FOLLOW-UP TO THE COMMISSION DISCHARGE FOR 2010:
FOLLOW-UP TO THE EUROPEAN PARLIAMENTS
RECOMMENDATIONS
Preliminary comment: this document is the Commission's report to the
European Parliament (EP) and the Council on the follow-up to the
discharge for the 2010 financial year, pursuant to Article 319(3)
of the Treaty on the Functioning of the European Union, Article 147
of the Financial Regulation (FR) and Article 119(5) of the European
Development Funds (EDF) Financial Regulation.
The report focuses on the four priority actions
highlighted by the European Parliament in its general discharge
resolutions as well as on other key requests. It is accompanied by
two Commission Staff Working Documents (CSWDs) containing the
Commission replies to each specific request from the EP and Council
(428 in total).
Compared to the 2009
discharge resolutions and recommendation, this represents an
increase of 44% of requests addressed to the Commission.
N.B. this summary confines itself to the manner in
which the Commission responded to the European Parliaments
requests.
CONTENT: the report specifies that out of these 428
requests, a total of 337 are contained in the EP resolution and 91
in the Council recommendation. The Commission agrees to start
new actions on 119 requests (95 from the EP and 24 from the
Council). It considers that for 283 requests (217 from the
EP and 66 from the Council), the required action has already
been taken or is on-going. Lastly, for reasons related to the
existing legal and budgetary framework or its institutional role or
prerogatives, the Commission cannot accept 26 requests (25
from the EP and 1 from the Council). A
justification is provided in the two attached CSWDs where the
Commission has not accepted the requests made by Discharge
Authority.
The Commissions responses to the EPs
requests may be summarised as follows:
1. Priority actions: in its resolution, Parliament specifically
highlights four priority actions of institutional accountability
and financial nature:
- Financial engineering instruments (FEIs):
Parliament invited the Commission to closely
monitor the use of FEIs through a set of different actions. In
February 2012, the Commission sent a staff working
document5
to the EP which provides an assessment of the
experience by both the Commission and the MS in implementing FEIs
in Cohesion Policy. Based on available audit results, this document
includes lessons learned and measures taken by the Commission and
the MS under the current programming period and also those proposed
for the future. However, experience has also shown that clearer
rules and more guidance are necessary to ensure sound financial
management. This is why the Commission addressed these
recommendations by including the concept and rules for leverage and
recycling into the proposals for the Common Provisions (CP) of the
structural instruments for the 2014-2020 programming period. It
also ensured as much as possible consistency between the framework
for financial instruments under the CP and the one for EU level
instruments under the EU FR (and will continue to ensure
consistency in the implementing subsequent Delegated
Acts).
At the beginning of 2011, the Commission also
undertook a comprehensive exercise of gathering information from
the Member States to identify the volumes of funding delivered
though FEIs and the types of instruments implemented. These
exercises showed that the legal framework needed to be improved and
the Commission initiated in July 2011 a revision of Council
Regulation (EC) No. 1083/2006. This fast track revision ended in
December 2011, with the introduction of requirements making the
reporting by the Member States on financial and implementation
issues a regular, standardized and compulsory procedure under the
annual reporting on the implementation of programmes.
- Accountability chain: the Parliament invited the Commission to provide the
Committee on Budgetary Control (CONT) with a full insight into the
MS annual summaries (AS). As a result, all AS were made available
to the EP under the discharge procedure. It will continue to do so
up to the end of the current 2007-2013 Multiannual Financial
Framework.
As for the Commissions political
declaration in which it accepts responsibility for the
implementation of the EU budget, the Commission confirms that it
fully assumes this responsibility as foreseen in Article 317 of the
TFEU. It formally and collegially adopts the Annual Synthesis
Report covering the overall responsibility for the EU budget. The
Commission is committed to continuously improve the quality,
readability and comparability of the AARs, which are its main
accountability and management reporting instrument. However,
concerning the request to add the responsible Commissioner's
signature to the AAR of his/her related department, the
Commission recalls that this is in contradiction to its
internal governance structure. Based on a decision of the
College, the primary responsibility for managing financial and
human resources is individually assigned to the Directors General
or Heads of Service.
- Increased use of pre-financing: the EP called on the Commission to be informed on the
increased use of pre-financings between 2005-2010 and to adapt its
level in the various programmes for ensuring the necessary float
for the beneficiaries to start the project. The increased use of
pre-financing over the recent years reflects the spending cycle of
multiannual programmes, and is mostly due to the beginning of
the 2007-2013 programming period. In fact, the level of
pre-financings in the various programmes should ensure the
necessary float for the beneficiary to start the project, while
safeguarding the financial interests of the EU. The EP and Council
agreed to amend the rules in the new Financial Regulation (FR)
where it will be foreseen that pre-financing should be regularly
cleared following the timing and economic substance of the
underlying projects. Alternatively, for projects exceeding EUR
5 million, the authorising officer shall obtain at least once a
year from the beneficiaries information on the cumulative spending.
Lastly, the latest information shows that the global amount of
pre-financings has slightly decreased in 2011, which confirms
that the increase witnessed in the early years of the 2007-2013
Financial Framework is also a normal development linked to the
spending profile of multiannual programmes.
- Effective sanctioning mechanisms in the area of
Cohesion policy: the EP invited the
Commission to create effective sanctioning mechanisms by making net
reductions a rule, abolishing retrospective projects as well as
obliging Member States to recover ineligible expenditure from
beneficiaries. The Commission considers that these sanctioning
mechanisms should be applied with minimal scope for discretion,
involve adequate reporting from Member States and allow it to
impose penalties, discontinue non-compliant operational programmes
and bring legal action against Member States in breach of their
obligations under Article 258 TFEU. It also considers that the
preventive and corrective measures already at hand (interruptions,
suspensions, financial corrections) contribute effectively towards
these aims although it acknowledges that the tools it has at its
disposal should be further strengthened in some areas. The
Commission's legislative proposals for the 2014-2020 period put
focus on results and effectiveness of the Cohesion policy. The
Commission has also made a proposal to reinforce the accountability
of Member States and its supervisory role by clarifying the use of
different sanctioning mechanisms at its disposal. However, it
did not propose a system to impose penalties on Member States or to
discontinue operational programmes in Member States or regions
which have repeatedly failed to implement Structural Funds and the
Cohesion Fund correctly. It considers that its existing
proposals for improved tools, including net corrections, allow it
to supervise adequately the implementation of each programme at the
level of Member States.
2) Horizontal issues: several questions were addressed in this
regard:
- Corporate governance of the Commission:
Parliament requested the President of the
Commission to sign the accounts and to present together with them a
description of the risks which could affect the achievement of the
policy objectives as well as a statement in which the President,
together with the College of Commissioners, accepts responsibility
for risk management and a formal Corporate Governance declaration.
The Commission has already expressed its views about the way it
takes overall political responsibility in this regard. As for the
signature of the accounts by its President, the Commission points
out that any additional statement by the President and/or the other
Members of the College, which remain politically responsible would
dilute the clear assignment of the actual management
responsibilities to the Director-Generals.
- Responsibility of Member States: Parliament requested the Commission to present a
proposal for the introduction of mandatory national management
declarations. As a result of the negotiations on the new FR, it
is now foreseen that Member States may provide to the Commission
declarations, signed at the appropriate level, based on the
information submitted annually to the Commission (accounts,
management declarations, annual summary of the final audit reports
and of controls, audit opinion). These voluntary
declarations would be issued in addition to the mandatory
management declarations as from 2014.
- European Financial Stabilisation Mechanism
(EFSM): the Commission was asked to
report to EP and Council twice a year on the risk that is incurred
on the Union's budget by its guarantee to the EFSM. The cash
management of the Commission and its right to draw on Member States
for contributions, under the provisions of Article 12 paragraph 3
of Regulation 1150/2000, ensures timely payment of all obligatory
expenditures, including debt service for the bonds issued by the
EU. Any funds mobilised in this way would be proposed to be
budgeted under the line 01 04 01 03 "European Union guarantee for
Union borrowings for financial assistance under the EFSM". The EP
as an arm of the Budgetary Authority would be part of this
decision.
- Transparency: the EP
requested that all grant payments from the EU budget should be
recorded in a user-friendly online database, paying due regard to
data protection law. The Commission considers that it is fulfilling
the requirements of transparency as defined in the FR, with due
regard to data protection law and European Court of Justice case
law. This information is available through the Financial
Transparency System (FTS), a central online search
engine.
3) Specific issues: the Commission highlights the following
observations:
- performance: the EP
recalls its suggestion that the Commission should appoint a
"performance evaluator" in order to establish clear ownership of
its Evaluation report. The Commission considers that there is no
lack of ownership of the evaluation report, as it is adopted by its
College and reiterates its commitment to present the evaluation
report in full compliance with Article 318 of the TFEU;
- cohesion: the EP called
on the Commission to analyse the weaknesses in the Member States
and regions affected by high error rates. The Commission indicates
that the Directors-General for Regional Policy and Employment have
put reservations on a significant number of programmes in their
2011 AARs and subsequently interrupted and/or suspended payments to
these programmes. This approach follows the general objective to
strengthen the Commission's supervisory role. The EP also called on
the Commission to resume interrupted payments only if sufficient
appropriate audit evidence gathered on the spot proves that
weaknesses were remedied. The Commission underlines that it
does not resume payments until it has confirmation that systems are
corrected for the future and that financial corrections have been
implemented on past expenditure, based on formal written
commitments;
- agriculture and natural resources: the EP invited the Commission to take the necessary
measures to ensure that bartering arrangements if to be continued
at all are transparent and cost effective. As regards the food aid
programme for the most deprived people, Regulation (EU) No 121/2012
allows the continuation of the current scheme until the completion
of the 2013 annual plan. According to the MFF proposal for
2014-2020, as of 2014 the food aid programme will be financed by
the Cohesion budget;
- external aid including the European Development Funds
(EDF): concerning the Union's aid to
Haiti, the EP asked the Commission to ensure better coherence and
complementarity between humanitarian aid and development aid. In
parallel, Parliament requested a list of the projects carried out
in Haiti with a detailed assessment of their current situation. The
instructions for EDF/DCI for the period 2014-20 sent to EU
delegations aim at ensuring a comprehensive, consistent and
effective approach towards partner countries and enhancing
coordination and complementarity between geographical and thematic
programmes/instruments. Parliament also called on the Commission to
accompany budget support instruments with rigorous and
well-defined conditions. This had already been addressed in the
Commission's communication on the future approach to EU budget
support to third countries and more
specifically in guidelines for designing and implementing budget
support programmes. As part of these guidelines, the Commission
prepared together with the Member States a common risk assessment
framework covering political governance, macroeconomic stability,
public financial management, corruption etc. This framework has
proved to be a useful tool for designing and implementing budget
support operations. Lastly, as for the integration of the EDF
into the Union budget, the Commission considers that, as the
Cotonou agreement is due to expire in 2020, the 2014-2020 period
should rather be used for redefining the principles and the
architecture of the EUACP partnership and for preparing the
integration of cooperation with ACP countries into the budget for
the post Cotonou period;
- decentralised agencies / joint
undertakings: several EP requests
concern issues that have been discussed by the Inter-Institutional
Working Group on agencies (IIWG) and are addressed in the common
approach recently adopted by the EP, the Council and the
Commission. The Commission will present a roadmap on the
implementation of the Common Approach with concrete timetables for
the planned initiatives by the end of 2012. It will indicate in
this roadmap how it will follow-up on the issues raised by the EP.
Agencies will be responsible for the implementation of those issues
which are within their remit.