Opinion No 3/99

of the Court of Auditors of the European Communities on an amended proposal for a Council Regulation (EC, ECSC, Euratom) amending the Financial Regulation of 21 December 1977 applicable to the general budget of the European Communities (Proposal presented by the Commission in document COM(1998) 676 final of 20 November 1998)

(1999/C 154/02)

THE COURT OF AUDITORS OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Community, and in particular Article 209 thereof,

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

Having regard to the Treaty establishing the European Atomic Energy Community, and in particular Article 183 thereof,

Having regard to the Financial Regulation of 21 December 1977 applicable to the general budget of the European Communities(1), which has been amended on several occasions, and in particular Article 140 thereof,

Having regard, in particular, to Council Regulation (EC, ECSC, Euratom) No 2779/98 of 17 December 1998(2), which is the most recent Regulation to amend the Financial Regulation,

Having regard to the Commission's initial proposal of 3 April 1998(3),

Having regard to the amended Commission proposal of 20 November 1998(4),

Having regard to the requests for an opinion on the amended proposal, which the Council sent to the Court of Auditors on 10 December 1998 and 9 March 1999,

Referring to Opinion No 9/98 concerning the initial proposal, which the Court of Auditors delivered on 22 October 1998(5),

Whereas the object of the initial proposal was to deduce the implications for the Financial Regulation of the introduction of the euro as the single currency for some Member States of the Communities, the abolition of the common organisational structure for the Economic and Social Committee and the Committee of the Regions and the adoption of the Stability and Growth Pact (SGP);

Whereas, at Parliament's request, the amended proposal has added to the above three reforms a fourth concerning the creation of a specific section of the budget for the Ombudsman;

Whereas since the Commission's presentation of the amended proposal on 20 November 1998 the Council has adopted, on 17 December 1998, Regulation (EC, ECSC, Euratom) No 2779/98, which modifies the Financial Regulation to take account of the introduction of the euro and the adoption of the Stability and Growth Pact; whereas in consequence only two reforms are still capable of being adopted: the one which concerns the abolition of the common organisational structure and that which concerns the creation of the budget section for the Ombudsman; whereas attention should therefore be focused on those provisions of the proposal that apply to the implementation of the latter two reforms,

HAS ADOPTED THE FOLLOWING OPINION:

Formal presentation of the amended proposal

1. The proposal is set out in two columns, the first containing the text of the initial proposal and the second the amended text. Both columns contain numerous blank spaces. The significance of the blank spaces is totally different from one column to the next. In the first column the blanks correspond to the absence of any provision. In the case of the second column they concern parts of the text that have remained identical from the initial proposal to the amended proposal. Without examining them carefully one might well assume that these sections concern provisions of the initial proposal that have been deleted in the revised proposal. It would have been clearer to specify "Provision unchanged".

2. This unusual and elliptical presentation may have been the cause of one particular omission. From the initial proposal to the amended proposal Article 126a has become Article 132a. Under the circumstances the reference to Article 126a in Article 1(4) of the initial proposal should have been corrected in the amended proposal to a reference to Article 132a. The second column is, however, blank at this point.

Consequences of abolishing the common organisational structure for the Economic and Social Committee and the Committee of the Regions

3. The Court of Auditors is pleased to note that, in accordance with the latter's recommendation (paragraph 2 of Opinion 9/98), the Commissionand the Council have correctly followed up the fact that, unlike the introduction of the euro and the implementation of the Stability and Growth Pact, where provision for the repercussions on the Financial Regulation could be adopted without delay (Council Regulation (EC, ECSC, Euratom) No 2779/98), the provisions amending the Financial Regulation in connection with the abolition of the common organisational structure could not enter into force until the Treaty of Amsterdam had been ratified and must, therefore, be the subject of a separate Council Regulation at a later date (point 4 first indent of the explanatory memorandum and Article 2 of the amended proposal).

4. Moreover, for obvious practical reasons, it is inconceivable that the section of the budget common to the two Committees can be split into two separate sections from one day to the next. Article 2 of the Regulation amending the Financial Regulation should therefore provide that the provisions (already mentioned by the Commission in that Article) which take account of the implications of the disappearance of the common organisational structure will enter into force on the first day after the entry into force of the Treaty of Amsterdam and, that notwithstanding, the budget that is in course of implementation at the time of the aforesaid entry into force will continue to be implemented up to the time of its closure.

Introduction of a separate budget section for the Ombudsman

5. The Court of Auditors has no objection to the principle of creating a separate section for the Ombudsman. However, it does wish the reasons for the proposed solution to be stated. This is not the case as the amended proposal stands at the moment.

6. The explanatory memorandum offers three reasons. The first is not very convincing, the second is based on a false premise and the third is rather weak.

(a) The first suggests that since both the Economic and Social Committee and the Committee of the Regions will, in future, each have their own specific section of the budget, "...this solution can also be extended to the Ombudsman". The Court does not see any relation between the two cases. The reasons for the establishment of separate sections for the two Committees do not apply in any way to the Ombudsman.

(b) The second claims that if the Ombudsman is not given a separate section it "...would otherwise be the only body with a budget annexed to the section of another institution". As it stands, this assertion is inaccurate. At the moment, the budget of the Publications Office is still an annex to Part A of the Commission section. It is true that the Publications Office is a purely technical structure.

(c) The third points out that, under Article 22(5), the Ombudsman is treated as an institution for the purposes of the Financial Regulation. However, Article 22(5) specifies "...save as otherwise provided". One might easily think, therefore, that, in accordance with Article 22(5), the Ombudsman is to be treated as an institution in every respect other than the allocation of a budget section to each institution.

7. Even if the explanatory memorandum were to give more solid reasons for the creation of a new section, those reasons would need to be included in a summary form in a recital in the actual text of the proposed Regulation. The function of the recitals is, in fact, not to summarise the provisions which follow, which is all too often what happens, but to provide the main elements of the reasons justifying them. In this respect the proposed third recital provides no explanation as to the purpose of the Ombudsman section.

8. All unnecessary words should be deleted. In Article 20(2) instead of "In the section for each institution", write "In each section". In actual fact, every section corresponds to an institution, or, at least, a "quasi-institution" and the shorter form of words is, in fact, sufficient because, according to Article 22(5) of the Financial Regulation, quasi-institutions are treated as institutions for the purposes of that Regulation, unless otherwise provided (which in this case is not so). For the same reason the words "the Economic and Social Committee, the Committee of the Regions and the Ombudsman" should be deleted from the third subparagraph of Article 26(4).

This Opinion was adopted by the Court of Auditors in Luxembourg at the Court meeting on 14 and 15 April 1999.

For the Court of Auditors

Jan O. KARLSSON

President

(1) OJ L 356, 31.12.1977, p. 1.

(2) OJ L 347, 23.12.1998, p. 3.

(3) Doc. COM(1998) 206 final and OJ C 149, 15.5.1998, p. 21.

(4) Doc. COM(1998) 676 final and OJ C 396, 19.12.1998, p. 18.

(5) OJ C 7, 11.1.1999, p. 1.