Proposal for a Decision of the European Parliament and of the Council of […] establishing a Community programme to support specific activities in the field of financial services, financial reporting and auditing {SEC(2009) 54}
Date: 2009-01-23
Institutions: European Commission
Subjects: EU financing, EU programme, auditing, financial services, information technology, technical standard, vocational training

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 23.1.2009 
COM(2009) 14 final 

2009/0001 (COD) 

Proposal for a 

DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

of […] 

establishing a Community programme to support specific activities in the field of 
financial services, financial reporting and auditing 

{SEC(2009) 54} 

(presented by the Commission) 

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EXPLANATORY MEMORANDUM 

1. 

CONTEXT OF THE PROPOSAL 

In the financial services sector and in the field of financial reporting and statutory audit, the 
Community is expected to financially support activities of certain bodies, both European and 
international, to ensure the effectiveness of Community policies in these areas. The purpose of 
this Decision is therefore to establish a new Community programme which will enable direct 
contributions to the funding of these bodies under the Community budget. These contributions 
will  ensure  stable,  diversified,  sound  and  adequate  funding  to  enable  such  bodies  to 
accomplish their mission in an independent and efficient manner. 

The  Commission  has  recognised  the  key  role  that  the  Committees  of  Supervisors,  IASCF, 
EFRAG and PIOB play in the completion and operation of the Internal Market. At the same 
time, the Commission has identified that the proper implementation of some key Community 
policies  could  be  at  risk  because  of  inadequate  funding  of  these  bodies.  Such  situation 
currently arises either (i) because of insufficient financial means to carry out certain projects 
(Committees  of  Supervisors,  EFRAG)  or  (ii)  because  of  reliance  on  non-diversified,  and 
voluntary funding from interested parties (IASCF, EFRAG, PIOB). In the latter case, present 
funding arrangements thus give rise to continuous concerns about the independence of these 
bodies.  In  an  extensive  ex-ante  evaluation,  the  Commission  assessed  five  possible  policy 
options:  (1)  keeping  the  status  quo;  (2)  increasing  contributions  within  the  existing  funding 
models;  (3)  setting-up  national  funding  schemes;  (4)  co-financing  under  the  Community 
budget;  and  (5)  setting-up  dedicated  EU  agencies  (in  relation  to  the  Committees  of 
Supervisors and EFRAG). The Commission's assessment was based on academic analysis, on 
information and statistics provided by the respective bodies themselves and on proposals and 
assessments  from  other  European  institutions.  Additionally,  the  Commission  screened  the 
relevant legislative provisions that are currently in force and which create obligations for, or 
transfer tasks to, these bodies. Based on this assessment, it was concluded that the best way 
forward is to co-finance the Committees of Supervisors, IASCF, EFRAG and PIOB either by 
way of action grants (Committees of Supervisors) or by way of an operating grant (IASCF, 
EFRAG and PIOB). This approach would ensure that (1) the Committees of Supervisors and 
EFRAG  are  adequately  equipped  with  the  financial  means  to  carry  out  certain  strategic 
projects,  which  significantly  exceed  the  current  funding  arrangements;  and  that  (2)  IASCF, 
EFRAG and PIOB do not only rely on non-diversified and voluntary funding from interested 
parties thus avoiding concerns as to the independence of their standard-setting related activity. 

In the context of the current financial crisis, the aims of the proposed Community programme 
gain additional importance. EU Member States consider that the enhancement of supervisory 
convergence  and  cooperation  in  the  field  of  financial  services  and  in  relation  to  financial 
reporting  and  auditing  should  be  given  a  high  priority.1  The  Commission  Communication 
"From  financial  crisis  to  recovery:  A  European  framework  for  action"  of  29  October  2008 
states that the EU needs to redefine the regulatory and supervisory model of the EU financial 

1 

See Declaration on a concerted European Action Plan of the Euro Area countries (14239/08), Summit 
of  the  Euro  Area  countries,  Brussels,  12  October  2008,  and  Conclusions  from  the  October  European 
Council (14368/08), Brussels, 15-16 October 2008, para. 1 et seq. 

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sector,  particularly  for  the  large  cross  border  financial  institutions.2  In  this  context,  several 
initiatives  are  under  way  at  EU  level  to  bring  substantive  improvements  within  the  existing 
supervisory  structures  (e.g.  the  forthcoming  amendments  to  the  Commission  Decisions 
establishing  the  Committees  of  Supervisors3  or  the  introduction  of  Colleges  of  Supervisors 
under the proposal for the revision of the Capital Requirements Directive4). These initiatives 
are carried out in parallel with and without prejudice to the forward-looking reflection on the 
future  European  supervisory  architecture  underway  in  the  high  level  group,  set  up  by  the 
Commission  on  21  October  2008  and  chaired  by  Jacques  de  Larosière.  5  The  Commission 
Communication  of  29  October  2008  states  that  the  crisis  has  also  demonstrated  the  need  to 
coordinate actions both at a European level and at an international level.6 In this context, the 
conclusions of the G20 Summit in Washington on 15 November 20087 are crucial, insisting in 
particular  on  the  need  to  strengthen  international  coordination  among  financial  supervisors 
and  international  standards  to  improve  the  governance  of  the  international  financial  system. 
The current political momentum means that change is possible both at EU and international 
level.  The  proposed  Community  programme  could  contribute  to  this  and  strengthen  the 
contribution  of  the  EU  to  the  implementation  of  the  action  plan  set  out  in  the  G20  summit 
declaration. 

1.1. 

Committees of Supervisors 

The  Committees  of  Supervisors  are  independent  advisory  bodies  set  up  by  the  Commission 
between  2001  and  20048  and  made  up  of  the  national  supervisors  competent  in  the  field  of 
securities,  banking  and  insurance  in  each  Member  State.  Their  mandate  is  threefold.  First, 
they  act  as  independent  bodies  for  reflection,  debate  and  advice  for  the  Commission  in  the 
above  fields.  Second,  they  contribute  to  the  consistent  and  timely  implementation  of 
Community  legislation  in  the  Member  States.  Third,  they  contribute  to  the  convergence  of 
supervisory  practices  throughout  the  Community  and  promote  cooperation  in  each  of  the 
above fields, for instance via the exchange of information. The Committees of Supervisors act 
independently  when  carrying  out  the  second  and  the  third  aspect  of  their  mandate,  the 
supervision of financial institutions not being an EU competence per se. Recent evaluations of 
the  functioning  of  these  Committees  by  the  European  Institutions  and  various  consultative 
groups9  and  the  crisis  in  the  financial  markets  which  has  unfolded  since  200710  have 
demonstrated the need for urgent progress in these areas. 

2 

3 
4 

5 

6 

7 

8 

9 

more 

information, 

  Commission  Press 

Commission  Communication  “From  financial  crisis  to  recovery:  A  European  framework  for  action” 
(COM(2008) 706 final), Brussels, 29 October 2008, p. 4. 
For more information, see: http://ec.europa.eu/internal_market/finances/committees/index_en.htm 
For 
http://ec.europa.eu/internal_market/bank/regcapital/index_en.htm#capitalrequire 
See 
at 
release  of  11  November  2008 
http://europa.eu/rapid/pressReleasesAction.do?reference=IP/08/1679&format=HTML&aged=0&langua
ge=EN&guiLanguage=en 
See Commission Communication “From financial crisis to recovery: A European framework for action” 
(COM(2008) 706 final), Brussels, 29 October 2008. 
Declaration of the Summit on Financial Markets and the World Economy, Washington, 15 November 
2008. 
Commission  Decisions  2001/527/EC,  2004/5/EC  and  2004/6/EC  establishing  the  Committee  of 
European Securities Regulators (CESR), the Committee of European Banking Supervisors (CEBS) and 
the Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS), respectively. 
See  for  instance,  Commission  Communication  on  the  Review  of  the  Lamfalussy  process  – 
Strengthening  supervisory  convergence  (COM(2007)  727  final),  FSC's  Report  on  Long  Term 
Supervisory Issues (“Ter Haar Report”; FSC 4162/08); European Parliament's Resolution on financial 

(IP/08/1679), 

available 

see: 

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It  is  appropriate  for  the  Community  to  contribute  financially  to  specific  actions  of  the 
Committees  of  Supervisors  considering  that  the  Committees  (i)  assume  key  functions  with 
regard  to  European  supervisory  structure,  (ii)  carry  out  projects  which  may  be  important 
components  in  the  implementation  of  EU  legislation  and,  (iii)  as  networks  of  national 
supervisory  authorities  representing  all  financial  services  sectors,  build  up  a  European 
financial supervisory culture. 

The  three  Committees  of  Supervisors  do  not  have  legal  personality  at  the  European  level. 
However,  to  be  able  to  contract  with  third  parties  and  facilitate  the  operation  and 
administration of the Committees, the members of each Committee of Supervisors have set up 
support  structures  with  legal  personality  in  each  Member  State  where  these  committees  are 
situated,  i.e.  France,  the  United  Kingdom  and  Germany11.  The  Community  will  contribute 
financially  to  these  support  structures  by  way  of  action  grants.  These  action  grants  will  be 
used exclusively by the support structures to finance certain projects relating, in particular, to 
training  of  staff  of  national  supervisory  authorities  and  the  management  of  information 
technology  projects.  These  action  grants  shall  by  no  means  interfere  with  the  scope  of  the 
mandates of the Committees as such. In addition, it will be stated in the grant themselves that 
all liabilities to arise as a result of the Community financing of the Committees of Supervisors 
will be borne by the recipient, i.e. the legal support structures. The legal support structures to 
the Committees will also be instructed to make sure that their statutes of incorporation state 
clearly that their tasks are limited to administrative support functions, including in particular 
training  of  staff  of  national  supervisory  authorities  and  management  of  information 
technology projects.  

1.2. 

Financial reporting 

A single set of high-quality international accounting standards supports the efficient operation 
of  the  Community's  internal  market  by  ensuring  that  investors,  creditors  and  other 
stakeholders  have  access  to  timely,  reliable  and  relevant  information  about  the  financial 
conditions of companies.  

As  in  the  case  of  the  supervision  of  financial  institutions,  the  crisis  in  the  financial  markets 
which has unfolded since 2007 has put the issue of accounting standards at the centre of the 
EU's political agenda12. Transparency and global cooperation is needed in order to ensure that 
cross-border  capital  flows  and  operations  can  be  monitored  in  an  internationally  consistent 
manner. At the same time, a level playing field has to be ensured for companies around the 
world when subjecting them to financial reporting obligations. 

Regulation  (EC)  No  1606/2002  (the  "IAS  Regulation")  provides  for  the  mandatory 
application  of  the  International  Financial  Reporting  Standards  (IFRS)  by  companies  with 
securities listed on a regulated market in the EU. 

10 

11 

12 

13-14 

services policy (2007)0338 and Report of the Inter-institutional Monitoring Group (IIMG), available at 
http://ec.europa.eu/internal_market/finances/committees/index_en.htm#interinstitutional 
See for instance Conclusions from the Spring European Council (Presidency Conclusions 7652/1/08), 
at 
para. 
2008, 
Brussels, 
http://www.consilium.europa.eu/ueDocs/cms_Data/docs/pressData/en/ec/99410.pdf. 
“Association Loi 1901” in France for CESR, “eingeschriebener Verein (e.V.) ” in Germany for CEOIPS 
and “Limited company by guarantee and without share capital” in the UK for CEBS. 
See for instance Conclusions from the Spring European Council (Presidency Conclusions 7652/1/08), 
Brussels, 
at 
para. 
2008, 
http://www.consilium.europa.eu/ueDocs/cms_Data/docs/pressData/en/ec/99410.pdf. 

available 

available 

March 

March 

13-14 

seq., 

seq., 

30 

30 

et 

et 

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IFRS  are  issued  by  the  International  Accounting  Standards  Board  (IASB)  and  related 
interpretations  by  the  International  Financial  Reporting  Interpretations  Committee  (IFRIC), 
two bodies of the International Accounting Standards Committee Foundation (IASCF)13.  

The incorporation of IFRS into Community law means that these standards play a major role 
in the operation of the Single Market and of the EU's economy. The Community therefore has 
a direct interest in ensuring that the process through which these standards are developed and 
approved  delivers  standards  that  are  consistent  with  the  public  interest  (e.g.  financial 
stability), with the Community's legal framework and with the European business reality.  

In particular, independence of the standard-setting process without any undue influence from 
parties with a stake in the outcome of the IASB's standard-setting process is crucial. The key 
concern  in  this  respect  is  to  avoid  the  reliance  of  the  standard-setter  on  voluntary  funding 
from  interested  parties  (such  as  auditors  or  listed  companies).  The  establishment  of 
appropriate funding arrangements of the IASCF is important to put an end to such reliance. 
This  should  in  turn  contribute  to  guarantee  the  independence  of  its  standard  setting  activity 
and limit concerns about possible conflicts of interest. Considering that IFRS have vocation to 
be incorporated into Community law, a financial contribution to the IASCF's budget from the 
Community  budget,  proportionate  to  the  Community's  weight  in  the  global  economy  and 
capital market, is necessary to help achieving  the  above objectives. Long-standing concerns 
about  the  IASCF's  funding  arrangements  have  been  repeatedly  highlighted,  notably  by  the 
ECOFIN Council in its conclusions adopted in July 200614 and July 200715, as well as by the 
European Parliament16. 

The  reform  of  the  IASCF's  funding  regime  is  a  necessary  but  not  sufficient  condition  to 
enhance  the  IASCF's  independence  and  the  former  thus  needs  to  be  assessed  within  the 
broader  context  of  the  IASCF's  proposed  governance  reforms.  In  the  framework  of  the 
IASCF's ongoing five-yearly constitutional review, the Commission is also pursuing a number 
of governance reforms aimed at enhancing the IASCF's accountability, independence, as well 
as  enhancements  of  the  IASB's  due  process.  These  reforms  should  be  implemented  by  the 
time the Community co-financing is in place. 

The  European  Financial  Reporting  Advisory  Group  (EFRAG)  was  founded  in  2001  by 
European  organisations  representing  issuers,  investors  and  the  accountancy  profession 
involved  in  the  financial  reporting  process17.  In  line  with  the  IAS  Regulation,  EFRAG 

13 

14 

15 

16 

17 

Press 

2006. 

Release 

The IASCF is a European standards body within the meaning of Article 162 (a) of the Implementing 
Regulation of the Financial Regulation applicable to the EU budget, being a body that sets accounting 
standards which are applicable in the EU pursuant to the provisions of Regulation (EC) No 1606/2002. 
2741st meeting of the Council of the European Union (Economic and Financial Affairs). Brussels, 11 
July 
at 
available 
http://www.consilium.europa.eu/ueDocs/cms_Data/docs/pressData/en/ecofin/90465.pdf 
2813th meeting of the Council of the European Union (Economic and Financial Affairs). Brussels, 10 
July 
at 
available 
http://www.consilium.europa.eu/ueDocs/cms_Data/docs/pressData/en/ecofin/95233.pdf 
See paragraph 16 of the EP's Resolution on International Financial Reporting Standards (IFRS) and the 
Governance  of  the  International  Accounting  Standards  Board  (IASB)  adopted  on  24  April  2008, 
available 
http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT+REPORT+A6-
2008-0032+0+DOC+XML+V0//EN&language=EN. 
Being a European organisation representing a network of non-profit bodies active in the Member States, 
EFRAG  is  a  body  pursuing  an  aim  of  general  European  interest  in  the  meaning  of  Art  162(b)  of  the 
Implementing  Rules  of  the  Financial  Regulation  applicable  to  the  EU  budget  (Regulation  No. 
2342/2002). 

Release 

2007. 

Press 

at 

EN 

5 

   EN 

 
                                                 
provides the European Commission with opinions on whether an accounting standard issued 
by  the  IASB  or  an  interpretation  issued  by  IFRIC  to  be  endorsed  complies  with  the 
Community  law,  in  particular,  with  the  requirements  of  the  IAS  Regulation  as  regards  the 
standard's  understandability,  relevance,  reliability  and  comparability  as  well  as  being 
conducive  to  public  good  and  the  true  and  fair  principle  as  set  out  in  Council  Directives 
78/660/EEC  and  83/349/EEC.  EFRAG's  role  was  formalised  in  a  Working  Arrangement 
concluded with the Commission Services in March 2006. 

In addition, EFRAG has been increasingly used as a platform of European stakeholders (both 
public  and  private)  to  provide  upstream,  technical  input  to  the  IASB  concerning  draft 
accounting standards.  

Nevertheless, this latter aspect of EFRAG's work is constrained by a lack of resources, which 
means  that  EU  business  and  economic  interests  are  not  sufficiently  represented  at 
international level in the course of the discussions with the IASB/IFRIC. In parallel, EFRAG 
suffers  from  current  reliance  on  non-diversified,  voluntary  funding  from  interested  parties 
(such  as  auditors),  which  raises  concerns  about  the  independence  of  standard  reviewing 
activity and about possible conflicts of interest. In its conclusions adopted on 8 July 2008, the 
ECOFIN Council welcomed the efforts to enhance the role of EFRAG in order to ensure that 
European  concerns  are  taken  into  proper  consideration  in  the  international  accounting 
standard  setting  process18.  The  European  Parliament  took  a  similar  position  in  an  own 
initiative report adopted in April 2008. In addition, in its opinion dated 10 September 2008, 
the Committee on Economic and Monetary Affairs of the European Parliament reiterated that 
"sufficient  funding  must  be  set  aside  for  […]  international  accounting  standard  setting,  in 
particular  to  the  International  Accounting  Standards  Committee  Foundation,  including  the 
International  Accounting  Standards  Board,  and  its  European  voice  through  the  European 
Financial  Reporting  Advisory  Group"19.  Numerous  private  stakeholders  also  raised  these 
concerns within the framework of the “EFRAG enhancement” project launched by EFRAG in 
July 2008.20 

EFRAG  is  currently  undergoing  governance  reforms  in  order  to  increase  its  accountability, 
ensure greater transparency, and public oversight over the organisation. These reforms should 
become  effective  in  the  first  half  of  2009  and  ensure  that  EFRAG's  governance  structure 
matches the expectations coupled with its public interest role. 

Taking into account EFRAG's key roles in supporting Community legislation and policies and 
in  representing  European  interests  in  the  standard  setting  process  at  international  level  it  is 
necessary  for  the  Community  to  contribute  to  EFRAG's  financing  to  ensure  credible  and 
independent  advice  as  well  as  to  enable  effective  and  timely  input  to  the  IASB  standard 
setting process. 

18 

19 

20 

EN 

2008. 

2882nd meeting of the Council of the European Union (Economic and Financial Affairs). Brussels, 8 
July 
at 
available 
http://www.consilium.europa.eu/ueDocs/cms_Data/docs/pressData/en/ecofin/101742.pdf 
See suggestion 6 of the opinion on the draft general budget of the European Union for the financial year 
http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-
2009, 
//EP//NONSGML+COMPARL+PE-407.786+02+DOC+PDF+V0//EN&language=EN 
For more information, see: http://www.efrag.org/projects/detail.asp?id=134 

available 

Release 

Press 

at 

6 

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1.3. 

Auditing 

Community  legislation  requires  a  company’s  financial  statements  to  be  audited  by  statutory 
auditors who should provide an independent opinion about a company's financial position, as 
reflected in the financial statements.  

A  harmonised  approach  to  statutory  auditing  based  on  high-quality  standards  agreed  at 
international  level  increases  the  overall  quality  of  audits,  both  within  the  Community  and 
globally,  strengthens  public  confidence  in  the  audit  function  and  hence  ensures  an  efficient 
functioning of the Community capital market and of the Internal Market.  

According  to  Directive  2006/43/EC,  international  standards  for  auditing  (ISAs)  can  be 
adopted for their application in the European Union provided a number of conditions are met, 
in particular, that the standards have been developed with proper due process, public oversight 
and  transparency.  International  standards  for  auditing  are  developed  and  approved  by  the 
International Auditing and Assurance Standards Boards (IAASB), which is a Committee set 
up by the International Federation of Accountants (IFAC).  

The  Public  Interest  Oversight  Board  (PIOB)  was  created  on  28  February  2005  by  the 
Monitoring  Group,  an  international  organisation  responsible  to  monitor  the  governance 
reform of IFAC21. The role of the PIOB is to oversee the process leading to the adoption of 
ISAs  and  other  public  interest  activities  of  the  International  Federation  of  Accountants 
(IFAC). The PIOB is the key body to ensure that the ISAs have been developed and adopted 
with proper due process, public oversight and transparency as required under Article 26 of the 
Directive 2006/43/EC. The fact that two, out of ten, members of the PIOB were appointed by 
the  Commission  in  March  2008  for  a  period  of  3  years  demonstrate  the  EU  interest  in  the 
good functioning of the PIOB. 

The  faculty  of  introduction  of  ISAs  into  Community  law  as  contemplated  under  Directive 
2006/43/EC  means  that  the  Community  has  a  direct  interest  in  ensuring  that  the  process 
through  which  these  standards  are  developed  delivers  standards  that  are  consistent  with  the 
public  interest  (e.g.  financial  stability),  the  Community's  legal  framework  and  the  European 
business reality.  

In  particular,  independence  of  the  oversight  process  without  any  undue  influence  is  crucial. 
The key concern in this respect is to avoid the reliance of the PIOB for its funding over non-
diversified, voluntary funding from interested parties which have a direct interest in auditing 
standards.  This  concern  has  been  voiced,  inter  alia,  by  all  the  public  institutions  sponsoring 
the PIOB.  

The establishment of appropriate funding arrangements of the PIOB is important to put an end 
to such reliance. This should in turn contribute to guarantee the independence of its oversight 
activity and limit concerns about possible conflicts of interest. To achieve this objective, it is 
therefore necessary for the Community to contribute fairly to the funding of PIOB. 

21 

The  Monitoring  group  is  made  up  of  the  International  Organization  of  Securities  Commissions,  the 
Basel Committee on Banking Supervision, the International Association of Insurance Supervisors, the 
World Bank and the Financial Stability Forum. See for instance First public report of the PIOB, 2005, 
p5. 

EN 

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1.4. 

Other possible beneficiaries 

The crisis in financial markets which has unfolded since 2007 could have consequences in the 
field  of  supervision  of  financial  institutions  and  markets  as  well  as  in  the  field  of  financial 
reporting  and  statutory  audit.  One  consequence  of  the  crisis  could  be  the  setting-up  of  new 
bodies at Community or international  level in one or several of these fields with a mandate 
covering similar Community objectives as the abovementioned beneficiaries of the proposed 
Community  programme.  Additionally,  it  might  occur  that  one  of  the  beneficiaries  of  this 
Community  programme  is  replaced  by  a  successor,  i.e.  a  new  body  between  the  date  of 
adoption of the Decision and the end of the proposed Community programme. It is therefore 
of utmost importance that the Decision provides for a provision that allows to flexibly adapt 
the  Programme  to  changes  in  the  institutional  framework,  while  still  respecting  the  overall 
aim  of  this  Programme.  The  decision  therefore  sets  out  that  the  Commission  by  way  of  an 
individual  decision  taken  in  accordance  with  Council  Decision  1999/468  of  28  June  1999 
laying  down  the  procedures  for  the  exercise  of  implementing  powers  conferred  on  the 
Commission could include a new or replace an old beneficiary in the Annex. The addition of 
new beneficiaries or the replacement of old beneficiaries during the period of funding is only 
possible in one of the two following situations: 

1.  One  of  the  beneficiaries  of  the  Programme  is  replaced  by  a  direct  successor. 
The  Commission  shall  decide  whether  the  successor  fulfils  the  eligibility 
criteria and thus qualifies to take over its predecessors' right of receiving funds 
in  this  Community  programme.  The  Annex  should  be  amended  accordingly. 
Such  selection  should  be  made  in  accordance  with  the  regulatory  procedure 
provided for in Article 5 of Decision 1999/468/EC22.  

2. 

The financial framework as defined in Article 9(1) is not exhausted completely. 
The  Commission  may  propose  an  additional  beneficiary  for  an  action  grant, 
provided  that  the  latter  complies  with  the  eligibility  criteria  as  set  out  in  this 
Decision. The Commission shall decide whether the proposed beneficiary and 
its  respective  actions  comply  with  the  criteria  set  out  in  this  Decision.  The 
Annex  should  be  amended  accordingly.  Such  amendment  should  be  made  in 
accordance with the regulatory procedure provided for in Article 5 of Decision 
1999/468/EC23.  

Any new beneficiary must fulfil one of the following criteria: 

•  it  should  have  a  legal  form  and  a  mandate  similar  to  the  Committees  of 
Supervisors  referred  to  under  Section  1.1  above  (i.e.  they  are  established  under 
Community  law  and  pursuing  activities  supporting  the  implementation  of  the 
corresponding  Community  policies  aimed  at  supervisory  convergence  and 
cooperation in the field of financial services);  

•  it  should  have  a  mandate  similar  to  the  bodies  active  in  the  field  of  financial 
reporting  and  auditing  referred  to  under  Section  1.2  and  1.3  above  (i.e.  they  are 
directly involved in the process of developing, applying, monitoring standards or 

22 

23 

OJ L 184, 17.7.1999, p. 23. Decision as amended by Decision 2006/512/EC (OJ L 200, 22.7.2006, p. 
11). 
OJ L 184, 17.7.1999, p. 23. Decision as amended by Decision 2006/512/EC (OJ L 200, 22.7.2006, p. 
11). 

EN 

8 

   EN 

 
                                                 
overseeing  standard  setting  process  in  support  of  the  implementation  of  the 
corresponding  Community  policies  in  the  field  of  financial  reporting  and 
auditing). 

2. 

LEGAL ELEMENTS OF THE PROPOSAL 

2.1. 

Legal basis 

The Treaty establishing the European Community and especially Article 95. 

2.2. 

Subsidiarity principle 

The  Community  programme  provides  for  the  possibility  to  co-finance  activities  of  certain 
bodies pursuing aims of a general Community interest on Community-wide issues in the field 
of financial services and by designing standards, endorsing standards or supervising standard 
setting processes in the field of financial reporting and auditing. The proposal complies with 
the  subsidiarity  principle  since,  in  accordance  with  Article  5  EC,  its  objectives  cannot  be 
sufficiently achieved by the Member States and can, by reason of the scale and the effect of 
the action, be better achieved at the Community level.  

2.3. 

Proportionality principle 

The  proposal  complies  with  the  proportionality  principle  as  set  out  in  Article  5  EC.  As 
assessed  in  the  ex-ante  evaluation,  this  Decision  does  not  go  beyond  what  is  necessary  in 
order to achieve its objectives. Community funding is proposed for a well defined and limited 
number  of  the  most  important  bodies  in  the  field  of  financial  services.  Within  the  current 
institutional framework, the new funding arrangements will ensure stable, diversified, sound 
and  adequate  funding  to  enable  the  relevant  bodies  to  carry  out  their  Community-related  or 
Community public interest mission in an independent and efficient manner. Financial support 
will  be  granted  according  to  the  conditions  laid  down  in  the  Council  Regulation  (EC, 
Euratom)  No  1605/200224  of  25  June  2002,  on  the  Financial  Regulation  applicable  to  the 
general budget of the European Communities and Commission Regulation (EC, Euratom) No 
2342/200225  of  23  December  2002,  laying  down  detailed  rules  for  the  implementation  of 
Council Regulation (EC, Euratom) No 1605/2002. 

3. 

BUDGETARY IMPLICATION  

The total amount to be borne by the Community’s budget is EUR 36,2 million for the 2010 – 
2013  period.  The  Programme  is  a  four  year  programme  aligned  with  the  duration  of  the 
financial perspectives 2007 – 2013.  

24 
25 

OJ L 248, 16.9.2002, p. 1. 
OJ L 357, 31.12.2002, p. 1. 

EN 

9 

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2009/0001 (COD) 

Proposal for a 

DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

of […] 

establishing a Community programme to support specific activities in the field of 
financial services, financial reporting and auditing 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  establishing  the  European  Community,  and  in  particular 
Article 95 thereof, 

Having regard to the proposal from the Commission26, 

Having regard to the opinion of the European Economic and Social Committee27, 

Acting in accordance with the procedure laid down in Article 251 of the Treaty28, 

Whereas: 

(1) 

(2) 

(3) 

The financial services sector is a key component of the internal market, crucial for the 
proper  functioning  of  the  European  economy  and  for  global  competitiveness.  A 
healthy  and  dynamic  financial  sector  requires  a  solid  framework  for  regulation  and 
supervision,  which  is  capable  to  cope  with  increasingly  integrating  the  financial 
markets in the Community. 

In a global economy, there is also a need to converge standards between jurisdictions 
or develop international standards. It is therefore important that the Community plays 
a role in the international standard setting process for financial markets. To ensure that 
interests of the Community are respected and that global standards are of high-quality 
and compatible with the Community legislation, it is essential that the interests of the 
Community are adequately represented in the international standard setting processes.  

The financial crisis has put the issue of supervision of financial institutions, notably on 
a cross-border basis, and of financial reporting at the forefront of the political agenda 
of  the  Community.  This  situation  could  lead  to  new  proposals  for  measures  for  the 
approximation of the provisions laid down by law, regulation or administrative action 
in  Member  States  which  have  as  their  object  the  establishment  or  improved 
functioning of the internal market. 

26 
27 
28 

OJ C , , p. . 
OJ C , , p. . 
OJ C , , p. . 

EN 

10 

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(4) 

(5) 

(6) 

(7) 

(8) 

(9) 

It  is  therefore  appropriate  to  provide  a  Community  programme  for  the  possibility  to 
co-finance activities of the European Financial Reporting Advisory Group (EFRAG), 
the  International  Accounting  Standards  Committee  Foundation  (IASCF)  and  the 
Public Interest Oversight Board (PIOB), which pursue, in accordance with Article 162 
of  Commission  Regulation  (EC,  Euratom)  No  2342/2002  of  23  December  2002, 
laying  down  detailed  rules  for  the  implementation  of  Council  Regulation  (EC, 
Euratom) No 1605/200229, aims of a general European interest by designing standards, 
endorsing standards or supervising standard setting processes in the field of financial 
reporting and auditing.  

It  is  also  appropriate  to  provide  action  grants  to  the  three  legal  support  structures, 
whose  exclusive  aim  is  to  provide  administrative  support  to  the  Committee  of 
European Securities Regulators, established by Commission Decision 2001/527/EC30, 
the  Committee  of  European  Banking  Supervisors,  established  by  Commission 
Decision  2004/5/EC31  and  the  Committee  of  European  Insurance  and  Pension 
Supervisors, established by Commission Decision 2004/6/EC32, for the carrying out of 
projects relating to, inter alia, training of staff of national supervisory authorities and 
management of information technology projects.  

Bodies  working  in  the  field  of  supervision,  accounting  and  auditing  are  highly 
dependent  on  funding  and  despite  their  major  roles  in  the  Community,  none  of  the 
proposed  beneficiaries  from  the  Community  programme  benefit  from  any  financial 
support from the Community budget, which may affect their capacity to comply with 
their respective missions which are decisive for the functioning of the Internal Market.  

A  Community  co-financing  ensures  that  these  bodies  benefit  from  clear,  stable, 
diversified,  sound  and  adequate  funding  and  that  they  are  able  to  accomplish  their 
public interest mission in an independent and efficient manner. 

In  addition  to  changing  their  funding  patterns,  IASCF  and  EFRAG  are  currently 
undergoing governance reforms to make sure that their structure and processes ensure 
their ability to accomplish their public interest mission in an independent and efficient 
manner.  These  reforms  should  be  in  place  by  the  time  the  Community  co-financing 
starts. 

The  crisis  in  financial  markets  could  lead  to  the  setting  up  of  new  bodies  at 
Community  or  international  level  with  a  mandate  covering  similar  Community 
objectives as the beneficiaries of the proposed Community programme.  

(10) 

It should be possible to include in the Programme new bodies, provided that they fulfil 
the strict eligibility criteria of this Decision. 

(11)  Since  the  selection  of  new  beneficiaries  is  a  measure  of  general  scope  within  the 
meaning of Article 2 of Council Decision 1999/468/EC of 28 June 1999 laying down 
the 
the  procedures  for 

implementing  powers  conferred  on 

the  exercise  of 

29 
30 
31 
32 

OJ L 357, 31.12.2002, p. 1. 
OJ L 191, 13.7.2001, p. 43–44. 
OJ L 3, 7.1.2004, p. 28–29. 
OJ L 3, 7.1.2004, p. 30–31. 

EN 

11 

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Commission33,  that  selection  should  be  made  by  use  of  the  regulatory  procedure 
provided for in Article 5 of that Decision. 

(12)  Council  Regulation  (EC,  Euratom)  No  1605/2002  of  25  June  2002  on  the  Financial 
Regulation  applicable  to  the  general  budget  of  the  European  Communities34  (the 
Financial  Regulation)  and  Regulation  (EC,  Euratom)  No  2342/200235,  which 
safeguard  the  Community  financial  interests,  have  to  be  applied  taking  into  account 
the principles of simplicity and consistency in the choice of budgetary instruments, a 
limitation on the number of cases where the Commission retains direct responsibility 
for  implementation  and  management,  and  the  required  proportionality  between  the 
level of resources and the administrative burden related to their use. 

(13)  The  proposal  provides  for  the  possibility  to  co-finance  activities  of  certain  bodies 
pursuing aims of a general Community interest on Community-wide issues in the field 
of  financial  services  and  by  designing  standards,  endorsing  standards  or  supervising 
standard setting processes in the field of financial reporting and auditing. The proposal 
complies  with  the  subsidiarity  principle  since,  in  accordance  with  Article  5  of  the 
Treaty, its objectives cannot be sufficiently achieved by the Member States and can, 
by reason of the scale and the effect of the action, be better achieved at the Community 
level.  

(14)  The proposal complies with the proportionality principle as set out in Article 5 of the 
Treaty.  As  closely  assessed  in  the  ex-ante  evaluation,  this  Decision  does  not  go 
beyond  what  is  necessary  in  order  to  achieve  its  objectives.  Community  funding  is 
proposed  for  a  well  defined  and  limited  number  of  the  most  important  bodies  in  the 
field of financial services. Within the current institutional framework, the new funding 
arrangements will ensure stable, diversified, sound and adequate funding to enable the 
relevant  bodies  to  carry  out  their  Community-related  or  Community  public  interest 
mission  in  an  independent  and  efficient  manner.  Financial  support  will  be  granted 
according  to  the  conditions  laid  down  in  the  Council  Regulation  (EC,  Euratom)  No 
1605/200236  of  25  June  2002,  on  the  Financial  Regulation  applicable  to  the  general 
budget of the European Communities and Commission Regulation (EC, Euratom) No 
2342/200237 of 23 December 2002, laying down detailed rules for the implementation 
of Council Regulation (EC, Euratom) No 1605/2002. 

HAVE DECIDED AS FOLLOWS: 

Article 1 

Establishment of the Programme 

A Community programme, hereinafter referred to as "the Programme", is hereby established 
for the period from 1 January 2010 to 31 December 2013 to support the activities of bodies 
which contribute to the achievement of the policy objectives of the Community in relation to 

33 
34 
35 
36 
37 

OJ L 184, 17.7.1999, p. 23.  
OJ L 248, 16.9.2002, p. 1. 
OJ L 357, 31.12.2002, p. 1. 
OJ L 248, 16.9.2002, p. 1. 
OJ L 357, 31.12.2002, p. 1. 

EN 

12 

   EN 

 
                                                 
supervisory convergence and cooperation in the field of financial services and in relation to 
financial reporting and auditing.  

Article 2  

Objectives 

1. 

2. 

The  general  objective  of  the  Programme  is  to  support  the  activities  or  actions  of 
certain bodies in the fields of financial services, financial reporting and auditing.  

The following activities are covered by the Programme. 

(a) 

(b) 

activities  supporting  the  implementation  of  Community  policies  aimed  at 
supervisory  convergence,  in  particular  by  means  of  training  of  personnel  and 
management  of  information  technology  projects  in  the  field  of  financial 
services; 

activities  developing  or  providing  input  to  the  development  of  standards, 
applying,  assessing  or  monitoring  standards  or  overseeing  standard  setting 
processes in support of the implementation of Community policies in the field 
of financial reporting and auditing. 

Article 3 

Access to the Programme 

To  be  eligible  for  Community  financing  under  the  Programme,  a  body  shall  fulfil  the 
following conditions: 

(a) 

(b) 

it  must  be  a  non-profit-making  legal  person,  with  an  objective  aimed  at 
promoting the public interest and pursuing aims of general European interest as 
provided for in Article 162 of Regulation (EC, Euratom) No 2342/2002; 

it  shall  not  be,  at  the  time  of  the  award  of  the  grant,  in  one  of  the  situations 
referred  to  in  Article  93(1),  Article  94  and  point  (a)  of  Article  96(2)  of  the 
Financial Regulation. 

Article 4 

Beneficiaries of the Programme 

The beneficiaries mentioned in the Annex shall benefit from the Programme. 

EN 

13 

   EN 

 
Article 5  

Award of grants 

1. 

2. 

3. 

The Commission shall provide financing under the Programme in the form of grants 
and  only  upon  the  receipt  of  an  appropriate  work  programme  and  an  estimated 
overall budget. 

Community  financing  to  the  beneficiaries  set  out  in  Section  A  of  the  Annex  shall 
only be awarded in the form of operating grants, which shall be used to finance their 
operating  costs  and  expenses  including  the  running  of  their  secretariats  and  the 
remuneration of their employees. In the event of renewal, those operating grants shall 
not be automatically decreased. 

Community  financing  to  the  beneficiaries  set  out  in  Section  B  of  the  Annex,  shall 
only be awarded in the form of action grants. Action grants shall only be granted for 
the activities set out in Article 6 and shall be subject to all the following conditions:  

(a) 

(b) 

they  shall  not  cover  activities  included  in  the  mandates  of  the  Committee  of 
European  Securities  Regulators, 
the  Committee  of  European  Banking 
the  Committee  of  European  Insurance  and  Pension 
Supervisors  and 
Supervisors; 

the administrative support function of the beneficiaries identified in Section B 
of  the  Annex  shall  be  clearly  set  out  in  their  respective  statutes.  The 
administrative  support  function  shall  be  the  sole  purpose  of  the  beneficiaries 
referred to in Section B of the Annex and shall include the carrying out of the 
activities laid down in Article 6 for the benefit of the Committee of European 
Securities Regulators, the Committee of European Banking Supervisors and the 
Committee of European Insurance and Pension Supervisors.  

4. 

The  Commission  shall  decide  on  the  amounts  and  on  the  maximum  percentage  of 
financing. Such decisions of the Commission shall be made public.  

Article 6 

Eligible activities of beneficiaries for action grants 

Without prejudice to Articles 3 and 5, the following activities shall be regarded to be eligible 
for action grants: 

(a) 

hosting conferences, seminars, training sessions and meetings of experts, 

(b)  preparing  and  issuing  publications,  preparation  and  execution  of  other 

information activities, 

(c) 

carrying out research, preparing studies, 

(d)  other supporting activities relevant to the Community's legislation or policies in 

the field of accounting and auditing; 

EN 

14 

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(e) 

(f) 

information  technology  projects  regarding,  inter  alia,  the  exchange  of 
information between national supervisors; 

training  programs  and  staff  secondment  schemes  for  staff  from  national 
supervisors. 

Article 7 

Selection of new beneficiaries 

1. 

2. 

The Commission may, in accordance with the procedure referred to in Article 13(2) 
select new beneficiaries for the Programme and amend the Annex accordingly. 

To qualify as a new beneficiary, a body shall fulfil the criteria set out in Article 3, 
and in addition, one of the following criteria: 

(a) 

it is a direct successor of one of the beneficiaries identified in the Annex; 

(b)  pursues activities supporting the implementation of Community policies aimed 

at supervisory convergence and cooperation in the field of financial services;  

(c) 

it  is  directly  involved  in  the  process  of  developing  or  providing  input  to  the 
development  of  standards,  applying,  assessing  or  monitoring  standards  or 
overseeing  standard  setting  processes  in  support  of  the  implementation  of 
Community policies in the field of financial reporting and auditing.  

3. 

Where a body selected by the Commission as a new beneficiary: 

(a) 

(b) 

fulfils the criteria for eligible activities set out in Article 6 and the criterion set 
out in point (a) of paragraph 2 of this Article, it may be awarded the grant of its 
predecessor identified in the Annex; or 

fulfils the criteria for eligible activities set out in Article 6 and the criteria set 
out  in  point  (b)  or  (c)  of  paragraph  2  of  this  Article,  it  may  be  awarded  an 
action  grant.  In  that  case,  the  maximum  amount  of  financing  available  under 
the  action grant  shall  not exceed on an annual basis the unused credits in the 
context of the grants awarded for specific actions or operating grants pursuant 
to Article 9. 

Article 8 

Transparency 

Any beneficiary of funding awarded under the Programme shall indicate in a prominent place, 
such  as  a  website  or  an  annual  report,  that  it  has  received  funding  from  the  budget  of  the 
European Union. 

EN 

15 

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Article 9 

Financial provisions 

1. 

2. 

The  financial  reference  amount  for  the  implementation  of  this  Decision  over  the 
period 2010-2013 is EUR 36,2 million. 

The  appropriations  allocated  in  accordance  with  this  Decision  shall  be  determined 
each year by the budgetary authority within the limits of the financial framework. 

Article 10 

Implementation 

The  measures  necessary  for  the  implementation  of  this  Decision  shall  be  adopted  by  the 
Commission  in  accordance  with  the  procedures  set  out  in  the  Financial  Regulation  and 
Regulation (EC, Euratom) No 2342/200238.  

Article 11 

Monitoring  

The  Commission  shall  ensure  that  for  any  action  financed  by  the  Programme,  the 
beneficiary submits annually a technical and financial report on the progress of work 
and  that  a  final  report  is  submitted  after  the  completion  of  the  action.  The 
Commission shall determine the form and content of the reports. 

Without prejudice to the audits carried out by the Court of Auditors in liaison with 
the  competent  national  audit  bodies  or  department  pursuant  to  Article  248  of  the 
Treaty, or any inspection carried out pursuant to point (b) of the first subparagraph of 
Article 279(1) of the Treaty, officials and other staff of the  Commission may carry 
out  on-the-spot  checks,  including  sample  checks,  on  actions  financed  under  the 
Programme  and  in  accordance  with  Council  Regulation  (Euratom,  EC)  No 
2185/9639. Where necessary, investigation shall be conducted by the European Anti-
Fraud Office (OLAF) and these shall be governed by Regulation (EC) No 1073/1999 
of the European Parliament and the Council40. 

The  Commission  shall  ensure  that  contracts  and  agreements  resulting  from  the 
implementation of the Programme provide in particular for supervision and financial 
control by the Commission (or any representative authorised by it), if necessary on-
the-spot, and for audits by the Court of Auditors. 

Commission  staff  and  outside  personnel  authorised  by  the  Commission  shall  have 
appropriate  right  of  access,  in  particular  to  the  beneficiary’s  offices  and  to  all  the 
information, including information in electronic  format, needed in order to conduct 
such audit. 

OJ L 357, 31.12.2002, p. 1. 
OJ L 292, 15.11.1996, p. 2. 
OJ L 136, 31.5.1999, p. 1. 

1. 

2. 

3. 

4. 

38 
39 
40 

EN 

16 

   EN 

 
                                                 
5. 

6. 

7. 

8. 

1. 

2. 

3. 

41 
42 
43 
44 

The Court of Auditors and the European Anti-Fraud Office (OLAF) shall enjoy the 
same rights, especially of access, as the Commission.  

The  beneficiary  of  an  operating  or  action  grant  shall  keep  available  for  the 
Commission all the supporting documents, including the audited financial statement, 
regarding  expenditure  incurred  during  the  grant  year,  for  a  period  of  five  years 
following  the  last  payment.  The  beneficiary  of  a  grant  shall  ensure  that,  where 
applicable, supporting documents in the possession of partners or members are made 
available to the Commission.  

On the basis of the results of the reports and sample checks referred to in paragraphs 
1 and 2, the Commission shall ensure that, if necessary, the scale or the conditions of 
allocation  of  the  financial  support  originally  approved  and  also  the  timetable  for 
payments are adjusted. 

The  Commission  shall  ensure  that  every  other  step,  necessary  to  verify  that  the 
actions  financed  are  carried  out  properly  and  in  compliance  with  this  Decision  and 
the Financial Regulation, is taken. 

Article 12 

Protection of the Community's financial interests 

The Commission shall ensure that, when the activities financed under the Programme 
are  implemented,  the  financial  interests  of  the  Community  are  protected  by  the 
application  of  preventive  measures  against  fraud,  corruption  and  other  illegal 
activities,  by  effective  checks  and  by  the  recovery  of  amounts  unduly  paid  and,  if 
irregularities  are  detected,  by  effective,  proportionate  and  dissuasive  penalties,  in 
accordance  with  Council  Regulation  (EC,  Euratom)  No  2988/9541,  Council 
Regulation  (Euratom,  EC)  No  2185/9642  and  Regulation  (EC)  No  1073/1999of  the 
European Parliament and of the Council43. 

For  the  Community  activities  financed  pursuant  to  this  Programme,  the  notion  of 
irregularity  referred  to  in  Article  1(2)  of  Regulation  (EC,  Euratom)  No  2988/9544 
shall mean any infringement of a provision of Community law resulting from an act 
or  omission  by  an  economic  operator,  which  has,  or  would  have,  the  effect  of 
prejudicing  the  general  budget  of  the  Communities  or  budgets  managed  by  them, 
either by reducing or losing revenue accruing from own resources collected directly 
on behalf of the Communities, or by an unjustified item of expenditure. 

The  Commission  shall  ensure  that  the  amount  of  financial  support  granted  for  an 
action  is  reduced,  suspended  or  recovered  if  it  finds  irregularities,  including  non-
compliance with this Decision, the individual decision or the contract or agreement 
granting the financial support in question, or if it transpires that, without Commission 

OJ L 312, 23.12.1995, p. 1. 
OJ L 292, 15.11.1996, p. 2. 
OJ L 136, 31.5.1999, p. 1. 
OJ L 312, 23.12.1995, p. 1. 

EN 

17 

   EN 

 
                                                 
4. 

5. 

1. 

2. 

approval  having  been  sought,  the  action  has  been  subjected  to  a  change  which 
conflicts with the nature or implementing conditions of the project. 

If  the  time  limits  have  not  been  observed  or  if  only  part  of  the  allocated  financial 
support  is  justified  by  the  progress  made  with  implementing  an  action,  the 
beneficiary shall submit observations to the Commission within a specified period. If 
the beneficiary does not give a satisfactory answer, the Commission may cancel the 
remaining  financial  support  and  may  demand  the  repayment  of  sums  already  paid 
out. 

The Commission shall ensure that any undue payment is repaid to the Commission. 
Interest shall be added to any sums not repaid in good time under the conditions laid 
down by the Financial Regulation. 

Article 13 

Committee 

The Commission shall be assisted by a regulatory committee. 

Where  reference  is  made  to  this  paragraph,  the  regulatory  procedure  laid  down  in 
Article 5 of Decision 1999/468/EC shall apply, in compliance with Articles 7 and 8 
thereof. 

The period provided for in Article 5(6) of Decision 1999/468/EC shall be 3 months. 

Article 14 

Evaluation 

1. 

No later than 31 December 2014, the Commission shall submit a report based, inter 
alia,  on  the  annual  reports  referred  to  in  Article  11(1),  to  the  European  Parliament 
and the Council on the achievement of the Programme’s objectives. 

That  report  shall  appraise  at  least  the  overall  pertinence  and  coherence  of  the 
Programme,  the  effectiveness  of  its  execution  and  the  overall  and  individual 
effectiveness of the various actions in terms of achievements of the objectives as set 
out in Article 2. 

The  report  shall  also  be  forwarded  to  the  Economic  and  Social  Committee  for 
information.  

2. 

The  European  Parliament  and  the  Council  shall,  in  accordance  with  the  Treaty, 
decide on the continuation of the Programme as from 1 January 2014. 

Article 15 

Entry into force 

EN 

18 

   EN 

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

Done at Brussels,  

For the European Parliament 
The President 

For the Council 
The President 

EN 

19 

   EN 

 
 
 
ANNEX  

The beneficiaries referred to in the Decision are the following. 

Beneficiaries in the field of financial reporting: 

Section A 

–  the European Financial Reporting Advisory Group (EFRAG);  

–  the International Accounting Standards Committee Foundation (IASCF). 

Beneficiaries in the field of auditing: 

–  the Public Interest Oversight Board (PIOB). 

Section B 

The following bodies, the aim of which is to provide administrative support to the Committee 
of European Securities Regulators, the Committee of European Banking Supervisors and the 
Committee of European Insurance and Pension Supervisors:  

–  In  the  case  of  the  Committee  of  European  Banking  Supervisors  (CEBS),  CEBS 
Secretariat  Limited,  a  UK  limited  company  by  guarantee  without  share  capital 
which  registered  office  is  situated  in  London  and  which  is  registered  under 
number 5161108 with Companies House. 

–  In the case of the Committee of European Securities Regulators (CESR) a French 
not  for  profit  organisation  ("Association  Loi  1901"),  which  registered  office  is 
situated  in  Paris  and  which  is  registered  under  number  441545308  with  the 
"prefecture de Police". 

–  In  the  case  of  the  Committee  of  European  Insurance  and  Occupational  Pensions 
Supervisors  (CEIOPS)  a  German  not  for  profit  organisation  ("eingetragener 
Verein  (e.V.)"),  which  registered  office  is  situated  in  Frankfurt  and  which  is 
registered under number VR 12777 with the "Amstgericht Frankfurt am Main ". 

EN 

20 

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LEGISLATIVE FINANCIAL STATEMENT 

1. 

NAME OF THE PROPOSAL: 

Community  programme  to  support  specific  activities  in  the  field  of  financial 
services, financial reporting and auditing 

2. 

ABM / ABB FRAMEWORK 

Policy Area(s) concerned and associated Activity/Activities: 

Policy Area : 12 Internal Market and services 

Activity : Corporate Environment, accounting and auditing 

Activity : Financial Markets  

3. 

BUDGET LINES 

3.1. 

Budget  lines  (operational  lines  and  related  technical  and  administrative 
assistance lines (ex-B..A lines)) including headings: 

Heading 1A: competitiveness for growth and employment 

12.0401 - new operational budget line to be requested 

3.2. 

Duration of the action and of the financial impact: 

Duration of the action: 4 years (2010 – 2013) 

Indicative duration of the financial impact including payments: 5 years (2010-2014) 

3.3. 

Budgetary characteristics: 

Budget 
line 

12.0401 

Type of expenditure 

New 

EFTA 
contribution 

Contributions 
from applicant 
countries 

Heading in 
financial 
perspective 

Non-
comp 

Diff45 

YES 

NO 

NO 

No 1A 

45 

Differentiated appropriations 

EN 

21 

   EN 

 
                                                 
4. 

SUMMARY OF RESOURCES 

4.1. 

Financial Resources 

4.1.1. 

Summary of commitment appropriations (CA) and payment appropriations (PA) 

EUR million (to 3 decimal places) 

Expenditure type 

Section 
no. 

Year 
2010 

Year 
2011 

Year 
2012 

Year 
2013 

Year 
2014 

Total 

Operational expenditure46 

Commitment Appropriations 
(CA) 

8.1. 

Payment 
(PA) 

Appropriations 

a 

b 

5.300 

10.300 

10.300 

10.300 

36.200 

2.650 

7.800 

10.300 

10.300 

5.150 

36.200 

Administrative expenditure within reference amount47 

Technical  &  administrative 
assistance (NDA) 

8.2.4. 

C 

TOTAL REFERENCE AMOUNT 

Commitment 
Appropriations 

a+c  5.300 

10.300 

10.300 

10.300 

36.200 

Payment Appropriations 

b+c  2.650 

7.800 

10.300 

10.300 

5.150 

36.200 

Administrative expenditure not included in reference amount48 

Human 
associated 
(NDA) 

resources 

and 
expenditure 

8.2.5. 

D 

1.406 

1.406 

1.406 

1.406 

1.406 

7.030 

Administrative  costs,  other 
than  human  resources  and 
not 
associated 
included 
reference 
in 
amount (NDA) 

costs, 

TOTAL CA including cost 
of Human Resources 

TOTAL PA including cost 
of Human Resources 

8.2.6. 

E 

0.020 

0.020 

0.020 

0.020 

0.020 

0.100 

a+c
+d+
e 

b+c
+d+
e 

6.726 

11.726  11.726 

11.726 

1.426 

43.330 

4.076 

9.226 

11.726 

11.726 

6.576 

43.330 

Co-financing details 

The  proposal  involves  co-financing  by  the  beneficiaries  using  their  own  funds  or  funds 
received from third parties (e.g. member organisations, stakeholders)49. 

46 
47 
48 

Expenditure that does not fall under Chapter xx 01 of the Title xx concerned. 
Expenditure within article xx 01 04 of Title xx. 
Expenditure within chapter xx 01 other than articles xx 01 04 or xx 01 05. 

EN 

22 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
An estimate of the level of this co-financing is indicated in the table below. 

Co-financing body 

IASCF  with  its  own  funds  and  with 
funds received from third parties 

(Beneficiary average co-finance 76%)  

EFRAG  with  its  own  funds  and  with 
funds received from third parties 

(Beneficiary average co-finance 50%)  

PIOB  with  its  own  funds  and  with 
funds received from third parties  

(Beneficiary average co-finance 70%) 

CESR,  CEBS  and  CEOIPS  (3LC) 
with  its  own  funds  and  with  funds 
received by third parties  

(Beneficiary average co-finance 52%) 

TOTAL  CA 
financing  

including  co-

f 

f 

f 

f 

a+c
+d+
e+f 

EUR million (to 3 decimal places) 

Year 
2010 

Year 
2011 

Year 
2012 

Year 
2013 

Year 
2014 

Total 

--- 

16.000 

16.000 

16.000 

3.000 

3.000 

3.000 

3.000 

0.700 

0.700 

0.700 

0.700 

2.153 

2.153 

2.153 

2.153 

0 

0 

0 

0 

48.000 

12.000 

2.800 

8.612 

12.579 

33.579 

33.579 

33.579 

1.426 

114.742 

4.1.2.  Compatibility with Financial Programming 

X 

Proposal  will  entail  reprogramming  of  the  relevant  heading  in  the  financial 
perspective. 

4.1.3.  Financial impact on Revenue 

X 

Proposal has no financial implications on revenue 

4.2. 

Human Resources FTE (including officials, temporary and external staff) – see 
detail under point 8.2.1. 

Annual requirements 

Year 
2010 

Year 
2011 

Year 
2012 

Year 
2013 

Year 
2014 

Total number of human resources 

12 

12 

12 

12 

12 

49 

Currently,  the  bodies  are  financed  as  follows:  IASCF  is  financed  mainly  by  means  of  voluntary 
contributions from private sector stakeholders; EFRAG is currently financed by a number of European 
associations  (such  as  BUSINESSEUROPE,  Fédération  des  Experts  Comptables  Européennes,  Comité 
Européen  des  Assurances,  European  Banking  Federation,  etc)  and  by  private  or  public  National 
Funding  Mechanisms  established  in  certain  Member  States;  PIOB  is  mainly  funded  by  IFAC  which 
represents the accountancy profession; the Committees of Supervisors (CESR, CEBS and CEIOPS) are 
financed  by  their  members,  consisting  of  national  supervisors  competent  in  the  field  of  securities, 
banking  and  insurance  in  each  Member  State.  For  a  more  detailed  overview  of  the  member 
organisations and stakeholders, please refer to the ex-ante evaluation point 1.1. 

EN 

23 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                                                                                                                         
5. 

CHARACTERISTICS AND OBJECTIVES 

5.1. 

Need to be met in the short or long term 

Operational objective 1: ensure stable, diversified, sound and adequate funding to 
enable the relevant bodies to carry out their public interest mission in an independent 
and  efficient  way  in  the  field  of  financial  reporting  and  auditing  (International 
Accounting  Standard  Committee  Foundation 
(IASCF),  European  Financial 
Reporting  Advisory  Group  (EFRAG)  and  Public  Interest  Oversight  Body  (PIOB)) 
within  a  reasonable  period  of  time  considering  the  urgency  of  the  EU  and 
international  context.  Operational  objective  2:  ensure 
the  Committees  of 
Supervisors  (3L3C)  are  adequately  equipped  with  financial  means  within  a 
reasonable  period  of  time,  considering  the  urgency  of  the  EU  and  international 
context.  

5.2. 

Value-added  of  Community  involvement  and  coherence  of  the  proposal  with 
other financial instruments and possible synergy 

- The Community involvement will strengthen the position of the European Union, 
notably in the context of the current discussions on the governance of these EU and 
international bodies (IASCF, EFRAG, and PIOB)  

-  Community  funding  will  demonstrate  the  EU  willingness,  in  the  context  of  the 
current financial crisis, to upgrade the issues of supervision of financial institutions 
and accounting standards (IASCF, EFRAG, and Committees of Supervisors); 

-  The  specific  Community  funding  will  signal  Community  interest  to  all  parties 
concerned, and it will encourage other EU public bodies and institutions to provide 
more funds and attention to these organisations; 

- Additionally, Community intervention will enhance the general recognition of the 
beneficiary  organisations  (particularly  EFRAG  and  PIOB),  while  providing  stable 
financing  for  bodies  subject  to  insufficient  funding  (especially  Committees  of 
Supervisors and EFRAG); 

-  The  proposed  Community  funding  will  be  a  key  component  in  the  short-term 
actions towards completion of a single market in the financial markets;  

5.3. 

Objectives, expected results and related indicators of the proposal in the context 
of the ABM framework 

-  Objective:  avoid  reliance  of  IASCF,  EFRAG  and  PIOB  on  voluntary  private 
funding from interested parties, thus ensuring independence of their work. Expected 
result:  put  an  end  to  continuous  concerns  about  possible  conflict  of  interests  and 
independence in relation to the standard-related activity (standard setting in relation 
to International Financial Reporting Standards (IFRS) for IASCF, IFRS review in the 
context  of  the  endorsement  process  for  EFRAG  and  overview  of  the  International 
Standards  for  Auditing  (ISA)  setting  process  for  PIOB  considering  that  these 
standards are part or potentially part of the acquis communautaire.  

- Objective: promote the global acceptance of the IFRS and of the IAS, together with 
other  public  authorities  in  the  US  and  other  countries/regions.  Expected  result: 

EN 

24 

   EN 

 
coordinated  international  recognition  of  IFRS  and  IAS  standards,  which  is  a  long 
term objective of the EU.  

- Objective: ensure a fairer burden sharing within the EU for the financing of IASCF 
and EFRAG, as only some EU stakeholders currently bear the cost of funding these 
institutions, while other Member States or stakeholders do not. Expected result: the 
Community financial contribution will level the field of EU national participations in 
the key international and EU standard-setting bodies (IASCF and EFRAG).  

-  Objective:  ensure  that  Committees  of  Supervisors  and  EFRAG  are  sufficiently 
equipped  in  terms  of  technical  and  financial  resources.  Expected  result:  the 
Community contribution will secure the existing operations of these bodies, and will 
co-fund  a  quality  set  of  new  actions  that  are  essential  in  the  overall  EU  financial 
policy.  Added  transparency  in  the  governance  of  these  institutions  will  also  be 
achieved. 

- Objective: to achieve the above within the shortest possible period of time, given 
the current financial crisis. Expected result: Community co-founding can be available 
for the beneficiaries within a very short period of time, if the Decision is adopted by 
the co-legislators in 2009. 

- Measurement / indicators: efficiency and quality will be measured by analysing the 
delivered  actions/papers/documents  and  their  practical  impact  within  the  objectives 
of the financial market policies of the European Union. 

5.4.  Method of Implementation (indicative) 

X 

Centralised Management 

X 

directly by the Commission 

6. 

MONITORING AND EVALUATION 

6.1.  Monitoring system 

The  Commission  will  closely  monitor  the  implementation  of  the  programmes  and 
will evaluate the impact of the proposed funding. To this end, the Commission will: 

- Monitor and analyse the annual planning and activity reports of the beneficiaries; 

-  Evaluate  the  quality  output  of  the  general  activities  /  specific  actions  to  be  co-
financed by the Communities. Precise feedback mechanisms will be put in place to 
assure the Community funds are used in accordance to the initial objectives and with 
the principles of sound financial management; 

- Request a specific annual report to be submitted to the Commission, according to 
the  individual  objectives  of  each  programme  and  in  line  with  the  guidelines  of  the 
Financial Regulations; 

EN 

25 

   EN 

 
- Finally, the European Commission as member of the monitoring/steering groups set 
up (or to be set up) by the beneficiaries, will ensure they operate efficiently and in 
the public interest of the EU; 

- On-going dialogue with other fund providers and key stakeholders; 

6.2. 

Evaluation 

6.2.1.  Ex-ante evaluation 

One detailed ex-ante evaluation has been carried out prior to the formulation of the 
draft  proposal.  It  is  composed  of  a  general  evaluation  report  and  four  detailed 
annexes,  each  of  them  devoted  to  the  proposed  beneficiaries  of  the  Community 
funding (Committees of Supervisors, IASCF, EFRAG and PIOB). 

6.2.2.  Measures taken  following  an intermediate/ex-post evaluation (lessons learned from 

similar experiences in the past) 

As  the  proposed  initiative  is  entirely  new  at  DG  MARKT,  intermediate/ex-post 
evaluations are not applicable at this stage. 

6.2.3.  Terms and frequency of future evaluation 

An  intermediate  evaluation  will  be  carried  out  after  two  years  of  the  programmes' 
implementation. An ex-post evaluation is to be organised at the end of the forecasted 
actions.  

7. 

ANTI-FRAUD MEASURES  

- Regular analysis of the beneficiaries' accounts, annual reports and audit certificates; 

-  Visits  to  the  beneficiaries'  premises  when  deemed  necessary  to  verify  budgetary 
systems and controls; 

-  All  regular  controls  to  grant  beneficiaries  forecasted  in  the  Financial  Regulation

EN 

26 

   EN 

 
8. 

DETAILS OF RESOURCES 

8.1. 

Objectives of the proposal in terms of their financial cost 

(Headings  of  Objectives,  actions 
and outputs should be provided) 

Type of output 

Average 
cost 

Year 2010 

Year 2011 

Year 2012 

Year 2013 

TOTAL 

No. 
outputs
(estim.) 

Total 
cost 

No. 
outputs
(estim.) 

Total 
cost 

No. 
outputs
(estim.) 

Total 
cost 

No. 
outputs
(estim.) 

Total 
cost 

No. 
outputs
(estim.) 

Total cost 

Indicative commitment appropriations in EUR million (to 3 decimal places) 

OPERATIONAL 
No.1 

OBJECTIVE 

Action 1  

Grant IASCF 

Action 2 

Grant EFRAG 

Action 3  

Grant PIOB 

- Output: IASCF  Non-degressive operating grant 

--- 

--- 

0 

--- 

5.000 

--- 

5.000 

--- 

5.000 

--- 

15.000 

- Output: EFRAG  Non-degressive operating grant 

--- 

--- 

3.000 

--- 

3.000 

--- 

3.000 

--- 

3.000 

--- 

12.000 

- Output: PIOB  Non-degressive operating grant 

Sub-total Objective 1 

OPERATIONAL 

OBJECTIVE 

--- 

--- 

--- 

--- 

0.300 

3.300 

--- 

--- 

0.300 

8.300 

--- 

--- 

0.300 

8.300 

--- 

--- 

0.300 

8.300 

--- 

--- 

1.200 

28.200 

EN 

27 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
No.2  

Action 1  

Grants Level 3 Committees50 

- Output 1: CEBS, CEIOPS, CESR  Action grant to support the training and 
a 

activities 

fostering 

secondment 
common supervisory culture 

--- 

--- 

1.040 

--- 

1.040 

--- 

1.040 

--- 

1.040 

--- 

4.160 

- Output 2: CEBS, CEIOPS, CESR 

IT  programmes  for  the  supervisory 
convergence 

--- 

--- 

0.960 

--- 

0.960 

--- 

0.960 

--- 

0.960 

--- 

3.840 

Sub-total Objective 2 

TOTAL COST 

2.000 

5.300 

2.000 

10.300 

2.000 

10.300 

2.000 

10.300 

8.000 

36.200 

50 

EN 

The mention of the three Committees of Supervisors is for ease of reference only. Legally speaking, the Committees do not have legal personality at the European level. 
However, to be able to contract with third parties and facilitate the operation and administration of the Committees, the members of each Committee of Supervisors have set 
up support structures with legal personality in each Member State where these committees are situated, i.e. France, the United Kingdom and Germany . In practice, the 
Community will thus contribute financially to these support structures, as indicated in Article 5 of the Decision. 

28 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
8.2. 

Administrative Expenditure 

The  needs  for  human  and  administrative  resources  shall  be  covered  within  the 
allocation  that  can  be  granted  to  the  managing  DG  in  the  framework  of  the  annual 
allocation procedure in the light of budgetary constraints. 

8.2.1.  Number and type of human resources 

Types of post 

Staff to be assigned to management of the action using existing 
and/or additional resources (number of posts/FTEs) 

Year 2010  Year 2011  Year 2012  Year 2013  Year 2014 

Officials or temporary 
staff51 (XX 01 01) 

A*/AD 

B*, 
C*/AST 

Staff financed52 by art. XX 01 02 

Other staff53 financed by art. XX 
01 04/05 

TOTAL 

5 

6 

1 

--- 

12 

5 

6 

1 

--- 

12 

5 

6 

1 

--- 

12 

5 

6 

1 

--- 

12 

5 

6 

1 

--- 

12 

8.2.2.  Description of tasks deriving from the action 

Operational management of action and operating grants 

Financial management, monitoring and auditing of the grant agreements 

All 12 staff will be partly involved in the development of the actions.  

8.2.3. 

Sources of human resources (statutory) 

X 

Posts  to  be  redeployed  using  existing  resources  within  the  managing  service 
(internal redeployment): 10 

X 

Posts to be requested in the next APS/PDB procedure: 2 

While 10 staff will be internally redeployed, one AD and one AST officials shall be 
requested to ensure a correct management of these new grant agreements. These two 
posts  will  be  essential  for  the  appropriate  monitoring  (financial,  audit,  technical 
tasks) and follow up of certainly large grant allocations,  an unprecedented exercise 
for DG MARKT. 

51 
52 
53 

Cost of which is NOT covered by the reference amount 
Cost of which is NOT covered by the reference amount 
Cost of which is included within the reference amount 

EN 

29 

   EN 

 
 
 
 
 
 
                                                 
8.2.4.  Other  Administrative  expenditure  included  in  reference  amount  (XX  01  04/05  – 

Expenditure on administrative management) 

EUR million (to 3 decimal places) 

Year 
2010 

Year 
2011 

Year 
2012 

Year 
2013 

Year 
2014 

TOTAL 

Not relevant 

Budget line 

(number and heading) 

administrative 
Technical 
assistance (including related staff costs) 

and 

Executive agencies54 

Other technical / administrative assistance 

- intra muros  

- extra muros 

Total  Technical  and  administrative 
assistance 

8.2.5.  Financial cost of human resources and associated costs not included in the reference 

amount 

EUR million (to 3 decimal places) 

Type of human resources 

Year 
2010 

Year 
2011 

Year 
2012 

Year 
2013 

Year 
2014 

Officials  and  temporary  staff  (XX 
01 01) 

1.342 

1.342 

1.342 

1.342 

1.342 

Staff  financed  by  Art  XX  01  02 
(auxiliary, END, contract staff, etc.) 

Total  cost  of  Human  Resources 
and  associated  costs  (NOT 
in 
reference amount) 

0.064 

0.064 

0.064 

0.064 

0.064 

1.406 

1.406 

1.406 

1.406 

1.406 

Calculation– Officials and Temporary agents 

9 officials in the operational units  

1 official in the financial unit  

1 official in IAC (Internal Audit Capability of DG MARKT) 

54 

Reference should be made to the specific legislative financial statement for the Executive Agency(ies) 
concerned. 

EN 

30 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
Calculation– Staff financed under art. XX 01 02 

1 contractual agent in the financial unit 

XX 01 02 11 01 – Missions 

0.020 

0.020 

0.020 

0.020 

0.020 

0.100 

Year 
2010 

Year 
2011 

Year 
2012 

Year 
2013 

Year 
2014 

TOTAL 

XX 01 02 11 02 – Meetings & Conferences 

XX 01 02 11 03 – Committees55  

XX 01 02 11 04 – Studies & consultations 

XX 01 02 11 05 - Information systems 

2  Total  Other  Management  Expenditure 

0.020 

0.020 

0.020 

0.020 

0.020 

0.100 

(XX 01 02 11) 

3 Other expenditure of an administrative 
to 

including  reference 

nature  (specify 
budget line) 

Total  Administrative  expenditure,  other 
than  human  resources  and  associated 
reference 
included 
costs 
amount) 

(NOT 

in 

0.020 

0.020 

0.020 

0.020 

0.020 

0.100 

The  cost  of  possible  meetings  is  not  included  in  the  present  financial  statement 
because it will be part of DG MARKT "global envelope" 

Calculation - Other administrative expenditure not included in reference amount 

--- 

55 

Specify the type of committee and the group to which it belongs. 

EN 

31 

   EN