Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on the financial rules applicable to the annual budget of the Union
Date: 2010-12-22
Institutions: European Commission
Subjects: financial management, financial regulation, general budget (EU), implementation of the budget

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EUROPEAN COMMISSION 

Brussels, 22.12.2010 
COM(2010) 815 final 

2010/0395 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

on the financial rules applicable to the annual budget of the Union 

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EXPLANATORY MEMORANDUM 

1. 

CONTEXT OF THE PROPOSAL 

The  present  proposal  takes  into  account  recent  legislative  and  political  developments 
regarding the Financial Regulation (hereinafter FR1). 

(1) 

For the sake of legal clarity and in order to facilitate the negotiations of the European 
Parliament  and  the  Council  (hereinafter  "the  legislative  authority"),  it  merges  and 
replaces two earlier Commission proposals on the revision of the FR in a single text 
and  under  a  standard  legislative  format  (no  recast).  These  two  earlier  proposals 
concerned  on  the  one  hand,  the  triennial  revision  of  the  Financial  Regulation 
(COM(2010)260  final),  which  notably  addressed  the  genuine  necessity  of  revisiting 
budget delivery mechanisms in the current economic context and in view of the future 
policy  challenges; and,  on the  other hand, the revision of the FR to align it with the 
Lisbon  Treaty  (COM(2010)71  final),  including  the  obligations  of  Member  States 
concerning  internal  control  and  audit  and  their  resulting  responsibilities  in  shared 
management.  Therefore,  these  two  earlier  proposals  (COM(2010)260  final)  and 
(COM(2010)71 final) are withdrawn.  

(2) 

Additionally,  it  also  incorporates  the  changes  to  the  FR  due  to  the  adoption  of  the 
Regulation  No  1081/2010  regarding  the  creation  of  the  European  External  Action 
Service (hereinafter the 'EEAS')2. 

1.1. 

PROCEDURE 

Since the entry into force of the Lisbon Treaty, the FR is to be revised in accordance with the 
ordinary legislative procedure foreseen in Article 322 TFEU. In order to allow the legislative 
authority to have a global view of the proposed modifications, the Implementing Rules of the 
Financial  Regulation  (hereinafter  IR3)  are  presented,  in  a  Commission  Staff  working 
document, together with the FR in a single package. The Implementing Rules, which contain 
more detailed provisions complementing the FR, will be adopted under the delegated powers 
of the Commission according to Article 290 TFEU. 

The present proposal does not contain any change of substance compared to the two earlier 
proposals  mentioned  in  point  1  above.  As  a  consequence,  the  working  document  of  the 
Commission services concerning the Implementing Rules to the FR (SEC(2010)), which has 
been  put  forward  by  the  Commission  together  with  the  triennial  revision,  remains  entirely 
valid. 

1 
2 
3 

Council Regulation No1605/2002 of 26.06.2002. 
European Parliament and Council Regulation No 1081/2010 of 24.11.2010 
Commission Regulation N° 2342/2002 of 23 December 2002. 

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1.2. 

CALENDAR 

It should be recalled that the present revision of the FR occurs while preparation for the post-
2013 programmes is also under way. It should therefore be considered in this wider context. 
For  this  reason,  it  is  important  that  all  the  actors  concerned  in  the  legislative  process,  in 
particular the European Parliament and the Council, maintain an ambitious timetable for the 
present revision and on the need to ensure coherence between the financial rules enshrined in 
the FR and on the content of sector-specific legal bases. For this to be effective, they should 
aim at an agreement on the package (Financial Regulation and Implementing Rules) so that it 
could  enter  into  application  on  1.1.2012,  which  is  a  very  ambitious  timetable  given  the 
inherent constraints of the ordinary legislative procedure. 

2. 

OBJECTIVE OF THE PROPOSAL 

Budget  is  one  of  the  key  instruments  to  deliver  EU  policies.  In  2011  more  than  EUR  126 
billion  is planned for allocation to EU policies benefitting the Union and its citizens. In the 
current  economic  context  it  is  even  more  important  that  the  delivery  mechanisms  of  the 
budget  operate  in  the  most  efficient  way  and  facilitate  the  implementation  of  EU  policies, 
while  securing  sound  treatment  of  European  taxpayers'  money.  In  particular,  it  is  important 
that these mechanisms are simple and transparent (especially to final recipients of EU funds), 
provide  the  possibility  for  leverage  of  non-EU  budget  resources  and  at  the  same  time 
strengthen the Commission's accountability for implementation of the budget as set in Article 
317 TFEU 

The FR contains all the principles and rules which govern the implementation of the budget. It 
has a horizontal character, being applicable to all areas of expenditure and all revenue.  

2.1. 

BASIS FOR UNDERTAKING THE PRESENT REVISION 

The FR should only  contain  the fundamental principles (FR, Title II) and the basic 
rules  of  budgetary  and  financial  management,  leaving  the  details  to  be  specified  in 
the IR and soft law such as internal guidelines. These principles must be respected in 
all legislative acts4 and by all institutions; they should be kept stable and derogations 
to them limited to a strict minimum. 

In terms of content, the key elements of the financial reforms should be preserved, in 
particular:  the  role  of  financial  actors,  the  importance  of  the  financing  decision 
adopted by the College for operational expenditure, the integration of controls with 
operational  services,  the  internal  audit  function,  activity-based  budgeting,  and 
modernisation  of  accounting  principles  and  basic  rules  applicable  to  grants. 
Procurement rules should be preserved in line with the procurement Directives. 

Moreover,  it  should  be  borne  in  mind  that  not  all  problems  encountered  with  the 
application of the rules require modifications of the FR. In the vast majority of cases, 
the  difficulties  raised  during  the  public  consultation  do  not  find  their  source  in  the 
Financial  Regulation  or  could  be  solved  by  interpretation  of  the  rules.  Difficulties 

4 

Article 2 FR. 

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also  stem  from  sector-based  regulations,  whose  level  of  detail  and  complexity 
increase significantly the risk of error or misinterpretation.  

In  terms  of  method,  any  modification  of  substance  has  been  assessed  against  the 
following benchmarks:  

–  reduce the administrative burden for beneficiaries, contractors and implementing 

partners; 

–  facilitate, whenever possible, the leveraging of budget appropriations; 

–  facilitate the Commission’s obligation under Article 317 of the Treaty to implement 
the budget and accomplish the policy objectives by improving delivery instruments 
and simplifying the rules and procedures; 

–  ensure sound financial management and protect the financial interests of the Union 

against fraud and other illegal activities5. 

2.2. 

NEED FOR A REFORM 

Reform  is  necessary  with  a  view  to  adapting  the  financial  rules  to  the  new 
requirements  of  budget  implementation  (co-financing  with  other  donors,  specific 
financial  instruments,  PPPs)  or  where  the  basic  principles  create  disproportionate 
workload (interests on pre-financing) or may unduly impede efficiency (prohibition 
of budget implementation through private sector bodies). The award of small grants 
and contracts also needs to be facilitated. 

Furthermore, the new procedure applicable to the IR, as set out in the Lisbon Treaty, 
should  lead  to  a  new  articulation  between  the  FR  and  the  IR,  imposing  a  complete 
review of the whole set of financial rules. In this regard, some IR provisions which 
currently define exceptions or derogations to FR provisions should be introduced in 
the  FR  itself,  while  the  IR  should  be  limited  to  technical  details  and  implementing 
modalities6. 

In this context, the Commission has based its proposal on the following objectives: 

•  to introduce more flexibility in the application of budgetary principles, which should 
better  suit  operational  needs  and  alleviate  unnecessary  administrative  burden  for 
recipients of Union funds; 

•  to streamline relations with implementing partners to which the Commission entrusts 
the  management  of  programmes  or  part  of  programming  actions  (projects),  in 
particular taking account of the nature of the implementing partner (Member States, 
agencies,  EIB,  public  and  private  operators,  etc.)  and  the  financial  risks  entailed 
(proportionality); 

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Article 310 (6) TFEU. 
Article 290 TFEU foresees that the European Parliament and the Council may entrust delegated powers to 
the  Commission  only  "[…]  to  supplement  or  amend  certain  non-essential  elements  of  the  [concerned] 
legislative act", i.e. the FR. 

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•  to shift the regime of grants from a real-cost based management (inputs) towards a 
performance-based  scheme  (outputs),  in  order  to  better target  policy  objectives  and 
achieve significant simplification of procedural and documentary requirements for the 
benefit of beneficiaries, and facilitate the use of lump sums; 

•  to ensure sound financial management while leaving significant room for manoeuvre 
for  Authorising  Officers  so  that  they  can  adapt  the  means  to  their  operational 
constraints and the financial risks they are faced with; 

•  to modernise the system of risk management and control measures so as to make 

them more proportional to the probability of errors and to the cost involved. 

2.3. 

ALIGNMENT WITH THE LISBON TREATY 

For  the  first  time  in  decades,  the  Lisbon  Treaty  (Treaty  on  the  Functioning  of  the 
European Union - TFEU), which entered into force on December 1, 2009, foresees 
important changes concerning budgetary and financial issues. These changes should 
be translated in the Financial Regulation and concern in particular: 

- the introduction of the multiannual financial framework in the Treaty, and its link to 
annual budgetary procedure: in this regard, as a consequence of the introduction of 
the  multiannual  financial  framework  in  the  TFEU,  some  provisions  of  the 
Interinstitutional  Agreement  (IIA)  on  budgetary  discipline  and  sound  financial 
management should be introduced in the Financial Regulation; 

-  the  new  annual  budgetary  procedure  and  the  abolition  of  the  distinction  between 
compulsory  and  non-compulsory  expenditure,  which  have  an  impact  on  the 
provisions relating to transfers and the provisional twelfths;  

-  the  new  provisions  introduced  in  Article  317  TFEU  concerning  the  control  and 
audit obligations of the Member States in the implementation of the budget, together 
with Point 44 of the Interinstitutional Agreement (IIA) on budgetary discipline and 
sound financial management (See point 4.3.1. for more details). 

The present proposal also allows for the streamlining of the Financial Regulation in 
line  with  the  Lisbon  Treaty,  through  both  technical  adaptations  and  the  deletion  of 
obsolete provisions. 

3. 

RESULTS OF CONSULTATIONS WITH THE INTERESTED PARTIES 

The  proposal  builds  on  the  results  of  the  public  consultation  of  19  October  20097,  which 
resulted  in  235  contributions  of  all  type  of  stakeholders  implementing  or  receiving  Union 
funds such as citizens, public and private operators or regional and national administrations. 
In particular, its aims at addressing the major  concern expressed in this public consultation, 
i.e. the excessive administrative burden imposed on recipients of Union funds.  

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http://ec.europa.eu/budget/library/consultations/FRconsult2009/draft_report_en.pdf 

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The  Commission  has  furthermore  built  on  the  experience  of  its  operational  services,  which 
have  been  involved  in  a  wide  internal  consultation,  and  lessons  learned  from  previous 
revisions. 

4. 

DETAILED CONTENT OF THE PROPOSAL 

The present revision has three main objectives.  

4.1. 

SIMPLIFICATION 

In order to simplify grant procedures and to shift towards a more result-oriented approach, the 
Commission proposes to facilitate the use of lump sums and other instruments allowing the 
Commission  to  reasonably  assess  and  fix  ex  ante  the  amount  necessary  for  achieving  a 
project.  In  future,  grant  would,  to  a  larger  extent,  be  paid  on  the  basis  of  such  an  ex  ante 
assessment, upon evidence that the project is achieved. 

Furthermore, the Commission proposes to revise rules requiring interest on pre-financing. The 
current  FR  imposes  disproportionate  administrative  burden  on  grant  beneficiaries  when 
obliging them to open a separate bank account so as to able to reimburse interest on generated 
on  the  funds  received.  In  practise,  the  amounts  concerned  are  often  very  low.  The 
Commission proposes to reverse the current approach: as a principle, interest on pre-financing 
would not be due to the Union unless, the grant agreement, for reasons of proportionality (ex: 
very  large  sums  involved)  and  sound  financial  management,  foresees  that  interest  has  to  be 
invested in the project or recovered. 

Regarding  procurement  rules the  provisions  related  to  bank  guarantees  to  be  provided  by 
the  contractor  and  the  procedures  for  the  award  of  small  contracts  are  modified  so  as  to 
achieve simplification.  

4.2. 

OBTAIN MORE RESULTS WITH LIMITED RESOURCES (LEVERAGING) 

The  Commission  sees  the  need  to  increase  the  leverage  of  Union  funds  against  the 
background  of  two  political  developments:  the  Political  Guidelines  that  Commission 
President  Barroso  adopted  in  2009  for  his  second  mandate,  which  proposed  to  maximise 
investment and devise innovative financial instruments, and the budgetary constraints both at 
national  and  Union  levels,  which  will  impact  the  negotiations  on  the  future  Multiannual 
financial framework (post 2013). 

A number of instruments are proposed to leverage Union funds, including: 

–  The  pooling  of  funds  in  external  relations:  together  with  the  revised  rules  on  external 
assigned  revenue,  the  creation  of  EU  Trust  funds  will  allow  pooling  of  funds  from 
multiple sources (Member States, Union Budget, third countries); 

–  Synergy  with  EIB  own  funds:  the  proposal  seeks  to  foster  a  systematic  use  of  mixed 
Instruments  (EU  funds/EIB  funds  for  risk  capital,  guarantee  funds,  long  terms  loans), 
which take into account the 'privileged partner' status of the EIB under the EU Treaty, and 
its contribution to the reinforcement of the internal market; 

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–  Synergy  with  private  funds  and  public-private  partnerships  (PPPs):  the  Commission 
proposes  to  facilitate  the  creation  of  PPPs,  either  via  a  simple  delegation  of  the 
Commission to a private entity that has successfully passed an ex ante check (capacity to 
manage public funds in accordance with standards of sound financial management), or via 
a basic act entrusting a EU public body with the implementation of a PPP, within a "light" 
framework regulation; 

–  Leveraging  effect  of  prizes  in  the  R&D  sector:  learning  from  successful  experience 
abroad, the Commission proposes to clarify rules for the award prizes which could, in the 
future, be more extensively used to induce private R&D investments into R&D. 

4.3. 

INCREASE ACCOUNTABILITY: RESPONSIBILITIES OF IMPLEMENTING PARTNERS AND 
'TOLERABLE RISK OF ERROR' 

4.3.1.  Reshaping the various methods of implementation  

The  proposal  seeks  to  simplify  the  different  methods  of  implementation  (centralised 
direct/indirect, shared, decentralised and joint management), to render the rules applicable to 
the different methods more coherent and to strengthen the accountability of the implementing 
partners so as to support the Commission in discharging its responsibility under the Treaty. 

The Commission proposes a set of common principles that shall apply in all cases of indirect 
managed, i.e. whenever the Commission entrusts third parties with the implementation of the 
Union budget. These principles (which may be complemented by sector specific-rules) are: 

–  Ex ante verification of the capacity to manage EU funds, taking due account of the specific 

risks of the actions concerned (flexibility and proportionality);   

–  Management, control and audit obligations (sound financial management); 

–  A  single  chain  of  accountability,  established  notably  through  the  annual  management 
declarations  of  assurance  to  be  signed  by  the  Commission  implementing  partners  and  a 
regular clearance of the accounts. 

Member States are the most important partner of the Commission and have a crucial role to 
play  in  the  implementation  of  the  budget  (Article  317(5)  TFEU).  The  current  FR  and  the 
Commission  proposal  take  this  into  account  by  providing  for  specific  rules,  reflecting  the 
common principles mentioned. 

The proposal for shared management builds on what already exists and has proved to function 
well in the area of shared management. On the basis of Article 317 TFEU, requiring the FR to 
lay down the control and audit obligations of the Member States in the implementation of the 
budget  and  the  resulting  responsibilities,  the  proposal  defines  the  key  functions  which 
management  and  control  systems  under  shared  management  have  to  perform.  The  Member 
States have considerable flexibility in arranging their existing administrative structures around 
these functions. 

4.3.2. 

Introducing the concept of Tolerable Risk of Error (TRE) 

Until now the benchmark for measuring how the Commission has managed risk has been the 
standard  2%  materiality  level  applied  by  the  Court  of  Auditors  across  the  whole  budget, 

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irrespective of the risks and the cost of controls entailed in each policy area. In order to allow 
a  more  adequate  yardstick  for  measuring  the  Commission's  management  of  risk,  the 
Commission proposes that a TRE is decided by the Council and the European Parliament for 
each policy area following a Commission proposal assessing the cost and benefits of controls. 

A  TRE  defined  for  each  policy  area  would  therefore  be  a  useful  tool  at  the  disposal  of  the 
Commission,  to  be  used  ex-ante,  in  order  to  adjust  the  way  it  manages  programmes  taking 
into account the risks involved. It does not interfere with control arrangements or corrective 
measures which are applied where errors are detected. Furthermore, the TRE would not entail 
differentiated  levels  of  tolerable  error  between  Member  States  but  would  be  applicable  to  a 
policy area at Union level. 

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2010/0395 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

on the financial rules applicable to the annual budget of the Union  

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 Commission8, 

Having regard to the opinion of the Court of Auditors9,  

After transmission of the draft legislative act to the national Parliaments, 

Acting in accordance with the ordinary legislative procedure, 

Whereas: 

(1) 

(2) 

Council  Regulation  (EC,  Euratom)  No  1605/2002  of  25  June  2002  on  the  Financial 
Regulation applicable to the general budget of the European Communities10 has been 
substantially  amended  several  times.  Since  further  amendments  are  to  be  made, 
including changes to take account of amendments introduced by the Treaty of Lisbon, 
the Regulation (EC, Euratom) No 1605/2002 should be replaced by this Regulation, in 
the interests of clarity. 

Regulation  (EC,  Euratom)  No  1605/2002  laid  down  the  budgetary  principles  and 
financial  rules  to  be  respected  in  all  legislative  acts  and  by  all  institutions.  The 
fundamental principles, the concept and the structure of that Regulation and the basic 
rules  of  budgetary  and  financial  management  need  to  be  maintained.  Derogations  to 
those  fundamental  principles  should  be  reviewed  and  simplified  as  far  as  possible, 
taking into account their continuing relevance, their added-value for the annual budget 
of the Union (hereinafter the 'budget'), and the burden they impose on stakeholders. It 
is necessary to maintain and strengthen the key elements of the financial reform: the 
role  of  the  financial  actors,  the  integration  of  controls  in  operational  services,  the 
internal  auditors,  the  Activity  Based  Budgeting,  the  modernisation  of  accounting 
principles and rules and the basic principles for grants. 

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10 

OJ XXX 
OJ C […] 
OJ L 248, 16.9.2002, p. 1. 

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(3) 

(4) 

(5) 

(6) 

(7) 

(8) 

Due  to  the  specific  nature  and  tasks  of  the  European  Central  Bank,  notably  its 
independence as regards the management of its finances, it should be excluded from 
the scope of this Regulation.  

In the light of practical experience, rules should be included in this Regulation in order 
to follow evolving requirements of budget implementation such as co-financing with 
other  donors,  to  increase  the  efficiency  of  external  aid  and  to  facilitate  the  use  of 
specific  financial  instruments  like  those  concluded  with  the  European  Investment 
Bank or implementation through public and private partnerships. 

Regulation (EC, Euratom) No 1605/2002 was confined to stating the broad principles 
and basic  rules governing  the  whole budgetary sector covered by the  Treaties, while 
the  implementing  provisions  were  laid  down  in  Commission  Regulation  (EC, 
Euratom)  No  2342/2002  of  23  December  2002  laying  down  detailed  rules  for  the 
implementation of Council Regulation (EC, Euratom) No 1605/2002 on the Financial 
Regulation applicable to the general budget of the European Communities11 in order to 
produce a better hierarchy of rules and make Regulation (EC, Euratom) No 1605/2002 
easier to read. Under the Treaty on the Functioning of the European Union (hereinafter 
the  'TFEU')  the  Commission  may  receive  delegation  to  adopt  acts  of  general 
application to supplement or amendment certain non-essential elements of legislative 
acts. As a consequence, some provisions laid down in Regulation (EC, Euratom) No 
2342/2002,  should  be  incorporated  into  this  Regulation.  The  detailed  rules  for  the 
application  of  this  Regulation  adopted  by  the  Commission  should  be  confined  to 
technical details and implementing modalities. 

Police  and  judicial  cooperation  in  criminal  matters  became  an  integral  part  of  other 
Union policies and internal actions. The specific financial provisions applicable to that 
policy  are  thus  no  longer  justified  and  should  therefore  not  be  included  in  this 
Regulation. 

Under 
the  multiannual  financial  framework  for  2007-2013,  established  by 
Interinstitutional  Agreement  of  17  May  2006  between  the  European  Parliament,  the 
Council  and 
the  Commission  on  budgetary  discipline  and  sound  financial 
management12,  the  Guarantee  Fund  for  external  actions  is  no  longer  subject  to  a 
special regime. Payments to that Fund from the budget are now entered in a dedicated 
budget  line.  The  relevant  specific  financial  provisions  are  no  longer  necessary  and 
should therefore not be included in this Regulation. 

The rules governing interest generated by pre-financing should be simplified as they 
generate  excessive  administrative  burden  on  both  recipients  of  Union  funds  and 
Commission services and create misunderstandings between the Commission services 
and  operators  and  partners.  For  reasons  of  simplification,  in  particular  in  respect  of 
grant beneficiaries, and in line with the principle of sound financial management, there 
should no longer be an obligation to generate interest on pre-financing and to recover 
such  interest.  [However,  it  should  be  possible  to  include  such  obligation  in  a 
delegation  agreement  in  order  to  allow  the  re-use  of  interests  generated  by  pre-
financing for the programmes managed by some delegates, or its recovery. 

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12 

OJ L 357, 31.12.2002, p. 1.  
OJ C 139, 14.6.2006, p. 1. 

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(9) 

Carry over rules for assigned revenue should take into account the distinction between 
external and internal assigned revenue. In order to respect the purpose assigned by the 
donor, external assigned revenues should be carried over automatically and used until 
all the operations relating to the programme or action to which it is assigned have been 
carried out. Where the external assigned revenue is received during the last year of the 
programme  or  action,  it  should  also  be  possible  to  use  it  in  the  first  year  of  the 
succeeding  programme  or  action.  It  should  be  possible  to  carry  over  the  internal 
assigned  revenue  for  one  year  only,  unless  specified  otherwise  in  the  basic  act 
applicable or in duly justified circumstances.  

(10)  As  regards  provisional  twelfths,  the  rules  should  be  clarified  for  the  situation  where 
the European Parliament decides to reduce the amount of the additional expenditure in 
excess of the provisional twelfths adopted by Council in accordance with Article 315 
of the TFEU. 

(11)  The Treaty requires that the multiannual financial framework be laid down in the form 
of  a  regulation.  It  is  therefore  necessary  to  incorporate  certain  provisions  from  the 
multiannual financial framework for 2007-2013 into this Regulation. In particular, in 
order  to  ensure  budgetary  discipline,  it  is  necessary  to  establish  a  link  between  the 
multiannual  financial  framework  and  the  annual  budgetary  procedure.  It  is  also 
necessary to include provisions on commitment of the European Parliament and of the 
Council to respect the allocations of commitment appropriations laid down in the basic 
acts for structural operations, rural development and the European Fisheries Fund. 

(12)  The derogation concerning assigned revenue should be modified to take into account 
the  specificities  of,  on  the  one  hand,  internal  assigned  revenue  -  arising  from 
appropriations authorised by the budgetary authority, and, on the other hand, external 
assigned  revenue  -  collected  from  and  assigned  by  various  donors  to  a  specific 
programme  or  action.  Furthermore,  external  donors  should  be  allowed  to  co-finance 
external actions, in particular humanitarian actions, even in cases where the basic act 
does not expressly provide for such co-financing. To facilitate the management of real 
estate stock, the list of internal assigned revenue should include revenue from the sale 
of buildings or assimilated operations. 

(13)  As  regards  the  presentation  of  assigned  revenues  in  the  draft  budget,  more 
transparency should be introduced by providing that amounts of assigned revenue are 
to be included in the draft budget for the amounts which are certain at the date of its 
establishment. 

(14)  As  regards  the  principle  of  specification,  a  distinction  is  no  longer  made  between 
compulsory and non-compulsory expenditure. Provisions concerning transfers should 
therefore be adapted accordingly. 

(15)  The rules governing transfers of appropriations should also be simplified and clarified 
on  certain  points  because  they  have  proved  cumbersome  or  unclear  in  practice.  It  is 
necessary  to  ensure  better  budget  implementation,  especially  in  relation  to  payments 
appropriations,  assigned  revenues  and  administrative  appropriations  which  are 
common  to  several  titles.  To  this  purpose,  the  typology  of  transfers  should  be 
simplified and more flexibility should be allowed in the adoption procedure of some 
transfers.  In  particular,  the  possibility  for  the  Commission  to  decide  on  transfers  of 
unused  budgetary  appropriations  in  cases  of  international  humanitarian  disasters  and 

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crisis  has  proved  to  be  relevant  and  efficient.  That  possibility  should  therefore  be 
extended to similar events occurring after 1st December. In those cases, for reasons of 
transparency, the Commission should inform immediately the budgetary authority of 
its decision. The Commission should also decide autonomously, within certain limits, 
on transfers from the emergency aid reserve. 

(16)  Concerning provisions on proportionality, the notion of tolerable risk of error should 
be  introduced  as  part  of  the  risk  assessment  made  by  the  Authorising  Officer.  The 
institutions  should  be  able  to  move  away  from  the  general  2%  materiality  threshold 
used  by  the  Court  of  Auditors  to  conclude  on  the  legality  and  regularity  of  the 
underlying transactions. Tolerable risk levels constitute more appropriate basis for the 
Discharge  Authority  to  judge  the  quality  of  the  management  of  risk  by  the 
Commission.  The  European  Parliament  and  the  Council should  therefore  determine 
the  level  of  tolerable  risk  of  error  per  policy  area,  taking  into  account  the  costs  and 
benefits of controls. 

(17)  For the purposes of Article 316 of the TFEU, it should be provided that the European 

Council and the Council share the same section in the budget. 

(18)  The amended annual budgetary procedure under the TFEU should be reflected in this 

Regulation. 

(19)  With  regard  to  the  establishment  of  the  budget,  it  is  important  to  clearly  define  the 
structure and the presentation of the draft budget drawn up by the Commission. The 
content  of  the  general  introduction  preceding  the  draft  budget  should  be  described 
more  precisely.  It  is  also  necessary  to  include  a  provision  on  financial  programming 
for  the  years  to  come  as  well  as  on  a  possibility  for  a  Commission  to  submit  any 
working paper to support budget requests. 

(20)  As regards the specific features of the Common Foreign and Security Policy, the forms 
basic  acts  can  take  under  the  TFEU  and  under  Title  V  and  VI  of  the  Treaty  on 
European Union should be updated. In addition, the adoption procedure of preparatory 
measures  in  the  area  of  external  action  should  be  adapted  to  the  provisions  of  the 
TFEU. 

(21)  As  regards  methods  of  implementation,  which  govern  in  particular  the  conditions  of 
externalisation  of  implementing  powers  to  third  parties,  the  rules  have  become  too 
complex  over  the  years  and  should  be  simplified.  At  the  same  time,  the  initial 
objective  of  externalisation,  to  ensure  that  whatever  the  method  of  implementation, 
expenditure should be implemented with a level of control and transparency equivalent 
to  that  expected  from  the  Commission  services,  should  be  maintained.  Therefore,  a 
clear distinction should be made between situations where the budget is implemented 
directly, by the Commission or its executive agencies and situations where the budget 
is implemented indirectly through third parties. This should allow establishment of a 
common regime for indirect management with the possibility to adapt it in accordance 
with sector-specific rules, in particular where the budget is implemented indirectly by 
Member  States  under  shared  management.  Such  common  regime  should  include  in 
particular the basic principles to be respected by the Commission where it decides to 
implement the budget indirectly and the basic principles to be respected by entrusted 
parties.  The  Commission  should  be  able  to  apply  Union  rules  and  procedures  or  to 

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accept the application of the rules and procedures of the entrusted entity, provided the 
latter guarantees an equivalent protection of the financial interests of the Union. 

(22)  Rules  on  ex  ante  assessment  of  entities,  other  than  Member  States  which  are  not 
subject  to  ex-ante  assessment,  should  be  adapted  to  ensure  that  all  entrusted  entities 
and  persons  provide  a  level  of  protection  of  the  financial  interests  of  the  Union 
equivalent to that  required  under this Regulation. As part of the supervision tasks of 
the Commission, it is necessary to provide for a set of control and audit obligations, 
including clearance of accounts procedures for all budget management types. 

(23) 

In  order  to  take  account  of  operational  needs  and  to  facilitate  implementation  by 
potential  beneficiaries  or 
implementing  partners,  requirements  should  remain 
proportionate  to  the  specific  risks  of  the  action  and  its  overall  control  environment. 
The nature of the tasks and the measures carried out by the Commission as part of the 
supervision  and  support  of  the  implementation  of  the  action  should  be  taken  into 
account when assessing the capacity of the third party or entity to comply with such 
requirements.  Furthermore,  this  Regulation  should  accommodate  new  financial 
instruments  such  as  financial  instruments  and  Public  Private  Partnerships  in  order  to 
improve budget and policy delivery. 

(24)  The  experience  with  Public  Private  Partnerships  (PPPs)  institutionalised  as  Union 
bodies  under  Article  185  of  Regulation  (EC,  Euratom)  No  1605/2002  demonstrates 
that further alternatives should be added in order to increase the choice of instruments 
to include bodies whose rules are more flexible and accessible to the private partners 
than those applicable to the Union institutions. Such alternatives should operate under 
indirect management. An alternative should be a body established by a basic act and 
endowed with financial rules which should take into account the principles necessary 
to  ensure  sound  financial  management  of  Union  funds.  These  principles  should  be 
adopted  in  a  delegated  regulation  and  should  be  based  on  those  with  which  third 
entities  entrusted  with  budget  implementation  tasks  have  to  comply.  Another 
alternative should be the implementation of PPPs by bodies governed by private law 
of a Member State.  

(25)  Basic  control  and  audit  obligations  of  Member  States  where  they  implement  the 
budget indirectly in shared management, which currently exist only in sector-specific 
Regulations, should be, for the purposes of Article 317 of the TFEU, introduced in this 
Regulation.  Therefore  it  is  necessary  to  include  provisions,  setting  out  a  coherent 
framework for all policy areas concerned, on a harmonised administrative structure at 
national  level,  common  management  and  control  obligations  for  those  structures, 
annual  management  declaration  of  assurance  with  independent  audit  opinion  thereon 
and an annual declaration by Member States by which they assume the responsibility 
for  the  management  of  Union  funds  they  are  entrusted  with,  financial  clearance, 
suspension  and  correction  mechanisms  operated  by  the  Commission.  Detailed 
provisions should remain in sector-specific Regulations. 

(26)  With  regard  to  the  duties  of  the  authorising  officer  by  delegation,  some  provisions 
should be clarified, in particular concerning the internal control procedures that he puts 
into place ex ante and ex post and his reporting duties. In this respect, the content of 
his  annual  activity  report  should  be  updated  in  line  with  practice  which  consists  in 
including  the  required  financial  and  management  information  to  support  his 
declaration of assurance on the performance of his duties. 

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(27)  The responsibilities of the Accounting Officer of the Commission should be clarified, 
in particular it should be specified that he is the only person who is entitled to define 
the accounting rules and harmonised charts of accounts, while Accounting Officers of 
all other institutions define accounting procedures applicable in their institutions. 

(28) 

In order to facilitate the implementation of certain programmes or actions entrusted to 
financial institutions, the possibility to open fiduciary accounts should be introduced in 
this Regulation. Such bank accounts should be opened in the name or on behalf of the 
Commission in the books of a financial institution. They should  be  managed by  that 
financial institution under the responsibility of the authorising officer and it should be 
possible to open them in other currencies than euro. 

(29)  Concerning revenue operations, it is necessary to streamline the rules on estimates of 
receivable amounts in order to take into account budgetary needs. Registration should 
be required when expectation of revenue has a certain degree of probability and can be 
translated  into  figures  with  a  reasonable  degree  of  approximation.  Simplification 
should  be  achieved  by  introducing  some  specific  provisions  on  procedures  of 
adjustment or cancellation of an estimate of amount receivable. 

(30)  The  rules  on  recovery  should  both  be  clarified  and  strengthened.  In  particular, 
clarification  is  needed  in  order  to  specify  that  the  cancellation  of  an  established 
amount  receivable  does  not  imply  a  waiver  of  a  Union's  established  entitlement. 
Moreover, in order to reinforce the safeguarding of the financial interests of the Union, 
Union funds claimed for reimbursement should be treated by Member States not less 
favourably than claims of public companies on their territory. 

(31)  Taking  into  account  Commission  Communication  on  the  management  of  fines 
temporarily  collected13  ,  fines,  penalties  and  sanctions  and  any  income  generated  by 
them should be recorded as budget revenue in the year following the exhaustion of all 
remedies against the decisions imposing them. As an exception to this rule, a portion 
limited  to  2%  of  the  total  amounts  of  fines  or  penalties  to  be  entered  in  the  budget 
should be withheld to supply the Fund created by that Communication. 

(32)  As  regards  payments  and  in  line  with  the  principle  of  sound  financial  management, 
clarification  of  the  various  types  of  payments  should  be  provided.  Moreover,  pre-
financing payments should be cleared regularly by the responsible authorising officer 
in  accordance  with  the  accounting  rules  defined  by  the  Accounting  Officer  of  the 
Commission.  To  this  effect,  appropriate  provisions  should  be  included  in  contracts, 
grant  decisions,  grant  agreements  as  well  as  in  delegation  agreements  with  third 
parties. 

(33) 

Institutions  should  be  allowed  to  give  their  prior  agreement  in  order  to  officially 
accept  the  transmission  of  documents  by  electronic  procedure.  Moreover,  in 
accordance  with  Commission  decisions  on  electronic  and  digitised  documents, 
financial provisions on verifications applicable to commitments should be updated and 
recognise  explicitly  the  legal  value  of  electronic  order  forms  and  invoices  for  the 
registration of legal commitments. 

13 

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(34)  The  rules  for  exclusion  should  be  improved  in  order  to  strengthen  the  protection  of 
financial interests of the Union. The reference to money laundering should be added, 
as  provided  for  in  the  Directive  2004/18/EC  of  the  European  Parliament  and  of  the 
Council of 31 March 2004 on the coordination of procedures for the award of public 
works  contracts,  public  supply  contracts  and  public  service  contracts14.  Moreover, 
situations  of  exclusion  concerning  candidates  or  tenderers  convicted  by  a  judgment 
having the force of res judicata for an offence concerning their professional conduct, 
or for fraud, corruption, involvement in a criminal organisation, money laundering or 
similar  criminal  infringements  detrimental  to  the  financial  interests  of  the  Union, 
should  be  extended  to  persons  having  powers  of  representation,  decision  making  or 
control over these candidates and tenderers.  However, for reasons of proportionality, 
exclusion should not apply to candidates and tenderers who can demonstrate that they 
have  taken  adequate  measures  against  the  concerned  persons  having  powers  of 
representation.  Finally,  in  order  to  ensure  the  continuity  of  service  of  the  institution, 
derogation  from  the  obligation  of  exclusion  based  on  the  grounds  of  bankruptcy  or 
analogous  situations,  grave  professional  misconduct  and  non  compliance  with  social 
obligations should be introduced in case of negotiated procedures where, for technical 
or artistic reasons or for reasons connected with the protection of exclusive rights, the 
contract can be awarded only to a particular economic operator. 

(35)  Although the European Central Bank (ECB) and the European Investment Bank (EIB) 
have  their  own  specific  status  within  the  Union  framework,  the  use  of  their  own 
resources  is  of  financial  interest  to  the  Union.  Therefore,  they  should  have  access  to 
the  information  contained  in  the  central  exclusion  database,  which  was  created  to 
protect the financial interests of the Union, and should take it into account under their 
responsibility for the award of contracts under their procurement rules. The ECB and 
the EIB should also communicate to the Commission information on tenderers which 
are  subject  to  a  definitive  judgment  for  fraud  or  similar  criminal  infringements 
detrimental to the financial interests of the Union. 

(36)  Concerning  administrative  and  financial  penalties,  a  sound  legal  basis  for  the 
publication of decisions applying such penalties should be introduced, in line with data 
protection  requirements.  Such  publication  should  remain  facultative  for  reasons  of 
data protection and legal security. 

(37)  For  reasons  of  legal  clarity  and  simplification,  the  framework  for  the  award  and 
monitoring of Union grants should be revised, in particular the specific provisions for 
implementing the principles of transparency, equal treatment, co-financing, non-profit, 
degressive award for operating grants, prohibition of retrospective awards and control. 

(38)  For the purpose of the framework for the award and monitoring of Union grants, and 
in  the  light  of  practical  experience,  the  lump  sums  regime  should  be  clarified  (lump 
sums, standard scale of unit costs and flat rates) and clearly distinguished from any ex-
post  verification  of  real  costs.  Control  measures  should  be  adjusted  to  this  new 
approach  with  the  possibility  to  request  operational  audits  and  to  extend  findings  to 
non audited projects of same beneficiary where recurrent errors have been detected in 
similar  projects.  Finally,  the  possibility  for  a  beneficiary  to  redistribute  its  grant  by 
way of subsidies to third parties should be extended under certain conditions in order 

14 

OJ L 134, 30.4.2004, p. 114. 

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to facilitate the correct implementation of programmes dedicated to numerous physical 
persons  who  can  only  be  reached  through  two  levels  of  dispatch.  This  redistribution 
should be authorised as long as appropriate guarantees are presented by the first rank 
beneficiary and adequate clauses to limit the margin of appreciation for the choice of 
sub-beneficiaries and the amount of the award are introduced in the grant agreement. 

(39)  As  a  new  type  of  financial  support,  prizes  should  be  regulated  separately  from  the 
grant  regime  with  specific  rules  not  containing  any  reference  to  predictable  costs. 
Prizes  should  be  part  of  the  annual  work  programme  and,  above  a  certain  threshold, 
should be awarded by a beneficiary or by a contractor after their award conditions and 
criteria have been approved by the Commission. 

(40)  Financial instruments are increasingly valuable to multiply the effect of Union funds 
when those funds are pooled with others funds or include a leverage effect. Since such 
financial  instruments  cannot  be  assimilated  to  services  or  grants,  a  new  type  of 
financial support should be established. 

(41)  As  regards  the  rules  on  accounting  and  the  accounts,  the  presentation  of  accounts 
should  be  simplified  by  providing  that  Union's  accounts  comprise  only  the 
consolidated  financial  statements  and  the  aggregated  budgetary  accounts.  It  should 
also be clarified that the consolidation process only concerns the institutions financed 
by the budget, in order to take into account the specific independent status of the ECB. 

(42) 

In  order  to  clearly  separate  the  duties  and  responsibilities  of  the  Commission's 
Accounting  officer  from  those  of  the  accounting  officers  of  institutions  or  bodies 
whose  accounts  are  consolidated,  it  should  be  provided  that  the  report  on  budgetary 
and financial management of the financial year has to be prepared by each institution 
or  body  and  then  sent  to  the  budgetary  authority  and  the  Court  of  Auditors  by  31 
March of the following financial year. 

(43) 

It  is  necessary  to  update  the  Union  rules  and  principles  on  accounting  in  order  to 
ensure their coherence with the International Public Sector Accounting Standard rules. 

(44)  The  provisions  concerning  provisional  and  final  accounts  should  be  updated,  in 
particular in order to provide for the reporting information that should accompany the 
accounts sent to the Commission's Accounting officer for the purpose of consolidation. 
Reference  should  also  be  made  to  the  representation  letter  accompanying  the 
transmission,  by  the  institutions  and  bodies  financed  by  the  budget,  to  the  Court  of 
Auditors of their final accounts, as well as to the representation letter accompanying 
the transmission of the Union's final consolidated accounts. Finally, an earlier deadline 
should be set out for the Court of Auditors to make its observations on the provisional 
accounts of institutions other than the Commission and bodies financed by the budget 
in order to allow them to draw up their final accounts taking into account the remarks 
by the Court of Auditors remarks. 

(45)  As regards the information which is to be submitted by the Commission in the context 
of discharge, the Commission should notably submit to the European Parliament and 
to  the  Council  an  evaluation  report  on  the  Union's  finances  based  on  the  results 
achieved,  in  accordance  with  Article  318  of  the  TFEU.  Adequate  provisions  should 
therefore be introduced in this Regulation for such report in relation to other existing 
reporting requirements. 

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(46)  As regards the specific provisions of this Regulation concerning the structural funds, 
cohesion  funds,  European  fisheries  fund,  the  European  Agricultural  Fund  for  Rural 
Development and funds in the area of Freedom, Security and Justice managed under 
shared management , the provision for repayment of payments on account and making 
appropriations  available  again  contained  in  the  Commission  declaration  annexed  to 
Council  Regulation  (EC)  No  1260/1999  of  21  June  1999  laying  down  general 
provisions  on  the  Structural  Funds15  should  be  retained.  Moreover,  by  way  of 
derogation from the rule of carry over, it should be allowed to carry over commitment 
appropriations  available  at  the  end  of  the  financial  year,  arising  from  repayments  of 
payment on account, until the closure of the programme, and to use those commitment 
appropriations when other commitment appropriations are no longer available. 

(47)  Furthermore, clarification is needed for the participation of the Joint Research Centre 
(JRC)  in  procurement  and  grant  procedures when  it  carries  out  activities  financed  in 
whole or in part by the budget outside the budget lines usually dedicated to the JRC in 
the research funds. When participating in grant and public procurement procedures as 
a  third  party,  the  JRC  should  be  exempted  from  the  application  of  the  provisions 
concerning  exclusion  criteria,  administrative  and  financial  penalties,  economic  and 
financial capacity and the lodging of guarantees. Moreover, it is necessary to take into 
account  the  technical-scientific  services  provided  by  the  JRC  to  other  institutions  or 
Commission services through internal administrative arrangements, which fall outside 
public  procurement  rules.  Finally,  in  order  to  carry  out  these  tasks  effectively,  that 
revenue  stemming  from  the  activities  linked  to  those  tasks  should  exceptionally  be 
considered external assigned revenue.  

(48)  As regards the specific provisions relating to the implementation of external actions, it 
is necessary to adapt them to the changes proposed for the methods of implementation. 

(49) 

In  order  to  strengthen  the  international  role  of  the  Union  in  external  actions  and 
development  and  to  increase  its  visibility  and  efficiency,  the  Commission  should  be 
authorised to create and manage European trust funds for emergency, post-emergency 
or thematic actions. Although not integrated in the budget, those trust funds should be 
managed  in  accordance  with  this  Regulation  to  the  extent  necessary  for  the  security 
and transparency of the use of Union funds. For that purpose, the Commission should 
chair the governing board established for each trust fund to ensure the representation 
of donors and to decide for the use of the funds. Moreover, the accounting officer of 
each trust fund should be the accounting officer of the Commission. 

(50)  As  regards  entities  entrusted  under  indirect  management  to  implement  external 
actions, the period for the conclusion of contracts and grants by these entities should 
be limited to three years following the signature of the delegation agreement with the 
Commission, unless specific exceptional and external circumstances prevail. However, 
that  deadline  should  not  apply  to  multiannual  programmes  implemented  under  the 
structural funds procedures. Detailed rules for de-commitment of appropriations in the 
case of those multiannual programmes should be laid down in sector-specific rules. 

(51)  With  regard  to  specific  rules  on  procurement  applicable  to  external  actions,  it  is 
necessary  to  allow  third  country  nationals  to  participate  in  tender  procedures,  in  the 

15 

OJ L 161, 26.6.1999, p. 1. 

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case of implementation of a programme without a basic act and where duly justified 
exceptional circumstances prevail. 

(52)  As regards specific provisions for administrative appropriations, institutions should be 
allowed to develop a long term real estate policy and profit from lower interest rates 
thanks to the favourable credit rating of the Union on the financial market. To this end, 
they should be authorised to raise loans outside the budget to acquire real estate assets. 
This  would  provide  the  possibility  to  address  the  complexity  of  the  current  system, 
while saving costs and introducing more transparency.  

(53)  As  regards  framework  research  programmes,  in  the  light  of  practical  experience,  the 
scope  of  the  special  selection  procedure  of  natural  persons  as  experts  should  be 
clarified  as  their  assistance  is  required  in  the  evaluation  of  project  proposals,  grant 
applications, projects and tenders and for providing expert opinion and advice. 

(54)  The  Commission  should  be  empowered  to  adopt  delegated  acts  in  accordance  with 
Article 290 of the Treaty in order to establish detailed rules for the application of this 
Regulation, a framework financial regulation for the bodies set up under the TFEU and 
the Euratom Treaty and a model financial regulation for Public-Private Partnerships in 
order to lay down the necessary principles to ensure sound financial management. 

(55)  The  revision  of  this  Regulation  should  be  made  only  when  necessary.  Too  frequent 
revisions  generate  disproportionate  cost  of  adjusting  administrative  structures  and 
procedures  to  the  new  rules.  Furthermore,  time  may  be  too  short  to  allow  for  valid 
conclusion to be drawn from the application of the rules in force. 

(56) 

In  order  to  ensure  continuity  in  the  implementation  of  the  current  programmes,  the 
provisions  concerning  control  and  audit  obligations  of  Member  States  when  they 
implement  the  budget  indirectly  under  shared  management  should  apply  only  to  the 
next generation of sector-specific regulations, 

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HAVE ADOPTED THIS REGULATION: 

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PART ONE 
COMMON PROVISIONS 

EN 

20 

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TITLE I 
SUBJECT MATTER AND SCOPE 

Article 1 
Subject matter 

This  Regulation  lays  down  the  rules  for  the  establishment  and  the  implementation  of  the 
annual budget of the Union, (hereinafter the 'budget') and the presentation and auditing of the 
accounts. 

Article 2 
Scope 

Any provision concerning the implementation of the revenue and expenditure of the budget, 
contained in another legislative act, must comply with the budgetary principles set out in Title 
II. 

This  Regulation  shall  apply  to  the  European  Parliament,  the  European  Council  and  the 
Council,  the  European  Commission,  the  Court  of  Justice  of  the  European  Union  and  the 
European Court of Auditors, the European Economic and Social Committee, the Committee 
of the Regions, the European Ombudsman, the European Data Protection Supervisor and the 
European External Action Service (hereinafter referred to as 'institution(s)'). 

This Regulation shall not apply to the European Central Bank. 

This  Regulation  shall  apply  to  the  implementation  of  administrative  expenditure  relating  to 
the appropriations provided in the budget for the Euratom Supply Agency.  

EN 

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TITLE II 
BUDGETARY PRINCIPLES 

Article 3 
Budgetary principles 

The budget shall be established and implemented in compliance with the principles of unity, 
budgetary accuracy, annuality, equilibrium, unit of account, universality, specification, sound 
financial management which requires effective and efficient internal control, and transparency 
as set out in this Regulation. 

CHAPTER 1 
PRINCIPLES OF UNITY AND OF BUDGET ACCURACY 

Article 4 
Definition of the budget 

1.  The  budget  is  the  instrument  which,  for  each  financial  year,  forecasts  and  authorises  all 
revenue  and  expenditure  considered  necessary  for  the  Union  and  the  European  Atomic 
Energy Community. 

2. The revenue and expenditure of the Union shall comprise: 

(a) 

the revenue and expenditure of the Union, including administrative expenditure 
occasioned  for  the  institutions  by  the  provisions  of  the  Treaty  on  European 
Union relating to the common foreign and security policy, and the operational 
expenditure  occasioned  by  implementation  of  those  provisions  where  this  is 
charged to the budget; 

(b) 

the expenditure and revenue of the European Atomic Energy Community. 

Article 5 
Rules governing the principles of unity and budgetary accuracy 

1.  Subject  to  Article  80,  no  revenue  shall  be  collected  and  no  expenditure  effected  unless 
booked to a line in the budget. 

2. No expenditure may be committed or authorised in excess of the authorised appropriations. 

3. An appropriation may not be entered  in the budget if it is not for an item of expenditure 
considered necessary. 

4. Interest yielded by the funds which are the property of the Union  shall not  be due to the 
Union  save  otherwise  provided  for  in  the  agreements  concluded  with  the  entrusted  entities 
listed  in  points  (ii)  to  (viii)  of  Article  55(1)(b),  and  in  grant  decisions  or  agreements 

EN 

22 

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concluded  with  beneficiaries.  In  those  cases,  such  interest  shall  be  re-used  for  the 
corresponding programme or recovered. 

CHAPTER 2 
PRINCIPLE OF ANNUALITY 

Article 6 
Definition 

The appropriations entered in the budget shall be authorised for one financial year which shall 
run from 1 January to 31 December. 

Article 7 
Type of appropriations 

1. The budget shall contain differentiated appropriations, which shall consist of commitment 
appropriations and payment appropriations, and non-differentiated appropriations. 

2. Commitment appropriations shall cover the total cost of the legal commitments entered into 
during the current financial year, subject to Article 83(2) and Article 180(2). 

3.  Payment  appropriations  shall  cover  payments  made  to  honour  the  legal  commitments 
entered into in the current financial year and/or earlier financial years. 

4. Paragraphs 1 and 2 shall be without prejudice to the special provisions of Titles I, IV and 
VI  of  Part  Two.  They  shall  not  prevent  appropriations  being  committed  globally  nor 
budgetary commitments being made in annual instalments. 

Article 8 
Accounting rules for the revenue and appropriations 

1. The revenue of a financial year shall be entered in the accounts for the financial year on the 
basis of the amounts collected during the financial year. However, the own resources for the 
month of January of the next financial year may be paid in advance pursuant to the Council 
Regulation (EC, Euratom) No 1150/200016 . 

2. The entries in respect of value added tax own resources, the additional resource based on 
gross national income and any financial contributions may be adjusted in accordance with the 
Regulation referred to in paragraph 1. 

3.  The  appropriations  authorised  for  a  given  financial  year  may  be  used  solely  to  cover 
expenditure  committed  and  paid  in  that  financial  year  and  to  cover  amounts  due  against 
commitments from earlier financial years. 

16 

JO L 130, 31.5.2000, p. 1. 

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4.  Commitments  shall  be  entered  in  the  accounts  on  the  basis  of  the  legal  commitments 
entered  into  up  to  31  December,  subject  to  the  global  commitments  referred  to  in  Article 
83(2)  and  the  agreements  referred  to  in  Article  180(2)  and  concluded  with  third  countries, 
which  shall  be  entered  in  the  accounts  on  the  basis  of  the  budget  commitments  up  to  31 
December. 

5. Payments shall be entered in the accounts for a financial year on the basis of the payments 
effected by the accounting officer by 31 December of that year at the latest. 

6.  By  way  of  derogation  from  paragraphs  3,  4  and  5,  the  expenditure  of  the  European 
Agricultural  Guarantee  Fund  shall  be  entered  in  the  accounts  for  a  financial  year  in 
accordance with the rules laid down in Title I of Part Two. 

Article 9 
Cancellation and carry over of appropriations 

1.  Appropriations  which  have  not  been  used  at  the  end  of  the  financial  year  for  which  they 
were entered shall be cancelled. 

However, they may be carried over to the following financial year only, by a decision taken 
by the institution concerned by 15 February at the latest, in accordance with paragraphs 2 and 
3 or be carried over automatically in accordance with paragraph 4. 

2.  Differentiated  commitment  appropriations  and  non-differentiated  appropriations  not  yet 
committed at the close of the financial year may be carried over in respect of: 

(a) 

(b) 

amounts  corresponding  to  commitment  appropriations  for  which  most  of  the 
preparatory  stages  of  the  commitment  procedure  have  been  completed  by  31 
December.  These  amounts  may  then  be  committed  up  to  31  March  of  the 
following year; 

amounts which are necessary when the legislative authority has adopted a basic 
act  in  the  final  quarter  of  the  financial  year  and  the  Commission  has  been 
unable  to  commit  the  appropriations  provided  for  this  purpose  by  31 
December. 

3. Payment appropriations may be carried over in respect of amounts needed to cover existing 
commitments  or  commitments  linked  to  commitment  appropriations  carried  over,  when  the 
appropriations provided for the relevant lines in the budget for the following financial year do 
not cover requirements. The institution concerned shall first use the appropriations authorised 
for the current financial year and shall not use the appropriations carried over until the former 
are exhausted. 

4. Non-differentiated appropriations corresponding to obligations duly contracted at the close 
of the financial year shall be carried over automatically to the following financial year only. 

5.  The  institution  concerned  shall  inform  the  European  Parliament  and  the  Council 
(hereinafter the 'budgetary authority’) by 15 March at the latest of the carry-over decision it 
has  taken  and  shall  state,  for  each  budget  line,  how  the  criteria  in  paragraphs  2  and  3  have 
been applied to each carry-over. 

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6.  Without  prejudice  to  Article  10,  appropriations  placed  in  reserve  and  appropriations  for 
staff expenditure may not be carried over. 

Article 10 
Carry over rules for assigned revenue 

Revenue  not  used  and  appropriations  available  at  31  December  arising  from  the  assigned 
revenue referred to in Article 18 shall be carried over as follows: 

(a) 

external assigned revenue shall be carried over automatically and must be fully 
used until all the operations relating to the programme or action to which they 
are assigned have been carried out; external assigned revenue received during 
the  last  year  of  the  programme  or  action  may  be  used  in  the  first  year  of  the 
succeeding programme or action; 

(b) 

internal  assigned  revenue  shall  be  carried  over  for  one  year  only,  unless 
specified otherwise in the basic act applicable, or in duly justified exceptional 
circumstances; the corresponding appropriations available must be used first. 

Article 11 
Decommitment of appropriations 

Without prejudice to Articles 170 and 174, where amounts are decommitted as a result of total 
or partial non-implementation of the actions for which they were earmarked, in any financial 
year  after  that  in  which  the  appropriations  were  entered  in  the  budget,  the  appropriations 
concerned shall be cancelled. 

Article 12 
Commitment of appropriations 

The appropriations entered in the budget may be committed with effect from 1 January, once 
the budget has been finally adopted, save as otherwise provided in Title I and Title VI of Part 
Two. 

Article 13 
Rules applicable in case of late adoption of the budget 

1. If the budget has not been definitively adopted at the beginning of the financial year, the 
first  paragraph  of  Article  315  of  the  Treaty  on  the  Functioning  of  the  European  Union 
(hereinafter the 'TFEU') shall apply to commitment and payment of expenditure which it has 
been possible to book to a specific chapter in the budget as part of implementation of the last 
budget duly adopted. 

2. Commitments may be made per chapter to a maximum of one quarter of the total allotted 
appropriations in the relevant chapter of the previous financial year plus one twelfth for each 
month which has elapsed. 

Payments  may  be  made  monthly  per  chapter  to  a  maximum  of  one  twelfth  of  the  allotted 
appropriations in the relevant chapter of the preceding financial year. 

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The  limit  of  the  appropriations  provided  for  in  the  draft  budget  in  preparation  may  not  be 
exceeded. 

3.  If  the  continuity  of  action  by  the  Union  and  management  needs  so  require,  the  Council, 
acting by a qualified majority on a proposal of the Commission, may authorise two or more 
provisional  twelfths  both  for  commitments  and  for  payments  over  and  above  those 
automatically made available pursuant to paragraphs 1 and 2. It shall forward the decision on 
authorisation without delay to the European Parliament.  

The  decision  shall  enter  into  force  thirty  days  following  its  adoption  unless  the  European 
Parliament,  acting  by  a  majority  of  its  Members,  decides  to  reduce  that  expenditure  within 
those thirty days. 

If  the  European  Parliament  decides  to  reduce that  expenditure,  the  Council  shall  review  the 
decision  on  authorisation  taking  into  account  the  amount  approved  by  the  European 
Parliament. 

The additional twelfths shall be authorised in full and shall not be divisible. 

CHAPTER 3 
PRINCIPLE OF EQUILIBRIUM 

Article 14 
Definition and scope 

1. Budget revenue and payment appropriations must be in balance. 

2.  Within  the  framework  of  the  budget,  the  Union  and  the  European  Atomic  Energy 
Community, as well as the bodies set up by the Union as referred to in Article 200, may not 
raise loans. 

Article 15 
Balance from financial year 

1.  The  balance  from  each  financial  year  shall  be  entered  in  the  budget  for  the  following 
financial year as revenue in the case of a surplus or as a payment appropriation in the case of a 
deficit. 

2.  The  estimates  of  such  revenue  or  payment  appropriations  shall  be  entered  in  the  budget 
during the budgetary procedure and in a letter of amendment presented pursuant to Article 35. 
They shall be drawn up in accordance with the Council Regulation implementing the Decision 
on the system of the Union's own resources. 

3.  After  the  presentation  of  the  accounts  for  each  financial  year,  any  discrepancy  with  the 
estimates shall be entered in the budget for the following financial year through an amending 
budget devoted solely to that discrepancy. In such a case, the draft amending budget must be 
submitted  by  the  Commission  within  15  days  following  the  submission  of  the  provisional 
accounts. 

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CHAPTER 4 
PRINCIPLE OF UNIT OF ACCOUNT 

Article 16 
Use of euro 

The multiannual financial framework and the budget shall be drawn up and implemented in 
euro  and  the  accounts  shall  be  presented  in  euro.  However,  for  the  cash-flow  purposes 
referred  to  in  Article  65,  the  accounting  officer  and,  in  the  case  of  imprest  accounts,  the 
imprest  administrators,  and,  for  the  needs  of  the  administrative  management  of  the 
Commission and the European External Action Service (hereinafter referred to as 'EEAS'), the 
authorising  officer  responsible  shall  be  authorised  to  carry  out  operations  in  national 
currencies as laid down in the delegated Regulation referred to in Article 199. 

CHAPTER 5 
PRINCIPLE OF UNIVERSALITY 

Article 17 
Definition and scope 

Total revenue shall cover total payment appropriations, subject to Article 18. All revenue and 
expenditure  shall  be  entered  in  full  without  any  adjustment  against  each  other,  subject  to 
Article 20. 

Article 18 
Assigned revenue 

1. External assigned revenue and internal assigned revenue shall be used to finance specific 
items of expenditure. 

2. The following shall constitute external assigned revenue: 

(a) 

(b) 

financial  contributions  from  Member  States  to  certain  research  programmes 
pursuant  to  the  Council  Regulation  implementing  the  Decision  on  the  system 
of the Union's own resources; 

financial contributions from Member States, third countries, including in both 
cases  their  public  and  parastatal  agencies,  legal  entities  or  natural  persons,  to 
certain  external  aid  projects  or  programmes  financed  by  the  Union  and 
managed by the Commission on their behalf ; 

(c) 

interest on deposits and the fines provided for in the Regulation on speeding up 
and clarifying the implementation of the excessive deficit procedure; 

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(d) 

revenue  earmarked  for  a  specific  purpose,  such  as  income  from  foundations, 
subsidies, gifts and bequests, including the earmarked revenue specific to each 
institution; 

(e) 

contributions to Union activities from third countries or various bodies; 

(f) 

assigned revenue referred to in Article 173(2) and Article 175(2). 

3. The following shall constitute internal assigned revenue: 

(a) 

revenue  from  third  parties  in  respect  of  goods,  services  or  work  supplied  at 
their request; 

(b)  proceeds  from  the  sale  of  vehicles,  equipment,  installations,  materials,  and 
scientific  and  technical apparatus  which  are  being  replaced  or  scrapped  when 
the book value is fully depreciated; 

(c) 

revenue arising from the repayment of amounts wrongly paid; 

(d)  proceeds from the supply of goods, services and works for other departments, 
institutions  or  bodies,  including  refunds  by  other  institutions  or  bodies  of 
mission allowances paid on their behalf; 

(e) 

insurance payments received; 

(f) 

(g) 

revenue from the sale, letting or any other contract concerning rights connected 
with real estate; 

revenue  from  the  sale  of  publications  and  films,  including  those  on  an 
electronic medium. 

4. The basic act applicable may also assign the revenue for which it provides to specific items 
of  expenditure.  Unless  specified  otherwise  in  the  basic  act  applicable,  such  revenue  shall 
constitute internal assigned revenue. 

5.  The  budget  shall  include  lines  to  accommodate  external  assigned  revenue  and  internal 
assigned revenue and wherever possible shall indicate the amount. 

Assigned revenue may be included in the draft budget only for the amounts which are certain 
at the date of the establishment of the draft budget. 

Article 19 
Donations 

1.  The  Commission  may  accept  any  donation  made  to  the  Union,  such  as  foundations, 
subsidies, gifts and bequests. 

2.  Acceptance  of  donations  of  a  value  of  EUR  50000  or  more  which  involve  a  financial 
charge, including follow-up costs, exceeding 10 % of the value of the donation made, shall be 
subject  to  the  authorisation  of  the  European  Parliament  and  of  the  Council,  both  of  which 
shall  act  on  the  matter  within  two  months  of  the  date  of  receipt  of  the  request  from  the 

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Commission. If no objection has been made within that period, the Commission shall take a 
final decision in respect of acceptance. 

Article 20 
Rules on deductions and exchange rates adjustments 

1.  The  delegated  Regulation  referred  to  in  Article  199  may  specify  the  cases  where  certain 
revenue may be deducted from requests for payment, which shall then be passed for payment 
of the net amount. 

2.  The  cost  of  products  or  services  provided  to  the  Union  incorporating  taxes  refunded  by 
third countries on the basis of the relevant agreements shall be charged to the budget for the 
tax inclusive amount. Subsequent reimbursement of taxes shall be treated as assigned revenue 
in accordance with Article 18(2). 

3.  Adjustments  may  be  made  in  respect  of  exchange  differences  occurring  in  the 
implementation of the budget. The final gain or loss shall be included in the balance for the 
year. 

CHAPTER 6 
PRINCIPLE OF SPECIFICATION 

Article 21 
General provisions 

1. Appropriations shall be earmarked for specific purposes by title and chapter; the chapters 
shall be further subdivided into articles and items. 

2.  The  Commission  may,  within  its  own  section  of  the  budget,  transfer  appropriations 
autonomously as detailed in Article 23 or shall request the budgetary authority's approval for 
the transfer of appropriations in the cases detailed in Article 24. 

3. Appropriations may be transferred only to budget lines for which the budget has authorised 
appropriations or carries a token entry "pro memoria".  

4. Appropriations corresponding to assigned revenue may be transferred only if such revenue 
is used for the purpose to which it is assigned. 

Article 22 
Transfers by institutions other than the Commission 

1.  Any  institution  other  than  the  Commission  may,  within  its  own  section  of  the  budget, 
transfer appropriations: 

(a) 

from one title to another up to a maximum of 10 % of the appropriations for the 
year shown on the line from which the transfer is made; 

(b) 

from one chapter to another and from one article to another without limit. 

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2.  Three  weeks  before  making  the  transfers  referred  to  in  paragraph  1,  the  institutions  shall 
inform the budgetary authority of their intentions. In the event of duly substantiated reasons 
being raised within this period by either branch of the budgetary authority, the procedure laid 
down in Article 24 shall apply. 

3. Any institution other than the Commission may propose to the budgetary authority, within 
its own section of the budget, transfers from one title to another exceeding the limit of 10 % 
of the appropriations for the financial year on the line from which the transfer is to be made. 
Those transfers shall be subject to the procedure laid down in Article 24. 

4. Any institution other than the Commission may, within its own section of the budget, make 
transfers within articles without informing the budgetary authority beforehand. 

Article 23 
Internal transfers by the Commission 

1. The Commission may, within its own section of the budget, autonomously: 

(a) 

transfer commitment appropriations within each chapter; 

(b) 

transfer payment appropriations within each title; 

(c) 

(d) 

as regards expenditure on staff and administration which is common to several 
titles, transfer appropriations from one title to another ; 

as  regards  operational  expenditure,  transfer  appropriations  between  chapters 
within the same title, up to a maximum total of 10 % of the appropriations for 
the year shown on the line from which the transfer is made. 

2.  The  Commission  may,  within  its  own  section  of  the  budget,  decide  on  the  following 
transfer  appropriations  from  one  title  to  another,  provided  it  informs  immediately  the 
budgetary authority of its decision: 

(a) 

(b) 

transfer  appropriations  from  the  "provisions"  title  referred  to  in  Article  43, 
where the only condition to lift the reserve lies in the adoption of a basic act in 
accordance  with  the  ordinary  legislative  procedure  foreseen  in  Article  294 
TFEU; 

in duly substantiated exceptional  cases  of international humanitarian  disasters 
and crises, occurring after 1 December of the budgetary year, the Commission 
may  transfer  unused  budgetary  appropriations  for  the  current  budgetary  year 
still  available  in  the  budget  titles  falling  under  heading  4  of  the  multiannual 
financial framework to the budget titles concerning the crisis management aid 
and humanitarian aid operations. 

Article 24 
Transfers by the Commission submitted to the budgetary authority 

1.  The  Commission  shall  submit  its  proposal  of  transfers  simultaneously  to  the  European 
Parliament and the Council.  

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2. The budgetary authority shall take decisions on transfers of appropriations as provided for 
in paragraphs 3 to 6, save as otherwise provided in Title I of Part Two. 

3.  Save  in  urgent  circumstances,  the  Council,  by  a  qualified  majority,  and  the  European 
Parliament,  shall  deliberate  upon  the  Commission  proposal  within  six  weeks  of  the  date  on 
which the two institutions received the proposal for each transfer submitted to them. 

4.  The  transfer  proposal  shall  be  approved,  if  within  the  six-week  period  in  any  of  the 
following cases: 

(a)  European Parliament and the Council approve it; 

(b) 

either  the  European  Parliament  or  the  Council  approves  it  and  the  other 
institution refrains from acting; 

(c)  European  Parliament  and  the  Council  refrain  from  acting  or  have  not  taken  a 

decision contrary to the Commission proposal. 

5. The six-week period referred to under point 4 shall be reduced to three weeks, unless either 
the European Parliament or the Council requests otherwise, in any of the following cases: 

(a) 

(b) 

the  transfer  represents  less  than  10%  of  the  appropriations  of  the  line  from 
which the transfer is made and does not exceed EUR 5 million; 

the  transfer  concerns  only  payment  appropriations  and  the  overall  amount  of 
the transfer does not exceed EUR 100 million. 

6. If either the European Parliament or the Council has amended the transfer while the other 
institution has approved it or refrains from acting, or if European Parliament and the Council 
have amended the transfer, the smaller amount approved either by the European Parliament or 
the Council shall be deemed approved, unless the Commission withdraws its proposal. 

Article 25 
Transfer subject to special provisions 

1.  Transfers  within  the  titles  of  the  budget  devoted  to  the  European  Agricultural  Guarantee 
Fund,  the  Structural  Funds,  the  Cohesion  Fund,  the  European  Fisheries  Fund,  the  European 
Agricultural  Fund  for  Rural  Development  and  Research  shall  be  the  subject  of  special 
provisions under Titles I, II and III of Part Two. 

2. Decisions on transfers to allow the use of the emergency aid reserve shall be taken by the 
budgetary  authority  on  a  proposal  from  the  Commission,  or  by  the  Commission  for  a 
maximum of 10% of the appropriations for the year shown on the line from which the transfer 
is made. 

The procedure provided for in Article 24(3) and (4) shall apply. If the Commission proposal is 
not agreed to by the European Parliament and the Council and there is a failure to arrive at a 
common  position  on  the  use  of  this  reserve,  the  European  Parliament  and  the  Council  shall 
refrain from acting on the Commission's proposal of transfers. 

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CHAPTER 7 
PRINCIPLE OF SOUND FINANCIAL MANAGEMENT 

Article 26 
Principles of economy, efficiency and effectiveness 

1.  Budget  appropriations  shall  be  used  in  accordance  with  the  principle  of  sound  financial 
management,  namely  in  accordance  with  the  principles  of  economy,  efficiency  and 
effectiveness. 

2. The principle of economy requires that the resources used by the institution for the pursuit 
of its activities shall be made available in due time, in appropriate quantity and quality and at 
the best price. 

The  principle  of  efficiency  is  concerned  with  the  best  relationship  between  resources 
employed and results achieved. 

The  principle  of  effectiveness  is  concerned  with  attaining  the  specific  objectives  set  and 
achieving the intended results. 

3. Specific, measurable, achievable, relevant and timed objectives shall be set for all sectors 
of  activity  covered  by  the  budget.  Achievement  of  those  objectives  shall  be  monitored  by 
performance  indicators  for  each  activity  and  information  shall  be  provided  by  the  spending 
authorities to the budgetary authority. Such information shall be provided annually and at the 
latest in the documents accompanying the draft budget. 

4. In order to improve decision-making, institutions shall undertake both ex ante and ex post 
evaluations  in  line  with  guidance  provided  by  the  Commission.  Such  evaluations  shall  be 
applied  to  all  programmes  and  activities  which  entail  significant  spending  and  evaluation 
results disseminated to spending, legislative and budgetary authorities. 

Article 27 
Compulsory financial statement 

1.  Any  proposal  or  initiative  submitted  to  the  legislative  authority  by  the  Commission,  the 
High  Representative  of  the  Union  for  Foreign  Affairs  and  Security  Policy  (hereinafter  the 
'High  Representative')  or  by  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 
by the evaluation provided for in Article 26(4). 

Any amendment to a proposal or initiative submitted to the  legislative  authority  which may 
have appreciable implications for the budget, including changes in the number of posts, must 
be  accompanied  by  a  financial  statement  prepared  by  the  institution  proposing  the 
amendment. 

2. In order to reduce the risk of fraud and irregularities, the financial statement referred to in 
paragraph 1 shall provide information on the internal control system set up, an assessment of 
the risk involved, as well as existing and planned fraud prevention and protection measures. 

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Article 28 
Internal control of budget implementation 

1. The budget shall be implemented in compliance with effective and efficient internal control 
as appropriate in each management mode, and in accordance with the relevant sector-specific 
regulations. 

2.  For  the  purposes  of  the  implementation  of  the  budget,  internal  control  is  defined  as  a 
process  applicable  at  all  levels  of  the  management  and  designed  to  provide  reasonable 
assurance of achieving the following objectives: 

(a) 

effectiveness, efficiency and economy of operations; 

(b) 

reliability of reporting; 

(c) 

safeguarding of assets and information; 

(d)  prevention, detection and correction of fraud and irregularities; 

(e) 

adequate management of the risks relating to the legality and regularity of the 
underlying  transactions,  taking  into  account  the  multiannual  character  of 
programmes as well as the nature of the payments concerned. 

Article 29 
Tolerable risk of error 

The Legislative authority shall, in accordance with the procedure laid down in Article 322 of 
the  TFEU,  decide  on  a  level  of  tolerable  risk  of  error  at  an  appropriate  aggregation  of  the 
budget.  That  decision  shall  be  taken  into  account  during  the  annual  discharge  procedure,  in 
accordance with Article 157(2).  

The level of tolerable risk of error shall be based on an analysis of the costs and benefits of 
controls. Member States and entities and persons referred to in point (b) Article 55(1) shall on 
request report to the Commission on the costs of controls borne by them as well as the number 
and size of activities financed by the budget. 

The level of tolerable risk of error shall be closely monitored and shall be reviewed in case of 
major changes in the control environment. 

CHAPTER 8 
PRINCIPLE OF TRANSPARENCY 

Article 30 
Publication of accounts, budgets and reports 

1. The budget shall be established and implemented and the accounts presented in compliance 
with the principle of transparency. 

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2. The President of the European Parliament shall have the budget and amending budgets, as 
finally adopted, published in the Official Journal of the European Union. 

The budget shall be published within three months following the date on which the budget is 
declared finally adopted. 

The  consolidated  annual  accounts  and  the  report  on  budgetary  and  financial  management 
drawn up by each institution shall be published in the Official Journal of the European Union. 

Article 31 
Publication of Union funds recipients and other information 

1. Information on borrowing-and-lending operations contracted by the Union for third parties 
shall appear in an Annex to the budget. 

2.  The  Commission  shall  make  available,  in  an  appropriate  manner,  information  on  the 
recipients of funds deriving from the budget held by it when the budget is implemented on a 
centralised basis and directly by its departments or by Union Delegations in accordance with 
the second paragraph of Article 53, and information on the recipients of funds as provided by 
the  entities  to  which  budget  implementation  tasks  are  delegated  under  other  modes  of 
management. 

3.This  information  shall  be  made  available  with  due  observance  of  the  requirements  of 
confidentiality,  in  particular  the  protection  of  personal  data  as  laid  down  in  Directive 
95/46/EC of the European Parliament and of the Council17 and Regulation (EC) No 45/2001 
of the European Parliament and of the Council18 , and of the requirements of security, taking 
into account the specificities of each management mode referred to in Article 53 and where 
applicable in conformity with the relevant sector-specific rules. 

17 
18 

OJ L 281, 23.11.1995, p. 31.  
OJ L 8, 12.1.2001, p. 1. 

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TITLE III 
ESTABLISHMENT AND STRUCTURE OF THE 
BUDGET 

CHAPTER 1 
ESTABLISHMENT OF THE BUDGET 

Article 32 
Estimates of revenue and expenditure 

The European Parliament, the European Council and the Council, the Court of Justice of the 
European Union, the Court of Auditors, the Economic and Social Committee, the Committee 
of  the  Regions,  the  Ombudsman,  the  European  Data-Protection  Supervisor  and  the  EEAS 
shall  draw  up  an  estimate  of  their  revenue  and  expenditure,  which  they  shall  send  to  the 
Commission before 1 July each year. 

The EEAS shall draw up an estimate of its revenue and expenditure, which it shall send to the 
Commission before 1 July each year. The High Representative shall hold consultations with 
the Members of the  Commission  responsible for development policy, neighbourhood policy 
and international cooperation, humanitarian aid and crisis response, regarding their respective 
responsibilities. 

These  estimates  shall  also  be  sent  by  these  institutions  to  the  budgetary  authority  for 
information  by  no  later  than  1  July  each  year.  The  Commission  shall  draw  up  its  own 
estimates, which it shall also send to the budgetary authority by the same date. 

In preparing its own estimates the Commission shall use the information referred to in Article 
33. 

Article 33 
Estimated budget of the bodies referred to in Article 200 

Each body referred to in Article 200 shall, in accordance with the instrument establishing it, 
send to the Commission and the budgetary authority by 31 March each year an estimate of its 
revenue and expenditure, including the establishment plan, and its draft work programme. 

Article 34 
Draft budget 

1.  The  Commission  shall  submit  a  proposal  containing  the  draft  budget  to  the  European 
Parliament and the Council, at the latest, by 1 September of the year preceding that in which 
the budget is to be implemented. 

The draft budget shall contain a summary general statement of the expenditure and revenue of 
the Union and consolidate the estimates referred to in Article 32. 

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The draft budget shall follow the structure and presentation set out in Articles 41 to 46. 

Each of the sections of the draft budget shall be preceded by an introduction drawn up by the 
institution concerned. 

The  Commission  shall  draw  up  the  general  introduction  to  the  draft  budget.  The  general 
introduction shall comprise financial tables covering the main data by titles and justifications 
for  the  changes  in  the  appropriations  from  one  financial  year  to  the  next  by  categories  of 
expenditure of the multi-annual financial framework. 

2. Where relevant, the Commission shall attach to the draft budget a financial programming 
for the following years. 

The financial programming shall be updated after the adoption of the budget, to incorporate 
the results of the budgetary procedure and any other relevant decisions. 

3. The Commission shall also attach to the draft budget any working paper it considers useful 
to support its budget requests. 

4. In accordance with Article 8(5) of Decision 2010/427/EU of 26 July 2010 establishing the 
organisation and functioning of the European External Action Service19 and in order to ensure 
the budgetary transparency in the area of external action of the Union, the Commission shall 
transmit  to  the  budgetary  authority,  together  with  the  draft  budget,  a  working  document 
presenting, in a comprehensive way: 

(a) 

(b) 

all administrative and operational expenditure related to the external actions of 
the  Union,  including  Common  Foreign  and  Security  Policy  (CFSP)  and 
Common Security and Defence Policy tasks, and financed from the budget; 

the  EEAS'  overall  administrative  expenditure  for  the  previous  year,  broken 
down  into  expenditure  by  delegation  and  expenditure  for  the  EEAS'  central 
administration;  together  with  the  operational  expenditure,  broken  down  by 
geographic  area  (regions,  countries),  thematic  areas,  Union  Delegation  and 
mission. 

The working document shall also: 

(a) 

(b) 

(c) 

show the number of posts for each grade in each category and the number of 
permanent and temporary posts, including contractual and local staff authorised 
within  the  limits  of  the  budget  appropriations  in  each  Union  Delegation,  as 
well as in the central administration of the EEAS; 

show  any  increase  or  reduction  of  posts  by  grade  and  category  in  the  central 
administration  of  the  EEAS,  and  in  all  Union  Delegations  based  on  the 
preceding year; 

show the number of posts authorised for the financial year, the number of posts 
authorised for the preceding year, as well as the number of posts occupied by 
diplomats seconded from the Member States, Council and Commission staff; 

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OJ L 201, 3.8.2010, p. 30. 

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(d)  provide  a  detailed  picture  of  all  staff  in  place  in  the  Union  delegations  at  the 
time of presenting the draft budget, including a breakdown by geographic area, 
individual  country  and  mission,  distinguishing  establishment  plan  posts, 
contract agents, local agents and seconded national experts and appropriations 
requested  in  the  draft  budget  for  such  other  types  of  personnel  with 
corresponding estimates of the equivalent full-time staff that may be employed 
within the limits of the appropriations requested. 

Article 35 
Letter of amendment to the draft budget 

Until  the  Conciliation  Committee  referred  to  in  Article  314  of  the  TFEU  is  convened,  the 
Commission may, on its own initiative or if requested by the other institutions, each in respect 
of its own section, present simultaneously to the European Parliament and the Council letters 
of amendment to the draft budget on the basis of new information which was not available at 
the  time  the  draft  was  established,  including  a  letter  of  amendment  updating  expenditure 
estimates for agriculture. 

Article 36 
Approval of the outcome of the Conciliation Committee 

Once the Conciliation Committee has agreed on a joint text, the European Parliament and the 
Council  shall  endeavour  to  approve  the  outcome  of  the  Conciliation  Committee  as  soon  as 
possible in accordance with Article 314(6) of the TFEU, in accordance with their respective 
internal rules of procedure. 

Article 37 
Adoption of the budget 

1.  The  President  of  the  European  Parliament  shall  declare  the  budget  finally  adopted  in 
accordance with the procedure provided for in Article 314(9) of the TFEU and Article 177(7) 
of the Treaty establishing the European Atomic Energy Community (hereinafter the 'Euratom 
Treaty'). 

2.  Once  the  budget  has  been  declared  finally  adopted,  each  Member  State  shall,  from  1 
January of the following financial year or from the date of the declaration of final adoption of 
the budget if that is after 1 January, be bound to make over to the Union the payments due as 
specified in the Council Regulation implementing the Decision on the system of the Union's 
own resources. 

Article 38 
Draft amending budgets 

1.  If  there  are  unavoidable,  exceptional  or  unforeseen  circumstances,  the  Commission  may 
present draft amending budgets. 

Requests  for  amending  budgets,  in  the  same  circumstances  as  referred  to  in  the  preceding 
paragraph, from institutions other than the Commission shall be sent to the Commission. 

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Before  presenting  a  draft  amending  budget,  the  Commission  and  the  other  institutions  shall 
examine  the  scope  for  reallocation  of  the  relevant  appropriations,  taking  into  account  any 
expected under-implementation of appropriations. 

2.  The  Commission  shall,  save  in  exceptional  circumstances,  submit  any  draft  amending 
budget simultaneously to the European Parliament and the Council by 1 September each year 
at  the  latest.  It  may  attach  an  opinion  to  the  requests  for  amending  budgets  from  the  other 
institutions. 

3.  The  European  Parliament  and  the  Council  shall  discuss  them  with  due  account  for  their 
urgency. 

Article 39 
Early transmission of estimates and draft budgets 

The Commission and the budgetary authority may agree to bring forward certain dates for the 
transmission of the estimates, and for the adoption and transmission of the draft budget. This 
arrangement  may  not,  however,  have  the  effect  of  shortening  or  prolonging  the  periods 
allowed for consideration of these texts under Article 314 of the TFEU and Article 177 of the 
Euratom Treaty. 

CHAPTER 2 
STRUCTURE AND PRESENTATION OF THE BUDGET 

Article 40 
Structure of the budget 

The budget shall consist of the following: 

(a) 

a general statement of revenue and expenditure; 

(b) 

separate  sections  subdivided  into  statements  of  revenue  and  expenditure  for 
each institution. 

The European Council and the Council shall share the same section of the budget. 

Article 41 
Classification of the budget 

1.  Commission  revenue  and  the  revenue  and  expenditure  of  the  other  institutions  shall  be 
classified  by  the  budgetary  authority  according  to  their  type  or  the  use  to  which  they  are 
assigned under titles, chapters, articles and items. 

2. The statement of expenditure for the Commission section shall be set out on the basis of a 
nomenclature adopted by the budgetary authority and classified according to purpose. 

A  title  shall  correspond  to  a  policy  area  and  a  chapter  shall,  as  a  rule,  correspond  to  an 
activity. 

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Each title may include operational appropriations and administrative appropriations. 

The administrative appropriations for a title shall be grouped in a single chapter. 

Article 42 
Prohibition of negative revenue 

The budget may not contain negative revenue. 

The  own  resources  paid  under  the  Council  Decision  on  the  system  of  the  Union's  own 
resources  shall  be  net  amounts  and  shall  be  shown  as  such  in  the  summary  statement  of 
revenue in the budget. 

Article 43 
Provisions 

1. Each section of the budget may include a ‘provisions’ title. Appropriations shall be entered 
in this title in the following two circumstances: 

(a)  where  no  basic  act  exists  for  the  action  concerned  when  the  budget  is 

established; 

(b)  where 

there  are  serious  grounds  for  doubting 

the 
appropriations or the possibility of implementing, under conditions consonant 
with  sound  financial  management,  the  appropriations  entered  on  the  lines 
concerned. 

the  adequacy  of 

The  appropriations  in  this  title  may  be  used  only  after  transfer  in  accordance  with  the 
procedure  laid  down  in  point  (d)  of  Article  23(1),  where  the  adoption  of  the  basic  act  is 
subject to the procedure laid down in Article 294 of the TFEU, and that of Article 24, for all 
other cases. 

2.  In  the  event  of  serious  implementation  difficulties,  the  Commission  may  propose,  in  the 
course  of  a  financial  year,  that  appropriations  be  transferred  to  the  ‘provisions’  title.  The 
budgetary authority shall take a decision on these transfers as provided in Article 24. 

Article 44 
Negative reserve 

The  Commission  section  of  the  budget  may  include  a  ‘negative  reserve’  limited  to  a 
maximum amount of EUR 200 million. This reserve, which shall be entered in a separate title, 
may comprise both commitment appropriations and payment appropriations. 

This reserve must be drawn upon before the end of the financial year by means of transfer in 
accordance with the procedure laid down in Articles 21 and 23. 

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Article 45 
Reserve for emergency aid 

1. The Commission section of the budget shall include a reserve for emergency aid for third 
countries. 

2. The reserve referred to in paragraph 1 shall be drawn upon before the end of the financial 
year by means of transfer in accordance with the procedure laid down in Articles 24 and 25. 

Article 46 
Presentation of the budget 

1. The budget shall show: 

(a) in the general statement of revenue and expenditure:  

(i) 

the estimated revenue of the Union for the financial year concerned; 

(ii) 

the estimated revenue for the preceding financial year and the revenue for year 
n - 2; 

(iii) 

the commitment and payment appropriations for the financial year concerned; 

(iv) 

the commitment and payment appropriations for the preceding financial year; 

(v) 

the expenditure committed and the expenditure paid in year n – 2; 

(vi)  appropriate remarks on each subdivision, as set out in Article 41(1); 

(b)  in  each  section  of  the  budget,  the  revenue  and  expenditure  shall  be  shown  in  the  same 
structure as in point (a); 

(c) as regards staff: 

(i) 

(ii) 

for  each  section  of  the  budget,  an  establishment  plan  setting  the  number  of 
posts  for  each  grade  in  each  category  and  in  each  service  and  the  number  of 
permanent  and  temporary  posts  authorised  within  the  limits  of  the  budget 
appropriations; 

an  establishment  plan  for  staff  paid  from  the  research  and  technological 
development appropriations for direct action and an establishment plan for staff 
paid from the same appropriations for indirect action; the establishment plans 
shall  be  classified  by  category  and  grade  and  shall  distinguish  between 
permanent  and  temporary  posts,  authorised  within  the  limits  of  the  budget 
appropriations; 

(iii)  as  regards  scientific  and  technical  staff,  the  classification  may  be  based  on 
groups of grades, in accordance with the conditions laid down in each budget; 
the establishment plan must specify the number of highly qualified technical or 
scientific  personnel  who  are  accorded  special  advantages  under  the  specific 
provisions of the Staff Regulations; 

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(iv)  an establishment plan setting the number of posts by grade and by category for 
each  body  referred  to  in  Article  200  which  receives  a  grant  charged  to  the 
budget.  The  establishment  plans  shall  show  next  to  the  number  of  posts 
authorised for the financial year the number authorised for the preceding year; 

(d) as regards borrowing-and-lending operations: 

(i) 

in  the  general  statement  of  revenue,  the  budget  lines  corresponding  to  the 
relevant operations and intended to record any reimbursements  received from 
beneficiaries  who  initially  defaulted,  leading  to  activation  of  the  performance 
guarantee.  These  lines  shall  carry  a  token  entry  "pro  memoria"  and  be 
accompanied by appropriate remarks; 

(ii) 

in the Commission section: 

- 

- 

the budget lines containing the Union's performance guarantees in respect 
of  the  operations  concerned.  These  lines  shall  carry  a  token  entry  "pro 
memoria",  so  long  as  no  effective  charge  which  has  to  be  covered  by 
definitive resources has arisen; 

remarks  giving  the  reference  to  the  basic  act  and  the  volume  of  the 
operations  envisaged,  the  duration  and  the  financial  guarantee  given  by 
the Union in respect of these operations; 

(iii) 

in a document annexed to the Commission section, as an indication: 

- 

- 

ongoing capital operations and debt management; 

the  capital  operations  and  debt  management  for  the  financial  year 
concerned; 

(e)  the  total  amount  of  CFSP  expenditure  shall  be  entered  into  one  budget  chapter,  entitled 
CFSP, with specific budgetary articles. Those articles shall cover CFSP expenditure and shall 
contain specific budget lines identifying at least the single major missions. 

2. In addition to the documents referred to in paragraph 1 the budgetary authority may attach 
any other relevant documents to the budget. 

Article 47 
Rules on the Establishment Plan for staff 

1. The establishment plan described in point (c) of Article 46(1) shall constitute an absolute 
limit for each institution or body; no appointment may be made in excess of the limit set. 

However, save in the case of grades AD 16, AD 15 and AD 14, each institution or body may 
modify establishment plans by up to 10 % of posts authorised, subject to two conditions: 

(a) 

(b) 

that the volume of staff appropriations corresponding to a full financial year is 
not affected, and 

that the limit of the total number of posts authorised by each establishment plan 
is not exceeded. 

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Three  weeks  before  making  the  modifications  referred  to  in  the  second  subparagraph,  the 
institutions  shall  inform  the  budgetary  authority  of  their  intentions.  In  the  event  of  duly 
justified reasons being raised within this period by either branch of the budgetary authority, 
the  institutions  shall  refrain  from  making  the  modifications  and  the  normal  procedure  shall 
apply. 

2. By way of derogation from the first subparagraph of paragraph 1, the effects of part-time 
work authorised by the appointing authority in accordance with the Staff Regulations may be 
offset by other appointments. 

CHAPTER 3 
BUDGETARY DISCIPLINE 

Article 48 
Compliance of the budget with the multiannual financial framework 

The budget shall comply with the multiannual financial framework. 

Article 49 
Compliance of Union acts with the budget and the multiannual financial framework 

Where by implementation of an act of the Union the appropriations available in the budget or 
the allocations available in the multiannual financial framework would be exceeded, such act 
may  be  implemented  in  financial  terms  only  after  the  budget  has  been  amended  and,  if 
necessary, the financial framework has been appropriately revised. 

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TITLE IV 
IMPLEMENTATION OF THE BUDGET 

CHAPTER 1 
GENERAL PROVISIONS 

Article 50 
Budget implementation according to sound financial management 

1. The Commission shall implement the revenue and expenditure of the budget in accordance 
with  this  Regulation,  on  its  own  responsibility  and  within  the  limits  of  the  appropriations 
authorised. 

2.  The  Member  States  shall  cooperate  with  the  Commission  so  that  the  appropriations  are 
used in accordance with the principle of sound financial management. 

Article 51 
Basic act and exceptions 

1.  A  basic  act  shall  first  be  adopted  before  the  appropriations  entered  in  the  budget  for  any 
action by the Union may be used. 

A  basic  act  is  a  legal  act  which  provides  a  legal  basis  for  the  action  and  for  the 
implementation of the corresponding expenditure entered in the budget. 

2.  In  application  of  the  TFEU  and  the  Euratom  Treaty,  a  basic  act  is  an  act  adopted  by  the 
legislative authority and may take the form of a regulation, a directive or a decision within the 
meaning of Article 288 of the TFEU. 

3. In application of Title V of the Treaty on European Union, a basic act may take one of the 
forms  specified  in  Articles  26(2),  28(1),  29,  31(2),  33  and  37  of  the  Treaty  on  European 
Union. 

4.  Recommendations  and  opinions  do  not  constitute  basic  acts  within  the  meaning  of  this 
Article, nor do resolutions, conclusions, declarations or other acts which have no legal effects. 

5.  By  way  of  derogation  from  paragraphs  1,  2  and  3,  the  following  may  be  implemented 
without  a  basic  act  provided  the  actions  which  they  are  intended  to  finance  fall  within  the 
powers of the Union: 

(a) 

appropriations for pilot projects of an experimental nature designed to test the 
feasibility  of  an  action  and  its  usefulness.  The  relevant  commitment 
appropriations may be entered in the budget for not more than two successive 
financial years; 

(b) 

appropriations for preparatory actions in the field of application of the TFEU 
and  the  Euratom  Treaty,  designed  to  prepare  proposals  with  a  view  to  the 

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adoption  of  future  actions.  The  preparatory  actions  are  to  follow  a  coherent 
approach and may take various forms. The relevant commitment appropriations 
may be entered in the budget for not more than three successive financial years. 
The  legislative  procedure  must  be  concluded  before  the  end  of  the  third 
financial  year.  In  the  course  of  the  legislative  procedure,  the  commitment  of 
appropriations  must  correspond  to  the  particular  features  of  the  preparatory 
action  as  regards  the  activities  envisaged,  the  aims  pursued  and  the  persons 
benefited. Consequently, the means implemented cannot correspond in volume 
to those envisaged for financing the definitive action itself. 

When  the  draft  budget  is  presented,  the  Commission  shall  submit  a  report  to 
the  budgetary  authority  on  the  actions  referred  to  in  point  (a)  and  the  first 
paragraph  of  this  point  which  shall  also  contain  an  assessment  of  results  and 
the follow-up envisaged; 

(c) 

appropriations for preparatory measures in the field of Title V of the Treaty on 
European Union. These measures shall be limited to a short period of time and 
shall be designed to establish the conditions for Union action in fulfilment of 
the  objectives  of  the  CFSP  and  for  the  adoption  of  the  necessary  legal 
instruments. 

For the purpose of Union crisis management operations, preparatory measures 
are designed inter alia to assess the operational requirements, to provide for a 
rapid  initial  deployment  of  resources,  or  to  establish  the  conditions  on  the 
ground for the launching of the operation. 

Preparatory measures shall be agreed by the Council, on a proposal by the High 
Representative of the Union for Foreign Affairs and Security Policy. 

In order to ensure the rapid implementation of preparatory measures, the High 
Representative  shall  inform  the  Commission  as  early  as  possible  on  the 
Council's  intention  to  launch  a  preparatory  measure  and  in  particular  of  the 
estimated  resources  required  for  this  purpose.  In  conformity  with  this 
Regulation, the Commission shall take all the necessary measures to ensure a 
rapid disbursement of the funds. 

(d) 

appropriations  for  one-off  actions,  or  even  actions  for  an  indefinite  duration, 
carried out by the Commission by virtue of tasks resulting from its prerogatives 
at institutional level pursuant to the TFEU and the Euratom Treaty other than 
its  right  of  legislative  initiative  referred  to  in  point  (b)  and  under  specific 
powers directly conferred on it by those Treaties, a list of which is given in the 
delegated Regulation referred to in Article 199; 

(e) 

appropriations  for  the  operation  of  each  institution  under  its  administrative 
autonomy. 

Article 52 
Implementation of the budget by other Institutions 

The  Commission  shall  confer  on  the  other  institutions  the  requisite  powers  for  the 
implementation of the sections of the budget relating to them. 

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Detailed  arrangements  may  be  agreed  with  the  Commission  in  order  to  facilitate  the 
implementation of the Union Delegations' administrative appropriations. Those arrangements 
shall  not  contain  any  derogation  from  the  provisions  of  this  Regulation  and  the  delegated 
Regulation referred to in Article 199. 

Article 53 
Delegation of budget implementation powers 

The  Commission  and  each  of  the  other  institutions  may,  within  their  departments,  delegate 
their  powers  of  budget  implementation  in  accordance  with  the  conditions  laid  down  by  this 
Regulation  and  by  their  internal  rules  and  within  the  limits  which  they  lay  down  in  the 
instrument of delegation. Those so empowered may act only within the limits of the powers 
expressly conferred upon them. 

However, the Commission may delegate its powers of budget implementation concerning the 
operational appropriations of its own section to the Heads of Union Delegations. It shall, at 
the same time, inform the High Representative thereof. When Heads of Union Delegations act 
as  subdelegated  authorising  officers  of  the  Commission,  they  shall  apply  the  Commission 
rules  for  the  implementation  of  the  budget  and  shall  be  submitted  to  the  same  duties, 
obligations  and  accountability  as  any  other  subdelegated  authorising  officer  of  the 
Commission. 

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. 

Article 54 
Conflict of interests 

1. All financial actors and any other person involved in budget implementation, management, 
audit  or  control  shall  be  prohibited  from  taking  any  action  which  may  bring  their  own 
interests into conflict with those of the Union. Should such a case arise, the person concerned 
must refrain from such actions and refer the matter to the competent authority. 

2. There is a conflict of interests where the impartial and objective exercise of the functions of 
a  financial  actor  or  other  person,  as  referred  to  in  paragraph  1,  is  compromised  for  reasons 
involving family, emotional life, political or national affinity, economic interest or any other 
shared interest with the beneficiary. 

CHAPTER 2 
METHODS OF IMPLEMENTATION 

Article 55 
Methods of implementation of the budget 

1. The Commission shall implement the budget in the following ways: 

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(a)  by  its  departments,  by  Union  Delegations  in  accordance  with  the  second  paragraph  of 
Article 53, or through executive agencies referred to in Article 59; 

(b)  indirectly,  in  shared  management  with  Member  States  or  by  entrusting  budget 
implementation tasks to: 

(i) 

third countries or the bodies they have designated; 

(ii) 

international organisations and their agencies; 

(iii)  financial 

institutions  entrusted  with 

the 

implementation  of  Financial 

Instruments pursuant to Title VIII; 

(iv) 

the European Investment Bank and the European Investment Fund or any other 
subsidiary of the Bank; 

(v)  bodies referred to in Articles 200 and 201; 

(vi)  public  law  bodies  or  bodies  governed  by  private  law  with  a  public  service 

mission as far as these latter provide adequate financial guarantees; 

(vii)  bodies  governed  by  private  law  of  a  Member  State,  entrusted  with  the 
implementation  of  a  public  and  private  partnership  and  providing  adequate 
financial guarantees; 

(viii)  persons entrusted with the implementation of specific actions pursuant to Title 
V of the Treaty on the European Union, and identified in the relevant basic act 
within the meaning of Article 51 of this Regulation. 

2. Member States and entities and persons listed under point (b) of paragraph 1 shall not have 
the status of authorising officer by delegation. 

3.  The  Commission  may  not  entrust  third  parties  with  executive  powers  it  enjoys  under  the 
Treaties where they involve a large measure of discretion implying political choices. 

Article 56 
Shared management with Member States 

1.  Member  States  shall  respect  the  principles  of  sound  financial  management,  transparency 
and  non-discrimination  and  ensure  the  visibility  of  Union  action  when  they  manage  Union 
funds. To this end, Member States shall fulfil the control and audit obligations and assume the 
resulting responsibilities laid down in this Regulation. Complementary provisions may be laid 
down in sector-specific rules. 

2.  Member  States  shall  prevent,  detect  and  correct  irregularities  and  fraud  when  executing 
tasks related to the implementation of the budget. To this end they shall carry out ex ante and 
ex post controls  including, where appropriate, on the spot checks, to ensure that the actions 
financed from the budget are effectively carried out and implemented correctly, recover funds 
unduly paid and bring legal proceedings as necessary.  

Member States shall impose effective, dissuasive and proportionate penalties on recipients as 
provided for in sector-specific rules and in national legislation. 

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3.  In  accordance  with  the  sector-specific  rules,  Member  States  shall  accredit  one  or  more 
public sector bodies which shall be solely responsible for the proper management and control 
of the funds, for which accreditation has been granted. This shall be without prejudice to the 
possibility for these bodies to carry out tasks not related to the management of Union funds or 
to entrust certain of their tasks to other bodies. 

The  accreditation  shall  be  given  by  a  Member  State  authority  in  accordance  with  sector-
specific rules ensuring that the body is capable of properly managing the funds. The sector-
specific rules may also define a role of the Commission in the accreditation process. 

The  accrediting  authority  shall  be  responsible  for  supervising  the  body  and  for  taking  all 
necessary  measures  to  remedy  any  deficiency  in  its  operation,  including  the  suspension  and 
withdrawal of the accreditation. 

4. Bodies accredited pursuant to paragraph 3 of this Article shall: 

(a) 

set up and ensure the functioning of an effective and efficient internal control 
system; 

(b)  use  an  annual  accounting  system  providing  accurate,  complete  and  reliable 

information in a timely manner; 

(c) 

(d) 

(f) 

be  subject  to  an  independent  external  audit,  performed  in  accordance  with 
internationally  accepted  auditing  standards  by  an  audit  service  functionally 
independent of the accredited body; 

ensure,  in  conformity  with  Article  31(2),  annual  ex  post  publication  of 
recipients of Union funds; 

ensure a protection of personal data which satisfies the principles laid down in 
Directive 95/46/EC. 

5. Bodies accredited pursuant to paragraph 3 of this Article shall provide the Commission by 
1 February of the following financial year with: 

(a) 

(b) 

(c) 

their accounts drawn up for the expenditure made in the execution of the tasks 
entrusted; 

a  summary  of  the  results  of  all  available  audits  and  controls  carried  out, 
including  an  analysis  of  systematic  or  recurrent  weaknesses  as  well  as 
corrective actions taken or planned; 

a  management  declaration  of  assurance  as  to  the  completeness,  accuracy  and 
veracity of the accounts, the proper functioning of the internal control systems 
as well as to the legality and regularity of the underlying transactions and the 
respect of the principle of sound financial management;  

(d) 

the  opinion  of  an  independent  audit  body  on  the  management  declaration  of 
assurance mentioned in point (c) of this paragraph, covering all its elements. 

If a Member State has accredited more than one body per policy area, it shall by 15 February 
of the following financial year provide the Commission with a synthesis report consisting of 

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an  overview  at  national  level  of  all  management  declarations  of  assurance  and  the 
independent audit opinions thereon, prepared for the policy area concerned. 

6. The Commission shall: 

apply  procedures  for  a  timely  financial  clearance  of  the  accounts  of  the  accredited 
(a) 
bodies, ensuring that the accounts are complete, accurate and true and allowing for a timely 
clearance of irregularity cases; 

exclude from Union financing expenditure the disbursements which have been made 

(b) 
in breach of Union law. 

Sector-specific  rules  shall  govern  the  conditions  under  which  payments  to  Member  States 
may be suspended by the Commission or interrupted by the authorising officer by delegation  

Article 57 
Indirect management with entities and persons other than Member States 

1.  Entities  and  persons  entrusted  with  budget  implementation  tasks  pursuant  to  point  (b)  of 
Article  55(1)  shall  respect  the  principles  of  sound  financial  management,  transparency  and 
non-discrimination and ensure the visibility of Union action when they manage Union funds. 
They shall guarantee a level of protection of the financial interests of the Union equivalent to 
that required under this Regulation when they manage Union funds, with due consideration: 

(a) 

the nature of the tasks entrusted and the amounts involved; 

(b) 

the financial risks involved; 

(c) 

the  level  of  assurance  stemming  from  their  systems,  rules  and  procedures 
together with the measures taken by the Commission to supervise and support 
the implementation of the tasks entrusted. 

2. To this effect, the entities and persons referred to in paragraph 1 shall: 

(a) 

set up and ensure the functioning of an effective and efficient internal control 
system; 

(b)  use  an  annual  accounting  system  providing  accurate,  complete  and  reliable 

information in a timely manner; 

(c) 

(d) 

(e) 

be  subject  to  an  independent  external  audit,  performed  in  accordance  with 
internationally  accepted  auditing  standards  by  an  audit  service  functionally 
independent of the entity or person concerned;  

apply  appropriate  rules  and  procedures  for  providing  financing  from  Union 
funds through grants, procurement and financial instruments; 

ensure,  in  conformity  with  Article  31(2),  annual  ex  post  publication  of 
recipients of Union funds ; 

(f) 

ensure a reasonable protection of personal data. 

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Persons  referred  to  in  point  (viii)  of  Article  55(1)(b)  may  satisfy  these  requirements 
progressively. They shall adopt their financial rules with the Commission's prior consent. 

3.  The  entities  and  persons  referred  to  in  paragraph  1  shall  prevent,  detect  and  correct 
irregularities and fraud when executing tasks related to the implementation of the budget. To 
this end they shall carry out ex ante and ex post controls including, where appropriate, on the 
spot checks, to ensure that the actions financed from the budget are effectively carried out and 
implemented correctly, recover funds unduly paid and bring legal proceedings as necessary.  

4. The Commission may suspend payments to entities and persons referred to in paragraph 1, 
in  particular  when  systemic  errors  which  question  the  reliability  of  the  internal  control 
systems  of  the  entity  or  person  concerned  or  the  legality  and  regularity  of  the  underlying 
transactions are detected.  

The authorising officer by delegation may interrupt payments to such entities or persons fully 
or  partially  for  the  purpose  of  further  verifications  when  information  comes  to  his  notice 
indicating a significant deficiency in the functioning of the internal control system or that the 
expenditure certified by the entity or person concerned is linked to a serious irregularity and 
has not been corrected, provided the interruption is necessary to prevent significant damage to 
the financial interests of the Union. 

5. The entities and persons referred to in paragraph 1 shall provide the Commission with: 

(a) 

a report on the implementation of the tasks entrusted; 

(b) 

(c) 

(d) 

their accounts drawn up for the expenditure made in the execution of the tasks 
entrusted; 

a  summary  of  the  results  of  all  available  audits  and  controls  carried  out, 
including  an  analysis  of  systematic  or  recurrent  weaknesses  as  well  as 
corrective actions taken or planned; 

a  management  declaration  of  assurance  as  to  the  completeness,  accuracy  and 
veracity of the accounts, the proper functioning of the internal control systems 
as well as to the legality and regularity of the underlying transactions and the 
respect of the principle of sound financial management;  

(e) 

the  opinion  of  an  independent  audit  body  on  the  management  declaration  of 
assurance mentioned in point (d) of this paragraph, covering all its elements. 

These elements shall be provided to the Commission by 1 February of the following financial 
year  with  the  exception  of  the  audit  opinion  referred  to  in  point  (e).  The  latter  shall  be 
provided at the latest by 15 March. 

These obligations shall be without prejudice to the provisions made in agreements concluded 
with international organisations and third countries. These provisions shall include at least the 
obligation of such entities to provide the Commission annually with a statement that, during 
the  financial  year  concerned,  the  Union  contribution  has  been  used  and  accounted  for  in 
compliance  with  the  requirements  set  out  in  paragraph  2  of  this  Article  and  the  obligations 
laid  down  in  the  agreement  concluded  with  the  relevant  international  organisations  or  third 
country. 

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6. The Commission shall: 

(a) 

ensure supervision and evaluation of the implementation of the tasks entrusted; 

(b) 

apply  procedures  for  a  timely  financial  clearance  of  the  accounts  of  the 
entrusted  entities  and  persons,  ensuring  that  the  accounts  are  complete, 
accurate and true and allowing for a timely clearance of irregularity cases; 

(c) 

exclude from Union financing expenditure the disbursements which have been 
made in breach of the applicable rules. 

7. Paragraphs 5 and 6 of this Article shall not apply to entities and persons which are subject 
to a separate procedure of discharge from the budgetary authority. 

Article 58 
Ex ante controls and agreements under indirect management 

1. Before the Commission entrusts tasks of budget implementation to entities or persons listed 
under point (b) of Article 55(1), it shall obtain evidence that the requirements of points (a) to 
(d) of Article 57(2) are fulfilled. 

The entity or person concerned shall inform the Commission without delay of any substantial 
change in its systems, rules and procedures that relate to the management of the Union funds 
entrusted.  Where  such  a  change  occurs,  the  Commission  shall  review  the  agreements 
concluded with the entity or person concerned in order to ensure continued compliance with 
the conditions set out in points (a) to (d) of Article 57(2). 

2. When choosing an entity from within a category listed in points (ii), (iii), (vi) and (vii) of 
Article  55(1)(b)  the  Commission  shall  take  due  account  of  the  nature  of  the  tasks  to  be 
entrusted as well as the experience and the operational and financial capacity of the entities 
concerned.  The  choice  shall  be  justified  on  objective  grounds  and  may  not  give  rise  to  a 
conflict of interest. 

3.  Agreements  concluded  under  indirect  management  shall  stipulate  the  requirements  laid 
down  in  points  (a)  to  (d)  of  Article  57(2).  They  shall  clearly  define  the  tasks  entrusted  and 
contain an undertaking of the entities or persons concerned to fulfil the obligations laid down 
in  points  (e)  to  (f)  of  Article  57(2),  and  to  refrain  from  any  act  which  may  give  rise  to  a 
conflict of interests. 

Article 59 
Executive agencies 

1.  The  executive  agencies  shall  be  legal  persons  under  Union  law  created  by  Commission 
Decision to which powers may be delegated to implement all or part of a Union programme 
or  project  on  behalf  of  the  Commission  and  under  its  responsibility  in  accordance  with 
Council Regulation (EC) No 58/200320. 

20 

OJ L 11, 16.1.2003, p. 1. 

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2. Implementation of the corresponding operational appropriations shall be carried out by the 
director of the agency in direct management. 

Article 60 
Limits to delegation of powers 

1. The Commission may not entrust measures of implementation of funds deriving from the 
budget, including payment and recovery, to external private-sector entities or bodies, except 
in the case referred to in points (vi) and (vii) of Article 55(1)(b), or in specific cases where the 
payments involved are to be made to beneficiaries determined by the Commission, are subject 
to  conditions  and  amounts  fixed  by  the  Commission  and  do  not  involve  the  exercise  of 
discretion by the entity or body making the payments. 

2. The tasks which may be entrusted by contract to external private-sector entities or bodies 
other  than  those  which  have  a  public-service  mission  are  technical  expertise  tasks  and 
administrative, preparatory or ancillary tasks involving neither the exercise of public authority 
nor the use of discretionary powers of judgment. 

CHAPTER 3 
FINANCIAL ACTORS 

SECTION 1 
PRINCIPLE OF SEGREGATION OF DUTIES 

Article 61 
Segregation of duties 

The  duties  of  authorising  officer  and  accounting  officer  shall  be  segregated  and  mutually 
incompatible. 

SECTION 2 
AUTHORISING OFFICER 

Article 62 
The authorising officer 

1. The institution shall perform the duties of authorising officer. 

2.  For  the  purposes  of  this  Title,  the  term  ‘staff’  refers  to  persons  covered  by  the  Staff 
Regulations.  

3. Each institution shall lay down in its internal administrative rules the staff of an appropriate 
level  to  whom  it  delegates  in  compliance  with  the  conditions  in  its  rules  of  procedure  the 
duties of the authorising officer, the scope of the powers delegated and the possibility for the 
persons to whom these powers are delegated to subdelegate them. 

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4. The powers of authorising officer shall be delegated or subdelegated only to staff. 

5. Authorising officers by delegation or subdelegation may act only within the limits set by 
the  instrument  of  delegation  or  subdelegation.  The  responsible  authorising  officer  by 
delegation  or  subdelegation  may  be  assisted  in  his  task  by  one  or  more  members  of  staff 
to  carry  out  certain  operations  necessary  for 
entrusted,  under  his  responsibility, 
implementation of the budget and presentation of the accounts. 

6.  Where  Heads  of  Union  Delegations  act  as  authorising  officers  by  subdelegation  in 
accordance with the second paragraph of Article 53, 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  subdelegation.  The  Commission  shall,  at  the 
same time, inform the High Representative thereof. 

Article 63 
Powers and duties of the authorising officer 

1.  The  authorising  officer  shall  be  responsible  in  each  institution  for  implementing  revenue 
and  expenditure  in  accordance  with  the  principles  of  sound  financial  management  and  for 
ensuring that the requirements of legality and regularity are complied with. 

2. For the purposes of paragraph 1 of this Article the authorising officer by delegation shall, in 
accordance  with  Article  28  and  the  minimum  standards  adopted  by  each  institution  and 
having due regard to the risks associated with the management environment and the nature of 
the actions financed, put in place the organisational structure and the internal control systems 
suited to the performance of his duties. The establishment of such structure and systems shall 
be supported by a comprehensive risk analysis. 

3. To implement expenditure, the authorising officer by delegation and by subdelegation shall 
make  budgetary  commitments  and  legal  commitments,  shall  validate  expenditure  and 
authorise  payments  and  shall  undertake  the  preliminaries  for  the  implementation  of 
appropriations. 

4.  Implementation  of  revenue  shall  comprise  drawing  up  estimates  of  amounts  receivable, 
establishing entitlements to be recovered and issuing recovery orders. It shall involve waiving 
established entitlements where appropriate. 

5.  Each  operation  shall  be  subject  at  least  to  an  ex  ante  control  based  on  a  desk  review  of 
documents  and  on  the  available  results  of  controls  already  carried  out,  relating  to  the 
operational and financial aspects of the operation  

Ex ante controls shall comprise the initiation and the verification of an operation. 

For a given transaction, members of staff who carry out the verification shall be other than, 
and not subordinate to, those who initiated the operation. 

6. The authorising officer by delegation may put in place ex post controls to verify operations 
already  approved  following  ex  ante  controls.  Such  controls  may  be  organised  on  a  sample 
basis according to risk. 

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The ex ante controls shall be carried by the members of staff other than those responsible for 
the  ex  post  controls.  The  members  of  staff  responsible  for  the  ex  post  controls  shall  not  be 
subordinate to the members of staff responsible for the ex ante controls. 

7. All staff responsible for controlling the management of financial operations must have the 
necessary  professional  skills.  They  shall  respect  a  specific  code  of  professional  standards 
established by each institution. 

8.  Any  member  of  staff,  involved  in  the  financial  management  and  control  of  transactions 
who considers that a decision he is required by his superior to apply or to agree to is irregular 
or  contrary  to  the  principles  of  sound  financial  management  or  the  professional  rules  he  is 
required to observe, shall inform the authorising officer by delegation in writing and, if that 
officer fails to take action, the panel referred to in Article 70(6). 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.  

9. The authorising officer by delegation shall report to his institution on the performance of 
his  duties  in  the  form  of  an  annual  activity  report  containing  financial  and  management 
information, including the results of controls, declaring that, except as otherwise specified in 
any  reservations  related  to  defined  areas  of  revenue  and  expenditure,  he  has  reasonable 
assurance that: 

(a) 

the information contained in the report presents a true and fair view; 

(b) 

the resources assigned to the activities described in the report have been used 
for  their  intended  purpose  and  in  accordance  with  the  principle  of  sound 
financial management; 

(c) 

the  control  procedures  put  in  place  give  the  necessary  guarantees  concerning 
the legality and regularity of the underlying transactions. 

That report shall indicate the results of the operations by reference to the objectives set, the 
risks  associated  with  these  operations,  the  use  made  of  the  resources  provided  and  the 
efficiency and effectiveness of the internal control system. No later than 15 June each year, 
the Commission shall send to the budgetary authority a summary of the annual reports for the 
previous year. The annual activity reports of the authorising officers by delegation shall also 
be made available to the budgetary authority. 

Article 64 
Powers and duties of heads of Union Delegations 

1.  Where  Heads  of  Union  Delegations  act  as  authorising  officers  by  subdelegation  in 
accordance  with  the  second  paragraph  of  Article  53,  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 

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subdelegated to them as well as any conflict of priorities which is likely to have an impact on 
the implementation of the financial management tasks subdelegated to them. 

Where  a  situation  or  conflict  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 Union Delegations find themselves in a situation referred to in Article 63(8), 
they  shall  refer  the  matter  to  the  specialised  financial  irregularities  panel  set  up  pursuant  to 
Article  70(6).  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 subdelegation in accordance 
with the second paragraph of Article 53 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 
63(9).  The  reports  of  the  Heads  of  Union  Delegations  shall  include  information  on  the 
efficiency and effectiveness of internal management and control systems put in place in their 
delegation, as well as on the management of operations subdelegated to them, and provide the 
assurance  pursuant  to  Article  70(5).  These  reports  shall  be  annexed  to  the  annual  activity 
report of the authorising officer by delegation, and shall be made available to the budgetary 
authority taking into account, where appropriate, their confidentiality. 

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 subdelegation in accordance 
with the second paragraph of Article 53 shall reply to any request by the authorising officer 
by delegation of Commission 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 Article 319 of the TFEU. 

SECTION 3 
ACCOUNTING OFFICER 

Article 65 
Powers and duties of the accounting officer 

1.  Each  institution  shall  appoint  an  accounting  officer  who  shall  be  responsible  in  each 
institution for the following: 

(a) 

proper  implementation  of  payments,  collection  of  revenue  and  recovery  of 
amounts established as being receivable; 

(b)  preparing and presenting the accounts in accordance with Title IX; 

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(c) 

keeping the accounts in accordance with Title IX; 

(d) 

(e) 

laying  down,  in  accordance  with  Title  IX,  the  accounting  procedures  and  the 
chart of accounts; 

laying  down  and  validating  the  accounting  systems  and  where  appropriate 
validating  systems  laid  down  by  the  authorising  officer  to  supply  or  justify 
accounting information; the accounting officer shall be empowered to verify at 
any time the respect of validation criteria; 

(f) 

treasury management. 

The responsibilities of the accounting officer of EEAS shall concern only the EEAS section of 
the  budget  as  implemented  by  the  EEAS.  The  accounting  officer  of  the  Commission  shall 
remain  responsible  for  the  entire  Commission  section  of  the  budget,  including  accounting 
operations relating to appropriations subdelegated to Heads of Union Delegations. 

The accounting officer of the Commission shall also act as the accounting officer of the EEAS 
in respect of the implementation of the EEAS section of the budget, subject to Article 208. 

2.  The  accounting  officer  of  the  Commission  shall  be  responsible  for  laying  down  the 
accounting rules and the harmonised charts of accounts in accordance with Title IX. 

3.  The  accounting  officer  shall  obtain  from  authorising  officers,  who  shall  guarantee  its 
reliability,  all  the  information  necessary  for  the  production  of  accounts  which  give  a  true 
image of the Institutions' financial situation and of budgetary implementation. 

4. Before the adoption of the accounts by the institution or the body referred to in Article 200, 
the  accounting  officer  shall  sign  them  off,  thereby  certifying  that  he  has  a  reasonable 
assurance  that  the  accounts  present  a  true  and  fair  view  of  the  financial  situation  of  the 
institution or body referred to in Article 200. 

For that purpose, the accounting officer shall verify that the accounts have been prepared in 
accordance  with  the  Union  accounting  rules  and  procedures  and  that  all  revenue  and 
expenditure is entered in the accounts. 

The  authorising  officers  by  delegation  shall  forward  all  information  that  the  accounting 
officer needs in order to fulfil his duties. 

The  authorising  officers  shall  remain  fully  responsible  for  the  proper  use  of  the  funds  they 
manage,  the  legality  and  regularity  of  the  expenditure  under  their  control  and  the 
completeness and accuracy of the information forwarded to the accounting officer. 

5. The accounting officer shall be empowered to check the information received as well as to 
carry out any further checks he deems necessary in order to sign off the accounts. 

The accounting officer shall make reservations, if necessary, explaining exactly the nature and 
scope of such reservations. 

6. Save as otherwise provided in this Regulation, only the accounting officer is empowered to 
manage cash and cash equivalents. He shall be responsible for their safekeeping. 

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7. Within the implementation of a programme or an action, fiduciary accounts may be opened 
in the name of the Commission and on its behalf in order to allow their management by an 
entity listed in the first paragraph of point (iii) and (iv) of Article 55(1)(b). 

These accounts shall be opened under the responsibility of the authorising officer in charge of 
the implementation  of  the programme  or action in agreement with the  accounting officer of 
the Commission. 

That bank account is managed under the responsibility of the authorising officer. 

Article 66 
Powers which may be delegated by the accounting officer 

The  accounting  officer  may,  in  the  performance  of  his  duties,  delegate  certain  tasks  to 
subordinate staff. 

The instrument of delegation shall lay down the tasks entrusted to the delegatees. 

SECTION 4 
IMPREST ADMINISTRATOR 

Article 67 
Imprest accounts 

1. Imprest accounts may be set up for the collection of revenue other than own resources and 
for  the  payment  of  small  sums  as  defined  in  the  delegated  Regulation  referred  to  in  Article 
199. 

However,  in  the  field  of  crisis  management  aid  and  humanitarian  aid  operations  within  the 
meaning of Article 118, imprest accounts may be used without any limitation on the amount 
while  respecting  the  level  of  appropriations  decided  by  the  budgetary  authority  on  the 
corresponding budget line for the current financial year. 

2.  Imprest  accounts  shall  be  endowed  by  the  institution's  accounting  officer  and  shall  be 
placed  under  the  responsibility  of  imprest  administrators  designated  by  the  institution's 
accounting officer. 

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CHAPTER 4 
LIABILITY OF THE FINANCIAL ACTORS 

SECTION 1 
GENERAL RULES 

Article 68 
Suspension and withdrawal of delegations given to authorising officers 

1.  Without  prejudice  to  any  disciplinary  action,  authorising  officers  by  delegation  and 
subdelegation may at any time have their delegation or subdelegation withdrawn temporarily 
or definitively by the authority which appointed them. 

2.  Without  prejudice  to  any  disciplinary  action,  the  accounting  officer  may  at  any  time  be 
suspended temporarily or definitively from his duties by the authority which appointed him. 

3.  Without  prejudice  to  any  disciplinary  action,  imprest  administrators  may  at  any  time  be 
suspended  temporarily  or  definitively  from  their  duties  by  the  authority  which  appointed 
them. 

Article 69 
Liability of the authorising officer for illegal activity, fraud or corruption 

1.  The  provisions  of  this  Chapter  are  without  prejudice  to  any  liability  under  criminal  law 
which  the  financial  actors  referred  to  in  Article  68  may  incur  as  provided  in  the  applicable 
national law and in the provisions in force on the protection of the Union's financial interests 
and  on  the  fight  against  corruption  involving  officials  of  the  Union  or  officials  of  Member 
States. 

2.  Each  authorising  officer,  accounting  officer  or  imprest  administrator  shall  be  liable  to 
disciplinary  action  and  payment  of  compensation  as  laid  down  in  the  Staff  Regulations, 
without prejudice to Articles 70, 71 and 72. In the event of illegal activity, fraud or corruption 
which may harm the interests of the Union, the matter shall be submitted to the authorities and 
bodies designated by the applicable legislation. 

SECTION 2 
RULES APPLICABLE TO AUTHORISING OFFICERS BY 
DELEGATION AND SUBDELEGATION 

Article 70 
Rules applicable to authorising officers 

1.  The  authorising  officer  shall  be  liable  for  payment  of  compensation  as  laid  down  in  the 
Staff Regulations. 

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2. The obligation to pay compensation shall apply in particular if: 

(a) 

(b) 

the  authorising  officer,  whether  intentionally  or  through  gross  negligence  on 
his  part,  determines  entitlements  to  be  recovered  or  issues  recovery  orders, 
commits  expenditure  or  signs  a  payment  order  without  complying  with  this 
Regulation and the delegated Regulation referred to in Article 199; 

the  authorising  officer,  whether  intentionally  or  through  gross  negligence  on 
his  part,  omits  to  draw  up  a  document  establishing  an  amount  receivable, 
neglects to issue a recovery order or is late in issuing it or is late in issuing a 
payment  order,  thereby  rendering  the  institution  liable  to  civil  action  by  third 
parties. 

3. An authorising officer by delegation or subdelegation who considers that a decision which 
it  is  his  responsibility  to  take  is  irregular  or  contrary  to  the  principles  of  sound  financial 
management shall inform the delegating authority in writing. If the delegating authority then 
gives  a  reasoned  instruction  in  writing  to  the  authorising  officer  by  delegation  or 
subdelegation to take that decision, the authorising officer may not be held liable. 

4.  In  the  event  of  subdelegation  within  his  services,  the  authorising  officer  by  delegation 
continues  to  be  responsible  for  the  efficiency  and  effectiveness  of  the  internal  management 
and  control  systems  put  in  place  and  for  the  choice  of  the  authorising  officer  by 
subdelegation. 

5. 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  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 the budget, in 
accordance with delegated Regulation referred to in Article 199. 

Heads  of  Union  Delegations  shall  report  on  their  responsibilities  pursuant  to  the  first 
subparagraph of this paragraph in accordance with Article 64(3). 

Each year, Heads of Union Delegations provide to the authorising officer by delegation of the 
Commission  the  assurance  on  the  internal  management  and  control  systems  put  in  place  in 
their  Delegation,  as  well  as  on  the  management  of  operations  subdelegated  to  them  and  the 
results thereof, in order to allow the authorising officer to establish his statement of assurance, 
as provided for in Article 63(9). 

6.  Each  institution  shall  set  up  a  specialised  financial  irregularities  panel  or  participate  in  a 
joint  panel  established  by  several  institutions.  The  panels  shall  function  independently  and 
determine  whether  a  financial  irregularity  has  occurred  and  what  the  consequences,  if  any, 
should be. 

On  the  basis  of  the  opinion  of  this  panel,  the  institution  shall  decide  whether  to  initiate 
proceedings  entailing  liability  to  disciplinary  action  or  to  payment  of  compensation.  If  the 
panel  detects  systemic  problems,  it  shall  send  a  report  with  recommendations  to  the 

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

7.  Where  Heads  of  Union  Delegations  act  as  authorising  officers  by  subdelegation  in 
accordance  with  the  second  paragraph  of  Article  53,  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 and to the authorising 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  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  subdelegation  if  irregularities  concern  the  competencies  of  the 
Commission  subdelegated  to  them.  In  such  a  case  the  High  Representative  shall  take 
appropriate  action  in  accordance  with  the  Staff  Regulation  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  point  (e)  of  Article  2of  the 
Conditions of Employment of Other Servants of the European Communities applies. 

SECTION 3 
RULES APPLICABLE TO ACCOUNTING OFFICERS AND IMPREST 
ADMINISTRATORS 

Article 71 
Rules applicable to accounting officers 

An accounting officer shall be liable to disciplinary action and payment of compensation, as 
laid  down  and  in  accordance  with  the  procedures  in  the  Staff  Regulations.  He  may  in 
particular become liable by any of the following forms of misconduct: 

(a) 

he loses or damages funds, assets and documents in his keeping; 

(b)  he wrongly alters bank accounts or postal giro accounts; 

(c) 

he  recovers  or  pays  amounts  which  are  not  in  conformity  with  the 
corresponding recovery or payment orders; 

(d)  he fails to collect revenue due. 

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Article 72 
Rules applicable to imprest officers 

An imprest officer shall be liable to disciplinary action and payment of compensation, as laid 
down  and  in  accordance  with  the  procedures  in  the  Staff  Regulations.  He  may  in  particular 
become liable by any of the following forms of misconduct: 

(a) 

he loses or damages funds, assets and documents in his keeping; 

(b)  he cannot provide proper supporting documents for the payments he has made; 

(c) 

he makes payments to persons other than those entitled; 

(d)  he fails to collect revenue due. 

CHAPTER 5 
REVENUE OPERATIONS 

SECTION 1 
MAKING AVAILABLE OF OWN RESOURCES 

Article 73 
Own resources 

An estimate of revenue constituted by own resources, as referred to in the Council Decision 
on the system of the Union's own resources, shall be entered in the budget in euro. It shall be 
made available in accordance with the Council Regulation implementing that Decision.  

SECTION 2 
ESTIMATE OF AMOUNTS RECEIVABLE 

Article 74 
Estimate of the amount receivable 

1. When the authorising officer responsible has sufficient and reliable information in respect 
of  any  measure  or  situation  which  may  give  rise  to  an  amount  owing  to  the  Union,  the 
authorising officer responsible shall first make an estimate of the amount receivable. 

2. The estimate of the amount receivable is adjusted by the authorising officer responsible as 
soon as he is aware of an event modifying the measure or the situation which has generated its 
drawing up. 

When establishing the recovery order on a measure or situation that had previously resulted in 
an estimate of amounts receivable, the amounts thereof shall be adjusted accordingly by the 
authorising officer responsible. 

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When the recovery order is drawn up for the same amount, the estimate of amounts receivable 
shall be reduced to zero. 

3.  By  way  of  derogation  from  paragraph  1,  no  estimate  of  the  amount  receivable  shall  be 
made before Member States make available to the Commission the amounts of own resources 
defined in the Council Decision on the system of the Union's own resources which are paid at 
fixed  intervals  by  the  Member  States.  The  authorising  officer  responsible  shall  issue  a 
recovery order in respect of these amounts. 

SECTION 3 
ESTABLISHMENT OF AMOUNTS RECEIVABLE 

Article 75 
Establishment of amounts receivable 

1.  Establishment  of  an  amount  receivable  is  the  act  by  which  the  authorising  officer  by 
delegation or subdelegation: 

(a) 

verifies that the debt exists; 

(b)  determines or verifies the reality and the amount of the debt; 

(c) 

verifies the conditions in which the debt is due. 

2.  The  own  resources  made  available  to  the  Commission  and  any  amount  receivable  that  is 
identified as being certain, of a fixed amount and due must be established by a recovery order 
to  the  accounting  officer  followed  by  a  debit  note  sent  to  the  debtor,  both  drawn  up  by  the 
authorising officer responsible. 

3. Amounts wrongly paid shall be recovered. 

4. The conditions in which interest on late payment is due to the Union shall be laid down in 
the delegated Regulation referred to in Article 199. 

SECTION 4 
AUTHORISATION OF RECOVERY 

Article 76 
Authorisation of recovery 

1.  The  authorisation  of  recovery  is  the  act  whereby  the  authorising  officer  by  delegation  or 
subdelegation  responsible  instructs  the  accounting  officer,  by  issuing  a  recovery  order,  to 
recover an amount receivable which he has established. 

2.  The  institution  may  formally  establish  an  amount  as  being  receivable  from  persons  other 
than Member States by means of a decision which shall be enforceable within the meaning of 
Article 299 of the TFEU. 

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SECTION 5 
RECOVERY 

Article 77 
Rules on recovery 

1. The accounting officer shall act on recovery orders for amounts receivable duly established 
by the authorising officer responsible. He shall exercise due diligence to ensure that the Union 
receive their revenue and shall see that their rights are safeguarded. 

The  accounting  officer  shall  recover  amounts  by  offsetting  them  against  equivalent  claims 
that the Union have on any debtor who himself has a claim on the Union that is certain, of a 
fixed amount and due. 

2.  Where  the  responsible  authorising  officer  by  delegation  is  planning  to  waive  or  partially 
waive recovery of an established amount receivable, he shall ensure that the waiver is in order 
and  complies  with  the  principle  of  sound  financial  management  and  proportionality  in 
accordance with the procedures and the criteria laid down in the delegated Regulation referred 
to  in  Article  199.  The  waiver  decision  must  be  substantiated.  The  authorising  officer  may 
delegate the decision only as laid down in the delegated Regulation referred to in Article 199. 

The responsible authorising officer may cancel an established amount receivable in full or in 
part,  in  accordance  with  the  conditions  set  out  in  the  delegated  Regulation  referred  to  in 
Article  199.  The  partial  cancellation  of  an  established  amount  receivable  does  not  imply  a 
waiver of a Union's established entitlement. 

Article 78 
Limitation period 

Without prejudice to the provisions of specific regulations and the application of the Council 
Decision relating to the Union's own resources system, entitlements of the Union in respect of 
third  parties  and  entitlements  of  third  parties  in  respect  of  the  Union  shall  be  subject  to  a 
limitation period of five years. 

The  date  for  calculating  the  limitation  period  and  the  conditions  for  interrupting  this  period 
shall be laid down in the delegated Regulation referred to in Article 199. 

Article 79 
National treatment for Union entitlements 

Amounts  receivable  by  the  Union  shall  not  be  treated  less  favourably  than  entitlements 
belonging  to  public  bodies  in  the  Member  States  where  the  recovery  proceeding  has  been 
conducted. 

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Article 80 
Fines, penalties and accrued interest imposed by the Commission 

Amounts received by way of fines, penalties and sanctions, and any accrued interest or other 
income generated by them shall not be recorded as budgetary revenue as long as the decisions 
imposing them may be overruled by the Court of Justice of the European Union. 

The  amount  referred  to  in  the  first  paragraph  shall  be  recorded  as  budgetary  revenue  at  the 
latest in the year following the exhaustion of all legal remedies to the extent that they are not 
returned to the entity that paid them in accordance with a judgment of the Court of Justice of 
the European Union. 

However, a portion not exceeding 2% of the total amounts referred to in the first paragraph 
may be withheld as a guarantee to ensure a minimum return on funds if the decision imposing 
the  fine  is  overruled  by  the  Court  of  Justice  of  the  European  Union.  This  portion  shall  be 
recorded as budget revenue in following years. 

The  first  paragraph  shall  not  apply  to  decisions  on  clearance  of  accounts  or  financial 
corrections. 

CHAPTER 6 
EXPENDITURE OPERATIONS 

Article 81 
Financing decision 

1. Every item of expenditure shall be committed, validated, authorised and paid. 

2.  Except  in  the  case  of  appropriations  which  can  be  implemented  without  a  basic  act  in 
accordance  with  point  (e)  of  Article  51(5),  the  commitment  of  the  expenditure  shall  be 
preceded by a financing decision adopted by the institution or the authorities to which powers 
have been delegated by the institution. 

SECTION 1 
COMMITMENT OF EXPENDITURE 

Article 82 
Types of commitments 

1. The budgetary commitment is the operation reserving the appropriation necessary to cover 
subsequent payments to honour legal commitments. 

The legal commitment is the act whereby the authorising officer enters into or establishes an 
obligation which results in a charge. 

The  budgetary  commitment  and  the  legal  commitment  shall  be  adopted  by  the  same 
authorising  officer,  save  in  duly  substantiated  cases  as  provided  for  in  the  delegated 
Regulation referred to in Article 199. 

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2.  The  budgetary  commitment  is  individual  when  the  beneficiary  and  the  amount  of  the 
expenditure are known. 

The budgetary commitment is global when at least one of the elements necessary to identify 
the individual commitment is still not known. 

The  budgetary  commitment  is  provisional  when  it  is  intended  to  cover  the  expenditure 
referred to in Article 162 or routine administrative expenditure and either the amount or the 
final beneficiaries are not definitively known. 

3.  Budgetary  commitments  for  actions  extending  over  more  than  one  financial  year  may  be 
broken down over several years into annual instalments only where the basic act so provides 
or for administrative expenditure.  

Article 83 
Rules applicable to commitments 

1. In respect of any measure which may give rise to expenditure chargeable to the budget, the 
authorising officer responsible must first make a budgetary commitment before entering into a 
legal obligation with third parties or transferring funds to a trust fund on the basis of Article 
178. 

2.  The  obligation  for  a  budgetary  commitment  before  entering  into  a  legal  commitment  as 
stipulated  in  paragraph  1,  is  not  applicable  to  legal  commitments  concluded  following  a 
declaration  of  a  crisis  situation  in  the  framework  of  the  Business  Continuity  Plan,  in 
accordance  with  the  procedures  adopted  by  the  Commission  under  its  administrative 
autonomy. 

3. Subject to the special provisions of Title IV of Part Two, global budget commitments shall 
cover  the  total  cost  of  the  corresponding  individual  legal  commitments  concluded  up  to  31 
December of year n + 1. 

Subject  to  Article  82(3)  and  Article  195(2),  individual  legal  commitments  relating  to 
individual or provisional budgetary commitments shall be concluded by 31 December of year 
n. 

At the end of the periods referred to in the first and second subparagraphs, the unused balance 
of these budgetary commitments shall be decommitted by the authorising officer responsible. 

The  amount  of  each  individual  legal  commitment  adopted  following  a  global  commitment 
shall, prior to signature, be registered by the authorising officer responsible in the budgetary 
accounts and booked to the global commitment. In case of humanitarian aid operations, civil 
protection  operations  and  crisis  management  aid,  and  when  the  urgency  justifies  it,  the 
registration of the amounts may be done immediately after the signature of the corresponding 
individual legal commitment. 

4.  The  budgetary  and  legal  commitments  entered  into  for  actions  extending  over  more  than 
one  financial  year  shall,  save  in  the  case  of  staff  expenditure,  have  a  final  date  for 
implementation set in compliance with the principle of sound financial management. 

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Any parts of such commitments which have not been executed six months after that date shall 
be decommitted in accordance with Article 11. 

The  amount  of  a  budget  commitment  corresponding  to  a  legal  commitment  for  which  no 
payment within the meaning of Article 87 has been made in a period of three years following 
the  signing  of  the  legal  commitment  shall  be  decommitted,  exception  made  for  cases  under 
litigation before judicial courts or arbitral bodies. 

Article 84 
Verifications applicable to commitments 

1.  When  adopting  a  budgetary  commitment,  the  authorising  officer  responsible  shall  ensure 
that: 

(a) 

the expenditure has been charged to the correct item in the budget; 

(b) 

the appropriations are available; 

(c) 

(d) 

the  expenditure  conforms  to  the  provisions  of  the  Treaties,  of  the  budget,  of 
this  Regulation,  of  the  delegated  Regulation  referred  to  in Article  199  of  this 
Regulation  and  of  all  acts  adopted  in  accordance  with  the  Treaties  and 
regulations; 

the principle of sound financial management is complied with. The opportunity 
of prefinancing payments, its amount and the overall payment schedule shall be 
commensurate  with  the  planned  duration,  the  progress  in  implementation  and 
the financial risks such prefinancing entails. 

2. When registering  a legal  commitment by physical or electronic signature, the authorising 
officer shall ensure that: 

(a) 

the commitment is covered by the corresponding budgetary commitment; 

(b) 

the expenditure is regular and conforms to the provisions of the Treaties, of the 
budget,  of  this  Regulation,  of  the  delegated  Regulation  referred  to  in  Article 
199 of this Regulation and of all acts adopted in accordance with the Treaties 
and the regulations; 

(c) 

the principle of sound financial management is respected. 

SECTION 2 
VALIDATION OF EXPENDITURE 

Article 85 
Validation of expenditure 

Validation of expenditure is the act whereby the authorising officer responsible: 

(a) 

verifies the existence of the creditor's entitlement; 

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(b)  determines or verifies the reality and the amount of the claim; 

(c) 

verifies the conditions in which payment is due. 

SECTION 3 
AUTHORISATION OF EXPENDITURE 

Article 86 
Authorisation of expenditure 

Authorisation  of  expenditure  is  the  act  whereby  the  authorising  officer  responsible,  having 
verified  that  the  appropriations  are  available  and  by  issuing  a  payment  order,  instructs  the 
accounting officer to pay an amount of expenditure which he has validated. 

Where periodic payments are made with regard to services rendered, including rental services, 
or  goods  delivered,  and  subject  to  his  risk  analysis,  the  authorising  officer  may  order  the 
application of a direct debit system. 

SECTION 4 
PAYMENT OF EXPENDITURE 

Article 87 
Types of payments 

1. Payment shall be made on production of proof that the relevant action is in accordance with 
the  provisions  of  the  basic  act  or  the  contract and  shall  cover  one  or  more  of  the  following 
operations: 

(a) 

payment of the entire amount due; 

(b)  payment of the amount due in any of the following ways: 

(i) 

pre-financing, which may be divided into a number of payments after the 
signature of the delegation agreement, the contract or grant agreement or 
after the reception of the grant decision; 

(ii)  one or more interim payments as a counterpart of a partial execution of 

the action; 

(iii)  payment  of  the  balance  of  the  amounts  due  where  the  action  is 

completely executed. 

2.  A  distinction  shall  be  made  in  the  budgetary  accounting  between  the  different  types  of 
payment referred to in paragraph 1 at the time they are made. 

3. The accounting rules referred to in Article 143 shall include the rules for clearing the pre-
financing in the accounts and for the acknowledgment of the eligibility of costs. 

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4. Pre-financing payments shall be cleared regularly by the responsible authorising officer. To 
this  effect  appropriate  provisions  shall  be  included  in  the  contracts,  grant  decisions  and 
agreements  as  well  as  the  delegation  agreements  entrusting  implementation  tasks  to  the 
entities and persons referred to in point (b) of Article 55(1). 

5. Further instalments made to beneficiaries of grants which take the form of a lump sum shall 
be treated as interim payments. 

Article 88 
Payment limited to funds available 

Payment of expenditure shall be made by the accounting officer within the limits of the funds 
available. 

SECTION 5 
TIME LIMITS FOR EXPENDITURE OPERATIONS 

Article 89 
Time limits for expenditure 

The validation, authorisation and payment of expenditure must be completed within the time 
limits  laid  down  in  the  delegated  Regulation  referred  to  in  Article  199,  which  shall  also 
specify the circumstances in which creditors paid late are entitled to receive default interest 
charged to the line from which the principal was paid. 

CHAPTER 7 
IT SYSTEMS 

Article 90 
Electronic management of operations 

Where  revenue  and  expenditure  operations  are  managed  by  means  of  computer  systems, 
documents may be signed by a computerised or electronic procedure. 

Article 91 
Transmission of documents between institutions 

Subject to the prior agreement of the institutions  concerned, any transmission of documents 
between institutions may be done by electronic means. 

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CHAPTER 8 
INTERNAL AUDITOR 

Article 92 
Appointment of the internal auditor 

Each  institution  shall  establish  an  internal  auditing  function  which  must  be  performed  in 
compliance  with  the  relevant  international  standards.  The  internal  auditor  appointed  by  the 
institution  shall  be  answerable  to  the  latter  for  verifying  the  proper  operation  of  budgetary 
implementation  systems  and  procedures.  The  internal  auditor  may  not  be  either  authorising 
officer or accounting officer. 

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 53 
shall  be  subject  to  the  verifying  powers  of  the  internal  auditor  of  the  Commission  for  the 
financial management subdelegated to them. 

The internal auditor of the Commission shall also act as the internal auditor of the EEAS in 
respect of the implementation of the EEAS section of the budget, subject to Article 208. 

Article 93 
Powers and duties of the internal auditor 

1.  The  internal  auditor  shall  advise  his  institution  on  dealing  with  risks,  by  issuing 
independent  opinions  on  the  quality  of  management  and  control  systems  and  by  issuing 
recommendations  for  improving  the  conditions  of  implementation  of  operations  and 
promoting sound financial management. 

He shall be responsible in particular: 

(a) 

for assessing the suitability and effectiveness of internal management systems 
and the performance of departments in implementing policies, programmes and 
actions by reference to the risks associated with them; 

(b) 

for assessing the efficiency and effectiveness of the internal control and audit 
systems applicable to every budgetary implementation operation. 

2.  The  internal  auditor  shall  perform  his  duties  on  all  the  institution's  activities  and 
departments. He shall enjoy full and unlimited access to all information required to perform 
his duties, if necessary on the spot, including in the Member States and in third countries. 

The  internal  auditor  shall  take  note  of  the  annual  report  of  the  authorising  officers  and  any 
other pieces of information identified. 

3.  The  internal  auditor  shall  report  to  the  institution  on  his  findings  and  recommendations. 
The  institution  shall  ensure  that  action  is  taken  on  recommendations  resulting  from  audits. 
The  internal  auditor  shall  also  submit  to  the  institution  an  annual  internal  audit  report 
indicating the number and type of internal audits carried out, the recommendations made and 
the action taken on those recommendations. 

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4.  Each  year  the  institution  shall  forward  a  report  to  the  discharge  authority  containing  a 
summary  of  the  number  and  type  of  internal  audits  carried  out,  the  recommendations  made 
and the action taken on those recommendations. 

Article 94 
Independence of the internal auditor 

Special rules applicable to the internal auditor shall be laid down by the institution and shall 
be such as to guarantee that he is totally independent in the performance of his duties and to 
establish his responsibility. 

If the internal auditor is a member of staff, he shall assume responsibility as laid down in the 
Staff Regulations and set out in the delegated Regulation referred to in Article 199. 

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TITLE V 
PROCUREMENT 

CHAPTER 1 
GENERAL PROVISIONS 

SECTION 1 
SCOPE AND AWARD PRINCIPLES 

Article 95 
Definition of public contracts 

1.  Public  contracts  are  contracts  for  pecuniary interest  concluded  in  writing  between  one  or 
more  economic  operators  and  one  or  more  contracting  authorities  within  the  meaning  of 
Articles 111 and 181, in order to obtain, against payment of a price paid in whole or in part 
from the budget, the supply of movable or immovable assets, the execution of works or the 
provision of services. 

These contracts comprise: 

(a) 

building contracts; 

(b) 

supply contracts; 

(c)  works contracts; 

(d) 

service contracts. 

2. Framework contracts are contracts concluded between one or more contracting authorities 
and one or more economic operators, the purpose of which is to establish the terms governing 
contracts to be awarded during a given period, in particular with regard to price and, where 
appropriate,  the  quantity  envisaged.  They  shall  be  governed  by  the  provisions  of  this  Title 
concerning the award procedure, including advertising. 

3. This Title does not apply to grants, without prejudice to Articles 100 to 103, or to service 
contracts concluded between the Commission, on the one hand, and the European Investment 
Bank,  the  European  Investment  Fund  or  any  other  subsidiary  of  the  European  Investment 
Bank, on the other hand. 

Article 96 
Principles applicable to public contracts 

1.  All  public  contracts  financed  in  whole  or  in  part  by  the  budget  shall  comply  with  the 
principles of transparency, proportionality, equal treatment and non-discrimination. 

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2. All procurement contracts shall be put out to tender on the broadest possible base, except 
when use is made of the negotiated procedure referred to in point (d) of Article 98(1).  

Contracting authorities may not use framework contracts improperly or in such a way that the 
purpose or effect is to prevent, restrict or distort competition. 

SECTION 2 
PUBLICATION 

Article 97 
Publication of public contracts 

1. All contracts exceeding the thresholds provided for in Article 112 or Article 181 shall be 
published in the Official Journal of the European Union. 

Contract notices shall be published in advance except in the cases referred to in Article 98(2) 
of this Regulation, as specified in the delegated Regulation referred to in Article 199 of this 
Regulation, and for the service contracts covered by Annex IIB to Directive 2004/18/EC. 

Publication of certain information after the contract has been awarded may be dropped where 
it would hinder application of the law, would be contrary to the public interest or would harm 
the  legitimate  business  interests  of  public  or  private  undertakings  or  could  distort  fair 
competition between them. 

2. Contracts with a value below the thresholds provided for in Article 112 or Article 181 and 
the service contracts referred to in Annex IIB to Directive 2004/18/EC shall be advertised by 
appropriate means, as specified in the delegated Regulation referred to in Article 199. 

SECTION 3 
PROCUREMENT PROCEDURES 

Article 98 
Procurement procedures 

1. Procurement procedures shall take one of the following forms: 

(a) 

the open procedure; 

(b) 

the restricted procedure; 

(c) 

contests; 

(d) 

the negotiated procedure; 

(e) 

the competitive dialogue. 

Where  a  public  contract  or  a  framework  contract  is  of  interest  to  two  or  more  institutions, 
executive  agencies  or  bodies  referred  to  in  Article  200  and  201,  and  whenever  there  is  a 

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possibility  for  realising  efficiency  gains,  the  contracting  authorities  concerned  shall  seek  to 
carry out the procurement procedure on an interinstitutional basis. 

Where a public contract or framework contract is necessary for the implementation of a joint 
action  between  an  institution  and  a  contracting  authority  from  a  Member  State,  the 
procurement  procedure  may  be  carried  out  jointly  by  the  institution  and  this  contracting 
authority, as specified in the delegated Regulation referred to in Article 199. 

2. For contracts where the value exceeds the thresholds provided for in Article 112 or Article 
181, use of the negotiated procedure shall be authorised only in the cases provided for in the 
delegated Regulation referred to in Article 199. 

3.  The  thresholds  below  which  the  contracting  authority  may  either  use  a  negotiated 
procedure or, by way of derogation from the first subparagraph of Article 95(1), simply pay 
costs  against  invoices  shall  be  determined  in  the  delegated  Regulation  referred  to  in  Article 
199. 

4. The delegated Regulation referred to in Article 199 shall define the procurement procedure, 
referred to in paragraph 1, applicable to service contracts covered by Annex IIB to Directive 
2004/18/EC  and  to  contracts  which  are  declared  to  be  secret,  whose  performance  must  be 
accompanied by special security measures, or when the protection of essential interests of the 
Union so requires. 

Article 99 
Content of tender documents 

Tender documents shall give a full, clear and precise description of the subject of the contract 
and specify the exclusion, selection and award criteria applicable to the contract. 

Article 100 
Exclusion criteria applicable for participation in tenders 

1. Candidates or tenderers shall be excluded from participation in procurement procedures if: 

(a) 

(b) 

they are bankrupt or being wound up, are having their affairs administered by 
the  courts,  have  entered  into  an  arrangement  with  creditors,  have  suspended 
business activities, are the subject of proceedings concerning those matters, or 
are in any analogous situation arising from a similar procedure provided for in 
national legislation or regulations; 

they  or  persons  having  powers  of  representation,  decision  making  or  control 
over  them  have  been  convicted  of  an  offence  concerning  their  professional 
conduct by a judgment of a competent authority of a Member State which has 
the force of res judicata; 

(c) 

they have been guilty of grave professional misconduct proven by any means 
which  the  contracting  authority  can  justify  including  by  decisions  of  the  EIB 
and international organisations; 

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(d) 

(e) 

they  are  not  in  compliance  with  their  obligations  relating  to  the  payment  of 
social  security  contributions  or  the  payment  of  taxes  in  accordance  with  the 
legal provisions of the country in which  they are established or with those of 
the  country  of  the  contracting  authority  or  those  of  the  country  where  the 
contract is to be performed; 

they  or  persons  having  powers  of  representation,  decision  making  or  control 
over  them  have  been  the  subject  of  a  judgment  which  has  the  force  of  res 
judicata  for  fraud,  corruption,  involvement  in  a  criminal  organisation,  money 
laundering  or  any  other  illegal  activity,  where  such  an  illegal  activity  is 
detrimental to the Union's financial interests; 

(f) 

they  are  currently  subject  to  an  administrative  penalty  referred  to  in  Article 
103(1). 

Points  (a)  to  (d)  shall  not  apply  in  the  case  of  purchase  of  supplies  on  particularly 
advantageous terms from a supplier which is definitively winding up its business activities or 
from the receivers or liquidators of a bankruptcy, through an arrangement with creditors, or 
through a similar procedure under national law. 

Points  (b)  and  (e)  shall  not  apply  when  the  candidates  or  tenderers  can  demonstrate  that 
adequate  measures  have  been  adopted  against  the  persons  having  powers  of  representation, 
decision making or control over them who are subject to the judgement referred to in points 
(b) or (e). 

2.  In  case  of  a  negotiated  procedure  where,  for  technical  or  artistic  reasons,  or  for  reasons 
connected  with  the  protection  of  exclusive  rights,  the  contract  can  be  awarded  only  to  a 
particular economic operator, the institution may decide not to exclude the economic operator 
at  stake  on  the  grounds  referred  to  in  paragraph  1,  points  (a),  (c)  and  (d)  if  this  is 
indispensable in order to ensure the continuity of service of the institution. In this case, it shall 
motivate its decision. 

3.  Candidates  or  tenderers  shall  certify  that  they  are  not  in  one  of  the  situations  listed  in 
paragraph 1. However, the contracting authority may refrain from requiring such certification 
for  very  low  value  contracts,  as  specified  in  the  delegated  Regulation  referred  to  in  Article 
199. 

For the purpose of the correct application of paragraph 1, the candidate or tenderer, whenever 
requested by the contracting authority, must: 

(a)  where  the  candidate  or  tenderer  is  a  legal  entity,  provide  information  on  the 
ownership  or  on  the  management,  control  and  power  of  representation  of  the 
legal entity and certify that they are not in one of the situations referred to in 
paragraph 1; 

(b)  where subcontracting is envisaged, certify that the subcontractor is not in one 

of the situations referred to in paragraph 1. 

4. The delegated  Regulation referred to in  Article 199 shall  determine  the  maximum period 
during which the situations referred to in paragraph 1 give rise to the exclusion of candidates 
or  tenderers  from  participation  in  a  procurement  procedure.  The  maximum  period  shall  not 
exceed 10 years. 

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Article 101 
Exclusion criteria applicable during procurement procedure 

A  contract  shall  not  be  awarded  to  candidates  or  tenderers  who,  during  the  procurement 
procedure for this contract: 

(a) 

are subject to a conflict of interest; 

(b) 

are  guilty  of  misrepresentation  in  supplying  the  information  required  by  the 
contracting  authority  as  a  condition  of  participation  in  the  procurement 
procedure or fail to supply this information; 

(c) 

find  themselves  in  one  of  the  situations  of  exclusion,  referred  to  in  Article 
100(1), for this procurement procedure. 

Article 102 
Central exclusion database 

1.  A  central  database  shall  be  set  up  and  operated  by  the  Commission  in  compliance  with 
Union  rules  on  the  protection  of  personal  data.  The  database  shall  contain  details  of 
candidates and tenderers which is in one of the situations referred to in Article 100, point (b) 
of  Article  103(1)  and  point  (a)  of  Article  103(2).  It  shall  be  common  to  the  institutions, 
executive agencies and the bodies referred to in Article 200. 

2. The authorities of the Member States and third countries as well as the bodies, other than 
those  referred  to  in  paragraph  1,  participating  in  the  implementation  of  the  budget  in 
accordance with Articles 55 and 58, shall communicate to the competent authorising officer 
information on candidates and tenderers which are in one of the situations referred to in point 
(e)  of  Article  100(1),  where  the  conduct  of  the  operator  concerned  was  detrimental  to  the 
Union's  financial  interest.  The  authorising  officer  shall  receive  this  information  and  request 
the accounting officer to enter it into the database. 

The  authorities  and  bodies  mentioned  in  the  first  subparagraph  shall  have  access  to  the 
information contained in the database and may take it into account, as appropriate and on their 
own  responsibility  for  the  award  of  contracts  associated  with  the  implementation  of  the 
budget. 

3. The European Central Bank, the European Investment Bank and the European Investment 
Fund  shall  have  access  to  the  information  contained  in  the  database  for  the  purpose  of 
protecting  their  own  funds  and  may  take  it  into  account,  as  appropriate  and  on  their  own 
responsibility for the award of contracts in accordance with their procurement rules. 

They  shall  communicate  to  the  Commission  information  on  candidates  and  tenderers  which 
are in one of the situations referred to in point (c) of Article 100(1), where the conduct of the 
operators concerned was detrimental to the Union's financial interests. 

4.  Transparent  and  coherent  criteria  to  ensure  proportionate  application  of  the  exclusion 
criteria  shall  be  laid  down  in  the  delegated  Regulation  referred  to  in  Article  199.  The 
Commission  shall  define  standardised  procedures  and  technical  specifications  for  the 
operation of the database. 

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Article 103 
Administrative and financial penalties 

1.  The  contracting  authority  may  impose  administrative  or  financial  penalties  on  the 
following: 

(a) 

(b) 

contractors,  candidates  or  tenderers  in  the  cases  referred  to  in  point  (b)  of 
Article 101; 

contractors who have been declared to be in serious breach of their obligations 
under contracts covered by the budget. 

In  all  cases,  however,  the  contracting  authority  must  first  give  the  person  concerned  an 
opportunity to present his observations. 

2.  The  penalties  referred  to  in  paragraph  1  shall  be  proportionate  to  the  importance  of  the 
contract and the seriousness of the misconduct, and may consist in: 

(a) 

the  exclusion  of  the  candidate  or  tenderer  or  contractor  concerned  from  the 
contracts  and  grants  financed  by  the  budget,  for  a  maximum  period  of  ten 
years; and/or 

(b) 

the payment of financial penalties by the candidate or tenderer or contractor up 
to the value of that contract. 

3. Decisions or summary of decisions indicating the name of the economic operator, a short 
description of the facts, the duration of the exclusion or the amount of the financial penalties 
may be published by the institution. 

Article 104 
Award criteria for contracts 

1. Contracts shall be awarded on the  basis of award criteria applicable to the content of the 
tender  after  the  capability  of  economic  operators  not  excluded  under  Articles  100,  101  and 
point  (a)  of  Article  103(2)  has  been  checked  in  accordance  with  the  selection  criteria 
contained in the documents relating to the call for tenders. 

2.  Contracts  shall  be  awarded  by  the  automatic  award  procedure  or  by  the  best-value-for-
money procedure. 

Article 105 
Submission of tenders 

1.  The  arrangements  for  submitting  tenders  shall  be  such  as  to  ensure  that  there  is  genuine 
competition  and  that  the  contents  of  tenders  remain  confidential  until  they  are  all  opened 
simultaneously. 

2. If deemed appropriate and proportionate, the contracting authority may require tenderers, as 
provided in the delegated Regulation referred to in Article 199, to lodge a security in advance 
as a guarantee that the bids made will not be withdrawn. 

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3. With the exception of the low value contracts referred to in Article 98(3), applications and 
tenders  shall  be  opened  by  an  opening  board  appointed  for  this  purpose.  Any  tender  or 
application declared by the board not to satisfy the conditions laid down shall be rejected. 

4.  All  requests  to  participate  or  tenders  declared  by  the  opening  board  as  satisfying  the 
conditions laid down shall be evaluated, on the basis of the criteria provided in the documents 
relating to the call for tenders, in order to propose to the contracting authority the award of the 
contract or to proceed with an electronic auction. 

Article 106 
Principles of equal treatment and transparency 

While the procurement procedure is under way, all contacts between the contracting authority 
and  candidates  or  tenderers  must  satisfy  conditions  ensuring  transparency  and  equal 
treatment. They may not lead to amendment of the conditions of the contract or the terms of 
the original tender. 

Article 107 
The award decision 

1. The authorising officer shall decide to whom the contract is to be awarded, in compliance 
with  the  selection  and  award  criteria  laid  down  in  advance  in the  documents  relating  to  the 
call for tenders and the procurement rules. 

2.  The  contracting  authority  shall  notify  all  candidates  or  tenderers  whose  applications  or 
tenders  are  rejected  of  the  grounds  on  which  the  decision  was  taken,  and  all  tenderers  who 
meet  the  exclusion  and  the  selection  criteria  and  who  make  a  request  in  writing  of  the 
characteristics and relative advantages of the successful tender and the name of the tenderer to 
whom the contract is awarded. 

However, certain details need not be disclosed where disclosure would hinder application of 
the  law,  would  be  contrary  to  the  public  interest  or  would  harm  the  legitimate  business 
interests  of  public  or  private  undertakings  or  could  distort  fair  competition  between  those 
undertakings. 

Article 108 
Cancellation of the procurement procedure 

The contracting authority may, before the contract is signed, either abandon the procurement 
or cancel the award procedure without the candidates or tenderers being entitled to claim any 
compensation. 

The  decision  must  be  substantiated  and  be  brought  to  the  attention  of  the  candidates  or 
tenderers. 

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SECTION 4 
GUARANTEES AND CONTROL 

Article 109 
Guarantees 

1. The contracting authority shall require contractors to lodge a guarantee in advance in the 
cases specified in the delegated Regulation referred to in Article 199. 

2.  The  contracting  authority  may,  if  it  deems  it  appropriate  and  proportionate,  require 
contractors to lodge such a guarantee in order to: 

(a) 

ensure full performance of the contract or 

(b) 

limit the financial risks connected with payment of pre-financing. 

Article 110 
Errors, irregularities and fraud in the procedure 

Where the award procedure proves to have been subject to substantial errors, irregularities or 
fraud, the contracting authority shall suspend the procedure and may take whatever measures 
are necessary, including the cancellation of the procedure. 

Where, after the award of the contract, the award procedure or the performance of the contract 
prove  to  have  been  subject  to  substantial  errors,  irregularities  or  fraud,  the  contracting 
authority may, depending on the stage reached in the procedure, refrain from concluding the 
contract or suspend performance of the contract or, where appropriate, terminate the contract. 

Where  those  errors,  irregularities  or  fraud  are  attributable  to  the  contractor,  the  contracting 
authority may in addition refuse to make payments, may recover amounts already paid or may 
terminate all the contracts concluded with this contractor, in proportion to the seriousness of 
the errors, irregularities or fraud. 

CHAPTER 2 
Provisions applicable to contracts awarded by the institutions on 
their own account 

Article 111 
The contracting authority 

The institutions shall be deemed to be contracting authorities in the case of contracts awarded 
on  their  own  account.  They  shall  delegate,  in  accordance  with  Article  62,  the  necessary 
powers for the exercise of the function of contracting authority. 

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Article 112 
Thresholds applicable 

1.  Subject  to  Title  IV  of  Part  Two  of  this  Regulation,  Directive  2004/18/EC  lays  down  the 
thresholds which determine: 

(a) 

the publication arrangements referred to in Article 97; 

(b) 

the choice of procedures referred to in Article 98(1); 

(c) 

the corresponding time limits. 

2.  Subject  to  exceptions  and  conditions  specified  in  the  delegated  Regulation  referred  to  in 
Article  199,  the  contracting  authority  shall  not,  in  the  case  of  contracts  covered  by 
Directive 2004/18/EC,  sign  the  contract  or  framework  contract  with  the  successful  tenderer 
until a period of standstill has elapsed. 

Article 113 
Rules on tender participation 

Participation  in  tendering  procedures  shall  be  open  on  equal  terms  to  all  natural  and  legal 
persons coming within the scope of the Treaties and to all natural and legal persons in a third 
country  which  has  with  the  Union  a  special  agreement  in  the  field  of  public  procurement 
under the conditions laid down in that agreement. 

Article 114 
Procurement rules of the World Trade Organisation 

Where the Multilateral Agreement on Government Procurement concluded within the World 
Trade Organisation applies, the contracts shall also be open to nationals of the States which 
have ratified this agreement, under the conditions laid down in that agreement. 

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TITLE VI 
GRANTS 

CHAPTER 1 
Scope and form of grants 

Article 115 
Scope of grants 

1. Grants are direct financial contributions, by way of donation, from the budget in order to 
finance any of the following: 

(a) 

an action intended to help achieve an objective forming part of a Union policy; 

(b) 

the functioning of a body which pursues an aim of general European interest or 
has an objective forming part of a Union policy (operating grants). 

They shall be covered either by a written agreement or by a Commission decision notified to 
the successful applicant. 

2. The following shall not constitute grants within the meaning of this Title: 

(a) 

expenditure  on  the  members  and  staff  of  the  institutions  and  contributions  to 
the European schools; 

(b)  public  contracts  referred  to  in  Article  95  and  aid  paid  as  macro  financial 

assistance and budgetary support; 

(c) 

(d) 

(e) 

(f) 

(g) 

financial  instruments  as  referred  to  in  Title  VIII  of  Part  One,  as  well  as 
shareholdings  or  equity  participations  in  international  financial  institutions 
such  as  the  European  Bank  for  Reconstruction  and  Development  (EBRD)  or 
specialised Union bodies such as the European Investment Fund; 

contributions  paid  by  the  Union  as  subscriptions  to  bodies  of  which  they  are 
members; 

expenditure  implemented  under  indirect  management  within  the  meaning  of 
Articles 55, 56 and 57; 

contributions  made  by  virtue  of  their  constitutive  basic  act  to  bodies  set  up 
under Article 59; 

expenditure  relating  to  fisheries  markets  referred  to  in  Article  3(2)  (f)  of 
Council Regulation (EC) No 1290/200521; 

21 

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(h) 

repayment of travel and subsistence expenses incurred by, or where appropriate 
any other indemnities paid to, persons invited or mandated by the institutions.  

(i) 

prizes given as rewards for a contest, to which Title VII of Part One applies. 

3.  Each  institution  may  award  grants  for  communication  activities  where,  for  duly  justified 
reasons, the use of public procurement procedures is not appropriate. 

Article 116 
Forms of grants 

Grants may take any of the following forms: 

(a) 

reimbursement of a specified proportion of the eligible costs actually incurred; 

(b) 

lump sums; 

(c) 

standard scale of unit costs; 

(d) 

flat-rate financing; 

(e) 

a combination of the forms referred to in points (a) to (d). 

CHAPTER 2 
Principles 

Article 117 
General principles applicable to grants 

1. Grants shall be subject to the principles of transparency and equal treatment. 

2. They may not be cumulative or awarded retrospectively. 

3. Grants must involve co-financing without prejudice to the specific rules laid down in Title 
IV of Part Two. 

Grants  shall  not  exceed  an  overall  ceiling  expressed  in  terms  of  an  absolute  value  which  is 
established on the basis of estimated eligible costs. 

The grant shall not exceed the eligible costs. 

4. Grants may not have the purpose or effect of producing a profit within the framework of 
the action or the work programme of the beneficiary. 

The first subparagraph shall not apply to: 

(a) 

actions the objective of which is the reinforcement of the financial capacity of 
a beneficiary or the generation of an income; 

(b) 

study, research or training scholarships paid to natural persons; 

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5. If a political party at Union level realises a surplus of income over expenditure at the end of 
a financial year for which it received an operating grant, part of that surplus up to 25 % of the 
total income for that year may, by derogation from the no-profit rule laid down in paragraph 
2,  be  carried  over  to  the  following  year  provided  that  it  is  used  before  the  end  of  the  first 
quarter of this following year. 

For  the  purpose  of  verifying  compliance  with  the  no-profit  rule,  the  own  resources,  in 
particular donations and membership fees, aggregated in the annual operations of a political 
party at Union level, which exceed 15 % of the eligible costs to be borne by the beneficiary, 
shall not be taken into account. 

The  second  subparagraph  shall  not  apply  if  the  financial  reserves  of  a  political  party  at 
European level exceed 100 % of its average annual income. 

6. For lumps sums, standard scale of unit costs and flat rate financing, the no-profit and the 
co-financing rules laid down in paragraphs 3 and 4 shall be reasonably ensured at the time of 
their determination or at the stage of the evaluation of the grant application. 

7.  Articles  122,  123  and  124  shall  not  apply  to  grants  awarded  to  the  European  Investment 
Bank, the European Investment Fund or any other subsidiary of that Bank. 

Article 118 
Transparency 

1. Grants shall be subject to a work programme, to be published at the start of the year. 

That  work  programme  shall  be  implemented  through  the  publication  of  calls  for  proposals, 
save  in  duly  substantiated  exceptional  cases  of  urgency  or  where  the  characteristics  of  the 
beneficiary or of the action leave no other choice for a given action, or where the beneficiary 
is identified in a basic act as recipient of a grant. 

The  first  subparagraph  shall  not  apply  to  crisis  management  aid,  civil  protection  operations 
and humanitarian aid operations. 

2.  All  grants  awarded  in  the  course  of  a  financial  year  shall  be  published  annually  in 
accordance with Article 31(2) and (3). 

Article 119 
Principle of non-cumulative award 

Each  action  may  give  rise  to  the  award  of  only  one  grant  from  the  budget  to  any  one 
beneficiary, except where the relevant basic acts authorise otherwise. 

A beneficiary may be awarded only one operating grant from the budget per financial year. 

The applicant shall immediately inform the authorising officers of any multiple applications 
and multiple grants relating to the same action or to the same work programme. 

In no circumstances shall the same costs be financed twice by the budget. 

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Article 120 
Retroactive award 

1. A grant may be awarded for an action which has already begun only where the applicant 
can demonstrate the need to start the action before the grant is awarded. 

In  such  cases,  costs  eligible  for  financing  may  not  have  been  incurred  prior  to  the  date  of 
submission of the grant application, save in duly substantiated exceptional cases as provided 
for in the basic act or in case of extreme urgency for crisis management aid, civil protection 
operations and humanitarian aid operations. 

No grant may be awarded retrospectively for actions already completed. 

2. An operating grant shall  be  awarded  within six  months after the start of  the beneficiary's 
budgetary year. Costs eligible for financing may neither have been incurred before the grant 
application was lodged nor before the start of the beneficiary's budgetary year. 

Article 121 
Principle of degressive award 

Unless  otherwise  specified  in  the  basic  act  or  in  the  financing  decision  for  grants  awarded 
under point (d) of Article 51(5) with regard to bodies pursuing an objective of general Union 
interest, when operating grants are renewed for a period exceeding four years, they shall be 
gradually decreased after the fourth year. 

CHAPTER 3 
Award procedure 

Article 122 
Applications for grants 

1. Grant applications shall be submitted in writing. 

2. Grant applications shall be eligible if submitted by the following: 

(a) 

legal persons;  

(b)  natural  persons in  so far as this is required by the nature or characteristics of 

the action or the objective pursued by the applicant. 

For the purposes of point (a), grant applications may be eligible if submitted by entities which 
do  not  have  legal  personality  under  the  applicable  national  law,  provided  that  their 
representatives have the capacity to undertake legal obligations on the behalf of the entity and 
offer guarantee for the protection of the Union's financial interests equivalent to that offered 
by legal persons. 

3. Articles 100 to 103 shall also apply to grant applicants. Applicants must certify that they 
are  not  in  one  of  the  situations  referred  to  in  Articles  100  to  103.  However,  the authorising 

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officer may refrain from requiring such certification, as specified in the delegated Regulation 
referred to in Article 199, for any of the following: 

(a) 

very low valued grants;  

(b)  when such certification has recently been provided in another award procedure; 

(c)  when there is a material impossibility to provide such certification. 

4.  Administrative  and  financial  penalties  which  are  effective,  proportionate  and  dissuasive 
may be imposed on applicants by the authorising officer, in accordance with Article 103. 

Those penalties may also be imposed on beneficiaries who at the moment of the submission 
of the application or during the implementation of the grant, have made false declarations in 
supplying  the  information  required  by  the  authorising  officer  or  fail  to  supply  that 
information. 

Article 123 
Selection and award criteria 

1. The selection criteria shall be such as to make it possible to assess the applicant's ability to 
complete the proposed action or work programme. 

2. The award criteria announced in advance in the call for proposals shall be such as to make 
it possible to assess the quality of the proposals submitted in the light of the objectives and 
priorities set. 

Article 124 
Evaluation procedure 

1.  Proposals  shall  be  evaluated,  on  the  basis  of  pre-announced  selection  and  award  criteria, 
with a view to determining which proposals may be financed. 

2. The authorising officer responsible shall then, on the basis of the evaluation provided for in 
paragraph 1, draw up the list of beneficiaries and the amounts approved. 

3.  The  authorising  officer  responsible  shall  inform  applicants  in  writing  of  the  decision  on 
their application. If the grant requested is not awarded, the institution shall give the reasons 
for  the  rejection  of  the  application,  with  reference  in  particular  to  the  selection  and  award 
criteria already announced. 

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CHAPTER 4 
Payment and control 

Article 125 
Pre-financing guarantee 

The authorising officer responsible may, if he deems it appropriate and proportionate, require 
the beneficiary to lodge a guarantee in advance in order to limit the financial risks connected 
with the payment of pre-financing. 

Article 126 
Payment of grants and controls 

1.  The  amount  of  the  grant  shall  not  become  final  until  after  the  authorising  officer 
responsible  has  accepted  the  final  reports  and  accounts,  without  prejudice  to  subsequent 
checks by the institution. 

2. Where substantial errors, irregularities or fraud are committed during the award procedure 
or the implementation of the grant and after the beneficiary has been given the opportunity to 
make  his  observations,  the  responsible  authorising  officer  may  take  any  of  the  measures 
referred to in Article 110. 

3. Where controls or audits demonstrate that recurrent errors exist for one beneficiary which 
also  have  an  impact  on  non-audited  projects  in  which  that  beneficiary  participates  or  has 
participated,  the  authorising  officer  may  extend  the  findings  to  those  non  audited  projects 
which  may  still  be  audited  in  accordance  with  the  grant  agreement  and  request  the 
reimbursement of the related amount. 

The  beneficiary  may,  within  an  adversarial  procedure,  challenge  the  correction  applied  by 
demonstrating that the calculation of corrections is erroneous and submitting new calculation. 

CHAPTER 5 
Implementation 

Article 127 
Subcontracting and grant redistribution 

1.  Where  implementation  of  the  action,  or  the  work  programme  in  case  of  operating  grant, 
requires the award of procurement contracts by the beneficiary, the relevant procedures shall 
be as set out in the delegated Regulation referred to in Article 199. 

2. Where implementation of the action or the work programme requires financial support to 
be  given  to  third  parties,  the  beneficiary  of  a  Union  grant  may  give  such  financial  support 
provided that the following conditions are met: 

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(a) 

(b) 

before awarding the grant, the responsible authorising officer has verified that 
the beneficiary offers adequate guarantees as regards the recovery of amounts 
due to the Commission; 

the  conditions  for  the  giving  of  such  support  are  strictly  defined  in  the  grant 
decision or agreement between the beneficiary and the Commission, in order to 
avoid the exercise of discretion by the beneficiary; 

(c) 

the  amounts  concerned  are  small,  as  defined  in  the  Delegated  Regulation 
referred to in Article 199. 

3. Each grant decision or agreement shall provide expressly for the Commission and the Court 
of  Auditors  to  exercise  their  powers  of  control,  on  documents  and  on  the  premises  and  on 
information, even stored on electronic media, over all third parties who have received Union 
funds. 

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TITLE VII 
PRIZES 

Article 128 
Definition 

For  the  purposes  of  this  Regulation,  "prizes"  shall  mean  financial  contributions  awarded 
following contests. 

Article 129 
General rules 

1. Prizes are subject to the principles of transparency and equal treatment. 

2. Prizes shall be part of the work programme referred to in Article 118 and adopted by the 
Commission and shall be subject to Article 118(2).  

The rules of the contest shall at least establish the award conditions, the criteria, the amount of 
the prize and the modality of payment.  

Prizes may not be awarded directly without a contest and shall be subject to publication in the 
same way as call for proposals. 

3. Prizes shall be awarded by the responsible authorising officer or by a jury. They shall be 
free to decide whether or not to award prizes depending on their appraisal of the quality of the 
entries by reference to the rules of the contest. 

4. The amount of the prize shall not be linked to the costs incurred by the recipient. 

5.  Where  prizes  exceeding  EUR  500.000  are  awarded  by  a  beneficiary  of  a  grant  or  by  a 
contractor, their award conditions and criteria shall be approved by the Commission. 

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TITLE VIII 
FINANCIAL INSTRUMENTS 

Article 130 
Definition and scope 

1. For the purpose of this Regulation, "financial instruments" shall mean Union measures of 
financial support provided from the budget in order to address a specific policy objective by 
way of loans, guarantees, equity or quasi-equity investments or participations, or other risk-
bearing instruments, possibly combined with grants. 

2.  The  provisions  of  this  Title  shall  also  apply  to  elements  directly  related  to  financial 
instruments, including technical assistance. 

3. The Commission may implement financial instruments in direct management mode, or in 
indirect management mode by entrusting tasks to the entities referred to in points (iii) and (iv) 
of Article 55(1)(b). 

Article 131 
Principles applicable to financial instruments 

1.  Financial  instruments  shall  be  provided  to  final  recipients  of  Union  funds  in  accordance 
with sound financial management, transparency and equal treatment and in accordance with 
the objectives established in the basic act that applies to those financial instruments. 

2. Without prejudice to points (d) and (e) of article 46(1), the budgetary expenditure linked to 
a financial instrument shall be kept within the relevant budgetary commitment made for it. 

3. Financial intermediaries involved in the execution of financial operations under a financial 
instrument shall comply with relevant standards on the prevention of money laundering and 
fight against terrorism. They shall not be established in territories whose jurisdictions do not 
co-operate  with  the  Union  in  relation  to  the  application  of  internationally  agreed  tax 
standards. 

4. Each agreement between an entity referred to in point (iii) and (iv) of Article 55(1)(b) and a 
financial intermediary referred to in paragraph 3 shall provide expressly for the Commission 
and  the  Court  of  Auditors  to  exercise  their  powers  of  control,  on  documents  and  on  the 
premises and on information, even stored on electronic media, over all third parties who have 
received Union funds. 

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TITLE IX 
PRESENTATION OF THE ACCOUNTS AND 
ACCOUNTING 

CHAPTER 1 
Presentation of the accounts 

Article 132 
Structure of the Union accounts 

The Union accounts shall comprise: 

(a) 

the  consolidated  financial  statements,  which  present  the  consolidation  of  the 
financial  information  contained  in  the  financial  statements  of  the  institutions 
financed  by  the  budget,  those  of  the  bodies  referred  to  in  Article  200  and  of 
other  bodies  whose  accounts  must  be  consolidated  in  accordance  with  Union 
accounting rules; 

(b) 

the aggregated budgetary accounts which present the information contained in 
the budgetary accounts of the institutions financed by the budget. 

Article 133 
Report on budgetary and financial management 

1. Each institution and body referred to in Article 132 shall prepare a report on budgetary and 
financial management of the financial year. 

They shall send the report to the budgetary authority and the Court of Auditors, by 31 March 
following the financial year. 

2.  The  report  referred  to  in  paragraph  1  shall  give  an  account,  at  least,  of  the  rate  of 
implementation of the appropriations together with summary information on the transfers of 
appropriations among the various budget items. 

Article 134 
Rules governing the accounts 

The  financial  statements  referred  to  in  Article  132  shall  comply  with  the  Union  accounting 
rules  as  adopted  by  the  Accounting  Officer  of  the  Commission  and  shall  present  a  true  and 
fair view of the assets and liabilities, charges, income and cash flow. 

The budgetary accounts referred to in Article 132 shall comply with the budgetary principles 
laid out in this Regulation. They shall present a true and fair view of the budgetary revenue 
and expenditure operations. 

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Article 135 
Accounting principles 

The  financial  statements  referred  to  in  Article  132  shall  present  information,  including 
accounting  policies,  in  a  manner  that  provides  relevant,  reliable,  comparable  and 
understandable  information.  They  shall  be  drawn  up  in  compliance  with  the  generally 
accepted accounting principles as outlined in the Union's accounting rules. 

Article 136 
Financial statements 

1. The financial statements shall be presented in millions of euro and shall comprise: 

(a) 

(b) 

(c) 

the balance sheet and the statement of financial performance, which represent 
the  assets  and  liabilities  and  financial  situation  and  the  economic  result  at  31 
December of the previous year; they shall be presented in accordance with the 
relevant  accounting  rules  adopted  by 
the 
Commission; 

the  Accounting  Officer  of 

the  cash-flow  statement  showing  amounts  collected  and  disbursed  during  the 
year and the final treasury position; 

the  statement  of  changes  in  net  assets  presenting  an  overview  of  the 
movements during the year in reserves and accumulated results. 

2.  The  notes  to  the  financial  statements  shall  supplement  and  comment  on  the  information 
presented  in  the  statements  referred  to  in  paragraph  1  and  shall  supply  all  the  additional 
information prescribed by the relevant accounting rules adopted by the Accounting Officer of 
the Commission. 

Article 137 
Budgetary implementation reports 

The  budgetary  implementation  reports  shall  be  presented  in  millions  of  euro.  They  shall 
comprise: 

(a) 

(b) 

the  budget  implementation  reports,  which  aggregate  all  budgetary  operations 
for the year in terms of revenue and expenditure; 

the  notes  to  the  budget  implementation  reports,  which  shall  supplement  and 
comment on the information given in the reports. 

The structure in which budget implementation reports are presented shall be the same as that of 
the budget itself. 

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Article 138 
Provisional accounts 

The  accounting  officers  of  the  other  institutions  and  bodies  referred  to  in  Article  132  shall 
send to the accounting officer of the Commission and to the Court of Auditors by 1 March of 
the following year at the latest their provisional accounts. 

The accounting officers of the other institutions and bodies referred to in article 132 shall also 
send by 1 March of following year at the latest a reporting package to the accounting officer 
of  the  Commission,  in  a  standardized  format  as  laid  down  by  the  accounting  officer  of  the 
Commission for consolidation purposes. 

The accounting officer of the Commission shall consolidate these provisional accounts with 
the Commission's provisional accounts and shall send to the Court of Auditors, by 31 March 
of  the  following  year  at  the  latest,  the  Commission's  and  the  consolidated  Union  provisional 
accounts. 

Article 139 
Approval of the final consolidated accounts 

1. The Court of Auditors shall, by the 1st of June at the latest, make its observations on the 
provisional accounts of other institutions and each body referred to in Article 132, and by 15 
June at the latest, make its observations on the provisional accounts of the Commission and 
the consolidated Union provisional accounts. 

2.  The  institutions  other  than  the  Commission,  and  each  of  the  bodies  referred  to  in  Article 
132,  shall  draw  up  their  final  accounts  and  send  them  to  the  accounting  officer  of  the 
Commission, the Court of Auditors, the European Parliament and the Council by 1 July of the 
following year at the latest with a view to drawing up the final consolidated accounts. 

The  accounting  officers  of  the  other  institutions  and  bodies  referred  to  in  Article  132  shall 
also send by 1 July of the following year at the latest, a reporting package to the accounting 
officer of the Commission, in a standardized format as laid down by the accounting officer of 
the Commission for consolidation purposes. 

3.  The  accounting  officer  of  each  institution  and  body  referred  to  in  Article  132  shall  also 
send to the Court of Auditors, with copy to the accounting officer of the Commission, at the 
same date as the transmission of his final accounts, a representation letter covering these final 
accounts. 

The final accounts shall be accompanied by a note established by the accounting officer, by 
which  he  declares  that  they  were  prepared  in  accordance  with  this  Title  and  with  the 
applicable accounting principles, rules and methods. 

4. The accounting officer of the Commission shall prepare the final consolidated accounts on 
the  basis  of  the  information  presented  by  the  other  institutions  and  bodies  referred  to  in 
Article  132  under  paragraph  2.  The  final  consolidated  accounts  shall  be  accompanied  by  a 
note established by the accounting officer of the Commission, by which he declares that they 
were  prepared  in  accordance  with  Title  IX  and  with  the  accounting  principles,  rules  and 
methods set out in annex to the financial statements. 

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5. After approving the final consolidated accounts and its own final accounts, the Commission 
shall  send  them  both  to  the  European  Parliament,  the  Council  and  the  Court  of  Auditors 
before 31 July of the following financial year. 

By  the  same  date,  the  accounting  officer  of  the  Commission  shall  transmit  a  representation 
letter covering the final consolidated accounts to the Court of Auditors. 

.6 The final consolidated accounts shall be published in the Official Journal of the European 
Union together with the statement of assurance given by the Court of Auditors in accordance 
with Article 287 of the TFEU and Article 160c of the Euratom Treaty by 15 November of the 
following financial year. 

CHAPTER 2 
Information on the implementation of the budget 

Article 140 
Report on the budgetary guarantees and risks 

In  addition  to  the  statements  provided  for  in  Articles  136  and  137,  the  Commission  shall 
report  to  the  European  Parliament  and  to  the  Council  once  a  year  on  budgetary  guarantees 
referred to in point (d) of Article 46(1) and the corresponding risks. 

This information shall be sent to the Court of Auditors at the same time. 

Article 141 
Budget implementation report 

1.  In  addition  to  the  statements  provided  for  in  Articles  136  and  137,  the  Commission's 
accounting  officer  shall  send  once  a  month  to  the  European  Parliament  and  to  the  Council 
figures,  aggregated  at  chapter  level  at  least,  on  the  implementation  of  the  budget,  both  for 
revenue and for expenditure against all appropriations. 

These figures shall also provide details of the utilisation of appropriations carried over. 

The figures shall be sent within 10 working days following the end of each month. 

2.  Three  times  a  year,  within  the  30  working  days  following  31  May,  31  August  and  31 
December, the Commission's accounting officer shall send to the European Parliament and to 
the  Council  a  report  on  the  implementation  of  the  budget,  covering  both  revenue  and 
expenditure broken down by chapter, article and item. 

This  report  shall  also  provide  details  of  the  utilisation  of  appropriations  carried  over  from 
previous financial years. 

3. The figures and the report on implementation of the budget shall at the same time be sent to 
the Court of Auditors. 

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CHAPTER 3 
Accounting 

SECTION 1 
COMMON PROVISIONS 

Article 142 
The accounting system 

1.  The  institution's  accounting  system  is  the  system  serving  to  organise  the  budgetary  and 
financial information in such a way that figures can be input, filed and registered. 

2.  The  accounts  shall  consist  of  general  accounts  and  budgetary  accounts.  These  accounts 
shall be kept in euro on the basis of the calendar year. 

3.  Notwithstanding  paragraph  2,  the  authorising  officer  by  delegation  may  keep  analytical 
accounts. 

Article 143 
Common provision to the institutions' accounting system 

1. The accounting officer of the Commission shall, after consulting the accounting officers of 
the other institutions and bodies referred to in Article 132, adopt the accounting rules and the 
harmonised chart of accounts to be applied by all the institutions financed by the budget, the 
offices referred to in Title V of Part Two and all the bodies referred to in Article 132. 

2. When adopting the rules and methods referred to in paragraph 1, the accounting officer of 
the Commission shall be guided by the internationally accepted accounting standards for the 
public sector but may depart from them where justified by the specific nature of the Union's 
activities. 

SECTION 1 
GENERAL ACCOUNTS 

Article 144 
The general accounts 

The general accounts shall record, in chronological order using the double entry method, all 
events  and  operations  which  affect  the  economic  and  financial  situation  and  the  assets  and 
liabilities of the institutions and bodies referred to in Article 132. 

Article 145 
Entries in the accounts 

1. Movements on the accounts and the balances shall be entered in the accounting ledgers. 

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2. All accounting entries, including adjustments to the accounts, shall be based on supporting 
documents, to which they shall refer. 

3. The accounting system must be such as to leave a trail for all accounting entries. 

Article 146 
Accounting adjustments 

The  accounting  officer  shall,  after  the  close  of  the  budgetary  year  and  up  to  the  date  of 
presentation of the accounts, make any adjustments which, without involving disbursement or 
collection in respect of that year, are necessary for a true and fair presentation of the accounts 
which complies with the Union's accounting rules. 

SECTION 3 
BUDGETARY ACCOUNTS 

Article 147 
Budgetary accounting 

1. The budgetary accounts provide a detailed record of budgetary implementation. 

2. For the purposes of paragraph 1, the budgetary accounts shall record all budgetary revenue 
and expenditure operations provided for in Title IV of Part One. 

CHAPTER 4 
Property inventories 

Article 148 
The inventory 

1. Each institution and each body referred to in Article 132 shall keep inventories showing the 
quantity  and  value  of  all  the  Union's  tangible,  intangible  and  financial  assets  in  accordance 
with a model drawn up by the accounting officer of the Commission. 

Each  institution  and  each  body  referred  to  in  Article  132  shall  check  that  entries  in  the 
inventory correspond to the actual situation. 

2. The sale of property shall be suitably advertised. 

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TITLE X 
EXTERNAL AUDIT AND DISCHARGE 

CHAPTER 1 
External audit 

Article 149 
External audit by the Court of Auditors 

1.  The  European  Parliament,  the  Council  and  the  Commission  shall  inform  the  Court  of 
Auditors, as soon as possible, of all decisions and rules adopted pursuant to Articles 9, 13, 18, 
22, 23, 25 and 37. 

2.  Each  institution  shall  inform  the  Court  of  Auditors  and  the  budgetary  authority  of  any 
internal rules it adopts in respect of financial matters. 

3. The Court of Auditors shall be informed of the appointment of authorising officers, internal 
auditors,  accounting  officers  and  imprest  administrators  and  of  delegation  decisions  under 
Articles 53, 65, 66, 67 and 92. 

Article 150 
Rules and procedure on the audit 

1. The examination by the Court of Auditors of whether all revenue has been received and all 
expenditure incurred in a lawful and proper manner shall have regard to the provisions of the 
Treaties, the budget, this Regulation, the delegated Regulation referred to in Article 199 and 
all other acts adopted pursuant to the Treaties. 

2.  In  the  performance  of  its  task,  the  Court  of  Auditors  shall  be  entitled  to  consult,  in  the 
manner  provided  for  in  Article  152,  all  documents  and  information  relating  to  the  financial 
management  of  departments  or  bodies  with  regard  to  operations  financed  or  co-financed  by 
the Union. It shall have the power to make enquiries of any official responsible for a revenue 
or  expenditure  operation  and  to  use  any  of  the  auditing  procedures  appropriate  to  the 
aforementioned departments or bodies. The audit in the Member States shall be carried out in 
conjunction  with  the  national  audit  institutions  or,  where  they  do  not  have  the  necessary 
powers,  with  the  national  departments  responsible.  The  Court  of  Auditors  and  the  national 
audit bodies of the Member States shall cooperate in a spirit of trust while maintaining their 
independence. 

In order to obtain all the necessary information for the performance of the task entrusted to it 
by the Treaties or the acts adopted pursuant to them, the Court of Auditors may be present, at 
its  request,  during  the  audit  operations  carried  out  within  the  framework  of  the 
implementation of the budget by, or on behalf of, any institution. 

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At the request of the Court of Auditors, each institution shall authorise financial institutions 
holding Community deposits to enable the Court of Auditors to ensure that external data tally 
with the accounts. 

3.  In  order  to  perform  its  task,  the  Court  of  Auditors  shall  notify  the  institutions  and 
authorities to which this Regulation applies of the names of the members of its staff who are 
empowered to audit them. 

Article 151 
Controls regarding securities and cash 

The  Court  of  Auditors  shall  ensure  that  all  securities  and  cash  on  deposit  or  in  hand  are 
checked  against  vouchers  signed  by  the  depositories  or  against  official  memoranda  of  cash 
and securities held. It may carry out such checks itself. 

Article 152 
Court of Auditors' right of access 

1. The Commission, the other institutions, the bodies administering revenue or expenditure on 
the  Union's  behalf  and  the  final  beneficiaries  of  payments  from  the  budget  shall  afford  the 
Court of Auditors all the facilities and give it all the information which the Court of Auditors 
considers  necessary  for  the  performance  of  its  task.  They  shall  place  at  the  disposal  of  the 
Court of Auditors all documents concerning the award and performance of contracts financed 
by  the  budget  and  all  accounts  of  cash  or  materials,  all  accounting  records  or  supporting 
documents,  and  also  administrative  documents  relating  thereto,  all  documents  relating  to 
revenue  and  expenditure,  all  inventories,  all  organisation  charts  of  departments,  which  the 
Court of Auditors considers necessary for auditing the budgetary and financial outturn report 
on  the  basis  of  records  or  on  the  spot  and,  for  the  same  purposes,  all  documents  and  data 
created or stored on a magnetic medium. 

The  other  services  and  internal  audit  bodies  of  the  national  administrations  concerned  shall 
afford the Court of Auditors all the facilities which it considers necessary for the performance 
of its task. 

The  first  subparagraph  shall  also  apply  to  natural  or  legal  persons  receiving  payments  from 
the budget. 

2. The officials whose operations are checked by the Court of Auditors shall: 

(a) 

show their records of cash in hand, any other cash, securities and materials of 
all kinds, and also the supporting documents in respect of their stewardship of 
the funds with which they are entrusted, and also any books, registers and other 
documents relating thereto; 

(b)  present  the  correspondence  and  any  other  document  required  for  the  full 

implementation of the audit referred to in Article 150(1). 

The information supplied under point (b) of the first subparagraph may be requested only by 
the Court of Auditors. 

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3. The Court of Auditors shall be empowered to audit the documents in respect of the revenue 
and  expenditure  of  the  Union  which  are  held  by  the  departments  of  the  institutions  and,  in 
particular,  by  the  departments  responsible  for  decisions  in  respect  of  such  revenue  and 
expenditure,  the  bodies  administering  revenue  or  expenditure  on  the  Union's  behalf  and  the 
natural or legal persons receiving payments from the budget. 

4. The task of establishing that the revenue has been received and the expenditure incurred in 
a lawful and proper manner and that the financial management has been sound shall extend to 
the utilisation, by bodies outside the institutions, of Union funds received by way of grants. 

5.  Union  financing  paid  to  beneficiaries  outside  the  institutions  shall  be  subject  to  the 
agreement  in  writing  by  the  beneficiaries  or,  failing  agreement  on  their  part,  by  the 
contractors or subcontractors, to an audit by the Court of Auditors into the use made of the 
financing granted. 

6. The Commission shall provide the Court of Auditors, at its request, with any information 
on borrowing-and-lending operations. 

7. Use of integrated computer systems may not have the effect of reducing the access of the 
Court of Auditors to the supporting documents. 

Article 153 
Annual report of the Court of Auditors 

1. The Court of Auditors shall transmit to the Commission by 15 June and to other institutions 
and bodies referred to in Article 132 by 1st of June at the latest, any observations which are, in 
its opinion, such that they should appear in the annual report. These observations must remain 
confidential  and  are  subject  to  a  contradictory  procedure.  Each  institution  shall  address  its 
reply to the Court of Auditors by 15 October at the latest. The replies of institutions other than 
the Commission shall be sent to the Commission at the same time. 

2. After completion of the contradictory procedure, each institution or body concerned shall 
address  its  reply  to  the  Court  of  Auditors  by  15  October  at  the  latest.  The  replies  of 
institutions other than the Commission and of the bodies shall be sent to the Commission at 
the same time. 

3. The annual report shall contain an assessment of the soundness of financial management. 

4. The annual report shall contain a section for each institution. The Court of Auditors may 
add any summary report or general observations which it sees fit to make. 

The  Court  of  Auditors  shall  take  all  necessary  steps  to  ensure  that  the  replies  of  each 
institution  to  its  observations  are  published  next  to  or  after  each  observation  to  which  they 
relate. 

5. The Court of Auditors shall transmit to the authorities responsible for giving discharge and 
to the other institutions, by 15 November at the latest, its annual report accompanied by the 
replies  of  the  institutions  and  shall  ensure  publication  thereof  in  the  Official  Journal  of  the 
European Union. 

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6. As soon as the Court of Auditors has transmitted the annual report, the Commission shall 
inform  the  Member  States  concerned  immediately  of  Court's  observations  which  relate  to 
management of the funds for which they are responsible under the rules applicable. 

Following  receipt  of  such  information,  the  Member  States  shall  inform  the  Commission 
within  100  days  of  the  measures  taken  to  address  the  Court  of  Auditors'  aforementioned 
observations  which  pertain  to  their  respective  country.  The  Commission  shall  communicate 
this information to the Court of Auditors, the Council and the European Parliament. 

Article 154 
Special reports of the Court of Auditors 

1.  The  Court  of  Auditors  shall  transmit  to  the  institution  or  the  body  concerned  any 
observations which are, in its opinion, such that they should appear in a special report. These 
observations must remain confidential and are subject to an adversarial procedure. 

The  institution  or  the  body  concerned  shall  have  two-and-a  half  months  within  which  to 
inform the Court of Auditors of any replies it wishes to make on those observations. 

The  Court  of  Auditors  shall  adopt  the  definitive  version  of  the  special  report  the  following 
month upon the receipt of the replies made by the institution or the body concerned. 

The special reports, together with the replies of the institutions or bodies concerned, shall be 
transmitted  without  delay  to  the  European  Parliament  and  the  Council,  each  of  which  shall 
decide, where appropriate in conjunction with the Commission, what action is to be taken in 
response. 

The  Court  of  Auditors  shall  take  all  necessary  steps  to  ensure  that  the  replies  of  each 
institution  or  body  concerned  to  its  observations  are  published  immediately  next  to  or  after 
each observation to which they relate. 

2. The opinions referred to in Article 287(4) of the TFEU which do not relate to proposals or 
drafts  covered  by  the  legislative  consultation  procedure  may  be  published  by  the  Court  of 
Auditors in the Official Journal of the European Union. The Court of Auditors shall take its 
decision on publication after consulting the institution which requested the opinion or which 
is  concerned  by  it.  Opinions  published  shall  be  accompanied  by  any  remarks  by  the 
institutions concerned. 

Article 155 
Statements of preliminary findings 

1. The Court of Auditors shall transmit to the institutions, bodies or Member States concerned 
the statements of preliminary findings resulting from its audits. The statements of preliminary 
findings which are, in the Court's opinion, such that they should appear in the annual report, 
shall be transmitted no later than by 1st of June of the exercise following the one to which they 
refer. The statements of preliminary findings must remain confidential. 

2. The institution, the body or the Member State concerned shall have two and a half months 
within  which  to  inform  the  Court  of  Auditors  of  any  comments  it  wishes  to  make  on  the 
statements of preliminary findings. 

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CHAPTER 2 
Discharge 

Article 156 
Timetable of the discharge procedure 

1. The European Parliament, upon a recommendation from the Council acting by a qualified 
majority, shall, before 15 May of year n + 2 give a discharge to the Commission in respect of 
the implementation of the budget for year n. 

2.  If  the  date  provided  for  in  paragraph  1  cannot  be  met,  the  European  Parliament  or  the 
Council shall inform the Commission of the reasons for the postponement. 

3.  If  the  European  Parliament  postpones  the  decision  giving  a  discharge,  the  Commission 
shall make every effort to take measures, as soon as possible, to remove or facilitate removal 
of the obstacles to that decision. 

Article 157 
The discharge procedure 

1. The discharge decision shall cover the accounts of all the Union's revenue and expenditure, 
the resulting balance and the assets and liabilities of the Union shown in the balance sheet. 

2. With a view to granting the discharge, the European Parliament shall, after the Council has 
done  so,  examine  the  accounts,  financial  statements  and  the  evaluation  report  referred  to  in 
Article  318  of  the  TFEU.  It  shall  also  examine  the  annual  report  made  by  the  Court  of 
Auditors  together  with  the  replies  of  the  institutions  under  audit,  and  any  relevant  special 
reports by the Court of Auditors in respect of the financial year concerned and the Court of 
Auditors'  statement  of  assurance  as  to  the  reliability  of  the  accounts  and  the  legality  and 
regularity of the underlying transactions. 

3.  The  Commission  shall  submit  to  the  European  Parliament,  at  the  latter's  request,  any 
information required  for  the  smooth  application of the discharge procedure for the  financial 
year concerned, in accordance with Article 319 of the TFEU. 

Article 158 
Follow-up measures 

1. In accordance with Article 319 of the TFEU and Article 180b of the Euratom Treaty, the 
Commission  and  the  other  institutions  shall  take  all  appropriate  steps  to  act  on  the 
observations  accompanying  the  European  Parliament's  discharge  decision  and  on  the 
comments accompanying the recommendation for discharge adopted by the Council. 

2. At the request of the European Parliament or the Council, the institutions shall report on the 
measures  taken  in  the  light  of  these  observations  and  comments,  and,  in  particular,  on  the 
instructions  they  have  given  to  those  of  their  departments  which  are  responsible  for  the 
implementation  of  the  budget.  The  Member  States  shall  cooperate  with  the  Commission  by 
informing  it  of  the  measures  they  have  taken  to  act  on  these  observations  so  that  the 

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Commission may take them into account when drawing up its own report. The reports from 
the institutions shall also be transmitted to the Court of Auditors. 

Article 159 
Specific provisions regarding the EEAS 

The EEAS shall be fully subject to the procedures provided for in Article 319 of the TFEU 
and in Articles 156, 157 and 158 of this Regulation. 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. 

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PART TWO 
SPECIAL PROVISIONS 

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TITLE I 
EUROPEAN AGRICULTURAL GUARANTEE FUND 

Article 160 
Special provisions on the European Agricultural Guarantee Fund 

1.  Parts  One  and  Three  of  this  Regulation  shall  apply  to  expenditure  effected  by  the 
authorities and bodies referred to in the rules relating to the European Agricultural Guarantee 
Fund (EAGF), and to revenue, save as otherwise provided in this Title. 

2. Operations managed directly by the Commission shall be implemented in accordance with 
the rules laid down in parts one and three. 

Article 161 
Commitments of EAGF funds 

1. For each financial year, the EAGF shall include non-differentiated appropriations, with the 
exception of the expenditure related to the measures referred to in Article 3(2) of Regulation 
(EC) No 1290/2005, which shall be covered by differentiated appropriations. 

2. Payment appropriations which have been carried over but which have not been used by the 
end of the financial year shall be cancelled. 

3.  Non-committed  appropriations  relating  to  the  actions  referred  to  in  Article  3(1)  of 
Regulation (EC) No 1290/2005 may be carried over to the next financial year only. 

Such carryover shall not exceed, within a limit of 2 % of the initial appropriations referred to 
in  the  first  subparagraph,  the  amount  of  the  adjustment  of  direct  payments  referred  to  in 
Article 11 of Council  Regulation  (EC) No 73/200922 and  which was  applied during the last 
financial year. 

Appropriations  which  are  carried  over  shall  be  returned  exclusively  to  the  budgetary  lines 
which cover the actions referred to in point (c) Article 3(1) of Regulation (EC) No 1290/2005. 

Such  carryover  may  lead  to  an  additional  payment  only  to  the  final  beneficiaries  who  have 
been  subject,  in  the  last  financial  year,  to  the  adjustment  of  direct  payments  in  accordance 
with Article 11 of Regulation (EC) No 73/2009. 

The carryover decision shall be taken, at the latest on 15 February of the year to which the 
carryover is being made, by the Commission, which shall inform the budgetary authority. 

Article 162 
Global provisional commitments of EAGF appropriations 

1. The Commission shall reimburse the expenditure incurred by the Member States. 

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2.  The  Commission  decisions  fixing  the  amounts  of  these  payments  shall  constitute  global 
provisional  commitments,  which  may  not  exceed  the  total  appropriations  entered  for  the 
EAGF. 

3. As from 15 November, routine management expenditure for the EAGF may be committed 
in  advance  against  the  appropriations  provided  for  the  following  financial  year.  Such 
commitments  may  not,  however,  exceed  three  quarters  of  the  total  corresponding 
appropriations for the current financial year. They may apply only to expenditure for which 
the principle is laid down in an existing basic act. 

Article 163 
Schedule and timing of budgetary commitments of EAGF funds 

1.  Expenditure  effected  by  the  authorities  and  bodies  referred  to  in  the  rules  relating  to  the 
EAGF shall, within two months following receipt of the statements sent in by Member States, 
be the subject of a commitment by chapter, article and item. Such commitment may be made 
after  the  elapse  of  that  two-month  period  whenever  a  procedure  for  a  transfer  of 
appropriations concerning the relevant budget lines is necessary. Save where payment has not 
yet  been  made  by  the  Member  States  or  where  eligibility  is  in  doubt,  the  amounts  shall  be 
charged as payments within the same two-month period. 

This  budgetary  commitment  shall  be  deducted  from  the  global  provisional  commitment 
referred to in Article 162. 

2.  Global  provisional  commitments  which  have  been  made  for  a  financial  year  and  which 
have not given rise to commitment on specific lines in the budget nomenclature by 1 February 
of the following financial year shall be cancelled in respect of the original financial year. 

3. Paragraphs 1 and 2 shall apply subject to the clearance of accounts. 

Article 164 
Accounting of EAGF funds 

In budgetary accounting, expenditure shall be booked to the accounts for a financial year on 
the basis of the repayments made by the Commission to the Member States by 31 December 
of  the  year  concerned  at  the  latest,  provided  that  the  payment  order  has  reached  the 
accounting officer by 31 January of the following financial year at the latest. 

Article 165 
Transfer of EAGF appropriations 

1. Where the Commission may transfer appropriations pursuant to Article 23(1), it shall take 
its  decision  by  31  January  of  the  following  financial  year  at  the  latest  and  shall  inform  the 
budgetary authority as provided for in Article 23(1). 

2. In cases other than those referred to in paragraph 1, the Commission shall submit transfer 
proposals to the budgetary authority by 10 January of the following financial year at the latest. 

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The  budgetary  authority  shall  take  decisions  on  such  transfers  in  accordance  with  the 
procedure provided for in Article 24, but within a time limit of three weeks. 

Article 166 
Assigned revenue of EAGF funds 

1. Assigned revenue under this Title shall be assigned according to origin in accordance with 
Article 18(4). 

2. The result of decisions on clearance of accounts, as referred to in Article 30 of Regulation 
(EC) No 1290/2005 shall be entered in a single Article. 

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TITLE II 
STRUCTURAL FUNDS, COHESION FUND, 
EUROPEAN FISHERIES FUND, EUROPEAN 
AGRICULTURAL FUND FOR RURAL 
DEVELOPMENT AND FUNDS IN THE AREA OF 
FREEDOM, SECURITY AND JUSTICE MANAGED IN 
SHARED MANAGEMENT 

Article 167 
Scope of special provisions on other Union funds 

the  Council23  on 

1.  Parts One  and  Three  of  this  Regulation  shall  apply  to  expenditure  effected  by  the 
authorities  and  bodies  referred  to  in  the  Regulation  (EC)  No 1290/2005  on  European 
Agricultural  Fund  for  Rural  Development,  Regulation (EC)  No 1080/2006  of  the  European 
Parliament  and  of 
the  European  Regional  Development  Fund, 
Regulation (EC)  No 1081/2006  of  the  European  Parliament  and  of  the  Council  24  on  the 
European  Social  Fund,  Council  Regulation (EC)  No 1084/2006  25  on  the  Cohesion  Fund, 
Council  Regulation (EC)  No 1198/200626  on  the  European  Fisheries  Fund,  and  funds  in  the 
area of Freedom, Security and Justice managed in shared management pursuant to Article 56 
of this Regulation, (hereinafter the 'Funds’), and to their revenue, save as otherwise provided 
in this Title. 

2. Operations managed directly by the Commission shall also be implemented in accordance 
with the rules laid down in parts one and three of this Regulation. 

Article 168 
Respect of the allocations of commitment appropriations 

The European Parliament and the Council undertake to respect the allocations of commitment 
appropriations  provided  for  in  the  relevant  basic  acts  for  structural  operations,  rural 
development and the European Fisheries Fund. 

Article 169 
Payments of contributions, interim payments and repayments regarding other Union funds 

1.  Payment  by  the  Commission  of  financial  contributions  from  the  Funds  shall  be  made  in 
accordance with the regulations referred to in Article 167. 

23 
24 
25 
26 

OJ L 210, 31.7.2006, p. 1. 
OJ L 210, 31.7.2006, p. 12. 
OJ L 210, 31.7.2006, p. 79. 
OJ L 223, 15.8.2006, p. 1. 

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2. The time limit for interim payments by the Commission shall be laid down in accordance 
with the regulations referred to in Article 167. 

3. The treatment of repayments by the Member States and the implications for the amount of 
contributions from the Funds shall be governed by the regulations referred to in Article 167. 

4.  By  way  of  derogation  from  article  10,  commitment  appropriations  available  on  31 
December  arising  from  repayments  of  payments  on  account  may  be  carried  over  until  the 
closure  of  the  programme  and  used  when  necessary  under  the  condition  that  other 
commitment appropriations are not longer available. 

Article 170 
Decommitment of appropriation of other Union funds 

The  Commission  shall  automatically  decommit  appropriations  that  have  been  committed  as 
provided for in the regulations referred to in Article 167. 

The decommitted appropriations may be made available again in the event of a manifest error 
attributable solely to the Commission. 

To  this  end,  the  Commission  shall  examine  decommitments  made  during  the  previous 
financial  year  and  decide,  by  15  February  of  the  current  year,  on  the  basis  of  requirements, 
whether it is necessary to make the corresponding appropriations available again. 

Article 171 
Transfer of appropriation between other Union funds 

With  regard  to  the  operational  expenditure  referred  to  in  this  Title,  the  Commission  may, 
except in the case of the European Agricultural Fund for Rural Development, make transfers 
from  one  title  to  another,  provided  that  the  appropriations  concerned  are  for  the  same 
objective  within  the  meaning  of  the  Regulations  governing  the  Funds  referred  to  in  Article 
167, or are Technical Assistance expenditure. 

Article 172 
Management, selection and audit of other Union funds 

Aspects concerning the management and selection of projects and audit shall be governed by 
the regulations referred to in Article 167. 

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TITLE III 
RESEARCH 

Article 173 
Research funds 

1.  Parts  one  and  three  shall  apply  to  the  research  and  technological  development 
appropriations, save as otherwise provided in this Title. 

These appropriations shall be entered either in one of the titles of the budget relating to the 
policy area research by direct or indirect action or in a chapter relating to research activities in 
another title. 

They  shall  be  used  by  implementation  of  the  actions  listed  in  the  delegated  Regulation 
referred to in Article 199. 

2.  The  appropriations  relating  to  the  revenue  generated  by  the  Research  Fund  for  Coal  and 
Steel established by the Protocol annexed to the TFEU on the financial consequences of the 
expiry of the ECSC Treaty and on the Research Fund for Coal and Steel shall be treated as 
assigned revenue within the meaning of Article 18. The commitment appropriations generated 
by this revenue shall be made available as soon as the amount receivable has been estimated 
and the payment appropriations as soon as the revenue has been received. 

3.  With  regard  to  the  operational  expenditure  referred  to  in  this  Title,  the  Commission  may 
make  transfers  from  one  title  to  another,  provided  that  the  appropriations  are  used  for  the 
same purpose. 

4.  Experts  paid  from  the  research  and  technological  development  appropriations  shall  be 
recruited  in  accordance  with  the  procedures  laid  down  by  the  Council  when  it  adopts  each 
research framework programme. 

Article 174 
Commitments of Research Fund 

1.  The  commitment  appropriations  corresponding  to  the  amount  of  the  commitment 
decommitted  as  a  result  of  total  or  partial  non-implementation  of  the  projects  relating  to 
research for which they were earmarked may, exceptionally and in duly substantiated cases, 
be made available again where it is essential to carry out the programme originally planned, 
unless the budget for the current financial year contains funds for this purpose. 

2. For the purposes of paragraph 1, the Commission shall, at the beginning of each financial 
year, examine decommitments made during the previous financial year and assess, in the light 
of the requirements, the need for making the appropriations available again. 

On  the  basis  of  this  assessment,  the  Commission  may  submit  appropriate  proposals  to  the 
budgetary authority, by 15 February of each financial year, stating for each budget item the 
reasons for making these appropriations available again. 

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3.  The  budgetary  authority  shall  decide  on  the  Commission's  proposals  within  six  weeks. 
Where  no  decision  is  taken  within  this  time  limit,  the  proposals  shall  be  deemed  to  be 
approved. 

The amount of commitment appropriations to be made available again in year n shall in no 
case exceed 25 % of the total amount decommitted on the same budget line in year n-1. 

4. Commitment appropriations made available again shall not be carried over. 

Legal  commitments  relating  to  the  commitment  appropriations  which  have  been  made 
available again shall be concluded by 31 December of year n. 

At  the  end  of  year  n,  the  unused  balance  of  the  commitment  appropriations  made  available 
again shall be definitively decommitted by the authorising officer responsible. 

Article 175 
Participation of the Joint Research Centre in non Research fund actions 

1.  The  Joint  Research  Centre  (JRC)  may  receive  funding  charged  to  appropriations  entered 
outside the titles and the chapters referred to in Article 173(1) in respect of its participation to 
procurement  and  grant  procedures  following  Titles  V  and  VI  of  Part  One,  and  financed  in 
whole or in part from the budget. 

For the purposes of the participation in the procurement and grant procedures, the JRC shall 
be considered as a legal entity established in a Member State. 

2. Shall be treated as assigned revenue within the meaning of Article 18(2) the appropriations 
relating to: 

(a) 

grant and procurement procedures in which the JRC participates or; 

(b) 

activities of the JRC on behalf of third parties or; 

(c) 

activities undertaken under an administrative agreement with other institutions 
or  other  Commission's  departments  for  the  provision  of  technical-scientific 
services. 

The commitment appropriations generated by revenue referred to in points (a) and (c) shall be 
made available as soon as the amount receivable has been estimated. 

For  activities  referred  to  in  point  (c),  appropriations  not  used  within  five  years  shall  be 
cancelled. 

The use of these appropriations shall be shown in a set of analytical accounts in the budgetary 
outturn  account  for  each  category  of  action  to  which  it  relates;  it  shall  be  separate  from 
revenue originating from financing by third parties (public or private) and from revenue from 
other services carried out by the Commission for third parties. 

3. When participating in grants or tender procedures in accordance with paragraph 1 of this 
Article, the JRC shall not be subject to the conditions laid in Article 100, points (b) and (c) of 
Article  101,  Articles  102,  103,  122(3)  and  122(4)  regarding  provisions  on  exclusion  and 
sanctions in relation to procurements and grants.  

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The JRC shall also be presumed to meet the requirements on economic and financial capacity.  

The JRC shall be exempted from lodging guarantees as provided for in Articles 109 and 125. 

4. The rules on procurement in Title V of Part One shall not apply to the activities of the JRC 
on behalf of third parties. 

5. By way of derogation from Article 23, the Commission may, within the title of the budget 
relating to the policy area ‘Direct action research’, make transfers between chapters of up to 
15 % of the appropriation in the line from which the transfer is made. 

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TITLE IV 
EXTERNAL ACTIONS 

CHAPTER I 
General provisions 

Article 176 
External actions 

1.  Parts  One  and  Three  shall  apply  to  external  actions  financed  from  the  budget,  save  as 
otherwise provided in this Title. 

2.  The  appropriations  for  the  actions  referred  to  in  paragraph  1  shall  be  used  by  the 
Commission: 

(a) 

either within the framework of aid granted on an autonomous basis; 

(b)  or in partnership with a third country referred to in point (i) of Article 55(1)(b), 

through the signature of a financing agreement; 

CHAPTER 2 
Implementation of actions 

Article 177 
Implementation of External Actions 

The actions referred to in this Title may be implemented directly by the Commission pursuant 
to point (a) of Article 55(1), or indirectly by any of the entities or persons listed in point (b) of 
Article 55(1), in accordance with the relevant provisions of Articles 55 to 60. Appropriations 
for  external  actions  may  be  combined  with  funds  from  other  sources  to  achieve  a  joint 
objective. 

Article 178 
Trust funds for external actions 

For emergency, post-emergency or thematic actions, the Commission may create trust funds 
following an agreement concluded with other donors. The constitutive act of each trust fund 
shall define the objectives of the trust fund. 

The contributions of the Union and the donors shall be entered into a specific bank account. 
These  contributions  are  not  integrated  in  the  budget  and  are  managed  by  the  Commission 
under  the  responsibility  of  the  authorising  officer  by  delegation.  The  entities  and  persons 
referred to in point (b) of Article 55(1) may be entrusted with budget implementation tasks in 
accordance with the relevant rules for indirect management. 

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The  accounting  officer  of  the  trust  fund  is  the  accounting  officer  of  the  Commission.  He  is 
responsible for laying down the accounting procedures and chart of accounts. 

The Commission’s internal auditor and the Court of auditors shall exercise the same powers 
over the trust fund as they do in respect of other actions carried out by the Commission.  

The specific bank account shall be opened and closed by the accounting officer. 

The Commission shall ensure a strict separation of duties between accountant and authorising 
officers. 

A  board  chaired  by  the  Commission  is  established  for  each  trust  fund  to  ensure  the 
representation of donors and to decide for the use of the funds. 

The  funds  pooled  into  the  trust  funds  are  managed  in  conformity  with  sound  financial 
management  and  transparency.  Funds  are  committed  and  paid  by  financial  agents  of  the 
Commission. 

The Commission is authorised to withdraw a maximum of 7 % of the amounts pooled into the 
trust fund to cover its management costs. For the duration of the trust fund, these management 
fees are assimilated to assigned revenues within the meaning of point (b) of Article 18(2) of 
the Financial Regulation. 

The accounting officer shall act on the recovery orders relating to actions funded by the trust 
fund.  Revenue  arising  from  the  repayment  of  these  recovery  orders  shall  be  returned  to  the 
specific bank account of the trust fund. Cancellation and waiving of recovery orders shall be 
made under the rules referred to in Article 77 of the Financial Regulation. 

Trust funds are created for a limited duration determined in their constitutive agreement. This 
duration may be extended by a decision of the Commission upon request of the board.  

The  liquidation  of  the  trust  fund  is  decided  by  the  Commission  after  expiration  of  the 
duration.  

The modalities of management, reporting and governance of these trust funds are detailed in 
the Delegated Regulation referred to in Article 199. 

Article 179 
Implementation of external actions through indirect management 

The  implementation  of  actions  implemented  indirectly  is  subject  to  scrutiny  by  the 
Commission  and  by  Union  Delegations  in  accordance  with  the  second  paragraph  of  Article 
53.  Such  scrutiny  shall  be  exercised  either  by  prior  approval,  by  ex  post  checks  or  by  a 
combined procedure. 

Article 180 
Agreements on the implementation of external actions 

1. Actions carried out shall give rise to one or more of the following instruments: 

(a) 

an agreement between the Commission and an entity referred to in Article 177; 

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(b) 

a contract or a grant agreement between the Commission and natural or legal 
persons responsible for carrying out the actions. 

The terms on which the external aid is given shall be laid down in the instrument by which the 
agreements or the contracts or the grants provided for in points (a) and (b) shall be managed. 

2.  Agreements  with  the  entities  referred  to  in  paragraph  1(a)  shall  be  concluded  by  31 
December of year n+1 at the latest, year n being the one in which the budgetary commitment 
was made. 

The agreements shall lay down the period within which the entities referred to in paragraph 1a 
shall conclude all individual contracts and grants which implement the action. Save for multi-
donor  actions,  such  period  shall  not  be  longer  than  three  years  following  the  date  of 
conclusion of the agreement, except: 

(a) 

for individual contracts relating to audit and evaluation ; 

(b)  under exceptional circumstances in the following cases: 

(i) 

riders to contracts already concluded; 

(ii) 

individual contracts to be concluded after early termination of an existing 
contract; 

(iii)  changes of entity charged with the entrusted tasks. 

3. Paragraph 2 shall not apply to the multiannual programmes that are implemented through 
split commitments in the following cases: 

(a) 

the transition assistance and institution building, the cross-border cooperation, 
regional  development,  human  resources  development  and  rural  development 
components of the Pre-Accession Assistance, 

(b) 

the  cross-border  cooperation  component  of  the  European  Neighbourhood  and 
Partnership policy. 

In  these  cases,  the  appropriations  shall  be  automatically  decommited  by  the  Commission  in 
accordance with the sector-specific rules. 

CHAPTER 3 
Procurement 

Article 181 
External action procurement 

1.  The  provisions  of  Chapter  1  of  Title  V  of  Part  One  relating  to  the  general  provisions  on 
procurement  shall  be  applicable  to  contracts  covered  by  this  Title  subject  to  the  special 
provisions  relating  to  thresholds  and  the  arrangements  for  awarding  external  contracts  laid 
down  in  the  delegated  Regulation  referred  to  in  Article  199.  The  contracting  authorities  for 
the purposes of this chapter shall be: 

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(a) 

(b) 

the  Commission  on  behalf  of  and  for  the  account  of  one  or  more  third 
countries; 

entities referred to in Article 177 and entrusted with the corresponding budget 
implementation tasks. 

2. The procurement procedures must be laid down in the agreements provided for in Article 
180. 

3.  The  provisions  of  this  Chapter  shall  not  apply  to  actions  under  sector-specific  basic  acts 
relating  to  crisis  management  aid,  to  civil  protection  operations  and  to  humanitarian  aid 
operations, as referred to in Article 118. 

Article 182 
Rules on participation in tender procedures 

1.  Participation  in  tendering  procedures  shall  be  open  on  equal  terms  to  all  persons  coming 
within the scope of the Treaties and to any other natural or legal person in accordance with the 
specific provisions in the basic instruments governing the cooperation sector concerned. 

2. In cases referred to in Article 51, it may be decided, under exceptional circumstances duly 
motivated by the authorizing officer, to allow third-country nationals other than those referred 
to in paragraph 1 to tender for contracts. 

3. Where an agreement on widening the market for procurement of goods or services to which 
the Union is party applies, the contracts for procurement financed by the budget shall also be 
open to third-country nationals other than those referred to in paragraphs 1 and 2, under the 
conditions laid down in this agreement. 

CHAPTER 4 
Grants 

Article 183 
Full financing of an external action 

An action may be financed in full by the budget only if this proves essential for it to be carried 
out. 

Article 184 
Applicable rules for external action grants 

Grant procedures  to be applied in indirect management  by  the  entities  referred  to  in  Article 
177  shall  be  laid  down  in  the  agreements  concluded  between  the  Commission  and  those 
entities. 

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Article 185 
Income generated by an action 

The responsible authorising officer may deduct the  income  generated  by an action from the 
profit referred to in Article 117(4) where a generation of income was provided for in the grant 
agreement and where it is reinvested to ensure the sustainability of the action. 

CHAPTER 5 
Auditing of accounts 

Article 186 
EU Audit in external action grants 

Each  agreement  between  the  Commission  and  an  entity  referred  to  in  Article  177,  or  grant 
agreement  or  grant  decision  must  expressly  provide  for  the  Commission  and  the  Court  of 
Auditors  to  have  the  power  of  audit,  on  the  basis  of  documents  and  on  the  spot,  over  all 
contractors and subcontractors who have received Union funds. 

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TITLE V 
EUROPEAN OFFICES 

Article 187 
The European Offices 

1. ‘European offices’ for the purposes of this Title are the administrative structures set up by 
one or more institutions to perform specific cross-cutting tasks. 

2.  This  Title  shall  apply  to  the  operation  of  the  European  Anti-fraud  Office,  with  the 
exception of Articles 190, 191 and 192. 

3. Parts One and Three shall apply to the operation of the European offices, save as otherwise 
provided in this Title. 

Article 188 
Appropriations regarding the Offices 

1. The appropriations for each European office, the total amount of which shall be entered in a 
specific budget line within the section of the budget relating to the Commission, shall be set 
out in detail in an Annex to that section. 

The Annex shall take the form of a statement of revenue and expenditure, subdivided in the 
same way as the sections of the budget. 

The  appropriations  entered  in  that  Annex  shall  cover  all  the  financial  requirements  of  each 
European office in the performance of its duties on behalf of the institutions. 

2. Each European office's establishment plan shall be annexed to that of the Commission. 

3.  The  Director  of  each  European  office  shall  take  decisions  on  transfers  within  the  Annex 
provided  for  in  paragraph  1.  The  Commission  shall  inform  the  budgetary  authority  of  such 
transfers. 

4. Each European office's accounts shall form an integral part of the Union's accounts referred 
to in Article 132. 

Article 189 
Authorising Officer of the Inter-institutional Offices 

The  Commission  shall,  in  respect  of  the  appropriations  entered  in  the  Annex  for  each 
European  office,  delegate  the  powers  of  authorising  officer  to  the  Director  of  the  European 
office concerned, in accordance with Article 62. 

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Article 190 
The accounts of the Inter-institutional Offices 

1. Each interinstitutional European office shall draw up analytical accounts of its expenditure, 
enabling  the  proportion  of  its  services  supplied  to  each  of  the  institutions  to  be  determined. 
The Director of the European office concerned shall adopt, after approval by its Management 
Committee, the criteria on which the accounting system shall be based. 

2. The remarks concerning the specific budget line in which is entered the total appropriation 
for  each  interinstitutional  European  office  shall  show  an  estimate  of  the  cost  of  services 
supplied by the office to each of the institutions. This shall be based on the analytical accounts 
provided for in paragraph 1. 

3. Each interinstitutional European office shall notify the institutions concerned of the results 
of the analytical accounts. 

Article 191 
Delegation of powers for Inter-institutional Offices 

1.  Each  institution  may  delegate  authorising  officer  powers  to  the  director  of  an 
interinstitutional European office for the management of appropriations entered in its section 
and shall set the limits and conditions for this delegation of powers. 

2.  The  internal  auditor  of  the  Commission  shall  exercise  all  responsibilities  laid  down  in 
Chapter 8 of Title IV of Part One. 

Article 192 
Services to third parties 

Should the remit of a European office involve supplies to third parties for pecuniary interest, 
its  Director  shall,  after  approval  of  the  Management  Committee,  lay  down  the  specific 
provisions governing how these supplies are to be made and the keeping of the corresponding 
accounts. 

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TITLE VI 
ADMINISTRATIVE APPROPRIATIONS 

Article 193 
General provisions 

Parts one and three shall apply to administrative appropriations, save as otherwise provided in 
this Title. 

Article 194 
Commitments 

1. As from 15 October of each year, routine administrative expenditure may be committed in 
advance  against  the  appropriations  provided  for  the  following  financial  year.  Such 
commitments  may  not,  however,  exceed  one  quarter  of  the  appropriations  decided  by  the 
budgetary authority on the corresponding budget line for the current financial year. They may 
not apply to new expenditure of a kind not yet approved in principle in the last budget duly 
adopted. 

2. Expenditure which must be paid in advance pursuant to legal or contractual provisions, for 
example  rents,  may  give  rise  to  payments  from  1  December  onwards  to  be  charged  to  the 
appropriations for the following financial year. In this case, the limit referred to in paragraph 
1 shall not apply. 

Article 195 
Specific provisions regarding administrative appropriations 

1. Administrative appropriations shall be non-differentiated appropriations. 

2. Administrative expenditure arising from contracts covering periods that extend beyond the 
financial year, either in accordance with local practice or relating to the supply of equipment, 
shall be charged to the budget of the financial year in which it is effected. 

3.  The  institutions  shall  inform  the  budgetary  authority  as  soon  as  possible  of  any  building 
project likely to have significant financial implications for the budget. 

If  either  branch  of  the  budgetary  authority  intends  to  issue  an  opinion,  it  shall  within  two 
weeks after receipt of the information on the building project notify the institution concerned 
of its intention to issue such an opinion. Failing a reply, the institution concerned may proceed 
with  the  planned  operation  under  its  administrative  autonomy,  subject  to  Article  335  of  the 
TFEU and Article 185 of the Euratom Treaty with regard to Union representation. 

That  opinion  shall  be  forwarded  to  the  institution  concerned  within  two  weeks  of  such 
notification. 

The institutions shall request the approval of the budgetary authority for the acquisition of real 
state assets or any other building project, financed through a loan. 

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TITLE VII 
EXPERTS 

Article 196 
Experts 

The delegated Regulation referred to in Article 199 shall include a specific procedure for the 
selection of natural persons as experts, for assisting the institutions in the evaluation of grant 
applications,  projects  and  tenders,  and  for  providing  opinion  and  advice  in  specific  cases. 
These persons shall be paid on the basis of a fixed amount announced in advance and shall be 
chosen on the basis of their professional capacity. The selection shall be done on the basis of 
selection criteria respecting the principles of non-discrimination, equal treatment and absence 
of conflict of interests. 

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PART THREE 
FINAL PROVISIONS 

Article 197 
Transitional provisions 

1. The Funds referred to in Article 167(1) for which the basic acts were repealed before the 
date of application of this Regulation, appropriations which were decommitted in application 
of Article 170 may be made available again in the case of a manifest error attributable solely 
to  the  Commission  or  in  the  case  of  force  majeure  which  has  serious  repercussions  for  the 
implementation of operations supported by those Funds. 

2.  For  transfers  of  appropriations  concerning  operational  expenditure  referred  to  in  the 
(EC)  No 1290/2005,  Regulation (EC)  No 1080/2006,  Regulation (EC) 
Regulation 
No 1081/2006,  Regulation (EC)  No 1084/2006,  Regulation (EC)  No 1198/2006  for  the  2000 
to  2006  programming  period,  for  which  Union  payments  still  have  to  be  made  for  the 
financial settlement of outstanding Union commitments until the closure of the assistance, the 
Commission  may  make  transfers  from  one  title  to  another,  provided  that  the  appropriations 
concerned are for the same objective or relate to Union initiatives or to technical assistance 
and innovative measures and are transferred to measures of the same nature. 

Article 198 
Information requests by the Budgetary Authority 

The European Parliament and the Council shall be empowered to obtain any information or 
explanations regarding budgetary matters within their fields of competence. 

Article 199 
Adoption of the detailed rules for the application of this Regulation 

The  Commission  shall  adopt  a  delegated  Regulation  on  detailed  rules  for  the  application  of 
this Regulation in accordance with Articles 202, 203 and 204. The delegated Regulation shall 
include  rules  on 
the 
appropriations provided in the budget for the Euratom Supply Agency. 

implementation  of  administrative  expenditure  relating 

the 

to 

Article 200 
Framework financial regulation for agencies and bodies set up under the TFEU and the 
Euratom Treaty 

1. The Commission shall adopt a framework financial regulation for bodies which are set up 
under  the  TFEU  and  the  Euratom  Treaty  and  which  have  legal  personality  and  receive 
contributions charged to the budget by means of a delegated act in accordance with Articles 
202, 203 and 204 of this Regulation. 

This framework financial regulation will be based on the principles and rules provided under 
this Regulation. 

EN 

118 

   EN 

The  financial  rules  of  those  bodies  may  not  depart  from  the  framework  financial  regulation 
except where their specific needs so require and with the Commission's prior consent. Such 
exception  may  not  concern  the  budgetary  principles  referred  to  in  Title  II  of  Part  One,  the 
principle of equality of treatment of operators, and specific provisions set out in the basic acts 
establishing such bodies. 

2. Discharge for the implementation of the budgets of the bodies referred to in paragraph 1, 
shall be given by the European Parliament on the recommendation of the Council. 

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

4. Unless otherwise provided in the basic act referred to in paragraph 1, the Court of Auditors 
shall examine the legality and regularity of the revenue and expenditure of this body before its 
accounts are consolidated with the Commission's accounts. This examination shall rely on the 
audit report established by an independent external auditor designated by the body and whose 
mission is to verify the conformity of the body's accounts with Article 134. 

Article 201 
Model Financial Regulation for public-private partnership bodies 

The  bodies  having  legal  personality  set  up  by  a  basic  act  and  entrusted  with  the 
implementation  of a  public-private  partnership pursuant  to point (v) of  Article  55(1)(b)shall 
adopt their financial rules. 

Those rules shall include a set of principles necessary to ensure sound financial management 
of Union funds, and be based on Article 57 and a model financial regulation adopted by the 
Commission by means of a delegated act in accordance with Articles 202, 203 and 204. 

Article 202 
Exercise of the delegation 

1.  The  powers  to  adopt  the  delegated  act  referred  to  in  Articles  199,  200  and  201  shall  be 
conferred on the Commission for an indeterminate period of time. 

2. As soon as it adopts this delegated act, the Commission shall notify it simultaneously to the 
European Parliament and to the Council. 

3.  The  powers  to  adopt  the  delegated  act  are  conferred  on  the  Commission  subject  to  the 
conditions laid down in Articles 203 and 204. 

Article 203 
Revocation of the delegation  

1.  The  delegation  of  power  referred  to  in  Article  199  may  be  revoked  at  any  time  by  the 
European Parliament or by the Council. 

2. The institution which has commenced an internal procedure for deciding whether to revoke 
the  delegation  of  power  shall  inform  the  other  institution  and  the  Commission  within  a 

EN 

119 

   EN 

reasonable  time  before  the  final  decision  is  taken,  indicating  the  delegated  powers  which 
could be subject to revocation and possible reasons for a revocation. 

3. The decision of revocation shall put an end to the delegation of the powers specified in that 
decision. It shall take effect immediately or at a later date specified therein. It shall not affect 
the validity of the delegated acts already in force. It shall be published in the Official Journal 
of the European Union. 

Article 204 
Objections to delegated acts  

1. The European Parliament and the Council may object to the delegated act within a period 
of two months from the date of notification. At the initiative of the European Parliament or 
the Council this period shall be extended by one month. 

2. If, on expiry of that period, neither the European Parliament nor the Council has objected to 
the delegated act it shall be published in the Official Journal of the European Union and shall 
enter into force at the date stated therein. 

The delegated act may be published in the Official Journal of the European Union and enter 
into force before the expiry of that period if the European  Parliament and the  Council have 
both informed the Commission of their intention not to raise objections. 

3. If the European Parliament or the Council objects to a delegated act, it shall not enter into 
force. The institution which objects shall state the reasons for objecting to the delegated act. 

Article 205 
Revision 

This  Regulation  shall  be  revised  whenever  it  proves  necessary  to  do  so,  in  accordance  with 
the procedure laid down by Article 322 of the TFEU and Article 183 of the Euratom Treaty.  

Article 206 
Repeal 

Regulation (EC, Euratom) No 1605/2002 is repealed.  

However, Article 53b of Regulation (EC, Euratom) No 1605/200227 shall continue to apply to 
all commitments made before 31 December 2013 of funds referred to in Article 167. 

References to the repealed Regulation shall be construed as references to this Regulation and 
shall be read in accordance with the correlation table in the Annex. 

27 

OJ L 248, 16.9.2002, p. 1. 

EN 

120 

   EN 

                                                 
Article 207 
Review concerning the EEAS 

The third subparagraph of Article 65(1) and the third paragraph of Article 92 will be reviewed 
in 2013 taking due account of the specificity of the EEAS and in particular that of the Union 
delegations, and, where appropriate, an adequate financial management capacity of the EEAS.  

Article 208 
Entry into force 

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

It shall apply as of 1 January 2012. 

Article 56 shall apply only to commitments made as of 1 January 2014 of funds referred to in 
Article 167. 

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

Done at […], 

For the European Parliament 
The President 

For the Council 
The President 

EN 

121 

   EN 

ANNEX – Correlation table 

Legislative proposal  

Titles  

Council  Regulation  (EC, 
Euratom) No 1605/2002 as 
modified  by  Regulation 
(EU, 
No 
Euratom) 
1081/2010 of the European 
Parliament 
the 
Council 

and 

PART ONE 

PART ONE 

COMMON PROVISIONS 

TITLE I 

Article 1 

Article 2 

TITLE II 

Article 3 

TITLE I 

Article 1 

Article 2 

TITLE II 

Article 3 

SUBJECT MATTER AND SCOPE 

Subject matter 

Scope 

BUDGETARY PRINCIPLES 

Budgetary principles 

CHAPTER 1 

CHAPTER 1 

Principles of unity and of budget accuracy 

Article 4 

Article 5 

Article 4 

Article 5 

Definition of the budget 

Rules governing the principles of unity and budgetary 
accuracy 

Article 5a 

- 

- 

EN 

122 

EN 

 
  
 
CHAPTER 2 

CHAPTER 2 

Principle of annuality 

Article 6 

Article 7 

Article 8 

Article 9 

Article 10 

Article 11 

Article 12 

Article 13 

Article 6 

Article 7 

Article 8 

Article 9 

Article 10 

Article 11 

Article 12 

Article 13 

Definition 

Type of appropriations 

Accounting rules for the revenue and appropriations 

Cancellation and carry over of appropriations 

Carry over rules for assigned revenue 

Decommittment of appropriations 

Commitment of appropriations 

Rules applicable in case of late adoption of the budget 

CHAPTER 3 

CHAPTER 3 

Principle of equilibrium 

Article 14 

Article 15 

Article 14 

Article 15 

Definition and scope 

Balance from financial year 

CHAPTER 4 

CHAPTER 4 

Principle of unit of account 

Article 16 

Article 16 

Use of euro 

CHAPTER 5 

CHAPTER 5 

Principle of universality 

Article 17 

Article 18 

Article 17 

Article 18 

Definition and scope 

Assigned revenue 

EN 

123 

EN 

 
  
Article 19 

Article 20 

Article 19 

Article 20 

Donations 

Rules on deductions and exchange rates adjustments 

CHAPTER 6 

CHAPTER 6 

Principle of specification 

Article 21 

Article 22 

Article 23 

Article 24 

Article 25 

Article 26 

Article 21 

Article 22 

Article 23 

Article 24 

- 

Article 25 

General provisions 

Transfers by institutions other than the Commission 

Internal transfers by the Commission 

Transfers by the Commission submitted to the budgetary 
authority 

- 

Transfer subject to special provisions 

CHAPTER 7 

CHAPTER 7 

Principle of sound financial management 

Article 27 

Article 28 

- 

- 

Article 26 

Article 27 

Article 28 

Article 29 

Principles of economy, efficiency and effectiveness 

Compulsory financial statement 

Internal control of budget implementation 

Tolerable risk of error 

CHAPTER 8 

CHAPTER 8 

Principle of transparency 

Article 29 

Article 30 

Publication of accounts, budgets and reports 

EN 

124 

EN 

 
  
Article 30 

Article 31 

TITLE III 

TITLE III 

Publication of Union funds recipients and other 
information 

ESTABLISHMENT AND STRUCTURE OF THE 
BUDGET 

CHAPTER 1 

CHAPTER I 

Establishment of the budget 

Article 31 

Article 32 

Article 33 

Article 34 

- 

Article 35 

Article 36 

Article 37 

Article 38 

Article 39 

Article 32 

Article 33 

Article 34 

Article 35 

Article 36 

- 

Article 37 

Article 38 

- 

Article 39 

Estimates of revenue and expenditure 

Estimated budget of the bodies referred to in Article 204 

Draft budget 

Letter of amendment to the draft budget 

Approuval of the outcome of the Conciliation Committee 

- 

Adoption of the budget 

Draft amending budgets 

- 

Early transmission of estimates and draft budgets 

CHAPTER 2 

CHAPTER 2 

Structure and presentation of the budget 

Article 40 

Article 41 

Article 40 

Article 41 

Structure of the budget 

Classification of the budget 

EN 

125 

EN 

 
  
Article 42 

Article 43 

Article 44 

Article 45 

Article 46 

Article 47 

- 

- 

- 

Article 42 

Article 43 

Article 44 

Article 45 

Article 46 

Article 47 

CHAPTER 3 

Article 48 

Article 49 

Prohibition of negative revenue 

Provisions 

Negative reserve 

Reserve for emergency aid 

Presentation of the budget 

Rules on the Establishment Plan for staff 

Budgetary discipline 

Compliance of the budget with the multiannual financial 
framework 

Compliance of Union acts with the budget and the 
multiannual financial framework 

TITLE IV 

TITLE IV 

IMPLEMENTATION OF THE BUDGET 

CHAPTER 1 

CHAPTER 1 

General provisions 

Article 48 

Article 50 

Article 49 

Article 50 

Article 51 

Article 51 

Article 52 

Article 53 

Budget implementation according to sound financial 
management 

Basic act and exceptions 

Implementation of the budget by other Institutions 

Delegation of budget implementation powers 

EN 

126 

EN 

 
  
Article 52 

Article 54 

Conflict of interests 

CHAPTER 2  

CHAPTER 2 

Methods of implementation  

Article 53 

Article 53a 

Article 53b 

Article 53c 

Article 53d 

Article 54 

Article 55 

Article 56 

Article 57 

Article 55 

- 

Article 56 

Article 57 

- 

Article 58 

Article 59 

- 

Article 60 

Methods of implementation of the budget 

- 

Shared management with Member States 

Indirect management with entities and persons other than 
Member States 

- 

Ex ante controls and agreements under indirect 
management 

Executive agencies 

- 

Limits to delegation of powers 

CHAPTER 3  

CHAPTER 3 

Financial actors 

Section 1 

Article 58 

Section 2 

Article 59 

EN 

Section 1 

Article 61 

Section 2 

Article 62 

Principle of segregation of duties 

Segregation of duties   

Authorising officer   

The authorising officer 

127 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Article 60 

Article 60a 

Section 3 

Article 61 

Article 62 

Section 4 

Article 63 

Article 63 

Article 64 

Section 3 

Article 65 

Article 66 

Section 4 

Article 67 

Powers and duties of the authorising officer  

Powers and duties of the heads of Union Delegations 

Accounting officer 

Powers and duties of the accounting officer  

Powers which may be delegated by the accounting officer

Imprest administrator 

Imprest accounts 

CHAPTER 4  

CHAPTER 4 

Liability of the financial actors 

Section 1 

Article 64 

Section 1 

Article 68 

Article 65 

Article 69 

Section 2 

Section 2 

Article 66 

Section 3 

Article 70 

Section 3 

General rules  

Suspension and withdrawal of delegations given to 
authorising officers 

Liability of the authorising officer for illegal activity, 
fraud or corruption 

Rules applicable to authorising officers by delegation 
and subdelegation 

Rules applicable to authorising officers 

Rules applicable to accounting officers and imprest 
administrators 

EN 

128 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Article 67 

Article 68 

Article 71 

Article 72 

Rules applicable to accounting officers 

Rules applicable to imprest officers   

CHAPTER 5  

CHAPTER 5 

Revenue operations   

Section 1 

Article 69 

Section 2 

Article 70 

Section 3 

Article 71 

Section 4 

Article 72 

Section 5 

Article 73 

Article 73a 

- 

Article 74 

Section 1 

Article 73 

Section 2 

Article 74 

Section 3 

Article 75 

Section 4 

Article 76 

Section 5 

Article 77 

Article 78 

Article 79 

Article 80 

Making available of own resources 

Own resources 

Estimate of amounts receivable 

Estimate of the amount receivable 

Establishment of amounts receivable 

Establishment of amounts receivable  

Authorisation of recovery 

Authorisation of recovery 

Recovery 

Rules on recovery 

Limitation period 

National treatment for Union entitlements 

Fines, penalties and accrued interest imposed by the 
Commission 

EN 

129 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CHAPTER 6 

CHAPTER 6 

Expenditure operations 

Article 75 

Section 1 

Article 76 

Article 77 

Article 78 

Section 2 

Article 79 

Section 3 

Article 80 

Section 4 

Article 81 

Article 82 

Section 5 

Article 83 

Article 81 

Section 1 

Article 82 

Article 83 

Article 84 

Section 3 

Article 85 

Section 3 

Article 86 

Section 4 

Article 87 

Article 88 

Section 5 

Article 89 

The financing decision 

Commitment of expenditure 

Types of commitments 

Rules applicable to commitments 

Verifications applicable to commitments 

Validation of expenditure 

Validation of expenditure 

Authorisation of expenditure 

Authorisation of expenditure  

Payment of expenditure 

Types of payments 

Payment limited to funds available 

Time limits for expenditure operations 

Time limits for expenditure 

CHAPTER 7  

CHAPTER 7 

IT systems 

Article 84 

Article 90 

Electronic management of operations 

EN 

130 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
- 

Article 91 

Transmission of documents between institutions 

CHAPTER 8  

CHAPTER 8 

Internal auditor 

Article 85 

Article 86 

Article 87 

TITLE V 

Article 92 

Article 93 

Article 94 

TITLE V 

Appointment of the internal auditor   

Powers and duties of the internal auditor 

Independence of the internal auditor  

PROCUREMENT 

CHAPTER 1  

CHAPTER 1 

General provisions 

Section 1 

Article 88 

Article 89 

Section 2 

Article 90 

Section 3 

Article 91 

Article 92 

Article 93 

Section 1 

Article 95 

Article 96 

Section 2 

Article 97 

Section 3 

Article 98 

Article 99 

Scope and award principles  

Definition of public contracts  

Principles applicable to public contracts 

Publication 

Publication of public contracts 

Procurement procedures 

Procurement procedures 

Content of tender documents  

Article 100 

Exclusion criteria applicable for participation in tenders

EN 

131 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Article 94 

Article 101 

Exclusion criteria applicable during procurement 
procedure 

Article 95 

Article 96 

Article 97 

Article 98 

Article 99 

Article 100 

Article 101 

Section 4 

Article 102 

Article 103 

Article 102 

Article 103 

Article 104 

Article 105 

Article 106 

Article 107 

Article 108 

Section 4 

Article 109 

Article 110 

CHAPTER 2  

CHAPTER 2 

Article 104 

Article 105 

Article 106 

Article 107 

EN 

Article 111 

Article 112 

Article 113 

Article 114 

Central exclusion database 

Administrative and financial penalties 

Award criteria for contracts   

Submission of tenders 

Principles of equal treatment and transparency 

The award decision 

Cancellation of the procurement procedure   

Guarantees and control 

Guarantees 

Errors, irregularities and fraud in the procedure 

Provisions applicable to contracts awarded by the 
institutions on their own account 

The contracting authority 

Thresholds applicable  

Rules on tender participation  

WTO procurement rules 

132 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TITLE VI 

TITRE VI 

GRANTS 

CHAPTER 1  

CHAPTER 1 

Scope and form of grants 

Article 108 

Article 108a 

Article 115 

Article 116 

Scope of grants 

Forms of grants 

CHAPTER 2  

CHAPTER 2 

Principles 

Article 109 

Article 110 

Article 111 

Article 112 

Article 113 

Article 117 

Article 118 

Article 119 

Article 120 

Article 121 

General principles applicable to grants 

Transparency   

Principle of non-cumulative award 

Retroactive award 

Principle of degressive award 

CHAPTER 3  

CHAPTER 3 

Award procedure 

Article 114 

Article 115 

Article 116 

Article 117 

Article 122 

Article 123 

Article 124 

- 

Applications for grants 

Selection and award criteria 

Evaluation procedure 

- 

CHAPTER 4  

CHAPTER 4 

Payment and control 

Article 118 

Article 125 

Pre-financing guarantee 

EN 

133 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Article 119 

Article 126 

Payment of grants and controls 

CHAPTER 5  

CHAPTER 5 

Implementation 

Article 120 

- 

- 

- 

- 

- 

- 

TITLE VII 

Article 127 

TITLE VII 

Article 128 

Article 129 

Subcontracting and grant redistribution 

PRIZES 

Definition 

General rules   

TITLE VIII 

FINANCIAL INSTRUMENTS 

Article 130 

Article 131 

TITLE IX 

Definition and scope   

Principles applicable to financial instruments 

PRESENTATION OF THE ACCOUNTS AND 
ACCOUNTING 

CHAPTER 1  

CHAPTER 1 

Presentation of the accounts 

Article 121 

Article 122 

Article 123 

Article 124 

Article 125 

EN 

Article 132 

Article 133 

Article 134 

Article 135 

- 

Structure of the Union accounts 

Report on budgetary and financial management 

Rules governing the accounts  

Accounting principles 

- 

134 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Article 126 

Article 127 

Article 128 

Article 129 

Article 136 

Article 137 

Article 138 

Article 139 

Financial statements   

Budgetary implementation reports 

Provisional accounts   

Approval of the final consolidated accounts  

CHAPTER 2  

CHAPTER 2 

Information on the implementation of the budget

Article 130 

Article 131 

Article 140 

Article 141 

Report on the budgetary guarantees and risks 

Budget implementation report 

CHAPTER 3  

CHAPTER 3 

Accounting 

Section 1 

Article 132 

Article 133 

Section 2 

Article 134 

Article 135 

Article 136 

Section 3 

EN 

Section 1 

Article 142 

Article 143 

Section 2 

Article 144 

Article 145 

Article 146 

Section 3 

Common provisions  

The accounting system 

Common provision to the institutions' accounting system

General accounts 

The general accounts 

Entries in the accounts 

Accounting adjustments 

Budgetary accounts   

135 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Article 137 

Article 147 

Budgetary accounting  

CHAPTER 4  

CHAPTER 4 

Property inventories  

Article 138 

TITLE VIII   

Article 148 

TITLE X 

The inventory  

EXTERNAL AUDIT AND DISCHARGE 

CHAPTER 1  

CHAPTER 1 

External audit 

Article 139 

Article 140 

Article 141 

Article 142 

Article 143 

Article 144 

- 

Article 149 

Article 150 

Article 151 

Article 152 

Article 153 

Article 154 

Article 155 

External audit by the Court of Auditors 

Rules and procedure on the audit 

Controls regarding securities and cash 

Court of Auditors' right of access 

Annual report of the Court of Auditors 

Special reports of the Court of Auditors 

Statements of preliminary findings 

CHAPTER 2  

CHAPTER 2 

Discharge 

Article 145 

Article 146 

Article 147 

Article 147a 

EN 

Article 156 

Article 157 

Article 158 

Article 159 

Timetable of the discharge procedure 

The discharge procedure 

Follow-up measures   

Specific provisions regarding the EEAS 

136 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PART TWO   

PART TWO 

SPECIAL PROVISIONS 

TITLE I 

TITLE I 

Article 148 

Article 160 

Article 149 

Article 150 

Article 151 

Article 152 

Article 153 

Article 154 

TITLE II 

Article 155 

- 

Article 156 

Article 161 

Article 162 

Article 163 

Article 164 

Article 165 

Article 166 

TITLE II 

Article 167 

Article 168 

Article 169 

EUROPEAN AGRICULTURAL GUARANTEE 
FUND  

Special provisions on the European Agricultural 
Guarantee Fund 

Commitments of EAGF funds 

Global provisional commitments of EAGF appropriations 

Schedule and timing of budgetary commitments of EAGF 
funds   

Accounting of EAGF funds   

Transfer of EAGF appropriations 

Assigned revenue of EAGF funds 

STRUCTURAL FUNDS, COHESION FUND, 
EUROPEAN FISHERIES FUND, EUROPEAN 
AGRICULTURAL FUND FOR RURAL 
DEVELOPMENT AND FUNDS IN THE AREA OF 
FREEDOM, SECURITY AND JUSTICE MANAGED 
IN SHARED MANAGEMENT 

Scope of special provisions on other Union funds 

Respect of the allocations of commitment appropriations 

Payments of contributions, interim payments and 

EN 

137 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
Article 157 

Article 170 

Decommitment of appropriation of other Union funds

repayments regarding other Union funds 

Article 158 

Article 171 

Transfer of appropriation between other Union funds

Article 159 

TITLE III 

Article 160 

Article 160a 

Article 161 

Article 172 

TITLE III 

Article 173 

Article 174 

Article 175 

Management, selection and audit of other Union funds 

RESEARCH 

Research funds 

Commitments of Research Fund 

Participation of the JRC in non Research fund actions

TITLE IV 

TITLE IV 

EXTERNAL ACTIONS 

CHAPTER I   

CHAPTER 1 

General provisions 

Article 162 

Article 176 

External actions 

CHAPTER 2  

CHAPTER 2 

Implementation of actions   

Article 163 

Article 177 

Implementation of External Actions 

Article 164 (repealed)  

Article 178 

Trust funds for external actions 

Article 165 

Article 179 

Implementation of external actions through indirect 
management 

EN 

138 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Article 166 

Article 180 

Agreements on the implementation of external actions

CHAPTER 3  

CHAPTER 3 

Procurement 

Article 167 

Article 168 

Article 181 

Article 182 

External action procurement   

Rules on participation in tender procedures 

CHAPTER 4  

CHAPTER 4 

Grants 

Article 169 

Article 169a 

- 

Article 183 

Article 184 

Article 185 

Full financing of an external action   

Applicable rules for external action grants 

Income generated by an action 

CHAPTER 5  

CHAPTER 5 

Auditing of accounts  

Article 170 

TITLE V 

Article 171 

Article 172 

Article 173 

Article 174 

Article 174a 

Article 186 

TITLE V 

Article 187 

Article 188 

Article 189 

Article 190 

Article 191 

EU Audit in external action grants 

EUROPEAN OFFICES 

The European Offices  

Appropriations regarding the Offices 

Authorising Officer of the Inter-institutional Offices 

The accounts of the Inter-institutional Offices 

Delegation of powers for Inter-institutional Offices 

EN 

139 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Article 175 

Article 192 

Services to third parties 

Article 176 (repealed) 

- 

- 

TITLE VI 

Article 177 

Article 178 

Article 179 

TITLE VII 

Article 179a 

TITLE VI 

Article 193 

Article 194 

Article 195 

TITLE VII 

Article 196 

ADMINISTRATIVE APPROPRIATIONS 

General provisions 

Commitments 

Specific provisions regarding administrative 
appropriations  

EXPERTS 

Experts 

PART THREE 

PART THREE 

FINAL PROVISIONS 

TITLE I 

Article 180 (repealed) 

- 

- 

- 

- 

Article 181 

TITLE II 

Article 182 

Article 183 

Article 197 

Transitional provisions 

- 

Article 198 

Article 199 

- 

Information requests by the Budgetary Authority 

Adoption of the detailed rules for the application of this 
Regulation 

Article 185 

Article 200 

Framework financial regulation for agencies and bodies 

EN 

140 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
- 

- 

- 

- 

Article 184 

Article 186 

Article 186a 

Article 187 

Article 201 

Article 202 

Article 203 

Article 204 

Article 205 

Article 206 

Article 207 

Article 208 

set up under the TFEU and the Treaty establishing the 
European Atomic Energy Community 

Model Financial Regulation for public-private partnership 
bodies 

Exercise of the delegation 

Revocation of the delegation 

Objections to delegated acts 

Revision 

Repeal 

Review concerning the EEAS 

Entry into force 

EN 

141 

EN