BUDGET: COURT OF AUDITORS BACKS FINANCIAL REGULATION.

• Position: Europe - Brief Article

The most detailed analysis of the proposed amendment of the Financial Regulation of 21 December 1977 concerns provisions linked to the EU's financial situation. The broad underlying philosophy of the Opinion is that the Budget and financial statements should reflect the reality of operations. The Court says the basis for budgetary commitments must be "clearly defined". The auditors argue that it should not be possible to divide commitments into artificial annual payments, adding that an annual ceiling is illogical. The Court insists that if its proposed amendments are not taken into account, it would be preferable to opt for a payments budget without commitment appropriations.Elsewhere, the Court is satisfied with the general tenor of the overhaul of the Financial Regulation, concerning methods of execution, financial players, the internal auditor, the award of public contracts and subsidies. However, amendments are proposed to the wording of articles in order to ensure that the proposed provisions are perfectly clear, precise, rigorous or flexible, whichever is appropriate. For example, the Court, pointing to the case of humanitarian aid, considers that the Financial Regulation should permit a measure of flexibility in the payment of subsidies to NGOs and insist neither on co-financing nor on the non-verifiable condition that no profit be made, nor, as a matter of course on limiting the rate of financing for administrative expenditure, but on the contrary provide scope for the payment of an extra-programme subsidy. Conversely, regarding the award of public contracts, the Court argues that the rule concerning situations in which errors, irregularities or fraud are suspected, should be further tightened and be subject to mandatory application by institutions where contractors are guilty of irregularities or fraud.The Court also approves measures aimed at rationalising the structure of the Budget (generalisation of differentiated appropriations, removal of negative expenditure), to reduce the number of derogation's to the budgetary principles of yearly recurrence and universality (termination of additional periods, except in the case of the EAGGF-Guarantee Section; termination of the practice of making appropriations available again, except for the Structural Funds...