Resolution of the European Parliament containing the comments accompanying the decision on the discharge to the Director of the European Agency for Reconstruction in respect of the implementation of its budget for the financial year 2002
Date: 2004-04-21
Institutions: European Parliament
Subjects: European Agency for Reconstruction, budgetary discharge, financial year, implementation of the budget

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Official Journal of the European Union

4.11.2004

RESOLUTION

of the European Parliament containing the comments accompanying the decision on the
discharge to the Director of the European Agency for Reconstruction in respect of the
implementation of its budget for the financial year 2002

THE EUROPEAN PARLIAMENT,

— having regard to the Court of Auditors' report on the financial statements of the European Agency
for Reconstruction for the financial year 2002, together with the Agency's replies (1) (C5‑0632/
2003),

— having regard to the Council's recommendation of 9 March 2004 (C5‑0149/2004),

— having regard to the EC Treaty, and in particular Article 276 thereof,

— having regard to Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial
Regulation applicable to the general budget of the European Communities (2) and in particular
Article 185 thereof, and to Council Regulation (EC) No 1646/2003 of 18 June 2003 amending
Regulation (EC) No 2667/2000 on the European Agency for Reconstruction, and in particular
Article 8 thereof (3),

— having regard to Commission Regulation (EC, Euratom) No 2343/2002 of 19 November 2002 on
the framework Financial Regulation for the bodies referred to in Article 185 of Council Regulation
(EC, Euratom) No 1605/2002 on the Financial Regulation applicable to the general budget of the
European Communities (4), and in particular Article 94 thereof,

— having regard to Rule 93 a of and Annex V to its Rules of Procedure,

— having regard to the Report of the Committee on Budgetary Control and the opinion of the
Committee on Foreign Affairs, Human Rights, Common Security and Defence Policy (A5-0212/
2004),

A. whereas the European Court of Auditors (ECA) stated in its abovementioned report that it had
obtained reasonable assurances that the accounts for the financial year ended 31 December 2002 are
reliable and that the underlying transactions, taken as a whole, are legal and regular,

B. whereas on 8 April 2003 Parliament gave discharge (5) to the Director of the Agency in respect of
the implementation of its budget for the 2001 financial year, on the basis of the report of the ECA,
and in so doing Parliament in its resolution, inter alia:

— insisted that the Agency, in line with previous observations of the ECA on financial statements
and accounts, take all necessary steps to avoid the risk of errors occurring as a result of using
spreadsheets for the purpose of keeping its accounts,

— called on the Commission to report back to Parliament on the results of an administrative
investigation into possible liability for mismanagement, as well as on measures taken were any
disciplinary measures to have been deemed appropriate,

(1) OJ C 319, 30.12.2003, p. 1.
(2) OJ L 248, 16.9.2002, p. 1.
(3) OJ L 245, 29.9.2003, p. 16.
(4) OJ L 357, 31.12.2002, p. 72.
(5) OJ L 148, 16.6.2003, p. 95.

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— invited the Agency, with the aim of securing the protection of the financial interests of the
Community, to ensure the systematic monitoring of all projects in the energy sector financed by
EU funds; to take all relevant measures,
in cooperation with UNMIK, the Kosovo Power
Corporation (KEK) and the external supervisory contractors, with a view to achieving the long-
term sustainability of investment in the energy sector; and to establish an overall plan for
monitoring projects financed and evaluating their consistency with EU policy in the region;

1. Notes the following figures for the accounts of the European Agency for Reconstruction for the

financial years 2002 and 2001;

Revenue and expenditure account for the financial years 2002 and 2001

(1 000 euro)

2002

2001

462 804

5 978

495

497

500

517 633

2 915

135

5 787

0

Total revenue (a)

470 274

526 469

Revenue

Comission subsidies (1)

Financial revenue

Miscellaneous revenue

Couterpart funds

Earmarked revenue

Expenditure

Staff — Title I of the budget

Payments

Appropriations carried over

Administration — Title II of the budget

Payments

Appropriations carried over

Operating activities — Title III of the budget

Payments

Appropriations carried over

Total expenditure (b)

Outturn for the financial year (a − b) (2)

Balance carried over from the previous financial year

Payments on the Commission's behalf (1)

2001 payment appropriations which lapse (Title III)

2001 appropriations carried over which lapse (Titles I and II)

Cancellations of 2001 appropriations carried over

Carry-overs of further 2001 appropriations

Exchange-rate differences

17 771

206

6 211

2 037

138 512

293 106

475 844

12 430

− 73 127

− 25 407

0

135

5 463

− 32 423

22

13 418

337

5 908

1 217

327 345

176 863

525 088

1 328

− 35 768

− 70 050

31 061

254

0

0

− 5

Balance for the financial year

− 122 908

− 73 127

Includes payments made by the Commission for the Agency to make payments on its behalf.

(1)
(2) Calculated according to the principles laid down in Article 15 of Council Regulation (EC,Euratom) No 1150/

2000 of 22 May 2000 (OJ L 130, 31.5.2000, p. 8).

NB: Any discrepancies in totals are due to the effects of rounding.
Source: Agency data

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Implementation of the budget

2. Notes the ECA recommendation that forecasts for administrative expenditure (Title II) should be
given careful attention so as to ensure that carry-overs and appropriations which lapse do not
account for too great a part of the total administrative budget; expects the Agency, in line with the
principle of budget accuracy, to take the necessary steps to comply with that recommendation;

Financial statements

3. Welcomes the fact that the Agency gave a positive follow-up to previous ECA observations, making
progress in strengthening its internal control system by the introduction of the SI2 accounting
system;

4.

5.

6.

7.

Invites the Agency rapidly to give an equally positive follow-up to the ECA's and the Parliament's
suggestion to introduce a reliable general accounting tool in all its centres and abandon the use of
spreadsheets for its general accounts;

Expects the Agency to promptly respond to the ECA invitation to clarify the status of funds made
available to specialised bodies for the financing of loan programmes in specific fields and to adopt
appropriate solutions as regards the way in which these funds should be recorded in the Agency's
financial statements;

Expresses its deep concern over the ECA's findings that a bank account had been opened in the
Agency's name of whose existence the accounting officer had not been advised; notes the
explanation provided by the Director of the Agency with regard to this matter; takes the view that in
a complex decentralised environment, such as the one in which the Agency operates, matters relating
to transactions with banks should be handled with the utmost care and transparency;

Notes the measures that the Agency has taken, stated in its replies to the questionnaire, to avoid such
a situation occurring again; invites the Agency to improve coordination between its accounting
officer and the delegated accountants in the operational centres; also invites the Agency and the
Commission to improve coordination between the Agency's accounting officer and the
Commission's accounting Directorate;

8.

Invites the Commission's Internal Audit Service to look into this matter to identify potential systemic
failures and make the necessary recommendations for remedying such problems;

Legality and regularity of the underlying transactions

9.

Shares the concern expressed by the ECA in its report about the risk of a weakening of the Agency's
internal control system which might come about through the proliferation of delegations issued by
the Director for the implementation of the budget; stresses that cases such as the ones identified by
the ECA, where commitments and payments were signed by employees not duly authorised to do so,
are unacceptable as they are in breach of the financial rules; expects the Director to provide a full
explanation of the circumstances in which this was allowed to happen and, further, to indicate the
measures taken or initiated to prevent such incidents from occurring again;

10. Expects the Agency to fully comply with the procedures for implementing the budget laid down in
both the new Financial Regulation and the Framework Financial Regulation for the Agencies; invites
the Director to give assurances that delegations will be reduced to the strict minimum, which is
indispensable for the smooth running of the Agency and the implementation of its budget in
accordance with sound financial management;

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11. Recalls that the European Parliament requested (1) the Commission to present, before June 2004, the
evaluation report provided for in Article 14 of Regulation (EC) No 2667/2000 on the application of
this regulation and a proposal on the status of the Agency;

Horizontal points on the Agencies and the Commission

Implementing the new Financial Regulation - Internal audit and control

12. Reiterates the position taken in its resolutions (2) accompanying the discharge given to the Agencies
for 2001 as regards the implementation of the new Financial Regulation; invites the Commission and
the Agencies to continue their cooperation, in particular in the areas of accounting, internal audit,
management and control procedures, so as to ensure that a coherent harmonised framework for the
functioning of the Agencies is established;

13. Recalls that it expressed concern in the discharge resolution for 2001 concerning the lack of controls
on the agencies carried out by the internal audit service of the Commission (IAS); expresses grave
concern that such controls do not seem to have been carried out this year; asks the Commission and
the IAS to explain the reasons for this and to provide data about the number of staff available to the
Internal Auditor to carry out controls in the agencies; expects the Commission to indicate how it can
guarantee that sufficient and correct controls are carried out in the satellite bodies, in particular the
IAS;

14. Stresses that it is essential that the Agencies be required to submit to the investigative powers of
OLAF under the same conditions as the institutions (3); invites the ECA to provide information, in
time for adoption of the discharge resolution, on whether the Community bodies which acceded to
the Interinstitutional Agreement of 25 May 1999 (4) on internal investigations by OLAF did so in the
same terms as those laid down in the Annex to this Agreement;

Financial Management

15. Notes that in some of the Agencies' replies to the questionnaire concerning the way in which the
recurrent problem of substantial carry-overs might be addressed, mention is made of the possibilities
offered by the new Financial Regulation, which provides for the use of ‘differentiated appropriations’;
invites the Agencies to better explain their analysis and to indicate in particular which of their
activities of a multi-annual nature might be financed by such appropriations;

16.

Invites the Commission to present its position on such a solution and, should it consider that this
solution is not feasible, to outline alternatives allowing for a substantial reduction in carry-overs;

Review of the agencies

17. Stresses that, prior to any decision to set up an agency, the Commission must make a rigorous
analysis of the need for and added value of the functions that the agency will perform, with an eye to
the principles of subsidiarity, budgetary rigour and procedural simplification;

18. Calls on the Commission to make a general study of activities currently carried out by various
Community bodies that might overlap or serve the same goals, and to propose appropriate
solutions, including the possible mergers of agencies;

(1) OJ C 272 E, 13.11.2003, p. 482.
(2) OJ L 148, 16.6.2003, p. 83 and OJ L 333, 20.12.2003, p. 53 (point 18).
(3)
(4) OJ L 136, 31.5.1999, p. 15.

Texts adopted, 13.1.2004, P5_TA(2004) 0015.

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19.

Is concerned by the fact that there is an imbalance between administrative and operational
expenditure in many Agencies, with administrative expenditure exceeding expenditure for
operational purposes; calls therefore on the Commission and the Agencies to set targets and a
timetable to reduce the level of administrative expenditure as a proportion of total expenditure;
notes that many Agencies see opportunities in this regard, as listed in the questionnaire;

20. With reference to the replies to the questionnaire on interinstitutional cooperation, encourages the
Agencies to improve cooperation between themselves in order to meet their needs in specific areas
(for example, software development) and reduce costs, rather than adopt solutions which were
initially designed for the purposes of the Commission but which often prove to be too cumbersome
and complicated for the Agencies' specific needs;

21. Encourages the Agencies to organise and develop a close working relationship with the competent
parliamentary committees; invites its standing committees with competence in the areas of activity of
each of the Agencies to coordinate their action with the Committees of Budgets and Budgetary
Control, with a view to ensuring efficient monitoring of the activity of the Agencies;

New sources of financing

22. Welcomes the responses and ideas that emerged from the questionnaire concerning the possibilities
of other sources of financing; notes that many current sources and proposals concern the letting of
buildings and facilities and the sale of publications and information; realises that for reasons of
independence, among other things, not all agencies are to accept additional financial sources; stresses
the economies of scale and financial benefits of the participation of non-EU countries in the
activities of certain Agencies; calls on the Commission and the Agencies to come forward with
constructive proposals with regard to further development of new sources of additional financing,
which would increase the level of self-financing;

23. Welcomes the financial contributions of some Member States and regions to the agencies located on
their area; considers it important for Council and the Commission to demand such contributions,
especially when new agencies are set up;

Harmonised operating framework

24. Recalls its position (1) that the multitude of different forms in the existing agencies''structures was
thought to be ‘neither transparent nor comprehensible, and, even bearing in mind the differences in
tasks, not justified’; invites the Commission to conduct a review of all the existing agencies with a
view to proposing, where appropriate, amendments to their basic instruments (2), so as to adapt
them to the models that the future regulatory framework should encompass; instructs its competent
committees to follow up this comprehensive review exercise, which should be conducted as soon as
possible, and to take into consideration the horizontal issues mentioned in this discharge resolution;

25.

Invites the Commission to present appropriate proposals, aimed at creating such a harmonised
framework for the agencies, prior to or at least in parallel with the presentation of the legislative
proposals for the new agencies; insists that an interinstitutional agreement spelling out common
guidelines is a pre-condition for creating the harmonised framework;

(1)
(2)

P5_TA(2004) 0015 (paragraphs 13 and 14).
P5_TA(2004) 0015 (paragraph 24).

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Staff policy

26. Notes that, as a result of the new Financial Regulation, the organigrams of the agencies are
established by the budgetary authority; stresses the importance of this change for the agency
discharge procedure in the years to come as regards checking application of the Staff Regulation in
matters of recruitment, promotion policy, vacancy rates and recruitment policy;

27. Notes that, in response to a questionnaire tabled in the course of the budgetary procedure for 2004,
it was established that, on average, it took considerably fewer years to obtain promotion at several
agencies than is the policy in the Commission, that vacancy rates were considerably higher compared
to other institutions and that several of the requested new posts were not proposed at the lowest
grade; considers that staff policy should form an important part of a review of the existing agencies;

28. Considers that the staff policy of the Agencies should comply with the Financial Regulation, the Staff
Regulations and the best practice generally followed by the institutions; considers that
the
Commission has been requested to give, before the 2005 budgetary procedure, guidelines
concerning staff policy, notably the rate of vacant posts, the rate of promotions, the level of
recruitment and the standard career profile;

29. Recalls the principle that the Agencies should as far as possible employ staff on temporary contracts,

in order to maintain flexibility and efficiency;

30.

31.

32.

Is concerned about the serious anomalies detected in connection with the selection procedures of the
European Monitoring Centre for Drugs and Drug Addiction, including: imprecise notice, incomplete
selection committee minutes, criteria for assessing candidates not defined in advance (1); is very
concerned that this might not be an isolated case but that Agencies in general might have difficulty
in managing these rather complex procedures in a fair and transparent manner;

Is of the opinion that selection procedures organised by Agencies should meet the same standards as
those organised by the European Personnel Selection Office (EPSO) and that they should not be
perceived as a backdoor for easy entry into the European civil service;

Invites the Commission to make proposals in order to ensure that the Agencies benefit from
appropriate support from the EPSO when organising selection procedures and that there is a
mechanism in place to validate the outcome of such procedures externally before recruitment takes
place.

(1)

See paragraph 13 of the Court of Auditors' specific report for 2002 (p. 64).