Opinion No 2/2001 on a proposal for a Council Regulation on the Financial Regulation applicable to the general budget of the European Communities
Date: 2001-06-05
Institutions: European Court of Auditors
Subjects: financial regulation, general budget (EU)

5.6.2001

EN

Official Journal of the European Communities

C 162/1

I

(Information)

COURT OF AUDITORS

on a proposal for a Council Regulation on the Financial Regulation applicable to the general
budget of the European Communities

OPINION No 2/2001

(submitted pursuant to Article 279 EC)

(2001/C 162/01)

THE COURT OF AUDITORS OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Commu-
nity, and in particular Article 248(4) and Article 279 thereof,

Having regard to the Treaty establishing the European Coal and
Steel Community, and in particular Article 45c(4) and Article 78h
thereof,

Having regard to the Treaty establishing the European Atomic
Energy Community, and in particular Article 160c(4), and Article
183 thereof,

Having regard to the proposal for a Council Regulation on the
Financial Regulation applicable to the general budget of the Euro-
pean Communities (1),

Having regard to the request for an opinion on this proposal sub-
mitted by the Council to the Court of Auditors on 24 November,
and received by the Court on 29 November 2000,

HAS ADOPTED THE FOLLOWING OPINION:

2. The Commission did not follow the Court’s recommendation
to set up a high-level working group including outside experts
with a view to thoroughly assessing the situation before making
any attempt to draw up a revised draft Financial Regulation (4). In
fact, the Commission availed itself of external resources in only
two areas: the simplification of the Financial Regulation, and the
keeping and the presentation of the accounts. Having examined
the study produced by experts consulted in the accounting field,
the Court regrets that the timetable drawn up by the Commission
has not enabled it to include in the proposal for a Financial Regu-
lation the proposals contained in the study, thereby leaving a sig-
nificant proportion of the recasting work unfinished (see para-
graphs 41 to 43).

3. The Commission proposal provides a basis for recasting the
financial regulations, although it does not take into consideration
all of the concerns which the Court expressed in Opinion No 4/97
and, generally speaking, is not radical enough. In this opinion, the
Court proposes such amendments to the Commission’s text as it
has deemed necessary, except in areas concerning the basic
accounting framework and the objectives of the accounts and of
the financial statements, the provisions governing which, in the
sections concerned, are inadequate.

1.
In 1998, the Commission embarked on the process of recast-
ing the existing financial legislation by presenting a working
document on recasting the Financial Regulation (2). This was the
Commission’s reply to the response given to the ‘seventh series’
of amendments to the Financial Regulation, including that of
Court Opinion No 4/97 (3), which sought a fundamental review
of all the financial legislation.

4. The general philosophy underlying this Court opinion is the
following:

(a) the Community budget system should apply the existing bud-
getary principles and should tolerate only those exceptions
that are indispensable;

(1) Commission document ref. 2000/203 (CNS) — COM(2000) 461

final.

(2) Commission working document concerning the recasting of the

Financial Regulation(SEC(1998) 1228 final, 22.7.1998).

(3) OJ C 57, 23.2.1998, p.1.

(b) the budget system should be as simple as possible;

(4) Paragraph 17 of Court Opinion No 4/97.

C 162/2

EN

Official Journal of the European Communities

5.6.2001

(c) the budget, in terms of both estimates and implementation,
and the financial statements, should reflect the reality of the
operations and financial situation of the Communities.

Budgetary principles (Part One, Title I, Articles 1 to 28)

5. The Court devoted several paragraphs of Opinion No 4/97 (1)
to the question of general budgetary principles. It recommended
that budgetary principles should be applied more strictly and
exceptions confined to a bare minimum. The Commission’s draft
recasting groups the principles together under a single title. The
Court suggests that certain articles should be amended or added
to so as to make the proposed definitions more rigorous and
more explicit. It regrets that certain exceptions to the principles
are still contained in the draft Financial Regulation.

6. The provision contained in Article 6(2), which allows for bud-
getary commitments in annual instalments, divests the notion of dif-
ferentiated appropriations of all meaning and should therefore be
deleted (see paragraphs 30 and 31).

7. The carrying-over of appropriations, which is authorised by
Article 8 of the draft, contravenes the very principle of the annu-
ality of the budget. Rules for carrying appropriations over are no
longer essential under the system of differentiated appropriations
(which the Commission proposes to generalise), in so far as the
commitments entered into are, where necessary, covered by pay-
ment appropriations which may arise from subsequent financial
years. Any shortage of payment appropriations which may arise
under certain budget headings could always be offset by the relax-
ation of the transfer rules proposed by the Commission (see para-
graph 10) and, exceptionally, by the possibility of requesting
appropriations by means of a supplementary budget. These carry-
overs of appropriations are unnecessary and have only a marginal
financial impact. On the other hand, they do make management
systems (in particular computerised accounting systems) more
complex and may even lead to confusion when the financial state-
ments are read. The objectives they are supposed to achieve can
be achieved through the normal arrangements for adopting and
implementing the budget.

9. Other unnecessary exceptions include the provisions laid down
by way of derogation from the principle of the universality of the
budget with a view to making the system for earmarking certain
revenue permanent (Article 17). As the Court points out in Opin-
ion No 1/2001 (2): ‘There may be circumstances in which certain
specific receipts, outside the field of the EAGGF-Guarantee, could
enable institutions to spend corresponding amounts for related
purposes without the need for fresh budgetary authorisation’. The
Court favours retention of this system but wishes marginal cases
to be treated in accordance with the general provisions.

10. The Court considers that the proposed Article 21, which
allows the Commission greater room for manoeuvre as regards
transfers of appropriations, is reasonable, in particular with a view
to drawing up the budget on the basis of activities. In order to
improve the current situation, consideration also needs to be given
to the application of the principle of budgetary specification and
to the structure of the budget (see paragraph 16 on the structure
of the budget).

11. As regards the principles of sound financial management, which
are mentioned in Article 25 of the draft, they could usefully be
completed by adding a definition of each principle.

12.
In addition to the aforementioned exceptions, special provi-
sions apply to certain Community activities (e.g. the EAGGF-
Guarantee, the Structural Funds, research, external measures,
offices and administrative appropriations) in the second part of
the draft Financial Regulation (Articles 134 to 168). A stricter
application of the principles would render many exemptions
superfluous, whereas the more specific provisions, by their very
nature, could be transferred to the rules for implementing the
Financial Regulation. Any important remaining exemptions could
be included in the first part of the Regulation.

8. The system of provisional twelfths described in Article 12 could
be placed after Article 33 of the draft, as it essentially concerns
the procedure for adopting the budget. The current provisions,
which are unnecessarily complicated, could be simplified.

13. As a general rule, the Court considers that, for the sake of
consistency and legal certainty, any exceptions to the budgetary
principles must always be clearly authorised in the Financial
Regulation, and not by sectoral regulations adopted on bases other
than Article 279 of the Treaty.

(1) Paragraph 15 (first to fourth indents) of Court Opinion No 4/97 and

paragraphs 1.1 to 1.32 of the Annex.

(2) Paragraph 31 of Court Opinion No 1/2001 (OJ C 55, 21.2.2001).

5.6.2001

EN

Official Journal of the European Communities

C 162/3

Drafting and structure of the budget (Part One, Title II,
Articles 29 to 44)

14. The Commission has retained in Article 41 of the draft the
possibility of including in the budget a negative reserve of a maxi-
mum of 200 Mio euro. The notion of a negative reserve impedes
the clear and accurate presentation of precisely calculated budget-
ary authorisations and, as such, contravenes the principle of
transparency as set out in the Commission’s draft.

15. The Court has a number of suggestions for improving or
clarifying the texts of Articles 39 and 43 concerning, respectively,
the prohibition of negative revenue and expenditure in the bud-
get, and the general presentation of the budget. The Court endorses
the proposal in Article 44 to give the institutions a measure of
flexibility in the composition and grading of their staff; it is for
consideration whether this flexibility should be further extended
so as to enable the institutions, within a budgetary allocation for
staff costs, to choose the most appropriate mix for them of per-
manent and temporary staff and staff working under external
contracts.

16.
In its Opinion No 4/97 (1), the Court referred to the cases of
loss of control observed in the application of the principle of bud-
getary specification, as a result of which some budget headings
which had been allocated huge amounts of appropriations existed
alongside others which had been allocated a few thousand euro.
To begin with, the Financial Regulation should contain a provi-
sion limiting these disparities. Consideration then needs to be
given to the relevance of subdividing budget headings into titles,
chapters, articles and items. The budgetary nomenclature could
be reviewed and the maximum number of budgetary subdivisions
could be limited to a specific level, for example the chapter, or to
an amount established by the budgetary authority, so as to guar-
antee the institutions greater flexibility as regards management.

Implementation of the budget (Part One, Title III, Articles
45 to 54)

17. The Commission has sought to clarify the situation by pro-
posing a specific chapter on methods of implementing the budget
(Articles 50 to 54). This clarification had proved necessary in the
light of numerous problems arising from the progressive increase
in the Commission’s workload, the enlargement of the European
Union, the role of the Technical Assistance Offices (TAOs) and the
size of the budgets to be managed.

18. Over and above the improvements made by the Commis-
sion, the wording of certain articles seems to need some refine-
ment so as to differentiate between the powers of the Commis-
sion and those of the other parties involved on the basis of the
method of implementation envisaged, whilst stressing that the
Commission nevertheless remains responsible in the final analysis
for the implementation of the budget, pursuant to Article 274 of
the Treaty. Whatever the method of implementation envisaged,
the Court welcomes the emphasis placed by the Commission on
the checks on measures undertaken and proposes that where the
Commission implements the budget on a decentralised basis its

(1) Paragraphs 1.20 and 1.21 of the Annex to the Court’s Opinion.

partners’ responsibilities should be specified. The Court welcomes
the inclusion of provisions which should permit the Commission
to work more rationally and effectively with international organi-
sations.

Financial actors / Liability of financial actors / Internal audi-
tor (Part One, Title III, Articles 55 to 64 and 80 to 82)

19.
In Opinion No 4/97, the Court urged the Commission to
explore ways of modernising the role of the financial actors (2). In par-
ticular, it recommended that a new Financial Regulation should
contain the following principles and provisions in respect of exer-
cising the internal control function in the institution:

— ‘the status and powers of the Financial Controller should be
redefined, on the assumption that he would exercise the func-
tions of internal auditor of the institution,

— a clearer indication should be given of the scope of the autho-
rising officers’ powers in respect of financial management and
financial control. Since the prior approval procedure is likely
to be used significantly less or even, in the end, to disappear
completely, additional provisions need to be introduced to
ensure the legality, regularity and sound financial manage-
ment of Community measures and to protect the Communi-
ties’ financial interests, in particular to prevent officials from
having to face any situation where a conflict arises between
the interests of the service and the interests of third parties,

— on the same assumption, the powers of the accounting officer

need to be strengthened’.

In actual fact, the provisions governing the financial actors and,
therefore, the structure of the Community internal control system
would represent an important step towards meeting the Court’s
recommendations, in particular with regard to the proposal that
an internal auditor should now oversee the internal control sys-
tems.

In its Opinion No 1/2000 (3) on the Commission’s proposal
20.
to separate the internal audit function from the financial control
function, the Court stressed the independence of the internal
auditor. The importance of this principle would require the Finan-
cial Regulation to lay down in unambiguous terms that, ‘in car-
rying out his duties, the internal auditor is responsible only to the
institution that designated him and that he reports direct to that
institution’ (4) (this addendum is proposed in these terms in Article
80).

(2) Paragraph 16(c) of Court Opinion No 4/97 and paragraphs 5.1 to

5.17 of the Annex.

(3) Court Opinion No 1/2000 (OJ C 327, 17.11.2000, p.1).
(4) Paragraph 11 of Court Opinion No 1/2000.

C 162/4

EN

Official Journal of the European Communities

5.6.2001

21. The Commission’s proposal concerning the financial actors
is based on a significant change in the structure of the Commu-
nity system of financial control with which the Court generally
agrees and which largely follows the recommendations in Court
Opinion No 4/97. However, the proposal makes no reference to
the Financial Controller, notwithstanding that Article 279c of the
Treaty explicitly refers to the Financial Controller as one of the
financial actors for whom the rules concerning responsibilities
are to be laid down by the Council.

22. Articles 56 and 57 of the Commission’s proposal, which
concern the Authorising Officer, should be amended. It is point-
less to propose that the Authorising Officer should submit
accounts to his institution when it does not appear clear what
accounts are concerned. There should also be a clear definition of
what professional responsibility he bears for the legality and regu-
larity of transactions or internal control systems. As the Court has
pointed out on several occasions, doing away with centralised
prior approval would not be acceptable unless it was replaced by
other procedures providing guarantees of at least equivalent value
involving actors other than the Financial Controller.

States, the Authorising Officer should be required at the very least
to draw up an estimated timetable for monitoring the recovery of
the miscellaneous own resources that are to be paid over period-
ically by the Member States.

26. As regards agricultural revenue categorised as miscellaneous
revenue, the draft does not specify whether it will be subject to
the general arrangements or to arrangements akin to those envis-
aged for own resources. Given that such agricultural revenue does
not constitute own resources, it must fall within the ambit of the
general arrangements.

Expenditure operations: commitments (Part One, Title III,
Articles 70 to 72)

23. The role of the Accounting Officer in keeping the accounts
and drawing up the financial statements would be strengthened,
in particular vis-à-vis the authorising departments. However,
Article 58 should also be expanded.

27. The Court considers that the Commission’s proposal con-
cerning the definition of the concept of a commitment does not
resolve all the questions raised by a reading of Articles 1(4)(3) and
36(2) of the current Financial Regulation as this area remains a
constant source of difficulties for the implementation of the bud-
get and for the accounting system.

24. The Court draws the Council’s attention to the fact that the
proposed text (Article 62) on the liability of the Authorising
Officer, unlike the provisions concerning the Accounting Offic-
ers and Imprest Administrators in Articles 63 and 64, contains no
provision as to what could constitute a serious error for which the
Authorising Officers could be held legally or financially respon-
sible. The Regulation needs to make clear that authorising offi-
cers may be held responsible for losses to the budget or damage
to the financial interests of the Community which result from
their actions (or failures to act) and which they should have fore-
seen. The Court further points out again (as it previously indi-
cated in paragraph 5.20 of the Annex to Opinion No 4/97) that
it is not sufficient to leave any necessary action to be taken under
the relevant provisions of the Staff Regulations; these provisions
are not apt for the recovery of money, and have in any case never
been applied. The Commission should therefore consider the pos-
sibility of creating within the current framework an independent
structure for establishing the financial responsibility of its officials
and other staff, the legal basis for which would not be the Staff
Regulations.

Revenue operations (Part One, Title III, Articles 65 to 69)

25. The abolition of any form of establishment of a claim in
respect of own resources, as envisaged in Article 66(1), is unsat-
isfactory. Even if an estimate of the claim cannot be made for tra-
ditional own resources, because the value of this revenue is known
only when it is made available to the Commission by the Member

28. Accordingly the Court proposes two changes in the arrange-
ments set out in the draft Regulation. First a ‘budgetary commit-
ment’ should be defined as the subject of a specific documented
decision by an institution or its delegate to spend a given sum of
money for a defined purpose. In accordance with the Commis-
sion’s proposals the amounts of money concerned by such deci-
sions would count against the budgetary provision for commit-
ment appropriations. Such decisions would need, as the
Commission proposes, to be translated into legal obligations to
third parties at the latest by the end of the financial year follow-
ing that in which the decision was taken. The Court suggests that
this latter stage in the process should use the term ‘legal obliga-
tion’, thereby avoiding the use of the word ‘commitment’ to mean
something other than the decision in the budgetary context.

29. Secondly, as stated in paragraph 6, which deals with the
budgetary principles, the Court considers that the provision in
Article 70(3) whereby commitments may be broken down into
instalments (where the basic act so provides) negates the essential
purpose of differentiated appropriations and of a commitments
budget and should therefore be deleted. The annual commitments
budget is intended to authorise and limit the expenditure deci-
sions made by the Communities during the financial year. These
expenditure decisions give rise to budgetary commitments which
constitute, in turn, the authorisation and limits for recording in
the accounts the corresponding legal obligations subsequently
entered into with third parties. Another objective is to ensure that
the actual extent of the Communities’ financial obligations is
known. Such a system only makes sense if it is applied in a

5.6.2001

EN

Official Journal of the European Communities

C 162/5

consistent manner to all expenditure decisions in all sections of
the budget. All specific expenditure decisions taken during a given
financial year should be exhaustively recorded in that year. The
commitments budget should therefore be sufficient to cover the
whole of the expenditure decisions made during a given year,
including those concerning programmes, projects, etc., requiring
payments which are staggered over several years. If the commit-
ment appropriations provided are not sufficient to cover all of the
estimated cost of a programme, then the corresponding decision
and legal obligation should not be made and entered into.

in the accounting and management systems in order for the latter
to indicate the extent to which budget operations have actually
been implemented in respect of final beneficiaries. To this end the
Commission proposes the separate disclosure of pre-financing
payments and refunds of expenditure charged to the annual bud-
get. However, it is also necessary that the degree to which pre-
financing payments charged to previous budgets have not yet
been absorbed by the financing of expenditure at final beneficiary
level, and the degree to which budgetary payments are not yet
‘cleared’, should also be accounted for on a continuous basis and
disclosed in summary form in the financial statements.

30. This means that, in fields involving substantial multiannual
programmes for which the expenditure decisions are adopted at
the beginning of the programming period, the amounts of com-
mitment appropriations may vary significantly from one year to
another. This would simply reflect the underlying reality of the
transactions concerned and could not be reconciled with the con-
cept of an annual commitments budget which was directly lim-
ited, as has so far been the case, by a linear financial perspective.
Currently the financial perspective (not mentioned in the Treaty
or the Commission’s proposal, but referred to in Article 3 of the
existing Financial Regulation) sets an own resources ceiling which
in turn is applied to annual budgets for both commitments and
payments, although it is only the payments that are directly
financed by the revenue raised. In order to ensure that this con-
flict does not arise in the future, the financial perspective ceilings
should be applied to the commitments budgets for the whole of
the period of a financial perspective, rather than on an annual
basis.

31. The Court wishes to emphasise that the criteria provided for
in the Financial Regulation for committing expenditure, and for
recording commitments in the accounts, should be applied con-
sistently across the whole budget without derogation for particu-
lar expenditure areas. If the Commission’s proposal is not amended
on the basis set out above, it would be better to opt for a pay-
ments budget only, without commitment appropriations. In such
a case, the institutions would still need to record and to present
to the budgetary authority, in support of their requests for bud-
getary provision for payments, information on expenditure deci-
sions taken and obligations entered into. No specific limits, how-
ever, would be set as part of the annual budgetary process on the
level of expenditure decisions. The institutions would still be sub-
ject to budgetary discipline in that they would have to manage
their affairs in such a way that the need to make payments did not
result in them exceeding the appropriations made available by the
budgetary authority for the financial year.

33. Pre-financing payments charged to the budget, most of which
are paid to intermediaries and not to final beneficiaries, should be
restricted to amounts demonstrably required to meet the Com-
munity’s share of the necessary pre-financing of programmes,
projects, the activities of technical assistance offices, etc. Where
further funds are required they should only be paid to reimburse
expenditure actually incurred. Where the initial advances are not
adequate to meet ongoing pre-financing needs an additional
advance would be paid. As operations approach completion, the
advances should be absorbed by setting them off against the last
payments due for expenditure reimbursements. Systematic per-
petual advance payment mechanisms, which increase the risk of
loss of control and provide a misleading image of budgetary
execution, should be prohibited.

Procurement (Part One, Title IV, Articles 83 to 100)

34. The Financial Regulation should contain only essential pro-
visions; provisions which, by their very nature, could be suscep-
tible to change should be transferred to the implementing arrange-
ments. This latter category includes specific cases of exclusion and
penalties (Articles 88 to 90).

35. The Court considers it important that the rule laid down in
Article 84(3) (new Article 96a) of the draft concerning situations
of suspected errors, irregularities or fraud, should be strengthened
and applied in all cases by the institutions wherever a contractor
has committed irregularities or fraud.

Expenditure operations: payments (Part One, Title III,
Articles 73 to 77)

32. Payments (and not ‘expenditure’, as stated in sections 2 to 5
of Chapter 6) must be carefully monitored at the various stages

36. The Court proposes the inclusion of an additional article
(Article 100b, the result of transferring Article 154 of the Com-
mission’s proposal) on the designation of persons eligible to par-
ticipate in tendering procedures in the area of external aid (see
paragraph 59).

C 162/6

EN

Official Journal of the European Communities

5.6.2001

Subsidies (Part One, Title V, Articles 101 to 114)

37. The provisions included under this title should be limited to
provisions of a general nature, to be implemented in accordance
with the recent vade mecum on subsidies which, in the Court’s
view, should enjoy the status of a Commission regulation.

38. Several aspects of the draft Financial Regulation should be
amended:

(a) Article 101 should distinguish more clearly between subsidies
and payments made in the context of a public works contract;

(b) the same article should also better define the scope of the title

in question.

39. Given the various fields of activity in which subsidies are dis-
bursed, for example in the field of humanitarian aid, the provi-
sions of the title should allow for a degree of flexibility:

(a) Article 102 should not insist on either joint financing or the
(unverifiable) condition that no profit should be made;

(b) Article 103 should envisage the possibility of disbursing a

subsidy outside the context of a programme;

(c) Article 106 should be deleted so as not automatically to limit
the rate at which administrative expenditure is financed.

40. Certain provisions should also be deleted, as they are self-
evident or unnecessary or because they would be impossible to
implement: this is the case, in particular, of the provisions envis-
aged in paragraphs 2 and 3 of Article 112 concerning the refund-
ing of subsidies, as the amendment of the provisions envisaged in
Article 112(1) is adequate.

Keeping and presentation of the accounts (Part One, Title VI,
Articles 115 to 122)

41. As paragraph 2 of this opinion states, the provisions submit-
ted take no account of the findings of the study commissioned
from a group of experts. This study provides a solid basis for
developing the provisions that are missing from the recast pro-
posal (see also paragraph 43 and the introductory comments to
Part One, Title VI). The provisions proposed by the Commission
should be revised before the Council takes a final decision. The
Court would also point out that under the amendment of the
Financial Regulation proposed by the ‘seventh series’ and ratified
in 1998 (1), the Commission included in Article 70 of the current

Financial Regulation a provision to distinguish between ‘budget-
ary expenditure and revenue’ and ‘non-budgetary expenditure and
revenue’, as a consequence of which a broader accounting result
is calculated. This is equivalent to distinguishing between two lev-
els of results, one concerning the implementation of the budget
and another which is obtained by adding to the first of those
operations which concern the accounts rather than the budget
(depreciation, provisions, etc.). Article 70 also provides for the
balance sheet to be drawn up on the basis of accruals accounting.
Thus, the provisions orienting the Community accounts frame-
work towards an accruals-based accounting system are found in
the current Financial Regulation. To be fully applicable, they
should have been made explicit and developed in the draft recast-
ing of the Financial Regulation. Once the Commission has com-
pleted this task, it must take the measures required to implement
these provisions.

42. The Court stresses the importance of choosing a basic
accounting framework as a prerequisite for any decision regard-
ing the keeping and presentation of the accounts. To this end, it
would be beneficial to consult the work of international bodies
with responsibilities in this area, a step which the Court recom-
mended in Opinion No 4/97 (2). In the form in which they are
currently presented, the financial statements are of limited value
to the user: for example, they do not distinguish between current
and capital expenditure, or between intermediate and definitive
payments, nor do they account for accrued accounts payable.
These deficiencies could be overcome by the adoption of an
accruals-based accounting framework, as foreseen by Article 70
of the current Financial Regulation.

Implementing an accounting and financial framework which
43.
is both consistent and rigorous is, however, a major operation. As
well as choosing a basic accounting framework, it is necessary to
define the objectives of the accounts and of the financial state-
ments, the principles, rules and accounting methods which deter-
mine the rules for keeping the accounts and drawing up the
financial statements, and the information contained therein. The
timetable for drawing up the financial statements could be brought
forward by doing away with additional periods (which are unnec-
essary once appropriations are no longer carried over and the
procedures for transferring payment appropriations are relaxed),
and their publication should comply fully with the principle of
transparency.

External audit and discharge (Part One, Title VII, Articles
123 to 133)

44. The provisions included under this title essentially concern
the Court’s role as external auditor of the Community’s finances.

(1) Council Regulation (EC, ECSC, Euratom) No 2548/98 (OJ L 320,

28.11.1998, p.1).

(2) Paragraph 15 (sixth and eighth indents) and paragraph 16(b) of Court
Opinion No 4/97 and paragraphs 1.33 to 1.48 of the Annex.

5.6.2001

EN

Official Journal of the European Communities

C 162/7

The Court considers that these provisions are in their rightful
place in the Treaty and that they do not need to be repeated and
explained in the Financial Regulation. The fact is that the repeti-
tion of certain provisions, in particular those dealing with the
Court’s role and its rights of access to information (in particular
Articles 123, 125 (in part), 127 (in part), 129 and 130 (in part)),
could be interpreted restrictively by certain bodies which are
audited by the Court. The Court should, in all cases, be in a posi-
tion to carry out its task without hindrance, pursuant to the pro-
visions of the Treaty.

Provisions specific to the EAGGF-Guarantee (Part Two, Title
I, Articles 134 to 140)

45. There is no need for a specific section for the EAGGF-
Guarantee. Only Article 136(2) needs to be retained and this
should be included in Article 70.

46. Most of the exemptions proposed by the Commission are
explained by the continuing existence of a system of non-
differentiated appropriations and by problems with procedures
for charging payments to detailed budget headings. The fact is
that EAGGF-Guarantee expenditure takes the form of refunds of
expenditure declared by Member States which are initially dis-
bursed outside the budget (‘advances’ consisting of provisional
refunds), followed by budgetary adjustments.

47. These adjustments often require appropriations to be trans-
ferred before expenditure can be charged to the appropriate bud-
get items. Furthermore, the level of detail currently utilised when
amounts are charged to the budget leads in practice to unaccept-
able delays in recording the adjustments to budgetary payments.

48. The Commission’s amendment to Article 21(1)(c) concern-
ing transfers between chapters of operational expenditure should
enable it to make the necessary transfers without having to wait
for the budgetary authority’s approval of transfer proposals at the
end of the year. The requirement to seek approval from the bud-
getary authority for transfers between budget headings under the
EAGGF-Guarantee is meaningless in a context where the expen-
diture is compulsory and the refunds to the Member States have
already been made.

49. As regards the breakdown of declared expenditure, the cur-
rent system requires the Member States to notify the Commission
by the 10th of each month of all expenditure disbursed during the
previous month. More detailed information for recording expen-
diture disbursed during the previous month in the Community
budget must be sent to the Commission by the 20th of each
month at the latest. For this reason and as the disbursed expen-
diture is taken into account for the EAGGF budget year, i.e. until

15 October, the Commission is in possession of the data suffi-
ciently early to charge the amounts in question to the budget
before the closure of the financial year (1).

50. Furthermore, if the Court’s proposal in Article 19 to specify
appropriations only by section, subsection, title, chapter and
article (and not by item and sub-item) were adopted, the registra-
tion of expenditure by Member State, measure and financial year
for management purposes would no longer affect the charging to
the budget of the monthly advances paid to the Member States.

51. Notifications in respect of certain data may contain inaccu-
racies. As a result, adjustments may prove necessary, even after
the accounts for a financial year have been closed. Nevertheless,
such adjustments, provided they do not affect the reliability of the
accounts, are recognised by generally accepted accounting prin-
ciples.

52. As for EAGGF-Guarantee appropriations for rural develop-
ment and the accompanying measures, these are multiannual
measures for which the value of commitments entered into dur-
ing a financial year is often different from the value of payments
made during the same financial year. It is therefore inappropriate
to specify in Article 135 that commitment appropriations are
equal in value to payment appropriations and Article 170 (appear-
ing in the transitional and final provisions) should be deleted.

Provisions specific to the Structural Funds (Part Two, Title
II, Articles 141 to 145)

53. There is no need for a separate Title because the Commis-
sion’s proposal contains very few derogations from the standard
rules.

54. Article 143 concerning the ‘reconstitution’ of commitment
appropriations when commitments made in prior years are decom-
mitted is unnecessary.

55. Article 144, giving the Commission the power to make
transfers of appropriations between Structural Funds (where
related to the same objectives), and Article 141(3) on the decen-
tralised management of pre-accession structural and agricultural
measures should be included in the appropriate place in Part One,
Titles I and III.

(1) As regards public-storage operations, the deadline for making adjust-
ments is 20 December. As the financial year for this category of
expenditure closes on 15 September, this deadline for making final
adjustments hardly seems justified.

C 162/8

EN

Official Journal of the European Communities

5.6.2001

56. The other articles are unnecessary because they either:

(a) state the evident fact that certain aspects of the management
of the Funds are subject to the provisions of the ‘rules’ govern-
ing the Structural Funds (specifically Regulation (EC) No 1260/
1999) when these do not constitute exceptions to general
rules (Articles 142(1), first indent, 142(2), 142(4), 145); or

(b) restate provisions in Part One (Article 142(1), second indent);

or

(c) appear to be based on a misunderstanding. Article 142(3) says
that ‘The treatment by the Member States of repayments of
pre-financing payments and the implications for the amounts
of contributions from the Funds shall be governed by the
rules referred to in Article 141’. The Regulation concerned,
Regulation (EC) No 1260/1999, makes no reference to the
reconstitution of payment appropriations.

Provisions specific to research (Part Two, Title III, Articles
146 and 147)

57. There is no need to create a specific Title for research. Exemp-
tions from the standard provisions should be included in the rel-
evant parts of the Financial Regulation (Article 146(1)(2) and (3)
and Article 147(3); the others should be deleted as standard provi-
sions
and
cover
Article 147(1) and(2)).

concerned (Article 146(2)

cases

the

60. Article 150(1) contains unrealistic and over-ambitious crite-
ria which the Commission should evaluate before deciding to
entrust management of actions under the rules of decentralised
management to non-member country governments. Such criteria
are not applied to Member State administrations before they are
entrusted with shared management responsibilities. It seems inap-
propriate to lay down such criteria in the Financial Regulation.
The provisions of Article 150(2) are adequate (see paragraph 58).

61. Article 151 is unclear and unnecessary. The fact that the
Commission retains the responsibility to carry out checks, even
where it has granted responsibilities under decentralised manage-
ment, is already set out in Article 50(3).

62. Article 152 sets out the contractual instruments to be used
for the implementation of external actions. This should be in the
implementing rules. The fact that financing agreements with bene-
ficiary non-member countries are to be treated as obligations to
third parties should be set out in Article 72.

63. Article 152 provides that the individual contracts and grant
agreements which implement financing agreements must be con-
cluded by 31 December of year n+ 3 (1), where n is the year of the
budget commitment. This is based on the rules applied in the
Phare programme, but such provisions are unsuited to current
implementation practice in development aid because the maxi-
mum implementation period seems too short. This is a manage-
ment issue already addressed in Article 71(3) by the requirement
that each commitment should have a final date for implementa-
tion.

Provisions specific to external measures (Part Two, Title IV,
Articles 148 to 156)

64. Article 153(2), providing that the procedures for awarding
the contracts should be laid down in the financing agreements,
contracts or grant agreements, should be transferred to Title IV of
Part I.

58. There is no need for a separate Title because the Commis-
sion’s proposal contains almost no derogations from the standard
rules. There are some extensions to these rules in Part One which
should be included in the appropriate Titles of that part. Article
153(1), providing that the implementing rules contain special
provisions relating to the thresholds and arrangements for award-
ing external contracts, and Article 154, concerning participation
in tendering procedures, should be included in Title IV of Part
One (see Articles 100a and 100b). Article 150(2), concerning the
assumption of full responsibility by beneficiary countries for
Community funds paid to them under the decentralised manage-
ment arrangements, should be inserted in Article 50 in Title III of
Part One.

65. Article 155, permitting the award of 100 % grants is a dero-
gation from the standard rules on grants in Title V of Part One.
The Court proposes
that Article 102(1), which requires
co-financing in the award of grants, and Article 106(1), which
provides that a grant may not finance the entire administrative
expenditure of the beneficiary organisation, should be omitted,
rendering the derogation at Article 155 unnecessary.

66. Article 156 concerning the auditing of the accounts is not
justified. To the extent that explicit provision for this should be in
the Financial Regulation, it should be placed in Title VII of Part
One, between Articles 126 and 127, or between Articles 127 and
128.

59. Articles 148 and 149 add little of substance to Article 50
and are therefore unnecessary.

(1) Except for contracts for auditing and evaluation, which may be con-

cluded later.

5.6.2001

EN

Official Journal of the European Communities

C 162/9

Provisions specific to the European Offices and to adminis-
trative appropriations (Part Two, Title V, Articles 157 to 168)

cial regulations, if it is to be meaningful, requires the Court to be
sent a copy of Parliament’s opinion so as to enable it to make such
additions to its own opinion as it may deem appropriate.

67. The Court recommends replacing both Titles (the first of
which concerns the Office for Official Publications of the Euro-
pean Communities, the other the European Anti-fraud Office) by
a single title for ‘European Offices’. As these Offices are likely to
increase in number (1), taking individual account of them in the
Financial Regulation would require the Regulation to be revised
each time an Office is created. Furthermore, it would be prefer-
able for the Offices to observe similar rules.

68. As regards administrative appropriations, none of the excep-
tions envisaged is indispensable if differentiated appropriations
are used for this type of expenditure. In the first year in which this
new system of appropriations is implemented, provision will
clearly have to be made for sufficient commitment appropriations
to cover all decisions taken and legal obligations entered into by
the institutions.

72. Rather than copy the standard general Financial Regulation,
which is not necessarily suited to their needs, the financial regula-
tions specific to the various Community bodies should be based on
a common framework drawn up by the Commission after it has
sought the opinion of Parliament, the Council and the Court.

73. The need for legality, consistency and unity in the applicable
financial provisions, together with the need for them to be trans-
parent and legible for users and managers, means that the number
of exceptions to the rules specified in the Financial Regulation
needs to be strictly limited and the sole exceptions allowed must
be specified therein. Consequently, the exceptions described in the
sectoral regulations should be rescinded.

Transitional provisions (Part Three, Title I, Articles 169 and
170)

CONCLUSIONS

69. These provisions were examined at the same time as the pro-
visions specific to the EAGGF-Guarantee (paragraphs 46 to 53).

Final provisions (Part Three, Title II, Articles 171 to 176)

70. The overall approach which the Court advocates is that of
retaining only the main provisions in the Financial Regulation.
Consequently, not only should the Financial Regulation empower
the Commission to adopt implementing arrangements for all of these
provisions but consultation in respect of these arrangements and
the adoption thereof should also take place at the same time as
the procedure for adopting revisions of the Financial Regulation.
This measure would guarantee the chronological consistency of
the applicable legislation in this area (which is all the more essen-
tial as the Financial Regulation itself would include only the basic
provisions) and would provide the Council with a comprehensive
overview of the rules which will ultimately apply.

71.
If the Parliament and the Council employ the consultation pro-
cedure when the Financial Regulation is being amended and if,
after this procedure, Parliament issues a further opinion, the pro-
vision that the Court should be specifically consulted about finan-

(1) As shown by the creation of the new Office for the Management of

External Aid (EuropeAid) at the beginning of 2001.

74. The general thrust of the Commission’s proposals on signifi-
cant issues (notably methods of implementation, financial actors,
internal auditor, procurement and grants) is considered to be sat-
isfactory. However, modifications are required to ensure that the
provisions are perfectly clear, precise, rigorous or flexible, as the
case may be.

75. There is a need for further simplification by:

(a) further limiting the exceptions to general principles;

(b) confining many detailed provisions to the implementing mea-

sures;

(c) eliminating Part Two, which contains separate sections for

various areas of expenditure.

76. The Court endorses the measures in the Commission’s pro-
posal aimed at rationalising the budget structure (general applica-
tion of differentiated appropriations; elimination of negative
expenditure), reducing certain exceptions to the budgetary prin-
ciples of annuality and universality (eliminating supplementary
periods, except for EAGGF-Guarantee; eliminating the making of
appropriations available again, except for Structural Funds; elimi-
nating the re-use of recoveries), and allowing borrowing solely to
finance the acquisition of immovable assets. However, in the
Court’s view the rationalisation should have gone further: in par-
ticular the Court considers that the carrying-over of appropriations

C 162/10

EN

Official Journal of the European Communities

5.6.2001

(paragraph 7), maintaining the supplementary period for EAGGF-
Guarantee (paragraph 49), and making appropriations available again
for the Structural Funds (paragraphs 54 and 56(c)) are not neces-
sary.

In order to reflect the reality of Community transactions and

77.
its financial position:

(a) the basis for budgetary commitments needs to be clearly
defined. All legal obligations entered into should be subject to
the authorisation of the commitments budget. There should
be no artificial annual tranches for commitments. It is not logical
that the financial perspective should in effect fix a ceiling for
annual commitments budgets. If the changes put forward by
the Court are not adopted it would be better to opt for a single
payments budget without commitment appropriations (para-
graphs 6 and 27 to 31);

(b) ‘advances’ paid out of the budget should be limited to what is
necessary for prefinancing. The real nature of budgetary pay-
ments, and the degree to which advances have been used for
expenditure at the level of final beneficiaries, should be dis-
closed in the annual financial statements (paragraphs 32 and
33);

(c) the Commission’s proposal for greater autonomy to make trans-
fers between appropriations for payment is reasonable and should
be kept. Once legal obligations have been entered into the
reality is that the payments budget must be adjusted to meet
the legitimate claims of beneficiaries which are often not eas-
ily predictable (paragraph 10);

(d) the negative reserve should be dropped because it allows the
adoption of a budget which exceeds the apparent total amount
authorised (paragraph 14).

78. The provisions of the section on the accounting and the finan-
cial statements are inadequate. This is the one main area where the
Court does not suggest a text to be inserted in the regulation, in
which there are significant omissions. The provisions proposed
by the Commission should be revised before the Council takes a
final decision (paragraphs 41 to 43).

79. The provisions on the powers and rights of the external audi-
tor are superfluous as the provisions of the Treaty are adequate in
themselves (paragraph 44).

This Opinion was adopted by the European Court of Auditors in Luxembourg at the Court meeting of 8 March
2001.

For the Court of Auditors

Jan O. KARLSSON

President

5.6.2001

EN

Official Journal of the European Communities

C 162/11

Commission’s proposal

Court’s modified proposal

Comments

OPINION OF THE COURT

PART ONE

PART ONE

COMMON PROVISIONS

COMMON PROVISIONS

TITLE I

TITLE I

GENERAL PROVISIONS

GENERAL PROVISIONS

Chapter1

Scope

Article 1

This Regulation lays down, pursuant to Article 279 of
the Treaty, the rules for the establishment of the
general budget of the European Communities,
hereinafter referred to as ‘the budget’.

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

Chapter 2

General budget principles

Article 1

Article 1

This Regulation lays down the rules for the
establishment of the general budget of the European
Communities, hereinafter referred to as ‘the budget’
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
supervising the liability of the authorising officers,
accounting officers and internal auditors. It lays down
the arrangements for external control and the
discharge procedure.

This Regulation lays down the rules for the
establishment of the general budget of the European
Communities, hereinafter referred to as ‘the budget’ 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
supervising 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 Committee, the Committee of the Regions and
the Ombudsman shall be treated as Community
institutions.

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

Article 2

Article 2

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.

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.

Chapter 1

Principle of unity

Article 3

Chapter Section 1

Principle of unity Principle of unity

Article 3

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

1. The budget is the instrument which, in a single
document, forecasts and authorises all the revenue and
expenditure of the Communities each year.

Amendment made with a view to
providing a complete definition of the
principle of unity.

C 162/12

EN

Official Journal of the European Communities

5.6.2001

Commission’s proposal

Court’s modified proposal

Comments

2. The revenue and expenditure of the Communities
shall comprise:

2. The revenue and expenditure of the Communities
shall comprise:

(a) the revenue and expenditure of the European Com-
munity, including administrative expenditure for
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;

(a) the revenue and expenditure of the European Com-
munity, including administrative expenditure for 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;

(b) the administrative expenditure of the European

Coal and Steel Community and the related revenue;

(b) the administrative expenditure of the European Coal
and Steel Community and the related revenue;

(c) the expenditure and revenue of the European

(c) the expenditure and revenue of the European

Atomic Energy Community.

Atomic 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.

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

Article 4

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

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

The reference to Article 69 is
superfluous, since Article 69 only
determines when revenue for
operations to which it refers is to be
entered in the accounts.

2. No expenditure may be committed or authorised in
excess of the authorised appropriations.

2. No expenditure may be committed or authorised in
excess of the authorised appropriations.

Chapter 2

Chapter Section 2

Principle of annuality

Principle of annuality Principle of annuality

Article 5

Article 5

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

The appropriations entered in the budget shall be
authorised for one financial year, which shall run from
1 January to 31 December.

Amendment made in order to provide
immediately, from Article 5, a
complete definition of the principle of
annuality.

Article 7(1) can be deleted as a result.

5.6.2001

EN

Official Journal of the European Communities

C 162/13

Commission’s proposal

Court’s modified proposal

Comments

Article 6

Article 6

1. The budget shall contain differentiated
appropriations, which shall consist of commitment
appropriations and payment appropriations.

1. The budget shall contain appropriations entered in
the budget shall be differentiated, which shall consisting
of commitment appropriations and payment
appropriations.

Amendment needed in order to clarify
the text.

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

2. Commitment appropriations shall cover the total
cost of the activities resulting from decisions taken legal
obligations entered into for in the current financial year
which are liable to give rise to a legal obligation in that
year or in subsequent financial years.

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

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

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

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

Appropriations shall be shown in the budget as fol-
lows:

3. Appropriations shall be shown in the budget as fol-
lows:

(a) the commitment appropriation authorised for the

(a) the commitment appropriations authorised for the

financial year in question and the payment
appropriation for the same financial year shall be
entered on the appropriate budget line;

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.

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

Article 7

Article 7

Amendment intended to bring out the
two initial stages of an operation:

— first, the financial decision,

— second, the legal obligation vis-à-

vis third parties.

In certain cases, these stages are
almost simultaneous.

Amendment needed in order to clarify
the text.

The notion of commitment in annual
instalments divests of all meaning the
differentiation of appropriations, under
which commitment appropriations are
intended to provide a formal
framework for authorisations to carry
out multiannual operations (see
Article 70(3)).

To be deleted as this clause would
fulfil the same function as
Article 43(2), were it amended.

1. The financial year shall run from 1 January to 31
December.

1. The financial year shall run from 1 January to 31
December.

See amendment made to Article 5.

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 in advance pursuant to
the Council Regulation implementing the Decision on
the system of the Communities’ own resources.

2.1. 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 made available to the
Communities in advance or in arrears, shall be charged
to their year of reference, on the basis of the
arrangements established in pursuant to the Council
Regulation implementing the Decision on the system of
the Communities’ own resources.

Amendment intended to address the
issue of charging to the financial year
and to cover the occasional delays
liable to arise in the payment of own
resources.

C 162/14

EN

Official Journal of the European Communities

5.6.2001

Commission’s proposal

Court’s modified proposal

Comments

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

3.2. The entries in respect of value added tax own
resources, the additional GNP-based resource and any
financial contributions may be adjusted in accordance
with the procedures established in the Regulation
referred to in paragraph 2 1.

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 amounts due
against commitments from preceding financial years.

5. Commitments shall be entered in the accounts on
the basis of the legal commitments entered into up to
31 December.

4.3. The commitment appropriations authorised for a
given year may be used solely to cover expenditure
committed and paid on which decisions are taken in
that financial year, save as otherwise provided in Title I
of Part Two, and to cover amounts due against
commitments from preceding financial years and which
give rise to a legal obligation in the current financial
year or subsequent financial years.

4. The payment appropriations authorised for a given
year may be used solely to cover sums expended in that
financial year by reason of amounts due against legal
obligations for that financial year or preceding financial
years.

5. Budgetary Ccommitments shall be entered in the
accounts for each financial year on the basis of the
legal commitments entered into up to decisions taken
between 1 January and 31 December (see Article 70).

6. Any legal commitments that arise between
1 January and 31 December shall be charged to the
corresponding budgetary commitments.

Text split into two paragraphs
(commitment/payment).

Text split into two paragraphs
(budgetary commitment and
registration of legal obligation) to
make a clear distinction between the
two separate stages constituted by the
decision to carry out an operation
(budgetary commitment) and the
registration of the legal obligation (see
Articles 70 and 71).

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.

6.7. Payments shall be entered in the accounts for a
financial year on the basis of the payments effected by
the accounting officer by between 1 January and 31
December of that year at the latest.

7. By way of derogation from paragraphs 5 and 6, the
expenditure of the Guarantee Section of the European
Agricultural 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.

7. By way of derogation from paragraphs 5 and 6, the
expenditure of the Guarantee Section of the European
Agricultural 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.

Reversion to standard rules as regards
the Guarantee Section of the EAGGF
would render this clause superfluous
(see Title I of Part Two).

Article 8

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.

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.

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.

The rules relating to carry-overs of
appropriations are superfluous in a
system of differentiated appropriations,
in that the commitments entered into
may be covered by payment
appropriations for subsequent
financial years.

Should there be a shortfall in payment
appropriations in subsequent financial
years, the flexibility that Article 21(2)
would introduce into the rules on
transfers should easily enable
managers to cope with the obligations
entered into. As a last resort, it would
still be possible to request the
appropriations in question by way of a
supplementary budget.

5.6.2001

EN

Official Journal of the European Communities

C 162/15

Commission’s proposal

Court’s modified proposal

Comments

2. Commitment appropriations may be carried over in
respect of:

2. Commitment appropriations may be carried over in
respect of:

(a) amounts corresponding to commitments which

(a) amounts corresponding to commitments which

have been virtually concluded at 31 December; or

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 Commis-
sion has been unable to commit the appropriations
provided for this purpose in the budget by 31
December.

(b) amounts which are necessary when the legislative
authority has adopted a basic instrument in the
final quarter of the financial year and the Commis-
sion 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.

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

3. Payment appropriations may be carried over in
respect of amounts needed to cover existing
commitments 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.

3. Payment appropriations may be carried over in
respect of amounts needed to cover existing
commitments 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.

4. The institution shall inform the European
Parliament and the Council (‘the budgetary authority’)
by 15 March at the latest of the carry-over decision
taken and shall state, for each budget item, how the
criteria in paragraphs 2 and 3 have been applied to
each carry-over.

4. The institution shall inform the European Parliament
and the Council (‘the budgetary authority’) by 15 March
at the latest of the carry-over decision taken and shall
state, for each budget item, how the criteria in
paragraphs 2 and 3 have been applied to each
carry-over.

5. Appropriations placed in reserve and
appropriations for staff expenditure may not be
carried over.

5. Appropriations placed in reserve and appropriations
for staff expenditure may not be carried over.

Article 9

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.

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.

Article 10

Article 10

When commitments are cancelled, as a result of total
or partial non-implementation of the actions for which
they were earmarked, in any financial year after that in
which the appropriations were entered in the budget,
the appropriations concerned shall lapse.

[When commitments are cancelled, as a result of total
or partial non-implementation of the actions for which
they the appropriations were earmarked committed, in
any financial year after that in which the
appropriations were entered in the budget, this cannot
result in appropriations being made available again the
appropriations concerned shall lapse.]

This text is not really necessary, in
that the practice it prohibits would not
be authorised if the text did not exist.
This clause was envisaged solely as a
means of countering an irregular
practice.

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

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

This clause is not only self-evident,
but also contains a reservation that is
incomprehensible as things stand.

C 162/16

EN

Official Journal of the European Communities

5.6.2001

Commission’s proposal

Court’s modified proposal

Comments

Article 11

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.

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.

The derogation envisaged is
unnecessary in a system of
differentiated appropriations, provided
that a sufficient volume of
commitment appropriations is
allocated in the first year of
application of the new system.

Article 12

Article 12

1. If the budget has not been finally adopted at 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.

1. If the budget has not been finally adopted at 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.

Text moved to Article 33a since it
essentially concerns the procedure for
adopting the budget.

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.

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 authorised for the relevant chapter in
the preceding financial year, account being taken of all
transfers, plus one twelfth for each completed month.

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

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

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

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.

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.

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.

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.

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.

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.

5.6.2001

EN

Official Journal of the European Communities

C 162/17

Commission’s proposal

Court’s modified proposal

Comments

4. If the continuity of Community activities and
management needs so require:

4. If the continuity of Community activities and
management needs so require:

(a) for expenditure necessarily resulting from the Trea-
ties 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 commit-
ments and payments in addition to those automati-
cally made available under paragraph 2;

(a) for expenditure necessarily resulting from the Trea-
ties 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 commit-
ments and payments in addition to those automati-
cally made available under paragraph 2;

(b) for expenditure other than that necessarily result-
ing 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.

(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 additional twelfths shall be authorised in whole.

The annual total authorised for each chapter by reason
of the twelfths may not exceed the total for 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.

The annual total authorised for each chapter by reason
of the twelfths may not exceed the total for 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.

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 in the 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.

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 in the 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.

Chapter 3

Chapter Section 3

Principle of equilibrium

Principle of equilibrium Principle of
equilibrium

Article 13

Article 13

1. Budget revenue and payment appropriations must
be in balance.

1. Budget revenue and payment appropriations must
be in balance.

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.

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.

C 162/18

EN

Official Journal of the European Communities

5.6.2001

Commission’s proposal

Court’s modified proposal

Comments

Article 14

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

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

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.

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

Chapter Section 4

Principle of unit of account

Principle of unit of account Principle of
currency unit

Article 15

Article 15

The budget shall be drawn up in euro.

The budget shall be drawn up and implemented in
euro, and the budgetary accounts presented in euro.

Chapter 5

Chapter Section 5

Principle of universality

Principle of universality Principle of
universality

Article 16

Article 16

1. Total revenue shall cover total payment
appropriations, subject to Article 17.

1. Total revenue shall cover total payment
appropriations, subject to Article 17.

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

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

The fact that the principle concerning
the currency unit also stipulates that
the budget should be implemented in
euro is essential to establishing the
principle of management being
conducted in euro. Commitments, in
principle contracts, as well as
payments are denominated in euro.
This reflects the constant efforts that
have been made by all the Community
institutions over the past 10 years,
which should eventually enable the
main burden of exchange risks to be
transferred to third parties.

The objectives targeted by the
derogation in Article 18 are not
indispensable and can be achieved by
means of the standard mechanisms for
the adoption and implementation of
the budget (see above).

5.6.2001

EN

Official Journal of the European Communities

C 162/19

Commission’s proposal

Court’s modified proposal

Comments

Article 17

Article 17

1. Revenue in the following categories provided for in
this Regulation shall not be used for any other
purpose:

1. Revenue in the following categories provided for in
this Regulation shall not be used for any purpose other
than the financing of certain specific items of
expenditure:

(a) financial contributions from Member States to
certain research programmes pursuant to the
Council Regulation implementing the Decision on
the system of the Communities’ own resources;

(a) financial contributions from Member States to
certain research programmes pursuant to the
Council Regulation implementing the Decision on
the system of the Communities’ own resources;

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

(b) interest on deposits and the fines provided for in
the Regulation 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;

(c) revenue earmarked for a specific purpose, such as
income from foundations, subsidies, gifts and
bequests;

(d) contributions to Community activities from third

(d) contributions to Community activities from third

countries or various bodies;

countries or various bodies;

(e) revenue from third parties in respect of goods,
services or work supplied at their request;

(e) revenue from third parties in respect of goods,
services or work supplied at their request;

(f) revenue arising from the repayment of amounts

(f) revenue arising from the repayment of amounts

unduly paid;

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;

(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;

(h) insurance payments received;

(i) revenue from payments connected with lettings;

(i) revenue from payments connected with lettings;

(j) revenue from the sale of publications and films,

(j) revenue from the sale of publications and films,

including those on an electronic medium.

including those on an electronic medium.

Some of the objectives targeted by this
derogation are not indispensable and
can be achieved by means of the
standard mechanisms for the adoption
and implementation of the budget
(entry in the budget of operations in
general, transfers on the basis of a
more flexible procedure if the
Commission’s proposals are accepted
(see Articles 20 and 21), constitution
and utilisation of ad hoc or
contingency reserves, and even, as a
last resort, supplementary budgets,
etc.).

Provision should be made for
processing this marginal revenue on
the basis of general provisions (see
paragraph 1 above).

Provision should be made for
processing this marginal revenue on
the basis of general provisions (see
paragraph 1 above).

Provision should be made for
processing this marginal revenue on
the basis of general provisions (see
paragraph 1 above).

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

Revenue which is earmarked for a specific purpose in
accordance with and whose collection is dependent on
this earmarking the applicable legal basis shall also not
be used for any other purpose, provided that this is
stipulated in the applicable legal basis.

Use of the earmarked revenue
mechanism must be strictly limited to
those cases where it cannot be avoided.

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 budget shall also 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.

C 162/20

EN

Official Journal of the European Communities

5.6.2001

Commission’s proposal

Court’s modified proposal

Comments

2. The Commission may accept any donation made to
the Communities, such as foundations, subsidies, gifts
and bequests.

2. The Commission may accept any donation made to
the Communities, such as foundations, subsidies, gifts
and bequests.

The Commission may accept donations which may
involve some financial charge only with prior
authorisation from the 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, the Commission shall take a final decision
in respect of acceptance.

2.3. The Commission may accept donations which
may involve some financial charge only with prior
authorisation from the 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, the Commission shall take a final decision in
respect of acceptance. The Commission shall take
account of any charges incurred when preparing the
budget for subsequent financial years.

Article 18

Article 18

1. The rules for the implementation of this Regulation
(hereinafter: ‘the implementing rules’) 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.

1. The rules for the implementation of this Regulation
(hereinafter: ‘the implementing rules’) 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.

2. The cost of products or services provided to the
Communities incorporating taxes refunded by the
Member States pursuant to the Protocol on the
Privileges and Immunities of the European
Communities shall be charged net to the budget.

2. The cost of products or services provided to the
Communities incorporating taxes refunded by the
Member States pursuant to the Protocol on the
Privileges and Immunities of the European
Communities shall be charged net to the budget at their
ex-tax total. Any taxes that may be incurred at that
time shall be entered in a suspense account until they
are repaid by the Member States.

This does not constitute a derogation
(entry in the accounts at net value),
but solely charging of the sum that
has still to be met from the
Community budget (ex-tax total).

Entering the sum in a suspense
account will oblige the manager to
ensure that the tax cost is recovered.

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

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

Chapter 6

Chapter Section 6

Principle of specification

Principle of specification Principle of
specification

Article 19

Article 19

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

Appropriations shall be earmarked for specific
purposes by section, and if necessary by sub-section,
title, and chapter and article; the articles shall if
necessary be further subdivided into items and
sub-items. The chapters shall be further subdivided into
articles and items.

It is proposed that budgetary
specification be restricted to article
level.

Article 20

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 they have made from one title to
another.

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

Amendment suggested to clarify the
text.

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.

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.

5.6.2001

EN

Official Journal of the European Communities

C 162/21

Commission’s proposal

Court’s modified proposal

Comments

Amendment suggested to clarify the
text.

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

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

Article 21

Article 21

1. The Commission may, within its own section of the
budget:

1. The Commission may, within its own section of the
budget:

(a) transfer appropriations from one article to another

(a) transfer appropriations from one article to another

within each chapter;

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;

(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 it does not alter the apportion-
ment between staff appropriations and other
administrative appropriations;

Amendment suggested to clarify the
notion of ‘appropriations entered
under the same heading’.

(c) as regards operational expenditure, transfer

(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.

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

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

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

Article 22

Article 22

1. The budgetary authority shall decide on transfers of
appropriations in accordance with paragraphs 2, 3 and
4 of this Article, subject to the derogations laid down
in Title I of Part Two.

1. The budgetary authority shall decide on transfers of
appropriations in accordance with paragraphs 2, 3 and
4 of this Article, subject to the derogations laid down
in Title I of Part Two.

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.

3. In the case of proposals for transfers relating to
expenditure 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 stipulated time limit. Where the European
Parliament does not act within this time limit, the
proposals for transfers shall be deemed to be
approved.

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.

3. In the case of proposals for transfers relating to
expenditure 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 stipulated time limit. Where the European
Parliament does not act within this time limit, the
proposals for transfers shall be deemed to be approved.

C 162/22

EN

Official Journal of the European Communities

5.6.2001

Commission’s proposal

Court’s modified proposal

Comments

4. Proposals for transfers relating both to expenditure
necessarily 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
institutions rejects the principle of the transfer, the
transfer shall not be made.

4. Proposals for transfers relating both to expenditure
necessarily 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
institutions rejects the principle of the transfer, the
transfer shall not be made.

Article 23

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

2. Revenue earmarked for a specific purpose may be
transferred only if it is not used for any other purpose.

2. Revenue earmarked for a specific purposes may be
transferred only if it is not used for another purpose.

Article 24

Article 24

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

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

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

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

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

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

5.6.2001

EN

Official Journal of the European Communities

C 162/23

Commission’s proposal

Court’s modified proposal

Comments

Chapter 7

Chapter Section 7

Principle of sound financial management

Principle of sound financial management
Principle of sound financial management

Article 25

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.

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. In accordance with the principle of economy, the
resources used by the organisation to produce goods
and/or services must be available in due time, in
appropriate quantity and quality, at the best price.
3. In accordance with the principle of efficiency, the
goods and services needed to achieve the organisation’s
objectives must be produced at an optimum
input-output ratio.

4. In accordance with the principle of effectiveness, the
given objectives must be achieved, thereby maximising
the desired effects of the policy being pursued.

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

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

3. In order to apply the principle of sound financial
management, the institutions shall evaluate actions
regularly.

36. In order to apply the principle of sound financial
management, the institutions shall evaluate their
actions regularly. The results of these evaluations shall
be incorporated in the analysis of the financial
management mentioned in Article 115(6).

Article 26

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.

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

Chapter Section 8

Principle of transparency

Principle of transparency Principle of
transparency

Article 27

Article 27

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

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

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.

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.

C 162/24

EN

Official Journal of the European Communities

5.6.2001

Commission’s proposal

Court’s modified proposal

Comments

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

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

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

3. The consolidated financial statements revenue and
expenditure account and balance sheet shall be
published in the Official Journal of the European
Communities. The financial management reports and
analyses drawn up by each institution shall also be
published in the Official Journal of the European
Communities.

It is essential that the institutions also
report on the tangible implementation
of their management in terms of what
they have actually achieved.

Article 28

Article 28

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

1. Information on borrowing 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.

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

TITLE II

TITLE II

ESTABLISHMENT AND STRUCTURE OF THE
BUDGET

ESTABLISHMENT AND STRUCTURE OF THE
BUDGET

Chapter 1

Chapter 1

Establishment of the budget

Establishment of the budget

Article 29

Article 29

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

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

These estimates shall be forwarded for information to
the budgetary authority before 1 July each year. The
Commission shall draw up its own estimates, which it
shall also forward to the budgetary authority before
1 July each year.

The text is incomplete in that the
Commission is not mentioned in
connection with the procedure for
informing the budgetary authority.

Article 30

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.

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.

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

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

5.6.2001

EN

Official Journal of the European Communities

C 162/25

Commission’s proposal

Court’s modified proposal

Comments

2. The Commission shall attach to the preliminary
draft budget:

2. The Commission shall attach to the preliminary
draft budget:

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

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

(b) an opinion on the estimates of the other institu-

(b) an opinion on the estimates of the other institu-

tions. This opinion may contain different estimates,
accompanied by the reasons therefore;

tions. This opinion may contain different estimates,
accompanied by the reasons therefore;

(c) any working paper it considers useful in connec-

tion with the staff of the institutions and the grants
they award.

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

3. The Commission shall draw up the general
introduction to the preliminary draft budget.

3. The Commission shall draw up the general
introduction to the preliminary draft budget.

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

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

Article 31

Article 31

1. The Commission may, on its own initiative or if
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.

1. The Commission may, on its own initiative or if
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.

2. However, save as otherwise agreed by the
institutions or in exceptional circumstances, the
Commission shall put such letter of amendment to the
Council at least 30 days before the first reading of the
draft budget by the European Parliament. The Council
must put the letter of amendment to the European
Parliament at least 15 days before the said first reading.

2. However, save as otherwise agreed by the
institutions or in exceptional circumstances, tThe
Commission shall put such letter of amendment to the
Council at least 30 days before the first reading of the
draft budget by the European Parliament. T, and the
Council must put the letter of amendment to the
European Parliament at least 15 days before the said
first reading.

The text proposed for deletion could be
viewed as an invitation to negotiations
on a procedure. Deleting the text
would still allow for the possibility of
exceeding the deadline agreed by the
institutions concerned.

Article 32

Article 32

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.

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

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

Article 33

Article 33

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.

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.

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 as
specified in the Council Regulation implementing the
Decision on the system of the Communities’ own
resources.

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 as
specified in the Council Regulation implementing the
Decision on the system of the Communities’ own
resources.

C 162/26

EN

Official Journal of the European Communities

5.6.2001

Commission’s proposal

Court’s modified proposal

Comments

Article 33a

The Commission is invited to simplify
this management procedure on the
basis of the provisional twelfths
system. The Court presents the
following suggestions.

1. If the budget has not been finally adopted at 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.

1. If the budget has not been finally adopted at 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.

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 authorised for the relevant chapter in
the preceding financial year, account being taken of all
transfers, plus one twelfth for each completed month.

2. Commitments may be entered into in respect of any
chapter, for up to one quarter of the total
appropriations authorised for the relevant chapter in
the preceding financial year, account being taken of all
transfers, plus one twelfth for each completed month,
provided these remain within the annual limits
established in paragraph 5.

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

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

It is suggested that the mechanism for
the system of management by twelfths
be simplified by only taking into
account, in the definition of those
twelfths, the appropriations for the
preceding financial year. This will
provide a straightforward and
consistent point of reference, while still
maintaining an overall annual limit
derived from the smallest of the
amounts set by the preceding budget,
less any transfers, by the current draft
budget or, in its absence, by the
preliminary draft budget.

To be deleted, as it is suggested that
the mechanism for the system of
management by twelfths be simplified
by only taking into account, in the
definition of those twelfths, the
appropriations for the preceding
financial year, while still maintaining,
an overall annual limit derived from
the smallest of the amounts set for the
chapter concerned by the preceding
budget, less any transfers, by the
current draft budget or, in its absence,
by the preliminary draft budget.

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.

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.

To be deleted with a view to the
application of standard provisions to
the Guarantee Section of the EAGGF.

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.

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,
provided these remain within the annual limits
established in paragraph 5.

It is suggested that the mechanism for
the system of management by twelfths
be simplified by only taking into
account, in the definition of those
twelfths, the appropriations for the
preceding financial year. This will
provide a straightforward and
consistent point of reference, while still
maintaining, an overall annual limit
derived from the smallest of the
amounts set by the preceding budget,
less any transfers, by the current draft
budget or, in its absence, by the
preliminary draft budget.

5.6.2001

EN

Official Journal of the European Communities

C 162/27

Commission’s proposal

Court’s modified proposal

Comments

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.

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.

To be deleted, as it is suggested that
the mechanism for the system of
management by twelfths be simplified
by only taking into account, in the
definition of those twelfths, the
appropriations for the preceding
financial year, while still maintaining,
an overall annual limit derived from
the smallest of the amounts set for the
chapter concerned by the preceding
budget, less any transfers, by the
current draft budget or, in its absence,
by the preliminary draft budget.

4. If the continuity of Community activities and
management needs so require:

4. If the continuity of Community activities and
management needs so require:

(a) for expenditure necessarily resulting from the Trea-
ties 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 commit-
ments and payments in addition to those automati-
cally made available under paragraph 2;

(a) for expenditure necessarily resulting from the Trea-
ties 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 commit-
ments and payments in addition to those automati-
cally made available under paragraphs 2 and 3;

(b) for expenditure other than that necessarily result-
ing 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.

(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 additional twelfths shall be authorised in whole.

The annual total authorised for each chapter by reason
of the twelfths may not exceed the total for 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.

5. The annual total authorised for each chapter by
reason of all the twelfths may not exceed the total for
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.

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 in the 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.

6. If, for a given chapter, and despite the authorisation
of two or more provisional twelfths in the
circumstances provided for in paragraph 4, it is not
possible 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 in the 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.

Article 34

Article 34

1. If necessary, the Commission may present
preliminary draft amending budgets.

1. If necessary, and in particular with a view to
carrying over the balance from the preceding financial
year, the Commission may shall present preliminary
draft amending budgets.

There is always at least one amending
budget to carry over the final balance
for the financial year (n – 1).

C 162/28

EN

Official Journal of the European Communities

5.6.2001

Commission’s proposal

Court’s modified proposal

Comments

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

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

2. The Commission shall 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.

2. The Commission shall 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.

3. The budgetary authority shall discuss them with
due account for their urgency.

3. The budgetary authority shall discuss them with due
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.

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

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.

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 36

Article 36

The Commission and the budgetary authority may
agree to bring forward certain dates for the
transmission of the estimates, and for the adoption
and transmission of the 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.

The Commission and the budgetary authority may
agree to bring forward certain dates for the
transmission of the estimates, and for the adoption and
transmission of the 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.

Chapter 2

Chapter 2

Structure and presentation of the budget

Structure and presentation of the budget

Article 37

Article 37

The budget shall consist of:

The budget shall consist of:

(a) a general statement of revenue;

(a) a general statement of revenue and a summary

statement of expenditure;

(b) separate sections subdivided into statements of
revenue and expenditure for each institution.

(b) separate sections subdivided into statements of
revenue and expenditure for each institution.

Article 38

Article 38

1. Commission revenue and the revenue and
expenditure of 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.

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

Should the legislator wish to provide
for classification by type and purpose,
it would be appropriate to specify this
in a logical manner (by type within
purpose or vice versa).

5.6.2001

EN

Official Journal of the European Communities

C 162/29

Commission’s proposal

Court’s modified proposal

Comments

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.

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

A title (or a subsection) shall correspond to a policy
area and a chapter shall, as a rule, correspond to an
activity. The administrative appropriations for a title
shall be grouped in a single chapter, on the basis of the
uniform nomenclature for each article adopted by the
budgetary authority by virtue of paragraph 1.

Article 39

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.

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. Only that part of the own resources that is
actually available for the purposes of financing the
budget shall be entered in the budget, in accordance
with the Council Decision on the system of the
Communities’ own resources.

By proposing to delete the first
sentence, the Court obviously intends
that the possibility of negative revenue
or expenditure should be eliminated. It
is evident that the absence of any text
would indicate that such operations
are irregular.

The wording proposed by the Court
aims to define available revenue as
being the revenue to be entered in the
accounts. It is thus not necessary to
provide for a derogation to allow for a
supposed entry in the accounts of the
net balance between own resources and
collection costs.

Article 40

Article 40

1. Each section of the budget may include a ‘provi-
sions’ title. Appropriations shall be entered in this title
in the following two circumstances:

1. Each section of the budget may include a ‘provisions’
title. Appropriations shall be entered in this title in the
following two circumstances:

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

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

when the budget is established;

when the budget is established;

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

(b) where there is uncertainty about the adequacy of or

need for the appropriations entered on the
operational budget lines.

It might be appropriate to consider
applying this reservation more
generally, to all the budget 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.

The appropriations in this title may be used only after
by means of a transfer has been effected 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
‘provisions’ title in the course of a financial year.

2. In the event of serious implementation difficulties,
the Commission may transfer appropriations to the
‘provisions’ title in the course of a financial year.

If this passage is to be kept, it would
be appropriate to clarify its content, as
it is an ‘innovation’ whose potential
value is difficult to ascertain.

Article 41

Article 41

The Commission section may include a ‘negative
reserve’ limited to a maximum amount of EUR 200
million. This reserve, which shall be entered in a
separate chapter, may comprise both commitment
appropriations and payment appropriations.

The Commission section may include a ‘negative
reserve’ limited to a maximum amount of EUR 200
million. This reserve, which shall be entered in a
separate chapter, may comprise both commitment
appropriations and payment appropriations.

The very notion of a negative reserve
is contrary to clear and transparent
presentation of the precise budgetary
authorisations established by the
budgetary authority. It makes it
impossible for those involved in the
budgetary procedure to adopt clear
and transparent expenditure
authorisations.

C 162/30

EN

Official Journal of the European Communities

5.6.2001

Commission’s proposal

Court’s modified proposal

Comments

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.

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

Article 42

1. The Commission section of the budget shall include
the following two reserves:

1. The Commission section of the budget shall include
the following two reserves:

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

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

(b) a reserve relating to Community loans and loan

(b) a reserve relating to Community loans and loan

guarantees to third countries.

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.

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.

Article 43

Article 43

The budget shall show:

The budget shall show:

1.

in the general statement of revenue:

1.

in the general statement of revenue:

(a) the estimated revenue of the Communities for the

(a) the estimated revenue of the Communities for the

financial year in question;

financial year in question;

(b) the revenue for the preceding financial year;

(b) the estimated revenue for the preceding financial
year, and revenue for the last financial year for
which the accounts have been closed;

More complete presentation of the
text.

(c) appropriate remarks on each subdivision;

(c) appropriate remarks on each subdivision;

5.6.2001

EN

Official Journal of the European Communities

C 162/31

Commission’s proposal

Court’s modified proposal

Comments

2.

in the section for each institution:

2.

in the summary statement of expenditure:

More complete presentation of the
text.

(a) the commitment and payment appropriations for

the financial year in question;

(b) the commitment and payment appropriations for

the preceding financial year;

(c) the expenditure committed and the expenditure

paid in the last financial year for which the accounts
have been closed;

(d) a summary statement of the schedule of payments

due in subsequent financial years to meet budgetary
commitments entered into during the financial year
or in preceding financial years;

in the section for each institution, the revenue and

23.
expenditure shall appear on the basis of the same
structure used in paragraphs 1 and 2, with the
appropriate remarks on each subdivision, and with
schedules of payments due in subsequent financial years
to meet budgetary commitments entered into during
the financial year or in preceding financial years;

Aggregation of the schedules will
provide the budgetary authority with
an overall view of the total payment
appropriations to be entered in the
budget in subsequent financial years to
meet the Community’s cumulative
commitments.

(a) as regards the statement of revenue:

(a) as regards the statement of revenue:

(i) the estimated revenue for each institution for the

(i) the estimated revenue for each institution for the

financial year in question;

financial year in question;

(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;

(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;

(iii) appropriate remarks on each revenue line;

(b) as regards the statement of expenditure:

(b) as regards the statement of expenditure:

(i) the appropriations made available for the financial

(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;

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;

(ii) appropriate remarks on each subdivision;

C 162/32

EN

Official Journal of the European Communities

5.6.2001

Commission’s proposal

Court’s modified proposal

Comments

3. as regards staff:

34. as regards staff:

(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 appropriations;

(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 appropriations;

(b) an establishment plan for staff paid from the

(b) an establishment plan for staff paid from the

research and technological development appropria-
tions, classified by category and grade and
distinguishing between permanent and non-
permanent staff, authorised within the limits of the
budget appropriations;

research and technological development appropria-
tions, 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 clas-
sification may be based on groups of grades, in
accordance with the conditions laid down in each
budget. The establishment plan must specify the
number of highly qualified technical or scientific
personnel who are accorded special advantages
under the specific provisions of the Staff Regula-
tions of officials of the European Communities and
Conditions of employment of other servants of the
European Communities, hereinafter: ‘the Staff
Regulations’;

(c) as regards scientific and technical staff, the classifica-

tion may be based on groups of grades, in
accordance with the conditions laid down in each
budget. The establishment plan must specify the
number of highly qualified technical or scientific
personnel who are accorded special advantages
under the specific provisions of the Staff Regula-
tions of officials of the European Communities and
Conditions of employment of other servants of the
European Communities, hereinafter: ‘the Staff
Regulations’;

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

(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 authorised for the preceding year;

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

4. as regards borrowing and lending operations:

45. as regards borrowing and lending operations:

(a) in the general statement of revenue, the budget

(a) in the general statement of revenue, the budget lines

lines corresponding to the relevant operations and
intended to record any reimbursements received
from beneficiaries 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;

corresponding to the relevant operations and
intended to record any reimbursements received
from beneficiaries 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:

(b) in the Commission section:

(i) the budget lines containing the Communities’

(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;

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 volume of the operations envisaged, the dura-
tion and the financial guarantee given by the Com-
munities in respect of these operations;

(ii) remarks giving a reference to the legal basis and the
volume of the operations envisaged, the duration
and the financial guarantee given by the Communi-
ties in respect of these operations;

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

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

as an indication:

as an indication:

(i) ongoing capital operations and debt management;

(i) ongoing capital operations and debt management;

(ii) the capital operations and debt management for

(ii) the capital operations and debt management for the

the financial year in question;

financial year in question;

5.6.2001

EN

Official Journal of the European Communities

C 162/33

Commission’s proposal

Court’s modified proposal

Comments

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.

56. 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

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.

1. The establishment plan described in Article 43,
paragraph 4 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 by up to 10 % and within the limit
of the budget appropriations and the total number of
posts allocated, except in the case of grades A 1 and
A 2.

However each institution may modify each
establishment plan by up to 10 % of the posts and
within the limit of the budget appropriations and the
total number of posts allocated, except in the case of
grades A 1 and A 2;

2. By way of derogation from the first subparagraph
of 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.

2. By way of derogation from the first subparagraph of
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

TITLE III

IMPLEMENTATION OF THE BUDGET

IMPLEMENTATION OF THE BUDGET

Chapter 1

Chapter 1

General provisions

General provisions

Article 45

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 authorised.

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 authorised.

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

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

C 162/34

EN

Official Journal of the European Communities

5.6.2001

Commission’s proposal

Court’s modified proposal

Comments

Article 46

Article 46

1. A basic act must first be adopted before the
appropriations entered in the budget for any
Community action may be used.

1. A basic act must first be adopted before the
appropriations entered in the budget for any
Community action may be used.

2. The following appropriations may be used without
a basic act provided that the actions they are intended
to finance fall within the competence of the Com-
munity:

2. The following appropriations may be used without a
basic act provided that the actions they are intended to
finance fall within the competence of the Community:

(a) appropriations for pilot schemes of an

experimental nature designed to test the feasibility
of an action and its usefulness;

(a) appropriations for pilot schemes of an experimental
nature designed to test the feasibility of an action
and its usefulness;

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

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

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

(c) appropriations for one-off actions, or even actions
for an indefinite duration, carried out by the Com-
mission 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

(d) appropriations for the operation of each institution

under its administrative autonomy.

under its administrative autonomy.

Article 47

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.

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

Article 48

The Commission and each of the other institutions
may, within their departments, delegate their powers
of budget implementation 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.

The Commission and each of the other institutions
may, within their departments, delegate their powers of
budget implementation 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

Article 49

The exceptions laid down arise from
the fact that the Treaty itself
introduces an exception to the need for
a basic act by providing for a specific
action to be conducted directly by the
Commission. Due to the limited and
determinate number of such cases, it is
proposed that the list of cases given in
Annex V to the Interinstitutional
Agreement of 6 May 1999 on
budgetary discipline should be
reproduced in full in the implementing
rules.

The text should be refined so that it
does not make any exception for staff
expenditure which is founded in a
basic act (the Staff Regulations).

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.

It shall be prohibited for any actor involved in the
implementation of the budget to take aAny measures of
budget implementation which may bring his own
interests into conflict with those of the Community.
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. Should such a case arise, the actor in
question must refer it to the competent authority.

There is a risk of a conflict of interests
not between persons, but between a
person and the Community.

5.6.2001

EN

Official Journal of the European Communities

C 162/35

Commission’s proposal

Court’s modified proposal

Comments

Chapter 2

Chapter 2

Methods of implementation

Methods of implementation

Article 50

Article 50

1. The Commission shall implement the budget on a
centralised basis or by shared or decentralised
management.

1. The Commission shall implement the budget on a
centralised basis or by shared or decentralised
management.

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

2. Where the Commission implements the budget on a
centralised basis, implementation operations shall be
performed directly by Commission departments or
indirectly, in accordance with Articles 51 to 54 by
executive agencies or by national, Community or
international public-law bodies.

Shows that Articles 51 to 54 are not
concerned with the shared or
decentralised management referred to
in Article 50(3), but with the indirect
management methods referred to in
Article 50(2).

3. Where the Commission implements the budget by
shared or decentralised management, implementation
operations shall be entrusted to Member States in
accordance with the provisions of Titles I and II of
Part Two, or to third 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, the Commission shall apply, in
accordance with specific provisions,
clearance-of-accounts procedures and appropriate
financial correction mechanisms.

3. Where the Commission implements the budget by
shared or decentralised management, implementation
operations shall be entrusted in part to Member States
in accordance with the provisions of Titles I and II of
Part Two, or.

4. When the Commission implements the budget on a
decentralised basis, implementation operations shall be
delegated in part to third countries in accordance with
Title IV of Part Two. In this both these cases, in order
to ensure that the funds are used in accordance with
the applicable rules, the Commission shall apply, in
accordance with specific provisions, clearance of
accounts procedures and appropriate financial
correction mechanisms which enable it to assume its
final responsibility for the implementation of the
budget.

5. The country concerned in paragraph 4 must agree
to assume full 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 implemented correctly,
to prevent and prosecute irregularities and fraud and to
recover funds lost, wrongly paid or incorrectly used.

Distinguishing between the two
methods of management enables each
to be defined more succinctly.
To be deleted if, as the Court proposes,
it is decided to delete the Titles in
question.

A reminder that ultimate
responsibility for the implementation
of the budget lies with the
Commission.

The provisions of Article 150(2)
applying to third countries should be
extended to Member States included
here.

Article 51

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.

1. The Commission may not delegate to third parties
the executive powers it enjoys under the Treaties where
they involve a large measure of discretion implying
political choices. The delegation of powers can only
involve clearly defined executive powers, which must be
entirely subject to supervision.

Additional text on the basis of
Judgment of 13 June 1958, Case
C– 9/56 Meroni v High Authority
[1958] ECR 1.

2. Within the limits laid down in paragraph 1, the
Commission may delegate tasks of public authority
and in particular measures of budget implementation
to executive agencies governed by Community or
international law, hereinafter ‘executive agencies’ or to
other external national, public-law bodies or bodies
with a public-service mission guaranteed by the State.

2. Within the limits laid down in paragraph 1, the
Commission may delegate tasks of public authority and
in particular measures of budget implementation,
namely commitment, validation, authorisation and
recovery, to executive agencies governed by
Community or international law, hereinafter called
‘executive agencies’, or to other external national,
Community or international public—law bodies or
bodies with a public-service mission guaranteed by the
State.

Full definition currently given in
Article 54.

Precision: the phrase ‘guaranteed by
the State’ would exclude a number of
NGOs and should thus be deleted.

C 162/36

EN

Official Journal of the European Communities

5.6.2001

Commission’s proposal

Court’s modified proposal

Comments

Article 52

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.

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.

The conditions and arrangements for 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 conditions and arrangements for 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.

Article 53

Article 53

1. Decisions delegating tasks to implementing bodies
or 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 appropriate arrangements for ensuring
the transparency of operations carried out and include
at least the following:

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

See Article 51(2).

(a) transparent, non-discriminatory procurement

(a) transparent, non-discriminatory procurement

procedures which prevent any conflicts of interest;

procedures which prevent any conflicts of interest;

(b) an effective system of internal control of manage-

(b) an effective system of internal control of manage-

ment operations;

ment operations;

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

(c) Separate accounting for these operations and

procedures for separate the presentation of the
accounts which will show enable the correct use
made of Community funds to be ascertained and
the true extent of this use to be reflected in the
Community accounts;

The accounts should not necessarily be
‘separated’ in order to achieve the
desired objectives, which should be
better defined.

(d) an independent external audit.

(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 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
implementation of the delegated tasks. It shall take
account of the equivalence of control systems when
undertaking its controls.

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

2. Where the Commission has made payments to
public-law bodies which yield interest, recovery orders
shall be issued periodically, at intervals of no more
than six months, for such interest to be booked to the
statement of revenue.

2. Where the Commission has made payments to
public—law bodies, or to bodies with a public-service
mission, which yield interest, recovery orders shall be
issued periodically, at intervals of no more than six
months, for such interest to be booked to the statement
of revenue.

It is assumed that this provision will
not apply to the interest paid to
implementing agencies, which would
be entered under the budget for the
agency itself.

5.6.2001

EN

Official Journal of the European Communities

C 162/37

Commission’s proposal

Court’s modified proposal

Comments

Article 54

Article 54

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

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

This full definition need only be given
once, the first time the measures of
budget implementation are mentioned
(see Article 51(2)).

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 involving
neither the exercise of public authority nor the use of
discretionary powers of judgement.

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 involving
neither the exercise of public authority nor the use of
discretionary powers of judgement.

See Article 51(2).

Chapter 3

Financial actors

Section 1

Chapter 3

Financial actors

Section 1

Principle of separation of duties

Principle of separation of duties

Article 55

Article 55

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

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

Section 2

Section 2

Authorising officer

Authorising officer

Article 56

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.

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.

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

2. Authorising officer powers shall be delegated or
subdelegated only to persons covered by the Staff
Regulations and the Conditions of employment of
other servants of the European Communities.

Without this amendment, some
high-level temporary members of staff
would no longer have authorising
officer powers.

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

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

Article 57

Article 57

1. The authorising officer by delegation and
subdelegation shall be responsible in each institution
for implementing revenue and appropriations in
accordance with the principles of sound financial
management.

1. The authorising officer by delegation and the
authorising officer by subdelegation shall be
responsible in each institution for implementing
revenue and appropriations in accordance with the
principles of legality, regularity and sound financial
management.

Amendment intended to clarify the
text and render it more complete, by
including in it the principles of
legality and regularity.

C 162/38

EN

Official Journal of the European Communities

5.6.2001

Commission’s proposal

Court’s modified proposal

Comments

2. To implement appropriations, the authorising
officer by delegation and by subdelegation shall make
commitments and shall validate expenditure and
authorise payments. Implementation 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.

2. To implement appropriations, the authorising
officer by delegation and by subdelegation shall make
commitments and shall validate expenditure and
authorise payments. Implementation 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. It shall involve waiving established entitlements
in appropriate cases.

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

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

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

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.

5. The authorising officer by delegation shall report to
his institution on the performance of his duties, in the
form of an annual activity report including on
comprising 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 and the operation of internal control systems.
The authorising officer by delegation shall, at the same
time, forward this report submit to the institution, to
the internal auditor.and to the accounting officer an
annual activity report together with accounts.

The proposal does not specify which
accounts are being referred to, or when
the report should be submitted.

The annual activity report drawn up
by the authorising officer by
delegation should include an
assessment of the internal control
systems for which he is responsible.

It is difficult to see the point of
sending the annual activity report to
the accounting officer, and to see
which accounts are meant to
accompany the report. The proposal
already requires that the authorising
officer supply the accounting officer
with all the necessary information (see
Article 58(2)).

5.6.2001

EN

Official Journal of the European Communities

C 162/39

Commission’s proposal

Court’s modified proposal

Comments

A more logical order and a more
complete text is proposed.

Section 3

Section 3

Accounting officer

Accounting officer

Article 58

Article 58

1. Each institution shall appoint an accounting officer
who shall be responsible in each institution:

1. Each institution shall appoint an accounting officer
who shall be responsible in each institution:

(a) for preparing and presenting the financial state-

(a) or preparing and presenting the financial statements

ments provided for in Title V;

provided for in Title V; for laying down the
minimum accounting rules and the accounting
systems used, and for validating these systems. The
Commission’s accounting officer shall be
responsible for laying down the accounting
standards, principles and methods applicable to the
drawing-up of the Community’s consolidated
financial statements;

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

(b) for laying down the minimum accounting rules and
the accounting systems used by authorising officers
and for validating these systems; for the manage-
ment of cash resources;

(c) for proper implementation of payments, manage-
ment of the treasury, collection of revenue and
recovery of established entitlements.

(c) for proper implementation of payments, manage-
ment of the treasury, collection of revenue and
recovery of established entitlements in conformity
with the information supplied by the authorising
officer and the accounting rules laid down in this
Regulation;

(d) for keeping the accounts and for drawing up and
presenting the financial statements stipulated in
Title VI.

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

2. The accounting officer shall obtain all the
information necessary for the purposes of the first
subparagraph needed to fulfil his duties from the
authorising officers.

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

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

It is difficult to see why a specific
reference has to be made to sectoral
regulations. Any derogations
concerning this area should be
specified in the Financial Regulation
itself.

Section 4

Section 4

Imprest administrator

Imprest administrator

Article 59

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 institution’s accounting officer.

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 institution’s accounting officer. Each institution’s
accounting officer may designate one or more imprest
account administrators, who shall be responsible for
effecting the payment of small sums and/or the
collection of revenue. The accounting officer shall to
this end set up and endow imprest accounts.

Modification designed to clarify the
text and render it more complete,
notably by proposing that the imprest
administrators would also have
responsibility for the collection of
revenue.

C 162/40

EN

Official Journal of the European Communities

5.6.2001

Commission’s proposal

Court’s modified proposal

Comments

Chapter 4

Chapter 4

Liability of the financial actors

Liability of the financial actors

Section 1

Section 1

No reference is made to the Financial
Controller, notwithstanding that
Article 297c of the Treaty explicitly
refers to the Financial Controller as
one of the financial actors for whom
the rules concerning responsibilities
are to be laid down by the Council.

General rules

General rules

Article 60

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.

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

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 Communities’ financial
interests and on the fight against corruption involving
officials of the European Communities or officials of
Member States.

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 Communities’ financial
interests and on the fight against corruption involving
officials of the European Communities or officials of
Member States.

Article 62

Article 62

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

1. Each authorising officer, accounting officer or
imprest administrator shall be liable to disciplinary
action and payment of compensation, as laid down in
the Staff Regulations without prejudice to Articles 62a,
63 and 64.

See text below.

5.6.2001

EN

Official Journal of the European Communities

C 162/41

Commission’s proposal

Court’s modified proposal

Comments

Section 2

Rules applicable to authorising officers

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.

Article 62a

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

Any decision taken after an authorising officer by
delegation or subdelegation has written to his
delegating authority must be logged in the accounting
system.

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.

32. 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.

Taking as a model the section
applicable to accounting officers and
imprest administrators, this section
should be supplemented with
provisions concerning the situations in
which authorising officers are liable to
disciplinary action and payment of
compensation, particularly in view of
the responsibilities defined in
Article 57. It is for the Commission to
lay down these provisions. The
Regulation needs to make clear that
authorising officers may be held
responsible for losses to the budget or
damage to the financial interests of
the Community which result from
their actions (or their failure to act)
and which they should have foreseen.
The Court further points out again (as
it previously indicated in
paragraph 5.20 of the Annex to its
Opinion No 4/97) that it is not
sufficient to leave any necessary action
to be taken under the relevant
provisions of the Staff Regulations;
these provisions are not apt for the
recovery of money, and have in any
case never been applied. The
Commission should therefore consider
the possibility of creating, within the
current framework, an independent
body which would be responsible for
ruling on the liability of these officials
and other servants in respect of the
payment of compensation, and which
would not have the Staff Regulations
as its legal basis.

Amendment intended to clarify the
notion of liability.

Amendment intended to ensure
transparency. Without this, there
would be no evidence of any such
conflicts of opinion between the
delegating authority and the
authorising officer by delegation or
subdelegation.

C 162/42

EN

Official Journal of the European Communities

5.6.2001

Commission’s proposal

Court’s modified proposal

Comments

Section 2

Section 2 3

Rules applicable to accounting officers and
imprest administrators

Rules applicable to accounting officers and
imprest administrators

Article 63

Article 63

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

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

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

in his keeping;

in his keeping

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

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

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

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

conformity with the corresponding recovery or
payment orders.

conformity with the corresponding recovery or pay-
ment orders;

(d) he omits, within reasonable time limits, to recover
amounts or to request from the authorising officer
a waiver of recovery of amounts receivable.

A more complete description of the
accounting officer’s responsibilities is
necessary.

Article 64

Article 64

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

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

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

in his keeping;

in his keeping;

(b) he cannot provide proper supporting documents

(b) he cannot provide proper supporting documents for

for the payments he has made;

the payments he has made;

(c) he makes payments to persons other than those

(c) he makes payments to persons other than those

entitled.

entitled;

(d) he omits to collect revenue due.

A more complete description of the
imprest administrator’s responsibilities
was necessary.

Chapter 5

Chapter 5

Revenue operations

Revenue operations

Section 1

Section 1

Making available of own resources

Making available of own resources

Article 65

Article 65

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.

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.

Any revenue, whatever its nature,
must form the subject of a budget
estimate. It is superfluous to specify
that it should be made available in
accordance with the Regulation
implementing the Council Decision
concerning own resources.

5.6.2001

EN

Official Journal of the European Communities

C 162/43

Commission’s proposal

Court’s modified proposal

Comments

Section 2

Section 2 1

Estimate of amounts receivable

Forward schedule and eEstimate of amounts
receivable

Article 66

Article 66

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

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

2. By way of derogation from paragraph 1, no
estimate of 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.

1. By way of derogation from paragraph 1, The
authorising officer shall draw up a forward schedule for
making directly available to the Commission no
estimate of 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.

2. Any measure or situation, other than those defined
in paragraph 1, which is liable to generate or alter an
amount receivable by the Communities shall give rise
to an estimate of the amount receivable drawn up by
the authorising officer.

3. The forward schedule and the estimate of the
amount receivable shall precede any recovery order.

Section 3

Recovery order

Article 67

Section 3 2

Recovery order

Article 67

Even if an estimate of amounts
receivable cannot be made for
traditional own resources, because the
sum total of such revenue is only
known at the time this is made
available to the Commission by the
Member States, it should be the
authorising officer’s duty to draw up,
as a minimum, a forward schedule
which allows recovery of the various
amounts of own resources paid at
fixed intervals by the Member States
to be monitored.

The general system must be applied to
any revenue from agricultural sources,
classified as miscellaneous revenue.

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.

A recovery order shall be drawn up by the authorising
officer to establish any own resources placed directly at
the disposal of the Commission and 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.

The implementing rules should specify
that the recovery order must indicate
the nature of the revenue, the budget
line concerned, the total amount and
the debtor.

Section 4

Recovery

Article 68

Section 4 3

Recovery

Article 68

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

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

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

C 162/44

EN

Official Journal of the European Communities

5.6.2001

Commission’s proposal

Court’s modified proposal

Comments

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.

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.

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

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.

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.

The provision of the first subparagraph shall not apply
to decisions on clearance of accounts or financial
corrections.

The provision of the first subparagraph shall not apply
to decisions on clearance of accounts or financial
corrections.

Chapter 6

Chapter 6

Expenditure operations

Expenditure operations

It is suggested that a recital be
included to the effect that: ‘The
implementation by the Commission of
any policy, activity, etc. requires on the
one hand administrative
implementation resulting in a legal
commitment pursuant to Articles 202
and 211 of the Treaty, and on the
other hand budgetary implementation
under Article 274 of the Treaty (see
Judgment of the Court of Justice of
24 October 1989, Case 16/88
Commission v Council, [1989]
ECR, 3457). The Financial
Regulation is concerned solely with
budgetary implementation.’

5.6.2001

EN

Official Journal of the European Communities

C 162/45

Commission’s proposal

Court’s modified proposal

Comments

Section 1

Section 1

Commitment of expenditure

Commitments of expenditure

Article 70

Article 70

1. A commitment shall be made up of a budget
commitment and a legal commitment.

1. A commitment shall be made up of a budget
commitment and a legal commitments.

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

1. The budget commitment is based on a documented
decision by an institution or those delegated to decide
on its behalf and consists of the prior allocation of is
the operation whereby the appropriations necessary to
cover a for performance of the legal obligation
imposing a charge on the budget, are reserved.

In order to avoid any confusion
between the administrative
implementation and budgetary
implementation facets of a policy,
which are clearly distinct (see remark
at beginning of chapter), it would be
better to avoid the use of the term
‘legal commitment’ and to refer, when
necessary in this chapter, to a ‘legal
obligation in respect of third parties’.
If conclusion of the legal obligation,
which is the final stage of the
administrative implementation,
requires a prior budgetary
implementation (see Article 71(1), as
amended), it does not constitute a
budget implementation measure and
should therefore not be defined in the
Financial Regulation.

It is necessary to be precise about the
point at which the budgetary
commitment is established, and on
which basis.

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

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

See the comment under Article 70(1),
first subparagraph.

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

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

While it is understandable that in
administrative practice, budgetary
commitments are made by the person
who also has responsibility for
entering into legal commitments on
behalf of the Communities, the
Financial Regulation cannot require
this as an absolute rule, since powers
of delegation in the field of the
administrative implementation of a
policy (Article 211 of the Treaty) and
in that of budgetary implementation
(Article 274 of the Treaty) are not the
same. See in this respect Judgment of
the Court of Justice, Case 16/88
Commission v Council, [1989],
ECR 3457, paragraph 17: ‘... the
power to adopt the administrative
decision and the power to commit the
expenditure may be entrusted, within
the internal organisation of each
institution, to different officials’.

C 162/46

EN

Official Journal of the European Communities

5.6.2001

Commission’s proposal

Court’s modified proposal

Comments

2. The budget commitment is global either when the
final beneficiary is not individually identified or when
the 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.

2. The budget commitment is global either when all
the elements (the final beneficiary, allocation of
amounts, etc.) necessary to identify individual
commitments are not known. is not individually
identified or when the commitment covers a number of
individual commitments. The budget 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.

It should be made clear that a budget
commitment is either global,
provisional, or individual. If the
beneficiary and the amount concerned
are known, then the budget
commitment is always individual, and
there is no need for a global
commitment covering individual
commitments.

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

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

This provision negates the concept of
differentiated appropriations and
should be dropped. The main reason
why this is introduced is to cope with
the situation of the Structural Funds
where it is not possible under current
arrangements to commit fully in the
first year of the multiannual
programme the total amount of the
programme without exceeding in that
year the ceiling of the financial
perspective. Similar considerations
have affected International Fisheries
Agreements, and external aid
(MEDA, 1996) in the past. However,
such a massive derogation from a key
concept of the Community budget —
the Structural Funds account for one
third of the total budget – negates
that concept to an unacceptable
degree.

The implication of the above is that
changes are needed in the mechanism
of the financial perspectives to enable
the concept of differentiated
appropriations to be respected.

Article 71

Article 71

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

1. In respect of any measure which may give rise to
expenditure payments chargeable to the budget, the
authorising officer must first make a budget
commitment before entering into an individual legal
commitment obligation is entered into with third
parties.

For consistency with Article 70.

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

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

Presumably the same rules apply to
legal obligations corresponding to
global or individual budget
commitments. The word ‘global’
should therefore not apply. Otherwise
different rules need to be formulated.
It is presumably also intended that the
same rule should apply to provisional
primary commitments, where the
current position is that unless legal
obligations are entered into before
31 December of year n, the amounts
concerned must be decommitted.

This text can be removed because the
ideas contained therein are included in
the second subparagraph, as redrafted.

5.6.2001

EN

Official Journal of the European Communities

C 162/47

Commission’s proposal

Court’s modified proposal

Comments

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

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

During the period referred to in subparagraph 1, the
conclusion of Each individual legal obligation must be
entered into by 31 December of the year following that
in which the primary commitment was raised, and
commitment shall be registered by the authorising
officer in the budget accounts against and booked to
the global related budget commitment.

At the end of this period As soon as the legal
obligation(s) have been entered into, but not later than
the date mentioned in the date mentioned in the
previous subparagraph, the any unused balance of the
this global budget commitment shall be decommitted
by the authorising officer.

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

3.2. The legal obligations entered into registered for
actions extending over more than one financial year
and the corresponding budget commitments shall have
a final date for implementation.

Because the corresponding secondary
commitment may be less than the
individual budget commitment, the
provisions of this subparagraph should
be generalised. Also, decommitment of
unused balances on budget
commitments must be done as soon as
it is clear that they are not required.

The text relating to final
implementation dates has been
significantly reduced with respect to
the current Financial Regulation. It is
therefore necessary to ensure that it
covers all possible cases. In fact, there
should be two final implementation
dates for each action: one
implementation date for the action
itself, in the context of the legal
obligation, and one subsequent
implementation date up until which
the financial operations connected with
the measure (payments etc.). can be
effected. The final implementation
dates should be set at the level of both
budget commitments and of legal
obligations.

3. Financial agreements with beneficiary third
countries shall be treated as individual legal obligations.

Transferred from Article 152(2).

4. The Commission decisions fixing the overall
amounts to be refunded on an estimated basis to the
Member States shall constitute both budget
commitments and legal obligations within the
framework of the EAGGF-Guarantee Section. The
procedures for entering adjustments, as commitments
and payments, in the relevant chapters and articles of
the budget, shall be defined in the implementing rules.

Transferred from Article 136(2) (see
comments at Article 136(2)).

Article 72

Article 72

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

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

(a) the expenditure has been charged to the correct

(a) the expenditure has been is to be charged to the

item in the budget;

correct item in the budget;

(b) the appropriations are available;

(b) the appropriations are available;

(c) he expenditure is in order and conforms to the

(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;

relevant provisions, in particular of the budget and
Regulations, and of all acts adopted in accordance
with the Treaties and of the Regulations;

(d) the principle of sound financial management is

(d) the principle of sound financial management is

complied with.

complied with.

C 162/48

EN

Official Journal of the European Communities

5.6.2001

Commission’s proposal

Court’s modified proposal

Comments

Article 72a

When registering a legal obligation, the authorising
officer shall ensure that:

There is a need to state the
preconditions applying to the
registering of legal obligations.

(a) it is covered by the related budget commitment;

(b) the expenditure conforms to the relevant provi-

sions, in particular of the budget and Regulations,
and of all acts adopted in accordance with the Trea-
ties and of the Regulations;

(c) the principle of sound financial management is

complied with.

Section 2

Section 2

Validation of expenditure

Validation of expenditure payments

Article 73

Article 73

Validation of expenditure is the act whereby the
authorising officer:

Validation of expenditure payments is the act whereby
the authorising officer:

The correct terminology is payments.
Expenditure is too general, as it can
include commitments.

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

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

(b) determines or verifies the existence and the

(b) determines or verifies the existence and the amount

amount of the sum due;

of the sum due;

(c) verifies the conditions under which payment falls

(c) verifies the conditions under which payment falls

due.

due.

Section 3

Section 3

Authorisation of expenditure

Authorisation of expenditure payments

Article 74

Article 74

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.

Authorisation is the act whereby the authorising
officer, after having checked that the appropriations are
available, by issuing a payment order, instructs the
accounting officer to pay an item of expenditure
amount due which he has validated.

The task of checking the availability of
appropriations used to be the
responsibility of the Financial
Controller (Article 47 in the old
Financial Regulation). It should be
made clear that under the new rules
this task falls to the authorising
officer.

5.6.2001

EN

Official Journal of the European Communities

C 162/49

Commission’s proposal

Court’s modified proposal

Comments

Article 75

Section 4

Payments

Article 75

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

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

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

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

budget commitment;

budget commitment;

A payment does not clear a budget
commitment.

(b) prefinancing;

(b) refinancing;

(c) an interim payment, to reimburse eligible

(c) an interim payment, to reimburse eligible

expenditure;

expenditure;

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

(d) payment of a balance, intended to clear a legal

obligation. 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).

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

A distinction shall be made in the accounts between
these different types of payment at the time they are
made. The subsequent conversion of prefinancing
payments to reimbursements, and the clearance of both
of these by balancing payments, should also be
recorded in the accounts.

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

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

Care is needed over the definition of
supporting documents. Currently
payments of types (a), (c) and (d) are
often made on the basis of statements
of expenditure, without the supporting
documents. Appropriate references to
supporting documentation should be
in the implementing measures.

The reference to the final date is not
appropriate, as it would mean that
any payment made after that date,
even though due to the beneficiary,
would be irregular.

It is absolutely essential that these
conversions are shown in the accounts
in order that they reflect the true
situation regarding financial
implementation of the operation. It
also is a key reflection of the principle
of transparency, and information on
the implementation of the budget.

The location of this text should be
examined, it may be more appropriate
to place it in Part One Title VI.

This is nothing to do with
authorisation of payments, and so
should be placed elsewhere. How
interest should be recorded needs to be
made explicit.

C 162/50

EN

Official Journal of the European Communities

5.6.2001

Commission’s proposal

Court’s modified proposal

Comments

2. Prefinancing payments charged to the budget should
be restricted to amounts demonstrably required to meet
the Community’s share of the necessary prefinancing of
operations co-financed by the Communities.

The provision is required because the
currently widely used systematic
mechanisms of perpetual advance
payments, mainly the intermediaries
and not to final beneficiaries, which
increase the risk of loss of control and
provide a misleading image of
budgetary execution, should be
prohibited. Where further funds in
addition to initial advances are
required they should be paid only to
reimburse expenditure actually
incurred. Where the initial advances
are not adequate to meet ongoing
prefinancing needs an incremental
advance should be paid. As operations
approach completion, the prefinancing
(advance) payments should be
absorbed by setting them off against
the last payments due to reimburse
expenditure.

Section 4

Section 4

Payment of expenditure

Payment of expenditure

Article 76

Article 76

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

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

Unnecessary, and arguable in light of
Article 75(1).

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

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

Unnecessary, as totally obvious.

(Article 76 is all that remains of
Articles 51 to – 53 of the old
Regulation, the rest being transferred
to the implementing rules. The two
remaining paragraphs are not
necessary, which means that there is
no need for Section 4).

Section 5

Section 5

Time limits for expenditure operations

Time limits for expenditure payment
operations

Article 77

Article 77

The validation, authorisation and payment of
expenditure must be completed within the time limits
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.

If theThe validation, authorisation and payment of
expenditure must is not be completed within the time
limits 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 budget line from which the principal was paid, in
accordance with the provisions laid down in the
implementing rules.

There is no point in setting up a rule
which renders late payments irregular.
The consequences of late payment,
however, should be made clear.

5.6.2001

EN

Official Journal of the European Communities

C 162/51

Commission’s proposal

Court’s modified proposal

Comments

Chapter 7

Chapter 7

This chapter has been moved to
Article 119a.

Information on the implementation of the
budget

Information on the implementation of the
budget

Article 78

Article 78

1. Once a month, the Commission shall 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 appropriations carried over.

1. Once a month, the Commission shall 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 appropriations carried over.

The figures shall be sent within 10 working days
following the end of each month.

The figures shall be sent within 10 working days
following the end of each month.

2. Three times a year, within the 30 working days
following 31 May, 31 August and 31 December, the
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.

2. Three times a year, within the 30 working days
following 31 May, 31 August and 31 December, the
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.

3. The figures and the report shall at the same time be
sent to the Court of Auditors.

3. The figures and the report shall at the same time be
sent to the Court of Auditors.

C 162/52

EN

Official Journal of the European Communities

5.6.2001

Commission’s proposal

Court’s modified proposal

Comments

Chapter 8

Chapter 8

It systems

Article 79

It systems

Article 79

Where revenue and expenditure operations are man-
aged 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 manage-
ment. To this end, in particular:

Where revenue and expenditure operations are man-
aged 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 manage-
ment. To this end, in particular.

(a) the computer systems shall refer to the supporting
documents corresponding to the data recorded;

(a)

the computer systems shall refer to the supporting
documents corresponding to the data recorded;

Chapter 8 is not needed as a separate
chapter dealing with IT systems. Some
of the items in the Commission’s draft
can be moved to the implementing
measures, as indicated below. There
are other points concerning computer
systems which should be included after
Article 121 in the section dealing
with the accounts.

It is vital that there is full
transparency in the computerised
systems used for accounting purposes.
It is essential that full records are kept
and properly maintained of, for
example, users, authorisations,
electronic signatures. Otherwise, such
things as electronic signatures are not
acceptable. Weaknesses in this area
identified by the Court in relation to
Sincom 2 undermine confidence in the
accuracy and correctness of the
accounts. This should, however, be
dealt with after Article 121 (see
Article 121a).

Already dealt with in Article 120(5).
There is no need to have a special
reference to computer systems.

(b) signatures may be added by a computerised or

electronic procedure.

(b)

signatures may be added by a computerised or
electronic procedure.

This provision should be in the
implementing measures.

5.6.2001

EN

Official Journal of the European Communities

C 162/53

Commission’s proposal

Court’s modified proposal

Comments

Chapter 9

Chapter 9 TITLE IV

To emphasise the independence of the
internal auditor in respect of the
financial actors.

Internal auditor

INTERNAL AUDITOR

Article 80

Article 80

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

Each institution shall appoint an internal auditor
responsible for providing the institution with
guarantees, in accordance with the relevant
international standards, concerning the proper
operation of budget implementation systems and
procedures. Each institution shall establish an internal
audit function within the institution. Internal auditing
is an assurance and consulting activity designed to add
value and improve the institution’s operations, as well
as helping it to accomplish its objectives by bringing a
systematic, disciplined approach to evaluating and
improving the management and control processes. The
duties of internal auditor shall be separate from any
financial functions.

The internal auditor shall only be responsible, in the
performance of his duties, to the institution which has
appointed him, and shall report directly to that
institution.

As is stressed in the Court’s Opinion
No 1/2000.

Article 81

Article 81

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 recommendations for improving the conditions
of implementation of operations and promoting the
economically sound use of the institution’s resources.

1. Each institution shall designate the internal auditor
according to the method appropriate to its specific
characteristics and requirements. Each institution shall,
according to its specific characteristics and
requirements, decide the scope of the internal auditor’s
work and adopt detailed objectives and procedures for
the internal audit function, having due regard to
international internal auditing standards.

12. 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 recommendations for improving the conditions
of implementation of operations and promoting the
economically sound use of the institution’s resources.

It should be considered whether such a
detailed description of specific duties
should be included in the
implementing measures rather than
the Financial Regulation itself.

He shall be responsible:

The internal auditor shall be responsible, in particular:

(a) for assessing the suitability and effectiveness of

(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

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.

(b) for assessing the suitability and quality of the

internal control systems applicable to every budget
implementation operation.

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 expenditure, where necessary on the spot,
including in the Member States and in third countries.

2.3. 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 expenditure, where necessary on the spot,
including in the Member States and in third countries.

C 162/54

EN

Official Journal of the European Communities

5.6.2001

Commission’s proposal

Court’s modified proposal

Comments

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

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

Article 82

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.

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.

Although their role and
responsibilities are significant, internal
auditors are not directly involved in
the implementation of the budget, and
there is therefore no reason to lay
down their liability to payment of
compensation.

TITLE IV

TITLE IV

PROCUREMENT

PROCUREMENT

Chapter 1

Chapter 1

General provisions

General provisions

Section 1

Scope

Article 83

Section 1

Scope

Article 83

1. Public contracts are contracts 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.

1. Public contracts are contracts 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:

These contracts comprise:

(a) building contracts;

(a) building contracts;

(b) supply contracts;

(b) supply contracts;

(c) works contracts;

(c) works contracts;

(d) service contracts.

(d) service contracts.

Note that certain contracts may be
concluded orally on conditions to be
specified elsewhere (see proposal for
new Article 86(2)).

The contracting authority no longer
needs to be defined by reference to the
Articles in question as this Title covers
all contracts.

To be defined in the implementing
rules.

To be defined in the implementing
rules.

To be defined in the implementing
rules.

To be defined in the implementing
rules.

2. This Title does not relate to grants.

2. This Title does not relate to grants.

To be deleted as it states the obvious.

Article 84

Article 84

1. All public contracts financed in whole or in part by
the budget shall comply with the principles of
transparency, proportionality, equal treatment and
non-discrimination.

1. All public contracts financed in whole or in part by
the budget shall comply with the principles of
transparency, proportionality and equal treatment and
non-discrimination.

‘Equal treatment’ and
‘non-discrimination’ seem to be two
expressions of a single principle.

5.6.2001

EN

Official Journal of the European Communities

C 162/55

Commission’s proposal

Court’s modified proposal

Comments

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. 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.

This provision does not concern the
scope of the Article and duplicates
Article 86. Furthermore, the need for
the widest possible call for tenders
does not apply to all contracts.

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.

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.

Amended and transferred to
Article 96a as it does not concern the
scope of the Article.

Article 84a

The provisions of this title shall not apply to activities
of the JCR performed on behalf of third parties.

Article 147(3) transferred to this Title
because a separate section on research
is unnecessary.

Section 2

Publication

Article 85

Section 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.

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.

Amendment required if the relevant
common arrangements are applied to
external aid.

2. Publication shall consist of a pre-information
notice, a contract notice and an award notice.

2. Publication shall consist of a pre-information notice,
a contract notice and an award notice.

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

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.

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.

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

Appropriate advertising to be defined
in the implementing rules

4. The subject of the contract must be clearly defined
in the documents relating to competitive tendering,
including the specifications.

4. The subject of the contract must be clearly defined
in the documents relating to competitive tendering,
including the specifications.

Amendment intended to make it clear
that the principle of transparency
concerns all stages of the procedure.

C 162/56

EN

Official Journal of the European Communities

5.6.2001

Commission’s proposal

Court’s modified proposal

Comments

Section 3

Section 3

Procurement procedures

Procurement procedures

Article 86

Article 86

1. Procurement procedures involving competitive
tendering shall take one of the following forms:

1. Procurement procedures involving competitive
tendering shall take one of the following forms:

(a) the open procedure;

(a) the open procedure;

(b) the restricted procedure;

(b) the restricted procedure;

(c) contests;

(c) contests;

(d) the negotiated procedure.

(d) the negotiated procedure.

2. For contracts where the value exceeds the
thresholds provided for in Article 98 or Article 153,
one of the procedures referred to in points (a), (b) and
(c) of paragraph 1 shall apply, subject to Article 87.

2. For contracts where the value exceeds the thresholds
provided for in Article 98 or Article 153, one of the
procedures referred to in points (a), (b) and (c) of
paragraph 1 shall apply, subject to Article 87.

3. For contracts where the value does not exceed the
thresholds provided for in Article 98 or Article 153,
the contracting authority may, in addition to the
procedures mentioned in paragraph 1, apply simplified
tendering procedures under which the candidates
invited to tender are selected on the basis of objective
criteria allowing genuine competition.

3. For contracts where the value does not exceed the
thresholds provided for in Article 98 or Article 153,
the contracting authority may, in addition to the
procedures mentioned in paragraph 1, apply simplified
tendering procedures under which the candidates
invited to tender are selected on the basis of objective
criteria allowing genuine competition.

2. Public works contracts shall be concluded in
writing, except where contracts may be made against
an invoice or a bill of costs, if the presumed value of
the supplies, services or work does not exceed the
limits set in the implementing rules.

Article 87

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.

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.

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.

To be defined in the implementing
rules.

To be defined in the implementing
rules.

To be defined in the implementing
rules.

To be defined in the implementing
rules.

To be deleted, as this provision aims
only to make it possible to implement
the negotiated procedure laid down in
Article 87 without restricting its scope
by specifying amounts.

To be deleted, as it concerns either a
(simplified) fifth procedure which
should be stipulated in paragraph 1(e)
or the implementation of a procedure
envisaged in paragraph 1, in which
case, the text is unclear and should, in
any case, be dealt with in the
implementing rules.

This amendment is linked to the
deletion of the words ‘in writing’ in
Article 83 and to the fact that
provision must be made for the
adoption of oral contracts in strictly
limited cases.

5.6.2001

EN

Official Journal of the European Communities

C 162/57

Commission’s proposal

Court’s modified proposal

Comments

Section 4

Section 4

Exclusion from procurement procedures

Exclusion from procurement procedures

Article 88

Article 88

1. Candidate or tenderer shall be excluded from award
of a contract if:

1. Candidate or tenderer shall be excluded from award
of a 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;

(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;

To be deleted and dealt with in the
implementing rules, the more
adaptable nature of which would
make it possible to extend exclusions
to situations not envisaged in this
text.

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

(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;

(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 accordance with the legal
provisions of the country in which they are
established or with those of the country of the
contracting authority or those of the country
where the contract is to be carried out.

(d)

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

2. Candidates or tenderers must certify that they are
not in one of the situations listed in paragraph 1.

2. Candidates or tenderers must certify that they are
not in one of the situations listed in paragraph 1.

Article 89

Article 89

1. Contracts may not be awarded to candidates or
tenderers who, during the procurement procedure:

1. Contracts may not be awarded to candidates or
tenderers who, during the procurement procedure:

(a) are subject to a conflict of interests;

(a) are subject to a conflict of interests;

(b) are guilty of misrepresentation in supplying the

(b) are guilty of misrepresentation in supplying the

information required by the contracting authorities
as a condition of participation in a contract
procedure;

information required by the contracting authorities
as a condition of participation in a contract
procedure;

(c) have attempted to obtain confidential information,
reach unlawful agreements with their competitors,
influence or corrupt the contracting authority in
any way.

(c) have attempted to obtain confidential information,
reach unlawful agreements with their competitors,
influence or corrupt the contracting authority in
any way.

Note that Article 88(1)(b) and (c)
and Article 89(2) provide for
permanent forms of exclusion, whereas
Article 90 provides for exclusion of no
more than five years.

Note that Article 88(1)(b) and (c)
and Article 89(2) provide for
permanent forms of exclusion, whereas
Article 90 provides for exclusion of no
more than five years.

To be deleted and dealt with in the
implementing rules, the more flexible
nature of which would make it
possible to extend exclusions to
situations not envisaged in this text.

C 162/58

EN

Official Journal of the European Communities

5.6.2001

Commission’s proposal

Court’s modified proposal

Comments

2. In addition to the cases provided for in
paragraph 1, 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.

2. In addition to the cases provided for in paragraph 1,
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.

Note that Article 88(1)(b) and (c)
and Article 89(2) provide for
permanent forms of exclusion, whereas
Article 90 provides for exclusion of no
more than five years.

Article 90

Article 90

Administrative or financial penalties may be imposed
on 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.

Candidates or tenderers who shall not be considered for
the awarding of a contract where they fall within one
of the situations justifying exclusion envisaged in the
implementing rules. They shall be informed thereof
without delay. by virtue of Articles 88 and 89.
Administrative or financial penalties may be imposed
on them, after they have been given the opportunity to
present their observations, in accordance with the
implementing rules. 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.

This amendment stems from the
transfer to the implementing rules of
specific cases of exclusion and from
the need to establish the basic rules
governing the principle of
administrative and financial penalties
in the Financial Regulation itself.

Section 5

Section 5 6

Invert the order of Sections 5 and 6,
as the contract is awarded once bids
have been submitted and opened.

Award of contracts

Award of contracts

Article 91

Article 91 95

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.

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.

2. Contracts shall be awarded in one of the following
two ways:

2. Contracts shall be awarded in one of the following
two ways:

(a) under the automatic award procedure, the contract
is awarded to the lowest bid submitted that is in
order and satisfies the conditions laid down;

(a) under the automatic award procedure, the contract
is awarded to the lowest bid submitted that is in
order and satisfies the conditions laid down;

(b) under the value-for-money procedure, the contract
is awarded to the bid offering the best quality-price
combination.

(b) under the value-for-money procedure, the contract
is awarded to the bid offering the best quality-price
combination. In this case, if the authorising officer
decides to set aside the opinion of the committee
referred to in Article 92(3) (91(3)), he shall justify
his decision accordingly.

Over and above the requirement to
justify any administrative decision,
steps must be taken to ensure that
account has actually been taken of the
ad hoc committee’s opinion and that
the decision has been fully justified.

5.6.2001

EN

Official Journal of the European Communities

C 162/59

Commission’s proposal

Court’s modified proposal

Comments

Section 6

Section 6 5

Invert the order of Sections 5 and 6,
as the contract is awarded once bids
have been submitted and opened.

Submission, opening and evaluation of
tenders

Submission, opening and evaluation of
tenders

Article 92

Article 92 (91)

1. The procedure for submitting tenders shall ensure
that they remain confidential until they are all opened
simultaneously.

1. The procedure for submitting tenders must ensure
that they remain confidential until they are all opened
simultaneously.

This is a formality which should be
reinforced.

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.

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.

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.

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 rules for appointing and running
the committee are to be specified in
the implementing rules.

Article 93

Article 93 (92)

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 equal treatment. They may
not lead to amendment of the conditions of the
contract or the terms of the original tender.

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 equal treatment. They may
not lead to amendment of the conditions of the
contract or the terms of the original tender.

Delete the word ‘original’, as it is
ambiguous, the implication being that
there may be tenders other than the
original tender.

Article 94

Article 94 (93)

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

The contracting authority shall notify all candidates or
tenderers whose applications or tenders are rejected or
not selected of the grounds on which the decision was
taken, and all tenderers whose tenders are admissible of
the characteristics and relative advantages of the
successful tender as well as the name of the tenderer to
whom the contract is awarded.

A description of the nature and
advantages of the successful tender
may lead to problems as regards the
disclosure of information and
confidentiality.

Article 95

Article 95 (94)

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

The contracting authority may, before the signing of
the contract, either abandon the contract or, in the
event of an irregularity, cancel the award procedure or
abandon the procurement without the candidates or
tenderers being able to claim any compensation.

Authorisation to cancel the procedure
must not be granted too readily,
owing to the attendant risk of
manipulation. On the other hand, the
possibility of abandoning a contract
definitively must exist (e.g. where the
project is no longer relevant). The
inversion of the order of the two
possibilities is purely stylistic.

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

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

C 162/60

EN

Official Journal of the European Communities

5.6.2001

Commission’s proposal

Court’s modified proposal

Comments

Section 7

Security

Article 96

Section 7

Security

Article 96

To guarantee implementation of contracts, the
contracting authority may require contractors to lodge
a security in advance.

To guarantee implementation of contracts, the
contracting authority may, and, in certain cases
envisaged by the implementing rules, must, require
contractors to lodge a security in advance.

Section 8

Irregularities and fraud

Article 84

Article 96a

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.

The institutions shall reserve the right to shall suspend
implementation, refuse to make payment, or recover at
any time amounts already paid for contracts in respect
of which they feel that the award procedure or
implementation is vitiated by error, by irregularities or
fraud attributable to the contracting party.

It seems preferable to create a special
section at the end of the chapter for
this type of situation (from
Article 84(3), which essentially
concerns circumstances identified after
a contract has been awarded).

The implementation of these rules
must not depend on the good will of
the institutions, but must be
compulsory in the event of fraud or
irregularities.

Chapter 2

Chapter 2

Specific provisions applicable to contracts
awarded by the community institutions on their
own account

Specific provisions applicable to contracts
awarded by the community institutions on their
own account

Article 97

Article 97

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

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

Article 98

Article 98

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.

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.

See Articles 100a and 100b.

Article 99

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 laid down in
that agreement, between that country and the
European Communities in the field of public
procurement.

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 laid down in
that agreement, between that country and the
European Communities in the field of public
procurement.

5.6.2001

EN

Official Journal of the European Communities

C 162/61

Commission’s proposal

Court’s modified proposal

Comments

Article 100

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.

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.

Chapter 3

Provisions applicable to external measures

Article 100a

The provisions of Chapter 1 of this Title shall be
applicable to all contracts financed in whole or in part
by the budget in third countries, subject to the special
provisions relating to thresholds and the arrangements
for awarding external contracts laid down in the
implementing rules.

The proposed text is a modified
version of the part of Article 153
which refers to special provisions for
external actions in the implementing
measures. It is incorporated here
because Title III of Part Two is
unnecessary as a separate section.

Article 100b

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

It was necessary to move the current
Article 154 because of the proposal to
delete the title listing exceptions in
respect of external aid, and of the need
to maintain access, in the area of
external aid, to public works contracts
for companies from countries with
which the Community has a special
relationship.

2. In exceptional cases and with due 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.

C 162/62

EN

Official Journal of the European Communities

5.6.2001

Commission’s proposal

Court’s modified proposal

Comments

TITLE V

GRANTS

TITLE V

GRANTS

Chapter 1

Chapter 1

General provisions

General provisions

Article 101

Article 101

1. Grants are direct financial contributions, by way of
donation, from the budget in order to finance:

1. A subsidy is a direct financial contribution granted
by a Community institution so as to promote the
implementation of a European Union policy objective,
or to pursue an aim of general European interest.
Grants are direct financial contributions, by way of
donation, from the budget in order to finance:

Definition inspired by the
Vade-mecum on grants of July 1998.
This definition covers both grants for
the functioning of a body as in
subparagraph (a) and those to support
actions as in subparagraph (b) of the
proposal).

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

(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.

(b) or action intended to help achieve an objective
forming part of a European Union policy.

They shall be covered by a written agreement

It They shall be covered by a written agreement. A
budget must be attached to the agreement granting the
subsidy.

Point 5(1)(6) of the Vade-mecum on
Grants (shorter version for the general
public; point 6(1)(6) of the complete
version of July 1998).

2. Expenditure on the institutions’ staff, loans and
shareholdings, payment of damages, and procurement
contracts shall not constitute grants.

2. Financial assistance provided through the
intervention of the Member States or of bodies
designated by them (‘transfers’), for example under the
common agricultural policy or the Structural Funds,
shall not constitute a subsidy as defined in
Article 101(1). (Expenditure on the Community
institutions’ staff, loans and shareholdings, payment of
damages, and procurement contracts shall not
constitute grants.)

The text of point 1(2) of the short
form Vade-mecum is incorporated to
clarify that this Title does not cover
Community support granted in areas
where there is shared management in
the sense of Article 50. It may be
questioned whether the reference to the
Community institutions’ staff, loans
and shareholdings, payment of
damages should be included as they
are manifestly not grants. While it
may be desirable, in the light of
problems that have arisen in the past
with inappropriate use of subsidies for
procurement of services and
equipment, to make absolutely clear
the distinction between procurement
contracts and grant agreements, this is
specified in the Vade-mecum.

5.6.2001

EN

Official Journal of the European Communities

C 162/63

Commission’s proposal

Court’s modified proposal

Comments

Chapter 2

Chapter 2

Award principles

Award principles

Article 102

Article 102

1. The award of grants is subject to the principles of
transparency and equal treatment. They may not be
cumulative or awarded retrospectively.

1. The award of grants is subject to the principles of
transparency and equal treatment. They may not be
cumulative or awarded retrospectively.

2. 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.

2. The grant may not have the purpose or effect of
producing a profit for the beneficiary.

2. The grant may not have the purpose or effect of
producing a profit for the beneficiary.

The concept of retroactivity is
qualified, given the provisions of
Article 105(1) and (3) which allow
retrospective funding in a limited,
defined and vital context. Point
4(1)(7) of the summary Vade-mecum
is more explicit when it states that the
retroactive subsidising of completed
measures is not allowed. The
requirement for co-financing is
unnecessary, especially as it is relaxed
in the external action area. It may be
desirable, and should be part of the
Commission’s policy for the individual
programmes, but should not be a
restrictive criterion in the Financial
Regulation. Omission here would
mean that the derogation in the
external aid area (Article 155) is
unnecessary.

Paragraph 2 has been moved from
Article 111. It may need to be
presented as Article 103.

This is unverifiable, because of the
fungible nature of support from
different origins received by
organisations.

Article 103

Article 103

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

1. Grants shall be subject to an annual programme
indicating this their legal base, the objectives and the
results expected.

This is not a principle, but means of
implementation. It should be in
Chapter 3.

These programmes shall be published every year and
implemented 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.

These programmes shall be published every year and
implemented 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.

In duly justified and exceptional circumstances, in the
interest of pursuing a Community objective or an aim
of general European interest, an individual grant may
be made without a programme existing.

First, while it is certainly desirable
that grants should normally only be
made within the context of a
programme, there will almost certainly
be occasions when a grant should be
made on an ad hoc basis. The
regulation should not prevent this.

2. All grants awarded in the course of a financial year
shall be published annually.

2. All grants awarded in the course of a financial year
shall be published annually within six months of the
end of that year.)

C 162/64

EN

Official Journal of the European Communities

5.6.2001

Commission’s proposal

Court’s modified proposal

Comments

Article 104

Article 104

1. One action may give rise to the award of only one
grant to any one beneficiary.

1. One action may give rise to the award of only one
grant to any one beneficiary.

The principle that grants may not be
multiplied, as stipulated in
Article 102(1), is sufficient. Further
details on the implementation of this
principle are in the Vade-mecum.

2. A beneficiary may be awarded only one operating
grant per financial year.

2. A beneficiary may be awarded only one operating
grant per financial year.

See above

This Article gives an explanation of
how to understand the principle of
retroactivity, especially in an area such
as humanitarian aid where urgency
prevails. It should be dealt with in the
implementing measures (or the
Vade-mecum). Article 102 should
contain a reference to such
implementing measures.

This is unnecessarily restrictive. It is
also unsatisfactorily drafted as it
permits 99 % financing of
administrative expenditure. Such
provisions are best dealt with in the
implementing measures (or the
Vade-mecum).

Article 105

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.

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.

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

2. No grant may be awarded retrospectively for
actions already completed.

2. No grant may be awarded retrospectively for actions
already completed.

Article 106

Article 106

1. The grant may not finance the entire administrative
expenditure of the beneficiary organisation or of the
action, subject to Title IV of Part Two.

1. The grant may not finance the entire administrative
expenditure of the beneficiary organisation or of the
action, subject to Title IV of Part Two.

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

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.

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.

Chapter 3

Award procedure

Chapter 3

Award procedure

Article 107

Article 107

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

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

Improvement of text. It is necessary to
avoid confusion between actions and
beneficiaries.

5.6.2001

EN

Official Journal of the European Communities

C 162/65

Commission’s proposal

Court’s modified proposal

Comments

Article 108

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
action or the objective pursued by the applicant,
natural persons or commercial enterprises may receive
grants.

Eligibility criteria, and the rules concerning exclusion of
applicants, are set out in the implementing measures. 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
action or the objective pursued by the applicant,
natural persons or commercial enterprises may receive
grants.

Eligibility criteria, exclusions, etc.
should be in the implementing
measures (the Vade-mecum).

2. Grants may not be awarded to applicants who are
or at 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.

2. Grants may not be awarded to applicants who are
or at 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.

Applicants must certify that they are not in one of the
situations listed in Article 88.

Applicants must certify that they are not in one of the
situations listed in Article 88.

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

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

Article 109

Article 109

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

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

These are implementation provisions
which should be in the implementing
rules. The principle of transparency is
set out in Article 101, and the
requirement to set out award criteria is
in Article 107.

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

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

This follows from the general
obligation of public services, and is
not necessary.

Chapter 4

Payment

Article 110

Chapter 4

Payment

Article 110

1. Grants shall be paid in euro.

1. Grants shall be paid in euro.

Unnecessary. The currency unit is the
euro. In almost all cases payment in
euro is automatic. There may be
exceptional cases, e.g. in the case of
humanitarian aid actions, where it is
necessary to use another currency.

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.

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.

Self-evident, unnecessary.

C 162/66

EN

Official Journal of the European Communities

5.6.2001

Commission’s proposal

Court’s modified proposal

Comments

Article 111

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.

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.

Not a payment problem, should go
under award principles. See
Article 102.

Article 112

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 institutions.

The amount of the grant shall not become final until
the institution has accepted that the general and
specific terms of the grant, laid down in the
implementing rules and the written grant agreement,
have been fulfilled. 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 institutions. If
these are not fulfilled, then full or partial
reimbursement may result.

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.

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.

This proposal as drafted is
unworkable. Article 112(1) is
sufficient.

3. Should the beneficiary infringe the rules and
principles laid down in this Title, the grant paid shall
be recovered.

3. Should the beneficiary infringe the rules and
principles laid down in this Title, the grant paid shall
be recovered.

The revised first paragraph of this
Article is sufficient. The individual
grant programmes may contain in
their conditions provisions identifying
the circumstances in which the
Commission may seek repayment of
the grant by a beneficiary in breach.

Chapter 5

Chapter 5

Implementation

Implementation

Article 113

Article 113

Where implementation of the action requires the
award of contracts, they shall be subject to Title IV of
this Part or Chapter 3 of Title IV of Part Two.

Where implementation of the action requires the award
of contracts procurement, they it shall be subject to
Title IV of this Part or Chapter 3 of Title IV of Part
Two.

Improved formulation.
This part of the Regulation has been
removed in the Court’s proposal.

Article 114

Article 114

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

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

This Article is not necessary if there
are general provisions in the Financial
Regulation concerning the evaluation
of all Commission expenditure
programmes (see Article 25).

5.6.2001

EN

Official Journal of the European Communities

C 162/67

Commission’s proposal

Court’s modified proposal

Comments

TITLE VI

TITLE VI

This Title does not indicate the basic
accounting framework chosen by the
Commission to record and present
financial information. It does not
incorporate the provisions of
Article 70 of the Regulation under
revision, distinguishing between
‘budgetary revenue and expenditure’
and ‘non-budgetary revenue and
expenditure’, and aiming at the
calculation of a broad accounting
result. Similarly, it takes no account of
the recommendations made by a
group of experts in the context of a
study.

The following aspects should be dealt
with in the Financial Regulation itself,
on the basis of the developments cur-
rently proposed by the international
bodies and of the recommendations
contained in the study:

(a) the basic accounting framework

which, in order to reflect
international trends in public sec-
tor accounting, requires the
implementation of an accruals-
based accounting system;

(b) the rules and methods for calculat-
ing the result of the implementa-
tion of the budget;

(c) the objectives and characteristics of
the accounts and of the financial
statements;

(d) the accounting principles which

determine the standards and rules
for keeping the accounts and
drafting the financial statements,
with reference to generally accepted
accounting principles;

C 162/68

EN

Official Journal of the European Communities

5.6.2001

Commission’s proposal

Court’s modified proposal

Comments

(e) the accounting rules applicable to
the drafting of the financial state-
ments, with reference to the work
of the aforementioned
international bodies: the IPSAS
(International Public Sector
Accounting Standards) accounting
standards of the International
Federation of Accountants (IFAC)
and, in the absence thereof, the
IAS (International Accounting
Standards) standards of the
International Accounting
Standards Committee (IASC) or
the proposals of the International
Organisation of Supreme Audit
Institutions (Intosai);

(f) the various components of the

financial statements, with reference
to generally accepted standards (i.e.
the balance sheet, an outturn
account, the cash-flow statement,
the statement of variations in own
capital and the Annex containing
explanatory notes on the financial
statements), together with one or
more statements on the
implementation of the budget;

(g) the scope of consolidation and the
consolidation method, as well as
the implementation of
homogeneous accounting methods
for all Community bodies which
may or may not be included in the
consolidation;

(h) the implementation of accounting
procedures, rules and methods so
as to take accounting data to be
included in the financial state-
ments directly from the central
accounting system without
recourse to data outside the
accounts;

(i) the rate at which intermediary

financial statements are presented.

Only points (d) and (f) above are
covered in Chapter 1 of this Title. The
drafting of the Articles concerned
should be improved.

5.6.2001

EN

Official Journal of the European Communities

C 162/69

Commission’s proposal

Court’s modified proposal

Comments

KEEPING AND PRESENTATION OF THE
ACCOUNTS

KEEPING AND PRESENTATION OF THE
FINANCIAL STATEMENTS ACCOUNTS

Chapter 1

Chapter 1

Presentation of the accounts

Presentation of the financial statements
accounts

Article 115

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.

1. The financial statements shall consist of the balance
sheet budget outturn account, the economic out-turn
account, the revenue and expenditure account and an
Annex and shall form an indissoluble whole. They shall
be presented in million euro.

The financial statements shall be presented in
accordance with the structure laid down by the Council
Directive on the annual accounts of certain kinds of
company, but shall nevertheless take account of the
particular nature of the Communities.

2. The balance sheet shall set out the financial
situation at 31 December of the preceding financial
year.

2. The balance sheet shall set out the financial
situation at 31 December of the preceding financial
year.

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.

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.

In order to observe the chronological
order of the transactions, the chapters
should be inverted by presenting the
chapter on the accounts before those
covering the presentation of the
accounts and the implementation of
the budget. The fact is that the
accounts are kept before the financial
statements are drafted and presented
to their recipients.

See point (f) of the introduction.

This proposed amendment would
make it easier to read the financial
statements and would bring
Community and international
practices into line.

See point (e) of the introduction.

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

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

See point (b) of the introduction.

The economic outturn account is produced by adding
the non-budgetary revenue and expenditure accounts to
the aforementioned budget outturn account.

See point (f) of the introduction.

4. The Annex shall supplement and comment on the
information provided in the balance sheet and the
revenue and expenditure account, in particular
explaining the methods used to draw them up and
commenting on the figures they contain.

4. The Annex shall supplement and comment on the
information provided in the balance sheet and by and
the revenue and expenditure budget outturn account
and the economic out-turn account, in particular by
explaining the methods used to draw them up and
commenting on the figures they contain.

C 162/70

EN

Official Journal of the European Communities

5.6.2001

Commission’s proposal

Court’s modified proposal

Comments

5. The consolidated financial statements of the
Communities shall present in aggregated form the
financial information contained in the
financialstatements of each institution.

5. The consolidated financial statements of the
Communities shall present in aggregated form the
financial information contained in the financial
statements of each institution and body over which one
or more Community institutions have a decisive
influence.

The addition of this provision would
make it possible to consolidate all
bodies connected to the institutions,
thereby accurately reflecting the scope
of the consolidation.

6. In addition to the financial statements, each
institution shall draw up a report on budget
implementation and an analysis of financial
management.

6. In addition to the financial statements, each
institution and body to which Article 115(5) refers,
shall draw up a report on budget implementation and
an analysis of financial management.

All provisions regarding information
on the implementation of the budget
could be brought together in a chapter
following the chapter on the
presentation of the financial
statements (see Chapter 3).

Article 116

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.

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.

2. The financial statements shall be drawn up in
accordance with the following generally accepted
accounting principles:

2. The financial statements shall be drawn up in
accordance with the following generally accepted
accounting principles:

The list below should be completed on
the basis proposed in point (d) of the
introduction by stating the
assumptions underlying the keeping of
the accounts and the drafting of the
financial statements (going concern
principle, prudence, accruals-based
accounting), the basic accounting
principles (permanence of methods
etc.) and the characteristics of the
financial statements (exhaustiveness
etc.).

(a) going concern basis;

(a) going concern basis;

(b) prudence;

(b) prudence;

(c) consistent accounting methods;

(c) consistent accounting methods;

(d) materiality;

(e) no netting;

(d) materiality;

(e) no netting;

(f) substance over form;

(f) substance over form;

(g) independence of financial years.

(g) independence of financial years.

5.6.2001

EN

Official Journal of the European Communities

C 162/71

Commission’s proposal

Court’s modified proposal

Comments

Article 117

Article 117

1. The accounting officers of 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.

1. The accounting officers of the other institutions and
of the bodies to which Article 115(5) refers, shall send
their provisional financial statements to the Court of
Auditors and to the Commission’s accounting officer
by 1 March of the following year at the latest.

The Commission ought to be able to
bring forward the date on which its
own provisional financial statements
are drafted into line with the 1 March
deadline stipulated for the other
institutions and bodies. In the
explanatory memorandum, the
Commission itself justifies dropping
the additional periods (except as
regards the EAGGF, a matter which
the Court comments upon in this
opinion) so as to speed up the
presentation of the financial
statements. If the Commission’s
provisional financial statements were
drafted two months earlier, the
deadline for drafting the provisional
consolidated financial statements could
be brought forward by one month
compared with the current proposal
(they would be drafted by 1 April
rather than 1 May). The date on
which the provisional financial
statements of the Commission and of
the other institutions and bodies are
sent to the Court of Auditors should
therefore also be brought forward to 1
March.

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

By the same date, Tthey shall also send him them a
report on budget implementation and an analysis of
financial management.

Same comment as for Article 117(1)
and for Article 115(6).

2. The Commission accounting officer shall
consolidate the 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
provisional consolidated financial statements of the
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.

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

Article 118

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.

1. The Court of Auditors shall draw up observations
on the provisional financial statements of each
institution and body to which Article 115(5) refers by
15 July at the latest to allow them to make the
corrections which they deem necessary for their final
financial statements.

Same comment as for Article 117(1)
and for Article 115(6).

The provisional financial statements
are exhaustive and consistent
documents, and are duly drafted by
the stipulated deadlines. They are
provisional only in that the
Commission has not yet formally
adopted them and that they may,
where appropriate, be subject to
corrections proposed by the Court.
However, the Court’s task cannot
under any circumstances involve
helping the Commission to draft the
final consolidated financial statements.
This responsibility, of an
administrative and accounting nature,
lies solely with the Commission and is
incompatible with the Court’s external
control responsibility.

C 162/72

EN

Official Journal of the European Communities

5.6.2001

Commission’s proposal

Court’s modified proposal

Comments

2. Each institution shall draw up its final financial
statements and send them to the Commission’s
accounting officer by 5 September of the following
year at the latest with a view to drawing up the final
consolidated financial statements.

2. Each institution and body to which Article 115(5)
refers shall be responsible for drawing up its own final
financial statements and send them to the
Commission’s accounting officer and to the Court of
Auditors by 5 September of the following year at the
latest with a view to drawing up the final consolidated
financial statements.

See above.

3. After approving the final consolidated financial
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.

3. After all its Members have approved the final
consolidated financial 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.

The formal adoption of the final
consolidated financial statements
should be the collective responsibility
of the Commissioners.

The application of the principle of
transparency means that the final
consolidated financial statements
should not only be published at the
same time as the Statement of
Assurance, but that they should be
published as a single document, as
recommended by Article 48 of the
fourth European Accounting Directive.

The provisions regarding information
on the implementation of the budget
which are contained in Article 115(6),
the second indent of Article 117(1)
and in part of Article 117(2) could be
transferred to this Chapter.

4. The final consolidated financial statements shall be
published in the Official Journal of the European
Communities 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 ECSC
Treaty and Article 160c of the Euratom Treaty by
30 November the following year.

4. The final consolidated financial statements shall be
published in the Official Journal of the European
Communities 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 ECSC
Treaty and Article 160c of the Euratom Treaty by
30 November the following year.

Chapter 2

Information on the implementation of the
budget

Article 119

Article 119

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

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

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

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

Article 119a (formerly Article 78)

1. Once a month, the Commission shall 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 appropriations carried over.

1. Once a month, the Commission shall 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 appropriations carried over.

The figures shall be sent within 10 working days
following the end of each month.

The figures shall be sent within 10 working days
following the end of each month.

2. Three times a year, within the 30 working days
following 31 May, 31 August and 31 December, the
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.

2. Three times a year, within the 30 working days
following 31 May, 31 August and 31 December, the
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.

3. The figures and the report shall at the same time be
sent to the Court of Auditors.

3. The figures and the report shall at the same time be
sent to the Court of Auditors.

5.6.2001

EN

Official Journal of the European Communities

C 162/73

Commission’s proposal

Court’s modified proposal

Comments

Chapter 2

Accounts

Article 120

Chapter 3

Same comment as for Chapter 1.

Accounts

Article 120

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.

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.

2. The accounting methods and the accounting plan
employed by the institutions shall be harmonised and
adopted by the Commission’s accounting officer.

2. The accounting rules and methods resulting from
the application of the principles set out in
Article 116(2), the rules governing the drafting of the
financial statements and the accounting plan employed
by the institutions and the bodies to which
Article 115(5) refers shall be harmonised and adopted
by the Commission’s accounting officer.

This proposed amendment establishes
a link between the accounting
principles set out in Article 116 and
the accounting rules and methods
defined in this Article.

See also points (d), (e), (f) and (h) of
the introduction.

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.

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

4. The budget accounts shall allow detailed
monitoring of budget implementation.

4. The budget accounts shall allow detailed monitoring
of budget implementation.

5. All accounting records shall be based on
supporting documents to which they shall refer.

5. All accounting records, including accounting
adjustments, shall be based on supporting documents
to which they shall refer.

This addition is intended to guarantee
the exhaustiveness of the supporting
documents.

6. All transactions shall be recorded in the accounts in
such a way that there is a full chronological record and
a clear audit trail.

Such a provision is needed to obviate
the situation in 2000 whereby this is
not the case for commitments.

Article 121

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.

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.

2. The accounting officer must 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 which complies with the rules.

This amendment is proposed so as to
reproduce the wording of
Article 116(1).

C 162/74

EN

Official Journal of the European Communities

5.6.2001

Commission’s proposal

Court’s modified proposal

Comments

Article 121a

Where computerised systems and subsystems are used
to process transactions underlying the accounts, full
descriptions of each system shall exist. Each description
will define the contents of all data fields and shall
include details of how the system treats individual
transactions. It will describe how the system ensures
that a full audit trail of every operation is kept. Such
descriptions of systems shall be regarded as part of the
accounts. These descriptions of accounting systems and
subsystems will mention, where appropriate, the links
between these systems and subsystems and the central
accounting system (especially as regards the transfer of
data and the reconciliation of balances).

It is vital that there is full
transparency in the computerised
systems used for accounting purposes.
It is essential that full records are kept
on, for example, users, authorisations,
electronic signatures. Otherwise, such
procedures as electronic signatures are
not acceptable.

Chapter 3

Chapter 3

Most of the contents of this Chapter
could usefully be transferred to the
implementing rules.

Property inventories

Property inventories

Article 122

Article 122

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

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

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

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.

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.

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.

5.6.2001

EN

Official Journal of the European Communities

C 162/75

Commission’s proposal

Court’s modified proposal

Comments

TITLE VII

TITLE VII

The provisions set out under this Title
mostly concern the Court’s role as
external auditor of the Community’s
finances. The Court considers that
provisions on this subject are best
enshrined in the Treaty and that they
need not be repeated or further
explained in the Financial Regulation.
The fact is that certain provisions, in
particular those concerning the Court’s
right of access to information, could
be interpreted restrictively by certain
bodies which are audited by the Court.
The Court should, in all
circumstances, be in a position to
carry out its duties without hindrance,
pursuant to the Treaty.

EXTERNAL AUDIT AND DISCHARGE

EXTERNAL AUDIT AND DISCHARGE

C HAPTER 1

External audit

Article 123

C HAPTER 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.

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

Article 124

1. The European Parliament, the Council and the
Commission shall inform the Court of Auditors, as
soon as possible, of all decisions and rules adopted
pursuant to Articles 8, 12, 17(2), 20, 21, 24 and 33.

1. The European Parliament, the Council and the
Commission shall inform the Court of Auditors, as
soon as possible, of all decisions and rules adopted
pursuant to Articles 8, 12, 17(2), 20, 21, 24 and 33.

These references are to be adapted in
the light of the amendments
ultimately made to the text.

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

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

3. The Court of Auditors shall be informed of the
appointment of authorising officers, internal auditors,
accounting officers and imprest administrators and of
financial delegation decisions under Articles 48, 56,
58, 59 and 80.

3. The Court of Auditors shall be informed of the
appointment of authorising officers, internal auditors,
accounting officers and imprest administrators and of
financial delegation decisions under Articles 48, 56, 58,
59 and 80.

These references are to be adapted in
the light of the amendments
ultimately made to the text.

The word ‘financial’ could introduce an
undesirable restriction in the point in
question.

Article 125

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.

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 toestablish 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.

C 162/76

EN

Official Journal of the European Communities

5.6.2001

Commission’s proposal

Court’s modified proposal

Comments

2. For the performance of its task, the Court of
Auditors 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.

2. For the performance of its task, the Court of
Auditors 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.

In order to obtain all the necessary information for 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.

In order to obtain all the necessary information for 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 audit
operations carried out within the framework of the
implementation of the budget by, or on behalf of any
Community institution 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.

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.

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.

This participation in Community
audit operations should be applicable
in all areas.

3. In carrying out its task, the Court of Auditors and
its 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.

3. In carrying out its task, the Court of Auditors and
its 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. In order to carry out its tasks, the Court of
Auditors shall notify the institutions and authorities to
which this Financial Regulation applies of the names of
the members of its staff who are empowered to audit
them.

This new wording observes the spirit
and letter of the Treaty and the
practice followed since the Court was
set up.

Article 126

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.

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.

Provisions too detailed and out of
date.

5.6.2001

EN

Official Journal of the European Communities

C 162/77

Commission’s proposal

Court’s modified proposal

Comments

Article 127

Article 127

1. The Commission, the other institutions, the bodies
administering revenue or expenditure on the
Communities’ behalf and the national auditinstitutions
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.

1. The Commission, the other institutions, the bodies
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 first subparagraph shall also apply to
natural or legal persons receiving payments from the
Community budget.

2. The officials whose operations are checked by the
Court of Auditors shall:

2. The officials whose operations are checked by the
Court 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 steward-
ship of the funds with which they are entrusted,
and also any books, registers and other documents
relating thereto;

(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 steward-
ship of the funds with which they are entrusted, and
also any books, registers and other documents relat-
ing thereto;

(b) present the correspondence and any other docu-
ment required for the full implementation of the
audit referred to in Article 125(1).

(b) present the correspondence and any other docu-
ment required for the full implementation of the
audit referred to in Article 125(1).

The information supplied under point (b) of the first
subparagraph may be requested only by the Court of
Auditors.

The information supplied under point (b) of the first
subparagraph may be requested only by the Court of
Auditors.

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

3. The Court of Auditors shall be empowered to audit
the documents in respect of the revenue and
expenditure of the Communities which are held by the
departments of the institutions and, in particular, by
the departments responsible for decisions in respect of
such revenue and expenditure, the bodies administering
revenue or expenditure on the Communities’ 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 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.

C 162/78

EN

Official Journal of the European Communities

5.6.2001

Commission’s proposal

Court’s modified proposal

Comments

4. The task of establishing that the revenue has been
received and the expenditure incurred in a lawful and
proper manner and that the financialmanagement has
been sound shall extend to the utilisation, by bodies
outside the institutions, of Community funds received
by way of grants.

4. 1.The task of establishing that the revenue has been
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 institutions, 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.

5.2. The award of Community financing paid 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 up to and including
the final beneficiary of the measure.

Modified to include provisions of
Article 156.

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

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

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

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

Article 128

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 Treaty and Article 160c(4)
of the Euratom Treaty shall be governed by the
provisions of paragraphs 2 to 7 of this Article.

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 Treaty and Article 160c(4) of the Euratom
Treaty shall be governed by the provisions of
paragraphs 2 to 7 of this Article.

2. The Court of Auditors shall transmit to the
Commission 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
institutions other than the Commission shall be sent
to the Commission at the same time.

2. The Court of Auditors shall transmit to the
Commission 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
institutions other than the Commission shall be sent to
the Commission at the same time.

The Court has managed for some
years now, by cooperating with the
Commission, to adopt its Report at
the end of October and to present it to
the Parliament in mid-November.
Providing the Member States with the
opportunity to reply via Commission
to the Court’s observations until 30
September, while allowing scope for
the institutions to submit their own
replies until 31 October, makes it very
difficult to preserve this timetable.

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.

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.

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

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

See above.

5. The annual report shall contain an assessment of
the soundness of financial management.

5. The annual report shall contain an assessment of
the soundness of financial management.

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

6. The annual report shall include a section for each
institution. The Court of Auditors may add any
summary report or general observationswhich it sees
fit to make.

5.6.2001

EN

Official Journal of the European Communities

C 162/79

Commission’s proposal

Court’s modified proposal

Comments

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.

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 by the replies and shall
ensure publication thereof in the Official Journal of the
European Communities.

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 by the replies and shall
ensure publication thereof in the Official Journal of the
European Communities.

See above.

Article 129

Article 129

At the same time as the annual report referred to in
Article 128, the Court of Auditors 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.

At the same time as the annual report referred to in
Article 128, the Court of Auditors 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.

Article 130

Article 130

1. In addition to the annual report, the Court of
Auditors 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.

1. In addition to the annual report, the Court of
Auditors 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.

2. The special reports shall be transmitted to the
institution or body concerned.

1.2. The Court shall notify the institution concerned of
all observations which are, in its opinion, such that
they could appear in a The special reportshall be
transmitted to the institution or body concerned. These
observations must remain confidential.

Specification required given the
context.

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.

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
observations special reports in question. The Court
shall adopt the definitive version of the special report
in question the following month.

Proposal to apply, by analogy, the
timetable for the annual report to
special reports.

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 of Community funds for
which the Member States are responsible under the
relevant rules, the Commission shall send the special
report to the Member States identified in the Court of
Auditors’ observations.

Should the Court of Auditors decide to have any
special reports published in the Official Journal of the
European Communities, they shall be accompanied by the
replies of the institutions concerned. Where the
observations referred to in the first paragraph special
report concerns the management of Community funds
for which the Member States are responsible under the
relevant rules, the Commission shall send the
observations concerned 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
transmit these replies to the Court of Auditors
together with its remarks.

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

C 162/80

EN

Official Journal of the European Communities

5.6.2001

Commission’s proposal

Court’s modified proposal

Comments

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

The special reports, accompanied by the replies of the
institution in question, shall be transmitted to the
European 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 been consulted, they may be published by
the Court of Auditors in the Official Journal of the
European Communities. 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.

2.3. If the opinions referred to in paragraph 1 do not
relate to proposals for legislation or draft legislation on
which it has been consulted, they may be published by
the Court of Auditors in the Official Journal of the
European Communities. 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
any comments by the replies of the institutions
concerned.

Chapter 2

Discharge

Article 131

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.

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.

2. If the date provided for in paragraph 1 cannot be
met, the European Parliament or the Council shall
inform the Commission of the reasons for the
postponement.

2. If the date provided for in paragraph 1 cannot be
met, the European Parliament or the Council shall
inform the Commission of the reasons for the
postponement.

3. If the European Parliament postpones the decision
giving 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.

3. If the European Parliament postpones the decision
giving 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.

Article 132

Article 132

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

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

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.

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.

5.6.2001

EN

Official Journal of the European Communities

C 162/81

Commission’s proposal

Court’s modified proposal

Comments

3. The Commission shall submit to the European
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 fundamental human rights, the
protection of business secrecy, the provisions
governing judicial and disciplinary proceedings and the
interests of the Union.

3. The Commission shall submit to the European
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 fundamental human rights, the protection
of business secrecy, the provisions governing judicial
and disciplinary proceedings and the interests of the
Union.

Article 133

Article 133

1. In accordance with Article 276 of the EC Treaty,
Article 78g of the ECSC Treaty and Article 180b 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.

1. In accordance with Article 276 of the EC Treaty,
Article 78g of the ECSC Treaty and Article 180b 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 instructions given to those of
their departments which are responsible for the
implementation of the budget. The 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.

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 instructions given to those of
their departments which are responsible for the
implementation of the budget. The 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.

PART TWO

PART TWO

SPECIAL PROVISIONS

SPECIAL PROVISIONS

TITLE I

TITLE I

EUROPEAN AGRICULTURAL GUIDANCE AND
GUARANTEE FUND, GUARANTEE SECTION

EUROPEAN AGRICULTURAL GUIDANCE AND
GUARANTEE FUND, GUARANTEE SECTION

Article 134

Article 134

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.

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.

There is no need for a specific section
for the EAGGF Guarantee Section.
Only Article 136(2) needs to be
retained and this should be included
in Article 70.

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

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

C 162/82

EN

Official Journal of the European Communities

5.6.2001

Commission’s proposal

Court’s modified proposal

Comments

Article 135

Article 135

1. For each financial year, the budget of the EAGGF
Guarantee Section shall include equal amounts of
commitment appropriations and payment
appropriations.

1. For each financial year, the budget of the EAGGF
Guarantee Section shall include equal amounts of
commitment appropriations and payment
appropriations.

The preservation of the arrangements
which currently apply to EAGGF
appropriations, i.e. the budgetary
practice based on accounting for
non-differentiated appropriations,
cannot be justified. The EAGGF can
be managed on the basis of
differentiated appropriations. As
regards rural development and
accompanying measures which are
financed by the EAGGF Guarantee
Section, it is necessary, in view of the
multiannual nature of the measures,
to envisage situations where the
amount of commitment
appropriations are not equal in value
to the amount of payment
appropriations (see Article 170,
transitional provisions).

2. Payment appropriations not used at the end of the
financial year shall be carried over automatically to the
following year only to cover earlier commitments.

2. Payment appropriations not used at the end of the
financial year shall be carried over automatically to the
following year only to cover earlier commitments.

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

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

Article 136

Article 136

1. The Commission shall reimburse the expenditure
incurred by the Member States.

1. The Commission shall reimburse the expenditure
incurred by the Member States.

Unnecessary.

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

2. The Commission decisions fixing the overall
amounts to be reimbursed on a provisional basis to the
Member States shall constitute simultaneously
budgetary and legal obligations within the framework
of the EAGGF Guarantee Section. The procedures for
recording adjustments in the budget, as commitments
and payments, in the chapters and articles concerned,
shall be defined in the implementing rules. The
Commission decisions fixing the amounts of these
payments shall constitute global provisional
commitments, which may not exceed total
appropriations entered in the EAGGF Guarantee
Section, less any earmarked revenue.

This Article should be incorporated
into Article 71. The commitments are
not provisional because the amounts
are known. All commitments can only
be entered into within the limits of the
available appropriations.

Agricultural revenue should be entered
in the general statement of revenue
(see Article 140).

3. As from 15 November, routine management
expenditure 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.

3. As from 15 November, routine management
expenditure 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.

Not necessary as payments are outside
the budget. In any event the
provisional reimbursements to
Member States in respect of a
particular financial year only start in
January of that year.

5.6.2001

EN

Official Journal of the European Communities

C 162/83

Commission’s proposal

Court’s modified proposal

Comments

Article 137

Article 137

1. Expenditure 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 statements sent in by Member States, be
the subject of a commitment by chapter, article and
item. Save where payment has not yet been made by
the Member States or eligibility is in doubt, the
amounts shall be charged as payments within the same
time-limit.

1. Expenditure 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 statements sent in by Member States, be
the subject of a commitment by chapter, article and
item. Save where payment has not yet been made by
the Member States or eligibility is in doubt, the
amounts shall be charged as payments within the same
time-limit.

Provisions of this kind concerning the
recording of the budgetary adjustments
for reimbursements in the budget
should be transferred to the
implementing procedures (see proposal
for Article 136(2)).

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

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.

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.

3. Paragraphs 1 and 2 shall apply subject to the
clearance of accounts.

3. Paragraphs 1 and 2 shall apply subject to the
clearance of accounts.

Unnecessary because evident.

Article 138

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 the payment order has reached the
accounting officer by 31 January of the following
financial year at the latest.

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 the
payment order has reached the accounting officer by
31 January of the following financial year at the latest.

Article 139

Article 139

1. Where the Commission may transfer
appropriations pursuant to Article 21, it shall take its
decision by 31 January of the following financial year
at the latest and shall inform the budgetary authority
thereof.

1. Where the Commission may transfer appropriations
pursuant to Article 21, it shall take its decision by
31 January of the following financial year at the latest
and shall inform the budgetary authority thereof.

The adoption of appropriate
procedures should enable the
budgetary adjustments for provisional
reimbursements to be recorded in the
budget before the closure of the
financial year on 31 December, since
the Member States’ declarations cover
the period ending on 15 October of
the financial year.

The need to transfer appropriations
during the period until 31 January of
the financial year n+ 1 is no longer
justified owing to the Commission’s
increased autonomy as regards
decision-making which is proposed for
the Commission in Articles 20 and
21.

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.

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.

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 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.

Article 140

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.

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.

Agricultural revenue should be entered
in the statement of revenue.

C 162/84

EN

Official Journal of the European Communities

5.6.2001

Commission’s proposal

Court’s modified proposal

Comments

TITLE II

TITLE II

STRUCTURAL FUNDS

STRUCTURAL FUNDS

Article 141

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.

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.

No need for a specific section for the
Structural Funds. Only one provision
(Article 144) can be considered an
exception to the general rules — it
should be incorporated in Article 21.

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.

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.

Unnecessary because evident.

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

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

To be treated in the context of
‘methods of implementation’
(Articles 50 to 54).

Article 142

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.

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

There is no need to state what is
evident. All payments are due when
conditions in specific regulations are
met.

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

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

Already said in Article 75. No need
to repeat.

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

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

No need to state this. See
Article 142(1). The general rule at
Article 71(3) provides for the fixing
of a date for all commitments by
which the final payment should be
made.

5.6.2001

EN

Official Journal of the European Communities

C 162/85

Commission’s proposal

Court’s modified proposal

Comments

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.

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.

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

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

Article 143

Article 143

There should not be a reference to
other rules without saying what the
essential provisions are. The specific
regulation does not mention any
reconstitution of payment
appropriations as a result of
reimbursements as supported in the
explanatory memorandum
(Article 3(A)(2)(b)). Regulation (EC)
No 1260/1999 (Article 32(2) (3))
does however refer to the fact that
payments on account should be
reimbursed when an action has not
commenced within 18 months of the
initial prefinancing payment having
been made. A procedure could be
envisaged whereby repayments of
initial prefinancing payments not used
within the prescribed time limit are
held in suspense accounts until it is
clear that there is no further claim.
The reimbursement should be recorded
as revenue when this becomes clear, at
the latest when an automatic
decommitment is made which the
Structural Fund Regulation requires to
be done no later than a further 18
months after such repayments take
place. If in the meantime the action
concerned has commenced, the
reimbursement can be used to restore
prefinancing. Such a provision should
be included in a more general section
about reimbursements (which currently
does not exist).

Evident for all areas of expenditure.
No need to say this here.

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

The Commission shall automatically decommit
appropriations that have been committed as provided
for in the rules referred to in Article 14 1.

Unnecessary because evident.

C 162/86

EN

Official Journal of the European Communities

5.6.2001

Commission’s proposal

Court’s modified proposal

Comments

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.

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.

This constitutes an exception to the
general rule (stated in Article 10) that
decommitment of commitments made
in a prior year should not result in
‘reconstituting’ the commitment
appropriations used in that prior year.
The reason for proposing the exception
is the declaration of the Commission
attached to Regulation (EC)
No 1260/1999 concerning those
automatic decommitments which could
be made in error, or could be made
because an action cannot be completed
within the specified time limits (due to
natural catastrophe etc.) As far as a
natural catastrophe is concerned,
restarting or replacing the initial
programme after several years should
be done using new commitment
appropriations, but there should be no
problem making such appropriations
available, if necessary by
supplementary budget, and even by
amending the financial perspective in
the unlikely event that that would be
necessary. The same reasoning would
apply in the rare event that it would
be necessary to recommit significant
amounts decommitted in error by the
Commission in a prior year.

Therefore the exception proposed to
rules applying to the annual budget is
not necessary to ensure that Member
States receive the amounts allocated to
them at the beginning of a
programming period.

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 appropriations available
again.

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 appropriations available again.

Article 144

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.

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

It is proposed to add this text to
Article 21(1)(d). This derogation will
only be necessary when the budget
structure is changed to show objectives
within Funds. Currently the situation
is the opposite.

Article 145

Article 145

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

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

Unnecessary because evident.

5.6.2001

EN

Official Journal of the European Communities

C 162/87

Commission’s proposal

Court’s modified proposal

Comments

TITLE III

RESEARCH

Article 146

TITLE III

RESEARCH

Article 146

1. Parts One and Three shall apply to the research and
technological development appropriations, save as
otherwise provided in this Title.

1. Parts One and Three shall apply to the research and
technological development appropriations, save as
otherwise provided in this Title.

A specific section for research is not
necessary. The provisions contained in
the articles below should be either
deleted or transferred to other parts of
the Financial Regulation.

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.

[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.]

This provision should be transferred to
Title II of Part One relating to the
structure of the budget. Furthermore,
the second sentence of the
sub-paragraph is unclear.

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.

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.

This exemption has only a marginal
effect and is all the more unnecessary
as the Commission proposes in
Article 21 a general limit of 10 %.

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

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

If considered useful, this provision
could be incorporated into the
provision envisaged by
Article 43(4)(b) and (c) (as amended
by the Court) on the establishment
plan for staff paid from research
appropriations.

Article 147

Article 147

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 participation on a competitive or
negotiated basis in Community activities financed in
whole or in part from the general budget.

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 participation on a competitive or negotiated basis in
Community activities financed in whole or in part from
the general budget.

The provisions on the transfer of
appropriations envisaged in Article 21
of this proposed Financial Regulation
should enable the Commission to
finance this type of work, thereby
making this Article unnecessary.

2. The appropriations relating to the activities in
which the 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.

2. The appropriations relating to the activities in which
the 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.

There is no need to include an article
of this kind in this Title: the
provisions it contains should be
covered by Article 17(1)(e).

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.

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.

The drafting of this sub-paragraph is
unclear. If it concerns measures
financed from the general budget, it
should be deleted (see comment in
Article 147(1); if it concerns measures
financed by third parties, there is no
need to include this kind of article in
this Title: the provisions it contains
should be covered by Article 17(1)(e).

C 162/88

EN

Official Journal of the European Communities

5.6.2001

Commission’s proposal

Court’s modified proposal

Comments

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.

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.

This provision has been transferred to
the new Article 84a under the Title
concerning procurement.

TITLE IV

TITLE IV

EXTERNAL ACTIONS

EXTERNAL ACTIONS

Chapter 1

Chapter 1

General provisions

General provisions

Article 148

Article 148

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

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

Paragraph 1 indicates that the
purpose of this Title is to set out
derogations from Parts One and
Three. The Title contains almost no
derogations, however. Instead it sets
out a number of implementation
details which should be in the
implementing measures. The few
derogations and some extensions to
general rules should be placed in the
appropriate parts of Part One.

2. The appropriations for the actions referred to in
paragraph 1 shall be used by the Commission:

2. The appropriations for the actions referred to in
paragraph 1 shall be used by the Commission:

All this could be in the implementing
measures.

(a) either by autonomous decision;

(a) either by autonomous decision;

(b) or under agreements concluded with one or more

(b) or under agreements concluded with one or more

beneficiary third countries;

beneficiary third countries;

(c) or under agreements with international

(c) or under agreements with international

organisations.

organisations.

Chapter 2

Chapter 2

Implementation of actions

Implementation of actions

Article 149

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.

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.

This is not a derogation, but means of
implementation. It is covered by
Articles 50 to 53 on methods of
implementation, to which nothing of
substance is added.

5.6.2001

EN

Official Journal of the European Communities

C 162/89

Commission’s proposal

Court’s modified proposal

Comments

Article 150

Article 150

1. The Commission may decide to entrust manage-
ment 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:

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:

Article 150 is unrealistic. The
Commission does not have the means
to verify this, the countries themselves
will not all be able to satisfy such
demanding criteria presented so
starkly, indeed the Member States
would have difficulty satisfying all of
them. The provisions of Article 50(2)
are adequate.

Such criteria should be prepared as
part of the implementing rules for the
programmes concerned, where they can
be expressed in a more appropriate
manner.

(a) effective separation of the duties of authorising

(a) effective separation of the duties of authorising

officer and accounting officer;

officer and accounting officer;

(b) existence of an effective system for the internal

(b) existence of an effective system for the internal

control of management operations;

control of management operations;

(c) procedures for the separate presentation of

(c) procedures for the separate presentation of accounts

accounts showing the use made of Community
funds;

showing the use made of Community funds;

It is not accounting separately for
Community funds that is important,
but adequate public accounting
procedures generally.

(d) existence of an independent external audit system;

(d) existence of an independent external audit system;

(e) transparent, non-discriminatory procurement
procedures ruling out all conflicts of interest.

(e) transparent, non-discriminatory procurement
procedures ruling out all conflicts of interest.

2. The beneficiary country must agree to assume full
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 implemented correctly, to prevent
and prosecute irregularities and fraud and to recover
funds lost, wrongly paid or incorrectly used.

2. The beneficiary country must agree to assume full
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 implemented correctly, to prevent
and prosecute irregularities and fraud and to recover
funds lost, wrongly paid or incorrectly used.

This provision should be put in
Article 50.

Article 151

Article 151

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

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

This provision applies in principle to
all fields of expenditure not only
external actions. It is already covered
by Articles 50(3) and 53(1), third
indent.

C 162/90

EN

Official Journal of the European Communities

5.6.2001

Commission’s proposal

Court’s modified proposal

Comments

Article 152

Article 152

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

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

All of Article 152 should be in the
implementing measures

(a) a financing agreement drawn up between the Com-

(a) a financing agreement drawn up between the Com-

mission, acting for the Communities, and the
beneficiary third country or countries or the bodies
they have designated, hereinafter referred to as ‘the
beneficiaries’;

mission, acting for the Communities, and the
beneficiary third country or countries or the bodies
they have designated, hereinafter referred to as ‘the
beneficiaries’;

(b) or a contract or grant agreement with a body

(b) or a contract or grant agreement with a body

established under national or international public
law or natural or legal persons responsible for car-
rying out the actions.

established under national or international public
law or natural or legal persons responsible for car-
rying out the actions.

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

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

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

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

This introduces, possibly, an element
of confusion in relation to Article 50
in so far as it seems to provide that
subsidies (grants) can be provided to
international public law bodies (i.e.
UN organisations). Article 50(2),
however, provides that the budget may
be implemented on an indirect
centralised basis by such
organisations.

The first sentence should be transferred
to Article 70(2). The details
concerning the time available for
concluding individual contracts within
a financing agreement have no place
here. Having said that, it is necessary
to comment on the proposal that such
contracts must be concluded by
31 December of year n+ 3 at the
latest. This comes from the rules that
have been adopted within Phare. To
apply them to development
cooperation is unrealistic, because too
short a period is defined. This is a
management issue already addressed
by the provision in Article 71(3)
requiring each legal obligation to have
a final date for implementation.

5.6.2001

EN

Official Journal of the European Communities

C 162/91

Commission’s proposal

Court’s modified proposal

Comments

Chapter 3

Chapter 3

Award of contracts

Award of contracts

Article 153

Article 153

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 special provisions
relating to thresholds and the arrangements for award-
ing external contracts laid down in the implementing
rules. Such contracts shall be awarded:

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 special provisions relating to
thresholds and the arrangements for awarding external
contracts laid down in the implementing rules. Such
contracts shall be awarded:

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

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

account of one or more beneficiaries;

of one or more beneficiaries;

(b) by the beneficiary or beneficiaries;

(b) by the beneficiary or beneficiaries;

(c) or by a body established under national or

(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.

international law or natural or legal persons who
have signed a contract or a financing or grant agree-
ment 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.

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

Article 154

Except for the necessity to state
explicitly that the provisions of
Chapter 1 of Title IV of Part One
apply to external actions, but are
subject to special provisions in the
implementing measures, these
provisions do not contain any
derogations vis-à-vis Part One Title
IV. They should, therefore, appear in
the implementing measures This
statement should, however, be specified
in Title IV of Part One (see
Article 100a).

1. Participation in tendering procedures shall be open
on equal terms to all persons coming within the scope
of the Treaties and, in accordance with the specific
provisions in the basic instruments governing the
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.

1. Participation in tendering procedures shall be open
on equal terms to all persons coming within the scope
of the Treaties and, in accordance with the specific
provisions in the basic instruments governing the
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.

This should be included in Title VI of
Part I. It is an extension of the
provisions of Article 99 applying to
contracts awarded by the Community
institutions on their own account.

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.

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.

As above.

Chapter 4

Award of grants

Chapter 4

Award of grants

Article 155

Article 155

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

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

This is a derogation from
Article 106(1)(Grants), which the
Court proposes to delete. Therefore
there is no need for Article 155.

C 162/92

EN

Official Journal of the European Communities

5.6.2001

Commission’s proposal

Court’s modified proposal

Comments

Chapter 5

Chapter 5

Auditing of accounts

Auditing of accounts

Article 156

Article 156

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.

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.

This is not a derogation as such. It
applies to all areas of the budget and
should be covered by the general
provisions, in Article 50 for the
Commission and in Article 127 for
the Court of Auditors.

TITLE V

TITLE V I

OFFICE FOR OFFICIAL PUBLICATIONS OF THE
EUROPEAN COMMUNITIES

EUROPEAN OFFICES DES PUBLICATIONS
OFFICIELLES DES COMMUNAUTES
EUROPEENNES

Article 157

Article 157

Parts One and Three shall apply to the operation of
the Office for Official Publications of the European
Communities, hereinafter referred to as ‘the Office’,
save as otherwise provided in this Title.

Parts One and Three shall apply to the operation of the
European Offices set up by the Community institutions
for Official Publications of the European Communities,
hereinafter referred to as ‘the Offices’, save as otherwise
provided in this Title.

The Financial Regulation should
preferably contain only the basic
mechanisms for the administrative and
accounting operations of the Offices
set up by the Community institutions
(European Offices).

As these Offices are likely to increase
in number, individual coverage in the
financial legislation would require the
Financial Regulation to be revised
each time a new Office is set up.

In addition, the Offices should
preferably follow similar rules, mostly
adopted in the form of implementing
rules for this Financial Regulation.

Article 158

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.

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

As above.

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 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 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.

5.6.2001

EN

Official Journal of the European Communities

C 162/93

Commission’s proposal

Court’s modified proposal

Comments

2. The Management Committee of the Office shall
take decisions on transfers within the Annex provided
for in paragraph 1. The Commission shall inform the
budgetary authority of such transfers.

2. The Director Management Committee of the Office
shall take decisions on transfers within the Annex
provided for in paragraph 1. He shall inform the
aforementioned institution and The Commission shall
inform the budgetary authority of such transfers.

As above.

Article 159

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.

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

As above.

Article 160

Article 160

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

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

As above.

2. The remarks concerning the specific budget line
under 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.

2. The remarks concerning the specific budget line
under 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.

As above.

3. The Office shall notify the institutions concerned of
the results of the analytical accounts.

3. The Office shall notify the institutions concerned of
the results of the analytical accounts.

As above.

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
balance sheet of the Communities referred to in
Article 115.

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
balance sheet of the Communities referred to in
Article 115.

As above.

Article 161

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.

As above.

The institution which sets up the Office The
Management Committee of the Office shall determine
the detailed rules for the implementation of this Title.
The Director of the Office shall determine, and also
specific rules governing the administrative and
accounting operations of the Office. 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.

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.

As above.

C 162/94

EN

Official Journal of the European Communities

5.6.2001

Commission’s proposal

Court’s modified proposal

Comments

The Financial Regulation should
preferably contain only the basic
mechanisms for the administrative and
accounting operations of the Offices
set up by the Community Institutions
(European Offices).

As these Offices are likely to increase
in number, individual coverage in the
financial legislation would require the
Financial Regulation to be revised
each time a new Office is set up.

In addition, the Offices should
preferably follow similar rules, mostly
adopted in the form of implementing
rules for this Financial Regulation.

TITLE VI

TITLE VI

EUROPEAN ANTI-FRAUD OFFICE

EUROPEAN ANTI-FRAUD OFFICE

Article 162

Article 162

Parts One and Three shall apply to the operation of
the European Anti-fraud Office (OLAF), save as
otherwise provided in this Title.

Parts One and Three shall apply to the operation of the
European Anti-fraud Office (OLAF), save as otherwise
provided in this Title.

Article 163

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.

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.

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

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

Article 164

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
Regulations.

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
Regulations.

Article 165

Article 165

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

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

5.6.2001

EN

Official Journal of the European Communities

C 162/95

Commission’s proposal

Court’s modified proposal

Comments

TITLE VII

TITLE VII

ADMINISTRATIVE APPROPRIATIONS

ADMINISTRATIVE APPROPRIATIONS

Article 166

Article 166

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

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

Article 167

Article 167

1. As from 15 November of each year, routine
administrative 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.

1. As from 15 November of each year, routine
administrative 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.

None of the exceptions envisaged in
this Title is essential to the
management of administrative
appropriations, if this type of
appropriation is subject to the logic of
differentiated appropriations. It is clear
that when this kind of appropriation
is implemented for the first time, there
will need to be an adequate volume of
commitment appropriations to cover
all decisions taken and legal
obligations entered into by the various
Community institutions.

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.

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.

As above.

Article 168

Article 168

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

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

2. Administrative expenditure arising from contracts
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.

2. Administrative expenditure arising from contracts
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.

As above.

As above.

PART THREE

PART THREE

TRANSITIONAL AND FINAL PROVISIONS

TRANSITIONAL AND FINAL PROVISIONS

TITLE I

TITLE I

TRANSITIONAL PROVISIONS

TRANSITIONAL PROVISIONS

Article 169

Article 169

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.

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.

C 162/96

EN

Official Journal of the European Communities

5.6.2001

Commission’s proposal

Court’s modified proposal

Comments

Article 170

Article 170

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

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

See proposed amendment to
Article 135.

TITLE II

TITLE II

FINAL PROVISIONS

FINAL PROVISIONS

Article 171

Article 171

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

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

Article 172

Article 172

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

In consultation with the European Parliament and the
Council and after the other institutions have delivered
their opinions, the Commission shall adopt the rules
needed to implement all of the provisions for
implementing of this Financial Regulation.

The Commission shall commence the aforementioned
consultations at the same time as it presents to the
Council its proposals to amend the Financial
Regulation.

It is important that the Commission
should be empowered to adopt
implementing rules for all provisions,
not just those which explicitly refer to
this possibility, which was the practice
followed with the current text.

It is important that all of the
applicable financial rules should be
consistent with each other at all times.
Simultaneous drafting also enables
those drawing up the legislation to
have an overview of the rules which
will ultimately be applied.

Article 173

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.

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

This provision does not enhance the
power of initiative of the Commission,
which must be able at all times to
propose any necessary amendments.

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.

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.

The conciliation shall take place in a ‘conciliation
committee’ consisting of the Council and
representatives of the European Parliament. The
Commission shall participate in the work of the
conciliation committee.

The conciliation shall take place in a ‘conciliation
committee’ consisting of the Council and
representatives of the European 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 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.

5.6.2001

EN

Official Journal of the European Communities

C 162/97

Commission’s proposal

Court’s modified proposal

Comments

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

When the positions of the two institutions are
sufficiently close, the European Parliament may give a
new opinion. This new opinion shall also be sent to the
Court of Auditors so as to enable it to add to its own
opinion where it deems that necessary. Thereafter, after
which the Council shall take definitive action.

It is important to preserve the
consultative role of the Court of
Auditors, by ensuring that its opinion
relates to the provisions in the form
they are to be amended.

Article 174

Article 174

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

The financial rules of Community bodies having legal
personality and receiving grants from the general
budget must be modelled on a framework legislation
drawn up by the Commission in consultation with the
Parliament and the Council and after the Court of
Auditors has given its opinion this Financial
Regulation. They may depart from them only if when
the specific requirements of their individual operation
so dictate.

The current provision which results in
the financial regulations of the
Community bodies with a legal
personality being based on the general
Financial Regulation leads these
bodies to adopt regulations which are
partly unsuited to their management
requirements. These bodies should be
able to operate in a relatively flexible
framework.

If the amendment suggested by the
Court is not approved, the Court
believes that the Commission should
also propose to the Council that, as
well as repealing the Financial
Regulation of 21 December 1977, it
should repeal all of the special
regulatory provisions which depart, in
particular in the sectoral regulations,
from the rules of the new Financial
Regulation.

Article 175

Article 175

The Financial Regulation of 21 December 1977 is
repealed.

The Financial Regulation of 21 December 1977 and any
legislative provision which is contrary to this Financial
Regulation are 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.

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

Article 176

This Regulation shall enter into force on the 20th day
following that of its publication in the Official Journal
of the European Communities,

This Regulation shall enter into force on the 20th day
following that of its publication in the Official Journal of
the European Communities.

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

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

Done at Brussels, ...

For the Council

The President

Done at Brussels, ...

For the Council

The President