Council Regulation (EC, Euratom) No 1995/2006 of 13 December 2006 amending Regulation (EC, Euratom) No 1605/2002 on the Financial Regulation applicable to the general budget of the European Communities
Date: 2006-12-13
Institutions: Council of the European Union
Subjects: financial management, financial regulation, general budget (EU), implementation of the budget

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I

(Acts whose publication is obligatory)

COUNCIL REGULATION (EC, EURATOM) No 1995/2006

of 13 December 2006

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 Commu-
nity, 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 Commission,

Having regard to the opinion of the European Parliament (1),

Having regard to the opinion of the Court of Auditors (2),

Having regard to the opinion of the European Economic and
Social Committee (3),

Whereas:

(1) Council Regulation (EC, Euratom) No 1605/2002 of
25 June 2002 on the Financial Regulation applicable to
the European Communities (4)
the general budget of
(hereinafter the Financial Regulation), lays down the legal
foundations of the financial management reform. As such,
its essential elements should be maintained and strength-
ened. Transparency, in particular, should be reinforced by
providing for information on beneficiaries of Community
funds. Moreover, the budgetary principles established by the
Financial Regulation should be respected in all legislative
acts and derogations should be kept to a strict minimum.

(2)

In the light of practical experience, certain amendments
should be made to the Financial Regulation in order to
facilitate budget implementation and the attainment of the
underlying policy objectives and to adjust certain proce-
dural 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 subparagraph of Article 5 of the EC Treaty.

(1) Opinion delivered on 6 July 2006 (not yet published in the Official

Journal).

(2) OJ C 13, 18.1.2006, p. 1.
(3) OJ C 28, 3.2.2006, p. 83.
(4) OJ L 248, 16.9.2002, p. 1.

(3) All amendments

should contribute to achieving the
objectives of the Commission's reforms and help improve
or ensure sound financial management, thus contributing
to obtaining a reasonable assurance of the legality and
regularity of financial operations.

(4) Account should be taken of provisions implementing the
revenue and expenditure of the budget, contained in the
basic legal acts adopted for the period 2007 to 2013, in
order to ensure coherence between those acts and the
Financial Regulation.

(5)

(6)

It should be clarified that sound financial management
requires effective and efficient internal control, and the
main features and objectives of internal control systems
should be defined.

In order to ensure the transparency of the use of funds
deriving from the budget, it is necessary to make available
information on the beneficiaries of
these funds within
certain limits necessary to protect legitimate public and
private interests and taking into account the particular
accounting period for the European Agricultural Guarantee
Fund.

(7) 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.

(8) 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 European Agricultural
Guarantee Fund (EAGF) set up by Council Regulation (EC)

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No 1290/2005 of 21 June 2005, on the financing of the
common agricultural policy (1).

month of the financial year, the Commission should be
allowed to decide autonomously on transfers of appropria-
tions concerning staff expenditure, within certain limits.

(9)

Payment requests from the Member States under the new
agricultural regulations will be concentrated overwhel-
mingly 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 increased to three quarters of corresponding
appropriations in 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 budgetary authority, there-
fore excluding transfers of appropriations.

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

(11) 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 contribu-
tions, as assigned revenue,
for projects under external
relations programmes managed by the Commission.
Second, proceeds from the sale of vehicles, equipment,
installations, materials, and scientific and technical appar-
atus 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.

(12) At present, the Commission must be authorised by the
budgetary authority before accepting any 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 donations
exceeding a certain value and involving significant charges.

(13) The rules governing transfers of appropriations should be
simplified and clarified on certain points because they have
proved cumbersome or unclear in practice.

(14) For

reasons of efficiency,

the Commission should be
allowed to decide autonomously on transfers from the
reserve in cases where no basic act 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.

(15) The rules on the Commission's administrative transfers
should be adapted to the new Activity-Based Budgeting
(ABB) structure. Thus, provision should be made for an
exemption from the ‘notification procedure’. During the last

(1) OJ L 209, 11.8.2005, p. 1.

(16) A number of articles of the Financial Regulation should be
amended because of the abolition of the reserve relating to
Community loans and loan guarantees to third countries,
the adoption of a new provisioning
and because of
mechanism for the Guarantee Fund for external actions.

(17)

funds

In order
in
to accelerate the mobilisation of
exceptional cases of international humanitarian disasters
and crises occurring at the end of the budgetary year, the
Commission should be allowed to autonomously transfer
the
unused budgetary appropriations available under
relevant heading of the multiannual financial framework
to the budget titles concerned.

(18) As regards the budget procedure, the requirement laid
down in the Financial Regulation that
the budget be
published within two months of adoption has proven
unrealistic, and three months would be more practicable.
The concept of an ‘Activity Statement’ should be inserted
into Financial Regulation in order to render official one of
the key elements of ABB, and the content of such
statements should be defined more precisely in order to
make them operational. Payment schedules should be
included in the working documents accompanying the
preliminary draft budget listed in 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 budget,

the implementation of

some
adjustments are necessary in order to better reflect the
specific features of
the Common Foreign and Security
Policy (CFSP). For reasons of legal clarity, the forms basic
acts can take under the EC Treaty and under Title V and VI
of the Treaty on European Union should be identified in 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.

It

shared management

(20) As regards methods of management, the relevant Article of
the Financial Regulation should be restructured for the
is also necessary to remove the
purpose of clarity.
limitation of
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. The relevant
provisions of the Financial Regulation should be completed
to include in particular the European Investment Bank and
the European Investment Fund as Community bodies to
which tasks can be delegated by the Commission. The

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in the Financial Regulation for using
criteria set out
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. The Financial Regulation
should also clarify the position of special advisors or heads
of mission appointed by the Council to manage certain
actions in the context of the CFSP.

(21) 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.
Following the Interinstitutional Agreement of 17 May 2006
between the European Parliament, the Council and the
Commission on budgetary discipline and sound financial
management (1), Member States should be obliged to
produce an annual summary of the available audits and
declarations in relation to the funds under shared manage-
ment.

(22) The prohibition on delegating implementation tasks to
should be modified in the Financial
private bodies
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 no discretionary powers are exercised by
the private company.

(23) The establishment by several institutions of joint financial

irregularities panels should be made possible.

(24) Accounting officers'

responsibility for

certifying the
accounts on the basis of the financial information supplied
to them by the authorising officers should 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.

(25) 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 of
Commissioners on the procedures and systems of
the
Commission. It should be necessary for the Commission's
internal auditor only to confirm that the bodies' internal
audit functions meet international standards, and for that
purpose he should be able to conduct assessments of the
quality of the internal audit activity.

(26) A period of limitation on the validity of claims should be
introduced. The Community, unlike many of its Member

(1) OJ C 139, 14.6.2006, p. 1.

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 corresponds
to sound financial management.

(27) The Financial Regulation should reflect the importance of
in the management of public
framework contracts
procurement. It should encourage the use of interinstitu-
tional procurement procedures and allow for the possibility
of joint procurement procedures between an institution
and a contracting authority from a Member State.

(28) 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
contracts (2). The possibility, open to Member States under
that Directive,
for
contracts declared secret when their performance must be
accompanied by special security measures or when the
protection of the Member State so requires, should be made
available to the Community institutions.

specific procedures

to determine

(29)

(30)

In line with Directive 2004/18/EC, the rules on exclusion
from a procurement procedure need to be clarified. In
addition, for reasons of legal certainty and proportionality,
a maximum period of exclusion should be specified in the
Financial Regulation. In the light of Directive 2004/18/EC,
an exception to the rules on exclusion should be made for
the purchase of supplies on particularly advantageous terms
from either a supplier which is definitively winding up its
business activities, from the receivers or liquidators of a
bankruptcy, through an arrangement with creditors, or
through a similar procedure under national law.

It should be made obligatory under the Financial Regula-
tion for candidates or tenderers in procurement procedures
to certify, if so requested, the ownership or the manage-
ment, 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. 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.

(31)

In order to enhance the effectiveness of procurement
the database of candidates or tenderers in
procedures,
common to the
situations of
institutions, executive agencies and bodies referred to in
the Financial Regulation.

exclusion should be

(2) OJ L 134, 30.4.2004, p. 114. Directive as last amended by
L 333,

Commission Regulation (EC) No 2083/2005 (OJ
20.12.2005, p. 28).

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(32)

In order to take account of the interests of unsuccessful
tenderers,
is appropriate to provide that a contract
covered by Directive 2004/18/EC cannot be signed before
the end of a reasonable standstill period.

it

(33) The obligations of the institutions to suspend a procure-
ment procedure or a contract under
the Financial
Regulation in cases of fraud and irregularities should be
clarified in order to enhance the operation of the relevant
provisions of that Regulation.

(34) As regards grants, simplification of the rules is needed. The
requirements for checks and guarantees should be more
proportionate to the financial risks involved. The definition
of grants needs to be clarified,
in particular as regards
financing related to loan activities or shareholdings and
expenditure relating to fisheries markets. To improve the
management of grants and to simplify procedures, it should
be possible to award grants either by a decision of the
institution or by a written agreement with the beneficiary.

(35) 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.

(36) For reasons of legal clarity, the exceptions to the non-profit
rule which are currently provided for in the implementing
rules should be included in the Financial Regulation.
Furthermore, it should be made clear that the purpose of
awarding grants to certain actions is to help reinforce
financial capacity or generate an income.

and certain types of entity which lack legal personality. In
line with the principle of proportionality, for very low-value
grants, the authorising officer may refrain from requesting
applicants to certify that
the
situations of exclusion under the relevant provisions of the
Financial Regulation.

they are not

in one of

(42) 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 a committee specifically set
up for that purpose, and that requirement should therefore
be removed.

(43) As regards the procurement standards to be applied by
beneficiaries of grants, the current rule in the Financial
Regulation is unclear and should be simplified. Moreover,
express provision should be made for the case in which the
implementation of an action necessitates financial support
to third parties.

(44) As regards the rules on accounting and the accounts, the
Financial Regulation should make it possible for
the
Commission's accounting officer to determine, in compli-
ance with international standards, which other bodies in
addition to those receiving Community subsidies fall within
the scope of the consolidation of the accounts, it being
the consolidation of accounts neither
understood that
entails any transfer of funds from self-financed bodies to
the general budget of the European Union nor influences
their financial and operational autonomy and the discharge
procedures for their accounts.

(37) 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 cases the nature of the action leaves
no choice in the selection of beneficiaries; such cases should
thus be exempted from this rule.

(45)

(38) The rule that the same action should not give rise to more
than one grant to any one beneficiary should be adjusted.
Some basic legal acts do permit Community funding from
different sources to be combined, and such cases may
increase in future in order to ensure the effectiveness of
expenditure. However,
it should be made clear in the
Financial Regulation that the same costs cannot be financed
twice by the Community budget.

(39) The rule that the agreement on an operating grant may not
be signed more than four months after the start of the
beneficiary's financial year has proven unnecessarily rigid.
This deadline should thus be extended to six months.

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

(41) Certain restrictions on the eligibility of beneficiaries should
be removed in order to allow for grants to natural persons

In view of the coming into existence of the EAGF, which is
to replace
the European Agricultural Guidance and
to financing of
Guarantee Fund (EAGGF) with respect
market measures from 1 January 2007, certain terminology
in the Financial Regulation should be adjusted. Clarification
is also required in the effect that provisional commitments
two-month deadline
the normal
may be made after
following receipt of
the Member States' statements of
expenditure in cases where a decision on a transfer of
appropriations is expected. The special provisions of the
Financial Regulation concerning transfers
should be
clarified.

(46) The terminology should also be adjusted 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 the Financial Regulation 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

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Financial Regulation only for cases where a manifest error is
attributable to the Commission.

(47) A provision should be added to the Financial Regulation 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.

(48)

It is necessary to allow appropriations, which have been
decommitted as a result of total or partial non-implemen-
tation 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.

(49) As regards external actions, it should be clarified that, in
line with existing practice, 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. 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
the financing agreement, should apply.
conclusion of
Specific
case of
foreseen for
should be
rules
decentralised management of multi-annual programmes
under Council Regulation (EC) No 1085/2006 of 17 July
2006 establishing an Instrument for Pre-Accession Assis-
tance (1) and Regulation (EC) No 1638/2006 of
the
European Parliament and of the Council of 24 October
2006 laying down general provisions establishing a
European Neighbourhood and Partnership Instrument (2).

the

(50)

to Directors of

it should be made
In order to facilitate management,
possible for the institutions to delegate the powers of
authorising officers
inter-institutional
European Offices for the management of appropriations
entered in their respective sections of the budget. While
the relevant
should remain unchanged,
their content
Articles of the Financial Regulation should be slightly re-
structured in order
to clarify the sub-delegation of
authorising powers by the Directors of Offices.

(51) The procedure under which the budgetary authority may
issue an opinion on a building project should be clarified.

(52) 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.

(53) Transitional provisions should be added. First, as regards
the making available again of decommitted appropriations
corresponding to commitments made during the 2000 to

2006 Structural Funds programming period, the case of
force majeure should continue to be applied as provided
currently in the Financial Regulation until the closure of the
assistance. This is in order to avoid disruption of
the
current system since force majeure is treated differently in
Regulation (EC) No 1083/2006 of 11 July 2006 laying
down general provisions on the European Regional
Development Fund, the European Social Fund and the
Cohesion Fund (3). Second, a transitional provision should
be added to the Financial Regulation to deal with the
implementation of the provisions on the central database
for exclusion from participation in procurement and grant
procedures. Finally, a similar provision should be added to
permit the outstanding Community commitments to be
financially settled in order to close the assistance provided
for in the Regulations governing the Structural Funds and
the Cohesion Fund for the 2000 to 2006 programming
period. For
the appropriations concerning operational
expenditure, the possibility for the Commission to make
transfers from one title to another must be retained,
provided that the appropriations in question are for the
same objective. Similarly, the Commission should be able to
continue to make transfers from one title to another when
the appropriations
in question relate to Community
initiatives or technical assistance and innovative measures,
provided that they are transferred to measures of the same
nature. This means, for instance, transferring appropria-
tions relating to one Community initiative to another in a
different title.

(54) Regulation (EC, Euratom) No 1605/2002 should therefore

be amended accordingly,

HAS ADOPTED THIS REGULATION:

Article 1

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

1.

in Article 1, the first paragraph shall be 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 presenta-
tion and auditing of the accounts.’;

2.

Article 3 shall be 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, univers-
ality, specification, sound financial management which
requires
control, and
internal
effective and efficient
transparency as set out in this Regulation.’;

(1) OJ L 210, 31.7.2006, p. 82.
(2) OJ L 310, 9.11.2006, p. 1.

(3) OJ L 210, 31.7.2006, p. 25.

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3.

in Article 5, paragraph 4 shall be replaced by the following:

7.

in Article 16, the second paragraph shall be 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 shall be 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
“the implementing rules”, shall
Regulation, hereinafter
specify the
authorising officer
in which the
responsible shall, by way of exception, recover annually
such interest. That interest shall be entered in the budget as
miscellaneous revenue.

cases

Interest shall not be due to the Communities in the

2.
following cases:

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

(a)

(b)

for
the cash-flow purposes
the accounting officer and,

referred to in
‘However,
Article 61,
in the case of
imprest accounts, the imprest administrators, and, for the
needs of the administrative management of the Commis-
sion's External Service, the authorising officer responsible
shall be authorised to carry out operations in national
currencies as laid down in the implementing rules.’;

8.

Article 18(1) is hereby amended as follows:

(a)

the introductory phrase shall be replaced by the
following:

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

(b)

the following point shall be 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;’;

pre-financing paid under a procurement contract
within the meaning of Article 88;

(c)

the following point shall be inserted:

(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
in accordance with the Staff Regulations of
staff
officials of
the European Communities and the
Conditions of employment of other servants of the
European Communities, hereinafter “the Staff Regula-
tions”;

(f)

pre-financing paid in the framework of joint manage-
ment as referred to in point (c) of Article 53(1).’;

‘(ea) proceeds from the sale of vehicles, equipment,
installations, materials, and scientific and tech-
nical apparatus which are being replaced or
scrapped when the book value is fully depre-
ciated;’;

9.

in Article 19(2), the first sentence shall be replaced by the
following:

‘Acceptance of donations of a value of EUR 50 000 or more
which involve a financial charge, including follow-up costs,
exceeding 10 % of the value of the donation made, shall be
subject to the authorisation of the European Parliament and
of the Council, both of which shall act on the matter within
two months of the date of receipt of the request from the
Commission.’;

5.

Article 9 is hereby amended as follows:

10. Article 22 shall be replaced by the following:

(a)

(b)

in the introductory phrase of paragraph 2, the words
for commitment of differentiated
‘Appropriations
shall be replaced by the words
appropriations’
‘Commitment appropriations’;

in the first sentence of paragraph 3,
the words
‘Appropriations for payment of differentiated appro-
priations’ shall be replaced by the words ‘Payment
appropriations’;

‘Article 22

1. Any institution other
than the Commission may,
within its own section of the budget, transfer appropria-
tions:

(a)

from one title to another up to a maximum of 10 % of
the appropriations for the year shown on the line
from which the transfer is made;

6.

in Article 11, the words ‘Article 157’ shall be replaced by the
words ‘Articles 157 and 160a’;

(b)

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

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

intentions.

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. 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
articles without informing the budgetary authority before-
hand.’;

11. Article 23 is hereby amended as follows:

(a)

paragraph 1 is hereby amended as follows:

(i)

point (b) shall be replaced by the following:

‘(b)

as regards expenditure on staff and admin-
istration, transfer appropriations from one
title to another up to a maximum of 10 %
of the appropriations for the year shown
on the line from which the transfer is made,
and up to a maximum of 30 % of the
appropriations for the year shown on the
line to which the transfer is made;’;

(ii)

the following point shall be added:

‘(d)

transfer appropriations, as soon as the basic
act is adopted pursuant to the procedure
laid down in Article 251 of the Treaty, from
the “provisions” title referred to in Arti-
cle 43 for the cases where no basic act
existed for the action concerned when the
budget was established.’;

(iii)

the second subparagraph shall be replaced by the
following:

transfers
‘Three weeks before making the
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 subparagraphs shall be added:

‘However, during the last two months of the
financial year,
the Commission may autono-
concerning
mously
expenditure on staff, external staff and other

appropriations

transfer

agents from one title to another within the total
limit of 5 % of
the
financial year. The Commission shall
inform
the budgetary authority within two weeks after
its decision on those transfers.

the appropriations of

The Commission shall
inform the budgetary
authority within two weeks after its decision on
transfers referred to in point (d) of the first sub-
paragraph.’;

(b)

in paragraph 2, the words ‘paragraph 1(c)’ shall be
replaced by the words ‘paragraph 1’;

12. Article 26 is hereby amended as follows:

(a)

paragraph 1 shall be replaced by the following:

‘1.
Transfers within the titles of the budget devoted
to the European Agricultural Guarantee Fund (EAGF),
the Structural
the
European Fisheries Fund, the European Agricultural
Fund for Rural Development (EAFRD) and Research
shall be the subject of special provisions under Titles I,
II and III of Part Two.’;

the Cohesion Fund,

Funds,

(b)

in paragraph 2,
replaced by the following:

the first

subparagraph shall be

‘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 Commis-
sion. A separate proposal must be submitted for each
individual operation.’;

(c)

the following paragraph shall be added:

In duly substantiated exceptional

‘3.
cases of
international humanitarian disasters and crises, occur-
ring after 15 December of the budgetary year, the
Commission may transfer unused budgetary appro-
priations for the current budgetary year still available
in the budget titles falling under heading 4 of the
multiannual financial framework to the budget titles
concerning the crisis management aid and humanitar-
ian aid operations. The Commission shall inform the
two branches of the budgetary authority immediately
after making such transfers.’;

13. Article 28 is hereby amended as follows:

(a)

paragraph 1 shall be replaced by the following:

‘1. Any proposal or initiative submitted to the
legislative authority by the Commission or by a
Member State in conformity with the relevant
provisions of the EC Treaty or 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
this
evaluation provided for
Regulation.

in Article 27(4) of

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Any amendment to a proposal or initiative submitted
to the legislative authority which may have appreci-
able implications for the budget, including changes in
the number of posts, must be accompanied by a
financial
institution
statement prepared by the
proposing the amendment.’;

(b)

paragraph 3 shall be replaced by the following:

16.

in Article 30, the following paragraph 3 shall be added:

‘3.
The Commission shall make available, in an appro-
priate manner, information on the beneficiaries of funds
deriving from the budget held by it when the budget is
implemented on a centralised basis and directly by its
departments, and information on the beneficiaries of funds
as provided by the entities to which budget implementation
tasks are delegated under other modes of management.

In order

to prevent

the risk of

‘3.
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.

the following Article shall be inserted:

‘Article 28a

1. The budget shall be implemented in compliance with
effective and efficient internal control as appropriate in
each management mode, and in accordance with the
relevant sector-specific regulations.

2.
For the purposes of the implementation of the budget,
internal control is defined as a process applicable at all
levels of
the management and designed to provide
reasonable assurance of achieving the following objectives:

(a)

effectiveness, efficiency and economy of operations;

the requirements of confidentiality,

information shall be made available with due
This
observance of
in
particular the protection of personal data as laid down in
Directive 95/46/EC of the European Parliament and of the
Council of 24 October 1995 on the protection of
individuals with regard to the processing of personal data
and on the free movement of such data (*) and Regula-
tion (EC) No 45/2001 of the European Parliament and of
the Council of 18 December 2001 on the protection of
individuals with regard to the processing of personal data
by the Community institutions and bodies and on the free
movement of such data (**), and of the requirements of
the specificities of each
security,
management mode referred to in Article 53 and where
applicable in conformity with the relevant sector-specific
rules.

taking into account

(*) OJ L 281, 23.11.1995, p. 31. Directive as amended by
L 284,

Regulation (EC) No 1882/2003 (OJ
31.10.2003, p. 1)
(**) OJ L 8, 12.1.2001, p. 1.’;

(b)

reliability of reporting;

17. Article 33(2) is hereby amended as follows:

(c)

safeguarding of assets and information;

(a)

point (d) shall be replaced by the following:

(d)

prevention and detection of fraud and irregularities;

‘(d)

the activity statements containing the following:

(e)

adequate management of the risks relating to the
legality and regularity of the underlying transactions,
taking into account
the multi-annual character of
programmes as well as the nature of the payments
concerned.’;

15.

in Article 29, paragraph 2 shall be replaced by the
following:

‘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.’;

— information on the achievement of all
previously set specific, measurable, achiev-
able, relevant and timed objectives for the
various activities as well as new objectives
measured by indicators,

— full justification and cost-benefit approach
in the level of

for proposed changes
appropriations,

— clear rationale for intervention at the EU
inter alia, with the

in keeping,
level
principle of subsidiarity,

— information on the implementation rates of
the previous year's activity and implemen-
tation rates for the current year.

Evaluation results shall be consulted and referred to as
the likely merits of proposed budget
evidence of
changes.’;

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(b)

the following point shall be added:

(b)

point (2) shall be replaced by the following:

‘(e)

a summary statement of
schedule of
payments due in subsequent financial years to
meet budgetary commitments entered into in
earlier financial years.’;

the

‘(2)

in the section for each institution, the revenue
and expenditure shall be shown in the same
structure as in point (1)’;

18.

in Article 37(1), the following subparagraph shall be added:

(c)

in point
following:

(3), point

(c) shall be replaced by the

‘Before presenting a preliminary draft amending budget, the
Commission and institutions other than the Commission
shall examine the scope for reallocation of the relevant
appropriations, taking into account any expected under-
implementation of appropriations.’;

19.

in Article 40, point (a) shall be 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;’;

‘(a)

a general statement of revenue and expenditure;’;

(d)

point (5) shall be replaced by the following:

20.

in Article 43(1), the second subparagraph shall be replaced
by the following:

‘The appropriations in this title may be used only after
transfer in accordance with the procedure laid down in
Article 23(1)(d), where the adoption of the basic act is
subject to the procedure laid down in Article 251 of the
Treaty, and that of Article 24, for all other cases’;

21.

in the second paragraph of Article 44,
the words
‘Articles 22, 23 and 25’ shall be replaced by the words
‘Articles 23 and 25’;

22. Article 45 shall be replaced by the following:

‘Article 45

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

2. 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 hereby amended as follows:

(a)

point (1) is hereby amended as follows:

(i)

the introductory phrase shall be replaced by the
following:

‘in the general
expenditure:’;

statement of

revenue

and

(ii)

point (f) shall be deleted;

(iii) point (g) shall be replaced by the following:

‘(g)

appropriate remarks on each subdivision,
as set out in Article 41(1)’;

‘(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), the words
‘grades A1, A2 and A3’ shall be replaced by the words
‘grades AD 16, AD 15 and AD 14’;

25. Article 49 shall be replaced by the following:

‘Article 49

1. A basic act shall first be adopted before the appro-
priations 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 generis.

3.
In application of Title V of the Treaty on European
Union (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
Treaty on European Union.

4.
In application of Title VI of the Treaty on European
Union (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 Treaty on European
Union.

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.

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6. By way of derogation from paragraphs 1 to 4, the
following may be implemented without a basic act provided
the actions which they are intended to finance fall within
the powers of the Communities or the European Union:

(a)

(b)

appropriations for pilot schemes of an experimental
nature designed to test the feasibility of an action and
its usefulness. The relevant commitment appropria-
tions may be entered in the budget for not more than
two successive financial years;

appropriations for preparatory actions in the fields of
application of the EC Treaty and the Euratom Treaty
the TEU, designed to prepare
and of Title VI of
proposals with a view to the adoption of
future
actions. The preparatory actions are to follow a
coherent approach and may take various forms. The
relevant commitment appropriations may be entered
in the budget for not more than three successive
financial years. The legislative procedure must be
concluded before the end of the third financial year. In
the course of the legislative procedure, the commit-
ment 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 imple-
mented 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 contain an assessment of results
and the follow-up envisaged;

(c)

appropriations for preparatory measures in the field
the Treaty on European Union
of Title V of
(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 and for the
adoption of the necessary legal instruments.

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.

Preparatory measures shall be agreed by the Council,
in full association with the Commission. To this end,
the Presidency, assisted by the Secretary-General of the
Council/High Representative for
shall
inform the Commission as early as possible of the
Council's intention to launch a preparatory measure
and in particular of the estimated resources required
for this purpose. In conformity with the provisions of
this Regulation, the Commission shall take all the

the CFSP,

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 paragraph shall be added:

‘Each institution shall exercise these powers in accordance
the
with this Regulation and within the limits of
appropriations authorised.’;

27. Article 52 shall be replaced by the following:

‘Article 52

1. All financial actors and any other person involved in
budget implementation, management, audit or 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 shall be replaced by the following:

‘Article 53

The Commission shall implement the budget in accordance
with the provisions set out in Articles 53a to 53d in any of
the following ways:

(a)

on a centralised basis;

(b)

by shared or decentralised management;

(c)

by joint management with international organisa-
tions.’;

29.

the following Articles shall be inserted:

‘Article 53a

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

indirectly,

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Article 53b

1. Where the Commission implements the budget by
shared management, implementation tasks shall be dele-
gated 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 complementary 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'
interests. To this
effect they shall in particular:

financial

(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 and fraud;

(c)

(d)

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

ensure, by means of relevant sector-specific regula-
tions and in conformity with Article 30(3), adequate
annual ex post publication of beneficiaries of funds
deriving from the budget.

To that effect, the Member States shall conduct checks and
shall put in place an effective and efficient internal control
laid down in
system,
Article 28a. They shall bring legal proceedings as necessary
and appropriate.

according to the provisions

3. Member States shall produce an annual summary at
the appropriate national level of the available audits and
declarations.

In order

to ensure that

the funds are used in
4.
accordance with the applicable rules, the Commission shall
apply clearance-of-accounts procedures or financial correc-
tion mechanisms which enable
final
to assume
responsibility for the implementation of the budget.

it

Article 53c

1. 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
residual tasks to bodies referred to in Article 54(2).

In order

to ensure that

2.
the funds are used in
accordance with the applicable rules, the Commission shall
apply clearance-of-accounts procedures or financial correc-
final
to assume
tion mechanisms which enable
responsibility for the implementation of the budget.

it

3. Third countries to which implementation tasks are
delegated shall ensure, in conformity with Article 30(3),
adequate annual ex post publication of beneficiaries of funds
deriving from the budget.

Article 53d

1. Where the Commission implements the budget by
joint management, certain implementation tasks shall be
delegated 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
and
laying down the
financial arrangements for their cooperation;

administrative

(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.

shall,

in their accounting, audit,
These organisations
internal
apply
standards which offer guarantees equivalent to internation-
ally accepted standards.

and procurement procedures,

control

Individual agreements concluded with international
2.
organisations for the award of
financing shall contain
detailed provisions for the implementation of the tasks
entrusted to such international organisations.

International organisations to which implementation
in conformity with
ex post publication of

3.
tasks are delegated shall ensure,
Article 30(3), adequate annual
beneficiaries of funds deriving from the budget.’;

30. Article 54 is hereby amended as follows:

(a)

paragraph 1 shall be replaced by the following:

‘1.
The Commission may not delegate to third
parties the executive powers it enjoys under the
Treaties where they involve a large measure of
discretion implying political choices. The implement-
ing tasks delegated must be clearly defined and fully
supervised as to the use made of them.

The delegation of budget-implementation tasks shall
comply with the principle of sound financial manage-
ment which requires effective and efficient internal
control and shall ensure compliance with the principle
of non-discrimination, and the visibility of Commu-
nity action. No implementing tasks delegated in this
way may give rise to conflicts of interests.’;

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(b)

paragraph 2 is hereby amended as follows:

(i)

the first sentence shall be replaced by the
following:

Implementation of

the corresponding operational
2.
appropriations shall be carried out by the director of the
agency.

Article 56

‘Within the limits laid down in paragraph 1, the
Commission may, when implementing the
budget by indirect centralised management or
by decentralised management under Articles 53a
or 53c, delegate tasks of public authority and in
particular budget implementation tasks to: […]’;

(ii)

point (b) shall be 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
the European Investment Bank or
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) shall be 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 comply-
ing with the conditions provided for in the
implementing rules.’;

(iv)

the following point shall be added:

‘(d) persons entrusted with the implementation
of specific actions pursuant to Title V of
the Treaty on European Union,
and
identified in the relevant basic act within
the meaning of Article 49 of this Regula-
tion.’;

1. Where the Commission implements the budget by
indirect centralised management,
first obtain
evidence of the existence and proper operation within the
the
entities
following:

to which it entrusts

implementation of

shall

it

(a)

(b)

transparent procurement and grant-award procedures
any
which are non-discriminatory and exclude
conflict of interest and which are in accordance with
the provisions of Titles V and VI respectively;

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;

(c)

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
in conformity
with Article 30(3).

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

systems of

entities

(c)

in paragraph 3, the second subparagraph shall be
replaced by the following:

‘Such bodies or persons
take appropriate
measures to prevent irregularities and fraud and if
necessary bring legal proceedings to recover funds
wrongly paid or incorrectly used.’;

shall

2.
In the case of decentralised management, the criteria
the
laid down in paragraph 1 with the exception of
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, national
or international public-sector bodies concerned.

31. Articles 55 and 56 shall be replaced by the following:

Notwithstanding paragraph (1)(a)
the Commission may decide:

and Article 169a,

‘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 its responsibility in accordance
with Council Regulation (EC) No 58/2003 of 19 December
2002 laying down the statute for executive agencies to be
in the management of
entrusted with certain tasks
Community programmes (*).

— in the case of pooling of funds, and

— under the conditions provided in the basic act,

to use the procurement or grant procedures of
beneficiary partner country or as agreed among donors.

the

Before taking such a decision, the Commission shall first
such
obtain evidence on a

case-by-case basis

that

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transparency, equal
procedures satisfy the principles of
treatment and non-discrimination, prevent any conflict of
interest, offer guarantees equivalent
to internationally
accepted standards and ensure compliance with the
provisions of sound financial management which requires
effective and efficient internal control.

The third country, national or international public-sector
bodies 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 legal proceedings
to recover funds wrongly paid.

3. The Commission shall ensure supervision, evaluation
and 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.

(c)

paragraph 3 shall be replaced by the following:

The powers of authorising officer

‘3.
delegated or subdelegated only to staff.’;

shall be

34.

in Article 60, paragraph 7 shall be 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 confirming that the information
contained in the report presents a true and fair view except
as otherwise specified in any reservations related to defined
areas of revenue and expenditure.

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.’;

35. Article 61 is hereby amended as follows:

(*) OJ L 11, 16.1.2003, p. 1.’;

(a)

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

32.

in Article 57, paragraph 1 shall be replaced by the
following:

‘the accounting officer shall be empowered to verify
the respect of validation criteria;’;

The Commission may not entrust measures of
‘1.
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 hereby amended as follows:

(a)

the following paragraph shall be inserted:

‘1a. For the purposes of this Title, the term “staff”
refers to persons covered by the Staff Regulations.’;

(b)

paragraph 2 shall be replaced by the following:

Each institution shall

lay down in its internal
‘2.
administrative rules the staff of an appropriate level to
whom it delegates in compliance with the conditions
in its rules of procedure the duties of the authorising
officer, the scope of the powers delegated and the
possibility for the persons to whom these powers are
delegated to subdelegate them.’;

(b)

the following paragraphs shall be inserted:

‘2a.
Before the adoption of the accounts by the
institution, the accounting officer shall sign them off,
thereby certifying that he has a reasonable assurance
that the accounts present a true and fair view of the
financial situation of the institution.

that

For that purpose, the accounting officer shall satisfy
the accounts have been prepared in
himself
accordance with the accounting rules, methods and
accounting systems established under his responsi-
bility 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.

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

39. Article 66 is hereby amended as follows:

(a)

paragraph 1 shall be replaced by the following:

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

The authorising officer

shall be liable for
‘1.
payment of compensation as laid down in the Staff
Regulations.’;

(b)

the following paragraph shall be inserted:

The

accounting officers of

2c.
the other
institutions and agencies shall sign off their annual
accounts and send them to the Commission's
accounting officer.’;

(c)

paragraph 3 shall be replaced by the following:

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

36.

in Article 62, the first paragraph shall be replaced by the
following:

‘The accounting officer may,
duties, delegate certain tasks to subordinate staff.’;

in the performance of his

37. Article 63 shall be 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 without any
limitation on the amount while respecting the level of
appropriations decided by the budgetary authority on the
corresponding budget line for the current financial year.

2.
Imprest accounts shall be endowed by the institution's
accounting officer and shall be placed under the respon-
sibility of
imprest administrators designated by the
institution's accounting officer.’;

38.

in Article 65, paragraph 1 shall be replaced by the
following:

The provisions of this Chapter are without prejudice
‘1.
to any liability under criminal
law 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
the fight against corruption involving officials of
Communities or officials of Member States.’;

‘1a.
apply in particular if:

The obligation to pay compensation shall

(a)

(b)

the authorising officer, whether intentionally or
through gross negligence on his part, 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;

the authorising officer, whether intentionally or
through gross negligence on his part, omits to
draw up a document establishing an amount
receivable, 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.’;

(c)

paragraph 3 shall be replaced by the following:

In the event of subdelegation within his
‘3.
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.’;

(d)

in paragraph 4, the first subparagraph shall be
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.
function independently and
The panels shall
irregularity has
determine whether a financial
occurred and what the consequences,
if any,
should be.’;

40. Article 73(2) shall be replaced by the following:

‘2. Where the responsible authorising officer by delega-
tion is planning to waive or partially waive recovery of an
established amount receivable, he/she shall ensure that the
waiver is in order and complies with the principle of sound
financial management and proportionality in accordance
with the procedures and the criteria laid down in the
implementing rules. The waiver decision must be sub-
stantiated. The authorising officer may delegate the decision
only as laid down in the implementing rules.

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

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41.

the following Article shall be inserted:

(c) works contracts;

‘Article 73a

(d)

service contracts.

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.

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

42.

in Article 75(2), the words ‘Article 49(2)’ shall be replaced
by the words ‘Article 49(6)(e)’;

43.

in Article 77(3), the third subparagraph shall be 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.’;

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

3. This Title does not relate to grants, without prejudice
to Articles 93 to 96.’;

48.

in Article 89(2), the following subparagraph shall be 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.’;

49. Article 90 is hereby amended as follows:

44.

in Article 80, the following paragraph shall be added:

(a)

paragraph 1 is hereby amended as follows:

‘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.’;

45.

in Article 86(1), point (b) shall be replaced by the following:

‘(b)

for assessing the efficiency and effectiveness of the
internal control and audit systems applicable to every
budgetary implementation operation.’;

46.

in Article 87, the second paragraph shall be 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.’;

47. Article 88 shall be 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;

(i)

the first subparagraph shall be replaced by the
following:

‘1. All contracts exceeding the thresholds
provided for in Article 105 or Article 167 shall
be published in the Official Journal of the European
Union.’;

(ii)

the second subparagraph shall be 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
the
Annex IIB to Directive 2004/18/EC of
European Parliament and of
the Council of
31 March 2004 on the coordination of proce-
dures for the award of public works contracts,
public supply contracts and public service
contracts (*).

(*) OJ L 134, 30.4.2004, p. 114. Directive as
last amended by Commission Regula-
tion (EC) No 2083/2005 (OJ L 333,
20.12.2005, p. 28).’;

(b)

paragraph 2 shall be replaced by the following:

‘2. Contracts with a value below the thresholds
provided for in Article 105 or Article 167 and the
service
referred to in Annex IIB to
Directive 2004/18/EC shall be advertised by appro-
priate means, as specified in the implementing rules.’.

contracts

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50. Article 91 is hereby amended as follows:

52. Article 93 is hereby amended as follows:

(a)

paragraph 1 shall be replaced by the following:

(a)

paragraph 1 is hereby amended as follows:

Procurement procedures shall take one of the

‘1.
following forms:

(i)

the introductory words shall be replaced by the
following:

(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 of
interest to two or more institutions, executive agencies
or bodies referred to in Article 185, and whenever
there is a possibility for realising efficiency gains, the
contracting authorities concerned shall seek to carry
out the procurement procedure on an interinstitu-
tional basis.

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 carried out jointly by the institution and this
contracting authority, as specified in the implement-
ing rules.’;

(b)

in paragraph 2, the second subparagraph shall be
deleted;

(c)

the following paragraph 4 shall be added:

‘4.
The implementing rules shall define the procure-
ment 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 Commu-
nities or the European Union so requires.’;

‘Candidates or tenderers shall be excluded from
participation in procurement procedures if:’;

(ii)

point (f) shall be replaced by the following:

‘(f)

they are currently subject to an adminis-
trative penalty referred to in Article 96(1).’;

(iii)

the following subparagraph shall be added:

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

(b)

paragraph 2 shall be replaced by the following:

‘2. 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.

the purpose of

For
paragraph 1,
requested by the contracting authority, must:

the correct application of
the candidate or tenderer, whenever

(a) where the candidate or tenderer is a legal entity,
provide information on the ownership or on the
management, control and power of representa-
tion of the legal entity;

(b) where subcontracting is envisaged, certify that
the subcontractor is not in one of the situations
referred to in paragraph 1.’;

51. Article 92 shall be replaced by the following:

(c)

the following paragraph shall be added:

‘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.’;

‘3.
The implementing rules shall determine the
maximum period during which the situations referred
to in paragraph 1 give rise to the exclusion of
candidates or
from participation in a
procurement procedure. The maximum period shall
not exceed 10 years.’;

tenderers

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53. Articles 94, 95 and 96 shall be replaced by the following:

(b)

‘Article 94

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

A contract shall not be awarded to candidates or tenderers
who, during the procurement procedure for this contract:

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

(a)

are subject to a conflict of interest;

(b)

(c)

are guilty of misrepresentation in supplying the
information required by the contracting authority as
a condition of participation in the procurement
procedure or fail to supply this information;

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

Article 95

1. A central database shall be set up and operated by the
Commission in compliance with Community rules on the
protection of personal data. The database shall contain
details of candidates and tenderers which is in one of the
situations referred to in Articles 93, 94, 96(1)(b) and (2)(a).
It shall be common to the institutions, executive agencies
and the bodies referred to in Article 185.

the Member States and third
2. The authorities of
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
communicate to the competent authorising officer infor-
mation on candidates and tenderers which are in one of the
situations referred to in Article 93(1) (e), where the conduct
of
to the
Communities'
interest. The authorising officer
shall receive this information and request the accounting
officer to enter it into the database.

concerned was detrimental

the operator

financial

authorities

and bodies mentioned in the

first
The
subparagraph shall have
information
contained in the database and may take it into account,
as appropriate and on their own responsibility for the
award of contracts associated with the implementation of
the budget.

to the

access

3. Transparent and coherent criteria to ensure propor-
tionate application of the exclusion criteria shall be laid
down in the implementing rules. The Commission shall
define standardised procedures and technical specifications
for the operation of the database.

Article 96

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

(a)

candidates or tenderers in the cases referred to in
point (b) of Article 94;

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 candidate or

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

the payment of financial penalties by the candidate or
tenderer or contractor up to the value of the contract
in question.’;

54. Article 97 shall be replaced by the following:

‘Article 97

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.

2. Contracts shall be awarded by the automatic award
procedure or by the best-value-for-money procedure.’;

55. Article 98 is hereby amended as follows:

(a)

paragraphs 1 and 2 shall be replaced by the following:

‘1.
The arrangements for submitting tenders 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.

If deemed appropriate and proportionate, the
2.
as
contracting authority may require
provided in the implementing rules,
to lodge a
security in advance as a guarantee that the bids made
will not be withdrawn.’;

tenderers,

(b)

paragraph 4 shall be replaced by the following:

‘4. All requests to participate or tenders declared by
the opening board as satisfying the conditions laid
down shall be evaluated, on the basis of the criteria
provided in the documents relating to the call for
tenders,
to propose to the contracting
authority the award of the contract or to proceed
with an electronic auction.’;

in order

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56. Articles 102 and 103 shall be replaced by the following:

the contract or framework contract with the successful
tenderer until a period of standstill has elapsed.’;

‘Article 102

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

2. The contracting authority may, if it deems it appro-
priate and proportionate, require contractors to lodge such
a guarantee in order to:

(a)

ensure full performance of the contract;

(b)

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

Article 103

Where the award procedure proves to have been subject to
substantial errors,
irregularities or 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
or the performance of the contract prove to have been
subject to substantial errors,
irregularities or fraud, the
institutions may, depending on the stage reached in the
procedure, refrain from concluding the contract or suspend
performance of
contract or, where appropriate,
the
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.’;

57.

in Article 104, the following sentence shall be added:

‘They shall delegate,
necessary powers for
contracting authority.’;

in accordance with Article 59, the
the function of

the exercise of

58. Article 105 shall be replaced by the following:

‘Article 105

1.
Subject to Title IV of Part Two of this Regulation,
Directive 2004/18/EC lays 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

59.

the title of Chapter 1 of Title VI of Part One shall be
replaced by the following:

‘CHAPTER 1

Scope and form of grants’;

60) Article 108 is hereby amended as follows:

(a)

in paragraph 1, the second subparagraph shall be
replaced by the following:

‘They shall be covered either by a written agreement
or by a Commission decision notified to the successful
applicant.’;

(b)

paragraph 2 shall be replaced by the following:

The following shall not constitute grants within

‘2.
the meaning of this Title:

(a)

(b)

(c)

(d)

(e)

(f)

(g)

expenditure on the members and staff of the
institutions and contributions to the European
schools;

loans, risk-bearing instruments of the Commu-
nity or Community financial contributions to
such instruments, 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 inter-
the
national
European Bank for Reconstruction and Devel-
specialised Community
opment
bodies
the European Investment
Fund (EIF);

(EBRD) or
such as

institutions

such as

financial

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 bodies to which implementa-
tion tasks are delegated in accordance with
Article 54(2) and contributions 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)
(f) of Council Regulation
(EC) No 1290/2005 of 21 June 2005 on the
financing of the common agricultural policy (*);

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(h)

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

(*) OJ L 209, 11.08.2005, p. 1. Regulation as
amended by Regulation (EC) No 320/2006 (OJ
L 58, 28.2.2006, p. 42).’;

(c)

the following paragraphs shall be added:

The following shall be assimilated to grants and

‘3.
shall be governed, as appropriate, by this Title:

On no account may the combined total costs eligible, as
specified in the implementing rules,
financing be
exceeded.

for

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;

(a)

(b)

the benefit deriving from an interest subsidy on
certain loans;

(c)

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

financial

actions the objective of which is the reinforcement of
the
the
generation of an income in the framework of external
actions.’;

a beneficiary or

capacity of

4.
Each institution may award grants for commu-
nication activities where, for duly justified reasons, the
use of public procurement procedures is not appro-
priate’;

61.

the following Article shall be inserted:

‘Article 108a

1. Grants may take any of the following forms:

(a)

reimbursement of a specified proportion of
eligible costs actually incurred;

the

(b)

lump sums;

(c)

flat-rate financing;

64.

in Article 110, paragraph 1 shall be 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.’;

65. Articles 111 and 112 are replaced by the following:

(d)

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

‘Article 111

2. Grants shall not exceed an overall ceiling expressed in
terms of absolute value.’;

Each action may give rise to the award of only one grant
from the budget to any one beneficiary, except where the
relevant basic acts authorise otherwise.

62.

the title of Chapter 2 of Title VI of Part One shall be
replaced by the following:

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

‘CHAPTER 2

Principles’;

63. Article 109 shall be replaced by the following:

‘Article 109

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 no circumstances shall the same costs be financed twice
by the budget.

1. Grants shall be subject to the principles of transparency
and equal treatment.

Article 112

They may not be cumulative or awarded retrospectively and
they must involve co-financing.

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.

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

No grant may be awarded retrospectively for actions already
completed.

2. An operating grant shall be awarded within six months
after the start of the beneficiary's budgetary year. Costs
eligible for financing may neither have been incurred before
the grant application was lodged nor before the start of the
beneficiary's budgetary year.’;

66.

in Article 113, paragraph 2 shall be 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).’;

Such penalties may also be imposed on beneficiaries who at
the moment of the submission of the application or during
the
false
declarations in supplying the information required by the
authorising officer or fail to supply this information.’;

the grant, have made

implementation of

68.

in Article 116, paragraph 1 shall be replaced by the
following:

Proposals shall be evaluated, on the basis of pre-
‘1.
announced selection and award criteria, with a view to
determining which proposals may be financed.’;

69. Article 118 shall be replaced by the following:

‘Article 118

1. The authorising officer responsible may, if he deems it
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.’;

67. Article 114 shall be replaced by the following:

70.

in Article 119, paragraph 2 shall be 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; grant applications may be eligible if
submitted by entities which do not have legal
law, pro-
personality under the applicable national
vided that their representatives have the capacity to
undertake legal obligations on their behalf and assume
financial liability;

(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.

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

in one of

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.

Should the beneficiary fail

‘2.
to comply with his
obligations, the grant shall be suspended or reduced or
terminated in the cases provided for by the implementing
rules after the beneficiary has been given the opportunity to
make his observations.’;

71. Article 120 shall be replaced by the following:

‘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)

(b)

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

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

(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

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beneficiary shall be determined in the implementing rules.

and financial management to the European Parliament and
the Council by the date specified in the second paragraph.’;

Each grant decision or agreement

3.
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.’;

75. Article 129 is hereby amended as follows:

(a)

in paragraph 1,
replaced by the words ‘Article 121’;

the words ‘Article 185’ shall be

72. Article 121 is hereby amended as follows:

(b)

paragraph 2 shall be replaced by the following:

(a)

point (a) shall be 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 must be consolidated in accordance
with Community accounting rules;’;

‘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.’;

(b)

point (d) shall be replaced by the following:

(c)

the following paragraph shall be inserted:

‘(d)

the aggregated reports on implementation of the
budget which present the information contained
in the reports referred to in point (c).’;

73. Article 122 shall be replaced by the following:

‘Article 122

1. The accounts of the institutions and bodies referred to
in Article 121 shall be accompanied by a report on
budgetary and financial management of the financial year.

2. The report referred to in paragraph 1 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.’;

74. Article 128 shall be replaced by the following:

The Commission's accounting officer shall
‘2a.
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 note 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 shall be 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.’;

(e)

in paragraph 4, the date ‘31 October’ shall be replaced
by the date ‘15 November’;

‘Article 128

76. Article 131 is hereby amended as follows:

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.

(a)

(b)

in paragraph 1, the words ‘the Commission’ shall be
replaced by the words ‘the Commission's accounting
officer’;

in paragraph 2, the words ‘the Commission’ shall be
replaced by the words ‘the Commission's accounting
officer’;

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

the latest,

77.

in Article 133(1), the words ‘Article 185’ shall be replaced
by the words ‘Article 121’;

78.

in Article 134, the words ‘Article 185’ shall be replaced by
the words ‘Article 121’;

The accounting officer of each institution and body referred
to in Article 121 shall also send the report on budgetary

79.

in Article 138(1), the words ‘Article 185’ shall be replaced
by the words ‘Article 121’;

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80.

in Article 139, paragraph 2 shall be replaced by the
following:

86. Article 149 is hereby amended as follows:

‘2.
Each institution shall inform the Court of Auditors
and the budgetary authority of any internal rules it adopts
in respect of financial matters.’;

81. Article 143 is hereby amended as follows:

(a)

in paragraph 2, the dates ‘15 June’ and ‘30 September’
shall be replaced by the dates
‘30 June’, and
‘15 October’, respectively;

(b)

paragraph 5 shall be replaced by the following:

The Court of Auditors shall transmit

‘5.
to the
authorities responsible for giving discharge and to the
other institutions, by 15 November at the latest, its
annual report accompanied by the replies of
the
institutions and shall ensure publication thereof in the
Official Journal of the European Union.’;

(c)

in paragraph 6, the date ‘15 February’ shall be replaced
by the date ‘28 February’;

82. Article 144 is hereby amended as follows:

(a)

in paragraph 1,
replaced by the following:

the fifth subparagraph shall be

‘Should the Court of Auditors decide to have any such
special reports published in the Official Journal of the
European Union, they shall be accompanied by the
replies of the institutions concerned.’;

(b)

in paragraph 2, the first sentence shall be replaced by
the following:

‘The opinions referred to in Article 248(4) of the
EC Treaty and Article 160c(4) of the Euratom Treaty
which do not relate to proposals or drafts covered by
the legislative consultation procedure may be pub-
lished by the Court of Auditors in the Official Journal
of the European Union.’;

83.

in Article 145(1), ‘30 April’ shall be replaced by ‘15 May’;

84.

in Title I of Part Two, the title shall be replaced by the
following:

‘TITLE I

EUROPEAN AGRICULTURAL GUARANTEE FUND’;

85.

in Article 148, paragraph 1 shall be 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 European Agricultural
Guarantee Fund (EAGF), and to revenue, save as otherwise
provided in this Title.’;

(a)

paragraph 1 shall be replaced by the following:

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

(b)

paragraph 3 shall be replaced by the following:

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

Such carryover shall not exceed, within a limit of 2 %
of the initial appropriations referred to in the first
subparagraph, the amount of the adjustment of direct
referred to in Article 11 of Council
payments
Regulation (EC) No 1782/2003 of 29 September 2003
establishing common rules for direct support schemes
under the common agricultural policy and establish-
ing certain support schemes for farmers (*) 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 Regula-
tion (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. Regulation as last
amended by Regulation (EC) No 1405/2006 (OJ
L 265, 26.9.2006, p. 1).’;

87.

in Article 150, paragraphs 2 and 3 shall be replaced by the
following:

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

3.
As from 15 November, routine management expen-
diture for the EAGF may be committed in advance against
the appropriations provided for the following financial year.
Such commitments may not, however, exceed three
quarters of the total corresponding appropriations for the
current financial year. They may apply only to expenditure

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for which the principle is laid down in an existing basic
act.’;

88.

in Article 151(1), the first subparagraph shall be 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.’;

89. Article 152 shall be replaced by the following:

‘Article 152

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

the year concerned at

European Agricultural Fund for Rural Development
(EAFRD) (*),
the European Regional Development
Fund (ERDF) (**), the European Social Fund (ESF)
(***),
the Cohesion Fund (****), and the European
Fisheries Fund (EFF) (*****), hereinafter “the Funds”,
and to their revenue, save as otherwise provided in
this Title.

(*)
(**)

Regulation (EC) No 1290/2005.
Regulation (EC) No 1080/2006 of the Eur-
opean Parliament and of the Council of 5 July
2006 on the European Regional Development
Fund (OJ L 210, 31.7.2006, p. 1).

(***) Regulation (EC) No 1081/2006 of the Eur-
opean Parliament and of the Council of 5 July
2006 on the European Social Fund (OJ L 210,
31.7.2006, p. 12).

(****) Council Regulation (EC) No 1084/2006 of
11 July 2006 establishing a Cohesion Fund (OJ
L 210, 31.7.2006, p. 79).

(*****) Council Regulation (EC) No 1198/2006 of
27 July 2006 on the European Fisheries Fund
(OJ L 223, 15.8.2006, p. 1)’

(b)

paragraph 3 shall be deleted.

94.

in Article 157, the second paragraph shall be replaced by
the following:

90.

in Article 153, paragraph 1 shall be replaced by the
following:

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

‘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
Article 23(1).’;

91. Article 154 shall be 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 Regulation (EC) No 1290/2005
shall be entered in a single Article.’;

92.

the title of Title II of Part Two shall be replaced by the
following:

‘TITLE II

STRUCTURAL FUNDS, COHESION FUND, EUROPEAN
FISHERIES FUND, AND EUROPEAN AGRICULTURAL
FUND FOR RURAL DEVELOPMENT’.

93. Article 155 is hereby amended as follows:

(a)

paragraph 1 shall be replaced by the following:

95. Article 158 shall be replaced by the following:

‘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
the same
that
objective within the meaning of the Regulations governing
the Funds referred to in Article 155, or are Technical
Assistance expenditure.’;

the appropriations in question are for

96.

in Article 160, the following paragraph shall be inserted:

The

appropriations

relating to the

‘1a.
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.’;

97.

the following Article shall be inserted:

‘Article 160a

‘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

1. The commitment appropriations corresponding to the
amount of the commitment decommitted as a result of

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total or partial non-implementation of the projects relating
to research for which they were earmarked may, exception-
ally 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.

2.
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 Commis-
sion's proposals within six weeks. Where no decision is
taken within this time limit, the proposals shall be deemed
to be approved.

The amount of commitment appropriations to be made
available again in year n shall in no case exceed 25 % 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 appro-
priations which have been made available again shall be
concluded by 31 December of year n.

the end of year n,

At
the
commitment appropriations made available again shall be
definitively decommitted by the authorising officer respon-
sible.’;

the unused balance of

98.

in Article 163, the first sentence shall be replaced by the
following:

‘The actions referred to in this Title may be implemented on
a centralised basis by the Commission, by shared manage-
ment, on a decentralised basis by the beneficiary third
country or countries, or jointly with international organisa-
in compliance with the relevant provisions of
tions
Articles 53 to 57.’;

99. Article 164 shall be deleted.

100. Article 166 is hereby amended as follows:

(a)

points (a) and (b) of the first subparagraph shall be
replaced by the following:

‘(a)

a financing agreement drawn up between the
Commission, acting for the Communities, and
the beneficiary third country or countries or the
bodies they have designated, hereinafter: “the
beneficiaries”;

(b)

a contract or a grant agreement between the
Commission and national or international pub-
lic-sector bodies or between the Commission
and natural or legal persons responsible for
carrying out the actions.’;

(b)

the second subparagraph shall be replaced by the
following:

‘The terms on which the external aid is given shall be
laid down in the instrument by which the financing
agreements or the contracts or the grants provided for
in points (a) and (b) shall be managed.’;

(c)

paragraph 2 shall be 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 agree-
ments which implement such financing agreements
shall be concluded or adopted no later than three
years following the date of conclusion of the financing
agreement.

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

(d)

the following paragraph 3 shall be added:

‘3.
The provision under paragraph 2 shall not apply
to the multi-annual programmes in the following
cases:

— the cross-border cooperation, regional develop-
ment, human resources development and rural
development components of Council Regula-
tion (EC) No 1085/2006 of 17 July 2006
establishing an Instrument
for Pre-Accession
Assistance (IPA) (*),

— the cross-border cooperation component of
Regulation (EC) No 1638/2006 of the European
Parliament and of the Council of 24 October
2006 laying down general provisions establish-
ing 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
third year following year n being the one in
which the budget commitment was made:

(i)

(ii)

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

it has not been used for making inter-
mediate payments; or

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(iii) no declaration of expenditure has been

106. Article 173 shall be replaced by the following:

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.

‘Article 173

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

to the Director of

(*) OJ L 210, 31.7.2006, p. 82.
(**) OJ L 310, 9.11.2006, p. 1.’;

107. in Article 174(1), the second sentence shall be replaced by

the following:

101. Article 167 is hereby amended as follows:

(a)

in paragraph 1, point (c) shall be replaced by the
following:

‘(c)

a national or international public-sector body or
natural or legal persons who are beneficiaries of
a grant for the implementation of an external
action.’;

(b)

paragraph 2 shall be 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.’;

‘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.’;

108. the following Article shall be 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.’;

102. in Title IV of Part Two, the title of Chapter 4 shall be

replaced by the following:

109. Article 175 shall be replaced as follows:

‘CHAPTER 4

Grants’;

103. the following Article shall be inserted:

‘Article 169a

Grant procedures to be applied in decentralised manage-
ment by beneficiary third countries shall be laid down in
the financing agreements referred to in Article 166. They
shall be based on the rules laid down in Title VI of
Part One.’;

104. Article 170 shall be replaced by the following:

‘Article 170

Each financing agreement or grant agreement or grant
decision must expressly provide for the Commission and
the Court of Auditors to have the power of audit, on the
basis of documents and on the spot, over all contractors
and subcontractors who have received Community funds.’;

‘Article 175

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.’;

110. Article 176 shall be deleted;

111. Article 178 is hereby amended as follows:

(a)

in paragraph 1, the second sentence shall be replaced
by the following:

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

(b)

in paragraph 2, the following sentence shall be added:

‘In this case, the limit referred to in paragraph 1 shall
not apply.’;

105. in Article 171, paragraph 2 shall be replaced by the

following:

112. in Article 179(3), the second and third subparagraphs shall

be replaced by the following:

‘2.
This Title shall apply to the operation of the European
Anti-fraud Office (OLAF), with the exception of Arti-
cles 174, 174a and 175(2).’;

‘If either branch of the budgetary authority intends to issue
an opinion, it shall within two weeks after receipt of the
information on the building project notify the institution

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concerned of its intention to issue such an opinion. 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.

This opinion shall be
concerned within two weeks of such notification.’;

forwarded to the

institution

For transfers of appropriations concerning operational
3.
expenditure referred to in the Regulations governing the
Structural Funds and the Cohesion Fund for the 2000 to
2006 programming period, for which Community pay-
ments still have to be made for the financial settlement of
outstanding Community commitments until the closure of
the assistance, the Commission may make transfers from
one title to another, provided that the appropriations in
question:

113. the following Title VII shall be inserted:

— are for the same objective, or

‘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 to, and final evaluation of, projects financed by
the budget.’;

114. Article 180 shall be deleted;

115. Article 181 shall be replaced by the following:

‘Article 181

1. As regards the Funds mentioned in Article 155(1) for
which the basic acts were repealed before the date of
application of this Regulation, appropriations which were
decommitted in application of Article 157(1) may be made
available again in the event of a manifest error attributable
solely to the Commission or in the case of force majeure
which has serious repercussions for the implementation of
operations supported by these Funds.

— relate to Community initiatives or

to technical
assistance and innovative measures and are transferred
to measures of the same nature.

4. Article 30(3) shall apply for the fund mentioned in
Article 148(1) for the first time in respect of the payments
charged to the 2008 budget.’;

116. Article 185 is hereby amended as follows:

(a)

in paragraph 1, the first sentence shall be replaced by
the following:

‘The Commission shall adopt a framework financial
regulation for the bodies set up by the Communities
and having legal personality which actually receive
contributions charged to the budget.’;

(b)

paragraph 4 shall be deleted.

Article 2

This Regulation shall enter into force on the 20th day following
its publication in the Official Journal of the European Union.

It shall apply from the date of entry into application of the
Commission Regulation amending Regulation (EC, Euratom)
No 2342/2002 laying down detailed rules for the implementa-
tion of the Financial Regulation and at the latest from 1 May 2007.

2. The central database referred to in Article 95 shall be
set up by 1 January 2009.

However, point 80 and points 84 to 94 of Article 1 of this
Regulation shall apply from 1 January 2007.

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

Done at Brussels, 13 December 2006.

For the Council
The President
E. TUOMIOJA