(1)

Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities has been substantially amended several times. Since further amendments are to be made, including changes to take account of amendments introduced by the Treaty of Lisbon, the Regulation (EC, Euratom) No 1605/2002 should be replaced by this Regulation, in the interests of clarity.

(1)

Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities has been substantially amended several times. Since further amendments are to be made, including changes to take account of amendments introduced by the Treaty of Lisbon, the Regulation (EC, Euratom) No 1605/2002 should be replaced by this Regulation, according to the Treaty of Lisbon adopted jointly by the European Parliament and the Council according to the ordinary legislative procedure, in the interest of clarity.

(2)

Regulation (EC, Euratom) No 1605/2002 laid down the budgetary principles and financial rules to be respected in all legislative acts and by all institutions. The fundamental principles, the concept and the structure of that Regulation and the basic rules of budgetary and financial management need to be maintained. Derogations to those fundamental principles should be reviewed and simplified as far as possible, taking into account their continuing relevance, their added-value for the annual budget of the Union (hereinafter the ‘budget’), and the burden they impose on stakeholders. It is necessary to maintain and strengthen the key elements of the financial reform: the role of the financial actors, the integration of controls in operational services, the internal auditors, the Activity Based Budgeting, the modernisation of accounting principles and rules and the basic principles for grants.

(2)

Regulation (EC, Euratom) No 1605/2002 laid down the budgetary principles and financial rules governing the establishment and implementation of the general budget, ensuring sound and effective management, control and protection of the financial interests of the Union, as well as increasing transparency, to be respected in all legislative acts and by all institutions. The fundamental principles, the concept and the structure of that Regulation and the basic rules of budgetary and financial management need to be maintained. Derogations to those fundamental principles should be reviewed and simplified as far as possible, taking into account their continuing relevance, their added-value for the annual budget of the Union (hereinafter the ‘budget’), and the burden they impose on stakeholders. It is necessary to maintain and strengthen the key elements of the financial reform: the role of the financial actors, the integration of controls in operational services, the internal auditors, the Activity Based Budgeting, the modernisation of accounting principles and rules and the basic principles for grants.

(4a)

As regards the Union’s research framework programmes, further simplification and harmonisation of rules and procedures should be introduced, as stated in the European Parliament resolution of 11 November 2010 on simplifying the implementation of the Research Framework Programmes (2), and in the Final Report of the Expert Group on Interim Evaluation of the Seventh Framework Programme, published on 12 November 2010 on the basis of Article 7(2) of Decision No 1982/2006/EC.

(5)

Regulation (EC, Euratom) No 1605/2002 was confined to stating the broad principles and basic rules governing the whole budgetary sector covered by the Treaties, while the implementing provisions were laid down in Commission Regulation (EC, Euratom) No 2342/2002 of 23 December 2002 laying down detailed rules for the implementation of Council Regulation (EC, Euratom) No 1605/2002 on the Financial Regulation applicable to the general budget of the European Communities11 in order to produce a better hierarchy of rules and make Regulation (EC, Euratom) No 1605/2002 easier to read. Under the Treaty on the Functioning of the European Union (hereinafter the ‘TFEU’) the Commission may receive delegation to adopt acts of general application to supplement or amendment certain non-essential elements of legislative acts . As a consequence, some provisions laid down in Regulation (EC, Euratom) No 2342/2002, should be incorporated into this Regulation . The detailed rules for the application of this Regulation adopted by the Commission should be confined to technical details and implementing modalities .

(5)

Regulation (EC, Euratom) No 1605/2002 was confined to stating the broad principles and basic rules governing the whole budgetary sector covered by the Treaties, while the implementing provisions were laid down in Commission Regulation (EC, Euratom) No 2342/2002 of 23 December 2002 laying down detailed rules for the implementation of Council Regulation (EC, Euratom) No 1605/2002 on the Financial Regulation applicable to the general budget of the European Communities11 in order to produce a better hierarchy of rules and make Regulation (EC, Euratom) No 1605/2002 easier to read. Under Article 290 of the Treaty on the Functioning of the European Union (hereinafter the ‘TFEU’) a legislative act may delegate to the Commission the power to adopt non-legislative acts only to supplement or amend certain non-essential elements of the legislative act . As a consequence, some provisions laid down in Regulation (EC, Euratom) No 2342/2002, should be incorporated into this Regulation.

(8)

The rules governing interest generated by pre-financing should be simplified as they generate excessive administrative burden on both recipients of Union funds and Commission services and create misunderstandings between the Commission services and operators and partners. For reasons of simplification, in particular in respect of grant beneficiaries, and in line with the principle of sound financial management, there should no longer be an obligation to generate interest on pre-financing and to recover such interest. However, it should be possible to include such obligation in a delegation agreement in order to allow the re-use of interests generated by prefinancing for the programmes managed by some delegates, or its recovery.

(8)

The rules governing interest generated by pre-financing should be simplified as they generate excessive administrative burden on both recipients of Union funds and Commission services and create misunderstandings between the Commission services and operators and partners. For reasons of simplification, in particular in respect of grant beneficiaries, and in line with the principle of sound financial management, the obligation to generate interest on pre-financing and to recover such interest should be lifted immediately . However, it should be possible to include such obligation in a delegation agreement in order to allow the re-use of interests generated by prefinancing for the programmes managed by some delegates, or its recovery.

(11)

The Treaty requires that the multiannual financial framework be laid down in the form of a regulation . It is therefore necessary to incorporate certain provisions from the multiannual financial framework for 2007-2013 into this Regulation. In particular, in order to ensure budgetary discipline, it is necessary to establish a link between the multiannual financial framework and the annual budgetary procedure. It is also necessary to include provisions on commitment of the European Parliament and of the Council to respect the allocations of commitment appropriations laid down in the basic acts for structural operations, rural development and the European Fisheries Fund.

(11)

As according to the Treaty the multiannual financial framework will in future be laid down in the form of a regulation and the interinstitutional agreement on budgetary discipline and sound financial management has to be amended accordingly, it is logical to incorporate certain provisions from the interinstitutional agreement into this Regulation. In particular, in order to ensure budgetary discipline, it is necessary to establish a link between the multiannual financial framework and the annual budgetary procedure. It is also necessary to include provisions on commitment of the European Parliament and of the Council to respect the allocations of commitment appropriations laid down in the basic acts for structural operations, rural development and the European Fisheries Fund.

(13a)

Revenue received by non-state third parties in the pursuit of the Union’s legitimate aims such as the fight against smuggling and counterfeiting of cigarettes (e.g. the ‘Phillip Morris’ agreement) should be treated as assigned revenue, in particular where these are the results of agreements concluded in the process of alternative dispute resolution.

(16)

Concerning provisions on proportionality, the notion of tolerable risk of error should be introduced as part of the risk assessment made by the Authorising Officer. The institutions should be able to move away from the general 2 % materiality threshold used by the Court of Auditors to conclude on the legality and regularity of the underlying transactions. Tolerable risk levels constitute more appropriate basis for the Discharge Authority to judge the quality of the management of risk by the Commission. The European Parliament and the Council should therefore determine the level of tolerable risk of error per policy area, taking into account the costs and benefits of controls.

(16)

In order to assess the risk of error, taking account of the principle of sound financial management and appropriate controls, and to react accordingly, a management tool showing the risk of error should be used.

(16a)

The principle of transparency, enshrined in Article 15 TFEU which requires the institutions to work as openly as possible, requires, in the area of the implementation of the Union budget, that citizens be able to know where and for what purpose funds are spent by the Union. Such information fosters democratic debate, contributes to the participation of citizens in the decision-making process of the Union and reinforces the institutional control and scrutiny over Union expenditure. This objective should be achieved by the publication, preferably using modern communication tools, of relevant information concerning final contractors and final beneficiaries of Union funds which takes into account their legitimate interests of confidentiality and security and, as far as natural persons are concerned, their rights to respect for their private lives and the protection of their personal data. Institutions should therefore apply a selective approach in line with the principle of proportionality. Decisions to publish should be based on relevant criteria in order to provide meaningful information.

(23a)

For very low and low-value grants, simplified procedures in accounting and authorisation may be applied in order to create a beneficiary-driven approach.

(23b)

Grants may also be authorised in the field of basic research, where no outcome or result can be presented in consequence of the research activity.

(24)

The experience with Public Private Partnerships (PPPs) institutionalised as Union bodies under Article 185 of Regulation (EC, Euratom) No 1605/2002 demonstrates that further alternatives should be added in order to increase the choice of instruments to include bodies whose rules are more flexible and accessible to the private partners than those applicable to the Union institutions. Such alternatives should operate under indirect management. An alternative should be a body established by a basic act and endowed with financial rules which should take into account the principles necessary to ensure sound financial management of Union funds. These principles should be adopted in a delegated regulation and should be based on those with which third entities entrusted with budget implementation tasks have to comply . Another alternative should be the implementation of PPPs by bodies governed by private law of a Member State .

(24)

The experience with Public Private Partnerships (PPPs) institutionalised as Union bodies under Article 185 of Regulation (EC, Euratom) No 1605/2002 demonstrates that further alternatives should be added in order to increase the choice of instruments to include bodies whose rules are more flexible and accessible to the private partners than those applicable to the Union institutions. Such alternatives should operate under indirect management. An alternative should be a body established by a basic act and endowed with financial rules which should take into account the principles necessary to ensure sound financial management of Union funds. These principles should be adopted in a delegated regulation on which the European Court of Auditors should be consulted and should be based on those with which third entities entrusted with budget implementation tasks have to comply.

(25)

Basic control and audit obligations of Member States where they implement the budget indirectly in shared management, which currently exist only in sector-specific Regulations, should be, for the purposes of Article 317 of the TFEU, introduced in this Regulation. Therefore it is necessary to include provisions, setting out a coherent framework for all policy areas concerned, on a harmonised administrative structure at national level, common management and control obligations for those structures, annual management declaration of assurance with independent audit opinion thereon and an annual declaration by Member States by which they assume the responsibility for the management of Union funds they are entrusted with, financial clearance, suspension and correction mechanisms operated by the Commission. Detailed provisions should remain in sector-specific Regulations.

(25)

Basic control and audit obligations of Member States where they implement the budget indirectly in shared management, which currently exist only in sector-specific Regulations, should be, for the purposes of Articles 317 and 290 of the TFEU, introduced in this Regulation. Therefore it is necessary to include provisions, setting out a coherent framework for all policy areas concerned, on a harmonised administrative structure at national level, which does not create any additional control structures but allows the Member States to accredit bodies entrusted with the implementation of Union funds. The Member States should have the competence to determine the entity or organisation carrying out the functions of the accrediting authority, which may be at the same administrative level as the accredited body or already be responsible for the supervision of other authorities at present; this should not preclude the choice of any other structure on the part of the Member States as long as this is in line with the provisions of this Regulation. Furthermore, common management and control obligations for those structures, annual management declaration of assurance with independent audit opinion thereon and an annual declaration by Member States by which they assume the responsibility for the management of Union funds they are entrusted with, financial clearance, suspension and correction mechanisms operated by the Commission should be contained in this Regulation in order to create a coherent legislative framework which also improves the overall legal certainty and the efficiency of controls and remedial actions as well as the protection of the Union’s financial interests . Detailed provisions should remain in sector-specific Regulations.

(33a)

All draft proposals submitted to the legislative authority should be suitable for the application of user-friendly information technologies (‘e-government’) and the interoperability of data processed in the management of the budget should be ensured, which should improve efficiency. Uniform data transmission standards for data available in electronic format should be foreseen. A transitional period of two years from the entry into force of this Regulation should be granted for the attainment of these targets.

(38a)

Lump sums and flat rates should be used on a voluntary basis and only applied where appropriate. The terminology in use on flat rates and lump sums should be clarified.

(38b)

A further clarification or a reasonable definition of eligible costs should be proposed, as it would enhance compliance with the full cost principle, namely direct and indirect costs, upstream and downstream of research.

(43a)

In order to allow its auditees sufficient time to address findings of the Court of Auditors that could have an impact on the auditees’ final accounts or the legality and/or regularity of their underlying transactions, the Court of Auditors shall ensure that all such findings are transmitted to the institution or body concerned in good time.

(44)

The provisions concerning provisional and final accounts should be updated, in particular in order to provide for the reporting information that should accompany the accounts sent to the Commission’s Accounting officer for the purpose of consolidation. Reference should also be made to the representation letter accompanying the transmission, by the institutions and bodies financed by the budget, to the Court of Auditors of their final accounts, as well as to the representation letter accompanying the transmission of the Union’s final consolidated accounts. Finally, an earlier deadline should be set out for the Court of Auditors to make its observations on the provisional accounts of institutions other than the Commission and bodies financed by the budget in order to allow them to draw up their final accounts taking into account the remarks by the Court of Auditors remarks.

(44)

The provisions concerning provisional and final accounts should be updated, in particular in order to provide for the reporting information that should accompany the accounts sent to the Commission’s Accounting officer for the purpose of consolidation. Reference should also be made to the representation letter accompanying the transmission, by the institutions and bodies financed by the budget, to the Court of Auditors of their final accounts, as well as to the representation letter accompanying the transmission of the Union’s final consolidated accounts. Finally, an earlier deadline should be set out for the Court of Auditors to make its observations on the provisional accounts of institutions other than the Commission and bodies financed by the budget in order to allow them to draw up their final accounts taking into account the remarks by the Court of Auditors remarks. In order to close the discharge procedure during the year following the year being audited, a working group will be set up to make proposals aimed at shortening the time taken by the procedure.

(45)

As regards the information which is to be submitted by the Commission in the context of discharge, the Commission should notably submit to the European Parliament and to the Council an evaluation report on the Union’s finances based on the results achieved, in accordance with Article 318 of the TFEU. Adequate provisions should therefore be introduced in this Regulation for such report in relation to other existing reporting requirements.

(45)

As regards the information which is to be submitted by the Commission in the context of discharge, the Commission should notably submit to the European Parliament and to the Council an evaluation report on the Union’s finances based on the results achieved, in accordance with Article 318 of the TFEU. Adequate provisions should therefore be introduced in this Regulation for such report in relation to other existing reporting requirements. The report should include in particular elements on the achievements in the field of gender aspects of staff policy.

(48)

As regards the specific provisions relating to the implementation of external actions, it is necessary to adapt them to the changes proposed for the methods of implementation.

(48)

As regards the specific provisions relating to the implementation of external actions, it is necessary to adapt them to the changes proposed for the methods of implementation and to propose a differentiated approach when the European Union is required to respond to humanitarian emergencies, international crises or third countries undergoing a process of democratic transition .

(54a)

It is of particular importance that the Commission carry out appropriate consultations during its preparatory work for delegated acts, including at expert level.

The Commission, when preparing and drawing up delegated acts, should ensure a simultaneous, timely and appropriate transmission of relevant documents to the European Parliament and Council.

(55)

The revision of this Regulation should be made only when necessary. Too frequent revisions generate disproportionate cost of adjusting administrative structures and procedures to the new rules. Furthermore, time may be too short to allow for valid conclusion to be drawn from the application of the rules in force.

(56a)

The readability of this Regulation should be improved by attaching an index that also includes the names of each article, as well as a glossary of financial terms,

—

the term ‘institution’ refers to the European Parliament, the European Council and the Council, the European Commission, the Court of Justice of the European Union and the European Court of Auditors, the European Economic and Social Committee, the Committee of the Regions, the European Ombudsman, the European Data Protection Supervisor and the European External Action Service (‘EEAS’);

—

the European Central Bank shall not be considered as an institution of the Union.

(a)

the revenue and expenditure of the Union , including administrative expenditure occasioned for the institutions by the provisions of the Treaty on European Union relating to the common foreign and security policy, and the operational expenditure occasioned by implementation of those provisions where this is charged to the budget ;

(a)

the revenue and expenditure of the Union;

(b)

the expenditure and revenue of the European Atomic Energy Community.

(b)

the revenue and expenditure occasioned for the implementation of the respective European Development Fund.

(a)

administrative expenditure, including expenditure occasioned for the institutions by the provisions of the Treaty on European Union relating to the Common Foreign and Security Policy and the operating expenditure occasioned by implementation of those provisions where this is charged to the budget; and

(b)

the operational expenditure, occasioned by implementation of those provisions where this is charged to the budget, including related support expenditure.

(aa)

or, in duly substantiated cases, amounts for building projects within the meaning of Article 195(3) which have not yet been completed if the preparatory stages of the commitment procedure have not yet been completed by 31 December and the amounts are needed so that progress with works can be stepped up or debt repaid early; these amounts may then be committed up to 31 December of the following year; and

(ba)

amounts corresponding from an own resource system.

(ea)

fines imposed in the area of competition, other fines and amounts receivable as a result of out-of-court settlements, understandings, or any other similar agreements concluded with, or off payments paid by, any non-state third parties;

(a)

revenue from third parties in respect of goods, services or work supplied at their request;

(a)

revenue from third parties in respect of goods, services or work supplied at their request;

(b)

proceeds from the sale of vehicles, equipment, installations, materials, and scientific and technical apparatus which are being replaced or scrapped when the book value is fully depreciated;

(b)

proceeds from the sale of vehicles, equipment, installations, materials, and scientific and technical apparatus which are being replaced or scrapped when the book value is fully depreciated;

(c)

revenue arising from the repayment of amounts wrongly paid;

(c)

revenue arising from the repayment of amounts wrongly paid subject to Article 77 ;

(ca)

revenue arising from interest on pre-financing subject to Article 5;

(d)

proceeds from the supply of goods, services and works for other departments, institutions or bodies, including refunds by other institutions or bodies of mission allowances paid on their behalf;

(d)

proceeds from the supply of goods, services and works for other departments, institutions or bodies, including refunds by other institutions or bodies of mission allowances paid on their behalf;

(e)

insurance payments received;

(e)

insurance payments received;

(f)

revenue from the sale, letting or any other contract concerning rights connected with real estate;

(f)

revenue from the sale, letting, reimbursement or any other contract concerning rights connected with real estate;

(g)

revenue from the sale of publications and films, including those on an electronic medium.

(g)

revenue from the sale of publications and films, including those on an electronic medium.

(a)

penalties imposed on parties to procurement contracts or beneficiaries of a grant;

(b)

discounts, refunds and rebates on individual invoices and cost statements;

(c)

interest generated by pre-financing payments;

(d)

adjustments for amounts unduly paid.

(a)

transfer commitment appropriations within each chapter;

(a)

transfer commitment appropriations within each chapter;

(b)

transfer payment appropriations within each title;

(b)

transfer payment appropriations within each title after prior notification to Parliament and Council provided that neither of them opposes the transfer within three weeks ;

(c)

as regards expenditure on staff and administration which is common to several titles , transfer appropriations from one title to another;

(c)

as regards expenditure on staff and administration, transfer appropriations from one title to another up to a maximum of 15 % of the appropriations for the year shown on the line from which the transfer is made, and up to a maximum of 30 % of the appropriations for the year shown on the line to which the transfer is made ;

(d)

as regards operational expenditure, transfer appropriations between chapters within the same title, up to a maximum total of 10 % of the appropriations for the year shown on the line from which the transfer is made.

(d)

as regards operational expenditure, transfer appropriations between chapters within the same title, up to a maximum total of 15 % of the appropriations for the year shown on the line from which the transfer is made ;

(a)

transfer appropriations from the ‘provisions’ title referred to in Article 43, where the only condition to lift the reserve lies in the adoption of a basic act in accordance with the ordinary legislative procedure foreseen in Article 294 TFEU;

(b)

in duly substantiated exceptional cases of international humanitarian disasters and crises, occurring after 1 December of the budgetary year, the Commission may transfer unused budgetary appropriations for the current budgetary year still available in the budget titles falling under heading 4 of the multiannual financial framework to the budget titles concerning the crisis management aid and humanitarian aid operations.

(a)

European Parliament and the Council approve it;

—

both arms of the budgetary authority approve it;

(b)

either the European Parliament or the Council approves it and the other institution refrains from acting;

—

one of the two arms of the budgetary authority approves it and the other refrains from acting;

(c)

European Parliament and the Council refrain from acting or have not taken a decision contrary to the Commission proposal.

—

both arms of the budgetary authority refrain from acting or have not taken a decision contrary to the transfer proposal.

(a)

the transfer represents less than 10 % of the appropriations of the line from which the transfer is made and does not exceed EUR 5 million;

(b)

the transfer concerns only payment appropriations and the overall amount of the transfer does not exceed EUR 100 million.

(aa)

precise, consistent and transparent rules for control with respect to the rights of involved parties;

(d)

prevention, detection and correction of fraud and irregularities;

(d)

notwithstanding the responsibilities of the financial actors as defined in Chapter 3, prevention, detection and follow-up of correction of fraud and irregularities;

(a)

segregation of tasks;

(b)

an appropriate risk management and control strategy including controls at beneficiary level;

(c)

avoidance of conflicts of interests;

(d)

adequate audit trails and data integrity in data systems;

(e)

procedures for monitoring of performance and for follow-up of identified internal control weaknesses and exceptions;

(f)

periodic assessment of the sound functioning of the internal control system.

(a)

the implementation of an appropriate risk management and control strategy coordinated among appropriate actors involved in the control chain;

(b)

the accessibility of control results to all appropriate actors involved in the control chain;

(c)

reliance where appropriate on management declarations of implementation partners and independent audit opinions, provided that the quality of the underlying work is adequate and acceptable and that it has been performed in accordance with agreed standards.

(d)

the timely application of corrective measures including, where appropriate, dissuasive penalties;

(e)

clear and unambiguous legislation underlying the policies;

(f)

the elimination of multiple controls;

(g)

the principle of improving the cost-benefit ratio of controls, taking into account the risk of error referred to in Article 29.

(a)

an analysis of financial management in the previous year and the commitments outstanding;

(b)

where appropriate, an opinion on the estimates of the other institutions which may contain different estimates, accompanied by the reasons therefore;

(c)

any working paper it considers useful in connection with the establishment plans of the institutions and the grants which the Commission awards to the bodies referred to in Article 196b and to the European Schools. Any such working paper, showing the latest authorised establishment plan, shall present:

(d)

the activity statements containing:

(a)

an annual report on the performance of existing ppps in the previous year;

(b)

the targets set for the year to which the draft budget relates, indicating any specific budgetary needs dedicated to attaining this target;

(c)

the administrative cost and implemented budget in total and per type as defined in Article 196a and per individual ppp in the preceding year;

(d)

the amount of financial contributions made from the Union’s budget and the value of contributions in kind made by the other partners for each ppp;

(e)

the staff tables, in application of paragraph (2a)(c) mutatis mutandis, of such ppps where staff are paid or partly paid by Union funds; these staff tables shall be taken into account when preparing the working document under paragraph (2a)(c).

(a)

the capital issued in the form of financial instruments and funded from the Union’s budget and the overall capital invested per financial instrument, including by third parties, in total and as leverage ratio per financial instrument, the value of participations in equity and quasi-equity investments;

(b)

revenues and repayments received in the previous year and a forecast for the year to which the draft budget relates;

(c)

the total amount of contingent and existing liabilities of the Union arising from the implementation of financial instruments in the previous year and in total broken down in particular by:

(d)

the financial provisions made in the budget for anticipated risks as well as unforeseen risks in total and per financial instrument;

(e)

the percentage and absolute number of cases in which guarantees were drawn on or junior debt or equity or quasi-equity participations were lost as a result of impairment or bankruptcy in total and per financial instrument for the previous year and the overall running time of the respective financial instrument;

(f)

the average duration between the payment of financial instruments in the form of junior debt capital (mezzanine) to the beneficiaries and the withdrawal of such capital; where this exceeds three years, the Commission shall provide an action plan for the reduction of the duration in the framework of the annual discharge procedure;

(g)

the geographical distribution of the application (absorption) of financial instruments per Member State and per financial instrument;

(h)

the administrative expenditure arising from any management fees, reimbursement or other monies paid for the management of financial instruments where this has been entrusted to third parties in total and per managing party and per financial instrument managed;

(i)

the staff tables, in application of paragraph (2a)(c) mutatis mutandis, where staff are paid or part paid by Union funds; these staff tables shall be taken into account when preparing the working document under paragraph (2a)(c).

(d)

provide a detailed picture of all staff in place in the Union delegations at the time of presenting the draft budget, including a breakdown by geographic area, individual country and mission, distinguishing establishment plan posts, contract agents, local agents and seconded national experts and appropriations requested in the draft budget for such other types of personnel with corresponding estimates of the equivalent full-time staff that may be employed within the limits of the appropriations requested.

(d)

provide a detailed picture of all staff in place in the Union delegations at the time of presenting the draft budget, including a breakdown by geographic area, gender, individual country and mission, distinguishing establishment plan posts, contract agents, local agents and seconded national experts and appropriations requested in the draft budget for such other types of personnel with corresponding estimates of the equivalent full-time staff that may be employed within the limits of the appropriations requested.

(a)

for each building, expenditure and areas covered by the appropriations of the corresponding budget lines;

(b)

expected evolution of the global programming of areas and locations for the coming years, with a description of the building projects in planning phase referred to in Article 195(3) which are already identified;

(c)

final terms and costs as well as relevant information regarding project implementation of new building projects previously submitted to the budgetary authority under the procedure established in Article 195(3) and not included in previous year’s working documents;

(d)

final terms and costs regarding cont r act extensions not subject to the procedure established in Article 195(3) but exceeding an annual charge of EUR 500 000.

(a)

surplus,

(b)

revision of the forecast of traditional own resources and Value Added Tax and Gross National Income bases,

(c)

increase in the forecast of revenue and decrease in payment appropriations.

(a)

a general statement of revenue and expenditure;

(a)

a general statement of revenue and expenditure making a distinction between operations and investment ;

(a)

expenditure on staff authorised in the establishment plan: there shall be an amount of appropriations and a number of establishment plan posts corresponding to this expenditure;

(b)

expenditure on external personnel and other expenditure referred to in point (c) of Article 23(1) and financed under the ‘administration’ heading of the multiannual financial framework;

(c)

expenditure on buildings and other related expenditure, including cleaning and maintenance, rental and hiring, telecommunications, water, gas and electricity;

d)

external personnel and technical assistance directly linked to the implementation of programmes.

(a)

in the general statement of revenue and expenditure:

(a)

in the general statement of revenue and expenditure:

(i)

the estimated revenue of the Union for the financial year concerned;

(i)

the estimated revenue of the Union for the financial year concerned;

(ii)

the estimated revenue for the preceding financial year and the revenue for year n - 2;

(ii)

the estimated revenue for the preceding financial year and the revenue for year n - 2;

(iii)

the commitment and payment appropriations for the financial year concerned;

(iii)

the commitment and payment appropriations for the financial year concerned;

(iv)

the commitment and payment appropriations for the preceding financial year;

(iv)

he commitment and payment appropriations for the preceding financial year;

(v)

the expenditure committed and the expenditure paid in year n – 2;

(v)

the expenditure committed and the expenditure paid in year n – 2 , the latter also expressed as a percentage of the budget ;

(vi)

appropriate remarks on each subdivision, as set out in Article 41(1);

(vi)

appropriate remarks on each subdivision, as set out in Article 41(1);

(b)

in each section of the budget, the revenue and expenditure shall be shown in the same structure as in point (a);

(b)

in each section of the budget, the revenue and expenditure shall be shown in the same structure as in point (a);

(c)

as regards staff:

(c)

as regards staff:

(i)

or each section of the budget, an establishment plan setting the number of posts for each grade in each category and in each service and the number of permanent and temporary posts authorised within the limits of the budget appropriations;

(i)

for each section of the budget, an establishment plan providing a comprehensive presentation of the entire human resources and setting the number of posts for each grade in each category and in each service and the number of permanent and temporary posts authorised within the limits of the budget appropriations , accompanied by a document presenting the full time equivalents of contract agents as well as local agents ;

(ii)

an establishment plan for staff paid from the research and technological development appropriations for direct action and an establishment plan for staff paid from the same appropriations for indirect action; the establishment plans shall be classified by category and grade and shall distinguish between permanent and temporary posts, authorised within the limits of the budget appropriations;

(ii)

an establishment plan for staff paid from the research and technological development appropriations for direct action and an establishment plan for staff paid from the same appropriations for indirect action; the establishment plans shall be classified by category and grade and shall distinguish between permanent and temporary posts, authorised within the limits of the budget appropriations;

(iii)

as regards scientific and technical staff, the classification may be based on groups of grades, in accordance with the conditions laid down in each budget; the establishment plan must specify the number of highly qualified technical or scientific personnel who are accorded special advantages under the specific provisions of the Staff Regulations;

(iii)

as regards scientific and technical staff, the classification may be based on groups of grades, in accordance with the conditions laid down in each budget; the establishment plan must specify the number of highly qualified technical or scientific personnel who are accorded special advantages under the specific provisions of the Staff Regulations;

(iv)

an establishment plan setting the number of posts by grade and by category for each body referred to in Article which receives a grant charged to the budget. The establishment plans shall show next to the number of posts authorised for the financial year the number authorised for the preceding year;

(iv)

an establishment plan setting the number of posts by grade and by category for each body referred to in Article 196b which receives a grant charged to the budget. The establishment plans shall show next to the number of posts authorised for the financial year the number authorised for the preceding year;

(ca)

as regards funding to international organisations, in a document annexed to the Commission section:

(i)

a summary of all contributions, with a breakdown per Union programme/fund and per international organisation,

(ii)

a statement of reasons explaining why it was more efficient for the Union to fund those international organisations rather than to act directly;

(d)

as regards borrowing-and-lending operations:

(d)

as regards borrowing-and-lending operations:

(i)

in the general statement of revenue, the budget lines corresponding to the relevant operations and intended to record any reimbursements received from beneficiaries who initially defaulted, leading to activation of the performance guarantee. These lines shall carry a token entry ‘pro memoria’ and be accompanied by appropriate remarks;

(i)

in the general statement of revenue, the budget lines corresponding to the relevant operations , in particular the implementation of financial instruments (Articles 130, 131) and intended to record any reimbursements received from beneficiaries who initially defaulted leading to activation of the performance guarantee as well as any revenue arising from the implementation of financial instruments . These lines shall carry a token entry ‘pro memoria’ and be accompanied by appropriate remarks;

(ii)

in the Commission section:

(ii)

in the Commission section:

—

the budget lines containing the Union’s performance guarantees in respect of the operations concerned. These lines shall carry a token entry ‘pro memoria’, so long as no effective charge which has to be covered by definitive resources has arisen;

—

the budget lines containing the Union’s performance guarantees and financial instruments in respect of the operations concerned. These lines shall carry a token entry ‘pro memoria’, so long as no effective charge which has to be covered by definitive resources has arisen;

—

remarks giving the reference to the basic act and the volume of the operations envisaged, the duration and the financial guarantee given by the Union in respect of these operations;

—

remarks giving the reference to the basic act and the volume of the operations envisaged, the duration and the financial guarantee given, or other financial instrument implemented by the Union in respect of these operations;

—

a comprehensive calculation of the rate of overall funds dedicated to financial instruments in relation to the Union’s budget;

(iii)

in a document annexed to the Commission section, as an indication:

(iii)

in a document annexed to the Commission section, as an indication:

—

all equity participations by means of financial instruments or ppp which shall be accompanied by specific remarks on their performance;

—

ongoing capital operations and debt management;

—

ongoing capital operations and debt management;

—

the capital operations and debt management for the financial year concerned;

—

the capital operations and debt management for the financial year concerned;

(e)

the total amount of CFSP expenditure shall be entered into one budget chapter, entitled CFSP, with specific budgetary articles. Those articles shall cover CFSP expenditure and shall contain specific budget lines identifying at least the single major missions .

(e)

the total amount of CFSP expenditure shall be entered into one budget chapter, entitled CFSP, with specific budgetary articles. Those articles shall cover CFSP expenditure and shall contain a specific budget line per mission;

(ea)

all revenue and expenditure under the respective European Development Fund which shall be entered under a special budget heading within the Commission section .

(b)

that the limit of the total number of posts authorised by each establishment plan is not exceeded .

(b)

that the institution or body has taken part in a benchmarking exercise with other bodies of the Union and other institutions as initiated by the Commission’s staff screening exercise .

—

Council Decision necessary for defining and implementing the common foreign and security policy (Article 26(2) TEU);

—

Council decision on operational action required by the international situation (Article 28(1) TEU);

—

Council decision defining the Union’s approach to a particular matter of geographical or thematic nature (Article 29 TEU);

—

Council decisions defining a Union action or position, or implementing such action or position (Article 31(2) 1st-3rd indents TEU) or on the appointment of a special representative (Article 31(2) 4th indent, Art. 33 TEU);

—

conclusion of agreements with one or more states or international organisations (Article 37 TEU).

(c)

appropriations for preparatory measures in the field of Title V of the Treaty on European Union. These measures shall be limited to a short period of time and shall be designed to establish the conditions for Union action in fulfilment of the objectives of the CFSP and for the adoption of the necessary legal instruments.

(c)

appropriations for preparatory measures in the field of Title V of the Treaty on European Union (concerning General Provisions on the Union’s External Action and Specific Provisions on the Common Foreign and Security Policy). These measures shall be limited to a short period of time and shall be designed to establish the conditions for European Union action in fulfilment of the objectives of the CFSP and for the adoption of the necessary legal instruments;

(a)

granting oneself or any third parties related by blood, kin or by any other specific properties unjustified direct or indirect advantages;

(b)

refusing to grant a potential beneficiary, recipient, candidate or tenderer the rights or advantages to which he is entitled or to grant these in excess;

(c)

committing undue or wrongful acts or failing to carry out acts that are mandatory.

(a)

by its departments, by Union Delegations in accordance with the second paragraph of Article 53, or through executive agencies referred to in Article 59;

(a)

by its departments, by staff in the Union Delegations under the supervision of the respective Head of Delegation, in accordance with the second paragraph of Article 53, or through executive agencies referred to in Article 59;

(b)

indirectly, in shared management with Member States or by entrusting budget implementation tasks to:

(b)

indirectly, in shared management with Member States or , subject to a specific provision in the basic act which shall also set out, other than in the cases of (i) and (iv), the type of implementing partners and types of operations, by entrusting certain specified budget implementation tasks to:

(i)

third countries or the bodies they have designated;

(i)

third countries or the bodies they have designated;

(ii)

international organisations and their agencies;

(ii)

international organisations and their agencies;

(iii)

financial institutions entrusted with the implementation of Financial Instruments pursuant to Title VIII;

(iv)

the European Investment Bank and the European Investment Fund or any other subsidiary of the Bank ;

(iv)

the European Investment Bank and the European Investment Fund;

(v)

bodies referred to in Articles 200 and 201 ;

(v)

bodies referred to in Articles 196b and 196c ;

(vi)

public law bodies or bodies governed by private law with a public service mission as far as these latter provide adequate financial guarantees;

(vi)

public law bodies or bodies governed by private law with a public service mission as far as these latter provide adequate financial guarantees;

(vii)

bodies governed by private law of a Member State, entrusted with the implementation of a public and private partnership and providing adequate financial guarantees;

(viii)

persons entrusted with the implementation of specific actions pursuant to Title V of the Treaty on the European Union, and identified in the relevant basic act within the meaning of Article 51 of this Regulation.

(viii)

persons entrusted with the implementation of specific actions in the Common Foreign and Security Policy pursuant to Title V of the Treaty on the European Union, and identified in the relevant basic act within the meaning of Article 51 of this Regulation.

(a)

satisfy themselves that actions financed from the budget are actually carried out and ensure that they are implemented correctly and for that purpose accredit and supervise bodies responsible for the management and control of Union funds;

(b)

prevent, detect and correct irregularities and fraud.

(a)

set up and ensure the functioning of an effective and efficient internal control system;

(a)

set up and ensure the functioning of an effective and efficient internal control system;

(b)

use an annual accounting system providing accurate, complete and reliable information in a timely manner;

(b)

use an accounting system providing accurate, complete and reliable annual information in a timely manner;

(c)

be subject to an independent external audit, performed in accordance with internationally accepted auditing standards by an audit service functionally independent of the accredited body ;

(c)

provide the prerequisite data and information in accordance with paragraph 5 ;

(d)

ensure, in conformity with Article 31(2), annual ex post publication of recipients of Union funds;

(d)

ensure ex post publication of recipients of Union funds in accordance with Article 31(2). Any processing of personal data shall comply with national provisions implementing Directive 95/46/EC.

(f)

ensure a protection of personal data which satisfies the principles laid down in Directive 95/46/EC.

(a)

their accounts drawn up for the expenditure made in the execution of the tasks entrusted;

(a)

the annual accounts of the accredited bodies on the expenditure that is made in the execution of the tasks entrusted to them and that is presented to the Commission for reimbursement, including the payments on account and sums for which recovery procedures are underway or have been completed. That information shall be accompanied by a statement of management responsibilities confirming that, in the opinion of those in charge of the management of the funds:

—

the information is properly presented, complete and accurate;

—

the expenditure has been used for its intended purpose, as defined in the sector-specific rules;

—

the control procedures put in place give the necessary guarantees concerning the legality and regularity of the underlying transactions; an annex to the declaration shall present the error rate per funds and an analysis of the errors as well as reservations, where applicable;

(b)

a summary of the results of all available audits and controls carried out, including an analysis of systematic or recurrent weaknesses as well as corrective actions taken or planned ;

(b)

a summary of the final audit reports and a summary of controls carried out, including an analysis of recurrent or systemic weaknesses, as well as corrective actions taken or planned and their results.

(c)

a management declaration of assurance as to the completeness, accuracy and veracity of the accounts, the proper functioning of the internal control systems as well as to the legality and regularity of the underlying transactions and the respect of the principle of sound financial management;

(d)

the opinion of an independent audit body on the management declaration of assurance mentioned in point (c) of this paragraph, covering all its elements.

(-a)

monitor the manner in which Member States fulfil their responsibilities, in particular by carrying out audits during the programme implementation;

(a)

apply procedures for a timely financial clearance of the accounts of the accredited bodies , ensuring that the accounts are complete, accurate and true and allowing for a timely clearance of irregularity cases ;

(a)

apply procedures for a timely financial clearance of the accounts of the accredited bodies, establishing whether the accounts are complete, accurate and true;

(b)

exclude from Union financing expenditure the disbursements which have been made in breach of Union law .

(b)

exclude from Union financing expenditure for which disbursements have been made in breach of Union law ;

(ba)

interrupt payment deadlines or suspend payments in the event of significant deficiencies in the monitoring by a Member State or in the functioning of a body accredited in accordance with paragraph 3, in the event that the prerequisite actions are not taken immediately.

(a)

the nature of the tasks entrusted and the amounts involved;

(a)

the nature of the tasks entrusted and the amounts involved;

(b)

the financial risks involved;

(b)

the financial risks involved;

(c)

the level of assurance stemming from their systems, rules and procedures together with the measures taken by the Commission to supervise and support the implementation of the tasks entrusted.

(c)

the level of assurance stemming from their systems, rules and procedures together with the measures taken by the Commission to supervise and support the implementation of the tasks entrusted.

(a)

set up and ensure the functioning of an effective and efficient internal control system;

(a)

set up and ensure the functioning of an effective and efficient internal control system;

(b)

use an annual accounting system providing accurate, complete and reliable information in a timely manner;

(b)

use an annual accounting system providing accurate, complete and reliable information in a timely manner;

(c)

be subject to an independent external audit, performed in accordance with internationally accepted auditing standards by an audit service functionally independent of the entity or person concerned;

(c)

be subject to an independent external audit, performed in accordance with internationally accepted auditing standards by an audit service functionally independent of the entity or person concerned;

(d)

apply appropriate rules and procedures for providing financing from Union funds through grants, procurement and financial instruments;

(d)

apply appropriate rules and procedures for providing financing from Union funds through grants, procurement and financial instruments;

(e)

ensure, in conformity with Article 31(2), annual ex post publication of recipients of Union funds ;

(e)

ensure ex post publication of recipients of Union funds in conformity with Article 31(2) and the protection of personal data which satisfies the principles laid down in Directive 95/46/EC ;

(f)

ensure a reasonable protection of personal data.

(f)

ensure a reasonable protection of personal data as laid down in Directive 95/46/EC and Regulation (EC) No 45/2001.

(a)

a report on the implementation of the tasks entrusted;

(a)

a report on the implementation of the tasks entrusted;

(b)

their accounts drawn up for the expenditure made in the execution of the tasks entrusted;

(b)

their accounts drawn up for the expenditure made in the execution of the tasks entrusted;

(c)

a summary of the results of all available audits and controls carried out, including an analysis of systematic or recurrent weaknesses as well as corrective actions taken or planned;

(c)

a summary of the results of all available audits and controls carried out, including an analysis of systematic or recurrent weaknesses as well as corrective actions taken or planned;

(d)

a management declaration of assurance as to the completeness, accuracy and veracity of the accounts, the proper functioning of the internal control systems as well as to the legality and regularity of the underlying transactions and the respect of the principle of sound financial management;

(d)

a management declaration providing reasonable assurance that:

(i)

the information contained in the accounts presents a true and fair view;

(ii)

the expenditure referred in the accounts has been used for its intended purpose and in accordance with the principle of sound financial management;

(iii)

the control procedures put in place give the necessary guarantees concerning the legality and regularity of the underlying transactions.

(e)

the opinion of an independent audit body on the management declaration of assurance mentioned in point (d) of this paragraph, covering all its elements.

(e)

These documents shall be accompanied by an opinion of an independent audit body , drawn up in accordance with the internationally accepted audit standards, on the completeness, accuracy and veracity of the accounts, on the proper functioning of the control procedures put in place as well as on the legality and regularity of the underlying transactions. The audit body shall report if the examination puts in doubt the assertions made in the management declaration.

(a)

ensure supervision and evaluation of the implementation of the tasks entrusted;

(a)

supervise that these entities fulfil their responsibilities, in particular by carrying out audits and evaluations during the programme implementation;

(b)

apply procedures for a timely financial clearance of the accounts of the entrusted entities and persons, ensuring that the accounts are complete, accurate and true and allowing for a timely clearance of irregularity cases;

(b)

apply procedures for a timely clearance of the accounts of the entities , establishing whether the accounts are complete, accurate and true and allowing for a timely clearance of irregularity cases ;

(c)

exclude from Union financing expenditure the disbursements which have been made in breach of the applicable rules .

(c)

exclude from Union financing expenditure for which disbursements have been made in breach of Union law.

a)

‧recoveries‧ are instruments applied to correct the receipt of irregular expenditure; in principle it is the recipients of such expenditure who repay sums incorrectly received. Where it is impossible to determine the actual amount of expenditure concerned, the amount to be recovered may be established by other scientific means. Such means should in principle be stipulated before the expenditure is committed;

b)

‧financial corrections‧ are instruments that predominantly address weaknesses in management systems. They withdraw funding from Member States or third countries or others which fail to ensure that the Union’s rules are correctly applied. They may also be applied for the promotion of the implementation of the Union’s policies laid down in the legal basis for the respective Union’s contribution.