Amended proposal for a Council Regulation (Euratom, ECSC, EC) amending the Financial Regulation of 21 December 1977 applicable to the general budget of the European Communities
Date: 1997-10-28
Institutions: European Commission
Subjects: financial control, financial management, financial regulation, general budget (EU), management audit

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels,  28.10.1997 
COM(97) 542 final 

96/0189 (CNS) 

AMENDED PROPOSAL FOR A COUNCIL REGULATION (Euratom, ECSC, EC) 
amending the Financial Regulation of 21 December 1977 applicable to the general budget 
of the European Communities 
(presented by the Commission pursuant to Article  189a(2) of the EC Treaty and the 
second paragraph of Article 119 of the Euratom Treaty) 

EXPLANATORY  MEMORANDUM 

1.  On  26  July  1996  the  Commission  approved  a  proposal1  for  the  amendment  of  the 
Financial  Regulation  of  21  December  1977  applicable  to  the  general  budget  of  the 
European  Communities2  on  the  basis  of  its  recommendations  under  the  plan  to 
improve financial management (SEM 2000). 

Parliament  delivered  its  opinion  on  this  proposal  at  the  14-18  July  part-session.  It 
called for a number of amendments, most of which the Commission is able to accept.3 

The Court  of Auditors was also consulted  under Article 209 of the EC Treaty.  It gave 
its opinion on  10 July  1997.4 

2.  With  the  exception  of  some  purely  stylistic  alterations,  the  main  amendments 
proposed  by  Parliament  which  the  Commission  has  incorporated  in  this  amended 
proposal concern the points listed below: 

(a)  the principle  that  where  commitments  are cancelled,  amounts  unduly paid  are  to 
be recovered and that interest will accrue in respect of those amounts as of the due 
date set out in the debit note; 

(b)  tightening of the provisions governing the delegation or sub-delegation of powers 
to  authorise  commitments  or payments,  to  require  that  the  rules  of procedure  of 
each institution specify  the powers delegated; 

(c)  the  provisions  covering  subcontracting  are  also  tightened  to  rule  out  the 
possibility of subcontracting in matters relating to the exercise of European public 
office; 

(d)  stricter accounting arrangements for the refund  of taxes; 

(e)  in  connection  with  Commission  decisions  which  constitute  commitment  of 
expenditure, the financial  controller shall take the appropriate  steps to ensure that 
the  individual  legal  commitments  correspond  to  the  budget  commitment  from 
which they derive and may apply spot checks; 

(f) 

the  financial  controller's  prior  approval  of  commitment  proposals  and  payment 
orders may also be granted on the basis of spot checks. 

3.  The  Commission,  however,  could  not  accept  Parliament's  other  amendments 

concerning: 

1  COM(96) 351 final. 

2  OJ L 356, 31.12.1977, p. 1. 

3  OJ .... 

4  OJ.... 

-  Article  15(6)  (supplementary  and/or  amending  budgets),  since  this  amendment 
concerns  a  matter  that  has  already  been  resolved  by  the  Council's  adoption  of 
Regulation (...)5; 

-  Article  22(4)  (in  part),  which  aims  to  prevent  the  exercise  of  a  discretionary 
power  under  a  Community  policy  being  delegated  or  subdelegated;  this 
amendment  is  inappropriate  since  only  delegation  within  each  institution  is 
concerned; 

-  Article  27(6),  since  Parliament's  amendment  is  inconsistent  with  the  budgetary 
principle of booking a net amount where prices include tax to be refunded  by the 
Member States; 

-  Article  36(3a)  (new),  since  this  amendment  deals  with  conflicts  of  interest.  In 
relation  to the Commission, the main party concerned  by the amendment,  this  is 
an area already covered by the SEM 2000 programme; 

-  Article  38(1 )(b),  since  there  is  no  justification  for  favouring  two  budgetary 

principles in the matter of the correct charging of expenditure; 

-  Article  39,  as  this  amendment  unduly  limits  the  power  of  each  institution  to 

overrule a decision by its financial controller to withhold approval; 

-  Article  58(3), as  it  is too  rigid  with  regard  to the treatment  of tenders  in  public 

procurement procedures. 

4.  The  Court  of  Auditors  opinion  made  no  concrete  amendments  to  the  Commission's 
initial  proposal,  but  some  of  the  Court's  comments  covered  amendments  by 
Parliament which the Commission has accepted (Articles 22(4a), 24, 37, 47,112). 

The Court  recommends  a complete revision  of  the  Financial  Regulation  and  offers  a 
critical analysis of the current text. The Commission  will certainly take account of this 
study and begin its own assessment of a possible recasting of the Financial  Regulation. 

* 

* 

The Commission, in accordance with Article  189a(2) of the EC Treaty and the second 
paragraph of Article 119 of the Euratom  Treaty, has drawn  up this amended  proposal 
which is being presented for the continuation of the procedure. 

Revision  of  the  Financial  Regulation  following  the  changes  to  the  system  for  the  clearance  of  the 
EAGGF Guarantee Section accounts. 

AMENDED PROPOSAL FOR A COUNCIL REGULATION  (Euratom, ECSC, EC) 
amending the Financial Regulation of 21  December 1977 applicable to the general 
budget of the European  Communities 

(presented by the Commission pursuant to Article  189a(2) of the EC Treaty and the second 
paragraph of Article  119 of the Euratom Treaty) 

In the  light  of the  opinions  of Parliament  and  the  Court  of Auditors  the  Commission  has 
amended its proposal as follows: 

INITIAL PROPOSAL 
(COM(96)351  final  of 26.7.1996) 

AMENDED  PROPOSAL 

THE  COUNCIL  OF  THE  EUROPEAN 
UNION, 

Having  regard  to  the  Treaty  establishing 
the  European  Coal  and  Steel  Community, 
and in particular Article 78h thereof, 

Having  regard  to  the  Treaty  establishing 
the European Community, and in particular 
Article 209 thereof, 

Having  regard  to  the  Treaty  establishing 
the  European  Atomic  Energy  Community, 
and in particular Article  183 thereof, 

Having  regard  to  the  proposal  from  the 
Commission, 

Having  regard  to  the  opinion  of  the  Court 
of Auditors, 

Having  regard 
European Parliament, 

to 

the  opinion  of 

the 

Whereas  the  conciliation  instituted  by  the 
joint  declaration  of  4 March  1975  by  the 
European  Parliament, the  Council  and the 
Commission  has  taken  place  within  a 
conciliation  committee; 

Whereas 
21 December  1977 

the  Financial  Regulation  of 
the 
applicable 

to 

INITIAL PROPOSAL 
(COM(96)351 final of 26.7.1996) 

AMENDED PROPOSAL 

budget 

general 
the  European 
of 
Communities1  ('the  Financial  Regulation') 
must  be  amended  to  improve  financial 
management within the institutions; 

Whereas the management  of  commitments 
is sometimes subject to considerable delays 
and  the  control  of  ongoing  commitments 
must therefore be strengthened; 

Whereas there must be strict control of the 
subdelegation  of  powers  to  sign  financial 
documents;  whereas  staff  who  exercise 
powers  which  are  not  delegated  or 
subdelegated to them or exercise powers in 
excess of the limits of the powers expressly 
conferred  on them must be  made  liable  to 
disciplinary  action and, where appropriate, 
to payment of compensation; 

Whereas,  if  management  of  Community 
programmes  is  subcontracted,  this must be 
governed  by  appropriate  provisions  to 
guarantee  the  transparency  of  operations 
and lay down the procedure for the entry in 
the  accounts  of  the  funds  generated  and 
available 
the 
in 
programmes in question; 

financing 

for  use 

the 

financial  controller 

Whereas 
is 
responsible  for  the  internal  audit  of  his 
institution;  whereas,  in  this  respect,  he 
must  be  consulted  about  setting  up  and 
altering  inventory  systems  and  systems  of 
financial  management  used  by 
the 
authorising  officers;  whereas  the  analysis 
of  financial  management  should  also  be 
submitted to the financial controller; 

Whereas  account  must  be  taken  of  the 
deriving 
requirements 
the 
computerised 
financial 
systems 
management; 

from 

of 

1  OJ  L  356,  31.12.1977,  p.  l.Regulation  last  amended  by  Council  Regulation  (EC,  Euratom,  ECSC) 

No 2335/95 of  18 September  1995 (OJ L 240, 7.10.1995, p. 12). 

INITIAL PROPOSAL 
(COM(96) 351 final of 26.7.1996) 

AMENDED  PROPOSAL 

Whereas  the  system  of  accounts  must  be 
improved; 

Whereas  the  Financial  Regulation  should 
contain  provisions  for  the  entry  in  the 
accounts  of 
traditional  own  resources, 
which  have  their  own  specific  features 
different  from  the  other  own  resources 
(VAT and GNP); 

the 

institution 

Whereas  the  legal  comrhitments  made  by 
and 
the 
accounting 
to  Financial 
submitted 
commitments 
the  central 
recorded 
Control  and 
accounts  must  correspond  exactly,  while 
leaving  a reasonable  length  of time  for  the 
conclusion  of  the  legal  commitments  in 
cases where the Commission's  decisions  of 
principle 
of 
as 
expenditure; 

commitment 

count 

in 

Whereas  time  limits  should  be  set  for  the 
procedure for overruling the withholding of 
approval by the financial controller; 

Whereas,  with  the  introduction  of  the 
statement  of  assurance,  it  is  essential  that 
the  discipline  required  with  regard 
to 
inventories be strengthened by laying down 
the  respective  duties  of  the  authorising 
officer  and the accounting  officer; 

for 

the 

procedure 

the 
Whereas 
authorisation  of transfers  between  chapters 
in  the  EAGGF  Guarantee  Section  should 
the  Commission 
be  adjusted 
additional  time  to present  its proposals  for 
transfer; 

to  allow 

the  Financial 
IX  of 
Whereas  Title 
Regulation  should  be  amended  to  bring  it 
into  line  with  the  criteria  of  transparency, 
publicity  and  competition  contained  in  the 
Council  directives  on 
the  award  of 
contracts  and  the  international  agreements 
to  which  the  European  Community  is  a 
signatory, 

INITIAL PROPOSAL 
(COM(96) 351 final of 26.7.1996) 

AMENDED  PROPOSAL 

HAS ADOPTED THIS REGULATION: 

Article 1 

1.  Article  1 is amended as follows: 

1.  Article  1  is amended as follows: 

(a) The first subparagraph  of paragraph 7 

(a) The first subparagraph  of paragraph 7 

is replaced by the following: 

is replaced by the  following: 

time 

"7.  The  legal  commitments  entered 
into  for  measures  extending  over 
more  than  one  financial  year  and  the 
corresponding commitment  proposals 
shall  contain  a 
for 
implementation  which  must  appear 
on  the  commitment  proposals  and 
must  be  specified  to  the  recipient  in 
due  form.  Any  commitments  not 
used  six  months  after  this  date  shall 
be  cancelled 
in  accordance  with 
Article 7(6)."; 

limit 

as 

Commitment 

"7. 
proposals 
submitted pursuant to Article 36 and 
legal 
corresponding 
Ihê 
commitments, 
the 
insofar 
implementation  thereof extends over 
more  than  one  financial  yearr  shall 
for 
time 
contain 
implementation  which  must  be 
notified  to the  recipient  in  due  legal 
form.  Commitments  not  used  six 
this  date  shall  be 
months  after 
cancelled 
accordance  with 
in 
Article 7(6)."; 

limit 

a 

(aa)  The 

third 
paragraph 7 
following: 

subparagraph 
replaced  by 

of 
the 

is 

The  Commission  may,  in  special 
circumstances, extend  the time  limit 
these 
implementation 
far 
of 
commitments,  where 
appropriate 
reasons are given by the recipients.': 

(b)  A  fourth  subparagraph  is  added  to 

(b)  A  fourth  subparagraph  is  added  to 

paragraph 7 as follows: 

paragraph 7 as follows: 

"In  this  case,  the  date  shall  be  put 
back  in  accordance  with  the  same 
procedure  as  that  provided  for  in 
Articles 36 
the 
commitment  proposal  and  shall  be 
the 
notified 
appropriate legal  form.". 

the  recipient 

for 

39 

to 

to 

in 

as 

"In  this  case,  the  date  shall  be 
adjusted  in accordance with the same 
procedure 
commitment 
proposal  and  shall  be  notified  to  the 
recipient  by  means  of  an  additional 
contract  or  in  any  other  appropriate 
legal  form.". 

the 

2.  Article 7 is amended as follows: 

(a)  In  the  first  indent  of  point  (a)  of 
paragraph 2 
is 
"which 
replaced  by  "relating",  the  semi 
colon  is  omitted  and  "these  amounts 
must" is replaced by "must"; 

relate" 

INITIAL PROPOSAL 
(COM(96) 351 final of 26.7.1996) 

AMENDED  PROPOSAL 

(b)  Paragraph 6 

i: 

replaced  by 

the 

(b)  Paragraph 6 

is 

replaced  by 

the 

following: 

following: 

commitments 

appropriations 

in  budget 
"When 
headings  where  there  is  a  distinction 
between  commitment  appropriations 
are 
and  payment 
cancelled -  as  a  result  of  total  or 
the 
partial  non-implementation  of 
projects 
they  were 
for  which 
earmarked -  in  any  financial  year 
after  that  in  which  the  commitment 
appropriations  were  entered  in  the 
budget,  the  appropriations  concerned 
shall, as a rule, lapse. In addition, any 
amounts  unduly  paid 
shall  be 
recovered.". 

for  which 

in  budget 
"When  commitments 
headings where there is a distinction 
between  commitment  appropriations 
and  payment  appropriations  are 
cancelled -  as  a  result  of  total  or 
partial  non-implementation  of  the 
projects 
they  were 
earmarked -  in  any  financial  year 
after  that  in  which  the  commitment 
appropriations  were  entered  in  the 
budget, the appropriations  concerned 
shall,  as  a  rule,  lapse.  Amounts 
unduly  paid  shall  be  recovered  in 
accordance  with 
the  procedures 
provided  for  in  Articles 28  and  29. 
Interest  shall  accrue  in  respect  of 
those amounts  as of the due date  set 
out  in  the  debit  note,  in  accordance 
implementing  measures 
with 
provided for in Article 139.". 

the 

\.  Article 22 is amended as follows: 

3.  Article 22 is amended as follows: 

(a)  A  fourth  subparagraph  is  added  to 

(a)  A  fourth  subparagraph  is  added  to 

paragraph 4: 

paragraph 4: 

been 

delegated 

"Any member of staff who authorises 
commitments  or  payments  without 
having 
or 
subdelegated  the necessary powers or 
in  excess  of  the  limits  of  the  powers 
expressly  conferred  upon  him  shall 
render  himself  liable  to  disciplinary 
action  and,  where  appropriate,  to 
payment 
in 
of 
accordance with Title V."; 

compensation 

of 

or 

subdelegated 

commitments 

staff  who 
"Any  member 
authorises 
or 
payments  without  having  been 
the 
delegated 
necessary powers in accordance with 
the  institutions'  rules  of  procedure 
or  in  excess  of  the  limits  of  the 
powers  expressly  conferred  upon 
him  shall  render  himself  liable  to 
action 
disciplinary 
and,  where 
of 
to 
appropriate, 
compensation  in  accordance  with 
Title V.  Each  institution  shall  adopt 
the 
shall 
rules  which 
procedure 
acts  of 
subdelegation.  Such  acts  shall  give 
obligatorily  details  of  the  powers 
conferred,"; 

payment 

issuing 

specify 

for 

INITIAL  PROPOSAL 
(COM(96) 351 final of 26.7.1996) 

AMENDED  PROPOSAL 

(b)A new paragraph is inserted: 

(b)  A new paragraph is inserted: 

"4a.  When 
Commission 
the 
subcontracts  the  implementation  of 
the  contracts 
certain  programmes, 
concluded  must 
all 
contain 
appropriate  provisions  for  ensuring 
the transparency  of the  subcontracted 
operations  in  accordance  with  the 
implementing  rules  provided  for  in 
Article 139. 

for 

for 

the 

the 

When 

ensuring 

contracts 

"4a. 
institutions 
commission  an outside person, body 
or  firm  to  perform  a  Community 
and 
activity. 
subcontracts  concluded 
that 
purpose  must contain  all  appropriate 
provisions 
the 
transparency  of  the  contracted  and 
subcontracted  operations,  and 
in 
particular  the  provisions  concerning 
the 
etc. 
generated,  the  keeping  of  accounts 
and  the recovery  of  amounts  unduly 
implementing  rules 
paid. 
The 
provided  for 
in  Article  139  shall 
establish the rules intended to ensure 
Ms 
regards 
management of the institutions, 

regulation  of 

transparency 

interest 

as 

the  payments  made 
generate 

the 
to 
If 
subcontractors 
interest 
which  may  be  used  to  finance  the 
programmes 
the 
following procedure shall be applied: 

question, 

in 

than  six  months, 

-  periodically,  at  intervals  of  no 
more 
recovery 
orders  shall be  issued  for  the  interest 
generated  by  these  funds,  which  will 
then  be  booked  to  the  statement  of 
revenue; 

-  at  the  same  time,  appropriations 
in 
the  corresponding  amount, 
for 
both  commitments  and  payments 
the 
shall  be  made  available 
of 
heading 
initial 
expenditure 
expenditure was charged.". 

in 
statement 
the 

the 
to  which 

of 

The  amounts  paid  to  subcontractors 
shall  be  credited  to  interest-bearing 
accounts.  Without  prejudice  to  any 
provisions  that  might  be  contained 
in specific  basic instruments  relating 
to  Community  policies  the  interest 
in  question  shall  be  used  to  finance 
these  activities.  To  that  ond,  the 
following 
be 
procedure 
applied: 

shall 

-  periodically,  at  intervals  of  no 
more 
than  six  months,  recovery 
orders shall be issued  for the interest 
generated by these  funds,  which will 
then  be  booked  to  the  statement  of 
revenue; 

-  at  the  same  time,  appropriations 
for  the  corresponding  amount,  in 
both  commitments  and  payments 
the 
shall  be  made  available 
of 
heading 
initial 
expenditure 
expenditure was charged.". 

in 
statement 
the 

the 
to  which 

of 

The  fourth  and  fifth  paragraphs  of 
the 
Article 24  are 
following: 

replaced  by 

4. 

The  fourth  and  fifth  paragraphs  of 
the 
Article 24  are 
following: 

replaced  by 

INITIAL PROPOSAL 
(COM(96) 351 final of 26.7.1996) 

AMENDED PROPOSAL 

inventory 

systems  of 

"The  financial  controller  must  be 
consulted  on 
the  setting  up  and 
alteration  of  the  accounting  systems 
the 
and 
institution  to  which  he  is  attached 
and on the setting up and alteration of 
the  systems  of financial management 
used by authorising  officers.  He shall 
have  access  to  the  data  of  such 
systems. 

Monitoring  shall  be  carried  out  by 
that  official  by  means  of  inspection 
of  the  files  relating  to  expenditure 
and revenue  and, if necessary,  on the 
spot. The financial controller  shall be 
responsible  for  the  internal  audit  of 
the institution, in accordance with the 
implementing  rules  provided  for  in 
Article 139.". 

5. 

The  following  paragraph  is  inserted 
after 
in 
the 
Article 25: 

paragraph 

fourth 

inventory 

systems  of 

"The  financial  controller  must  be 
consulted  on  the  setting  up  and 
alteration  of  the  accounting  systems 
the 
and 
institution  to  which  he  is  attached 
and  on  the  setting  up  and  alteration 
of 
financial 
management  used  by  authorising 
officers.  He shall  have  access  to  the 
data of such systems. 

systems 

the 

of 

Monitoring  shall  be  carried  out  by 
that  official  by  means  of  inspection 
of  the  files  relating  to  expenditure 
and revenue and, if necessary, on the 
spot.  The  financial  controller  shall 
be  responsible  for  the  internal  audit 
of the institution, in accordance with 
the  implementing  rules  provided  for 
in  Article  139.  That  audit  shall 
include 
the 
effectiveness  of the management and 
control  systems  and  verification  that 
operations  have  been  effected  in  a 
regular manner.". 

assessment 

of 

The  following  paragraph  is  inserted 
after 
in 
the 
Article 25: 

paragraph 

fourth 

"The  accounting  officer  must  be 
consulted  on  the  setting  up  and 
alteration  of  the  accounting  systems 
of  financial  management  used  by 
authorising  officers,  where 
such 
systems  are  intended  to  supply  data 
to  the  central  accounts.  He  shall,  at 
his request, have access to the data of 
such systems.". 

"The  accounting  officer  shall  be 
consulted  on  the  setting  up  and 
alteration  of  the  accounting  systems 
of  financial  management  used  by 
authorising  officers,  where  such 
systems  are  intended  to  supply  data 
to  the  central  accounts.  He  shall,  at 
his  request,  have  access  to  the  data 
of  such  systems.  The  accounting 
officer  shall also be consulted on the 
the 
setting  up  and  alteration  of 
inventory systems.". 

6.  Article 27 is amended as follows: 

>.  Article 27 is amended  as  follows: 

(a)  In  paragraph  2,  point  (f)  is  deleted 
and points  (g) and  (h) become  points 
(f) and (g) respectively. 

(a)  In  paragraph  2,  point  (f)  is  deleted 
and points (g) and (h) become points 
(f) and (g) respectively. 

INITIAL PROPOSAL 
(COM(96) 351 final of 26.7.1996) 

AMENDED  PROPOSAL 

(b)  The  following  paragraph  is  inserted 

(b)  The  following  paragraph  is  inserted 

after paragraph 2: 

after  paragraph 2: 

"3.  Notwithstanding  Article 4,  where 
products  or  services  supplied  to  the 
Commission  incorporate  taxes  which 
are  refunded  by  Member  States 
pursuant to the Protocol on  Privileges 
and Immunities, the net price shall be 
charged to the budget. 

The  refund  of  these  taxes  shall  be 
monitored 
the 
separately 
accounts."; 

in 

incorporate 

"3. Notwithstanding Article 4, where 
products  or  services  supplied  to  the 
Commission 
taxes 
which  are  refunded  by  Member 
States  pursuant  to  the  Protocol  on 
Privileges  and  Immunities,  the  net 
price shall be charged to the budget. 

in 

The  refund  of  these  taxes  shall  be 
separately 
monitored 
the 
accounts. 
Such  refund  shall  be 
recorded  by  entry  of  the  definitive 
amount  in  the  institution's  accounts 
at the latest in the year following  the 
financial  year 
it  was 
collected,"; 

in  which 

(c)  Paragraphs 3 and 4 are renumbered  4 

(c)  Paragraphs 3  and  4  are  renumbered 

and 5 respectively; 

4 and 5 respectively; 

(d)  In paragraph  5, which  is  renumbered 
6,  the  letter  (g)  is  replaced  by  the 
letter  (f)  and  the  letter  (h)  by  the 
letter (g). 

(d) 

In paragraph  5, which is renumbered 
6,  the  letter  (g)  is  replaced  by  the 
letter  (0  and  the  letter  (h)  by  the 
letter (g). 

K  The  following  paragraph  is  added  to 

Article 28: 

"3.  Notwithstanding  paragraph  1,  no 
forward  estimate  shall  be  made  for 
the  own  resources  defined  in  Article 
2(1)  and  (2)  of  Council  Decision 
94/728,  which  are  paid  at  fixed 
the  Member  States, 
intervals  by 
before  the  Member  States  make  the 
amounts  available  directly  to  the 
Commission.  The  authorising  officer 
responsible  shall  issue  a  recovery 
order for them. 

The  recovery  orders  for  the  revenue 
referred  to  at  Article  2(1 )(a)  and  (b) 
of that Decision shall be based on the 
monthly  statements  of  entitlements 
established  by  the  Member  States, 
which they send to the Commission. 

10 

INITIAL PROPOSAL 
(COM(96) 351 final of 26.7.1996) 

AMENDED PROPOSAL 

they  have 

The  recovery  orders  shall  be  sent  to 
the  financial  controller  for  approval. 
After 
his 
approval,  they  shall  be  registered  by 
the  accounting  officer  in  accordance 
with the implementing rules provided 
for in Article 139.". 

received 

8.  Article 36 is amended as follows: 

8.  Article 36 is amended as follows: 

(a)  The 

correction 

in 

concerns 
version. 

the  French 

paragraph 1 
language 

(a)  The 

correction 

in  paragraph 1 
language 

the  French 

concerns 
version. 

(b)  Paragraphs 2  and  3  are  replaced  by 

(b)  Paragraphs 2  and  3  are  replaced  by 

the  following: 

the  following: 

by 

taken 

decisions 

"2.  Without  prejudice  to  Article 99, 
the 
the 
Commission  in  accordance  with  the 
provisions  authorising 
it  to  grant 
financial  aid  from  the  various  funds 
or  similar  operations  shall  constitute 
commitments  of  expenditure.  Unless 
these  decisions  stipulate  a  different 
in 
time 
accordance  with  the  abovementioned 
provisions,  these  commitments  shall 
cover 
the 
legal 
corresponding 
commitments  up  to  31 December  of 
year  n+L 

cost 
individual 

implementation 

limit  for 

total 

the 

of 

by 

taken 

decisions 

"2.  Without  prejudice  to Article 99, 
the 
the 
Commission  in  accordance  with  the 
provisions  authorising  it  to  grant 
financial aid  from  the  various  funds 
or similar operations  shall  constitute 
commitments of expenditure. Unless 
these  decisions  stipulate  a  different 
in 
time  limit  for  implementation 
the 
accordance 
abovementioned  provisions, 
these 
commitments  shall  cover  the  total 
cost  of the  corresponding  individual 
legal 
to 
31 December o f year  n+I. 

commitments 

with 

up 

During  the period  of  implementation 
referred  to  in  the  first  subparagraph, 
the  conclusion  of  each  individual 
legal  commitment  shall  be  registered 
by  the  authorising  officer 
in  the 
central  accounts  and  booked  to  the 
commitment  referred  to  in  the  first 
subparagraph. 

During the period  of  implementation 
referred  to  in the  first  subparagraph, 
the  conclusion  of  each  individual 
legal commitment shall be registered 
by  the  authorising  officer 
in  the 
central  accounts  and  booked  to  the 
commitment  referred  to  in  the  first 
subparagraph. 

The  financial  controller  shall  take 
the  necessary  steps  to  guarantee 
adequate  control  of  the  separate 
legal commitments. 

11 

INITIAL PROPOSAL 
(COM(96) 351 final of 26.7.1996) 

AMENDED PROPOSAL 

The unused  balance  shall  be released 
after the time limit is laid down. 

The unused balance shall be released 
after the time limit is laid down. 

exact 

account 

The  procedure 
implementing 
for 
paragraphs  1 and  2  shall  ensure  that 
is  kept  of 
an 
commitments  and  authorisations  in 
terms  of  actual  needs  and  that  the 
commitments 
specific 
the  overall  budget 
correspond 
commitment  provided  for  by 
the 
Commission  decision. The  procedure 
the 
determined 
shall 
implementing  rules  provided  for  in 
Article 139.". 

legal 
to 

by 

be 

3. 

account 

The  procedure 
implementing 
for 
paragraphs  1 and  2 shall  ensure  that 
is  kept  of 
an  exact 
commitments  and  authorisations  in 
terms of actual  needs andr  as regards 
paragraph 2.  that  the  specific  legal 
commitments  correspond 
the 
to 
overall 
commitment 
provided  for  by  the  Commission 
decision.  The  procedure  shall  be 
determined  by 
implementing 
the 
rules provided for in Article 139.". 

budget 

£&  The following  paragraph is added to 

Article 37: 

in 

for 

individual 

to 
subparagraph 

"The  proposals  for  commitments 
referred  to  in  Article 3 6m  and  the 
legal 
proposals 
commitments  referred 
the 
.of 
second 
Article 36(2)  may  be  subject  to  spot 
checks.  Such checks shall be carried 
out  under  a  system  which  identifies 
risk  sectors, in which there is a high 
probability  that  the  conditions  set 
in  Article 38(1)  will  not  be 
out 
Individual  commitments 
fulfilled, 
shall  be  checked  systematically  in 
risk sectors.". 

In  Article 39,  the  second  and  third 
paragraphs  are 
the 
following: 

replaced  by 

"Cases  where  approval  is  withheld 
and  the  authorising  officer  maintains 
his  proposal  shall  be  referred  for  a 
decision  to  the  superior  authority  of 
institution  among 
the  competent 
those 
two 
first 
paragraphs  of  Article  22  within  two 
months  of the date of the decision  to 
withhold approval. 

listed 

the 

in 

12 

INITIAL  PROPOSAL 
(COM(96) 351 final of 26.7.1996) 

AMENDED  PROPOSAL 

Except  where  the  availability  of  the 
appropriations  is  in  doubt,  the  said 
superior  authority may, by a decision 
stating the full  reasons therefor,  taken 
on  its  sole  responsibility,  overrule 
such  a refusal.  This  decision  shall  be 
final and binding with effect  from  the 
approval  was 
date 
withheld. 
taken  by 
It  must  be 
15 February  of  year  n+1.  It  shall  be 
communicated  for  information  to  the 
financial  controller.  The  superior 
authority  of  each  institution  shall 
inform  the  Court  of  Auditors  of  all 
such decisions within one month.". 

on  which 

10. 

shall  be  added 

In  the  third  indent  of  Article 44,  the 
after 
following 
"national  currency":  "However, when 
payment  orders  are  sent  to the  banks 
computerised 
of 
by 
procedures,  the  amount  need  not  be 
expressed in words,". 

means 

10a.  A  third  subparagraph  is  added  to 

Article 46(1) as follows; 

to  authorise 

"The  decision 
the 
balance  shall  be  adopted  within  the 
time 
in 
laid 
limit 
Article 1(7),", 

down 

10b.  A 

third  paragraph 
Article 47 as follows: 

is  added 

to 

"Prior approval  may be given on the 
basis  of a spot  check;  this  shall be 
carried  out  under  a  system  which 
identifies risk sectors, in which there 
the 
is  a  high  probability 
conditions  set  out  in  the  second 
paragraph  will  not  be 
fulfilled. 
Payment  orders  shall  be  checked 
systematically in risk sectors.". 

that 

13 

INITIAL PROPOSAL 
(COM(96) 351 final of 26.7.1996) 

AMENDED  PROPOSAL 

iOc.  The  following  article  is  inserted  in 

Title IV; 

Article S5a 

"The  power  and  authority  of  the 
institutions  to  conclude  contracts  in 
the  performance  of  tasks  involving 
the exercise of public office  may not 
be  ceded  or  transferred  in  any  way 
by  the  institutions  to  persons  or 
bodies  other 
the  European 
than 
Community's  institutions  or  bodies 
set by the European  Community." 

Two  new  paragraphs  are  added  to 
Article 
second 
after 
paragraph: 

the 

65 

"The 
inventory  system  shall  be 
established by the authorising  officer 
with  the  technical  assistance  of  the 
accounting  officer.  This  inventory 
system, which  shall  be  administered 
the  authorising  officer,  shall 
by 
provide 
system  of 
accounts  with  all  the  appropriate 
information  needed  to  draw  up  the 
institution's balance sheet. 

the  central 

11.  Three  new  paragraphs  are  added  to 
Article 65 after the second paragraph: 

11 

"The  inventory  system  established 
and  administered  by  the  authorising 
officer  with  the  technical  assistance 
of  the  accounting  officer  and  under 
his 
shall 
provide 
system  of 
accounts  with  all  the  appropriate 
information  needed  to  draw  up  the 
institution's balance sheet. 

the  central 

supervision 

technical 

shall 

For  this  purpose,  the  inventory  and 
accounting 
be 
systems 
organised  in such  a way  as to  ensure 
the  concordance  of  the  information 
they  each  contain  and  the  possibility 
that  operations  can  be  audited  from 
the  time  the  equipment  is  acquired 
and  entered  in  the  inventory  to  the 
time  when  it  is  decommissioned  or 
scrapped. 

to 

The  institutions  shall  each  adopt,  for 
their  own  purposes,  provisions 
the 
the  keeping  of 
relating 
equipment 
their 
recorded 
respective  balance  sheets  and  shall 
departments 
the 
determine 
responsible for this task.". 

in 

to 

The institutions shall each adopt,  for 
their  own  purposes,  provisions 
the  keeping  of 
the 
relating 
equipment 
their 
recorded 
respective  balance  sheets  and  shall 
departments 
the 
determine 
responsible 
inventory 
for 
system.". 

the 

in 

14 

INITIAL PROPOSAL 
(COM(96) 351 final of 26.7.1996) 

AMENDED PROPOSAL 

12.  Article 70 is amended as follows: 

(a)  In  the  first  paragraph,  the  word 
"budgetary"  shall  be  replaced  by 
"expenditure and revenue". 

(b)  In the  second  paragraph,  point  (a)  is 

replaced by the following: 

"(a) 

accounts  of  expenditure 
and  revenue,  subdivided 
into 
separate 
two 
subcategories: 

-  accounts  of  budgetary 
expenditure 
and 
revenue,  which  allow 
implementation  of  the 
budget  to  be  monitored 
and  the  balance  for  the 
financial  year 
to  be 
determined, 

of 
non-
-  accounts 
expenditure 
budgetary 
revenue,  which 
and 
complement 
the 
previous  accounts  and 
can be used to produce a 
broader 
accounting 
result.". 

13.  The following article is inserted: 

"Article 70a 

in  the 
The  rules  for  the  entry 
accounts of the depreciation of assets 
and  the  rules  for  writing  down  the 
value  of  assets  and  for  constituting 
provisions shall be determined by the 
implementing  rules  provided  for  in 
Article 139.". 

15 

INITIAL PROPOSAI, 
(COM(96)351 final of 26.7.1996) 

AMENDED PROPOSAL 

13a,  Article 76 
following; 

is  replaced  by 

the 

and  administrators 

"The liability of authorising officers, 
financial  controllers,  accounting 
accounting 
Officers, 
assistant 
Officers 
of 
advance  funds to disciplinary  action 
if  necessary,  payment  of 
and, 
compensation may be determined in 
accordance  with  the  provisions  of 
Articles 22 and 86 to 89 of the Staff 
Regulations  of  officials  of 
the 
European Communities. 

any 

reports 

All  relevant  data  or  information. 
including 
and 
withholdings  of  approval  by  the 
shall  be. 
controller, 
financial 
communicated 
the  authority 
[Q 
empowered to initiate  the procedure 
concerning 
and 
financial  responsibility",. 

disciplinary 

14.  Article 79 
following: 

is 

replaced  by 

the 

to 

its 

transmit 

financial 

controller, 

"Each institution  shall, not later than 
1  March, 
the 
Commission,  after  submitting  them 
to 
the 
information  required  for  drawing up 
the revenue  and expenditure  account 
sheet  and  a 
and 
contribution  to  the  analysis  of  the 
financial  management  referred  to  in 
Article 80.". 

the  balance 

In Article 104(2), "one month before 
31 January" 
by 
"luJanuary". 

replaced 

is 

15. 

In  Article  104(2),  "one  month' 
replaced by "21  days". 

is  15. 

16 

INITIAL PROPOSAL 
(COM(96) 351 final of 26.7.1996) 

AMENDED  PROPOSAL 

16.  Article  109(3) 
following: 

is  replaced  by 

the 

of 

the 

and 

shall  notify 

"It  shall  transmit  to  the  Commission 
the  results  of  the 
for  agreement 
examination 
tendering 
procedure  and  a  proposal  for  the 
award  of  the  contract.  It  shall  sign 
contracts,  additions  to  contracts  and 
estimates 
the 
Commission  thereof.  For  contracts, 
additions  to  contracts,  and  estimates, 
the  Commission,  where  appropriate, 
individual 
shall 
commitments  in  accordance  with  the 
procedures  laid  down  in  Articles  36 
to  39.  Individual  commitments  shall 
the  commitments 
count 
under 
financing  agreements 
provided  for  in  Article  106(2),  in 
second 
accordance  with 
subparagraph of Article 36(2).". 

towards 
the 

enter 

into 

the 

17.  Article  112 
following: 

is 

replaced  by 

the 

17.  Article  112 

is  replaced  by 

the 

following: 

Title IV, 

"Notwithstanding 
this 
section  shall  apply  to  cases  in  which 
the  Commission,  in  connection  with 
external  aid financed from the budget 
of  the  European  Communities,  acts 
as contracting  authority  in  the  award 
of works,  supply  or service  contracts 
not covered by the Council  directives 
coordinating 
the  award  of  public 
works,  supply  or  service  contracts  or 
by  the  Plurilateral  Agreement  on 
Government  Procurement  concluded 
Trade 
the 
within 
Organisation.". 

World 

"The provisions  of this  section  shall 
apply instead of those under Title IV 
to  cases  in  which  the  Commission, 
in  connection  with  external  aid 
financed  from  the  budget  of  the 
European  Communities,  acts  as 
contracting  authority in the award of 
works,  supply  or  service  contracts 
not covered: 

- 

- 

the 

by 
directives 
Council 
coordinating  the  award  of  public 
works, supply or service contracts or 

by  the  Plurilateral  Agreement  on 
Government  Procurement  concluded 
Trade 
the  World 
within 
Organisation.". 

17 

INITIAL PROPOSAL 
(COM(96) 351 final of 26.7.1996) 

T 

AMENDED PROPOSAL 

18.  Article  113 
following: 

is 

replaced  by 

the 

"The procedure to be followed  for the 
award  of  works,  supply  or  service 
contracts financed from  the budget of 
for 
the  European  Communities 
recipients  of  external  aid  shall  be 
specified  in  the  financing  agreement 
or 
the 
following principles.". 

the  contract,  subject 

to 

Article 2 

This Regulation shall  enter into  force 
on  the  seventh  day  following 
its 
publication  in the  Official Journal  of 
the European Communities. 

This  Regulation  shall  be  binding  in 
its entirety  and directly  applicable  in 
all Member States. 

Done at..., 

For the Council 

The President 

18 

ISSN 0254-1475 

COM(97) 542 final 

DOCUMENTS 

EN 

12  oi 

Catalogue number  :  CB-CO-97-570-EN-C 

ISBN 92-78-26286-2 

Office  for Official  Publications of the European Communities 

L-2985 Luxembourg 

19