Proposal for a COUNCIL REGULATION amending Regulation (EC) No 215/2008 on the Financial Regulation applicable to the 10th European Development Fund, as regards the European external action service
Date: 2010-12-20
Institutions: European Commission
Subjects: EU office or agency, European Development Fund, financial management, financial regulation, implementation of the budget

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 20.12.2010 
COM(2010) 795 final 

2010/0381 (NLE) 

Proposal for a 

COUNCIL REGULATION 

amending Regulation (EC) No 215/2008 on the Financial Regulation applicable to the 
10th European Development Fund, as regards the European external action service 

(presented by the Commission) 

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EXPLANATORY MEMORANDUM 

The Financial Regulation applicable to the 10th European Development Fund (10th EDF FR) 
governs all the rules and procedures applicable to the use of EDF resources. It is aligned as far 
as possible with the provisions of the Financial Regulation applicable to the general budget of 
the  European  Union,  while  taking  into  account  the  specificity  of  the  EDF,  whose  financing 
remains outside the EU budget.  

The  present  Commission  proposal  aims  at  amending  the  Financial  Regulation  applicable  to 
the  10th  European  Development  Fund  to  take  into  account  the  creation  of  the  European 
External Action Service (hereinafter EEAS) as foreseen in the Lisbon Treaty.  

The changes proposed are in line with the modifications brought to the Financial Regulation 
applicable  to  the  general  budget  for  the  same  purpose,  by  Regulation  No  1081/2010  of  the 
European  Parliament  and  of  the  Council  of  24  November  2010  amending  Financial 
Regulation applicable to the general budget, as regards the European External Action Service. 
As the current proposal could not be presented before the final adoption of the Regulation No. 
1081/2010  on  24  November  2010,  the  Commission  considers  that  it  is  urgent  to  amend  the 
10th  EDF  FR  as  soon  as  possible,  in  order  to  provide  a  stable  legal  framework  for  the 
implementation of the EDF and to prevent discrepancies in implementation of the budget and 
the EDF resources. 

As  provided  for  in  Article  10(2)  of  the  Internal  Agreement,  the  present  Commission's 
proposal  should  be  adopted  by  Council,  after  having  received  the  opinions  of  the  European 
Investment Bank and the Court of Auditors.  

Main changes relating to the creation of the EEAS: 

The  modifications  introduced  aim  at  integrating  the  EEAS  within  the  financial  governance 
framework  of  the  Commission  whenever  it  participates  in  the  implementation  of  EDF 
resources.  

Main changes proposed to the 10th EDF FR in order to align it with the proposed amendments 
of the Financial Regulation, as regards the European external action service: 

•  Heads of Union Delegations are to be given sub-delegated implementation powers by the 
responsible Commission Directors Generals (DG) and become authorising officers by sub-
delegation  (AOSDs).  When  they  implement  EDF  resources  Heads  of  Union  Delegations 
should apply the Commission rules and are submitted to the same duties and obligations as 
any  other  authorising  officer  by  sub-delegation.  To  this  effect  the  Commission  may  give 
them instructions where necessary and appropriate; 

•  The Commission remains responsible for the implementation of EDF resources, including 
for EDF resources implemented by Heads of Delegations who are authorising officers by 
sub-delegation;  

•  In  order  to  facilitate  the  implementation  by  the  Union  Delegations  of  the  support 
expenditure foreseen in Article 6 of the Internal Agreement, detailed arrangements may be 
agreed between the Commission and the EEAS; 

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•  In  order  to  allow  the  Commission  to  fulfil  its  responsibilities,  the  Heads  of  Union 
Delegations should provide the necessary information and provide an assurance, together 
with  a  report  including  information  on  the  efficiency  and  effectiveness  of  internal 
management  and  control  systems  in  their  delegation,  as  well  as  the  management  of 
operations sub-delegated to them; 

•  In the context of discharge, the EEAS should be fully subject to the procedures provided 
for in Articles 142 to 144 of the 10th EDF FR and should fully cooperate with institutions 
involved;  

•  The panel of irregularities of the Commission should also be the panel of irregularities for 
the EEAS in cases where the Commission sub-delegates implementation powers to Heads 
of Union Delegations; 

•  The Accounting Officer and the Internal Auditor of the Commission remain responsible for 
the entire implementation of EDF resources, including for EDF resources sub-delegated to 
the Heads of Union Delegations.  

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

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2010/0381 (NLE) 

Proposal for a 

COUNCIL REGULATION 

amending Regulation (EC) No 215/2008 on the Financial Regulation applicable to the 
10th European Development Fund, as regards the European external action service 

THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty on the functioning of the European Union,  

Having regard to the Partnership Agreement between the members of the African, Caribbean 
and  Pacific  Group  of  States  of  the  one  part,  and  the  European  Community  and  its  Member 
States, of the other part, signed in Cotonou on 23 June 20001 and revised in Luxembourg on 
25 June 20052 (the ACP-EC Agreement), 

Having regard to the Internal Agreement between the Representatives of the Governments of 
the Member States, meeting within the Council, on the financing of Community aid under the 
multiannual financial framework for the period 2008 to 2013 in accordance with the ACP-EC 
Agreement  and  on  the  allocation  of  financial  assistance  for  the  Overseas  Countries  and 
Territories  to  which  Part  Four  of  the  EC  Treaty  applies3  (the  Internal  Agreement)  and  in 
particular Article 10(2) thereof, 

Having regard to the proposal from the European Commission4, 

Having regard to the opinion of the Court of Auditors5, 

Having regard to the opinion of the European Investment Bank6 

Whereas: 

(1) 

(2) 

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Council  Regulation  (EC)  No  215/2008  of  18  February  2008  on  the  Financial 
Regulation applicable to the 10th European Development Fund7, lays down the rules 
for  the  establishment  and  financial  implementation  of  the  resources  of  the  10th 
European Development Fund (hereinafter 'EDF').  

The  Treaty  of  Lisbon  establishes  a  European  External  Action  Service  (hereinafter 
'EEAS').  In  order  to  take  into  account  the  establishment  of  the  EEAS,  Council 
Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation 

OJ L 317, 15.12.2000, p. 3. 
OJ L 287, 28.10.2005, p. 4. 
OJ L 247, 9.9.2006, p. 32. 
OJ C , , p. . 
OJ C , , p. . 
OJ C , , p. . 
OJ L 78, 19.03.2008, p. 1. 

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(3) 

(4) 

(5) 

(6) 

applicable to the general budget of the European Communities8 (hereinafter 'Financial 
Regulation') has been amended9. In order to provide for a stable legal framework for 
the  implementation  of  EDF  and  to  take  into  account  the  establishment  of  the  EEAS 
and amendments to the Financial Regulation, it is necessary to amend Regulation (EC) 
No 215/2008.  

According  to  the  Council  decision  2010/427/EU  of  26  July  2010  establishing  the 
organisation and functioning of the European External Action Service10, the EEAS is a 
service of a sui generis nature and should be treated as an institution for the purposes 
of the Financial Regulation.  

The  Treaty  on  the  Functioning  of  the  European  Union  provides  that  Commission 
Delegations  will  become  part  of  the  EEAS  as  Union  Delegations.  It  is  necessary  to 
ensure  the  continuity  of  the  functioning  of  Union  Delegations  and  in  particular  the 
continuity  and  efficiency  in  the  management  of  EDF  resources  by  the  Delegations. 
Therefore  the  Commission  should  be  authorised  to  sub-delegate  its  powers  of 
implementation of EDF resources to Heads of Union Delegations belonging to EEAS 
as a separate institution. The authorising officers by delegation 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  setting  up  and 
functioning  of  internal  management  and  control  systems  and  for  the  management  of 
the funds and the operations carried out within their Delegations. They should report 
twice  a  year  to  that  effect.  It  is  appropriate  to  provide  for  withdrawal  of  such 
delegation in accordance with the rules applicable to the Commission. 

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

In the context of discharge, given that the EEAS should be treated as an institution for 
the  purposes  of  the  Financial  Regulation,  the  EEAS  should  be  fully  subject  to  the 
procedures  provided  for  in  Articles  142,  143  and  144  of  Regulation  (EC)  No 
215/2008. The EEAS should fully cooperate with institutions involved in the discharge 
procedure and provide, as appropriate, any additional necessary information, including 
through attendance at meetings of the relevant bodies. The Commission should remain 
responsible,  in  accordance  with  Article  2  of  Regulation  (EC)  No  215/2008  for  the 
implementation  of  EDF  resources,  including  for  EDF  resources  implemented  by 
Heads of Union Delegations who are authorising officers by sub-delegation. 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 be informed at the same time and should 
facilitate  the  cooperation  between  Union  Delegations  and  Commission  departments. 

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OJ L 248, 16.9.2002, p.1. 
Regulation  (EU,EURATOM)  No  1081/2010  of  the  European  Parliament  and  of  the  Council  of  24 
November  2010  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, OJ L 311, 26.11.2010, p.9. 
OJ L 201, 3.8.2010, p.30. 

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(7) 

(8) 

(9) 

(10) 

Given  the  novelty  of  this  structure,  high  standard  provisions  on  transparency  and 
financial accountability need to be applied. 

The  accounting  officer  of  the  Commission  should  remain  responsible  for  the  entire 
implementation  of  EDF  resources,  including  accounting  operations  relating  to  EDF 
resources sub-delegated to Heads of Union Delegations.  

In order to ensure coherence and equality of treatment between authorising officers by 
sub-delegation who are EEAS staff and those who are Commission staff, and to ensure 
that the Commission is properly informed, 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.  Nevertheless,  in  order  to  maintain  the  link  between  financial 
management responsibility and disciplinary action, the Commission should be entitled 
to  request  the  High  Representative  to  initiate  proceedings  if  the  panel  finds 
irregularities concerning those competencies of the Commission sub-delegated to the 
Heads of Union Delegations. In such a case the High Representative should take the 
appropriate action in accordance with the Staff Regulations. 

In order to ensure effective and efficient internal control Heads of Union Delegations 
shall be subject to the verifying powers of the internal auditor of the Commission for 
the financial management sub-delegated to them.  

In  order  to  ensure  democratic  scrutiny  of  the  implementation  of  the  EDF  resources 
Heads  of  Union  Delegations  should  provide  an  assurance,  together  with  a  report 
including information on the efficiency and effectiveness of internal management and 
control systems in their delegation, as well as on the management of operations sub-
delegated to them. The Heads of Union Delegations' reports should be annexed to the 
annual  activity  report  of  the  responsible  authorising  officer  by  delegation  and  made 
available to the European Parliament and the Council. 

(11)  Regulation (EC) No 215/2008 should therefore be amended accordingly,   

HAS ADOPTED THIS REGULATION: 

Regulation (EC) No 215/2008 is amended as follows: 

Article 1 

(1) 

In Article 14(3), the first subparagraph is replaced by the following: 

"3. The Commission shall make available, in an appropriate manner, information on 
the beneficiaries of funds deriving from the EDF held by it when EDF resources are 
implemented  on  a  centralised  basis  and  directly  by  its  departments  or  by  Union 
Delegations in accordance with the second paragraph of Article 17, and information 
on  the  beneficiaries  of  funds  as  provided  by  the  entities  to  which  financial 
implementation tasks are delegated under other modes of management." 

(2) 

In Article 17, the following paragraphs are added: 

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"However, the Commission may delegate its powers to implement EDF resources to 
the  Heads  of  Union  Delegations.  It  shall,  at  the  same  time,  inform  the  High 
Representative thereof. When Heads of Union Delegations act as authorising officers 
by sub-delegation, they shall apply the Commission rules for the implementation of 
EDF  resources  and  shall  be  submitted  to  the  same  duties,  obligations  and 
accountability as any other authorising officer by sub-delegation. 

The Commission may withdraw that delegation in accordance with its own rules. 

For  the  purposes  of  the  second  paragraph,  the  High  Representative  shall  take  the 
measures  necessary  to  facilitate  the  cooperation  between  Union  Delegations  and 
Commission departments. 

Detailed  arrangements  may  be  agreed  between  the  Commission  and  the  European 
External Action Service (hereinafter 'EEAS') in order to facilitate the implementation 
by Union Delegations of the resources foreseen for support expenditure linked to the 
EDF under Article 6 of the Internal Agreement."  

(3) 

Article 25(1), the first subparagraph is replaced by the following: 

"1.  Where  the  Commission  implements  EDF  resources  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  17,  or 
indirectly, in accordance with paragraphs 2 to 4 of this Article and with Articles 26 
to 29." 

(4) 

In Article 32, 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 17, they shall be subject to 
the  Commission  as  the  institution  responsible  for  the  definition,  exercise, 
control and appraisal of their duties and responsibilities as authorising officers 
by  sub-delegation.  The  Commission  shall,  at  the  same  time,  inform  the  High 
Representative thereof." 

(5) 

At the end of second paragraph of Article 38 the following sentence shall be added: 

"The  annual  activity  reports  of  the  authorising  officers  by  delegation  shall  also  be 
made available to the European Parliament and the Council." 

(6) 

In Part one, Title IV, Chapter 3, Section 2, the following Article 38a is added: 

"Article 38a 

1.  Where  Heads  of  Union  Delegations  act  as  authorising  officers  by  sub-
delegation  in  accordance  with  the  second  paragraph  of  Article  17,  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 of the financial interests 
of the Union. 

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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 EDF resources sub-delegated to them as well as any conflict 
of  priorities  which  is  likely  to  have  an  impact  on  the  implementation  of  the 
financial management tasks sub-delegated to them. 

Where a situation or conflict of the type referred to in the second subparagraph 
arises, the Heads of Union Delegations shall inform the responsible Directors-
General  of  the  Commission  and  of  the  EEAS  thereof  without  delay.  Those 
Directors-General shall take appropriate steps to remedy the situation.  

2. 

If  Heads  of  a  Union  Delegations  find  themselves  in  a  situation  referred  to  in 
Article  37(4),  they  shall  refer  the  matter  to  the  specialised  financial 
irregularities panel set up pursuant to Article 54(3). In the event of any illegal 
activity,  fraud  or  corruption  which  may  harm  the  interests  of  the  Union,  they 
shall inform the authorities and bodies designated by the applicable legislation.  

3.  Heads of Union Delegations acting as authorising officers by sub-delegation in 
accordance  with  the  second  paragraph  of  Article  17  shall  report  to  their 
authorising officer by delegation so that the latter can integrate their reports in 
his annual activity report referred to in Article 38. The reports of the Heads of 
Union  Delegations  shall 
the  efficiency  and 
effectiveness of internal management and control systems put in place in their 
Delegation, as well as on the management of operations sub-delegated to them, 
and  provide  the  assurance  pursuant  to  Article  54(2a).  These  reports  shall  be 
annexed  to  the  annual  activity  report  of  the  authorising  officer  by  delegation, 
and shall be made available to the European Parliament and the Council taking 
into account, where appropriate, their confidentiality.  

information  on 

include 

The  Heads  of  Union  Delegations  shall  fully  cooperate  with  institutions 
involved in the discharge procedure and provide, as appropriate, any additional 
necessary  information.  In  this  context,  they  may  be  requested  to  attend 
meetings of the relevant bodies and assist the responsible authorising officer by 
delegation. 

4.  Heads of Union Delegations acting as authorising officers by sub-delegation in 
accordance with the second paragraph of Article 17 shall reply to any request 
by the authorising officer by delegation at its own request or, in the context of 
discharge, at the request of the European Parliament.  

5. 

The Commission shall ensure that sub-delegating powers are not detrimental to 
the discharge procedure, in accordance with Articles 142, 143 and 144." 

(7) 

In Article 39(1) the following subparagraph is added: 

"The  accounting  officer  of  the  Commission  shall  remain  responsible  for  the  entire 
implementation  of  EDF  resources,  including  accounting  operations  relating  to  EDF 
resources sub-delegated to Heads of Union Delegations." 

(8) 

Article 54 is amended as follows: 

(a) 

the following paragraph is inserted: 

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"2a.  In  the  event  of  sub-delegation  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 setting 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 out within the Union Delegation under their responsibility. Before 
taking up their duties, they must complete specific training courses on the 
tasks and responsibilities of authorising officers and the implementation 
of EDF resources, in accordance with Article 37(3). 

Heads of Union Delegations shall report on their responsibilities pursuant 
to  the  first  subparagraph  of  this  paragraph  in  accordance  with  Article 
38a(4). 

Each year, Heads of Union Delegations provide to the authorising officer 
by  delegation  the  assurance  on  the  internal  management  and  control 
systems put in place in their Delegation, as well as on the management of 
operations sub-delegated to them and the results thereof, in order to allow 
the authorising officer to establish his statement of assurance, as provided 
for in Article 38." 

(b) 

the following paragraph is added: 

"4.  Where  Heads  of  Union  Delegations  act  as  authorising  officers  by  sub-
delegation  in  accordance  with  the  second  paragraph  of  Article  17,  the 
specialised  financial  irregularities  panel  set  up  by  the  Commission 
pursuant  to  paragraph  3  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 and 
to  the  authorising  officer  by  delegation,  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 to initiate, in the High Representative's capacity as 
appointing authority, proceedings entailing liability to disciplinary action 
or  to  payment  of  compensation  against  authorising  officers  by  sub-
delegation if irregularities concern the competencies of the Commission 
sub-delegated to them. In such a case the High Representative will take 
appropriate  action  in  accordance  with  the  Staff  Regulations  in  order  to 
enforce  decisions  on  disciplinary  action  and/or 
the  payment  of 
compensation, as recommended by the Commission. 

The  Member  States  shall  fully  support  the  Union  in  the  enforcement  of 
any liability under Article 22 of the Staff Regulations of temporary staff 
to  whom  Article  2,  point  (e)  of  the  Conditions  of  Employment  of  other 
servants of the Communities applies." 

(9) 

In Article 89, the following paragraph is added: 

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"For the purposes of the internal auditing of the EEAS, Heads of Union Delegations, 
acting  as  authorising  officers  by  sub-delegation  in  accordance  with  the  second 
paragraph  of  Article  17  shall  be  subject  to  the  verifying  powers  of  the  internal 
auditor of the Commission for the financial management sub-delegated to them."  

(10)  The following Article is inserted: 

"Article 144a 

The EEAS shall be fully subject to the procedures provided for in Articles 142, 143 
and  144.  The  EEAS  shall  fully  cooperate  with  the  institutions  involved  in  the 
discharge  procedure  and  provide,  as  appropriate,  any  additional  necessary 
information, including through attendance at meetings of the relevant bodies." 

Article 2 

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

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

Done at Brussels,  

For the Council 
The President 

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