21.6.93 OfficialJournaloftheEuropeanCommunities NoC170/29
OPINIONNo4/93OFTHECOURTOFAUDITORS OFTHEEUROPEAN COMMUNITIES
onaproposalforaCouncilRegulation (ECSC,EEC,Euratom)amendingtheFinancial
Regulationof21December1977applicabletotheGeneralBudgetoftheEuropean
Communities
(93/C170/04)
THECOURTOFAUDITORS OFTHEEUROPEAN COM­
MUNITIES ,
HavingregardtotheTreatyestablishingtheEuropean
CoalandSteelCommunity ,andinparticularArticle78h
thereof,
HavingregardtotheTreatyestablishingtheEuropean
AtomicEnergyCommunity ,andinparticularArticle183
thereof,
HavingregardtotheTreatyestablishingtheEuropean
EconomicCommunity ,andinparticularArticle209
thereof,
HavingregardtotheFinancialRegulationof21December
1977,applicabletotheGeneralBudgetoftheEuropean
Communities (]),asamendedmostrecentlybyCouncil
Regulation (ECSC,EEC,Euratom)No610/90of13March
1990,
HavingregardtotheproposalforaCouncilRegulation
(ECSC,EEC,Euratom)amendingtheFinancialRegulation
of21December1977applicabletotheGeneralBudgetof
theEuropeanCommunitiessubmittedbytheCommission
on17February1993,
HavingregardtotheCouncil'srequest,submittedtothe
Courton12March1993,fortheCourtofAuditorstobe
consultedonthisproposal;
HASADOPTEDTHEFOLLOWING OPINION :
PARTONE
Generalobservations
1.Thecreationofnewreservescoveringexternal
operationsdepartsfromthebudgetaryprinciplesof
universalityandnon-allocation ofappropriations and,
assuch,shouldbetakenintoaccountinArticle4.2of
theFinancialRegulation .
2.InaccordancewithArticle19.3oftheFinancial
Regulation,thebudgetarynomenclature istobe
decidedduringthebudgetaryprocedure .Con­
sequently,theFinancialRegulationshouldnot,in
principle,actasasubstituteforthebudgetary
procedure .If,asappearstobetrueinthiscase,the
FinancialRegulationshould,intheinterestofharmonization ,setoutnewbudgetheadingsdirectly,
asanexception,thisshouldbedoneinalimitedand
consistentway.
3.Consequently ,withoutprejudicetosuchprovisionsas
theCommissionmaydeemitnecessarytoadoptas
regardsthebudgetarynomenclature withinthe
frameworkofthebudgetaryprocedure,itistheCourt's
viewthat,asfarastheFinancialRegulationis
concerned,thenumberofheadingsshouldbekeptto
thestrictminimumnecessary.Thus,budgetary
monitoringoftheGuaranteeFundmaybeensuredby
keepingtothreeheadings:
—oneheading,tobeincludedinthegeneral
statementofrevenue,coveringthecallforthe
fundsrequired(Article20.6a),firstindentofthe
proposal);
—anotherheading,tobeincludedintheCommission
sectionofthestatementofexpenditure (the
proposedArticle20.6b),toprovideforthe
endowmentoftheGuaranteeFundbyatransfer
procedure;
—athirdheadingfortherecreditingtothegeneral
statementofrevenueofanyGuaranteeFund
surplusvisavisthe'targetamount'(Article20.6a,
fourthindentoftheproposal).
4.AstheGuaranteeFundisoutsidethebudget,its
managementshouldalsobeextra-budgetary .Never­
theless,asisstatedinArticles6,7and8oftheproposal
foraRegulationconcerningtheFund,itshouldstillbe
managedaccordingtotheconservatismprincipleand
thatofsoundfinancialmanagement .
5.Consequently ,theGuaranteeFundshouldbeentered
inthebalancesheetoftheCommunities andshouldbe
subjecttothegeneralprinciplesforthepresentationof
accountslaiddownintheFinancialRegulation .
6.Fromthepointofviewoftheextra-budgetary
managementoftheGuaranteeFund,thenewtitleXa,
thenewArticle123a)andthesecondandthirdindents
ofArticle20.6a),whichprovideforthefactual
recordinginthebudgetofthemanagementofthe
GuaranteeFund,cannolongerbejustifiedandmust
thereforebedeleted.However,shouldthisnewtitle (i)OJNoL356,31.12.1977.

NoC170/30 OfficialJournaloftheEuropeanCommunities 21.6.93
andArticlebekept,inordertocompletethis
mechanismoftwofoldrecordingintheaccounts(inthe
budgetandoutsidethebudget)itwillalsobenecessary
toprovidefortheinclusionofthreeadditional
headingsinthebudget:
—aheadinginthegeneralstatementofrevenuefor
interestreceivedonGuaranteeFundinvestments ;
—aheadinginthegeneralstatementofrevenuefor
laterepaymentsbyGuaranteeFundbeneficiaries ;
—aheadingintheCommissionsectionstatementof
expenditureinordertoprevent,intheeventofthe
Communityguaranteetakingeffect,confusion
betweenactualbudgetaryappropriations (direct
budgetaryintervention),asprovidedforinArticle
20.5b)andthosecorrespondingtotherecordingin
thebudgetofGuaranteeFundinterventions .
7.Theprovisionregardingtheheadinginthestatement
ofrevenuewhichisintendedtobeusedtoenable
repaymentsbydefaultingdebtorstobecreditedtothe
Budget,totheextentthatnoFundGuaranteeis
involved,must,inanycase,bedeleted,sincethe
generalprincipleestablishedinArticle20.5(a)ofthe
FinancialRegulationalreadyappliestothecases
coveredbytheprovisioninquestion.Amendmentsto
thiseffectcanbefoundinthesecondpartofthis
Opinion.
8.Furthermore ,theCourt,intheinterestofconsistency ,
wonderswhy,incontrasttotheloanguaranteereserve,
noprovisionismadeinthestatementofrevenuefortwonewheadingstowhichownresourcestobecalled
upwhentheEAGGFandemergencyaidresourcesare
mobilizedmaybecredited.
9.Moreover,theCourtcannotseethepointofthe
provisioninArticle26.11oftheRegulationproposal,
sinceitcanonlyhamperthebudgetarymanagement .
Thefactisthatthetransfersinquestion,especially
thosewhicharenecessaryforthemobilizationofthe
loanguaranteereserve,cannotbeblockedbythe
budgetaryauthoritiesinthecaseoftheautomatic
paymentsprovidedforinArticle2oftheproposal,or
whenaCommunityguaranteeishonouredwhere
debtorsdefault.Furthermore ,thedecisionsupon
whichthemobilization ofreservesisbasedshould
usuallybetakenbeforehandbythebudgetaryau­
thority.Generallyspeaking,itshouldbestressedthat
theonlypracticalconsequenceofarefusalonthepart
ofthebudgetaryauthoritytocarryoutthetransfersin
questionwouldbetocutofftheflowoffundstothe
Fund.Indeed,sucharefusalwouldnotcallinto
questionthedecisiontograntaCommunityguarantee
andtheCommunityTreasurywouldstillhaveto
honourit.
PARTTWO
Examination ofindividualarticles
Inthefollowingsummarytable,theCourtsetsoutthe
amendmentstotheCommission'sproposalwhichwere
adumbrated inPartOne:

THECOMMISSION 'SPROPOSAL THECOURT'SPROPOSAL COMMENTS
Article20.6
a)aheadingto[concerningbudgetarydiscipline]
—asheadingtorecordinthebudgetpaymentsmade—deleteindent
bytheGuaranteeFundTheactualmanagementoftheGuaranteeFundmustbe
keptseparatefromtheBudget,liketheFunditself.
Retainingtheheadinginquestionwould,inanycase,
presupposetheduplicationoftheextra-budgetary
managementoftheFund.21.6.93 OfficialJournaloftheEuropeanCommunities NoC170/31Thisheadingduplicatestheheadingalreadysetoutin
Article20.5a)oftheFinancialRegulations .—aheadingtoallowlaterepaymentsbydefaulting —deleteindent
recipientstobebookedtothebudgetiftheyarenot
madedirecttotheGuaranteeFundinaccordance
withthethirdindentofArticle2ofRegulation
(EEC,Euratom )No....[establishingtheFund]
—aheading....[concerningbudgetarydiscipline]
Article26.11
Thisprovisionmakesthebudgetarymanagementofthe
reservesevenmoreunwieldy.Decisionsontransferstoallowtheutilizationofthedelete
reservetoguaranteeCommunityloansandloan
guaranteestonon-membercountriesandthereservefor
emergencyaidshallbetakenbythebudgetaryauthority
inaccordancewithparagraph5

THECOMMISSION 'SPROPOSAL THECOURT'SPROPOSAL COMMENTS
TitleXaArticle123a delete ThisnewTitleandthisnewArticlecannolongerbe
justifiedfromthepointofviewofextra-budgetary
managementoftheGuaranteeFund.IftheTitleand
Articlewerekept,itwouldalsobenecessarytocreatea
newbudgetheadingintheCommissionsectionofthe
statementofexpenditureinordertopreventconfusion
betweenactualbudgetaryappropriations (directbudget
intervention),asprovidedforinArticle20.5b),and
thosecorresponding totherecordinginthebudgetof
GuaranteeFundinterventions .
ThisOpinionwasadoptedbytheCourtofAuditorsinLuxembourgattheCourtmeetingof
22April1993.
FortheCourtofAuditors
AndreJ.MIDDELHOEK
PresidentNoC170/32 OfficialJournaloftheEuropeanCommunities 21.6.93