WRITTEN QUESTION E-0207/99

by Heidi Hautala (V) to the Commission

(12 February 1999)

Subject: Payments to national organisations

There are problems with the payment of subsidies allocated to national organisations in the European Union. In the reply of 10 September 1998 (E-2156/98) made on behalf of Commissioner Erkki Liikanen, it was stated said that decisions on subsidies were made on the basis of legislative texts and ultimately in accordance with Commission instructions and guidelines. The questioner was urged to consult the unit which had taken the decision on the subsidy.

It is hard for national organisations to obtain information on why payment is delayed even though the organisation's closing accounts and report have been approved by the Commission. Numerous contacts by post, fax and telephone fail to produce a result. The delay may be as much as a year and the organisation is not able to find out why the promised funding does not arrive. This causes the organisations not only operational problems with the completion of their projects but also accounting problems.

Can the Commission department which has dealt with and monitored the project follow up and hasten the activities of the funding department? How does the Commission monitor payments from its funding unit? Can the Commissioner provide instructions and guidelines on project funding?

Answer given by Mr Liikanen on behalf of the Commission

(28 April 1999)

The Commission's implementation of the budget is based on the principle that the functions of authorising officer, accountant and financial controller are separate. In organisational terms this principle is reflected in the separation of these functions in the different directorate-generals, under the authority of the various Commissioners. The authorising departments, or operational directorates-general, administer the projects and are empowered to commit expenditure and issue payment orders. The authorising officers must obtain the approval of the Financial Controller for implementation.

Over the past few years the Commission has taken a number of steps, under the SEM 2000 programme (Sound and Efficient Management), to eliminate delays in the payment of Community grants wherever possible.

The Commission closely monitors the performance of its departments in the area of payment times. In 1998 the average time taken for payments was 55,1 days. The period is measured from the day on which a valid invoice or request for payment is received to the day when the Commission's bank carries out the instruction to pay the beneficiary. The figures show that most of the delays are attributable to the authorising departments. They also show that 74 % of all Commission payments are made within 60 days and 15 % take more than 90 days. The Commission has set its departments the target that 95 % of payments should be made within 60 days and intends to continue its efforts to ensure that this target is met.

Internal statistics also show that, except where delays are due to factors attributable to the beneficiaries themselves (incorrect bank details, insufficient grounds, missing or inadequate supporting documents, failure to comply with the terms of the contract), payments are made within reasonable deadlines in terms of standard business practice.

Furthermore, on 10 June 1997 the Commission adopted a communication on payment times and penalty interest(1), requiring the Commission to pay penalty interest, at the request of the beneficiary, if payment is not made within a period regarded as appropriate in the light of standard business practice (60 days), provided that the beneficiary has complied with all the relevant contractual provisions. This obligation must be stipulated on all contracts concluded by the Commission, with effect from the date of the communication. In addition, the Commission proposed an amendment to the Financial Regulation(2) and its implementing provisions so that creditors who receive late payment have the right to claim penalty interest.

The Commission recently commissioned an external study of payment times, which has just been completed. The results and recommendations of this will form the subject of a Commission communication in the near future.

On the operational front, the Commission has continued its efforts to improve financial management by introducing its new computerised accounting system (Sincom2). Once fully operational, this system should ensure complete security and greater efficiency in the execution of payments.

The rules on budget implementation may be found in the Financial Regulation and its implementing provisions.

(1) SEC(97) 205.

(2) SEC(98) 1228 final.