5. 6. 79 Official  Journal  of the European  Communities NoC  139/25 
Opinion  of the  Court  of Auditors  on the draft  Council  Regulation  amending  the Financial 
Regulation  of 21 December  1977  applicable  to the  general  budget  of the  European 
Communities 
THE  COURT  OF  AUDITORS  OF  THE  EUROPEAN 
COMMUNITIES, 
Having  regard  to  the  draft  Council  Regulation 
amending  the  Financial  Regulation  of 21 December 
1977  applicable  to the  general  budget  of the  European 
Communities, 
Whereas  the  Court,  while  agreeing  that  transactions 
concerning  borrowing  and  lending  should  be shown  in a 
separate  part  of the  Community  budget,  suggests  that 
they  should  be made  the subject  of a separate  indent  in 
Article  1 (1) of the Financial  Regulation; 
Whereas  the  Court  notes  that,  in the  Commission's 
proposed  amendments,  the term  'costs'  used  in Articles 
1 (1),  1 (4) and  3 (2) appears  to be used  in a different 
sense  from  that  in the proposals  for Articles  16 and  73, 
and considers  that  in relation  to borrowing  and  lending 
transactions,  the  term  'costs'  should  not  include 
interest; 
Whereas  the  Court  considers  that  the summaries  of the 
elements  involved  in borrowing  and  lending  operations 
set out  in the proposals  for Articles  1 (4),  3 (2),  16 and 
73 need  modification  for  the  sake  of clarity  and 
consistency; 
Whereas  the  Court  considers  that  the  introduction  of 
the interval  of six weeks  in the Commission's  proposal 
for a revised  second  subparagraph  in Article  6 (3) 
should  not  have  the effect  of extending  the final  date  for 
approving  an  application  for  carry  over  of 
appropriations  beyond  31 May; 
Whereas  the  Court  considers  that  the  automatic  carry 
over  of authorizations  entered  in Part  II of the  budget 
should  be limited  to one  year; 
Whereas  the  Court  considers  that  the  Communities' 
undertaking  to use  own  resources  in case  of default  or 
delay  in payments  by  beneficiaries  as proposed  in 
Article  16 should.be  entered  in Part  I of the budget; Whereas  the  Court  considers  that  notwithstanding  the 
list of headings  set out  in the  Commission's  proposed 
amendment  to  Article  90  (2),  the  budgetary 
nomenclature  should  be regulated  by Article  15 (3) of 
the Financial  Regulation, 
HAS  ADOPTED  THE  FOLLOWING  OPINION: 
Article  1 (1) 
Instead  of the proposal  of the Commission  add  a further 
indent  to the second  subparagraph  to read  as follows: 
'All financial  operations,  including  interest  and 
costs,  in connection  with  the borrowing  and  lending 
operations  which  are  based  on  the  Treaty 
establishing  the  European  Economic  Community. 
These  operations  shall  be entered  in a second'part  of 
the budget  as provided  in Article  15  of this 
Regulation.' 
Article  1 (4) 
Instead  of the  proposal  of the  Commission  substitute 
the following  wording: 
'Operating  expenditure  arising  from  contracts 
which  have  been  concluded,  in accordance  with 
local  usage,  for periods  going  beyond  the  financial 
year,  the  repayment  of loans  and  payment  of 
interest  and  costs  related  to loans,  are not  subject  to 
the provisions  of the preceding  subparagraph.  Such 
expenditure  shall  be charged  to the  budget  for  the 
financial  year  in which  it is effected.' 
Article  3 (2) 
Instead  of the  proposal  of the  Commission  substitute 
the following  wording: 
'Notwithstanding  paragraph  1, revenue  earmarked 
for a specific  purpose,  such  as  income  from 
foundations,  subsidies,  gifts,  bequests,  and  the 
product  of any  loans  raised,  repayment  of sums  lent, 
receipt  of interest  on and  reimbursement  of costs 
related  to these  loans,  shall  not  be used  for  any 
other  purpose.' 
No C 139/26 Official  Journal  of the European  Communities 5. 6. 79 
Article  6 (3) 
Instead  of the  proposal  of the  Commission  substitute 
the following  wording: 
'Unless  the  Council  acting  by a qualified  majority 
decides  otherwise  within  six weeks  of receiving  the 
application  but  in any  event  before  1 June,  the 
carrying  over  of these  appropriations  shall  be 
deemed  to be approved. 
The Council  shall  consult  the European  Parliament 
immediately  upon  receiving  the application  to carry 
over  appropriations.' 
Article  6 (4) 
Instead  of the  proposal  of the  Commission  add  the 
following  subparagraph: 
'Authorizations  entered  in Part  II of the  budget 
shall,  were  the  operations  have  not  been 
implemented  by the  end  of the  financial  year  for 
which  they  were  authorized,  be  carried  over 
automatically  to the following  financial  year  only.' 
Article  7 
Substitute  in the proposal  of the Commission  the word 
'completely'  for the word  'solely'. 
Article  12 (1) 
Substitute  the  following  wording  for  the  text  of the 
Commission's  proposal: 
'1. The  Commission  shall,  in the preliminary  draft 
budget  which  it shall  place  before  the Council  not 
later  than  1 September  of each  year: 
— draw  up Part  I of the budget  which  shall  include 
a consolidated  statement  of  the  estimates 
referred  to in Article  11, 
— draw  up  Part  II of the  budget  which  shall 
include  the  borrowing  and  lending  operations 
referred  to in Article  1 (1) of this  Regulation. 
It shall  at the  same  time  forward  the  preliminary 
draft  budget  to the European  Parliament.' 
Article  IS 
Substitute  the  following  wording  for  the  part  of the 
Commission's  proposal  that  deals  with  Part  II of the 
budget: 'Part  II shall  consist  of: 
— the  borrowing  and  lending  operations  referred 
to in Article  1 (1) of this  Regulation.' 
Article  16 
Instead  of  the  proposal  of  the  Commission  the 
following  wording  should  be  substituted  for  para-
graph  3: 
'3. As  regards  borrowing  and  lending  operations: 
— in Part  I: 
— a token  entry  under  the appropriate  budget 
headings  to represent  those  sums  which  the 
Communities  may  be called  upon  to pay  to 
fulfil  their  undertaking  to  use  own 
resources,  to honour  the  obligations  arising 
out of loan  contracts  in case  of default  or 
delay  in repayment  by a beneficiary, 
— a token  entry  to represent  any  sums  received 
in respect  of sums  so paid  from  own 
resources, 
— remarks  which,  in particular,  express  the 
Communities'  undertaking  to  use  own 
resources  to meet  any  delay  or default  by a 
beneficiary  in the repayment  of a loan; 
— in Part  II two  titles  divided  into  chapters, 
articles  and  items  accompanied  by appropriate 
remarks. 
— Title  I shall  include: 
— authorizations  for loans  to be contracted 
in the financial  year  concerned, 
— estimated  loan  repayments  to and  in-
terest  receipts  by  the  Community  in 
respect  of lending  operations, 
— estimated  contributions  towards  the 
costs  of the  borrowing  and  lending 
operations, 
— broken  down  as above,  the  revenue 
entered  in the  budget  for the preceding 
financial  year,  and  the actual  revenue  for 
the last  financial  year  of which  the 
accounts  have  been  closed. 
— Title  II shall  include: 
— authorizations  for  Community  lending 
1 operations  during  the  financial  year 
concerned, 
5. 6. 79 Official  Journal  of the European  Communities No C 139/27 
— appropriations  to cover  the  repayment 
of Community  borrowings  and  of the 
payment  of interest  thereon, 
— appropriations  to cover  the  costs  of 
borrowing  and  lending  operations, 
— broken  down  as  above,  the  appro-
priations  entered  in the  budget  for  the 
preceding  financial  year,  and  the  actual 
expenditure  for  the  last  financial  year 
for which  the accounts  have  been  closed.' 
Article  73 (5) 
Instead  of the  proposal  of the  Commission  substitute 
the following  wording: 
'— total  loans  outstanding  at 1 January  of the 
financial  year, 
— capital  movements  plus  interest  received  and 
costs  paid  and  reimbursed  in  respect  of 
lending-on  operations, 
— total  borrowings  outstanding  at 1 January  of the 
financial  year, 
— capital  movements,  plus  interest  paid  and  costs 
paid  and  reimbursed  in respect  of borrowings, Community  indebtedness  at 31 December  of the 
financial  year.' 
Article  88 
Following  subparagraph  1, insert  subparagraph  2 as in 
Commission's  proposal  and  renumber  subparagraphs  2, 
3 and  4. 
Article  89 
Substitute  the following  wording  for the second  indent 
under  (b) in the Commission's  proposal: 
'— a simplified  version  of the schedule  of amounts 
and due  dates  for commitments  and  payments 
referred  to in the third  subparagraph  below.' 
Adopted  on 27 July  1978. 
Michael  N. MURPHY 
President  of the Court  of Auditors