Brussels, 26/06/2002 (Agence Europe) - On Tuesday, without debate, the Council of Ministers adopted the new version of the Financial Regulation applicable to the general budget of the European Communities, that will take effect on 1 January 2003. This unique legal instrument, which comprises no less than 187 articles, now brings together all the principles and major provisions that govern the establishment and execution of the budget, as well as financial auditing (see details in EUROPE of 10 and 11 June, p.14, and 14 June, p.17).
The Commission welcomes the following elements in the new Financial Regulation in particular: - simplicity and legibility: the new Financial Regulation, which has a new presentation (table of contents and numerous subheadings) will be easier to use; - clear budgetary principles: unity and budget accuracy (the regulation also applies to operational spending under CFSP and police and justice cooperation in criminal matters), annuality, equilibrium, unit of account (the budget is given in euros but, for some treasury needs, the accountant is authorised to put operations in national currencies), universality, specification (a certain degree of management flexibility is allowed for credit payments of institutions), sound financial management (performance indicators established per activity will be assessed) and transparency (better information on execution of the budget); - new budget presentation: from 2004, the budget will only be presented according to activity based budgeting, that is, it will be divided into policy fields (economic and financial affairs, business, competition, employment and social affairs, agriculture and rural development, energy and transport, environment, research, press and communication, external relations, trade, development and relations with ACP, enlargement, humanitarian aid, fight against fraud, administration, budget, audit, statistics, pensions and reserves). Furthermore, the Commission's budget section may comprise a "negative reserve" the maximum amount of which is fixed at EUR 200 million.
During a meeting with several journalists, on Monday, Commissioner Michaele Schreyer mainly insisted on the following changes: (1) for the first time, the financial regulation contains provisions on calls for tenders. The Commission should make its choice known to all those taking part in the calls for tenders. Persons providing misleading or fraudulent information may now be excluded from the market, and information concerning them seized in a database accessible to the other European institutions; (2) "sunset clauses" will apply to appropriations. Thus, on external aid matters, commitment appropriations must be used for individual contracts or agreements within three years of authorisation; (3) unless the Council decides otherwise, negative expenditure will be abolished from 2007 and included in the budget as agricultural assigned revenue; (4) in future, all European institutions will have the possibility during the financial year, to adjust their establishment plan to new requirements up to a maximum of 10% of their resources; (5) the Financial Regulation spells out the principles that apply to agencies; (6) the Regulation sets out provisions relating to the management of appropriations and to the control and verification system; (7) the duties of the individual financial actors (accounting and authorising officers), as well as the internal auditor, are laid down and their responsibilities clearly stipulated. Authorising officers must present a report on financial management each year. The Commission accounting officer obtains the right of own initiative concerning the charts of accounts of the other institutions.
Ms Schreyer said that "Europe will now have a completely new and modern Financial Regulation, based on the principles of clarity, efficiency and transparency". All rules and procedures for the implementation and discharge of the budget have been rationalised and modernised. Commission Vice-President Neil Kinnock welcomed this "major milestone in the overall reform of the European Commission's administration started in 1999". He noted that "this change in the law was essential to our efforts to ensure more efficient and effective management and control of EU taxpayers' money".
We would point out that the implementation of the new Financial Regulation must be accompanied by other legislative instruments that should also be in application in 2003: - arrangements for implementation of the Financial Regulation, the proposal of which will be sent for interinstitutional consultation in July, with a view to its final adoption before the end of the year; - basic regulations of traditional agencies, which will be presented in July (discharge by the European Parliament, internal audit by the Commission's internal auditor, application of Commission accounting norms and decision by the budgetary authority on the table of resources); - and a basic regulation of executive agencies to which Article 55 of the new Financial Regulation refers.