Communication from the Commission to the Council, the European Parliament and the European Court of Auditors on a roadmap to an integrated internal control framework
Date: 2005-06-15
Institutions: European Commission
Subjects: audit, budgetary control, general budget

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 15.6.2005 
COM(2005) 252 final 

COMMUNICATION FROM THE COMMISSION TO THE COUNCIL, THE 
EUROPEAN PARLIAMENT AND THE EUROPEAN COURT OF AUDITORS 

on a roadmap to an integrated internal control framework 

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A. THE CASE FOR ACTION 

The Court of Auditors published its Annual Report for the financial year 2003 in November 
2004.  For  the  10th  time,  the  Court  presented  an  annual  statement  of  assurance  (or  a  DAS), 
which was largely positive  as  regards the reliability of the accounts, commitments  and own 
resources but indicated that it had no reasonable assurance for payments under all parts of the 
general budget of the European Union apart from administrative expenditure1.  

The current situation cannot be left as it is. Taxpayers should have reasonable assurance that 
the  funds  of  the  European  Union  are  managed  in  a  legal  and  regular  manner.  This  is 
highlighted  by  the  fact  that  both  Parliament  and  Council  have  repeatedly  stated  their 
disappointment  that  the  Court  is  not  able  to  give  a  positive  statement  of  assurance  –  most 
recently, in connection with the 2003 discharge procedure. Both institutions have invited the 
Commission  to  take  action  to  resolve  the  situation.  The  Barroso  Commission  has  therefore 
made it a strategic objective to strive for a positive statement of assurance from the European 
Court of Auditors2. This process of course implies renewed Commission efforts in a number 
of areas. Whilst the Commission has sole responsibility under the Treaty for implementing the 
Budget,  4  out  of  every  5  euros  in  the  budget  are  in  reality  handled  by  the  Member  States 
under  shared  management,  so  it  is  essential  that  Member  States  take  active  part  in  the 
initiative. 

Achieving  a  positive  DAS  is  a  highly  ambitious  objective  and  the  DAS  should  not  be 
expected  to  turn  from  negative  one  year  to  clean  the  following  year.  Indeed,  the  Court  of 
Auditors  is  not  able  to  give  a  positive  DAS  unless  it  has  reasonable  assurance  that 
transactions  down  to  the  level  of  the  individual  beneficiary,  i.e.  payments  made  by 
Member States to the final beneficiary such as the farmer, the student, the enterprise and in 
some cases a public body, are legal and regular. Thus, the supervisory systems and controls 
must provide reasonable assurance that the risk of error at this level is properly managed, and 
include an appropriate level of on-the-spot checks at the premises of claimants. 

In its opinion No 2/20043 on an effective and efficient control framework, the Court, whilst 
accepting that many of the necessary elements were in place, and that there had recently been 
significant  progress  in  improving  systems,  criticised  certain  aspects  of  the  current  control 
frameworks in the various areas of the budget in the following terms: 

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In the Annual Report for the financial year 2003, the Court enters one reservation concerning sundry 
debtors as regards the reliability of the accounts. It considers that underlying transactions are legal and 
regular  in  respect  of  revenue,  commitments  and  administrative  expenditure.  It  gives  a  qualified 
statement on the underlying transactions concerning agriculture, structural measures, internal policies, 
external actions and pre-accession aid.  
Cf.  Commission  Communication  Strategic  Objectives  2005-2009,  Europe  2010:  A  Partnership  for 
European Renewal, Prosperity, Solidarity and Security - COM(2005) 12, 26.1.2005 
Opinion No 2/2004 of the Court of Auditors of the European Communities on the ‘single audit’ model 
(and a proposal for a Community internal control framework) - OJ C 107, 30.4.2004. 

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Unclear and inconsistent objectives 
•  No  clearly  established  control  strategy  leading  to  overall  or  specific  objectives  for  the 

various systems. 

Lack of coordination 
•  No formal requirement for control bodies to coordinate the planning of checks, or take into 

account the checks made by others.  

•  Information provided by Member States on the results of checks is sometimes inadequate 

or inconsistent. 

No information on costs and benefits 
•  In  the  areas  of  shared  management,  the  majority  of  the  costs  of  undertaking  controls  are 
borne  by  the  Member  States/beneficiary  States  whereas  the  benefit  accrues  to  the  EU 
budget.  Thus,  Member  States/beneficiary  States  have  little  incentive  to  devote  sufficient 
resources to controlling EU funds.  

•  No  information  is  currently  available  on  the  costs  of  controls  borne  by  either  Member 

States or the Commission, or on the benefit they bring. 

Inconsistent application 
•  Random  checks  and  risk-based  checks  have  very  different  and  mutually  exclusive 
objectives.  When  rules  do  not  sufficiently  define  the  approach  to  be  used,  the  result  is 
confusion and reduced effectiveness. 

•  Control procedures are highly decentralised both in the Commission and in Member States. 
In practice, there is not always consistency in approach, extent, timing, follow-up etc. As a 
result, there are differences in the quality of checks. 

•  Independent  audits  are  not  required  in  all  budgetary  areas  and,  where  required,  there  are 
sometimes  inadequate  terms  of  reference  for  the  audit  work,  and  there  are  not  always 
standard procedures for the selection of the auditors. 

•  The  option  of  penalties  for  irregular  claims  exists  only  within  agriculture  and  internal 

policies. 

Not all these points are relevant to all budgetary areas, and in some cases qualifications are 
required. 

The Court also offered its advice on the elements it considers indispensable for an effective 
and  efficient  control  framework,  in  which  the  Commission  would,  except  for  directly 
managed expenditure, play a mainly supervisory role, and on-the-spot checks by the central, 
Community level would become less necessary: 

•  “common  principles  and  standards  ...  [are]  to  be  applied  at  all  levels  of 

administration in the institutions and Member States alike" (paragraph 57); 

•  internal  controls  should  "provide  reasonable"  (not  absolute)  "assurance  on  the 
legality  and  regularity  of  transactions,  and  compliance  with  the  principles  of 
economy, efficiency and effectiveness" (paragraph 57); 

•  the "cost of the controls should be in proportion to the benefits they bring in both 

monetary and political terms" (paragraph 57); 

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•  the  "system  should  be  based  around  a  logical  chain  structure  where  controls  are 
undertaken, recorded and reported to a common standard, allowing reliance to be 
placed on them by all participants" (paragraph 57). 

The  Commission  broadly  agrees  with  the  Court’s  recommendations,  and  indeed  has  been 
implementing  improvements  along  these  lines.  It  accepts  that  the  road  towards  a  'positive' 
statement  of  assurance  is  to  provide  the  Court  with  evidence  that  supervisory  systems  and 
controls are in place which keep the risk of irregularity within reasonable limits. If it can be 
shown that the control framework which it recommends is in place, and functions effectively, 
the Court would have a basis for the assurance it seeks.  

Most  Member  States  have  shown  their  openness  to  the  Court's  proposals  for  an  integrated 
control framework and for a single audit model. 

In  its  recommendation  for  the  2003  discharge,  Council  stated  that  "it  shares  the  Court's 
consideration relating to further improving the design of control systems by establishing clear 
and  consistent  objectives  and  responsibilities.  In  this  context,  the  Council  notes  with  great 
interest the Court's proposal for the development of a Community internal control framework 
as presented in its opinion on the single audit model". It considered "that as a rule no sector 
should  be  excluded  from  this  approach  and  invites  the  Commission  to  take,  where 
appropriate, the relevant initiatives. In this context, the Council underlines the importance of 
applying  and,  where  appropriate,  developing  common  standards  for  financial  control  and 
internal audit". 

The European Parliament gave its political analysis of the issue in §15 to §80 of its resolution 
on  the  2003  discharge,  and,  in  §75,  called  on  the  Council  to  work  with  the  Parliament  and 
Commission to give the creation of a comprehensive control and audit framework the priority 
and political momentum it requires. 

The Commission broadly agrees with the recommendations of both Parliament and Council. It 
will build further on the achievements of its administrative reform to complete an integrated 
control framework. 

B. ACTIONS REQUIRED OF THE COMMISSION 

The  Commission  is  determining  the  gaps  which,  in  its  view,  exist  between  the  control 
framework in place for each area of budgetary expenditure and the general principles defined 
by the Court in its opinion No 2/2004, with particular emphasis on the controls which limit 
the risks concerning the legality and regularity of the underlying transactions. It will propose 
the action required to address each gap, and the timetable for implementing this action, and 
discuss this with the Court, Council and Parliament. 

The  action  will  include,  on  the  one  hand,  the  identification  of  weaknesses  in  the  present 
legislation,  and  the  improvements  envisaged,  and,  on  the  other  hand,  the  action  required  to 
implement an adequate control framework within the present legislation. It will also cover an 
assessment of the consistency of the regulatory framework for the 2007-2013 period with the 
Court’s recommendations. 

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Firstly,  to  ensure  that  its  own  house  is  in  order,  the  Commission  is  identifying  the 
improvements necessary to the control framework for budgetary management and centrally 
managed  funds  where  this  does  not  meet  the  objectives  defined  by  the  Court.  The  action 
required to address these gaps includes: 

–  ensuring  that  the  Directors-General's  annual  activity  reports  present  clearly  the 
basis  for  assurance  on  the  underlying  transactions,  accompanied  by  appropriate 
indicators, and that the declaration of assurance covers the part of the accounts for 
which they are responsible, and, as much as possible, quantifies the effect of any 
reserves;  

–  ensuring  that  the  Accounting  Officer  signs  off  the  Commission's  accounts  to 
certify  that  (s)he  has  made  the  checks  that  (s)he  considers  necessary  and  is 
satisfied that the accounts have been prepared in accordance with the accounting 
rules, methods and accounting systems established under his/her responsibility for 
the  Commission's  accounts,  that  (s)he  has  made  any  adjustments  which  are 
necessary  for  a  true  and  fair  presentation  of  the  accounts  in  accordance  with 
Article 136 of the Financial Regulation, and that they are therefore reliable. In this 
respect,  an  amendment  to  Article  61  of  the  Financial  Regulation  has  been 
proposed as part of the revision of this Regulation adopted on 3 May 2005; 

–  assure  in  all  Directorates  General  a  clear  definition  of  the  role  of  the  resource 
directors, in their support of their Director-General in daily financial and control 
matters,  and  as  regards  the  annual  activity  report  and  its  accompanying 
declaration; 

–  further elaboration of the Commission’s follow-up reports, making it possible for 
the  Court  to  assess  what  steps  have  been  taken  to  implement  previous 
recommendations of the Court;  

–  reinforce the role of the Commission-wide management assessment played by the 
annual  Synthesis  report,  which  takes  stock  of  the  situation  in  the  services  and 
addresses major crosscutting issues;  

–  exploring the scope for greater simplification of the management of EC funds, and 

ensuring that the control requirements are proportionate to the risks; 

–  introducing  a  common  methodology  for  risk  assessment,  in  particular  to  give 
assurance on the management of the risk of error in the underlying transactions; 

–  providing guidelines for the services concerned by each family of expenditure on 
strategies for on-the-spot checks, including the methodology for the evaluation of 
supervisory systems and controls, the determination of sample sizes, the sampling 
techniques, the evaluation of the effect of errors on the EC budget and the level of 
acceptable risk; 

–  defining  categories  of  errors,  determining  the  rate  of  error  found  by  on-the-spot 
checks on the basis of representative samples and reporting this, together with the 
corrective measures taken and/or planned, in the annual activity reports; 

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–  ensuring that the resources allocated to ex-ante and ex-post checks are sufficient 

to achieve an appropriate balance between the costs and benefits of controls. 

When  the  Commission  delegates  powers  to  implement  a  Community  programme  or  project 
managed on a centralised basis to an Executive Agency, these can recruit staff in the number 
required  and  with  the  skills  necessary  to  assure  appropriate  checks.  These  agencies  have 
internal  control  requirements  which  are  identical  to  those  in  force  in  the  Commission, 
allowing  the  Commission  to  exercise  full  supervision.  They.could  be  subject  to  an 
independent annual audit. 

No new legislation is necessary to implement this plan of action, but adjustments have been 
proposed  to  the  present  provisions  of  the  Financial  Regulation  and  its  Implementing  Rules 
which  could  contribute  to  the  Commission's  initiatives  in  this  area.  Some  sector  regulations 
may also need to  be adjusted. When new  policies  are formulated, the level  of  risk which is 
acceptable  during  their  implementation  should  be  defined  and  agreed  with  the  legislative 
authority. 

Secondly, the Commission will work with the Member States to improve controls over funds 
in  shared  management.  It  acknowledges  its  responsibility  for  the  implementation  of  the 
budget as set out in Article 274 of the Treaty: “The Commission shall implement the budget 
[…] on its own responsibility and within the limits of the appropriations, having regard to the 
principles  of  sound  financial  management.  Member  States  shall  cooperate  with  the 
Commission to ensure that the appropriations are used in accordance with the principles of 
sound financial management.”  

Given  the  proportion  of  the  budget  under  shared  management,  it  is  not  possible  for  the 
Commission  to  achieve  a  positive  DAS  unless  Member  States  –  fulfilling  their  obligations 
under  Articles  274  and  280  of  the  Treaty  –  can  provide  the  Commission  with  reasonable 
assurance  for  the  transactions  which  they  implemented.  There  should  be  clear  provisions 
specifying how this assurance will be given. The proposed control framework should provide 
for incentives and, where necessary, coercive measures. 

The action required to address the gaps found includes: 

–  continuation  of  the  Commission’s  efforts  to  simplify  aid  schemes  financed  by 
EAGGF  Guarantee,  and  to  improve  the  provisions  concerning  primary  level 
controls  for  market  measures  outside  the  scope  of  the  Integrated  Administration 
and Control System (IACS) and geographical information systems (GIS); 

–  verifying  the  regulatory  framework  proposed  for  2007-2013  and  if  necessary 
adapting this to include the provisions which, in the light of the gap-assessment, 
are required to complete an integrated control framework, addressing the views of 
the Court and taking into account the elements requested by Parliament4 (annual 
audits  of  each  paying  authority,  ex-ante  Disclosure  Statements5  and  ex-post 

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In  the  agricultural  sector,  for  example,  an  ex-post  declaration  of  assurance  by  the  heads  of  Member 
States’ paying agencies has already been accepted by the Council as part of its agreement on the new 
basic regulation on the financing of the common agricultural policy. 
Under which the managing authority of each Member State (e.g. the Finance Ministry) states every year 
that proper control systems are in place. 

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Declarations of Assurance at Member State level, access to the reports of auditors 
and control bodies, sanctions on claimants which are proportionate but dissuasive, 
and reporting of the rate of error affecting EC funds and of systemic weaknesses); 

–  improving cooperation arrangements in line with the 'single audit' approach, and 
completing  the  existing  body  of  guidance  on  common  principles  and  standards 
regarding  auditing  methods,  key  controls  and  strategies  for  on-the-spot  checks, 
including  the  assessment  of  supervisory  systems  and  controls,  the  determination 
of sample sizes, the sampling techniques and the evaluation of the effect of errors 
on the EC budget; 

–  presenting in October 2005 an initial report exploring the road map to a protocol 
with  Member  States  in  which  the  managing  authority  (Parliament  suggests  the 
Finance Minister) will declare, prior to disbursement and on an annual basis, that 
proper control systems, capable of providing adequate assurance for Commission 
accountability purposes, are in place. 

When  a  Member  State  fails  to  adequately  address  the  risks  of  error,  the  Commission  will 
protect  the  EC  budget  by  rigorously  applying  the  existing  provisions  for  the  suspension  of 
payments and financial corrections. 

Once  the  basis  for  an  integrated  control  framework  is  agreed,  the  Commission  will  explore 
further  with  the  Member  States  the  scope  for  attaining  greater  efficiency  in  the  audit  effort 
through the single audit model6. 

Where funds are under indirect central management, decentralised management or joint 
management,  it  will  introduce  the  principles  set  out  above,  but  adapted  as  appropriate  for 
each circumstance. In particular, its action will include: 

–  requiring  ex-ante  Disclosure  Statements  and  annual  ex-post  Declarations  of 

Assurance at Member State level for funds managed by national agencies; 

–  where necessary, increasing surveillance and control over intermediary bodies. 

Most  irregularities  found  in  the  underlying  transactions  represent  error  rather  than  fraud. 
Work will be undertaken in close collaboration with OLAF to make a clear distinction. 

C. ACTIONS REQUIRED OF THE MEMBER STATES 

In  its  2003  discharge  report,  the  European  Parliament  firmly  calls  for  Member  States' 
financial control systems to be reviewed and for the failings to be remedied. To ensure that 
Member  States  deal  with  the  weaknesses  in  their  management  of  EU  funds,  the  Parliament 
resolution on the 2003 Discharge (Wynn report) suggests that the managing authority of each 
Member State (e.g. the Finance Ministry) should have to state every year that proper control 
systems are in place. The Commission is called upon to draw up a report to look at ways of 
agreeing  a  protocol  on  this  matter  with  Member  States.  Parliament  is  adamant  that  the 

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An effective chain of controls operating to common standards, with each level taking into the account 
the work of others. See §39 of the Court's opinion No 2/2004. 

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Commission's  central  controls  cannot  on  their  own  solve  the  problem.  Member  States  must 
therefore be encouraged to manage EU funds as “their own”.  

There is at present little evidence that the level of checks prescribed by the present regulations 
needs  to  be  increased,  although  this  eventuality  is  not  excluded.  First  and  foremost,  the 
Member  States  are  asked  to  ensure  that  the  control  framework  required  by  present 
Community legislation is in place, is adequately resourced, and works effectively to limit the 
risk of error in the underlying transactions.  

Under  the  pressure  of  financial  corrections,  the  controls  required  of  Member  States  under 
EAGGF  Guarantee  are  largely  in  place,  but  further  improvements  are  still  needed,  for 
example  IACS  in  Greece,  and  ex-post  controls  and  mutual  assistance  between  customs 
services under Regulation (EEC) No 4045/89. 

It is particularly for structural funds that the Member States have yet to demonstrate that the 
controls  in  place  are  effective  in  limiting  the  risk  of  error.  In  view  of  the  diversity  of  the 
projects and aid schemes eligible for funding and of the implementing bodies concerned, the 
Community legislation and Commission guidance cannot set precise rules for supervision and 
controls. The Member States must ensure, for all programmes, that the present regulations are 
fully respected: 

–  the  primary  controls  (checks  on  the  reality  of  the  service  rendered  and  on  the 
expenditure  claimed)  are  either  exhaustive,  or  else  sufficient  with  regard  to  the 
costs and benefits of the checks7;  

–  there is an appropriate risk analysis; 

–  the error rate in the samples verified is assessed and reported; 

–  proportionate but dissuasive sanctions are applied for serious irregularities; 

–  primary controls are adequately supervised by the implementing body and by the 

Managing Authority; 

–  corrective action is taken whenever necessary; 

–  the Paying authority has the means and resources to obtain the assurance it needs 

to certify the amounts claimed from the Commission. 

They  should  do  so  in  the  light  of  the  guidance  provided  by  the  Commission  as  mentioned 
above, and ensure coherence between the controls over the various programmes of assistance, 
and that the controls meet the required standards. 

The  controls  at  Member  State  level8  also  need  to  be  rendered  effective  throughout  the 
structural  funds'  programming  period.  The  'contract  of  confidence'  proposed  by  the 
Commission  simply  specifies  an  audit  strategy  for  the  controls  required  by  the  regulations, 
together with annual reporting on their progress and a formal conclusion as to the functioning 

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Article 4 of Regulation (EC) No 438/2001. 
Articles 10 and 15 of Regulation (EC) No 438/2001. 

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of the system. Member States will be expected to bring their control units to apply such an 
audit strategy, and adequately report on its implementation, as from the present programming 
period.  

The  Member  States  should  ensure  that  the  material  weaknesses  of  the  supervisory  systems 
and controls, and the error rates found at each level of the control framework, are determined 
and  reported  in  terms  of  their  effect  on  Community  funds,  and  that  appropriate  corrective 
measures are taken whenever justified by considerations of costs and benefits. 

So that the Commission, and hence the Court, can gain assurance from the Member States on 
the  controls  operated  throughout  each  budgetary  year  on  funds  managed  in  partnership  as 
from 2006, the Member States should: 

–  provide  annual  ex-ante  Disclosure  Statements  and  ex-post  Declarations  of 
Assurance at the highest Member State level (Parliament suggests the Minister of 
Finance); 

–  support the above by requiring each responsible authority at operational level (e.g. 
Paying  Agency,  Paying  Authority  and  Managing  Authority)  to  make  similar 
annual  statements  and  declarations,  supported  by  opinions  from  independent 
auditors; 

–  request their Supreme Audit Institutions or the body providing audit assurance at 
Member  state  level  to  exercise  oversight  over  the  control  frameworks  for  EC 
funds, and to report on weaknesses in its design and operation in practice; 

–  request the Supreme Audit Institutions, or other independent audit bodies, to audit 
the ex-post Declarations of Assurances and report to the national parliaments on 
the result. 

Member  States  should  be  requested  to  take  responsibility  for  the  controls  over  National 
Agencies  and  implement  similar  measures  where  funds  are  under  indirect  central 
management. 

Furthermore,  it  is  recognised  that  the  current  time  frame  for  the  discharge  process  does  not 
give  the  Council  sufficient  time  to  discuss  and  react  in  substance  to  the  findings  and 
recommendations  from  the  Court.  Likewise,  the  current  Commission  report  on  the  Member 
States'  replies9  gets  only  brief  attention  in  the  Council  and  plays  a  very  limited  role  in  the 
discharge procedure or in the follow-up to recommendations. Therefore, after consulting  all 
the institutions concerned, the Commission is ready to consider a modification of Article 145 
of the Financial Regulation to postpone the deadline for a discharge decision as requested by 
Parliament10. An extension of the time allotted to the discharge procedure would contribute to 

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Article  143(6)  of  the  Financial  Regulation  requires  the  Commission  to  transmit  a  summary  of  the 
Member  States'  replies  by  15  February  of  the  year  following  the  publication  of  the  Court's  Annual 
report.  
The issues to be examined include the conflict with the date of the electoral campaigns when Parliament 
is  renewed,  and  impact  of  any  postponement  of  a  discharge  decision  on  the  subsequent  discharge 
procedure. 

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facilitating the substantial involvement of the Council and Member States, which is the key 
objective of the road map towards an integrated control framework. 

The  Member  States  will  also  be  requested  to  give  their  views  on  other  issues  raised  by  the 
Court and by the European Parliament: 

–  the  degree  to  which  the  cost  of  controls  over  EC  funds  can  be  determined,  and 

whether it should be borne by the EC budget; 

–  the scope for the introduction of a 'single audit' approach, implying the adoption 
of  common  principles  and  standards,  the  coordination  of  working  programmes, 
and access by each control body to the results of the work of others; 

–  the scope for increasing the role of national Supreme Audit Institutions through a 
more systematic sharing of national audit reports on the use of EU funds with the 
European Court of Auditors.  

D. ROLE OF THE COURT OF AUDITORS 

The Court of Auditors has developed the DAS methodology in recent years. It now includes 
four elements: 1) an examination of supervisory systems and controls, 2) an examination of 
samples  of  transactions,  3)  an  analysis  of  the  annual  activity  reports  and  declarations  of 
Directors-General,  4)  where  necessary,  an  examination  of  the  work  of  other  auditors.  The 
Commission  as  well  as  the  Parliament  and  Council  have  supported  this  development.  The 
Commission has taken note that the Court has stated in its 2005 work programme that it will 
work  on  “developing  the  DAS  methodology  in  the  context  of  new  parameters”  with  the 
objective of answering “more and more closely to the needs of the users of the DAS”. 

At the end of the meeting between the Commission and the Court of Auditors on 16 March 
2005, Mr Hubert Weber, President of the Court of Auditors stated: "The Court of Auditors' 
aim  is  to  maximise  the  impact  and  efficiency  of  its  audit  work  through  an  approach  which 
seeks  to  improve  results  rather  than  concentrate  on  listing  errors.  In  order  to  help  the 
Commission with its task to further improve the supervisory and control systems of the EU 
budget  at  all  levels,  the  Court  is  committed  to  further  developing  its  DAS  approach.  This 
allows  the  Court  to  even  better  measure  progress  and  point  out  more  precisely  where 
improvements are needed." 

This  Communication  presents  the  actions  envisaged  to  put  into  place  an  integrated  control 
framework. A working document will present the control framework in place in 2004, and the 
actions  which  the  Commission  considers  necessary  to  achieve  the  objectives  set  out  in  the 
Court's opinion n° 2/2004, including those already proposed for the 2007-2013 period.  

E. CONCLUSION AND PROPOSAL 

While all institutions would like a positive DAS to be granted on the implementation of the 
budget, it is for the Commission and the Member States together to ensure that the Court is in 
a position to find audit evidence of progress towards an adequate management of the risk of 
error.  This  will  not  happen  overnight,  and  the  DAS  should  not  be  expected  to  turn  from 
negative one year to clean the following year. A nuanced positive DAS, however, would be 

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much  more  effective  in  helping  the  Commission  and  Member  States  to  make  incremental 
improvements towards a clean DAS.  

The Commission is realistic and it welcomes the continued critical scrutiny from the Court of 
Auditors, and its advice, as an independent observer, on all the preparatory work. 

With this Communication, the Commission intends to initiate a process which can lead to a 
common  understanding  by  November  2005  between  the  Commission,  Parliament  (as 
discharge  authority)  and  the  Council  on  how  the  current  internal  control  framework  can  be 
improved in order to make it possible for the Commission to provide the Court of Auditors 
with reasonable assurance as to the legality and regularity of transactions. A further overview 
of the timetable for the roadmap is provided in the annex. 

It  is  proposed  that  the  Commission  notes  the  recommendations  of  the  Discharge  Authority, 
and instructs its services to: 

–  identify the gaps and propose plans of action to complete the control frameworks on which 

the Court can base the assurance its seeks; 

–  undertake  discussions  with  the  appropriate  Council  Committees,  and  present  in  October 
2005 an initial report proposing a basis for a common understanding with Member States 
on an integrated internal control framework; 

–  verify  the  regulatory  framework  proposed  for  2007-2013  and  if  necessary  propose 
adaptations to include the provisions which, in the light of the gap-assessment, are required 
to complete an integrated control framework. 

In  parallel,  it  is  suggested  that  the  Council  Presidency  should  establish  a  High-Level  Inter-
institutional trialogue tasked with negotiating and reaching an agreement on the crosscutting 
issues  in  the  present  proposals,  which  should  spell  out  a  common  understanding  of  what 
would  constitute  an  adequate  and  satisfactory  Community  integrated  control  framework  as 
well  as  the  necessary  steps  to  implement  it.  This  agreement  is  to  be  formalised  in  an  Inter-
institutional agreement signed at political level.  

The  Commission  would  welcome  the  opinion  of  the  European  Court  of  Auditors  on  the 
actions  proposed  in  the  Inter-institutional  agreement,  and  would  also  like  its  views  on 
whether,  if  adequately  implemented,  they  would  be  sufficient  to  provide  the  Court  with  a 
basis  for  an  assurance  on  the  legality  and  regularity  of  the  underlying  transactions,  in 
particular  on  the  evaluation  of  errors  found  in  measures  covered  by  a  multi-annual  control 
framework. 

EN 

11 

   EN 

 
The following timetable is envisaged for the further process: 

Annex 

June 2005 

The  Commission  adopts  the  Communication  on  a  roadmap  to  an  integrated  internal 
control framework, and completes (supervised by DG Budget) its assessment of the gaps 
between  its  present  control  frameworks  and  that  recommended  by  the  Court,  and  its 
proposals for action. 

July 2005 

First discussions among the Parliament, the Council and the Commission. The Council 
establishes a high-level panel of experts. 

to  September 

Discussion by each service of its gap analysis and action plan with the Court of Auditors. 

July 
2005 

October 2005 

Conference on the DAS organised by COCOBU. 

November 2005 

Initial report proposing the basis for a common understanding. 

Common understanding among the Parliament, the Council and the Commission on the 
internal control framework. 

The  Commission  adopts  the  Communication  on  a  roadmap  to  an  integrated  internal 
control  framework  (action  plan).  This  Communication  will  present  the  common 
understanding on the gap assessment and actions to be taken in order to achieve a fully 
integrated control framework for both centralised management and shared management. 
The aim is to make it possible for the Commission to provide the Court of Auditors with 
reasonable assurance as to the legality and regularity of transactions. 

Interinstutional  agreement  with  Parliament  and  Council  on  the  steps  needed  to  achieve 
an integrated control framework. 

2006 - 

Implementation of the action plan. 

EN 

12 

   EN