PracticeAuditEU to reform its accounting ‘bible’

EU to reform its accounting 'bible'

The European Union Council of Ministers has approved a root-and-branch reform of the European Union's Financial Regulation, its accounting bible, which is designed to make the budgetary management of the EU more simple and efficient.

The new system comes into force on 1 January, 2003. It will, for instance not only permit cash accounting, but also integrated accrual accounting.

A European Commission statement said: ‘All rules and procedures for the implementation and discharge of the budget have been rationalised and modernised, and financial management will now be geared to results andperformance, with clearly assigned responsibilities and closer involvement of the EU’s financial managers in the whole budgetary process.’

The reforms include:

  • Boosting clarity by dividing the EU budget into clear sections, including a table of contents and subheadings. These will be split by policy area and further subdivided into activities, giving ‘a clearer picture of the cost of each policy;’
  • Allowing flexibility: giving all EU institutions the right to adjust plans to deal with new requirements up to a maximum of 10% of their resources;
  • Introducing for the first time, rules on public procurement procedures, which insist that the Commission inform all tenderers of a selected tender. Companies providing false information or trying to cheat EU procedures may be blacklisted;
  • Insisting that performance indicators are set out for individual activities when budgets are established;
  • The clear stipulation of duties of the individual financial officers within the EU and also of allowable management methods for budget implementation.

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