WRITTEN QUESTION E-2894/02

by Jens-Peter Bonde (EDD) to the Commission

(14 October 2002)

Subject: Bookkeeping in the Commission

1. Which DGs have signed their accounts without reservation, and which DGs have made reservations to the accounts?

2. Which DGs have double entry bookkeeping for all their transactions?

3. Which DGs use Excel spreadsheets for their bookkeeping?

4. By what date does the Commission expect double entry bookkeeping to be established in the various directorates and agencies?

5. When will there be a centrally kept bookkeeping system that includes the transactions from every DG and the decentralised agencies and bodies?

Answer given by Mr Schreyer on behalf of the Commission

(2 December 2002)

1. Each Directorate General (DG) in the annual activity report makes a declaration on the sound financial management of the available resources and the regularity and legality of the underlying transactions, not simply on the accounts. The DG for the Budget expressed two reserves in his 2001 declaration, one on the synchronisation, consistency and security of data for the financial information and one on the imperfect reflection of the complete situation of the assets and liabilities in the financial position. Both matters were already cited in the 2001 Working Paper as matters needing improvements. Modernisation measures have been taken since then, such as introducing new elements in the financial statements (registration and depreciation of fixed assets, value adjustments for entitlements, pension rights, entry of carryovers as charges and debts for the financial year), improvements in accounting information system (synchronisation and quality assurance, system interface, security access update and review, system failure tests, invoice register, etc.).

2. All transactions registered by DGs in their budgetary management tool are booked in the central accounting system (SAP R/3) on a double entry book keeping basis:

- Si2 is the budgetary management tool for the authorising services (DGs). Transactions are introduced by the Directorates General in Si2, either directly, or indirectly via transfer from local computer systems, through a standard interface. All transactions must be validated in Si2 by the authorising officer before transfer into R/3;

- SAP R/3 is used by the services of the Accountant and by the Financial Controller. This system is the official accounting system of the Commission in which budgetary accounting, general accounting (double entry book keeping), treasury management, the validation of third parties, recoveries and the emission of payments via the SWIFT(1) network are carried out.

The Commission's accounting framework and its accounting system were developed at a time when cash accounting was in general use across the public sector, and mainly served the purpose of budgetary accounting. The procedures also had to be designed to reflect the provisions of the Financial Regulation(2).

The Commission produces fully automatic cash based financial statements without any need for extra-accounting information.

3. and 4. The Commission has already introduced elements of accrual accounting in the presentation of its financial statements in recent years. Some of these accrual-based balance sheet data and information for annexes to the accounts are drawn from sources outside the official accounting system, for example the value of the pension system liabilities, or, in the Parliament's accounts, the value of its buildings.

This accrual-type information transmitted by the other DGs to the Accounting Officer of the Commission must be prepared following the established inventory and asset valuation rules. In order to facilitate the controls, harmonisation and aggregation of data, the DGs are requested to transmit their information under the form of pre-formatted Excel tables. As will thus be clear, this does not mean that the DGs keep their cash and general accounts in Excel.

The Commission has a centralised accounting system, which brings together all the transactions of each DG. This was one of the major reforms made possible by the introduction of Sincom2.

The accounts of the agencies are not included in this central system because their annual accounts are not consolidated with the accounts of the Communities, but are presented separately.

5. The Commission has already a centrally kept book keeping system that is used when drawing up the annual statement of accounts.

The annual accounts of the agencies will be consolidated in the year 2005(3). By this date, the Agencies will have had to apply the same accounting principles and rules as the Commission. Nevertheless, they are free to use the same accounting system as the Commission or to choose another system adapted to their size and needs.

(1) Society for Worldwide Interbank Financial Telecommunications.

(2) Council Regulation (EC, Euratom, ECSC) No 2335/95 of 18 September 1995 amending the Financial Regulation of 21 December 1977 applicable to the general budget of the European Communities, with regard to the special provisions applicable to research and technological development appropriations, OJ L 240, 7.10.1995.

(3) Article 121 of Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the Communities, OJ L 248, 16.9.2002.