ARCHIVES HISTORIQUES
DELACOMMISSION
COLLECTION RELIEEDES
DOCUMENTS "COM"
COM(79)202
Vol.1979/0088

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COMMISSION OFTHEEUROPEAN COMMUNITIES
COM(79)202 final
Brussels,23rdApril1979
PROPOSAI.FORA
COUNCILREGULATION (ECSC,EEC,EURATOM)
AMENDING THEFINANCIAL REGULATION
OF21DECEMBER1977
APPLICABLE TOTHEGENERALBUDGETOFTHEEUROPEAN COMMUNITIES
(presented bytheCommissiontotheCouncil)
^t'
U1
\
C0M(79)202final

EXPLANATORY imfORAlfSUM
I. Cî?!IERAL CONoIDSRATIOnS
1.Article 9°of "theFinancial Regulation of21December 1977 states that
theexpenditure financed bytheGuarantee Section oftheEuropean Agricultural
Guidance andGuarantee Fund "shall betaken into account forafinancial year
onthebasis ofpayments made upto31December •••provided that their
commitment andauthorization have reached theaccounting officer notlater
than 31March ofthefollowing year ".This provision ,which already existed
under theFinancial Regulation of25April .1973 (Article 109)^i establishes
what iscommonly called the "EAGGF additional period ".Thesystem takes
into account thespecial features ofthemanagement oftheEAGGF Guarantee
Section appropriations ,which involves theintervention ofgovernment
departments andagencies (the"paying agencies "referred toinArticle 4of
Regulation (ESC)No729/70)» itpresents certain disadvantages .
TheEAGGF additional period isasubstantial departure from thegeneral
budgetary system oftheEuropean Communities ,under which accounts are
closed on31December onthebasis ofpayments effected bytheaccounting
officer notlater than thefollowing 15January (final paragraph of
Article 5oftheFinancial Regulation of21December 1977)•Inpractice ,
theexistence ofanadditional period has theeffect ofpostponing the
actual closure ofaccounts until 31March and thepresentation oftherevenue
andexpenditure account bytheCommission until 1June ofthefollowing
financial year .
2.Inaddition ,thepresentation oftherevenue andexpenditure account
rather late intheyear obviously hasrepercussions onthevarious dates set
outintheFinancial Regulation forauditing theaccounts .
This situation mayruncounter tocertain objectives which anybody ofbudgetary
lawshould trytoachieve ,i.e. simplicity andclarity inthekeeping of
accounts andthespeedy closure andauditing ofaccounts ,thetime factor being
essential fortheeffectiveness andimpact ofthemonitoring process .The
experience oftheInstitutions during theprocedure leading tothefirst annual
report oftheCourt ofAuditors ,published attheendofJanuary 1979^1 has
also shown that thedates inquestion should bearranged rescheduled ,sothat
theparties concerned have thenecessary time tofulfil their functions
with allefficiency .
Abolition oftheEAGGF additional period forthese reasons would indeed make
formore rational timing .Theoutcome would belonger periods both forthe
pOJNoL356 ,31December 1977 »
.OJNoL116 ,1May1973 .
¿OJNoL94,28April 1970 .
OJNoC313 .30December 1978 »

2
adoption oftheannualreportoftheCourtofAuditors andthe
communication bytheInstitutions oftheirrepliestothecomments
inthatreport,withnoconcomitant extension oftheperiodinwhich
theCommission mustdrawuptherevenueandexpenditure account.
Thetwodrawbacks referredtoabove(theexistence ofanadditional
periodforentering EAGGFGuarantee Sectionexpenditure intheaccounts
andthepressure ofdeadlines whicharesometimes tootightinthe
rendering andauditingofaccounts)couldthusbeeliminated simultaneously .
3.Thechangestobemadethusspringfromthetwofollowing aims:
–morerational scheduling ofthevariousdeadlines stipulated inthe
Financial Regulation of21December 1977forrendering andauditing
theaccounts ;
–simultaneous abolition oftheadditional periodforentering the
expenditure oftheEAGGFGuarantee Sectionintheaccounts .
Topermitapromptdecision onthisproposal ,theCommission hasincluded
nothingwhichtouchesonotherpoints.Itintends,inaccordance with
Article107oftheFinancial Regulation (whichprovidesforathree-yearly
reviewoftheprovisions ofthisRegulation ),toincorporate inonetext
alltheamendments ofvarioussortswhicharefoundtobeneeded.That
textwill,ofcourse,takeintoaccountthesuggestions already made
bytheCourtofAuditors.
II.DETAILED EXPLANATIONS (intheorderoftheArticlestobeamended)
1.Morerational scheduling ofthetime-limits fortherendering and
andauditing ofaccounts
Theabolition oftheEAGGFadditional periodwillhavetwopositiveeffects
onthetimetable forrendering andauditing accounts :firstly,thetime-
limitscanbesetearlierintheyearand,secondly,theperiodswill
generally belonger.Toachievethis,thefollowing Articlesofthe
Financial Regulation of21December 1977needtobeamended:
(a)Article6(3):Intheinterests ofbudgetarytransparencyand
rational management oftheappropriations ,thereshouldbeno
excessive delayindecisions onrequeststocarryover
appropriations ,tobemadetotheBudgetary Authority .The
Commission accordingly proposes 21February (insteadof1May
asatpresent)asthefinaldateforsubmitting requeststo
carryoverappropriations ,asprovidedinArticle6(3).

-3-
(b)Articles 73I74and77sIi.isproposed tomake 1April
thefinal date fordrawing uptherevenue andexpenditure
account ,theanalysis offinancial management andthebalance
sheet (thecurrent deadline is1June ).Since theaccounts
forthefinancial year should from nowonbeclosed on
15January (forexpenditure under thegeneral system provided
forinArticle 5oftheFinancial Regulation )oron
31January (forEAGGF Guarantee Section expenditure ),the
Commission would infact still have the same amount oftime
fordrawing upthese documents (1February to31March instead
of1April to31Kay).TheArticle 74deadline for
communication bythe other Institutions ofthe information
required fordrawing upthese documents should therefore be
brought forward to15February .
(c)Article 83(l )sThetime saved byeliminating theadditional
EAGGF period could also beapplied tothedeadline forthe
adoption bytheCourt ofAuditors ofitsannual report .The
Court ofAuditors would also have anextra month forcompleting
this task (1April to15June instead of1June to15July ).
TheCommission considers that this extra time would bevery
useful totheCourt ofAuditors initswork and ,ingeneral ,
for theefficiency andprecision oftheexternal financial
controls .
2.Elimination ofthe additional period for entering EAGGF Guarantee
Section expenditure inthe accounts
(a)Thecurrent "additional period "fortheEAGGF Guarantee Section ,
which extends three months (from 1January to31March )beyond theone-year
Budget implementation period ,wasinstituted with theobject ofgiving time
forthetransfer andprocessing ofdata from thenational totheCommunity
level .
Thetime–lagbetween establishment ofthedata concerned bythepaying
agencies intheMember States andthetransmission ,processing ,verification
andentry into theaccounts ofthat data atCommunity level isgenerally
about three months –inter alia because ofthe constraints ofthe present
rules (authorization oftransfers bytheBudgetary Authority ).
If,therefore ,theperiod forentry intheCommunity accounts fortheEAGGF
Guarantee Section currently spreads over 15months (from 1January ofthe
financial year nto31March ofthefinancial year n+1),this issimply
duetothematerial andlegislative constraints resulting from the
two-tier system which characterizes andgoverns budgetary implementation
intheEAGGF Guarantee Section –thenational tier and theCommunity tier .
Yetthepresent solution ,devised when theFinancial Regulation of
25April 1973 wasdrafted ,isnottheonly possible wayoftackling this
particular situation .Itsaimwastocomplete ,by31March ofthefinancial
year n+1,theestablishment ,andhence theentry into theaccounts ,ofthe
final data on.expenditure incurred during thefinancial year n.

However,-theFinancial Regulation permitstheuseofanothertechnique
which,inpractice ,hasthesameresults–thetechnique ofautomaticcarry-overs .15/thismethod,allexpenditure (incommitments and
actualpayments )forwhichsubstantiating statements havebeensentin,
checkedandenteredintheaccounts by.31Januaryofthefinancial
yearn+1,wouldberecordedinthecourseofthefinancial yearn.In
thecaseofexpenditure forwhichitisnotpossible tocomplete these
operations by31January,thefollowing provisions wouldapply?
–theestimates communicated bytheMemberStatesintheirmost
recentapplications forad.vancepayments wouldbechargedas
commitments ;, „
–thesecommitments wouldbeeligible forautomatic carryovers and
wouldbeimplemented ,i.e.settledatCommunity level,duringthe
subsequent months(February,March,etc.oftheyearn+1).
Asimplementation ofcarryovers inn+1isbydefinition afunction andan
integralpartofoperations underthefinancial yearn,theendresultis
thesameasthatobtained underthecurrentsystem.Theadvantage isthe
valuable gainoftwomonthsforthenextstep,i.e.verification ofthe
accounts.Itistherefore proposed thatArticle 97oftheFinancial
Regulation of21December 1977 amendedtothiseffect.
Theprovisions ontheclearance oftheaccounts aretherefore amendedaccordingly
(amendment ofArticle100).
(b)YJithregardtoexpenditure forwhichithasnotbeenpossibleto
processthefinalsubstantiating statements beforetheclosingofthe
financial year(31JanuaryfortheEAGGFGuarantee Section),thisproposal
therefore advocates thatthecharging ascommitments shouldbeperformed
onthebasisoftheestimates ofrequirements asstatedbytheMemberStates
intheirmostrecentapplications foradvancepayments.Thecommitments
basedontheseestimates wouldthenbecarried overautomatically tothe
follov;inf ;financial year.
Itgoeswithoutsayingthattheutilization ofthesecarryovers ,during
thesubsequent financial yearwillnotalwayscoincideabsolutely ,itemby
item,withthecommitments basedonestimated requirements andthatcertain
adjustments willbenecessary .Inpractice,thesewouldbethefinal
adjustments whichatpresentaremadeinMarch,andtheywouldallowa
finaladaptation ofappropriations torequirements .
Thisbeingso,andinharmonywiththeobjectofthisproposal,provision
shouldtherefore bemadeforthese–minor–adjustments tobedecided
bytheCommission underthesameprocedure asthatproposed (below)for
transfers madeduringafinancial year.Theproposed amendments to
Article 98takethesepointsintoconsideration .

Inordertokeepatime-~Festa?ietiea en=fcheuseofapppep^ia^ieyis Garbledevea?,itisproposed ,thatappropriations carriedoverwhichhavenotbeen
committed ,orchai'gedaspaymentsbefore30Juneofthefinancial yearto
whichtheyarecarriedovershouldbecancelled undertheyearoforigin
(amendmenttoArticle99)«
(c)Theprovisions oftheFinancial Regulation relatingtodecisions in
respectoftransfers ofappropriations intheEAGGFGuarantee Section
callforthefollowing comments :
(i)Thedistinction between"chapters"and"articles"doe3notnecessarily
indicate specific categories ofappropriations
Thestructure ofthenomenclature oftheEAGGPGuarantee Sectionis
theoutcomeofhistorical development .Inprinciple ,eachchapter
shouldcorrespond toaspecific marketorganization .
Althoughgenerally true,thisprinciple isnotalwaysrespected .
ThepresentChapter73»forexample,groupstogether several
different marketorganizations eachofwhichshould,intheory,be
thesubjectofanindividual chapter.
Underthepresentrules,then,theCommission mayitselfdecideto
maketransfers between ,forexample,thecommonorganization ofthe
marketinhops(Article732)anddriedfodder(Article734)tutnot,
forinstance ,between .Chapter60(cereals)andChapter 61(rice).
Thepresentsituation ,therefore ,isnotstrictly basedonalogical
approach ,butratheronanapproach ofmereform.
(ii)Oncetheestimates havebeendrawnup,i.e.theBudgethasbeen
adoptedbytheBudgetary Authority ,itisimplemented inthefirst
instance bytheKeraberStates.
Initially ,theCommissions roleasauthorizing bodyconsists of
granting advances onthebasisoftheMemberStates 1estimates .
Theseadvances taketheformofglobalcommitments .
Itisonlylater,aftertwotothreemonths,whentheseadvanceshave
beenimplemented bytheMemberStates,thattheCommission isina
positiontocarryoutthedetailedchargingofcommitments and
paymentstoindividual items.Thisisdoneonthebasisofthe
substantiating statements forwarded bytheMemberStatesafter
carrying outtherequisite examinations andchecks.

6
(iii)Expenditure intheEAGGFGuarantee Sectioniscompulsory expenditure
Expenditure intheEAGGFGuarantee Sectionisbydefinition compulsory
expenditure .Although theCommission hascertaintechnical powers
inmarketmanagement ,thevolumeofexpenditure istheineluctable
resultofalllegislation inforceandofthecyclicalsituation .
Ithasoftenbeenstressedlatelythatagricultural expenditure
cannotbecontained atthebudgetlevel:theefforttocontainit
mustbeexertedupstream ,i.e.atthelevelofbasiclegislation .
*
Theseconsiderations implythattransfers intheEAGGPGuarantee Section
arebasically "transfers forregularization purposes",andnot"transfers
forauthorization purposes".
Itisnotthetransfer procedure whichmakesitpossibleforMemberStates
toeffectexpenditure ;onthecontrary ,itsaimistoadjusttheestimates
ofappropriations enteredintheBudgettoactualneeds.Thusthe
requirements whichmustbemetarefirstestablished ,andlaterthe
appropriations areadjusted asneeded.
Thepresentprovisions wherebytheCouncilformally approves suchtransfers
donotcorrespond toreality.Theymakeforunnecessary procedural
complications andtheironlyeffectistoincrease delays.
ItshouldalsobenotedthattheCommission systematically consults the
EAGGPCommittee beforeitselfdeciding ontransfers betweenarticles and
beforeproposing transfers betweenchapterstotheCouncil.This
procedure enablestherepresentatives oftheMemberStatestocheckthat
thetransfers proposed meettheMemberStates'requirements .
TheCommission therefore believes thatitwouldbeintheinterests ofall
theinstitutions concerned toproceedasfollows:
(i)alltransfers withintheGuarantee Sectiontobedecideduponbythe
Commission afterconsulting theEAGGPCommittee ;
(ii)"theBudgetary Authoritytobeimmediately informedofthesedecisions
(amendment toArticle 101).

(d)Theprovisions governing food aidshould bealtered inthelight of
thenewrules proposed forthe EAGGP Guarantee Section .Thenew
Articles 97(0 »97(2 ),100and101would then also apply tofood aid
(amendment toArticle 102).

PROPOSAL FORACOUNCIL REGULATION
(03SC.EEC,Euratom)
amendingtheFinancial Regulation of21December 1977
applicable tothegeneralbudgetoftheEuropean Communities
THECOUNCIL OFTHEEUROPEAN COMMUNITIES ,
HavingregardtotheTreatyestablishing theEuropean CoalandSteel
Community ,andinparticular Article78hthereof,
HavingregardtotheTreatyestablishing theEuropean Economic Community ,
andinparticular Article 209thereof,
HavingregardtotheTreatyestablishing theEuropean AtomicEnergy
Community ,andinparticular Article183thereof,
Havingregardtotheproposal fromtheCommission ,
HavingregardtotheopinionoftheEuropean Parliament ,
HavingregardtotheopinionoftheCourtofAuditors ,
Whereas ,intheinterests ofgreatersimplicity andclarityinthe
keepingofaccounts,itwouldappearappropriate toabolishtheadditional
periodforenteringintheaccounts expenditure undertheEAGGF
Guarantee Section ;
Whereastheabolition ofthisperiodwouldpermitamorerational scheduling
ofthetime–limitsgoverning theprocedure fortherendering andauditing
oftheaccounts ;
Whereas ,tothisend,certainprovisions oftheFinancial Regulation of
21December 1977(0mustbeamended,
HASADOPTED THISREGULATION :
ARTICLE 1
TheFinancial Regulation of21December 1977isherebyamendedasfollows:
(1)O.J.NoL35^,31December 1977,p.1*

1.Thefirstsubparagraph ofArticle6(3)shall "bereplaced "bythe
following :
"3.Inthecaseoftheappropriations referredtoinparagraph 1(b),the
Commission shalltransmit totheCouncil andshallforwardtothe
European Parliament ,notlaterthan21February.therequeststocarryover
appropriations ,dulysubstantiated ,madebytheEuropean Parliament ,
theCouncil,theCourtofJustice,theCourtofAuditors andthe
Commission itself."
2.Theintroductory paragraph ofArticle73shallbereplaced bythe
following :
"TheCommission shalldrawup,notlaterthan1Aprilofthefollowing
year,arevenueandexpenditure accountfortheCommunities ,whichshall
includethefollowing documents classified inaccordance withthe
budgetnomenclature :"(remainder unchanged).
3.Article74shallbereplaced bythefollowing :
"EachInstitution shall,notlaterthan15February ,forwardtothe
Commission theinformation required fordrawinguptherevenueand
expenditure accountandthebalancesheet,together withacontribution
totheanalysis ofthefinancial management referredtoinArticle 75•"
4.Article77shallbereplaced bythefollowing : ^
"TheCommission shallforwardtherevenueandexpenditure account,the
financial analysis andthebalancesheettotheEuropean Parliament ,the
CouncilandtheCourtofAuditors by1Aprilatthelatest."
5.Article83(1)shallbereplaced bythefollowing :
"TheCourtofAuditors shalltransmit totheCommission andtothe
Institutions concerned ,by15Juneatthelatest,anycomments whichare,
initsopinion,ofsuchanaturethattheyshouldappearinthereport
providedforinArticle78foftheECSCTreaty,Article206aofthe
ESCTreatyandArticle180aoftheEuratomTreaty.EachInstitution
shalladdressitsreplytotheCourtofAuditors by31Octoberatthe
latest.TherepliesoftheInstitutions otherthantheCommission shall
beforwarded simultaneously totheCommission .n

-\-
6.Article 97shall "bereplaced "bythefollowing :
"1.Expenditure shallbetakenintoaccountforafinancial yearonthe
basisofpayments madeupto31December bytheauthorities andbodiesreferredtoinArticle4ofRegulation (EEC)No729/70,providedthattheir
commitment andauthorization havereachedtheaccounting officernotlater
than31January ofthefollowing year.
"2.Expenditure effected between 1Januaryand31Octoberbyauthorities
andbodiesunderArticle4ofRegulation (EEC)ifo729/70shallbethe
subjectofacommitment andshallalsobechargedasapaymentbychapter,
articleanditem,afterexamination ofthestatements transmitted bythe
MemberStatesinaccordance withtheprovisions laiddownpursuantto
Article5(3)ofthesaidRegulation ,andafterapprovalbythe
Financial Controller .
Thecommitment shallbeenteredintowithintwomonths
following receiptofthestatements transmitted bytheMemberStates.
Thecharging asapaymentshall,inprinciple ,becarriedoutwithinthe
sameperiod,subjecttosubsequent provisions herein.
"3.Theexpenditure tobeeffected inNovember andDecember byauthorities
andbodies'underArticle4ofRegulation (EEC)No729/70shallbethe ,
subject ofacommitment onthebasisofthestatements ofestimates
transmitted bytheI-iemoerStates.
"4.Thecommitments providedforinparagraphs 2and3shallbededucted
fromthoseprovidedforinArticle 96."
7.Article98shallbereplaced bythefollowing :
"1.Thecommitments providedforinArticle97(3)shallbethesubjectof
automatic carryovers tothefollowing financial year.
"2.Appropriations whichattheendoftheyearremainintheformof
globalcommitments ,pursuanttotheprovisions ofArticle 96,shallbe
automatically carriedoversothattheexpenditure chargeable tothe
financial yearoforiginmaybetakenintoaccount underthearticles and
itemsinquestion .
"3»Thedifference betweenthetotalexpenditure actually disbursed during
afinancial yearbytheauthorities andbodiesunderArticle 4of
Regulation (EZXQUo729/79andthetotalcommitments andchargings as
paymentseffectedunderArticle97(2)and(3)forthesamefinaneial"~year
shallbechargedagainsttheappropriations carried overtinder
paragraphs 1and2.
"4.Thecharging providedforinparagraph 3shallbesubjecttoan
examination ofthestatements transmitted bythei-IemberStatesinaccordance
withtheprovisions laiddownpursuanttoArticle 5(3)of
Regulation (EEC)jfo729/70,ter'approva'i'd'ytheFinancial Controller .

I
"5*TheCommission may beauthorized ,where theneed arises ,and in i
accordance with tho nrocednre provided for inArticle 13of
Herniation (EEC)ito729/70.tomake those transfers which prove necessary !
from theautomatic carryovers provided "for inparagraph 1." I
8.Article 99shall bereplaced "bythefollowing :
f
"1. Appropriations carried over under paragraphs 1and 2of
Article 96and v;hich ha.ve notbeen the subject ofacommitment orbeen
charged anapayment not later than 30June ofthefinancial year towhich
they were carried over shall becancelled inrespect oftheoriginal financial
year .
"2.Aglobal provisional commitment corresponding tothe appropriations
cancelled pursuant toparagraph 1shall beconstituted from the
appropriations ofthe current financial year ,"
9.Article 100shall bereplaced bythefollowing :
"1.Articles 97and98shall apply without prejudice totheclearance of
accounts provided forinArticle 5(2J(b )ofRegulation (EEC)No729/70.
"2.Any difference v;hich may exist between the total expenditure charged
totheaccounts for afinancial year pursuant toArticles 97and 98and
the total expenditure established bythe Commission when clearing the
accounts asprovided forinArticle 5(2)(b )ofReflation (EEC )No729/70
shall becharged ,under asingle article ,asover–orunder –expenditure
tothe financial year inwhich the accounts are cleared ."
10.Article 101shall bereplaced bythefollowing :
"1.Appropriations made available inonechapter ofexpenditure maynot
beallocated toanother chapter ofexpenditure .
"2.Transfers between chapters andtransfers within achapter shall be
made bydecision oftheCommission taken notlater than 31January in
accordance with the procedure provided forinArticle 13of
Reflation (EEC )flo729/70* *
"3.TheCommission shall inform theBudgetary Authority ofsuch transfers ."
11.InArticle 102 .
(a)thethird paragraph shall bereplaced by "thefollowing :
"Article 97(1 )and (2)andArticles 100and101shall apply asregards thecharging
aspayment ofexpenditure effected bytheMember States using the .funds
advanced bytheCommission ,andasregards theclearance ofaccounts ."

(b)thefinalparagraph shallbodeleted.
ARTICLE 2■
A•
ThisRegulation shallenterintoforceon1June1979»
ThisRegulation shallbebindinginitsentirety anddirectlyapplicable
inallMemberStates.