PURPOSE: to grant discharge to the Committee of the Regions for the 2005 financial year.

LEGISLATIVE ACT: Decision 2008/504/EC of the European Parliament on the discharge for implementation of the European Union general budget for the financial year 2005 (Section VII - Committee of the Regions).

CONTENT: with the present decision, the European Parliament grants the Secretary-General of the Committee of the Regions 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 604 votes for, 64 against and 2 abstentions, and granted the Committee of the Regions' Secretary-General discharge for the implementation of the Committee of the Regions budget for the financial year 2005. In doing so, it made a series of observations on the discharge in its accompanying resolution.

Parliament began by noting that in 2005 the Committee of the Regions (CoR) had available commitment appropriations amounting to total of EUR 69 570 456,32 with a utilisation rate of 96,65%. Following the introduction of accrual accounting with effect from 1 January 2005 the CoR's financial statements disclose a positive economic out-turn for the year (EUR 4 050 062,65) and identical amounts of assets and liabilities (EUR 118 221 197,95).

Parliament went on to note that the CoR's administration had requested certain beneficiaries of weighted salary transfers to present additional evidence, and in 2005 the administration did not recover any overpayments. However, the internal audit on salaries transfer requested by the Secretary-General was completed in February 2006, and the administration is now proceeding with the recovery of overpayments which concern a limited number of officials. Furthermore, Parliament noted that as soon as he heard of this problem, the CoR's Secretary-General immediately asked the then Internal Auditor to continue his work on weighted salary transfers. He adopted a restrictive interpretation of the relevant rules of the recently amended Staff Regulations and ordered the recovery of any amounts considered to have been unduly paid. Some of the officials that have been obliged to repay dispute the CoR Secretary-General's reading of the relevant rules and have referred the matter to the Court of Justice. Parliament supported the Secretary-General in his intention to set up an administrative inquiry and expected him to start disciplinary proceedings on the basis of the OLAF report regarding staff concerned. There must be a strict prosecution of all cases where fraudulent behaviour could be proved.

On the matter of administrative cooperation, Parliament felt that such cooperation between the CoR and the European Economic and Social Committee (EESC) should be beneficial to both and financially advantageous for EU taxpayers. It insisted that any new structures put in place for administrative cooperation between the two committees should result in financial and organisational benefits, and demanded that both committees find a suitable way to continue the administrative cooperation. 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 two institutions to conduct a joint analysis based on appropriate bench marks – if necessary with the help of the ECA – 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.

Lastly, it noted with concern that it had not been possible to fill all vacant posts from the reserve lists drawn up after EPSO competitions and asked the CoR to analyse the reasons for the shortage of qualified candidates and to inform the competent committee.

The committee adopted the report by Daniel CASPARY (EPP-ED, DE) granting discharge to the Committee of the Regions for 2005. In its accompanying resolution, the committee referred to the cases of weighted salary transfers which had been investigated. It supported the Secretary-General of the CoR in his intention to set up an administrative inquiry and disciplinary proceedings where necessary, and called for "a strict prosecution of all cases where fraudulent behaviour can be proved".

In other points, the report noted that the administrative cooperation between the CoR and the European Economic and Social Committee 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 – Committee of the Regions).

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 Committee of the Regions : to recall, the Committee’s administrative expenditure totalled EUR 64 million in 2005. The Court states that following the Court’s 2004 DAS audit and two internal audits, the administration of the Committee of the Regions asked certain beneficiaries of weighted salary transfers to present additional evidence. Several transfers which had not been regularly carried out before May 2004 and/or for which the beneficiaries did not present sufficient evidence were discontinued. In 2005 the administration did not recover any overpayments, although, according to Article 85 of the Staff Regulations, ‘any sum overpaid shall be recovered if the recipient was aware that there was no due reason for the payment or if the fact of the overpayment was patently such that he could not have been unaware of it.’

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 VII – Committee of the Regions.

CONTENT: this document sets out the amount of expenditure and the financial statement of the Committee of the Regions (CoR) for 2005 and presents an analysis of its financial management. The available appropriations set out in the Committee’s 2005 budget amounted to EUR 59.8 million, with a 96% utilisation rate

Main axes of 2005 expenditure : the budget implementation is characterised by the continuation of the consolidation of the Committee’s institutional role within the EU.

In this context, 6 priority policy areas have been defined around which the implementation of the 2005 budget is centred:

territorial cohesion and financial perspectives : special attention has been given to the preparation of the 2007-2013 financial perspectives and in particular the structural operations of the new financial framework; the debate on the European Constitution : the CoR, in association with other institutions, has set up forums and debates on the new Constitution; Lisbon Strategy : the CoR has centred its efforts on the social implications of the Lisbon Strategy and in particular in terms of employment. It also concentrated on the Agenda for social policy, the Community action programme on health and future investments in education and training, research, information society and eEurope 2010; review of the sustainable development strategy : the CoR seeks to influence the Community debate which aims to place environment policy at the heart of the European debate; area of freedom, security and justice : the CoR seeks to influence the debate so that future programmes take account of the regional dimension of the AFSJ; application of the subsidiarity principle in regional policy : in the context of the Constitution, the region dimension and impact of the Committee of the Regions should be strengthened.

On an internal level , the Secretary General of the CoR continued to improve internal services. As regards administration, this is marked by the continued reform process which started in 2004.

Other salient issues of the CoR’s budget implementation can be summarised as follows:

Title I (Staff costs): this budget item shows the effects of the enlargement process. The institution’s budget was respected however certain issues were highlighted:

mission costs and travel expenses: an implementation rate of 60% (consequently EUR 125 000 was carried over to 2006). Overall, this amount has increased given the arrival of the new members which necessitates more travel abroad. This item was also used to organise a special Summit in Wroclaw; reception costs: showed an implementation rate of 28% ( part of this amount has been carried over to 2006 in order to reconcile reimbursement invoices which arrived later than expected; interinstitutional cooperation (notably concerning translation): is behind with a 42% implementation rate. Substantial amounts have been paid to the Translation Centre for earlier work.

It should be noted that the support costs for translation (EUR 500 000 in 2005) were used at a rate of 96.5%. Most of this amount was used for external translations of the new languages.

Title II (Operational expenditure): this heading was characterised by;

building projects in 2005 and the relationship with the Economic and Social Committee; the maintenance of Belliard 68 and Belliard 99/101; the renovation of the “Trèves” building;the contract for the last “enlargement” building was signed on 2 December 2005; the prospect of future enlargement (in particular for the Van Maerlant II and another part of the Montoyer building).

As regards building acquisition, 2005 has shown less significant investment in this area.

For further details concerning the Committee’s expenditure 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 VII – Committee of the Regions.

CONTENT: this document sets out the amount of expenditure and the financial statement of the Committee of the Regions (CoR) for 2005 and presents an analysis of its financial management. The available appropriations set out in the Committee’s 2005 budget amounted to EUR 59.8 million, with a 96% utilisation rate

Main axes of 2005 expenditure : the budget implementation is characterised by the continuation of the consolidation of the Committee’s institutional role within the EU.

In this context, 6 priority policy areas have been defined around which the implementation of the 2005 budget is centred:

territorial cohesion and financial perspectives : special attention has been given to the preparation of the 2007-2013 financial perspectives and in particular the structural operations of the new financial framework; the debate on the European Constitution : the CoR, in association with other institutions, has set up forums and debates on the new Constitution; Lisbon Strategy : the CoR has centred its efforts on the social implications of the Lisbon Strategy and in particular in terms of employment. It also concentrated on the Agenda for social policy, the Community action programme on health and future investments in education and training, research, information society and eEurope 2010; review of the sustainable development strategy : the CoR seeks to influence the Community debate which aims to place environment policy at the heart of the European debate; area of freedom, security and justice : the CoR seeks to influence the debate so that future programmes take account of the regional dimension of the AFSJ; application of the subsidiarity principle in regional policy : in the context of the Constitution, the region dimension and impact of the Committee of the Regions should be strengthened.

On an internal level , the Secretary General of the CoR continued to improve internal services. As regards administration, this is marked by the continued reform process which started in 2004.

Other salient issues of the CoR’s budget implementation can be summarised as follows:

Title I (Staff costs): this budget item shows the effects of the enlargement process. The institution’s budget was respected however certain issues were highlighted:

mission costs and travel expenses: an implementation rate of 60% (consequently EUR 125 000 was carried over to 2006). Overall, this amount has increased given the arrival of the new members which necessitates more travel abroad. This item was also used to organise a special Summit in Wroclaw; reception costs: showed an implementation rate of 28% ( part of this amount has been carried over to 2006 in order to reconcile reimbursement invoices which arrived later than expected; interinstitutional cooperation (notably concerning translation): is behind with a 42% implementation rate. Substantial amounts have been paid to the Translation Centre for earlier work.

It should be noted that the support costs for translation (EUR 500 000 in 2005) were used at a rate of 96.5%. Most of this amount was used for external translations of the new languages.

Title II (Operational expenditure): this heading was characterised by;

building projects in 2005 and the relationship with the Economic and Social Committee; the maintenance of Belliard 68 and Belliard 99/101; the renovation of the “Trèves” building;the contract for the last “enlargement” building was signed on 2 December 2005; the prospect of future enlargement (in particular for the Van Maerlant II and another part of the Montoyer building).

As regards building acquisition, 2005 has shown less significant investment in this area.

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