PURPOSE: presentation of revenue and expenditure account and financial statement relating to operations of the 1998 budget - section III - Commission (VoL. I and II).
CONTENT: The document gives an account of the use of the Commission's appropriations in 1998, heading by heading. The 1998 budget procedure falls within the framework of the financial perspectives annexed to the inter-institutional agreement on budgetary discipline of 29.10.1993, modified in December 1994 as a result of the enlargement of the Union to take in Austria, Finland and Sweden. These financial perspectives, in 1997, were the subject of a technical adjustment to GNP and price trends. It was also in 1997 that a proposal to adapt the financial perspectives to implementation conditions was adopted; its objective was to transfer appropriations not used in 1996 for structural actions to 1999 (545 millions euros).
In this way, the ceiling for commitment appropriations for 1998 was set at 94.744 billion euros and the ceiling for payment appropriations was 90.581 billion euros. The margin available under the own resources ceiling (1.26% of GNP) was brought to 0.03% of GNP in 1998.
This document also presents a summary of the 1998 budgetary procedure which was characterised by wide consultation between the various institutions. The 1998 budget could be described as a rigorous budget, although it does provide funding for the Union's main priorities, such as the 'EMPLOY' initiative called for and obtained by the European Parliament, the main large Community programmes and the PEACE initiative in Northern Ireland.
As regards the overall implementation of the budget, 97.5% of the commitment appropriations authorised in 1998 were carried out or carried forward into 1999, i.e. at a higher rate than in 1997 (96.7%). These figures confirm that the provisional suspension of around 100 budget lines for a total of 920 million euros while the legal bases were being examined did not have a significant effect on the implementation of the budget.
Although for the headings 1 (CAP) and 3 (internal policies), the utilisation rates are the same as in 1997, there were good trends evident for heading 2 (Structural Funds) with an implementation rate of around 99.3%. On the other hand, there was a slowing down in the implementation of external actions (95.9% as opposed to 97.7%) and administrative expenses (95.1% in 1998 in contrast to 98.3% in 1997).
In conclusion, therefore, in 1998, the total appropriations for payments actually implemented or carried forward leaves a margin of 9.3 billion euros under the ceiling fixed for payment appropriations in the financial perspectives. This total of payment appropriations represents 1.11% of GNP (as against 1.13% in 1997), while the own resources ceiling would be at 1.26% of GNP.

PURPOSE : to present the management account and the financial statement relating to the implementation of the budget for the 1998 financial year (Commission - Vol.IV).
CONTENT : this document presents the European Commission's consolidated management accounts and the financial statement for the 1998 financial year which also includes various tables on the level of expenditure.
The total gross amount of budgetary expenditure for this financial year amounts to EUR 81 64 billion.

The European Parliament adopted its resolution, drafted by Ms. Gabriele STAUNER (EPP/ED, D), on the postponement of the discharge to the Commission in respect of implementation of the general budget of the EU for the 1998 financial year.
The Parliament informs the Commission that it postpones discharge and asks it to take steps by 15 May 2000, among other things, to:
- to make a commitment to the target of cutting the current error rate of more than five per cent detected by the Court of Auditors by a considerable rate, for example by two percentage points, in 2001 and of arriving at a positive statement of assurance in 2003 at the latest on the basis of a method to be agreed with the Court of Auditors, the budgetary authority and the Commission;
- a clarification of the criteria that determine the proportionality of the reduction of a financial correction and clear rules for which cases a decision of the Commissioner or the College is required (against the background of the Fléchard case);
- a statement that it does not consider the Fléchard case as closed until the opinion of the Court of Auditors has been analysed and all outstanding questions raised by the Parliament have been resolved;
- calling on OLAF (anti-fraud office) to launch an investigation into the Fléchard case to identify those responsible for arranging the disappearance of documents;
- a commitment to present a detailed regulation on new archive routines, assurances that a person within each DG has been given responsibility for archives, and an undertaking that where documents are found to be missing, this will lead to a full administrative enquiry;
- a commitment to re-examine the ECHO case and to re-open a formal investigation in accordance with the Staff Regulations if new evidence were to become available;
- in the MED affair, for the complete dossier to be submitted to the appropriate judicial authorities in Belgium, France and Italy, and for agreement, if necessary, to launch statutory disciplinary proceedings against the officials involved, in the light of the findings of the national judicial authorities;
- submission of the results of the 1998 systematic review of the contracts awarded to visiting scientists; a Commission initiative to provide the investigating Belgian public prosecutor with full information on the circumstances in which irregular contracts were allocated and signed;
- launching a formal administrative investigation to ascertain responsibilities in connection with the withheld warning of serious deficiencies at the Joint Research Centre;
- submission of a report by the Financial Controller on the number of correcting communications and postponements/ withholdings of approvals in 1998, including an analysis of the most frequent types of errors;
- submission of a report on action taken by the Member States who have not yet implemented the integrated administration and control system for agricultural expenditure;
- an update on the actions which the Commission has taken in response to the recommendations of the EP's Committee ofInquiry into the Community Transit System;
- a full report on the number and outcome of disciplinary proceedings carried out since 1998 in all cases in which the Community's financial interests are affected;
- a clear commitment by the Commission to the principles for access to information, as defined in its 19 January 2000 resolution on the 1997 discharge;
- a response to the proposals to set up an external chamber at the Court of Auditors or the Court of Justice to deal with disciplinary procedures for budgetary irregularities as soon as possible;
- a commitment to include an independent external element in its disciplinary procedure.

The European Parliament adopted the Decision drafted by Gabriele STAUNER (EPP/ED, Germany) and gave the Commission discharge in respect of the implementation of the general budget of the Union for the 1998 financial year. The Commission had satisfied most of the requirements set out on 13 April when the discharge had been postponed. In particular, the Commission will take action to cut drastically the errors in the implementation of the budget. Whilst the Flechard case could not be regarded as closed until all problems, and in particular, the monitoring of export operations, had been resolved, the proportionality of penalties had been dealt with. The Parliament set out its comments on the discharge in an accompanying resolution. In its Decision on closing the accounts relating to the implementation of the general budget, Parliament recalled that according to the statement made by the Court of Auditors, the figures presented in the consolidated revenue and expenditure account are marred by a number of errors and weaknesses, including the understatement of fixed assets, essentially buildings, by around ECU 540m. Parliament approved the closure of the accounts. The main points of Parliament's resolution containing comments on the discharge are as follows:
-with regard to the Statement of Assurance, Parliament pointed out that in 1998 for the fifth consecutive time, the Court of Auditors would not provide an assurance that the transactions underlying the payments for the financial year were, taken as a whole, legal and regular. It reiterated its call for the Commission to arrive at a positive Statement of Assurance for the 2003 financial year at the latest. The Commission needed to formulate verifiable intermediate objectives for the reform process by the end of the year.
-on the Common Agricultural Policy, the Commission must ensure that the principle of budgetary universality is respected. In the specific case of export of butter to the former USSR, the handling of the penalty deposit has been contested by the Court of Auditors. OLAF is asked to forward its report on the missing minutes of the meeting on 7 January 1994. Parliament cannot conclude consideration of this case until the results of the OLAF investigation have been assessed and the Commission has forwarded o Parliament all available documents.
-On structural measures, Parliament called for monitoring of the Structural Funds to be more effective and for mid-term evaluation to be a genuine instrument of sound management. It deplored the persistently large number of irregularities identified by the court of Auditors, particularly with regard to expenditure certificates, and asked Member States to ensure efficient administration of structural measures.
-On research, Parliament deplored the number of substantive errors in about one-third of the payments where the Commission had paid too much, mostly due to ineligible costs being claimed by the beneficiaries, and the formal errors that occurred in almost one fifth of the payments. It also pointed out the errors, including deliberate overcharging, in almost two thirds of the payments based on cost declarations.
-On external aid, Parliament draw attention to tender procedures under PHARE and TACIS, and asked for remedial measures. On the ECHO affair, Parliament is not satisfied that the Commission has made a commitment tointroduce an external element in itsdisciplinary procedure.
-Lastly, Parliament repeated that, as the discharge authority, it must be granted access to the relevant documents in order to establish that the Commission has carried out its obligations. It will follow the implementation of the interinstitutional agreement closely.