WRITTEN QUESTION E-3849/02 by Erik Meijer (GUE/NGL) to the Commission. The arduous process of establishing an accounting system for EU expenditure which everybody considers to be sufficiently clear and capable of being monitored.
Date: 2003-01-09
Institutions: European Parliament, Provisional data
Subjects: European Commission, European accounting system, accounting, business data processing, computer system, financial regulation, institutional reform, management audit, public accounting

7.11.2003

EN

Official Journal of the European Union

C 268 E/55

(2003/C 268 E/057)

WRITTEN QUESTION E-3849/02

by Erik Meijer (GUE/NGL) to the Commission

(9 January 2003)

Subject: The arduous process of establishing an accounting system for EU expenditure which everybody

considers to be sufficiently clear and capable of being monitored

1. Why was not a reform of the Commission’s accounting system planned and carried out before 2002?

2. Why is a new system which complies with the new Financial Regulation not being introduced until
2005?

Is it realistically possible to introduce this Financial Regulation successfully without simultaneously

3.
introducing a new accounting system?

4. Why has the Commission produced accounts despite having known for years that there is not yet an
accounting system capable of providing evidence in support of them?

5. Why, in 1999, did the Commission continue to invest in the upgrading of Sincom-1 to Sincom-2 by
adding the subsystems SI-2 and SAP/R3, despite the fact that it was known in advance that the system was
vulnerable and incoherent?

6. Why was not SAP/R3 used as the only method of administering EU funds?

7.

How many euros has the Commission invested in developing the internal system SI-2?

8. Why has the Commission postponed until the end of 2002 the introduction of a system to
administer the funds although such a computer system is essential in order to make the reforms a success?

9. Why did the Commission reject the use of SAP/R3 for all its directorates, although it had specially
commissioned SAP in 1995 to design a tailor-made solution?

10. Why, early in 2002, did the Commission dismiss reform proposals relating to the accounting
system which would inter alia have made it compulsory to use SAP to the full?

11. When will the Commission introduce a double-entry book-keeping system for its budget accounts?

12. Will the Commission now find a lasting solution in the implementation of the broad outlines of the
proposals by former accounting officer Marta Andreasen? As from which financial year will such a
solution be implemented?

Answer given by Mrs Schreyer on behalf of the Commission

(5 March 2003)

1.
The Commission points out that the modernisation of the accounting of the European Communities
is a wide-ranging project. Achieving this project will take time, as experienced by some member States that
have begun with a similar reform.

The Commission has launched a multiannual plan in 2000 for the modernisation of its accounting
framework, notably by:

(cid:1) tendering a study on the establishment and presentation of the accounts of the Union, which was

delivered mid 2000 by high level experts on public accounting (Valencia University);

(cid:1) drawing up (following the mentioned study, internal discussions and working groups), in 2001, an
action plan for modernisation, which was discussed with the Court of Auditors in June 2001. The
Court has welcomed the orientations defined by the Commission. The concrete implementation was
postponed pending the arrival of a new Accounting Officer;

(cid:1) introducing the new accounting principles in the new Financial Regulation: accrual accounting

principles have to be applied for the financial year 2005.

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Official Journal of the European Union

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7.11.2003

The new Financial Regulation requires the Commission to produce accounts on an accrual basis
2.
(Title VII of part one of the Regulation). This requirement applies from 2005 (cid:1) article 181 of the
Regulation states that ‘the provisions of Title VII of part one shall apply gradually depending on technical
possibilities in order to be fully effective for the budgetary year 2005’. The Commission, as set out in the
Communication of December 2002 (1) is taking action progressively to move towards compliance with
these requirements, both in terms of adapting the accounting framework and of introducing a new
computerised accounting system. In the meantime, the Commission has adapted the Sincom2 system to
take account of the other requirements of the new Financial Regulation, which are applicable from 2003
(see response to question 3 below). The Commission’s actions are therefore in line with the Financial
Regulation.

As indicated in the IFAC Study 14, Chapter I, the transition period can be short (up to three years),
medium (four to six years) or long (over six years).

3.
It is entirely possible for the Commission to comply with the Financial Regulation without the
introduction of a new accounting system before 2005. The Commission has been taking steps to adapt
Sincom2 to take account of the requirements of the new Financial Regulation, notably as regards the types
of transaction and the new financial circuits, but also to ensure that the rules implemented from 2003 by
the Financial Regulation can be respected. As explained in response to question 2, the requirement for
accrual-based accounting, which is not supported by Sincom2 as it was not required under the previous
Financial Regulation, comes into effect for 2005.

4.
The Commission has an accounting system that produces fully automatic cash based annual
accounts. The Court of Auditors has declared the accounts of the Commission reliable in their annual
report, with certain reservations. The reservations on the accounts, made by the Court of Auditors concern
accrual accounting elements that are introduced in the annual accounts. The Commission’s accounting
system fully conforms to the requirements of the Financial Regulation.

Cash accounting has been the standard in public accounting for many years. Only recently, some countries
and other public bodies are moving to a new, accrual based way of accounting. Few Member States
present their accounts already in this way. The Commission’s practices comply with those followed in the
large majority of the Member States (2).

The new Financial Regulation, which has come into force on 1 January 2003, requires full compliance
with international standards, including accrual accounting, by 2005. The Commission is working on this
issue. In the meantime, the cash based accounts are reliable and supported by the computer system.

5.
Sincom2 was not an upgrade of Sincom1, but is a completely new system. The development of a
new system was necessary, not least because elements of Sincom1 were not ‘year 2000 compliant’.
Sincom1 consisted of seven separate sub-systems, some of them not being linked. Sincom2 brought all of
this functionality together into one system. The choice of the current architecture was made after detailed
appraisal (see response to question 6 below).

6.
SAP is the official accounting system of the Commission and it is the SAP data (registered by the
Accountant) which represent the definitive data and which are used to prepare the accounts and to
manage the treasury. The decision in favour of the current architecture was taken following an appraisal of
the options. At the time, it was decided that SAP R/3 could not be used by all Commission services
because the SAP system did not meet the technical and operational requirements for generalised use which
were set out Commission policy at the time.

The Commission is required to work to rules and regulations which vary according to the different sectors
of activity. The Si2 database was conceived to be able to link with the various technologies on which local
computer systems developed by the authorising services to meet their specific financial management needs
are based, and to allow therefore one single system to be used to provide accounting information to the
SAP system through a standard interface.

The development of Si2 between 1994 and 1997 cost some EUR 1,5 million. The cost of

7.
maintenance and new developments since that date is some EUR 620 000 per year.

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Official Journal of the European Union

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The Commission has not postponed development until the end of 2002. As explained above,
8.
Sincom2 has been adapted in accordance with the rules fixed by the new Financial Regulation. The
Communication of the Commission in December 2002 set out both the action which will be taken to
improve the functioning of Sincom2 during 2003 and the work towards a new system to support accrual-
based accounting which will be introduced from 2005.

See response to question 6. In fact, the version of SAP used by the Commission is specially adapted

9.
to meet the Commission’s needs, as envisaged in the original design of the system.

The Commission did not dismiss ‘reform proposals’ early in 2002. The sole use of SAP is one of the
10.
options which will be examined in further detail during the first part of 2003. The development and
implementation of a new computerised system is not something which can be undertaken lightly and
without sufficient study (cid:1) especially given the complexity of the Commission’s rules and regulations
which do not necessarily fit well within standard accounting systems. Following detailed consideration in
the second half of 2002, the Commission adopted a Communication in December 2002 setting out how
the modernisation of accounting would be carried out. This includes provision for the detailed analysis of
system options, which will be necessary to ensure that the right approach is selected.

Every single transaction (also budgetary transaction)

11.
Commission’s official accounting system, on a double entry basis.

is accounted for

individually in the

12.
The Commission made it clear long before Mrs Andreasen’s appointment that its accounting system
would be modernised and reformed (cid:1) in line with developments in some Member States. It is precisely for
that reason that it commissioned the study and established the action plan (June 2001), referred to in the
answer to question 1.

The Communication of the Commission of 17 December 2002 (1) describes the steps to be taken for the
reform of the accounting framework and system. As required by the new Financial Regulation, the annual
accounts for the year 2005 will be produced following the new principles.

(1) COM(2002) 755 final.
(2) The Netherlands is moving very recently towards whole of government financial statements based on the accrual
principles. Source: Berg, J.W. van den; Kok, L.H. Eigentijds begroten/2001 In: OPENBARE UITGAVEN = ISSN 0030-
3488: Vol. 33 (2001), No 5, pp. 211-216.

(2003/C 268 E/058)

WRITTEN QUESTION E-3884/02

by Konstantinos Hatzidakis (PPE-DE) to the Commission

(13 January 2003)

Subject: Take-up of Community funding in Greece at the end of 2002

Can the Commission indicate the level of commitments and expenditure effected at the end of 2002 for
each operational programme as a percentage of Community funds earmarked for Greece under the third
CSF?

Answer given by Ms Schreyer on behalf of the Commission

(20 February 2003)

The information requested is set out in the table that is being sent direct to the Honourable Member and
to Parliament’s Secretariat. It should be noted that the amount committed and paid under the Community
‘Interreg’ initiative cannot be compared with the amount earmarked for Greece (allocations column) since,
for Community accounting purposes, commitments and payments are allocated to the country that
coordinates the programmes.