Communication from the Commission Synthesis of Annual Activity Reports 2002 of DGs and Services
Date: 2003-07-09
Institutions: European Commission
Subjects: European Commission, activity report, administration of the Institutions, financial management, management audit, personnel administration

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 9.7.2003
COM(2003) 391 final

COMMUNICATION FROM THE COMMISSION

Synthesis of Annual Activity Reports 2002 of DGs and Services

TABLE OF CONTENTS

1.

2.

3.

3.1.

3.2.

3.3.

Introduction .....................................................................................................4

Overview of Main policy results presented by services in 2002 ......................4

Overview of the services’ management and controls in 2002 .........................9

Management issues: outline of the main achievements................................10

Internal control systems: need for improvement ...........................................11

Issues raised by the European Court of Auditors and in the Internal Auditor’s
and the Audit Progress Committee’s reports ................................................14

3.3.1. Recommendations of the European Court of Auditors..................................14

3.3.2.

Internal Auditor’s report.................................................................................15

3.3.3. Audit Progress Committee’s report ...............................................................16

4.

4.1.

4.2.

4.3.

4.4.

5.

5.1.

5.2.

5.3.

Stabilisation of Annual Report process .........................................................17

Year 2001 .....................................................................................................17

Improvements to methodology......................................................................17

Year 2002 .....................................................................................................18

Necessary improvements .............................................................................18

On-going work and new corrective actions required .....................................19

Corrective actions undertaken by DGs and services ....................................19

2001 Synthesis action plans follow up ..........................................................19

Ongoing work to be followed up in 2003 .......................................................20

5.3.1. Lack of human resources..............................................................................20

5.3.2. Recovery.......................................................................................................21

5.3.3. Shared management arrangements .............................................................22

5.3.4. Shared costs programmes............................................................................23

5.3.5.

Implementation of the Legislative and Work Programme in the Commission24

5.3.6. The devolution process in external relations.................................................24

5.3.7. Commission’s accounting framework and information systems ....................25

5.3.8. Follow-up to Internal Audit Capability reports ...............................................25

5.3.9. Follow-up of OLAF activities .........................................................................26

5.4.

New corrective actions..................................................................................26

5.4.1.

Internal Control Standards in Delegations ....................................................26

2

5.4.2.

Integration of the EDF in the EC Budget.......................................................27

5.4.3. Control environment issues in Press relays and representations .................27

5.4.4.

Implementation of the acquis in the enlarged Union .....................................27

5.4.5.

Internal Control Standards ............................................................................28

5.4.6. Follow-up to recommendations and of action plans ......................................28

6.

Conclusion ....................................................................................................29

3

1. 

INTRODUCTION

In May 2002 the Directors-General and Heads of Service produced their first
Annual Activity Reports (hereinafter called Annual Reports), to cover the year
2001.  The  Commission  then  adopted  the  first  Synthesis  of  the  Annual
Reports in July and transmitted it to the other institutions. This first exercise
confirmed the Commission’s increased focus on management responsibility,
accountability and transparency.

The purpose of the Synthesis is to enable the Commission to:

(cid:1)  take  note  of  the  main  policy  results  achieved  by  the  Commission’s
services focusing on the delivery of the Annual Policy Strategy for 2002;

(cid:1)  take  stock  of  the  situation  of  its  Directorates-General  (hereinafter  called

DGs) and services;

(cid:1)  monitor progress and identify issues requiring corrective actions;

(cid:1)  report to the other institutions on the above.

For this, it has at its disposal in particular the services’ Annual Reports, plus
the  reports  of  the  Audit  Progress  Committee,  the  Internal  Auditor,  and  the
European Court of Auditors. It also  assesses  the  state  of  implementation  of
the Reform, and the follow-up to the previous Synthesis.

Overall,  examination  of  the  performance  of  the  Commission’s  DGs  and
services  in  2002  shows  good  progress,  although  improvement  needs  to
continue on a number of issues:

(cid:1)  The annual report process, which started last year, and was affected by a
number  of  methodological  problems,  has  improved  and  is  on  the  way  to
becoming stabilised.

(cid:1)  Assessment  of  the  overview  from  the  DGs  and  services  shows  good
progress  in  the  implementation  of  the  Reform  as  well  as  improvements
regarding issues identified in last year’s Synthesis. However, a number of
teething  problems  need  to  be  addressed,  and  a  better  anchoring  of  the
new working methods put in place.

(cid:1)  The issues requiring corrective actions have been actively addressed and
results  are beginning  to have  their  effects  in  many  cases,  although  other
issues require in-depth work which will take more time.

2. 

OVERVIEW OF MAIN POLICY RESULTS PRESENTED BY SERVICES IN 2002

This  section  provides  a  short  summary  of  the  attainment  of  objectives  by
Directorates-General  and  services  focusing  on  the  delivery  of  the  Annual
Policy Strategy for 2002.

The year began with the introduction of euro notes and coins in 12 Member
States and ended with the decision of the Copenhagen European Council to

4

admit  10  new  Member  States  to  the  European  Union.  It  was  a  year  of
significant  landmarks  between  these  two  historic  turning  points,  made  of
continuing progress and achievements in many Community policies.

For  2002,  the  following  objectives  were  set  in  the  Commission’s  Annual
Policy Strategy:

(cid:1)  Externally, stability, peace and prosperity  were key objectives. Therefore,
progress  towards  integration  was  to  be  accompanied  by  a  coherent  and
global policy of building relations with neighbouring countries and regions
and  responding  to  the  challenges  of  globalisation.  Enlargement  went
hand  in  hand  with  a  supportive  policy  in  favour  of  the  Mediterranean
region.  In  addition,  a  reinforced  development  co-operation  policy  was
focused on reducing poverty in the developing world.

(cid:1)  Internally,  the  Commission  defined  as  key  objectives  the  promotion  of
safety  and  security  of European  citizens  and  economic  integration.  The
introduction  of  the  single  currency,  the  promotion  of  sustainable
development  (which  also  has  an  internal  dimension)  and  a  new
governance approach were identified as essential contributions to realise
a qualitative leap towards economic, social and political integration.

A.

Enlargement

(cid:1)  Completing  a  process  launched  nine  years  earlier  in  the  same  city,  the
Copenhagen  European  Council  on  12  and  13  December  concluded  the
negotiations  with  10  candidate  countries  (Cyprus,  the  Czech  Republic,
Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia)
paving  the  way  for  the  single  greatest  enlargement  in  the  history  of  the
European Union.

(cid:1)  The  success  in  December  was  the  culmination  of  intense  negotiations,
coupled  with  preparations  for  the  accession  of  the  candidate  countries,
which  continued  throughout  the  year  and  built  on  the  efforts  and
achievements  of  previous  years.  A  turning  point  came  at  the  end  of
October following publication of the Commission’s reports on the progress
of each candidate country towards accession. These formed the basis for
a  decision  by  the  Council  and  then  the  European  Council,  meeting  in
Brussels, to complete the negotiations with the 10 countries selected from
the 13 applicants for EU membership to form the first wave.

B. Mediterranean neighbourhood

(cid:1)  The  Barcelona  process  received  new  impetus:  the  Commission  made
concrete  proposals  on  the  creation  of  a  functioning  Euro-Med  internal
market, the reinforcement of co-operation in the field of justice and home
affairs  and  the  establishment  of  a  Euro-Mediterranean  Foundation  to
promote  inter-cultural  dialogue  and  environmental  co-operation.  The
Barcelona  European  Council  agreed  to  the  creation  of  a  Euro-Med
investment facility in the EIB to stimulate private investment in the region.

5

(cid:1)  The support for the stabilisation and association process under way in the
western  Balkans  was  important  not  only  in  terms  of  the  financial  aid
provided  in  2002  but  also,  and  more  particularly,  because  of  the
Community  contribution  to  the  progressive  alignment  of  the  legal  and
economic systems of these countries with those of the European Union.

C.

Development co-operation

(cid:1)  The  Union’s  contribution  to  the  fight  against  poverty  in  the  world
focused  in  2002  on  education  and  health,  for  which  the  Commission
proposed new thematic and sectoral frameworks, in  particular  in  the fight
against HIV/AIDS.

(cid:1)  The  Commission’s  contributions  to  the  Monterrey  conference  led  to  the
agreement  by 
the
the  Barcelona  European  Council 
contribution  to  development  co-operation  up  to  0.39%  of  the  Member
States GNP by 2006.

increase 

to 

(cid:1)  The  European  Union  strove  to  implement  the  agenda  agreed  in  Doha
(Qatar) in 2001 for a new round of multilateral trade negotiations under the
World  Trade  Organisation,  in  which  was  reflected  the  importance  the
European  Union  attaches  to  promoting  better  integration  of  developing
countries in the world economy and international trade.

D.

Safety and security

(cid:1)  Following  international  events,  the  Commission  recognised  the  need  to
focus  on  the  security  of  European  citizens.  The  Commission  made  a
series  of  concrete  proposals  and  measures  to  deliver  the  Tampere
agenda for the establishment of a European area of freedom, security and
justice.  EUROJUST  was  formally  established  and  the  European  arrest
warrant  and  Framework  decision  on  terrorism  were  adopted.  These
constitute important achievements for co-operation and mutual recognition
in criminal law matters.

(cid:1)  On  proposal  from  the  Commission,  the  Council  adopted  action  plans  to
promote  an  integrated  system  of  external  border  management  and  to
tackle illegal immigration.

(cid:1)  Further  steps  towards  the  common  European  immigration  and  asylum
policies  were  taken  e.g.  through  a  proposal  on  admission  of  third
countries nationals for certain purposes and the creation of an Immigration
and Asylum Committee.

(cid:1)  The  progress  made  in  2002  towards  solving  the  problems  posed  by  the
situation of the Russian enclave of Kaliningrad vis-à-vis future EU Member
States  is  also  an  important  step  forward  towards  increased  security  and
stability.

(cid:1)  Several proposals have also been tabled to enhance safety and security in
transport,  energy  supply  (including  nuclear  safety)  and  health.  In  this
respect,  the  availability  of  staff  with  the  necessary  expertise  in  very

6

specific areas will require special attention (see action “Human resources”
under point 5.3.1.).

E.

Single market and introduction of the euro

(cid:1)  The  euro  notes  and  coins  were  successfully  introduced  in  12  Member
States.  Based  on  the  undertaking  to  conduct  sound  macroeconomic
policies, the euro contributes to growth, competitiveness and employment.
However, the introduction of the euro also highlights further changes that
are  still  needed  for  Europe  to  gain  the  full  benefits  of  the  single  market.
Given the success of the physical introduction of the euro, economic and
monetary union undoubtedly qualifies as one of the  significant  landmarks
in  European  integration,  ranking  alongside  such  earlier  achievements  as
the customs union of 1968 and the single market of 1992.

(cid:1)  The  Commission  continued  to  contribute  to  the  Lisbon  agenda,  in
particular in the area of policy co-ordination in the medium and long term.
Solid  achievements  were  recorded  in  several  areas,  such  as  the
Community  health  and  safety  at  work  strategy,  the  Commission’s
commitment  to  lifelong  learning,  the  liberalisation  of  the  markets  in
services  and  the  energy  market,  and  the  reform  of  the  regulatory
framework for  telecommunications.  Legislation  on  integrating  rail  markets
was also tabled.

(cid:1)  Following the call by the Barcelona European Council for the launch of the
Galileo  programme  for  satellite  radio-navigation,  the  Council  adopted  a
regulation setting up the Galileo joint undertaking.

(cid:1)  The 6th Framework programmes for research were adopted and launched
and  a  debate  was  initiated  on  the  means  to  achieve  the  3%  target  for
research  investments  in  Europe,  consolidating  the  European  Research
Area.

(cid:1)  eLearning and Erasmus Mundus programmes were proposed and a policy
framework for  the development  of the  Information  Society  (eEurope)  was
set up to promote Europe's move to a knowledge-based society.

F.

Sustainable development

(cid:1)  The  Commission  worked  in  2002  on  making  concrete  the  principles
agreed in the EU Sustainable Development Strategy with the introduction
of  the  environmental  dimension  in  the  Lisbon  process  aiming  at  striking
the  "right"  balance  between  economic  competitiveness,  social  inclusion
and environmental protection. The Commission also played a major role at
the  World  summit  in  Johannesburg,  facing  hesitations  and  fighting  for
concrete commitments.

(cid:1)  The  sixth  environmental  action  programme,  which  was  also  adopted  in
2002,  established a  new framework  for  Community  policy  in  this  area  for
the years to come.

7

(cid:1)  With  the  aim  to  consolidate  prosperity  and  welfare  of  the  European
citizens without putting at risk  the  quality  of  life  of future  generations,  the
Commission  actively  worked for  the extension of  the open method  of  co-
ordination to the area of pensions.

(cid:1)  2002 saw the effective creation of the European Food Safety Authority, the
adoption  of  the  new  Consumer  Policy  Strategy  for  2002-2006  and  the
adoption  by  the  European  Parliament  and  the  Council  of  the  new  Public
Health Programme covering the years 2003 to 2008.

(cid:1)  In  July,  the  Commission presented  a  proposal  for  the  mid-term  review  of
the  common  agricultural  policy,  where  it  outlined  ideas  for  improving  the
common  market  organisations,  introducing  simpler  and  more  sustainable
direct support for producers and consolidating and strengthening the rural
development aspect (the second pillar). 2002 also saw the adoption of the
reform of the Common Fisheries policy, with proposals aimed at ensuring
the  sustainable  development  of  the  sector  both  environmentally  and
economically.

G. Governance

(cid:1)  Following the adoption of a White Paper on European governance in July
2001,  the  Commission  adopted  an  action  plan  on  “better  regulation”
(June 2002), a communication on impact assessment and a consultative
document  on  consultation  of  interested  parties  by  the  Commission.  The
Commission  adopted  a  second  package  in  December  2002  that  covered
better  regulation,  including  proposals  on  comitology,  agencies,  tripartite
contracts,  infringements,  use  of  expertise  and  minimum  standards  for
public consultations.

(cid:1)  The  Commission  pursued  its  unparalleled  reform  of  staff  policy,  and
presented  a  proposal  to  the  other  Institutions  to  modernise  the  Staff
Regulations.

(cid:1)  The  Commission  adopted  detailed  implementing  rules  for  the  application
of the new Financial Regulation approved by Council in June. This  major
reform of the financial rules governing the EU's activities entirely recast the
Financial  Regulation  that  had  originally  been  adopted  in  1977,  and
amended on many occasions since then.

(cid:1)  The Commission also presented its vision of the future European project in
two contributions to the Convention. The communication presented by
the  Commission  to  the  convention  on  4  December  suggested  various
changes  to  the  EU’s  institutional  system  and  a  simplification  of  the
decision-making  process  without  upsetting  the  balance  between  the
Parliament, the Council and the Commission. It also advocated reinforcing
the common foreign and security  policy  by  creating  the  post of  Secretary
of  the  European  Union, to be held  by  a  member of  the  Commission  who
would be accountable to the Council. Finally, the Commission pleaded for
these  proposals  to  be  incorporated  in  a  constitutional  treaty  that  would
also  contain  the  charter  of  fundamental  rights  of  the  European  Union
proclaimed in December 2000

8

In  conclusion,  the  Commission  considers  the  balance  sheet  of  year  2002
achievements  to  be  positive,  with  special  reference  to  the  successful
completion  of  the  enlargement  negotiations,  the  introduction  of  Euro  notes
and coins in all Member States of the Eurozone

It  is  nevertheless  conscious  of  the  challenges  ahead  such  as,  on  the
enlargement  front,  the  need  to  implement  the  Community  acquis  fully  from
the  day  of  accession,  and  i.a.  of  the  efforts  still  required  to  go  beyond  the
limited results of the Johannesburg summit on sustainable development.

As regards budgetary aspects, €97 billion Euro were committed in 2002 from
total  authorized  appropriations  of  €99  billion.  Payments  made  amounted  to
€83 billion from total budgetary appropriations of €96 billion. The  number  of
accounting  documents  registered  in  order  to  account  for  this  budgetary
execution amounts to 526,000. This includes  about  90,000  recovery  orders,
over 36,000 commitments and almost 400,000 payment requests.

3. 

OVERVIEW OF THE SERVICES’ MANAGEMENT AND CONTROLS IN 2002

Progress  was  made  for  management  issues  but  improvements  are  still
necessary in certain areas of internal controls.

Considerable  progress  had  been  achieved  by  the  end  of  2002  in  the
management  systems  of  the  Commission,  in  terms  of  establishment  and
delivery of the tools and processes. Progress was also achieved or reduction
of  the  backlog  with  particular  focus  on  the  commitments  remaining  to  be
settled1. This progress was possible only as a result of significant efforts  by
all  services  concerned.  However,  it  has  to  be  stressed  that  many  reform-
related  instruments  outlined  below  only  started  being  implemented  in  2003.
Assessment  of  the  real-life  experience  will  be  a  crucial  test  of  their
effectiveness,  and  of  the  depth  of  the  changes  required  in  the  working
methods (3.1).

in 
the  analysis  shows  a  need 

As  regards  internal  control  systems  described  more  in  detail  in  section  3.2,
the  underlying
although  advancements  were  made 
standards, 
the
Commission’s  services:  through  a  combination  of  various  measures  –  in
particular a review of staff and training needs, accelerated implementation of
internal control baseline requirements, and completion of the complete cycle
of  in-depth  audits  –  DGs  and  services  should  be  able  to  focus  on  the
effectiveness of implementation of the control objectives (3.2).

implementing 
for  better  anchoring 

in 

Finally, a number of issues which require consideration have been identified
in audits conducted by the European Court of Auditors and the Internal Audit
Service.  Moreover,  the  recommendations  of  the  Audit  Progress  Committee
are considered (3.3).

1 In French: Reste à liquider or RAL.

9

                                                
3.1.  Management issues: outline of the main achievements

Regarding Human resources:

–  In  2002,  the  Commission  has  put  forward  a  proposal  to  the  other
Institutions  to  modernise  the  Staff  Regulations  applicable  to  officials  and
other  staff  employed  by  the  European  institutions.  On  this  basis,  political
agreement with Council on the proposal was reached on 19 May 2003.

–  Job descriptions for all staff were defined and an integrated appraisal and

promotion system was set up to be used from 2003 onwards.

–  Clear  guidelines  on  structured  mobility  were  defined  introducing  the

principle of regular but voluntary mobility of staff.

–  A  central  Career  Guidance  function  was  created  to  advice  staff  in  their

career development.

–  New  training  guidelines  and  a  strategic  training  framework  were  adopted
and  contain  measures  to  align  staff  training  more  closely  with  the
Commission’s strategic goals and values.

–  A  European  Personnel  Selection  Office  was  set  up  in  2002,  which
provided  assistance  in  the  selection  of  a  first  group  of  auxiliary  agents
from the new Member States.

–  Procedural  rules  for  administrative  inquiries  and  disciplinary  proceedings
were adopted, an Investigation and Disciplinary Office of the Commission
(IDOC)  was  set  up  in  2002,  and  a  decision  establishing  clear  rules  for
reporting wrongdoings was also adopted.

–  The first phase of a scheme of special measures to terminate the service

of officials of the European Communities was adopted.

Regarding financial management:

–  The  new  Financial  Regulation  and  its  implementing  rules  were  adopted
last year and entered into force in January 2003. A special effort has also
been  made  in  designing  and  implementing  provisions  in  the  domain  of
recoveries of funds unduly paid.

–  All  services  conducted  a  detailed  Readiness  Assessment  aimed  at
assessing  to  which  extent  they  were  ready  for  implementing  the
requirements of the new Financial Regulation in their daily procedures. In
line  with  the  new  Financial  Regulation,  the  design  of  financial  circuits
concerning ex-ante verification of operations  and appropriate  segregation
of  duties  was  finalised.  New  or  modified  types  of  commitments  and
payments were put in place.

–  The responsibility and accountability of Authorising Officers by delegation
for their actions were made explicit and underlined. Internal controls in the
services were further tightened, this being one of the preconditions for the
abolition of centralised Financial Control.

10

–  The  commitments  remaining  to  be  settled  have  been  significantly  scaled

down in 2002 and are being further reduced.

Regarding Management systems:

–  In  2002,  Activity-based  management  (ABM)  and  the  Strategic  Planning
and  Programming  cycle  started  to  become  fully  operational.  Annual
management  plans  were  established  in  all  DGs  and  services  using
comparable  management  information  on  priorities,  allocated  resources,
objectives  and  indicators  by  activity.  The  management  plan  covers  all
activities of a service and helps services to plan, monitor and report on its
activities,  actions  and  use  of  resources  in  conformity  with  its  mission
statement  and  objectives.  It  also  provides  input  for  the  Annual  Policy
Strategy,  the  Preliminary  Draft  Budget  and  through  its  execution  is  the
basis on which the Annual Reports are built.

–  As indicated above, 2002 was also the first year where Directors-General
and Heads of Service presented their Annual Reports and declarations of
assurance.

–  Activity-based  budgeting  (ABB)  is  the  main  budgetary  component  of  the
Activity Based Management (ABM). Preparatory work has been carried out
throughout  2002  in  view  of  the  move  to  a  fully-fledged  ABB  budget  in
2004.

A number of key measures of the reform were adopted in 2002, but the
crucial  implementation  steps  will  be  taken  in  2003.  This  is  the  case  in
particular  with  the  career  development  review  and  the  new  financial
regulation.  In  the  same  way,  the  modernisation  of  the  accounting
framework to progressively implement accrual accounting principles, to
be  completed  by  2005,  constitute  a  major  challenge  for  the  financial
management of the Commission.

3.2. 

Internal control systems: need for improvement

The  internal  control  framework  used  by  the  Commission  is  based  on  24
Internal Control Standards which encompass all aspects of the Commission’s
management  process.  For  the  2002  Annual  Activity  Reports,  DGs  and
services were asked once again to self-assess the degree of implementation
of these standards in terms of the minimum requirements expected to be in
place  as  at  31  December  2002.  These  assessments  were  the  product  of
management judgements by the DG itself, in the light of the information and
knowledge available, although of course independent audits may have been
used in certain cases to help form those judgements. In addition to reporting
progress in implementing the Standards, DGs and services were required to
make a brief appraisal of the inherent internal control and risk environment in
which  they  operate.  The  aim  was  to  increase  understanding  of  the
reservations  and  other  important  issues  raised  that  might  impact  on  the
assurances required in the annual declarations.

Control Environment

11

Reflecting  the  continued  priority  given  to  developing  key  human  resource
related  initiatives,  DGs  and  services  generally  reported  strong  progress  in
implementing  the  standards  covering  job  descriptions  and  staff  appraisal
(Standards  2  and  4),  but  were  less  confident  on  the  standards  concerned
with ensuring staff competence and mobility (Standard 3) and with sensitive
functions  (Standard  5).  Concern  was  expressed  in  general  terms  about  the
availability of staff with the right expertise, and particular attention was drawn
to the financial and nuclear domains where the right skills are notably in short
supply and where the Commission has very specific needs.

Performance and Risk Assessment

The  reported  level  of  implementation  of  the  control  standards  underpinning
ABM,  particularly  on  Annual  Management  Plans  (Standards  9)  and  setting
objectives (Standard 7), mirrors the general progress and priorities attached
to  this  initiative.  However,  more  limited  progress  is  reported  in  establishing
effective  monitoring  systems  based  on  performance  indicators,  where  there
clearly  remains  much  work  to do  in  developing meaningful  input  and  output
measures. On the analysis and management of risks (Standard 11), DGs and
services  undertook  a  major  exercise  in  2002  to  assess  their  state  of
readiness for coping with the new Financial Regulation by assessing the risks
involved  and  the  necessary  control  measures.  However,  at  the  year-end
there remained work to be done by DGs and services in ensuring that certain
mandatory  controls  would  be  in  place.  Moreover,  it  is  clear  from  the  limited
progress  made  in  general,  that  DGs  and  services  are  some  way  short  of
having a fully embedded risk management culture in place.

Information and Communication

The  main  areas  of  concern  raised  by  DGs  and  services  under  this  heading
include  the  use  of  key  performance  indicators  (Standard  12)  where  half  of
DGs and services reported that they had implemented at least the minimum
requirements.  The  remainder  reports  that  implementation  is  still  underway,
citing  amongst  other  issues  problems  encountered  in  using  IRMS  as  an
effective management tool in their day-to-day operations.

DGs  and  services  reflect  more  progress  related  to  the  mail  registration  and
filing  systems  where  a  large  majority  of  DGs  and  services  reported  that  at
least  the  minimum  requirements  had  been  implemented.  This  reflects  a
broad  consensus  that  the  ADONIS  mail  registration  system  is  in  place,  but
also that there is ongoing work still needed to ensure proper management of
filing systems.

Control Activities

Control  activities  are  fundamental  components  of  a  DG’s  system  of  internal
control and cover the everyday operations designed to provide management
with  reasonable  assurance  on  the  achievement  of  objectives  and  the
management of risks, whatever the domain. These cover fundamental issues
such  as  the  separation  of  duties,  documentation  of  the  control  procedures
and  the  supervision  activities  carried  out  by  Management  to  ensure  that
those  controls  are  applied  as  intended.  Weaknesses  in  the  area  of  control

12

activities  are  often  inter-connected,  with  for  example,  the  absence  of
insufficient  or  unclear
appropriately  expert  staff,  compounded  by 
documentation  setting  out  exactly  what  is  required  and  poor  management
supervision overseeing the whole process. Whilst DGs and services reported
significant  advances  in  certain  areas,  most  notably  in  ensuring  proper
separation  of  duties  in  their  financial  circuits,  this  control  component  as  a
whole  reveals  the  greatest  scope  for  improvement  and  can  most  readily  be
linked to reservations and to other weaknesses raised in the Annual Reports.
Over half of the DGs and services reported that they were still in the process
of implementing the minimum standards in the area of supervision. A minority
of  DGs  and  services  reported  that  they  had  implemented  the  minimum
standards or more on the documentation of procedures.

Audit and Evaluation

DGs  and  services  report  steady  progress  in  establishing  the  elements
necessary for having a sound audit and evaluation framework which includes
ensuring the proper follow up of audit findings, control weaknesses and self-
review.  Whilst  all  DGs  and  services  have  largely  embraced  the  need  for
management  to  review  the  systems  of  control  for  which  it  is  responsible,
there  are  certain  areas,  notably  in  the  Commission’s  delegations  and
representations, where this needs to be strengthened as a process.

Overall conclusions

In  conclusion,  the  Commission’s  internal  control  systems  are  still
evolving.  The  internal  control  standards  provide  the  basis  for  these
systems and DGs and services have self-assessed and reported in their
Annual  Reports  progress  made  in  complying  with  these  standards.
Overall, it is evident that there is a greater understanding of these issues and
in  particular  of  the  fact  that  internal  control  is  not  limited  to  just  financial
matters,  although  it  should  be  noted  that  the  latter  were  given  special
attention  in  2002  through  the  readiness  assessment  process  in  preparation
for  the  New  Financial  Regulation.  General  progress  in  implementing  the
standards continues to be made. The self-assessment process, coupled with
increased  awareness  of  management  responsibility  and  the  progress
reported  in  implementing  the  standards  represent  major  steps  forward  but
they do not constitute proof itself that the systems of control fully address risk
and are working as intended.

The  assurances  required  in  the  declaration  are  inextricably  linked  to  the
adequacy  of  the  control  systems.  The  underlying  framework  of  control  and
the  achievement  of  the  control  standards  are  not  an  end  in  itself  but  a
platform  for  gaining  and  delivering  the  assurances  on  proper  management
and control. DGs and services have not always explicitly linked the content of
reservations to the assurances required.

13

3.3. 

Issues  raised  by  the  European  Court  of  Auditors  and  in  the  Internal
Auditor’s and the Audit Progress Committee’s reports

3.3.1.  Recommendations of the European Court of Auditors

Amongst  the  recommendations  made  by  the  European  Court  of  Auditors
(ECA) in its Annual Report concerning the financial year 2001, some are of a
cross-cutting nature and warrant mention in the present Synthesis.

ECA’s  recommendations  on  the  reform  have  been  taken  up  by  the
Commission. In particular:

(cid:1)  The  ECA’s  Annual  Report  pointed  out  that  by  the  end  of  May  2002
insufficient progress had been made on developing the  new accounting
framework (Point 9.8.) In this respect, a communication on modernisation
of  the  accounting  system  was  adopted  in  December  2002  (COM(2002)
755). The Commission recognises the need for enhanced monitoring (see
part 5.3.7. below) and will regularly inform the discharge authority and the
ECA  of  the  progress  made.  Once  the  new  accounting  framework  is  in
place, a number of problems highlighted by the Court, e.g. the difficulty in
taking  stock  of  the  amounts  held  by  the  financial  intermediaries  and  not
yet paid to the final beneficiaries (Point 9.25. of the ECA’s Annual Report),
will be resolved once and for all.

(cid:1)  A  series  of  recommendations  concerning  the  establishment  of  the
Annual  Activity  Reports  have  been  pursued:  the  timetable  has  been
brought forward (Points 9.54. and 9.55. of the ECA’s Annual Report), and
will  need  to  be  brought  forward  still  further  for  the  deadline  laid  down  in
Article 60(7) of the recast Financial Regulation to be met, as required from
the  2003  exercise  onwards.  A  number  of  concerns  expressed  regarding
the  nature  of  reservations  and  observations  (Points  9.71.  to  9.91.  and
9.97d  of  the  ECA’s  Annual  Report)  have  been  addressed  through  more
specific  guidelines.  Further  fine-tuning  of  the  methodology  will  be
introduced  in  respect  of  the  2003  Annual  Report  exercise  (see  part  4.
below).

(cid:1)  Difficulties  concerning  availability  of  skilled  staff,  as  underlined  by  the
ECA  (Point  9.65. of  the ECA’s  Annual  Report), are acknowledged  by  the
Commission.  Remedial  measures  to  be  carried  out  are  laid  down  in  part
5.3.1. below.

(cid:1)  ECA’s  concerns  regarding 

internal  control
standards (Point 9.66. of the ECA’s Annual Report) are addressed in part
5.4.5. below.

implementation  of 

the 

(cid:1)  Measures  have  been  adopted  and  will  be  closely  monitored  in  order  to
guarantee  more effective management of  the  recovery  of  funds  unduly
paid  (Point  9.67.  of  the  ECA’s  Annual  Report).  Certain  measures
designed  to  improve  recovery  procedures  were  already  put  into  effect  in
2002  and  are  ongoing  ,  including  computer  developments  and  additional
documentation  of  procedures.  Also,  in  2003  the  process  of  issuing  the
debt  notes  is  being  decentralised.  Finally,  an  Internal  Audit  Service  audit

14

of  recoveries  has  been  finalised  in  early  2003.  Following  examination  by
the Audit Progress Committee, it was agreed that services will put in place
action  plans  to  follow  up  the  recovery  issues  and,  if  necessary,  integrate
these in their annual management plans (see action “recovery” under point
5.3.2).

(cid:1)  The  Court  also  recommended  to  review  the  organisation  of  the  Audit
Progress  Committee  in  order  to  reinforce  mechanisms  to  deal  with  any
potential  conflicts  of  interest  when  discussing  issues  where  the  services
concerned  fall  under  the  responsibility  of  the  Chair  or  other  members  of
the  Committee.  A  number  of  measures  are  now  contemplated  that
respond to the Court’s concerns (see part 3.3.3. hereunder).

(cid:1)  The  Commission  undertook  to  take  actions  on  corresponding  Court’s
recommendations  concerning 
regularity  of  underlying
transactions,  including  clarification  and  simplification  in  the  field  of  the
structural  funds  and  implementation  of  an  effective  audit  strategy  for  the
Research  framework  programme.  Remedial  measures  to  be  carried  out
are laid down in parts 5.3.3. and 5.3.4. hereunder.

legality  and 

(cid:1)  The Reform White Paper Action 87 provided that the IAS should carry out
a  cycle  of  in-depth  audits  after  the  completion  of  the  first  round  of  DGs’
Annual  Activity  Reports  and  the  attached  assurance  statements  of
authorising officers by delegation. The IAS aims to provide an overall view
of the quality of internal control systems in its annual report for 2003.

3.3.2. 

Internal Auditor’s report

The  annual  report  of  the  Internal  Audit  Service  (IAS)  includes  a  series  of
issues  to  be  considered  by  the  Commission.  These  concern  in  particular  a
number of issues raised in the organisation of the Commission following the
Reform, which require fine-tuning or clarification in some instances.

(cid:1)  Political  supervision  on  accounting  reform:  it  will  be  provided  through
regular  discussion  in  the  Commission  on  the  basis  of  briefing  to  the
Commission by the competent Commissioner (part 5.3.7. below).

(cid:1)  Increasing synergy within the Commission’s audit community: it is a useful
objective  as  suggested  by  the  IAS.  The  Communication  on  “Actors  in
internal  control  and  internal  audit”  reconfirmed  the  “IAS’s  mandate  to
support  IACs  through  Auditnet  and  more  precisely  to  promote  common
methods,  tools  and  techniques  concerning  audit  in  the  Commission”2.  In
conclusion,  the  IAS  should,  in  agreement  with  the  concerned  actors,
ensure that its central co-ordination role is fully developed.

(cid:1)  The co-ordination of decentralised responsibilities  in  certain management
and  control  areas:  more  efforts  will  need  to  be  undertaken  to  effectively
communicate  the  revised  management  and  control  framework  to  the
different levels of management and staff. This is accompanied by a strong

2 SEC(2003) 59/3 of January 2003.

15

                                                
co-ordination  role  played  by  the  Secretariat-General,  which  operates  via
internal  governance  instruments  such  as  the  group  of  Directors-General,
the Resource directors and the inter-service co-ordination group as well as
the ABM Steering Group.

(cid:1)  Guiding  resource  decisions  through  management  risk  assessment:  the
question  needs  to  be  addressed.  The  Commission  will  consider  how  to
make  risk  assessment  a  more  visible  factor  to  be  taken  into  account  in
preparing management plans and making resource allocations

(cid:1)  Shared  management:  the  IAS  suggested  that  DGs  and  services  should
address scarcity of resources by giving priority to preventive actions over
closure  audits.  While  trying  to  give  priority  to  preventive  audits  in  areas
with the highest risk level, first priority has to be given to comply with the
legal obligation to close the programmes only after appropriate audits.

(cid:1)  Statements of assurance from beneficiary countries as a tool for obtaining
reasonable  assurance 
the  event  of  shared  or  decentralised
management: This  solution,  while  not  seeming  prima  facie  appropriate  in
the  context  of  external  aid,  will  be  further  examined  in  areas  of  shared
management  by  the  follow-up  working  group  to  Action  12  of  the  2001
Synthesis (see part 5.3.3.).

in 

An  overview  of  the  recommendations  of  the  Internal  Audit  Service  2002
annual report is contained in a separate Communication to the Commission.

3.3.3.  Audit Progress Committee’s report

The second annual report of the Audit Progress Committee covers the period
from  May  2002  to  April  2003.  According  to  the  Audit  Progress  Committee
Charter3,  it  presents  the  Committee’s  own  activities  and  its  views  on  the
internal  control  systems  within  the  Commission,  on  the  basis  of  the  work  of
Internal Audit Service.

Drawing  on  the  main  recommendations  put  forward  in  the  report,  the
following issues are highlighted:

(cid:1)  The services should improve their contribution to the audits by reacting in
due  time  to  the  draft  audit  reports  in  order  to  help  the  Internal  Audit
Service  reduce  the  current  average  audit  duration  of  over  a  year  to  a
period  that  maintains  the  full  utility  of  the  audit  results.  The  auditees
the  agreed
should  also  ensure 
recommendations.

implementation  of 

the  proper 

(cid:1)  The Internal Audit Service should improve its methodology in co-ordination
with  other  internal  auditors  so  that  it  is  well-established  and  known.  In
particular  it  should  continue  its  recent  approach  to  focus  its  audits  on
questions of compliance, efficiency and effectiveness and undertake these
audits  within  a  timeframe  maintaining  the  validity  of  findings  and

3 SEC(2000)1808/3, adopted on 31.10.2000

16

                                                
the  acceptance 

recommendations.  It  should  also  continue  its  endeavours  to  base  its
findings  on  undisputed  evidence  so  that  they  can  be  agreed  with  the
auditees  and  hence  help 
for
improve 
recommendations. Commission management emphasises that in order to
assess  progress  in  the  implementation  of  internal  control,  management
needs information on compliance. The recommendations should be more
clearly  prioritised,  stressing  the  risk  in  case  of  non-implementation,  and
taking account of possible additional costs, to help auditees to implement
them  properly.  Finally,  the  Internal  Auditor  should  put  in  place  without
delay  an  operating  system  for  the  follow-up  of  recommendations  and
develop  closer  working  relations  with  the  Internal  Audit  Capabilities  to
bring overall improvement of audit performance of the Commission.

rates 

(cid:1)  The  Audit  Progress  Committee  should  be  able  to  have  an  overview  of
internal  controls  systems  through  the  work  of  internal  and  external
auditors.  Regarding  its  organisation,  it  is  noted  that  the  Audit  Progress
Committee will maintain its current composition and role while stepping up
the  rhythm  of  its  meetings  and  contacts  with  the  European  Court  of
Auditors.  The  Commissioner  responsible  for  the  budget  will  continue  to
pass  the  Committee’s  chairmanship  to  another  member  when  audits
specifically  concern  the  services  under  her/his  own  responsibility.  This
principle will also apply to the other members. Besides, a second external
member  will  join  the  Committee  from  2004  onwards  to  enhance  its
expertise.  Finally,  the  APC  secretariat  will  be  located  in  the  Secretariat-
General.

4. 

STABILISATION OF ANNUAL REPORT PROCESS

4.1. 

Year 2001

The first Annual Reports covering the year 2001 was a pilot exercise. The
new  concepts  and  methodology  they  entailed  proved  to  be  a  powerful
instrument for transparency and accountability. The feed-back from  external
stakeholders, such as the Court of Auditors, was positive. However, this first
exercise suffered from a number of weaknesses, such as lack of consistency
regarding the scope and the  meaning  of  the  reservations,  the actual  impact
of the issues identified in the reservations and, more generally, the need, as
expressed, for clarification of the methodology.

4.2. 

Improvements to methodology

The  Commission  has  drawn  lessons  from  this  pilot  experience  and
considered recommendations made by the Court of Auditors and the Internal
Auditor.  Building  on  the  experience  gained  from  the  first  exercise,  the  2002
exercise shows methodological improvements in several respects:

(cid:1)  Different  parts  of  the  Annual  Reports  have  been  improved  and  new
sections  added,  e.g.  for  the  purposes  of  presenting  the  follow-up  to  the
previous recommendations of the Internal Audit Service and the European
Court of Auditors and to the action plans of the 2001 Annual Reports and
Synthesis.

17

(cid:1)  A major effort was made to clarify the scope of the declarations and
reservations  (concept  of  materiality,  i.e.  definition  of  the  threshold  of
importance  beyond  which  a  deficiency  needs  to  be  considered  for  a
reservation) in a communication adopted in January4.

(cid:1)  A  peer  review  of  potential  reservations  was  organised  prior  to  the
submission  of  the  Annual  Reports  and  declarations.  The  peer  review
increased the level of consistency in the use of reservations.

4.3. 

Year 2002

An  analysis  of 
improvement in terms of understanding and consistency.

the  2002  Annual  Reports  shows  a  qualitative

(cid:1)  Some  of  last  year’s  reservations  are  presented  this  year  in  the  form  of
observations  following  the  clarification  of  the  scope  and  criteria  for  those
concepts.

(cid:1)  Most  recurrent  reservations  concern  the  difficulties  to  cope  with  the
inherent risk in shared or  decentralised management  (see  action "shared
management"  under  point  5.3.3.),  risk  of  overpayments  in  contracts  and
grants based on reimbursement of actual costs (see action " co-financing "
under point 5.3.4.) and lack of specialised human resources e.g. in areas
as  financial  management,  audit,  nuclear  safety  or  linguistic  tasks  (see
action "human resources" under point 5.3.1.).

(cid:1)  Observations  relate  in  particular  to  inadequate  implementation  of  the
internal  control  standards  (see  action  “Internal  Control  Standards”  under
point  5.4.5),  to  lack  of  human  resources  and  to  financial  management
problems.  Some  of  them  concern  issues  that  need  to  be  addressed  to
correct  the  underlying  causes.  Services  concerned  should  therefore
identify  specific  action  plans  as  far  as  the  measures  envisaged  are
manageable  by  the  Directorate-General  (see  action  “Follow  up  by
services” under point 5.4.6).

4.4. 

Necessary improvements

While  accountability  awareness 
the
Commission,  efforts  still  need  to  be  made  to  improve  the  quality  of  the
process  as  a  whole  at  all  levels  within  DGs  and  services,  in  particular
regarding the following issues arising from the Annual Reports:

is  now  well  established  across 

–  reservations should always be supported by concrete evidence;

–  the  impact  of  reservations  on  the  specific  assurances  required  in  the

declaration should always be made explicit;

–  the materiality criterion used to assess whether an issue should be subject

to a “reservation” should always be properly explained;

4 COM(2003)28 of 21.01.2003

18

                                                
–  the agreed standard wording for the declaration should always be used;

–  reservations  carried  over  from  the  previous  exercise  should  not  be
included simply to report on the state of progress without consideration for
the actual impact on the assurances.

The  necessary  clarifications  will  be  integrated  in  the  guidelines  for  the
establishment of the Annual Reports on year 2003, drawing on best practises
identified in Annual Reports on 2002.

5. 

ON-GOING WORK AND NEW CORRECTIVE ACTIONS REQUIRED

The analysis of implementation of corrective actions undertaken by DGs and
services last year, and of the action plan adopted by the Commission, shows
that the issues identified have been actively addressed.

It should be noted, however, that as 2001 was the first year for this exercise,
many  issues have  been  raised,  some of  them  having  awaited  resolution  for
some  time.  It  is  therefore  normal  that  this  year  a  reduced  number  of  new
issues should be raised within the Commission, while the resolution of some
of last year’s issues will take some time, given their complexity.

The  present  section  is  designed  to  give  an  update  both  on  how  DGs  and
services have dealt with corrective actions undertaken at their level (5.1) and
on  the  issues  raised  in  last  year’s  Synthesis,  some  of  which  continue  to  be
raised this year. Issues that have been resolved or are on the way to being
resolved  are  recapitulated  (5.2),  while  the  state  of  play  is  provided  on  a
number  of  key  issues  (5.3).  Finally,  a  number  of  new  issues  requiring
improvement or corrective actions are identified (5.4).

5.1. 

Corrective actions undertaken by DGs and services

All  DGs  and  services  reported  on  the  implementation  of  action  plans  to
remedy  the  previous  reservations  and  observations  (where  applicable).
However, the effects of those actions were not fully visible at the end of 2002
and some of them will only bear fruit from the 2003 exercise onwards.

Successful  implementation  of  action  plans  requires  ongoing  monitoring  and
allocation  of  sufficient  resources  through  the  Management  Plans.  In  this
respect,  improvements  should  be  made,  as  not  all  DGs  and  services
have adequately translated their action plans into Management Plans.

5.2. 

2001 Synthesis action plans follow up

Last year, the first Synthesis included  an  action plan  whose  implementation
has proved satisfactory.

(cid:1)  A  number  of  actions  in  the  fields  of  management  and  control  have  been
successfully completed, such as the readiness assessments in view of the
entry into force of the new financial regulation (Action 11), the design and
documentation  of  financial  procedures  (9),  the  strengthening  of  co-
ordination  mechanisms  in  the  Commission  (6),  clarification  of  the

19

responsibilities of  the  key  actors  in audit and  control  (13) and  training  on
financial management (15).

(cid:1)  Actions  has  been  achieved  in  other  fields  too,  such  as  the  methodology
and guidance for producing the Annual Activity Reports for 2002 (10, see
also  part  4.2.  above),  the  adoption  in  June  2003  of  a  communication  on
the  role  of  Directors-General  in  the  framework  of  shared  management
(12), as well or measures concerning nuclear safety (3).

(cid:1)  In  addition,  a  number  of  actions  have  been  launched,  for  which  the
timetable for resolution of the issue raised runs over several years. This is
for instance the case with the modernisation of the accounting framework
(16 and 17) and with the interoperability action plan (7).

(cid:1)  Some improving  or  corrective  actions for  issues  identified and  addressed
last  year  require  an  update  and/or  new  action  e.g.  issues  relating  to
shared management (12) and co-financing (1). The state of play regarding
such  modified  on-going  actions,  including  where  necessary  an  update  of
corrective measures, is provided in the sections below.

(cid:1)  Finally,  although  in  some  cases  positive  effects  were  noticeable  in  the
establishment  of  the  2002  Annual  Reports  (for  instance  improvement  in
the  Annual  Report  methodology  or  clarification  of 
the  role  and
responsibility  of  the  actors  in  the  domains  of  control  and  audit),  in  many
instances  the  corrective  action  will  only  bear  fruit  from  the  2003  exercise
onwards  or  later  depending  on  the  nature  of  the  issue  and  the  specific
timetable agreed.

5.3. 

Ongoing work to be followed up in 2003

5.3.1.  Lack of human resources

As in 2001, a number of Directors-General and Heads  of  Service  explain  in
their  2002  Annual  Activity  Report  that  they  could  not  achieve  certain
objectives  set  for  2002  for  lack  of  human  resources.  The  Internal  Auditor’s
report also refers to a structural lack of human resources for performing the
tasks of the Commission. In this context, the efforts made for some years by
DGs  and  services  to  redeploy  staff  to  priority  actions  while  maintaining  the
same  level  of  commitment  to  implement  their  still  more  demanding  core-
business activities should be recognised. Despite the organisation in 2002 of
additional  competitions  and  the  possibility  given  to  services  to  recruit
temporary agents on permanent posts until the competitions have produced
their results, the following issues have been raised:

–  insufficient  human  resources  allocation  to  ensure  full  implementation  of

the acquis in the enlarged Union;

–  unavailability  or  scarcity  of  people  with  the  right  profile  and  expertise  for
specific  tasks,  in  particular  in  financial  management  and  audit,  nuclear
safety, linguistic profile or other specialised expertise.

Action “Human resources”

20

A.
DGs  and  services will  be  requested  to  prioritise  their  activities  in
their  Annual  Management  Plans  starting  from  2004.  In  allocating  their
resources internally, they are requested to ensure adequate staffing for
units  that  are  specifically  dealing  with  internal  control  and  audit
matters.  Furthermore,  in  accordance  with  the  Code  of  Conduct  for
Commissioners  and  Departments, 
the
Commissioner  concerned  will  identify  actions  that  may  not  be  carried
out.  Accordingly,  and  based  on  an  overall  management  risks
assessment,  resources  could  be  further  redeployed  amongst  services
towards  priority 
the
Commission’s  strategic  objectives.  The  outcome  will  be  fed  into  the
Commission’s Annual Policy Strategy.

the  Director-General  and 

those  contributing 

initiatives,  notably 

to 

B.
DGs are also requested to identify training and recruitment needs
to fill vacant posts for financial management, internal control and audit
activities,  and  to  communicate  these  to  DG  for  Personnel  and
Administration by September 2003. On the basis of this assessment as
well as  on  the  basis  of  the  strategic  training  framework  and  individual
training  maps,  Directorate-General  for  Personnel  and  Administration
this  basis,  a
will  review 
communication to the Commission will report before the end of 2003 on
the situation, the actions taken, and the measures proposed to improve
the level of specific expertise (e.g. financial management and control).

the  situation  of  scarce  skills.  On 

5.3.2.  Recovery

Despite  measures  already  taken,  recoveries  of  unduly  paid  funds  remain  a
significant risk sector for many services in the institution. Directorate-General
for  Budget  will  lead  the  monitoring  process  on  clearance  of  the  backlog  of
recoveries by addressing quarterly to each authorising officer by delegation a
report setting out the number, value and age of outstanding recovery orders
falling under his or her responsibility, together with indicators of the progress
made, and to make to this end the necessary improvements to its computer
systems.  In  turn,  the  authorising  officers  concerned  should  ensure  an
efficient  internal  monitoring  of  the  recovery  of  amounts  due  and  open
commitments.  The 
the
Internal  Audit  Service  should 
implementation  of  the  related  audit  recommendations  by  the  DGs  and
services concerned.

follow  up  on 

Action “Recovery”

The  recovery  of  amounts  due  on  direct  expenditure  is  to  be
A.
addressed  in  the  annual  management  plan  of  each  authorising  officer
by  delegation,  accompanied  by  appropriate  performance  indicators.
The  last  Budget  quarterly  report  mentioned  above  will  be  annexed  to
his or her annual activity report.

B. Directorate-General for Budget will lead the monitoring process on
clearance of the backlog of recoveries by developing both indicators of
performance  (on  a  service  and  Commission  level)  and  information
systems  that  would  provide  for  management  purposes  regular  and
reliable  statistics/indicators  to  authorising  officers,  and  that  would

21

allow  a  Commission-wide  overview  of  overall  performance  and
effectiveness.

C.
The  Internal  Audit  Service  should  follow  up  with  all  authorising
officers in due course implementation of the recommendations relevant
for  their  services,  through  management  or  specific  action  plans,
without there being a need for another special IAS audit on recoveries
in the near future.

5.3.3.  Shared management arrangements

in  shared  management  have 

The information presented in the 2002 Annual Reports on this issue suggests
greater  understanding  of  shared  management  issues.  However,  some  DGs
involved 
their
declarations  because  of  the  lack  at  this  stage  of  sufficient  tools  and
procedures  in  the  legal  framework  to  give  a  reasonable  assurance  that  the
management  and  control  systems  in  the  Member  States  are  functioning
satisfactorily. Similar issues were raised last year.

included  reservations 

in 

Reservations linked to shared management are related to the level of control
executed by the DGs and services and to the results of analysis and audit of
the  Member  States  performed  by  the  Directorate-General.  In  some  cases,
reservations are included because DGs have not yet completed the analysis
of  their  system  descriptions.  In  other  cases,  the  systems  analysis  has  been
made but not evaluated and ex-post audits have not yet been performed. In a
few  cases,  reservations  reflect  weaknesses  detected  in  the  Member  States
by  DGs  after  verification  of  Member  States’  control  systems,  although  the
financial consequences are addressed through financial corrections based on
ex-post controls by the DGs.

The variety of audit practices in the Commission and in the Members States
calls  for  the  methodology  to  converge  in  order  to  improve  the  impact,
efficiency and comparability.

Action “Shared management”

Following  Action  12  of  last  year’s  Synthesis5,  an  interservice
A.
group  has  been  launched  to  analyse  possible  measures  such  as  an
assurance  declaration  by  Member  States,  the  provision  of  ex-ante
disclosure  statements  by  Member  States,  the  aggregation  of  agencies
for  the  certification  process,  controls  over  the  certification  process  in
Member  States  and  the  development  of  minimum  standards  for
analysing  risks  related  to  new  or  amended  secondary  legislation.  This
group will be co-ordinated by Directorate-General for BUDGET with the
support  of  Directorates-General  for  AGRI,  REGIO,  EMPL,  FISH,  JAI,
ELARG,  SG,  SJ and  IAS.  Being  a  multiannual  task,  a  first  intermediate
report should be ready before the end of 2003, and will take account of
interim results of the legal analysis group below.

5 See Communication C(2003)1830/2 of 18.06.2003

22

                                                
B. Concrete  steps  will  be  taken  to  promote  convergence  of  audit
methodologies  and  processes  between  DGs  and  services  operating
under shared management arrangements. Specific attention will be paid
to  the  development  of  common  standards,  taking  into  account  well-
established  best  practices,  complementary  control  and  audit
processes, at Community and national levels, and assurance protocols
with Member States. To this effect, Directorate-General REGIO with the
other  operational  DGs  concerned  and  support  from  the  Internal  Audit
Service will prepare a Communication by March 2004.

C.
A  legal  analysis  of  shared  management  responsibilities  between
the Commission and the current and future Member States will also be
carried  out  by  the  Legal  Service.  On  this  basis,  the  Commission  will
make  all  appropriate  recommendations  to  clarify  the  respective
responsibilities of Member States and of the Commission in the case of
shared management. Proposals will be prepared by March 2004 by  DG
REGIO  in  agreement  with  the  Secretariat-General  and  the  other
structural funds Directorates-General.

5.3.4.  Shared costs programmes

The research area

Across  the  Research  area  in  general,  reservations  have  been  included
regarding  the  management  and  control  of  shared  costs  contracts  under  the
5th Framework programme. Under this system Community funds are paid on
the basis of eligible costs incurred, as declared by the beneficiaries. Because
these  costs  cannot  be  completely  and  accurately  ascertained  by  the
Commission  prior  to  the  authorisation  of  payments,  a  risk  of  overpayment
exists.  Only  a  full  financial  audit  can  determine  with  certainty  and  accuracy
the correctness of the cost claimed.

Following  action  1  of  the  Synthesis  made  last  year,  a  common  action  plan
was  adopted  by  the  Commission  on  10  January  2003,  and  implementation
has begun, this including measures to improve the consistency between DGs
and  services  in  the  management  of  these  contracts  and  to  increase  the
effectiveness in the verification of cost claims and to reduce the risk of errors.
These measures will be implemented in 2003 and beyond.

Additional remedial actions were adopted by several DGs (e.g. introduction of
audit  certifications,  increase  in  the  number  of  ex-post  audits,  greater
communication to beneficiaries, limiting the number of old contracts with less
robust clauses) in a attempt to reduce the risk. This risk cannot however be
eliminated  altogether.  This  would  require  full  financial  audit  of  all  projects,
which would not be cost-effective for the Commission.

Co-financing programmes in general

Risks relating to the exactitude of cost claims are not limited to the Research
field.  It  concerns  all  systems  based  on  the  reimbursement  of  real  eligible
costs (e.g. other grants). Further action is needed to cover also these areas
dealing with co-financing programmes.

23

Action “Co-financing”

An  interservice  group,  led  by  the  Secretariat-General  with  the  support
of  Directorate-General  BUDG,  and  involving  all  Directorates-General
concerned by co-financing programmes will examine by the end of 2003
the  possibility  of  introducing  flat-rate  elements  into  subsidies.  The
associated  control  methodology  should,  where  possible,  seek  to
develop  common  standards  for  risk  management  and  assessment  of
costs  and  benefits,  without  excluding  the  possibility  of  random
checking.

5.3.5. 

Implementation of the Legislative and Work Programme in the Commission

In  2001,  the  Commission  launched  a  renewed  programming  exercise
focusing on initiatives and proposals linked to strategic priorities. The results
in  2002  were  quite  positive.  Following  action  6  of  last  year’s  Synthesis,  the
Commission  set  up  in  2002  the  necessary  mechanisms  for  a  systematic
follow  up  of  the  implementation  of  the  Work  Programme  and  for  flexible
solutions to be found to the problems encountered.

Action “Work Programme implementation”

The  Secretariat-General  will 
the
implementation  of  the  2003  Legislative  and  Work  Programme,  namely
by taking into account the renewal of the European Parliament in 2004,
and  the  consequences  that  this  will  have  on  the  current  levels  of
implementation.

strengthen  monitoring  of 

5.3.6.  The devolution process in external relations

A  process  of  devolving  project  management  to  the  Delegations  was  part  of
the external assistance reform launched in May 20006. This process is rooted
in the principle that everything that can be better managed on the spot should
not be managed in Brussels.

As announced in the Synthesis of the 2001 Annual Reports, a review should
be  made  this  year.  The  scope  of  the  review  will  be  extended  to  focus  in
particular on the following aspects:

–  The question of matching human resources to increased responsibilities in

deconcentrated delegations;

–  The issue of the appropriate deployment of staff members in headquarters

and in delegations to manage external aid properly;

–  The question of the administrative expenditure which is currently executed

centrally but could be deconcentrated to delegations.

Action “Devolution”

6

See SEC(2000)814/5

24

                                                
External  Relations  DGs,  under  leadership  of  Directorate-General  for
External  Relations  and  in  agreement  with  the  Secretariat-General,  the
Directorate-General 
for
Administration,  will  prepare  by  the  end  of  2003  a  communication
evaluating  the  results  of  the  devolution  exercise  paying  particular
attention  to  the  above-mentioned  issues.  The  resource  implications  of
this action plan will be examined in the Annual Policy Strategy for 2005.

the  Directorate-General 

for  Budget  and 

5.3.7.  Commission’s accounting framework and information systems

Reservations expressed by Directorate-General for Budget refer firstly to the
issue  of  accrual  accounting  and  secondly  to  the  coherence  between  the
various subsystems of Sincom2.

The  financial  statements  do  not  fully  reflect  the  financial  situation  of  the
Communities as regards accrual elements. This situation should be corrected
once  and  for  all  as  from  2005,  when,  in  accordance  with  the  new  financial
regulation and the overall modernisation project adopted by the Commission
on 17 December 2002, the financial statements have to be established by an
integrated  system  in  accordance  with  the  principle  of  accrual  accounting.
Meanwhile, Directorate-General for Budget will continue its efforts to improve
its  development  of  accrual  accounting  with  the  assistance  of  recognised
experts in public finance.

With  regard  to  the  various  subsystems  of  Sincom2,  the  reservation  covers
two aspects. The first problem relates to the system architecture which leads
to the redundancy of some data inside the information systems which in turn
creates  a  risk  of  lack  of  coherence  of  information  presented  to  the
Authorising Officers, on the one hand, and the central services, on the other
hand.  A  lasting  solution  in  this  area  will  come  only  from  a  change  in  the
systems  architecture,  as  envisaged  in  the  aforementioned  modernisation
project.  Nevertheless,  thanks  to  the  reconciliation  process  carried  out  by
Directorate-General  for  Budget,  the  consistency  of  the  2002  data  is
guaranteed. The second point refers to the security policy of the systems and
in particular access rights. An overall security policy covering all subsystems
still needs to be developed.

Action “Accounting framework and information systems”

The  Commission  will  continue  to  be  regularly  informed  of  progress  in
this matter.

5.3.8.  Follow-up to Internal Audit Capability reports

The issue of follow-up and transmission of audit reports done by the Internal
Audit  Capabilities  has  arisen.  This  is  of  particular  importance  where  such
reports raise issues which may have an impact on other services, or on the
reputation  of 
for
Commissioners  of  being  regularly  informed  of  any  issues  arising  from  the
work of auditors, or controllers, in the services operating within their area of
responsibility is recalled.

the  Commission.  More  generally, 

importance 

the 

25

Action “Follow up of audit reports”

At least twice a  year,  the  Directors-General will  inform  the  responsible
Commissioner on work undertaken by their Internal  Audit  Capabilities,
the conclusions reached and the remedial actions planned or launched.
This information should also cover any appropriate issues arising from
the work of the internal Audit Service, the European Court of Auditors,
the DG in the context of ex-post controls, and OLAF. In the interval, the
above information shall be submitted by the Director-General any time
that she/he deems it appropriate.

5.3.9.  Follow-up of OLAF activities

OLAF,  the  Office  in  charge  with  fighting  against  fraud  prejudicial  to  the
Community financial interest, is in the specific situation of being structurally a
Commission  service,  while  having  an  operational  independence  and  a
degree  of  budgetary  and  administrative  autonomy.  While  fully  recognising
OLAF’s  independence,  the  Commission  needs  to  be  informed  of  the  major
issues reported to the Office, in order to take appropriate measures.

Action “Follow up OLAF”

A. Where  the  Director-General  reports  a  specific  issue  to  OLAF  or
where  she/he  considers  it  is  sufficiently  important,  she/he  will  inform
the responsible Commissioner.

A Code of Conduct will be drawn up by the end of September 2003

B.
to improve information flows between OLAF and the Commission.

5.4. 

New corrective actions

Corrective action at Commission level is also required for a number of other
issues which emerged in 2002.

5.4.1. 

Internal Control Standards in Delegations

A  number  of  reports  and  declarations  signed  by  Directors-General  of  the
External Relations family have identified the need for reviewing the status of
implementation of Internal Control Standards in Delegations, particularly in so
far as it affects the management of administrative expenditure.

–  A  common  action  plan  should  be  designed  by  Directorate-General  for
External Relations, in agreement with the External relations DGs and with
the  support  of  Directorate-General  for  Budget,  to  implement  internal
control  standards  adapted  to  the  environment  in  which  Delegations
operate,  with  particular  emphasis  on  the  self-assessment  process  in
Delegations.

Action “Internal Controls in Delegations”: A working group led by Directorate-
General RELEX will design with the support of Directorate-General for Budget
an  action  plan  specific  to  the  External  Relations  family  to  implement  the
internal  control  framework  and  develop  the  self-assessment  process  in  the
Delegations.

26

5.4.2. 

Integration of the EDF in the EC Budget

The European Development Fund is an extra-budgetary instrument financed
from  direct  contributions  of  the  Member  States.  Its  management  requires  a
regulatory  framework,  accounting  system  and  decision  making  procedures
separate and different from the Community budget. The end of the timeframe
for  the  9th  EDF  and  the  need  to  negotiate  between  the  EU  and  the  ACP
Countries  a  new  allocation  from  2005  and  the  preparation  of  new  Financial
Perspectives  provide  an  opportune  timing  for  the  Commission  to  present  a
new  Communication  setting  out 
the  advantages  and  drawbacks  of
incorporating the EDF into the Community budget. In the meantime, following
the  entry  into  force  of  the  9th  EDF  new  Financial  Regulation,  the  EDF
accountancy should be accrual based by January 2005. A working group of
Directorates-General  for  Budget  and  AIDCO  will  examine  the  possible
scenarios  for  including  the  EDF  accountancy  in  the  future  Commission
accounting system.

Action  “EDF”:  Following  on  from  the  review  reflection  work  currently  under
way,  the  Commission  will  prepare  a  Communication  on  the  prospect  of
integrating  the  EDF  into  the  EC  budget  as  part  of  the  preparation  of  future
financial perspectives.

5.4.3.  Control environment issues in Press relays and representations

The  2002  Annual  Report  of  Directorate-General  PRESS  includes  two
reservations  covering  basic  weaknesses  in  internal  control  in  the  Networks
and Representations.

Action “PRESS” A: Directorate-General PRESS, with the technical assistance
of  Directorate-General  for  BUDGET,  will  assess  by  March  2004  the  situation
regarding  the  control  environment,  identifying  the  main  weaknesses  and
proposing solutions with particular focus on the Relays and Networks and the
management  and  control  environment  in  the  Representations.  The  in-depth
audit of Directorate-General PRESS currently being carried out by the Internal
Auditor should also be of assistance in this regard.

Action “PRESS” B: In order to implement the decision of  the  Commission  of
December 2002, a working group chaired by the Deputy Secretary-General will
be  set  up  with  the  task  of  examining  the  feasibility  of  integrating  the
Representations 
into  the  rotation  schemes  of
Directorate-General for External Relations.

in  the  Member  States 

5.4.4. 

Implementation of the acquis in the enlarged Union

The Community acquis must be fully implemented in the enlarged Union from
the  first  day  of  accession.  This  means  guaranteeing  availability  of  the  legal
texts  in  the  official  languages  of  the  new  Member  States  from  1  May  2004
and  ensuring  proper 
the  various  provisions.  The
responsible  DGs  will  oversee  the  transposition  and  implementation  of  the
acquis  by  EU  Member  States  including,  from  May  2004  onwards,  the  new
Members  States,  in  line  with  the  usual  procedures.  This  will  focus  in
particular on the Internal Market legislation and on specific aspects  such as

implementation  of 

27

food  inspections,  nuclear  safety,  external  border  controls  or  environment
monitoring.

Action “Community Acquis” A: The Legal Service will monitor, in co-operation
with DG Enlargement and with the assistance of the Office of Publications, the
progress in translation of the acquis by the new Member States and will set up
an appropriate updating mechanism for the list of the acquis. It will regularly
report on the progress from September 2003 onwards.

Action “Community Acquis”  B:  the  Secretariat-General will  design a  process
for overseeing implementation of the acquis. This exercise will be carried out
in  close  co-operation  with  all  DGs  and  services  concerned.  It  will  focus
namely on the most sensitive provisions and should  enable  the  Commission
to launch the appropriate actions in due course taking into account the results
of the monitoring report to be adopted in October 2003.

5.4.5. 

Internal Control Standards

As is outlined in Part 3.2., DGs and services continued their efforts in 2002 to
implement Internal Control Standards. There has been progress in complying
with  requirements,  but  it  is  acknowledged  that  there  is  still  progress  to  be
made in order to fully implement all baseline requirements. The Commission
request  all  DGs  and  services  to  give  priority  to  the  outstanding  actions  in
order to ensure satisfactory implementation by the end of 2003.

The  Central  Financial  Service  assists  services  in  the  implementation  of
internal  control  standards,  by  ensuring  a  good  understanding,  developing
tools and methodologies, and providing training. This is crucial to ensure that
what services will report in their self-assessment of internal controls will be a
proper  representation  of  their  situation.  The  Central  Financial  Service  will
prepare a yearly report providing an overview of the internal control systems
of  the  Commission  by  Directorate-General  and  service;  this  report  will  be
submitted  in  April  every  year,  and  will  be  updated  each  October.  This
overview  will  be  one  of  the  distinct  and  essential  reports  informing  the
Synthesis, alongside with the other audit and control reports.

There  is  a  need  to  reflect  upon  the  experiences  so  far  in  implementing  the
standards  and  to  enhance  ownership  by  DGs  and  services,  while  ensuring
that those standards reflect internationally accepted best practices.

Action  “Internal  Control  Standards”:  All  DGs  and  services  will  develop  an
action plan with the aim of reaching compliance with the baseline requirements
before  the  end  of  2003.  As  a  result,  these  baseline  requirements  will  be
satisfactorily implemented at the 31st December 2003. Services will be asked to
report  by  the  end  of  September  2003  on  their  readiness  to  meet  the
31 December 2003 deadline. Specific support may be provided in order to help
services unable to meet this deadline.

5.4.6.  Follow-up to recommendations and of action plans

DGs and services should ensure that actions required to follow up on specific
management and control weaknesses are fully reflected in their management

28

plans and implemented without delay. This concerns notably specific external
or internal audit recommendations, actions identified in the present Synthesis
and  corrective  actions  presented  by  DGs  and  services  in  their  2002  Annual
Reports to deal with the deficiencies identified in their reservations. The 2002
annual  reports  contain  also  a  significant  number  of  observations  for  which,
where  manageable  by  the  service,  the  underlying  problems  should  be
addressed through specific action.

Actions  to  address  these  issues  should  be  incorporated  into  the  on-going
Annual  Management  Plans  with  a  timetable,  and  should  be  regularly
monitored 
individual
Commissioners  are  responsible  for  assuring  that  the  Directors-General
concerned  have  set  in  train  the  measures  envisaged  in  their  area  of
responsibility.

the  expected  results.  Also 

for  achievements  of 

Action  “Follow  up  by  services”:  DGs  and  services  will  incorporate  the
necessary action plans into their management plans and will regularly monitor
their implementation.

6. 

CONCLUSION

2002  is  the  second  year  of  the Annual  Reports and  declarations,  which  are
an important aspect of the Reform. The Commission has drawn the relevant
lessons - as explained in this report - from the first year's experience and has
refined  this  management  responsibility  and  transparency  tool  for  the  year
2002. These cultural changes required important efforts from the whole staff
and  highlighted  even  more  the  high  inherent  risk  level  of  the  Commission
activities.

In order to take the significance of this exercise and the progress made since
last  year  fully  into  account,  it  is  important  to  emphasise  the  multi-faceted
nature of the Annual Reports as:

(cid:1)  An  accountability  instrument  for  the  Directors-General  and  Heads  of

Services to use in their management sphere for the year reported on;

(cid:1)  An instrumental factor for change, both in terms of process and outcome.
It  is  an  instrument  to  detect  weaknesses  and  risks  with  respect  to  set
objectives  and  expected  results.  Their  explicit  identification  accelerates
remedial action;

(cid:1)  A tool to foster ownership of results, management and control not only at

senior officials level, but also among staff.

The  positive  effects  of  the  introduction  of  Annual  Reports  and  declarations
also have to be acknowledged:

–  The  nature  of  this  process  goes  beyond  just  implementing  a  set  reform
agenda,  as  it  is  intended  to  bring  out  new  issues.  It  encourages  the  full
disclosure of shortcomings calling for remedial action.

–  This  represents  a  process  of  cultural  change,  in  which  increased
transparency of both strengths and weaknesses has very positive effects.

29

In this respect, senior management and staff have been made increasingly
aware that all have a role to play in management and control, besides the
designated responsibilities of specific actors.

–  It represents a vehicle  for assessing  on  a  global  basis  the  situation of  its
DGs and services, taking responsibility for results and deciding on issues
requiring  corrective  actions.  This  enables  the  Commission  to  consolidate
in  management.
the  delivery  of  policy 

results  with  progress 

30

SYNTHESIS ACTIONS SUMMARY

The following table summarises all tasks and actions resulting from the
present Synthesis

INTERNAL CONTROLS.

Réf.
Synthès
e

Task /
(New/ongoing)
Action

5.4.5.

New 
Action
“Internal  Control
Standards”

Description

All  DGs  and  services  will  develop  an  action  plan  with  the
aim of reaching compliance with the baseline requirements
before  the  end  of  2003.  As  a  result,  these  baseline
requirements  will  be  satisfactorily  implemented  at  the  31
December 2003. Services will be asked to report by the end
of  September  2003  on 
the
31 December 2003  deadline.  Specific  support  may  be
provided  in  order  to  help  services  unable  to  meet  this
deadline.

their  readiness 

to  meet 

5.4.5.

Internal  control
standards
review

There  is  a  need  to  reflect  upon  the  experiences  so  far  in
implementing  the  standards  and  to  enhance  ownership  by
DGs  and  services,  while  ensuring  that  those  standards
reflect internationally accepted best practices.

Responsible /
deadline

All  DGs  /  end
2003

DG  BUDG,  in
agreement
with 
ADMIN 
Secretariat-
General

DG
and

3.3.2.

Communication

Effectively  communicate  the  revised  management  and
control  framework  to  the  different  levels  of  management
and staff.

All DGs

5.4.1.

New 
“Internal
Controls 
Delegations

Action

in

5.4.3.

New 
“PRESS”

Action

A  working  group  led  by  Directorate-General  RELEX  will
design  with  the  support  of  Directorate-General  for  Budget
an  action  plan  specific  to  the  External  Relations  family  to
implement  the  internal  control  framework  and  develop  the
self-assessment process in the Delegations.

the 

identifying 

the  situation 

A  Directorate-General  PRESS,  with 
technical
assistance of Directorate-General for BUDGET, will assess
by  March  2004 
the  control
environment, 
the  main  weaknesses  and
proposing solutions with particular focus on the Relays and
Networks and the management and control environment in
the  Representations.  The  in-depth  audit  of  Directorate-
General  PRESS  currently  being  carried  out  by  the  Internal
Auditor should also be of assistance in this regard.

regarding 

RELEX
DG
in

DG 
(chair), 
BUDG, 
agreement
with  External
Relations  DGs
/ end 2003

A. DG PRESS,
/
DG  BUDG 
2004
March 

B. In order to implement the decision of the Commission of
December  2002,  a  working  group  chaired  by  the  Deputy
Secretary-General will be set up with the task of examining
the  feasibility  of  integrating  the  Representations  in  the
Member  States  into  the  rotation  schemes  of  Directorate-
General for External Relations.

Deputy

B. 
Secretary
General (chair)
/ end 2003

31

FINANCIAL MANAGEMENT

Réf.
Synthè
se

5.3.7.

5.3.3.

Task /
(New/ongoing)
Action

Ongoing  Action
“Accounting
framework”

Ongoing  Action
“Shared
management”

5.3.4.

Ongoing  Action
“Co-financing

5.3.2.

Ongoing  Action
“Recovery”

Description

The Commission will continue to be regularly informed
of progress in this matter.

last  year’s  Synthesis,  an
A.  Following  Action  12  of 
interservice  group  has  been  launched  to  analyse  possible
measures  such  as  an  assurance  declaration  by  Member
States,  the  provision  of  ex-ante  disclosure  statements  by
Member  States,  the  aggregation  of  agencies  for  the
certification  process,  controls  over  the  certification  process
in  Member  States  and  the  development  of  minimum
standards  for  analysing  risks  related  to  new  or  amended
secondary  legislation.  This  group  will  be  co-ordinated  by
the  support  of
Directorate-General 
Directorates-General  for  AGRI,  REGIO,  EMPL,  FISH,  JAI,
ELARG,  SG,  SJ  and  IAS.  Being  a  multiannual  task,  a  first
intermediate report should be ready before the end of 2003,
and will take account of interim results of the legal analysis
group below.

for  BUDGET  with 

C.  A  legal  analysis  of  shared  management  responsibilities
between  the  Commission  and  the  current  and  future
Member  States  will  also  be  carried  out  by  the  Legal
Service.  On  this  basis,  the  Commission  will  make  all
appropriate  recommendations  to  clarify  the  respective
responsibilities of Member States and of the Commission in
the  case  of  shared  management.  Proposals  will  be
prepared by March 2004  by  DG REGIO  in  agreement  with
the  Secretariat-General  and  the  other  structural  funds
Directorates-General.

concerned 

An  interservice  group,  led  by  the  Secretariat-General  with
the support of Directorate-General BUDG, and involving all
Directorates-General 
co-financing
programmes will examine by the end of 2003 the possibility
into  subsidies.  The
of 
associated  control  methodology  should,  where  possible,
seek  to  develop  common  standards  for  risk  management
and  assessment  of  costs  and  benefits,  without  excluding
the possibility of random checking.

flat-rate  elements 

introducing 

by 

Responsible /
deadline

Commissioner
Schreyer  /  on
a regular basis

A.  DG  BUDG
(chair),  other
DGs
concerned 
end 2003

/

C. DG REGIO,
Legal Service,
Secretariat-
General and
the other
structural
funds DGs /
March 2004

Secretariat-
General
(chair), 
BUDG, 
DGs
concerned 
end 2003

DG
all

/

A.  The  recovery  of  amounts  due  and  the  clearing  of  open
commitments is to be addressed in the annual management
plan of each authorising officer by delegation, accompanied
by  appropriate  performance  indicators.  The  last  Budget
quarterly report mentioned above  will be annexed  to  his or
her annual activity report.

A.  Each  DG  /
task
regular 
in
starting 
January 2004

B.  Directorate-General  for  Budget  will  lead  the  monitoring
process  on  clearance  of  the  backlog  of  recoveries  by
developing  both  indicators  of  performance  (on  a  service

B. DG  BUDG /
process
starting

32

and Commission level) and information systems that would
provide  for  management  purposes  regular  and  reliable
statistics/indicators  to  authorising  officers,  and  that  would
allow  a  Commission-wide  overview  of  overall  performance
and effectiveness.

immediately

C.  The  Internal  Audit  Service  should  follow  up  with  all
authorising  officers  in  due  course  implementation  of  the
recommendations  relevant 
through
management or specific action plans, without there being a
need for another special IAS audit on recoveries in the near
future.

their  services, 

for 

5.3.6.

Ongoing  Action
“Devolution”

the 

for  External  Relations  and 

leadership  of
External  Relations  DGs,  under 
in
Directorate-General 
agreement  with  the  Secretariat-General,  the  Directorate-
General 
for
Administration  will  prepare  by 
the  end  of  2003  a
communication  evaluating  the  results  of  the  devolution
exercise paying particular attention to the following issues:

the  Directorate-General 

for  Budget  and 

–  The question of matching human resources to increased

responsibilities in deconcentrated delegations;

/

IAS 

C. 
process
starting
immediately

RELEX

DG 
(Chair),
External
Relations
DGs,
Secretariat-
General,  DG
BUDG, 
DG
ADMIN  /  end
2003

–  The 

issue  of 

the  appropriate  deployment  of  staff
members in headquarters and in delegations to manage
external aid properly;

–  The  question  of  the  administrative  expenditure  which  is
currently executed centrally but could be deconcentrated
to delegations.

The  resource  implications  of  this  action  plan  will  be
examined in the Annual Policy Strategy for 2005.

5.4.2.

New Action “EDF”

Following on from the review reflection work currently under
way, the Commission will prepare a Communication on the
prospect of integrating the EDF into the EC budget as part
of the preparation of future financial perspectives.

DG  BUDG 
end 2003

/

Réf.
Synthè
se

3.3.2.

AUDIT

Task /
(New/ongoing)
Action

Description

Responsible /
deadline

Co-ordination  of
the  Commission’s
audit community

IAS  to  support  IACs  through  Auditnet  and  more  precisely
ensure  that  its  central  co-ordination  role  is  fully  developed
to  promote  common  methods, 
techniques
concerning audit in the Commission.

tools  and 

IAS 
continuous
task 
immediately

starting

3.3.3.

Audit
methodology

The services should improve their contribution to the audits
by reacting in due time to the draft audit reports in order to
reduce the current average audit duration of over a year to
a  period  that  maintains  the  full  utility  of  the  audit  results.
The auditees should also ensure the proper implementation
of the agreed recommendations.

33

/

/

All  DGs 
continuous
task 
immediately

starting

5.3.8.

Ongoing  Action
of
up 
“Follow 
audit reports”

At least twice a  year,  the  Directors-General  will  inform  the
responsible  Commissioner  on  work  undertaken  by  their
Internal Audit Capabilities, the conclusions reached and the
remedial  actions  planned  or  launched.  This  information
should  also  cover  any  appropriate  issues  arising  from  the
work  of  the  internal  Audit  Service,  the  European  Court  of
Auditors,  the  DG  in  the  context  of  ex-post  controls,  and
OLAF.  In  the  interval,  the  above  information  shall  be
submitted  by  the  Director-General  any  time  that  she/he
deems it appropriate.

/
task

All  DGs 
regular 
starting
immediately

5.3.9.

Ongoing  Action
“Follow up OLAF”

A.  Where  the  Director-General  reports  a  specific  issue  to
OLAF or where she/he considers it is sufficiently important,
she/he will inform the responsible Commissioner.

A.  All  DGs  /
regular 
task
starting
immediately

3.3.3.

Internal 
Service

Audit

methodology

5.3.3.

Ongoing  Action
“Audit  in  Shared
management”

OLAF,

/  by

B. 
Secretariat-
General 
September
2003

/

IAS 
continuous
task 
immediately

starting

B.  A  Code  of  Conduct  will  be  drawn  up  by  the  end  of
September  2003  to  improve  information  flows  between
OLAF and the Commission.

improve 

the  acceptance 

Internal  Audit  Service  should 

its
The 
methodology in co-ordination with other internal auditors so
that it is well-established  and known. In  particular it should
continue its recent approach to focus its audits on questions
of  compliance,  efficiency  and  effectiveness  and  undertake
these  audits  within  a  timeframe  maintaining  the  validity  of
findings  and  recommendations.  It  should  also  continue  its
endeavours to base its findings on undisputed evidence so
that  they  can  be  agreed  with  the  auditees  and  hence  help
recommendations.
improve 
Commission  management  emphasises  that  in  order  to
assess  progress  in  the  implementation  of  internal  control,
management  needs 
information  on  compliance.  The
recommendations  should  be  more  clearly  prioritised,
stressing the risk in case of non-implementation, and taking
account  of  possible  additional  costs,  to  help  auditees  to
implement  them  properly.  Finally,  the  Internal  Auditor
should  put  in  place  without  delay  an  operating  system  for
the  follow-up  of  recommendations  and  develop  closer
working relations with the Internal Audit Capabilities to bring
overall 
the
Commission.

improvement  of  audit  performance  of 

rates 

for 

operating 

A. Concrete steps will be taken to promote convergence of
audit  methodologies  and  processes  between  DGs  and
shared  management
services 
under 
the
arrangements.  Specific  attention  will  be  paid 
development  of  common  standards,  taking  into  account
well-established best practices, complementary control and
audit  processes,  at  Community  and  national  levels,  and
assurance  protocols  with  Members  States.  To  this  effect,
Directorate-General REGIO with the other operational DGs
concerned  and  support  from  the  Internal  Audit  Service  will
prepare a Communication by March 2004.

to 

DG 
REGIO
(chair),  other
operational
DGs
concerned,
IAS 
2004

/  March

3.3.3.

Audit 
Committee

Progress

The  Audit  Progress  Committee  should  be  able  to  have  an
overview  of  internal  controls  systems  through  the  work  of
internal and external auditors.

34

/

APC 
continuous
task 

starting

Audit overview

3.3.3.

Audit 
Committee

Progress

organisation

Regarding  its  organisation,  it  is  noted  that  the  Audit
Progress  Committee  will  maintain  its  current  composition
and  role  while  stepping  up  the  rhythm  of  its  meetings  and
the  European  Court  of  Auditors.  The
contacts  with 
Commissioner  responsible  for  the  budget  will  continue  to
pass  the  Committee’s  chairmanship  to  another  member
when audits specifically concern the services under his/her
responsibility.  This  principle  will  also  apply  to  the  other
members. Besides, a second external member will join the
Committee  from  2004  onwards  to  enhance  its  expertise.
Finally, 
the
Secretariat-General.

the  APC  secretariat  will  be 

located 

in 

immediately

/

APC 
continuous
task 
immediately

starting

Réf.
Synthè
se

5.3.5.

ACTIVITY  BASED  MANAGEMENT 
PROGRAMMING

/  STRATEGIC  PLANNING  AND

Task /
(New/ongoing)
Action

Description

Responsible /
deadline

Ongoing  Action
“Work
Programme
implementation”

The  Secretariat-General  will  strengthen  monitoring  of  the
the  2003  Legislative  and  Work
implementation  of 
Programme,  namely  by  taking  into  account  the  renewal  of
the  European  Parliament  in  2004,  and  the  consequences
that this will have on the current levels of implementation.

/

Secretariat-
General 
continuous
task 
immediately

starting

3.3.2.

management  risk
assessment

Guiding  resource  decisions 
through  management  risk
assessment:  the  question  needs  to  be  addressed.  The
Commission  will  consider  how  to  make  risk  assessment  a
more  visible  factor  to  be  taken  into  account  in  preparing
management plans and making resource allocations

5.3.1.

Ongoing  Action
“Human
resources”

A.  DGs  and  services  will  be  requested  to  prioritise  their
activities  in  their  Annual  Management  Plans  starting  from
2004.  In  allocating  their  resources  internally,  they  are
requested  to  ensure  adequate  staffing  for  units  that  are
specifically  dealing  with  internal  control  and  audit  matters.
Furthermore,  in  accordance  with  the  Code  of  Conduct  for
Commissioners  and  Departments,  the  Director-General
and  the  Commissioner  concerned  will  identify  actions  that
may  not  be  carried  out.  Accordingly,  and  based  on  an
overall management risks assessment, resources could be
further  redeployed  amongst  services 
towards  priority
initiatives  notably  those  contributing  to  the  Commission’s
strategic  objectives.  The  outcome  will  be  fed  into  the
Commission’s Annual Policy Strategy.

to 

identify 
to 
fill  vacant  posts 

training  and
B.  DGs  are  also  requested 
recruitment  needs 
financial
for 
management,  internal  control  and  audit  activities,  and  to
communicate these to DG for Personnel and Administration
by  September  2003.  On  the  basis  of  this  assessment  as
well as on the basis of the strategic training framework and
individual training maps, Directorate-General for Personnel

35

Secretariat-
General,  DG
BUDG,  IAS 
/
continuous
task 
immediately

starting

A.  All  DGs  /
task
regular 
staring 
in
January 2004

B.  All  DGs  /
September
2003

DG  ADMIN 
end 2003

/

and Administration will review the situation of scarce skills.
On  this  basis,  a  communication  to  the  Commission  will
report before the  end of 2003 on the situation,  the  actions
taken, and  the measures proposed to improve  the  level  of
specific expertise (e.g. financial management and control).

AAR METHODOLOGY

Réf.
Synthè
se

Task /
(New/ongoing)
Action

Description

4.4.

AAR Methodology The  guidelines  for  Annual  Reports  2003  should  further

clarify that:

–  Reservations should always be supported by  concrete

– 

– 

– 

evidence;
the  impact  of  reservations  on  the  specific  assurances
required  in  the  declaration  should  always  be  made
explicit;
the materiality criterion used to assess whether an issue
should  be  subject  to  a  “reservation”  should  always  be
properly explained;
the agreed standard wording for the declaration should
always be used;

–  reservations  carried  over  from  the  previous  exercise
should not be included simply to report on the state of
progress  without  consideration  for  the  actual  impact  on
the assurances.

Responsible /
deadline

Secretariat-
General 
December
2003

/

5.4.6.

New 
Action
“Follow  up  by
services”

DGs  and  services  will  incorporate  the  necessary  action
plans  into  their  management  plans  and  will  regularly
monitor their implementation.

/

All  DGs 
continuous
action  starting
immediately

ACQUIS

Réf.
Synthè
se

5.4.4.

Task /
(New/ongoing)
Action

Action

New 
“Community
Acquis”

Description

Responsible /
deadline

A.  The  Legal  Service  will  monitor,  in  co-operation  with  DG
Enlargement  and  with  the  assistance  of  the  Office  of
Publications, the progress in translation of the acquis by the
new Member States and will set up an appropriate updating
mechanism for  the  list  of  the  acquis.  It  will  regularly  report
to  the  Commission  on  the  progress  from  September  2003
onwards.

A. 
Legal
Service,  DG
ELARG,
Opoce 
continuous
action  starting
immediately

/

B.  The  Secretariat-General  will  design  a  process  for
overseeing implementation of the acquis. This exercise will
be  carried  out  in  close  co-operation  with  all  DGs  and
services  concerned.  It  will  focus  namely  on  the  most
sensitive  provisions  and  should  enable  the  Commission  to
launch  the  appropriate  actions  in  due  course  taking  into

B.  Secretariat-
General 
/
continuous
action  starting
immediately

36

account the results of the monitoring report to be adopted in
October 2003.

37

2001
Action

Action 1

Action 2

Action 3

Follow-up of the action plan of the Synthesis of the 2001 Annual
Activity Reports

A) Cross cutting political issues

Description

Status

Completed  /  follow-up  action  to  be  launched.
The  Commission  adopted  in  January  2003  an  action
plan  providing  general  measure,  such  as 
the
establishment  of  an  interservice  group  to  address
weak  points  in  the  management  of  research  projects,
and  specific  actions  were  proposed  with  reference  to
the  5th  and  the  6th  framework  programmes  (Better
general  co-ordination,  fostered  contract  management,
more  effective  audits  and  controls,  sanctions).
However,  these  measures  will  only  produce  concrete
effects  from  2003  onwards  (see  point  5.3.4.  of  the
present Synthesis for follow up action).

On-going 
action.
The  competent  Commissioners  have  decided  to  keep
the  current  organisation  as  it  is  in  order  to  give  more
time  to  the  reform  of  the  external  aid  to  bring  all  its
fruits  and  not  to  prejudge  the  decisions  that  will  be
taken by the new Commission on this issue. As to the
assessment of the risks linked  to  external  aid  and  the
evaluation  of 
the  corresponding
exercise will be carried out in 2003 (see point 5.3.6. of
the present Synthesis).

the  devolution, 

plan 

addressing 

As  far  as  research  programmes  are
concerned, 
the  Commission  will
adopt  before  end  of  2002  a  detailed
action 
the
complexity  of  financial  management
actions 
of 
through
indirect 
enhanced
simplification 
and 
the  different
consistency  between 
in  place  and
systems  currently 
through 
contract
management.

improved 

the  year  how 

The  Commission  has  noted 
the
necessity  to  examine  the  scope  for
synergies  between 
the  services
involved in  External  Relations.  Relex
Commissioners,  in  agreement  with
the  President  and  Vice-President
Kinnock,  should  re-examine  before
the  end  of 
the
resources  and  structures  of  DGs
Relex,  Development  and  EuropeAid
can  best  be  organised  in  the  longer
term 
to  serve  Relex
Commissioners  in  the  conduct  of
remain
their 
portfolios,  which 
unchanged. 
the
Commission  will  also  assess  and
make  transparent  the  risks  linked  to
external and communicate any major
conclusions to the other institutions; it
will  also  carry  out  an  evaluation  of
the  operation  of 
the  devolution
exercise next year.

this  context 

in  order 

In 

in 

the 

The  reservations 
field  of
nuclear  safety  will  be  addressed
before the  end of the  year through  a
package  of  proposals  to  create  an
operational  legislative  framework  for
the 
identification  of  EU  safety
standards  and  the  preservation  of
funds,  and  by
decommissioning 
looking  carefully  at  the  way  in  which
nuclear  expertise  is  shared  among
the competent services.

the 

the 

nuclear 

legislative  authorities.  As 

/  follow  up  action  to  be

Partially  completed 
launched.
The  Commission  adopted  on  30  January  2003  two
proposals for Directives (Euratom), which are currently
to
examined  by 
optimising 
the
Commission,  a  series  of  measures  has  been  adopted
by  the  Commission  on  26  June  2002.  Moreover,  the
interservice  nuclear  co-ordination  group  analysed  in
December  2002  the  state  of  the  nuclear  expertise  at
the  Commission.  The  remaining  need  of  competent
staff  in  charge  of  control  of  the  nuclear  safety  in  the
member states  will  be  addressed  under  point  5.3.1  of
the present Synthesis.

expertise  within 

38

Action 4

2001
Action

Action 5

Action 6

Action 7

the  Council 

in  meeting 

The  Commission  will  seek  to  clarify
its  share  of
with 
responsibility 
the
objectives established for  the  shared
management of the Structural Funds.
The  Commission  will  also  make
proposals 
its
monitoring  and  control  powers  to  its
responsibilities.

in  order 

to  align 

On-going action.
On 7 October 2002, proposals were submitted to help
tackle the delegation risk inherent to shared
management. These included information and support
by the Commission to its partners in the Member
States; guidance and response to queries during the
implementation of policy objectives; monitoring of
progress on-the-ground; evaluation of results achieved
and audit the legality and regularity of payments. The
perspective of formal declaration of assurance to be
given by Member States appears to be not acceptable
for the time being. New orientations concerning the
next programming period starting 2007 will be provided
by the Commission in the 3rd report on cohesion due to
be adopted by end 2003.

B) IMPLEMENTATION OF THE REFORM

Description

Status

to 

lack  of  human
Regarding 
the 
resources  with 
the
respect 
implementation  of  the  Reform,  the
Commission  will  pay  attention  to  the
needs  expressed  by  Directors-
General  in  their  Annual  Reports  in
the  context  of  the  next  strategic
planning and programming cycles.

On-going action.
As a first step, a note on the methodology for the
allocation of human resources was sent to all
Directors-Generals in October 2002. The 2004 APS
decision, adopted on 5 March 2003 (COM(2003) 83),
states that the posts freed by the early retirement
scheme for the years 2002, 2003 and 2004 will be
used for the implementation of the reform.

Regarding 
continued
the 
implementation  of  the  Reform,  the
Secretariat-General  will,  in  close  co-
operation with the DG for Budget and
the DG for Administration, review the
co-ordination  mechanisms  between
the  central  services  with  a  view  to
improving  the  guidance  and  advice
provided  to  operational  services.  In
addition,  the  Secretariat-General  will
prepare  a  detailed  ABM  Guide  by
October 2002 and will assist services
in  the  preparations  of  their  Annual
Management Plan for 2003.

co-ordinate 

An inter-service working group will be
the
mandated 
to 
existing
interoperability 
information  systems.
management 
This 
by
November  2002  an  action  plan  and
supervise its execution.

group  will 

establish 

of 

Completed.
Regarding  co-ordination  the  Commission  decided  in
September  to  request  the  ABM  Steering  Group  to
actively co-ordinate all reform-related  questions  with  a
strategic  or  political  character,  covering  ABM,  human
resources issues and budgetary and audit aspects. By
the  same  decision,  the  role  of  the  Directors-General
Group was consolidated and two co-ordination Groups
at  Director  level  (the  Resource  Directors  Group  and
the Interservices co-ordination Group). Moreover, work
progressed  on  Service  Level  Agreements  amongst
services.  The  Secretariat-General  developed  a
detailed ABM guide  with  a user-friendly  online  version
and  a  best  practice  website.  To  assist  services  in  the
preparations  of  their  Annual  Management  Plan  for
2003,  the  Secretariat-General  set  up  a  support  desk
for each service and organised 36 ABM seminars.

On-going action.
The “e-Commission interoperability” project was
initiated in June 2002. A draft action plan on
interoperability of IT systems, addressing
organisational, technical and methodological issues,
was established by the interservice group in December
2002, finalised in January and presented to the
Resources Directors in February 2003. A Commission
communication on interoperability is foreseen for the
second half-year 2003.

39

Action 8

Action 9

Action 10

Action 11

DG  for  Budget,  in  collaboration  with
the  Secretariat-General,  will  provide
enhanced  support  and  practical
guidance  for  the  standards  covering
sensitive  functions  and  supervision,
which  are  considered  as  very
important for a smooth functioning of
the  Commission  services,  before  the
end of 2002.

All  Commission  services  will  give
particular  attention  in  2002  to  the
design and documentation of internal
control  procedures, 
in  particular
those  financial  procedures  aimed  at
preventing  errors  and  detecting
irregularities  and  the  recording  of
exceptions.

Secretariat-General, 

The 
in
collaboration with DG for Budget, DG
for Personnel and Administration and
the Internal Audit Service, will review
and enhance before end of 2002 the
methodology  and  guidance 
for
producing 
the  Annual  Activity
Reports for 2002.

On-going action.
On sensitive functions (internal control standard 5)
draft guidelines have been established and were sent
to DGs in May 2003. Regarding supervision (internal
control standard 17), a guide, adopted in 2002, has
been distributed to all Directorates-General and
Services.

Completed.
The  exercise  of  conceiving  and  documenting  internal
control procedures has been launched by all services.
In  particular,  the  readiness  assessment  evaluation
(see Action 11) allowed  each  Directorate-General  and
Service as well as the Commission as a whole to carry
out the in-depth analysis required by this exercise.

Completed.
On  21  January  2003,  the  Commission  adopted  the
ABM  communication  (COM(2003)  28),  which  also
covers  the  preparation  of  the  Annual  Report  and
provides  the  services  with  new  guidelines  on  de
declaration of the authorising officer by delegation and,
the  concept  of  reservation,  the  hand-over  between
Directors-General  and  the  question  of  the  cross-
delegations.  The  draft  of  these  new  guidelines  had
already  been  communicated  to  the  services  in  the
Annual  Report  circular  in  December  2002.  Other
actions,  in  particular  a  peer  review  of  the  draft
reservations,  have  continued  to  assist  services  before
the finalisation of their 2002 Annual Report.

In  advance  of  the  new  Financial
Regulation,  Directors-General  and
Heads  of  Service  will  evaluate  by
November  2002 
the  degree  of
assurance  on  the  readiness  of  the
internal control systems in place and
the  Commission  central  services  will
undertake  the  necessary  measures
to support  them  in  this  regard.  Tools
will  be  continued  to  be  developed  to
in
assist  Commission 
controls
their  existing 
adapting 
systems 
new
to  meet 
requirements  and  an  extensive
training programme will be developed
to support the process.

services 

the 

circulated 

Completed.
In  September  2002,  a  “Process  Handbook”  giving
guidance  to  the  services  on  how  to  evaluate  their
degree of readiness for the implementation of the new
Financial  Regulation  was 
the
Directorates-General  and  Services.  It  served  as  a
basis  for  the  readiness  assessment  performed  by
them.  A  synthesis 
the
Commission on 17 December 2002 (SEC(2002) 1362).
A  temporary  help-desk  has  been  set  up  to  give
assistance  to  the  services  on  specific  questions.  The
Directorate-General 
for  Budget  provided  detailed
training  to  Commission  personnel  on  the  specific
requirements of the new Financial Regulation.

thereof  was  adopted  by 

to 

C) HORIZONTAL MANAGEMENT THEMES

2001
Action

Description

Status

Action

DG  for  Budget,  in  collaboration  with Completed  /  follow  up  action  to  be  launched.

40

12

Action
13

Action
14

the  problems  arising 

DG  for  Personnel  and  Administration
the  concerned  services,  will
and 
analyse 
from
shared management by March 2003. It
the
will  make  a  proposal 
the
Commission  on 
responsibilities  of 
the  Authorising
Officer  in  each  domain  where  shared
management applies.

to 
the  scope  of 

that,
The  Commission  will  ensure 
the
before  1  December  2002, 
responsibilities  of  the  key  actors  in
audit  and  control  are  clarified 
in
accordance  with  the  stated  principles
of  the  Reform  White  Paper  and  the
best
Financial  Regulation, 
new 
practice  and  internationally  accepted
principles of good governance.

related 

competitions 

issues  and 

DG  for  Personnel  and  Administration
will review as soon as possible in 2002
profiles  for  new  recruitment’s  needed
by  services  in  financial  management
launch
and 
additional  open 
as
appropriate.  In  this  respect,  DG  for
Personnel and Administration will draw
up  a  plan  to  be  executed  by  the  new
personnel  selection  office,  EPSO,  as
from  early  2003.  As  an 
interim
measure, the recruitment of temporary
agents on vacant permanent posts will
be  extended  up  to  the  point  at  which
sufficiently  long  reserve  lists  for  the
related competitions will be exploitable.

Action
15

DG 
the
for  Budget  will  provide 
necessary training for staff on financial
management  as  well  as 
training
the
geared 
specifically 
implementation  of  the  new  Financial
Regulation.

to 

Action
16

The  Commission  will,  by  the  end  of
2002,  adopt  and  communicate  to  the
coherent
other 
the
implementation 

Institutions 

plan 

for 

a 

their 

the  scope  of 

A communication on this issue has been developed in
conjunction  with  the  services  concerned,  aimed  at
clarifying  the  role  of  Directors-General  in  the  shared
management  within  the  legal  framework  currently  in
force  and 
responsibilities
(C(2003)1830).  In  parallel,  specific  requirements  have
been  given  to  the  Directorates-General  and  Services
on how they should  deal  with  this  issue in the context
of  the  2002  Annual  Activity  Reports.  This  should
moreover  be  completed  by  concrete  steps  to  promote
a  convergence  of  audit  methodologies,  an  analysis  to
identify  possible  improvements  in  terms  of  share
management 
including  an
responsibilities,  mainly 
examination  of  the  concept  of  certification,  assurance
declaration  and  disclosure  statement  by  the  Member
States (see point 5.3.3. of the present Synthesis).

Completed.
On  21  January  2003,  the  Commission  adopted  a
communication  (SEC(2003)  59)  which,  among  others,
included  clarification  of  the  responsibilities  of  key
actors  regarding  Audit  and  Control,  including  aspects
related  Annual  Reports  and  sets  out  the  Central
Financial  Service  to  provide  an  overview  of  internal
control  with  effect  from  2004  onwards.  The  role  of
Resource  Directors  in  this  regard  at  the  level  of  the
Directorates-General 
being
and 
strengthened.

Services 

is 

view 

Completed  /  follow-up  action  to  be  launched.
With  a 
to  establishing  a  multi-annual
programming  of  competitions  the  Directorate-General
for  Personnel  and  Administration  (DG  ADMIN)  started
a detailed analysis of the profiles for new recruitment’s
needed  by  services  and  has  submitted  a  first  request
for a series of competitions to EPSO for launch in late
2003.  In  the  meanwhile,  the  practice  of  recruiting
temporary staff on permanent posts could be extended
until  the  adoption  of  the  foreseen  amendments  of  the
Staff  Regulations.  Nevertheless,  further  efforts  will  be
done  to  address  properly  the  lack  of  certain  expertise
as  explained  under  point  5.3.1.  of 
the  present
Synthesis.

information  sessions  on 

Completed.
Professional  training  on  financial  rules  and  procedure
has  been  carried-out  all 
the  whole  year  2002.
the  new
Moreover,  31 
Financial  Regulation  has  been  organised  in  autumn
2002,  with  an  attendance  of  2730.  A  comprehensive
training program has been adopted for 2003, covering
(public  procurement,  grants,
specialised  courses 
recoveries…)  and  ad-hoc  sessions  at  the  request  of
the services.

On-going action.
A communication on the modernisation of the
Community accounting framework was adopted by the
Commission on 17 December 2002 (COM(2002)755),

41

modernisation  of 
the  accounting
framework,  including  the  progressive
evolution 
accrual
accounting basis.

towards 

an 

Action
17

Action
18

financial 

The Commission will adopt by the end
of  2002  a  communication  with  the
strategic  orientations  for  the  future
information  systems.
core 
When  fixing  the  project  plan,  absolute
priority  will  be  given  to  three  aspects:
avoiding 
through
inconsistencies 
redundancy  of  data  and  applications,
enhancing further the security  controls
and audit trail provisions in the system
and  implementing  the  new  Financial
Regulation by 1 January 2003.

The  missing  or 
inadequate  action
plans  will,  by  September  2002,  be
included  in  the  Annual  Management
Plans  for  2002.  These  action  plans,
like  the  other  action  plans,  will  be
the 
translated 
Annual
for  2003  as
Management  Plans 
be
will 
appropriate. 
monitored  by 
the  Commissioner
responsible and will be reviewed in the
next Annual Report exercises.

Progress 

into 

which provides in particular for the move to an accrual
accounting system for the financial year 2005,
according to the new Financial Regulation. Monitoring
and regular information of the Commission on this
subject will be carried out (see point 5.3.7. of the
present Synthesis).

in 

On-going action.
Strategic  orientations  for  the  future  core  financial
information  systems  was  also  dealt  with 
the
Commission  communication  of  17  December  2002  on
the  modernisation  of 
framework,
mentioned  above  (See  Action  16).  It  sets  out  in
particular  the  action  to  be  taken  as  regards  project
organisation,  resources  and  the  timing  of  the  work  to
develop an integrated computerised system. According
to  point  5.3.7.  of 
the
Commission  will  be  kept 
informed  on
progress made.

the  present  Synthesis, 

the  accounting 

regularly 

/ 

to  be

follow-up  action 

Partially  completed 
launched.
In  September,  a  note  was  sent  to  all  Directors-
Generals  reminding  all  services  of  their  obligation  to
implement  the  Synthesis  action  plan  and  to  keep  the
Secretariat-General  informed.  A  follow-up,  in  the  form
of  exchange  of  information,  has  also  been  conducted
through the ABM/SPP Network and the Network of the
Financial  Units  (RUF).  Moreover,  virtually  all  services
reported  in  their  2002  Annual  Activity  Reports  on  the
state  of  implementation  of  action  plans  drawn  up  to
remedy  the  2001  reservations  and,  where  applicable,
observations.  As  explained  under  point  5.1  of  the
present Synthesis, further improvements are needed to
ensure  the  proper  monitoring  of  the  individual  action
plans by the services. A specific action focusing on the
need  for  improving  the  monitoring  of  action  plans  is
foreseen in the present Synthesis (see point 5.4.6)

42