Opinion No 12/2002 on the proposal for a Council regulation on a Financial Regulation applicable to the ninth European Development Fund under the ACP/EU Partnership Agreement signed at Cotonou on 23 June 2000
Date: 2002-10-15
Institutions: European Court of Auditors
Subjects: ACP countries, European Development Fund, agreement (EU), financial aid, financial regulation, management accounting

17.1.2003

EN

Official Journal of the European Communities

C 12/19

OPINION No 12/2002

on the proposal for a Council regulation on a Financial Regulation applicable to the ninth
European Development Fund under the ACP/EU Partnership Agreement signed at Cotonou on
23 June 2000

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

(2003/C 12/02)

CONTENTS

Paragraph

Page

PRELIMINARY OBSERVATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Relationship to the general Financial Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Necessity of innovating so that the Financial Regulation is applicable to all subsequent
EDFs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Need for the Financial Regulation to be straightforward, clear and immediately
comprehensible . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

MAIN OBSERVATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Principle of sound financial management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Composition and structure of EDF resources and allocations . . . . . . . . . . . . . . . . . . . . . .

Implementation of the EDF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Internal auditor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1-6

1

2-3

4-5

6

7-30

8

9

15

16

Procurement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

17-19

Direct labour operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Presentation of the accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Audit of the accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

20

21

22

Specific provisions concerning EDF resources managed by the EIB . . . . . . . . . . . . . . . . . .

23-25

Discharge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Duration of the ninth EDF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

TECHNICAL OBSERVATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Structure of the Financial Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Terminology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Concepts of principal authorising officer and national authorising officer . . . . . . . . . . . .

‘Passed for payment’ voucher . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Authorisation and payment of expenditure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Grants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Audit of the accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

26

27-30

31-51

31-32

33-44

45

46

47

48-49

50-51

20

20

20

20

20

21

21

21

21

23

23

23

23

23

24

24

24

25

25

25

26

26

26

26

26

C 12/20

EN

Official Journal of the European Communities

17.1.2003

THE COURT OF AUDITORS OF THE EUROPEAN COMMUNITIES,

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

Having regard to the Partnership Agreement between the ACP
States and the European Community and its Member States,
signed at Cotonou (Benin) on 23 June 2000, hereinafter called
‘the ACP-EC Agreement’ (1),

Having regard to Council Decision 2001/822/EC of 27 November
2001 on the Association of the overseas countries and territories
with the European Community, hereinafter called ‘the Overseas
Association Decision’ (2),

Having regard to the Internal Agreement between representatives
of the Governments of the Member States, meeting within the
Council, on the financing and administration of Community aid
under the ACP-EC Agreement and the allocation of financial assis-
tance for the overseas countries and territories to which part IV
of the EC Treaty applies (hereinafter called ‘the Internal Agree-
ment’), and in particular Article 31 thereof, which provides for
consultation of the Court of Auditors (3),

Having regard to the Commission proposal of 11 June 2002 (4),

the Financial Regulation applicable to the general budget that
could be applied in the EDF context. However, some of the
changes made are meaningful only in the context of a budget-
based system and are difficult to transpose to a fund-based system
(see, for example, paragraphs 15(a), 15(c), 15(d) and 35). Con-
versely, some elements of the general Financial Regulation that
should have been applied to the EDF are missing (see paragraphs
7, 8, 15(b) and 17 to 19).

3.
Furthermore, the Court does not intend to return to the
provisions that it found problematic when it gave its opinion on
the recasting of the general Financial Regulation, which was not
adequately taken into account. For example, although the Court
recognises the importance of a harmonised approach to the
drawing-up and auditing of the accounts, the unrealistic change
to the timetable for the external audit of the accounts is still a
problem.

Necessity of innovating so that the Financial Regulation is
applicable to all subsequent EDFs

Hitherto every EDF has had a different Financial Regula-

4.
tion. This has had numerous disadvantages:

Having regard to the Council’s request for an opinion on that pro-
posal, sent to the Court on 23 July 2002,

(a) although these regulations are very similar, they all vary in

substance;

HAS ADOPTED THE FOLLOWING OPINION:

PRELIMINARY OBSERVATIONS

Introduction

1.
The Court notes that the time allowed for producing the
opinion is very short. In fact, it must be possible for the Financial
Regulation applicable to the ninth EDF to be adopted before the
end of the year 2002, so that it can actually be implemented at
the beginning of 2003. The Council has already reached an
advanced stage in the legislative procedures for the adoption of
this Regulation. For that reason the opinion has focused on essen-
tial matters of substance, without necessarily combining them
with proposals for alternative text.

(b) it is not possible to implement an EDF until the correspond-

ing Financial Regulation has been finalised;

(c) since several EDFs are being implemented simultaneously (one
that is starting up, another in midstream and others that are
coming to an end), several different Financial Regulations are
in application at any one time, depending on the EDFs in
question;

(d) given that the finance for some projects is provided with the
assistance of two or even three EDFs, there is a possibility of
conflict between the various sets of rules.

5.
The Court suggests that the legislator innovate by adopt-
ing a single Financial Regulation applicable to all present and
future EDFs, which, like the general Financial Regulation, would
be amended whenever there was felt to be a need. A measure of
this type would ensure continuity of approach, without the risk
of interrupting implementation of the EDFs, and would greatly
simplify management.

Relationship to the general Financial Regulation

2.
The Court notes that the draft Financial Regulation has
successfully included those changes made during the recasting of

(1) OJ L 317, 15.12.2000, p. 3.
(2) OJ L 314, 30.11.2001, p. 1 and OJ L 324, 7.12.2001, p. 1.
(3) OJ L 317, 15.12.2000, p. 355.
(4) COM(2002) 290 final of 11 June 2002.

Need for the Financial Regulation to be straightforward, clear
and immediately comprehensible

6.
The introduction of a single Financial Regulation that
applies to all the EDFs should be taken as the opportunity for pro-
ducing clear, straightforward legislation concentrating on the pro-
visions that are essential and necessary for implementation of the
EDFs:

17.1.2003

EN

Official Journal of the European Communities

C 12/21

(a) the present proposal takes provisions of the Internal Agree-
ment verbatim and quotes them for information purposes,
thereby creating a risk of confusion if one text is modified and
not the other (e.g. Article 6(3));

(b) furthermore it paraphrases some other provisions of the Inter-
nal Agreement, which gives rise to the aforementioned risk,
with the additional risk of divergent interpretation because of
the differences in the formulation of the two texts (e.g. Article
6(1)(b) and (2));

(c)

lastly, it refers to concepts and procedures that are defined
elsewhere, for example, in the ACP-EC Agreement or in Annex
IV to that Agreement, thereby making immediate comprehen-
sion very difficult (e.g. Article 9(1));

(d) it would be preferable for the Financial Regulation to be con-
fined to concepts and procedures that are essential for imple-
mentation of the EDFs; this would also give the Commission
the possibility of consolidating in a single document the stan-
dards and decisions which at any given moment constitute
the full legal framework governing implementation of the
EDFs.

MAIN OBSERVATIONS

Principle of sound financial management

In order to improve decision-taking, Article 4 should pro-
7.
vide for ex post as well as ex ante evaluations (1) of the pro-
grammes and operations undertaken, which should be in accor-
dance with the guidelines laid down by the Commission (in this
respect see Article 3 of Annex IV to the ACP-EC Agreement and
Article 27(4) of the Financial Regulation applicable to the general
budget).

8.
In order to prevent risk of fraud or irregularity the Com-
mission should provide information on measures planned for that
purpose when programmes and actions are adopted (see Article
28(3) of the Financial Regulation applicable to the general bud-
get).

Composition and structure of EDF resources and allocations

9.
Title II on resources covers resources (Article 6) and certain
aspects of EDF expenditure (Article 7), without distinction. It
would be preferable for either the title or the content to be recon-

(1)

In the French text, the phrase ‘appréciation ex ante’ must, in any case,
be replaced by ‘évaluation ex ante’.

sidered. The Court suggests as title ‘Composition and structure of
EDF resources and expenditure’ and suggests that, as regards con-
tent, there should be a structured definition of, on the one hand,
the composition, breakdown and making available of EDF
resources, and, on the other, the composition and breakdown of
the ‘allocations’ — a term which has still to be defined and which,
in principle, corresponds to the broad categories of EDF expen-
diture authorisation.

Implementation of the EDF

10.
Following on from Articles 11 and 32 of the Internal
Agreement, Article 9 provides a breakdown of the main responsibili-
ties for implementation of the EDF between the Commission and the
European Investment Bank (EIB) by creating two separate areas of
management, one for each of the two bodies. This thus creates,
for the first time, a category of expenditure which, whilst it
remains subject to audit by the Court (under the EIB-Court-
Commission tripartite agreement provided for in Article 112 of
this Regulation), is not subject to a discharge from the competent
Community authorities (see paragraph 26).

‘the Commission shall

Chapter 2 describes the different methods of implementa-
11.
tion: centralised and decentralised. As regards the latter, Article
14(3) specifies,
implement clearance of
account procedures or financial correction mechanisms enabling it to
discharge its obligations under the ACP-EC Agreement’. It is impor-
tant for such essential provisions to be retained. Furthermore,
they must be drafted and implemented in a way which ensures
that they have maximum effectiveness. Under no circumstances
must the breakdown of administrative responsibilities between
the Community and the ACP partner States have the effect of
exonerating the Commission of its responsibilities as regards eco-
nomic, efficient, effective, legal and regular use of the resources at
its disposal. In particular, the Commission must actually be able
to recover amounts that have been unduly paid to national authori-
ties or final beneficiaries.

12.
In this respect, the statement in Chapter 3, Article 18(2),
that, save where otherwise indicated, references to the authorising
officer or to the authorising officer responsible or to the account-
ing officer shall be deemed to refer to the Commission’s authoris-
ing officers or the Commission’s accounting officer, confirms that
the Financial Regulation for the ninth EDF does not apply directly
to the national authorising officers or paying agents, the authorities
in the ACP States that are the Community’s partners. Similarly
Articles 35 and 37, concerning the liability of authorising offic-
ers and accounting officers to pay compensation, do not apply to
official bodies in the ACP States that are the Community’s part-
ners. As a consequence it is important for the Commission to
ensure, by means of appropriate clearance of accounts procedures
or financial correction mechanisms, that its partners respect the
agreed standards applicable to operations financed by the EDF

C 12/22

EN

Official Journal of the European Communities

17.1.2003

and thus give effective scope to Article 37(8) of Annex IV to the
ACP-EC Agreement which specifies that ‘The paying agents, the
national authorising officer, … shall remain financially liable until
the Commission gives final clearance for the operations for the
execution of which they are responsible’. It must be said that these
clearance of accounts procedures and financial correction mecha-
nisms are not adequately explained in the EDF implementing pro-
visions as a whole.

[English text: ‘to which power may be delegated to implement all
or part of a Community programme or project’]. This wording
would also be more closely aligned with the proposed regulation
concerning executive agencies, to which Article 16 of this Finan-
cial Regulation refers and which, at the present stage (4), provides
that the delegation may only concern ‘specific individual projects’
(Article 6(b)).

13.
As regards delegation of powers, the jurisprudence of the
Court of Justice (1) has laid down that a discretionary power can-
not be delegated and that the delegation may only involve clearly
defined executive powers. This principle should be reiterated
clearly in the text of the Financial Regulation:

(a)

in Article 15(2) first subparagraph, the phrase ‘a large mea-
sure of discretion’ should be deleted as the Commission may
only entrust clearly defined executive powers to third parties
and the executive powers may not contain any measure of
discretion implying political choices;

(b) because of its general scope the first sentence of Article 15(4)
should appear immediately after the first subparagraph of the
present paragraph 2 (2), and should read as follows,
‘The
implementation tasks delegated must be clearly defined and
fully supervised as to the use made of them’;

(c)

irrespective of the amount, a financing decision always involves
the exercise of discretionary powers (3) and therefore cannot
be the object of delegation. The second subparagraph of
Article 15(2) of the proposed Financial Regulation should
therefore be redrafted as follows: ‘The financing decisions pro-
vided for in Article 52(2) may never be delegated’.

In the French text, Article 16 provides that the Commis-
14.
sion may delegate to executive agencies ‘tout ou partie de la mise en
œuvre … des ressources du FED’ [translation: ‘power… to imple-
ment all or part of the EDF’s resources’], which leaves some doubt
as to whether a block delegation of the entire management of EDF
resources might be possible, even though that would be contrary
to the principles of the Meroni judgment mentioned above. The
Court suggests aligning the French text with the English text and
amending it thus, ‘… auxquelles peut être déléguée tout ou partie
de la mise en œuvre, pour le compte de la Commission et sous sa
responsabilité, d’un programme ou projet communautaire, …’

(1)

Judgment of the Court of Justice of 13 June 1958, Case 9/56 Meroni v
High Authority.

(2) Following the model of Article 54(1) of the Financial Regulation of
25 June 2002 applicable to the general budget (OJ L 248, 16.9.2002,
p. 1).

(3) The discretionary nature of the powers can be seen particularly in
Article 16 of Annex IV to the Cotonou Agreement: the taking of a
financing decision involves a dialogue with the ACP States concerned
(paragraphs 2 and 3) and with the ACP-EC Committee (paragraph
5(a)) as well as a dialogue with the EDF Committee (Article 21(1) and
(2) of the Internal Agreement), which implies that there is the pos-
sibility of adopting, amending or rejecting the initial proposal (para-
graph 6).

15.
Articles 50 to 55 on the commitment of expenditure are
inconsistent and have incorrectly taken provisions from the new
general Financial Regulation regarding the implementation of
‘crédits budgétaires pluriannuels’ [translation: ‘multiannual bud-
getary appropriations’]:

(a) for example, Articles 51(1), 53, 54(4), second and third sub-
paragraphs, and 55(2), second subparagraph, use the concept
of ‘appropriation’, which is incorrect in the non-budgetary
context of funds. In the EDF context a precise definition is
necessary (see paragraph 2);

(b) Article 53 defines the role of the authorising officer respon-
sible when adopting a financial commitment, but does not
specify his/her role in relation to the corresponding legal
commitment (and, in particular, checking that the commit-
ment is covered by the corresponding financial commitment
(see Article 78(2) of the general Financial Regulation, mutatis
mutandis);

(c) Article 54(2), third subparagraph, takes a clause from the gen-
eral Financial Regulation (adoption within three years — after
financial commitment — of individual contracts and agree-
ments) which is meaningless in the context of direct manage-
ment by the Commission, given that a clause of this type is
laid down in Article 55(4)(a) as regards decentralised manage-
ment in the ACP States;

(d) the possibility of cancelling appropriations as provided in the
second and third subparagraphs of Article 54(4) is meaning-
less in a fund system where the concept of ‘appropriation’
does not exist and the cancellation of an allocation is difficult
to imagine;

(e)

in the French text of the third subparagraph of Article 54(4),
delete the word ‘ensuite’ which introduces a payment period
of three years from the decommitment of the funds, which is
incomprehensible. The second and third subparagraphs refer

(4) Amended proposal for a Council regulation laying down the statute
for executive agencies to be entrusted with certain tasks in the man-
agement of Community programmes (COM(2001) 808 final — CNS
2000/0337 (OJ C 103 E, 30.4.2002, p. 253)).

17.1.2003

EN

Official Journal of the European Communities

C 12/23

to different situations. The starting point for the three-year
period mentioned in the third subparagraph has still to be
specified;

Presentation of the accounts

(f) Articles 54(5) and 55(5) must be reviewed, in order to pre-
serve the idea that the accounts must remain open as long as
a transaction has not been finally cleared, but without intro-
ducing the idea that decommitment may be deferred even
though there is available information that makes it possible to
adjust (often, by reducing) the level of the corresponding
Community obligation. It is important to avoid blocking funds
unnecessarily when they could be used on other projects.

Internal auditor

16.
It would be useful if Article 71(4) provided for the report
summarising the number and type of internal audits carried out
to be sent to the Court of Auditors every year.

Procurement

17.
It might be advisable to include a chapter on ‘Guarantees
and control’, as provided in Article 103 of the Financial Regula-
tion applicable to the general budget.

In Articles 102, 125 and 135, the dates which affect the
21.
Court’s work are not aligned with the corresponding dates in the
general Financial Regulation:

(a)

in Article 102, there is a difference of one month between the
date for sending the report on the financial management and
that for sending the provisional accounts which the report is
supposed to accompany under Article 96(2). The report should
be sent with the provisional accounts on 31 March;

(b) in Article 125, the sending of the report on the financial man-
agement of the resources managed by the EIB gives rise to a
similar observation: the report should be sent to the Commis-
sion not later than 28 February;

(c)

in Article 135, the deadlines to be respected during the tran-
sitional period for sending the financial management reports
mentioned in the preceding paragraphs should be aligned
with those of the general Financial Regulation, namely with-
out any delay between them and the presentation of the pro-
visional accounts which they accompany;

(d) Article 135(a) should read ‘30 April for Article 102’;

(e) Article 135(g) should read ‘31 March and 15 September for

Article 125’.

18.
The Court suggests specifying that provisions on exclu-
sion from tendering are laid down in the Council decision on the
position to be adopted by the Community in the ACP-EC Council
of Ministers regarding the implementation of Articles 28, 29 and
30 of Annex IV to the Cotonou Agreement (1).

Audit of the accounts

19.
In order to improve the award procedures there should
be provision for the compilation of a central database containing
details of candidates and tenderers (see Article 95 of the Financial
Regulation applicable to the general budget). It is also important
to make provision for the contracting authority to have the pos-
sibility of abandoning the procurement or cancelling the award
procedure, before the contract is signed, without the candidates
or tenderers being entitled to claim any compensation (see Article
101 of the Financial Regulation applicable to the general budget).

Direct labour operations

20.
The Court notes that the provisions which it is proposed
to introduce in Article 80(3) provide for ‘externalised direct labour
operations’ (an increasingly widespread form of management) the
legal foundation which they lacked.

The Court proposes the following amendments to Article

22.
115:

(a)

in Article 115(1) insert ‘the Treaty establishing the European
Community’ before ‘the ACP-EC Agreement’. The Treaty is, in
fact, the legal base for the Overseas Association Decision (2),
as well as for the Financial Regulation of the ninth EDF
itself (3). It might also be advisable to mention ‘the Internal
Agreement’, which also constitutes the legal base for the
Financial Regulation for the ninth EDF (see its fourth citation);

(b) the Cotonou Agreement provides that various intermediaries
(national authorising officers, paying agents, etc) may be
involved in the management of
resources.
Articles 52(4) and 94(2) of this Financial Regulation provide
for the Court to exercise its powers of control over recipients
of financing or financial assistance from EDF resources. The

the EDF’s

(1) COM(2002) 183 final, of 12 April 2002.

(2) See footnote 2 on page 2.
(3) See the first citation of the proposal to which this opinion relates.

C 12/24

EN

Official Journal of the European Communities

17.1.2003

first subparagraph of Article 115(5) should therefore be
amended (1) as follows: ‘The Commission, bodies other than
the Bank which manage EDF resources and beneficiaries of
financing or financial assistance from EDF resources shall
afford the Court of Auditors …’ and the final subparagraph
should read: ‘… which are held by the responsible depart-
ments of the Commission, bodies other than the Bank which
manage EDF resources and the natural or legal persons who
are beneficiaries of financing or financial assistance from EDF
resources’;

(c)

in paragraph (6) specify that ‘the task of establishing …’ con-
cerns not only ‘EDF resources received’, but those that have
been ‘managed’ as well;

Discharge

26.
As stated in paragraph 10, the Articles relating to the dis-
charge, and Article 119(2) in particular, limit to the management
by the Commission the scope of the discharge from Parliament.
The Court regrets that, under the Internal Agreement (Article
32(3) and (5)), the operations managed by the EIB are not subject
to a discharge procedure that involves the Council and Parlia-
ment, even though the operations are conducted by the Bank on
behalf of and at the risk of the Community (Article 11(2) of the
Internal Agreement), on the basis of EDF resources. The Court
notes that, in the beginning, these funds were contributed by
European taxpayers, not by the financial market.

(d) in the context of decentralisation, it might be useful to lay
down in Article 115 an additional paragraph in favour of par-
ticipation by the national audit authorities of beneficiary
countries in the audit of national cofinancing funds.

Duration of the ninth EDF

Specific provisions concerning EDF resources managed by the
EIB

23.
In Article 125 it is important that the accounts of the
investment facility, like those of the interest subsidies, provide a
trail for the full circuit of the funds, from receipt to disbursement
and then to the revenue to which they give rise and any subse-
quent recoveries. At all events these data must, when the EDF
accounts provided for in Article 96 are presented, give a consoli-
dated view of the management as a whole. Articles 125 and 96
must be very explicit on these points.

In Article 126, ‘the EIB’s own rules’ should not be restric-
24.
tive: the rules should be applied with due regard to the general
rules governing management of the EDF, and in particular the
Partnership Agreement with the ACP States, the Internal Agree-
ment and the Financial Regulation (2).

27.
The provision contained in Article 136(2) paraphrases
Article 2(4) of the Internal Agreement and should be clarified. It
says, in fact, ‘Before the expiry of the ninth EDF, the Member
States shall set a date beyond which the funds of the EDF may no
longer be committed’.

28.
The higher-level texts, namely the ACP-EC Agreement,
the Financial Protocol annexed thereto, as well as the Internal
Agreement, set a duration of five years for the EDFs (and the ninth
EDF in particular) reckoned from 1 March 2000 (Article 95 of the
Agreement; paragraph 1 of the Financial Protocol; Article 35(3)
of the Internal Agreement). The Financial Protocol (paragraph 5)
and the Internal Agreement (Article 1(2)(c)) also state that the
overall amount of the present Financial Protocol supplemented by
the remaining balances from previous EDFs shall cover the period
2000 to 2007. Strictly speaking, the EDF therefore has a duration
of five years. In practice, its duration has apparently been extended
to seven years. Furthermore a number of provisions specify that,
once committed, operations shall be implemented and shall give
rise to payments in subsequent years.

In this context, at least two interpretations of Article

29.
136(2) appear possible:

— first interpretation: before 1 March 2005, the formal date for
the expiry of the ninth EDF, the Member States fix a date
after which the funds of the EDFs may no longer be com-
mitted. The date in question may not be later than 31 Decem-
ber 2007, the maximum period of effect for the ninth EDF
as laid down in paragraph 5 of the Financial Protocol,

In Article 129(2) specify, ‘The balances remaining from
25.
previous EDFs
shall be used to finance new projects,
programmes …’ in order to avoid any possibility of remaining
balances being used to help out projects that are in difficulties.

— second interpretation: before 31 December 2007, the date on
which the ninth EDF expires in practice as a result of para-
graph 5 of the Financial Protocol, the Member States fix a
date (in 2008, 2009, or even much later) after which the
funds of the ninth EDF may no longer be committed.

(1) On the model of Article 142 of the Financial Regulation applicable

to the general budget.

(2) As provided in Article 11(2) of the Internal Agreement.

30.
Other interpretations also seem possible. It is therefore
important for Article 136 to be drafted in a way which removes
any ambiguity.

17.1.2003

EN

Official Journal of the European Communities

C 12/25

TECHNICAL OBSERVATIONS

Structure of the Financial Regulation

In several Articles (2), the English text refers to the ‘finan-
37.
cial year’. Since the principle of annuality as such does not apply
to the EDF, it would be better to define ‘financial year’ (3) follow-
ing the model for the general budget (see Article 272 EC). This
could be done by adding in Article 8(1) the sentence, ‘The finan-
cial year shall run from 1 January to 31 December’.

31.
Article 9 should be at the very beginning of the Financial
Regulation, before the title ‘PART ONE’. It is, in fact, very general
in nature. Inserting it as the first provision of the Financial Regu-
lation applicable to the ninth EDF would enable the reader to
realise immediately that the whole of the first part (Articles 1 to
120) only applies to the EDF resources managed by the Commis-
sion and the second part (Articles 121 to 128) to the EDF resources
managed by the EIB (Article 9(3)). It would also avoid the need for
repetition of this information (Article 40). The Court notes, how-
ever, that some of the provisions in the first part may also con-
cern the EIB (for example, Article 96 on the drawing-up of the
EDF’s accounts).

32.
In Article 41, the second subparagraph of paragraph 3
and the third subparagraph of paragraph 4 have no place in the
first part of the Financial Regulation, which only concerns opera-
tions managed by the Commission. The second subparagraph of
paragraph 3 already appears correctly in Article 122(1) and may,
therefore, be deleted; the third subparagraph of paragraph 4
should be moved to Article 122.

38.
There are no implementing rules for the EDF Financial
Regulation. In Article 35 the phrase ‘to comply with the Financial
Regulation and the rules for its implementation’ should be replaced
by ‘to comply with this Regulation and the rules for the imple-
mentation of the general Financial Regulation, where appli-
cable’ (4). In the English text, ‘comply with the Financial Regula-
tion’ should be replaced by ‘comply with this Regulation’.

39.
In the French text of Article 51(4)(f) it would be prefer-
able for the English term ‘freelance’ to be replaced by the French
term ‘indépendants’.

Terminology

In Article 79(3), replace ‘at the earliest opportunity’ by

40.
‘within 15 days’.

Title III

is incorrectly titled ‘Implementation of EDF
33.
resources’, taking terminology from the ACP-EC Agreement and
the Internal Agreement. A better title would be ‘Implementation
of the EDF’. In fact, Title III is essentially concerned with expen-
diture.

34.
Chapter 6 on expenditure concerns not only the commit-
ment, but also the validation, authorisation and payment of
expenditure. Article 49(2) should be amended thus, ‘The deci-
sions and procedures for commitment, validation, authorisation
and payment of expenditure …’.

35.
In several Articles (1), the use of the term ‘appropriation’
has been taken direct from the Financial Regulation applicable to
the general budget and is inappropriate in the context of a fund.

There is no definition of the term ‘allocations’ in this

36.
Financial Regulation (see paragraph 9).

(1) See Article 6(2), Article 51(1), Article 53(b), Article 54(4) second and
third subparagraphs, Article 55(2), second subparagraph, and Article
61(d).

41.
In the French text of Article 81(e), ‘fonctions d’ordonnateur
et de comptable’ should be used in preference to ‘fonctions
d’ordonnancement et de paiement’ (see Articles 58 and 61 of the
Financial Regulation applicable to the general budget).

In Article 86(2) omit the word ‘budgetary’, which is out

42.
of place in the Financial Regulation for the EDF.

(2) See Article 8(1), (3)(a) and (4), Article 39(1), third subparagraph,
Article 54(4), first subparagraph, Article 86(2), Article 96(2)(a) and
(b), Article 99(1), Article 100(1)(b) and (c)(i), (ii), (iii), (v), Article
101(2)(a), (b) and (c), Article 105(2) and (3), Article 109, Article
110(1)(d) and (5), Article 116(1), Article 119(3), Article 125(2), second
subparagraph, and Article 135(1) and (2).

(3) There is no such definition in the Cotonou Agreement or the Internal
Agreement, although they both refer to ‘the financial year’ (see in par-
ticular Article 10(1) of the Internal Agreement).

(4) They apply particularly in the cases referred to in Articles 36(3) 48(2),
58 and 72 of the Financial Regulation applicable to the ninth EDF.

C 12/26

EN

Official Journal of the European Communities

17.1.2003

Presenting the EDF accounts is ultimately the Commis-
43.
sion’s responsibility and in Article 96 the expression ‘The Com-
mission shall draw up’ should preferably be replaced by ‘The
Commission shall approve’ and, in Articles 100 and 101 of the
French text, ‘sont établis par le comptable’ should be replaced by
‘sont préparés par le comptable’.

In Article 124, replace the word ‘regularly’, which is

44.
imprecise, by ‘quarterly’.

Concepts of principal authorising officer and national authoris-
ing officer

45.
Paragraphs 1 and 2 of Article 19 are apparently redun-
dant and should be deleted since the concept of chief authorising
officer appointed by the Commission is the subject of paragraphs
3 et seq. of Article 19 and that of the national authorising officer
appointed by each ACP State is in Article 35 of Annex IV to the
Cotonou Agreement.

(c)

in Article 62(d) and (e), there is no need to introduce these
references to the financial commitment, since the references
to the legal commitment are sufficient (delete (d) and modify
(e));

(d) in the French text of Article 64(1) replace ‘démonstration’ by

‘preuves’;

(e)

in Article 64, paragraphs 3 and 4 are not clear because of the
use of the word ‘count’. Presumably the idea is that the nature
of any pre-financing changes when it is followed by an interim
payment and the accounting description then changes to
interim payment, in the same way that the description of an
interim payment that is followed by the payment of a balance
changes to payment of balance;

(f)

in the second paragraph of Article 66 preferably specify that
the joint signature rule applies to all forms of ‘bank payments’
and that one of the signatures must be that of the ‘competent
accounting officer’ and not that of the EDF ‘accounting officer’,
which would make the procedure unnecessarily cumbersome.

‘Passed for payment’ voucher

Grants

46.
The ‘passed for payment’ voucher referred to in Article
57(3) should not only be signed by the authorising officer respon-
sible, it should be dated as well.

Authorisation and payment of expenditure

The following technical comments relate to Articles 60 to

47.
68, which concern authorisation and payment of expenditure:

(a)

in Article 61(b), the authorising officer must, logically speak-
ing, ensure that the payment order corresponds to the ‘legal
commitment’ and not the ‘financial commitment’;

In Article 90(3) specify a deadline for replies to grant

48.
applications.

In Article 94(2) omit ‘including’ as OLAF is operation-

49.
ally independent of the Commission.

Audit of the accounts

50.
In Article 111(2) it would be useful for the chart of
accounts sent to the Court of Auditors to be accompanied by the
applicable accounting rules and methods provided for in para-
graph 1.

(b) in Article 62 add a subparagraph stating ‘the supporting

documents examined’;

In Article 113 replace the phrase ‘as soon as possible’ by

51.
‘within not more than 15 working days’.

This opinion was adopted by the Court of Auditors in Luxembourg the 15 October 2002.

For the Court of Auditors

Juan Manuel FABRA VALLÉS

President