PURPOSE: to grant discharge to the Economic and Social Committee for the 2005 financial year.

LEGISLATIVE ACT: Decision 2008/503/EC of the European Parliament on the discharge for implementation of the European Union general budget for the financial year 2005 (Section VI - European Economic and Social Committee).

CONTENT: with the present decision, the European Parliament grants the Secretary-General of the Economic and Social Committee discharge in respect of the implementation of the budget for the financial year 2005.

This decision is in line with the European Parliament’s resolution adopted on 24 April 2007 and comprises a series of observations that form an integral part of the discharge decision (please refer to the summary of the opinion of 24/04/2007).

The European Parliament adopted a resolution drafted Daniel CASPARY (EPP-ED, D), by 580 votes for, 50 against and 23 abstentions, and granted the European Economic and Social Committee's Secretary-General discharge for the implementation of the European Economic and Social Committee budget for the financial year 2005. In doing so, Parliament made a series of observations on the discharge in its accompanying resolution.

It began by noting that, in 2005 the European Economic and Social Committee (EESC) had available commitment appropriations amounting to a total of EUR 106 880 105,67 with a utilisation rate of 94,99 %. Following the introduction of accrual accounting with effect from 1 January 2005 the EESC's financial statements disclose a negative economic out-turn of EUR 3 811 889,47 (deficit) and identical amounts (EUR 168 387 721,19) in respect of both assets and liabilities.

With regard to administrative cooperation, Parliament noted that, notwithstanding the setting-up of a unit responsible for coordinating financial and contractual activities throughout the joint services of the EESC and the Committee of the Regions (CoR), some weaknesses still appeared concerning the operational management of certain procurement and coordination procedures between the new unit and the operating units which had not been clearly defined. The EESC and the CoR are currently considering whether they should continue to manage certain activities in common through the joint services, and, if so, what form that collaboration should in future take. Parliament felt that the administrative cooperation between the CoR and the EESC should be beneficial to both committees and financially advantageous for European taxpayers. Any new structures of administrative cooperation between the two committees must result in financial benefits. It demanded that both committees find a way to continue the administrative cooperation already in place. Having regard to the substantial divergences between the findings of the reports of the joint services and the CoR's two external experts, Parliament invited the CoR and the EESC to conduct a joint analysis based on appropriate benchmarks – if necessary with the help of the Court of Auditors – of the precise costs, benefits and savings generated by cooperation and to submit the results of their examination to the competent committee by 31 October 2007.

On the matter of buildings, Parliament recalled that, in 2005, the EESC began discussions with the Commission about taking over the office space in the van Maerlant building, and that following this event, the two Institutions do not expect to need further buildings in the coming years.

On the matter of travel expenses, Parliament noted that consideration is being given to establishing a clearer procedure for refunding travel expenses and paying travel and subsistence allowances, particularly in situations which are not explicitly envisaged by the rules.

Lastly, it observed that, further to the Belgian criminal proceedings against a former EESC Member concerning travel expenses, the EESC has brought a civil action for damages and that the Belgian Court is expected to give its judgment towards the middle of 2007.

The committee adopted the report by Daniel CASPARY (EPP-ED, DE) granting discharge to the European Economic and Social Committee for 2005. In its accompanying resolution, the committee welcomed the fact that since 2004 all plenary sessions of the EESC have taken place in Parliament's premises. It also noted that consideration was being given within the EESC to establishing a clearer procedure for refunding travel expenses and paying travel and subsistence allowances

In other points, the report noted that the administrative cooperation between the Committee of the Regions and the EESCommittee should be beneficial to both and financially advantageous for European taxpayers, and called on the two institutions to find a suitable way to continue such cooperation. Lastly, in view of the substantial divergences between the findings of the reports of the joint services and the CoR's two external exports, the committee urged the CoR and the EESC to conduct a joint analysis - if necessary with the help of the Court of Auditors - of the precise costs, benefits and savings generated by cooperation.

PURPOSE : to present the Court of Auditors’ report on the implementation of the 2005 budget (other institutions – Economic and Social Committee).

CONTENT : in its 29th Annual Report on the implementation of the general budget of the European Union, the Court highlights that 2005 was the first full year in which the European Union had 25 Members. The Court’s audit did not reveal any material errors concerning the legality and regularity of underlying transactions.

Supervisory and control systems : i n 2005 all the Institutions had supervisory and control systems complying with the requirements of the new Financial Regulation. However, some Institutions had not fully implemented all their Internal Control Standards (in particular the Council).

Also in 2005, the NAP (Nouvelle Application Paie), a computer application for calculating staff remunerations created in 2003 and managed by the Commission Paymaster Office (PMO), was being used by all the Institutions. The technical weaknesses noted in 2004 were overcome, minimising the risk of erroneous calculation of the various elements of staff remuneration. However, the institutions did not systematically use the reporting facilities of NAP in order to verify, before the final pay run, all the data concerning situations specific to individual members of staff. Although not mandatory pursuant to the Financial Regulation, ex-post controls would increase the reliability of the administrative procedures for managing staff remunerations and help to uncover possible weaknesses and errors in the system.

Staff Regulations : the amended Staff Regulations, which entered into force on 1 May 2004, state that accommodation costs incurred on mission are reimbursed up to a maximum fixed for each country. Contrary to this rule, all the Institutions, except the Court of Justice, the Court of Auditors and the Ombudsman, provided in their internal rules for the payment of a flat-rate sum, ranging from 30 to 60 % of the maximum allowable amount, to staff who do not produce any evidence of having incurred accommodation costs. After the publication of the European Court of Auditors’ Annual Report concerning the financial year 2004, the European Economic and Social Committee amended its internal rules in December 2005 in order to ensure compliance with the Staff Regulations.

Specific remarks concerning the Economic and Social Committee : to recall, the Committee’s administrative expenditure totalled EUR 96 million in 2005. The Court states that the setting-up in the course of 2005 of a unit responsible for coordinating financial and contractual activities throughout the joint services of the European Economic and Social Committee and the Committee of the Regions improved annual procurement planning and provided the operational units with guidance on tendering procedures. However, some weaknesses still appeared concerning the operational management of certain procurement procedures (for example: too little time allowed for the verification of complex draft contracts), and coordination procedures between the new unit and the operating units had not been clearly defined.

General conclusions : the Court states that improvements have been made by all the Institutions in order to adapt their supervisory and control systems to the requirements of the new Financial Regulation. The Court’s audit found that, notwithstanding the weaknesses mentioned in the previous paragraphs, the supervisory and control systems were adequate to manage the risk as regards legality and regularity of the transactions underlying the accounts of the Institutions’ administrative expenditure. The Court’s audit did not reveal material errors affecting the legality and regularity of the administrative expenditure.

PURPOSE: presentation of the final annual accounts of the European Community for the financial year 2005 – Other institutions: Section VI – Economic and Social Committee.

CONTENT: this document sets out the amount of expenditure and the financial statement of the Economic and Social Committee (ESC) for 2005 and presents an analysis of its financial management. The available appropriations set out in the Court’s 2005 budget amounted to EUR 103 million of which EUR 99 million was spent (a take-up rate of 95.94%).

Main axes of 2004 expenditure : budget implementation of the ESC can be characterised by the following :

enhancing the Committee’s credibility through selectivity in its work programme, choice of opinions and forward studies; playing a key role in the Communicating Europe campaign; enhancing the EESC’s visibility by an initiative aimed at the general public and by giving prominence to the role played by its members; ensuring maximum transparency for its work; enhancing the members’ status commensurate with their value and highlighting their political responsibility; asserting the EESC’s role as an institutional partner in civil dialogue and guarantor of participatory democracy; contributing to the general debate on the future of Europe and European identity, more specifically through a series of conferences and cultural events and by awarding a civil society prize.

On an internal level, the Committee continued to implement its 2003-2005 medium-term development plan in accordance with several lines of action:

improving the service provided to members by cultivating a genuine partnership; continuing the implementation of modern working methods with the active support of the entire staff, whilst maintaining quality of life at work; strengthening interinstitutional cooperation and developing activities to make it more open and visible externally; implementing an ambitious and dynamic communication policy.

It should also be noted that in many sectors, a number of activities were achieved which were not foreseen at the start of the year.

Title I (Staff costs): this budget heading is mainly highlighted by the delays in recruitment of enlargement related staff. As a consequence, the budget implementation showed less significant expenditure for mission costs; staff training, etc. One also notes the costs relating to contract staff. Given that the budget for contract staff was drawn up for the first time for the 2005 financial year, the need was over estimated by 48%. This under-use can be explained in part by the application of guidelines requiring a minimum recruitment period of three months, and partly by the additional administrative work involved in recruiting contract as opposed to auxiliary.

2005 was also marked by a change in policy as regards compensation for overtime. Moreover, the demand for translations was much lower than in 2004.

Title II (Operational expenditure) : notably building policy, at 31.12.2005, the EESC and the Committee of the Regions together had 5 buildings under long term leases (Rue Montoyer 92-102; Rue Belliard 68-72 and 103-11; Rue de Trèves 74 and Rue Belliard 93). Following the new accounting rules, the balance sheet was recalculated at 1 January 2005. The net values of the buildings were decreased because the future variable price index addition to payments no longer added to the net present value. At the same time, the net value of Rue de Trèves, EUR 10 396 943 was added as the contract was signed in 2004.

In parallel, on 2 December 2005, a new long lease was signed jointly by the EESC and the Committee of the Regions concerning the “Rue Belliard 93” building. The EECS’s share, which is 50%, amounts to EUR 5 736 656 and is recorded in the EESC balance sheet from 31 December 2005 onwards.

The continuation of interinstitutional cooperation should also be noted. Pursuant to a cooperation agreement concluded with the Committee of the Regions, the agreements on invoicing between the committees has been simplified the management of appropriations and the settlement of bills.

For further details concerning the Economic and Social Committee’s budget in 2005, please refer to the annexed detailed analysis of expenditure.

PURPOSE: presentation of the final annual accounts of the European Community for the financial year 2005 – Other institutions: Section VI – Economic and Social Committee.

CONTENT: this document sets out the amount of expenditure and the financial statement of the Economic and Social Committee (ESC) for 2005 and presents an analysis of its financial management. The available appropriations set out in the Court’s 2005 budget amounted to EUR 103 million of which EUR 99 million was spent (a take-up rate of 95.94%).

Main axes of 2004 expenditure : budget implementation of the ESC can be characterised by the following :

enhancing the Committee’s credibility through selectivity in its work programme, choice of opinions and forward studies; playing a key role in the Communicating Europe campaign; enhancing the EESC’s visibility by an initiative aimed at the general public and by giving prominence to the role played by its members; ensuring maximum transparency for its work; enhancing the members’ status commensurate with their value and highlighting their political responsibility; asserting the EESC’s role as an institutional partner in civil dialogue and guarantor of participatory democracy; contributing to the general debate on the future of Europe and European identity, more specifically through a series of conferences and cultural events and by awarding a civil society prize.

On an internal level, the Committee continued to implement its 2003-2005 medium-term development plan in accordance with several lines of action:

improving the service provided to members by cultivating a genuine partnership; continuing the implementation of modern working methods with the active support of the entire staff, whilst maintaining quality of life at work; strengthening interinstitutional cooperation and developing activities to make it more open and visible externally; implementing an ambitious and dynamic communication policy.

It should also be noted that in many sectors, a number of activities were achieved which were not foreseen at the start of the year.

Title I (Staff costs): this budget heading is mainly highlighted by the delays in recruitment of enlargement related staff. As a consequence, the budget implementation showed less significant expenditure for mission costs; staff training, etc. One also notes the costs relating to contract staff. Given that the budget for contract staff was drawn up for the first time for the 2005 financial year, the need was over estimated by 48%. This under-use can be explained in part by the application of guidelines requiring a minimum recruitment period of three months, and partly by the additional administrative work involved in recruiting contract as opposed to auxiliary.

2005 was also marked by a change in policy as regards compensation for overtime. Moreover, the demand for translations was much lower than in 2004.

Title II (Operational expenditure) : notably building policy, at 31.12.2005, the EESC and the Committee of the Regions together had 5 buildings under long term leases (Rue Montoyer 92-102; Rue Belliard 68-72 and 103-11; Rue de Trèves 74 and Rue Belliard 93). Following the new accounting rules, the balance sheet was recalculated at 1 January 2005. The net values of the buildings were decreased because the future variable price index addition to payments no longer added to the net present value. At the same time, the net value of Rue de Trèves, EUR 10 396 943 was added as the contract was signed in 2004.

In parallel, on 2 December 2005, a new long lease was signed jointly by the EESC and the Committee of the Regions concerning the “Rue Belliard 93” building. The EECS’s share, which is 50%, amounts to EUR 5 736 656 and is recorded in the EESC balance sheet from 31 December 2005 onwards.

The continuation of interinstitutional cooperation should also be noted. Pursuant to a cooperation agreement concluded with the Committee of the Regions, the agreements on invoicing between the committees has been simplified the management of appropriations and the settlement of bills.

For further details concerning the Economic and Social Committee’s budget in 2005, please refer to the annexed detailed analysis of expenditure.