Ministers’ Deputies
CM Documents

CM(2008)138 21 October 20081
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1042 (Budget) Meeting, 25-27 November 2008
11 Administration and Logistics


11.2 Meeting report of the Budget Committee – October 2008 session

Item to be considered by the GR-PBA at its meeting on 6 November 2008

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1. The Budget Committee met in Strasbourg on 6-10 October 2008.

2. The agenda of the meeting appears at Appendix V and the list of participants at Appendix VI.

I. OPENING OF THE MEETING AND EXAMINATION OF THE DOCUMENTS

      Report of the September 2008 meeting

3. The Committee took note of the report of the September 2008 meeting.

Minutes of the September 2008 meeting

4. The Committee examined and approved the minutes of its meeting held in September 2008.

II. EVOLUTION OF THE BUDGETARY CONTEXT FOR 2009

5. The Director General of Administration and Logistics informed the Budget Committee of the latest developments in respect of the Draft Budgets for 2009.

6. In respect of the Pension Reserve Fund he informed the Committee that during the meeting of the Group of Rapporteurs on Programme Budget and Administration (GR-PBA) on 23 September delegations acknowledged member states’ obligations and expressed the wish to meet the financing requirements of the Pension Reserve Fund as set out in the latest actuarial study as quickly as possible. In respect of the question of financing the required increase in member states' contributions some delegations were in favour of using a mix of the various options put forward in document GR-PBA(2008)9.

7. The Director General also informed the Committee of the latest developments regarding the recommendation of the Co-ordinating Committee on Remuneration (CCR) in respect of the salary adjustment for 2009. The draft report of the CCR recommended a net increase of 3.0% for 2009 for staff members based in France made up of two separate adjustments:

- A positive inflation adjustment of + 3.6% linked to the inflation rate within France (CCR report rate)

      - A negative adjustment of – 0.6% linked to the trend in net remuneration in reference to national civil services.

8. As the Draft Budget had been prepared on the basis of an inflation rate of 1.9% (the rate used in accordance with the procedure adopted by the Committee of Ministers, i.e. the 12 month inflation rate in the host country as of February of the year prior to the budget year in question, as determined by Eurostat), this means that an additional € 1.69M would have to be found in the ordinary budget plus € 0.41M for the Pension Reserve Fund and € 0.24M in the Partial Agreements (including € 0.15M for the Pharmacopoeia) if a decision were to be taken to cover the recommended adjustment in remuneration in full.

9. The Director General also informed the Committee that the Registrar of the European Court of Human Rights had formally submitted, in May, proposals for a new reinforcement programme of the Court, which would run from 2010-2012, to the Committee of Ministers. The Committee of Ministers would discuss the matter for the first time on 14 October in a meeting of the liaison group between the Court and the Committee of Ministers. He reminded the Committee that, should proposals for an increase in the number of staff at the Court be approved, there would be implications in terms of office space required in order to house them.

10. In respect of the presentation of the 2009 draft budget, the Director General pointed out to the Committee that their recommendations in respect of streamlining the presentation of the budget had been acted upon by the Secretariat and in this respect there was a significant reduction in the number of Logframes and Expected Results presented in the draft ordinary budget (from 2007 to 2009 the number of logframes had been reduced from 40 to 18 and the number of expected results from 184 to 78). This process of rationalisation had been accompanied by an effort to ensure that the expected results shown in the draft budget were more specific and measurable.

III. EXCHANGE OF VIEWS WITH THE SECRETARY GENERAL

11. The Committee held an exchange of views with the Secretary General, who presented the main points of the 2009 draft budget and updated the Committee on recent developments which would have an effect on the 2009 budget.

12. In particular he raised the following issues:

      - the increase required in the Pension Reserve Fund,
      - the recent events in the Caucasus,

- the latest information regarding the recommendation of the Co-ordinating Committee on Remuneration (CCR) on the 2009 salary adjustment.

13. In respect of the financing requirements of the Pension Reserve Fund the Secretary General informed the Committee that the consensus amongst the member states seemed to be that the full increase required to finance the pension reserve fund should be found already in 2009 and that the increase should not be phased in. The Secretary General indicated that he proposed to reimburse to member states € 3.0M from the budget of the EDQM, which member states would be free to use in order to finance their contributions to the Pension Reserve Fund. He also stated that he would be examining the budget of the EDQM in more detail in order to establish whether or not it would be possible to return any further amounts to member states in subsequent years.

14. In respect of recent events in the Caucasus, the Secretary General stated that the Programme of Activities was in the process of being reviewed in order to establish which programmes and projects needed to be enhanced and given extra resources and whether it was necessary to launch any new projects in order to react to the situation in an appropriate manner.

15. This exercise might result in a need to re-prioritise within the Programme of Activities and accordingly make cuts in certain areas in order to finance this urgent priority for the Organisation.

16. Against this background the Secretary General urged the Budget Committee to support his proposal to use previous years' credit balances to fund the 2009 budget, as the alternative would be further significant cuts within the Programme of Activities.

17. As detailed in the presentation of the Director General of Administration at the beginning of the meeting, the indications were that the CCR would recommend a salary adjustment for staff members in France of 3.0% for 2009. The Secretary General reminded the Committee that, whilst in 2007 he had negotiated with the staff of the organisation for the recommendation of the CCR to be implemented only from 1st July of that year (with the result that the annual increase amounted to 1.55% - half the percentage increase recommended by the CCR), this “deal” had been made on the basis of an agreement that the methodology for the calculation of the salary adjustment was adopted for the following six years with the possibility of a review by the CCR after four years. He stated that he was therefore of the opinion that the organisation was obliged to make provision for the 3.0% adjustment in the budget for 2009.

18. In order to bridge the funding gap of € 1.69M required from the Ordinary Budget to finance the adjustment in full, he stated that he would be making a number of proposals which would include:

- Asking four administrative entities who for the moment had not made significant proposals for efficiency gains (the Parliamentary Assembly, the Court (excluding case processing appropriations), the Congress and the Commissioner for Human Rights) to make further efficiency savings for the 2009 budget.

- Reducing appropriations in respect of consultants and official journeys.

IV. EXAMINATION OF THE 2009 DRAFT BUDGETS

Observations on the Budget

19. The Committee noted that, in accordance with the methodology approved by the Committee of Ministers, the inflation adjustment to be applied to the 2009 budget was 1.9%.

20. The Committee was of the opinion that the increase in member states’ contributions to the General Budget as a whole should therefore be limited to 1.9%, which would represent an amount of €4 526 300 (i.e. the member states’ contributions for 2008, amounting to €238 225 800, multiplied by 1.9%). The draft budget2 proposals of the Secretary General include an increase of €11 172 300 (+4.69%) in member states' contributions in respect of the General Budget:

+ €4 002 400 Ordinary Budget (+1.99%)
+ €56 000 European Youth Foundation (+1.90%)

      + €7 113 900 Pension Reserve Fund (+ 24.37%) as a result of the actuarial study undertaken for the period 2009-2011.

21. Therefore the additional financing currently requested by the Secretary General in the draft budget over and above zero real growth in member states’ contributions to the General Budget amounted to €6 646 000. (€11 172 300 - €4 526 300)

22. In this respect, the Director General of Administration and Logistics pointed out that in the past the Committee of Ministers had applied zero real growth only to the Ordinary Budget and the Partial Agreements' budgets. The change in policy recommended by the Budget Committee would lead to a gradual but substantive reduction of the Programme of Activities of the Organisation in the medium term.

23. The Committee noted that it was probable that the CCR would recommend a salary adjustment as from 1 January 2009 of 3.0%. This would require a further increase in contributions to the Pension Reserve Fund of €414 200 (i.e. a total increase of € 7 528 100).

24. The Committee noted that the Secretary General had undertaken to meet the effects of the CCR recommendation within the Ordinary Budget without increasing member states' contributions.

25. The Committee recalled that in its May 2008 meeting report it had recommended that the level of contributions to the Pension Reserve Fund should be adjusted in accordance with the results of the actuarial study. This would alleviate the future increase in the burden borne by the member states, which was the very reason why the Committee of Ministers had decided to set up the Pension Reserve Fund. It maintained this opinion.

26. In respect of the Ordinary Budget the Committee noted that the Secretary General proposed using the full amount of the available credit balances of the budgets from previous years (a total of €4 934 600, of which €902 600 came from the 2006 balance carried forward to 2009 by virtue of a decision of the Committee of Ministers taken whilst adopting the 2008 budget and €4 032 000 corresponded to the credit balance from the accounts of 2007).

27. In respect of the credit balance on the 2007 Ordinary Budget, the Committee reiterated its position of principle, as stated in previous reports, that any unexpended balance arising at the end of a financial year should be returned to member states. The Committee also underlined that, due to the variable nature of credit balances from year to year, where the Committee of Ministers decided to use the credit balance from previous years to finance future years' budgets, it should be used solely to finance one-off rather than recurrent structural expenditure so as not to cause problems with financing in future years.

28. In this connection the Committee recalled its comment included in the report of its May 2008 meeting;

29. “The Committee could not endorse the proposal of the Secretary General to finance part of the 2009 budget by using all of the credit balance from the 2007 financial year and the €900K which had been already set aside from the credit balance of the 2006 financial year. The Committee wished to highlight to the Committee of Ministers that a similar level of resources could not be guaranteed to be available for future years’ budgets.”

30. The Committee noted that the decision to carry forward to 2009 the remaining credit balance from 2006 had been taken in the knowledge that there would be an effect on the 2009 budget arising mainly from the decision on the Court's reinforcement programme taken in the context of the 2008 budget. The Committee noted that the amount included in the 2009 budget in respect of decisions taken in prior years was €1 455 300.

31. In the light of the above remarks and recommendations the Committee took note that within the 2009 budget proposals there were also proposals for one-off expenditure totalling €500 000 in respect of the 60th anniversary of the Organisation (consisting of €400 000 included in reserves in Vote II and €100 000 in the budget of the Directorate General of Human Rights and Legal Affairs for a specific event (Pan European Media Conference) to be held in the context of the 60th anniversary).

32. The Committee felt that if these two amounts were kept in the budget it would be reasonable given that they were non recurrent expenses to cover these two budget items in 2009 with credit balances from previous years.

33. The Budget Committee accordingly recommends that the Committee of Ministers consider its proposal to reduce the amount to be included in the draft budget of receipts for 2009 in respect of balances carried forward from previous years to €1 955 300 (€1 455 300 in relation to prior year decisions and €500 000 for the 60th anniversary), i.e. a reduction of €2 979 300 in comparison with the figure currently included in the draft budget (€4 934 600 minus €1 955 300).

34. This recommendation would notably have the effect of limiting growth in the expenditure base for subsequent years and consequently in contributions.

35. In the light of this proposal, the Committee recommended that the ordinary budget of expenditure also be reduced by €2 979 300 in order that member states' contributions remain at the currently proposed level, which represented zero real growth. The Committee recommended that the €2 979 300 from previous years' balances which would not be used as receipts in the 2009 draft budget should be returned to member states. This amount would be credited to the member states as an advance on their contributions for 2009. This would mean that the total amount which member states were in fact called upon to pay for the Ordinary Budget in 2009 would be reduced to € 202 022 700 (€ 205 002 000 minus €2 979 300).

36. A table setting out the Budget Committee's proposal can be found in Appendix II for the Ordinary Budget and in Appendix III for all the budgets.

37. The Committee noted the Secretary General's intention to propose that an amount of €3 000 000 be apportioned between the member states of the EDQM. Those member states would then be free to use this money howsoever they wished, one of their options being to use it to partially offset the increase of contributions due in 2009 in respect of the Pension Reserve Fund. The Committee endorsed this proposal.

38. Taking into account the Secretary General's proposal to apportion €3 000 000 between the member states of the EDQM and the above recommendation to reimburse €2 979 300 of ordinary budget credit balances, the total amount credited to member states would amount to €5 979 300.

39. The above recommendations would have the effect of partially offsetting the impact on member states of the increase in contributions to the Pension Reserve Fund in 2009. These were however ad hoc measures valid only for 2009.The Committee therefore reminded the Committee of Ministers that in 2010 and future years the amount to be paid in respect of the Pension Reserve Fund would still be at least €7.5M more than the amount paid in 2008 and that long-term financing had to be found.

Suggestions for possible savings in the Ordinary Budget

40. In order to find the savings which would be necessary to implement its recommendations, the Committee recommended that the Secretary General examine again whether further savings could be made throughout the organisation, either in the form of efficiency gains or through improved control of payroll costs, and whether the implementation of new programmes or projects (e.g. the proposed Yearbook) could be postponed to later budgets. Another possible solution for finding savings, albeit technical, would be to apply a fixed percentage reduction to all expenditure lines of the budget. A reduction of 1% on all budget lines would yield savings of €2.2M. The Committee recognised that any decision targeting programmes or projects would require the Committee of Ministers to be firm on the concept of prioritisation and might involve difficult decisions to be taken by the Committee of Ministers.

41. The Secretary General could use a combination of these proposals to find the €2.9M necessary to meet the Committee’s recommendations and the €1.69M he had undertaken to find in order to meet the salary adjustment.

Staff Costs

42. In respect of staff costs in general, the Committee wished to bring to the attention of the Committee of Ministers the fact that it was essential for them to exercise close control over the staff costs of the Organisation. In particular, the Committee felt that the Committee of Ministers should ensure that it exercised control over both the number of staff working for the Organisation and the total cost of those staff.

43. The Committee noted that the nine redeployments of posts proposed on page 146 of the draft budget for 2009 (CM(2008)130 vol. 1) resulted in a € 140 000 increase in the payroll, not to mention the impact on the Pension Fund. In this respect the Committee recommended that wherever there were proposals to redeploy staff, in line with priorities and as a result of efficiency gains or other savings, it was imperative that there be no increase in the overall number of posts and that the operation be financially neutral, unlike what was proposed for 2009.

44. The Committee noted that the number of staff leaving the Organisation was very low. To ensure sufficient flexibility in the overall staffing levels of the Organisation and absorb future fluctuations in the workload, the Committee recommended that there should always be a balance between staff members on contracts of a limited duration and those on contracts of indeterminate duration.

45. The Committee also drew the attention of the Committee of Ministers to the fact that, as indicated in the table on page 174 of the Draft Budgets for 2009 (CM(2008)130 Vol 1), any decisions in respect of the creation of new posts and positions would have an impact on the Organisation's future pension liabilities and consequently on member states' contributions to the Pension Reserve Fund.

Logframes

46. The Committee appreciated the progress made in respect of Logframes and encouraged the Secretariat to continue this progress, building as results obtained in previous years.

Vote I

Directorate of External Relations

47. The Director of External Relations presented the 2009 budgets for his Directorate. The Committee noted that the 2009 proposals included an additional two posts for the directorate to be redeployed from elsewhere within the budget of the Organisation. It pointed out that in future draft budgets, wherever there was a proposal for additional staff, justifications should be included, as was the case in the draft budgets of the Partial Agreements.

Directorate of Communication

48. The Committee noted that the Directorate of Communication’s draft budget for 2009 showed a significant increase (+ 4.2%, equating to €270,600) and that this increase was due primarily to a greater number of targeted Council of Europe campaigns linked to the implementation of the Communication Strategy approved in 2006 by the Committee of Ministers.

49. The Committee recommended that, with regard to specific campaigns for partial agreements, their cost be properly assessed and charged to the budget of the partial agreement in question.

Vote II

50. The Committee took note with satisfaction that changes to the programme had been financed by reallocating appropriations and that the budget for Vote II had been kept within zero real growth.

51. It nonetheless pointed out that implementation of the new activities must not depend on voluntary contributions.

52. The Committee considered that the logframes must be completed with the performance aspect by including previous years' results and by setting quantified objectives for the year under consideration.

53. The Committee noted that Vote II activities were self-assessed, with the exception of activities co-financed by the European Commission.

Vote III - Parliamentary Assembly

54. In respect of the request of the Parliamentary Assembly to transform seven positions into permanent posts, the Committee noted that the Secretary General had not, as yet, decided whether or not to include this in his budgetary proposals for 2009. The Committee recommended that these positions should not be transformed into permanent posts as such a transformation would reduce the flexibility of the Organisation and create long-term liabilities.

55. The Committee noted that the only reductions in appropriations for 2009 which were evidenced in the draft budget for 2009 were the across the board cuts proposed by the Secretary General in respect of savings in travel costs. The Committee recalled that in the report of its May 2008 meeting it had stated:

56. “The Committee regretted that three administrative entities with significant budgets (the Parliamentary Assembly, the Court and the Congress) had not proposed meaningful efficiency gains for 2009. The Committee therefore recommended that further savings which would have to be made to balance the 2009 budgets should include efficiency gains within the budgets of the Parliamentary Assembly, the Court and the Congress.” (CM(2008)88)

57. The Committee welcomed the fact that the Secretary General had identified some efficiency gains by means of reductions in travel costs, which had been applied throughout the budget, and had also not followed the request of the Parliamentary Assembly, which in its Opinion on the 2009 budget had proposed an increase (at 2008 Prices) of €57 400.

      Vote IV – European Court of Human Rights

58. The Committee had an exchange of views with the Registrar of the Court. He provided the Committee with the latest information on the current situation at the Court in respect of case processing, a new enhancement programme which had been proposed for 2010-2012 and the proposal to transform 211 positions into permanent posts. He also informed the Committee that Protocol 14 had still not yet been ratified by one member state.

59. In respect of the workload of the Court the Registrar indicated that:

- The number of applications pending was currently growing by 1 700 every month;

    - the number of applications had increased by 10% every year since 1999 and the estimate for 2008 was also a 10% increase.

      - The number of chamber cases (cases that cannot be dismissed under a summary procedure as inadmissible) pending was 30 000 and the current objective for settling this type of case was 3 000 per year.

60. The Registrar also informed the Committee that in order to address this workload and the continuing deficit between incoming cases and cases disposed of, a three-year recruitment plan for the period 2010-2012 had been submitted to the Committee of Ministers, which represented an increase in posts at the Court of 75 for each of the three years 2010/2011/2012. The Committee noted that seventeen positions remained to be filled out of those approved in 2007.

61. The Registrar also drew the Committee's attention to the fact that if the number of staff at the Court were to be increased there would be a requirement for additional office space in which to house them.
In this connection, the Committee nonetheless reiterated the recommendation it had made in May (CM(2008)88):

"Whilst the Committee noted that there was a proposal to meet any such needs by means of the refurbishment of the currently vacant B building, it insisted that no decision on the eventual refurbishment should be taken until there had been a decision of the Committee of Ministers on a significant programme of increased resources of the Court."

As this office space did not exist within the Organisation at the current time it would be important that any decision taken in respect of the recruitment plan should be taken as quickly as possible so that, if necessary, new offices could be made available in good time.

62. The Committee drew the Committee of Ministers' attention to its earlier observation (see paragraph 45) concerning the impact of any decision to create new posts or positions on member states' contributions to the Pension Reserve Fund.

63. After considering the proposal to transform 211 positions into permanent posts, the Committee acknowledged that it was necessary for the Court to be able to offer fixed-term contracts lasting a reasonable number of years in order to recruit staff of a sufficient calibre under the young lawyers scheme. The Committee recognised that the practice of renewing positions for a limited number of years presented real problems in terms of recruitment and administration of recruitment and that in a medium-term perspective it was unlikely that the workload of the Court would diminish to such an extent that these existing positions would not be necessary.

64. The Committee also noted that if the positions were transformed into posts the Court undertook to offer fixed-term contracts on approximately 130-150 of these posts.

65. The Committee therefore recommended that, in order to give the Court the flexibility it requires so as to be able to offer four to five year contracts on positions and also to retain flexibility for the organisation in future, the 211 positions be prolonged for a period of ten years, i.e. until 31 December 2018. This recommendation should also apply to the five positions within the Directorate General of Administration and Logistics linked to the enhancement programmes of the Court.

66. The Committee noted that, in connection with the proposal for the transformation of the positions at the Court into permanent posts, it had been proposed to transform 20 positions within the Department for the Execution of Judgments of the Directorate General of Human Rights and Legal Affairs, which had been created as part of the past reinforcement programmes of the Court.

67. The Director General of Administration drew the Committee's attention to the fact that, unlike in the Court where the current ratio of permanent posts to positions was 2:1 (418 posts, 211 positions), the ratio within the Department for the Execution of Judgments was currently closer to 1:2 (13 posts and 20 positions). The Committee accepted that, as the work of the Department for the Execution of Judgments is inextricably linked to the work of the Court, it was appropriate that the ratio of posts to positions within this section should be similar to that of the Court. It therefore recommended that ten positions (8 A2 posts and 2 B2 posts) be transformed into permanent posts and that the remaining positions be prolonged for a period of ten years in line with the recommendation concerning the positions at the Court.

68. The Committee noted that the Court had not made any proposals for significant efficiency gains in 2009 and, as mentioned above under Vote III, recalled its recommendation that all areas of the budget should make efficiency gains. In respect of the Court, in addition to productivity gains in case processing to increase the number of cases dealt with, reductions should also be made in appropriations for Administrative Research, Library, Publications and Information activities.

69. With regard to the Court's logframes, the Committee recommended that in future budgets more quantitative information be given in the logframes, for example in respect of the average number of applications disposed of per case-processing lawyer, and that comparative figures of actual results for previous years be provided in all performance indicators where possible so as to permit progress to be gauged.

      Vote V - Congress of Local and Regional Authorities of the Council of Europe

70. The Committee noted that the budget of the Congress did not contain any reduction in terms of efficiency gains in comparison with 2008, other than those identified by the Secretary General, by means of reductions in travel costs, which had been applied throughout the budget.
The Committee again recalled its statement contained in its May 2008 report as detailed above under Vote III.

Vote VI – Human Resources Directorate

71. The Committee held an exchange of views with the Director of Human Resources, who presented the work of the Directorate over the year and the draft budget for 2009.

72. Regarding the Directorate's logframe, the Committee recommended that in future budgets the information contained in the progress review reports be included in the draft budgets so as to have an overall analysis of the proposals.

73. The Committee also referred to its general comments concerning staff costs as set out under the heading “Staff Costs”.

    Vote VIII and Vote IV

    Investment programme 2009 and investment Plan 2009-2013

74. The Committee took note of the proposed investment programme for 2009 totalling € 4 564  000 and the investment plan for 2009-2013 amounting to € 26 814  000. It noted that these were financed entirely through appropriations from the Ordinary Budget (Vote VIII and Vote IV) and that reimbursement of the internal loan would end in 2009.

75. The Committee felt that in order to have a more accurate idea of the total cost of projects carried out in the Council of Europe, it would be helpful to indicate the part already financed by previous investment programmes approved by the Committee of Ministers. The Committee suggested that in coming years a column indicating the total cost of each project be added to the investment plan table.

76. The Committee was able to recommend the draft investment programme for 2009 as presented in the draft budget.

      Vote IX – Receipts

      Bank Interest

77. The Committee noted that the Draft Budget for 2009 included an amount of € 3 000 000 in respect of interest. The Committee felt that, given the current financial situation, this was a reasonable estimate.

      Pensions Budget

78. The Committee noted that nearly the entire Pensions Budget was related to contractual obligations to existing pensioners and consequently represented obligatory expenditure.

79. The Committee did note however that there was some expenditure within the budget relating to the management of the Pension Fund and the cost of the Council of Europe’s’ participation in the Co-ordination system. The Committee invited the Secretariat to examine these budget lines further with a view to making economies within the Pensions Budget.

      Rates of various retainers, honoraria and allowances for 2009

80. The Committee recommended, as before, that all flat-rate daily allowances should be increased by the same amount, i.e. € 3.

V. EXAMINATION OF THE EDQM'S DRAFT BUDGET FOR 2009 AND ITS MEDIUM-TERM STRATEGY

2007 financial statements

81. The Budget Committee took note of the draft decision concerning the financial statements of the Pharmacopoeia for the year ended 2007 (CM(2008)100, page 131). It noted that the proposed allocation of the surplus totalling € 13.824 million could be summarised as follows:

Main budget

    - €2 834 500 allocated to the member states, i.e. an amount equivalent to the total contributions for 2009
    - €2 014 172 transferred to the investment account

Publications, development, certification and conferences budget

    - €3 000 000 allocated to the member states
    - €3 701 560 carried forward to 2008

Biological standardisation budget

    - €2 274 015 carried forward to 2008.

82. The Committee welcomed the proposed reimbursements to the member states. It considered that, although on first analysis an increase in the amount proposed for reimbursement could be envisaged, it must be borne in mind that the Committee of Ministers had allocated to the EDQM new activities transferred from the Partial Agreement in the Public Health Field without any budgetary compensation and that new activities were included in the EDQM's proposed medium-term strategy. Since the GR-SOC would be examining these activities from a technical standpoint on 5 November, the Committee proposed that it come back to this matter during the 2010 Budget examination in the light of actual developments. The Committee consequently recommended the proposal to reimburse an amount of € 2.834 million (equivalent to 2009 contributions) and 3 million from reserves to the member states.

83. The Committee noted that there remained in the draft 2009 budget, after reimbursements, a substantial reserve. (see Appendix IV)

84. The Committee noted that it was also proposed that part of the 2007 surplus on the main budget of the Pharmacopoeia, corresponding to a sum of € 2.014 million, should be transferred to the Pharmacopoeia's special investment account. On this point, the Committee was of the opinion that the investments should be financed solely by appropriations from the main budget and not by direct allocation of the results of previous years. Accordingly, given that the draft investment programme for 2009 could be implemented without allocation of this amount, the sum of 2.014 million euros should be transferred to the main budget where it would remain available to meet subsequent investment plan financing requirements. This recommendation had an impact on the presentation of the draft budget for 2009, a revised version of which is appended to this report.

85. The Budget Committee wished to draw the Committee of Ministers' attention to the fact that the interest earned on the EDQM's cash balances is not included in the partial agreements' receipts but is recorded in the Ordinary Budget. The Committee considered that, in future, bank interest generated by the EDQM's assets should be included in the EDQM's receipts.

86. The Committee pointed out that its proposed change in the treatment of bank interest would lead to a corresponding decrease in the amount of interest recorded as receipts in the Ordinary Budget. Furthermore, given the volume of the activities of the EDQM, the Committee was of the opinion that separate Financial Statements should be presented in respect of the EDQM, which should be the subject of a separate opinion by the External Auditor. It might be necessary to review the contract of the External Auditor to take account of such a development. In accordance with the Financial Regulations, all additional costs incurred as a result of these measures would have to be met from the budget of the EDQM. The transfer of interest should go hand in hand with a corresponding transfer of bank charges, which would therefore be deducted from the amount credited as receipts.

87. The Committee noted that the Secretariat proposed carrying out a feasibility study concerning this proposal and underlined that, if this practice were applied to the EDQM – following the example of Eurimages and the North-South Centre (Lisbon) - the consistency principles under the IPSAS accounting standards would require it to be applied to all the budgets; the result would be greater transparency of the Partial Agreements' accounts.

Draft budget for 2009

88. The Committee took note of the various documents provided to it. These documents showed that the EDQM was proposing a € 3.2 million increase in expenditure, principally linked to the implementation of its medium-term strategy, which would be examined by the GR-SOC in November. The Committee noted that this increase in expenditure had no impact on member states' contributions.

89. The Committee was surprised to note the projected significant increase in expenditure under "Consultants". The Secretariat informed the Committee that the increases were linked to a number of aspects of the medium-term strategy, in particular the necessity to compensate the authorities of member states whose experts participated in the assessment of applications for certifications and in inspections and the proposal to translate the European Pharmacopoeia into third countries' languages (since the translation work involved was of a scientific nature, it would be necessary to use outside technical translators). The Committee noted that two posts linked to the cosmetics and food packaging activities were transferred from the Partial Agreement in the Social and Public Health Field (1 A1/2 post and 1 B2 post). In view of the EDQM's specificities and the uncertainty of the medium-term strategy results, the Committee recommended creating 14 positions (six at grade A1/2, 1 B5, 4 B4 and 3 B3) instead of permanent posts and did not recommend transforming 24 positions into posts, but that these positions be nevertheless extended until the end of the implementation of the medium-term strategy i.e. 31 December 2011.

90. For these reasons, the Committee recommended that recruitments on vacant posts should be made under fixed-term contracts.

91. The Committee also recommended that the Pharmacopoeia should open up to outside bodies and that greater use should be made of secondments, which would be beneficial for all concerned.

92. The Committee recommended the proposed total expenditure and receipts as shown in the revised version of the draft budget appended to this report, which includes a reserve of €9 425 900 (Appendix IV).

Programme of investments for 2009 (Appendix IV)

93. The Committee took note of the direct medium term investment plan 2009-2013, amounting to a total of €12.5M. The Committee recommended the 2009 investment programme amounting to €3.2M. As mentioned above, the Committee considered that the programme for each year should be financed solely by means of appropriations from the main budget.

VI. EXCHANGE OF VIEWS WITH THE EXTERNAL AUDITOR ON THE COUNCIL OF EUROPE'S CONSOLIDATED FINANCIAL STATEMENTS FOR 2007

94. The Committee held an exchange of views with representatives of the External Auditor on the Consolidated Financial Statements of the Organisation for 2007 and his report thereon and discussed the memorandum of the Secretary General concerning the follow up to the report of the External Auditor.

95. In respect of the recommendations 1 and 2 of the External Auditor, that consideration be given to removing the requirement for separate audit opinions in respect of Eurimages and the North South Centre and a separate audit opinion on the budgetary management accounts, the Committee agreed with the Secretary General that the separate audit opinions in respect of Eurimages, the North South Centre and the budgetary management accounts are necessary.

96. In respect of the other recommendations, the Committee was in agreement, in particular with the recommendation in respect of disclosure of any significant control weaknesses (recommendation 4). In this regard they also recommended, following the exchange of views with the Internal Auditor on his annual report for 2007, that the Internal Audit annual report should be more detailed.

VII. EXCHANGE OF VIEWS WITH THE INTERNAL AUDITOR ON HIS ANNUAL REPORT FOR 2007

97. The Committee held an exchange of views with the Internal Auditor on his annual report for 2007.

98. The Committee appreciated the work which the Internal Auditor had undertaken during 2007 as evidenced in his report. The Committee wished to reaffirm its support for the work of the Internal Auditor and stressed that the work of his directorate was a fundamental and important part of the system of internal control and sound financial management within the Organisation.

99. The Committee noted that the Internal Auditor prepared a work programme each year covering a number of specific audits. The Committee recommended that certain areas, such as the verification of actual results in comparison with expected results (as evidenced in the annual progress review reports) or the audit of internal control procedures in respect of payments, should be audited every year.

100. The Committee also stated that, as mentioned above in the context of the exchange of views with the External Auditor, the Internal Auditor's annual report should be more detailed, particularly in respect of areas where problems had been identified.

101. In the light of certain observations made by the Internal Auditor, the Committee insisted that the implementation of expenditure procedures should be better supervised at the level of operational departments.

VIII. EXCHANGE OF VIEWS WITH THE GROUP OF RAPPORTEURS ON PROGRAMME, BUDGET AND ADMINISTRATION (GR-PBA)

102. The Committee held an exchange of views with the GR-PBA, during which the Chair of the Committee presented the conclusions of its September meeting and its conclusions concerning the EDQM and other Partial Agreement budgets.

IX. EXAMINATION OF THE FINANCIAL STATEMENTS FOR 2007

103. The Committee noted that the draft resolution concerning the financial statements of the Enlarged Partial Agreement on Sport contained a proposal to transfer the unspent appropriations relating to 2007 to a special account of the partial agreement.

104. The Committee took note that the Statutory Committee of the Partial Agreement had recently taken a decision to transfer this balance provisionally to a suspense account pending a final decision on the allocation of this amount to be taken during the adoption of the draft budget for 2009, bearing in mind the fact that the United Kingdom had announced its withdrawal from the partial agreement as from 1 January 2009.

105. The Committee restated its opinion that all unspent balances of budgets should be returned to member states.

IX. ANY OTHER BUSINESS

Dates proposed for 2009 meetings

106. - Wednesday 13 to Friday 15 May 2009
- Monday 14 to Thursday 17 September 2009
- Monday 12 to Friday 16 October 2009

Appendix I

Extract, page 4, Draft Budget for 2009 CM(2008)130 Vol. 1.

Appendix II

Appendix III

Appendix IV

Appendix V

BUDGET COMMITTEE

October session 2008

Monday 6 October at 9 a.m. – Friday 10 October 2008

Room 7, Palais de l’Europe

DRAFT AGENDA

Item 1 Opening of the meeting

      - report of the September 2008 meeting

        CM(2008)132: Meeting report of the Budget Committee – September 2008 session

      - minutes of the September 2008 meeting

        P-Bud(2008)CR2: Budget Committee - Minutes of the September 2008 session

Item 2 Exchange of view with the Secretary General Mr Terry Davis

      CM(2008)130 Vol. 1 : Ordinary Budget - Vote I to Vote IX; Subsidiary Budgets - Services, Subsidiary Budget of the European Youth Centres, Subsidiary Budget for Publications, Extraordinary Budget3, Pensions, Budget of the European Youth Foundation
      CM(2008)130 Vol. 2 : Draft Programme of Activities for 2009 (Vote II)
      CM(2008)61: Priorities for 2009 – Budgetary implications

Item 3 Evolution of the budgetary context for 2009

      CM(2008)130 Vol. 1 : Ordinary Budget - Vote I to Vote IX; Subsidiary Budgets - Services, Subsidiary Budget of the European Youth Centres, Subsidiary Budget for Publications, Extraordinary Budget, Pensions, Budget of the European Youth Foundation
      CM(2008)130 Vol. 2 : Draft Programme of Activities for 2009 (Vote II)
      CM(2008)61: Priorities for 2009 – Budgetary implications

Item 4 Examination of the 2009 draft budgets

      CM(2008)130 Vol. 1 : Ordinary Budget - Vote I to Vote IX; Subsidiary Budgets - Services, Subsidiary Budget of the European Youth Centres, Subsidiary Budget for Publications, Extraordinary Budget, Pensions, Budget of the European Youth Foundation
      CM(2008)130 Vol. 2 : Draft Programme of Activities for 2009 (Vote II)
      P-Bud(2008)2: Budgetary tables by accounting code
      CM(2008)61: Priorities for 2009 – Budgetary implications

Item 5 Examination of the EDQM’s draft budget for 2009 and its medium term strategy

      CM(2008)130 Vol. 4 : Draft Budget of the European Pharmacopoeia for 2009
      P-Bud(2008)9: EDQM Medium term plan Budgetary Implications 2009-2011
      P-Bud(2008)10: 2009 EDQM Budget – Medium Term Investment plan 2009-2013
      P-Bud(2008)11: Pharmacopoeia Budget – Detailed tables – Expenditure and receipts by accounting code
      P-Bud(2008)12: Pharmacopoeia Estimated Balance Sheet as at 31 December 2007

Item 6 Exchange of views with the External Auditor on the Council of Europe consolidated financial statements for 2007

      CM(2008)100: Consolidated Financial Statements and Budgetary Management Accounts of the Council of Europe for the year ended 31 December 2007
      CM(2008)113: Financial Statements of the Council of Europe for the financial year 2007 - Follow up to the Report of the External Auditor

Item 7 Exchange of views with the Internal Auditor on its annual 2007 report

      CM(2008)87 and addendum: Annual Report 2007 of the Directorate of Internal Audit

Item 8 Exchange of views with the Group of Rapporteurs on Administrative and Budgetary Questions (GR-PBA)

Item 9 Any other business

Additional Information Documents:

Title of Document

GR-PBA(2008)9: Financing of pensions
GR-PBA(2008)8: Annotated Agenda
Document P-Bud(2008)14: Table of posts including EDQM proposals
Document P-Bud(2008)15: Pharmacopoeia Results Reconciliation
Document P-Bud(2008)16: Budgetary Situation as at 30 September 2008
Document P-Bud(2008)17: European Pharmacopoeia – Increased use of expert consultants in 2009
Departure and recruitment of permanent staff 01-10-2007 to 01-10-2008
European Pharmacopoeia 2008 posts and positions
2009-2013 Investment Plan – additional information cost of projects already financed
Budget 2009 Comparison of Total of Expenditure with 2008
Explanation of modifications performed on the EDQM tables following Budget Committee’s recommendations

Appendix VI

BUDGET COMMITTEE

October session 2008

(6-10 October 2008)

LIST OF PARTICIPANTS

STATES MEMBERS
Austria Mr Christoph JACKWERTH
Belgium Ms Anne VAN NIEUWENBURG
France Ms Marie-Chantal MUSSET (Chair)
Germany Mr Michael LAUMANNS (Substitute)
Italy Mr Claudio DE ROSE
Poland

Mr Andrzej CIOPINSKI (Apologies)

Romania Mr Stefan PETRESCU
Russian Federation Mr Maxim N. GOLOVINOV (Substitute)
Sweden Mr Åke HJALMARSSON (Vice Chair)
Turkey Mr Fikret DEMIR (Substitute)
United Kingdom Ms Joycelyn BUCHAN
Note 1 ; This document has been classified restricted until examination by the Committee of Ministers.
Note 2 See extract from document CM(2008)130 Volume 1 (Draft budget for 2009) in Appendix I
Note 3 Items discussed at the Budget Committee September session.


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