European Law Monitor

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Simplification and better public control: EU agrees its new financial rules

A final agreement was reached to reform the management of the EU budget and to simplify access to EU funding. The new rules, based on a Commission proposal, were agreed by the European Parliament and Member States. They will help boost the delivery of the EU programmes under the 2007-2013 Financial Framework.

Dalia Grybauskaitė, European Commissioner for Budget and Financial Programming, said: “The EU funds will now be easier to access, particularly for small beneficiaries, and at the same time more transparent and better accounted for. This is a good deal and good news for European citizens.”

Simpler rules for easier access to EU funding

Cutting excessive paperwork and simplification of the procedures will facilitate access to EU funding for the usual beneficiaries of small grants and contracts, such as small and medium-sized enterprises (SMEs), schools, universities, research laboratories, development agencies and municipalities.

The new rules will make life easier for these beneficiaries by cutting red tape. For example, the supply of evidence of clean criminal or professional records or guarantees for up-front payments will be reduced to necessary minimum. Procedures for grants will be simplified through a wider use of lump sum payments (therefore beneficiaries will no longer have to provide very detailed information on all expenses). Outsourcing to private bodies of minor tasks such as the organisation of conferences and travel for visiting scientific experts will allow more cost-effective work.

As a global player, the EU will gain more flexibility to react immediately in end-of-year humanitarian or crisis management situations. It will also be easier to delegate the management of the EU funds directly to recognised national bodies in the third countries receiving EU aid.

Better public control through more scrutiny

At the same time improved transparency will help protect the EU’s financial interests. The names of beneficiaries of agricultural and structural funds will have to be disclosed to public opinion, thus ensuring transparency in the use of taxpayers' money.

The Commission will a have a new tool to prevent fraud and corruption with the setting up of a central database of organisations excluded from EU funding. This database will contain all relevant information on entities condemned for fraud or corruption in the Member States and third countries involved in the implementation of EU programmes.

The new financial rules will improve Member States' reporting on the implementation of the part of the EU budget managed by them (i.e. 76% of the total EU budget). National authorities have committed themselves to put in place efficient internal control systems and make the necessary checks on EU funds under their management. Annual summaries done by the Member States of the available audits on these funds will provide the Commission with better assurance on the proper implementation of the EU budget.

New rules, i.e. the revised Financial Regulation and the linked Implementing Rules (to be adopted in the beginning of next year), will apply as of 1 May 2007.