Council Regulation (EC, ECSC, Euratom) No 2548/98 of 23 November 1998 amending the Financial Regulation of 21 December 1977 applicable to the general budget of the European Communities
Date: 1998-11-23
Institutions: Council of the European Union
Subjects: commitment of expenditure, financial control, financial regulation, general budget (EU), management audit

28. 11. 98

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Official Journal of the European Communities

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I

(Acts whose publication is obligatory)

COUNCIL REGULATION (EC, ECSC, EURATOM) No 2548/98

of 23 November 1998

amending the Financial Regulation of 21 December 1977 applicable to the
general budget of the European Communities

THE COUNCIL OF THE EUROPEAN UNION,

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

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
Atomic Energy Community, and in particular Article 183
thereof,

Having regard to the proposal from the Commission (1),

Having regard to the opinion of the European Parlia-
ment (2),

Having regard to the opinion of the Court of Auditors (3),

Whereas the conciliation instituted by the Joint Declara-
tion of 4 March 1975 by the European Parliament, the
Council and the Commission has taken place within a
conciliation committee;

Whereas the Financial Regulation of 21 December 1977
applicable to the general budget of
the European
(hereinafter ‘the Financial Regulation')
Communities (4)
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 to
that end the provision in Article 1(7),
inserted when
Regulation (Euratom, ECSC, EEC) No 610/90 of 13
March 1990 amending the Financial Regulation of 21
December 1977 applicable to the general budget of the
European Communities (5) was
should be
supplemented by providing for general provisions on
cancelling appropriations
in Articles 1(7) and 36(2);
whereas however it should be provided that these provi-
sions do not apply to the Structural Funds or the Cohe-

adopted,

(1) OJ C 296, 8. 10. 1996, p. 13 and OJ C 359, 25. 11. 1997,

p. 9.

(2) OJ C 286, 22. 9. 1997, p. 330.
(3) Opinion delivered on 9 and 10 July 1997 (not yet published

in the Official Journal).

(4) OJ L 356, 31. 12. 1977, p. 1. Regulation as last amended by
Regulation (EC) No 2444/97 (OJ L 340, 11. 12. 1997, p. 1).

(5) OJ L 70, 16. 3. 1990, p. 1.

sion Fund, so as not to affect the possible development of
particular provisions concerning them and having regard
to the need to ensure consistency between them all;

Whereas there must be strict control of the delegation
and subdelegation of powers to sign; whereas staff who
exercise powers which are not delegated or subdelegated
to them or who 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 to lay down the procedure for the entry in the
accounts of the funds available for use in financing the
programmes in question;

Whereas the financial controller is responsible for the
internal audit of his institution; whereas, in this respect,
he must be consulted about setting up and altering in-
ventory 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;

the possibilities
Whereas account must be taken of
deriving from computerised systems of financial manage-
ment;

Whereas the system of accounts must be improved;

Whereas
the Financial Regulation should contain
adequate provisions for the entry in the accounts of tradi-
tional own resources, which have their own specific
features as compared with the other own resources (VAT
and GNP);

Whereas the legal commitments made by the institution
and the accounting commitments submitted to financial
control and recorded in the central accounts must cor-
respond exactly, while leaving a reasonable length of time
for the conclusion of the legal commitments in cases

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Official Journal of the European Communities

28. 11. 98

where the Commission’s decisions count as global
budgetary commitments;

Whereas the degree and nature of the risks incurred as a
result of commitments and payments vary according to
the sector involved; whereas consequently the financial
controller should, while maintaining a minimum prior
control over all the commitments and payments for all
recipients as well as a systematic control
in the risk
sectors, be able to make distinctions in the methods of
control in such a way as to enable an allocation of means
while taking account of
the risks; whereas systematic
control must be maintained or reinstated in the risk
sectors;

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

it

is essential

Whereas, with the introduction of the statement of assur-
ance,
the discipline required with
regard to inventories be strengthened by laying down the
respective duties of
the authorising officer and the
accounting officer;

that

Whereas the procedure for the authorisation of transfers
between chapters
in the EAGGF Guarantee Section
should be adjusted by allowing the Commission addi-
tional time to present its proposals for transfer;

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

HAS ADOPTED THIS REGULATION:

Article 1

The Financial Regulation is amended as follows:

1. in Article 1(7):

(a)

the first subparagraph shall be replaced by the
following:

the

and

corresponding

The legal commitments entered into for
‘7.
measures extending over more than one financial
year
commitment
proposals shall contain a time limit for imple-
mentation. This date must be notified to the reci-
pient in the appropriate legal form. The parts of
those commitments not used six months after this
date shall be cancelled in accordance with Article
7(6). However, the third sentence of this subpara-
graph shall apply to neither the Structural Funds
nor the Cohesion Fund.';

(b) the third subparagraph shall be replaced by the

following:

‘The Commission may, in special circumstances,
adjust the time limit for implementation of these
commitments, where appropriate reasons
are
given by the recipients.';

(c) the following subparagraph shall be added:

‘In this case, the date shall be adjusted in accord-
ance with the same procedure as that provided for
in Articles 36 to 39 for the commitment proposal
and shall be notified to the recipient in the appro-
priate legal form.';

2. in Article 7:

(a)

in the first indent of point (a) of paragraph (2), the
words ‘which relate' shall be replaced by the word
‘relating', the semi-colon shall be deleted and the
words ‘these amounts must' shall be replaced by
the word ‘must';

(b) in paragraph 6, the first subparagraph shall be

replaced by the following:

and

payment

appropriations

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

in the

3. in Article 22:

(a)

in paragraph 2, the following subparagraph shall
be added:

‘The Commission and other institutions may not,
under any form or upon any basis whatsoever,
delegate to outside entities or organisations tasks
of implementing the budget which may give rise
to missions on the part of the European public
service, especially where powers to enter into
public contracts are involved.';

(b) in paragraph 4, the following shall be inserted as

the third subparagraph:

‘All acts implementing the budget which are
capable of giving rise to a confusion of interests
between delegator, delegatee and third party re-
cipient of expenditure shall be prohibited.

implementing arrangements

The
in
Article 139 shall govern the conditions for imple-
menting this Article, in particular the following
aspects:

set out

— causes of the confusion of interests,
— persons between whom the confusion of inter-

ests may arise,

— consequences of the confusion of interests.';

(c)

in paragraph 4, the following subparagraph shall
be added:

‘Any member of staff who authorises commit-
ments or payments without having been delegated
or subdelegated the necessary powers, or in excess
of the limits of the powers expressly conferred
to
upon him,

render himself

liable

shall

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to
disciplinary action and, where appropriate,
payment of compensation in accordance with
Title V. Each institution shall adopt internal rules
which shall specify the procedure for issuing acts
shall obligatorily
of
specify in detail the powers conferred.';

subdelegation. Such acts

(d) the following paragraph shall be inserted:

‘4a. When the institutions commission an
outside person, body or
firm to perform a
Community activity, the contracts and subcon-
tracts concluded for that purpose must contain all
appropriate provisions for ensuring the transpar-
ency of the contracted and subcontracted opera-
tions in accordance with the implementing rules
provided for in Article 139.

the payments made to the subcontractors
If
generate interest which may be used to finance
the programmes in question, the following proce-
dure shall be applied:

— 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 cor-
responding amount,
in both commitments
and payments, shall be made available in the
heading of the statement of expenditure to
which the initial expenditure was charged.';

4. in Article 24, the fourth and fifth paragraphs shall be

replaced by the following:

‘The financial controller must be consulted on the
setting up and alteration of the accounting systems
and inventory systems of the 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.

shall be responsible for

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

5. in Article 25,

the following paragraph shall be

inserted after the fourth paragraph:

‘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 setting up and altera-
tion of the inventory systems.';

6. in Article 27:

(a)

in paragraph 2, point (f) shall be deleted;

(b) the following paragraph shall be inserted after

paragraph 2:

‘2a. Notwithstanding Article 4, where products
or services supplied to the Commission incor-
porate taxes which are refunded by Member States
pursuant
and
Immunities, the net price shall be charged to the
budget.

to the Protocol on Privileges

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

the latest

7. in Article 28, the following paragraph shall be added:

‘3. Notwithstanding paragraph 1, no forward
estimate shall be made for the own resources defined
in Article 2(1) and (2) of Decision 94/728/EC,
Euratom, which are paid at fixed intervals by the
Member States, 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 estab-
lished by the Member States, which they send to the
Commission.

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

8. in Article 36:

(a)

the correction in paragraph 1 concerns
French language version;

the

(b) paragraphs 2 and 3 shall be replaced by the

following:

‘2. Without prejudice to Article 99,
the de-
cisions taken by the Commission in accordance
with the provisions authorising it to grant finan-
cial aid from the various funds or similar opera-
tions shall constitute commitments of expend-
iture. Unless these decisions stipulate a different
time limit for implementation in accordance with
these commit-
the abovementioned provisions,
ments shall cover
the cor-
responding individual legal commitments up to
31 December of year n + 1.

the total cost of

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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 unused balance shall be released after the
time limit
laid down.
However, this paragraph shall apply neither to the
Structural Funds nor to the Cohesion Fund.

implementation is

for

3.
The procedure for implementing paragraphs
1 and 2 shall ensure that an exact account is kept
of commitments and authorisations in terms of
actual needs and, as regards paragraph 2, that the
specific legal commitments correspond to the
overall budget commitment provided for by the
Commission decision. The procedure shall be
determined by the implementing rules provided
for in Article 139.';

9. in Article 37, the following paragraph shall be added:

‘The proposals for commitments referred to in Article
36(1) and the proposals for individual legal commit-
ments referred to in the second subparagraph of
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 prob-
ability that the conditions set out in Article 38(1) will
not be fulfilled. Individual commitments shall be
checked systematically in risk sectors.';

10. in Article 39, the second and third paragraphs shall

be replaced by the following:

‘Cases where approval is withheld and the authorising
officer maintains his proposal shall be referred for a
decision to the superior authority of the competent
institution among those listed in Article 22(1) and (2)
within two months of the date of the decision to
withhold approval.

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 date on which approval was withheld. It must be
taken by 15 February of year n + 1. It shall be
information to the financial
communicated for
controller. The superior authority of each institution
shall inform the Court of Auditors of all such de-
cisions within one month. The Court of Auditors
shall
report annually to the Parliament and the
Council, within the context of the discharge pro-
cedure, on the consequences of the decision to over-
rule, from the point of view of the legality of, or
non-compliance with, a directive as regards public
works or service contracts.';

11. in Article 44, in the third indent, the following shall

be added after the words ‘national currency':

‘However, when payment orders are sent to the banks
by means of computerised procedures, the amount
need not be expressed in words,';

12. in Article 46(1), the following subparagraph shall be

added:

‘The decision to authorise the balance shall be
adopted within the time limit laid down in Article
1(7).';

13. in Article 47, the following paragraph shall be added:

‘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 is a high prob-
ability that the conditions set out in the second para-
graph will not be fulfilled. Payment orders shall be
checked systematically in risk sectors.';

14. in Article 58(3) the following sentence shall be added:

‘The tenderer’s offer must from the outset contain all
the essential elements required in the invitation to
tender, subject to being considered inadmissible. The
implementing arrangements set out in Article 139
shall apply for the purpose of establishing the criteria
for identifying the essential elements of the tender.';

15. in Article 65, the following paragraphs shall be added:

‘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 by the authorising officer, shall
provide the central system of accounts with all the
appropriate information needed to draw up the insti-
tution’s balance sheet.

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

for

16. Article 70 shall be amended as follows:

(a)

in the first paragraph, the word ‘budgetary' shall
‘expenditure and
be replaced by the words
revenue';

(b) in the second paragraph, point

(a)

shall be

replaced by the following:

‘(a) accounts of expenditure and revenue, subdi-

vided into two separate 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 deter-
mined,

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

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17. the following Article shall be inserted:

‘Article 70a
The rules for the entry in the accounts of the depre-
ciation 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.';

18. Article 76 shall be replaced by the following:

‘Article 76
The liability of authorising officers, financial control-
lers, accounting officers, assistant accounting officers
and administrators of advance funds to disciplinary
action and, if necessary, payment of 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.

information,

relevant data or

including any
All
reports and withholdings of approval by the financial
controller, shall be communicated to the authority
empowered to initiate the procedure concerning
disciplinary and financial responsibility.';

19. Article 79 shall be replaced by the following:

‘Article 79
Each institution shall, not
than 1 March,
transmit to the Commission, after submitting them to
its financial controller, the information required for
drawing up the revenue and expenditure account and
the balance sheet and a contribution to the analysis of
the financial management referred to in Article 80.';

later

20. in Article 104(2), the words ‘one month before 31
January' shall be replaced by the words ‘10 January';

21. Article 109(3) shall be replaced by the following:

‘3.
It shall transmit to the Commission for agree-
ment the results of the examination of the tendering
procedure and a proposal
the
contract. It shall sign contracts, additions to contracts

the award of

for

and estimates and shall notify the Commission
thereof. For contracts, additions to contracts, and es-
timates,
the Commission, where appropriate, shall
enter into individual commitments in accordance
with the procedures laid down in Articles 36 to 39.
Individual commitments
the
commitments
agreements
the
provided for in Article 106(2), in accordance with the
second subparagraph of Article 36(2).';

shall count
financing

towards

under

22. Article 112 shall be replaced by the following:

‘Article 112

The provisions of this section shall apply instead of
those under Title IV to cases in which the Commis-
sion, in connection with external aid financed from
the general 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 within the World Trade
Organisation.';

23. Article 113 shall be replaced by the following:

‘Article 113

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

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 Brussels, 23 November 1998.

For the Council

The President

R. EDLINGER