Opinion No 2/2002 on an amended proposal for a Council Regulation on the Financial Regulation applicable to the general budget of the European Communities
Date: 2002-02-21
Institutions: European Court of Auditors
Subjects: European Court of Auditors, financial regulation, general budget (EU), opinion

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I

(Information)

COURT OF AUDITORS

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

OPINION No 2/2002

(pursuant to Article 248(4), second subparagraph, EC)

(2002/C 92/01)

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,

Whereas the Council’s aforementioned request for an opinion of
24 November 2000 also covers the substantial modifications
made to the text during the course of the legislative procedure,
since otherwise Article 279 of the Treaty establishing the Euro-
pean Community would be voided of its substance,

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

HAS ADOPTED THE FOLLOWING OPINION:

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

Introduction

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,

Having regard to the amended proposal for a Council Regulation
on the Financial Regulation applicable to the general budget of
the European Communities (2),

Whereas this amended proposal introduces substantial modifica-
tions, in particular to Part 1, Title VIII, concerning external audit
and the discharge,

1. On 8 February, 2002, the President of the Court sent a letter
to the President of the Council announcing that the Court had
decided to prepare observations on those parts of the amended
proposal which concern directly its own operations, notably Title
VIII, Chapter 1, Articles 138 to 145 of Part 1 dealing with external
audit, and Title VII, Chapter 1, Articles 127 to 128 of Part 1 con-
cerning the presentation of the accounts. These observations con-
cern:

— the provisions concerning the Court’s role as external auditor
which repeat or extend in an unsatisfactory manner the provi-
sions set out in the Treaty,

— Articles 143 to 145, which deal with the Court’s annual report,
special reports and opinions, and which provide for a proce-
dure and timetable which are unworkable for the Member
States, the Commission and the Court alike, and which will
not allow the Court to issue in the time allowed useful reports
to the discharge authority,

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

final.

(2) Commission document ref. 2001/0318 (CNS) — COM(2001) 691

final.

— the need to omit from the amended proposal any provisions
which impose upon the Court obligations, notably in relation
to the publication in its reports of Member State replies, which
go beyond those provided for in the EC Treaty,

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— the timetable and procedure for the presentation by the Com-
mission of first, provisional accounts and then final accounts,
which can affect considerably the ability of the Court to carry
out its role as external auditor, and which is inconsistent with
the wish to accelerate production of the Court’s annual report,
and confuses responsibility of auditor and auditee.

departments’ (2), — text which has been added to that of the ini-
tial proposal. However, Article 140 then fails to go on to say that
‘The Court of Auditors and the national audit bodies of the Mem-
ber States shall cooperate in a spirit of trust while maintaining
their independence’ which is an important part of Article 248(3)
of the Treaty.

2. The Court supports the objective of bringing forward the date
of publication of the annual report, and improving the consider-
ation given to the views of the Member States. However, it consid-
ers that the proposals made in Title VII and Title VIII are unlikely
to be workable and are inconsistent with the Treaty in some
respects.

Provisions in the amended proposal which repeat/explain the
provisions of the Treaty

6. Similar problems exist with Article 142 of the amended pro-
posal, where Article 142(3) develops the second subparagraph of
Article 248(3), setting out more specific obligations on Member
State institutions to provide information to the Court.

7. Furthermore, Article 145 restricts ‘observations’ which the
Court may make to the form of ‘special reports’, by omitting the
word ‘particularly’ from the first paragraph, which is clearly
intended to quote Article 248(4), second subparagraph, of the
Treaty.

In paragraph 44 of its Opinion No 2/2001 the Court pointed
3.
out that provisions which are set out in the Treaty concerning the
Court’s role as external auditor of the Community’s finances do
not need to be repeated and explained in the Financial Regulation.
The Commission has, however, maintained its proposal, and
indeed some new and important elements have been added, with
results that are unsatisfactory in several respects not only for the
Court but also for the Member States.

8. The Court, therefore, reiterates the point made in its opinion,
that such provisions from the Treaty should not be repeated or
extended in the Financial Regulation, so as to avoid any confu-
sion about how the Court should exercise its responsibilities. The
Financial Regulation cannot introduce new elements which either
increase the Court’s obligations or diminish its rights as provided
for by the Treaty. On this basis, the following Articles should be
omitted from the amended proposal: Article 138, Article 140
(part), Article 141 (3), Article 142(1) to 3 and 6, Article 144,
Article 145(1).

4.
In some places, the paraphrasing of the Treaty in the amended
proposal is wrong, with unsatisfactory consequences. For example,
in Article 138 it is stated that ‘The Court of Auditors shall con-
duct the audit of accounts provided for by Article 248 of the EC
Treaty…’. But this is not what Article 248 says. Article 246 of the
Treaty provides that the Court of Auditors ‘shall carry out the
audit’, without limiting it to ‘the accounts’ (1). Article 248(1) then
provides that ‘The Court of Auditors shall examine the accounts
of all revenue and expenditure…’ This is part of its audit task.
Article 248 requires the Court to undertake an audit which goes
beyond the narrow concept of ‘audit of accounts’. The words ‘of
accounts’ in Article 138 should have been omitted.

5. Article 140(1) repeats part of Article 248(3) of the Treaty
which provides that ‘The audit in the Member States shall be car-
ried out in liaison with the national audit bodies or, if these do
not have the necessary powers, with the national competent

(1) This is true of the English language version, although the French
language version of this Article does so in spite of the content of
Article 248.

The procedure and timetable proposed for the annual report and
special reports are unworkable

The annual report

9.
In Annex 1 is set out a series of timetables for the presenta-
tion of the accounts and for the annual report of the Court. It
includes the timetable of the current Financial Regulation, that of
the initial proposal of the Commission, and that of the amended
proposal, and, finally, a new proposal of the Court which is
designed to overcome the difficulties posed by the proposals of
the Commission.

(2) Whereas the French text of Article 140(1) of the FR proposal repeats
word for word Article 248(3) of the Treaty, the text in English, ‘In the
Member States the audit shall be carried out in conjunction with
national audit institutions, or where they do not have the necessary
powers, with the national departments responsible’, shows differences
resulting from translation. This illustrates the danger of repeating or
paraphrasing text extracted from the Treaty.

(3) The Court pointed out in its Opinion No 2/2001 that this Article (for-
merly Article 126 of the initial proposal) is ‘too detailed and out of
date’. The Commission has not explained why it has been maintained.

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10. The initial proposal of the Commission for the new Financial
Regulation maintained the timetable of the current Financial
Regulation for the annual report, i.e. preliminary observations of
the Court to be transmitted to the institutions by 15 July, and
transmission of the final report by 30 November. The new ele-
ment was the introduction of a procedure for obtaining Member
States’ replies. The Court, in its Opinion No 2/2001, observed
that including this provision for treating Member States’ replies
would make it very difficult to preserve the timetable (1).

14. Thus it is not just the Court, but also the Member States and
the Commission that will find the timetable unworkable. Indeed,
in order to maximise the time available for completing its annual
audit work, particularly on the accounts (see paragraphs 21 to 23)
and other aspects of the statement of assurance, the Court sug-
gests that its preliminary observations be presented on 1 July
rather than 15 June. This is still consistent with producing the
final annual report on 31 October.

11. The amended proposal of the Commission now brings for-
ward the timetable by one month. The preliminary observations
of the Court are to be transmitted to the institutions by 15 June
instead of 15 July, and the final report is to be transmitted to the
institutions by 31 October instead of 30 November. The Court
supports the accelerated timetable for producing the annual report,
but notes that achieving this will require a consistent approach
throughout the text of the Financial Regulation.

12. Under the new proposals the Commission would be required
to send to the Member States, immediately after 15 June, those
observations concerning Member States in which the Member
States are identified. These observations would have to be sent to
the Member States in their own languages, which means that the
observations would have to be translated. It takes time to prepare
translations after adoption by the Court of preliminary observa-
tions, so that there would inevitably be a delay before the Member
States receive them in their own languages, which is unlikely to
be before the beginning of July. The Member States then have
until 31 August to send replies to the Commission. The Court
currently experiences difficulties in obtaining replies to sector let-
ters in the two months currently agreed.

13. Supposing that all the 15 Member States’ replies are received
by the Commission by 31 August, it has only one month to trans-
late the replies, analyse them, and prepare its comments on them,
at the same time as it is completing the contradictory procedure
with the Court on the preliminary observations. It should be
noted that the advanced timetable is such that the Commission
and the Court will have to conduct their contradictory discus-
sions on the preliminary observations during July and August, i.e.
before the Member States’ replies are received. It will not be pos-
sible to wait for the replies of the Member States before the con-
tradictory discussions between the two institutions because that
would make physically impossible the task of producing the final
text of the Court’s report, and the Commission’s replies, in all the
Community languages by the prescribed deadline. The Commis-
sion will not, therefore, be able to take into account the Member
States’ replies in its draft answers submitted to contradictory dis-
cussion. It should be underlined that allowing a reasonable period
for contradictory discussions is essential to avoid needless con-
tradictions between the report and the replies based on avoidable
misunderstandings, which only complicate the task of the dis-
charge authorities.

(1) Comments to Article 128(2), Opinion No 2/2001 (OJ C 162, 5.6.2001).

Special reports

15. Similar problems concern Article 145, which deals with the
procedure for special reports. First, it should be noted that there
is some very poor drafting which confuses matters, notably the
repetition in the third and sixth subparagraphs of the text in para-
graph 2 concerning the adoption of the special report by the
Court, and the incorrect reference to the transmission of the spe-
cial report (instead of the preliminary observations) to the Mem-
ber States in the fourth subparagraph of paragraph 2. Leaving
such matters to one side, the procedure proposed is unworkable.

16. Member States are given one and a half months (approxi-
mately six weeks) to reply to observations in preliminary observa-
tions that are sent to them. The Commission is to transmit ‘with-
out delay’ these replies to the Court, together with its remarks.
Because the Commission will need some time to translate, analyse
and consolidate its remarks on the Member States’ replies, it will
scarcely have time to do this before it should produce, within two
and a half months, its own final replies. Again, the Member States’
replies are divorced from the contradictory discussion between
the Court and the Commission, which is highly unsatisfactory.

The Financial Regulation cannot impose obligations on the
Court which go beyond the provisions of the Treaty

17. The only provision in the EC Treaty for the publication by
the Court in the Official Journal of the European Communities of
replies to its observations is in Article 248(4), first subparagraph,
where it is provided that the replies ‘of the institutions’ to the
observations of the Court in connection with its annual report
shall be published in the Official Journal. The Treaty makes no
provision in respect of special reports or opinions. Nowhere in
the Treaty is provision made for the Court to publish the replies
of the Member States, either in connection with the annual report
or with special reports. A Council Regulation may not impose
such an obligation on the Court (see paragraph 2).

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18. The initial proposal of the Commission provided in relation
to both the annual report and special report procedures for Mem-
ber State replies to the preliminary observations which concerned
them to be sent to the Commission, and for the Commission to
transmit these replies with its remarks to the Court. No provision,
however, was made for the replies of the Member States to be
published by the Court in the Official Journal as part of the report.
The wording of Article 143 in the amended proposal relating to
the annual report is ambiguous, and should explicitly restrict the
publication of replies to those of the institutions. In the amended
proposal in Article 145(2), eighth subparagraph concerning the
special report procedure it is expressly provided that should the
Court decide to publish a special report in the Official Journal, the
report ‘shall be accompanied by the replies of the institutions
concerned or of the Member States in question’. The underlined
text is new, and constitutes a substantial modification to the initial
proposal. The Court has not been consulted on this text. This
modification directly affects the rights and obligations of the
Court as an institution, and as the external auditor of the Com-
munities: by increasing the obligations on the Court concerning
the publication of replies, it restricts the rights of the Court to
decide what, apart from the replies of the institutions, should be
published. As the modification goes beyond what is provided for
in the Treaty, it should be deleted. Indeed, the Court of Justice
stated clearly in its judgment on the Ismeri case that the Court is
not bound by the Treaty to publish the replies of parties other
than the institutions (1).

19. Under existing arrangements, Member States are informed
about observations of the Court which directly concern them,
and are requested to provide their comments to both the Court
and the Commission, mainly through the sector letter proce-
dure (2). This procedure enables Member State positions to be
taken into account both by the Court and the Commission when
finalising the text of a report and the replies of the Commission.
This ensures that for the replies to its annual and special reports
the Court has one interlocutor only, the Commission, which is
the institution responsible under the Treaty for the implementa-
tion of the budget.

(1)

(2)

Judgment of the Court of Justice of 10 July 2001 in Case C-315/99 P,
Ismeri Europa v Court of Auditors, [2001] ECR I-5281, point 27: ‘It
should be noted that, under the provisions applicable to its proceed-
ings, the Court of Auditors is not bound to submit draft reports to
third parties under the same conditions which apply in the case of
Community institutions or to publish the replies of those concerned
following publication of its reports. The procedure provided for under
Article 188c(4) of the EC Treaty (now, after amendment Article 248(4)
EC) and Article 206 of the Treaty is intended to contribute to improv-
ing the financial management of the Community by providing for
reports to be transmitted to the institutions and for the latter to
respond to them. Involvement of third parties in that procedure would
not contribute to attainment of the objective pursued’.
‘Sector letters’ are used by sectors of the Court to communicate
potential observations to auditees, before their final adoption by the
Court itself. All sector letters and replies from the Member States are
copied to the Commission. This procedure has been confirmed and
developed through the Contact Committee of the Presidents of the
Court and the Supreme Audit Institutions (SAIs) of the Member States
(see the Declaration on the Court of Auditors adopted by the Nice
Conference).

The provisions concerning the presentation and publication of
the accounts

In its Opinion No 2/2001 the Court pointed out in its com-
20.
ments on Article 118 (Article 128 in the amended proposal) that:

‘The provisional financial statements are exhaustive and con-
sistent documents, and are duly drafted by the stipulated dead-
lines. They are provisional only in that the Commission has not
yet formally adopted them and that they may, where appropri-
ate, be subject to corrections proposed by the Court. However,
the Court’s task cannot under any circumstances involve help-
ing the Commission to draft the final consolidated financial
statements. This responsibility, of an administrative and account-
ing nature, lies solely with the Commission and is incompat-
ible with the Court’s external control responsibility.’

However, the amended proposal does not make clear what is the
nature of the provisional accounts and takes no account of the
Court’s opinion. The Court’s experience in recent years is that the
accounts which the Commission presents under the existing Finan-
cial Regulation on 1 May, and which are supposed to be final
accounts at that stage, are incomplete and contain significant
errors, and that, in addition to the corrections proposed by the
Court, the Commission continues to propose modifications until
a corrected set of accounts is finally issued in September/
October (3).

21. The accounts to be presented for audit on 31 March should
be complete, properly drawn up accounts approved by the Com-
mission. There must be no confusion in the Financial Regulation
about the roles of the auditee and the auditor with regard to the
preparation of the accounts. Therefore all reference to ‘provisional’
accounts should be deleted.

22. On further reflection, it also seems inadvisable to provide in
the Financial Regulation for a date for the eventual issuing of cor-
rected accounts. The essential need is for such accounts to be pro-
duced in time for the Court to take account of them before finalis-
ing its statement of assurance, a matter which can be agreed
between the Court and the Commission. If, however, it is decided
to include such a date in the Financial Regulation it should not be
later than 31 July.

23. The drafting of Article 128 of the amended proposal, which
provides for the Court’s statement of assurance to be published in
the Official Journal together with the final consolidated accounts
by 31 October at the latest, has not been sufficiently coordinated

(3) This procedure is not provided for in the current Financial Regula-
tion, where there is only provision for the final accounts to be pre-
sented by 1 May. In practice, the Commission has issued corrected
final accounts after requesting the Court’s agreement to do so.

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with Articles 143 and 144, which provide for the Court of Audi-
tors to transmit the annual report and the statement of assurance
by the same date to the discharge authorities and to the other
institutions. It is reasonable for the statement of assurance itself
to be published with the final consolidated accounts. But the
statement should also be published in the Official Journal at the
same time as the annual report which contains all the supporting
material to the statement of assurance. Indeed, the best solution
would be for the final consolidated accounts, the statement of
assurance, and the annual report to be published in the Official
Journal on the same day, in the same edition. It would, however,
not be feasible to publish the annual report in the Official Journal
on 31 October while maintaining the rest of the timetable.

24. Article 128, therefore, should be modified to provide that
the final consolidated accounts should be published in the Official
Journal together with the statement of assurance and the annual
report of the Court (1). Given the complications involved in the
Official Journal publication of these documents in all Community
languages, and with the replies placed alongside the observations,
it would be advisable not to specify a specific date, in accordance
with the provisions of Article 143 for the annual report.

Conclusion

provisions of the Treaty concerning the Court’s role and respon-
sibilities as external auditor of the Community’s finances, the pro-
visions of the Treaty should not be repeated or extended in the
Financial Regulation (see paragraphs 3 to 8).

26. Also, in light of the above observations, for reasons both of
timetable and compatibility with the Treaty, the Court considers
that the proposal to include formally the obtaining of Member
States’ replies in the procedure for the annual and special reports
should be dropped. Reliance should continue to be placed on the
sector letter procedure to obtain the position of the Member States
on the audit findings of the Court (see paragraphs 9 to 19).

27. The Court also proposes that the procedure and the time-
table for the accounts should be modified to ensure that the
accounts presented for audit are exhaustive and consistent docu-
ments approved by the Commission (see paragraphs 20 to 24).

28. With these amendments, the Court considers that bringing
forward the timetable so that preliminary observations are trans-
mitted to the Commission on 1 July and the final annual report
of the Court is transmitted to the discharge authorities and the
other institutions by 31 October, is feasible. The fourth column
of Annex 1 sets out the complete proposed timetable.

25. The Court repeats its argument set out in Opinion No 2/2001
that, to avoid restrictive and controversial interpretation of the

29. Accordingly, the Court presents redrafts for the text of Article
127, 128 and 138 to 145 of the amended proposal. These are set
out in Annex 2.

This Opinion was adopted by the Court of Auditors in Luxembourg at its meeting of 21 February 2002.

For the Court of Auditors

Juan Manuel FABRA VALLÉS

President

(1) This is, in fact current practice: the annual report of the Court includ-
ing the statement of assurance, and the final consolidated accounts,
are published on the same day in the Official Journal, although in dif-
ferent editions.

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TIMETABLE FOR THE PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS AND FOR THE ANNUAL REPORT

ANNEX I

Description

Current Financial
Report

Initial proposal

Amended proposal

The Court’s proposal

The accounting officers of the other institutions forward their
accounts
officer
(Article 127(1))

the Commission’s

accounting

to

Consolidation of the provisional accounts (1) by the Com-
mission and
the Court
(Article 127(2))

forwarding

these

of

to

The Court makes its observations on the provisional
accounts (1) of the institutions (Article 128(1))

Forwarding to the other institutions of the preliminary obser-
vations with a view to the annual report (Article 143(2))

The Commission sends the Member States identified in the
report the observations that concern them (Article 143(3))

The other institutions forward their final accounts (1) to the
Commission’s accounting officer (Article 128(2)) (2)

The Member States send their replies to the Commission
(Article 143(4))

Approval of the final consolidated accounts (1) by the Com-
mission and
the Court
(Article 128(3))

forwarding

these

of

to

1 March

1 March

1 March

1 March

1 May

1 April

31 March

31 March

1 July

1 July

—

—

15 July

15 June

15 July

15 July

15 June

—

—

—

—

As soon as possible
after 15 July

As soon as possible
after 15 June

5 September

31 July

15 July

30 September

31 August

30 September

15 September

—

—

The Commission sends the Court of Auditors its replies and
those of the Member States, accompanied by its comments
(Article 143(4))

Publication of the final consolidated accounts (1) along with
the statement of assurance (Article 128(4))

Forwarding of the annual report to the other institutions,
with the Court ensuring publication thereof in the Official
Journal (Article 143(7)) (date of publication in the Official
Journal not specified)

31 October (3)

31 October

30 September

30 September (3)

— (4)

30 November

31 October

With the annual
report: see line
below

30 November

30 November

31 October

31 October

(1) The notions of ’provisional’ and ’final’ accounts should be abolished.
(2) Generally speaking, the other institutions would have no significant corrections to make.
(3) Only the replies from the Commission and the other institutions.
(4) No specific date for publication of the final consolidated accounts in the Official Journal.

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Commission’s amended proposal
(COM(2001)691 Final)

Court’s proposed modifications

References to text

ANNEX II

Title VII

Title VII

PRESENTATION OF THE ACCOUNTS AND
ACCOUNTING

PRESENTATION OF THE ACCOUNTS AND
ACCOUNTING

CHAPTER 1

CHAPTER 1

PRESENTATION OF THE ACCOUNTS

PRESENTATION OF THE ACCOUNTS

Article 127

Article 127

1. The accounting officers of the other institutions and
bodies referred to in Article 190 shall send to the
Commission’s accounting officer, by 1 March of the
following year at the latest, their provisional accounts
together with the report on budgetary and financial
management during the year.

1. The accounting officers of the other institutions and
bodies referred to in Article 190 shall send to the
Commission’s accounting officer, by 1 March of the
following year at the latest, their provisional accounts
together with the report on budgetary and financial
management during the year.

See paragraphs 20 and 21

officer

accounting

Commission’s

2. The
shall
consolidate the provisional accounts and shall send to
the Court of Auditors, by 31 March of the following year
at the latest, the provisional accounts of each institution
and body referred to in Article 190 together with the
provisional consolidated accounts.

officer

accounting

Commission’s

2. The
shall
consolidate the provisional accounts and shall send to
the European Parliament, the Council and the Court of
Auditors, by 31 March of the following year at the latest,
the provisional accounts of each institution and body
referred to in Article 190 together with the provisional
consolidated accounts approved by the Commission.

See paragraphs 20 to 22

He shall also send the report on budgetary and financial
management of each institution and body referred to in
Article 190 to the European Parliament, the Council and
the Court of Auditors by the same date.

He It shall also send the report on budgetary and
financial management of each institution and body
referred to in Article 190 to the European Parliament, the
Council and the Court of Auditors by the same date.

Article 128

Article 128

1. The Court of Auditors shall, by 15 June at the latest,
make its observations on the provisional accounts of
each institution and body referred to in Article 190 so
that they can make the corrections considered necessary
for drawing up the final accounts.

1. The Court of Auditors shall, by 15 June 1 July at the
latest, make its preliminary observations on the
provisional accounts of each institution and body
referred to in Article 190 and on the consolidated so that
they can make the corrections considered necessary for
drawing up the final accounts.

See paragraphs 14 and 20 to 22

2. Each institution and body referred to in Article 190
shall draw up its final accounts and send them to the
Commission’s accounting officer by 31 July of the
following year at the latest with a view to drawing up the
final consolidated accounts.

2. Each institution and body referred to in Article 190
shall draw up its final accounts and send them to the
Commission’s accounting officer by 31 July of the
following year at the latest with a view to drawing up the
final consolidated accounts.

See paragraphs 20 to 22

3. After approving the final consolidated accounts, the
Commission shall
send them to the European
Parliament, the Council and the Court of Auditors by
15 September of the following year at the latest.

3. After approving the final consolidated accounts, the
Commission shall
send them to the European
Parliament, the Council and the Court of Auditors by
15 September of the following year at the latest.

See paragraphs 20 to 22

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Commission’s amended proposal
(COM(2001)691 Final)

Court’s proposed modifications

References to text

4. The final consolidated accounts 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 31 October of the following year.

4. The final consolidated accounts shall be published in
the Official Journal of the European Communities together
with the annual report of the Court of Auditors and 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 31 October of the following year.

See paragraphs 23 and 24

Title VIII

Title VIII

EXTERNAL AUDIT AND DISCHARGE

EXTERNAL AUDIT AND DISCHARGE

CHAPTER 1

CHAPTER 1

EXTERNAL AUDIT

EXTERNAL AUDIT

Article 138

Article 138

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.

See paragraphs 3 to 8
Also, the words ‘of accounts’ are too
restrictive, indeed incorrect.

Article 139

Article 139

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 9, 13, 18, 22, 23, 26 and 36.

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 9, 13, 18, 22, 23, 26 and 36.

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

2. The institutions shall send to the Court of Auditors
any internal rules 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
delegation decisions under Articles 51, 61, 62, 63 and
85.

3. The Court of Auditors shall be informed of the
appointment of authorising officers, internal auditors,
accounting officers and imprest administrators and of
delegation decisions under Articles 51, 61, 62, 63 and 85.

Article 140

Article 140

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. The
audit in the Member States shall be carried out in
conjunction with the national audit institutions or,
where they do not have the necessary powers, with the
national departments responsible.

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. The audit
in the Member States shall be carried out in conjunction
with the national audit institutions or, where they do not
the necessary powers, with the national
have
departments responsible.

See paragraphs 3 to 8, in particular
paragraph 5

17.4.2002

EN

Official Journal of the European Communities

C 92/9

Commission’s amended proposal
(COM(2001)691 Final)

Court’s proposed modifications

References to text

See paragraphs 3 to 8, in particular
paragraph 5

2. In the performance of its task, the Court of Auditors
shall be entitled to consult, in the manner provided for
in Article 142, all documents and information relating to
the financial management of the departments or bodies
subject to its audit. 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. In the performance of its task, the Court of Auditors
shall be entitled to consult, in the manner provided for in
Article 142, all documents and information relating to
the financial management of the departments or bodies
subject to its audit. 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 adopted pursuant to them, the Court of Auditors
its request, during the audit
may be present, at
operations carried out within the framework of the
implementation of the budget by, or on behalf of, any
Community institution.

In order to obtain all the necessary information for the
performance of the task entrusted to it by the Treaties or
the acts adopted pursuant to 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.

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

3. In order to perform its task, the Court of Auditors
shall notify the institutions and authorities, to which this
Regulation applies, of the names of the members of its
staff who are empowered to audit them.

3. In order to perform its task, the Court of Auditors
shall notify the institutions and authorities, to which this
Regulation applies, of the names of the members of its
staff who are empowered to audit them.

Article 141

Article 141

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. It 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. It may carry out such checks
itself.

Too
detailed
Inappropriate
particular task of the Court.

and
out
precision

of
of

date.
one

Article 142

Article 142

on

revenue

and the

responsible

expenditure

1. The Commission, the other institutions, the bodies
administering
the
or
Communities’ behalf and the national audit institutions
or, where they do not have the necessary powers, the
final
national departments
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 considers
necessary for the performance of its task. They shall
place at the disposal of the Court of Auditors all
documents concerning the award and performance of
contracts financed by the Community budget and all
accounts of cash or materials, all accounting records or
supporting
administrative
documents relating thereto, all documents relating to
revenue and expenditure, all inventories, all organisation
charts of departments, which the Court of Auditors
considers necessary for auditing the budgetary and
financial outturn report 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.

documents,

also

and

See paragraphs 3 to 8, in particular
paragraph 6

on

revenue

and the

responsible

expenditure

1. The Commission, the other institutions, the bodies
administering
the
or
Communities’ behalf and the national audit institutions
or, where they do not have the necessary powers, the
final
national departments
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 considers
necessary for the performance of its task. They shall place
at the disposal of the Court of Auditors all documents
concerning the award and performance of contracts
financed by the Community budget and all accounts of
cash or materials, all accounting records or supporting
documents, and also administrative documents relating
and
thereto,
expenditure, all inventories, all organisation charts of
departments, which the Court of Auditors considers
necessary for auditing the budgetary and financial
outturn report 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.

relating to revenue

all documents

C 92/10

EN

Official Journal of the European Communities

17.4.2002

Commission’s amended proposal
(COM(2001)691 Final)

Court’s proposed modifications

References to text

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
from the Community
budget.

receiving payments

See paragraphs 3 to 8, in particular
paragraph 6

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:

See paragraphs 3 to 8, in particular
paragraph 6

(a) show their records of cash in hand, any other cash,
securities and materials of all kinds, and also the sup-
porting documents in respect of their stewardship 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 sup-
porting documents in respect of their stewardship of
the funds with which they are entrusted, and also any
books, registers and other documents relating thereto;

(b) present the correspondence and any other document
required for the full implementation of the audit
referred to in Article 140(1).

(b) present the correspondence and any other document
required for the full implementation of the audit
referred to in Article 140(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 sub-
paragraph may be requested only by the Court of Audi-
tors.

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 expen-
diture 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 expen-
diture on the Communities’ behalf and the natural or
legal persons receiving payments from the budget.

The national audit institutions or, where they do not
have the necessary powers, the national departments
responsible shall provide the Court of Auditors, at its
request, with all the information they possess on opera-
tions financed or co-financed by the Communities and
on the management and control of these operations.

The national audit institutions or, where they do not
have the necessary powers, the national departments
responsible shall provide the Court of Auditors, at its
request, with all the information they possess on opera-
tions financed or co-financed by the Communities and
on the management and control of these operations.

See paragraphs 3 to 8, in particular
paragraph 6

4. 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 out-
side the institutions, of Community funds received by
way of grants.

4. 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 out-
side the institutions, of Community funds received by
way of grants.

This does not repeat or extend Treaty
provisions about the role of the Court
and therefore may be maintained.

5. Community financing paid to beneficiaries outside
the institutions shall be subject to the agreement in writ-
ing by the beneficiaries or, failing agreement on their
part, by the contractors or subcontractors, to an audit by
the Court of Auditors into the use made of the financ-
ing granted.

5. Community financing paid to beneficiaries outside
the institutions shall be subject to the agreement in writ-
ing by the beneficiaries or, failing agreement on their
part, by the contractors or subcontractors, to an audit by
the Court of Auditors into the use made of the financing
granted.

This does not repeat or extend Treaty
provisions about the role of the Court
and therefore may be maintained.
Text deleted not understandable.

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.

See paragraphs 3 to 8

17.4.2002

EN

Official Journal of the European Communities

C 92/11

Commission’s amended proposal
(COM(2001)691 Final)

Court’s proposed modifications

References to text

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

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

Article 143

Article 143

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.

shall

transmit

2. The Court of Auditors
to the
Commission and the institutions concerned, by 15 June
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
30 September at the latest. The replies of institutions
other than the Commission shall be sent
to the
Commission at the same time.

shall

transmit

2. The Court of Auditors
to the
Commission and the institutions concerned, by 15 June1
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 30 September at the latest. The replies of
institutions other than the Commission shall be sent to
the Commission at the same time.

See paragraph 14

3. The Commission shall
inform Member States
without delay 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 without
delay 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.

See paragraphs 9 to 14, 17 to 19, and
26

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

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

See paragraphs 9 to 14, 17 to 19 and
26

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 contain 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 contain a section for each
institution. The Court of Auditors may add any summary
report or general observations which it sees fit to make.

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

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

shall

transmit

7. The Court of Auditors
to the
authorities responsible for giving discharge and to the
other institutions, by 31 October 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 31 October at the latest, its annual report
accompanied by the replies of the institutions and shall
ensure publication thereof in the Official Journal of the
European Communities.

See paragraph 18

Article 144

Article 144

At the same time as the annual report referred to in
Article 143, 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 143, 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.

See paragraphs 3 to 8, espe-
cially 8

C 92/12

EN

Official Journal of the European Communities

17.4.2002

Commission’s amended proposal
(COM(2001)691 Final)

Court’s proposed modifications

References to text

Article 145

Article 145

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. It may
also deliver opinions at the request of any of the
institutions.

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. It may also
deliver opinions at the request of any of the institutions.

See paragraph 7

2. The Court of Auditors shall notify the institution
concerned of all observations which are, in its opinion,
such that they should appear in a special report. These
observations must remain confidential.

2. The Court of Auditors shall notify the institution
concerned of all observations which are, in its opinion,
such that they should appear in a special report. These
observations must remain confidential.

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 in
question.

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

Consistency

The Court of Auditors shall adopt the definitive version
of the special report in question the following month.

The Court of Auditors shall adopt the definitive version
of the special report in question within the month the
following month the receipt of
the
institution concerned.

the replies of

Where the observations
referred to in the first
subparagraph concern 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.

Where the observations
referred to in the first
subparagraph concern 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.

See paragraphs 15 to16, 17 to 19 and
26

The Member States shall send their replies to the
Commission within one and a half months of the
the observations in question. The
presentation of
Commission shall, without delay, 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
the observations in question. The
presentation of
Commission shall, without delay, transmit these replies
to the Court of Auditors together with its remarks.

See paragraphs 15 to 16, 17 to 19 and
26

The Court of Auditors shall adopt the definitive version
of the special report in question the following month.

The Court of Auditors shall adopt the definitive version
of the special report in question the following month.

Unnecessary repetition

The special reports, together with the replies of the
institutions concerned or the Member States in question,
shall be transmitted without delay to the European
Parliament and the Council, each of which shall decide,
where approprate in conjunction with the Commission,
what action is to be taken in response.

The special reports, together with the replies of the
institutions concerned or the Member States in question,
shall be transmitted without delay to the European
Parliament and the Council, each of which shall decide,
where approprate in conjunction with the Commission,
what action is to be taken in response.

See paragraphs 15 to 16, 17 to 19 and
26

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 or of the Member States in
question.

Should the Court of Auditors decide to have any such
reports published in the Official Journal of the European
Communities, they shall be accompanied by the replies of
the institutions concerned or of the Member States in
question.

See paragraphs 15 to 16, 17 to 19 and
26

3. The opinions referred to in paragraph 1 which do not
relate to proposals or drafts covered by the legislative
consultation procedure may be published by the Court
of Auditors in the Official
the European
Communities. The Court of Auditors shall take its decision
on publication after consulting the institution which
requested the opinion or which is concerned by it.
Opinions published shall be accompanied by any
remarks by the institutions concerned.

Journal of

in the Official

3. The opinions referred to in paragraph 1 which do not
relate to proposals or drafts covered by the legislative
consultation procedure may be published by the Court of
Auditors
the European
Communities. The Court of Auditors shall take its decision
on publication after consulting the institution which
requested the opinion or which is concerned by it.
Opinions published shall be accompanied by any
remarks by the institutions concerned.

Journal

of