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Financial Regulation

Financial regulation © European Union
The CONT Committee is currently working, jointly with BUDG Committee, on a legislative report on the financial rules applicable to the annual budget of the Union. The European Commission presented a proposal aiming at replacing the existing Financial Regulation 1605/2002 of 26.06.2002. The Financial Regulation contains all the principles and rules governing the implementation of the EU budget. It has a horizontal character, being applicable to all areas of expenditure and all revenue.
The ongoing revision of the European financial rules aims at simplification of the existing rules with regard to grants and procurement, obtaining more results with limited resources, and increasing accountability in spending EU funds.


Providing parliamentary scrutiny over financially significant decisions in building policies of the EU institutions over time has become an integral function of the BUDG Committee, acting on behalf of the Budgetary Authority. BUDG is taking an interest in this policy for various reasons:
- Expenditure on buildings constitutes a significant part of the administrative budgets of the EU Institutions (Heading 5 of the MFF).
- Over the last 10 years the EU institutions have shifted away from primarily renting their premises to becoming property-owners in their own right.
- Legal and budgetary commitments entered into, when signing or extending building contracts, tend to be long-term and involve large sums of money.
- EP Rules of Procedure provide BUDG with responsibility for "opinions concerning buildings-related projects with significant financial implications".
The entry into force of the new Financial Regulation (FR) on January 1, 2013, has altered and reinforced the rules applicable to all EU institutions when reporting on their building policies or notifying specific building projects. Three separate reporting procedures to the Parliament and Council as two arms of the Budgetary Authority now have been introduced:
- annual working document on building policy in Article 203(3) of the FR;
- early warning procedure in Article 203(4);
- prior approval procedure in Article 203(5) and (6).
For any building project likely to have significant financial implications for the budget, the EU institution must present the building project, including its detailed estimated costs and its financing, as well as a list of draft contracts intended to be used, and must request the approval of the European Parliament and the Council before contracts are concluded. If the European Parliament or the Council reject the building project, the institution concerned shall withdraw its proposal and may submit a new one.
Significant financial implications are defined as follows:
- any acquisition of land;
- the acquisition, sale, structural renovation, construction of buildings or any project combining these elements to be implemented in the same timeframe, exceeding EUR 3 000 000;
- any new building contract (including usufructs, long-term leases and renewals of existing building contracts under less favourable conditions) not covered by point (ii) with an annual charge of at least EUR 750 000;
- the extension or renewal of existing building contracts (including usufruct and long-term leases) under the same or more favourable conditions, with an annual charge of at least EUR 3 000 000.
The Committee on Budgets is empowered by a delegation of EP Plenary to give the view of the Budgetary Authority to another institution (without a formal decision by the House) on approvals of building notification. This delegation is underpinned by Rule 78.1 of the EP Rules of Procedure, which state that "Parliament shall monitor the implementation of the current year's budget [by entrusting] this task to the committees responsible for the budget and budgetary control". The reason for that delegation of power is to strike a balance between sufficient formality and transparency while respecting the very tight deadlines during the approval procedure.

Financial Regulation

Financial Regulation
In October 2012 a new Financial Regulation applicable to the general budget of the European Union was adopted by Parliament and Council.
Together with its rules of application it is in force since 1 January 2013.
The new rules have brought changes in terms of:
- simplification (cutting red tape, speeding up procedures, in particular the time-to-grant, and shifting the focus from paperwork to performance)
- accountability (ensuring enhanced sound financial management and the protection of the EU’s financial interests), and
- leverage: (introducing financial mechanisms which will enable the mobilisation of third-party funds as leverage on EU funds).