Proposal for a Council Regulation (EC, ECSC, Euratom) on the Financial Regulation applicable to the general budget of the European Communities (COM(2000) 461 final — 2000/0203(CNS))
Date: 2001-03-27
Institutions: European Commission
Subjects: Community budget, budget policy, financial regulation, general budget (EU), public finance

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II

(Preparatory Acts)

COMMISSION

Proposal for a Council Regulation (EC, ECSC, Euratom) on the Financial Regulation applicable to
the general budget of the European Communities

(2001/C 96 E/01)

COM(2000) 461 final (cid:151) 2000/0203(CNS)

(Submitted by the Commission on 18 October 2000)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European
Community, and in particular Article 279 thereof,

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

(3) As

the budget should respect

regards budget principles,

the establishment and
implementation of
the four
fundamental principles of budgetary law (unity, univer-
specification, annuality), and the principles of
sality,
sound
unit of
financial management,
account and transparency.

equilibrium,

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

(4) This Regulation should reassert

those principles, keep
exceptions to an absolute minimum and impose strict
conditions on those exceptions.

Having regard to the proposal from the Commission,

Having regard to the opinion of the European Parliament,

Having regard to the opinion of the Court of Auditors,

Whereas:

(1) Since times have changed enormously since the Financial
Regulation of 21 December 1977 applicable to the general
budget of the European Communities (1) was adopted, in
particular as a result of a series of enlargements, a
financial perspective forming a framework for the devel-
opment of the budget and changes to the institutional
structure, that Financial Regulation has been substantially
times. Since further amendments are
amended several
necessary
the
requirements of simplification in legislative and adminis-
trative matters and the tightening up of management of
the Financial Regulation of 21
Community finances,
December 1977 should be recast in the interests of clarity.

in particular, of

to take

account,

(2) This Regulation should be confined to stating the broad
principles and basic rules governing all budgetary matters
referred to in the Treaty and the detailed provisions
should be moved to a Regulation laying down rules for
the implementation of this Regulation (hereinafter:
(cid:145)the
implementing rules(cid:146))
to produce a better
in order
hierarchy of rules and make the Financial Regulation
easier to read.

(1) OJ L 356, 31.12.1977, p. 1; Regulation as last amended by Regu-
lation (EC, ECSC, Euratom) No 2673/1999 (OJ L 326, 18.12.1999,
p. 1).

(5) As regards the principle of unity, this Regulation should
state that it also applies to expenditure on the common
foreign and security policy and cooperation in the field of
justice and home affairs where this is charged to the
budget. Decisions on the establishment plans of
the
Community agencies should be taken by the budgetary
authority as part of the budgetary procedure in view of
their
future, on the number of
European civil servants and on the general budget, via
subsidies paid or planned by those agencies, or
the
pensions which will be paid to their staff.

impact, present or

(6) As regards the principle of universality, the practices of
repayment of payments on account and re-use should be
discontinued; in some cases they should be replaced by
earmarked revenue. These amendments should not affect
the special rules applicable to the Structural Funds.

financial and administrative

(7) As regards the principle of specification, the Commission
should be given some degree of management flexibility
for transfers of staff and administrative appropriations
between titles
relating to different policy areas and
between chapters for operational expenditure. This Regu-
lation should allow integrated presentation of the allo-
cation of
resources by
purpose. The procedures for transferring administrative
appropriations should be harmonised for all the other
institutions so that transfers between titles are a matter
for the budgetary authority and those within titles a
matter
for each institution. The budgetary authority
should be allowed to constitute reserves in only two
cases: where there is no legal base and where it is not
certain that appropriations are adequate or necessary.

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be

to appropriations of

(8) As regards annuality, differentiated appropriations should
be used in all areas, although the technical arrangements
applied at present
the European
Agricultural Guidance and Guarantee Fund (EAGGF)
of
should
should be
commitment and payment appropriations
taken by the institution concerned as a result of
the
simplification brought about by the abandoning of
non-differentiated appropriations. The additional periods
should be restricted to cases which are absolutely
necessary, namely EAGGF payments.

retained. Decisions

carryovers

on

(9) As

the

regards

aim is

transparency,

to improve
information on implementation of the budget and the
accounts. A strict deadline should also be set for the
publication of
the budget. Negative expenditure and
negative revenue should also be eliminated, the former
now being treated as earmarked revenue.

(10) Finally,

the principle of sound financial management
should be defined by reference to the principles of
economy, efficiency and effectiveness, and compliance
with those principles checked by means of measurable
indicators in such a way that results can be assessed.
Provision should be made for evaluation throughout the
cycle of a programme.

(11) As regards the establishment and presentation of

the
budget, budgetary procedures should be harmonised and
simplified by elimination of the distinction, which has no
practical
impact, between supplementary budgets and
amending budgets.

(12) The Commission section of the budget should present
appropriations and resources by purpose (activity-based
budgeting), with a view to enhancing transparency in
the budget with reference to the
the management of
objectives of
and in
particular efficiency and effectiveness.

sound financial management

(13) The Commission should enjoy a measure of flexibility in
the management of its staff complement in relation to
what
the
is authorised in the budget, especially as
emphasis in management is now to be on results and
not on means. This freedom will, however, continue to
be restricted by the dual limit of budget appropriations
and the total number of posts allocated; in addition there
will be no latitude as regards grade A1 and A2 posts.

of

the

possible methods

(14) As regards implementation of the budget, there should be
clarification
of
various
implementing the budget, either on a centralised basis
by the Commission or on a shared basis with the
Member States or on a decentralised basis with third
It should be possible
countries receiving external aid.
for centralised management either
to be performed
directly by Commission departments or to be delegated

international or Community public-law
to national,
in particular executive agencies set up by the
bodies,
Communities. Those
to
agencies
implement all or part of a programme under the respon-
sibility and control of the Commission.

should

able

be

(15) As the Commission is responsible for implementation of
it may not delegate any tasks of public
the budget,
authority involving the use of discretionary powers of
judgment. This Regulation should restate this principle
and specify the scope of the tasks that may be delegated.
It should also be stipulated that private-law bodies, other
than
public-service mission
guaranteed by the Member States, should not be able to
undertake any budget implementation measure but only
provide specialist technical or administrative services or
perform preparatory or ancillary tasks.

those which

have

a

(16) For the sake of compliance with the principles of trans-
parency and sound financial management, the public-law
bodies or bodies with a public-service mission guaranteed
by the State to which implementing tasks are delegated on
behalf of
transparent
the Commission should have
procurement procedures, effective internal controls and
a system for presentation of
the accounts which is
separate from their other activities and an external audit.

(17) As regards the role of the different actors, authorising
officers should be given more responsibility by dropping
centralised ex ante controls, and in particular advance
approval by the financial controller of revenue and expen-
diture operations and verification by the accounting
that payment does constitute discharge of all
officer
liability.
internal auditor of
the function of
In return,
management and internal control systems set up by auth-
orising officers should be developed. The internal auditor
should be the financial controller within the meaning of
the Treaties.

of

the

Regulations

(18) The liability of authorising officers, accounting officers
and imprest administrators is not different from that of
other officials and staff and should be subject, under the
European
of Officials
Staff
Communities and the Conditions of Employment of
Other Servants of those Communities (hereinafter:
(cid:145)the
Staff Regulations(cid:146)) to the application of the existing disci-
plinary and financial compensation measures. On the
identifying
other hand,
specific cases of misconduct of accounting officers and
imprest administrators given the nature of their duties
should be retained; they will no longer have any special
allowance or insurance. This Regulation should also refer
to the provisions in force on the protection of
the
interests and on the
European Communities’
fight
the
European Communities or officials of Member States of
the European Union.

corruption involving officials of

certain specific provisions

financial

against

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(19) The concepts of budget and legal commitment of expen-
diture and the conditions of application should be
defined. In order to limit in time the potential budget
impact of Commission decisions and to restrict
the
the period during
volume of dormant commitments,
legal commitments may be made on
which individual
the basis of global budget commitments
should be
limited.

(20) This Regulation should define the typology of payments

which may be made by authorising officers.

authorisation

(21) This Regulation should stipulate that the operations of
validation,
be
completed within a time limit which will be set in the
implementing rules and that in the event of failure to
respect
time limit creditors will be entitled to
default interest to be charged to the budget.

payment must

and

this

of

and

the Council

(22) As regards procurement, the Directives of the European
Parliament
the
procedures for the award of public supply, service and
works
contracts
concluded by the institutions acting on their own
their principles should also govern the rules
account;
applicable to all contracts awarded on behalf of
third
parties.

should apply

coordinating

to public

contracts

(23) In order to prevent irregularities and to combat fraud and
corruption and promote sound and efficient management,
the award of contracts to candidates or tenderers who
have been guilty of
such acts or have conflicting
interests should be ruled out.

(29) So that the rights and obligations of the institution and of
the beneficiary are clear, the grant award should be the
subject of a written agreement.

(30) When a grant is awarded, the authorising officer should
monitor the use made of
it and carry out an overall
evaluation of the results obtained for each programme.

(31) As regards the keeping and presentation of accounts, it
should be stipulated that the accounts comprise general
accounts and budget accounts and it should be added that
the general accounts are based on a system of accrual
accounting whereas the budget accounts are intended to
draw up the revenue and expenditure account and the
reports on implementation of the budget.

(32) The principles on which the general accounts are based
and the financial statements are presented should be
defined
accepted
to
accounting principles and the Council Directives on the
annual accounts of certain types of companies, where
they are relevant, in the context of the public service.

internationally

reference

by

(33) The provisions on the supply of information concerning
implementation of
the budget should be adapted to
extend this information to the use of appropriations
carried over, made available again and re-used and to
improve the arrangements for providing monthly figures
and the report on implementation which will be sent
three times a year to the budgetary authority.

(24) For the sake of transparency, candidates and tenderers
should be informed in appropriate manner about
the
award of contracts.

(34) The accounting methods employed by the institutions
should be harmonised and, in this field, the Commission’s
accounting officer should have the right of initiative.

(25) Finally, as part of the process of increasing the responsi-
bility of
current Advisory
Committee on Procurement and Contracts should be
dispensed with.

authorising officers,

the

(26) As regards grants, a framework for the award and moni-
toring of Community grants which implements the prin-
ciples
programming,
co-financing, collective assessment and control should
be put in place.

transparency,

basis,

legal

of

(27)

In order to avoid any cumulation,
it should not be
possible for grants to be awarded to finance the same
action twice or to finance actions which have already
been completed before the application for the grant is
made.

(28) In a similar maner to the rules concerning the award of
public contracts, grounds for excluding certain parties
from the award of grants should be laid down in order
to have appropriate means of combating fraud and
corruption.

(35) It should be specified that

the use of computerised
financial management systems should in no way restrict
the Court of Auditors’ rights of access to supporting
documents.

form of pre-financing,

(36) The rather vague concepts of advance and payment on
account should be dropped; payments should be made in
the
and
payments of the final balance, when the entire amount
is not paid in one instalment, and it should be stipulated
that interest generated by amounts paid as pre-financing
constitute budget revenue.

interim payments

(37) As regards external audit and discharge, although the
Commission is fully responsible for implementation of
the budget, the importance of management shared with
the Member States or decentralised management with
third countries requires their full cooperation throughout
the audit procedure by the Court of Auditors and the
discharge by the budgetary authority.

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(38) In order

to improve interinstitutional operation,

the
Commission should present to the European Parliament,
at its request, any information relating to the year in
question required for
the
discharge procedure, with due respect for fundamental
human rights,
the
provisions governing judicial and disciplinary proceedings
and the interests of the Union.

the protection of business secrecy,

the smooth application of

(39) Special provisions

Community policies
consistent with sectoral rules.

should be laid down for certain
this Regulation is

to ensure

(40) As regards the EAGGF, the specific management features,
relating in particular to the fact that commitment appro-
priations and payment appropriations are equal and to
the
should be maintained,
although the appropriations for rural development will
not be covered with effect from 1 January 2007.

arrangements,

carryover

(41)

In order
to guarantee the overall amount of appro-
priations available, earmarked revenue from the EAGGF
Guarantee Section should be assigned to it in full.

(42) Provision should be made for the possibility of advance
commitments from 15 November preceding the financial
year in question.

(43) As

regards

the Structural Funds,

the provision for
repayment of payments on account and making appro-
priations available again as provided for in the (unpub-
lished) Commission declaration annexed to Council Regu-
lation (EC) No 1260/1999 of 21 June 1999 laying down
general provisions on the Structural Funds should be
retained.

(44) As regards research, the presentation of the budget should
concerning

provisions

the

be
harmonised with
activity-based budgeting.

(45) As

action,

external

of
regards
authorised
aid should be
management of
provided that
the Commission is given guarantees of
sound financial management and the beneficiary State is
accountable to the Commission for the funds paid to it.

decentralisation

external

private law should comply with the general principles on
the award of contracts laid down in Title IV of Part One
and Title IV of Part Two of this Regulation as regards
external actions.

(47) As regards the European Anti-Fraud Office (OLAF), a
rules
for
should contain the
separate
title
management of OLAF,
in terms of
information contained in Annex to the budget and defi-
nition of the powers delegated to the Director.

in particular

special

(48) A separate title should also contain the special rules

applicable to administrative appropriations.

(49) As a transitional measure, provision should be made for
the maintenance of the special EAGGF monetary reserve
until the entry into force of the Regulation on budgetary
discipline and, as regards rural development programmes
and accompanying measures, provision should be made
for the special EAGGF Guarantee Section arrangements
for appropriations to apply only until the end of
the
current programming period,

HAS ADOPTED THIS REGULATION:

PA R T O N E

COMMON PROVISIONS

TITLE I

GENERAL PROVISIONS

Article 1

This Regulation lays down the rules for the establishment of
the general budget of the European Communities, hereinafter
referred to as (cid:145)the budget(cid:146) and the implementation of revenue
and expenditure. It also contains the rules for the keeping of
accounts, procurement and the award of grants by the
Communities. It determines the rules and methods for super-
vising the liability of
the authorising officers, accounting
officers and internal auditors. It lays down the arrangements
for external control and the discharge procedure.

For the purposes of this Regulation, the Economic and Social
the
and
Committee,
Ombudsman shall be treated as Community institutions.

the Committee

the Regions

of

(46) Financing agreements or contracts signed with the bene-
ficiary State or a national, Community or international
public-law body or natural or legal persons governed by

The establishment and implementation of
the budget shall
comply with the principles of unity, annuality, equilibrium,
unit of account, universality, specification, sound financial
management and transparency as set out in this Regulation.

Article 2

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CHAPTER 1

PRINCIPLE OF UNITY

Article 3

1.
The budget is the instrument which forecasts and auth-
orises the revenue and expenditure of the Communities each
year.

The revenue and expenditure of the Communities shall

2.
comprise:

(a) the revenue and expenditure of the European Community,
including administrative expenditure
the common
foreign and security policy and for cooperation in the
field of justice and home affairs and the related operational
expenditure where this may be charged to the budget;

for

(b) the administrative expenditure of the European Coal and

Steel Community and the related revenue;

Payment appropriations shall cover payments made to honour
the legal commitments entered into in the current financial
year and/or earlier financial years.

Paragraph 1 is without prejudice to the special provisions
2.
of Titles I and VII of Part Two. It shall not prevent appro-
priations
budgetary
nor
commitments being made in annual instalments.

committed

globally

being

3.

Appropriations shall be shown in the budget as follows:

(a) the commitment appropriation authorised for the financial
year in question and the payment appropriation for the
same financial year shall be entered on the appropriate
budget line;

(b) the estimated annual payment appropriations required for
the subsequent financial years shall be set out against the
commitment appropriations in an indicative schedule in the
remarks column.

(c) the expenditure and revenue of

the European Atomic

Article 7

Energy Community.

3.
The budget shall record the guarantee for borrowing and
lending operations entered into by the Communities and
payments to the Guarantee Fund for external actions,
the
operations of which are shown in the Commission’s revenue
and expenditure account and balance sheet.

Article 4

1.
Subject to Article 69, no revenue shall be collected and
no expenditure effected unless booked to an article in the
budget.

No expenditure may be committed or authorised in

2.
excess of the authorised appropriations.

CHAPTER 2

PRINCIPLE OF ANNUALITY

Article 5

The appropriations entered in the budget shall be authorised
for one financial year.

The financial year shall

1.
December.

run from 1 January to 31

2.
The revenue of a financial year shall be entered in the
accounts for the financial year on the basis of the amounts
collected during the financial year. However, the own resources
for the month of January of the next financial year may be
paid
to the Council Regulation
implementing the Decision on the system of the Communities’
own resources.

in advance pursuant

The entries in respect of value added tax own resources,
3.
the
financial
resource
additional GNP-based
contributions may be adjusted in accordance with the Regu-
lation referred to in paragraph 2.

and

any

4.
The appropriations authorised for a given year may be
used solely to cover expenditure committed and paid in that
financial year, save as otherwise provided in Title I of Part Two,
and to cover
from
preceding financial years.

amounts due

commitments

against

Commitments shall be entered in the accounts on the
the legal commitments entered into up to 31

5.
basis of
December.

Article 6

6.
Payments shall be entered in the accounts for a financial
year on the basis of the payments effected by the accounting
officer by 31 December of that year at the latest.

The budget shall contain differentiated appropriations,
and
commitment

appropriations

1.
consist of
which shall
payment appropriations.

Commitment appropriations shall cover the total cost of the
legal obligations entered into for the current financial year.

7.
the
By way of derogation from paragraphs 5 and 6,
expenditure of the Guarantee Section of the European Agri-
cultural Guidance and Guarantee Fund (EAGGF)
shall be
entered in the accounts for a financial year in accordance
with the rules laid down in Title I of Part Two.

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Article 8

1.
Commitment appropriations and payment appropriations
which have not been used at the end of the financial year for
which they were entered shall lapse.

However, they may be carried over to the next financial year
only, by a decision taken by the institution concerned by 15
February at the latest, in accordance with paragraphs 2 and 3.

Commitment appropriations may be carried over

2.
respect of:

in

(a) amounts corresponding to commitments which have been

virtually concluded at 31 December; or

(b) amounts which are necessary when the legislative authority
has adopted a basic instrument in the final quarter of the
financial year and the Commission has been unable to
commit the appropriations provided for this purpose in
the budget by 31 December.

The amounts referred to in the first subparagraph must be
committed by 31 March of the following year.

to

cover

needed

existing

commitments

Payment appropriations may be carried over in respect of
3.
amounts
or
commitments linked to commitment appropriations carried
over, when the appropriations provided for the relevant lines
in the budget for the following financial year do not cover
requirements. The institution concerned shall
first use the
appropriations authorised for the current financial year and
shall not use the appropriations carried over until the former
are exhausted.

priations were entered in the budget,
concerned shall lapse.

the appropriations

Any amounts which have been wrongly paid shall be
recovered, subject to Title II of Part Two.

Article 11

The appropriations entered in the budget may be committed
with effect from 1 January, once the budget has been finally
adopted, save as otherwise provided in Title I and Title VII of
Part Two.

Article 12

If

the budget has not been finally adopted at

1.
the
beginning of the financial year, Article 273 of the EC Treaty,
Article 78b of the ECSC Treaty, and Article 178 of the Euratom
Treaty shall apply to commitment and payment of expenditure
approved in principle in the last budget duly adopted.

An item of expenditure shall be considered as having been
approved in principle in the last budget duly adopted if it
could have been charged to a specific budget line for the
financial year concerned.

2.
Commitments may be entered into in respect of any
chapter, for up to one quarter of the total appropriations auth-
orised for the relevant chapter in the preceding financial year,
account being taken of all transfers, plus one twelfth for each
completed month.

The institution shall inform the European Parliament and
4.
the Council ((cid:145)the budgetary authority(cid:146)) by 15 March at the latest
of the carryover decision taken and shall state, for each budget
item, how the criteria in paragraphs 2 and 3 have been applied
to each carryover.

The commitments may not exceed the appropriations provided
for in the draft budget or,
in the
preliminary draft budget.

in the absence thereof,

Appropriations placed in reserve and appropriations for

5.
staff expenditure may not be carried over.

The global provisional commitments of the Guarantee Section
of the EAGGF referred to in Title I of Part Two shall be treated
as commitments for the purposes of the first subparagraph.

Article 9

Revenue not used and appropriations available at 31 December
arising from the earmarked revenue referred to in Article 17
shall be carried over automatically. Earmarked revenue must be
used first.

3.
Payments may be made monthly in respect of any chapter
up to one twelfth of the total appropriations authorised for the
relevant chapter in the preceding financial year, account being
taken of all transfers.

Article 10

When commitments are cancelled, as a result of total or partial
non-implementation of
for which they were
the actions
earmarked, in any financial year after that in which the appro-

The measure provided for in the first subparagraph may not
have the effect of placing at the disposal of the Commission,
for any month, appropriations in excess of one twelfth of those
provided for in the draft budget or, in the absence thereof, in
the preliminary draft budget.

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If

4.
management needs so require:

continuity

the

of Community

activities

and

Article 31. They shall be drawn up in accordance with the
Council Regulation implementing the Decision on the system
of the Communities’ own resources.

(a) for expenditure necessarily resulting from the Treaties or
from acts adopted in accordance therewith, the Council
acting by a qualified majority may, at the request of the
Commission and after consulting the European Parliament,
authorise simultaneously two or more provisional twelfths
for both commitments and payments in addition to those
automatically made available under paragraph 2;

(b) for expenditure other than that necessarily resulting from
the Treaties, or from acts adopted in accordance therewith,
the third paragraph of Article 273 of the EC Treaty, the
second subparagraph of Article 78b (2) of the ECSC Treaty,
and the third paragraph of Article 178 of the Euratom
Treaty shall apply.

The additional twelfths shall be authorised in whole.

The annual total authorised for each chapter by reason of the
twelfths may not exceed the total
the corresponding
chapter of the preceding year’s budget, account being taken
of transfers, nor may it exceed the total for the corresponding
chapter of the draft budget or,
in the absence thereof, the
preliminary draft budget.

for

5.
If, for a given chapter, the authorisation of two or more
provisional twelfths granted in the circumstances provided for
in paragraph 4 is not sufficient
to cover the expenditure
necessary to avoid a break in continuity of the Communities’
activity in the area in question, authorisation may exceptionally
be given by the procedures provided for
first
subparagraph of paragraph 4 to exceed the total provided for
in the third subparagraph of paragraph 4.
In this case the
overall total of the appropriations available in the budget of
the preceding year may not be exceeded.

in the

After the presentation of the accounts for each financial year,
any discrepancy with the estimates shall be entered in the
budget for the following financial year through an amending
budget.

CHAPTER 4

PRINCIPLE OF UNIT OF ACCOUNT

Article 15

The budget shall be drawn up in euro.

CHAPTER 5

PRINCIPLE OF UNIVERSALITY

Article 16

Total revenue shall cover total payment appropriations,

1.
subject to Article 17.

All revenue and expenditure shall be entered in full
2.
without any adjustment against each other, subject to Article
18.

Article 17

Revenue in the following categories provided for in this

1.
Regulation shall not be used for any other purpose:

(a) financial contributions

to certain
research programmes pursuant to the Council Regulation
implementing the Decision on the system of the Commun-
ities’ own resources;

from Member States

CHAPTER 3

PRINCIPLE OF EQUILIBRIUM

Article 13

Budget revenue and payment appropriations must be in

1.
balance.

(b) interest on deposits and the fines provided for in the Regu-
lation on speeding up and clarifying the implementation of
the excessive deficit procedure;

(c) revenue earmarked for a specific purpose, such as income

from foundations, subsidies, gifts and bequests;

(d) contributions to Community activities from third countries

or various bodies;

2.
The Communities may not raise loans to cover a budget
deficit. They are, however, authorised to raise loans for the sole
purpose of investments in immovable assets.

(e) revenue from third parties in respect of goods, services or

work supplied at their request;

Article 14

The balance from each financial year shall be entered in the
budget for the following financial year as revenue in the case of
a surplus or payment appropriation in the case of a deficit. The
estimates of such revenue or payment appropriations shall be
entered in the budget during the budget procedure and, where
appropriate, in a letter of amendment submitted pursuant to

(f) revenue arising from the repayment of amounts unduly

paid;

(g) proceeds from the supply of goods, services and works for
other institutions or bodies,
including refunds by other
institutions or bodies of mission allowances paid on their
behalf;

(h) insurance payments received;

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(i) revenue from payments connected with lettings;

(j)

revenue from the sale of publications and films, including
those on an electronic medium;

Revenue which is earmarked for a specific purpose in
accordance with the applicable legal basis shall also not be
used for any other purpose.

The budget shall carry items to accommodate the categories of
revenue referred to in the first and second subparagraphs and,
wherever possible, an estimated amount shall be entered.

The Commission may accept any donation made to the
and
foundations,

subsidies,

such as

gifts

2.
Communities,
bequests.

The Commission may accept donations which may involve
some financial charge only with prior authorisation from
European Parliament and the Council, which shall act on the
matter within two months of the date of receipt of the request
from the Commission. If no objection has been made within
that period,
take a final decision in
respect of acceptance.

the Commission shall

Article 18

The rules for the implementation of this Regulation (here-
1.
inafter: (cid:145)the implementing rules(cid:146)) may specify the cases where
certain revenue may be deducted from invoices or requests for
payment, which shall then be passed for payment of the net
amount.

The cost of products or

2.
services provided to the
Communities incorporating taxes refunded by the Member
States pursuant
and
Immunities of
the European Communities shall be charged
net to the budget.

to the Protocol on the Privileges

Subject to the arrangements set out for the Commission,
2.
each institution may, within its own section of the budget,
to another and
transfer appropriations
from one article to another. These institutions shall
inform
the budgetary authority and the Commission of the transfers
they have made.

from one chapter

Article 21

The Commission may, within its own section of

1.
budget:

the

(a) transfer appropriations from one article to another within

each chapter;

(b) as regards expenditure on staff and administration, transfer
appropriations from one title to another provided that the
appropriations are entered under the same heading;

(c) as regards operational expenditure, transfer appropriations
between chapters within the same title, up to a maximum
of 10 % of the initial appropriations on the line from which
the transfer is made.

The Commission shall inform the budgetary authority of the
transfers it has made under points (b) and (c) of
the first
subparagraph.

The Commission may propose to the budgetary authority,
2.
within its own section of the budget, transfers other than those
referred to in paragraph 1.

Article 22

Adjustments may be made in respect of exchange
3.
differences occurring in the implementation of
the budget.
The final gain or loss shall be included in the balance for the
year.

1.
The budgetary authority shall take decisions on transfers
of appropriations as provided for in paragraphs 2, 3 and 4,
subject to the derogations provided for in Title I of Part Two.

CHAPTER 6

PRINCIPLE OF SPECIFICATION

Article 19

Appropriations shall be earmarked for specific purposes by title
and chapter;
the chapters shall be further subdivided into
articles and items.

Article 20

1.
Subject to the arrangements set out for the Commission,
each institution may, within its own section of the budget,
propose to the budgetary authority transfers from one title to
another.

Proposals made by the other institutions for transfers from one
title to another shall be forwarded by the Commission to the
budgetary authority for its decision. The Commission may
attach its own opinion to such proposals.

2.
In the case of proposals for transfers of appropriations
relating to expenditure necessarily resulting from the Treaties
or from acts adopted in accordance therewith, the Council
shall, after consulting the European Parliament, act by a
qualified majority within six weeks, except in urgent cases.
The European Parliament shall deliver its opinion within such
time as will permit the Council to take note of it and to act
within the stipulated time limit. Where the Council does not
act within this time limit, the proposals for transfers shall be
deemed to be approved.

In the case of proposals for transfers relating to expen-
3.
diture other than that necessarily resulting from the Treaties or
from acts adopted in accordance therewith,
the European
Parliament shall, after consulting the Council, act within six
weeks, except in urgent cases. The Council shall deliver its
opinion, by a qualified majority, within such time as will
permit the European Parliament to take note of it and to act
within the
the European
Parliament does not act within this time limit, the proposals
for transfers shall be deemed to be approved.

stipulated time

limit. Where

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Proposals for transfers relating both to expenditure neces-
4.
sarily resulting from the Treaties or from acts adopted in
accordance therewith, and to other expenditure shall be
deemed to be approved if neither the European Parliament
nor the Council has decided otherwise within six weeks of
the date on which the two institutions received the proposals.
If, in the case of such proposals for transfers, the European
Parliament and the Council reduce the proposed transfer by
different amounts, whichever is the smaller of the amounts
accepted by one of the two institutions shall be deemed to
be approved. Where one of
the
rejects
principle of the transfer, the transfer shall not be made.

the institutions

Article 26

During the budgetary procedure, the Commission shall provide
the necessary information for a comparison between changes
in the appropriations required and the initial forecasts made in
the financial statements accompanying all proposals sent to the
legislative authority which may have a budgetary impact.

CHAPTER 8

PRINCIPLE OF TRANSPARENCY

Article 27

Article 23

1.
Appropriations may be transferred only to budget lines
for which the budget has authorised appropriations or carries a
token entry (p.m.).

1.
The budget shall be drawn up and implemented and the
accounts presented in compliance with the principle of trans-
parency.

Revenue earmarked for a specific purpose may be trans-

2.
ferred only if it is not used for any other purpose.

2.
The President of the European Parliament shall have the
budget and amending budgets, as finally adopted, published in
the Official Journal of the European Communities.

Article 24

The budget shall be published within two months following the
date on which the budget is declared finally adopted.

Transfers within the titles of the budget devoted to the
1.
EAGGF, Guarantee Section, the Structural Funds and research
shall be the subject of special provisions under Titles I, II and
III of Part Two.

3.
The consolidated revenue and expenditure account and
balance sheet shall be published in the Official Journal of the
European Communities.

2.
the
Decisions on transfers to allow the utilisation of
reserve relating to Community loans and loan guarantees to
third countries and the reserve for emergency aid shall be taken
by
from the
Commission.

authority on a proposal

the budgetary

The procedure provided for by Article 22 shall apply. However,
if the European Parliament and the Council are unable to agree
the Commission has
on an amount different
proposed or if they fail to act, the Commission’s proposal for
a transfer shall be deemed to be approved.

from what

Article 28

Information on borrowing

1.
and lending operations
contracted by the Communities shall appear in an Annex to
the budget.

2.
Information on the operations of the Guarantee Fund for
external actions shall appear in the revenue and expenditure
account and the balance sheet.

CHAPTER 7

ESTABLISHMENT AND STRUCTURE OF THE BUDGET

TITLE II

PRINCIPLE OF SOUND FINANCIAL MANAGEMENT

Article 25

1.
Budget appropriations shall be used in accordance with
the principle of sound financial management, that is to say, in
accordance with the principles of economy, efficiency and
effectiveness.

2.
Objectives which can be checked by means of measurable
indicators shall be set and achievement of these objectives shall
be monitored.

In order

3.
to apply the principle of
management, the institutions shall evaluate actions regularly.

sound financial

CHAPTER 1

ESTABLISHMENT OF THE BUDGET

Article 29

The European Parliament, the Council, the Court of Justice of
the
the European Communities,
Economic and Social Committee,
the
Regions and the Ombudsman shall draw up an estimate of
their revenue and expenditure which they shall send to the
Commission before 1 July each year.

the Court of Auditors,
the Committee of

These estimates shall be forwarded for information to the
budgetary authority before 1 July each year.

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Article 30

1.
The Commission shall place a preliminary draft budget
before the Council by 1 September of each year at the latest. It
shall at the same time transmit the preliminary draft budget to
the European Parliament.

defining, where appropriate, its reasons for departing from the
preliminary draft budget.

Article 33

The preliminary draft budget shall contain a general statement
of revenue of the Communities and consolidate the estimates
referred to in Article 29.

1.
The President of the European Parliament shall declare
the budget finally adopted in accordance with the procedure
provided for in Article 272 of the EC Treaty, Article 78 of the
ECSC Treaty and Article 177 of the Euratom Treaty.

The Commission shall attach to the preliminary draft

2.
budget:

(a) the analysis of the financial management for the preceding
financial year and the provisional consolidated balance
sheet
in
Article 115;

the same financial year, as provided for

for

(b) an opinion on the estimates of the other institutions. This
opinion may contain different estimates, accompanied by
the reasons therefor;

(c) any working paper it considers useful in connection with
the staff of the institutions and the grants they award.

The Commission shall draw up the general introduction

3.
to the preliminary draft budget.

Each of the sections of the preliminary draft budget shall
4.
be preceded by an introduction produced by the institution
concerned.

Article 31

1.
if
The Commission may, on its own initiative or
requested by the other institutions, each in respect of its own
section, present to the Council a letter of amendment to the
preliminary draft budget on the basis of new information
which was not available at
the time the preliminary draft
was established.

However, save as otherwise agreed by the institutions or
2.
in exceptional circumstances, the Commission shall put such
letter of amendment to the Council at least thirty days before
the first
the draft budget by the European
Parliament. The Council must put the letter of amendment to
the European Parliament at least fifteen days before the said
first reading.

reading of

2.
Once the budget has been declared finally adopted, each
Member State shall, from 1 January of the following financial
year or from the date of the formal declaration if it is made
after 1 January, be bound to make over to the Community the
payments due
specified in the Council Regulation
implementing the Decision on the system of the Communities’
own resources.

as

Article 34

If necessary, the Commission may present preliminary

1.
draft amending budgets.

Preliminary draft amending budgets from institutions other
than the Commission shall be sent to the Commission.

The Commission shall

2.
submit any preliminary draft
amending budget to the Council by 1 September each year
at the latest, barring exceptional circumstances. It may attach
a dissenting opinion to the requests for amending budgets from
the other institutions.

The budgetary authority shall discuss them with due

3.
account for their urgency.

4. Where the Council, having received a preliminary draft
amending budget, considers that it is not necessary to establish
a draft amending budget, it shall determine its position after an
exchange of views with the European Parliament.

Article 35

Except for the timetable, Articles 32 and 33 shall apply to
amending budgets. They must be substantiated by reference
to the budget whose estimates they are amending.

Article 32

Article 36

1.
The Council shall establish the draft budget in accordance
with the procedure laid down in Article 272 of the EC Treaty,
Article 78 of the ECSC Treaty and Article 177 of the Euratom
Treaty.

2.
The Council shall place the draft budget before the
European Parliament by 5 October at the latest. The Council
shall attach to that draft budget an explanatory memorandum

for

the transmission of
the adoption and transmission of

The Commission and the budgetary authority may agree to
the
bring forward certain dates
the
estimates, and for
preliminary draft and draft budgets. This agreement may not,
however, have the effect of reducing or delaying the periods
allowed for consideration of these texts under Article 272 of
the EC Treaty, Article 78 of the ECSC Treaty and Article 177 of
the Euratom Treaty.

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CHAPTER 2

STRUCTURE AND PRESENTATION OF THE BUDGET

comprise both commitment appropriations and payment
appropriations.

Article 37

The budget shall consist of:

(a) a general statement of revenue;

This reserve must be drawn upon before the end of
the
financial year by means of transfer in accordance with the
procedure laid down in Articles 20, 21 and 22.

Article 42

(b) separate sections subdivided into statements of revenue and

expenditure for each institution.

The Commission section of the budget shall include the

1.
following two reserves:

Article 38

Commission revenue and the revenue and expenditure of
1.
the other
institutions shall be classified by the budgetary
authority according to their type or the use to which they
are assigned under titles, chapters, articles and items.

2.
The statement of expenditure for the Commission section
shall be set out on the basis of a nomenclature adopted by the
budgetary authority and classified according to purpose.

(a) a reserve for emergency aid for third countries;

(b) a reserve relating to Community loans and loan guarantees

to third countries.

2.
The conditions for the entry, utilisation and financing of
the reserves referred to in paragraph 1(a) and (b) are laid down
in the Council Decision on budgetary discipline and in the
Council Regulation implementing the Decision on the system
of the Communities’ own resources.

A title shall correspond to a policy area and a chapter shall, as
a rule, correspond to an activity. The administrative appro-
priations for a title shall be grouped in a single chapter.

The budget shall show:

Article 43

Article 39

The budget may not contain negative revenue or expenditure.
The own resources paid under the Council Decision on the
system of the Communities’ own resources shall be entered
net in the budget statement of revenue.

Article 40

1.

in the general statement of revenue:

(a) the estimated revenue of
financial year in question;

the Communities for

the

(b) the revenue for the preceding financial year;

(c) appropriate remarks on each subdivision;

1.
Each section of the budget may include a (cid:145)provisions(cid:146) title.
Appropriations shall be entered in this title in the following
two circumstances:

2.

in the section for each institution:

(a) as regards the statement of revenue:

(a) where no legal basis exists for the action concerned when

the budget is established;

(i) the estimated revenue for each institution for the

financial year in question,

(b) where there is uncertainty about the adequacy of or need
for the appropriations entered on the operational lines.

The appropriations in this title may be used only by means of
transfer in accordance with the procedure laid down in Articles
20, 21 and 22.

2.
In the event of serious implementation difficulties, the
Commission may transfer appropriations to the (cid:145)provisions(cid:146)
title in the course of a financial year.

Article 41

The Commission section may include a (cid:145)negative reserve(cid:146)
limited to a maximum amount of EUR 200 million. This
reserve, which shall be entered in a separate chapter, may

(ii) the revenue entered in the budget for the preceding
financial year and the revenue established for the
last financial year for which accounts have been
closed,

(iii) appropriate remarks on each revenue line;

(b) as regards the statement of expenditure:

(i) the appropriations made available for the financial
year in question and for the preceding financial year
and the actual expenditure in the last financial year
for which the accounts have been closed, broken
down into commitments and payments,

(ii) appropriate remarks on each subdivision;

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3. as regards staff:

(ii) the capital operations and debt management for the

financial year in question;

(a) for each section of the budget, an establishment plan
setting the number of permanent and temporary posts
for each grade in each category and in each service
authorised within the limits of
the budget appro-
priations;

(b) an establishment plan for staff paid from the research
and technological development appropriations, classified
by category and grade and distinguishing between
permanent and non-permanent staff, authorised within
the limits of the budget appropriations;

(c) as regards scientific and technical staff, the classification
may be based on groups of grades, in accordance with
the conditions laid down in each budget. The estab-
specify the number of highly
lishment plan must
scientific personnel who are
qualified technical or
accorded
specific
provisions of the Staff Regulations of officials of the
European Communities and Conditions of Employment
of Other Servants of the European Communities, here-
inafter: (cid:145)the Staff Regulations(cid:146);

advantages

special

under

the

(d) an establishment plan setting the number of posts for
each grade in each category in each agency set up by the
Communities.

The establishment plans shall show next to the number of
posts authorised for the financial year the number auth-
orised for the preceding year;

4. as regards borrowing and lending operations:

(a) in the general statement of revenue, the budget lines
corresponding to the relevant operations and intended
to record any reimbursements
received from bene-
ficiaries who initially defaulted, leading to activation of
the performance guarantee. These lines shall carry a
token entry (p.m.) and be accompanied by appropriate
remarks;

(b) in the Commission section:

(i) the budget

lines

containing the Communities’
performance guarantees in respect of the operations
in question. These lines shall carry a token entry
(p.m.), so long as no effective charge which has to
be covered by specific resources has arisen;

(ii) remarks giving a reference to the legal basis and the
the operations envisaged, the duration
the
financial

volume of
and
the
Communities in respect of these operations;

guarantee

given

by

5. the budget lines under revenue and expenditure necessary
for implementing the reserve relating to Community loans
and loan guarantees
to third countries and also for
implementing the Guarantee Fund for external actions.

Article 44

1.
The establishment plan shall constitute an absolute limit
for each institution; no appointment may be made in excess of
the limit set.

However, each institution may modify each establishment plan
the budget appro-
by up to 10 % and within the limit of
priations and the total number of posts allocated, except in
the case of grades A1 and A2.

By way of derogation from the first subparagraph of
2.
paragraph 1, the effects of part-time work authorised by the
appointing authority in accordance with the Staff Regulations
may be offset by other appointments.

TITLE III

IMPLEMENTATION OF THE BUDGET

CHAPTER 1

GENERAL PROVISIONS

Article 45

1.
The Commission shall implement the budget in revenue
and expenditure in accordance with this Regulation, on its own
responsibility and within the limits of the appropriations auth-
orised.

The Member States shall cooperate with the Commission
2.
to ensure that the appropriations are used in accordance with
the principle of sound financial management.

Article 46

A basic act must

1.
first be adopted before the appro-
priations entered in the budget for any Community action
may be used.

The following appropriations may be used without a
the actions they are intended to

2.
basic act provided that
finance fall within the competence of the Community:

(c) in a document annexed to the Commission section, as

an indication:

(i) ongoing capital operations and debt management,

(a) appropriations for pilot schemes of an experimental nature
the feasibility of an action and its

designed to test
usefulness;

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(b) appropriations for preparatory actions, designed to prepare
proposals for the adoption of future Community actions;

(c) appropriations for one-off actions, or even actions for an
indefinite duration, carried out by the Commission by
virtue of tasks resulting from its prerogatives at institutional
level other than its right of legislative initiative and under
specific powers directly conferred on it by the Treaties;

(d) appropriations for the operation of each institution under

its administrative autonomy.

Article 47

The Commission shall confer on the other institutions the
requisite powers for the implementation of
the sections of
the budget relating to them.

Article 48

The Commission and each of the other institutions may, within
their departments, delegate their powers of budget implemen-
tation in accordance with the conditions laid down by their
rules of procedure and within the limits which they lay down
in the instrument of delegation. Those so empowered may act
only within the limits of the powers expressly conferred upon
them.

Article 49

Any measures of budget implementation which may give rise
to a conflict of interests between the delegator, the delegatee
and the third party supplying the revenue or the third party
receiving the expenditure shall be prohibited.

Article 51

1.
The Commission may not delegate the executive powers
it enjoys under the Treaties where they involve a large measure
of discretion implying political choices.

laid down in paragraph 1,

2. Within the limits
the
Commission may delegate tasks of public authority and in
implementation to executive
particular measures of budget
agencies governed by Community or international
law, here-
inafter:
to other external national,
public-law bodies or bodies with a public-service mission
guaranteed by the State.

(cid:145)executive agencies(cid:146) or

Article 52

The executive agencies are bodies which can be empowered to
implement all or part of a Community programme or project
on behalf of the Commission and under its responsibility.

conditions

and arrangements

The
creation and
operation of these agencies shall be defined in such a way
that the Commission retains control of implementation and
can monitor their operation.

the

for

Article 53

Decisions delegating tasks to implementing bodies or
1.
agencies governed by Community or international
law or to
external national public-law bodies or bodies with a public-
service mission guaranteed by the State must include all appro-
priate
transparency of
operations carried out and include at least the following:

arrangements

ensuring

the

for

CHAPTER 2

METHODS OF IMPLEMENTATION

(a) transparent, non-discriminatory procurement procedures

which prevent any conflicts of interest;

Article 50

(b) an effective system of

internal control of management

operations;

The Commission shall

1.
centralised basis or by shared or decentralised management.

the budget on a

implement

basis,

2. Where the Commission implements the budget on a
be
centralised
performed directly by Commission departments or by
executive agencies or by national, Community or international
public-law bodies.

implementation

operations

shall

3. Where the Commission implements the budget by shared
or decentralised management, implementation operations shall
in accordance with the
be entrusted to Member States
to third
provisions of Titles
countries in accordance with Title IV of Part Two.
In this
case, in order to ensure that the funds are used in accordance
with the applicable rules,
in
accordance with specific provisions, clearance of accounts
procedures and appropriate financial correction mechanisms.

the Commission shall apply,

I and II of Part Two, or

(c) separate accounts for these operations and procedures for
separate presentation of the accounts which will show the
use made of Community funds;

(d) an independent external audit.

The Commission may accept that the audit, accounting and
procurement systems of the delegatees are equivalent to its
own, with due account for internationally accepted standards.

The Commission must also ensure periodic supervision,
evaluation and control of
the
delegated tasks.
It shall take account of the equivalence of
control systems when undertaking its controls.

implementation of

the

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2. Where the Commission has made payments to public-law
bodies which yield interest, recovery orders shall be issued
periodically, at
for
such interest to be booked to the statement of revenue.

intervals of no more than six months,

Article 54

entrust measures of budget
The Commission may not
implementation, namely commitment, validation, authorisation
or recovery to external private-law bodies or organisations,
other
a public-service mission
guaranteed by the State.

than those which have

The tasks which may be entrusted by contract
to external
private-law bodies or organisations other than those which
have a public-service mission guaranteed by the State are
technical expertise tasks and administrative, preparatory or
ancillary tasks
exercise of public
authority nor the use of discretionary powers of judgment.

involving neither

the

CHAPTER 3

FINANCIAL ACTORS

S e c t i o n 1

Principle of separation of duties

Article 55

The duties of authorising officer and accounting officer shall be
separated.

S e c t i o n 2

Authorising officer

Article 56

1.
Each institution shall lay down in its rules of procedure
the staff of an appropriate level to whom it delegates the duties
of authorising officer, the scope of the powers delegated and
the possibility for the persons to whom these powers are
delegated to subdelegate them.

revenue and appropriations in accordance with the principles
of sound financial management.

To implement appropriations, the authorising officer by
2.
delegation and by subdelegation shall make commitments and
shall validate expenditure and authorise payments. Implemen-
tation of appropriations shall also include programming this
implementation and implementing the measures required to
make appropriations available to the third parties for whom
the expenditure is intended.

3.
Implementation of revenue shall comprise drawing up
estimates of amounts receivable, establishing entitlements to
be recovered and issuing recovery orders.
involve
It shall
waiving established entitlements in appropriate cases.

4.
in
The authorising officer by delegation shall set up,
accordance with the minimum standards set by each institution
risks associated with the
and taking into account
the
management environment and the nature of
the actions
financed, the organisational structure and the monitoring and
internal control
the
systems and procedures
performance of his tasks.

required for

5.
The authorising officer by delegation shall report to his
institution on the performance of his duties, including on the
results of the operations by reference to the objectives set, on
the risks associated with these operations and on the use made
of the resources provided. The authorising officer by delegation
shall submit to the institution, to the internal auditor and to
the accounting officer an annual activity report together with
accounts.

S e c t i o n 3

Accounting officer

Article 58

Each institution shall appoint an accounting officer who

1.
shall be responsible in each institution:

(a) for preparing and presenting the financial

statements

provided for in Title VI;

2.
The powers of authorising officer shall be delegated or
subdelegated only to persons covered by the Staff Regulations.

(b) for laying down the minimum accounting rules and the
accounting systems used by authorising officers and for
validating these systems;

3.
Authorising officers by delegation or subdelegation may
act only within the limits set by the instrument of delegation.

(c) for proper implementation of payments, management of
the treasury, collection of revenue and recovery of estab-
lished entitlements.

Article 57

1.
shall be responsible in each institution for

The authorising officer by delegation and subdelegation
implementing

The accounting officer
information
necessary for the purposes of the first subparagraph from the
authorising officers.

shall obtain all

the

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Save as otherwise provided in this Financial Regulation or
2.
in any sectoral regulation,
the accounting officer is alone
empowered to manage monies and other assets. He shall be
responsible for their safekeeping.

S e c t i o n 2

Rules applicable to accounting officers and imprest
administrators

S e c t i o n 4

Imprest administrator

Article 59

For the payment of small sums, imprest accounts may be set
up which shall be endowed by the institution’s accounting
officer and shall be placed under the responsibility of imprest
administrators designated by the
accounting
officer.

institution’s

CHAPTER 4

LIABILITY OF THE FINANCIAL ACTORS

S e c t i o n 1

General rules

Article 60

Without prejudice to any disciplinary action, authorising
officers by delegation and subdelegation, accounting officers
and imprest administrators may be suspended from their
duties by the authority which appointed them.

Article 61

The provisions of this chapter are without prejudice to the
criminal law liability which the persons referred to in Article
60 may incur as provided in the applicable national law and in
the provisions in force on the protection of
the European
interests and on the fight against
Communities’
corruption involving officials of the European Communities
or officials of Member States.

financial

Article 63

An accounting officer shall be liable to disciplinary action and
payment of compensation in particular where:

(a) he loses or damages monies, assets and documents in his

keeping;

(b) he alters bank accounts or postal giro accounts;

(c) he recovers or pays amounts which are not in conformity

with the corresponding recovery or payment orders.

Article 64

An imprest administrator shall be liable to disciplinary action
and payment of compensation in particular where:

(a) he loses or damages monies, assets and documents in his

keeping;

(b) he cannot provide proper supporting documents for the

payments he has made;

(c) he makes payments to persons other than those entitled.

CHAPTER 5

REVENUE OPERATIONS

S e c t i o n 1

Making available of own resources

Article 62

Article 65

Each authorising officer, accounting officer or imprest
1.
administrator
to disciplinary action and
payment of compensation as laid down in the Staff Regu-
lations, without prejudice to Articles 63 and 64.

shall be

liable

An estimate of revenue constituted by own resources, as
referred to in the Council decision on the system of
the
European Communities’ own resources, shall be entered in
the budget in euro. It shall be made available in accordance
with the Council Regulation implementing that decision.

2.
An authorising officer by delegation or subdelegation
who considers that a decision he is required to take is
irregular or contrary to the principles of sound financial
management shall
inform his higher authority in writing. If
the instruction is then confirmed in writing, the authorising
officer by delegation or subdelegation may not be held liable.

S e c t i o n 2

Estimate of amounts receivable

Article 66

3.
In the event of subdelegation, the authorising officer by
delegation continues to be responsible for the effectiveness of
the control systems put in place and for the choice of the
authorising officer by subdelegation.

An estimate of the amount receivable shall first be made
1.
by the authorising officer
in respect of any measure or
situation which may give rise to or modify an amount owing
to the Communities.

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By way of derogation from paragraph 1, no estimate of
2.
the amount receivable shall be made before Member States
make directly available to the Commission the amounts of
own resources defined in the Council Decision on the system
of the Communities’ own resources which are paid at fixed
intervals by the Member States. The authorising officer shall
issue a recovery order in respect of these amounts.

S e c t i o n 3

Recovery order

Article 67

A recovery order shall be drawn up by the authorising officer
to establish every amount receivable that is identified as being
certain, of a fixed amount and due. The conditions in which
interest on late payment is due to the budget shall be laid down
in the implementing rules.

S e c t i o n 4

Recovery

Article 68

1.
The accounting officer shall act on recovery orders duly
established by the authorising officer. He shall exercise due
diligence
their
receive
revenue and shall see that their rights are safeguarded.

the Communities

to ensure

that

The accounting officer shall
inform the authorising officer
when revenue is not received by the due date. He shall,
where appropriate, initiate the enforced recovery procedure.

The accounting officer may recover amounts by offsetting them
against equivalent claims that
the Communities have on a
debtor who himself has a claim on the Communities that is
certain, of a fixed amount and due.

2. Where the authorising officer waives recovery of an
established entitlement, he shall ensure that the waiver is in
order and complies with the principle of sound financial
management. He shall
inform the accounting officer of the
waiver so that it can be registered. The waiver decision must
be substantiated and adopted by the authorising officer by
delegation. The authorising officer by delegation shall refer
any cases about which he has doubts to the higher authority
for a decision.

Article 69

Revenue received by way of fines, periodic penalty payments
and other penalties and any accrued interest shall not be finally
recorded as budget revenue as long as the decisions imposing
them may be annulled by the Court of Justice.

CHAPTER 6

EXPENDITURE OPERATIONS

S e c t i o n 1

Commitment of expenditure

Article 70

A commitment

1.
commitment and a legal commitment.

shall be made up of

a budget

The budget commitment is the operation whereby the appro-
priations necessary for performance of the obligation imposing
a charge on the budget are reserved.

is the act whereby the authorising
The legal commitment
officer enters into an obligation with regard to third parties
which results in expenditure being charged to the budget.

The legal commitment and the budget commitment shall, as a
rule, be adopted by the same person.

is not

individually

The budget commitment is global either when the final
2.
identified or when the
beneficiary
commitment covers a number of
individual commitments.
The commitment is provisional when it is intended to cover
routine administrative expenditure and the amount
is not
definitively determined. The budget commitment is individual
when the final beneficiary is individually determined.

3.
Budget commitments for actions extending over more
than one financial year may be broken down into instalments
where
the budget
commitment
extending over
several years, the legal commitment shall mention this.

is divided into instalments

so provides. Where

the basic

act

Article 71

1.
In respect of any measure which may give rise to expen-
diture chargeable to the budget, the authorising officer must
first make a budget commitment before entering into an indi-
vidual legal commitment with third parties.

Subject to the special provisions of Title IV of Part Two,
2.
global budget commitments shall cover the total cost of the
corresponding
commitments up to 31
legal
individual
December of year N + 1.

the
During the period referred to in subparagraph 1,
conclusion of each individual
shall be
registered by the authorising officer in the budget accounts
and booked to the global commitment.

legal commitment

The provision of
decisions on clearance of accounts or financial corrections.

the first subparagraph shall not apply to

At the end of this period, the unused balance of this global
budget commitment shall be decommitted by the authorising
officer.

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The legal commitments entered into for actions extending
3.
over more than one financial year and the corresponding
budget commitments shall have a final date for implemen-
tation.

(d) payment of a balance, based on supporting documents,
which is designed to clear the budget commitment and
which is made before the final date stipulated in Article
71(3).

Article 72

A distinction shall be made in the accounts between these
different types of payment.

When drawing up acts of budget commitment, the authorising
officer shall ensure that:

(a) the expenditure has been charged to the correct item in the

budget;

(b) the appropriations are available;

(c) the expenditure is in order and conforms to the relevant
provisions, in particular of the budget and regulations, and
of all acts adopted in accordance with the Treaties and of
the regulations;

Only amounts paid by way of prefinancing shall yield
2.
interest until such time as they are definitively transferred to
the final beneficiaries, save where they are made available to
the Member States’ authorities.

S e c t i o n 4

Payment of expenditure

Article 76

(d) the principle of sound financial management is complied

with.

Payment of expenditure is the final act whereby the institution
is discharged of its obligations towards its creditors.

S e c t i o n 2

Validation of expenditure

Article 73

Validation of expenditure is the act whereby the authorising
officer:

(a) verifies the existence of the creditor’s claim;

(b) determines or verifies the existence and the amount of the

sum due;

(c) verifies the conditions under which payment falls due.

Payment of expenditure shall be made by the accounting officer
within the limits of the funds available.

S e c t i o n 5

Time-limits for expenditure operations

Article 77

completed within the

The validation, authorisation and payment of expenditure must
be
laid down in the
implementing rules, which shall also specify the circumstances
in which creditors paid late are entitled to receive default
interest charged to the line from which the principal was paid.

time-limits

S e c t i o n 3

Authorisation of expenditure

Article 74

CHAPTER 7

INFORMATION ON THE IMPLEMENTATION OF THE BUDGET

Article 78

Authorisation is the act whereby the authorising officer, by
issuing a payment order,
instructs the accounting officer to
pay an item of expenditure which he has validated.

Article 75

Once a month,

the Commission shall

1.
send to the
European Parliament and the Council aggregate figures, by
chapter, on the implementation of
the budget, both for
revenue and for expenditure against all appropriations. These
figures shall also show details of
the utilisation of appro-
priations carried over.

A payment order may, in accordance with the provisions
1.
of the basic act or the contract, cover one of the following
operations:

The figures shall be sent within ten working days following the
end of each month.

(a) payment of the entire amount due thus clearing the budget

commitment;

(b) prefinancing;

(c) an interim payment, to reimburse eligible expenditure;

Three times a year, within the thirty working days
2.
the
following 31 May, 31 August
Commission shall
send the European Parliament and the
Council a report on implementation of the budget, covering
both revenue and expenditure broken down by chapter, article
and item. This report shall also give details of the utilisation of
appropriations carried over from previous financial years.

and 31 December,

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The figures and the report shall at the same time be sent

3.
to the Court of Auditors.

The internal auditor shall report to the institution on his
3.
findings and recommendations. The institution shall ensure
that action is taken on recommendations resulting from audits.

CHAPTER 8

IT SYSTEMS

Article 79

Where revenue and expenditure operations are managed by
means of computer systems, the provisions of this Title and
of Chapters 2 and 3 of Title VI of Part One shall apply with
due allowance for the possibilities and requirements deriving
from computerised management. To this end, in particular:

(a) the

computer

systems

shall

refer

to the

supporting

documents corresponding to the data recorded;

(b) signatures may be added by a computerised or electronic

procedure.

CHAPTER 9

INTERNAL AUDITOR

Article 80

Each institution shall appoint an internal auditor responsible
for providing the institution with guarantees,
in accordance
standards, concerning the
with the relevant
proper operation of budget
implementation systems and
procedures. The internal auditor may be neither authorising
officer nor accounting officer.

international

Article 82

Special rules applicable to the internal auditor shall be laid
down by the institution and shall be such as to guarantee
that he is independent in the performance of his duties. The
internal auditor shall, in the performance of his duties, be liable
to disciplinary action and payment of compensation as laid
down in the Staff Regulations.

TITLE IV

PROCUREMENT

CHAPTER 1

GENERAL PROVISIONS

S e c t i o n 1

Scope

Article 83

Public contracts are contracts

1.
for pecuniary interest
concluded in writing by a contracting authority within the
meaning of Articles 97 and 153, in order to obtain, against
payment of a price paid wholly or partly from the budget, the
supply of movable or immovable assets, the execution of works
or the provision of services.

These contracts comprise:

Article 81

(a) building contracts;

1.
The internal auditor shall assist his institution in dealing
with risks, by issuing independent opinions on the quality of
management and control systems and by issuing recommen-
dations for improving the conditions of
implementation of
operations and promoting the economically sound use of the
institution’s resources.

(b) supply contracts;

(c) works contracts;

(d) service contracts.

He shall be responsible:

2.

This Title does not relate to grants.

(a) for assessing the suitability and effectiveness of

internal
management systems and the performance of departments
in implementing policies, programmes and actions by
reference to the risks associated with them; and

(b) for assessing the suitability and quality of

the internal
control systems applicable to every budget implementation
operation.

Article 84

All public contracts financed in whole or in part by the
transparency,

1.
budget
shall comply with the principles of
proportionality, equal treatment and non-discrimination.

2.
All contracts shall be put out to tender on the broadest
possible base except in the cases of which an exhaustive list is
given in the detailed implementing rules.

2.
The internal auditor shall perform his tasks on all the
institution’s activities and departments. He shall enjoy full
and unlimited access to files relating to revenue and expen-
diture, where necessary on the spot, including in the Member
States and in third countries.

3.
The institutions shall reserve the right to suspend, refuse
or recover at any time amounts paid for contracts in respect of
which they feel that the award procedure was vitiated by error,
irregularities or fraud.

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S e c t i o n 2

Publication

Article 85

1.
All contracts with a value exceeding the thresholds
provided for in Article 98 or Article 153 shall be published
in the Official Journal of the European Communities.

Publication shall consist of a pre-information notice, a

2.
contract notice and an award notice.

The contract notice shall be published, except in the cases
referred to in Article 87.

The award notice need not be published where publication
would hinder application of the law, would be contrary to
the public interest or would harm the legitimate business
interests of public or private undertakings or could distort
fair competition between the suppliers.

3.
Contracts with a value not exceeding the thresholds
provided for in Article 98 or Article 153 shall be advertised
as appropriate.

The subject of the contract must be clearly defined in the
including the

4.
documents relating to competitive tendering,
specifications.

S e c t i o n 3

Procurement procedures

Article 86

Procurement procedures involving competitive tendering

1.
shall take one of the following forms:

(a) the open procedure;

(b) the restricted procedure;

(c) contests;

(d) the negotiated procedure.

For contracts where the value exceeds the thresholds
2.
provided for
the
procedures referred to in points (a), (b) and (c) of paragraph
1 shall apply, subject to Article 87.

in Article 98 or Article 153, one of

For contracts where the value does not exceed the
3.
the
thresholds provided for in Article 98 or Article 153,
in addition to the procedures
contracting authority may,
mentioned
tendering
simplified
procedures under which the candidates invited to tender are
selected on the basis of objective criteria allowing genuine
competition.

in paragraph 1,

apply

Article 87

1.
Contracts may be awarded by negotiated procedure
without prior publication of a contract notice only in the
cases set out in the implementing rules.

2.
After a contract notice is published and candidates have
been selected on the basis of the criteria set out, the negotiated
procedure may be used only in the cases set out
in the
implementing rules.

S e c t i o n 4

Exclusion from procurement procedures

Article 88

Candidate or tenderer shall be excluded from award of a

1.
contract if:

(a) they are bankrupt or being wound up, are having their
affairs administered by the courts, have entered into an
arrangement with creditors, have
suspended business
activities, are the subject of proceedings concerning those
matters, or are in any analogous situation arising from a
similar procedure provided for in national
legislation or
regulations;

(b) they have been convicted of an offence concerning their
professional conduct by a judgment which has the force of
res judicata;

(c) they have been guilty of grave professional misconduct
proven by any means which the contracting authority can
justify;

(d) they have not fulfilled obligations relating to the payment
of social security contributions or the payment of taxes in
the country in
accordance with the legal provisions of
which they are established or with those of the country
of
the country
the contracting authority or
where the contract is to be carried out.

those of

Candidates or tenderers must certify that they are not in

2.
one of the situations listed in paragraph 1.

Article 89

Contracts may not be awarded to candidates or tenderers

1.
who, during the procurement procedure:

(a) are subject to a conflict of interests;

(b) are guilty of misrepresentation in supplying the information
required by the contracting authorities as a condition of
participation in a contract procedure;

(c) have attempted to obtain confidential

unlawful agreements with their competitors,
corrupt the contracting authority in any way.

information, reach
influence or

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In addition to the cases provided for in paragraph 1,
2.
contracts may not be awarded to candidates or tenderers
who, in another procurement or grant procedure financed by
the Community budget, have been declared to be in serious
breach of contract for failure to comply with their contractual
obligations.

Article 90

financial penalties may be imposed on
Administrative or
candidates or
tenderers who are excluded by virtue of
Articles 88 and 89, after they have been given the opportunity
to present their observations. These penalties may consist of
the suspension or cancellation of funding for ongoing contracts
or the exclusion of the candidate or tenderer concerned from
contracts financed by the Community budget for a period of
up to five years.

S e c t i o n 5

Award of contracts

Article 91

1.
The selection criteria for evaluating the capability of
candidates or tenderers and the award criteria for evaluating
the content of the tenders shall be defined in advance and set
out in the call for tender.

Contracts shall be awarded in one of the following two

2.
ways:

(a) under

the automatic award procedure,

is
awarded to the lowest bid submitted that is in order and
satisfies the conditions laid down;

the contract

(b) under

the value-for-money procedure,

is
awarded to the bid offering the best quality-price combi-
nation.

the contract

S e c t i o n 6

Submission, opening and evaluation of tenders

Article 92

The procedure for submitting tenders shall ensure that
they are all opened simul-

1.
they remain confidential until
taneously.

2. Whatever procedure is applied for awarding the contract,
the applications and tenders shall be opened by a tender board
appointed for this purpose. Any tender or proposal declared by
the board not to satisfy the conditions laid down shall be
rejected.

Article 93

While the procedure for awarding a contract is under way, all
contacts between the contracting authority and candidates or
tenderers must satisfy conditions ensuring transparency and
the
equal
conditions of the contract or the terms of the original tender.

treatment. They may not

lead to amendment of

Article 94

contracting authority shall notify all

The
candidates or
tenderers whose applications or tenders are rejected of the
grounds on which the decision was taken, and all tenderers
the characteristics and
whose tenders are admissible of
relative advantages of
tender as well as the
name of the tenderer to whom the contract is awarded.

the successful

Article 95

The contracting authority may, before signature of the contract,
the award procedure or abandon the procurement
cancel
without the candidates or tenderers being able to claim any
compensation.

The decision must be reasoned and be brought to the attention
of the candidates or tenderers.

S e c t i o n 7

Security

Article 96

To guarantee implementation of contracts,
authority may require contractors
advance.

the contracting
to lodge a security in

CHAPTER 2

PROVISIONS APPLICABLE

SPECIFIC
TO CONTRACTS
AWARDED BY THE COMMUNITY INSTITUTIONS ON THEIR
OWN ACCOUNT

Article 97

The Community institutions shall be deemed to be contracting
authorities in the case of contracts awarded on their own
account.

Article 98

3.
All applications or tenders declared by the tender board
to satisfy the conditions laid down shall be evaluated on the
basis of
the selection and award criteria by a committee
appointed for this purpose.

The thresholds and time-limits applicable shall be those laid
down in the Directives of the European Parliament and of the
Council on the coordination of procedures for the award of
public services, supply and works contracts, subject to Title III
of Part Two.

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Article 99

Participation in tendering procedures shall be open on equal
terms to all natural and legal persons coming within the scope
of the Treaties and to all natural and legal persons in a third
country which has ratified a special agreement, under the
conditions
agreement, between that
country and the European Communities in the field of public
procurement.

laid down in that

The grant may not have the purpose or effect of

2.
producing a profit for the beneficiary.

Article 103

1.
Grants shall be subject to an annual programme indi-
cating this legal base, the objectives and the results expected.

Article 100

Where the Plurilateral Agreement on Government Procurement
concluded within the World Trade Organisation applies, the
contracts shall also be open to nationals of the States which
have ratified this agreement, under the conditions laid down in
that agreement.

These programmes shall be published every year and imple-
mented through the publication of calls for proposals except
where the urgency, the nature of the action or the status of the
beneficiary makes this inappropriate.

All grants awarded in the course of a financial year shall

2.
be published annually.

TITLE V

GRANTS

CHAPTER 1

GENERAL PROVISIONS

Article 101

Grants are direct

1.
donation, from the budget in order to finance:

financial contributions, by way of

(a) either the functioning of a body which pursues an aim of
general European interest or has an objective forming part
of a European Union policy;

(b) or action intended to help achieve an objective forming

part of a European Union policy.

They shall be covered by a written agreement.

Article 104

One action may give rise to the award of only one grant

1.
to any one beneficiary.

A beneficiary may be awarded only one operating grant

2.
per financial year.

Article 105

1.
A grant may be awarded for an action which has already
begun only where the applicant can demonstrate the need to
start the action before the award decision.

In such cases, expenditure eligible for financing may not have
been incurred prior to the date of submission of the grant
application.

No grant may be awarded retrospectively for actions

2.
already completed.

Expenditure on the institutions’ staff,

loans and share-
2.
holdings, payment of damages, and procurement contracts
shall not constitute grants.

Article 106

The grant may not

1.
finance the entire administrative
expenditure of the beneficiary organisation or of the action,
subject to Title IV of Part Two.

CHAPTER 2

AWARD PRINCIPLES

Article 102

1.
The award of grants is subject to the principles of trans-
parency and equal treatment. They may not be cumulative or
awarded retrospectively and they must involve co-financing.

Where operating grants are renewed, they shall be gradually
decreased.

2.
Derogations from paragraph 1 may be laid down either
in the legal basis or in the budget remarks for organisations
pursuing an objective of general European interest. Derogations
from the second subparagraph of paragraph 1 may be laid
down in the same way for international organisations.

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CHAPTER 3

AWARD PROCEDURE

Article 107

Article 111

Under the conditions attached to the grant, the beneficiary may
be required to lodge a security in advance as a guarantee that
he will discharge his obligations.

The call for proposals shall set out selection criteria which
make it possible to assess the applicant’s financial and oper-
ational capacity to complete the proposed action and the award
criteria for selecting the beneficiaries of the grants.

Article 108

1.
Grant applications submitted in writing by non-profit-
making legal persons shall be eligible. By way of exception,
depending on the nature of
the objective
pursued by the applicant, natural persons or commercial enter-
prises may receive grants.

the action or

Article 112

1.
The amount of the grant shall not become final until after
the action has been completed or the operating costs have
been presented and the institution has accepted the final
accounts, without prejudice to subsequent checks by the insti-
tutions.

2.
The grant must be repaid pro rata by the beneficiary if
the action is not carried out or only partly carried out or is not
completed on schedule, where sums above the maximum
amounts provided for in the agreement have been paid or
where the action has been carried out at a lower cost.

Grants may not be awarded to applicants who are or at
2.
the time of a grant award procedure or procurement procedure
financed from the budget have been in one of the situations
referred to in Articles 88 and 89.

Should the beneficiary infringe the rules and principles

3.
laid down in this Title, the grant paid shall be recovered.

Applicants must certify that
situations listed in Article 88.

they are not

in one of

the

Administrative and financial penalties may be imposed on
applicants who are excluded pursuant to Articles 88 and 89.

Article 109

Applications

1.
evaluated, on the basis of
pre-announced selection and award criteria, by a committee
set up for that purpose.

shall be

The institution shall inform applicants in writing of the
2.
decision on their application. If it decides not to award all or
part of
the institution shall give the
reasons for its decision.

the requested grant,

CHAPTER 4

PAYMENT

Article 110

1.

Grants shall be paid in euro.

CHAPTER 5

IMPLEMENTATION

Article 113

Where implementation of the action requires the award of
this Part or
contracts,
Chapter 3 of Title IV of Part Two.

they shall be subject

to Title IV of

Article 114

Each grant programme shall be evaluated to ensure that the
results are consistent with the objectives set.

TITLE VI

KEEPING AND PRESENTATION OF THE ACCOUNTS

CHAPTER 1

PRESENTATION OF THE ACCOUNTS

Article 115

1.
The financial statements shall consist of the balance sheet,
the revenue and expenditure account and an Annex and shall
form an indissoluble whole. They shall be presented in euro.

2.
The rate of payment shall be determined by the financial
risks involved, the duration and progress of the action or the
real costs incurred by the beneficiary.

The balance sheet shall set out the financial situation at

2.
31 December of the preceding financial year.

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The balance sheet shall be presented in the form laid down in
the Council Directive on the annual accounts of certain types
of companies, with account being taken of the specific features
of the Communities.

3.
The revenue and expenditure account shall set out all
budget operations for the year in terms of revenue and expen-
diture.

The Annex shall

4.
supplement and comment on the
information provided in the balance sheet and the revenue
and
the
methods used to draw them up and commenting on the
figures they contain.

in particular

expenditure

explaining

account,

The consolidated financial statements of the Communities
information

5.
shall present
contained in the financial statements of each institution.

in aggregated form the financial

In addition to the financial statements, each institution
implementation and an

6.
shall draw up a report on budget
analysis of financial management.

Article 116

1.
The financial statements must comply with the rules and
be accurate and comprehensive and present a true and fair
view of assets, the financial situation and the outturn of the
financial year.

The financial statements shall be drawn up in accordance

2.
with the following generally accepted accounting principles:

(a) going concern basis;

(b) prudence;

(c) consistent accounting methods;

(d) materiality;

(e) no netting;

(f) substance over form;

(g) independence of financial years.

The Commission accounting officer shall consolidate the
2.
provisional financial statements and shall send to the Court of
Auditors, by 1 May of the following year at the latest, each
institution’s provisional financial statements together with the
the
provisional
Communities. He shall also send each institution’s analysis of
financial management to Parliament, the Council and the Court
of Auditors by the same date.

consolidated

statements

financial

of

Article 118

1.
The Court of Auditors shall draw up observations on the
provisional financial statements of each institution by 15 July at
the latest to allow them to make the corrections which they
deem necessary for their final financial statements.

Each institution shall draw up its

2.
financial
statements and send them to the Commission’s accounting
officer by 5 September of
the latest
with a view to drawing up the final consolidated financial
statements.

the following year at

final

After

approving

financial
3.
statements, the Commission shall send them to the European
Parliament,
the Council and the Court of Auditors by 30
September of the following year at the latest.

consolidated

final

the

The final consolidated financial

shall be
4.
published in the Official
the European Communities
Journal of
together with the statement of assurance given by the Court
of Auditors in accordance with Article 248 of the EC Treaty,
Article 45c of
the
Euratom Treaty by 30 November the following year.

the ECSC Treaty and Article 160c of

statements

Article 119

The Commission shall report to the European Parliament and
the Council twice a year on budget guarantees and the corre-
sponding risks.

This information shall be sent to the Court of Auditors at the
same time.

Article 117

The accounting officers of

1.
the other institutions shall
send their provisional financial statements to the Commission’s
accounting officer by 1 March of the following year at the
latest.

CHAPTER 2

ACCOUNTS

Article 120

They shall also send him a report on budget implementation
and an analysis of financial management.

1.
The accounts shall consist of general accounts and budget
accounts. These accounts shall be kept in euro on the basis of
the calendar year.

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The

2.
employed by the
adopted by the Commission’s accounting officer.

accounting methods
institutions

accounting plan
and the
shall be harmonised and

3.
The general accounts shall show, by the double entry
method, all revenue and expenditure for the financial year
and is intended to establish the institution’s assets.

The budget accounts shall allow detailed monitoring of

4.
budget implementation.

All accounting records shall be based on supporting

5.
documents to which they shall refer.

Article 121

1.
The figures from the general and budget accounts shall be
adopted at the close of the budget year with a view to drawing
up the financial statements of the Communities referred to in
Chapter 1.

2.
The accounting officer may, after the close of the budget
year and up to the date of closure of the accounts, make any
corrections which, without involving disbursement in respect
of that year, are necessary for a full, true and fair presentation
of the financial statements.

CHAPTER 3

PROPERTY INVENTORIES

Article 122

Each institution shall keep inventories showing the quantity
and value of all
intangible and
financial assets in accordance with a model drawn up by the
accounting officer of the Commission.

the Communities’

tangible,

Each institution shall carry out its own inspection to ascertain
that entries in the inventory correspond to the actual situation.

The sale of movable property shall be suitably advertised.

A statement or record shall be drawn up by the authorising
officer whenever any property in the inventory is sold, given
away free of charge, scrapped, hired out, or found missing on
account of loss, theft or any other reason.

TITLE VII

EXTERNAL AUDIT AND DISCHARGE

CHAPTER 1

EXTERNAL AUDIT

Article 123

The Court of Auditors shall conduct the audit of accounts
provided for by Article 248 of the EC Treaty, Article 45 of
the ECSC Treaty and Article 180 of the Euratom Treaty.

Article 124

The

European

Parliament,

1.
Commission shall
possible, of all decisions and rules adopted pursuant
Articles 8, 12, 17(2), 20, 21, 24 and 33.

the
inform the Court of Auditors, as soon as
to

the Council

and

2.
The institutions shall send to the Court of Auditors any
rules of procedure they adopt in respect of financial matters.

of

The Court of Auditors
authorising
and

the
3.
auditors,
appointment
accounting officers
and of
imprest
financial delegation decisions under Articles 48, 56, 58, 59
and 80.

informed of
internal
administrators

shall be
officers,

Article 125

1.
The audit carried out by the Court of Auditors shall be
based on records and, if necessary, performed on the spot. Its
purpose shall be to establish that all revenue has been received
and all expenditure incurred in a lawful and proper manner
having regard to the provisions of the Treaties, the budget, this
Regulation and all other acts adopted pursuant to the Treaties.
It shall also establish that the financial management has been
sound.

For the performance of its task, the Court of Auditors
2.
shall be entitled to consult,
in the manner provided for in
Article 127, all documents and information relating to the
financial management of the departments or bodies subject
to its inspection. It has the power to make enquiries of any
official responsible for a revenue or expenditure operation and
to use any of the auditing procedures appropriate to those
departments or bodies.

to obtain all

the necessary information for

In order
the
performance of the task entrusted to it by the Treaties or the
acts taken to implement them, the Court of Auditors may be
present, at its request, during the operations carried out by the
Commission under the rules applicable to EAGGF Guarantee
and own resources. This provision shall also apply to the
inspection of any fund set up by the Communities.

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At the request of the Court of Auditors, each institution shall
authorise financial organisations holding Community deposits
to enable the Court of Auditors to ensure that external data
tally with the accounts.

In carrying out its task, the Court of Auditors and its
3.
members may be assisted by officers of
the Court of
Auditors. The Court of Auditors itself or one of its members
shall notify the authorities with which the delegated officer is
to work of the tasks delegated to him.

Article 126

The Court of Auditors shall ensure that all securities and cash
on deposit or in hand are checked against vouchers signed by
the depositories or against official memoranda of cash and
securities held. The Court of Auditors may carry out such
checks itself.

Article 127

institutions,

The Commission,

1.
the bodies
the other
administering revenue or expenditure on the Communities’
behalf and the national audit institutions or, where they do
not dispose of the necessary powers, the national departments
responsible and the final beneficiaries of payments from the
budget shall afford the Court of Auditors all the facilities and
give it all the information which the Court of Auditors may
consider necessary for the performance of its task. They shall
place at the disposal of the Court of Auditors all documents
concerning the conclusion and implementation of contracts
financed by the Community budget and all accounts of cash
or materials, all accounting records or supporting documents,
and also administrative documents pertaining thereto, all
documents relating to revenue and expenditure, all inventories,
all organisation charts of departments, which the Court of
Auditors may consider necessary for auditing the revenue
and expenditure account on the basis of records or on the
spot and,
for the same purposes, all documents and data
created or stored on a magnetic medium.

The first subparagraph shall also apply to natural or legal
persons receiving payments from the Community budget.

The officials whose operations are checked by the Court

2.
of Auditors shall:

(a) show their

records of cash in hand, any other cash,
securities and materials of all kinds, and also the supporting
documents in respect of their stewardship of the funds with
which they are entrusted, and also any books, registers and
other documents relating thereto;

(b) present

the correspondence and any other document
required for the full implementation of the audit referred
to in Article 125(1).

information supplied under point

The
first
subparagraph may be requested only by the Court of Auditors.

(b) of

the

The Court of Auditors shall be empowered to audit the
3.
documents in respect of the revenue and expenditure of the
Communities which are held by the departments of the insti-
tutions and, in particular, by the departments responsible for
the
decisions in respect of such revenue and expenditure,
bodies administering revenue or expenditure on the Commun-
ities’ behalf and the natural or legal persons receiving payments
from the budget.

The national audit institutions or, where they do not dispose of
the necessary powers,
the national departments responsible
shall provide the Court of Auditors with all the information
they possess on operations financed or cofinanced by the
Communities and on the management and control of these
operations.

The task of establishing that

the revenue has been
4.
received and the expenditure incurred in a lawful and proper
manner and that the financial management has been sound
shall extend to the utilisation, by bodies outside the insti-
tutions, of Community funds received by way of grants.

5.
The award of Community grants to beneficiaries outside
the institutions shall be subject to the agreement in writing by
the beneficiaries to an audit being carried out by the Court of
Auditors on the use made of the amounts granted.

6.
The Commission shall provide the Court of Auditors, at
its request, with any information on borrowing and lending
operations.

Use of integrated computer systems shall not have the
7.
effect of reducing the access of the Court of Auditors to the
supporting documents.

Article 128

1.
The annual report of the Court of Auditors provided for
in Article 248(4) of the EC Treaty, Article 45c(4) of the ECSC
the Euratom Treaty shall be
Treaty and Article 160c(4) of
governed by the provisions of paragraphs 2 to 7 of this Article.

The Court of Auditors shall transmit to the Commission
2.
and the institutions concerned, by 15 July at the latest, any
observations which are, in its opinion, such that they should
appear in the annual report. These observations must remain
confidential. Each institution shall address its reply to the Court
of Auditors by 31 October at the latest. The replies of insti-
tutions other
to the
Commission at the same time.

than the Commission shall be sent

3.
The Commission shall inform Member States of the Court
of Auditors’ observations on the management of Community
funds for which they are responsible under the rules applicable,
whenever the Member States referred to are identified in those
observations.

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The Member States shall reply to the Commission by 30
4.
September at the latest. The Commission shall transmit the
reply,
to the Court of
Auditors, by 31 October.

accompanied by its

comments

The annual report shall contain an assessment of the

5.
soundness of financial management.

The annual report shall include a section for each insti-
6.
tution. The Court of Auditors may add any summary report or
general observations which it sees fit to make.

The Court of Auditors shall take all necessary steps to ensure
that
the replies of each institution to its observations are
published immediately after the observations to which they
relate.

7.
The Court of Auditors shall transmit to the authorities
responsible for giving discharge and to the other institutions,
by 30 November at the latest, its annual report accompanied
in the
by the replies and shall ensure publication thereof
Official Journal of the European Communities.

Article 129

the Court of Auditors

At the same time as the annual report referred to in Article
128,
shall provide the European
Parliament and the Council with a statement of assurance as
to the reliability of the accounts and the legality and regularity
of the underlying transactions.

reports shall be transmitted to the European
The special
Parliament and the Council, each of which shall decide,
where appropriate in conjunction with the Commission, what
action is to be taken in response.

3.
If the opinions referred to in paragraph 1 do not relate to
proposals for legislation or draft legislation on which it has
they may be published by the Court of
been consulted,
Auditors in the Official
the European Communities.
Journal of
The Court of Auditors shall take its decision on publication
after consulting the institution which requested the opinion or
the institution concerned by the Court of Auditors’ analysis.
Opinions published shall be accompanied by the replies of the
institutions concerned.

CHAPTER 2

DISCHARGE

Article 131

1.
The European Parliament, upon a recommendation from
the Council acting by a qualified majority, shall, before 30
April of the year N + 2 give a discharge to the Commission
in respect of the implementation of the budget for year N.

If the date provided for in paragraph 1 cannot be met,
inform the

2.
the Council shall
the European Parliament or
Commission of the reasons for the postponement.

Article 130

In addition to the annual report, the Court of Auditors
1.
may also, at any time, submit observations,
in the form of
special reports, on specific questions and deliver opinions at
the request of one of the institutions of the Communities.

If the European Parliament postpones the decision giving
3.
a discharge, the Commission shall make every effort to take
measures, as soon as possible, to remove or facilitate removal
of the obstacles to that decision.

The special reports shall be transmitted to the institution

2.
or body concerned.

Article 132

The institution concerned shall have two and a half months
within which to inform the Court of Auditors of any comments
it wishes to make on the special reports in question.

Should the Court of Auditors decide to have any such reports
published in the Official Journal of
the European Communities,
they shall be accompanied by the replies of the institutions
concerned. Where the special report concerns the management
for which the Member States are
of Community funds
responsible under the relevant rules,
the Commission shall
send the special report to the Member States identified in the
Court of Auditors’ observations.

The Member States shall send their replies to the Commission
within one and a half months of the adoption of the special
report. The Commission shall
these replies to the
Court of Auditors together with its remarks.

transmit

The discharge decision shall cover the accounts of all the
1.
Communities’ revenue and expenditure, the resulting balance
and the assets and liabilities of the Communities shown in the
financial statement.
the
responsibility of
the Commission’s budgetary management
over the financial year in question.

include an assessment of

It shall

2.
To grant the discharge, the European Parliament shall,
after the Council has done so, examine the accounts and
financial statements mentioned in Article 275 of
the EC
Treaty, Article 78d of the ECSC Treaty, and Article 179a of
the Euratom Treaty. It shall also examine the annual report
made by the Court of Auditors together with the replies of
the institutions under audit, any relevant special reports by the
Court of Auditors in respect of the financial year in question
and the Court of Auditors’ statement of assurance as to the
reliability of the accounts and the legality and regularity of the
underlying transactions.

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to

the

shall

submit

The Commission

European
3.
Parliament, at the latter’s request, any information required
for the control of the implementation of the budget of the
year in question. Access to confidential
information and the
arrangements for handling it shall comply with the funda-
mental rights of the individual, business secrecy, the provisions
governing judicial
and the
interests of the Union.

and disciplinary proceedings

Article 133

the ECSC Treaty and Article 180b of

In accordance with Article 276 of the EC Treaty, Article
1.
78g of
the Euratom
Treaty, the Commission and the other institutions shall take
all appropriate steps to act on the observations accompanying
the European Parliament’s discharge decision and on the
comments accompanying the recommendation for discharge
adopted by the Council.

2.
At the request of the European Parliament or the Council,
the institutions shall report on the measures taken in the light
of these observations and comments, and, in particular, on the
their departments which are
instructions given to those of
the
responsible
the budget. The
for
Member States
shall cooperate with the Commission by
informing it of the measures they have taken to act on these
observations so that
the Commission may take them into
account when drawing up its own report. The reports from
the institutions shall also be transmitted to the Court of
Auditors.

implementation of

PA R T T W O

SPECIAL PROVISIONS

TITLE I

EUROPEAN

AGRICULTURAL

GUIDANCE

AND

GUARANTEE FUND, GUARANTEE SECTION

Article 136

The Commission shall reimburse the expenditure incurred

1.
by the Member States.

The Commission decisions fixing the amounts of these
2.
payments
shall constitute global provisional commitments,
which may not exceed total appropriations entered in the
EAGGF Guarantee Section, less any earmarked revenue.

As from 15 November, routine management expenditure
3.
for
the EAGGF Guarantee Section may be committed in
advance against the appropriations provided for the following
financial year. Such commitments may not, however, exceed
one half of
the total corresponding appropriations for the
current financial year. They may apply only to expenditure
for which the principle is laid down in an existing legal base.

Article 137

Expenditure

1.
effected by the authorities and bodies
referred to in the rules relating to the EAGGF Guarantee
Section shall, within two months following receipt of
the
in by Member States, be the subject of a
statements sent
commitment by chapter,
and item. Save where
article
payment has not yet been made by the Member States or
shall be charged as
the amounts
in doubt,
eligibility is
payments within the same time-limit.

This budget commitment shall be deducted from the global
provisional commitment referred to in Article 136.

2.
Global provisional commitments which have been made
for a financial year and which have not been committed by
specific lines in the budget nomenclature by 1 February of the
following financial year shall be cancelled in respect of the
original financial year.

Article 134

Paragraphs 1 and 2 shall apply subject to the clearance of

3.
accounts.

1.
Parts One and Three of this Regulation shall apply to
expenditure effected by the authorities and bodies referred to
in the rules relating to the EAGGF Guarantee Section and to
revenue, save as otherwise provided in this Title.

2.
Operations managed directly by the Commission shall be
implemented in accordance with the rules laid down in Parts
One and Three.

Article 135

For each financial year,

1.
the EAGGF
Guarantee Section shall include equal amounts of commitment
appropriations and payment appropriations.

the budget of

Payment appropriations not used at

2.
financial year
following year only to cover earlier commitments.

the
shall be carried over automatically to the

the end of

Article 138

Expenditure shall be booked to the accounts for a financial year
on the basis of the repayments made by the Commission to the
Member States by 31 December of the year concerned at the
latest, provided that
reached the
accounting officer by 31 January of the following financial
year at the latest.

the payment order has

Article 139

1. Where the Commission may transfer appropriations
pursuant
take its decision by 31
shall
January of the following financial year at the latest and shall
inform the budgetary authority thereof.

to Article 21,

it

3.
Payment appropriations which have been carried over but
which have not been used by the end of the financial year shall
lapse.

2.
In cases other than those referred to in paragraph 1, the
Commission shall submit transfer proposals to the budgetary
authority by 10 January of the following financial year at the
latest.

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The budgetary authority shall take decisions on such transfers
in accordance with the procedure provided for in Article 22,
but within a time-limit of three weeks.

The decommitted appropriations may be made available again
in the event of a manifest error attributable solely to the
Commission or
in the event of a major natural disaster
which has serious repercussions for the implementation of
operations supported by the Structural Funds.

Article 140

Earmarked revenue under this Title shall be earmarked in its
entirety either to appropriations for the EAGGF Guarantee
Section for financing expenditure on the common agricultural
policy or to appropriations for the EAGGF Guarantee Section
for rural development and accompanying measures.

To this end, the Commission shall examine decommitments
made during the previous financial year and decide, by 15
February of the current year, on the basis of requirements,
whether it
is necessary to make the corresponding appro-
priations available again.

TITLE II

STRUCTURAL FUNDS

Article 141

1.
Parts One and Three of this Regulation shall apply to
expenditure effected by the authorities and bodies referred to
in the rules governing the Structural Funds, the Cohesion Fund
and the pre-accession structural and agricultural measures and
to revenue, save as otherwise provided in this Title.

2.
Operations managed directly by the Commission shall
also be implemented in accordance with the rules laid down
in Parts One and Three of this Regulation.

3.
The pre-accession structural and agricultural measures
may be managed on a decentralised basis as provided in
Article 150.

Article 142

1.
Payment by the Commission of contributions from the
Funds shall be made in accordance with the rules referred to in
Article 141.

It may take the form of prefinancing, an interim payment or
payment of the balance.

2.
The time-limit for interim payments by the Commission
shall be laid down in accordance with the rules referred to in
Article 141.

3.
The treatment of repayments by the Member States of
prefinancing payments and the implications for the amount
of contributions from the Funds shall be governed by the
rules referred to in Article 141.

Payments

shall be made

to any financial
4.
corrections deemed necessary by the Commission or
the
Member States in order to comply with the rules referred to
in Article 141.

subject

Article 144

With regard to operational expenditure referred to in this Title,
the Commission may make transfers from one title to another,
provided that the appropriations in question are for the same
objective, within the meaning of the rules referred to in Article
141.

Article 145

Aspects concerning the management and selection of projects
and audit shall be governed by the rules referred to in Article
141.

TITLE III

RESEARCH

Article 146

Parts One and Three shall apply to the research and tech-
as otherwise
appropriations,

save

1.
nological development
provided in this Title.

These appropriations shall be entered either in a budget title
relating to research policy or in a chapter relating to research
activities in another title. They shall be used by implementation
of the actions set out in detail in the implementing rules.

2. Within the budget title relating to the research policy
area,
the Commission may, by way of derogation from
Article 21, make transfers between chapters of up to 15 % of
the appropriations on the line from which the transfer is made.

3.
Experts paid from the research and technological devel-
opment appropriations shall be recruited in accordance with
the procedures laid down by the Council when it adopts each
research framework programme.

Article 147

Article 143

The Commission shall automatically decommit appropriations
that have been committed as provided for in the rules referred
to in Article 141.

1.
The Joint Research Centre (JRC) may receive funding
charged to appropriations entered outside the title and the
chapters referred to in Article 146(1) in respect of its partici-
pation on a competitive or negotiated basis in Community
activities financed in whole or in part from the general budget.

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The appropriations relating to the activities in which the
2.
JRC participates on a competitive basis shall be treated as
earmarked revenue within the meaning of Article 17. The
commitment appropriations generated by this revenue shall
be made available as soon as the amount receivable has been
estimated.

The utilisation of these appropriations shall be shown in a set
of analytical accounts in the revenue and expenditure account
for each category of action to which it relates;
it shall be
separate from revenue originating from financing by third
parties
(public or private) and from revenue from other
services carried out by the Commission for third parties.

3.
The rules on procurement in Title IV of Part One shall
not apply to the activities of the JRC on behalf of third parties.

TITLE IV

EXTERNAL ACTIONS

CHAPTER 1

GENERAL PROVISIONS

Article 148

1.
Parts One and Three shall apply to external actions
financed from the budget, save as otherwise provided in this
Title.

The

2.
paragraph 1 shall be used by the Commission:

appropriations

actions

the

for

referred to in

(a) either by autonomous decision;

(b) or under agreements concluded with one or more bene-

ficiary third countries;

(c) or under agreements with international organisations.

CHAPTER 2

IMPLEMENTATION OF ACTIONS

Article 149

The actions referred to in this Title may be implemented either
on a centralised basis by the Commission or on a partly or
wholly decentralised basis by the beneficiary third country or
countries, or jointly with international organisations.

Article 150

1.
The Commission may decide to entrust management of
certain actions to the authorities of beneficiary third countries,
after having established that the beneficiary third country or
countries are in a position to apply the following minimum
criteria for the management of Community funds:

(a) effective separation of the duties of authorising officer and

accounting officer;

(b) existence of an effective system for the internal control of

management operations;

(c) procedures

for

the separate presentation of accounts

showing the use made of Community funds;

(d) existence of an independent external audit system;

(e) transparent, non-discriminatory procurement procedures

ruling out all conflicts of interest.

The beneficiary country must agree to assume full
2.
responsibility for the Community funds paid to it;
it shall
also undertake to conduct regular checks to ensure that the
actions financed from the Community budget have been imple-
mented correctly, to prevent and prosecute irregularities and
fraud and to recover funds lost, wrongly paid or incorrectly
used.

Article 151

The implementation of actions by beneficiary third countries or
international organisations
to scrutiny by the
Commission. Such scrutiny shall be exercised either by prior
approval, by ex post checks or by a combined procedure.

subject

is

Article 152

1.
Actions carried out autonomously or under agreements
with beneficiary third countries or international organisations
shall give rise to:

(a) a financing agreement drawn up between the Commission,
acting for
the Communities, and the beneficiary third
country or countries or the bodies they have designated,
hereinafter referred to as (cid:145)the beneficiaries(cid:146);

(b) a contract or grant agreement with a body established
under national or international public law or natural or
legal persons responsible for carrying out the actions.

These contracts and agreements shall lay down the terms on
which the external aid shall be managed by the contractor.

contracts

Financing agreements with beneficiary third countries
2.
shall be treated as individual
legal commitments concluded
within the time limits laid down in Article 71(2). The indi-
such
vidual
financing agreements must be concluded by 31 December of
year N + 3 at the latest, year N being the one in which the
Individual contracts and
budget commitment was made.
agreements
be
evaluation may
relating
concluded later.

and agreements which implement

to audit

and

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CHAPTER 3

CHAPTER 5

AWARD OF CONTRACTS

AUDITING OF ACCOUNTS

Article 153

Article 156

1.
The provisions of Article 53 and of Chapter 1 of Title IV
of Part One relating to the general provisions on procurement
shall be applicable to contracts covered by this Title subject to
the
relating
the
arrangements for awarding external contracts laid down in
the implementing rules. Such contracts shall be awarded:

special provisions

to thresholds

and

(a) by the Commission on behalf of and for the account of one

or more beneficiaries;

(b) by the beneficiary or beneficiaries;

(c) or by a body established under national or international
law or natural or
legal persons who have signed a
contract or a financing or grant agreement with the
Commission for the implementation of an external action.

2.
The procedures for awarding the contracts must be laid
down in the financing agreements or contracts or grant
agreements referred to in Article 152.

Article 154

1.
Participation in tendering procedures shall be open on
equal terms to all persons coming within the scope of the
in accordance with the specific provisions in
Treaties and,
the basic
cooperation sector
concerned, to all natural and legal persons who are nationals
of the beneficiary third countries or of any other third country
expressly mentioned in those instruments.

instruments governing the

2.
In exceptional cases and with proper justification, it may
be decided, on the basis of the specific conditions laid down in
the basic instruments governing cooperation, to allow nationals
of third countries other than those referred to in paragraph 1
to tender for contracts.

CHAPTER 4

AWARD OF GRANTS

Article 155

An action may be financed in full by the budget if this is
essential for it to be carried out.

Each financing agreement or contract or grant agreement shall
expressly provide for
the Commission and the Court of
Auditors
to have the power of audit, on the basis of
documents and on the spot, up to and including the final
beneficiary of the operation, subject the derogations provided
for in Article 53.

TITLE V

OFFICE

FOR OFFICIAL

PUBLICATIONS OF THE

EUROPEAN COMMUNITIES

Article 157

Parts One and Three shall apply to the operation of the Office
for Official Publications of the European Communities, here-
inafter referred to as (cid:145)the Office(cid:146), save as otherwise provided in
this Title.

Article 158

1.
The appropriations for the Office, the total amount of
which shall be entered under a special budget line within the
section of the budget relating to the Commission, shall be set
out in detail in an Annex to that section.

The Annex shall take the form of a statement of revenue and
expenditure, subdivided in the same way as the sections of the
budget.

The appropriations entered in that Annex shall cover all the
financial requirements of the Office in the performance of its
duties in the service of the Community institutions.

The Management Committee of

2.
decisions on transfers within the Annex provided for
paragraph 1. The Commission shall
authority of such transfers.

take
in
inform the budgetary

the Office shall

Article 159

The Commission shall, in respect of the appropriations entered
in the Annex for the Office, delegate the powers of authorising
officer to the Director of the Office and shall set the limits and
conditions for this delegation of powers.

Article 160

1.
The Office shall draw up analytical accounts of its expen-
diture, enabling the proportion of its services supplied to each
of
to be determined. The Management
Committee shall lay down the criteria on which the accounting
system shall be based.

institutions

the

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The remarks concerning the specific budget line under
2.
which is entered the total appropriation for the Office shall
show an estimate of the cost of services supplied by the Office
to each of the institutions. This shall be based on the forecasts
of the analytical accounts provided for in paragraph 1.

The Office shall notify the institutions concerned of the

3.
results of the analytical accounts.

4.
The revenue and expenditure account and the balance
sheet of the Office shall form an integral part of the revenue
and expenditure account and of
the
Communities referred to in Article 115.

the balance sheet of

Article 161

The Management Committee of the Office shall determine the
detailed rules for the implementation of this Title, and also
specific rules governing the terms of sale of publications and
the corresponding accounting system.

Each institution shall retain the powers of authorisation for
expenditure charged to the appropriations for the publication
of all work entrusted to outside bodies by the Office. The net
proceeds from the sale of the publications shall be used as
earmarked revenue by the institution which drew up these
publications, in accordance with Article 17.

TITLE VI

EUROPEAN ANTI-FRAUD OFFICE

Article 165

The revenue and expenditure account and the balance sheet of
OLAF shall form an integral part of the revenue and expen-
diture account and of the balance sheet of the Communities
referred to in Article 115.

TITLE VII

ADMINISTRATIVE APPROPRIATIONS

Article 166

Parts One and Three shall apply to administrative appro-
priations, save as otherwise provided in this Title.

Article 167

1.
As from 15 November of each year, routine adminis-
trative expenditure may be committed in advance against the
appropriations provided for the following financial year. Such
commitments may not, however, exceed one quarter of the
total corresponding appropriations for the current
financial
year. They may not apply to new expenditure of a kind not
yet approved in principle in the last budget duly adopted.

2.
Expenditure which must be paid in advance, for example
rents, may give rise to payments from 1 December onwards to
be charged to the appropriations for the following financial
year.

Article 162

Article 168

Parts One and Three shall apply to the operation of
European Anti-Fraud Office
provided in this Title.

the
as otherwise

(OLAF),

save

Article 163

1.
Appropriations to cover all the financial requirements for
the operation of OLAF in the exercise of its tasks and remits
shall be entered under a special budget line within the section
of the budget relating to the Commission. These appropriations
shall be set out in detail in an Annex which shall take the form
of a statement of revenue and expenditure, subdivided in the
same way as the sections of the budget.

The Commission shall, at the request of the Director of
2.
OLAF, make transfers within the Annex referred to in
paragraph 1. The Commission shall
inform the budgetary
authority of such transfers.

For each financial year the amount of the commitment
1.
appropriations contained in the budget shall be equal to that of
the payment appropriations.

expenditure

Administrative

from contracts
2.
covering periods that extend beyond the financial year, either
in accordance with local practice or relating to the supply of
equipment, shall be charged to the budget of the financial year
in which it is effected.

arising

PA R T T H R E E

TRANSITIONAL AND FINAL PROVISIONS

TITLE I

TRANSITIONAL PROVISIONS

Article 169

Article 164

The Commission shall delegate the powers of authorising
officer in respect of the appropriations entered in the Annex
to the Commission Section relating to OLAF to the Director of
OLAF and shall set the limits and conditions for this delegation
of powers. The Director of OLAF shall be authorised to
subdelegate his powers to staff covered by the Staff Regu-
lations.

The section of the budget relating to the Commission shall, as
a transitional measure, contain within the appropriations for
the EAGGF Guarantee Section a monetary reserve, for which
the entry, utilisation and financing conditions are determined
by the Council Decision on budgetary discipline and the
Council Decision on the system of
the Communities’ own
resources and by the provisions adopted for implementing
the latter.

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Official Journal of the European Communities

27.3.2001

Article 170

The EAGGF Guarantee appropriations for rural development
and accompanying measures shall remain subject to Article
the period covered by the financial
135 until
is until 31 December 2006. Appropriate
perspective,
provisions shall be adopted after that date.

the end of

that

TITLE II

FINAL PROVISIONS

Article 171

The European Parliament and the Council shall be empowered
to demand any
regarding
budgetary matters within their competence.

information or

explanations

Article 172

In consultation with the European Parliament and the Council
and after the other institutions have delivered their opinions,
the Commission shall adopt
implementing this
Financial Regulation.

rules

for

Article 173

Every three years, the European Parliament and the Council
shall examine this Financial Regulation in the light of a
proposal from the Commission.

Parliament. The Commission shall participate in the work of
the conciliation committee.

The aim of
the conciliation procedure shall be to seek
agreement between the European Parliament and the Council.
The procedure should normally take place over a period not
exceeding three months, unless the instrument
in question
must be adopted by a specific date or if the matter is urgent,
in which case the Council may set an appropriate time limit.

the two institutions are sufficiently
When the positions of
close, the European Parliament may give a new opinion, after
which the Council shall take definitive action.

Article 174

financial

rules of Community bodies having legal
The
personality and receiving grants
from the general budget
must be modelled on this Financial Regulation. They may
their
from them when the specific requirements of
depart
individual operation so dictate.

Article 175

The Financial Regulation of 21 December 1977 is repealed.

References to the repealed Regulation shall be construed as
references to this Regulation and shall be read in accordance
with the correlation table in the Annex.

Article 176

Any financial regulations amending this Financial Regulation
shall be adopted by the Council after
recourse to the
conciliation procedure, if the European Parliament so requests.

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

The conciliation shall take place in a (cid:145)conciliation committee(cid:146)
consisting of the Council and representatives of the European

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

27.3.2001

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Official Journal of the European Communities

C 96 E/33

ANNEX

CORRELATION TABLE

(Article 175)

Financial Regulation of 21 December 1977

This Regulation

Part I

Title I

Article 1(1)

Article 1(2)

Article 1(3)

Article 1(4) and (5)

Article 1(6)

Article 1(7)

Article 2

Article 3

Article 4(1)

Article 4(2)

Article 4(3)

Article 5

Article 6

Article 7(1)

Article 7(2)

Article 7(3)

Article 7(4)

Article 7(5)

Article 7(6)

Article 7(7)

Article 7(8) and (9)

Article 8(1)

Article 8(2) and (3)

Article 9

Article 10

Article 11(1)

Article 11(2) to (5)

Title II

Section I

Article 12

Article 13

Article 14

Article 15(1), (3), (4) and (5)

Article 15(6)

Article 15(2)

Article 16(2)

Article 16(1)

Article 17

Part One

Title I

Article 3(1) and (2)

Article 5

Article 168(2)

Article 6

Deleted

Article 71(3)

Articles 25 and 45(2)

Article 26

Article 16(2)

Articles 16(1) and 17

Article 17

Article 4

Article 7

Deleted

Article 8

Deleted

Article 9

Deleted

Articles 10 and 14(3)

Article 142(3)

Deleted (*)

Article 11

Articles 136(3) and 167

Article 12

Article 27(2)

Article 15

Deleted (*)

Title II

Chapter 1

Article 29

Article 30

Article 31

Article 34

Deleted (*)

Article 35

Article 35

Article 32

Article 33

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Official Journal of the European Communities

27.3.2001

Financial Regulation of 21 December 1977

This Regulation

Article 18

Section II

Article 19(1), first subparagraph

Article 19(1), 2nd subparagraph

Article 19(2) and (3)

Article 19(4)

Article 19(5)

Article 19(6)

Article 19(7)

Article 19(8)

Article 20(1), (2), (3), (5) and (6)

Article 20(4)

Title III

Section I

Article 21, 1st subparagraph

Article 21, 2nd subparagraph

Article 21, 3rd subparagraph

Article 21, 4th subparagraph

Article 22(1), 1st subparagraph

Article 22(1), 2nd subparagraph

Article 22(2), 1st subparagraph

Article 22(2), 2nd subparagraph

Article 22(3)

Article 22(4), 1st and 2nd subparagraphs

Article 22(4), 3nd and 4th subparagraphs

Article 22(4), 5th subparagraph

Article 22(4)a

Article 22(5)

Article 23

Article 24, 1st, 3rd, 4th and 7th subparagraphs

Article 24, 2nd, 5th and 6th subparagraphs

Article 24, 8th and 9th subparagraphs

Article 25, 1st to 4th subparagraphs

Article 25, 5th subparagraph

Article 25, 6th and 7th subparagraphs

Article 26(1)

Article 26(2) and (4)

Article 26(3)

Article 26(5)

Article 26(6) and (7)

Article 26(8) and (9)

Article 26(10) and (11)

Article 27(1)

Article 36

Chapter 2

Article 37

Deleted

Articles 38 and 19

Article 40

Article 41

Article 169

Article 28(1)

Article 42

Article 43

Article 44

Title III

Chapter 1

Article 55

Article 57

Article 58

Article 80

Article 45(1)

Article 46

Article 47

Articles 51(2) and 54(1)

Deleted

Article 48

Article 49

Article 56

Article 53

Article 29(1)

Articles 79 and 127(7)

Deleted

Article 81

Deleted

Article 58

Deleted

Deleted (*)

Article 19

Article 20

Article 21

Article 22

Deleted

Article 23

Article 24

Article 18(1)

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Financial Regulation of 21 December 1977

This Regulation

Article 27(2) and (5)

Article 27(2)a

Article 27(3)

Article 27(4)

Section II

Article 28(1)

Article 28(2)

Article 28(3)

Article 28a

Article 29

Article 30

Article 31

Article 32

Article 33

Article 34

Article 35

Section III

Article 36

Article 37

Article 38

Article 39

Article 40

Article 41

Article 42

Article 43

Article 44

Article 45

Article 46

Article 47

Article 48

Article 49

Article 50

Article 51(1) and (2)

Article 51(3)

Article 52

Article 53

Article 54

Section IV

Article 55

Title IV

Section One

Article 56

Article 57

Deleted

Article 18(2)

Deleted

Article 18(3)

Chapter 5

Article 66(1)

Article 67

Article 66(2)

Article 69

Article 68

Deleted (*)

Article 65

Article 14

Deleted (*)

Article 78

Deleted (*)

Chapter 6

Articles 71(1) and (2), and 152

Deleted

Article 72

Deleted

Article 73

Deleted (*)

Deleted (*)

Article 74

Deleted (*)

Deleted (*)

Deleted

Deleted (*)

Deleted

Deleted (*)

Deleted

Article 76

Deleted

Deleted

Deleted (*)

Article 59

Deleted (*)

Title IV

Article 98

Deleted

C 96 E/36

EN

Official Journal of the European Communities

27.3.2001

Financial Regulation of 21 December 1977

This Regulation

Article 58(1)

Article 58(2)

Article 58(3)

Article 58(4)

Article 59

Article 60

Article 61

Article 62

Article 63

Article 64

Article 64a

Section II

Article 65

Article 66

Article 67

Article 68

Section III

Article 69

Article 70

Article 70a

Article 71

Article 72

Title V

Article 73

Article 74

Article 75(1)

Article 75(2)

Article 75(3)

Article 75(4)

Article 75(5)

Article 76

Article 77

Title VI

Article 78

Article 79

Article 80

Article 81

Article 82

Article 83(1)

Article 83(2), (3) and (4)

Article 84

Article 85

Articles 83, 84(2) and 86

Article 85

Article 91(1)

Deleted (*)

Article 87

Article 86(3)

Deleted

Article 84(1)

Deleted

Deleted

Article 96

Chapter 3

Article 122, 1st and 2nd subparagraphs

Article 122, 3rd subparagraph

Article 122, 4th subparagraph

Deleted (*)

Article 120(1), (3) and (5)

Article 120(4)

Deleted (*)

Deleted

Article 121

Title III, Chapter 4

Article 62(1)

Deleted

Article 63

Article 64

Deleted

Deleted

Articles 58 and 59

Article 62(1)

Deleted

Title VI, Chapter 1

Article 117(3)

Article 117(2) and (3)

Article 115(3) and (6)

Article 115(2)

Article 117(3)

Article 125(3)

Article 124

Deleted

Article 125(1) and (2)

27.3.2001

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C 96 E/37

Financial Regulation of 21 December 1977

This Regulation

Article 86

Article 87

Article 88

Article 88a

Article 89(1)

Article 89(2)

Article 89(3)

Article 89(4)

Article 89(5)

Article 89(6)

Article 89(7) and (8)

Article 89(9) and (10)

Article 90

Title VII

Article 91

Article 92(1) and (2)

Article 92(3)

Article 92(4)

Article 93

Article 94

Article 95

Article 96(1), (2) and (3)

Article 96(4)

Article 97

Title VIII

Article 98

Article 99(1)

Article 99(2)

Article 100

Article 101

Article 102

Article 103

Article 104

Title IX

Section One

Article 105(1) and (2)

Article 105(3)

Article 105(4)

Article 105(5)

Article 106(1)

Article 106(2)

Article 106(3)

Article 126

Article 127(1) to (5)

Article 128(1), (4), (5) and (6)

Article 129

Article 131(1)

Article 132(2)

Article 132(3)

Article 131(2) and (3)

Article 132(1)

Deleted

Article 133

Deleted (*)

Article 130

Part Two (cid:151) Title III

Article 146(1)

Article 146(2)

Article 147(1)

Article 147(4)

Deleted

Deleted

Article 146(3)

Deleted

Article 147(2) and (3)

Deleted

Part Two (cid:151) Title I

Article 134

Article 136(1) and (2)

Deleted (*)

Article 137(1) and (2)

Article 138

Deleted

Article 137(3)

Article 139

Part Two (cid:151) Title IV

Chapter 1

Article 148

Deleted (*)

Deleted

Article 3(3)

Article 152

Deleted

Deleted (*)

C 96 E/38

EN

Official Journal of the European Communities

27.3.2001

Financial Regulation of 21 December 1977

This Regulation

Section II

Article 107

Article 108

Article 109

Article 110

Article 111

Section III

Article 112

Article 113

Article 114

Article 115

Article 116

Article 117

Article 118

Article 119

Section IV

Article 120

Title X

Article 121

Article 123

Title XI

Section I

Article 124

Article 125

Article 126

Section II

Article 127

Article 128

Article 129

Article 130

Article 131

Article 132

Title XIa

Article 132a

Title XII

Article 133(1)

Article 133(2) and (3)

Article 133(4), (5) and (9)
Article 133(6), 1st subparagraph
Article 133(6), 2nd subparagraph

Article 133(7)

Article 133(8)

Article 133(10)

Chapter 2

Deleted

Deleted

Deleted

Deleted

Deleted

Chapter 3

Article 153(1)

Article 153(2)

Article 154

Deleted

Deleted

Deleted

Deleted

Deleted

Chapter 4

Article 156

Deleted

Deleted

Deleted

Deleted

Deleted

Deleted

Deleted

Deleted

Deleted

Deleted (*)

Deleted

Deleted

Deleted

Deleted

Title V

Article 157

Article 158

Article 160

Article 159
Article 161, 2nd subparagraph

Deleted

Deleted (*)
Article 161, 1st subparagraph

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Official Journal of the European Communities

C 96 E/39

Financial Regulation of 21 December 1977

This Regulation

Part II

Article 134

Article 135

Article 136

Article 137

Part III

Article 138

Article 139

Article 140

Article 141

Article 142

Article 143

Deleted

Article 119

Article 3(3)

Deleted

Article 127(6)

Part Three

Article 171

Article 172

Article 173

Article 174

Article 175

Article 176

(*) Articles deleted but which will be incorporated into the rules for implementation.