Resolution of the European Parliament

of 5 May 2010

with observations forming an integral part of its Decisions on discharge in respect of the implementation of the European Union general budget for the financial year 2008, Section III — Commission and executive agencies

THE EUROPEAN PARLIAMENT,

having regard to the European Union general budget for the financial year 2008 [1],

having regard to the final annual accounts of the European Communities for the financial year 2008 — Volume I (SEC(2009) 1089 — C7-0172/2009) [2],

having regard to the Commission’s annual report to the European Parliament on the follow-up to 2007 discharge decisions (COM(2009) 526), and to the Commission staff working document accompanying that report (SEC(2009) 1427),

having regard to the Commission communication entitled "Synthesis of the Commission’s management achievements in 2008" (COM(2009) 256),

having regard to the Commission’s annual report to the discharge authority on internal audits carried out in 2008 (COM(2009) 419), and to the Commission staff working document accompanying that report (SEC(2009) 1102),

having regard to the Commission’s report on Member States’ replies to the Court of Auditors’ 2008 annual report (SEC(2010) 178 and SEC(2010) 196),

having regard to the Green Paper on the European transparency initiative, adopted by the Commission on 3 May 2006 (COM(2006) 194),

having regard to Opinion No 2/2004 of the Court of Auditors on the "single audit" model (and a proposal for a Community internal control framework) [3],

having regard to the Commission communication on a roadmap to an integrated internal control framework (COM(2005) 252),

having regard to the Commission Action Plan towards an Integrated Internal Control Framework (COM(2006) 9), the report on the Commission action plan towards an integrated internal control framework (COM(2008) 110), and the Commission staff working document accompanying that report (SEC(2008) 259),

having regard to the Impact Report on the Commission action plan towards an integrated internal control framework (COM(2009) 43),

having regard to Opinion No 6/2007 of the Court of Auditors on the annual summaries of Member States; "national declarations" of Member States; and audit work on EU funds of national audit bodies [4],

having regard to the Commission’s action plan to strengthen the Commission’s supervisory role under shared management of structural actions (COM(2008) 97) and the interim report on the follow-up to that action plan (SEC(2009) 1463),

having regard to the Commission’s report on progress in Bulgaria under the Cooperation and Verification Mechanism (COM(2009) 402) and the supporting document accompanying that report (SEC(2009) 1074),

having regard to the Commission’s report on progress in Romania under the Cooperation and Verification Mechanism (COM(2009) 401) and the supporting document accompanying that report (SEC(2009) 1073),

having regard to the Annual Report of the Court of Auditors on the implementation of the budget concerning the financial year 2008, together with the institutions’ replies [5], and to the Court of Auditors’ special reports,

having regard to the statement of assurance as to the reliability of the accounts and the legality and regularity of the underlying transactions, provided by the Court of Auditors pursuant to Article 248 of the EC Treaty [6],

having regard to the Commission communication of 16 December 2008 on a common understanding of the concept of tolerable risk of error (COM(2008) 866), and to the Commission staff working document accompanying that communication (SEC(2008) 3054),

having regard to the Council’s recommendation of 16 February 2010 on the discharge to be given to the Commission in respect of the implementation of the budget for the financial year 2008 (5826/2010 — C7-0054/2010),

having regard to the Council’s recommendation of 16 February 2010 on the discharge to be given to the executive agencies in respect of the implementation of the budget for the financial year 2008 (5828/2010 — C7-0055/2010),

having regard to Articles 274, 275 and 276 of the EC Treaty, Articles 317, 318 and 319 of the Treaty on the Functioning of the European Union and Articles 179a and 180b of the Euratom Treaty,

having regard to international audit standards and international accounting standards, in particular those applying to the public sector,

having regard to Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities [7], and in particular Articles 55, 145, 146 and 147 thereof,

having regard to Council Regulation (EC) No 58/2003 of 19 December 2002 laying down the statute for executive agencies to be entrusted with certain tasks in the management of Community programmes [8], and in particular Article 14(2) and (3) thereof,

having regard to Rule 76 of, and Annex VI to, its Rules of Procedure,

having regard to the report of the Committee on Budgetary Control and the opinions of the other committees concerned (A7-0099/2010),

A. whereas Article 317 of the Treaty on the Functioning of the European Union provides that responsibility for implementation of the Union budget lies with the Commission, in cooperation with the Member States, who are to cooperate with the Commission in order to ensure that the appropriations are used in accordance with the principles of sound financial management,

B. whereas the second subparagraph of Article 287(1) of the Treaty on the Functioning of the European Union requires the Court of Auditors to provide Parliament and the Council with a statement of assurance as to the legality and regularity of the underlying transactions, adding that the statement may be supplemented by specific assessments for each major area of Union activity,

C. whereas the implementation of major EU policies is characterised by the "shared management" of the Community budget by the Commission and the Member States, under which 80 % of Community expenditure is administered by the Member States,

D. whereas improvement of the financial management in the Union must be supported by a close monitoring of progress in the Commission and in the Member States, and whereas Member States should assume responsibility in the management of EU funds, ensuring the completion of an EU integrated internal control framework with the aim of obtaining a positive Statement of Assurance (DAS),

E. whereas in its last five annual discharge resolutions Parliament drew attention to the urgent need to introduce national declarations at an appropriate political level, covering all EU funds coming under shared management, in order that each Member State take responsibility for the management of EU funds received,

F. whereas the implementation of point 44 of the Interinstitutional Agreement of 17 May 2006 between the European Parliament, the Council and the Commission on budgetary discipline and sound financial management [9] (the IIA) and of Article 53b(3) of the Financial Regulation, concerning annual summaries of the audits and declarations available, should make a substantial contribution towards improving management of the EU budget,

G. whereas the Court of Auditors, in its abovementioned Opinion No 6/2007, also stresses that national declarations may be regarded as a new element of internal control of EU funds, and that they could stimulate improved control of EU funds in shared management areas,

H. whereas the work of Parliament’s Committee on Budgetary Control in general and the discharge procedure in particular form part of a process seeking to establish full accountability on the part of the Commission as a whole and individual Members of the Commission, as well as all other relevant actors, of which Member States are the most important part, for financial management in the EU, in accordance with the Treaty on the Functioning of the European Union, and thereby to create a more solid basis for decision-taking,

I. whereas Parliament’s Committee on Budgets should take due account of the 2008 discharge results and recommendations during the next budgetary procedure,

J. whereas the Council recommendation on discharge should, in order to serve a constructive purpose, aim to strengthen the reform efforts and the responsibility of the Member States to remedy the problems identified by the Court and secure improved financial management in the European Union,

K. whereas the current discharge schedule is much too long in view of the need to introduce as quickly as possible the corrective measures and reforms called for by Parliament in its control capacity; whereas the annual accounts must be drawn up before the end of the first quarter of the year following the financial year under review, so that the Court of Auditors can deliver its report before the end of the second quarter of the year following the year under review,

L. whereas Article 83 of Regulation (EEC, Euratom, ECSC) No 259/68 of the Council of 29 February 1968 laying down the Staff Regulations of Officials and the Conditions of Employment of Other Servants of the European Communities [10] stipulates that pensions are charged to the budget and that the Member States jointly guarantee payment of such benefits in accordance with the scale laid down for financing such expenditure; whereas staff pay back to the general budget a share of their salaries to contribute to the funding of the pension scheme,

M. whereas Article 83 of Regulation (EEC, Euratom, ECSC) No 259/68 establishes a joint guarantee by the Member States, which means that the guarantee is applicable in the event of the default of one or more Member States, and makes it possible to consider that the Union has a claim on the Member States that have underwritten that commitment,

HORIZONTAL ISSUES

Overriding concerns and targets to be achieved

1. Remains concerned, at the start of the new Commission’s term of office, about accumulated problems deriving from the previous Commission, notably:

- continuing high rates of error in payments,

- slowness in recoveries of undue payments, and

- carryovers at unprecedented high levels;

2. Welcomes the initial signs of a collegial approach from the new Commission, as demonstrated in the engagement of Commissioners László Andor, Johannes Hahn and Algirdas Šemeta in discussions with Parliament’s Committee on Budgetary Control, and expects a strong statement from Commissioners Janusz Lewandowski and Algirdas Šemeta promising action in the areas of: Member State statements of assurance, proposals for tolerable risk of error, simplification and transparency, and trust funds covering external actions, and further believes that this must cover further action in the area of corrections and recoveries, and internal control systems;

3. Believes that errors in expenditure hinder effectiveness in achieving EU policy targets, and reiterates that policy groups with an error rate below 2 % still account for only 47 % of the EU budget, representing an increase of just 9 % from 2005 to 2008; considers that this is still an inadequate level of improvement year on year and points out that, despite some areas of improvement, an error rate above 5 % remains in policy groups which account for 31 % of the budget, and a rate of between 2 % and 5 % for a further 22 %;

4. Calls on the Commission to prepare and submit to Parliament a new Agenda for 2010 onwards, providing for an acceleration in the reduction of error rates so as to ensure that a further 20 % of the budget can be given a "green" classification from the Court of Auditors by 2014, with interim changes called for from the Court of Auditors for a new methodology to show specific error rates within the Cohesion budget chapter and differentiating between payments made under the 2000-2006 and the 2007-2013 legislation; considers that reaching this target is an essential part of getting full value for EU expenditure in the future and progressing towards a positive DAS;

5. Calls on the Commission President to inform Parliament about how the Commission will operate in a more coordinated way, so as to address remaining weaknesses in the financial systems and significantly reduce error rates as indicated above;

Reliability of the accounts and legality of the underlying transactions

6. Notes with satisfaction the Court’s positive opinion concerning the reliability of the final annual accounts and the Court’s statement that the accounts present fairly, in all material respects, the financial position of the Communities and the results of their operations and cash flows as at 31 December 2008;

7. Considers it abnormal that the annual accounts should be presented with negative own capital of EUR 51400000000 and wonders whether the amounts to be called on from the Member States should not be shown as assets, since this involves a certain commitment concerning pensions payable to staff and estimated at EUR 37000000000; notes the explanations by the Commission’s accountant to the effect that the international accounting standards applicable to the public sector were duly applied; proposes that consideration be given to creating a Community pension fund to externalise financial commitments of this kind concerning staff;

8. Expresses nonetheless its concern at the Court’s observations regarding weaknesses identified in certain bodies and Directorates-General of the Commission in the accounting system for invoices/cost statements and pre-financing which put at risk the quality of financial information;

9. Welcomes the unqualified opinion given by the Court on revenue, commitments for all policy groups and payments underlying the accounts for the policy groups "Education and Citizenship" and "Administrative and other expenditure", which are in all material respects legal and regular;

10. Calls on the Court of Auditors to provide at the next discharge the statement of assurance as to the legality and regularity of the underlying transactions as required in the second subparagraph of Article 287(1) of the Treaty on the Functioning of the European Union, just as it does for the reliability of the accounts;

11. Welcomes the Commission’s efforts to promote and apply improved control and management procedures which lead to an improvement compared to previous years with a reduction in the level of error found by the Court in underlying transactions in certain expenditure areas (the policy areas "Agriculture and natural resources", "Research, energy and transport" and "Education and citizenship");

12. Regrets that the DAS still remains qualified (negative) in extremely important Community spending areas of the budget for the 2008 financial year (Rural development, Structural measures, Research, energy and transport, External actions at the level of implementing organisations and Enlargement), where payments are still affected by large-scale material errors;

13. Acknowledges that in its Communication on the impact of the action plan to strengthen the Commission’s supervisory role under shared management of structural actions, the Commission indicates that the steps outlined in it have been completed; notes that the preliminary results show an error rate in expenditure of around 5 % for the 2007-2013 period; awaits, however, the wider benefits to cohesion policy, where there are still very large problems despite the progress made by the Commission towards a more efficient use of EU funds and the overall control environment;

14. Considers likewise, as regards Research, energy and transport and External aid, development and enlargement, that the Commission Action Plan towards an Integrated Internal Control Framework should already bring benefits and that the Commission should be able to provide a series of indicators and descriptors to measure the impact of this Action Plan;

15. Notes, however, the Court’s observation that it is not yet possible to determine whether the Action Plan has had a measurable impact on the supervisory and control systems and ultimately on the regularity of transactions (point 2.28 of the 2008 Annual Report), and urges the Commission to take appropriate action to ensure that, for the 2009 discharge, indicators are in place to measure the impact of that Action Plan;

16. Calls on the Commission to put forward proposals for shortening the periods involved in the discharge process, so that the vote in plenary can be held in the year following the financial year under review;

Information and framework of the DAS

17. Welcomes the work done by the Court to further improve the clarity of the DAS approach as regards factors contributing to more efficient and effective control systems in each sector from year to year and the quality of specific parts of the Court’s report, such as that dealing with structural measures, and invites the Court to continue to keep Parliament regularly informed;

18. Considers that the Court’s assessment, made each year since the Maastricht Treaty, on how the Commission manages the EU funds has proven to be a useful tool for improving the management of these funds, and recognises that the Commission has made great efforts to improve management; calls on the Member States, however, to show a greater commitment to improving the spending of funds;

19. Points out the improvement achieved since the entry into force of the Nice Treaty, inasmuch as the Court’s statement of assurance of the reliability of the accounts and of the legality and regularity of the underlying transactions may be supplemented by specific assessments for each major area of Union activity (now Article 287(1) of the Treaty on the Functioning of the European Union);

20. Nevertheless, considers also that having only one global and annual assessment does not reflect the complex structure of the European Communities’ finances, and further considers that to continue to have a negative annual assessment after 15 consecutive years may have negative repercussions amongst citizens who do not understand why the Court always gives a negative opinion;

Revision of the Treaties: reform of the DAS

21. Notes that, according to Article 48(2) of the EU Treaty, as modified by the Lisbon Treaty, Parliament has an enhanced role in the procedure of revision of the Treaties, having secured the right of initiative to submit to the Council proposals for the amendment of the Treaties, i.e. of the statement of assurance;

22. Calls for reflection on the feasibility of separate statements of assurance in the future, to be provided both by sector/policy area and by multiannual programme, in order to provide a better match between the Court’s methodology and the multiannual and sectoral nature of the European Communities’ finances;

23. Notes that the Commission has persistently claimed that the "multiannual nature" of the expenditure concerned means that most errors can be detected and corrected before the closure of the relevant programmes; further notes that the Court considers that there is, at present, insufficient information available to support this claim;

Budgetary management

24. Is concerned that outstanding budgetary commitments (unused commitments carried forward to be used in future years), mainly on multiannual programmes, increased in 2008 by EUR 16,4 billion (11,8 %) to EUR 155,0 billion (point 3.9 of the 2008 Annual Report), whilst acknowledging that this is due in certain cases to delays in the start-up phase of the new programmes while in others it reflects a poor budget planning process; is concerned that unused funds each year represent lost opportunities for implementation of EU policies and programmes;

25. Takes note, however, that, even though outstanding budgetary commitments on differentiated expenditure remain at a very high level exceeding the total budgetary commitment appropriations for 2008, the Court also points out that most outstanding budgetary commitments are now from 2007 and 2008 and therefore related to the current financial framework (point 3.15 of the 2008 Annual Report);

26. Welcomes the fact that automatic de-commitment should prevent problems in the current funding period but remains concerned that the highest proportion of outstanding budgetary commitments ("RAL") is related to the cohesion area associated with the lack of any de-commitment procedure for the 2000-2006 period;

27. Asks the Member States to transmit the remaining compliance assessment documents of the Management and Control Systems as soon as possible and in sufficient quality in order to avoid further delays regarding the interim payments and a further increase of outstanding budgetary commitments;

28. Calls on the Commission to provide Parliament with an overview of budgetary support granted, by country and by fund, for the years 2005 to 2009;

Recoveries

29. Notes some improvement in recoveries, but nevertheless remains concerned about the problems which subsist regarding irregularly disbursed Community funds and the poor quality of the information supplied on the correction mechanism applied at Member State level; draws attention to the urgent need to aim for a 100 % recovery rate in respect of funds that have been falsely issued;

30. Welcomes the information given by the Commission on financial corrections, by Member State, up to September 2009, but is concerned that the annual nature of the Court’s report means a mismatch with cumulative data supplied by the Commission, thus making a complete assessment of performance for the single year in question, 2008, impossible;

31. Calls on the Commission to enhance the efficiency and effectiveness of multiannual recovery systems, including at Member State level, and to consolidate data on recoveries and financial corrections in order to provide reliable figures which can be compared between the various policy areas and fund management procedures; calls on the Commission to report to Parliament in the notes accompanying the annual accounts, so that an overview can be obtained;

32. Requests the Commission to present complete and reliable figures for financial corrections and, in particular, recoveries, specifying the Member State concerned, the exact budget line and the year to which the individual recoveries relate (as already specified in the Discharge Report for 2006 [11]), given that any other presentation makes serious control impossible;

33. Recalls its demand that the Commission produce an annual fund-by-fund grading per Member State, specifying the error rate established — both with and without the impact of corrective mechanisms — and that it forward this to Parliament in an active, transparent and easily accessible manner;

34. Invites the Court of Auditors to make its comments on such list, based on its own findings;

Suspension of payments

35. Points out the importance of the final decisions and corrective measures taken with the aim of removing EU funding from expenditure which has not been carried out in conformity with EU legislation, and restates its call for the precise budget heading and the year to which individual recoveries relate to be specified;

36. Assures the Commission of its full support in the rigorous application of the legislation on suspension of payments, and welcomes the measures already initiated for the non-transfer of funds where the Commission has no absolute guarantee of the reliability of the management and control systems of the Member State which is the beneficiary of those funds;

37. Draws attention to the example of Greece, where significant financial corrections brought about by Commission decision appear to have resulted in better performance in some areas; invites the Commission to identify these areas and recalls that, as regards the Integrated Administration and Control System (IACS), no evidence has been provided that the action plan set up and implemented by the Greek authorities was effective (2008 Annual Report, point 2.5);

38. Believes that, in the case of recurrent reserves for expenditure programmes in a particular Member State, suspension of payments, as a means of pressure, will contribute to greater involvement of the Member States in the correct use of EU funds received;

39. Calls on the Commission to simplify the rules and apply the existing legislation on suspension of payments wherever necessary, and to inform Parliament, the Council and the Court of Auditors in good time concerning suspensions of payments and their results;

Annual summaries

40. Considers that the annual summaries which Member States have to provide of available audits and declarations, pursuant to the IIA and Article 53b(3) of the Financial Regulation, should be the first step towards the introduction of national management declarations in all Member States;

41. Welcomes the statement by the Interparliamentary Conference on "Improving National Accountability of EU funds" held in The Hague on 28- 29 January 2010, recommending that national policy instruments be implemented or strengthened to contribute to the improvement of the control and management of EU expenditure in Member States, and that instruments used for the management and accountability of EU funding, such as the annual reports, should contain elements of a common EU framework in order to make comparisons and identify "best practices", as well as taking a step forward to national management declarations;

42. Stresses the need to strengthen the role of annual summaries in the upcoming review of the Financial Regulation as well as to improve the quality, homogeneity and comparability of the data provided by Member States so as to ensure their added value in the field of the control of EU funds;

43. Welcomes the information provided to Parliament by the Commission on the annual summaries received in 2009 and calls on the Commission to make all annual summaries of all Member States public in order to enhance transparency and public accountability; invites the Commission, on the basis of the annual summaries received, to analyse the strengths and weaknesses of each Member State’s national system for the administration and control of EU funds;

44. Considers that it is of the utmost importance for the Commission to report on the quality of those annual summaries and to add value to the process by identifying common problems, possible solutions or best practices, using this information in its supervisory role;

45. Considers that a comparative analysis should be forwarded to Parliament, the Council and the Court by late 2010 and should be made public soon thereafter;

46. Calls on the Commission to ensure that the general Guidance Note concerning the annual summaries requires a uniform methodology and analytical scope from all Member States; notes the intention of the Commission to revise its Guidance Note in such a way as to simplify the reporting requirements and provide more guidance on good practice; requires the Commission to take this opportunity to include in the Guidance Note a framework for national management declarations for those Member States that decide to introduce them and to develop its incentive-based approach;

National management declarations

47. Welcomes the voluntary initiatives taken by Denmark, the Netherlands, Sweden and the United Kingdom to draw up national management declarations; notes, however, the big differences between the four national initiatives; warmly welcomes the letter from the Dutch and Swedish Governments inviting the Commission to issue guidance on the definition of key aspects of national declarations, which could also serve as a valuable source of information for other Member States; regrets the fact that, despite those initiatives, most other Member States have yet to introduce them;

48. Recalls its demand for the introduction of national management declarations (paragraph 32 of its resolution of 23 April 2009 [12] accompanying its decision on discharge for 2007);

49. Draws attention to the first paragraph of Article 317 of the Treaty on the Functioning of the European Union (ex Article 274 of the EC Treaty), which now provides that the Commission "shall implement the budget in cooperation with the Member States", and remains convinced that progress will be made by obtaining national management declarations covering all EU funds coming under shared management, as requested by Parliament in its last five annual discharge resolutions;

50. Points to the second paragraph of Article 317 of the Treaty on the Functioning of the European Union, which imposes certain as yet undefined control and audit obligations of the Member States and resulting responsibilities; invites the Commission to use the new wording of Article 317 to introduce mandatory national management declarations as soon as possible; also refers to Article 291 of the Treaty on the Functioning of the European Union, which provides the Commission with new tools to achieve an even and uniform implementation of legally binding Union acts;

51. Calls on the Commission to propose, within the framework of the review of the Financial Regulation, the obligation for Member States to issue national management declarations signed at an appropriate political level and certified by their national supreme audit body, as a means of administrative relief as well as improved administration of funds under shared management;

52. Calls, pursuant to Article 287(3) of the Treaty on the Functioning of the European Union, as regards shared-management controls, for cooperation to be stepped up between national audit bodies and the Court;

53. Proposes that national audit bodies, in their capacity as independent external auditors, and with due regard for international audit standards, issue national audit certificates for the management of EU funds, calls on the Commission to examine the possibility of modifying and adapting the discharge timetable in order to allow for timely audits of the national management declarations by the (national) external auditors;

54. Is deeply concerned about the proven manipulation of financial statistics and tax evasion in Greece; notes the generalised public-sector corruption throughout the administration, including in public procurement, as recognised by the Prime Minister of Greece; draws attention to the significant effect in terms of costs that this has on Greece’s budget; calls on the Commission to investigate as a matter of priority the circumstances under which the Commission was provided with and effectively accepted wrong macroeconomic data for such a long period of time;

The Commission’s internal control system

The Action Plan for an Integrated Internal Control Framework

55. Voices its concern at the Court’s repeated criticism of the inadequate quality of controls in Member States and considers it detrimental to the image of the EU if individual Member States are able to apply different control standards;

56. Notwithstanding the progressive improvement in the DAS since 2003 (56 % of expenditure being given positive audit opinions by the Court in 2008 compared to 6 % in 2003), remains concerned by the Court’s assessment that it is not yet possible to determine whether the Action Plan has had a measurable impact on the supervisory and control systems, and that the Commission is not able to demonstrate that the steps taken by it to improve supervisory and control systems have been effective in mitigating the risk of error in some areas of the budget (points 2.28 and 2.33 of the 2008 Annual Report);

57. Calls on the Commission to continue to present regular assessments of the integrated internal control system, and calls for even better and more explicit coverage — in the annual activity reports and the synthesis report — of the functioning of Commission departments’ and Member States’ shared-management systems, as is already done by the Commission’s DG for Regional Policy in its annual activity report;

Analysis of the existing balance between operational expenditure and the cost of the EU funds’ control system

58. Draws attention, in this context, to the importance of Action 10 of the above-mentioned Action Plan, which proposes making an "analysis of the costs of controls", in view of the "need to reach an appropriate balance between the costs and benefits of controls";

59. Calls on the Commission to carry out in 2010 a more complete and exhaustive evaluation of the resources given over to control systems in the areas of research, energy, transport, rural development, external aid and administrative expenditure, as requested by Parliament in its previous resolutions accompanying the discharge decisions;

60. Believes that this will be a crucial tool for assessing what future improvements can be achieved and at what cost, as recommended by the Court in its 2008 Annual Report (point 2.35(a)), and for achieving progress on the question of tolerable risk of error;

Tolerable risk of error

61. Takes note of the above-mentioned Commission communication of 16 December 2008 on a common understanding of the concept of tolerable risk of error as a sound methodological basis for an economic analysis of acceptable levels of risk; recalls its doubts concerning the figures provided by the Member States on control costs and calls on the Commission to update and complete the figures used in the communication; invites the Commission to address all weaknesses and shortcomings identified by the Court of Auditors, and underlines the following:

- the definition of a possible tolerable risk of error is only one of several elements to be explored with a view to improving financial management in the European Union; other elements are (1) better use of existing control systems, (2) an increase in what are generally very low control costs, (3) simplification and (4) concentration,

- the quality of the information available from the Member States is currently not sufficient as a basis for the establishment and approval of a tolerable risk of error,

- the Council’s position on the question is not known;

62. Calls on the Commission to provide a detailed analysis of the shortcomings and weaknesses identified by the Court of Auditors [13], especially regarding the quality of the data available from the Member States;

63. Recalls Action 4 of the above-mentioned Action Plan, which, in line with the recommendations of Parliament, proposes the initiation of "interinstitutional dialogue on risks to be tolerated in the underlying transactions"; notes, however, that implementation of this action has scarcely begun;

64. Considers, therefore, that the Commission, in line with the principles of proportionality and cost efficiency (value for money) of the control systems, should evaluate the relationship between, on the one hand, the resources available for each particular policy, and, on the other, the part of those resources dedicated to the control systems broken down by area of expenditure;

65. Asks the Commission to identify areas of high political sensitivity (with high "reputational risk") where a quality approach to rates of error (rather than an economic one) should be adopted;

66. Considers that the volume of Union funds at risk because of errors should also be taken into consideration when a tolerable error rate is determined;

67. Believes also that the cost-benefit ratio existing between the resources dedicated to control activities and the results obtained by the controls should be a key element to be taken into account by the Court when it delivers its DAS;

68. Regrets that the Commission puts more effort into convincing Parliament about the need to introduce a "tolerable risk of error" than into persuading Member States of the need for mandatory national management declarations;

Simplification

69. Emphasises that control systems are a reflection of the complexity of regulations and rules on the various, sometimes overlapping levels; urges the Commission, therefore, to speed up the simplification exercise whilst fully involving Parliament, and asks Member States and regions to make corresponding efforts to that end;

Interinstitutional debate on the current discharge procedure system

70. Calls on the Commission to organise an interinstitutional discussion involving in the initial phase, at the highest level, representatives of the Council, of the Commission, of the Court of Auditors and of Parliament, and in the second phase representatives from the Member States, of national parliaments and supreme audit institutions, with a view to embarking on a comprehensive debate on the current discharge procedure system;

71. Proposes to give the Commission, during the forthcoming budgetary procedure, the financial resources needed to organise such debate;

Political responsibility and administrative responsibility at the Commission

Annual activity reports

72. Regrets that, in the 2008 Annual Report, the Court once again stresses that some of the annual activity reports still do not include sufficient evidence for its DAS; invites the Court of Auditors to include in the different chapters of the Annual Report a detailed analysis of the corresponding annual activity reports;

73. Expresses its concern about the fact that the Court continues to find weaknesses in the operation of supervisory and control systems and in the relevant reservations on the assurance given in the declarations by the Commission’s Directors-General, namely as regards their impact on the assurance concerning the legality and regularity of underlying transactions, and reminds the Member States and the Commission of their respective responsibilities in this field;

Transparency and ethics

74. Insists that the public must have access to information on all members of expert groups and working groups working with the Commission as well as disclosure concerning beneficiaries of EU funding;

75. Insists that the Commission must be responsible for ensuring the completeness, searchability and comparability of the data provided concerning the beneficiaries of EU funding, including details of recipients and their projects;

76. Welcomes the fact that the information on EU funding beneficiaries is to be published more widely and on an easily accessible and user-friendly website, and calls for standardisation of the structure and presentation of national, regional and international sites accessible from a central portal;

77. Emphasises once again the need to revise the present Code of Conduct of the Members of the Commission in order to remedy shortcomings such as: (a) the absence of any definition of the term "conflict of interest", (b) the failure to prescribe a course of action if a conflict of interest arises, (c) a lack of clarity with regard to the acceptance of gifts and hospitality, and (d) the absence of any body designated to look into complaints as well as to relieve the President from the (possible) duty of self-assessment;

78. Expects the Commission to begin the process of consulting Parliament on revision of the present Code of Conduct of the Members of the Commission in accordance with the common understanding reached on 27 January 2010 between President José Manuel Barroso and Parliament’s Working Party on the revision of the Framework Agreement between the Parliament and the Commission, and to adopt the revised version of its Code of Conduct of the Members of the Commission by August 2010 at the latest, whilst observing that this revision should have been done prior to the appointment of the new Commission;

79. Recalls the importance of complete transparency and publicity with regard to staff working in the cabinets of Members of the Commission who have not been recruited in accordance with the Staff Regulations;

80. Also recalls that the binding Code of Conduct of the Members of the Commission should incorporate the necessary ethical rules and the principal guidelines to be observed by Commissioners in the conduct of their office, in particular when appointing colleagues, especially to their cabinets;

81. Calls on the Commission to ensure that all staff are well trained and properly briefed about their obligations and rights under Articles 22a and 22b of the Staff Regulations;

Governance and administrative reform

82. Notes the small decrease (from 31,8 % in 2007 to 30,9 % in 2009) in staff allocated to "administrative support and coordination functions", which forms only part of the overall overhead; recalls its previous demands for measures aimed at attaining a proportion of 20 % in this area (paragraph 217 of its above-mentioned resolution of 23 April 2009);

83. Urges the Commission to submit, together with the preparatory documents for the 2011 budget (formerly working documents relating to the preliminary draft budget), an establishment plan implementing a 3 % reduction in this field as a first step towards reaching the 20 % level by the end of the term of office of the Barroso II Commission;

84. Calls on the Commission, in the run-up to review of the Staff Regulations of officials and Conditions of Employment of other servants, to devise and submit alternative methods for the adjustment of the pay of officials and other servants on a proper legal and actuarial basis; considers that this should bring about a broader basis of calculation for the annual adjustment and a prompter pay adjustment, and thus more appropriately reflect general economic developments in the Member States;

85. Calls on the Commission to assess the value of placing candidates in entry pay grades solely in the light of their suitability and to put forward proposals for placing qualified staff in higher pay grades; expects also, as part of the assessment, a report on the practical use of cabinet members after they leave office and in relation to the entry conditions they were expected to fulfil;

86. Calls on the Commission to state its position on the extent to which the savings foreseen in the 2004 reform of the Staff Regulations have actually been achieved, especially with regard to the increase in contributions by officials and other servants in the areas of health care and pensions;

87. Proposes that the Commission split the hierarchical power between people with accounting responsibility and those responsible for transferring funds in application of the normal security rules for internal control in treasury management;

Management of the agencies

88. Recalls its demand (paragraphs 254 and 255 of its above-mentioned resolution of 23 April 2009) for the development and implementation of a general management system for the "regulatory agencies" as well as for the introduction of an effective monitoring system for the Union agencies;

89. Stresses in that regard that, notwithstanding the legally independent status of certain agencies, the Commission remains responsible for the implementation of the budget (in accordance with Article 317(1) of the Treaty on the Functioning of the European Union, Articles 54, 55 and 185 of Regulation (EC, Euratom) No 1605/2002 and Article 37 and Article 41(2) of Regulation (EC, Euratom) No 2342/2002);

European Anti-Fraud Office (OLAF)

90. Is concerned at the number of investigations taking over nine months and the low level of follow-up in national judiciaries of cases investigated by OLAF, and believes that an assessment of the staffing resources in OLAF should be carried out in order to see whether increased staffing could bring improvements in these two areas;

91. Welcomes the undertakings of 15 January 2010 by the new Commission to unblock discussions in the Council about the reform of OLAF and to come forward, at the latest by July 2010, with the promised and long overdue Commission’s "reflection paper" as a basis for negotiations in the Council;

92. Reiterates the importance of taking into account Parliament’s first-reading position of 20 November 2008 on a proposal for a Regulation of the European Parliament and of the Council amending Regulation (EC) No 1073/1999 concerning investigations conducted by the European Anti-Fraud Office (OLAF) [14], and wishes to re-emphasise that, for the future strength of OLAF, it should remain within the Commission whilst retaining its independence; recalls that Article 317 of the Treaty on the Functioning of the European Union places an enhanced responsibility on the Member States and thus supports Parliament’s continuous call for improved cooperation by the Member States with OLAF;

93. Wishes to have early sight of the proposal for the establishment of a European Public Prosecutor’s Office (EPPO) as envisaged in Article 86 of the Treaty on the Functioning of the European Union; wishes to be involved in the discussions about the establishment of an EPPO;

94. Requires the Commission to come forward, as a matter of urgency, with its promised and long-awaited "reflection paper", and reiterates the importance of Parliament’s above-mentioned first-reading position of 20 November 2008 on the subject; wishes to re-emphasise that, for the future strength of OLAF, it should remain within the Commission whilst retaining its independence; stresses its proposals regarding the post of Director-General of OLAF, as contained in Parliament’s position, and calls for the successful candidate to be appointed very quickly; takes the view that the selection procedure needs to be carried out in an interinstitutional framework which fully respects Parliament’s prerogatives;

95. Reaffirms its opinion that the procedure for the appointment of the interim Director General of OLAF must follow mutatis mutandis the rules contained in the act providing for OLAF’s legal basis, namely Article 12 of Regulation (EC) No 1073/1999 of the European Parliament and of the Council of 25 May 1999 concerning investigations conducted by the European Anti-Fraud Office (OLAF) [15]; deplores the Commission’s general application of the Staff Regulations and is concerned that the Commission’s position may affect OLAF’s effectiveness;

SECTORAL ISSUES

Revenue

96. Welcomes the fact that the Court considered that, overall, the Member States’ statements regarding traditional own resources sent to the Commission were reliable and free from material error and also that the VAT– and GNI-based own resources were correctly calculated and correctly collected and entered in the Community accounts by the Commission;

97. Takes note, with deep concern, of the Commission’s report on the Greek government deficit and debt statistics (COM(2010) 1), which raises serious doubts concerning the reliability of the data delivered by the Greek authorities; calls on the Commission to establish by its own investigations the validity of the data made available in 2008 and to confirm the regularity and legality of the calculation and contribution of the own resources made available;

98. Asks the Commission to present its plans on the future handling of operations with the Greek administration; stresses that staff involved in the management of European funds must be excepted from cost-cutting measures in order to ensure the maintenance and integrity of the management structures;

99. Notes however, regarding the VAT-based own resources, that reservations dating back as far as 1989 continue to exist, and calls on the Commission, in cooperation with the Member States, to continue its efforts to ensure that reservations are lifted within reasonable timescales;

100. Asks the Commission, regarding GNI-based own resources, to follow the Court’s recommendation in point 4.36 of its 2008 Annual Report and to communicate to Parliament details of the progress made in applying direct verification and assessing supervisory and control systems in Member States’ national statistical institutes;

The common agricultural policy

101. Welcomes the positive assessment by the Court, based on its audit work, that, save as regards Rural Development, the payments for the year ended 31 December 2008 for the Agriculture and Natural Resources policy group were free from material error; is pleased to note that the average EU 27 error rate is below the 2 % threshold tolerated by the Court;

102. Notes with concern the extreme spread of on-the-spot error rates by Member State in the implementation of area aids (France 0,20 %, United Kingdom 0,24 %, Germany 0,3 %, Greece 3,70 %, Romania 12,57 %, Bulgaria approximately 6 %) and insists that the overall credibility of the system must not be jeopardised; calls for well directed, immediate measures resulting in both administrative relief for outperforming Member States and effective countermeasures;

103. Regrets the Court’s finding concerning Rural Development expenditure, which is still affected by a high level of errors, although the estimated error level was lower than in previous years;

104. Welcomes the evaluation made by the Commission concerning the quality of the statements and annual summaries presented by Member States for Agriculture expenditure, which concluded that, in 2008, the majority of them complied with their legal obligations and generally followed the Commission guidelines;

105. Reiterates, as in previous years, that the IACS is generally an effective control system for limiting the risk of error or irregular expenditure, but nevertheless regrets that the Court found significant weaknesses in selected paying agencies in three Member States: Bulgaria, Romania and the United Kingdom (Scotland) (point 5.32 of the 2008 Annual Report); acknowledges, however, that steps were taken to address these weaknesses;

106. Calls for a simplification of complex rules and more precise definitions of eligibility criteria, especially for agri-environmental schemes, first of all at Commission level but also at national level, in the context of the rural development plans, and asks also for all stakeholders to be given more comprehensive and clearer instructions and guidelines, and for training actions to be organised;

107. Regrets the fact that the Land Parcel Identification System (LPIS) applied by national authorities is still not correct in some Member States in which substantial deficiencies were reported by the Court (in Bulgaria, Spain, Poland and the United Kingdom); notes that different measures have been taken at national level to address the deficiencies;

108. Also expresses its concern about the errors in respect of expenditure under the SAPARD Programme in Bulgaria and Romania, which caused the Directorate-General for Agriculture to make a reservation in its Annual Activity Report; notes the action plans already in place in response to the Commission’s recommendations;

109. Emphasises the importance of prompt and thorough ex-post audits to detect ineligible expenditure and/or inadequate supporting documentation, in order to allow the necessary corrections to be made;

110. Is concerned by the shortcomings found by the Court concerning the Member States’ definition of what is required to maintain land in good agricultural and environmental condition (GAEC), such that certain beneficiaries are paid aid under SPS or SAPS without doing anything with the land concerned (point 5.49 of the 2008 Annual Report);

111. Considers that these weaknesses, including the question of beneficiaries who do not meet the definition of "farmers", as denounced by the Court in the 2008 Annual Report, should be resolved by the Commission in order to provide a greater level of assurance which can be gained from the work of the certification bodies;

112. Takes note of the conclusions of the Court and therefore urges the Commission to improve checks in those Member States which did not comply with Community legislation when allocating entitlements beyond the provisions of the regulations;

113. Notes that the Commission raised shortcomings in respect of the debtors’ accounts for one quarter of the paying agencies and has proposed financial corrections amounting to some EUR 25,3 million; further notes that these corrections represent some 1,95 % of the EUR 1295 million that are to be recovered as at the end of financial year 2008; stresses that, whilst just below the 2 % level of materiality, they indicate that a risk of material error at the overall level of the debtors’ accounts exists;

114. Asks the Commission to carry out a detailed follow-up to ensure that the debts are correct and properly charged to the Community budget;

Cohesion

115. Notes that interim payments for the period 2007-2013 made in 2008 account for only 32 % of expenditure and that the comments of the Court of Auditors refer, in particular, to expenditure during the 2000-2006 programming period, which represented 68 % of cohesion payments in 2008; notes, therefore, that the effects of the reinforcement of the legal framework for the period 2007-2013 and the simplification measures adopted in 2008 and 2009 cannot be visible yet;

116. Stresses the absolute priority of further reducing global error rates, which remained high in this spending area in 2008, and of improving the Commission’s supervision and the system of recoveries;

117. Is concerned that errors in the area of Cohesion funding indicate that at least 11 % of the total amount reimbursed should not have been paid out, with no improvement on 2007; regrets that financial corrections and recoveries are only partly functional; notes that the following financial corrections have been made for the 2000-2006 programming period: Spain EUR 1535,07 million; Greece EUR 881,24 million; Italy EUR 693,90 million; France EUR 248,48 million; United Kingdom EUR 155,94 million; Portugal EUR 128,24 million; Poland EUR 88,99 million; Hungary EUR 40,62 million; Slovak Republic EUR 39,16 million; Ireland EUR 25,55 million; Germany EUR 19,33 million; Sweden EUR 11,30 million;

118. Notes with concern the difficulties encountered by Member States’ authorities as regards both the transposition of the 2007-2013 regulatory requirements (such as incompatibility issues between EU and national levels, delays in the establishment of the rules, unclear rules) and the establishment of the new management and control systems (allocation of tasks for the new institutions, i.e. the managing, certifying and audit authorities);

119. Deplores the fact that the system of sanctions for Member States returning high error rates and receiving large shares of funds is inefficient since they only repay between 3 % and 5 % of the overall appropriations in recoveries; is concerned that the cost of maintaining proper control systems manifestly exceeds this amount, so that this is a negative incentive;

120. Reiterates its call for further simplification of the rules proposed by the Commission and, at the same time, for the introduction of more efficient controls at national and EU level, with a view to effective implementation of the Structural and Cohesion Funds; takes the view that an objective assessment of the effects of the simplification measures introduced in 2008-2009 is essential, and calls on the Commission to carry out this assessment by the end of 2010;

121. Takes note of the concern expressed by the Court of Auditors at the difficulties of taking a definitive and unchangeable snapshot, solely in the annual report, of the changing and progressive reality that is the Cohesion Policy budget, subject to a multiannual and dynamic schedule in which the final percentages of errors and irregularities with consequences, and the real amounts subject to recovery, can be verified only at a much later stage (the Commission has just closed the accounts for the 1994-1999 period); to that end calls on the Commission to present, in addition to the current Action Plan, a proposal in cooperation with the Court of Auditors for solving these phasing difficulties between the multiannual budgetary framework and the annual auditing system; considers that such a proposal would also be useful to ensure there is more efficient control of major European projects such as Galileo;

122. Notes that the action plan to strengthen the Commission’s supervisory role under shared management of structural actions, presented in 2008, was not fully implemented in 2008 and would not have remedied the main problem, namely that of over-complex rules combined with implementation requirements which differ from one Member State to another and sometimes even between different regions; asks the Commission to provide for translation in due course of the guidelines for public authorities in the Member States; stresses moreover that its impact cannot be assessed as errors committed in previous years are still affecting the expenditure reimbursed by the Commission, as the Court has rightly pointed out in its Annual Report (point 6.34);

123. Considers that, despite the marked improvement in the management and control systems introduced by the 2008 action plan, which strengthened the Commission’s supervisory role in structural actions, the fact that, as observed by the Commission, only 31 % of systems work well and that more than 60 % require improvement is unsatisfactory; therefore calls on the responsible Member States, regional authorities and managing authorities to collaborate strongly with the Commission in an effort to reverse these statistics;

124. Notes the result of the audit showing a preliminary error rate of 5 % which reflects the positive result of the simplification introduced for the 2007-2013 programming period;

125. Observes that the Commission’s action plan has enabled it to take action along all the lines recommended by the Court of Auditors; welcomes the Commission’s actions providing training and guidance for programmes authorities with a view to improving the functioning of the shared management system applied in relation to cohesion policy spending; encourages the Commission to further increase its efforts by providing guidance to Member States and encouraging them to strengthen recovery procedures and reporting;

126. Notes the observation of the Court of Auditors that the proportion of projects in the representative statistical sample affected by errors was 43 % and that a large number of these were over-reimbursed; considers, however, that this observation must be tempered by the Commission’s assertion that it was aware of the existence of deficiencies in five of the six programmes concerned and had taken remedial action; notes the Commission’s second assertion, supported by the observation of the Court of Auditors at point 6.20 of its Annual Report, that 58 % of errors concern compliance errors and would have had no effect on the reimbursement of expenditure;

127. Notes that infringement of public procurement rules is one of the most frequent reasons underlying irregularities; calls on the Commission to verify the origin of this lack of compliance with those rules; welcomes in this context the findings of the Court of Auditors and the initiatives taken by the Commission to simplify the management of the Structural Funds, and takes the view that these initiatives will contribute to a reduction in the incidence of errors;

128. Encourages the Commission to present by 2011 at the latest a proposal on tolerable risk of error in the Cohesion policy area, which has been the most error-prone area;

129. Calls on the Commission to make an initial analysis, as a matter of urgency, of the cost-benefit ratio existing between the resources dedicated to control activities in DG REGIO and DG EMPL and the results obtained by these controls;

130. Notes that the first positive effects of the reinforced control and legal framework, as well as the Commission’s action plan, on the error rate for the 2007-2013 programming period are likely to be visible only from the end of 2010;

131. Is concerned that, with the 2000-2006 programming period coming to an end, national authorities, under pressure to absorb all committed funds, may have submitted an increasing number of unforeseen projects; stresses the need to ensure that this situation will not be repeated in the current programming period and calls on the Commission to strictly apply corrective and dissuasive measures (suspensions of payments and financial corrections) against Member States where appropriate;

132. Deplores in this context the slow start-up of programmes related to the 2007-2013 programming period due to the late submission by Member States of compliance assessment reports and audit strategies; shares the Court’s views and is worried that this delay might increase the probability that the control systems fail to prevent and detect errors during the start-up phase; again calls on the Commission to perform its supervisory role with the utmost rigour;

133. Requests the Commission to identify and spread best practices amongst Member States in order to allow an increased absorption of funds and improved beneficiary cash-flow by amending and simplifying the Structural Funds implementing regulations at national level;

134. Notes the observation of the Court of Auditors that, for the 2007-2013 programming period, control provisions are strengthened and the respective responsibilities of the Commission and Member States clarified; in this context, appreciates the added value of the audit authority set up for each programme and shares the Commission’s expectation that the annual control report and opinion submitted by the audit authority should enhance the assurance provided by national control systems;

135. Requests the Commission to provide it, in its forthcoming synthesis report and its DGs’ annual activity reports, with clear information identifying those Member States the control systems of which are the least effective and producing an annual grading of Member States for each fund; moreover, invites the Court to draw up the same list on the basis of its audits;

136. Draws attention to the Court’s observation, similar to that for the year 2007, that the scope and scale of the reservations in the annual activity reports understate the gravity of the problems of irregularity and ineffective control systems; takes the view, therefore, that the DGs’ approach should be more prudent and the scope of the reservations consequentially greater;

137. Draws attention to the specific character of the cohesion policy spending resulting from the multiannual management system and stresses that the financial corrections are made in subsequent years and also at the closure of the programming period, which, overall, allows the Commission to detect and correct a large number of irregularities;

138. Welcomes the quarterly reports which the Commission is providing on financial corrections and the intensification of financial corrections by the Commission in 2008 and 2009; regrets, however, that the system of financial corrections has little dissuasive effect on Member States since any ineligible expenditure identified by the Commission or the Court can be substituted for eligible expenditure by a Member State; takes the view that the Commission should make sure that, in future, only irregularities identified by Member States themselves can be substituted for other expenditure without any loss of funding for the Member State concerned;

139. Deplores the poor quality of reporting by some Members States to the Commission on recoveries and financial corrections, which limits the usefulness and completeness of the Commission’s quarterly reports to Parliament; calls on the Commission to take further steps to ensure that Member States fulfil their obligations by rigorously verifying and assessing the reliability and completeness of the reported data, and looks forward to receiving the new guidance note to certifying authorities, including the Commission’s recommendations for improving reporting procedures; requests the Commission to identify in its forthcoming synthesis report those Member States that are not fully complying with the reporting requirements;

140. Notes that the number of irregularities reported by the Member States to OLAF for the year 2008 varies widely: Italy 802, Spain 488, United Kingdom 483, Portugal 403, Germany 372, Poland 329, the Netherlands 262, Sweden 146, France 98, Greece 96, Czech Republic 80, Slovak Republic 62, Hungary 39, Austria 37, Belgium 35, Estonia 28, Finland 28, Lithuania 26, Latvia 22, Slovenia 13, Cyprus 4, Bulgaria 4, Ireland 2, Malta 1, Romania 0; is concerned that this does not point towards a coherent reporting system;

141. Notes that no case of fraud was communicated to the Commission in respect of projects audited and stresses that the level of errors outlined in the report of the Court of Auditors does not necessarily refer to fraud;

142. Asks the Commission to constantly monitor the plausibility of the reported numbers and to verify on the basis of its own investigations the efficiency of reporting systems where the reported number of irregularities appears to be excessively low;

143. Calls on the Commission to provide detailed information on the implementation figures and distribution schemes for payments made out of the European Union Solidarity Fund by the Greek authorities following the devastating forest fires; calls on the Commission to provide information on the ex-post controls carried out and the results thereof;

144. Welcomes the decision of the Court of Auditors to include in the 2010 Annual Work Programme the audits on the ESF and the ERDF in the field of tourism, vocational training for women and public drinking water supply, which are of particular importance for the development of local communities;

145. Invites the Court of Auditors to assess how the external evaluations in respect of the Structural and Cohesion Funds are performed by the managing authorities, and to pay particular attention to the independence of the evaluation when it is paid for by the evaluation beneficiary;

146. Invites the Court of Auditors to assess, in terms of human resources, the capacity of Member States’ audit authorities to perform audits and their independence when carrying out the compliance assessment of the management control system;

Employment and social affairs

147. Welcomes the fact that, in the context of the resources allocated to the European Social Fund (ESF), the utilisation rate for commitment appropriations was 100 % (EUR 10,6 billion) and for payment appropriations 97,1 % (EUR 8,8 billion); acknowledges the Commission’s efforts to improve financial management;

148. Has evidence of a lower error rate in the ESF than the 11 % reported for Structural Funds in general; encourages the Commission to put its own figure on the ESF error rate and to examine the possibility of greater autonomy for the ESF in the forthcoming financing period;

149. Recalls that it is for the Directorate-General for Employment, which administers the funds, to adopt appropriate measures to prevent fraud and corruption; welcomes the close cooperation with OLAF; calls for assurances that national judicial authorities will also continue to investigate and punish instances of fraud in the ESF;

150. Notes that the error rate does not necessarily refer solely to fraud, and calls, therefore, for a clear distinction to be made between instances of fraud and error rates in the future;

151. Welcomes the Commission’s efforts to hold all Member States fully to account through annual audit control reports and summary annual reports; calls for an appraisal of the reporting requirements, with a view to ensuring that information is not sought twice; considers the failure to provide accountability reports, or the provision of incomplete reports, by national administrative and control bodies, as well as any contravention of the minimum requirements laid down in the financial regulations, to be unacceptable and punishable; calls on the Commission, therefore, to develop proposals to improve and expand the existing reporting requirements, incorporating a sanctions mechanism;

152. Notes the scope for conflicts of interest between those responsible for managing funding and beneficiaries of funding in the allocation process; calls on the Commission to take steps to enforce the rules on the prevention of conflicts of interest in the allocation process by providing national administrations with adequate resources;

153. Underlines the specific needs of target groups and project leaders in the ESF; suggests that the co-financing of projects should also include voluntary activities in non-profit-making organisations and contributions in kind; calls on project leaders to furnish an updated survey by Member State and by project on the administrative costs of the ESF;

154. Recalls the latest amendments made to the Structural Fund Regulations (Regulation (EC) No 1341/2008 [16], Regulation (EC) No 284/2009 [17], Regulation (EC) No 396/2009 [18], Regulation (EC) No 397/2009 [19] and Regulation (EC) No 846/2009 [20]) with the aim of simplifying administrative procedures; calls for a report on the effects of these amendments;

155. Notes that such simplification procedures are key to reducing administrative burdens at national, regional and local levels; stresses the importance of ensuring that such procedures do not lead to a higher error rate in the future;

Internal policies

Research, Energy and Transport

156. Welcomes the slight reduction in errors compared to previous years for this policy group as well as the improvement concerning late payments, the Court having found that the Commission considerably improved its performance in 2008 in making timely payments to beneficiaries;

157. Urges the Commission to do its utmost to maintain the positive 2008 trend in this area, which is under the Commission’s direct financial management;

158. Nevertheless, notes with concern that, in general, as regards research, energy and transport the Court’s audit once again reveals a material level of error in payments to beneficiaries and in the Commission’s supervisory and control systems, which do not sufficiently mitigate the inherent risk of reimbursement of overstated costs;

159. Is especially concerned by the outstanding reservation made by the four Research family services due to the rate of residual errors affecting cost claims in the Sixth Framework Programme (FP6);

160. Notes also the systemic disparity in the treatment of the EU’s funds’ recipients in different sectors, programmes and management modes;

161. Is concerned that the EU’s public image may suffer as a result of the stakeholders’ realisation that stricter control systems are applied to the agricultural domain than to research implementation;

162. Notes that some legal provisions regarding research funding (e.g. concerning sanctions) were not applied previously, and calls on the Commission to end this state of affairs and to ensure the full and consistent application of the existing legal provisions;

163. Recalls at the same time its demands raised in its above-mentioned resolution of 23 April 2009 (paragraph 117 et al.), in particular its request for abstention from any retroactive changes and for beneficiaries’ legitimate expectations to be honoured, as well as speeding up the acceptance of certificates concerning the methodology applied in relation to average personnel costs, where no visible progress has been achieved; calls on the Commission, for the purposes of good law-making, to submit realistic proposals in terms of both targets and procedures in the future;

164. In that regard, notes with deep concern that only one certificate concerning the methodology applied in relation to average personnel costs has been approved;

165. Regrets also the lack of clear information concerning Galileo assets; asks the Commission to obtain the information needed in order to draw up an inventory, to verify the recognition criteria and to assess the valuation of the Galileo assets held by the European Space Agency; requests the Commission to send this information to Parliament before the end of 2010;

166. Is concerned that the current regulation of the existing Framework Programme does not correspond to the needs of a modern research environment and believes that further modernisation and simplification are essential for a new Framework Programme;

167. Considers that simplification of the calculation rules for claimed costs is necessary in order to improve the situation, and invites the Commission to continue its efforts to devise the most easily applicable rules for beneficiaries of the programmes; asks for a clear definition of the necessary criteria for assessing whether beneficiaries’ costing methodologies comply with the regulatory requirements;

168. Stresses that the Commission must ensure rigorous application of the controls, in particular by improving the reliability of audit certificates and through effective implementation of its ex-post audit strategy, imposing penalties where appropriate and making timely recoveries or adjustments in cases of undue reimbursement of claimed costs, as recommended by the Court;

169. Also requests the Commission to reflect on the distribution of activities between the research DGs, which, combined with the absence of an integrated management information system, according to the Court renders coordination more difficult, in particular for the follow-up of audit results;

Environment, Public Health and Food Safety

170. Considers the overall implementation rates of the budgetary headings for the environment, public health and food safety satisfactory;

171. Underlines the overall rate of 95,15 % of the budget execution in the field of the environment, the 99,75 % implementation of commitment credits in the field of public health and the 98 % execution of the food safety and animal health chapter, which represents a satisfactory result;

172. Notes that under the 2008 budget six pilot projects and preparatory actions were implemented;

173. Welcomes the achievement of 99,26 % of the implementation of the LIFE + operational budget; notes that 196 projects were selected; notes that 52 % of funding granted was awarded to "nature and biodiversity" projects; considers, however, that there is still room for improvement in the Commission’s management so as to ensure the sustainability of co-financed projects;

174. Notes in that regard that improvements could be achieved by ensuring that supporting measures are already in place when calls for proposals are launched, by further improving the dissemination of knowledge generated by LIFE projects and by strengthening the systematic follow-up of projects after their closure;

175. Calls on the Commission to develop further assistance and specific training for applicants and user-friendly guidelines; stresses that immediate attention should be given to those programme parts where the level of implementation has become low and to act accordingly;

176. Underlines the importance of providing further and focused assistance to applicants engaged in implementing projects under the public health programme, in order to avoid unreasonable cost claims and incomplete financial reports, which result in lengthy procedures; additionally, considers that calls for tenders must be clear and user-friendly, in order to avoid project applications which are clearly not eligible for funding due to their size and associated high costs or which are of poor quality;

177. Notes with satisfaction the successful implementation of the Community Tobacco Fund, and is confident of the importance of that instrument;

178. Reminds the Commission of its responsibility towards the Executive Agency for Health and Consumers (EAHC); notes that the EAHC was managing 256 cost-shared projects, representing a total of EUR 119 million from the EU budget, and that it organised expert meetings as well as information days; regards the performance of the EAHC in 2008 as satisfactory;

Internal Market and Consumer Protection

179. Regrets that the annual activity reports of the Commission Directorates-General and Services are available on-line in only one language; urges the Commission to improve the situation as regards the coming year’s reports;

180. Points out that, in many situations, errors made in the implementation of the budget are a consequence of the excessive complexity of expenditure rules and procedures; encourages the Commission, therefore, to make further efforts to simplify the legal framework, notably in order to solve remaining problems in some control systems;

181. Deplores the fact that the frequency of physical checks done by Members States on imports remains very low, despite the frequent recommendations of the Court of Auditors and the fact that customs duties represent a considerable amount of the total revenue for the 2008 budget; consequently, calls on the Commission to ask Member States to find an appropriate balance between physical checks at import and the post-clearance audits of operators;

182. Welcomes the improvements made to achieve an execution rate of 92 % for payment credits for the implementation and development of the internal market (budget line 12 02 01); notes the execution rate of 48 % for the SOLVIT Programme (budget line 12 02 02) which is due to use of payment credits only in the first year of the creation of this budget line; acknowledges, therefore, the fact that the execution rate for commitment credits has reached 97 %;

183. Acknowledges that an execution rate of 97 % for payment credits in the area of customs policy (budget lines 14 04 01 and 14 04 02) constitutes a considerable improvement in relation to the previous year due to an improved calculation method, and encourages the Commission to continue in this vein;

184. Appreciates the efforts made to reach an execution rate of 97 % for payment credits for the consumer programme (budget lines 17 02 01 and 17 02 02);

Transport and Tourism

185. Notes that in the 2008 budget, as finally adopted and amended during the course of the year, specifically for policies within the remit of the Committee on Transport and Tourism, a total of EUR 2516000000 was included in commitment appropriations and EUR 1703000000 was available in payment appropriations; notes further that, of these amounts:

- EUR 969425000 was available in commitment appropriations for Trans-European Networks for Transport (TEN-T) and EUR 892308000 in payment appropriations,

- EUR 13600000 in commitment appropriations and EUR 10000000 in payment appropriations was available for transport safety,

- EUR 39080000 in commitment appropriations and EUR 37958000 in payment appropriations was available for the Marco Polo programme,

- EUR 96160000 was available in commitments and EUR 98000000 in payments for the transport agencies and the Galileo Supervisory Authority,

- EUR 468472000 in commitment appropriations and EUR 345402000 in payment appropriations was available for transport, including a priority area dedicated to sustainable urban mobility, in the Seventh Framework Programme for Research and Development,

- EUR 5350000 was available in commitment appropriations for transport security, including the priority action aimed at facilitating cross-border traffic on the EU North-East external border-crossing points,

- EUR 2500000 in commitment appropriations and EUR 1500000 in payment appropriations was available for tourism;

186. Notes that, in considering the implementation of the budget for the 2008 financial year, the Court of Auditors has chosen to focus on energy and research policies rather than on transport policy;

187. Welcomes the continuing high utilisation rates of both commitment and payment appropriations for TEN-T projects, both reaching almost 100 %, and calls on Member States to ensure that adequate funding is made available from national budgets to match this EU commitment; recalls that Parliament supported a higher level of Union funding; notes that the review of the TEN-T priority projects in 2010 will be the occasion to assess whether this expenditure has been sufficient and effective;

188. Is concerned that, for the second consecutive year, there has been a low uptake of payment appropriations for transport safety (79 %); notes that the uptake of payment appropriations for the Marco Polo II programme was particularly low (40 %) and that only 67 % of payments for the optimisation of transport systems was taken up; recalls that, in all these cases, the amount in the 2008 budget was the one proposed in the Commission’s preliminary draft budget (PDB);

189. Regrets the exceptionally low take-up rate of payment appropriations for passenger rights (27 %); notes that the payments undertaken represent only 55 % of the amount proposed by the Commission in its PDB; underlines that investing in, inter alia, information to passengers on their rights is of high importance for the effective application of the rules;

190. Insists that the take-up rate of payment appropriations for the Galileo programme (50 %) is inadequate, given its importance for the sustainable logistics and transport sectors;

191. Calls on the Commission to provide a detailed explanation of this underspending and to give an account of the measures it will take to ensure that the problem does not recur in future;

192. Notes that sampling checks on transactions reveal a margin of error most probably between 2 % and 5 %: calls on the Commission to intensify its efforts to bring this figure down to below 2 %;

193. Notes with satisfaction that the Court of Auditors has taken the view that the annual accounts of the Trans-European Transport Network Executive Agency are legal and regular in all significant aspects; is concerned about the delays in recruitment and welcomes the Agency’s objective of filling posts that are currently vacant;

194. Regrets the lack of data on actions in the field of tourism and welcomes the new legal and economic framework provided by the Lisbon Treaty, which allows the development of actions at the European Union level (social and cultural tourism, destinations of excellence, etc.) in this sector supported in a multiannual budgetary framework;

195. Repeats its demand to the Commission to forward to Parliament and to the Council, each year, a more detailed description of expenditure against each budget line compared with the comments/remarks made in respect of the line;

Culture and Education

196. Welcomes the Commission’s efforts to achieve greater transparency and customer-friendliness, and supports further steps in that direction; requests, for the upcoming mid-term reviews of the multiannual programmes, that an in-depth assessment be carried out of implementation and management structures; recommends the inclusion of elements to measure client satisfaction in relation to national agencies; recalls in this context that almost 70 % of the funds of the multiannual programmes are implemented through national agencies;

197. Supports the guidance provided by the Commission to national authorities as regards the supervision of the work of national agencies with a view to further facilitating programme management in Member States; encourages the Commission to continue the active monitoring of programme management by national agencies, in order to avoid interruptions in the implementation of parts of the multiannual programmes; supports the strict line taken by the Commission of suspending payments to national agencies in cases where management weaknesses are detected; calls on all parties involved to avoid the negative consequences for beneficiaries caused by such failures; calls on the Commission, in the interests of transparency and cost control, to separate the organisational and staff costs of national agencies from funds to be paid in grants;

198. Draws attention to the dangers of control measures which are disproportionate to the budgets administered; considers that the relevant control requirements must not under any circumstances result in pressure to make increases in scale which will raise the threshold for participants;

199. Calls on the Commission, in the light of the revision of the Financial Regulation, to work towards a new arrangement under which beneficiaries can be allowed to acquire more assets without having to fear that this will result in a reduction in the support allocated to them on the basis of EU co-financing;

200. Calls on the Commission, together with the national agencies, to seek a reasonable and flexible solution to the problem of interest on unspent decentralised budgets, on which withholding tax is paid in the Member States but which national agencies must repay in full;

201. Notes the significant reduction of errors related to payments; considers, however, that further improvements are needed for interim and final payments; calls on the Commission to supervise more closely the annual ex-post declaration process in respect of the Lifelong Learning Programme, by means of monitoring visits and direct verification;

202. Calls on the Commission to review the bureaucratic obstacles impeding the "Youth in Action" Programme; calls especially for the measures under Actions 1.1 and 1.3 of the Programme to be made available as low-threshold services; emphasises that selection criteria must be transparent and comprehensible for applicants; calls on the Commission to consider the introduction of a new mode of allocation of funding under the "Youth in Action" Programme so as to make funding available to small-scale and youth projects which are unable in the current situation to raise their own finance;

Civil Liberties, Justice and Home Affairs

203. Notes a relative decrease in the level of implementation of commitments of the budget for the Area of Freedom, Security and Justice in 2008 compared to 2007 (87,51 % in 2008 compared to 90,29 % in 2007); notes that EUR 75000000 have been carried over in 2009, but observes that, according to the information received from the Commission services, that amount was committed before 31 March 2009; points out that the implementation level of payments has increased as compared with 2007 (80,88 % in 2008 against 60,41 % in 2007); calls on the Directorate-General for Freedom, Security and Justice to try to continue maximising the level of implementation of commitments and payments in 2009;

204. Regrets that, within the framework of the External Borders Fund, the first pre-financing payments to Member States could not be made by the Commission until the final months of 2008, as the implementing rules were only adopted on 5 March 2008 and some Member States submitted the initial versions of Descriptions of Management and Control Systems as well as of the programming documents with substantial delays or insufficient quality;

205. Notes that in the coming years the discharge for the implementation of the budget for the agencies should be further based on the relevant committee’s assessment of the Agency’s performance throughout the year;

Second-generation Schengen Information System

206. Is very concerned about the delays in setting up the second-generation Schengen Information System and the implications of these delays for the EU budget and the Member States’ budgets; notes that the so-called "milestone 1 test" concerning the stability, reliability and performance of the SIS II project, carried out at the end of January 2010, was not successful;

207. Recalls the Commission’s obligation under Council Regulation (EC) No 1104/2008 of 24 October 2008 on migration from the Schengen Information System (SIS 1+) to the second generation Schengen Information System (SIS II) [21] and Council Decision 2008/839/JHA of 24 October 2008 on migration from the Schengen Information System (SIS 1+) to the second generation Schengen Information System (SIS II) [22] to submit a progress report concerning the development of SIS II and the migration from SIS I + to SIS II to Parliament and to the Council every six months and for the first time after the first six months of 2009; notes that the first progress report, covering the period from January 2009 to June 2009 (COM(2009) 555) and published on 22 October 2009, is outdated and that the second progress report is not yet available;

208. Reiterates the Council’s and Parliament’s request to the Commission — made by the Council in its conclusions on the further direction of SIS II of 4/ 5 June 2009 and by Parliament in its resolution of 22 October 2009 on progress of Schengen Information System II and Visa Information System [23] — that it ensure full transparency as regards the financial aspects of the development of the second-generation SIS;

209. Stresses that the Commission should comply with its reporting obligations in a more timely and transparent manner;

210. Invites the Court of Auditors to carry out an in-depth audit and to present a special report evaluating the management of the SIS II project by the Commission, from the beginning of the project starting with the initial call for tenders;

211. Reserves the right to hold in reserve the funds to be allocated for the development of SIS II in the 2011 annual budget, in order to ensure full parliamentary scrutiny and oversight of the process;

Women’s Rights and Gender Equality

212. Reminds the Commission that under Article 8 of the Treaty on the Functioning of the European Union the promotion of equality between men and women is a fundamental principle of the European Union and should be respected in all European Union activities, and therefore should also be traceable in the European Union budget discharge;

213. Regrets that gender budgeting has still not been implemented; therefore reiterates its demand to the Commission to take further steps towards ensuring that gender mainstreaming becomes a reality in budgetary planning;

214. Welcomes the feasibility study [24] prepared by the Commission on gender budgeting, and calls on all partners in the European Union budgetary process to take the study into consideration when preparing, implementing or auditing the budget;

215. Calls on the Commission to make further efforts to develop gender-specific data that can be included in the budget discharge reports, since the very limited data available so far do not give an appropriate overview of the situation;

216. Invites the Court of Auditors to dedicate a separate part within its discharge reports to gender equality aspects;

217. Welcomes the fact that financing mechanisms for 2007-2013 have been simplified, but regrets that, in spite of this improvement, in 2008 a large number of reimbursements to the Cohesion projects, (to which the European Social Fund and gender equality belong), were again affected by errors; therefore asks the Commission to ensure that financing mechanisms are more effective;

External actions

218. Notes from experience in 2007 and in 2008 that it is essential to ensure that transparency in this policy area continues to improve in terms of expenditure, particularly in view of the setting-up of the European External Action Service (EEAS);

219. Calls on Commission to submit, before the end of the 2008 discharge procedure, concrete, detailed and all-encompassing plans for the staffing, organisational and control structure of the EEAS, showing in particular the increase in and allocation of staff, the envisaged budgetary implications and changes to the Statute and the Financial Regulation, and to enter immediately into negotiations with the budgetary authority on the basis of the proposals submitted; rejects negotiations based on vague framework agreements;

220. Is strongly of the view that Parliament’s right of scrutiny as discharge authority should in no way diminish with the setting-up of the EEAS; expects the Commission to bear this [25] in mind when proposing the review of the current Financial Regulation; stresses that this latter revision should be part of the normal triennial revision; rejects the idea of a fast-track procedure as envisaged by the Commission;

221. Notes with great concern that the Court’s overall assessment that the supervisory and control systems of all DGs concerned (AIDCO, RELEX, ELARG and ECHO) are still only partially effective, as well as the Court’s conclusion that payments in this policy group were affected by material error; points out that, as previously, errors are to be found mainly at delegation and beneficiary level;

222. Welcomes DG AIDCO’s improvements in its supervisory and control systems; however, encourages EuropeAid to make the necessary improvements to its ex-ante checks, to have recourse to external audits and to remedy the inconsistencies and shortcomings in its Annual Audit Plan, in the CRIS audit module and in the overall monitoring of audit results;

223. Urges DG RELEX to strengthen its ex-post controls and to remedy the weaknesses revealed by the Court in respect of its financial management and supervision of projects; welcomes the recognition by DG RELEX of the need to pay more attention to this problem;

224. Draws attention to the substantial number of possible fraud cases (102 cases) under investigation by OLAF in this policy group — the second highest number, just behind internal investigations; welcomes the focus by OLAF on External Aid, in investigative and preventive work and intensified cooperation activities;

225. Deplores the delays in achieving transparency over EU funds administered by international organisations and especially by the UN (in "joint management"); deplores the difficulties the Court has had to face, despite the Commission’s repeated calls for observance of the Financial and Administrative Framework Agreement (FAFA), in obtaining audit reports and supporting documents from the UN; recognises and welcomes the progress made, in particular the conclusion of an agreement on terms of reference for verification missions in April 2009 and the signature of the joint guidelines on reporting;

226. Appreciates that UN organisations often possess specific experience and expertise not readily found elsewhere; none the less, expresses concern that the Commission does not convincingly demonstrate beforehand whether the choice of a UN organisation is in fact more efficient and effective than other ways of delivering aid [26]; calls on the Commission to implement a more transparent and objective process for selecting aid implementation channels;

227. Notes the ongoing trend of increasing contributions to the multi-donor funds and in particular to the UN, in line with the principles of good donor cooperation; however, expresses its dissatisfaction concerning the persisting problems faced by the Court of Auditors in accessing the financial documents emanating from the UN agencies; welcomes the steps taken by the Commission to facilitate the auditing processes of the Court of Auditors and calls for further measures in order to fully safeguard the financial interests of the European Union and to increase the transparency of the process including, if necessary, modifications to the FAFA;

228. Stresses in this context its deep frustration and dissatisfaction that the Commission has so far failed to act in order to create a truly European instrument for the implementation of crisis management, as it has been asked to do in previous discharge resolutions; once more insists that this should be done urgently, and calls on the new Commission to give itself the possibility of managing multi-donor trust funds itself in the forthcoming revision of the Financial Regulation;

229. Welcomes the positive developments in terms of transparency, goals and international donor coordination brought about by the establishment of the PEGASE mechanism [27], which was built upon the TIM [28] but which is wider in scope as it covers both TIM expenditure and expenses relating to the re-launching of economic activities — budgetary support, the financing of infrastructures and social issues — in line with the Palestinian Reform and Development Plan;

230. Notes the Court’s recommendation that clear strategic objectives and measurable performance indicators should be established in the strategy programming documents for the European Neighbourhood and Partnership Instrument; considers that similar steps should also be taken in relation to other external instruments, which continue to be very general in scope;

231. Suggests that the Commission draw up a study assessing the scope for making external policy budgets more flexible; considers that, in view of the budget surpluses which have arisen to date and the still growing needs in this field of policy, scope for greater flexibility should be provided for in advance, although not at the expense of proper budgeting and budgetary control;

Development and humanitarian aid

232. Deplores the finding by the Court’s audit that budget support commitments were affected by a high level of non-quantifiable errors; insists that the Commission should assess these payments even more rigorously; notes with satisfaction in this context the review in February 2009 of the financial circuits for this type of payments;

233. Notes with satisfaction the improvement in the clarity and structure of the Commission’s assessments of compliance with the requirements of the DCI Agreement (Financing instrument for development cooperation); however, deplores the fact that the Court has found frequent cases in which the Commission did not demonstrate in a structured and formalised manner that public finance management was sufficiently transparent, accountable and effective, or, at least, that a credible and relevant reform programme was in place;

234. Agrees with the Court that the Commission should pursue its efforts to support its decisions on the eligibility of budget support and to ensure that all future financing agreements provide a comprehensive and clear basis for the assessment of compliance with payment conditions;

235. Calls on the Commission, as regards budget support, to bolster supervisory and control systems for ensuring the regularity of payments, to monitor more closely organisations implementing EU-funded projects, to carry out more effective audits, with rigorous follow-up, and to develop more results-oriented budget support guidelines;

236. Urges the Commission to help partner countries develop parliamentary control and audit capacities, in particular when aid is provided via budget support, and invites the Commission to report regularly on progress achieved;

237. Points out that its role as regards budget support is to hold the Commission accountable for the results of spending, and that budget support is an aid instrument which requires a paradigm shift in oversight behaviour, moving from control over inputs to the checking of results against indicators;

238. Reiterates its request that development aid in general and budget support in particular should be progressively linked to an ex-ante country disclosure statement, issued by the recipient country’s government and signed by its finance minister, concerning selected issues that affect the governance and accountability structure of a beneficiary country;

239. Invites the new Commission to take the lead and to present this proposal to other international donors — in particular the World Bank — with a view to developing and implementing such an instrument in agreement with other donors; waits to be informed by the Commission about a possible timeframe for such negotiations;

240. Urges the Commission to define strategic objectives and adequate performance indicators that would allow an efficient impact assessment of EU actions;

241. Invites the Commission to place greater emphasis on women’s health in developing countries in general, and improvements in maternal health in particular, as this is