EUROPEAN PARLIAMENT WORKING DOCUMENT. Committee on Budgetary Control

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1 EUROPEAN PARLIAMT 2004 ««««««««««««Committee on Budgetary Control WORKING DOCUMT on amendments to the Internal Rules on the implementation of the Budget of the European Parliament Committee on Budgetary Control Rapporteur: Borut Pahor DT\ doc PE v01-00

2 A. Background 1. At its meeting of 1 December 2004 the Bureau decided to seek the opinion of the Committee on Budgetary Control on a proposed revision, submitted by the Secretary- General, to Parliament's Internal Rules 1 on the implementation of the budget. 2. In the hierarchy of applicable texts, the Internal Rules come in third place after the Financial Regulation and its Implementing Rules. The Internal Rules are essentially a technical text containing instructions and guidelines to be applied by the Administration in its day-to-day management of Parliament's budget. They set out the procedures and practical arrangements which apply in the specific Parliament context. 3. The Internal Rules therefore lay down the detailed provisions to be followed by the Administration concerning such matters as carry-overs and transfers of appropriations, delegation of authorising officer duties, internal management and control procedures, internal audit, closure of accounts, inventory and external audit. 4. The Internal Rules were last amended on 4 December 2002 (see footnote) with the aim of having a text compatible with the new Financial Regulation in place in time for its entry into force on 1 January Since that date, there have been a number of developments including the adoption of new Implementing Rules of the Financial Regulation on 23 December 2002, as well as various reports by the Internal Auditor, the Court of Auditors and the Committee on Budgetary Control, all of which necessitate changes to the Internal Rules. In addition, in the Administration's practical experience in applying the new rules has brought to light the need for a number of practical adjustments or improvements. 5. Article 20 of the Internal Rules stipulates the following: "These internal rules may be amended by the Bureau after consulting the Committee on Budgetary Control. They shall be reviewed after the first year of application, or sooner, on the basis of a report by the Secretary-General, in order, if necessary, to amend them appropriately in the light of experience." The Committee on Budgetary Control was consulted on the previous revision in December B. What is the Administration proposing? The following summary of specific comments on the main new provisions in the draft Internal Rules is taken from the Secretary-General's note to the Bureau (PE /BUR). 1 The text currently in force, adopted on 4 December 2002, can be found on the European Parliament website at PE v /5 DT\ doc

3 6.1 The bulk of the established framework laid down by the Internal Rules has been retained: There is no change in the allocation of authorising officer powers: principal authorising officer by delegation (Secretary-General), authorising officers by delegation (directors-general plus Jurisconsult), and authorising officers by subdelegation; Transfer procedure arrangements, which stem from the provisions of the Financial Regulation, have also been retained; The budget implementation procedures for initiators, ex-ante verifiers, authorising officers and FINORD administrators have been retained unchanged. 6.2 A number of provisions are designed to enhance flexibility: Assigned revenue will now be permissible in connection with the sale of vehicles (Article 2(6)); It will now be possible to subdelegate authorising officer powers in connection with transfers of appropriations between sub-items within an item (Articles 3(8) and 5(5)); The scope for subdelegating power of signature in connection with transfers of appropriations remains strictly limited, but it has been modified to make it practicable (Article 3(8)). 6.3 A number of provisions will become more binding on authorising officers: The requirement to draw up a financial statement (Article 8(1)) will be extended to 'any proposal with likely significant financial implications or any change in rules', and authorising officers will be called upon to provide progress reports on such proposals. The changes are intended to foster information flow to the Bureau and to support decision-taking on specific issues and during preparation of the budget. The periodic reports (Article 8(4) to (9)) on budget implementation during a financial year, which, to date, have been drawn up at regular intervals and at least once a year, will be replaced by three reports to be submitted on specified dates: the first, on 20 January, is to provide information on any changes made to objectives and of the impact of those changes on resources previously allocated and on the schedule of activities for the financial year which will have recently started; the second will provide details of the implementation of appropriations as at 31 May and the updated programme of activities for the subsequent period; the third will provide implementation details as at 31 August and should make it possible to have a good idea of the volume of appropriations which may be available for a year-end mopping-up transfer. Payment by standing order or direct debit (Article 10) is allowed only if stipulated DT\ doc 3/5 PE v01-00

4 in a contract. This has been made more restrictive in the revised text by adding 'as being the sole method of payment' in order to take account of the Court of Auditors' observations in this connection. The terms 'approval' and 'withholding of approval' will be replaced by 'endorsement' and 'withholding of endorsement'. Several other institutions have abandoned the terms used under the old Financial Regulation in favour of terms which better reflect the verification function in its new form. This change also follows on from a suggestion made by the Internal Auditor in his annual report. To date, the existence of the Inter-Service Public Procurement Group, whose role is to advise authorising officers on contract awards, has been based on a decision by the Secretary-General. Provision for it will now be made in the Internal Rules (Article 17). 6.4 The purpose of the other changes made is to provide greater clarity with regard to: the structure of the text (reordering of paragraphs, in particular those relating to the financial statement, which are now located within the article on the authorising officer (Article 8(1) to (3)); wording (at the Court of Auditors, the term 'sector-specific letters' has now been superseded by 'statement of preliminary findings' (Article 15(2)); the definition of procedures (financial statement, Article 8(1) to (3); modification of the establishment plan; building projects, Article 16; drafting replies to the Court of Auditors, in particular with regard to the political groups, Article 15(5)); more precise wording of a number of provisions (authorisation to waive debt recovery, Article 5(5); informing the Council about building projects, Article 16); deleting transitional provisions (transitional period, discharge for the Accounting Officer). C. Procedure The Bureau has asked for the committee's opinion on a text revised by the Administration to take account of recent changes and developments. This revision is essentially technical in character. However, a more extensive revision of the Commission Regulation setting out the Implementing Rules (and, possibly, parts of the Financial Regulation) is currently being prepared. Any such changes to the underlying texts will have an impact on Parliament's internal rules and require further amendments, entailing another referral to the Committee on Budgetary Control. This wider revision would be more likely to throw up issues of a political character and it is perhaps more appropriate to wait for the broader consultation by the Bureau rather than to deliver two opinions on the same set of rules. PE v /5 DT\ doc

5 In this connection, it may be helpful to point out that the Chairman, Mr Fazakas, recently declined a request 1 by the Commission's Director-General for the Budget, Mr Romera, for a "fast-track" opinion on a limited revision of the Implementing Rules preferring to await the proposals for an overall review of the Financial Regulation and Implementing Rules expected to be published in May/July D. Conclusion There are two possible options. Option 1 Submit a report to the Bureau immediately containing amendments to the Administration's text in the knowledge that a further revision will be necessary at the end of the year. Option 2 Inform the Bureau that the committee has no major objection to the text submitted by the Secretary-General but expects to be consulted on the Internal Rules in due course in the context of the overall revision of the Financial Regulation and Implementing Rules. The Rapporteur submits the choice between the two options to the committee and would be glad to hear Members' views. 1 Letter ed to Members on 1 February DT\ doc 5/5 PE v01-00