Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Regulation (EU) No 258/2014 establishing a Union Programme to support specific activities in the field of financial reporting and auditing for the period of 2014-20
Date: 2016-04-13
Institutions: Directorate-General for Financial Stability, Financial Services and Capital Markets Union, European Commission
Subjects: EU financing, EU programme, audit, financial services, international standard, single market, standardised accounting system

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   EUROPEAN COMMISSION  Brussels, 13.4.2016  COM(2016) 202 final 2016/0110 (COD)   Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Regulation (EU) No 258/2014 establishing a Union Programme to support specific activities in the field of financial reporting and auditing for the period of 2014-20  (Text with EEA relevance)  
 
EXPLANATORY MEMORANDUM 

CONTEXT OF THE PROPOSAL 

The single internal market is one of the European Union's greatest achievements. Integration 
and  a  perfectly  functioning  internal  market  are  indispensable  in  making  the  Europe  2020 
strategy successful; put the EU economy on a sustainable growth path in order to overcome 
the financial and sovereign debt crisis that unfolded since 2008. 

As capital markets are  global, harmonisation of financial reporting and audit  rules at global 
level is essential for the smooth functioning of the capital markets and also the realisation of 
an  integrated  market  for  financial  services  in  the  EU.  Instead  of  introducing  its  own  set  of 
financial  reporting  standards,  the  EU  decided  in  2002  with  the  adoption  of  the  Regulation 
1606/2002  on  the  application  of  international  accounting  standards  (IAS  Regulation)  to 
implement  internationally  agreed  accounting  standards,  the  so-called  International  Financial 
Reporting  Standards  (IFRS)  developed  by  the  International  Accounting  Standards  Board 
(IASB). 

With more and more countries moving towards and adopting IFRS, the EU has to speak with 
one  voice.  The  European  Financial  Reporting  Advisory  Group  (EFRAG),  the  European 
Commission's  technical  adviser  in  accounting  matters  has  gradually  taken  up  the  role  of 
providing upstream, technical and credible input to the IASB standard setting process. 

Both the international standard setter and the organisation representing Europe's interests need 
to be independent, possess the sufficient capacity and expertise to produce quality standards 
and input to those standards, and have sound financial basis in order to be able to carry out 
their public interest mission on a long-term basis. 

To  these  ends,  in  2009  the  European  Parliament  and  the  Council  established  a  Community 
Programme to support specific activities in the field of financial services, financial reporting 
and auditing1. This programme was extended with the Regulation (EU) No 258/2014 of the 
European  Parliament  and  the  Council  of  3  April  2014  ("Financing  Regulation").  The 
beneficiaries  of  the  extended  programme  are  the  IFRS  Foundation,  EFRAG  and  the  Public 
Interest Oversight Board (PIOB). 

The Financing Regulation prolonged the financing of the IFRS Foundation and PIOB for the 
period  2014-2020.  In  view  of  the  uncertainties  related  to  a  major  governance  reform  the 
organisation was undergoing in 2014, the co-legislators decided to limit its financing period 
until  the  end  of  2016  and  called  on  the  Commission  to  submit  a  legislative  proposal,  if 
appropriate, to continue financing of EFRAG after 31 December 2016. In the meantime, the 
governance  reform  of  EFRAG  was  successfully  implemented  on  31  October  2014. 
Consequently, the purpose of this regulation is to extend the Union co-financing of EFRAG 
for  the  period  2017-2020  under  the  Union  programme  established  by  the  Financing 
Regulation.  

1.1. 

EFRAG 

EFRAG  was  established  in  2001  as  a  private  organisation  to  provide  the  Commission  with 
technical expertise in financial reporting matters. At the beginning, EFRAG provided mainly 
advice to the Commission on whether an international accounting standard to be adopted in 

1 

Decision  No  716/2009/EC  of  the  European  Parliament  and  of  the  Council  of  16  September  2009 
establishing  a  Community  programme  to  support  specific  activities  in  the  field  of  financial  services, 
financial reporting and auditing (OJ L 253, 25.9.2009, p. 8). 

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the Union meets the technical endorsement criteria2. EFRAG has gradually taken on the role 
of pro-actively influencing the IASB in its standard setting work. It provides input by issuing 
comment  letters  on  draft  standards  and  early-stage  contribution  by  publishing  discussion 
papers on current accounting issues.  

Originally,  representation  and  voting  rights  at  EFRAG's  governing  bodies  (such  as  the 
General  Assembly  and  the  Supervisory  Board)  were  tied  to  the  financial  contribution  to 
EFRAG's budget. The body in charge of the core technical work, the TEG (Technical Expert 
Group), has always been independent. 

On  12  November  2013  the  Commission  published  the  report  of  Philippe  Maystadt,  special 
advisor  to  the  Commissioner  responsible  for  internal  market  and  services,  in  which  he 
outlined  potential  reforms  to  EFRAG  governance  aimed  at  reinforcing  the  Union's 
contribution to the development of international accounting standards. The recommendations 
of Philippe Maystadt were broadly supported by the ECOFIN Council of 15 November 2014. 
The  timely  implementation  of  the  reform  was  also  deemed  necessary  by  the  European 
Parliament and the Council to achieve the expected objectives of the co-financing programme 
established by the Financing Regulation of 2014. 
In July 2014, the Commission submitted a report to the European Parliament and the Council3 
on  the  progress  achieved  in  the  implementation  of  the  reform  of  EFRAG,  which  came  to  a 
favourable conclusion regarding the progress made to date. 

The reform involved a fundamental revision of the EFRAG Statutes and the EFRAG Internal 
rules  to  incorporate  a  new  governance  structure,  which  increased  the  legitimacy  and 
representativeness of EFRAG. The revised EFRAG Statutes and EFRAG Internal Rules were 
approved  on  16  June  2014  with  an  effective  date  of  31  October  2014.  On  the  same  day 
EFRAG enlarged its membership4 and the new governance structure became operational as of 
November 2014. 

The reform resulted in establishing a new Board of EFRAG, its new decision-making body, 
with balanced representation of public and private interests. The EFRAG Board takes all its 
decisions  on  a  consensus  basis  after  considering  the  results  of  EFRAG’s  due  process.  The 
Commission,  European  Supervisory  Authorities  and  the  European  Central  Bank  have  been 
contributing  to  the  discussions  of  the  Board  as  observers.  The  President  of  the  Board  is 
nominated  by  the  Commission  after  consulting  the  European  Parliament  and  the  Council. 
Currently, one of the Board Members acts as the President pending the formal appointment. 
The  Commission  ensures  that  the  Accounting  Regulatory  Committee  provides  input  to 
EFRAG or requests specific assessments where it is needed. As a result, EFRAG is now well 
equipped  to  strengthen  the  legitimacy  of  its  positions  and  significantly  contribute  to  the 
objective of Europe speaking with one voice.  

In order to continue to play a key role in ensuring Union's needs and interest are duly taken 
into account in the development phase of new standards as well as to provide the Commission 
with  high  quality  endorsement  advice  on  new  or  amended  standards,  EFRAG  needs  solid, 
long-term, diverse funding to be credible and independent and be able to produce top-quality 
documents by employing top-quality experts. 

2 
3 
4 

EFRAG is the body mentioned in recital (10) of the IAS Regulation  
http://ec.europa.eu/transparency/regdoc/rep/1/2014/EN/1-2014-396-EN-F1-1.Pdf 
Currently EFRAG has sixteen members: European Stakeholder Organisations: BUSINSESSEUROPE, 
EACB,  EBF,  EFAA,  EFFAS,  ESBG,  FEE  and  Insurance  Europe;  National  Organisations:  Denmark, 
France, Germany, Italy, Netherlands, Luxembourg, Sweden and the UK. 

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In line with the Financing Regulation, EFRAG was allocated an amount of EUR 9 303 000 
for the period 2014-2016. The current regulation proposes to allocate to EFRAG an additional 
amount of EUR 13 831 000 for the period 2017-2020. This amount corresponds to the amount 
of financing EFRAG for that period in the Commission proposal of 19 December 2012 for the 
Financing  Regulation  currently  in  place.  In  order  to  ensure  the  operational  continuity  of 
EFRAG  it  is  necessary  to  maintain  the  EU  co-financing  given  that  it  accounts  for 
approximately 60% of EFRAG's budget. 

2. 

LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY 

2.1. 

Legal basis 

The  legal  basis  is  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 114. 

In accordance with the Commission legislative policy adopted in the framework of the Multi-
Annual Financial Framework, the present funding programme is proposed as a Regulation. 

2.2. 

Subsidiarity principle 

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

2.3. 

Proportionality principle 

The proposal complies with the proportionality principle as set out in Article 5 of the Treaty 
on the European Union. As assessed in the ex-ante evaluation accompanying the Commission 
proposal  of  19  December  2012  for  the  Financing  Regulation  currently  in  place,  this 
Regulation  does  not  go  beyond  what  is  necessary  in  order  to  achieve  its  objectives.  Union 
funding is proposed for a well-defined and limited number of the most important bodies in the 
field  of  financial  services.  Within  the  current  institutional  framework,  the  new  funding 
arrangements  will  ensure  stable,  diversified,  sound  and  adequate  funding  to  enable  the 
relevant  bodies  to  carry  out  their  Union-related  or  Union  public  interest  mission  in  an 
independent  and  efficient  manner.  Financial  support  will  be  granted  according  to  the 
conditions laid down in Regulation (EU, Euratom) No 966/2012 of the European Parliament 
and of the Council of 25 October 2012 on the financial rules applicable to the general budget 
of the Union and Commission Delegated Regulation (EU) No 1268/2012 of 29 October 2012 
on the rules of application of Regulation (EU, Euratom) No 966/2012. 

3. 

RESULTS 
CONSULTATIONS AND IMPACT ASSESSMENTS 

EX-POST 

EVALUATIONS, 

OF 

STAKEHOLDER 

In the ex-ante evaluation5 accompanying the Commission's proposal of 19 December 2012 for 
the Financing Regulation that is currently in place, different possible alternatives of funding 
EFRAG were assessed. The objectives of the programme established by the Regulation were 
to ensure stable, diversified, sound and adequate funding and to enable EFRAG to accomplish 
its  mission  in  an  independent  and  efficient  manner.  It  has  been  concluded  that  Union  co-
financing is the most efficient option. This assessment is still valid following the governance 
reform of EFRAG implemented in 2014. 

5 

SWD(2012) 444 final 

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In the ex-ante evaluation it was concluded that the programme with respect to EFRAG has so 
far  met  the  objectives  set  and  that  financing  should  be  continued.  As  explained  above,  the 
governance  reform  of  EFRAG  was  successfully  implemented  in  2014  following  the 
recommendations  laid  down  in  the  report  of  Philippe  Maystadt.  The  Commission  favorably 
assessed  the  activities  of  EFRAG  following  the  reform  in  its  report  to  the  European 
Parliament and the Council of 17 September 2015.6 In the report, the Commission confirmed 
that EFRAG took account in its endorsement assessments of whether IFRS were meeting all 
technical  criteria  of  the  IAS  Regulation.  Following  its  governance  reform,  EFRAG  has 
strengthened  its  scope  of  assessment  of  whether  new  or  proposed  financial  reporting 
requirements  are  conducive  to  the  public  good.  The  Commission  also  welcomed  EFRAG's 
willingness  to  further  develop  its  capacities  with  respect  to  the  analysis  of  the  effects  of 
standards  including  macro-economic  effects  such  as  any  detrimental  effects  on  financial 
stability or economic development in the EU. 

Therefore, it is appropriate to propose to continue financing of EFRAG for the period 2017-
2020 in  order  to  meet the long-term objectives of the Union programme to  support  specific 
activities in the field of financial reporting and auditing. For more details please refer to the 
Commission  services'  ex  ante  evaluation  accompanying  the  Commission's  proposal  of  19 
December 2012 for the Financing Regulation that is currently in place (COM(2012)782final). 

4. 

BUDGETARY IMPLICATIONS 

The proposed regulation prolongation of the financing of EFRAG  for the period  2017-2020 
will  increase  the  total  budget  of  the  programme  to  support  specific  activities  in  the  field  of 
financial reporting and auditing from EUR 43.176 million to approx. EUR 57 million. 

This  will  result  in  additional  amount  to  be  borne  by  the  Union's  budget  of  EUR  13.831 
million. 

6 

Report  on  the  activities  of  the  IFRS  Foundation,  EFRAG  and  PIOB  in  2014  –  COM  (2015)  461  
http://ec.europa.eu/finance/company-reporting/docs/reports/20150917-com-2015-461-final_en.pdf 

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2016/0110 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

amending Regulation (EU) No 258/2014 establishing a Union Programme to support 
specific activities in the field of financial reporting and auditing for the period of 2014-
20  

(Text with EEA relevance) 

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 114 thereof, 

Having regard to the proposal from the European Commission, 

After transmission of the draft legislative act to the national parliaments, 
Having regard to the opinion of the European Economic and Social Committee7,  

Acting in accordance with the ordinary legislative procedure, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

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8 

On the basis of Regulation (EU) No 258/2014 of the European Parliament and of the 
Council8,  the  International  Financial  Reporting  Standards  Foundation  (the  IFRS 
Foundation),  which  is  the  legal  successor  to  the  International  Accounting  Standards 
Committee  Foundation  (IASCF),  and  the  Public  Interest  Oversight  Board  (PIOB) 
benefit  from  Union  co-financing  in  the  form  of  operating  grants  until  31  December 
2020. 

The  European  Financial  Reporting  Advisory  Group  (EFRAG),  on  the  basis  of 
Regulation  (EU)  No  258/2014,  benefits  from  Union  co-financing  in  the  form  of 
operating grants until 31 December 2016. 

On  12  November  2013,  the  Commission  published  the  report  of  Philippe  Maystadt, 
special advisor to the Commissioner responsible for internal market and services (the 
‘special  advisor’s  report’),  in  which  he  outlined  potential  reforms  to  EFRAG 
governance  aimed  at  reinforcing  the  Union’s  contribution  to  the  development  of 
international accounting standards. 

The  Commission  closely  monitored  the  implementation  of  the  reform  of  EFRAG 
governance  and  informed  duly  the  European  Parliament  and  the  Council  of  the 
progress  in  its  implementation.  The  Commission  found  that  EFRAG  successfully 
implemented  the conclusions  of  the  special advisor’s  report,  by  implementing  a  new 
governance  structure,  which  has  increased  the  legitimacy  and  representativeness  of 

OJ C , , p. . 
Regulation  (EU)  No  258/2014  of  the  European  Parliament  and  of  the  Council  of  3  April  2014 
establishing  a  Union  Programme  to  support  specific  activities  in  the  field  of  financial  reporting  and 
auditing for the period of 2014-20 and repealing Decision No 716/2009/EC (OJ L 105, 8.4.2014, p. 1). 

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(5) 

(6) 

EFRAG.  Therefore  it  is  appropriate  to  continue  financing  of  EFRAG  for  the  period 
2017-2020  in  order  to  meet  the  long-term  objectives  of  the  Union  programme  to 
support specific activities in the field of financial reporting and auditing. 

Regulation (EU) No 258/2014 should therefore be amended accordingly. 

Since  the  objective  of  this  Regulation,  namely  increasing  the  budget  of  a  Union 
programme for the period 2017 to 2020 in order to support the activities of EFRAG, 
which contribute to the achievement of the policy objectives of the Union in relation to 
financial  reporting,  cannot  be  sufficiently  achieved  by  the  Member  States  but  can 
rather, by reason of its scale and effects, be better achieved at Union level, the Union 
may  adopt  measures,  in  accordance  with  the  principle  of  subsidiarity  as  set  out  in 
Article  5  of  the  Treaty  on  European  Union.  In  accordance  with  the  principle  of 
proportionality, as set out in that Article, this Regulation does not go beyond what is 
necessary in order to achieve that objective. 

HAVE ADOPTED THIS REGULATION: 

Regulation (EU) No 258/2014 is amended as follows: 

Article 1  

(1) in Article 3(1)(a), point (i) is replaced by the following: 

"(i) EFRAG;"; 

(2) Article 6 is amended as follows: 

(a) paragraph 1 is replaced by the following: 

"1.  The  financial  envelope  for  the  implementation  of  the  Programme  for  the  period 
2014 to 2020 shall be EUR 57 007 000 in current prices."; 

(b) in paragraph 3, point (a) is replaced by the following: 

"(a) for EFRAG:  EUR 23 134 000;". 

Article 2  

– Entry into force 

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

It shall apply from 1 January 2017.  

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

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Done at Brussels, 

For the European Parliament 
The President 

For the Council 
The President 

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LEGISLATIVE FINANCIAL STATEMENT 

1. 

FRAMEWORK OF THE PROPOSAL/INITIATIVE  

1.1.  Title of the proposal/initiative  

1.2.  Policy area(s) concerned in the ABM/ABB structure 

1.3.  Nature of the proposal/initiative  

1.4.  Objective(s)  

1.5.  Grounds for the proposal/initiative  

1.6.  Duration and financial impact  

1.7.  Management mode(s) planned  

2. 

MANAGEMENT MEASURES  

2.1.  Monitoring and reporting rules  

2.2.  Management and control system  

2.3.  Measures to prevent fraud and irregularities  

3. 

ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE  

3.1.  Heading(s)  of  the  multiannual  financial  framework  and  expenditure  budget 
line(s) affected  

3.2.  Estimated impact on expenditure  

3.2.1. Summary of estimated impact on expenditure  

3.2.2. Estimated impact on operational appropriations  

3.2.3. Estimated impact on appropriations of an administrative nature 

3.2.4. Compatibility with the current multiannual financial framework 

3.2.5. Third-party contributions  

3.3.  Estimated impact on revenue

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LEGISLATIVE FINANCIAL STATEMENT 

1. 

FRAMEWORK OF THE PROPOSAL/INITIATIVE  

1.1. 

Title of the proposal/initiative  

Proposal for a Regulation of the European Parliament and of the Council amending 
Regulation  (EU)  No  258/2014  of  the  European  Parliament  and  of  the  Council  of  3 
April 2014 establishing a Union Programme to support specific activities in the field 
of financial reporting and auditing for the period of 2014-20 and repealing Decision 
No 716/2009/EC.  
Policy area(s) concerned in the ABM/ABB structure9  

1.2. 

Policy Area: Financial stability, financial services and Capital Markets Union 

1.3. 

Nature of the proposal/initiative  

 The proposal/initiative relates to a new action  

  The  proposal/initiative 
project/preparatory action10  

relates 

to  a  new  action 

following  a  pilot 

 The proposal/initiative relates to the extension of an existing action  

 The proposal/initiative relates to an action redirected towards a new action  

1.4. 

Objective(s) 

1.4.1.  The  Commission's  multiannual 

strategic  objective(s) 

targeted  by 

the 

proposal/initiative  

The  Programme  also  contributes  to  the  Europe  2020  strategy,  by  reinforcing  the 
single  market  of  financial  services  and  capital,  as  well  as  to  the  strategy’s  external 
dimension.  It  is  expected  to  contribute  to  the  objectives  of  ensuring  comparability 
and  transparency  of  company  accounts  throughout  the  Union  and  of  making  the 
needs  of  the  Union  heard  in  the  context  of  the  global  harmonisation  of  financial 
reporting standards.  

1.4.2. 

Specific objective(s) and ABM/ABB activity(ies) concerned  

Specific  objective:  To  improve  the  conditions  for  the  functioning  of  the  internal 
market  by  supporting  transparent  and  independent  development  of  international 
financial reporting standards 

ABM/ABB activity(ies) concerned 

12 Financial services and capital markets 

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10 

ABM: activity-based management; ABB: activity-based budgeting. 
As referred to in Article 54(2)(a) or (b) of the Financial Regulation. 

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1.4.3.  Expected result(s) and impact 

Specify the effects which the proposal/initiative should have on the beneficiaries/groups targeted. 

Increase the financial independence of EFRAG  

Equip EFRAG with the necessary resources to carry out its European public interest 
mission 

1.4.4. 

Indicators of results and impact  

Specify the indicators for monitoring implementation of the proposal/initiative. 

The extent to which the EU could influence the development of IFRS  

1.5. 

Grounds for the proposal/initiative  

1.5.1.  Requirement(s) to be met in the short or long term  

Raising the independence (also the perceived independence) of EFRAG and enable it 
to carry out its public interest mission in a satisfactory manner 

1.5.2.  Added value of EU involvement 

The  main  goal  of  the  Programme  is  to  improve  the  conditions  for  the  efficient 
functioning  of  the  internal  market  by  supporting  the  transparent  and  independent 
development of international financial reporting. In this respect, the programme aims 
at ensuring comparability and transparency of company accounts throughout the EU 
and globally.  

Furthermore,  a  significant,  credible  and  independent  technical  upstream  European 
input  is  essential  at  the  development  of  those  standards.  EFRAG  is  responsible  for 
those activities. 

1.5.3.  Lessons learned from similar experiences in the past 

The current financing has been successful so far in meeting the expectations 

1.5.4.  Compatibility and possible synergy with other appropriate instruments 

Not applicable  

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1.6. 

Duration and financial impact  

 Proposal/initiative of limited duration  

–   Proposal/initiative in effect from 01/01/2017 to 31/12/2020  

–   Financial impact from 2017 to 2020  

 Proposal/initiative of unlimited duration 

–  Implementation with a start-up period from YYYY to YYYY, 

–  followed by full-scale operation. 
1.7.  Management mode(s) planned11  

 Direct management by the Commission 

–   by its departments, including by its staff in the Union delegations;  

–    by the executive agencies  

 Shared management with the Member States  

 Indirect management by entrusting budget implementation tasks to: 

–   third countries or the bodies they have designated; 

–   international organisations and their agencies (to be specified); 

–  the EIB and the European Investment Fund; 

–   bodies referred to in Articles 208 and 209 of the Financial Regulation; 

–   public law bodies; 

–   bodies governed by private law with a public service mission to the extent that 

they provide adequate financial guarantees; 

–   bodies governed by the private law of a Member State that are entrusted with 
the  implementation  of  a  public-private  partnership  and  that  provide  adequate 
financial guarantees; 

–    persons  entrusted  with  the  implementation  of  specific  actions  in  the  CFSP 

pursuant to Title V of the TEU, and identified in the relevant basic act. 

– 

If more than one management mode is indicated, please provide details in the ‘Comments’ section. 

11 

Details  of  management  modes  and  references  to  the  Financial  Regulation  may  be  found  on  the 
BudgWeb site: http://www.cc.cec/budg/man/budgmanag/budgmanag_en.html 

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2. 

MANAGEMENT MEASURES  

2.1.  Monitoring and reporting rules  

Specify frequency and conditions. 

EFRAG: Progress and final reports as required by the grant agreement, annual report 
on activities of EFRAG as required by the Financing Regulation, participation of the 
Commission services in EFRAG Board meetings. 

2.2.  Management and control system  

2.2.1.  Risk(s) identified  

There is a risk of not achieving the operational objectives (if beneficiary's output of 
the  general  activities/specific  actions'  quality  are  not  in  accordance  with  the  initial 
objectives as described in the annual proposal). 

There  is  a  risk  of  threat  to  the  EU  financial  interests/reputation  if  Commission's 
services fail to identify ineligible expenditure. 

2.2.2. 

Information concerning the internal control system set up 

–  Beneficiaries  are  requested  to  submit  an  annual  report,  in  accordance  with  the 
individual  objectives  of  each  programme  and  in  line  with  the  guidelines  of 
Regulation (EU, Euratom)  No 966/2012  of 25  October 2012, on the financial  rules 
applicable to the general budget of the European Union. 

– The operational unit responsible within DG FISMA have regular contacts with the 
beneficiaries and participate in all committees of EFRAG. 

Risk of threat to the EU Financial interests: 

– Controls of grant commitments and payments in DG FISMA follow the reinforced 
financial  circuit  and  comprise  desk  checks  of  relevant  supporting  documents, 
including  interim  and  final  reports,  audited  accounts  and  specific  documents 
requested  by  the  DG.  These  controls  are  documented  in  checklists  that  are 
systematically filled in by all actors involved in the respective financial transactions 
(OIA,OVA,OVA2,FIA,  FVA,  FVA2,  AO),  including  controls  carried  out  by  the 
DG's  financial  unit  on  financial  and  legal  matters  in  order  to  deliver  the  "Bon  à 
Payer" 

–  The  DG's  financial  unit  systematically  carries  out  on-the-spot  controls  on  each 
beneficiary with substantive testing of a sample of transactions with an aim to assess 
the  beneficiary's  financial  and  internal  control  system  and  to  provide  the  AO  with 
additional assurance on the sufficient protection of the EU financial interests. 

2.2.3.  Estimate of the costs and benefits of the controls and assessment of the expected level 

of risk of error  

The maximum error rate would remain below 2%. 

The cost of the controls would be around 0.5 FTE or 66 000€ per year. 

The maximum benefit of the controls would be 100% of the annual granted amount 
spent adequately and following the sound financial management principle. 

2.3.  Measures to prevent fraud and irregularities  

Specify existing or envisaged prevention and protection measures. 

EN 

13 

   EN 

Reinforced  financial  circuits  with  both  an  ex-ante  operational  and  financial 
verification  

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

On-the-spot regular audits to verify budgetary systems and controls 

EN 

14 

   EN 

3. 

3.1. 

ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE  

Heading(s)  of  the  multiannual  financial  framework  and  expenditure  budget 
line(s) affected  

  Existing budget lines  

In order of multiannual financial framework headings and budget lines. 

Budget line 

Heading of 
multiannual 
financial 
framework 

Number  
Description 

12 02 03 

Type of  
expenditure 

Diff./Non-
diff.12 

Contribution  

from 
EFTA 
countries
13 

from 
candidate 
countries14 

from third 
countries 

within the 
meaning of 
Article 21(2)(b) of 
the Financial 
Regulation  

1 

in 
Standards 
reporting and auditing15 

the  fields  of  financial 

Diff. 

 /NO 

NO 

NO 

NO 

  New budget lines requested: N/A 

12 
13 
14 
15 

Diff. = Differentiated appropriations / Non-diff. = Non-differentiated appropriations. 
EFTA: European Free Trade Association.  
Candidate countries and, where applicable, potential candidate countries from the Western Balkans. 
The budget line is indicative and could be changed following the annual procedure' 

EN 

15 

   EN 

 
 
                                                 
3.2. 

Estimated impact on expenditure  

3.2.1. 

Summary of estimated impact on expenditure  

Heading of multiannual financial  
framework  

1 

Smart and Inclusive Growth 

EUR million (to three decimal places) 

DG  FISMA 

2017 

2018 

2019 

2020 

2021 

TOTAL 

 Operational appropriations  

12  02  03  Standards  in  the  fields  of  financial 
reporting and auditing 

Commitments 

Payments 

(1) 

(2) 

3.356 

2.517 

3.423  

3.406 

3.491 

3.474 

3.561 

3.544 

0 

0.890 

13.831 

13.831 

Appropriations  of  an  administrative  nature  financed  from  the 
envelope of specific programmes16  

Number of budget line N/A 

TOTAL appropriations 
for DG FISMA 

Commitments 

Payments 

 TOTAL operational appropriations  

Commitments 

Payments 

  TOTAL  appropriations  of  an  administrative  nature 
financed from the envelope for specific programmes  

(3) 

=1 

=2 

(4) 

(5) 

(6) 

3.356 

3.423  

3.491 

3.561 

0 

2.517 

3.406 

3.474 

3.544 

0.890 

13.831 

13.831 

3.356 

2.517 

3.423  

3.406 

3.491 

3.474 

3.561 

3.544 

0 

0.890 

13.831 

13.831 

16 

EN 

Technical and/or administrative assistance and expenditure in support of the implementation of EU programmes and/or actions (former ‘BA’ lines), indirect research, 
direct research. 

16 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
TOTAL appropriations  
under HEADING 1 
of the multiannual financial framework 

Commitments 

=4+ 6 

3.356 

3.423  

3.491 

3.561 

0 

Payments 

=5+ 6 

2.517 

3.406 

3.474 

3.544 

0.890 

13.831 

13.831 

If more than one heading is affected by the proposal / initiative: N/A 

 TOTAL operational appropriations  

Commitments 

Payments 

  TOTAL  appropriations  of  an  administrative  nature 
financed from the envelope for specific programmes  

(4) 

(5) 

(6) 

TOTAL appropriations  
under HEADINGS 1 to 4 
of the multiannual financial framework 
(Reference amount) 

Commitments 

=4+ 6 

Payments 

=5+ 6 

EN 

17 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Heading of multiannual financial  
framework  

5 

‘Administrative expenditure’17   

2017 

2018 

2019 

2020 

2021 

TOTAL 

EUR million (to three decimal places) 

DG:FISMA 

 Human resources  

 Other administrative expenditure  

TOTAL DG FISMA 

Appropriations  

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

TOTAL appropriations 
under HEADING 5 
of the multiannual financial framework  

(Total  commitments  = 
Total payments) 

0 

0 

0 

0 

0 

0 

0 

0 

0 

Year 
N18 

Year 
N+1 

Year 
N+2 

Year 
N+3 

TOTAL 

EUR million (to three decimal places) 

TOTAL appropriations  
under HEADINGS 1 to 5 
of the multiannual financial framework  

Commitments 

3.356 

3.423  

3.491 

3.561 

0 

Payments 

2.517 

3.406 

3.474 

3.544 

0.890 

13.831 

13.831 

17 

18 

EN 

No new administrative appropriations are necessary as the Legislative Financial Statement to the 2014 Financing Regulation had already included all administrative 
appropriations for the period 2014-2020.  
Year N is the year in which implementation of the proposal/initiative starts. 

18 

EN 

 
  
 
 
 
 
 
 
 
 
 
                                                 
3.2.2.  Estimated impact on operational appropriations  

–    The proposal/initiative does not require the use of operational appropriations  

–   The  proposal/initiative  requires  the  use  of  operational  appropriations,  as 

explained below: N/A (operating grants) 

3.2.3.  Estimated impact on appropriations of an administrative nature 

3.2.3.1.  Summary  

–    The  proposal/initiative  does  not  require  the  use  of  appropriations  of  an 

administrative nature  

–   The proposal/initiative requires the use of appropriations of an administrative 
nature, which have been already inlcuded in the Legislative Financial Statement to 
the 2014 Financing Regulation (for the period 2014-2020). 

3.2.3.2.  Estimated requirements of human resources 

–    The proposal/initiative does not require the use of human resources.  

–   The proposal/initiative requires the use of human resources as already inlcuded 

in the Legislative Financial Statement to the 2014 Financing Regulation: 

3.2.4.  Compatibility with the current multiannual financial framework  

–   The  proposal/initiative  is  compatible  with  the  current  multiannual  financial 

framework. 

–    The proposal/initiative will entail reprogramming of the relevant heading in the 

multiannual financial framework. 

Explain what reprogramming is required, specifying the budget lines concerned and the corresponding 
amounts. 

–    The  proposal/initiative  requires  application  of  the  flexibility  instrument  or 

revision of the multiannual financial framework. 

Explain what is required, specifying the headings and budget lines concerned and the corresponding 
amounts. 

3.2.5.  Third-party contributions  

–  The proposal/initiative does not provide for co-financing by third parties.  

–  The proposal/initiative provides for the co-financing estimated below: 

    Appropriations in EUR million (to three decimal places) 

2017 

2018 

2019 

2020 

Total 

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

(Beneficiary  average  co-finance 
40%) 

TOTAL appropriations 
co-financed  

5.593 

5.705 

5.818 

5.935 

23.051 

5.593 

5.705 

5.818 

5.935 

23.051 

EN 

19 

   EN 

 
 
 
3.3. 

Estimated impact on revenue  

–   The proposal/initiative has no financial impact on revenue. 

–    The proposal/initiative has the following financial impact: 

– 

– 

 

 

on own resources  

on miscellaneous revenue  

EN 

20 

   EN