25. 7. 79 Official  Journal  of the  European  Communities No C 187/9 
COURT  OF AUDITORS 
Opinion  of the  Court  of Auditors  on the  proposal  for  a Council  Regulation  on the 
measures  to be taken  in the event  of irregularities  affecting  the own  resources  referred  to 
in the Decision  of 21 April  1970  and  the organization  of an information  system  for the 
Commission  in this  field 
THE  COURT  OF AUDITORS  OF THE  EUROPEAN 
COMMUNITIES, 
Having  regard  to Article  209  of the EEC  Treaty  and 
Article  183  of the EAEC  Treaty, 
Having  regard  to the  recommendation  set  out  in 
paragraph  12.23  of Chapter  12 of Part  1 of its Annual 
Report  for  1977  that  the  Commission  pursue  ways 
and means  of facilitating  the exchange  of information 
and reciprocal  help  to improve  the  control  of own 
resources, 
Whereas  the  rapid  adoption  and  implementation  of 
the Regulation  now  proposed  by the  Commission 
should  increase  the effectiveness  of the Community  in 
combating  irregularities  in the field  of own  resources; 
Whereas,  however,  it is desirable  to define  the cases 
of irregularity  to be reported  under  this  Regulation, 
HAS  ADOPTED  THE  FOLLOWING  OPINION: 
Article  4 
1. The  Court  draws  attention  to the fact  that  this 
Article  can  in no way  limit  its right  of access  under 
the Treaties  to all  information  and  documents 
exchanged  between  the  national  authorities  and  the 
Commission  in the application  of this  Regulation. Articles  5 and  7 
2. The  draft  Regulation  contains  no definition  of 
the irregularities  to be  reported  in the  field  of 
customs  duties  and  agricultural  levies.  Nor  is any 
definition  as such  proposed  for irregularities  affecting 
VAT  own  resources,  although  paragraph  2 of Article 
7 sets  out some  examples  of 'infringements'. 
3. Some  guidance  on what  the term  'irregularities' 
is intended  to cover  is essential  in order  to ensure  the 
consistency  and  comparability  of the  information  to 
be provided  by the Member  States.  This  is important 
since  the  laws  of the  Member  States  differ  in this 
respect.  Under  the  Regulation  as drafted  there  is a 
danger  that  Member  States  will  feel  obliged  to report 
every  instance  of irregularity,  however  minor  or 
temporary  in character,  that  involves  sums  equal  to or 
in excess  of the  minimum  amounts  provided  for  in 
Article  9. Thus,  for  example,  under  the  second 
paragraph  of Article  5, Member  States  might  feel 
called  upon  to report  every  case  where  a customs 
declaration  is found  to contain  an error  on the part  of 
the taxpayer  or his agent  even  where  such  an error  is 
inadvertent. 
4. The  Court  assumes  that  it is not  intended  that 
such  minor  infractions  should  be reported.  On  the 
contrary,  in order  that  control  and  auditing  at the 
Community  level  should  be as effective  as possible, 
the Court  is of the opinion  that  the irregularities  to be 
reported  should  be confined  to: 
(a) those  cases  involving  fraud; 
(b) those  cases  falling  short  of fraud  but  which 
nevertheless  involve  serious  manipulations  which 
are contrary  to the  spirit  of the  own  resources 
system; 
(c) those  cases  in which  it has  not  been  possible  to 
establish  own  resources  because  of delays,  e.g.,  in 
giving  information  such  as  declarations  or 
returns. 
No C 187/10 Official  Journal  of the  European  Communities 25. 7. 79 
5. With  these  considerations  in mind,  the  Court 
considered  whether  it might  be possible  to propose  a 
satisfactory  definition  of  irregularities  for  the 
purposes  of this  Regulation.  In view  of the differences 
in the  laws  of the  Member  States  on this  point, 
however,  it concluded  that  the pursuit  of a generally 
acceptable  definition  would  unduly  delay  the 
adoption  of the Regulation. 
6. A  more  promising  approach,  in the  Court's 
view,  would  be to define  those  cases  which  it would 
be most  useful  to the Commission  to have  reported  to 
it. The  Court  draws  a distinction  between  those  own 
resources  covered  by Article  5 of the  Regulation 
(customs  duties  and  agricultural  levies)  and  those 
covered  by Article  7 (VAT). 
7. As  regards  Article  5, it suggests  that  the 
following  sentence  could  be added  at the end  of the 
first paragraph: 
'For the purposes  of this  Article,  the cases  of irre-
gularities  which  should  be included  in this  list 
shall  be confined  to those  which,  in the opinion 
of the Member  State  concerned,  involve  any  act 
or practice  or omission  designed  to result  in a 
loss of own  resources  or any  act or practice  or 
omission  whereby  the  establishment  of own 
resources  is unduly  delayed/ 
8. As  regards  the VAT  own  resources  covered  by 
Article  7, however,  the Court  finds  it difficult  to offer 
an opinion  because  it finds  the intention  behind  the 
Article  as drafted  unclear.  Unlike  Article  5, this 
Article  does  not  call  for  concrete  details  about 
particular  cases  but  for  information  which  is 
essentially  statistical  in character.  It is difficult  to see 
to what  practical  use  the Commission  could  put  the 
information  provided,  e.g.,  as regards  the organization 
of additional  on-the-spot  audits.  The  Court  suggests 
that more  consideration  be given  to the objectives  of 
Article  7. 
Article  6 
9. Paragraph  1 of this  Article  requires  Member 
States  to inform  the  Commission  of any  legal  or 
administrative  procedures  which  have  been  initiated 
following  discovery  of an irregularity.  Any  such  cases 
are likely  to have  been  the subject  of a report  under 
Article  5. The  initiation  of legal  or administrative 
procedures  may  be only  one  of a variety  of outcomes 
of the  initial  act which  is the subject  of the  report 
under  Article  5. The  most  useful  information  for the new section  of the Commission  is to know  the result 
of all the  cases  reported  under  that  Article.  It is 
accordingly  suggested  that  Article  6 as it is drafted  at 
present  should  be  deleted  and  replaced  by  the 
following: 
'1. When  forwarding  reports  as  required 
under  Article  5 Member  States  should,  in 
addition,  indicate  any  substantive  action  taken  in 
respect  of cases  which  have  been  the subject  of 
earlier  reports  under  Article  5. 
2. "Substantive  action"  in  the  preceding 
paragraph  includes: 
— the  initiation  of legal  or administrative  proce-
dures, 
— decisions  taken  on such  procedures  including 
the amounts  established, 
— decisions  to take  no further  action. 
3. If  the decision  is to take  no further  action, 
a brief  explanation  should  be given.' 
Article  11 
10. Paragraph  4 is of a different  nature  from  the 
three  foregoing  paragraphs  all of which  concern 
action  to be initiated  by the Commission.  This  is an 
important  paragraph  and  would  have  a better  impact 
if made  the subject  of a separate  Article. 
Article  12 
11. The  first  paragraph  says  that  'The  infor-
mation  shall  enable  the Commission  to take  the 
necessary  steps,  etc.'  Such  wording  is suitable  for a 
commentary  on legislation  but  not  in the legislation 
itself  which  should  prescribe,  not describe,  the action 
to be taken.  The  Court  suggests  that  the paragraph  be 
redrafted  as follows: 
'With  the  information  referred  to in Articles  5 
and 6 and  the reports  referred  to in Article  7 the 
Commission  shall  take  the necessary  steps  as part 
of its activities  to prevent  and  monitor  irregu-
larities  in the own  resources  sector,  such  as: etc.' 
25. 7. 79 Official  Journal  of the  European  Communities No C 187/11 
12. In  providing  that  the Commission  may  conduct 
on-the-spot  examinations,  the first  indent  appears  to 
increase  the  Commission's  powers,  since  under 
Community  law  as  it stands  at  present,  the 
Commission  may  only  be associated  with  inspection 
measures  carried  out  by the Member  States  (Article 
18 (2) of Regulation  (EEC,  Euratom,  ECSC)  No 
2891/77).  The  Court  would  welcome  such  an 
extension  of the Commission's  powers  but feels  that 
this extension  should  be more  clearly  set out  in the 
text in order  to avoid  misunderstandings. Regulation  (EEC)  No  283/72 
The Court  suggests  that,  after  the present  Regulation 
has been  adopted,  Council  Regulation  (EEC)  No 
283/72  concerning  irregularities  in the  EAGGF 
Sector  should  be revised  in the light  of the new  proce-
dures  introduced  for own  resources. 
Adopted  on 17 May  1979. 
Michael  N. MURPHY 
President