Select Committee on European Scrutiny Twelfth Report


FINANCIAL MANAGEMENT


(22983)
14379/01
COM(00) 696

Commission follow-up report on the European Parliament's 1999 Discharge Resolution.


Legal base:
Document originated:19 November 2001
Forwarded to the Council: 20 November 2001
Deposited in Parliament: 10 December 2001
Department:HM Treasury
Basis of consideration: EM of 17 December 2001
Previous Committee Report: None
To be discussed in Council: March 2002
Committee's assessment:Politically important
Committee's decision:Cleared


Background

  20.1  As part of the normal discharge procedure for the budget, the Commission usually prepares a follow-up report in response to the detailed comments from the Council on the improvements it wishes to see in the management of the Communities' resources. Included in that report is usually a response to the European Parliament's discharge resolution. On this occasion, the Commission has produced a separate report responding to the European Parliament, as requested by the European Parliament.

The document

  20.2  The document comprises an introduction, explaining the context, followed by a summary of the action taken by the Commission to address the concerns raised by the European Parliament. Part 2 of the document quotes the European Parliament's resolution on closing the budget for 1999, including the Commission's response to the specific comments made by the European Parliament. Part 3 quotes the European Parliament's lengthy observations and recommendations on discharge together with the Commission's responses.

  20.3  The European Parliament approved the closure of the accounts, but expressed concern on a number of points, including the failure to draw up comprehensive financial statements and the supply of information and documents in the context of the Framework Agreement, and called on the Commission to reduce the error rate and to achieve a positive Statement of Assurance by the Court of Auditors by 2003. The Commission replied that it has applied the Framework Agreement fully and that the reforms put in place should help reduce the error rate.

  20.4  The European Parliament also criticised Member States, drawing on references in the reports from the European Court of Auditors and OLAF (the EU's anti-fraud body). In response, the Commission provided examples of actions it proposes to take. The European Parliament also requested that the Commission provide updates on a number of large fraud cases, and criticised several aspects of external actions, such as the PHARE programme.

  20.5  The European Parliament produced a ten point plan for the Commission, including information on the performance appraisal of senior staff, information on the comparable performances of different Directorate Generals, a summary of all audits, data on posts held by recent leavers, information on the results of investigations set in train by whistleblowers, the establishment of a central database on individuals and companies that have defrauded the EU budget, faster recovery procedures and electronic transmission of documents. In response the Commission said it would provide some of the information in the appropriate form. Some other information, such as performance appraisal of staff, would remain confidential.

The Government's view

  20.6  In her Explanatory Memorandum of 17 December, the Economic Secretary to the Treasury (Ruth Kelly) provides a helpful summary of the specific responses to the European Parliament's demands. In welcoming the report, she says that it shows that the Commission is taking the European Parliament's recommendations seriously. She considers that the European Parliament's comments are detailed and demanding and that the Commission's response is sensible, making reference to the important reforms already in progress. She adds that the details of the report will be considered carefully during the discharge procedure for the 2000 budget.

Conclusion

  20.7  We report here on the Commission's report since it represents a new development in the discharge procedure. It suggests that the European Parliament and the Commission are actively engaged in improving financial management.

  20.8  We clear the document.


 
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Prepared 25 January 2002