CELEX: 51988PC0148
Language: en
Date: 1988-03-18
Title: Proposal for a COUNCIL REGULATION (ECSC, EEC, Euratom) amending the Financial Regulation of 21 December 1977 applicable to the general budget of the European Communities (presented by the Commission)

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COM (88) 148
Vol. 1988/0044
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 ---pagebreak--- COMMISSION OF THE EUROPEAN COMMUNITIES
                                                     COМ(88 ) 148 final
                                                     Brussels , 18 March 1988
                                 Proposai for a
                   COUNCIL REGULATION ( ECSC , EEC , Euratom )
 amending the Financial Regulation of 21 December 1977 applicable to
               the general budget of the European Communities
                         (presented by the Commission )
           V''
 ---pagebreak---                              EXPLANATORY MEMORANDUM
SUBJECT : Proposal for the amendment of the Financial Regulation of 21
December 1977 to give effect to the conclusions of the European Council
of 11-13 February 1988 .
Following its communications C0M(87) 100 of 15 February 1987 and
( C0M(87) 101 of 28 February 1987 - outlining the reorganization of the
Community 's Financing system - the Commission sent the authorities
concerned a series of sepcific proposals on the various aspects
requiring substantive reform .
These specific proposals included C0M(87 ) 400 final of 24 July 1987
setting out the amendments to the Financial Regulation designed in
particular to reorganize and tighten up the rules of budget management .
The European Council of 11-13 February 1988 endorsed by and large the
objectives set by the Commission . As regards the Financial Regulation
in particular, the European Council stated in its conclusions that the
provisions relating to the following aspects needed to be revised as a
matter of priority .
I)         strengthening of the principle of annuality , by revision of
           the arrangements governing carryovers and the conditions to be
           satisfied for certain appropriations released from commitment
           to be made available again ,
II )        conditions for financing the EA6GF Guarantee Section , notably
           by maintaining force the temporary arrangements already
           adopted'1   subject to an adjustment of the period of
           deferment of advances ( two and a half months instead of two
           months ), and by establishing a realistic timetable for the
            clearance of accounts ,
III )       recognition of the principle that a "negative reserve " may be
           entered when the budget is established .
 ( 1 ) Régulation No 3183 / 87 of 19.10.1987
 ---pagebreak---                                       - 2 -
In order to give effect to the conclusions of the Euronean Counci l the
Commission therefore présents the spécifie proposais below .
It would point out , as regards procedure, that it       bases these
proposals on the text of the Financial Regulation of 21 December 1977
as currently in force and that it is hereby amending any parts of its
earlier proposals which are not compatible with the provisions proposed
below .
The Commission feels that in view of their priority nature , these
proposais ought to be acted upon immediately .
I ) STRENGTHENING THE PRINCIPLE OF ANNliALITY
On this point the Commission is repeating the proposal it made in
C0M(87) 400 final of 24 July 1987 . The same idea was expressed in the
conclusions of the European Council and the relevant arrangements were
largely endorsed by Parliament and the Court of Auditors in their
opinions on the proposal .
However, the Commission is now adding to its initial proposal
appropriate "technical criteria " - in line with the conclusions of the
European Council - which define more closely the conditions of
admissibility, for special and specific reasons , of certain carryovers
and the conditions to be satisfied for certain appropriations released
from commitment to be made available again .
For this purpose Articles 1 , 6, 73 and 88 of the Financial Regulation
need to be revised . It should be noted on this point that in accordance
with the proposal already presented by the Commission ( C0M(87) 458
final of 30.9.1987 ) in the area of research appropriations too , the
carryover arrangements will be tightened up appreciably in order to
achieve the stricter discipline reguired in the management of
appropriations , although a certain degree of flexibility ( see Article
88 ) will be required for the reasons and constraints specific to this
area .
It is of course clear that the amendment proposed here to Article 88 is
the only one which , in the present context and for the reasons given,
affects the area of research appropriations ; hence all the special
provisions - Articles 86 to 94 of the Financial Regulation - remain
applicable, notably those concerning work financed by outside bodies
 (without prejudice to the changes which may be . made in this area in the
general revision of the Financial Regulation ;       .
( 1 ) See conclusions of the European Counci l : SN/461 / 1 /88 of 19 February
      1988 , page 11 , paragraph 18 , last subparagraph .
 ---pagebreak---                                           - 3 -
 II . AMENDHENT OF THE SPECIAL PROVISIONS APPLICABLE TO THE EAGGF
       GARANTEE SECTION                  -
 1 ) Adjustwent of the financing arrangements
      The Commission proposed a temporary adjustment of the EAGGF
      Guarantee Section financing arrangements to . deal with the budget
      situation in 1987 and 1988 . This proposal m - which amounted in
      practice to the deferment of the entry of advances in the accounts -
      has already been adopted by the Council ( Regulation No 3183 / 87 of 19
      October 1987, amending Regulation No 729 / 70 : the corresponding
      amendment of the Financial Regulation is in the process of being
      adopted ) .
      It should now be noted that the European Council agreed :
      - to continue with the application of this " switch " in the EAGGF
        Guarantee Section financing arrangements ,
      - to extend the period of deferment from the initial two months to
        two and a half months .
      The appropriate changes must accordingly be made to the rules . As
      regards the Financial Regulation , Article 98 is amended . The
      Commission is proposing in parallel the appropriate amendments to
      Regulation No 3183 / 87 of 19 October 1987 .
      Under the new financing system - where advances are deferred in
      relation to the expenditure already effected by the Member States -
      it will be possible to shorten the "additional period " from the
      three months currently allowed ( closure at 31 March of year n+1 ) to
      one month ( closure in future at 31 January of year N+1 .
  2 ) Provision of a realistic tinetable for the clearance of accounts
      Prompted by its own experience and the comments of Parliament and
      the  Court of Auditors, the Commission-jin its proposed general
      revision of the Financial Regulation'' made good a deficiency in
      the existing text and set a realistic and binding timetable for the
      clearance of the EAGGF Guarantee Section accounts . This involved
      expanding Article 99 .
( 1 ) C0M(87) 365 final of 10.7.1987 ( amending Régulation No 729/70) ■
      COM (87) 511 final of 19.10.1987 ( amending the Financial Régulation)
( 2 ) C0M(84 ) 123 final of 9.3.1984
 ---pagebreak---                                        - 4 -
     This Commission proposal was confirmed by C0M(87) 400 final of 24
     July 1987 and matched by a proposal ,. for harmonizing the basic
     provisions in Regulation No 129/70 n .
     The European Council agreed that priority needed to be assigned, in
     the general revision of the Financial Regulation , to the provisions
     concerning the clearance of the EAGGF Guarantee Section accounts , in
     view of the fundamental financial importance of this operation ,
     which is , moreover, very closely tied up with the need to improve
     budget management .
     The Commission is therefore repeating the proposal in question , but
     at the same time it feels that the time-limits initially proposed
     should be tightened a little . Article 99 of the Financial Regulation
     needs to be amended accordingly .
I I I. POSSIBILITY OF ENTERING A "NEGATIVE RESERVE"
       The entry of a negative reserve can be justified on the following
       grounds :
       a ) " Financial " reason
           It has been shown statistically from the way in which recent
           years' budgets have been established and fromthe final outturn
           figures that generally speaking certain discrepancies between
           total appropriations authorized and total appropriations finally
           used are objectively unavoidable . In other words the overall
           outturn figures reveal ultimately that amounts remain unspent
           under a number of headings ( inevitable differences between
           amounts authorized and outturn ).
       b ) Procédural reason
           The course of the budget procedure in practice and the
           frequently complex and delicate final phase of the negociations
           between the two arms of the budgetary authority have
           demonstrated how useful it is to be able to enter a negative
           reserve as a way of bringing the procedure to a close .
( 1 ) cf. COM ( 87 ) 212 final of 30.4.1987
 ---pagebreak---                                        - 5 -
          It is accordingly proposed , in line with the conclusions of the
          Euyropean Council , that :
         - the possibility of entering a "négative reserve " be provided
             for in the rules ;
         - the maximum amount be Limited to 200 million ECU, in order not
             to undermine the fundamental objective of the budget , which is
             to match forecasts with the expenditure and revenue
             authori zed .
         The Commission therefore proposes that a new provision be
         entered in Article 15 .
                                             *
          In order to help the authorities concerned in their examination
         of this proposal , it is perhaps useful to specify that as
          regards procedure and substance the proposal is made up of the
          following :
          1 ) Points for which the substantive proposal has already been
              presented to the authorities concerned
              a ) Annuality
                  - general arrangements : C0M(87 ) 400 of 24.7.1987
                  - RDT arrangements1 : COM (87) 458 of 30.9.1987
              b ) EAG6F Guarantee Section
                  - deferment of advances ( two month ) : C0M(87 )   511 of
                    19.10.1987^
                  - clearance of accounts : C0M(84 ) 123 of 9.3.1984 .
          2 ) New points presented for the first time in this proposai
              a ) Annuality :                 addition of "technical criteria "
              b ) EAGGF Guarantee Section : (-   adjustment of deferment ( two
                                              (  and a half month ),
                                              (- shortening of "additional
                                              (  period" ( from three month fo
                                              (  one month ),
                                              (- tighter schedule for clea-
                                              (  rance of accounts ,
              c ) "Négative reserve " : an entirely new concept .
( 1 ) Research and technological development
( 2) The decision on the substance , for the temporary arrangement ,
      has already been taken ( Regulation No 3183 /87 of 19.10.1987 )
 ---pagebreak---                                       - 6 -
            It is further pointed out that once the Council has taken the
            new "own resources " decision and passed the appropriate
            implementing regulations , an adjustment will be necessary to
            certain articles^ of the Financial Regulation, mainly
            concerned with wording, in order to update the corresponding
            references . This updating will be made later during the
            general revision of the Financial Regulation to be undertaken
            in accordance with the conclusions of the European Council .
                                        *   *   *
            The Commission would accordingly ask the Council to consult
            Parliament and the Court of Auditors on this entire proposal .
            Moreover, in accordance with the objective endorsed by the
            European Council , the Coimmission would ask all the
            institutions concerned to attach the highest priority to
            dealing with this proposal .
            In the light of the Council 's planned target - adoption of
            the specific amendments to the Financial Regulation by 31 May
            - the Commission has set out in the Annex suggested dates for
            the various stages of the procedure which will make it
            possible to attain the objectives agreed by the European
            Counci l .
(1 ) e.g . Articles 3, 5 , 26 , 27 , 28, 30
 ---pagebreak---                                - 7 -
                                                                 ANNEX
                             SUGGESTED DATES FOR THE
                        VARIOUS STAGES OF THE PROCEDURE
TRANSMISSION OF THE PROPOSAL TO THE COUNCIL    around 18 March
OPINION OF THE COURT OF AUDITORS               by 5 Apri L
OPINION OF PARLIAMENT                          part-session from 11 to 15 April
COMMON POSITION OF COUNCIL                     by 6 May
CONCILIATION WITH PARLIAMENT                   week of 16 to 20 May *
ADOPTION OF AMENDED FINANCIAL REGULATION       not Later than 31 May .
* May part-session of Parliament
 ---pagebreak---                                      - 8 -
                                Proposai for a
                 COUNCIL REGULATION ( ECSC , EEC , Euratom )
   amending the Financial Regulation of 21 December 1977 applicable
           to the general budget of the European Communities
THE COUNCIL OF THE EUROPEAN COMMUNITIES ,
Having regard to the Treaty establishing the European Coal and Steel Community ,
and in particular Article 78 h thereof ,
Having regard to the Treaty establishing the European Economic Community ,
and in particular Article 209 thereof ,
Having regard to the Treaty establishing the European Atomic Energy Community ,
and in particular Article 183 thereof ,
Having regard to the proposal from the Commission , ( 1 )
Having regard to the opinion of the European Parliament , ( 2 )
Having regard to the opinion of the Court of Auditors , ( 3 ),
Whereas the conciliation provided for in the Joint Declaration of 4 March 1975
of the European Parliament , the Council and the Commission ( 4 ) took place in a
Conciliation Committee ;
Whereas the Financial Regulation of 21 December 1977 ( 5 ), as last amended by Regulation
( ECSC , EEC , Euratom ) . ( 6) must be amended to give effect to the conclusions of
the Brussels , European Council of 11-13 February 1988 concerning stricter annual
management of appropriations , the financing arrangements for the common
agricultural policy and the possibility of entering a " negative reserve " when
the budget is established ;
                                                                              ./.
(1)
(2)
(3)
( 4 ) 0J No C  89 , 22.4.1975 , p  1
( 5 ) 0J No L  356 , 31.12.1977,  P- 1 .
( 6 ) OJ No L
 ---pagebreak---                                                               /
                                        - 9 -
Whereas , in the interests of improved budgetary management and greater
transparency of appropriations , differentiated appropriations should no
longer be carried over automatically ; whereas , however , the Commission
should be empowered to effect some carryovers on the basis of specific
criteria ; whereas certain appropriations which have been released from
commitment may be made available again only on the basis of specific
criteria and only after a Commission decision ;
Whereas the Financial Regulation must reflect the arrangements for
financing the Guarantee Section of the European Agricultural Guidance and
Guarantee Fund to take account of the amendments to Council Regulation
( EEC ) No 729 / 70 , ( 1 ) as last amended by Regulation . ; ( 2 )
Whereas an   appropriate provision must be inserted to allow a negative
reserve to   be entered in the budget to cover the discrepancies which
inevitably   arise during implementation between the total appropriations
authorized   and the total appropriations used .
HAS ADOPTED THIS REGULATION :
                                                                          ./.
( 1 ) 0J No L 94 , 28.4.1970, p. 13 .
(2)
 ---pagebreak---                                          - 10 -
                                        Artide 1
The Financial Régulation of 21 December 1977 is hereby amended as follows :
1 . In Article 1,-the following paragraph 3a is inserted :
    " 3a . The legal commitments entered into for measures extending over more
            than one financial year shall contain a time limit for implementation
            which must be specified to the recipient in due form when the aid
            is granted ."
2 . I.n Article 6, paragraph 2 is replaced by the following :
    " 2 . In the case of budget headings where a distinction is made between
          commitment appropriations and payment appropriations , commitment
          appropriations and payment appropriations which have not been used
          at the end of the financial year for which they were entered may , by
          decision of the Commission taken not later than 15 February , be
          carried over to the next financial year only, in accordance with the
          following criteria :
          ( a ) in the case of commitment appropriations :
                - amounts which relate to operations for which preliminaries
                  have been virtually completed at 31 December but for which accoun¬
                  ting commitments have not yet been made : these amounts must in
                  principle be committed by 31 March of the following year ;
                - amounts which are necessary when the Council has adopted a
                  basic instrument towards the end of the financial year and the
                  Commission has been unable to commit the appropriations provided
                  for this purpose in the budget by 31 December .
          ( b ) in the case of payment appropriations :
                - amounts needed to cover existing commitments or relating to
                  commitment appropriations carried over , when the appropriations
                  provided for the headings concerned in the budget for the
                                                                        /
 ---pagebreak---                                    - 11
              following financial year do not cover requirements : in exercising
               its powers to implement the budget the Commission shall , depending
              on management requi rements , endeavour to use first the appropria¬
              tions authorized for the current financial year and not use the
              appropriations carried over until the former are exhausted .
          The Commission shall inform the budgetary authority of the decision
          taken and state the reasons for carrying over the appropriations ."
3 . In Article 6 , paragraph 6 is replaced by the following :
    " 6 . When commitments in budget headings where there is a distinction
          between commitment appropriations and payment appropriations are
          cancelled in any financial year after that in which the commitment
          appropriations were entered in the budget., the appropriations
          concerned shall , as a rule , lapse .
          However , the commitment appropriation corresponding to the amount
          of the commitment cancelled may , exceptionally , be made available
          again , in accordance with the specific criteria laid down in the
          implementing measures provided for in Article 106 , when it is
          essential to carry out the programme originally planned , unless the
          budget for the current financial year contains funds available for
          this purpose .
          At the beginning of each financial year , the Commission shall
          therefore examine the cancellations which have taken place in the
          previous financial year and assess , in the light of requirements ,
          the need for making the appropriations available again .
          The Commission shall take this decision by 15 February of each
          financial year .
          The Commission shall inform the budgetary authority of the decision
          taken and state the reasons for maintaining these appropriations ."
 ---pagebreak---                                                - 12 -
4 . In Article 15, the following paragraph 4a is inserted :
    " 4a . The chapter for provisional appropriations in the Commission Section
           may include a negative reserve limited to a maximum of 200 million ECU .
           This reserve may include both appropriations for commitments and
           appropriations for payments .
           This reserve shall be drawn upon by means of transfer in accordance
           with the procedure laid down in Article 21 ."
5 . In Article 73(2 ), the final indent is replaced by the following :
    "- appropriations carried over under Articles 6 and 88;"
6 . In Article 73(3 ), the fourth and fifth indents are replaced by the following
    "- the commitment appropriations and payment appropriations carried over
        under Articles 6 and 88 ;"
7 . In Article 73(4 ), the first indent is replaced by the following :
    "- the amount of appropriations carried over , a distinction being made
        between commitment appropriations , payment appropriations and
        non-di f ferent i ated appropr i at i ons ;"
8 . In Article 73(4 ), the fifth indent is delëted .
9 . In Article 88(3), the final subparagraph is replaced by the following :
    " The payment appropriations represent the upper limit of expenditure
    which may be paid or authorized for payment during each financial year
    to cover commitments entered into during the current year or earlier
    financial years ."
                                                                     /
 ---pagebreak---                                           - 13 -
10 . In Article 88 , paragraph 4 is replaced by the following :
     " 4 . The commitment and payment appropriations for this sector shall , as a
            rule , be carried over pursuant to Article 6 ( 2 ) of this Régulation
            in view of the spécial requirements of these activities , in order to :
           - maintain the continuity of budgetary execution from one
              year to the next ,
           - safeguard the budgetary allocations which enable multiannual
              programme decisions to be respected ."
11 . Article 98 is replaced by the following :
                                     " Article 98
     Expenditure shall be booked to the accounts for a financial year on the
     basis of the advances paid by the Commission to the Member States during
     that year in accordance with Article 5 of Regulation ( EEC ) No 729 / 70,
     provided that notification of their commitment and authorization have
     reached the accounting officer not later than 31 January of the following
     year ."
12 . Article 99 is replaced by the following :
                                     " Article 99
      1 . The object of the clearance of the accounts provided for in Article 5(2 ) ( b )
           of Régulation ( EEC ) No 729 / 70 shall be to détermine the amount of
           expenditure effected in each Member State during the financial year in
                           «
           question which may be recognized as being chargeable to the EAGGF .
           Not later than 1 June of the year following the financial year in
           question Member States shall , for the purpose of clearance of the
           accounts , send to the Commission summary annual accounts for the
           financial year ended , amending where necessary the monthly accounts .
            These summary accounts shall be accompanied by the appropriate reports
           drawn up by the competent audit and control departments and dealing
           with the expenditure referred to in the Articles relating to
           expenditure covered by the clearance .
                                                                               ./.
 ---pagebreak---                                           14
         If the accounts of a paying agency or department have not reached the
         Commission by 1 June , the Commission may clear the accounts of that
         agency or department solely on the basis of the financial statements
         referred to in Article 5 ( 1 ) ( a ) of Regulation ( EEC ) No 729 / 70 as
         described by implementing measures adopted pursuant to Article 5(3 )
         of that Regulation .
     2 . On the basis of the accounts or statements mentioned in paragraph 1 and
         of the findings of audits of documents and on-the- spot checks under Article
         9 of Regulation ( EEC ) No 729/ 70 , the Commission , after consulting the Fund
         Committee referred to in Article 13 of that Regulation , shall clear the
         accounts not later than 15 September of the second year following the
         financial year in question .
     3 . The Commission shall transmit the clearance decisions to the Member
         States and publish them in the Official Journal .
     4 . The outcome of the clearance decision , i.e. any discrepancy which may
         exist between the total expenditure booked to the accounts for a
         financial year pursuant to Articles 97 and 98 and the total expenditure
         recognized as allowable by the Commission when clearing the accounts
         shall be booked, under a single article^ as additional expenditure , or
         a reduction in expenditure ."
                      **
13 . In Article 100 ( 1 ), "1 April of the following financial year " is replaced
     by "1 February of the following financial year ".
14 . In the second subparagraph of Article 101 ( 1 ) and the first subparagraph
     of Article 101 ( 2 ) "31 March of the following financial year " is replaced
     by "31 January of the following financial year ".
                                                                                  ./.
 ---pagebreak---                               Article  2
This Régulation shall enter into force on the third day following that
of its publication in the Official Journal of the European Communities .
It shall apply from .
It shall be binding in its entirety and directly applicable in all
Member States ."