COMMISSION OF THE EUROPEAN COMMUNITIES 
Brussels, 28.10.1997 
COM(97) 542 final 
96/0189 (CNS) 
AMENDED PROPOSAL FOR A COUNCIL REGULATION (Euratom, ECSC, EC) 
amending the Financial Regulation of 21 December 1977 applicable to the general budget 
of the European Communities 
(presented by the Commission pursuant to Article 189a(2) of the EC Treaty and the 
second paragraph of Article 119 of the Euratom Treaty) 

EXPLANATORY MEMORANDUM 
1. On 26 July 1996 the Commission approved a proposal1 for the amendment of the 
Financial Regulation of 21 December 1977 applicable to the general budget of the 
European Communities2 on the basis of its recommendations under the plan to 
improve financial management (SEM 2000). 
Parliament delivered its opinion on this proposal at the 14-18 July part-session. It 
called for a number of amendments, most of which the Commission is able to accept.3 
The Court of Auditors was also consulted under Article 209 of the EC Treaty. It gave 
its opinion on 10 July 1997.4 
2. With the exception of some purely stylistic alterations, the main amendments 
proposed by Parliament which the Commission has incorporated in this amended 
proposal concern the points listed below: 
(a) the principle that where commitments are cancelled, amounts unduly paid are to 
be recovered and that interest will accrue in respect of those amounts as of the due 
date set out in the debit note; 
(b) tightening of the provisions governing the delegation or sub-delegation of powers 
to authorise commitments or payments, to require that the rules of procedure of 
each institution specify the powers delegated; 
(c) the provisions covering subcontracting are also tightened to rule out the 
possibility of subcontracting in matters relating to the exercise of European public 
office; 
(d) stricter accounting arrangements for the refund of taxes; 
(e) in connection with Commission decisions which constitute commitment of 
expenditure, the financial controller shall take the appropriate steps to ensure that 
the individual legal commitments correspond to the budget commitment from 
which they derive and may apply spot checks; 
(f) the financial controller's prior approval of commitment proposals and payment 
orders may also be granted on the basis of spot checks. 
3. The Commission, however, could not accept Parliament's other amendments 
concerning: 
1 COM(96) 351 final. 
2 OJ L 356, 31.12.1977, p. 1. 
3 OJ .... 
4 OJ.... 
- Article 15(6) (supplementary and/or amending budgets), since this amendment 
concerns a matter that has already been resolved by the Council's adoption of 
Regulation (...)5; 
- Article 22(4) (in part), which aims to prevent the exercise of a discretionary 
power under a Community policy being delegated or subdelegated; this 
amendment is inappropriate since only delegation within each institution is 
concerned; 
- Article 27(6), since Parliament's amendment is inconsistent with the budgetary 
principle of booking a net amount where prices include tax to be refunded by the 
Member States; 
- Article 36(3a) (new), since this amendment deals with conflicts of interest. In 
relation to the Commission, the main party concerned by the amendment, this is 
an area already covered by the SEM 2000 programme; 
- Article 38(1 )(b), since there is no justification for favouring two budgetary 
principles in the matter of the correct charging of expenditure; 
- Article 39, as this amendment unduly limits the power of each institution to 
overrule a decision by its financial controller to withhold approval; 
- Article 58(3), as it is too rigid with regard to the treatment of tenders in public 
procurement procedures. 
4. The Court of Auditors opinion made no concrete amendments to the Commission's 
initial proposal, but some of the Court's comments covered amendments by 
Parliament which the Commission has accepted (Articles 22(4a), 24, 37, 47,112). 
The Court recommends a complete revision of the Financial Regulation and offers a 
critical analysis of the current text. The Commission will certainly take account of this 
study and begin its own assessment of a possible recasting of the Financial Regulation. 
* * 
The Commission, in accordance with Article 189a(2) of the EC Treaty and the second 
paragraph of Article 119 of the Euratom Treaty, has drawn up this amended proposal 
which is being presented for the continuation of the procedure. 
Revision of the Financial Regulation following the changes to the system for the clearance of the 
EAGGF Guarantee Section accounts. 
AMENDED PROPOSAL FOR A COUNCIL REGULATION (Euratom, ECSC, EC) 
amending the Financial Regulation of 21 December 1977 applicable to the general 
budget of the European Communities 
(presented by the Commission pursuant to Article 189a(2) of the EC Treaty and the second 
paragraph of Article 119 of the Euratom Treaty) 
In the light of the opinions of Parliament and the Court of Auditors the Commission has 
amended its proposal as follows: 
INITIAL PROPOSAL 
(COM(96)351 final of 26.7.1996) AMENDED PROPOSAL 
THE COUNCIL OF THE EUROPEAN 
UNION, 
Having regard to the Treaty establishing 
the European Coal and Steel Community, 
and in particular Article 78h thereof, 
Having regard to the Treaty establishing 
the European Community, and in particular 
Article 209 thereof, 
Having regard to the Treaty establishing 
the European Atomic Energy Community, 
and in particular Article 183 thereof, 
Having regard to the proposal from the 
Commission, 
Having regard to the opinion of the Court 
of Auditors, 
Having regard to the opinion of the 
European Parliament, 
Whereas the conciliation instituted by the 
joint declaration of 4 March 1975 by the 
European Parliament, the Council and the 
Commission has taken place within a 
conciliation committee; 
Whereas the Financial Regulation of 
21 December 1977 applicable to the 
INITIAL PROPOSAL 
(COM(96)351 final of 26.7.1996) AMENDED PROPOSAL 
general budget of the European 
Communities1 ('the Financial Regulation') 
must be amended to improve financial 
management within the institutions; 
Whereas the management of commitments 
is sometimes subject to considerable delays 
and the control of ongoing commitments 
must therefore be strengthened; 
Whereas there must be strict control of the 
subdelegation of powers to sign financial 
documents; whereas staff who exercise 
powers which are not delegated or 
subdelegated to them or exercise powers in 
excess of the limits of the powers expressly 
conferred on them must be made liable to 
disciplinary action and, where appropriate, 
to payment of compensation; 
Whereas, if management of Community 
programmes is subcontracted, this must be 
governed by appropriate provisions to 
guarantee the transparency of operations 
and lay down the procedure for the entry in 
the accounts of the funds generated and 
available for use in financing the 
programmes in question; 
Whereas the financial controller is 
responsible for the internal audit of his 
institution; whereas, in this respect, he 
must be consulted about setting up and 
altering inventory systems and systems of 
financial management used by the 
authorising officers; whereas the analysis 
of financial management should also be 
submitted to the financial controller; 
Whereas account must be taken of the 
requirements deriving from the 
computerised systems of financial 
management; 
1 OJ L 356, 31.12.1977, p. l.Regulation last amended by Council Regulation (EC, Euratom, ECSC) 
No 2335/95 of 18 September 1995 (OJ L 240, 7.10.1995, p. 12). 
INITIAL PROPOSAL 
(COM(96) 351 final of 26.7.1996) 
Whereas the system of accounts must be 
improved; 
Whereas the Financial Regulation should 
contain provisions for the entry in the 
accounts of traditional own resources, 
which have their own specific features 
different from the other own resources 
(VAT and GNP); 
Whereas the legal comrhitments made by 
the institution and the accounting 
commitments submitted to Financial 
Control and recorded in the central 
accounts must correspond exactly, while 
leaving a reasonable length of time for the 
conclusion of the legal commitments in 
cases where the Commission's decisions of 
principle count as commitment of 
expenditure; 
Whereas time limits should be set for the 
procedure for overruling the withholding of 
approval by the financial controller; 
Whereas, with the introduction of the 
statement of assurance, it is essential that 
the discipline required with regard to 
inventories be strengthened by laying down 
the respective duties of the authorising 
officer and the accounting officer; 
Whereas the procedure for the 
authorisation of transfers between chapters 
in the EAGGF Guarantee Section should 
be adjusted to allow the Commission 
additional time to present its proposals for 
transfer; 
Whereas Title IX of the Financial 
Regulation should be amended to bring it 
into line with the criteria of transparency, 
publicity and competition contained in the 
Council directives on the award of 
contracts and the international agreements 
to which the European Community is a 
signatory, AMENDED PROPOSAL 
INITIAL PROPOSAL 
(COM(96) 351 final of 26.7.1996) AMENDED PROPOSAL 
HAS ADOPTED THIS REGULATION: 
Article 1 
1. Article 1 is amended as follows: 
(a) The first subparagraph of paragraph 7 
is replaced by the following: 
"7. The legal commitments entered 
into for measures extending over 
more than one financial year and the 
corresponding commitment proposals 
shall contain a time limit for 
implementation which must appear 
on the commitment proposals and 
must be specified to the recipient in 
due form. Any commitments not 
used six months after this date shall 
be cancelled in accordance with 
Article 7(6)."; 
(b) A fourth subparagraph is added to 
paragraph 7 as follows: 
"In this case, the date shall be 
adjusted in accordance with the same 
procedure as the commitment 
proposal and shall be notified to the 
recipient by means of an additional 
contract or in any other appropriate 
legal form.". 
2. Article 7 is amended as follows: 
(a) In the first indent of point (a) of 
paragraph 2 "which relate" is 
replaced by "relating", the semi­
colon is omitted and "these amounts 
must" is replaced by "must"; 1. Article 1 is amended as follows: 
(a) The first subparagraph of paragraph 7 
is replaced by the following: 
"7. Commitment proposals 
submitted pursuant to Article 36 and 
Ihê corresponding legal 
commitments, insofar as the 
implementation thereof extends over 
more than one financial yearr shall 
contain a time limit for 
implementation which must be 
notified to the recipient in due legal 
form. Commitments not used six 
months after this date shall be 
cancelled in accordance with 
Article 7(6)."; 
(aa) The third subparagraph of 
paragraph 7 is replaced by the 
following: 
The Commission may, in special 
circumstances, extend the time limit 
far implementation of these 
commitments, where appropriate 
reasons are given by the recipients.': 
(b) A fourth subparagraph is added to 
paragraph 7 as follows: 
"In this case, the date shall be put 
back in accordance with the same 
procedure as that provided for in 
Articles 36 to 39 for the 
commitment proposal and shall be 
notified to the recipient in the 
appropriate legal form.". 
INITIAL PROPOSAL 
(COM(96) 351 final of 26.7.1996) 
(b) Paragraph 6 i: 
following: replaced by the 
"When commitments in budget 
headings where there is a distinction 
between commitment appropriations 
and payment appropriations are 
cancelled - as a result of total or 
partial non-implementation of the 
projects for which they were 
earmarked - in any financial year 
after that in which the commitment 
appropriations were entered in the 
budget, the appropriations concerned 
shall, as a rule, lapse. In addition, any 
amounts unduly paid shall be 
recovered.". AMENDED PROPOSAL 
\. Article 22 is amended as follows: 
(a) A fourth subparagraph is added to 
paragraph 4: 
"Any member of staff who authorises 
commitments or payments without 
having been delegated or 
subdelegated the necessary powers or 
in excess of the limits of the powers 
expressly conferred upon him shall 
render himself liable to disciplinary 
action and, where appropriate, to 
payment of compensation in 
accordance with Title V."; (b) Paragraph 6 is replaced by the 
following: 
"When commitments in budget 
headings where there is a distinction 
between commitment appropriations 
and payment appropriations are 
cancelled - as a result of total or 
partial non-implementation of the 
projects for which they were 
earmarked - in any financial year 
after that in which the commitment 
appropriations were entered in the 
budget, the appropriations concerned 
shall, as a rule, lapse. Amounts 
unduly paid shall be recovered in 
accordance with the procedures 
provided for in Articles 28 and 29. 
Interest shall accrue in respect of 
those amounts as of the due date set 
out in the debit note, in accordance 
with the implementing measures 
provided for in Article 139.". 
3. Article 22 is amended as follows: 
(a) A fourth subparagraph is added to 
paragraph 4: 
"Any member of staff who 
authorises commitments or 
payments without having been 
delegated or subdelegated the 
necessary powers in accordance with 
the institutions' rules of procedure 
or in excess of the limits of the 
powers expressly conferred upon 
him shall render himself liable to 
disciplinary action and, where 
appropriate, to payment of 
compensation in accordance with 
Title V. Each institution shall adopt 
rules which shall specify the 
procedure for issuing acts of 
subdelegation. Such acts shall give 
obligatorily details of the powers 
conferred,"; 
INITIAL PROPOSAL 
(COM(96) 351 final of 26.7.1996) AMENDED PROPOSAL 
(b)A new paragraph is inserted: 
"4a. When the Commission 
subcontracts the implementation of 
certain programmes, the contracts 
concluded must contain all 
appropriate provisions for ensuring 
the transparency of the subcontracted 
operations in accordance with the 
implementing rules provided for in 
Article 139. 
If the payments made to the 
subcontractors generate interest 
which may be used to finance the 
programmes in question, the 
following procedure shall be applied: 
- periodically, at intervals of no 
more than six months, recovery 
orders shall be issued for the interest 
generated by these funds, which will 
then be booked to the statement of 
revenue; 
- at the same time, appropriations 
for the corresponding amount, in 
both commitments and payments 
shall be made available in the 
heading of the statement of 
expenditure to which the initial 
expenditure was charged.". 
The fourth and fifth paragraphs of 
Article 24 are replaced by the 
following: (b) A new paragraph is inserted: 
"4a. When the institutions 
commission an outside person, body 
or firm to perform a Community 
activity. the contracts and 
subcontracts concluded for that 
purpose must contain all appropriate 
provisions for ensuring the 
transparency of the contracted and 
subcontracted operations, and in 
particular the provisions concerning 
the regulation of interest etc. 
generated, the keeping of accounts 
and the recovery of amounts unduly 
paid. The implementing rules 
provided for in Article 139 shall 
establish the rules intended to ensure 
Ms transparency as regards 
management of the institutions, 
The amounts paid to subcontractors 
shall be credited to interest-bearing 
accounts. Without prejudice to any 
provisions that might be contained 
in specific basic instruments relating 
to Community policies the interest 
in question shall be used to finance 
these activities. To that ond, the 
following procedure shall be 
applied: 
- periodically, at intervals of no 
more than six months, recovery 
orders shall be issued for the interest 
generated by these funds, which will 
then be booked to the statement of 
revenue; 
- at the same time, appropriations 
for the corresponding amount, in 
both commitments and payments 
shall be made available in the 
heading of the statement of 
expenditure to which the initial 
expenditure was charged.". 
4. The fourth and fifth paragraphs of 
Article 24 are replaced by the 
following: 
INITIAL PROPOSAL 
(COM(96) 351 final of 26.7.1996) 
5. "The financial controller must be 
consulted on the setting up and 
alteration of the accounting systems 
and inventory systems of the 
institution to which he is attached 
and on the setting up and alteration of 
the systems of financial management 
used by authorising officers. He shall 
have access to the data of such 
systems. 
Monitoring shall be carried out by 
that official by means of inspection 
of the files relating to expenditure 
and revenue and, if necessary, on the 
spot. The financial controller shall be 
responsible for the internal audit of 
the institution, in accordance with the 
implementing rules provided for in 
Article 139.". 
The following paragraph is inserted 
after the fourth paragraph in 
Article 25: 
"The accounting officer must be 
consulted on the setting up and 
alteration of the accounting systems 
of financial management used by 
authorising officers, where such 
systems are intended to supply data 
to the central accounts. He shall, at 
his request, have access to the data of 
such systems.". AMENDED PROPOSAL 
6. Article 27 is amended as follows: 
(a) In paragraph 2, point (f) is deleted 
and points (g) and (h) become points 
(f) and (g) respectively. "The financial controller must be 
consulted on the setting up and 
alteration of the accounting systems 
and inventory systems of the 
institution to which he is attached 
and on the setting up and alteration 
of the systems of financial 
management used by authorising 
officers. He shall have access to the 
data of such systems. 
Monitoring shall be carried out by 
that official by means of inspection 
of the files relating to expenditure 
and revenue and, if necessary, on the 
spot. The financial controller shall 
be responsible for the internal audit 
of the institution, in accordance with 
the implementing rules provided for 
in Article 139. That audit shall 
include assessment of the 
effectiveness of the management and 
control systems and verification that 
operations have been effected in a 
regular manner.". 
The following paragraph is inserted 
after the fourth paragraph in 
Article 25: 
"The accounting officer shall be 
consulted on the setting up and 
alteration of the accounting systems 
of financial management used by 
authorising officers, where such 
systems are intended to supply data 
to the central accounts. He shall, at 
his request, have access to the data 
of such systems. The accounting 
officer shall also be consulted on the 
setting up and alteration of the 
inventory systems.". 
>. Article 27 is amended as follows: 
(a) In paragraph 2, point (f) is deleted 
and points (g) and (h) become points 
(f) and (g) respectively. 
INITIAL PROPOSAL 
(COM(96) 351 final of 26.7.1996) 
(b) The following paragraph is inserted 
after paragraph 2: 
"3. Notwithstanding Article 4, where 
products or services supplied to the 
Commission incorporate taxes which 
are refunded by Member States 
pursuant to the Protocol on Privileges 
and Immunities, the net price shall be 
charged to the budget. 
The refund of these taxes shall be 
monitored separately in the 
accounts."; 
(c) Paragraphs 3 and 4 are renumbered 4 
and 5 respectively; 
(d) In paragraph 5, which is renumbered 
6, the letter (g) is replaced by the 
letter (f) and the letter (h) by the 
letter (g). 
K The following paragraph is added to 
Article 28: 
"3. Notwithstanding paragraph 1, no 
forward estimate shall be made for 
the own resources defined in Article 
2(1) and (2) of Council Decision 
94/728, which are paid at fixed 
intervals by the Member States, 
before the Member States make the 
amounts available directly to the 
Commission. The authorising officer 
responsible shall issue a recovery 
order for them. 
The recovery orders for the revenue 
referred to at Article 2(1 )(a) and (b) 
of that Decision shall be based on the 
monthly statements of entitlements 
established by the Member States, 
which they send to the Commission. AMENDED PROPOSAL 
(b) The following paragraph is inserted 
after paragraph 2: 
"3. Notwithstanding Article 4, where 
products or services supplied to the 
Commission incorporate taxes 
which are refunded by Member 
States pursuant to the Protocol on 
Privileges and Immunities, the net 
price shall be charged to the budget. 
The refund of these taxes shall be 
monitored separately in the 
accounts. Such refund shall be 
recorded by entry of the definitive 
amount in the institution's accounts 
at the latest in the year following the 
financial year in which it was 
collected,"; 
(c) Paragraphs 3 and 4 are renumbered 
4 and 5 respectively; 
(d) In paragraph 5, which is renumbered 
6, the letter (g) is replaced by the 
letter (0 and the letter (h) by the 
letter (g). 
10 
INITIAL PROPOSAL 
(COM(96) 351 final of 26.7.1996) 
The recovery orders shall be sent to 
the financial controller for approval. 
After they have received his 
approval, they shall be registered by 
the accounting officer in accordance 
with the implementing rules provided 
for in Article 139.". 
8. Article 36 is amended as follows: 
(a) The correction in paragraph 1 
concerns the French language 
version. 
(b) Paragraphs 2 and 3 are replaced by 
the following: 
"2. Without prejudice to Article 99, 
the decisions taken by the 
Commission in accordance with the 
provisions authorising it to grant 
financial aid from the various funds 
or similar operations shall constitute 
commitments of expenditure. Unless 
these decisions stipulate a different 
time limit for implementation in 
accordance with the abovementioned 
provisions, these commitments shall 
cover the total cost of the 
corresponding individual legal 
commitments up to 31 December of 
year n+L 
During the period of implementation 
referred to in the first subparagraph, 
the conclusion of each individual 
legal commitment shall be registered 
by the authorising officer in the 
central accounts and booked to the 
commitment referred to in the first 
subparagraph. AMENDED PROPOSAL 
8. Article 36 is amended as follows: 
(a) The correction in paragraph 1 
concerns the French language 
version. 
(b) Paragraphs 2 and 3 are replaced by 
the following: 
"2. Without prejudice to Article 99, 
the decisions taken by the 
Commission in accordance with the 
provisions authorising it to grant 
financial aid from the various funds 
or similar operations shall constitute 
commitments of expenditure. Unless 
these decisions stipulate a different 
time limit for implementation in 
accordance with the 
abovementioned provisions, these 
commitments shall cover the total 
cost of the corresponding individual 
legal commitments up to 
31 December o f year n+I. 
During the period of implementation 
referred to in the first subparagraph, 
the conclusion of each individual 
legal commitment shall be registered 
by the authorising officer in the 
central accounts and booked to the 
commitment referred to in the first 
subparagraph. 
The financial controller shall take 
the necessary steps to guarantee 
adequate control of the separate 
legal commitments. 
11 
INITIAL PROPOSAL 
(COM(96) 351 final of 26.7.1996) AMENDED PROPOSAL 
The unused balance shall be released 
after the time limit is laid down. 
The procedure for implementing 
paragraphs 1 and 2 shall ensure that 
an exact account is kept of 
commitments and authorisations in 
terms of actual needs and that the 
specific legal commitments 
correspond to the overall budget 
commitment provided for by the 
Commission decision. The procedure 
shall be determined by the 
implementing rules provided for in 
Article 139.". 
In Article 39, the second and third 
paragraphs are replaced by the 
following: 
"Cases where approval is withheld 
and the authorising officer maintains 
his proposal shall be referred for a 
decision to the superior authority of 
the competent institution among 
those listed in the first two 
paragraphs of Article 22 within two 
months of the date of the decision to 
withhold approval. The unused balance shall be released 
after the time limit is laid down. 
3. The procedure for implementing 
paragraphs 1 and 2 shall ensure that 
an exact account is kept of 
commitments and authorisations in 
terms of actual needs andr as regards 
paragraph 2. that the specific legal 
commitments correspond to the 
overall budget commitment 
provided for by the Commission 
decision. The procedure shall be 
determined by the implementing 
rules provided for in Article 139.". 
£& The following paragraph is added to 
Article 37: 
"The proposals for commitments 
referred to in Article 36m and the 
proposals for individual legal 
commitments referred to in the 
second subparagraph .of 
Article 36(2) may be subject to spot 
checks. Such checks shall be carried 
out under a system which identifies 
risk sectors, in which there is a high 
probability that the conditions set 
out in Article 38(1) will not be 
fulfilled, Individual commitments 
shall be checked systematically in 
risk sectors.". 
12 
INITIAL PROPOSAL 
(COM(96) 351 final of 26.7.1996) AMENDED PROPOSAL 
10. Except where the availability of the 
appropriations is in doubt, the said 
superior authority may, by a decision 
stating the full reasons therefor, taken 
on its sole responsibility, overrule 
such a refusal. This decision shall be 
final and binding with effect from the 
date on which approval was 
withheld. It must be taken by 
15 February of year n+1. It shall be 
communicated for information to the 
financial controller. The superior 
authority of each institution shall 
inform the Court of Auditors of all 
such decisions within one month.". 
In the third indent of Article 44, the 
following shall be added after 
"national currency": "However, when 
payment orders are sent to the banks 
by means of computerised 
procedures, the amount need not be 
expressed in words,". 
10a. A third subparagraph is added to 
Article 46(1) as follows; 
"The decision to authorise the 
balance shall be adopted within the 
time limit laid down in 
Article 1(7),", 
10b. A third paragraph is added to 
Article 47 as follows: 
"Prior approval may be given on the 
basis of a spot check; this shall be 
carried out under a system which 
identifies risk sectors, in which there 
is a high probability that the 
conditions set out in the second 
paragraph will not be fulfilled. 
Payment orders shall be checked 
systematically in risk sectors.". 
13 
INITIAL PROPOSAL 
(COM(96) 351 final of 26.7.1996) AMENDED PROPOSAL 
11. Three new paragraphs are added to 
Article 65 after the second paragraph: 
"The inventory system established 
and administered by the authorising 
officer with the technical assistance 
of the accounting officer and under 
his technical supervision shall 
provide the central system of 
accounts with all the appropriate 
information needed to draw up the 
institution's balance sheet. 
For this purpose, the inventory and 
accounting systems shall be 
organised in such a way as to ensure 
the concordance of the information 
they each contain and the possibility 
that operations can be audited from 
the time the equipment is acquired 
and entered in the inventory to the 
time when it is decommissioned or 
scrapped. 
The institutions shall each adopt, for 
their own purposes, provisions 
relating to the keeping of the 
equipment recorded in their 
respective balance sheets and shall 
determine the departments 
responsible for this task.". 11 iOc. The following article is inserted in 
Title IV; 
Article S5a 
"The power and authority of the 
institutions to conclude contracts in 
the performance of tasks involving 
the exercise of public office may not 
be ceded or transferred in any way 
by the institutions to persons or 
bodies other than the European 
Community's institutions or bodies 
set by the European Community." 
Two new paragraphs are added to 
Article 65 after the second 
paragraph: 
"The inventory system shall be 
established by the authorising officer 
with the technical assistance of the 
accounting officer. This inventory 
system, which shall be administered 
by the authorising officer, shall 
provide the central system of 
accounts with all the appropriate 
information needed to draw up the 
institution's balance sheet. 
The institutions shall each adopt, for 
their own purposes, provisions 
relating to the keeping of the 
equipment recorded in their 
respective balance sheets and shall 
determine the departments 
responsible for the inventory 
system.". 
14 
INITIAL PROPOSAL 
(COM(96) 351 final of 26.7.1996) 
12. Article 70 is amended as follows: 
(a) In the first paragraph, the word 
"budgetary" shall be replaced by 
"expenditure and revenue". 
(b) In the second paragraph, point (a) is 
replaced by the following: 
"(a) accounts of expenditure 
and revenue, subdivided 
into two separate 
subcategories: 
- accounts of budgetary 
expenditure and 
revenue, which allow 
implementation of the 
budget to be monitored 
and the balance for the 
financial year to be 
determined, 
- accounts of non-
budgetary expenditure 
and revenue, which 
complement the 
previous accounts and 
can be used to produce a 
broader accounting 
result.". 
13. The following article is inserted: 
"Article 70a 
The rules for the entry in the 
accounts of the depreciation of assets 
and the rules for writing down the 
value of assets and for constituting 
provisions shall be determined by the 
implementing rules provided for in 
Article 139.". AMENDED PROPOSAL 
15 
INITIAL PROPOSAI, 
(COM(96)351 final of 26.7.1996) AMENDED PROPOSAL 
13a, Article 76 is replaced by the 
following; 
"The liability of authorising officers, 
financial controllers, accounting 
Officers, assistant accounting 
Officers and administrators of 
advance funds to disciplinary action 
and, if necessary, payment of 
compensation may be determined in 
accordance with the provisions of 
Articles 22 and 86 to 89 of the Staff 
Regulations of officials of the 
European Communities. 
All relevant data or information. 
including any reports and 
withholdings of approval by the 
financial controller, shall be. 
communicated [Q the authority 
empowered to initiate the procedure 
concerning disciplinary and 
financial responsibility",. 
14. Article 79 is replaced by the 
following: 
"Each institution shall, not later than 
1 March, transmit to the 
Commission, after submitting them 
to its financial controller, the 
information required for drawing up 
the revenue and expenditure account 
and the balance sheet and a 
contribution to the analysis of the 
financial management referred to in 
Article 80.". 
15. In Article 104(2), "one month' 
replaced by "21 days". is 15. In Article 104(2), "one month before 
31 January" is replaced by 
"luJanuary". 
16 
INITIAL PROPOSAL 
(COM(96) 351 final of 26.7.1996) 
16. Article 109(3) is replaced by the 
following: 
"It shall transmit to the Commission 
for agreement the results of the 
examination of the tendering 
procedure and a proposal for the 
award of the contract. It shall sign 
contracts, additions to contracts and 
estimates and shall notify the 
Commission thereof. For contracts, 
additions to contracts, and estimates, 
the Commission, where appropriate, 
shall enter into individual 
commitments in accordance with the 
procedures laid down in Articles 36 
to 39. Individual commitments shall 
count towards the commitments 
under the financing agreements 
provided for in Article 106(2), in 
accordance with the second 
subparagraph of Article 36(2).". 
17. Article 112 is replaced by the 
following: 
"Notwithstanding Title IV, this 
section shall apply to cases in which 
the Commission, in connection with 
external aid financed from the budget 
of the European Communities, acts 
as contracting authority in the award 
of works, supply or service contracts 
not covered by the Council directives 
coordinating the award of public 
works, supply or service contracts or 
by the Plurilateral Agreement on 
Government Procurement concluded 
within the World Trade 
Organisation.". AMENDED PROPOSAL 
17. Article 112 is replaced by the 
following: 
"The provisions of this section shall 
apply instead of those under Title IV 
to cases in which the Commission, 
in connection with external aid 
financed from the budget of the 
European Communities, acts as 
contracting authority in the award of 
works, supply or service contracts 
not covered: 
- by the Council directives 
coordinating the award of public 
works, supply or service contracts or 
- by the Plurilateral Agreement on 
Government Procurement concluded 
within the World Trade 
Organisation.". 
17 
INITIAL PROPOSAL T AMENDED PROPOSAL 
(COM(96) 351 final of 26.7.1996) 
18. Article 113 is replaced by the 
following: 
"The procedure to be followed for the 
award of works, supply or service 
contracts financed from the budget of 
the European Communities for 
recipients of external aid shall be 
specified in the financing agreement 
or the contract, subject to the 
following principles.". 
Article 2 
This Regulation shall enter into force 
on the seventh day following its 
publication in the Official Journal of 
the European Communities. 
This Regulation shall be binding in 
its entirety and directly applicable in 
all Member States. 
Done at..., 
For the Council 
The President 
18 

ISSN 0254-1475 
COM(97) 542 final 
DOCUMENTS 
EN 12 oi 
Catalogue number : CB-CO-97-570-EN-C 
ISBN 92-78-26286-2 
Office for Official Publications of the European Communities 
L-2985 Luxembourg 
19