SIT '; £• COMMISSION OF THE EUROPEAN COMMUNITIES 
O0M(9O) 691 final 
Brussels, 4 January 1994 
REPORT FROM THE COMMISSION 
on the functioning of the inspection arrangements 
for traditional own resources 
(Article 18(5) of Council Regulation (EEC. Euratom) N° 1552/89) 
Report 
by the Commission 
on the functioning of the inspection arrangements 
for traditional own resources 
(Article 18(5) of Council Regulation (EEC, Euratom) N° 1552/89) 
CONTENTS 
INTRODUCTION 
1. Purpose and structure of the report 
2. Legal framework 
HOW THE INSPECTION ARRANGEMENTS OPERATE 
1. Inspection arrangements at Community level 
2. Joint inspections and own inspections 
2.1 Methods 
2.1.1 Joint inspections 
2.1.2 Own inspections 
2.2 Inspections carried out and main findings 
III ASSESSMENT OF HOW THE INSPECTION ARRANGEMENTS ARE 
WORKING AND CONCLUSIONS 
1. General assessment of the system 
2. Conclusions 
2.1 Improving existing inspection methods 
2.2 Rationalizing the choice of topics and multiannual 
planning of on-the-spot inspections 
2.3 Refining follow-up procedures 
2.4 Cementing the partnership between the Member States 
and the Commission 
I INTRODUCTION 
1. Purpose and structure of this report 
a. Purpose 
Article 18(5) of Council Regulation (EEC, Euratom) N° 1552/89 of 29 May 
1989 implementing Decision 88/376/EEC/Euratom on the system of the 
Community's own resources1 requires the Commission to report every three 
years to the European Parliament and the Council on the functioning of the 
inspection arrangements. 
This report therefore analyses the working of the inspection arrangements 
for traditional own resources from January 1989 to December 1992. 
This covers the first three years in which Regulation 1552/89 was applied. 
Although the Regulation did not enter into force until 8 June 1989, Article 
24 stipulated that it would apply retroactively from 1 January 1989. 
However, for organizational reasons the new type of inspection (own 
inspection) could not be put into effect immediately. The first own inspection 
was carried out in January 1990. The reference period (1989-1992) 
therefore covers all aspects of the first three years of application of the 
legislation. 
b. Structure 
Part I sets out the purpose and structure of this report and the legal 
framework underlying the various inspection arrangements. Part II analyses 
how the inspection arrangements introduced by Regulation 1552/89 have 
operated. The various means of inspection available to the Commission are 
reviewed here. Particular attention is also focused on the way national 
provisions have been modified to satisfy the Community requirements arising 
from the Regulation, this being a specific aspect of the functioning of the 
inspection arrangements and the Commission having given a political 
commitment to this effect when the Regulation was adopted. 
The Commission's assessment of the functioning of the inspection 
arrangements as a whole and the conclusions which it feels should be drawn 
from this form the subject of Part III. 
OJ L 155, 7.6.1989, p. 1 
2. Legal framework 
Decision 88/376/EEC, Euratom 
Council Decision 88/376/EEC, Euratom of 24 June 19882 provides the legal 
basis for the Communities' traditional own resources system. Article 2(1) 
defines the own resources entered in the budget of the Communities. 
Traditional own resources are defined as revenue from: 
a) levies, premiums, additional or compensatory amounts, additional 
amounts or factors and other duties established or to be established 
by the institutions of the Communities in respect of trade with 
non-member countries within the framework of the common 
agricultural policy, and also contributions and other duties provided for 
within the framework of the common organization of the markets in 
sugar; 
b) Common Customs Tariff duties and other duties established or to be 
established by the institutions of the Communities in respect of trade 
with non-member countries and customs duties on products coming 
under the Treaty establishing the European Coal and Steel Community. 
Regulation (EEC, Euratom) N° 1552/89 
Regulation 1552/893 implements the own resources Decision by establishing 
the requisite legal arrangements. 
The Regulation specifies when entitlement to traditional own resources is 
established4 and lays down rules for entering these resources in the accounts 
and making them available to the Commission. 
It also contains provisions on inspection and on the Advisory Committee on 
the Communities' Own Resources. 
OJ L 185, 15.7.1988, p. 24. 
OJ L 155, 7.6.1989, p. 1. 
The Communities' entitlement to traditional own resources is established as soon as 
the debtor has been notified of the amount due by the competent department of the 
Member State (Article 2). 
Regulation 1552/89 introduces a number of new elements which were not 
present in the earlier legislation (Council Regulation (EEC, Euratom, ECSC) 
N° 2891/77 of 19 December 1977 implementing the Decision of 21 April 
1970 on the replacement of financial contributions from Member States by 
the Communities' own resources5, as last amended by Regulation (EEC, 
Euratom, ECSC) No 1990/866). The most important of these are: 
• definition of the moment of establishment of an entitlement (Article 
2); 
• introduction of separate accounts (Article 6(2)); 
• obligation to supply more information on the progress of recovery and 
on cases of fraud and irregularity (Article 6(3)); 
• own inspections (Article 18(3)); 
• possibility of exemption from the obligation to place resources at the 
disposal of the Commission (Article 17(2)). 
Regulation (EEC, Euratom, ECSC) N° 165/74 
Council Regulation (EEC, Euratom, ECSC) N° 165/74 of 21 January 1974 
determining the powers and obligations of officials appointed by the 
Commission7 applies to inspections carried out in conjunction with the 
authorities of the Member States, pursuant to Article 18 of Regulation 
1552/89. 
Regulation 165/74 stipulates that such joint inspections will relate to the 
establishment, recording and making available of traditional own resources. 
The officials concerned are bound by professional secrecy and subject to 
other requirements in the exercise of their powers of investigation. 
5 OJ L 336, 27.12.1977, p.1. 
6 OJ L 176, 7.7.1988, p. 1. 
7 OJ L 20, 24.1.1974, p. 1 . 
HOW THE INSPECTION ARRANGEMENTS OPERATE 
1. Inspection arrangements at Community level 
The Community control and inspection arrangements for traditional own 
resources, as put in place under Regulation 1552/89 and implemented by the 
Commission, can be represented schematically as fottows: 
, Checks on 
législation ->. Analysis of Member States' provisions 
for establishing, collecting and making 
available traditional own resources 
(Art. 4(1){b)) 
Documentary 
checks .Analysis of statements 
and reports 
Analysis of specific 
cases 
On-the-spot 
inspections in 
' the Member 
States Joint inspections 
(Art. 18(2» 
.Own inspections 
(Art. 18(3)) r^ Accounting 
information Monthly statement 
A accounts 
(Art. 6(2){a)) 
Quarterly statement 
B accounts 
(Art. 6(3)) 
Summary account of 
.established entitlements 
+ annual report (Art. 7) 
Half-yearly report on outcome of inspections 
'in Member States (Art. 17(3)) 
Exemption from the obligation to place resources 
,at the Commission's disposal in cases of force majeure 
or specific cases if the amount exceeds ECU 10 000 
(Art. 17(2)) 
Cases of fraud and irregularities involving entitlements 
""^of over ECU 10 000 (Art. 6(3), second subparagraph) 
Regulation 1552/89 delegates the collection of traditional own resources to 
the Member States. They therefore carry the prime responsibility for 
establishing entitlement to own resources, entering them in the accounts and 
making them available. On the other hand, as the Commission is accountable 
to the budgetary authority for the management of traditional own resources, 
it must satisfy itself that these tasks are being carried out in accordance with 
Community regulations and ensure that the rules are being applied correctly. 
The complementary nature of the Member States' and the Commission's 
responsibilities should thus help to ensure that the Community's financial 
interests are properly protected. 
In implementing the revenue side of the budget, the Commission carries out 
three kinds of inspection, within the limits laid down by the Treaty and 
secondary legislation. These inspections are in addition to the checks which 
the Member States themselves are required to carry out. 
a. Checks on legislative and administrative provisions 
The Member States are required to inform the Commission of the 
general legislative, regulatory, administrative and accounting 
provisions relating to the establishment, collection and making 
available to the Commission of traditional own resources. If, having 
examined them, the Commission feels that certain national provisions 
do not satisfy the requirements for the proper collection of traditional 
own resources, it will contact the Member State in question to seek a 
solution to the problems. These bilateral contacts mainly take place at 
an operational level and solutions can usually be found at that level 
too, avoiding the need for infringement procedures in most cases. 
It is obvious that the Member States' obligation under article 4 (1) (b) of 
Regulation 1552/89 to inform the Commission of the provisions that they 
adopted shall apply also in regard to future modifications made to these 
provisions. 
b. Documentary checks 
The documentary checks carried out by the Commission are designed 
to enable it to monitor certain accounting information systematically 
and to analyse other information supplied under the Community 
regulations on traditional own resources. 
Five different types of information are sent to the Commission for the 
purposes of these checks: 
i. Monthly statements of the A accounts 
Article 6 of Regulation 1552/89 requires accounts for own 
resources to be kept by the Treasury or other body appointed in 
each Member State. Entitlements established in accordance 
8 
with Article 2 of the Regulation, i.e. amounts due which have 
been notified to the debtor, are entered in these accounts. 
Entries must be made by the first working day after the 19th 
day of the second month following the month in which the 
entitlement was established. Because the obligation to enter 
established entitlements in the accounts for own resources is 
laid down in subparagraph (a) of Article 6(2) of the Regulation, 
the accounts are known as A accounts. 
Each month,8 the Member States send the Commission a 
statement of the established entitlements that have been 
entered in the A accounts. 
The Commission checks that the amounts credited by the 
Member State to the Treasury account opened in its name 
correspond to those appearing in the monthly statement. If 
necessary, the Commission will contact the Member State 
concerned and make any corrections that are required by 
amending the statements. It will also examine any corrections 
made by the Member States themselves to the entitlements 
established in previous monthly periods. Where necessary, the 
Commission may charge interest on late payments. 
In the case of sugar production levies, the monthly statements 
enable the Commission to compare the total amount of revenue 
actually received with the theoretical revenue for the relevant 
marketing period. Any discrepancies are examined in greater 
detail to determine the cause. 
Like all the other administrative and accounting information at 
the Commission's disposal concerning the establishment, 
recording and making available of traditional own resources, the 
information given in the monthly statement is also often used 
when preparing and carrying out on-the-spot inspections. 
The monthly statement of the A account must be sent to the Commission at the 
latest by the first working day after the 19th day of the second month following the 
month in which the entitlement was established. 
Quarterly statement of the B accounts 
Under Article 6(2)(b) of Regulation 1552/89, established 
entitlements that have not been entered in the A accounts 
because they have not yet been recovered and no security has 
been provided must be entered in separate accounts, known as 
B accounts. 
The B accounts may also include established entitlements for 
which a security has been provided, but which have been 
challenged and might be subject to change once the dispute has 
been settled. All the amounts entered in these separate 
accounts are shown in quarterly statements sent to the 
Commission.9 
The Commission then checks each quarterly statement to 
satisfy itself that it accords with the previous monthly 
statement. This check involves comparing the difference 
between the balance of the quarter covered by the statement 
and the balance of the previous quarter with the amounts of 
established entitlements, corrections, cancellations and sums 
recovered in the course of the quarter covered by the 
statement. In the event of a discrepancy, the Commission 
contacts the Member State concerned to ascertain the reason. 
The Commission also carries out statistical analyses of the B 
accounts to assess the relative importance of disputes and 
methods used to settle such cases. To this end it compares the 
amounts entered in the B accounts and the amounts entered in 
the A accounts, evaluates the relative weight of corrections and 
cancellations, and monitors trends in the average time taken to 
recover debts and the amounts outstanding. 
iii. Summary account and annual report 
By 1 May of each year, the Member States are required by 
Article 7 of Regulation 1552/89 to provide the Commission 
with a summary account of all the entitlements established in 
the previous year. 
The quarterly statement of B accounts must be sent to the Commission, at the 
latest, by the first working day after the 19th day of the second month following 
the quarter in which the entitlement was established. 
10 
This must be accompanied by a report on the establishment and 
entry in the accounts of own resources. The Commission 
evaluates the information in these reports, comparing it with 
other data from different sources at its disposal. 
iv. Half-yearly report 
As part of the checks on the collection of the Community's 
traditional own resources,10 the Member States notify the 
Commission twice a year, in half-yearly reports, of the outcome 
of their inspections. The reports also contain comprehensive 
information and cover questions of principle involved in the 
major problems that have arisen, especially in disputed cases. 
Particular attention is paid to cases involving legal proceedings, 
both civil and criminal, between the national authorities and 
debtors regarding the collection of import duties. In addition the 
reports spell out the reasons behind any cases where Member 
States have not made available to the Commission some 
amounts of entitlements that have been established but not 
collected, either because of force majeure or in individual cases 
where the amount involved exceeds ECU 10 000. 
These reports are an invaluable source of information, enabling 
the Commission to monitor closely the way in which Member 
States are exercising the powers delegated to them by the 
Community in the area of traditional own resources. Although 
all this information is evaluated in different contexts, the 
Commission pays particular attention to cases where exemption 
is claimed from the requirement to make established 
entitlements available for reasons of force majeure or in special 
individual cases. 
If a Member State invokes the notion of force majeure, the 
Commission takes care to see that the rules as stated by the 
Court of Justice are observed.11 The Commission has six 
months in which to communicate any comments it may have to 
the Member State concerned. 
10 Article 17 of Regulation (EEC, Euratom) N_ 1552/89. 
11 The criteria applied by the Commission to determine whether recourse to the notion 
of force majeure is justified or not are set out in a Commission communication 
published in OJ C 259, 6.10.1988, p. 10. 
11 
v. Half-yearly statement of cases of fraud and irregularities 
A final point to be made under the heading of documentary 
checks is that the Commission monitors the Member States' 
anti-fraud activities in the field of traditional own resources. It 
does so by analysing a sample of disputed cases, namely the 
cases of fraud and irregularities already detected by the Member 
States. 
The second subparagraph of Article 6(3) of Regulation 1552/89 
requires Member States to supply a brief description of all such 
cases involving entitlements of over ECU 10 000. 
These cases (of which there are currently about 2 300) are 
monitored in a coordinated way by various Commission 
departments, including the Unit on Coordination of Fraud 
Prevention, the Directorate-General for Financial Control, the 
Directorate-General for Agriculture and, in particular, the 
Directorate-General for Customs and Indirect Taxation. 
A selection is made of cases to be monitored. Those which 
meet certain criteria are monitored until they are settled.12 To 
this end the Commission maintains regular contacts with the 
Member States to update the information it has received and 
note any entries in the accounts or recoveries that might have 
occurred since the previous statement. 
Furthermore, if the Commission learns of a major case of fraud 
or irregularity that has not been notified pursuant to Regulation 
1552/89 (whether through a report by way of mutual 
assistance under Council Regulation (EEC) N° 1468/81,13 or as 
the result of a joint or own inspection, or from some other 
source), it will remind the Member State concerned of its 
obligations under the Community regulations to protect the 
Community's financial interests. The Commission also asks 
Member States about the state of progress in establishing and 
recovering entitlements and any obstacles in their way. 
12 In particular, cases where there is detriment to the Community budget, cases which 
are already the subject of enquiries by the Commission, cases where responsibility 
is shared among several Member States, or where there is a time limit, or those in 
which the budgetary authority or other inspection agencies have a particular 
interest. 
13 OJ L 144, 2.6.1981, p. 1. 
12 
On-the-spot inspections in Member States 
Although documentary checks and checks on the compatibility of 
national own resources provisions with Community law have a place 
among the instruments for verifying the application of Community 
regulations on traditional own resources, no monitoring system could 
ever be properly effective and viable without the possibility of 
on-the-spot inspections. The fact that the Commission can go and see 
things on the spot enhances the practical dimension of the various 
matters it handles in connection with the application of the 
Community rules on traditional own resources. Such inspections are 
also essential for checking whether the conclusions drawn from its 
checks on the documents and legislation are in fact accurate. 
2. Joint inspections and own inspections 
Ensuring Community monitoring on the spot by associating the Commission 
with inspections was introduced when the system of Community own 
resources was set up by the Decision of 21 April 1970. Joint inspections of 
this sort are carried out in accordance with the provisions of Regulations 
1552/89 and 165/74. 
Article 18(2) of Regulation 1552/89 requires Member States to associate the 
Commission, at its request, with the inspection measures they carry out. The 
distinguishing feature of this type of inspection is that the prime 
responsibility for organizing the inspection (fixing the dates and purpose) and 
the choice of the site of the inspection rests with the Member State 
concerned. 
The Commission, for its part, has to check that the Community's financial 
interests are always protected and that the traditional own resources are 
made available correctly. In order to ensure that entitlements are collected 
with due regard to the interests of the Community budget, Community law 
also explicitly confers on the Commission the power to monitor the 
establishment, recording and making available of traditional own resources, 
operations which are the responsibility of each Member State. 
The Council subsequently introduced a new method of inspection (Article 
18(3) of Regulation 1552/89). Unlike the joint inspections, where the 
initiative and responsibility rest primarily with the Member States, own 
inspections allow the Commission to conduct its own checks on the spot. 
13 
The scope of own inspections and general arrangements for their conduct 
were set out in a Commission statement entered in the Council minutes, 
spelling out how it intended to exercise this power (involvement of officials 
of the Member State concerned, advance notice given to the national 
authorities, an undertaking not to have unduly frequent recourse to the 
procedure, etc.). 
2.1 Methodology 
2.1.1 Joint inspections 
Certain procedures have been established both to ensure transparency 
and clarity and to enable the Commission to fulfil its obligations 
towards the other Community institutions and the Member States as 
regards monitoring how the latter manage the Community's traditional 
own resources. 
At the end of each year, the Commission department responsible - the 
Directorate-General for Budgets - drafts a programme for the year 
ahead. This specifies the number, date and subject matter of 
inspections and is discussed with the appropriate national authorities 
before being adopted by joint agreement. The finalized programme is 
sent by the Commission to the offices of the permanent 
representatives of all the Member States. Within the Commission 
prime responsibility for implementing the programme rests with DG 
XIX, as the authorizing department, but other Commission 
departments are also involved, depending on the subject under 
investigation. 
Roughly a month before each visit, the Commission writes to the 
office of the permanent representative of the Member State 
concerned, confirming the date of the inspection. A certified copy of 
the letter is issued to each of the appointed officials, stating their 
name and official position, and this constitutes the terms of reference 
from the Commission to the national authorities, as provided for in 
Regulation 165/74. 
Before each inspection the various Commission departments 
participating in the inspection hold an internal coordination meeting to 
define the objectives of the visit. These preparatory meetings, at 
which a common approach is decided, help to ensure that the 
inspections proceed smoothly. 
14 
At the initial meeting in the Member State where the joint inspection is 
taking place, the officials appointed by the Commission are briefed by 
national officials on the various activities of the department where 
checks are to be carried out. The Commission officials and the 
national officials responsible work out the procedures for the 
inspection and agree on a detailed programme of work. 
Once the inspection has been completed, the results are discussed at 
a final meeting. The national authorities are informed of the 
Commission officials' full findings from their checks. They are 
therefore aware of the main points likely to feature in the official 
version of the inspection report that will be sent to the Member State. 
The Member State, for its part, may make any comments it sees fit. 
The checks carried out by the Commission officials during the joint 
inspections are based on the supporting documents referred to in 
national and Community legislation, which Member States are required 
to keep for at least three years after the end of the year to which the 
documents relate. The Commission officials must have access to 
these documents when carrying out their random checks to see that 
the amounts of traditional own resources paid to the Commission by 
the Member States are actually what is legally due. In order to do this, 
the Community procedure is followed from the origin of the debt 
(operative event) to its entry in the Commission's accounts, by way of 
the procedures for establishing, recording and making them available. 
The results of the inspections carried out by the Commission are also 
communicated to the Court of Auditors, as well as to the other 
Member States with a view to discussion in the Advisory Committee 
on the Communities' Own Resources. 
The Advisory Committee, set up under Article 20 of Regulation 
1 552/89, consists of representatives of the Member States and the 
Commission and its purpose is, among other things, to examine and 
discuss the problems raised in inspection reports. The procedure is 
designed to ensure equal treatment for the Member States, at least for 
those affected by the issues concerned. Following discussion in the 
Committee, the Commission adopts its final position and informs the 
Member State concerned accordingly. 
15 
2.1.2 Own inspections 
In terms of procedure, the preparations for own inspections are similar 
to those for joint inspections, apart from the fact that Member States 
are not informed of the annual inspection programme. 
The officials appointed by the Commission must have a written 
authorization to carry out on-the-spot checks. They have access to the 
supporting documents relating to the establishment, recording and 
making available of traditional own resources, which are kept for at 
least three years after the end of the year to which they relate. They 
also have access to any other papers relating to the supporting 
documents in question. 
The Member State concerned is given due notice of an inspection by 
the Commission in a letter explaining the reasons for it and its 
purpose. It is also informed of the names and official positions of the 
officials appointed by the Commission to carry out the inspection. 
Obviously, for reasons of efficiency, the inspection should normally be 
conducted with the collaboration of national officials appointed by the 
Member State. However, the refusal of a Member State to cooperate 
cannot, in principle, prevent the officials appointed by the Commission 
from proceeding with their inspection. 
As regards the practical implementation of the inspections, most of 
the procedural rules governing joint inspections apply mutatis 
mutandis (preparatory meeting, final meeting, inspection results sent 
to the Member State concerned, confidentiality of information 
gathered in the course of the inspection, evaluation of the inspection 
findings in the Advisory Committee on the Communities' Own 
Resources). 
In the Commission's view, these inspections of its own have the 
advantage of allowing the Community interest aspect to be 
emphasized much more forcefully in Community monitoring systems. 
Equally, they allow issues regarding controls which the Commission 
regards as a priority, but which do not feature prominently on the 
national authorities' agenda, to receive the attention they deserve. 
2.2 Inspections carried out and main findings 
During the reference period (1989 - 1992) the Commission carried out a 
total of 59 joint inspections as follows: 
16 
Year 
1989 
1990 
1991 
1992 B 
2 
1 
-
1 DK 
1 
1 
-
1 D 
3 
1 
-
-GR 
2 
1 
1 
1 ES 
3 
2 
1 
1 F 
3 
1 
1 
2 IR 
1 
1 
1 
1 I 
3 
1 
1 
2 L 
1 
1 
-
-NL 
2 
-
-
1 PT 
3 
1 
1 
-UK 
4 
2 
1 
1 Total 
28 
13 
7 
11 
17 
It will be noted that the number of joint inspections has dropped since 1990, 
when the Commission began conducting its own inspections (under Article 
18(3) of Regulation 1552/89). 
The breakdown of topics covered in the joint inspections was as follows: 
1989 release into free circulation 
trad, own resources accounts 
ex post repayment/recovery 
presentation of goods at customs 
inward processing 
value for customs purposes 
sugar and isoglucose levies 
external Community transit 
imports of fishery products 30% 
19% 
16% 
11% 
8% 
6% 
5% 
4% 
1% 
1990 release into free circulation 
trad, own resources accounts 
inward processing 
presentation of goods 
special customs zones 35% 
31% 
17% 
13% 
4% 
1991 release into free circulation 45% 
trad, own resources accounts 35% 
inward processing (continued from 1990) 10% 
special customs zones 10% 
1992 separate accounts 
imports under preferential agreements 
transit by rail 80% 
10% 
10% 
During this same period the Commission carried out a total of 29 inspections 
of its own, broken down as follows: 
Year 
1989 
1990 
1991 
1992 B 
-
1 
-DK 
-
1 
1 D 
2 
2 
2 GR 
-
1 
-ES 
1 
1 
1 F 
1 
1 
-IR 
-
1 
-I 
1 
1 
-L 
-
1 
1 NL 
1 
1 
1 PT 
1 
1 
2 UK 
-
1 
1 Total 
7 
13 
9 
18 
It will be seen that the Commission carried out no inspections of its own in 
1989. This was because it proved impossible, for organizational reasons, to 
implement the new inspection arrangements introduced under Regulation 
1552/89 until some time after the Regulation entered into force on 8 June 
1989. 
The areas covered in the inspections were as follows: 
1990 inward processing 29% 
presentation at customs - release into free 
circulation of fishery products 29% 
separate accounts 14% 
imports of cattle from Eastern Europe -
Community transit 14% 
postal traffic 14% 
1991 separate accounts 92% 
special destinations 8% 
1992 imports under preferential agreements 56% 
sugar and isoglucose levies 33% 
imports of cattle from Eastern 
Europe - Community transit 14% 
The main practical results to emerge from the inspections, both in regulatory 
terms (where Member States have taken measures to implement Community 
rules or adapted their regulations to bring them into line with Community 
requirements) and in financial terms (where Member States have corrected 
the amounts of traditional own resources or paid interest when late in 
making own resources available), are set out below under the major subject 
headings. 
But before looking more closely at these results, the point should be made 
that it is not always easy to determine the financial impact of inspections in 
cases where the Member States have had to correct the amount of 
traditional own resources made available to the Commission following an 
inspection. This is because their additional payments are included in the 
overall amount of own resources paid over to the Commission each month. 
Without any specific indication that these extra payments are in response to 
the Commission's inspections, it is impossible to make the link between 
book entries and inspections. 
19 
Furthermore, if a particular office inspected was applying national rules that 
are open to challenge from the point of view of the Community rules, the 
conclusions from the local inspection have to be extended to the entire 
territory of the Member State in question. 
The Commission's inspections have also brought to light some weaknesses 
or gaps in national provisions. To rectify these problems the Member States 
have, where necessary, taken steps to bring their rules into line with 
Community legislation. 
It is not possible to place a figure on the amount of Community own 
resources saved as a result of the changes in national regulations requested 
by the Commission, but it is certainly substantial. 
Over the reference period from 1989 to 1992, total additional payments 
made to the Commission where a link can be established with comments in 
reports on its own or joint inspections amounted to ECU 17 717 257. 
The Commission's inspections have also often shown that traditional own 
resources were not made available within the time limit laid down in 
Community law - in other words by the first working day after the 19th of 
the second month following that in which the entitlement was established 
(Article 10(1) of Regulation 1552/89). Interest from the Member States on 
late payments over the reference period totalled ECU 39 731 273. 
The main results of the inspections carried out by the Commission in the 
Member States between 1989 and 1992, broken down by major headings, 
are as follows: 
Implementation of separate accounts in the Member States 
One of the major innovations of Regulation 1552/89 was to introduce 
separate accounts for established entitlements not yet recovered (B 
accounts) in addition to the accounts for entitlements established, recovered 
and made available (A accounts). 
20 
In financial terms, the separate accounts record potential revenue from 
traditional own resources for which the recovery procedure has been set in 
motion, but where the sums due have not yet been recovered. The Member 
States inform the Commission through their quarterly statements of the 
position regarding sums still to be recovered. From 1990 to 1992 the figures 
for the twelve Member States were as follows (at 31.12.1992, in million 
ECU): 
Year 
1990 
1991 
1992 BE 
2 
958 
4 
811 
6 
066 DK 
• 
-DE 
26 
323 
117 
725 
142 
840 GR 
178 
504 
1 
240 ES 
-
15 
632 
16 
679 F 
7 
770 
32 
312 
39 
560 IR 
1 
4 
4 
2 
1 IT 
31 
735 
49 
229 
57 
639 L 
-
2 
2 NL 
-
11 
586 
13 
656 PT 
1 
853 
2 
468 
4 
085 UK 
6 
998 
4 
502 
6 
749 TOTAL 
77 829 
238 
772 
288 
537 
Since most of the Member States had to set up separate accounts from 
scratch, because their accounting systems made no provision for them, the 
Commission's main priority in its inspections was to concentrate on the 
implementation of these accounts to ensure that they were in line with 
Community law. 
From 1990 to 1992 the Commission carried out 33 inspections - 19 joint 
inspections and 14 of its own - covering the B accounts. In some cases 
recourse to the own inspection formula was dictated by the fact that the 
Commission had to "impose" its choice of topic, particularly where the topic 
was not included by the national authorities in their inspection plan for the 
period in question. 
The inspections in the Member States showed that the separate accounts 
are kept on a daily basis, either centrally or at local offices. Since this is a 
matter of some importance, the Commission adopted a communication on 
concerning the implementation of the B accounts in the Member 
States.14 This report and the recommendations which it contains are also 
based on the findings from the traditional own resources inspections in this 
field. 
14 COM(93) 10.1993. 
21 
In response to the Commission's comments in its inspection reports the 
Member States have, where necessary, amended their legislation, regulations 
or administrative and accounting provisions to satisfy the requirements of 
Regulation 1552/89. Some examples are given below, country by country: 
1. In BELGIUM the date of entry in the separate accounts was not 
recorded in the register, causing difficulties in checking compliance 
with the time limits for entries. 
* From 1 January 1992 the date has been recorded in the register 
(amendment to Annex 4 of the circular of 15.12.1981). 
Similarly, cases of fraud notified to the Commission that involved 
agricultural levies were entered late in the accounts. 
* In the meantime there has been a reorganization to improve 
cooperation between Customs and the central office for quotas 
and licences as regards the establishment and recovery of 
agricultural levies. 
In GERMANY entries in the separate accounts were being duplicated 
(with entries being made for principals and those jointly liable). 
* The necessary instructions have been issued to clarify the 
situation. 
Furthermore the quarterly statements submitted to the Commission in 
accordance with Article 6(3) of Regulation 1552/89 showed only a 
global figure for all payments, write-offs and remissions, posing some 
problems for inspections. 
* The forms used in Germany have been modified to show clearly 
the figures for the different categories. The German authorities 
are also reorganizing their accounting system for traditional own 
resources. 
3. There were some difficulties over the handling of the separate 
accounts in GREECE, with identical cases that should have involved 
the entry of established entitlements in the separate accounts being 
treated differently. 
22 
National instructions to remedy the shortcomings observed 
were issued in circulars dated 13.1.1992 and 20.4.1992. 
23 
In SPAIN the amounts of established traditional own resources 
covered by guarantees were entered in the separate accounts without 
any evidence that they had been contested, contrary to what is 
required under Community legislation. 
* National procedures have been altered in the light of the 
Commission's comments. 
It was also found that entries in the separate accounts for the 
temporary admission of goods were being made late. 
* In response to the Commission's comments, Spain modified its 
procedure, shortening the deadline for presentation of evidence 
of re-export so that the entitlements due can be entered inside 
the required time limit. 
5. In FRANCE it was found that entries in the separate accounts were 
being made late for traditional own resources where recovery is 
uncertain. 
* In the wake of the Commission's findings, the French 
authorities introduced a special register at the Regional 
Documentation and Inspection Centres (CERDOC), making it 
easier for inspectors to check compliance with the time limits 
for entry in the accounts at customs offices. 
It was also found that the implementation date of the B accounting 
system was not the same in the offices inspected. 
* Following the Commission's observations, a training seminar 
was organized by the French authorities to forestall any 
difficulties in the implementation of the separate accounts. A 
note was also sent to all regional directors to ensure compliance 
with the national instructions on the practical application of 
Community regulations. 
There was a lack of transparency in the way the separate accounts 
were kept at the Accountant General's Office in IRELAND. 
* A new system was introduced at the Accountant General's 
Office from October 1991 in response to the Commission's 
comments. 
24 
There were also delays in entering cases of fraud and irregularity in 
the accounts. 
* The appropriate instructions were issued to the Investigation 
Branch to ensure that all traditional own resources are entered 
in the accounts in time. 
In ITALY cases of non-payment entered in the separate accounts 
which had been passed on to collectors for enforcement action were 
not being handled adequately. 
* This anomaly was rectified by the publication of a ministerial 
circular on 12.9.1991. 
Also in the event of dispute, the amount due was not being 
established and entered in the separate accounts immediately after 
notification to the taxpayer. 
* In response to the Commission's comments, entries are made in 
the separate accounts as soon as the collector receives 
confirmation of receipt of the demand for payment, in line with 
Community rules. 
8. In the NETHERLANDS, there are differences in the treatment of 
customs duties and agricultural levies as regards separate accounts. 
The authority responsible for agricultural levies keeps separate 
accounts and the relevant statements are notified to the Commission. 
The customs authorities, on the other hand, do not keep any separate 
accounts. 
As a rule all customs duties payable are established and made 
available to the Commission under ordinary accounting arrangements. 
Subsequently, any duties to be refunded are deducted from the 
amounts made available to the Commission. 
As far as the keeping of separate accounts is concerned, the 
Commission sent some comments to the Dutch authorities on the 
drawing up of the quarterly statements, and in response they have 
taken appropriate steps. 
25 
In the case of PORTUGAL, problems have arisen over the date of 
establishment, entries in the separate accounts and notification of the 
amount due. 
* New instructions were issued to the departments concerned in 
circular N° 273 of 1991 to meet Community requirements. 
A problem was also found regarding established entitlements that 
were contested by the taxpayer. The contested amounts were not 
recorded anywhere until the court that deals with the application of 
customs legislation had reached its decision. 
* Following the internal instructions issued in 1991, these 
amounts are now recorded in the B accounts. 
It was also found that some amounts already entered in the A 
accounts were transferred to the B accounts. 
* The Portuguese authorities have altered their national 
instructions in response to the Commission's observations. 
Lastly the quarterly statements of entitlements established but not yet 
recovered included information relating not only to established 
entitlements but also to entitlements that had not been established. 
* The national instructions were modified with effect from 
1.1.1 992 to comply with Community requirements. 
10. In the UNITED KINGDOM, the register of irregularities and ex post 
recovery could not be considered adequate for the purposes of 
separate accounting because not all entries could be identified and 
outstanding cases could not be monitored, in particular as regards the 
remainder still to be recovered. 
* The British authorities have reviewed their national instructions 
and steps have been taken to improve procedures. 
In addition the quarterly statements of entitlements established but 
not yet recovered did not contain any details of recoveries or write­
offs made during the quarter in question. 
* The appropriate steps have been taken by the British authorities 
and the quarterly statement revised. 
26 
11. DENMARK does not keep B accounts, since all established 
entitlements are made available to the Commission regardless of 
whether they are recovered or not. In the very few cases where a 
national court rules that the amount payable is not the same as that 
already made available to the Commission, a correction is made. 
12. The accounting arrangements applied by LUXEMBOURG did not give 
rise to any comments by the Commission. 
Sugar and isoglucose levies 
The basic regulation laying down the rules for establishing the sugar levy and 
the procedures for payment by those liable is Council Regulation (EEC) N° 
1785/81 on the common organization of the markets in the sugar sector.15 
The rules for sugar apply mutatis mutandis to isoglucose. 
The Commission carried out 6 inspections (3 joint inspections in Spain, 
Portugal and the Netherlands in 1989 and 3 of its own in Spain, Portugal and 
the United Kingdom in 1992). In 1990 and 1991 the Commission was 
unable to carry out any inspections relating to the implementation of the B 
accounts). 
The inspections on sugar and isoglucose brought to light a number of 
problems involving subsequent additional payments by the Member States. 
An initial inspection in PORTUGAL in 1989 showed that levies on sugar 
imported for processing before Portugal's accession to the Community, but 
not re-exported, had been established late. In this case the Portuguese 
authorities made levies totalling ECU 10 226 30616 available to the 
Commission. 
A second inspection, also in 1989, revealed another case where levies were 
established late, this time for surplus sugar that was not exported. The 
Portuguese authorities paid the Commission ECU 182 17717 in levies, plus 
interest totalling ECU 119 163.18 
15 
16 
17 
18 OJ L 177, 1.7.1981, p. 4. 
Esc. 1 773 374 434 at the 1989 rate of 173.413. 
Esc 32 992 510 at the 1990 rate of 181.101. 
Esc. 20 819 449 at the 1992 rate of 174.714. 
27 
In their inspection in the UNITED KINGDOM the Commission officials found 
that storage levies totalling ECU 9 082 89819 were established late. A 
comment to this effect in the inspection report was contested by the British 
authorities and the Commission is currently looking into the various aspects 
of the matter. 
Apart from a few minor errors in accounting entries, which were 
subsequently corrected, the inspections in the other Member States did have 
any financial implications. 
On the Community side, it became apparent that Council Regulation 
1552/89 needed to be amended to make it clear that entitlements from 
sugar and isoglucose levies should in all cases (whether recovered or not) be 
entered in the A accounts kept by the Member States. 
If these entitlements are not subsequently recovered within the time limits 
laid down, the Member States may correct the entry made and, by way of 
an exception, enter the entitlements in their separate accounts. 
Inward processing arrangements 
The Commission conducted 3 joint inspections - one in Ireland in 1989, and 
the others in Belgium and the United Kingdom in 1990 - concentrating 
mainly on the application of the Community rules on inward processing. The 
system, which is designed to promote the export of compensating products 
obtained from non-Community goods by freeing them from import duties, 
was laid down in Regulation (EEC) N° 1999/85.20 The most important of the 
various implementing regulations is Regulation (EEC) N° 2228/91,21 which 
lays down the main arrangements for applying the system. 
The Commission's inspections prompted the authorities in some of the 
Member States to rectify their practices in this field in certain respects. 
The Commission's inspection in BELGIUM showed that the authorizations for 
inward processing issued by the Belgian authorities did not contain all the 
information required by the Community rules. The Belgian authorities have 
undertaken to take the necessary steps to comply with Community 
legislation. In due course the Commission will carry out an inspection to 
check whether this undertaking has been kept. 
'9 UKL 6 700 000 at the 1992 rate of 0.737650. 
20 OJ L 188, 20.7.1985, p. 1. 
21 OJ L 210, 31.07.1991, p. 1. 
28 
The Commission's inspection in IRELAND revealed the need for changes in 
the national provisions governing inward processing. The Irish authorities 
have since brought in the following amendments: 
Point 9.8 of the national instructions - Customs code, volume VI - has 
been deleted. This allowed inward processing operations to proceed 
within the area of Shannon customs-free airport without authorization. 
The inward processing authorization form used by the Irish authorities 
has been replaced, because it did not include all the particulars 
contained in the Community model as regards the tariff classification 
of compensating products and the various customs offices responsible 
for placing goods under the procedure, monitoring and clearance. 
The customs authorities must now check whether the relevant 
economic conditions are fulfilled before issuing an authorization, rather 
than afterwards, as provided for in point 11 of the national 
instructions. 
In the UNITED KINGDOM, the Commission inspection showed that the 
British inward-processing authorization form did not comply with the 
Community rules. The United Kingdom has since agreed to use only the 
Community model. 
The inspection in the NETHERLANDS on the inward processing of milk 
products brought to light a number of departures from the Community rules: 
the validity of inward-processing authorizations issued for milk 
products had been extended beyond the three-month time limit laid 
down by Community law; 
economic conditions were being assessed in a way which is not in 
accordance with Community legislation. 
Appropriate steps have been taken by the competent authorities to change 
their procedures. 
An own inspection carried out in FRANCE into inward processing 
concentrated on a specific case of fraud. Once the fraud had been 
confirmed, the traditional own resources were recovered. 
20 
Imports of cattle from Eastern European countries 
The point of reference regulation for these inspections is Council Regulation 
(EEC) No 2726/90 on Community transit,22 which establishes the conditions 
governing the movement of non-Community goods within the Community's 
customs territory. 
The inspections have concentrated on Germany, since it is the Member State 
with the longest common frontier with the Eastern European countries 
involved (Poland and Czechoslovakia especially). Three own inspections 
carried out by the Commission (one in 1990 and two in 1992) confirmed 
large-scale fraud in this connection. Following the inspections, the German 
authorities were asked to take the necessary steps to put a stop to these 
fraudulent imports and prevent their recurrence as well as to recover the 
sums evaded on these transit operations discharged on a false basis. The 
inspections prompted a number of initiatives on the part of the Commission, 
which alerted the Member States involved and so paved the way for inquiries 
and arrests by the various national investigation departments. 
Moreover, these events led the Commission to adopt Regulation (EEC) 
No3712/9223 with the aim of improving the system of guarantees for 
Community transit operations. 
Regardless of the eventual outcome in the other Member States concerned, 
Germany has informed the Commission that, for the customs offices 
involved in the affair, a total of ECU 1 402 29024 in customs duties and 
ECU 9 032 04625 in agricultural levies had been entered in the separate 
accounts. 
Preventive action was also taken by the German authorities and the 
following measures were adopted: 
ministerial orders of 30 August 1991 introducing obligatory physical 
checks on cattle originating in Poland that are put into free circulation 
or placed under the external Community transit procedure; 
22 
23 
24 
25 OJ L 262, 26.9.1990, p.1. 
OJ L 378, 23.12.1992, p.15. 
DM 2 833 061 at the 1992 rate of 2.02031. 
DM 18 287 940 at the 1992 rate of 2.02031 
30 
a ministerial order of 1 October 1991: 
• extending the obligation to present the customs office of entry 
with the import certificates required under Community 
agricultural regulations to include cases where animals are 
placed under the external Community transit procedure, 
particularly if the destination customs office lies within the 
Community's customs territory; and 
• requiring submission of the original or a certified copy of the 
purchase contracts when live animals destined for a 
non-member country are placed under the external Community 
transit procedure; 
a Ministerial order of 19 November 1991 including instructions to 
customs offices to establish, in every case of external transit, whether 
the total guarantee indicated by the principal is sufficient to cover any 
customs debt on importation which might be incurred; 
a ministerial order of 2 December 1992 instructing customs offices to 
report on what measures they had already taken or still had to take 
with regard to guarantees and the recovery of duty evaded. 
Imports under preferential arrangements 
The regulations on which the preferential arrangements are based are 
adopted each year by the Council. There are separate regulations for 
different countries and categories of goods (e.g. industrial goods, textiles, or 
agricultural products from Bolivia, Albania, the Baltic States, etc.). 
In 1992 the Commission carried out six inspections covering the application 
of the preferential arrangements in six Member States (own inspections in 
Germany, Denmark, the Netherlands, Luxembourg and Portugal and a joint 
inspection in Italy). 
Inspections of imports of this kind will be carried out in the other Member 
States in the course of 1993. 
To improve the preparation of inspections an analysis of imports in each 
Member State is first made to identify which goods covered by the 
generalized system of preferences are major imports in terms of value. 
31 
It should be pointed out that, on average, these Commission inspections 
each cover 600 import dossiers, which represents a substantial amount of 
work. 
Some problems or errors in applying Community and national rules have been 
pinpointed and brought to the attention of the authorities. In this connection, 
an inspection in France once again highlighted the specific question of 
certain preferential bilateral agreements. 
Following comments by the Commission on this question, the French 
authorities modified their inspection procedures to ensure that Community 
rules on bilateral quotas were strictly applied. 
It is also planned to implement Community measures to replace national 
quotas with Community quotas as soon as possible. 
The inspections carried out by the Commission highlighted the existence of 
problems with the post-clearance controls intended to ensure that all the 
necessary conditions for the application of the preferential arrangements 
have been properly met. 
It would seem that the Member States have different interpretations of the 
concept of "grounds for doubt", on the basis of which the customs 
authorities are meant to initiate the post-clearance inspection procedure. The 
Commission's departments are currently looking into the problem with a 
view to proposing a common interpretation of the concept. 
Imports of fishery products 
Council Regulation No 137/79 on the institution of a special method of 
administrative cooperation for fishery products26 and Council Regulation 
No 802/68 on the common definition of the concept of the origin of goods27 
provide the basic reference for Commission inspections into imports of 
fishery products. 
In 1990 the Commission carried out two own inspections covering imports 
of fishery products - in Spain and Portugal - which brought to light a number 
of errors in the administration of tariff quotas, notably in relation to imports 
of fish caught by vessels in mixed ownership (Spain/third country). 
26 OJ L 20, 27.1.1979, p.1. 
27 OJ L 148, 28.6.1968, p.1 
32 
These errors worked to the detriment of the Community budget. Following 
detailed examination of the cases raised, the Commission initiated the 
procedure to regularize the situation as regards the establishment, recovery 
and making available of the traditional own resources involved. In the 
meantime, action to regularize the situation created by the incorrect 
administration of certain tariff quotas has already led to the recovery of 
ECU 83 838.28 
28 PTA 10 849 522 at the 1990 rate of 129.411. 
33 
II! ASSESSMENT OF HOW THE INSPECTION ARRANGEMENTS ARE 
WORKING AND CONCLUSIONS 
1. General assessment of the system 
Leaving aside the considerations which prompted it to propose an 
amendment of Regulation No 1552/89,29 the Commission considers that 
there is still room for improvement in the traditional own resources 
inspection system, even though it works well on the whole. There is a 
certain degree of interaction between the various types of check (legislative, 
documentary and "on-the-spot") used to monitor the Member States' 
application of the Community rules on the establishment, entry in the 
accounts and making available of traditional own resources involves a degree 
of interaction. This interaction could be enhanced to achieve greater synergy. 
a. The legislative checks on the measures adopted by the Member States 
in the field of traditional own resources provides the Commission with 
its most important means of measuring the Member States' ability to 
handle their assigned task of collecting Community revenue. Where 
anomalies are discovered, every attempt is made to find a solution in 
consultation with the Member State concerned. The Commission has 
always found these dialogues most valuable and profitable. This 
conclusion is supported by the very small number of cases in which 
the Court of Justice has had to intervene. However, this process to 
eliminate anomalies should be speeded up. 
b. The documentary checks carried out by the Commission on the basis 
of various statements, reports and other administrative or accounting 
information enable it to monitor trends in the establishment, entry in 
the accounts and making available of traditional own resources. The 
fact that corrections have to be made and interest on late payments 
demanded from the Member States after the monthly and quarterly 
statements have been analysed clearly shows the need to continue 
with these checks. 
With regard to the monthly statement in particular, the Commission 
has found that some Member States are having problems in meeting 
their obligation under Article 18(2)(b) to identify the financial findings 
of the inspections carried out in the Member States by means of 
appropriate notes. 
29 COM(92) 519, 11 December 1992. 
34 
Without this information it is not always possible to measure the 
financial impact of a particular inspection at a later date, since in such 
cases the additional payments made are included in the total amount 
of traditional own resources made available to the Commission each 
month. What is more, the quality of the information passed on to the 
Commission's departments is not always good enough for it to be 
used to full advantage, and the Member States will be asked to make 
more effort in this area. 
Under Regulation 1552/89 as it stands at the moment, the 
Commission is not able to undertake systematic monitoring of frauds 
and irregularities involving entitlements of over ECU 10 000 that are 
detected by the Member States. This is why the Commission recently 
set up the system described in Part II to monitor such cases. It hopes 
that this will lead to more efficient follow-up of recovery operations. 
Some aspects of the present system of documentary checks could be 
strengthened if the Council adopts the proposed amendments to 
Regulation 1552/89 currently being examined by the budgetary 
authority. The main alterations proposed to the system described in 
Part II are: 
the monthly and quarterly statements of accounts would 
contain annexes making it possible to follow up the 
establishment and settlement of cases of fraud and irregularities 
notified under Article 6(3) of the present Regulation; 
the half-yearly statement on the results of national inspections 
will become a full report on the operation of the Member States' 
recovery and monitoring systems, enabling the Commission to 
update the information which it already possesses on these 
systems, on the inspection effort put in and the results 
achieved, and on the types of case involved and the problems 
associated with recovery. 
This information would be very useful for the preparation of 
on-the-spot inspections of traditional own resources and could help 
enhance the value of the analysis of information supplied on cases of 
fraud and irregularities. 
'&*<*£&*^&^**&^-^ ••*•*'*+{ : -;V^'\* ;^*r^'^^^^***Vt*£^ •as&fe^Çf-ïîtô-" v; 
35 
c. Any assessment of the effectiveness of on-the-spot inspections in 
general must take account of the fact that their main aim is to ensure 
that the Community rules on traditional own resources are being 
properly applied. 
As a rule the joint or own inspections organized under Article 18 of 
Regulation 1552/89 involve a much greater horizontal element than 
the investigations carried out by other Commission departments. 
The inspections carried out under Article 18 therefore have a 
significant preventive effect. The mere fact that the Commission is 
carrying out regular inspections should be sufficient to influence the 
way in which the Community and national rules on traditional own 
resources are applied and thus improve the overall recovery of its 
resources. 
The inspection findings also prove valuable in other areas. In view of 
the close links between customs legislation and the rules on the 
establishment of traditional own resources, inspection findings are 
taken into consideration when the effectiveness and smooth operation 
of customs legislation are being evaluated. Similarly, information 
obtained from inspections can prompt the Commission to propose 
appropriate legislative measures. 
The direct and indirect impact of the inspections carried out during the 
1989-1992 reference period covered by this report are encouraging. 
Thus, the Commission feels that there has been a marked 
improvement in the way the B accounts are kept in most Member 
States as a result of its inspection operations. This has helped greatly 
to improve the scope for monitoring recovery. Similarly - and bearing 
in mind the limited human resources available to the Commission 
during the period in question - the results of inspections into economic 
customs procedures, preferential arrangements and the sugar sector, 
have enabled the Commission to form a generally favourable picture of 
the situation in these areas, subject to the proposed improvements. 
The Commission much appreciates the cooperation of the Member 
States, which have given Commission officials every assistance when 
they have needed to visit an individual taxpayer's premises in the 
course of an inspection to obtain information which the authorities 
could not provide. 
36 
The positive benefits gained in this area should serve to convince any 
Member States which may still harbour doubts. It is essential that the 
principle of own inspections by the Commission, as laid down in 
Community law, should be applied as comprehensively as possible, 
and they should not have to depend for their success on good 
personal relations between the Community administration and the 
national authorities. 
37 
2. Conclusions 
2.1 Improving existing methods of inspection 
The experience gained over the period from 1989 to 1992 has led the 
Commission to the following conclusions: 
• Refining legislative checks 
The Commission is planning to devote special attention to a horizontal 
analysis of national measures relating to areas which are or will be the 
subject of specific inspections. It aims to assess the relative effectiveness of 
national measures and, where appropriate, will put forward its ideas on what 
steps are necessary either by the Member States or through Community 
legislation. 
• Expanding documentary checks 
Evaluating the accounting statements, reports and other information sent to 
the Commission is both the basis for risk analysis and the primary area 
where such techniques are applied. These analyses will be stepped up and 
integrated better into the documentary inspection system so that the 
maximum benefit possible can be gained from the information available. 
• Making better use of systems study inspection techniques 
In the Commission's view the existing systems-study based inspection 
techniques should be stepped up and updated. This approach evaluates the 
system as a whole and not just isolated operations, thus enabling the 
effectiveness and economy of the system under scrutiny to be measured. As 
part of this approach, the procedure known as risk analysis makes it possible 
to identify risks within a system where the financial consequences of an 
improper application of the rules on traditional own resources would be most 
serious. 
The Commission had already begun applying these techniques during the 
period covered by this report. Their introduction will allow the Commission to 
make the best possible use of its limited resources, without undermining the 
effectiveness of the inspections or causing excessive bureaucratic 
constraints. 
38 
It is particularly important in this context to step up the inspection of 
administrative infrastructures set up by the individual Member States for the 
establishment, entry in the accounts and making available of traditional own 
resources. A detailed assessment of the capabilities of the administrative 
structures under investigation is required. These findings will be taken into 
account, by means of risk analysis, in the planning of future traditional own 
resources inspection visits. 
2.2 Rationalization of the choice of topics and multiannual planning of 
on-the-spot inspections 
When deciding on specific topics for inspection, the Commission is proposing 
to make greater use of objective criteria justifying the allocation of limited 
resources, taking into account both the indicators obtained through more 
extensive use of systems study techniques and the signals and other 
information provided by bodies outside the Commission, such as the 
European Parliament, the Court of Auditors, national administrations and 
various other sources. 
Similarly, the annual planning of specific areas for inspection will tie in more 
closely with a multiannual strategy for inspection activities, creating, among 
other things, a greater degree of transparency in relations between the 
Commission and the Court of Auditors, which also carries out inspections 
into the collection of traditional own resources. This planning needs to be 
flexible and capable of adjustment to reflect new priorities requiring a 
reassessment of the specific topics planned. 
2.3 Refining follow-up procedures 
It is planned to speed up the procedure for following up inspections, and the 
Commission is developing appropriate software at the moment. The database 
being created should make it possible to follow up the results of traditional 
own resources inspections with optimum efficiency and is due to come into 
operation by mid-1994. 
39 
2.4. Cementing the partnership between the Member States and the 
Commission 
Working relations between the Member States and the Commission are 
satisfactory. Nevertheless, the Commission feels that they ought to be 
developed further through a permanent administrative partnership with the 
Member States. The climate of mutual confidence surrounding this 
consultation structure would have a beneficial impact on the practical 
operation of the various inspection procedures. 
With this in mind, the Commission is planning to organize a workshop on 
different inspection procedures in the first few months of 1994. The aim of 
this liaison with the Member States is to gather ideas from the national 
operational departments on the practical aspects of on-the-spot inspections. 
The conclusions of this exchange of views will be used in the preparatory 
work on a proposal to amend Regulation 165/74, which the Commission is 
planning to put to the Council by the summer of 1994. 

Ho 
ISSN 0254-1475 
COM(93) 691 final 
DOCUMENTS 
EN 01 
Catalogue number : CB-CO-93-701-EN-C 
ISBN 92-77-62671-2 
Office for Official Publications of the European Communities 
L-2985 Luxembourg