Commission Regulation (EC) No 1653/2004 of 21 September 2004 on a standard financial regulation for the executive agencies pursuant to Council Regulation (EC) No 58/2003 laying down the statute for executive agencies to be entrusted with certain tasks in the management of Community programmes
Date: 2004-09-21
Institutions: European Commission
Subjects: EU office or agency, EU programme, financial regulation, legal status, management, outsourcing

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COMMISSION REGULATION (EC) No 1653/2004

of 21 September 2004

on a standard financial regulation for the executive agencies pursuant to Council Regulation (EC)
No 58/2003 laying down the statute for executive agencies to be entrusted with certain tasks in the
management of Community programmes

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty
Community,

establishing the European

Having regard to Council Regulation (EC) No 58/2003 of
19 December 2002 laying down the statute for executive
agencies to be entrusted with certain tasks in the management
of Community programmes (1) and in particular Article 15
thereof,

Having regard to the opinion of the European Parliament,

Having regard to the opinion of the Council,

Having regard to the opinion of the Court of Auditors,

Whereas:

(1)

(2)

(3)

(4)

Regulation (EC) No 58/2003 laid down the statute for
executive agencies to be entrusted with certain tasks in
the management of Community programmes, which the
Commission was charged with setting up.

These executive agencies (hereinafter the agencies) will
have legal personality and their own operating (i.e.
administrative) budget, the implementation of which is
governed by this standard financial regulation pursuant
to Article 15 of Regulation (EC) No 58/2003. However,
when the Commission delegates responsibility to the
implementation of operational
agency for the budget
appropriations
relating to Community programmes,
these appropriations will remain entered in the general
budget and be governed by 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)
(hereinafter the general
Financial Regulation).

In accordance with Article 15 of Regulation (EC) No
58/2003,
executive
agencies covers their administrative expenditure for the
financial year.

the operating budget of

the

a

it is
In accordance with Regulation (EC) No 58/2003,
necessary to adopt
regulation
which the agencies must apply when implementing
content
their
which is as close as possible to the general Financial
Regulation. If the standard financial regulation does not

appropriations, with a

standard financial

administrative

(5)

(6)

(7)

(8)

(9)

expressly lay down rules, the provisions of the general
Financial Regulation apply along with Commission Regu-
lation (EC, Euratom) No 2342/2002 of 23 December
2002 laying down detailed rules for the implementation
of Council Regulation (EC, Euratom) No 1605/2002 of
25 June 2002 on the Financial Regulation applicable to
the general budget of the European Communities (3).

The fundamental principles of budgetary law (unity,
universality, specification and annuality), and the prin-
ciples of budget accuracy, equilibrium, unit of account,
sound financial management and transparency should be
reaffirmed.

As far as their staff are concerned, agencies will have to
distinguish between temporary posts, which will be
an establishment plan submitted for
covered by
approval to the budgetary authority, and appropriations
allowing the remuneration of other categories of staff,
recruited on renewable contracts.

far as

the financial actors are concerned,

As
is
necessary to define the powers and responsibilities of
the agency's accounting officer and authorising officer,
who must be officials subject to the Staff Regulations
of the Officials of the European Communities, and the
conditions under which the authorising officer will be
able to delegate his powers of budget implementation.

it

The authorising officer should be given a significant
degree of management autonomy. He must be given
complete freedom for transfers, subject to an obligation
to inform the steering committee, which must be able to
oppose such transfers within a time limit of one month.

is

internal auditor

the function of

In accordance with Article 20(2) of Regulation (EC) No
58/2003,
to be
performed in the executive agencies by the internal
auditor of the Commission. The Commission's internal
auditor should therefore perform the same tasks in
respect of
the executive agencies as those which the
general Financial Regulation entrusts to him in respect
of the Commission's departments. Moreover, an internal
auditing service must be able to advise the agency's
authorising officer on dealing with risks, as is the case
for the authorising officers within the Commission.

(1) OJ L 11, 16.1.2003, p. 1.
(2) OJ L 248, 16.9.2002, p. 1.

(3) OJ L 357, 31.12.2002, p. 1.

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(10)

(11)

(12)

(13)

For each executive agency, the timetable for drawing up
the operating budget, for presentation of the accounts
and for discharge must comply with the provisions of
Regulation (EC) No 58/2003, and the general Financial
Regulation. The discharge authority for the executive
agencies' operating budget must be the same as for the
general budget.

The accounting rules applied by the agencies must allow
consolidation with the Commission accounts. They must
be adopted by the Commission's accounting officer by
analogy with Article 133 of the general Financial Regu-
lation. The Court of Auditors will audit
the agency's
accounts.

equilibrium, unit of account, universality, specification, sound
financial management and transparency as set out in this Regu-
lation.

CHAPTER 1

Principle of unity and budget accuracy

Article 4

The budget shall be the instrument which, for each financial
year,
forecasts and authorises the revenue and expenditure
considered necessary for the agency.

Each agency should have access to the panel referred to
in Article 66(4) of the general Financial Regulation set up
by the Commission to examine irregularities so that a
similar assessment can be made of identical cases.

Article 5

The revenue of the agency shall comprise a grant awarded by
the Communities and any other revenue,
including assigned
revenue within the meaning of Article 15.

For their operating budget, agencies must meet the same
requirements as the Commission for public contracts
awarded on its own account. For this, a reference to
the general Financial Regulation will suffice.

Expenditure shall comprise the administrative expenditure of the
agency as well as, if applicable, expenditure financed by assigned
revenue in accordance with the first paragraph.

(14) No provision is made for the award of grants because the
executive agencies may not award grants from their
operating budget, which must be used only to cover
administrative expenditure,

Article 6

No revenue shall be collected and no expenditure effected unless
booked to a line in the budget.

HAS ADOPTED THIS REGULATION:

TITLE I

SUBJECT MATTER

Article 1

This regulation lays down the essential rules applicable to the
establishment and execution of the operating budget (hereinafter
the budget) of the agencies referred to in Regulation (EC) No
58/2003 (hereinafter the agencies or the agency).

Article 2

For any aspect
the executive
relating to the operation of
agencies which is not expressly defined by this regulation, the
provisions of Regulation (EC, Euratom) No 1605/2002 (here-
inafter the general Financial Regulation) and Regulation (EC,
Euratom) No 2342/2002 shall apply mutatis mutandis.

TITLE II

BUDGETARY PRINCIPLES

Article 3

The budget shall be established and implemented in compliance
with the principles of unity and budget accuracy, annuality,

An appropriation may not be entered in the budget if it is not
for an item of expenditure considered necessary.

No expenditure may be committed or authorised in excess of
the appropriations authorised by the budget.

CHAPTER 2

Principle of annuality

Article 7

The appropriations entered in the budget shall be authorised for
one financial year which shall run from 1 January to 31
December.

The appropriations entered in the budget shall be non-differen-
tiated appropriations.

that extend beyond the financial year, either

Administrative expenditure arising from contracts covering
periods
in
accordance with local practice or relating to the supply of
equipment, shall be charged to the budget of
the financial
year in which it is effected.

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Article 8

The agency's revenue shall be entered in the accounts for a
financial year on the basis of the amounts collected during
that year.
It shall result in the same level of appropriations
being made available.

The appropriations authorised in the budget for a given year
may be used solely to cover expenditure committed and paid in
that
against
and to cover
commitments from the previous financial year.

financial year,

amounts due

CHAPTER 3

Principle of equilibrium

Article 11

Budget revenue and expenditure must balance. The agency may
not raise loans.

Appropriations may not exceed the amount of the Community
subsidy referred to in Article 5, plus assigned revenue and any
other revenue referred to in Article 5.

Article 9

Article 12

Appropriations which have not been used at the end of the
financial year for which they were entered shall be cancelled.

If the balance of the outturn account within the meaning of
Article 56 is positive, it shall be repaid to the Commission up
to the amount of the subsidy paid during the year.

Appropriations corresponding to obligations duly contracted at
the close of the financial year shall be carried over automatically
to the following financial year only. Appropriations carried over
which have not been utilised by 31 March of year N+1 shall be
automatically cancelled. Appropriations carried over in this way
shall be identified in the accounts.

The difference between the subsidy referred to in Article 5 and
that actually paid to the agency shall be cancelled.

CHAPTER 4

Principle of unit of account

Article 13

Appropriations relating to staff expenditure may not be carried
over.

The budget shall be drawn up and implemented in euro and the
accounts shall be presented in euro.

The appropriations available at 31 December arising from the
assigned revenue referred to in Article 15 shall be carried over
automatically. The appropriations available corresponding to
assigned revenue carried over must be used first.

However, for cash-flow purposes, the accounting officer of the
executive agency may,
in duly justified cases, carry out
operations in national currencies and, where applicable, in the
currencies of third countries.

Article 10

The appropriations entered in the budget may be committed
with effect from 1 January, once the budget has become defi-
nitive.

However, as from 15 November of each year, routine adminis-
trative expenditure may be committed in advance against the
appropriations provided for the following financial year. Such
commitments may not exceed one quarter of the appropriations
on the corresponding budget line for the current financial year.
They may not relate to new expenditure whose principle has
not yet been acknowledged in the last budget duly adopted.

Moreover, expenditure which must be paid in advance,
for
example rents, may give rise to payments from 1 December
onwards
the
following financial year.

charged to the

appropriations

to be

for

If the budget has not been adopted at the beginning of the
financial year, the system of provisional twelfths laid down in
the general Financial Regulation shall apply mutatis mutandis.

CHAPTER 5

Principle of universality

Article 14

Total revenue shall cover total expenditure, with the exception
of revenue assigned to specific items of expenditure. All revenue
and expenditure shall be entered in full without any adjustment
against each other, subject to Article 16.

Article 15

Revenue earmarked for a specific purpose, such as income from
foundations, subsidies, gifts and bequests, and revenue from the
Member States, non-member countries or miscellaneous bodies
for the implementation of programmes funded by sources other
than the general budget of the European Communities (here-
inafter the general budget), constitutes revenue assigned to
specific items of expenditure.

All assigned revenue must cover all direct or indirect expen-
diture incurred by the activity or purpose in question. The
budget shall carry lines to accommodate the categories of
assigned revenue and wherever possible shall
indicate the
amount.

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The management board shall decide, after obtaining the
Commission’s agreement,
if any gifts, bequests and subsidies
from sources other than the Community may be accepted.

The principle of effectiveness is concerned with attaining the
specific objectives set and achieving the intended results. These
results shall be evaluated.

Article 16

The cost of products or services provided to the agency shall be
charged to the budget for the full ex-tax amount, where they
refunded, either by the Member States
incorporate taxes
pursuant to the Protocol on the Privileges and Immunities of
the European Communities, or by a Member State or non-
member country on the basis of other relevant agreements.

Any national taxes temporarily borne by the agency under the
first paragraph shall be entered in a suspense account until they
are refunded by the State concerned. Any negative balance shall
be entered in the budget as expenditure.

CHAPTER 6

Principle of specification

Article 17

The appropriations in their entirety shall be earmarked for
specific purposes by title and chapter; the chapters shall be
further subdivided into articles and items.

Article 18

The director shall take decisions on transfers of appropriations
within the operating budget. He shall inform the Commission
and the management board beforehand, which shall have one
month in which to oppose such transfers. After this time limit
they shall be deemed to be adopted.

Appropriations corresponding to assigned revenue may be
transferred only if they are used for the purpose to which the
revenue is assigned.

CHAPTER 7

Principle of sound financial management

Article 19

The annual work programme of

the executive agency
3.
adopted by the management board shall contain detailed
objectives and performance indicators.

CHAPTER 8

Principle of transparency

Article 20

The budget shall be drawn up and implemented and the
accounts presented in compliance with the principle of trans-
parency.

The budget and amending budgets, as finally adopted, shall be
published in the Official Journal of the European Union within two
months of their adoption.

TITLE III

ESTABLISHMENT AND STRUCTURE OF THE BUDGET

Article 21

The executive agency shall send the Commission, by 31 March
each year at the latest, an estimate of its revenue and expen-
diture drawn up by the Director of the Agency and adopted by
the management board and the general guidelines underlying
that estimate, together with its work programme.

The agency's estimate of revenue and expenditure shall include:

(a) an establishment plan setting the number of

temporary
posts authorised within the limits of the budget appro-
priations, by grade and by category;

(b) where there is a change in the number of persons in post, a

statement justifying the request for new posts;

(c) a quarterly estimate of cash payments and receipts.

Article 22

1.
Budget appropriations shall be used in accordance with
the principle of sound financial management, that is to say, in
accordance with the principles of economy, efficiency and effec-
tiveness.

The Commission, as part of the procedure for adopting the
general budget, shall send the agency's statement of estimates
to the budgetary authority and propose the amount of the
subsidy for the agency and the number of staff it considers
that the agency needs.

2.
The principle of economy requires that the resources used
by the agency for the pursuit of its activities shall be made
available in due time, in appropriate quantity and quality and
at the best price.

The agency's operating budget may not be adopted definitively
until the general budget of the European Union has been finally
adopted in accordance with the procedure provided for in
Article 13 of Regulation (EC) No 58/2003.

The principle of efficiency is concerned with the best rela-
tionship between resources employed and results achieved.

The budgetary authority shall adopt the establishment plan of
all
thereto in
accordance with Article 24.

the agencies and any subsequent amendment

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to the budget,

including the establishment
Any amendment
plan, shall be the subject of an amending budget adopted by
the same procedure as the initial budget, subject to Articles 18
and 24.

Article 23

The budget shall comprise a statement of
statement of expenditure. It shall show:

revenue and a

1.

in the statement of revenue:

(a)

the estimated revenue of the agency for the financial year
in question;

(b) the revenue for the preceding financial year and the

revenue for year N–2;

(c) appropriate remarks on each revenue line;

2.

in the statement of expenditure:

(a) appropriations for the financial year in question;

(b) the appropriations for the preceding financial year and

the appropriations for year N–2;

(c) appropriate remarks on each subdivision.

Article 24

1.
The establishment plan referred to in Article 21 shall
show next to the number of posts authorised for the financial
year, the number authorised for the preceding year and the
number of posts actually filled. It shall constitute an absolute
limit for the agency; no appointment may be made in excess of
the limit set.

However, the management board may modify the establishment
plan by up to 10 % of posts authorised below grade A3
provided that this does not affect the volume of staff appro-
priations corresponding to a full financial year and remains
within the limits of the total number of posts authorised by
the establishment plan.

By way of derogation from paragraph 1, the effects of
2.
part-time work authorised by the appointing authority in
accordance with the Staff Regulations of Officials and the
Conditions of Employment of Other Servants of the European
Communities (hereinafter the Staff Regulations) may be offset
by other appointments.

TITLE IV

IMPLEMENTATION OF THE BUDGET

CHAPTER 1

General provisions

Article 25

The director shall perform the duties of authorising officer. He
shall be an official subject to the Staff Regulations. He shall
implement the budget in revenue and expenditure in accordance
with this Regulation, on his own responsibility and within the
limits of the appropriations authorised.

Article 26

The director may delegate his powers of budget implementation
to staff of the agency subject to the Staff Regulations. These
members of staff may act only within the limits of the powers
expressly conferred upon them.

Article 27

All financial actors within the meaning of Chapter 2 of this
Title shall be prohibited from taking any measures of budget
implementation which may bring their own interests into
conflict with those of
the Communities.
Should such a case arise, the actor in question must refrain
from such measures and refer the matter to his superior. The
director must refer it to the management board.

the agency or of

There is a conflict of interests where the impartial and objective
exercise of the functions of a financial actor in the implemen-
tation of the budget or an internal auditor is compromised for
reasons involving family, emotional
life, political or national
affinity, economic interest or any other shared interest with
the beneficiary.

CHAPTER 2

Financial actors

Article 28

The duties of authorising officer and accounting officer shall be
segregated and mutually incompatible.

Article 29

The authorising officer shall be responsible for implementing
revenue and expenditure in accordance with the principles of
the
sound financial management
requirements of legality and regularity are complied with. He
shall conserve the supporting documents relating to operations
carried out for a period of five years from the date of the
decision granting discharge in respect of
implementation of
the budget.

ensuring that

and for

in place,

The authorising officer by delegation shall put
in
compliance with the relevant minimum standards adopted by
the Commission for its own departments and having due regard
to the specific risks associated with his/her management envir-
onment,
internal
management and control procedures suited to the performance
including where appropriate ex post verifi-
of his/her duties,
cations.

organisational

structure

and

the

the

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the
Depending on the nature and scope of
authorising officer may establish within his/her departments
an expertise and advice function designed to help him/her
control the risks involved in his/her activities.

the duties,

Before an operation is authorised, the operational and financial
aspects shall be verified by members of staff other than the one
who initiated the operation. Initiation and the ex ante and ex
post verification of an operation shall be separate functions.

The authorising officer shall report to the management board
on the performance of his duties in the form of an annual
in accordance with Article 9(7) of Regulation
activity report,
in
(EC) No 58/2003, by 15 March of
question.

the financial year

Article 32

Without prejudice to any disciplinary action, authorising officers
by delegation may at any time have their delegation withdrawn
temporarily or definitively by the authority which appointed
them, by a reasoned decision and after having been heard.
The director may at any time withdraw his agreement to a
specific delegation.

Without prejudice to any disciplinary action, the accounting
officer may at any time be suspended temporarily or definitively
from his duties by the management board, by a reasoned
decision and after having been heard. The management board
shall appoint an interim accounting officer.

Article 30

Article 33

The management board shall appoint an accounting officer,
who is an official subject to the Staff Regulations and who
shall be responsible for:

(a) proper implementation of payments, collection of revenue
and recovery of amounts established as being receivable;

The provisions of this chapter are without prejudice to the
criminal-law liability which the authorising officer and his
delegates may incur as provided in the applicable national law
and in the provisions in force on the protection of the Commu-
interests and on the fight against corruption
nities' financial
involving officials of the Communities or officials of Member
States.

(b) drawing up the agency's accounts in accordance with Title

VI;

(c) keeping the accounts in accordance with Title VI;

(d) implementing the accounting rules and methods and the
in accordance with the provisions

chart of accounts
adopted by the Commission's accounting officer;

(e)

treasury management.

The accounting officer shall obtain from the authorising officer,
who shall guarantee its reliability, all the information necessary
for the production of accounts which give a true image of the
agency's assets and of budget implementation.

The accounting officer is alone empowered to handle monies
and other assets. He shall be responsible for their safekeeping.

CHAPTER 3

Liability of the financial actors

Article 31

Any member of staff involved in the financial management and
control of transactions who considers that a decision he is
required by his superior to apply or to agree to is irregular or
contrary to the principles of sound financial management or the
professional rules he is required to observe shall
inform the
director in writing and, if the latter fails to take action within
a reasonable period, the panel referred to in Article 35 and the
management board. In the event of any illegal activity, fraud or
corruption which may harm the interests of the Community, he
shall
inform the authorities and bodies designated by the
applicable legislation.

Every authorising officer and accounting officer shall be liable to
disciplinary action and payment of compensation as laid down
in the Staff Regulations. In the event of illegal activity, fraud or
corruption which may harm the interests of the Community,
the matter will be referred to the authorities and bodies
designated by the applicable legislation.

Article 34

laid

The authorising officer shall be liable to payment of
1.
compensation as
Staff Regulations.
down in the
Accordingly, he may be required to make good, in whole or
in part, any damage suffered by the Communities as a result of
serious misconduct on his part
in
connection with the performance of his duties, in particular if
he determines entitlements to be recovered or issues recovery
orders, commits expenditure or signs a payment order without
complying with this Regulation.

in the course of or

The same shall apply where, through serious misconduct, he
fails to draw up a document establishing an amount receivable
or if he fails to issue a recovery order or is, without justification,
late in issuing it, or if he fails to issue a payment order or is late
in issuing it, thereby rendering the agency liable to civil action
by third parties.

2.
An authorising officer by delegation who considers that a
decision falling under his responsibility is irregular or contrary
to the principles of sound financial management shall inform
the delegating authority in writing. If the delegating authority
then gives a reasoned instruction in writing to the authorising
officer by delegation to implement the decision in question, the
latter must implement it and may not be held liable.

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Article 35

1.
The panel
set up by the Commission to determine
whether a financial
the
irregularity has occurred and what
consequences,
in accordance with Article
the general Financial Regulation, may exercise the
66(4) of
same powers in respect of the agency as it does in respect of
Commission departments.

if any, should be,

to

initiate

disciplinary

On the basis of the opinion of this panel, the director shall
decide whether
or
proceedings for the payment of compensation.
If the panel
detects systemic problems, it shall send a report with recom-
mendations to the authorising officer and to the Commission's
internal auditor. If the opinion implicates the director, the panel
shall send it to the management board and the Commission's
internal auditor.

proceedings

2.
Any member of staff may be required to make good, in
whole or in part, any damage suffered by the agency as a result
of serious misconduct on his part
in the course of or in
connection with the performance of his duties. The appointing
authority shall take a reasoned decision, after completing the
formalities laid down by the Staff Regulations with regard to
disciplinary matters.

Any amount receivable that is identified as being certain, of a
fixed amount and due must be established by a recovery order
given to the accounting officer, accompanied by a debit note
sent to the debtor. Both of these documents shall be drawn up
and sent by the authorising officer responsible.

Without prejudice to the provisions laid down in the rules,
contract or agreement applicable, any debt not repaid on the
due date laid down in the debit note shall bear interest in
accordance with Regulation (EC, Euratom) No 2342/2002.

Article 39

The authorisation of recovery is the act whereby the authorising
officer responsible instructs the accounting officer, by issuing a
recovery order, to recover an amount receivable which he has
established.

The accounting officer shall act on recovery orders for amounts
receivable duly established by the authorising officer or
authorising officer responsible. He shall exercise due diligence
to ensure that the agency receives its revenue and shall see that
its rights are safeguarded.

Article 36

Amounts wrongly paid shall be recovered.

An accounting officer may be liable to disciplinary action and
payment of compensation, as laid down in the Staff Regu-
lations, in particular where:

(a) he/she loses or damages monies, assets and documents in
his/her keeping or causes them to be lost or damaged by his
negligence;

(b) he/she alters bank accounts or postal giro accounts without

notifying the authorising officer in advance;

(c) he/she

recovers or pays amounts which are not

in
conformity with the corresponding recovery or payment
orders;

(d) he/she fails to collect revenue due.

CHAPTER 4

Revenue operations

Article 37

An estimate of the amount receivable shall first be made by the
authorising officer responsible in respect of any measure or
situation which may give rise to or modify an amount owing
to the agency.

Article 38

Establishment of an amount receivable is the act by which the
authorising officer:

Article 40

Where the authorising officer responsible is planning to waive
recovery of an established amount receivable, he shall ensure
that the waiver is in order and complies with the principle of
sound financial management. He shall report his intention to
waive an established amount receivable to the management
board. Such a waiver shall be by decision of the authorising
officer, which must be substantiated. The authorising officer
may delegate this decision only for amounts receivable of less
than EUR 5 000. The waiver decision shall state what action has
been taken to secure recovery and the points of law and fact on
which it is based.

The authorising officer responsible shall cancel an established
amount receivable when the discovery of a mistake as to a
point of law or fact reveals that the amount had not been
correctly established. The authorising officer may delegate this
decision only for amounts receivable of less than EUR 5 000.
Such cancellation shall be by decision of the authorising officer
responsible and shall be suitably substantiated.

The authorising officer responsible shall adjust the amount of
an established debt upwards or downwards when the discovery
of a factual error entails the alteration of the amount of the
debt, provided that this correction does not involve the loss of
the agency's established entitlement. Such an adjustment shall
be by decision of the authorising officer responsible and shall be
suitably substantiated.

(a) verifies that the debt exists;

Article 41

(b) determines or verifies the reality and the amount of the

debt;

(c) verifies the conditions in which the debt is due.

Upon actual recovery of the sum due, the accounting officer
shall make an entry in the accounts and shall
inform the
authorising officer responsible. A receipt shall be issued in
respect of all cash payments made to the accounting officer.

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If actual recovery has not taken place by the due date stipulated
the accounting officer shall
in the debit note,
inform the
authorising officer
responsible and immediately launch the
procedure for effecting recovery by any means offered by the
law, including, where appropriate, by offsetting and, if this is
not possible, by enforced recovery.

The accounting officer shall recover claims that the agency has
on any debtor who himself has a claim on the agency that is
certain, of a fixed amount and due by offsetting the equivalent
amounts.

Article 42

Further time for payment may be granted by the accounting
officer, in liaison with the authorising officer responsible, only
on written request, with due indication of the reasons, provided
that the debtor undertakes to pay interest for the entire period
of time allowed, starting from the date on which the payment
was originally due and that, in order to safeguard the rights of
the agency, he provides a financial guarantee covering both the
principal sum and the interest.

CHAPTER 5

Expenditure operations

Article 43

Every item of expenditure shall be committed, validated,
authorised and paid.

Article 44

In respect of any measure which may give rise to expenditure
chargeable to the budget, the authorising officer responsible
must first make a budgetary commitment before entering into
a legal obligation with third parties.

legal commitments relating to individual or
The individual
provisional budget commitments shall be concluded by 31
the latest. The unused balance of
December of year N at
these budget commitments
shall be decommitted by the
authorising officer responsible.

Article 45

When a budget commitment is adopted, the authorising officer
responsible shall ensure that the expenditure has been charged
to the correct item in the budget, that the appropriations are
available and that the expenditure conforms to the relevant
provisions,
including compliance with the principle of sound
financial management.

Article 46

The validation decision shall be expressed by the signing of a
‘passed for payment’ voucher by the
authorising officer
‘passed for
responsible.
In a non-computerised system,
payment’ shall take the form of a stamp incorporating the
signature of the authorising officer responsible. In a compu-
take the form of
terised system,
validation using the personal password of
the authorising
officer responsible.

‘passed for payment’ shall

Article 47

Authorisation of expenditure is the act whereby the authorising
officer responsible, by issuing a payment order,
instructs the
accounting officer to pay an item of expenditure which he
has validated. The payment order shall be dated and signed
by the authorising officer responsible and, where appropriate,
it shall be accompanied by a document certifying that the goods
have been entered in the inventories referred to in Article 64.

Payment of expenditure shall be made by the accounting officer
within the limits of the funds available.

Article 48

The validation, authorisation and payment of expenditure must
be carried out within the time limits specified in, and in
accordance with the provisions of, the general Financial Regu-
lation and its implementing rules.

CHAPTER 6

Internal auditor

Article 49

The role of internal auditor in the executive agencies shall be
exercised by the Commission's internal auditor.

The Commission's internal auditor shall exercise the same
the executive agencies as over Commission
powers over
departments under Articles 85 and 86 of
the general
Financial Regulation. He shall
to the management
board and the director on his findings and recommendations.
They shall ensure that action is taken on recommendations
resulting from audits
and inform the Commission. The
internal auditor shall submit to the agency, and send to the
Commission for information, an annual report indicating the
number and type of audits carried out, the recommendations
made and the action taken on these recommendations.

report

The internal auditor's liability in the exercise of his duties shall
be determined in accordance with Article 87 of the general
Financial Regulation.

Validation of expenditure is the act whereby the authorising
officer responsible verifies the existence of the creditor's enti-
tlement, verifies the conditions under which payment falls due
and determines or verifies the reality and the amount of the
claim. The validation of any expenditure shall be based on
supporting documents certifying the creditor's entitlement.

Every year the agency shall transmit to the discharge authority
and the Commission a report drawn up by the director of the
agency summarising the number and type of internal audits
made by the internal auditor, the recommendations made and
the follow-up given to those recommendations.

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TITLE V

PROCUREMENT

Article 50

1.
As regards procurement for the operation of the agency,
the provisions of the general Financial Regulation and Regu-
lation (EC, Euratom) No 2342/2002 shall apply.

Executive

2.
as
contracting authority, with the award of Commission or inter-
institutional contracts.

agencies may

associated,

to be

ask

3.
By way of derogation from paragraph 1, for the supply of
goods, provision of services or performance of work that the
Commission or interinstitutional offices are able to carry out,
the executive agencies shall first use them before applying a
procurement procedure.

TITLE VI

PRESENTATION OF THE ACCOUNTS AND ACCOUNTING

the financial year,
collection.

regardless of

the date of payment or

The value of assets and liabilities shall be determined in
laid down by the
accordance with the valuation rules
accounting methods referred to in Article 59.

Article 55

The financial statements shall be presented in euro and shall
comprise:

(a)

the balance sheet and the economic outturn account, which
represent the assets and liabilities and financial situation and
the economic outturn at 31 December of the previous year;
they shall be presented in accordance with the structure laid
down by the Council Directive on the annual accounts of
certain types of companies, but with account being taken of
the specific nature of the agency's activities;

(b) the

cash-flow table

collected and
disbursed during the year and the final treasury position;

amounts

showing

CHAPTER 1

Presentation of the accounts

Article 51

(c)

the statement of changes in capital presenting in detail the
increases and decreases during the year in each item of the
capital accounts.

The agency's accounts shall comprise the financial statements
implementation. They shall be
and the reports on budget
accompanied by
financial
management during the year.

report on budgetary

and

a

The Annex to the financial statements shall supplement and
comment on the information presented and shall supply all
the
internationally
accepted accounting practice where
such information is
relevant to the agency's activities.

information prescribed

additional

by

Article 52

Article 56

The accounts must comply with the rules and be accurate and
comprehensive and present a true and fair view:

The budget implementation reports shall be presented in euro.
They shall comprise:

(a) as

regards

the financial

the assets and
liabilities, charges and income, entitlements and obligations
not shown as assets or liabilities, and cash flow;

statements, of

(b) as regards reports on budget implementation, of revenue

and expenditure operations.

Article 53

The financial statements shall be drawn up in accordance with
the generally accepted accounting principles specified in Regu-
lation (EC, Euratom) No 2342/2002, namely: going concern
basis, prudence, consistent accounting methods, comparability
of information, materiality, no netting, reality over appearance,
accrual-based accounting.

Article 54

In accordance with the principle of accrual-based accounting,
the financial statements shall show the charges and income for

(a)

the budget outturn account, which sets out all budget
operations for the year in terms of revenue and expenditure;
the structure in which it is presented shall be the same as
that of the budget itself;

(b) the annex to the budget outturn account, which shall
supplement and comment on the information given in
that account.

Article 57

The agency's accounts shall be consolidated with those of the
Commission, in accordance with the procedure provided for in
Article 14 of Regulation (EC) No 58/2003 and in accordance
with the following provisions:

(a)

the management board shall notify, by 1 March following
the end of the financial year, the accounting officer of the
Commission and the Court of Auditors of the provisional
accounts accompanied by the report on the budgetary and
financial management during the year;

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(b) the management board shall approve, on the basis of the
draft drawn up by the director, the final accounts of the
agency and shall send them to the accounting officer of the
Commission and to the Court of Auditors, the European
Parliament and the Council, by 1 July of the following year
at the latest;

(c)

the final accounts of the agency, consolidated with those of
the Commission, shall be published in the Official Journal of
the European Union on 31 October of the following financial
year;

(d) the director shall send the Court of Auditors a reply to any
observations made in the report referred to in Article 14(3)
of Regulation (EC) No 58/2003 by 30 September at the
latest.

CHAPTER 2

Accounting

Article 58

1.
The agency's accounting system is the system serving to
organise the budgetary and financial information in such a way
that figures can be input, filed and registered.

The accounts shall consist of general accounts and budget
accounts. These accounts shall be kept in euro on the basis
of the calendar year.

The figures in the general accounts and the budget accounts
shall be adopted at the close of the budget year so that the
accounts referred to in Chapter 1 can be drawn up.

Notwithstanding paragraph 1, the authorising officer may

2.
keep analytical accounts.

Article 62

The accounting officer of the agency shall, after the close of the
budget year and up to the date of presentation of the final
accounts, make any adjustments which, without
involving
are
collection in respect of
disbursement or
necessary for a true and fair presentation of the accounts in
compliance with the rules.

that year,

Article 63

The budget accounts shall provide a detailed record of budget
implementation. The budget accounts shall record all budget
revenue and expenditure operations provided for in Title IV.

Article 64

The agency's accounting officer shall keep inventories showing
the quantity and value of all the agency's tangible,
intangible
and financial assets in accordance with a model drawn up by
the accounting officer of
the Commission. The agency's
accounting officer shall check that entries in the inventory
correspond to the actual situation.

The sale of movable property shall be advertised in an appro-
priate manner.

TITLE VII

EXTERNAL AUDIT AND DISCHARGE

Article 65

The Court of Auditors shall scrutinise the agency's accounts in
accordance with Article 248 of the EC Treaty.

Article 59

The scrutiny carried out by the Court of Auditors shall be
governed by Articles 139 to 144 of the general Financial Regu-
lation.

The accounting rules and methods and the harmonised chart of
accounts to be applied by the agency shall be adopted by the
Commission's accounting officer,
in accordance with Article
133 of the general Financial Regulation.

Article 60

The general accounts shall record, in chronological order using
the double entry method, all events and operations which affect
the economic and financial
situation and the assets and
liabilities of the agency.

Article 61

Movements on the accounts and the balances shall be entered in
the accounting ledgers.

All accounting entries, including adjustments to the accounts,
shall be based on supporting documents, to which they shall
refer. The accounting system must be such as to leave a trail for
all accounting entries.

The management board shall send the Court of Auditors the
budget, as finally adopted. It shall inform the Court of Auditors,
as soon as possible, of all decisions and acts adopted pursuant
to Articles 15, 18, 26 and 31.

Article 66

The European Parliament, upon a recommendation from the
Council, which shall decide by qualified majority, shall give a
discharge to the director in respect of the implementation of the
administrative budget for year N by no later than 29 April of
the year N+2.

the
The discharge decision shall cover the accounts of all
agency's revenue and expenditure, the resulting balance and
the assets and liabilities of the agency shown in the balance
sheet. Discharge shall be granted concomitantly with that
relating to the implementation of the general budget of the
European Union.

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With a view to granting the discharge, the European Parliament
shall, after the Council has done so, examine the financial
statements and reports on budget
the
agency.
the Court of
Auditors referred to in Article 14(3) of Regulation (EC) No
58/2003, together with the replies of the director.

It shall also examine the report of

implementation of

The director shall submit to the European Parliament, at the
latter's request, in the same manner as provided for in Article
146(3) of the general Financial Regulation, any information
required
discharge
the
procedure for the year in question.

smooth application of

the

for

For earlier years these time limits shall be:

(a) 15 September for Article 57(b),

(b) 30 November for Article 57(c),

(c) 31 October for Article 57(d).

Article 67

The director and the Commission shall take all appropriate
steps to act on the observations accompanying the European
Parliament's discharge decision and on the comments accom-
panying the recommendation for discharge adopted by the
Council.

At the request of the European Parliament or the Council, the
director shall report on the measures taken in the light of these
observations and comments. After first sending the report to
the Commission, he shall send a copy to the Court of Auditors.

TITLE VIII

TRANSITIONAL AND FINAL PROVISIONS

Article 68

The provisions of Title VI shall apply progressively in line with
technical possibilities so as to produce their full effect in respect
of financial year 2005.

Article 69

The European Parliament,
the Council and the Commission
shall be empowered to obtain any necessary information or
explanations regarding budgetary matters within their fields of
competence.

Article 70

The time limits referred to in Article 57 shall apply for the first
time in respect of financial year 2005.

This Regulation shall enter into force on the twentieth day
following its publication in the Official Journal of the European
Union.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels, 21 September 2004.

For the Commission

Michaele SCHREYER
Member of the Commission