Modified proposal for a Council Regulation amending Regulation (EC, Euratom) No 1605/2002 on the Financial Regulation applicable to the general budget of the European Communities
Date: 2006-05-18
Institutions: European Commission
Subjects: budgetary control, financial management, financial regulation, general budget (EU), implementation of the budget

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 18.5.2006 
COM(2006) 213 final 

2005/0090 (CNS) 

Modified proposal for a 

COUNCIL REGULATION 

amending Regulation (EC, Euratom) No 1605/2002 on the Financial Regulation 
applicable to the general budget of the European Communities 

(presented by the Commission) 

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EXPLANATORY MEMORANDUM 

1. 

BACKGROUND 

The  recast  Financial  Regulation  ('FR')  was  adopted  by  the  Council,  acting  unanimously,  in 
June 2002, after recourse to a successful conciliation procedure with the European Parliament 
and  after  significant  input  from  the  Court  of  Auditors.  In  December  2002  the  Commission 
adopted  the  implementing  rules  ('IR')  of  the  recast  FR after  extensive  consultation  of  the 
institutions.  Both  regulations,  which  apply  to  all  institutions,  entered  into  force  on 
1 January 2003.  

According  to  its  Article  184,  the  FR  is  subject  to  review  every  three  years,  or  whenever  it 
proves necessary to do so. In compliance with this obligation, on 3 May 2005 the Commission 
adopted a proposal for revising the FR. 

As  provided  for  in  Article  279  of  the  Treaty  establishing  the  European  Community,  the 
Commission's proposal was submitted to the European Parliament for consultation and to the 
Court of Auditors for an opinion. The other institutions were also informed.  

The results of the inter-institutional consultations are as follows: 

a) 

b) 

c) 

The  European  Economic  and  Social  Committee  (“EESC”),  whose  opinion  is  not 
required under Article 279 TCE, delivered a broadly favourable opinion in October 
2005. 

The Court of Auditors (“ECA”) delivered a broadly favourable opinion in December 
2005,  while  considering  that  the  extent  of  the  revision  is  too  wide  and  expressing 
some concern in specific areas. 

The  European  Parliament  voted  its  amendments  during  the  plenary  session  of  15 
March 2006. Parliament presented 134 amendments which represents by far the most 
substantial contribution to the Commission's proposal. 

d) 

The Council completed its first reading of the Commission proposal in March 2006. 

The Commission also had extensive consultations with the representatives of civil society and 
in  particular  NGOs  on  the  difficulties  perceived  by  them  in  the  implementation  of  the  FR. 
(hearings in the ECOSOC and EP as well as meetings with Commission services). 

The  Commission  is  now  taking  the  initiative  of  presenting  a  modified  proposal  for  revising 
the FR, incorporating to a large extent the opinions of the other institutions and taking account 
of  the  concerns  expressed  by  the  representatives  of  civil  society.  This  modified  proposal 
should help to build inter-institutional consensus by accepting the most important requests of 
the  institution  and  reducing  the  areas  of  disagreement,  notably  between  Council  and 
Parliament.  

It is recalled that in accordance with Article 184 of the FR a conciliation procedure (within 
the meaning of the Joint Declaration of 4 March 1975) between Council and Parliament, if the 
European  Parliament  so  requests,  with  the  active  assistance  of  the  Commission,  must  take 
place before the Council adopts the revision of the FR. The objective is to reach agreement on 

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the  modified  proposal  during  the  first  half  of  2006.  This  would  leave  the  Commission  the 
second  half  of  the  year  to  prepare  the  IR  linked  to  the  revision  of  the  FR,  so  that  both 
regulations can enter into force on 1 January 2007. 

2. 

THE COMMISSION'S MODIFIED PROPOSAL FOR REVISING THE FR 

The Commission is proposing amendments to its initial proposal in order to take account of 
the  opinions  of  the  other  institutions  and  of  comments  made  during  the  first  reading  in  the 
Council.  These  amendments  do  not  change  the  basic  structure  of  the  Commission’s  initial 
proposal and its key elements. They preserve the “acquis” of the financial reform, and strike a 
better  balance  between  the  protection  of  the  financial  interests  and  the  proportionality  of 
administrative costs and user-friendly procedures.  

In  compliance  with  the  "presentation  rules  for  amended  and  re-examined  proposals"1,  the 
amendments to the Commission's first proposal (COM (2005)181 final) have been highlighted 
using strikethrough for deleted text and bold and underlined for new or amended text. 

3. 

EXPLANATION OF THE MAIN AMENDMENTS  

3.1. 

Budgetary principles 

a) 

b) 

c) 

d) 

The proposed modification in Article 8, specifying that own resources paid in 
advance should be treated as revenue in the following financial year, is deleted 
as the Council expressed a negative view on this change. 

The  possibility  to  commit  expenditure  in  advance  is  maintained  as  an 
exceptional measure for crisis management aid and humanitarian aid, but it is 
specified  that  the  budgetary  authority  should  be  informed  ex-post  of  such 
commitments (amendment No 30 of the Parliament). 

Cross-references  are  updated  in  Articles  11  and  18  to  ensure  internal 
consistency within the text. 

In  Article  19,  the  requirement  for  authorisation  by  the  budgetary  authority  is 
limited  to  donations  involving  a  financial  charge  exceeding  10%  of  the 
donation made, in compliance with the view expressed by the Council on this 
Article.  Thus,  the  rights  of  the  budgetary  authority  are  preserved  whilst 
respecting the principle of proportionality as requested by the Parliament. 

e)  As  regards  the  transfers  of  appropriations  by  the  institutions  other  than  the 
Commission,  the  Parliament  asked  for  the  status  quo  to  be  maintained 
(amendments  No 34  to  38).  Article  22  has  been  amended  accordingly. 
However, certain provisions on the transfers of the other Institutions have been 
transferred  from  the  IR  to  the  FR  for  reasons  of  legal  certainty  and  better 
legibility of the texts. 

1 

SEC (1999)1224 of 23 July 1999. 

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f) 

in 

the 

following  month 

As regards the transfers of the Commission, it is necessary to provide for some 
flexibility for transfers regarding staff expenditure during the last three months 
of the financial year. To this end, the Commission should decide autonomously 
on these transfers within the limit of 10 % of the appropriations and inform the 
(Article  23(1),  second 
budgetary  authority 
subparagraph).  This  proposal  partially  integrates  Parliament's  amendments 
Nos 39, 41 and 42. At the same time, for reasons of efficiency (to avoid delays) 
the  Commission  should  be  allowed,  after  the  adoption  of  the  legal  basis,  to 
decide  autonomously  on  purely  mechanical  transfers  of  appropriations  placed 
in reserve when the budget is adopted for lack of legal basis (Article 23(1)(d); 
but  the  Commission  should  inform  ex-post  the  budgetary  authority  of  these 
transfers  (Parliament's  amendment  No  40).  Cross-references  are  updated  in 
paragraph 2. 

g)  An editorial correction is proposed in Article 26, taking into account changes 

of terminology in Part II of the FR. 

h) 

i) 

j) 

k) 

In  line  with  Parliament's  amendment  No  50,  the  scope  of  Article  28  on 
financial  statements  is  extended  in  order  to  cover  legislative  proposals 
presented by Member States in accordance with the Treaty on European Union, 
and substantial amendments to a legislative proposal which have an impact on 
the budget. 

In  accordance  with  Parliament's  amendments  Nos  45  to  48,  the  principle  of 
proportionality  laid  down  in  Article  5(3)  of  the  Treaty  establishing  the 
European Community is properly reflected in the new Chapter 7a of the FR. 

In line with Parliament recommendation No 52 of the report on the discharge 
for  2004,  transparency  has  to  be  reinforced  by  providing  for  information  on 
beneficiaries  of  Community  funds, 
the 
implementation of the budget. 

irrespective  of 

the  mode  of 

In  line  with  the  ECA  opinion  No  2/20042,  the  support  of  the  European 
Parliament3 and Council4 towards an effective and efficient integrated internal 
control  framework  and  the  Commission’s  commitment  in  its  Action  Plan5,  a 
new  budgetary  principle  is  added  in  Chapter  9  of  the  Title  II.  This  new 
principle  is  designed  to  improve  the  implementation  of  the  budget,  the 
effectiveness  and  efficiency  of  the  operations,  the  reliability  of  financial 
reporting, the protection of the financial interests of the Communities and the 
management of the risks relating to the legality and regularity of the underlying 
transactions.  in  such  a  way  as  to  reach  a  tolerable  level  of  risk.  The 
terminology used in Articles 60, 66 and 86 is modified accordingly. 

2 
3 

4 
5 

OJ C107/1 of 30.4.2004 (“Single Audit” opinion). 
Points  8,  20,  83,  86  and  87  of  the  European  Parliament’s  Discharge  Resolution  for  2004  and 
Parliament’s amendment N° 52. 
ECOFIN Conclusions of 8 November 2005 – SI(2005)1015, annex 8, esp. paragraphs 4, 6, 15 and 17. 
Action  Plan  towards  an  integrated  internal  control  framework  of  17  January  2006  (COM(2006)0009, 
action 2 and 4. 

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l) 

Concerning  Parliament’s  amendment  No  51  on  the  follow-up  given  to  the 
budgetary  remarks,  the  Commission  confirms  its  willingness  to  supply  the 
Parliament  with  any  information  it  may  consider  appropriate  to  request 
pursuant to Article 182. 

3.2. 

Establishment and structure of the budget 

a) 

b) 

c) 

In  compliance  with  the  new  budgetary  principle  on  effective  and  efficient 
internal control, information on the tolerable risk of errors should be included 
in the Activity Statement (Article 33). 

In line with the opinion of the Court of Auditors, the summary statement of the 
schedules of payments is included in the list of working documents attached to 
the preliminary draft budget (Article 33). 

The  amendments  to  Articles  26,  45  and  46  are  maintained  in  line  with  the 
proposed  adoption  of  a  new  provisioning  mechanism  for  the  Guarantee  Fund 
for external actions6. Their final outcome will depend on the legislator’s stand 
on the proposed mechanism. 

3.3. 

Implementation of the budget – Methods of management (Articles 48-57) 

a) 

b) 

c) 

In  line  with  the  request  of  the  Council,  for  reasons  of  legal  clarity,  some 
adjustments  have  been  made  in  Article  49  in  order  to  better  reflect  the 
specificities of the Common Foreign Security Policy (CFSP) and to provide for 
more  rapid  financing  of  EU  crisis  response  actions.  As  the  basis  for  the 
implementation of expenditure is a basic act adopted by the Council, it appears 
more appropriate to identify the respective basic acts under the EC Treaty and 
Title V and VI of the TEU in Article 49 FR instead of in the IR (as is currently 
the case). In addition, a specific provision is added in order to properly reflect 
the  types  of  preparatory  measures  that  may  be  undertaken  in  the  field  of  the 
CFSP. 

In  line  with  Parliament’s  amendment  No  59,  it  is  specified  in  Article  50  that 
the institutions implement their sections of the budget within the limits of the 
appropriations authorised. 

For  the  purpose  of  clarity,  Article  53  is  restructured  and  split  into  several 
articles:  one  general  Article  and  four  Articles  corresponding  to  the  different 
methods  of  implementation.  The  modifications  introduced  take  account  of 
amendments No 60 and 61 of the Parliament. Also in line with amendment No 
62 of the Parliament and requests by several delegations in the Council, the use 
of  bodies,  including  “national  agencies”,  is  authorised  in  decentralised 
management. 

d) 

Following  the  new  inter  institutional  agreement  (point  44)  in  order  to 
strengthen  an  integrated  internal  control  of  Community  funds  under  shared 
management,  Member  States  shall  submit  to  the  Commission  an  annual 

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COM (2005)130 final of 5 April 2005.  

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summary  at  the  appropriate  national  level  of  the  available  audits  and 
declarations. 

e) 

In  order  to  enlarge  the  possibilities  of  delegation  of  tasks  to  Community 
bodies,  Article  54(2)(b)  is  completed  to  include  in  particular  the  European 
Investment Bank and the European Investment Fund in order to allow them to 
carry out specific tasks requiring a high degree of specialisation and expertise 
notably for the management of instrument referred to in Article 108(2)(c). 

3.4. 

Financial Actors (Articles 58-68) 

a)  Article  60(7),  which  specifies  the  content  of  the  annual  activity  report  of  the 
authorising  officers,  has  been  modified  in  accordance  with  Parliament's 
amendment No 66. 

b) 

In  line  with  Parliament's  amendment  No  68,  the  accounting  officer,  when 
certifying  the  accounts,  is  empowered  to  make  such  checks  as  he  considers 
necessary to the accounts and to make reservations. 

c)  A small editorial correction is proposed in Article 63, in line with the Council's 

initial reaction on this issue. 

d)  As  requested  by  the  Parliament  (amendment  No  69),  the  application  of  the 
financial  liability  of  authorising  officers  is  clarified  and,  in  cases  of  gross 
negligence, limited to one year’s salary. For the sake of consistency and equal 
treatment,  the  same  conditions  and  limitations  should  apply  to  all  financial 
actors and any other persons involved in budget implementation 

(e) 

f) 

In  line  with  comments  during  the  Council  discussions,  the  possibility 
introduced in Article 66(2a) for the authorising officer to refer a matter to the 
financial  irregularities  panel  is  withdrawn,  but  will  be  introduced  in  the 
implementing rules. 

In  line  with  Parliament’s  amendment  No  70  and  the  Court  of  Auditor’s 
opinion, the establishment by several institutions of joint financial irregularities 
panels is made possible. 

3.5. 

Revenue and expenditure operations (Articles 69-83) 

a) 

In accordance with the Protocol on the position of Denmark and the Protocol 
on  the  position  of  the  United  Kingdom  and  Ireland  annexed  to  the  Treaty  on 
European Union and the Treaty establishing the European Community, Article 
72 has been amended in order to properly reflect the special position of these 
Member States with respect to Title IV of the EC Treaty. 

b) 

In accordance with Parliament's amendment No 75, the direct debit system is 
authorised for periodic payments of administration or running costs. 

3.6. 

Public procurement and contracts 

a) 

The FR should provide the possibility of framework contracts pursuant to EP 
amendments Nos 14 and 80 and, in line with Parliament’s amendments Nos 13 

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b) 

c) 

and 78 and a comment from the Court of Auditors, the possibility of carrying 
out procurement procedures on an interinstitutional basis. The FR should also 
contain  the  principle  of  the  prior  information  procedure  before  a  contract 
awarded by the institutions on their own account can be signed, in accordance 
with EP amendment No 93. 

In line with the Court of Auditors' reaction and comments in the Council, the 
distinction  between  obligatory  and  optional  grounds  of  exclusion  is  deleted. 
Pursuant  to  the  EC  Public  Procurement  Directive7,  a  specific  rule  should 
nevertheless  be  laid  down  for  the  purchase  of  supplies  on  particularly 
advantageous terms from either a supplier which is definitively winding up its 
business activities, or the receivers or liquidators of a bankruptcy, in the case of 
an  arrangement  with  creditors  or  a  similar  procedure  under  national  law. 
According  to  amendments  No  15  and  82,  the  maximum  duration  of  legal 
exclusion should also be fixed in the FR. 

In line with the remarks of the ESC, the suggestion from the Court of Auditors 
and  amendment  No  88  of  the  EP,  a  central  database  for  the  purposes  of 
exclusion of economic operators from a procurement or grant procedure should 
be set up and operated by the Commission. The database should be common to 
the  institutions,  executive  agencies  and  bodies  referred  to  in  Article  185. 
Member  States,  third  countries  and  other  bodies  participating  in  the 
implementation  of  the  budget,  should  communicate  to  the  competent 
authorising  officer  information  on  the  most  relevant  cases  of  exclusion  under 
the  FR  and  take  into  account  the  information  in  the  database  when  awarding 
grants and contracts financed from the Communities’ budget. 

d)  Under  EP  amendments  Nos  84  and  86,  participation  in  a  procurement 
procedure  for  the  award  of  low  value  contracts  with  a  single  tender  and  for 
payments  against  invoices  should  be  possible  without  requiring  certificates 
from national authorities certifying that the tenderer is not in a situation giving 
rise to exclusion. 

e) 

Securities in the context of procurement should be required only when deemed 
appropriate and proportionate, as requested by the EP in amendments Nos 19 
and 96. 

3.7. 

Grants 

a)  As  suggested  by  the  Parliament  (amendment  No  98),  and  following  the 
conclusions of a Commission working group set up to that end, Article 108 is 
modified  to  introduce  the  option  for  grants  to  be  awarded  by  means  of 
Commission decisions, instead of using only agreements. Articles 96, 112, 114, 
120, 166 and 167 are amended accordingly. 

b)  As  suggested  by  the  Parliament  (amendment  No  99),  provision  is  made  for 
grants  to  be  awarded  by  the  institutions  for  information,  publicity  and 
communication activities.  

7 

OJ  L  134, 30.04.2004,  p. 114.  Directive  as  amended  by Commission  Regulation  (EC)  No  1874/2004 
(OJ L 326, 29.10.2004, p. 17). 

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c)  As required by the Parliament (amendment No 99), social measures in favour 
of members, staff, former members and former staff of the institutions shall not 
be considered as grants, but shall constitute administrative allocations. 

d) 

e) 

f) 

Some  clarifications  are  introduced  in  relation  to  the  financial  instruments 
which are not considered as grants. 

It  is  also  clarified  that  expenditure  relating  to  fisheries  markets  are  not 
governed by the provisions concerning grants of this Regulation. 

Following  the  observations  of  the  Court  of  Auditors,  the  principle  of 
appreciation of the  non profit at the level of “the beneficiary” is reinstated in 
Article 109.. 

g)  As  suggested  by  both  the  Court  of  Auditors  and  the  Parliament  (amendment 
No 108),  provisions  are  reinforced  to  avoid  multiple  financing  of  the  same 
costs. 

h)  As  requested  by  the  Parliament  (amendment  No 109),  the  obligation  to 
gradually  decrease  operating  grants  shall  not  apply  to  lump  sums  or  flat-rate 
financing. 

i) 

j) 

As  suggested  by  the  Parliament  (amendment  No 112),  applicants  shall  certify 
that they are not in a situation of exclusion only for grants exceeding a certain 
value. 

Article 118 is amended to limit the ability of the authorising officers to require 
beneficiaries to lodge a guarantee when deemed appropriate and proportionate 
only, in accordance with the Parliament’s request (amendment No 120). 

3.8. 

Accounting 

a) 

In  line  with  Parliament's  amendment  No 123,  the  content  of  the  report  on 
budgetary and financial management is specified in Article 122. 

b)  A  small  editorial  correction  is  proposed  in  Article  128  to  clarify  the  deadline 
for  transmission  of  the  Commission's  report  on  budgetary  and  financial 
management during the year. 

c) 

In accordance with Parliament's amendment No 124, Article 139 is amended to 
ensure  that  the  budgetary  authority  is  duly  informed  of  any  internal  rules 
adopted by the institutions in financial matters. 

3.9. 

Administrative appropriations 

In line with Parliament’s amendment No 130, a three-week period is laid down for 
the building procedure (i.e. one week for the notification of the intention to issue an 
opinion plus the existing two-week period for the transmission of the opinion). 

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3.10.  Recruitment of experts for evaluation of proposals and follow-up and evaluation 

of projects 

Following a comment of the Court of Auditors, the specific procedure for selection 
of experts should be clearly distinguished from procurement procedures. 

3.11.  Transitional and Final Provisions 

a)  A  transitional  provision  should  be  added  in  Article  181a  to  deal  with 
expenditure  from  Community  Initiatives  and  Technical  Assistance  and 
Innovative  Measures  provided  for  in  Council  Regulation  (EC)  No  1260/1999 
of  21  June  1999  laying  down  general  provisions  on  the  Structural  Funds  and 
for which payments still have to be made. 

b) 

It  appears  appropriate  to  define  how  the  audit  function  of  each  Community 
body can be exercised (either by an internal or by an external auditor). 

c)  As  suggested  by  the  Parliament  (amendment  No 134),  in  the  light  of  the 
content of Article 133, paragraph 4 of Article 185 appears superfluous and can 
be deleted. 

Finally,  it  is  worth  mentioning  that  the  implementation  measures  for  the  control 
linked with the concept of the tolerable risk introduced in Article 30a will be subject 
to  a  transitional  period  (as  from  1  January  2009)  to  be  specified  in  relation  to  the 
specific provisions which will be included in the implementing rules of the FR. 

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2005/0090 (CNS) 

Modified proposal for a 

COUNCIL REGULATION 

amending Regulation (EC, Euratom) No 1605/2002 on the Financial Regulation 
applicable to the general budget of the European Communities 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  establishing  the  European  Community,  and  in  particular 
Article 279 thereof, 

Having  regard  to  the  Treaty  establishing  the  European  Atomic  Energy  Community,  and  in 
particular Article 183 thereof, 

Having regard to the proposal from the Commission1, 

Having regard to the opinion of the European Parliament2, 

Having regard to the opinion of the Court of Auditors3, 

Whereas: 

(1) 

(2) 

(3) 

Council  Regulation  (EC,  Euratom)  No  1605/20024,  hereinafter  “the  Financial 
Regulation”, lays down the legal foundations of the financial management reform. As 
such, its essential elements should be maintained and strengthened. Transparency, in 
particular, has to be reinforced by providing for information on beneficiaries of 
Community  funds.  Moreover,  it  establishes  budgetary  principles  which  should  be 
respected by all legislative acts and from which derogations should be kept to a strict 
minimum. 

Certain amendments are justified in light of practical experience in order to facilitate 
budget implementation and the realisation of the underlying policy objectives and to 
adjust  some  procedural  and  documentary  requirements  so  as  to  make  them  more 
proportionate  to  the  risks  and  cost  involved,  in  accordance  with  the  principle  of 
proportionality as set out in the third paragraph of Article 5 of the EC Treaty. 

All  amendments  must  contribute  to  achieving  the  objectives  of  the  Commission's 
reforms,  should  help  improve  or  ensure  sound  financial  management,  and  should 
enhance the protection of the Communities’ financial interests against fraud and illegal 

1 
2 
3 
4 

OJ C […], […], p. […]. 
OJ C […], […], p. […]. 
OJ C 13, 18.1.2006, p. 1. 
OJ L 248, 16.9.2002, p. 1. 

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(4) 

(5) 

(5) 

(6) 

activities,  thus  contributing  to  obtaining  a  reasonable  assurance  of  the  legality  and 
regularity of financial operations.  

Some  amendments  are  necessary  to  take  account  of  provisions  implementing  the 
revenue  and  expenditure  of  the  budget,  contained  in  the  legislative  acts  due  to  be 
adopted for the period 2007 to 2013, in order to ensure coherence between those acts 
and the Financial Regulation 

The  principle  that  other  legislative  acts  concerning  budget  implementation  must 
comply with the Financial Regulation should be reinforced. 

Pursuant  to  Article  1  of  the  Protocol  on  the  application  of  the  principles  of 
subsidiarity  and  proportionality,  annexed  to  the  Treaty  establishing  the 
European Community and appended to the Treaty of Amsterdam amending the 
Treaty  on  European  Union,  each  institution,  in  exercising  the  powers  conferred 
on  it,  is  required  to  comply  with  the  principle  of  proportionality,  according  to 
which  any  action  by  the  Community  must  not  go  beyond  what  is  necessary  to 
achieve the objectives of the Treaty. 

A new budgetary principle on effective and efficient internal control needs to be 
established in order to define the main principles of internal control systems for 
the implementation of the budget in order to obtain a level of tolerable risk when 
controlling the legality and regularity of the underlying transactions. 

(76)  On  certain  points,  more  efficiency  and  transparency  is  needed  with  regard  to  the 

application of budgetary principles, in order better to suit operational needs. 

(87)  As regards the principle of unity of the budget, the rule governing interest generated 
by  pre-financing  should  be  simplified.  The  administrative  burden  involved  in  the 
recovery  of  that  interest  is  disproportionate  to the objective pursued and it would be 
more  efficient  to  allow  interest  to  be  set  off  against  the  final  payment  to  the 
beneficiary. 

(98)  With regard to the principle of annuality, more flexibility and transparency should be 
introduced  to  respond  to  functional  needs.  The  carry-over  of  appropriations  should 
exceptionally  be  permitted  in  the  case  of  expenditure  on  direct  payments  to  farmers 
under  the  new  European  Agricultural  Guarantee  Fund  (EAGF).  Commitment  of 
expenditure  in  advance  should  be  authorised  for  crisis  management  aid  and 
humanitarian  aid  so  that  the  Community  can  respond  adequately  if  an  international 
disaster occurs at the end of the budget year. 

(109)  Payment requests from the Member States under the new agricultural regulations will 
be concentrated overwhelmingly at the beginning of the budget year n. Therefore, the 
maximum threshold for advance commitments against the EAGF (from 15 November 
of year n-1) to cover routine management expenditure (charged to the budget of year 
n) should be removed with regard to the last adopted agricultural budget. As regards 
the  limit  on  advance  commitment  of  administrative  expenditure,  the  text  should  be 
amended so that it refers to appropriations decided by the budget authority. 

(1110) The use of non-differentiated appropriations for veterinary measures, charged against 
the EAGF, unduly hampers the implementation of such actions, especially in respect 

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of  the  limits  placed  on  the  possibilities  for  carry-overs.  The  use  of  differentiated 
appropriations  for  such  expenditure  should  therefore  be  permitted,  as  this  is  more  in 
keeping with the multi-annual nature of the actions. 

(1211) As  regards  the  principle  of  universality,  two  points  should  be  added  to  the  list  of 
assigned revenue. First, as is currently possible under specific research programmes, it 
should  be  possible  for  the  Member  States  to  make  ad  hoc  contributions,  as  assigned 
revenue,  for  projects  under  external  relations  programmes  managed  by 
the 
Commission.  Secondly,  proceeds  from  the  sale  of  vehicles,  equipment,  installations, 
materials, and scientific and technical apparatus which are being replaced or scrapped 
should be treated as assigned revenue, as an encouragement to authorising officers to 
obtain the best prices for their disposal. 

(1312) At  present,  the  Commission  must  be  authorised  by  the  budgetary  authority  before 
accepting  donations,  such  as  gifts  or  bequests,  which  involve  a  charge.  To  avoid 
unnecessary and cumbersome procedures, authorisations should be made compulsory 
only in the case of significant charges exceeding 10 % of the value of the donation 
made. 

(1413) In relation to the principle of specification of the budget, the rules governing transfers 
of  appropriations  should  be  simplified  and  clarified  on  certain  points  because  in 
practice they have proved cumbersome or unclear. The intention was for Article 22 of 
the Financial Regulation to apply to institutions other than the Commission, since the 
Commission  has  its  own  regime.  That  provision  should  therefore  be  amended 
accordingly. 

(14)  As  regards  the  "notification  procedure",  the  Commission  and  the  other  institutions 
notify  their  transfer  proposals  to  the  budgetary  authority,  which  may  invoke  the 
normal procedure if it wishes to raise objections. In such cases, in theory, the normal 
deadlines apply for the decision of the budgetary authority on the transfer. However, 
the text does not state when time for the purposes of the deadline is to be deemed to 
start running, and that omission should be remedied. 

(15)  As  a  measure  of  simplification  for  the  management  of  their  budget,  the  institutions 
other than the Commission should be enabled to make transfers of appropriations from 
article  to  article  within  the  same  chapter  without  prior  notification  to  the  budgetary 
authority. 

(1516) For reasons of efficiency, the Commission should be allowed to decide autonomously 
on  transfers  from  the  reserve  in  cases  where  no  basic  act,  within  the  meaning  of 
Article 49 of the Financial Regulation, exists for the action concerned at the time when 
the budget is established, but where the basic act is adopted in the course of the year. 
In those cases, however, the Commission should inform the budgetary authority 
in the month following its decision. 

(1617) The rules on the Commission's administrative transfers should be adapted to the new 
the 
Activity-Based  Budgeting  (ABB)  structure.  Thus,  an  exemption  from 
"notification  procedure"  should  be  provided  for  the  Commission  during  the  last 
three  months  of  the  financial  year.  In  those  cases,  the  Commission  should  be 
allowed  to  decide  autonomously  on  transfers  of  appropriations  concerning  staff 
expenditure,  within  the  limit  of  10  %  of  the  appropriations  of  the  year.  The 

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Commission  should  inform  the  budgetary  authority  in  the  month  following  its 
decision.limited to transfers between articles, within the administrative chapter of each 
title, which exceed 10% of the appropriations of the year. On the other hand, transfers 
between articles of different titles financing expenditure of identical nature should be 
decided autonomously by the Commission 

(1718) Articles 26, 45 and 46 of the Financial Regulation should be amended because of the 
abolition  of  the  reserve  relating  to  Community  loans  and  loan  guarantees  to  third 
countries and the adoption of a new provisioning mechanism for the Guarantee Fund 
for external actions. 

(1819) As  regards  the  budget  procedure,  the  requirement  laid  down  in  Article  29  of  the 
Financial Regulation that the budget be published within two months of adoption has 
proven unrealistic: three months would be more practicable. The concept of "Activity 
Statement"  should  be  inserted  in  Article 33  of  the  Financial  Regulation  in  order  to 
render official one of the key elements of ABB. In Article 46 Concerning the content 
of  the  budget,  the  payment  schedules  should  be  included  in  the  working  documents 
accompanying  the  preliminary  draft  budget  listed  in  Article  33  of  the  Financial 
Regulation  instead  of  in  the  budget  itself,  as  they  are  not  relevant  to  the  budgetary 
procedure and are unnecessarily burdensome. 

(19)  As regards the implementation of the budget, some adjustments appear necessary 
in  order  to  better  reflect  the  specific  features  of  the  Common  Foreign  and 
Security  Policy  (CFSP).  For  reasons  of  legal  clarity,  the  types  of  basic  acts 
applicable under the EC Treaty and under Title V and VI of the TEU should be 
identified in Article 49 of the Financial Regulation instead of in the implementing 
rules.  In  addition,  a  specific  provision  should  be  added  in  order  to  properly 
reflect the types of preparatory measures that may be undertaken in the field of 
the CFSP. 

(2020) As regards methods of management, Article 53 of the Financial Regulation should 
be restructured for the purpose of clarity. It is also necessary in Article 53(3) of the 
Financial Regulation to remove the limitation of shared management to the European 
Agricultural  Guidance  and  Guarantee  Fund  (EAGGF)  and  Structural  Funds,  because 
additional programmes will now operate under shared management. The requirements 
for  joint  management  need  to  be  made  clearer.  Article  54(2)(b)  is  completed  to 
include  in  particular  the  European  Investment  Bank  and  the  European 
Investment  Fund  as  Community  bodies  to  which  tasks  are  entrusted  by  the 
Commission. The criteria set out in Article 54 of the Financial Regulation for using 
national public-sector bodies should be simplified in order to facilitate their use and to 
respond  to  growing  operational  needs,  and  the  scope  of  the  provision  should  be 
extended to international public bodies. Article 54 should also clarify the position as 
regards  the  special  case  of  special  advisors  or  heads  of  mission  appointed  by  the 
Council to manage certain actions in the context of the common foreign and security 
policy. 

(2121) The responsibilities of the Member States under shared management should be set out 
in  more  detail,  to  take  account  of  the  ongoing  discussions  between  the  institutions 
concerning  the  discharge  procedure  and  the  appropriate  control  systems  to  put  in 
place, reflecting the mutual responsibilities of the Member States and the Commission 
Taking account of the need for a common control framework, controls carried out by 

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the  Commission  in  decentralised  or  indirect  centralised  management  and,  where 
appropriate, in shared management should be reinforced. To this end, following the 
new  inter  institutional  agreement  (point  44),  Member  States  shall  submit  to  the 
Commission  an  annual  summary  of  the  available  audits  and  declarations  in 
relation with funds under shared management. 

(2222) The  prohibition  on  delegating  implementation  tasks  to  private  bodies  should  be 
modified  in  Article 57  of  the  Financial  Regulation  because  the  terms  of  that 
prohibition  have  turned  out  to  be  unnecessarily  strict.  It  should  be  possible,  for 
example, for the Commission to engage the services of a travel agency or a conference 
organiser  to  take  charge  of  reimbursing  the  costs  of  participants  at  conferences, 
provided that care is taken to ensure that no discretionary powers are exercised by the 
private company. 

(23)  The conditions and limitations regarding financial liability of all financial actors 
and any other person involved in budget implementation should be clarified. In 
particular,  such  liability  should  be  limited  in  cases  of  gross  negligence  to  a 
maximum of 12 months’ salary. 

(24)  The  establishment  by  several  institutions  of  joint  financial  irregularities  panels 

should be made possible. 

(23)  The  authorising  officer  by  delegation  should  be  entitled  to  refer  a  matter  to  the 

financial irregularities panel if he considers that a financial irregularity has occurred. 

(2524) As regards the accounting officer, his responsibility for certifying the accounts on the 
basis of the financial information supplied to him by the authorising officers has to be 
clarified.  To  this  end,  the  accounting  officer  should  be  empowered  to  check  the 
information  received  by  the  authorising  officer  by  delegation  and  to  enter 
reservations, if necessary. 

(2625) As  regards  the  internal  auditor,  the  relationship  between  the  Commission's  internal 
auditor and bodies set up by the Communities should be clarified. Those bodies should 
have  their  own  internal  audit  function  reporting  to  their  own  management  boards, 
whereas  the  Commission's  internal  auditor  reports  to  the  College  on  the  procedures 
and systems of the Commission. It should be necessary for the Commission's internal 
auditor  only  to  certify  that  the  bodies'  internal  audit  functions  meet  international 
standards, and for that purpose he should be able to conduct quality audits. 

(2726)The  rules  on  recovery  of  amounts  receivable  should  be  clarified  and  strengthened  in 
order to take account of recent case-law and better to safeguard the financial interests 
of the Communities. Enforced recovery should be assisted by ensuring in Article 72 of 
the  Financial  Regulation  that  the  Community's  claims  may  also  benefit  from  the 
instruments  adopted  under  the  EC  Treaty  provisions  on  judicial  cooperation  in  civil 
law matters having cross-border implications, which notably means that an entitlement 
established by the courts in one jurisdiction would be recognised in the others under a 
simplified procedure. The relevant agreements between the European Community 
and  the  Member  States  having  a  special  position  with  respect  to  Title  IV  of  the 
EC Treaty should apply in the relations with those Members States when they do 
not participate in a specific measure. 

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(28) 

In order to improve the effectiveness of recoveries, a provision should be introduced 
under which the Member States should be required to treat Community claims in the 
same way as claims of a fiscal nature within their own jurisdiction 

(2927) A period of limitation on the validity of claims should be introduced. The Community, 
unlike many of its Member States, is not subject to a period of limitation under which 
financial claims are extinguished after a certain period of time. Nor is the Community 
restricted  by  a  period  of  limitation  in  the  pursuit  of  its  claims  against  third  persons. 
The  introduction  of  such  a  period  of  limitation  should  correspond  to  sound  financial 
management. 

(3028) As  regards  the  rules  on  public  procurement  contracts,  the  Financial  Regulation 
should  reflect  the  importance  of  framework  contracts  in  the  management  of 
public  procurement  and  encourage  the  use  of  interinstitutional  procurement 
procedures and allow for the possibility of joint procurement procedures between 
an institution and a contracting authority from a Member State. 

(31)  Certain  technical  adjustments  should  be  made  to  ensure  that  the  terminology  of  the 
Financial Regulation is fully in line with that of Directive 2004/18/EC of the European 
Parliament and of the Council of 31 March 2004 on the coordination of procedures for 
the  award  of  public  works  contracts,  public  supply  contracts  and  public  service 
contracts5. The possibility open to Member States under that Directive to determine 
specific  procedures  for  contracts  declared  secret,  when  their  performance  must 
be  accompanied  by  special  security  measures,  or  when  the  protection  of  the 
Member  State so requires of declaring procurement procedures to be secret should 
be made available mutatis mutandis to the Community institutions in Article 91 of the 
Financial Regulation. 

(29)  The Financial Regulation rules on the exclusion of tenderers impose a stricter regime 
for  the  Community  institutions  than  that  provided  for  in  Directive  2004/18/EC.  The 
Financial  Regulation  makes  no  distinction  between  the  most  serious  grounds  for 
exclusion  and  other  grounds.  Directive  2004/18/EC,  on  the  other  hand,  does  make 
such  a  distinction  and  that  distinction  should  be  made  available  for  the  Community 
institutions.  Articles  93  and  94  of  the  Financial  Regulation  should  provide  for 
mandatory exclusion in the most serious cases, while allowing the possibility for the 
contracting  authority,  on  the  basis  of  a  risk  assessment,  to  add  other  cases  of 
exclusion.  The  same  distinction  should  be  made  in  Article  114  of  the  Financial 
Regulation, as regards grants. The rules on penalties, laid down in Article 96 of that 
Regulation, should be adjusted accordingly. 

(32) 

In  line  with  Directive  2004/18/EC,  the  rules  on  exclusion  from  a  procurement 
procedure need to be clarified in Articles 93 and 96 of the Financial Regulation. 
A  clear  distinction  should  be  made  between  mandatory  exclusion  and  exclusion 
on  the  basis  of  an  administrative  penalty.  In  addition,  for  reasons  of  legal 
certainty and proportionality, a maximum period of exclusion should be specified 
in the Financial Regulation. In light of Directive 2004/18/EC, an exception to the 
rules  on  exclusion  should  be  made  for  the  purchase  of  supplies  on  particularly 

5 

OJ L 134, 30.4.2004, p. 114. Directive as last amended by Commission Regulation (EC) No 2083/2005 
(OJ L 333, 20.12.2005, p. 28). 

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advantageous  terms  from  either  a  supplier  which  is  definitively  winding  up  its 
business  activities,  or  the  receivers  or  liquidators  of  a  bankruptcy,  an 
arrangement with creditors, or a similar procedure under national law. 

(3430) It  should  be  made  obligatory  under  Article  93  of  the  Financial  Regulation  for 
candidates  or  tenderers  in  procurement  procedures  to  certify,  if  so  requested,  the 
ownership or the management, control and power of representation of the legal entity 
submitting  a  tender  or  that  their  subcontractors  are  not  in  one  of  the  situations 
referred  to  in  Article  93  of  the  Financial  Regulation.  Taking  into  account  the 
principle of proportionality, tenderers should not be required to certify that they 
are not in one of the situations giving rise to exclusion when they participate in a 
procurement procedure for the award of very low-value contracts. 

(3531) Article  95  of  the  Financial  Regulation  requires  all  institutions  to  keep  databases  of 
those candidates or tenderers in situations of exclusion under Article 93 or 94 and to 
have  access  to  each  other's  databases.  In  order  to  enhance  the  effectiveness  and 
improve the protection of the financial interests of the Communities, the database 
should be common to the institutions, executive agencies and bodies referred to in 
Article  185.  In  addition,  the  Member  States,  third  countries  and  other  bodies 
participating  in  the  implementation  of  the  budget,  should  communicate  to  the 
competent  authorising  officer  information  associated  with  certain  situations  of 
exclusion  under  the  FR  and  take  into  account  the  information  in  the  database 
when awarding grants and contracts financed from the Communities’ budget. It 
would  be  more  cost-effective  but  still  consistent  with  that  principle,  to  allow  small 
institutions with only a few procurement procedures to meet that obligation by sharing 
a database. 

(32)  Successive  framework  research  programmes  have  facilitated  the  work  of  the 
Commission  by  laying  down  specific  simplified  rules  to  govern  the  awarding  of 
contracts to external experts for evaluation and technical assistance. Articles 91 and 97 
of  the  Financial  Regulation  should  make  similar  provision  in  respect  of  all  other 
programmes where there is a need for such a procedure. 

(36) 

In  order  to  take  account  of  the  interests  of  unsuccessful  tenderers,  it  is 
appropriate to provide that, as a matter of principle, they must be informed after 
a  contract,  tendered  by  the  institutions  on  their  own  account  and  covered  by 
Directive  2004/18/EC,  has  been  awarded  and  that  such  a  contract  cannot  be 
signed before the end of a reasonable standstill period. 

(3733) The  obligations  of  the  institutions  to  suspend  a  procurement  procedure  or  a  contract 
under Article 103 of the Financial Regulation in cases of fraud and irregularities need 
to be clarified, so that the obligations are understandable and capable of being applied. 

(3834) As regards grants, simplification of the rules is needed. Requirements for checks and 
guarantees  should  be  more  proportionate  to  the  financial  risks  involved.  Some 
essential  changes  need  to  be  made  first  in  the  Financial  Regulation,  so  that  detailed 
provision can later be made in the implementing rules. The scope of grants needs to be 
clarified in Article 108 of the Financial Regulation, in particular as regards financing 
related  to  loan  activities  and  or  shareholdings  and  social  policy  measures  vis-à-vis 
members  of  the  institutions  or  their  staff  and  expenditure  relating  to  fisheries 
markets.  The  principle  of  proportionality  has  to  be  added.  The  possibility  for  the 

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institutions  to  use  grants  for  the  purpose  of  communication  activities  should  be 
clearly recognised. Finally, to improve the management of grants and to simplify 
procedures,  it  should  be  possible  to  award  grants  either  by  decisions  of  the 
institution or by written agreements with beneficiaries. 

(39)  For  reasons  of  clarity  and  transparency,  the  use  of  lump  sum  and  flat-rate 
payments  should  be  authorised  alongside  the  more  traditional  method  of 
reimbursing costs actually incurred. 

(4035) It  is  appropriate  that  the  exceptions  to  the  non-profit  rule,  provided  for  in  the 
implementing rules, be included in the Financial Regulation. Furthermore, Article 109 
of  the  Financial  Regulation  should  make  it  quite  clear  that  the  whole  purpose  of 
awarding grants to certain actions is to help reinforce financial capacity or generate an 
income. 

(4136) The rule that grants should be awarded on the basis of calls for proposals has proved 
its worth. Experience has shown, however, that in certain situations the nature of the 
action  leaves  no  choice  in  the  selection  of  beneficiaries,  and  Article  110  of  the 
Financial Regulation should expressly recognise that such exceptional cases arise. 

(4237) The rule that the same action should not give rise to more than one grant to any one 
beneficiary should be adjusted because some basic acts do permit Community funding 
to  be  combined  and  such  cases  may  increase  in  future  in  order  to  ensure  the 
effectiveness of expenditure. However, the opportunity should be taken to strengthen 
the  rule  and  to  make  clear  in  Article  111  of  the  Financial  Regulation  that  the  same 
costs can never be financed twice by the Community budget. 

(4338) Where grants are given for running costs, the rule that the necessary agreement may 
not be signed more than four months after the start of the beneficiary's financial year 
has  proven  unnecessarily  rigid  and  Article  112  of  the  Financial  Regulation  could 
safely fix that deadline at 6 months. 

(44)  For reasons  of  simplification, in  the  case of operating grants taking the form of 
lump-sums  or  flat-rate  financing,  the  rule  that  grants  shall  gradually  decrease 
should be removed. 

(39)  For  reasons  of  clarity  and  transparency,  the  use  of  flat-rate  payments  should  be 
authorised in a new Article 113a of the Financial Regulation, to co-exist with the more 
traditional method of reimbursing costs actually incurred. 

(4540) In  Article  114  of  the  Financial  Regulation,  certain  restrictions  on  the  eligibility  of 
beneficiaries  should  be  removed  in  order  to  allow  for  grants  to  natural  persons  and 
certain  types  of  entity  which  lack  legal  personality.  According  to  the  principle  of 
proportionality,  for  very  low-value  grants,  the  authorising  officer  may  refrain 
from requesting applicants to certify that they are not in one of the situations of 
exclusion under Articles 93, 94 or 96 of the Financial Regulation. 

(4641) While grants will continue to be awarded on the basis of selection and award criteria, 
there  is  no  need  in  practice  to  have  those  criteria  evaluated  by  one  and  the  same 
committee, and that requirement should therefore be removed from Article 116 of the 
Financial Regulation 

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(4742) As  regards  the  procurement  standards  to  be  applied  by  beneficiaries  of  grants,  the 
current  rule  in  Article  120  of  the  Financial  Regulation  is  unclear  and  needs  to  be 
simplified. Moreover, the case in which the implementation of an action necessitates 
financial support to third parties has to be expressly provided for. 

(4843) As  regards  the  rules  on  accounting  and  the  accounts,  Article  121  of  the  Financial 
Regulation  should  make  it  possible  for  the  Commission’s  accounting  officer  to 
determine, in compliance with international standards, which other bodies in addition 
to those receiving Community subsidies fall within the scope of the consolidation. 

(4944) In view of the coming into existence of the EAGF, which replaces the EAGGF from 
2007,  terminology  needs  to  be  adjusted  in  the  title  of  Title  I  of  Part  Two,  and  in 
Articles  26  and  148  to  151,  of  the  Financial  Regulation.  Clarification  is  required  in 
Article 151 to the effect that provisional commitments may be made after the normal 
two-month deadline following receipt of the Member States' statements of expenditure 
in  cases  where  a  decision  on  a  transfer  of  appropriations  is  expected.  Article  153 
concerning transfers needs clarification. 

(5045) As  well  as  in  the  title  of  Title  II  of  Part  Two,  terminology  should  be  adjusted  in 
Article 155(1) and (3) of the Financial Regulation so that reference is made only to the 
structural funds, the cohesion fund, the fisheries fund and the rural development fund. 
References  to  pre-accession  structural  measures  (ISPA)  and  agricultural  measures 
(SAPARD) should be removed, since they involve management by third countries on 
a  decentralised  basis  in  accordance  with  Article  164  and  will  continue  to  be 
implemented largely in the same way as at present. As regards the making available 
again  of  decommitted  appropriations,  in  line  with  the  new  basic  acts  for  structural 
actions in the period 2007 to 2013 which cover the case of force majeure, provision 
should  be  maintained  in  the  Financial  Regulation  only  for  cases  where  "manifest 
error" is attributable to the Commission. 

(5146) In Article 160 of the Financial Regulation, a provision needs to be added to cover the 
assigned  revenue  generated  by  the  winding-up  of  the  European  Coal  and  Steel 
Community and the making available of the corresponding appropriations. 

(5247) It  is  necessary  to  allow  appropriations  which  have  been  decommitted  as  a  result  of 
total or partial non-implementation of the projects for which they were earmarked to 
be  made  available  again.  However,  that  should  be  possible  only  under  strict 
conditions,  and  only  in  the  area  of  research,  since  research  projects  present  a  higher 
financial risk than those in other policy areas. 

(5348) As  regards  external  actions,  it  should  be  clarified  that  the  grant  procedures  to  be 
applied  by  third  countries  in  the  case  of  decentralised  management  have  to  be 
specified  in  the  financing  agreements  concluded  with  those  countries.  That  would 
amount  to  a  codification  of  existing  practice.  It  should  be  specified  that  the  “n+3 
rule”  according  to which individual contracts and agreements which  implement 
such  financing  agreements  have  to  be  concluded  no  later  than  three  years 
following the date of conclusion of the financing agreement, shall not apply in the 
case  of  decentralised  management  of  multi-annual  programmes  under  Council 
Regulations (EC) …… (IPA and ENPI). A “n + 4” decommitment rule will apply 
in this case. 

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(5449) As  regards  the  European  Offices,  it  should  be  made  possible  for  the  institutions  to 
delegate authorising officer power to directors of inter-institutional European Offices 
for  the  management  of  appropriations  entered  in  their  respective  sections  of  the 
budget,  in  order  to  facilitate  management.  Whilst  the  content  should  remain 
unchanged, Articles 171, 173 and 176 of the Financial Regulation should be slightly 
re-structured  in  order  to  clarify  the  sub-delegation  of  authorising  powers  by  the 
directors of Offices. 

(55)  A period of one week for the notification of the intention of the two branches of 
the  budgetary  authority  to  issue  an  opinion  in  the  framework  of  a  building 
procedure should be provided for. 

(56)  Successive  framework  research  programmes  have  facilitated  the  work  of  the 
Commission by laying down simplified rules for the selection of external experts 
for evaluation of proposals or grant applications and technical assistance for the 
follow-up  and  evaluation  of  projects  funded.  This  procedure  should  be  made 
available in respect of all other programmes. 

(57)  Transitional  provisions  should  be  added  to  deal  with  expenditure  from 
Community  initiatives  and  technical  assistance  and  innovative  measures  as 
provided  for  in  Council  Regulation  (EC)  No  1260/1999  of  21  June  1999  laying 
down  general  provisions  on  the  Structural  Funds6  and  for  which  payments  still 
have to be made, as the implementation of the provisions on the central data base 
for exclusion from participation in procurement and grant procedures. 

(5850) Regulation (EC, Euratom) No 1605/2002 should therefore be amended accordingly, 

HAS ADOPTED THIS REGULATION: 

Article 1 

Regulation (EC, Euratom) No 1605/2002 is amended as follows: 

(1) 

In Article 1, the first paragraph is replaced by the following: 

"This Regulation lays down the rules for the establishment and implementation of the 
general  budget  of  the  European  Communities,  hereinafter  "the  budget",  and  the 
presentation and auditing of the accounts." 

(2) 

Article 2 is replaced by the following: 

“Article 2 

Any provision concerning the implementation of the revenue and expenditure of the 
budget,  contained  in  another  legislative  act,  must  comply  in  particular  with  the 
budgetary principles set out in Title II.” 

6 

OJ  L  161,  26.06.1999,  p.  1.  Regulation  as  last  amended  by  Regulation  (EC)  No  173/2005  (OJ  L  29, 
2.2.2005, p. 3). 

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(2) 

Article 3 is replaced by the following: 

“Article 3 

The  budget  shall  be  established  and  implemented  in  compliance  with  the 
principles of unity, budgetary accuracy, annuality, equilibrium, unit of account, 
universality,  specification,  sound  financial  management,  proportionality, 
transparency  and  effective  and  efficient  internal  control  as  set  out  in  this 
Regulation” 

(3) 

In Article 5, paragraph 4 is replaced by the following: 

"4.  Subject to Articles 5a, 18 and 74, interest yielded by the funds which are the 
property  of  the  Communities  shall  be  entered  in  the  budget  as  miscellaneous 
revenue." 

(4) 

The following Article 5a is added in Chapter 1 of Title II of Part One: 

"Article 5a 

1. 

Interest  generated  by  pre-financing  payments  shall  be  assigned  to  the 
programme  or  the  action  concerned  and  deducted  from  the  payment  of  the 
balance of the amounts due to the beneficiary. 

The  Regulation  laying  down  the  rules  for  implementing  this  Regulation, 
hereinafter  ’the  implementing  rules’,  shall  specify  the  cases  in  which  the 
authorising  officer  responsible  shall,  by  way  of  exception,  recover  annually 
such interest by means of a recovery order. That interest shall be entered in the 
budget as miscellaneous revenue. 

2. 

Interest shall not be due to the Communities in the following cases:  

(a) 

pre-financing  which  does  not  represent  a  significant  amount,  as 
determined in the implementing rules; 

(b)  pre-financing  paid  under  a  procurement  contract  within  the  meaning  of 

Article 88; 

(c) 

pre-financing paid to Member States; 

(d)  pre-financing paid under the pre-accession aid; 

(e) 

advances  paid  to  members  of  the  institutions  and  to  staff  in  accordance 
with the Staff Regulations of Officials of the European Communities and 
the  Conditions  of  employment  of  other  servants  of  the  European 
Communities, hereinafter ’the Staff Regulations’; 

(f) 

pre-financing paid in the framework of  joint  management as referred to 
in point (c) of Article 53(1)." 

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(6) 

In Article 8(1), the following sentence is added: 

“The amounts paid in advance shall be treated as revenue of the next financial year.” 

(5) 

 In Article 11, “Article 157” is replaced by “Articles 157 and 160a”. 

(6) 

In Article 12, the following paragraph is added: 

"However,  in  duly  substantiated  exceptional  cases,  the  appropriations  for  the 
purposes  of  crisis  management  aid  and  humanitarian  aid  operations  may  be 
committed as from 15 December of each year against the appropriations provided for 
the following financial year. Such commitments may not exceed one quarter of the 
appropriations  on  the  corresponding  budget  line  for  the  last  adopted  budget.  The 
budgetary authority shall be informed ex post of these commitments". 

(7) 

In Article 16, the second paragraph is replaced by the following: 

"However, for the cash-flow purposes referred to in Article 61, the accounting officer 
and, in the case of imprest accounts, the imprest administrators, and, for the needs of 
the  administrative  management  of 
the 
authorising officer responsible shall be authorised to carry out operations in national 
currencies as laid down in the implementing rules." 

the  Commission’s  External  Service, 

(8) 

In Article 18(1) paragraph 1, is amended as follows: 

(a) 

the introductory phrase is replaced by the following: 

“Without  prejudice  to  Article  160(1)(a)  and  Article  161(2),  the  following 
items of revenue shall be used to finance specific items of expenditure:” 

(b) 

the following point (aa) is inserted: 

"(aa)  financial  contributions  from  Member  States  and  other  donor  countries, 
including in both cases their public and parastatal agencies, or from 
international organisations to certain external aid projects or programmes 
financed  by  the  Community  and  managed  by  the  Commission  on  their 
behalf, pursuant to the relevant basic act;"  

(c) 

the following point (ea) is inserted: 

"(ea)  proceeds  from  the  sale  of  vehicles,  equipment,  installations,  materials, 
and  scientific  and  technical  apparatus  which  are  being  replaced  or 
scrapped;" 

(9) 

In Article 19(2), the first sentence is replaced by the following: 

“Acceptance  of  donations  which  involve  a  significant  financial  charge  exceeding 
10 % of the value of the donation made shall be subject to the authorisation of the 
European Parliament and the Council, both of which shall act on the matter within 
two months of the date of receipt of the request from the Commission.” 

(10)  Article 22 is replaced by the following: 

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“Article 22 

1.  Any institution other than the Commission may, within its own section of the 

budget, make transfers: 

(a) 

(b) 

from one title to another within a total limit of 10% of the appropriations 
for the financial year on the line from which the transfer is to be made;  

from  one  chapter  to  another  and  from  one  article  to  another  without 
limit. 

2. 

Three  weeks  before  making  the  transfers  referred  to  in  paragraph  1,  the 
institutions  shall  inform  the  budgetary  authority  and  the  Commission  of  their 
intentions.  In  the  event  of  duly  substantiated  reasons  being  raised  within  this 
period by either branch of the budgetary authority, the procedure laid down in 
Article 24 shall apply.  

The budgetary authority shall take decisions on these transfers within the time 
limits laid down in Article 24, which shall be deemed to begin on the date on 
which the budgetary authority was informed by the institution of the intended 
transfer. 

3.  Any  institution  other  than  the  Commission  may  propose  to  the  budgetary 
authority,  within  its  own  section  of  the  budget,  transfers  from  one  title  to 
another exceeding the limit of 10% of the appropriations for the financial year 
on the line from which the transfer is to be made. The budgetary authority shall 
inform  the  Commission  accordingly.  Those  transfers  shall  be  subject  to  the 
procedure laid down in Article 24. 

4.  Any institution other than the Commission may, within its own section of the 
budget, make transfers within chapters articles without prior information of the 
budgetary authority.” 

(11)  Article 23 is amended as follows: 

(a) 

paragraph 1 is amended as follows: 

(i) 

point (b) is replaced by the following: 

"(b)  as  regards  staff  and  operating  expenditure,  transfer  appropriations 
from  one 
to  another  only  between  articles  financing 
expenditure of identical nature up to a maximum of 10 % of the 
appropriations  for  the  year  shown  on  the  line  from  which  the 
transfer is made."; 

title 

(ii) 

the following point (d) is added: 

"(d)  transfer  appropriations  from  the  "provisions"  title  referred  to  in 
Article 43  for  the  cases  where  no  basic  act  exists  for  the  action 
concerned when the budget is established but is adopted during the 
course of the financial year." 

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(iii)  the  second  subparagraph  is  replaced  by  the  following:deleted 

“Three  weeks  before  making  the  transfers  referred  to  in  points  (b) 
and  (c)  of  the  first  subparagraph,  the  Commission  shall  inform  the 
budgetary authority of its decision. In the event of duly substantiated 
reasons being raised within that three-week period by either branch 
of  the  budgetary  authority,  the  procedure  laid  down  in  Article  24 
shall apply.” 

(iv)  the 

following 

third  and 

fourth  subparagraphs  are  added: 

“However,  during  the  last  three  months  of  the  financial  year,  the 
Commission  may  autonomously  transfer  appropriations  concerning 
expenditure on staff, external staff and other agents from one title to 
another  within  the  total  limit  of  10  %  of  the  appropriations  of  the 
financial year. The Commission shall inform the budgetary authority 
in the month following its decision on those transfers. 

The Commission shall inform the budgetary authority in the month 
following its decision on transfers referred to in point (d) of the first 
subparagraph.” 

(b) 

the following paragraph 1a is inserted:  

“1a.  The Commission shall inform the budgetary authority three weeks before 

making the following: 

(a) 

transfers  between  articles  within  the  chapter  corresponding  to 
administrative  appropriations  of  the  same  title  which  exceed  10% 
of the appropriations of the year  shown  on  the  article  from  which 
the transfer is made; 

(b) 

transfers referred to in point (c) of paragraph 1.  

In  the  event  of  duly  substantiated  reasons  being  raised  within  that 
three-week  period  by  either  branch  of  the  budgetary  authority,  the 
procedure  laid  down  in  Article  24  shall  apply.  The  budgetary  authority 
shall take decisions on these transfers within the time limits laid down in 
Article 24,  which  shall  be  deemed  to  begin  on  the  date  on  which  the 
budgetary  authority  was  informed  by  the  Commission  of  the  intended 
transfer.”; 

(c b)  in paragraph 2, "paragraph 1(c)" is replaced by "paragraph 1 and 1a". 

(12) 

In Article 26(2)is amended as follows: 

(a)  paragraph 1 is replaced by the following: 

“1.  Transfers  within  the  titles  of  the  budget  devoted  to  the  European 
Agricultural  Guarantee  Fund  (EAGF),  the  Structural  Funds, 
Cohesion Fund, Fisheries Fund, the European Agricultural Fund for 

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Rural  Development  (EAFRD)  and  Research  shall  be  the  subject  of 
special provisions under Titles I, II and III of Part Two.” 

(b) 

in paragraph 2, the first subparagraph is replaced by the following: 

"Decisions on transfers to allow the utilisation of the reserve for emergency aid 
shall be taken by the budgetary authority on a proposal from the Commission. 
A separate proposal must be submitted for each individual operation." 

(13)  Article 28 is amended as follows: 

(a)  paragraph 1 is replaced by the following: 

“1.  Any  proposal  submitted  to  the 

legislative  authority  by  the 
Commission,  by  a  Member  State  in  compliance  with  the  relevant 
provisions of the Treaty on European Union (TEU), which may have 
an impact on the budget, including changes in the number of posts, 
must  be  accompanied  by  a  financial  statement  and  the  evaluation 
provided for in Article 27(4) of this Regulation. 

Any substantial amendment to a proposal submitted to the legislative 
authority  which  may  have  an  impact  on  the  budget,  including 
changes in the number of posts, must be accompanied by a financial 
statement prepared by the institution proposing the amendment”. 

(b)  paragraph 3 is replaced by the following: 

“3. 

In order to prevent the risk of fraud and irregularities, the financial 
statement  referred  to  in  paragraph  1  shall  record  any  information 
regarding  existing  and  planned  fraud  prevention  and  protection 
measures.” 

(14)  After Article 28, the following Chapter 7a is inserted: 

“CHAPTER 7a 
Principle of proportionality 

Article 28a 

Budget appropriations shall be implemented in accordance with the principle of 
proportionality  laid  down  in  the  third  paragraph  of  Article  5  EC  Treaty.  The 
procedures  used  for  carrying  out  programmes  and  activities  shall  be 
determined on the basis of their objectives, and take account of the amounts and 
risks involved. 

(15) 

In Article 29, paragraph 2 is replaced by the following: 

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24 

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"2.  The President of the European Parliament shall have the budget and amending 
budgets, as finally adopted, published in the Official Journal of the European 
Union. 

The budget shall be published within three months following the date on which 
the budget is declared finally adopted. 

The  consolidated  annual  accounts  and  the  report  on  budgetary  and  financial 
management  drawn  up  by  each  institution  shall  be  published  in  the  Official 
Journal of the European Union." 

(16) 

In Article 30, the following paragraph 3 is added: 

“3. 

Information  on  the  beneficiaries  of  funds  deriving  from  the  budget  is 
ensured  in  the  most  appropriate  manner  taking  into  account  the 
specificities of each management mode referred to under Article 53.” 

(17)  After Article 30, the following Chapter 9 is added: 

“CHAPTER 9 
Principle of effective and efficient internal control 

Article 30a 

1. 

2. 

The budget shall be implemented in compliance with effective and efficient 
internal control as appropriate in each management mode, subject to the 
principle of proportionality. 

For the purposes of the implementation of the budget, internal control is 
defined  as  a  process  applicable  at  all  levels  in  the  chain  of  management 
and  designed  to  provide  reasonable  assurance  on  the  achievement  of  the 
following objectives: 

(a) 

effectiveness and efficiency of operations; 

(b) 

reliability of financial reporting; 

(c) 

safeguarding of assets and information; 

(d)  prevention and detection of fraud and irregularities; 

(e) 

adequate  management  of  the  risks  relating  to  the  legality  and 
regularity of the underlying transactions. 

3. 

The  risk  of  irregularity  or  illegality  in  the  underlying  transactions, 
inherent  to  the  implementation  of  a  basic  act,  will  be  addressed  by  an 
adequate level of control, in order to reach a tolerable level of risk, taking 
into  account  the  multi-annual  character  of  programmes  as  well  as  the 
nature of the payments concerned. 

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(18) 

In Article 33(2), point (d) is replaced by the following is amended as follows: 

(a)  point (d) is replaced by the following: 

"(d)  the activity statements containing the information: 

– 

– 

on the achievement of all previously set objectives for the various 
activities as well as new objectives measured by indicators; 

on  the  management  in  previous  years  of  the  tolerable  risk  on 
legality  and  regularity  in  underlying  transactions  as  well  as 
additional measures needed in this context. 

Evaluation results shall be consulted and referred to as evidence of the  likely 
merits of a proposed budget amendment." 

(b) 

the following point (e) is added: 

“(e)  a summary statement of the schedule of payments due in subsequent 
financial  years  to  meet  budgetary  commitments  entered  into  in 
earlier financial years.” 

(19) 

In Article 40, point (a) is replaced by the following: 

“(a)  a general statement of revenue and expenditure;” 

(20) 

In the second subparagraph of Article 43(1), is amended as follows: 

(a) 

in the of paragraph 1, "Article 24" is replaced by "Articles 23 and 24". 

(b) 

in paragraph 2, "Article 24" is replaced by "Articles 23 and 24". 

(21) 

In the second paragraph of Article 44, "Articles 22, 23 and 25" is replaced by "Articles 
23 and 25". 

(22)  Article 45 is replaced by the following: 

"Article 45 

1. 

2. 

The  Commission  section  of  the  budget  shall  include  a  reserve  for  emergency 
aid for third countries. 

The reserve referred to in paragraph 1 shall be drawn upon before the end of 
the  financial  year  by  means  of  transfer  in  accordance  with  the  procedure  laid 
down in Articles 24 and 26." 

(23)  Article 46(1) is amended as follows: 

(a) 

point (1) is amended as follows: 

(i) 

the introductory phrase is replaced by the following: 

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26 

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“in the general statement of revenue and expenditure:”; 

(ii)  point (f) is deleted; 

(iii)  point (g) is replaced by the following: 

“(g)  appropriate 

remarks  on  each  subdivision,  as  set  out 

in 

Article 41(1)”; 

(b)  point (2) is replaced by the following: 

"(2)  in  the  section  for  each  institution,  the  revenue  and  expenditure  shall  be 

shown in the same structure as in point (1)"; 

(c) 

in point (3), point (c) is replaced by the following:  

“(c)  as  regards  scientific  and  technical  staff,  the  classification  may  be  based 
on groups of grades, in accordance with the conditions laid down in each 
budget;  the  establishment  plan  must  specify  the  number  of  highly 
qualified  technical  or  scientific  personnel  who  are  accorded  special 
advantages under the specific provisions of the Staff Regulations;” 

(d)  point (5) is replaced by the following: 

"(5)  the  budget 

lines  under  revenue  and  expenditure  necessary  for 

implementing the Guarantee Fund for external actions." 

(24) 

In the second subparagraph of Article 47(1), "grades A1, A2 and A3" is replaced by 
"grades AD 16, AD 15 and AD 14". 

(25)  Article 49 is replaced by the following: 

“Article 49 

“1.  A basic act shall first be adopted before the appropriations entered in the 
budget for any action by the Communities or by the European Union may 
be used. 

A basic act is a legal act which provides a legal basis for the action and for 
the  implementation  of  the  corresponding  expenditure  entered  in  the 
budget.  

2. 

In application of the EC Treaty and the Euratom Treaty, a basic act is an 
act  adopted  by  the  legislative  authority  and  may  take  the  form  of  a 
regulation, a directive, a decision within the meaning of Article 249 of the 
EC Treaty or a decision sui generis7. 

7 

Beschluss 

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27 

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3. 

4. 

In  application  of  Title  V  of  the  TEU  (concerning  Common  Foreign  and 
Security Policy - CFSP), a basic act may take one of the forms specified in 
Articles 13(2) and (3), 14, 18(5), 23(1) and (2) and 24 of the TEU. 

In  application  of  Title  VI  of  the  TEU  (concerning  Police  and  Judicial 
Cooperation in Criminal Matters), a basic act may take one of the forms 
referred to in Article 34(2) of the TEU. 

5.  Recommendations  and  opinions  do  not  constitute  basic  acts  within  the 
meaning  of  this  article,  nor  do  resolutions,  conclusions,  declarations  or 
other acts which have no legal effects. 

6. 

By  way  derogation  of  paragraphs  1  to  4,  the  following  may  be 
implemented  without  a  basic  act  as  long  as  the  actions  which  they  are 
intended to finance fall within the competence of the Communities or the 
European Union: 

(a)  appropriations for pilot schemes of an experimental nature designed 
to  test  the  feasibility  of  an  action  and  its  usefulness.  The  relevant 
commitment  appropriations  may  be  entered  in  the  budget  for  only 
two successive financial years; 

take  various 

(b)  appropriations for preparatory actions in the fields of application of 
the EC Treaty and the Euratom Treaty and of Title VI of the TEU, 
designed to prepare proposals with a view to the adoption of future 
actions.  The  preparatory  actions  are  to  follow  a  coherent  approach 
and  may 
forms.  The  relevant  commitment 
appropriations  may  be  entered  in  the  budget  for  only  three 
successive financial years at most. The legislative procedure must be 
concluded before the end of the third financial year. In the course of 
the  legislative  procedure,  the  commitment  of  appropriations  must 
correspond  to  the  particular  features  of  the  preparatory  action  as 
regards  the  activities  envisaged,  the  aims  pursued  and  the  persons 
benefited. Consequently, the means implemented cannot correspond 
in volume to those envisaged for financing the definitive action itself; 

When  the  preliminary  draft  budget  is  presented,  the  Commission 
shall  submit  a  report  to  the  budgetary  authority  on  the  actions 
referred to in points (a) and (b) which shall also cover an assessment 
of results and the follow-up envisaged; 

(c) 

for 

appropriations for preparatory measures in the field of Title V of the 
TEU (concerning CFSP). These measures shall be limited to a short 
period  of  time  and  shall  be  designed  to  establish  the  conditions  for 
European  Union  action  in  fulfilment  of  the  objectives  of  the  CFSP 
instruments; 
and 
For  the  purpose  of  EU  crisis  management  operations,  preparatory 
measures  are  designed 
inter  alia  to  assess  the  operational 
requirements, to provide for a rapid initial deployment of resources, 
or to establish the conditions on the ground for the launching of the 
operation. 

the  adoption  of 

the  necessary 

legal 

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The  Secretary-General  of  the  Council/High  Representative  for  the 
CFSP,  assisting  the  Presidency,  shall  associate  the  Commission  as 
early  as  possible  on  the  Council's  intention  to  decide  a  preparatory 
measure and on the estimated resources required for this purpose. In 
conformity  with  the  provisions  of  this  Regulation,  the  Commission 
shall take all the necessary measures to ensure a rapid disbursement 
of the funds; 

(d)  appropriations  for  one-off  actions,  or  even  actions  for  an  indefinite 
duration, carried out by the Commission by virtue of tasks resulting 
from its prerogatives at institutional level pursuant to the EC Treaty 
and  the  Euratom  Treaty  other  than  its  right  of  legislative  initiative 
referred to in point (b) and under specific powers directly conferred 
on  it  by  those  Treaties,  a  list  of  which  is  given  in  the  implementing 
rules; 

(e) 

appropriations  for  the  operation  of  each  institution  under  its 
administrative autonomy.” 

(26) 

In Article 50, the following second paragraph is added: 

“Each institution shall exercise these powers in accordance with this Regulation 
and within the limits of the appropriations authorised.” 

(27)  Article 52 is replaced by the following: 

“Article 52 

1.  All  financial  actors  and  any  other  person  involved  in  budget  implementation, 
management,  audit  or  internal  control  shall  be  prohibited  from  taking  any 
action  which  may  bring  their  own  interests  into  conflict  with  those  of  the 
Communities.  Should  such  a  case  arise,  the  person  in  question  must  refrain 
from such actions and refer the matter to the competent authority. 

2. 

There is a conflict of interests where the impartial and objective exercise of the 
functions of a financial actor or other person, as referred to in paragraph 1, is 
compromised for reasons involving family, emotional life, political or national 
affinity, economic interest or any other shared interest with the beneficiary." 

(28)  Article 53 is replaced by the following: amended as follows: 

The Commission shall implement the budget in any of the following ways: 

“Article 53 

(a)  on a centralised basis; 

(b)  by shared or decentralised management; 

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(c)  by joint management with international organisations.” 

(29)  The following Articles 53a to 53d are inserted: 

“Article 53a 

Where  the  Commission  implements  the  budget  on  a  centralised  basis, 
implementation  tasks  shall  be  performed  either  directly  by  its  departments  or 
indirectly, in accordance with Articles 54 to 57. 

(a) 

paragraphs 3 and 4 are replaced by the following: 

Article 53b 

1.  Where  the  Commission  implements  the  budget  by  shared  management, 
implementation tasks shall be delegated to Member States. That method shall 
apply in particular to the actions referred to in Titles I and II of Part Two. 

2.  Without prejudice to more specific provisions included in relevant sector-
specific  regulations,  and  in  order  to  ensure  in  shared  management  that  the 
funds  are  used  in  accordance  with  the  applicable  rules  and  principles,  the 
Member States shall take all the legislative, regulatory and administrative or 
other  measures  necessary  for  protecting  the  Communities’  financial 
interests in order to: 

(a) 

satisfy  themselves  that  actions  financed  from  the  budget  are  actually 
carried out and to ensure that they are implemented correctly; 

(b)  prevent and deal with irregularities, mismanagement and fraud; 

(c) 

(d) 

recover funds wrongly paid or incorrectly used or funds lost as a result of 
irregularities or errors; 

ensure,  with  due  observance  of  the  requirements  of  confidentiality 
and security, adequate annual ex post publication of beneficiaries of 
funds deriving from the budget. 

To that effect, the Member States shall conduct regular checks and shall put in 
place  an  effective  and  efficient  internal  control  system,  according  to  the 
principles  laid  down  in  Article  30a.  They  shall  bring  legal  judicial 
proceedings as are necessary and appropriate. for the purposes of points (b) 
and (c). 

3.  Member States shall submit to the Commission an annual summary at the 

appropriate national level of the available audits and declarations. 

4. 

In  order  to  ensure  that  the  funds  are  used  in  accordance  with  the 
applicable  rules,  the  Commission  shall  apply  clearance-of-accounts 
procedures or financial correction mechanisms which enable it to assume 
final responsibility for the implementation of the budget. 

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Article 53c 

41.  Where the Commission implements the budget by decentralised management, 
implementation  tasks  shall  be  delegated  to  third  countries  in  accordance  with 
Article 56 and Title IV of Part Two, without prejudice to delegation of tasks 
to bodies referred in Article 54(2). 

2. 

3. 

In  order  to  ensure  that  the  funds  are  used  in  accordance  with  the 
applicable  rules,  the  Commission  shall  apply  clearance-of-accounts 
procedures or financial correction mechanisms which enable it to assume 
final responsibility for the implementation of the budget. 

Third countries to which implementation tasks are delegated shall ensure, 
with  due  observance  of  the  requirements  of  confidentiality  and  security, 
adequate  annual  ex  post  publication  of  beneficiaries  of  funds  deriving 
from the budget. 

(b)  paragraph 6 is deleted; 

(c) 

paragraph 7 is replaced by the following: 

Article 53d 

71.  Where  the  Commission  implements  the  budget  by  joint  management,  certain 
implementation  tasks  shall  be  entrusted  to  international  organisations,  in 
accordance with the implementing rules, in the following cases: 

(a)  wherever  the  Commission  and  the  international  organisation  are  bound 
by a long-term framework agreement laying down the administrative and 
financial arrangements for their cooperation; 

(b)  wherever the Commission and the international organisation elaborate a 

joint project or programme; 

(c)  where the funds of several donors are pooled and are not earmarked for 
specific items or categories of expenditure, that is to say, in the case of 
multi-donor actions. 

These  organisations  shall,  in  their  accounting,  audit,  internal  control  and 
procurement procedures, apply standards which offer guarantees equivalent to 
internationally accepted standards. 

The individual agreement concluded with the international organisation for the 
award of the financing shall contain detailed provisions for the implementation 
of the tasks entrusted to the international organisation. 

International  organisations  to  which  implementation  tasks  are  delegated 
shall  ensure,  with  due  observance  of  the  requirements  of  confidentiality 
and security, adequate annual ex post publication of beneficiaries of funds 
deriving from the budget.” 

2. 

3. 

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(30)  Article 54 is amended as follows: 

(a) 

in paragraph 1, the following subparagraph is added: 

“The  delegation  of  budget-implementation  tasks  shall  comply  with  the 
requirements  of  sound  financial  management  and  effective  and  efficient 
internal  control  and  shall  ensure  compliance  with  the  principle  of  non-
discrimination, and the visibility of Community action. No implementing tasks 
entrusted in this way may give rise to conflicts of interests.” 

(b)  paragraph 2 is amended as follows:  

(i) 

in the first sentence, “Article 53(2)” is replaced by “Articles 53a and 
53c”. 

(ii)  point (b) is replaced by the following: 

“(b)  bodies set up by the Communities as referred to in Article 185 
and other specialised Community bodies, such as the European 
Investment  Bank  or  the  European  Investment  Fund,  provided 
that  to  do  so  is  compatible  with  the  tasks  of  each  body  as 
defined in the basic act.” 

(iii)  point (c) is replaced by the following: 

“(c)  national or international public-sector bodies or bodies governed by 
private  law  with  a  public-service  mission  providing  adequate 
financial  guarantees  and  complying  with  the  conditions  provided 
for in the implementing rules.” 

(iv) 

the following point (d) is added: 

“(d)  persons  entrusted  with  the  implementation  of  specific  actions 
pursuant to Title V of the TEU, and identified in the relevant basic 
act within the meaning of Article 49.” 

(c) 

in paragraph 3, the second subparagraph is replaced by the following: 

“Such  bodies  or  persons  shall 
to  prevent 
irregularities  and  fraud  and  if  necessary  bring  judicial  legal  proceedings  to 
recover funds wrongly paid or incorrectly used.” 

take  appropriate  measures 

(31)  Articles 55 and 56 are replaced by the following: 

“Article 55 

1. 

The executive agencies shall be legal persons under Community law created by 
Commission Decision to which powers may be delegated to implement all or 
part of a Community programme or project on behalf of the Commission and 
under 
accordance  with  Council  Regulation 
its 
(EC) No 58/2003(*). 

responsibility 

in 

EN 

32 

   EN 

 
2. 

Implementation  of  the  corresponding  operational  appropriations  shall  be 
carried out by the director of the agency. 

_________________ 

(*)  OJ L 11, 16.1.2003, p. 1.” 

Article 56 

1.  Where  the  Commission  implements  the  budget  by  indirect  centralised 
management,  it  shall  first  obtain  evidence  of  the  existence,  relevance  and 
proper  operation  within  the  entities  to  which  it  entrusts  implementation,  in 
accordance with the rules of sound financial management, of the following: 

(a) 

(b) 

(c) 

transparent  procurement  and  grant-award  procedures  which  are  non-
discriminatory  and  exclude  any  conflict  of  interest  and  which  are  in 
accordance with the relevant provisions of this Regulation; 

an effective and efficient internal control system for the management of 
operations,  which  includes  effective  segregation  of  the  duties  of 
authorising officer and accounting officer or of the equivalent functions; 

accounting  arrangements  for  the  operations  and  procedures  for  the 
presentation  of  the  accounts  which  will  enable  the  correct  use  of  the 
Community funds to be ascertained and the true extent of this use to be 
reflected  in  the  Community  accounts;an  accounting  system  that 
enables  the  correct  use  of  Community  funds  to  be  verified  and  the 
use of funds to be reflected in Community accounts; 

(d) 

an independent external audit;  

(e) 

(f) 

public  access  to  information  at  the  level  provided  for  in  Community 
Regulations; 

adequate annual ex post publication of beneficiaries of funds deriving 
from  the  budget,  with  due  observance  of  the  requirements  of 
confidentiality and security. 

The Commission may accept that the audit, accounting and procurement 
systems of the entities referred to in Paragraphs 1 and 2 are equivalent to 
its own, with due account for internationally accepted standards. 

2. 

In the case of decentralised management, the criteria laid down in paragraph 1 
with the exception of the criterion provided in point (e), shall apply, in full 
or  in  part,  depending  on  the  degree  of  decentralisation,  agreed  between  the 
Commission and the third country concerned. 

Notwithstanding  paragraph  (1)(a)  and  Article  169a  the  Commission  may 
decide, in the case of pooling of funds, and under the conditions provided 
in  the  basic  act,  to  use  the  procurement  or  grant  procedures  of  the 
beneficiary partner country or as agreed among donors, after first having 
obtained evidence on a case by case basis that such procedures satisfy the 

EN 

33 

   EN 

 
principles  of  transparency,  equal  treatment  and  non—discrimination, 
to 
prevent  any  conflict  of 
internationally accepted standards and ensure adequate protection of the 
financial interests of the Community. 

interest,  offer  guarantees  equivalent 

The third country concerned shall undertake to fulfil the following obligations: 

(a) 

(b) 

(c) 

(d) 

to  comply,  subject  to  the  first  subparagraph  of  this  paragraph,  with  the 
criteria laid down in paragraph 1; 

to ensure that the audit referred to in point (d) of paragraph 1 is exercised 
by a national institution for independent external auditing; 

to conduct regular checks to ensure that the actions to be financed from 
the budget have been implemented correctly; 

to  take  appropriate  measures  to  prevent  irregularities  and  fraud  and,  if 
necessary,  to  bring  judicial  legal  proceedings  to  recover  funds  wrongly 
paid. 

3. 

The  Commission  shall  ensure  supervision,  evaluation  and  internal  control  of 
the  implementation  of  the  tasks  entrusted.  It  shall  take  the  equivalence  of 
control systems into account when it carries out controls using its own control 
systems. 

(32) 

In Article 57, paragraph 1 is replaced by the following: 

"1.  The  Commission  may  not  entrust  measures  of  implementation  of  funds 
deriving from the budget, including payment and recovery, to external private-
sector entities or bodies, except in the case referred to in Article 54(2)(c) or in 
specific  cases  where  the  payments  involved  are  to  be  made  to  beneficiaries 
determined by the Commission, are subject to conditions and amounts fixed by 
the Commission and do not involve the exercise of discretion by the entity or 
body making the payments." 

(33)  Article 59 is amended as follows: 

(a) 

the following paragraph 1a is inserted: 

“1a.  For the purposes of this Title, the term “staff” refers to persons covered 

by the Staff Regulations.” 

(b)  paragraph 3 is replaced by the following: 

"3.  The powers of authorising officer shall be delegated or subdelegated only 

to staff." 

(34) 

In Article 60, the first sentence of paragraph 7 is replaced by the following: 

“7.  The  authorising  officer  by  delegation  shall  report  to  his  institution  on  the 
performance of his duties in the form of an annual activity report, together with 
financial  and  management  information  and  any  reservations  in  relation 

EN 

34 

   EN 

 
thereto,  and  accompanied  by  a  declaration  of  assurance  certifying  that  the 
information contained in the report presents a true and fair view. 

That report shall indicate the results of the operations by reference to the 
objectives set, the risks associated with these operations, the use made of 
the resources provided and the efficiency and effectiveness of the internal 
control  system.  The  internal  auditor  shall  take  note  of  the  annual  report 
and any other pieces of information identified. No later than 15 June each 
year, the Commission shall send to the budgetary authority a summary of 
the annual reports for the previous year. These reports shall set out details 
of  the  measures  taken  to  limit  the  risk  of  irregularity  or  illegality  in 
connection with the operations dealt with in the report and an assessment 
of the effectiveness of those measures.” 

(35)  Article 61 is amended as follows: 

(a) 

in paragraph 1, point (e), the following sentence is added: 

“the  accounting  officer  shall  be  empowered  to  verify  the  respect  of 
validation criteria;” 

(b) 

the following paragraphs 2a, 2b and 2c are inserted: 

"2a.  Before the adoption of the accounts by the institution, the accounting 
officer  shall sign them off,  certifying that they present a  reasonable 
true and fair view of the financial situation of the institution. 

For that purpose the accounting officer shall satisfy himself that the 
accounts  have  been  prepared  in  accordance  with  the  accounting 
rules,  methods  and  accounting  systems  established  under  his 
responsibility as laid down in this Regulation for the accounts of his 
institution,  and  that  all  revenue  and  expenditure  is  entered  in  the 
accounts. 

The authorising officers by delegation shall forward all information 
that the accounting officer needs in order to fulfil his duties. 

The authorising officers shall remain fully responsible for the proper 
use of the funds they manage as well as the legality and regularity of 
the expenditure under their control. 

2b.  The accounting officer shall be empowered to check the information 
received  as  well  as  to  carry  out  any  further  checks  he  deems 
necessary in order to sign off the accounts.   

The  accounting  officer  shall  make  reservations, 
explaining exactly the nature and scope of such reservations. 

if  necessary, 

2c.  The  accounting  officers  of  the  other  institutions  and  agencies  shall 
sign  off  their  annual  accounts  and  send  them  to  the  Commission’s 
accounting officer.” 

EN 

35 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
The  accounting  officer  shall  prepare  the  accounts  on  the  basis  of  the 
information  presented  under  paragraph  2.  The  final  accounts  drawn  up 
under  Article  129(2)  and  (3)  shall  be  accompanied  by  a  certificate 
established  by  the  accounting  officer,  by  which  he  declares  that  they 
were  prepared  in  accordance  with  Title  VII  and  with  the  accounting 
principles, rules and methods set out in annex to the financial statements.  

(b)  paragraph 3 is replaced by the following: 

"3.  Save  as otherwise provided in  this Regulation, the accounting officer is 
alone  empowered  to  manage  cash  and  cash  equivalents.  He  shall  be 
responsible for their safekeeping." 

(36) 

In Article 62, the first paragraph is replaced by the following: 

“The accounting officer may, in the performance of his duties, delegate certain tasks 
to subordinate staff.” 

(37)  Article 63 is replaced by the following: 

"Article 63 

1. 

Imprest  accounts  may  be  set  up  for  the  collection  of  revenue  other  than  own 
resources  and  for  the  payment  of  small  sums  as  defined  in  the  implementing 
rules. 

However, in the field of crisis management aid and humanitarian aid operations 
within  the  meaning  of  Article  110,  imprest  accounts  may  be  used  for  larger 
paymentswithout any limitation on the amount. 

2. 

Imprest  accounts  shall  be  endowed  by  the  institution's  accounting  officer  and 
shall be placed under the responsibility of imprest administrators designated by 
the institution's accounting officer." 

(38) 

In Article 65, paragraph 1 is replaced by the following: 

“1.  The  provisions  of  this  Chapter  are  without  prejudice  to  the  criminal-law 
liability  which  the  financial  actors  referred  to  in  Article  64  may  incur  as 
provided  in  the  applicable  national  law  and  in  the  provisions  in  force  on  the 
protection  of  the  Communities'  financial  interests  and  on  the  fight  against 
corruption  involving  officials  of  the  Communities  or  officials  of  Member 
States.” 

(39)  Article 66 is amended as follows: 

(a) 

in paragraph 1, the first sentence is replaced by the following: 

“1.  The  authorising  officer  shall  be  liable  for  payment  of  compensation  as 

laid down in the Staff Regulations. 

EN 

36 

   EN 

 
 
(b) 

the following paragraphs 1a to 1d are inserted: 

“1a.  The obligation to pay compensation shall apply in particular if in the 

following cases: 

– 

– 

(a)  the  authorising  officer,  whether  intentionally  or  through 
gross negligence on his part, which specify that a member of staff 
covered by the relevant provisions may be required to make good, 
in whole or in part, any damage suffered by the Communities as a 
result  of  serious  misconduct  on  his/her  part  in  the  course  of  or  in 
connection  with  the  performance  of  his/her  duties,  in  particular  if 
he/she  determines  entitlements  to  be  recovered  or  issues  recovery 
orders,  commits  expenditure  or  signs  a  payment  order  without 
complying with this Regulation and the implementing rules; 

(b)  the  authorising  officer,  whether  intentionally  or  through 
gross  negligence  on  his  part,  omits  to  draw  up  a  document 
establishing a debt, neglects to issue a recovery order or is late 
in  issuing  it  or  is  late  in  issuing  a  payment  order,  thereby 
rendering the institution liable to civil action by third parties. 

1b.  When  the  case  and  the  degree  of  misconduct  are  considered,  all 
circumstances,  in  particular  the  resources  made  available  to  the 
authorising  officer  to  enable  him  to  perform  his  duties,  must  be 
taken into account.  

1c. 

In keeping with the principle of proportionality, the level of liability 
of the authorising officer shall be assessed primarily on the basis of 
the  degree  of  his  serious  misconduct.  If  the  authorising  officer  acts 
intentionally  he  shall  be  liable  for  the  entire  loss  suffered.  If  the 
authorising officer has committed gross negligence, the liability shall 
be limited to a maximum of 12 months’ basic salary.  

1d.  The  conditions  and  limitations  regarding  liability  to  payment  of 
compensation  laid  down  in  paragraphs  1  to  1c  shall  apply  mutatis 
mutandis to the members of staff referred to in the second sentence 
of Article 59(4).” 

(b) 

the following paragraph 2a is inserted: 

"2a.  An  authorising  officer  by  delegation  may  refer  a  matter  to  the  panel 
referred to in paragraph 4 if he/she considers that a financial irregularity 
has occurred." 

(c)  paragraph 3 is replaced by the following: 

“3. 

In  the  event  of  subdelegation  within  his  services,  the  authorising 
officer  by  delegation  continues  to  be  responsible  for  the  efficiency 
and  effectiveness  of  the  internal  management  and  control  systems 
put  in  place  and  for  the  choice  of  the  authorising  officer  by 
subdelegation.” 

EN 

37 

   EN 

 
(d) 

in paragraph 4, the first subparagraph is replaced by the following: 

“4.  Each  institution  shall  set  up  a  specialised  financial  irregularities 
panel  or  participate  in  a  joint  panel  established  by  several 
institutions.  The  panels  shall  function  independently  and  determine 
whether  a  financial 
irregularity  has  occurred  and  what  the 
consequences, if any, should be.” 

(40) 

In Article 67, the following paragraph is added: 

“The conditions and limitations regarding liability to payment of compensation 
laid  down  in  Article  66(1b)  and  (1c)  shall  apply  mutatis  mutandis  to  the 
accounting officer and the staff referred to in Article 62.” 

(41) 

In Article 68, the following paragraph is added: 

“The conditions and limitations regarding liability to payment of compensation 
laid  down  in  Article  66(1b)  and  (1c)  shall  apply  mutatis  mutandis  to  imprest 
officers.” 

(42) 

In Article 72(2), the following subparagraph is added 

"The institution may also obtain an enforcement order from the competent authority 
by  ordinary  judicial  procedure.  For  such  purposes  its  receivable  amounts  are 
assimilated  to  receivable  amounts  under  civil  and  commercial  law  within  the 
meaning of the instruments adopted on the basis of Article 65 of the EC Treaty and, 
where appropriate, the agreements applicable between the Community and the 
Member  States  having  a  special  position  with  respect  to  Title  IV  of  the  EC 
Treaty." 

(43) 

In Article 73(2), the following subparagraph is added: 

"The responsible authorising officer may furthermore cancel or adjust an established 
amount  receivable,  in  accordance  with  the  conditions  set  out  in  the  implementing 
rules." 

(44)  The following Articles 73a and 73b are inserted: 

"Article 73a 

In order to protect their financial interests, amounts receivable by the Communities 
shall  enjoy  the  same  privileges  in  national  legal  systems  as  entitlements  of  a  fiscal 
nature which belong to public bodies in the Member States. 

Article 73b  

Without prejudice to the provisions of specific regulations and the application of the 
Council Decision relating to the Communities' own resources system, entitlements of 
the Communities in respect of third parties and entitlements of third parties in respect 
of the Communities shall be subject to a limitation period of five years. 

EN 

38 

   EN 

 
The date for calculating the limitation period and the conditions for interrupting this 
period shall be laid down in the implementing rules." 

(45) 

In Article 75(2), “Article 49(2)” is replaced by “Article 49(62)(de)” 

(46) 

In Article 77(3), the third subparagraph is replaced by the following: 

“The  amount  of  a  budget  commitment  corresponding  to  a  legal  commitment  for 
which  no  payment  within  the  meaning  of  Article  81  has  been  made  in  a  period  of 
three years following the signing of the legal commitment shall be decommitted.” 

(47) 

In Article 80, the following paragraph is added: 

“Where  periodic  payments  are  made  with  regard  to  services  rendered, 
including rental services, or goods delivered, and subject to his risk analysis, the 
authorising officer may order the application of a direct debit system.” 

(48) 

In Article 86(1), point (b) is replaced by the following: 

“(b)  for  assessing  the  efficiency  and  effectiveness  of  the  internal  control  and 

audit systems applicable to every budgetary implementation operation.” 

(49) 

In Article 87, the second paragraph is replaced by the following: 

“If  the  internal  auditor  is  a  member  of  staff,  he  shall  assume  responsibility  as  laid 
down in the Staff Regulations and spelt out in the implementing rules.” 

(50)  Article 88 is replaced by the following amended as follows: 

(a) 

in paragraph 1, the first subparagraph is replaced by the following: 

“Article 88 

1. 

Public  contracts  are  contracts  for  pecuniary  interest  concluded  in  writing 
between  one  or  more  economic  operators  and  one  or  more  contracting 
authorities  within  the  meaning  of  Articles  104  and  167,  in  order  to  obtain, 
against payment of a price paid in whole or in part from the budget, the supply 
of  movable  or  immovable  assets,  the  execution  of  works  or  the  provision  of 
services. 

These contracts comprise: 

(a) 

contracts for the purchase or rental of a building; 

(b) 

supply contracts; 

(c)  works contracts; 

(d) 

service contracts. 

2.  Framework  contracts  are  contracts  concluded  between  one  or  more 
contracting authorities and one or more economic operators, the purpose 

EN 

39 

   EN 

 
 
 
of  which  is  to  establish  the  terms  governing  contracts  to  be  awarded 
during  a  given  period,  in  particular  with  regard  to  price  and,  where 
appropriate,  the  quantity  envisaged.  They  shall  be  governed  by  the 
provisions  of  this  Title  concerning  the  award  procedure,  including 
advertising. 

(b)  paragraph 2 is replaced by the following: 

3. 

This Title does not relate to grants, without prejudice to Articles 93 to 96." 

(51) 

In Article 89 (2), the following subparagraph is added: 

“Contracting  authorities  may  not  use  framework  contracts  improperly  or  in 
such  a  way  that  the  purpose  or  effect  is  to  prevent,  restrict  or  distort 
competition.” 

(52) 

In Article 90(1), the second subparagraph is replaced by the following: 

“Contract  notices  shall  be  published  in  advance  except  in  the  cases  referred  to  in 
Article 91(2) of this Regulation, as specified in the implementing rules, and for the 
service  contracts  covered  by  Annex  IIB  to  Directive  2004/18/EC  of  the  European 
Parliament and of the Council(**). 

_______________ 
(**)  OJ L 134, 30.4.2004, p. 114.” 

(53)  Article 91 is amended as follows: 

(a) 

paragraph 1 is replaced by the following: 

“1.  Procurement procedures shall take one of the following forms: 

(a) 

the open procedure; 

(b) 

the restricted procedure; 

(c) 

contests; 

(d) 

the negotiated procedure; 

(e) 

the competitive dialogue. 

Where a public contract or a framework contract is likely to be of interest 
to  two  or  more  institutions,  executive  agencies  or  bodies  referred  to  in 
Article  185,  the  contracting  authorities  concerned  shall  seek,  whenever 
appropriate, 
the  procurement  procedure  on  an 
interinstitutional basis. 

to  carry  out 

Where  a  public  contract  or  framework  contract  is  necessary  for  the 
implementation of a joint action between one institution and a contracting 
authority  from  a  Member  State,  the  procurement  procedure  may  be 

EN 

40 

   EN 

 
carried  out  jointly  by  the  institution  and  this  contracting  authority,  as 
specified in the implementing rules.” 

(b) 

in paragraph 2, the second subparagraph is deleted; 

(c) 

the following paragraph 4 is added: 

“4.  The implementing rules shall define the procurement procedure, referred 
to in paragraph 1, applicable to service contracts covered by Annex IIB 
to  Directive  2004/18/EC  and  to  contracts  which  are  declared  to  be 
secret, whose performance  must be  accompanied by special security 
measures,  or  when  the  protection  of  essential  interests  of  the 
Communities or the European Union so requires.”. and shall include 
specific rules for the awarding of contracts to external experts to provide 
evaluation or technical assistance.” 

(54)  Article 92 is replaced by the following: 

“Article 92 

“The  documents  relating  to  the  call  for  tenders  shall  give  a  full,  clear  and 
precise  description  of  the  subject  of  the  contract  and  specify  the  exclusion, 
selection and award criteria applicable to the contract.” 

(55)  Article 93 is amended as follows: and 94 are replaced by the following: 

“Article 93 

1. 

Subject to paragraph 5, candidates or tenderers who are in any of the following 
situations shall be excluded from participation in a procurement procedure: 

(a) 

they  have  been  the  subject  of  a  judgment  which  has  the  force  of 
res judicata for fraud, corruption, involvement in a criminal organisation, 
money  laundering  or  any  other  illegal  activity  detrimental  to  the 
Communities' financial interests; 

(b) 

they  are  currently  subject  to  an  administrative  penalty,  referred  to  in 
Article 96. 

2. 

Subject to paragraph 5, and on the basis of the analysis of risks, the contracting 
authority may decide to exclude from participation in a procurement procedure 
candidates and tenderers who are in any of the following situations:  

(a) 

they  are  bankrupt  or  being  wound  up,  are  having  their  affairs 
administered  by  the  courts,  have  entered  into  an  arrangement  with 
creditors,  have  suspended  business  activities,  are  the  subject  of 
proceedings  concerning  those  matters,  or are  in  any  analogous  situation 
arising  from  a  similar  procedure  provided  for  in  national  legislation  or 
regulations; 

EN 

41 

   EN 

 
(b) 

(c) 

(d) 

they  have  been  convicted  of  an  offence  concerning  their  professional 
conduct by a judgment which has the force of res judicata; 

they have been guilty of serious professional misconduct proven by any 
means which the contracting authority can justify; 

they  have  not  fulfilled  obligations  relating  to  the  payment  of  social 
security  contributions  or  the  payment  of  taxes  in  accordance  with  the 
legal  provisions  of  the  country  in  which  they  are  established  or  with 
those of the country of the contracting authority or those of the country 
where the contract is to be performed. 

3. 

The situations  of  exclusion  shall be  defined in advance and communicated to 
candidates or tenderers. 

(a)  Paragraph 1 is amended as follows: 

(i) 

point (f) is replaced by the following: 

“(f)  they are currently subject to an administrative penalty referred 

to in Article 96(1).” 

(ii) 

the following subparagraph is added: 

«Points  (a)  to  (d)  of  the first  subparagraph  shall  not  apply  in  the  case  of 
purchase of supplies on particularly advantageous terms from either 
a supplier which is definitively winding up its business activities, or 
the  receivers  or  liquidators  of  a  bankruptcy,  an  arrangement  with 
creditors, or a similar procedure under national law.»; 

(b)  paragraph 2 is replaced by the following: 

“42.  Candidates  or  tenderers  shall  certify  that  they  are  not  in  one  of  the 
situations  listed  in  paragraph  1.  However,  the  contracting  authority 
may  refrain  from  requiring  such  certification  for  very  low  value 
contracts, as specified in the implementing rules. and, as appropriate, 
that they are not in one of the situations listed in paragraph 2.  

For  the  purpose  of  the  correct  application  of  paragraph  1,  the 
candidate  or  tenderer,  whenever  requested  by  the  contracting 
authority, must: 

a) 
where  the  candidate  or  tenderer  is  a  legal  entity,  provide 
information on the ownership or on the management, control and power 
of representation of the legal entity, 

where  subcontracting 

b) 
the 
subcontractor is not in one of the situations referred to in paragraph 
1.” 

is  envisaged,  certify 

that 

(c) 

the following paragraph 3 is added: 

EN 

42 

   EN 

 
 
 
 
 
 
 
 
5.“3.  The  implementing  rules  shall  determine  the  maximum  period  during 
which  the  situations  referred  to  in  paragraph  1(a)  and  2  give  rise  to  the 
exclusion of candidates or tenderers from participation in a procurement 
procedure. The maximum period shall not exceed ten years.” 

(56)  Articles 94, 95 and 96 are replaced by the following: 

“Article 94 

Contracts  may  not  be  awarded  to  candidates  or  tenderers  who,  during  the 
procurement procedure: 

(a) 

are subject to a conflict of interest; 

(b)  have  made  false  declarations  in  supplying  the  information  required  by  the 
contracting  authority  as  a  condition  of  participation  in  the  procurement 
procedure or fail to supply this information; 

(c) 

find  themselves  in  one  of  the  situations  of  exclusion,  referred  to  in  Article 
93(1), for this procurement procedure; 

(d)  make substantial errors or commit irregularities or fraud. 

Article 95 

1. 

2. 

For the purposes of ensuring the protection of the Communities’ financial 
interests  a  central  database  shall  be  set  up  and  operated  by  the 
Commission  in  compliance  with  Community  rules  on  the  processing  of 
personal  data.  The  database  contains  details  of  candidates  and  tenderers 
which is in one of the situation referred to in Articles 93, 94, 96 (1) (b) and 
(2) (a). It is common to the institutions, executive agencies and the bodies 
referred to in Article 185. 

The  authorities  of  the  Member  States  and  third  countries  as  well  as  the 
bodies,  other  than  those  referred  to  in  paragraph  1,  participating  in  the 
implementation of the budget in accordance with Articles 53 and 54, shall 
information  on 
communicate  to  the  competent  authorising  officer 
candidates and tenderers which are in one of the situations referred to in 
Article 93 (1) points (a) (b), (c) and (e), where the conduct of the operator 
concerned  was  detrimental  to  the  Communities’  financial  interests.  They 
are  fully  responsible  for  the  veracity  and  legality  of  the  information 
transmitted.  The  authorising  officer  shall  validate  this  information  and 
request the accounting officer to enter it into the database. 

The authorities and bodies mentioned in the first indent of this paragraph 
shall have access to the information contained in the database and take it 
into account, as appropriate and on their own responsibility, for the award 
of contracts associated with the implementation of the budget. 

EN 

43 

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3. 

4. 

In addition to access associated with the implementation of the budget, the 
Commission  may  authorise  access  to  the  information  contained  in  the 
database  at  the  request  of  the  authorities  of  Member  States,  third 
countries and international organisations justified by them on grounds of 
important public interests. 

Transparent and coherent criteria to ensure proportionate application of 
the  exclusion  criteria  shall  be  laid  down  in  the  implementing  rules.  The 
technical 
Commission 
specifications for the operation of the database. 

standardised  procedures  and 

shall  define 

“However, for cost-effectiveness reasons, two or more institutions may agree to use a 
common database." 

Article 96 

1. 

The contracting authority may impose administrative or financial penalties on 
the following: 

(a) 

(b) 

candidates  or  tenderers  in  the  cases  referred  to  in  points  (b)  and  (d)  of 
Article 94; 

contractors  who  have  been  declared  to  be  in  serious  breach  of  their 
contractual obligations under contracts or grants agreements covered by 
the budget. 

In  all  cases,  however,  the  contracting  authority  must  first  give  the  person 
concerned an opportunity to present his observations. 

2. 

The  penalties  referred  to  in  paragraph  1  shall  be  proportionate  to  the 
importance  of  the  contract  and  the  seriousness  of  the  misconduct,  and  may 
consist in: 

(a) 

(b) 

the  exclusion  of  the  candidate  or  tenderer  or  contractor  concerned  from 
the contracts and grants financed by the budget, for a maximum period of 
ten years; 

the  payment  of  financial  penalties  by  the  candidate  or  tenderer  in  the 
cases  referred  to  in  point  (a)  of  paragraph  1  or  by  the  contractor  or 
beneficiary in the case referred to in point (b) of paragraph 1, where the 
case is really serious and without exceeding the value of the contract in 
question." 

(57) 

In Article 97, paragraph 1 2 is replaced by the following: 

“1.  Contracts shall be awarded on the basis of award criteria applicable to the 
content  of  the  tender  after  the  capability  of  economic  operators  not 
excluded  under  Articles  93,  94  and  96(2)(a)  has  been  checked  in 
accordance with the selection criteria contained in the documents relating 
to the call for tenders.” 

EN 

44 

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"2.  Contracts may be awarded by the automatic award procedure, or by the best-
value-for-money  procedure  or,  in  the  case  of  contracts  to  external  experts  for 
evaluation  or  technical  assistance,  on  the  basis  of  the  capability  of  the 
candidates." 

(58)  Article 98 is amended as follows:  

(a) 

paragraphs 1 and 2 are replaced by the following: 

"1.  The  arrangements  for  submitting  tenders  or  applications  requests  to 
participate shall  be  such  as  to  ensure  that  there  is  genuine  competition 
and  that  the  contents  of  tenders  remain  confidential  until  they  are  all 
opened simultaneously. 

2. 

If deemed appropriate and proportionate, the contracting authority 
may  require  tenderers,  as  provided  in  the  implementing  rules,  to 
lodge a security in advance as a guarantee that the bids made will not 
be withdrawn.” 

(b)  paragraph 4 is replaced by the following: 

"4.  All  applications  requests  to  participate  or  tenders  declared  by  the 
opening board to satisfy the conditions laid down shall be evaluated, on 
the  basis  of  the  selection  and  awardcriteria  laid  down  in  the  documents 
relating to the call for tenders, with a view to proposing to the contracting 
authority to whom the contract should be awarded or before proceeding 
with an electronic auction." 

(59)  Articles 102 and 103 are replaced by the following: 

“Article 102 

1. 

The  contracting  authority  may  if  deemed  appropriate  and  proportionate 
require contractors to lodge a guarantee in advance in order to: 

(a) 

ensure full performance of the contract; 

(b) 

limit the financial risks connected with payment of pre-financing.” 

2. 

The  contracting  authority  shall  require  contractors  to  lodge  such  a 
guarantee in the cases specified in the implementing rules.” 

Article 103 

Where  the  award  procedure  is  subject  tovitiated  by  substantial  errors,  or 
irregularities or by fraud, the institutions shall suspend the procedure and may take 
whatever measures are necessary, including the cancellation of the procedure. 

Where,  after  the  award  of  the  contract,  the  award  procedure  proves  to  have  been 
subject  tovitiated  by  substantial  errors,  or  irregularities  or  by  fraud,  or  the 

EN 

45 

   EN 

 
performance  of  the  contract  is  subject  toso  vitiated,  the  institutions  shall  at  their 
own discretion and, depending on the stage reached in the procedure, refrain from 
concluding  the  contract  or  suspend  performance  of  the  contract  or,  where 
appropriate, terminate the contract. 

Where  such  errors,  irregularities  or  fraud  are  attributable  to  the  contractor,  the 
institutions may in addition refuse to make payments, may recover amounts already 
paid or may terminate all the contracts concluded with this contractor, in proportion 
to the seriousness of the errors, irregularities or fraud.” 

(60) 

In Article 104, the following sentence is added: 

"They  shall  delegate,  in  accordance  with  Article  59,  the  necessary  powers  for  the 
exercise of the function of contracting authority." 

(61)  Article 105 is replaced by the following: 

"Article 105 

1. 

Subject to Title IV of Part Two of this Regulation, Directive 2004/18/EC shall 
lay down the thresholds which determine: 

(a) 

the publication arrangements referred to in Article 90; 

(b) 

the choice of procedures referred to in Article 91(1); 

(c) 

the corresponding time limits." 

2. 

Subject  to  exceptions  and  conditions  specified  in  the  implementing  rules, 
the  contracting  authority  shall  not,  in  the  case  of  contracts  covered  by 
Directive  2004/18/EC,  sign  the  contract  or  framework  contract  with  the 
successful tenderer until a period of standstill has elapsed.” 

(62)  The title of Chapter 1 of Title VI of Part One is replaced by the following: 

“CHAPTER 1 
Scope and form of grants” 

(63)  Article 108 is amended as follows:  

(a) 

In paragraph 1, the second subparagraph is replaced by the following:  

«Grants shall be awarded either by a Commission decision notified to the 
successful applicant or by a written agreement concluded with him.» 

(b)  Paragraph 2 is replaced by the following: 

"2.  The following shall not constitute grants within the meaning of this Title: 

EN 

46 

   EN 

 
 
(a) 

(b) 

(c) 

(d) 

(e) 

(f) 

(g) 

(h) 

expenditure  on  the  members  and  staff  of  the  institutions, 
including  social  policy  measures  to  support  associations  of 
former  or  current  members  or  staff  and  contributions  to  the 
European schools; 

loans,  risk-bearing 
the  Community  or 
instruments  of 
Community  financial  contributions  to  such  instrumentsloan 
guarantees,  the  public  contracts  referred  to  in  Article  88  and  aid 
paid as macro financial assistance and budgetary support; 

equity  investments  on  the  basis  of  the  private  investor  principle, 
quasi-equity  financing  and  shareholdings  or  equity  participations 
in international financial institutions such as the European Bank for 
Reconstruction  and  Development 
specialised 
Community bodies such as the European Investment Fund (EIF); 

(EBRD)  or 

contributions  paid  by  the  Communities  as  subscriptions  to  bodies 
of which they are members; 

expenditure  implemented  as  part  of  shared,  decentralised  or  joint 
management within the meaning of Articles 53 to 53d; 

payments made to the delegated bodies of the Commission referred 
to  in  Articles  54  and  55  and  the  Community  bodies  referred  to  in 
Article 185 bodies to which implementation tasks are delegated 
in accordance with Article 54(2) and payments made by virtue 
of their constitutive basic act to bodies set up by the legislative 
authority; 

expenditure relating to fisheries markets referred to in Article 
3(2)  point  (f)  of  Council  Regulation  (EC)  No  1290/2005  of  21 
June 2005 on the financing of the common agricultural policy8; 

repayment  of  travel  and  subsistence  expenses  incurred  by,  or 
where appropriate any other indemnities paid to persons invited 
or mandated by the institutions." 

(c) 

the following paragraphs 3 and 4 are added: 

“3.  The  following  shall  be  assimilated  to  grants  and  shall  be  governed,  as 

appropriate, by this Title: 

(a) 

the benefit deriving from an interest subsidy on certain loans;  

(b) 

equity investments or participations other than those referred to in 
point (c) of paragraph 2. 

8 

OJ L 209, 11.08.2005, p. 1 

EN 

47 

   EN 

 
                                                 
4. 

Each  institution  may  award  grants  for  communication  activities 
where,  for  duly  justified  reasons,  the  use  of  public  procurement 
procedures is not appropriate.” 

(64)  The following Article 108a is inserted: 

“Article 108a 

1.  Grants may take any of the following forms: 

(a) 

reimbursement of a specified proportion of the eligible costs actually 
incurred; 

(b) 

lump sums; 

(c) 

flat-rate financing; 

(d)  a combination of the forms referred to in points (a), (b) and (c); 

2.  Grants  shall  respect  an  overall  ceiling  expressed  in  terms  of  absolute 

value. Articles 109 and 111 shall apply.” 

(65)  The title of Chapter 2 of Title VI of Part One is replaced by the following: 

“CHAPTER 2 
Principles” 

(66)  Article 109 is replaced by the following: 

“Article 109 

1.  Grants  shall  be  subject  to  the  principles  of  transparency,  proportionality,  and 

equal treatment.  

They  may  not  be  cumulative  or  awarded  retrospectively.  and  They  must 
involve co-financing with the exception of grants referred to in Article 169.  

On  no  account  may  the  combined  total  costs  eligible  for  financing  be 
exceeded. 

2.  Grants  may  not  have  the  purpose  or  effect  of  producing  a  profit  for  the 

beneficiary. 

3. 

Paragraph 2 shall not apply to the following: 

(a) 

study, research or training scholarships paid to natural persons;  

(b)  prizes awarded following contests; 

EN 

48 

   EN 

 
(c) 

(d) 

actions  the  objective  of  which  is  the  reinforcement  of  the  financial 
capacity  of  a  beneficiary  or  the  generation  of  an  income  in  the 
framework of external actions; 

low value grants taking one of the forms provided for in points (b) or (c) 
of  Article  113a(1),  or  a  combination  thereof,  in  accordance  with  the 
implementing rules. 

(67) 

In Article 110(1), the second subparagraph paragraph 1 is replaced by the following: 

“1.  Grants  shall  be  subject  to  an  annual  work  programme,  to  be  published  at  the 

start of the year. 

That annual work programme shall be implemented through the publication of 
calls for proposals, save in duly substantiated exceptional cases of urgency or 
where  the  characteristics  of  the  beneficiary  or  of  the  action  leave  no  other 
choice for a given action, or where the beneficiary is identified in a basic act 
as recipient of a grant. 

The  first  subparagraph  shall  not  apply  to  crisis  management  aid  and 
humanitarian aid operations.” 

(68)  Articles 111 and 112 are replaced by the following: 

"Article 111 

One action may give rise to the award of only one grant from the budget to any one 
beneficiary, except where otherwise authorised by the basic acts concerned. 

A beneficiary may be awarded only one operating grant from the budget per financial 
year. 

The applicant shall immediately inform the authorising officers of any multiple 
applications and multiple grants relating to the same action or to the same work 
programme. 

In any case, the same costs shall not be financed twice by the budget.” 

(a) 

in paragraph 1, the second subparagraph is replaced by the following: 

Article 112 

“1.  A  grant  may  be  awarded  for  an  action  which  has  already  begun  only 
where  the  applicant  can  demonstrate  the  need  to  start  the  action  before 
the grant is awarded. 

In such cases, costs eligible for financing may not have been incurred prior to 
the  date  of  submission  of  the  grant  application,  save  in  duly  substantiated 
exceptional cases as provided for in the basic act or in the case of expenditure 

EN 

49 

   EN 

 
 
 
 
 
necessary  for  the  proper  implementation  of  crisis  management  aid  or 
humanitarian aid operations as provided for in the implementing rules. 

No grant may be awarded retrospectively for actions already completed. 

(b)  paragraph 2 is replaced by the following: 

2.  An The agreement on an operating grant shall be awarded signed more than 
within  six  months  after  the  start  of  the  beneficiary's  budgetary  year.  Costs 
eligible for financing may not have been incurred before the grant application 
was lodged nor before the start of the beneficiary's budgetary year." 

(69) 

In Article 113, paragraph 2 is replaced by the following: 

“2.  Unless otherwise specified in the basic act with regard to bodies pursuing 
an  objective  of  general  European  interest,  when  operating  grants  are 
renewed, they shall be gradually decreased. This provision shall not apply 
to grants taking one of the form referred to in points (b) and (c) of Article 
108a(1).” 

(70)  The following Article 113a is inserted: 

"Article 113a 

1.  Grants may take any of the following forms:  

(a) 

reimbursement  of  a  specified  proportion  of  the  eligible  costs  actually 
incurred;  

(b) 

lump sums; 

(c) 

flat-rate financing ;  

(d) 

a combination of the forms referred to in points (a), (b) and (c). 

2.  Grants shall respect an overall ceiling expressed in terms of absolute value. In 

any event, Articles 109 and 111 shall apply." 

(71)  Article 114 is replaced by the following: 

“Article 114 

1.  Grant applications shall be submitted in writing. 

2.  Grant applications shall be eligible if submitted by the following: 

(a) 

legal  persons;  exceptionally,  grant  applications  may  be  eligible  if 
submitted  by  entities  which  do  not  have  legal  personality  under  the 
applicable  national  law,  provided  that  their  representatives  have  the 
capacity  to  undertake  legal  obligations  on  their  behalf  and  assume 
financial liability. 

EN 

50 

   EN 

 
(b)  natural  persons  in  so  far  as  this  is  required  by  the  nature  or 
characteristics  of  the  action  or  the  objective  pursued  by  the  applicant. 
exceptionally, grant applications may be eligible if submitted by entities 
which  do  not  have  legal  personality  under  the  applicable  national  law, 
provided  that  their  representatives  have  the  capacity  to  undertake  legal 
obligations on their behalf and assume financial liability. 

3.  Grants may not be awarded to applicants who are, at the time of a grant award 
procedure,  in  one  of  the  situations  referred  to  in  Articles  93(1),  and  94  and 
96(2)(a)  or,  where  appropriate,  in  one  of  the  situations  referred  to  in  Article 
93(2). 

Applicants must certify that they are not in one of the situations referred to in 
the  first  subparagraph.  However,  the  authorising  officer  may  refrain  from 
requiring  such  certification  for  very  low  value  grants,  as  specified  in  the 
implementing rules. 

4.  Administrative  and  financial  penalties  which  are  effective,  proportionate  and 
dissuasive  may  be  imposed  on  applicants  by  the  authorising  officer,  in 
accordance with Article 96. 

Such  penalties  may  also  be  imposed  on  beneficiaries  who  at  the  moment  of 
the  submission  of  the  application  or  during  the  implementation  of  the 
grantagreement,  have  made  false  declarations  in  supplying  the  information 
required by the authorising officer or fail to supply this information." 

(72) 

In Article 116, paragraph 1 is replaced by the following: 

“1.  Proposals  shall  be  evaluated,  on  the  basis  of  pre-announced  selection  and 

award criteria, with a view to determining which proposals may be financed.” 

(73)  Article 118 is replaced by the following: 

“Article 118 

1. 

The  authorising  officer  responsible  may  if  deemed  appropriate  and 
proportionate  require  the  beneficiary  to  lodge  a  guarantee  in  advance  in 
order  to  limit  the  financial  risks  connected  with  the  payment  of  pre-
financing. 

2. 

The  authorising  officer  shall  require  the  beneficiary  to  lodge  such  a 
guarantee in advance in the cases specified in the implementing rules.” 

(74) 

In Article 119, paragraph 2 is replaced by the following: 

“2.  Should the beneficiary fail to comply with his obligations, the grant shall 
be suspended and reduced or terminated in the cases provided for by the 
implementing rules after the beneficiary has been given the opportunity to 
make his observations.” 

(75)  Article 120 is replaced by the following: 

EN 

51 

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"Article 120 

1.  Where  implementation  of  the  action  requires  the  award  of  procurement 
contracts by the beneficiary, the relevant procedures shall be as set out in the 
implementing rules. 

2.  Where  implementation  of  the  action  requires  financial  support  to  be  given  to 
third  parties,  the  beneficiary  of  a  Community  grant  may  give  such  financial 
support provided that the following conditions are met: 

(a) 

the financial support is not the primary aim of the action; 

(b) 

the  conditions  for  the  giving  of  such  support  are  strictly  defined  in  the 
grant  decision  or  agreement  between 
the 
Commission, with no margin for discretion; 

the  beneficiary  and 

(c) 

the amounts concerned are small. 

For  the  purpose  of  point  (c),  the  maximum  amount  of  financial  support 
that can be paid to a third party by  a beneficiary shall be determined in 
the implementing rules. 

3. 

Each grant decision or agreement shall provide expressly for the Commission 
and  the  Court  of  Auditors  to  exercise  their  powers  of  control,  on  documents 
and on the premises, over all contractors and subcontractors who have received 
Community funds." 

(76)  Article 121 is amended as follows: 

(a) 

point (a) is replaced by the following: 

"(a) 

the financial statements of the institutions as set out in Article 126, those 
of  the  bodies  referred  to  in  Article  185  and  of  other  bodies  whose 
accounts  need  to  be  consolidated  in  accordance  with  Community 
accounting rules;" 

(b)  point (d) is replaced by the following: 

"(d)  the aggregated reports on implementation of the budget which present the 

information contained in the reports referred to in point (c)." 

(77) 

In Article 122 is amended as follows: 

(a) 

"Article 185" is replaced by "Article 121". 

(b) 

the following second paragraph is added:   

«The report referred to in the first paragraph shall give an account, inter 
alia,  of  the  rate  of  implementation  of  the  appropriations  together  with 
summary  information  on  the  transfers  of  appropriations  among  the 
various budget items.» 

EN 

52 

   EN 

 
 
(78)  Article 128 is replaced by the following: 

"Article 128 

The accounting officers of the other institutions and bodies referred to in Article 121 
shall  send  to  the  Commission's  accounting  officer  and  to  the  Court  of  Auditors  by 
1 March  of  the  following  year  at  the  latest  their  provisional  accounts  together  with 
the report on budgetary and financial management during the year. 

The  Commission's  accounting  officer  shall  consolidate  these  provisional  accounts 
with the Commission's provisional accounts and shall send to the Court of Auditors, 
by  31  March  of  the  following  year  at  the  latest,  the  Commission's  provisional 
accounts  accompanied  by  its  report  on  budgetary  and  financial  management 
during the year together with the provisional consolidated accounts.  

The  accounting  officer  of  each  institution and  body  referred  to  in  Article  121  shall 
also  send  the  report  on  budgetary  and  financial  management  to  the  European 
Parliament and the Council by the date specified in the second paragraph." 

(79)  Article 129 is amended as follows: 

(a) 

in paragraph 1, "Article 185" is replaced by "Article 121"; 

(b)  paragraph 2 is replaced by the following: 

"2.  The  institutions  other  than  the  Commission,  and  each  of  the  bodies 
referred  to  in  Article 121,  shall  draw  up  their  final  accounts  in 
accordance  with  Article  61  and  send  them  to  the  Commission's 
accounting officer and the Court of Auditors by 1 July of the following 
year  at  the  latest  with  a  view  to  drawing  up  the  final  consolidated 
accounts."; 

(c) 

the following paragraph 2a is inserted: 

"2a.  The Commission's accounting officer shall prepare the final consolidated 
accounts  on  the  basis  of  the  information  presented  by  the  other 
institutions  under  paragraph  2.  The  final  consolidated  accounts  shall  be 
accompanied by a certificate established by the Commission's accounting 
officer, by which he/she declares that they were prepared in accordance 
with Title VII and with the accounting principles, rules and methods set 
out in annex to the financial statements." 

(d)  paragraph 3 is replaced by the following: 

"3.  After  approving  the  final  consolidated  accounts  and  its  own  final 
accounts,  the  Commission  shall  send  them  both  to  the  European 
Parliament, the Council and the Court of Auditors before 31 July of the 
following financial year." 

(80) 

In Article 130, the first paragraph is replaced by the following: 

EN 

53 

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“In addition to the statements provided for in Articles 126 and 127, the Commission 
shall  report  to  the  European  Parliament  and  to  the  Council  annually  on  budgetary 
guarantees and the corresponding risks.” 

(81)  Article 131 is amended as follows: 

(a) 

(b) 

in paragraph 1, "the Commission" is replaced by "the Commission's accounting 
officer"; 

in paragraph 2, "the Commission" is replaced by "the Commission's accounting 
officer". 

(82) 

In Article 133(1), "Article 185" is replaced by "Article 121". 

(83) 

In Article 134, "Article 185" is replaced by "Article 121". 

(84) 

In Article 138(1), "Article 185" is replaced by "Article 121". 

(85) 

In Article 139, paragraph 2 is replaced by the following: 

“2.  Each  institution  shall  notify  the  Court  of  Auditors  and  informs  the  two 
arms of the budgetary authority of any internal rules they adopt in respect 
of financial matters.” 

(86) 

In Title I of Part Two, the title is replaced by the following: 

"TITLE I 
EUROPEAN AGRICULTURAL GUARANTEE FUND" 

(87) 

In Article 148, paragraph 1 is replaced by the following: 

"1.  Parts One and Three of this Regulation shall apply to expenditure effected by 
the authorities and bodies referred to in the rules relating to the EAGF, and to 
revenue, save as otherwise provided in this Title." 

(88)  Article 149 is amended as follows: 

(a) 

paragraph 1 is replaced by the following: 

“1.  For  each  financial  year,  the  EAGF  shall  include  non-differentiated 
appropriations,  with  the  exception  of  the  expenditure  related  to  the 
measures 
in  Article  3(2)  of  Council  Regulation 
(EC) No 1290/2005(***),  which  shall  be  covered  by  differentiated 
appropriations. 

referred 

to 

_________________ 
(***) 

OJ L 209, 11.8.2005, p. 1” 

(b)  paragraph 3 is replaced by the following: 

“3.  Non-committed  appropriations  relating  to  the  actions  referred  to  in 
Article 3(1) of Regulation (EC) No 1290/2005 may be carried over to the 
next financial year only.  

EN 

54 

   EN 

 
Such  carryover  shall  not  exceed,  within  the  limit  of  3  %  of  the  initial 
appropriations  referred  to  in  the  first  subparagraph,  the  amount  of  the 
adjustment  of  direct  payments  referred  to  in  Article  11  of  Council 
Regulation  (EC)  No  1782/2003(****)  and  which  was  applied  during  the 
last financial year. 

Appropriations which are carried over shall be returned exclusively to the 
budgetary lines which cover the actions referred to in Article 3(1)(c) of 
Regulation (EC) No 1290/2005. 

Such  carryover  may  lead  to  an  additional  payment  only  to  the  final 
beneficiaries  who  have  been  subject,  in  the  last  financial  year,  to  the 
adjustment  of  direct  payments  in  accordance  with  Article  11  of 
Regulation (EC) No 1782/2003. 

The carryover decision shall be taken, at the latest on 15 February of the 
year  to  which  the  carryover  is  being  made,  by  the  Commission,  which 
shall inform the budgetary authority. 

__________________ 

(****)  OJ L 270, 21.10.2003, p. 1.” 

(89) 

In Article 150, paragraphs 2 and 3 are replaced by the following:  

"2.  The  Commission  decisions  fixing  the  amounts  of  these  payments  shall 
constitute  global  provisional  commitments,  which  may  not  exceed  the  total 
appropriations entered for the EAGF. 

3.  As from 15 November, routine management expenditure for the EAGF may be 
committed  in  advance  against  the  appropriations  provided  for  the  following 
financial year. Such commitments may not, however, exceed the corresponding 
appropriations decided by the budgetary authority for the last adopted budget. 
They may apply only to expenditure for which the principle is laid down in an 
existing basic act." 

(90) 

In Article 151(1), the first subparagraph is replaced by the following: 

"Expenditure effected by the authorities and bodies referred to in the rules relating to 
the  EAGF  shall,  within  two  months  following  receipt  of  the  statements  sent  in  by 
Member  States,  be  the  subject  of  a  commitment  by  chapter,  article  and  item.  Such 
commitment  may  be  made  after  the  elapse  of  that  two-month  period  whenever  a 
procedure for a transfer of appropriations concerning the budget lines in question is 
necessary.  Save  where  payment  has  not  yet  been  made  by  the  Member  States  or 
where  eligibility  is  in  doubt,  the  amounts  shall  be  charged  as  payments  within  the 
same two-month period." 

(91)  Article 152 is replaced by the following: 

EN 

55 

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"Article 152 

In budgetary accounting, expenditure shall be booked to the accounts for a financial 
year on the basis of the repayments made by the Commission to the Member States 
by 31 December of the year concerned at the latest, provided that the payment order 
has reached the accounting  officer  by 31 January of the following financial year at 
the latest." 

(92) 

In Article 153, paragraph 1 is replaced by the following: 

"1.  Where the Commission may transfer appropriations pursuant to Article 23(1), 
it  shall  take  its  decision  by  31  January  of  the  following  financial  year  at  the 
latest and shall inform the budgetary authority as provided for in three weeks 
before making the transfers referred to in point (a) of Article 23(1)." 

(93)  Article 154 is replaced by the following: 

“Article 154 

1.  Assigned  revenue  under  this  Title  shall  be  assigned  according  to  origin  in 

accordance with Article 18(2). 

2. 

The result of decisions on clearance of accounts, as referred to in Article 30 of 
Council Regulation (EC) No 1290/2005 shall be entered in a single Article.” 

(94)  The title of Title II of Part Two is replaced by the following: 

“TITLE II 
STRUCTURAL FUNDS, COHESION FUND, FISHERIES FUND, AND 
AGRICULTURAL FUND FOR RURAL DEVELOPMENT” 

(95)  Article 155 is amended as follows: 

(a) 

paragraph 1 is replaced by the following: 

"1.  Parts  One  and  Three  of  this  Regulation  shall  apply  to  expenditure 
effected  by  the  authorities  and  bodies  referred  to  in  the  Regulations 
governing  the  European  Regional  Development  Fund  (ERDF),  the 
European Social Fund (ESF), the Cohesion Fund, the European Fisheries 
Fund  (EFF),  and  the  EAFRD,  hereinafter  ’the  Funds‘,  and  to  their 
revenue, save as otherwise provided in this Title."; 

(b)  paragraph 3 is deleted. 

(96) 

In Article 157, the second paragraph is replaced by the following: 

"The  decommitted  appropriations  may  be  made  available  again  in  the  event  of  a 
manifest error attributable solely to the Commission." 

(97)  Article 158 is replaced by the following: 

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"Article 158 

With regard to the operational expenditure referred to in this Title, the Commission 
may,  except  in  the  case  of  the  EAFRD,  make  transfers  from  one  title  to  another, 
provided  that  the  appropriations  in  question  are  for  the  same  objective  within  the 
meaning  of  the  Regulations  governing  the  Funds  referred  to  in  Article  155,  or  are 
Technical Assistance expenditure.” the same category of expenditure from among 
the following: 

(a)  Community Initiatives;  

(b)  Technical Assistance and Innovative Measures." 

(98) 

In Article 160, the following paragraph 1a is inserted: 

"1a.  The appropriations relating to the revenue generated by the Research Fund for 
Coal  and  Steel  established  by  the  Protocol  annexed  to  the  EC  Treaty  on  the 
financial consequences of the expiry of the ECSC Treaty and on the Research 
Fund  for  Coal  and  Steel  shall  be  treated  as  assigned  revenue  within  the 
meaning  of  Article  18.  The  commitment  appropriations  generated  by  this 
revenue  shall  be  made  available  as  soon  as  the  amount  receivable  has  been 
estimated  and  the  payment  appropriations  as  soon  as  the  revenue  has  been 
received." 

(99)  The following Article 160a is inserted: 

"Article 160a 

1. 

2. 

The  commitment  appropriations  corresponding 
the 
commitment decommitted as a result of total or partial non-implementation of 
the  projects  relating  to  research  for  which  they  were  earmarked  may, 
exceptionally and in duly substantiated cases, be made available again where it 
is  essential  to  carry  out  the  programme  originally  planned,  unless  the  budget 
for the current financial year contains funds for this purpose. 

the  amount  of 

to 

For  the  purposes  of  paragraph  1,  the  Commission  shall,  at  the  beginning  of 
each  financial  year,  examine  decommitments  made  during  the  previous 
financial year and assess, in the light of the requirements, the need for making 
the appropriations available again. 

On  the  basis  of  this  assessment,  the  Commission  may  submit  appropriate 
proposals  to  the  budgetary  authority,  by  15  February  of  each  financial  year, 
stating  for  each  budget  item  the  reasons  for  making  these  appropriations 
available again. 

3. 

The budgetary authority shall decide on the Commission's proposals within six 
weeks. Where no decision is taken within this time limit, the proposals shall be 
deemed to be approved. 

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The amount of commitment appropriations to be made available again in year n 
shall  in  no  case  exceed  50%  of  the  total  amount  decommitted  on  the  same 
budget line in year n-1. 

4. 

Commitment appropriations made available again shall not be carried over. 

Legal  commitments  relating  to  the  commitment  appropriations  which  have 
been made available again shall be concluded by 31 December of year n. 

At  the  end  of  year  n,  the  unused  balance  of  the  commitment  appropriations 
made  available  again  shall  be  definitively  decommitted  by  the  authorising 
officer responsible." 

(100)  In Article 163, the first sentence is replaced by the following: 

“The actions referred to in this Title may be implemented on a centralised basis 
by  the  Commission,  by  shared  management  with  Member  States,  on  a 
decentralised basis by the beneficiary third country or countries, or jointly with 
international organisations.” 

(101)  Article 164 is deleted. 

(102)  Article 166 is amended as follows:   

(a)  point (b) of the first subparagraph is replaced by the following:: 

“(b)  a contract or a grant to national or international public-sector bodies 
or natural or legal persons responsible for carrying out the actions.” 

(b) 

the second subparagraph is replaced by the following: 

“The  terms  on  which  the  external  aid  is  given  shall  be  laid  down  in  the 
instrument by which the contracts or the grants provided for in points (a) 
and (b) of this paragraph shall be managed.” The contracts and agreements 
provided for in points (a) and (b) of the first subparagraph shall lay down the 
terms on which the external aid shall be managed by the beneficiaries or by the 
contractors." 

(c)  Paragraph 2 is replaced by the following: 

2. 

Financing  agreements  with  the  beneficiary  third  countries  referred 
to in paragraph 1(a) shall be concluded by 31 December of year n + 1 
at  the  latest,  year  n  being  the  one  in  which  the  budgetary 
commitment was made. 

The  individual  contracts,  grant  decisions  and  agreements  which 
implement such financing agreements shall be concluded or adopted 
no  later  than  three  years  following  the  date  of  conclusion  of  the 
financing  agreement.  However,  in  the  case  of  long-term  and  multi-
the 
phase 
Commission may exceptionally fix an extension of this deadline up to 
5 years in the financing decision on the project concerned.  

infrastructure  and  rural  development  projects, 

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Individual contracts and agreements relating to audit and evaluation 
may be concluded later.” 

(d) 

the following paragraph 3 is added: 

“3.  The  provision  under  paragraph  2  shall  not  apply  in  the  following 

cases: 

– 

– 

the  cross-border  cooperation,  regional  development,  human 
resources  development  and  rural  development  components  of 
Regulation  xxxx/2006  establishing  an  Instrument  for  Pre-
Accession Assistance; 

the  cross  border  cooperation  component  of  Regulation 
xxxx/2006  establishing  a  European  Neighbourhood  and 
Partnership Instrument. 

In these cases, the following rules shall apply: 

a)  Any  portion  of  a  budget  commitment  for  such  a  multi-annual 
programme  shall  be  automatically  decommited  where,  by  31 
December of the fourth year following year n being the one in 
which the budget commitment was made: 

(i) 

it has not been used for the purpose of pre-financing; or 

(ii) 

it  has  not  been  used  for  making  intermediate  payments; 
or 

(iii)  no declaration of expenditure meeting the conditions laid 
down in Article … of the IPA Regulation or Article … of 
the ENPI Regulation has been presented in relation to it. 

b)  That  part  of  budget  commitments  still  open  on  31  December 
2017 for which a declaration of expenditure has not been made 
by 31 December 2018 shall be automatically decommitted.” 

(103)  In Article 167 is amended as follows: 

(a) 

In paragraph 1, point (c) is replaced by the following: 

“(c)  a national or international public-sector body or natural or legal persons 
who are beneficiaries of who have signed with the Commission a grant 
agreement for the implementation of an external action.” 

(b)  Paragraph 2 is replaced by the following: 

“2.  The  procurement  procedures  must  be  laid  down  in  the  financing 
agreements or in the grant decision or grant agreement provided for 
in Article 166.” 

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(104)  In Title IV of Part Two, the title of Chapter 4 is replaced by the following: 

“Chapter 4 
GRANTS” 

(105)  The following Article 169a is inserted: 

“Article 169a 

Grant  procedures  to  be  applied  in  decentralised  management  by  beneficiary  third 
countries shall be laid down in the financing agreements referred to in Article 166. 
They provisions shall be based on the rules laid down in Title VI of Part One.” 

(106)  In Article 171, paragraph 2 is replaced by the following: 

"2.  This  Title  shall  apply  to  the  operation  of  the  European  Anti-fraud  Office 

(OLAF), with the exception of Articles 174, 174a and 175(2)." 

(107)  Article 173 is replaced by the following: 

“Article 173 

The Commission shall, in respect of the appropriations entered in the Annex for each 
European  office,  delegate  the  powers  of  authorising  officer  to  the  Director  of  the 
European office concerned, in accordance with Article 59." 

(108)  In Article 174(1), the second sentence is replaced by the following: 

"The  Director  of  the  European  office  concerned  shall  adopt,  after  approval  by  its 
Management  Committee,  the  criteria  on  which  the  accounting  system  shall  be 
based." 

(109)  The following Article 174a is inserted: 

"Article 174a 

1. 

Each institution may delegate authorising officer powers to the director of an 
interinstitutional European office for the management of appropriations entered 
in  its  section  and  shall  set  the  limits  and  conditions  for  this  delegation  of 
powers. 

2. 

The  internal  auditor  of  the  Commission  shall  exercise  all  responsibilities  laid 
down in Title IV, Chapter 8 of Part One." 

(110)  Article 175 is amended as follows: 

(a) 

paragraph 1 is deleted; 

(b)  paragraph 2 is replaced by the following: 

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"2.  Should the remit of a European office involve supplies to third parties for 
pecuniary  interest,  its  Director  shall,  after  approval  of  the  Management 
Committee,  lay  down  the  specific  provisions  governing  how  these 
supplies are to be made and the keeping of the corresponding accounts." 

(111)  Article 176 is deleted. 

(112)  Article 178 is amended as follows: 

(a) 

in paragraph 1, the second sentence is replaced by the following: 

"Such  commitments  may  not,  however,  exceed  one  quarter  of 
the 
appropriations decided by the budgetary authority on the corresponding budget 
line for the current financial year."; 

(b) 

in paragraph 2, the following sentence is added: 

"In this case, the limit referred to in paragraph 1 shall not apply." 

(113)  In Article 179(3), the second subparagraph is replaced by the following: 

“The two branches of the budgetary authority shall, within one week, notify the 
institution concerned of their intention to issue an opinion to the latter. Failing a 
reply, the institution concerned may proceed with the planned operation under 
its administrative autonomy, subject to Article 282 of the EC Treaty and Article 
185 of the Euratom Treaty with regard to Community representation.” 

(114)  After Article 179 the following Title VII is inserted: 

“TITLE VII 
EXPERTS 

Article 179a 

The  implementing  rules  shall  include  a  specific  procedure  for  the  selection  of 
experts, to be paid on the basis of a fixed amount, for assisting the institutions in 
particular  in  evaluating  proposals  and  grant  applications  or  tenders  for 
procurement  and  for  providing  technical  assistance  in  the  follow-up  and  final 
evaluation of projects financed by the budget.” 

(115)  In Article 181, a new paragraph 6 is added: 

“6.  The central database referred to in Article 95 shall be set up by 1 January 

2009.” 

(116)  The following Article 181a is inserted: 

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“Article 181a 

With regard to the operational expenditure referred to in Title II of Part Two of 
this Regulation, the Commission may make transfers from one title to another 
or within the same title, provided that the appropriations concerned are for the 
same objective, or the same category of expenditure from among the following 
measures,  provided  for  in  Council  Regulation  (EC)  No  1260/1999  (*****),  for 
which payments still have to be made: 

(a)  Community initiatives;  

(b) 

technical assistance and innovative measures. 

__________________ 

(*****) OJ L 161, 26.6.1999, p. 1.” 

(117)  In Article 183, the following second paragraph is added: 

“It  shall  seek  the  opinion  of  the  other  institutions  referred  to  in  Article  1  and 
take  due  account  thereof,  where  appropriate.  The  institutions  shall  give  their 
opinion within two months of receiving the draft of the Commission.” 

(118)  In  Article  185  is  amended  as  follows,  paragraphs  3  and  4  are  replaced  by  the 

following:  

(a)  paragraph 3 is replaced by the following: 

"3.  Each  body  referred  to  in  paragraph  1  shall  establish  an  internal  audit 
function  which  must  be  performed  in  compliance  with  the  relevant 
international standards.   

The  audit  function  shall  be  performed  either  by  designating 
internally  an  auditor,  or  by  entrusting  an  external  auditor  for  that 
purpose. The results of the audits performed by those bodies shall be 
transmitted  to  the  Commission’s  internal  auditor,  who  shall  inform 
the Commission. 

The Commission's internal auditor shall certify that the operation of the 
audit function respects international audit standards and, for that purpose, 
may conduct quality audits.” 

(b)  paragraph 4 is deleted: 

4. 

The bodies referred to in Article 121 shall apply the accounting rules set 
out  in  Article  133  so  that  their  accounts  can  be  consolidated  with  the 
Commission's accounts." 

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Article 2 

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

It shall apply from 1 January 2007. 

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

Done at Brussels, […] 

For the Council 
The President 
[…] 

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