Council Regulation (EC) No 215/2008 of 18 February 2008 on the Financial Regulation applicable to the 10th European Development Fund
Date: 2008-02-18
Institutions: Council of the European Union
Subjects: European Development Fund, financial regulation

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I

(Acts adopted under the EC Treaty/Euratom Treaty whose publication is obligatory)

REGULATIONS

COUNCIL REGULATION (EC) No 215/2008

of 18 February 2008

on the Financial Regulation applicable to the 10th European Development Fund

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the proposal from the Commission,

Having regard to the Treaty establishing the European Commu-
nity,

Having regard to the opinion of the Court of Auditors (7),

Having regard to the opinion of the European Investment Bank,

Having regard to the Partnership Agreement between the
members of the African, Caribbean and Pacific Group of States
of the one part, and the European Community and its Member
States, of the other part, signed in Cotonou on 23 June 2000 (1)
and revised in Luxembourg on 25 June 2005 (2) (the ACP-EC
Agreement),

Having regard to Council Decision 2001/822/EC of 27 Novem-
ber 2001 on the association of the overseas countries and
territories with the European Community (the Overseas
Association Decision) (3), and in particular the fourth paragraph
of Article 23 thereof,

Having regard to Decision No 1/2006 of the ACP-EC Council of
Ministers of 2 June 2006 specifying the multiannual financial
framework for the period 2008 to 2013 and modifying the
revised ACP-EC Agreement (4),

Having regard to the Internal Agreement between the Repre-
sentatives of the Governments of the Member States, meeting
within the Council, on the financing of Community aid under
the multiannual financial framework for the period 2008 to
2013 in accordance with the ACP-EC Agreement and on the
allocation of financial assistance for the Overseas Countries and
Territories to which Part Four of the EC Treaty applies (5) (the
Internal Agreement) and in particular Article 10(2) thereof,

Having regard to Council Regulation (EC) No 617/2007 of
14 May 2007 on the implementation of the 10th European
Development Fund under the ACP-EC Partnership Agreement (6),

(1) OJ L 317, 15.12.2000, p. 3.
(2) OJ L 287, 28.10.2005, p. 4.
(3) OJ L 314, 30.11.2001, p. 1. Decision amended by Council Decision

2007/249/EC (OJ L 109, 26.4.2007, p. 33).

(4) OJ L 247, 9.9.2006, p. 22.
(5) OJ L 247, 9.9.2006, p. 32.
(6) OJ L 152, 13.6.2007, p. 1.

Whereas:

(1)

It is necessary to determine the detailed rules for the
payment of contributions by the Member States to the 10th
European Development Fund (the EDF), set up by the
Internal Agreement, and for the allocation of financial
assistance for the Overseas Countries and Territories to
which Part Four of the EC Treaty applies (OCTs).

(2) Rules should be laid down for the treatment of the balances
remaining from the previous EDFs, in particular as regards
the detailed arrangements for their transfer to the 10th EDF
and the rules applicable for their implementation, or the
consequences of
in relation with
their decommitment
Member States contributions.

(3)

(4)

(5)

(6)

It is necessary to lay down the conditions in accordance
with which the Court of Auditors must exercise its powers
in respect of the EDF.

It is necessary to lay down the conditions in accordance
with which the European Investment Bank (EIB) manages
EDF resources.

The provisions concerning scrutiny by the Court of
Auditors of the EDF resources managed by the EIB should
comply with the Tripartite Agreement concluded between
the Court of Auditors,
the EIB and the Commission
provided for in Article 248(4) of the Treaty.

It is appropriate to ensure the proper, prompt and efficient
execution of programmes and projects financed under the
ACP-EC Agreement and to establish management proce-
dures which are transparent and easy to apply, and which
facilitate the decentralisation of tasks and responsibilities.

(7) OJ C 23, 28.1.2008, p. 2.

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(7)

(8)

The parties to the ACP-EC Agreement have reaffirmed their
commitment to the social and ethic clauses as defined by
the
International Labour Organisation (ILO)
relevant
Conventions,

It is necessary to establish the detailed rules in accordance
with which the authorising officer by delegation establishes
the necessary arrangements to ensure the proper execution
of operations,
in close cooperation with the National
Authorising Officer.

(9) As far as possible, Council Regulation (EC, Euratom)
No 1605/2002 of 25 June 2002 on the Financial
Regulation applicable to the general budget of the European
Communities (1) should, as the cornerstone of the reform
of the Commission's internal management, be taken into
account in this Regulation, for reasons of efficiency and
simplification. If appropriate Commission Regulation (EC,
Euratom) No 2342/2002 of 23 December 2002 laying
down detailed rules for the implementation of Council
Regulation (EC, Euratom) No 1605/2002 on the Financial
Regulation applicable to the general budget of the European
Communities (2) should be applied mutatis mutandis in
certain cases.

(10) All changes in comparison with the Financial Regulation of
27 March 2003 applicable to the Ninth European
Development Fund (3) should contribute to achieving the
objectives of the Commission's reforms, should improve or
ensure sound financial management, and should enhance
the protection of the financial interests of the Community
against fraud and other illegal activities, and thus enhance
legality and regularity of financial operations.

(11) Some changes in comparison with the Financial Regulation
for the Ninth EDF are necessary in the light of practical
experience in order to facilitate EDF implementation and
the realisation of the underlying policy objectives and to
adjust some procedural and documentary requirements.
Transparency,
to be reinforced by
providing for information on beneficiaries of Community
funds.

in particular, has

(12) The principle of sound financial management should imply
effective and efficient internal control for the implementa-
tion of EDF resources.

(13) As regards EDF resources, it should be made possible for
Member States to make voluntary financial contributions to
help achieve the objectives of
the ACP-EC Partnership
Agreement outside co-financing arrangements, as provided
for in Regulation (EC) No 617/2007.

(14) The principle of specification should apply to the EDF.

(1) OJ L 248, 16.9.2002, p. 1. Regulation as last amended by Regulation
(EC, Euratom) No 1525/2007 (OJ L 343, 27.12.2007, p. 9).
(2) OJ L 357, 31.12.2002, p. 1. Regulation as last amended by
Regulation (EC, Euratom) No 478/2007 (OJ L 111, 28.4.2007,
p. 13).

(3) OJ L 83, 1.4.2003, p. 1.

(15) As regards the methods of implementation of the EDF
resources, the provisions on centralised, decentralised and
joint management as laid down in the Financial Regulation
for the Ninth EDF should be restructured for the purpose of
clarity and some requirements should be made clearer. In
the
particular,
conditions for the delegation of tasks and the criteria for
using national public-sector bodies should be simplified in
order to facilitate their use and to respond to growing
operational needs.

the requirements for joint management,

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

(17) As regards the accounting officer, his responsibility for
certifying the accounts on the basis of
the financial
information supplied to him by the authorising officers
has to be made clearer. 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.

(18) The conditions and limitations regarding financial liability
of all financial actors and any other person involved in EDF
implementation should be clarified.

(19) The rules on recovery of amounts receivable should be
clarified and strengthened in order to better safeguard the
financial interests of the Communities. In particular, the
conditions in which interest on late payments is due to the
EDF should be specified.

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

(21)

In line with the general Financial Regulation and Directive
2004/18/EC of the European Parliament and the Council of
31 March 2004 on the coordination of procedures for the

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award of public works contracts, public supply contracts
and public service contracts (1), the rules on exclusion from
a procurement procedure need to be clarified. A clear
distinction should be made between mandatory exclusion
and exclusion on the basis of an administrative penalty. In
addition, for reasons of legal certainty and proportionality,
a maximum period of exclusion should be laid down. An
exception to the rules on exclusion may be provided for as
regards the purchase of supplies on particularly advanta-
geous terms from either a supplier which is definitively
winding up its business activities, or the receivers or
liquidators of a bankruptcy, an arrangement with creditors,
or a similar procedure under national law.

(24) The rule that grants should be awarded on the basis of calls
for proposals has proved its worth. Experience has shown,
however, that in certain situations the nature of the action
leaves no choice in the selection of beneficiaries. It should
therefore be expressly recognised that such exceptional
cases arise.

(25) Where grants are given for running costs, the rule that the
necessary agreement may not be signed more than four
months after the start of the beneficiary's financial year has
proven unnecessarily rigid. That deadline should therefore
be fixed at six months.

(22)

It is appropriate to allow the use of the central database
in situations of
concerning candidates or
exclusion set up under Regulation (EC,
Euratom)
No 1605/2002 in the context of the EDF.

tenderers

(23) As regards grants, some clarifications need to be made in
Article 103, in particular as regards their scope. To improve
the management of grants and to simplify procedures, it
should be possible to award grants either by decisions of
the institution or by written agreements with beneficiaries,
and to authorise the use of
lump sum and flat-rate
payments alongside the more traditional method of
reimbursing costs actually incurred. Finally, requirements
for checks and guarantees should be more proportionate to
the financial risks involved.

(26) As grants should continue to be awarded on the basis of
selection and award criteria, there is no need to have those
criteria evaluated in all cases by a committee. Other more
flexible means should be allowed for the evaluation of the
selection criteria.

(27) For the sake of clarity, the rule concerning the procurement
requirements to be applied by beneficiaries of grants should
be simplified. Moreover, it should be expressly provided for
the case in which the implementation of an action
necessitates financial support to third parties,

HAS ADOPTED THIS REGULATION:

(1) OJ L 134, 30.4.2004, p. 114. Directive as last amended by
Commission Regulation (EC) No 1422/2007 (OJ L 317, 5.12.2007,
p. 34).

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CONTENTS

PART ONE — MAIN PROVISIONS

TITLE I — SUBJECT MATTER AND SCOPE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

TITLE II — FINANCIAL PRINCIPLES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER 1: PRINCIPLE OF FINANCIAL ACCURACY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER 2: PRINCIPLE OF THE UNIT OF ACCOUNT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER 3: PRINCIPLE OF SPECIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Articles

1-5

6

7-8

9

10

CHAPTER 4: PRINCIPLE OF SOUND FINANCIAL MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

11-13

CHAPTER 5: PRINCIPLE OF TRANSPARENCY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

14

TITLE III — RESOURCES AND MEMBER STATES CONTRIBUTIONS

CHAPTER 1: COMPOSITION OF EDF RESOURCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

15-16

TITLE IV — IMPLEMENTATION OF EDF RESOURCES

CHAPTER 1: GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

17-19

CHAPTER 2: METHODS OF IMPLEMENTATION

Section 1: General provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

20

Section 2: Decentralised management

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

21-24

Section 3: Centralised management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

25-28

Section 4: Joint management with international organisations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER 3: FINANCIAL ACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 1: Principle of segregation of duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

29

30

31

Section 2: Authorising officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

32-38

Section 3: Accounting officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

39-43

Section 4: Paying agent

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

44-47

Section 5: Paying manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

48-50

CHAPTER 4: LIABILITY OF FINANCIAL ACTORS

Section 1: General rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

51-52

Section 2: Rules applicable to authorising officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

53-54

Section 3: Rules applicable to accounting officers and paying managers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

55-56

CHAPTER 5: REVENUE OPERATIONS

Section 1: Making available of EDF resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

57-61

Section 2: Estimates of amounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 3: Establishment of amounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

62

63

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Section 4: Authorisation of recovery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 5: Recovery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER 6: EXPENDITURE OPERATIONS

Articles

64

65

Section 1: General provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

66

Section 2: Commitment of expenditure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

67-72

Section 3: Commitment of expenditure under centralised or joint management

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

73-76

Section 4: Commitment of expenditure under decentralised management

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

77-80

Section 5: Validation of expenditure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 6: Authorisation of expenditure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

81

82

Section 7: Payment of expenditure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

83-86

Section 8: Time limits for expenditure operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER 7: IT SYSTEMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

87

88

CHAPTER 8: INTERNAL AUDITOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

89-90

TITLE V — PROCUREMENT

CHAPTER 1: GENERAL PROVISIONS

Section 1: Scope and award principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

91-92

Section 2: Publication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

93

CHAPTER 2: PROCUREMENT PROCEDURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

94-99

TITLE VI — DIRECT LABOUR AND INDIRECT DECENTRALISED OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100-102

TITLE VII — GRANTS

CHAPTER 1: SCOPE AND FORMS OF GRANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103-104

CHAPTER 2: PRINCIPLES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105-109

CHAPTER 3: AWARD PROCEDURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110-112

CHAPTER 4: PAYMENT AND CONTROL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113-115

CHAPTER 5: IMPLEMENTATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116-117

TITLE VIII — PRESENTATION OF THE ACCOUNTS AND ACCOUNTING

CHAPTER 1: PRESENTATION OF THE ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118-125

CHAPTER 2: INFORMATION ON IMPLEMENTATION OF EDF RESOURCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

126

CHAPTER 3: ACCOUNTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127-133

TITLE IX — EXTERNAL AUDIT AND DISCHARGE

CHAPTER 1: GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

134

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CHAPTER 2: EXTERNAL AUDIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135-141

CHAPTER 3: DISCHARGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142-144

PART TWO — SPECIFIC PROVISIONS CONCERNING EDF RESOURCES MANAGED BY THE EIB . . . . . . . . . . . 145-152

Articles

PART THREE — TRANSITIONAL AND FINAL PROVISIONS

TITLE I — TRANSITIONAL PROVISIONS

CHAPTER 1: TRANSFER OF BALANCE REMAINING FROM PREVIOUS EDFs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153-154

CHAPTER 2: BALANCES REMAINING FROM PREVIOUS EDFs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER 3: RULES APPLICABLE FOR THE IMPLEMENTATION OF PREVIOUS EDFs . . . . . . . . . . . . . . . . . . . . . . . .

155

156

CHAPTER 4: TRANSITIONAL PERIOD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157-158

TITLE II — FINAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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PART ONE

MAIN PROVISIONS

TITLE I

SUBJECT MATTER AND SCOPE

Article 1

TITLE II

FINANCIAL PRINCIPLES

Article 6

EDF resources
established and implemented in
compliance with the following principles as set out in this
Regulation:

shall be

This Regulation lays down the rules for the establishment and
financial implementation of the resources of the 10th European
Development Fund (EDF), and the presentation and auditing of
the accounts.

(a)

financial accuracy;

(b)

unit of account;

(c)

specification;

Article 2

(d)

sound financial management;

1. The Commission shall assume the responsibilities of the
Community defined in Article 57 of the ACP-EC Agreement and
in the Overseas Association Decision.

(e)

transparency.

To that end, it shall undertake the financial implementation of
operations carried out with EDF resources allocated in the form
of non-repayable aid, excluding interest rate subsidies, and make
payments in accordance with this Regulation.

For the purposes of the application of this Regulation, the
2.
Commission shall act on its own responsibility and within the
limits of the resources allocated.

Article 3

The European Investment Bank (EIB), acting on behalf of the
Community, shall manage the Investment Facility, as well as
interest rate subsidies, and shall conduct operations there under,
in accordance with the rules set out in Part Two. In that context,
the EIB shall act on behalf of and at the risk of the Community.

implementation of
The EIB shall undertake the financial
operations carried out by means of
loans from its own
resources, where applicable combined with interest rate subsidies
drawn from the EDF's grant resources.

Article 4

The provisions of this Part and Part Three shall apply exclusively
to the financial implementation of the EDF resources managed
by the Commission. Those provisions may not be interpreted as
giving rise to any obligations on the Commission's part in
respect of
implementation of EDF resources
managed by the EIB.

the financial

Article 5

1. Unless otherwise specified, references in this Regulation to
the ACP States shall be deemed to refer also to the bodies or
representatives defined in Articles 13 and 14 of Annex IV to the
ACP-AC Agreement, which they may duly mandate to exercise
their responsibilities under that Agreement.

CHAPTER 1

Principle of financial accuracy

Article 7

1. No revenue shall be collected and no expenditure effected
unless booked to an allocation of the EDF.

2. No expenditure may be committed or authorised in excess
of the allocations.

Interest yielded by the funds which are the property of the

3.
EDF shall be entered as EDF revenue.

Article 8

Interest generated by pre-financing payments

shall be
1.
assigned to the programme or
the action concerned and
deducted from the payment of the balance of the amounts due
to the beneficiary.

Interest shall not be due to the Communities in the

2.
following cases:

(a)

(b)

(c)

pre-financing which does not
amount;

represent a significant

pre-financing paid under a procurement contract within the
meaning of Article 91;

advances paid to members of the institutions and to staff in
accordance with the Staff Regulations of officials of the
European Communities and the Conditions of employment
of other servants of the European Communities (the Staff
Regulations);

(d)

pre-financing paid in the framework of joint management
as referred to in Article 20(1)(c).

2. The financial year shall begin on 1 January and end on
31 December.

3. Articles 3, 4 and 4a of Regulation (EC, Euratom) No 2342/
2002 shall apply mutatis mutandis to the implementation of
paragraphs 1 and 2.

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CHAPTER 2

Principle of the unit of account

Article 9

EDF resources shall be drawn up and implemented in euro

1.
and the accounts shall be presented in euro.

However, for the treasury management purposes referred to in
Article 39, the accounting officer may carry out operations in
euro or in other currencies.

2. Articles 7 and 8 of Regulation (EC, Euratom) No 2342/2002
shall apply mutatis mutandis to the implementation of para-
graph 1.

CHAPTER 3

Principle of specification

Article 10

Article 12

In order to improve decision-making, in particular to justify and
specify the determination of the contributions to be paid by
Member States
the following
referred to in Article 57,
evaluations are required:

(a)

(b)

the use of EDF resources shall be preceded by an ex ante
evaluation of the operation to be undertaken;

the operation shall be submitted to an ex post evaluation
with a view to ensuring that the intended results justify the
means deployed.

Article 13

1. The principle of sound financial management required that
EDF resources shall be implemented in compliance with effective
and efficient internal control as appropriate in each management
mode.

EDF resources shall be earmarked for specific purposes according
to the main instruments of cooperation, as described in the
Financial Protocol of the ACP-EC Agreement and in the Overseas
Association Decision.

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

In respect of the ACP States, those instruments are laid down by
the Financial Protocol set out in Annex Ib to the ACP-EC
Agreement. Earmarking of resources shall also be based on the
provisions of the Internal Agreement and shall take account of
support expenditure linked to
the resources
programming and implementation under Article 6 thereof.

reserved for

In respect of the OCTs, those instruments are laid down in
Annex IIA bis to the Overseas Association Decision. Earmarking
of those resources shall also take account of the non-allocated
reserve provided for in Article 3(4) of that Annex and of the
resources reserved for studies or technical assistance measures
under Article 1(1)(c) thereof.

(a)

effectiveness, efficiency and economy of operations;

(b)

reliability of reporting;

(c)

safeguarding of assets and information;

(d)

prevention and detection of fraud and irregularities;

(e)

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

CHAPTER 4

Principle of sound financial management

Article 11

EDF resources

1.
shall be used in accordance with the
principles of sound financial management, namely in accordance
with the principles of economy, efficiency and effectiveness.

2. The principle of economy requires that the resources used
for the pursuit of activities shall be made available in due time, in
appropriate quantity and quality and at the best price.

The principle of efficiency is concerned with the best relationship
between resources employed and results achieved.

CHAPTER 5

Principle of transparency

Article 14

1.
EDF resources shall be established and implemented and the
accounts presented in compliance with the principle of
transparency.

2. The annual estimates of commitments and payments under
Article 7 of the Internal Agreement, together with the EDF
accounts referred to in Article 118 of this Regulation, shall be
published in the Official Journal of the European Union.

The principle of effectiveness is concerned with attaining the
specific objectives set and achieving the intended results.

3.
Specific, measurable, achievable, relevant and timed objec-
tives shall be set. The achievement of those objectives shall be
monitored by performance indicators.

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

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This information shall be made available with due observance of
the requirements of confidentiality, 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 (1) and
Regulation (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 (2) by
the Community institutions and bodies and on the free
movement of such data, and of the requirements of security,
taking into account the specificities of each management mode
referred to in Article 20.

TITLE III

RESOURCES AND MEMBER STATES CONTRIBUTIONS

CHAPTER 1

Composition of EDF resources

Article 15

Article 18

1. All financial actors and any other person involved in the
implementation, management, audit or control of EDF resources
shall be prohibited from taking any action which may bring their
own interests into conflict with those of the Community. Should
a conflict of interests arise, the person in question shall refrain
from such an action 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
life, political or national affinity,
involving family, emotional
shared interest with the
economic interest or any other
beneficiary.

3. Article 34 of Regulation (EC, Euratom) No 2342/2002 shall
apply mutatis mutandis to the implementation of paragraphs 1
and 2.

Article 19

The EDF resources shall consist of the amounts laid down in
Article 1 of the Internal Agreement.

For the purposes of this Title, the term ‘staff’ refers to persons
covered by the Staff Regulations.

Article 16

1. The Commission may manage financial contributions from
Member States and other donor countries on their behalf,
including in both cases their public and parastatal agencies, or
from international organisations to certain projects or pro-
grammes financed by the EDF, in accordance with Article 9(1)
and (2) of Regulation (EC) No 617/2007.

2. The Commission may also manage voluntary financial
contributions from Member States in accordance with Arti-
cle 9(4) and (5) of Regulation (EC) No 617/2007 and any specific
arrangements
laid down in relevant bilateral contribution
agreements.

3. The additional resources as defined in paragraphs 1 and 2
shall be managed according to the same rules as the EDF
resources.

TITLE IV

IMPLEMENTATION OF EDF RESOURCES

CHAPTER 1

General provisions

Article 17

CHAPTER 2

Methods of implementation

S e c t i o n 1

G e n e r a l p r o v i s i o n s

Article 20

in
1. The Commission shall
accordance with the provisions set out in Articles 21 to 29 in
any of the following ways:

implement EDF

resources

(a)

by decentralised management;

(b)

by centralised management;

(c)

by joint management with international organisations.

2. Chapter 2 ‘methods of implementation’ of Part I, Title IV of
Regulation (EC, Euratom) No 2342/2002 shall apply mutatis
mutandis to the implementation the present Chapter.

S e c t i o n 2

D e c e n t r a l i s e d m a n a g e m e n t

Article 21

The Commission may, within its own departments, delegate its
powers to implement EDF resources,
in accordance with the
conditions laid down by this Regulation and by its internal rules
and within the limits set by the Commission in the instrument of
delegation. Those so empowered may act only within the limits
of the powers expressly conferred upon them.

(1) OJ L 281, 23.11.1995, p. 31.
(2) OJ L 8, 12.1.2001, p. 1.

As a general rule, the Commission shall undertake the financial
implementation of EDF resources by one of the following:

(a)

by means of decentralised management with the ACP States
in accordance with the conditions set out in the ACP-EC
Agreement and applying the breakdown of responsibilities
that Agreement and
provided for
Articles 34, 35 and 36 of Annex IV thereto;

in Article 57 of

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(b)

by means of decentralised management with the OCTs in
accordance with the conditions set out in the Overseas
Association Decision and in the measures implementing
that Decision.

Article 22

In the context of decentralised management, the Commis-
1.
sion shall undertake the financial
implementation of EDF
resources in accordance with the detailed rules laid down in
paragraphs 2, 3 and 4. As provided for in the case of centralised
management, the Commission may delegate residual tasks to
bodies referred to in Article 25(2) to (5).

2. The beneficiary ACP States or OCTs shall:

(b)

(c)

(d)

(e)

conduct regular checks to ensure that the actions to be
financed by EDF resources have been implemented
correctly;

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;

an accounting system that enables the correct use of EDF
resources to be verified and the use of funds to be reflected
in the EDF accounts;

an independent external audit exercised by a national
institution for independent external auditing;

in the case of the direct-labour operations referred to in
Article 101(1), adequate provisions for the management
the
and scrutiny of
definition of
imprest
manager and the local accounting officer.

imprest accounts and for

the responsibilities of

the local

local

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

For
the
the purposes of applying the first subparagraph,
Commission shall, in agreement with the beneficiary ACP States
and OCTs, incorporate appropriate provisions in the financing
agreements referred to in Article 70(3).

(a)

(b)

3.
In order to ensure that funds are used in accordance with the
applicable rules and within the limits of powers thereby
conferred upon it, the Commission shall apply clearance-of-
accounts procedures or financial correction mechanisms which
enable it
the ACP-EC
in particular under Article 34(1) of Annex IV
Agreement,
thereto, and under
in
particular under Articles 20 and 32 thereof.

the Overseas Association Decision,

to discharge its obligations under

4.
Partner countries and territories to which implementation
tasks are delegated shall ensure, in conformity with Article 14(3),
adequate annual ex post publication of beneficiaries of funds
deriving from the EDF.

Article 23

The implementation by ACP States and OCTs of operations
financed from EDF resources shall be subject to Commission
scrutiny.

That scrutiny may be exercised by prior approval, by ex post
checks or by a combined procedure,
in accordance with the
provisions of the ACP-EC Agreement, the Overseas Association
Decision and the measures implementing that Decision.

Article 24

Depending on the degree of decentralisation provided for in the
ACP-EC Agreement, the Overseas Association Decision and the
measures implementing that Decision, the Commission shall
strive to encourage the beneficiary ACP States and the OCTs to
adhere, when exercising the powers entrusted to them under the
ACP-EC Agreement and under
the Overseas Association
Decision, to the principle of sound financial management set
out in Article 11, in particular the progressive application of the
following criteria:

(a)

transparent procurement and grant-awarded procedures,
which are non-discriminatory and exclude any conflict of
interests;

S e c t i o n 3

C e n t r a l i s e d m a n a g e m e n t

Article 25

1. Where the Commission implements EDF resources on a
centralised basis, implementation tasks shall be performed either
directly by its departments or indirectly,
in accordance with
paragraphs 2 to 4 of this Article and with Articles 26 to 29.

Indirect implementation, in accordance with paragraphs 2 to 4
of this Article and with Article 27 to 29 also applies in the case
of delegation of residual tasks to bodies referred to in paragraph 3
of this Article in the case of decentralised management.

2. The Commission may not delegate to third parties the
executive powers it enjoys under the ACP-EC Agreement or the
Overseas Association Decision where those powers involve a
large measure of discretion implying political choices. The
implementing tasks delegated shall be clearly defined and fully
supervised as to the use made of them.

The delegation of financial implementation tasks shall comply
with the principle of sound financial management and shall
ensure compliance with the visibility of Community action. No
implementation tasks delegated in this way may give rise to
conflicts of interests.

3. Within the limits laid down in paragraph 2, the Commission
may delegate tasks of public authority, and in particular financial
implementation tasks, to the following:

(a)

the executive agencies established in accordance with
Council Regulation (EC) No 58/2003 (1);

(1) OJ L 11, 16.1.2003, p. 1.

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(b)

national public-sector bodies or bodies governed by private
law with a public-service mission and providing adequate
financial guarantees for the implementation of the tasks
assigned to them.

The Commission may draw on the EDF resources in order to pay
financial compensation to these bodies for the administrative
costs incurred.

The Commission shall inform annually the Council of the cases,
agencies and bodies concerned. It shall provide commensurate
motivation of the use of national agencies.

4.
Implementation of the corresponding EDF resources by an
agency referred to in paragraph 3(a) shall be carried out by the
director of that agency.

5. Where the agencies and bodies referred to in paragraph 3
perform implementation tasks, they shall conduct regular checks
to ensure that the actions to be financed from EDF resources
have been implemented correctly.

Such agencies and bodies shall take appropriate measures to
prevent irregularities and fraud and if necessary bring legal
proceedings to recover funds wrongly paid or incorrectly used.

Article 26

Where the Commission implements EDF resources by indirect
centralised management,
it shall first obtain evidence of the
existence and proper operation within the entities to which it
entrusts implementation of the following:

(a)

(b)

(c)

transparent procurement and grant-awarded procedures
which are non-discriminatory and exclude any conflict of
interest and which are in accordance with Titles V and VII;

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;

an accounting system that enables the correct use of EDF
resources to be verified and the use of funds to be reflected
in the EDF accounts;

(d)

an independent external audit;

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

(e)

(f)

Article 27

1. 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.

2. The European Anti-Fraud Office (OLAF) shall enjoy the same
powers with regard to bodies to which tasks are delegated as it
does with regard to Commission departments. The bodies in
question shall adopt the necessary measures to help OLAF carry
out internal investigations. Any act undertaken by such bodies
for the implementation of EDF resources, and in particular any
decision or any contract concluded by them, must specifically
provide for the same controls as those provided for in Arti-
cle 70(4).

Article 28

The Commission may not entrust measures of implementation
of funds deriving from EDF resources, such as payment and
recovery, to external private-sector entities or bodies except to
those referred to in point (b) of
the first subparagraph of
Article 25(3) 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.

The tasks which may be entrusted by contract to external private-
sector entities or bodies other than those referred to in point (b)
of the first subparagraph of Article 25(3) are technical expertise
tasks and administrative, preparatory or ancillary tasks involving
neither
the use of
discretionary powers of judgment.

the exercise of public authority nor

S e c t i o n 4

J o i n t m a n a g e m e n t w i t h i n t e r n a t i o n a l
o r g a n i s a t i o n s

Article 29

1. Where the Commission implements EDF resources by joint
management, certain implementation tasks shall be delegated to
international organisations in the following cases:

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

adequate annual ex post publication of beneficiaries of funds
deriving from the EDF in conformity with Article 14(3).

(b) wherever the Commission and the international organisa-

tion elaborate a joint project or programme;

The Commission may accept
the audit, accounting,
procurement and grant-awarded systems of the agencies and
bodies referred to in Article 25(3) are equivalent to its own, with
due account for internationally accepted standards.

that

(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.

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

in their accounting, audit,

members of staff entrusted, under his responsibility, to carry out
certain operations necessary for the implementation of EDF
resources and presentation of the accounts.

2. The implementation by international organisations of
operations financed from EDF resources shall be subject to
scrutiny by the Commission. Such scrutiny shall be exercised by
prior approval, by ex post checks or by a combined procedure.

Individual agreements concluded with international organi-
3.
sations
financing shall contain detailed
provisions for the implementation of the tasks entrusted to
such international organisations.

the award of

for

International organisations to which implementation tasks
4.
are delegated shall ensure,
in conformity with Article 14(3),
adequate annual ex post publication of beneficiaries of funds
deriving from the EDF.

CHAPTER 3

Financial actors

Article 30

Article 33

The authorising officer shall be responsible for the following:

(a)

implementing revenue and expenditure in accordance with
the principle of sound financial management;

(b)

ensuring that the requirements of legality and regularity are
complied with.

Article 34

1. To implement expenditure,
the authorising officers by
delegation and by sub-delegation shall make financial commit-
ments and, where appropriate, legal commitments, shall validate
expenditure and authorise payments and shall undertake the
preliminaries for the implementation of EDF resources.

The Commission shall provide each financial actor with the
resources required to perform his duties and a charter describing
in detail his tasks, rights and obligations.

Implementation of revenue shall comprise drawing up
2.
estimates of amounts receivable, establishing entitlements to be
recovered and issuing recovery orders. It shall involve waiving
established entitlements where appropriate.

S e c t i o n 1

P r i n c i p l e o f s e g r e g a t i o n o f d u t i e s

Article 31

The duties of authorising officer and accounting officer shall be
segregated and mutually incompatible.

S e c t i o n 2

A u t h o r i s i n g o f f i c e r

Article 32

In the context of

1.
the financial
operations referred to in Article 2,
perform the duties of authorising officer.

implementation of
the
the Commission shall

2. The Commission shall determine the staff of an appropriate
level to whom it delegates the duties of authorising officer, the
scope of the powers delegated and the possibility for the persons
to whom these powers are delegated to sub-delegate them.

3. The powers of authorising officer shall be delegated or sub-
delegated only to staff.

Article 35

Save in cases where management is centralised or joint with
international organisations, operations relating to the imple-
mentation of programmes or projects shall be carried out by the
national or regional authorising officer, as defined in Article 35
of Annex IV to the ACP-EC Agreement and in the measures
implementing the Overseas Association Decision,
in close
cooperation with the Commission in accordance with Arti-
cles 34, 35 and 36 of Annex IV to the ACP-EC Agreement.

Article 36

1. Where the authorising officer by delegation becomes aware
of problems in carrying out procedures relating to management
of EDF resources, he shall, in conjunction with the national or
regional authorising officer, make all contacts necessary to
remedy the situation and take any steps that are necessary.

In cases where the national or regional authorising officer does
not or is unable to perform the duties incumbent on him under
the ACP-EC Agreement, the authorising officer by delegation
may temporarily take his place, in which case, the Commission
may receive, from the resources allocated to the ACP State in
question, financial compensation for the extra administrative
workload incurred.

4. Authorising officers by delegation or sub-delegation may act
only within the limits set by the instrument of delegation or sub-
delegation. The responsible authorising officer by delegation or
sub-delegation may be assisted in his task by one or more

2. Any measure taken by the authorising officer by delegation
pursuant to paragraph 1 shall be taken in the name of and on
behalf of the national or regional authorising officer concerned.

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Article 37

1. The authorising officer by delegation shall put in place, in
compliance with the minimum standards adopted by the
Commission and having due regard to the risks associated with
the management environment and the nature of the actions
financed, the organisational structure and the internal manage-
ment and control procedures suited to the performance of his
duties, including where appropriate ex post verifications.

2. Before an operation is authorised,
the operational and
financial aspects shall be verified by members of staff other than
the one who initiated the operation. The initiation and the ex ante
and ex post verification of
that operation shall be separate
functions.

S e c t i o n 3

A c c o u n t i n g o f f i c e r

Article 39

1. The Commission shall appoint an accounting officer who
shall be responsible for:

(a)

(b)

proper implementation of payments, collection of revenue
and recovery of amounts established as being receivable;

preparing and presenting the accounts in accordance with
Title VIII;

(c)

keeping the accounts for:

(i)

the allocations referred to in Article 15, except those
for the Investment Facility, and interest rate subsidies;

3. All staff responsible for controlling the management of
financial operations shall have the necessary professional skills.
They shall respect a specific code of professional standards
established by the Commission.

(ii)

the commitments referred to in Article 70;

(iii) payments, revenue and debts;

4. Any member of staff involved in the financial management
and control of transactions who considers that a decision he is
required by his superior to apply or to agree to is irregular or
contrary to the principles of sound financial management or the
professional rules he is required to observe shall
inform the
authorising officer by delegation in writing and, if the latter fails
to take action, the panel referred to in Article 54(3).

In the event of fraud, corruption or any other illegal activity
which may harm the interests of the Community, he shall inform
the authorities and bodies designated by the applicable
legislation.

Article 38

report

The authorising officer by delegation shall
to the
Commission on the performance of his duties in the form of
an annual activity report together with financial and manage-
ment information confirming that the information contained in
the report presents a true and fair view except as otherwise
specified in any reservations related to the defined areas of
revenue and expenditure.

That report shall
the operations by
indicate the results of
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 provided. No later than 15 June each
year, the Commission shall send to the European Parliament and
the Council a summary of the annual activity report for the
previous year.

(d)

(e)

laying down, in accordance with Title VIII, the accounting
rules and methods and the chart of accounts;

laying down and validating the accounting systems and
where appropriate validating systems laid down by the
authorising officer by delegation to supply or
justify
accounting information;

(f)

treasury management.

The accounting officer shall be empowered to verify the respect
of criteria for the validating referred to in point (e) of the first
subparagraph.

2. The accounting officer shall obtain from the authorising
officer by delegation and from the EIB, who shall, each for their
own part, guarantee its reliability, all the information necessary
for the production of accounts giving a true image of
the
financial implementation of EDF resources.

Article 40

1. Before the adoption of the accounts by the Commission, 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 EDF.

For that purpose the accounting officer shall satisfy himself that:

(a)

the accounts have been prepared in accordance with the
accounting rules, methods and accounting systems estab-
lished under his
laid down in this
responsibility as
Regulation for the EDF accounts;

(b)

all revenue and expenditure is entered in the accounts.

The authorising officer by delegation shall forward all informa-
tion that the accounting officer needs in order to fulfil his duties.

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The authorising officer shall remain fully responsible for the
proper use of the funds he/she manages as well as the legality
and regularity of the expenditure under his control.

Article 41

The accounting officer shall be empowered to check the
information received as well as to carry out any further checks
he deems necessary in order to sign off the accounts. The
accounting officer shall make reservations, if necessary, explain-
ing exactly the nature and scope of such reservations.

Article 42

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.

Article 43

Save as otherwise provided in this Regulation, only the
accounting officer may,
in the performance of his duties,
delegate certain tasks to subordinate staff.

The instrument of delegation shall lay down the tasks entrusted
to the delegates.

S e c t i o n 4

P a y i n g a g e n t

Article 44

1.
In order to make the payments provided for in Article 37(1)
and (4) of Annex IV to the ACP-EC Agreement or in the
measures implementing the Overseas Association Decision, the
accounting officer shall open accounts, where appropriate, with
financial
for
payments in the national currencies of the ACP States or in the
local currencies of the OCTs, and with financial institutions in
the Member States, for payments in euro and other currencies.

institutions in the ACP States and the OCTs,

2. These financial
institutions, which act as paying agents,
execute payments on the instructions of the accounting officer.

3.
In accordance with Article 37(2) of Annex IV to the ACP-EC
Agreement, deposits in accounts with financial institutions in the
ACP States and the OCTs shall bear no interest and the latter shall
receive no remuneration for their services.

In accordance with Article 1(6) of
the Internal Agreement,
deposits in accounts with financial institutions in the Member
States shall bear interest. Such interest shall be credited to the
one of the accounts provided for in that Article.

Article 45

The relations between the Commission and the paying agents
provided for in Article 37 of Annex IV to the ACP-EC Agreement
or in the measures implementing the Overseas Association
Decision shall be the subject of contracts. Once signed, copies of
those contracts shall be sent to the Court of Auditors for
information purposes.

Article 46

1. The Commission shall transfer from the special accounts
opened pursuant
the amounts needed to
replenish the accounts opened in its name in accordance with
Article 44. Such transfers shall be made on the basis of the cash
needs of the projects and programmes.

to Article 59(3)

2. The Commission shall endeavour to make any withdrawals
from the special accounts referred to in the first subparagraph of
Article 59(3) in such a way as to maintain a distribution of its
assets in those accounts corresponding to the proportions in
which the various Member States contribute to the EDF.

Article 47

The signatures of the Commission staff who are empowered to
carry out operations on the EDF's accounts shall be lodged with
the banks concerned when the accounts are opened or, in the
case of staff who are authorised subsequently, when they are
designated.

S e c t i o n 5

P a y i n g m a n a g e r

Article 48

1.
In order to make the payments provided for in Article 44,
the accounting officer shall appoint a paying manager to execute
local payments through the paying agent account.

2.
Paying managers shall be chosen from officials or, should
the need arise and only in duly substantiated cases, from other
members of staff.

Article 49

1. The appointment of the paying manager shall be the subject
of a decision by the accounting officer, on a duly substantiated
proposal from the authorising officer responsible. That decision
shall set out the respective responsibilities and obligations of the
paying manager and the authorising officer.

It shall specify at least:

(a)

(b)

(c)

the frequency with which supporting documents are to be
produced and the procedure for producing them;

the procedure to be followed for replenishing the paying
agent account;

the period of validity of the authorisation given to the
paying manager by the accounting officer;

(d)

the identity of the appointed paying manager.

The amendment of
the decision referred to in the first
subparagraph shall also be the subject of a decision by the
accounting officer on a duly substantiated proposal from the
authorising officer responsible.

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2. The paying manager may, after the instruction from the
accounting officer, execute duly authorised payments to third
parties within the limits of the positive residual balance of the
paying agent account at the bank.

In the event of fraud, corruption or any other illegal activity
which may harm the interests of the Community, the matter shall
be submitted to the competent authorities or bodies.

Article 50

S e c t i o n 2

Replenishment of local bank accounts

R u l e s a p p l i c a b l e t o a u t h o r i s i n g o f f i c e r s

The accounting officer shall replenish paying agent accounts and
shall monitor those accounts as regards the opening of bank
accounts, the delegation of signatures and the controls on the
spot and in the centralised accounts.

Article 53

The obligation for the authorising officer to pay compensation as
referred to in Article 52(2) shall apply in particular if:

Paying agent accounts may be endowed directly by miscellaneous
local revenue that arise from:

(a)

(a) miscellaneous repayments;

(b)

recovery orders.

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;

CHAPTER 4

Liability of the financial actors

S e c t i o n 1

G e n e r a l r u l e s

Article 51

1. Without prejudice to any disciplinary action, the authorising
officers by delegation and by sub-delegation may at any time
have their delegation or sub-delegation withdrawn temporarily or
definitively by the authority which appointed them.

2. Without prejudice to any disciplinary action, the accounting
officer may at any time be suspended temporarily or definitively
from his duties by the Commission.

3. Without prejudice to any disciplinary action, the paying
managers may at any time be suspended temporarily or
definitively from their duties by the authority which appointed
them.

Article 52

1. The provisions of this Chapter are without prejudice to any
liability under criminal law which the financial actors referred to
in Article 51 may incur as provided in the applicable national
law and in the provisions in force on the protection of the
financial interests of the Communities and on the fight against
corruption involving staff or officials of Member States.

2.
Each authorising officer, accounting officer or paying
manager shall be liable to disciplinary action and payment of
compensation as laid down in the Staff Regulations, without
prejudice to Articles 53 to 56 of this Regulation.

(b)

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 Commission liable to
civil action by third parties.

Article 54

1. Where an authorising officer by delegation or by sub-
delegation considers that a decision which it is his responsibility
to take is irregular or contrary to the principles of sound
financial management, he shall inform the delegating authority
in writing. If the delegating authority then gives a reasoned
instruction in writing to the authorising officer by delegation or
by sub-delegation to take the decision in question, the latter may
not be held liable.

2.
the
In the event of sub-delegation within his services,
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 sub-delegation.

3. The specialised financial irregularities panel set up by the
Commission pursuant to Regulation (EC, Euratom) No 1605/
2002 shall have competence to determine, in relation to the EDF,
whether a financial
the
consequences, if any, should be. In respect of the management of
EDF resources by the Commission, cases shall be referred to that
panel as provided for in Article 75 of Regulation (EC, Euratom)
No 2342/2002.

irregularity has occurred and what

On the basis of the panel's opinion, the Commission shall decide
whether to initiate proceedings entailing liability to disciplinary
action or to payment of compensation. If the panel detects
systemic problems, it shall send a report with recommendations
to the authorising officer by delegation, provided the latter is not
the person involved, as well as to the internal auditor.

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S e c t i o n 3

— the annual amount of the contribution for the year n + 1;

R u l e s a p p l i c a b l e t o a c c o u n t i n g o f f i c e r s a n d
p a y i n g m a n a g e r s

— the amount of the first instalment of the contribution for

the year n + 1.

Article 55

An accounting officer shall be liable to disciplinary action and
payment of compensation, as laid down and in accordance with
the procedures in the Staff Regulations. He may in particular
the following forms of
render himself
misconduct:

liable by any of

(a)

he loses or damages monies, assets and documents in his
keeping;

(b)

he wrongly alters bank accounts or postal giro accounts;

(c)

he recovers or pays amounts which are not in conformity
with the corresponding recovery or payment orders;

(d)

he fails to collect revenue due.

Article 56

A paying manager shall be liable to disciplinary action and
payment of compensation, as laid down and in accordance with
the procedures in the Staff Regulations. He may in particular
render himself
the following forms of
misconduct:

liable by any of

The Council shall decide on this proposal by 15 November of the
year n.

the
The Member States shall pay the first
contribution for the year n + 1 at the latest by 21 January of
the year n + 1.

instalment of

3. The Commission shall present a proposal by 15 June of the
year n + 1, containing:

— the amount of the second instalment of the contribution

for the year n + 1;

— a revised annual amount of the contribution for the year
n + 1 in line with actual needs, in case where, in accordance
with Article 7(3) of the Internal Agreement, the annual
amount deviate from actual needs.

The Council shall decide on the proposal at the latest 21 calendar
its
days following the presentation by the Commission of
proposal.

he loses or damages monies, assets and documents in his
keeping;

Member States shall pay the second instalment at the latest 21
calendar days following the date on which the Council decision
was notified to them.

he cannot provide proper supporting documents for the
payments he/she has made;

(c)

he makes payments to persons other than those entitled;

(d)

he fails to collect revenue due.

CHAPTER 5

Revenue operations

S e c t i o n 1

the Investment Facility,

4. By 15 June of the year n + 1, the Commission, taking into
account the EIB's forecasts concerning the management and
operation of
including interest rates
subsidies, shall establish and communicate to the Council a
statement of
the commitments, payments and the annual
amount of the calls for contributions made in the year n and
to be made in the year n + 1 and n + 2. These amounts for the
years n + 1 and n + 2 shall be based on the capacity to deliver
effectively the proposed level of resources.

5. The Commission shall present a proposal by 10 October of
the year n + 1, containing:

M a k i n g a v a i l a b l e o f E D F r e s o u r c e s

— the third instalment of the annual contribution for the year

Article 57

n + 1;

1.
In accordance with Article 7 of the Internal Agreement, the
ceiling for the annual amount of the contributions for the year
n + 2 and the annual amount of the contribution for the year
n + 1 shall be determined according to the procedure set out in
the paragraphs 2 to 7. The annual contributions shall be paid in
three instalments. These shall be determined according to the
procedure set out in the paragraphs 2 to 7.

2. The Commission shall present a proposal by 15 October of
the year n, containing:

— a revised annual amount of the contribution for the year
n + 1 in line with actual needs, in case where in accordance
with Article 7(3) of the Internal Agreement the annual
amount deviate from actual needs.

The Council shall decide on the proposal at the latest 21 calendar
its
days following the presentation by the Commission of
proposal.

— the ceiling for the annual amount of the contribution for

the year n + 2;

Member States shall pay the third instalment at the latest 21
calendar days following the date on which the Council decision
was notified to them.

(a)

(b)

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6. The sum of the instalments relating to a certain year cannot
exceed the annual amount of the contribution determined for
that year. The annual amount of the contribution cannot exceed
the ceiling determined for that year. The ceiling cannot be
increased except in accordance with Article 7(4) of the Internal
Agreement. A possible increase of the ceiling shall be made part
of the proposals referred to under paragraphs 2 to 5 above.

2. The interest for unpaid amounts shall be charged at a rate of
two percentage points above the interest rate applied by the
European Central Bank to its main refinancing operations on the
first working day of the month in which the amount falls due, as
published in the C series of the Official Journal of the European
Union. That rate shall be increased by a quarter of a percentage
point for each month of delay.

7. The ceiling for the annual amount of the contribution for
the year n + 2, the annual amount of the contribution for the
year n + 1 and the instalments of the contributions shall specify,
in accordance with Articles 1 to 5:

(a)

the amount managed by the Commission and

(b)

the amount managed by the EIB, including interest rates
subsidies.

Article 58

1. The instalments to be paid by each Member State and
referred to in Article 57 shall be set in such a way as to be in
proportion to that State's contributions to the EDF as fixed in
Article 1(2) of the Internal Agreement.

2. Calls for contributions shall first use up the amounts laid
down for previous EDFs, one after the other.

The interest shall be payable for the entire period of delay and
shall be calculated from the first calendar day following the
deadline for payment of the concerned instalment.

3.
In respect of the amount due to the Commission under
Article 57(7)(a), late payment interest shall be credited to one of
the Internal
the accounts provided for
Agreement.

in Article 1(6) of

In respect of the amount due to the EIB under Article 57(7)(b),
late payment interest shall be credited to the Investment Facility.

Article 61

Upon expiry of the financial protocol set out in Annex Ib to the
ACP-EC Agreement, that part of the contributions which the
Member States remain obliged to pay in accordance with
Article 57 shall be called up by the Commission, as required, in
accordance with the conditions laid down in this Regulation.

S e c t i o n 2

Article 59

E s t i m a t e s o f a m o u n t s r e c e i v a b l e

1. The financial contributions of the Member States shall be
expressed in euro.

Article 62

Each Member State shall pay the amount of its contribution

2.
in euro.

3.
In respect of the amount due to the Commission under
Article 57(7)(a), financial contributions shall be credited by each
Member State to a special account entitled ‘Commission of the
European Communities — European Development Fund’ opened
with the bank of issue of that Member State or the financial
institution designated by it. The amount of such contributions
the payments
shall remain in those special accounts until
provided for in Article 37 of Annex IV to the ACP-EC Agreement
or in the measures implementing the Overseas Association
Decision need to be made.

In respect of the amount due to the EIB under Article 57(7)(b),
financial contributions shall be credited by each Member State, in
accordance with Article 146.

1. An estimate of the amount receivable shall first be made by
the authorising officer responsible in respect of any measure or
situation which may give rise to or modify an amount owing to
the EDF.

2. By way of derogation from paragraph 1, no estimate of the
amount receivable shall be made before Member States make
available to the Commission the amounts of their contributions
to the EDF, as defined in Articles 57 and 58. The authorising
officer responsible shall issue a recovery order in respect of these
amounts.

3. Article 77 of Regulation (EC, Euratom) No 2342/2002 shall
apply mutatis mutandis to the implementation of paragraph 1.

S e c t i o n 3

E s t a b l i s h m e n t o f a m o u n t s r e c e i v a b l e

Article 63

Where necessary, the Commission shall provide appropriate
technical assistance in the implementation of
the Council
decisions referred to in Article 57.

Establishment of an amount receivable is the act by which

1.
the authorising officer by delegation or sub-delegation:

Article 60

(a)

verifies that the debt exists;

1. Where an instalment of contributions payable under this
Article is not paid by the concerned deadline fixed by
paragraphs 2 to 5 of Article 57, the Member State concerned
shall be required to pay interest in respect of the unpaid amount.

(b)

determines or verifies the reality and the amount of the
debt;

(c)

verifies the conditions in which the debt is due.

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2. The EDF resources made available to the Commission and
any amount receivable that is identified as being certain, of a
fixed amount and due shall be established by a recovery order to
the accounting officer followed by a debit note sent to the debtor,
both drawn up by the authorising officer responsible.

authorising officer may delegate the decision only in accordance
with Regulation (EC, Euratom) No 2342/2002.

5. The authorising officer may cancel or adjust an established
amount receivable.

3. Amounts wrongly paid shall be recovered.

4. Article 86 of Regulation (EC, Euratom) No 2342/2002 shall
apply mutatis mutandis as regards the conditions in which interest
on late payment is due to the EDF.

S e c t i o n 4

A u t h o r i s a t i o n o f r e c o v e r y

Article 64

1. The authorisation of recovery is the act whereby the
authorising officer by delegation or sub-delegation responsible
instructs the accounting officer, by issuing a recovery order, to
recover an amount receivable which he has established.

2. Without prejudice to the responsibilities of the ACP States or
the OCTs, the Commission may formally establish an amount as
being receivable from persons other than States by means of a
decision which shall be enforceable under the same conditions as
laid down in Article 256 of the Treaty.

3. Articles 81 and 84 of Regulation (EC, Euratom) No 2342/
2002 shall apply mutatis mutandis to the implementation of
paragraphs 1 and 2.

S e c t i o n 5

R e c o v e r y

Article 65

1. The accounting officer shall act on recovery orders for
amounts receivable duly established by the authorising officer
responsible. He shall exercise due diligence to ensure that the
EDF receives its revenue and shall ensure that its rights are
safeguarded.

2. The accounting officer shall recover amounts by offsetting
them against equivalent claims that the EDF or the Community
have on any debtor who himself has a claim on the EDF or the
Community that is certain, of a fixed amount and due.

3. As regards the direct
labour and indirect decentralised
operations referred to in Title VI, where claims from the EDF on
the National Authorising Officer are not recovered within the
prescribed time-limits, the authorising officer responsible shall
take all the necessary measures to obtain actual repayment of the
sums due, including, where appropriate, suspension of the use of
that type of arrangement for that State or OCTs.

4. Where the authorising officer by delegation 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 principles of sound financial management and
proportionality. The waiver decision shall be substantiated. The

6.
Entitlements of the EDF in respect of third parties and
entitlements of third parties in respect of the EDF shall be subject
to a limitation period of five years.

7. Articles 82 to 85 and 87 to 89 of Regulation (EC, Euratom)
No 2342/2002 shall apply mutatis mutandis to the implementa-
tion of paragraphs 1 to 6.

CHAPTER 6

Expenditure operations

S e c t i o n 1

G e n e r a l p r o v i s i o n s

Article 66

Every item of expenditure shall be committed, validated,
authorised and paid.

S e c t i o n 2

C o m m i t m e n t o f e x p e n d i t u r e

Article 67

The commitment of expenditure shall be preceded by a financing
decision adopted by the Commission or by the authorities to
which the Commission has delegated powers.

Article 68

1. The financial commitment by the Commission is the
operation reserving the funds necessary to cover subsequent
payments to honour a legal commitment.

2. The legal commitment by the Commission is the act
whereby the authorising officer
responsible enters into or
establishes an obligation with regard to third parties which
results in a charge to the EDF.

3. The financial commitment and the legal commitment shall
be adopted by the same authorising officer. That rule may be
waived in the following cases:

(a)

administrative expenditure incurred by the Commission
within the meaning of Article 69(3) in respect of which the
financial commitments have been divided in accordance
with Article 69(2);

(b)

global commitments
under Article 70(3).

relating to financing agreements

Article 69

1. The Commission's financial commitment is individual when
the beneficiary and the amount of the expenditure are known.

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The Commission's financial commitment is global when at least
one of
the elements necessary to identify the individual
commitment is still not known.

2.
Financial commitments for administrative expenditure of
the Commission may be divided over several years into annual
instalments. The corresponding legal commitments shall provide
for that division.

3. The following shall be regarded as administrative expendi-
ture for the purposes of point (a) of the third paragraph of
Article 68 and paragraph 2 of this Article:

(a)

expenditure on human resources other than regular staff;

(b)

training expenditure;

(c) mission expenses;

(d)

representation expenses;

(e) meeting expenses;

(f)

expenses relating to freelance interpreters and/or transla-
tors;

natural or legal persons responsible for carrying out the
actions.

4.
Each financing agreement, contract or grant agreement shall
provide expressly for the Commission, OLAF and the Court of
Auditors, to exercise their powers of control, on documents and
on the spot, over all contractors and subcontractors who have
received financing from EDF resources.

Article 71

When adopting a financial commitment, the authorising officer
responsible shall ensure that the following:

(a)

the expenditure has been charged to the correct accounting
item;

(b)

the funds are available;

(c)

in accordance with the relevant
the expenditure is
provisions,
in particular of the ACP-EC Agreement, the
Overseas Association Decision, the Internal Agreement, this
Regulation, and all acts adopted in implementation of those
provisions;

(g)

expenses relating to exchanges of officials;

(d)

the principle of sound financial management is complied
with.

(h)

cost of
property;

recurring rentals of movable and immovable

Article 72

(i)

(j)

cost of miscellaneous insurance;

cost of cleaning and maintenance;

(k)

costs related to the use of telecommunications services;

(l)

cost of water, gas and electricity;

(m) outlay for periodical publications.

Article 70

1. The authorising officer responsible shall make a financial
commitment before entering into a legal commitment, binding
upon the Commission, with third parties.

Financing decisions taken by the Commission, in accordance
2.
with the ACP-EC Agreement or
the Overseas Association
Decision, which authorise it to grant financial aid from the
EDF, shall give rise to financial commitments by the Commis-
sion.

3. The following shall constitute legal commitments by the
Commission:

(a)

a financing agreement between the Commission, acting on
behalf of the Community, and the beneficiary ACP States or
the beneficiary OCTs or the bodies they have designated;

(b)

a contract or grant agreement between the Commission
international public-sector bodies or
and national or

When registering a legal commitment, the authorising officer
shall ensure the following:

(a)

(b)

the commitment is covered by the corresponding financial
commitment;

the expenditure is regular and in accordance with the
relevant provisions, in particular of the ACP-EC Agreement,
the Overseas Association Decision, the Internal Agreement,
this Regulation, and all acts adopted in implementation of
those provisions;

(c)

the principle of sound financial management is respected.

S e c t i o n 3

C o m m i t m e n t o f e x p e n d i t u r e u n d e r
c e n t r a l i s e d o r j o i n t m a n a g e m e n t

Article 73

Where EDF resources are managed by the Commission on a
centralised basis or jointly, the commitment of expenditure shall
be subject to the provisions of this Section.

Article 74

1.
Legal commitments relating to individual financial commit-
ments shall be concluded by the Commission by 31 December of
year N at
the latest, year N being the year in which the
Commission's individual financial commitment was adopted,
subject to Article 68(3).

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2. As a general rule, global financial commitments shall cover
the total cost of the corresponding individual legal commitments
concluded by the Commission up to 31 December of year N + 1,
year N being the year in which the Commission's global financial
commitment was adopted, subject to Article 68(3).

S e c t i o n 4

C o m m i t m e n t o f e x p e n d i t u r e u n d e r
d e c e n t r a l i s e d m a n a g e m e n t

However, where the global commitments referred to in Arti-
cle 70(3)(a) are implemented, the Commission shall conclude the
corresponding individual contracts and agreements 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. Riders to contracts already
concluded may also be concluded later.

At the end of the periods referred to in paragraph 1 and the first
and second subparagraphs of this paragraph, the authorising
officer responsible shall decommit the unused balance of those
financial commitments.

Article 75

Article 77

Where EDF resources are managed on a decentralised basis, the
commitment of expenditure by the Commission shall be subject
to the provisions of this Section.

Article 78

1.
Financing agreements with the beneficiary ACP States or
OCTs shall be concluded by 31 December of year N + 1 at the
latest, N being the year in which the Commission's global
financial commitment was adopted.

Where financing agreements are not concluded by the deadline
corresponding
laid down in the
appropriations shall be cancelled.

subparagraph,

first

the

1. The amount of each individual legal commitment adopted
by the Commission following a global commitment shall, prior
to signature, be registered by the authorising officer responsible
in the EDF accounts and booked to the global
financial
commitment.

2. The Commission shall be under an obligation to effect
payment from EDF resources whenever the authorising officer
responsible endorses contracts, grant agreements and pro-
gramme estimates, as provided for in Article 101(3).

2. The legal commitments entered into for actions extending
over more than one financial year and the corresponding
financial commitments shall have a final date for implementation
sound financial
set
management, save in the case of the administrative expenditure
referred to in Article 69(3).

in accordance with the principle of

Any parts of such commitments which have not been executed
six months after
that date shall be decommitted and the
corresponding appropriations cancelled.

The amount of a financial commitment corresponding to a legal
commitment for which no payment has been made in a period
of three years following the signing of the legal commitment
shall be decommitted and the corresponding appropriations
cancelled.

3.
Paragraph 2 shall apply without prejudice to the decisions
that the Council may adopt under Articles 96 and 97 of theœ
ACP-EC Agreement.

Article 76

The termination of a project and the decommitment of the funds
committed in accordance with Articles 73, 74 and 75 shall be
carried out when the legal commitments entered into by the
Commission in connection with that project with respect to third
parties are concluded and the related payments and collections
have been recorded in the EDF accounts.

The authorising officer responsible shall register in the EDF
accounts, prior to signature for endorsement, the amount of each
individual
endorsed
following a global commitment. He shall book this amount to
the global financial commitment.

commitment which he/she has

legal

3.
Paragraph 1 shall apply without prejudice to the decisions
that the Council may adopt under Articles 96 and 97 of the
ACP-EC Agreement.

Article 79

In accordance with the principle of sound financial management
referred to in Article 11 and acting within its powers, the
Commission shall endeavour to ensure that:

(a)

(b)

the legal commitments implementing the financing agree-
ments referred to in Article 78(1) are concluded no later
than three years following the date of conclusion of the
Individual contracts
corresponding financing agreement.
and agreements relating to audit and evaluation, and riders
to contracts already concluded, may be concluded later;

financing commitment
the amount of an individual
corresponding to a legal commitment
implementing a
financing agreement referred to in Article 78(1) and for
which no payment has been made in a period of three years
following the signing of the legal commitment shall be
decommitted.

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At the end of any deadline fixed in the financing agreements for
conclusion of the legal commitments referred to in point (a) of
the first subparagraph, the authorising officer responsible shall
decommit the unused balance of the corresponding financial
commitments.

2. 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.

Legal commitments as referred to in point (b) of
the first
subparagraph shall be contracts, grant agreements or programme
estimates concluded by the ACP State or OCTs or its authorities
or contracts and grant agreements concluded by the Commission
acting in their name and on their behalf. For the purposes of
application of
in
agreement with the beneficiary ACP States and OCTs, incorpo-
rate relevant provisions in the financing agreements referred to in
Article 78(1).

the Commission shall,

this subparagraph,

3. Articles 102 and 103 of Regulation (EC, Euratom) No 2342/
2002 shall apply mutatis mutandis to the implementation of this
Article.

S e c t i o n 7

P a y m e n t o f e x p e n d i t u r e

Article 83

Article 80

1.
Payment shall be made on production of proof that the
relevant action is in accordance with the basic act or the contract.
Payment shall cover one or more of the following operations:

The termination of a project and the decommitment of the funds
committed in accordance with Articles 78 and 79 shall be
carried out by the ACP State or OCTs or its authorities, and/or by
the Commission acting in their name and on their behalf in
connection with that project with respect to third parties, after
conclusion of the legal commitments entered into and after the
related payments and collections have been recorded in the EDF
accounts.

S e c t i o n 5

Va l i d a t i o n o f e x p e n d i t u r e

Article 81

(a)

payment of the entire amount due;

(b)

payment of the amounts due in any of the following ways:

(i)

pre-financing, which may be divided into a number of
payments;

(ii)

one or more interim payments;

(iii) payment of the balance of the amounts due.

1. Validation of expenditure is the act whereby the authorising
officer responsible:

2. A distinction shall be made in the accounts between the
different types of payment referred to in paragraph 1 at the time
they are made.

(a)

verifies the existence of the creditor's entitlement;

3. Articles 104 and 105 of Regulation (EC, Euratom) No 2342/
2002 shall apply mutatis mutandis.

(b)

determines or verifies the reality and the amount of the
claim;

Article 84

(c)

verifies the conditions in which payment is due.

2. Articles 97 to 101 of Regulation (EC, Euratom) No 2342/
to the validation of
2002 shall apply mutatis mutandis
expenditure.

S e c t i o n 6

A u t h o r i s a t i o n o f e x p e n d i t u r e

Article 82

The accounting officer shall make the payment of expenditure
within the limits of the funds available.

Article 85

Payments shall be effected through the bank accounts referred to
in Article 44. The detailed rules for opening, administering and
using such accounts shall be determined by the accounting
officer.

Those rules shall in particular require the joint signatures on
transfer orders and all bank payments of two members of staff
duly authorised by the accounting officer.

1. Authorisation of expenditure is
the act whereby the
authorising officer responsible, having verified that the funds
are available and by issuing a payment order,
instructs the
accounting officer to pay an amount of expenditure which he has
validated.

Article 86

For payments made by the paying manager, the authorising
officer responsible shall ensure that checks are carried out before
their execution.

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S e c t i o n 8

in implementing policies, programmes and actions by
reference to the risks associated with them;

T i m e l i m i t s f o r e x p e n d i t u r e o p e r a t i o n s

Article 87

1. The validation, authorisation and payment of expenditure
shall be completed within a period of no more than 90 days
from the date on which payment is due. The national or regional
authorising officer shall authorise the expenditure and notify the
Commission's authorising officer responsible accordingly no
later than 45 days before that time limit expires.

2. Creditors paid late are entitled to receive default interest in
accordance with Article 106 of Regulation (EC, Euratom)
No 2342/2002.

3. Claims for delayed payments for which the Commission is
responsible in accordance with Article 37 of Annex IV to the
ACP-EC Agreement shall be borne by the Commission from the
account or accounts provided for in Article 1(6) of the Internal
Agreement.

CHAPTER 7

IT systems

Article 88

1. Where revenue and expenditure operations are managed by
means of computer systems, documents may be signed by a
computerised or electronic procedure.

2. Articles 107 and 108 of Regulation (EC, Euratom) No 2342/
2002 shall apply mutatis mutandis to the implementation of this
Article.

CHAPTER 8

Internal auditor

Article 89

The internal auditor of the EDF shall be the internal auditor of
the Commission. He shall perform his duties in accordance with
the relevant international standards. He shall be answerable to
the Commission for verifying the proper operation of systems
and procedures for implementing EDF resources managed by the
Commission under Article 2. The internal auditor may not be
either authorising officer or accounting officer.

Article 90

1. The internal auditor shall advise the Commission on dealing
with risks, by issuing independent opinions on the quality of
management and control systems and by issuing recommenda-
tions
implementation of
operations and promoting sound financial management.

improving the conditions of

for

He shall be responsible in particular for the following:

(b)

assessing the efficiency and effectiveness of the internal
control and audit systems applicable to every operation for
the implementation of EDF resources.

2. The internal auditor shall enjoy full and unlimited access to
all the information required to perform his duties, if necessary on
the spot, including in the Member States and in third countries.

3. The internal auditor shall report to the Commission on his
findings and recommendations. The Commission shall ensure
that action is taken on recommendations resulting from audits.
The internal auditor shall also submit to the Commission an
annual internal audit report indicating the number and type of
audits carried out, the recommendations made and the action
taken on those recommendations.

4.
Each year the Commission shall forward a report to the
discharge authority summarising the number and type of
internal audits carried out, the recommendations made and the
action taken on those recommendations.

5. Articles 109 to 115 of Regulation (EC, Euratom) No 2342/
2002 shall apply mutatis mutandis to the implementation of this
Article.

TITLE V

PROCUREMENT

CHAPTER 1

General provisions

S e c t i o n 1

S c o p e a n d a w a r d p r i n c i p l e s

Article 91

are

Public

contracts

contracts

1.
for pecuniary interest
concluded in writing between one or more economic operators
and one or more contracting authorities within the meaning of
Article 92 in order to obtain, against payment of a price paid in
whole or in part from EDF resources, the supply of movable or
immovable assets, the execution of works or the provision of
services.

Those contracts comprise:

(a)

supply contracts;

(b) works contracts;

(a)

internal
assessing the suitability and effectiveness of
management systems and the performance of departments

(c)

service contracts.

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Framework contracts are contracts concluded between one
2.
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.

Article 92

1. The following shall be contracting authorities for
purposes of this Title:

the

(a)

(b)

(c)

(d)

the beneficiary ACP States or bodies duly mandated by
them in so included official regional bodies, or their
representatives;

the Commission, in the case of contracts awarded on its
own account;

the Commission, on behalf of and for the account of one or
more beneficiary ACP States;

a national or international public sector body or natural or
legal persons who have signed a financing agreement or
grant agreement with one or more ACP countries or with
the Commission for the implementation of a programme
or project.

2. The procurement procedures shall be laid down in the
financing agreements referred to in Article 70(3).

S e c t i o n 2

P u b l i c a t i o n

Article 93

Within the limits of the powers conferred on it by the ACP-EC
Agreement and in accordance with the conditions laid down in
Annex IV thereto, the Commission shall take the necessary steps
to have international tendering procedures published in the
Official Journal of the European Union and on the Internet.

CHAPTER 2

Procurement procedures

Article 94

1. The conditions for participation and the procedures for the
award of contracts relating to operations financed by the EDF to
assist ACP States shall be those defined in Annex IV to the ACP-
EC Agreement.

The procedures for the award of contracts relating to operations
financed by the EDF to assist OCTs shall be defined in the
measures implementing the Overseas Association Decision.

2. Where the Commission acts as contracting authority for the
implementation of humanitarian aid or emergency aid within the
framework of the ACP-EC Agreement or the Overseas Associa-
tion Decision, it shall be required to comply with the relevant
Community rules on procurement.

Article 95

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.

Article 96

1. Candidates or tenderers shall be excluded from participation
in procurement procedures if:

(a)

(b)

(c)

(d)

(e)

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

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

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

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

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

(f)

they are currently subject to an administrative penalty
referred to in Article 99.

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 bankruptcy,
through an arrangement with creditors, or through a similar
procedure under national law.

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.

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

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

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(b) where

subcontracting is

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

certify that

envisaged,

3. Article 133 of Regulation (EC, Euratom) No 2342/2002
shall apply mutatis mutandis to the implementation of this Article.

Article 97

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

(a)

are subject to a conflict of interest;

(b)

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

(c)

find themselves in one of
the situations of exclusion,
referred to in Article 96(1), for this procurement procedure.

Article 98

Within the limits of the powers conferred on it by the ACP-EC
Agreement the Commission shall take steps to use the central
database set up pursuant to Regulation (EC, Euratom) No 1605/
2002 and containing details of candidates and tenderers who are,
according to the rules defined in Annex IV to the ACP-EC
Agreement, in a situation that excludes them from participation
in procedures for the award of contracts relating to operations
financed by the EDF.

Article 99

Subject

to Annex IV to the ACP-EC Agreement,

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

(a)

(b)

candidates or tenderers in the cases referred to in Arti-
cle 97(b);

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

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

2. The penalties referred to in paragraph 1 shall be propor-
tionate to the importance of the contract and the seriousness of
the misconduct, and may consist in:

(a)

(b)

the exclusion of the candidate or tenderer or contractor
concerned from the contracts and grants financed by the
EDF, 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.

3. Article 134b of Regulation (EC, Euratom) No 2342/2002
shall apply mutatis mutandis to contracts financed from EDF
resources.

TITLE VI

DIRECT LABOUR AND INDIRECT DECENTRALISED
OPERATIONS

Article 100

This Title shall govern the direct labour and indirect decentralised
operations provided for in Article 24 of Annex IV to the ACP-EC
Agreement. It shall apply mutatis mutandis to financial cooper-
ation with the OCTs.

Article 101

In the case of direct

1.
labour operations, projects and
programmes shall be implemented directly through public
departments of the ACP States concerned.

The Community shall contribute to the costs of
those
departments by providing the equipment and/or materials that
they lack and/or the resources to acquire any additional staff
required, such as experts from within the ACP States concerned
or other ACP States. The Community's participation shall cover
only costs incurred by supplementary measures and temporary
expenditure relating to execution that are strictly confined to the
requirements of the project in question.

The financial management of a project implemented by direct
labour in accordance with the first and second subparagraphs
shall be carried out by local imprest accounts administered by a
local imprest manager and a local accounting officer, appointed
by the national or regional authorising officer with the prior
approval of the Commission's authorising officer responsible.

In the case of

indirect decentralised operations,

2.
the
contracting authority within the meaning of Article 92(1)(a)
shall entrust tasks relating to the implementation of projects or
programmes to bodies governed by public laws of the ACP States
concerned or bodies governed by private law that are legally
distinct from the ACP States concerned.

In such cases, the body concerned shall assume responsibility for
the management and implementation of the programme or
project in place of the national or regional authorising officer.
Tasks so delegated may include the power to conclude contracts
and manage contracts and the supervision of works on behalf of
or for the account of the ACP States concerned.

their cost

3. Direct labour and indirect decentralised operations shall be
implemented on the basis of a programme of measures to be
carried out and an estimate of
(the programme
estimate). The programme estimate is a document laying down
the programme of measures to be carried out and the human
and material resources required, the corresponding budget and
the detailed technical and administrative implementing arrange-
ments for decentralised execution of a project over a specified
labour and, possibly, by means of public
period by direct
procurement and the award of specific grants.

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Each programme estimate shall be prepared by the local imprest
manager and the local accounting officer referred to in the third
subparagraph of paragraph 1,
labour
operations, or by the body referred to in paragraph 2, in the case
of indirect decentralised operations. It shall then be approved by
the national or regional authorising officer and the Commis-
sion's authorising officer responsible before the activities it
provides for commence.

in the case of direct

4.
In the context of the implementation of the programme
estimates referred to in paragraph 3, the procurement and grant
award procedures shall comply with those referred to in Titles V
and VII respectively.

5. The financing agreements referred to in Article 70(3) must
make provision for
labour
operations or indirect decentralised operations.

the implementation of direct

Article 102

In the case of indirect decentralised operations the contracting
authority referred to in Article 92(1)(a)
shall conclude a
delegation agreement when entrusting implementation tasks to
a body governed by public laws of the ACP States concerned or
by private law with a public service mission. It shall conclude a
service contract when entrusting those tasks to a body governed
by private law. The Commission shall ensure that the delegation
agreement or service contract sets out:

adequate provisions for scrutiny of the use of EDF resources
by the Commission, OLAF,
regional
authorising officer, the Court of Auditors and the national
audit bodies of the ACP States concerned;

the national or

a clear definition and precise delimitation of the powers
delegated to the body concerned and the powers retained
by the national or regional authorising officer;

the procedures to be followed in exercising the powers so
delegated, such as the selection of actions to be financed,
the award of contracts or the supervision of works;

the possibility of ex post review and financial penalties
where the granting of funds or award of contracts by the
body concerned does not correspond to the procedures laid
down in point (c);

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;

(a)

(b)

(c)

(d)

(e)

(f)

TITLE VII

GRANTS

CHAPTER 1

Scope and form of grants

Article 103

1. Grants are direct
donation, from EDF resources in order to finance:

financial contributions, by way of

(a)

either an action intended to help achieve an objective of the
ACP-EC Agreement or the Overseas Association Decision,
or of a programme or project adopted in accordance with
that Agreement or in accordance with that Decision;

(b)

or the functioning of a body which pursues such an
objective.

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

2. The following shall not constitute grants for the purposes of
this Title:

(a)

financing agreements as referred to in Article 70(3)(a);

(b)

(c)

(d)

(e)

public contracts as referred to in Title V or direct labour
operations as referred to in Title VI;

loans, guarantees, contributions, contracts,
interest rate
subsidies or any other financial operation managed by the
EIB;

direct or indirect budgetary assistance, or aid to help relieve
debt or support export earnings in the event of short-term
fluctuations;

payments made to bodies to which implementation tasks
in
are delegated by the Commission as provided for
Articles 25 to 28 or within the framework of
joint
management referred to in Article 29.

3. Articles 160 to 184a (Title VI ‘Grants’) and Article 253 of
Regulation (EC, Euratom) No 2342/2002 shall apply mutatis
mutandis to this title.

Article 104

1. Grants may take any of the following forms:

(a)

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

an accounting system that enables the correct use of EDF
resources to be verified and the use of funds to be reflected
in the EDF accounts.

(b)

lump sums;

(c)

flat-rate financing;

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(d)

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

2. A beneficiary may be awarded only one operating grant per
financial year from EDF resources.

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

CHAPTER 2

Principles

Article 105

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

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

On no account may the combined total costs eligible, as specified
in the grant agreement, for financing be exceeded.

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

Paragraph 2 shall not apply to the following:

(a)

study, research or training scholarships paid to natural
persons;

(b)

prizes awarded following contests;

(c)

actions the objective of which is the reinforcement of the
financial capacity of a beneficiary or the generation of an
income.

Article 106

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 the ACP-EC
Agreement and the Overseas Association Decision as recipient of
a grant.

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

2. All grants awarded in the course of a financial year shall be
published annually with due observance of the requirements of
confidentiality and security.

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
EDF resources.

Article 108

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

In such cases, costs eligible for financing may not have been
incurred prior to the date of submission of the grant application,
save in duly substantiated exceptional cases or in the case of
expenditure necessary for the proper implementation of crisis
management aid or humanitarian aid operations, as provided for
in the ACP-EC Agreement or the Overseas Association Decision.

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 budget year. Costs eligible for
financing may neither have been incurred before the grant
application was lodged nor before the start of the beneficiary's
budget year.

Article 109

The grant may not finance the entire costs of the action, except if
this proves essential for it to be carried out.

The grant may not finance the entire operating expenditure of
the beneficiary body.

CHAPTER 3

Award procedure

Article 110

1. Grant applications shall be submitted in writing.

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

Article 107

Each action may give rise to the award of only one grant

1.
from EDF resources to any one beneficiary.

(a)

legal persons; grant applications may be eligible if
submitted by entities which do not have legal personality
their
under the applicable national

law, provided that

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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, in one of the situations of
exclusion referred to in Articles 96(1) and 97, and in Arti-
cle 99(2)(a).

Applicants shall 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
valued grants.

CHAPTER 4

Payment and control

Article 113

The pace of payments shall be determined by the financial risks
involved, the duration and progress of the action, or the costs
incurred by the beneficiary.

Article 114

The authorising officer
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.

responsible may,

if he deems

4. The authorising officer may impose administrative and
financial penalties which shall be effective, proportionate and
dissuasive on the applicant.

1. The amount of the grant shall not become final before the
Commission has accepted the final reports and accounts, without
prejudice to subsequent checks by the Commission.

Article 115

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

2.
Should the beneficiary fail to comply with his obligations,
the grant shall be suspended or reduced or terminated after the
beneficiary has been given the opportunity to make his
observations.

Article 99 shall apply mutatis mutandis.

Article 111

CHAPTER 5

Implementation

Article 116

1. The selection criteria shall be such as to make it possible to
assess the applicant's ability to complete the proposed action or
work programme.

2. The award criteria announced in advance in the call for
proposals shall be such as to make it possible to assess the quality
of the proposals submitted in the light of the objectives and
priorities set.

Article 112

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

2. The authorising officer responsible shall then, on the basis
of the evaluation provided for in paragraph 1, draw up the list of
beneficiaries and the amounts approved.

1. Where implementation of the action requires the award of
procurement contracts by the beneficiary, the grant agreements
referred to in Article 103(1) shall make provision for procedures
that comply with the Community rules on procurement
applicable to cooperation with non-member countries.

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

(a)

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

(b)

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

(c)

the amounts concerned are small.

3. The authorising officer responsible shall inform applicants
in writing of the decision on their application. If the grant
requested is not awarded, he shall give the reasons for the
rejection of the application, with reference in particular to the
selection and award criteria already announced.

3.
Each grant decision or agreement shall provide expressly for
the Commission, OLAF 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 financial
assistance from EDF resources.

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Article 117

(c)

consistent accounting methods;

In the context of decentralised management, referred to in
Articles 21 to 24, the Commission shall strive to encourage
management by the beneficiary ACP States and OCTs that is
aimed at applying provisions equivalent to those laid down in
this Title.

TITLE VIII

PRESENTATION OF THE ACCOUNTS AND ACCOUNTING

CHAPTER 1

Presentation of the accounts

Article 118

1. The Commission shall draw up, by 31 July each year at the
latest, the accounts of the EDF describing the financial situation
of the Fund as at 31 December of the preceding year. The EDF
accounts shall comprise:

(a)

the financial statements referred to in Article 122;

(b)

(c)

the reports on financial
Article 123;

implementation referred to in

the financial statements and the information supplied by
the EIB in accordance with Article 149(2).

2. The EDF accounts shall be accompanied by a report on
the year containing an accurate
financial management of
description of:

(a)

(b)

the achievement of the objectives for the financial year, in
accordance with the principle of sound financial manage-
ment;

the financial situation and the events that had a significant
influence on the activities carried out during the financial
year.

(d)

comparability of information;

(e) materiality;

(f)

no netting;

(g)

reality over appearance;

(h)

accrual-based accounting.

Article 121

1.
In accordance with the principle of accrual-based account-
ing, the financial statements referred to in Article 122 shall show
the charges and income for the financial year, regardless of the
date of payment or collection.

2. The value of assets and liabilities shall be determined in
accordance with the valuation rules provided for in Article 129.

Article 122

1. The financial statements shall be prepared by the accounting
officer and presented in millions of euro. They shall comprise:

(a)

the balance sheet, which represents the assets and liabilities
and financial situation and the economic outturn of the
EDF at 31 December of the previous year;
it shall be
presented in accordance with the structure laid down by the
Directives of the European Parliament and Council on the
annual accounts of certain types of companies, but with
account being taken of the specific nature of the EDF's
activities;

(b)

the cash-flow table showing amounts collected and
disbursed during the year, the final treasury position and
a statement of changes in capital covering the preceding
financial year;

Article 119

(c)

a table of items payable to the EDF showing:

The accounts shall comply with the rules and shall be accurate
and comprehensive. They shall present a true and fair view as
regards the following:

(a)

the financial statements, of the assets and liabilities, charges
and income, entitlements and obligations not shown as
assets or liabilities, and cash flow;

(i)

(ii)

amounts still to be recovered at the beginning of the
financial year;

entitlements established in the course of the financial
year;

(iii) amounts recovered in the course of the financial year;

(b)

the reports on financial implementation, of the revenue and
expenditure operations from EDF resources.

(iv)

cancellation of established entitlements;

Article 120

The financial statements referred to in Article 122 shall be drawn
up in accordance with the generally accepted accounting
principles, namely:

(a)

going concern basis;

(b)

prudence;

(v)

amounts still
financial year.

to be recovered at

the end of

the

2. The annex to the financial statements shall supplement and
comment on the information presented in the statements
referred to in paragraph 1 and shall supply all the additional
information prescribed by internationally accepted accounting
to the EDF's
practice where such information is relevant
activities.

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Article 123

1. The reports on financial implementation shall be prepared
by the authorising officer responsible in conjunction with the
accounting officer and presented in millions of euro. They shall
comprise:

4. The final accounts shall be published in the Official Journal of
the European Union together with the statement of assurance
given by the Court of Auditors in respect of the part of the EDF
resources for which the Commission is responsible for financial
management under Article 2 by 15 November of the following
financial year.

(a)

(b)

the financial outturn account, which sets out all financial
operations
and
expenditure.

in terms of

the year

revenue

for

the annex to the financial outturn account, which shall
supplement and comment on the information given in that
account.

2. The financial outturn account shall contain the following
tables:

(a)

(b)

(c)

a table describing changes over the preceding financial year
in the allocations indicated in the Annex;

a table showing by allocation the total commitments,
assigned funds and payments effected during the financial
year and aggregate totals since the opening of the EDF;

tables showing by allocation, country, territory, region or
sub-region, the total commitments, assigned funds and
payments effected during the financial year and aggregate
totals since the opening of the EDF.

Article 124

The accounting officer shall send the provisional accounts to the
Court of Auditors by 31 March of the following financial year at
the latest.

By 30 April of the following financial year at the latest the
accounting officer shall send to the European Parliament, the
Council and the Court of Auditors the report, referred to in
Article 118(2), concerning financial management during the
year.

Article 125

1. The Court of Auditors
shall, by 15 June, make its
observations on the provisional accounts as regards the part of
the EDF resources for which the Commission is responsible for
financial management under Article 2, so that the Commission
can make the corrections deemed necessary for drawing up the
final accounts.

2. The accounting officer shall prepare the final accounts
accompanied by a note established by himself, by which he
declares that they were prepared in accordance with Title VIII and
with the accounting principles, rules and methods set out in
annex to the financial statements.

CHAPTER 2

Information on implementation of EDF resources

Article 126

1. The Commission and the EIB shall monitor, each to the
extent to which it is concerned, the use of EDF assistance by the
the OCTs or any other beneficiary, and the
ACP States,
implementation of projects
financed by the EDF, having
particular regard to the objectives referred to in Articles 55
and 56 of the ACP-EC Agreement and in the corresponding
provisions of the Overseas Association Decision.

2. The EIB shall periodically inform the Commission regarding
the implementation of projects financed by the EDF resources it
administers, following the procedures set out in the operational
guidelines of the Investment Facility.

3. The Commission and the EIB shall provide the EDF
Committee with information on the operational implementation
of EDF resources through the national and regional allocations
set out in the Annex. Such information shall also cover projects
and programmes financed from the Investment Facility. The
Commission shall send that information to the Court of Auditors
in accordance with paragraphs 5 and 7 of Article 11 of the
Internal Agreement.

CHAPTER 3

Accounting

Article 127

1. The accounting system is the system serving to organise the
financial information in such a way that figures can be input,
filed and registered.

2. The accounts shall consist of general accounts and financial
accounts. Those accounts shall be kept in euro on the basis of the
calendar year.

3. The figures in the general accounts and the financial
accounts shall be established at the close of the financial year so
that the accounts referred to in Chapter 1 can be drawn up.

4. Notwithstanding paragraphs 2 and 3, the authorising officer
by delegation may keep analytical accounts.

Article 128

3. The Commission shall approve the final accounts and send
them to the European Parliament, the Council and the Court of
Auditors by 31 July of the following financial year at the latest.

The accounting officer shall be responsible for the monitoring
and entry in the accounts of payments by the Member States and
other revenue.

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Article 129

1. The accounting officer shall adopt the applicable accounting
rules and methods. He shall prepare and, after consulting the
authorising officer by delegation, adopt the chart of accounts to
be applied to the EDF's operations.

In so doing the accounting officer shall be guided by the
internationally accepted accounting standards for the public
sector. However, he may depart from them where justified by the
specific nature of the EDF's activities.

2.
Entries in the accounts shall be made on the basis of the
chart of accounts using a nomenclature which makes a clear
distinction between the general accounts and the financial
accounts. The chart of accounts shall be sent to the Court of
Auditors.

Article 130

The general accounts shall record, in chronological order using
the double entry method, all events and operations affecting the
economic and financial situation and the assets and liabilities of
the EDF, and which make up the EDF balance sheet.

Article 131

1. Movements on the accounts and the balances shall be
entered in the accounting ledgers.

2. All accounting entries,
to the
accounts, shall be based on supporting documents, to which
they shall refer.

including adjustments

3. The accounting system shall be such as to leave a trail for all
accounting entries.

Article 132

The accounting officer shall, after the close of the financial year
and up to the date of presentation of the accounts, make any
adjustments which, without involving disbursement or collection
in respect of
that year, are necessary for a true and fair
presentation of the accounts which complies with the rules.

3. The commitments defined in Article 70 shall be recorded in
euro for the value of
the financing decisions taken by the
Commission.

The commitments defined in Article 78(2) shall be recorded in
euro at the equivalent of
the contracts, grant
agreements and programme estimates. That value shall include
where appropriate:

the value of

(a)

(b)

provision for the payment of reimbursable expenses on
presentation of supporting documents;

provision for the revision of prices and contingencies as
defined in EDF-funded contracts;

(c)

financial provision for exchange rate fluctuations.

the decision giving discharge in respect of

4. All accounting records referring to the fulfilment of a
commitment shall be kept for a period of five years from the date
of
the financial
implementation of EDF resources, referred to in Article 142,
concerning the financial year during which the commitment was
closed for accounting purposes.

TITLE IX

EXTERNAL AUDIT AND DISCHARGE

CHAPTER 1

General provisions

Article 134

The operations financed from EDF resources managed by the EIB
in accordance with Article 3 shall be subject to the audit and
discharge procedures laid down in the Statutes of the EIB for all
of its operations. Detailed rules for auditing by the Court of
Auditors are set out in the Tripartite Agreement. They shall be
agreed upon by the EIB, the Commission and the Court of
Auditors in the Agreement currently in force or possibly by a
new Agreement or any other agreement that may replace it.

Article 133

1. The financial accounts shall provide a detailed record of the
financial implementation of EDF resources.

As regards the operations financed from EDF resources managed
by the Commission in accordance with Article 2, the Court of
Auditors shall exercise its powers in accordance with this Title.

They shall show all:

(a)

allocations;

(b)

commitments;

CHAPTER 2

External audit

Article 135

(c)

payments, and established debts and collection operations
for the financial year, in full and without any adjustment
against each other.

1. The Commission shall inform the Court of Auditors, as soon
as possible, of all decisions and rules adopted pursuant to this
Regulation.

2. When commitments, payments and debts are expressed in
national currencies, the accounting system shall make it possible,
where necessary, for them to be recorded in national currencies
as well as in euro.

2. The Court of Auditors shall be informed of the appointment
of authorising officers, internal auditors, accounting officers and
paying managers and of delegation decisions under Articles 17,
39, 43, 48 and 89.

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Article 136

1.
In respect of cooperation with the ACP States, the Court of
Auditors, when examining whether all revenue has been received
and all expenditure incurred in a lawful and proper manner, shall
the ACP-EC
have regard to the provisions of
Agreement, the Internal Agreement, this Regulation and all
other acts adopted pursuant to those instruments.

the Treaty,

In respect of cooperation with the OCTs, the Court of Auditors,
when examining whether all revenue has been received and all
expenditure incurred in a lawful and proper manner, shall have
regard to the provisions of the Treaty, the Overseas Association
Decision, the Internal Agreement, this Regulation and all other
applicable acts.

2.
In the performance of its task, the Court of Auditors shall be
entitled to consult, in the manner provided for in Article 138(4)
and (5), all documents and information relating to the financial
management of departments or bodies with regard to operations
financed or co-financed from EDF resources. It shall have the
power to make enquiries of any official responsible for a revenue
the auditing
or expenditure operation and to use any of
procedures appropriate to the aforementioned departments or
bodies.

to obtain all

the necessary information for

the
In order
performance of its task, the Court of Auditors may be present,
at its request, during the audit operations carried out within the
framework of financial implementation by, or on behalf of, the
Commission.

At the request of the Court of Auditors, the Commission shall
authorise financial institutions holding EDF deposits to enable
the Court of Auditors to ensure that the external data tally with
the accounts.

In the performance of its task, the Court of Auditors shall notify
the Commission and the authorities to which this Regulation
its staff who are
applies of the names of
empowered to audit them.

the members of

auditing the financial outturn report on the basis of records or
on the spot and, for the same purposes, all documents and data
created or stored on a magnetic medium.

The first subparagraph shall also apply to natural or legal persons
receiving payments from EDF resources.

2. The officials whose operations are checked by the Court of
Auditors shall:

(a)

(b)

show their records of cash in hand, any other cash,
securities and materials of all kinds, and also the supporting
documents in respect of their stewardship of the funds with
which they are entrusted, and also any books, registers and
other documents relating thereto;

present
the correspondence or any other document
required for the full implementation of the audit referred
to in paragraph 1. The information supplied pursuant to
the first sentence of this point may be requested only by the
Court of Auditors.

3. The Court of Auditors shall be empowered to audit the
documents in respect of the EDF revenue and expenditure which
are held by the Commission departments responsible.

4. The task of establishing that the revenue has been received
and the expenditure incurred in a lawful and proper manner and
that the financial management has been sound shall extend to
the utilisation, by bodies outside the Commission, of EDF
resources received by way of grants.

5.
Financing from EDF resources paid to beneficiaries outside
the Commission shall be subject to the agreement in writing by
the beneficiaries or, failing agreement on their part, by the
contractors or subcontractors, to an audit by the Court of
Auditors of the use made of the financing granted.

6. Use of integrated computer systems may not have the effect
of reducing the access of the Court of Auditors to the supporting
documents.

Article 137

7. The national audit authorities of the ACP States shall be
encouraged to participate in the work of the Court of Auditors.

The Court of Auditors shall ensure that all securities and cash on
deposit or in hand are checked against vouchers signed by the
depositories or against official memoranda of cash and securities
held. It may carry out such checks itself.

Article 138

the bodies administering revenue or
1. The Commission,
expenditure on the EDF behalf and the final beneficiaries of
payments from EDF resources shall afford the Court of Auditors
all the facilities and give it all the information which the Court of
Auditors considers necessary for the performance of its task.
They shall place at the disposal of the Court of Auditors all
documents concerning the award and performance of contracts
and all accounts of cash or materials, all accounting records or
supporting documents, and also administrative documents
relating thereto,
and
inventories, all organisation charts of depart-
expenditure, all
ments, which the Court of Auditors considers necessary for

relating to revenue

all documents

Article 139

1. The annual report of
governed by this Article.

the Court of Auditors shall be

2. The Court of Auditors shall transmit to the Commission, by
15 June at the latest, any observations which are, in its opinion,
such that
they should appear in the annual report. Those
observations must remain confidential. The Commission shall
address its replies to the Court of Auditors by 15 October at the
latest.

3. The annual report shall contain an assessment of
soundness of financial management.

the

4. The Court of Auditors may add any summary report or
general observations which it sees fit to make.

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5. The Court of Auditors shall take all necessary steps to ensure
that the Commission's replies to its observations are published
immediately after the observations to which they relate.

6. The Court of Auditors shall transmit to the authorities
responsible for giving discharge and to the Commission, by
15 November at the latest, its annual report accompanied with
the replies of the Commission and shall ensure publication
thereof in the Official Journal of the European Union.

Article 140

1. The Court of Auditors shall notify the Commission of all
observations which are, in its opinion, such that they should
appear in a special report. Those observations must remain
confidential.

Article 143

1. The discharge decision shall cover the accounts referred to in
Article 118, except the part thereof provided by the EIB in
accordance with Article 149(2).

2. With a view to granting the discharge,
the European
Parliament shall, after the Council has done so, examine the
accounts referred to in Article 118. It shall also examine the
annual report made by the Court of Auditors together with the
Commission's replies, any relevant special reports by the Court
of Auditors in respect of the financial year in question and the
Court of Auditors' statement of assurance as to the reliability of
the accounts and the legality and regularity of the underlying
transactions.

The Commission shall have two-and-a half months within which
to inform the Court of Auditors of any comments it wishes to
make on the observations in question.

3. The Commission shall submit to the European Parliament, at
the latter's request, any information required for the control of
implementation of the EDF resources managed by the Commis-
sion in accordance with Article 2 for the year in question.

The Court of Auditors shall adopt the definitive version of the
special report in question the following month.

2. The special reports referred to in paragraph 1, together with
the Commission's replies, shall be transmitted without delay to
the European Parliament and the Council, each of which shall
decide, where appropriate in conjunction with the Commission,
what action is to be taken in response.

information and the arrangements for
Access to confidential
handling it shall comply with fundamental rights, the protection
of business secrecy,
the provisions governing judicial and
disciplinary proceedings and the interests of the Community.

Article 144

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 Commission's replies.

1. The Commission shall take all appropriate steps to act on
the observations accompanying the European Parliament's
discharge decision and on the comments accompanying the
recommendation for discharge adopted by the Council.

3. The Court of Auditors may, at the request of one of the other
institutions, issue opinions on matters relating to the EDF.

Article 141

At the same time as the annual report referred to in Article 139,
the Court of Auditors shall provide the European Parliament and
the Council with a statement of assurance as to the reliability of
the accounts and the legality and regularity of the underlying
transactions.

CHAPTER 3

Discharge

Article 142

1. Before 15 May of year N + 2, the European Parliament, upon
a recommendation from the Council acting by a qualified
majority, shall give a discharge to the Commission in respect of
the financial implementation for year N of the EDF resources,
which it manages in accordance with Article 2.

2.
If the date provided for in paragraph 1 cannot be met, the
European Parliament or the Council shall inform the Commis-
sion of the reasons for the postponement.

2. At the request of the European Parliament or the Council,
the Commission shall report on the measures taken in the light
of those observations and comments, and, in particular, on the
instructions given to those of
its departments which are
responsible for the financial implementation of EDF resources.
That report shall also be transmitted to the Court of Auditors.

3. The decision giving the discharge shall be published in the
Official Journal of the European Union.

PART TWO

SPECIFIC PROVISIONS CONCERNING EDF RESOURCES
MANAGED BY THE EIB

Article 145

the EIB shall

send the
Each year, before 1 September,
Commission its estimates of commitments and payments, which
are necessary for drawing up the communication referred to in
in respect of
Article 7(1) of
the
operations of
including interest rate
the Investment Facility,
subsidies, in accordance with the Internal Agreement.

the Internal Agreement,

If the European Parliament postpones the decision giving a
3.
discharge,
to take
the Commission shall make every effort
measures, as soon as possible, to remove or facilitate removal of
the obstacles to that decision.

The EIB shall send the Commission updated estimates of
commitments and payments when deemed necessary. Modalities
shall be defined in the management agreement referred to in
Article 152.

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Article 146

1. The contributions referred to in Article 58 and adopted by
the Council shall be paid without cost for the beneficiary by the
Member States to the EIB via a special account opened by the EIB
the Investment Facility in accordance with
in the name of
detailed rules laid down in the management agreement provided
for in Article 152.

Save where the Council decides otherwise regarding the
2.
remuneration of the EIB in accordance with Article 5 of the
Internal Agreement, proceeds received by the Bank via the credit
balance of the special accounts referred to in paragraph 1 of this
Article shall supplement the Investment Facility and shall be
taken into consideration for the calls for contribution referred to
in Article 57.

3. Any rights resulting from operations carried out by the EIB
using EDF resources, and particularly rights as creditor or owner,
shall be vested in the Member States.

4. The EIB shall undertake the treasury management of the
amounts referred to in paragraph 1 in accordance with the
detailed rules laid down in the management agreement provided
for in Article 152.

5. The Investment Facility shall be managed in accordance with
the conditions laid down in the ACP-EC Agreement, the Overseas
Association Decision and the Internal Agreement.

Article 147

The EIB shall be remunerated on a full indemnity basis for the
management of the Investment Facility operations. The Council
shall decide on the resources and mechanisms for remuneration
of the Bank in accordance with Article 5(2) of the Internal
Agreement. The measures implementing that decision shall be
incorporated in the management agreement provided for in
Article 152.

Article 148

The EIB shall regularly inform the Commission of the operations
carried out under the Investment Facility, including interest rate
subsidies, of the use made of each call for contributions paid to
the EIB and,
in particular, of the total quarterly amounts of
commitments, contracts and payments, in accordance with the
detailed rules laid down in the management agreement provided
for in Article 152.

the financial statements drawn up in accordance with the rules
and methods referred to in paragraph 1 and the information
referred to in Article 123(2).

Those documents shall be submitted in draft form no later than
28 February and in their final version no later than 30 June of
the following financial year, so that they can be used by the
Commission in preparing the accounts referred to in Article 118
of
the
this Regulation in accordance with Article 11(6) of
Internal Agreement. The report on the financial management of
the resources managed by the EIB shall be submitted by the latter
to the Commission no later than 31 March of the following
financial year.

Article 150

The EIB's own rules shall apply to contracts financed by the EDF
resources which it manages.

Article 151

Where programmes or projects are co-financed by the Member
States or their implementing bodies and correspond to the
priorities laid down in the Country Cooperation Strategies
provided for in the implementation Regulation foreseen in the
second subparagraph of Article 10(1) of the Internal Agreement
and in Article 20 of the Overseas Association Decision, the EIB
may entrust responsibility for managing Community aid to
Member States or their implementing bodies.

Article 152

The detailed rules for implementing this Part shall be the subject
of a management agreement between the Commission, acting on
behalf of the Community, and the EIB.

PART THREE

TRANSITIONAL AND FINAL PROVISIONS

TITLE I

TRANSITIONAL PROVISIONS

CHAPTER 1

Transfer of balances remaining from previous EDFs

Article 153

Transfers to the 10th EDF of
the balances remaining from
resources constituted under the Internal Agreements relating to
the seventh (1), eighth (2) and Ninth (3) EDFs (hereinafter previous
EDFs) shall be made in accordance with Article 1(2)(b), (3) and
(4) of the Internal Agreement.

Article 149

Article 154

1. The EIB shall keep the accounts of the Investment Facility,
including interest rate subsidies, financed by the EDF to provide a
trail for the full circuit of the funds, from receipt to disbursement
and then to the revenue to which they give rise and any
subsequent recoveries. The EIB shall draw up the relevant
accounting rules and methods according to international
accounting standards and inform the Commission and the
Member States accordingly.

The balance of revenue accruing from interest on the resources
of previous EDFs shall be transferred to the 10th EDF and
allocated for the same purposes as the revenue provided for in
Article 1(6) of the Internal Agreement. The same shall apply to
miscellaneous
for
example, default interest received in the event of late payment
of contributions to those EDFs by Member States and the interest
generated by the EDF resources managed by the EIB.

revenue of previous EDFs

comprising,

Each year

2.
send the Council and the
Commission a report on the implementation of operations
financed from EDF resources under its management, including

the EIB shall

(1) OJ L 229, 17.8.1991, p. 288.
(2) OJ L 156, 29.5.1998, p. 108.
(3) OJ L 83, 1.4.2003, p. 1.

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CHAPTER 2

Balances remaining from previous EDFs

Article 155

The amounts from projects under the Ninth EDF or from
previous EDFs not committed according to Article 1(3) of the
Internal Agreement, or decommitted unless decided otherwise by
the Council unanimously according to Article 1(4) of
the
Internal Agreement, shall reduce the part of Member States
contributions stated in Article 1(2)(a) of the Internal Agreement.

The impact on the contribution of each Member State shall be
calculated in proportion to the contribution of each Member
State to the Ninth EDF. The impact will be calculated annually
and for the first time in the year following the performance
review of 2010 foreseen in Annex 1b of the ACP-EC Agreement.

CHAPTER 3

Rules applicable for the implementation of previous EDFs

Article 156

The provisions of the 10th EDF concerning the financial actors,
revenue operations, validation, authorisation and payment of
the presentation of accounts and
expenditure,

IT systems,

accounting, as well as external audit and discharge also apply
to operations financed from previous EDFs.

CHAPTER 4

Transitional period

Article 157

The procedure concerning Member States' contributions laid
down in Articles 57 to 61 shall apply for the first time for the
contributions of the year N + 2, under condition that the 10th
EDF enters into force between 1 October of year N and
30th September of year N + 1.

Article 158

The central database referred to in Article 98 shall be set up by
1 January 2009.

TITLE II

FINAL PROVISIONS

Article 159

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

It shall be applicable for the same period as the Internal Agreement.

Done at Brussels, 18 February 2008.

For the Council

The President

D. RUPEL