CELEX: 51997PC0542
Language: en
Date: 1997-10-28
Title: Amended proposal for a Council Regulation (Euratom, ECSC, EC) amending the Financial Regulation of 21 December 1977 applicable to the general budget of the European Communities

COMMISSION OF THE EUROPEAN COMMUNITIES
                                               Brussels, 28.10.1997
                                                COM(97) 542 final
                                                96/0189 (CNS)
  AMENDED PROPOSAL FOR A COUNCIL REGULATION (Euratom, ECSC, EC)
amending the Financial Regulation of 21 December 1977 applicable to the general budget
                             of the European Communities
   (presented by the Commission pursuant to Article 189a(2) of the EC Treaty and the
                 second paragraph of Article 119 of the Euratom Treaty)
 ---pagebreak---  ---pagebreak---                              EXPLANATORY MEMORANDUM
1. On 26 July 1996 the Commission approved a proposal1 for the amendment of the
   Financial Regulation of 21 December 1977 applicable to the general budget of the
   European Communities2 on the basis of its recommendations under the plan to
   improve financial management (SEM 2000).
   Parliament delivered its opinion on this proposal at the 14-18 July part-session. It
   called for a number of amendments, most of which the Commission is able to accept.3
   The Court of Auditors was also consulted under Article 209 of the EC Treaty. It gave
   its opinion on 10 July 1997.4
2. With the exception of some purely stylistic alterations, the main amendments
   proposed by Parliament which the Commission has incorporated in this amended
   proposal concern the points listed below:
   (a) the principle that where commitments are cancelled, amounts unduly paid are to
         be recovered and that interest will accrue in respect of those amounts as of the due
         date set out in the debit note;
   (b) tightening of the provisions governing the delegation or sub-delegation of powers
         to authorise commitments or payments, to require that the rules of procedure of
         each institution specify the powers delegated;
   (c) the provisions covering subcontracting are also tightened to rule out the
        possibility of subcontracting in matters relating to the exercise of European public
         office;
   (d) stricter accounting arrangements for the refund of taxes;
   (e) in connection with Commission decisions which constitute commitment of
         expenditure, the financial controller shall take the appropriate steps to ensure that
        the individual legal commitments correspond to the budget commitment from
         which they derive and may apply spot checks;
   (f) the financial controller's prior approval of commitment proposals and payment
         orders may also be granted on the basis of spot checks.
3. The Commission, however, could not accept Parliament's other amendments
   concerning:
1
     COM(96) 351 final.
2
     OJ L 356, 31.12.1977, p. 1.
3    OJ ....
4
     OJ....
 ---pagebreak---      - Article 15(6) (supplementary and/or amending budgets), since this amendment
         concerns a matter that has already been resolved by the Council's adoption of
         Regulation (...)5;
     - Article 22(4) (in part), which aims to prevent the exercise of a discretionary
         power under a Community policy being delegated or subdelegated; this
         amendment is inappropriate since only delegation within each institution is
         concerned;
     - Article 27(6), since Parliament's amendment is inconsistent with the budgetary
         principle of booking a net amount where prices include tax to be refunded by the
         Member States;
     - Article 36(3a) (new), since this amendment deals with conflicts of interest. In
         relation to the Commission, the main party concerned by the amendment, this is
         an area already covered by the SEM 2000 programme;
     - Article 38(1 )(b), since there is no justification for favouring two budgetary
         principles in the matter of the correct charging of expenditure;
     - Article 39, as this amendment unduly limits the power of each institution to
         overrule a decision by its financial controller to withhold approval;
     - Article 58(3), as it is too rigid with regard to the treatment of tenders in public
         procurement procedures.
4. The Court of Auditors opinion made no concrete amendments to the Commission's
   initial proposal, but some of the Court's comments covered amendments by
   Parliament which the Commission has accepted (Articles 22(4a), 24, 37, 47,112).
   The Court recommends a complete revision of the Financial Regulation and offers a
   critical analysis of the current text. The Commission will certainly take account of this
   study and begin its own assessment of a possible recasting of the Financial Regulation.
                                                  *   *
   The Commission, in accordance with Article 189a(2) of the EC Treaty and the second
   paragraph of Article 119 of the Euratom Treaty, has drawn up this amended proposal
   which is being presented for the continuation of the procedure.
     Revision of the Financial Regulation following the changes to the system for the clearance of the
     EAGGF Guarantee Section accounts.
 ---pagebreak---   AMENDED PROPOSAL FOR A COUNCIL REGULATION (Euratom, ECSC, EC)
   amending the Financial Regulation of 21 December 1977 applicable to the general
                           budget of the European Communities
 (presented by the Commission pursuant to Article 189a(2) of the EC Treaty and the second
                       paragraph of Article 119 of the Euratom Treaty)
In the light of the opinions of Parliament and the Court of Auditors the Commission has
amended its proposal as follows:
           INITIAL PROPOSAL                             AMENDED PROPOSAL
     (COM(96)351 final of 26.7.1996)
THE COUNCIL OF THE EUROPEAN
UNION,
Having regard to the Treaty establishing
the European Coal and Steel Community,
and in particular Article 78h thereof,
Having regard to the Treaty establishing
the European 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,
Having regard to the opinion of the Court
of Auditors,
Having regard to the opinion of the
European Parliament,
                                              Whereas the conciliation instituted by the
                                              joint declaration of 4 March 1975 by the
                                              European Parliament, the Council and the
                                              Commission has taken place within a
                                              conciliation committee;
Whereas the Financial Regulation of
21 December 1977 applicable to the
 ---pagebreak---             INITIAL PROPOSAL                                  AMENDED PROPOSAL
     (COM(96)351 final of 26.7.1996)
general budget of the European
Communities1 ('the Financial Regulation')
must be amended to improve financial
management within the institutions;
Whereas the management of commitments
is sometimes subject to considerable delays
and the control of ongoing commitments
must therefore be strengthened;
Whereas there must be strict control of the
subdelegation of powers to sign financial
documents; whereas staff who exercise
powers which are not delegated or
subdelegated to them or exercise powers in
excess of the limits of the powers expressly
conferred on them must be made liable to
disciplinary action and, where appropriate,
to payment of compensation;
Whereas, if management of Community
programmes is subcontracted, this must be
governed by appropriate provisions to
guarantee the transparency of operations
and lay down the procedure for the entry in
the accounts of the funds generated and
available for use in financing the
programmes in question;
Whereas the financial controller is
responsible for the internal audit of his
institution; whereas, in this respect, he
must be consulted about setting up and
altering inventory systems and systems of
financial management used by the
authorising officers; whereas the analysis
of financial management should also be
submitted to the financial controller;
Whereas account must be taken of the
requirements         deriving      from       the
computerised        systems      of financial
management;
 1
     OJ L 356, 31.12.1977, p. l.Regulation last amended by Council Regulation (EC, Euratom, ECSC)
     No 2335/95 of 18 September 1995 (OJ L 240, 7.10.1995, p. 12).
 ---pagebreak---            INITIAL PROPOSAL                   AMENDED PROPOSAL
     (COM(96) 351 final of 26.7.1996)
Whereas the system of accounts must be
improved;
Whereas the Financial Regulation should
contain provisions for the entry in the
accounts of traditional own resources,
which have their own specific features
different from the other own resources
(VAT and GNP);
Whereas the legal comrhitments made by
the institution and the accounting
commitments submitted to Financial
Control and recorded in the central
accounts must correspond exactly, while
leaving a reasonable length of time for the
conclusion of the legal commitments in
cases where the Commission's decisions of
principle count as commitment of
expenditure;
Whereas time limits should be set for the
procedure for overruling the withholding of
approval by the financial controller;
Whereas, with the introduction of the
statement of assurance, it is essential that
the discipline required with regard to
inventories be strengthened by laying down
the respective duties of the authorising
officer and the accounting officer;
Whereas      the    procedure      for    the
authorisation of transfers between chapters
in the EAGGF Guarantee Section should
be adjusted to allow the Commission
additional time to present its proposals for
transfer;
 Whereas Title IX of the Financial
 Regulation should be amended to bring it
 into line with the criteria of transparency,
 publicity and competition contained in the
 Council directives on the award of
 contracts and the international agreements
 to which the European Community is a
 signatory,
 ---pagebreak---              INITIAL PROPOSAL                           AMENDED PROPOSAL
      (COM(96) 351 final of 26.7.1996)
HAS ADOPTED THIS REGULATION:
                    Article 1
1. Article 1 is amended as follows:           1. Article 1 is amended as follows:
   (a) The first subparagraph of paragraph 7     (a) The first subparagraph of paragraph 7
       is replaced by the following:                  is replaced by the following:
       "7. The legal commitments entered             "7.         Commitment       proposals
       into for measures extending over              submitted pursuant to Article 36 and
       more than one financial year and the          Ihê         corresponding         legal
       corresponding commitment proposals            commitments, insofar           as the
        shall contain a time limit for               implementation thereof extends over
        implementation which must appear             more than one financial yearr shall
        on the commitment proposals and              contain       a    time    limit    for
        must be specified to the recipient in        implementation which must be
        due form. Any commitments not                notified to the recipient in due legal
        used six months after this date shall        form. Commitments not used six
        be cancelled in accordance with              months after this date shall be
        Article 7(6).";                              cancelled in accordance with
                                                     Article 7(6).";
                                              (aa) The         third     subparagraph     of
                                                     paragraph 7 is replaced by          the
                                                     following:
                                                     The Commission may, in special
                                                     circumstances, extend the time limit
                                                     far     implementation      of    these
                                                     commitments, where appropriate
                                                     reasons are given by the recipients.':
  (b) A fourth subparagraph is added to         (b) A fourth subparagraph is added to
        paragraph 7 as follows:                       paragraph 7 as follows:
         "In this case, the date shall be             "In this case, the date shall be put
         adjusted in accordance with the same         back in accordance with the same
        procedure as the commitment                   procedure as that provided for in
        proposal and shall be notified to the         Articles 36     to     39    for   the
         recipient by means of an additional          commitment proposal and shall be
         contract or in any other appropriate         notified to the recipient in the
         legal form.".                                appropriate legal form.".
 2.      Article 7 is amended as follows:
   (a) In the first indent of point (a) of
         paragraph 2 "which relate" is
         replaced by "relating", the semi-
         colon is omitted and "these amounts
         must" is replaced by "must";
 ---pagebreak---            INITIAL PROPOSAL                               AMENDED PROPOSAL
    (COM(96) 351 final of 26.7.1996)
(b) Paragraph 6 i:         replaced   by    the  (b) Paragraph 6 is replaced by the
     following:                                       following:
     "When commitments in budget                      "When commitments in budget
     headings where there is a distinction            headings where there is a distinction
     between commitment appropriations                between commitment appropriations
     and payment appropriations are                   and payment appropriations are
     cancelled - as a result of total or              cancelled - as a result of total or
     partial non-implementation of the                partial non-implementation of the
     projects for which they were                     projects for which they were
      earmarked - in any financial year               earmarked - in any financial year
      after that in which the commitment              after that in which the commitment
      appropriations were entered in the              appropriations were entered in the
      budget, the appropriations concerned            budget, the appropriations concerned
      shall, as a rule, lapse. In addition, any       shall, as a rule, lapse. Amounts
      amounts unduly paid shall be                    unduly paid shall be recovered in
      recovered.".                                     accordance with the procedures
                                                      provided for in Articles 28 and 29.
                                                       Interest shall accrue in respect of
                                                       those amounts as of the due date set
                                                       out in the debit note, in accordance
                                                       with the implementing measures
                                                       provided for in Article 139.".
\.    Article 22 is amended as follows:          3.    Article 22 is amended as follows:
 (a) A fourth subparagraph is added to            (a) A fourth subparagraph is added to
      paragraph 4:                                     paragraph 4:
       "Any member of staff who authorises             "Any member of staff who
       commitments or payments without                 authorises       commitments        or
       having       been       delegated      or       payments without having been
       subdelegated the necessary powers or            delegated or subdelegated the
       in excess of the limits of the powers            necessary powers in accordance with
       expressly conferred upon him shall               the institutions' rules of procedure
       render himself liable to disciplinary            or in excess of the limits of the
       action and, where appropriate, to                powers expressly conferred upon
       payment       of compensation          in        him shall render himself liable to
       accordance with Title V.";                       disciplinary action and, where
                                                        appropriate,     to    payment     of
                                                        compensation in accordance with
                                                        Title V. Each institution shall adopt
                                                        rules which shall specify the
                                                        procedure for issuing acts of
                                                        subdelegation. Such acts shall give
                                                        obligatorily details of the powers
                                                         conferred,";
 ---pagebreak---             INITIAL PROPOSAL                          AMENDED PROPOSAL
    (COM(96) 351 final of 26.7.1996)
(b)A new paragraph is inserted:                (b) A new paragraph is inserted:
     "4a.      When      the    Commission         "4a.        When the institutions
     subcontracts the implementation of            commission an outside person, body
     certain programmes, the contracts             or firm to perform a Community
      concluded      must     contain      all     activity.     the    contracts     and
      appropriate provisions for ensuring          subcontracts concluded for that
      the transparency of the subcontracted        purpose must contain all appropriate
      operations in accordance with the            provisions      for    ensuring     the
      implementing rules provided for in           transparency of the contracted and
      Article 139.                                 subcontracted operations, and in
                                                   particular the provisions concerning
                                                   the regulation of interest etc.
                                                   generated, the keeping of accounts
                                                   and the recovery of amounts unduly
                                                   paid.      The implementing rules
                                                   provided for in Article 139 shall
                                                   establish the rules intended to ensure
                                                   Ms transparency as regards
                                                   management of the institutions,
       If the payments made to the                  The amounts paid to subcontractors
       subcontractors     generate    interest      shall be credited to interest-bearing
       which may be used to finance the             accounts. Without prejudice to any
       programmes       in question,       the      provisions that might be contained
       following procedure shall be applied:        in specific basic instruments relating
                                                    to Community policies the interest
                                                    in question shall be used to finance
                                                    these activities. To that ond, the
                                                    following procedure shall be
                                                    applied:
       - periodically, at intervals of no           - periodically, at intervals of no
       more than six months, recovery               more than six months, recovery
       orders shall be issued for the interest      orders shall be issued for the interest
       generated by these funds, which will         generated by these funds, which will
       then be booked to the statement of           then be booked to the statement of
       revenue;                                     revenue;
       - at the same time, appropriations           - at the same time, appropriations
       for the corresponding amount, in             for the corresponding amount, in
       both commitments and payments                both commitments and payments
       shall be made available in the               shall be made available in the
       heading of the statement of                  heading of the statement of
       expenditure to which the initial             expenditure to which the initial
       expenditure was charged.".                   expenditure was charged.".
       The fourth and fifth paragraphs of 4.        The fourth and fifth paragraphs of
       Article 24 are replaced by the               Article 24 are replaced by the
        following:                                  following:
 ---pagebreak---            INITIAL PROPOSAL                            AMENDED PROPOSAL
    (COM(96) 351 final of 26.7.1996)
     "The financial controller must be             "The financial controller must be
     consulted on the setting up and               consulted on the setting up and
     alteration of the accounting systems          alteration of the accounting systems
     and inventory systems of the                  and inventory systems of the
     institution to which he is attached           institution to which he is attached
     and on the setting up and alteration of       and on the setting up and alteration
     the systems of financial management           of the systems of financial
     used by authorising officers. He shall        management used by authorising
     have access to the data of such               officers. He shall have access to the
     systems.                                      data of such systems.
     Monitoring shall be carried out by            Monitoring shall be carried out by
     that official by means of inspection          that official by means of inspection
     of the files relating to expenditure          of the files relating to expenditure
     and revenue and, if necessary, on the         and revenue and, if necessary, on the
     spot. The financial controller shall be       spot. The financial controller shall
     responsible for the internal audit of         be responsible for the internal audit
     the institution, in accordance with the       of the institution, in accordance with
     implementing rules provided for in            the implementing rules provided for
     Article 139.".                                in Article 139. That audit shall
                                                   include       assessment     of    the
                                                   effectiveness of the management and
                                                   control systems and verification that
                                                   operations have been effected in a
                                                   regular manner.".
5.   The following paragraph is inserted           The following paragraph is inserted
     after the fourth paragraph in                 after the fourth paragraph in
     Article 25:                                   Article 25:
     "The accounting officer must be               "The accounting officer shall be
     consulted on the setting up and               consulted on the setting up and
     alteration of the accounting systems          alteration of the accounting systems
     of financial management used by               of financial management used by
     authorising officers, where such              authorising officers, where such
      systems are intended to supply data          systems are intended to supply data
     to the central accounts. He shall, at         to the central accounts. He shall, at
      his request, have access to the data of      his request, have access to the data
      such systems.".                              of such systems. The accounting
                                                   officer shall also be consulted on the
                                                   setting up and alteration of the
                                                   inventory systems.".
6.    Article 27 is amended as follows:       >.   Article 27 is amended as follows:
 (a) In paragraph 2, point (f) is deleted      (a) In paragraph 2, point (f) is deleted
      and points (g) and (h) become points          and points (g) and (h) become points
      (f) and (g) respectively.                     (f) and (g) respectively.
 ---pagebreak---          INITIAL PROPOSAL                         AMENDED PROPOSAL
   (COM(96) 351 final of 26.7.1996)
(b) The following paragraph is inserted (b)    The following paragraph is inserted
    after paragraph 2:                         after paragraph 2:
    "3. Notwithstanding Article 4, where       "3. Notwithstanding Article 4, where
    products or services supplied to the       products or services supplied to the
    Commission incorporate taxes which         Commission         incorporate    taxes
    are refunded by Member States              which are refunded by Member
    pursuant to the Protocol on Privileges     States pursuant to the Protocol on
    and Immunities, the net price shall be     Privileges and Immunities, the net
    charged to the budget.                     price shall be charged to the budget.
    The refund of these taxes shall be         The refund of these taxes shall be
    monitored      separately     in   the     monitored       separately     in   the
    accounts.";                                accounts. Such refund shall be
                                               recorded by entry of the definitive
                                               amount in the institution's accounts
                                               at the latest in the year following the
                                               financial year in which it was
                                               collected,";
(c) Paragraphs 3 and 4 are renumbered 4 (c)    Paragraphs 3 and 4 are renumbered
    and 5 respectively;                        4 and 5 respectively;
(d) In paragraph 5, which is renumbered (d)    In paragraph 5, which is renumbered
    6, the letter (g) is replaced by the       6, the letter (g) is replaced by the
    letter (f) and the letter (h) by the       letter (0 and the letter (h) by the
    letter (g).                                letter (g).
K   The following paragraph is added to
    Article 28:
    "3. Notwithstanding paragraph 1, no
    forward estimate shall be made for
    the own resources defined in Article
    2(1) and (2) of Council Decision
    94/728, which are paid at fixed
    intervals by the Member States,
    before the Member States make the
    amounts available directly to the
    Commission. The authorising officer
    responsible shall issue a recovery
    order for them.
    The recovery orders for the revenue
    referred to at Article 2(1 )(a) and (b)
    of that Decision shall be based on the
    monthly statements of entitlements
     established by the Member States,
    which they send to the Commission.
                                            10
 ---pagebreak---           INITIAL PROPOSAL                             AMENDED PROPOSAL
    (COM(96) 351 final of 26.7.1996)
     The recovery orders shall be sent to
     the financial controller for approval.
     After they have received his
     approval, they shall be registered by
     the accounting officer in accordance
     with the implementing rules provided
     for in Article 139.".
8.   Article 36 is amended as follows:         8.   Article 36 is amended as follows:
 (a) The correction in paragraph 1              (a) The correction in paragraph 1
     concerns the French language                   concerns the French language
     version.                                       version.
 (b) Paragraphs 2 and 3 are replaced by         (b) Paragraphs 2 and 3 are replaced by
     the following:                                 the following:
     "2. Without prejudice to Article 99,           "2. Without prejudice to Article 99,
     the decisions taken by the                     the decisions taken by the
     Commission in accordance with the              Commission in accordance with the
     provisions authorising it to grant             provisions authorising it to grant
     financial aid from the various funds           financial aid from the various funds
     or similar operations shall constitute         or similar operations shall constitute
     commitments of expenditure. Unless             commitments of expenditure. Unless
     these decisions stipulate a different          these decisions stipulate a different
     time limit for implementation in               time limit for implementation in
     accordance with the abovementioned             accordance            with         the
     provisions, these commitments shall            abovementioned provisions, these
     cover the total cost of the                    commitments shall cover the total
     corresponding       individual   legal         cost of the corresponding individual
     commitments up to 31 December of               legal     commitments        up     to
     year n+L                                       31 December o f year n+I.
     During the period of implementation            During the period of implementation
     referred to in the first subparagraph,         referred to in the first subparagraph,
     the conclusion of each individual              the conclusion of each individual
     legal commitment shall be registered           legal commitment shall be registered
     by the authorising officer in the              by the authorising officer in the
     central accounts and booked to the             central accounts and booked to the
     commitment referred to in the first            commitment referred to in the first
     subparagraph.                                  subparagraph.
                                                    The financial controller shall take
                                                    the necessary steps to guarantee
                                                    adequate control of the separate
                                                    legal commitments.
                                            11
 ---pagebreak---        INITIAL PROPOSAL                         AMENDED PROPOSAL
(COM(96) 351 final of 26.7.1996)
 The unused balance shall be released        The unused balance shall be released
 after the time limit is laid down.          after the time limit is laid down.
 The procedure for implementing 3.           The procedure for implementing
 paragraphs 1 and 2 shall ensure that        paragraphs 1 and 2 shall ensure that
 an exact account is kept of                 an exact account is kept of
 commitments and authorisations in           commitments and authorisations in
 terms of actual needs and that the          terms of actual needs andr as regards
 specific       legal       commitments      paragraph 2. that the specific legal
 correspond to the overall budget            commitments correspond to the
 commitment provided for by the              overall      budget         commitment
 Commission decision. The procedure          provided for by the Commission
 shall be determined by the                  decision. The procedure shall be
 implementing rules provided for in          determined by the implementing
 Article 139.".                              rules provided for in Article 139.".
                                          £& The following paragraph is added to
                                             Article 37:
                                             "The proposals for commitments
                                             referred to in Article 3 6 m and the
                                             proposals for individual legal
                                             commitments referred to in the
                                             second          subparagraph        .of
                                             Article 36(2) may be subject to spot
                                             checks. Such checks shall be carried
                                             out under a system which identifies
                                             risk sectors, in which there is a high
                                             probability that the conditions set
                                             out in Article 38(1) will not be
                                             fulfilled, Individual commitments
                                             shall be checked systematically in
                                             risk sectors.".
 In Article 39, the second and third
 paragraphs are replaced by the
  following:
  "Cases where approval is withheld
  and the authorising officer maintains
  his proposal shall be referred for a
  decision to the superior authority of
  the competent institution among
  those listed in the first two
  paragraphs of Article 22 within two
  months of the date of the decision to
  withhold approval.
                                        12
 ---pagebreak---             INITIAL PROPOSAL                              AMENDED PROPOSAL
    (COM(96) 351 final of 26.7.1996)
      Except where the availability of the
      appropriations is in doubt, the said
      superior authority may, by a decision
      stating the full reasons therefor, taken
     on its sole responsibility, overrule
     such a refusal. This decision shall be
     final and binding with effect from the
     date on which approval was
     withheld. It must be taken by
      15 February of year n+1. It shall be
     communicated for information to the
     financial controller. The superior
     authority of each institution shall
     inform the Court of Auditors of all
     such decisions within one month.".
10.  In the third indent of Article 44, the
     following shall be added after
     "national currency": "However, when
     payment orders are sent to the banks
     by      means       of     computerised
     procedures, the amount need not be
     expressed in words,".
                                                 10a. A third subparagraph is added to
                                                      Article 46(1) as follows;
                                                      "The decision to authorise the
                                                      balance shall be adopted within the
                                                      time     limit     laid     down     in
                                                      Article 1(7),",
                                                 10b. A third paragraph is added to
                                                      Article 47 as follows:
                                                      "Prior approval may be given on the
                                                      basis of a spot check; this shall be
                                                      carried out under a system which
                                                      identifies risk sectors, in which there
                                                       is a high probability that the
                                                       conditions set out in the second
                                                      paragraph will not be fulfilled.
                                                       Payment orders shall be checked
                                                       systematically in risk sectors.".
                                               13
 ---pagebreak---            INITIAL PROPOSAL                               AMENDED PROPOSAL
    (COM(96) 351 final of 26.7.1996)
                                                 iOc. The following article is inserted in
                                                      Title IV;
                                                                    Article S5a
                                                      "The power and authority of the
                                                      institutions to conclude contracts in
                                                      the performance of tasks involving
                                                      the exercise of public office may not
                                                      be ceded or transferred in any way
                                                      by the institutions to persons or
                                                      bodies other than the European
                                                      Community's institutions or bodies
                                                      set by the European Community."
11.  Three new paragraphs are added to 11             Two new paragraphs are added to
     Article 65 after the second paragraph:           Article 65 after the second
                                                      paragraph:
     "The inventory system established
     and administered by the authorising               "The inventory system shall be
      officer with the technical assistance            established by the authorising officer
      of the accounting officer and under             with the technical assistance of the
      his technical supervision shall                  accounting officer. This inventory
      provide the central system of                    system, which shall be administered
      accounts with all the appropriate                by the authorising officer, shall
      information needed to draw up the                provide the central system of
      institution's balance sheet.                     accounts with all the appropriate
                                                       information needed to draw up the
                                                       institution's balance sheet.
      For this purpose, the inventory and
      accounting       systems      shall   be
      organised in such a way as to ensure
      the concordance of the information
      they each contain and the possibility
      that operations can be audited from
      the time the equipment is acquired
       and entered in the inventory to the
       time when it is decommissioned or
       scrapped.
       The institutions shall each adopt, for           The institutions shall each adopt, for
       their own purposes, provisions                   their own purposes, provisions
       relating to the keeping of the                   relating to the keeping of the
        equipment      recorded      in   their         equipment       recorded    in    their
        respective balance sheets and shall             respective balance sheets and shall
        determine        the       departments          determine         the      departments
        responsible for this task.".                     responsible for the inventory
                                                         system.".
                                                14
 ---pagebreak---            INITIAL PROPOSAL                       AMENDED PROPOSAL
     (COM(96) 351 final of 26.7.1996)
12.   Article 70 is amended as follows:
  (a) In the first paragraph, the word
      "budgetary" shall be replaced by
      "expenditure and revenue".
  (b) In the second paragraph, point (a) is
      replaced by the following:
       "(a)      accounts of expenditure
                and revenue, subdivided
                into       two       separate
                subcategories:
                - accounts of budgetary
                   expenditure            and
                   revenue, which allow
                   implementation of the
                   budget to be monitored
                   and the balance for the
                   financial year to be
                   determined,
                - accounts        of     non-
                   budgetary expenditure
                   and revenue, which
                   complement              the
                   previous accounts and
                   can be used to produce a
                   broader        accounting
                   result.".
13.   The following article is inserted:
               "Article 70a
      The rules for the entry in the
      accounts of the depreciation of assets
      and the rules for writing down the
      value of assets and for constituting
      provisions shall be determined by the
      implementing rules provided for in
      Article 139.".
                                               15
 ---pagebreak---            INITIAL PROPOSAI,                            AMENDED PROPOSAL
    (COM(96)351 final of 26.7.1996)
                                               13a, Article 76    is    replaced    by   the
                                                    following;
                                                    "The liability of authorising officers,
                                                    financial controllers, accounting
                                                    Officers,     assistant      accounting
                                                    Officers and administrators of
                                                    advance funds to disciplinary action
                                                    and, if necessary, payment of
                                                    compensation may be determined in
                                                    accordance with the provisions of
                                                    Articles 22 and 86 to 89 of the Staff
                                                    Regulations of officials of the
                                                    European Communities.
                                                    All relevant data or information.
                                                    including       any      reports    and
                                                    withholdings of approval by the
                                                    financial     controller,     shall   be.
                                                    communicated        [Q the      authority
                                                    empowered to initiate the procedure
                                                    concerning        disciplinary      and
                                                     financial responsibility",.
14.  Article 79     is  replaced   by    the
      following:
     "Each institution shall, not later than
      1     March,     transmit    to     the
      Commission, after submitting them
      to its financial controller, the
      information required for drawing up
      the revenue and expenditure account
      and the balance sheet and a
      contribution to the analysis of the
      financial management referred to in
      Article 80.".
15.   In Article 104(2), "one month' is         15.   In Article 104(2), "one month before
      replaced by "21 days".                          31 January"      is     replaced     by
                                                      "luJanuary".
                                              16
 ---pagebreak---            INITIAL PROPOSAL                             AMENDED PROPOSAL
    (COM(96) 351 final of 26.7.1996)
16.  Article 109(3) is replaced by the
     following:
     "It shall transmit to the Commission
     for agreement the results of the
     examination       of the tendering
     procedure and a proposal for the
     award of the contract. It shall sign
     contracts, additions to contracts and
     estimates and shall notify the
     Commission thereof. For contracts,
     additions to contracts, and estimates,
     the Commission, where appropriate,
     shall     enter      into      individual
     commitments in accordance with the
     procedures laid down in Articles 36
     to 39. Individual commitments shall
     count towards the commitments
     under the financing agreements
     provided for in Article 106(2), in
     accordance       with     the     second
     subparagraph of Article 36(2).".
17.  Article 112    is   replaced     by    the 17.  Article 112 is replaced by the
     following:                                      following:
     "Notwithstanding        Title IV,     this      "The provisions of this section shall
     section shall apply to cases in which           apply instead of those under Title IV
     the Commission, in connection with              to cases in which the Commission,
     external aid financed from the budget           in connection with external aid
     of the European Communities, acts               financed from the budget of the
     as contracting authority in the award           European Communities, acts as
     of works, supply or service contracts           contracting authority in the award of
     not covered by the Council directives           works, supply or service contracts
     coordinating the award of public                not covered:
     works, supply or service contracts or
     by the Plurilateral Agreement on              - by     the      Council     directives
     Government Procurement concluded                coordinating the award of public
     within       the      World        Trade        works, supply or service contracts or
     Organisation.".
                                                   - by the Plurilateral Agreement on
                                                     Government Procurement concluded
                                                     within      the     World       Trade
                                                     Organisation.".
                                                17
 ---pagebreak---           INITIAL PROPOSAL                   T   AMENDED PROPOSAL
    (COM(96) 351 final of 26.7.1996)
18.  Article 113    is   replaced   by   the
     following:
     "The procedure to be followed for the
     award of works, supply or service
     contracts financed from the budget of
     the European Communities for
     recipients of external aid shall be
     specified in the financing agreement
     or the contract, subject to the
     following principles.".
                  Article 2
     This Regulation shall enter into force
     on the seventh day following its
     publication in the Official Journal of
     the European Communities.
     This Regulation shall be binding in
     its entirety and directly applicable in
     all Member States.
Done at...,
                             For the Council
                               The President
                                              18
 ---pagebreak---  ---pagebreak---                                                                   ISSN 0254-1475
                                                           COM(97) 542 final
                                             DOCUMENTS
EN                                                                    12 oi
                                    Catalogue number : CB-CO-97-570-EN-C
                                                             ISBN 92-78-26286-2
Office for Official Publications of the European Communities
L-2985 Luxembourg
                                               19