A4-0331/96

Resolution on the Commission's programme to improve financial management (Sound and Efficient Financial Management 2000, SEM 2000)

The European Parliament,

- having regard to Rule 148 of its Rules of Procedure,

- having regard to the report of the Committee on Budgetary Control (A4-0331/96),

A. whereas the Commission has launched a large-scale programme to improve financial management entitled SEM 2000,

B. whereas this programme signals a major change in the Commission's approach to management problems, since a critical review, open to contributions from the other institutions, has been embarked upon for the first time,

C. whereas Parliament, as the discharge authority, is among the institutions most closely concerned by this reform programme and whereas it is therefore opportune for it to play a part in analysing the problems and to advocate solutions in the context of wholehearted cooperation with the Commission and the Member States,

D. whereas Parliament is also a legislative and budgetary authority and whereas, in that capacity, it can provide the support that valid reform initiatives require,

E. whereas the institutions concerned should be informed systematically about the programme's progress,

F. whereas the reform of the Commission's organization and internal procedures should be encouraged and continued along the broad lines envisaged by the Commission (definition of budgetary priorities in advance, creation of a finances/resources structure within each Directorate-General to act as a counterweight to the management structure, improvements in the rules concerning the responsibility of staff); whereas, however, the details of this reform should be spelt out more clearly,

G. whereas it is essential to upgrade the financial management function in order to cope with the major challenges that will face the Community budget by the turn of the century (institutional changes, new financial perspectives, enlargement), and whereas such an upgrading will require a range of measures designed to enhance the skills and training of staff,

H. whereas the under-implementation of appropriations has reached substantial proportions and has serious negative effects such as the immobilization of resources, late implementation at the end of the financial year and the abandonment of programmes,

I. whereas the main obstacles to the proper implementation of appropriations are:

- inadequate information, which prevents realistic budget forecasts being made,

- delays stemming from failure to comply with the deadlines laid down in budget commitments and from problems with the availability of national co-financing,

- the multiplicity of national bodies responsible for implementation,

J. whereas an extension of the clearance of accounts, advocated by the Madrid European Council, is desirable:

- for the Structural Funds, to enable the accounting, management and control system to be rationalized,

- for traditional own resources, to tackle the problems associated with the failure to establish entitlements and the recovery of established entitlements,

K. whereas it is technically possible to apply the procedure for the clearance of accounts to the Structural Fund sector and traditional own resources, provided that the procedure is adapted to the specific characteristics of these sectors,

L. whereas any financial corrections which might be applied to the Structural Funds should not have the effect of reducing the impact of the financial instrument,

M. whereas the introduction of a system of control by sampling for the approval of the Financial Controller should satisfy the need for simplification, but would require an appropriate regulatory framework,

N. whereas action in response to Parliament's resolutions on discharge and budgetary control would have to be ensured not only within the Commission but also by the national administrations responsible for decentralized budget implementation,

O. whereas the Commission's initiatives regarding external controls (delegation of powers to national control bodies, joint programme of national and Community control authorities, introduction of a common control methodology) are to be encouraged,

P. whereas, however, these initiatives should involve the national control bodies to a greater extent,

Q. whereas fraudulent behaviour may be facilitated by certain legislative mechanisms and whereas steps should be taken both to eliminate such provisions from existing legislation and to prevent similar provisions being adopted in future,

R. whereas evaluation should be granted the greatest possible degree of both independence and retroactivity/conditionality in respect of the legislative, financial and budgetary decisions that it underlies,

S. whereas a comprehensive evaluation of SEM 2000 will subsequently be necessary to check whether this programme has been able to deal with the criticisms voiced by Parliament, the Council and the Court of Auditors in connection with the discharge procedure, the Statement of Assurance and resolutions on budgetary control,

T. whereas it will probably be necessary for Parliament to adjust its internal procedures regarding discharge and budgetary control to the various aspects of the reform,

1. Undertakes to contribute to the new programme in terms of analysis, proposals and, if necessary, legislative and budgetary support;

2. Calls on the Commission to furnish it systematically with information about the results of its own analyses and of those carried out in cooperation with the Member States and also about the practical steps adopted;

Procedures and organization within the Commission

3. Calls on the Commission:

(a) to continue the successful experiment of defining budgetary priorities in advance;

(b) to give the 'finances' sector a genuine role as a counterweight within each Directorate General, by giving it the function of evaluating the choices made by management, on the basis of a cost/benefit analysis;

(c) to merge the services responsible for the management of financial and human resources or, at least, to codify the procedures for coordination between those services;

(d) to establish rules laying down the principles for ensuring the disciplinary and financial liability of those involved in the budgetary procedure and laying down in particular the conditions under which the procedure will be initiated and conducted, and to allow the institutions to make appropriate arrangements for this within their own internal rules;

(e) to continue its work on upgrading the financial management function and to submit a report on measures taken, or those planned, to enhance the skills and training of staff;

Budget implementation

4. Calls on the institutions to establish within each of their directorates- general a finance unit based on the Commission model;

5. Calls on the Commission:

(a) to take steps to enhance the flow of information on the implementation of the EAGGF-Guarantee Section and the Structural Funds, to the benefit of itself, Parliament and the Council;

(b) to propose penalties in the event of the flow of information being irregular;

(c) to take steps to assure itself in advance of the availability of national co-financing;

(d) to comply rigorously with the deadlines laid down in the commitments entered into;

6. Proposes that the Member States should concentrate the role of coordination between the various national and regional administrations responsible for budget implementation in the hands of a single body and make that body their representative vis-à-vis the Commission;

7. Invites the Council and the Commission to discuss with Parliament the introduction of a procedure for providing up-to-date information about budget implementation and the financial forecasts, in order to improve implementation in the current financial year and adjust the budget forecasts for the next financial year;

Financial liability of the Member States as regards the implementation of the Community budget. Clearance of accounts and financial corrections - eligibility

8. Calls on the Commission to propose regulatory and administrative measures to adapt the system for the clearance of accounts to the specific characteristics of the Structural Funds and traditional own resources, and in particular:

(a) revision of Articles 23 and 24 of the coordinating regulation governing the Funds;

(b) codification, in a regulation, of the criteria for eligibility for structural measures;

(c) strengthening of the regulatory instruments and systematic use of accounting controls and checks on the national control and management systems with regard to traditional own resources;

Rationalizing controls and preventing fraud

9. Calls on the Commission to submit a proposal to make the Financial Regulation consistent with the system of control by sampling that it intends gradually to introduce;

10. Proposes to the Member States and the Commission that they should draw up a code of conduct on the provision of information to Parliament and the Council concerning action taken on their resolutions and recommendations concerning discharge and budgetary control;

11. Invites the Commission to involve the national control authorities more extensively in its programme in the interests of coordinating control activities and harmonizing the methods thereof;

12. Calls on the Commission to continue and extend to other sectors its work seeking out regulatory provisions conducive to fraud in agricultural legislation and with regard to own resources;

13. Proposes to the Commission and the Council the introduction, by mutual agreement, of a fraud prevention code under which the institutions would undertake to seek the opinion of a body responsible for budgetary control in advance of any proposal or deliberation;

Evaluation

14. Invites the Commission:

(a) to ensure the independent status of the evaluation units that it is planning to set up in the Directorates-General;

(b) to coordinate its evaluation programme with the timetable for legislative and budgetary decisions;

(c) to propose a reform of the Financial Regulation whereby all legislative decisions or any programmes with financial implications would be preceded by an evaluation;

(d) to check the adequacy of the appropriations earmarked for evaluation by budget sector and to report to Parliament thereon;

(e) to provide Parliament with all available evaluations, where appropriate by computerized means;

15. Invites the Member States and the Commission jointly to define more clearly, applying the subsidiarity principle, their respective roles regarding evaluation in each budget sector;

16. Indicates that it will apply the changes made necessary by the various aspects of the reform to the budgetary control and discharge procedures; calls now on the Member States to notify the discharge authority, via the Commission, of the action they have taken in response to the comments made in discharge resolutions and other resolutions relating to budgetary implementation;

17. Reserves the right to evaluate the future progress of SEM 2000, in order to ascertain whether it has made it possible to resolve the problems noted in the acts closing the discharge procedures and in other acts relating to budgetary control;

18. Instructs its President to forward this resolution to the Commission and the Council.