WRITTEN QUESTION P-2521/01

by Diemut Theato (PPE-DE) to the Commission

(11 September 2001)

Subject: Detailed rules for the implementation of the Financial Regulation

Pursuant to Article 139 of the Financial Regulation, the Commission is to adopt implementing measures for the Financial Regulation in consultation with the European Parliament and the Council.

On 21 August 2001, the Commission adopted Regulation (EC) No 1687/2001(1) amending the detailed rules implementing the Financial Regulation. The majority of the amendments called for by Parliament at its sitting of 15 May 2001 to the Commission's original proposal (SEC(2000) 1890) were not incorporated.

1. Will the Commission state:

(a) Why it did not attempt to seek an agreement between Parliament, the Council and itself on the amendments to be made?

(b) Why it did not consult Parliament again, as Parliament asked in its resolution of 15 May 2001?

2. Will it also state:

(a) Why it did not incorporate Parliament's calls for the safeguarding and strengthening of the internal auditor's independence (in particular as regards a right to bring action similar to that of the financial controller?

(b) Why it went back on its original proposal and failed to include provisions pursuant to which the internal auditor, in addition to evaluating the effectiveness of management and control systems, was also to have verified the regularity of financial operations and the soundness of financial management?

(c) Why it has not acted in accordance with the new Article 24a of the Financial Regulation(2), under which implementing measures are to be laid down pursuant to Article 139 on the verification, by means of internal audit, of the regularity of budget management?

(1) OJ L 228, 24.8.2001, p. 8.

(2) OJ L 111, 20.4.2001, p. 2.

Answer given by Mrs Schreyer on behalf of the Commission

(5 November 2001)

Parliament adopted ten amendments in its opinion of 15 May 2001 to the Commission's proposed Regulation amending Commission Regulation (Euratom, ECSC, EC) No 3418/93 of 9 December 1993 laying down detailed rules for the implementation of certain provisions of the Financial Regulation of 21 December 1977(1). This opinion was drawn up after discussions and contacts in particular with Parliament's Committee on Budgetary Control and its rapporteur. Extensive discussions took place also with the Council, the Court of Auditors and the Economic and Social Committee who each adopted opinions.

Commission Regulation (EC) No 1687/2001 of 21 August 2001 amending Commission Regulation (Euratom, ECSC, EC) No 3418/93 of 9 December 1993 laying down detailed rules for the implementation of certain provisions of the Financial Regulation of 21 December 1977(2) was adopted on the basis of these opinions.

1. The Regulation of 21 August 2001 takes over the substance of most of Parliament's amendments, including those relating to the internal auditor, and a number of amendments from the Council, from the Court of Auditors and also from the Economic and Social Committee.

The Commission did, however, have to reject some amendments, including some relating to the internal auditor, either because they were not consistent with the rules governing relations between the institutions or with the current Financial Regulation, or because they were at odds with the principle of sound financial management, for instance on how to deal with conflicts of interest.

Article 139 of the Financial Regulation provides for the Commission to adopt the implementing rules after consultation of Parliament and Council and once the opinions of other institutions have been adopted. This was confirmed in opinion No 22/2001 of 23 February 2001 which Parliament's legal service delivered in connection with the adoption of Parliament's resolution on the updating of the Regulation laying down detailed rules for the implementation of the Financial Regulation. Once it has examined the opinions of the other institutions, the Commission adopts its final regulation. Reconsulting the other institutions is not foreseen.

2. Parliament adopted an amendment inserting seven articles relating to the internal auditor:

- The proposals which concerned Articles 43c to g duplicated the provisions of Article 24a of the Financial Regulation and Articles 36, 39, 40, 41 and 43 of the Regulation laying down the implementing rules. Article 24a of the Financial Regulation extends to the internal auditor the provisions applicable and still in force for the financial controller, as regards in particular the independence and the guarantees he enjoys

- To rewrite provisions already existing in the same section of the regulation would have offended the rules of good legislative drafting. The provisions, and in particular the guarantees of independence, are nevertheless applicable to the internal auditor by virtue of the references in Article 24a of the Financial Regulation.

- Guarantees are also written into the Charter of the Internal Audit Service adopted by the Commission on 31 October 2000.

- As regards the auditor's duties, the Commission's initial proposal carried no reference to the verification of the regularity of operations, contrary to what is stated in the question. The Commission did not therefore go back on anything. On the question of detailed arrangements, both the Committee on Budgetary Control and the full House rejected the amendments setting a minimum rate of control.

- A detailed description of the methods for conducting internal audits would add nothing to the international professional standards applicable, which are sufficient to guarantee the professional nature of the service.

- The Commission Regulation does, however, cover the analysis of sound financial management, a broader concept than the regularity of budget management referred to in the question.

- Finally the amendment proposing that an Article 43b be inserted could not be accepted as it was not consistent with the new Article 24a of the Financial Regulation, which makes no provision for the appointment of subordinate auditors.

3. Nevertheless, the Commission did take over the substance of the majority of the amendments of Parliament, and will continue to give all due weight to the opinion of Parliament in its decisions on such implementing rules.

(1) OJ L 315, 16.12.1993.

(2) OJ L 228, 24.8.2001.