CELEX: 51979PC0202
Language: en
Date: 1979-04-23
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 to the Council)

ARCHIVES HISTORIQUES
DE LA COMMISSION
COLLECTION RELIEE DES
DOCUMENTS "COM"
COM (79) 202
Vol. 1979/0088
 ---pagebreak--- Disclaimer
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concernant l'ouverture au public des archives historiques de la Communauté économique
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p. 1), tel que modifié par le règlement (CE, Euratom) n° 1700/2003 du 22 septembre 2003
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In accordance with Council Regulation (EEC, Euratom) No 354/83 of 1 February 1983
concerning the opening to the public of the historical archives of the European Economic
Community and the European Atomic Energy Community (OJ L 43, 15.2.1983, p. 1), as
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file have been declassified in conformity with Article 5 of the aforementioned regulation.
In Übereinstimmung mit der Verordnung (EWG, Euratom) Nr. 354/83 des Rates vom 1.
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Wirtschaftsgemeinschaft und der Europäischen Atomgemeinschaft (ABI. L 43 vom 15.2.1983,
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 ---pagebreak---        COMMISSION OF THE EUROPEAN COMMUNITIES
                                                         COM(79)202 final
                                                         Brussels , 23rd April 1979
                                     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 to the Council )
                   ^ t'
                   U1
                       \
C0M(79 ) 202 final
 ---pagebreak---                                 EXPLANATORY imfORAlfSUM
I.   Cî?!IERAL C ONo I DSR ATI OnS
1 . Article 9° of "the Financial Regulation of 21 December 1977 states that
the expenditure financed by the Guarantee Section of the European Agricultural
Guidance and Guarantee Fund " shall be taken into account for a financial year
on the basis of payments made up to 31 December ••• provided that their
commitment and authorization have reached the accounting officer not later
than 31 March of the following year".          This provision, which already existed
under the Financial Regulation of 25 April . 1973 ( Article 109)^i establishes
what is commonly called the "EAGGF additional period". The system takes
into account the special features of the management of the EAGGF Guarantee
Section appropriations , which involves the intervention of government
departments and agencies ( the "paying agencies" referred to in Article 4 of
Regulation (ESC ) No 729/70 )»             it presents certain disadvantages .
The EAGGF additional period is a substantial departure from the general
budgetary system of the European Communities , under which accounts are
closed on 31 December on the basis of payments effected by the accounting
officer not later than the following 15 January ( final paragraph of
Article 5 of the Financial Regulation of 21 December 1 977 ) • In practice ,
the existence of an additional period has the effect of postponing the
actual closure of accounts until 31 March and the presentation of the revenue
and expenditure account by the Commission until 1 June of the following
financial year .
2 . In addition , the presentation of the revenue and expenditure account
rather late in the year obviously has repercussions on the various dates set
out in the Financial Regulation for auditing the accounts .
This situation may run counter to certain objectives which any body of budgetary
law should try to achieve , i.e. simplicity and clarity in the keeping of
accounts and the speedy closure and auditing of accounts , the time factor being
essential for the effectiveness and impact of the monitoring process . The
experience of the Institutions during the procedure leading to the first annual
report of the Court of Auditors , published at the end of January 1979^1 has
also shown that the dates in question should be arranged rescheduled , so that
the parties concerned have the necessary time to fulfil their functions
with all efficiency .
Abolition of the EAGGF additional period for these reasons would indeed make
for more rational timing.          The outcome would be longer periods both for the
pOJ No L 356 , 31 December 1977 »
 .OJ No L 116 , 1 May 1973 .
¿OJ No L 94 , 28 April 1970.
  OJ No C 313 . 30 December 1978 »
 ---pagebreak---                                   2
adoption of the annual report of the Court of Auditors and the
 communication by the Institutions of their replies to the comments
 in that report , with no concomitant extension of the period in which
the Commission must draw up the revenue and expenditure account .
The two drawbacks referred to above ( the existence of an additional
period for entering EAGGF Guarantee Section expenditure in the accounts
and the pressure of deadlines which are sometimes too tight in the
rendering and auditing of accounts ) could thus be eliminated simultaneously .
3.   The changes to be made thus spring from the two following aims :
–   more rational scheduling of the various deadlines stipulated in the
    Financial Regulation of 21 December 1977 for rendering and auditing
    the accounts ;
–   simultaneous abolition of the additional period for entering the
    expenditure of the EAGGF Guarantee Section in the accounts .
To permit a prompt decision on this proposal , the Commission has included
nothing which touches on other points . It intends , in accordance with
Article 107 of the Financial Regulation ( which provides for a three-yearly
review of the provisions of this Regulation), to incorporate in one text
all the amendments of various sorts which are found to be needed .    That
text will , of course ,       take into account the suggestions already made
by the Court of Auditors.
II . DETAILED EXPLANATIONS ( in the order of the Articles to be amended )
1.    More rational scheduling of the time-limits for the rendering and
      and auditing of accounts
The abolition of the EAGGF additional period will have two positive effects
on the timetable for rendering and auditing accounts : firstly , the time-
limits can be set earlier in the year and , secondly , the periods will
generally be longer . To achieve this , the following Articles of the
Financial Regulation of 21 December 1977 need to be amended :
( a) Article 6 ( 3 ) : In the interests of budgetary transparency and
      rational management of the appropriations , there should be no
      excessive delay in decisions on requests to carry over
      appropriations , to be made to the Budgetary Authority . The
      Commission accordingly proposes 21 February ( instead of 1 May
      as at present ) as the final date for submitting requests to
      carry over appropriations , as provided in Article 6(3 ).
 ---pagebreak---                                   - 3 -
(b) Articles 73 I 74 and 77 s    Ii. is proposed to make 1 April
      the final date for drawing up the revenue and expenditure
      account , the analysis of financial management and the balance
      sheet ( the current deadline is 1 June ). Since the accounts
      for the financial year should from now on be closed on
      15 January ( for expenditure under the general system provided
      for in Article 5 of the Financial Regulation) or on
      31 January ( for EAGGF Guarantee Section expenditure ), the
      Commission would in fact still have the same amount of time
      for drawing up these documents (1 February to 31 March instead
      of 1 April to 31 Kay). The Article 74 deadline for
      communication by the other Institutions of the information
      required for drawing up these documents should therefore be
      brought forward to 15 February .
( c ) Article 83(l ) s The time saved by eliminating the additional
      EAGGF period could also be applied to the deadline for the
      adoption by the Court of Auditors of its annual report . The
      Court of Auditors would also have an extra month for completing
      this task (1 April to 15 June instead of 1 June to 15 July).
      The Commission considers that this extra time would be very
      useful to the Court of Auditors in its work and , in general ,
      for the efficiency and precision of the external financial
      controls .
2.    Elimination of the additional period for entering EAGGF Guarantee
      Section expenditure in the accounts
( a) The current " additional period" for the EAGGF Guarantee Section,
which extends three months ( from 1 January to 31 March) beyond the one-year
Budget implementation period , was instituted with the object of giving time
for the transfer and processing of data from the national to the Community
level .
The time–lag between establishment of the data concerned by the paying
agencies in the Member States and the transmission, processing , verification
and entry into the accounts of that data at Community level is generally
about three months – inter alia because of the constraints of the present
rules (authorization of transfers by the Budgetary Authority ).
If , therefore , the period for entry in the Community accounts for the EAGGF
Guarantee Section currently spreads over 15 months ( from 1 January of the
financial year n to 31 March of the financial year n+1 ), this is simply
due to the material and legislative constraints resulting from the
two-tier system which characterizes and governs budgetary implementation
in the EAGGF Guarantee Section – the national tier and the Community tier .
Yet the present solution, devised when the Financial Regulation of
25 April 1973 was drafted , is not the only possible way of tackling this
particular situation. Its aim was to complete , by 31 March of the financial
year n+1 , the establishment , and hence the entry into the accounts , of the
final data on. expenditure incurred during the financial year n.
 ---pagebreak--- However , -the Financial Regulation permits the use of another technique
which , in practice , has the same results – the technique of automatic
carry-overs .   15/ this method , all expenditure ( in commitments and
actual payments ) for which substantiating statements have been sent in,
checked and entered in the accounts by . 31 January of the financial
year n+1 , would be recorded in the course of the financial year n .     In
the case of expenditure for which it is not possible to complete these
operations by 31 January , the following provisions would apply ?
–   the estimates communicated by the Member States in their most
    recent applications for ad.vance payments would be charged as
    commitments ;,                                                „
–   these commitments would be eligible for automatic carryovers and
    would be implemented , i.e. settled at Community level , during the
    subsequent months ( February , March, etc . of the year n+1 ).
As implementation of carryovers in n+1 is by definition a function and an
integral part of operations under the financial year n , the end result is
the same as that obtained under the current system . The advantage is the
valuable gain of two months for the next step , i.e. verification of the
accounts . It is therefore proposed that Article 97 of the Financial
Regulation of 21 December 1977        amended to this effect .
The provisions on the clearance of the accounts are therefore amended accordingly
( amendment of Article 100).
( b) YJith regard to expenditure for which it has not been possible to
process the final substantiating statements before the closing of the
financial year ( 31 January for the EAGGF Guarantee Section), this proposal
therefore advocates that the charging as commitments should be performed
on the basis of the estimates of requirements as stated by the Member States
in their most recent applications for advance payments .       The commitments
based on these estimates would then be carried over automatically to the
follov;inf; financial year .
It goes without saying that the utilization of these carryovers , during
the subsequent financial year will not always coincide absolutely , item by
item , with the commitments based on estimated requirements and that certain
adjustments will be necessary . In practice , these would be the final
adjustments which at present are made in March , and they would allow a
final adaptation of appropriations to requirements .
This being so , and in harmony with the object of this proposal , provision
should therefore be made for these – minor – adjustments to be decided
by the Commission under the same procedure as that proposed ( below) for
transfers made during a financial year . The proposed amendments to
Article 98 take these points into consideration.
 ---pagebreak--- In order to keep a time-~Festa?ietiea en =fche use of apppep^ia^ieyis Garbled evea?,
it is proposed, that appropriations carried over which have not been
committed, or chai'ged as payments before 30 June of the financial year to
which they are carried over should be cancelled under the year of origin
( amendment to Article 99 )«
( c ) The provisions of the Financial Regulation relating to decisions in
respect of transfers of appropriations in the EAGGF Guarantee Section
call for the following comments :
   ( i ) The distinction between "chapters" and "articles" doe3 not necessarily
          indicate specific categories of appropriations
          The structure of the nomenclature of the EAGGP Guarantee Section is
          the outcome of historical development .      In principle, each chapter
          should correspond to a specific market organization .
          Although generally true , this principle is not always respected .
          The present Chapter 73 » for example, groups together several
          different market organizations each of which should, in theory, be
          the subject of an individual chapter .
          Under the present rules , then, the Commission may itself decide to
          make transfers between, for example , the common organization of the
          market in hops ( Article 732 ) and dried fodder ( Article 734 ) tut not ,
          for instance , between . Chapter 60 ( cereals ) and Chapter 61 ( rice ).
          The present situation, therefore , is not strictly based on a logical
          approach , but rather on an approach of mere form .
  ( i i ) Once the estimates have been drawn up, i.e. the Budget has been
          adopted by the Budgetary Authority, it is implemented in the first
           instance by the Keraber States .
           Initially, the Commissions role as authorizing body consists of
          granting advances on the basis of the Member States 1 estimates .
          These advances take the form of global commitments .
           It is only later, after two to three months, when these advances have
          been implemented by the Member States , that the Commission is in a
           position to carry out the detailed charging of commitments and
           payments to individual items .    This is done on the basis of the
           substantiating statements forwarded by the Member States after
           carrying out the requisite examinations and checks .
 ---pagebreak---                                         6
 ( iii ) Expenditure in the EAGGF Guarantee Section is compulsory expenditure
          Expenditure in the EAGGF Guarantee Section is by definition compulsory
          expenditure .  Although the Commission has certain technical powers
          in market management , the volume of expenditure is the ineluctable
          result of all legislation in force and of the cyclical situation .
          It has often been stressed lately that agricultural expenditure
          cannot be contained at the budget level : the effort to contain it
          must be exerted upstream, i.e. at the level of basic legislation.
                                                *
 These considerations imply that transfers in the EAGGP Guarantee Section
 are basically "transfers for regularization purposes ", and not "transfers
 for authorization purposes ".
 It is not the transfer procedure which makes it possible for Member States
 to effect expenditure ; on the contrary, its aim is to adjust the estimates
 of appropriations entered in the Budget to actual needs .      Thus the
 requirements which must be met are first established, and later the
 appropriations are adjusted as needed.
 The present provisions whereby the Council formally approves such transfers
 do not correspond to reality.       They make for unnecessary procedural
 complications and their only effect is to increase delays .
 It should also be noted that the Commission systematically consults the
 EAGGP Committee before itself deciding on transfers between articles and
 before proposing transfers between chapters to the Council .      This
 procedure enables the representatives of the Member States to check that
 the transfers proposed meet the Member States' requirements .
 The Commission therefore believes that it would be in the interests of all
 the institutions concerned to proceed as follows :
  (i ) all transfers within the Guarantee Section to be decided upon by the
       Commission after consulting the EAGGP Committee ;
(ii ) "the Budgetary Authority to be immediately informed of these decisions
       ( amendment to Article 101 ).
 ---pagebreak--- ( d) The provisions governing food aid should be altered in the light of
the new rules proposed for the EAGGP Guarantee Section.   The new
Articles 97(0 » 97(2), 100 and 101 would then also apply to food aid
( amendment to Article 102).
 ---pagebreak---                        PROPOSAL FOR A COUNCIL REGULATION
                           ( 03 SC . 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 78h 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,
Having regard to the opinion of the European Parliament ,
Having regard to the opinion of the Court of Auditors ,
Whereas , in the interests of greater simplicity and clarity in the
keeping of accounts, it would appear appropriate to abolish the additional
period for entering in the accounts expenditure under the EAGGF
Guarantee Section;
Whereas the abolition of this period would permit a more rational scheduling
of the time–limits governing the procedure for the rendering and auditing
of the accounts ;
Whereas , to this end, certain provisions of the Financial Regulation of
21 December 1977 (0 must be amended ,
HAS ADOPTED THIS REGULATION:
                                    ARTICLE 1
The Financial Regulation of 21 December 1977 is hereby amended as follows:
 ( 1 ) O.J. No L 35^, 31 December 1977 , p. 1 *
 ---pagebreak--- 1 . The first subparagraph of Article 6(3 ) shall "be replaced "by the
following :
"3 .  In the case of the appropriations referred to in paragraph 1(b ), the
Commission shall transmit to the Council and shall forward to the
European Parliament , not later than 21 February. the requests to carryover
appropriations, duly substantiated, made by the European Parliament ,
the Council , the Court of Justice , the Court of Auditors and the
Commission itself ."
2.   The introductory paragraph of Article 73 shall be replaced by the
following :
"The Commission shall draw up, not later than 1 April of the following
year , a revenue and expenditure account for the Communities , which shall
include the following documents classified in accordance with the
budget nomenclature:"     ( remainder unchanged).
3.   Article 74 shall be replaced by the following:
" Each Institution shall , not later than 15 February, forward to the
Commission the information required for drawing up the revenue and
 expenditure account and the balance sheet , together with a contribution
to the analysis of the financial management referred to in Article 75 •"
4. Article 77 shall be replaced by the following:             ^
"The Commission shall forward the revenue and expenditure account , the
financial analysis and the balance sheet to the European Parliament , the
 Council and the Court of Auditors by 1 April at the latest ."
 5 . Article 83(1 ) shall be replaced by the following:
 "The Court of Auditors shall transmit to the Commission and to the
 Institutions concerned, by 15 June at the latest , any comments which are,
 in its opinion, of such a nature that they should appear in the report
 provided for in Article 78f of the ECSC Treaty, Article 206a of the
 ESC Treaty and Article 180a of the Euratom Treaty.     Each Institution
 shall address its reply to the Court of Auditors by 31 October at the
 latest .   The replies of the Institutions other than the Commission shall
be forwarded simultaneously to the Commission. n
 ---pagebreak---                                      - \ -
 6.   Article 97 shall "be replaced "by the following:
"1 . Expenditure shall be taken into account for a financial year on the
basis of payments made up to 31 December by the authorities and bodies
referred to in Article 4 of Regulation ( EEC ) No 729/70, provided that their
commitment and authorization have reached the accounting officer not later
than 31 January of the following year .
" 2.   Expenditure effected between 1 January and 31 October by authorities
and bodies under Article 4 of Regulation ( EEC ) ifo 729/70 shall be the
subject of a commitment and shall also be charged as a payment by chapter,
article and item , after examination of the statements transmitted by the
Member States in accordance with the provisions laid down pursuant to
Article 5(3 ) of the said Regulation, and after approval by the
Financial Controller .
The commitment shall be entered into within two months
following receipt of the statements transmitted by the Member States .
The charging as a payment shall , in principle , be carried out within the
same period, subject to subsequent provisions herein .
"3 .   The expenditure to be effected in November and December by authorities
and bodies' under Article 4 of Regulation ( EEC ) No 729/70 shall be the            ,
subject of a commitment on the basis of the statements of estimates
transmitted by the I-iemoer States .
"4 . The commitments provided for in paragraphs 2 and 3 shall be deducted
from those provided for in Article 96 ."
7.    Article 98 shall be replaced by the following:
"1 .   The commitments provided for in Article 97(3 ) shall be the subject of
automatic carryovers to the following financial year .
 " 2.      Appropriations which at the end of the year remain in the form of
global commitments , pursuant to the provisions of Article 96 , shall be
automatically carried over so that the expenditure chargeable to the
financial year of origin may be taken into account under the articles and
 items in question .
 "3 »  The difference between the total expenditure actually disbursed during
a financial year by the authorities and bodies under Article 4 of
 Regulation ( EZXQ Uo 729/79 and the total commitments and chargings as
 payments effected under Article 97(2 ) and ( 3 ) for the same f inane ial"~year
 shall be charged against the appropriations carried over tinder
 paragraphs 1 and 2 .
 " 4 . The charging provided for in paragraph 3 shall be subject to an
 examination of the statements transmitted by the i-Iember States in accordance
 with the provisions laid down pursuant to Article 5(3 ) of
 Regulation ( EEC ) jfo 729/70,        ter'approva'i' d'y the Financial Controller.
 ---pagebreak---                                                                                        I
"5 *   The Commission may    be authorized, where the need arises , and in             i
accordance with tho nrocednre provided for in Article 13 of
Herniation ( EEC ) ito 729/70. to make those transfers which prove necessary           !
from the automatic carryovers provided" for in paragraph 1 ."                          I
8.     Article 99 shall be replaced "by the following:
                                                                                        f
"1 .        Appropriations carried over under paragraphs 1 and 2 of
Article 96 and v;hich ha.ve not been the subject of a commitment or been
charged an a payment not later than 30 June of the financial year to which
they were carried over shall be cancelled in respect of the original financial
year .
"2.    A global provisional commitment corresponding to the appropriations
cancelled pursuant to paragraph 1 shall be constituted from the
appropriations of the current financial year ,"
9.     Article 100 shall be replaced by the following:
"1 .   Articles 97 and 98 shall apply without prejudice to the clearance of
accounts provided for in Article 5(2J(b ) of Regulation ( EEC ) No 729/70.
" 2.   Any difference v;hich may exist between the total expenditure charged
to the accounts for a financial year pursuant to Articles 97 and 98 and
the total expenditure established by the Commission when clearing the
accounts as provided for in Article 5( 2)(b ) of Reflation ( EEC ) No 729/70
shall be charged , under a single article , as over– or under–expenditure
to the financial year in which the accounts are cleared. "
10.    Article 101 shall be replaced by the following:
" 1 . Appropriations made available in one chapter of expenditure may not
be allocated to another chapter of expenditure .
" 2 . Transfers between chapters and transfers within a chapter shall be
made by decision of the Commission taken not later than 31 January in
accordance with the procedure provided for in Article 13 of
Reflation ( EEC ) flo 729/70*                                                        *
"3 .   The Commission shall inform the Budgetary Authority of such transfers ."
 11 .  In Article 102 .
 ( a) the third paragraph shall be replaced by "the following:
 "Article 97(1 ) and ( 2) and Articles 100 and 101 shall apply as regards the charging
as payment of expenditure effected by the Member States using the . funds
advanced by the Commission, and as regards the clearance of accounts."
 ---pagebreak--- ( b ) the final paragraph shall bo deleted.
                              ARTICLE 2  ■
                                                           A •
This Regulation shall enter into force on 1 June 1979 »
This Regulation shall be binding in its entirety and directly applicable
in all Member States .