 
The result was an artificial inflation of the amount 
made available to the Member States in 1981. 
(') Annual report on the financial year 1979, para­
graph 4.46; OJ No C 342, 31.12.1980. (2) OJ No C 342, 31. 12. 1980: Remark of the Court on 
the reply of the Commission to paragraph 4.47. See 
also the Opinion of the Court of 21 May 1981 in res­
pect of Article 73(3) of the Financial Regulation, OJ 
No C 232, 11. 9. 1981, pp. 48 and 49. 
31. 12. 82 Official Journal of the European Communities 41 
Justification for the amounts in the 1974-75 clearance 
decisions 
4.28. The clearance decisions of the Commission, 
each taken for an individual Member State, state an 
amount of expenditure to be refused and fix the 
total expenditure recognized as chargeable to the 
EAGGF, Guarantee Section for each of the finan­
cial years concerned. This information is inadequate 
due to the absence of (i) details of the amount and 
of the nature of the corrections made; (ii) reference 
to the expenditure of the financial year charged as 
payments; and (iii) reference to the summary 
accounts provided by the Member State for the pur­
pose of clearance. It is, therefore, difficult to assess 
the practical consequences of the decision. 
4.29. Moreover, the global amounts to which the 
decisions relate are not presented using consistent 
methods, as can be seen from the preparatory docu­
ments. 
(a) The amounts provisionally refused (87-8 mil­
lion ECU (!)) are, according to the recitals in the 
decisions in respect of 1974 and 1975, included 
in the amounts finally refused (172-2 million 
ECU 0)), whereas this was not the case in the 
earlier decisions relating to 1971 and 1972. either 
(i) the balance of negative and positive cor­
rections (2). This is the general ciase; 
or 
(ii) only the sum of the negative corrections. 
This is the case, for example, with the 
decisions relating to the Netherlands and 
Ireland in 1975. 
Table 4.6 — Clearance for the Netherlands and Ireland 1975 
(1 000 ECU) (I) 
Ireland Nether­
lands 
Total negative 
corrections -1 104 - 367 
Total positive 
corrections + 3 499 + 1 014 
Balance + 2 395 + 647 
Amount refused 
(decision) -1 104 - 367 
(') Rate of 18. 9. 1981. 
(b) The amounts provisionally refused in 1973 and 
not accepted at the time of the 1974 and 1975 
clearances, i.e. 104 000 ECU, are considered by 
the Commission unless otherwise stated to have 
been finally refused, whereas entire sectors of 
expenditure which were provisionally accepted 
in 1973 and of which no further mention was 
made at the time of the 1974 and 1975 clear­
ances are still considered open to re-examina­
tion by the Commission. 
(c) Depending upon the accounts cleared (and by 
reference to the corrections listed in the numer­
ous preparatory documents) the amounts 
refused represent: Clearance of the accounts and national aid 
4.30. Under the clearance of the 1974 and 1975 
accounts, the Commission refused to charge to the 
EAGGF, Guarantee Section, expenditure on aid to 
wine distillation in France, on the grounds that this 
Member State had introduced a national system of 
Community financing which was considered incom­
patible with the common organization of the mar­
ket. In doing so, the Commission repeated a deci­
sion taken on clearance of the 1971-72 accounts 
which had been upheld by the Court of Justice (3). 
These individual decisions are part of a general 
policy in accordance with the 'Guidelines for Euro­
pean agriculture (4) drafted for the implementation 
(') Sum of figures obtained after conversion of the 
amounts in national currency at the rate on 
18.9.1981. (2) The Court expressed reservations on the concept of 
positive correction in its annual report on the finan­
cial year 1979, paragraphs 4.52 and 4.53, OJ No C 342, 
31.12.1980. 
(3) Cases 15 and 16/76 (judgments of 7.2. 1979) ECR 
[1979] 321 etseq. 
(4) Commission Document No COM(81) 608 final. 
42 Official Journal of the European Communities 31. 12. 82 
of the mandate of 30 May 1980, in which the Com­
mission expressed its intention in similar cases to 
refuse to charge the expenditure concerned to the 
EAGGF, Guarantee Section. Such a policy is likely 
to give the clearance decisions a new dimension, but 
it implies close coordination of the procedures gov­
erning audit of national aid and verification for the 
purpose of clearance, which are currently the res­
ponsibility of different departments of the Commis­
sion. 
Current litigation arising from clearance of the 
accounts 
4.31. Following the clearance decisions in respect 
of the 1974-75 accounts, three Member States, the 
Netherlands, the Federal Republic of Germany and 
Italy challenged the content of the decisions relating 
to them before the Court of Justice (!). 
Progress of clearance work 
4.32. Delay in clearance continues and only the 
Commission forecasts show an improvement in the 
situation. The decisions taken during 1981, adopted 
on 16 November 1981, concern the accounts of the 
financial years 1974 and 1975: the delay is between 
five and six years. Whereas the expenditure of ten 
financial years (58 085-2 million EUA) should have 
been finally cleared on that date, only five of those 
years (15 026-6 million EUA) had actually been 
cleared. On 12 October 1982 the Court adopted a 
^special, report analysing the reasons for this delay 
and making a number of suggestions to overcome 
it (*). 
Frauds and irregularities 
Difficulty of access to important files and 
irrecoverable amounts 
4.33. In its report on the financial year 1980, the 
Court of Auditors regretted the fact that it did not 
(') Cases 45/82 (Netherlands), 46/82 (Federal Republic 
of Germany), 61/82 and 62/82 (Italy). See OJ 
Nos C 72, 23. 3. 1982, C 62, 12. 3. 1982 and C 67, 16. 3. 
1982. 
(2) See OJ No C 313, 29. 11. 1982. A draft special report 
has been sent to the Commission on 7 April 1982. have access to frauds and irregularities files not yet 
closed which were of most importance for the prob­
lem of recovery of sums wrongly paid. This diffi­
culty has now in,principle been overcome, but the 
problem remains of amounts wrongly paid and 
declared irrecoverable. These sums amount to 
1- 6 million ECU since 1970, and it is foreseeable 
that in the short term a further 7 • 5 million ECU will 
be added. The loss of these amounts is, in principle, 
to be borne by the Community, but under 
Article 8 (2) of Council Regulation (EEC) No 729/ 
70 of 21 April 1970 (3) the burden can be shifted to a 
Member State if the latter has been negligent or is 
responsible for the irregularity. 
In 1981, the Commission was still not in a position 
to take a definite decision as to where the loss of 
these amounts would lie. 
The Commission statistics 
4.34. In 1981, provision of information under Arti­
cles 3 and 5 of Council Regulation (EEC) No 283/ 
72 of 7 February 1972 (4) (notification by the Mem­
ber States of irregularities discovered and of the 
state of the recovery procedures) appears, as in 1980, 
to have been somewhat above the average for earlier 
years. This is mainly due to the large number of 
Table 4.7 — Irregularities notified and recoveries effected 
Cases notified Recoveries 
Year 
Number Amounts 
(Mio ECU) Number Amounts 
(Mio ECU) 
1971 8 11 986 • 7 11 855 
1972 20 2 296 16 1 055 
1973 49 1 281 43 0 677 
1974 87 4 288 70 0-958 
1975 128 2 886 104 1 341 
1976 223 5 834 145 2 728 
1977 147 9 254 84 2 521 
•1978 105 3 016 65 1 175 
1979 112 2 163 81 1 443 
1980 239 20 729 120 1 879 
1981 242 16 112 73 1 588 
Total 1360 79 844 808 27 220 
Source: Eleventh EAGGF financial report 1981.. Document 
COM(82) 439 final. 
(3) OJ No L 94, 28.4. 1970, p. 13. 
C) OJ No L 36, 10. 2. 1972, p. 1. 
31. 12. 82 Official Journal of the European Communities 43 
notifications (92) of incomplete or irregular applica­
tion of the programmes for conversion of beef cattle 
or the non-marketing of milk. 
Table 4.8 shows, by main headings, the distribution, 
by country, of cases declared in 1981 and of the 
number of recoveries in these cases. 
Implementation of the legislation to improve 
prevention and suppression of fraud and irregularities 
t 
4.35. Implementation of Council Directive (EEC) 
No 77/435 of 27 June 1977 (J) on scrutiny by Mem­
ber States of transactions forming part of the system 
of financing by the EAGGF, Guarantee Section, has 
(•) OJ No L 172, 12.7. 1977, p. 17. been slow, as already noted by the Court (2), but 
appears now to be entering an operational stage. An 
evaluation by the Court of the functioning of this 
system is in progress. 
4.36. Council Regulation (EEC) No 1468/81 of 19 
May 1981 (3) on mutual assistance between the 
administrative authorities of the Member States and 
cooperation jbetween the latter and the Commission 
to ensure the correct application of the law on cus­
toms or agricultural matters, applicable from 1 July 
1981, completes the system of rules under which the 
Member States have prime responsibility for com­
bating irregularities. Its application should contri­
bute to improving the quality of the machinery of 
supervision of the management of Community 
funds in the agricultural sector. 
(2) Annual report on the financial year 1980, para­
graph 4.38 (OJ No C 344, 31. 12. 1981). 
0) OJ No L 144,2. 6. 1981, p. 1. 
Table 4.8 — Irregularities notified in 1981 
Member State Number of cases declared 
Amounts 
(Mio ECU) Cases 
recovered Amounts 
recovered 
(Mio ECU) Member State Intervention 
Refunds Monetary 
compensa­
tory 
amounts Total Amounts 
(Mio ECU) Cases 
recovered Amounts 
recovered 
(Mio ECU) Member State 
Milk 
products - Other 
products Refunds Monetary 
compensa­
tory 
amounts Total Amounts 
(Mio ECU) Cases 
recovered Amounts 
recovered 
(Mio ECU) 
(1) (2) (3) (4) (5) (6) (7) (8) (9) 
Belgium , 0 0 0 1 1 0-178 0 — 
Denmark 21 0 11 0 32 0-329 3 0-017 
FR of Germany 78 13 19 4 114 12-859 46 1-190 
France 15 1 13 11 40 0-456 12 0-146 
Ireland 0 0 1 5 6 0-666 1 0-135 
Italy 1 1 0 0 2 0-970 0 — 
Netherlands 1 1 2 1 5 0-056 1 0-001 
United Kingdom 24 5 2 11 42 0-598 10 0-099 
Total 1400) 21 48 33 242 16112 73 1-588 
(') Of the 140 cases, 90 relate to the premium for the non-marketing of milk or the premium for conversion of cattle. 
Notes: (1) For Greece and Luxembourg, the figures are 0. 
(2) Percentage of cases recovered = 30-16% ((8)/(6)). 
(3) Percentage of amounts recovered = 9 -84% ((9)/(7)). 
Source: Eleventh EAGGF financial report 1981, Document COM(82) 439 final. 
44 Official Journal of the European Communities 31. 12. 82 
CHAPTER 5 
European Agricultural Guidance and Guarantee Fund, Guidance 
Section (EAGGF, Guidance Section) 
TABLE OF CONTENTS Paragraph reference 
Summary of principal comments 5.0 
Introduction 5.1 and 5.2 
Summary of financial information 5.3 to 5.5 
_ \ 
Comments arising from the financial information in the 
accounts 5.6 
Comments arising from examination of the system of grant­
ing and management of the aid 
Irregularities 
Council Directive 72/159/EEC concerning the moderni­
zation of farms 
Implementation of the development plans 
Investments in the pork sector 
New measures for the reorganization of fruit production 
Repair of earthquake damage in Friuli-Venezia Giulia 5.7 to 5.26 
5.7 to 5.10 
5.11 to 5.19 
5.11 to 5.15 
5.16 to 5.19 
5.20 to 5.23 
5.24 to 5.26 
SUMMARY OF PRINCIPAL COMMENTS 
5.0. The principal comments in this chapter are: 
(a) Commitments, for which there is no legal obligation, 
have been retained in the accounts: 5.6 
(b) The national administrations have not provided informa­
tion on irregularities as required by the regulations. 5.7 to 5.10 
(c) The implementation of the development plans provided 
for under Directive 72/159/EEC has not been moni­
tored and supervised satisfactorily. 5.11 to 5.15 
(d) The ceiling for investments in the pork sector laid down 
by Directive 72/159/EEC has not been respected by 
Member-States. 5.16 to 5.19 
(e) The implementation of Regulation 794/76 concerning 
the reorganization of fruit production should be 
improved. 5.20 to 5.23 
(0 Use of appropriations for the repair of earthquake dam­
age in Friuli/Venezia Giulia was dilatory and at times 
covered new investments not within the scope of the 
regulations 5.24 to 5.26 
31. 12. 82 Official Journal of the European Communities 45 
Introduction (Mio ECU) 
5.1. The EAGGF, Guidance Section, which was 
created by Council Regulations (EEC) No 25/62 of 
4 April 1962 (1) and No 17/64 of 5 February 1964 
(2), finances the common measures adopted for the 
fulfilment of the objectives set out in Article 39(1) (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 eligible investments — and, 'reimbursement' 
measures, whereby Member States can be reim­
bursed part of their expenditure for certain opera­
tions complying with the conditions laid down by 
Community provisions. New allocations of 1981: 
appropriations in Chapters 80 to 86 of 
the initial budget 
appropriations in the amending budget 
appropriations transferred from Chap­
ter 100 
appropriations transferred from Chapter 
62 
Appropriations remaining from 1980 
Total 629 6 
50 0 
33 0 
22 0 
80 4 
815 0(5) 
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 1980-84, 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. Commitments and payments of the 
financial year 
5.4. The commitments and payments of the finan­
cial year are summarized in Table 5.1, which also 
shows the amount of appropriations available. For 
Chapters 80 to 86 as a whole, commitments 
amounted to 695-1 million ECU in 1981, i.e. 85 • 3 % 
of the funds available (5). The corresponding figures 
for 1980 were 624 -5 million ECU and 92 -3% respec­
tively. 
Summary of financial information 5.5. Payments amounted to 576-4 million ECU in 
1981 compared with 601-3 million ECU for the pre­
vious financial year. They may be broken down as 
follows: 
Commitment appropriations available 
in 1981 460-4 million ECU charged to 1981 payment 
appropriations; 
30-4 million ECU charged to payment appro­
priations carried over from 1980; 
5.3. The commitment appropriations available in 
1981 for the EAGGF, Guidance Section, comprise: 
(») OJ No 30, 20. 4. 1962, p. 991. 
(2) OJ No 34, 27. 2. 1964, p. 586. 
(3) OJ No L 117, 12. 5. 1979, p. 4. 
(4) OJ No L 367, 31. 12. 1980, p. 87. 85 -6 million ECU charged to non-differentiated 
appropriations carried over from financial years 
priortol977. 
(5) See Table 5.1 and note 3. 
46 Official Journal of the European Communities 31. 12. 82 
Table 5.1 — EAGGF, Guidance Section: Appropriations available in 1981 and their utilization 
(Mio ECU) 
Differentiated appropriations Non-differentiated 
appropriations from 
before 1977 Commitment 
' • appropriations Payment appropriations Non-differentiated 
appropriations from 
before 1977 
Article of the budget Final 
appropria­
tions 
available 
in 1981 (') Commit­
ments 
in 1981 Final 
appropria­
tions 
available 
in 1981 (2) Payments 
in 1981 Appropria-
- tions 
carried 
over Payments 
in 1981 
A — Projects for the improvement of agricultural 
structures (3) 
800 Individual projects 
801 Marketing 
802 Public services 3-2 
178-5 
36-5 169-7 
.28-7 33-3 
61 -2 
13-0 31-7 
55-5 
6-5 305 • 1 85-6 
Total A 218 2 198-4 107-5 93-7 305-1 85-6 
B — General socio-structural measures 
810 Modernization 
811 Cessation 
812 Training 114-9 
0-9 
5-0 110-4 
0-7 , 
4-9 116-7 
0-9 
5-0 "110-4 
0-7 
4-9 , 
Total B 120-8 116-0 122-6 1160 
C — Measures to assist less-favoured areas 
820 Mountain and hill farming 
821 Mediterranean forests 
822 Regions — Italy 
823 Regions — France 
824 Regions — Ireland 
825 {legions — Denmark 
826 Regions — United Kingdom 
827 Regions — Belgium 110-5 
50-9 
55-8 
15-4/ 
14-7 
3-0 
1-0 106-7 
44-3 
53-4 
13-0 
13-2 
1-6 110-5 
20-8 
16-0 
15-3 
14-7 106-7 
9-1' 
13-0 
13-2 
Total C 251 -3 232-2 177-3 142-0 
D — Structural measures relating to the common 
organizations of the market 
830 Producer organizations 
831 Milk and meat 
832 Wine 
833 Fruit 3-8 
135-5 
32-2 
, 7-8 1-1 
108-2 
13 -1 
6-7 3-8 
135-5 
18-6 
7-2 1-1 ' 
108-2 
13-1 
6-7 
Total D 179-3 129-1 16:> -1 129-1 
E — Specific measures in the fisheries sector 
860 Inshore fishing 
862 Producer groups 
8 300 Salt cod-fishing industry 
(1975 budget items) 45-3 
0-1 19-3 
01 13 9 
0-1 9-9 
0-1 
0-1 
Total E 45-4 19-4 140 100 0-1 — 
Grand Total 8150 695-1 586-5 490-8 305-2 85-6 
(') Taking into account transfers, decommittals and appropriations remaining from 1980. 
(2) Taking into account transfers t'nd carryovers from 1980. 
(3) In 1981 25-4 million ECU were decommitted and re-utilized in accordance with Regulation 3171/75. These recommitments and payments 
are entered in the accounts against non-differentiated appropriations. 
31. 12. 82 Official Journal of the European Communities 47 
Of the 586 -5 million ECU in payment appropria­
tions available from the 1981 budget and from carry­
overs from 1980, 490-8 million ECU (i.e. 83-7%) 
were utilized. The corresponding figures for 1980 
were 479-4 million ECU in payments, representing 
90% of funds. Article 8(3) of Regulation 729/70 of 21 April 
1970 (5), imposes a series of duties upon both the 
Member States and the Commission for the purpose 
of intensifying the campaign against irregularities 
and recovering the sums lost in this way. 
Comments arising from the financial 
information in the accounts 
5.6. By way of exception to the principle of 
annuality, Council Regulation (EEC) No 3171/75 
of 3 December 1975 0) provides that in the event of 
a total or partial cancellation of aid.to projects gov­
erned by Council Regulation (EEC) No 17/64 (2) 
the appropriations thus made-available may be used 
to finance new projects (see also Article 6 (6) of the 
Financial Regulation of 21 December 1977 (3)). 
Since there is no statutory provision as to how 
appropriations that haye again become available are 
to be presented in the accounts, they remain in the 
accounts as commitments, until such time as a new 
financing decision is made. For the projects prior to 
1976 alone there is a total of approximately 3-2 mil­
lion ECU which, at 31 December 1981, continued to 
appear in the Commission's accounts as commit­
ments outstanding although they no longer repre­
sented any obligations. Article 2 of Regulation 283/72 obliges Member 
States to communicate to the Commission within a 
short time the provisions that they adopt by law, 
regulation or administrative action to satisfy them­
selves that transactions financed by the Fund are 
actually carried out and are executed correctly, to 
prevent and deal with irregularities and to recover 
sums lost as a result of irregularities or negligence.-
5.8. To date there is still no regular forwarding of 
the national provisions specially designed to cam­
paign against irregularities and facilitate the recov­
ery of sums lost during the various projects financed 
by the EAGGF, Guidance Fund, as laid down in the 
above-mentioned Article 2. 
The Commission makes up for the absence of a 
regular flow of information on the provisions relat­
ing to irregularities by collecting data on national 
inspection procedures and systems during its 
on-the-spot checks or on examination of the 
requests for reimbursement. 
Comments arising from examination of 
the system of granting and 
management of the aid There is no question of the usefulness of such initia­
tives but it must be stressed that they are an unsuit­
able means, since the information provided is frag­
mentary and at all events late; the Commission 
cannot by this method have a complete and regu­
larly updated record of the national legislation on 
irregularities. 
Irregularities 
5.7. Council Regulation (EEC) No 283/72 of 
7 February 1972 (4), adopted in application of 5.9. Articles 3 and 5 of Regulation No 283/72 
impose upon the Member States the duty to inform 
the Commission, on a quarterly basis, of cases of 
irregularities which have been the subject of primary 
administrative or judicial findings of fact, or of judi­
cial or administrative procedures instituted with a 
view to recovering sums wrongly paid, and of the 
progress and outcome of such proceedings. 
(') OJNoL315, 5. 12. 1975, p. 1. 
(2) OJ No 34, 27. 2. 1964, p. 586. 
(3) OJ No L 356, 31. 12. 1977, p. 1. 
(«) OJ No L 36, 10. 2. 1972, p. 1. (5) OJNoL94, 28.4. 1970, p. 13. 
48 Official Journal of the European Communities 31. 12. 82 
This duty is not regularly observed either; it was 
even found that in some Member States the Com­
munity regulations laying down this duty to forward 
information had not been properly disseminated 
and that, at the administrative level, the necessary 
instructions had not been given for the introduction 
of an effective system of communication. 
This situation may be explained by the small num­
ber of national departments concerned in the man­
agement of the structural projects decided in the 
years immediately following the adoption of Regu­
lation No 283/72, and also by the fact that the con­
cept of irregularity was sufficiently clear in the case 
of those projects. 
However, the rise in the number of structural pro­
jects (some of which contain no clear indication of 
what cases constitute irregularities) and the prolifer­
ation of departments charged with managing them, 
make the need for strict observance of Community 
regulations increasingly apparent. It is strongly 
recommended that countries who fail to observe 
these regulations should be formally reminded of 
their obligation both to communicate to the Com­
mission all cases of irregularities established, and to 
inform it without delay of the recovery procedures 
instituted and of the progress and outcome of such 
proceedings. 
5.10. Despite efforts by the Commission and the 
Member States there are still differing interpreta­
tions of the concept of irregularity. The question of 
a uniform interpretation or at least approaching 
interpretations of the concept of irregularity for the 
different Member States and the different projects is 
closely linked with that of an efficient current infor­
mation network to be created and maintained by all 
the bodies concerned. 
Council Directive 72/159/EEC concerning 
the modernization of farms 
Implementation of the development plans 
5.11. Directive 72/159 (') forms part of a group of 
four directives for socio-structural purposes adopted 
v (') OJ No L 96, 23. 4. 1972, p. 1. by the Council in 1972 and 1975. Two of these have 
been the subject of comments in the previous report 
of the Court: Directive No 72/160 (2) concerning 
measures to encourage the cessation of farming and 
the reallocation of utilized agricultural area for the 
purposes of structural improvement and Direc­
tive 72/161 (3) concerning the provision of socio­
economic guidance for and the acquisition of occu­
pational skills by persons engaged in agriculture 
(paragraphs 5.10 to 5.16 of the 1980 report (4). A 
third Directive (75/268) (5) on mountain and hill 
farming and farming in certain less-favoured areas 
gave rise to a special report (6). 
It should be recalled that unlike a regulation, a 
directive, when chosen as an instrument for imple­
menting the common agricultural structures policy, 
affords the Member States considerable liberty in 
applying it, which should enable them to take into 
consideration differences in the nature and intensity 
of structural problems in agriculture between one 
region and another in the Community. 
5.12. Directive 72/159 (which estimated the cost 
over five years at 432 million ECU, whereas pay­
ments for the whole of the period 1972-81 only 
amounted to 305 million ECU) provides that the 
Member States are to introduce a system of selective 
incentives to farms suitable for development, 
designed to encourage their operation and develop­
ment under certain conditions. 
A farm is to be considered suitable for development 
where the farmer: 
(a) practises farming as his main occupation; 
(b) possesses adequate occupational skill and com­
petence; 
(c) draws up a plan for the development of the 
farm business which shows that, upon its com­
pletion, the farm undergoing modernization will, 
be capable of attaining, as a minimum, a level 
of earned income comparable to that received 
for non-agricultural work in the region in ques­
tion. 
Other provisions of the Directive concern the 
introduction of incentives to encourage the keeping 
(2) OJ No L 96, 23, 4. 1972, p. 9. 
(3) OJ No L 96, 23. 4. 1972, p. 15. 
C) OJ No C 344, 31. 12. 1981, p. 69. 
(5) OJ No L 128, 19. 5. 1975, p. 1. 
(6) OJ No C 358, 31. 12. 1980, p. 1. 
31. 12. 82 Official Journal of the European Communities 49 
of accounts on farms, the grant of a launching aid to when the plan is drawn up. The principal activities 
any recognized group having as its object mutual and characteristics of the farm are then examined by 
aid between farms, a more rational common use of the departments that contribute to the drafting and 
agricultural investments, or group farming opera- approval of the plan and a visit is often made to the 
tions, and the introduction of schemes for irrigation undertaking. Subsequent administrative supervision, 
or for land reparcelling. in particular to verify that the investment projects 
have been properly implemented, is far less sys­
tematic. The administrations make the point that, at 
the local level, the agents or advisers responsible for 
monitoring implementation of the plans have direct 
knowledge "of the farms. It is, however, regrettable 
that there is very little documentation of the manner 
The Guidance Section of the EAGGF contributes jn which these administrative agents and technical 
25% of Che eligible expenditure Aids from the Mem- advisers perform this duty and that not even [he 
ber States in the area covered by the Directive are essential details of their visits to the farms are 
subject to limitations and in some cases prohibited. recorded 
5.13. During the year the Court carried out audits 
on the application of Directive 72/159 in five Mem­
ber States (Germany, Denmark, France, the Nether­
lands, United Kingdom) and was present at an audit 
carried out by the Commission in Italy. 
One of the initial conditions for granting aids to 
implement development plans is that the earned 
income per man-work unit (MWU) at the outset of 
the plan is lower than the comparable income 
received for non-agricultural work in the region. During the implementation of the plan, the adminis­
trative work is too often limited to examination of 
documents in support of the expenditure sent in by 
the beneficiaries, with no emphasis on finding out 
whether the developments, which are often scattered 
throughout the farm, actually exist, what condition 
they are in, and whether they are used. In some 
cases in the Netherlands it was not possible to 
obtain,precise documentary evidence of the actual 
cost of equipment and buildings. 
It was observed that in the Netherlands the MWU 
are calculated not on the basis of the labour force 
actually employed on the farm at the outset of the 
plan but of a volume of work determined by the 
number of hours theoretically required to perform 
the various tasks on the farm. The total income of 
the farm is thus divided by a number of MWU 
which may exceed the number of persons actually 
employed, which in turn makes it possible to reduce 
the unit income to a level below that of the compa­
rable income. The method of calculating the MWU 
would profit from a more precise definition, in order 
to ensure more realistic results. 
5.14. Most of the Member States concentrate their 
efforts on administrative supervision at the time 5.15. The economic follow-up of the development 
plans and, more especially, determination of the 
progress achieved on the farm as a result of the 
plan, also poses considerable problems. Despite the 
efforts of the national administrations and the pro­
fessional organizations to make the beneficiaries of 
the plans aware of the (economic outturn of their 
farms, no true method of measuring the success of 
the plans has as yet been developed. It is usually 
possible to ascertain whether the figures given as 
forecasts in the plan have been achieved. Especially 
if the plan covers several years, however, the figures 
set by it may no longer be representative of the 
development objective to be achieved. Since the 
income to be achieved on completion of the plan is 
set without consideration of the effects of inflation, 
it is difficult to compare it with the results actually 
attained on completion of the plan, which do reflect 
the prevailing rate of inflation, especially where 
there is a different pattern of change in agricultural 
and non-agricultural incomes. 
50 Official Journal of the European Communities 31. 12. 82 
Moreover, the development of farm incomes is 
influenced by external forces unforeseen by the 
plan, which make any assessment of its success 
unreliable. Comparison of the outturn with the fore­
casts of the plan should be put on a firmer basis by 
means of a periodic examination of the annual 
accounts that have to be kept as a condition for 
receiving aid for a development plan. It is regret­
table that, as revealed by the Court's audits, such 
comparisons are not generally made by the depart­
ments responsible in the Member States. 
The completion of the plan is certainly the most 
appropriate moment to assess the achievement of 
changes on the farm or the failure to do so and to 
discover the reasons for such a situation. The Direc­
tive, which aims to change the economic behaviour 
i of farmers, has not been fully applied if there is no 
attempt to consider the position at the conclusion of 
the development plan and make comments. 5.17. The administrations of the Member States 
generally overstepped the limits imposed by the 
Directive. 
5.18. All the Member States in which audits were 
performed gave a very narrow interpretation of what 
constitutes an investment in the pork sector. In 
order not to exceed the ceiling of 40 000 ECU laid 
down by the Directive, only the construction of the 
piggery building and a part of the technical installa­
tions were considered as investments of this type. 
The ancillary costs, the cost of connection to the 
water mains and main sewers and to the electricity 
network, earthworks, access roads, installations for 
feedingstuffs or the storage of cereals, were almost 
always excluded. This practice would not appear 
consistent with the concept of a pork production 
unit, since the production of pork is only possible 
through the use of a number of integrated installa­
tions. 
Investments in the pork sector 
5.16. Article 9 of Directive 72/159 on the moderni­
zation of farms provides that where the develop­
ment plan provides for an investment in pig farm­
ing, the granting of the incentives to that investment 
shall be subject to the condition that the investment 
is of at least 10 000 ECU but does not exceed 
40 000 ECU (raised to 13 309 ECU and 67 466 ECU 
respectively as from 1 January 1981). Aids which do 
not satisfy the conditions laid down in Article 9 are 
subject to the general prohibition under Article 
14(3)(b) of the Directive. 
The lower limit is designed to curb the creation of 
pig farms of inadequate size. The other provisions 
(in particular the upper limit and the prohibiting of 
other subsidies) were intended to prevent the crea­
tion of pig-breeding factories entirely independent 
of the land, which are questionable from certain 
economic aspects and from the viewpoint of protec­
tion of the environment. 5.19. The United Kingdom has introduced two 
ceilings. One is applied within the development 
plans and the other, which applies for only two 
years, concerns a national aid in the pork sector 
which is granted despite the prohibition in 
Article 14(3) of the Directive. 
Questioned on the justification for such provisions, 
the national administration concerned stated that 
the dual ceiling had been abolished with effect from 
1 February 1980, but it did not intend to re-examine 
or recover subsidies relating to the earlier period, 
since they had been paid in good faith. As at 15 July 
1982, when the comments of the Court were sent to 
the Commission, no action had been taken by the 
latter to record the number of cases where the limit 
had been exceeded or to recover any aid wrongly 
paid. 
The investment scheme in the pork sector was 
amended by Council Regulation (EEC) No 1945/81 
of 30 June 1981 ('), itself supplemented by Commis­
sion Regulation (EEC) No 2180/81 of 30 July 
1981 (2). The following comments concern the appli­
cation of the scheme prior to its amendment. New measures for the reorganization of 
fruit production 
5.20. Despite the reorganization measures in 
Council Regulation (EEC) No 2517/69 (3), there 
remained an imbalance between supply and 
(') OJ No L 197,20.7. 1981, p. 31. 
(2) OJ No L 211,31. 7. 1981, p. 28. (3) OJ No L 318, 18. 12. 1969, p. 15. 
31. 12. 82 Official Journal of the European Communities 51 
demand in the Community market for apples and 
pears. This situation resulted in a surplus of 'Golden 
Delicious', 'Starking Delicious' and 'Imperatore' 
apples and 'Passe Crassane' pears. On 6 April 1976, 
therefore, the Council adopted Regulation (EEC) 
No 794/76 (!) which granted the producers a pre­
mium for grubbing the varieties in question. 
As at 31 December 1981, total reimbursements 
granted to the Member States under this Regulation 
amounted to 6 054 984 ECU, with 50% for France 
(3 041 461 ECU) and 30% for Italy (1 788 610 ECU), 
and audits carried out by the Court led to the fol­
lowing findings. 
5.21. Article 2(2) of Regulation No 794/76 pro­
vides that the recipient of the premium is to under­
take to abstain, for a period of five years, from any 
planting of apple, pear or peach trees, other than for 
purposes of normal replanting of the areas of 
orchard remaining following the grubbing opera­
tion. administration to the beneficiaries were made up to 
18 months late. 
Similarly, it was not until after a request for reim­
bursement of 1-8 million ECU, submitted by Italy 
over two years late on 22 November 1980, that the 
Commission on 18 December 1981, after a transfer 
of appropriations, was able to decide on payment. 
5.23. Council Regulation (EEC) No 1153/78 (2) 
amended Article 4 of Regulation No 2517/69 and 
lifted the ban on Member States granting national 
aid for the replanting of apple, pear and peach 
orchards. On the other hand, national aid to encour­
age new planting or enlargement of apple, pear or 
peach orchards is still forbidden. The French system 
of aid for the replanting of orchards, however, pro­
vides only for a balance on a national scale between 
planting and grubbing which removes any con­
straint on the individual farm and makes it difficult 
to ascertain whether there is general compliance 
with the ban imposed by the Regulation. 
The Court endeavoured to find out what measures 
had been adopted to ensure that this undertaking 
was observed in the event that the land was sold, 
leased or otherwise transferred. 
It appeared that the Commission had not consid­
ered making any special provisions on this point; 
the Commission took the view that rules of imple­
mentation on this subject were a matter for the 
Member States and therefore informed the Court of 
its intention to draw the latters' attention to the 
checks that must be carried out and on the need to 
inform it of the results. 
5.22. Article 2 also states that the grubbing must be 
undertaken before 1 April 1977 and Article 3 that 
the premium is to be paid at the latest three months 
after the claimant has shown that he has actually 
carried out the grubbing operation, the proof con­
sisting of an attestation from the competent auth­
ority. Under Article 8, the requests for reimburse­
ment are to be submitted to the Commission before 
1 July of the following year, i.e. in this case 1 July 
1978. Although the grubbing took place within the 
prescribed time-limit, payments by the Italian Repair of earthquake damage in 
Friuli- Venezia Giulia 
5.24. Following the earthquake in 1976 in the 
Friuli-Venezia Giulia region of Italy, the Council of 
the European Communities adopted, on 21 June 
1976, two Regulations (EEC) Nos 1505 and 1506/ 
76 (3) concerning an emergency Community aid 
towards repairing the damage to agriculture and the 
infrastructural damage caused by the earthquake. 
Supplementary budget No 1 of 1976 (4) provided for 
two appropriations of 45 million u.a, and 15 million 
u.a. respectively, opened under Chapter 58 of the 
budget 'Community aid to the Friuli disaster area' 
which were used to finance 96 agricultural projects 
and 11 infrastructure projects. 
0) OJ No L 93, 8.4. 1976, p. 3. (2) OJ No L 144, 31. 5. 1978, p. 4. 
(3) OJ No L 168, 28. 6. 1976, p. 9. 
(4) OJ No L 205, 30. 7. 1976, p. 1. 
52 Official Journal of the European Communities 31. 12. 82 
The position of the agricultural projects on the basis 
of the data available at the time this report was 
adopted may be summarized as follows: 
— 60 projects were completed and approved; 
— 28 projects were completed and were awaiting 
approval; 
— 5 projects were still in progress; 
— 3 were at the tendering stage. 
5.25. Although the total amount had been commit­
ted, approximately 50% of the Community aid for 
these projects had still to be paid as at 31 December 
1981. Checks carried out by the Court confirmed the 
comment already made in paragraph 5.23 of its 1979 
report (J) concerning the length of the approval pro­
cedure for the projects at national level. There is an 
average period of over two years — and in some 
cases as much as 42 months — between the date of the decision in principle and the decision to begin 
work on the site. 
Despite the lengthy procedure, the national stan­
dards for the award of contracts have not always 
been strictly applied. In several cases, the authoriza­
tions required at the ministerial or regional levels 
were not delivered until after the start of the opera­
tions which they concerned. 
5.26. According to Regulation No 1505/76, Com­
munity aid was to contribute to the restoration and 
improvement of both the production conditions in 
agriculture or on farms and the facilities for market­
ing or processing agricultural products. 
The terms 'restoration' and 'improvement' have 
sometimes been applied very freely, some of the 
projects financed (particularly the construction of 
cheese-processing plants) appearing to be mainly 
for new types of plant. 
C) OJ No C 342, 31. 12. 1980, p. 87. 
31. 12. 82 Official Journal of the European Communities 53 
CHAPTER 6 
The European Social Fund and other expenditure in the social 
sector 
TABLE OF CONTENTS Paragraph reference 
Summary of principal comments 6.0 
Introduction 6.1 
Summary of financial information 6.2 to 6.5 
Comments arising from the financial information in the 
accounts 6.6 to 6.11 
Re-utilization of appropriations decommitted 6.6 and 6.7 
Cancellation of commitments from before 1980 6.8 
Clearing of files from 1975 and 1976 6.9 to 6.11 
Comments on the financial management 6.12 to 6.16 
Comments arising from a follow-up of the preparatory stu­
dies and pilot schemes system 6.17 to 6.20 
SUMMARY OF PRINCIPAL COMMENTS 
6.0. The principal comments in this chapter are: 
(a) Substantial commitments from 1980 and 1981 were can­
celled, generally without adequate explanation for non-
use by the Member States. Commitments from before 
1980 were also cancelled, resulting in cancellation of 
appropriations. 6.6 to 6.8 
Substantial balances remained outstanding at 31 Decem­
ber 1981 from commitments made in 1975 and 1976. 6.9 to 6.11 
(b) There is a need for improvement in the systems for pro­
cessing applications for assistance and payment and the 
provision of information about national procedures. 6.12 to 6.16 
(c) The system of preparatory studies and pilot schemes has 
been improved. 6.17 to 6.20 
54 Official Journal of the European Communities 31.12.82 
Introduction 
6.1. The expenditure of the European Social Fund 
is covered by Chapters 50 to 52. Other expenditure 
in the social sector appears in Chapter 59 (aid to dis­
aster victims in the Community). 
Summary of financial information 
European Social Fund 
(Chapters 50, 51 and 52) 
6.2. Table 6.1 shows details of the commitment 
appropriations and their utilization. The initial budget, which was slightly above that of 
the previous year, amounted to 963 million ECU. To 
this were added appropriations remaining from 1980 
(6 -9 million ECU), appropriations released by can­
cellation of commitments entered into in 1980 
(99-8 million ECU), and amounts released follow­
ing application of the new rate of the ECU to com­
mitments prior to 1981 (38 -7 million ECU). Re­
usable appropriations arising from the cancellation 
of 1980 commitments represent a considerable sum, 
amounting as they do to some 100 million ECU or 
10% of the initial budget, as against 1 -7% in 1980. 
The commitments entered into amounted to 
996-2 million ECU or 89-9% of appropriations 
available, allowing for the variations in the ECU. 
Three countries receive three-quarters of the com­
mitments (France, Italy and the United Kingdom). 
Table 6.1 — Commitment appropriations available in 1981 and their utilization 
(Mio ECU) 
Budget heading Budget 
(after sup­
plementary 
and 
amending 
budgets) Commit­
ment 
appropria­
tions 
remaining Transfers 
of appro­
priations 1980 com­
mitments 
released 
and re-used • Final 
appropria­
tions: 
(2) + (3) + ( 
4)+ (5) var­
iations due 
to ECU Commit­
ments 
entered 
into in 
1981 Commit­
ment 
appropria­
tions 
remaining 
at the close 
of 1981 
(1) (2) (3) (4) , (5) (6) (7) (8) = 
(6)-(7) 
Agriculture and textiles 
Young people — training 
Young people — employment 
Handicapped persons 
Migrant workers 
Women 500 
5010 
5011 
502 
503 
505 180 
264 0 
1080 
300 
22-0 0-8 
0-5 
0-2 -0-7 
+ 0-7 4-4 ' 
26-5 
7-0 
01 
3-4 24-8 
300-3 
118-2 
31 -1 
25-5 20-8 
269-8 
104-0 
30-6 
22-6 4-1 
30-5 
14-2 
0-5 
2-9 
Chapter SO — Total 442 0 1-6 — 414 500-0 447-8 52-2 
Improvement of employment 
situation 
Handicapped persons 
Industrial conversion 510 
511 
512 428-0 
90-0 
p.m. 5-2 
-0-3 55-1 
3-2 510-4 
94-5 456-3 
88-9 54-1 
5-6 
Chapter 51 — Total 5180 5-2 — 58-3 604-9 545 1 59-7 
Chapter 52 
Pilot schemes and preparatory studies 30 01 + 0-3 3-5 3-2 0-3 
Total 963 0 6-9 — 99-8 1 108-4 996-2 112-2 
31.' 12. 82 Official Journal of the European Communities 55 
6.3. Table 6.2 shows the payment appropriations 
available and their utilization. The budget 
amounted to 620-4 million ECU, as against 700-7 
million ECU in 1980. The payments made from the 
appropriations for the financial year amounted to 
547-4 million ECU, i.e. a utilization rate of 88 -2%. 
For the majority of the articles, utilization was in 
general satisfactory, with the exception of 
Article 510 and Chapter 52. For the latter, no pay­
ment was made. Three-quarters of the total pay­
ments (column 9) were in favour of three countries 
(France, Italy and the United Kingdom). 
Payments in respect of commitments entered into in 
1981 amounted on average to about 30%, with a 
minimum of some 20% (France and the Nether­
lands) and a maximum of 45% (Ireland and Den­
mark). For Luxembourg, no payments were made. Total commitments outstanding at the beginning of 
the financial year 1981 were 1 399-9 million ECU, 
and payment was made of 454-9 million ECU (i.e. 
32-5%). 
6.4. As far as the settlement of commitments out­
standing from before 1980 is concerned, a total of 
116-1 million ECU in appropriations was decom-
mitted and thus cancelled; 31% concerned France, 
20% Germany, 18% Italy and 15% the United King­
dom. 
Analysis of the settlement of commitments out­
standing from 1975, 1976 and 1977 leads to the fol­
lowing comments: 
(a) For all countries decommittals are well above i 
payments. 
Table 6.2 — Payment appropriations available and their utilization 
(Mio ECU) 
A. Payment appropriations of the 1980 budget B. Carryove r from 1980 
C. Total 
Budget heading 
Initial 
budget Transfers 
of appro­
priations Final 
appropria­
tions Payments 
made Carryovers 
to 1982 Appropria­
tions car­
ried over 
from 1980 Payments 
made payments 
made in 
1981 
(1) (2) (3) (4) = 
(2) + (3) (5) (6) = 
(4)-(5) (7) (8) (9) = 
('5)+ (8) 
Agriculture and textiles 500 110 2-0 130 12-5 0-5 1-7 1-7 14-2 
Young people — training 5010 172-2 -0-8 171-4 171-2 0-2 22-4 22-4 193-6 
Young people — employment 
5011 69-6 -90 60-6 60-5 0-1 21-6 21 -6 82-1 
Handicapped persons 502 1-0 — " 1-0 0-3 0-7 — — 0-3 
Migrant workers 503 21 -0 14-0 35-0 34-8 0-2 0- 0-1 34-9 
Women 505 120 -6-2 5-8 5-8 — 3-9 3-9 9-7 
Chapter 50 — Total 286-8 — ' 286-8 285-1 1-8 49-7 49-7 334-8 
Improvement of employment 
situation 510 286-8 -15-0 271-8 202-6 69-2 144-4 144-4 .349-4 
Handicapped persons 511 44-8 15-0 59-8 59-8 — 2-6 2-6 62-4 
Industrial conversion 512 p.m. — p.m. — — ' — — — 
Chapter 51 —Total 331-6 — 331-6 262-3 69-3 147-0 147 0 409-4 
Chapter 52 
Pilot schemes and preparatory 
studies 20 — 2-0 — 2-0 1-9 1-7 1-7 
Total 620-4 — 620-4 547-4 73-0 198-7 198-5 745-9 
56 Official Journal of the European Communities 31. 12. 82 
(b) Of the commitments outstanding from 1975 
(10-3 million ECU at 1 January 1981), which 
concerned four countries, almost all those relat­
ing to Italy and the United Kingdom were can­
celled. For France, which had the largest bal­
ance, half were cancelled; 2% were paid. For 
Ireland, where the balance was small, a third 
were paid. (b) Of the 40 million ECU committed as a precau­
tionary measure at the end of 1980 — following 
the earthquake in the south of Italy — and car­
ried over to the financial year 1981, 39 -9 million 
ECU have been paid. 
(c) For 1976 (28-5 million ECU in commitments 
outstanding at 1 January 1981), decommittals 
were particularly high, with the result that at the 
end of 1981, with the exception of Italy, there 
were no longer any significant amounts out­
standing. With regard to the latter country, the 
balance still amounts to some 5 million ECU, 
after decommittals of about 15% and payments 
of 1%. Comments arising from the financial 
information in the accounts 
Payments in general were not significant, with 
the exception of the United Kingdom, where 
they represented about 26%. Re-utilization of appropriations 
decommitted 
(d) For 1977 (104-3 million ECU in commitments 
outstanding at 1 January 1981), settlement also 
varied greatly from one country to another. 
For the most recent years (1978 to 1980) more than 
half the balance outstanding (which was 
1 256-8 million ECU at 1 January 1981) has now 
been paid. The position once again varies greatly 
from country to country. 
Emergency aid to disaster victims in the 
Community (Chapter 59) 6.6. During 1981, 114-2 million ECU were re-used 
after decommittal. These appropriations were made 
available by releasing 99-8 million ECU from 1980 
commitments and 14-4 million ECU from 1981 
commitments. 
6.7. The latter amount concerns about 50 files and 
in 13 cases examined in particular by the Court the 
decommittal amounted to over 80% of the initial 
commitment. There are generally no grounds given 
for not using the amounts released, communication 
of these decommittals by the Member States usually 
taking the form of a list of amounts with references 
to the corresponding files. It is only where the com­
munication is made by individual file that a reason 
is sometimes given for the decommittal. It would 
nevertheless be generally useful for the Commission 
to have a statement of the reasons behind the 
decommittals, which it could then take into consid­
eration when preparing its budget estimates. 
6.5. The appropriations available amounted to 
61 million ECU. 
(a) Of the 21 million ECU in the 1981 budget, 18-5 
million ECU were committed and paid, com­
prising 15 million ECU for the earthquake in 
the south of Italy in November 1980, 3 million 
ECU for the earthquake in Greece (February/ 
March 1981) and 0-5 million ECU following 
extremely severe weather in Denmark (Novem­
ber 1981). At the end of the financial year there 
thus remained 2 -5 million ECU available. It was also noted that the Commission itself did not 
always take account of changes made prior to the 
decision. For example, in two of the cases exam­
ined, the Commission departments responsible did 
not consider new information in their possession 
before the decision was taken. 
In one case, its effect was to modify the data on 
which the application for assistance was based, in 
the other, the communication stated that the appli-
31. 12. 82 Official Journal of the European Communities 57 
cation was being withdrawn. It was thus necessary 
to make the corresponding decommittals after the 
approval decisions had been taken, a process which 
could easily have been avoided. 
Cancellation of commitments from before 
1980 
6.8. Decommittals made in 1981 in respect of com­
mitments remaining from the years prior to 1980 
amounted to 116 1 million ECU. Commitment 
appropriations not committed at the end of the 
financial year for which they were entered in the 
budget were cancelled, since they remain available 
only for the year following ('). With regard to com­
mitments for 1978 and 1979, decommittals 
amounted to more than 300 000 ECU per project for 
about 30 projects. 
Investigations to determine the reasons for the delay 
in decommittal showed that it is due to: 
(a) The lateness with which the Commission is 
informed that projects have been cancelled. 
(b) The fact that it is only at the time of the request 
for payment of the balance that the costs are 
seen to be considerably lower than estimated: 
generally, the beneficiary could have updated 
his estimates, and in most cases at the very start 
of the operation. 
(c) The time taken by the Commission to make the 
corresponding decommittals on the basis of the 
communications from the Member States and 
the unused balances appearing at the time of 
the request for final payment; this takes several 
months — sometimes even more than a year. 
This situation suggests that the balances outstanding 
contain too large a component of commitments 
which are no longer justified. 
(J) Financial Regulation, Article 6, paragraph 2 (a); (OJ 
No L 356, 31. 12. 1977). Clearing offiles from 1975 and 1976 
6.9. The Court paid particular attention to commit­
ments outstanding at 31 December 1981 that dated 
from 1975 and 1976, in order to ascertain the rea­
sons for such old commitments still being in exist­
ence. 
6.10. In general, these are cases of approvals based 
on a three-year programme (or even longer, where 
the schedule is extended). Often, the file covers sev­
eral subsidiary projects, which are not classified sys­
tematically, making the work of examination very 
slow and complicated and increasing the likelihood 
of errors. In several cases the Court was unable to 
establish whether there had been any action by the 
Commission or by the beneficiary for several years;, 
moreover, there were instances of notification of 
non-utilization going back to 1979 on which no fur­
ther steps had been taken, and in one case a request 
for final payment made in 1976 had not been acted 
upon until 1979. 
It is true that decisions to extend the schedule of 
operations may explain why some files from 1975 
and 1976 still show amounts outstanding, but this 
explanation by no means applies to every file. 
6.11. In several cases relating to the years in'ques­
tion it was found that the payment proposal was not 
in the file or that there was no accompanying pay­
ment order. 
Among the files which were considered as closed, 
the Court found a number in respect of which com­
mitments remained outstanding in the central 
accounts. In these circumstances, the Court had dif­
ficulties in properly examining the monitoring of 
commitments. 
Comments on the financial 
management 
6.12. The examination, in nine Member States, of 
the national systems of application for assistance 
and payment and of the systems of management of 
58 Official Journal of the European Communities 31. 12. 82 
operations co-financed by the ESF gives rise to the 
following comments on the financial management 
in 1981. (a) On several occasions, cases were found of pay­
ments which were not for the objectives stated 
in the decision: 
6.13. In two cases of approved applications, it was 
found that in April 1981 the financial aid in the 
decisions of a French financing body had been 
reduced, without notification of the national auth­
orities responsible for submitting the applications 
for assistance (J). As a result, the Commission's 
decision of approval in July 1981 allocated to the 
beneficiaries concerned too much assistance. 2. In a German case, whereas the initial objec­
tive was to assist young people, part of the 
expenditure went to fitting out the prem­
ises; 
In another German case, the decision con­
cerns professional training whereas the pay­
ments referred to information of a socio-
pedagogical nature. 
It was found in another French case of an approved 
application for assistance that the budget sent to the 
same authorities had included interest charges 
which are not eligible. 
In several cases (particularly in Ireland and in the 
Netherlands), it proved impossible to obtain the 
basis of calculation of the estimated expenditure. 
These facts underline the benefit that the ESF 
departments would derive from systematic inquiry 
as to the national procedures governing applications 
for assistance and also from improving their own 
system of processing the applications. 
6.14. On the question of payment of advances, it 
was noted that in 1981 the Netherlands had made a 
repayment to the Community budget, as advances 
paid in respect of 1979 commitments had proved to 
be more than the amounts actually due on the basis 
of the expenditure eligible at the end of the opera­
tions. The repayment was effected by reducing by a 
like amount the application for a balance payable in 
respect of another operation. 
This situation shows the very approximate character 
of the certification supplied by the national auth­
orities to justify applications for advances. 
6.15. The examination by the ESF departments 
prior to payment of the balance calls for the follow­
ing criticisms: 
(') It is these authorities which will subsequently be 
called upon to certify the factual and accounting 
accuracy of the information given in the applications 
for payment. (b) In the view of the Court, some of the expendi­
ture approved by the ESF does not wholly com­
ply with the regulations and guidelines. This is 
the case with: 
1. Contributions to the staff redundancy fund, 
although the basic principle of eligibility is 
the cost of the operation. 
2. A deficit in the day-to-day management of 
a training establishment. 
3. Expenditure on an operation to benefit 
migrant workers some of whom are not 
eligible under the terms of the regulation. 
4. Expenditure on an operation for handi­
capped persons which included persons 
who were only socially maladjusted. 
5. Expenditure in favour of handicapped per­
sons who were not from priority regions, as 
required by the Commission decision. 
6. Expenditure on general academic education 
which never gives rise to eligible expendi­
ture. 
(c) In one case, the basis of calculation of an appli­
cation for payment could not even be provided. 
6.16. In a system of shared responsibility such as 
exists, in the ESF, it is important for the Commission 
to take care to satisfy itself by means of the appro­
priate contacts that certification of the eligibility of 
expenditure is well-founded. In this regard the 
Court notes from the mission reports sent to it by 
the ESF Directorate that in only 17 cases in 1981 
had balances first been checked on the spot by the 
ESF departments before being paid. 
31. 12. 82 Official Journal of the European Communities 59 
Comments arising from a follow-up of 
the preparatory studies and pilot 
schemes system 
6.17. Paragraphs 6.14 to 6.30 of the annual report 
of the Court concerning the financial year 1980 (!) 
contained the conclusions of an examination of pre­
paratory studies and pilot schemes. 
6.18. In 1981, the first results of the observations 
contained in the report could be seen in the intro­
duction of an application form which was specially 
designed for preparatory studies and pilot schemes. 
The approach is more systematic and the promoter 
has to provide information on his activities, his objec­
tives, his system of financing and financial control, 
his level of specialization, and full details of the 
proposed study or pilot scheme. In the same way, in the information sent to the promoter, the Commis­
sion has set out the various costs which may be con­
sidered eligible. In particular, administrative costs 
will henceforth be accepted up to a limit of 20% of 
the total cost. 
6.19. With regard to the case referred to in para­
graph 6.20 of its report on the financial year 1980 — 
where a promoter had only fulfilled a small part of 
his commitments and could only justify about one-
third of the advances paid by the ESF — the Court 
was informed that a new project had been proposed 
to the Commission which, if accepted, would be 
implemented without any further Community 
financing. 
6.20. Access to files has been considerably 
improved, as have certain measures in respect of the 
management of this sector. 
(») OJ No C 344, 31. 12. 1981. 
60 Official Journal of the European Communities 31. 12. 82 
CHAPTER 7 
The European Regional Development Fund (ERDF) 
TABLE OF CONTENTS Paragraph reference 
Summary of principal comments 7.0 
Introduction 7.1 and 7.2 
Summary of financial information 7.3 to 7.9 
Commitment appropriations and their utilization 7.3 to 7.5 
Payment appropriations and their utilization 7.6 to 7.9 
Comments arising from the financial information in the 
accounts • 7.10 to 7.16 
Exceeding of the quotas fixed for certain Member States 7.10 to 7.13 
Anomalies in the procedure governing commitments 7.14 and 7.15 
The size of the Fund's contribution to investments in 
. infrastructures 7.16 
Comments arising from examination of the system of grant­
ing and management of the aid 7.17 to 7.39 
Comments on the consistency of the investment aids with 
regional development programmes and other Community 
objectives 7.17 to 7.25 
Comments on the profitability of the projects and on the 
calculation of the aid 7.26 to 7.32 
Lack of effect of the accelerated payments procedure on 
the completion times for projects 7.33 to 7.39 
SUMMARY OF PRINCIPAL COMMENTS 
7.0. The principal comments in this chapter are: 
(a) Certain Member States did not exhaust their quotas. 7.10 to 7.13 
(b) The aid is sometimes granted subject to appropriations 
becoming available and there are anomalies in the proce­
dure governing commitments. 7.14 and 7.15 
(c) The proportion of aid allocated to investments in infra­
structures has increased. 7.16 
(d) Certain assisted projects are not closely connected with 
the regional development programmes. 7.17 to 7.21 
31. 12. 82 Official Journal of the European Communities 61 
(e) The various Community measures are sometimes lacking 
in consistency or coordination. 7.22 to 7.25 
(f) The rate of Community participation is sometimes of 
marginal significance, and there are anomalies in the cal­
culation of the aid for some projects. 7.26 to 7.32 
(g) The accelerated payments procedure has not had the 
effect of reducing the time required to complete the pro­
jects. 7.33 to ' 7.39 
Introduction 
7.1.—The European Regional Development Fund 
(ERDF) was established by Council Regulation 
(EEC) No 724/75 of 18 March 1975 (0 (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 comprises: 
(a) Community support for regional policy mea­
sures adopted by the Member States, which 
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%. 
(') OJ No L 73, 21.3. 1975, p. 1. 
(2) OJ No L 35, 9. 2. 1979, p. 1. 
(3) OJ No L 349, 23. 12. 1980, p. 10. 7.2. Important changes in the current regulations 
were contained in a proposal for a regulation sub­
mitted by the Commission to the Council on 
26 October 1981 (4) which was under consideration 
at the time of drafting these comments. 
Summary of financial information 
Commitment appropriations and their 
utilization 
7.3. The evolution and utilization of the commit­
ment appropriations available to the Commission in 
1981 for the ERDF are summarized in Table 7.7. 
(4) OJ No C 336, 23. 12. 1981, p. 60. 
Table 7.1 — Commitment appropriations available in 1981, evolution and utilization 
(Mio ECU) 
Chapter 1981 
budget Transfers Appropria­
tions 
remaining 
from 1980 Decom-
mittals Adjust­
ments (var­
iations in 
ECU rate) Final 
appropria­
tions Commit­
ments 
entered 
into in 
1981 Appropria­
tions 
remaining 
at end of 
1981 
(1) (2) (3) (4) (5) (6) (7) = 
(2) + ... 
+ (6) (8) (9) = 
(7)-(8) 
Quota measures 
(Chapter 55) 
Non-quota measures 
(Chapter 56) 
Total 1.463-0 +34-0 31-9 25-5 60-8 1 615-2 1596-2 19-0 
77-0 -34-0 58-2 — — 101-2 40-6 60-6 
1 540-0 — 90 1 25-5 60-8 1 716-4 1 636-8 79-6 
62 Official Journal of the European Communities 31. 12. 82 
7.4. 95.4% of the appropriations available for 
Chapters 55 and 56 were used, as against 92 -7% in 
1980 and 95 -2% in 1979. Commitments entered into 
amounted to 1 636-8 million ECU in 1981, i.e. an 
increase of 499 million ECU over 1980 ( + 43-9%) 
over half of which (248-3 million ECU) is from aid 
to Greece. 
Commitments for the financial year mainly con­
cerned Chapter 55 (quota measures) 98 • 8% of whose 
allocation was used (97-3% in 1980 and 99-6% in 
1979). Aid from the Fund for quota measures was 
granted to 2 763 projects (4 study projects, 700 pro­
jects in industrial, handicraft or service activities 
and 2 059 infrastructure projects),corresponding to 
total estimated investments of approximately 
13 992 million ECU. The total number of projects 
financed since the creation of the ERDF is approxi­
mately 14 500. The distribution by country of the 
commitments of the financial year relating to quota 
measures is shown in Table 7.2, which also gives payments in 1981 and the balances outstanding at 
31 December 1981. 
7.5. For the' first time, commitments were also 
entered into in 1981 for the specific Community 
measures for regional development (Chapter 56 of 
the budget — non-quota measures) laid down in 
Article 13 of the amended ERDF Regulation. 
By five regulations of 7 October 1980 (Nos 2615/80 
to 2619/80) 0) the Council adopted specific Com­
munity measures, covering a period of five years. 
The total aid allocated for these measures in 1981 
amounted to 166 million ECU. In accordance with 
the provisions of the Council Regulations of 7 Oct­
ober 1980, only the amount of the first annual 
tranche^ i.e. 40 -6 million ECU, was committed in 
1981. 
(') OJ No L 271, 15. 10. 1980, p. 1. 
Table 7.2 — Commitments and payments in 1981 by Member State (quota measures — Chapter 55 of the budget) 
(Mio ECU) 
Beneficiary 
Member State Balance 
payable at 
31. 12.80 Commitments entered 
into in 1981 Payments in 1981 
Decom-
mittals Adjust­
ments to 
balance of 
commit­
ments for 
ECU rate 
variations Balance 
payable at 
31. 12.81 Beneficiary 
Member State Balance 
payable at 
31. 12.80 Commitments entered 
into in 1981 of balance 
payable at 
31. 12. 80 of 1981 
commit­
ments Total Decom-
mittals Adjust­
ments to 
balance of 
commit­
ments for 
ECU rate 
variations Balance 
payable at 
31. 12.81 
(0 , (2) (3) (4) (5) (6) = 
(4) + (5) (7) (8) (9) = (2) 
+ (3)-(6) 
— (7) +(8) 
Belgium 23-6 2-6 (0-2%) 9-0 0-1 9-1 0-2 - 0-2 16-7 
Denmark 13-7 19-4 (1-2%) 10-7 — 10-7 0-0 - 0-2 22-2 
FR of Germany 78-2 57-6 (3-6%) 24-8 11-4 36-2 2-3 + 2-9 100-2 
Greece — 248-3 (15-5%) — 122-0 122-0 . — — 126-3 
France 286-9 151-3 (9-5%) 41-4 20-7 62-1 3-2 -11-6 361-3 
Ireland 69-8 105-2 (6-6%) 33-9 45-4 79-3 1-0 - 0-5 94-2 
Italy 6,86-0 649-4 (40-7%) 138-0 72-2 210-2 4-6 -50-3 1 070-2 
Luxembourg 1-0 1-6 (0-.l%) — 1-0 1-0 — - 0-0 1 -6 
Netherlands 32-9 12-9 (0-8%) 5-7 — 5-7 — + 1-0 41-2 
United Kingdom 337-2 347-9 (21-8%) 122-4 132-7 255-1 14-2 - 2-0 413-8 
Total 1 529-3 1596-2 (100 -0%) 385-9 405-5 791-4 25-5 -60-8 2 247-7 
31. 12. 82 Official Journal of the European Communities 63 
Payment appropriations and their utilization 
7.6. The payment appropriations available to the 
Commission in 1981 and their utilization are sum­
marized in Table 7.3. 
7.7. Total payments amounted to 798 -7 million 
ECU, as against 726 -7 million ECU in 1980 and 
513-1 million ECU in 1979. This represents a util-. 
ization rate of 95-7% of the payment appropriations 
available to the Commission during the financial 
year for Chapters 55 and 56 of the budget, as against 
97 -9% in 1980 and 60 -2% in 1979. 
7.8. For the quota measures, payments of commit­
ments entered into in 1981 and of commitments 
from previous financial years amounted to 
405 -5 million ECU and 385 -9 million ECU respect­
ively. This ratio, compared with the figures of 
249-2 million ECU and 550 million ECU respect­
ively which appeared in the estimated schedule of 
payments under Chapter 55 of the budget (see 
remarks of amending budget No 1 for 1981) (') 
reveals an acceleration of payment of the commit­
ments of the financial year, due, to a great extent, to 
the accelerated payments procedure, while settle­
ment of the commitments remaining from previous 
financial years continued at a slower rate than an­
ticipated. 7.9. At 31 December 1981, total commitments out­
standing, for quota and non-quota measures, were 
as follows: 
— Financial years 1975 to 1977 75 -8 million ECU 
— Financial year 1978 
— Financial year 1979 
— Financial year 1980 
— Financial year 1981 
i.e. a total of 108-8 million ECU 
255 -8 million ECU 
616 -6 million ECU 
1 224-0 million ECU 
2 281-0 million ECU 
(') OJ No L 305, 26. 10. 1981, p. 61. Comments arising from the financial 
information in the accounts 
Exceeding of the quotas fixed for certain 
Member States 
7.10. The distribution by Member State of the 
commitment appropriations for quota measures still 
unused at the close of the financial year is shown in 
Table 7.4. ~ 
7.11. The appropriations available for Belgium, 
which in 1981 received commitments of 2-6 million 
ECU, represented over one and a half times that 
country's share of the endowment for the financial 
year. 
Table 7.3 — Payment appropriations available in 1981, and utilization 
(Mio ECU) 
Chapter 1981 budget Carryovers from 1980 Total 
Chapter Final 
appropri­
ations Payments Carry­
overs to 
1982 Appro­
priations 
carried 
over Transfers Final 
appropri­
ations Payments Total 
appropri­
ations 
available Total 
payments 
(1) (2) (3) (4) = 
(2)-(3) (5) (6) (7) = 
(5) + (6) (8) (9) = 
(2) + (7) (10) = 
(3) + (8) 
Quota measures 
(Chapter 55) 
Non-quota measures 
(Chapter,56) 
Total 799-2 783-4 15-8 
20 0 — 20-0 
819-2 783-4 35-8 4-7 +3-3 810 8-0 
10-6 -3-3 7-3 7-3 
15-3 — 15-3 15-3 807-2 791-4 
27-3 7-3 
834-5 798-7 
64 Official Journal of the European Communities 31. 12. 82 
Table 7.4 — Commitment appropriations remaining at the close of 1981 — by Member State 
Belgium Den­
mark FR of 
Ger­
many Greece France Ireland Italy Luxem­
bourg Nether­
lands United 
King­
dom Total 
Appropriations 
remaining: 
— MioECU 
— as % of the coun­
try's allocation for 
1981 24-7 0-5 16-4 -58-1 80-4 -14-4 -61-6 0-1 4-8 26-2 19-0 
152%. 3% 24%, -31% 40% -17% -12% 6% 27% 8% 1% 
7.12. As a percentage of their allocation, a sizeable 
balance remained available to France, and to a less­
er extent, Germany and the Netherlands, which had 
not submitted sufficient aid requests before the 
close of the financial year to exhaust their 1981 quo­
tas. in the absence of eligible requests for assistance 
from some Member States is understandable, it must 
be observed that the decision in question departs 
from the provisions of the applicable regulation. 
7.13. The Commission considered that it would be 
unjustified to leave these allocations unused while 
there were still eligible requests for assistance from 
other countries which Were unsatisfied due to a lack 
of appropriations and that a compensating adjust­
ment could be made in 1982. For this reason the 
Commission decided to overrule the Financial Con­
troller's refusal to grant approval and use the com­
mitment appropriations still available at the close of 
1981 in favour of Greece, Ireland and Italy, beyond 
the quotas fixed for these countries, to a ceiling of 
135 million ECU. 
It should be noted, in this connection, that a declar­
ation recorded in the minutes of the Council Meet­
ing of 6 February 1979 at which Regulation (EEC) 
No 214/79 was approved, stipulated that the quotas 
were to be observed for periods of three years (the 
first of these three-year periods beginning in 1978). Anomalies in the procedure governing 
commitments 
7.14. Examination of the aid decisions adopted by 
the Commission at the end of 1980 and in 1981 
reveals that investment aids were sometimes allo­
cated for multiannual periods, subject to entry in 
future budgets of the appropriations required for 
this purpose. Only one annual tranche of aid relat­
ing to the financial year in which the decision was 
taken was then committed and entered in the 
accounts of that year. 
This procedure, which was expressly provided for in 
the Council regulations on specific measures, was 
also applied in a number of cases where aid was 
granted for quota measures. 
The provisions of Regulation (EEC) No 214/79 
relating to quotas were, however, amended by Regu­
lation (EEC) No 3325/80, which fixed new distribu­
tion rates for the year 1981 only (the Regulation 
having to be re-examined before 1 January 1982), 
without, of course, renewing the declaration as to 
observance of the quotas for a three-year period. The following were noted: 
(a) Sixteen aid decisions for Greece, where the aid 
was divided between 1981 and 1982; 
While the Commission's desire not to leave a large 
amount of commitment appropriations unutilized (b) Three decisions for Ireland, where the aid was 
divided in one case between 1980 and 1981 and 
in two cases between 1980 and 1982; 
31. 12. 82 Official Journal of the European Communities 65 
(c) One decision for Italy, where the aid was div­
ided between 1980 and 1981. 
Decisions adopted on condition that the necessary 
appropriations are provided in future budgets, do 
not constitute commitments within the meaning of 
Article 32 et seq. of the Financial Regulation, which 
state the provisions applicable to the implementa­
tion of the budget oif the Communities. They are in 
fact decisions of a kind not provided for by the 
Financial Regulation and are of doubtful legality, 
since they predetermine budget decisions to be 
taken in future years. 
In addition, management of the ERDF is under the 
system of differentiated appropriations, which is 
precisely intended where multiannual measures are 
concerned to make provision for the usual gap in 
time between the aid decision and the various 
annual tranches in which it is implemented. 
7.15. On the subject of the procedure,- governing 
commitments it should also be noted that the aid 
decisions are entered late in the accounts. The deci­
sions concerning the third instalment of 1981, 
adopted on 14 September, were entered on a provi­
sional basis on 21 October, and on completion of 
the relevant procedures, the commitments were fi­
nally taken to account on 9 November. 
The decisions relating to non-quota measures 
adopted on 10 June were entered on a provisional 
basis on 21 October and finally taken to account on . 
3 November. vious reports (!). It is not possible to obtain from 
this documentation a complete picture of the man­
agement of the Fund. 
The size of the Fund's contribution to 
investments in infrastructures 
7.16. Article 4 (1) (b) of Regulation No 724/75 as 
amended provides that the total share of the overall 
assistance granted by the Fund for financing invest­
ments in infrastructures may not exceed 70% of the 
Fund's assistance. This percentage must be com­
plied with over a period of three years, but it may be 
exceeded by a decision of the Council acting on a 
proposal from the Commission. The same Article 
also states that in administering the Fund, the Com­
mission is to take account of the particular situation 
of certain regions on the basis of the regional 
development programmes. It adds that the Member 
States are to take all steps to enable these provisions 
to be applied. 
The percentage share of assistance by the Fund to 
investments in infrastructures has varied as follows 
over the past financial years: 63 • 5% in 1978; 69-8% 
in 1979; 72-4% in 1980. From an average of 70% for 
the period 1978 to 1980, it rose to 87 -3% in 1981. 
For five countries (Denmark, Greece, Italy, Luxem­
bourg and the Netherlands) the share of assistance 
devoted to infrastructures represented 90% to 100% 
of the ERDF aid received in 1981; for two others 
(Ireland, United Kingdom) over 80% of the aid 
received. 
There is no reason for provisional entries unless 
they are sufficiently close in time to the commit­
ment decision. In the above circumstances, the 
usefulness of such entries seem doubtful. Further­
more, in respect of the supporting documents for the 
commitments, it is regrettable that none of the files 
checked by the Court contained any trace of the 
Financial Controller's approval that the rules of pro­
cedure for the implementation of the budget make 
compulsory for aid decision proposals before they 
can be submitted to the Commission. This trend merits particular attention because there 
is no common Community definition of eligible 
infrastructure, which is interpreted differently by 
each country (the failure of the Council to react to 
the Commission's note of 18 February 1981, indicat­
ing the categories of investment for which the 
ERDF may grant aid in the various regions assisted, 
has not assisted the task of finding a solution to this 
problem). 
Difficulties such as the above should be removed by 
improving the documentation made available to the 
Court for inspection, the inadequacy of which has 
already been pointed out by the Court in its pre­(') See paragraph 7.12 of the Court's report concerning 
the financial year 1980 (OJ No C 344, 31. 12. 1981, 
p. 90). 
t 66 Official Journal of the European Communities 31. 12. 82 
Comments arising from examination of 
the system of granting and 
management of the aid 7.18. A further consideration is that even when 
details are provided by the programmes they are not 
always taken into consideration in selecting the pro­
jects, as illustrated by the following cases examined 
during the year. 
Comments on the consistency of the 
investment aids with regional development 
programmes and other Community 
objectives 
l.M. Article 6 of the amended ERDF Regulation 
provides that the projects financed must fall within 
the framework of a regional development pro­
gramme. The latter are established according to a 
joint plan prepared by the Regional Policy Com­
mittee. The Member States send their regional 
development programmes to the Commission, 
which examines whether the investments to be 
assisted are consistent with the programmes and 
objectives of the Community, so that it may deter­
mine the priorities for assistahce from the Fund. 
The programmes cover, in principle, a period of five 
years. After the 'first generation' of programmes, the 
Member States submitted a few annually updated 
versions and then the 'second generation' of pro­
grammes which, unlike the first, have not yet been 
published by the Commission. The 'first generation' 
of programmes are in fact of little use for the choice 
of projects. The Commission itself in its opinion of 
23 May 1979 on the regional development pro­
grammes (') states by way of conclusion that 
although they enable it to make a better assessment 
of investment projects, 'these programmes need to 
be developed further if they are to be regarded as a 
sufficiently detailed reference framework for assess­
ing such projects'. 7.19. The regional development programme of 
Luxembourg for the period 1976 — 80 recorded an 
imbalance between the north of the country and the 
south, in favour of the latter. Of the six Luxembourg 
projects subsidized hitherto by the ERDF, only one 
— a water supply project — concerned the north of 
the country. Moreover, although the programme 
included measures and objectives in the industrial 
sector, no project of this type had been assisted by 
the Fund. 
7.20. For Lorraine, whose 1976 — 80 programme 
besides developing employment by the strengthen­
ing and diversification of the productive sector also 
provided for appropriate retraining of the workforce 
and opening up of the region by improving the 
major arteries of communication, only 2 decisions 
out of 26 (5 09 million ECU out of a total of 
29-43 million ECU) concerned infrastructures. 
Emphasis was placed on industrial investments, 
which were seen as having a more immediate impact 
on employment, despite the more diversified mea­
sures and objectives set out in the programme. 
The opposite situation was observed in Corsica, 
whose programme concentrated on the development 
of the secondary sector as a means of solving the 
problem of employment, the aim being to promote 
high-profit small and medium-sized undertakings. 
All the projects financed by the ERDF in Corsica 
from 1975 to 1980 concern the improvement of the 
infrastructure, in conjunction with the development 
of tourism in particular. 
7.21. An industrial project was subsidized in 1981 
in the Wiirzburg area (North Bavaria) although the 
The overly vague character of the programme leads 1979 — 82 programme for the region indicates that 
the Court to stress again (see 1979 report of the there is already a high concentration of industry in 
Court of Auditors, paragraph 7.19) (2) the need for this area. 
criteria which would ensure selection from among 
the projects eligible for assistance from the Fund of 
those that would be truly assisted by it. 
7.22. The consistency of the investments assisted 
by other Community programmes and objectives 
also calls for some comments. 
(>) OJ No L 143, 12. 6. 1979, p. 7. 
(2) OJ No C 342, 31.12.1980, p. 120. 7.23. On the basis of Articles,92 and 93 of the EEC 
Treaty, concerning aids granted by the Member 
31. 12. 82 Official Journal of the European Communities 67 
States, the Commission forbade the Dutch govern­
ment to grant an 'additional premium for major 
schemes' in favour of an investment in the chemical 
sector (!). This same investment had received two 
ERDF subsidies. In its decision of 23 July 1981 pro­
hibiting the grant, the Commission took the view 
that the investments considered were inopportune, 
since they would aggravate the over-capacity which 
already existed and were even liable to affect trad­
ing conditions to an extent contrary to the common 
interest. It also pointed out that examination of the 
development of the sectors concerned showed that 
the play of market forces should be capable itself, 
without State intervention, of assuring a normal 
development of this activity. It added that the area 
under consideration was not a region where the 
standard of, living was abnormally low or which suf­
fered from serious underemployment. 
These remarks clearly raise the problem of the con­
sistency and . coordination of the various Com­
munity measures, since the Commission, via the 
ERDF, lent its support to an investment which in 
another connection it considered liable to be ser­
iously prejudicial to competition and thus in con­
tradiction with one of the major objectives of the 
Communities. 
7.24. A similar comment should be made on the 
determination of areas eligible for assistance from 
the ERDF. In 1980 and 1981 projects were subsi­
dized in various labour market regions in Lower 
Saxony (Federal Republic of Germany), while in 
February 1979 the Commission had already chal­
lenged the compatibility of State regional aids 
granted in these regions with the common mar­
ket (2). ject to develop .milk production although it is trying 
elsewhere to reabsorb milk surpluses. 
Comments on the profitability of the projects 
and on the calculation of the aid 
7.26. Account must be taken of the profitability of 
the investment in allocating assistance from the 
Fund (Article 5 (1) (c) of the amended ERDF Regu­
lation). 
7.27. In practice, the only quantified information 
that systematically appears in the requests for assist­
ance is that necessary as a basis for calculating the 
aid: amount of the investment, number of jobs for 
the industrial projects. It is likewise on the basis of 
these data that (to a varying degree in each country) 
the subsequent checks by the national and Com­
munity administrations are actually made. 
7.28. The requests for assistance far more rarely 
contain quantified data on other aspects directly 
related to the profitability of the investments (pro­
duction, cost price, turnover, sources of supply and 
outlets, qualification of staff, etc.). Even when they 
occasionally appear, there is no later verification in 
an accurate, documented form at national level and 
therefore none at Community level. 
7.29. National aid as a proportion of the invest­
ment cost can vary greatly from one project to 
another. 
7.25. Similarly, the ERDF subsidized drainage 
works in Ireland in the River Maigue Basin (Mid-
West) and River Boyne Basin (East-North East). 
The aim of these projects was to increase the 
incomes of the farmers concerned through an 
increase in livestock, in particular dairy herds, with 
the result that the Community contributed to a pro­7.30. Of the six infrastructure projects that Luxem­
bourg submitted for assistance from the ERDF, five 
received Community aid amounting to less than 
30% of the State investment; in one case the pro­
portion was 5 -3%. This participation rate is not in 
compliance with Article 4(2) (b) of the Fund Regu­
lation, which in respect of investments in infrastruc­
tures of less than 10 million ECU, stipulates a con­
tribution equal to 30% of the expenditure incurred 
by public authorities. A very low participation rate 
is, in addition, likely to reduce the incentive value 
of the aid to the investments and to result in the aid 
being too widely scattered. 
(•) Decision of 23 July 1981 (OJ No L 256, 10.9. 1981, _ . 
p. 2etseq.). 7.31. The last comment applies equally to the 
(2) OJ No C 36,9. 2. 1979, p. 22. many industrial investments, both above and below 
68 Official Journal of the European Communities 31. 12. 82 
10 million ECU, in Germany for which the aid allo­
cated by the ERDF was less than 5% of the cost of 
the investment and in a number of cases amounted 
to no more than some 0-5% of expenditure. 
/ 
7.32. The investment cost of several industrial pro­
jects in Ireland examined by the Court in 1981, as 
stated to the Commission and as used to determine 
the assistance from the Fund (limited to 20% of the 
investment cost) included various amounts (working 
capital, staff training) which do not represent invest­
ment expenditure and therefore should not have 
been taken into consideration in calculating the 
ERDF aid. 
The Commission had found such amounts included 
in the investment expenditure of other similar pro­
jects during on-the-spot checks carried out by it in 
1979, and had consequently corrected the state­
ments of account submitted by the Irish authorities 
for those same projects. The latter have, moreover, 
since 1979 changed the system that they previously 
followed to determine the investment cost. 
The audits carried out by the Court during the year, 
however, showed that no rectification had been 
made in respect of similar prpjects from the period 
prior to 1979, other than those subject to the Com­
mission's on-the-spot checks, and it appears that the 
necessary steps should be taken to make such a rec­
tification. 
Lack of effect of the accelerated payments 
procedure on the completion times for 
projects the introduction of such a system, the Court of Aud­
itors wished to ascertain the effect that the use of 
this procedure, accelerating the rate of payments 
and making available cash resources to the Member 
States, could have had in improving the scheduled 
and actual completion dates of the projects. 
7.34. A pilot survey was therefore comducted to 
analyse the change in the proportion of projects 
completed, three years after these accelerated pay­
ments had been introduced. 
The data used involved a first sub-sample of 100 
projects from 1977 (out of a total 1 908) and a 
second of 100 from 1979 (out of a total 2 726). For 
the first group, the completion rate at the end of 
1979 was examined and for the second, at the end of 
1981, i.e. after a period of two years in both cases. 
7.35. For the purpose of this study, a project was 
considered completed if its file was closed. Taking 
into account the time required for the administrative 
procedure of closing the file, it is probable that, on 
the dates in question, other projects were in practice 
completed, without the relevant Commission file 
being closed. This circumstance does not, however, 
lessen the value of the comparisons made, since the 
same method was applied to both sub-samples. 
7.36. In order to ensure that the sample was repre­
sentative, the projects in the pilot survey were cho­
sen from those submitted by five Member States 
which together represented 94% (for 1977) and 96% 
(for 1979) of the total projects financed during the 
two years in question. The number of projects for 
each Member State was determined according to its 
proportion of the projects of each year. 
7.33. Regulation (EEC) No 214/79 (!) which 
amended the basic ERDF Regulation introduced 
the procedure of accelerated payment, whereby 
Member States can be reimbursed, to the limit of 
75% of the Community assistance, public aid dis­
bursed by them, on condition that at least 30% of 
the payments constituting the basis for aid from the 
Fund have been made. Independently of any consi­
derations as to the purpose intended to be served by The projects were selected in the order of the list 
published in the Official Journal (2), but were div­
ided by type of investment (industry, infrastructure, 
etc.) and for each of these types of investment the 
regions were chosen which had received the highest 
total amount of aid in 1977 and 1979. 
(i) OJ No L35,9. 2. 1979, p. 1. (2) OJ No C 99, 24.4. 1978; OJ No C 38, 12.2. 1979; 
OJ No C 354, 31. 12. 1980. 
31. 12. 82 Official Journal of the European Communities 69 
7.37. Completion of the selected 1977 and 1979 
projects is compared in Table 7.5. 
Table. 7.5 — Comparison of 1977 and 1979 projects 
completed 
Number 
of pro­
jects 
selected Number of projects included 
in the pilot survey to be 
completed within a maximum 
period of two years 
Esti­
mated Com­
pleted Comple­
tion 
rate 
1977 projects 100 97 41 42% 
1979 projects 100 86 12 14% For the 1977 decisions, i.e. before the introduction 
of accelerated payments, 41 projects out of 97 had 
been completed within the scheduled two years, i.e. 
a completion rate of 42%. This rate fell to 14% for 
the 1979 decisions (12 projects completed out of an 
estimated 86). 
7.38. It must therefore be concluded that there has 
been no improvement in maintenance of the sched­
ules for completion since 1979 and that at all events 
the accelerated payments procedure has not pro­
duced an increase in the number of files closed; on 
the contrary the number has fallen considerably. 
7.39. Comparison of the proportion of 1977 and 
1979 aid paid at the end of 1979 and 1981 respect­
ively does not reveal any significant difference, the 
payments representing approximately 75% in both 
cases. 
70 Official Journal of the European Communities 31. 12. 82 
CHAPTER 8 
Research, energy, industry, etc. 
TABLE OF CONTENTS Paragraph reference 
Summary of principal comments 8.0 
Introduction 8.1 
Summary of financial information 8.2 
Budgetary nomenclature 8.3 
Research — general 8.4 
Research — direct action 8.5 and 8.6 
Multiannual programmes 8.5 
JRC — Ispra 8.6 
Research — indirect action 8.7 to 8.32 
JET Joint Undertaking 8.7 
Cost-sharing contracts 8.8 to . 8.32 
Introduction 8.8 • to 8.12 
Findings 8.13 to 8.29 
Conclusions 8.30 to 8.32 
SUMMARY OF PRINCIPAL COMMENTS 
8.0. The principal comments in this chapter are: 
(a) The Court stresses the need for as much stability as possi­
ble in budgetary nomenclature. 
(b) Commitments were understated in JET's accounts. 
(c) Budgetary management of indirect action cost-sharing 
contracts could be improved. 
(d) The legal and contractual bases for certain indirect action 
cost-sharing activities are unsatisfactory. 
(e) The provisions of the Financial Regulation do not make 
it clear to what extent they are intended to apply to cost-
sharing contracts. 
(f) Commission contract management procedures could be 
improved. 8.3 
8.7 
8.13 to 8.15 
8.16 to 8.18 
8,19 to 8.21 
8.22 to 8.29 
31. 12. 82 Official Journal of the European Communities 71 
Introduction 
8.1. This chapter is concerned with expenditure on 
energy, research and miscellaneous allied, activities, 
for which appropriations for commitment and pay­
ment are contained in Chapters 32 to 39 of the 
budget. Budgetary nomenclature 
8.3. 1980 and 1981 saw substantial changes in 
budgetary nomenclature in this field. Expenditure 
on indirect action was particularly affected. The 
changes have continued in 1982, with the renumber­
ing of the budgetary chapters on research and 
investment. 
Summary of financial information 
8.2. Table 8.1 summarizes the use of appropria­
tions in 1981. In order that year to year comparisons of expendi­
ture may be made more easily, the Court stresses the 
need for as much stability as possible in budgetary 
nomenclature. 
Appropriations available for commitment are up by 
8-9% compared with 1980 (from 600-2 MEUA); 
appropriations for payments increased by 8-3% 
(from 556 0 MEUA). Use of appropriations has also 
risen: commitments — 79• 8% (1980 : 77-7%); pay­
ments — 76-8% (1980 : 60-1%). Research — General 
8.4. The Communities' research activities are gov­
erned by the Euratom Treaty (nuclear research) and 
by action taken under Article 235 of the EEC Treaty 
(non-nuclear research). Where research is carried out 
entirely by the Communities at the Joint Research 
Table 8.1 —• Commitments and payments — research, energy, industry, etc. 
(Mio ECU) 
Expenditure area 
(chapter of budget) Commitments Payments 
Expenditure area 
(chapter of budget) Appropriations for 
commitment avail­
able in 1981 (') Commitments 
entered into 
in 1981 • Appropriations for 
payment available 
in 1981 Payments made in 
1981 
Energy (32) 137 4 64- 1 107 4 63 -1 
Direct action research (33) 179 4 143-7 186 9 141-8 
Indirect action research (3) (33) 247 9 213-1 182 8 153-8 
Safeguards (34) 1 7 1-6 2 2 1-4 
Environment (35) 9 4 8-9 13 8 8-4 
Information (36) 7 5 7-1 8 9 6-8 
Industry and transport (37) 15 6 8-6 16 2 ' 6-6 
Miscellaneous (39) 10 2 10-1 16 1 9-9 
Total 609 1 457-2 534 3 391-8 
Note: Comparable figures for J ET (4) 77 8 77-1 76 3 70-6 
(') Appropriations in the 1981 budget, plus appropriations remaining at the end of 1980, after transfers. 
(2) Appropriations in the 1981 budget, plus carryovers from 1980, after transfers. 
(3) Including contribution to JET. 
(4) Based on JET's total budget (i.e. including Commission contribution). 
72 Official Journal of the European Communities 31. 12. 82 
Centre (JRC) it is termed 'direct action'; research 
performed in concert with third parties under con­
tract to the Communities is known as 'indirect ac-r 
tion\ sion's account of this contribution with the corres­
ponding entries in JET's financial statements. 
In its 1981 audit the Court concentrated on the man­
agement of contracts concluded in the framework of 
the Communities' indirect action programmes. It 
also examined direct action activities at the JRC at 
Ispra and indirect action at the Joint European 
Torus (JET) Joint Undertaking at Culham. 
Research — Direct action The Court's audit of JET's 1981 accounts was com­
pleted in March 1982, and its report sent to JET on 
30 April 1982. The Court reported that in its opinion 
the financial statements of JET presented fairly the 
Joint Undertaking's year-end financial position and 
its income and expenditure for the year, except that 
commitments for Titles 2 and 3 were understated by 
some 0-5 and 11 million ECU respectively. This 
understatement resulted from a change in the basis 
of JET's accounts during the year, in combination 
with JET's policy of committing certain expenditure 
only when payment is made. Other matters raised 
included the method of accounting for expected 
increases in contract prices affected by inflation, 
claims by contractors and internal audit. 
Multiannual programmes 
8.5. The Court completed its examination of the 
financial management of JRC multiannual pro­
grammes in 1981 and sent the results to the Com­
mission. The Court is confident that discussions 
which are now under way will lead to useful Cost-sharing contracts: Introduction 
improvements in the JRC's management proce­
dures. - ^ 
Background 
JRC— Ispra 
8.6. Following visits to the JRC establishment at 
Ispra, the Court made a number of recommenda­
tions about financial and administrative manage­
ment at the Centre. The points in question (concern­
ing the inventory, car pool and buildings) are under 
discussion between the Court and the Commission. 8.8. Contracts concluded by the Commission in 
this field are of three types: 
(a) 'cost-sharing contracts', where the Commission 
makes a contribution towards the total cost of a 
specific research project carried out by an exter­
nal contractor; 
Research — Indirect action 
JET Joint Undertaking 
8.7. The Commission contributes 80% of JET's 
annual budget. The Court reconciled the Commis-(b) 'association contracts', where the Commission 
participates in the cost of a long-term research 
activity executed in association with Member 
States or third parties (this type of contract 
exists only in the field of biology and thermo­
nuclear fusion); 
(c) 'study contracts' totally financed by the Com­
mission and executed by third parties (experts/ 
institutions). 
31. 12. 82 Official Journal of the European Communities 73 
As at 31. 12. 1981 the Commission was managing 
1 685 cost-sharing contracts, 49 association contracts 
and 244 study contracts. 
8.9. The Court concentrated, in its 1981 audit, on 
cost-sharing contracts (!) and from the range of 
measures funded by Articles 334 to 339 of the 1981 
budget, it selected a number of research contracts in 
the field of new sources of energy. Of the indirect 
action budgetary appropriations, those earmarked 
for research into new energy sources are by far the 
largest: 1981 commitment appropriations represent 
33 -4% and payment appropriations 18 -2% of total 
indirect action appropriations. Also the new energy 
sources research programme covers a politically and 
economically important field of common research 
activities in which expenditure shows a rising trend. 
(') See also the annual reports on the financial years 1978 
and 1979 (OJ Nos C 326, 31.12. 1979 and C 342, 
31. 12. 1980). Financial information 
8.10. Table 8.2 summarizes the expenditure in this 
field in the period 1979 — 81, covering 2Vi years of 
the four-year research programme that commenced 
on 1 July 1979. 
Audit approach 
Objective 
I ' 
8.11. The objective was, on the basis of a sample 
of contracts concluded in the field of new energy 
sources, to assess the Commission's systems for the 
management of cost-sharing contracts concluded 
under the 1975-79 and 1979-83 programmes (2). The 
audit concentrated on a review of the procedures 
governing: 
(2) OJ Nos L 231, 2. 9. 1975 and L 231, 13.9. 1979. 
Table 8.2 — Use of appropriations under budgetary item 3340 (new energy sources) for the period 1979 — 81 
(a) Commitment appropriations: (MioECU) 
Budget 
year Appropriations 
available in the 
financial year (') 
(after transfers) Commitments entered into 
Remaining available 
for the following year Budget 
year Appropriations 
available in the 
financial year (') 
(after transfers) Amounts Percentage of appro­
priations available Remaining available 
for the following year Cancellations 
1979 17-2 7-3 42-4% 9-9 — 
1980 55-4 26-3 ' 47-4% 29-1 — 
1981 68-2 52-6 77-1% 15-6 — 
(b) Payment appropriations: 
Budget 
year Appropriations 
available in the 
financial year (') 
(after transfers) Payments made 
Carryovers Budget 
year Appropriations 
available in the 
financial year (') 
(after transfers) Amounts Percentage of appro­
priations available to the following 
year. Cancellations 
1979 290 17-1 58-9% 9-4 2-5 
1980 37-7 15-8 ' 41-9% 21-9 — 
1981 32-7 25-5 77-9% 7-2 — 
(') Including appropriations remaining available or carried over from the preceding year. 
74 
— the selection of contractors; 
— contract negotiation and conclusion; 
— interim and final reporting; 
— financial and scientific monitoring and evalua­
tion; 
— accounting and budgetary systems; 
— utilization of research results. 
Sampling and conclusions 
8.12. The audit was based on a sample of contracts 
reflecting the following features of the total popula­
tion: 
— completed contracts; 
— contracts still in progress; 
— the cost of the Commission's participation; 
— the spread of contracts between the Member 
States; 
the range of sub-programmes. 
Although the sample was selected so as to be as 
representative as possible, the material that it repre­
sents is too complex and heterogeneous to allow 
reliable statements to be made about the whole sta­
tistical population. Nevertheless, in so far as the crit­
icisms that follow concern the systems employed by 
the Commission or the rules on which they are 
based, the Court considers that they can reasonably 
be applied to other cost-sharing contracts in the 
research field. 
Cost-sharing contracts: Findings 
Budgetary management 
8.13. The financial management of multiannual 
programmes poses special problems, including that 31. 12. 82 
of allocating budget payment appropriations over 
the period of the programme in such a way as to 
match expenditure with the development of the 
activities financed. There is evidence to suggest that 
the Communities' performance in this respect could 
be improved. The fluctuations in the proportion of 
appropriations committed and spent in 1979-81 
(see Table 8.2) is due largely to the phenomenon 
described in the next paragraph (a high proportion 
of the appropriations used in 1979 and 1980 related 
to the previous four-year programme). 
8.14. Expenditure under the 1979 — 83 programme 
cannot get under way until contracts are placed and 
signed. The time involved can be as much as two 
years. Table 8.3 illustrates the steps involved in the 
implementation of the solar energy sub-programme. 
However, the payment appropriations granted in the 
budget do not reflect this slow start-up, and the 
result is serious under-utilization in the early years 
of the programme. 
Table 8.3 — Illustration of the sequence of events in the 
execution of the 1979 — 83 programme 
Date Event 
July 1979 Start of programme 
September 1979 Retroactive programme approval by 
Council (OJ No L 231, 13.9. 1979) 
November 1979 Tender period expires 
November 1979 to 
March 1980 Consideration of research proposals 
by Commission 
March 1980 Advisory committees consider pro­
posals 
March to July 1980 Consideration of technical annexes 
Negotiation with contractors I 
July 1980 Informal agreement with contractors 
October 1980 Commissioner approves research 
actions 
November 1980 Files passed to contract service 
January 1981 Contracts drafted 
January to Febru­
ary 1981 Internal procedures involving finan­
cial and scientific approval of 
contracts 
March 1981 Contracts despatched to contractors 
June 1981 Signed contracts returned 
July 1981 Contracts signed by Commission 
Post-July 1981 Payment of advances and other 
sums due Official Journal of the European Communities 
Official Journal of the European Communities 75 31. 12.82 
8.15. The Court realizes the complexity of the 
operations involved, and accepts that some delay is 
inevitable. Nevertheless the Commission should 
endeavour to streamline the process as far as is con­
sistent with financial and scientific security. The 
Commission and Council are invited to consider 
whether the adoption of rolling programmes would 
alleviate the effects of this problem. The Commis­
sion and the budgetary authorities should take this 
into account when drawing up the budget. 
Legal and regulatory framework 
Legal basis for expenditure 
8.16. The 1975 — 79 programme for research and 
development in the field of energy was adopted by 
the Council in August 1975, and covered five objec­
tives: 
— energy conservation; 
— production and utilization of hydrogen; 
— solar energy; 
— geothermal energy; 
— systems analysis: development of models. 
On 31 December 1981, 101 cost-sharing contracts 
based on this programme were still open. In Sep­
tember 1979 the Council adopted a second pro­
gramme for 1979 — 83 covering a similar field. 
8.17. It seems clear from the continuity of objec­
tives in these programmes that the Commission and 
Council intended contracts made under the first 
programme, but uncompleted when it expired, to 
continue to operate under the second. Indeed, such 
an approach is fully consistent with the principles of 
sound financial management. However, there are no provisions in the programme decisions allowing this 
to be done. 
Contractual basis and delays in signature 
8.18. In some 90% of the contracts audited there 
was a gap between the effective starting date of the 
contract (i.e. the start of research activities by the 
contractor) and the signature of the contract. These 
periods varied between 2 and 24 months. In two 
cases, the contracts were not signed until work was 
completed. Strictly speaking, until the contract is 
signed, there is no contractual basis for the research 
work carried out. More important, the Commis­
sion's right to audit the work carried out cannot be 
invoked before signature. Moreover, reporting 
timetables can be upset and budgetary management 
disrupted. 
Selection of contractors 
8.19. The tendering procedures to be used in the 
scientific field are laid down in Titles IV and VII of 
the 1977 Financial Regulation (1). These provide that 
generally tenders are to be sought and that the plac­
ing of contracts by private treaty is to be excep­
tional. However, the Court's audit showed that in 
two research areas private treaty was the rule rather 
than the exception, and the wider opportunities to 
tender guaranteed by observance of the tendering 
rules — even though stated as an objective in the 
Commission's internal regulations (2) on the subject 
— were not given. 
8.20. The provisions of the Financial Regulation 
do not make it clear to what extent they are 
intended to apply to cost-sharing contracts. The 
Court is also aware that in practice the number of 
potential contractors for a particular project may be 
extremely limited. However, failure to publicize 
(!) OJ No L 356, 31. 12. 1977. 
(2) 'Preparation and execution of research programmes', 
2.6.1980. 
\ 
76 Official Journal of the European Communities 31. 12. 82 
contract offers could exclude certain bodies from 
the research effort in question and lead to a small 
self-perpetuating group of contractors, with a corres­
pondingly adverse effect on the quality and range of 
the work done. The Court therefore considers it 
important to ensure that proper publicity is given 
and that, in contrast to present practice, use of the 
private treaty procedure is limited to exceptional 
cases and full justification is given. 
Advisory Committee on Purchases and Contracts 
8.21. The Court found no evidence that this Com­
mittee's opinion had been sought on the contracts 
audited. An external, independent appraisal of sub­
stantial expenditure proposals is an integral part of 
an internal control system, and such consultation 
should normally be carried out. If the existing Com­
mittee does not have the necessary expertise to 
judge scientific matters, consideration should be 
given to replacing it by a more specialized body 
with the same function. 
Management procedures 
InternaI instructions on research 
8.22. The Court is pleased to note that, following 
its comments on the financial years 1978 and 1979, 
the Commission brought new internal rules into 
effect on 1 January 1981. However, although this 
has brought about some useful procedural improve­
ments, there are still shortcomings, either because 
the rules do not adequately cover certain situations 
or because they are not always applied. archive a single file. However, by virtue both of its 
location, and of the fact that central airchives tend to 
be used to store closed files, it is not accessible as a 
working tool, and for operational purposes contract 
information is fragmented in a number of separate 
working files. This hampers the management of con­
tracts and the Court suggests that master working 
files containing all relevant information be set up, if 
necessary with sub-files. Justification of decisions 
taken on contracts was not systematically docu­
mented, making it difficult for management to mon­
itor and control the contracts or to check that all 
operations due to be performed had been done. In 
particular weaknesses were noted in the selection of 
contractors (evaluation and comparison of propo­
sals, etc.), the evaluation of progress and final 
reports, and the maintenance of financial records. 
Progress and final reports 
8.24. Dates specified in the contracts for the sub­
mission of interim and final reports have not often 
been respected. Fewer than 10% of the final reports 
due for contracts selected for audit were transmitted 
on time. Of the 101 contracts from the 1975 — 79 
research programme still open on 31 December 
1981, more than half were without final reports. In 
certain cases, no interim reports at all had been 
requested because of a lack of staff to evaluate 
them. 
8.25. The Commission is now tending to use con­
tractors' meetings, at which a number of contractors 
in a given field discuss research progress, as a sub­
stitute for progress reports. This is contrary to the 
provisions of the contracts, which should be> 
amended if the practice is to be continued. 
Evaluation of research proposals and progress 
Documentation and filing 
8.23. The Commission requires every item of its 
business to be documented by a single file, kept in 
the relevant Directorate-General's central archives. 
Thus, for each cost-sharing contract, there is in the 8.26. As regards evaluation of contractor's propo­
sals, the audit revealed little or no evidence of eval­
uation procedures in four research fields. In others, 
evaluation is carried out by the expert groups and 
Advisory Committees on Programme Management 
although, even at this level, there is little evidence of 
written comparison between the various proposals 
received. It is the practice of the Commission to 
accept these evaluations. 
31. 12. 82 Official Journal of the European Communities 77 
8.27. Evaluation of interim and final reports or of 
progress reported in contractors' meetings is not 
based on a common overall approach; in some 
areas, there is no specific evaluation system, while 
in others certain evaluation work is performed. But 
even so, evidence of the application of evaluation 
procedures is inadequate. In consequence, in about 
50% of the cases audited, authorizations for interim 
payments were based not on formal scientific eval­
uation and certification of interim reports, but rather 
on oral contacts, meetings and correspondence. sions were intended in particular to obtain informa­
tion about the current situation of work done by the 
contractors. No evidence, of detailed planning or 
specific audit plans for such missions was available. 
The mission reports generally did not provide spe­
cific and detailed audit results. 
Cost-sharing contracts: Conclusions 
Financial and scientific on-the-spot audit by the 
Commission 
8.28. In its report on the financial year 1978 the 
Court commented adversely on this aspect of the 
Commission's internal control (1). The Court notes 
that, beginning in 1981, private audit firms have 
been engaged to assist the Commission in this task 
by carrying out financial audits of contractors. 
Although the number of such audits performed in 
1981 was small, the Court trusts that this develop­
ment will lead to an improvement in control in 
future years. The number of audits performed 
directly by the Commission in 1981 remained small: 
thus, of the contracts examined by the Court, only 
two had been subject to financial audit, while five 
further audits were planned. In addition there was 
no evidence of concrete audit plans and the quality 
of audit reports (where these were produced) and of 
measures taken was inadequate. 
In some Member States, the national audit body has 
the responsibility for auditing the affairs of the 
organization with which the Commission has con­
cluded a contract. If, in such circumstances, the con­
tract itself has been, or is planned to be, the subject 
of an audit with a similar coverage by the national 
audit body, the Court trusts that the Commission 
will take steps to avoid any duplication of effort 
between the national audit body and either the 
Commission's own staff or any private auditors it 
may have engaged. 
8.29. In addition, the Court found that on-the-spot 
verifications by scientists had been carried out for 
only one-third of the contracts audited. These mis-Budgetary management 
8.30. Budgetary management procedures heed 
review and improvement. Time-consuming adminis­
trative procedures in the preparation and execution 
of cost-sharing contracts have created problems in 
budgetary forecasting and presentation. Efforts 
should be made to rationalize current administrative 
and budgetary procedures and to improve forecast­
ing. 
Legal basis 
8.31. Clear provisions to cover uncompleted con­
tracts when programmes expire should be estab­
lished to avoid the difficulty arising from the intro­
duction of new programmes. 
Management procedures 
8.32. Existing internal instructions intended to 
rationalize and harmonize the preparation, execu­
tion and utilization of research programmes should 
be better respected in several areas. In addition, 
administrative and management procedures should 
be followed in the same way for all contracts. Cer­
tain operational rules and contractual provisions 
might be amended in the light of experience and 
developments. 
0) OJ No C 326, 31. 12. 1979, paragraph 6.57. 
78 Official Journal of the European Communities 31. 12. 82 
CHAPTER 9 
Cooperation with developing countries and non-member States 
TABLE OF CONTENTS Paragraph reference 
Summary of principal comments 9.0 
Introduction 9.1 
Summary of financial information 9.2 and 9.3 
Food aid (Chapter 92) 9.4 to 9.16 
Financial and technical cooperation with non-associated 
developing countries (Chapter 93) 9.17 to 9.23 
Exceptional measures in favour of developing countries and 
non-member States (Chapter 95) 9.24 to 9.26 
Cooperation with non-member States (Chapter 96) 9.27 to 9.33 
European Association for Cooperation (EAC) 9.34 
SUMMARY OF PRINCIPAL COMMENTS 
9.0. The principal comments in this chapter are the follow­
ing: 
(a) There has been an improvement in the volume of food 
aid delivered. The budget estimates and procedures are 
inadequate. 9.6 to 9.9 
(b) Certain specific improvements are suggested in respect of 
food aid. 9.10 
(c) There is a lack of information on the dates of shipment of 
food aid. 9.11 
(d) The on-the-spot findings are satisfactory, but beneficiar­
ies do not fulfil their obligations. 9.12 to 9.16 
(e) The progress reports are inadequate. 9.25 
(f) Considerable amounts of budget appropriations cannot 
be audited by the Court of Auditors. 9.31 
(g) There are shortcomings in the central accounts of the 
European Association for Cooperation (EAC). 9.34 
31. 12. 82 Official Journal of the European Communities 79 
Introduction 
9.1. Title 9 of the general budget contains mainly 
appropriations for the benefit of non-member 
States: food aid and disaster aid, aid to non-asso­
ciated developing countries and to other non-mem-
ber States, and the subsidy for the operation of the 
European Association for Cooperation (EAC). 
The following comments result from an analysis of 
the accounts and records and from on-the-spot find­
ings in Pakistan, Senegal and Mauritania. 
Summary of financial information 
9.2. In 1981 the appropriations for payment avail­
able under 'Cooperation with developing countries 
and non-member States' and the payments made 
against these appropriations were as shown in 
Table 9.1. 1 ( 
9.3. For a comprehensive view of all Community 
expenditure in respect of cooperation with develop­
ing countries, account must also be taken of pay­
ments made under the European Development 
Funds (EDF) which remain outside the framework 
of the budget (663.7 million ECU) and the propor­
tion of expenditure incurred as refunds in respect of 
Community food aid and charged to the EAGGF, 
Guarantee Section (181.9 million ECU), which 
raises the total in payments to 1 704-1 million ECU. 
Food aid (Chapter 92) 
Budgetary situation 
9.4. In 1981 the appropriations available under 
Chapter 92 and the payments made against these 
appropriations were as given in Table 9.2. 
9.5. The Commission grants advances to the inter­
vention agencies in each Member State to enable 
Table 9.1 — Appropriations for payment available and payments made (Title 9) 
(Mio ECU) 
Chapter of the budget Appropriations for payment 
available in 1981 Payments made in 1981 
Carryovers 
to 1982 Cancel­
lations Chapter of the budget 
Carried 
over from 
1980 Budget 
1981 (') Total Amount Rate of 
payment Carryovers 
to 1982 Cancel­
lations 
(1) (2) (3) (4) = 
(2) + (3) (5) (6) = 
(5)/(4) (7) (8) 
Food aid (Chapter 92) 213-5 509-4 722-9 601-6 83-2% 110-7 10-6 
Cooperation with non-associated devel­
14-2 0-1 oping countries (Chapter 93) 35 • 7 (2) 72-5 108-2 93-9 86-8% 14-2 0-1 
Specific measures for cooperation with 
14-6 0-9 0-2 developing countries (Chapter 94) 0-9 14-8 15-7 14-6 93-0% 0-9 0-2 
Exceptional measures to assist develop­
ing countries and non-member countries 
(disasters) (Chapter 95) 4-4 23 0 27-4 26-5 96-7% 0-9 0-0 
Cooperation with non-member countries 
(Chapter 96) 127-7 157-3 285-0 83-1 29-2% 131-6 70-3 
Operating expenses of Commission dele-' 
gations in developing countries (Chap­
0-2 ter 99) — 39-2 39-2 38-8 99-0% 0-2 0-2 
Total 382-2 816-2 1 198-4 858-5 71-6% 258-5 81-4 
(') Including transfers of appropriations. 
(2) Including 15-5 Mio ECU in carryovers transferred from Article 871. 
80 Official Journal of the European Communities 31. 12. 82 
Table 9.2 — Budgetary situation in respect of Chapter 92 
(Mio ECU) 
Product Programme Appro­
priations 
carried 
over 
from 
1980 Initial 
appro­
priations 
198! Changes 
in appro­
priations Appro­
priations 
available Payments 
made in 
1981 Appro­
priations 
carried 
over to 
1982 Cancella­
tions 
, (5) = (2) 
(1) (2) (3) (4) + (3) 
) + (4 (6) (7) (8) 
Cereals (a) previous 57-1 + 9 1 66 2 56 8 9-4 
(b) 1981 — 134-6 -22 6 112 0 110 5 1-5 — 
Skimmed-milk (a) previous 75-6 4-1 + 78 3 158 0 158 0 : — — 
powder •(b) 1981 — 96-5 -32 4 64 1 55 2 8-9 — 
Butteroil (a) previous 58-9 2-7 + 52 0 113 6 113 6 — — 
(b) 1981 — 67-8 -5 9 61 9 30 1 31-8 — 
Sugar (a) previous 2-3 — + 2 4 4 1 4 5 — 0-2 
(b) 1981 — 2-0 -1 2 0 8 0-8 — 
Other products 0-4 — + 50 2 50 6 9 8 40-8 00 
Transport costs (a) previous 18-7 1-3 + 27 7 47 7 44 3 3-4 — 
(b) 1981 — 56-3 -17 8 38 5 18 1 20-4 — 
Other expenditure 0-5 ' 11 -0 1 1 5 0 4 01 10 
Financial contributions to UNWRA — — + 3 3 3 3 0 3 3-0 — 
Total 213-5 366-4 + 143 0 722 9 601 6 110-7 10 6 
Table 9.3 — Breakdown of payments in 1981 
(Mio ECU) 
Implementation and charging of payments Cereals Skimmed-milk 
powder Butteroil and 
butter Other products 
and expendi­
ture Total 
CD (2) (3) (4) (5) (6) 
Payments via: 
Belgium 6 3 48 6 45 5 1 9 102-3 
Denmark 0 3 1 3 1 6. 0 5 3-7 
FR of Germany 13 4 206 7 63 8 7 6 291-5 
Greece 2 6 0 8 3-4 
France. 131 6 7 5 67 0 11 8 217-9 
Ireland 10 0 2 8 0 2 13-0 
Italy 20 2 A 2 9 23-1 
Luxembourg 0 7 0-7 
Netherlands 3 3 7 9 17 8 0 7 29-7 
United Kingdom 4 5 11 0 22 9 1 4 39-8 
Total payments via the Member States (a) 182 2 293 7 221 4 27 8 725-1 
Direct payments from the Commission (b) 8 8 49 6 58-4 
Total payments (a) + (b) 191 0 293 7 221 4 77 4 783-5 
Charged against: 
— Title 6 23 7 80 5 77 7 181-9 
— Title 9 167 3 213 2 143 7 77 4 601-6 
31.12.82 Official Journal of the European Communities 81 
them to finance the food aid operations that are to 
be carried out by an undertaking established in that 
Member State. Table 9.3 breaks down payments for 
1981 by Member State in which undertakings per­
formed the food aid operations. ies of food aid in 1981. It shows that a substantial 
effort has been made to eliminate the backlog and 
that the quantities still to be delivered at the end of 
the financial year have decreased considerably in 
relation to the previous year. 
Implementation offood aid programmes 
9.6. Table 9.4 gives the state of progress in deliver­Deliveries under the 1981 food aid programmes and 
their allocation between beneficiaries were as shown 
in Table 9.5. 
Table 9.4 — Quantities delivered under the food aid programmes for cereals, milk powder and butteroil 
(Tonnes) 
Product Still to be delivered at 
.31. 12. 1980 1981 programme Delivered or in the 
course of delivery in 
1981 Still to be delivered at 
31. 12. 1981 
(1) (2) (3) (4) (5) 
Cereals 245 699 927 663 991 130 182 232 
Skimmed-milk powder 104 477 150 000 214 656 39 821 
Butteroil 28 970 45 000 56 913 17 057 
Table 9.5 — 1981 programmes: allocation between beneficiaries and state of deliveries (as a percentage) at 31.12.1981 
Beneficiary country Cereals Skimmed-milk powder Butteroil 
Beneficiary country 
tonnes % 
delivered tonnes % 
delivered • tonnes % 
delivered 
(1) (2) (3) (4) (5) (6) (7) 
Bangladesh 130 000 100 5 000 0 3 000 0 
Egypt 135 000 100 10 000 100 2 800 100 
Pakistan 35 000 100 750 0 1 500 0 
Sri Lanka 32 000 100 p.m. p.m. 
Tanzania 30 000 100 2 500. 100 400 100 
Mozambique 25 000 100 750 100 •200 100 
Madagascar 21 000 71 p.m. — 
Kenya 15 000 100 2 000 100 500 100 
Zambia 15 000 100 1 500 100 500 100 
India — — 31 000 100 12 700 62 
ACP countries in Sahel 118 000 82 9 350 100 3 900 87 
Other ACP countries 73 000 76 4 650 60 2 005 74 
Middle East 24 000 100 3 800 100 2 525 100 
Other non-associated countries 53 500 78 10 750 77 1 600 100 
Organizations: 
— international 167 000 61 35 632 61 ' 10 100 56 
— non-governmental 18 500 0 25 000 74 2 000 99 
Total 0) 892 000 84 142 682 79 43 730 66 
(') In addition, there is a reserve available of 35 663 tonnes of cereals, 7 318 tonnes of skimmed-milk powder and I 270 tonnes of butteroil. 
82 Official Journal of the European Communities 31.12.82 
Comments arising from the adopted on 21 December 1981 to measures which 
examination of the accounts the Commission clearly could not implement before 
J 1982. 
Budget estimate 
9.7. As in previous years, the budget estimate for 
1981 was extremely inaccurate. The Commission did 
not base its calculation of the appropriations neces­
sary on a realistic forecast of the implementation of 
the aid programmes. Amounts to be recovered 
9.8. An amount of 0-8 million ECU appears in the 
Commission's balance sheet as debts to be recov­
ered from various beneficiaries of food aid as mis­
cellaneous expenditure paid on their behalf by the 
Commission ; some of these debts go back one or 
more years. 
Table 9.6 shows that the appropriations for deliver­
ies under the 1981 programmes were again overesti­
mated and the appropriations for late deliveries 
under previous years' programmes considerably 
underestimated. 
These unrealistic estimates were largely corrected on 
the adoption of amending budgets. Moreover, 
Table 9.2 shows that the appropriations carried over 
were reduced from 213-5 million ECU in 1980 to 
110-7 million ECU in 1981, 40 million ECU of 
which were allocated by the amending budget Comments arising from the 
examination of procedures 
9.9. There has been no significant improvement in 
respect of the procedural weaknesses referred to in 
previous reports by the Court of Auditors (annual 
report 1980 (!), paragraph 9.6): 
(') OJ No C 344, 31. 12. 1981. 
Table 9.6 — Initial appropriations of the 1981 budget and payments made in 1981 
(Mio ECU) 
Product Programme Initial appropriations 
Payments 
actually made 
in 1981 Payments as a 
percentage of 
initial appro­
priations Product Programme Title 6': food 
aid refunds Title 9: food 
aid Total Payments 
actually made 
in 1981 Payments as a 
percentage of 
initial appro­
priations 
(1) (2) (3) (4) = 
(2) + (3) (5) (6) = 
(5)/(4) 
Cereals (a) previous p.m. p.m. p.m. 17-6 
(b) 1981 57-8 134-6 192-4 125-7 65% 
Skimmed-milk powder (a) previous 4-9 4-1 9-0 142-7 1 590% 
(b) 1981 100-9 96-5 197-4 75-4 38% 
Butteroil (a) previous 4-9 2-7 7-6' 117-0 1 540% 
- (b) 1981 112-7 67-8 180 5 45-5 25% 
Sugar (a) previous p.m. p.m. p.m. 2-5 — 
(b) 1981 1-0 2-0 3-0 — — 
Other products p.m. p.m. p.m. 9-4 — 
Transport costs (a) previous — • 1-3 1-3 25-6 1 969% 
(b) 1981. — 56-3 56-3 18-1 32% 
Miscellaneous — 1-1 1-1 0-4 36% ' 
Total (a) previous 98 8-1 17-9 305-4 1 710% 
(b) 1981 272-4 358-3 630-7 274-5 44% 
(a) + (b) 282-2 366-4 648-6 579-9 89% 
31. 12. 82 Official Journal of the European Communities 83 
(a) Renewed delays in the adoption by the Council of 
the year's programmes 
The allocation of food aid between the various 
beneficiaries was decided by the Council only on 
30 May 1981, whereas the. Commission proposal 
was sent to the Council on 13 February 1981. 
This interval could not but increase the delays in the 
implementation of the programmes. 
(b) Impossibility of checking the implementation of 
programmes against the accounts 
The absence of an individual record of commit­
ments for each operation makes it impossible to 
reconcile the quantitative and financial aspects of 
the implementation of the programmes, or to trace 
the cost of each operation from the accounts, even 
though the Commission's present accounting sys­
tems could enable such comparisons to be made. 
(c) Clearance of the accounts increasingly delayed 
The delay in the clearance of the accounts of ad­
vances for the amounts expended by the Member 
States is continuing to increase, contrary to the indi­
cations in the previous replies of the Commission to 
the comments of the Court of Auditors (annual 
report 1978 (1), paragraph 7.15: annual report 
1979 (2), paragraph 9.11: annual report 1980 (3), 
paragraph 9.15). Since the decision of 22 November 
1977 in respect of the financial year 1974, no further 
clearance decisions have been taken: 
(d) Quality controls of quantities mobilized 
Although the Court noted an apparent drop in the 
number of deliveries of food aid of substandard 
quality, such deliveries do continue to be made, and 
it is surprising that of the 0-6 million ECU in the 
1981 budget allocated for quality controls only 10% 
have been expended for this purpose. General comments 
9.10. In 1982, the Community food aid budget will 
bear expenditure of some 1 -55 ECU per kg for the 
supply of 150 000 tonnes of skimmed-milk powder 
and of some 4-40 ECU per kg for the supply of 
45 000 tonnes of butteroil. The nutritional and 
financial value of these goods leads the Court to 
request the Community authorities responsible to 
take, without delay, certain simple and inexpensive 
measures to limit losses and increase the efficiency 
of food aid in milk powder and butteroil. These are: 
(a) To improve the quality of the milk powder bags 
and particularly those used for vitaminized 
skimmed-milk powder intended for individual 
distribution which in 1980 represented two-
thirds of the total aid in skimmed milk powder. 
Annex II of Regulation (EEC) No 625/78 lays 
down three possible qualities of packaging, to 
be chosen by the manufacturer. The relevant 
technical specifications have been drawn up in 
accordance with the conditions of eligibility for 
public storage in the Community. They do not 
take account of possible transportation overseas 
or on rough tracks. The most expensive quality 
of bag is also the strongest but it seems never to 
be used. It is this quality, or an even better one, 
which should be prescribed for Community aid. 
The extra cost per kg of vitaminized skimmed-
milk powder would be about 0-005 to 0 01 
ECU, or 0-3% to 0-6% of the value of the 
product. 
(b) With regard to vitaminized skimmed-milk pow­
der, to draw the attention of certain beneficiary 
States where the need is particularly acute, to 
the possibility offered by Article 6 of Regulation 
(EEC) No 303/77 of providing that 'in excep­
tional cases, specific packaging requirements 
may be laid down'. This information could be 
imparted when the Commission advises a coun­
try of its intention to grant it aid. The Court of 
Auditors has often drawn attention to the disad­
vantages of the 25 kg bags, as did the delegation 
from the European Parliament during its mis­
sion to Ethiopia. Skimmed-milk powder pro­
vided by the United States or Switzerland is 
packed in 2 to 5 kg tins. 
(») OJ No C 326,31. 12. 1979. , , „ . . „ , 
(2) OJ No C 342, 31. 12. 1980. (c) To indicate in all cases in the exchange of let-
(3) OJ No C 344, 31. 12. 1981. ters between the Community and the benefici-
84 Official Journal of the European Communities 31. 12. 82 
ary State the delivery date desired by the latter, 
in order to avoid, as the Court found on numer­
ous occasions, deliveries at unsuitable times. 
This comment also applies to cereals. 
(d) To mark the date of manufacture on the packag­
ing in plain language and not in code as 
allowed by the above-mentioned Regulation 
(EEC) No 625/78 and also the recommended 
date by which the product is to be used. 
(e) To use for butteroil a design of tin (broader and 
shorter) which has been found on numerous 
occasions in practice to be more durable. Commission; nor were the reports on the distri­
bution of the aid, on the use of the counterpart 
funds and on the implementation of the 
development projects to be financed by the 
counterpart funds; 
(b) The counterpart funds resulting from the sale of 
Community food aid delivered between 1974 
and 1981, of an approximate value at the world 
price of 40 million ECU, had not, in March 
1982, been allocated to the financing of 
development projects. They remained unused in 
various bank accounts. 
9.11. At the beginning of 1981, the Court of Audi­
tors wished to carry out various checks on a number 
of consignments of food aid at the time of shipment 
and therefore asked the Commission for the antici­
pated loading dates of those consignments. On 
27 July 1981, the Commission replied to the Court 
that it was not possible to communicate the actual 
dates of shipment to the Court of Auditors since 
they were in fact only sent to the Commission, via 
the intervention agencies concerned, after the deliv­
eries had taken place. 
The Court cannot dispense with checks of this kind 
since they are essential for verifying the quality of 
the aid at the time of shipment and it would request 
the Commission to take the measures necessary to 
remedy this weakness. 
Specific comments 
9.12. Pakistan occupies the fourth place among the 
developing countries receiving direct food aid. Since 
1969, it has received 467 000 tonnes of cereals, 
17 750 tonnes of butteroil and 8 600 tonnes of 
skimmed-milk powder, at a value at Community 
prices of around 150 million ECU. Moreover, food 
aid of an approximate value of 20 million ECU has 
been delivered for the benefit of Afghan refugees in 
Pakistan. The Commission should have reminded Pakistan of 
its obligations, in particular in respect of the coun­
terpart funds, where it should have encouraged Pak­
istan to allocate them to the financing of a small 
number of easily identifiable projects, such as the 
projects to which the Commission has already prov­
ided aid under programmes of financial and tech­
nical cooperation in favour of non-associated devel­
oping countries. This could have been done without 
difficulty since, at the instigation of other donors, 
the machinery necessary for monitoring the counter­
part funds has been set up in the Pakistan adminis­
tration. 
9.14. In its annual proposals on the distribution of 
food aid between beneficiaries, the Commission 
indicated, for Pakistan, that there was a need to 
import wheat, without at the same time mentioning 
the amount of Pakistani exports of rice. Thus it is 
not made clear that over the last few years Pakistan 
has been a net exporter of cereals. This omission 
conceals the fact that Community food aid is not 
helping to make good a shortage of food but is in 
reality a form of financial aid. On the other hand, 
the Commission proposals to grant Pakistan for 
some years no more than a few hundred tonnes of 
skimmed-milk powder (750 tonnes in 1981 out of 
the 10 000 tonnes requested) are not based on a 
detailed analysis of this country's requirements and 
its capacity for absorbing this aid. 
9.13. On the basis of on-the-spot findings, it 
appeared that the delivery and distribution of direct 
aid were properly carried out. However, Pakistan's 
obligations towards the Community were not res­
pected : 
(a) The reports that should have been drawn up 
when the aid was unloaded were not sent to the 9.15. Between 1972 and 1981, Community food 
aid to Senegal comprised 136 555 tonnes of cereals, 
13 850 tonnes of skimmed-milk powder and 
700 tonnes of butteroil, of which the value at Com­
munity prices is about 50 million ECU. In general, 
this aid was properly carried out. Nevertheless, 
during its visit to Senegal, the Court found that the 
Commission had failed to inform its local delega-
31. 12.82 Official Journal of the European Communities 85 
tion of the planned dates of the last two deliveries 
of food aid or to send it the results of a joint inquiry 
in that country by the delegation and experts from 
Brussels on the quality of a particular consignment 
of aid. 
9.16. Between 1973 and 1981, Community food 
aid to Mauritania comprised 70 500 tonnes of 
cereals, 11 600 tonnes of skimmed-milk powder and 
5 950 tonnes of butteroil, of which the value at 
Community prices amounted to about 54 million 
ECU. 
Mauritania has well understood the role which can 
be played by food aid. This country has acted ener­
getically to maximize its effects by closely supervis­
ing food aid distribution and ensuring that it does 
not have any detrimental effect on local production. 
Informal procedures allowing very close coordina­
tion between the main donors (FAO, WFP, USAID 
and EEC) have been set up and since 1975 have 
given very satisfactory results. The Court recom­
mends strongly that, based on what is done in 
Mauritania, the Commission should promote 
on-the-spot coordination between donors and 
should extend it without delay to other countries 
receiving Community aid. Financial and technical cooperation 
with non-associated developing 
countries (Chapter 93) 
9.17. As at 31 December 1981, the annual pro­
grammes from 1976-81 were in the state of comple­
tion as shown in Table 9.7. 
Comments arising from the 
examination of the accounts 
9.18. In 1981, the payments concerning pro­
grammes prior to 1981 amounted to 87 -5 million 
ECU, which indicates.a considerable acceleration in 
the rate of implementation of the projects. This left 
the Community without funds from April 1981, as 
the budgetary authorities had only granted 23 mil­
lion ECU out of 65 million ECU in payment appro­
priations requested by the Commission in the 1981 
budget. Finally, a transfer of 15-5 million ECU 
against appropriations carried over was authorized 
in September 1981, and on 26 October 1981 an 
amount of 44 million ECU was granted by means of 
the first amending budget. 
Table 9.7 — Annual programmes as at 31 December 1981 
(Mio ECU) 
State of completion Programme Total at 
31. 12. 1981 State of completion 
1976 1977 1978 1979 1980 1981 Total at 
31. 12. 1981 
Budget allocation 
Number of projects concerned 
(a) Commitments entered into 
(b) Payments made to 31. 12. 1981 20-0(') 45-0(>) 70-0' 110-0 138-5 150-0 
(8) (20) (34) (40) (36) (20) 
22-6 45-6 . 70-0 1100 136-4 117-8 
19-1 31-2 30-5 44-2 40-8 — 533-5 
(158) 
502-4 
165-8(2) 
Still to be paid at 31. 12. 1981: 
(a)-(b) 
o/o 
(a) 3-5 14-4 39-5 65-8 95-6 117-8 
15% 32% 56% 60% 70% 100% 336-6 
67% 
Note: at 31 December 1980 there 
was still to be paid 4-7 18-0 52-3 90-5 100-8 — 266-3 
(') In Mio u. a. fixed at a rate of 1 u. a. = USD 112. 
(2) Out of the total of 165-8 Mio ECU, 87-5 Mio ECU was in 1981. 
86 Official Journal of the European Communities 31. 12. 82 
The reductions made by the budgetary authority 
were based on the rate of disbursement during the pre­
vious years. They could certainly have been avoided 
if the Commission had based its annual requests for 
payment appropriations on detailed and updated 
forecasts for each project financed, which would 
facilitate the assessment made by the budgetary 
authority. manager of a project in a remote area will have dif­
ficulty in becoming familiar with the Community 
regulations and procedures. Furthermore, the Com­
mission has up to now sent nobody to carry out an 
on-the-spot inspection of the projects. 
9.19. Moreover, it should be noted that 2 of the 
20 projects in the 1977 programme, 3 of the 34 1978 
projects and 11 of the 40 1979 projects have still not 
started up from the financial point of view. These 
delays are explained by the Commission as being 
due to the difficulties experienced by the benefici­
aries in drawing up the technical files and in com­
pleting the detailed procedures for the implementa­
tion of the projects; this suggests that the financing 
was premature. 
Other comments 
9.20. After Bangladesh and India, which were the 
subject of comments in its previous annual 
report (}), (paragraphs 9.19 to 9.21), the Court of 
Auditors continued its visits to non-associated 
developing countries with Pakistan. Between 1976 
and 1981 Pakistan received finance worth 39 million 
ECU for eight projects. The Court visited six of 
these projects, in respect of which Community 
financial aid amounts to 34-2 million ECU. All the 
projects form a considerable contribution to the 
development of Pakistan. 
Reduced Community presence 
9.21. Since responsibility for the various types of 
Community aid to Pakistan and for the various 
stages of implementation of the aid is divided 
between some ten divisions at the Commission, and 
since there is no local delegation, contacts between 
the Commission and Pakistan are neither regular 
nor coordinated. Delays in implementation 
9.22. The majority of the projects visited suffer 
from delays in implementation, which result either 
from the length of local administrative procedures 
for approval of the proposals, or from unforeseen 
technical incidents during the work. 
One project did not receive official approval allow­
ing it to commence until two years after the financ­
ing agreement was signed. Another project was 
stopped for two years pending official approval of 
an increase of 260% in the estimated costs, following 
a considerable underestimation in the preliminary 
study of the number of construction works. The 
deadline for completion of a third project had to 
be extended from 5 to 11 years, when soil conditions 
turned out to be much more difficult than had been 
indicated in the preliminary study. 
Payment procedures 
9.23. Among 40 transfers of funds made by the 
Commission on behalf, of one project, the Court 
found that three transfers in 1979 and 1980 for a 
total amount of USD 66 914 had not been credited 
to the account of the payee, i.e. the local project 
manager. At present, the Commission is endeavour­
ing to trace these payments and to develop a suit­
able procedure for remedying such shortcomings. 
Those responsible for the implementation of three 
projects stated that, since there were no direct repre­
sentatives, they had experienced great difficulty in 
starting up the projects. Incleed, it is clear that the Exceptional measures in favour of 
developing countries and 
non-member States (Chapter 95) 
(') OJ No C 344, 31. 12. 1981. 9.24 In 1981, the Community contribution in 
favour of disaster victims in nine non-member 
31. 12. 82 Official Journal of the European Communities 87 
States amounted to 23 million ECU and was impie- Cooperation with non-member States 
mented by 19 different organizations. (Chapter 96) 
Financial cooperation with the 
Maghreb and Mashreq countries and with 
Cyprus and Malta 
Comments arising from the 
examination of procedures 
Inadequacy of progress reports 9.27. The Maghreb (Algeria, Morocco, Tunisia) 
and Mashreq countries (Egypt, Jordan, Libya, 
Syria), together with Cyprus and Malta, benefit from 
financial aid granted by the Community under var­
ious cooperation agreements concluded individually 
in 1976 or 1977 with each of these States (see 
Table 9.8). 
9.25. An examination of the files on aid of this 
kind showed that in about half the cases final 
reports on the operations were missing and those 
which had been sent in were very brief. In general, 
they do not contain all the information which the 
Commission requests the beneficiary to provide: 
progress of the operation, type, quantity and cost of 
supplies, amounts paid, quantities distributed, ser­
vices carried out. Observance of the obligation to 
make a report to the Commission is especially 
important since the supporting documents proper 
are retained by the implementing bodies and these 
reports are therefore the only documents that the 
Commission has to assess the use made of the 
funds. « 
Comments arising from on-the-spot visits Financial position at 31 December 1981 
9.28. The agreements make provision for the 
implementation of aid financed by means of loans 
from the European Investment Bank's own 
resources and by non-refundable subsidies or 
special loans charged to the Community budget. 
About 115 projects or operations have been started 
up in these countries of which 20% concern interest 
subsidies, 20% investments and 60% principally stu­
dies, technical assistance and training and coopera­
tion. The difficulties encountered during the imple­
mentation of the projects vary from one project and 
country to another, but in general the selection of 
projects and their execution are subject to delay for 
a variety of reasons: dilatory local administration, 
difficulties in adapting to Community procedures, 
political situation, etc. 
9.26. In 1980 and 1981 the Afghan refugees settled 
in Pakistan received food aid of an approximate 
value of 20 million ECU at Community prices and 
financial contributions amounting to 25 -7 million 
ECU intended mainly for the purchase of tents and 
blankets. Officials of the Court of Auditors were 
able to visit ten refugee villages, to which foreigners 
do not normally have access, and were able to ascer­
tain that the Community aid was being put to good 
use. Deliveries of food aid arrived regularly and in 
sufficient quantities, at least as far as cereals are' 
concerned, due to the large quantities made avail­
able by Pakistan from its own reserves. Other countries benefiting from financial aid 
within the framework of Chapter 96 of the 
budget 
9.29. Turkey, Greece (before accession), and Por­
tugal (until accession) receive financial aid in 
accordance with various agreements or financial 
protocols concluded with the Community (see 
Table 9.9). 
88 I Official Journal of the European Communities 31. 12. 82 
Table 9.8 — Financial position at 31 December 1981 by beneficiary country 
(Mio ECU) 
Beneficiary country Amounts 
provided for 
in protocol Amounts 
charged to 
general 
budget Financial position at 31 12. 1981 
Payments 
made in 1981 Cancel­
lations Beneficiary country Amounts 
provided for 
in protocol Amounts 
charged to 
general 
budget Total com­
mitments Total pay­
ments Rate of pay­
ment Payments 
made in 1981 Cancel­
lations 
(1) ' (2) (3) (4) (5) (6) = 
(5)/(3) (7) (8) 
Cyprus 300 100 1-5 1-5 15-0% 1-5 0-3 
Malta 260 100 9-9 5-7 57-0% 5-0 — 
Maghreb 
— Algeria 1140 44-0 29-4 2-1 4-8% 2-1 8-0 
— Morocco 130-0 74-0 74-0 25-3 34-2% 16-9 — 
— Tunisia 950 '54-0 39-7 12-6 23-3% 8-7 — 
Mashreq 
— Egypt 1700 77-0 53-5 10-7 13-9% 1 -4 5-6 
— Jordan 400 22-0' 18-8 6-8 30-9% 3-9 — 
— Libya 300 100 3-7 1-3 13-0% 0-7 0-3 
— Syria 600 260 • 18-2 2-9 11-2% 0-5 5-6 
Total at 31.12.1981 695 0 327- 0 248-7 68-9 21 • 1% 40-7 19-8 
Table 9.9 — Financial position at 31 December 1981 (by beneficiary country) of the financial protocols and aid 
(Mio ECU) 
Beneficiary country Amounts provided for 
in agreements Amounts to be financed 
by the general budget Total commitments 
against budget appro­
priations Total payments against 
budget appropriations 
Greece (') 280-0 55-0 53-2 31 -6 
Portugal (2) 505-0 155-0 29-2 29-2 ' 
Turkey (3) 385-0 295-0 266-0 62-0 
Total 1 1700 505 0 348-4 122-8 
(') Financial protocol — OJ No L 225 of 16. 8. 1978. 
(2) Financial protocol — OJ No L 274 of 29. 9. 1978 and pre-accession aid — OJ No L 349 of 23. 12. 1980. 
(3) Third financial protocol — OJ No L 67 of 17. 3. 1979 and special aid to Turkey — Council Decision of 2. 4. 1979. 
Financial position at 31 December 1981 
9.30. The agreements provide for the financing of 
various projects in the beneficiary States by means 
of loans made from the EIB's own resources, which 
may carry interest subsidies charged to the Com­
munity budget, or by means of special loans or 
non-refundable aid also charged to the Community 
budget. General comments 
Audit of the appropriations provided for in the 
financial protocols 
9.31. By reason of two agreements concluded 
between the Commission and the EIB, a consider­
able proportion of the operations financed from 
31. 12. 82 Official Journal of the European Communities 89 
Chapter 96 of the Community budget is managed by 
the EIB and is subject to the audit and discharge 
procedures provided for by the Bank in respect of 
all its operations (see Article 9.2 of. the Convention). 
The following operations are concerned: 
— • interest subsidies out of budget resources for 
loans granted by the EIB from its own 
resources; 
— risk capital out of budget resources; 
— special loans of budget resources in the indus-
* trial, energy, mining, tourism and economic 
infrastructure sectors in the Maghreb and Mash-
req countries; 
— all special loans out of budget resources for 
other countries. 
For the majority of projects financed in this way, the 
Commission's official files are incomplete; there is 
no financing proposal, no financing agreement, no 
loan contract nor adequate reports on the progress 
of the projects. Contracts for construction works, 
supplies and services, concluded in respect of the 
projects, as well as the supporting documents relat­
ing to payments, are never sent to the Commission 
by the EIB, and the Court of Auditors was not able 
to make the necessary checks for lack of documents 
in the files. This situation contrasts strongly with 
that of the co-financing which the World Bank man­
ages on behalf of the Commission. For the latter, the 
basic documents appear in the Commission files, 
and the supporting documents relating to pay­
ments and contracts can be consulted by the Court 
of Auditors. 
In conclusion, for Chapter 96 of the budget, the 
total amount of budget appropriations managed by 
the EIB which cannot be audited by the Court of 
Auditors and on which the Court is therefore not 
able to provide the information which is essential 
for the authorities giving discharge, amounts to 
some 410 million ECU out of the 832 million ECU 
in the budget under aid to the countries in question. 
Absence of implementing measures relating to the 
execution of the financial protocols 
9.32. The draft financial regulation on the applica­
tion of the cooperation agreements concluded with the Maghreb and Mashreq countries and of the pro­
tocols concluded with Malta and Cyprus, as well as 
the draft financial regulation on the financial proto­
cols concluded with Greece, Turkey and Portugal, 
'on which the Parliament and the Court of Auditors 
have given their opinion, have been before the 
Council since February and March 1978 respec­
tively. The Council has furthermore not yet taken a 
decision on the draft financial regulation which was 
submitted to it on 25 March 1981, concerning th? 
application of the provisions of the agreement, in 
the form of an exchange of letters between the Euro­
pean Economic Community and the Portuguese 
Republic, on the implementation of pre-accession 
aid to Portugal. The Parliament and the Court of 
Auditors have given their opinions on this draft 
regulation. 
9.33. The draft financial regulations provided, 
inter alia, for the establishment of a Committee, 
made up of representatives of the governments of 
the Member States, to which the financing proposals 
should be submitted for opinion. The Committee 
was to decide by qualified majority. In the event of 
a favourable opinion by this Committee, the Com­
mission would be authorized to take the financing 
decision; in the event of an unfavourable opinion, 
the proposal would either,be withdrawn or submit­
ted to the Council for a decision. In the absence of a 
financial regulation, an ad hoc 'Mediterranean' 
group waSxCreated within the Council, which takes 
decisions by unanimity and not by qualified major­
ity. 
European Association for Cooperation 
(EAC) 
Shortcomings in the central accounts of the EAC 
9.34. For 1981, the expenditure of the European 
Association for Cooperation (EAC), which was 
charged to Title 9 of the Community budget, 
amounted to 38 -6 million ECU, to which were 
added 10-5 million ECU charged to the European 
Development Funds. 
The Court of Auditors undertook a detailed exami­
nation of the EAC accounts, the latter having been 
sent to the Commission on 21 May 1982, instead of 
90 Official Journal of the European Communities 31. 12. 82 
28 February 1982 as provided for in the agreement 
between the Commission and the EAC. In general, 
the 120 imprest accounts established outside Europe 
and managed by the EAC are tightly run locally and 
subsequently checked effectively by the EAC 
departments in Brussels. 
On the other hand, the central accounts of the EAC 
have, over the years, become disorganized and they 
contain serious weaknesses: 
(a) The expenditure of the financial year 1981 was 
114 000 ECU more than the figures given in the 
accounts, since the EAC did not take account of 
exchange rate losses suffered over the last few 
years. 
(b) Various accounts have not been cleared or have not been subject to any follow-up for several 
years. For example, members of the EAC's own 
staff have been among the miscellaneous deb­
tors of the EAC since 1978 and 1979. 
(c) There has been no reconciliation by either the 
Commission or the EAC of the amount due to 
the EDF according to the EAC accounts 
(7 • 1 million ECU) and the amount due from the 
EAC in the EDF accounts (13-1 million ECU). 
This laxity has already been commented on in a 
previous annual report (annual report 1979 ('), 
Part II — paragraph 4.3). 
(d) For certain items of expenditure such as remu­
nerations, the principle of separation of the 
authorizing and accounting officers has not 
been respected. Moreover, there is no internal 
auditor in the EAC. 
(!) OJ No C 342, 31. 12. 1980. 
31. 12. 82 Official Journal of the European Communities 91 
CHAPTER 10 
Staff expenditure 
TABLE OF CONTENTS Paragraph reference 
Summary of principal comments 10.0 
Introduction 10.1 
Summary of financial information - 10.2 to 10.4 
The conditions of employment of local staff of the institu­
tions 10.5 to 10.9 
The translation services of the institutions 10.10 to 10.19 
The system of payment of remunerations at the European 
Parliament 10.20 to 10.24 
SUMMARY OF PRINCIPAL COMMENTS 
10.0. The principal comments in this chapter are: 
(a) The conditions of employment of local staff do not com­
ply with the Conditions of Employment of Other Ser­
vants. In particular, the Parliament has not followed the 
provisions of the Staff Regulations when appointing 
local staff as officials. 10.9 
(b) The institutions have not endeavoured to channel the 
flow of material for translation, with a view to reducing 
its volume, by the use of clear rules of procedure. 10.14 
(c) There are a number of weaknesses in the system of pay­
ment of remunerations at the European Parliament, with 
the result that the relevant legal requirements are not ful­
filled. 10.21 
Introduction 
10.1. Staff expenditure is effected essentially 
under the rules of the Staff Regulations of Officials 
of the European Communities and of its annexes 
and the Conditions of Employment of Other Ser­
vants of the European Communities (temporary, 
auxiliary and local staff, and special advisers). 
These provisions govern, in particular; the careers of 
staff, their working conditions, emoluments and 
social security benefits. It should be noted that the lists of posts annexed to 
the general budget set an upper limit on the number 
of officials and temporary staff whose salaries may 
be paid from staff appropriations during the finan­
cial year. 
It should also be noted that by a Council Regula­
tion of 15 December 1981 0) a so-called 'crisis levy' 
is imposed on salaries, pensions and severance 
(») OJ No L 386, 31. 12. 1981. 
92 Official Journal of the European Communities 31. 12. 82 
grants, with effect from 1 July 1981. This levy, which 
was initially introduced for a period of 10 years, 
amounts to 2-54% in the first year, rising to 12-7 % 
as from the fifth year. 
Summary of financial information 
10.2. Title 1 of the budget consists entirely of 
appropriations to cover the staff expenditure of the 
institutions. In addition, staff expenditure out of 
.research and* investment appropriations appears 
under Title 3 of the Commission budget. 
In addition to the staff expenditure of 635 -2 million 
ECU given in Table 10.1, there was expenditure of 
93-9 million ECU against the appropriations for 
research and investment under Title 3, Chapter 33. 
This comprised 77 million ECU for 'direct action' 
and 16-9 million ECU for 'indirect action'. Thus 
total staff expenditure in 1981 amounted to 
729 1 million ECU. Staff 
10.3. Table 10.2 shows the distribution among the 
various institutions of posts authorized in the 
budget for 1980 and 1981 and of staff employed as 
at 31 December 1980 and 31 December 1981. In this 
context it should be mentioned that Greece became 
a member of the European Communities as from 
1 January 1981 and a number of posts were reserved 
for staff of Greek nationality. 
10.4. Apart from staff in posts provided for in the 
budget, a further 1 434 auxiliary staff, local staff and 
special advisers were employed as at 31 December 
1981 (1), divided among the institutions as shown in 
Table 10.3. 
(') Articles 3 to 5 of the Conditions of Employment of 
Other Servants of the European Communities. 
Table 10.1 — Utilization of staff appropriations — by chapter of the budget and institution 
(Mio ECU) 
Chapter and institution Appropriations 
Commitments Payments Chapter and institution 
Initial Final Commitments Payments 
(1) (2) (3) (4) (5) 
A — By budget chapter 
1.0. Members of the institutions 43-9 43-8 38-9 37-8 
1.1. Staff 618-2 614-6 . 561-4 558-6 
1.2. Allowances and expenses on entering and on 
leaving the service and on transfer 17-5 . 20-0 18-8 17-8 
1.3. Mission and duty travel 18-4 19-6 18-7 15-7 
1.4. Social welfare 3-0 • 3-2 31 2-5 
1.5. Internal training courses and vocational training 
of staff 3-2 3-2 3-2 2-8 
Total 704-2 704-4 644-1 635-2 
B — By institution 
Parliament 142-4 142-1 121-0 117-1 
Council 56-1 56-6 53-6 53-0 
Economic and Social Committee 13-7 13-7 12-6 12-6 
Commission (') 460-5 460-5 429-3 425-2 
Court of Justice 19-3 19-2 17-0 17-0 
Court of Auditors 12-2 12-3 10-6 10-3 
Total 704-2 704-4 644-1 635-2 
(') Including Office for Official Publications. 
31. 12. 82 Official Journal of the European Communities 93 
Table 10.2 — Officials and temporary staff 
1980 1981 
Institution Posts author­
ized Staff at 
31 December Difference 
(2)—(3) Posts author­
ized Staff at 
31 December Difference 
(5)-(6) 
(1) (2) (3) (4) (5) (6) (7) 
Parliament 2 5730) 2 008 565 2 927 2 409 518 
Council 1 599 1 479 120 1 700 1 570 130 
Economic and Social Committee 339 335 4 374 361 13 
Commission: 
— Administration, excluding Off­
ice for Official Publications 8 885 8 466 419 9 173 (2) 8 754 419 
— Office for Official Publications 265 228 37 284 255 29 
— Research and investment: 
Direct action 2 260 2 240 20 2 260 2 206 54 
— Research and investment: 
Indirect action 476 431 45 493 439 54 
Court of Justice 363 332 31 452(3) 390 62 
Court of Auditors 259 208 51 284 232 52 
Total 17 019 , 15 727 1 292 17 947 (4) 16 616 1331 
(') Of which 232 are blocked, 45 reserved for secondment of staff to political groups and 113 reserved for the entry of Greece. 
(2) Including 3 posts authorized by supplementary budget No 1. 
(s) Including 10 posts authorized by supplementary budget No 1. 
(«) This total does not include the 34 officials of the European Centre for the Development of Vocational Training and the 34 officials ol the 
European Foundation for the Improvement of Living and Working Conditions. These employees are not subject to the Staff Regulations, 
as they do not formally belong to the staff of the European Communities. 
Table 10.3 — Auxiliary staff, local staff and special advisers 
Institution 31 December 1980 31 December 1981 
Institution Auxiliary 
staff Local 
staff(') Special 
advisers Total Auxiliary 
staff Local 
staff (0 Special 
advisers Total 
Parliament 131 21 — 152 142 — — 142 
Council 3 69 1 73 16 37 — 53 
Economic and Social Committee 16 11 — 27 30 12 — 42 
Commission: 
— Administration 52 751 22 825 148 898 30 ' 1 076 
— Research and investment 73 — — 73 64 — — 64 
Court of Justice 32 6 1 39 37 6 1 44 
Court of Auditors 2 8 ' — 10 7 6 — 13 
Total 309 866 24 1 199 444 959 31 1434 
(0 Including local staff paid by extra-budgetary.bodies (restaurants, creches, etc.). 
94 Official Journal of the European Communities 31. 12. 82 
The conditions of employment of 
local staff of the institutions 
10.5. The Court of Auditors examined the applica­
tion of the conditions of employment of local staff 
at all the Community institutions with the exception 
of the Office for Official Publications and the press 
and information offices. 
10.6. For the payment of expenditure in respect of 
local staff, the budget provides in item 1112 global 
appropriations which are not broken down by posts 
or component parts of the salary. 
The number of local staff employed in the financial 
years 1980 and 1981 can be seen from Table 10.3. 
The appropriations authorized in those financial 
years and their utilization by the individual institu­
tions are shown in Table 10.4. 
10.7. Under Articles 4 and 79 of the Conditions of 
Employment of Other Servants (Staff Regulations, 
Part II), the conditions of employment of local staff 
are to be determined by each institution in accord­
ance with current rules and practice in the place 
where they are to perform their duties. Accordingly, 
all the institutions have adopted rules on the condi­
tions of employment for local staff. 
10.8. Examination of whether the rules adopted by 
the institutions are actually based upon current local 
rules and practice revealed the following: Article 4 of the Conditions of Employment of Other 
Servants provides that local staff shall be engaged 
for manual or service duties. Consequently the con­
ditions of employment should follow the local rules 
on comparable activities. 
However, 
(a) The institutions in Brussels have laid down con­
ditions of employment which place local staff 
on an equal footing with public officials and in 
some aspects, such as period of notice, leave, 
social benefits and salary grading, are even 
more favourable. 
(b) The institutions in Luxembourg have stated in 
the Conditions of Employment that they have 
laid down for local staff that the basic monthly 
salaries be adjusted annually to match the 
change in real wages in the manufacturing 
industry of the Grand Duchy of Luxembourg as 
a whole, as established by the Statistical Office 
of the European Communities. 
The institutions have applied these provisions 
in full in the case of increases in wages, but no 
account has been taken of any decline in wages. 
On this basis, salaries ought to have been 
reduced by 0-7% in 1979/80 and by 4-4% in 
Table 10.4 — Appropriations for local staff (item 1112) and their utilization by institution (]) 
(ECU) 
Institution 1980 1981 
Institution 
Appropriations Payments Appropriations Payments 
Parliament 350 000 251 764 50 000 4 889 
Council 887 000 828 040 920 000 698 098 
Economic and Social Committee 228 200 211 734 270 000 268 682 
Commission: 
— Brussels 4 131 481 4 131 481 4 231 000 4 126 078 
— Luxembourg 1 560 000 1 422 178 1 358 000 1 350 711 
Court of Justice 139 360 133 934 160 120 145 124 
Court of Auditors 86 160 85 906 80 000 78 034 . 
Total 7 382 201 7 065 037 7 069 120 6 671 616 
(') Excluding local staff paid from extra-budgetary funds. 
31. 12. 82 Official Journal of the European Communities 95 
1980/81. This 'negative' salary adjustment 
would in any case have been largely compen­
sated for by the automatic adjustment of salar­
ies against the general cost of living index (on 
average 7 • 5% per annum). 
10.9. Since 1976, the Parliament has progressively 
established a total of 246 local staff as officials by 
mpans of internal competitions. These appointments 
cover not only employees who as local staff already 
performed duties for which vacant posts were prov­
ided in the Staff Regulations (Article 5 in conjunc­
tion with Annex IA). A large number of local staff 
have been made officials whose work is not really a 
part of the activity of the European Parliament and 
for whom no posts are provided by the above-men­
tioned regulations, namely the staff employed in 
social welfare bodies such as canteens, creches and 
the staff shop. 
The Court of Auditors finds: 
— that the spirit and the letter of the Staff Regula­
tions have been breached in varying degrees in 
the matter of local staff; 
— that there are considerable differences between 
the institutions in the interpretation of the regu­
lations and consequently in the treatment of 
local staff; 
— that the institutions concerned should urgently 
re-examine this anomalous and inconsistent 
situation and take all necessary steps in conse­
quence. 
The translation services of the 
institutions 
10.10. In 1980/81 the Court of Auditors examined 
the organization of the translation services of all the 
institutions and at the same time carried out a cost 
analysis of the translations. The figures related tp 
1979, since the 1980 and 1981 data available upon 
completion of the audit did not allow a uniform 
analysis of the results. The general audit comments 
are equally valid for the later years. 
10.11. The establishment of translation services 
with one section per official language results from 
Council Regulation No 1 (!) under which the offi­cial and working languages of the European Com­
munity are the languages of the Member States (2). 
Although Article 6 of Regulation No 1 determining 
the languages to be used by the institutions allows 
the institutions to stipulate in their rules of proce­
dure 'which of the languages are to be used in spe­
cific cases', the Court of Auditors found that none 
of the institutions examined had made use of this 
power. In practice, the institutions work on the 
assumption that every document submitted is in 
principle to be translated into every language 
desired. 
10.12. The volume of translation essentially deter­
mines the size of the translation services, i.e. the 
number of revisers arid translators as well as the 
number of typists and other staff directly involved. 
It is therefore the determining factor for the related 
expenditure (direct costs). Table 10.5 gives a break­
down of the direct costs of the translation services. 
The introduction of Greek as the seventh official 
language is not taken into consideration. 
To these direct costs of approximately 84 million 
ECU must be added an estimated 13 million ECU 
in indirect costs, consisting of rent, mission expen­
ses, office furniture and equipment, office machines 
and reproduction equipment. On the basis of both 
direct and indirect costs, an average cost of 
105 ECU per page translated is obtained for 1979. 
In its reply (Annex V, 10.10 to 10.19) the Council 
draws attention to the fact that the Court of Audi­
tors may not be treating all the institutions uni­
formly in the manner in which it determines the 
number of pages translated and that the Court does 
not take into consideration the difficulty of,the 
texts. 
In establishing the number of pages translated in 
1979, the Court used the same methods for all the 
institutions. A page was taken to be of 300 words. In 
applying this norm, possible differences were deter­
mined by the statistical sampling method. The 
Council statistics on the number of pages translated 
were found to differ by 33 % from the norm and 
thus to diverge considerably from the statistics of 
the other institutions, which were closer to reality. 
There is no question here of arbitrary treatment. 
(') OJ No 17, 16. 10. 1958. (2) The current official languages are: Danish, Dutch, 
English, French, German, Greek and Italian. 
96 Official Journal of the European Communities 31. 12. 82 
Table 10.5 — Direct costs of the translation services 
Institution Direct costs 
(Mio ECU) (') Number of pages 
translated (2) Cost per page 
(ECU) 
Parliament 15-940 163 000 98 
Council 16-730 172 000 97 
Commission: 
— Brussels 29 060 352 000 83 
— Luxembourg (3) 12-780 123 000 104 
Court of Justice 3-300 51 000 65 
Economic and Social Committee 4-650 52 000 89 
Court of Auditors 0-960 12 000 80 
Total 83-420 925 000 91 
(') Converted al the rate of 1 ECU = BFR 40. 
(2) Number of pages rounded off. 
(3) Including expenditure for translators assigned to terminology work. 
The study of cost per page translated revealed only 
marginal differences in the difficulty of texts, which 
were therefore disregarded for all the institutions. 10.15. To reduce the loss of productivity which the 
examination of the organization of the work 
revealed, regard should be had to the following mat­
ters: 
10.13. The relatively low cost per page translated 
in the Court of Justice is explained by the fact that 
all its translation staff are trained lawyers. Accord­
ingly, it is frequently unnecessary for translations to 
be heavily revised, and the revisers often do transla­
tion work themselves. In the Commission in Luxem­
bourg all texts are revised, as the wide variety of 
topics makes it impossible to engage specialized 
translators. On the other hand, the productivity of 
the translators is considerably lower than at the 
other institutions. 
10.14. In view of the high cost, and to prevent a 
further rise in costs in the future, the Court of Audi­
tors considers it essential for the institutions to 
reduce the volume of translation by the use of clear 
rules of procedure. It would thus appear necessary 
to limit the number of persons who are entitled to 
send material for translation, so as to prevent docu­
ments for internal use being sent for translation 
when still in draft form. 
On the basis of an internal analysis of the institu­
tion, an attempt should be made to order the types 
of documents so as to give priority to translations of 
absolute necessity for the institution's work. (a) Reference documents should be sent with the 
documents to be translated, as they help to 
avoid re-translation of the same material and 
loss of time on terminological research. 
(b) Rational programming of both the translations 
and the translators' and revisers' time should be 
introduced by establishing production norms 
biased on an analysis of input. 
(c) A more even distribution of the work of each 
institution over the year could be achieved if 
closer cooperation were encouraged between 
the translation services of the different institu­
tions, which would have the considerable 
advantage of avoiding alternating periods of 
high and low work-load. 
10.16. Productivity could also be improved if 
working documents that are still at the stage of 
internal discussion could be sent out in unrevised 
translation (insofar as their intended use allows), if 
marked as such. 
10.17. An electronic technical dictionary 
(EURODICAUTOM) is being developed under the 
31. 12. 82 Official Journal of the European Communities 97 
direction of the Commission; this should be at the 
disposal of the translation services of all the institu­
tions, in order to reduce the amount of time spent 
on searching for specialized terminology. 
At 31 December 1981 the central data bank set up 
for this purpose had a capacity of approximately 
230 000 technical terms, including 40 000 abbrevia­
tions. In order to ensure the system's maximum cost 
effectiveness, i.e. to reach a reply rate of about 70%, 
storage of over 500 000 technical terms per official 
language is required. This objective should be 
achieved as soon as possible. The terminological 
work of the translators themselves could also contri­
bute to this effort. 
The current plan is in the medium term for every 
translator to have immediate access to the central 
data bank by means of a terminal. The introduction 
of this system would increase the productivity of the 
translation services and at the same time ensure the 
employment of a uniform terminology by all the 
institutions. 
The Court is, however, not unaware of the fact that 
the installation of a terminal in the office of each 
member of staff involved in translation would be 
very expensive. It would therefore seem advisable to 
examine whether greater centralization cannot be 
introduced into the existing plans. Consideration 
should be given to the possibility of a limited num­
ber of translators sending their terminological ques­
tions in a list to a central office, which would then 
interrogate the central data bank and obtain the 
information required in printed form. 
10.18. In 1976 the Commission purchased an auto­
matic translation system invented in the United 
States (Systran), which it has since further devel­
oped for Community use. 'Systran' already has a 
number of different language combinations and has 
to date frequently been run on an experimental 
basis. These test runs have shown the possibilities of 
the system and its limits. Given the advanced stage 
of its development, the Court would suggest that it 
may now be advisable to' put the 'Systran' system 
into service in day-to-day translation in certain suit­
able fields, and to adjust the system as necessary on 
the basis of the experience gained thereby. 
10.19. The above-mentioned limits of the 'Systran' 
system have, prompted the Commission to propose 
to the Council the development of a new automatic 
translation system (Eurotra). The total cost of this project is currently estimated at 16 million ECU. 
Recognition must be given to the Commission's 
efforts to integrate automatic systems into the trans­
lation process, in order to prevent further inflation 
of staff numbers in this field in the long term and 
reduce translation costs. None the less, steps should 
be taken to ensure that the costs remain in reason­
able proportion to results, through effective coordi­
nation and supervision of the related research activi­
ties. 
The system of payment of 
remunerations at the European 
Parliament 
10.20. As in 1980 at the Commission, the Euro­
pean Court of Auditors in 1981 examined the sys­
tem of payment of remunerations at the European 
Parliament. Payment of remunerations concerns 
about 2 400 officials and temporary staff and the 
corresponding expenditure amounted to about 
80 million ECU. As part of this audit, the Court of 
Auditors also examined the decisions relating to 
entitlements of staff and their financial effects. A 
method was used which enabled a representative 
sample to be taken. 
Weaknesses of the system of payment of 
remunerations 
10.21. The analysis of the system of payment of 
remunerations gives rise to the following comments: 
(a) There is no comparison of the remunerations of 
successive months, including the effect of inter­
vening changes, so as to establish that the most 
recent month's payment is correct. The inability 
to employ this type of check is largely due to the 
low capacity of the Commission's computer sys­
tem, which is also used by the Parliament. 
(b) At the same time, there is no procedure to 
inform the authorizing departments that their 
financial decisions have been correctly applied. 
(c) The monthly payment of remunerations, takes 
place without the accounting officer having an 
authorization from the authorizing officer which 
has first been approved by the Financial Con­
troller, as provided by Articles 39 and 43 of the 
' Financial Regulation. 
98 Official Journal of the European Communities 31. 12. 82 
Fixed reimbursement of official entertainment 
expenses 
10.22. Under Article 14 of Annex VII of the Staff 
Regulations, an official who, by reason of his duties, 
regularly incurs entertainment expenses may be 
granted a fixed rate allowance to cover such expen­
ses. The conditions for the application of these 
provisions are: 
(a) the duties which give rise to entertainment 
expenditure in the interests of the service are 
clearly defined; 
(b) the official regularly incurs this expenditure; 
(c) the amount of this regular expenditure has been 
estimated in advance. 
At the time of the audit (May 1981) the European 
Parliament was paying 54 members of staff a fixed 
monthly allowance for entertainment expenses rang­
ing from BFR 1 000 to 16 000 per person. The allow­
ance was granted to staff of all categories. It 
included 11 members of staff (some of whom 
received a very high fixed allowance) whose activi­
ties did not normally involve any entertainment 
duties. For example, a skilled employee (messenger, 
D2) received a service allowance of BFR 12 000 and 
two senior secretarial assistants (B2) received sums 
of BFR 16 000 and 15 000 respectively. In the deci­
sions of the appointing authority on these allow­
ances, no grounds were given either for the choice of 
staff concerned or for the size of the sum granted to 
them. It is therefore impossible to judge whether 
these decisions are based on the matters, as defined 
by the Staff Regulations, which are essential to jus­tify the expenditure of 82 000 ECU for this purpose 
in 1981. 
Personal files 
10.23. Many personal files are not kept in accord­
ance with the provisions of Article 26 of the Staff 
Regulations. The documents are neither registered, 
numbered, nor filed in serial order. It was also 
found that a large number of documents essential 
for the establishment of staff entitlements were 
missing. A system of controls is at all events neces­
sary to ensure that the user of a personal file can be 
located at any time. 
The role of the Financial Controller 
10.24. In several cases the Financial Controller has 
given his approval 'with reservations' or added a 
rider. Article 43 of the Financial Regulation prohi­
bits the Financial Controller from giving approval 
with reservations in any form. Consequently such 
comments do not affect the validity of the decision 
in any way. 
It was also found the the Financial Controller car­
ries out his checks before the decision of the author­
izing officer or of the appointing authority is taken. 
In this way, internal control becomes an integral 
part of the process of authorizing, so that neither the 
independence of the Financial Controller nor a 
separation of powers is guaranteed. 
31. 12. 82 Official Journal of the European Communities 99 
CHAPTER 11 
Operational expenditure 
TABLE QF CONTENTS Paragraph reference 
Summary of principal comments 11.0 
Introduction 11.1 to 11.3 
Summary of financial information 11.4 and 11.5 
Infringement of the Financial Regulation in the employment 
of inspectors by the Commission to monitor compliance with 
steel production quotas 11.6 to 11.8 
Meetings of various bodies of the European Parliament else­
where than at the three usual working places 11.9 to 11.14 
Delegations, press and information offices 11.15 to 11.22 
SUMMARY OF PRINCIPAL COMMENTS 
11.0. The principal comments in this chapter are: 
(a) Audit firms and engineers required by the Commission to 
inspect steel undertakings were engaged in breach of 
Article 32 of the Financial Regulation. 11.6 to 11.8 
(b) The cost of meetings of parliamentary committees and 
political groups held elsewhere than at the three usual 
working places is considerably increased by organiza­
tional and staff expenses. 11.9 to 11.12 
(c) The exchange rates used in settling the allowances of 
Members of the European Parliament should be revised. 11.13 and 11.14 
(d) Audit visits to some of the delegations and the press and 
information offices of the Parliament and Commission 
give rise to a number of comments on their administra­
tion. 11.15 to 11.22 
100 Official Journal of the European Communities ' 31.12.82 
Introduction 
11.1. Operational expenditure comprises expendi­
ture under Title 2 of the budget of the Commission 
and under Titles 2 and 3 of the budgets of the other 
institutions. liamentary institutions and committees provided for 
within the framework of conventions or associa­
tions, contributions to the secretarial expenses of the 
political groups, other political activities, contacts 
with members of the parliaments of third countries) 
and under the same title of the budget of the Court 
of Justice (Court expenses). 
11.2. Title 2 of the budgets of the institutions cov­
ers the expenditure necessary for the day-to-day 
operation of the institutions of the Communities 
other than direct expenditure on staff, which is 
charged to Title 1 (see Chapter 10 of this report). 
Title 2 also includes the expenses of meetings, stu­
dies, publications and information and certain sub­
sidies, including those to external bodies (see Chap­
ter 12 of this report). < 
11.3. Other operational expenditure consists 
mainly of expenditure under Title 3 of the budget of 
the European Parliament (expenditure on interpar­The expenditure of the Economic and Social Com­
mittee, which appears in total under Title 3 of the 
Council budget, is considered separately according 
to the nature of the particular item (Titles 1 or 2). 
Summary of financial information 
11.4. Table 11.1 summarizes the 1981 budget trans­
actions by chapter and by institution. 
Table 11.1 — Operational expenditure: appropriations and utilization — by budget chapter and institution 
(Mio ECU) 
Budget chapter and institution Appropriations 
Commitments Payments Budget chapter and institution 
Initial Final Commitments Payments 
(1) (2) (3) (4) (5) 
A — By budget chapter 
2.0 Immovable property investments, rental of buildings 
and associated expenditure 97-2 103-6 96-5 85-6 
2.1 Expenditure relating to the data-processing centre 200 20-7 20-7 16-1 
2.2 Movable property and associated expenditure 18-8 20-3 18-3 12-4 
2.3 Current operating expenditure 35-7 37-6 36-3 29-4 
2.4 Entertainment and representation expenses 1-5 1-5 1-3 0-9 
2.5 Expenditure on formal and other meetings 19-2 21 -2 19-4 18-3 
2.6 Expenditure on studies, surveys and consultations 14-0 27-0 25-6 12-0 
2.7 Expenditure on publishing and information 44-8 45-5 44-6 28-1 
2.8 Subsidies for balancing budgets 34-8 43-9 39-8 39-1 
2.9 Subsidies and financial contributions 4-9 4-9 4-4 3-7 
3.7 Expenditure relating to certain institutions and bodies 6-7 7-1 6-7 5-6 
Total 297-6 333-3 313-6 251-2 
B — By institution 
Parliament 50-5 55-1 50-3 38-5 
Council 34-2 35-2 33-6 24-2 
Economic and Social Committee 7-5 7-5 7-1 6-1 
Commission (') 196-8 227-0 214-5 176-0 
Court of Justice 61 6-1 6-0 4-8 
Court of Auditors 2-5 2-4 2-1 1-6 
Total 297-6 333-3 313-6 251-2 
(l) Including the operational expenditure of the Office for Official Publications. 
31. 12. 82 Official Journal of the European Communities 101 
11.5. Differences between the figures of the ori­
ginal budget and those of the final budget shown in 
Table 11.1 result from transfers within Title 2 made 
during the financial year in accordance with Article 
21 of the Financial Regulation (*), an increase of 
7 950 000 ECU in the Title 2 appropriations of the 
Commission, authorized by amending budget 
No 1 (2), and transfers authorized from other titles, 
in particular from the Chapters 'Provisional appro­
priations' and 'Contingency reserve' of Title 10. 
Infringement of the Financial 
Regulation in the employment of 
inspectors by the Commission to 
monitor compliance with steel 
production quotas 
11.6. On 31 October 1980 the Commission decided 
that the compliance of steel companies with the 
steel production quotas should be monitored by pri­
vate audit firms and engineers. Accordingly, at the 
beginning of November about 100 experts from 
audit firms and about 40 engineers were engaged to 
carry out this work. 
Not until 11 December 1980 did the authorizing 
officer make the first proposal for commitment of 
expenditure in the sum of 1 000 000 ECU, which 
was approved by the financial controller on 
22 December 1980, although the latter was informed 
that the services of the inspectors in question had 
already been engaged by the Commission. A second 
proposal for commitment, again for 1 000 000 ECU, 
was submitted to the financial controller on 
24 December 1980, and approved by the latter on 
31 December 1980. The sum of 2 000 000 ECU in 
the proposals for commitment represented the total 
owed by the Commission to the inspectors for ser­
vices rendered in November and December of 1980. 
When at the beginning of 1981 the authorizing offi­
cer submitted to the Financial Controller various 
payment orders for payments to be made to these 
inspectors, the Financial Controller withheld 
approval on the grounds that the expenditure in 
question arose at a time when no commitment of 
appropriations had been made for it. The Commis-
(') OJ No L 356, 31. 12. 1977. 
(2) OJ No L 305, 26. 10. 1981. sion overruled this refusal by its decision of 
25 March 1981. 
11.7. Under Article 32 of the Financial Regulation, 
the relevant authorizing officer of the Commission 
should have made the proposal for commitment 
before the obligation to pay the inspectors arose, i.e. 
before engaging their services at the beginning of 
November 1980. The late submission of the propo­
sals for commitment by the Commission therefore 
constituted a clear breach of the provisions of the 
said Article, since at the time that these provisions 
were approved there already existed obligations for 
payment of some 1 550 000 ECU. 
11.8. Although the financial controller could .have 
withheld his approval by reason of the illegal proce­
dure of the authorizing officer; he approved the pro­
posals for commitment and thereby retrospectively 
legalized the availability of 2 000 000 ECU to pay 
for the inspectors' services. 
Meetings of various bodies of the 
European Parliament elsewhere than at 
the three usual working places 
11.9. The Court examined the expenditure on 
meetings of the parliamentary committees, political 
groups, the Bureau of the Parliament and the Quaes­
tors held elsewhere than at the three usual working 
places of the European Parliament. Due to delays in 
booking a large part of the expenditure in 1981, the 
Court had to refer to meetings held in 1980. 60 
meetings were examined in all: 11 committee meet­
ings, 47 meetings of the political groups, 2 meetings 
of the Bureau and of .the Quaestors of the Parlia­
ment. 
11.10. In order to determine the amount of 
expenditure incurred, the. cost of each meeting had 
to be calculated by the Court, since the organization 
of a meeting does not give rise to an individual 
commitment and the expenditure may be allocated 
to any of a number of budget articles or items, 
according to its nature (1004, 1170* 1301, 2000, 2311, 
2353, 255, 3701, 3707). The amounts given have 
generally had to be determined by an analysis of the 
available accounts and supporting documents based 
on outside sources or by estimates of the expenses 
incurred. The Court estimates the cost of these 60 
meetings at 2.1 million ECU, which are broken 
down in Table 11.2. 
102 Official Journal of the European Communities 31. 12. 82 
Table 11.2 — Number and cost of meetings 
Breakdown of total costs by type (1 000 ECU) 
Type of meeting Number of 
meetings Total costs 
(1 000 ECU) Members' 
allowance Staff mission 
expenses Freelance inter­
preters Miscellaneous 
organizational, 
expenses 
(1) (2)' (3) = 
(4) +(5) + 
(6) + (7) (4) (5) (6) (7) 
Parliamentary committees 11 433 195 139 64 35 Parliamentary committees 
(100%) (45-0%) (32-1%) (14-8%) (8-1%) 
Political groups 47 1 655 1 088 241 141 185 
(100%) (65-7%) (14-6%) (8-5%) (11-2%) 
Quaestors, Bureau, Enlarged 2 46 19 17 7 3 
Bureau (100%) (41-3%) (37-0%) (15-2%) (6-5%) 
Total 60 2 134 1302 397 212 223 
(100%) (61-0%) (18-6%) (9-9%) (10-5%) 
Parliamentary activities elsewhere than at the usual 
working places during the financial year 1980 may 
be summarized quantitatively as follows: 
— working days: 172 
— average length of a meet­
ing: 2-8 days 
— attendance of Members Qf 
Parliament: approximately 2 200. 
— officials participating 
(including freelance inter­
preters) : 
11.11. The committees are allowed to meet else­
where than at the three working places (') under the 
Rules of Procedure of the Parliament (Rule 10) (2), 
according to which each committee may with the 
authorization of the Bureau hold one or several 
meetings per year elsewhere than at its usual venues. 
A decision of the Bureau of 19 January 1978 affords 
the political groups the possibility of holding two 
meetings per year elsewhere than at its usual ven­
ues: other meetings are also allowed in the capitals 
of the Member States between part-sessions. A dele-
(') OJ No 152, 13.7. 1967. 
(2) OJ No C 90, 21.4. 1981 and OJ No C 93, 9. 4. 1979 
(Article 2). gation from each group (a minimum of 6 persons 
and a maximum of 25% of the group) may, as a gen­
eral rule, meet once a year in a non-member country 
which has requested accession to the Community. 
Each meeting may last a maximum of four days. 
Expenditure on these meetings includes the travel 
and subsistence allowances of the Members of the 
Parliament and the meeting expenses (staff, confer­
ence room, team of interpreters for a maximum of 6 
languages, requisite technical staff). These allow­
ances and expenses are charged to the budget of the 
Parliament (3). 
11.12. The higher cost of meetings held elsewhere 
than at the three working places is due in particular 
to the mission expenses of large numbers of staff 
and to heavy miscellaneous organization expenses 
(approximately 30% of the total cost). In order to 
assess the difference between holding a meeting at 
one of the three working places and elsewhere, the 
(3)' Decision of the Bureau of 19 January 1978: 
'5. For the meetings referred to in points 1, 2, 3 and 
4, the Secretariat of the European Parliament will 
make available to each group a conference room 
and a team of interpreters for a maximum of six 
languages and the technical staff required to 
ensure that meetings run smoothly. It will also 
bear, the cost of these administrative services and 
the cost of the transport of documents and the 
use of official cars in accordance with the general 
regulations in force. 
The necessary arrangements will be made on 
receipt of a prior written request from the group 
concerned.' 
(Doc. PE 52.074 (BUR)). approximately 1 200 
over half of which 
are interpreters. 
31. 12. 82 Official Journal of the European Communities 103 
Court calculated what the cost of certain meetings 
would have been if they had been held at one of the 
usual working places. rency, the highest and lowest margins between the 
rates used (1 September 1976 rates) and the rates in 
1980 and 1981 are given in Table 11.3. 
Thus a meeting of a Parliamentary committee in 
Florence (cost 40 000 ECU) would have cost 11 600 
ECU less had it been held in Brussels. Similarly, a 
meeting of a political group in Venice (cost 124 000 
ECU) cost much more than if it had been held in 
Luxembourg or Strasbourg, the difference being as 
much as 50 000 ECU in one of these cases. It should 
be noted, moreover, that the only case where a meet­
ing of a political group proves to be less expensive 
is when a group consisting mostly of Members of 
Parliament of the same nationality meets in the cap­
ital of their country. Table 11.3 — Margins between exchange rate of ECU at 
1.9.1976 and exchange rates used in 1980 and 1981 
National currency Limits of variation (%) 
National currency 
1980 1981 
BFR 3-8- 6-4 2-8- 5-2 
DM 8-3-12-3 7-5— 14-3 
HFL 4-6- 6-4 3-0- 8-6 
UKL 0-2-13-4 5-0-.18-9 
The exchange rates used for settlement of 
the travel and subsistence allowances of the 
Members of the Parliament 
11.13. Following examination of the expenditure 
for parliamentary meetings, the Court has the fol­
lowing comments to make on the settlement of the 
allowances of Members. According to Article 17 of 
the current rules 'the ... Members' subsistence and 
travel allowances shall be drawn up in EUA' (^.The 
same Article states: 'Whatever the fluctuations in 
the EUA, the allowance paid to Members* expressed 
in their national currency, shall in no circumstances 
be less than that paid on 1.9. 1976 (status quo)' (J). 
In practice, the allowances are converted in conse­
quence into national currency either at the 1976 rate 
or at the last rate available in the week preceding the 
meeting, the more favourable rate being applied 
(1976 rate for strong currencies; current rate for 
others). 11.14. The provisions of Article 17 of these inter­
nal rules have had considerable financial repercus­
sions. The Court estimates that one-third of the 
expenditure charged to item 1004 (travel and sub­
sistence allowances: attendance at meetings and 
associated expenditure) in 1980, amounting to 
9 163 000 ECU, was paid in Belgian francs, and that 
payments in German marks and pounds sterling 
each represented 15% of the total. Having regard to 
the application of the 1976 rate and the trend of the 
margins in 1980 as given in Table 11.3, the differ­
ence between the sum of the allowances calculated 
by the 'status quo' rule and at the current rates may 
be estimated at approximately 400 000 ECU. 
In view of these findings, the Court suggests that the 
application of the 'status quo' rule for determining 
allowances be reconsidered. The use of more current 
exchange rates would appear appropriate for the 
purpose of settling the allowances in question. 
As to the effects of the provision in question, it 
should be noted that the 'status quo' has been in 
application for the Belgian franc, German mark and 
and Dutch guilder without interruption since 1 Sep­
tember 1976. This rate has also been used for pay­
ments in pounds sterling since March 1980. By cur-
(0 Doc. PE-1-1138 rev. (September 1980). Delegations, press and information offices 
11.15. As in previous years, the Court of Auditors 
audited the delegations and the press and informa­
tion offices of the Commission and the Parliament. 
The principal task of these offices is to inform the 
local public about the European Communities and 
their policies and about the work and aims of the 
bodies that these represent. 
104 Official Journal of the European Communities 31. 12. 82 
11.16. As at 31 December 1981, the Commission 
maintained 13 press and information offices: in the 
10 Member States and in Lisbon, Madrid and 
Ankara. At the same time, the Commission had 9 
delegations in (non-member countries or at interna­
tional organizations, 7 of which are also engaged in 
press and information activities. The 13 press and 
information offices are supplemented by 5 branch 
offices. One delegation also has a branch office. The 
Parliament at the same date had 10 press and infor­
mation offices in the capitals of the Member States. 
The staff of the Commission's offices, at 31 March 
1981, totalled 441 persons (200 officials and 
241 local staff). The offices of the Parliament at 
1 January 1981 employed 61 persons in all (53 offi­
cials and 8 other staff). 
Neither the Commission nor the Parliament have so 
far drawn up statements of costs for each of their 
offices. Consequently, the Court found itself 
obliged to make its own estimates for the financial 
year 1980, which are as follows: 
(Mio ECU) 
Commission Parliament 
Staff (') 11-6 1-6 
Administration (2) 5-2 0-6 
Information 3-6 0-3 
Total 20-4 2-5 
(') Excluding mission expenses (budget item 1301). 
(2) Excluding entertainment and representation expenses (item 
2401). 
On the occasion of on-the-spot audits at the Dublin, 
Athens, Lisbon and Madrid offices the Court made 
the following findings: 
11.17. Both the Commission and the Parliament 
calculate and pay the monthly salaries of officials 
working in these offices through their central admin­
istration ('). No check is made of the number of 
officials actually employed against the number of 
salaries actually paid. This weakness in the system 
of internal control means that, for example, unjusti­
fied payments to non-existent officials could even­
tually not be discovered. The Court therefore suggests that a suitable form of 
exchange of information be set up between the cen­
tral administration and the local offices. At the same 
time, all the necessary documentation for the calcu­
lation of salaries should be available in every local 
office. 
11.18. By Article 3 of the Protocol on the Privileges 
and Immunities of the European Communities, the 
offices within the 10 Member States are exempt 
from payment of indirect taxes. In practice, in seven 
of these countries, value-added tax (2) is paid ini­
tially and then reclaimed if the tax or basis of 
assessment exceeds a certain minimum, which var­
ies from country to country. 
The procedure is that after close of the imprest 
account at the end of each month invoices that 
include reclaimable tax are sent to the central 
administration, so that it can arrange for repayment 
from the national tax authorities. They are not first 
recorded in an asset account. 
From this moment the office no longer has any con­
trol over, the debt owed to it. It is neither informed 
as to whether the central administration has 
requested reimbursement of the tax at all, nor 
exactly what sum is repaid by the national auth­
orities. There is therefore a danger of the tax paid 
differing in amount from the sum reimbursed. 
11.19. Throughout 1980 there were cases of irregu­
larities in the calculation of overtime for all five 
local staff of the Commission office in Dublin. 
These could be discovered because at the end of this 
year four of the five employees purported to have 
worked exactly the same number of hours overtime 
(275). 
It was found that this overtime had never been 
worked and that the payments for it were intended 
simply to raise the salaries of the local staff by 
illegal means. In the course of 1980 a total of IRL 
3 700 (5 400 ECU) was paid out in this manner. 
For 1981, the head of the Dublin office was 
informed in a letter from a senior official of the 
Directorate-General responsible (DG X) '. .. you 
can "distribute" 50% of the previous year's total 
however you wish among the different members of 
your staff. 
(') In Brussels for the Commission, in Luxembourg for 
the Parliament. (2) In Greece, turnover tax. 
31. 12. 82 Official Journal of the European Communities 105 
The Court would like to know what measures the tional costs resulting amount to approximately 
Commission intends to take. DR 910 000 (14 600 ECU). 
11.20. In Dublin, although the offices of both the 
Parliament and the Commission are in the same 
building, they have separate entrances. The extra 
cost occasioned by the need for a second security 
officer is at present approximately IRL 9 500 (13 800 
ECU) per year. 
11.21. The Parliament rented new premises in Ath­
ens as from 1 October 1980; the lease for the old off­
ice premises expired on 30 November 1981. Conse­
quently, for not less than 13 months the Parliament 
continued to pay rent for two buildings. The addi-11.22, The Parliament's new office (rented from 
1. 10. 1980) is now on the ground floor of the same 
building as the Commission's (rented from 1.9.s 
1975), which is on the second floor. The Parliament 
none the less pays DR 529 -50 (8 -5 ECU) per square 
metre, more than double the rent of the Commis­
sion, which pays the same proprietor DR 260 (4-2 
ECU) per square metre. The considerable difference 
between the two rents cannot be explained by the 
different dates of the two leases alone. 
106 Official Journal of the European Communities 31. 12. 82 
CHAPTER 12 
External bodies 
TABLE OF CONTENTS ' Paragraph reference 
Summary of principal comments 12.0 
Introduction 12.1 and 12.2 
Summary of financial information 12.3 
Euratom Supply Agency 12.4 
Berlin Centre and Dublin Foundation 12.5 
European Schools 12.6 
Conclusions 12.7 
SUMMARY OF PRINCIPAL COMMENTS 
12.0. The principal comments in this chapter are: 
(a) Criticisms made by the Court in previous years remain 
valid. 12.7 
(b) Uncertainty over the Euratom Supply Agency's role 
affects questions of accounting policy. 12.4 
(c) Internal control in the Berlin Centre and Dublin Founda­
tion is weakened by excessive use of the imprest system. 12.5 
(d) Internal control in the European Schools is still unsatis­
factory. • 12.6 
31. 12. 82 Official Journal of the European Communities 107 
Introduction 
12.1. In addition to its responsibility for auditing 
the accounts of all revenue and expenditure of the 
Communities, the Court of Auditors is responsible 
for auditing the accounts of all bodies set up by the 
Communities, insofar as this is not precluded by the 
relevant constituent instrument. Accordingly, an­
nual audits are carried out in the following bodies: 
(a) The Euratom Supply Agency; 
(b) The European Centre for the Development of 
Vocational Training (Berlin Centre); 
(c) The European Foundation for the Improvement 
of Living and Working Conditions (Dublin 
Foundation); 
(d) The European Schools (9 schools) (*) and the 
Office of the Board of Governors of the Euro­
pean Schools. Table 12.1 — External bodies — use of appropriations 
(Mio ECU) 
External 
body Avail­
able (') 
appropria­
tions Payments Carry­
overs to 
next year Cancella­
tions 
Euratom Sup­
ply Agency 1-2 10 01 0-1 
Berlin Centre 4-2 3-1 0-7 0-4 
Dublin Foun­
dation 3-8 30 0-7 01 -
European (2) 
Schools 53-4 52-0 0-2 1-2 
Total 62-6 59-1 1-7 1-8 
(') Including appropriations of the current financial year and 
carryovers from the previous year. 
(2) Exchange rate used: 1 ECU = BFR 40-2554 (accounts are pub­
lished in Belgian francs). 
12.2. The Court of Auditors prepares a separate 
annual report on each of these bodies and sends it 
to the relevant discharge or governing authority. 
This chapter contains a summary of the most impor­
tant points arising in those reports. It also highlights 
issues which the Court particularly wishes to draw 
to the attention of the Commission, which provides, 
by way of subsidies paid under Titles 2 and 3 of its 
budget, the bulk of the finances for the operations 
of these bodies. In particular, the question of the use of the 
Agency's paid-up capital, which is not being 
employed for the purpose for which it was sub­
scribed, should be settled. Problems remain with the 
conversion into ECU of the Agency's capital and of 
the year-end balance sheet. The investment portfolio 
continues to be the subject of an unnecessary year-
end revaluation. The Agency still has no financial 
regulation. However, the Court is pleased to note 
that the problem of direct confirmation of bank bal­
ances has now been solved. 
Summary of financial information, 
12.3. Table 12.1 sets out the use of appropriations 
in 1981 in respect of each of the external bodies for 
which the Court of Auditors has made a report. 
Euratom Supply Agency 
12.4. Continuing uncertainty over the future role 
of the Agency is still delaying the resolution of var­
ious accounting problems referred to in the Court's 
reports on the Agency for 1981 and previous years. 
(') The European Schools are: Bergen, Brussels I, Brus­
sels II, Culham, Karlsruhe, Luxembourg, Mol, Mun­
ich and Varese. Berlin Centre and Dublin Foundation 
12.5. A number of points concerning the manage­
ment and accounting policies of these bodies were 
raised in the annual reports. The Court wishes in 
particular to draw two questions to the attention of 
the Commission. First, in both bodies the absence of 
a 'resident' financial controller (documents are sent 
to Brussels for approval) has led to an excessive use 
of the imprest system. To avoid the consequent 
weakening of the financial controller's role — he 
works very largely ex post facto — the Court would 
prefer control to be exercised on the spot in Berlin 
and Dublin (whether by seconding a member of the 
Commission's staff or by entrusting the'task to the 
existing staff of the Centre arid Foundation, is for 
the relevant authorities to decide). Second, the 
108 Official Journal of the European Communities 31. 12. 82 
accounting systems in both establishments have 
been criticized in the past, in particular the keeping 
at Berlin of parallel accounts in German marks and 
ECU. The Court considers that, given the close simi­
larities in size, constitution and function between 
the Centre and the Foundation, similar systems 
should be used that embody the maximum simpli­
city consistent with the requirements of the financial 
regulations. accounts and management procedures. The Court 
recommended a thorough-going review of the sys­
tems governing the payment of salaries, with parti­
cular reference to the question of computerization, 
and urged the Board of Governors to revise the 
schools' financial regulations and instructions in a 
number of respects. It also looks forward to learning 
what action the Board of Governors intends to take 
following presentation by an independent expert of 
a report on the school's internal control problems. 
European Schools 
12.6. The Court's report on the 1980 accounts was 
sent to the Board of Governors on 18 December 
1981. It criticized in particular the continuing 
absence of an internal control system in the schools, 
and pointed out a number of deficiencies in the Conclusions 
12.7. Many of the Court's criticisms from previous 
years remain valid. The Court therefore urges the 
Commission and the various management bodies to 
give priority to the reforms recommended. 
31. 12. 82 Official Journal of the European Communities 109 
CHAPTER 13 
Loans, borrowings and interest rate subsidies 
TABLE OF CONTENTS ' Paragraph reference 
Summary of principal comments 13.0 
Introduction 13.1 to 13.3 
Summary of financial information 13.4 and 13.5 
Observations on the financial information 13.6 to 13.8 
European Monetary System (EMS) interest rate subsidies 
(Chapter 57) 
Observations on commitments and allocation of sub­
sidies 13.9 to 13.11 
New Community Instrument (NCI) loans and EMS interest 
rate subsidies 
Impact on employment 13.12 to 13.14 
SUMMARY OF PRINCIPAL COMMENTS 
13.0. The principal comments in this chapter are: 
(a) Amounts stated in the Commission's balance sheet at 
31. 12. 1981 for NCI and Euratom loans need to be clari­
fied. 13.7 
(b) There is a discrepancy between the Commission's 
accounts and the European Investment Bank's (EIB) 
accounts with regard to the NCI loans granted in 1981. 13.8 
(c) Steps should be taken to ensure that total appropriations 
for EMS interest rate subsidies are committed and paid 
within the financial year. 
(d) The Commission should state the criteria on which EMS 
interest rate subsidies are allocated to NCI and EIB 
loans. 13.11 
(e) The adequacy of the information provided by the EIB to 
the Commission for assessing eligibility for NCI loans 
and EMS interest rate subsidies should be reviewed. 13.12 to 13.14 
110 Official Journal of the European Communities 31. 12. 82 
Introduction 
13.1. The Community loan mechanisms, which are 
financed exclusively by borrowings contracted by 
the Commission on behalf of the Community, 
namely, Balance of Payments (BP), European 
Atomic Energy Community (Euratom) and New 
Community Instrument (NCI), continued to operate 
in 1981, although no new loans were granted under 
the BP mechanism. Summary of financial information 
EMS interest rate subsidies 
13.4. Appropriations available in 1981 for EMS 
interest rate subsidies amounted to 239-8 million 
ECU, of which 36 • 8 million ECU were appropria­
tions carried over from 1980. The distribution of 
EMS interest rate subsidies paid in 1981, between 
Member States and between projects receiving NCI 
and EIB loans, is illustrated in Table 13.1. 
13.2. During 1981 and the first half of 1982, the 
Court of Auditors prepared and finalized a special 
report on these mechanisms. This study examined 
the decision-making procedures, the financial man­
agement arrangements and external audit responsi­
bilities of the mechanisms, inter alia in relation to 
the European Investment Bank (EIB). 
13.3. The Court gave particular attention to the 
following matters in relation to the 1981 financial 
year: 
(a) European Monetary System's (EMS) interest 
rate subsidies paid to selected NCI and EIB 
loans for projects in Ireland and Italy. 
(b) NCI loans granted. 
(c) The Commission balance sheet relating to out­
standing loans and borrowings. Loans and borrowings 
13.5. The upward trend in the overall level of out­
standing loans and borrowings under the various 
mechanisms is illustrated in Table 13:2. 
Observations on the financial 
information 
13.6. The Court of Auditors is concerned that the 
financial information contained in the Commis­
sion's balance sheet and revenue and expenditure 
account (') should be presented in a consistent and 
coherent manner and should reflect accurately the 
financial situation for loans and borrowings. Within 
this context, the Court wishes to draw attention to 
two aspects of the Commission's 1981 accounts, 
which were also referred to in relation to the 1980 
accounts. 
(») C0M(82)233-Final, Vol II, pp. 319-325. 
Table 13.1 — Expenditure on EMS interest rate subsidies in 1981 
(Mio ECU) 
Member State Payments against 1980 appropriations carried over Payments against 1981 appropriations 
Member State 
EIB loans 
(No of projects) NCI loans 
(No of projects) EIB loans 
(No of projects) NCI loans 
(No of projects) 
Ireland 63-5(15) 3-1(2) 
Italy 36-8(13) — 70-4(21) 15-1(7) 
Total 36-8(13) — 133-9(36) 18-2(9) 
31. 12. 82 Official Journal of the European Communities 111 
Table 13.2 — Evolution of loans and borrowings during 1981 
(Mio ECU) 
Mechanism Outstanding at 31. 12. 1980 Amounts received 
and disbursed in 1981 Outstanding 31. 12. 1981 
Mechanism Loans Borrowings Loans Borrowings Loans Borrowings Mechanism 
(1) (2) (3) (4) (5) (6) 
NCI 482-6 490-9 328-4 334 0 872-'4 885-6 
Euratom 497-7 503-9 357-9 360-9 886-1 901-2 
Balance of payments 1 013-3 1 013-3 — — 1 045-4 1 045•4 
Total 1993 6 2 008 1 686-3 694-9 2 803 9 2 832-2 
Source: Commission balance sheet and revenue and expenditure account for 1981, COM(82) 233 -Final, Vol II, pages 319 — 325. 
Note: The amounts outstanding at 31. 12. 1981 do not correspond to the totals of columns (l) + (3) and (2)+ (4) respectively due to currency 
exchange fluctuations of the ECU and capital repayments. 
Commission's balance sheet 
13.7. The Commission's balance sheet at 31. 12. 
1981 shows as 'differences to be regularized' (!), the 
differences between total outstanding loans and 
total outstanding borrowings under the NCI and 
Euratom mechanisms of 13-2 million ECU and 9-7 
million ECU respectively (see Table 13.2, columns 
(5) and (6)). 
The Court considers firstly, that this term 'differ­
ences to be regularized' is potentially misleading to 
the reader of the accounts. Secondly, the presenta­
tion of these amounts as 'differences' is an over-sim-
plification of the actual situation at 31. 12. 1981 as 
indicated by the accounts of DG XVIII (Credit and 
Investments), i.e. the service within the Commission 
responsible for the financial administration of the 
Euratom and NCI mechanisms. Comparability with the EIB's balance sheet 
13.8. The Court stressed last year the basic require­
ment that the figures relating to NCI loans con­
tained in the Commission's balance sheet and the 
EIB's balance sheet should be compatible and that, 
in the event of differences in the method of calcula­
tion, a footnote to the Commission's balance sheet 
should give an explanation. There is again, however, 
such a discrepancy in the 1981 accounts. Whereas 
the EIB's accounts show 539-8 million ECU (2) as 
the volume of NCI loans granted in 1981, the Com­
mission's accounts show only 328-4 million ECU 
(see Table 13.2, column (3)). 
EMS interest rate subsidies 
(Chapter 57) 
The amounts of 13-2 million ECU and 9-7 million 
ECU are in fact the net result of a series of compen­
sating factors, e.g. issue costs to be recovered, 
interest payable and receivable, commissions, bank 
deposits and the surplus/deficit on the revenue and 
expenditure account. In the opinion of the Court, 
therefore, either the exact amount for each item 
should be identified in the balance sheet or a foot­
note to the balance sheet should give the breakdown 
of these net amounts. Observations on commitments and 
allocation of subsidies 
Commitments 
13.9. The commitment and payment procedures 
for the EMS interest rate subsidies were agreed 
between the Commission and the EIB in a coopera-
(i) COM(82)233-Final, Vol II, p. 287. (2) EIB Annual Report 1981, Table 2, p. 24. 
112 Official Journal of the European Communities 31. \1. 82 
tion agreement dated 17. 9. 1979. This agreement 
provides that, within a period of two months follow­
ing the signature of a subsidized NCI or EIB loan 
contract, the EIB will send the Commission the 
detailed calculation for that loan of the interest rate 
subsidy to be paid out of Article 570 of the Com­
munity budget. The Commission, on the basis of 
this information, commits and pays the interest rate 
subsidy to the EIB. 
Up to 1 December 1981, 50-9 million ECU of the 
1981 budgetary appropriations-had not been com­
mitted by the Commission. These appropriations 
were then committed following EIB indications that 
16 subsidized EIB loan contracts would be signed 
before 31 December 1981, even though the exact 
calculation of the interest subsidy would not be 
communicated to the Commission until later. How­
ever, since the EIB had concluded loan contracts by 
31 December 1981 for 13 of the 16 projects envis­
aged, 9 -8 million ECU of the amount committed in 
December 1981 had to be cancelled in 1982. 
13.10. To avoid a repetition of this cancellation of 
appropriations, the Court suggests that the Commis­
sion takes the appropriate measures, with the EIB 
and other parties involved, so as to ensure that the 
total budgetary appropriations for the interest rate 
subsidies are committed and paid within the finan­
cial year in question 
13.11. Table 13.3 shows that, on average, some 
70% of NCI loans have received EMS interest rate 
subsidies compared to some 79% of EIB loans. The 
Court has seen no evidence of a general approach 
which could explain the difference. It considers, 
therefore, that the Commission should state its cri­
teria for allocating interest rate subsidies and, in 
particular, the basis for sharing the amount. avail-
Table 13.3 — EIB and NCI loans, with or without EMS 
interest rate subsidies, granted to Ireland and Italy for 
infrastructure projects 1979-81 
(Mio ECU) 
EIB NCI 
(A) Total loans: 
(B) Loans receiving EMS interest 
rate subsidies: 
% <2> 3 276-9 520-4 
2 592-7 365-7 
79-1% 70-3% 
(A) able (200 million ECU per annum) between NCI 
and EIB loans. 
New Community Instrument loans 
and EMS interest rate subsidies 
Impact on employment 
13.12. The Commission decides on the eligibility 
of projects for NCI loans and EMS interest rate sub­
sidies by reference to the criteria established by the 
Council, notably that the project must contribute to 
improving the employment situation in the Member 
State concerned (!). To determine this eligibility, the 
Commission receives information on the projects 
from the EIB. In practice, however, the majority of 
these projects have already benefited from EIB 
loans and the EIB therefore simply refers to, or 
updates if necessary, the information already given 
on the projects for the purposes of the Commis­
sion's opinion (2) on the EIB loans. 
13.13. For 1981, there was no quantification of the 
direct employment impact of projects (permanent/ 
temporary jobs forecast) in the EIB documents on 
which the Commission based its eligibility decision 
for: 
(a) 7 of the 9 subsidized (3) NCI loans; 
(b) the 5 unsubsidized NCI loans; 
(c) 11 of the 12 subsidized EIB loans examined by 
the Court from a total of 49 EIB projects. 
The documents on which the EIB took its NCI loan 
decisions included precise job creation forecasts in 
(') Article 5, Council Regulation 1736/79, 3. 8. 1979, OJ 
L200, 8. 8. 1979. 
(2) Article 21 (2), Protocol on the Statute of the EIB, EEC 
Treaty. ' 
(3) Subsidized, i.e. benefited from the EMS interest rate 
subsidy of 3% which is financed by the Community 
budget. 
31. 12. 82 Official Journal of the European Communities 113 
their economic and financial evaluation of each 
project. However, these documents were sent to the 
Commission for information only after it had taken 
its eligibility decisions on the projects in question. 
13.14. The Court considers that the Commission, 
prior to taking its decisions on the eligibility of pro­
jects for NCI loans and/or EMS interest rate subsi­
dies, should receive indications on the employment impact of the projects from the EIB within the lat-
ter's information note on the projects. 
The Court considers, moreover, that this EIB infor­
mation note, the content of which has remained bas­
ically unchanged since 1975, should be re-evaluated. 
This re-evaluation should notably assess to what 
extent the information contained therein accords 
with the information required by the Commission 
for its decisions on the eligibility of projects for NCI 
loans and/or EMS interest rate subsidies. 
114 Official Journal of the European Communities 31. 12. 82 
CHAPTER 14 
Measures to limit the United Kingdom net contributions to the 
Community budget 
TABLE OF CONTENTS Paragraph reference 
Summary of principal comments 14.0 
Introduction 14.1 and 14.2 
Budgetary provisions 14.3 and 14.4 
Operation of the financial mechanism 14.5 and 14.6 
Observations on the operation of the financial mechanism 14.7 
Operation of the supplementary measures 14.8 to 14.11 
Observations on the system of granting and management of 
the aid at Community and national level 14.12 to 14.14 
SUMMARY OF PRINCIPAL COMMENTS 
14.0. The principal comments in this chapter are: 
(a) The operation of the financial mechanism gave rise to an 
exchange loss of 22-9 million ECU. 14.5 to 14.7 
(b) The actions taken in implementing the supplementary 
measures do not belong to real programmes. 14.12 to 14.14 
Introduction 
14.1. On 30 May 1980 ihe Council agreed on 
arrangements to limit the net United Kingdom con­
tributions to the Community budget for the finan­
cial years 1980 and 1981. For 1980, the agreement 
provided that the net United Kingdom contribution 
would be calculated on the basis of the Commission 
estimate (1784 million ECU). 1 175 million ECU 
would be deducted from this figure to leave a contri­
bution of 609 million ECU for 1980. The agreement 
also provided rules for calculating the repayment 
should the actual contribution prove to be higher 
than 1 784 million ECU. The arrangements for implementing the agreement fell into two parts, a 
financial mechanism and supplementary measures. 
14.2. The financial mechanism was to operate first. 
It was governed by Regulation No 1172/76 (!) as 
amended by Regulation No 2743/80 (2), and was 
similar to that which had operated during the years 
to 1979, but with somewhat different conditions. It 
provided for the refund to be determined by a com-
(1) OJ No L 131, 20. 5. 1976, p. 7. 
(2) OJ No L 284, 29. 10. 1980, p. 1. 
31. 12. 82 Official Journal of the European Communities 115 
parison of the amount actually paid by the UK and 
the amount it would have paid if the budget had 
been financed on a gross domestic product basis. 
The supplementary measures, under Regulation 
No 2744/80 (!), were to be used to top up the 
amount payable under the financial mechanism to 
the level stipulated in the Council conclusions. It 
was also intended that the bulk of the refund due in 
respect of 1980 would be paid early in 1981. 
Budgetary provisions 
14.3. The amount of the repayment agreed by the 
Council for 1980, 1 175 million ECU, had to be 
grossed up to 1 437 -6 million ECU, so that the 
United Kingdom would recover its share of the 
revenue needed to finance the repayment. The 
budgetary provisions made in 1980 and 1981 to 
implement this part of the agreement were accord­
ingly as follows: 
(Mio ECU) 
• Chapter 58 — supplementary 
measures: 
1980 final appropriations 193-5 
1981 original budget 855-0 
— less amending budgets 1 & 2 - 79-9 
— plus transfer from Chapter 100 + 150-0 
— plus transfer from Article 410 
i.e. original provision for the 
financial mechanism (see para­
graphs 14.5 and 14.6) + 469-0 
1981 final appropriations 1 394-1 
The utilization of these amounts is shown in Table 
14.1. 
14.4. By comparison with the expectations when 
the agreement was made, the United Kingdom's 
actual net contribution for 1980 was about 
1 510 million ECU, i.e. 275 million lower than esti­
mated. But the agreement made no provision for 
reducing the repayment in such circumstances. equal to 75% of the provisional amount of the pay­
ment should be made at the beginning of the year 
following the year of application. Accordingly, an 
advance amounting to 351 750 000 ECU (75% of the 
provision in Article 410) was made to the United 
Kingdom in January 1981. 
14.6. The operation of this mechanism was subject 
to three main conditions, each related to the gross 
domestic product of the Member State concerned. 
In October 1981, in accordance with Article 7(2) of 
the regulation, the Commission established, on the 
basis of the relevant information for the financial 
year 1980, that one of the conditions contained in 
the regulation had not in the event been fulfilled. 
Consequently, the financial mechanism ceased to be 
operative and the advance made in January was 
refunded in December 1981. The repayment to the 
United Kingdom, therefore, fell to be made wholly 
under the supplementary measures and the Com­
mission obtained authority for a transfer of the 
whole of the 469 million ECU originally provided in 
Article 410 to Chapter 58 (see paragraph 14.8 et 
seq). 
Observations on the operation of the 
financial mechanism 
14.7. The regulation governing the financial 
mechanism provided that advances should be paid 
to the Member State in national currency with con­
version from ECU at the average exchange rate for 
the year in which the application was made. As 
transactions had to be accounted for at the 
exchange rate ruling on the date of the transactions, 
it was inevitable that there would be exchange dif­
ferences in the Commission accounts. In the event, 
the 1981 transactions described above gave rise to 
exchange losses of some 22-9 million ECU. This 
forms part of the net exchange loss referred to in 
paragraph 2.11 of this report. 
Operation of the financial mechanism 
14.5. Article 7 of Regulation No 1172/76 provided 
that, at the request of the Member State, an advance 
(') OJ No L 284, 29. 10. 1980, p. 4. Operation of the supplementary 
measures 
14.8. The budgetary appropriations required to 
implement the Council decision in respect of 1980 
and their use is shown in Table 14.1. 
116 Official Journal of the European Communities 31. 12. 82 
Table 14.1 — Utilization of appropriations for 
supplementary measures 
(Mio ECU) 
•1980 
budget 1981 
budget Total 
Final appropriations 193-5 13941 1 587-6 
Commitments in 1980 
Commitments in 1981 
Carryover (non-automatic) 
to 1982 of uncommitted 
appropriations 193-5 
1 244-1 
1500 1437 6 
150-0 
Payments in 1980 
Payments in 1981 
Carryover (automatic) to 
1982 of unpaid commit­
ments 174-2 174-2 
19 - 3 1 229-1 , 1 248-4 
15-0 15-0 
14.9. Article 5(3) of the Regulation provided for 
advances of 90% to be made by the Commission as 
soon as a decision had been taken on sub-pro­
grammes to be financed. The payments thus made 
during 1981 are summarized in Table 14.2. 14.11. Two new decisions, for a total of 557 mil­
lion ECU, were adopted in December 1981. The 
first (375-5 million ECU) amended and supple­
mented all previous decisions (including those of 
1980) by increasing both the amount of investments 
planned and the percentage of the aid, which was 
fixed at rates varying from 20% of the investment in 
the case of housing and advance factories to 50% 
(60% in Northern Ireland) for roads, railways and 
telecommunications. The second decision taken in 
December 1981 concerned a road programme in var­
ious areas of the United Kingdom; the amount of 
the aid (181 - 5 million ECU) represents about 60% 
of payments by the Member State for the invest­
ments concerned during the national financial year 
1 April 1980 to 31 March 1981. 
Observations on the system of granting 
and management of the aid at 
Community and national level 
14.12. Article 2 of Regulation No 2744/80 lays 
down that the supplementary measures 'shall be 
implemented by means of financial assistance for 
the realization of certain categories of investments 
in the framework of special programmes lasting sev­
eral years drawn up by the United Kingdom'. 
Table 14.2 — Utilization of payments appropriations 
available in 1981 (in accordance with Article 5 (3) of 
Regulation No 2744/80) 
(Mio ECU) 
1980 
appropriations 1981 
appropriations 
Payments made at the time 
of the decision — - 1 160-4 
Payments as balances 19-3 68-7 
Total 19-3 1 229-1 14.13. Audits carried out by the Court in 1981 in 
Northern Ireland relating to investments in the 
housing sector and in land reclamation, showed 
that, in view of the date on which the regulation was 
adopted, the investments financed for the period 
covered by the national financial year April 1980 to 
March 1981 could not be incorporated in real pros­
pective programmes. 
14.10. A first series of decisions concerning the 
utilization of the appropriations for the financial 
year was taken in January and March 1981 in res­
pect of a total of 687 • 1 million ECU. 14.14. The programmes consisted in selecting cer­
tain categories of expenditure which were provided 
for by the United Kingdom authorities for the finan­
cial year 1980-81; they mainly concerned operations 
decided upon, or even already under way and were 
all drawn up on an annual basis. The incentive 
nature of such programmes for the period under 
consideration was therefore necessarily limited, and 
it will only be during later financial years that the 
funds allocated might finance new measures. 
31. 12. 82 Official Journal of the European Communities 117 
Part II 
The European Development Funds (EDF) 
TABLE OF CONTENTS Paragraph reference 
Introduction 15.1 to 15.9 
Financial aspects of the European Development Funds 15.10 to 15.17 
Integrated development 15.18 to 15.32 
Processing, financing, implementation and management of 
projects 15.33 to 15.62 
Effectiveness of EDF agricultural aid measures 15.63 to 15.71 
Weaknesses in supervision 15.72 to 15.82 
Introduction 
15.1. The Court of Auditors' assessment of the 
activities of the European Development Funds is 
based this year on its missions to Senegal, the Ivory 
Coast, Lesotho, Malawi, Mauritania, Togo and 
Benin. In the case of the last two countries, last 
year's annual report already contained a partial an­
alysis. The comments below are a summary of the 
Court's findings in respect of regularity, legality and 
sound financial management. They have been sent 
to the Commission in the form of a detailed report 
on each mission. 7 school projects, amounting to 21 million 
ECU; 
13 health or domestic water supply and sani­
tation projects, amounting to 49 million 
ECU; 
emergency aid and microprojects amounting 
to 6 million ECU. 
In total, these projects represent 362 million ECU in 
EDF finance alone, to which should be added, 
where applicable, financing from national and other 
external sources. 
15.2. The projects examined comprise: 
— , 26 projects in the fields of agriculture, stock-
farming, fisheries and fish-farming, amount-
• ing to 181 million ECU; 
— 5 projects in the industrial and energy fields 
amounting to 13 million ECU; 
— 21 communication infrastructure projects, 
amounting to 92 million ECU; For the seven ACP countries visited, the Court's 
audit covered an average of 65% of the total EDF 
finance. Furthermore, in addition to the projects vis­
ited during 1981-82, the Court has also drawn upon 
the experience acquired from its audit missions of 
earlier years to support its arguments. 
15.3. Notwithstanding the particular criticisms 
made below on certain projects, the Court wishes to 
make it quite clear that, taken overall, the situation 
is satisfactory, and to stress the important contribu­
tion made by EDF aid to the development of the 
countries concerned. 
118 Official Journal of the European Communities 31. 12. 82 
15.4. First, in quantitative terms, the ratio of EDF 
aid to the total bilateral and multilateral public aid 
received by the countries visited is not inconsider­
able. In 1978, it was 4-9% in the Ivory Coast, 9% in 
Lesotho, 13-8% in Togo and 22-4% in Senegal. 
Furthermore, in terms of the development of certain 
particular sectors, EDF aid can have a decisive 
effect. Thus in Senegal, the EDF alone financed 792 
primary school classes; the same country owes 
almost 10% of its road network, one of the largest in 
Africa and 27% of which is asphalted, to the EDF. 
The very large Senegalese cotton-growing sector 
(more than 48 000 hectares in 1978-79) was financed 
half by the EDF, half by the Senegalese Govern­
ment. In the Ivory Coast, the EDF has financed the 
planting of 36 700 hectares of palm plantations out 
of the 90 000 hectares that the sector comprised in 
1980, i.e. almost 41% of the total programme. 
15.5. Then, in qualitative terms, a large number of 
projects are a success from a technical point of view. 
This can be seen at various stages of the project: 
during execution of the work itself, when it is 
carried out expeditiously, thanks to good 
on-site organization, as with the Nkula II 
dam in Malawi; 
on completion, when in agricultural projects 
forecasts of surface-area and yield are met, as 
in the Senegalese cotton-growing sector up to 
1977; attached. This sense of appreciation was confirmed 
by both the local authorities and the representatives 
of the Member States during the Court's latest visits. 
15.6 None the less, at the risk of repeating itself, 
the Court is too often obliged to make the same 
remarks on the projects financed or co-financed by 
the EDF in the countries visited. In order not to 
labour the point, the Court will present only a small 
number of typical cases to illustrate each of the criti­
cisms made, but it could in most instances have 
provided many times the number of examples given. 
The Court would like to stress, however, that criti­
cisms of any particular project arising from its 1981 
audit visits are not to be viewed in isolation, as simi­
lar findings have been made during earlier audit vis­
its in other countries, and may be found in its pre­
vious reports. 
15.7. It' is regrettable that the Commission depart­
ments have only recently begun to make full use of 
the lessons of the past in the preparation and imple­
mentation of EDF projects. In this respect the cre­
ation of a data bank containing details of past 
experience and architectural and technical stan­
dards for tropical countries would avoid repetition 
of the same errors not only by European consul­
tants, who are often unaware of local climatic, 
economic and social conditions, but also by con­
tractors and by officials responsible for supervision 
and control. A data bank of this nature would also 
be a very useful working tool for the delegations. 
at the 'finished product' stage, when its 
quality suggests that both the initial plan and 
its execution were sound, as with the railway 
investments on the Abidjan-Niger line in the 
Ivory Coast; 
during use, when after several years the 
sound technical quality of the installation has 
been confirmed, as with the Ziguinchor-
Kolda road in Senegal, still in excellent con­
dition after seven years. 15.8. Another fairly general failing is the too iso­
lated approach of the projects supported by the 
EDF. Experience has shown that projects may be a 
technical success without improving regional or 
national welfare. A 'good' project, according to the 
views current in the industrialized countries, is an 
entity planned to have a given profitability and con­
structed according to the most advanced standards, 
which upon completion is handed over entirely to 
the recipient country. This approach tends to suffer 
from over-sophistication and not to have sufficient 
regard for the value of local materials or of the tried 
and tested traditional methods of the country., 
Community aid is also generally appreciated by the 
beneficiaries as being 'generous' (it contains a large 
proportion of outright gifts) and 'non-political', i.e. 
given without ulterior motives or political strings Furthermore, this approach assumes that the reci­
pient countries are capable of both managing the 
31. 12. 82 Official Journal of the European Communities 119 
projects with due professional competence and 
financing the costs of management and upkeep. As 
this is not often the case, completed EDF projects 
are in danger of rapid collapse; this trend is irrever­
sible unless it is accepted that an increasingly large 
proportion of future funds is to be devoted to sal­
vaging the achievements of earlier EDF projects, 
with the disturbing consequence that a 7th or 8th 
EDF may be anticipated purely to serve as a 
'Repairs Fund'. 
15.9. It is important to recognize that frequently 
development projects are subject to serious natural 
or political constraints which contribute to their dif­
ficulties or even their failure, without the managers 
or the Commission being in any way responsible. 
Thus drought bears the main responsibility for the 
collapse of certain agricultural projects in the Sahel. 
In the same way, those responsible for projects are 
helpless in the face of natural calamities like the 
advance of the desert or soil erosion. Instability in 
the markets for tropical products is occasionally the 
cause of serious financial crises from which the pro­
jects cannot escape unscathed. Some projects are 
directly or indirectly affected by political decisions 
or disturbances, which may even sometimes orginate 
outside the country in question. These facts should 
be borne in mind in order fairly to judge the scope 
of the Court's comments and to place them in their 
proper context. — From the accounts in their present form it is 
not possible to determine the state of com­
pletion of the indicative programmes of each 
recipient country, nor whether these pro­
grammes are on schedule. 
— Certain items cannot be properly understood 
without explanation. It would be helpful if 
the different accounting principles employed 
and the meaning of certain data were given 
in explanatory notes, as has been the practice 
since 1980 in the revenue and expenditure 
account and in the balance sheet of the Euro­
pean Communities. 
— The provisional accounts for 1981 were not 
submitted to the Court until 7 May 1982, and 
then only in an incomplete form, whereas the 
Financial Regulation requires them to be'sent 
by 31 March at the latest. 
— Because they are late, the Commission's 
accounts are of little use for daily manage­
ment purposes, since operations completed 
from the beginning of 1981 were not entered 
in the accounts until May of the same year. 
15.12. Table 15.1 summarizes the financial oper­
ations for 1981 by type of aid. 
Financial aspects of the European 
Development Funds 
Comments on the different Funds 
Preparation and presentation of accounts 
15.10. The systems used to record in the accounts 
the financial operations of the EDF are reliable. In 
1981, improvements were again made to the presen­
tation of the accounts. Thus for the first time, the 
operations belonging to a particular financial year 
appear separately in the accounts and not merely in 
a cumulative record of the expenditure of previous 
years. 
15.11 Weaknesses none the less remain in the clar­
ity of the accounts and the promptness with which 
they are submitted: Specific comments 
.15.13. The whole of the 1st EDF (final allocation: 
569 -4 million ECU) has been expended. 
15.14. Of the present allocation of funds to the 
2nd EDF (733 -8 million ECU), 4 million ECU 
remain to be disbursed. 38 projects under the 2nd 
EDF are still not closed. In respect of 18 of these 
projects no payment has been recorded for two 
years. 
15.15. In the 3rd EDF there remain 71-3 million 
ECU to be disbursed, out of the present allocation 
of 913 1 million ECU. In addition, the National 
Banana Board of Somalia had received an advance 
of 5-4 million ECU repayable on 31 March 1978. 
Not being able to meet this debt when it fell due, 
Somalia agreed to pay off the advance in six half-
yearly instalments between January 1980 and July 
1982. In 1980 only one payment was made, so that 
120 Official Journal of the European Communities 31. 12. 82 
Table 15.1 — 1981 Financial operations 
(Mio ECU) 
Type of aid 4th EDF 5th EDF 
Type of aid 
Financing 
decisions Payments Financing 
decisions Payments 
Miscellaneous grants 144-5 326-6 278-4 6-0 
Exceptional aid -0-7 16-2 24-6 13-4 
Interest rate subsidies — 2-0 28-8 28-8 
Special loans 5-7 77-3 13-5 — 
Risk capital 10 21-0 60-5 4-6 
Stabex . — 2-7 143-1 143-1 
Sysmin — — • 
1981 Total 150-5 445-8 548-9 195-9 
the balance repayable at 31 December 1981 amounts 
to 4.5 million ECU. 
15.16. In 1981, all the Member States paid their 
contributions to the treasury of the 4th EDF after 
the due dates stated in Article 2 of the Financial 
Regulation (J). Three Member States were more than 
two months late (Denmark, Italy, Netherlands), and 
a fourth (Belgium) more than six months late. Furth­
ermore, calls for funds from the Member States con­
tinue to be worked out in a rough and ready way, 
and are not based on sufficiently precise forecasts of 
cash needs. Thus in its note to the Council of 
11 November 1981 presenting the schedule of calls 
for contributions from the Member States, the Com­
mission stated that, since its accounts are kept in 
many different places, it needed to have at its dis­
posal at 31 December 1981 cash resources totalling 
130 million ECU, whereas in reality 245 million 
ECU proved to be available at that date. 
v Financial management of exceptional aid 
15.17. Shortcomings were found in the financial 
management of exceptional aid granted under 
Article 59 of the Lome I Convention: 
— Exceptional aid is normally granted for short-
term measures. However, in only 14 of the 
91 measures financed between 1976 and 1980 
have the accounts been closed. A balance of 
(') OJ No L 229, 20. 8. 1976, p. 9. Ill million ECU, covering 77 uncompleted 
measures, remain committed unnecessarily. 
— In respect of three measures, actual payments 
exceed the amount laid down in the financing 
decision by 95 065 ECU. These payments, occa­
sioned by exchange differences or by extra costs 
incurred by the beneficiaries, should be recov­
ered by the Commission. 
Integrated development 
Development is a universal process 
15.18. The value of projects cannot be assessed 
solely on the basis of their direct financial profita­
bility. Other factors include diversification of the 
national economy and the 'spin-off effect of the 
project on the rest of the economy. The construction 
of a hospital at Kaedi in Mauritania (2 million 
ECU) with original methods involving the syste­
matic use of local materials is creating a local craft 
industry of brick makers, carpenters and masons, 
especially since the non-governmental organization 
which is developing these techniques is also apply­
ing them to public housing construction, likewise 
partly financed by the EDF. The development of the 
fishing port at Abidjan (3-6 million ECU), has 
brought in its wake considerable private investment 
in the port area (6-5 million ECU). 
31. 12. 82 Official Journal of the European Communities 121 
15.19. In most of the agricultural projects the 
development of fpod crops does not receive the 
same attention as that of cash and export crops — 
to the detriment of the goal of self-sufficiency in 
food. The rice-cotton project in the Ivory Coast has 
not achieved its target in rice-planting (51%) but has 
exceeded its target for the area planted in cotton 
(168%). In Senegal, too, the results of the cotton-
cereals project have favoured cotton to the detri­
ment of cereals. Although product/price relation­
ships are a considerable factor in this trend, the 
principal cause is the fact that the majority of agri­
cultural support structures were created to develop 
solely crops for export, and sound experience has 
been acquired only in the production of these crops. 
15.20. Projects cannot be regarded as contributing 
to integrated development when they neglect social 
aspects. 
The financing proposal for a pilot project for small-
scale tobacco farmers in the Mzimba region of 
north-west Malawi did not include funds for infra­
structure to serve the population, and the technical 
investments were implemented without ensuring 
that water resources would be sufficient for the 
population — they are likely to become insufficient 
when the number of farmers exceeds 200 (the long: 
term plan is for 2 000). However, the construction of 
a dispensary was subsequently included in the pro­
gramme. 
15.21. Technological aids like the tractor are cer­
tainly useful on large estates, but are inaccessible to 
the great majority of farmers or are too costly, where­
as the use of animal traction can be expanded and 
as an 'intermediate technology' can improve the 
standard of living of the ordinary farmer who pre­
viously cultivated by manual labour alone. In the 
Ivory Coast, animal traction has had considerable 
success in the rice-cotton project (263% of the area 
planned) and more generally in the cotton sector, 
where in 12 years it has come to be used on 20% of 
the area under cultivation. Whereas in that country 
and sector, motorization has had no effect on 
income, the change from manual cultivation to cul­
tivation by animal traction has brought decisive pro­
gress: in 1980-81, 34-6% of cotton planters using 
manual methods had an income of CFAF 
100-000 (') or over whilst the figure was 78-4% for planters using animal traction. For this reason, the 
emphasis on training in motorized cultivation at the 
Tove national school of agriculture financed by the 
EDF in Togo, to the relative neglect of cultivation 
by animal traction, might appear unwise. 
15.22. The creation of a landless workforce that 
occurs in large agri-industrial complexes is avoided 
in the case of village plantations, but unfortunately 
these are often neglected in favour of the industrial 
plantations and are not developed.,Production from 
village oil palm plantations in the Ivory Coast 
reached only 53% of target in 1978-79 and 72% in 
1979-80. The stagnation of Ivory Coast palm oil 
production before 1979-80 is attributable tp the 
decline of the village plantations, which represent 
40% of total productive land. However, the Ivory 
Coast has recently opted clearly in favour of devel­
oping the village plantations for the production of 
cash crops. 
15.23. Too often, agricultural projects take over the 
land allocated to them without resolving the prob­
lems of the existing ownership rights. The rubber 
project at Grand-Bereby in the Ivory Coast, which 
was launched in 1972 and which the EDF is still 
financing, gave rise to the expulsion of between 500 
and 1 000 persons, who did not receive compensa­
tion until January 1982. In the case of the Gorgol 
development area in Mauritania, the fact that the 
land problems were not solved had detrimental 
effects both technically and socially. A large number 
of persons with rights to the land under customary 
law did not agree to release their land to the project 
or to work as farmers on the project, and were 
deprived of the right to use their land without, how­
ever, losing their title to it or being compensated. 
They were therefore long opposed to the develop­
ment of the project. 
(') 'CFA Franc': franc of the 'Communaute Financiere 
Africaine' (African Financial Community) in West 
Africa and of the 'Cooperation Financidre en Afrique 
Centrale' (Central African Financial Cooperation 
Fund). CFAF 1 = FF0-02. At 31 December 1981, 
1 ECU = CFAF 309-4. Development is an internal process 
15.24. Projects should take account of the aspira­
tions of the local people. It is sometimes possible 
122 Official Journal of the European Communities 31. 12. 82 
for the local beneficiaries to take charge of the pro­
jects. The market gardening project at Ferkesse-
dougou in the Ivory Coast is very close to a com­
plete handover, both financially and technically, to 
the local market gardeners. The latter are well-
organized in village cooperative groups, which 
legally are virtually autonomous, since loans are 
contracted, products sold and supplies purchased in 
their names as groups, and not in the name of the 
company managing the project. The farmers are able 
to finance the operating costs and investment and 
even certain aspects of the social infrastructure 
(housing, school). 
15.25. Training is undoubtedly the main prerequi­
site for taking over projects in this way, as can be 
clearly seen in the rice plantations of the Senegal 
river, in Mauritania, and in the village water supply 
project in the Ivory Coast: the villagers have quickly 
learned to maintain simple pumps themselves and 
to clean and protect the areas round their bore­
holes, and it will be possible to expand the hygiene 
and technical training given by the Ivory Coast 
authorities responsible through a contribution of 
200 000 ECU from the 5th EDF. CFAF 775 for cotton. Even where projects in the 
south, or even on the coast, have been financed, 
such as rubber and oil palm, a large proportion of 
the land cultivated is in the south-west, a new region 
where there are virtually no people and where 
development will help to re-balance the regional 
economies of the Ivory Coast. 
15.27. Nevertheless, the dispersion of operations 
may mean that each measure is too limited and tran­
sitory to have a lasting effect. Finance from the 1st 
and 2nd EDF in favour of the Atakora region, in 
Benin, was geographically much too widely spread 
and the projects covered were too diversified. None 
of the individual measures reached take-off point: 
progress was short-lived and the conditions for 
long-term success were not met. The farmers 
stopped using fertilizer as soon as free distribution 
stopped, and the anti-erosive earth banks were des­
troyed by cattle. After a marked increase in the area 
under cultivation and the quantities produced up to 
1976, the area was almost back in 1980 to the pos­
ition it had been in in 1968, at the time of financing 
by the 1st EDF. Aid under the 4th EDF fortunately 
again concentrated resources on specific projects 
which should prove durable (opening up the 
region). 
Development is a balanced process 
Financing of 'equipment' or financing of 'operations' 
15.26. Development should not lead to an aggra­
vation of regional imbalances. In this regard, the con­
tribution of the EDF to developing the northern part 
of the Ivory Coast, i.e. the savanna, which is econ­
omically at a great disadvantage compared to the 
southern and forested part, has been positive: in this 
country, the EDF did not finance coffee or cocoa, 
which are very lucrative crops in the southern part, 
but cotton and rice, which are mainly or exclusively 
savanna crops. In the north the EDF has financed 
rparket gardening, village water supply projects, the 
hospital at Korhogo and is preparing to contribute 
towards improving the sanitation of this town from 
the 5th EDF. Cotton and rice have helped consider­
ably to increase the agricultural income of the 
savanna farmers: a working day, evaluated at only 
CFAF 520 for the cultivation of maize, CFAF 495 
for groundnuts and CFAF 450 for yams, is eval­
uated at CFAF 440 to 775 for rain-watered rice and 15.28. Although, by force of circumstances, the 
financing of agricultural projects covers, for a rela­
tively long period, all the capital and operating 
expenditure, since in agriculture they are for a long 
time indissociable, the same does not apply in the 
other sectors. 
15.29. It will be understood that communications 
infrastructure or sanitation improvement projects 
are conceived as purely capital projects. Still 
the EDF has increasingly to finance large mainte­
nance operations: 37% of the 5th EDF indicative pro­
gramme for Togo is devoted to infrastructure, and 
under this heading, provision is made essentially for 
31. 12. 82 Official Journal of the European Communities 123 
the reinforcement and maintenance of existing 
roads, rather than for new roads. The EDF will 
make a contribution of 5 million ECU for repairs to 
the Nouakchott-Rosso road in Mauritania. 
15.30. On the other hand, in all the school projects 
visited, the EDF has financed only the walls and 
equipment, and not the educational facilities them­
selves and maintenance of the buildings. The .only 
exceptions are the Ouando market gardening train­
ing centre in Benin, for which the EDF has financed 
four years of training programmes, and the Sainte 
Marie school in Abidjan, which will be repaired 
from funds remaining from the 3rd EDF. 
15.31. In the sanitation projects it is even more dif­
ficult to limit financing solely to capital expendi­
ture. This is certainly the case of the 'Institut 
national de la sante publique' and of the Korhogo 
hospital in the Ivory Coast, but the latter has been 
under-used through a lack of human and material 
resources. In Lesotho, the rural dispensaries pro­
gramme is for renovation and not for new structures. 
The EDF has also since 1975, financed semi-perma­
nent technical assistance for the Nouakchott hospi­
tal, and this is understandable since Mauritania 
devotes one third of its health budget to running this 
hospital, of which over half is staff expenditure. 
15.32. All these examples show that the principle 
of only financing capital expenditure is dangerous, 
and that in practice it is often necessary to finance 
operating costs if the investments are not to be lost 
or under-used. The Lome II Convention, moreover, 
authorizes this practice, within certain limits. 
Processing, financing, implementation 
and management of projects 
Viability of projects 
15.33. The viability of the large majority of pro­
jects is amply borne out both in the forecasts and in 
practice, in that they are financially profitable in themselves, as in the case of a large number of agri­
cultural projects, or benefit the national economy, 
particularly in the case of road projects or are of 
clear social value, such as projects providing drink­
ing water to the local people. 
15.34. However, there could be no justification for 
the installation in Mauritania, in an isolated spot 
without adequate technical facilities, of a thermo­
dynamic solar pump, of a very experimental kind, 
the cost of which (413 290 ECU) is roughly equal to 
that of some 50 classical motor-driven pumps with 
which it would have been possible to irrigate 500 
hectares instead of the 20 covered by the solar 
pump. This pump, which worked only for a few 
hours when it was put into service in 1980, would 
have required annual maintenance at a cost Of some 
40 000 ECU, far in excess of the financial capacity 
of the farmers. 
15.35. It was risky, to say the least, in 1967 to start 
cultivating the avocado tree on a semi-industrial 
scale in the Ivory Coast, when the lack of experi­
ence and knowledge in the country about its cultiva­
tion meant it was really an experimental project, 
which turned out to be a total failure. 
15.36. The urgency of the need to buy ten lorries as 
emergency aid to Lesotho was disproved by the fact 
that they were registered late, seven months after 
delivery. 
Inadequate preliminary studies 
15.37. The rate of progress of agricultural projects 
is frequently overestimated, as in the case of the 
rubber project at Grand-Bereby, in the Ivory Coast, 
where it was necessary to reduce the rate of planting 
from 3 000 ha/year to 2 000 ha/year, of> else the 
yield per hectare is wrongly forecast, as in the pro­
ject for growing groundnuts for human consump­
tion in Senegal, where the objectives of 1 370 kg/Ha 
(first stage) and 1 400 kg/ha (second stage) were 
reduced in the third stage (1976-80) to 800 kg/ha, in 
the light of experience. 
15.38. In other cases, it is the 'finished product' 
which through bad design does not adequately meet 
requirements. The juxtaposition, in breach of the 
124 Official Journal of the European Communities 31. 12. 82 
basic principles of hygiene, of abattoirs, incubators 
and feed factory at the poultry farm in Baguida, in 
Togo, was probably the cause of the very high mor­
tality rate of the livestock on the farm (85% in 1974). 
Contrary to the original plans, it is not possible to 
show films or slides in the lecture hall at the veteri­
nary school in Dakar, as there are large openings of 
natural indirect light which cannot be covered; nor 
is it possible to follow a classical spoken lecture 
because there are no desk tops on which to take 
notes. 
15.39. Out of 22 rural post offices planned in 
Lesotho, 4 will not be built. The financing agree­
ment signed on 21 February 1979 retained the esti­
mates of costs used in the preliminary study, which 
had been based on prices in March 1977 (1-5 mil­
lion ECU). The validity of the study at the time of 
its publication is not in question but since the prices 
were out of date after two years of inflation, they 
should have been revised before being used as a 
basis for the proposal and the financing agreement. 
15.40. Variations in the implementation of a pro­
ject are sometimes attributable to a lack of precision 
or to contradictions in the contractual documents. 
In the construction of the Fpum-Gleita dam in 
Mauritania, for example, the services requested 
from the consultants and those requested from the 
contractor were not coordinated: at the beginning 
nobody was asked to draw up plans for the imple­
mentation of the project while in the next stage this 
was entrusted to the consultants and the establish­
ment of the detailed plans was requested both from 
the consultants and the contractor, which contri­
buted to doubling the amount of the initial contract 
of the consultants from 0-6 to 1-2 million ECU. 
15.41. It is regrettable that the Commission should 
agree in this way to finance projects on the basis of 
inadequate studies, and this is particularly serious 
when the weaknesses in the studies and the design 
errors are clearly discernible at the stage of process­
ing the project. A fairly typical case is that of the 
Kaedi-Kiffa road in Mauritania, financed in Nov­
ember 1963, the design of which was criticized at an 
early stage by the technical controller. Right at the 
start he had virtually predicted the actual sequence 
of events: the road rapidly deteriorated until it 
became almost totally unusable. Failure to adapt designs and techniques to local 
conditions 
15.42. Many architectural designs are not appro­
priate to the climate of tropical countries; flat roofs, 
for example, as in the case of the 'Institut national 
de la sante publique' in Abidjan, cannot stop water 
seeping in from the torrential downpours. The six 
threshing machines provided in the Gorgol develop­
ment area in Mauritania cannot thresh the local 
varieties of crops and have remained unused since 
they were delivered. In Lesotho, an integrated rural 
development project, the BASP, which claimed to 
be developing agriculture, failed to recognize that 
the local food products were not competitive with 
the South African products freely available on the 
market, and the extreme shortage of labour in the 
regions to be developed. 
15.43. On the other hand, the Court this year 
found several cases of hospitals which had been 
adapted to African customs and to local resources 
by being contructed in small units or on one level at 
Korhogo (Ivory Coast), at Kaedi (Mauritania), and 
Mangochi and Nsanje (Malawi); local materials 
were systematically used in these same hospitals, 
with the exception of Korhogo. On the other hand, 
the hospital in Nouakchott is of European architec­
tural design which is completely unsuited: a build­
ing of several storeys, it runs counter to the African 
tradition of the family staying with the patient. Such 
a multi-storey construction requires lifts, but at pres­
ent none is in working condition. Finally, reinforced 
concrete and superfluous embellishments also exag­
gerate the costs. 
15.44. The priority given by the EDF to these large 
curative medicine establishments should be ques­
tioned, since they are expensive, require sophisti­
cated equipment and in the end benefit only a rela­
tively limited and privileged urban fringe of the 
population. More modest infrastructures spread 
more widely over the country could be more benefi­
cial for the overall level of health of the country. 
15.45. If the use of sophisticated equipment is to a 
certain extent debatable in the hospitals, it is all the 
more so in a veterinary schooj such as that in Dakar, 
where some of the equipment is too expensive and 
of doubtful usefulness: a research microscope 
31. 12. 82 Official Journal of the European Communities 125 
equipped for photography, worth 14 000 ECU; 72 
flameproof neon tubes, the majority of which are 
worth 285 ECU each; 39 emergency relief tubes on 
accumulators, 2 of which are worth 2 414 ECU and 
37 worth 1 035 ECU each; equipment which does 
not appear to be really necessary or of priority 
importance. This choice of equipment is all the 
more out of place as the veterinary surgeons trained 
in this way will not have been properly prepared to 
face the far more difficult conditions they will find 
in their respective countries and particularly in the 
rural environments with no facilities, where they will 
have to work after completing their training. 15.47. It is true that with services of equal quality, 
a selection based on the amount of the tenders is 
justified, but the comparision must be made on a 
valid basis. The tenders for the dairy at Blantyre, in 
Malawi, were compared not in local currency, as 
provided for in the general conditions (Articles 
31 and 33), but in ECU. The tenders for supervision 
of the construction work on the Foum-Gleita dam in 
Mauritania were compared in local currency, but on 
the basis of rates converted from the EUA or Euro­
pean currencies which differed from each other, and 
which, moreover, all differed from the rate applic­
able under the Financial Regulation. If the tenders 
of the two best-placed undertakings had been cor­
rectly converted, their order in the size of bids 
would have been reversed. 
Unsatisfactory comparison of tenders 
15.46. For the awarding of contracts, 'the lowest 
tender' and 'the most economically advantageous 
tender' are not always equivalent expressions. The 
criterion of 'the most economically advantageous 
tender' is in fact wider, since it makes it possible to 
take account of the relationship between quality and 
price. It is, moreover, the only criterion admitted by 
the rules since the commencement of the EDF (for 
the 1st EDF: Council Regulation No 5 of 2 Decem­
ber 1958 (1), Article 20; for the 5th EDF: Lome II Con­
vention, Article 130 (2)). However, the Commission 
tends to limit itself to the criterion of the lowest bid­
der, particularly where the project's financial 
resources are rather limited. Lack of coherence of the physical and human 
resources used in the projects 
15.48. In some cases, the factories for processing 
agricultural produce are too large or put into service 
prematurely in relation to the volume of the produc­
tion to be handled, and are therefore under-used. In 
oil palm mills in the Ivory Coast, only two-thirds of 
the milling capacity is used. In Togo, an agricultural 
development programme was not linked to the ani­
mal traction programme, which caused the latter to 
fail. 
The lowest bid for the Nouakchott-Rosso road was 
pared to the bone and it subsequently turned out 
that the unit prices were under-estimated. In spite of 
this, the EDF insisted on them, and the contract, 
which was concluded for an amount of 4 -4 million 
ECU, finally cost 8-6 million ECU, and half of the 
road must now be rebuilt at an estimated cost of 12 
million ECU. For the rice project along the Senegal 
river, still in Mauritania, the EDF ignored the ad­
vice that was pressed upon it and insisted on the 
cheapest motor-driven pumps, which are, however, 
the least robust and gienerally last no more than two 
years. Their numerous breakdowns reduce the areas 
irrigated and endanger the crops. 
(1) OJ No 33, 31. 12. 1958, p. 684. 
(2) OJNOL347, 22. 12. 1980, p. 46. 15.49. The optimun size of the farms is not always 
ascertained. The main weakness of the market gar­
dening project in Ferkessedougou in the Ivory 
Coast, which was otherwise a sound project, is the 
under-utilization of the land caused by irreversibly 
allocating plots which are too large with regard to 
the working capacity of the farmers. On the other 
hand, the plots of land in the rice plantations of the 
Senegal river in Mauritania are too small (30 ares) 
and yield clearly inadequate incomes per family. 
The very size of the Ivory Coast palm plan (90 000 
ha in 1980) inflated the overhead costs of the man­
agement structures and the government is currently 
trying to remedy this situation by decentralizing'the 
management to the level of autonomous agricultural 
industrial units. It would appear that there is a rela­
tively low optimum size for the irrigated areas: if 
126 \ 
Official Journal of the European Communities 31. 12. 82 
they are too small, they are not profitable as the 
expensive equipment installed is under-used; if they 
are too large, their management becomes unwieldy. Objectives not fulfilled 
15.53. The time taken to implement projects, their 
cost and the extent to which objectives are achieved 
are closely linked. 
Lack of coordination in financing 
15.50. The bridges over the Casamance in Senegal, 
for which EDF finance of 7 million ECU was pro­
vided, have had their usefulness as part of the 
Ziguinchor-Dakar link considerably reduced by the 
absence of a bridge over the river Gambia, which 
can only be crossed by a ferry of limited capacity 
that gives rise to long delays. Vehicles often prefer 
to make a detour of 400 km via eastern Senegal. 15.54. Poor matching of finance and objectives 
prevents both attainment of the objectives and con­
tainment of the costs. The second dam project in the 
Hodhs, in Mauritania, provided for the construction 
of 18 dams for 3-46 million ECU, of which 
2 -19 million ECU were to be borne by the Euro­
pean Community. An updating in 1977-78 showed 
considerable increase in costs. Despite additional 
German financing of 1-83 million ECU ( + 53%), 
only 5 dams and some 40 small earth dykes have 
been completed. 
15.51. Financing only part of the necessary invest­
ments, and relying on the beneficiary State to cover 
the rest, is in principle a desirable solution, but one 
which sometimes leads to disappointments, for 
example with the wells and bore-holes financed by 
the EDF in the Ivory Coast, 500 of which are at 
present without pumps, as the local authorities were 
not able to make available to the project the neces­
sary funds, as they had undertaken. Sometimes, even a slight shortfall in the financing is 
enough to jeopardize the effectiveness of the project 
to a greater or lesser degree. Insufficient mainte­
nance and a deliberate decision by the EDF not to 
finance the full cost of the Kaedi-Kiffa road 
(1-.5 million ECU instead of the 1-8 million ECU 
requested by the Mauritanian government, which 
was a reasonable estimate), meant that the invest­
ment was in the end almost a total failure since it 
could not stand up to the erosion caused by the 
violent winds and by the periodic rising of the 
wadis. In this way 1 • 5 million ECU were wasted. 
15.52. Although it is to be recommended on many 
points, it appears in practice that badly prepared 
co-financing often gives, rise to inadequate coordi­
nation between the various parties providing the 
funds, which is a source of numerous inconsisten­
cies. For the Foum-Gleita dam, in Mauritania, coor­
dination between the EDF, the German 'Kreditan-
stalt fur Wiederaufbau' (KFW), and the World Bank 
was extremely laborious. The processing, of the pro­
ject took almost ten years. The World Bank only 
began to pay its contribution in November 1981 and 
the funds from the KFW had not yet been provided 
at the time of the Court's visit in February 1982, 
while those of the EDF had been available since 
October 1980. Moreover, certain bodies providing 
the funds insist on a choice of firms which do not 
comply with the EDF competitiveness criteria. 
Co-financing is the reason for a disparity, which is 
detrimental to sound operation, in the origin of the 
equipment, for example in the rubber project at 
Grand-Bereby in the Ivory Coast, and in the rice 
plantations in Mauritania (motor-driven pumps). At the school in Tintane, in Mauritania, the pupils 
had to sit on the concrete floor because the interior 
equipment had not yet arrived one year after the 
school was put into operation; in this school, as in 
the other buildings of the school project of which it 
formed part, equipment was not ordered within the 
framework of Community financing for fear of the 
appropriations being exhausted. However, 185 000 
ECU will probably be left over from the project, 
while the cost of this equipment was estimated at 
260 000 ECU. With a project costing 3.38 million 
ECU, the. EDF will have failed to ensure that the 
schools and colleges in question can. function nor­
mally, for the sake of avoiding barely 2% extra 
financing. 
15.55. Inflation means that long delays generally 
lead to financial overruns. A part of the water sup-
31. 12. 82 Official Journal of the European .Communities 127 
ply in Lilongwe, Malawi, was completed two years 
late and with a 15% overrun. More than two years 
elapsed between the signing of the financing agree­
ment for the provision of public utilities at the tour­
ist complex in Nouakchott (September 1973) and 
the conclusion of the contract (January 1976), and 
the total cost of the project rose in practice from the 
0-9 million planned to 2 million ECU, an increase 
of 122%. 
15.56. Delays also jeopardize the results of the 
projects. The airlift financed as emergency aid to 
mitigate the effects of interruptions to fuel supplies 
by rail to Malawi was requested by the national 
authorities and implemented too late to reduce sig­
nificantly the shortage of fuel, and only a short time 
before the rail service was re-established. Out of 
500 km of tracks to be created in Atakora, in Benin, 
in the financing stage of the 4th EDF, only 100 km 
were built, because of a delay of almost two years in 
starting up, during which time the construction costs 
rose by 160%. The Ivory Coast budget was not able to finance in 
time the necessary replacements in the oil palm 
plantations. 
15.59. A large number of projects show the serious 
defect of having been designed without sufficient 
consideration of this burden of recurring mainte­
nance and management costs upon the local auth­
orities which they would be unable to bear. It was 
therefore hardly advisable for the 'Institut national 
de la Sante publique' (INSP) and the 'Ecole Nationr 
ale superieure agronomique' (ENSA) in Abidjan to 
have centralized air conditioning installed, which 
electricity consumption and maintenance made a 
costly solution. At the ENSA it has been Qut of 
order for some time; at the INSP, where it is now 
well worn, its overhaul could not be met from the 
Institute's operating budget. 
15.57. The cost, results and time necessary for the 
implementation of a project are so interrelated that 
when it is progressing badly, it is not unusual for it 
to show simultaneously the three symptoms of 
delay, financial overruns and unsatisfactory results, 
as in the case of the San Pedro-Issia road in the 
Ivory Coast, which was built in 64 months instead 
of the 33 months planned, gave rise to excess costs 
of 47 million ECU against an estimated cost of 
16-9 million ECU and which nevertheless, one year 
after completion of the work, is in a state of very 
poor repair, and will require remaking at a cost of 
25 million ECU. 15.60. Dams were built in the Hodhs in Mauri­
tania (6 million ECU of which over 3 million were 
charged to the EDF) without providing for the sub­
sequent agricultural staff or defining the responsibil­
ity for and the supervision of the works once com­
pleted. The failure of the 'BASF, an integrated rural 
development in Lesotho, is largely due to the fact 
that the administrative and technical structures of 
the country were not in a position to implement and 
take responsibility for such a varied programme. 
This project has also been the subject of a very criti­
cal evaluation study financed by the Commission. 
Technical choices, and failure to take into 
consideration later management constraints 
15.58. Numerous projects are jeopardized by fail­
ure to maintain equipment. Indeed, beneficiary 
countries encounter extreme difficulty in meeting 
the running costs necessitated by many projects. 
This is true of a number of roads and schools in 
Togo, of the furniture in the primary schools in 
Senegal, and of the roads built in Malawi under the 
'National Rural Development Programme'(NRDP). 15.61. A large amount of the equipment is unused, 
under-used or out of order for long periods because 
of a lack of specialized local staff to maintain or run 
it, or because there are no spare parts or after-sales 
service. This is the case with various pieces of equip­
ment at the hospitals in Nouakchott in Mauritania 
and Korhogo in the Ivory Coast. One-third of the 
extension at the Nouakchott hospital, which is fully 
equipped, has been unused since 1978 because of a 
lack of financial resources and staff. Various pieces 
of sophisticated equipment at the veterinary school 
in Dakar have never even been plugged in, while 
two graders and two loaders intended for Atakora in 
Benin have been immobilized since their delivery, 
for lack of instructions in their use and mainte­
nance. Through lack of medical and para-medical 
staff, the hospital at Korhogo is only used at 50% of 
its capacity. As there is an insufficient number of 
suitably qualified staff, the success of the develop-
128 Official Journal of the European Communities 31. 12. 82 
ment project, in the Mphaki area in Lesotho is con­
siderably handicapped: qualified Ministry of Agri­
culture staff do not like working in this remote area, 
and the 33 posts planned will be difficult to fill. A 
heavy public works vehicle cannot be maintained 
locally in Malawi as it is too complex (Karonga-
Chiweta road). which the major part of the active population works. 
Under these circumstances, to keep prices low at the 
production stage by administrative measures is tan­
tamount to holding down the income of the major­
ity of the population. 
The quality of the managers 
15.62. Some projects are jeopardized by shortcom­
ings in the management company or structure. The 
ability and number of executive staff, whether tech­
nical assistants or national officials, are basic pre­
requisites for success. The variable quality of tech­
nical assistance has been detrimental to the NRDP 
in Malawi (arrival one year late, completely 
replaced two years later), to the development project 
at Atakora in Benin and in general in Mauritania, 
where the rigours of its climate and its geographical 
isolation make it difficult to obtain high quality 
technical assistance. On the other hand, and with 
the exception of the above-mentioned case of the 
NRDP, Malawi has been able to integrate and con­
trol the technical assistance and thus make the best 
use of the service provided. 
Effectiveness of EDF agricultural aid 
measures 
15.63. Whether a quality agricultural project 
remains economically profitable after EDF assist­
ance has been withdrawn, depends not only on sub­
sequent internal management but also oh external 
factors, one of the most important of which is the 
price policy operated in the country concerned. 
Both at the stages of processing and implementa­
tion, this element should be taken into considera­
tion by the Commission together with the other fac­
tors which contribute to the success of the projects. 15.65. Low prices for the producer also have the 
great disadvantage of removing the incentive to 
produce. In one country, low prices caused oil palm 
production to decline until 1980 (665 000 tonnes of 
bunches in 1976-77, 563 000 tonnes in 1979-80), the 
price per kilogram of bunches produced by the vil­
lage growers remaining fixed at CFAF 10 for several 
years up until 1981. In another country, they caused 
cotton production to stagnate until around 1975 and 
the yield of the village palm-groves to fall until 
1979. The reverse effect is also evident: in this same 
country cotton production rose dramatically (11 000 
tonnes in 1975, 20 000 tonnes in 1979-80) following 
an increase in the price for the producer. 
15.66. The administrative fixing of prices seems to 
overlook the fact that there is competition between 
the crops in terms of the income obtained from 
them by the farmers. In one country, rice cultivation 
is discouraged by the competition from maize: rice 
requires more irrigation (which is expensive) and 
produces incomes per hectare which are 38% lower 
than those of maize (a maximum of 935 ECU 
against 1 500 ECU annually). The same phenome­
non occurs in another country where the price of 
maize has risen more (34% in several stages from 
1974-75 to 1981-82) than that of rice (24% for the 
same period, the increase not occurring until 1981-
82). In the same country, the difference in price 
between groundnuts and cotton, to the advantage of 
the latter, has gradually fallen from 70-100% in 
1970-71 to 20-30%; since the cultivation of cotton is 
more demanding, there has been a shift away from 
cotton production, which previously was increasing 
at a considerable rate and has now dropped again 
from 45 000 tonnes in 1976-77 to 20 000 tonnes in 
1980-81. 
Consequences of policies of low prices for producers 
15.64. The principal output in the countries visited 
by the Court comes from the agricultural sector, in 15.67. Often the official prices are considerably 
lower than those obtainable through private chan­
nels. This situation has the effect of diverting pro­
duction from the official channels and therefore 
from the processing plants, which are thus generally 
under-used. In one country, there has hitherto been 
31. 12. 82 Official Journal of the European Communities 129 
no marketing of agricultural products under an inte­
grated development project on account of the unre-
munerative prices offered by this project, compared 
with those on the local markets. In another country, 
a palm oil mill operated only at 32% of its capacity 
between 1977 and 1979 and another oil mill at 17% 
in 1979-80: the prices of bunches on the local mar­
kets are often more attractive. Moreover, the raising 
of prices in December 1979 immediately caused a 
massive increase in the yield of the first of these two 
oil mills, which rose from 1 218 tonnes in 1979 to 
7 018 tonnes for the first six months of 1980 alone. 
Division of income or losses between the country's 
different interest groups 
15.68 This critical assessment of price policy 
would not be fair if it were not viewed in the more 
general context of the distribution of the value 
added between its various beneficiaries and possible 
uses. It is not sufficient to increase the prices for the 
producer to remedy the situation: the governments 
have the. difficult task of reconciling the interests of 
the farmer, the consumer and the State. The problem 
is at its most acute for non-competitive production: 
here it is a case of distributing losses rather than 
profits. represents 52, but this rice is sold to the consumer at 
the same price as the imported rice, i.e. 75, and thus 
with a loss of 25 to the State. In another country, the 
cost pf producing rice and delivering it to the 
national port is between CFAF115 to 135 while 
imported rice costs CFAF 60/kg cif to the same 
port. 
15.71. In 1973, wishing to attain national self-suf­
ficiency in rice, one government at. the same time 
created a considerable incentive to production by 
raising the price for the producer from CFAF 23 to 
65/kg at a stroke and dealt a serious blow to con­
sumption by raising the retail price from CFAF 70 
to 125/kg. Due to the fact that foreign rice entered 
the country at a retail price of CFAF 93, however, a 
reverse action in 1977 reduced the consumer price 
from CFAF 125 to 100/kg. Despite a corresponding 
drop in the price for the producer from CFAF 65 to 
50/kg, the cost price of the national rice reached 
once more CFAF 160/kg, i.e. a loss of CFAF 60/kg 
borne by the State. These shifts of policy first of all 
made imports drop from 148 000 tonnes in 1973 to 
1 600 tonnes in 1975; then made them increase to 
280 000 tonnes in 1980. The problem is one that sev­
eral governments continually encounter: to recon­
cile these four requirements of self-sufficiency in 
food, farmers' interests, urban consumers' interests 
and balancing the national finances. 
15.69. This is the case with cotton in one country 
visited. It creates little return on the farmer's work­
ing day: CFAF 775 compared with CFAF 1 450 to 
2 120 for coffee, CFAF 1 180 to 1 765 for cocoa. It 
should be pointed out, however, that out of a cost 
price for the fibre taken as 100, the farmer's remu­
neration accounts for almost half (48), while the 
proceeds from the sale abroad amount only to 73, 
the difference of 27 constituting a loss for the coun­
try which is, in fact, supported by the State. Weaknesses in supervision 
15.72. The Commission is sometimes not equipped 
with adequate documentation on the implementa­
tion of the projects by reason of the failings of either 
the local authorities or the delegations or the inter­
nal documentation system of certain departments of 
the Commission itself. 
15.70. A comparable problem is that of non-com­
petitiveness when it arises on the internal market 
rather than at export. A typical case is that of rice, 
which several countries in search of self-sufficiency 
in food are endeavouring to develop, although 
imported rice is less expensive. In one country, if 
the cost price of rice produced under a national pro­
ject is taken as 100, the producers' remuneration 15.73. The local authorities often fail to produce 
the reports requested of them on the implementa­
tion of projects financed by the EDF. 
15.74. The Commission delegations on the spot, 
which experience a rapid turnover in staff and are 
130 Official Journal of the European Communities 31. 12. 82 
overburdened with daily administrative work, do 
not always provide the reports required on the pro­
gress of the projects. Where these reports do exist, 
which is indeed more often the case, they are some­
times so technical and involved or, on the contrary, 
so brief that they hardly serve as a basis for assess­
ing the project: in this connection, the Commission 
could usefully provide the delegations with guide­
lines for drawing up reports in order to avoid these 
problems. 
15.75. The files in the central archives of the Direc­
torate-General for Development at the Commission 
are often very incomplete, which is most probably 
because the various administrative services keep 
some of the most important documents for them­
selves. Japanese origin in everyday use at the hospital in 
Korhogo on the Ivory Coast; pumps in the bay of 
Soumbedioune .in Senegal, proof of whose Com­
munity origin, doubted by the Court, could not be 
supplied by the Commission departments. 
15.79. Delays in payment are often caused by 
slowness and poor organization of controls within 
the national administrations, sometimes at their 
expense. This is the case of the 'Lakeshore fisheries 
development' project in Malawi whose statement of 
accounts takes a year to reach the delegation, and 
for the microprojects in the same country in respect 
of which statements of account of expenditure 
amounting to 148 000 ECU have not yet been sent 
to the EDF. The same applies to approximately 
45 000 ECU spent on rural clinics in Lesotho. 
15.76. The projects in progress are generally well 
monitored by the delegations. This does not always 
apply to projects which the EDF no longer assists 
financially, contrary to Article 31 (4) of Protocol No 
2 of the Lome I Convention which stipulates that 
'the Delegate shall collaborate with the national 
authorities in examining completed projects regu­
larly. Reports on the outcome of the examination 
shall be drawn up by him and communicated to the 
ACP State concerned'. 
15.77. One would expect faster and more decisive 
reaction from the dommission to prevent projects in 
progress from being interrupted on account of ser­
ious mishaps. The urgent need to strengthen the 
dyke at Gorgol in Mauritania, at an estimated cost 
of 1-25 million ECU has been recognized since 
1980 following an expert's report. Since the appro­
priate decisions were not taken in good time, how­
ever, the dyke collapsed in September 1981 and no 
steps had yet been taken in February 1982 at the 
time of the Court's visit. In Senegal, the drainage 
network and installations in the bay of Soumbe-
dioune, completed since mid-1980, had not yet 
been put into operation at the time of the Court's 
visit in June 1981 on account of a mutual rejection 
of responsibilities by the Senegalese authorities, the 
consultants, the suppliers and the Commission. 
15.78. The Community authorities occasionally 
overlook the acquisition of imported equipment of 
non-Community origin without the special authori­
zation required under the financing agreements (for 
the 4th and 5th EDF, Article X of the general 
clauses): ophthalmological instruments of One firm owed approximately 27 500 ECU by the 
Ivory Coast administration for its services at the 
hospital at Korhogo was eventually paid directly by 
the department in Brussels three years late (1977-80) 
because the local administration had several times 
lost all or part of the payment files. In February 
1981, the undertaking was still demanding some 
7 500 ECU in interest for late payment. 
15.80. Delays and errors1 in accounting may also be 
observed in the Community accounts. Almost two 
years after the implementation of an exceptional aid 
to Malawi, 1-4 million ECU unspent remain com­
mitted, which prevents them from being reallocated 
to other projects. An error in the EDF quarterly bal­
ance sheets existing for over two years produced the 
same result, when 34 662 ECU were entered in the 
accounts as being committed for a road study in 
Mauritania which had actually been completed at a 
cost of 22 915 ECU. A quite considerable delay is 
often noted in the accounting of expenditure on 
projects by the Brussels departments. At 31 March 
1981, the EDF had only entered 276 117 ECU in the 
accounts for expenditure as exceptional aid to Sene­
gal, although already at 6 November 1980 the 
amount of expenditure recorded locally had reached 
930 000 ECU. As a result, the rate of consumption 
of the resources of the indicative programmes is 
sometimes greatly understated (case Of Lesotho). 
15.81. The guarantees provided for the 'sound 
implementation' of the contracts are sometimes 
inadequate, leaving the Commission incapable of 
31. 12. 82 Official Journal of the European Communities 131 
bringing appropriate pressure to bear upon the 
defaulting undertakings. 
Sometimes penalties exist but are not imposed. For 
example, the Ivory Coast administration waived 
payment by the undertaking responsible for con­
structing the college for students of agronomics at 
Abidjan of two-thirds of the penalty for delay with 
which it could have been charged, representing a 
reduction of approximately 75 000 ECU, despite the 
many criticisms made on provisional acceptance of 
the building, which the undertaking, already.behind 
schedule, took three years to rectify. 
The case of the pump in N'Gorel Guidal, Mauri­
tania, combines both these faults: 
1. Inadequate guarantees: 
The contract for the supply and installation of 
the solar pump does not contain any minimum 
conditions as to duration and regularity of oper­
ation that could be applied to decide provi­
sional and (a fortiori) final acceptance. The 
imposition of such conditions was particularly 
essential since, as admitted by the Commission, 
the project was of an experimental nature. 
2. Guarantees provided but not implemented: 
— Provisional acceptance was given on 11 July 
1980 although there had been no proof of 
the pump's capacity to operate for long 
periods and on a regular basis (the pump 
only operated for a few hours in all); in 
addition to its usual consequences, provi­
sional acceptance had the effect, in this 
case, of terminating the security for the ad­
vance of 30% on the contract price, since the 
bank's guarantee is stated in the letter of 
indemnity to end on the date of provisional 
acceptance. 
— On provisional acceptance the guarantee in 
• lieu of retention of a sum equal to 10% of 
the contract price, although provided for in 
the contract, was not given. 9 July 1981, i.e. one year after provisional 
acceptance, which removed the last guaran­
tee held by the Commission. In February 
1982, however, at the time of the Court's 
visit, the pump still did not work. 
15.82. The relations existing between the Commis­
sion and the European Investment Bank in respect 
of the management of risk capital, special loans and 
interest rate subsidies should be reconsidered. Every 
act of delegation presupposes that the delegator will 
check that the delegatee has properly executed his 
mandate. The information sent to the Commission 
by the EIB on the projects whose financing it man­
ages on behalf of the EDF are extremely brief. This 
applies to the project manufacturing solar energy 
captors and heating chambers financed in 1979 in 
Senegal by a conditional loan of 500 000 ECU (risk 
capital). The file sent by the Commission to the 
Court contained only the simplified description of the 
project mentioned above, the particulars and date 
of the loan agreement and the mention of an initial 
call for funds of 250 000 ECU paid on 19 September 
1980. 
In so far as the Commission neither demands nor 
obtains from the EIB the information and docu­
ments necessary for a serious assessment of the 
management of the Community resources delegated 
to it, the Court of Auditors feels it necessary to 
stress, as it did in its previous annual report (1980 (') 
paragraphs 14.14 to 14.16), that it is unable to per­
form the duties imposed on it by the Treaties and 
which involve the examination of 'the accounts of 
all expenditure and revenue of the Community'. 
The Commission has stated that, to allay the Court's 
concern in this matter, it has agreed with the EIB 
that the latter's reports on the execution of its man­
date will in future be more detailed. Experience will 
show whether the information available in future 
will enable the Court to put the discharge authority 
in a position to exercise its right of inspection on a 
major part of Community expenditure. 
— In the absence of final acceptance, the bal­
ance. of the contract price was paid on (0 OJ No C 344, 31. 12. 1981. 

31. 12. 82 Official Journal of the European Communities 133 
ANNEX I 
Allocation of responsibilities among Members of the Court of Auditors 
at 30 November 1982 
(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 sections; 
Secretariat of the Court including Court rules and regulations Pierre LELONG 
President 
(b) Relations with other Community institutions, national audit bodies and other audit 
bodies. Public relations generally . 
(c) Work programme and coordination of missions in Member States 
(d) Legal Service 
(e) Appointing authority within the meaning of the Staff Regulations of officials and 
other servants of the European Communities 
(a) Working methods and training ' Andre MIDDELHOEK 
(b) Studies 
(c) Editing annual and other reports 
(d) Community accounting procedures 
(e) General accounts 
(f) Loans and borrowings (other than banking aspects) 
(a) Staff management and administration of the Court Georges VITALIS 
(b) Budget and accounting of the Court 
(c) Translation Service 
(d) Brussels office 
(e) Documentation and archives 
Audit of 
(a) European Agricultural Guidance and Guarantee Fund (Guidance Section) 
(b) European Regional Development Fund Aldo ANGIOI 
134 Official Journal of the European Communities 31.12.82 
Audit of Paul GAUDY 
(a) European Coal and Steel'Community 
(b) European Social Fund and related expenditure 
(c) Banking aspects of loans and borrowings 
Audit of Arne K. JOHANSEN 
Own resources 
Audit of Albert LEICHT 
Staff and operational expenditure of institutions, including Publications Office, press 
and information offices 
Audit of Marcel MART 
(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 
Audit of Michael N. MURPHY 
European Agricultural Guidance and Guarantee Fund (Guarantee Section) 
Audit of 
(a) Research and investment, energy and industry expenditure 
(b) External bodies (including subsidies) ' Sir Norman PRICE 
31. 12. 82 Official Journal of the European Communities 135 
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 
1982 are listed below; those adopted between 1 December 
1981 and 30 November 1982 are marked by an asterisk (*). 
Title, Date of adoption Publication 
Opinion of the Court of Auditors on: . 
• an amended proposal for a Council Regulation implementing, in 9 December 1977 Not published 
respect of own resources from value-added tax, the Decision of 
21 April 1970 on the replacement of the financial contributions 
from Member States by the Communities' own resources; 
• an amended proposal for a Regulation (ECSC, EEC, Euratom) 
implementing the Decision of 21 April 1970 on the replacement 
of the financial contributions from Member States by the Com­
munities' own resources. 
Opinion on the draft Financial Regulation concerning the EAGGF 13 April 1978 OJ NoC 139, 
Guarantee Section for the periods 1967/68 to 1970. 5. 6. 1979, 
p. 18 • 
Report on the 1977 accounts of the Euratom Supply Agency. 25 April 1978 Not published 
Opinion on the draft Regulation on the application of the provisions 23 May 1978 OJ No C 139, 
of Protocol 1 to the Cooperation Agreements concluded with Alger- 5. 6. 1979, 
ia, Morocco, Tunisia, Egypt, Lebanon, Jordan and Syria and the p. 19 
Financial Protocols concluded with Malta and Cyprus. 
Opinion on the draft Regulation on the application of the provisions 23 May 1978 OJ No C. 139, 
of the Financial Protocols concluded with Greece, Turkey and Por- 5.6. 1979, 
tugal. p. 18 
• Opinion on the general revision of the Financial Regulation of 
25 April 1973 applicable to the general budget of the European 
Communities. 
— Opinion of the Court of Auditors relating to the Financial Regu­
lation of 21 December 1977 applicable to the general budget of 
the European Communities (final official title under which the 
opinion was adopted). — partial opinion 
adopted on 16—17 Nov­
ember 1977 
— final opinion 31 May 
1978 OJ NoC 139, 
5. 6. 1979, 
p. 20 
Report on the accounts of the European Schools for 1976. 8 June 1978 Not published 
Report on the 1977 accounts of the European Foundation for the 
Improvement of Living and Working Conditions (Dublin). 8 June 1978 Not published 
136 Official Journal of the European Communities 31. 12. 82 
title Date of adoption • Publication 
Opinion on the draft Council Regulation (ECSC, EEC, Euratom) 
on the procedure for applying the European unit of account (EUA) 
to the legal acts adopted by the institutions of the European Com­
munities. 15 June 1978 OJ NoC 139, 
5. 6. 1979, 
p. 23 
Report on the 1977 accounts of the European Centre for the De­
velopment of Vocational Training (Berlin). 15 June 1978 Not published 
Opinion on the draft Council Regulation amending the Financial 
Regulation of 21 December 1977 applicable to the general budget of 
the European Communities. 27 July 1978 OJ NoC 139, 
5.6. 1979, 
p. 25 
Observations on the European Association for Cooperation (EAC). 5 October 1978 Not published 
Opinion on the draft Council Decision amending Decision 72/335/ 
EEC on the Community financing of certain special expenditure ar­
ising from the implementation of the 1971 Food Aid Convention. 
(Note: opinion delivered under Articles 209 and 206a.) 26 October 1978 Not published 
First Annual Report, concerning the financial year 1977. November 1978 OJ NoC 313, 
30. 12. 1978 
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. 
(Note: opinion delivered under Articles 209 and 206a.) 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 De­
velopment of Vocational Training (Berlin). 7 June 1979 Not published 
Report on the accounts of the European Schools for 1977. 13 June 1979 Not published 
31. 12. 82 Official Journal of the European Communities 137 
Title Date of adoption Publication 
ECSC Annual Report 1978 (balance sheet and accounts). 14 June 1979 Not published 
Special report on accommodation policies of the institutions of the 
European Communities. 20 June 1979 OJ No C 221, 
3.9. 1979 
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 ex­
penditure 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 t 
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. 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. 22 May 1980 ' OJ NoC 165, 
5. 7. 1980, 
p. 2 
OJ NoC 165, 
5.7.1980, 
p. 9 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 OJ NoC 165, 
5. 7. 1980, 
p. 2 
OJ NoC 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 De- 19 June 1980 
velopment of Vocational Training (Berlin). Not published 
138 Official Journal of the European Communities 31. 12; 82 
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, 
Opinion on a proposal for a Council Regulation amending Regula­
tion (EEC) No 1172/76 of 17 May 1976 setting up a financial me­
chanism. 3 July 1980 p. / 
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. i 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 Comput­
er Centre of the European Communities. 6 November 1980 Not published 
Third Annual Report, concerning the financial year 1979. 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 fnechanism 
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 Eu­
ropean 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 No C 150, 
19. 6. 1981 
Observations on the proposal for a Council Regulation relating to 
the financing by the EAGGF, Guarantee Section, of certain inter­
vention measures, particularly those involving the buying-in, storage 
and sale of agricultural products by intervention agencies. 19 February 1981 Not published 
Study on the European Centre for the Development of Vocational 5 March 1981 
Training (Berlin). Not published 
31. 12. 82 Official Journal of the European Communities 139 
Title Date of adoption Publication 
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 
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 De­
velopment 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 
Study of the financial systems of the European Communities (1981). 26 November 1981 OJ No C 342, 
31. 12. 1981 
Report on the accounts of the European Schools for 1980. 10 December 1981 Not published 
(') Available only in French. 
140 Official Journal of the European Communities 31. 12. 82 
Title Date of 
adoption Publication 
* Special report on expatriation and foreign residence allowances. 4 February 1982 Available from the Court 
of Auditors 
* Opinion on a proposal 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 No C 122, 
13.5.1982 
* Special report on sales of reduced-price butter within the Com­
munity. 18 March 1982 OJ No C 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 No C 319, 
6. 12. 1982 
* Special report on job-creation or maintenance in the granting of aid 
to regional investments. 30 July 1982 To be published in OJ 
after 30. 11. 1982 
* Special report on the Community inward processing system. ^ 16 September 1982 OJ No C 286, 
4. 11. 1982, 
p. 4 
* Opinion on: 
• a proposal for a regulation amending Regulation No 337/75 es­
tablishing a European Centre for the Development of Vocational 
Training, 16 September 1982 To be published in OJ 
after 30. 11. 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 on 
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. 
* Special report on the 'Como' frauds. 16 September 1982 Not published 
* Special report on the financial management of multi-annual 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 
31. 12. 82 Official Journal of the European Communities 141 
Title Date of adoption Publication 
* Report on the 1981 accounts of the European Centre for the De­
velopment of Vocational Training (Berlin). 7 October 1982 Not published 
* Report (Annex to the Annual Report ECSC 1980) on loans — bor­
rowings — interest rate subsidies. 12 October 1982 Not published 
* Special report on the clearance of the accounts of the EAGGF Guar­
antee Section, the structure and operation of the system. 12 October 1982 OJ No C 313, 
29.11.1982 
* Opinion on a proposal for a Council Regulation amending Regula­
tion (EEC, Euratom, ECSC) No 2891/77 implementing the Decision 
of 21 April 1970 on the replacement of financial contributions from 
Member States by the Communities' own resources. 16 November 1982 To be published in OJ 
after 30. 11. 1982 
* Opinion on a proposal for a Council Resolution amending and ex­
tending the terms of validity of Regulation (EEC, Euratom, ECSC) 
No 2892/77 implementing in respect of own resources accruing from 
value-added tax the Decision of 21 April 1970 on the replacement of 
financial contributions from Member States by the Communities' 
own resources. 16 November 1982 To be published in OJ 
after 30. 11. 1982 
* Report (Annex to the Annual Report ECSC 1981) on loans for hous­
ing. 25 November 1982 Not published 
* Fifth Annual Report, concerning the financial year 1981. 25 November 1982 This edition 

31. 12. 82 Official Journal of the European Communities 143 
ANNEX III 
Financial information relating 
to the general budget of the European Communities 
and 
to the European Development Funds 
(1981) 
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 the European Communities C) and of the European Development Funds and from other detailed finan­
cial records provided by the Commission. 
2. Change of monetary unit 
This Annex sets out not only the situation for the year under review, but also historical data, which have been the 
subject of two changes in monetary unit: firstly from the unit of account (u.a.) to the European unit of account 
(EUA) as from 1 January 1978 and subsequently from the European unit of account to the European currency 
unit (ECU) as from 1 January 1981. 
For the general budget the historical data are given in the monetary unit in force in the financial years concerned, 
i.e. until 1977 in u.a., from 1978 to 1980 in EUA and from 1981 in ECU (see § 1.5 for details). 
For the European Development Funds all historical data are given in ECU in accordance with the agreement to 
adopt as the conversion rate 1 u.a. = 1 EUA = 1 ECU. 
3. Unit of presentation and rounding off of financial data 
The financial data are presented in millions (Mio) of monetary units — in Mio u.a., Mio EUA or in Mio ECU respec­
tively. They have been rounded off to one decimal place. 
In complex circumstances the rounding off may give rise to slight differences in certain additions of figures. 
(1) For the financial year 1981: revenue and expenditure account and balance-sheet of the budget 1981 (Documents COM(82) 233, 234 and 270). 
144 Official Journal of the European Communities 31. 12. 82 
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 Deutschmark 
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 for 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 
OD 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 Budget section 
T Budget title 
Ch Budget chapter 
— Nil 
0,0 Data between zero and 0,05 
o/o Percentage 
§ Section referring within this annex to texts, diagrams and tables 
31. 12. 82 Official Journal of the European Communities 145 
Contents 
Part I: General budget of the European Communities 
Page 
§ 1. Background information on the general budget 146 
The financial year 1981: budget and out-turn 
§ 2. General budget 1981: estimated revenue 150 
§ 3. General budget 1981: estimated expenditure — appropriations for payment 151 
§ 4. General budget 1981: appropriations for commitment 152 
§ 5. Estimated and actual revenue in 1981 153 
§ 6. Appropriations for commitment available in 1981 and their utilization 154 
§ 7. Appropriations for payment available in 1981 and their utilization 155 
§ 8. Actual own resources in 1981 156 
§ 9. Rate of utilization of appropriations available in 1981 157 
§ 10. The consolidated revenue and expenditure account and the balance of the financial year 1981 158 
§11. Payments made in 1981—by sector and by recipient Member State 159 
§12. EAGGF-Guarantee: payments made in 1981—by market and by recipient Member State 160 
§13. The structural Funds: commitments entered into and payments made in 1981—by recipient Member State . . 161 
Historical data relating to the implementation of the general budget (1976-81) 
§ 14. Utilization of the appropriations for payment for the period 1976-81 (principal sectors) 162 
§ 15. Utilization rates of the appropriations for payment from 1976 to 1981 (principal sectors) 163 
§16. Evolution of annual payments — by sector (1976-81) 164 
§ 17. Evolution of the ratio of 'annual payments by sector' to 'total of annual budgetary payments' (1976-81) 165 
§ 18 Annual payments to the Member States (1976-81) 166 
§19. Actual own resources — by Member State (1976-81) 167 
Part II: The European Development Funds (EDF) (position at 31 December 1981) 
§ 20. General information on the EDF 168 
§ 21. The 4th and 5th EDF: allocations, financing, distribution of aid, utilization rates 169 
§ 22. The 4th EDF: aid by type and by recipient country 170 
§23. The 4th EDF: financial implementation of aid by recipient country 171 
§ 24. The 5th EDF: aid by type and by recipient country 172 
§25. The 5th EDF: financial implementation of aid by recipient country 173 
§ 26. The five EDF: evolution of annual payments (1960-81) 174 
146 Official Journal of the European Communities 31. 12. 82 
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 estimate of administrative expenditure, the EEC budget and the Euratom 
administrative budget. The Euratom research and investment budget was incorporated in the general budget as from 1971 by 
the Treaty of Luxembourg (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 (10). 
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 + 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, 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 in December 1981 between the ECU and the national currencies were as follows: 1 ECU = BFR/LFR 
41,4054 = DKR 7,87369 = DM 2,44878 = DR 61,8110 = FF 6,18331 = IRL 0,690318 = LIT 1 314,22 = HFL 2,68095 = UKL 
0,567528. 
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 o/o of a uniform EC assessment basis (11); 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-financial contributions. In 1980 the VAT system was applied by all 
Member States. In 1981 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). 
(1°) For the presentation of this annex a special nomenclature classifying expenditure by sectors is adopted (see § 6, column (1)). 
(11) See Sixth Council Directive of 17 May 1977, common system of VAT: uniform assessment basis (OJ No L 145, 13. 6. 1977). 
31.12.82 Official Journal of the European Communities 147 
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. The budget contains a schedule showing the 
incidence of expenditure planned for the years concerned: 
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) (') = non-differentiated appropriations (NDA) 
+ commitment appropriations (CA) (1); 
— the total of appropriations for payment (AFP) (') = 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) P 
im Commitment 
appropriations 
(CA) 
Non-differentiated 
appropriations 
(NDA) 
year 1: 
year 2: Oca »• AFC: 150 
(| f[\- NDA 100-
AFC:180 
Si 60* 
NDA 120. 
year 3: AFC: 215 -CA 65. 
a NDA: 150 • Commitment 
appropriations (CA) ' 
of prior years \ 
Summary of all types of appropriations: Budget 
Type of 
appropriation it 
IS 1! E a 
2 « 
<f> Differentiated 
appropriations 
(DA) o Li. < 
si 9 £ 
II Q. F 
S O 
a" 
Zs 
(DM2) CL K «< 
o — 
SS 
&| P « 5 a 
<s 
(1)'<3) Budget 
Type of 
appropriation it 
IS 1! E a 
2 « 
<f> I§ 
if 11 
in (2) • c o 
_ « 
E2_ 
5 St 
(3) o Li. < 
si 9 £ 
II Q. F 
S O 
a" 
Zs 
(DM2) CL K «< 
o — 
SS 
&| P « 5 a 
<s 
(1)'<3) 
year 1 100 50 27 150 127 
year 2 120 60 38 180 158 
year 3 150 65 75 215 225 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 
allocated; the CA are financed over several years. 
year 1 
T 
I Amounts financed in: 
year 2 year 3 
T 11 
I 
I i 
i 
"1 
01 150 16 i 
1 
1 
A 
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. 
y- -y- w Appropriations for payment: 
Payment appropriations 
(PA) App'i-
priations 
payment Non-differentiated 
appropriations (NDA) 
(1) Note It 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
tia ted appropriations 
148 Official Journal of the European Communities 31. 12. 82 
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 obligatory expenditure (1) and make amendments for non-obligatory expenditure; these modifi­
cations and amendments are submitted to the Council. For obligatory expenditure the Council takes the final decision. For 
non-obligatory 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 (i 1). 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 (i *•) carry-overs. 
— Cancellation of appropriations: The balance is cancelled. 
31. 12. 82 Official Journal of the European Communities 149 
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.). 
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 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). 
(1) Obligatory expenditure is that resulting necessarily from the Treaties or from acts adopted in accordance with them. 
(2) For details concerning the budgetary procedure see Articles 78 ECSC, 203 EEC and 177 Euratom. 
(3) Article 8 of the Financial Regulation. 
(4) Article 1 (5) of the Financial Regulation. 
(5) Article 21 of the Financial Regulation. 
(6) 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. 
(8) 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). 
(9) Article 87 of the Financial Regulation and Article 91 (2) of the modified Financial Regulation. 
(10) Articles 6 (2) (a) and 88 (3) of the Financial Regulation. 
(11) Article 6 (1) (b) of the Financial Regulation. 
(12) Articles 6 (1) (c), 6 (2) (b) and 88 (4) of the Financial Regulation. 
(13) Articles 6 (4) and 108 (3) (a), (b) of the Financial Regulation. 
(14) 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). 
(15) Articles 73 to 77 of the Financial Regulation. 
(is) Articles 78e, 78f ECSC, 206 and 206a EEC, 180 and 180a Euratom and Articles 78 to 84 of the Financial Regulation. 
(17) Articles 78g ECSC, 206b EEC, 180b Euratom. 
(10) Article 85 of the Financial Regulation. 
150 Official Journal of the European Communities 31. 12. 82 
§ 2. General budget 1981: estimated revenue 
(after supplementary and amending budgets: see also § 5) 
Total own resources (by Member State) 
Customs duties 
Agricultural levies 
Sugar and isoglucose levies 
VAT/financial contributions 
Other revenue Total 
estimated 
revenue: 
18 434,0 
Mio ECU Other revenue: 
— Surplus 
from 1980: 
— ECSC contribution 
(Art. 20 of the 
Merger Treaty): 
— Contribution of 
the Member States 
to supplementary 
Euratom programmes: 14,4 Mio ECU 
— Deductions from staff 
remunerations: 97.8 Mio ECU 
— Miscellaneous 
revenue: 43,4 Mio ECU 406,7 Mio ECU 
(2.2 %) 
246,1 Mio ECU 
5,0 Mio ECU 
Customs duties: 
6 366.0 Mio ECU (34,5 %) VAT and financial 
Sugar and isoglucose levies: 
463,5 Mio ECU (2.5 %) 
Agricultural levies: 
1 310.2 Mio ECU (7,1 %) 
31. 12. 82 Official Journal of the European Communities 151 
Other institutions: 352,7 Mio ECU (1,9 %) 
— Parliament: 199.4 Mio ECU 
— Council: (') 113.1 Mio ECU 
— Court ol Justice: 25,4 Mio ECU 
— Court ot Auditors: 14,8 Mio ECU 
(') Including Economic and Social Committee: 21.3 Mio ECU Key: 
I 1 Non-differentiated appropriations 
I 1 (NDA) 
Sectors with differentiated 
' •. --'J appropriations: payment appropriations 
•• Appropriations available to 
the Commission 
| 1 Appropriations available to the 
I 1 other institutions § 3. General budget 1981: estimated expenditure — appropriations for payment 
(after supplementary and amending budgets, before transfers and supplementary receipts: see § 7, column 3) 
Total 
estimated 
expenditure. 
Appropriations 
for payment: 
18 434,0 
Mio ECU (') 
(') Sum of non-differentiated 
appropriations 
(15 933,6 Mio ECU) 
and payment 
appropriations 
(2 500,4 Mio ECU). 10. Provisional appropriations and contingency reserve: 207,5 ECU (1,1 %) 
(incl. NDA 192.5 Mio ECU) 
9 Reimbursements to Member States: 2 410.0 Mio ECU (13.1 %) 
8 Other sectors: 149,2 Mio ECU (0.8 %) (incl. NDA: 136.2 Mio ECU) 
7. Cooperation with developing countries: 791,2 Mio ECU (4,3 %) 
(incl. NDA: 563,5 Mio ECU) 
6. Research, investment, energy: 288,5 Mio ECU (1,6 %) (incl. NDA: 1,0 Mio ECU) 
5, Regional Fund: 819,2 Mio ECU (4,4 %) 
4. Social Fund: 620,4 Mio ECU (3,4 %) 
3. EAGGF-Guidance: 517,6 Mio ECU (2,8 %) 
( 2.11. Clearance of the accounts: - 40,0 Mio ECU (-0.2 %) 
*" I 2.10. Agri-monetary measures: 168,0 Mio ECU (0.9 %) 
2.9. Other markets: 869,5 Mio ECU (4,7 %) 
2.8. Tobacco: 327.0 Mio ECU (1,8%) 
2.7. Wine: 618,0 Mio ECU (3,4%) 
2.6. Fruit and vegetables: 715,0 Mio ECU (3,9 %) 
2.5. Beef and veal, pigmeat: 1 659,0 Mio ECU (9,0 %) 
2 4. Sugar: 700,0 Mio ECU (3,8 %) 
2.3. Oils and fats: 958,0 Mio ECU (5,2 %) 
Milk products: 3 675,0 Mio ECU (19,9 %) 
Cereals and rice: 1 963,0 Mio ECU (10.6 %) 
1. Administration (all institutions): 1 017,9 Mio ECU (5,5 %) • 2.2. 
• 2.1. 
31. 12.82 Official Journal of the European Communities 152 
§ 4. General budget 1981: appropriations for commitment 
(after supplementary and amending budgets, before transfers, etc.: see § 6, column 3) 
Total 
appropriations 
(or commitment 
19 986,1 
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 of the non-differentiated appropriations and 
their diagrammatical presentation being the same 
The total appropriations for commitment are not balanced by the 
budgetary revenue of 1981 as the commitment appropriations 
also include amounts to be financed by budgetary revenue of 
subsequent years (see § 1.7). 
Key: 
Non-differentiated appropriations 
i —I Sectors with differentiated appropriations: 
I 1 Commitment appropriations 1. Administration (all institutions): 1 017.9 Mio ECU (5,1 %) 
(for the breakdown of these appropriations by institution see § 3) 2. EAGGF-Guarantee: 11 612.5 Mio ECU (58,1 %) 
(for the breakdown of these appropriations 
by markets see § 3) 
(') Sum of non-differentiated 
appropriations (15 933,6 Mio ECU) 
and 
commitment appropriations 
(4 052,4 Mio ECU) 5. Regional Fund: 1 540,0 Mio ECU (7,7 %) 
4 Social Fund 963,0 Mio ECU (4,8 •/.) 10 Provisional appropriations and contingency reserve: 241,4 Mio ECU (1,2 %) 
(incl. NDA: 192,5 Mio ECU) 
9. Reimbursements to Member States: 2 410,0 Mio ECU (12,1 %) 
8. Other sectors: 175,4 Mio ECU (0,9 %) (incl. NDA: 136,2 Mio ECU) 
7. Cooperation with developing countries: 967,9 Mio ECU (4,8 %) 
(incl. NDA: 563,5 Mio ECU) 
6. Research, investment, energy: 378.4 Mio ECU (1,9 %) (incl. NDA: 1,0 Mio ECU) 
3. EAGGF-Guidance: 679,6 Mio ECU (3,4 %) 
153 Official Journal of the European Communities 31. 12. 82 
§ 5. Estimated amid actuall revenue in 1981 
A. Summary of estimated (1) and actual (2) revenue in 1981: 
Estimated revenue Actual revenue 
of the 1981 budget in 1981 
Mio ECU % Mio ECU % 
1. Own resources: 18 027,3 97,8 % 18 024,0 97,7 % 
— Customs duties 6 366,0 34,5 % 6 392,4 34,6 % 
— Agricultural levies 1 310,2 7,1 % 1 264,9 6,9 % 
— Sugar and isoglucose levies 463,5 2,5 % 482,5 2,6 % 
— VAT 1981 9 190,2 49,9 % 9 187,8 49,8 % 
— Financial contribution (GNP) 
1981 Greece 151,3 0,8 % 151,4 0,8 % 
— Balance of VAT and financial 
contributions before 1981 546,1 3,0 % 545,0 3,0 % 
2. Other revenue: 406,7 2,2 % 425,1 2,3 % 
— Surplus from 1980 (3) 246,1 1,4 % 246,1 1,4 % 
— ECSC contributions (Article 20 
of the Merger Treaty) 5,0 0,0 % 5,0 0,0 % 
— Contribution of the Member 
States to supplementary 
Euratom programmes 14,4 0,1 % 14,4 0,1 % 
— Deductions from staff 
remuneration 97,8 0,5 % 90,0 0,5 % 
— Miscellaneous revenue 43,4 0,2 % 69,6 0,3 % 
Total revenue 18 434,0 100 % 18 449,1 100 % 
B. Estimated (1) and actual (2) own resources in 1981 by Member State: 
(Mio ECU) 
Type of resource Belgium Denmark FR of 
Germany Greece France Ireland Italy Luxem­
bourg The 
Nether­
lands United 
Kingdom EUR 10 
Customs duties: 
— estimated 
— actual 407,0 
408,4 132,0 
135,2 1 910,0 
1 943,8 82,0 
84,6 1 050,0 
977,3 76,0 
81,9 650,0 
633,0 4,0 
4,5 570,0 
572,8 1 485,0 
1 550,9 6 366,0 
6 392,4 
Agricultural levies: 
— estimated 
— actual 185,0 
178,4 12,5 
10,1 170,0 
179,9 20,0 
17,4 135.0 
103.1 2,5 
4,3 240,0 
247,6 0,1 
0,1 180,0 
175,4 365,0 
348,6 1 310,2 
1 264,9 
Sugar and 
isoglucose levies: 
— estimated 
— actual 25,9 
27,8 17,3 
19,3 123,4 
126,9 2,7 
1,0 152,1 
154,5 4,7 
4,6 58,0 
62,5 -37,5 
39,1 41,9 
46,9 463,5 
482,5 
VAT 1981: 
— estimated 
— actual 373,7 
374,6 212,4 
212,3 2 753,8 
2 759,3 151,3(4) 
151,4(4) 2 234,6 
2 236,0 70.8 
70.9 1 337,6 
1 333,8 20,7 
20,7 494,9 
494,9 1 691,7 
1 685,2 9 341,5 
9 339,2 
Balance of VAT and 
financial contributions 
before 1981: 
— estimated 
— actual 1,4 
1,4 -22,5 
-22,5 47,2 
47,2 — 20,1 
20,1 -2,7 
-2,7 249,2 
249,1 3,0 
1,9 4.9 
4,9 245,5 
245,5 546,1 
545,0 
Total own resources: 
— estimated 
— actual 993,0 
(5,5 %) 
990,5 
(5,5 %) 351,8 
(2,0 %) 
354,4 
(2,0 %) 5 004,4 
(27,8 %) 
5 057,1 
(28,1 %) 256,0 
(1,4 %) 
254,5 
(1,4 %) 3 591,8 
(19,9 %) 
3 491,1 
(19,4 %) 151,3 
(0,8 %) 
158,9 
(0,9 %) 2 534,8 
(14,1 %) 
2 526,0 
(14,0 %) 27,8 
(0,1 %) 
27,2 
(0,1 %) 1 287,3 
(7,1 %) 
1 287,1 
(7,1 %) 3 829,1 
(21,3 %) 
3 877,2 
(21,5 %) 18 027,3 
(100%) 
18 024,0 
(100 %) 
(1) Estimated revenue 1981 = estimated revenue of the 1981 budget after supplementary and amending budgets. 
(2) Actual revenue in 1981 = sum of recoveries upon entitlements established during 1981 and recoveries upon entitlements still to be recovered from 1980. 
(3) The surplus from 1980 is after amendments to the 1980 revenue and expenditure account (Document COM(81) 649). 
(4) Greece paid a financial contribution based on its GNP. 
154 Official Journal of the European Communities 31. 12. 82 
§ 6. Appropriations for commitment available in 1981 and their utilization (Mio ECU) 
Sector 
(the corresponding headings 
in the general budget are shown 
in brackets: 
section (S), title (T), 
chapter (Ch)) 
Type of appropriations: 
non-differentiated appropriations (NDA); commitment appropriations (CA) 
1981 budget (after (supplementary and amending budgets) 
Final appropriations 1981 (1) 
Commitments entered into in 1981 Appropriations available for 1982 
Sector 
(the corresponding headings 
in the general budget are shown 
in brackets: 
section (S), title (T), 
chapter (Ch)) 
Type of appropriations: 
non-differentiated appropriations (NDA); commitment appropriations (CA) 
1981 budget (after (supplementary and amending budgets) 
Final appropriations 1981 (1) 
Commitments entered into in 1981 O 
CO 
E o 
3 
CO 
g > CU 
c o oo < >» o> 
zS 2 O) 
•§ ® .E «> co o 
E o -o ® jo 
< zz O co o o I-CO 
c 
o 
JS 
o 
c 
CO 
o 
(1) (2) (3) (4) (5) (6) (7) (8) 
= (6)+ (7) (9) 
= (4)—(5)—(8) 
1. Administration (all institutions) 
1.1. Commission (S III: T 1 and 2) 
1.2. Parliament (S I) 
1.3. Council (S II) 
1.4. Court of Justice (S IV) 
1.5. Court of Auditors (S V) NDA 
NDA 
NDA 
NDA 
NDA 
NDA 1 017,9 
665.3 
199.4 
113,1 
25,4 
14,8 1 040,6(3) 
687.5 
199.6 
113,1 
25,6 
14,8 958,1 (") 
643,9 
171,3 
106,9 
23,2 
12,8 0,6 — 0,6 
0,6 — 0,6 82,0 
43,7 
27,7 
6,2 
2,4 
2,0 
2. EAGGF-Guarantee 
(S III: T 6 and 7, Ch 88) 
2.1. Cereals and rice (Ch 60, 61) 
2.2. Milk products (Ch 62) 
2.3. Oils and fats (Ch 63) 
2.4. Sugar (Ch 64) 
2.5. Beef and veal, pigmeat 
(Ch 65, 66) 
2.6. Fruit and vegetables (Ch 68) 
2.7. Wine (Ch 69) 
2.8. Tobacco (Ch 70) 
2.9. Other markets 
(Ch 67, 71, 73, 74, 88) 
2.10. Agri-monetary measures 
(Ch 75, 78) 
2.11. Clearance of the accounts 
(Ch 79) NDA 
NDA 
. NDA 
NDA 
NDA 
NDA 
NDA 
NDA 
NDA 
NDA 
NDA 
NDA 11 612,5 
1 963,0 
3 675,0 
958,0 
700,0 
1 659,0 
715,0 
618,0 
327,0 
869,5 
168,0 
-40,0 11 570,5 
1 956,0 
3 516,0 
1 028,0 
770,0 
1 639,0 
675,0 
550,0 
364,5 
864,0 
248,0 
-40,0 10 980,2 
1 943,1 
3 342,7 
1 025,4 
767,5 
1 591,5 
641.1 
459,4 
361,8 
770.2 
238,4 
- 161,0 161,7 — 161,7 
10,1 — 10,1 
133,7 — 133,7 
1,6 — 1,6 
12,7 — 12,7 
3,6 — 3,6 428,6 
2,8 
39,6 
1,0 
2.5 
34,8 
30,3 
90,6 
2,7 
93,8 
9.6 
121,0 
3. EAGGF-Guidance (S III: Ch 80 to 86) CA 679,6 815,0 695,1 (2) — 109,0 109,0 10,8 
4. Social Fund (S III: Ch 50 to 53) CA 963,0 1 108,4 996,2 — 112,2 112,2 0,0 
5. Regional Fund (S III: Ch 55, 56) CA 1 540,0 1 716,4 1 636,8 — 79,6 79,6 
6. Research, investment, energy 
(S III: Ch 32, 33) 
6.1. Research and investment (Ch 33) 
6.2. Energy (Ch 32) NDA + CA 
CA 
NDA 
CA 378,4 
271,4 
1,0 
106,0 564,7 
427,2(5) 
3,9 
133,6 420,9 
356,8 
2,9 
61,2 — 129,3 129,3 
— 57,1 57,1 
— 72,2 72,2 14,5 
13,4 
0,9 
0,2 
7. Cooperation with developing 
countries (S III: T 9) 
7.1. Food aid (Ch 92) 
7.2. Financial aid (Ch 93 to 96, 99) NDA + CA 
NDA 
NDA 
CA 967,9 
506,4 
57,1 
404,4 1 107,0 
509,4 
78,5 
519,1 903,4 
508.7 
71,9 
322.8 — 191,0 191,0 
— 191,0 191,0 12,5 
0,7 
6,5 
5,3 
8. Other sectors 
(S III: Ch 30, 31, 34, 35, 36, 37, 39, 54, 
59, 87, 89) NDA + CA 
NDA 
CA 175,4 
136,2 
39,2 183,8 
138,7 
45,1 88.7 
66,9 
21.8 62,0 21,8 83,8 
62,0 — 62,0 
— 21,8 21,8 11,4 
9,9 
1,5 
9. Reimbursements to Member States 
(S III: Ch 40,41,49,57, 58) 
9.1. Costs incurred in collecting 
own resources (Ch 40) 
9.2. Specific measures 
(Ch 41, 49, 57, 58) NDA 
NDA 
NDA 2 410,0 
814,0 
1 596,0 2 566,2 
814,0 
1 752,2 2 403,9 
814,0 
1 589,9 150,0 — 150,0 
150,0 — 150,0 12,3 
12,3 
10. Provisional appropriations and 
contingency reserve (S III: T 10) NDA + CA 
NDA 
CA 241.4 
192.5 
48,9 15,3 
9,9 
5,4 - - - -15,3 
9,9 
5,4 
Total Non-differentiated appropriations 
Commitment appropriations 
Appropriations for commitment NDA 
CA 
NDA + CA 15 933,6 
4 052,4 
19 986,1 15 917,8(6) (3) 
4 770,1 
20 687,9(3) 14 992,6(4) 
4 090,6 
19 083,2(4) 374,3 — 374,3 
— 643,0 643,0 
374,3 643,0 1 017,3 550,9 
36,6 
587,5 
(1) Amended by: transfers; supplementary receipts; CA remaining from 1980; decommittals and adjustments due to changes in ECU rates; non-automatic carry-overs from 1980. 
(2) Excluding an amount of 25,4 Mio ECU representing the re-utilization of amounts released in accordance with Council Regulation (EEC) No 3171/75; this amount is included in the 
Table Appropriations for payment carried over from 1980' (§ 7). 
(3) Including non-automatic carry-overs from 1980 also available for commitments: 0,5 Mio ECU. 
(4) Including the commitments entered into against non-automatic carry-overs from 1980: 0,2 Mio ECU. 
(5) Including 6,7 Mio ECU representing supplementary receipts received in respect of services performed on behalf of outside bodies. 
(6) After transfer of 16,3 Mio ECU to the 1981 payment appropriations (see § 7, notes 6 and 7). 
31. 12. 82 Official Journal of the European Communities 155 
§ 7. Appropriations for payment available in 1981 and their utilization 
(Mio ECU) 
A. Appropriations for payment of the 1981 budget B. Appropriations for payment 
carried over from 1980 
Sector 
(for the correspond­
ing budget 
headings 
see § 6, column 1) . . c c ~ o O < 'Z. ~ Q <0 io^7r c o) 3. a 
9-co w 2 
9-2 <S « 
O ~ £ <5 
2 E-a c cl >,< >. O Q. CO CL I- c co ait. 5. — <0 3 a> •£ n 
T? ® 
3 E .E n o ~o 
5 S| O) 3 t *- CO CO CO CO 
oh 
CO C C 
"C co 
S-- E O Q) 
Q.2Q.~ 
8 g £ <D 
•o to 
E 
(O 
c 
c 00 t O) >.*-
10 Q. .5= C\J 
CO 
CT> £-
2 C -</) CO CO 
©y E 
> raS T F 3 
to 7 
« 3 o o ™ c co c o 
ro a> o c (0 O CO 
Q) CO •*-
0) O C 
>2 a 0 o> k-
t E ® 10 o "= 01 5 a) T3 (0 
E 
2 c ® ~ 
c 00 fc» 
a. £ a> > 
O CM 
-L CO 
CO) 
<0 TI O 2 CO 
c o 
a5 
Q5 CJ c co 
o C. 
Total 
payments 
made in 
1981 
(1) (2) (3) (4) (5) (6) (7)= 
(4)—(5)—(6) (8) (9) (10) (11) = (8) 
—(9)—(10) (12) = 
(5) + (9) 
1. Administration 
(all institutions) 
1.1. Commission 
1.2. Parliament 
1.3. Council 
1.4. Court of Justice 
1.5. Court of Auditors NDA 
NDA 
NDA 
NDA 
NDA 
NDA 1 017,9 
665.3 
199.4 
113,1 
25,4 
14,8 1 040,2 
687,5 
199,4 
113,1 
25,4 
14,8 886,4 
601,1 
155,6 
95,9 
21,8 
12,0 72,0 
42,7 
16,4 
10,9 
1,2 
0,8 81,8 
43,7 
27,4 
6,2 
2,4 
2,0 67,2 
39,4 
16,0 
9,8 
1,4 
0,6 57,8 
35,7 
12,4 
8,0 
1,2 
0,5 -9.5 
3,7 
3.6 
1,9 
0,2 
0,1 944,3 
636.8 
168,0 
103.9 
23,0 
12,5 
2. EAGGF-Guarantee 
2.1. Cereals and rice 
2.2. Milk products 
2.3. Oils and fats 
2.4. Sugar 
2.5. Beef and veal, 
pigmeat 
2.6. Fruit and 
vegetables 
2.7. Wine 
2.8. Tobacco 
2.9. Other markets 
2.10. Agri-monetary 
measures 
2.11. Clearance of 
the accounts NDA 
NDA 
NDA 
NDA 
NDA 
NDA 
NDA 
NDA 
NDA 
NDA 
NDA 
NDA 11 612,5 
1 963,0 
3 675,0 
958,0 
700,0 
1 659,0 
715,0 
618,0 
327,0 
869,5 
168,0 
-40,0 11 570,5 
1 956,0 
3 516,0 
1 028,0 
770,0 
1 639,0 
675,0 
550,0 
364,5 
864,0 
248,0 
-40,0 10 979,5 
1 943,1 
3 342,7 
1 025,3 
767,5 
1 591,5 
641,1 
459,4 
361,8 
769,7 
238,4 
- 161,0 162,4 
10,1 
133,7 
1,8 
12,7 
3,6 
0,5 428,6 
2,8 
39,6 
1,0 
2.5 
34,8 
30,3 
90,6 
2,7 
93,8 
9.6 
121,0 8,7 
8,7 8,7 
8,7 
— 
-10 988,2 
1 951,8 
3 342,7 
1 025,3 
767,5 
1 591,5 
641,1 
459,4 
361,8 
769,7 
238,4 
- 161,0 
3. EAGGF-Guidance NDA+PA 
NDA 
PA 517,6 
517,6 550,6 
550,6 460,4 
460,4 90,2 
90,2 -341.1 
305.2 
35,9 116,1 
85,6 
30,5 209,4 
209,4 15,5 
io,i n 
5,4 576,5 
85,6 
490,9 
4. Social Fund PA 620,4 620,4 547,4 73,0 — 198,7 198,5 — 0,2 745,8 
5. Regional Fund PA 819,2 819,2 783,4 35,8 — 15,3 15,3 — — 798,7 
6. Research, investment, 
energy 
6.1. Research, 
investment 
6.2. Energy NDA+PA 
PA 
NDA 
PA 288,5 
255,5 
1,0 
32,0 295,1 
262,1 OH 
3,9 
29,1 207,0 
206,5 
0,5 81,1 
49,5 
2,5 
29,1 7.0 
6.1 
0,9 182,0 
107,6(3) 
1,5 
72,9 151,6 
89,0 
1,4 
61,2 10,9 
10,9 19,5 
7,7 
0,1 
11,7 358,6 
295,5 
1,9 
61,2 
7. Cooperation with 
developing countries 
7.1. Food aid 
7.2. Financial aid NDA+PA 
NDA 
NDA 
PA 791,2 
506,4 
57,1 
227,7 816,2 
509,4 
78,5 
228,3 550,4 
398,0 
69,9 
82,5 258,5 
110,7 
2,0 
145,7 7,3 
0,7 
6,5 382.3 
213,6 
5,3 
163.4 (5) 308,1 
203,7 
5,0 
99,4 -74,2 
9,9 
0,3 
64,0 858,5 
601,7 
74,9 
181,9 
8. Other sectors NDA+PA 
NDA 
PA 149,2 
136,2 
13,0 153,2 
138,7 
14,5 46,8 
42,8 
4,0 96,5 
86,0 
10,5 9,9 
9,9 96,7 
79,4 
17,3 81,7 
65,1 
16,6 10,9 
10,9 4,1 
3,4 (4) 
0,7 128,5 
107,9 
20,6 
9. Reimbursements to 
Member States 
9.1. Costs incurred 
in collecting 
own resources 
9.2. Specific 
measures NDA 
NDA 
NDA 2 410,0 
814,0 
1 596,0 2 566,2 
814,0 
1 752,2 2 250,7 
740,7 
1 510,0 303,2 
73,2 
230,0 12,3 
12,3 143,0 
66,3 
76,7 143,0 
66,3 
76,7 - -2 393,7 
807,0 
1 586,7 
10. Provisional appropriations 
and contingency reserve NDA+PA 
NDA 
PA 207,5 
192,5 
15,0 9,9 
9,9 — -9,9 
9,9 - - - - -
Total Non-differentiated 
appropriations 
Payment 
appropriations 
Appropriations 
for payment NDA 
PA 
NDA+PA 15 933,6 
2 500,4 
18 434,0 15 917,3(6) 
2 524,2 (7) 
18 441,5 pj 14 627,9 
2 084,1 
16 712,0 738,8 
434,0 
1 172,8 550.6 
6,1 
556.7 824.0 
611.1 
1 435,1 (3) 570,3 
510,5 
1 080,8 220,4 
10,9 
231,3 33,3 
89,7 
123,0 (") 15 198,2 
2 594,6 
17 792,8 
(1) Including 4,8 Mio ECU representing supplementary receipts received in respect of services performed on behalf of outside bodies. 
(2) Including a 'transfer' of 2,7 Mio ECU from carry-overs from 1980. 
(3) After a'transfer'of 2,7 Mio ECU to the 1981 appropriations. 
(4) Including adjustments to balances of commitments due to changes in ECU rates: 8,5 Mio ECU under 'EAGGF-Guidance Section' (Ch 80), and 1,1 Mio ECU for 'Other sectors' 
(Ch 59). 
(5) Including 15,5 Mio ECU from Chapter 87 (Fisheries sector). 
(6) After a transfer of 16,3 Mio ECU to the 1981 payment appropriations (see note 7). 
(?) Including 16,3 Mio ECU from the 1981 NDA, 2,7 Mio ECU from the PA carried over from 1980 and 4,8 Mio ECU corresponding to receipts for services performed on behalf of outside 
bodies. 
(8) The amounts of non-automatic carry-overs to 1982 are given in § 6, column 6. The automatic carry-overs to 1982 are equal to the difference between § 7, column 6 and § 6, col­
umn 6. 
156 Official Journal of the European Communities 31. 12.82 
§8. Actual own resources in 1981 
(Summary of basic figures, see § 5) 
A. Actual own resources in 1981 — 
by type 
ZI7 
3 
O 
Hi 
o 
0 3 
O ID 
O 
5 
0 Total: 18 024,0 Mio ECU B. Actual own resources in 1981 — by Member State and by type 
D 
O 
UJ 
0 
1 
m 
s CT> D 
O UJ 
W& DK D 
O UJ 
D 
O 
UJ 
0 
1 
D 
O 
& 1 3 
O 
o 
5 
£ 
o> m 
CM 
? o / 
D 
O 
UJ 
o 
2 o 
D 
O UJ 
o 
o> 
CO* 
s s O UJ 
o 
5 
z_7 
D 
O UJ 
— r» 
D GR F IRL I 
Total: 18 024.0 Mio ECU -NL a UK 
C. Shares of Member States in each type of own resources 
30.4 
3.8 28.4 VAT and financial contributions (%) 
22.8 
1,5 19.6 
16.0 
0.7 5,1 
0.2 
B DK 0 GR F IRL I L NL UK Customs duties (%) 
24.3 
B DK D GR F IRL I L NL UK 
32,0 
Agricultural levies (%) 
14,1 14,2 27.6 
B DK D GR F IRL L NL UK Sugar and isoglucose 
levies (%) 
8,1 9.7 
B DK D GR F IRL I L NL UK 
31. 12. 82 Official Journal of the European Communities 157 
§ 9. Rate of utilization of appropriations available in 1981 
I. Final appropriations 
for commitment in 1981 
(see § 6, columns 4 to 9) Final 1981 appropriations 
for payment 
(see § 7, columns 4 to 7) 
o UJ 
o 
2 
o o 
8 « 
ts 
c? 
32 
of 
» Q 
Sg 
= 3 Total: 
20 887,9 Mio ECU 
Total: 
18 441.5 Mio ECU 
92.2 % 90,6 % 
4.8 Key: 
• Non-differentiated 
appropriations 
• Commitment appropriations 
Payment appropriations 
m Rate of commitment 
H Rate ot payment 
E Rate of unused 
appropriations 
remaining available for 
1982 (appropriations 
remaining and/or carried 
over) 
Cancellations 
III. Appropriations for payment 
carried over from 1980 
(see § 7, columns 8 to 11) 
Total: 1 435,1 Mio ECU 
6.4 % 
158 Official Journal of the European Communities 31. 12. 82 
§ 10. The consolidated revenue and expenditure account and the balance of the financial year 1981 
(Application of Article 15 of Council Regulation (ECSC, EEC, Euratom) No 2891/77) 
Revenue: 
Sources of lunds actually 
available for the 
linancial year 1981. 
Total: 
18 574,8 Mio ECU Expenditure: 
Application ol funds 
available for the 
financial year 1981. 
Total: 
18 574,8 Mio ECU 
(4) Cancellation of 
carry-overs from 
1980 
(see § 7. column 11) 
(3) Carry-overs from 1980 
transferred' to the 
appropriations of 1981 
(see § 7, 
footnotes 2 and 3) 
(2) Other actual revenue 
(including balance of 
financial year 1980: 
246,1 Mio ECU) 
(see §5) 123,0 Mio ECU 
2,7 Mio ECU 
425,1 Mio ECU 661,5 Mio ECU 
(1) Total actual own 
resources in 1981: 
18 024,0 Mio ECU 
(see § 5) VAT/financial 
contributions: 
9 884.2 Mio ECU 
482,5 Mio ECU 
Agricultural 
levies: 
1 264,9 Mio ECU 
Customs duties: 
6 392.4 Mio ECU 
r 28,5 Mio ECU 
7 1 172,8 Mio ECU 
16 712,0 Mio ECU (8) Balance of 1981 
to be entered 
in the 1982 
budget 
(7) Other expenditure: 
- Exchange rate losses: 
27,7 Mio ECU 
- Receipts not due 
repayable: 
0.8 Mio ECU 
(6) 1981 appropriations 
for payment carried 
over to 1982 
(see § 7, column 6) 
(5) Payments made 
in 1981 against 
appropriations 
of the 1981 budget 
(see § 7, column 5) 
Note: The result of the financial year 1981, defined as (1) + (2) - (5) - (6), is 564,3 Mio ECU. 
31. 12. 82 Official Journal of the European Communities 159 
§ 11. Payments made in 1981 — by sector and by recipient Member State 
Note: Payments made in 1981 = payments against 1981 appropriations plus payment against carry-overs from 1980 
A. By sector: 
(see also § 7. column 12) 
Total 
payments: 
17 792,8 
Mio ECU 1. Administration (all institutions) 
6. Research, investment, energy 
7. Cooperation with developing countries 
8. Other sectors 944,3 Mio ECU (5.3 •/.) 
358.6 Mio ECU (2.0 '/.) 
858.5 Mio ECU (4.8 %) 
128,5 Mio ECU (0,7 %) 
to "5 
"• .2# «> 5 o> • 
3 O »-
u * 3 eg 
(/) CM 
B. By recipient Member State: 
(see also § 12, § 13, § 18) Payments to Member States: 
9 Reimbursements to 
Member States 2 393,7 Mio ECU (13.5 */») 
5 Regional Fund 798,7 Mio ECU (4,5 %) 
4. Social Fund 745.8 Mio ECU (4.2 •/.) 
3 EAGGF-Guidance 576.5 Mio ECU (3.2 •/.) 
2 EAGGF-Guarantee 10 988.2 Mio ECU (61,8 %) 
Total: 15 502,9 Mio ECU (87,2 %) 
The breakdown of these payments by recipient 
Member State is set out below 
Reimbursements 
Member States 
Structural Funds 
EAGGF-Guaran-
B DK D GR F IRL , ( f 
L NL UK c 
EUR 10 
EAGGF-Guarantee (') 489,5 509,1 2 033,9 146,2 3 017,9 440.5 2 096.7 4.1 1 165,6 1 084.7 10 988,2 
Structural Funds 46,6 50,1 243.0 128,6 343,5 201.1 499,3 3.8 41,9 563,1 2 121,0 
Reimbursements to 
Member States 61,8 16,2 225,4 120,0 123,1 75.4 217,2 0.4 77,3 1 476,9 2 393,7 
Total 597,9 575,4 2 502,3 394,8 3 484,5 717,0 2 813,2 8.3 1 284,8 3 124,7 15 502,9 
('} For the EAGGF-Guarantee these figures include adjusted monetary compensatory amounts (see § 12(D). footnote 1) 
160 Official Journal of the European Communities 31. 12.82 
§ 12. EAGGF-Guarantee: payments made in 1981 — by market and by recipient Member State 
A. Payments made in 1981. by market: 
-Total: 10 988,2 Mio ECU B. Payments made in 1981, by recipient Member State: 
m B DK D 
O 
2 _ 
g" O CO 
CM C 
a 
OS GR IRL I Key: 
- tor the colour cor­
responding to 
each market, 
see A 
I—| remaining 
"LI" markets 
ffl.O? 3 
2°o SB* 
°I§ 
pfi 
9 NL UK 
-Total: 10 988,2 Mio ECU 
2.3. Oils and tats (%) _1L C. Share of payments received In 1981 
2.2. Milk products (%) by the Member States for the principal markets: 
45,2 
2.1. Cereals 2.5. Beef and veal, pigmeat (%) 
2.8. Fruit and 
vegetables (%) 2.4. Sugar (%) 414 
D. Record of payments made in 1981 — by recipient Member State and by market: 
(Mio ECUf 
Market B DK 0 GR F IRL I L NL UK EUR 10 
2.1 Cereals and rice 110,1 32,6 323,3 19,2 882,1 3,0 275,7 0.6 83,2 222,0 1 951,8 
2.2. Milk products 174,8 261,1 810,1 0,4 828,9 193,0 57,9 3.1 722,7 290.7 3 342,7 
2.3. Oils and fats 16,1 4,6 223.6 43,6 173,0 — 442,2 — 18,6 103.6 1 025,3 
2.4 Sugar 88,1 29.6 156,3 2.8 317,7 3,9 64,5 — 51.5 53,1 787,5 
2.5. Beef and veal, pigmeat 28,4 139,3 308,0 — 409,6 219.7 224,5 0,1 121.3 140,6 1 591,5 
2.6 Fruit and vegetables 5,7 0,7 19,3 20,5 106,7 0,1 479,9 — 6,1 2.1 641,1 
2.7. Wine — 0,0 0,5 3,3 215,0 — 240.4 — — 0.2 459,4 
2.8. Tobacco 2,2 27,0 — 79,5 — 253.1 — 0.0 — 381,8 
2.9. Other markets 64,9 40,8 52,0 56,4 123,0 21.0 33,5 0,1 104.5 273,5 789,7 
2.10. Agri-monetary 
64,3 1.1 238,4 measures (') 7,8 1.1 128,2 — 0.3 -0.1 35,5 0,2 64,3 1.1 238,4 
2.11. Clearance ot 
- 181,0 the accounts -8,6 -0,7 - 14,4 — - 117,9 -0.1 - 10,5 -0,0 -6.6 -2,2 - 181,0 
Total 489,5 509,1 2 033,9 148,2 3 017,8 440,5 2 098,7 4,1 1 185,8 1 084,7 10 988,2 
(') The agri-monetary measures include monetary compensatory amounts (MCAsI ad|usted to cancel the effect of the application of Article 2(al of Council Regulation (EECI 
No 974/71 under which exporting Member Stales themselves pay directly the MCAs due on import of certain importing Member States The MCA adiustment consists in 
allocating to these importing Member Slates the amounts which are chargeable to them 
31.12.82 Official Journal of the European Communities 161 
§13. The structural Funds: commitments entered into and payments made in 1981 — by recipient 
Member State 
Note: 
The structural Funds (EAGGF-Guidance. Social Fund. Regional Fund) are provi­
ded with differentiated appropriations ('). which comprise both commitment ap­
propriations and payment appropriations with different financial incidence (see 
§ 1.7). The commitments entered into in 1981 relate to multiannual projects which 
are financed in 1981 and in subsequent years; the payments made in 1981 relate 
to commitments entered into in 1981 and in previous years. 
O The only exception being that EAGGF-Guidance carry-overs from previous years also in­
clude non-differentiated appropriations. 
Social Fund 
* EAGGF-
Guidance 
(a) Commitments 
(b) Payments 
3. EAGGF-Guidance: 
(a) Commitments (*) 
(b) Payments 16,1 
22.1 19,7 
20.9 107,4 
134,5 17,4 137,8 
121,4 71,5 
60,4 206,8 
80.5 2,3 
2.3 26,3 
21,9 115,2 
112,5 720,5(') 
576,5 
4. Social Fund: 
(a) Commitments 
(b) Payments 24,2 
15.3 24,5 
18,5 76,8 
72,3 30,1 
6,6 142,1 
155.3 105,8 
60,4 331,3 
207,1 0,6 
0.6 12.7 
14,3 248.1 
195,4 996,2 
745,8 
5. Regional Fund: 
(a) Commitments 
(b) Payments 2,9 
9.2 19,4 
10.7 57,6 
36,2 248,4 
122,0 166.8 
66,8 108,4 
80.3 670,5 
211,7 1.6 
0.9 12,9 
5.7 348,3 
255,2 1 636,8 
798,7 
Total: 
(a) Commitments 
(b) Payments 43,2 
46,6 63.8 
50,1 241,8 
243,0 295,9 
128,6 446,7 
343,5 285,7 
201,1 1 208,6 
499,3 4,5 
3,8 51,9 
41,9 711,6 
563,1 3 353,5 
2 121,0 3 
O Ui 
o 
(2) Including an amount of 26.4 Mio ECU representing the re-utilization of amounts released (see also § 6. footnote 2) 
162 Official Journal of the European Communities 31. 12. 82 
§ 14. Utilization of the appropriations for payment for the period 1976-81 (principal sectors) 
A. Appropriations lor the financial year B. Carry-overs from the previous financial year C. 
a> a> •o 3 CD c o 
.5 
a. o o a ,E a. LL <0 CO 
c ® E >. CD 
a. 
Carry-overs to 
the following financial year c o 
to 
® o c CO 
O in 
a> > o £• ca 
O CO 
c ® E >. CS 
a. 
Carry-overs to 
the following financial year <0 c o 
© o c CO 
O Total 
annual 
payments 
(1) (2) (3) (4) (5) = 
(2)—(3)—(4) (6) (7) (8) (9) = 
(6)—(7)—(8) (10) = 
(3)+(7) 
a> w . 1976 
1977 Mio 
u.a. 8 470,6 
9 584,3 8 470,6 
9 584,3 6 257,2 
7 227,3 1 986,7 
1 670,5 226,7 
686,5 2 123,8 
2 787,4 1 030,4 
1 477,6 800,7 
894,4 292,7 
415,3 7 287,6 
8 704,9 General bud 
— total — 1978 
1979 
1980 Mio 
EUA 12 362,7 
14 447,0 
16 182,5 12 377,5 
14 488,3 
16 233,3 10 733,8 
12 925,3 
14 866,7 1 527,7 
1 450,7 
1 108,4 115,9 
112,4 
258,3 2 007,0 
2 098,9 
1 869,8 (5) 1 239,2 
1 441,8 
1 423,7 (5) 601,2 
457,9 
329,4 166,6 
199,2 
116,7 (5) 11 973,1 
14 367,1 
16 290,4 (5) General bud 
— total — 
1981 Mio 
ECU 18 434,0 18 441,5 16 712,0 1 172,8 556,7 1 435,1 1 080,8 231,3 123,0 17 792,8 
1976 
1977 Mio 
u.a. 5 877,7 
7 101,6 5 835,3 
7 103,1 5 040,8 
5 571,0 677,7 
1 022,8 116,7 
509,4 332,9 
677,7 324,2 
595,9 - 8,6 
81,9 5 365,0 
6 166,8 EAGGF 
iuarantee 1978 
1979 
1980 Mio 
EUA 8 695,3 
10 404,1 
11 507,5 8 679,3 
10 404,1 
11 505,2 8 648,8 
10 404,1 
11 306,2 30,4 
8,7 190,3 633,8 
30,4 629,8 
30,4 — 4,0 9 278,6 
10 434,5 
11 306,2 
ci® 
1981 Mio 
ECU 11 612,5 11 570,5 10 979,5 162,4 428,6 8,7 8,7 - - 10 988,2 
1976 
1977 Mio 
u.a. 325,0 
157,8 325,0 
157,8 67,4 
79,9 257,6 
77,9 0,0 954,6 
1 058,3 150,8 
216,8 800,7 
838,7 3,1 
2,8 218,2 
296,7 3. EAGGF 
Guidance 1978 
1979 
1980 Mio 
EUA 423.5 
319.6 
308.7 444,5 
304,2 
320,0 141,8 
91,2 
284,1 302,7 
213,0 
35,9 -801,2 
858,6 
648,4 181,8 
312.2 
317.3 ' 571,9 
435,4 
305,2 47,5 
111,1 
25,9 323,6 
403,4 
601,3 3. EAGGF 
Guidance 
1981 Mio 
ECU 517,6 550,6 460,4 90,2 -341,1 116,1 209,4 15,5 576,5 
1976 
1977 Mio 
u.a. 441,0 
172,4 443,0 
172,4 10,2 
115,4 429,2 
57,1 3,6 508,8 
429,2 246,1 
201,5 = 262,7 
227,7 256,3 
316,9 I. Social 
Fund 1978 
1979 
1980 Mio 
EUA 538,8 
502,5 
700,7 538,8 
530,0 
700,7 239,3 
296,8 
502,0 299,5 
233,2 
198,7 — 45,5 
299,5 
233,2 45,5 
298,8 
233,2 - 0,7 284,8 
595,7 
735,2 
1981 Mio 
ECU 620,4 620,4 547,4 73,0 — 198,7 198,5 - 0,2 745,8 
1976 
1977 Mio 
u.a. 300,0 
400,0 300,0 
400,0 218,0 
290,5 82,0 
109,5 - 59,3 
82,0 59,3 
82,0 - - 277,3 
372,5 Regions 
Fund 1978 
1979 
1980 Mio 
EUA 525,0 
499,0 
403,0 525,0 
499,0 
403,0 171,8 
160,0 
387,7 353,2 
339,0 
15,3 -83,1 
353,1 
339,0 83,1 
353,2 
339,0 — — 254,9 
513,1 
726,7 
in 
1981 Mio 
ECU 819,2 819,2 783,4 35,8 - 15,3 15,3 — - 798,7 
•c s 1976 
1977 Mio 
u.a. 165.2 
217.3 165,2 
214,9 84,1 
106,0 63,4 
101,8 17,7 
7,1 46,9 
63,4 34,0 
37,3 - 12,9 
26,1 118,1 
143,2 
u c ^ m #> *» w S n> ® E S? 
8f g DC § 0) 1978 
1979 
1980 Mio 
EUA 235,3 
246,9 
353,6 271,1 
267,9 
365,7 123,5 
141,9 
188,0 146,9 
125,6 
177,1 0,6 
0,4 
0,6 103,3 
146,9 
111,3 68,2 
112,0 
102,2 7,5 35,1 
34,9 
1,5 191,7 
253,9 
290,2 
. c co — 
1981 Mio 
ECU 288,5 295,1 207,0 81,1 7,0 182,0 151,6 10,9 19,5 358,6 
c o> ° .E r: o. <n Jo# 
§£i Oc o 1976 
1977 Mio 
u.a. 301,4 
255,2 320.3 
257.4 57.5 
70.6 214,9 
179,9 47,9 
6,9 81,0 
214,9 79,3 
145,3 - 1,7 
69,5 136.8 
215.9 c o> ° .E r: o. <n Jo# 
§£i Oc o 1978 
1979 
1980 Mio 
EUA 380,6 
494,9 
620,4 381.7 
541,6 
666.8 138,5 
230.7 
295.8 240,8 
308,1 
366,8 2,4 
2,8 
4,2 184,5 
210,8 
288,1 126,7 
174,7 
213,0 — 57,8 
36,1 
75,1 265,2 
405,4 
508,8 
1981 Mio 
ECU 791,2 816,2 550,4 258,5 7,3 382,3 308,1 — 74,2 858,5 
(1) After supplementary and amending budgets. 
(2) After supplementary receipts and transfers. 
(3) After transfers between budget headings and 'transfers' to the appropriations of the current financial year. 
(4) Since 1978, including adjustments of balances of commitments due to variations in the EUA and ECU rates (Chapters 59 and 80). 
(5) These amounts take account of amendments made to the 1980 revenue and expenditure account (Document COM(81) 649). 
31. 12. 82 Official Journal of the European Communities 163 
§ 15. Utilization rates of the appropriations for payment from 1976 to 1981 (principal sectors) 
Payment 
rate 
<%) 
Key: Rate ot 
carry-over to 
the following 
year(%) Cancellation 
rate 
(%) 
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 
I 4> 
£ 
o 1976 73,9 % ' ~23,5% 1976 48,5 % 37.7% "• 
1977 75,4 % I 17.4% H 1977 53,0 % 32.1 % | 
1978 86.7 % |12.3 % 1978 61,7% 30.0 % 
1979 89,2 % 10.0 KH 1979 68.7 % 1 21,8% 
1980 91,6% 6.8 % K | 1980 76.1 % I 17,6 %n 
1981 90,6 % 6,4 %h | 1981 75.3 % 116.1 % |H 
1976 86.4 % 1976 97,4 % 
1977 78,4 % 114.4% • 1977 87,9 % 
1978 99.6 % 0.4 % 1978 99,4 % 
1979 
o o 
5? 1979 100 % 
1980 98.3 % 0,1 % J 1980 No carry-overs from 1979 
1981 94.9 % 1.4 % 1981 100 % 
1976 1976 
1977 50.6 % • 
49.4 % 1977 20,5 % 79.3 % J 1978 31,9% 68.1 % 1978 22,7 % 71,4% • 1979 30.0 % 70.0 % 1979 36.4 % 50.7 % • i 
1980 88.8 % |11,2% 1980 48.9 % 47.1 % 
1981 83.6 % I! 16.4 % i 1981 34,0 % 61,4% 
85 CO u. 1976 
1977 
1978 
1979 
1980 
1981 f 2.3 % I 
66,9 % 33,1 % 
44,4 % 55,6 % 
56,0 % I 44.0 % 
71.6% 28.4 % 
88.2 % 111.8% 1976 
1977 
1978 
1979 
1980 
1981 100 % 
99.8 % 
100 % 
99.9 % 
i? 1976 
1977 
1978 
1979 
1980 
1981 72,7 % | 27,3% 
72,6 % 27,4 % 
32.7 % 67.3 % 
32,1 % 67,9 % 
96,2 % 3,8% I-
95,6 % 4.4 % • 1976 
1977 
1978 
1979 
1980 
1981 100% 
100 % 
100 % 
100 % 
100% 
100 % 
ih 1976 
1977 49,3 % 47.4 % 
1978 45,6 % 54,2 % 
1979 53,0 % 46,9 % 
1980 51,4% 48,4 % 
1981 70,1 % 27.5 % • 1976 
1977 
1978 
1979 
1980 
1981 72.5 % 
58.8 % 
66,0 % 
76,2 % 
6.7 % 91.8% 
83.3 % 
19/6 
1977 27.4 % 69,9 % 
1978 36,3 % 63,1 % 
1979 42,6 % 56.9 % 
1980 44,4 % 55,0 % 
1981 67,4 % 31.7% 1976 
1977 
1978 
1979 
1980 
1981 97.9 % 
67,6 % 
68.7 % 
82,9 % 
73,9 % 
80,6 % 
164 Official Journal of the European Communities 31. 12. 82 
§ 16. Evolution off annwal payments — by sector (1976-81) 
Note: Annual payments = payments against appropriations of the financial year plus payments against carry-overs from the previous 
financial year. 
Sector 1976 
Mio u.a. % 1977 
Mio u.a. 1978 
Mio EUA 1979 
Mio EUA 1980 
Mio EUA 1981 
Mio ECU 
1. Administration 
1.1. Commission 
1.2. Parliament 
1.3. Council (2) 
1.4. Court of Justice 
1.5. Court of 
Auditors 419,7 
313,9 
44,6 
52,0 
9,2 5,8 
4,4 
0,6 
0,7 
0,1 497,0 
366,5 
58,5 
61,0 
10,7 
0,3 5,7 
4,2 
0,7 
0,7 
0,1 
0,0 676,7 
492,0 
84,1 
79,0 
14,7 
7,0 5,7 
4,1 
0,7 
0,7 
0,1 
0,1 772,9 
551,9 
109,0 
86,5 
16,3 
9,2 5,4 
3,8 
0,8 
0,6 
0,1 
0,1 821,8(') 
562,1 
135,1 (') 
94,5 
19,3 
10,8 5,0 
3,4 
0,8 
0,6 
0,1 
0,1 944,3 
636.8 
168,0 
103.9 
23,0 
12,5 
2. EAGGF-Guarantee 
2.1. Cereals and rice 
2.2. Milk 
products 
2.3. Oils and fats 
2.4. Sugar 
2.5. Beef and veal, 
pigmeat 
2.6. Fruit and 
vegetables 
2.7. Wine 
2.8. Tobacco 
2.9. Other 
markets 
2.10. Agri-monetary 
measures 
2.11. Clearance of 
the accounts 5 365,0 
631,0 
2 052,6 
307,0 
234,7 
691.7 
144.8 
62,1 
213,3 
163,2 
864,6 73,6 
8,6 
28,2 
4,2 
3,2 
9,5 
2,0 
0,9 
2,9 
2,2 
11,9 6 166,8 
425.3 
2 603,9 
98,8 
536,7 
396.4 
199.6 
187.7 
241,0 
205.8 
1 271,6 70,9 
4,9 
29,9 
1,1 
6,2 
4,5 
2.3 
2,2 
2,8 
2.4 
14,6 9 278,6 
1 196,6 
3 381,6 
543.1 
770.2 
661.7 
227,4 
89,0 
313.8 
315,6 
1 779,6 77,5 
10,0 
28,3 
4,5 
6.4 
5.5 
1,9 
0,8 
2.6 
2,6 
14,9 10 434,5 
1 608,3 
4 521,4 
606.3 
939.8 
852,1 
441,5 
61,3 
225,5 
468.9 
709.4 72,6 
11,2 
31,5 
4.2 
6.5 
5,9 
3,1 
0,4 
1.6 
3.3 
4,9 11 306,2 
1 719,0 
4 752,0 
687,3 
575.2 
1 479,0 
687.3 
299.5 
309,3 
499,0 
298.6 69,4 
10,6 
29,2 
4,2 
3,5 
9.1 
4.2 
1,8 
1,9 
3,1 
1,8 10 988,2 
1 951,8 
3 342,7 
1 025,3 
767,5 
1 591,5 
641,1 
459,4 
361,8 
769,7 
238,4 
- 161,0 
3. EAGGF-Guidance 218,2 3,0 296,7 3,4 323,6 2,7 403,4 2,8 601,3 3,7 576,5 3,2 
4. Social Fund 256,3 3,5 316,9 3,6 284,8 2,4 595,7 4,1 735,2 4,5 745,8 4,2 
5. Regional Fund 277,3 3,8 372,5 4,3 254,9 2,1 513,1 3,6 726,7 4,5 798,7 4,5 
6. Research, investment, 
energy 
6.1. Research and 
investment 
6.2. Energy 118,1 
102,4 
15,7 1,6 
1,4 
0,2 143,2 
129,8 
13,4 1,6 
1,5 
0,1 191,7 
173,1 
18,6 1,6 
1,4 
0,2 253,9 
225,1 
28,8 1,8 
1,6 
0,2 290,2 
249,9 
40,3 1.8 
1,5 
0,3 358,6 
295,5 
63,1 
7. Cooperation 
with developing 
countries 
7.1. Food aid 
7.2. Financial aid 136,8 
116,0 
20,8 1,9 
1,6 
0,3 215,9 
187,4 
28,5 2,5 
2,2 
0,3 265,2 
236,0 
29,2 2,2 
2,0 
0,2 405,4 
259,0 
146,4 2,8 
1,8 
1,0 508,8 
318,8 
190,0 3.1 
1.9 
1.2 858,5 
601.7 
256.8 
8. Other sectors 
9. Reimbursements to 
Member States 
9.1. Costs incurred 
in collecting 
own resources 
9.2. Specific measures 23,8 0,3 30,9 0,4 35,5 0,3 88,3 0,6 77,8 0,5 128,5 
472,3 6,5 665,0 7,6 662,1 5,5 899,9 6,3 1 222,4 7,5 
472,3 6,5 665,0 7,6 662,1 5,5 726,6 
173,3 5.1 
1.2 791,2 
431,2 4,9 
2,6 2 393,7 13,5 
807,0 
1 586,7 
Total 7 287,6 100 8 704,9 100 11 973,1 100 14 367,1 100 16 290,4(') 100 17 792,8 100 
(1) These amounts take account of amendments to the 1980 revenue and expenditure account (Document COM(81) 649). 
(2) Including the Economic and Social Committee. 
31. 12. 82 Official Journal of the European Communities 165 
§17. Evolution of the ratio of 'annual payments by sector' to 'total of annual budgetary payments' 
(1976-81) 
(For detailed figures see § 16) 
A. General budget (all sectors): 
Total ot annual budgetary payments = 100 •/• Log 
100 % : 
50 % ' -*-2. EAGGF-Guarantee 
9 Reimbursements 
to Member States 
10% : 
^ 1. Administration 
7. Cooperation with developing countries 
^ 5. Regional Fund 
4. Social Fund 5% -
— ^ 1. Administration 
7. Cooperation with developing countries 
^ 5. Regional Fund 
4. Social Fund 
3. EAGGF-Guidance 
6. Research, investment, energy 
1 % ; 
0,5 % • 
" \ \ \ \ -*-B Other sectors 
. 
' "1976 1977 1978 1979 1980 1981 
B. EAGGF-Guarantee (all markets): 
Total of annual budgetary payments 100 % Log 
100% 
50% 
2.2. Milk products 
-<-2.1. Cereals and rice 
10% s\ -*• 2.5. Beet and veal, pigmeat 
^ 2.3. Oils and tats 
2.4. Sugar 5% v' -*• 2.5. Beet and veal, pigmeat 
^ 2.3. Oils and tats 
2.4. Sugar 
V* / 
c—~~'r: X * 1 "*• 2.9. Other markets 
2.6. Fruit and vegetables 
2.7. Wine 
1 % 
0,5 % X / 
/ — 
/ N 
\ v . 
/ / 2.8. Tobacco 
2.10. Agri-monetary measures 
1 % 
0,5 % N 
v.. 
N 
N / 
/ 
/ 
/ 
"" " 1976 1977 1978 1979 1980 1981 
166 Official Journal of the European Communities 31. 12. 82 
§ 18. Annual payments to the Member States (1976-81) 
This table summarizes the annual payments to the Member States under the principal sectors. For the period under consideration these 
payments represent 89,2 % of total budgetary payments (= the aggregate of the totals in § 16). 
Annual payments = payments against appropriations for the financial year plus payments against carry-overs from the previous year. 
Payments under the EAGGF-Guarantee include adjusted monetary compensatory amounts (see § 12(D), footnote 1). 
Belgium Den­
mark FR of 
Germany Greece France Ireland Italy Luxem­
bourg Nether­
lands United 
Kingdom EUR 
9/10 
2. EAGGF-Guarantee 327,4 355,9 850,2 1 375,3 186,4 876,2 8,1 696,1 689,4 5 365,0 
-r 3. EAGGF-Guidance 11,1 6,5 49,9 — 44,7 9,3 37,9 0,4 14,9 43,5 218,2 
6 4. Social Fund 9,3 20,0 59,5 — 29,8 11,2 37,6 0,0 12,9 66,2 246,4(>) 
o 5. Regional Fund 6,1 4,0 13,3 — 28,9 18,0 112,9 0,4 5,4 88,3 277,3 
9.1. Costs incurred in collecting 277,3 
a> own resources 32,4 10,5 114,9 — 69,5 3,4 82,3 0,3 52,1 106,8 472,3 
Total 386,3 
(5,9 %) 396,9 
(6,1 %) 1 087,8 
(16,5%) — 1 548,2 
(23,5 %) 228,3 
(3,5 %) 1 146,9 
(17,4%) 9,2 
(0,1 %) 781,4 
(11,9%) 994,2 
(15,1 %) 6 579,2 (1) 
(100 %) 
2. EAGGF-Guarantee 377,8 428,0 1 112,6 — 1 310,3 400,1 785,4 8,0 723,9 1 020,7 6 166,8 
-r 3. EAGGF-Guidance 16,6 14,5 69,7 — 59,3 14,8 34,3 2,2 19,9 65,4 296,7 
3 4. Social Fund 6,6 9,7 38,0 — 35,6 26,4 89,6 0,0 8,1 102,3 316,2(2) O 5. Regional Fund 2,8 5,8 24,9 — 45,8 22,1 149,5 0,1 2,8 118,6 372,5 
9.1. Costs incurred in collecting 
N o> own resources 47,7 14,3 130,1 — 85,2 5,8 130,0 0,3 68,5 183,1 665,0 
451,5 472,3 1 375,3 — 1 536,2 469,2 1 188,8 10,6 823,2 1 490,1 7 817,2 (J) 
(5,8 %) (6,0 %) (17,6%) (19,7 %) (6,0 %) (15,2 %) (0,1 %) (10,5 %) (19,1 %) (100 %) 
2. EAGGF-Guarantee 558,8 567,8 2 316,1 1 450,9 341,3 1 771,5 23,9 1 094,9 1 153,4 9 278,6 
< 3. EAGGF-Guidance 15,7 16,0 125,1 — 60,5 16,8 31,3 1,4 16,3 40,5 323,6 
UJ 4. Social Fund 12,0 3,7 52,7 — 52,2 30,9 29,0 0,1 14,6 89,5 284,8 
5. Regional Fund 6,0 1,4 42,2 — 40,6 20,5 78,5 0,2 6,5 59,0 254,9 
9.1. Costs incurred in collecting 59,0 254,9 
K o> own resources 51,0 13,6 180,3 — 90,8 5,4 96,1 0,3 86,5 138,1 662,1 
643,5 602,5 2 716,4 — 1 695,0 414,9 2 006,4 25,9 1 218,8 1 480,5 10 804,0 
(6,0 %) (5,6 %) (25,1 %) (15,7%) (3,8 %) (18,6%) (0,2 %) (11,3%) (13,7%) (100 %) 
2. EAGGF-Guarantee 756,1 639,9 2 329,8 2 252,9 457,0 1 642,6 13,6 1 416,9 925,7 10 434,5 (3) 
3. EAGGF-Guidance 17,1 15,1 118,5 . — 99,4 28,2 35,1 0,6 25,3 64,2 403,4 
< 4. Social Fund 7,8 24,5 61,4 — 93,7 38,8 156,3 0,3 11,1 201,9 595,7 
UJ 5. Regional Fund 3,1 9,1 46,0 — 103,6 32,9 143,7 0,3 8,6 165,7 513,1 
'i 9.1. Costs incurred in collecting 
58,8 513,1 
own resources 58,8 14,9 197,5 — 98,9 6,3 96,2 0,4 84,9 168,6 726,6 
K o> 9.2. Specific measures — — — 66,1 92,2 - 15,0 173,3 
Total 842,9 703,5 2 753,2 -2 648,5 629,3 2 166,1 15,2 1 546,8 1 541x1 12 846,6 Total (6,6 %) (5,5 %) (21,4 % (20,6 %) (4,9 %) (16,9%) (0,1 %) (12,0%) (12,0%) (100 %) 
2. EAGGF-Guarantee 571,7 615,8 2 454,4 2 829,7 564,6 1 828,1 11,6 1 545,0 885,2 11 306,1 (4) 
3. EAGGF-Guidance 25,3 24,5 142,2 — 133,4 45,1 97,5 1,0 26,4 105,9 601,3 
< 3 4. Social Fund 12,1 14,7 80,5 — 195,8 72,5 194,4 0,4 5,1 159,7 735,2 
UJ 5. Regional Fund 6,6 9,4 50,4 — 99,7 69,6 249,1 1,0 7,7 233,2 726,7 
9.1. Costs incurred in collecting 726,7 
own resources 61,5 15,7 212,7 — 113,8 7,6 106,7 0,5 82,9 189,8 791,2 CO at 9.2. Specific measures — — — — - 67,1 134,7 - - 229,4 431,2 
Total 677,2 680,1 2 940,2 — 3 372,4 826,5 2 610,5 14,5 1 667,1 1 803,2 14 591,7 Total (4,6 %) (4,7 %) (20,1 %) (23,1 %) (5,7 %) (17,9%) (0,1 %) (11,4 %) (12,4%) (100 %) 
2. EAGGF-Guarantee 489,5 509,1 2 033,9 146,2 3 017,9 440,5 2 096,7 4,1 1 165,6 1 084,7 10 988,2 
3. EAGGF-Guidance 22,1 20,9 134,5 — 121,4 60,4 80,5 2,3 21,9 112,5 576,5 
D 4. Social Fund 15,3 18,5 72,3 6,6 155,3 60,4 207,1 0,6 14,3 195,4 745,8 
111 5. Regional Fund 9,2 10,7 36,2 122,0 66,8 80,3 211,7 0,9 5,7 255,2 798,7 
9.1. Costs incurred in collecting 798,7 
own resources 61,8 16,2 225,4 8.9 123,1 8,8 94,9 0,4 77,3 190,2 807,0 
CO 
o> 9.2. Specific measures — — — 111,1 — 66,6 122,3 - -1 286,7 1 586,7 
Total 597,9 575,4 2 502,3 394,8 3 484,5 717,0 2 813,2 8,3 1 284,8 3 124,7 15 502,9 (3,9 %) (3,7 %) (16,1 %) (2,5 %) (22,5 %) (4,6 %) (18,1 %) (0,1 %) (8,3 %) (20,2 %) (100 %) 
P) Not including payments of 9,9 Mio u.a. (Social Fund) for which the breakdown by Member State cannot be ascertained without unwarranted expenditure of time 
£ r'01 '"Eluding payments of 0,7 Mio u.a. (Social Fund) for which the breakdown by Member State cannot be ascertained without unwarranted expenditure of time 
(3) For 1979 the breakdown of the annual payments under the EAGGF-Guarantee has been established on the basis of the advances paid to the Member States 
(4) Excluding payments of 0,1 Mio EUA to recipients not specifically from the Community. 
31. 12. 82 Official Journal of the European Communities 167 
§19. Actual own resources — by Member State (1976-81) 
Belgium Denmark FR of 
Germany Greece France Ireland Italy Luxem­
bourg The 
Nether­
lands United 
Kingdom EUR 
9/10 
Customs duties 242,2 100,7 990,9 - 630,1 29,8 606,4 3,3 323,0 1 138,1 4 064,5 
Agricultural levies 121,3 9,0 169,5 - 69,3 7,0 303,0 0,1 253,6 102,5 1 035,2 
o 
£ Sugar and isoglucose levies 7,9 4,1 26,6 -43,0 2,6 24,8 - 9.8 9,6 128,5 
<o r-o> Financial contributions (GNP) 126,6 45,4 920,8 -909,8 382,4 8,5 88,6 -2 482,1 
Total 498,0 
(6,5 %) 159,2 
(2.1 %) 2 107,8 
(27,3 %) — 1 652,2 
(21,4 %) 39,4 
(0,5 %) 1 316,6 
(17.1 %) 11,9 
(0,1 %) 675,0 
(8,8 %) 1 250,2 
(16,2 %) 7 710,3 
(100 %) 
Customs duties 209,5 96,5 840,0 - 563,1 32,5 585.5 2.5 290,3 1 307,3 3 927,2 
a Agricultural levies 181,1 17,1 199,5 - 93,2 13,5 558,3 0,1 258,1 255,3 1 576,1 
o 
£ Sugar and isoglucose levies 10,0 7,1 51,2 -51,1 3,8 47,7 -16,2 15,2 202,4 
r» i>-a> Financial contributions (GNP) 116,9 72,4 1 028,2 — 954,1 — 176,8 9,3 136,9 -2 494,5 
Total 517,5 193,0 2 118,9 — 1 661,4 49,8 1 368,3 11,9 701,5 1 577,8 8 200,2 
(6,3 %) (2,4 %) (25,8 %) (20,3 %) (0,6 %) (16,7 %) (0,1 %) (8,6 %) (19,2 %) (100 %) 
< 3 111 
o Customs duties 
Agricultural levies 
Sugar and isoglucose levies 
Financial contributions (GNP) 295.7 
184,5 
22,2 
239.8 107,9 
9,8 
19,4 
138,2 1 376,0 
289,3 
146.0 
1 716,1 -649,5 
142,2 
117,5 
1 275,4 46,7 
5,1 
3,6 
32,2 400,8 
507,7 
46,3 
700,3 3,5 
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 
i 
CO 
r-o> Total 742,1 
(6,2 %) 275,2 
(2,3 %) 3 527,4 
(29,4 %) — 2 184,7 
(18,2 %) 87,7 
(0,7 %) 1 655,1 
(13,8 %) 13,3 
(0,1 %) 1 193,2 
(9,9 %) 2 325,2 
(19,4 %) 12 003,9 
(100 %) 
After extra-budgetary financial 
compensation (') 776,2 
(6,5 %) 275,2 
(2,3 %) 3 737,6 
(31,1 %) — 2 315,0 
(19,3%) 69,3 
(0,6 %) 1 734,5 
(14,4%) 14,2 
(0,1 %) 1 238,1 
(10,3%) 1 843,8 
(15,4 %) 12 003,9 
(100 %) 
< 
3 III 
o Customs duties 
Agricultural levies 
Sugar and isoglucose levies 
VAT 
Financial contributions (GNP) 335,7 
229,7 
30,9 
329,6 124,3 
8,0 
21,1 
183,9 1 586,6 
263,7 
146,3 
2 245,6 -754.2 
96,5 
152.3 
1 720,4 57,1 
3,6 
4,6 
41,6 497,2 
410.6 
45,9 
747.7 3,8 
0,1 
14,9 485,6 
313,2 
37,8 
453,6 1 344,6 
353,2 
26,1 
1 302,6 5 189,1 
1 678,6 
464,9 
4 737,7 
2 302,1 
o> K o> Total 925,8 
(6,4 %) 337,4 
(2,4 %) 4 242,2 
(29,5 %) 2 723,5 
(19,0 %) 106,9 
(0,7 %) 1 701,4 
(11,8%) 18,8 
(0.1 %) 1 290,2 
(9,0 %) 3 026,4 
(21,1 %) 14 372,4 
(100 %) 
After extra-budgetary financial 
compensation (') 966,5 
(6,7 %) 337,4 
(2,4 %) 4 407,2 
(30,7 %) 2 886,5 
(20,1 %) 104,6 
(0,7 %) 1 793,2 
(12,5 %) 19,4 
(0,1 %) 1 344,1 
(9,3 %) 2 513,5 
(17,5 %) 14 372,4 
(100 %) 
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 
< 3 111 
o 
T Agricultural levies 193,1 7,5 223,7 - 91,6 3,9 379,3 0,1 234,7 401,5 1 535,4 < 3 111 
o 
T Sugar and isoglucose levies 27,2 19,1 130,7 - 158,0 4,6 54,4 - 40,8 32,1 466,9 
o 00 O) VAT (') 337,8 (3) 189,5 2 456,6 (3) — 1 842,4 (3) 63,6 858,7 15,2 461,6 1 294,1 7 519,5 
Total 950,6 
(6,2 %) 346,2 
(2,2 %) 4 610,2 
(29,9 %) — 2 992,0 
(19,4 %) 139,3 
(0,9 %) 1 929,3 
(12,5%) 19,6 
(0,1 %) 1 272,6 
(8,3 %) 3 167,8 
(20,5 %) 15 427,6 
(100 %) 
Customs duties 408,4 135,2 1 943,8 84,6 977,3 81,9 633,0 4,5 572,8 1 550,9 6 392,4 
3 
O 111 
o 
2 Agricultural levies 178,4 10,1 179,9 17,4 103,1 4,3 247,6 0,1 175,4 348,6 1 264,9 3 
O 111 
o 
2 Sugar and isoglucose levies 27,8 19,3 126,9 1,0 154,5 4,6 62,5 -39,1 46,9 482,5 
CO 
at VAT («) 376,0 189,8 2 806,5 151,4(5) 2 256,1 68,2 1 582,9 22,6 499,8 1 930,7 9 884,1 
Total 990,5 
(5,5 %) 354)4 
(2,0 %) 5 057,1 
(28,1 %) 254,5 
(1.4%) 3 491,1 
(19,4 %) 158,9 
(0,9 %) 2 526,0 
(14,0%) 27,2 
(0,1 %) 1 287,1 
(7,1 %) 3 877,2 
(21,5 %) 18 024,0 
(100 %) 
(1) Under Article 131 of the Treaty of Accession. 
(2) Including the 1979 VAT balance and the adjustments to the 1979 financial contributions. 
(3) These amounts take account of amendments to the 1980 revenue and expenditure account (Document COM(81) 649). 
(«) Including VAT balances and financial contributions before 1981. 
(5) Greece paid a financial contribution based on its GNP. 
168 Official Journal of the European Communities 31. 12. 82 
Part II: The European Development Funds (EDF) 
(position at 31 December 1981) 
§ 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 § 26. 
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 OD: 
— 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 OD). 
(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: 4 646,6 Mio ECU. 
The EDF are financed by the EC Member States (with the exception of Greece) in proportions laid down in the internal agree­
ments. 
The above-mentioned internal agreements provide for distribution of the allocations of the 4th and 5th EDF between the ACP 
States and the OCT/OD 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 agreed 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). 
(1) 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 (Lom6 I, Article 16, and Lom6 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. 82 Official Journal of the European Communities 169 
§ 21. The 4th and 5th EDF: allocations, financing, distribution of aid, utilization rates 
Allocation and financing Distribution of aid Utilization at 31.12. 1981 
4th EDF: 
Allocation: 
3 155,9 Mio ECU 
Financing by: 
DK: 2.40 % 
IRL: 0,60 % 
L: 0.20 % B: 6.25 % 
D: 25.95 % 
F: 25.95 % 
1:12.00% 
NL: 7.95 % 
UK: 18.70% Nature of aid: 
Special 
loans: 
469,5 
Grants: 
2 195,6 
CO © 2 =6 
« 5) 
1 = 
.! -
a » 
o © x rr UJ £ 
D-r-150,0 
~^r~ 101,0 
Stabex: 
389,8 Programmable aid: 
2 413,5 a. 
o < = 
E5 
E eg CD OJ 
11 
s§ o — 
6! C -O Programming 
of aid: 
ACP States: 
2 343.8 
o -
I 5 % 
» o © 
8 2 » 
!l« 
If! o> t c ©"DO 
tr < o 
i * 
OCT/OD: 69,7 «• 
" Risk capital Non-
programmed 
aid: 
.. 742.4 Utilization: 
Payments: 
1 232,4 
(51.1 %) 
Payments: 
667.9 
(90.0 %) Financing 
decisions: 
2179,7(90,3%) 
Financing 
decisions: 
701,6 (94,5 %) 
5th EDF: 
DK: 2,5 % 
IRL: 0,6 % 
L: 0,2 % Allocation: 
4 646,6 Mio ECU 
Financing by: 
B: 5.9 % 
D: 28,3 % 
F: 25,6 % 
I: 11,5% 
NL: 7,4 % 
UK: 18,0% Nature of aid: 
Special loans: 
Grants: 
2 979,0 
a 2 " CO 
203^2 
178,8 
Risk capital: 
}S1° 
Stabex: 569,6 
Sysmin: 280,0 ja-
o 
a. 
o < _ 
vt 2L ® 
E 03 
0)«7) 
Programmable a £ 
)>aid: o s= 
3 128,0 51 
u ; 
OCT: 61,0 Programming of aid: 
ACP States: 
3 067,0 
of which: 
Regional projects: 
600,0 
Aam,niW 
Non-
programmed 
aid: 
1 518,6 Utilization: 
Payments: 6,0 (0,2 %) I Financing 
I decisions: 
291.9 (9,3%) 
Payments 189 9 (12.5 % Financing 
decisions: 
256.9 (16.9%) 
170 Official Journal of the European Communities 31. 12. 82 
§ 22. The 4th EDF: aid by type and by recipient country 
(financial implementation at 31 December 1981) (Mio ECU) 
Recipient country A. Non-programmed aid B. Programmable aid (indicative 
programmes (ACP) and other aid) Total (A + B) 
Recipient country Financing decisions 
CO c o 
CO o o 
< Financing decisions 
CO 
c a> 
E ® 
w <S 
a. E O) {/) 
c c 
o .2 C </) 
eg -Q 
.E a> U- "O (O 
c a> c a> 
>,*° 
to <5 
a. E Recipient country CO Q> 
T> 
to .O 3 (0 
To "Jo 
£ c Q) CO 
c » « 
Q. CO O 
to 
be ® to 
$ I 
® s 
X 
LLL (0 X 
a> -Q 
55 E. + 
+ 
_ G. B + <D 
X) 
co 
E 
to 
c a> 
E >* ca QL CO c o 
CO o o 
< m 
c CO 
6 CO 
o <0 
a « CO ° O , 
° § CO 
c a> 
E ® 
w <S 
a. E O) {/) 
c c 
o .2 C </) 
eg -Q 
.E a> U- "O (O 
c a> c a> 
>,*° 
to <5 
a. E 
(1) (2) (3) (4) (5) . (6) (7) (8) (9) (10) (11) (12) (13) 
=(6)+(11) (14) 
= (7) + (12) 
ACP countries: 
Ethiopia 
Tanzania 
Zaire 
Sudan 
Uganda 
Mali 
Kenya 
Madagascar 
Niger 
Upper Volta 
Malawi 
Guinea 
Somalia 
Senegal 
Rwanda 
Burundi 
Cameroon 
Chad 
Ghana 
Zambia 
Benin 
Ivory Coast 
Centr. African Rep. 
Togo 
Mauritania 
Sierra Leone 
Congo 
Liberia 
Lesotho 
Guinea Bissau 
Jamaica 
Botswana 
Suriname 
Mauritius 
Guyana 
Swaziland 
Gambia 
Papua 
New Guinea 
Fiji 
Gabon 
Solomon Islands 
Nigeria 
Other ACP countries: 
Bahamas 
Barbados 
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 
(Total other countries) 
Regional projects 
Administrative costs 
Contingency reserve 0,8 
9,3 
1,1 
1,6 
2,3 
0,6 
2.3 
4,7 
2.4 
1.7 
7,6 
0,4 
3,6 
1,2 
1,3 
2.5 
2,0 
1,2 
4.2 
9.8 
1.3 
1.6 
(2,9) 
2,6 7.8 
5.3 
6,5 
0,3 
6.4 
1.2 
2.3 
0,8 
7.9 
1,2 
0,2 
0,3 
8.5 
3.0 
0,5 
4.6 
7.5 
0,2 
3.4 
0,9 
3.1 
2,9 
0,3 
0,1 
1.7 
0,0 
3.2 
1,2 
2,4 
1.6 
3,6 
0,0 
1,0 
0,2 
0,6 
(5,4) 
6,1 4.8 
0,3 
19.3 
4.9 
3.5 
1,0 
1.4 
1,7 
9.6 
4,0 
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 
0,0 
1,3 
2,9 
1,3 
3,9 
0,5 
0,3 
0,3 
1,0 
0,2 
(11.7) 
13,3 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 
1,2 
2.8 
1,2 
(5,2) 19,2 
29,6 
24,6 
53,2 
24.4 
17,2 
11,9 
9,8 
34.2 
16,8 
7.5 
3.8 
15,6 
80,6 
9.6 
4,1 
15,6 
15,1 
10.5 
22,1 
20.4 
23.6 
8.9 
7,1 
42.3 
4.0 
10.5 
9.1 
1.3 
11,8 
1.2 
5.7 
7.4 
3.2 
16.4 
10.6 
2.8 
9.9 
6.7 
9.8 
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 
(25,2) 
22,0 19,2 
29,2 
22,1 
53.1 
23,8 
16.2 
11.7 
9,3 
32.2 
16,5 
6,1 
3.5 
15.3 
73.8 
8.7 
3.8 
15,0 
14,8 
10.4 
21.3 
20.4 
23.4 
8.9 
7.1 
42.0 
4.0 
10.5 
8,9 
1.2 
11,7 
1.1 
5.7 
5.2 
0,5 
15.1 
8.6 
2.8 
9,9 
6.7 
9.8 
1.3 
5,6 
2,3 
2.3 
3,8 
0,4 
0,2 
0,3 
1,0 
2,8 
0,6 
1.4 
1,6 
(23,6) 
20,0 117,5 
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 
1,8 
2.6 
4.0 
6.1 
2.7 
0,5 
2,0 
7,0 
0,5 
1.8 
3.2 
4,6 
2.4 
3,2 
10,3 
0,6 
(53,3) 
302,9 
101,4 
11.7 85.6 
68.7 
87,1 
75,3 
51,7 
67,9 
34,0 
62,6 
64.6 
55.7 
53,9 
36.8 
55,7 
38,7 
56.0 
47.7 
33.3 
42.1 
28.4 
26,0 
33,0 
12.9 
36,4 
33.2 
31.8 
25.4 
18.3 
18.9 
18,3 
18.5 
' 9,1 
17,8 
3.6 
4.7 
5,9 
8.3 
11.3 
4,2 
3.2 
1.5 
0,7 
8.4 
0,7 
1,0 
3,9 
6.3 
2,2 
0,5 
2,0 
6.8 
0,5 
1,7 
0,9 
3.6 
2,2 
2.7 
2.8 
0,6 
(38,4) 
191.3 
101.4 33,4 
8,0 
15.0 
9,7 
1,2 
37,8 
6,0 
7,0 
11.7 
25.4 
15.1 
2,6 
3,0 
17.5 
7.5 
19.6 
17,6 
0,4 
22.8 
2,3 
1.0 
6.7 
4.8 
8.6 
0,6 
4.0 
7.6 
6,8 
3,5 
1,3 
6.7 
7.5 
6,0 
1.1 
1.6 
0.9 
0,1 
2.9 
(6,6) 
63,6 85,6 
102,1 
95,1 
90.3 
61.4 
69.1 
71,8 
68,6 
64.6 
62.7 
65.6 
62.2 
55.7 
53.8 
58.6 
50.7 
50.8 
49,6 
48,0 
43.6 
33,4 
35.7 
36.4 
35.5 
31.8 
26.4 
25,0 
23,7 
18.3 
18.5 
17,7 
18.4 
7.6 
12,3 
12.7 
11.8 
11,3 
5.5 
9,9 
9,0 
6.7 
8.4 
1.8 
2.6 
3,9 
6,3 
2,2 
0,5 
2,0 
6.8 
0,5 
1.7 
0,9 
4.5 
2,2 
2.8 
5,7 
0,6 
(45,0) 
254,9 
101,4 47,5 
47,2 
32.7 
32.8 
18,5 
58,5 
47.5 
30.6 
46.9 
34.8 
41,2 
39.7 
30.4 
35.7 
41.9 
31.5 
29,2 
25.8 
20,0 
27.8 
21,4 
18,0 
21,4 
26,0 
22,1 
14.6 
21.9 
10,6 
10,8 
13.4 
9,4 
11.7 
3.2 
3.3 
7.3 
7.8 
5.9 
1,1 
5.4 
6.7 
0,9 
2,1 
0,4 
1,3 
2,0 
2,1 
1,3 
0,4 
1,1 
1.8 
0,1 
0,9 
0,7 
3.3 
1,0 
2.4 
1.5 
0,3 
(20,6) 
128,6 
91.5 104.8 
131,7 
119,7 
143,5 
85,8 
86.3 
83.7 
78.4 
98.8 
79.5 
73.1 
66,0 
71.3 
134,4 
68.2 
54,8 
66.4 
64,7 
58.5 
65.7 
53.8 
59,3 
45.3 
42.6 
74,1 
30.4 
35.5 
32.8 
19.6 
30,3 
18.9 
24.1 
7.6 
19.7 
15,9 
28.2 
21,9 
8.3 
19.8 
15,7 
6.7 
18,2 
1.8 
3,9 
10,0 
9.2 
4,5 
4.4 
2.5 
7.1 
0,5 
2,0 
2,1 
7.3 
2.8 
4.2 
7.3 
0,6 
(70,2) 
276.9 
101,4 66.7 
76,4 
54.8 
85.9 
42,3 
74,7 
59.2 
39,9 
79.1 
51.3 
47.3 
43.2 
45.7 
109.5 
50,6 
35.3 
44.2 
40,6 
30.4 
49,1 
41.8 
41.4 
30.3 
33,1 
64,1 
18,6 
32.4 
19.5 
12,0 
25,1 
10,5 
17.4 
3,2 
8.5 
7.8 
22.9 
14.5 
3.9 
15.3 
13.4 
0,9 
11,9 
0,4 
2.6 
7,6 
4.4 
3.6 
4,2 
1.5 
2,0 
0,1 
1,2 
1.7 
6,1 
1.6 
3.8 
3,1 
0,3 
(44,2) 
148.6 
91.5 
Total ACP 
OCT/OD 66,1 
1,6 96,8 
1,9 144,9 
0,5 377,5 
12,3 685,3 
16,3 653,1 
14,8 2 343,8 
69,7 1 728,3 
33,0 398,9 
19,5 2 127,2 
52,5 1 205,9 
26,5 2 812,5 
68,8 1 859,0 
41,3 
TOTAL 4th EDF 67,7 98,7 145,4 389,8 701,6 667,9 2 413,5 1 761,3 418,4 2 179,7 1 232,4 2 881,3 1 900,3 
12.82 Official Journal of the European Communities 171 
§ 23. The 4th EDF: financial implementation of aid by recipient country (31.12.1981) 
(For detailed figures see § 22) 
A. Non-programmed aid 
I h 
Mio ECU B. Programmable aid 
(indicative programmes (ACP) and other aid) 
H 1 1 1 1 1 1 1 1 h 
10 50 100 Mio ECU Recipient country 
Ethiopia 
Tanzania 
Zaire 
Sudan 
Uganda 
Kenya 
Madagasca 
Upper Volta 
Malawi 
Guinea 
Somalia 
Senegal 
Rwanda 
Burundi 
Cameroon 
Chad 
Ghana 
Zambia 
Benin 
Ivory Coast 
Centr. African Rep. 
Mauritania 
Sierra Leone 
Congo 
Liberia 
Lesotho 
Gumea Bissau 
Jamaica 
Botswana Allocations 
Suriname 
Mauritius Financing 
decisions Financing 
decisions Guyana 
Swaziland 
Gambia Payments Payments 
Papua New Guinea 
Gabon 
Solomon Islands 
Nigeria 
Other ACP countries 
Regional projects 
Administrative costs 
Contingency reserve 
172 Official Journal of the European Communities 31. 12. 82 
§ 24. The 5th EDF: aid by type and by recipient country 
(financial implementation at 31 December 1981) (MI0 ECU) 
A. Non-programmed aid B. Programmable aid (indicative 
programmes (ACP) and other aid) Total (A + B) 
Financing decisions Financing decisions 
Recipient country CO o> 
TJ 
"co 
N 3 CO 
B> « 
£ c Q) CO 
C O) .2 
Q. CO 
o 
J£ CO 
ir CO O)" 
i! 
©2 
x 5 LD <0 X a> N 
s 55 c 
E co >> 
CO CO 
SG-
« n 
o -£ <0 
CO 
E 
CO 
c a> 
E >. CO 
Q. CO 
c o 
CO o 
o 
< CO 
c 
CO 
0 CO c 
CO 
o 
W 
'o a) 
Q. 
CO co i. 
o o 
I- C. <0 T3 CO 
E 
CO 
c 0) 
E >> CO Q. O) CO c c 
o .2 C CO 
CO 5 
.£ ® U. "O 0) 
T3 CO 
E 
CO 
c 0) 
E >> CO Q. 
(1) (2) (3) (4) (5) (6) (7) (8) 0) (10) (11) (12) (13) (14) 
= (7)+(12) (15) 
=(8)+(13) 
ACP countries: 
Ethiopia 
Tanzania 
Zaire 
Sudan 
Uganda 
Mali 
Kenya 
Madagascar 
Niger 
Upper Volta 
Malawi 
Guinea 
Somalia 
Senegal 
Rwanda 
Burundi 
Cameroon 
Chad 
Ghana 
Zambia 
Benin 
Ivory Coast 
Centr. African Rep. 
Togo 
Mauritania 
Sierra Leone 
Congo 
Liberia 
Lesotho 
Guinea Bissau 
Jamaica 
Botswana 
Suriname 
Mauritius 
Guyana 
Swaziland 
Gambia 
Papua 
New Guinea 
Fiji 
Gabon 
Solomon Islands 
Nigeria 3.6 
2,9 
3.8 
1.7 
1,5 
1.9 
4,0 
7,2 7,5 
6.0 
1.5 
2,2 
3.0 
2.6 
2,3 
4,0 
6,0 
1,5 
0,7 
3,0 
12,0 0,2 
0,1 
2,0 
0,5 
3.4 
0,6 
0.3 
0,2 
0,8 
0,0 
0,3 
0,5 
10,5 
0,2 
1.5 
0,1 
0,8 
0,5 
0,0 
0,3 
0,2 6,3 
13,4 
2,6 
10,0 
1.2 
1,3 
1.8 
38,6 
6,6 
11,0 
2,5 
19,2 
1,0 
1,0 
0,2 
1.5 
3,2 
8,1 
0,9 -0,2 
13,9 
8,0 
13,9 
3,4 
3,2 
11,8 
3,6 
4.4 
0,0 
4.6 
0,5 
14,9 
44,0 
6,6 
15,0 
3.8 
4.0 
6.1 
4.0 
19,2 
1.5 
1,5 
1,0 
0,7 
3,2 
1,5 
3,2 
1.9 
8.1 
12,0 
5,2 
7,2 
0,2 0,2 
6,3 
1,5 
13,9 
0,3 
3.2 
11,7 
2.5 
3.6 
0,0 
1.3 
0,2 
9,1 
41,5 
6.6 
11,0 
3.8 
3.1 
0,0 
2,5 
19,2 
1,5 
1,5 
1,0 
0,3 
1,5 
3.2 
1.9 
8,1 
0,0 
4,8 
7,2 
0,2 125,0 
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 48,5 
5.1 
1.2 
1.5 
5,0 
17,4 
16,1 
8,3 
20.4 
29,3 
4.0 
0,9 
11.5 
3.6 
17.6 
0,4 
0,7 
0,5 
8.1 
6,9 
0,6 
6,3 
0,2 
4.1 
1,3 
1.7 
3.2 
0,1 
0,7 
0,8 
0,4 
2,0 
1,0 
1,7 
0.5 
0,4 
3,7 
0,2 
0,4 
0,1 
0,5 5,0 
8,0 53,5 
5.1 
1.2 
1.5 
5,0 
17,4 
16,1 
8,3 
20.4 
29,3 
4.0 
0,9 
11.5 
3.6 
17.6 
0,4 
0,7 
0,5 
8.1 
6,9 
0,6 
14,3 
0.2 
4.1 
1,3 
1.7 
3.2 
0,1 
0,7 
0,8 
0,4 
2,0 
1.0 
1,7 
0,5 
0,4 
3,7 
0,2 
0,4 
0,1 
0,5 0,0 
0,4 
0,0 
0,6 
0,5 
1,0 
0,0 
0,0 
0,3 
0,1 
0,0 
0,0 
0,0 
0,0 
0,0 
0,0 
0,1 
0,2 
0,0 
0,0 
0,0 
0,0 
0,0 
0,0 53.7 
19,0 
9.2 
15,4 
8,4 
20,6 
27,9 
11,9 
24.8 
29.3 
8,6 
1.4 
26.4 
47,6 
24,2 
15.4 
4.5 
4.5 
14,2 
10.9 
0,6 
33.5 
1,7 
5.6 
1.3 
2.7 
3.2 
0,8 
3,9 
2.3 
3.6 
2,0 
1,0 
1.7 
0,5 
2,3 
11,8 
12,2 
5,6 
7,3 
0,7 0,2 
6,3 
1.5 
14,3 
0,3 
3.2 
12,3 
3.0 
3.6 
1,0 
1.3 
0,2 
9.1 
41,8 
6.7 
11,0 
3.8 
3.1 
0,0 
2,5 
0,0 
19,2 
1,5 
1,5 
0,0 
1,1 
0,2 
0,3 
1,5 
3.2 
0,0 
0,0 
1.9 
8,1 
0,0 
4,8 
7,2 
0,2 
Other ACP countries: 
Bahamas 
Barbados 
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 
0,2 
1,8 
3,0 
0,5 0,5 
0,2 
0,1 
0.5 
0,2 
0,0 0,2 
1,1 
2,5 
0,5 
1.4 
1,2 
0,6 
0,0 -0,9 
0,7 
1,5 
1,9 
3.0 
0.5 
1,4 
0,2 
4,2 
0,0 
1.1 
0,0 0,9 
0,2 
1,1 
0,3 
2,9 
0,5 
1,4 
1.2 
0,6 
0,0 2,0 
3,5 
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 
1.6 
0,2 
0,4 
0,1 
0,2 
0,2 
0,1 
0,1 
0,1 
1,2 
2,2 
5.1 
1.2 
0,2 -0,1 
1,6 
0,2 
0,4 
0,1 
0,2 
0,2 
0,1 
0,1 
0,1 
1,2 
2.2 
5.1 
1.2 
0,2 0,0 
0,1 
0,0 
0,0 0,1 
2.5 
0,9 
1,9 
2,0 
3.2 
0,2 
0,1 
0,6 
0,1 
2.6 
2,4 
9.3 
0,0 
1,1 
1,2 
0,2 0,9 
0,2 
1,1 
0,3 
2,9 
0,1 
0,5 
0,0 
1,4 
1,2 
0.6 
0,0 
(Total other countries) (0,9) (5,5) (1.5) (7,5) (-) (15,4) (9,1) (95,0) (13,0) (-) (13,0) (0,1) (28,4) (9.2) 
Regional projects 
Contingency reserve 1,3 1,8 
- - -3,1 3,0 600,0 
186,5 27,9 0,5 28,4 2,6 31,5 5,6 
Total ACP 28,8 59,6 24,5 137,9 250,8 184,8 3 067,0 277,8 13,5 291,3 5,9 542,1 190,7 
OCT — 1,0 — 5,1 — 6,1 5,1 61,0 0,6 — 0,6 0,1 6,7 5,2 
TOTAL 5th EDF 28,8 60,6 24,5 143,0 - 256,9 189,9 3 128,0 278,4 13,5 291,9 6,0 548,8 195,9 
31.12.82 Official Journal of the European Communities 173 
§ 25. The 5th EDF: financial implementation of aid by recipient country (31 December 1981) 
(For detailed figures see § 24) 
A. Non-programmed aid 
I 
Mio ECU 50 
Key: 
Financing 
decisions 
Payments 10 Recipient country 
Ethiopia 
Tanzania 
Zaire H I 
10 B. Programmable aid 
(indicative programmes (ACP) and other aid) 
\ 1 1 1 1 1 1 1 
Sudan 
Uganda 
Mali 
Kenya 
Madagascar 
Niger 
Upper Volta 
Malawi 
Guinea 
Somalia 
Senegal 
Rwanda 
Burundi 
Cameroon 
Chad 
Ghana 
Zambia 
Benin 
Ivory Coast 
Centr Alrican Rep 
Togo 
Mauritania 
Sierra Leone 
Congo 
Liberia 
Lesotho 
Guinea Bissau 
Jamaica 
Botswana 
Suriname 
Mauritius 
Guyana 
Swaziland 
Gambia 
Papua New Guinea 
Fiji 
Gabon 
Solomon Islands 
Nigeria 
Other ACP countries 
Regional projects 
Contingency reserve H 
50 100 Mio ECU 
Key: 
Allocations 
i 
! Financing 
l decisions 
Payments 
1 600.0 
1C 186,5 
1L 
OCT 
174 Official Journal of the European Communities 31.12.82 
Mio ECU 
§ 26. The five EDF: evolution of annual payments (1960-81) 
600 ' 
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. 
500 H 
400 
300 
200 
100 
1960 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 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 0.5 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 78.6 494 25.9 23.4 17.2 16.3 7.9 4.1 2.5 0.9 729,8 
3rd EDF 22.5 42,8 98.5 140.6 182.7 131,0 79.8 66.0 37.4 19.8 20.7 841,8 
4th EDF 97.5 148.1 326.3 423.4 459.3 445.8 1 900,3 
5th EDF 195.9 195,9 
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 4 237,2 Key: 
1 5th EDF 
4th EDF 
3rd EDF 
2nd EDF 
1st EDF 
31. 12. 82 Official Journal of the European Communities 175 
ANNEX IV 
EUROPEAN PARLIAMENT 
Replies to the comments of the Court of Auditors concerning the financial year 1981 
1.16/17. In the joint declaration signed on 30 June 1982 
by the Presidents of Parliament, Council and Commission, 
they undertook that the study of the revision of the Finan­
cial Regulation should be concluded by the three institu­
tions as soon as possible. It is hoped that the competent 
bodies of Parliament will complete their work during the 
autumn session. 
2.2 (a) 
— The requested reconciliation of inventory ledgers and 
physical property is currently being carried out in 
stages. 
A computerized inventory of office machines, which in 
terms of value constitute by far the biggest part of the 
inventory, was carried out at the beginning of 1982. 
— Although a new inventory of the furniture is currently 
being carried out by the departments responsible in 
collaboration with the directorates-general, the cost, 
particularly in terms of staff, of improved stock man­
agement would outweigh the advantage to be derived 
from it. 
— Finally, as regards the booking of the amounts relating 
to office supplies, contacts have been established with 
the relevant departments of the Court of Auditors with 
a view to defining criteria for their'classification in the 
balance sheet. 
2.2 (b) It must be pointed out that it is not possible, to 
calculate in advance the exact amount involved in gains 
and losses arising out of changes in the exchange rate and 
it is for this reason that a p.m. entry in relation to heading 
2321 appears in the budget of Parliament. A request for an 
estimated transfer is made in October of each year (if 
required) but the final figure can be affected by changes 
between then and the end of the financial year. 
2.2 (c) The competent authority of the European Parlia­
ment already furnished a detailed reply when considering 
the special report of the Court of Auditors on this subject 
(OJ 1982 —C 202). 
2.2 (d) As regards the suspense accounts, which concern 
only officials, a thorough and detailed analysis has been 
made of the outstanding amounts, including a succint de­
scription of the causes and the proposed solution. In all 
these cases, the Treasurer and the financial administrator 
are in the process of settling the items for which they are 
responsible. The balance of 1979 and, to a large extent, 
that of 1980 will in the meantime have been budgetized. 2.6(b) The reciprocal accounts with the Commission 
have been in operation since 1 January 1982 and will, in 
the future, be balanced at the end of each financial year in 
conjunction with the Commission. 
10.5/9. The budgetary authorities accepted in 1976 the 
principle of creating, stage by stage, statutory posts to 
which local staff who met certain criteria could be 
appointed, in accordance with the relevant statutory proce­
dures: the first of these criteria were the performance of 
regular duties, seniority in the performance of these duties 
and a need to use the services of local staff in the different 
places of work of the institution. 
It is confirmed that local staff have been appointed as offi­
cials on the basis of the results of regular competitions 
organized in full compliance with the statutory procedures. 
The position adopted by Parliament calls for a thorough 
examination of the desirability of maintaining the local 
staff category since the number of posts involved is limited 
and haying regard to the discriminatory aspect of their • 
social and financial status by comparison with established 
officials. A revision of the Staff Regulations should clear 
up all the problems in this area. 
Table 
The calculations supplied by the Court of Auditors have 
been noted. However, it must be pointed out that Parlia­
ment is an institution with its own special features and 
obligations, which are difficult to compare with those of 
other institutions and which derive chiefly from the follow­
ing factors: 
— the three different places of work, which involve a con- . 
siderable splitting-up of parliamentary and administra­
tive activities; 
— the 42 language combinations, resulting from Parlia­
ment's obligation to have equal respect for all the offi­
cial languages of the Community (translation of seven 
languages into seven languages) ; 
— the meeting of deadlines imposed by the essential 
requirements of the plenary sitting. 
10.11. The particular sensitivity of the parliamentary 
institution concerning the equality of the official languages 
176 Official Journal of the European Communities 31. 12. 82 
is responsible for the situation commented on by the Court 
of Auditors. 
10.14. The College of Quaestors has proposed measures 
to limit the number of persons authorized to submit 
requests for translation and the length of the texts to be 
translated so as better to establish the priorities needed for 
improved planning of work. These decisions were recently 
submitted to the enlarged Bureau of the European Parlia­
ment. 
10.16. As far as the requirements of those requesting 
translation allow, texts are not revised. 
10.17. There are plans to install multi-function terminals 
in each translation section. This would provide easier 
access to terminological information, enabling a variety of 
indexes to be held and work to be better monitored. 
10.18. This system is only operational for three language 
pairs (English to French, French to English and English to 
Italian). 
The Secretariat of Parliament will shortly be testing a sys­
tem of this kind on simple texts in the English section. The 
work already carried out by the Commission will enable 
the costs of these tests to be kept to a minimum. 
10.20/21. (a) As the Court of Auditors rightly observes, 
it is the low capacity of the Commission's computer system 
which is responsible for the problems that have been 
pointed out. 
To make up, at least in part, for this shortcoming, the 
departments responsible carry out manually systematic 
and partial calculations and checks on the various compo­
nents of officials' salaries. A comparison of total remuner­
ations from one month to the next, which is certainly desir­
able, can only be achieved with the use of an independent 
computer system operated directly by Parliament, as in the 
case of the Court of Justice and the Council. 
A proposal to this effect is currently being considered by 
the Informatics Steering Committee and will shortly be. 
submitted to the competent authorities. It should be noted 
that the same applies to the payment of officials of the 
Court of Auditors, for which Parliament is responsible in 
accordance with the agreement reached between the two 
institutions, and for which it receives no financial compen­
sation. 
b) Contacts have been established with the Court of Audi­
tors to determine to what extent the suggestion put forward 
could be implemented as well as the amount of work it 
would involve for the departments concerned. Solving the 
problem definitively would entail introducing an indepen­
dent computer system as explained under (a). 
(c) The shortcomings pointed out by the Court of Auditors 
are due mainly to the data-processing deadlines of the 
Computer Centre. Parliament will ask the Commission to,review the data-
processing timetable established by the Commission on the 
basis of its own requirements without taking account of the 
particular needs of our institution. 
In addition, contacts are shortly to be established with the 
Court of Auditors with a view to finding joint solutions 
which are compatible not only with the provisions of the 
Financial Regulation but also with the obligations deriving 
from the Staff Regulations. 
10.22. The Appointing Authority decided to grant the 
allowances mentioned in this paragraph in full compliance 
with Article 14 of Annex VII to the Staff Regulations, act­
ing in its discretionary capacity, and taking into account 
the special requirements of Parliament and the constraints 
to which the officials concerned were subjected. 
If the Court of Auditors considers that it would be pref­
erable to adopt a single set of rules on this issue, the nor­
mal procedures would have to be followed for such cases 
and the matter referred to the interinstitutional bodies res­
ponsible in this connection. 
10.23. Every effort is made to keep personal files up to 
date and properly classified. It is, however, a continuing 
process and, at any given time, certain documents may not 
have been filed. In addition,, to avoid overloading a file, 
some documents are treated as annexes when they are 
obviously complementary to documents or information 
already furnished and filed. 
Access to personal files is confined to easily identifiable 
persons, i.e. the official himself, for on-the-spot consul­
tation, officials of the Personnel Division, Chairmen of 
Interview Boards and officials of the Court of Auditors 
when carrying out their control functions. The identity of 
the person concerned is noted immediately on handing-
over and on return. 
10.24. The Parliament will ensure that, in the future, the 
separation of the functions referred to will be strictly 
adhered to. 
11.9-11.11-11.12. Note has been taken of the calcula­
tions relating to the costs of meetings held outside the 
three usual places of work. 
Attention is drawn, however, to the complete indepen­
dence of the political authority as regards the choice of 
meeting places. The remarks of the Court of Auditors can­
not and should not call that principle into question again. 
The Bureau decision of 22 June 1978 states that the politi­
cal groups have the right to meet during adjournments of 
the session for five days in the week preceding each part-
session. 
Parliament confirms its determination to enforce the provi­
sions of that decision. 
The Bureau's policy is to restrict to the bare minimum the 
number of meetings of Parliament's bodies outside the 
normal places of work. 
31. 12. 82 Official Journal of the European Communities 177 
11.13-11.14. The competent authorities undertake to 
examine the different exchange rates applicable to the var­
ious expenses and allowances. 
11.15-11.17: The competent authority feels that these 
observations are directed mainly at the Commission. 
Although the costs relating to the various external offices 
are not specifically booked as such in the general accounts, 
our institution is able to assess them. 
If requested to do so by the Court of Auditors, the compe­
tent authority can draw up an analysis of the cost of the 
external offices. 
Parliament is not aware of any unjustified payments hav­
ing been made to non-existent officials. The establishment 
of recruitment contracts by the Secretariat in Luxembourg 
completely precludes any such possibility. 
11.18. In relation to the recovery of VAT, the competent 
authority suggests that this problem should be dealt with in 
a wider context rather than confined to payments made by 
or on behalf of the external offices. 
Proposals have accordingly been examined with the com­
petent services with a view to rationalizing the situation. 
They entail, for the authorizing officer: 
— indicating on payment and budgetary- expenditure 
orders the net amount >to be charged to the budget 
heading, 
— charging to a special suspense account the amount of 
VAT to be recovered depending on the State involved. These proposals are in compliance with the spirit of the 
Financial Regulation both as regards the provisions of 
Article 4 and those of Article 23.2. 
Preliminary remark which must be made regarding the 
external offices: 
11.20. In spite of Parliament's efforts to work out joint 
solutions to infrastructure problems (buildings, door-keep­
ers, information technology, documentation, etc.), the 
Commission insists on retaining its independence. 
11.21. The new offices could not be occupied because 
of the substantial alterations which had to be carried out to 
adapt them to the operating requirements of the institu­
tion. 
The tendering processes had to be adhered to in accord­
ance with the Financial Regulation. The lease of the tem­
porary premises had therefore to be extended, in accord­
ance with a decision by the College of Quaestors con­
firmed at its meeting of 26 and 27 November 1981. 
11.22. Two important factors explain the difference 
between the rents paid by the Commission and those paid 
by Parliament: 
— the five-year gap between the signing of the two leases, 
and 
— the fact that Parliament occupies the ground floor, 
which is inevitably dearer considering the use to which 
the offices are to be put. 
178 Official Journal of the European Communities 31. 12. 82 
ANNEX V 
COUNCIL 
Replies to the comments of the Court of Auditors concerning the financial year 1981 
Preliminary comment CHAPTER 10 
The Council would reiterate its wish that the compients by 
the Court of Auditors on each institution should be c ... 
brought together in a separate part of the Court's report. Stall expenditure 
CHAPTER 1 
General comments 
ACCOUNTING REGULATION — IMPLEMENTING 
MEASURES FOR THE FINANCIAL REGULATION OF 
21 DECEMBER 1977 
1.17. Contrary to the Court's assertion, the Council gave 
its opinion on the draft Commission Regulation om imple­
menting measures for certain provisions of the Financial 
Regulation of 21 December 1977 on 9 February 1981. The 
Council forwarded this opinion to the Commission by let­
ter dated 11 February 1981. 
CHAPTER 2 
Accounting matters 
FIXED ASSETS 
2.4 (a) The amount of the fixed assets will be given in 
the balance sheet as at 31 December 1982. 
ADVANCES PAID TO THE PUBLICATIONS OFFICE 
2.4 (b) Action will be taken on this comment by the 
Court of Auditors in 1982. THE CONDITIONS OF EMPLOYMENT OF LOCAL STAFF 
OF THE INSTITUTIONS 
10.5 to 10.9 In view of the extremely large number of 
local staff employed by the Commission in Brussels, it is 
normal that the Council should for many years have fol­
lowed the rules established by that institution after consult­
ing the Staff Regulations Committee. 
It should be noted that the Community insitutions have 
special requirements regarding language knowledge and 
working hours. 
As for the details of the rules in question, however, current 
practice in Brussels was studied by the Commission. 
THE TRANSLATION SERVICES OF THE INSTITUTIONS 
10.10 to 10.19. When it supplied the statistical data 
required by the Court of Auditors, in particular on the 
actual language complement and the number of pages 
translated, the Council stated that for 1979 the total figure 
was 257 598 pages translated. 
This figure which is far higher than that put forward by the 
Court (172 000 pages) can be explained as follows: the 
institution responsible for this check probably deducted a 
fixed number to take account of repeat pages, slightly 
amended pages and 'part-pages' (e.g. telexes). These pages 
count in full for the Council's statistics although they do 
not require the same amount of work by the linguist as 
'normal' pages (25 lines of new text). The number of pages 
deducted is estimated at 86 000. 
The Council, however, regards such a method as extremely 
debatable for three reasons: 
— It should be applied uniformly to the other institutions. 
The Court should accompany its table by an explana­
tory comment on this point. 
31. 12. 82 Official Journal of the European Communities 179 
The deduction percentage applied may be arbitrary. It is 
to be feared that the 33% adopted by the Court is based 
less on actual calculations that on probabilities. This is 
the impression given owing to the absence of any 
explanatory comment. — Finally, a large number of 'easy' to translate pages is in 
fact offset by pages involving more text than usual (e.g. 
extra-long pages or very closely spaced pages), and 
sometimes by texts of quite considerable difficulty. 
How is account to be taken here of the great amount of 
time devoted to checking and research? 
180 Official Journal of the European Communities 31. 12. 82 
ANNEX VI 
COMMISSION 
Replies to the comments of the Court of Auditors concerning the financial year 1981 
Part I arrears in the 1981 accounts — the surplus available from 
1980 (246 132 415 ECU) to be entered in the 1981 accounts 
would have been 165 million ECU lower. 
CHAPTER 1 
General comments 
SUMMARY OF PRINCIPAL COMMENTS AND REPLIES 
1.0. 
(b) Total revenue for 1981 was not affected 
by the entry in the 1980 accounts of arrears 
of own resources collected in 1981. The 
Commission respected the wishes of the 
budgetary authority. 1.4 
(c) The Commission's detailed replies are 
given in the corresponding chapters. During the procedure for adopting supplementary and 
amending budget No 2/1981, the budgetary authority 
regarded the arrears of own resources as 'Surplus available 
from the previous year'. The entry of these amounts in the 
1980 accounts is therefore in accordance with the wishes of 
the budgetary authority. 
1981 discharge 
1.6. The Commission's replies to the various points 
which concern it are given in the corresponding chapters. 
1.6 
(d) The Commission has taken steps to get 
up to date in clearing the accounts of the 
EAGGF Guarantee Section. 
(e) The Court's comment concerns the 
Member States rather than the Commission. 
It also fails to take into account the replies 
given in previous reports. 1 g Clearance of EA GGF Guarantee Section accounts 
1.8. As can be seen from its replies to the Court's special 
report on this subject, the Commission is keenly aware of 
the problem and has taken steps to speed up the clearance 
of accounts. ' 
(g) The Commission and the EIB are anx­
ious to enable the Court to exercise its rights 
and fulfil its obligations. 1.11 to 1.13 
(h) The Commission agrees with the Court. 1.16 
Entry in the 1980 accounts of arrears of own resources col­
lected in 1981 
1.4. The Commission would point out that total revenue 
for 1981 was not affected by the entry in the 1980 accounts 
of arrears of own resources collected in 1981. If the Com­
mission had acted as the Court wished— by entering the Application of the rules in the agricultural sector 
1.9. The Court's comment is a matter for the Member 
States. It is a summary comment which ignores the replies 
given to previous reports. 
The Commission pointed out in its 1980 replies that the 
term 'irregularity' is broader in scope than fraud as defined 
by criminal law; it has in fact no equivalent in the legal ter­
minology of any of the Member States. The Commission 
wishes to stimulate as broad as possible an exchange of 
information and therefore willingly accepts the lack of an 
31. 12. 82 Official Journal of the European Communities 181 
absolutely consistent interpretation which it considers CHAPTER 2 
would prove unduly restricting. 
Accounting matters 
DELEGATION OF CERTAIN TASKS BY THE 
COMMISSION TO THE EUROPEAN INVESTMENT BANK 
(EIB) 
Adequacy of information made available by the EIB to the 
Commission SUMMARY OF PRINCIPAL COMMENTS AND REPLIES 
2.0. 
(d) As the Court of Auditors has noted, pro­
gress has been made in catching up. 2.5 
1.11 to 1.13. In a desire to satisfy the Court, the Com­
mission and the Bank have agreed to increase the amount 
of information sent to the Court — and to Parliament — 
on the use of budget funds and EDF resources in whose 
management the Bank is involved. The Chairman of the 
Bank recently stated this to the Committee on Budgetary 
Control. (e) The necessary adjustments have been 
made and measures taken to reduce these 
discrepancies in the future. 2.6 
(f) The error pointed out by the Court of 
Auditors had already been spotted by the 
Commission and corrected in the 19,82 
accounts. 2.7 
As a result the Bank's annual reports to the Commission 
on the exercise of its mandate, which are sent to the Court 
of Auditors, will be more detailed. The Commission and 
the Bank will consider the question of supporting docu­
ments to see if they can find a solution which will be 
acceptable to the Court. (g) This problem, which mainly affects the 
balance sheet, is still the subject of internal 
discussions. The Commission is thinking of 
suggesting to the other institutions that they 
follow the Court's recommendation and use 
the rate at 31 December when preparing the 
balance sheet from 1982 onwards. 2.10 
(h) In the case of exchange losses, a solution 
The Commission does not agree that the Bank does not might be found when the Financial Regula-
always pass on information in good time. tjon js revjse<j; with regard to bank charges, 
the necessary action will be taken. 2.11 
It would point out, in the first place, that it has the infor­
mation needed to decide on the eligibility of investment 
projects in accordance with the aims and guidelines of the 
decisions and regulations in question. It does not depend 
only on the EIB for information but has other sources as a 
result of its own financial activity. 
There are also frequent meetings between the Bank and the 
Commission on matters concerned with the use of the 
NCI, Euratom loans and the Lome Conventions. These 
take place at various levels, including that of Chairman 
and Board of Directors of the Bank and the appropriate 
Member of the Commission. 
Exercise of the Court's rights and discharge of its obligations 
under the Treaties 
The explanations given above will show that the Commis­
sion and the Bank are anxious to ensure that .the Court is 
able fully to exercise its rights and fulfil its obligations. (i) Measures have been taken to speed up 
the clearance of the debit accounts con­
cerned. 2.12 
(k) — There can be no uncertainty with 
regard to the amount of the surplus 
(246 132 000 ECU), which, moreover, 
appears in supplementary and 
amending budget No 2 for 1981. 
— The Commission is willing to exam­
ine any way of improving the explan­
atory notes. 
— The reconciliation system introduced 
in 1981 ought to make for an 
improvement in the presentation of 
the consolidated balance sheet. 2.14 
2.5. 
Bank reconciliations at 31 December 1981 
I 
(a) 110 577• 74 ECU of receipts 
The Commission's efforts in this regard and the assurance 
recently given by the Chairman of the EIB to the Com­
mittee on Budgetary Control should allay any fears that 
the Court will not be in a position to perform its tasks 
properly-. (b) Receipts and expenditure were entered under 1982 
As the Court of Auditors has noted, progress has been 
made in catching up. Many of the adjustments which were 
182 Official Journal of the European Communities 31. 12. 82 
still needed have been effected or are being dealt with. 
Furthermore: 
(a) many of the receipts in question consisted of payments 
from very remote banks, operations which always take 
a long time; In the light of the Court's comments, the Commission will 
go on doing what it can to reduce the chances of such dis­
crepancies appearing again. 
(b) interest for 1981 on a number of bank accounts was 
entered in the books for the following year, when it 
was actually received. The Commission had always 
believed this interpretation of the Financial Regulation 
to be correct, but after discussions with the Court of 
Auditors, it will now conform to the Court's wishes. 
Talks are now in progress with the other institutions to 
decide on the precise method to be used from 1982 
onwards; EAGGF ADVANCES 
2.7. The error pointed out by the Court of Auditors had 
already been spotted in the course of checks carried out by 
the Commission, and was corrected in the 1982 accounts 
by the issue of regularizing payment orders in May 1982. 
(c) — entry of205 million ECU 
— rent for the first half-year 1982 
— 1 900 000 ECU paid to the EAC 
(c) Treasury accounts: the entry was a true reflection of 
the information passed to the accounting officer under 
the provisions of Regulation No 2891/77; 
With regard to the other two points, the Commission 
accepts the Court's point of view. The necessary 
arrangements have been made for the future. •HOLIDAY CAMPS' ACCOUNT 
2.8 to 2.9. The accounts department raised the matter 
with the authorizing department and an improvement has 
been evident in 1982. A careful analysis of these two 
accounts is in progress: a way should be found of eliminat­
ing the anomalies pointed out by the Court of Auditors 
with respect to the presence of debit balances in the 'reallo­
cated transfers' accounts; with regard to the holiday 
camps, the authorizing officer has taken steps to shorten 
the time needed to recover the sums advanced. 
In order to comply as far as possible with the Court's 
request for an improvement in the year-end closure, the 
Commission is planning to produce before the end.of the 
year a preparatory balance sheet closed at 30 September; 
this should enable it to detect and eliminate any anomalies 
before the accounts are closed. In this connection, more­
over, the Court's staff has announced that the Court's work 
will henceforward start earlier than in the past. 
CONTRA ACCOUNTS OF THE COMMUNITY BODIES 
— Restaurant account in the Commission's books and 
Commission account in the restaurant's books 
— Three amounts appearing in the balance of the Parlia­
ment account in the Commission's books 
2.6. 
— The necessary adjustments have been made, as 
requested by the Court. In future the balances in the 
Commission's account and the restaurant account will 
be reconciled periodically. 
— A system for the regular exchange of statements of 
account and confirmation of balances between the 
accounting officers of the institutions was set up in 
1981 and has been working satisfactorily since 1982. CONVERSION RATES 
(a) The Commission's balance sheet at 31 December 1981 
was drawn up on the basis of several conversion rates 
(b) A number of conversion rates are also used in recording 
the day-to-day operations of the financial year 
2.10. 
(a) The existing rules do not contain any specific provi­
sion about which conversion rate to use for the balance 
sheet. Up to now, therefore, the Commission's 
approach, when preparing the balance sheet, has been 
to apply by analogy the criteria adopted for the 
revenue and expenditure account. Following talks with 
the Commission, the Court of Auditors recommended 
that, for the purposes of the balance sheet, the rate at 
31 December should be used. The Commission will 
suggest to the other institutions that they follow the 
Court's recommendation when producing their own-
balance sheets. 
(b) With regard to day-to-day operations — i. e. imple­
mentation of the budget — the use of monthly conver­
sion rates is the outcome of the 'statement' entered by 
the Council in its minutes when the Financial Regula­
tion of 21 December 1977 was adopted, introducing 
the EUA (since replaced by the ECU). The application 
of the monthly conversion rates was therefore formally 
incorporated in the Commission's proposal for a revi­
sion of the implementing measures (Articles 85 to 91) 
of the Financial Regulation, which is now before the 
other institutions awaiting their opinion. The Commis-
31. 12. 82 Official Journal of the European Communities 183 
sion has not been able to adopt the Regulation laying 
down the implementing measures as Parliament, at the 
time of writing, had not delivered its opinion. (c) Consolidated balance sheet of the Communities for 1981 
('Current assets' heading; the heading 'Sundry debtors' 
includes real debts owing to the Community and expend­
iture to be adjusted; consolidation) 
Appropriations available to cover (a) exchange losses and (b) 
bank charges 
2.11. 
(a) Like Parliament (see paragraph 2.2 (b)), the Commis­
sion had to deal with the problem of exchange losses. 
The use of transfers was found in practice to involve 
major difficulties (neither the amounts nor the details 
of the transfers could be given or reliably estimated; 
and in its 1980 report (paragraph 1.13), the Court of 
Auditors ruled out the use of 'open transfers'). The 
solution chosen appeared the best in the circum­
stances. The only way to produce a permanent solution 
would be by a change in the Financial Regulation. 
(b) The Commission accepts the Court of Auditors' view­
point, and the necessary arrangements have been made 
for the future. 
A sum of860 000 ECU for development projects in the Medi­
terranean countries, including expenditure, appears in the 
balance sheet under the heading 'Advances' 
2.12. The Commission has set up an improved system 
for monitoring all these debit accounts with a view to 
speeding up their clearance by the authorizing departments 
concerned, either by entry as budgetary expenditure or by 
recovery of the claim. — Stationery and office supplies are written off as soon 
as they are acquired and entered as budgetary expen­
diture for the year. No inventory is kept by value. There 
cannot be said to be 'stocks' in the usual meaning of 
the term, but simply expendable supplies deposited in 
central stores that contain sufficient reserves to keep 
the departments going, bearing in mind the delivery 
times for the various items. 
— At the time the balance sheet is prepared, it is not 
always easy to draw a distinction between real debts 
owing to the Community and expenditure to be 
adjusted. The Commission will endeavour in future to 
make the breakdown required by the Court of Audi­
tors. 
— The system for reconciling accounts which was intro­
duced in 1981 should prevent this from happening 
again. 
— In the explanatory notes attached to the consolidated 
balance sheet (paragraph 4.14, page 27 of Volume V) 
the Commission gives the amount of commitments 
which are not covered by appropriations carried for­
ward. The Commission does not consider that it needs 
to show in the balance sheet items such as leases, guar­
antees, securities, etc., which will appear as revenue or 
expenditure in budgets of subsequent years. Neverthe­
less, the Commission will investigate whether some of 
the commitments referred to by the Court could be 
inserted in the balance sheet as memorandum items. 
Balance sheet of the Communities 
2.14. 
(a) Surplus available from 1980 as 
accounts and in the 1981 accounts shown in the 1980 
The final surplus balance for 1980 was 246-132 million 
ECU. (Reference should be made to the revenue and 
expenditure account and the amended balance sheet pre­
pared by the Commission and sent to the budgetary and 
control authorities on 13 January 1982.) The data referred 
to above should eliminate any doubts about.the figures. 
Moreover, supplementary and amending budget No 2 for 
1981 carries 246 -132 million ECU on the revenue side as 
the surplus for the previous year. 
(b) Explanatory notes to Volume V of the revenue and 
expenditure account 
The Commission is willing to look for any way of improv­
ing the notes. The proposals promised by the Court will be 
useful in this connection. CHAPTER 3 
Revenue 
SUMMARY OF PRINCIPAL COMMENTS AND REPLIES 
3.0. 
(a) The political dispute was resolved by 
means of a compromise covering all the 
sums to be paid to the budget by the Member 
States in question. 
(b) The basic Regulation allows the Member 
States a considerable margin of discretion in 
applying the Regulation. 
The Commission has proposed a revision of 
Regulation No 2892/77 which would 
improve many points. 3.3 to 3.5 
3.7 to 3.11 
184 Official Journal of the European Communities 31. 12. 82 
(c) The differences found by the Court of 
Auditors between the final VAT base and the 
initial budget estimates are due not to errors 
in the method of estimation but to external 
variations which have nothing to do with this 
system. 3.12 virtue of the adoption of amending budget No 1/1981 the 
reservations made by three Member States (France, Ger­
many and Belgium) with regard to their payments in re­
spect of supplementary budget No 2/1980 and/or the ini­
tial 1981 budget cease to apply and that these States are 
therefore now honouring their commitments in respect of 
these two budgets'. 
(e) The Commission has sent a reasoned 
opinion on this subject to the Member States 
and is currently examining the situation with 
them. 3.18 to 3.23 
(0 The Commission agrees with the Court's 
comments and is continuing to take appro­
priate steps. 3.25 to 3.32 
(g) The Commission is being kept informed 
of the investigations in progress which have 
already led to an initial establishment of own 
resources (1.7 million ECU). 3.33 to 3.35 
(h) The Commission has taken internal 
measures to increase efficiency. 3.41 to 3.47 In these circumstances, the budget dispute might have 
been revived if the Commission had demanded interest on 
late payments. By waiving its claims on the three Member, 
States, the Commission acted within the spirit of the politi­
cal compromise; it also complied with the procedure pro­
vided for by Article 24 of the Financial Regulation. 
As regards the accounting for the 1980 arrears, the Com­
mission would point out that during the procedure for ,the 
adoption of supplementary and amending budget No 2/ 
1981, which, as mentioned above, was destined to resolve 
the budget dispute in accordance with the arrangements 
agreed by the two arms of the budgetary authority, the 
arrears of own resources payments were treated as a sur­
plus available from the previous financial year. The entry 
of these payments in the 1980 accounts is thus in compli­
ance with the wishes of the budgetary authority. 
Budget dispute of 1980 and 1981, waiver of interest on late 
payments and accounting for 1980 arrears 
3.3 to 3.6. Late payments generally result from adminis­
trative errors; a number of cases occur every, year. 
Article 11 of Regulation No 2891/77 is then strictly 
applied and, apart from a few exceptions, the Member 
States at fault never dispute these cases but pay the sums 
due within a reasonable period.' 
Political disputes about the budget, however, are quite 
another matter. 
As regards the budget dispute of 1980 and 1981, the cover­
ing letter for the draft of amending budget No 1/1981 sent 
by the President of the Council to the President of Parlia­
ment on 10 August 1981 shows that the Member States 
considered the adoption of this amending budget a politi­
cal act to reach an overall settlement of the institutions' 
differences over supplementary budget No 2/1980 and the 
1981 budget. The statement that these delegations would 
consider all the financial issues settled indicates the impli­
cations of the decision taken. The other Member States did 
not challenge this statement of position contained in the 
letter of 10 August 1981 from the President of the Council 
to the President of Parliament. This letter was discussed by 
the Parliament's Committee on Budgets on 7 September 
1981 and its contents were not disputed. 
In point 18 of its Resolution of 18 September 1981 on the 
draft amending budget No 1 of the European Communi­
ties for the financial year 1981, Parliament noted 'that by Calculation of the VA T base by the revenue method 
(method B) 
3.8. The controls of the VAT base in the Member States 
are conducted in1 accordance with Council Regulation 
No 165/74 in association with the national authorities and 
in compliance with the national laws applying to them; the 
Commission does not, therefore, enjoy complete freedom 
of action. In its proposal of 20 July 1982 amending Regu­
lation No 2891/77, the Commission sought the right to 
conduct direct inspections of the Communities' own 
resources in national departments. 
Several checks have been made to clarify the situation as 
regards the errors discovered in the Netherlands. The Neth­
erlands authorities corrected these errors following two 
control reports for 1979 and 1980. 
VA Tpayments by Denmark and Ireland 
3.9. The matter of the unauthorized deduction of VAT 
resources by Denmark has now been settled and the Dan­
ish authorities have paid over the VAT in question for botfi 
1979 and 1980. The comments concerning Ireland had 
already been made to the Irish authorities in the Commis­
sion's control reports or during the discussions of this sub­
ject in the Advisory Committee on Own Resources and the 
Irish authorities have been asked to improve their meth­
ods. 
31. 12. 82 Official Journal of the European Communities 185 
Calculation of financial compensation 
3.10. The Commission acknowledges that there is some 
foundation for the Court's comments. However, it must be 
borne in mind the Article 9 of Regulation No 2892/77 per­
mits the use of 'appropriate data' and 'approximate esti­
mates'; the sixth recital of the Regulation recognizes that 
there is an appreciable margin of discretion in the way in 
which the Member States will apply certain provisions of 
the Regulation. 
Prompted by the same considerations as the Court, the 
Commission is attempting to reduce this margin of discre­
tion. of national revenue for the period before Greece joined the 
Community. The audit system set up by the Greek au­
thorities to control the Communities' own resources (see 
the reply to point 3.14 above) should rule out any possibil­
ity of this applying to the establishment of these receipts. 
Audit of computerized accounting in Denmark 
3.16 to 3.17. The Commission will pay special attention 
to the Court's comment. 
Revision of Regulation No 2892/77 
3.11. The Commission has proposed a revision of Regu­
lation No 2892/77 which, although it still does not provide 
for the application of a single and more satisfactory system 
of calculating the uniform base, nevertheless contains sev­
eral improvements on the current rules; an additional tran­
sitional period of three years will help to make matters 
clearer. 
Estimates used as a basis for the payment of VAT own 
resources 
3.12. The variations observed by the Court of Auditors 
between the final VAT base for 1979 and 1980 and the ini­
tial estimates in the budgets for these years are not due to 
any shortcoming in the method of estimation but to exter­
nal factors which cannot be taken into consideration when 
the estimates are made: in Italy, the cause was the success 
of the anti-fraud campaign following the introduction of a 
computer system and in the United Kingdom, the rise in 
the value of the pound, as mentioned in Table 3.2 of the 
Court of Auditors' report. 
The Commission is endeavouring to improve the methods 
of estimation. 
Internal audit by the Greek authorities 
3.15. The Commission considers that the control meas­
ures taken by the Greek authorities and introduced on 
1 January 1981 are satisfactory and comply with the obli­
gations imposed on Member States by Article 18 of Regu­
lation No 2891/77. 
The Commission would point out that the checks con­
ducted by the Audit Directorate of the Directorate-General 
for Customs have now gone beyond 1977, but it will 
ensure, by means of bilateral contacts witH the Greek au­
thorities, that the time-limits for post-clearance collection 
laid down in Article 2 of Regulation No 1697/79 are re­
spected. 
As regards the Court's statement that 'the review gives rise 
to significant sums of additional revenue', the Commission 
would observe that this statement applies to the collection Duty-free allowances — tax-free shops — butter ships 
3.18 to 3.23. As shown by the various proposals it has 
put forward on the subject, the Commission has always 
been opposed to the 'butter ships'. From 1 January 1982 it 
stopped paying refunds for Community products sold on 
these ships. 
On 24 June 1982 the Commission sent all the Member 
States a reasoned opinion about the problem referred to by 
the Court of Auditors (butter ships and duty-free shops). 
The Member States, meeting within an ad hoc Council 
working party, are considering what solutions should be 
adopted, bearing in mind all the implications. The Com­
mission will keep the Court of Auditors informed of the 
progress made. 
3.24 to 3.32. 
Agricultural levies; systematic control and return of licences 
Since the licences issued in one Member State are also 
valid in the others, a systematic cross-check would require 
the transmission of tens or even hundreds of thousands of 
data a year and a check on this information on arrival as 
well as any feedback. In theory, it would also be possible 
to check the unreturned licences but information would 
then have to be sent to some 1 300 customs offices (Ger­
many, France and Italy) and to the departments responsi­
ble for collecting import levies in other Member States. 
Subject to the information provided by the Court of Audi­
tors in paragraph 3.32 (examination in progress within the 
Trade Mechanisms Experts Group of the Community), the 
Commission can see no need for proposing such syste­
matic checks to the Member States since the advantages 
would not appear to outweigh the drawbacks. However, in 
spite of the precautions already taken, the Commission is 
well aware of the risks of irregularities or falsifications. It 
has resumed its examination of this subject and asked the 
Member States to inform it of the type of checks currently 
carried out; if necessary it will propose new checks in line 
with the possibilities open to the national authorities. 
186 Official Journal of the European Communities 31. 12. 82 
Coordination between national departments 
The Commission can only approve the Court's comments. 
It has already made representations to the Member States 
— and will continue to do so — to improve the exchange 
of information between the departments concerned. 
Notification of levy rates 
The Commission would point out that almost all the levy 
rates are communicated in full to the Member States. The 
problem raised could normally affect only products pro­
cessed from cereals, since it is in this sector that there are 
frequent changes of some — but not all — levy rates. How­
ever, in view of the number of these processed products, 
the rates are communicated in full to the Member States on 
the first day of each month. This has been standard prac­
tice since the common market organization was first estab­
lished in this sector (1962). 
Full communication of all the rates applicable every time 
the green rate changes is out of the question at present for 
technical and budgetary reasons. 
The Commission is aware of the problems and is consider­
ing how modern communications technology could be 
used to facilitate the application of these various rates in 
national currency by the Member States. CHAPTER 4 
EAGGF — Guarantee Section 
SUMMARY OF PRINCIPAL COMMENTS AND REPLIES 
4.0. 
(a) Expenditure decreased not only in milk 
and milk products but also in fruit and 
vegetables, especially processed products. 4.5 to 4.7 
(c) The Commission would draw attention 
to its efforts to reduce the rates of monetary 
compensatory amounts. 4.9 to 4.11 
(d) In general, the existence of different 
budget rates (the effect of the double rate) is 
taken into account in preparing financial 
assessments. 4.12 
(e) The grounds for these special advances 
were duly substantiated. 4.13 to 4.14 
(g) The Commission is continuing its efforts 
to reconcile the differences which persist 
between the cash position recorded by the 
Member States and that recorded by the 
Commission. 4.16 
Irregularities in the meat sector (The Netherlands) 
3.33 to 3.35. The Commission is being kept constantly 
informed of the progress of the investigations. 
The competent authority in the Netherlands has already 
made establishments for 1-7 million ECU and the neces­
sary steps will be taken to ensure official establishment of 
the remainder. (h) Direct management by the Commission 
of certain expenditure is necessary and is 
• permissible in the case of budget appropria­
tions- for the EAGGF. Such expenditure is 
subject to the general rules of the Financial 
Regulation, including those on the automatic 
carryover of amounts committed but not 
paid. 
(j) Direct financing of aid to disaster victims 
in Italy from Article 590 of the general 
budget would have resulted in unjustified 
delays. 4.17 
4.19 
Control of sugar levies 
3.36 to 3.39. The Commission agrees with the Court's 
comments. (k) The Commission does not agree with the 
Court's view on the financial depreciation of 
certain products in public storage which are 
bound to incur losses upon sale; it applies 
the current Council regulation. 4.20 to 4.21 
Miscellaneous revenues 
3.40 to 3.41. To improve the procedure for collecting 
miscellaneous revenues, the Commission decided on 
26.May 1982 to end the division of responsibilities in this 
sector between authorizing officers and the accounting 
officer and to instruct the accounting officer to take charge 
of debt collection, the procedure for which is shortly to be 
amended. (1) This was the result of a decision by the 
budgetary authority. 
(m) The problems mentioned by the Court 
will be resolved by the management letter 
referred to in Chapter 2 (Accounting matters) 
of this report. 
The Commission does not agree with the 
Court. 4.22 
4.23 to 4.27 
31. 12. 82 Official Journal of the European Communities 187 
(n) The inconsistent presentation of clear- Special advances without supporting documents 
ance decisions has no financial consequ­
ences. The Commission will, however, 
endeavour to pay heed to the Court s com- 4.14. Although it is true that the five advances men-
ment- t0 ^ ^ tioned by the Court were made without documentary sup­
port, they were considered justified by the Commission 
departments and this view was endorsed by the EAGGF 
(p) Delays in clearing accounts are being Committee at its meeting of 16 December 1981. 
reduced. 4.31 to 4.32 
In order to meet the formal requirements of the Court of 
Auditors, the Member States will in future be asked to con­
firm and support such requests in writing. 
4.33 to 4.36 (q) The allocation of responsibility amounts 
which cannot be recovered must be deter­
mined case by case according to rules which 
have still to be drawn up. 
The management of the EAGGF, Guarantee Section has 
developed within a legislative framework which has remained 
unchanged and is generally specific 
4.1. The Commission notes that the revision of the 
Financial Regulation now in progress should clarify the 
provisions regarding Title VIII (EAGGF, Guarantee Sec­
tion). 
161 • 7 million ECU could only be carried over after approval 
by the budgetary authority 
4.4. The Commission would point out that the carryover 
of 100 million ECU in respect of the milk co-responsibility 
programme was proposed in response to the wishes 
expressed in Parliament's resolution of 19 November 1981. 
MCAs charged with refunds 
4.11. The Commission wishes to point out that the pro­
gramming of the computer is being amended at its request. DIRECT MANAGEMENT AND AUTOMATIC 
CARRYOVERS 
4.17. In its answer to similar comments in the Court's 
1980 report, the Commission pointed out that in certain 
cases it had to be able to make direct payments for man­
agement measures. Since these are financed by deductions 
from the aids to producers, it is logical that they should 
remain closely linked to the original payments. The pay­
ments in question were therefore charged to a new line in 
the EAGGF, Guarantee Section budget title. 
The Commission does not consider such payments to be 
either anomalous or excluded by the principles governing 
the management of the EAGGF appropriations. Since 
these payments are not made by national agencies and are 
not the subject of advances in the usual way, they do not 
follow the specific rules which Title VIII of the Financial 
Regulation lays down for such payments. 
They are, however, subject to the general rules of the 
Financial Regulation applying to all direct payments made 
by the Commission, including automatic carryovers of 
appropriations committed but not yet paid. Direct manage­
ment is limited to highly specific, marginal cases. 
Monetary unit — dual rate 
4.12. Following the Court's comment in its annual 
report for 1980, in which it asked the Commission to calcu­
late the effects of the use of a dual conversion rate on the 
basis of changes in the rate, the Commission, in its llth 
Financial Report (§ 2.12), estimated this effect at 125 mil­
lion ECU for 1981. 
The effect of the dual rate is calculated both when budget 
estimates are prepared and when the financial impact of 
agricultural proposals, especially price proposals and 
related measures, is calculated, although the figure is not 
always expressly mentioned, particularly when it is small. MANAGEMENT OF AID TO DISASTER VICTIMS IN 
ITALY 
4.19. Strict compliance with the rules on expenditure 
under Article 590, and the transfer to this article of the 
appropriations required before a decision was taken on the 
free supply of food from intervention stocks to disaster vic­
tims in Italy, would have involved considerable delays. For 
humanitarian reasons, the Commission therefore opted to 
charge this expenditure provisionally to the EAGGF, 
Guarantee Section appropriations and then to rectify the 
situation, as noted by the Court of Auditors. 
188 Official Journal of the European Communities 31. 12. 82 
Depreciation of certain publicly-stored agricultural products 
4.20 to 4.21. The guarantee which follows from the facil­
ity to sell products into public interveiition at a certain 
price level is likely to involve losses. V of the revenue and expenditure account and balance 
sheet of assets and liabilities will be the subject of a man­
agement letter. The problems mentioned by the Court will 
be considered in the light of this letter. 
If these are considerable, the second paragraph of Article 8 
of Council Regulation (EEC) No 1883/78 allows deprecia­
tion of products in public storage on 31 December. This 
depreciation, for which available appropriations are used, 
is subject to the rules laid down by that Regulation, which 
state that depreciation may not have the effect of reducing 
the price below the average of the purchase prices and the 
prices obtained on disposal. Hence depreciation is always 
smaller than the financial loss suffered by the Community. 
These provisions have the following advantages: Recovery of expenditure refused under clearance decisions 
4.27. The Commission adopted its clearance decisions 
on 16 November 1981 and sent them to the Member States 
on 2 and 3 December 1981, that is after advances for 
December had been paid. The Commission informed the 
Member States of the exact amounts .resulting from these 
decisions by letters dated 14 December and recovery was 
made on 18 December. 
— as far as possible, they avoid possible burdens being 
carried forward to future budgets; 
Justification of amounts in the 1974/75 clearance decisions 
they save interest charges on the Community budget 
and reduce national charges because the Member 
States have less money tied up. 
The Commission's use of the room for manoeuvre allowed 
by the criteria laid down by the Council does not justify 
the criticism made. 4.28. In order to keep its clearance decisions to a rea­
sonable length, the Commission has not included thou­
sands of detailed figures. These are, however, contained in 
the full report on which the decisions are based and this is 
available to all those concerned with the clearance deci­
sions, including the Court of Auditors. Nevertheless, the 
Commission will endeavour to make future clearance deci­
sions more readily comprehensible. 
Valuation at zero price of 8 000 tonnes of beef given to 
Poland 
4.22. This humanitarian aid operation was carried out in 
accordance with conditions laid down by the budgetary 
authority. The Commission can only repeat its preference 
for a procedure which would have avoided the Court's crit­
icism. 
Entry of a negative appropriation of 40 million ECU for the 
clearance of accounts 
4.25. When preliminary draft amending budget No 2/81 
was established, the Commission had still not taken its 
clearance decision and so the final amount was not known. 
At that time, the estimates were still partial. Lack of a consistent method of presenting clearance deci­
sions 
4.29. (a) and (b) Although the texts of the clearance 
decisions for 1974 and 1975 were adopted, the expenditure 
provisionally refused was refused Community finance in 
the clearance for 1971, 1972, 1973, 1974 and 1975. Expend­
iture refused is only included in the decision for the fol­
lowing year when it can be either partly or totally financed 
or when the reservation continues. Expenditure provision­
ally refused in 1971 and 1972 was therefore finally 
excluded from Community financing. Expenditure provi­
sionally refused in 1973 (BFR 13-5 million, LIT 92-8 mil­
lion and HFL 8-2 million) was partly financed (BFR 10-3 
million, LIT 61-2 million and HFL 5-2 million) by the 
EAGGF on the occasion of the 1974 clearance, while the 
reservation for the Netherlands was continued in the case 
of HFL 3 million. As a result, BFR 3-2 million and LIT 
31-6 million were finally excluded from Community 
finance. 
Clearance — global charging 
4:26. In Chapter 2 (Accounting matters), paragraph 2.14 
(b), the Court states that the explanatory notes of Volume (c) As the Court has noted, the amounts recorded in the 
recitals to the clearance decisions as those to be excluded 
from Community financing are usually the balance of 
negative and positive corrections. In the case of the 1975 
decisions for the Netherlands and Italy, however, the 
amounts given were only the negative corrections. As the 
31. 12. 82 Official Journal of the European Communities 189 
Court points out, this procedure was inconsistent with the 
presentation of other decisions, but it had no effect on the 
financial results annexed to the decisions in question. (f) The term 'improvement' has been chosen 
in the regulation to ensure that the aid is not 
confined to reconstruction only. 5.24 to 5.26 
PROGRESS OF CLEARANCE WORK 
4.32. The Court's comments in its special report on the 
clearance of accounts were the subject of a separate reply 
by the Commission on 30 September 1982. 
Frauds and irregularities: final allocation of irrecoverable 
amounts 
4.33. The Commission has not yet been able to take a 
decision on certain Amounts which have become irrecover­
able following irregularities because such decisions can 
only be taken after each case has been examined on the 
basis of rules which have still to be drawn up. For adminis­
trative reasons this work, which is extremely time-consum­
ing, has still not been done. Recording of appropriations to be re-used 
5.6. The Commission applies properly the provisions of 
the Financial Regulation and of Regulation No 3171/75. 
Thus, certain amounts not used for completed projects or 
following cancellations cannot be re-used immediately, 
since the availability for re-use was noted too late in the 
year. 
Non-differentiated appropriations that can be re-used on 
the basis of the provisions of Regulation (EEC) No 3171/ 
75 cannot be transferred to another budget heading, and 
the Commission can only cancel them or maintain them as 
commitments to be liquidated. 
Communications concerning irregularities 
CHAPTER 5 
EAGGF, Guidance Section 
SUMMARY OF MAIN OBSERVATIONS AND REPLIES 
5.0. 
(a) In the present system of execution as 
provided for by the Financial Regulation, the 
practice followed is the only one enabling 
the appropriations released to be re-used 
completely. 
(b) The communication of data on irregular­
ities has always been complete. Since 1980, it 
has been made more systematic to take 
account of the increased number of indirect 
measures. 5.6 
5.7 to 5.10 
(c) (d) The Commission is ensuring proper 
application of Directive 72/159 in compli­
ance with the objectives and provisions of 
this instrument. 5.16 to 5.19 
(e) The Commission has asked the Member 
States to notify it of the results of national 
verifications carried out under the regulation. 5.20 to 5.23 5.8. The Commission requires Member States to send 
information on their control measures as prescribed in 
Article 2 of Regulation (EEC) No 283/72. The Member 
States are continuosly reminded of the need to comply 
with this obligation. 
In the early years, however, the Commission did not insist 
on a special and systematic submission from Member 
States of national regulations in respect of the application 
of Article 2 of Regulation (EEC) No 283/72, as far as mea­
sures under the Guidance Section were concerned. The 
indirect actions actually implemented were few, the irregu­
larity possibilities for these measures were well defined 
and appreciated by Member. States, there was a limited 
number of national services responsible for the administra­
tion of the measures, and the necessary information was, in 
fact, received from Member States. 
In all application measures adopted since 1980, it has been 
compulsory for Member States to submit to the Commis­
sion, along with the first reimbursement claim, the texts of 
national control provisions etc. For measures with advance 
payments the Commission received information at an ear­
lier stage since audits on-the-spot are normally made 
before submission of the reimbursement claim. This initia­
tive — which in no way releases Member States from the 
obligation of systematically submitting their control prov­
isions and amendments thereto — is of considerable 
value to the Commission. 
5.9. The Commission has always insisted on the submis­
sion of quarterly communications according to Articles 3 
and 5 of Regulation (EEC) No 283/72 along with supple­
mentary information as prescribed. Member States are fre­
quently reminded to ensure that all cases of irregularity are 
190 Official Journal of the European Communities 31. 12. 82 
duly reported and pursued. However the Regulation does 
not provide for a communication if there is no new infor­
mation to send. 
The steadily increasing number of indirect actions in 
recent years and new national services involved, with less 
precise or no indication of what constitutes an irregularity 
in the particular case — especially in respect of indirect 
actions implemented by directives — has led to a certain 
lack of knowledge at local level of the communication pro­
cedures of Regulation (EEC) No 283/72 as ascertained by 
on-the-spot audits. Since 1980 Member States have there­
fore been reminded, on the occasion of on-the-spot audits, 
of the importance of ensuring that the provisions of Regu­
lation (EEC) No 283/72 are known and applied for each 
indirect action by all services involved in the administration 
thereof. 
In accordance with the Court's suggestion, the Commis­
sion has quite recently once again reminded the Member 
States of their obligations under Regulation No 283/72. 
5.10. The Court made a similar comment as regards the 
concept of 'irregularity' in its comments upon the Guaran­
tee Section in the Report on the 1980 financial year. 
The Commission again wants to point out that the concept 
of 'irregularity' has no direct equivalent in the legal sys­
tems of the Member States and it goes further than the 
criminal act of fraud as defined by the national penal laws. 
Indeed, in the course of the Council negotiations prior to 
the adoption of Regulation (EEC) No 283/72 it was 
accepted that the term had a very wide range of applica­
tion thus giving the Commission a maximum of informa­
tion in this field. The Guidance Section, in Document VI/ 
5516/80 of 12 March 1980 attempted to outline some of 
the situations to which the term 'irregularity' might be 
applied. 
As a result of the discussions with Member States that 
document is now in course of revision. It was, however, 
welcomed by Member States and has essentially been 
accepted by them. 
Application of Directive 72/159/EEC 
The Commission notes the Court's comments on the provi­
sions of the directive adopted by the Council in 1972. As 
the Court's observation^ have a more general scope, the 
Commission will make below only partial replies. It there­
fore may as appropriate provide any useful additional 
information when it has information on actual cases. 
5.13. The Commission asks the Court to inform it of the 
cases noted during the inspection visits it refers to. As soon as it has received communication of these cases, it 
will examine the problems submitted by the Court. But it 
must point out at once that the Netherlands interpretation 
is the right one. 
5.14. The Commission feels that it is quite normal that 
'the Member States concentrate their efforts on administra­
tive supervision' at the time when the plan is drawn up, the 
quality of the plan being a crucial factor in the economic 
future of the farm. In addition, the correctness of the 
financial execution of the plan is verified systematically. 
However, as soon as this has been established, there is no 
need for systematic verification of the progress and use of 
the investments. 
5.15. As the effort devoted to preparing the plan is the 
decisive factor, the Commission feels that very extensive 
follow-up would be relatively costly in terms of the results 
it would yield. 
The Court's observation concerning the reference to the 
general development of wages for the determination of 
comparable income (outside agriculture) at the end of the 
period of the plan is not justified. All the Member States 
have chosen methods of fixing a plan's objective ensuring 
as much as possible that the modernization objective actu­
ally achieved at the completion of a plan is comparable 
with real circumstances outside agricultre. 
Application of Directive 72/159/EEC in the pigmeat sector 
5.16. to 5.18. In April 1980, the Commission adopted 
the following fundamental definition criteria: 
'Investment in pig farming shall be taken to mean invest­
ment in the construction, extension and alteration of pig­
geries and in the installation of technical facilities required 
for running them. 
This means, for instance, that automatic manure removal 
systems or feeding systems in the piggery are eligible under 
Article 9 (2) but that feed-mixing facilites are not.' 
These criteria are an accurate reflection of the Council's 
decision and intention, are practicable and take account of 
the different methods of pigmeat production — by avoiding, 
for example, penalization of farmers growing their own 
feed. 
5.19. The possibility of receiving national aid, for that 
part of their investment which went beyond the ceiling 
applied to investments aided under development plans, 
resulted from an interpretation of Directive 72/159 which 
was, in the Commission's opinion, wrong. 
At the Commission's request, the United Kingdom has 
now submitted statistics indicating the possible extent of 
the aid involved and the Commission should shortly be in 
a position to draw its conclusions. 
31. 12. 82 Official Journal of the European Communities 191 
Application of Regulation (EEC) No 794/76 concerning the 
re-organization of fruit production 
5.21. The Regulation provides for verfication, after five 
years, of compliance with the beneficiaries' undertakings. 
The Commission has asked the Member States to send it 
the results of this verification. On this occasion, informa­
tion has been requested concerning the arrangements made 
to ensure compliance with the undertaking in cases of sale, 
leasing or other transfer of land, and on the proportion of 
land escaping compliance with this undertaking, for these 
reasons. 
5.22. In October 1982 the Commission decided to ini­
tiate the infringement procedure against Italy because of 
the long delays in the execution of this measure. 
Aid to the repair of damage caused by the earthquake in 
Friuli- Venezia Giulia Considerable progress has been made in 
clearing up a number of difficult outstanding 
cases and the amount now outstanding (10-2 
million ECU) in respect of 1975 and 1976 is 
1-5% of the total amounts (1975 to 1980) 
outstanding at the end of 1981. The delays 
arise from the complexity of the files and the 
necessity to carry out appropriate controls of 
the claims. 6.9 to 6.11 
(b) The Commission is undertaking a pro­
gramme of studies of the national systems of 
the Member States. 
The Commission has been unable to com­
ment and follow up points made by the 
Court on a number of specific dossiers 
because the information on the points arising 
from the Court of Auditors' 'on the spot 
checks' was not available. 6.12 to 6.16 
5.25: To enable it to make a better assessment of the 
Court's observation, the Commission has asked for further-
details from the Member State concerned. 
5.26. In fact, the term "improvement" has been chosen 
in the Regulation to avoid confining the aid to the rebuild­
ing of facilities which in certain cases would no longer 
have matched current needs. This applied for certain 
cheese factories, in respect of which it has been decided to 
set up larger competitive units rather than to rebuild a very 
large number of small ones. 
CHAPTER 6 
The European Social Fund and other expenditure 
in the social sector Utilization of the 1981 commitment appropriations 
6.2. The Commission approved three series of projects 
under the 1981 budget, the last one on 17 September 1981. 
They totalled at that time 1 020-43 million ECU, which 
corresponded to the near totality of the appropriations 
available. The unused appropriations were intended as a 
reserve to cover any risks of exchange rate fluctuations, as 
requested by the Court of Auditors. 
The variations due to changes in the value of the ECU as 
•well as the realignment of parities within the European 
Monetary System on 4 October 1981 produced a move­
ment in the opposite direction, however, with commit­
ments falling from 1 020-43 million ECU to 996-21 mil­
lion ECU. The unused appropriations together with large 
refunds from Member States towards the end of the year 
gave a final total of 112-2 million ECU in commitment 
appropriations available on 31 December 1981 and there­
fore remaining in 1982. 
SUMMARY OF PRINCIPAL COMMENTS AND REPLIES 
6.0. 
(a) The refunds notified by the Member 
States are made in accordance with the 
Financial Regulations and in response to 
written requests twice per year by the Com- -
mission for such information. The two major 
reasons for the non-utilization of appropria­
tions in respect of continuous operations are 
that national budgetary resources are not 
available or that the operation does not 
begin on time or at the level planned, factors 
which cannot be influenced by the Commis­
sion. Member States are now requested to 
indicate the reasons why the appropriations 
are not used. 6.6 to 6.8 Utilization of the 1981 payment appropriations 
and 
Utilization of appropriations carried over from 1980 
6.3 and 6.4. 
1. Utilization of the 1981 payment appropriations 
Of the 620-4 million ECU in 1982 appropriations, 88-2% 
(547-4 million ECU) was used. There are two reasons why 
all the appropriations were not spent: the large carryover 
of 198-7 million ECU had to be used first and requests for 
payment were not spread equally between chapters. 
For Chapter 50, requests were far in excess of the sums 
available, while in Chapter 51, in particular Item 5100 
192 Official Journal of the European Communities 31. 12. 82 
(Regions), requests from some Member States were slower 
and smaller than expected with the result that 73 million 
ECU (payment appropriations) as regards Chapters 50, 51 
and 52 were carried over automatically to 1982, because 
some Member States did not use fully the possibilities for 
advance payments offered by the Social Fund. 
2. Utilization of payment appropriations carried over 
from 1980 
The 326-40 million ECU added by supplementary budget 
No 2/1980 at the end of the year produced a carryover to 
1981 of 198-7 millibn ECU. This was used up entirely 
except for a small amount of 210 000 ECU in Chapter 52 
(Pilot schemes and preparatory studies), which lapsed 
because there were insufficient claims. Commission observes that it has used every opportunity to 
emphasize the need for notification of unused appropria­
tions within the specified deadline. 
(b) As to the overestimation of the costs by the benefici­
ary, it has to be noted that it is not possible in the majority 
of cases to indicate the shortfall at the beginning of the 
operations, since the promoters are unlikely to take the risk 
of refunding appropriations, when inflation and other 
unforeseen items could cause costs to rise during the pro­
gramme. 
(c) The delay in the closure of a dossier is a function of the 
complexity of each of the dossiers. When a final claim for 
payment is received it is often necessary to seek supple­
mentary information. For reasons of internal control the 
final claim might not be accepted so causing a change in 
the amount to be paid and to be cancelled. 
Reasons for non-use of amounts released 
6.7. There are a number of explanations why the 
amounts allocated are not fully utilized. It should be 
remembered that estimates of expenditure are made in the 
middle of the year preceding the year of commencement of 
the operation and for many organizations the budget allo­
cation for the following year is not known. In addition the 
legislation on which the applications are based may some­
times change at short notice. The two major reasons for the 
non-utilization of appropriations in respect of continuous 
operations are that national budgetary resources are not 
available or that the operation does not begin on time or at 
the. level planned, factors which cannot be influenced by 
the Commission. In addition to this, when the amount has been paid, a list 
of payments is sent on a monthly basis to each Member 
State and as a final check the Member States are given two 
months to notify the Commission whether the amount to 
be cancelled is correct according to their records. 
Only after this time can the definite amount be cancelled. 
In the cases mentioned by the Court all the dossiers pre­
sented certain difficulties which took some time to over­
come. In one case two visits on the spot were necessary 
(the last in May 1982) and in another, the Member States 
asked for the dossier to be kept open pending litigation 
between the Member State and the promoter. 
Twice per year the Commission requests the Member 
States to indicate in respect of each operation the amounts 
of appropriations committed in the previous year and in 
the current year which will not be used. The Commission 
now requests the Member States to indicate the reasons 
why the appropriations are not being used. 
The application of computer techniques to the Social Fund 
is giving greater flexibility and every effort is being made 
to update the information to the last possible moment 
before presenting the data for Commission decision. It 
often happens and indeed did happen in the two cases 
mentioned that modifications are received just before the 
presentation of the document to the Commission and it 
has to be asked whether a major decision based on a docu­
ment of 1 000 pages should be delayed for one modifica­
tion, which can easily be rectified later. The aim of the 
Commission is to minimize the period between the meet­
ing of the Social Fund Committee and the Commission 
Decision while at the same time having the most up-to-
date information possible. Outstanding balances in the 1975 and 1976files 
6.10 and 6.11. The official records of all commitments, 
payments and withdrawals are held in the financial service 
of the Social Fund. The question of the internal organ­
ization of the Fund was thoroughly studied and this solu­
tion was adopted so as to ensure the most efficient system 
for the administration of the Fund. 
As regards the outstanding balances in the 19*75 and 1976 
files the observation of the Court refers to five very com­
plex dossiers which group together a large number of 
promoters. Since 1979, by meetings and through corres­
pondence the Member States were asked to furnish all 
information required for the examination of the final 
claims. A number of Member States had, however, 
reserved their position on the final closure on a number of 
dossiers. The complexity of a number of these dossiers 
explains the reason for the withdrawals being made only in 
1981. 
Reasons for the delay in withdrawals 
6.8. (a) As regards the lateness with which the Commis­
sion is informed that projects have been cancelled, the Finally, it has happened in the past that some files were 
considered as closed without the final withdrawal being 
made. However the definitive records of amounts out-
31. 12. 82 Official Journal of the European Communities 193 
standing are checked in the financial services of the Social 
Fund and these are the basis for definitive withdrawals. 
Under the present system whereby the amounts of final 
payments are notified to the Member States with an indi­
cation of the amounts to be withdrawn, the actual withdra­
wal follows automatically if the Member State does not 
react within two months. 1. In the Commission's view, and subject to any addi­
tional information on which the Court has based its 
comments and which the Commission does not pos­
sess, the claims are eligible. 
2. The Commission Decision specifies 1. 'Berufliche Vor-
bereitungsmaBnahmen'. Consequently the expenses 
referred to by the Court are considered-by the Commis­
sion as eligible. 
Need of the Commission for better and more systematic 
knowledge of national procedures 
6.13. The national systems for the presentation of appli­
cations are studied as part of the general survey of national 
systems referred to at paragraph 6.16. The Commission was 
not informed of the dossiers referred to immediately after 
the on-the-spot checks by the Court of Auditors; it is will­
ing to examine together with the Court the problems 
raised. (b) Insufficient compliance of certain expenditures approved 
by the Social Fund with the 'regulations and guidelines 
1., 2., 3. The information oh which the Court based its 
comment is not available to enable follow-up. 
4. The Commission accepts the definition of handi­
capped established by the appropriate authorities in 
accordance with the national legislation and practice 
in each Member State. However, the case will be fol­
lowed up. 
Payment of advances 
6.14. Following the pressing demand of the budgetary 
authority to speed up payments in the sector of the Social 
Fund and to create a more rapid impact by the Community 
budget on the national measures in the social field, the 
Council Decision (858/72/EEC) of 24 April 1972 as 
amended by Regulation (EEC) No 2894/77 introduced in 
1978 the system of advances to expedite payment. The 
cases mentioned by the Court show some disadvantages of 
such a system. In fact, there is a risk in any system of ad­
vance payments and it was anticipated by the Commission 
that the question of overpayment could arise. It was for 
this reason that provision for repayment by the beneficiary 
was included in the rules with secondary liability resting 
with the Member States. Normally repayments are made 
by deduction of amounts from other dossiers for the same 
beneficiary. The number of cases where recovery is neces­
sary is a small proportion of the total number of cases (less 
than 1% of the total payments in 1981) and no appropria­
tions whatsoever have been lost. 5. The decision of the Commission was split into two 
parts, one referring to priority regions while the other 
did not. 
6. The general observation of the Court allows only a 
general statement of the Commission. 
6.16. Before paying a claim introduced by the compe­
tent authorities of the Member State, the Commission ser­
vices check the documentation submitted to support the 
claim. In the cases referred to by the Court of Auditors, the 
records submitted by the appropriate authorities broken 
down for each period of training and for each training 
institution concerned were considered as satisfactory. 
As regards the suggestion of the Court of Auditors that the 
Commission should take greater care to satisfy itself by 
means of appropriate contact that certification of the eligi­
bility of expenditure is well founded, the Commission 
would like to make the following statement: 
6.15. 
(a) Payments for objectives other than those, stated in the 
Commission's decision 
The Commission has not received the results of on-the-
spot verifications carried out by the Court. This restricts 
considerably the ability of the Commission to follow up 
the points made'in this paragraph. 
The following are the comments on the dossiers referred to 
in this paragraph: All claims for payment must be submitted through and 
signed by a nominated representative of the Member State. 
The Commission has the right to check, on the spot, all 
expenditure. The Commission is undertaking a programme 
of examination of the national systems of applying for aid 
and claiming payments from the Social Fund. The Fund is 
updating its knowledge regularly. 
Some 57 dossiers (which would comprise considerably 
more programmes) were the subject of on-the-spot visits by 
the services of the Fund in 1981. 
194 Official Journal of the European Communities 31. 12. 82 
CHAPTER 7 
The European Regional Development Fund 
SUMMARY OF PRINCIPAL COMMENTS AND REPLIES 
7.0. 
(a) The Commission's decision to utilize 
available appropriations beyond certain quo­
tas was taken in the interest of sound finan­
cial management. 7.10 to 7.13 mit sufficient eligible requests for assistance in good time, 
and to give assistance beyond their respective quotas for 
1981 to Greece, Ireland and Italy. Given that these three 
Member States had submitted eligible requests for assist­
ance beyond their quotas, it would have been quite unac­
ceptable, from the point of view of management of the 
appropriations allocated to the Fund by the budgetary 
authority, to leave some commitment appropriations un­
utilized. A clearing operation will, in any case, be possible 
in 1982 between the Member States which in 1981 submit­
ted requests in excess of their quotas and those failing to 
take them up in full. Thus, the distribution of ERDF 
funds, as set out in Article 2(3)(a) of the ERDF Regulation, 
will ultimately be respected. 
(b) Delays in accounting for commitments 
should not occur in future. The Financial 
Controller's approval of these decisions is 
available to the Court of Auditors. ~ 7.14 to 7.15 
(c) The proportion of Fund assistance going 
to infrastructure projects should be calcu­
lated over a three-year period; this would 
show that the Commission was justified in 
its decisions. 7.16 
(d) The 1981 financial year is covered by the 
'second-generation' programmes. Within that 
framework the Commission complies strictly 
with the ERDF Regulation. 7.17 to 7.21 
(e) The examples mentioned by the Court of 
Auditors appear to arise from misunder­
standings. 7.22 to 7.25 The Commission's approach in this matter accords with 
the conclusion set out by Parliament's Committee on 
Budgets in its opinion to the Committee on Regional 
Policy and Regional Planning on the Commission's 
proposal for a review of the ERDF Regulation (PE 76.871, 
point 19b), where it states that quotas are purely indicative. 
Commitment of assistance extending over two successive 
budgetary years 
7.14. The procedure whereby assistance is committed in 
two successive budgets was used in 1981 for certain large 
investment projects in order to avoid breaking up ongoing 
projects in two artificial annual tranches on the one hand, 
and blocking a disproportionate amount of the commit­
ment appropriations available to the ERDF on the other. 
The Commission is devising a procedure whereby projects 
of this kind will be subject to annual decisions. 
(0 It is primarily for the Member State con­
cerned to determine whether productive 
instruments are economically sound. The 
Community contributions are the highest the 
ERDF Regulation will permit. 7.26 to 7.32 
(g) The object of the accelerated payments 
procedure is not to speed up projects but to 
make cash resources available to Member 
States more rapidly. 7.33 to 7.39 Commitment procedure 
7.15. The Commission takes its decisions after the 
Financial Controller has approved all aspects mentioned 
in Article 34 of the Financial Regulation. 
The documents recording approval are available for the 
Court's inspection; the Commission will make all appro­
priate practical arrangements. 
Quotas for certain Member States 
7.10 to 7.13. The Commission's decision to allow 1981 
commitment appropriations still available to be used for 
certain Member States beyond their quotas can be justified 
as a measure of sound financial management, in accord­
ance with Article 35 of the Financial Regulation. The deci­
sion is therefore not irregular. The Commission considered 
that sound management of Community resources permit­
ted it to utilize the commitment appropriations not,taken 
up in 1981 by certain Member States which failed to sub-The cases mentioned by the Court where accounting 
entries were late are exceptional; they were due to circum­
stances which should not arise again. 
Proportion of Fund operations devoted to investments in 
infrastructures 
7.16. While it is true that the proportion of total Fund 
assistance that goes to finance investments in infrastruc-
31. 12. 82 Official Journal of the European Communities 195 
tures is constantly increasing, it should be noted that the 
figure of 70% mentioned in Article 4(1 )(b) of the ERDF 
Regulation refers to a three-year period. Moreover, accord­
ing to the statements written into the Council minutes of 
6 February 1979, the Commission may take account of 
particular constraints imposed on certain Member States 
by the small size of their quota. particular to Article 7 on the submission of requests for 
assistance by Member States, which does in fact provide 
for a simplified procedure for global requests. 
The Commission would point out that, should an under­
taking prove not to be viable and go bankrupt before the 
ERDF file is closed, the ERDF aid will be recovered in 
accordance with the provisions of Article 9 of the ERDF 
Regulation. 
Consistency between assisted projects and regional develop­
ment programmes or other Community objectives 
7.17 to 7.25. The 'first-generation' regional development 
programmes cover a period which ended in 1980. The 1981 
financial year, to which the report refers, is covered by the 
'second-generation' programmes (1981-85), all 'first-gener­
ation' programmes having now been completed (para­
graphs 7.17 to 7.21). The Commission would also point out that the Fund's par­
ticipation rate (paragraphs 7.29 to 7.31) should be judged 
not only in relation to the overall investment but also to 
aid given by the Member States, which is the basis for cal­
culating ERDF assistance. The rate of 30% of expenditure 
by the national authorities on infrastructure investments is 
the maximum allowed by the ERDF Regulation. 
The Commission would repeat (J) that with regard to selec­
tion techniques and criteria it strictly observes the provi­
sions of the ERDF Regulation. With the examination of 
applications for aid, which includes a check to ensure that 
they comply with the ERDF Regulation, particularly with 
Article 6(1) regarding the consistency of investment aids 
with regional development programmes, and the consulta­
tions on these applications, it is clear that the projects are 
assessed with regard to the criteria for eligibility for ERDF 
aid. These criteria are explicitly set out in Article 5 of the 
ERDF Regulation, so there is no need for them to be 
adopted, as the Court of Auditors seems to suggest. More­
over, as the Commission itself emphasized in its opinion of 
23 May 1972 (2), the 'first-generation' development pro­
grammes helped it to determine which projects should 
receive ERDF assistance and hence to see that the projects 
fitted into the programmes. 
After thorough examination the Commission stands by its 
decisions in the three cases mentioned by the Court of 
Auditors under paragraphs 7.22 to 7.25. 
Profitability of the projects and calculation of the aid 
7.26 to 7.32. Since ERDF quota operations are designed 
to contribute to the Member States' own regional policy 
programmes, it should be noted, with regard to the 'econ­
omically sound' aspect mentioned in Article 4(1 )(a) of the 
ERDF Regulation, that it is primarily for the Member 
States to check on the economic viability of an enterprise ' 
(paragraphs 7.26 to 7.28). To insist on the submission of all 
possible data for an assessment of the profitability of pro­
jects, as the Court of Auditors suggests, would run counter 
to the spirit and the letter of the ERDF Regulation, in 
(') See paragraphs 7.14 to 7.18 of the Commission's reply to the 
comments by the Court of Auditors concerning 1980; OJ 
C 344, 31. 12. 1981, p. 232. 
(J) OJ L 143, 12. 6. 1979, pp. 7 and 8. The industrial projects in Ireland (paragraph 7.32) were 
mentioned by the Court of Auditors following one of its 
own audits; the Commission has learnt about it from the 
brief comment in the Court's report for 1981. The sugges­
tion that part of the investment cost was not eligible for 
assistance from the Fund should therefore be examined in 
greater detail with the Court of Auditors, in accordance 
with the information procedure agreed in 1981 (3). If neces­
sary the Commission will then take the matter up with the 
Member State concerned. 
Lack of the effect of the accelerated payments procedure on 
the completion times for projects 
7.33 to 7.39. By its very nature, the ERDF payments sys­
tem, and, in this case, the system of accelerated payments, 
is not intended to speed up projects, since accelerated pay­
ments by the Fund would have a decisive effect on the 
time required to complete individual projects only if they 
were made direct to individual investors. However, in 
accordance with the fifth subparagraph of Article 4(2)(a) of 
the Regulation, the contribution from the Fund is normally 
paid to the central authorities, which retain it as a partial 
repayment of the aid they have given, except in the case of 
infrastructure projects in the United Kingdom and regional 
projects in Italy, where the Fund's contribution goes to the 
regional or local authorities concerned via the central au­
thorities. 
The real question is not how much the system of acceler­
ated payments has helped to reduce the completion times 
for projects, particularly since there is little possibility of 
doing the actual work faster or of speeding up administra­
tive and financial procedures related to the preparation 
and conclusion of project files and contracts. It would be 
(3) See paragraph 7.3 of the Commission's reply to the Court of 
.Auditors' report on 1980; OJ C 344, 31. 12. 1981, p. 230. 
196 Official Journal of the European Communities 31. 12. 82 
more to the point to find out to what extent the faster flow 
of ERDF funds resulting from the accelerated payments 
procedure has enabled the central authorities of the Mem­
ber States (and in the case of the United Kingdom and 
Italy, the regional or local authorities) to increase expendi­
ture by financing new projects. There can be no doubt, 
however, that certain large projects assisted by the ERDF 
were without any doubt speeded up because the Member 
States concerned had counted on the accelerated pay­
ments. ticularly to align the budget nomenclature more closely on 
the pattern of projects and programmes. Year-on-year 
comparisons must take full account of the evolution of 
research activities, as reflected in the nomenclature. 
Implementation of the JET budget and year-end financial 
statements 
CHAPTER 8 
Research, energy, industry, etc. 8.7. These comments should be addressed to the JET 
itself, which has legal personality, is independent of the 
Community and is governed by its own rules. But the 
Commission has taken due note of the Court's comments 
and will urge the JET authorities to take account of them. 
SUMMARY OF PRINCIPAL COMMENTS AND REPLIES 
8.0. 
(a) The nomenclature inevitably has to 
change as projects and programmes evolve. 
(b) The Commission will also urge the JET 
authorities to act along the lines suggested 
by the Court of Auditors. 8.3 Sample used as a basis for the comments of the Court of 
Auditors 
8.12. As the Court says, the sample was not broad 
enough to permit reliable statements about the whole sta­
tistical population. An interim reservation must be entered 
as long as the sample has not been broadened. 
(c) The Commission is planning to make a 
substantial improvement by means of the 
general outline programme for research pro­
jects. 8.14 to 8.16 
(d) Article 7 of the Euratom Treaty, 
Article 235 of the EEC Treaty and 
Article 88 (3) of the Financial Regulation 
provide an adequate legal basis for ensuring 
continuity in" the objectives of the relevant 
research programmes. 
As regards the signing of contracts, it must 
be remembered that very often research pro­
grammes are adopted retroactively, appro­
priations are released very late and various 
constraints affect the award of contracts as 
between public authorities. 8.17 to 8.19 Budgetary' management of shared-cost contracts 
8.13 to 8.15. The Court's example — the solar energy 
subprogramme — is not typical. The lapse of time between 
approval of the programme and payment of the first instal­
ment following signature of a shared-cost contract varies 
from one programme to another. 
The Court itself recognized that research activities are com­
plex and that some delays are inevitable. 
The Commission is actively considering the problem and is 
planning to make a substantial improvement in the situa­
tion by means of the general outline programme for 
research projects. 
(e) Tendering procedures in the strict sense 
of the term cannot be used for shared-cost 
research contracts. 8.20 to 8.21 
(f) The Court itself observes that certain 
improvements have been made; the Com­
mission will continue. 8.23 to 8.30 
Changes in budgetary nomenclature 
8.3. Substantial improvements have been made at the 
request of Parliament, the Council and the Court of Audi­
tors itself in order to make the budget easier to follow, par-Programme decisions make no provision for continuing con­
tracts entered into in the course of a programme 
8.17. The time-limits set in programme decisions under 
Article 7 of the Euratom Treaty and Article 235 of the EEC 
Treaty do not exclude implementation of the programme 
beyond its expiry date. Contracts can, therefore, exceed the 
duration of the programme if there are sound scientific and 
financial grounds for doing so. 
Article 88 (3) of the Financial Regulation provides that 
commitment appropriations remain valid until cancelled 
under the budgetary procedure. 
31. 12. 82 Official Journal of the European Communities 197 
There is consequently a legal basis for continuity in the 
objectives of these programmes. 
Signing of contracts 
8.18. The following points must be borne in mind: 
— Research programmes are often approved late, which 
means that the decisions have retroactive effect. 
— The budgetary authority has to transfer appropriations 
from Chapter 100 to the appropriate budget entry, 
which takes further time. 
— There are certain rules governing the conclusion of 
contracts on both the Community side and the contrac­
tors' side (often public or semi-public bodies) which 
make it impossible to proceed quickly. 
Procedure for awarding contracts 
8.19 to 8.21. Services supplied under these shared-cost 
research contracts are not intended as a quid pro quo for 
the direct benefit of the Community. The fact that they are 
part-financed rather means that financial support is given 
to activities undertaken by an outside party under the 
Community's more general policy. 
The use of a tendering procedure is a general principle 
which should be complied with wherever possible. 
But the very nature of these contracts virtually rules out 
tendering procedures for reasons set out below. 
The notice in the Official Journal gives only a general list 
of the research areas in which the Commission wishes to 
receive proposals. The scientific departments cannot pro­
duce the kind of specifications that would enable bodies to 
compete for research contracts. Under the general Com­
munity policy, contractors are selected by reference to the 
specific value of each proposed research project; the var­
ious proposals cannot necessarily be compared. Commis­
sion notices in the Official Journal regarding research pro­
grammes must not be regarded either as invitations to 
tender or as awards of contracts within the meaning of the 
Financial Regulation. 
To take one example, the only possible way of operating 
the solar radiation data project under the solar energy sub-
programme is by contracts placed by private treaty, since 
only the national andiocal meteorological offices can col­
lect the data. 
The same reasoning applies to the energy systems analysis 
and strategy studies subprogramme. 
In reality, there is no risk of potential contractors being 
excluded. 8.23. 
1. Existence of separate working files 
This is no way hampers contract management. It is up to 
the relevant director-general to organize these matters in 
accordance with the needs of his department. 
2. Selection of contractors, evaluation of interim and final 
reports and the maintenance of financial records 
In the context of their regular contacts with the Court, 
Commission departments will seek out possible improve­
ments. 
Progress and final reports 
8.23 and 8.25. The fact that in certain cases the 
appointed time scheludes were not observed may have a 
variety of causes inherent in the somewhat unpredictable 
nature of research activities: the contract may have been 
extended for technical reasons, the scientific departments 
may have refused to accept the report and asked for it to 
be improved or there may have been some dispute as to 
how the research was to proceed. It was for these reasons 
the 101 out of the 683 contracts under the first programme 
had not been closed by 31 December 1981. The situation 
on 30 June 1982 was that there were only 60 uncompleted 
contracts, in five of which there was a dispute. The Com­
mission will endeavour to close the remaining contracts as 
soon as possible. 
The written reports submitted at meetings of contractors 
mentioned at paragraph 8.25 are published; they are con­
sidered as interim reports where appropriate. 
They provide an excellent basis for evaluating and orient­
ing research; they are at least as valuable as formal interim 
reports and often supply more information. 
The changes suggested by the Court of Auditors at para­
graph 8.25 will be made in contracts for the implementa­
tion of the next programme (1983-87) both so as to take 
account of this new reports system, which has been found 
more useful and more efficient than the mere notification 
of interim reports, and so as to ensure that reports are sub­
mitted and sums due are paid on the appointed dates. 
Evaluation procedures 
8.26 and 8.27. Research proposals have been evaluated 
and compared in all cases. ACPM opinions are always 
sought on the basis of discussions and Commission staff 
papers setting out views and making recommendations. In 
the course of its work on preparation of the outline pro­
gramme, the Commission is currently reviewing the role of 
the ACPMs. 
198 Official Journal of the European Communities 31. 12. 82 
Standardizing the evaluation procedures for final, interim 
or contractors' meeting reports is not always a useful exer­
cise, as each subprogramme is a sui generis phenomenon 
and deals with a variety of topics. CHAPTER 9 
Cooperation with developing countries and 
non-member States ^ 
SUMMARY OF PRINCIPAL COMMENTS AND REPLIES 
Financial and scientific audit on-the-spot by the Commission 9.0. 
8.28 and 8.29. The frequency of on-the-spot audits flows 
from the fact that the invitation to private audit firms to 
tender for the work of assisting the Commission was only 
issued in 1981, and the firms were not selected until the 
end of that year. The Commission welcomes the Court's 
view that this will help to improve auditing in future years. (a) The figures in the budgetary estimates 
represent the volumes of food aid decided on 
by the budgetary authority. They are affected 
by subsequent trends in world prices. The 
Commission has proposed measures to 
reduce the uncertainty factor. 9.6 to 9.9 
An audit schedule has been prepared on the basis of 
detailed criteria for the second half of 1981 and for 1982; it 
can be made available to the Court. (b) The Commission is closely following the 
development of new packaging methods. 9.10 
As for scientific checks on the spot, these are valuable only 
where the research is conducted in laboratories. They are 
not appropriate in other cases, such as the construction of 
mathematical models for systems analysis or the solar 
radiation data project. Moreover it is quite impossible for 
the Commission to have the whole of its staff travelling on 
audit missions. This kind of work would require a substan­
tial increase in manpower. (c) The Commission suggests that the Court 
approach the suppliers direct, as only they 
know the actual dates of shipments. 
(d) Formal reports have been supplemented 
by frequent contacts between Commission 
staff in Brussels and the authorities in the 9.11 
country concerned. 9.12 to 9.16 
The Commission does not share the Court's view that it 
should altogether abandon its own audits of organizations 
with which it has contracts on the assumption that they can 
be audited by national audit bodies. Because the Commis­
sion is responsible for the implementation of the budget, it 
is indispensable that it make its own checks. Moreover, the 
national audit bodies proceed on a different basis from the 
Commission, which is not in a position to exercise any 
influence over audits of which the results are not brought 
to its attention. (e) The Commission is fully aware of the 
importance of these reports; more frequent 
missions undertaken by more staff would 
help in securing prompt, detailed reports. 
(0 The Commission and the European 
Investment Bank have agreed to improve the 
information available to the Court on the use 
of funds managed by the Bank. 9.25 
9.31 
Conclusions 
8.31 to 8.33. As regards the budgetary management of 
indirect action shared-cost contracts, where the Court of 
Auditors recognizes that matters are complex and some 
delay is inevitable, the Commission is proposing to make a 
substantial improvement by means of the general outline 
programme for research projects. (g) The EAC has been asked to submit a 
paper to its Administrative Board and Gen­
eral Meeting by 30 September informing 
them of the steps taken. 
Budgetary estimates 9.34 
Otherwise, the Commission would refer the Court to its 
answers to specific points considered above. It will con­
tinue its efforts to achieve the desired improvements. 9.7. The Commission confirms the data in its answer to 
the Court's report for 1980 (paragraphs 9.8 to 9.10) con­
cerning the budgetary estimates, in which the figures per­
force represent the quantities of food aid decided on by the 
budgetary authority. Accuracy is indeed hard to achieve, 
31. 12. 82 Official Journal of the European Communities 199 
especially as there is a considerable time lag between mak­
ing the estimates and implementing the programme, and a 
number of factors, not least the trend of world prices, can 
seriously upset the initital estimates. 
Amounts to be recovered 
9.8. The recovery of debts is beset with difficulties and 
delays, either because the debtors contest their liability or 
because they are actually unable to pay. 
COMMENTS ARISING FROM THE EXAMINATION OF 
PROCEDURES 
9.9. (b) The link between the quanitative and financial 
aspects of implementation of the programme is maintained 
for each individual operation by means of statements of 
expenditure incurred by the Member States pursuant to 
Regulation No 249/77. 
It is indeed impossible to trace the cost of each operation 
from the accounts, but it can be clearly ascertained from 
the abovementioned statements. 
The absence of an individual record of commitments for 
each operation is not, therefore, really prejudicial to the 
transparency sought by the Court. 
Nevertheless, the Commission will examine the possibility 
of responding to the Court's wishes by the regular com­
munication of these data to central accounts. 
(c) The Commission is aware of the basic problem of hav­
ing to make up delays and speed up clearance procedures. 
The substantial increase in the overall appropriations allo­
cated to Community food aid makes their stewardship a 
much more complex arid time-consuming task for Com­
mission staff. In the circumstances, it has not proved possi­
ble to make any significant improvement over 1981 in the 
matter of clearing accounts. Steps have been taken to solve 
the problem by assigning more staff and by more selective 
auditing. tions. This did not work out altogether satisfactorily in 
terms of distribution or of cost. The Commission is aware 
of the drawbacks of using 25 kg bags and has undertaken a 
study of the problem with a working group of several 
experts from national packaging institutes reporting to the 
Management Committee on Milk and Milk Products. A 
solution should therefore be found in the near future and 
made generally applicable when current work for the con­
solidation of Regulation (EEC) No 303/77 is completed. 
(c) This suggestion would introduce an unnecessary rigid­
ity into agreements with recipients with no real compensa­
tory advantages. The delivery date is, nevertheless, always 
agreed between the recipient and the Commission. The 
fact that a recipient does not receive aid exactly when he 
initially wants it is not always the responsibility or within 
the control of the Commission (e.g. length of decision­
making procedures, market possibilities (no offers), length 
of time necessary for recipient to arrange transport^ change 
of delivery time at request of recipient). 
(d) Under 'labelling requirements' Annex III to the pro­
posal for a Regulation consolidating Regulation No 303/ 
77 will stipulate that the date of manufacture is to be indi­
cated in clear. The Commission is also considering the 
Court's suggestion of indicating a recommended date by 
which the product is to be used. 
(e) The packaging of butteroi' has been the subject of an 
in-depth study. It resulted in the definition of very strict 
standards set out in Part II of Annex II to Regulation 
(EEC) No 303/77. Whatever its form, compliance of the 
packaging used with these standards will be certified by a 
packaging institute accredited by the Member State con­
cerned, on the strength of a test report and a description of 
the technical properties of the components of the packing. 
If the resistance of the tins proved inadequate in use the 
level of the standards required would have to be raised 
though no particular shape of tin would be prescribed. 
9.11. The Commission can only confirm the contents of 
its letter to the Court dated 27 July 1981 concerning actual 
loading dates. In view of commercial practice on the ship­
ping market and the obligations deriving from the various 
terms of delivery (cif, fob), these particulars cannot be 
ascertained until shortly before actual loading. 
That was why in its letter of 27 July 1981 the Commission 
suggested that the Court approach the suppliers direct, as 
only they know the actual dates of shipment and loading 
often begins very soon after the dates have been set. 
GENERAL COMMENTS 
9.10. (a) Commission staff are paying close attention to 
the development of new packaging techniques. 
(b) As regards small packages of 1 or 2 kg the Commission 
tried out a new idea" in 1981 for three different destina­SPECIFIC COMMENTS 
9.13. (a) The formal reports from Pakistan have been 
irregular and the Commission has once again drawn this to 
the attention of the authorities. However, regular contact is 
20Q Official Journal of the European Communities 31. 12. 82 
maintained with the authorities in Brussels, which accounts 
for the general high standard of food operations in Pakis­
tan. 9.19. There are several reasons for the delays in imple­
menting certain projects: 
(b) In some countries the matter of counterpart funds is 
complex. Though individualized, accounts in Pakistan are 
integrated into the national budget, which makes it hard to 
identify the projects they are funding in whole or in part. .It 
must nevertheless be said that Pakistan has very success­
fully mounted a dynamic programme to achieve self-suffi-
ciency in food. 
9.14. Member States are well aware that Pakistan is one 
of the world's leading rice exporters. They are also aware 
that Pakistan is a large importer of wheat. 
The suggestion by the Court that because Pakistan 
exports rice there is no nutritional advantage in importing 
wheat is questionable. Moreover, one of the objectives of 
food aid is to provide economic aid. The Court's sugges­
tion that aid to Pakistan is largely financial should be 
taken as an affirmation that the aid has achieved one of its 
objectives. In 1982, when Pakistan became less dependent 
on imports, it did not request food aid in cereals. (a) In two cases completion of the project was suspended 
by two persons providing capital as a result of the political 
situation in the recipient country. 
(b) Six other projects, of which four date from 1977 and 
1978 programmes, are cofinancing ventures, mainly with 
regional banks, which has had some effect on the rate of 
implementation. Though the Commission is endeavouring, 
as recommended by the Regulation on aid to non-asso­
ciated developing countries, to make use of cofinancing 
possibilities, it is forced, to conclude that this usually 
means that the project takes longer on account of proce­
dures superimposed by each donor for the final approval 
of financing, negotiating agreements with the recipient 
country and issying invitations to tender. Lastly, in cofi­
nancing it frequently happens that the components 
financed by one of the donors (the EEC) do not represent 
the initial stage of implementation. Yet all the financing 
must normally be arranged before any start is made. 
In milk powder it is precisely because Pakistan has been so 
uncertain in the past in how to use skimmed-milk powder 
that the Commission has limited the quantities. TTie fact 
that Pakistan has a high absorption capacity does not 
relieve the Commission of its responsibilities for ensuring 
correct usage. 
9.16. Where coordination is necessary, useful or desira­
ble, the Commission has cooperated or even taken the ini-. 
tiative (e.g. Mali). 
Where formal arrangements are necessary the Commission 
has supported them. However, given the already heavy 
burden both for donors and recipients of administrative 
procedures, the Commission does not believe in institu­
tionalizing activities which function effectively without a 
formal framework. 
Financial and technical cooperation with non-associated 
developing countries 
COMMENTS ARISING FROM THE EXAMINATION OF 
THE ACCOUNTS 
9.18. The forecasts of expenditure made by the Com­
mission in its preliminary draft budget were correct and 
justified. The serious interruption in payments that 
occurred in 1981 was the direct result of the average cuts in 
the appropriations made by the budgetary authority. It 
would therefore be unfair to blame the Commission for 
what happened. (c) Two other projects (78/17 and 79/14) are not cofi-
nanced but involve two regional organizations. Here the 
slowness in implementing projects is the price of wanting 
to promote bodies which are still in their infancy. 
(d) The last two projects (79/10 and 79/36) started late 
because the authorities of the recipient country were slow 
in completing the preliminaries: finalizing specifications, 
hiring consultants, issuing calls for tender, buying land, 
preparing the paperwork, and so on. 
(e) If the Commission departments responsible for follow­
ing up aid to non-associated developing countries had 
more staff, more assistance to the recipient countries 
* would then no doubt have speeded things up. But this is 
not to say that the financing was premature. Certain tech­
nical and administrative operations, which for most pro­
jects must be completed before work actually starts and 
money is expended, cannot be effected, under the internal 
regulations of most recipient countries, until the funds for 
the project are finally obtained and the agreement signed. 
Though the time required to complete this preliminary 
stage can be shortened if more assistance is provided, it is 
still not possible to deal with it before financing is assured. 
Community presence 
9.21. and 9.22. Community financial and technical aid 
for Pakistan basically consists of a sound choice of pro­
jects of value to the country. The Court nevertheless criti­
cizes a lack of follow-up in their implementation. This 
31. 12. 82 Official Journal of the European Communities 201 
comment is justified and it highlights once again the inad­
equate number of staff that the Commission can assign to 
administer aid to non-associated developing countries. It 
is, moreover, in order to mitigate this difficulty that most 
of the projects are cofinanced, management being dele­
gated to associates such as the IBRD, the ADB and Uni-
cef. Follow-up of these projects has been assigned to their 
responsible officers, who are required to submit regular 
reports to the Commission. As the Court has found on the 
spot, this delegation of authority is working satisfactorily. Cooperation with non-member States 
GENERAL COMMENTS 
9.31. The information the Court has gathered on future 
drafting of more detailed reports on managerial assign­
ments given by the Commission to the EIB is no less valid 
for the operations financed under Chapter 96 of the Com­
mission's budget. 
The cofinancing procedure certainly does nothing to facili­
tate swift implemantation of projects, since it requires the 
agreement of all the parties involved. When this is com­
pounded by time-consuming local administrative proce­
dures, it is not unusual for a project to start until several 
months, or even a year or two, after the financing decision 
has been taken. 
Payment procedures 
9.23. Of the three cases involved one has been settled. 
The other two are being settled, the bank in question hav­
ing given the necessary instructions to its correspondent in 
Pakistan. 
Exceptional measures in favour of developing countries and 
non-member States Implementing measures relating to the execution of the 
financial protocols 
9.32 and 9.33. The Council's failure to adopt the draft 
financial regulations on the application of the cooperation 
agreements with the Maghreb and Mashreq countries, on 
its desk since early 1978, has necessitated an ad hoc proce­
dure; the fact that positions are adopted unanimously and 
not by majority has caused serious delays in approving 
drafts because of opposition by one Member State. 
In its recommendation for Council Regulations concerning 
the conclusion of the new financial protocols between the 
European Economic Community and the southern Medi­
terranean countries (COM (82) 119 final, 16.3.82) the Com­
mission moreover stressed that the ad hoc procedure 
applied 'was always intended to be a strictly temporary 
measure ... (and) therefore considers that a definitive pro­
cedure for the provision of financial aid under the budget, 
consistent with the decision-making process, should be 
established for the implementation of the new financial 
protocols. It accordingly calls on the Council to complete 
the conciliation procedure initiated with Parliament on the 
basis of the joint guidelines adopted in 1978'. 
COMMENTS ARISING FROM THE EXAMINATION OF 
PROCEDURES 
European Association for Cooperation (EAC) 
PROGRESS REPORTS 
9.25. The Commission is fully aware of the importance 
of progress reports and is endeavouring to secure compli­
ance with the obligation to submit them. When emergency 
aid under Article 950 is paid in two or more instalments, 
the second and subsequent instalments are not paid until a 
report has been received on the use of the funds already 
disbursed. To obtain final reports the Commission cannot 
apply the same pressure, and when none is received it can 
only remind recipients of their obligations. Experience has 
shown, however, that on-the-spot inspections by the Com-1 
mission itself are the most effective reminder. CENTRAL ACCOUNTS OF THE EAC 
9.34. The Commission keeps an eye on the EAC man­
agement, which is monitored by the EAC's Administrative 
Board and by the Association's auditor. 
In his report to the General Meeting for 1981 the auditor 
made a number of comments, many of which are also 
made by the Court. The EAC was asked to submit a 
memorandum by 30 September to the Administrative 
Board and the General Meeting informing them of steps 
taken of corrections made in the accounts. 
More regular missions by the emergency aid department 
would require more staff but would help in getting prompt, 
detailed reports. The Court of Auditors will be kept informed by way of the 
abovementioned papers. 
202 Official Journal of the European Communities 31. 12. 82 
CHAPTER 10 
Staff expenditure 
SUMMARY OF PRINCIPAL COMMENTS AND REPLIES difficulties in the utilization of the reference parameter. 
For historical reasons, the link was mainly with wages in 
the Luxembourg steel industry. Declining production and 
a reduction in the number of hours worked produced the 
fall noted, which affects total wages and salaries, not basic 
rates. 
10.0. 
(a) The Commission maintains that the 
terms on which local staff are employed con­
form to the principles laid down in the Con­
ditions of Employment of Other Servants. Because of these difficulties, the Commission ignored the 
movements which had occurred and also entered into 
negotiations with the assistance of the Statistical Office of 
the European Communities, negotiated a new indicator 
with the staff representatives. 
10.9 
(b) In the Commission, translation requests 
are governed by rules and vetted by the Plan­
ning Department. 10.14 
The translation services of the institutions 
The conditions of employment of the institutions' local staff 10.10. The Commission would emphasize the import­
ance to the Community of documents being available on 
time in all official languages whenever necessary. 
10.8. The conditions of employment of local staff are 
based on the rules and practice current in the place where 
they are employed. In each place of employment, the insti­
tution therefore bases its conditions on the most appro­
priate local rules and practice. 
The Commission considers that this approach, which con­
forms to an express provision of the Conditions of 
Employment of Other Servants, is essential in order to pro­
vide a realistic response to each local situation, whether in 
Brussels or elsewhere. This is not simply a legal requirement, it,is essential if the 
Community is to achieve its aims. It is also vital that the 
translations be of high quality. 
The Commission would therefore draw the Court's atten­
tion to the difficulties of measuring an activity such as 
translation in purely quantitative terms. In counting the 
number of pages translated, the Court will no doubt have 
realized that the documents in question vary widely, both 
in complexity and the required quality of the finished 
product, which depends on the purpose for which the 
translation is requested. 
In the case .of local staff employed in Brussels, it was 
necessary, for recruitment reasons, to take as a reference 
the rules and practice applied to contract staff employed 
by the Belgian civil service. In certain fields, such as sup­
plementary sickness insurance and supplementary retire­
ment pension cover, the Commission has also followed the 
agreed practice of other large employers in Brussels. 
The Commission can confirm that the rules provide for the 
salaries of local staff to be adjusted either upwards or 
downwards in line with movements in the reference para­
meter. 
This principle was applied in the 1978 salary review for 
local staff in Brussels (deduction of 11% from the 1977-78 
annual adjustment review) and the Commission will 
shortly be making a similar reduction this year (1 -6% to be 
deducted from the next two automatic increases in line 
with the Belgian consumer price index). The specific situa­
tion in Luxembourg referred to by the Court does not arise 
from the abandonment of this principle but from technical Nevertheless the Commission readily admits that these 
considerations do not absolve the translation services from 
the requirements of efficiency and good management. The 
Commission's Management and Organization Division 
has conducted a survey, the results of which are just emerg­
ing and will be used as the basis for improvements on three 
possible fronts: organization, working methods and rela­
tions between the translation departments and their 'custo­
mers'. The Commission will naturally keep the Court's 
comments in mind during this process. It would also like 
to comment specifically on the following points: 
10.11. The Commission does not operate on the princi­
ple that every document sent for translation should be 
translated into every language desired. Documents are 
returned if the purpose of the translation is not clear (no 
destination specified, work involving research rather than 
translation). Clearer guidelines on this subject are, how­
ever, being prepared. 
10.12 and 10.13 — Table 10.5. As stated above, the 
figures produced by the Court are of relative significance, 
31. 12. 82 Official Journal of the European Communities 203 
and hence so are the conclusions based on them. Certain 
comments are, however, called for on these figures, espe­
cially those for Luxembourg, which seem too high. There 
are a number of reasons why translation costs per page are 
higher in Luxembourg than in Brussels: 
— about 25% of the work of the translation departments 
in Luxembourg consists of the records of parliamen­
tary debates; 
— about 30% consists of invitations to tender. 
Since both these types of text, which together account 
for over half the work done, are for immediate publica­
tion and require careful checking because of their 
importance, they, are revised more carefully than docu­
ments which are returned to the originating depart­
ments before publication. 
— This pattern of work creates a number of management 
problems (limits on scope for specializing, training 
needs, etc.) in addition to the difficulties of recruiting 
to Luxembourg. 
10.14. The Commission already restricts by grade the 
staff authorized to send work for translation. It is not con­
vinced that such restrictions should be extended, especially 
since their usefulness is debatable. It is, however, willing to 
seek other ways of making departments aware of transla­
tion costs and limiting the volume of requests. 
10.15. The suggestions made by the Court are already 
being applied: 
(a) documents are often returned with a request that back­
ground material be supplied; 
(b) central planning carries out this programming in the 
light of past experience. This enables all needs to be 
met; 
(c) it would be difficult to impose such procedures on the 
day-to-day work programme. 
If this proposal were generally applied, translators 
could be required to handle texts for which they were 
not adequately prepared: the result would be that 
translations would take too long. Furthermore, many 
documents translated are confidential or for official 
use only. 
It is, however, possible to spread certain large regular 
jobs more evenly as is already done with the reports of 
parliamentary debates. 
10.16. Internal discussion documents are not normally 
revised. 
10.17. The goal of 500 000 terms cited by the Court 
should be reached in the medium term provided sufficient staff are available to check terminological equivalents sup­
plied by outside bodies and the translators themselves. 
Through its action plan on multilingualism, the Commis­
sion is already financing the acquisition of collections of 
terminology and intends to compile a list of terminological 
resources which could be incorporated into Eurodicautom. 
10.18. This translation system is already being used for 
a pilot experiment in the Commission's administrative 
departments in Luxembourg. 
Systran covers a limited number of language pairs, which 
account for about 35% of the Commission's workload. In 
addition, certain kinds of text are unsuitable for machine 
translation. 
Apart from these reservations, Systran is being brought 
gradually into day-to-day use with some success. This pro­
cess will take some time, partly because of psychological 
factors inherent in the training of translators but chiefly 
because it requires a complex infrastructure of word pro­
cessors which also have to be standardized and harmon­
ized. 
Once installed, Systran will not be available only to the 
Commission: negotiations are in progress to enable other 
Community institutions and the administrations of the 
Member States to use it without cost to the Commission. It 
is also intended to make Systran available to users of 
Euronet-Diane, which will give a multilingual dimension 
to the information available on this network. 
10.19. The Eurotra project is primarily for research and 
development. It will be of value to research and teaching 
on linguistics and data processing. 
Eurotra will not be ready to replace Systran for Com­
munity purposes before 1988 but it will then be extremely 
valuable because of its modular construction and multilin­
gual capacity (parallel translation into six target lan­
guages). 
CHAPTER 11 
Administrative expenditure 
SUMMARY OF PRINCIPAL COMMENTS AND REPLIES 
11.0. 
(a) In the case of the first proposal for com­
mitment of expenditure the Financial Con-
204 Official Journal of the European Communities 31. 12. 82 
troller .reported to the Commission that he 
had been asked to approve this after the 
event. He withheld his approval for payment 
orders, corresponding to the second commit­
ment proposal, relating to services rendered 
for which no appropriations were available. 
(d) Detailed replies to each of these com­
ments are given below. 11.6 to 11.8 
11.15 to 11.22 CHAPTER 12 
External bodies 
SUMMARY OF PRINCIPAL COMMENTS AND REPLIES 
12.0. 
(a) These points mainly concern bodies 
which are independent of the Commission. 
Audits at steel undertakings 
11.6 to 11.8. The Financial Controller received two pro­
posals for commitments. The first was submitted on 
11 December 1980 and covered two contracts already con­
cluded between the two parties. It was, in fact, a submis­
sion after the event and contrary to the Financial Regula­
tion. There can be no denying that this procedure was 
irregular. However, when a commitment procedure is oth­
erwise in order the Financial Controller, realizing that the 
Commission is legally committed and that payment is due 
to the other party, does not withhold approval for that 
reason alone. He approves the commitment proposal with 
an indication that it has been submitted after the event and 
reports to the Commission. Nevertheless, the Commission will do what 
it can to ensure that action is taken on the 
Court's comments. 
(b) The matters raised by the Court are dealt 
with in detail in the Agency's replies to the 
Court's initial report. 
(c) The Commission has asked its Financial 
Controller to investigate ways of improving 
internal control in these bodies. Appropriate 
steps have already been taken. 
(d) The Commission shares the Court's con­
cern and has conveyed this to the Board of 
Governors of the European Schools. 12.7 
12.4 
12.5 
12.6 
The second commitment proposal was duly approved on 
29 December 1980, after the appropriation to cover it had 
been provided by a transfer effected on 24 December. It 
was only when the payment orders against this commit­
ment were presented for approval that the Financial Con­
troller found that some of them were for services rendered 
before the date of the transfer, in other words when no 
funds were yet available. That was why he withheld his 
approval on the payment orders in question. Euratom Supply Agency 
12.4. The matters raised by the Court are dealt with in 
detail in the Agency's replies to the Court's initial report. 
The Commission can certify that the Agency's paid-up 
capital has been invested profitably through a variety of 
banks. 
Delegations and Information Offices 
11.17. As of this year all officials and other staff are 
paid by the administrators of imprest accounts in each Off­
ice. These payments are checked at headquarters. 
11.18. During the financial year the Commission books 
the VAT repayments due from the Member States. At the 
end of the year amounts nor recovered are clearly reflected 
in the balance sheet. 
11.19. The Directorate-General for Information is mak­
ing the administrative investigations required by the 
Court's comments. Internal control in the Berlin Centre and the Dublin Founda­
tion — Parallel accounts in DM and ECU in the Berlin 
Centre 
12.5. 
Geographical separation makes effective control very 
difficult. In both cases, the amounts involved are 
insufficient to warrant the appointment of a financial 
controller on the spot, while the independence required 
of such an official rules out a part-time appointment 
since this would not be entirely under the authority of 
the Financial Controller. 
31. 12. 82 Official Journal of the European Communities 205 
The Commission has asked its Financial Controller to 
investigate ways of improving internal control in these 
two bodies. Arrangements have already been made to 
back up the documentary checks carried out in Brus­
sels by an on-the-spot audit of imprese accounts to be 
conducted every three months by Division XX-A-1. 
Financial Control will also be represented at the six-
monthly meetings of the Management Boards of the 
two bodies. (b) These differences, which are mostly of a 
technical nature, arise from the EIB's prac­
tice for converting into ECU and for loans 
concluded or paid. 13.8 
(c) Efforts are made each year to see that 
these appropriations are used to the best 
effect. 13.9 and 13.10 
The keeping of parallel accounts in DM and ECU is 
fully justified and not open to criticism. The use of the 
ECU is in the interests of the Community and facili­
tates control of the utilization of budget appropria­
tions, notably to ensure that these are not exceeded. 
The computer used in the Berlin Centre enables such 
accounts to be kept with no extra work. (d) Such criteria would not be helpful. 13.11 
(e) The Commission would recall the 
detailed explanations given in reply to para­
graph 4.38 of the Court of Auditors' special 
report on borrowings and loans. 13.12 to 13.14 
Presentation of borrowings and loans in the Commission's 
balance sheet 
Internal control in the European Schools 
12.6. Although by virtue of the Statute of the European 
Schools these criticisms are not directed at the Commis­
sion, it has taken note of them and conveyed to the Board 
of Governors of the European Schools the concern 
expressed by the Court of Auditors, which it shares. 13.7. An explanation of the 'differences to be regular­
ized' is given at paragraph 4.2 of the explanatory notes to 
the revenue and expenditure account and the balance sheet 
contained in Volume V of the revenue and expenditure 
account and balance sheet relating to budget operations 
for 1981 (pages 22 and 23). Further explanations were 
provided in a letter from Mr Tugendhat to the President of 
the Court of Auditors dated 23 June 1982. 
From the next financial year, the Commission will do all it 
can to act on the Court's suggestions. 
Criticisms made in previous years 
12.7. These points mainly concern bodies which are 
independent of the Commission. Discrepancies between the EIB's accounts and those of the 
Commission with regard to NCI loans granted in 1981 
Nevertheless, the Commission will do what it can to ensure 
that action is taken on the Court's comments. 13.8. The explanation for the difference of 211-4 mil­
lion ECU between the 539-8 million ECU given in Table 2 
on page 24 of the EIB's annual report and the 328 -4 mil­
lion ECU given on page 325 of Volume II of the Commis-. 
sion's revenue and expenditure account is as follows: 
CHAPTER 13 
Loans, borrowings and interest rate subsidies 
SUMMARY OF PRINCIPAL COMMENTS AND REPLIES 
13.0. 
(a) Further details appear in the explanatory 
notes to Volume V of the revenue and 
expenditure account for 1981 and other clari­
fications have been given to the Court of 
Auditors. 13.7 1. The EIB converts currencies at the rate applying on the 
last day of the quarter before the loan was signed whereas 
the Commission uses the rate obtaining on the first day of 
the month in which the loan was signed. 
2. The EIB bases its figures on loans signed even if they 
have not been paid whereas the Commission figures refer 
only to loans actually paid out. 
This discrepancy is accounted for by two large NCI loans 
which were signed but not paid in 1981. These loans, for 
emergency aid (') to areas of Italy affected by the Novem­
ber 1980 earthquake, were as follows: 
(') Council Decision 81/19/EEC of 20 January 1981. 
206 Official Journal of the European Communities 31. 12. 82 
Operation EIB 
(1) Commission 
(2) Difference 
(1-2) 
Loans paid out 
rate on last day of quarter 
rate on first day of month 328 852 234-20 
328 431 103-17 421131-03 
Loans signed but not paid out 
rate on last day of quarter 210 960 387-21 — — 210 960 387-21 
Total 539 812 621-41 328 431 103-17 -211381518-24 
(a) provision of basic infrastructure for pre­
fabricated villages rehousing victims in 
Campania and Basilicata 155-2 million ECU 
(b) restoration of 1 179 State schools dam­
aged in Campania and Basilicata 55 • 7 million ECU 
Total (') 210-9 million ECU 
Optimum use of appropriations for EMS subsidies 
13.10. The Commission and the EIB are aware of the 
problem raised by the Court of Auditors and try every year 
to ensure that the budget appropriations for interest rate 
subsidies under the EMS are used as effectively as possi­
ble. 
Hqwever, neither the Commission nor the Bank has abso­
lute control over the signing of loan contracts by the pro­
moters of eligible projects, which is a necessary precondi­
tion for the commitment of these appropriations. with paragraph 4.38 of the special report on loans and bor­
rowings concerning documentation supplied by the EIB on 
the eligibility of projects in the light of the criteria and 
guidelines laid down by the Council. 
The Commission has the information it needs to decide 
whether investment projects are eligible in the light of the 
aims and guidelines of the relevant decisions and regula­
tions. It does not rely exclusively on the information pro­
vided by the EIB but also uses other information obtained 
through its own contacts and financial operations. 
The Commission will nevertheless convey to the EIB the 
Court's comments on the information required to decide 
on the eligibility of projects. 
With particular reference to the effect of the investments 
concerned on employment, it should be noted that in the 
case of infrastructure work any such estimate, regarded as 
'essential' for EMS projects, is extremely tentative because 
the jobs created are purely temporary. It is even harder to 
evaluate the indirect effects on employment of the indus­
tries served by the new infrastructure. 
Criteria for allocating EMS interest rate subsidies between 
NCI and EIB loans 
13.11. The Commission's decisions on.the eligibility of 
projects are in no way guided by any predetermined distri­
bution of subsidies between NCI and EIB loans, so that 
criteria for such a division would not be helpful. For projects on the productive sectors, however, the Bank 
keeps the Commission regularly informed of their effects 
on employment, in terms of jobs created, lost or main­
tained, and the Commission attaches particular importance 
to this information in evaluating EIB projects. But in the 
case of NCI projects, assistance has so far been only for 
small and medium-sized enterprises via global loans whose 
impact on employment cannot be measured in advance. 
NCI and EIB loans eligible for an EMS interest rate sub­
sidy are mainly concerned with infrastructure work. 
Information sent by the EIB to the Commission to enable it 
to decide on the eligibility of projects for an NCI loan or an 
EMS interest rate subsidy, with particular reference to the 
effect on employment 
13.12 to 13.14. The Commission would refer to the 
explanations it gave to the Court of Auditors in connection CHAPTER 14 
Measures to limit the United Kingdom net 
contributions to the Community budget 
Investments in Northern Ireland 
(') See page 100 of the EIB's Annual Report for 1981 — projects 
170 and 171 costing respectively LIT 195 000 million and LIT 
70 000 million converted from national currency to ECU. 14.12 to 14.14. Regulation No 2744/80 adopted as a 
result of the political agreement of 30 May 1980 on the 
31. 12. 82 Official Journal of the European Communities 207 
subsequent reduction of British contribution to the Com­
munity budget makes implied provision for the reimburse­
ment of expenditure which, at the time the Community aid 
decision was taken, had already been made by the United 
Kingdom in respect of investments being undertaken or 
completed and not in respect of investments which were 
new or had not yet begun. Nowhere does the Regulation 
state that these measures must be additional to expenditure 
by the Member State. When they were implemented, the 
British Government stated that the effect of these measures 
would be to reduce expenditure on infrastructure invest­
ment less sharply than budgetary restrictions would other­
wise have dictated. 
Part II 
The European Development Funds 
Because of the far-reaching scope of some of the Court's 
observations, which touch on general themes underlying 
development policy, the Commission has felt it necessary 
to set out its doctrine as comprehensively as possible, at 
the risk of making its response a little lengthy. The points 
of view expressed in no way imply disagreement between 
the two institutions; on the contrary, they tend to comple­
ment one another. 
Introduction 
Using lessons learned from past experience in preparing pro­
grammes 
15.7. Although the Commission has not so far had 
architectural standards or lessons of the past fed into a 
data bank for its own use, it does have a number of rules or 
criteria, worked out over the years, which take account of 
past mistakes. 
The documentation gathered together in order to carry out 
this task consists of technical reports from the Delegations, 
sector-by-sector and project evaluation reports, reports 
drawn up by internal financial control and, lastly, the 
numerous external control reports made by the Court of 
Auditors, and all this material can indeed be considered as 
forming the basis for a genuine data bank. 
We must be wary of extrapolations, however. This is why 
the Commission prefers to work on a case-by-case basis, 
taking account of the specific nature of each project. report), use of direct labour, participation by the popula­
tion (e.g. by working on or providing materials for rural 
water engineering projects) and so on. The Court's descrip­
tion may have been true in the past but it is less and less so 
now. 
(b) The problem of management and upkeep — especially 
the financial side — is another difficulty altogether. The 
Commission held ad hoc meetings with the Member States 
to discuss the problems of road maintenance and the 
financing of maintenance and repairs when Lome II was 
under preparation (see Articles 152 and 153). This is a mat­
ter of concern to everyone engaged in development and 
there is no denying that, especially as far as the LLDS (!) 
are concerned, providers of funds cannot avoid having to 
cover a certain proportion of recurrent costs. For example, 
this was the conclusion reached at the seminar on recurrent 
costs held on Ouagadougou in January 1982 under the 
aegis of the CILSS (2). 
Moreover, the Court itself emphasizes this need elsewhere 
in its report (notably in paragraph 15,32). 
In this connection the Commission would like to point out 
to the Court that the main problem is that, generally speak­
ing, providers of funds set great store by the concept of 
'profitability' without taking proper account of the 'recur­
rent costs'. This is why the Commission is careful to show 
details of recurrent expenditure in each project proposal. 
This helps to show the recipient that he has to face up to 
his responsibilities and to determine from the outset how 
such expenditure is to be covered; in some cases the poten­
tial beneficiary may give up the idea of the project and in 
others, where vitally important projects are concerned, the 
Commission may agree to such expenditure being covered 
for a limited period. 
It is a fact that, sometimes, unforeseen changes in the 
economic situation mean that a State is no longer able to 
pay. It is only realistic, here, for the aid donor to cover the 
cost in order to safeguard the existence of a capital project 
and prevent it disappearing altogether. As the Court will 
see from this procedure, there is no point in having abso­
lute rules if they are not tempered with a little pragmatism. 
Financial aspects of the European Development Funds 
COMMENTS ON THE DIFFERENT FUNDS 
Preparation and presentation of accounts 
15.11. First indent. Using the statistics on the progress of 
Too isolated approach of the projects implemented projects, which are available at the beginning of the follow-
ing year, it is possible — as far as the fourth EDF is con-
jS g cerned, under which the system of indicative programmes 
became official — to compare actual commitments with 
(a) The concept of what is a 'good' project inevitably 
varies. This is proven by the fact that the Commission's 
own definition has evolved towards the financing of (.) Least developed countries. 
microprojects since Lome I, the increasingly frequent use (2) Permanent Inter-State Committee for Drought Control in the 
of local materials (see paragraph 15.18 in the Court's Sahel. 
208 Official Journal of the European Communities 31. 12. 82 
other forecasts. During the life of the fourth EDF there was 
no 'optimum pace' of implementation and it was only in 
1980 (the last year of the fourth Fund, in principle, and 
hence the one for which a comparative balance sheet could 
be drawn up) that any real comparison could be made 
between quotas and commitments. The annual 'Article 41' 
report gives details of this, with all necessary statistics. 
Under Lom6 II an optimum commitment rate is set for the 
fifth EDF (Article 109(4) and Article 110(1 )(a) and (b)). 
DG VIII's desk officers, who have always monitored the 
implementation of the indicative programmes, now pro­
vide annual figures, broken down by country, comparing 
the programmed rate with the actual rate. These figures are 
centralized in DG VIII and are available for perusal by the 
Court. The Commission wishes to inform the Court that 
the 'optimum commitment rate' for 1981 for all the ACP 
States was 14-8%, whereas the actual rate was 12-1%. This 
seems fairly satisfactory, but there are underlying differ­
ences between countries ('). 
It is obvious that all these details cannot appear in the 
'financial' accounts, which are meant to show the account­
ing pattern of the operations. 
1 Second indent. The Commission does not agree with the 
Court when it says that 'certain items cannot be properly 
understood without explanation'. For each EDF there is a 
separate accounting plan embodying the principles for 
classifying and registering accounting operations and their 
meaning. The Court is in possession of these documents. 
Moreover, since the 1981 financial year, all operations 
belonging to a given year also appear in the accounts and 
are no longer entered in cumulative form under previous 
years. One of the Commission's main concerns is that the 
accounts should be reliable and transparent — the Court 
has acknowledged that they are — so that staff distant 
from accounting headquarters (national authorizing offi­
cer, Delegation) can make the most of this instrument for 
managing projects. control, the possibility of bringing forward the closing date 
for end-of-year operations so as to be able to draw up the 
balance sheets and revenue and expenditure accounts ear­
lier and thereby enable the following year's accounts for 
the day-to-day administration of the projects to be opened 
sooner. 
15.14. Having definitively closed the accounts of the 
first EDF in 1981, the Commission is now doing all it can 
to close projects outstanding under the second EDF. 
Reminders are sent to the Delegations regularly in order to 
speed up operations. Unfortunately, they come up against 
the inertia of the national administrations fairly frequently 
and this prevents certain operations necessary for closure 
of the accounts from being carried out. 
15.15. Despite being sent several reminders during 1980 
and 1981, the Somali, Government has not honoured its 
commitments regarding repayment of the advance to the 
National Banana Board, which should have been paid off 
in six half-yearly instalments between January 1980 and 
July 1982. The Somali authorities blame the great budget 
difficulties facing them in present political circumstances. 
The Commission is following developments here carefully 
in liaison with its Delegate in Mogadishu. 
Late payment of contributions by Member States 
15.16. (a) It is true that some Member States — and one 
in particular stands out here — never pay their contribu­
tions at the correct date. This has two effects on the Fund's 
cash resources. 
First, experience has shown that the worst offenders 
among the Metnber States are generally those whose cur­
rencies tend to fluctuate on the exchange markets, with the 
result that the Commission is bound to record an exchange 
loss when the contributions are finally paid. 
Third and fourth indents. Meanwhile, drawing up explana­
tory notes or comments on certain data in the revenue and 
expenditure accounts would — given the staff available at 
the moment — only further encumber and delay the pre­
paration of end-of-year accounts since it is already impos­
sible in present circumstances to forward them to the Court 
by the deadline of 31 March set in the Financial Regula­
tion. Second, the fact that some Member States are late in pay­
ing their contributions penalizes those that have been more 
conscientious. When it needs to make payments the Com­
mission has to call for the cash from the conscientious 
States sooner than from those that are behind in their pay­
ments since it is obvious that special accounts that are 
empty cannot be debited. 
However, the Commission does its utmost to report on its 
management within the prescribed time limits but, as it has 
already pointed out in its replies to earlier Court report's 
(see paragraph 14.18 of the 1980 report), it is hampered by 
certain difficulties of a technical or administrative nature. 
Nevertheless, with a view to speeding things up the Com­
mission is studying, in liaison with those responsible for 
(') For example: Barbados — forecast rate 10% for year 1, actual 
rate 45%; Benin — forecast rate 15%, actual rate 
1%. (b) The Commission, when determining its cash needs, 
takes two factors into consideration: first, a forecast hinged 
on the state of commitments and the estimated rate of 
implementation; secondly, the trend of EDF expenditure 
over the years since the start of operations, in order to pro­
ject into the following financial year the trend revealed 
from examination of past years. / 
FINANCIAL MANAGEMENT OF EXCEPTIONAL AID 
15.17. First indent. The concept of rapid implementa­
tion, which is at the root of emergency aid as managed at 
31. 12. 82 Official Journal of the European Communities 209 
present and clearly stated in Article 137 of the second 
Lome Convention, was not generally accepted in respect 
of exceptional aid in the early days of the first Lome Con­
vention and payments stretching over several years were 
made in many instances. Given the fact that it is difficult 
to reopen a dossier once it is closed should a late request 
for payment be received — which is always a possibility — 
the Commission has adopted the careful approach and has 
waited, before closing dossiers definitively, until it has had 
firm assurances from the Delegates that there will be no 
need for further payments. Since all operations benefiting 
from exceptional aid allocated between 1976 and 1980 
have now been terminated in the field, the relevant dos­
siers will be closed as soon as the necessary assurances 
have been given regarding their financial execution. 
It should be noted that the systematic application of a time 
limit for the implementation of new emergency aid opera­
tions should enable the dossiers to be closed much sooner 
in future. 
Second indent. The overruns totalling 95 065 ECU which 
the Court recorded for three emergency aid projects have 
not escaped the Commission's notice; in July 1981 it took 
the necessary steps to recover from the two recipient States 
the amounts in local currency which they had authorized 
unduly and charged to the EDF. 
In the first case, the authorities of the recipient State have 
refused up to now to pay the debt (5 161 ECU) which the 
Commission was trying to recover, on the grounds that the 
unfavourable exchange rate between their national cur­
rency and the ECU was a factor over which they had no 
control. The Commission is following this up. In the 
second case, the recipient State, after using delaying tac­
tics, finally repaid the excess (89904-17 ECU) in June 
1982. from the economic viewpoint with the means to invest, pay 
for their imports and so on. 
The projects in the Ivory Coast, referred to by the Court, 
were carried out at a time when that country had no policy 
to speak of on rice growing; what is more, there were no 
milling facilities. There are now a number of projects, 
started more recently, which are aimed at counteracting 
this tendency. In Guinea-Bissau for example, a 'cotton 
project' has turned into a 'cotton and grains' project, and 
so on. 
15.20. It is obvious that, where integrated rural develop­
ment is concerned, the more 'perfect' the project is in terms 
of catering for possible needs and the greater its chances of 
success, the more expensive it is as well. It is difficult to 
draw the line between what absolutely has to be done via 
external aid and what can be undertaken by the population 
given local conditions. It is particularly difficult, when 
launching a pilot project, to assess in advance which com­
ponents of a project will be considered most important by 
the future beneficiaries. In this respect the Mzimba project 
enabled us to see what the essential social components of 
an extended project should be. Also, it should always be 
borne in mind that the Commission does not have absolute 
control over the content of a project; it is the recipient 
State which decides on that when it submits its request and 
very often the request contains no mention of certain com­
ponents which the State itself is intending to finance 
direct. 
15.21. The Commission broadly agrees with the Court 
about the advantages of intermediate technology. Never­
theless, account must be taken of a certain amount of res-
istence — sociological or political — on the part of the 
national authorities (intermediate technology has no pres­
tige value) and, where training projects are concerned, of 
the need to train future staff in the various techniques 
available. 
Integrated development 
DEVELOPMENT IS A UNIVERSAL PROCESS 
15.18 and 15.19. The 'universal' nature of development 
is a relatively new idea, born of the simultaneous sudden 
awareness of the population explosion in the developing 
countries, the dramatic climatic changes taking place, such 
as the drought in the Sahel in 1971/74 and, finally, the 
increasing draft to the towns, which results in a considera­
ble increase in the number of people unable to grow their 
own food. For along time, right up to the 1960s, agricul­
tural production was generally able to meet requirements. 
The 'goal of self-sufficiency in food' is therefore relatively 
recent and it would not be fair to judge from this angle 
projects that were prepared, or even implemented, at a 
time when food shortages occured only when there was a 
natural disaster. Projects involving cash or export crops 
were designed to fulfil a specific and immediate aim — 
that of providing States that were not yet truly independent The Commission's stance on the matter is that technology 
must be chosen very carefully as a rule, and that the choice 
must be geared very closely to local conditions as regards 
the possibility of mastering and making efficient use of a 
given type of technology. 
15.22. . The Commission wishes to point out that the 
Community contribution to the Ivory Coast 'palm plan' 
was aimed essentially at launching the plan by creating 
32 000 ha of industrial plantations. Hence Community aid 
is not to be blamed for the lack of attention paid to village 
plantations. The advantage of 'large agro-industrial com­
plexes' is that they constitute a viable entity which, in this 
case, has placed the Ivory Coast in a very good position as 
a world producer and exporter of palm oil, besides provid­
ing valuable spin-offs — industrial processing, job crea­
tion, currency earnings and so on. Experience has shown, 
moreover, that village plantations can develop only if 
backed up by an industrial plantation. 
Lastly, it would seem risky to gear a project to village plan­
tations growing a crop destined exclusively for export. 
210 Official Journal of the European Communities 31. 12. 82 
Prices of tropical products fluctuate a good deal and it is in 
fact the stagnant price of palm oil that has discouraged 
Ivory Coast planters in the case referred to by the Court. 
DEVELOPMENT IS A BALANCED PROCESS 
15.27 to 15.32. The Commission agrees entirely that pro­
jects financed by the Community should not lead to imbal­
ances within the ACP States' economies. This is why all 
schemes put forward since the first Lome Convention 
came into force have had to be part of an indicative pro­
gramme which, in turn, forms part of the particular coun­
try's development plan. countries do not always honour their commitments as set 
out in the Financing Agreements, because of a lack of 
budget appropriations, inadequate skilled personnel or the 
isolated location of the centres in which the staff has to 
serve — as is the case with Korhogo hospital where, 
despite its excellent technical design and satisfactory 
maintenance, there is not sufficient Ivory Coast medical 
and nursing staff available and there is also a shortage of 
medicines and small, cheap basic instruments which would 
help the hospital to operate better. This deplorable situa­
tion has not changed in spite of the fact that the Commis­
sion has frequently drawn the authorities' attention to their 
obligations under the Financing Agreement. The Commis­
sion sends periodic reminders about the matter. 
It is true that, in the past, the EPF has been expressly 
asked to finance particular schemes by recipient countries 
and that these schemes have not always lived up to the 
hopes that were placed in them or have collapsed as soon 
as the initial technical assistance has been withdrawn. But 
it is the same here as in other fields where success or fail­
ure may depend on factors that are difficult to evaluate at 
the moment when the decisions have to be taken. It should 
also be borne in mind that under the first and second' 
EDFs financing requests were made more in accordance 
with the immediate priorities of newly independent coun­
tries than on ^he basis of an overall development plan, 
which had yet to be devised and put on paper. 
As the Court says, the Community has learnt from experi­
ence and, from the start of the fourth Fund, has been con­
centrating resources on specific projects which should 
prove durable, even if it does mean financing maintenance 
operations. 
As far as schools are concerned the EDF does generally 
finance 'only the walls and equipment'. This does not 
mean that there is no interest in the content of the 'educa­
tional facilities'. On the contrary, various aspects such as 
the training of national teachers, improved teaching meth­
ods, the quality of the teaching and whether it is suited to 
the local context, etc., are taken into consideration when 
the Commission appraises the project. 
For example, the fourth-EDF project for the Bangui 
Higher Teacher Training College (Central African 
Republic) is intended to help, by training Central African 
teachers, the government's efforts towards reforming pri­
mary schooling 'aimed a making the school a place for 
general social improvement'. Appraisal, financing, implementation and management of 
projects 
Installation if a solar pump in Mauritania 
15.34. The Court's remark about the installation of the 
solar pump 'in an isolated spot without adequate technical 
facilities' is justified, but we must not forget that the instal­
lation in Africa of the first pumps of this type was seen as 
an experiment, carried out at a time when little was known 
about solar energy but when it was sometimes regarded as 
a panacea and there were not yet any very clear ideas 
about possible uses. Since then the Commission has 
financed a study (in 1980) to evaluate equipment using 
solar energy, the conclusions of which are now being used 
to launch new projects in this field. It is in this same spirit 
that the Commission has decided to cofinance, from 
regional fifth-EDF funds, the setting-up of the Regionail 
Centre for Solar Energy (CRES) in West Africa, the main 
task of which will be to monitor solar installations in the 
region, but only where such monitoring is likely to come 
up with useful results for the countries concerned. 
Purchase of 10 lorries for Lesotho 
15.36. The Commission feels that the Court's assess­
ment of the situation regarding the availability of the lor­
ries purchased under an emergency aid project should be 
qualified. It is true that the registration formalities were 
delayed because the administration was slow in setting up 
the public body that was to administer the equipment in 
question. 
There are cases other than those quoted by the Court where 
the EDF has financed the construction of buildings and 
also technical assistance and training courses. 
The Commission also has to finance technical assistance 
or operating costs in the health field, if the capital projects 
financed are to be used by and benefit the population con­
cerned. However, it should be noted that the recipient Preliminary studies 
15.37 to 15.41. The Court states that, in certain cases, 
the 'preliminary studies' are 'inadequate'. There are three 
possible attitudes towards development. Either one is a 
perfectionist, not embarking upon a project unless one is 
absolutely certain of all the facts — technical, economic, 
social and financial — in which case the cost of the studies 
in terms of both time and money becomes enormous. Or 
one is slapdash and rushes things, in which case one is 
31. 12. 82 Official Journal of the European Communities 211 
soon in trouble when it comes to implementing the project. 
Or, the third possibility, one tries to steer a middle-of-the-
road course and accepts what is commonly called a meas­
ure of 'risks and uncertainties', calculated on the basis of 
the sensitivity analysis of the return on the project. Many 
providers of funds, including the Commission, endeavour 
to steer this course after having experimented with the 
other two. Therefore it is not surprising if certain risks do 
materialize in the form of longer implementation periods 
than forecast, higher costs, lower yields and so on. 
Certain hitches can be remedied along the road: the lecture 
theatre in the veterinary school in Dakar can be improved 
if it is felt necessary (paragraph 15.38) and so on. 
As regards the Kaedi-Kiffa road (paragraph 15.41), the 
Financial Agreement made no mention of improvements 
over 170 km but involved local works, consisting essen­
tially of building structures for crossing watercourses, 
causeways over low ground subject to flooding and firm 
carriageways on sandy ground. The project cannot be con­
sidered a virtual write-off. There are still a number of large 
structures in use, notably those over the Gorgol and the 
opening through the Soufa pass. 
Also, the rapid deterioration is not due solely to 'weak­
nesses in the studies' and 'design errors' but also to total 
lack of maintenance. 
Adapting designs and techniques to local conditions 
15.42 and 15.43. To say that 'many architectural designs 
are not appropriate to the climate of tropical countries 
would seem to be going too far. There are many other 
examples of designs that are suited not only to the climate 
but to other physical and cultural conditions. The Com­
mission would point out that it received for its Mopti 
health centre in Mali the Aga Khan Prize for architecture, a 
prize awarded for a building which is particularly well 
suited to its physical, human and cultural environment. 
Account must also be taken here of the problem of mainte­
nance. A number of capital projects deteriorate because 
the minimum amount of maintenance, which is very sim­
ple, is not carried out as agreed (roofs of buildings, road 
surfaces, etc.) and not because they were badly designed. 
15.44. Although a certain degree of priority has been 
given to 'large curative medicine establishments' in the 
past, this has been in response to a definite necessity — 
that each country should have at least one hospital capable 
of providing certain treatment or examinations so that 
patients do not have to be sent abroad. Once a certain 
amount of infrastructure of this type exists it is possible to 
spread subsequent capital projects and design them on a 
more modest scale. Moreover, Community aid has devel­
oped along these lines in that it is financing more and 
more bush health centres and secondary hospitals. 
This principle is acknowledged by other providers of 
funds, moreover, for it is one of the conclusions that 
emerged from the International Conference on Primary Health Care held in Alma Ata in September 1978. It is also 
along these lines that the 'basic principles' emerging from 
the ex-post evaluation of EDF-financed health projects 
were drawn up during a meeting of ACP and EEC experts 
in Freetown in December 1978 and endorsed by the ACP-
EEC Council of Ministers in Libreville on 9 May 1980. 
15.45. The question of 'sophisticated equipment' has to 
be examined very closely. Although it is generally true that 
sophistication is a bad thing (see the comments on inter­
mediate technology above), cases may arise — say a col­
lege for executive staff —where it is useful to have a small 
proportion of more complicated equipment. In this respect 
it is important that operational equipment, which should 
be suited to the possibilities offered by the environment, 
should not be judged by the same yardstick as teaching 
materials or research equipment. While acknowledging 
that certain items could have been chosen — and very 
probably would have been in present circumstances — 
from a less sophisticated range, this consideration also 
applies to the Dakar veterinary college 0) referred to by 
the Court. 
UNSATISFACTORY COMPARISON OF TENDERS 
15.46 and 15.47. In many instances the award of con­
tracts is the subject of difficult discussions with the reci­
pient States. The Commission, for its part, endeavours to 
see that the most 'economically advantageous' tender is 
accepted, despite pressure from certain national adminis­
trations. 
The Nouakchott-Rosso road, referred to by the Court, was 
cofinanced with the IDA and Mauritania. The EDF felt 
that the lowest tender was realistic and should not be 
rejected. The same problem would have cropped up with 
the second lowest, moreover, and that was 36% higher than 
the first. Also, account has to be taken of currency move­
ments; the 8-6 million ECU quoted corresponds to 1967 
units of account and the 12 million ECU to 1982 ECU. 
Also, another important cause of the deterioration is the 
inferior quality of the material available for the construc­
tion of the second section. 
Regarding the choice of motor-driven pumps used in the 
rice fields in Mauritania, the Commission intends to com­
pare different types of equipment on the basis of purchase 
price and durability and to draw conclusions from this for 
future projects. 
Although it is true that the tenders for the Blantyre dairy in 
Malawi were compared in ECU, the comparison was very 
strict and there was no discrimination regarding the choice 
of contractor since the calculations were made on the basis 
of reference exchange rates applied in the same way to all 
the tenders and published in advance in the Official Jour­
nal of the European Communities. 
(>) Inter-State Scientific School of Veterinary Medicine (EISMV). 
212 Official Journal of the European Communities 31. 12. 82 
Moreover, the contractor had made a firm price offer 
whereas the other tenderers had included a price revision 
clause in their tenders, which the Tender Board Office 
thought might put the initial tenders up by 10% to 15%. 
Hence the choice made by the Malawi authorities, in 
agreement with the Commission, was indeed the most 
economically advantageous tender. 
Physical and human resources used in the projects 
15.48. The Commission can cite examples of projects 
where the building of the factory was deferred until justi­
fied by local production of the raw materials. It is neces­
sary to qualify the statement that factories are 'too large', 
since the cost is not in proportion to the size, especially if 
standard components are used. 15.52. While confinancing can admittedly be the source 
of many difficulties and delays, it is nevertheless of unden­
iable value, and the only means of providing large 
amounts of financing. 
In order to keep the difficulties down to a minimum, the 
Commission tries to arrange for a complete lot to be allo­
cated to the same supplier of funds, which reduces the 
problem of disparities in the origin of the materials. How­
ever, the rules of individual suppliers of funds mean that 
this is not always possible. 
The Commission informs the Court that KfW (•) financing 
for Foum-Gleita has now been arranged and will be used 
until the balance originally planned between the various 
sources of financing is established. 
15.49. Local conditions should be taken into considera­
tion when considering optimum size. Although the size of 
the plots of land in Mauritania's rice plantation project, a 
case referred to by the Court, is certainly less than the opti­
mum minimum, it is the result of a political decision by the 
government (to give a plot to the maximum number of 
families) under a national policy which it is difficult for us 
to question. The case of Ferkessedougou is different: the 
apparent underutilization of the land is temporary and 
seemingly due to the difficulties encountered in marketing 
a wider range of products. It will also perhaps be necessary 
to take on extra paid labour, as happens quite frequently in 
the Ivory Coast. 
LACK OF COORDINATION IN FINANCING 
15.50 and 15.51. In the case of cofinancing or successive 
financing, it is essential to take the time factor into account 
in assessing the results of a project. 
When, for example, the Ziguinchor bridge was financed, 
Gambia was not yet associated with the EEC and the 
building of the bridge was justified largely by the need to 
provide the local population with a means of crossing the 
Casamance, and not solely by the need to complete the 
Ziguinchor-Dakar link. The problem of bridging the river 
Gambia has for a number of years formed the subject of 
detailed study by the two States concerned. 
The problem of equipping the wells sunk in the Ivory 
Coast with pumps has now been solved. The Commission 
would certainly have been criticized if it had opposed the 
express wish of the Ivory Coast Government to bear the 
costs of part of the operation: the Lome Convention 
clearly states that Community aid should complement the 
ACP States' own development efforts. The situation would 
certainly be greatly eased if there were never any hiatus 
between the execution of a capital project and its use. That 
is the ideal, and the day it comes about, development aid 
will probably no longer be necessary. OBJECTIVES NOT FULFILLED 
15.54• The remark made by the Court is incontestable in 
terms of the principle involved: the financing should 
indeed match' the objectives. The Commission considers, 
however, that this should not hamper execution in succes­
sive tranches, especially where part of the project is needed 
urgently and the funds required are not available in their 
entirety, or where it is felt that the initial results should be 
seen first so that the project can be directed along different 
lines if necessary. 
The remarks made by the Court concerning the dam pro­
ject in the Hodhs in Mauritania are realistic and echo the 
Commission's own concern. The economic and financial 
return are not the only aspects taken into account, how­
ever, in selecting such projects. The Mauritanian Govern­
ment obviously attaches greater importance to the overall 
impact and to the laudable aim of halting the population 
drift to the towns. For this reason it also seems to be reject­
ing any revision of the general approach to the project and 
the methods of execution. 
So despite its reservations the Commission cannot go 
against the wishes of the recipient State, even if mainte­
nance of the works later proves deficient, owing to a lack 
of proper training and supervision. All this shows just how 
vitally important the problem of water is to countries such 
as Mauritania. 
The situation in the school in Tintane is the result of a 
deliberate choice by the Mauritanian authorities: when it 
became apparent that there might be an overrun on the 
cost of the project, various solutions were examined by the 
government, including suggestions for a reduction in the 
overall scale of the project. The Mauritanian authorities 
then decided to withdraw the equipment for all the schools 
from the EDF financing package and indent other sources 
of funds for those supplies. It is now up to the government 
to state what should be done with the remaining sum and 
to establish priorities in this sphere. 
(') Kreditanstalt fur Wiederaufbau. 
Official Journal of the European Communities 213 31.12.82 
15.55 to 15.57. It is true that delays in execution and 
overruns are often linked, but is the Commission alone to 
blame? The Commission feels that the cooperative 
approach chosen for Community aid, based on the dual 
notion of a dialogue with the national government and 
making the latter assume a growing degree of responsibility, 
has a cost, which is one that has to be accepted but often 
results in delays (see the Commission's Article 41 report to 
the ACP-EEC Council of Ministers for 1980, Chapter III. 1, 
for example). 
It is necessary, furthermore, to assess the exact causes and 
the nature of the delays. The example of the Lilongwe 
water supplies quoted by the Court does not seem justi­
fied: the project was not completed 'two years late', the 
delay occurring in the execution by direct labour, after the 
bulk of the work had been done, of part of the connec­
tions, the cost of which did not exceed 15% of the initial 
commitment. The project was in fact considered a success 
by the Malawi authorities. 
Similarly, in the case of the San Pedro-Issia road in the 
Ivory Coast, the Community financing was strictly limited 
from the outset and the overrun was financed by the Ivory 
Coast authorities themselves. 
TECHNICAL CHOICES, AND FAILURE TO TAKE INTO 
CONSIDERATION LATER MANAGEMENT CONSTRAINTS 
15.58 to 15.62. It is true that the management con­
straints (in terms of funds and human resources) tend to be 
underestimated by the beneficiary country at the prepara­
tion stage of projects, and the Commission has often had 
to urge the national government very strongly to accept 
technical assistance, the training of local staff, etc. The 
rapid turnover of local management — mentioned by the 
Court itself — is, for example, a frequent difficulty. The 
Korhogo hospital is essentially equipped to function as a 
regional hospital centre for the less favoured northern 
region, which has a population of well over 700 000. 
The hospital is designed not only to meet curative medi­
cine requirements, but also to play an active part in prev­
entive medicine and health education campaigns. Suitably 
qualified staff in sufficient numbers have yet to be found 
for it. 
The list of equipment was drawn up by an independent 
hospital expert in close conjunction with the departments 
and doctors responsible for health programming in the 
Ivory Coast. It is unfortunate that those responsible in the 
Ministry of Health for deciding on the equipment were no 
longer in office when the hospital was commissioned, and 
especially that the departments which will be responsible 
for the equipment were consulted neither at the acceptance 
nor at the design stage. This is consequently^ typical case 
of different users at the design-acceptance stage from the operating stage. Experience has shown that in this sphere, 
as in many others, desiderata can vary significantly, not to 
say greatly, from one user to another. 
In a number of cases (Nouakchott hospital, for instance), 
the Commission has financed a technical assistance pro­
gramme to help solve the problems involved in the use of 
equipment, maintenance and building up a stock of spare 
parts. 
As regards the financial aspect of the 'BASP' (') project, 
there is an unspent balance of 873 000 ECU (out of a com­
mitment of 3 million ECU), i. e. some 30%. This sum will 
probably be used for a study on the development of a val­
ley in the same region as the 'BASP' project. 
Furthermore, the infrastructure built under that project, 
particularly the sheds, tracks and accommodation for local 
staff, can be used if new agricultural projects are carried 
out in the same region (in the abovementioned valley and/ 
or in others). 
The effectiveness of the EDF's aid to agriculture 
Price policy 
15.63 to 15.71. The level of prices for products is 
regarded by the Commission as a very important factor 
and the Court is surely aware of the contribution made in 
this sphere to a 'realistic prices' campaign in Mali, for 
example, in conjunction with other suppliers of funds. 
The problem is a very complex one, however. Factors such 
as how difficult it is to grow the product, whether it can be 
traded on a parallel market or smugglied, etc., do have an 
effect, albeit one that is difficult to quantify. A project can­
not be considered as producing no results if the product is 
not sold via official channels. Where the product is mar­
keted, albeit on a parallel market, income is created for the 
producer, a consumer requirement is met, and imports, are 
probably reduced accordingly, resulting in a saving for the 
balance of payments. 
This problem was regarded as sufficiently important to be 
discussed at the recent ACP-EEC Council of Ministers 
meeting at Libreville. It is expressly stated in the third par­
agraph of Chapter III.2 of the Resolution formulated by 
the Article 108 Committee that 'the prices for agricultural 
products paid to producers are one of the factors for the 
success of projects aimed at increasing production capaci­
ties. It is therefore desirable that the ACP States benefit 
from all necessary support from the Community'. The 
inclusion of this paragraph in the ACP-EEC Council Reso­
lution was secured by the Community on a proposal from 
the Commission following a hard battle: it should be 
remembered that two years ago a first attempt by the Com­
munity along the same lines failed, since the ACP States 
considered they had sovereign control over all matters 
relating to the fixing of agricultural prices. 
(') Basic agricultural services programme. 
214 Official Journal of the European Communities 31. 12. 82 
Shortcomings in supervision Measures to maintain project continuity 
15.73. Admittedly, the local authorities do often fail to 
produce the reports requested of them on the implementa­
tion of projects financed by the EDF. This is a problem 
which the Commission is attempting to overcome by get­
ting the Delegations periodically to remind the national 
authorities concerned of their obligations in this regard. 
15.74. Again, it is true that the volume of daily adminis­
trative work does not always allow Delegations to go into 
as much detail as would be desirable in compiling the per­
iodic progress reports on projects. The Court does in fact 
admit that this is the exception rather than the rule, noting 
that in general 'reports do exist', even though they may be 
'technical and involved'. The Commission provided the-
Delegations in 1978 with a model for their six-monthly 
reports on agricultural projects. Additional points and 
guidelines aimed at standardizing the presentation and 
content of reports will be offered in the revised manual of 
instructions currently being prepared. 15.77. The main thing about the Gorgol project is that 
after the dyke collapsed in August 1981, the Commission 
took action to get it repaired, so that it was ready by July 
1982, in time for the new season's activities. 
The installations at Soumbedioune (Senegal) were com­
missioned in August 1981. 
Equipment of non-Community origin 
15.78. It is true that non-Community equipment was 
supplied under an invitation to tender for surgical instru­
ments for use at the hospital in Korhogo (Ivory Coast). 
15.75. It sometimes happens that the files in the central 
archives are incomplete because the officials dealing with 
the implementation of projects hold on to papers they 
need for their work. Contracts and estimates, technical 
reports and the progress of works or service contracts and 
various background documents are kept in the technical or 
financial departments concerned. 
This can make it difficult to review projects that are in pro­
gress, but the difficulties must not be exaggerated. We would point out that (a) the instruments in question 
represent only a fraction of the equipment supplied and (b) 
the Ivory Coast authorities took delivery of them without 
notifying the Delegation first. 
The underwater pumps supplied for the drainage project in 
the bay of Soumbedioune are of dual origin; they were 
semi-manufactured in Sweden and finished in France, and 
so could be regarded as being of Community origin. 
Monitoring of projects 
15.76. Projects are generally well monitored by the 
Delegations. As regards completed projects, including 
some completed several years ago, the Commission has 
taken steps to see that up-to-date files are available for the 
purposes of inspection. Delegation staff are required to 
visit projects to check on maintenance and operation, and 
a file is kept on each project indicating the objectives, cir­
cumstances of implementation including any technical 
problems, final cost, financial position, evaluation, and 
standard of maintenance since commissioning. All this 
documentation is compiled by the Delegations with the 
help of the Commission departments concerned, and is 
submitted to the Court by the Commission Delegate 
during the visit of inspection. These files represent a consi­
derable amount of work, but they are also important 
sources of archive material. A recent memorandum author­
izing the destruction of certain archives therefore specifies 
that essential papers such as evaluation reports and sum­
maries should be kept. The Commission is unable to do 
any more given present staffing levels. Delays in payment 
15.79. The Commission agrees with the Court that 
delays in payment are most often caused by the slowness, 
negligence or poor organization of national administra­
tions. The Delegations are keenly aware of the shortcom­
ings of the national authorizing officers, who have impor­
tant responsibilities in this field, and do everything they 
can to Remedy them, including, in some cases, taking over 
the work of the department concerned. 
Despite this, there are countries, such as those mentioned 
by the Court, where delays do build up and cannot always 
be prevented. One supplier for the Korhogo hospital pro­
ject, for instance, was paid nearly three years late as a 
result of negligence on the part of the Ivory Coast auth­
orities concerned, despite our Delegation's repeated efforts 
to get them to deal with the case. 
In the end the Commission paid the supplier direct on the 
basis of a fresh statement. The Ivory Coast administration 
will naturally be required to pay any interest claimed on 
the delayed payment. 
31. 12. 82 Official Journal of the European Communities 215 
Other delays 
15.80. The accounting delays and mistakes noted by the 
Court are in fact anomalies, and do not justify any general 
conclusions. The considerations set out in paragraph 15.17 
apply to both instances of late closure of the exceptional 
aid accounts mentioned by the Court. With regard to the 
error in the quarterly balance sheets for the second EDF, it 
should be pointed out that at that time the project account­
ing system did not provide for the adjustment of accounts 
between items 2 and 4, as it now does. This is not to say 
that the method was faulty; the accounts were cleared 
separately. Admittedly the 11 747 ECU could have been 
released sooner, but in fact the money was not needed 
urgently for any other operation as Mauritania's allocation 
was far from used up. was paid against a deposit for an equivalent sum, FF 
714 300. 
The goods were provisionally accepted on 11 July 1980, 
subject to reservations which were to be withdrawn by a 
minuted statement. 
Instead of settling the balance of the contract price (FF 
401 540) on payment of a second deposit to secure the 
guarantee, the Commission delayed payment for a year. 
Once the year was up the national authorizing officer 
issued the payment certificate for the final instalment, spe­
cifying that it covered the supply of equipment alone, not 
the operation of the power station. 
Ensuring the proper execution of contracts 
15.81. The contract to supply the solar pump for 
N'Gorel Guidal was worth a total of FF 2 381 000. 
Approximately 85% of the contract price was paid by 
instalments in accordance with the terms of the contract. 
The 30% advance payable when the contract was signed But as the reservations had not been withdrawn by the time 
payment was made, the sum of FF 714 300 originally 
deposited was not released and is still there. 
The Commission therefore takes the view that that sum 
could still be called, particularly as the goods have still not 
been finally accepted. The supplier has been formally 
requested to take all possible steps to fulfil his contractual 
obligations. 
216 Official Journal of the European Communities 31. 12. 82 
ANNEX VII 
COURT OF JUSTICE 
Replies to the comments of the Court of Auditors concerning the financial year 1981 
EXAMINATION OF THE BALANCE SHEET OF THE 
COURT OF JUSTICE AS AT 31 DECEMBER 1981 
2.13. 
(a) The Court of Justice is aware of the importance of the 
checking of inventories of moveable property and will give 
special attention to the comment of the Court of Auditors. 
It should be pointed out that a new inventory system has 
been installed for furniture, office machinery, technical 
equipment and library stock. At the present time that sys­
tem remains to be checked. A reconciliation between the 
inventory ledger, the balance sheet figure and the physical 
assets will be performed at the same time. (b) The Court of Justice will take account of the comment 
of the Court of Auditors when recording interest received 
in respect of the financial year 1982. 
It emphasizes, however, that interest entered in the bank 
account in January has always been allocated to the finan­
cial year during which it was received. That method was 
originally adopted in order to prevent bank transactions 
from being recorded over two different financial years. 
(c) The Court of Justice accepts the comment of the Court 
of Auditors. In future these expenses will be charged to the 
budget of the financial year in which they are incurred. 
31. 12. 82 Official Journal of the European Communities 217 
ANNEX VIII 
ECONOMIC AND SOCIAL COMMITTEE 
Replies to the comments of the Court of Auditors concerning the financial year 1981 
10.0 (b) The organization of the work of the Economic 
and Social Committee, and of its constituent bodies (sec­
tions and study groups), has been reviewed by the Com­
mittee Bureau on several occasions. The Bureau subse­
quently embodied various procedural rules in its Standing 
Orders including the following: 
'Study groups should work in three languages, to be 
determined by the chairman of the study group before 
the first meeting, according to the study group's com­
position. The rapporteur's language may be added, if 
not among the three languages selected. 
To lighten the workload involved in the translation 
and reproduction of the various preliminary docu­
ments, it is necessary to limit the basic documentation 
(miscellaneous documents, members' written com­
ments, appendices, etc.), which will be translated only 
into the language chosen by the rapporteur. 
Preliminary draft and draft versions of opinions and 
reports and the rapporteur's initial working paper are 
to be translated and reproduced in all the working lan­
guages of the study group. 
More use should be made of corrigenda in order to cut 
down on the number of intermediate versions of draft 
opinions at study group level. The draft report should 
be drawn up at the end of the study group's work.' 
10.11. The ESC Bureau has incorporated certain proce­
dural rules for use of languages in its Standing Orders. 
These are appended to the Committee's Rules of Proce­
dure (see paragraph 10.0). 
The Committee enforces these rules strictly, even though 
this can create difficulties. 10.13. Due to the wide range of subjects with which it 
deals, the- Economic and Social Committee is unable to 
operate strict specialization among its translators and 
revisers. Each language division has a relatively small staff, 
so that translators have to translate from a large number of 
languages — five or even six — and revisers have to revise 
these texts. 
10.14. As specified under paragraph 10.0, the Com­
mittee has taken steps to reduce the volume of translations. 
Furthermore, the Division for Document Production, 
Coordination and Internal Affairs is responsible for vetting 
all requests for translations. 
10.15. Some of the proposed arrangements are already 
in force at the Economic and Social Committee. 'Produc­
tivity' is difficult to evaluate according to yardsticks appli­
cable for all the institutions. It must therefore be emphas­
ized that the output of the Committee's translation divi­
sions — which has to be termed good — is largely 
dependent on the pattern of work of the Committee and its 
constituent bodies. This makes it impossible to have a bal­
anced spread of work throughout the year. 
During peak periods, output can reach double the norm, 
while during some slack or holiday periods it may fall 
below the general average. 
10.16. In appropriate cases, translations are not revised. 
Increasing translator experience should make it possible 
for this trend to become more widespread. 
10.17. Experience has shown that at present one ter­
minal is enough. The terminal is installed in the central 
secretariat of the translation divisions.