Communication from the Commission to the European Parliament, the Council and the Court of Auditors - Synthesis of the Commission's management achievements in 2007
Date: 2008-06-04
Institutions: European Commission
Subjects: EU activity, European Commission, administration of the Institutions, audit, financial control, financial management, general budget (EU), implementation of the budget, personnel administration, report

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 4.6.2008 
COM(2008) 338 final 

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL AND THE COURT OF AUDITORS 

Synthesis of the Commission's management achievements in 2007 

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COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL AND THE COURT OF AUDITORS 

Synthesis of the Commission's management achievements in 2007 

1. 

INTRODUCTION 

The EU budget is a key tool for delivering the Union's policies, and the effectiveness 
of  EU  spending  can  therefore  have  an  important  influence  on  whether  the  EU 
matches the expectations of its citizens. The Commission needs to be in a position to 
demonstrate that public funds are well targeted and well managed, and be transparent 
about any cases where high standards cannot be assured. In line with Article 274 of 
the EC Treaty, the Commission takes overall responsibility for implementing the EU 
budget.  

•  The  operational  implementation  of  the  budget  is  delegated  to  the  Directors-
General,  who  are  responsible  for  the  sound  financial  management  of  resources 
and for running effective and efficient control systems. As "authorising officers by 
delegation" (AOD), they report on the performance of their duties in the form of 
an annual activity report1 (AARs), which is the main vehicle through which they 
express their accountability to the College. The declaration of assurance signed 
by  the  Directors-General,  included  in  their  AAR,  focuses  on  the  legality  and 
regularity  of  financial  transactions.  The  AARs  also  go  beyond  financial  matters 
and include a review of policy results, as well as a comprehensive assessment of 
internal control systems.  

•  It  is  the  responsibility  of  Directors-General  to  inform  their  Commissioner(s)  of 
any  difficulties  encountered  in  executing  their  tasks  during  the  year  –  an 
obligation  which  goes  beyond  the  purely  financial  aspects.  The  content  of  the 
AARs  is  discussed  with  the  Commissioner(s)  before  signature  by  the  Director-
General. 

•  By  adopting 

this  Synthesis, 

the  Commission  assumes 

its  political 
responsibility for management by its Directors-General and Heads of Service, 
on  the  basis  of  the  assurances  and  reservations  made  in  their  AARs.  It  puts  in 
place  measures  to  remedy  any  weaknesses  identified.  The  Commission  is 
committed  to  making  further  progress  towards  a  positive  "declaration  of 
assurance"  by  the  European  Court  of  Auditors  and  instructs  its  services  to 
implement in full the measures outlined in this document.  

1 

Article 60 of the Financial Regulation. 

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2. 

SETTING UP GOOD QUALITY ANNUAL ACTIVITY REPORTS  

2.1. 

Towards a clearer presentation  

Progress  in  the  quality  and  coverage  of  the  AARs  has  been  made  since  their 
introduction  in  2002.  On  the  strength  of  experience  from  previous  years  and 
encouraged both by the European Court of Auditors and the Internal Audit Service's 
audit on the assurance process, further efforts were made in 2007 to:  

•  Follow  up  on  past  reservations.  The  Secretariat  General  and  DG  Budget 

monitored all the action plans designed to address past reservations.  

•  Adapt control strategies to specific control environments.  Control 

strategies 
need to be adapted to the specific control environment of each activity, as they are 
the  basis  for  the  declaration  of  assurance  and  any  reservations.  With  the  aim  of 
presenting  the  control  strategies  in  a  harmonised  way  in  the  AARs,  internal 
control templates were developed and used by almost all services.  

•  Improve the coherence and clarity of the reports.  More precise guidance was 
given to the services, and largely followed, to ensure a more consistent approach 
within  the  Commission  and  within  families  of  Directorates-General,  thereby 
following  up  largely  on  commitments  made  in  the  2006  Synthesis  Report.  It 
notably  became  compulsory  for  AODs  to  disclose  the  indicators  used  to  ensure 
legality  and  regularity  of  transactions.  AODs  proposing  no  reservations  for 
shortcomings pinpointed by the Court of Auditors in its annual report were asked 
to  explain  the  reasons  in  their  reports.  To  make  the  individual  reports  more 
complete  and  more  internally  consistent,  AODs  were  invited  to  describe  the 
"building blocks" on which they base their assurance. 

2.2. 

Towards a stronger review process 

Although  ultimately  the  Director-General  remains  solely  responsible  for  the  AAR 
and  for  any  reservation(s)  made,  the  process  by  which  the  draft  reports  and 
reservations  are  reviewed  by  the  Secretariat  General  and  DG  Budget  has  also  been 
strengthened:  

•  As in previous years, "peer review" meetings took place, organised by families 

of Directorates-General.  

•  The  "peer  review"  exercise  was  extended  to  cover  past  reservations  that  the 
Directors-General  intended  to  lift,  to  ensure  that  all  such  decisions  were  well 
founded and duly explained.  

•  For the first time, the "peer review" also examined all budget areas which were 
considered  by  the  Court  of  Auditors  as  being  unsatisfactory  in  its  annual 
reports for 2005 and 2006, to ensure a consistent response.  

•  The  general  consistency  of  the  reports  with  Court  of  Auditors'  findings  and 
internal  audits  was  checked,  especially  in  cases  when  a  delay  in  the 
implementation of recommendations occurred.  

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2.3. 

Conclusions 

•  The  Commission  notes  that  progress  has  been  made  in  the  presentation  of  the 
AARs,  which  generally  attained  a  satisfactory  level,  but  notes  that,  in  specific 
fields, further improvements can be made. 

•  Directors-General  express  a  management  opinion  based  on  information  which 
includes Commission's own audit work, reports and observations of the Court of 
Auditors and where appropriate the results of Member States' controls. While the 
Court  expresses  an  annual  audit  opinion  on  the  accounts  and  the  legality  and 
regularity of the underlying transactions, the Directors-General's opinion focuses 
on whether funds have been used for their intended purpose, taking account of the 
multi-annual nature of controls,  

•  While the "peer review" exercise was useful, more needs to be done to improve 
the AAR process in certain areas, notably to ensure consistency between services. 
The Court of Auditors' practice of rating the reports by the extent to which they 
can be relied on as audit evidence has provided an impetus for improvement.  

•  To promote further improvement, in particular as to the consistency and clarity of 
the reports, the Secretariat General and DG Budget will make early contact with 
services  each  year,  to  discuss  the  state  of  play  on  reservations  expressed  in  past 
AARs.  In  addition,  the  "peer  review"  process  as  currently  organised  will  be 
enriched with bilateral meetings with selected services based on positions outlined 
in draft AARs.  

•  The  Secretariat  General  and  DG  Budget  will  also  provide  further  guidance  to 
promote  consistency  in  the  treatment  of  reputational  risks  and  to  address  more 
clearly the link between error rates, materiality and reservations. 

3. 

ASSURANCE  ON  LEGALITY  AND  REGULARITY  OF  TRANSACTIONS  AND 
RESERVATIONS MADE BY THE DIRECTORS-GENERAL 

Having examined the AARs, in particular the declarations signed by each Director-
General,  the  Commission  notes  that  all  Directors-General  reported  having 
reasonable assurance that the resources assigned to its activities have been used for 
their  intended  purpose  and  in  accordance  with  the  principles  of  sound  financial 
management,  and  that  the  implemented  control  procedures  give  the  necessary 
guarantees  concerning  the  legality  and  regularity  of  the  underlying  transactions. 
Nevertheless,  a  number  of  declarations  were  qualified  with  reservations.  The 
Directorates-General  concerned  have  indicated  that  they  are  committed  to  dealing 
with  these  weaknesses  through  clearly  defined  action  plans.  Despite  those 
weaknesses,  none  of  the  services  concluded  that  they  prevent  them  from  providing 
overall "reasonable assurance". 

The number of reservations for 2007 was slightly lower than for 2006 (17 compared 
to 20), continuing the downward trend of earlier years. In total, 13 Directors-General 
expressed  reservations  for  2007  (15  for  2006),  with  four  having  two  reservations. 
The scope of individual reservations was in some cases expanded, covering a greater 
number  of  Member  States  or  programmes.  Nine  reservations  made  for  2006  were 

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lifted,  but  eleven  were  recurrent  reservations.  The  majority  of  the  reservations 
entered for 2007 concerned either the quality of Member States' control systems or 
errors detected at beneficiary level. An overview of the reservations made for 2007 is 
available in Annex 2.  

3.1. 

Structural Funds 

Structural  measures  represent  one  of  the  core  policies  of  the  Union,  implemented 
with  the  Member  States  under  "shared  management".  A  detailed  assessment  of  the 
Member States' control systems was presented in the AARs, specifying the reliance 
that  could  be  placed  on  them.  In  2007,  the  Directors-General  in  charge  of  the 
Structural Funds agreed that, whenever significant deficiencies have been identified 
in  programmes  or  Member  States,  they  systematically  take  it  into  account  when 
calculating whether the sum of the "amounts at risk" reaches the materiality criteria – 
unless there is reliable audit evidence that an action plan to remedy the weaknesses is 
being implemented by the national authorities and first results have been produced. 
This  approach,  which  follows  the  Court  of  Auditors’  2006  report,  strengthens  the 
basis of assurance of these Directors-General. It also led to an increase in the number 
of programmes or Member States subject to a reservation in 2007 compared to 2006: 

•  Concerning  the  European  Regional  Development  Fund,  the  Director-General  for 
Regional Policy entered a reservation for ten Member States (the Czech Republic, 
Finland, Germany, Greece, Ireland, Italy, Luxembourg, Poland, Slovakia, Spain) 
and  for  51  INTERREG  programmes.  He  also  expressed  a  reservation  on 
management  of  the  Cohesion  Fund  in  five  Member  States  (Bulgaria,  the  Czech 
Republic, Slovakia, Hungary and Poland).  

•  As  regards  the  European  Social  Fund,  the  Director-General  for  Employment, 
social affairs and equal opportunities issued a reservation for eight Member States 
(Spain,  the  United  Kingdom,  France,  Italy,  Slovakia,  Portugal,  Belgium  and 
Luxembourg).  

Several  measures  were  taken  in  2007  and  early  2008  to  clarify  and  strengthen  the 
respective  roles  of  the  Member  States  and  the  Commission  under  shared 
management.  

•  The  Commission  issued  guidance  to  Member  States  on  the  right  level  of 
corrections to apply in the case of irregularities relating to public procurement in 
co-financed projects, as well as, for the 2007-2013 period, extensive guidelines on 
the compliance assessment procedure, on the provision of a national audit strategy 
and on audit sampling, in order to promote coherence of testing done by Member 
State's audit authorities.  

•  The Commission adopted  a policy of launching immediately a formal procedure 
for  suspension  of  payments  and  financial  corrections  where  serious  systems 
deficiencies are identified by audits. For example, payments were suspended for 
12 programmes in England in April 2007. There are currently formal procedures 
underway  for  54  programmes  and  60  Cohesion  Fund  projects  for  suspension  of 
payment  and  financial  correction.  In  October  2007  the  Commission  for  the  first 

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time  provided  aggregate  figures  for  financial  corrections  undertaken  at  national 
level through withdrawals and recoveries by the Member States2.  

•  For the first time, annual summaries of available audits and declarations in the 
field of shared management had to be provided by Member States, as required by 
the revised Financial Regulation. For the structural actions policy area, by the end 
of  April  2008,  all  Member  States  but  one  (Germany)  had  presented  annual 
summaries which complied, or mainly complied, with the minimum requirements 
of the regulation. However, the absence of overall analysis or conclusions in many 
cases meant that the added value was limited, due at least partly to the novelty of 
the  requirement.  The  Commission  closely  supervises  the  annual  summaries 
process to ensure that all Member States submit a summary and that all meet the 
minimum requirements. Letters have been sent in the event of non-transmission or 
non-compliance  and  the  Commission  has  begun  legal  proceedings  against 
Germany.  

The  Commission  agrees  that  the  Court'  of  Auditors'  findings  on  Structural  Funds 
demonstrate  an  unacceptably  high  error  rate.  Its  commitment  to  ongoing  and  new 
actions was formalised by the adoption of the "Communication on an action plan 
to strengthen  the  Commission's supervisory role under shared management of 
structural  actions"3.  The  Commission  will  provide  the  European  Parliament  with 
quarterly reports on the implementation of the action plan, including information on 
corrections and recoveries imposed by the Commission. In addition, the Commission 
will provide a progress report on the action plan in October 2008 and a final report in 
January 2009. 

The  Commission  has  shown  its  strong  political  commitment  to  reducing  the  error 
level and applying suspension of payments and financial corrections to show that the 
structural action budget is being managed rigorously.  

The Commission is convinced that the requirement for annual summaries will make 
Member States more accountable for the use of Structural Funds, provided that they 
follow  the  recommendations  to  improve  the  quality.  This  process  will  help  the 
Commission's own assurance. 

3.2. 

Agriculture 

Support for agriculture and rural development is implemented in shared management 
with  the  Member  States  through  a  comprehensive,  four-level  management  and 
controls  system.  It  forms  the  basis  of  the  reasonable  assurance  of  the  Director-
General  for  Agriculture  and  Rural  Development  on  the  legality  and  regularity  of 
underlying transactions in this area. The substantive rules governing the granting of 
agricultural  support  under  both  the  EAGF  and  the  EAFRD  have  been  consolidated 
and  simplified.  Direct  payments  presently  account  for  some  84.5%  of  total  EAGF 
expenditure  and  are  managed  and  controlled  by  the  Integrated  Administration  and 
Control  System  (IACS).  As  the  Court  of  Auditors  has  acknowledged,  this  is  an 
effective system for limiting the risk of error or irregular expenditure, provided it is 

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Annex to the Annual Report on the Structural Funds - SEC(2007) 1456, 
http://ec.europa.eu/regional_policy/sources/docoffic/official/reports/pdf/annex/2006_sf_annex_en.pdf 
COM(2008) 97. 

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properly  applied.  Statistical  information  received  from  Member  States  in  2007, 
covering  nearly  90  %  of  EAGF  and  EAFRD  expenditure,  indicate  an  overall  error 
rate for agricultural expenditure below the level of materiality. 

Moreover, in 2007, a number of new instruments were fully applicable for the first 
time. This includes, in particular, the statement of assurance to be given by Member 
States' paying agencies, the annual summary (synthesis report) to be provided by the 
national  coordinating  bodies  and  the  obligation  of  the  certification  bodies  to  verify 
and  validate  inspection  statistics  and  post-payment  checks.  Member  States  have  in 
general complied with their new legal obligations. 

The reservation on IACS in Greece has been in force since 2002. The Greek action 
plan has delivered results but the implementation of a fully operational Land Parcel 
Identification System, foreseen for the end of 2008, is still outstanding. The amount 
at  risk  is  not  material  but  the  overall  issue  remains  material  because  of  the 
reputational risk for the Commission.  

The  second  reservation  made  by  the  Director-General  for  Agriculture  and  Rural 
Development  concerns  rural  development.  Preliminary  data  from  Member  States 
indicate  that  the  error  rate  in  rural  development  (particularly  in  agri-environmental 
measures)  is  higher  than  in  other  parts  of  agricultural  expenditure.  This  higher  rate 
seems  to  be  due  to  the  complexity  of  these  measures  rather  than  weaknesses  in 
control systems. For these reasons, the Commission considers that the tolerable risk 
of  error  could  be  set  above  2  %.  Due  to  the  preliminary  nature  of  these  data,  it  is 
however  not  possible  to  establish  an  exact  error  rate.  It  is  therefore  not  possible  to 
conclude  whether  the  error  rate  for  rural  development  is  below  materiality  or  not 
which is why the Director-General made a reservation on this issue. 

The Commission will continue to closely monitor that the Greek authorities take all 
measures necessary to implement the action plan concerning IACS. The Commission 
has already taken mitigating action to reduce the error rate in rural development for 
the  programming  period  2007-2013.  The  Commission  will  also  examine  costs  and 
benefits  of  controls  in  this  area,  in  particular  for  agri-environmental  measures,  in 
order to address the issue of residual risk. .  

3.3. 

External actions 

The Court of Auditors' 2006 report stated that the project implementing organisations 
were not operating satisfactorily and felt that further efforts were required in terms of 
effective implementation of systems and supervision. 

The  Director-General  of  the  EuropAid  Cooperation  Office,  in  charge  of  external 
assistance, took a number of measures to strengthen his control strategy. The number 
of  audits  was  significantly  increased,  in  particular  verification  of  aid  spent  by 
International Organisations, which rose from 7 in 2006 to 50 in 2007. A total of 650 
audits  had  been  launched  by  year  end.  New  terms  of  reference  for  expenditure 
verifications  of  grant  contracts,  as  well  as  for  financial  and  system  audits  launched 
by the Commission, were issued. These further reinforce and systematise the controls 
on the main risk areas identified by the Court. The Director-General was confident 
that the control system adequately mitigated the risks and did not issue a reservation. 

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To  enhance  the  traceability  and  visibility  of  EU  funds  channelled  through  UN  and 
other multilateral donor trust funds, the Commission has taken a number of measures 
over  recent  years,  including  improved  visibility  guidelines,  more  verification 
missions, more detailed reporting requirements and improved compliance analysis of 
the UN's financial control standards.  

The  Commission  will  continue  to  strengthen  its  control  strategy  in  the  field  of 
external assistance and to deepen both its reflection  on the cost of controls,  and  its 
dialogue with the Court of Auditors.  

It  will  also  continue  its  efforts  towards  greater  transparency  on  end  beneficiaries, 
provided that the rules on personal data and security requirements are followed.  

Efforts will continue to make better use of and share audit results within the RELEX 
family.  

The  Commission  will  continue  monitoring  and  improving  implementation  of  the 
framework  agreements  on  financial  and  contractual  procedures  signed,  inter  alia, 
with a number of UN agencies4 and the World Bank5.  

3.4. 

Pre-accession 

PHARE 

Under  the  Extended  Decentralised  management  System  (EDIS),  the  Commission 
confers  management  powers  on  the  implementing  agencies  of  the  beneficiary 
country.  Monitoring  has  indicated  that  irregular  contracts  and  payments  may  have 
been  made  by  two  agencies  implementing  PHARE  in  Bulgaria.  Payments  were 
suspended and a reservation was made on this issue which presents a risk for sound 
financial management and affects the reputation of the Commission.  

The  Commission  has  indicated  25  corrective  actions  that  the  Bulgarian  authorities 
need  to  take  to  address  weaknesses  in  the  control  systems.  Targeted  on-the-spot 
controls will be carried out in 2008. Vigorous action will be taken to prevent similar 
shortcomings in other countries in the future.  

SAPARD 

The Court of Auditors concluded that for 2006 the situation regarding SAPARD was 
not satisfactory. The Directorate-General for Agriculture, in charge of SAPARD, is 
following  up  closely  on  the  Court's  findings.  It  however  took  the  view  that  the 
materiality criteria for making a reservation for 2007 were not met.  

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Financial and Administrative Framework Agreement/ FAFA. 
Trust Fund and Co-Financing Framework Agreement. 

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3.5. 

Internal policies 

Research 

•  The  Research  Directorates-General  made  a  reservation  for  2006  on  Framework 
programme 5 due to errors in beneficiaries' cost statements. However, there is no 
reservation  for  2007  as  this  programme is  now  gradually  winding  down  and  the 
relative weight of the payments made is less significant. Furthermore, in line with 
the  action  plan  on  FP5,  follow  up  of  audit  results  through  recovery  orders  was 
vigorously pursued. 

•  For Framework programme 6, the Directorates-General have defined a common 
audit  strategy  for  2007-2010.  It  aims  at  assessing  the  legality  and  regularity  of 
transactions  with  representative  audit  results  (random  sampling)  and  at  reducing 
the  level  of  error  by  identifying  and  correcting  errors  in  the  cost  declarations  of 
the largest beneficiaries, complemented by a risk-based sample. The strategy was 
fully launched in 2007, with 377 ex-post audits carried out. 2007 was the first year 
of implementation of the multi-annual strategy and the process of extrapolation of 
audit results to non audited contracts with the same beneficiary was being set up. 
Against  this  background  and  in  the  light  of  error  rates  above  2%,  the  services 
decided  to  qualify  this  year's  declaration  of  assurance  with  a  reservation  on  the 
accuracy of cost claims for FP6.  

•  For Framework programme 7, calls for proposals have been launched and so far 
only  pre-financing  payments  have  been  made.  Important  actions  have  been 
introduced  to  reduce  the  risk  of  error:  ‘agreed-upon  procedures’  have  been 
developed,  which  require  certifying  auditors  to  perform  a  compulsory  set  of 
procedures  and  report  in  a  mandatory  format.  The  ex-ante  controls  are  being 
reinforced  by  introducing  the  possibility  of  ex-ante  audit  certification  of  the 
beneficiary's accounting methodology. No reservation was made. 

The  Commission  has  made  considerable  efforts  to  improve  its  management  of 
research  funds  within  the  applicable  legal  and  financial  framework.  Although 
reservations were expressed by the Directors-General on  Framework  programme 6, 
one of the main objectives of the common multi-annual audit strategy is to reduce the 
overall level of risk to below materiality.  

Furthermore, services will continue the implementation of Framework programme 7, 
so that it can take full advantage of simplification in the new legal framework.  

Justice, Freedom and Security  

Two reservations were made for 2007 concerning the implementation, under shared 
management,  of  the  European  Refugee  Fund.  One  is  an  extension  of  a  reservation 
made in 2006 which concerns weaknesses in the control systems for the management 
of  this  Fund  in  Italy.  The  responsibility  for  solving  this  issue  lies  mainly  with  the 
Italian  authorities,  and  the  Directorate-General  is  following  it  closely.  It  should  be 
noted that while the amount at risk concerns a significant part of the budget for Italy, 
its impact is limited in terms of the overall JLS budget for 2007.  

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Furthermore,  the  Directorate-General  reported  that  its  sectoral  legislation  for 
European  Refugee  Fund  II  provided  only  a  limited  basis  for  monitoring  and 
supervisory  work  and  that  the  monitoring  relied  to  a  large  extent  on  the 
Commission's own control strategy (monitoring missions and assessment of control 
systems). Because it had not carried out on-the-spot controls in 14 Member States in 
2007,  the  Director-General  decided  to  make  a  reservation  because  of  the  limited 
assurance he had on FER II in these Member States.  

The Commission will take action to strengthen its assurance on the management of 
the  European  Refugee  Fund  II  by  the  Member  States  in  2008.  A  risk  analysis  will 
serve as a basis for making further visits and guidance to the Member States will be 
strengthened. For 2008-2013 a new basic act will cover the European Refugee Fund 
III, addressing issues arising from the previous Fund.  

Other policy areas  

Difficulties linked to cost claims were encountered by the Directorate-General for 
Environment,  which  made  a  reservation  because  of  the  increased  percentage  of 
errors detected by ex-post controls.  

Two further reservations, already made in 2006, were maintained for 2007: 

•  The  Director-General  for  Enterprise  and  Industry  expressed  a  reservation 
because two beneficiaries of grants, involved in European Standardisation, do not 
have appropriate cost reporting systems.  

•  The  Director-General  for  Economic  and  Financial  affairs  made  a  reservation 
because  of  a  possible  failure  in  the  internal  control  system  of  an  external  body 
entrusted with indirect centralised management.  

Measures were taken in 2007 in each of these areas. Actions in 2008 will be pursued 
vigorously,  including  better  information  to  beneficiaries,  simplification  of  rules  in 
the new legal frameworks or contracts, and stronger Commission control. 

The  Commission  has  instructed  its  services  to  take  all  necessary  measures  to  lift 
these reservations once the underlying problems have been resolved. 

Communication 

The  Directorate-General  for  Communication  made  a  reservation  in  its  2006  annual 
activity  report  because  of  deficiencies  in  the  internal  control  system.  The  problem 
has been addressed by setting up a centralised ex-post control. However, because the 
unit  only  became  operational  in  the  last  two  months  of  2007,  the  Director-General 
decided to maintain the reservation for 2007. 

Education and Culture 

The  Director-General  for  Education  and  Culture  lifted  the  past  reservation  on 
National Agencies, anticipating the results of a revised control system implemented 
in  2007  as  a  consequence  of  new  legislation.  This  system  is  based  on  ex-ante 
declarations  of  assurance  by  the  national  authorities.  This  year  the  Directorate-
General reported an error rate above 3% for audited projects, but indicated this could 

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not  be  extrapolated  because  the  audit  sample  was  largely  risk-based:  the  issue  was 
therefore not considered material. The Directorate-General also pursued its efforts to 
obtain validation from the Accounting Officer of its local accounting system. 

The  Commission  has  instructed  DG  Education  and  Culture  to  ensure  effective 
implementation  of  the  control  strategy  and  to  address  all  outstanding  obstacles  to 
obtaining validation of its local accounting system. 

Statistics  

The reservation made by Eurostat in 2006 due to lack of assurance on the regularity 
of  payments  made  to  some  National  Statistics  Institutes  was  lifted  as  corrective 
action,  such  as  the  enhanced  ex-ante  verifications,  was  taken  in  2007,  giving 
reasonable assurance to the Director-General on the regularity of the payments made 
during that year. His services are working on issues relating to previous years.  

3.6. 

Administration 

Appropriate  and  reliable  Information  Technology  systems  are  crucial  to  the  proper 
delivery  of  practically  all  Commission  activities.  However,  despite  the  renting  of 
some  new  data  centre  premises,  the  Director-General  of  DIGIT  considered  it 
necessary to maintain the previous reservation on building infrastructure because of 
the inadequacy of part of the infrastructures currently hosting both the main site and 
the  back-up  site  in  Luxembourg.  Whilst  some  improvements  to  the  building  were 
made  during  2007,  and  whilst  this  risk  was  managed  effectively  in  2007,  the 
Commission  considers  it  necessary  to  reduce  further  the  risk  to  business  continuity 
and data integrity.  

The  Commission  will  continue  to  implement  its  multi-annual  IT  strategy  in 
2008/2009, ensuring secure and functionally appropriate building infrastructures for 
the data and telecommunication centres of the Commission.  

3.7. 

Conclusions 

•  The  Commission  instructs  its  services  to  take  vigorous  action  to  address  the 
causes of reservations in the 2007 AARs and will closely monitor progress, with a 
special attention to recurring reservations.  

•  A 

regular  dialogue  between  Commissioners  and  Directors-General  on 
management  issues  is  an  important  element  in  the  accountability  chain.  It  is 
particularly  important  in  cases  where  reservations  are  recurrent  and  in  areas  in 
which the Court of Auditors identified weaknesses. The Commission instructs the 
Directors-General in these situations to inform their Commissioner(s) regularly on 
latest developments or progress made. 

•  The implementation of the action plan to strengthen the Commission's supervisory 
role under shared management of structural action, presented in February 2008, is 
a high priority for the Commission and must be implemented on time. 

EN 

11 

   EN 

•  The Commission encourages Member States to provide voluntary annual national 
declarations, which may constitute an additional "building block" in the provision 
of Directors-General assurance.  

•  Addressing  the  causes  of  errors  is  vital  and  the  Commission  services  will  issue 

guidance and take other necessary action to reduce the risk of error.  

•  The  Commission  will  also  make  all  necessary  efforts  to  demonstrate  the 
effectiveness  of  its  controls.  Its  accounting  system  is  being  revamped  to  allow, 
from 2008, full reporting on the correction of errors by the Commission, including 
those relating to payments of earlier years. 

•  Finally, the Commission will continue its work on the cost-benefit of control and 
on residual risk. A Communication on this subject will be issued in autumn 2008, 
and should provide a firm basis for taking forward the concept of tolerable risk as 
a  tool  for  judging  how  effectively  risk  is  being  managed  in  Community 
programmes. 

4. 

OTHER ISSUES HIGHLIGHTED IN THE ANNUAL REPORTS 

4.1. 

Implementation of EU law 

Laws do not serve their full purpose unless they are properly applied and enforced. In 
2007, the Commission presented an ambitious communication aimed at minimising 
these risks and containing measures to improve the application of Community law6. 
This will involve more co-operation between the Member States and the Commission 
in  preventing  problems  from  arising,  dealing  more  effectively  with  problems  and 
resolving  infringements  more  quickly.  It  will  also  involve  better  integration  of 
implementation and enforcement considerations from the design of laws through the 
adoption  process  to  the  evaluation  of  results.  Clarification  of  implementation 
challenges is essential to improving laws and to achieving "Better Regulation" goals 
such  as  simplification  and  reduction  of  administrative  burden,  in  the  interest  of 
citizens and businesses. 

4.2. 

Conservation of fisheries resources 

The Court of Auditors argued in a special report7 that the present control, inspection 
and  sanction  systems  relating  to  the  rules  on  conservation  of  Community  fisheries 
resources needed to be strengthened considerably to achieve the goal of sustainable 
exploitation of fisheries resources. The Commission shares the Court's analysis. First, 
it encourages Member States to apply the interim measures that were proposed on a 
voluntary basis. It will, in parallel, work on ambitious proposals aiming at reforming 
the European control policy: the state of fish stocks today shows how it is essential 
that the effectiveness of the control, inspection and sanction systems is strengthened 
and harmonised.  

6 
7 

Communication on "A Europe of Results - Applying Community Law" - COM(2007) 502, 5.9.2007. 
European Court of Auditors' Special Report No 7/2007 on the control, inspection and sanction systems 
relating to the rules on conservation of Community fisheries resources (OJ C 317, 28.12.2007). 

EN 

12 

   EN 

                                                 
The  Commission  is  committed  to  ensuring  sustainability  of  fisheries  resources, 
which  can  only  be  guaranteed  through  action  at  European  level.  It  will  propose,  in 
October  2008,  a  Council  Regulation  recasting  and  modernising  the  Common 
Fisheries Policy control system. To reach its objectives it needs the full commitment 
of Member States.  

4.3. 

Security 

Audits on EC delegations revealed weaknesses in the security of information and in 
their  transmission  systems  as  well  as  in  physical  security.  Implementation  of  the 
action plans is progressing.  

In  addition  to  the  routine  security  measures  focussed  on  persons,  buildings  and 
information  technologies  at  its  principal  sites,  the  Commission  will  give  increased 
attention to the security of its delegations.  

5. 

OVERALL CONCLUSION 

The  Commission  considers  that  the  internal  control  systems  in  place,  with  the 
limitations  described  in  the  2007  AARs,  provide  reasonable  assurance  that  the 
resources assigned to its activities have been used for their intended purpose and in 
accordance with the principles of sound financial management. It also considers that 
the  control  procedures  put  in  place  give  the  necessary  guarantees  concerning  the 
legality and regularity of the underlying transactions for which the Commission takes 
overall responsibility pursuant to Article 274 of the EC Treaty.  

However,  it  acknowledges  that  further  efforts  are  needed  to  resolve  a  number  of 
weaknesses,  in  particular  those  highlighted  in  the  reservations  of  the  delegated 
authorising officers - and those belonging to budget  areas that were  not considered 
satisfactory by the Court of Auditors.  

EN 

13 

   EN 

Annex 1: 

Human Resources management and other management issues 

Annexes:  

Annex 2: 

Reservations 2003-2007  

Annex 3: 

2007 Synthesis multi-annual objectives  

Annex 4: 

Executive and regulatory agencies  

Annex 5: 

Report on negotiated procedures  

Annex 6: 

Summary of waivers of recoveries of established amounts receivable in 2007  

Annex 7: 

Compliance with payment time-limits and suspension of time-limits  

EN 

14 

   EN 

Annex 1: 
Human Resources Management and other management issues 

1. 

HUMAN RESOURCES MANAGEMENT 

•  Ethics 

In  a  global  context  where  ethical  behaviour  and  ethics  in  general  are  becoming 
increasingly  important,  the  need  for  a  clearer  and  simpler  framework  of  standards 
and guidelines arose. These issues have now been addressed in a communication on 
'Enhancing  the  Environment  for  Professional  Ethics  in  the  Commission'  dated  5 
March  20088.  The  main  goal  of  this  initiative  is  to  refresh  awareness  and  provide 
better guidance on professional ethics in the Commission. 

Furthermore,  as  part  of  the  European  Transparency  Initiative,  a  study  on  ethics  for 
public office-holders9 was commissioned to compare ethical rules for Commissioners 
and  for  leaders  of  other  EU  institutions  and  their  counterparts  in  all  the  Member 
States,  the  USA  and  Canada.  The  results  of  this  study  show  that  the  Commission 
standards compare favourably.  

The Commission is conscious that continued effort is nonetheless needed in the years 
to come to foster the ethics culture that it has developed and ensure that the rules are 
applied  on  the  ground.  In  order  to  benefit  from  external  views,  the  Commission 
intends to broaden the mandate of its ad hoc Ethical Committee and request it to give 
an opinion on the advisability of revising the Code of Conduct of Commissioners.  

•  Screening of Human Resources of April 2007 

In April 2007, the Commission presented its "screening" of its human resources and 
committed  itself  to  maintain  stable  staffing  for  the  period  2009-2013  (after  all 
enlargement-related personnel are integrated) and to meet new staffing needs in key 
policy areas exclusively through redeployment. The report also contained an analysis 
of the Commission's overheads. It was welcomed by the Parliament, and an update 
was provided by end April 2008. 

The  Commission's  willingness  to  explore  all  rationalisation  scenarios  that  could 
improve  performance  and  trigger  efficiency  gains  was  expressed  in  the  report, 
especially  in  the  field  of  communication,  crisis  management  and  external  relations. 
These areas have been subject to a more in-depth analysis.  

–  In  the  area  of  external  relations,  it  has  been  decided  to  reallocate  internally  100 

posts of officials to the new priority countries and policy fields.  

–  As  regards  crisis  management,  the  Commission  presented  at  the  beginning  of 
2008  a  communication  entitled  "Reinforcing  the  Union's  Disaster  Response 

8 
9 

COM(2008) 301. 
http://ec.europa.eu/dgs/policy_advisers/publications/docs/hpo_professional_ethics_en.pdf 

EN 

15 

   EN 

                                                 
Capacity"10.  It  puts  forward  specific  measures  to  be  implemented  by  the  end  of 
2008 to meet the growing challenges posed by natural and man-made disasters.  

–  In the area of communication, the Commission is considering freeing up a fraction 
of the posts currently devoted to communication activities and to redeploy them to 
the  Representation  Offices,  to  corporate  communication  activities  and  to  the 
general  Commission  redeployment  pool.  To  deliver  on  this  objective,  the 
Commission  intends  to  take  several  measures  which  could  be  based  on  the 
following: link communication strategy more closely to political priorities; reduce 
the  number  of  general  communication  priorities  to  make  them  more  focused; 
develop  partnerships  with  the  Member  States;  organise  secondment  of  staff  to 
Representations; develop communication skills of staff and align human resources 
in communication activities to real needs. 

•  Integrated human resources strategy  

The Commission  continued its efforts to  put in place a strategically aligned human 
resource management aimed at a shift from focusing on rights, obligations, rules and 
compliance  to  a  more  strategic  approach  with  a  focus  on  results,  added-value  and 
benefits  for  the  Commission.  This  will  enable  the  human  resources  function  to 
gradually  become  a  key  player  in  the  Commission,  actively  contributing  to 
formulating organisational strategy and ensuring its implementation. 

•  IT tools 

The  administration  has  worked  on  the  development  of  new  integrated  IT  tools  for 
more  efficient  management  of  human  resources  and  of  the  related  individual 
financial entitlements. 

•  Recruiting and retaining permanent staff 

The administration has instituted various measures to improve staff management and 
recruitment,  in  particular  by  devising  a  professionalisation  programme  and  by 
increased cooperation with EPSO. 

•  Recruitment of citizens from enlargement countries  

Several  services  pointed  to  difficulties  in  recruiting  certain  EUR10  profiles  as 
permanent staff, notably IT and financial staff and translators for certain languages. 
Certain competitions completed by EPSO in 2007 indeed failed to yield the expected 
number  of  successful  candidates.  Priority  also  had  to  be  given  to  more  generalist 
competitions,  in  order  to  achieve  optimum  use  of  EPSO  recruitment  capacity. 
Although  the  list  of  successful  candidates  covered  70  %  of  the  Commission's 
recruitment  needs,  there  were  major  variations  between  competitions,  nationalities 
and  profiles  (ranging  from  7  to  100%).  As  in  2006,  the  Commission  attained  the 
overall  recruitment  targets  for  nationals  from  EU-10  and  EU-2  Member  States  in 
2007. From 2004 to 2007 well above 3 000 posts have been filled by nationals from 
the  enlargement  countries.  The  monitoring  mechanism  which  the  Commission  had 
put  in  place  during  2006  for  EU-10  recruitment  was  maintained  and  improved  in 

10 

COM(2008) 130. 

EN 

16 

   EN 

                                                 
2007 and contributed largely to this achievement. The Commission is on a very good 
path  to  meet  the  various  recruitment  targets  set  in  the  context  of  EU-10  and  EU-2 
enlargements.  

2. 

OTHER MANAGEMENT ISSUES 

•  The internal control framework in the Commission 

An effective and efficient internal control system requires management to address the 
question of risk and to focus control resources on areas where risk is greatest, while 
ensuring adequate control of all activities. The Commission adopted in October 2007 
a  communication  on  the  revision  of  the  Internal  Control  Standards  and  Underlying 
Framework11,  which  set  out  16  revised  internal  control  standards  for  effective 
management to replace the set of 24 standards put in place in 2000. The aim of the 
revised standards is to strengthen the basis of the annual declaration of assurance of 
the Directors-General by analysing how effective the control system is in practice.  

The Commission also reported on its Action Plan towards an Integrated Internal 
Control Framework12 and concluded that most of the "gaps" have been filled. Work 
will be completed in 2008 and the first impact report will be issued in early 2009. 

•  Financial management 

In 2007, DG Budget complemented and consolidated its accounting modernisation. 
The  Accounting  Officer’s  report  on  the  verification  of  local  systems  at  the  end  of 
2007  noted  improvements  compared  to  2006,  mainly  in  the  development  of  the 
knowledge  of  accrual  accounting  and  ABAC  systems.  However,  two  services' 
systems were not validated, although the risk to the accuracy of the Commission's 
accounts as a whole is not considered material. 

The  modernisation  of  the  European  Development  Fund  (EDF)  accounts,  which  are 
separate from the accounts of the General Budget, aims to transfer the management 
functionality for EDF projects to DG AIDCO's local system while keeping the EDF 
accounts on an accrual basis in ABAC. While the developments of the central ABAC 
component were largely completed and tested according to plans in 2007 the project 
has experienced a succession of postponements, due in particular to the need for DG 
AIDCO  to  complete  the  developments  necessary  for  CRIS  to  comply  with  the 
accrual accounting rules for the General Budget. The accounting officer validated the 
local  system  in  early  2008.  The  implementation  of  the  new  system  is  now  planned 
for January 2009.  

Although measurable improvements were made in 2007 as regards payments times, 
the overall situation remained unsatisfactory. In the light of the implementing rules 
(Article 106.5), by which creditors are automatically entitled to interest if payments 
are  made  late,  services  need  to  take  action,  and  closely  monitor  payment  time 
compliance  in  the  future.  Suspensions  in  the  procedure  (for  example,  because 

11 

12 

Communication  to  the  Commission:  Revision  of  the  Internal  Control  Standards  and  the  Underlying 
Framework: Strengthening Control Effectiveness - SEC(2007) 1341. 
COM(2008) 110. 

EN 

17 

   EN 

                                                 
additional information is required from the beneficiary) must be recorded in ABAC 
so that payment times are calculated correctly. 

A new, dynamic approach to fraud proofing was introduced13. Based on the lessons 
learned from OLAF’s operational experience, the new arrangements are intended to 
allow  services  to  react  swiftly  to  new  fraud  patterns  and  to  share  information  for 
prevention purposes.  

•  Internal audit 

The  number  of  critical  recommendations  issued  by  the  Internal  Audit  Service  has 
decreased significantly (12 in 2006, 6 in 2007), and there has been a reduction in the 
rate  of 
number  of  audits  generating  adverse  opinions.  The  acceptance 
recommendations  has  increased  from  89%  for  audits  on  Commission  services 
finalised in 2006, to 99% for audits finalised in 2007. 

While the number of critical and very important recommendations overdue by more 
than six months at the end of 2007 remained almost the same as at the end of 2006 
(7 critical and 37 very important recommendations), the total number of outstanding 
critical  and  very  important  recommendations  grew  from  78  to  175  due  to  the 
increased number of audit reports issued. Significant differences were noted between 
the Internal Auditor's view on the state of progress on recommendations and that of 
the  auditee.  The  Commission  needs  the  reasons  for  the  increase  in  outstanding 
recommendations  to  be  examined  and  addressed  including  the  extent  to  which 
differences of view between the auditor and auditees have led to this situation. 

A  number  of  developments  were  observed  with  regard  to  the  internal  audit 
architecture:  

–  Coordination  between  the  Internal  Audit  Service  and  the  Internal  Audit 
Capabilities  was  deepened  in  2007,  leading  to  coordinated  strategic  and  annual 
audit plans aimed at providing better audit coverage of the key risks. These efforts 
towards a greater consolidation of the audit universe are essential having regard 
to the objective of the IAS, supported by the Commission in last year's Synthesis 
report,  of  providing  an  annual  overall  opinion  on  internal  controls  in  the 
Commission starting with 2009, the final year of the current audit planning.  

–  The Commission updated the mission charter of the Internal Audit Service14 and 
introduced a model charter for the Internal Audit Capabilities of the Directorates-
General,  in  order  to  reflect  these  evolutions  and  to  make  more  efficient  and 
effective use of the internal audit resources.  

–  Commission participation in the Audit Progress Committee was extended by the 
appointment in July 2007 of two additional Members among the Commissioners, 
so that it is now composed of seven Commissioners and two external members.  

13 

14 

Communication on the prevention of fraud by building on operational results: a dynamic approach to 
fraud-proofing - COM(2007) 806, 17.12.2007. 
http://ec.europa.eu/dgs/internal_audit/index_en.htm 

EN 

18 

   EN 

                                                 
•  Transparency initiative 

Subsequent  to  a  public  consultation,  the  Commission  adopted  a  Communication, 
"Follow-up  to  the  Green  Paper  'European  Transparency  Initiative'"15,  which 
announced  measures  to  enhance  transparency  in  different  respects.  Regarding  the 
relations  between  interest  representatives  (lobbyists)  and  the  Commission,  it  was 
decided  to  create  and  launch,  in  spring  2008,  a  voluntary  register  of  interest 
representatives,  linked  to  a  code  of  conduct.  Discussions  with  stakeholders  and  an 
open, public consultation16 were organised on the text of the code of conduct.  

In  order  to  enhance  financial  transparency17,  the  Financial  Regulation  requires  the 
publication of beneficiaries of EU funds across all management modes. Work on the 
practical  arrangements  started  in  2007.  The  first  full  publication  exercise  is 
scheduled for 2008, with the exception of the first pillar of the Common Agricultural 
Policy  (the  European  Agricultural  Guarantee  Fund  -  EAGF),  for  which  publication 
must take place in 2009. 

The  Commission  adopted  a  Green  Paper18  on  the  revision  of  Regulation  (EC)  No 
1049/2001 on access to documents, thereby launching an open consultation.  

•  Business continuity management  

All  Directorates-General  developed  Business  Impact  Analyses  and  Business 
Continuity  Plans  in  spring  2007.  A  communication  test  took  place  in  July  2007, 
which examined both internal and external communication channels. A Commission-
wide  business  continuity  exercise  followed  in  December  2007,  which  tested 
corporate business continuity communication flow and operational arrangements for 
crisis  management  teams.  The  outcome  of  both  tests  was  positive  and  a  further 
exercise is planned in 2008. 

•  Building policy 

In a Communication on the accommodation of Commission services in Brussels and 
Luxemburg19,  adopted  in  2007,  the  Commission  further  clarified  its  policy  in  this 
field and launched a revision of the buildings procurement methodology – aimed at 
ensuring both maximum value for money and transparency towards the market. 

15 

16 
17 
18 

19 

COM(2007) 127  
http://www.cc.cec/sg_vista/cgi-
bin/repository/getdoc/COMM_PDF_COM_2007_0127_F_EN_ACTE.pdf 
http://ec.europa.eu/transparency/consultation_code/index_en.htm 
http://ec.europa.eu/commission_barroso/kallas/transparency_en.htm 
COM(2007) 185  
http://ec.europa.eu/transparency/revision/docs/gp_en.pdf 
COM(2007) 501. 

EN 

19 

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DG 

Reservations 2007 

Reservations 2006 

Reservations 2005 

Reservations 2004 

Reservations 2003 

Annex 2: 
Reservations 2003-2007 

AGRI 

2 

1. Insufficient 
implementation of IACS in 
Greece 

1 

1. Insufficient 
implementation of IACS in 
Greece 

2 

2. Expenditure under rural 
development 

REGIO 

2 

1. Management and control 
systems for identified 
ERDF programmes 
(period 2000-2006) in: 

2 

1. the CZECH 
REPUBLIC – 4 
programmes 

2. FINLAND – 4 
programmes (Operational 
Programmes East, North, 
South and West) 

3. GERMANY – 4 
programmes (for OP 
Saarland (objective 2), OP 
Mecklenburg-Vorpommern 
(objective 1), OP Hamburg 
(objective 2) and URBAN II 

Neubrandenburg in 
Mecklenburg-Vorpommern) 

4. GREECE – 15 
programmes (13 regional 
OPs, OP Competitivity and 

3 

1. Management and control 
systems for identified 
ERDF programmes in 
United Kingdom - England 
(West Midlands; London; 
North West; North East; 
Yorkshire and 
the Humber and East 
(URBAN II programme 
only)) and Scotland (West 
and East Scotland) 

2. Management and control 
systems for ERDF 
programmes in the 
INTERREG programmes 
(except IIIB North West 
Europe and Azores, 
Canaries, Madeira) 

3 

3 

1. Preferential import of 
high quality beef 
(“Hilton” beef) – risk of 
non-respect of product 
definition; 
2. Insufficient 
implementation of IACS 
in Greece 

1. Management and 
control systems for 
ERDF in UK-England; 
2. Management and 
control systems for 
ERDF in Spain; 
3. Management and 
control systems for the 
Cohesion Fund in Spain 

1. EAGGF Guidance: 
MS control systems 
2. IACS in Greece; 
3. "Hilton" beef 

1. Management and 
control systems for 
ERDF in one Member 
State; 
2. Management and 
control systems for the 
Cohesion Fund in one 
Member State - 2000/06;
3. Management and 
control systems of ISPA 
in one candidate country 

5 

5 

1. EAGGF Guidance 
programmes; 
2. International Olive Oil 
Council; 
3. Import of Basmati rice;  
4. IACS in Greece; 
5. "Hilton" beef 

1. Management and control 
systems for ERDF in 
Greece - 2000/06; 
2. Management and control 
systems of URBAN & 
INTERREG - 2000/06; 
3. Management and control 
systems for ERDF in Spain 
- 2000/06; 
4. Management and control 
systems for the Cohesion 
Fund in Greece, Spain and 
Portugal - 2000/06; 
5. Management and control 
systems of ISPA 

EN 

20 

EN 

 
  
 
  
  
  
  
 
 
OP Information Society) 

5. IRELAND – 4 
programmes 

6. ITALY – 17 programmes 
(Puglia, Lazio, Sardinia, 
Bolzano, Liguria, Piemonte, 
Friuli Venezia Giulia, 
Calabria, Campania, Molise, 
Sicilia, Transport, Research, 
Technical Assistance, and 
Urban II- Taranto, Mola di 
Bari, and Pescara) 

7. LUXEMBOURG – 1 
programme 

8. POLAND – 3 
programmes (Regional 
Operational Programme 
(IROP), SOP Improvement 
of Competitiveness of 
Enterprises and SOP 
Transport) 

9. SLOVAKIA – 2 
programmes (OP Basic 
Infrastructure and OP 
Industry and Services) 

10. SPAIN (14 Intermediate 
Bodies (with an impact on 
20 OPs), OP "Sociedad de 
la Informacion" and the 10 
URBAN programmes) 

11. INTERREG - 51 
programmes 

EN 

21 

EN 

 
  
 
 
2. Management and control 
systems for identified 
COHESION FUND 
systems (period 2000-2006) 
in: 

- Bulgaria (National Roads 
Infrastructure Fund),  

- the Czech Republic, 

- Slovakia, 

- Hungary (environmental 
sector) and  

- Poland. 

1 

Management and control 
systems for identified ESF 
Operational Programmes in 
Spain, United Kingdom, 
France, Italy, Slovakia, 
Portugal, Belgium and 
Luxembourg. 

EMPL 

1 

1 

1 

1. Systèmes de gestion et 
de contrôle des 
programmes 
opérationnels en 
England (UK) 

1. European Social Fund 
- Member states' 
management and control 
systems of some 
operational programmes 

1 

1. European Social Fund - 
Member states' management 
and control systems  

1. Systèmes de gestion et 
de contrôles de 
programmes opérationnels 
du FSE en Espagne, en 
Ecosse (objectifs 2 et 3, 
UK), en Suède (objectif 3 
en partie), en Slovaquie, en 
Slovénie, en Lettonie et 
dans les régions Calabre et 
Lazio (IT) 

FISH 

0 

0 

0 

0 

0 

1 

1. FIFG: Insufficient 
implementation of 
management and control 
systems for two national 
programmes in one 
Member State 

JRC 

0 

0 

0 

1 

1. Status and correctness 
of the closing balance 

1 

1. Cash flow - 
competitive activities 

1 

1 

1. FIFG expenditure. 
Analysis of the 
Management and Control 
systems not yet completed 
for all Member States 

1. Cash flow, assets and 
liabilities from competitive 
activities 

EN 

22 

EN 

 
  
 
 
RTD 

1 

Reservation concerning the 
rate of residual errors with 
regard to the accuracy of 
cost claims in Sixth 
Research Framework 
Programme (FP6). 

INFSO 

1 

Reservation concerning the 
rate of residual errors with 
regard to the accuracy of 
cost claims in Framework 
Programme 6 contracts. 

2 

1. Accuracy of the cost 
claims and their conformity 
with the provisions of FP5 
research contracts.  

1 

2. Absence of sufficient 
evidence to determine the 
residual level of persisting 
errors with regard to the 
accuracy of cost claims in 
FP6 contracts. 

3 

 1. Allocation of research 
personnel 

2 

1. Exactitude des 
déclarations de coûts et 
leur conformité avec les 
clauses des contrats de 
recherche du 5ème 
PCRD 

1. Errors relating to the 
accuracy and eligibility 
of cost claims and their 
compliance with the 
provisions of research 
contracts under FP5; 
2. Allocation of research 
personnel 

1 

1. Frequency of errors in 
shared cost contracts 

1 

1. Frequency of errors in 
shared cost contracts 

2 

1. Frequency of errors in 
shared cost contracts; 
2. Research staff 
working on operational 
tasks 

2 

1. Frequency of errors in 
shared cost contracts; 
2. Research staff working 
on operational tasks 

ENTR 

2 

1.Unsatisfactory functioning 
of the financing of European 
Standardisation 

2 

2. Reservation concerning 
the rate of residual errors 
with regard to the accuracy 
of cost claims in Sixth 
Research Framework 

2 

1. Errors relating to 
accuracy and eligibility 
of costs claims and their 
compliance with the 
provisions of research 
and eligibility of costs 
claims and their 
compliance with the 
provisions of the 
research contracts under 

2 

1. Frequency of errors in 
shared-cost contracts in 
the research area; 

2 

1. Frequency of errors in 
shared-cost contracts in the 
research area 

2. Uncertainty regarding 
cost claims of the 
European 
Standardisation 
Organisations 

2. Financial management of 
conferences organised 
under the Innovation 
Programme 

EN 

23 

EN 

2. Errors relating to the 
accuracy of cost claims and 
their compliance with the 
provisions of the research 
contracts, FP5 

3. Absence of sufficient 
evidence to determine the 
residual level of persisting 
errors with regard to the 
accuracy of cost claims in 
Framework Programme 6 
contracts 

1. Errors relating to 
accuracy and eligibility of 
costs claims and their 
compliance with the 
provisions of the research 
contracts under FP 5 

2. Unsatisfactory 
functioning of the financing 

 
  
 
 
 
 
 
 
 
Programme (FP6). 

of European 
Standardisation  

the 5th Research 
Framework Programme;

TREN 

1 

Reservation concerning the 
rate of residual errors with 
regard to the accuracy of 
cost claims in Sixth 
Framework Programme 
(FP6) contracts. 

EAC 

0 

1 

1 

2 

1. Erreurs concernant 
l'exactitude et l'éligibilité 
des déclarations de coûts et 
respect des termes des 
contrats du 5e PCRD 

1. Faiblesse des systèmes 
de contrôle constatées dans 
certaines Agences 
Nationales 

2 

2. Uncertainty regarding 
cost claims of the 
European 
Standardisation 
Organisations 

1. Risque de surpaiement 
concernant le 5éme 
Programme Cadre; 
2. Sûreté nucléaire 

4 

1. Frequency of errors in 
shared cost contracts; 
2. Contractual 
environment of DG 
TREN LUX; 
3. Nuclear safety; 
4. Inventory in nuclear 
sites 

0 

0 

1. Insuffisante assurance 
quant à la gestion à 
travers les agences 
nationales 
2. Insuffisante assurance 
quant à la fiabilité et 
l'exhaustivité des 
montants inscrits au 
bilan de la Commission 
et au compte de résultat 
économique 

6 

3 

1. Frequency of errors in 
shared cost contracts; 
2. Burden of the past; 
3. Contractual environment 
of DG TREN Luxembourg; 
4. Expertise for control of 
nuclear security; 
5. Nuclear safety; 
6. Verifications under Art. 
35 of the Euratom Treaty 

1. Burden of the past 
(observation in 2002 AAR); 
2. On the spot controls 
(observation in 2002 AAR); 
3. Implementation of Art. 
35 of FR Implementing 
Rules 

ENV 

1 

Eligibility of expenditures 
declared by beneficiaries of 
action grants 

0 

0 

0 

0 

0 

0 

2 

1. Potentially abnormal 
RAL; 
2. Grants- Eligible costs 

EN 

24 

EN 

 
  
 
 
SANCO 

0 

JLS 

2 

ESTAT 

0 

1. Faiblesse des systèmes de 
contrôle et de gestion du 
Fonds européen pour les 
Réfugiés en Italie, pour les 
périodes de programmation 
2000-2004, et 2005-2007 

2. Garantie limitée sur les 
opérations mises en oeuvre 
par 14 EM dans le cadre du 
FER II (2005-2007) 

ECFIN 

1 

Possibility that additionality 
requirements were 
insufficiently achieved. 

TRADE 

AIDCO 

ELARG 

0 

0 

1 

EN 

Potential irregularities in the 
management of PHARE 

1 

1 

1 

1 

0 

0 

0 

1 

2 

1. Insufficient assurance of 
business continuity of a 
critical activity 

1. Faiblesse des systèmes 
de contrôle et de gestion du 
Fonds européen pour les 
Réfugiés en Italie, pour la 
période de programmation 
2000-2004 

0 

0 

0 

0 

1. Faiblesse des 
systèmes de gestion du 
Fonds européen pour les 
Réfugiés au Royaume-
Uni et au Luxembourg; 
2. Mise en œuvre encore 
incomplète des contrôles 
ex-post sur place 

1. Health crisis 
management 

0 

0 

1. Insufficient number of 
ex-post controls 
missions and lack of a 
fully-fledged 
methodology in the area 
of direct management in 
2005; 
2. Management and 
control systems for the 
European Refugee Fund 
for the UK for 1002-
2004 

2 

2 

0 

0 

1. Absence de garantie sur 
la régularité des paiements 
effectués en 2006 dans le 
cadre des conventions de 
subvention signées avec 
trois Instituts nationaux de 
statistiques pour lesquels 
des manquements ont été 
constatés en 2006 

1. Possibility that 
additionality requirements 
are not sufficiently met 

0 

0 

0 

3 

1. Errors in the 
declaration of eligible 
costs in relation to 
grants; 
2. Insufficient number of 
ex-post controls carried 
out in 2003 

1. Errors in the declaration 
of eligible costs in relation 
to grants; 
2. Weakness in project 
management procedures; 
3. Insufficient number of 
ex-post controls carried out 
in 2003 

0 

0 

0 

0 

0 

0 

0 

0 

1 

0 

0 

1. Legal status and 
liability of contractual 

25 

0 

0 

1 

0 

0 

1. Gaps in Romania's 
and Bulgaria's capacity 

0 

1 

3 

0 

1. Partnership with an 
NGOs association 

1. Inherent risk in 
decentralised systems;2. 

EN 

 
  
 
 
 
 
 
funds under extended 
decentralised management 
by the following Bulgarian 
Implementing Agencies: 

- Central Finance and 
Contract Unit (CFCU) 

- Ministry for Regional 
Development and Public 
Works (MRDPW). 

partner in the framework 
of implementation of EU 
EU contribution to 
UNMIK Pillar IV in 
Kosovo 

to manage and 
implement increasing 
amounts of aids 

Gaps in systems and 
transaction audits;3. 
Uncertainties regarding 
claims of financial 
intermediaries 

ECHO 

0 

0 

0 

0 

0 

DEV 

RELEX 

0 

0 

0 

0 

0 

0 

TAXUD 

0 

0 

0 

0 

2 

1 

0 

1. Insuffisances du 
contrôle et de 
l’information de gestion;
2. Insuffisances de la 
gestion administrative en 
délégations, et 
principalement au niveau 
de la mise en place et du 
respect des circuits 
financiers 

1 

0 

2 

0 

0 

1. Non respect of the 
contractual procurement 
procedures by a 
humanitarian 
organisation for projects 
funded by ECHO 

0 

2 

0 

1. Internal control 
standards in Directorate 
K; 
2. Internal control 
standards in Delegations 

0 

1. Internal control standards 
in Directorate K; 
2. Internal control standards 
in Delegations 

1. Trans-European 
networks for customs 
and tax : availability and 
continuity 

0 

0 

1 

1. Monitoring of the 
application of the 
preferential treatments 

EN 

26 

EN 

 
  
 
 
 
 
MARKT 

0 

COMP 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

COMM 

1 

Supervision 

1 

1. Ex-post control system 

1 

1. Supervision (ex-post 
controls on grants) 

Inadequacy of the Data 
Centre building 
infrastructure in 
Luxembourg. 

0 

1 

0 

1.Business continuity risks 
due to inadequacy of the 
data centres building 
infrastructure. 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

1 

1 

1 

0 

0 

0 

ADMIN 

DIGIT 

PMO 

OIB 

OIL 

EPSO 

OPOCE 

0 

1 

0 

0 

0 

0 

0 

EN 

1. Business continuity 
risks due to inadequacy 
of the data centres 
building infrastructure 

1. Council's antenna for 
sickness insurance 

1. Deficiency in OIB's 
contracts & procurement 
management 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

27 

2 

0 

0 

1 

1. Relays and networks - 
grands centres; 
2. Functioning of 
Representations EUR-15 

0 

0 

1. Council's antenna for 
sickness insurance 

3 

0 

2 

1 

0 

0 

0 

1. Relays and networks; 
2. Representations; 
3. Copyrights - press cuts 

0 

 - 

1. Council's antenna for 
sickness insurance; 
2. Paul Finet Foundation 

1. Lack of long term 
planning of the buildings 
policy. 

0 

0 

0 

EN 

 
  
 
 
 
  
  
 
 
  
 
 
 
BUDG 

0 

0 

0 

2 

0 

1 

0 

0 

0 

1 

1. Accrual accounting 
for the European 
Development Fund; 
2. Accrual accounting of 
the Community Budget - 
three local systems 

0 

1. Weak general internal 
control environment 

0 

0 

0 

1. Audit of community 
bodies (traditional 
agencies) 

2 

0 

0 

0 

0 

0 

1 

1. Accrual accounting 
for the Community and 
the EDF budgets; 
2. Subsystems of 
SINCOM 2: accesses 
control 

0 

0 

0 

0 

0 

1. Audit of Community 
agencies 

3 

0 

0 

0 

0 

0 

1 

1. Accrual accounting; 
2. Syncom subsystems; 
3. Accounting management 
of European Development 
Fund 

0 

0. 

0 

0 

0 

1. Audit of Community 
agencies 

0 

0 

0 

0 

0 

1 

0 

0 

0 

0 

0 

1. Audit of community 
bodies (regulatory 
agencies) 

0 

0 

20 

0 

0 

31 

0 

0 

32 

0 

0 

49 

SG 

BEPA 

SJ 

SCIC 

DGT 

IAS 

0 

0 

0 

0 

0 

0 

OLAF 

TOTAL 

0 

17 

EN 

28 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
Annex 3: 
Synthesis 2007 multi-annual objectives 

This Annex reports on the progress realised in 2007 against the reference framework laid down by the 2004 Synthesis and updated by the 2005 and 
2006 Synthesis reports containing the Commission’s multiannual objectives and related actions to address the major crosscutting management issues.  

New actions introduced as a follow up to the 2007 Synthesis report are indicated in bold italics.  

Internal control systems and performance management 

Subject 

Objective 

Initiative(s) to meet the objective 

Responsible 
service(s) and 
timetable 

Progress made in 2007 

Internal 
control 

1.  Achieving  an 
effective 
internal 
control  system  and 
of 
ownership 
control 
internal 
and 
concepts 
processes 
all 
levels  in  each  DG 
and service. 

at 

The internal control coordinator in each 
service  should  carry  out  a  regular 
review  of  the  effectiveness  of  internal 
control  issues  at  least  in  the  context  of 
to 
twice-yearly 
the 
Commissioners  and  of 
the  annual 
activity report. 

information 

services, 
All 
continuous 
action 
with  the  support  and 
guidance 
of  DG 
BUDG  and  the  ICC 
network. 

Completed 

It  is  now  a  well  established  practice  that 
services  review  at 
the 
control.  This 
effectiveness 
requirement  is  now  enshrined  in  the  Internal 
Control  Standards  for  Effective  Management 
adopted in October 2007- SEC(2007) 1341. 

least  once  a  year 
internal 

of 

Furthermore, 
Commissioner  at 
management and control issues.  

services 
least 

inform 

their 
twice  yearly  on 

Members  of  staff  are 
in  self-
assessment exercises on the effectiveness of the 
internal control system. 

involved 

EN 

29 

EN 

 
  
 
 
Revision of internal control standards to 
enhance effectiveness 

DG  BUDG  by  the 
end of 2007 

Completed 

Develop  indicators  for  legality  and 
regularity  of  transactions  to  support 
assurance in annual activity reports. 

by 
All 
services 
‘families’  with 
the 
support  of  BUDG 
and  SG,  before  the 
establishment 
of 
2007 
(originally: 
2006) annual activity 
in  March 
reports 
2008. 

An internal communication revising the internal 
control standards for effective management was 
adopted in October 2007- SEC (2007) 1341.  

Completed 

for 

Working  groups  have  been  set  up  to  develop 
regularity  of 
legality  and 
indicators 
transactions by families of DGs. The guidelines 
for the Annual Activity Report for the year 2007 
refer to different sets of indicators for: 

- the Research family 

-  direct  centralised  management  (grants  and 
procurement) 

- joint management  

- shared management. 

For  the  Structural  Funds  family,  legality  and 
regularity 
indicators  were  developed  and 
provided  as  from  the  AAR  2006.  For the  AAR 
2007,  particular  attention  has  been  paid  to 
improving  the  content  and  clarity  of  the  report 
by  implementing  the  recommendations  of  the 
Court of Auditors and the IAS. 

EN 

30 

EN 

 
  
 
Annual 
activity 
reports 
Synthesis 

and 

Promoting 

2. 
Commission’s 
accountability 
through 
annual 
activity  reports  and 
synthesis 
their 
solidly  based  on 
assurances 
from 
managers. 

Some  Commission  departments  should 
give, where needed, a fuller explanation 
of  their  environment  and  the  risks 
faced,  including  risks  that  remain  even 
after  mitigating  measures  have  been 
taken. The impact of their environment 
and risks should be made more explicit 
and  in  most  cases  fuller  explanations 
should be given on the overall impact of 
reasonable 
reservations 
assurance. 

the 

on 

With  the  assistance  of  central  services, 
work by ‘families’ will be continued, so 
that  each  area  benefits  from  a  specific, 
coherent methodology. 

All  services  in  the 
2007 annual reporting 
exercise. 

Completed 

The  guidelines  for  Annual  Activity  Reports  for 
the  year  2007  emphasize  the  need  to  include 
more 
coherent 
explanations of DGs' internal control systems.  

streamlined,  precise 

and 

- the use of an internal control template ensures 
that  control  systems  of  the  different  DGs  are 
presented  in  a  more  coherent  way  within  the 
Commission  and,  more  specifically,  within 
families of DGs.  

-  Precise  guidance  was  also  given  to  DGs  to 
explain  how  the  various  components  of  the 
assurance  process 
("building 
link 
blocks").  

together 

- More precise guidance was given on when and 
how to make a reservation.  

- Assurance had to be supported by legality and 
regularity indicators. 

The DGs have generally followed the guidelines 
and  an  improvement  can  be  observed  in  their 
AARs.  

Completed 

Under  the  Action  Plan  towards  an  Integrated 
Internal  Control  Framework,  "internal  control 
templates"  were 
promote 
consistency between services in the presentation 
of control strategies.  

developed 

to 

EN 

31 

EN 

 
  
 
guidance 
in 

The  central  services  will  provide 
to 
further 
promote 
consistency 
treatment  of 
the 
reputational risks and the link between 
error 
and 
reservations. 

materiality 

rates, 

The  Commission  will  further  embed 
risk  management 
regular 
management  process  and  integrate  risk 
internal  control 
its 
assessment 
systems. 

its 

in 

in 

the 

In 2007 such templates were developed for each 
internal 
management  mode,  describing 
control system on a consistent and concise basis 
and presenting a logical build-up to the Director 
General's  assurance  statement.  The  format  was 
used  by  almost  all  services  in  2007  AAR  and 
has  improved  awareness  of  control  structures 
and  sources  of  assurance.  It  furthermore  helps 
pinpoint weaknesses and define improvements. 

BUDG and SG 

New action 

By end 2008 

All services, with the 
assistance  of  DG 
BUDG,  as  specified 
in SEC(2005) 1327. 

Completed 

the  Commission 

The revised Internal Control Standards, decided 
in  October  2007, 
by 
risk 
specifically  provide  a  Standard 
management processes (standard 6). 

for 

Risk  management  was  formally  integrated  into 
the  2006  programming  and  planning  exercise 
and  services’  critical  risks  are  since  then 
disclosed in the Annual Management Plans.  

Risk  manage-
ment 

Establishing 
3. 
effective 
and 
comprehensive  risk 
management 
making  it  possible 
to  identify  and  deal 
with  all  major  risks 
and 
service 
at 
Commission 
level 
lay  down 
and 
to 
appropriate 
action 
to  keep  them  under 
control, 
including 
disclosing  resources 
needed 
to  bring 
major  risks  to  an 
acceptable level. 

EN 

32 

EN 

 
  
Residual risk 

4.  Taking  further 
concept  of 
the 
residual risk 

Commission  will  continue  its  work  on 
the  cost-benefit  of  control  and  on 
residual  risk  per  policy  area.  A 
Communication on this subject will be 
issued in autumn 2008. 

DG  BUDG  together 
concerned 
with 
services 

By October 2008 

New action 

Governance 

Subject 

Objective 

Initiative(s) to meet the objective 

Internal  audit 
recommenda-
tions 

a 

Ensuring 

5. 
smooth 
implementation  of 
accepted 
internal 
audit 
recommendations 

Follow-up  of  action  plans  stemming 
from  internal  audit  recommendations 
should be regularly monitored at senior 
management  level,  and  fully  integrated 
regular  management  planning, 
into 
especially 
the  annual  management 
plans. 

Responsible 
service(s) and 
timetable 

Progress made in 2007 

All services  

Completed 

Follow-up  is  being  actively  monitored  through 
different  tools  (DGs'  internal  databases,  "Issue 
track" system) and regularly reviewed by senior 
management.  

Further  efforts  were  made  to  ensure  a  timely 
implementation of the audit recommendations:  

-  The  Audit  Progress  Committee  alerted  the 
Cabinets  responsible  for  departments  lagging 
the 
them 
behind, 
appropriate follow up by their services. 

to  monitor 

requesting 

-  New  provisions  were 
the 
standing  instructions  to  the  Annual  Activity 
Reports  and  to  the  "peer  review"  process  to 
ensure that Directors-General concerned explain 

introduced 

to 

EN 

33 

EN 

 
  
 
 
 
All 
services 
concerned  with  the 
assistance of SG and 
DG BUDG. 

their 

reports 

in 
reasons  why 
recommendations had not been implemented in 
time.  

the 

Ongoing 

In  a  Communication  of  March  200820,  the 
Commission  drew  attention  to  the  lack  of  a 
common  vision  on  the  role  and  functions  of 
regulatory  agencies.  It  announced  a  horizontal 
evaluation  of 
regulatory  agencies,  a 
moratorium  on  creating  new  agencies  and  a 
review  of 
internal  systems  governing 
agencies. 

the 

its 

negotiate 

agencies. 

regulatory 

The input of all institutions is necessary 
comprehensive 
a 
to 
framework,  to  clarify  the  respective 
responsibilities of the institutions and of 
the 
This 
framework  would  be  applicable  to  the 
creation  of  future  agencies  and,  at  a 
later 
in 
existence. The Commission calls on the 
proposed 
adopt 
Council 
framework  on 
regulatory  agencies, 
suggest  amendments,  or  reflect  on  new 
possibilities. 

those  already 

stage, 

the 

to 

to 

The Commission will develop practical 
solutions  respecting 
the  balance  of 
responsibilities and accountability. 

Interested  DGs  with 
of 
the 
support 
BUDG,  SG, 
and 
DIGIT. 

Continuous action 

IT 

Regarding 
Infrastructure  Consolidation, 
DIGIT is already ensuring end-user support for 
the  ADMIN  family  (DG  ADMIN  and  offices), 
DG REGIO and the IAS. Furthermore, DG EAC 
signed a "protocole d'accord" to take over its IT-
support. 

The Service Level Agreement (SLA) which was 
established  in  2006  between  BEPA  and SG  for 

Regulatory 
agencies 

6.  Clarifying 
the 
respective roles and 
responsibilities  of 
Commission 
services 
regulatory 
agencies. 

and 

Inter-service 
arrangements 

that 

7.  Ensuring 
inter-service 
arrangements 
for 
small  services  are 
based  on  a  cost-
benefit analysis and 
made in accordance 
applicable 
with 
while 
rules, 
the 
preserving 
of 
responsibility 

20 

EN 

Communication from the Commission to the European Parliament and the Council: "European Agencies – the way forward" - COM(2008) 135. 

34 

EN 

 
  
                                                 
each 
delegated 
authorising officer. 

Reservations 

8.  Ensuring  strong 
follow-up  of  action 
plans  related  to  the 
expressed 
reservations, 
notably 
for 
to 
progress 
made in 2008. 

the 
be 

management  of  human  and  financial  resources, 
logistics and strategic planning was renewed in 
2007. 

The  SLA  signed  in  2006 between  DG  ADMIN 
and  the  IAS  for  management  of  the  latter's 
human  and  financial  resources  was  renewed  in 
2007. 

OIB cooperates with other Services on the basis 
of  clearly  defined  arrangements  &  Service 
Level Agreements. In 2007, the following SLAs 
regarding buildings were signed:  

-  with  EAC  executive  agency 
supplementary office space) 

(on 

the 

- with ERC and RTD Commission Agency 

(signature  for  Covent  Garden  building 
ongoing)  

is 

- with CoR/EESC (VM-2 building) 

- with CFCA Executive Agency 

DGs concerned 

Continuous action 

DGs  report  on  the  implementation  of  action 
plans  in  a  given  year  in  their  annual  activity 
report.  This  has  been  specifically  mentioned  in 
the standing instructions for 2007 AARs.  

DGs were also invited to mention the actions to 
be  taken  in  the  coming  year  as  a  follow  up  to 
previous  reservations.  This  requirement  was 
included in the guidelines for the 2008 AMPs.  

to 

report 

on 
Directors-General  will 
progress 
respective 
the 
Commissioner  in  the  context  of  the 
regular follow-up meetings on audit and 
control.  The ABM  Steering  Group  will 
closely  monitor  and  regularly  report  to 
the  College  on  the  implementation  of 
the  remedial  actions 
that  delegated 
authorising  officers  have  committed  to 
carry out in their annual activity reports.

EN 

35 

EN 

 
  
For  all 
reservations,  delegated  authorising 
officers have laid down appropriate action plans 
to  solve 
the  underlying  weaknesses.  They 
monitored  the  implementation  of  action  plans 
and reported to the Commissioner responsible .  

The implementation of all action plans has also 
been  monitored  by  the  ABM  Steering  Group 
which 
report 
regularly  to  the  Group  on  the  state  of  play  of 
their action plans.  

invited  Directors-General 

to 

Financial management 

Subject 

Objective 

Initiative(s) to meet the objective 

Implementation  of 
towards 
Framework. 

an 

the  action  plan 
Internal 

Integrated 

Integrated 
internal 
control 
framework 

Enhancing 
by 
a 

9. 
accountability 
establishing 
comprehensive 
internal 
integrated 
control  framework 
the 
in 
line  with 
requirements 
set 
out  in  the  ECA’s 
opinions  on  ‘single 
audit’. 

Responsible 
service(s) and 
timetable 

All services 

Ongoing 

Progress made in 2007 

Commission  adopted  on  27/2/2008  a  report  on 
the  action  plan  towards  an  integrated  internal 
control  framework  (COM(2008)  110  final). 
Most  actions  have  been  implemented  and  the 
remaining ones will be completed during 2008. 
The  Commission  can  show  that  it  has  made 
concrete  progress.  The  impact  of  the  actions 
will  form  the  basis  of  the  evaluation  of  the 
progressive  success  of  the  action  plan  through 
decreasing  error  rates  and  improved  ratings  of 
systems  by  the  Court.  Early  in  2009  the 
Commission  will  prepare  a  further  impact 

EN 

36 

EN 

 
  
 
closer 

harmonisation 

Further  attempts  have  to  be  made  to 
achieve 
of 
methodology and definition of common 
ex-post  control  strategies  and  ensure 
proportionality between ex-ante and ex-
post  controls,  at  least  at  the  level  of 
‘families’  of  services  operating  in  the 
same budget area. 

All  services  with  the 
assistance  of  DG 
BUDG,  continuous 
action. 

and 

Ex-ante 
ex-post 
controls 

by 

Improving 
and 

10. 
efficiency 
strengthening 
accountability 
ensuring 
proportionality  and 
sound  balance 
a 
ex-ante 
between 
ex-post 
and 
controls 
and  by 
further 
harmonisation  and 
better  focusing  of 
ex-post controls 

assessment as at 31 December 2008. 

Completed 

to 

for 

In  2007,  "internal  control  templates"  were 
developed 
each  management  mode, 
describing  the  internal  control  system  on  a 
consistent  and  concise  basis  and  presenting  a 
logical  build-up 
the  Director  General's 
assurance  statement.  These  templates  are  built 
on  a  common  format  which  leaves  some 
flexibility  for  adaptation  to  the  needs  of  the 
DGs.  The  format  was  used  by  almost  all 
services  in  2007  AAR  and  has  improved 
awareness  of  control  structures  and  sources  of 
assurance.  It  helps  pinpoint  weaknesses  and 
define improvements. 

EN 

37 

EN 

 
  
Common  guidelines  on 
sampling 
methods and related level of confidence 
should be finalised. 

Services  concerned 
with  the  support  of 
DG 
BUDG, 
progressively  up  to 
the end of 2007. 

Ongoing 

Extensive  guidelines  on  audit  sampling  in  line 
with  international  auditing  standards  have  been 
prepared  in  the  Structural  Funds  to  promote 
coherence  in  testing  done  by  Member  State 
audit  authorities21.  The  Commission  has 
provided  guidance  on  best  practice  in  the 
management  of  external  audit 
framework 
contracts  to  ensure  a  consistency  and  high 
quality of audit results22.  

In  the  research  area,  the  joint  audit  strategy  set 
up in 2007 includes guidance on sampling.  

Based  on  the  experience  gathered  from  the 
research  audit  strategy  and  taking  into  account 
that  not  all  elements  of  the  approach  are 
transposable  to  all  areas,  the  Commission  will 
issue  guidance  to  its  services  on  sampling 
strategies by July 2008.  

DG  COMM  will  put  in  place  a  system 
of  structured  ex-post  control  in  all 
the 
Representations  and  Units 
Headquarter. 

in 

DG  COMM  by  the 
end of 2007 

Completed 

A centralised ex-post control unit was set up in 
this Directorate-General on 1 November 2007.  

21 
22 

Para 40 & 49 Opinion 02/2004. 
Para 37 Opinion 02/2004. 

EN 

38 

EN 

 
  
 
 
                                                 
The Commission will further strengthen 
its accounting processes and systems to 
improve  the  quality  of  the  financial 
information 
of 
deadlines. 

respect 

and 

the 

All 
services, 
action 
continuous 
with  the  assistance 
of the services of the 
Accounting Officer 

Accounts 

11. 
Increasing 
responsibility  and 
at 
accountability 
the 
the 
level  of 
Commission  as  a 
the 
whole 
signing-off  of  the 
accounts  by 
the 
Accounting  Officer 
improved 
and  by 
quality  of  financial 
information. 

by 

Financial 
simplification 

Making 

12. 
financial 
management  more 
by 
efficient 
applying 
simplification 
measures. 

Services  are  called  upon  to  apply  the 
simplification  measures  that  have  been 
introduced  by  the  basic  acts  under  the 
next  generation  of  programmes  (2007-
2013)  and  by  the  amended  financial 
rules 

All 
services 
concerned  as  from 
the  entry  into  force 
legal 
these 
of 
provisions. 

Continuous action 

In  2007,  DG  Budget  complemented  and 
consolidated the accounting modernisation.  

The  single  datawarehouse  was  also  made 
available to all services and is expected to lead 
to  an  improvement  in  financial  management 
information.  

report  on 

The  Accounting  Officer’s 
the 
verification of local systems at the end of 2007 
noted  improvements  compared  to  2006,  mainly 
in the development of the knowledge of accrual 
accounting  and  ABAC  systems.  However,  two 
systems were not validated. 

Completed 

During 2007 the Commission clarified the rules 
through  guidelines,  notably  the  guidelines  on 
FP7,  on  the  implementing  rules  for  Structural 
Funds  2007-13,  for  Education  Policy  2007-13, 
and will continue to provide support and further 
guidance  where  necessary.  The  Commission 
will also ensure that future legislative proposals 
include clear and straightforward rules. 

EN 

39 

EN 

 
  
 
Human resources 

Subject 

Objective 

Initiative(s) to meet the objective 

Simplification 

13.  Simplifying 
to 
procedures 
both 
increase 
efficiency 
and 
employee 
satisfaction. 

The Task Force for the simplification of 
administrative  procedures  will  propose 
specific  measures 
to  simplify  and 
improve  human  resource  management 
and administrative procedures. 

Responsible 
service(s) and 
timetable 

DG ADMIN by June 
2007  (originally  by 
the end of 2006) 

Progress made in 2007 

Completed 

DG ADMIN, based on a collaborative effort and 
consultation of all Commission staff, prepared a 
Communication  to  the  College  enshrining  the 
key  principles  of  the  simplification  drive  and 
proposing a detailed plan with 85 actions, to be 
carried  out  within  well  defined  deadlines.  This 
the 
Communication  was 
its 
Commission  on  4 
implementation is ongoing. 

adopted 
July  2007 

by 
and 

the  Commission’s 

In parallel, the Commission will present 
to  simplify  and 
specific  measures 
improve 
staff 
appraisal  system  (Career  Development 
Review). 
These  measures  will 
complement those presented early 2006 
which were already implemented in the 
current exercise. 

DG  ADMIN  by  the 
end of 2007 

Completed 

New  rules  have  been  presented  in  March  2008 
after  an 
intense  consultation  process  with 
Commission  services  and  staff  representatives 
throughout 2007 and the first quarter of 2008. 

The  new  rules  should  be  implemented  in  2009 
and  should  allow  for  a  better  differentiation  of 
to  merit.  The 
according 
career 
assessment and promotion exercises will also be 
significantly shortened. 

speeds 

EN 

40 

EN 

 
  
 
 
Staff skills  

Aligning 
and 
to 
that 
the 
and 

14. 
resources 
needs  better 
make  sure 
staff  have 
skills 
qualifications 
to 
necessary 
their 
perform 
duties, 
in 
particular in areas 
such  as  financial 
management, 
audit, 
science, 
linguistics and IT. 

the  conclusions  of 

Following 
the 
evaluation  on  the  Strategic  Alignment 
of Human Resources, various measures 
are being prepared. 

-programme  of 
European 

The  Commission  will 
identify  any 
shortfalls  and  communicate  its  specific 
needs  so  that  they  are  promptly  taken 
into  consideration  and  included  in  the 
inter-
work 
Personnel 
institutional 
Selection  Office. 
of 
specialised  training  and  measures  to 
improve 
the  recruitment  procedures 
and,  in  particular  in  areas  where  a 
shortage of skilled staff is identified. 

Provision 

the 

DG  ADMIN  by  the 
end of 2007 

Ongoing 

Among the measures already started: 

- the development of the HR Community; 

- the dissemination of best practices; 

- the HR Professionalisation Programme; 

- the development of HR Metrics; 

- the HR scorecard prototype; 

- the specification of the HR reporting facility in 
Sysper2. 

Ongoing 

On 13.11.2007, Vice-President Kallas submitted 
to  the  College  a  Communication  (SEC(2007) 
1412)  describing  how  EPSO  had  served  the 
Commission's  needs  in  the  last  few  years  and 
spelling out ways of improving the situation. 

DG  ADMIN 
EPSO, 
tasks. 

and 
ongoing 

The  Commission  will  take  measures  to 
improve  its  Job  Information  System  so 
that it enables the organisation to have a 
its  current  human 
global  view  of 
resources and to produce easily detailed 
analysis by corporate processes. 

DG  ADMIN 
in 
collaboration  with 
DIGIT,  SG  and  DG 
BUDG by end 2007 

Ongoing 

The  e-CV  project  was  delayed  because  of 
rearranged priorities. 

There are now approximately 3 000 CVs in the 
system,  but  full  deployment  and  use  will  only 
take  place  in  2008,  once  the  matching  tool  is 
tested and validated. 

EN 

41 

EN 

 
  
 
 
 
adjust 

The  Commission  will 
its 
of  mobility,  where 
management 
necessary, so as to achieve the ultimate 
objective  of  ‘the  right  person  in  the 
right  job’,  in  particular  as  regards 
sensitive  posts.  Proposals  will  be  made 
during  2006  to  mitigate  the  impact  of 
mobility,  with  particular  attention  for 
specialised  functions  and  small  DGs 
and sites. 

DG  ADMIN 
in 
collaboration  with 
SG  and  DG  BUDG, 
by  the  end  of  2007 
(originally  by 
the 
end of 2006). 

Completed 

The  revision  of  the  Commission's  Internal 
Control  Standards,  was  concluded  in  October 
2007  and  guidelines  on  sensitive  functions 
(January 2008) were subsequently adopted.  

It should result in a more harmonised approach 
of  the  Commission's  services  in  regards  to  the 
improved 
definition  of  sensitivity  and  an 
monitoring  of  the  most  critical  sensitive  posts, 
thus  significantly  reducing  the  issues  related  to 
compulsory mobility. 

Continuity of operations 

Subject 

Objective 

Initiative(s) to meet the objective 

Business 
continuity 

15.  Ensuring 
that 
the  Commission  is 
able 
to  maintain 
business  continuity 
in  case  of  major 
disruption 
its 
activities  

to 

Commission 

The 
adopt 
Commission-wide policy guidelines and 
develop business continuity plans. 

will 

Responsible 
service(s) and 
timetable 

of 

All  services  with  the 
support 
SG, 
ADMIN  and  DIGIT 
by  the  end  of  March 
2007. 

Progress made in 2007 

Completed 

All  Directorates-General  developed  Business 
Impact Analyses and Business Continuity Plans 
in  spring  2007.  A  communication  test  took 
place  in  July  2007,  which  examined  both 
internal  and  external  communication  channels. 
continuity 
A  Commission-wide 
exercise  followed  in  December  2007  with 
satisfactory results.  

business 

The Commission will address the issue 
of  the  suitability  of  the  data  centre 

DIGIT, OIB and OIL 
in 2006 and in 2007. 

Ongoing 

EN 

42 

EN 

 
  
 
 
hosting  IT  systems  and  ensure  that 
the  best  IT 
current  reflections  on 
governance 
to 
lead 
operational conclusions in 2006. 

arrangements 

A multi-annual (2006-2011) strategy to improve 
the housing conditions for the Data and telecom 
Centres of the Commission has been developed 
and  approved.  This  should  lead  to  the  most 
critical 
into 
professional data centre type rooms in a phased 
approach  and 
refurbishing  of  air 
the 
conditioning  and  electrical  infrastructure  in  the 
JMO Data Centre room. 

IT  equipments  being  moved 

to 

Contracts  for  the  rent  of  two  new  data  centre 
type rooms in Brussels and in Luxembourg were 
signed.  For  the  one  in  Brussels,  the  move  was 
completed in February 2007 and, for the one in 
Luxembourg, by March 2007. 

OIL  planned  a  second  room  in  Luxembourg 
which should have been available by July 2007 
and  initiated  the  required  procedures.  These 
premises  are  however  currently  still  not 
available. 

EN 

43 

EN 

 
  
Annex 4: 
Executive and regulatory agencies 

In  line  with  practice  in  most  Member  States,  using  agencies  to  implement  key  tasks  has 
become an established part of the way the European Union works.  

Executive  agencies  operate  in  a  clear  institutional  framework,  governed  by  a  single  legal 
base23. Their tasks must relate to the management of Community programmes or actions, they 
are set up for a limited period and they are always located close to Commission headquarters. 
The responsibility of the Commission for executive agencies is clear: the Commission creates 
them,  maintains  "real  control"  over  their  activity,  and  appoints  the  director.  Their  annual 
activity reports are annexed to the report from their parent Directorate(s)-General. A standard 
financial  regulation  adopted  by 
the  establishment  and 
implementation  of  the  budget,  applies  to  all  executive  agencies.  A  revision  of  the  working 
arrangements was also agreed in October 2007 with the European Parliament, with the aim to 
further facilitate inter-institutional cooperation in this field.  

the  Commission,  governing 

Six executive agencies have been created:  

•  the  Executive  Agency  for  Competitiveness  and  Innovation  Programme  (EACI  –  former 

Intelligent Energy Executive Agency) 

•  the Public Health Executive Agency (PHEA) 

•  the Education, Audiovisual and Culture Executive Agency (EACEA) 

•  the Trans-European Transport Network Executive Agency (TEN-TEA) 

•  the European Research Council Executive Agency (ERC)  

•  the Research Executive Agency (REA).  

Three of these were operational in 2007. Their annual activity reports did not indicate any 
particular control issues. The breakdown of staff employed in 2007 by these agencies was as 
follows:  

Contractual 
agents 

and 

Other  external 
agents 

Total 

Seconded 
officials 
temporary 
agents 

EACI 

22 

PHEA 

8 

47 

20 

69 

28 

23 

Council  Regulation  (EC)  No  58/2003  of  19  December  2002  laying  down  the  statute  for  executive 
agencies  to  be  entrusted  with  certain  tasks  in  the  management  of  Community  programmes  (OJ  L  11, 
16.1.2003). 

EN 

44 

   EN 

 
 
 
 
                                                 
EACEA  69 

Total  

99 

232 

299 

10 

10 

311 

408 

The  screening  of  resources  by  the  Commission  of  April  2007  suggested  that  there  are  no 
strong  candidates  for  a  new  executive  agency24.  If  new  needs  appear,  the  Commission's 
starting  point  will  be  to  explore  the  option  of  extending  the  scope  of  an  existing  agency  to 
cover  a  new  programme.  Under  the  current  circumstances,  it  is  unlikely  that  new  executive 
agencies will be needed during the period of the current financial framework to 2013. 

The 29 regulatory agencies are independent legal entities and the 20 of these which receive 
funds  from  the  European  Union  budget  receive  discharge  directly  from  the  European 
Parliament.  In  a  Communication  of  March  2008  "EU  agencies:  the  way  forward"25  the 
Commission  drew  attention  to  the  lack  of  a  common  vision  on  the  role  and  functions  of 
regulatory  agencies.  It  announced  a  horizontal  evaluation  of  the  regulatory  agencies,  a 
moratorium  on  creating  new  agencies26  and  a  review  of  its  internal  systems  governing 
agencies. A common website of the Commission and the regulatory agencies was created on 
the Commission's intranet to provide a platform for documents of shared interest. 

24 
25 

26 

SEC(2007) 530 "Planning & optimising Commission human resources to serve EU priorities". 
Communication from the Commission to the European Parliament and the Council: European Agencies 
– the way forward - COM(2008) 135. 
It however indicated that agencies which are already under inter-institutional discussion would go ahead 
as  planned,  including  existing  proposals  in  the  fields  of  energy  and  telecoms,  as  well  as  planned 
agencies  in  the  field  of  justice  and  home  affairs  and  that  changes  in  the  scope  of  existing  agencies 
would also continue.  

EN 

45 

   EN 

 
 
                                                 
Annex 5: 
Rapport sur les procédures négociées 

1. BASE LEGALE 

L'article  54  des  Modalités  d'Exécution  (ME)  du  Règlement  Financier  (RF)  établit 
l'obligation, pour les ordonnateurs délégués, de recenser les marchés faisant l'objet de 
procédures  négociées  (PN).  En  outre  la  Commission  doit  annexer  au  résumé  des 
Rapports  Annuels  d'Activités  (RAA)  visé  à  l'art.  60.7  du  RF  un  rapport  sur  les 
procédures négociées. 

2. MÉTHODOLOGIE 

Une  distinction  a  été  faite  entre  les  40  directions  générales,  services,  offices  et 
agences  exécutives  qui,  en  principe,  n’octroient  pas  d’aide  extérieure,  et  les  3 
directions générales (AIDCO, ELARG et RELEX) passant des marchés dans le cadre 
d'actions  extérieures  (base  légale  différente:  chapitre  3  du  titre  IV  de  la  deuxième 
partie  du  RF)  ou  pour  compte  de  la  Commission  mais  en  dehors  du  territoire  de 
l'Union européenne. 

En  effet,  ces  3  directions  générales  présentent  des  aspects  particuliers  en  ce  qui 
concerne la collecte des données (déconcentration des services…), le nombre total de 
marchés  passés,  l'application  d'autres  seuils  pour  le  recensement  des  procédures 
négociées (10 000 €), ainsi que la possibilité  de recours à la procédure négociée dans 
le cadre du mécanisme de réaction rapide (urgence impérieuse). Pour ces raisons, les 
marchés de ces Directions générales nécessitent une approche statistique distincte. 

3. RESULTATS GLOBAUX DU RECENSEMENT FINAL 

3.1. 

Les  40  directions  générales,  services  ou  offices  sans  les  3  directions  générales 
"actions extérieures" 

Sur base des données reçues, les statistiques suivantes ont été établies: 148 marchés 
négociés pour une valeur totale de 156 513 441 € ont été attribués sur un ensemble 
de  1 085  marchés,  toutes  procédures  confondues,  pour  une  valeur  totale  de 
1 383 010 782 €. 

La  proportion  moyenne  pour  l'Institution  du  nombre  de  procédures  négociées  par 
rapport  au  nombre  de  marchés  passés  s'élève  dès  lors  à  13,64 %.  La  moyenne  de 
l'Institution calculée par rapport au montant des marchés attribués (au lieu du nombre 
de marchés) s'élève à 11,32 %. 

Il  a  été  considéré  que  la  proportion  pour  une  DG/service  doit  être  estimée  comme 
"notablement plus élevée que la moyenne enregistrée au niveau de son Institution", 
quand  elle  dépasse  de  moitié  la  proportion  moyenne,  c'est-à-dire  lorsqu'elle  est 
supérieure au seuil de référence s'établissant à 20,46 %. 

Ainsi, 9 directions générales ou services sur 40 ont dépassé le seuil de référence en 
2007.  Toutefois,  il  faut  signaler  qu'une  des  directions  générales  n'a  passé  qu'une 

EN 

46 

   EN 

 
procédure négociée mais son faible nombre de marchés au total fait que sa moyenne 
est élevée. Par ailleurs, pour deux des directions générales, les procédures négociées 
représentent un pourcentage substantiellement inférieur à la moyenne de l'Institution 
en valeur totale des marchés passés.  

Par ailleurs, l'évolution par rapport à 2006 pour l'ensemble des directions générales a 
été limitée: augmentation de 1,33 % en nombre de procédures et de 4,01 % en valeur. 
Ainsi 5 directions générales présentent une augmentation interannuelle qui peut être 
considérée comme sensible par rapport aux années précédentes (supérieure à 10 %). 

3.2. 

Les trois directions générales "actions extérieures" 

Sur base des données reçues, les statistiques suivantes ont été établies: 196 marchés 
négociés pour une valeur totale de 116 182 314 € ont été attribués sur un ensemble 
de  1 696  marchés  toutes  procédures  confondues,  pour  une  valeur  totale  de 
1 324 647 489 €. 

La  proportion  moyenne  pour  les  3  directions  générales  "actions  extérieures"  du 
nombre  de  procédures  négociées  par  rapport  au  nombre  de  marchés  passés  s'élève 
dès  lors  à  11,56 %  et  la  moyenne  calculée  par  rapport  au  montant  des  marchés 
attribués s'élève à 8,77 %. Le seuil de référence (moyenne plus 50 %) étant donc de 
17,33 %, aucune des ces 3 directions générales ne dépasse ce seuil. 

La  comparaison  interannuelle  pour  ces  directions  générales,  par  rapport  à  l'année 
2006,  montre  une  certaine  stabilité:  pas  de  changement  dans  le  pourcentage  du 
nombre  des  procédures  négociées  et  diminution  significative  de  3,85 %  de  leur 
valeur. 

4. ANALYSE DES JUSTIFICATIONS ET MESURES CORRECTIVES 

Trois  catégories  de  justifications  sont  évoquées  par  les  directions  générales  ayant 
dépassé les seuils: 

•  Des  déviations  statistiques  résultant  d'un  faible  nombre  de  marchés  passés 
(toutes  catégories  confondues)  ou  de  l'utilisation  de  contrats  cadres.  Ceci,  en 
intégrant dans un seul contrat «cadre» un nombre élevé de contrats «spécifiques», 
réduit le nombre total de marchés passés par les Directions générales concernées et 
donc la base applicable (ensemble de marchés, toutes catégories confondues). 

•  Des  situations  objectives  du  secteur  d'activité  économique  où  le  nombre 
d'opérateurs  (candidats  ou  soumissionnaires)  peut  être  fort  limité,  voire  en 
situation  de  monopole  (pour  des  raisons  de  propriété  intellectuelle,  expertise 
spécifique…). Des situations de captivité technique peuvent également apparaître. 

•  Des marchés complémentaires, lorsqu'ils ne peuvent pas être techniquement ou 
économiquement séparés du marché principal (initial), ou les marchés similaires, 
conformes au projet de base. 

EN 

47 

   EN 

 
Plusieurs  mesures  correctives  ont  déjà  été  proposées  ou  mises  en  place  par  les 
directions générales: 

•  L'établissement de documents types et documents d'orientation. La publication 
en  avril  2008  du  nouveau  Vade-mecum  des  marchés  de  la  Commission, 
substantiellement amélioré, s'intègre dans cette ligne d'action. 

•  L'amélioration de la formation et une meilleure communication interservices. 
À ce titre, le Service financier central a mis en place pour 2008 une série d'ateliers 
qui ont pour objectif, d'une part, d'améliorer le niveau des procédures des marchés 
et,  d'autre  part,  d'offrir  un  forum  d'échange  d'expériences  entre  différents 
DG/services, afin de promouvoir les meilleurs pratiques. 

•  L'amélioration  du  système  d'évaluation  des  besoins  des  DG/services  et  une 

bonne programmation. 

•  Le  renforcement  de  la  structure  interne  et  l'application  des  standards  de 
contrôle.  Les  procédures  de  marchés  devront  continuer  à  être  intégrées  dans  la 
revue  régulière  sur  l’efficacité  du  contrôle  interne,  notamment  l’analyse  de  la 
dépendance  éventuelle  envers  certains  contractants.  En  tout  état  de  cause,  les 
procédures et contrôles doivent être correctement documentés pour assurer la piste 
de l'audit.  

EN 

48 

   EN 

 
Annex 6: 
Summary of waivers of recoveries of established amounts receivable in 2007  

(Article 87.5 IR) 

In  accordance  with  Article  87(5)  of  the  Implementing  Rules  the  Commission  is  required  to 
report  each  year  to  the  budgetary  authority,  in  an  annex  to  the  summary  of  the  Annual 
Activity Reports, on the waivers of recovery involving 100 000 € or more.  

The following table shows the total amount and the number of waivers above 100 000 € per 
Directorate-General/Service for the EC budget and the European Development Fund for the 
financial year 2007.  

EC budget: 

Directorate-General/Service  

Amount of waivers in € 

Number of waivers 

AIDCO 

EAC 

EACEA 

ECHO 

ENTR 

INFSO 

RTD 

TREN 

1.565.692,31 

651.065,59 

466.000,00 

507.960,89 

627.441,60 

1.089.676,12 

1.312.047,13 

1.283.040,18 

9 

5 

2 

1 

4 

7 

5 

5 

7.502.923,82 

38 

European Development Fund: 

Directorate-General/Service 

Amount of waivers in €

Number of waivers 

AIDCO 

465.540,96 

2 

EN 

49 

   EN 

 
 
Annex 7 
Compliance with payment time-limits 
and suspension of time-limits  

(Article 106.6 IR) 

Time-limits  for  payments  are  laid  down  in  the  Implementing  Rules  of  the  Financial 
Regulation27 (hereinafter IR), and exceptionally in sector specific regulations. Under Article 
106  IR  payments  must  be  made  within  forty-five  calendar  days  from  the  date  on  which  an 
admissible  payment  request  is  registered  or  thirty  calendar  days  for  payments  relating  to 
service or supply contracts, save where the contract provides otherwise. Commission standard 
contracts  are  in  line  with  the  time-limits  provided  for  in  the  IR.  However,  for  payments 
which,  pursuant  to  the  contract,  grant  agreement  or  decision,  depend  on  the  approval  of  a 
report  or  a  certificate  (interim  and/or  final payments),  the  time-limit  does  not  start  until  the 
report or certificate in question has been approved28. Under Article 87 of the Regulation of the 
European  Parliament  and  the  Council  laying  down  general  provisions  on  the  European 
Development Fund, the European Social Fund and the Cohesion Fund, a specific rule applies: 
payments have to be made within two months29.  

Following  the  revised  Implementing  Rules,  which  entered  into  application  on  1  May  2007, 
the compliance with payment time-limits was reported for the first time by the Services in the 
2007 Annual Activity Reports30. Overall, the Commission has improved its performance for 
payments  over  2005-2007,  in  number  and  in  value,  even  if  the  average  delay  has  not 
significantly  decreased.  The  following  table  summarises  the  current  situation  concerning 
payments  made  after  the  expiry  of  the  time-limits  (hereafter  late  payments),  as  resulting 
from data encoded in ABAC: 

2005 

Late payments in number 

42,74% 

Late payments in value 

17,48% 

2007 

22,57% 

11,52% 

Delays on average31 

49,13 days 

47,98 days 

The cause of delays include inter alia the complexity of evaluation of supporting documents, 
in particular of technical reports requiring external expertise in some cases, the difficulty of 

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28 

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30 
31 

Commission Regulation (EC) No 2342/2002 of 23 December 2002 (OJ L 357, 31.12.2002, p. 1) as last 
amended by Regulation (EC) No 478/2007 of 23 April 2007 (OJ L 111, 28.4.2007, p. 13). 
Pursuant to Article 106(3) IR, the time allowed for approval may not exceed: 
(a) 20 calendar days for straightforward contracts relating to the supply of goods and services; 
(b) 45 calendar days for other contracts and grants agreements; 
(c) 60 calendar days for contracts and grant agreements involving technical services or actions which 
are particularly complex to evaluate. 
Regulation  (EC)  No  1083/2006  of  the  European  Parliament  and  of  the  Council  laying  down  general 
provisions on the European regional Development Fund, the European Social Fund and the Cohesion 
fund and repealing Regulation (EC) No 1260/1999 (OJ L 210, 31.7.2006, p. 25). 
Based on available data in ABAC as of end of the financial year 2007. 
Net delays. 

EN 

50 

   EN 

 
 
 
                                                 
 
 
 
efficient  coordination  of  financial  and  operational  checks  of  requests  for  payments,  and 
managing suspensions.  

The Commission has taken many steps to avoid late payments. Internal monitoring systems, 
with  regular  reporting  on  late  payments  and/or  requested  payments  have  been  put  in  place. 
Simplification initiatives have been taken to speed up the process of examining requests for 
payments, such as wider use of audit certificates, better definition of deliverables or types of 
costs  to  facilitate  the  checks  to  be  carried  out.  Awareness  actions  and  exchanges  of  best 
practices also take place on a regular basis. These measures have already impacted positively, 
as  the  above  statistics  indicate.  Moreover,  in  order  to  meet  the  new  requirements  of  the 
revised IR, further developments had also to be made to ABAC in 2008. 

As far as the payment of interest for late-payments is concerned, the Commission has had 
to deal with limited requests over 2005-2007. 

2005 

2007 

Requests  for  interest  for  late 
payments in number 

149, i.e. 0,11% 

136, i.e. 0,16% 

Amounts  of  interest  paid  for 
late payments 

230.736,58 € 

378.211,57 € 

The rules for the payment of interest for late payments are clearly stipulated in the standard 
contracts and grant agreements used by the Commission authorising officers. The very limited 
number of requests for payment of interest might be due to the fact that beneficiaries have not 
paid sufficient attention to the clauses entitling them to claim interest or that they deliberately 
do  not  claim  it,  in  particular  if  the  amount  is  not  significant  or  if  they  have  submitted  the 
supporting documents late32. As from 1 January 2008 payment of interest for late payments is 
automatic  and,  in  principle33,  no  longer  conditional  upon  the  presentation  of  a  request  for 
payment. 

The  Commission  is  committed  to  further  improving  the  management  of  payments  and 
instructs  its  Services  to  comply  constantly  with  high  performance  standards,  to  assess  the 
efficiency of its tools and to take appropriate corrective measures to ensure timely payments. 

32 
33 

In 2007, more than 1/3 of the total amount of interest paid has been paid to two energy suppliers. 
With the exception of small amounts (200 euro in total or less). 

EN 

51 

   EN