PURPOSE: to give discharge to the Council for the 2005 financial year.

LEGISLATIVE ACT: Decision 2008/498/EC of the European Parliament on the discharge for implementation of the European Union general budget for the financial year 2005 (Section II - Council).

CONTENT: with the present decision, the European Parliament grants the Secretary-General of the Council 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 583 votes for, 68 against and 28 abstentions, and granted the Council's Secretary-General discharge for implementation of the Council budget for the financial year 2005. Having done so, it set out its observations in the accompanying resolution.

Parliament began by noting that in 2005 the Council had available commitment appropriations amounting to a total of EUR 588 182 64052 with a utilisation rate of 96.69 %. Following the introduction of accrual accounting with effect from 1 January 2005 the Council's financial statements disclose a positive economic out-turn of EUR 19 386 89140 and identical amounts (EUR 398 520 00403) of assets and liabilities. Parliament regretted that unlike other institutions, the Council does not submit an annual activity report to the European Parliament, citing the Gentlemen's Agreement of 1970 and the absence of any corresponding requirement in the Financial Regulation. It called on the Council to reconsider this decision in order to be more accountable to the general public and taxpayers.

With regard to the Council’s financial management, Parliament indicated that that, while the Council's reformed system for reimbursing the travel expenses of delegates of Council Members had greatly reduced the administrative burden, there were insufficient checks on the validity of Member States' statements before payment of the July 2005 instalment. The internal auditor stressed the need for more transparency as to the eligibility of meetings and refundable expenses. Parliament noted that the Council Secretariat is currently reviewing the system, and that each delegation now receives from the Council Secretariat a limited budget with a ceiling.

At the same time, Parliament recalled that the Council was unwilling to reply officially to a questionnaire to all the institutions (including the European Parliament) concerning the use of official cars having regard to the terms of the Gentlemen's Agreement. In view of its age and the substantial shortfall between words used and the meaning or interpretation which is attributed to them, Parliament felt that the Gentlemen's Agreement might be in need of revision.

It went on to observe that, in its special report No 9/2006, the ECA found that the cost per page of translation at the Council was EUR 276 (as against EUR 194 at the Commission and EUR 119 at the European Parliament). This difference was partly explained by the Council Secretariat's success in reducing the number and length of documents sent for translation and establishing a list of core documents.

Lastly, Parliament called for maximum transparency in the area of Common Foreign and Security Policy (CFSP) and asked the Council to ensure that no operating CFSP expenditure appears in the Council's budget. It reserved the right to take the necessary steps, where appropriate, if the agreement is infringed.

It should be noted that the amendments proposed by the Greens/ALE group were rejected in Plenary.

The committee adopted the report by Daniel CASPARY (EPP-ED, DE) granting discharge to the Council for 2005. In its accompanying resolution, the committee regretted the fact that, unlike other institutions, the Council does not submit an annual activity report to Parliament and it called on the Council to reconsider this decision "in order to be more accountable to the general public and taxpayers". Referring to the longstanding ‘Gentleman's Agreement’ between the two arms of the budgetary authority, the report said that, "in view of its age and the substantial shortfall between words used and the meaning or interpretation which is attributed to them, the Gentleman’s Agreement may be in need of revision". The report said that the current compromise - consisting of an informal dialogue between the Council and the competent committee’s chairman and rapporteur – should be widened so as to include a Member from each political group, and called for negotiations to begin with Council with a view to putting revised arrangements for informal dialogue in place in time for the next discharge procedure.

Lastly, the committee called for “maximum transparency” in the area of Common Foreign and Security Policy (CFSP). It urged the Council to ensure, in line with the Interinstitutional Agreement of 17 May 2006, that no operating CFSP expenditure appears in the Council's budget, and said that Parliament reserved the right "to take the necessary steps, where appropriate, if the agreement is infringed".

Special Report 9/2006 from the Court of Auditors concerns translation expenditure incurred by the Commission, the Parliament and the Council.

The objective of the audit was to assess the extent to which the Commission, the Parliament and the Council manage their translation resources and expenditure efficiently and effectively . The Court addressed three questions:

Is translation demands met and are there adequate procedures to avoid unnecessary translations? Are translations timely and of adequate quality for their purpose? Were the institutions able to keep the cost of translations under control?

The audit has shown that the institutions have adopted different approaches when responding to rising translation demand. Both the Commission and the Council have taken adequate measures to reduce the number of documents translated into all languages. A significant part of all translation requests is, however, not governed by the translation guidelines adopted by each institution, and none of the institutions has a clear and coherent procedure for requesting translations.

The three translation services audited generally manage to deliver translations into the EU-15 languages on time and with the required quality. However, in 2004 there were significant problems for the EU-10 languages.

A calculation made by the Court shows that in 2003 the full cost of translation was about EUR 100 million each for the Parliament and for the Council and EUR 215 million for the Commission. Following the increase in the number of languages after the May 2004 EU enlargement, the cost of translation has risen to approximately EUR 128 million for the Parliament, EUR 126 million for the Council and EUR 257 million for the Commission in 2005. The average cost per page in 2003 was EUR 150 at the Parliament and at the Commission, and EUR 254 at the Council. In 2005, the average cost per page rose to EUR 194 at the Commission and EUR 276 at the Council, but dropped to EUR 119 at the Parliament. Internal translation is more expensive than freelance translation, but comparison is difficult as texts translated externally are of a different nature and the quality of internal translation is recognised to be higher.

While the Commission and the Council have been successful in reducing demand for translations into the EU-15 languages this has also resulted in overcapacity and below-average productivity. The Court, however, noted significant differences in the productivity and the outsourcing percentages of the different language units of the different institutions.

With the exception of the Commission for 2002, none of the institutions had calculated their total translation cost or the average cost per page translated.

The Court considers that savings could be achieved by further increasing interinstitutional cooperation, in particular by ensuring that spare capacity in one institution is made available to other institutions in order to reduce their outsourcing to freelance translators. However, lack of forecasts and insufficient communication of available translation capacity make it difficult for the institutions to take full advantage of temporarily available capacity at other institutions. In 2005, the Parliament and several Commission DGs outsourced a similar number of pages of non-urgent documents in the same languages which could have been translated by another institution. Total payments of about EUR 11 million for freelance translations could thus have been avoided.

The Court notes that while advanced IT tools are available at the audited translation services, they are not used in a consistent manner.

Council conclusions : following the reception of the Special Report 9/2006 on 15 September 2006, the Permanent Representatives Committee instructed the Budget Committee to examine it and draw the relevant conclusions. Following that examination, the Antici Group was tasked with examining certain language aspects of the draft conclusions. A special Council group (the Antici Group) highlighted the importance of multilingualism in order to better communicate with citizens and to take account of national parliaments was stressed in particular.

At the ECOFIN Council on 27 February 2007, the Council approved the conclusions on EU translation expenditure (refer to the Council conclusions for more details). It advocates inter-institutional cooperation being reinforced to all institutions in order to improve the efficiency and the procedures and to reduce the costs in the field of translations. These conclusions do not constitute a change of policy as regards translation.

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

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 Council : to recall, Council administrative expenditure totalled EUR 533 million in 2005. The Court states that the Council reformed its system for reimbursing the travel expenses of delegates of Council Members with Decision 190/2003, applicable from 1 January 2004. The reimbursement is paid within the limit of a fixed allocation per Member State. Each Member State is paid two instalments per year: one in January and the other in July. Before the end of February, each Member State provides the General Secretariat with a statement showing how the total appropriation allocated to it during the previous year has been used. Unused sums and amounts for which no supporting documents have been provided are deducted from the amounts to be paid in the next instalment. The Court found that the new system greatly reduced the administrative burden on the Council of paying delegates’ expenses, but that there had been insufficient checks on the validity of Member States’ statements before payment of the July 2005 instalment.

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 II – Council.

CONTENT: this document sets out the amount of expenditure and the financial statement of the Council for 2005 and presents an analysis of its financial management. The available appropriations amounted to EUR 563 million , with an 82.6% utilisation rate for the running costs of the Institution and 98.6% if the additional advances provided to fund the LEX building are taken into account.

Main axes of 2005 expenditure : the implementation of the Council’s budget was characterised by the following:

problems concerning the active recruitment of staff following the 2004 enlargement; the continuation of its building policy; excessive translation costs.

Amendments to the budget : the difference between the budget forecasts and the implementation of the budget is due to the following:

low rate of staff occupation (average of 86%); the success of a new allocation system for interpretation as well as the lack of interpreters for the new languages (general staffing problems); Member States failing to justify the amounts granted for delegates’ travel expenses, delays in the SESAME project; delays in the establishment of security plans.

The main titles subject to a significant modification (difference of more than EUR 250 000 compared to the forecasts) are the following :

Titre I (Staff costs): implementation was marked by the reduction in the amounts provided for the officials’ basic salaries. This saving was made through a yearly adjustment of salaries (with a gain of around EUR 5 million) and a weaker staff policy than was originally planned (under-estimation of staff caused a budget increase of EUR 15 million). To accommodate the lack of staff, the Secretary-General called on auxiliary staff notably for the linguistic services via an appropriation transfer between lines.

Other posts which were under-estimated are :

- contract agents, under-utilised by more than 30%;

- reinstallation allowances and relocation costs: these lines have been under-utilised due to the lack of personnel. In addition, translation costs have been reinforced to cover the addition work brought about by 10 new working languages (EUR 422 000 entered in the budget, which is an increase of more than 250%). On the other hand, interpretation costs have decreased by 35%.

Title II (Operational expenditure): this sector has been largely dominated by the Council’s buildings policy which saw its budget explode with an increase of 623% (the initial amount provided for this area was EUR 14.4 million) and the Council spent EUR 104.4 million after a transfer of appropriations and savings made on other lines. The Council’s objective was to proceed with a pre-financing plan for the acquisition of the LEX building after the end of year mop-up of transfers.

One also notes the strengthening of IT systems and an important increase in costs relating to claims (costs resulting from the treatment of antidumping claims). On the other hand, interpretation and translation costs have decreased. Conference and meeting costs showed an increase of 975% (going from EUR 80 000 to EUR 860 000 after a transfer of appropriations).

Title III (Expenditure resulting from missions carried out by the Council): the expenditure of this sector mainly concerns the European Security and Defence Policy and seconded national experts. It appears that the amounts initially set out for the special ESDP advisers has been underestimated except for the post dealing with external experts which increased the amount of the budget line by 42%. Other areas under this title were, on the other hand, subject to a lower rate of implementation such as for the security of the OP-Centre.

Lastly, this title is also characterised by the carrying over of the SESAME project from 2005 to 2006 causing a reduction of EUR 18.7 million appropriations.

For further details concerning the Council’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 II – Council.

CONTENT: this document sets out the amount of expenditure and the financial statement of the Council for 2005 and presents an analysis of its financial management. The available appropriations amounted to EUR 563 million , with an 82.6% utilisation rate for the running costs of the Institution and 98.6% if the additional advances provided to fund the LEX building are taken into account.

Main axes of 2005 expenditure : the implementation of the Council’s budget was characterised by the following:

problems concerning the active recruitment of staff following the 2004 enlargement; the continuation of its building policy; excessive translation costs.

Amendments to the budget : the difference between the budget forecasts and the implementation of the budget is due to the following:

low rate of staff occupation (average of 86%); the success of a new allocation system for interpretation as well as the lack of interpreters for the new languages (general staffing problems); Member States failing to justify the amounts granted for delegates’ travel expenses, delays in the SESAME project; delays in the establishment of security plans.

The main titles subject to a significant modification (difference of more than EUR 250 000 compared to the forecasts) are the following :

Titre I (Staff costs): implementation was marked by the reduction in the amounts provided for the officials’ basic salaries. This saving was made through a yearly adjustment of salaries (with a gain of around EUR 5 million) and a weaker staff policy than was originally planned (under-estimation of staff caused a budget increase of EUR 15 million). To accommodate the lack of staff, the Secretary-General called on auxiliary staff notably for the linguistic services via an appropriation transfer between lines.

Other posts which were under-estimated are :

- contract agents, under-utilised by more than 30%;

- reinstallation allowances and relocation costs: these lines have been under-utilised due to the lack of personnel. In addition, translation costs have been reinforced to cover the addition work brought about by 10 new working languages (EUR 422 000 entered in the budget, which is an increase of more than 250%). On the other hand, interpretation costs have decreased by 35%.

Title II (Operational expenditure): this sector has been largely dominated by the Council’s buildings policy which saw its budget explode with an increase of 623% (the initial amount provided for this area was EUR 14.4 million) and the Council spent EUR 104.4 million after a transfer of appropriations and savings made on other lines. The Council’s objective was to proceed with a pre-financing plan for the acquisition of the LEX building after the end of year mop-up of transfers.

One also notes the strengthening of IT systems and an important increase in costs relating to claims (costs resulting from the treatment of antidumping claims). On the other hand, interpretation and translation costs have decreased. Conference and meeting costs showed an increase of 975% (going from EUR 80 000 to EUR 860 000 after a transfer of appropriations).

Title III (Expenditure resulting from missions carried out by the Council): the expenditure of this sector mainly concerns the European Security and Defence Policy and seconded national experts. It appears that the amounts initially set out for the special ESDP advisers has been underestimated except for the post dealing with external experts which increased the amount of the budget line by 42%. Other areas under this title were, on the other hand, subject to a lower rate of implementation such as for the security of the OP-Centre.

Lastly, this title is also characterised by the carrying over of the SESAME project from 2005 to 2006 causing a reduction of EUR 18.7 million appropriations.

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