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The European  Commission today endorsed  several important steps towards  its
goal to change  the financial management culture of the  European Commission.
The verification of expenditure will be rationalised,  internal audit will be
improved  and control and  audit will be coordinated  between the  Commission
and the Member  States. The legislation of  the European Union is to  be made
as fraud proof as possible. 

The programme  "Sound and efficient  management 2000" or  SEM 2000, has  been
launched to modernise the handling  of the EU money. The measures now decided
upon have been  proposed by  Commissioner Anita Gradin as  a part of  the SEM

-The  measures taken today by  the Commission  mean that we  are taking steps
towards  a really  sound and  efficient management of  the EU  budget. We are
creating a system  to make sure that the money  is not only used according to
the rules but that tax payers get good value for money.

-We need simple,  clear and fraud-proof legislation. A complicated  system of
rules and regulations leaves  the door open to fraud and  irregularities. I'd
like  to see  an anti-fraud reflex  implanted in all  managing departments in
the Commission, Commissioner Anita Gradin said.

The  Commission is  responsible for the  execution of the  budget - around 85
billion Ecus each  year. The management of  80 percent of the  budget is done
in and  by Member States. The  Commission is, however, responsible  for these
payments and must make sure that the money is properly and well spent. 

Thus  the Commission  handles  over 360  000  financial transactions  a  year
including  some  250  000  payment  orders  ranging  from  employees'  travel
expenses to  huge sums for structural  funds and agriculture. All  these pass
through the financial control service - Directorate General XX. 

The  number of payments grow each year. This  system has long been cumbersome
and  complicated  with responsibility  in  too  many hands.  The  system  has
outgrown itself.

Rationalising routine checks

DG XX will still  check payments before they are made, but  the whole process
will be rationalised  using sampling and other accepted audit  methods. Large
and high risk payments continue to be checked individually.

This  streamlining of  controls will  speed up  budget  execution and  enable
Financial Control  to put more effort into :

Internal Audit

The Commission  will develop and  strengthen its own  audit function to  make
sure  that resource management is improved as a part of SEM 2000. This has to
be pushed through and maintained in every single department.

This  means  that  the  departments  have  to   create  their  own  effective
management and  control systems  to monitor  and evaluate  the efficiency  of
programmes  and  actions.   The performance  audits will  continually control
that  the use  of  staff and  financial resources  give  value  for money  in
relation to  the objectives set  for the  programmes and other  actions. This
stress  on responsibility  for the  departments themselves  will  also define
where responsibility lies.

The traditional  financial, accounting  and management  audits   by DG XX  in
different  departments will be more frequent and efficient. The ad hoc audits
will continue.

Coordination between Commission and Member States.

80  percent  of the  payments from  the Commission  is  paid directly  to the
Member  States for  them to  distribute and  control. The  main part  of this
money goes to the Agricultural Policy  and Structural funds. It is  important
that these expenditures  are verified and  audited along the  same lines  and
methods  used  by  the  Commission  and  the  Court  of  Auditors.  Financial
Controllers  in Member  States  and in  the  Community institutions  have  to
cooperate effectively.

The Commission is  discussing this coordination with personal representatives
of  the Finance  Ministers of the  Member States within  the framework of SEM

The Commission has also  drawn up agreements on  the audit of the  Structural
Funds with  eight Member States.  It is hoped that  such agreements  with the
remaining seven will be signed soon.

The Commission  today approved measures to  improve the existing coordination
of verification and audit  by Commission and national audit  units on the use
of  Community funds  in  Member States.  Duplication  has to  be avoided  and
resources used more efficiently. 

The Commission has also decided upon: 

Fraud-proofing legislation. 

All  new legislation  with  financial impact  will  be scrutinised  from  the
viewpoint  of making  it fraud-proof  already at  drafting  stage. Until  now
fraud proofing has only  been applied to draft  regulations in the high  risk
sectors  of Agricultural  Policy  and fishery  sector.  The vetting  will  be
extended to all  sectors of expenditure. This will  be done by DG XX  and the
anti-fraud unit, Uclaf.

Existing legislation  will also  be checked according  to the  new system  of
simplifying and clarifying all legislation to minimise the  risk of fraud and


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