Article 66 
1. The authorising officer shall be liable for payment of compensation as laid down in the Staff Regulations. 1a. The obligation to pay compensation shall apply in particular if: (a) the authorising officer, whether intentionally or through gross negligence on his part, determines entitlements to be recovered or issues recovery orders, commits expenditure or signs a payment order without complying with this Regulation and the implementing rules; (b) the authorising officer, whether intentionally or through gross negligence on his part, omits to draw up a document establishing an amount receivable, neglects to issue a recovery order or is late in issuing it or is late in issuing a payment order, thereby rendering the institution liable to civil action by third parties. 2. An authorising officer by delegation or subdelegation who considers that a decision which it is his/her responsibility to take is irregular or contrary to the principles of sound financial management shall inform the delegating authority in writing. If the delegating authority then gives a reasoned instruction in writing to the authorising officer by delegation or subdelegation to take the decision in question, the authorising officer may not be held liable. 3. In the event of subdelegation within his services, the authorising officer by delegation continues to be responsible for the efficiency and effectiveness of the internal management and control systems put in place and for the choice of the authorising officer by subdelegation. 4. Each institution shall set up a specialised financial irregularities panel or participate in a joint panel established by several institutions. The panels shall function independently and determine whether a financial irregularity has occurred and what the consequences, if any, should be. On the basis of the opinion of this panel, the institution shall decide whether to initiate proceedings entailing liability to disciplinary action or to payment of compensation. If the panel detects systemic problems, it shall send a report with recommendations to the authorising officer and to the authorising officer by delegation, provided the latter is not the person involved, as well as to the internal auditor.
Amendment rationale: EXPLANATORY MEMORANDUM The present Commission proposal aims at amending the Financial Regulation in line with the creation of the European External Action Service (hereinafter EEAS) as foreseen in the Lisbon Treaty. The Financial Regulation (FR) governs all the rules and procedures applicable to the use of EU funds and must be respected by all institutions. It is completed by Implementing Rules (IR) which should also be amended, in a separate proposal, to accommodate for the creation of the EEAS. Specificities for the management of the EEAS Staff are put forward in a separate Commission proposal to amend the Staff Regulation. The changes proposed build on the guidelines endorsed by the European Council of October 29-30, 2009 for the creation of the future EEAS as a sui generis service. The Commission will present, as foreseen in Article 184 of the Financial Regulation, its proposal for the triennial review of the Financial Regulation at the end of the first semester 2010. However , the Commission considers that an ad-hoc revision of the FR is inevitable before and separately from the triennial review if the EEAS is to be put in place rapidly. Other aspects relating to the implementation of the Lisbon Treaty have been covered by a separate proposal adopted by the Commission on 3 March 2010 (COM(2010) 71). 1. Main changes relating to the creation of the EEAS Article 27(3) of the Treaty on the European Union (TEU) foresees that the EEAS assist the High Representative (HR) to fulfil his mandate and that the organisation and functioning of the service shall be established by a decision of the Council, on a proposal from the HR after consulting the European Parliament and after obtaining the consent of the Commission. In its conclusions, the European Council of October 29-30, 2009 has endorsed some guidelines for the creation of the future EEAS as a sui generis service and invited the High Representative to put the EEAS in place 'by the end of April 2010'. In budgetary terms, the EEAS will be treated as an institution in the sense of Article 1 of the Financial Regulation so that it will have budgetary autonomy, i.e. its own section in the EU budget. It will implement its own administrative expenditure (like all other institutions) and will therefore receive discharge from the European Parliament for it. The European Parliament will therefore exercise its full budgetary and control powers towards the EEAS. Moreover, current Delegations of the Commission around the world become Union Delegations and will be part of the EEAS. Because these Delegations will continue implementing external aid, which is currently for most of them their main task, ways should be found to allow them to implement operational expenditure while they are not anymore part of the Commission, taking into account that the concerned part of their staff, i.e. operational and financial staff, will remain Commission staff. The Commission has been particularly attentive that the present proposal allow to EEAS to fulfil this task of a unified external action, without leading to a weakening of sound financial management, accountability and the protection of the financial interests of the Union. Naturally, the European Parliament will continue to grant discharge to the Commission for the implementation of the Commission section of the Budget, including operational appropriations implemented by Heads of Union Delegations who will act as sub-delegated authorising officers of the Commission. To achieve this purpose, the modifications introduced in the Financial Regulation aim at integrating the EEAS within the financial governance framework of the Commission whenever it participates in the implementation of its operational budget. In this context, it is essential that the EEAS builds on the experience, guidance, support and training for financial management and internal control in the external relations field which have been developed by the Commission over many years. The proposed approach is that Heads of Union Delegations be given sub-delegated implementation powers by the responsible Commission Directors Generals (DG). They would become authorising officers by sub-delegation (AOSDs) of the Commission and would be responsible before the DG which has sub-delegated budget implementation tasks to them. Specific rules are therefore proposed so that Heads of Union Delegations, when they implement part of the Commission section of the budget apply the Commission rules for the implementation of the budget and are submitted to the same duties and obligations as any other sub-delegated authorising officer of the Commission. To this effect the Commission may give them instructions where necessary and appropriate. Current rules on OLAF will also apply to Heads of Union Delegations in cases of financial irregularities relating to the management of appropriations from the EEAS section of the Budget and appropriations sub-delegated to them from the Commission section of the Budget. No specific provision concerning OLAF is required in the Financial Regulation. However, the present Commission proposal includes a new provision so that the panel of irregularities of the Commission is also the panel of irregularities for the EEAS in cases where the Commission sub-delegates implementation powers to Heads of Union Delegations. New provisions are also proposed to ensure that the HR plays a central role for the proper coordination and exchange of information between the EEAS and the Commission. Finally, in order to ensure an efficient management of Union Delegations, it is proposed that administrative and support expenditure which finance common costs in Delegations should be executed by a single support service, whatever the section of the Budget in which the respective appropriations are entered. To that effect, the possibility for detailed rules should be foreseen in Article 50 FR, to be convened with the Commission. 2. Commission Staff Working document concerning the Implementing Rules To complement the present Commission proposal to amend the Financial Regulation, a Commission Staff working document presents the changes required in the Implementing Rules. These changes will be adopted by the Commission once the amended FR is adopted and will concern the specific provisions which should apply to Heads of Delegation when they act as sub-delegated authorising officers of the Commission, in particular: - the fact that they have to sign the Charter for sub-delegated authorising officers, which stipulates in detail their duties and obligations, before starting to implement the EU Budget; - the Internal Rules of the Commission for the execution of the Budget; - the code of professional standards adopted by the Commission; - the panel of irregularities of the Commission (complementary provisions to the ones already set out in the FR are enshrined in the Implementing Rules).
Revised version (Article 66 ):
1. The authorising officer shall be liable for payment of compensation as laid down in the Staff Regulations. 1a. The obligation to pay compensation shall apply in particular if: (a) the authorising officer, whether intentionally or through gross negligence on his part, determines entitlements to be recovered or issues recovery orders, commits expenditure or signs a payment order without complying with this Regulation and the implementing rules; (b) the authorising officer, whether intentionally or through gross negligence on his part, omits to draw up a document establishing an amount receivable, neglects to issue a recovery order or is late in issuing it or is late in issuing a payment order, thereby rendering the institution liable to civil action by third parties. 2. An authorising officer by delegation or subdelegation who considers that a decision which it is his/her responsibility to take is irregular or contrary to the principles of sound financial management shall inform the delegating authority in writing. If the delegating authority then gives a reasoned instruction in writing to the authorising officer by delegation or subdelegation to take the decision in question, the authorising officer may not be held liable. 3. In the event of subdelegation within his services, the authorising officer by delegation continues to be responsible for the efficiency and effectiveness of the internal management and control systems put in place and for the choice of the authorising officer by subdelegation. 3a. In the event of sub-delegation to the Heads of Union Delegations, the authorising officer by delegation shall be responsible for the definition of the internal management and control systems put in place, their efficiency and effectiveness. The Heads of Union Delegations shall be responsible for the adequate setting up and functioning of those systems, in accordance with the instructions of the authorising officer by delegation, and for the management of the funds and the operations they carry out within the Union Delegation under their responsibility. Before taking up their duties, they must complete specific training courses on the tasks and responsibilities of authorising officers and the implementation of the budget, in accordance with Article 50 of the Implementing Rules. Heads of Union Delegations shall report on their responsibilities pursuant to the first subparagraph of this paragraph in accordance with Article 60a(3). Each year, Heads of Union Delegations shall provide to the authorising officer by delegation of the Commission the assurance on the internal management and control systems put in place in their Delegation, as well as on the management of operations sub-delegated to them and the results thereof, in order to allow the authorising officer to establish his statement of assurance, as provided for in Article 60(7). 4. Each institution shall set up a specialised financial irregularities panel or participate in a joint panel established by several institutions. The panels shall function independently and determine whether a financial irregularity has occurred and what the consequences, if any, should be. On the basis of the opinion of this panel, the institution shall decide whether to initiate proceedings entailing liability to disciplinary action or to payment of compensation. If the panel detects systemic problems, it shall send a report with recommendations to the authorising officer and to the authorising officer by delegation, provided the latter is not the person involved, as well as to the internal auditor. 5. Where Heads of Union Delegations act as authorising officers by sub-delegation in accordance with the second paragraph of Article 51, the specialised financial irregularities panel set up by the Commission pursuant to paragraph 4 of this Article shall be competent for cases referred to in that paragraph. If the panel detects systemic problems, it shall send a report with recommendations to the authorising officer, the High Representative and to the authorising officer by delegation of the Commission, provided the latter is not the person involved, as well as to the internal auditor. On the basis of the opinion of the panel, the Commission may request the High Representative to initiate, in the High Representative's capacity as appointing authority, proceedings entailing liability to disciplinary action or to payment of compensation against authorising officers by sub-delegation if irregularities concern the competencies of the Commission sub-delegated to them. In such a case, the High Representative will take appropriate action in accordance with the Staff Regulations in order to enforce decisions on disciplinary action and/or the payment of compensation, as recommended by the Commission. The Member States shall fully support the Union in the enforcement of any liability under Article 22 of the Staff Regulations of temporary staff to whom Article 2, point (e) of the Conditions of Employment of Other Servants of the European Communities applies.
Article 67 
An accounting officer shall be liable to disciplinary action and payment of compensation, as laid down and in accordance with the procedures in the Staff Regulations. He/She may in particular render himself liable by any of the following forms of misconduct: (a) he/she loses or damages monies, assets and documents in his/her keeping; (b) he/she wrongly alters bank accounts or postal giro accounts; (c) he/she recovers or pays amounts which are not in conformity with the corresponding recovery or payment orders; (d) he/she fails to collect revenue due.
Article 68 
An imprest officer shall be liable to disciplinary action and payment of compensation, as laid down and in accordance with the procedures in the Staff Regulations. He/She may in particular render himself liable by any of the following forms of misconduct: (a) he/she loses or damages monies, assets and documents in his/her keeping; (b) he/she cannot provide proper supporting documents for the payments he/she has made; (c) he/she makes payments to persons other than those entitled; (d) he/she fails to collect revenue due.
Article 69 
An estimate of revenue constituted by own resources, as referred to in the Council Decision on the system of the Communities' own resources, shall be entered in the budget in euro. It shall be made available in accordance with the Council Regulation implementing that Decision.
Article 70 
1. An estimate of the amount receivable shall first be made by the authorising officer responsible in respect of any measure or situation which may give rise to or modify an amount owing to the Communities. 2. By way of derogation from paragraph 1, no estimate of the amount receivable shall be made before Member States make available to the Commission the amounts of own resources defined in the Council Decision on the system of the Communities' own resources which are paid at fixed intervals by the Member States. The authorising officer responsible shall issue a recovery order in respect of these amounts.
Article 71 
1. Establishment of an amount receivable is the act by which the authorising officer by delegation or subdelegation: (a) verifies that the debt exists; (b) determines or verifies the reality and the amount of the debt; (c) verifies the conditions in which the debt is due. 2. The own resources made available to the Commission and any amount receivable that is identified as being certain, of a fixed amount and due must be established by a recovery order to the accounting officer followed by a debit note sent to the debtor, both drawn up by the authorising officer responsible. 3. Amounts wrongly paid shall be recovered. 4. The conditions in which interest on late payment is due to the Communities shall be laid down in the implementing rules.
Article 72 
1. The authorisation of recovery is the act whereby the authorising officer by delegation or subdelegation responsible instructs the accounting officer, by issuing a recovery order, to recover an amount receivable which he/she has established. 2. The institution may formally establish an amount as being receivable from persons other than States by means of a decision which shall be enforceable within the meaning of Article 256 of the EC Treaty.
Article 73 
1. The accounting officer shall act on recovery orders for amounts receivable duly established by the authorising officer responsible. He/She shall exercise due diligence to ensure that the Communities receive their revenue and shall see that their rights are safeguarded. The accounting officer shall recover amounts by offsetting them against equivalent claims that the Communities have on any debtor who himself/herself has a claim on the Communities that is certain, of a fixed amount and due. 2. Where the responsible authorising officer by delegation is planning to waive or partially waive recovery of an established amount receivable, he/she shall ensure that the waiver is in order and complies with the principle of sound financial management and proportionality in accordance with the procedures and the criteria laid down in the implementing rules. The waiver decision must be substantiated. The authorising officer may delegate the decision only as laid down in the implementing rules. The responsible authorising officer may furthermore cancel or adjust an established amount receivable, in accordance with the conditions set out in the implementing rules.
Article 73a 
Without prejudice to the provisions of specific regulations and the application of the Council Decision relating to the Communities' own resources system, entitlements of the Communities in respect of third parties and entitlements of third parties in respect of the Communities shall be subject to a limitation period of five years. The date for calculating the limitation period and the conditions for interrupting this period shall be laid down in the implementing rules.
Article 74 
Revenue received by way of fines, periodic penalty payments and other penalties and any accrued interest shall not be finally recorded as budgetary revenue as long as the decisions imposing them may be annulled by the Court of Justice. The first paragraph shall not apply to decisions on clearance of accounts or financial corrections.
Article 75 
1. Every item of expenditure shall be committed, validated, authorised and paid. 2. Except in the case of appropriations which can be implemented without a basic act in accordance with Article 49(6)(e) , the commitment of the expenditure shall be preceded by a financing decision adopted by the institution or the authorities to which powers have been delegated by the institution.
Article 76 
1. The budgetary commitment is the operation reserving the appropriation necessary to cover subsequent payments to honour a legal commitment. The legal commitment is the act whereby the authorising officer enters into or establishes an obligation which results in a charge. The budgetary commitment and the legal commitment shall be adopted by the same authorising officer, save in duly substantiated cases as provided for in the implementing rules. 2. The budgetary commitment is individual when the beneficiary and the amount of the expenditure are known. The budgetary commitment is global when at least one of the elements necessary to identify the individual commitment is still not known. The budgetary commitment is provisional when it is intended to cover the expenditure referred to in Article 150 or routine administrative expenditure and either the amount or the final beneficiaries are not definitively known. 3. Budgetary commitments for actions extending over more than one financial year may be broken down over several years into annual instalments only where the basic act so provides and for administrative expenditure. Where the budgetary commitment is thus divided into annual instalments, the legal commitment shall stipulate this, except in the case of expenditure on staff.
Article 77 
1. In respect of any measure which may give rise to expenditure chargeable to the budget, the authorising officer responsible must first make a budgetary commitment before entering into a legal obligation with third parties. 2. Subject to the special provisions of Title IV of part two, global budget commitments shall cover the total cost of the corresponding individual legal commitments concluded up to 31 December of year n + 1. Subject to Article 76(3) and Article 179(2), individual legal commitments relating to individual or provisional budgetary commitments shall be concluded by 31 December of year n . At the end of the periods referred to in the first and second subparagraphs, the unused balance of these budgetary commitments shall be decommitted by the authorising officer responsible. The amount of each individual legal commitment adopted following a global commitment shall, prior to signature, be registered by the authorising officer responsible in the budgetary accounts and booked to the global commitment. 3. The legal commitments entered into for actions extending over more than one financial year and the corresponding budgetary commitments shall, save in the case of staff expenditure, have a final date for implementation set in compliance with the principle of sound financial management. Any parts of such commitments which have not been executed six months after that date shall be decommitted in accordance with Article 11. The amount of a budget commitment corresponding to a legal commitment for which no payment within the meaning of Article 81 has been made in a period of three years following the signing of the legal commitment shall be decommitted.
Article 78 
1. When adopting a budgetary commitment, the authorising officer responsible shall ensure that: (a) the expenditure has been charged to the correct item in the budget; (b) the appropriations are available; (c) the expenditure conforms to the provisions of the Treaties, of the budget, of this Regulation, of the implementing rules and of all acts adopted in accordance with the Treaties and regulations; (d) the principle of sound financial management is complied with. 2. When registering a legal commitment, the authorising officer shall ensure that: (a) the commitment is covered by the corresponding budgetary commitment; (b) the expenditure is regular and conforms to the provisions of the Treaties, of the budget, of this Regulation, of the implementing rules and of all acts adopted in accordance with the Treaties and the regulations; (c) the principle of sound financial management is respected.
Article 79 
Validation of expenditure is the act whereby the authorising officer responsible: (a) verifies the existence of the creditor's entitlement; (b) determines or verifies the reality and the amount of the claim; (c) verifies the conditions in which payment is due.
Article 80 
Authorisation of expenditure is the act whereby the authorising officer responsible, having verified that the appropriations are available and by issuing a payment order, instructs the accounting officer to pay an amount of expenditure which he/she has validated. Where periodic payments are made with regard to services rendered, including rental services, or goods delivered, and subject to his risk analysis, the authorising officer may order the application of a direct debit system.
Article 81 
1. Payment shall be made on production of proof that the relevant action is in accordance with the provisions of the basic act or the contract and shall cover one or more of the following operations: (a) payment of the entire amount due; (b) payment of the amount due in any of the following ways: (i) pre-financing, which may be divided into a number of payments; (ii) one or more interim payments; (iii) payment of the balance of the amounts due. (b) payment of the amount due in any of the following ways: (i) pre-financing, which may be divided into a number of payments; (ii) one or more interim payments; (iii) payment of the balance of the amounts due. 2. A distinction shall be made in the accounts between the different types of payment referred to in paragraph 1 at the time they are made.
Article 82 
Payment of expenditure shall be made by the accounting officer within the limits of the funds available.
Article 83 
The validation, authorisation and payment of expenditure must be completed within the time limits laid down in the implementing rules, which shall also specify the circumstances in which creditors paid late are entitled to receive default interest charged to the line from which the principal was paid.
Article 84 
Where revenue and expenditure operations are managed by means of computer systems, documents may be signed by a computerised or electronic procedure.
Article 85 
Each institution shall establish an internal auditing function which must be performed in compliance with the relevant international standards. The internal auditor appointed by the institution shall be answerable to the latter for verifying the proper operation of budgetary implementation systems and procedures. The internal auditor may not be either authorising officer or accounting officer.
Amendment rationale: EXPLANATORY MEMORANDUM The present Commission proposal aims at amending the Financial Regulation in line with the creation of the European External Action Service (hereinafter EEAS) as foreseen in the Lisbon Treaty. The Financial Regulation (FR) governs all the rules and procedures applicable to the use of EU funds and must be respected by all institutions. It is completed by Implementing Rules (IR) which should also be amended, in a separate proposal, to accommodate for the creation of the EEAS. Specificities for the management of the EEAS Staff are put forward in a separate Commission proposal to amend the Staff Regulation. The changes proposed build on the guidelines endorsed by the European Council of October 29-30, 2009 for the creation of the future EEAS as a sui generis service. The Commission will present, as foreseen in Article 184 of the Financial Regulation, its proposal for the triennial review of the Financial Regulation at the end of the first semester 2010. However , the Commission considers that an ad-hoc revision of the FR is inevitable before and separately from the triennial review if the EEAS is to be put in place rapidly. Other aspects relating to the implementation of the Lisbon Treaty have been covered by a separate proposal adopted by the Commission on 3 March 2010 (COM(2010) 71). 1. Main changes relating to the creation of the EEAS Article 27(3) of the Treaty on the European Union (TEU) foresees that the EEAS assist the High Representative (HR) to fulfil his mandate and that the organisation and functioning of the service shall be established by a decision of the Council, on a proposal from the HR after consulting the European Parliament and after obtaining the consent of the Commission. In its conclusions, the European Council of October 29-30, 2009 has endorsed some guidelines for the creation of the future EEAS as a sui generis service and invited the High Representative to put the EEAS in place 'by the end of April 2010'. In budgetary terms, the EEAS will be treated as an institution in the sense of Article 1 of the Financial Regulation so that it will have budgetary autonomy, i.e. its own section in the EU budget. It will implement its own administrative expenditure (like all other institutions) and will therefore receive discharge from the European Parliament for it. The European Parliament will therefore exercise its full budgetary and control powers towards the EEAS. Moreover, current Delegations of the Commission around the world become Union Delegations and will be part of the EEAS. Because these Delegations will continue implementing external aid, which is currently for most of them their main task, ways should be found to allow them to implement operational expenditure while they are not anymore part of the Commission, taking into account that the concerned part of their staff, i.e. operational and financial staff, will remain Commission staff. The Commission has been particularly attentive that the present proposal allow to EEAS to fulfil this task of a unified external action, without leading to a weakening of sound financial management, accountability and the protection of the financial interests of the Union. Naturally, the European Parliament will continue to grant discharge to the Commission for the implementation of the Commission section of the Budget, including operational appropriations implemented by Heads of Union Delegations who will act as sub-delegated authorising officers of the Commission. To achieve this purpose, the modifications introduced in the Financial Regulation aim at integrating the EEAS within the financial governance framework of the Commission whenever it participates in the implementation of its operational budget. In this context, it is essential that the EEAS builds on the experience, guidance, support and training for financial management and internal control in the external relations field which have been developed by the Commission over many years. The proposed approach is that Heads of Union Delegations be given sub-delegated implementation powers by the responsible Commission Directors Generals (DG). They would become authorising officers by sub-delegation (AOSDs) of the Commission and would be responsible before the DG which has sub-delegated budget implementation tasks to them. Specific rules are therefore proposed so that Heads of Union Delegations, when they implement part of the Commission section of the budget apply the Commission rules for the implementation of the budget and are submitted to the same duties and obligations as any other sub-delegated authorising officer of the Commission. To this effect the Commission may give them instructions where necessary and appropriate. Current rules on OLAF will also apply to Heads of Union Delegations in cases of financial irregularities relating to the management of appropriations from the EEAS section of the Budget and appropriations sub-delegated to them from the Commission section of the Budget. No specific provision concerning OLAF is required in the Financial Regulation. However, the present Commission proposal includes a new provision so that the panel of irregularities of the Commission is also the panel of irregularities for the EEAS in cases where the Commission sub-delegates implementation powers to Heads of Union Delegations. New provisions are also proposed to ensure that the HR plays a central role for the proper coordination and exchange of information between the EEAS and the Commission. Finally, in order to ensure an efficient management of Union Delegations, it is proposed that administrative and support expenditure which finance common costs in Delegations should be executed by a single support service, whatever the section of the Budget in which the respective appropriations are entered. To that effect, the possibility for detailed rules should be foreseen in Article 50 FR, to be convened with the Commission. 2. Commission Staff Working document concerning the Implementing Rules To complement the present Commission proposal to amend the Financial Regulation, a Commission Staff working document presents the changes required in the Implementing Rules. These changes will be adopted by the Commission once the amended FR is adopted and will concern the specific provisions which should apply to Heads of Delegation when they act as sub-delegated authorising officers of the Commission, in particular: - the fact that they have to sign the Charter for sub-delegated authorising officers, which stipulates in detail their duties and obligations, before starting to implement the EU Budget; - the Internal Rules of the Commission for the execution of the Budget; - the code of professional standards adopted by the Commission; - the panel of irregularities of the Commission (complementary provisions to the ones already set out in the FR are enshrined in the Implementing Rules).
Revised version (Article 85 ):
Each institution shall establish an internal auditing function which must be performed in compliance with the relevant international standards. The internal auditor appointed by the institution shall be answerable to the latter for verifying the proper operation of budgetary implementation systems and procedures. The internal auditor may not be either authorising officer or accounting officer. For the purposes of the internal auditing of the EEAS, Heads of Union Delegations, acting as authorising officers by sub-delegation in accordance with the second paragraph of Article 51 shall be subject to the verifying powers of the internal auditor of the Commission for the financial management sub-delegated to them. The internal auditor of the Commission shall also act as the internal auditor of the EEAS in respect of the implementation of the EEAS section of the budget, subject to Article 186a.
Article 86 
1. The internal auditor shall advise his/her institution on dealing with risks, by issuing independent opinions on the quality of management and control systems and by issuing recommendations for improving the conditions of implementation of operations and promoting sound financial management. He/She shall be responsible in particular: (a) for assessing the suitability and effectiveness of internal management systems and the performance of departments in implementing policies, programmes and actions by reference to the risks associated with them; (b) for assessing the efficiency and effectiveness of the internal control and audit systems applicable to every budgetary implementation operation. 2. The internal auditor shall perform his/her duties on all the institution's activities and departments. He/She shall enjoy full and unlimited access to all information required to perform his duties, if necessary on the spot, including in the Member States and in third countries. 3. The internal auditor shall report to the institution on his/her findings and recommendations. The institution shall ensure that action is taken on recommendations resulting from audits. The internal auditor shall also submit to the institution an annual internal audit report indicating the number and type of internal audits carried out, the recommendations made and the action taken on those recommendations. 4. Each year the institution shall forward a report to the discharge authority summarising the number and type of internal audits carried out, the recommendations made and the action taken on those recommendations.
Article 87 
Special rules applicable to the internal auditor shall be laid down by the institution and shall be such as to guarantee that he/she is totally independent in the performance of his/her duties and to establish his responsibility. If the internal auditor is a member of staff, he shall assume responsibility as laid down in the Staff Regulations and spelt out in the implementing rules.
Article 88 
1. Public contracts are contracts for pecuniary interest concluded in writing between one or more economic operators and one or more contracting authorities within the meaning of Articles 104 and 167, in order to obtain, against payment of a price paid in whole or in part from the budget, the supply of movable or immovable assets, the execution of works or the provision of services. These contracts comprise: (a) contracts for the purchase or rental of a building; (b) supply contracts; (c) works contracts; (d) service contracts. 2. Framework contracts are contracts concluded between one or more contracting authorities and one or more economic operators, the purpose of which is to establish the terms governing contracts to be awarded during a given period, in particular with regard to price and, where appropriate, the quantity envisaged. They shall be governed by the provisions of this Title concerning the award procedure, including advertising. 3. This Title does not relate to grants, without prejudice to Articles 93 to 96.
Article 89 
1. All public contracts financed in whole or in part by the budget shall comply with the principles of transparency, proportionality, equal treatment and non-discrimination. 2. All procurement contracts shall be put out to tender on the broadest possible base, except when use is made of the negotiated procedure referred to in Article 91(1)(d). Contracting authorities may not use framework contracts improperly or in such a way that the purpose or effect is to prevent, restrict or distort competition.
Article 90 
1. All contracts exceeding the thresholds provided for in Article 105 or Article 167 shall be published in the Official Journal of the European Union . Contract notices shall be published in advance except in the cases referred to in Article 91(2) of this Regulation, as specified in the implementing rules, and for the service contracts covered by Annex IIB to Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts ( 11 ). Publication of certain information after the contract has been awarded may be dropped where it would hinder application of the law, would be contrary to the public interest or would harm the legitimate business interests of public or private undertakings or could distort fair competition between them. 2. Contracts with a value below the thresholds provided for in Article 105 or Article 167 and the service contracts referred to in Annex IIB to Directive 2004/18/EC shall be advertised by appropriate means, as specified in the implementing rules.
Article 91 
1. Procurement procedures shall take one of the following forms: (a) the open procedure; (b) the restricted procedure; (c) contests; (d) the negotiated procedure; (e) the competitive dialogue. Where a public contract or a framework contract is of interest to two or more institutions, executive agencies or bodies referred to in Article 185, and whenever there is a possibility for realising efficiency gains, the contracting authorities concerned shall seek to carry out the procurement procedure on an interinstitutional basis. Where a public contract or framework contract is necessary for the implementation of a joint action between one institution and a contracting authority from a Member State, the procurement procedure may be carried out jointly by the institution and this contracting authority, as specified in the implementing rules. 2. For contracts where the value exceeds the thresholds provided for in Article 105 or Article 167, use of the negotiated procedure shall be authorised only in the cases provided for in the implementing rules. 3. The thresholds below which the contracting authority may either use a negotiated procedure or, by way of derogation from the first subparagraph of Article 88(1), simply pay costs against invoices shall be determined in the implementing rules. 4. The implementing rules shall define the procurement procedure, referred to in paragraph 1, applicable to service contracts covered by Annex IIB to Directive 2004/18/EC and to contracts which are declared to be secret, whose performance must be accompanied by special security measures, or when the protection of essential interests of the Communities or the European Union so requires.
Article 92 
The documents relating to the call for tenders shall give a full, clear and precise description of the subject of the contract and specify the exclusion, selection and award criteria applicable to the contract.
Article 93 
1. Candidates or tenderers shall be excluded from participation in procurement procedures if : (a) they are bankrupt or being wound up, are having their affairs administered by the courts, have entered into an arrangement with creditors, have suspended business activities, are the subject of proceedings concerning those matters, or are in any analogous situation arising from a similar procedure provided for in national legislation or regulations; (b) they have been convicted of an offence concerning their professional conduct by a judgment which has the force of res judicata ; (c) they have been guilty of grave professional misconduct proven by any means which the contracting authority can justify; (d) they have not fulfilled obligations relating to the payment of social security contributions or the payment of taxes in accordance with the legal provisions of the country in which they are established or with those of the country of the contracting authority or those of the country where the contract is to be performed; (e) they have been the subject of a judgment which has the force of res judicata for fraud, corruption, involvement in a criminal organisation or any other illegal activity detrimental to the Communities' financial interests; (f) they are currently subject to an administrative penalty referred to in Article 96(1). Points (a) to (d) of the first subparagraph shall not apply in the case of purchase of supplies on particularly advantageous terms from a supplier which is definitively winding up its business activities, or from the receivers or liquidators of a bankruptcy, through an arrangement with creditors, or through a similar procedure under national law. 2. Candidates or tenderers shall certify that they are not in one of the situations listed in paragraph 1. However, the contracting authority may refrain from requiring such certification for very low value contracts, as specified in the implementing rules. For the purpose of the correct application of paragraph 1, the candidate or tenderer, whenever requested by the contracting authority, must: (a) where the candidate or tenderer is a legal entity, provide information on the ownership or on the management, control and power of representation of the legal entity; (b) where subcontracting is envisaged, certify that the subcontractor is not in one of the situations referred to in paragraph 1. 3. The implementing rules shall determine the maximum period during which the situations referred to in paragraph 1 give rise to the exclusion of candidates or tenderers from participation in a procurement procedure. The maximum period shall not exceed 10 years.
Article 94 
A contract shall not be awarded to candidates or tenderers who, during the procurement procedure for this contract: (a) are subject to a conflict of interest; (b) are guilty of misrepresentation in supplying the information required by the contracting authority as a condition of participation in the procurement procedure or fail to supply this information; (c) find themselves in one of the situations of exclusion, referred to in Article 93(1), for this procurement procedure.
Article 95 
1. A central database shall be set up and operated by the Commission in compliance with Community rules on the protection of personal data. The database shall contain details of candidates and tenderers which is in one of the situations referred to in Articles 93, 94, 96(1)(b) and (2)(a). It shall be common to the institutions, executive agencies and the bodies referred to in Article 185. 2. The authorities of the Member States and third countries as well as the bodies, other than those referred to in paragraph 1, participating in the implementation of the budget in accordance with Articles 53 and 54, shall communicate to the competent authorising officer information on candidates and tenderers which are in one of the situations referred to in Article 93(1) (e), where the conduct of the operator concerned was detrimental to the Communities' financial interest. The authorising officer shall receive this information and request the accounting officer to enter it into the database. The authorities and bodies mentioned in the first subparagraph shall have access to the information contained in the database and may take it into account, as appropriate and on their own responsibility for the award of contracts associated with the implementation of the budget. 3. Transparent and coherent criteria to ensure proportionate application of the exclusion criteria shall be laid down in the implementing rules. The Commission shall define standardised procedures and technical specifications for the operation of the database.
Article 96 
1. The contracting authority may impose administrative or financial penalties on the following: (a) candidates or tenderers in the cases referred to in point (b) of Article 94; (b) contractors who have been declared to be in serious breach of their obligations under contracts covered by the budget. In all cases, however, the contracting authority must first give the person concerned an opportunity to present his observations. 2. The penalties referred to in paragraph 1 shall be proportionate to the importance of the contract and the seriousness of the misconduct, and may consist in: (a) the exclusion of the candidate or tenderer or contractor concerned from the contracts and grants financed by the budget, for a maximum period of ten years; and/or (b) the payment of financial penalties by the candidate or tenderer or contractor up to the value of the contract in question.
Article 97 
1. Contracts shall be awarded on the basis of award criteria applicable to the content of the tender after the capability of economic operators not excluded under Articles 93, 94 and 96(2)(a) has been checked in accordance with the selection criteria contained in the documents relating to the call for tenders. 2. Contracts shall be awarded by the automatic award procedure or by the best-value-for-money procedure.
Article 98 
1. The arrangements for submitting tenders shall be such as to ensure that there is genuine competition and that the contents of tenders remain confidential until they are all opened simultaneously. 2. If deemed appropriate and proportionate, the contracting authority may require tenderers, as provided in the implementing rules, to lodge a security in advance as a guarantee that the bids made will not be withdrawn. 3. With the exception of the contracts involving small amounts referred to in Article 91(3), applications and tenders shall be opened by an opening board appointed for this purpose. Any tender or application declared by the board not to satisfy the conditions laid down shall be rejected. 4. All requests to participate or tenders declared by the opening board as satisfying the conditions laid down shall be evaluated, on the basis of the criteria provided in the documents relating to the call for tenders, in order to propose to the contracting authority the award of the contract or to proceed with an electronic auction.
Article 99 
While the procurement procedure is under way, all contacts between the contracting authority and candidates or tenderers must satisfy conditions ensuring transparency and equal treatment. They may not lead to amendment of the conditions of the contract or the terms of the original tender.
Article 100 
1. The authorising officer shall decide to whom the contract is to be awarded, in compliance with the selection and award criteria laid down in advance in the documents relating to the call for tenders and the procurement rules. 2. The contracting authority shall notify all candidates or tenderers whose applications or tenders are rejected of the grounds on which the decision was taken, and all tenderers whose tenders are admissible and who make a request in writing of the characteristics and relative advantages of the successful tender and the name of the tenderer to whom the contract is awarded. However, certain details need not be disclosed where disclosure would hinder application of the law, would be contrary to the public interest or would harm the legitimate business interests of public or private undertakings or could distort fair competition between those undertakings.
Article 101 
The contracting authority may, before the contract is signed, either abandon the procurement or cancel the award procedure without the candidates or tenderers being entitled to claim any compensation. The decision must be substantiated and be brought to the attention of the candidates or tenderers.
Article 102 
1. The contracting authority shall require contractors to lodge a guarantee in advance in the cases specified in the implementing rules. 2. The contracting authority may, if it deems it appropriate and proportionate, require contractors to lodge such a guarantee in order to: (a) ensure full performance of the contract; (b) limit the financial risks connected with payment of pre-financing.
Article 103 
Where the award procedure proves to have been subject to substantial errors, irregularities or fraud, the institutions shall suspend the procedure and may take whatever measures are necessary, including the cancellation of the procedure. Where, after the award of the contract, the award procedure or the performance of the contract prove to have been subject to substantial errors, irregularities or fraud, the institutions may, depending on the stage reached in the procedure, refrain from concluding the contract or suspend performance of the contract or, where appropriate, terminate the contract. Where such errors, irregularities or fraud are attributable to the contractor, the institutions may in addition refuse to make payments, may recover amounts already paid or may terminate all the contracts concluded with this contractor, in proportion to the seriousness of the errors, irregularities or fraud.
Article 104 
The Community institutions shall be deemed to be contracting authorities in the case of contracts awarded on their own account. They shall delegate, in accordance with Article 59, the necessary powers for the exercise of the function of contracting authority .
Article 105 
1. Subject to Title IV of Part Two of this Regulation, Directive 2004/18/EC lays down the thresholds which determine: (a) the publication arrangements referred to in Article 90; (b) the choice of procedures referred to in Article 91(1); (c) the corresponding time limits. 2. Subject to exceptions and conditions specified in the implementing rules, the contracting authority shall not, in the case of contracts covered by Directive 2004/18/EC, sign the contract or framework contract with the successful tenderer until a period of standstill has elapsed.
Article 106 
Participation in tendering procedures shall be open on equal terms to all natural and legal persons coming within the scope of the Treaties and to all natural and legal persons in a third country which has with the European Communities a special agreement in the field of public procurement under the conditions laid down in that agreement.
Article 107 
Where the Multilateral Agreement on Government Procurement concluded within the World Trade Organisation applies, the contracts shall also be open to nationals of the States which have ratified this agreement, under the conditions laid down in that agreement.
Article 108 
1. Grants are direct financial contributions, by way of donation, from the budget in order to finance: (a) either an action intended to help achieve an objective forming part of a European Union policy; (b) or the functioning of a body which pursues an aim of general European interest or has an objective forming part of a European Union policy. They shall be covered either by a written agreement or by a Commission decision notified to the successful applicant. 2. The following shall not constitute grants within the meaning of this Title: (a) expenditure on the members and staff of the institutions and contributions to the European schools; (b) loans, risk-bearing instruments of the Community or Community financial contributions to such instruments, the public contracts referred to in Article 88 and aid paid as macro financial assistance and budgetary support; (c) equity investments on the basis of the private investor principle, quasi-equity financing and shareholdings or equity participations in international financial institutions such as the European Bank for Reconstruction and Development (EBRD) or specialised Community bodies such as the European Investment Fund (EIF); (d) contributions paid by the Communities as subscriptions to bodies of which they are members; (e) expenditure implemented as part of shared, decentralised or joint management within the meaning of Articles 53 to 53d; (f) payments made to bodies to which implementation tasks are delegated in accordance with Article 54(2) and contributions made by virtue of their constitutive basic act to bodies set up by the legislative authority; (g) expenditure relating to fisheries markets referred to in Article 3(2) (f) of Council Regulation (EC) No 1290/2005 of 21 June 2005 on the financing of the common agricultural policy ( 12 ); (h) repayment of travel and subsistence expenses incurred by, or where appropriate any other indemnities paid to, persons invited or mandated by the institutions. 3. The following shall be assimilated to grants and shall be governed, as appropriate, by this Title: (a) the benefit deriving from an interest subsidy on certain loans; (b) equity investments or participations other than those referred to in point (c) of paragraph 2. 4. Each institution may award grants for communication activities where, for duly justified reasons, the use of public procurement procedures is not appropriate.
Article 108a 
1. Grants may take any of the following forms: (a) reimbursement of a specified proportion of the eligible costs actually incurred; (b) lump sums; (c) flat-rate financing; (d) a combination of the forms referred to in points (a), (b) and (c). 2. Grants shall not exceed an overall ceiling expressed in terms of absolute value.
Article 109 
1. Grants shall be subject to the principles of transparency and equal treatment. They may not be cumulative or awarded retrospectively and they must involve co-financing. On no account may the combined total costs eligible, as specified in the implementing rules, for financing be exceeded. 2. Grants may not have the purpose or effect of producing a profit for the beneficiary. 3. Paragraph 2 shall not apply to the following: (a) study, research or training scholarships paid to natural persons; (b) prizes awarded following contests; (c) actions the objective of which is the reinforcement of the financial capacity of a beneficiary or the generation of an income in the framework of external actions. 4. If a political party at European level realises a surplus of income over expenditure at the end of a financial year for which it received an operating grant, part of that surplus up to 25 % of the total income for that year may, by derogation from the no-profit rule laid down in paragraph 2, be carried over to the following year provided that it is used before the end of the first quarter of this following year. For the purpose of verifying compliance with the no-profit rule, the own resources, in particular donations and membership fees, aggregated in the annual operations of a political party at European level, which exceed 15 % of the eligible costs to be borne by the beneficiary, shall not be taken into account. The second subparagraph shall not apply if the financial reserves of a political party at European level exceed 100 % of its average annual income.
Article 110 
1. Grants shall be subject to an annual work programme, to be published at the start of the year. That annual work programme shall be implemented through the publication of calls for proposals, save in duly substantiated exceptional cases of urgency or where the characteristics of the beneficiary or of the action leave no other choice for a given action, or where the beneficiary is identified in a basic act as recipient of a grant. The first subparagraph shall not apply to crisis management aid and humanitarian aid operations. 2. All grants awarded in the course of a financial year shall be published annually with due observance of the requirements of confidentiality and security.
Article 111 
Each action may give rise to the award of only one grant from the budget to any one beneficiary, except where the relevant basic acts authorise otherwise. A beneficiary may be awarded only one operating grant from the budget per financial year. The applicant shall immediately inform the authorising officers of any multiple applications and multiple grants relating to the same action or to the same work programme. In no circumstances shall the same costs be financed twice by the budget.
Article 112 
1. A grant may be awarded for an action which has already begun only where the applicant can demonstrate the need to start the action before the grant is awarded. In such cases, costs eligible for financing may not have been incurred prior to the date of submission of the grant application, save in duly substantiated exceptional cases as provided for in the basic act or in the case of expenditure necessary for the proper implementation of crisis management aid or humanitarian aid operations as provided for in the implementing rules. No grant may be awarded retrospectively for actions already completed. 2. An operating grant shall be awarded within six months after the start of the beneficiary's budgetary year. Costs eligible for financing may neither have been incurred before the grant application was lodged nor before the start of the beneficiary's budgetary year.
Article 113 
1. The grant may not finance the entire costs of the action, subject to Title IV of part two. The grant may not finance the entire operating expenditure of the beneficiary body. 2. Unless otherwise specified in the basic act with regard to bodies pursuing an objective of general European interest, when operating grants are renewed, they shall be gradually decreased. This provision shall not apply to grants taking one of the form referred to in points (b) and (c) of Article 108a(1).
Article 114 
1. Grant applications shall be submitted in writing. 2. Grant applications shall be eligible if submitted by the following: (a) legal persons; grant applications may be eligible if submitted by entities which do not have legal personality under the applicable national law, provided that their representatives have the capacity to undertake legal obligations on their behalf and assume financial liability; (b) natural persons in so far as this is required by the nature or characteristics of the action or the objective pursued by the applicant. 3. Grants may not be awarded to applicants who are, at the time of a grant award procedure, in one of the situations referred to in Articles 93(1), 94 and 96(2)(a). Applicants must certify that they are not in one of the situations referred to in the first subparagraph. However, the authorising officer may refrain from requiring such certification for very low value grants, as specified in the implementing rules. 4. Administrative and financial penalties which are effective, proportionate and dissuasive may be imposed on applicants by the authorising officer, in accordance with Article 96. Such penalties may also be imposed on beneficiaries who at the moment of the submission of the application or during the implementation of the grant, have made false declarations in supplying the information required by the authorising officer or fail to supply this information.
Article 115 
1. The selection criteria shall be such as to make it possible to assess the applicant's ability to complete the proposed action or work programme. 2. The award criteria announced in advance in the call for proposals shall be such as to make it possible to assess the quality of the proposals submitted in the light of the objectives and priorities set.
Article 116 
1. Proposals shall be evaluated, on the basis of pre-announced selection and award criteria, with a view to determining which proposals may be financed. 2. The authorising officer responsible shall then, on the basis of the evaluation provided for in paragraph 1, draw up the list of beneficiaries and the amounts approved. 3. The authorising officer responsible shall inform applicants in writing of the decision on their application. If the grant requested is not awarded, the institution shall give the reasons for the rejection of the application, with reference in particular to the selection and award criteria already announced.
Article 117 
The pace of payments shall be determined by the financial risks involved, the duration and progress of the action or the costs incurred by the beneficiary.
Article 118 
1. The authorising officer responsible may, if he deems it appropriate and proportionate, require the beneficiary to lodge a guarantee in advance in order to limit the financial risks connected with the payment of pre-financing. 2. The authorising officer shall require the beneficiary to lodge such a guarantee in advance in the cases specified in the implementing rules.
Article 119 
1. The amount of the grant shall not become final until after the institution has accepted the final reports and accounts, without prejudice to subsequent checks by the institution. 2. Should the beneficiary fail to comply with his obligations, the grant shall be suspended or reduced or terminated in the cases provided for by the implementing rules after the beneficiary has been given the opportunity to make his observations.
Article 120 
1. Where implementation of the action requires the award of procurement contracts by the beneficiary, the relevant procedures shall be as set out in the implementing rules. 2. Where implementation of the action requires financial support to be given to third parties, the beneficiary of a Community grant may give such financial support provided that the following conditions are met: (a) the financial support is not the primary aim of the action; (b) the conditions for the giving of such support are strictly defined in the grant decision or agreement between the beneficiary and the Commission, with no margin for discretion; (c) the amounts concerned are small. For the purpose of point (c), the maximum amount of financial support that can be paid to a third party by a beneficiary shall be determined in the implementing rules. 3. Each grant decision or agreement shall provide expressly for the Commission and the Court of Auditors to exercise their powers of control, on documents and on the premises, over all contractors and subcontractors who have received Community funds.
Article 121 
The Community accounts shall comprise: (a) the financial statements of the institutions as set out in Article 126, those of the bodies referred to in Article 185 and of other bodies whose accounts must be consolidated in accordance with Community accounting rules; (b) the consolidated financial statements which present in aggregated form the financial information contained in the financial statements of the institutions and bodies referred to in point (a); (c) the reports on implementation of the budget of the institutions and the budgets of the bodies referred to in Article 185; (d) the aggregated reports on implementation of the budget which present the information contained in the reports referred to in point (c).
Article 122 
1. The accounts of the institutions and bodies referred to in Article 121 shall be accompanied by a report on budgetary and financial management of the financial year. 2. The report referred to in paragraph 1 shall give an account, inter alia, of the rate of implementation of the appropriations together with summary information on the transfers of appropriations among the various budget items.
Article 123 
The accounts must comply with the rules and be accurate and comprehensive and present a true and fair view: (a) as regards the financial statements, of the assets and liabilities, charges and income, entitlements and obligations not shown as assets or liabilities and cash flow; (b) as regards reports on budgetary implementation, of revenue and expenditure operations.
Article 124 
The financial statements shall be drawn up in accordance with the generally accepted accounting principles, namely: (a) going-concern basis; (b) prudence; (c) consistent accounting methods; (d) comparability of information; (e) materiality; (f) no netting; (g) reality over appearance; (h) accrual-based accounting.
Article 125 
1. In accordance with the principle of accrual-based accounting, the financial statements shall show the charges and income for the financial year, regardless of the date of payment or collection. 2. The value of assets and liabilities shall be determined in accordance with the valuation rules provided for in Article 133.
Article 126 
1. The financial statements shall be presented in millions of euro and shall comprise: (a) the balance sheet and the economic outturn account, which represent the assets and liabilities and financial situation and the economic outturn at 31 December of the previous year; they shall be presented in accordance with the structure laid down by the Directives of the European Parliament and of the Council on the annual accounts of certain types of companies, but with account being taken of the specific nature of the Communities' activities; (b) the cash-flow table showing amounts collected and disbursed during the year and the final treasury position; (c) the statement of changes in capital presenting in detail the increases and decreases during the year in each item of the capital accounts. 2. The Annex to the financial statements shall supplement and comment on the information presented in the statements referred to in paragraph 1 and shall supply all the additional information prescribed by internationally accepted accounting practice where such information is relevant to the activities of the Communities.
Article 127 
The budgetary implementation reports shall be presented in millions of euro. They shall comprise: (a) the budgetary outturn account, which sets out all budgetary operations for the year in terms of revenue and expenditure; the structure in which it is presented shall be the same as that of the budget itself; (b) the Annex to the budget outturn account, which shall supplement and comment on the information given in that account.
Article 128 
The accounting officers of the other institutions and bodies referred to in Article 121 shall send to the Commission's accounting officer and to the Court of Auditors by 1 March of the following year at the latest their provisional accounts together with the report on budgetary and financial management during the year. The Commission's accounting officer shall consolidate these provisional accounts with the Commission's provisional accounts and shall send to the Court of Auditors, by 31 March of the following year at the latest, the Commission's provisional accounts accompanied by its report on budgetary and financial management during the year together with the provisional consolidated accounts. The accounting officer of each institution and body referred to in Article 121 shall also send the report on budgetary and financial management to the European Parliament and the Council by the date specified in the second paragraph.
Article 129 
1. The Court of Auditors shall, by 15 June at the latest, make its observations on the provisional accounts of each institution and each body referred to in Article 121 . 2. The institutions other than the Commission, and each of the bodies referred to in Article 121, shall draw up their final accounts in accordance with Article 61 and send them to the Commission's accounting officer and the Court of Auditors by 1 July of the following year at the latest with a view to drawing up the final consolidated accounts. 2a. The Commission's accounting officer shall prepare the final consolidated accounts on the basis of the information presented by the other institutions under paragraph 2. The final consolidated accounts shall be accompanied by a note established by the Commission's accounting officer, by which he/she declares that they were prepared in accordance with Title VII and with the accounting principles, rules and methods set out in annex to the financial statements. 3. After approving the final consolidated accounts and its own final accounts, the Commission shall send them both to the European Parliament, the Council and the Court of Auditors before 31 July of the following financial year. 4. The final consolidated accounts shall be published in the Official Journal of the European Communities together with the statement of assurance given by the Court of Auditors in accordance with Article 248 of the EC Treaty and Article 160c of the Euratom Treaty by 15 November of the following financial year.
Article 130 
In addition to the statements provided for in Articles 126 and 127, the Commission shall report to the European Parliament and to the Council twice a year on budgetary guarantees and the corresponding risks. This information shall be sent to the Court of Auditors at the same time.
Article 131 
1. In addition to the statements provided for in Articles 126 and 127, the Commission's accounting officer shall send once a month to the European Parliament and to the Council figures, aggregated at chapter level at least, on the implementation of the budget, both for revenue and for expenditure against all appropriations. These figures shall also provide details of the utilisation of appropriations carried over. The figures shall be sent within 10 working days following the end of each month. 2. Three times a year, within the 30 working days following 31 May, 31 August and 31 December, the Commission's accounting officer shall send to the European Parliament and to the Council a report on the implementation of the budget, covering both revenue and expenditure broken down by chapter, article and item. This report shall also provide details of the utilisation of appropriations carried over from previous financial years. 3. The figures and the report on implementation of the budget shall at the same time be sent to the Court of Auditors.
Article 132 
1. The institution's accounting system is the system serving to organise the budgetary and financial information in such a way that figures can be input, filed and registered. 2. The accounts shall consist of general accounts and budgetary accounts. These accounts shall be kept in euro on the basis of the calendar year. 3. The figures in the general accounts and the budgetary accounts shall be adopted at the close of the budgetary year so that the accounts referred to in Chapter 1 can be drawn up. 4. Notwithstanding paragraphs 2 and 3, the authorising officer by delegation may keep analytical accounts.
Article 133 
1. The Commission's accounting officer shall, after consulting the accounting officers of the other institutions and bodies referred to in Article 121 , adopt the accounting rules and methods and the harmonised chart of accounts to be applied by all the institutions, the offices referred to in Title V of part two and all the bodies referred to in Article 121 . 2. When adopting the rules and methods referred to in paragraph 1, the Commission's accounting officer shall be guided by the internationally accepted accounting standards for the public sector but may depart from them where justified by the specific nature of the Communities' activities.
Article 134 
The general accounts shall record, in chronological order using the double entry method, all events and operations which affect the economic and financial situation and the assets and liabilities of the institutions and bodies referred to in Article 121 .
Article 135 
1. Movements on the accounts and the balances shall be entered in the accounting ledgers. 2. All accounting entries, including adjustments to the accounts, shall be based on supporting documents, to which they shall refer. 3. The accounting system must be such as to leave a trail for all accounting entries.
Article 136 
The accounting officer shall, after the close of the budgetary year and up to the date of presentation of the accounts, make any adjustments which, without involving disbursement or collection in respect of that year, are necessary for a true and fair presentation of the accounts which complies with the rules.
Article 137 
1. The budgetary accounts provide a detailed record of budgetary implementation. 2. For the purposes of applying paragraph 1, the budgetary accounts shall record all budgetary revenue and expenditure operations provided for in Title IV of part one.
Article 138 
1. Each institution and each body referred to in Article 121 shall keep inventories showing the quantity and value of all the Communities' tangible, intangible and financial assets in accordance with a model drawn up by the accounting officer of the Commission. Each institution and each body referred to in Article 121 shall check that entries in the inventory correspond to the actual situation. 2. The sale of movable property shall be suitably advertised.
Article 139 
1. The European Parliament, the Council and the Commission shall inform the Court of Auditors, as soon as possible, of all decisions and rules adopted pursuant to Articles 9, 13, 18, 22, 23, 26 and 36. 2. Each institution shall inform the Court of Auditors and the budgetary authority of any internal rules it adopts in respect of financial matters. 3. The Court of Auditors shall be informed of the appointment of authorising officers, internal auditors, accounting officers and imprest administrators and of delegation decisions under Articles 51, 61, 62, 63 and 85.
Article 140 
1. The examination by the Court of Auditors of whether all revenue has been received and all expenditure incurred in a lawful and proper manner shall have regard to the provisions of the Treaties, the budget, this Regulation, the implementing rules and all other acts adopted pursuant to the Treaties. 2. In the performance of its task, the Court of Auditors shall be entitled to consult, in the manner provided for in Article 142, all documents and information relating to the financial management of departments or bodies with regard to operations financed or co-financed by the Communities. It shall have the power to make enquiries of any official responsible for a revenue or expenditure operation and to use any of the auditing procedures appropriate to the aforementioned departments or bodies. The audit in the Member States shall be carried out in conjunction with the national audit institutions or, where they do not have the necessary powers, with the national departments responsible. The Court of Auditors and the national audit bodies of the Member States shall cooperate in a spirit of trust while maintaining their independence. In order to obtain all the necessary information for the performance of the task entrusted to it by the Treaties or the acts adopted pursuant to them, the Court of Auditors may be present, at its request, during the audit operations carried out within the framework of the implementation of the budget by, or on behalf of, any Community institution. At the request of the Court of Auditors, each institution shall authorise financial institutions holding Community deposits to enable the Court of Auditors to ensure that external data tally with the accounts. 3. In order to perform its task, the Court of Auditors shall notify the institutions and authorities to which this Regulation applies of the names of the members of its staff who are empowered to audit them.
Article 141 
The Court of Auditors shall ensure that all securities and cash on deposit or in hand are checked against vouchers signed by the depositories or against official memoranda of cash and securities held. It may carry out such checks itself.
Article 142 
1. The Commission, the other institutions, the bodies administering revenue or expenditure on the Communities' behalf and the final beneficiaries of payments from the budget shall afford the Court of Auditors all the facilities and give it all the information which the Court of Auditors considers necessary for the performance of its task. They shall place at the disposal of the Court of Auditors all documents concerning the award and performance of contracts financed by the Community budget and all accounts of cash or materials, all accounting records or supporting documents, and also administrative documents relating thereto, all documents relating to revenue and expenditure, all inventories, all organisation charts of departments, which the Court of Auditors considers necessary for auditing the budgetary and financial outturn report on the basis of records or on the spot and, for the same purposes, all documents and data created or stored on a magnetic medium. The other services and internal audit bodies of the national administrations concerned shall afford the Court of Auditors all the facilities which it considers necessary for the performance of its task. The first subparagraph shall also apply to natural or legal persons receiving payments from the Community budget. 2. The officials whose operations are checked by the Court of Auditors shall: (a) show their records of cash in hand, any other cash, securities and materials of all kinds, and also the supporting documents in respect of their stewardship of the funds with which they are entrusted, and also any books, registers and other documents relating thereto; (b) present the correspondence and any other document required for the full implementation of the audit referred to in Article 140(1). The information supplied under point (b) of the first subparagraph may be requested only by the Court of Auditors. 3. The Court of Auditors shall be empowered to audit the documents in respect of the revenue and expenditure of the Communities which are held by the departments of the institutions and, in particular, by the departments responsible for decisions in respect of such revenue and expenditure, the bodies administering revenue or expenditure on the Communities' behalf and the natural or legal persons receiving payments from the budget. 4. The task of establishing that the revenue has been received and the expenditure incurred in a lawful and proper manner and that the financial management has been sound shall extend to the utilisation, by bodies outside the institutions, of Community funds received by way of grants. 5. Community financing paid to beneficiaries outside the institutions shall be subject to the agreement in writing by the beneficiaries or, failing agreement on their part, by the contractors or subcontractors, to an audit by the Court of Auditors into the use made of the financing granted. 6. The Commission shall provide the Court of Auditors, at its request, with any information on borrowing-and-lending operations. 7. Use of integrated computer systems may not have the effect of reducing the access of the Court of Auditors to the supporting documents.
Article 143 
1. The annual report of the Court of Auditors shall be governed by the provisions of paragraphs 2 to 6 of this Article. 2. The Court of Auditors shall transmit to the Commission and the institutions concerned, by 30 June at the latest, any observations which are, in its opinion, such that they should appear in the annual report. These observations must remain confidential. Each institution shall address its reply to the Court of Auditors by 15 October at the latest. The replies of institutions other than the Commission shall be sent to the Commission at the same time. 3. The annual report shall contain an assessment of the soundness of financial management. 4. The annual report shall contain a section for each institution. The Court of Auditors may add any summary report or general observations which it sees fit to make. The Court of Auditors shall take all necessary steps to ensure that the replies of each institution to its observations are published immediately after the observations to which they relate. 5. The Court of Auditors shall transmit to the authorities responsible for giving discharge and to the other institutions, by 15 November at the latest, its annual report accompanied by the replies of the institutions and shall ensure publication thereof in the Official Journal of the European Union. 6. As soon as the Court of Auditors has transmitted the annual report, the Commission shall inform the Member States concerned immediately of the details of that report which relate to management of the funds for which they are responsible under the rules applicable. Following receipt of such information, the Member States shall reply to the Commission within 60 days. The latter shall transmit a summary to the Court of Auditors, the Council and the European Parliament before 28 February .
Article 144 
1. The Court of Auditors shall notify the institution concerned of all observations which are, in its opinion, such that they should appear in a special report. These observations must remain confidential. The institution concerned shall have two-and-a half months within which to inform the Court of Auditors of any comments it wishes to make on the observations in question. The Court of Auditors shall adopt the definitive version of the special report in question the following month. The special reports, together with the replies of the institutions concerned, shall be transmitted without delay to the European Parliament and the Council, each of which shall decide, where appropriate in conjunction with the Commission, what action is to be taken in response. Should the Court of Auditors decide to have any such special reports published in the Official Journal of the European Union, they shall be accompanied by the replies of the institutions concerned. 2. The opinions referred to in Article 248(4) of the EC Treaty and Article 160c(4) of the Euratom Treaty which do not relate to proposals or drafts covered by the legislative consultation procedure may be published by the Court of Auditors in the Official Journal of the European Union. e Court of Auditors shall take its decision on publication after consulting the institution which requested the opinion or which is concerned by it. Opinions published shall be accompanied by any remarks by the institutions concerned.
Article 145 
1. The European Parliament, upon a recommendation from the Council acting by a qualified majority, shall, before 15 May of year n + 2 give a discharge to the Commission in respect of the implementation of the budget for year n . 2. If the date provided for in paragraph 1 cannot be met, the European Parliament or the Council shall inform the Commission of the reasons for the postponement. 3. If the European Parliament postpones the decision giving a discharge, the Commission shall make every effort to take measures, as soon as possible, to remove or facilitate removal of the obstacles to that decision.
Article 146 
1. The discharge decision shall cover the accounts of all the Communities' revenue and expenditure, the resulting balance and the assets and liabilities of the Communities shown in the balance sheet. 2. With a view to granting the discharge, the European Parliament shall, after the Council has done so, examine the accounts and financial statements referred to in Article 275 of the EC Treaty and Article 179a of the Euratom Treaty. It shall also examine the annual report made by the Court of Auditors together with the replies of the institutions under audit, any relevant special reports by the Court of Auditors in respect of the financial year in question and the Court of Auditors' statement of assurance as to the reliability of the accounts and the legality and regularity of the underlying transactions. 3. The Commission shall submit to the European Parliament, at the latter's request, any information required for the smooth application of the discharge procedure for the financial year in question, in accordance with Article 276 of the EC Treaty.
Article 147 
1. In accordance with Article 276 of the EC Treaty and Article 180b of the Euratom Treaty, the Commission and the other institutions shall take all appropriate steps to act on the observations accompanying the European Parliament's discharge decision and on the comments accompanying the recommendation for discharge adopted by the Council. 2. At the request of the European Parliament or the Council, the institutions shall report on the measures taken in the light of these observations and comments, and, in particular, on the instructions they have given to those of their departments which are responsible for the implementation of the budget. The Member States shall cooperate with the Commission by informing it of the measures they have taken to act on these observations so that the Commission may take them into account when drawing up its own report. The reports from the institutions shall also be transmitted to the Court of Auditors.
Article 148 
1. Parts One and Three of this Regulation shall apply to expenditure effected by the authorities and bodies referred to in the rules relating to the European Agricultural Guarantee Fund (EAGF), and to revenue, save as otherwise provided in this Title. 2. Operations managed directly by the Commission shall be implemented in accordance with the rules laid down in parts one and three.
Article 149 
1. For each financial year, the EAGF shall include non-differentiated appropriations, with the exception of the expenditure related to the measures referred to in Article 3(2) of Regulation (EC) No 1290/2005, which shall be covered by differentiated appropriations. 2. Payment appropriations which have been carried over but which have not been used by the end of the financial year shall be cancelled. 3. Non-committed appropriations relating to the actions referred to in Article 3(1) of Regulation (EC) No 1290/2005 may be carried over to the next financial year only. Such carryover shall not exceed, within a limit of 2 % of the initial appropriations referred to in the first subparagraph, the amount of the adjustment of direct payments referred to in Article 11 of Council Regulation (EC) No 1782/2003 of 29 September 2003 establishing common rules for direct support schemes under the common agricultural policy and establishing certain support schemes for farmers ( 13 ) and which was applied during the last financial year. Appropriations which are carried over shall be returned exclusively to the budgetary lines which cover the actions referred to in Article 3(1)(c) of Regulation (EC) No 1290/2005. Such carryover may lead to an additional payment only to the final beneficiaries who have been subject, in the last financial year, to the adjustment of direct payments in accordance with Article 11 of Regulation (EC) No 1782/2003. The carryover decision shall be taken, at the latest on 15 February of the year to which the carryover is being made, by the Commission, which shall inform the budgetary authority.
Article 150 
1. The Commission shall reimburse the expenditure incurred by the Member States. 2. The Commission decisions fixing the amounts of these payments shall constitute global provisional commitments, which may not exceed the total appropriations entered for the EAGF. 3. As from 15 November, routine management expenditure for the EAGF may be committed in advance against the appropriations provided for the following financial year. Such commitments may not, however, exceed three quarters of the total corresponding appropriations for the current financial year. They may apply only to expenditure for which the principle is laid down in an existing basic act.
Article 151 
1. Expenditure effected by the authorities and bodies referred to in the rules relating to the EAGF shall, within two months following receipt of the statements sent in by Member States, be the subject of a commitment by chapter, article and item. Such commitment may be made after the elapse of that two-month period whenever a procedure for a transfer of appropriations concerning the budget lines in question is necessary. Save where payment has not yet been made by the Member States or where eligibility is in doubt, the amounts shall be charged as payments within the same two-month period . This budgetary commitment shall be deducted from the global provisional commitment referred to in Article 150. 2. Global provisional commitments which have been made for a financial year and which have not given rise to commitment on specific lines in the budget nomenclature by 1 February of the following financial year shall be cancelled in respect of the original financial year. 3. Paragraphs 1 and 2 shall apply subject to the clearance of accounts.
Article 152 
In budgetary accounting, expenditure shall be booked to the accounts for a financial year on the basis of the repayments made by the Commission to the Member States by 31 December of the year concerned at the latest, provided that the payment order has reached the accounting officer by 31 January of the following financial year at the latest.
Article 153 
1. Where the Commission may transfer appropriations pursuant to Article 23(1), it shall take its decision by 31 January of the following financial year at the latest and shall inform the budgetary authority as provided for in Article 23(1). 2. In cases other than those referred to in paragraph 1, the Commission shall submit transfer proposals to the budgetary authority by 10 January of the following financial year at the latest. The budgetary authority shall take decisions on such transfers in accordance with the procedure provided for in Article 24, but within a time limit of three weeks.
Article 154 
1. Assigned revenue under this Title shall be assigned according to origin in accordance with Article 18(2). 2. The result of decisions on clearance of accounts, as referred to in Article 30 of Regulation (EC) No 1290/2005 shall be entered in a single Article.
Article 155 
1. Parts One and Three of this Regulation shall apply to expenditure effected by the authorities and bodies referred to in the Regulations governing the European Agricultural Fund for Rural Development (EAFRD) ( 14 ), the European Regional Development Fund (ERDF) ( 15 ), the European Social Fund (ESF) ( 16 ), the Cohesion Fund ( 17 ), and the European Fisheries Fund (EFF) ( 18 ), hereinafter ‘the Funds’, and to their revenue, save as otherwise provided in this Title. 2. Operations managed directly by the Commission shall also be implemented in accordance with the rules laid down in parts one and three of this Regulation.
Amendment rationale: EXPLANATORY MEMORANDUM The present Commission proposal aims at amending the Financial Regulation in line with the creation of the European External Action Service (hereinafter EEAS) as foreseen in the Lisbon Treaty. The Financial Regulation (FR) governs all the rules and procedures applicable to the use of EU funds and must be respected by all institutions. It is completed by Implementing Rules (IR) which should also be amended, in a separate proposal, to accommodate for the creation of the EEAS. Specificities for the management of the EEAS Staff are put forward in a separate Commission proposal to amend the Staff Regulation. The changes proposed build on the guidelines endorsed by the European Council of October 29-30, 2009 for the creation of the future EEAS as a sui generis service. The Commission will present, as foreseen in Article 184 of the Financial Regulation, its proposal for the triennial review of the Financial Regulation at the end of the first semester 2010. However , the Commission considers that an ad-hoc revision of the FR is inevitable before and separately from the triennial review if the EEAS is to be put in place rapidly. Other aspects relating to the implementation of the Lisbon Treaty have been covered by a separate proposal adopted by the Commission on 3 March 2010 (COM(2010) 71). 1. Main changes relating to the creation of the EEAS Article 27(3) of the Treaty on the European Union (TEU) foresees that the EEAS assist the High Representative (HR) to fulfil his mandate and that the organisation and functioning of the service shall be established by a decision of the Council, on a proposal from the HR after consulting the European Parliament and after obtaining the consent of the Commission. In its conclusions, the European Council of October 29-30, 2009 has endorsed some guidelines for the creation of the future EEAS as a sui generis service and invited the High Representative to put the EEAS in place 'by the end of April 2010'. In budgetary terms, the EEAS will be treated as an institution in the sense of Article 1 of the Financial Regulation so that it will have budgetary autonomy, i.e. its own section in the EU budget. It will implement its own administrative expenditure (like all other institutions) and will therefore receive discharge from the European Parliament for it. The European Parliament will therefore exercise its full budgetary and control powers towards the EEAS. Moreover, current Delegations of the Commission around the world become Union Delegations and will be part of the EEAS. Because these Delegations will continue implementing external aid, which is currently for most of them their main task, ways should be found to allow them to implement operational expenditure while they are not anymore part of the Commission, taking into account that the concerned part of their staff, i.e. operational and financial staff, will remain Commission staff. The Commission has been particularly attentive that the present proposal allow to EEAS to fulfil this task of a unified external action, without leading to a weakening of sound financial management, accountability and the protection of the financial interests of the Union. Naturally, the European Parliament will continue to grant discharge to the Commission for the implementation of the Commission section of the Budget, including operational appropriations implemented by Heads of Union Delegations who will act as sub-delegated authorising officers of the Commission. To achieve this purpose, the modifications introduced in the Financial Regulation aim at integrating the EEAS within the financial governance framework of the Commission whenever it participates in the implementation of its operational budget. In this context, it is essential that the EEAS builds on the experience, guidance, support and training for financial management and internal control in the external relations field which have been developed by the Commission over many years. The proposed approach is that Heads of Union Delegations be given sub-delegated implementation powers by the responsible Commission Directors Generals (DG). They would become authorising officers by sub-delegation (AOSDs) of the Commission and would be responsible before the DG which has sub-delegated budget implementation tasks to them. Specific rules are therefore proposed so that Heads of Union Delegations, when they implement part of the Commission section of the budget apply the Commission rules for the implementation of the budget and are submitted to the same duties and obligations as any other sub-delegated authorising officer of the Commission. To this effect the Commission may give them instructions where necessary and appropriate. Current rules on OLAF will also apply to Heads of Union Delegations in cases of financial irregularities relating to the management of appropriations from the EEAS section of the Budget and appropriations sub-delegated to them from the Commission section of the Budget. No specific provision concerning OLAF is required in the Financial Regulation. However, the present Commission proposal includes a new provision so that the panel of irregularities of the Commission is also the panel of irregularities for the EEAS in cases where the Commission sub-delegates implementation powers to Heads of Union Delegations. New provisions are also proposed to ensure that the HR plays a central role for the proper coordination and exchange of information between the EEAS and the Commission. Finally, in order to ensure an efficient management of Union Delegations, it is proposed that administrative and support expenditure which finance common costs in Delegations should be executed by a single support service, whatever the section of the Budget in which the respective appropriations are entered. To that effect, the possibility for detailed rules should be foreseen in Article 50 FR, to be convened with the Commission. 2. Commission Staff Working document concerning the Implementing Rules To complement the present Commission proposal to amend the Financial Regulation, a Commission Staff working document presents the changes required in the Implementing Rules. These changes will be adopted by the Commission once the amended FR is adopted and will concern the specific provisions which should apply to Heads of Delegation when they act as sub-delegated authorising officers of the Commission, in particular: - the fact that they have to sign the Charter for sub-delegated authorising officers, which stipulates in detail their duties and obligations, before starting to implement the EU Budget; - the Internal Rules of the Commission for the execution of the Budget; - the code of professional standards adopted by the Commission; - the panel of irregularities of the Commission (complementary provisions to the ones already set out in the FR are enshrined in the Implementing Rules).
Revised version (Article 155 ):
1. Parts One and Three of this Regulation shall apply to expenditure effected by the authorities and bodies referred to in the Regulations governing the European Agricultural Fund for Rural Development (EAFRD) ( 15 ), the European Regional Development Fund (ERDF) ( 16 ), the European Social Fund (ESF) ( 17 ), the Cohesion Fund ( 18 ), and the European Fisheries Fund (EFF) ( 19 ), hereinafter ‘the Funds’, and to their revenue, save as otherwise provided in this Title. 2. Operations managed directly by the Commission shall also be implemented in accordance with the rules laid down in parts one and three of this Regulation.
Article 156 
1. Payment by the Commission of financial contributions from the Funds shall be made in accordance with the regulations referred to in Article 155. 2. The time limit for interim payments by the Commission shall be laid down in accordance with the regulations referred to in Article 155. 3. The treatment of repayments by the Member States and the implications for the amount of contributions from the Funds shall be governed by the regulations referred to in Article 155.
Article 157 
The Commission shall automatically decommit appropriations that have been committed as provided for in the regulations referred to in Article 155. The decommitted appropriations may be made available again in the event of a manifest error attributable solely to the Commission. To this end, the Commission shall examine decommitments made during the previous financial year and decide, by 15 February of the current year, on the basis of requirements, whether it is necessary to make the corresponding appropriations available again.
Article 158 
With regard to the operational expenditure referred to in this Title, the Commission may, except in the case of the EAFRD, make transfers from one title to another, provided that the appropriations in question are for the same objective within the meaning of the Regulations governing the Funds referred to in Article 155, or are Technical Assistance expenditure.
Article 159 
Aspects concerning the management and selection of projects and audit shall be governed by the regulations referred to in Article 155.
Article 160 
1. Parts one and three shall apply to the research and technological development appropriations, save as otherwise provided in this Title. These appropriations shall be entered either in one of the titles of the budget relating to the policy area research by direct or indirect action or in a chapter relating to research activities in another title. They shall be used by implementation of the actions listed in the implementing rules. 1a. The appropriations relating to the revenue generated by the Research Fund for Coal and Steel established by the Protocol annexed to the EC Treaty on the financial consequences of the expiry of the ECSC Treaty and on the Research Fund for Coal and Steel shall be treated as assigned revenue within the meaning of Article 18. The commitment appropriations generated by this revenue shall be made available as soon as the amount receivable has been estimated and the payment appropriations as soon as the revenue has been received. 2. With regard to the operational expenditure referred to in this Title, the Commission may make transfers from one title to another, provided that the appropriations are used for the same purpose. 3. Experts paid from the research and technological development appropriations shall be recruited in accordance with the procedures laid down by the Council when it adopts each research framework programme.
Article 160a 
1. The commitment appropriations corresponding to the amount of the commitment decommitted as a result of total or partial non-implementation of the projects relating to research for which they were earmarked may, exceptionally and in duly substantiated cases, be made available again where it is essential to carry out the programme originally planned, unless the budget for the current financial year contains funds for this purpose. 2. For the purposes of paragraph 1, the Commission shall, at the beginning of each financial year, examine decommitments made during the previous financial year and assess, in the light of the requirements, the need for making the appropriations available again. On the basis of this assessment, the Commission may submit appropriate proposals to the budgetary authority, by 15 February of each financial year, stating for each budget item the reasons for making these appropriations available again. 3. The budgetary authority shall decide on the Commission's proposals within six weeks. Where no decision is taken within this time limit, the proposals shall be deemed to be approved. The amount of commitment appropriations to be made available again in year n shall in no case exceed 25 % of the total amount decommitted on the same budget line in year n-1 . 4. Commitment appropriations made available again shall not be carried over. Legal commitments relating to the commitment appropriations which have been made available again shall be concluded by 31 December of year n . At the end of year n , the unused balance of the commitment appropriations made available again shall be definitively decommitted by the authorising officer responsible.
Article 161 
1. The Joint Research Centre (JRC) may receive funding charged to appropriations entered outside the titles and the chapters referred to in Article 160(1) in respect of its participation on a competitive or negotiated basis in Community activities financed in whole or in part from the general budget. 2. The appropriations relating to the activities in which the JRC participates on a competitive basis shall be treated as assigned revenue within the meaning of Article 18. The commitment appropriations generated by this revenue shall be made available as soon as the amount receivable has been estimated. The utilisation of these appropriations shall be shown in a set of analytical accounts in the budgetary outturn account for each category of action to which it relates; it shall be separate from revenue originating from financing by third parties (public or private) and from revenue from other services carried out by the Commission for third parties. 3. The rules on procurement in Title V of part one shall not apply to the activities of the JRC on behalf of third parties. 4. By way of derogation from Article 23, the Commission may, within the title of the budget relating to the policy area ‘Direct action research’, make transfers between chapters of up to 15 % of the appropriation in the line from which the transfer is made.
Article 162 
1. Parts one and three shall apply to external actions financed from the budget, save as otherwise provided in this Title. 2. The appropriations for the actions referred to in paragraph 1 shall be used by the Commission: (a) either within the framework of aid granted on an autonomous basis; (b) or under agreements concluded with one or more beneficiary third countries; (c) or under agreements with the international organisations referred to in Article 53.
Article 163 
The actions referred to in this Title may be implemented on a centralised basis by the Commission, by shared management, on a decentralised basis by the beneficiary third country or countries, or jointly with international organisations in compliance with the relevant provisions of Articles 53 to 57 . Appropriations for external actions may be combined with funds from other sources to achieve a joint objective.
Amendment rationale: EXPLANATORY MEMORANDUM The present Commission proposal aims at amending the Financial Regulation in line with the creation of the European External Action Service (hereinafter EEAS) as foreseen in the Lisbon Treaty. The Financial Regulation (FR) governs all the rules and procedures applicable to the use of EU funds and must be respected by all institutions. It is completed by Implementing Rules (IR) which should also be amended, in a separate proposal, to accommodate for the creation of the EEAS. Specificities for the management of the EEAS Staff are put forward in a separate Commission proposal to amend the Staff Regulation. The changes proposed build on the guidelines endorsed by the European Council of October 29-30, 2009 for the creation of the future EEAS as a sui generis service. The Commission will present, as foreseen in Article 184 of the Financial Regulation, its proposal for the triennial review of the Financial Regulation at the end of the first semester 2010. However , the Commission considers that an ad-hoc revision of the FR is inevitable before and separately from the triennial review if the EEAS is to be put in place rapidly. Other aspects relating to the implementation of the Lisbon Treaty have been covered by a separate proposal adopted by the Commission on 3 March 2010 (COM(2010) 71). 1. Main changes relating to the creation of the EEAS Article 27(3) of the Treaty on the European Union (TEU) foresees that the EEAS assist the High Representative (HR) to fulfil his mandate and that the organisation and functioning of the service shall be established by a decision of the Council, on a proposal from the HR after consulting the European Parliament and after obtaining the consent of the Commission. In its conclusions, the European Council of October 29-30, 2009 has endorsed some guidelines for the creation of the future EEAS as a sui generis service and invited the High Representative to put the EEAS in place 'by the end of April 2010'. In budgetary terms, the EEAS will be treated as an institution in the sense of Article 1 of the Financial Regulation so that it will have budgetary autonomy, i.e. its own section in the EU budget. It will implement its own administrative expenditure (like all other institutions) and will therefore receive discharge from the European Parliament for it. The European Parliament will therefore exercise its full budgetary and control powers towards the EEAS. Moreover, current Delegations of the Commission around the world become Union Delegations and will be part of the EEAS. Because these Delegations will continue implementing external aid, which is currently for most of them their main task, ways should be found to allow them to implement operational expenditure while they are not anymore part of the Commission, taking into account that the concerned part of their staff, i.e. operational and financial staff, will remain Commission staff. The Commission has been particularly attentive that the present proposal allow to EEAS to fulfil this task of a unified external action, without leading to a weakening of sound financial management, accountability and the protection of the financial interests of the Union. Naturally, the European Parliament will continue to grant discharge to the Commission for the implementation of the Commission section of the Budget, including operational appropriations implemented by Heads of Union Delegations who will act as sub-delegated authorising officers of the Commission. To achieve this purpose, the modifications introduced in the Financial Regulation aim at integrating the EEAS within the financial governance framework of the Commission whenever it participates in the implementation of its operational budget. In this context, it is essential that the EEAS builds on the experience, guidance, support and training for financial management and internal control in the external relations field which have been developed by the Commission over many years. The proposed approach is that Heads of Union Delegations be given sub-delegated implementation powers by the responsible Commission Directors Generals (DG). They would become authorising officers by sub-delegation (AOSDs) of the Commission and would be responsible before the DG which has sub-delegated budget implementation tasks to them. Specific rules are therefore proposed so that Heads of Union Delegations, when they implement part of the Commission section of the budget apply the Commission rules for the implementation of the budget and are submitted to the same duties and obligations as any other sub-delegated authorising officer of the Commission. To this effect the Commission may give them instructions where necessary and appropriate. Current rules on OLAF will also apply to Heads of Union Delegations in cases of financial irregularities relating to the management of appropriations from the EEAS section of the Budget and appropriations sub-delegated to them from the Commission section of the Budget. No specific provision concerning OLAF is required in the Financial Regulation. However, the present Commission proposal includes a new provision so that the panel of irregularities of the Commission is also the panel of irregularities for the EEAS in cases where the Commission sub-delegates implementation powers to Heads of Union Delegations. New provisions are also proposed to ensure that the HR plays a central role for the proper coordination and exchange of information between the EEAS and the Commission. Finally, in order to ensure an efficient management of Union Delegations, it is proposed that administrative and support expenditure which finance common costs in Delegations should be executed by a single support service, whatever the section of the Budget in which the respective appropriations are entered. To that effect, the possibility for detailed rules should be foreseen in Article 50 FR, to be convened with the Commission. 2. Commission Staff Working document concerning the Implementing Rules To complement the present Commission proposal to amend the Financial Regulation, a Commission Staff working document presents the changes required in the Implementing Rules. These changes will be adopted by the Commission once the amended FR is adopted and will concern the specific provisions which should apply to Heads of Delegation when they act as sub-delegated authorising officers of the Commission, in particular: - the fact that they have to sign the Charter for sub-delegated authorising officers, which stipulates in detail their duties and obligations, before starting to implement the EU Budget; - the Internal Rules of the Commission for the execution of the Budget; - the code of professional standards adopted by the Commission; - the panel of irregularities of the Commission (complementary provisions to the ones already set out in the FR are enshrined in the Implementing Rules).
Revised version (Article 163 ):
The actions referred to in this Title may be implemented on a centralised basis by the Commission pursuant to Article 53a, by shared management, on a decentralised basis by the beneficiary third country or countries, or jointly with international organisations in compliance with the relevant provisions of Articles 53 to 57. . Appropriations for external actions may be combined with funds from other sources to achieve a joint objective.
Article 165 
The implementation of actions by beneficiary third countries or international organisations is subject to scrutiny by the Commission. Such scrutiny shall be exercised either by prior approval, by ex post checks or by a combined procedure.
Amendment rationale: EXPLANATORY MEMORANDUM The present Commission proposal aims at amending the Financial Regulation in line with the creation of the European External Action Service (hereinafter EEAS) as foreseen in the Lisbon Treaty. The Financial Regulation (FR) governs all the rules and procedures applicable to the use of EU funds and must be respected by all institutions. It is completed by Implementing Rules (IR) which should also be amended, in a separate proposal, to accommodate for the creation of the EEAS. Specificities for the management of the EEAS Staff are put forward in a separate Commission proposal to amend the Staff Regulation. The changes proposed build on the guidelines endorsed by the European Council of October 29-30, 2009 for the creation of the future EEAS as a sui generis service. The Commission will present, as foreseen in Article 184 of the Financial Regulation, its proposal for the triennial review of the Financial Regulation at the end of the first semester 2010. However , the Commission considers that an ad-hoc revision of the FR is inevitable before and separately from the triennial review if the EEAS is to be put in place rapidly. Other aspects relating to the implementation of the Lisbon Treaty have been covered by a separate proposal adopted by the Commission on 3 March 2010 (COM(2010) 71). 1. Main changes relating to the creation of the EEAS Article 27(3) of the Treaty on the European Union (TEU) foresees that the EEAS assist the High Representative (HR) to fulfil his mandate and that the organisation and functioning of the service shall be established by a decision of the Council, on a proposal from the HR after consulting the European Parliament and after obtaining the consent of the Commission. In its conclusions, the European Council of October 29-30, 2009 has endorsed some guidelines for the creation of the future EEAS as a sui generis service and invited the High Representative to put the EEAS in place 'by the end of April 2010'. In budgetary terms, the EEAS will be treated as an institution in the sense of Article 1 of the Financial Regulation so that it will have budgetary autonomy, i.e. its own section in the EU budget. It will implement its own administrative expenditure (like all other institutions) and will therefore receive discharge from the European Parliament for it. The European Parliament will therefore exercise its full budgetary and control powers towards the EEAS. Moreover, current Delegations of the Commission around the world become Union Delegations and will be part of the EEAS. Because these Delegations will continue implementing external aid, which is currently for most of them their main task, ways should be found to allow them to implement operational expenditure while they are not anymore part of the Commission, taking into account that the concerned part of their staff, i.e. operational and financial staff, will remain Commission staff. The Commission has been particularly attentive that the present proposal allow to EEAS to fulfil this task of a unified external action, without leading to a weakening of sound financial management, accountability and the protection of the financial interests of the Union. Naturally, the European Parliament will continue to grant discharge to the Commission for the implementation of the Commission section of the Budget, including operational appropriations implemented by Heads of Union Delegations who will act as sub-delegated authorising officers of the Commission. To achieve this purpose, the modifications introduced in the Financial Regulation aim at integrating the EEAS within the financial governance framework of the Commission whenever it participates in the implementation of its operational budget. In this context, it is essential that the EEAS builds on the experience, guidance, support and training for financial management and internal control in the external relations field which have been developed by the Commission over many years. The proposed approach is that Heads of Union Delegations be given sub-delegated implementation powers by the responsible Commission Directors Generals (DG). They would become authorising officers by sub-delegation (AOSDs) of the Commission and would be responsible before the DG which has sub-delegated budget implementation tasks to them. Specific rules are therefore proposed so that Heads of Union Delegations, when they implement part of the Commission section of the budget apply the Commission rules for the implementation of the budget and are submitted to the same duties and obligations as any other sub-delegated authorising officer of the Commission. To this effect the Commission may give them instructions where necessary and appropriate. Current rules on OLAF will also apply to Heads of Union Delegations in cases of financial irregularities relating to the management of appropriations from the EEAS section of the Budget and appropriations sub-delegated to them from the Commission section of the Budget. No specific provision concerning OLAF is required in the Financial Regulation. However, the present Commission proposal includes a new provision so that the panel of irregularities of the Commission is also the panel of irregularities for the EEAS in cases where the Commission sub-delegates implementation powers to Heads of Union Delegations. New provisions are also proposed to ensure that the HR plays a central role for the proper coordination and exchange of information between the EEAS and the Commission. Finally, in order to ensure an efficient management of Union Delegations, it is proposed that administrative and support expenditure which finance common costs in Delegations should be executed by a single support service, whatever the section of the Budget in which the respective appropriations are entered. To that effect, the possibility for detailed rules should be foreseen in Article 50 FR, to be convened with the Commission. 2. Commission Staff Working document concerning the Implementing Rules To complement the present Commission proposal to amend the Financial Regulation, a Commission Staff working document presents the changes required in the Implementing Rules. These changes will be adopted by the Commission once the amended FR is adopted and will concern the specific provisions which should apply to Heads of Delegation when they act as sub-delegated authorising officers of the Commission, in particular: - the fact that they have to sign the Charter for sub-delegated authorising officers, which stipulates in detail their duties and obligations, before starting to implement the EU Budget; - the Internal Rules of the Commission for the execution of the Budget; - the code of professional standards adopted by the Commission; - the panel of irregularities of the Commission (complementary provisions to the ones already set out in the FR are enshrined in the Implementing Rules).
Revised version (Article 165 ):
The implementation of actions by beneficiary third countries or international organisations is subject to scrutiny by the Commission and by Union Delegations in accordance with the second paragraph of Article 51. ch scrutiny shall be exercised either by prior approval, by ex post checks or by a combined procedure.
Article 166 
1. Actions carried out shall give rise to: (a) a financing agreement drawn up between the Commission, acting for the Communities, and the beneficiary third country or countries or the bodies they have designated, hereinafter: ‘the beneficiaries’; (b) a contract or a grant agreement between the Commission and national or international public-sector bodies or between the Commission and natural or legal persons responsible for carrying out the actions. The terms on which the external aid is given shall be laid down in the instrument by which the financing agreements or the contracts or the grants provided for in points (a) and (b) shall be managed. 2. Financing agreements with the beneficiary third countries referred to in paragraph 1(a) shall be concluded by 31 December of year n+1 at the latest, year n being the one in which the budgetary commitment was made. The individual contracts, grant decisions and agreements which implement such financing agreements shall be concluded or adopted no later than three years following the date of conclusion of the financing agreement. Individual contracts and agreements relating to audit and evaluation may be concluded later. 3. The provision under paragraph 2 shall not apply to the multi-annual programmes in the following cases: — the cross-border cooperation, regional development, human resources development and rural development components of Council Regulation (EC) No 1085/2006 of 17 July 2006 establishing an Instrument for Pre-Accession Assistance (IPA) ( 19 ), — the cross-border cooperation component of Regulation (EC) No 1638/2006 of the European Parliament and of the Council of 24 October 2006 laying down general provisions establishing a European Neighbourhood and Partnership Instrument ( 20 ). In these cases, the following rules shall apply: (a) any portion of a budget commitment for such a multi-annual programme shall be automatically decommited where, by 31 December of the third year following year n being the one in which the budget commitment was made: (i) it has not been used for the purpose of pre-financing; or (ii) it has not been used for making intermediate payments; or (iii) no declaration of expenditure has been presented in relation to it; (a) any portion of a budget commitment for such a multi-annual programme shall be automatically decommited where, by 31 December of the third year following year n being the one in which the budget commitment was made: (i) it has not been used for the purpose of pre-financing; or (ii) it has not been used for making intermediate payments; or (iii) no declaration of expenditure has been presented in relation to it; (b) that part of budget commitments still open on 31 December 2017 for which a declaration of expenditure has not been made by 31 December 2018 shall be automatically decommitted.
Article 167 
1. The provisions of Article 56 and of Chapter 1 of Title V of part one relating to the general provisions on procurement shall be applicable to contracts covered by this Title subject to the special provisions relating to thresholds and the arrangements for awarding external contracts laid down in the implementing rules. The contracting authorities for the purposes of this chapter shall be: (a) the Commission on behalf of and for the account of one or more beneficiaries; (b) the beneficiary or beneficiaries; (c) a national or international public-sector body or natural or legal persons who are beneficiaries of a grant for the implementation of an external action. 2. The procurement procedures must be laid down in the financing agreements or in the grant decision or grant agreement provided for in Article 166.
Article 168 
1. Participation in tendering procedures shall be open on equal terms to all persons coming within the scope of the Treaties and, in accordance with the specific provisions in the basic instruments governing the cooperation sector concerned, to all such natural and legal persons who are nationals of the beneficiary third countries or of any other third country as are expressly mentioned in those instruments. 2. In duly substantiated exceptional cases, it may be decided, on the basis of the specific conditions laid down in the basic acts governing cooperation, to allow third-country nationals other than those referred to in paragraph 1 to tender for contracts. 3. Where an agreement on widening the market for procurement of goods or services to which the Community is party applies, the contracts for procurement financed by the budget shall also be open to third-country nationals other than those referred to in paragraphs 1 and 2, under the conditions laid down in this agreement.
Article 169 
An action may be financed in full by the budget only if this proves essential for it to be carried out.
Article 169a 
Grant procedures to be applied in decentralised management by beneficiary third countries shall be laid down in the financing agreements referred to in Article 166. They shall be based on the rules laid down in Title VI of Part One.
Article 170 
Each financing agreement or grant agreement or grant decision must expressly provide for the Commission and the Court of Auditors to have the power of audit, on the basis of documents and on the spot, over all contractors and subcontractors who have received Community funds.
Article 171 
1. ‘European offices’ for the purposes of applying this Title are the administrative structures set up by one or more institutions to perform specific cross-cutting tasks. 2. This Title shall apply to the operation of the European Anti-fraud Office (OLAF), with the exception of Articles 174, 174a and 175(2). 3. Parts one and three shall apply to the operation of the European offices, save as otherwise provided in this Title.
Article 172 
1. The appropriations for each European office, the total amount of which shall be entered in a specific budget line within the section of the budget relating to the Commission, shall be set out in detail in an Annex to that section. The Annex shall take the form of a statement of revenue and expenditure, subdivided in the same way as the sections of the budget. The appropriations entered in that Annex shall cover all the financial requirements of each European office in the performance of its duties on behalf of the institutions. 2. Each European office's establishment plan shall be annexed to that of the Commission. 3. The Director of each European office shall take decisions on transfers within the Annex provided for in paragraph 1. The Commission shall inform the budgetary authority of such transfers. 4. Each European office's accounts shall form an integral part of the Communities' accounts referred to in Article 121.
Article 173 
The Commission shall, in respect of the appropriations entered in the Annex for each European office, delegate the powers of authorising officer to the Director of the European office concerned, in accordance with Article 59.
Article 174 
1. Each interinstitutional European office shall draw up analytical accounts of its expenditure, enabling the proportion of its services supplied to each of the institutions to be determined. The Director of the European office concerned shall adopt, after approval by its Management Committee, the criteria on which the accounting system shall be based . 2. The remarks concerning the specific budget line in which is entered the total appropriation for each interinstitutional European office shall show an estimate of the cost of services supplied by the office to each of the institutions. This shall be based on the analytical accounts provided for in paragraph 1. 3. Each interinstitutional European office shall notify the institutions concerned of the results of the analytical accounts.
Article 174a 
1. Each institution may delegate authorising officer powers to the director of an interinstitutional European office for the management of appropriations entered in its section and shall set the limits and conditions for this delegation of powers. 2. The internal auditor of the Commission shall exercise all responsibilities laid down in Title IV, Chapter 8 of Part One.
Article 175 
Should the remit of a European office involve supplies to third parties for pecuniary interest, its Director shall, after approval of the Management Committee, lay down the specific provisions governing how these supplies are to be made and the keeping of the corresponding accounts.
Article 177 
Parts one and three shall apply to administrative appropriations, save as otherwise provided in this Title.
Article 178 
1. As from 15 November of each year, routine administrative expenditure may be committed in advance against the appropriations provided for the following financial year. Such commitments may not, however, exceed one quarter of the appropriations decided by the budgetary authority on the corresponding budget line for the current financial year . They may not apply to new expenditure of a kind not yet approved in principle in the last budget duly adopted. 2. Expenditure which must be paid in advance pursuant to legal or contractual provisions, for example rents, may give rise to payments from 1 December onwards to be charged to the appropriations for the following financial year. In this case, the limit referred to in paragraph 1 shall not apply .
Article 179 
1. Administrative appropriations shall be non-differentiated appropriations. 2. Operating expenditure arising from contracts covering periods that extend beyond the financial year, either in accordance with local practice or relating to the supply of equipment, shall be charged to the budget of the financial year in which it is effected. 3. The institutions shall inform the two branches of the budgetary authority as soon as possible of any building project likely to have significant financial implications for the budget. If either branch of the budgetary authority intends to issue an opinion, it shall within two weeks after receipt of the information on the building project notify the institution concerned of its intention to issue such an opinion. Failing a reply, the institution concerned may proceed with the planned operation under its administrative autonomy, subject to Article 282 of the EC Treaty and Article 185 of the Euratom Treaty with regard to Community representation. This opinion shall be forwarded to the institution concerned within two weeks of such notification.
Article 179a 
The implementing rules shall include a specific procedure for the selection of experts, to be paid on the basis of a fixed amount, for assisting the institutions, in particular in evaluating proposals and grant applications or tenders for procurement, and for providing technical assistance in the follow-up to, and final evaluation of, projects financed by the budget.
Article 181 
1. As regards the Funds mentioned in Article 155(1) for which the basic acts were repealed before the date of application of this Regulation, appropriations which were decommitted in application of Article 157(1) may be made available again in the event of a manifest error attributable solely to the Commission or in the case of force majeure which has serious repercussions for the implementation of operations supported by these Funds. 2. The central database referred to in Article 95 shall be set up by 1 January 2009. 3. For transfers of appropriations concerning operational expenditure referred to in the Regulations governing the Structural Funds and the Cohesion Fund for the 2000 to 2006 programming period, for which Community payments still have to be made for the financial settlement of outstanding Community commitments until the closure of the assistance, the Commission may make transfers from one title to another, provided that the appropriations in question: — are for the same objective, or — relate to Community initiatives or to technical assistance and innovative measures and are transferred to measures of the same nature. 4. Article 30(3) shall apply for the fund mentioned in Article 148(1) for the first time in respect of the payments charged to the 2008 budget.
Article 182 
The European Parliament and the Council shall be empowered to obtain any information or explanations regarding budgetary matters within their fields of competence.
Article 183 
The Commission shall adopt rules for implementing this Regulation.
Article 184 
Every three years, or whenever it proves necessary to do so, this Regulation shall be the subject of a review in accordance with the procedure laid down by Article 279 of the EC Treaty and Article 183 of the Euratom Treaty, after recourse to the conciliation procedure, if the European Parliament so requests.
Article 185 
1. The Commission shall adopt a framework financial regulation for the bodies set up by the Communities and having legal personality which actually receive contributions charged to the budget . The financial rules of these bodies may not depart from the framework regulation except where their specific operating needs so require and with the Commission's prior consent. 2. Discharge for the implementation of the budgets of the bodies referred to in paragraph 1, shall be given by the European Parliament on the recommendation of the Council. 3. The Commission's internal auditor shall exercise the same powers over the bodies referred to in paragraph 1 as he/she does in respect of Commission departments.
Article 186 
The Financial Regulation of 21 December 1977 is hereby repealed. References to the repealed Regulation shall be construed as references to this Regulation and shall be read in accordance with the correlation table in the Annex.
Article 187 
This Regulation shall enter into force on the 20th day following its publication in the Official Journal of the European Communities . It shall apply from 1 January 2003. This Regulation shall be binding in its entirety and directly applicable in all Member States.