Commission staff working document accompanying the Report from the Commission to the European Parliament on the follow-up to 2007 Discharge Decisions {COM(2009) 526}
Date: 2009-10-16
Institutions: European Commission
Subjects: budgetary discharge, financial year, general budget (EU), implementation of the budget

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internal reference 

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 16.10.2009 
SEC(2009) 1427 final 

COMMISSION STAFF WORKING DOCUMENT 

accompanying the REPORT FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT on the follow-up to 2007 Discharge Decisions 

{COM(2009) 526} 

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TABLE OF CONTENTS 

INTRODUCTION...................................................................................................................... 1 

COMMISSION STAFF WORKING DOCUMENT accompanying the REPORT FROM THE 

COMMISSION TO THE EUROPEAN PARLIAMENT on the follow-up to 2007 
Discharge Decisions..................................................................................................... 2 

Main conclusions .............................................................................................................. 3 

Statement of Assurance .................................................................................................... 5 

Budgetary management - financial corrections, amounts recovered and suspension of 

payments ........................................................................................................... 10 

Annual summaries of audits and declarations available in the shared-management field, 
and national management declarations............................................................. 12 

Control systems............................................................................................................... 16 

Transparency................................................................................................................... 23 

Financial Regulation ....................................................................................................... 28 

Anti-Fraud Office (OLAF) ............................................................................................. 29 

Own resources................................................................................................................. 32 

Agriculture and natural resources ................................................................................... 33 

Fisheries subsidies .......................................................................................................... 37 

Cohesion ......................................................................................................................... 39 

Internal policies............................................................................................................... 44 

External actions............................................................................................................... 57 

Non-governmental organisations (NGOs) ...................................................................... 63 

Development................................................................................................................... 64 

Pre-accession strategy..................................................................................................... 70 

Administrative expenditure............................................................................................. 79 

Follow-up measures in the light of the discharge ........................................................... 82 

Special Report No 6/2007 on the effectiveness of technical assistance in the context of 

capacity development ....................................................................................... 83 

Special Report No 1/2008 concerning the procedures for the preliminary examination 

and evaluation of major investment projects for the 1994-1999 and 2000-2006 
programming periods........................................................................................ 87 

Special Report No 2/2008 concerning Binding Tariff Information (BTI)...................... 90 

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Special Report No 3/2008 on the European Union Solidarity Fun: how rapid, efficient 

and flexible is it?............................................................................................... 91 

Special Report No 4/2008 concerning the implementation of milk quotas in the Member 
States which joined the European Union on 1 May 2004 ................................ 92 

Special Report No 5/2008 - The European Union's agencies: Getting results ............... 94 

Special Report No 6/2008 concerning European Commission Rehabilitation Aid 

following the Tsunami and Hurricane Mitch.................................................... 96 

Special Report No 7/2008 on Intelligent Energy 2003-2006 ....................................... 100 

Special Report No 8/2008 - Is cross-compliance an effective policy? ......................... 102 

Special Report No 9/2008 - The effectiveness of EU support in the area of freedom, 

security and justice for Belarus, Moldova and Ukraine ................................. 104 

Special Report No 11/2008 - The management of the European Union support for the 

public storage of cereals ................................................................................. 108 

European Development Funds...................................................................................... 110 

Requests to the Commission in resolutions concerning the agencies........................... 120 

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INTRODUCTION 

This Commission Staff Working Document completes the Report from the Commission to the 
Parliament  on  the  Follow-up  to  2007  Discharge  Decisions  {COM(2009)XXX  final}.  It 
presents in detail the answers to the 203 specific requests made by the European Parliament in 
the comments accompanying its Resolutions on the 2007 Discharges1. 

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For each specific request a reference is given to the relevant Parliament document. The references for 
requests 1-169 are all for the 2007 General Budget Discharge. 

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COMMISSION STAFF WORKING DOCUMENT accompanying the 
REPORT FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT on the follow-up to 2007 Discharge Decisions 

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Main conclusions 

1. 

The European Parliament notes considerable improvements in the field of Research 
and  Technological  Development  (RTD)  financial  management  where  error  rates 
were reduced by more than 50% in the space of three years; invites the Commission 
to continue its simplification efforts in  order to improve the use of programmes by 
final beneficiaries. (§ 4) 

Commission's response: 

FP7  has  brought  about  a  number  of  important  simplifications  already.  The 
introduction of the participants guarantee fund allowed to considerably reduce the 
number  of  ex-ante  financial  checks  and  the  use  of  protective  measures,  and 
replaced  the  collective  financial  responsibility  of  the  contractors  as  laid  down  in 
FP6.  The  introduction  of  the  certification  of  the  beneficiary's  accounting 
methodology  in  FP7  contributes  to  a  reduction  in  the  number  of  required  audit 
certificates  and  will  limit  ex-post  controls.  The  unique  registration  facility  for 
participants  avoids  repeated  requests  to  beneficiaries  and  improves  data  quality 
and  coherence  in  all  grant  management  systems.  Further  improvements  will  be 
achieved by the gradual introduction of fully electronic exchange systems for the 
whole chain of proposal and grant management procedures in the frame of the e-
FP7 initiative. 

2. 

The European Parliament remains concerned about the lack of EU capacity in crisis 
management; considers that the Union is losing its political  compass, visibility  and 
accountability when using international trust funds which could have been managed 
by the Commission if it had respected discharge reports 2005 and 2006 and built up 
its own post-crisis instrument; is greatly concerned at the lack of control of EU funds 
implemented by certain UN agencies and the unwillingness of UN agencies to follow 
up on fraud cases where EU funds are involved. (§ 6 + § 163) 

Commission's response: 

The  Commission  is  continuously  working  towards  achieving  its  aim  of  a  fully 
integrated  and  comprehensive  EU  response  capacity  to  contribute  to  a  safer  and 
more  secure  Union.  As  a  further  contribution,  the  Commission  is  elaborating  an 
inventory  of  Community  policies  and  instruments  for  the  management  of  crises. 
This is a step towards improving visibility and transparency on crisis management 
instruments  of  the  Commission  and  of  Agencies.  It  should  enable  improved 
effectiveness  of  action,  as  a  quick  reference  guide  in  support  of  scenarios  for 
operations inside and outside the EU.  

The  Commission  will  investigate  making  proposals  (within  the  context  of  the 
revision  of  the  Financial  Regulation)  to  allow  the  Commission  to  set  up  and 
manage multi-donor trust funds. The issue of the use of the EC operational budget 
to cover related administrative costs will also be examined. 

Recent  evaluations  of  the  Commission's  cooperation  with  partner  countries 
through  the  UN  and  aid  delivery  through  the  EIB  and  the  development  banks 
conclude  that  such  interventions  resulted  in  added  value  and  tangible  results,  in 

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particular  for  the  larger  trust  funds.  In  addition,  participation  in  such  initiatives 
enabled the Commission to intervene in politically sensitive areas, where it would 
otherwise have been impossible to deliver aid. However the Commission recognises 
that  exactly  because  of  the  political  sensitivity  of  its  interventions  in  crisis 
management, more attention should be paid to its visibility as political and delivery 
actor. The Commission was able to benefit from the field presence and expertise of 
its multilateral partners in terms of implementation. 

Under  the  terms  of  the  Financial  and  Administrative  Framework  Agreement 
(FAFA)  the  EC  anti-fraud  office  (OLAF)  can  use  the  verification  clause  to 
perform on the spot checks on UN activities to which EC funds contribute. Anti-
fraud  enquiries  are  dealt  with  by  cooperation  between  OLAF  and  the  anti-fraud 
services of each UN organisation concerned. The Commission has also regularly 
drawn  the  attention  of  the  UN  to  OLAF's  responsibilities  in  cases  of  suspected 
fraud  or  irregularity  in  relation  to  Commission  funds.  Moreover  the  6th  Annual 
FAFA Working Group meeting, which took place in April 2009, agreed on terms 
of  reference  for  financial  verification  missions,  which  will  make  these  missions 
even more effective. 

As regards UN operations in Kosovo, the Commission would like to specify that the 
UN's involvement in EU-funded projects in Kosovo is at present limited to it acting 
as a contractor for projects in a limited number of specific areas: 

- UNDP on minorities return and reintegration in Kosovo (3.7 MEUR under IPA, 
project running until 4/2010); 

-  UNOPS  on  vetting  of  judges  (5  MEUR  under  Instrument  for  Stability,  project 
running until 10/2009).  

Concerning  the  follow-up  to  findings  of  the  Investigation  Task  Force  (ITF), 
following the ITF's liquidation, UNMIK transferred all ITF case files to the EU's 
rule  of  law  mission  in  Kosovo,  EULEX.  EULEX  have  confirmed  receipt.  The 
Commission  will  continue  to  keep  in  close  and  regular  contact  with  EULEX  on 
any developments relating to the files concerned. The continuity of ITF functions 
in  Kosovo  is  ensured  by  the  Office  of  Internal  Oversight  Services  (OIOS),  which 
supervises  UN  funded  operations,  by  OLAF,  which  ensures  the  EU's  financial 
interests  are  protected,  and  by  the  Financial  Intelligence  Unit,  which  operates 
within the framework of EULEX. 

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Statement of Assurance 

3. 

4. 

The Commission should pay due attention to the comments presented by the Court of 
Auditors  in  order  to  improve  the  comprehensiveness  and  accuracy  of  the  basic 
accounting data. (§ 10) 

Commission's response: 

The Commission always takes into account the remarks and recommendations of 
the Court of Auditors so as to try to improve the quality of its accounting data and 
accounts. 

The Commission should give further specification concerning the annexed notes on 
the other amounts to be called from Member States, totalling EUR 27.900.000.000. 
(§ 11) 

Commission's response: 

The  Commission  has  implemented  the  request.  More  details  on  these  amounts 
were given in the provisional 2008 accounts. 

5. 

Consideration should be given to establishing a Community pension fund in order to 
externalise the financial commitments vis-à-vis staff. (§ 11) 

Commission's response: 

The European Communities Pension Scheme is defined in the Staff Regulations. 
When  in  2003,  the  Commission  presented  a  proposal  amending  the  Staff 
Regulations,  due  consideration  (backed-up  by  a  complex  actuarial  study)  was 
given  to  setting-up  a  pension  fund.  However  the  analysis  did  not  conclude  in 
favour of such a change. Initial set-up costs as well as risks of losses by the fund 
due to the investment climate and policy would be particular concerns. 

The Commission considers that the hypotheses and conditions of this analysis have 
not changed and therefore that the conclusions remain valid. 

The  amount  of  EUR  27.9  billion  stated  in  the  accounts,  and  to  which  the  European 
Parliament refers in point 11 of its resolution,  is the net amount of all the EC's liabilities 
less  all  the  EC's  assets.  In  fact,  details  of  amounts  to  be  paid  from  future  budgets  are 
already given in the balance sheet itself and the notes to the accounts (primarily under the 
heading current liabilities). 

6. 

The Commission should put forward a proposal concerning the accounting treatment 
of  major  European  projects  (Galileo  or  TENs)  which  require  funding  which  goes 
beyond  the  scope  of  the  multiannual  financial  framework  and  which  it  cannot 
therefore control. (§ 12) 

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Commission's response: 

The  EC  accounting  rules,  based  on  the  International  Public  Sector  Accounting 
Standards (IPSAS) are already sufficient to allow the Commission to account for 
such activities. 

7. 

The Commission should examine the possibility of including in the annual accounts 
provisions  for  major  maintenance  and  refurbishment  work  on  the  European 
Communities'  buildings  stock,  given  the  lack  of  a  buildings  depreciation  schedule 
broken down by specific component and setting out the main tangible fixed assets to 
be  replaced  at  regular  intervals.  Such  provisions  for  major  maintenance  or 
refurbishment works should be backed by multiannual upkeep programmes designed 
to keep buildings in a good state of repair without prolonging their life. (§ 13) 

Commission's response: 

The Commission will not be taking the requested action. The inclusion of such a 
provision would be clearly contrary to the EC accounting rules (these rules being 
based  on  the  internationally  accepted  International  Public  Sector  Accounting 
Standards, IPSAS). 

8. 

The Commission should  properly  verify  that, in the absence of a capital tie-up, the 
European  Communities'  level  of  political  authority  in  the  agencies  included  in  the 
international  public-sector  accounting 
consolidated  accounts  complies  with 
standards. (§ 14) 

Commission's response: 

As part of its modernisation of the accounting system project, the Commission has 
examined  the  necessary  issues  surrounding  the  consolidation  of  the  European 
Communities  Agencies  so  as  to  ensure  that  they  comply  with  the  relevant 
accounting rules.  

The consolidation of the European Communities Agencies is based on the control 
concept and in accordance with the European Communities accounting rule based 
on  International  Public  Sector  Accounting  Standards,  IPSAS,  (see  also  2008 
European  Communities  annual  accounts  section  1.3  "Controlled  entities"). 
Control is defined by IPSAS 6 as "the power to govern the financial and operating 
policies  of  an  entity  so  as  to  be  able  to  benefit  from  the  entities  activities."  The 
existence or ownership of share capital is just one indication of control.  

The Commission confirms that, as the agencies are created by a secondary act of 
European  Communities  legislation,  they  are  considered  as  being  under  the 
exclusive control of the European Communities (not the Commission.) While the 
Commission,  through  its  accounting  services,  makes  the  physical  consolidation, 
the  overall  "parent  company"  is  the  European  Communities.  Furthermore,  the 
consolidation of the European Communities' agencies is explicitly foreseen by the 
Financial Regulation (Art. 121). 

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9. 

The  Commission  should  clarify  the  possibilities  under  the  Staff  Regulations  of 
appointing ‘non category’ senior officials, unless specifically mentioned in the staff 
establishment plans, in the last step of the AD16 grade. (§ 15) 

Commission's response: 

The non-category staff (listed under HC in the establishment plans) mentioned by 
the European Parliament concern 6 posts in the establishment plans of Parliament 
(1  permanent  post),  Council  (2  permanent  posts),  the  Court  of  Auditors  (1 
temporary  post),  the  Economic  and  Social  Committee  (1  temporary  post)  and  the 
Committee of the Regions (1 temporary post). 

These positions have been created by the budgetary authority in the establishment 
plans of the institutions concerned and the actual appointing of persons on these 
positions is the sole responsibility of the AIPN of these institutions. 

10. 

The  Commission  should  analyse  and  strives  for  simplification  of  complicated  or 
unclear  legal  requirements  in  extremely  important  Community  spending  areas 
(agricultural spending excluding the EAGF, cohesion, research, energy and transport, 
external actions, education and culture). (§ 17) 

Commission's response: 

The Commission agrees that high error rates are partly due to complex eligibility 
rules.  It  acknowledges  that  simplification  has  a  role  to  play  in  improving  the 
implementation  of  EU  policies  and  reducing  error  rates,  but  points  out  that  a 
certain degree of complexity in rules and eligibility criteria is unavoidable as these 
are often fixed in order to achieve desired policy objectives and are the outcome of 
a complex legislative procedure. The Commission has committed itself to seeking 
simplification where possible and will pursue this objective further. The impact of 
simplification will be visible in the medium- to long-term.  

For example, the Commission recognises that the legal framework in the Cohesion 
policy  area  is  complex,  and  that  this  increases  the  risk  of  errors  at  beneficiary 
level. The Commission has proposed measures to simplify some of the present rules 
and  is  exploring  the  scope  for  further  simplifications.  For  the  Structural  Funds, 
the  simplification  implemented  in  the  2007-13  legislation  will  start  to  become 
visible in the error rates the Court is detecting on the ground in the declaration of 
assurance  (DAS)  2010  at  the  earliest.  Further  simplification  is  already  being 
prepared  and  will  be  proposed  shortly,  but  will  of  course  take  correspondingly 
longer to have an impact on the Court's results.  

the  7th  Framework  Programme  for  research  and 
As  another  example, 
technological  development  (FP7)  has  brought  about  a  number  of  important 
simplifications  already.  The  introduction  of  the  participants  guarantee  fund 
allowed to considerably reduce the numbers of ex-ante financial checking, the use 
of protective measures and the number of required audit certificates. The unique 
registration  facility  for  participants  avoids  repeated  requests  to  beneficiaries  and 
improves data quality and coherence in all grant management systems. The project 
reporting  was  streamlined,  including  reduced  data  requirements,  simplified 
reporting  guides  and  longer  reporting  periods.  Further  improvements  will  be 

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achieved by the gradual introduction of fully electronic exchange systems for the 
whole  chain  of  proposal  and  grant  management  processes  in  the  frame  of  the  e-
FP7 initiative. 

The Commission has also taken action in several ways to improve the situation in 
rural development, for example: The Council Regulation 1290/2005 gave way for 
the-post  2007  period  to  align  the  management  and  control  system  for  the 
expenditure  under  the  newly  created  European  Agricultural  Fund  for  Rural 
Development  (EAFRD)  with  the  EAGGF  guarantee  system.  Thus,  in  the  future, 
the advantages of the EAGF Guarantee system that are largely recognized will also 
cover the rural development expenditure. 

As  far  as  the  Directorate-General  for  Education  and  Culture  (DG  EAC)  is 
concerned  the  design  of  the  new  programmes  2007-2013  has  taken  into  account 
the Court of Auditors' recommendations of previous years to simplify the rules and 
to make more use of lump sum financings. This is intended to further reduce the 
error rate. 

The  Commission  is  currently  working  to  identify  possible  areas  of  further 
simplification in the context of its preparatory work for the triennial revision of the 
Financial  Regulation.  It  could  focus  in  particular  on  grants,  in  particular 
eligibility rules; management methods, whose provisions have become increasingly 
complex and which are crucial to improve the efficiency and delivery of external 
aid in particular; and control measures. The degree of complexity of the eligibility 
rules  has  a  direct  link  with  the  intensity  and  cost  of  controls  required  to  gain 
reasonable  assurance  on  the  legality  and  regularity  of  transactions.  If  simplified 
eligibility  rules  are  decided  and  effectively  implemented  (e.g.  increased  use  of 
lumps-sums and flat rates, acceptance of the use of national eligibility rules in case 
of co-financing by Member States) the underlying transactions will be less prone to 
error, which will allow to perform less extensive controls (controls can be focussed 
on  output  rather  than  input)  and  ultimately  reduce  the  cost  of  controls.  The 
Commission is also working on the concept of tolerable risk of error, which seeks 
to identify the intensity of the controls which is most cost-effective, i.e. to provide 
an appropriate balance between costs and benefits (reduction in error rates). 

11. 

The  Commission  should  further  step  up  its  monitoring  of  controls  delegated  to 
Member States and give them clear guidance on how to prevent, identify and correct 
errors,  and  where  Member  States'  control  systems  remain  ineffective,  it  should 
compel  Member  States  to  meet  their  obligations  and  make  the  necessary 
improvements,  in  particular  by  imposing  payment  suspensions  and  financial 
corrections. (§ 18) 

Commission's response: 

The Commission is taking the requested action. 

In the Cohesion policy area Member States have to submit annual control reports 
describing  the  audit  work  done  and  the  findings  of  that  work.  These  reports  are 
discussed with the Commission at annual bilateral audit coordination meetings. In 
the 2007-13 period audit bodies will use a common sampling methodology and will 
indicate  in  their  control  reports  the  error  rates  found,  which  will  thus  provide  a 

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better pointer to the effectiveness of their control systems and help the Commission 
to target its own audit work on the higher-risk programmes. 

Guidance  on  the  day-to-day  checks  by  management  bodies  and  the  certifying 
authority  and  on  audit  sampling  has  already  been  issued  and  the  Commission  is 
investing considerably in providing training for national officials who are expected 
to disseminate the information and guidance received in their home countries. The 
main  guidance  documents  are  being  collected  in  an  Audit  Reference  Manual, 
which will be finalised in 2009. 

The  Commission  is  using  its  powers  of  imposing  payments  suspensions  and 
financial  corrections  in  order  to  compel  improvements  in  systems  to  a  greater 
extent than in the past. In 2008 over EUR 1.5 billion of financial corrections and 
10  suspension  decisions  were  imposed,  compared  with  EUR  330  million  of 
corrections and one suspension decision in 2007. 

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Budgetary management - financial corrections, amounts recovered and suspension of 
payments 

12. 

The  European  Parliament  considers  with  regard  to  shared  or  decentralised 
management,  however,  that  the  Commission  must  apply  Regulation  (EC,  Euratom) 
No  1605/2002 
its  ultimate  responsibility  for  budget 
implementation,  and  emphasises  the  need  to  make  financial  corrections  as  soon  as 
irregularities uncorrected by Member States are detected, without waiting for the end 
of the multiannual cycle. (§ 20) 

in  full  and  assume 

Commission's response: 

The Commission is taking the requested action. 

The  Structural  and  Cohesion  Fund  regulations  provide  the  means  by  which  the 
Commission  discharges  its  ultimate  responsibility  for  the  proper  execution  of  the 
budget in the Cohesion policy area. These include both preventive and corrective 
mechanisms. 

The Commission takes action to remedy weaknesses in control systems giving rise 
to irregularities as soon as it becomes aware of them. In such cases it agrees the 
implementation of an action plan with the Member State concerned. These result 
not  only  in  improvements  in  systems  but  also  in  financial  corrections  to  remove 
irregular expenditure from past claims. The Commission services have accelerated 
the  procedures  for  suspension  of  payments  and  financial  corrections  during  the 
programme period. Details can be found in the report on the implementation of the 
Action  Plan  of  19  February  2008  to  strengthen  the  Commission's  supervision  of 
Member  States 
to  shared  management  of  structural  actions 
(COM(2009)  42).  In  the  2007-13  period,  the  heads  of  the  Structural  Fund 
departments will be able to interrupt payments even more rapidly. 

in  relation 

While  most  irregular  expenditure  should  be  corrected  during  the  programme 
period,  the  closure  procedure  provides  an  essential  safety  net  at  the  end  of  the 
control cycle. 

13. 

The European Parliament notes with concern the problems surrounding recovery of 
irregularly disbursed Community funds and the poor quality of the data supplied on 
the  correction  mechanism  applied  at  Member  State  level,  which,  on  occasion,  are 
contradictory  and  incomplete  as  regards  cohesion  policies,  and  the  fact  that,  with 
regard  to  agriculture,  the  ECA  has  doubts  as  to  the  reliability  of  the  information 
supplied (paragraphs 3.26 and 5.44 of the 2007 annual report); 

Points  also  to  the  importance  of  the  final  decisions  and  corrective  measures  taken 
with the aim of excluding from Community funding expenditure which has not been 
carried  out  in  conformity  with  Community  legislation,  and  restates  its  call  for  the 
precise  budget  heading  and  the  year  to  which  individual  recoveries  relate  to  be 
specified, in keeping with standard practice in the agriculture and natural resources 
sector; 

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Calls on the Commission to enhance the efficiency and effectiveness of multiannual 
recovery  systems,  including  at  Member  State  level,  and  to  consolidate  data  on 
recoveries  and  financial  corrections,  in  particular  in  the  areas  covered  by  the 
Structural Funds, in order to provide reliable figures which can be compared between 
the various policy areas and fund management procedures; calls on the Commission 
to  report  to  Parliament  in  the  notes  accompanying  the  annual  accounts,  so  that  an 
overview can be obtained; 

Calls, in view of the persistence of recovery-related problems, for the system to be 
evaluated. (§§ 21-24) 

Commission's response: 

Changes  have  been  made  to  the  ABAC  financial  system  in  2008  to  allow  the 
tracing of recoveries to specific errors or irregularities detected. This has allowed it 
to  already  present  more  complete  and  reliable  recovery  figures  in  the  2008 
accounts.  Thus  the  Commission  will  continue  to  include  in  the  notes  to  the 
accounts its own financial corrections. The Commission commits itself to continue 
the efforts to improve the quality of information produced by the Member States on 
financial corrections, withdrawals and recoveries. This information is included in 
Annex to the annual report on the implementation of the Structural Funds. It will 
continue to report to the budgetary authority on this issue. 

Furthermore, the Commission will pursue ongoing efforts and will not hesitate to 
proceed to financial corrections where necessary. Within the legal framework, the 
Commission  has  taken  steps,  under  the  Action  plan  of  19  February  2008  to 
strengthen its supervision of Member States in relation to shared management of 
structural actions, to ensure that irregularities found in the implementation of the 
Structural  Funds  are  dealt  with  as  soon  as  they  are  detected  and  financial 
corrections are applied promptly. Also, in agriculture the Commission has already 
taken  action  to  improve  the  reliability  of  information  provided  by  Member  States 
by  revising  its  Guidelines  for  financial  year  2008  and  by  closely  monitoring  the 
situation by audit missions in 2008. 

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Annual summaries of audits and declarations available in the shared-management field, 
and national management declarations 

14. 

The Commission should ensure that annual summaries of audit by the Member States 
be  published  together  with  the  Commission’s  assessment  and  should  also  be 
forwarded  to  the  Parliament's  committee  responsible  in  the  course  of  the  discharge 
procedure. (§ 26) 

Commission's response: 

The Commission is taking the requested action. 

An evaluation of the annual summaries is given in the Annual Activity Reports of 
the Directorates General concerned and is also made available to Parliament. 

The  Commission  supports  the  transmission  of  the  annual  summaries  to  the 
Budgetary  Control  Committee.  However,  this  disclosure  can  only  take  place  with 
the  agreement  of  the  Member  States.  The  Commission  is  requesting  their 
agreement. 

15. 

The  Commission  should  analyse  the  summaries  received  in  2009  with  the  aim  of 
optimising  their  added  value  in  terms  of  the  assurance  they  provide  regarding  the 
operation of the internal control systems employed by the Member States and should 
include  an  analysis  of  the  annual  summaries  submitted  by  Member  States  in  the 
annual  report  pursuant  to  Article  86(4)  of  Council  Regulation  (EC,  Euratom)  No 
1605/2002,  using  as  benchmarks  the  provisions  of  the  Interinstitutional  Agreement 
on budgetary discipline and sound financial management. (§§ 27 and 28) 

Commission's response: 

The Commission has taken the requested action. 

The 2009 Annual Activity Reports of the Directorates General for Regional Policy 
and  Employment  give  an  assessment  of  the  contribution  made  by  the  annual 
summaries  to  the  assurance  regarding  the  operation  of  Member  States’  control 
systems  that  is  presented  in  the  reports.  The  summaries  may  make  such  a 
contribution particularly when they contain an analysis of problems or an actual 
statement  of  assurance.  The  Commission  will  continue  to  encourage  Member 
States to add value to the summaries in this way. Compared to 2007, for 2008 all 
Member  States  respected  the  obligation  set  in  Article  53b(3)  of  the  Financial 
Regulation to provide an annual summary and complied or mostly complied with 
the  minimum  requirements.  For  2008  the  Commission  issued  new  and  better 
guidelines for the annual summaries under structural funds.  

For agriculture an evaluation has been submitted to Parliament on the statements 
of  assurance  from  the  directors  of  the  paying  agencies  and  the  related  opinions 
from  the  certification  bodies  as  well  as  the  annual  summaries  from  the 
coordination  bodies  which  the  Commission  had  received  for  agricultural 
expenditure. The Directorate-General for Agriculture and rural Development also 
informed on the annual summaries in its annual activity report for 2008. 

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As  the  annual  summaries  are  not  subject  to  audit  by  the  Internal  Auditor  of  the 
Commission,  his  annual  report  under  Article  86(4)  of  the  Financial  Regulation 
cannot contain such an analysis. 

16. 

The Commission should regularly present a qualitative and quantitative evaluation of 
the annual summaries in the activity reports and make this information available to 
all the parties concerned, and to the public, during the discharge procedure; the first 
of these assessments should be transmitted by September 2009 and, in addition to an 
annual formal presentation  to Parliament, this analysis of annual summaries should 
also  be  circulated  to  all  national  parliamentary  public  accounts  committees.  (§§  29 
and 30) 

Commission's response: 

The Commission has taken the requested action. 

The  Annual  Summaries  do  not,  on  their  own,  provide  sufficient  information  to 
assess  the  strengths  and  weaknesses  of  Member  States’  management  and  control 
systems  for  the  Structural  Funds.  The  Commission  makes  its  assessments,  which 
are  published  Member  State  by  Member  State  and  programme  by  programme  in 
the  Directorates’  General  Annual  Activity  Reports,  from  numerous  sources,  the 
chief  ones  being  its  own  audit  work  and  that  of  the  European  Court  of  Auditors 
and the reports received from Member States on the results of the work their own 
audit  authorities  have  carried  out,  which  are  discussed  at  annual  bilateral  audit 
coordination  meetings  with  the  Commission.  Other  information  used  includes 
Member  States’  reports  on  financial  corrections,  irregularities  reported  to  OLAF 
and  complaints.  The  annual  summaries  contribute  to  the  assurance  of  the 
Commission when they contain analysis of problems, identify good practices, and 
provide an overall statement of the Member State’s assurance on their systems. Not 
all  the  summaries  yet  do  so,  and  the  Commission  is  therefore  continuing  to 
encourage the Member States to add value to the summaries in such ways.  

The Commission thus could not meet the request in Parliament’s 2007 discharge 
resolution for an assessment of the strengths and weaknesses of control systems on 
the  basis  of  the  annual  summaries  in  isolation.  Instead,  the  assessment  was 
provided  in  the  Annual  Activity  Reports  on  the  basis  of  the  usual  sources  of 
assurance  available.  The  same  is  true  for  the  assessments  in  the  Annual  Activity 
Reports for 2008. 

An  assessment  of  the  2008  annual  summaries  has  been  presented  in  the 
Directorates’ General Annual Activity Reports, which are published along with the 
Synthesis  Report.  To  enable  Parliament  to  make  its  own  assessment,  the 
Commission has requested the agreement of Member States to disclose the texts of 
annual summaries to the Budgetary Control Committee. 

Reference is made to the letter of Vice-President Kallas to Mr Bösch dated 7 April 
2009. 

17. 

The  Commission  should  carry  out,  after  three  years,  a  comprehensive  evaluation, 
analysing  the  added  value  of  the  annual  summaries  for  the  sound  financial 

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management  of  EU  funds  in  the  Member  States,  as  well  as  the  degree  of 
independence of the auditors involved. (§ 31) 

Commission's response: 

The  Commission  agrees  that  a  stocktaking  of  the  added  value  of  annual 
summaries after three years would be useful. By then the situation regarding the 
content  of  the  annual  summaries  and  the  extent  and  usefulness  of  voluntary 
national  declarations  will  have  stabilised,  and  there  will  be  more  information 
available about the effectiveness of the control framework for Cohesion policy in 
the  2007-13  period  and  in  particular  about  how  appropriate  the  reporting 
requirements are in that framework and whether they need to be strengthened. 

The  Commission  does  not  consider  it  necessary  to  assess  the  independence  of 
national  auditors  in  connection  with  the  review  of  annual  summaries.  The  audit 
authorities  for  structural  funds  programmes  are  required  to  be  functionally 
independent,  to  comply  with  internationally  accepted  audit  standards  and  to 
demonstrate  this  in  their  audit  strategies  submitted  to  the  Commission  for 
approval. The Commission will verify this in performing its own audit work of the 
national  audit  authorities.  It  does  not  consider  that  a  specific  study  of  the 
independence of auditors is necessary. 

18. 

The  Commission  should  declare  what  it  has  done  for  introducing  national 
management  declarations  in  all  Member  States,  taking  into  account  previous 
discharge  resolutions,  and  urgently  to  make  all  necessary  efforts  to  upgrade  the 
annual  summaries  so  that  they  carry  the  same  political  weight  as  the  national 
management  declarations;  the  Commission  should  use  its  right  of  initiative  to 
propose a Council decision to make national declarations compulsory. (§ 32) 

Commission's response: 

The Commission will continue to support Member States that have moved towards 
national  declarations  and  will  continue  to  provide  all  national  supreme  audit 
institutions  with  annual  reports  on  payments  made  in  their  Member  State.  The 
Commission has been available to discuss with Member States the basic issues on 
the preparation of national  declarations and has participated in events organised 
for this purpose (such as a meeting in Hague in December 2008, where 21 Member 
States  were  present).  The  Commission  is  analysing  those  declarations  and 
statements which have been provided, with the aim of defining the key aspects of 
format and scope which add value. 

Responding  to  a  Commission  proposal,  Council  declined  to  make  national 
declarations  compulsory  in  November  2005.  Instead  it  agreed  to  provide  annual 
summaries  of  available  audits  and  declarations,  in  agreement  with  the  terms  of 
Article  44  of  the  Interinstitutional  Agreement  of  17  June  2006.  This  hard  won 
political  agreement,  supported  firmly  by  the  Commission,  was  converted  into 
provisions in the revised Financial Regulation (Article 53b), adopted unanimously 
by  Council  in  December  2006,  and  in  its  implementing  rules.  The  Commission 
continues to take various steps to improve the added value of annual summaries.  

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The revised guidelines on annual summaries for structural actions issued in 2008 
repeat  the  encouragement  to  undertake  an  overall  analysis  to  increase  the  added 
value  of  the  information  transmitted  and  propose  a  standard  statement  of 
assurance, which, if used, could come closer to a declaration. The recommended 
standard statement reads:  

"Based  on  the  results  of  the  above  certification  of  expenditure  and  audit 
summaries,  it  is  my  opinion  that  for  the  year  ended  31  December  20..  the 
management  and  control  systems  for______  structural  measures  established  for 
the  programming  period  2000-06  and  for  2007-13  complied  with  the  applicable 
regulatory  requirements  and  functioned  effectively  so  as  to  provide  reasonable 
assurance  that  statements  of  expenditure  certified  to  the  Commission  are  correct 
and, as a consequence, reasonable assurance of the legality and regularity of the 
underlying transactions." 

The  Commission  welcomes  the  initiative  by  seven  Member  States  to  append  an 
assurance  statement  to  their  annual  summaries  for  2008  as  is  suggested  in  the 
revised  guidelines.  Together  with  the  four  national  management  declarations 
received for 2008, this brings to 11 the number of Member States providing some 
sort of national assurance. 

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Control systems 

19. 

Manuals,  guidance  notes  and  participation  rules  applicable  to  grants  should  be 
consolidated  and  Parliament  should  be  involved  in  discussion  on  simplifying  the 
implementing rules. (§§ 36 and 37) 

Commission's response: 

The Commission is taking the requested action. 

The  form  in  which  information  is  given  to  beneficiaries  on  the  rules  and 
conditions  attached  to  EU  funding  is  important.  It  can  considerably  reduce  the 
administrative burden if this documentation is consolidated in an easily digestible 
form. In the shared management area this is the responsibility of Member States. 
The  Commission  encourages  them  to  provide  information  in  such  a  form,  and 
plays  its  own  part  in  simplifying  the  implementation  of  the  rules  by  issuing 
guidance  which  brings  together  the  requirements  and  translates  them  into  good 
practices.  For  example,  the  Commission  has  made  available  a  digest  of  the 
eligibility  rules  for  Cohesion  policy  in  the  2007-13  period  and  it  is  consolidating 
the guidance notes on control and audit requirements in a single Structural Funds 
Audit Reference Manual.  

Such documents are for use by the Member States’ management and audit bodies. 
They  will  tend  to  be  incorporated  into  procedure  manuals  for  use  by  the  staff  of 
such  bodies,  but  for  beneficiaries  a  more  succinct  and  user-friendly  presentation 
will clearly be needed. 

20. 

The  Commission,  along  with  Member  States  and  regions,  should  accelerate  the 
simplification exercise of regulations whilst fully involving Parliament. (§ 38) 

Commission's response: 

The Commission is taking the requested action. 

The Commission is engaged in examining the legal provisions for Cohesion policy 
in  the  2007-13  period  with  a  view  to  amending  the  regulations  to  introduce 
simplifications of the rules approved in 2006. Some amendments, for example on 
flat rates and revenue-generating investments, have already been passed into law. 
The  remaining  ones  will  be  enacted  shortly.  Parliament  is  fully  involved  in  this 
process in accordance with the applicable procedures. 

21. 

The Commission should review the conditions for using the flat-rate method so as to 
increase reliability in beneficiaries' interest. (§ 39) 

Commission's response: 

Lump  sums  and  flat  rate  are  currently  used  extensively  in  the  Marie  Curie 
Programme;  lump  sums  have  been  also  established  for  use  by  international  co-
operation  partner  countries  (ICPC)  partners  and  flat  rates  for  CONCERTO 
actions. Flat rates for indirect costs are also available for certain participants. The 

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Commission has examined the potential use of flat rates and lump sums under the 
current  legal  framework  and,  as  a  result  of  this  exercise,  is  in  the  process  of 
introducing  flat  rates  to  cover  subsistence  costs  incurred  by  beneficiaries. 
Additional  ways  of  introducing  flat  rates  and  lump  sums  representing  genuine 
simplification for applicants and complying at the same time with the principles of 
sound financial management would require changes to the legal basis (revision of 
the Financial Regulation, Framework Programme participation rules). 

The  Commission  has  also  taken  steps  to  simplify  rules  for  structural  actions  by 
amending the relevant legislation to expand the  use of flat rates, lump sums and 
unit  costs  to  all  types  of  expenditure  for  both  ERDF  and  ESF.  The  Commission 
will consider proposing further measures in 2009 to simplify the implementation of 
the Funds on the basis of recommendations of a joint Commission/Member State 
working group.  

The  Commission  will  present  its  proposal  for  the  future  Financial  Regulation 
before  May  2010.  The  simplification  of  rules,  in  particular  for  the  award  and 
control of grants, is one of the main objectives assigned to this exercise. 

22. 

The  implementation  of  Action  4  of  the  Action  Plan  towards  an  integrated  internal 
control framework, concerning the launching of an interinstitutional initiative on the 
basic principles to be considered regarding the risks to be tolerated in the underlying 
transactions should be sped up. (§ 40) 

Commission's response: 

In 2006 the Commission proposed a text in the Financial Regulation concerning 
the tolerable risk of error (within the deadlines laid down in the action plan for an 
integrated control framework). The proposal was rejected by Council at the end of 
2006. The Commission immediately started gathering data on control costs in the 
Member  States,  which  gave  rise  to  the  Communication  from  the  Commission  of 
16 December 2008 “Towards a common understanding of the concept of tolerable 
risk of error” (COM(2008) 866). 

23. 

The  Commission  is  reminded  of  the  importance  of  Action  10  of  the  Action  Plan, 
which proposes making an 'analysis of the costs of controls', in view of the 'need to 
reach an appropriate balance between the costs and benefits of controls'. (§ 41) 

Commission's response: 

The Commission presented an analysis of the costs of control for certain policies 
(structural  funds  and  agriculture)  in  its  Communication  of  16 December  2008 
“Towards  a  common  understanding  of  the  concept  of  tolerable  risk  of  error” 
(COM(2008) 866).  The  Commission  undertook  to  analyse  these  costs  in  each 
budget  sector  by  2012  within  the  framework  of  action  to  develop  an  approach 
based on tolerable risk of error. 

24. 

The  annual  activity  reports  of  the  directorates-general  should  include,  again, 
information  on  the  quality  of,  and  improvement  in,  controls  in  the  Member  States, 
and the Commission should grade all payment agencies and certification bodies. (§ 
42) 

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Commission's response: 

The  requested  action  has  been  taken.  The  Commission  already  assesses  the 
effectiveness  of  national  control  systems  in  the  Annual  Activity  Reports  of  the 
Directorates General. It will continue to promote quality of the annual summaries 
and to encourage Member States to increase their added value.  

It  will  also  continue  to  present  an  analysis  of  the  quality  of  the  systems  in  the 
annual  activity  reports  and  also  to  use  all  of  the  information  at  its  disposal  to 
present an assessment of Member States' systems in the reports. 

25. 

The  Commission  should  present  regular  assessments  of  the  integrated  internal 
control system, and better coverage is expected – in the annual activity reports and 
the  synthesis  report  –  of  Commission  departments'  and  Member  States'  shared-
management  systems,  in  particular  as  regards  technical  quality  and  ethical 
considerations, e.g. the level of independence of national audit authorities. (§ 43) 

Commission's response: 

The  Authorising  Officers  by  Delegation  already  provide,  in  their  Annual  activity 
Reports (part 2), a general appreciation of their internal control systems and a full 
explanation of weaknesses identified. Specifically concerning shared management, 
a clear link between the strands of control exercised both by the Commission and 
the  member  states'  administrations  has  to  be  demonstrated,  evidence  should  be 
provided on the effectiveness of control systems and an assessment of the quality of 
annual summaries has to be presented. 

The  Synthesis  Report,  which  is  set  up  on  the  basis  of  the  assurances  and 
reservations  made  in  the  Annual  Activity  Reports,  puts  in  place  measures  to 
remedy  any  weaknesses  identified  and  instructs  the  Commission  services  to  take 
action to address the causes of reservations in their annual activity reports and to 
regularly monitor progress. 

26. 

The Commission should carry out a more complete and exhaustive evaluation of the 
resources  given  over  to  control  systems,  by  spending  area,  for  all  Union  spending 
areas, as called for by Parliament in its discharge resolutions in previous years and in 
view of the ‘getting results’ concept. (§ 44) 

Commission's response: 

The  Commission  believes  that  a  tolerable  risk  approach  represents  a  sound  and 
efficient stewardship of EU funds. It presented  a communication  on this issue in 
December  2008  (COM(2008)  866),  using  structural  funds  and  rural  development 
as illustrative examples.  

Further data-gathering will be needed to underlie firm proposals on tolerable risk. 
The  nature  of  the  work  required  and  timing  will  vary  according  to  the  different 
policy  areas  and  will  be  focused  on  expenditure  governed  by  2007-13  legislation. 
As the statistics on the costs of control from this programming period will become 
progressively  available  over  the  next  two  years,  the  Commission  plans  to  provide 
analyses of the tolerable risk of error, for the different policy areas, progressively 

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in the time period until the end of year 2012. It will make concrete proposals for 
tolerable risk in the areas of research, energy and transport and rural development 
in  the  first  half  of  2010  and  on  external  aid,  development  and  enlargement  and 
administrative expenditure in the latter half of 2010. 

27. 

On the basis of the annual summaries received, the Commission should analyse the 
strengths  and  weaknesses  of  each  Member  State's  national  system  for  the 
administration and control of Community funds, together with an estimate of the cost 
of  national  systems  for  the  control  of  Community  funds;  this  comparative  analysis 
should be sent to Parliament, Council and the Court of Auditors in early 2010, and 
serve as a basis for an interinstitutional dialogue on the tolerable risk of error. (§§ 45 
and 46) 

Commission's response: 

The Commission is taking the requested action. 

As noted in the response to the requests in paragraphs 29 and 30 of the European 
Parliament's  resolution,  the  Annual  Summaries  do  not,  on  their  own,  provide 
sufficient  information  to  assess  the  strengths  and  weaknesses  of  Member  States’ 
management  and  control  systems  for  the  Structural  Funds.  The  Commission 
makes its assessments from  numerous sources and publishes them Member  State 
by  Member  State  and  programme  by  programme  in  the  Directorates’  General 
Annual Activity Reports. 

The  Commission  will  continue  to  encourage  the  Member  States  to  add  value  to 
annual  summaries  so  that  they  make  a  bigger  contribution  to  the  Commission’s 
assurance on systems. 

With  regard  to  the  cost  of  national  control  systems,  the  Commission  has  already 
carried  out  a  survey  of  the  costs  of  controls  in  the  structural  actions  area  whose 
results  were  used  in  the  Commission's  communication  towards  a  common 
understanding  of  the  concept  of  tolerable  risk  of  error  (COM(2008)  866). 
Proposals for cohesion policy will be made by the end of 2012 on the basis of 2010 
payments, which will be the first year the majority of Structural Funds execution 
will be under the 2007-13 period legislation. 

28. 

The  Commission  should  use  the  work  done  under  the  Communication  on  the 
tolerable risk of error further when preparing its proposal on tolerable level of risk by 
budgetary area, especially for structural funds and the EAFRD; the dialogue between 
the  external  auditor  and  the  auditee  should  continue  to  comply  with  international 
auditing standards which stipulate that it is for the external auditor to decide. (§ 48) 

Commission's response: 

As  mentioned  in  the  reply  to  paragraph  44  of  the  European  Parliament's 
resolution,  further  data-gathering  will  be  needed  to  underlie  firm  proposals  on 
tolerable risk. The nature of the work required and timing will vary according to 
the different policy areas and will be focused on expenditure governed by 2007-13 
legislation. As the statistics on the costs of control from this programming period 
will become progressively available over the next two years, the Commission plans 

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to  provide  analyses  of  the  tolerable  risk  of  error,  for  the  different  policy  areas, 
progressively in the time period until the end of year 2012.  

The Commission fully recognises the Court's independent role, but points out that 
the  auditor’s  determination  of  materiality  is  a  matter  of  professional  judgment 
taking  into  account  legislators'  and  regulators'  expectations  as  regards  the  cost-
effectiveness  of  controls  and  non-compliance,  as  set  out  by  the  international 
standards of supreme audit institutions (ISSAI 1320).  

The tolerable risk of error - which as suggested by the Court should be decided by 
the political authorities - would inform the Court's judgement on materiality.  

As the Commission has already indicated in its communication COM(2008) 866, it 
would not be appropriate for the Commission, as the auditee, to fix a tolerable risk 
level. 

29. 

The Commission should compile fresh statistics as to the reliability of data provided 
by  Member  States [on costs of control], plus an in-depth analysis thereof, once the 
impact of the 2007-2013 rules becomes clear and forward that analysis to Parliament 
and the Council before the end of 2011. (§§ 49 and 50) 

Commission's response: 

The  Commission  has  undertaken  to  present  a  new  study  on  the  costs  of  controls 
and  tolerable  risk  of  error  in  the  Structural  Funds.  This  will  be  focused  on 
expenditure governed by 2007-13 legislation (2010 data) and, as this analysis will 
need  to  take  account  also  of  the  Court's  DAS  errors  for  2010  (for  which  the 
Court's  annual  report  will  be  published  in  November  2011),  it  will  be  presented 
during 2012. 

30. 

The Commission should ensure a close tie-in between tolerable level of risk and an 
in-depth study into the cost-effectiveness of Commission and Member State control 
systems for each Community spending area. (§ 51) 

Commission's response: 

The concept of tolerable risk requires the definition of cost-effectiveness of control 
systems. As mentioned in the reply to paragraph 44 of the European Parliament's 
resolution,  further  data-gathering  will  be  needed  to  underlie  firm  proposals  on 
tolerable risk. The nature of the work required and timing will vary according to 
the different policy areas and will be focused on expenditure governed by 2007-13 
legislation. As the statistics on the costs of control from this programming period 
will become progressively available over the next two years, the Commission plans 
to provide analyses of the tolerable risk of error until 2012. 

31. 

The Commission, with the technical support of the Court of Auditors, to carry out an 
in-depth  analysis  in  the  areas  of  research,  external  relations  and  administrative 
expenditure, and to submit a report on the findings before the end of 2010. (§ 52) 

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Commission's response: 

The requested analysis will be delivered before the end of 2010, see also the reply 
to paragraph 44 of the European Parliament's resolution. 

32. 

The  volume  of  Community  funds  lost  because  of  errors  should  also  be  taken  into 
consideration when a tolerable error rate is determined. (§ 53) 

Commission's response: 

Errors,  once  detected,  give  rise  to  financial  corrections  and  recoveries,  so  that 
normally no European funds are lost.  

in 

its  Communication 

The  Commission  presented 
towards  a  common 
understanding  of  the  concept  of  tolerable  risk  of  error  (COM(2008)  0866)  an 
economic analysis of the concept (comparing the costs of control with the amounts 
of error which would be likely to be detected and corrected). It is clear that under a 
tolerable risk approach the Commission would need to continue to make recoveries 
where it detects errors. The tolerable risk level fixed would therefore relate to the 
estimated error rate in transactions or projects which have not been subject to on 
the spot controls.  

In this respect, any decision on a tolerable risk level has to be taken by the Council 
and  Parliament,  and  would  be  based  on  a  joint  consideration  of  the  political 
imperatives,  the  benefits  of  a  policy  (also  non-financial),  the  inherent  and 
reputational risks, the impact of any further simplification, and the additional cost 
associated with reducing error rates through more control. 

33. 

Tangible  proposals  should  be  produced  with  regard  to  improving  the  management 
and  control  of  Community  spending  and,  for  some  aspects,  a  degree  of 
harmonisation, and, during the forthcoming budgetary procedure, Parliament should 
give  the  Commission  the  resources  needed  to  undertake  a  study.  The  Commission 
should  without  delay  submit  its  proposals  for  achieving  the  objective  of  a  positive 
DAS. (§§ 54 and 55) 

Commission's response: 

In  recent  years,  the  Commission  has  put  significant  efforts  into  improving  its 
control  systems,  following  recommendations  made  by  the  Court  of  Auditors  and 
the  Discharge  Authority.  It  has  set  up  action  plans  to  address  the  deficiencies 
noted  by  its  own  audit  work  or  those  by  the  external  auditor  -  notably  the  action 
plan  towards  an  integrated  internal  control  framework  and  the  action  plan  to 
strengthen  the  Commission's  supervisory  role  for  Structural  actions.  Also,  an 
impact report on the action plan towards an integrated internal control framework 
was adopted by the Commission in early 2009 (COM(2009) 43). The Commission 
is,  on  a  continuous  basis,  further  improving  its  control  systems  and  those  of  its 
partners where it identifies weaknesses. 

The  context and scope of  such a  study can  only  be  defined  during  2010  and  will 
depend  on  the  progress  made  in  the  Inter-Institutional  discussions  on  tolerable 
risk, on which the Commission has committed to make concrete proposals for the 

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areas of research, energy and transport and rural development in the first half of 
2010  and  on  external  aid,  development  and  enlargement  and  administrative 
expenditure in the latter half of 2010. 

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Transparency 

34. 

Study the possibility of creating with the European Parliament a common mandatory 
register for lobbyists. (§ 56) 

Commission's response: 

The Commission seeks the full collaboration of the European Parliament (EP) on 
this  issue.  A  high-level  EP-Commission  group  agreed  on  22  April  to  create  a 
common register for interest representatives. 

35. 

The Commission should establish a new code of conduct for its Members, so as to 
improve  and  define  more  clearly 
individual  and  collective  political 
their 
responsibility  and  accountability  for  their  decisions  and  for  the  implementation  of 
their policies by their services. (§ 57) 

Commission's response: 

The  Commission  considers  that  the  existing  code  of  conduct  for  Members  of  the 
Commission  already  contains  comprehensive  and  appropriate  rules  on 
responsibility  and  ethics.  As  regards  ethical  rules,  the  independent  study  carried 
out  by  the  European  Institute  for  Public  Administration  in  co-operation  with  the 
Utrecht  School  of  Governance,  the  University  of  Helsinki  and  the  University  of 
Vaasa,  which  was  released  by  the  Commission  on  11  December  2007,  concluded 
that the European Commission system is sound, and that the necessary rules and 
procedures  are  in  place.  The  Commission  will  nevertheless  also  analyse  the 
external  study  commissioned  by  the  European  Parliament  (Committee  on 
Budgetary Control) on the “The code of conduct for Commissioners – improving 
effectiveness and efficiency”. The opinions in the report as well as the experience 
gained by the Commission in the implementation of the code of conduct will feed 
the  Commission's  reflexion  about  possible  further  improvement  of  the  existing 
framework. 

36. 

The Commission should ensure the completeness, searchability and comparability of 
data provided on the beneficiaries of EU funding. (§ 58) 

Commission's response: 

The Commission believes it has fulfilled its obligations with respect to the current 
requirements. 

In relation to funds that are centrally managed by the Commission, information is 
presented  through  the  Financial  Transparency  System,  which  provides  complete, 
searchable and comparable data. 

In relation to funds under shared management, the responsibility for the provision 
of data on beneficiaries lies on the relevant management authority (see art 30 of 
the Financial Regulation). 

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The  Commission has adopted implementing regulations or issued guidance  notes 
to ensure that the quality and timeliness of the data is guaranteed within each of 
these policy areas, or has negotiated agreements with the relevant institutions (e.g. 
international  organisations  and  third  countries).  The  Commission  encourages 
Member  States  to  publish  this  information  in  the  most  appropriate  and  user-
friendly  way  allowing  for  potential  comparison  between  the  Member  States. 
Furthermore, it has set up a web portal on the Europa site where all available links 
to relevant websites are provided. 

The Commission considers that the information it provides, through a portal or a 
website,  is  presented  in  a  clear,  harmonious  and  searchable  manner.  The 
information provided, originating from the Commission services or from Member 
states'  administrations, generally  complies with  the  existing  EU  law  and,  when  it 
does not, the Commission takes the necessary action to remedy the situation. 

37. 

The Commission should ensure complete transparency and publicity with  regard to 
the cabinet staff of Members of the Commission not recruited in accordance with the 
Staff Regulations. (§ 59) 

Commission's response: 

The  Commission  underlines  that  the  rules  governing  the  composition  of  the 
Cabinets  and  the  Spokespersons  are  based  on  principles  of  rigour  and 
transparency and are set out in a document proposed by the President and agreed 
by the College, SEC(2007)2602. 

Officials are seconded to the cabinets in the interest of the service and temporary 
agents  are  employed  in  accordance  with  the  specific  rules  adopted  by  the 
Commission. Special Advisers might be recruited by Commissioners on the basis of 
a  transparent  procedure  but  in  any  case,  these  do  not  belong  to  Commissioners' 
Cabinets. 

Cabinet staff are subject to the Staff regulations or the Conditions of Employment 
of Other Staff of the Communities like all the other staff assigned to Commission 
services  (the  only  exception  being  the  so  called  "blue  book  trainees",  but  there 
again there is no difference between those assigned to a cabinet and those assigned 
to services). 

38. 

In relation to the publication of the names of recipients of EU funds, the Commission 
should  assess  the  usefulness  of  the  information  published  by  the  Member  States  in 
the light of the policy objectives set forth. (§ 60) 

Commission's response: 

The Commission regularly monitors the adequacy and the compliance of the data 
it  communicates  regarding  the  beneficiaries  of  EU  funds  and  it  also  regularly 
monitors the functionalities of the different websites and search tools implemented 
by the Member States. 

In  order  to  facilitate  access  to  this  information,  the  European  Commission's 
Directorate General for Regional Policy operates a clickable map with the links to 

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the beneficiaries' lists published on the managing authorities' websites. The map is 
accessible from the Inforegio website: 

http://ec.europa.eu/regional_policy/country/commu/beneficiaries/index_en.htm 

For agriculture, there is now a web page with links to the different Member States' 
websites publishing information on payments to beneficiaries according to the new 
legislation (EAFRD 2007 as from 30 September 2008 and EAGF-EAFRD 2008 as 
from  30  April  2009).  Due  to  legal  procedures  by  some  beneficiaries  and  to 
local/regional court decisions, the German publication was delayed until 16 June 
2009.  Since  this  publication  was  covering  all  Länder  except  Bavaria,  the 
Commission  initiated  an  infringement  procedure  against  Germany.  However,  the 
Land of Bavaria announced on 13 July 2009 that it will start publication of data as 
from August 2009. The Commission services have assessed the different Member 
States'  websites  and  the  various  functionalities  of  the  search  tool.  Some 
shortcomings  have  been  noticed  as  regards  the  way  the  data  are  published  (for 
instance,  limitation  of  results  shown,  no  search  tool)  and  as  regards  the  content 
(public storage not specified), reasons for which reminding letters have been sent 
to all Member States but Belgium, requesting them to remedy the problems by 30 
September 2009. 

See http://ec.europa.eu/agriculture/funding/index_en.htm 

Information on beneficiaries of the European fisheries Fund is as yet limited, but 
this is linked to the fact that very few Member States have actually made payments 
under  the  new  programmes.  A  portal  leading  to  the  existing  national  websites 
exists: 

http://ec.europa.eu/fisheries/cfp/structural_measures/transparency_en.htm  

The  same  situation  applies  for  the  four  funds  managed  under  the  programme 
Solidarity and Management of Migration flows. Relevant portal:  

http://ec.europa.eu/justice_home/funding/intro/funding_solidarity_en.htm  

In the fields of external relations, the Commission has negotiated agreements with 
international  organisations  and  third  countries.  Links  to  the  relevant  websites  is 
available through the following portal: 

http://ec.europa.eu/europeaid/work/funding/beneficiaries_en.htm 

39. 

The  Commission  should  enter  the  money  from  the  ex-Economat  off-budget  bank 
accounts in the ordinary budget before making proposals for its use. (§ 61) 

Commission's response: 

The  requested  action  has  been  taken.  The  amounts  from  the  ex-Economat  have 
been transferred to the Commission's bank accounts (value 21.4.2009) and at the 
same time the corresponding off budget accounts have been closed. 

1. As regards the follow-up to the 2006 and 2007 discharge resolutions. 

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In September 2005 the Commission's Accounting Officer drew up an inventory of 
all bank accounts not established by the Accountant to evaluate if the existence of 
the account was still justified. No irregularities were found in the management of 
these funds, which included the ex-Economat accounts. 

Regarding  the  latter,  the  conclusion  was  that  their  continued  existence  was  no 
longer  justified  and  they  were  thus  to  be  closed  and  the  sums  transferred  to  the 
Community budget. 

Since 
the 
the  Commission's  decision  of  12  November  2008  concerning 
Commission's ex-Economat off budget bank accounts(COM(2008)692) was taken, 
the  funds  have  been  transferred  from  the  external  bank  accounts  to  the 
appropriate Commission's budget lines and the accounts have been closed. 

2. As regards the information of the budgetary authority. 

On 12 November 2008 the Commission transmitted its Communication concerning 
the Commission's ex-Economat off budget bank accounts (COM(2008)692) to the 
European Parliament and to Council.  

The  European  Parliament  has  been  fully  informed  since  the  decision  of  ex-
Economat  off  budget  bank  accounts  was  taken.  Moreover  a  detailed  explanation 
has  been  provided  to  Parliament  through  the  Commission's  to  parliamentary 
questions.  To  respond  to  Parliament's  concern  about  this  issue  Vice  President 
Kallas sent a letter to President Pöttering on 3 March 2009.  

The  Commission  gave  detailed  replies,  orally  in  plenary  and  in  writing,  to 
parliamentary  questions  E-4819/05,  H-0212/06,  H-0758/06,  E-5524/06  and  E-
5697/08 complemented by letters from Commissioner Grybauskaité to Dr Grässle 
on 10 March, 23 March 2006, 2 June 2006, 13 October 2006 and again on 12 June 
2008. 

3. As regards the Commission's participation in the European Parliament's fitness 
centre. 

Over the years an amount of 2.8 million €  had accumulated on two bank accounts 
from the operational surplus of the "Economat" i.e. from the difference between 
revenues from sales to staff and operating costs and from the sale of its stocks to 
Delhaize, when this activity was contracted out by the Commission in 2002. Since 
then, the amounts on the bank accounts continued to generate interests.  

Given the source of the sums on the accounts, i.e. an operating surplus mainly due 
to sales to staff and their families, it was decided to use the funds for social projects 
benefiting the staff. 

One  of  the  four  projects  is  the  Commission's  contribution  to  the  European 
Parliament's  fitness  centre.  Given  the  recent  decision  of  the  Bureau  of  the 
European Parliament on the scope of the project, the Commission might review its 
position as soon as the scope and calendar of the follow-up project to the current 
renovation is defined more clearly. 

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40. 

The  Commission  should  ensure  that  a  comprehensive,  easily  accessible  public 
database containing information on all final beneficiaries of EU funding be available 
before the next European elections. (§ 62) 

Commission's response: 

The  Commission  has  set  up  the  Financial  Transparency  System  which  provides 
complete, searchable and comparable data on funds centrally managed. 

A portal on the Europa site provides links to national websites where information 
responding to the implementing rules and guidelines adopted is provided. 

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Financial Regulation 

41. 

The Commission should present by 1 January 2010 proposals for a revised and fully 
consolidated  Financial  Regulation  with  chapters  specific  to  individual  expenditure 
programmes  which  bring  together  all  the  requirements  which  a  beneficiary  of  a 
programme  must  fulfil  in  one  single  comprehensive  source  and  with  further 
simplifications  as  regards  the  award  and  control  of  grants;  the  Commission  should 
engage in consultations with the other institutions at a very early stage and the next 
3-yearly review should be carried out by means of the conciliation procedure. (§§ 64 
and 65) 

Commission's response: 

The  Commission  will  present  its  proposal  for  the  future  Financial  Regulation  in 
accordance with the provisions of the Financial regulation currently into force, i.e. 
before May 2010. 

As was the case in the past, the future Financial Regulation will be discussed and 
negotiated  in  close  cooperation  with  the  Parliament  and  Council  and  in 
accordance with the legislative procedure foreseen in the EC Treaty. In particular, 
if the Lisbon Treaty has entered into force, the future Financial Regulation will be 
co-decided by the European Parliament and the Council. Otherwise, the Financial 
Regulation  will  be  adopted  as  currently,  which  includes  the  recourse  to  the 
conciliation procedure with the European Parliament (Article 184 of the Financial 
Regulation).  

Concerning  the  content  of  the  future  Financial  Regulation,  the  Commission  can 
confirm that the simplification of rules, in particular for the award and control of 
grants,  is  one  of  the  main  objectives  assigned  to  this  exercise.  However,  a 
consolidation would entail an integration in the FR of all exceptional measures in 
acts that have been decided by co-decision (for example, the participation rules for 
the 7th Framework Programme). The selection and attribution criteria are specific 
depending  on  the  nature  of  the  actions  and  are  defined  per  programme.  If  these 
were  integrated  in  the  FR,  the  latter  would  become  “illegible”.  Furthermore,  the 
Treaty  foresees for  certain  policies (Research) that specific rules can be adopted, 
whose inclusion in the FR would empty the basic acts of any substance. 

In  accordance  with  established  practice,  DG  BUDG  will  carry  out  informal 
preparatory discussions with the other Institutions and organs before the adoption 
of the Commission's proposals. 

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Anti-Fraud Office (OLAF) 

42. 

The  Commission  should  give  to  OLAF  immediate  access  to  its  databases  if  this  is 
necessary  in  connection  with  an  investigation,  so  that  investigations  can  be  opened 
and conducted without delay. (§ 66) 

Commission's response: 

In compliance with the regulations in place OLAF must and does have immediate 
access  to  any  information  held  by  the  Commission  and  required  to  conduct  an 
investigation. 

It  is  the  Commission  policy  to  give  to  OLAF  immediate  access  to  its  databases  if 
this is required for an investigation or in the evaluation phase, linked to a specific 
case included in OLAF's Case Management System (CMS). 

43. 

The  Commission  should  ensure  that  beneficiary  third  countries  give  OLAF  all 
necessary  assistance  during  on-the-spot  inspections  and  checks,  together  with  all 
relevant  information  on  follow-up  to  investigations  carried  out;  the  Commission 
should  ensure  that  all  future  contracts  stipulate  that  the  authorities  of  the  countries 
concerned must fully cooperate with OLAF. (§ 67) 

Commission's response: 

The requested action has been taken. 

The  Commission  has  already  incorporated  a  standardised  provision  to  this  effect 
into  the  General  Conditions  of  all  types  of  standard  Financing  Agreements  with 
beneficiary third countries (cf. Article 20 of the General Conditions of the standard 
financing agreement under decentralised EU Budget; cf. Article 15 of the GGCC 
of the standard financing agreement under centralised EU Budget; cf. Article 19 
of the GGCC of the standard financing agreement under FED Budget). All future 
contracts will (continue to) stipulate that the authorities of the countries concerned 
must fully cooperate with OLAF. 

44. 

The Commission should use all the powers available to it under the Treaties to bring 
about  effective  cooperation  among  national  authorities  in  the  fight  against 
Community fraud. (§ 68) 

Commission's response: 

Contacts  are  very  frequent  between  OLAF  and  the  national  judicial  authorities 
and OLAF is aware of what is going on at national level. While the Commission 
fully  respects  the  independence  of  Member  State  police  and  judicial  authorities, 
there is of course room for improvement. 

The figure of 6.7% mentioned by the European Parliament in its resolution comes 
from the recent workshop organised by the Committee on budgetary control of the 
European  Parliament  on  19  February  2009  and  could  lead  to  misinterpretation. 
Figures were provided at the request of the rapporteur, Mrs. Grässle, by OLAF on 

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final follow up results covering the 3 years from January 2006 to December 2008. 
Judicial  procedures  take  on  average  far  longer  than  3  years  so  the  period  is  too 
short to draw any meaningful conclusions. 

45. 

The  European  Parliament  notes  with  concern  that  between  2006  and  2008  only  37 
out  of  222  internal  investigations  gave  rise  to  disciplinary  proceedings  and  that,  of 
these 37 investigations, only two produced genuine consequences, three were halted 
for lack of evidence and the other 32 – i.e. 87% – have yet to produce results; calls 
on the Commission to undertake to pursue internal investigations just as vigorously 
as external investigations and to ensure that those investigations which have not yet 
given rise to effective disciplinary follow-up produce results. (§ 69) 

Commission's response: 

The Commission is reviewing its disciplinary practice with the aim of accelerating 
the  procedure,  a.o.  through  a  better  collaboration  between  OLAF  and  the 
Investigation  and  Disciplinary  Office  of  the  Commission  (IDOC).  In  particular, 
cases transferred from OLAF will be handled without delay. 

The figure of 87% does not correspond to all cases: it is based on a list of 27 cases 
recently transferred by OLAF. It has also to be noted that since the beginning of 
2009, 2 more cases resulted in a disciplinary penalty and 4 others are waiting for 
the  Disciplinary  Board's  reasoned  opinion  which  could  be  delivered  before  the 
summer break (situation June 2009). 

The  Commission  services  are  currently  investigating  the  possibilities  to  increase 
the efficiency of the process and to impose disciplinary measures within a shorter 
time. The recent modification of the tables laying down the Appointing Authority 
contributes to this aim. 

46. 

The  Commission  should  establish  a  mechanism  for  exchanges  of  information 
between OLAF and the Member States concerning the follow-up to Community anti-
fraud  investigations;  in  particular,  the  Commission  should  ensure  that  national 
judicial authorities keep OLAF regularly informed, by means of progress reports, on 
the  outcome  of  the  judicial  action  taken  in  the  fight  against  Community  fraud, 
following the forwarding of OLAF files. (§ 70) 

Commission's response: 

The Commission agrees on the importance to improve judicial follow up but is not 
convinced  that  compulsory  reporting  is  the  most  efficient  approach.  OLAF’s 
judicial  and  legal  advice  unit  was  given  extra  staff  to  cover  better  the  national 
judicial  systems  of  the  different  Member  States.  OLAF  which  is  in  regular  and 
close cooperation with the authorities of the Member States aims to build further 
on  its  Europe  wide  network  of  specialised  magistrates  to  improve  information 
exchange  and  identify  best  practice.  There  is  of  course  always  room  for 
development and improvement. 

The  second  protocol  to  the  Convention  on  the  protection  of  financial  interests 
enters into force on 19 May 2009. It has been ratified by most Member States and 
provides specifically for direct cooperation between the European Commission and 

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the judicial authorities of the Member States in the protection of the Community's 
financial interests. 

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Own resources 

47. 

The Commission should see to it that when the new own resources decision comes 
into force, and backdated to 1 January 2007, GNI data including FISIMs will be used 
to  calculate  Community  own  resources  and  that,  on  that  basis,  past  and  future 
payments by the Member States will be calculated afresh. (§§ 71 to 73) 

Commission's response: 

The  requested  action  has  been  taken.  The  Commission  "proposal  for  a  Council 
Decision on the allocation of financial intermediation services indirectly measured 
(FISIM)  for  the  establishment  of  the  Gross  National  Income  (GNI)  used  for  the 
purposes  of  the  European  Communities'  budget  and  its  own  resources",  adopted 
on  26  May  2009  (COM(2009)238final)  provides  for  the  retroactive  allocation  of 
FISIM  to  GNI  for  own  resources  purposes  from  1  January  2005  -  the  date  the 
allocation  of  FISIM  became  compulsory  in  the  European  System  of  Accounts 
(ESA95)  (pursuant  to  Article  2  of  Commission  Regulation (EC) No 1889/2002  of 
23 October 2002). 

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Agriculture and natural resources 

48. 

Simplify,  strengthen  and  consolidate  the  control  rules  in  the  rural  development 
expenditure, and in particular in the expenditure on agri-environmental measures. (§ 
74) 

Commission's response: 

The requested action has been taken in the rural development area, where most of 
the  errors  appear  (the  EAGF  part  of  agriculture  expenditure  has  an  error  rate 
below materiality). 

-  Member  States  are  obliged  to  ensure  that  all  rural  development  measures  are 
verifiable  and  controllable.  Member  States  must  also  make  sure  that  the  rules 
concerning eligibility are respected.  

- These issues were discussed intensely between the Commission and the National 
Authorities  before  the  rural  development  programmes  for  2007-2013  were 
approved. 

-  The  Commission  has  given  extra  guidance  to  Member  States  on  how  to 
implement agri-environment measures. 

- Audit missions will take a closer look at the origin of higher error rates in agri-
environmental measures. 

-  The  higher  error  rates  in  rural  development,  in  particular  agri-environmental 
measures seem to be due to the complex nature of the policy rather than problems 
in the controls. 

The Council Regulation 1290/2005 provides for the-post 2007 period to align the 
management  and  control  system  for  the  expenditure  under  the  newly  created 
European  Agricultural  Fund  for  Rural  Development  (EAFRD) with  the  EAGGF 
guarantee  system.  Thus,  in  the  future,  the  advantages  of  the  EAGF  Guarantee 
system  that  are  largely  recognized  will  also  cover  the  rural  development 
expenditure. 

49. 

Take the appropriate measures, consisting of at least simplifying the policy together 
with  ensuring  clearer  and  consistent  control  systems,  to  correct  the  errors  in 
interpreting  the  provisions  of  the  regulations  as  quickly  as  possible  and  to  inform 
Parliament in late 2009 about the measures taken (§ 77) 

Commission's response: 

The requested action has been taken. The Commission has addressed this issue in 
the  Health  Check:  In  the  past,  the  Court  has  stated  clearly  that  the  design  and 
implementation  of  the  SPS  limits  the  risk  of  irregular  payments  to  farmers.  The 
CAP Health Check agreement brings further simplification (e.g. reducing the types 
of  entitlements,  possibility  to  merge  entitlements)  and  more  decoupling  of 
payments  (e.g.  arable  crops,  seeds,  hops,  animal  premia).  Further  decoupling 
means in terms of administration a better controllability and that no more specific 

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sectoral criteria have to be respected (i.e. to verify that the coupled crop has been 
indeed produced), but only the general rules of SPS. 

The  Commission  has  already  reported  to  the  Parliament  on  these  simplification 
actions,  notable  in  its  Annual  Activity  Report  on  2008  and  thus  sees  the 
information request by end 2009 by the Parliament as fulfilled. 

The  Commission  will  continue  the  path  of  simplification.  A  communication  on 
simplification  of  the  CAP  was  published  in  March  2009.  This  document  outlines 
the activities that have been carried out since the 2005 Communication, take stock 
of the progress that has been made and sketch out ideas for future action. 

The communication was welcomed in the May Council conclusions, in which the 
Commission  was  invited  to  take  further  action  in  simplifying  the  CAP,  including 
considering  the  39  concrete  Member  State  suggestions  until  the  next  Council 
meeting in November 2009 under the Swedish Presidency. 

In  addition,  besides  CAP  specific  projects,  DG  AGRI  is  actively  involved  in  the 
Simplification  Rolling  Programme,  which  includes  all  simplification  activities  of 
the  Commission  as  well  as  the  Action  Programme  for  Reducing  Administrative 
Burdens. This Action Programme is established with a view to the overall objective 
of reducing administrative burden by 25% by 2012. 

50. 

Suspend  payments  in  the  framework  of  the  Integrated  Administration  and  Control 
System in Greece if the Greek authorities are unable to prove that the problems have 
been resolved by 31 December 2009. (§ 78) 

Commission's response: 

The  requested  action  has  been  taken.  The  Commission  was  ready  to  suspend 
payments  in  case  the  action  plan  would  not  have  been  implemented  by  the  31 
December 2008, the date foreseen. The latest update from Commissioner Fischer 
Boel (dated 12 March 2009) confirms that Greece has complied with its action plan 
and  has  created  a  new,  operational  LPIS.  The  new  system  will  be  used  by  the 
Greek  authorities  for  the  first  time  during  the  2009  claims  procedure.  The 
Commission will continue to closely monitor the IACS procedure in Greece. Also, 
the ongoing conformity clearance procedures covering the financial risks resulting 
from  deficiencies  for  the  years  2006-2008  will  continue.  For  the  future,  the 
Commission  confirms  it  will  apply  appropriate  measures  proportionate  to  the 
eventual weaknesses. 

51. 

Urges  the  Member  States,  in  cooperation  with  the  Commission,  to  step  up  their 
checks as regards the Single Payment Scheme management and control and the area-
aid  eligibility  checks,  in  particular  as  regards  beneficiaries'  compliance  with 
eligibility requirements. (§ 81) 

Commission's response: 

The  Commission  has  taken  the  requested  action.  The  Commission  has  addressed 
these problems in the Health Check: 

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- Member States will have the possibility to exclude beneficiaries from the SPS who 
do not have their main economic activity in agriculture, a point often criticized by 
the Court and in public. 

-  Simplification  of  the  entitlements:  the  rules  will  be  the  same  for  normal 
entitlements  and  those coming from  the national reserve;  if  a farmer doesn't  use 
entitlements  for  two  years,  they  revert  to  the  national  reserve.  In  the  longer  run, 
also  special  entitlements  will  be  phased  out,  which  means  that  there  will  only  be 
one type of entitlements instead of three under the current legal situation. 

52. 

Clarify and simplify the eligibility requirements of the Single Payment Scheme as far 
as possible. (§ 81) 

Commission's response: 

The  requested  action  has  been  taken.  The  Commission  has  addressed  these 
problems in the Health Check: 

- Member States will have the possibility to exclude beneficiaries from the SPS who 
do not have their main economic activity in agriculture, a point often criticized by 
the Court and in public. 

-  Simplification  of  the  entitlements:  the  rules  will  be  the  same  for  normal 
entitlements  and  those coming from  the national reserve;  if  a farmer doesn't  use 
entitlements  for  two  years,  they  revert  to  the  national  reserve.  In  the  longer  run, 
also  special  entitlements  will  be  phased  out,  which  means  that  there  will  only  be 
one type of entitlements instead of three under the current legal situation. 

The  Commission  will  continue  the  path  of  simplification.  A  communication  on 
simplification  of  the  CAP  was  published  in  March  2009.  This  document  outlines 
the activities that have been carried out since the 2005 Communication, take stock 
of the progress that has been made and sketch out ideas for future action. 

The communication was welcomed in the May Council conclusions, in which the 
Commission  was  invited  to  take  further  action  in  simplifying  the  CAP,  including 
considering  the  39  concrete  Member  State  suggestions  until  the  next  Council 
meeting in November 2009 under the Swedish Presidency. 

In  addition,  besides  CAP  specific  projects,  DG  AGRI  is  actively  involved  in  the 
Simplification  Rolling  Programme,  which  includes  all  simplification  activities  of 
the  Commission  as  well  as  the  Action  Programme  for  Reducing  Administrative 
Burdens. This Action Programme is established with a view to the overall objective 
of reducing administrative burden by 25% by 2012. 

53. 

The Commission must propose measures to reform the clearance system to make it 
possible to establish clear and valid links between amounts recovered and the amount 
of  irregular  payments  and  ensure,  as  far  as  possible,  that  the  cost  of  financial 
corrections is met by the final beneficiaries and not by the taxpayer and that flat-rate 
corrections are applied to those Member States which fail to meet their obligations. 
(§ 83) 

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Commission's response: 

The requested action has been taken. The current clearance of accounts practice 
already reflects that "as far as possible, that the cost of financial corrections is met 
by the final beneficiaries and not by the taxpayer and that flat-rate corrections are 
applied to those Member States which fail to meet their obligations". 

1. Under the principle of shared management, the recovery of irregular payments 
from  the  final  beneficiaries  is  the  sole  responsibility  of  Member  States.  The 
conformity  clearance,  in  contrast,  is  designed  to  exclude  expenditure  from 
Community  financing  which  has  not  been  executed  in  compliance  with 
Community  rules,  thus  shielding  the  Community  budget  from  expenditure  that 
should not be charged to it (financial corrections). 

2. Financial corrections are determined on the basis of the nature and gravity of 
the  infringement  and  the  financial  damage  caused  to  the  Community.  Wherever 
possible,  the  Commission  calculates  the  amount  on  the  basis  of  the  loss  actually 
caused  or  on  the  basis  of  an  extrapolation.  However,  this  often  requires  the 
cooperation of the Member State concerned which alone is in possession of all the 
financial information required. Only where this is not possible, flat-rates are used 
which  take  account  of  the  severity  of  the  deficiencies  in  the  national  control 
systems  in  order  to  reflect  the  financial  risk  for  the  Community.  Therefore,  it 
would  be  wrong  to  say  that  there  is  no  link  between  the  amount  of  the  financial 
corrections and the level of irregular payments made to final beneficiaries. 

3.  Where  irregular  payments  to  final  beneficiaries  are  or  can  be  identified  as  a 
result  of  the  conformity  clearance  procedures,  Member  States  are  required  to 
follow  them  up  by  recovery  actions  against the  final  beneficiaries.  Moreover,  the 
new  50/50  rule  enshrined  in  Article  32(5)  of  Council  Regulation  (EC)  No 
1290/2005  is  a  strong  incentive  for  Member  States  to  ensure  an  expeditious  and 
effective  recovery  of  irregular  payments  from  the  final  beneficiaries.  However, 
recovery  from  the  final  beneficiaries  is  often  not  possible  because  the  financial 
corrections  only  relate  to  deficiencies  in  the  Member  States'  management  and 
control systems and it is primarily in these cases that the corrections take the form 
of  flat  rates.  Still,  such  financial  corrections  are  an  important  means  to  improve 
these  systems  and,  thus,  to  prevent  or  detect  and  recover  irregular  payments  to 
final beneficiaries in the future. 

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Fisheries subsidies 

54. 

Exclude  Member  States  which  fail  to  implement  adequately  the  rules  of  the  CFP 
from Fisheries Partnership Agreements; (§ 87) 

Commission's response: 

The current legal framework does not allow for it. However, according to Article 5 
of  Council  Regulation  (EC)  No  1006/2008  concerning  authorisations  for  fishing 
activities of Community fishing vessels outside Community waters and the access 
of third country vessels to Community waters, a Member State may not submit to 
the Commission applications for a fishing authorisation for fishing vessels flying 
their flag who do not respect a fisheries agreement. 

55. 

Introduce  EU  legislation  that  excludes  all  vessel  owners  convicted  of  serious 
infringements  in  accordance  with  Council  Regulation  (EC)  No  1447/1999  from 
receiving Community aid under the European Fisheries Fund and/or benefiting from 
Fisheries Partnership Agreements (§ 88) 

Commission's response: 

Regulation(COM(2008)0721):  Article  82  (1)  of  this  proposal  establishes  that  the 
range of sanctions and measures provided for in Chapter IX of Council Regulation 
(EC)  No  1005/2008  apply  to  Community  fishing  vessels  or  nationals  of  Member 
States.  Article  45  (7)  of  Council  Regulation  (EC)  No  1005/2008  foresees  the 
temporary  or  permanent  ban  on  access  to  public  assistance  or  subsidies,  as  an 
accompanying  measure  to  the  sanctions  provided  for  in  Chapter  IX  of  Council 
Regulation (EC) No 1005/2008. 

56. 

Ensure that Community aid is not used to modernise fleet segments characterised by 
overcapacities (§ 89) 

Commission's response: 

This is already the case. The use of aid to modernise fleet is a competence of the 
Member  States.  However,  according  to  Articles  6(5)  and  25(2)  of  Council 
Regulation (EC) No 1198/2006, operations financed by the EFF shall not increase 
fishing effort, and the aid shall not increase the ability of the vessel to catch fish. 

57. 

Reminds  the  Commission  of  its  commitments,  within  the  framework  of  the  EU 
Sustainable Development Strategy approved by the European Council in Göteborg in 
June 2001 and revised by the European Council in Vienna in June 2006, to abolish 
environmentally damaging subsidies and to put forward by 2008 a roadmap for the 
reform, sector by sector, of these subsidies with a view to eliminating them (§ 90) 

Commission's response: 

The  Commission  has  been  mainstreaming  the  issue  into  its  different  sectoral 
policies.  For  example:  In  the  area  of  fisheries,  the  2002  reform  of  the  Common 
Fisheries Policy (CFP) made already important progress in the right direction, in 

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particular  by  moving  towards  better  integration  of  environmental  concerns  into 
fisheries management and by removing some of the financial support that directly 
contributed to overcapacity.  The Green Paper on the  reform of the CFP of  April 
2009  launched  a  public  consultation  which  is  ongoing  and  covers  inter  alia  the 
question of public financial support to fisheries that contradicts CFP objectives. In 
the  framework  of  the  Health  Check  of  the  Common  Agricultural  Policy  the 
Commission  promoted  agricultural  aid  that  is  oriented  towards  sustainability 
objectives. New State aid guidelines on environmental protection were adopted in 
2008  (OJ  No  C  82,  01.04.2008,  p.1.),  which  strike  a  balance  between  delivering 
larger  environmental  benefits  and  minimizing  distortions  of  competition,  thus 
helping Member States to develop sustainable environmental policies. 

The  Budget  review  will  also  provide  for  an  opportunity  to  make  sure  that  EU 
financing fully complies with the Union's environmental and climate objectives. 

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Cohesion 

58. 

Report  to  Parliament  in  early  2010  on  the  further  actions  carried  out  in  2009  to 
improve  management  and  control  systems  both  at  Member  State  level  and  at 
supervisory level at the Commission and on the initial impact of the actions under the 
Commission's action plan. (§ 94) 

Commission's response: 

The Commission is taking the requested action. 

In  the  report  on  the  implementation  of  the  action  plan  to  strengthen  the 
Commission's  supervisory  role  for  structural  actions  (COM(2009)  42),  the 
Commission has committed itself to reporting in early 2010 on the further actions 
carried out in 2009 and on the first impact of all the actions. 

59. 

Continue  the revision procedure and to simplify existing regulations without delay. 
(§ 95) 

Commission's response: 

The Commission is taking the requested action. 

The  Commission  has  continued  the  revision  of  the  2007-13  rules  with  a  view  to 
amending  the  regulations  to  introduce  simplifications.  These  include  the 
Commission 
in 
implementing  regulation,  Regulation  1828/2006, 
particular  simplifications  to  the  system  for  reporting  irregularities  are  being 
introduced.  Reference  is  also  made  to  the  response  to  paragraph  38  of  the 
resolution. 

in  which 

60. 

Make as much use as possible, without undermining the effectiveness of spending, of 
the  scope  for  simplification  provided  for  by  the  spending  rules,  and  calls  on  the 
Commission  to  launch  a  discussion  exercise  on  new  simplification  measures  that 
might be adopted, including computerisation of the system; expects the Commission 
to  come  forward  with  concrete  simplification  proposals  for  the  period  2007-2013 
based  on  the  outcome  of  the  proceedings  of  the  Simplification  Working  Group.  (§ 
96) 

Commission's response: 

The Commission is taking the requested action. It refers to the answer to point 95 
of the resolution. 

The systems for communications between Member States and the Commission on 
2007-13 programmes are fully computerised in the “SFC 2007” network. 

61. 

Make an estimate of the positive impact of cohesion policy, by Member State, and to 
submit to it a report on its Union-level added value. (§ 97) 

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39 

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Commission's response: 

The Commission has taken the requested action. 

It  already  publishes  an  Annual  Report  on  the  Implementation  of  the  Structural 
Funds and a Report on Economic and Social Cohesion once every three years. 

62. 

Bring its control requirements into line with the frequency and seriousness of errors 
found under the European Regional Development Fund (ERDF) from 2000 to 2006 
in  the  Member  States  most  affected;  calls  also  on  the  Commission  to  inform 
Parliament about its response to these high rates of error in the three Member States 
concerned (Spain, Italy & UK). (§ 98) 

Commission's response: 

The Commission has taken the requested action. 

The Commission's audit work is based on a comprehensive risk assessment, which 
is  regularly  updated.  This  risk  assessment  takes  into  account  previous  results, 
including the level of financial corrections, and leads to more rigorous audit work 
in more risky areas and programmes.  

The  level  of  financial  corrections  made  in  2008  as  a  result  from  EU  audit  work 
reflects  the  previous  distribution  of  audit  work,  based  on  the  assessment  of  the 
risks  at  the  end  of  2007  and  in  previous  years.  As  the  risk  assessment  takes  into 
account the level of funds allocated, it is reasonable that programmes with higher 
volumes of EU funds are subject to more EU audits and hence more corrections. 
In  many  cases  the  corrections  result  from  remedial  action  plans  to  clear  out 
irregular  expenditure  due  to  general  weaknesses  in  control  systems  or  systemic 
errors. The current level of corrections is thus by no means always an indicator of 
the degree of further action required. 

A summary of the Commission’s current assessment of the effectiveness of systems 
in the different Member States and the degree of risk attaching to them is given in 
the  Directorates’  General  Annual  Activity  Reports  for  2008.  The  Commission’s 
audit strategy for 2009 is based on its assessment of the residual risk after taking 
account of the corrections applied. 

The figures for corrections resulting from EU audits should also be taken together 
with  the  figures  for  recoveries  reported  by  the  Member  States  themselves,  partly 
resulting from their own control and audit work. A breakdown of these recoveries 
by Member State was given in an annex to the Commission's Annual Report on the 
Implementation of the Structural Funds for 2007 (SEC(2008) 2649). There will be 
a similar breakdown in the 2008 implementation report. 

Thus,  it  would  be  mistaken  to  assume  that  Member  States  showing  lower 
corrections resulting from EU audit work in 2008 no longer need to improve their 
systems  or  that  higher  figures  in  certain  Member  States  reveal  a  low  level  of 
control activity. 

63. 

Bring its control requirements into line with the frequency and seriousness of errors 
found  under  the  Cohesion  Fund  from  2000  to  2006  in  the  Member  States  most 

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40 

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affected;  calls  also  on  the  Commission  to  inform  Parliament  about  its  response  to 
these high rates of error in the two Member States concerned (Greece & Spain). (§ 
99) 

Commission's response: 

The Commission has taken the requested action. 

Parliament is referred to the response to paragraph 98 of its resolution. 

It should be noted that Greece and Spain account for the bulk of Cohesion Fund 
projects that have already been implemented or closed. Therefore, the distribution 
of financial corrections is not surprising. 

64. 

Bring its control requirements into line with the frequency and seriousness of errors 
found  under  the  European  Social  Fund  (ESF)  from  2000  to  2006  in  the  Member 
States  most  affected;  calls  also  on  the  Commission  to  inform  Parliament  about  its 
response to these high rates of error in the two Member States concerned (Spain & 
Italy). (§ 100) 

Commission's response: 

The Commission has taken the requested action. 

Parliament  is  referred  to  the  response  to  paragraph  98  of  its  resolution.  Other 
important factors when drawing comparisons are the number of programmes and 
the management structure, whether at centralized national or at regional level. 

As for the other funds, the audit work on ESF programmes is targeted at the most 
risky Member States and programmes. For Spain in 2009 DG EMPL will carry out 
three  follow-up  audits  and  five  audits  to  verify  preparations  for  closure.  As  from 
2010  three  audits  will  be  carried  out  in  Spain  to  verify  the  effectiveness  of 
management and control systems for the 2007-13 period. For Italy four ESF audits 
for are planned in 2009. 

65. 

Continue to apply financial corrections, in conformity with the regulation in force, in 
order to remove any irregular items of expenditure declared at an earlier stage and to 
employ  rigorous  closure  procedures  for  the  2000-2006  ERDF,  Cohesion  Fund  and 
ESF  programmes  so  that,  when  the  accounts  are  closed,  such  items  of  expenditure 
have  been  largely  eliminated;  calls  on  the  Commission,  further,  to  continue  to 
provide it with detailed information about the financial corrections applied and, once 
the closure procedure has started, to provide an estimate of the residual error rate in 
the programmes closed in this way. (§ 101) 

Commission's response: 

The Commission is taking the requested action. 

It  will  continue  to  apply  financial  corrections  to  remove  irregular  expenditure 
declared earlier and will employ rigorous closure procedures as a final safety net. 
It  will  also  continue  to  provide  Parliament  with  detailed  information  about  the 

EN 

41 

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financial corrections applied and once closure has started will attempt to provide 
an estimate of the level of residual error in closed programmes. 

66. 

Continue  to  identify,  in  annual  activity  reports,  control  problems  relating  to  shared 
management  in  the  Member  States,  including  at  payment  authority  level,  so  as  to 
identify the specific weaknesses, by Member State and by programme, and for there 
to be a direct tie-in between reservations and those problems; calls on it to produce 
an  annual  grading  of  Member  States,  for  each  European  fund,  and  to  forward  it  to 
Parliament, specifying the error rate established. (§ 102) 

Commission's response: 

The Commission is taking the requested action. 

Annual  Activity  Reports  identify  problems  with  control  systems,  including  those 
relating to paying authorities, and reservations are made to the Director General’s 
declaration in appropriate cases. 

The Commission cannot give an error rate per Member State, as comparable data 
are not yet available from Member States and the Commission itself does not audit 
a  representative  sample  of  transactions  in  all  Member  States  every  year.  For  the 
2007-13 period programmes, Member States will be required to report error rates. 

67. 

Apply strictly the Community rules on the suspension of payments where a Member 
State fails to provide the guarantees sought. (§ 103) 

Commission's response: 

The Commission is taking the requested action. 

In  2008  the  Commission  demonstrated  a  more  rigorous  approach  to  suspending 
payments in cases where it had evidence of serious deficiencies in control systems. 
It  adopted  10  payments  suspension  decisions  in  2008.  Reference  is  made  to  the 
final report on the Action Plan to strengthen the Commission's supervisory role in 
structural actions (COM(2009) 42). 

68. 

Ensure that the simplification procedures contribute to a reduction in the error rate in 
the future. (§ 106) 

Commission's response: 

The  Commission  is  taking  the  requested  action.  It  refers  to  its  responses  to 
paragraphs 38 and 95 of the resolution about the simplifications underway. 

The  Commission  is  taking  care  to  avoid  any  dilution  in  control  standards  as  a 
result  of  the  simplifications.  For  example,  the  compliance  assessment  procedure, 
which  is  an  important  safeguard  that  good  control  systems  are  in  place  before 
interim payments begin to be made, has not been changed. 

The Commission has issued multiple guidance notes for the 2007-2013 period that 
facilitate  the  practical  application  of  the  rules  for  management  and  control. 
Further  simplifications  on  the  management  and  control  of  the  EU  funds  are 

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42 

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underway. The Commission holds annual meetings with national audit authorities 
on management and control issues and held seminars in 2008 and 2009 targeted to 
managing and certifying authorities. 

The  Commission  does  not  expect  a  significant  decrease  in  the  error  rate  until 
2007-13  programmes  begin  to  account  for  the  bulk  of  expenditure  included  in 
interim payments. The Commission is to carry out an audit of a sample of 2007-13 
operations in the second half of 2009 to provide a first estimate of the error level in 
the new programmes. 

69. 

Further clarify the difference of interpretation between the ECA and the Commission 
concerning  rules  relating  to  the  eligibility  of  expenditure  and  calls  for  the 
interpretation  of  the  rules  as  to  the  application  of  financial  corrections  to  be 
harmonised. (§ 108) 

Commission's response: 

The Commission is taking the requested action. 

It is using various means to narrow the differences of interpretation that arise in 
relation to the Court’s audit findings: The Commission and the Court hold “inter-
institutional colloquia” on average twice a year to discuss such questions. A joint 
working group prepares the discussions of interpretation issues. Another means of 
reducing  differences  of  interpretation  is  the  procedure  of  tripartite  meetings 
between the Court, the Commission and the Member State concerned before audit 
findings are reported in the Court’s annual report. The procedure was introduced 
for the first time for the 2007 DAS and has been widely welcomed. 

The different time perspectives adopted by the Court and the Commission in their 
audit  work  accounts  for  many  of  the  differences  of  assessment  of  the  financial 
impact of errors. The Court adopts a strictly annual perspective; the Commission 
looks  at  the  entire  multi-annual  control  cycle  up  to  closure.  There  are  also 
differences  with  regard  to  public  procurement  irregularities.  The  Commission 
applies a sliding scale of financial corrections depending on the seriousness of the 
infringement. The Court applies a 100% error rate for all serious infringements of 
the EU or national rules (for example failure to put a contract out to competition), 
but  treats  minor  breaches  of  the  rules  as  compliance  errors  which  do  not  count 
towards the error rate. 

70. 

Make (Commission and ECA) a clear distinction between level of errors and fraud in 
future documents. (§ 110) 

Commission's response: 

The Commission has taken the requested action. Whenever fraud is confirmed, the 
Commission will disclose the fact in its public statements on the case. OLAF also 
publishes statistics of cases of suspected fraud that Member States identify in their 
reports of irregularities, in its annual Article 280 report. 

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Internal policies 

71. 

The  European  Parliament  deplores  the  fact  that  according  to  the  ECA,  while  the 
Commission  manages  internal  policy  actions  directly,  the  same  problems  from 
previous  years  are  persisting  (cost  reimbursement  errors,  complexity  of  the  rules 
applied,  and  lack  of  an  effective  penalising  mechanism),  and  calls  on  the 
Commission to continue its efforts to simplify, and further clarify, the proportionality 
rules applicable to shared-cost programmes. (§ 112) 

Commission's response: 

The Commission has committed itself to seeking simplification where possible and 
will pursue this objective further. 

High  error  rates  are  due  in  a  large  part  to  complex  eligibility  rules.  The 
Commission  acknowledges  that  simplification  has  an  important  role  to  play  in 
reducing error rates, but points out that a certain degree of complexity in rules and 
eligibility criteria is unavoidable as these are often fixed in order to achieve desired 
policy objectives. 

The  action  already  taken  to  address  the  risk  of  error  in  cost  statements  from 
beneficiaries has contributed to a reduction in error rates of more than 50% in the 
space of three years. 

When errors are detected, the Commission will correct them rather than penalise 
the beneficiaries. Further, it is implementing a dissuasive mechanism to encourage 
avoidance of errors ("liquidated damages"). 

In addition, FP7 has already brought about a number of important simplifications. 

The Commission has implemented measures to reinforce the effectiveness of audit 
certificates  by 
to  certifying  entities,  beneficiaries  and 
operational  services  within  the  Commission,  and  for  FP7  two  further  measures 
were introduced: 

improving  support 

(1)  audit  certification  based  on  "agreed  upon  procedures"  which  consist  of  a 
compulsory  set  of  procedures  to  be  used  by  certifying  auditors;  and  (2)  optional 
cost  calculation  methodology  certification  for  beneficiaries  with  multiple 
participations in order to prevent common methodological errors. These measures 
are expected to ensure, before payments are authorised, that beneficiaries' costing 
methodologies better comply with the contractual provisions. 

The  unique  registration  facility  for  participants  avoids  repeated  requests  to 
beneficiaries  and  improves  data  quality  and  coherence  in  all  grant  management 
systems.  The  project  reporting  was  streamlined, 
including  reduced  data 
requirements, simplified reporting guides and longer reporting periods. 

However, it should be noted that the impact of simplification will only be visible in 
the  medium-long  term.  Further  improvements  will  be  achieved  by  the  gradual 
introduction of fully electronic exchange systems for the whole chain of proposal 

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and  grant  management  procedures  in  the  frame  of  the  e-FP7  initiative  (the 
Participant portal). 

72. 

The  European  Parliament  calls  on  the  Commission  to  continue  to  exploit  the 
reimbursement possibilities offered by the 7th Framework Programme, in particular 
to  analyse  further  the  appropriateness  of  the  rules  of  the  programme  on  flat-rate 
payment  procedures,  and  to  inform  the  parliamentary  committee  responsible  in  the 
context  of  the  mid-term  review  of  its  contribution  to  the  simplification  of  the  rules 
for beneficiaries and to the necessary improvements to the system. (§ 116 ) 

Commission's response: 

A first tangible step was taken on 4 June 2007, when the Commission decided on 
lump  sums  for  International  Cooperation  Partner  Countries'  beneficiaries.  The 
Commission continues to work towards a simplification of the cost reimbursement 
system,  gradually  introducing  the  use  of  flat  rates  and  lump-sums  where 
appropriate (for example for subsistence and accommodation costs). Defining flat 
rates and lump sums for major budget items like personnel costs is a very complex 
task because of the difficulty of having sufficiently reliable statistical information 
to  fix  the  level  of  the  lump  sum  of  flat  rates.  Wider  acceptance  of  flat  rates  and 
lump  sums  will  have  an  impact  on  the  risk  of  error  and  therefore  is  relevant  in 
fixing  an  appropriate  tolerable  rate  of  error  for  the  research  area.  So  the 
Commission  has  to  move  step  by  step,  also  taking  account  of  the  fact  that 
beneficiaries do not consider flat rates and lump sums to be a simplification in all 
cases.  Further  steps  will  be  taken  after  careful  consideration  of  their  likely 
consequences  and  with  due  regard 
the  principle  of  sound  financial 
management. 

to 

73. 

The European Parliament is concerned about 7th Framework Programme rules which 
deviate from the common nationally and internationally acknowledged and certified 
accounting  and  calculation  methods  and  which  do  not  accept  the  results  of  the 
national audit authorities concerning the nationally certified average hourly rates per 
cost centre; regards the 7th Framework Programme rules as clearly contradicting the 
modern  accounting  and  calculation  standards  of  European  industry  in  asking  for 
individual costs of persons actively involved in a specific research programme; asks 
the  Commission  to  start  a  procedure  making  7th  Framework  Programme  rules 
compatible with general business practices that allow for calculation and charging of 
average  hourly  rates  per  cost  centre  and  do  not  ask  for  individual  costs  of  persons 
actively involved in a specific research programme. (§ 117) 

Commission's response: 

The Commission very much welcomes the support of the European Parliament in 
its  endeavours  to  efficiently  implement  the  Framework  Programme  within  the 
particular context of the modernisation of the research institutions´ administrative 
and  management  practices.  However,  the  Commission  cannot  implement  the 
specific request for the following reasons: 

The  Rules  for  Participation  for  FP7  (Art.  31)  provide  that  average  costs  can  be 
charged as long as they do not deviate "significantly" from actual costs. However, 
the Rules do not define "significantly" in terms of the permissible deviation which, 

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in  view  of  the  2%  materiality  threshold  applied  by  the  Court  of  Auditors,  offers 
little  flexibility  in  practice.  The  Commission  has  stipulated  (in  the  model  grant 
agreement) that beneficiaries may claim average costs where their cost calculation 
methodologies  have  been  approved  ex  ante  by  the  Commission.  The  Commission 
decided  in  June  2009  to  work  on  the  basis  of  deviation  of  max.  5%  for  cost 
methodologies. 

The use of average costs needs to be reconciled with the "non-profit rule" in the 
Financial Regulation. Implementing the specific request would mean that the link 
between average and actual costs at beneficiary level would be lost: such globally-
applied average rates would cause a considerable risk of significant deviations on 
individual  transactions and  beneficiaries (especially  those  with  few  participations 
in FP7). 

Moreover, the types of system referred to in the request are applied only in some 
Member  States:  implementing  this  request  would  therefore  require  accepting  all 
national  systems  (or  developing  them  where  these  are  not  available)  to  ensure 
consistency of treatment. 

Finally this matter should certainly be revisited in light of the progress of the inter-
institutional  discussions  on  the  tolerable  level  of  error  in  the  field  of  European 
research policy. 

74. 

As  regards  the  certificates  on  the  methodology  (CoM  and  CoMAv),  the  European 
Parliament is concerned at as yet unapproved certificates and urges the Commission 
to  establish  the  necessary  comprehensible  criteria  for  approving  certificates  on  the 
methodology for both personnel and indirect costs; believes that beneficiaries should 
be allowed to use average personnel costs and to apply an established methodology 
for calculating the indirect cost; calls for a timely start to the process of approving (or 
rejecting) the certificates to make sure that the funds earmarked for research can be 
used;  asks  the  Commission  to  accept  such  average  hourly  rates  per  cost  centre 
without  a  certification  as  regards  the  methodology  at  least  if  they  are  audited  and 
certified by a national authority (§ 118) 

Commission's response: 

The Commission fully shares the concern expressed by the European Parliament. 
FP7 provides two types of cost methodology certification: the mandatory certificate 
on the methodology on average personnel costs (CoMAv) and the certificate on the 
methodology for personnel and indirect costs (CoM), optional for any beneficiary 
of  multiple  grants  fulfilling  the  eligibility  criteria  set  by  the  Commission.  The 
certification  of  average  personnel  costs  was  introduced  to  accommodate  those 
participants  who,  as  derogation  to  the  general  rule  of  actual  costs,  use  average 
costs for charging personnel. FP7 rules provide that average personnel costs may 
be  used  if  they  are  consistent  with  the  management  principles  and  accounting 
practices of the participant, do not differ significantly from actual costs, are based 
on a methodology certified by an independent auditor and finally approved by the 
Commission. The meaning of "significant deviation" has not been defined by the 
legislator  in  the  FP7  rules  for  participation.  In  this  context  the  Commission  has 
assessed  several  possibilities  striving  to  balance  the  need  for  simplification  while 
ensuring  the  legality  and  regularity  of  expenditure.  It  is  to  be  noted  that  the 

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acceptance of average rate methodologies is based on the hypothesis that upward 
and downward deviations between actual and average personnel costs within grant 
payment transactions towards a certified beneficiary should be set-off against each 
other over all its grants for the whole duration of the Framework Programme. The 
Commission will very shortly decide on a number of criteria that could at the same 
time provide a reasonable level of assurance in terms of the DAS and a substantial 
degree of simplification for the beneficiaries. The Commission also considers that 
this  matter  will  need  to  be  revisited  in  the  future  with  a  view  to  further 
simplification. Finally, the Commission takes note of the request to accept average 
hourly rates per cost centre without a certification on the methodology. It cannot 
implement  it,  however,  for  the  reasons  already  highlighted  in  the  reply  to 
paragraph  117  as  such  an  acceptance  would  be  in  breach  of  the  applicable 
regulatory provisions. 

75. 

The  European  Parliament  recalls  its  request,  with  a  view  to  simplifying  the 
administrative  procedures  and  grant  applications,  for  one  single  contact  point  to  be 
set  up  for  beneficiaries  with  the  competence  to  decide  on  issues  regarding  the 
research framework. (§ 119) 

Commission's response: 

and 

A single contact point for beneficiaries regarding the research framework related 
issues has been established. Since the start of the 7th Framework Programme, the 
Commission operates a central enquiry service for all questions related to proposal 
submission 
management 
(http://ec.europa.eu/research/index.cfm?pg=enquiries),  providing  centralised  and 
harmonised  replies  wherever  possible,  while  detailed  issues  related  to  the 
implementation of individual grants requiring an analysis on a case-by-case basis 
stay  under  the  responsibility  of  the  relevant  authorising  officer.  These  services 
complement  the  continued  role  of  the  National  Contact  Points  in  Member  States 
and of Cordis. 

research 

grant 

76. 

The  European  Parliament  calls  on  the  Commission,  as  a  requirement  for  legal 
certainty, to refrain from re-calculating the financial statements of projects under the 
6th Framework Programme that it has already approved and settled, by applying new 
interpretations  to  the  eligibility  criteria  for  costs  established  in  the  General 
Conditions (Annex II) of the FP6 model contract. (§ 120) 

Commission's response: 

The  Commission  has  devised  a  control  strategy  aimed  to  ensure  the  legality  and 
regularity of the 6th Framework Programme on a multiannual basis. It is based on 
the  detection  and  correction  of  any  errors  which  could  not  be  identified  before 
making  the  payment.  This  is  achieved  by  ex-post  auditing  and  thoroughly 
recovering any amount found to be overpaid to the audited beneficiaries, even for 
non-audited contracts. 

The re-calculation of the financial statements of projects is a necessary condition 
to correct the detected systematic errors likely to affect non-audited contracts. The 
acceptance  of  this  particular  request  would  therefore  mean  that  amounts 
receivable would not be recovered.  

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Refraining from re-calculating the financial statements affected by detected errors 
requires  a  clear  commitment  from  the  European  Parliament  and  the  Council  to 
take  this  political  decision  into  account  in  the  framework  of  the  discharge 
procedure,  in  particular  with  reference  to  the  opinion  of  the  Court  of  Auditors, 
since it should be noted that this will potentially lead to increased residual rates of 
error.  This  should  be  taken  into  account  when  a  tolerable  risk  of  error  will  be 
discussed. 

The  split  of  responsibility  between  the  Commission  and  the  beneficiaries  in  this 
respect  should  be  maintained.  When  the  Commission  proves  the  existence  of  an 
error  and  its  systematic  character,  the  beneficiary  is  responsible  to  quantify  the 
financial consequence of those errors. In some specific cases (lack of reliable time 
recording  system)  the  assessment  of  the  financial  consequences  of  this  non 
compliance  of  the  contractor  is  particularly  difficult  or  time-consuming  and  may 
even  require  that  in  specific  cases  the  non  audited  closed  contracts  be  subject  to 
further scrutiny. 

In  order  to  avoid  any  misunderstanding,  the  Commission  wishes  to  clarify  that 
these  corrections  do  not  result  from  the  application  of  new  interpretations,  but 
from  the  audit  of  cost  statements  submitted  by  beneficiaries  within  the  same 
Framework  Programme.  In  accordance  with  the  provisions  of  the  model  grant 
agreement,  the  Commission  may  carry  out  audits  up  to  five  years  after  the  final 
payment of a project and make the relevant financial adjustments.  

77. 

The European Parliament notes that the two-stage procedure for the 7th Framework 
Programme is being applied in certain areas; calls on the Commission to consult with 
research  organisations  on  the  appropriateness  of  extending  this  experiment  to  other 
types of project where this would result in considerable reductions in the preparation 
costs of initial project applications (§ 121) 

Commission's response: 

A two-stage procedure is indeed used in some FP7 calls for proposals, particularly 
where  a  high  subscription  rate  is  expected,  including  in  calls  which  are  more 
bottom-up  in  nature.  While  this  works  well  in  many  areas,  it  is  not  a  panacea, 
since experience shows that often the efforts required to prepare a good first-stage 
proposal (including formulation of idea, gathering of a consortium etc.) represent 
a substantial part of the effort to write a full proposal. Consultations during FP6 
led to an estimate that this part is around 80%. Informed observers and applicants, 
when consulted during FP7, have remained ambivalent about the possible benefits 
of two-stage procedures. Moreover, it should be recalled that two-stage procedures 
prolong  the  "time-to-grant".  The Commission will continue  to monitor this issue 
in  its  informal  contacts  with  stakeholder  groups,  but  does  not  consider  a  new 
specific consultation to be necessary at this stage. 

78. 

The European Parliament points out that, in the research field, the Commission has 
increased  the  number  of  research  bodies,  cooperation  models  and  management 

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mechanisms;  recalls  that  this  is  due  to  the  considerable  increase  in  funds  made 
available  under  the  financial  framework  2007-2013  for  research  and  innovation; 
invites the ECA to assess possible problems of transparency vis-à-vis the budgetary 
authority  and  the  differing  way  of  dealing  with  beneficiaries  under  those  models; 
calls for the Director-General to give over a chapter of his AAR to each such body, 
model  and  mechanism  in  order  to  provide  information  on  the  use  of  funds  and  the 
outcomes sought with these public-private cooperation models. (§ 122) 

Commission's response: 

The  principal  means  to  achieve  transparency  towards  the  Budgetary  Authority  is 
the discharge by the European Parliament for different management models. The 
Directors  of  executive  agencies  receive  discharge  from  the  European  Parliament 
on  their  implementation  of  administrative  costs;  operational  costs  are  part  of  the 
Commission's  discharge.  The  Executive  Directors  of  the  Joint  Undertakings 
receive  discharge  from  the  European  Parliament  on  the  implementation  of  the 
entire budget of the Joint Undertaking. In addition, the agencies' Annual Activity 
Reports  (AARs)  are  annexed  to  the  AARs  of  the  parent  DGs.  Within  this 
framework, the Commission is actively laying the ground to allow these bodies to 
operate autonomously. 

In particular, in order to be able to report in the AAR: 

The agencies and Joint Undertakings must implement in practice the governance 
and accountability model outlined in the internal control framework applicable in 
the  Research  DGs.  For  Art.  169  bodies,  the  Financial  Regulation  lists  the 
conditions, which are largely equivalent. 

The legal instruments that bind the body with the Commission (Delegation Act and 
Memorandum of Understanding for the agencies and the contracts with the Joint 
Undertakings  and  Art.  169  bodies)  require  reporting  on  the  operation  of  the 
internal  control  systems  in  line  with,  and  using  the  same  indicators  as,  those 
agreed by the Research DGs. In addition, the DGs have the right to request further 
information if and when needed. 

Furthermore, as before, the Directorates must report on the achievement of their 
political  objectives  in  part  1  of  the  AAR,  including  the  activities  of  these  bodies 
where applicable. 

79. 

The  European  Parliament  calls  on  the  Commission  to  offer  further  assistance  to 
applicants  in  the  context  of  multiannual  programmes,  especially  by  providing 
specific training for applicants and user-friendly guidelines; 

Welcomes the efforts to target calls for tenders more effectively and to provide more 
assistance to applicants, especially in public health programmes, in order to prevent 
the  submission  of  project  applications  which  are  clearly  not  eligible  for  funding  or 
are  of  poor  quality,  but  notes  that  further  work  is  needed  in  order  to  obtain  a 
satisfactory situation. (§§ 127-128) 

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Commission's response: 

The  Commission  has  taken  the  requested  action.  In  the  area  of  public  health,  in 
2008 and 2009, EAHC introduced national info days in addition to the European 
info day in Luxembourg, to allow more participants to have first hand information 
on the annual call for proposals. In 2008, 12 national info days took place. In 2009 
the number was 16, and a specific effort was made to reduce the high number of 
ineligible or low quality proposals in previous calls. 

A  "Guide  for  applicants"  is  produced  yearly  and  is  accessible  on-line  to  help 
applicants to submit proposals that meet the required standards. 

A  special  training  on  the  application  process  was  provided  to  the  national  focal 
points of the health programme in 2008, in order to enable them to provide a better 
service for potential applicants at national level, according to a 'train the trainers' 
approach. 

Applicants receive routinely a copy of the independent evaluation of their proposal, 
which  sets  out  in  detail  the  weaknesses  of  proposals.  This  allows  applicants  to 
submit better proposals in the next round. 

In 2009, the application process was made even more user friendly for applicants, 
by  improving  the  application  form  based  on  the  results  of  a  satisfaction  survey 
among  persons  submitting  proposals  in  2008.  This  resulted  in  fewer  questions  to 
the  help  desk  in  2009,  despite  a  higher  number  of  proposals.  The  satisfaction 
survey  launched  in  2008  showed  that  91%  of  the  applicants  in  the  call  for 
proposals  considered  the  documentation  produced  useful  to  very  useful  and  92% 
judged the support received from the help desk good to very good. 

In  September  2009,  EAHC  will  support  a  specific  training  seminar  for  potential 
beneficiaries hosted by the Spanish national focal point, with the aim to improve 
the quality of proposals. 

In  the  environment  field,  DG  ENV  started  in  2008  to  organize  workshops  in  all 
Member  States  to  provide  information  to  potential  applicants  about  LIFE+.  For 
what  concerns  guidelines,  a  full  set  of  guidelines  for  applicants  and  for  the 
evaluators  of  proposals  are  published  each  year,  at  the  same  time  as  the  call  for 
proposals.  The  feedback  received  from  applicants  show  that  these  guidelines  are 
user-friendly  and  very  helpful  in  the  preparation  of  proposals.  From  one  year  to 
the  next  the  guidelines  are  fine-tuned  to  address  specific  issues  raised  by 
applicants or potential applicants. 

80. 

The  European  Parliament  points  out  that  part  of  the  Health  Action  Programme  is 
implemented  by  the  Executive  Agency  for  Health  and  Consumers;  reminds  the 
Commission  in  this  context  to  use  programme  funds  of  an  operational  nature  very 
cost-effectively as they are also used for administrative tasks. (§ 129) 

Commission's response: 

The implementation of the Health Action Programme by the Executive Agency for 
Health and Consumer Protection is performed on the basis of the delegation of the 

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Commission and under its control and responsibility. The Commission ensures the 
setting up within the Agency of grant award and procurement procedures, internal 
control  and  accountancy  systems,  which,  at  the  same  time,  comply  with  sound 
financial management and the general Financial regulation and ensure the use of 
the Public Health Programme funds in a cost effective manner. 

81. 

The  European  Parliament  points  out  that  compliance  with  the  administrative  and 
financial provisions of Regulation (EC, Euratom)  No 1605/2002 should not lead to 
unnecessary delays in awarding grants or selecting projects to be financed and calls 
on  the  Commission  to  continue  its  efforts  to  improve  administrative  procedures 
which  have  an  impact  on  the  implementation  of  commitment  and  payment 
appropriations. (§ 130) 

Commission's response: 

The Commission has taken the requested action. A recent report from the Court of 
Auditors clearly demonstrates that, since the Public Health Programme has been 
put in place, significant improvements have been made in the reduction of the time 
to contract. 

Since 2008, habilitation is given from the Commission to the Director General of 
DG  SANCO  in  order  to  simplify  the  administrative  procedures  and  significantly 
reduce the delays for awarding grants. 

DG  ENV  has  also  implemented  several  measures  to  accelerate  commitments  and 
payments, in respect of the financial regulation. 

DG  ENV  has  in  particular  taken  steps  to  adopt  the  annual  financing  decision 
foreseen  by  article  75  of  the  Financial  Regulation  as  soon  as  possible  (for 
example,  in  October  2008  for  the  2009  budgetary  year)  in  order  to  be  able  to 
launch the award procedures as soon as possible. 

As  regards  the  LIFE+  call  for  proposals  for  action  grants,  the  Commission  is 
aware  of  the  length  of  procedures,  but  considers  that  the  margin  available  to 
shorten  the  procedures  is  limited  as  the  length  of  selection  procedures  is  largely 
conditioned by the comitology requirements of the Regulation. 

As  regards  payments,  DG  ENV  revised  its  financial  circuits  for  pre-financing 
payments  in  2008.  This  allowed  a  reduction  from  28  to  18  days  for  payment  of 
these pre-financings. 

Delays  in  payments  for  LIFE+  project  grants  are  largely  due  to  incomplete 
reporting  by  many  grant  beneficiaries,  which  leads  to  sometimes  lengthy 
exchanges  of  correspondence  concerning  the  eligibility  of  certain  costs  declared. 
The  procedures  for  assessment  of  payment  requests  have  been  reviewed  with  a 
view to reducing the payment delays whilst maintaining a high level of control. 

82. 

The European Parliament 
calls on Member States to further improve their internal 
control  systems  to  prevent  the  placing  of  unauthorised  goods  on  the  Community 
market;  calls  furthermore  on  the  Commission  to  follow  up  on  any  shortcomings 
detected in the area of consumer protection in 2007. (§ 132) 

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51 

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83. 

84. 

Commission's response: 

The  Commission  works  closely  with  Member  States 
to  enhance  market 
surveillance  and  consumer  protection.  For  details  of  its  work  in  the  area  of 
consumer  safety,  the  Parliament  is  referred  to  the  2008  Annual  Report  on  the 
operation of the Rapid Alert System for non-food consumer products. In addition, 
the Commission intends to issue a Communication on enforcement in the area of 
Consumer Policy later in 2009. 

The European Parliament notes that the implementation rate of 77% for budget line 
17  02  02  (consumer  protection  programme)  is  lower  than  in  previous  years;  notes 
further that, according to the Commission, the reasons for this are the transfer of non-
differentiated appropriations from the Executive Agency for Health and Consumers 
back  to  the  consumer  protection  programme,  and  some  late  commitments  made 
during the year 2007, with the result that payments planned for 2007 were not made; 
calls therefore on the Commission to improve budget planning in this area. (§ 136) 

Commission's response: 

The Commission has implemented 96,35 % of payment credits from budget line 17 
02 02 in 2008, which confirms the exceptional situation in 2007. 

The European Parliament notes with satisfaction that, as a result of reactions to the 
Court  of  Auditors'  Special  Report  No  6/2005  on  the  trans-European  network  for 
transport  ,  the  maximum  rate  of  financial  aid  for  cross-border  projects  has  been 
increased  to  30%  and  the  minimum  funding  threshold  to  EUR  1  500  000;  notes 
further that the evaluation procedure for the selection of projects has been improved 
and  monitoring  has  been  enhanced,  but  deplores  at  the  same  time  the  fact  that  the 
structure  for  the  description  of  works  has  not  been  harmonised  and  technical  and 
financial monitoring has not been standardised. (§ 140) 

Commission's response: 

Several  new  requirements  and  modifications  to  the  existing  system  have  in  fact 
been put in place in order to standardise and improve the technical and financial 
monitoring of projects. The TEN-T Executive Agency and the Commission worked 
together  to  prepare  a  new  model  financial  Decision  for  the  programming  period 
2007-2013. Particular attention was paid to an improvement of the elements which 
allow technical and financial monitoring of the actions funded under the TEN-T 
programme. At the same time the definition of works and studies was also revised, 
taking into account the comments of the Court of Auditors on this subject. 

85. 

The European Parliament notes the ECA's finding that the approaches taken by the 
national  authorities  with  a  view  to  obtaining  a  basis  for  the  ex  ante  declaration  of 
assurance differ and that the degree of disclosure as to the procedures carried out by 
those authorities varies greatly; calls on the Commission to commence an exercise to 
harmonise  those  declarations  and  to  keep  Parliament  and  the  ECA  informed  about 
the exercise. (§ 146) 

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Commission's response: 

The  request  has  been  implemented.  Guidelines  for  the  National  Authorities  have 
been  issued  already  in  2007  and  updated  in  March  2009.  Copies  of  those 
Guidelines have been transmitted to the European Parliament and to the European 
Court of Auditors. 

86. 

The European Parliament welcomes the fact that the number of late payments in the 
area of education and culture is decreasing, and expects the Commission to continue 
its efforts to further reduce them. (§ 150) 

Commission's response: 

The  requested  action  has  been  implemented.  During  2008,  DG  EAC  has  taken 
further  measures  to  closely  monitor  the  development  of  payment  delays.  The 
monthly  reporting  to  management  has  been  extended  and  includes  both  the 
average  payment  delays  as  well  as  an  analysis  of  payments  made  within  the 
different contractual time limits or exceeding those limits. 

The  regular  follow-up  of  payment  delays  has  resulted  in  a  clear  reduction  of  the 
average  payment  time  (an  average  in  2007  of  38,80  days  for  procurement  and 
54,12 days for grants is down to a total average of 28,89 days in 2008). 

87. 

The  European  Parliament  expresses  its  hope  that  the  control  system  established  by 
the  Directorate  General  for  Communication  at  the  end  of  2007  will  make  it 
unnecessary to enter a reservation regarding its budget management in the future, as 
was the case for the financial year 2007. (§ 151) 

Commission's response: 

The  Commission  has  taken  the  action  required.  In  the  light  of  the  new  control 
system,  which  has  highlighted  a  number  of  errors  in  budgetary  management  for 
2008, DG COMM has entered a reservation in respect of that year. The action plan 
introduced is designed to improve budgetary management and, if that is found to 
be the case, avoid the need to renew this reservation in future. 

88. 

The  European  Parliament  requests  further  information  from  the  Commission 
concerning  the  creation  of  administrative  structures  in  Member  States  to  assist  in 
town-twinning activities, especially as regards the need for such structures, the costs 
involved and their purpose. (§ 152) 

Commission's response: 

As  of  2008,  Europe  for  Citizens  Contact  points  began  to  be  established  in  the 
countries participating in the Europe for Citizens Programme. They are intended 
to  be  decentralised  communication  co-coordinating  bodies  providing  information 
on  the  Programme  to  potential  beneficiaries  and  the  general  public.  They  are 
expected to play an intermediary role between the wide diversity of stakeholders of 
the Programme and  the  European  Commission as  well  as  to  actively  mobilize all 
relevant  national  networks.  An  overview  of  Contact  Points  is  available  at 
http://ec.europa.eu/citizenship/how-to-participate/doc714_en.htm. 

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The  initiative  to  create  the  Contact  Points  came  through  the  Europe  for  Citizens 
Programme  Committee  which  comprises  government  representatives  from  the  27 
Member  States  and  other  countries  participating  in  the  Programme.  The 
Committee  identified  a  lack  of  awareness  of  the  Programme,  especially  amongst 
civil society. It was decided that decentralized co-coordinating bodies offering close 
proximity to citizens and stakeholders and the ability to communicate in the home 
language  were  the  most  appropriate  way  to  respond  to  this  need  and  facilitate 
information dissemination at national, regional and local level. The Contact Points 
also have a key role to play in providing guidance and assistance to broaden access 
to the Programme to the many small organisations active in civil society who have 
little or no experience of European co-funding application procedures. 

The  co-coordinating  bodies  were  designated  by  the  Member  States  and  are  now 
operating  in  23  countries.  In  some  cases,  the  bodies  work  alongside  the  Cultural 
Contact Points supported within the EU Culture Programme. 17 of the Europe for 
Citizens Contact points have applied for, and been awarded, co-financing to help 
cover  the  operating  costs  of  the  new  information  and  liaison  activities  to  be 
undertaken.  A  total  of  just  over  417.000  Euro  of  Community  co-financing  was 
provided for this purpose in 2008. 

The  Europe  for  Citizens  Contact  points,  which  cover  the  whole  Programme, 
complement  the  information  and  awareness-raising  efforts  of  the  Council  of 
European  Municipalities  and  Regions  (CEMR)  and 
its  national  member 
associations  concerning  the  Town-Twinning  possibilities  supported  by  the 
Programme. 

89. 

The European Parliament requests the Commission to examine ways of making the 
Youth  Programme  more  capable  of  reaching  new  groups  of  young  people,  in 
particular  those  from  disadvantaged  backgrounds;  to  this  end,  suggests  that  youth 
organisations,  including  the  European  Youth  Forum,  increase  efforts  to  target  such 
groups,  to  improve  reporting  standards  and  funding  criteria  and  to  disseminate 
information on the programme itself more widely amongst young people (§ 153) 

Commission's response: 

The  Commission  fully  shares  the  objective  to  reinforce  the  participation  of 
disadvantaged young people in the Youth programme. For this reason an inclusion 
strategy has been developed in 2007, aiming both at increasing participation in the 
programme of youth with disadvantaged backgrounds and inclusion of this topic in 
the projects supported by the programme. In this framework, an explicit selection 
criterion  has  been  introduced  in  the  user  guide  in  2008,  and  in  2009  particular 
attention  shall  be  paid  to  disabled  young  people  and  young  people  with  a  Roma 
background. The Commission has also revised reporting in order to allow a proper 
monitoring of the participation of disadvantaged young people.  

Provisional  results  of  the  Youth  programme  for  2008  indicate  that  about  one 
quarter  of  the  participants  of  the  programme  can  be  considered  as  having  fewer 
opportunities and about 40% of all projects aim, among other things, at promoting 
the inclusion of disadvantaged young people. 

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90. 

The European Parliament calls on the Directorate-General for Freedom, Security and 
Justice to try to maximise the level of implementation of commitment and payment 
appropriations in 2008. (§ 154) 

Commission's response: 

The  Commission  closely  monitors  the  budget  implementation  and  works  for  the 
maximisation  of  the  implementation  rate  in  the  area  of  Freedom  Security  and 
Justice, in the respect of sound financial management of budget appropriations. At 
the end of 2008, including the transactions in the 'carry-over', the implementation 
rate for commitments was 98% and 88% for payments. 

91. 

The European Parliament reiterates its call to the Commission for gender equality to 
be  taken  into  due  consideration  as  an  ongoing  priority  objective  during  budgetary 
planning, in accordance with the principle of gender budgeting, as it requested in its 
resolution  of  3  July  2003  on  gender  budgeting,  building  public  budgets  from  a 
gender  perspective,  and  criticises  the  delay  in  completing  the  Commission's 
feasibility study on the topic. (§§ 157-158) 

Commission's response: 

The Commission has taken the requested action. 

• The study on gender budgeting was launched in 2007 in order to further explore 
the feasibility of and options for introducing elements of gender budgeting in the 
budgetary  process.  The  study  was  finalised  in  June  2008  and  was  transmitted  to 
the European Parliament (FEMM) in July 2008. 

•  The  study  focused  on  experience  of  gender  budgeting  initiatives  in  relevant 
countries.  Gender  budgeting  raises  some  conceptual  and  methodological 
challenges: 

Firstly, to do a credible and comprehensive gender budget analysis is complex and 
it  can  only  be  carried  out  gradually.  For  example,  gender  budgeting  requires 
gender specific data and few budgetary figures are broken down by gender. 

Secondly, in a gender analysis of expenditure it is important to make a distinction 
between the initial effect of spending and the long term impact, since there is not 
necessarily  an  obvious  correlation  between  the  two.  To  determine  the  long  term 
impact of an activity is more relevant and challenging. 

Thirdly,  whereas  no  Member  State  of  the  EU  has  comprehensively  implemented 
gender budgeting in accordance with the EP's definition, some gender budgeting 
initiatives exist. These initiatives take different forms in terms of both strategy and 
implementation,  as  well  as  the  context  in  which  the  gender  budgeting  initiatives 
are carried out. Moreover, the EU budget exhibits certain differences with national 
budgets  (no  direct  taxes,  no  social  security  system  etc.),  which  influence  the 
manner in which gender budgeting could possibly be applied at the EU level. 

•  The  Commission  has  examined  the  conclusions  which  can  be  drawn  from  the 
study.  One  of  the  options  put  forward  by  the  study  is  to  consider  the  gender 
dimension  in  the  impact  assessments.  Impact  Assessment  (or  the  ex-ante 

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evaluation)  of  new  proposals  is  a  key  moment  to  consider  the  implication  of 
policies on women and men. The Commission's new impact assessment guidelines 
(2009) provide ways to ensure that impacts on women and men are studied when 
designing new policies and programmes and that their effects on women and men 
are properly evaluated. A toolkit on assessment of social impacts (including impact 
on gender) has been developed. 

• Another option is to improve the reporting to the Budgetary Authority on gender 
equality  policies.  Consequently,  a  new  instruction  for  the  Activity  Statements  for 
Preliminary Draft Budget 2010 requires, where appropriate, that gender aspects be 
considered. 

EN 

56 

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External actions 

92. 

The European Parliament notes that external aid was virtually unaffected by the most 
recent revision of Regulation (EC, Euratom) No 1605/2002, and calls for a revision 
of  Title  IV,  'External  action',  of  Regulation  (EC,  Euratom)  No  1605/2002  so  as  to 
bring  it  more  closely  into  line  with  the  special  conditions  relating  to  contracts  and 
grants in this area. (§ 162) 

Commission's response: 

Title IV of the Part 2 of the Financial Regulation, like all other provisions of the 
Financial Regulation, will be examined as part of the three-yearly review in 2010.  

On  the  basis  of  experience  and  wide  consultation  within  its  services,  the 
Commission  will  make  the  relevant  proposals  in  order  to  promote  further 
simplification  of  the  financial  management  system  for  external  aid.  Provisions 
concerning grants and contracts in the area of external aid will naturally be part 
of this exercise. 

93. 

The  European  Parliament  calls  on  the  Commission  to  ensure  full  financial 
transparency in external aid, in accordance with Articles 53 to 56 of Regulation (EC, 
Euratom)  No  1605/2002,  and  to  honour  its  undertaking  to  Parliament  that  any 
international organisation receiving Community funds will be required to submit the 
results of all internal and external audits of the use of those Community funds to the 
ECA  and  to  the  Commission's  Internal  Auditor;  calls  also  for  OLAF  to  be  given 
access to data where fraud is suspected. (§164) 

Commission's response: 

to 

international  organisations 

As  explained  by  the  Commission  during  the  2009  budgetary  procedure,  the 
Commission  cannot  accept  this  request  because  it  is  not  in  conformity  with  the 
Financial  Regulation.  The  Financial  Regulation  specifies  the  conditions  under 
which  the  Commission  can  entrust  the  management  and  implementation  of 
joint  management.  The 
projects 
Commission  must  check  that  the  key  financial  procedures  (including  internal 
control  and  external  audit)  of  each  international  organisation  comply  with 
international standards, and the FR provides for the internal organisation then to 
apply  these  procedures.  Moreover,  the  terms  of  the  standard  contribution 
agreement (SCA) applicable to contracts signed between the Commission and these 
organisations already provide for the Commission to receive a copy of the audited 
financial statements of the organisation as well as for access to project documents 
to be given to the Court of Auditors and OLAF.  

through 

For  the  UN,  external  audit  reports  issued  by  the  UN  Board  of  Auditors,  which 
certify  a  given  UN  organisation's  accounts  for  a  given  biennium,  are  public 
documents.  Concerning  internal  audit  reports,  practice  varies  between  agencies; 
for  the  Commission's  biggest  partner,  UNDP,  internal  audit  reports  are  internal 
documents,  but  the  Commission's  verification  teams  may  request  a  summary  of 
such reports and, where confidentiality considerations allow, the Commission has 

EN 

57 

   EN 

received  the  information  requested.  OLAF  will  (continue  to)  be  given  access  to 
data where fraud is suspected. 

94. 

The  European  Parliament  notes  that,  on  the  basis  of  a  number  of  hypotheses  ('best 
estimates'),  the  total  cost  of  the  checks  carried  out  by  the  Directorate-General  for 
Humanitarian  Aid  (DG  ECHO)  has  been  put  at  EUR  25  000  000  for  the  financial 
year 2007, this being equivalent to 3.2% of the total humanitarian assistance budget 
for that year; deplores the lack of procedures for risk management by DG ECHO and 
calls  for  such  procedures  systematically  to  be  incorporated  into  the  control 
arrangements; 

Notes that, according to information from the Commission, that estimate covers only 
part of the costs relating to humanitarian operations funded by DG ECHO, because 
the cost of checks carried out by humanitarian organisations, which are included in 
the overall cost of the grant agreements, are also funded by DG ECHO. (§§ 165-166) 

Commission's response: 

The  requested  action  linked  to  risk  management  is  implemented.  The  risk 
management  procedures  and  their  link  with  control  arrangements  are  the 
following: Firstly, an annual risk analysis is carried out by the management of DG 
ECHO.  This  analysis  takes  into  account  DG  ECHO  controls  set  up  and  the 
mitigation  measures  to  strengthen  the  latter.  Secondly  a  specific  analysis  of  the 
risks is carried out before establishing the ex-posts audits' yearly planning. Lastly, 
the past 2007 IAC structure corresponding to a common IAC for both DG AIDCO 
and ECHO was split as from 1/1/2008 in two separate entities. The Internal Audit 
Capability Sector for DG ECHO became operational in July. After a detailed risk 
analysis,  a  revised  work  plan  was  adopted,  taking  into  account  the  key  risks 
identified by the DG and the work performed by the Internal Audit Service of the 
Commission for the period 2007-2009. 

95. 

The European Parliament regrets that in Kenya the Commission disbursed budgetary 
support straight after the elections of 27 December 2007, thus giving the impression 
of  taking  sides  in  the  debate  on  the  legitimacy  of  the  election  results;  recalls  its 
resolution of 17 January 2008 on Kenya, and looks to the Commission  to take due 
account thereof. (§ 169) 

Commission's response: 

In  hindsight,  the  Commission  also  regrets  that  this  budget  support  payment  was 
made.  Nevertheless,  the  Commission  wishes  to  recall  the  course  of  the  events  in 
this specific case:  

A payment under the Poverty Reduction Budget Support programme (PRBSII) of € 
40.6 million was agreed by letter from the Commission to the Kenyan Minister of 
Finance  of  28  November  2007.  The  release  of  this  tranche  was,  amongst  others, 
agreed on the basis of and approval by the IMF Board of Directors in November 
2007  of  the  completion  of  the  third  review  of  the  IMF  PRGF  programme.  The 
Commission approved the release in November 2007 on the basis of: 

EN 

58 

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-  satisfactory  implementation  of  the  overall  macro-economic  reform  programme 
underlying the IMF PRGF agreement, 

-  improvement  in  public  financial  management  based  on  the  assessment  of  the 
implementation  of  the  PFM  action  plan  (on  budget  formulation,  execution, 
reporting  and  control)  reflected  in  the  achievement  of  additional  PEM-AAP 
(Public Expenditure Management Assessment and Action Plan) benchmarks, and 
on  the  basis  of  achievement  of  indicator  targets  in  the  health  and  education 
sectors.  These  targets  are  enshrined  in  the  PRBSII  Financing  Agreement,  as 
signed  on  30  November  2005.  Payment  on  28  December  2007  General  elections 
consisting of Presidential, Parliamentary and local elections, were held on 27th of 
December  in  Kenya.  In  view  of  the  ongoing  election  process  the  European 
Commission decided, in consultation with Member States, to schedule the payment 
after the elections. Following the contract stipulations the payment had to be made 
before the end of the year. It was therefore decided to schedule the payment for 28 
December  2007.  The  EU  Election  Observation  Mission  observed  the  Presidential 
and  Parliamentary  elections.  The  Parliamentary  elections  went  well.  The 
Presidential  elections  initially  went  well,  but  were  marred  by  irregularities  in  the 
processing and tallying of votes. These irregularities only became apparent as from 
Friday  night  -  Saturday  29  December,  when  the  result  aggregates  of  the  last  49 
constituencies  (out  of  210)  faced  delays  in  reporting  at  the  central  level.  The 
preliminary analysis of the EU EOM (that the General Elections had fallen short 
of key international standards), was reported on Monday, 1 January 2008. At this 
stage it was too late to block the payment. 

Since then, and based upon this experience, the Commission has put in place an 
enhanced  approval  process  for  budget  support  payments  scheduled  during 
electoral periods in order to avoid similar situations. 

96. 

The  European  Parliament  notes  the  Court's  assessment  that  the  supervisory  and 
control systems for external relations, enlargement and humanitarian aid are partially 
effective; accepts that many of the errors detected concern advance payments and are 
then rectified when final payments are made; nevertheless, invites the Commission to 
make  the  necessary  improvements  to  its  monitoring  and  verification  procedures, 
especially  at  the  level  of  implementing  organisations,  without  this  leading  to 
unnecessary administrative burdens for the final beneficiaries; recognises at the same 
time the progress made by the Commission and the United Nations to date. (§ 170) 

Commission's response: 

During  recent  years,  measures  to  reinforce  the  controls  at  the  level  of 
implementing organisations were introduced by the Commission. The report from 
the Court of Auditors for 2007 reflects a number of improvements in the quality of 
such controls, leading to a reduction in the estimated error rate. 

These include in particular the new standard Terms of Reference for the different 
types of audits and the introduction of CRIS-Audit for their follow-up. Given their 
recent  introduction  the  full  benefits  of  such  measures  were  not  fully  apparent  in 
2008,  but  the  Commission  expects  they  will  become  more  evident  in  the  future. 
Meanwhile the Commission continues its efforts to further improve its systems – in 
line with the Court's recommendations – and plans to put in place complementary 

EN 

59 

   EN 

measures,  like  the  development  of  a  specific  tool  to  help  implementing 
organisations  better  manage  EC  funds  and  respect  EC  rules,  thus  reinforcing 
preventive measures. 

97. 

The  European  Parliament  deplores  the  continuing  lack  of  transparency  concerning 
the  use  of  Community  funds  channelled  through  United  Nations  organisations; 
supports the Commission's efforts to find a solution and to ensure that the Court of 
Auditors  receives  all  requested  information  in  a  timely  fashion;  welcomes  the 
increasing number of verification missions performed by the Commission under the 
Financial  and  Administrative  Framework  Agreement  between 
the  European 
Community  and  the  United  Nations  (FAFA  agreement);  expects  these  missions  to 
further enhance the transparency and visibility of Community contributions to UN-
led activities. (§ 171) 

Commission's response: 

The Commission will continue to work closely with the UN to improve the conduct 
of  verification  missions  and  to  enhance  the  transparency  and  visibility  of 
Community  contributions  to  the  UN.  In  this  regard,  the  6th  Annual  FAFA 
Working Group meeting, which took place in April 2009, has agreed on terms of 
reference  for  verification  missions  -  these  TOR  have  already  been  successfully 
used  on  a  trial  basis  for  the  past  year.  The  Commission  will  also  continue,  in 
accordance  with  Article  30.3  of  the  Financial  Regulation,  to  ensure  that 
information  on  the  beneficiaries  of  funds  is  made  available  by  the  UN.  This 
information  will  be  published  either  by  the  UN  through  its  local  offices  or  on 
Delegation  websites.  The  Commission  will  also  publish  consolidated  information 
centrally.  Updates  to  the  European  Parliament  on  the  situation  in  Pakistan, 
Afghanistan,  Georgia  and  Palestine  are  being  sent  regularly.  The  European 
Parliament is also provided with updated information on Multi-donor trust funds. 
The  Commission  considers  that  these  actions  will  significantly  contribute  to 
further enhancing transparency . 

98. 

The European Parliament calls on the Commission to further improve, and to define 
more clearly, the conditions and performance indicators used for the disbursement of 
budgetary  support  to  third  countries,  so  as  to  provide  for  clear,  unambiguous  and 
measurable assessment criteria with a specific timetable, if applicable. (§ 172) 

Commission's response: 

The  Commission  has  already  established  a  leading  role  among  the  donor 
community  in  the  promotion  of  the  use  of  results  and  performance  indicators.  It 
continues  to  refine  this  approach  and  strive  to  ensure  that  criteria  for 
disbursement  are  as  clear  and  unambiguous  as  possible,  in  line  with  existing 
guidelines. Recently developed guidelines on budget support - in crisis situations - 
will be submitted to Parliament in September 2009. 

99. 

The  European  Parliament  notes  the  ECA’S  Special  Report  No  5/2007  on  the 
Commission's management of the CARDS programme ; emphasises the importance 
of reinforced strategic guidance from the Commission to ensure, in close cooperation 
and  dialogue  with  Parliament,  an  appropriate  focus  in  selecting  key  areas  of 
intervention  within  the  framework  of  the  Instrument  for  Pre-accession  Assistance; 

EN 

60 

   EN 

calls  on  the  Commission  to  devise  a  comprehensive  strategy  to  improve  local 
ownership of the design and implementation of projects. (§ 175) 

Commission's response: 

The Commission considers  that  the necessary actions,  developed in  the following 
paragraphs, have been taken to implement the request. 

IPA  strategy  papers,  notably  the  Multi–annual  Indicative  Planning  Documents 
(MIPDs)  allow  for  better  match  between  resources,  needs  and  absorption 
capacities of the beneficiaries. They are reviewed annually by the Commission in 
close  cooperation  with  the  beneficiary  countries  in  the  light  of  the  Enlargement 
Strategy  papers.  This  mechanism  allows  maintaining  the  balance  between 
flexibility and sustainability of the assistance. The cooperation and dialogue with 
European Parliament plays a very important role in this process. The MIPDs are 
made available to the EP at the same time as they are circulated to Member States 
within the comitology procedure.  

After the launch of IPA, the Commission launched new initiatives in the Western 
Balkans  and  Turkey  such  as  the  Infrastructure  Projects  Facility,  the  Energy 
Efficiency  Facility,  and  the  European  Fund  for  South  East  Europe  for  small 
businesses  development.  Education  is  a  key  priority  for  IPA  (participation  in 
Erasmus Mundus, Youth in Action, Tempus). All these programmes are intended 
to  catalyse  and  support  regional  cooperation  initiatives  such  as  the  Regional 
School  of  Public  Administration,  Disaster  Risk  Reduction,  and  cultural  heritage 
rehabilitation.  Special  attention  is  given  to  development  of  civil  society  and  civil 
society  dialogue  –  the  Commission,  following  the  request  of  the  European 
Parliament, set up a new Financing Facility under IPA (Civil Society Facility) in 
2008 which is focused on capacity building at local level.  

Over  the  last  two  years,  the  beneficiary  countries  have  made  progress  towards 
assuming  a  greater  ownership  and  responsibility  in  the  management  of  IPA 
programmes.  In  order  to  further  advance  the  ownership,  the  Commission  has 
catalysed additional mechanisms such as donor coordination. During the last years 
the  Commission  succeeded  to  promote  broad  consensus  among  donors  of  the 
Western  Balkans  and  Turkey  to  foster  the  "ownership"  of  the  coordination  of 
assistance by the beneficiary countries as a vital element to maximise the impact of 
aid,  as  well  as  to  support  the  national  authorities  in  their  efforts  to  assume 
responsibility of donor coordination. In this process the MIPDs together with the 
National Strategies have been recognised as key donor coordination tools. 

100. 

The European Parliament expects to be kept regularly informed about steps taken by 
the  Commission  concerning  the  implementation  of  the  significant  pledges  made  in 
support  of  Georgia's  post-conflict  recovery  and  future  development  at  the 
international donors' conference held in Brussels on 22 October 2008. (§ 176) 

Commission's response: 

The  Commission  Delegation  in  Georgia  issues  a  quarterly  bulletin  to  keep  all 
stakeholders informed on the status of its activities. 

EN 

61 

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The first issue was published in December 2008, while the second one was released 
in April 2009. The third state of play update report will be submitted to Parliament 
in September 2009. 

101. 

The European Parliament reiterates its request that the Commission regularly present 
to  Parliament  specific  measures  to  further  increase  Union  ownership  of  its  external 
actions in their geographical contexts, in accordance with the principles of efficiency, 
accountability and visibility. (§ 177) 

Commission's response: 

The European Commission has put in place over the last few years several actions 
that will increase EU ownership of external actions: 

-  Expenditure  verifications  cover  98%  of  the  amount  of  the  grants.  They  are 
conducted  according  to  Terms  of  Reference  (ToR)  which  are  mandatory  since 
2006; 

-  Since  October  2007,  standard  ToR  for  audits  (financial  and  systems)  are 
mandatory for all kind of projects financed by the external headings of the Budget 
and managed by AIDCO; 

-  The  compliance  analysis  of  UN  organisations'  procedures  with  internationally 
accepted standards in terms of audit, accounting internal control and procurement 
(the "four pillars" exercise) has been performed for 15 UN organisations; 

-  Common  ToR  for  verification  missions  are  in  the  process  of  being  agreed  with 
the UN; 

-  The  Commission  and  the  UN  have  signed  joint  guidelines  on  reporting  to 
improve the reporting practises; 

-  A  new  version  of  the  Practical  Guide  to  Contract  procedures  for  EC  external 
actions applicable as from 01/01/09 has been released in 12/2008; 

- The Commission has signed an action plan on visibility in 2006, followed by the 
approval  of  joint  guidelines  indicating  how  this  should  be  implemented.  The 
guidelines  have  been  incorporated  in  the  Communication  and  Visibility  Manual 
for EU External Actions, adopted in April 2008. 

- The Trust Funds and Co-financing Framework Agreement between the EC and 
the World Bank Group was signed on 20 March 2009 by Presidents Barroso and 
Zoellick, including a new annex on visibility; 

- Efforts are exercised for the Commission to be part of the governing structures of 
trust funds and implementing organisations, although the fact that the EC is not a 
member of the UN nor shareholder of the WB makes this difficult. 

The  choice  of  delivery  channels  is  made  on  a  case  by  case  basis  and  the 
Commission  cannot,  and  would  not,  always  decide  to  undertake  actions  directly. 
This  is  the  reason  for  the  provision  in  the  Financial  Regulation  for  joint 
management and for more co-financing. 

EN 

62 

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Non-governmental organisations (NGOs) 

102. 

The European Parliament takes note of the role and growing number of NGOs in the 
administration  of  Community  funds;  calls  on  the  Commission  to  evaluate  the 
effectiveness of operating grants for the NGOs' Brussels headquarters, and to apply 
strictly the principle of the degressivity of operating grants laid down in the Financial 
Regulation. (§ 178) 

Commission's response: 

In the framework of its external actions the Commission provides funds for non-
state actors to implement development projects. The Commission conducts regular 
evaluations  and  audits  on  all  operating  grants,  including  those  given  to  NGOs. 
When an operating grant is granted the Commission will continue to strictly apply 
the  Financial  Regulation  including  the  principle  of  degressivity.  Performance 
audits  and/or  evaluations  will  be  launched  for  any  ongoing  Non  State  Actor 
operating grants. 

103. 

The  European  Parliament  asks  the  Commission  to  compile,  by  the  end  of  2009,  a 
comprehensive list of all NGOs which have received EU funds. (§ 179) 

Commission's response: 

Since  2008,  the  Commission  publishes  the  name  of  all  beneficiaries  of  external 
actions funding in compliance with Article 30.3 of the Financial Regulation. This 
list  is  comprehensive,  and  therefore  not  limited  to  "NGOs",  a  generic  term  for 
which  there  is  no  commonly  agreed  legal  definition.  For  contractual  aspects  of 
funding,  the  Commission  identifies  the  eligibility  of  Non-State  Actors  (NSA)  for 
EC 
framework. 
(http://ec.europa.eu/europeaid/work/funding/beneficiaries_en.htm) 

their  own  national 

the  basis  of 

funding  on 

legal 

EN 

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Development 

104. 

The European Parliament  notes  that  the  ECA  has  concluded  once  again  that  DG 
ECHO should enhance its audit strategy by ensuring better coverage of operations at 
implementing  organisation-level  and,  more  specifically,  in  the  field  for  all  types  of 
partners (paragraph 8.33(f) of the annual report for 2007); 

Encourages  the  Commission,  in  connection  with  the  objective  it  set  in  2007  of 
having each project visited at least once a year by an expert, except where this cannot 
be done on account of security conditions or access difficulties, to continue to check 
that humanitarian aid specialists are permanently in the field in order to facilitate and 
maximise the impact of the humanitarian operations financed by the Commission, in 
whatever country or region. (§§ 180-181) 

Commission's response: 

The  requested  action  has  been  taken.  In  line  with  the  requirements  of  the 
Financial  Regulations,  DG  ECHO  undertakes  audits  of  partner  organisations 
adhering  to  the  FPA.  The  audit  strategy  is  risk  based  which  considers  financial 
and  operational  strengths  of  the  partners,  the  results  of  past  audits,  assessments 
and  feedback  received  from  ECHO  staff.  The  strategy  also  ensures  that  all 
partners  are  audited  over  a  2  to  3  years  cycle  depending  on  whether  the  partner 
has been classified as having 'A' or 'P' control mechanisms. The audits themselves 
follow  a  2-track  approach:  audits  are  performed  both  at  DG  ECHO  partners' 
headquarters  for  finalised  projects  (at  least  once  every  three  to  four  years  and 
more frequently where higher risk is determined or the partner receives significant 
DG  ECHO  funds)  and  in  the  field  for  ongoing  projects  (determined  by  an 
assessment of risk and the past coverage of the partner concerned). Headquarters 
audits  consist  of  two  phases.  Firstly,  an  analysis  of  partners’  internal  control 
systems and in particular the financial systems put in place to record and account 
for  expenditures  incurred  on  DG  ECHO  funded  projects.  Secondly,  a  control  of 
expenditures against supporting documents for a sample of contracts. The level of 
transactions  controlled  is  based  on  the  results  of  the  assessment  of  the  internal 
control system. The results of the audits are used for the periodic assessments of 
the  partners  and  for  ensuring  the  eligibility  of  the  funds  claimed.  The  later  may 
also lead to a recovery of funds due to the Commission. 

The number of field audits had already been increased in 2007 from 20 in 2006 to 
37  in  2007.  For  2008,  47  field  audits  were  initiated  and  31  reports  finalised.  In 
2009, 40 to 45 field audits are planned.  

In addition to these financial audits which are carried out by external auditors, the 
monitoring  of  projects  is  also  undertaken  through  DG  ECHO  which  supervises 
projects  and  draw  up  regular  reports  (notably  through  a  worldwide  network  of 
around  100  field  experts  continuously  working  for  DG  ECHO.  These 
Humanitarian Aid specialists are permanently on the ground in order to facilitate 
and  maximise  the  benefits  of  the  humanitarian  operations  financed  by  the 
Commission).  

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Moreover, since 2007, each project is supposed to be visited at least once during its 
lifetime. In 2007 and 2008, 90% of projects were directly monitored in the field, the 
remaining 10% being projects where access, security and nature of project did not 
permit direct monitoring. 

Therefore,  audits  have  to  be  appreciated  in  the  context  of  DG  ECHO's  overall 
control  strategy  which  also  includes  the  follow-up  carried  out  by  its  headquarter 
staff  and  the  analysis  of  the  information  provided  by  partners  in  their  various 
reports.  Indeed,  the  information  which  results  from  such  controls  is  used  by  the 
external auditors when audits are carried out at partners' headquarters. 

105. 

The European Parliament considers that, in connection with project implementation, 
the  Commission  should  ensure  that  the  reporting  requirements  agreed  with  the 
United  Nations  in  April  2007  are  strictly  applied  and  that  financial  reports  are 
produced in accordance with those requirements. (§ 182) 

Commission's response: 

The  Commission  attaches  great  importance  to  ensuring  that  provisions  on 
reporting  are  fully  respected,  especially  in  terms  of  content  and  deadlines.  The 
entry into force of reporting guidelines in 2007 has been very helpful in clarifying 
the responsibilities of our partners. Reporting has subsequently been addressed in 
the Joint Reference Group established to review implementation questions with the 
UN.  In  addition,  the  Frequently  Asked  Questions  published  on  the  EuropeAid 
internet site at the beginning of 2009 address reporting matters and provide further 
assistance to staff both from the Commission and from international organisations 
on  the  interpretation  of  certain  reporting  provisions.  With  regard  to  financial 
reporting, international organisations are not obliged to use a standard reporting 
format; however they are obliged to report in a way that enables the Commission to 
compare planned expenditure with that effectively realised. 

106. 

The  European  Parliament  considers  that  thought  should  be  given  to  clarifying 
funding  structures  (European  Development  Fund  (EDF),  Commission,  European 
Investment Bank, etc.) in the development and external actions fields, with a view to 
giving  greater  visibility  to  Community  action  and  ensuring  better  auditing  of  the 
funds committed; calls for a study to be carried out into the incorporation of the EDF 
into the Community budget, in preparation for a political debate on this subject. 

It calls for the ending of the previous system of consecutive EDFs by means of the 
full consolidation of the financing of EU/ACP cooperation in the EU budget in order 
to ensure parliamentary oversight of the allocation of resources under the EDFs; 

Welcomes  the  Commission  engagement  to  "raise  again  its  proposal  to  fully 
incorporate  the  EDF  into  the  budget  during  discussions  on  the  next  financial 
framework" [Note: (SEC(2008)2579) Commission Staff Working Document. Annex 
to the report from the Commission to the European Parliament on the follow-up to 
2006 Discharge procedure, p. 86.]; invites the Commission to keep its Committee on 
Budgetary Control fully informed as regards the preparation of this initiative; 

Reaffirms its support for the incorporation of the EDF into the general budget of the 
European  Union,  which  it  considers  would  make  it  possible  to  enhance  the 

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coherence, transparency and effectiveness of the EDF and to strengthen its oversight 
system. (§ 185 + EDF §§ 41, 77 and 78) 

Commission's response: 

The Commission agrees with the European Parliament on the appropriateness of 
consolidating  the  financing  of  EU/ACP  cooperation  into  the  Community  budget, 
which would ensure parliamentary oversight of the allocation of resources under 
the EDF and would contribute to aid effectiveness through further harmonisation 
of aid implementation.  

The Commission expects to resubmit the proposal for post 10th EDF budgetisation 
in the framework of the performance review of the 10th EDF, foreseen by the end 
of 2010 (in accordance with the 10th EDF Internal Agreement art. 1.10). It would 
allow to bring the proposal in line with the next financial framework after 2013. It 
would also follow the budget review for which the EU's role in the globalised world 
will  be  a  central  issue,  including  questions  on  more  effective  delivery  of 
development aid and thus also including the future of the EDF. 

The  Commission  will  keep  the  European  Parliament  informed  as  regards  the 
preparation of this initiative. 

107. 

The  European  Parliament  draws  attention  to  the  Commission's  commitment  to  take 
steps to ensure that by 2009 a benchmark of 20% of its allocated assistance [under 
the Development  Cooperation  Instrument (DCI)] is devoted to basic and secondary 
education and basic health; calls on the Commission to provide detailed information 
on  how  this  benchmark  will  be  met  through  projects,  programmes  and  budget 
support;  calls  for  greater  consistency  between  the  Thematic,  Country  and  Regional 
Strategy  Papers  in  the  areas  of  health  and  education,  in  particular  when  aid  is 
provided  via  budget  support;  calls  for  reporting  against  the  same  benchmark  to  be 
provided  for  the  EDFs;  calls  on  the  Commission  to  prioritise  support  to  health 
systems and identify the most appropriate aid delivery instruments for this area. 

Stresses that priority must be given to the enrolment in schools of children, including 
disabled  children,  from  hard-to-reach  groups  in  countries  with  critical  MDG 
indicators. (§§ 186-187 + EDF §§ 8-9) 

Commission's response: 

The  Commission  reaffirms  its  commitment  in  the  limits  of  the  respect  of  the 
ownership  and  aid  effectiveness  principles  according  to  which  it  is  up  to  the 
beneficiary countries to identify their priority sectors and take the lead of the donor 
coordination.  The  Commission’s  basic  development  approach  focuses  on  poverty 
alleviation  and,  within  this  context,  on  improvements  within  the  social  sectors. 
Thus, the Commission concentrates on achieving development results as measured 
by  performance  indicators.  The  Commission  will  continue  to  promote  the  use  of 
outcome indicators, not only in Performance Assessment Frameworks, but also in 
sector reviews thereby significantly contributing to sector dialogue and to progress 
towards the MDGs. The Commission  is  committed to ensure that the articulation 
between  general  budget  support,  sector budget support and sector programmes is 
clarified  in  order  to  ensure  better  synergies.  In  addition,  the  Commission  is 

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improving the predictability of its General Budget Support instrument through the 
provision  of  "MDG  Contracts"  in  performing  partner  countries  within  the 
framework  of  the  10the  EDF.  The  Commission  continues  to  be  committed  to 
supporting  the  achievement  of  the  education  and  gender  MDGs  as  well  as 
Education  For  All  goals,  through  use  of  a  wide  selection  of  the  instruments 
available:  the  MDG-Contract,  budget  support,  sector  support,  specific  projects 
where  appropriate,  and  through  support  to  the  Education  For  All  Fast  Track 
Initiative.  On  an  international  policy  level  the  Commission  has  repeatedly 
reiterated  this  commitment  with  specific  statements  drawing  attention  to  the 
necessity to ensure inclusive education if we are to achieve the MDGs. The prime 
responsibility for reaching all children however, remains with developing countries 
themselves. 

intends 

Most of  the hard to  reach  children  are in the so called 'fragile states', where the 
Commission 
to  support  education  service  delivery  and  capacity 
development;  the  EC  contribution  will  be  channelled  through  the  'education 
transition  fund',  under  the  umbrella  of  the  Education  For  All  Fast  Track 
Initiative,  financed  under  the  DCI  Investing  in  People  programme.  A  statistical 
update  is  to  be  submitted  to  Parliament  in  September  2009  regarding  2008 
performance and 2009 projections on health and education interventions. 

108. 

The  European  Parliament  urges  the  Commission  to  prioritise  support  for  partner 
countries in developing parliamentary control and audit capacities, in particular when 
aid is provided via budget support, and invites the Commission to report regularly on 
the progress achieved. 

Is  of  the  view  that  the  involvement  of  national  parliaments,  civil  society  and  local 
authorities  in  partner  countries  is  indispensible  for  achieving  genuine  ownership  of 
the  process;  urges  the  Commission  to  make  every  effort  to  improve  dialogue  with 
these bodies at all the different stages of the programming process. (§ 188 + EDF §§ 
55-56) 

Commission's response: 

In  line  with  its  policy  to  foster  Country  Ownership,  the  Commission  encourages 
and  supports  efforts  of  partner  countries  to  develop  parliamentary  control  and 
audit capacities. Thus, the Commission has been and is supporting many capacity 
building initiatives in this area and will report on this within its annual reports on 
external assistance. A study on the support to parliaments in external development 
and cooperation programmes (including statistics per region on funding in support 
of parliaments) will be submitted to Parliament in November. 

109. 

The  European  Parliament  points  out  that  due  attention  must  be  paid  to  the 
sustainability of the Commission's interventions, including the formulation of a clear 
exit strategy which does not compromise results and monitoring of implementation; 
considers  that  enhanced  evaluation  of  results  represents  a  major  factor  in  ensuring 
the democratic legitimacy of Union development cooperation. (§ 189 + EDF § 5) 

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Commission's response: 

The European Consensus states that the European Communities will consistently 
use  an  approach  based  on  results  and  performance  indicators.  The  quality  of 
projects  funded  by  the  European  Communities  is  assessed  on  the  basis  of 
relevance,  feasibility  and  effectiveness.  Corresponding  indicators  are  identified, 
monitored  and  referred  to  in  evaluation.  The  evaluations  realised  by  EuropeAid 
mainly  consist  of  thematic,  sectoral  and  geographical  as  well  as  evaluations  of 
regulations  and  instruments,  whose  results  are  integrated  in  the  decision-making 
process  and  policy/programme  design  on  the  basis  of  different  feed-back 
mechanisms.  At  the  level  of  projects  or  programmes,  the  results-oriented 
monitoring  system  provides  the  Commission  with  a  rapid  appreciation  of 
performance. 

110. 

The  European  Parliament  welcomes  the  adoption  in  2007  of  the  Union  Code  of 
Conduct on Complementarity and Division of Labour in Development Policy, which 
is geared towards enhancing cooperation and coordination between the Commission 
and  the  Member  States;  calls  on  the  Commission  to  redouble  its  efforts  to  ensure 
genuine implementation of the Code of Conduct, including by addressing persisting 
problems in the best interests of the partner countries. (§ 190) 

Commission's response: 

Since May 2007 the Commission has been working on the implementation of the 
EU Code of Conduct on complementarity and division of labour in various ways.  

Starting  with  the  dissemination  of  the  EU  Code  of  Conduct  in  June  2007  with  a 
note signed by DG DEV and 27 DGs of the Member States (MS), followed in July 
2007 by a joint note from Commissioners Michel and Ferrero-Waldner, asking to 
take  concrete  steps  towards  its  implementation,  and  with  continuous  staff 
awareness  raising  through  trainings,  seminars  and  specific  support  to  EC 
Delegations. 

The  action  continued  with  the  commissioning  by  the  EC  of  various  studies  (EU 
Donor  Atlas  (2008),  Compendium  on  division  of  labour  (2007),  study  on  co-
financing (2007)) on current practices. And, as stated in the Council Conclusions 
of 27 May 2008, the Fast Tracking Initiative for division of labour was launched: 
In  a  letter  addressed  to  27  EU  Development  Ministers,  Commissioner  L.  Michel 
suggested adopting a pro-active approach by applying two of the guiding principles 
of the Code of Conduct: delegated cooperation and establishing a lead donorship 
arrangement  for  the  coordination  of  all  donors  in  a  given  sector.  This  combines 
with  action  by  EC  and  MS  to  facilitate  the  division  of  labour  process  in  partner 
countries.  The  process  is  further  supported  by  an  EU  Toolkit  with  practical 
information on in-country division of labour processes, written by the EC together 
with the MS, and distributed to MS and EC Delegations. 

Furthermore, at the international policy level, division of labour was one of the EU 
priorities  in  the  EU  common  position  for  the  EU  participation  at  the  IIIrd  High 
Level  Forum  in  Accra  in  September  2008.  Since  then  the  implementation  of 
division  of  labour  is  one  of  the  priority  actions  in  the  EC  internal  operational 
action  plan  for  follow  up  of  Accra.  Technical  seminars  were  organised  by  the 

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Commission  with  the  Member  States  to  prepare  for  Accra,  and  subsequently  to 
work on the follow up. Aid effectiveness including division of labour is a recurring 
subject in EU-DGs meetings and the EDF Committee. 

And  finally,  at  the  operational  level  EC  Delegations  received  guidelines  on  the 
practical application of delegated cooperation. Concerning EDF Programming the 
Guidelines  for  10th  EDF  annual  operational  reviews  2007  and  2008  ask 
specifically  for  progress  on  division  of  labour.  The  implementation  of  delegated 
cooperation is already progressing, with some agreements signed, and many others 
under  preparation.  To  date,  there  are  currently  about  60  agreements  in  pipeline: 
36  delegation  agreements  amounting  to  some  €213  million  and  14  transfer 
agreements  amounting  to  some  €113  million.   This  process  should  considerably 
reduce  transaction  and  coordination  costs  through  large  size  and  multi-donor 
arrangements.  EuropeAid  is  currently  in  the  process  to  develop  Action  Plans  for 
six  countries  (Ethiopia,  Mozambique,  Tanzania,  Bangladesh,  Nicaragua  and 
Vietnam)  where  the  EC  is  leading  the  Fast  Tracking  Division  of  Labour.  The 
challenge  is  to  make  this  operational  and  to  produce  concrete  and  measurable 
results  before  the  next  HLF  IV  in  2011.  The  Mid  Term  Review  of  country  and 
thematic programmes, which started in 2009 with the review of the DCI and ENPI 
and  will  continue  into  2010  with  that  of  the  EDF,  is  a  unique  opportunity  to 
deepen the joint programming process. Therefore EC Delegations are encouraged 
to enhance the involvement of Member States, in order to achieve further division 
of labour through concentration and/or delegated cooperation. 

111. 

The  European  Parliament  takes  the  view  that  the  consultation  of  civil  society  and 
local  authorities  prior  to  drawing  up  Country  Strategy  Papers  (CSPs)  under  the 
Development  Cooperation  Instrument  was  not  sufficient  to  satisfy  the  legal 
obligation established under Article 19(3)of Regulation (EC) No 1905/2006 , namely 
that  ‘strategy  papers  shall,  in  principle,  be  based  on  a  dialogue  with  the  partner 
country  or  region  which  involves  civil  society  and  regional  and  local  authorities’; 
considers,  in  this  respect,  the  involvement  of  national  parliaments  in  partner 
countries  indispensable  to  achieving  genuine  ownership  of  the  process;  urges  the 
Commission  to  make  every  effort  to  improve  dialogue  with  these  bodies  at  the 
various stages of the programming process. (§ 191) 

Commission's response: 

The  current  Country  and  Regional  Strategy  Papers  2007-2013  for  the  countries 
covered by the DCI Regulation were prepared over the period 2005-2006, prior to 
the  entry  into  force  of  the  DCI  Regulation.  During  that  period  measures  were 
taken  in  the  majority  of  the  countries  concerned  to  consult  civil  society,  notably 
through the organisation of meetings and workshops as well as the publication on 
EC Delegation websites of Concept Papers. In the context of the Mid-Term Review 
of the DCI Strategy Papers, taking place in 2009 with a view to the preparation of 
the  2011-2013  Indicative  Programmes,  further  specific  instructions  have  been 
issued regarding consultation with civil society in the review process. Attention has 
also been drawn to consultation with parliamentary authorities. 

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Pre-accession strategy 

112. 

The European Parliament points out that, for the first time following the accession of 
new Member States, the Commission has  introduced a cooperation and verification 
mechanism  for  Romania  and  Bulgaria  to  remedy  'shortcomings  in  the  areas  of 
judicial reform and the fight against corruption and organised crime and to monitor 
progress  in  these  areas'  (COM(2008)0063),  and  wonders  about  the  effectiveness  of 
that mechanism, as well as the relevance and reliability of the information supplied 
to the discharge authority. 

Notes that a number of Commission directorates-general and offices are responsible 
for  administering  this  mechanism,  under  the  authority  of  the  Secretary-General; 
considers  the  combined  efforts  of  those  bodies  to  be  inadequate;  expects  better 
coordination  and  the  systematic  inclusion  of  an  assessment  of  all  the  Commission 
bodies  concerned  in  the  progress  reports;  wonders  what  lessons  for  applicant 
countries  and  potential  applicant  countries  the  Commission  draws  from  the 
mechanism. (§§ 192-193) 

Commission's response: 

When Bulgaria and Romania entered the EU on 1 January 2007, a Co-operation 
and Verification Mechanism was set up to help remedy certain shortcomings in the 
areas of judicial reform, the fight against corruption and, for Bulgaria, organised 
crime  and  to  monitor  progress  in  these  areas  through  periodical  reports.  Four 
benchmarks  have  been  established  for  Romania  and  six  for  Bulgaria.  In  the 
context  of  the  mechanism,  the  Commission  has  established  a  close  dialogue  with 
the  authorities  of  the  two  Member  States  concerned  but  also  with  Civil  Society, 
individual  experts  and  other  Member  States.  This  dialogue 
takes  place 
continuously  and  at  different  levels.  The  Commission  reports  biannually  on 
progress  under  the  mechanism  and  all  reports  are  regularly  addressed  to  the 
European  Parliament and to  the Council.  The  Council has  taken a close  interest 
and has each time adopted Council conclusions in the matter, totalling 5 to date. 
The close dialogue established with Bulgaria and Romania and the Commission's 
reports have lead to concrete progress on the ground in both countries in terms of 
legislative,  structural  and  procedural  reforms.  Romania  and  Bulgaria  have 
confirmed  their  commitment  to  the  mechanism,  nevertheless  in  some  areas 
concrete results of the reform measures taken are not yet visible and will require 
longer term efforts given their nature. The Commission has therefore called upon 
both countries to strengthen their efforts and focus them on those areas which are 
most  in  need.  In  addition,  a  special  envelope  under  the  Transition  Facility  has 
been made available for the purpose of supporting both countries in their reform 
efforts. 

Financial  assistance  continues  to  be  provided  to  support  the  reform  of  the 
judiciary  and  anti-corruption  measures,  in  particular  through  the  transition 
facility,  which  has  a  specific  focus  on  the  benchmarks  to  be  met  under  the 
Cooperation and Verification Mechanism. 

Through  the  Interservice  Group  Romania  /  Bulgaria,  the  views  of  all  concerned 
Commission  services  on  progress  in  Bulgaria  and  Romania  are  carefully  taken 

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into  account  in  the  establishment  of  the  periodic  reports.  In  this  context,  the 
Commission  has  also  addressed  the  issue  of  sound  financial  management  and 
control which depends closely on a functioning judiciary and on an effective fight 
against  fraud,  corruption  and  organised  crime.  As  the  situation  with  the 
management of EU funds in Bulgaria gave rise to particular concerns from early 
2008  onwards,  the  Commission  issued  a  report  on  this  matter  in  parallel  and 
linked to the report under the mechanism on 23 July 2008. This report was equally 
transmitted  to  the  European  Parliament.  Individual  financing  decisions  are 
however  taken  in  accordance  with  the  regulations  in  force  by  the  respective 
competent Commission services. 

The new Instrument for Pre-Accession Assistance includes all forms of assistance 
provided  to  potential  candidate  and  candidate  countries  under  a  single  umbrella. 
The IPA also harmonises the management systems and control mechanisms. The 
Commission  services  concerned  have  also  coordinated  their  approach  as  regards 
the accreditation of implementing structures for decentralised management. 

113. 

The  European  Parliament  recalls  that  in  its  Special  Report  No  4/2006  concerning 
Phare  investment  projects  in  Bulgaria  and  Romania  the  ECA  drew  attention  to  a 
large number of problems concerning the management of European funds, including 
irregularities regarding invitations to tender and the eligibility of expenditure, cases 
of  failure  to  use  investment  monies  for  their  intended  purpose  and  a  lack  of 
administrative capacity;  

Voices  concern,  furthermore,  at  the  fact  that  the  Member  of  the  Commission  with 
responsibility for enlargement failed to provide the Committee on Budgetary Control 
with  sufficiently  detailed  information  about  the  scale  of  the  shortcomings  in  good 
time;  

Voices serious concern at the fact that the Commission suspended EUR 200 000 000 
in agricultural funding  for  Romania and froze  EUR  250  000  000  in  Phare  funding, 
EUR  105  000  000  in  Sapard  funding  and  EUR  115  000  000  in  ISPA  funding  in 
Bulgaria; notes that the final loss for Bulgaria under Phare is EUR 220 000 000; 

Considers that the Commission should step up technical assistance to Member States 
to  strengthen  their  administrative  capacity;  points  out  that  sound  management  of 
European funds is an obligation and a duty for all Member States, and supports the 
temporary  suspension  of  funding  by  the  Commission  in  cases  where  a  Member 
State's management systems fail to function as required. (§§ 195-199) 

Commission's response: 

The  Commission  has  taken  the  necessary  action  to  answer  the  Parliaments' 
request. 

The Commission reacted quickly as soon as it became aware of potential risks of 
mismanagement in Bulgaria, and took several timely and proportional measures to 
protect the financial interests of the Community. Following identification of risks 
in  its  2006  Annual  Activity  Report,  which  was  available  to  the  European 
Parliament,  DG  ELARG  delayed  EDIS  accreditation  of  the  Bulgarian  agencies 
until  June  2007,  after  accession,  when  it  was  granted  conditionally.  After  audit 

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missions  in  autumn  2007  identified  shortcomings  in  meeting  the  conditions,  and 
regular monitoring revealed significant irregularities in February 2008, payments 
were  suspended  in  February  2008  for  the  two  agencies  concerned  (except  for 
twinning  which  was  not  affected).  This  situation  led  to  reservations  in  the  2007 
annual activity report, presented to the European Parliament, and culminated with 
the withdrawal of the EDIS accreditation for the same two agencies in July 2008. 
Unfortunately,  these  measures  have  not  yet  led  to  sufficient  improvements  of  the 
systems  in  Bulgaria  to  allow  the  Commission  to  propose  the  reinstatement  of 
accreditation for the two agencies at this stage.  

The Commission will however endeavour to ensure that the European Parliament, 
and particularly its Committee on Budgetary Control, will be kept informed on this 
issue in the future.  

Moreover, the  Commission wishes  to provide some clarification regarding one of 
the figures indicated for Bulgaria, namely the amount of EUR 220 Million, which 
was  lost  for  Bulgaria  under  Phare.  Only  part  of  this  amount  was  not  used  as  a 
direct consequence of the Commission's measures, as significant amounts of funds 
were already cancelled by the local authorities in any case. 

With  regard  to  the  suspension  of  payments  to  two  ex-ISPA  projects  in  Bulgaria, 
the  Commission  interrupted  these  payments  as  soon  as  the  irregularities  came  to 
light and later confirmed this formally with a suspension decision. Thus, there was 
a limited financial risk to the EU budget. Bulgaria submitted a report on the action 
plan for restructuring the roads agency in November 2008 and DG REGIO carried 
out  an  audit  of  the  corrective  action  taken  in  January  2009.  As  a  result  the 
Commission was able to lift the suspension for these payments in May 2009. 

Regarding SAPARD, the most recent information to the Bulgarian authorities on 
the still outstanding issues was addressed in a letter of DG AGRI on 19 May 2009. 
The Romanian authorities have been informed in a high level mission in February 
2009 to Bucharest and in a letter in June 2009 of still outstanding points regarding 
the  implementation  of  the  SAPARD  action  plan.  Only  when  this  information  is 
received,  the  Commission  will  consider  resuming  the  reimbursements  under  the 
SAPARD programme. 

114. 

The  European  Parliament  notes  that  over  the  period  2007  to  2013,  Bulgaria  is  to 
receive  EUR  6  853  000  in  structural  funding,  and  Romania  EUR  19  200  000;  in 
addition to the information given in the annual activity report and in the reports on 
the  Structural  Funds  and  the  Cohesion  Fund,  calls  for  responsible  and  effective 
administration of these funds. (§ 200) 

Commission's response: 

The  Commission  is  taking  the  requested  action.  It  will  continue  to  use  all  the 
means at its disposal to ensure proper management of these funds. It is monitoring 
closely  the  compliance  assessment  procedure  which  makes  sure  before  interim 
payments begin to flow that effective management and control systems have been 
set  up  to  manage  the  funds.  The  programmes  for  the  2007-13  period  contain  a 
significant technical assistance component to increase administrative capacity. 

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115. 

The  European  Parliament  is  of  the  opinion  that  the  preparation  of  the  absorption 
capacity of Romania and Bulgaria for funds in the Agricultural and Cohesion policy 
fields  has  not  been  treated  by  the  Commission  with  the  necessary  seriousness,  and 
that statements and actions of the Commission in this context were misleading, not 
only for Parliament but also for the Bulgarian and Romanian governments, and were 
one reason for the loss of funds by those Member States; 

Calls  on  the  Commission  to  keep  it  informed  of  the  practical  outcome  of  judicial 
reform  and  anti-corruption  efforts  and  to  include  in  the  progress  reports  criteria 
quantifying progress in these areas; 

Considers  that  the  EU  institutions  should  apply  the  principle  of  zero  tolerance  in 
connection with cases of misuse of Community funds, fraud and corruption; calls on 
the Commission to ensure that unduly paid amounts are recovered; 

Agrees with the Commission that all actions and measures recently taken by Bulgaria 
need to be followed up by credible, structural corrective actions and a fundamental 
reform of all structures involved in the management of EU funds, so as to ensure the 
correct  and  timely  take  up  of  funds  and  a  high  level  of  transparency;  calls  in  this 
context  on  the  Commission  to  improve  coordination  and  communication  with  the 
national  authorities  and  closely  monitor  the  implementation  of  the  various  action 
plans submitted to it by Bulgaria, and to keep Parliament informed thereof; asks the 
Commission to submit to it a special report on the state of play of the management 
and control of all EU funds in Bulgaria covering the period until 15 July 2009; 

Calls on the Commission, in the light of the last progress report and the setbacks with 
regard to the fight against corruption, to submit to it a special report on the state of 
play  of  the  management  and  control  of  EU  funds  in  Romania  and  on  the  measures 
taken and the progress made in the fight against corruption covering the period until 
15 July 2009. (§§ 201-203, 205, 206) 

Commission's response: 

With  regard  to  the  request  of  the  Parliament  to  receive  a  special  report  on  the 
measures taken and the progress made in the fight against corruption covering the 
period  until  15  July  2009,  the  Commission  refers  to  its  fifth  bi-annual  reports  to 
the European Parliament and the Council in the context of the Co-operation and 
Verification  Mechanism  (CVM)  on  progress  in  Romania  (COM(2009  401  final) 
and Bulgaria (COM(2009) 402 final) adopted on 22 July 2009. 

The  Commission  has  treated  the  Romanian  and  Bulgarian  accession  with  the 
appropriate seriousness and diligence. It has taken all necessary steps, before and 
after accession, to properly prepare and monitor both countries. The Commission 
continues to work in close cooperation with national authorities in order to ensure 
that community funds are efficiently and correctly used. 

As  regards  the  management  and  control  of  EU  funds  in  Bulgaria  and  Romania, 
the Commission will in autumn 2009 provide the Parliament with information on 
the state of play.  

When  Bulgaria  and  Romania  entered  the  EU  on  1  January  2007,  the 
aforementioned  Co-operation  and  Verification  Mechanism  (CVM)  was  set  up  to 

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help Bulgaria and Romania remedy certain shortcomings in the areas of judicial 
reform  and  the  fight  against  corruption  and  for  Bulgaria  also  the  fight  against 
organised crime and to monitor progress in these areas. 

The  irregularities  in  the  management  of  pre-accession  funds  in  Bulgaria  since 
2007,  and  in  Romania  in  2008,  have  come  to  light  thanks  to  the  Commission's 
controls. They are evidence of the effectiveness of the mechanisms in place and the 
Commission's supervisory activities. 

As  regards  the  situation  in  Bulgaria,  the  Commission  entertains  a  close  and 
constructive  dialogue  since  accession  with  the  Bulgarian  authorities  at  technical 
and ministerial levels which is welcomed and publicly confirmed by Bulgaria. The 
Commission intensively discusses with the Bulgarian authorities  all the  technical 
issues in a constructive manner and it will continue to do so with a view to solving 
all outstanding issues. 

With  regard  to  the  Structural  Funds  programming  period  2007-2013,  the 
Commission  is  monitoring  rigorously  the  compliance  assessment  procedure,  to 
ensure that management and control systems are properly set-up. 

Operational  programmes  in  both  countries  have  been  effectively  launched  and 
projects  already  contracted  are  at  satisfactory  level,  while  many  cohesion  fund 
projects are already adopted. The JASPERS facility assists national authorities in 
preparing major projects and both countries are well advanced in presenting major 
projects for financing to the Commission. 

In  Romania,  several  capacity  building  actions  have  been  put  in  place  and  the 
Commission is working in close cooperation with national authorities to promote 
simplification  of  administrative  procedures.  In  parallel,  ex-ISPA  projects  have 
increased  their  absorption  rhythm  by  50%  in  2007,  45%  in  2008  and  aim  at  the 
same  levels  in  2009.  A  well  functioning  audit  authority  and  an  ad  hoc  structure 
(UCEVAP)  for  the  ex  ante  control  of  public  procurement  provide  to  the 
Commission assurance on the legality and regularity of expenditure. 

In  Bulgaria,  a  specific  absorption  monitoring  system  (LOTHAR)  has  been 
designed in cooperation with national authorities and is now fully functional. 

On  the  basis  of  lessons  learnt  from  EU  10  accession  the  Commission  strongly 
advised  Bulgaria  and  Romania  to  take  key  decisions  to  prepare  urgently  and 
thoroughly for the absorption of pre-accession assistance, and also the EU funds 
after  accession.  The  credit  absorption  for  Romania  and  Bulgaria  in  the 
agricultural area is satisfying: The Commission during accession negotiations also 
pointed out in precise terms that the accurate implementation of the CAP and the 
good  functioning  of  the  Community's  internal  market  is  impossible  without 
reliable  financial  management  and  control  systems,  in  particular  the  Paying 
Agency and the Integrated Administration and Control System (IACS), including 
the Land Parcel Identification System (LPIS). In 2006 the Commission concluded 
that there was no sufficient progress in preparing for the IACS. As a consequence 
the Commission adopted a Regulation establishing a safeguard mechanism aiming 
at  eliminating  the  risk  of  not  having  operational  IACS  in  both  countries,  which 
represented an additional incentive to speed up and finalize in an acceptable way 

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the  establishment  of  operational  control  systems.  On  this  basis,  the  Commission 
informed Romania in October 2007 that the safeguard mechanism would be used 
involving  a  cut  of  25  per  cent  of  European  Union  farm  payments  to  Romania 
unless serious shortcomings in the administration and financial control system in 
Romania  were  addressed  urgently.  The  Commission  only  decided  to  stop  this 
procedure when it was assured that Romania had addressed the shortcomings in a 
satisfactory  manner.  An  assessment  on  the  state  of  play  of  the  management  and 
control  of  EU  funds  is  included  in  the  relevant  section  of  DG  AGRI's  annual 
activity report, as demonstrated by the reservations. 

116. 

The European Parliament calls, furthermore, on OLAF to forward to it the findings 
of its ongoing enquiries in Member States. (§ 204) 

Commission's response: 

OLAF already reports to the EP on the findings of its completed investigations in 
Member States but has to respect the provisions of Regulation 1073/1999 which for 
pertinent reasons, in particular the secrecy of the investigation, do not permit it to 
give information on ongoing investigations. 

117. 

The  European  Parliament  points  out  that  it  is  the  responsibility  of  the  Commission 
delegations  in  the  applicant  countries  and  potential  applicant  countries  to  prepare 
those countries to ensure proper use of European funds; calls for anti-fraud strategies 
to be incorporated in this pre-accession process and for the relevant administrations 
to  be  trained  under  a  programme  of  exchanges  between  the  Commission  and  the 
administrations of applicant countries and potential applicant countries. (§ 207) 

Commission's response: 

The Commission is taking the requested action. 

The  fight  against  corruption  and  organised  crime  is  a  key  priority  of  all  the 
Accession  and/or  European  Partnerships  for  candidate  and  potential  candidate 
countries. 

The  Commission  has  also  made  it  an  integral  part  of  its  strategy  for  the 
implementation of IPA. All Multi-annual Indicative Planning Documents for IPA 
(MIPDs) now include the fight against corruption as a priority. 

Those  issues  concerning  the  legislation  to  be  taken  up  in  the  framework  of  the 
approximation of the acquis are dealt with in the framework of several negotiating 
chapters  within  the  enlargement  process,  such  as  chapters  24  (JLS)  and  32 
(financial control). 

technical  assistance 

In  addition, 
the 
administrations that will be in charge for the management of IPA funds, as well as 
for  the  development  of  public  finance  control  systems.  Twinning  with  Member 
states will be one main tool for implementing these projects. 

the  preparation  of 

is  foreseen  for 

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More  practical  initiatives  are  to  be  proposed  and  prepared  in  co-operation  with 
OLAF, possibly on the basis of those already taken in the framework of the former 
enlargement rounds. 

118. 

The  European  Parliament  calls  on  the  Commission  to  play  a  more  active  role  in 
connection with the expenditure control systems existing in Turkey, Croatia, Serbia, 
the Former Yugoslav Republic of Macedonia and the other Western Balkan countries 
during the pre-accession stage, and requests it to provide Parliament, in its report on 
the  progress  of  those  countries,  with  more  detailed  information  on  this  issue, 
including a detailed analysis of the reasons for any failings; calls on the Commission 
to introduce in the progress reports a system of traffic lights (green, amber and red 
lights) to denote the progress made towards achieving the various key objectives. (§ 
208) 

Commission's response: 

The  Commission's  authorising  officers  by  subdelegation  (AOSDs)  of  the  level  of 
Directors and Heads of Delegations already play a very active role in connection 
with the existing expenditure control systems. 

The  annual  Progress  Reports  on  candidate  countries  provide  an  overview  on 
matters  related  to  financial  assistance  and  would  also  mention  serious  problems 
with  clear  political  implications  (such  as  the  risk  of  losing  the  conferral  of 
management for decentralised implementation). In addition, in acquis chapter 32 
(Financial control) the Commission reports on the protection of the EU's financial 
interests in the candidate countries. 

Due  to  the  political  nature  of  these  reports,  the  Commission  does  not  at  present 
intend  to  extend  the  information  provided  with  more  detailed  analysis  on  control 
systems or the introduction of a traffic light system in the reports. However, more 
information can be provided in the IPA  annual report, the presentation of which 
might in future be closer aligned with that of the yearly Enlargement Package (the 
general enlargement activity programme for the next calendar year) in autumn. 

119. 

The  European  Parliament  deplores  the  cases  of  fraud  and  mismanagement  of 
European funds administered by the United Nations identified in connection with EU 
funding  of  reconstruction  work  in  Kosovo  and  the  lack  of  follow-up  by  the  United 
Nations of these clearly identified cases; 

recalls  that  the  Investigation  Task  Force  (ITF)  established  to  investigate  financial 
irregularities  and  fraud  concerning  EU  funds  in  Kosovo  finished  its  operations  in 
August 2008, that its final report identified criminal conduct on the part of,  among 
others,  United  Nations  staff,  and  that  several  international  warrants  were  issued 
without  any  results  being  achieved  in  that  regard  by  the  United  Nations;  asks  the 
Commission  to  press  for  the  execution  of  these  warrants;  asks  the  Commission, 
further, to present a report on the legal follow-up to all cases discovered; calls for the 
establishment of a successor organisation, involving the Commission and OLAF, in 
the fight against fraud and irregularity. (§§ 209 and 212) 

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Commission's response: 

The Commission accepts the request of the European Parliament and some of the 
necessary initiatives have already been taken. 

It is correct that since 1999 several cases of fraud have been detected in Kosovo. 
An OLAF/OIOS (UN Office of International Oversight) Investigation Task Force 
conducted  a  series  of  investigations  in  Kosovo  in  2004/2005.  The  ITF  found 
several cases of wrongdoing in the Publicly Owned Enterprises and the KEK and 
Pristina Airport. These concerned cases of corruption, forgery of documents, sale 
of  working  certificates,  etc.  Some  cases  have  resulted  in  successful  judicial 
proceedings, which were concluded with the imprisonment of the perpetrators and 
the recovery of funds. 

Although  the  ITF  was  dissolved  in  summer  2008,  the  fight  against  fraud, 
corruption  and  other  irregularities  is  ensured  in  Kosovo.  The  UN's  OIOS  still 
supervises UN operations in Kosovo, and the FIU operates within the framework 
of the EU's ESDP Rule of Law mission EULEX. In accordance with the provisions 
of EC Regulation 1073/1999 OLAF is still competent to carry out investigations in 
order to protect the EU’s financial interests and is in particular kept informed by 
ECLO (European Commission Liaison Office) and EULEX. 

The  European  Reconstruction  Agency  (ERA)  has  ceased  to  exist,  but  OLAF  is 
working closely with the Pristina office (ECLO) and is continuing to manage the 
investigation files submitted to it. 

The Commission is prepared to forward to Parliament the information provided to 
it by the SRSG on the situation and the outcome of the UNMIK initiatives. 

120. 

The European Parliament  proposes 
the  Kosovo 
that 
Government to supply an audit certificate in respect of European funds, in particular 
those included in the budget, from the country's audit authorities. (§ 211) 

the  Commission  ask 

Commission's response: 

The Commission has taken due note of the European Parliament's request for an 
audit  certificate  from  the  Kosovo  Government,  as  under  the  current  direct 
management by the Commission the appropriate audit arrangements have already 
been made. 

In  the  context  of  Macro-Financial  Assistance  (MFA),  which  is  to  be  provided  in 
the form of budget support, the payments become possible if the Commission signs 
a  Memorandum  of  Understanding  (MoU)  with  the  Kosovo  authorities  stipulating 
that  payments  be  subject  to  stringent  conditions.  The  relevant  Financing 
Agreement already includes provisions for inspection, fraud prevention and audits 
as well as explicit references to the European Anti Fraud Office and the European 
Court of Auditors. 

On  the  other  hand,  the  Kosovo  authorities  are  at  present  not  involved  in  the 
management  of  pre-accession  assistance  funds.  These  funds  are  managed  by  the 
Commission  itself  under  centralised  management  through  the  Commission's 
Liaison Office in Pristina and are subject to the terms and conditions of the Grant 

EN 

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and  Financing  Agreements  for  the  respective  programmes  concerned,  as  well  as 
the  IPA  Framework  Agreement  signed  with  the  authorities.  These  documents 
include  detailed  descriptions  of  arrangements  allowing  for  the  inspection,  fraud 
prevention  and  audits  in  line  with  the  Financial  Regulation.  They  also  include 
explicit  references  to  the  right  of  the  European  Anti-Fraud  Office  and  the 
European Court of Auditors to carry out controls at any time. 

Within  the  framework  of  the  provisions  for  decentralised  management,  which 
would be put in place in Kosovo some time in the future, the local authorities will 
need  to  appoint  a  national  audit  authority.  This  authority  would  at  that  point  be 
competent  to  audit  EU  funds  and  would  then  be  in  a  position  to  issue  the 
certification suggested. In the meantime, the Commission will continue to intensify 
its cooperation with the competent audit bodies in Kosovo. 

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Administrative expenditure 

121. 

to  meeting 

their  obligations  under 

The Commission should ensure that the Belgian and United Kingdom governments 
commit 
inter-governmental 
agreements  -  for  Belgium  the  earliest  possible  provision  of  a  fourth  or  even  a  fifth 
European school, for the UK the secondment of a sufficient number of teachers - and 
expects the current enrolment policy regarding the Berkendael/Laeken schools to be 
revised in order to avoid long and unacceptable travelling times for children. (§ 214) 

the  existing 

Commission's response: 

As regards the obligations of the Belgian government, the Commission agrees with 
the observation, as the overcrowding of the Brussels schools is a fact. Concerning 
the  4th  Brussels  school,  a  provisional  site  has  been  set  up  (Berkendael)  and  the 
Belgian authorities have promised that the definitive site (Laeken) will be available 
in  2012.  Concerning  the  5th  school,  the  Board  of  Governors  of  the  European 
Schools have instructed their Secretary General to start the negotiations with the 
local authorities. 

As  regards  the  obligation  of  the  UK  government,  the  context  is  different.  The 
Board  of  Governors  adopted  a  decision  in  April  2009  regarding  the  cost  sharing 
which  gives  the  possibility  to  have  non  native  teachers  seconded  by  MS,  after  a 
strict  quality  control  of  the  linguistic  competences.  The  Board  also  agreed  to 
consider  the  proportion  of  pupils  of  a  given  nationality  as  a  good  parameter  to 
estimate the fair proportion of seconded teachers from the same MS. Furthermore, 
when  part-time  teachers  compensate  the  absence  of  seconded  teachers,  the 
additional  burden  on  the  EU  contribution  will  be  quantified  and  monitored 
annually. 

As regards the enrolment policy, the rather stringent policies for the school years 
2007-2008  and  2008-2009  (which  resulted  from  the  overcrowding)  have  been 
revised and the new policy adopted by the Board for the school year 2009-2010 has 
resulted in 92% of children being registered in the school of their parents' choice. 

122. 

The  Commission  should  reorganise  its  human  resources  in  order  to  reduce  the 
proportion of staff working in administrative support and coordination areas to 20%. 
(§ 217) 

Commission's response: 

The Commission is already implementing measures to limit the proportion of staff 
working  in  the  areas  of  support  and  coordination:  this  corresponds  to  the 
Commission's  commitment  not  to  ask  for  new  staff  until  2013  (save  for 
institutional  changes)  and  to  redeploy  staff  now  in  support  and  coordination 
functions  to  the  policy  areas.  Incidentally,  it  has  not  been  shown  that  fixing  the 
benchmark at 20% would be the most appropriate. Nor it is by any means proven 
that an administration with such a percentage would perform better. 

123. 

The Commission should inform the European Parliament of how staff mobility might 
be confined to sensitive posts. (§ 218) 

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79 

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Commission's response: 

The  Commission  would  like  to  clarify  that  its  general  policy  on  mobility  was  not 
only  intended  for  sensitive  posts.  The  guidelines  on  mobility  adopted  in  2002 
confirm the principle that mobility is voluntary, but encouraged after 5 years. The 
only  cases  where  mobility  is  (ultimately)  mandatory  concern  on  the  one  hand 
management  posts  and  on  the  other  hand  the  sensitive  functions.  This  policy  is 
part of a wider Human Resource approach, which aims at aligning the interests of 
the services and those of the individuals. The Commission is aware of the possible 
impact of badly managed mobility, which is to be mitigated with forward-planning 
and good practices for file hand-over. 

Regarding  the  specific  situation  of  sensitive  posts,  and  subsequently  to  the 
adoption  by  the  Commission  of  the  reviewed  framework  for  Internal  Control 
Standards  for  Effective  Management  (COM(2007)1341),  the  Secretary  General 
and  the  Directors  General  for  Budget,  and  for  Personnel  and  Administration 
adopted  on  19  December  2007  a  reviewed  guidance  on  mobility  and  sensitive 
functions (SEC(2008)77). With the experience of the previous system, they focused 
on  truly  sensitive  areas,  related  to  the  risks,  to  the  mitigating  controls  in  place 
(such  as  the  instruments  of  delegation,  supervision  and  the  four  eyes  principle) 
and to the real possibilities for fraud or misuse. They also proposed mobility as the 
ultimate measure for the management of sensitive functions, the effects of which 
are then mitigated by other internal control measures such as handover files and 
general  continuity  plans.  The  new  guidelines  and  their  implementation  in  the 
Directorates-General  have  resulted  in  a  considerable  reduction  in  the  number  of 
posts involving sensitive functions, which is expected to continue in 2009. 

124. 

The  Commission  should  inform  Parliament  of  all  new  projects  concerning  its 
buildings  stock  prior  to  their  adoption,  and  should  notify  the  Committee  on 
Budgetary Control of all initiatives and new decisions concerning property projects, 
including  preparatory  work  and  invitations  to  tender,  in  respect  of  which  it  is 
proposed  that  a  tender  committee  should  be  established,  which  would  include 
representatives from Parliament. (§§ 219 and 220) 

Commission's response: 

Information  on  building  needs  is  provided  on  two  separate  occasions:  annually 
with  the  preliminary  draft  budget  (PDB)  and  for  each  building  project  with 
significant  financial  implications  (see  also  reply  to  paragraph  2,  p.  38  of  the 
Council recommendation on the 2007 discharge). 

As  a  standard  part  of  the  information  provided  with  the  PDB,  the  Commission 
gives all the details concerning the real estate situation (list of buildings including 
new  and  abandoned  buildings,  m²,  contracts,  costs).  Subsequently  to  the  EP's 
resolution  on  the  2008  Draft  budget,  the  Commission  has  forwarded  to  the 
budgetary authority the 2009-2011 planning in this area. 

Pursuant  to  Article  179  (3)  of  the  Financial  Regulation,  the  Commission  always 
informs  the  budgetary  authority  for  all  building  projects  with  a  significant 
financial implication for the budget and this information is given in advance of the 
legal commitment and contains an updated planning. Pursuant to Art. 263 of the 

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Implementing  Rules,  the  Commission  informs  at  the  same  time  the  budgetary 
authority of its schedule for building projects. 

The  Authorising  Officer  by  Delegation  (AOD)  has  full  responsibility  for  the 
procedure  and  decides  autonomously  on  the  composition  of  the  opening  and 
evaluation  committees.  Obviously,  in  the  case  of  interinstitutional  procedures,  a 
representative  of  the  EP's  administration  could  very  well  be  nominated  by  the 
AOD, as it has been done in several instances. 

125. 

OLAF should notify Parliament of any cases of fraud brought to light in the property 
policy field and to look into possible conflicts of interest. (§ 221) 

Commission's response: 

OLAF  agrees  to  provide  general  information  on  the  outcome  of  its  completed 
investigations  while  at  the  same  time  respecting  the  need  for  confidentiality  for 
cases where action is still ongoing by the national judicial authorities. 

126. 

The Commission should conduct an audit of both its own buildings and the buildings 
of  all  the  other  Community  institutions,  and  to  look  into  the  idea  of  a  common 
property management structure. (§ 222) 

Commission's response: 

Each authorising officer is responsible for the appropriations assigned to them and 
for implementing the control framework, including the audit plan. 

Furthermore,  expenditure  on  buildings  has  recently  been  examined  in  an  ECA 
Special Report (No 2/2007). It would be inefficient for several bodies to carry out 
further audits on the same subject. 

The Commission is ready to take part in any interinstitutional initiative, including 
one  launched  by  the  relevant  administrative  departments  of  the  two  arms  of  the 
budgetary  authority.  However,  as  was  pointed  out  in  a  previous  reply  to  the 
budgetary  authority  (cf.  report  A-0069/2007  of  29 March  2007  on  general 
guidelines  for  the  2008  budget),  it  has  identified  some  remaining  difficulties, 
linked in part to political and budgetary constraints, the desire of each institution 
to maintain its independence and the large number of sites. 

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Follow-up measures in the light of the discharge 

127. 

The European Parliament  deplores  the  fact  that,  in  the  annual  accounts  of  the 
European Communities for the financial year 2007, follow-up measures in the light 
of  the  discharge,  stating  merely  that  when  granting  discharge  Parliament  may 
highlight  observations  it  considers  important,  often  recommending  actions  that  the 
Commission  should  take  concerning  these  matters;  notes  that,  although  this  is 
correct,  the  Commission  fails  to  mention  that  Article  276  of  the  EC  Treaty  also 
requires  the  Commission  to  take  all  appropriate  steps  to  act  on  the  observations  in 
Parliament's  decisions  giving  discharge  relating  to  the  execution  of  expenditure; 
reminds the Commission, therefore, that the calls made in its discharge resolution are 
not  simply  non-binding  recommendations,  but  instructions  which  the  Commission 
must act on when implementing the budget. (§ 223) 

Commission's response: 

The  Commission  follows-up  all  discharge  requests  except  where  they  are  not  in 
line with the existing legal framework or its institutional prerogatives. Pursuant to 
Article  276(3)  of  the  EC  Treaty  and  Article  147  of  the  Financial  Regulation  it 
reports each year to the European Parliament on the measures taken in the light of 
the observations and comments made by the Parliament in its discharge decisions. 
In the present report on the follow-up to the 2007 Discharge Decisions as well as 
in last year's report on the follow-up to the 2006 Discharge Decisions (COM(2008) 
629  of  15.10.2008),  the  Commission  accepted  over  95%  of  the  European 
Parliament's requests to it. 

The  Commission  is  thus  committed  to  ensuring  that  discharge  requests  from  the 
European  Parliament  and  the  Council  and  audit  recommendations  from  the 
European Court of Auditors are systematically followed up and implemented. Each 
Directorate-General  or  service  is  responsible  for  the  follow-up  of  external  audit 
and  discharge  observations  which  concern  them  and  must  report  in  a  central 
database on the progress made. 

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Special Report No 6/2007 on the effectiveness of technical assistance in the context of 
capacity development 

128. 

The European Parliament 
considers that technical assistance (TA) and other types 
of  external  aid,  which  is  still  too  donor-driven,  often  inefficient  and  unsustainable, 
urgently  needs  to  be  reformed  by,  among  other  things,  promoting  local  ownership, 
more  effectively  coordinating  the  resources  between  Member  States  at  Union  and 
international level, and ensuring that there is sufficient time to implement projects; 

Notes in this context the approval by the Commission's services in July 2008 of the 
Backbone Strategy and the Work Plan to meet aid effectiveness targets on Technical 
Cooperation and Project Implementation Units; calls therefore on the Commission to 
inform Parliament about the implementation of this strategy for the first time before 
the end of March 2009, and thereafter at six-monthly intervals; 

Notes the belated information on the amounts spent on TA recently provided by the 
Commission  to  the  ECA  following  publication  of  the  ECA's  special  report;  is 
surprised that this information was not made available during the preparation of the 
special  report;  acknowledges  that  the  definition  employed  by  the  OECD’s 
Development  Aid  Committee  is  broad  and  in  practice  leads  to  differences  in 
interpretation; hopes that the strategy adopted by the Commission will also lead to a 
more operational definition of TA. (§§ 224-226) 

Commission's response: 

The Commission refers to the report on "State of progress on the implementation 
of the Reform on TC" sent to the European Parliament on the 30th of March 2009 
and the Attached Guidelines on "Making TC more effective". A state of progress 
report  on  backbone  strategy  (TA/PIU)  will  be  updated  for  submission  to  the 
European Parliament in September 2009. 

129. 

The  European  Parliament  calls  on  the  Commission  to  propose  the  necessary 
legislative  changes  before  the  end  of  the  mandate  of  the  current  Commission,  and 
urges Member States to take the necessary steps to ensure the widespread use of this 
instrument,  adapted  to  particular  needs,  in  those  countries,  and  to  amend  the 
regulation on the implementation of the 10th EDF accordingly. (§ 227) 

Commission's response: 

The  possibility  to  extend  Member  State  public  agents  expertise  worldwide  is  not 
constrained  by  any  legal  provision  but  by  the  capacity  and  availability  of  such 
expertise in each Member State. The Commission will do its utmost to encourage 
Member States to mobilise this public expertise. 

A note will be submitted to Parliament in September 2009 explaining actions in a 
similar spirit as the 'twinning instrument' in other regions. 

130. 

The  European  Parliament  deplores  the  fact  that  the  suspension  clause,  allowing  an 
accelerated procurement procedure, is barely used by the Commission; requests the 

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Commission  to  use  this  facility  wisely  in  order  to  improve  the  timetable  for  the 
implementation of TA operations. (§ 228) 

Commission's response: 

The Practical Guide for contract procedures for external actions provides that in 
duly justified cases, tender procedures may be published with a suspension clause 
(i)  before  a  financing  decision  is  adopted  or  (ii)  before  a  financing  agreement 
between  the  European  Commission  and  the  beneficiary  country  is  signed.  The 
Community  will  study  the  possibility  to  extend  further  the  use  of  this  suspension 
clause. 

As far as the EDF is concerned, the use of this clause before the adoption of the 
financing  decision  is  expressly  authorised  under  the  EDF  (see  article  19b  of 
Annex  IV  of  the  Cotonou  Agreement)  in  all  duly  substantiated  cases  in  order  to 
ensure  early  project  start-up.  The  Commission  will  investigate  making  proposals 
(within the context of the revision of the Financial Regulation) to facilitate further 
simplification of  the  financial management system  for external  aid e.g.  to  extend 
the use of the suspension clause in tendering procedures. 

131. 

The  European  Parliament  finds  it  unacceptable  that  some  companies  deliberately 
propose  experts  with  good  CVs  in  order  to  win  a  contract  while  knowing  that  the 
expert  in  question  will  not  be  available  to  take  up  the  assignment;  agrees  with  the 
ECA that the selection criteria for TA used by the Commission are inappropriate; 

Requests therefore that the Commission take much greater account of other criteria 
(such  as  those proposed by the ECA), rather than solely considering the CV of the 
team  leader  expert;  suggests  that  this  could  be  done,  for  example,  by  creating  a 
database,  compatible  with  legal  requirements,  of  firms  which  fail  to  provide  the 
proposed  expert,  which  should  in  turn  prevent  them  from  participating  in 
procurement  for  a  specified  period;  notes  that  the  Commission  has  adopted 
Regulation  (EC,  Euratom)  No  1302/2008  of  17  December  2008  on  the  central 
exclusion database and Decision 2008/969/EC, Euratom of 16 December 2008 on the 
Early Warning System for the use of authorising officers of the Commission and the 
executive  agencies  ,  but  that  these  new  instruments  do  not  make  it  possible  to 
exclude firms on this basis; further notes that these aspects are part of the Work Plan 
(Axis  3,  Actions  13-15),  and  calls  on  the  Commission  to  apply  the  related  actions 
immediately; 

Calls  on  the  Commission,  as  far  as  possible,  to  act  in  a  manner  consistent  with  its 
transparency  initiatives  and  to  take  into  account  Parliament's  resolution  of  19 
February 2008 on transparency in financial matters, and recommends that a database 
be set up providing an overview of TA missions and results which can be used for 
future TA tasks and to prevent duplications. (§§ 229-230 and 232) 

Commission's response: 

The  profile  and  expertise  of  each  expert  remain  the  first  critical  factor  for 
performance.  The  Commission  reminds  that  the  selection  criteria  in  call 
procedures are pre-established in an objectively verifiable and transparent way and 
are adapted to the specific needs of each individual call. Proposed experts can be 

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considered  only  after  they  sign  and  submit  their  own  availability  and  exclusivity 
statement. 

AIDCO will study the possibility of setting up a data base recording performance 
of experts and contractors as well as the unavailability of experts at the start of the 
contract. However the possibility to exclude firms from future tenders is limited to 
the cases foreseen in the Financial Regulation. 

132. 

The  European  Parliament  agrees  with  the  ECA  that  there  is  incoherence  in  the 
Commission's  approach  regarding  the  use  of  partner  countries'  public  financial 
management  and  procurement  systems,  which  stands,  sometimes, 
in  direct 
contradiction to the Union’s commitments in the context of the Paris Declaration on 
Aid  Effectiveness  endorsed  on  2  March  2005  ;  urges  the  Commission  therefore  to 
ensure the quick implementation of these commitments on the basis of the strategic 
dialogue provided for in the framework of the Accra and post Accra work stream and 
the Work Plan actions (Axis 1, in particular Action 20). (§ 231) 

Commission's response: 

In line with the international commitments taken in Paris and Accra, the EC is on 
track  to  achieve  the  target  of  channelling  50%  of  government  to  government 
assistance through national country systems. Results scored respectively 35% and 
34% for use of country public financial management systems and use of country 
procurement  systems  in  2007.  Initiatives  have  been  taken  to  increasingly  use 
country systems and to ensure a coherent approach concerning the use of partner 
countries' public financial management and procurement systems. 

In order to make aid more effective and in line with the European Consensus on 
development (2005), the Commission gives, where circumstances permit, priority to 
budget support, which favours by its nature the increased use of country systems. 
Indeed,  the  use  of  budget  support  strengthens  country  ownership,  supports 
partner’s  national  accountability  and  promotes  sound  and 
transparent 
management  of  public  finances.  The  Commission  assessed  budget  support 
projections  to  2013  in  order  to  improve  medium  term  predictability  of  the  public 
financial assistance channelled to the partner countries. 

Furthermore,  some  operational  tools  for  decentralisation  have  been  adopted  in 
2008-09: 

The new Practical Guide to Contract procedures for EC external actions has been 
redrafted by outlining the applicable rules for decentralised management. 

The Commission has adopted a Short Guide on Decentralised management which 
details the new rules. This document provides the required framework to allow the 
EC  to  meet  the  objectives  of  Paris  and  Accra  regarding  the  increased  use  of 
national country systems. 

In order to assess whether the partner country has the capacity and the reliability 
to manage external EC funds, the Commission has also adopted terms of reference 
for assessing partner countries systems. 

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However,  progress  in  the  use  of  country  systems  is  tempered  by  specific 
constraints,  in  particular  the  need  to  ensure  that  the  administrations  of  the 
beneficiary countries are solid enough to guarantee the correct use of EU funds. 
Both  the  Court  and  European  Parliament  rightly  insist  on  the  Commission 
remedying  the  detected  weaknesses  in  the  financial  procedures  and  controls  of 
implementing  organisations,  among  which  the  beneficiary  administrations. 
Moreover,  the  Financial  Regulation  does  not  currently  provide  the  appropriate 
flexibility  to  fully  respond  to  the  ambitious  objectives  of  the  Accra  commitments. 
The Commission will rely on the support of the budgetary authority to amend the 
Financial Regulation on the occasion of its next revision. 

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Special Report No 1/2008 concerning the procedures for the preliminary examination 
and evaluation of major investment projects for the 1994-1999 and 2000-2006 
programming periods 

133. 

The Commission should review the strict approval procedure for major projects, and 
rationalise  decision-making  by  indicating  real  values,  thereby  avoiding  treating  the 
procedure  as  an  excessively  ‘administrative  procedure’,  reducing  the  length  of  the 
decision-making  process  to  a  reasonable  duration,  and  establishing,  as  soon  as 
possible,  an  independent  unit  for  major  projects with horizontal competence within 
the  Directorate  General  for  Regional  Policy  (DG  REGIO);  the  Commission  is 
reminded of the importance of funding investment in software but it must not reduce 
the number of on-the-spot checks as a result of this investment. (§ 233) 

Commission's response: 

The Commission has taken the requested action. 

For  the  2007-13  programme  period  a  number  of  improvements  have  been 
introduced  in  the  procedures  and  working  practices  which  will  make  for  more 
efficient  and  consistent  assessment  of  Major  Project  applications.  These 
improvements  include  standard  application  forms  for  use  by  Member  States, 
computerization of all the data, development of cost-benefit analysis software, the 
setting up of a dedicated assessment team to support the work of the geographical 
units in assessing applications, the operation of the JASPERS instrument to assist 
Member States, and a framework contract to provide specific technical assistance. 

134. 

The Commission should report on the practical application of the n+2 and n+3 rules 
for major projects, since some Member States have tried to ‘circumvent’ the ERDF 
rules (more specifically, the n+2 rule) by merging a number of projects such that the 
total figure for these fell just short of the threshold values for major projects and then 
waiting for the Commission decision to suspend the n+2 rule. (§ 234) 

Commission's response: 

The Commission will not be taking the requested action. 

To avoid the artificial grouping of projects, the Commission systematically verifies 
the correct application of Article 39 of Regulation No 1083/2006, and in particular 
that the threshold for a major project is reached and the requirement is met that a 
major  project  should  be  "intended  in  itself  to  accomplish  an  indivisible  task  of  a 
precise economic or technical nature".  

The  advantage  of  major  project  status  under 
is 
counterbalanced  by  the  more  stringent  information  requirements  associated  with 
applications. 

the  "n+2/n+3"  rule 

Therefore,  in  the  Commission’s  opinion,  a  report  on  the  practical  application  of 
the rules to major projects is not necessary, as there is no real risk. 

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135. 

The  Commission  should  overturn  the  ‘risk-averse’  culture  (with  high-quality, 
innovative  investments  losing  prominence),  a  practice  which  runs  counter  to  the 
Community’s efforts as laid down in the Lisbon Strategy. (§ 235) 

Commission's response: 

The Commission will not be taking the requested action. 

Member  States  are  required  to  allocate  60%  of  the  funds  in  the  Convergence 
Objective  and  75%  of  those  in  the  Regional  Competitiveness  and  Employment 
Objective  to  the  priorities  of  the  Lisbon  Agenda  including  innovation,  R&D,  and 
information and communication technologies. 

These allocations will be monitored through the data Member States are required 
to  provide  to  the  Commission  on  the  categories  of  their  expenditure.  Moreover, 
major projects applications now have to include the NACE codes concerned. 

During  the  2007-13  programming  period,  the  estimated  investments  under 
Cohesion Policy in the innovation area are put at €86 billion, which is 25% of total 
funding. 

The Commission is engaged in many initiatives in support of innovation projects. 
These are summarized in its Communication on "Cohesion Policy: investing in the 
real economy" (COM(2008) 876). 

136. 

The Commission should fund education and training for its own staff (DG REGIO) 
instead for a separate group (JASPERS), which is located within the structure of the 
European  Investment  Bank  and  is  therefore  not  accountable  to  the  Commission  for 
its work. (§ 236) 

Commission's response: 

The JASPERS instrument was set up to provide assistance to Member States in the 
preparation  of major projects before their submission to the Commission. This is 
an  important  improvement,  as  former  experience  showed  that  many  projects 
submitted  were  insufficiently  prepared  (notably  in  the  areas  of  State  aid,  public 
tenders,  technical  specifications,  etc.).  The  recourse  to  JASPERS  experts  has  no 
link  with  the  appraisal  of  the  major  project  applications  by  DG  REGIO  staff. 
Numerous training sessions are organised within DG REGIO on how to appraise 
major  projects.  Furthermore,  a  five-people  team  dedicated  to  the  appraisal  of 
major  project  has  now  been  set  up  within  the  Coordination  Unit  of  DG  REGIO 
which  provides  support  to  the  geographical  units.  Finally,  in  the  case  of 
through  a 
technical  projects,  outside  experts  can  contribute 
particularly 
framework contract. 

137.  Monitoring of major projects needs to be focused on information to be provided for 
by Member States because there is currently no tangible evidence that major projects 
financed by Community funding are effective and that the Member States have used 
the funds received as effectively and productively as possible. (§ 237) 

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Commission's response: 

The Commission is taking the requested action. 

The Commission agrees that there is a need for more harmonised information on 
reporting  on  completed  major  projects  and  has  proposed  some  guidance  in  this 
regard  in  the  context  of  clarifying  reporting  requirements  in  the  implementing 
regulation. 

It  should  be  noted  that  the  current  regulation  governing  the  Structural  and 
Cohesion Funds in Article 49(3) is quite clear that the Commission carries out ex 
post  evaluations  at  the  level  of  operational  programmes.  There  is  no  mention  of 
project  level  evaluation.  Nonetheless,  the  Commission  undertakes  evaluations  of 
samples  of  projects  (e.g.,  for  the  Cohesion  Fund  and  ISPA  2000-2007  and  in 
2014/15 on the 2007-2013 period), but this work should be complemented and built 
on by evaluations carried out by the Member States. 

The Commission intends to continue to encourage Member States to carry out ex 
post  evaluations  (and/  or  cost  benefit  analyses)  of  major  projects,  recognising, 
however, that there is no legal obligation for them to do so. Member States' project 
level  evaluations  can  add  value  to  the  broader  evaluations  carried  out  by  the 
Commission. 

It  should  be  noted  that  the  focus  of  this  work  is  on  evaluation  and  learning,  not 
control.  Requirements  for  control  for  major  project  are  the  same  as  those  for  all 
ERDF and Cohesion Fund expenditure. 

138. 

The  Commission  should  ensure  that  its  Internet  site  will  enable  citizens  to  monitor 
the status of any major project. (§ 238) 

Commission's response: 

The Commission is taking the requested action. 

The Directorate General for Regional Policy is currently developing a database of 
project fiches accessible on its internet site (Inforegio) which will display summary 
information on major projects as soon as they are adopted by the Commission, and 
which will be regularly updated. 

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Special Report No 2/2008 concerning Binding Tariff Information (BTI) 

139. 

The  European  Parliament  urges  the  Commission  to  endeavour  to  resolve  the 
outstanding  problems  and  shortcomings  as  a  matter  of  urgency,  since  they  could 
result in a loss of revenue for the Union in the form of traditional own resources; 

Urges  the  Commission  to  resolve  tariff-classification  disputes  by  the  deadlines  laid 
down  by  Community  law  and,  at  the  latest,  within  five  months  and,  in  view  of  the 
possible loss of own resources, to increase the number of staff working on BTI and 
classification  to  four  persons  and  to  ensure  that  those  persons  also  carry  out  more 
risk analyses and exercise more stringent scrutiny of Member State contributions to 
the system, possible abuses of the period-of-grace system and BTI 'shopping'; 

Calls  on  the  Commission  to  provide,  by  the  end  of  2009,  information  on  all  the 
initiatives and measures taken on the basis of the ECA's observations, together with 
details of their implementation. (§§ 239, 241, 242) 

Commission's response: 

As requested by Mr Staes (MEP) in his working document of October 2008 on the 
Special  report  of  the  Court  of  Auditors,  the  Commission  informed  the  European 
Parliament of the measures taken on the basis of the observations by the Court of 
Auditors  by  the  end  of  2008  (letter  sent  to  Mr  Staes  on  18  December  2008).  The 
Commission will provide the European Parliament with further information on the 
outcome of discussions with regard to the review and fine-tuning of the final draft 
of Implementing Provisions of the Modernised Customs Code, including the draft 
provisions concerning periods of grace, which will take place during the next BTI 
Committee in early September 2009. 

However,  it  should  be  noted  that  the  legislation  provides  that  divergent  tariff 
classifications have to be solved within six months and shortening this time period 
to  less  than  six  months,  as  requested  by  the  European  Parliament,  would  not  be 
feasible  because  of  procedural  constraints.  The  solution  of  a  case  of  divergent 
classification requires that agreement is reached in the Customs Code Committee 
on  the  characteristics  and  description  of  the  products  to  be  classified,  on  the 
correct  classification  and  on  the  type  of  measure  to  be  adopted  to  solve  the 
divergent classification. This process requires often that the same file is discussed 
at  two  or  more  meetings  of  the  Committee,  before  the  Committee  can  adopt  an 
opinion on the proposed measure. The meetings of the Committee take place with 
an  interval  of  at  least  three  months  and  after  the  vote  in  the  Committee  the 
measure still has to be adopted by the Commission, in all Community languages. 
In  a  large  majority  of  cases  of  divergent  classification,  a  solution  within  five 
months is therefore not possible. 

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Special Report No 3/2008 on the European Union Solidarity Fun: how rapid, efficient 
and flexible is it? 

The European Parliament has made no specific requests to the Commission. 

Commission's response: 

No reply necessary. 

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Special Report No 4/2008 concerning the implementation of milk quotas in the Member 
States which joined the European Union on 1 May 2004 

140. 

Continue  to  take  all  steps  necessary  in  order  to  ensure  effective  monitoring  of  the 
establishment and management of the milk quotas system. (§ 247) 

Commission's response: 

The requested action has been taken. Commission services are continuously taking 
all necessary action to ensure the effective monitoring of the milk quota regime. 

141. 

Ask the new Member States to adhere to the general principle that all milk marketed 
must be recorded. (§ 249) 

Commission's response: 

The  requested  action  has  been  taken.  The  Commission  reminded  all  Member 
States  of  this  general  principle  in  a  letter  sent  on  18  December  2008  (AGRI 
D/30692). 

142. 

Ask the new Member States to improve their database record-keeping and to avoid 
unnecessary checks. (§ 250) 

Commission's response: 

The requested action has been taken. In the framework of bilateral contacts with 
the  new  Member  States,  the  Commission  has  regularly  encouraged  new  Member 
States  to  improve  their  database  record-keeping.  However,  the  Commission  does 
not  agree  with  the  wording  of  the  second  part  of  the  request  "…to  avoid 
unnecessary  checks"  since  this  wording  gives  the  impression  that  there  are 
controls that are unnecessary, thus giving an incentive to Member States to ask for 
removal of controls. 

143. 

Continue to assess developments in the dairy sector, in particular those linked to its 
market,  to  the  situation  of  producers,  and  to  the  implications  for  regional 
development,  in  particular  in  the  assessment  reports  to  be  submitted  before  31 
December  2010  and  before  31  December  2012  under  the  terms  of  the  political 
agreement on the common agricultural policy ‘health check’ concluded in November 
2008. (§ 251) 

Commission's response: 

The Commission will be taking action in line with what was agreed in the Health 
Check. The political agreement requests the Commission to evaluate the evolution 
of the milk sector, in particular of its market, and to ensure this follow up in the 
framework of the evaluation reports foreseen by the political agreement before the 
31st December 2010 and before the 31st December 2012. 

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However, the wording by Parliament does not reflect the political agreement linked 
to  the  Health  Check  but  goes  beyond  it  and  the  Commission  will  not  be  taking 
action to that extent. 

144. 

Abide by all of the ECA's recommendations in connection with the 'health check' and 
to consider possible adjustments to the common market organisation for milk and the 
milk quota scheme, which should focus on: 

transitional  and  accompanying  measures  to  be  envisaged  in  regions  where 

(a) 
small producers are still very much in the majority; 

(b) 
the  need  for  milk  producers  in  the  new  Member  States  to  have  a  clear 
regulatory framework and clear prospects encouraging them to make the investments 
that are vital in order for their activity to remain viable. (§ 252) 

Commission's response: 

The requested action has been taken. 

A political agreement on the CAP health check was reached on 20 November 2008. 
It  was  decided  at  the  time  that  the  dairy  industry  should  be  made  more  efficient 
and  more  responsive  to  market  trends  and,  in  particular,  to  the  prospect  of  the 
quota  being  withdrawn  by  2015.  As  of  2009  the  quota  level  has  gradually  been 
increased  in  identical  fashion  for  all  Member  States.  It  has  been  decided  to 
implement five quota increases of 1% per annum from 1 April 2009. 

The  Commission  maintains  that  this  will  provide  a  predictable,  transparent  and 
objective development perspective for all producers irrespective of where they are 
located  in  the  European  Union,  thus  allowing  for  a  smooth  transition  prior  to 
2015. 

In addition, the situation of some producers deemed more vulnerable by virtue of 
their  size  or  location  has  been  taken  into  account  by  allowing  for  a  degree  of 
flexibility  in  the  granting  of  direct  payments.  The  direct  aid  regime  has  been 
adjusted to enable those Member States which wish to do so to modulate the level 
of  aid  to  some  producers  subject  to  compliance  with  certain  limits.  A  milk 
production  component  has  been  integrated  into  objectives  for  rural  development 
measures so as to facilitate restructuring of the industry. 

A  wide-ranging  review  of  the  dairy  CMO  has  been  carried  out  and  certain 
measures deemed inefficient, like private storage of cheese and marketing aid for 
butter, have been abandoned. 

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Special Report No 5/2008 - The European Union's agencies: Getting results 

145. 

The  European  Parliament  welcomes  the  ECA  special  report  and  urges  the 
Commission to note the shortcomings identified in it, as well as to take steps in line 
with the ECA’s recommendations; 

Calls  on  the  Commission  to  develop  and  implement  a  general  management  system 
for  the  EU  'regulatory'  agencies,  based  on  explicit  criteria,  such  as  transparency, 
economy,  efficiency,  effectiveness  and  exchange  of  best  practices;  takes  the  view 
that the Commission should be in active communication with the Union agencies and 
should assist management boards in the implementation of activity-based budgeting 
and management (ABB/ABM); 

Calls on the Commission to introduce an effective monitoring system for the Union 
agencies, allowing internal transfer of best practices and methodology and containing 
a range of both general and specific indicators for evaluation purposes; 

Calls  on  the  Commission  to  develop  guidelines  for  improving  the  planning, 
monitoring,  reporting  on  and  evaluation  of  the  agencies'  activities  and  fully  to 
implement  the  concept  of  'getting  results'  established  by  Regulation  (EC,  Euratom) 
No 1605/2002 in 2002 and the framework Financial Regulation for the agencies. (§§ 
253-256) 

Commission's response: 

The  Commission  is  looking  at  the  assistance  it  can  offer  agencies  via  its 
departments  and  representatives  on  agencies’  management  boards  with  a  view  to 
implementing the Court’s recommendations. 

The Commission is not in a position to develop a general management system or to 
impose  rules  of  conduct  for  planning,  monitoring  and  reporting  on  agencies  in 
view of their legal independence and the restrictions on its own powers laid down 
by the legislator in the act setting up each agency. 

However, the Commission takes the view that a consistent policy on the approach 
to  agencies  would  improve  their  transparency,  efficiency  and  effectiveness.  This 
stance is also reflected in the Communication of the Commission of March 2008 
“European  agencies  –  The  way  forward”  and  in  the  approach  taken  by  the 
interinstitutional  working  group,  which  comprises  representatives  of  the  three 
institutions. Following the first meeting of the group at political level on 10 March 
2009, intensive work is continuing at technical level. Work at this stage consists in 
preparing factsheets for each discussion point identified at the first meeting of the 
group  at  technical  level.  Work  with  a  view  to  developing  a  common  approach  to 
agencies will be continued using these factsheets. 

The  Commission  also  supports  the  idea  of  exchanging  best  practice  to  enable 
agencies to benefit from our experience. The findings of the current evaluation of 
the  system  of  decentralised  agencies  should  help  to  improve  availability  of 
comparable information. 

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The  information  provided  in  2004  on  the  guidelines  for  evaluating  agencies  is  a 
good  example  of  an  exchange  of  best  practice.  In  addition,  the  Commission 
regularly organises meetings with agencies to exchange best practice on evaluation 
and  provides  ad  hoc  assistance  to  agencies  carrying  out  evaluations.  The 
introduction  and  implementation  of  new  practices  should  be  limited  until  the 
findings  of  the  current  evaluation  and  the  conclusions  of  the  interinstitutional 
working group have been made public. 

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Special Report No 6/2008 concerning European Commission Rehabilitation Aid 
following the Tsunami and Hurricane Mitch 

146. 

The European Parliament calls on the Commission to draw all necessary conclusions 
from the experiences following Hurricane Mitch and the tsunami in order to improve 
future  performance;  urges  the  Commission  to  play  an  active  role  at  international 
level with a view to remedying systemic weaknesses in international relief capacity. 
(§ 257) 

Commission's response: 

The Commission, as demonstrated in its response to the tsunami, will continue to 
play an active and leading role in the coordination of the international response on 
major natural catastrophes, as well as supporting when necessary the capacity of 
the  recipient  country  to  ensure  effective  coordination  and  reconstruction.  The 
Indonesia mid term evaluation will be finalised in 2009. 

In  Sri  Lanka,  the  action  plan  following  ECA  recommendations  included  the 
reinforcement  of  mechanisms  for  internal  monitoring  (done  in  November  2007 
with the recruitment of technical expertise for infrastructure and the setting up of 
tool  for  the  comparison  of  civil  works  -  in  terms  of  (unit)  costs,  value  for  money 
and standards - which was done in mid 2008). 

147. 

The European Parliament calls on the Commission to pay particular attention to the 
following issues in future rehabilitation actions: ensuring that funding is needs-based, 
that  the  affected  population  –  including  the  poor,  women  and  children  –  is  at  the 
centre  of  the  aid  measures  and  that  detailed  and  accurate  information  about  the 
outcomes  of  assistance  is  available  to  both  taxpayers  in  donor  countries  and  the 
affected populations. (§ 258) 

Commission's response: 

Disasters and crises are costly in both human lives and resources and therefore the 
main  challenges  -  particularly  for  disaster  prone  countries  -  are  to  identify 
appropriate preparedness measures to enhance the self-capacity of the population 
and  to  prevent  new  disasters.  There  is  no  unique  model  to  respond  ideally  to 
reconstruction and rehabilitation constraints, since there are no easy solutions to 
complex  situations.  The  Commission  has  always  considered  that  the  affected 
population  and  more  specifically  the  most  vulnerable  one,  should  be  the  direct 
beneficiaries  of  the  EC  funding  mechanisms  enabling  them  to  rebuild  a  viable 
livelihood as the first step towards sustainable community development and an exit 
from  the  poverty  spiral.  For  that  purpose,  extensive  needs  assessment  are 
conducted  on  the  ground  in  order  to  design  a  meaningful  response  taking  into 
account time constraints, degree of flexibility and relevant control mechanisms.  

Furthermore,  visibility  and  reporting  activities  are  systematically  foreseen 
(regardless if the implementing partner is another international organisation, or if 
activities  are  directly  financed  and  followed  up  by  the  Commission).  These 
activities  include  inter  alia  adequate  press  coverage  during  the  contract  signing 
ceremonies,  notice  boards  placed  on  rehabilitated  infrastructure,  pamphlets, 

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internet,  etc.  As  a  general  rule,  a  non  negligible  percentage  of  the  overall 
programmes' budget has to be dedicated to visibility activities. 

148. 

The  European  Parliament  calls  on  the  Commission  to  review  its  list  of  NGOs  in 
order  to  exclude  non  bona  fide  NGOs,  and  to  lay  down  procurement  policies  that 
prevent misappropriation of donated funds by such NGOs. (§ 260) 

Commission's response: 

The requested action has been taken. For Humanitarian actions, the Commission 
implemented beginning of 2008 a new Framework Partnership Agreement (FPA). 
The signature of this FPA is a condition sine-qua-non before the NGO can enter 
into  a  grant  agreement  with  the  Commission.  To  that  effect,  the  NGO  (whose 
headquarter  is  located  on  the  European  territory)  has  to  evidence  that  it  has 
sufficient  administrative  and  financial  capacities.  These  capacities  are  analysed 
first before FPA signature and then continuously re-assessed. In addition, the FPA 
defines,  inter  alia,  rigorous  rules  on  procurement  procedures  and  incorporate 
mechanisms of suspension and exclusion if these are not respected. 

149. 

The  European Parliament calls on the Commission to give Union aid a sufficiently 
high  profile  without,  in  so  doing,  jeopardising  overall  efficiency  and  equity 
objectives. (§ 261) 

Commission's response: 

incorporates  visibility  provisions 

The  Commission 
its  contracts  with 
implementing  partners  including  international  organisations.  The  Commission 
revised  in  2008  the  "Guidelines  for  the  Communication  and  Visibility  of  EU 
External Action" in order to enhance these aspects 

in 

150. 

Expects the Commission not only to accept the ECA's recommendations but also to 
indicate the earliest date for their implementation. (§ 263) 

Commission's response: 

The  Commission  agrees  with  the  ECA  recommendations.  The  Commission  has 
already  adopted  or  plans  to  adopt  measures  in  relation  to  the  Court's 
recommendations by the end of 2009. 

151. 

Considers, moreover, that in connection with humanitarian aid it is essential for the 
Commission  to  assert  the  criteria  governing  aid  effectiveness  as  enshrined  in  the 
Paris Declaration on Aid Effectiveness. (§ 264) 

Commission's response: 

The requested action has been taken. The European Consensus on Humanitarian 
Aid,  signed  by  the  Presidents  of  the  European  Parliament,  the  Council  and  the 
Commission in December 2007, sets out in  chapter  3  a  "Common  Framework  to 
Deliver EU Humanitarian Aid" with a view to improve "Coordination, Coherence 
and Complementarity", to "Providing adequate and effective aid", and to ensure " 
Quality,  effectiveness  and  accountability".  In  concrete  terms,  this  means  -  inter 

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alia  -  a  commitment  to  international  coordination  mechanisms  and  stronger  EU 
coordination.  The  Consensus  is  quite  concrete  on  the  specific  areas  of 
implementation  where  progress  can  be  made:  throughout  2008,  the  Commission 
has  begun  with  "real  time  sharing  of  information  on  situation  assessments  and 
response  intentions",  a  enhanced  "policy-level  exchange  on  aid  and  intervention 
strategies"  both  in  the  context  of  the  newly  created  Council  Working  Group  on 
Humanitarian  Aid  and  Food  Aid  as  well  as  the  Good  Humanitarian  Donorship 
Initiative. 

The Working Group, as well as on the ground coordination, serve to ensure that 
there are no overlaps of aid of different donors. In addition, the Commission's aid 
is, with the exception of a reserve for sudden onset disasters, fully programmed at 
the  beginning  of  each  budget  year.  This  programme  is  always  presented  to  the 
responsible  EP  Committee  (CODEV)  and 
the 
Commission also ensures - in line with the Consensus - that it draws on "local and 
regional resources and procurements". 

the  Council.  Furthermore, 

In  sum,  the  EC  humanitarian  aid  follows  the  Good  Humanitarian  Donorship 
principles, many of which relate to aid effectiveness as well as the elements of the 
Paris Declaration which can be used and promoted in a humanitarian context. 

In  addition  to  above  description,  assurance  on  aid  effectiveness  is  complemented 
by  the  performance  of  policy  evaluations  and  the  development  of  a  set  of  system 
indicators. 

152. 

The European Parliament calls on the Commission to set a realistic and firm deadline 
for  funds  to  be  made  available,  in  order  to  encourage  the  recipient  countries  to 
implement the agreed projects in a timely manner. (§ 265) 

Commission's response: 

When  providing  co-financing,  the  Commission  requires  a  clear  and  realistic 
development  or  rehabilitation  strategy  together  with  a  financing  plan.  All  the 
Commission's  Tsunami  funds  (202  million  euros)  were  committed  by  the  end  of 
2006. 

153. 

The  European  Parliament  considers  that,  in  the  event  of  natural  disasters, 
humanitarian aid should be provided with no political strings attached; takes the view 
that the Commission should nonetheless require recipient countries to ensure: 

(a) unrestricted access to victims;  

(b) that the assistance is not subject to taxation, customs duty or any other form of 
fiscal burden; 

(c)  that  there  will  be  no  delay  in  granting,  and  no  refusal  to  grant,  visas  to 
international staff working for relevant aid agencies;  

(d) that beneficiaries will not be required to pay for the donated goods and services 
(or that all such revenue will be channelled into reconstruction operations); 

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Calls  on  the  Commission  to  consider  suspending  aid  should  any  of  the  above 
principles be violated. (§§ 266-267) 

Commission's response: 

The  Commission  fully  agrees  with  all  points  and  the  requested  action  has  been 
taken:  its  humanitarian  aid  to  third  countries  -  be  it  for  the  consequences  of 
natural disasters or complex emergencies - is based on assessed need and is never 
offered  with  political  conditionality  attached.  Where  access  is  limited,  the 
Commission  vigorously  advocates  for  access  to  the  disaster  victims  -  recent 
examples include Commissioner Michel's missions and public interventions in the 
wake of Cyclone Nargis and during the recent conflict in the Middle East. In the 
same context, the Commission has strongly demanded access for international aid 
personnel.  In  principle,  the  Commission's  humanitarian  aid  is  provided  free  of 
charge with the exception of specific programmes such as "work for aid" that have 
the  double  effect  of  providing  local  employment,  reconstruction  and  injection  of 
needed  investment  in  a  given  area.  Concerning  taxes,  tariffs  or  other  fiscal 
measures,  the  Commission  fully  supports  the  international  initiative  for  an 
"International Disaster Response Law" that would tackle these issues at national 
level. 

However,  the  Commission  does  not  consider  suspending  aid,  should  any  of  the 
mentioned  principles  be  violated.  Indeed,  Commission  is  of  the  view  that  its 
humanitarian  aid  should  serve  the  victims  of  disasters  wherever  they  are.  In  the 
Commission's  experience,  an  insistence  on  further  access  to  victims  while 
providing  aid  where  such  access  is  already  provided  is  more  effective  that  the 
threat  of  suspending  all  humanitarian  aid  because  of  access  difficulties.  This 
approach  was  effective  in  the  instance  of  cyclone  Nargis  where  international 
prodding led the Burmese authorities to provide increasing access after an initial 
refusal  to  do  so.  As  a  matter  of  fact,  in  most  complex  emergencies,  access 
difficulties occur frequently, but can usually be overcome. 

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Special Report No 7/2008 on Intelligent Energy 2003-2006 

154. 

Take into account and reduce in line with the principles of better regulation the costs 
borne by beneficiaries in preparing proposals and reporting. (§ 269) 

Commission's response: 

A  series  of  measures  have  been  put  in  place  during  the  past  two  years  (2007  - 
2008) aiming to reduce the costs borne by beneficiaries. Based on the experience 
with  the  first  IEE  programme,  the  funding  for  beneficiaries  in  the  IEE  II 
programme  (2007-2013)  was  increased  to  75%  (compared  to  50%  under  IEE  I) 
and  a  standard  flat  rate  of  60%  was  introduced  for  the  indirect  costs  of  all 
beneficiaries, thereby reducing considerably the costs of proposal preparation and 
financial  reporting.  At  the  same  time,  the  number  of  contract  amendments  is 
reduced by approximately 50% by removing the need for EACI to authorise budget 
shifts  below  a  certain  value.  It  has  been  concluded  that  these  simplifications 
contributed  to  the  highest  number  of  applications  ever  received  in  the  2007  Call 
(423 proposals), with nearly 50% newcomers. Fewer priority areas were opened in 
the Call 2008, thereby increasing the focus, and this Call received 342 proposals, 
which is also a very good response. In the second year of the IEE II programme 
(2008), an electronic submission system (adapted from EPSS) was provided, which 
speeds  up  the  evaluation  process  and  reduces  the  burden  of  proposers,  and  the 
guides  for  proposers  include  enhanced  guidance  on  performance  /  impact 
indicators. Furthermore, the effort needed to review previously supported projects, 
when  preparing  proposals,  has  been  reduced  by  the  launching  of  a  new  projects 
database, which went online in mid 2008. 

The time to contract was reduced in 2008 when, for the first time in IEE, proposers 
were notified of the evaluation results and all negotiations were started in the same 
year  as  the  Call  was  published.  Also  helping  the  beneficiaries,  the  EACI  has 
maintained average payment times of 36 days. 

A joint DG TREN / EACI working group, ensures that the experience of managing 
IEE  projects  is  fed  back  each  year  into  the  next  annual  work  programme.  This 
group  has  developed  the  improvements  and  simplifications  cited  above,  and  will 
continue for the rest of the programme. 

155. 

Actively pursue its policy of giving priority to the creation of energy agencies in the 
new Member States in order to arrive at a well-balanced distribution across the whole 
Union. (§ 271) 

Commission's response: 

The Commission confirms its commitment to actively involve new Member States 
in  the  programme.  In  order  to  measure  the  overall  effectiveness  of  the  IEE-II 
programme,  the  Commission  set,  among  others,  specific  targets  for  more  active 
involvement of beneficiaries and a good proportion of new beneficiaries applying 
to and succeeding from New Member States. Regarding the specific case of energy 
agencies, the creation of agencies depends mainly on the availability of local and 
regional  structures  for  co-financing  and  their  committing  to  their  agency  in  the 

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long-run. Acknowledging this diversity, the Commission encouraged in particular 
new MS to take up the concept of energy agencies (e.g. call 2004 gave priority to 
the creations of agencies in new MS). 

This helped to build momentum and influence the decision making process at local 
level. As a result, after a slow start, 16 new energy agencies were established in the 
new Member States from 2005 to 2007 and efforts are continuing. A tender for a 
new study of local and regional energy agencies was launched in 2009, and this is 
expected to provide up-dated information on the evolving roles of such agencies, as 
well as on the related needs of the public authorities which establish them. 

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Special Report No 8/2008 - Is cross-compliance an effective policy? 

156. 

Simplify the cross-compliance framework by limiting it to the principal elements of 
farming  activities  where  improvements  are  sought  and  by  specifying  the  expected 
results, requirements and standards. (§ 273) 

Commission's response: 

The Commission has simplified cross compliance in the framework of the Health 
Check in particular regarding: 

The  better  focusing  of  the  framework  to  farming  activity:  some  provisions 
• 
not  relevant  to  cross  compliance  have  been  withdrawn,  some  other  relevant 
provisions have been added; 

The simplification of the management of cross compliance: changes already 

• 
decided for the first CAP Pillar have been extended to the second Pillar. 

The  Commission  has  launched  discussions  with  Member  States  on  further 

• 
possibilities of simplifying the management rules of cross-compliance. 

In  addition,  the  Commission  has  taken  the  initiative  to  set  up  an  expert  working 
group with the aim of ensuring that the cross-compliance obligations at farm level 
are clear. 

However, the Commission will not "specify the expected results, requirements and 
standards" because of the great environmental and agricultural diversity between 
different parts of Europe, which means that it does not make sense to set detailed 
standards centrally and since this would mean adding a layer of management and 
control resulting in doubling the administrative burden. 

157. 

Draw a clear distinction between cross-compliance and agri-environment; notes that 
elements  of  rural  development  policy,  such  as  the  approval  of  standards  by  the 
Commission and the obligation to lay down verifiable standards, should also apply to 
cross-compliance. (§ 274) 

Commission's response: 

Cross compliance represents the demarcation line between penalising farmers for 
the non-compliance with mandatory requirements (in line with the "polluter pays 
principle")  and  rewarding  farmers  for  the  voluntary  provision  of  environmental 
benefits through agri-environmental or animal welfare commitments. Thus, cross-
compliance  and  agri-environment  or  animal  welfare  measures  complement  each 
other without any possible overlap. 

The  Commission  has  no  intention  to  approve  standards  or  to  lay  down  verifiable 
norms.  This  would  only  add  complexity  and  administrative  burden.  The 
Commission's reply in the Court's Special report explains this clearly (paragraph 
87, second bullet, page 60): 

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"A significant degree of flexibility must be offered to Member States to allow them 
to adapt the obligations to the specific characteristics of the areas concerned. The 
Commission  does  not  intend  to  approve  national  standards  within  the  cross 
compliance system. The respect by Member States of a minimum level-playing field 
is however ensured by the Commission through its monitoring and audit activity. 
Moreover,  the  rural  development  policy  is  based  on  programming  periods  and 
national  programmes  are  approved,  not  individual  standards.  Therefore  the 
comparison  with  cross  compliance  is  not  necessarily  relevant.  The  principle  that 
Member  States  shall  define  verifiable  standards  is  already  underlying  the 
legislation on cross compliance." 

158. 

Implement a sound monitoring system to measure performance by defining relevant 
indicators  and  baseline  levels;  Member  States  are  invited  to  submit  complete  and 
reliable data, which should be subject to closer analysis by the Commission. (§ 276) 

Commission's response: 

The  Commission  is  taking  the  requested  action.  The  implementation  of  a  good 
management system by Member States is checked during the audits carried out in 
Member States and any failure found with this obligation is subject to clearance of 
account procedure. 

The Commission will pursue its efforts to help the Member States implementing an 
efficient  control  and  sanction  system.  The  Council  issued  a  conclusion  in  this 
respect  in  the  Health  Check  and  the  Commission  is  committed  to  continue  the 
discussions  with  this  view.  Expert  group  meetings  are  envisaged  in  2009  on 
simplification to call for contributions from Member States on aspects not covered 
by the Health Check. This will also give a further opportunity to Member States to 
present and therefore compare particular aspects of their sanctioning systems. 

The Commission has already developed data and indicators for cross compliance, 
which  show  that  the  system  is  applied,  in  particular  as  regards  the  control  and 
reduction  system.  However  the  Commission  has  indicated  that  it  is  currently 
examining the monitoring. 

It is clear that the validity of the data could be further reinforced, as well as their 
timeliness.  Further  work  will  be  carried  out  in  the  context  of  a  reinforced 
monitoring system. 

159. 

Present proposals of relevant indicators and baseline levels at the latest in the context 
of the budget review and the next reform of the common agricultural policy. (§ 277) 

Commission's response: 

The Commission takes note of the request to present proposals up until the timing 
of the budget review but would like to remind the Parliament that legal proposals 
will not be part of the budget review. 

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Special Report No 9/2008 - The effectiveness of EU support in the area of freedom, 
security and justice for Belarus, Moldova and Ukraine 

160. 

The  European  Parliament  urges  the  Commission  to  carry  out  a  full  analysis  of  the 
reasons for the shortcomings and lack of results in some of the projects in Belarus, 
Moldova  and  Ukraine,  and  to  improve  the  planning,  management  and  control  of 
Union funds in these countries. (§ 279) 

Commission's response: 

The  Commission  has  taken  stock  of  the  lessons  learnt  under  TACIS  while 
developing  the  ENPI.  Furthermore,  the  full  application  of  deconcentration 
measures  and  a  streamlining  of  instruments  at  programming  stage  have  already 
shown  clear  indications  of  improvements  in  planning,  managing  and  control  of 
EU  funds  spending  in  these  countries.  A  state  of  play  report  will  be  submitted  to 
Parliament in September. 

161. 

The European Parliament insists that the Commission continue to target Union funds 
to  the  specific  priorities  of  Moldova,  Belarus  and  Ukraine,  bearing  in  mind  the 
progress made in previous projects. (§ 280) 

Commission's response: 

The Commission acknowledges the importance of 'lessons learnt' in the design of 
new targeted projects – especially in sensitive areas such as JLS. The Commission 
underlines  that  it  already  includes  at  the  level  of  a  project's  preparation  relevant 
information  regarding  lessons  learnt.  The  Identification  Fiche  for  project 
approach  is  used  for  screening  by  the  Quality  Support  Group,  and  then  is 
translated into an Action Fiche which is part of the financing decision containing 
a  section  regarding  "lessons  learnt"  and  how  these  have  been  taken  on  board 
(section 2.2). A state of play report will be submitted to Parliament in September. 

162. 

The European Parliament 
to  make  EU  funding 
procedures  more  flexible,  which  would  allow  adjustment  of  project  dossiers, 
benchmarks  and  goals  in  order  to  reflect  changes  in  the  economic  and  political 
situation in the countries concerned. (§ 281) 

the  Commission 

calls  on 

Commission's response: 

While  the  ENPI  does  represent  a  more  flexible  instrument  than  its  predecessor, 
there  is  still  a  clear  case  for  a  division  of  labour  between  funding  instruments, 
according  to  the  advantages  and  specificities  of  each.  The  focus  of  ENPI 
programmes  in  Ukraine  and  Moldova  is,  for  example,  on  large,  sector-wide 
support programmes, rather than smaller projects. This is in line with the need to 
improve  the  focus  and  strategic  impact  of  ENPI  funding.  Other  instruments 
however,  such  as  the  Thematic  Programme  for  Asylum  and  Migration  have  the 
ability  to  mobilise  smaller  pools  of  funds,  in  a  more  rapid  and  flexible  way  than 
large-scale sector reform programmes so as to respond quickly to swift changes in 
the economic and political situation in the countries. A state of play report will be 
submitted to Parliament in September. 

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163. 

The European Parliament 
requests that the Commission ensure the sustainability of 
Union-financed projects by clearly defining the commitments made by the recipient 
government at the end of each project. (§ 282) 

Commission's response: 

The  Commission  agrees  that  the  recipient  country  should  clearly  express  its 
interests  and  wishes  to  underlines  that  these  expressions  are  set  out  in  the 
Partnership and Cooperation Agreements and in the ENP action plans. They are 
further  taken  into  consideration  at  the  project's  identification  stage  following 
priorities  identified  in  the  Country  Strategy  Paper  and  the  National  Indicative 
Programmes  in  line  with  the  ENP  Action  plans.  National  participation  is 
envisaged and implemented according to the nature of the project. A state of play 
report will be submitted to Parliament in September. 

164. 

The  European  Parliament  deplores  the  fact  that  the  effectiveness  of  Community 
funding was insufficient in cases where, although there were shortcomings in project 
management,  grants  were  awarded  to  the  same  contractors  for  new  projects;  thus 
urges  the  Commission  to  define  clear  criteria  for  selecting  contactors  and  to  avoid 
repetition of the unsatisfactory management of Community funds. (§ 283) 

Commission's response: 

The  profile  and  expertise  of  each  expert  remain  the  first  critical  factor  for 
performance.  The  Commission  reminds  that  the  selection  criteria  in  call 
procedures are pre-established in an objectively verifiable and transparent way and 
are adapted to the specific needs of each individual call. Proposed experts can be 
considered  only  after  they  sign  and  submit  their  own  availability  and  exclusivity 
statement. 

AIDCO will study the possibility of setting up a data base recording performance 
of experts and contractors as well as the unavailability of experts at the start of the 
contract. However the possibility to exclude firms from future tenders is limited to 
the cases foreseen in the Financial Regulation. 

165. 

The  European  Parliament 
its 
communication with the governments of Ukraine, Moldova and Belarus, and that it 
take  appropriate  steps  to  encourage  and  help  recipient  countries  to  establish  and 
exercise effective donor coordination. (§ 284) 

the  Commission 

recommends 

improve 

that 

Commission's response: 

Although the recent creation of the Coordination Bureau for European and Euro-
Atlantic  Integration  is  a  step  forward  towards  coordination  of  European  Union 
cooperation, it does not include, for the time being, the coordination of European 
Union (European  Communities and  European Union  Member  States) assistance. 
The European Union needs to encourage the government of Ukraine to extend the 
mandate of the Coordination Bureau for European and Euro-Atlantic Integration 
and reform the current inefficient and fragmented coordination system. The need 
for a reform is strongly supported by the Deputy Prime Minister, who is suggesting 
setting up a single agency with strong coordinating powers which would take over 

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all responsibilities related to external assistance. The level of the coordinating unit 
would  be  raised  from  the  Ministry  of  Economy  to  the  Cabinet  of  Ministers;  the 
Vice  Prime  Minister  would  become  the  National  Coordinator  of  External 
Assistance. 

As  regards  the  Republic  of  Moldova,  the  Government  established  an  Office  for 
Coordination of the European Integration in April 2008, following a dialogue with 
the  Commission.  This  office  is  also  in  charge  of  coordinating  overall  external 
assistance  flowing  into  Moldova.  Furthermore,  a  Commission  for  European 
Integration chaired by the President of the Republic of Moldova was set-up in May 
2008  to  coordinate  the  dialogue  between  the  government  and  the  European 
Institutions  and  to  oversee  the  implementation  of  the  European  Union-Moldova 
Action  Plan.  The  Office  for  Coordination  of  the  European  Integration  had  been 
fulfilling the tasks of the Secretariat to the Commission until February 2009, when 
its responsibility was transferred to the Ministry for Foreign Affairs and European 
Integration.  This  new  set-up  should  go  along  with  an  intensification  of 
information  exchange  with  the  Office  in  order  to  maintain  an  adequate  level  of 
coordination  between  progress  on  policy  dialogue  and  assistance  planning 
activities. 

With regards to Belarus, the European Commission is at the forefront of the donor 
coordination  efforts  through  the  quarterly  informal  donor  coordination  meetings 
chaired by RELEX in Brussels. Its purpose is to coordinate the various initiatives 
of  main  European  Union  Member  State  donor  and  international  donor 
organizations  to  which  Belarus  is  not  participating.  Furthermore,  the  European 
Commission  Delegation  in  Minsk,  with  the  support  of  the  National  coordination 
Unit  regularly  hosts  donor  meetings  with  Belarusian  counterparts  from  the 
Ministry of Economy and the Ministry of Foreign Affairs. 

166. 

The European Parliament encourages the Commission to focus more on the issue of 
effective prosecution in the fight against organised crime, and to explore possibilities 
for  promoting  greater  public  involvement  in  anti-corruption  policy  by  supporting 
civil society organisations in issues relating to the judiciary and good governance. (§ 
285) 

Commission's response: 

More  effective  prosecution  and  systematic  information  sharing  between  law 
enforcement  bodies  has  to  be  ensured  in  the  frame  of  the  joint  European 
Communities - Council of Europe project: Ukraine's International Cooperation in 
Criminal Matters (UPIC) since 2006 and currently ongoing. 

Clearly, the ultimate responsibility for achievements in this very sensitive area like 
prosecution  and  improved  inter-services  cooperation  for  criminal  investigations 
lies  with  the  national  authorities  due  to  matters  relating  to  national  sovereignty 
including security. 

Unfortunately,  the  legislative  process  was  in  Ukraine  hampered  by  frequent 
changes in the Government after the Orange Revolution, and generally legislative 
processes  are  always  slow  in  the  region.  Joint  sessions  with  the  relevant  law 
enforcement  bodies  were  held  during  the  lifetime  of  the  EC-CoE  project  (2006-

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2008)  in  order  to  encourage  information  sharing  and  promote  good  practice  on 
effective prosecution. 

The  matter  of  effective  prosecution  in  the  fight  against  organised  crime  was 
further  addressed  within  the  TACIS  programme  "Interpol-assisted  International 
Cooperation  in  Criminal  Matters  by  Ukrainian  Law-enforcement"  (ended  in 
December  2008)  which  aimed  at  improving  capacities  of  the  Ukrainian  law-
enforcement agencies to effectively exchange criminal information through the I-
24/7 worldwide Interpol network. The ongoing European Union Border Assistance 
Mission  continues  to  contribute  to  enhancing  the  overall  border  and  customs 
management capacities and the abilities of Moldova and Ukraine to fight against 
cross-border and organised crime and to approximate the standards of the border 
and law enforcement authorities to those of the EU. 

Particularly  under  the  framework  of  the  ongoing  Project  against  corruption 
(UPAC),  regular  round  tables  with  Non  State  Actors  will  continue  to  be  held. 
Moreover, in the frame  of  the Mid  Term  Review process of the Country Strategy 
Paper  and  National  Indicative  Programme,  Non  State  Actors  will  be  widely 
consulted via the web and further meetings will be held. 

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Special Report No 11/2008 - The management of the European Union support for the 
public storage of cereals 

167. 

Take into account the geographical location of the stores and in particular the quality 
of the cereal lots when it sets the minimum disposal price. 

Make the costs of activities not directly related to the intervention storage of cereals 
more transparent; therefore suggests that the subsidy element of programmes, such as 
support  for  the  most  deprived  persons  or  the  bioethanol  industry,  be  directly 
allocated to the activities concerned. 

Explore  the  idea  of  constituting  a  Community  strategic  reserve  of  cereals  should  a 
food shortage occur at Community level. (§ 286, 287 & 291) 

Commission's response: 

The Commission will not be taking the requested action. Under the current system 
the  resale  price  of  each  batch  is  determined  without  taking  into  consideration 
either  its  quality  or  its  geographical  location.  Doing  otherwise  would  make  the 
system very difficult to manage in practice. The Commission finds that the current 
system has the advantage of being straightforward, objective and more efficient. 

An ad-hoc approach can and has been followed on several occasions for the last 
remaining batches at the end of each exercise. 

As  regards  the  support  for  the  most  deprived  persons,  the  Commission  services 
consider that the budgetary process followed ensures that the costs of this activity 
are  transparent.  The  cereals  outtakes  are  funded  through  budget  item  05020401. 
Furthermore,  the  public  storage  accounts  clearly  identify  separately  all  stock 
movements  involving  the  support  for  the  most  deprived  person's  scheme.  The 
combined  examination  of  these  separate  accounts  leads  to  the  transparent 
presentation  of  the  financial  cost  of  this  scheme  to  the  EU  budget  both  from  the 
budgetary and from the stock accounting viewpoints. 

The tender for the resale of rye in view of its processing into ethanol was a pilot 
project  for  a  limited  quantity  of  grain.  The  accounts  for  this  one-off  tender  are 
included  in  the  budget  line  for  sales  of  intervention  rye,  together  with  the  other 
three  tenders  opened  the  same  marketing  year.  The  pilot  project  for  bio-ethanol 
represented less than 11 % of the quantities of intervention rye put for sale during 
that marketing year. It was therefore not necessary to create a specific budget line. 
In  addition,  this  tender  has  not  been  reopened  in  subsequent  years  and  the  pilot 
project has not been repeated ever since. 

The  Commission  is  of  the  view  that  strategic  reserves  would  not  be  an  effective 
instrument  for  managing  shortages  in  the  cereal  market  and  therefore  does  not 
consider  the  possibility  of  constituting  such  reserves.  The  experience  of  the  last 
years  shows  that  in  a  situation  of  high  prices  the  production  of  cereals  in  the 
Community  can  increase  rapidly.  Moreover,  the  recent  Council  decisions  on  the 
Health  Check  have  confirmed  this  line  and  turned  public  intervention  of  cereals 
into a safety-net mechanism for situations of low prices. 

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168. 

Evaluate the costs of controls in the field of public storage operations of cereals; calls 
on  the  Commission  to  create  more  incentives  for  Member  States  to  reduce  the 
storage  and  capital  costs  of  their  interventions  and  to  optimise  the  time  of  sale  of 
their stocks. (§ 288) 

Commission's response: 

The Commission is working on the most appropriate method to follow in the cases 
where certain Member States do not declare their interest costs, in the framework 
of  the  Commission's  calculation  of  the  specific  interest  rate  to  be  used  for  the 
reimbursement of the financing costs for public storage operations. 

However,  the  Commission  will  not  act  on  the  first  part  of  the  request.  The 
Communication  on  "Tolerable  risk  of  error"  that  the  Commission  adopted  in 
December  2008  already  covers  the  costs  of  control  for  a  variety  of  measures.  In 
this context, the Commission is of the opinion that a separate exercise for the costs 
of control for intervention storage of cereals is not appropriate. 

169. 

Strengthen its review of the costs notified by the paying agencies by systematically 
following  up  on  any  unusual  data  or  trends;  on-the-spot  inspections  should  include 
checks  of  the  data  used;  the  Commission  should  review  its  standard  costs  for 
operations without movement to ensure that they do not exceed actual costs. (§ 289) 

Commission's response: 

The Commission will be taking part of the requested action, concerning standard 
costs  for  operations  without  movement:  The  Commission  is  examining  the 
situation  and  it  will  decide  on  the  most  appropriate  method  to  follow  for  the 
calculation  of  entry  and  removal  standard  costs  without  stock  movement.  The 
review  will  be  carried  out  once  the  public  storage  situation  and  the  information 
received from Member States allows it. 

The Commission currently carries out a thorough analysis of the cost information 
received from the Member States concerned. On the basis of the Commission's risk 
analysis  and  the  limited  quantities  in  store,  on-the-spot  inspections  of  this 
information cannot be justified at this point in time. 

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European Development Funds 

170. 

The  European  Parliament  invites  the  Commission  -  when  "fine-tuning"  its  control 
strategy  (points  1  to  5  of  the  Annual  Report  on  the  EDFs)  -  to  identify  the  point 
where lack of results and the costs of control call for a policy change. 

Notes that the Commission considers that "(g)iven the financial and human resources 
available to it, (...) it has set up control systems which provide reasonable assurance" 
(point 53 of the Annual Report on the EDFs);  

Regards  the  Commission's  answers  as  unsatisfactory  in  that  it  seems  reluctant  to 
review the arrangements it has put in place, and invites the Commission to give more 
precise information as to the notion of "reasonable assurance" and, in particular, as 
regards the actual cost/benefit ratio of controls and the actual error rate, as well as a 
breakdown indicating which additional human and financial resources are necessary 
to improve the control system in order to allow the Court to give the mark "effective" 
as the overall assessment. 

Notes with satisfaction the Court's recognition of Europe Aid's efforts to develop a 
control strategy; takes the view that an efficient control strategy aims at preventing 
errors ex-ante and not primarily at recovering undue paid funds ex-post; invites the 
Commission to continue developing its control strategy in the light of this approach, 
which is a priority for the discharge authority. (EDF §§ 2, 23, 24 and 65) 

Commission's response: 

Ex ante controls constitute a major part of EuropeAid's current control strategy, so 
that  errors  detected  during  such  controls  can  be  corrected  before  payments  are 
approved.  These  ex  ante  checks,  which  are  obligatory  on  all  transactions,  are 
modulated  in  relation  to  the  characteristics  of  each  activity.  They  include, 
whenever  needed  and  appropriate,  audits  or  specific  technical  certification  by 
independent experts, in relation to the type of contract/operator, resulting in a high 
intensity  of  checks  at  the  level  of  the  implementing  organisations,  notably  before 
final payments. 

EuropeAid  is  willing  to  continue  in  the  light  of  this  approach  and  to  pursue  its 
efforts in order to further improve the management of implementing organisations. 
The  Commission  will  submit  a  report  to  Parliament  and  Council  based  on  the 
findings  of  the  tolerable  risk/cost-effectiveness  studies  for  external  action  and  a 
review of the AIDCO control strategy will follow. 

171. 

Takes the view that the implementation strategy for the Tenth EDF (EUR 21 966 000 
000 for the period from 2008 to 2013) should focus on areas of crucial importance 
for ensuring sustainable development; encourages the Commission to prioritise and 
avoid proliferation; 

Believes  that  the  Commission,  in  an  effort  to  prioritise  and  concentrate  its 
development  activities,  could  look  for  opportunities  to  increase  assistance  to  low-
income countries. (EDF §§ 3-4) 

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Commission's response: 

The 10th EDF programming was based on the Joint Statement by the Council, the 
European Parliament and the Commission on European Development Policy (the 
'European  Consensus')  (OJ  C(2006)46  of  24.2.2006,  p.  1)  which  identifies  nine 
core  areas  of  intervention  and  asked  for  concentration  in  two  focal  areas  plus 
general budget support. 

The  10th  EDF  Mid-Term  Review  (2009-2010)  guidelines  ask  for  more  joint 
programming,  leading  to  further  concentration  and  division  of  labour,  based  on 
the Council conclusions of 15.5.2007 which include the adoption the EU Code of 
Conduct on complementarity and division of labour. This code of conduct suggests 
concentrating on maximum three sectors plus general budget support. 

46 out of 77 ACP countries eligible to EDF funding, representing 94% of the ACP 
population  are  Low  Income  Countries.  The  10th  EDF  aid  allocation  model 
(Commission  decision  C(2007)3617  of  1.8.2007)  gives  an  important  weighting  to 
needs and vulnerability, with the LICs being allocated more than 90% of the initial 
country allocations for programmed aid. 

172.  Welcomes the commitment of all available funding for the Ninth EDF in 2007; calls 
on the Commission to formulate recommendations applicable for the non-committed 
parts of the Eighth EDF; stresses however that speedy commitment of funds should 
not be carried out to the detriment of the quality of projects. (EDF § 7) 

Commission's response: 

Almost  all  the  funds  available  under  the  9th  EDF  and  all  the  funds  available 
(decommitted)  from  previous  EDFs  (including  the  8th)  were  committed  by  end 
2007.  Furthermore,  in  accordance  with  article  1(4)  of  the  10th  EDF  internal 
agreement, funds decommitted subsequently from the old EDFs can no longer be 
committed. As indicated in declaration N° 2 concerning the multiannual financial 
framework for the period 2008 to 2013, agreed at the 31st session of the ACP-EC 
Council  of  Ministers  Port  Moresby,  Papua  New  Guinea,  1  and  2  June  2006: 
"based on the performance review in 2010 and a proposal by the Commission, the 
Council  of  the  European  Union  will  consider  a  decision  by  unanimity  on  the 
transfer  of  any  funds  decommitted  from  ACP  projects  funded  out  of  the  9th  and 
previous EDFs into the reserves of the 10th EDF." The Commission will therefore 
analyse  the  possibility  to  prepare  a  proposal  in  2010  on  the  use  of  decommitted 
funds from the 7th, 8th and 9th EDFs on the basis of the results of the 10th EDF 
mid-term review. 

173. 

Regrets however that the Commission's follow up to observations made by the Court 
in  a  number  of  cases  is  inadequate;  stresses  that  the  Commission's  action  on  the 
Court's recommendations is an important element of accountability for the discharge 
authority;  welcomes  the  fact  that  the  Commission  "will  provide  more  detailed 
information in the future" (point 13 of the Annual Report on the EDFs). (EDF § 11) 

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Commission's response: 

The  Court's  observation  refers  primarily  to  the  adequacy  of  the  information 
supplied  by  the  Commission  on  actions  taken  or  planned  as  a  follow-up  to 
observations by the Court. On the substance, the Commission always analyses the 
Court’s observations carefully to ensure that they are implemented appropriately. 
The nature of some observations means that it is sometimes difficult to be precise 
in  terms  of  the  schedule  for  implementation.  Nevertheless,  the  Commission  does 
follow up observations and most of them are implemented according to a specific 
schedule  and  with  a  precise  description  of  the  measures  taken.  The  backbone 
strategy,  CRIS  AUDIT,  CRIS  FED,  the  terms  of  reference  for  the  verification  of 
supporting  documents  for  programme  estimates  and  the  methodology  for 
verification missions are all examples of recommendations which have either been 
implemented  or  are  currently  being  finalised.  However  care  will  be  taken  to 
provide more detailed information in the summary of the Commission's follow-up 
to observations by the Court in the future. 

174. 

As  regards  the  reliability  of  the  accounts,  notes  the  Court's  recurrent  remark 
concerning the validity of the Commission's statistical approach used to estimate the 
provision for costs incurred in the reporting period for which no invoices have been 
received at year-end; further notes that this provision amounts to EUR 2 087 000 000 
or 83% of total liabilities (point 17 of the Annual Report on the EDFs); invites the 
Commission to continue to fine-tune and improve its approach. (EDF § 18) 

Commission's response: 

The Commission instructed an independent auditor to carry out  a study to  check 
whether  the  method  used  is  appropriate.  The  study’s  findings  show  that  the 
assumptions  underpinning  mathematical  estimates  of  invoices  to  be  received  are 
correct  in  the  vast  majority  of  cases.  However,  the  study  recommends  a  different 
approach  in  a  limited  number  of  cases.  The  Court  has  been  informed  of  the 
findings and the Commission has undertaken to implement the recommendations 
for the 2009 accounting year. 

175. 

Notes  the  difference  of  opinion  between  the  Commission  and  the  Court  as  regards 
the moment when financing agreements should be "drawn up" and "signed" (point 19 
of  the  Annual  Report  on  the  EDFs);  regrets  the  unclear  message  to  the  discharge 
authority,  and  invites  the  Commission  to  provide  clarification  so  that  all  parties  - 
Commission and ACP States - have the same understanding of "drawn up". (EDF § 
19) 

Commission's response: 

Once financing proposals have been decided on by the Commission, the financing 
agreement is drawn up and signed by the Commission (within 60 days) and then it 
is concluded  i.e. given  the  second  signature by the beneficiary  (by  the  end  of  the 
following  calendar  year).  Accordingly,  a  distinction  should  be  made  between 
“drawing  up”  (see  Article 17(2)  of  Annex 4  to  the  Cotonou  Agreement),  which 
means “preparing” / “drafting” the proposed agreement (which is supposed to be 
done  “within  60  days  of  the  decision”  of  the  Commission)  and  the  second 
signature, which means the “conclusion” of the agreement. The deadline by which 

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the two parties must sign a financing agreement is set at 31 December of year N+1 
(Article 54(2) of the Financial Regulation of the 9th EDF and Article 78(1) of the 
Financial  Regulation  of  the  10th  EDF).  As  a  matter  of  diligent  practice,  the 
Commission  does  not  only  draw  up  (prepare  /  draft)  but  also  sign  virtually  all 
financing agreements within 60 days of its decision. The beneficiary then has until 
31 December of year N+1 to sign. 

176. 

Notes that the Court, in the course of checking transactions, was unable to obtain the 
relevant documentation from United Nations bodies in the case of two payments (out 
of a sample of eleven); calls on the Commission, therefore, to ensure full compliance 
with the financial and administrative framework agreement. (EDF § 20) 

Commission's response: 

The  Commission  endeavours  to  ensure  full  compliance  with  the  FAFA  and  has 
drawn the attention of the UN representation in Brussels to these two cases. 

177. 

Notes  that  the  Court  highlights  the  inadequacy  of  the  controls  carried  out  by 
supervisors  or  auditors,  which  indicates  the  weaknesses  in  the  supervisory  and 
control systems; calls on the Commission, therefore, to tighten up its controls and, in 
particular,  to  introduce  a  system  of  review  of  external  audit  reports  to  check  their 
quality. (EDF § 25) 

Commission's response: 

The Commission has carried out quality reviews of its EDF external audit reports 
since 2005. The follow-up to the main findings has led to significant improvements 
in  the  use  of  terms  of  reference  for  audits  and  the  quality  of  audit  reports.  The 
quality  review  system  is  annually  reviewed  and  it  was  significantly  improved  in 
2008 and 2009 following lessons learned. 

178. 

As regards budget support, invites the Commission to provide the evidence on which 
it has based its conclusions and to present it in such a way that it is clear how much 
progress has been made (from where to where) and why this amount of progress was 
considered "sufficient"; 

Is worried by the Court's findings, but even more by the Commission's replies, which 
show  that  the  Commission  is  very  reluctant  to  share  the  information  on  which  its 
decisions on budget support are based; 

Regrets  that  it  does  not  have  sufficient  useful,  comprehensive  and  reliable 
information in order to carry out an effective oversight of budget support results; 

Invites the Commission to draw up an annual report on the use of budget support - 
and its Committee on Budgetary Control to draw up an own initiative report on this 
annual report - including useful,  comprehensive, reliable,  analytical and  evaluative, 
and not only descriptive, information on: 

− planned and disbursed budget support 

−  achievement  of  expected  results  as  set  out  by  donor  objectives  and  country 
strategies 

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− existence and quality of complementary conditions 

−  the  effectiveness  of  the  dialogue,  the  state  of  donor  harmonisation,  the 
complementary  capacity  building  which  has  taken  place  and  the  effect  of  that 
capacity building 

− achievement of improved country systems 

− accountability institutions, public finance management institutions, monitoring and 
evaluation institutions 

− the amount and rate of irregular expenditure 

− an analysis of the typology of irregularities (systemic and non-systemic) brought to 
light by controls and audits 

− remedial action taken; 

Further  invites  the  Commission  to  identify,  with  the  utmost  rigour,  countries  or 
issues in budgetary support implementation where particular parliamentary attention 
could prove useful in improving donor accountability; 

Also invites the Commission to introduce annual monitoring of this risk; 

Takes the view that the higher degree of discretion in "dynamic approach" decisions 
on  budget  support  must  be  counterbalanced  by  an  equally  high  degree  of 
transparency; invites, therefore, the Commission to make available to its Committee 
on Budgetary Control and its Committee on Development the information on which 
it bases its assessments; 

Expects  in  particular  to  receive  explicit  information  on  the  Commission's  risk 
assessments  and  analyses  of  government  systems  in  developing  countries,  its 
judgement  of 
the  significance  of  system  weaknesses  as  regards  potential 
inefficiencies and wastage of aid and estimates, quantified to the extent possible, of 
these factors, as well as information on measures taken, or to be taken in future, in 
order to mitigate the identified risks; 

Welcomes  the  Commission's  acceptance  of  the  Court's  observations,  as  well  as  the 
Commission's intentions, and looks forward to being informed of the detailed design 
and implementation of this "enhanced approach". (EDF §§ 31, 36, 40, 42-44, 47, 48, 
52, 66 and 67) 

Commission's response: 

The  Commission  fully  cooperated  with  the  Court  of  Auditors  in  providing  the 
information  and  analysis  upon  which  it  bases  its  budget  support  decisions.  The 
issues raised in the Court's Annual Report 2007 on the EDF have been addressed 
in  detail  in  Commissioner  Michel's  letter  to  the  Member  of  the  Court  dated  9th 
January  2009,  with  copy  to  the  European  Parliament.  This  was  followed  up  in 
April 2009 by a detailed presentation by the Directors General for EuropeAid and 
Development to the Members of the Court on the Commission's approach to these 
issues. 

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At  the  same  time,  strenuous  efforts  are  being  made  to  improve  the  analysis  of 
eligibility and enhance the clarity of Financing Agreements and payment decisions 
for  budget  support  programmes.  The  formulation  of  every  budget  support 
programme  now  includes  detailed  supplementary  documentation  on  each  of  the 
three  eligibility  criteria.  The 
to  all  budget  support 
programmes  approved  in  2008  are  presented  in  summarised  form  in  the  Annual 
Action  Programmes  of  2008  which  are  available  on  the  EuropeAid  public 
(Europa) website (see http://ec.europa.eu/europeaid/work/ap/aap/2008_en.htm). 

information  relating 

The  Commission  understands  and  accepts 
the  demand  for  even  greater 
transparency in the treatment of budget support. In this context, the Commission 
presented  its  indicative  plans  for  all  budget  support  disbursements  in  2009  and 
2010  on  a  country-by-country  basis  to  the  EDF  Committee  in  March  2009.  The 
Commission is nevertheless concerned to limit the proliferation of reporting on the 
EDF  (e.g.  Annual  Activity  Reports  for  EuropeAid  and  DG  Development,  the 
European  Development  Funds  Financial  Management  Report,  the  European 
Development  Funds  Financial  Report  and  the  Annual  Report  on  the  European 
Community's  Development  and  External  Assistance  Policies  and 
their 
Implementation).  The  Commission  therefore  proposes  to  provide  more  in  depth 
coverage  of  budget  support  issues  in  future  annual  reports  on  the  'European 
Community's  Development  and  External  Assistance  Policies  and 
their 
Implementation'. This more in depth coverage of budget support issues will extend 
to  information  on  results,  analysis  and  assessment  of  risk  and  draw  on  available 
public finance management (PFM) diagnostics. 

In  addition  the  Commission  believes  that  evaluations  provide  a  crucial  tool  for 
organisational learning and effective oversight. The Commission has participated 
in several OECD evaluations of budget support operations in order to examine its 
contribution to achieving sustainable results. The evaluations carried out in 2006 
in  Burkina  Faso,  Malawi,  Mozambique,  Nicaragua,  Rwanda,  Uganda  and 
Vietnam showed that with the provision of General Budget Support (GBS), "pro-
poor expenditures" increased in those respective countries. 

The Commission is actively supporting the involvement of national parliaments in 
the  review  of  budget  support  programmes.  We  have  recently  seen  increased 
participation  of  parliaments  in  annual  budget  support  review  in  Tanzania  and 
Zambia.  At  the  same  time,  the  Commission  is  providing  direct  support  to 
parliaments in a number of countries in order to further strengthen accountability 
and transparency. 

179. 

Invites the Commissioner to review these intentions until rhetoric has been replaced 
by reality and conclusive evidence, showing the extent to which budget support has 
given  better  value  for  money  than  other  aid  instruments  or  has  had  an  impact  on 
income poverty is available. (EDF § 50) 

Commission's response: 

The Commission is committed to an evidence based approach in the development 
of  budgetary  support.  In  this  perspective  the  Commission  has  spearheaded,  in 
collaboration  with  Member  States  and  other  donors,  the  development  of  a 
comprehensive evaluation methodology which will seek to assess the contribution 

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of  budget  support  to  poverty  reduction.  This  approach  will  be  tested  during  the 
course of 2009. The objective is to systematically conduct joint evaluations of GBS 
and SBS programmes at country level. Pilot countries have been selected (Zambia 
and  Niger)  and  first  evaluations  will  be  launched  in  2009.  The  Commission 
understands  that  the  Court  of  Auditors  will  also  be  carrying  out  a  performance 
audit  in  2009/10  on  general  budget  support  operations  and  look  forward  to  its 
conclusions. 

180. 

Notes  that  NAOs  (National  Authorising  Officers)  are  obligatory  in  ACP  States  but 
do not exist in RELEX developing countries; invites the Commission to inform it of 
the advantages and disadvantages of the EDF approach and to assess best practices 
across  ACP  States  in  order  to  improve  the  control  of  EDF  expenditure  by  NAO 
administrations; 

Further notes that "the lack of capacity and resources within NAO administrations" is 
"regularly reported by delegations" (point 41 of the Annual Report on the EDFs) to 
EuropeAid's central services; invites the Commission to inform it of feedback given 
to delegations on this issue. (EDF §§ 58 and 59) 

Commission's response: 

The  NAO’s  functions  and  responsibilities  exist  “de  jure”  in  accordance  with 
Article 35  of  Annex  IV  to  the  ACP-EU  Partnership  Agreement.  This  has  the 
advantage  of  making  the  national  authorities  more  responsible  for  cooperation 
programmes. However, the management capacity of the NAO and his departments 
is often not sufficient to ensure full compliance with the obligations resulting from 
Article 35. 

The  Commission  has  adapted  to  this  by  modulating  the  degree  to  which 
management is decentralised. In practice, most financing is put in place by way of 
partially  decentralised  management  (with  ex-post  controls  by  the  Commission  on 
all transactions over a given threshold) or centralised management. 

EuropeAid  is  informed  of  the  capacity  of  the  national  authorities  via  delegations 
and follow-up missions. Discussion with delegations on this subject takes place, for 
example,  via  the  External  Assistance  Management  Reports  (EAMR),  to  which 
headquarters  respond  through  regional  seminars  (with  bilateral  meetings  to 
provide  each  delegation  with  a  situation  report  on  the  cooperation  programme), 
and as part of annual operational reviews. 

The  Commission  organises  training  for  administrations  and  has  set  up  capacity 
building programmes for NAOs in a large number of countries. Any new support 
proposals  for  NAOs  are  discussed  within  EuropeAid’s  Quality  Support  Group 
when the identification fiche and then the action fiche are processed. Delegations 
are  informed  systematically  of  the  QSG’s  conclusions  and  must  take  them  into 
account when finalising projects. Within that context, the new backbone strategy to 
reorganise technical cooperation and project implementation units is an important 
tool which provides guidance for the setting-up of support for NAOs. 

181. 

Notes that, according to the Court, the number of Commission staff compared to the 
funds  committed  is  decreasing,  and  that  no  significant  increase  of  staff  is  foreseen 

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despite  the  forecasted  substantial  increase  of  commitments  under  the  10th  EDF 
(point 33 of the Annual Report on the EDFs); 

Fully  agrees  with  the  Court  that  there  "is  a  risk  that  shortage  or  inadequate 
distribution of staff or unavailability of specific skills and knowledge has an impact 
on the quality of the controls, verification and monitoring" (point 33 of the Annual 
Report on the EDFs); 

Invites  the  Commission  to  explain  how  it  envisages  managing  the  tension  -  if  not 
contradiction  -  between  the  need  for additional human resources at delegations and 
its  commitment"  to  maintain  stable  staffing  once  all  enlargement-related  personnel 
are integrated, with no requests for new posts for the period 2009-2013" and "to meet 
new staffing needs in key policy areas exclusively through redeployment within and 
between departments" [Note: Report from the Commission. Planning and optimising 
Commission human resources to serve EU priorities(SEC(2007)0530), p. 3]; 

Takes  the  view  that  additional  human  resources  could  be  found  by  abolishing  the 
split  responsibility  for  development  between  RELEX  and  DEV;  invites  the  current 
Commission to take the necessary steps with a view to facilitating this reorganisation 
in the new Commission; believes that the current division of labour on development 
co-operation  between  DEV  and  RELEX  does  not  allow  the  Commission  to 
participate fully in nurturing international efforts to promote development coherence 
and aid effectiveness; further invites the Commission to ensure that development co-
operation  is  unambiguously  dedicated  to  the  primary  objective  of  poverty 
eradication; 

Calls on the Commission to take the necessary measures to increase the number of 
staff  allocated  to  the  EDF's  management  and  control  structures  in  view  of  the 
anticipated increase in the volume of commitments under the Tenth EDF. (EDF §§ 
60-64) 

Commission's response: 

The Commission may, in addition to the statutory staff (establishment plan posts) 
dedicated  to  the  managing  of  the  EDF,  and  in  accordance  with  the  Internal 
Agreement of the EDF, resort to external personnel financed from the programme 
itself. This is not only true for the recruitment of external personnel in delegation 
(as is the case for the general budget), but also – and this is new under the 10th 
EDF  -  for  the  recruitment  of  external  personnel  at  Headquarters  (see  article  6, 
par.2, letter c) of the 10th EDF Internal Agreement). 

According  to  the  Draft  Preliminary  Budget  for  2010,  the  external  personnel  in 
place at 1/04/2009 financed by the EDF amounts to 275 contract agents (of which 
34  at  headquarters)  and  607  local  agents.  A  reinforcement  of  some  74  FTE  is 
foreseen for the period 2009-2014, whether in delegations or at Headquarters.  

Moreover, 
the  Commission's  communication  "Planning  &  Optimising 
Commission  Human  Resources  to  serve  EU  priorities"  –  SEC(2007)530  of 
24/04/2007) allows for possible additional external personnel for the management 
of  deconcentrated  external  aid  action  in  delegations  and  does  not  concern  EDF 
resources,  since  they  are  extra-budgetary.  External  personnel  is  financed  by  the 

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assigned  revenue  from  contribution  to  administrative  support  expenditure  of  the 
EDF linked to programming and implementation. 

According  to  the  institutional  balance  set  out  by  the  Treaties,  the  Commission  is 
responsible  for  the  management  of  the  EU  budget  and  the  EDF.  The  staff 
allocation  and  responsibilities  between  Commission  departments  is  therefore  a 
question  of  internal  organisation  within  the  Commission.  In  this  sense,  the 
Commission  carried  out  in  2008  an  analysis  of  the  network  structure  of 
delegations  in  order  to  rationalize  and  optimize  the  allocation  of  existing 
resources. 

182. 

Believes  that  the  Commission  should  inform  recipient  countries'  administrations  of 
its accountability obligations and request those who manage funds downstream to be 
subject to similar obligations; 

Takes  the  view,  therefore,  that  development  aid  in  general  and  budget  support  in 
particular  should  be  tied  to  an  ex-ante  disclosure  statement,  issued  by  the  recipient 
country's government and signed by the finance minister, concerning selected issues 
that affect the governance and accountability structure of a beneficiary country; 

Invites  the  Commission  to  take  the  lead  and  to  present  this  proposal  to  other 
international donors - in particular the World Bank - with a view to developing and 
implementing  such  an  instrument  in  agreement  with  other  donors;  stresses  that  the 
nature  of  penalties  for  a  deliberately  misleading  disclosure  statement  will  need 
particular attention; 

Invites the Commission to inform it of a possible timeframe for these negotiations. 
(EDF §§ 71-76) 

Commission's response: 

The Commission takes note of the suggestion of a Country Disclosure Statement. 
However the Commission believes that key information on governance is generally 
available through analysis carried out with the cooperation of the authorities and 
other actors such as the IMF and World Bank. These analyses are fully taken on 
board in our Country Strategy Papers and budget support Financing Agreements. 
If within budget support operations a government does not meet its commitments 
as regards public finance management reforms or performance indicators within 
variable  tranches,  this  would  be  taken  into  consideration  in  the  determination  of 
the tranche disbursements 

183. 

Invites the Commission to inform it of the specific procedures it has established with 
the EIB in order to coordinate the two institutions' efforts to achieve EU development 
objectives, as well as of the efficiency of these procedures. 

Invites  the  Commission  to  follow-up  closely  the  implementation  of  the  Investment 
Facility with a view to guaranteeing that it fulfils its objective as a development tool, 
and to inform its Committee on Budgetary Control on a regular basis of its findings. 
(EDF §§ 86-89) 

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Commission's response: 

Since  the  9th  EDF  the  internal  agreement  has  provided  for  a  clear  separation 
between  the  EDF  funds  managed  by  the  Commission  and  those  managed  by  the 
EIB. The Commission does not act as authorising officer for Investment Facility 
funds and, as such, is not responsible for funds managed by the EIB. 

However, as provided for in the implementing regulation for the 10th EDF, the EIB 
consults  the  Commission  on  strategy  documents,  guidelines  and  projects.  At  the 
same  time,  the  Commission  consults  the  EIB  when  devising  strategies  for  the 
different  countries  or  regions  and  the  EIB’s  scope  of  intervention  is  normally 
determined in the national or regional programming documents. 

In  addition,  the  Commission  coordinates  actively  with  the  EIB  for  a  coherent 
approach  to  grants  and  loans,  at  technical  level  through  dialogue  between  the 
respective services and at a strategic level e.g. in the framework of decision making 
structures  for  the  EU  Africa  Infrastructure  Trust  Fund,  where  both  the 
Commission  and  the  EIB  are  members  of  the  Steering  Committee,  and  for  the 
Water and Energy Facilities, for which the EIB sits as member of the two Informal 
Advisory  Groups  of  Experts.  The  purpose  of  this  coordination  is  to  ensure 
consistency and to promote synergies between development aid granted by the EU 
and the Bank’s operations. 

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Requests to the Commission in resolutions concerning the agencies 

184. 

The  European  Parliament  deplores  the  fact  that  the  ECA  again  found  serious 
problems  as  regards  the  implementation  of  procurement  rules  and  the  Staff 
Regulations in many agencies; is not prepared to accept that these weaknesses have 
persisted  over  many  years;  considers  that  the  revision  of  the  Regulation  (EC, 
Euratom)  No  2343/2002  will  not  do  away  with  these  problems  and  that  a 
fundamental overhaul of the legal framework is needed; (P6_TA(2009)0274 - §11) 

Commission's response: 

The  fact  that  some  weaknesses  are  identified  under  current  financial  rules  may 
require that some of these rules are changed in the future. 

The  Commission  will  present  its  proposal  for  the  modification  of  the  Financial 
Regulation  next  year  taking  into  account  the  observations  of  the  EP.  Financial 
Rules  specific  to  agencies  (notably  the  Framework  Financial  Regulation)  will  be 
examined, if relevant, following the triennial revision of the Financial Regulation. 
They will also have to take into account the work of the inter-institutional working 
group. 

However,  some  weaknesses  identified  by  ECA  were  also  due  to  incomplete 
application  of  current  financial  rules,  in  particular  when  some  agencies  lacked 
adequate experience in financial management. 

In  order  to  improve  the  situation,  the  Commission  provides  a  wide-ranging 
assistance  to  agencies  in  several  areas  (see  full  details  in  reply  to  §25  of  the 
resolution of the European Parliament). 

185. 

The  European  Parliament  notes  the  Commission's  statement  that  all  necessary 
support was granted to those agencies wishing to migrate to ABAC (Accrual Based 
Accounting);  notes  that  the  agencies  in  some  cases  considered  the  support  as 
insufficient. (P6_TA(2009)0274 - §12) 

Commission's response: 

The Commission is deeply involved to connecting the Agencies to ABAC. A quick 
overview of the connection of entities to ABAC since the start of the project shows 
that : 

•  19  entities  have  been  connected  at  31/12/2008.  Since  the  first  agency  has  been 
connected in 2006, the average is 6 agencies per year. 

•  In  2009,  according  to  the  forecast,  10  new  entities  will  be  connected,  which 
represents a significant effort for the Commission. 

• Now, discussions are ongoing with 5 existing Agencies which continue currently 
to  work  with  the  previous  computer  system  SI2,  and  should  migrate  to  ABAC  in 
2010. 

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•  At  the  end  of  2010,  all  existing  entities  having  introduced  a  request  should  be 
connected to ABAC (approximately forty entities). 

186. 

The European Parliament urges the Commission to consider technical abatement in 
order  to  lower  surpluses  in  case  of  low  implementation  rates  and  persistently  high 
trigger  a  reduction  of  assigned  revenue 
vacancy  rates,  which  will  also 
(P6_TA(2009)0274 - §14) 

Commission's response: 

The Commission has taken the requested action. 

It has taken the Parliament's request into  account  when  preparing  its  2010  PDB 
request, as explained in more detail in the dedicated PDB Working Document on 
agencies (section 2.1 decentralised agencies). 

187. 

The  European  Parliament  notes,  in  this  context,  the  difficulties  of  decentralised 
agencies in recruiting highly qualified staff and experts; invites the Commission and 
the  European  Personnel  Selection  Office  to  strengthen  their  supporting  efforts. 
(P6_TA(2009)0274 - §15) 

Commission's response: 

EPSO  provides  assistance  to  the  Agencies  on  the  basis  of  a  Service  Level 
Agreement signed on 14 March 2007. 25 Regulatory Agencies have signed the SLA 
between  this  date  and  today.  Currently  EPSO  provides  Agencies  with  support 
mainly on publication of posts and 3rd language testing coverage. On basis of an 
additional bilateral detailed service level agreement, EPSO also organised recently 
several open competitions for one specific agency (OHIM). 

In  the  context  of  the  implementation  of  the  EPSO's  Development  Programme, 
EPSO would be pleased to review the terms of its service level agreement with the 
Agencies in the near future, with a view to formalising improvements of service: 

- short term : provide a consultancy role that: (1) encourages the agencies to make 
full  use  of  the  data  bases  of  candidates  already  available  for  recruitment  eRL 
(laureates of competitions) /CAST (selected contract agents), (2) help Agencies to 
market more effectively any vacancies that they cannot fill from EPSO's existing 
databases,  so  that  the  Agency's  selection  standards  are  not  confused  with  those 
followed  by  EPSO  itself  when  selecting  candidates  for  the  Institutions  and  (3)  to 
make available other IT tools to the Agencies (online application form) ; 

- medium term: inventory of Agency needs, training for Agency Staff, allowing use 
of framework contracts ; 

-  long  term:  possible  full  support  of  EPSO  where  the  Office  would  organise 
selection procedures for agencies through its IT system and using Computer Based 
Testing. 

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188. 

The  European  Parliament  urges  the  Commission  to  continue  scrutinizing  the 
agencies'  budget  implementation  for  2008  and  2009  and  to  make  the  necessary 
adjustments to the agencies' budget proposals (P6_TA(2009)0274 - §16) 

Commission's response: 

The Commission has taken the requested action. 

It has taken the Parliament's request into  account  when  preparing  its  2010  PDB 
request, as explained in more detail in the dedicated PDB Working Document on 
agencies (section 2.1 decentralised agencies). 

189. 

The  European  Parliament  welcomes  the  Commission's  efforts,  since  the  2009 
Preliminary Draft Budget (PDB), to systematically take into account the last known 
surpluses  (in  the  case  of  the  2009  PDB,  those  of  year  n-2)  when  calculating  the 
Community  contribution;  in  order  to  improve  transparency  and  efficiency,  calls  on 
the  Commission,  as  a  principal  rule,  to  provide  detailed  information  on  the 
procedures  for  calculating  and  accounting  for  all  types  of  assigned  revenue  at  the 
agencies'  disposal,  specifically  those  arising  from  previous  years'  surpluses. 
(P6_TA(2009)0274 - §17) 

Commission's response: 

The Commission has taken the requested action. 

It has taken the Parliament's request into  account  when  preparing  its  2010  PDB 
request, as explained in more detail in the dedicated PDB Working Document on 
agencies (section 2.1 decentralised agencies). 

190. 

The  European  Parliament  regrets  that  the  Commission,  despite  Parliament's  request 
in  2006  discharge  resolutions  on  agencies,  has  not  presented  a  rapid  solution  and 
therefore asks the Commission again to look for a quick solution in order to enhance 
effectiveness by grouping the administrative functions of various agencies together. 
(P6_TA(2009)0274 - §24) 

Commission's response: 

The  outcome  and  calendar  for  such  a  proposal  does  not  depend  on  the 
Commission exclusively. 

This item is currently under discussion in the inter-institutional Working Group on 
regulatory agencies. 

As established in the Common Statement of 10 March 2009, the inter-institutional 
Working  Group  on  Regulatory  Agencies  will  address  a  number  of  key  issues  put 
forward  by  the  participating  Institutions,  including  the  role  and  position  of  the 
Agencies in the EU's institutional landscape, the creation, structure and operation 
of these agencies, together with funding, budgetary, supervision and management 
issues. At technical level, a list of specific issues have been identified and agreed 
upon.  Work  is  currently  ongoing  within  the  Group  and  the  Commission  will 
undertake the necessary action depending on the outcome of these discussions. 

EN 

122 

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In this context the inter-institutional Working Group will, inter alia, examine the 
findings  of  the  study  commissioned  by  the  European  Parliament  on  the 
opportunity  and  feasibility  of  establishing  common  support  services  for  EU 
Agencies (April 2009). 

191. 

The  European  Parliament  encourages  the  Commission  to  increase  its  efforts  in 
providing  all  necessary  administrative  assistance  to  relatively  small  and  especially 
newly-created agencies; bearing in mind negative experiences from the past; calls on 
the  Commission  to  issue  in  the  shortest  possible  time  special  guidelines  for  the 
agencies concerning the application of financial rules in relation to staff recruitment, 
public procurement and so on (P6_TA(2009)0274 - §25) 

Commission's response: 

The  Commission  provides  wide-ranging  assistance  to  agencies  in  several  areas, 
particularly regarding budgetary (notably: annual budgetary procedure, including 
financial  management  and  accounting)  and 
activity-based  management, 
administrative  issues  (for  example:  implementing  provisions  for  the  staff 
regulations  and  staff  policy  plan).  Some  of  this  assistance  is  provided  by  the 
Commission  by  legal  requirement,  while  in  many  other  cases  the  Commission 
assists agencies on a voluntary basis. 

Moreover,  the  Commission  has  improved  its  co-operation  with  the  agencies 
concerning  the  participation  of  its  representatives  in  the  Management  Boards, 
Memoranda of Understanding and services provided. 

In practice, agencies receive the same type of assistance than Commission services 
concerning budgetary and financial management issues, through the CFS Central 
Financial  Service)  helpdesk,  the  accounting  services  of  the  Commission,  internet 
tools and training, to which they have already full access. 

In particular, detailed guidance on procurement and other financial management 
issues is made available on a dedicated website. 

Agencies  also  already  have  access  to  a  number  of  framework  contracts  of  the 
Commission,  provided  they  are  listed  as  potential  contracting  authorities  in  the 
tender  documents 
to  an 
-  as 
interinstitutional contract). 

independent  entity 

(equivalent 

for  any 

Finally,  agencies  are  encouraged  to  sign  a  number  of  service-level  agreements 
with all horizontal Commission Directorates-General for support services, notably 
those relating to buildings and security, IT systems (including ABAC where 22 out 
of 31 agencies are already using this central system, with 2 more scheduled to join 
by  the  end  of  2009  and  5  more  during  2010),  general  and  language  training, 
medical services, etc. 

The  Commission  undertook  a  review  of  the  support  it  offers  to  agencies,  which 
resulted  in  a  document  mapping  all  the  services  currently  delivered  by  the 
Commission. This exercise had a twofold purpose: first, to ensure that agencies are 
aware  of  the  full  scope  of  services  that  the  Commission  offers;  and  second,  to 
identify areas where assistance can be improved and rendered more efficient. This 

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mapping exercise was done in close cooperation with agencies via their TROIKA. 
The  final  document  will  be  distributed  to  agencies  soon.  Further  steps  could  be 
undertaken on that basis. 

The Commission will take into account the results of the interinstitutional Working 
Group in order to further improve its assistance, where necessary. 

192. 

The  European  Parliament  recalls  the  Commission's  horizontal  evaluation  of  the 
decentralised agencies referred to in its above-mentioned Communication, the results 
of  which  should  be  available  by  2009-10;  calls  on  the  Commission  to  ensure  that 
evaluations of agencies become more transparent in the interests of both the agencies 
and stakeholders (P6_TA(2009)0274 - §32) 

Commission's response: 

In  addition  to  the  ongoing  evaluation  of  decentralised  agencies,  the  Commission 
has  carried  out  two  meta-studies  -  one  in  2003  and  one  in  2008  -  that  provide  a 
horizontal assessment of the system of decentralised agencies. Furthermore, in the 
context of the discussion of the PDB, the Commission has provided the budgetary 
authority with a set of documents containing information on existing and planned 
evaluations of agencies, as well a summary of main evaluation findings. 

Regarding  the  evaluations  of  individual  agencies,  it  is  important  to  bear  in  mind 
that  generally  agencies  are  responsible  for  undertaking  their  own  evaluation  on 
programmes  and  activities,  and  only  certain  Constituent  Acts  also  foresee  a  role 
for the Commission concerning this kind of evaluations. 

See also reply to the European Parliament's request in § 256 of the 2007 discharge 
resolution concerning the guidelines on evaluation. 

193. 

The  European  Parliament  recalls  the  suggestion  made  in  its  above-mentioned 
resolution that the inter-institutional working group address, inter alia, the need for a 
standard approach to the presentation of the agencies' activities during the financial 
year in question (P6_TA(2009)0274 - §40) 

Commission's response: 

This item is among the discussion items agreed at present by the inter-institutional 
Working Group. 

As established in the Common Statement of 10 March 2009, the inter-institutional 
Working  Group  on  Regulatory  Agencies  will  address  a  number  of  key  issues  put 
forward  by  the  participating  Institutions,  including  the  role  and  position  of  the 
Agencies in the EU's institutional landscape, the creation, structure and operation 
of these agencies, together with funding, budgetary, supervision and management 
issues. At technical level, a list of specific issues have been identified and agreed 
upon. 

194. 

The  European  Parliament  Insists  on  the  need  to  establish  minimum  common 
standards  with  regard  to  the  setting-up  of  decentralised  agencies  in  the  future. 
(P6_TA(2009)0274 - §43) 

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124 

   EN 

Commission's response: 

This item is currently under discussion in the inter-institutional Working Group on 
regulatory agencies. 

As established in the Common Statement of 10 March 2009, the inter-institutional 
Working  Group  on  Regulatory  Agencies  will  address  a  number  of  key  issues  put 
forward  by  the  participating  Institutions,  including  the  role  and  position  of  the 
Agencies in the EU's institutional landscape, the creation, structure and operation 
of these agencies, together with funding, budgetary, supervision and management 
issues. At technical level, a list of specific issues have been identified and agreed 
upon. Work is currently ongoing within the Group and appropriate measures may 
be adopted depending on the outcome of these discussions. 

195. 

The European Parliament asks the Commission and the agencies, in the meantime, to 
make available the financial documentation produced by the agencies in a complete, 
comparable  and  up-to-date  manner  on  the  common  website  launched  by  the 
Commission  and 
intranet. 
(P6_TA(2009)0274 - §44) 

the  decentralised  agencies  on 

the  Commission's 

Commission's response: 

The  Commission  will  undertake  the  necessary  actions  to  keep  up-to-date 
information on the common Commission-Agencies website. 

196. 

The European Parliament calls on the inter-institutional working group, in the light 
of the 2007 discharge exercise, to consider  

- the reasons behind budget implementation problems, in particular the lack of a top-
down approach concerning the agencies' budgets and staffing, 

- the question why compliance with recruitment and procurement rules is a recurrent 
problem in many agencies, 

-  lessons  learned  from  the  specific  experience  of  the  European  Anti-Fraud  Office 
related to agencies, 

- how  the implementation of  policies by agencies  can  be  made  more  cost  efficient, 
for example by grouping the administrative functions of various agencies together, 

- how the Commission's different support functions and services could be made more 
reactive in order to respond quicker to the agencies' needs. (P6_TA(2009)0274 - §45) 

Commission's response: 

All these aspects are currently under discussion in the inter-institutional Working 
Group on regulatory agencies. 

As established in the Common Statement of 10 March 2009, the inter-institutional 
Working  Group  on  Regulatory  Agencies  will  address  a  number  of  key  issues  put 
forward  by  the  participating  Institutions,  including  the  role  and  position  of  the 
Agencies in the EU's institutional landscape, the creation, structure and operation 

EN 

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of these agencies, together with funding, budgetary, supervision and management 
issues. At technical level, a list of specific issues have been identified and agreed 
upon. Work is currently ongoing within the Group and appropriate measures may 
be adopted depending on the outcome of these discussions. 

197. 

European Translation Centre: The European Parliament insists that the Commission 
and  the  Centre  strive  to  resolve  the  dispute  over  pension  contributions  for  staff 
quickly; requests the Centre to inform the discharge authority of the outcome of the 
negotiations. (P6_TA(2009)0272 - §8) 

Commission's response: 

On 11.12.2007, the Court of Justice has transferred case C-269/06 to the Tribunal 
of First Instance, where it is now registered as case T-406/07. 

The  Commission  is  closely  following  this  issue  and  will  inform  the  European 
Parliament of any development in this case. 

198. 

European  Agency  for  Reconstruction:  The  European  Parliament  requests  the 
Commission to inform Parliament's competent committee of: 

(a) how the unused budgetary appropriations will be implemented; 

(b)  whether  a  memorandum  of  understanding  covering  all  items  in  the  Agency's 
balance sheet has been concluded between the Agency and the Commission, or how 
the  Commission  has  otherwise  ensured  the  completeness  of  the  transfer  of  all  files 
and items; 

(c) how the accumulated surplus of EUR 180 000 000 shown in the Agency's balance 
sheet at 31 December 2007 will be managed by the Commission. (P6_TA(2009)0299 
- §9) 

Commission's response: 

The  Commission  will  provide  the  information  requested  by  the  European 
Parliament  in  its  fifth  and  final  information  note  on  the  phasing  out  of  the 
European Agency for Reconstruction. 

199. 

Fundamental Rights Agency: The European Parliament notes that OLAF has opened 
an investigation concerning the Agency; calls on the Agency and on the Director in 
particular  to  fully  cooperate  with  OLAF;  requests  that  OLAF,  the  Agency  and  the 
Commission  inform  the  discharge  authority  of  the  results  of  the  investigation  and 
possible follow-up measures as soon as possible (P6_TA(2009)0304 - §6) 

Commission's response: 

OLAF is able to confirm that the case in question was closed without follow-up as 
no irregularities were identified. 

200. 

The  European  Parliament  urges  the  Commission  to  ensure  that  the  European 
Maritime  Safety  Agency,  the  European  Aviation  Safety  Agency  and  the  European 
Railway  Agency  maintain  strict  financial  discipline  in  the  future  and  always  works 

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within  the  agreed  budgets.  (P6_TA(2009)0298  -  §12,  P6_TA(2009)0267  -  §11  and 
P6_TA(2009)0297 - §232) 

Commission's response: 

The  requested  action  has  been  taken.  The  Commission  insists  that  all  EU  bodies 
should  comply  with  EC  legislation,  and  with  the  Preliminary  Draft  Budget  for 
2010 it confirms its policy to ensure that the agencies present more realistic budget 
proposals. 

However,  it  should  be  noted  that  the  regulatory  agencies  are  independent  bodies 
set  up  by  Community  law  and  that  they  are  therefore  responsible  for  their  own 
administration and management. 

201. 

European Police College: The European Parliament asks the Commission to closely 
supervise the implementation of the College's budget (P6_TA(2009)0295 - §3) 

Commission's response: 

The  Commission  accepts  the  request.  Taking  account  of  the  legal  and  budgetary 
the 
the  Commission 
autonomy  of 
implementation  of  the  CEPOL's  budget.  Particular  attention  is  paid  to  the 
cashflow position and the forecast of expenditure and implementation. 

is  closely  monitoring 

the  agencies, 

202. 

European Police College: The European Parliament calls on the College, OLAF and 
the  Commission  to  inform  the  discharge  authority  of  the  results  of  the  OLAF 
investigation without delay as soon as they are available. (P6_TA(2009)0295 - §20) 

Commission's response: 

OLAF  agrees  to  provide  information  on  the  outcome  of  its  investigation  while  at 
the same time respecting the need for confidentiality for cases where action is still 
ongoing by the national judicial authorities. 

203. 

European  GNSS  Supervisory  Authority:  The  European  Parliament  calls  on  the 
Commission,  to  which  the  Galileo  and  EGNOS  project  assets  are  currently  being 
transferred,  to  consider  the  ECA's  observations  and  ensure  that  these  assets  are 
properly recorded in the accounts. (P6_TA(2009)0296 - §16) 

Commission's response: 

The  Commission  is  currently  working  together  with  the  European  Space  Agency 
and the European GNSS Supervisory Authority (GSA) to ensure that assets from 
the  EGNOS  system  and  the  relevant  assets  of  the  GSA  are  transferred  to  the 
Commission  and  properly  recorded  in  the  accounts.  The  transfer  of  the  assets  of 
the Galileo programme from ESA to the Commission is not foreseen to begin until 
the end of 2010. 

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