Brussels, 31/01/2005 (Agence Europe) - Last Friday, the European Commission announced that the long task of modernising the internal accounting system was finished. As provided for by the provisions of the new financial regulation, the Commission managed to put in place a new financial accounting system at the beginning of 2005 (registering the accounting action when it happens and not when the money is paid, and not evaluating the assets and liabilities until the end of the financial year), instead of cash basis accounting.
Work to update the system caused much trouble at the Commission, especially in the procedure to discharge the 2001 budget, which the European Parliament struggled to agree on in April 2003 (EUROPE of 9 April 2003) due to public criticism from the accountant at the time, Marta Andreasen. Ms Andreasen was suspended from her duties on 24 May and, last October, the Commission decided to release her, as it felt that the “enormity of her conduct had caused an irremediable break in the trust the Commission needs to be able to grant its staff”, and thus made it impossible to maintain the working relationship between her and the Institution (EUROPE of 14 October 2004).
This re-vamping of the accounting system, which required an investment of 25 million EUR, has helped to improve the information in financial reports and answer criticism from the Court of Auditors and recommendations from various international bodies, such as the IFAC (International Federation of Accountants). According to the Commission, this new system will allow risks of error and irregularities in the EU's accounts to be reduced. The Commission was not alone in this venture. Spain, the UK, Sweden and Finland have already switched from a cash-based accounting system to an accrual-based one. Belgium and France are working on this, and the local authorities of the Netherlands, Italy and Germany are working towards it, even though the national authorities have not yet made an official decision. The Commission states that the new accounting system will continue to develop during 2005, phasing in the external operations of the Commission's budget, in other words loan activities and aid under the European Development Fund (EDF).
Plans to modernise the Commission's accounting system were launched in 2000, with an initial study commissioned by the then Director General of DG Budget, Jean-Paul Mingasson. In 2001, the former Budget Commissioner Michaele Schreyer proposed that modified accounting rules be included in the new financial regulation, providing for an accrual-based accounting system to be set in place by 2005. On 17 December 2002, the Commission adopted its communication on the modernisation of the accounting system of the European communities in which it undertook to submit regular information on the subject.