Proposal for a Regulation of the European Parliament and of the Council amending Council Regulation (EC, Euratom) No 1605/2002 on the Financial Regulation applicable to the general budget of the European Communities, as regards the European external action service {SEC(2010) 257}
Date: 2010-02-24
Institutions: European Commission
Subjects: EU office or agency, EU relations, common foreign and security policy, financial management, financial regulation, general budget (EU), implementation of the budget

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EUROPEAN COMMISSION 

Brussels, 24.3.2010 
COM(2010) 85 final 

2010/0054 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

amending Council Regulation (EC, Euratom) No 1605/2002 on the Financial Regulation 
applicable to the general budget of the European Communities, as regards the European 
external action service 

{SEC(2010) 257} 

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EXPLANATORY MEMORANDUM 

The present Commission proposal aims at amending the Financial Regulation in line with the 
creation  of  the  European  External  Action  Service  (hereinafter  EEAS)  as  foreseen  in  the 
Lisbon Treaty. The Financial Regulation (FR) governs all the rules and procedures applicable 
to  the  use  of  EU  funds  and  must  be  respected  by  all  institutions.  It  is  completed  by 
Implementing  Rules  (IR)  which  should  also  be  amended,  in  a  separate  proposal,  to 
accommodate  for  the  creation  of  the  EEAS.  Specificities  for  the  management  of  the  EEAS 
Staff are put forward in a separate Commission proposal to amend the Staff Regulation. 

The changes proposed build on the guidelines endorsed by the European Council of October 
29-30, 2009 for the creation of the future EEAS as a sui generis service. 

The  Commission  will  present,  as  foreseen  in  Article  184  of  the  Financial  Regulation,  its 
proposal for the triennial review of the Financial Regulation at the end of the first semester 
2010.  However,  the  Commission  considers  that  an  ad-hoc  revision  of  the  FR  is  inevitable 
before and separately from the triennial review if the EEAS is to be put in place rapidly. Other 
aspects relating to the implementation of the Lisbon Treaty have been covered by a separate 
proposal adopted by the Commission on 3 March 2010 (COM(2010) 71). 

(1)  Main changes relating to the creation of the EEAS 

Article 27(3) of the Treaty on the European Union (TEU) foresees that the EEAS assist the 
High Representative (HR) to fulfil his mandate and that the organisation and functioning of 
the service shall be established by a decision of the Council, on a proposal from the HR after 
consulting the European Parliament and after obtaining the consent of the Commission. 

In  its  conclusions,  the  European  Council  of  October  29-30,  2009  has  endorsed  some 
guidelines for the creation of the future EEAS as a sui generis service and invited the High 
Representative to put the EEAS in place 'by the end of April 2010'.  

In budgetary terms, the EEAS will be treated as an institution in the sense of Article 1 of the 
Financial Regulation so that it will have budgetary autonomy, i.e. its own section in the EU 
budget. It will implement its own administrative  expenditure (like  all other institutions) and 
will  therefore  receive  discharge  from  the  European  Parliament  for  it.  The  European 
Parliament will therefore exercise its full budgetary and control powers towards the EEAS.  

Moreover,  current  Delegations  of  the  Commission  around  the  world  become  Union 
Delegations  and  will  be  part  of  the  EEAS.  Because  these  Delegations  will  continue 
implementing external aid, which is currently for most of them their main task, ways should 
be found to allow them to implement operational expenditure while they are not anymore part 
of the Commission, taking into account that the concerned part of their staff, i.e. operational 
and  financial  staff,  will  remain  Commission  staff.  The  Commission  has  been  particularly 
attentive  that  the  present  proposal  allow  to  EEAS  to  fulfil  this  task  of  a  unified  external 
action, without leading to a weakening of sound financial management, accountability and the 
protection  of  the  financial  interests  of  the  Union.  Naturally,  the  European  Parliament  will 
continue  to  grant  discharge  to  the  Commission  for  the  implementation  of  the  Commission 
section of the Budget, including operational appropriations implemented by Heads of Union 
Delegations who will act as sub-delegated authorising officers of the Commission. 

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To  achieve  this  purpose,  the  modifications  introduced  in  the  Financial  Regulation  aim  at 
integrating  the  EEAS  within  the  financial  governance  framework  of  the  Commission 
whenever it participates in the implementation of its operational budget. In this context, it is 
essential that the EEAS builds on the experience, guidance, support and training for financial 
management and internal control in the external relations field which have been developed by 
the Commission over many years. 

The  proposed  approach  is  that  Heads  of  Union  Delegations  be  given  sub-delegated 
implementation powers by the responsible Commission Directors Generals (DG). They would 
become  authorising  officers  by  sub-delegation  (AOSDs)  of  the  Commission  and  would  be 
responsible  before  the  DG  which  has  sub-delegated  budget  implementation  tasks  to  them. 
Specific  rules  are  therefore  proposed  so  that  Heads  of  Union  Delegations,  when  they 
implement part of the Commission section of the budget apply the Commission rules for the 
implementation  of  the  budget  and  are  submitted  to  the  same  duties  and  obligations  as  any 
other  sub-delegated  authorising  officer  of  the  Commission.  To  this  effect  the  Commission 
may give them instructions where necessary and appropriate. 

Current rules on OLAF will also apply to Heads of Union Delegations in cases of financial 
irregularities  relating  to  the  management  of  appropriations  from  the  EEAS  section  of  the 
Budget and appropriations sub-delegated to them from the Commission section of the Budget. 
No specific provision concerning OLAF is required in the Financial Regulation. However, the 
present  Commission  proposal  includes  a  new  provision  so  that  the  panel  of  irregularities  of 
the  Commission  is  also  the  panel  of  irregularities  for  the  EEAS  in  cases  where  the 
Commission sub-delegates implementation powers to Heads of Union Delegations. 

New  provisions  are  also  proposed  to  ensure  that  the  HR  plays  a  central  role  for  the  proper 
coordination and exchange of information between the EEAS and the Commission. 

Finally, in order to ensure an efficient management of Union Delegations, it is proposed that 
administrative and support expenditure which finance common costs in Delegations should be 
executed  by  a  single  support  service,  whatever  the  section  of  the  Budget  in  which  the 
respective appropriations are entered. To that effect, the possibility for detailed rules should 
be foreseen in Article 50 FR, to be convened with the Commission. 

(2) 

Commission Staff Working document concerning the Implementing Rules 

To  complement  the  present  Commission  proposal  to  amend  the  Financial  Regulation,  a 
Commission  Staff  working  document  presents  the  changes  required  in  the  Implementing 
Rules.  These  changes  will  be  adopted  by  the  Commission  once  the  amended  FR  is  adopted 
and  will  concern  the  specific  provisions  which  should  apply  to  Heads  of  Delegation  when 
they act as sub-delegated authorising officers of the Commission, in particular: 

–  the  fact  that  they  have  to  sign  the  Charter  for  sub-delegated  authorising  officers,  which 
stipulates  in  detail  their  duties  and  obligations,  before  starting  to  implement  the  EU 
Budget; 

–  the Internal Rules of the Commission for the execution of the Budget; 

–  the code of professional standards adopted by the Commission; 

–  the  panel  of  irregularities  of  the  Commission  (complementary  provisions  to  the  ones 

already set out in the FR are enshrined in the Implementing Rules).  

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2010/0054 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

amending Council Regulation (EC, Euratom) No 1605/2002 on the Financial Regulation 
applicable to the general budget of the European Communities, as regards the European 
external action service 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  functioning  of  the  European  Union,  and  in  particular 
Article 322 thereof, in conjunction with the Treaty establishing the European Atomic Energy 
Community, and in particular Article 106a thereof, 

Having regard to the proposal from the European Commission, 

Having regard to the opinion of the Court of Auditors1, 

Acting in accordance with the ordinary legislative procedure, 

Whereas: 

(1) 

(2) 

(3) 

Council  Regulation  (EC,  Euratom)  No  1605/2002  of  25  June  2002  on  the  Financial 
Regulation  applicable  to  the  general  budget  of  the  European  Communities2 
(hereinafter  the  Financial  Regulation),  lays  down  the  budgetary  principles  and 
financial  rules  which  should  be  respected  in  all  legislative  acts.  It  is  necessary  to 
amend  certain  provisions  of  the  Financial  Regulation  in  order  to  take  account  of  the 
amendments introduced by the Treaty of Lisbon. 

The  Treaty  of  Lisbon  establishes  a  European  External  Action  Service  (hereinafter 
“EEAS”). According to the conclusions of the European Council of 29 and 30 October 
2009,  the  EEAS  is  a  service  of  a  sui  generis  nature  and  should  be  treated  as  an 
institution for the purposes of the Financial Regulation.  

Given  that  the  EEAS  should  be  treated  as  an  institution  for  the  purposes  of  the 
Financial Regulation, the European Parliament is to grant discharge to the EEAS for 
the  implementation  of  the  appropriations  voted  in  the  EEAS  section  of  the  Budget. 
The European Parliament should also continue to grant discharge to the Commission 
for the implementation of Commission's section of the Budget, including operational 
appropriations  implemented  by  Heads  of  Delegations  who  are  sub-delegated 
authorising officers of the Commission. 

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OJ C , , p. . 
OJ L 248, 16.9.2002, p. 1. 

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(4) 

(5) 

(6) 

(7) 

(8) 

(9) 

The Lisbon Treaty foresees that Commission Delegations become part of the EEAS as 
Union  Delegations.  In  order  to  ensure  their  efficient  management,  all  administrative 
and support expenditure of Union Delegations which finance common costs should be 
executed  by  a  single  support  service.  To  that  effect,  the  Financial  Regulation  should 
foresee the possibility for detailed rules, to be agreed with the Commission, in order to 
facilitate  the  implementation  of  the  Union  Delegations'  operating  appropriations 
entered in the EEAS and the Council sections of the Budget. 

It is necessary to ensure the continuity of the functioning of Union Delegations and in 
particular  the  continuity  and  efficiency  in  the  management  of  external  aid  by  the 
Delegations.  Therefore  the  Commission  should  be  authorised  to  subdelegate  its 
powers  of  budget  implementation  of  operational  expenditure  to  Heads  of  Union 
Delegations  belonging  to  EEAS  as  a  separate  institution.  Furthermore,  where  the 
Commission implements the budget under direct centralised management, it should be 
allowed  to  do  so  also  through  sub-delegation  to  Heads  of  Union  Delegations.  The 
authorising  officers  by  delegation  of  the  Commission  should  continue  to  be 
responsible  for  the  definition  of  internal  management  and  control  systems,  while  the 
Heads  of  Union  Delegations  should  be  responsible  for  the  adequate  set  up  and 
functioning  of  internal  management  and  control  systems  and  for  the  management  of 
the  funds  and  the  operations  carried  out  within  their  Delegations  and  they  should 
report twice a year to that effect.  

In order to comply with the principle of sound financial management, Heads of Union 
Delegations,  when  acting  as  sub-delegated  authorising  officers  of  the  Commission, 
should  apply  the  Commission  rules  and  should  be  subject  to  the  same  duties, 
obligations  and  accountability  as  any  other  sub-delegated  authorising  officer  of  the 
Commission.  For  those  purposes,  they  should  also  refer  to  the  Commission  as  their 
institution where required. 

The Commission retains full responsibility for the discharge procedure as concerns the 
Commission  section  of  the  budget  implemented  by  EEAS.  In  order  to  allow  the 
Commission  to  fulfil  its  responsibilities,  the  Heads  of  Union  Delegations  should 
provide the necessary information. The High Representative of the Union for Foreign 
Affairs  and  Security  Policy  should  facilitate  the  cooperation  between  Union 
Delegations and Commission departments.  

The  accounting  officer  of  the  Commission  remains  responsible  for  the  entire 
Commission  section  of  the  Budget,  including  accounting  operations  relating  to 
appropriations sub-delegated to Heads of Union Delegations. Therefore, it is necessary 
to clarify that the responsibilities  of the accounting officer of the EEAS should only 
concern the EEAS section of the budget to avoid any overlapping of responsibilities. 

In  order  to  ensure  coherence  and  equality  of  treatment  between  sub-delegated 
authorising officers who are EEAS staff and those who are Commission staff, as well 
as proper information of the Commission, the special financial irregularities panel of 
the  Commission  should  also  be  responsible  for  handling  irregularities  within  the 
EEAS  where  the  Commission  sub-delegated  implementation  powers  to  Heads  of 
Union  Delegations.  Nonetheless,  in  order  to  maintain  the  link  between  financial 
management responsibility and disciplinary action, the Commission should be entitled 
to  request  the  High  Representative  of  the  Union  for  Foreign  Affairs  and  Security 
Policy  to  initiate  proceedings  if  irregularities  concerning  the  competencies  of  the 

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Commission  sub-delegated  to  the  Heads  of  Union  Delegations  were  found  by  the 
panel.  In  such  a  case  the  High  Representative  should  take  the  appropriate  action  in 
accordance with the Staff Regulation. 

(10) 

In order to ensure coherence, efficiency and cost-effectiveness of financial control, the 
internal auditor of the Commission should act as the internal auditor of the EEAS in 
respect of the budget implementation of both the Commission and the EEAS sections 
of the Budget. 

(11)  Council  Regulation  (EC,  Euratom)  No  1605/2002  should  therefore  be  amended 

accordingly, 

HAVE ADOPTED THIS REGULATION: 

Regulation (EC, Euratom) No 1605/2002 is amended as follows: 

Article 1 

(1) 

In  the  first  subparagraph  of  Article  1(2),  the  words  'the  European  External  Action 
Service' are inserted in front of 'the Economic and Social Committee'. 

(2) 

In Article 28(1), the first subparagraph is replaced by the following:  

"Any proposal or initiative submitted to the legislative authority by the Commission, 
the  High  Representative  of  the  Union  for  Foreign  Affairs  and  Security  Policy  or  a 
Member  State,  which  may  have  an  impact  on  the  budget,  including  changes  in  the 
number  of  posts,  must  be  accompanied  by  a  financial  statement  and  the  evaluation 
provided for in Article 27(4) of this Regulation." 

(3) 

In Article 30(3), the first subparagraph is replaced by the following: 

"The Commission shall make available, in an appropriate manner, information on the 
beneficiaries  of  funds  deriving  from  the  budget  held  by  it  when  the  budget  is 
implemented on a centralised basis pursuant to Article 53a, and information on the 
beneficiaries  of  funds  as  provided  by  the  entities  to  which  budget  implementation 
tasks are delegated under other modes of management."  

(4) 

In  the  first  paragraph  of  Article  31,  to  the  words  'the  European  External  Action 
Service' are inserted in front of 'the Economic and Social Committee'. 

(5) 

In the first paragraph of Article 50, the following sentence is added: 

"However,  detailed  rules  may  be  agreed  with  the  Commission  in  order  to  facilitate 
the implementation of the Union Delegations' operating appropriations entered in the 
EEAS and the Council sections of the Budget." 

(6) 

In Article 51, the following paragraphs are added: 

"However,  the  Commission  may  delegate  its  powers  of  budget  implementation 
concerning the appropriations of its own section to the Heads of Union Delegations. 
When  Heads  of  Union  Delegations  act  as  sub-delegated  authorising  officers  of  the 
Commission,  they  shall  apply  the  Commission  rules  for  the  implementation  of  the 

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budget  and  shall  be  submitted  to  the  same  duties,  obligations  and  accountability  as 
any other sub-delegated authorising officer of the Commission. 

For the purposes of the second paragraph, the High Representative of the Union for 
Foreign Affairs and Security Policy shall take the measures necessary to facilitate the 
cooperation between Union Delegations and Commission departments." 

(7) 

Article 53a is replaced by the following: 

"Article 53a 

the  Commission 

Where 
the  budget  on  a  centralised  basis, 
implementation  tasks  shall  be  performed,  either  directly,  by  its  departments  or  by 
Union  Delegations  in  accordance  with  the  second  paragraph  of  Article  51,  or 
indirectly, in accordance with Articles 54 to 57." 

implements 

(8) 

In Article 59, the following paragraph 5 is added: 

"5.  Where  Heads  of  Union  Delegations  act  as  authorising  officers  by  sub-
delegation  in  accordance  with  the  second  paragraph  of  Article  51,  they  shall 
refer, where their duties as authorising officer so require, to the Commission as 
their institution." 

(9) 

In section 2, the following Article 60a is added: 

"Article 60a 

1.  Where Heads of Union Delegations act as authorising officers by subdelegation 
in  accordance  with  the  second  paragraph  of  Article  51,  they  shall  cooperate 
closely  with  the  Commission  for  the  proper  implementation  of  the  funds,  in 
order to ensure in particular the legality and regularity of financial transactions, 
the respect of the principle of sound financial management in the management 
of the funds and the effective protection the financial interests of the Union.  

To this effect, they shall take the measures necessary to prevent any situation 
susceptible  to  put  at  stake  the  responsibility  of  the  Commission  for  the 
implementation of the budget sub-delegated to them as well as any conflict of 
interest  or  priorities  having  impact  on  the  implementation  of  the  financial 
management tasks sub-delegated to them.  

Where a situation or conflict referred to in the second subparagraph arise, the 
Heads  of  Union  Delegations  shall  inform  the  responsible  Commission 
department and the High Representative of the Union for Foreign Affairs and 
Security Policy thereof without delay. 

2.  When a Head of a Union Delegation finds himself in a situation referred to in 
Article 60(6), he shall refer to the specialised financial irregularities panel set 
up  pursuant  to  Article  66(4).  In  the  event  of  any  illegal  activity,  fraud  or 
corruption  which  may  harm  the  interests  of  the  Union,  he  shall  inform  the 
authorities and bodies designated by the applicable legislation. 

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3.  Heads of Union Delegations acting as authorising officers by subdelegation in 
accordance with the second paragraph of Article 51 shall report twice a year to 
their  authorising  officer  by  delegation  so  that  the  latter  can  integrate  their 
reports in his annual activity report referred to in Article 60(7). That biannual 
report  submitted  by  the  Heads  of  Union  Delegation  shall  include  information 
on the efficiency and effectiveness of internal management and control systems 
put  in  place  in  their  delegation,  as  well  as  the  management  of  operations 
subdelegated to them. 

4.  Heads of Union Delegations acting as authorising officers by subdelegation in 
accordance with the second paragraph of Article 51 shall reply to any request 
by the authorising officer by delegation of Commission." 

(10) 

In Article 61(1), the following subparagraph is added: 

"The responsibilities of the accounting officer of EEAS shall only concern the EEAS 
section of the budget as implemented by the EEAS." 

(11) 

Article 66 is amended as follows: 

(a) 

the following paragraph 3a is inserted: 

"3a.  In  the  event  of  subdelegation  to  the  Heads  of  Union  Delegations,  the 
authorising officer by delegation shall be responsible for the definition of 
the  internal  management  and  control  systems  put  in  place,  their 
efficiency  and  effectiveness.  The  Heads  of  Union  Delegations  shall  be 
responsible for the adequate set up and functioning of those systems, in 
accordance with the instructions of the authorising officer by delegation, 
and for the management of the funds and the operations they carry within 
the Union Delegation under their responsibility. 

Heads of Union Delegations shall report on their responsibilities pursuant 
to  the  first  subparagraph  of  this  paragraph  in  accordance  with  Article 
60a(3). 

Each year, Heads of Union Delegations provide to the authorising officer 
by delegation of the Commission a statement of assurance on the internal 
management and control systems put in place in their Delegation in order 
to  allow  the  authorising  officer  to  establish  his  own  statement  of 
assurance." 

(b) 

the following paragraph 5 is added: 

"5.  Where  Heads  of  Union  Delegations  act  as  authorising  officers  by 
subdelegation  in  accordance  with  the  second  paragraph  article  51,  the 
specialised  financial  irregularities  panel  set  up  by  the  Commission 
pursuant  to  paragraph  4  of  this  Article  shall  be  competent  for  cases 
referred to in that paragraph. 

If  the  panel  detects  systemic  problems,  it  shall  send  a  report  with 
recommendations  to  the  authorising  officer,  the  High  Representative  of 
the Union for Foreign Affairs and Security Policy and to the authorising 

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officer  by  delegation  of  the  Commission,  provided  the  latter  is  not  the 
person involved, as well as to the internal auditor. 

On the basis of the opinion of the panel, the Commission may request the 
High Representative of the Union for Foreign Affairs and Security Policy 
to initiate,  in  his  capacity as appointing authority, proceedings entailing 
liability  to  disciplinary  action  or  to  payment  of  compensation  against 
authorising  officers  by  subdelegation  if  irregularities  concern  the 
competencies  of  the  Commission  sub-delegated  to  them.  In  such  a  case 
the High Representative shall take appropriate action in accordance with 
the Staff Regulation." 

(12) 

In Article 85, the following paragraphs are added: 

"For the purposes of the internal auditing of the EEAS, Heads of Union Delegations, 
acting  as  authorising  officers  by  subdelegation  in  accordance  with  the  second 
paragraph  of  Article  51  shall  be  subject  to  the  verifying  powers  of  the  internal 
auditor of the Commission for the financial management sub-delegated to them. 

For  reasons  of  coherence,  efficiency  and  cost-effectiveness,  the  internal  auditor  of 
the Commission shall also act as the internal auditor of the EEAS in respect of the 
budget implementation of the EEAS section of the budget." 

(13) 

In Article 163, the first sentence is replaced by the following: 

"The actions referred to in this Title may be implemented on a centralised basis by 
the Commission pursuant to Article 53a, by shared management, on a decentralised 
basis  by  the  beneficiary  third  country  or  countries,  or  jointly  with  international 
organisations in compliance with the relevant provisions of Articles 53 to 57." 

(14) 

Article 165, the first sentence is replaced by the following: 

"The  implementation  of  actions  by  beneficiary  third  countries  or  international 
organisations is subject to scrutiny by the Commission pursuant to Article 53a." 

(15) 

In Article 185, paragraph 3 is replaced by the following: 

"3. The Commission's internal auditor shall exercise the same powers over the bodies 
referred  to  in  paragraph  1  as  he/she  does  in  respect  of  Commission  departments  or 
Union Delegations." 

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

Article 2 

This Regulation shall be binding in its entirety and directly applicable in all Member States. 

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Done at Brussels,  

For the European Parliament 
The President 

For the Council 
The President 

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