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 2003
Date: 2005-04-12
Institutions: European Parliament
Subjects: European Agency for Reconstruction, budgetary discharge, financial year, implementation of the budget

27.7.2005

EN

Official Journal of the European Union

L 196/61

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 2003

THE EUROPEAN PARLIAMENT,

— having regard to the Court of Auditors’ report on the annual accounts of the European Agency for

Reconstruction for the financial year 2003, together with the Agency's replies (1),

— having regard to the Council's Recommendation of 8 March 2005 (6864/2005 — C6-0076/2005),

— 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 Rules 70 and 71 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 (A6-0074/2005),

A.

B.

C.

D.

E.

Whereas the European Court of Auditors (ECA) stated,
Agency's accounts do not present a true and fair view of
financial situation.

in its abovementioned report, that the
the Agency's actual economic and

Whereas the ECA expressed certain reserves with regard to the funds entrusted to external bodies
(both national and international), that Court also stated however that the transactions underlying the
Agency's annual accounts were legal and regular.

Whereas the ECA had certain reserves as to the validity of some of the supporting documents.

Whereas the ECA expressed certain reserves concerning the procurement procedure.

Whereas on 21 April 2004 the European Parliament gave discharge (5) to the Director of the Agency
in respect of the implementation of its budget for the 2002 financial year, on the basis of the report
of the ECA, and in so doing Parliament in its resolution inter alia:

— invited the Agency to give rapidly a positive follow-up to the Court's and the Parliament's
suggestion to introduce a reliable general accounting tool in all its centres abandoning the use
of spreadsheets for its general accounts,

— expected the Agency, promptly to 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 the appropriate solutions as regards the way in which these funds should be recorded in
the Agency's financial statements,

— invited 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,

(1) OJ C 41, 17.2.2005, p. 35.
(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 330, 4.11.2004, p. 1.

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Official Journal of the European Union

27.7.2005

1.

Notes the following figures for the accounts of the European Agency for Reconstruction (EAR) for
the financial years 2003 and 2002:

Revenue and expenditure account for the financial years 2003 and 2002

(in EUR 1 000)

2003

2002

275 280

462 804

3 955

1 517

379

28 034

5 978

495

497

500

Total revenue (a)

309 164

470 274

Revenue

Commission grants

Financial revenue

Miscellaneous revenue

Counterpart funds

Contributions from third parties

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

17 027

306

5 261

1 215

69 565

265 352

17 771

206

6 211

2 037

138 512

293 106

457 844

12 430

– 73 127

– 25 407

0

5 463

135

– 32 423

0

0

22

Total expenditure (b)

358 725

Outturn for the financial year (a – b) (1)

– 49 560

Balance carried over from the previous financial year

Payments on the Commission's behalf

Payments to be made on the Commission's behalf

– 112 908

– 5 231

– 515

Cancellations of appropriations carried over from previous financial years

30 649

N –1 appropriations carried over which lapse (Titles I and II)

Complement: 2001 appropriations carried over

Financial revenue to be repaid

Counterpart fund adjustments

Exchange rate differences

146

0

– 3 955

400

23

Balance for the financial year

– 140 951

– 112 908

(1) Calculated according to the principles laid down in Article 15 of Council Regulation (EC, Euratom) No 1150/2000

(OJ L 130, 31.5.2000, p. 1).NB: Any discrepancies in totals are due to the effects of rounding.

Source: This table summarises the data from the revenue and expenditure account included in the final financial statements of the

Agency for the financial year 2003.

2.

Notes that in 2003 the total portfolio overseen by the EAR was EUR 1 900 million of which 81 %
was contracted and 67,5 % disbursed for assistance programmes across its four operational centres
(Belgrade, Podgorica, Pristina and Skopje), and that the EAR's total budget for 2003 was EUR 358,6
million, the bulk of which was for assistance programmes, and that out of the EUR 327,8 million of
new EC credits received by the EAR in 2003, EUR 62,3 million was for Kosovo, EUR 200 million for
Serbia, EUR 12 million for Montenegro and EUR 33,5 million for the Former Yugoslav Republic of
Macedonia;

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Official Journal of the European Union

L 196/63

Implementation of the budget

3.

4.

5.

Notes the ECA observation on the practice in the Agency's budget, as adopted by the Governing
Board, which does not observe the principle of differentiated appropriations, which results in an
accounting out-turn for the financial year that bears no relation to the economic reality, and in a
i.e. EUR 140,95 million, which is largely artificial;
cumulative deficit as of 31 December 2003,

Notes in the answers of the Agency, that it has now taken steps to clarify the financial presentation
of its operation, which results in a consolidated revenue and expenditure account for the whole
period 2004, therefore expects that the problem will be solved for the discharge procedure 2004;

Encourages the Commission and the ECA to reinforce their cooperation with the EAR in this field in
order to guarantee its budget implementation efficiency;

Financial statements

6.

7.

8.

9.

10.

11.

12.

13.

Notes the ECA's repeated observations on the weaknesses of the Agency's accounting system,
particular the keeping of the general accounts on a single entry basis;

in

Welcomes the answer by the Agency, which says it has now fully overcome the weaknesses
mentioned by the Court and is now using double entry general accounting system along with the
budgetary tool SI2;

Invites the Commission to undertake all means necessary to allow all Agencies to share as quickly as
possible the Commission's new accounting system as introduced on 1 January 2005;

Expresses its surprise that the ECA has still not received clarification as to the status of funds made
available to specialised bodies for the financing of loan programmes in specific fields and invites the
Agency to adopt the appropriate solutions as regards the way in which these funds should be
recorded in the Agency's financial statements;

Understands from the Agency that only a minor balance of these funds is still remaining and was
almost fully expended at the end of 2004; invites the EAR Director to give a full report to the
competent committee on the implementation and efficiency of such loan programmes on the earliest
occasion;

Notes that the Agency has in the meantime reinforced its accounting staff and instruments and hopes
that the improvements undertaken in 2004 will put an end to the repetition of negative remarks by
the ECA on this issue;

Is pleased to note that the average time taken by the EAR to make payments for assistance
programmes in 2003 was 9 days;

Notes the specific conditions under which the Agency is operating and expresses its recognition for
the achievements of the Agency in the fulfilment of its mandate; calls on the Commission to give the
necessary support to the EAR to ensure its full adaptation to the procedures and requirements of the
new position of the Agency within the Commission (following enlargement);

14.

Notes that since 2003 major changes in the tender system have been undertaken, which should
guarantee the transparent treatment of each tender;

15. Welcomes in this respect the immediate action taken by the Director of the Agency when discovering
irregularities in the conclusion of one of the major infrastructure contracts, including the automatic
suspension of the person responsible and the transmission of the dossier to OLAF; encourages both
the Director and the Commission, as well as the ECA, to go on with this procedure of immediate
action and to enhance the required risk analysis in particular as regards sectors with a high risk
profile;

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16.

17.

18.

19.

20.

Notes that OLAF found strong evidence that the successful firm received assistance from the Agency
employee suspended in connection with the infrastructure contract in question in preparing the
documents relating to its bid (1); points out that, under the rules governing calls for tenders, even
the attempt by a tenderer to obtain confidential information concerning a call for tenders procedure
entails his exclusion from the procedure;

Fails to understand why, according to information supplied by the Commission (Questions for
written answers to Commissioners Michel and Ferrero-Waldner of 3 December 2004) the OLAF
final report on this case could not be submitted to members of the Agency's Governing Board;
expects this situation to be remedied forthwith so that the Agency's supreme decision-taking body
can form a complete picture of events;

Urges the EAR Director in future to apply Article 103 of the Financial Regulation consistently and to
suspend the execution of contracts where serious errors or irregularities or fraud have occurred in the
award procedure;

Calls on the EAR Director, the Commissioner responsible, the ECA and the OLAF Director to inform
the European Parliament as soon as possible of such actions and findings;

Notes the report of the Commission's Internal Audit Service on the activities of the EAR, in line with
the request in the European Parliament's 2002 discharge of the Agency;

Legality and regularity of the underlying transactions

21.

Notes the ECA's call for a reduction in the number of authorising officers (56 by the end of 2003)
and recognises the efforts by the Agency, which limited this number by February 2004 to only 20
delegations and subdelegations, which should allow a proper financial implementation while ensuring
an efficient implementation of the actions planned at local level;

22. Welcomes the participation of the Agency's Director in the hearing in the context of the discharge
procedure 2003 which led to a number of clarifications on the level of its achievements in the
implementation of its mandate; expects that the Agency will undertake all the necessary actions to
achieve fully sound financial management;

23.

Recognises the fact that the presence of the EAR's Director before the Committee on Budgetary
Control, and on a later occasion before the Committee on Foreign Affairs, has been helpful
in
clarifying certain issues and providing explanations for certain situations which had been of
genuine concern to the European Parliament, in particular, the question of the allocation of tasks
between the Commission's ‘deconcentrated’ delegations in the region and the EAR's operational
centres;

General points addressed to the Commission and the Agencies

24.

25.

Recalls its position that while it supported the Commission's efforts to establish a limited number of
models, at least for future ‘regulatory’ agencies, it took the view that the structure of current and
future agencies merited in-depth consideration at interinstitutional level; also stresses that before the
Commission defines the framework conditions for the use of regulatory agencies an interinstitutional
agreement should spell out common guidelines; this should happen before setting up a harmonised
framework for the structure of the agencies;

Notes the Commission's position (2) with regard to delegating responsibility for the execution of tasks
to bodies, including agencies, other than the Commission's core administration; takes the view that
this does not answer Parliament's call for in-depth consideration at interinstitutional
level of the
structure of existing agencies; therefore invites the Commission to provide clarification on this point
and on the future overall Interinstitutional Agreement related to the new arrangements to be set up
within or in parallel with the Financial Perspective (3);

(1) OLAF fifth activity report for the year ending June 2004 (case study, p. 34).
(2) As set out in Annex 1 to the Communication from the Commission to the Council and the European Parliament
the enlarged Union 2007-2013’,

‘Building our common future, policy challenges and budgetary means of
(COM(2004) 0101, p. 38).

(3) See Annex to the Commission's report on the follow-up to 2002 Discharges (COM(2004) 0648, p. 108).

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26.

Invites the Commission to organise and perform in the medium term, e.g. on a standard three-year
cycle, a cross-cutting analysis of the evaluations carried out on individual Agencies in order to:

(a) reach conclusions with regard to the coherence of Agency activity with EU policies in general and
as regards the synergies existing or to be developed between the agencies and Commission
departments and the avoidance of overlapping between them;

(b) make an assessment of the broader European added value of the Agencies’ outputs in their
the Agency

the relevance, efficiency and effectiveness of

respective area of activity and of
model in implementing or contributing to EU policies;

27.

28.

(c) determine and enhance the impact of the Agencies’ actions in terms of the proximity, accessibility

and visibility of the EU to its citizens;

Expects such an overall analysis to be available by the end of 2005 so as to cover the three-year
period from the time of the introduction of the new Financial Regulation and the consequent new
framework in the Agencies’ system;

Invites the Agencies to participate actively in such a process and to cooperate with the Commission,
providing the necessary input on matters that they feel are of substance to their functioning, role,
remit and needs, as well as on any matter which could help to improve the whole discharge
procedure, with a view to contributing to the success of such a process and increasing the account-
ability and transparency of the Agencies; invites Agencies to present such input also to its competent
committees;

29.

Calls on the Commission, in parallel with this exercise, to present by the end of 2005 at the latest,
proposals for changes to be made in the existing Agencies’ Constituent Acts with a view, inter alia, to
optimising its relationship with the Agencies; such proposals should aim at:

(a)

increasing communication between the Commission and the Agencies;

(b) establishing or expanding cooperation in defining needs to be covered and objectives, outputs to
be produced and the strategy to achieve them, and in setting standards for monitoring and
evaluation;

(c) enhancing complementary action, better organising the necessary resources and their effective
allocation to produce results, and devising a communication strategy for dissemination of those
results;

30.

31.

Emphasises that, before any decision is taken to propose the creation of a new agency,
the
Commission must undertake a strict evaluation of the need and added value of the function of
this agency, bearing in mind existing structures, the principles of subsidiarity, budgetary austerity and
the simplification of procedures;

Expects the Commission to present swiftly the guidelines concerning staff policy of the Agencies that
the 2005 budgetary
Parliament had requested the Commission to present before the end of
procedure;

General points addressed to the Agencies

32.

33.

Expects to receive from now on, from each of the Agencies, the report summarising information
on the audits carried out by the Internal Auditor, the recommendations made and the action
taken on these recommendations in accordance with Article 72(5) of Regulation (EC, Euratom)
No 2343/2002;

Invites the Agencies to make further efforts to apply correctly the staff regulations and rules
applicable to other civil servants with regard to their staff (recruitment procedures and relevant
decisions taken, personal
files, calculation of remuneration and other entitlements, promotions
policy, percentage of vacant posts, quotas for respecting gender equality, etc.);

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34.

35.

36.

37.

38.

39.

40.

41.

Notes that, in general, the respective percentage of male and female employees in the overall staff
composition of the Agencies shows that an imbalance between men and women exists; regrets that
men make up about one third of staff and are over-represented in high grade positions while women
are generally over-represented in low grade positions; expects the Agencies to take immediate and
effective measures to correct this situation;

Calls on the Agencies to ensure that all the relevant provisions of Directive 2002/73/EC of the
European Parliament and of
the Council of 23 September 2002 amending Council Directive
76/207/EEC on the implementation of the principle of equal treatment for men and women as
regards access to employment, vocational training and promotion, and working conditions (1) are
introduced in their respective staff policies;

Expects the Agencies, in response to the relevant observations of the ECA, to comply fully with the
budgetary principles as set out in the Financial Regulation, in particular those of unity and budgetary
accuracy; calls on the Agencies that have not yet done so to fulfil the Financial Regulation's
requirements on accounting matters and to strengthen further their procedures as regards internal
management and control with the aim of increasing accountability, transparency and European added
value;

Encourages the Agencies, especially those whose activities have points in common with the activities
or missions of other Agencies, to strengthen their cooperation, thus opening up opportunities for
developing synergies; invites them to formalise, where appropriate, such cooperation through specific
agreements (joint declarations, memoranda of understanding, decisions on joint planning and
actions/programmes presenting complementary characteristics) so as to ensure that there is no
duplication of work, that each Agency's output is clearly identified and that the result of joint
efforts maximises the added value and the impact of their work; expects to be informed regularly
on this issue;

Calls on the Agencies to pay special attention to procedures for the award and management of
contracts; invites them to take all appropriate measures as regards their administrative structures in
order to strengthen their internal control procedures, channels and management; takes the view that
such measures may include, where necessary or feasible, the setting-up of specialised units entrusted
with the task of advising, on the basis of risk analysis, on how best to prepare contract award
procedures, to ensure monitoring and to carry out follow-up, as required; on this matter, calls on the
Commission and the ECA to strengthen cooperation with the Agencies;

Notes the difficulties to which some Directors, in particular of the ‘newly created’ Agencies, referred
with regard to the Agencies’ compliance with the calendar and deadlines for reporting as set in the
Financial Regulation; invites the Agencies’ Directors, in the perspective of the forthcoming review of
the Financial Regulation to be held in 2005, to inform its Committees on Budgets and Budgetary
Control of the difficulties encountered so far so that these may be considered in the framework of the
review; expects the Directors to make specific proposals for alternative arrangements as to deadlines
that may best suit their functioning requirements while respecting the reporting obligations of the
Agencies as provided for in the Financial Regulation;

Notes the positive response by the Agencies’ Directors to the call by Parliament's committee
responsible for preparing discharge for the establishment of a more precise system of communi-
cation, in particular as regards the transmission by the Agencies to that committee of documents
relating to the Agencies’ reporting obligations; takes the view that better organisation of such
communication will strengthen its cooperation with the Agencies and enhance democratic control;

Invites the Directors of the Agencies from now on to accompany their annual activity report, which
is presented together with financial and management information, with a declaration of assurance
concerning the legality and regularity of operations, similar to the declarations signed by the
Directors-General of the Commission;

(1) OJ L 269, 5.10.2002, p. 15.

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42.

Invites the Agencies to develop a comprehensive strategy of communication addressing the need to
make available, in the appropriate form, the results of their work to the general public beyond the
presentation of such results to the Institutions, Member States’ competent services, specialists,
partners or specific beneficiaries; calls on the Agencies,
in view of the development of such a
to intensify their cooperation and exchange information on best practice aimed at
strategy,
achieving this goal; expects its competent committees to be duly informed by the Agencies, before
the next discharge exercise, on the progress made in devising such a strategy in order to ensure the
effective and timely monitoring of their activities;

General points addressed to the ECA and the Agencies

43. Welcomes the ECA's initiative to add a table to its specific reports on the Agencies presenting
summary information on the competences, governance, resources available and products/output of
the particular agency; takes the view that this enhances the clarity and transparency of the work of
these Community bodies, while providing a useful basis for comparison, where appropriate, with a
view to helping set up the harmonised framework for the Agencies that Parliament has called for;

44.

45.

Invites the ECA and the Agencies to strengthen their cooperation in order to enhance the procedures
and technical tools to improve the sound management of all the budgetary and finance issues, with
the view to establishing a methodology that prepares the ground for a positive budget discharge from
the start of the process; expects to be informed regularly of the progress made and the implemen-
tation of best practices;

Calls on the ECA and the Agencies to enhance transparency in the procédure contradictoire prior to the
ECA's final report, so as to avoid any contradiction or ambiguity which could jeopardise the cred-
ibility of the whole exercise;
invites the ECA and the Commission to propose a
feasible way of updating information on the improvements made and/or the problems found, from
the time when the ECA's preparatory report is first discussed until the time of the decision as to
in order to offer the most accurate picture of the situation of the
whether to grant discharge,
Agencies.

in this respect,