Opinion No 7/2007 on a draft Council Regulation amending Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities
Date: 2007-11-22
Institutions: European Court of Auditors
Subjects: economic support, financial management, financial regulation, general budget (EU), political parties, provision, revenue

21.12.2007

EN

Official Journal of the European Union

C 312/1

I

(Resolutions, recommendations and opinions)

OPINIONS

COURT OF AUDITORS

on a draft Council Regulation amending Regulation (EC, Euratom) No 1605/2002 of 25 June 2002
on the Financial Regulation applicable to the general budget of the European Communities

OPINION No 7/2007

(pursuant to Article 279 (1) of the EC Treaty)

(2007/C 312/01)

THE COURT OF AUDITORS OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Commu-
nity, and in particular Article 279 (1) thereof,

Having regard to the draft Council Regulation (1) amending Regu-
lation (EC, Euratom) No 1605/2002 of 25 June 2002 on the
Financial Regulation applicable to the general budget of the Euro-
pean Communities (2)
(hereinafter the Financial Regulation)
resulting from a Permanent Representative Committee’s decision
to split a Commission proposal (3) for a Regulation of the Euro-
pean Parliament and of the Council amending Regulation (EC)
No 2004/2003 (4) on the regulations governing political parties
at European level and the rules regarding their funding,

Having regard to the Council’s request for an opinion on the
abovementioned draft Council Regulation, received at the Court
on 29 October 2007,

HAS ADOPTED THE FOLLOWING OPINION:

1. The draft Council Regulation on which the Court of Audi-
tors’ opinion is requested aims to introduce into Article 109
the Financial Regulation exceptions, applicable to
of

(1) Council document No 14320/07 PE 341 INST 127.
(2) OJ L 248, 16.9.2002
(3) Commission document No COM(2007) 364 final.
(4) OJ L 297, 15.11.2003, p. 1.

political parties at European level, to the general rule, set out
in the same Article, that ‘grants may not have the purpose or
effect of producing a profit for the beneficiary’.

2. As the Court of Auditors has recently stressed, complicated
rules or unclear eligibility criteria have a considerable impact
on the legality and regularity of transactions (5). If the legis-
lator considers that derogations from the no-profit rule in
favour of political parties at European level are appropriate,
it is important that such derogations are set out simply, pre-
cisely and unequivocally, so that compliance with them can
be easily verified by the authorising officer when paying the
grants and by the Court of Auditors when auditing the
payments.

3. The first derogation to the ‘no-profit rule’ enables a political
party at European level having realised a surplus of income
over expenditure at the end of a financial year for which it
received a grant to carry over to the following year part of
that surplus up to 25 % of the total income for that year, pro-
vided that the surplus carried over is used before the end of
the first quarter of this following year. Compliance with this
condition can be verified only if appropriate implementing
rules set the obligation for the beneficiary having carried over
a surplus to the following year to produce evidence that its

(5) Annual Report concerning the financial year 2006, Introduction,

paragraph 0.7.

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Official Journal of the European Union

21.12.2007

eligible expenditure during the first quarter of that year is at
least as much as the amount carried over. In order to allow
the authorising officer to determine the value of the final
grant payment or, if necessary, the amount of grant monies
advanced that need to be recovered, such evidence should be
produced shortly after the end of the quarter or, at the latest,
with the claim for the balance of the grant if a balance is still
outstanding.

4. The second derogation to the ‘no-profit rule’

limits the
amount of own resources to be taken into account when
determining whether a surplus has been made to 15 % of the
party’s eligible costs so long as the ‘financial reserves’ of the
party do not exceed 100 % of its average annual income. A
definition of ‘financial reserves’ is not given by the account-
ing standards commonly applied at European Union level

and so the term could be interpreted differently depending
on the financial reporting framework under which the politi-
cal party prepares its annual statements of revenue and
expenditure and assets and liabilities. The term ‘average
annual income’ is also not sufficiently defined to enable its
calculation, for example no reference is made to a period of
time.

5. The Court concludes that more precision with regard to the
procedures, as described in paragraph 3, and clear definitions
of the terms ‘financial reserves’ and ‘annual average income’
are required to allow a consistent application and verification
of the proposed exemptions from the ‘no-profit rule’. In
order to achieve this objective, further amendments to the
Financial Regulation itself or to the detailed rules for its
implementaion (1) would be necessary.

This Opinion was adopted by the Court of Auditors in Luxembourg at its meeting of
22 November 2007.

For the Court of Auditors
Hubert WEBER
President

(1) Commission Regulation (EC, Euratom) No 2342/2002 of 23 Decem-

ber 2002 (OJ L 357, 31.12.2002, p. 1).