EUROPEAN
COMMISSION RESPONSES TO THE RECOMMENDATIONS MADE BY
THE EP IN THE
GENERAL BUDGET DISCHARGE RESOLUTION
Opening remarks: the
Commission’s report deals with the follow-up to the European Parliament
Discharges given for the 2005 financial year. The Commission’s full answers
to each of the recommendations are also available in a Commission working
document (SEC(2007)1185).
Content: the present report
aims to respond to each of the recommendations accompanying the decisions
giving discharge by the European Parliament relating to the execution of
expenditure in 2004 (including expenditure of decentralised agencies and EDF
expenses). The current summary focuses on the recommendations made at the
Commission with regard to its implementation of the budget (for the terms of
its recommendations, refer to the European Parliament opinion summary
24/04/2007: see procedure DEC/2006/2070).
In this context, the Commission
has identified that from the 163 recommendations made by the European
Parliament to the Commission, action has already been taken for 52
recommendations, though the results still must be evaluated. For another 99
recommendations the Commission agrees to take the action recommended by
Parliament. Finally, the Commission deems 12 recommendations to be
unacceptable and will therefore not be taking the requested action. The
responses of the Commission can be summarised as follows:
1) Horizontal issues:
- Statement of assurance:
regarding the accounts, the Commission indicates that it has corrected,
where possible, the errors highlighted by the Court during its 2005
audit. The Commission has also considered these errors and their causes
so as to try to avoid their recurrence. In shared management the
Commission has asked Member States to ensure that beneficiaries of
Structural Funds are made aware of controls and the risk of cancellation
of funding. Further guidance was published regarding information that
Member States will have to send to the Commission on recoveries and
withdrawals of funding following irregularities. Guidelines on the
closure of 2000-2006 programmes were issued by the Commission, as well
as guidance illustrating good practice in first-level management
controls and the checking of payment authorities;
- National management
declarations: given that the 27 Member States have different
governmental and management structures for EU funds under shared
management, the Commission considers that the development of a single
standard declaration would not yield significant benefits. The
Commission will, however, continue to support such initiatives taken by
national administrators while they remain;
- Suspension of payments and
financial corrections: the Commission will continue its practice of
suspending payments and imposing financial corrections when errors
stemming from serious system deficiencies are detected in Member States
in programmes under shared management. The Commission has also presented
a proposal to the Council to amend the Council Regulation (EC) No
1290/2005 on the financing of the Common Agricultural Policy, which will
allow it to further simplify the existing possibility to reduce or
suspend payments to a Member State with ambiguous control systems. In
addition, the Commission indicates that the 2006 annual accounts of the
EC already include information about the financial corrections made by
the Commission. For 2007, it is foreseen to add further information
concerning the financial corrections made by the Member States;
- The Commission’s internal control
system: the Commission will publish a final report on the implementation
of the action plan towards an Integrated Internal Control Framework in
2008. This report will make an initial examination of the impact of the
different actions on assurance and will draw conclusions concerning the
future consolidation of the Integrated Internal Control Framework;
- Political responsibility and
administrative responsibility of the Commission: regarding annual
activity reports, the Commission will continue to work towards
harmonising the presentation of management and internal control systems
and better explaining the consequences of the reservations expressed by
the Director-Generals. It will also continue developing indicators on
legality, regularity and sound financial management by “families” of
services (also see SEC(2007)1185 summary). Furthermore, the Commission
indicates that by adopting the synthesis report, the Commission assumes
its political responsibility for management by its Director-Generals, on
the basis of the assurances and reservations issued by them in their
annual activity report. A synthesis report signed by the Secretary
General of the Commission, as recommended by the European Parliament,
would not increase the accountability of the Commission but would rather
create confusion and possible overlapping in the different tasks and
responsibilities. The Commission will continue the implementation of its
Transparency Initiative.
b) Sectoral
Issues
- Revenue: the Commission
continues to examine with the Member States, both individually and in
the Advisory Committee of Own Resources, how Member States may be helped
to provide the information, required by the Commission in order to lift
restrictions, more quickly. Regarding the GNI own resource, the Commission
will perform more direct verification of selected national aggregates
during the period 2007-2009 of GNI verification missions;
- CAP: like the European
Parliament, the Commission welcomes the Court’s acknowledgement that the
Integrated Administrative Control System (IACS), when correctly applied,
constitutes an effective monitoring system for reducing the risk of
error or of irregular expenditure within the Common Agricultural Policy
(CAP). The Commission is continuing its efforts to monitor the full and
correct application of the IACS in all Member States. In case of
deficiencies, the Commission will not hesitate to impose financial
corrections. The Commission has taken steps to correct the problems
identified in checks relating to the rural development and the export
refund sectors. The Commission has notably addressed the deficiencies
found in the olive oil sector, and the auditing procedures are underway;
- Structural measures: in this
sector the Commission is implementing all recommendations by the European
Parliament. The Commission continues to exercise its supervisory role on
an ongoing basis through auditing, coordination of activities and the
dissemination of guidance and good practice guidelines. Where the
Commission finds inadequacies in the Member States’ systems, it makes
recommendations and, in serious cases, agrees remedial action plans
which it closely monitors. If the inadequacies persist, the Commission
will suspend payments to the programme or Member State concerned (by way
of example, in April 2007 the Commission suspended ERDF payments to
certain programmes in England). In keeping with its supervisory role,
the Commission is focusing on improving the effectiveness of the control
system as a whole (see above). For Member States and programmes on which
reservations are entered in the Director-General’s annual declarations,
and for other systems showing serious deficiencies, the Commission
monitors closely the implementation of agreed action plans;
- Internal policies, including
research: the Commission continues to improve its control systems in the
context of the action plan towards an Integrated Internal Control
Framework. A multi-annual approach to mitigating the inherent risk of
reimbursement of overstated costs has been introduced in the research
area, including a substantial increase in the number of ex-post audits.
Furthermore, "agreed upon procedures" have been developed to
provide a compulsory set of procedures for the certification of the
financial statements and the certification of the methodology described
in the model grant agreement for the Seventh Research Framework
Programme (FP7).These actions are
expected to lead to a reduction in the rate of errors. In the context of
the FP7, steps have also been taken to simplify the rules for the
reimbursement of costs. In relation to national agencies, the decisions
relating to the new generation of programmes in the fields of education,
training and youth provide for a comprehensive set of checks and
controls regarding the respect of procedures and internal control
mechanisms in order to ensure and verify the regularity and legality of
transactions as well as the reality and eligibility of activities;
- External actions: the
Commission is aware of the risks at the project-implementing level in an
organisation and has taken a number of measures over the past years to
reduce the potential effects, by foreseeing the usage and improvement of
standard contract provisions. In early 2006, the standard grant and
fee-based service contracts were revised. New specifications have been
established so as to reinforce the verification of compliance with the
conditions defined in the contract, including those relating to public
procurement procedures. EuropeAid’s Common Relex Information System
(CRIS) allows relevant analysis to be carried out to further improve
management;
- Pre-accession strategy: as
recommended by the European Parliament, the Commission will continue to
monitor the functioning of the national supervisory and control systems
for programme expenditure under the pre-accession strategy, in
particular within the SAPARD/IPARD paying agencies. Moreover, when
establishing joint projects with international institutions, the
Commission is particularly attentive to the expertise and the added
value that those institutions can provide to the full respect of the
financial regulation;
Administrative expenditure and
agencies: in this domain, the Commission indicates that the Court’s audits
found no significant error affecting the legality and regularity of
administrative expenditure. As regards the cost of maintaining its buildings,
the Commission will prepare a renovation-planning forecast, which will be
transmitted to the European Parliament and the Council. The Commission will
also examine if it has fallen victim to the elevators cartel mentioned by the
European Parliament. Moreover, the Commission confirms that invalidity
pensions are granted and extended on medical grounds only. Furthermore, the
Commission shares the European Parliament's concerns about good governance
and better regulation of the agencies. It considers that the adoption of the
draft inter-institutional agreement on the operating framework for the
European Regulatory Agencies (see procedure reference ACI/2005/2035)would
help to satisfy the recommendations of the Parliament on this issue. Whilst
fully respecting the autonomy of the regulatory agencies, the Commission
continues to provide extensive guidance and support to these agencies in the
mean time. The Service Level Agreements drawn up with many regulatory
agencies in 2006 in different areas of administration and training are an
example of this.