Communication from the Commission to the European Parliament and the Council -  Progress Report on the Commission reform - Beyond the reform mandate
Date: 2005-12-21
Institutions: European Commission
Subjects: European Commission, institutional reform, report

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 21.12.2005 
COM(2005) 668 final 

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT AND THE COUNCIL 

PROGRESS REPORT ON THE COMMISSION REFORM BEYOND THE REFORM 
MANDATE 

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COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT AND THE COUNCIL 

PROGRESS REPORT ON THE COMMISSION REFORM BEYOND THE REFORM 
MANDATE 

1. INTRODUCTION 

In  2000,  the  Commission  launched  an  unprecedented  administrative  Reform  project  which 
was  built  upon  previous  modernisation  initiatives.  During  its  term  in  office,  it  laid  the 
groundwork for the most radical administrative transformation since the institution’s creation, 
aimed at overhauling working methods, financial management systems and personnel policy. 
Measures  were  taken  in  four  areas,  the  “pillars”  of  Reform:  Creating  a  culture  based  on 
service  and  efficiency;  Strategic  Planning  and  Programming,  Personnel  Policy;  and  Audit, 
Financial  Management  and  Control.  These  measures  were  based  on  five  key  principles: 
independence, responsibility, accountability, efficiency and transparency. 

The  Reform  mandate  was  designed  to  equip  the  Commission  with  new  administrative  and 
managerial tools to deal with its expanded role and competencies within the European Union 
and to adapt to a changing international environment. It addressed many of the Commission’s 
longstanding problems and shortcomings which had been documented in internal and external 
reports and studies. The Commission’s credibility with external stakeholders and the public in 
general  had  been  seriously  questioned.  It  became  imperative  for  the  Commission  to  refocus 
on its core activities and political objectives. A new robust financial management, control and 
audit system was vital to remedy the weaknesses identified. A modern personnel policy was 
required to make full use of staff competencies, while a more service-orientated culture was 
necessary to address the needs of both external stakeholders and personnel. 

These were the main areas of the Reform, which led to a fundamental change in the way the 
Commission  works,  moving  from  a  more  traditional  centralised  bureaucracy  set  up  to  deal 
with  the  problems  and  responsibilities  of  the  past  towards  a  more  performance-based 
management organisation geared to facing the challenges of the present and the future. With 
the reform instruments in hand, the Commission will now move on to consolidating and fine-
tuning them and will pursue their simplification with a service orientated point of view and 
with the necessary flexibility to improve their efficiency and effectiveness. 

This  report,  which  covers  the  period  from  February  2004  to  the  present,  responds  to  the 
specific request by the European Parliament in its resolution on the Commission’s legislative 
and work programme 20051 for an account of the state of implementation of the Reform. The 
Commission  takes  this  opportunity  to  take  stock  of  the  progress  achieved  and  to  present  its 
outlook  for  developments  in  the  areas  of  strategic  planning,  financial  and  human  resource 
management and working methods during its term in office. 

1 (P6_TA(2005)0053). 

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 2. REVIEW OF PROGRESS ACHIEVED 

The period covered by this report witnessed the completion of all the reform-related measures 
set  out  in  the  Commission’s  White  Paper  on  the  Reform.  The  underlying  objective  of  the 
Reform was to introduce a new service-orientated culture to enable the Commission to focus 
on its core activities and political objectives and thus deliver its policies more effectively and 
efficiently. 

To reinforce transparency and efficiency of the Commission’s activities, a Strategic Planning 
and Programming (SPP) cycle was put in place, which integrates the planning and budgeting 
processes. This cycle is founded on Activity-Based Management (ABM), the cornerstone of 
the Commission’s integrated performance management system. 

Human resource management moved forward with the adoption of the new Staff Regulations, 
which,  among  other  things,  established  a  linear  career  system  designed  to  increase  staff 
motivation  and  enhance  meritocracy.  The  Commission  ensured  both  stability  during  the 
enlargement  phase  and  a  smooth  transition  to  the  new  Staff  Regulations,  which  came  into 
force on 1 May 2004. 

The  financial  management  system  was  modernised  by  expanding  the  responsibilities  of 
authorising  officers  and  by  increasing  their  accountability.  The  introduction  of  accrual 
accounting  as  of  January  2005  was  an  important  part  of  this  modernisation  process.  In 
addition,  internal  controls  and  audit  were  developed  to  enhance  the  efficiency  and 
effectiveness in the use of Community resources. As these tools have been integrated in the 
daily management of Commission Departments, the Commission is now entering a phase of 
further consolidation. 

Creating a culture based on service and efficiency 

Transparency and responding to the public 

Reform  has  brought  significant  improvements  to  the  Commission’s  transparency  and 
efficiency in dealing with the public. The Code of good administrative behaviour has set rules 
aimed  at  guaranteeing  high  quality  service  to  the  public.  These  include  the  right  of  every 
person  to  have  her/his  affairs  handled  impartially,  fairly  and  within  a  reasonable  time. 
Transparency about its work has been developed by various measures, including the creation 
of  a  website  providing  information  on  the  Commission’s  strategic  planning,  day  to  day 
activities and results achieved.2 

The  number  of  requests  for  access  to  Commission  documents  has  continued  to  rise  sharply 
(70% increase from 2003 to 2004), while the rate of positive replies remained stable at around 
two-thirds. The number of hits on the “Openness and Access to Documents” website tripled in 
2004 as compared to the previous year. On 30 January 2004, the Commission adopted a report 
on  the  implementation  of  the  principles  of  the  Regulation  regarding  public  access  to 
documents.3 This report concluded that the objectives of the regulation were met. 

2 http://europa.eu.int/comm/atwork/index_en.htm. 
3 COM(2004) 45. 

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Governance and better regulation 

Administrative reform has contributed to the objective of improving European governance. In 
particular,  the  changes  envisaged  in  the  Commission’s  June  2002  Action  Plan  on  Better 
Regulation, e.g. establishing principles and minimum standards for consulting the public, and 
guidelines  for  the  collection  and  use  of  expert  advice,  have  now  been  fleshed  out  and  are 
being  progressively  integrated  into  the  working  methods  of  the  Commission.4  For  example 
through  the  website  “Your  voice  in  Europe”,5”  members  of  the  public  can  take  part  in 
interactive  policy-making  by  contributing  to  debates  on  emerging  policy  issues  and 
responding to public consultations. Furthermore, the Prodi Commission introduced measures 
to  improve  the  management  of  infringements  procedures  for  failure  to  comply  with 
Community law. These measures will in turn help the Commission to meet its commitments 
under  the  Inter-Institutional  Agreement  on  "Better  Lawmaking",  which  was  signed  in 
December 2003. 

To  ensure  that  its  proposals  meet  the  highest  standards  of  quality  and  are  developed  on  the 
basis of careful analysis of their potential effects, the Barroso Commission has put renewed 
emphasis  on  impact  assessment  of  major  legislative  and  policy-defining  proposals  in  the 
Commission’s  Annual  Work  Programme,  particularly  as  regards  the  assessment  of  key 
economic  impacts.  Through  impact  assessment  and  public  consultation,  the  quality  of  the 
proposals (and hence the speed with which they can be adopted by the Council and European 
Parliament) will be further enhanced.6 The delivery of items in the Work Programme has been 
substantially improved from under 50% at the start of the last Commission to 70% in 2004. 
For 2005, the Commission aims to implement 90% of its Work Programme.  

A  revised  impact  assessment  approach  was  set  out  in  the  Commission  Staff  Working 
Document  Impact  Assessment:  Next  Steps  in  support  of  Competitiveness  and  Sustainable 
Development7 of October 2004  and  further  consolidated in the March 2005  Communication 
Better Regulation for Growth and Jobs in the European Union.8 The Commission’s internal 
Impact Assessment Guidelines were also reviewed and endorsed by the Commission in June 
2005,9 giving clearer guidance both on how, for example, to take the principles of subsidiarity 
and  proportionality  into  account  and  how  to  assess  economic  and  competitiveness  impacts. 
They also underline the need to examine a range of policy options with a view to improving 
the conditions not only for business but also for individuals. 

As  announced  in  its  March  communication  on  better  regulation  for  growth  and  jobs,  in 
September the Commission presented the results of a screening exercise of pending legislative 
proposals and announced its intention to withdraw 68 of these. In October 2005, a new phase 
of its legislative simplification programme was presented, based on the result of stakeholder 
consultation and a more sectoral approach. A public web consultation was launched on 1 June 
2005.  Specific  invitations  were  also  addressed  to  Member  States  and  key  stakeholders  to 
contribute  to  this  exercise  with  suggestions  for  simplification  to  improve  the  business 
environment and competitiveness. 

4 COM(2002) 275 and COM(2002) 278. 
5 http://europa.eu.int/yourvoice/index_en.htm. 
6 Since its introduction in 2003, the Commission has carried out more than 100 impact assessments. 
7 SEC(2004)1377. 
8 COM(2005)97. 
9 SEC(2005)791. 

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Following  the  presentation  in  March  2005  of  a  Commission  Staff  Working  Document  on 
administrative  costs  and  a  pilot  phase  during  April-September  2005,  the  Commission 
presented its position on a common methodology for measuring administrative burdens to be 
applied by EU institutions and Member States when assessing the impacts of EU legislative 
initiatives. 

Simplification of procedures and working methods 

Simplification  of  procedures  and  working  methods  is  an  ongoing  facet  of  reform  and  has 
developed  beyond  what  was  envisaged  in  the  White  Paper.  An  Interim  Action  Plan10  was 
successfully  concluded,  including  actions  to  simplify  the  decision-making  process.  A  major 
overhaul of the Commission’s Manual of Operating Procedures was completed in 2003. All 
the relevant documentation concerning simplification is made available to Commission staff 
on an internal website, which is also a tool for feedback and suggestions from staff. 

In line with the Union’s e-Europe action plan, the e-Commission action plan was launched in 
2001  with  the  aim  of  modernising  the  Commission’s  internal  administrative  procedures, 
improving communication between the Commission and its outside partners and developing 
the  services  which  the  Commission  provides  to  the  public  and  businesses.  A  number  of 
initiatives have already been launched to implement leading web-based solutions in the areas 
of human resources and financial control. The Commission’s document management policy is 
being reformed by way of a major initiative called e-DOMEC.11 Digital technologies enable 
the Commission to exchange information more effectively, radically transforming the way it 
communicates  with  the  various  civil  society  groups  and  its  partner  institutions.  In  October 
2004, the Commission complemented its e-Commission action plan with memoranda on new 
IT governance and interoperability. 

Working methods of the Members of the Commission 

In  December  2004,  the  Members  of  the  Commission  agreed  on  a  number  of  new  internal 
working  methods  aimed  at  improving  coordination  and  preparation  of  its  work.12  The 
instruments  include  increased  use  of  Groups  of  Commissioners  for  the  purpose  of  internal 
coordination. The new working methods have been reflected in the revised Internal Rules of 
the Commission. 

Externalisation and the Commission’s Administrative Offices 

In  the  context  of  the  White  Paper  on  Reform,  the  Commission  developed  a  policy  of 
externalising implementation tasks of certain programmes to executive agencies. The aim is to 
focus  Commission  staff  resources  on  the  institution's  core  tasks  and  to  achieve  the  goals  of 
Community  programmes  more  effectively.  Three  executive  agencies  are  established  and 
should be fully operational by late 2005/early 2006.13 Preparations for establishing two other 
executive agencies are well advanced.14 

10 SEC(2000) 1757/6. 
11 e-DOMEC stands for Electronic Archiving and Document Management in the European Commission. 
12 SEC (2004)1617/4. 
13  The Intelligent  Energy  Executive Agency, the  Executive Agency  for  the  Public  Health  Programme,  and  the 

Education, Audiovisual and Culture Executive Agency. 

14  Including  the  Trans-European  Transport  Network  Executive  Agency  and  the  Seventh  Research  Framework 

Programme Executive Agency structures referred to in COM(2005)119.  

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In 2004, the three administrative offices (PMO, OIB, and OIL) completed their second year of 
operations,  passing  from  a  transition  phase  to  a  consolidation  phase.  Their  Management 
Boards consider the underlying reasons for their creation to be still largely valid. The Offices 
executed their management plans successfully; the use of performance indicators in 2005 will 
provide  a  more  substantiated  assessment  of  their  operations.  Further  clarification  of 
competencies between the Offices and DG ADMIN is necessary in specific domains. 

Strategic planning and programming 

Like  other  performance  management  systems,  the  Commission’s  Strategic  Planning  and 
Programming (SPP) cycle begins with strategy-setting and high-level objectives, which feed 
through into resource allocation and operational planning, followed by an implementation and 
monitoring phase, ex-post reporting, and a continuous improvement loop provided notably by 
evaluation  and  audit.  The  SPP  cycle  has  put  policy  priorities  at  the  heart  of  the  decision-
making  process,  including  resource  allocation.  While  the  Annual  Policy  Strategy  (APS) 
defines policy priorities and the corresponding resource needs, the Preliminary Draft Budget 
presents  a  more  detailed  request  for  resources  on  the  basis  of  performance  information  by 
activity. 

ABM  instruments  are  integrated  into  the  Commission’s  working  methods  and  are  used  to 
communicate  with  other  institutions.  Managers  are  required  to  focus  on  delivering  priority 
objectives, to set related actions, and to monitor and report on performance. More remains to 
be  done,  however,  to  increase  the  influence  of  the  instruments  on  policy,  including  more 
systematic  use  of  performance  information  (objectives  measured  by  means  of  indicators)  to 
improve the day-to-day management of activities. Greater political involvement in this field 
would allow the Commission to make fuller use of its performance management system. 

In  early  autumn  2004,  the  Budgetary  Authority  provided  the  Commission  with  feedback  on 
the performance information used to justify the preliminary draft budget in a report from the 
Presidency of the Council15 and  a working document  of the European  Parliament.16 Despite 
the Commission’s efforts to take the recommendations into account, the use of performance 
information by the Budgetary Authority remains limited, which has led to the reform having 
limited impact on the budgetary procedure itself. 

The 2004 Synthesis Report,17 adopted in June 2005, enabled the Commission to take stock of 
the internal management of its departments. Although in principle the relevant information is 
available in the annual activity reports, in ex-post evaluations and in other mandatory reports, 
external reporting on policy results will be improved to enable readers to get an overview of 
achievements on priority initiatives. 

Strategic Objectives 2005-2009 

In  January  2005,  the  Commission  presented  its  strategic  objectives  for  the  period  2005-
2009,18  and  the  work  programme  for  2005.19  In  short,  the  strategic  objectives  focused  on 
prosperity – of particular importance, given the link to the “growth and jobs” agenda of the 

15 COMBUD 140/04 of September 2004. 
16 DT/539456 of August 2004. 
17 COM(2005)256. 
18 COM(2005)12 of 26.01.2005. 
19 COM(2005)15 of 26.01.2005. 

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Lisbon  strategy  –  solidarity  in  an  enlarged  Union  and  security,  as  well  as  the  projection  of 
those goals outside the Union. 

When  presenting  the  multi-annual  strategic  objectives  and  the  work  programme,  President 
Barroso  expressed  the  ambition  of  this  Commission  to  work  even  more  closely  with 
Parliament  and  the  Council  to  deliver  common  objectives.  This  ambition  later  guided  the 
revision  of  the  Framework  Agreement  between  the  Commission  and  Parliament,  stressing 
regular, bilateral dialogue at the highest level. President Barroso also placed new emphasis on 
communication, listening to the citizens, and working for and with them. 

Personnel Policy 

The new Staff Regulations, the last major legislative component of the Reform, were formally 
adopted  on  22  March  2004  and  entered  into  force  on  1  May  2004.  This  event  marked  the 
conclusion  of  a  long  and  arduous  ‘overhaul  phase’  during  which  the  necessary  regulatory 
framework of internal reform was put in place. The Staff Regulations were complemented by 
the  adoption  of  implementing  rules  concerning  the  personal  liability  of  staff,  professional 
incompetence,  and  contract  and  temporary  staff.  The  gradual  phasing-out  of  auxiliary  staff 
began in 2004 and, in June 2005, EPSO launched a competition for contract staff to set up its 
database.  In  addition,  following  the  conclusion  of  a  “one-off”  scheme  for  termination  of 
service (dégagement) and the conclusion of the preparations for enlargement, a redeployment 
exercise was carried out to assign human resources where departments needed those most. 

2005  marked  the  completion  of  the  third  full  exercise  of  the  new  staff  appraisal  system. 
However, since this remains a sensitive issue for staff, an in-depth external evaluation of the 
system  was  launched  in  March  2004.  This  evaluation  was  conducted  with  a  view  to 
improving,  in  particular,  the  link  between  merit  and  promotion  and  the  differentiation  of 
career progress and also to addressing questions of transparency. 

The  Guidelines  on  Mobility  have  led  to  an  improvement  in  the  way  in  which  mobility  is 
managed  in  the  Commission  and  good  practices  are  being  disseminated  with  the  aim  of 
bringing about a system of career management through which the Commission can ensure that 
the  ‘right  person  is  in  the  right  job  at  the  right  time’,  thus  achieving  efficiency  and 
effectiveness.  While  the  experience  of  mobility  has  overall  been  positive,  some  adverse 
effects of compulsory mobility for sensitive posts, such as loss of expertise and institutional 
knowledge, were noted and need to be addressed. 

Training continued to play a key role in the Commission’s human resources policy. Overall, 
the average number of training days per official in 2004 was 9.1, a significant increase on the 
2001 figure of 6.9. The general training budget, which grew steadily in 2002 and 2003 after a 
considerable increase of 63.6% in 2001, was further augmented by 37% in 2004. The creation 
of  the  European  Administrative  School  in  January  2005  should  further  reinforce  training  in 
the Institutions. 

training  as  provided  by 

An  evaluation  of  management  training  and  development  in  the  Commission  concluded  that 
is 
management 
comprehensive  and  highly  regarded  by  trainees.  By  the  end  of  2004,  approximately  800 
managers  had  completed  the  Middle  Management  Training  Programme.  A  follow-up 
programme  was  developed  and  introduced  in  late  2004,  focusing  on  action  learning.  Work 
began  in  2004  on  the  development  of  a  Senior  Management  Programme  and  a  Leadership 
Programme for senior managers. 

the  Commission’s  Central  Training  Unit 

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The Commission adopted three Communications in 2004 and 2005 relating to the recruitment 
of  staff  from  the  new  Member  States  at  all  levels.20  They  specified  the  methodology  and 
procedures  to  be  applied  to  senior  management  recruitment  and  laid  down  the  general 
principles  to  be  applied  during  a  transition  period.  In  addition,  they  set  both  overall  targets 
and  targets  for  middle  management  recruitment  per  Commission  Department  for  2004  and 
2005. While the targets set for staff were basically achieved, the recruitment of managers, in 
particular of middle managers, experienced delays and, therefore, is being monitored closely. 

The Commission adopted the Fourth Action Programme for Equal Opportunities for Women 
and  Men  at  the  Commission,  which  aims  to  support  the  Commission’s  policy  of  equality 
between  women  and  men  and  also  proposes  a  number  of  measures  which  draw  on  the  key 
findings  of  an  external  evaluation  completed  at  the  end  of  2003.  These  actions  have 
contributed to meeting the Commission’s targets for recruitment and appointment of women 
foreseen for 2005. 

Audit, financial management and control 

Major initiatives in internal control 

The  2004  Annual  Activity  Reports  (AARs)  of  Commission  Departments  drew  a  globally 
satisfactory picture of the management and control situation. The “reservations”21 included in 
the activity reports indicate that most underlying problems are recurring and are being solved 
in a mid-term timeframe. The 2004 Synthesis Report,22 adopted by the Commission in June 
2005,  took  stock  of  this  situation  and  laid  down  actions  to  expand  the  Commission’s 
responsibility, monitoring capacity and accountability, such as the “Roadmap to an integrated 
control framework” and a Commission-wide risk management methodology, see below. 

In  the  wake  of  the  events  concerning  Eurostat,  the  2004  Code  of  Conduct  for 
Commissioners23  introduced  a  stipulation  which  is  still  in  force  that  all  Commissioners  be 
informed  at  least  every  six  months  of  the  difficulties  and  risks  linked  to  financial 
management,  of  the  effectiveness  of  internal  control  and  audit,  and  of  issues  raised  by 
controlling bodies or the discharge authority. 

As of 2004 the focus shifted from evaluating compliance with regulations and procedures to 
analysing  the  effectiveness  of  internal  control24  with  respect  to  the  main  control  objectives. 
Also,  training  courses  were  organised  with  a  view  to  improve  ownership  of  both  internal 
control and risk management. 

As  regards  risk  management,  2004  saw  the  first  steps  towards  a  common  approach  for  the 
whole  Commission:  a  draft  pilot  framework  was  proposed  for  seven  Commission 
Departments as a basis for evaluating their major risks and defining related action plans, while 
drafting  their  annual  management  plan  for  2005.  An  inter-service  steering  committee  has 

20 SEC(2005)811, SEC(2004)253, SEC(2004)1602. 
21  Serious  weaknesses  as  regards  the  sound  financial  management,  the  legality  or  the  regularity  of  underlying 

transactions for which corrective actions have been launched. 

22 COM(2005)256. 
23 COM (2004) 93 final, annex 4. 
24 The internal control standards implemented in the Commission are largely based on the COSO framework (the 

Committee of Sponsoring Organizations of the Treadway Commission). 

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since  followed  up  the  development  of  a  common  approach,  adopted  by  the  Commission  in 
October 2005. 

Following  the  synthesis  of  the  2002  AARs,  a  new  ex-post  control  network  was  set  up  to 
define  guidelines  and  circulate  best practices  among  Commission  Departments.25  One  of  its 
objectives is to agree on a common terminology and a typology of errors. 

As stated in the overall positive assessment of the Commission’s evaluation framework by the 
Court  of  Auditors  in  September  2005,  the  Commission’s  Departments  continued  to  expand 
and  improve  their  evaluation  activities,  increasingly  addressing  activities  outside  the 
traditional  area  of  expenditure  programmes  (e.g.  policies  and  horizontal  themes).  Marked 
progress has been made in the field of ex-ante evaluation, in particular in those areas where 
evaluations  of  this  kind  had  been  combined  with  an  impact  assessment.  At  central  level, 
increasing importance has been attached to producing highly synthesised papers on evaluation 
highlights so as to enhance higher level use of evaluation data. 

2005  saw  the  adoption  by  the  Commission  of  the  roadmap  towards  an  integrated  internal 
control framework26 and the drafting of the related report on the gap assessment27 between the 
internal  control  framework  within  the  Commission  and  the  control  principles  set  out  in  the 
Court  of  Auditors’  proposal  for  a  Community-internal  control  framework  (opinion  Nº 
2/2004). The aim of these documents is first to pave the way towards clearer accountability 
arrangements  and  greater  assurance  for  the  Community  budget  execution;  and  secondly,  to 
demonstrate more clearly the sound functioning of these processes to the Discharge Authority 
and  the  European  Court  of  Auditors  in  the  context  of  its  annual  declaration  of  assurance 
(DAS) regarding  the legality and regularity of the underlying transactions. This will require 
the active involvement of Member States as regards shared management. 

Major initiatives in financial management and accounting 

In  2004,  preparations  were  undertaken  for  the  transition  to  accrual  accounting  on  1 January 
2005.  The  new  accounting  system  complies  with  the  international  accounting  standards  for 
the public sector developed by the International Federation of Accountants (IFAC) and could 
help the Commission become a leader in this field. This has required major efforts throughout 
the Commission, notably in terms of information systems and training and of registering legal 
entities,  invoices,  fixed  assets,  prefinancing  and  guarantees  for  current  or  former  contracts. 
Despite the various practical difficulties still being addressed, numerous benefits are expected 
from the modernisation of the accounting system and related developments. These include the 
ability to monitor the concentration of Community funds with defined contractors, to detect 
exposure to risks linked to guarantees, to control prefinancing and monitor payment deadlines 
better,  and  to  draw  up  more  reliable  financial  statements.  Security  of  data  and  access  rules 
were  also  a  major  concern  throughout  the  development  of  the  project.  One  of  the  main 
benefits will be the availability from 2005 of accounting data on an integrated system, notably 
as regards assets and liabilities. Together these actions represent a significant move to address 
concerns raised by the European Court of Auditors over the years. 

On  3  May  2005,  the  Commission  adopted  a  proposal  for  the  revision  of  the  Financial 
Regulation.  This  proposal  aims  in  particular  at  further  clarifying  management  modes  and 

25 SEC (2004) 986, 12/7/2004, action related to co-financing. 
26 COM (2005) 252, 15/6/2005. 
27 Commission staff working document, 2/8/2005. 

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balancing  the  costs  and  benefits  of  controls.  It  stresses  the  responsibility  of  authorising 
officers  to  put  in  place  adequate  internal  controls  which  reflect  the  risks  related  to 
procurement or grants in particular. It also provides for the accounting officer to sign off the 
final  accounts,  declaring  that  they  were  prepared  in  accordance  with  both  the  provisions  on 
the presentation of the accounts and accounting principles, rules and methods. 

A first amendment to the implementing rules of the Financial Regulation was adopted by the 
Commission in July 2005.28 It sets out in the main to transpose the new directive on public 
procurement  and  to  develop  a  first  reply  to  management  issues  raised  by  financial  units  for 
low  value  contracts  and  grants.  It  also  addresses  the  conclusions  on  lump  sums  reached 
following the synthesis of 2002 AARs. It thus looks for a better balance between the costs and 
benefits of controls. 

Major initiatives in the internal audit domain 

In  2004,  the  Internal  Audit  Service  (IAS)  concluded  a  series  of  in-depth  audits,  risk 
assessments and desk reviews in Commission departments in response to a specific action of 
the  Reform  White  Paper.  Beyond  the  immediate  objective  of  providing  those  Commission 
Departments  with  independent  audit  assessments  and  providing  the  Commission  itself  with 
the first comprehensive feedback since the start of reform, these audits also provided the IAS 
with  the  necessary  basis  for  developing  its  own  risk-based  audit  programme,  in  line  with 
professional standards and practices. 

The  IAS  noted  improved  implementation  of  Internal  Controls  Standards,  more  reliable 
financial  circuits  as  a  result  of  implementation  of  the  new  Financial  Regulation,  better 
planning  and  performance  monitoring  tools  (ABM)  and  the  introduction  of  modern 
accounting and financial reporting based on International Accounting Standards. The IAS also 
indicated a need to pay greater attention to effectiveness in implementing the Internal Control 
Standards and the Annual Management Plans (AMPs), a need to introduce Commission-wide 
risk management, and to improve controls, supervision and monitoring of the application of 
internal procedures and financial management. 

The new Audit Progress Committee chaired by Vice-President Kallas started its work at the 
end of 2004. Its scope was broadened to examine the work of the internal audit units (Internal 
Audit  Capability  -  IAC).  The  Audit  Progress  Committee  will  also  deal  with  questions 
concerning the discharge procedure. 

In  the  Reform  Progress  Report  of  January  2004,  the  Commission  asked  the  IAS  to  report 
twice  yearly  on  key  findings  in  IAC  audits.  Two  such  reports  have  been  prepared  so  far, 
bringing  to  the  attention  of  the  Commission  a  number  of  key  risk  areas  in  and  across 
Commission Departments. 

The  working  relationship  between  the  IAS  and  the  internal  audit  units  in  Commission 
Departments  has  developed  considerably.  The  Internal  Auditor  chairs  a  network  of 
Commission internal auditors, which facilitates the exchange of information, including audit 
programming, and  strives to harmonise methodologies and reporting formats. Arrangements 
for quality assessments of the internal audit units and their reporting requirements to the IAS 

28 Regulation (EC) No 1261/2005, 20/7/2005 (OJ L 201, 2/8/2005). 

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have  been  simplified.  The  IAS  and  IACs  now  apply  common  minimum  standards  for  audit 
reporting, in particular on the rating of audit observations/recommendations. 

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3. FUTURE POLICY DEVELOPMENTS 

Simplification  of  procedures  and  working  methods  is  a  cross-cutting  objective  for  this 
Commission. This reflects a common perception within the organisation that the reforms were 
necessary  and  that  more  rigour  was  needed  in  areas  such  as  financial  management,  but  that 
some  of  the  measures  introduced  could  now,  in  the  light  of  experience,  be  streamlined  to 
achieve  productivity  gains  that  could  be  used  for  core  tasks  such  as  developing  and 
implementing the policies that serve the European public. 

The  Commission  has  made  communication  one  of  its  strategic  objectives.  In  July  2005  it 
adopted an “Action Plan to Improve Communicating Europe by the Commission” with a view 
to  concentrate  on  providing  clear,  comprehensive  and  timely  communication  to  the  public. 
The recently launched “Plan D: Democracy, Dialogue, Debate”, which lays the foundations 
of a profound debate on the future of Europe, is an example of the Commission’s commitment 
to better communication. 

A  number  of  areas  have  been  identified  for  further  development  of  the  strategic  planning 
process  in  the  Commission,  thus  making  it  more  effective  in  improving  transparency, 
performance and resource allocation, and ensuring the delivery of political priorities. 

Regarding  human  resource  management,  the  goal is  to  further  embed,  consolidate  and  fine-
tune the Staff Regulations and other reform measures and to ensure the further development 
of  a  service-orientated  administrative  culture.  The  aim  of  simplification  is  to  increase 
efficiency and  staff  satisfaction by  focusing on  and responding  more  to the needs of clients 
and also by adopting a more flexible approach where possible. In addition, measures will be 
taken to increase transparency and to improve communication and dialogue between staff and 
the  administration,  ensuring  that  human  resource  policies  and  their  rationale  are  clearly 
understood. 

The  Commission  aims  to  deliver  results  on  its  political  objectives  and  priorities,  while 
strengthening  its  assurances  as  regards  sound  financial  management  and  the  legality  and 
regularity of underlying transactions. This means appropriate management of risks inherent in 
any political organisation and the build–up of an integrated internal control framework with 
the Member States, which manage around 80% of the Community budget. The impact of its 
policies  should  also  be  clearly  assessed  and  reporting  on  its  activities  and  financial  data 
should  be  transparent  and  accurate.  All  this  will  be  made  easier  by  simplified  and  clearer 
rules, notably stemming from the Financial Regulation, and a better balance between the costs 
and benefits of control. 

Creating a culture based on service and efficiency 

Transparency and responding to the public 

In line with the commitment undertaken in its Communication on its strategic objectives for 
2005-2009  and  as  a  logical  complement  to  Plan  D:  Democracy,  Dialogue  and  Debate,  the 
Commission  decided  in  November  2005  to  launch  a  European  Transparency  Initiative.  The 
basic  aim  of  this  proposal  is  to  increase  the  public’s  trust  and  confidence  in  European 
institutions by making them more accountable and susceptible to public scrutiny. It foresees 
the publication of a Green paper by the beginning of 2006 to launch a public debate on how to 
improve transparency of the use of Community funds, consultation with civil society and the 
role of lobbies in the decision making process. The Commission will continue to take action 

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to improve its own transparency vis-à-vis European citizens including measures to facilitate 
access  to  information  through  modern  information  and  communication  tools.  In  this 
framework, the Regulation on public access to documents will also be reviewed. 

Governance and better regulation 

The Commission’s work on better regulation and legislative simplification will continue and 
intensify. In the area of impact assessment, work on monitoring and developing the approach 
will continue, taking into account the views of users and other stakeholders. An external and 
comprehensive evaluation of the Commission’s impact assessment system will be launched in 
early 2006. This will help to identify the strengths and weaknesses of the overall approach. A 
network  of  external  experts  is  also  being  established  to  provide  input  on  impact  assessment 
methodology. 

The  Commission  continues  to  urge  the  Council  and  the  European  Parliament  (under  the 
existing Inter-Institutional Agreement on Better Lawmaking) and the Member States to make 
substantial  and  swift  progress  towards  a  simpler  and  better  regulatory  environment.  Its  new 
approach  to  legislative  simplification  sets  out  a  rolling  programme  for  the  next  3  years.  It 
involves a focused  assessment of  EU legislation in a number of  sectors. In this context,  the 
Commission  will  complete  its  response  to  the  15  Council  priorities  for  simplification,  as 
endorsed by the Competitiveness Council in November 2004. 

Simplification of procedures and working methods 

Work  is  already  underway  to  simplify  financial  management  and  administrative  procedures 
by  focusing  on  issues  from  a  user’s  perspective.  Other  areas  where  simplification  could  be 
pursued  include  audit  and  control.  Central  and  support  services  will  be  expected  to  make 
simplification an integral part of their normal activities (“mainstreaming”), and focus more on 
the  impacts  and  the  administrative  burden  of  new  or  changed  procedures  and  working 
methods  on  Commission  departments  by  analogy  with  how  the  Commission  is  pursuing  its 
Better  Regulation  agenda.  Appropriate  impact  assessment  methods  for  internal  procedures 
could  be  developed  to  this  end.  Staff  opinion  surveys  and  electronic  consultations  on  the 
Intranet  will  be  important  sources  of  information  upon  which  corrective  measures  could  be 
based. 

The Commission recently adopted a Communication29 on how e-Commission will contribute 
to  modernising  the  Commission’s  working  methods  and  improving  the  services  provided  to 
staff,  national  administrations,  partners,  business  and  citizens,  thereby  renewing  its 
commitment to the e-Commission and its intention to use technology to facilitate efficiency 
and  transparency.  This  forms  part  of  the  Commission’s  own  contribution  to  e-Government 
within the broader objectives of creating a knowledge-based society which stimulates growth 
and jobs. Future e-Commission activities will seek, inter alia, to develop the level of policy 
and  administrative  services  available  electronically  to  users  inside  and  outside  the 
Commission, to implement interoperable information systems that improve effectiveness and 
reduce duplication, and to raise the level of IT security. 

Externalisation and the Commission’s Administrative Offices 

29 “e-Commission 2006-2010: enabling efficiency and transparency”, C (2005)4473. 

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In  its  first  communication  on  the  financial  perspectives  for  2007-2013,  the  Commission 
underlined  the  need  to  focus  its  activities  on  the  development  and  monitoring  of  policies 
under  the  Treaty.  It  identified  “principles  for  administrative  governance”  (less  direct 
management, better control of delivery and greater cost-effectiveness) as well as areas where 
outsourcing  of  programme  management  to  an  executive  agency  could  be  envisaged.  Some 
Commission  Departments  are  currently  considering  outsourcing  to  such  executive  agencies. 
However, as no executive agency is yet fully operational, it remains to be seen whether this 
option  is  the  most  cost-effective.  The  Commission  will  make  an  initial  appraisal  of  the 
situation in its 2005 Synthesis Report. After three years of operation, the executive agencies 
will  be  assessed  through  an  external  evaluation.  Options  for  externalisation  will  only  be 
considered  where  cost-effectiveness  can  clearly  be  established  and  where  governance  and 
control issues can be satisfactorily addressed. 

In addition, the results of an evaluation of the functioning of the Offices, which was launched 
in  October  2005,  will  be  used  to  take  measures  to  improve  their  operations,  delineate 
competencies  where  appropriate  and  to  consider  options  for  developing  further  their 
interinstitutional dimension. 

Strategic planning and programming 

The main points concerning the SPP cycle can be summarised as follows: 

Develop the multi-annual perspective of strategic planning 

The multi-annual dimension of the strategic planning cycle should be emphasised. The APS 
will  be  placed  in  a  multi-annual  perspective.  In  preparation  for  the  APS,  past  achievements 
will  be  assessed  against  the  multi-annual  objectives.  The  APS  orientation  debate  of  the 
Members of the Commission - the cornerstone of the political leadership of the cycle – will be 
further  enhanced  by  increasing  coordination  between  Commission  Departments  and  input 
from them ahead of the debate and by focusing the debate on the main policy options. 

Drive the culture of objective-setting 

The  Commission  will  step  up  its  efforts  to  improve  the  quality,  relevance  and  definition  of 
objectives and indicators, and to develop multi-annual target-setting. The need to deliver on 
priority  objectives  and  to  report  on  performance  will  be  further  embedded  in  the 
administrative  culture.  Specific  attention  will  be  given  to  the  difficulties  encountered  by 
Commission Departments in developing indicators that are meaningful for the general public 
and to increasing their ownership by the top management and the Commission itself. 

Further improve the resource allocation process 

The  information  basis  and  the  decision-making  process  for  resource  allocation  have  been 
substantially  improved  in  the  last  years  and  are  being  linked  to  the  budgetary  cycle. 
Nevertheless, the recent orientation for the revision of the objective criteria and indicators for 
assessing  resource  needs,  workload  and  performance  will  further  improve  this  process. 
Moreover  some  earmarked  posts  may  be  allocated  temporarily  to  departments  in  order  to 
better reflect the Commission’s priorities before being redeployed to other priority areas upon 
the  attainment  of  the  envisaged  objectives.  Therefore,  performance  information  should 
become  an  important  element  in  the  preparation  of  the  preliminary  draft  budget  and  the 
subsequent budget procedure. 

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Enhance reporting and communication of policy results 

Communication  to  citizens  and  other  stakeholders  on  the  benefits  of  EU  action  is  a  key 
priority of  the  Commission, which  intends to  make more  systematic use of  quantitative and 
qualitative performance information to enhance its capacity to communicate effectively. This 
includes the definition of relevant and understandable objectives and indicators. In the context 
of the SPP cycle, Commission Departments will be required to define the main objectives for 
each  policy  area  in  clear  political  language,  explaining  major  political  challenges  and 
achievements in a way that is meaningful to the public. 

To  strike  a  better  balance  between  reporting  policy  results  and  on  internal  control  and 
management  issues,  reporting  on  the  progress  made  in  achieving  strategic  policy  objectives 
will be addressed to the European Parliament, the Council and other stakeholders each year. 
The existing Synthesis Report will continue to focus on management and control matters. 

Personnel policy 

The  personnel  of  the  Commission  are  undoubtedly  its  main  asset  and  provide  it  with  the 
capacity  to  develop  and  implement  policy  measures.  The  success  of  the  Commission  in 
achieving its strategic objectives is therefore intrinsically linked to the quality and innovation 
of  Human  Resources  Management  (HRM).  Although  HRM  in  the  Commission  has 
significantly  developed  over  the  years,  staff  in  general  and  even  staff  involved  in  HRM  at 
local level still perceive it as a control and compliance function. 

In  the  medium  term,  the  Commission  will  strive  to  develop  HRM  as  part  of  its  strategy  to 
ensure  that  human  resources  are  managed  in  such  a  way  as  to  allow  the  Commission  to 
deliver on its agenda and to meet its objectives. In this context, the extended use of IT tools, 
e.g.  the  introduction  of  the  e-CV,  a  database  with  the  professional  profiles  of  the 
Commission’s staff, should play an important role. 

The Commission will work to further increase the specialised expertise of HRM practitioners 
so  as  to  professionalise  HRM  functions  and  processes  both  in  the  departments  and  in  the 
institution  as  a  whole.  The  key  elements  include  increasing  service  orientation,  pursuing 
simplification  as  an  ongoing  activity,  developing  a  performance-driven  culture  and 
recognising  individual  performance.  Work  on  the  formulation  of  a  specific  Action  Plan  to 
professionalise HRM in the medium term has progressed well. 

The  subsequent  objective  is  to  establish  HRM  as  a  Strategic  Partner  for  the  purposes  of 
strategic alignment of human resources. HRM will be further developed to include strategic 
HRM processes such as Competency Management, Organisational Development, Succession 
Management, Strategic Resources Planning, etc. 

The  action  plan  presented  in  July  2004,  with  the  aim  of  recruiting  experts  and  developing 
specialised  training  of  staff  already  in  place,  will  be  continued.  The  Commission  will  also 
contribute  to  the  work  programme  of  the  interinstitutional  European  Personnel  Selection 
Office  in  an  effort  to  ensure  that  competitions  continue  to  provide  adequate  numbers  of 
successful candidates to fill vacant posts. 

The  Commission  will  also  aim  to  achieve  a  balance  between  decentralising  HRM  functions 
and ensuring consistent application of Staff Regulations and HRM policies. To this end, DG 
ADMIN  will  have  to  play  an  active  role  in  promoting,  supporting  and  facilitating  common 

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HRM practices while at the same time allowing a greater degree of flexibility at local level 
where this kind of flexibility could enhance performance. 

Progress has been made regarding the development of a policy on wellbeing at the workplace 
which  should  be  finalised  in  the  near  future.  In  the  field  of  equal  opportunities,  realistic 
targets will be set and measures taken to ensure better gender balance. Work will continue on 
the development of viable solutions for flexitime and telework schemes aimed at increasing 
the reconciliation of private and professional lives. In addition, the Commission is currently 
reflecting  on  ways  to  further  improve  and  simplify,  where  appropriate,  its  present  staff 
performance, appraisal and promotion system. 

Audit, financial management and control 

Major initiatives in internal control 

The first multi-annual objective of the 2004 Synthesis was to achieve effective functioning of 
internal  control  systems  and  ownership  of  the  corresponding  concepts  and  processes  in  all 
Commission  Departments,  notably  through  regular  internal  control  reviews  by  the  internal 
control  coordinators  (ICC).  Guidance  in  that  respect  will  be  further  developed  by  central 
services and discussed in the ICC network. 

As  regards  risk  management,  the  goals  for  2005-2006  are  to  strengthen  the  structures  and 
processes  at  individual  DG  level.  Risk  management  will  be  introduced  as  part  of  the  AMP 
2006  process  and,  from  2006  onwards,  central  guidance  and  tools  will  progressively  be 
developed  for  the  different  types  of  activities,  projects  and  processes  the  Commission  deals 
with. A methodology to deal with risk at “family” level and involvement of the main external 
partners are scheduled for 2007. 

With  the  roadmap  to  an  integrated  internal  control  framework,  the  Commission  intends  to 
initiate a process of improvement of the current internal control framework in order to make it 
possible  for  the  Commission  to  provide  the  Court  of  Auditors  with  reasonable  assurance  as 
regards  the  legality  and  regularity  of  the  underlying  transactions.  While  discussing  with  the 
Member  States,  Parliament  and  the  Court  of  Auditors,  the  Commission  pursues  internal 
consultations  designed  to  come  up  with  an  action  plan  in  early  2006  that  will  lay  the 
foundations  for  such  an  integrated  framework.  Those  actions  will  then  have  to  be 
implemented in the months and years to come. 

The importance of ex-post controls was also reaffirmed in the 2004 Synthesis. The aim is to 
improve efficiency and strengthen accountability by further harmonising and focusing ex-post 
controls  through  strategies  defined  at  family  level.  Generally  speaking,  the  reflections 
surrounding  gap  assessment  and  the  roadmap  towards  an  integrated  internal  control 
framework  should  strive  towards  offering  departments  control  strategies  covering  the  cost-
benefit of both ex-ante and ex-post controls. 

The  Commission  is  currently  preparing  a  new  Communication  on  evaluation,  the  main 
purpose  of  which  is  to  promote  the  generation  of  evaluation  evidence  that  can  be  used  for 
budgetary  and  strategic  decision-making.  It  also  aims  to  consolidate,  clarify  and  simplify 
existing evaluation practices and requirements with a view to maximising the added value of 
evaluation in the light of the Commission's priority information needs. 

Major initiatives in financial management and accounting 

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The  amended  Financial  Regulation  now  being  discussed  with  the  other  institutions  and  the 
corresponding implementing rules are due to enter into force by 1 January 2007, together with 
the new generation of basic acts for the 2007-2013 programming period. 

A proposal for a separate round of simplification of the implementing rules was adopted by 
the Commission in October 2005. It aims at further simplifying financial procedures for the 
Commission  Departments,  as  well  as  economic  operators  and  beneficiaries  of  grants, 
especially as regards low value contracts and agreements and external actions. 

While the essential adaptations to enable the move to the new accounting environment were 
completed by the end of 2004, the closure of the first accrual accounting year is well on track. 
Fine-tuning work remains to be done both to build on these changes and to extend the benefits 
of  the  system  beyond  the  Commission’s  own  accounts.  Work  is  underway  in  2005,  for 
example,  to  incorporate  the  financial  activities  (loan  and  borrowing),  the  European 
Development Fund and the administrative appropriations managed by delegations within the 
accounting system and discussions have been started with a view to the possibility of opening 
the  Commission’s  system  to  Agencies  and  to  other  Institutions.  Meanwhile,  use  of  the 
Commission’s  contracts  database  has  been  made  obligatory  for  contracts  signed  in  2005, 
opening accrual accounting balances are being validated by the DGs. In parallel, measures are 
being taken to improve the operational performance and security of IT systems. 

Major initiatives in internal audit 

The Commission’s internal audit community intends to intensify its efforts to make more of 
possible  synergies  between  the  different  stakeholders;  to  improve  the  coordination  of  work 
programmes;  to  pursue  further  methodology  development  and  harmonisation  across  the 
internal audit functions; and to broaden the use of the IT-based Audit Management System. 

The  recently  launched  quality  assessment  cycle  of  the  internal  audit  units  of  Commission 
Departments,  being  carried  out  by  the  IAS,  will  be  finalised  in  2006.  This  comprehensive 
quality  exercise,  which  is  in  line  with  professional  standards,  will  aim  to  guarantee  the 
availability of quality internal audit services for Commission Departments and to establish an 
objective basis which will allow auditors to rely on the results of other internal audits. 

The Audit Progress Committee is expanding its role and consolidating its ability to effectively 
monitor the follow-up of audit recommendations. 

As  regards  the  scope  and  nature  of  its  audit  activity,  the  IAS  will  continue  to  cover  areas 
beyond  financial  management  and  accounting.  This  includes  planning  and  policy-making, 
policy  implementation  and  monitoring  activities,  and  responds  to  professional  practice  in 
terms of evaluation and better risk management, control, and governance processes.30 It will 
also pay particular attention to simplification and proportionality, developing better instead of 
more  controls  and  moving  from  formal  compliance  with  internal  control  standards  to  their 
effective implementation. 

Major initiatives with regard to OLAF 

30 Institute of Internal Auditors (IIA) performance standard 2100, http://www.theiia.org/?doc_id=1499. 

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In February  2004 the  Commission adopted a first series of proposals amending Regulations 
1073/1999  and  1074/199931.  Following  a  special  report  (No  1/2005)  by  the  Court  of 
Auditors32 concerning the management of OLAF and a public hearing on the reinforcement of 
OLAF  in  July  2005  at  the  European  Parliament  (Committee  on  Budgetary  Control)  the 
Commission is now planning to present a new legislative proposal, building on the previous 
advances made and looking at governance and control in particular.  

Over  the  past  years  OLAF  has  substantially  reinforced  its  service  activities,  including  for 
Commission Services by fraud proofing legislative proposals at an early stage. 

31 
32 

(COM (2004) 103 and 104) 
OJ C 202, 18. 8.2005, p. 1. 

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4. CONCLUSIONS 

The  internal  reforms  undertaken  by  the  Commission  in  2000  amounted  to  a  major 
modernisation  exercise  involving  an  overhaul  of  its  working  methods,  procedures  and 
regulations.  This  achievement  was  made  possible  through  the  combined  efforts  of  both 
internal  -staff  and  management-  and  external  -the  other  institutions-  stakeholders.  The 
Barroso  Commission  considers  that  the  key  principles  underlying  reform  measures  remain 
sound.  Now  that  the  Reform  per  se  has  been  concluded,  the  Commission  is  determined  to 
build upon its achievements and ensure that its resources, both financial and human, are used 
efficiently and effectively in an open and transparent manner so as to facilitate control and 
build up the trust of Europe’s citizens. It is committed to delivering its strategic objectives in 
the areas of prosperity, solidarity, social justice and security, and putting a strong European 
voice  on  the  international  scene  by  focusing  its  attention  on  the  formulation  and  effective 
delivery of its policies. 

To facilitate the achievement of these objectives during its mandate, the Commission intends: 

•  to  pursue  further  consolidation,  streamlining  and  simplification  of  internal  procedures 
and working methods in the interests of effectiveness and efficiency and to strike a better 
balance between the level of risk and the cost of control; 

•  to ensure that this process becomes internalised as part of a normal process of continual 

learning and organisational improvement; 

•  to  improve  transparency,  accountability  and  communication  with  the  European  public, 

other EU institutions and other partners; and 

•  to  enhance  ownership  -  both  at  political  and  at  staff  level  -  of  the  Commission’s  new 
management  culture,  which  is  based  on  responsibility,  accountability,  empowerment, 
better communication and dialogue. 

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