Ministers’ Deputies
CM Documents

CM(2009)90 20 May 20091
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1062 Meeting, 1 July 2009
11 Administration and Logistics


11.1 Meeting report of the Budget Committee – May 2009 session

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1. The Budget Committee met in Strasbourg on 13 - 15 May 2009.

2. The Committee considered the following items:

    I. Opening of the meeting
    II. Election of Chairperson and Vice-Chairperson of the Committee
    III. Examination of the following documents:

        - Report of the October 2008 meeting

      - Minutes of the October 2008 meeting

    IV. Presentation of changes made by the Deputies to the draft budget for 2009 before its approval
    V. Execution of the 2008 budget - RBB and PMM results
    VI. Examination of the priorities for 2010 and exchange of views with the Secretary General
    Mr. Terry Davis
    VII. Judges’ conditions of service
    VIII. The situation of the Pension Reserve Fund and exchange of views with M. Petauton, President of the Management Board of the Pension Reserve Fund
    IX. Administrative charges
    X. The situation of the Organisation’s buildings
    XI. Controlling the evolution of the payroll
    XII. Modification of the Directorate of Logistics’ investment programme
    XIII. Any other business

3. The agenda of the meeting appears at Appendix IV and the list of participants at Appendix V.

I. OPENING OF THE MEETING

II. ELECTION OF CHAIRPERSON AND VICE-CHAIRPERSON OF THE COMMITTEE

4. Ms Musset was elected Chair, and Mr Hjalmarsson Vice-Chair for 2009.

III. EXAMINATION OF THE FOLLOWING DOCUMENTS:

Report of the October 2008 meeting

5. The Committee took note of the report of the October 2008 meeting.

Minutes of the October 2008 meeting

6. The Committee examined and approved the minutes of its meeting held in October 2008.

IV. PRESENTATION OF CHANGES MADE BY THE DEPUTIES TO THE DRAFT BUDGET FOR 2009 BEFORE ITS APPROVAL

7. The Committee took note of the changes to the draft budget which had been made by the Committee of Ministers during the course of the budgetary debate.

8. The Committee noted that the changes had been made in order to be able to finance the part of the Action Plan for the promotion of values and standards of the Council of Europe in Georgia and the Russian Federation to be financed by the Ordinary Budget and to finance the recommendations of the CCR on the salary adjustment for 2009.

V. EXECUTION OF THE 2008 BUDGET - RBB AND PMM RESULTS

9. The Committee examined the documents:

- CM/Inf(2009)10: Budgets of the Council of Europe for the financial year 2008 - Progress Review Report
- CM/Inf(2009)12: Programme of Activities 2008 - Progress Review Report
- P-Bud(2009)3: Budgetary Execution of the 2008 Ordinary Budget

RBB and PMM results

10. The Committee noted that the two documents were different in approach. The document in respect of the Programme of Activities was an analytical aid to member states in preparing and directing future years’ programmes, whereas the progress review in respect of other areas of the budget was a more factual document which focused on actual results compared to stated expected results and associated performance indicators.

11. The Committee noted that in particular as regards the Programme of Activities there was still a tendency to express expected results in terms of activities carried out rather than actual results. It supported the work of the Directorate of Strategic Planning to continue to improve the quality of presentation of the programme of activities so that results rather than activities were to the fore within programme and project log frames.

12. The Committee noted that the Organisation relies more and more on extrabudgetary resources which puts additional pressure on the resources of the General Budget. This point is examined in point IX (Administrative charges).

13. The Committee noted that the progress review report in relation to non Vote II activities was less voluminous than in previous years due to the first stage of the rationalisation of Log frames which took place in 2008. The Secretariat recalled that this process would continue in 2009 as a result of the further rationalisation which took place for the 2009 budget.

Execution of the 2008 budget and prospects for 2009

14. The Committee welcomed the fact that the execution of the 2008 budget showed a positive financial balance of € 1.948M including an unspent balance on expenditure appropriations (after deduction of the negative reserve) of only € 515 000 ( as compared to unspent expenditure appropriations of € 1.9M in 2007 and € 3.8M in 2006). These good results derived from the measures which had been taken in respect of better budgeting, Quarterly Reporting and more rigorous financial management.

15. As regards the situation of the 2009 budget the Committee noted that, because of the drastic cuts in interest rates resulting from the economic crisis, forecast interest receipts were now much lower than expected at the time of the adoption of the budget. The Secretariat informed the Committee that consideration was already being given to the possible repercussions of this situation for the execution of the 2009 budget.

VI. EXAMINATION OF THE PRIORITIES FOR 2010 AND EXCHANGE OF VIEWS WITH THE SECRETARY GENERAL MR. TERRY DAVIS

16. The Secretary General presented the document on priorities for 2010. His presentation appears at Appendix I to this report.

17. The Committee held an exchange of view with the Secretary General on the priorities proposals and formulated the following comments and recommendations:

General Remarks

18. The Committee noted that the Secretary General had presented a budget proposal within Zero Real Growth of member states contributions. It recognised that in doing this the Secretary General had reduced the budget of expenditure of the Organisation by some €4.5M.

19. The Committee stressed that in the current economic situation, a budget of real terms growth could be one of the realistic options, however the budgetary constraints which member states were facing could lead them to consider other technical options, including Zero Nominal Growth, for the budget preparation process for 2010.

Inflation rate to be applied to the budget

20. The Committee noted that the inflation adjustment proposed by the Secretary General for 2010 was 2.8%, in accordance with the methodology adopted by the Committee of Ministers at their 983rd meeting in December 2006.

“The Deputies … agreed that the price adjustment, for 2008 and subsequent four years, is made using the seasonally-adjusted EUROSTAT index (average of the monthly indices during the last twelve months) for France for the period ending in February of the year when the Secretary General makes his proposals for the priorities of the Organisation for the subsequent year and their budgetary implications.”

21. The Committee noted that the recommendations of the CCR in respect of Salary Adjustments were based on data in relation to inflation figures to June of the year prior to the budget year in question. This meant that there was always a possibility that there could be a difference between the CCR recommendation on salaries and the data for the inflation figure on the basis of which the draft budget is prepared.

22. The Committee did however feel that given the current economic climate in member states this question would need to be looked at in detail at a later date in particular when examining the Draft Budgets, in order to be in line with updated forecasts of inflation rates, given that these rates are currently falling.

Proposal of the Secretary General in respect of the negative reserve and interest income

23. The Committee noted that the Secretary General (in Para 35 of CM(2009)67) recognised that it was likely that the CCR recommendation on salaries would propose a lower adjustment than the inflation adjustment of 2.8% used as per the Committee of Ministers decision.

24. The Secretary General had made two proposals for the use of appropriations which might be available in the event of a CCR recommendation lower than 2.8%, as follows: “any savings from the difference between the two adjustments should be used to offset any reduction in interest receipts and also reduce the negative reserve.”

25. The Committee noted that, in the priorities document, the Secretary General had not included any reduction in interest income, generated by the investment of cash balances. Given the current levels of interest rates the Committee was convinced that the present forecast of receipts was well above what could be expected. The Committee also recalled that it wished to see the interest results from investment of cash balances of the EDQM included with the budget of the EDQM and not the Ordinary Budget.

26. The Committee recommended that the Draft Budget should reflect a true and fair view of the situation prevailing at the time of its preparation which would probably mean a substantial reduction in forecast income.

27. Whilst the Committee welcomed proposals for a reduction in the negative reserve they considered that such proposals should have been made as part of the main priorities proposals rather than in the manner they have been proposed i.e. dependant upon a particular set of circumstances.

28. The Committee would pay particular attention to the proposals which would be made in this respect in the detailed draft budget to be examined in Autumn.

Experts Payments

29. The Secretary General had indicated in his priorities document that the cost of the payment of daily allowances to government experts attending plenary meetings was some €850 000 and that if the Organisation were to stop paying these allowances, those appropriations which would be made available could be used for other activities. The Committee noted that the Secretary General had not included this proposal in the 2010 priorities. The Committee was of the opinion that this proposal did not constitute a reduction in cost but rather a transfer of charge and that if it was adopted by the Committee of Ministers it should lead to a reduction in Member States Contributions.

Transfer of responsibility in respect of Information Offices

30. The Committee noted that this was essentially a political proposal and that the Committee of Ministers would take a decision on the basis of a paper to be presented to them shortly.

31. The Committee recommended that the Committee of Ministers take a decision before the end of June on this matter in order that moral obligations in relation to the situation of staff currently employed by the Council of Europe within these offices can be met in due time. A decision before the end of June would also be required to enable the Secretary General to prepare his draft budget in consequence.

32. In any case the Committee considered that if the decision were taken it would mean that if the member states concerned wished to keep the existing offices open there would be a transfer of charge to certain member states and not an economy.

Partial Agreements

33. The Committee noted that the Secretary General had insisted that the budgets proposed for 2010 remained within the confines of Zero Real Growth, except where there had been new accessions.

EDQM

34. The Committee welcomed the fact that it is proposed that as in previous years, a reimbursement of credit balances equal to the total of member states contributions would be made to member states.

35. The Committee recalled that in 2009 member states had also been reimbursed € 3.0M from the EDQM accumulated balances.

36. The Committee stated that it would examine, during its September meeting, in the light of the 2010 budget proposals and the investment programme of the EDQM, whether any further reimbursement of accumulated reserves would be possible. The Committee also recalled the recommendation it had made during its October 2008 meeting: (as per para 85 CM(2008)138).

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.”

Partial agreement on the Council of Europe development Bank

37. The Committee welcomed the fact that the Secretary General had included proposals to transfer certain activities of the Partial Agreement of the Council of Europe Development Bank to the bank itself but noted that this was subject to the final approval of the proposal by the Bank. The Committee would examine the detailed proposals at its September meeting.

Court Enhancement Programme

38. The detail of the proposal by the Court for an Enhancement Programme as set out in CM(2009)78 was not on the agenda of the current session of the Committee and had not been examined in depth by the Committee during the meeting. It recalled that the Secretary General had not included the financial resources for the implementation of the programme in his 2010 priorities. The Committee noted that the annual cost of the programme once fully implemented would amount to approximately €21.6M (at 2009 prices).

39. The Committee also noted that because of the current lack of office space needed in order to meet the requests of the Court, it would not be possible to accommodate additional staff recruited under the programme until at least 20 months after any possible decision by the Committee of Ministers to go ahead with the programme.

40. The Committee recognised that any significant reinforcement of the Court presented a serious challenge for the Organisation. If the € 21.6 M were to be financed by additional resources, made available through member states contributions, this would represent additional contributions of some 10% for member states. The Committee considered that in the current economic climate it would not be possible in the foreseeable future to allocate additional resources to the Council of Europe by increasing Member States contributions in order to finance the programme of the Court.

41. The Committee also noted, that if the organisation had to finance some €21.6M on an annual basis for the Court programme within the Ordinary Budget this would only be possible by making dramatic reductions in other sectors of the Organisation, in particular the Programme of Activities, which would fundamentally affect the current split between the different votes of the budget. This would probably involve the suppression of certain activities and consequently same staff members would be made redudant with the requirement to compensate them for loss of employment.

VII. JUDGES’ CONDITIONS OF SERVICE

42. The Budget Committee had been requested by the Committee of Ministers to examine the proposals contained in CM(2009)40rev in respect of the possibility of judges joining the medical care insurance scheme and the new pension scheme of the Council of Europe.

43. The Committee held an exchange of views with Mrs. Elisabet Fura-Sandström, Chair of the Court’s Status Committee, Mr. Erik Fribergh, the Registrar of the Court, and Mr. Eric Gires, the Head of the Actuarial Unit of the Joint Pensions Administration Section (JPAS) who had carried out a study on the effects of the proposal on the current pension scheme and the Director General of Administration and Logistics.

44. Following this exchange of views and after receiving further explanations on the proposals from the Secretariat, the Committee expressed strong reservations as to a change to the current system of remuneration for Judges which, it recalled, had been devised by the Budget Committee to ensure the independence of Judges sitting on the Court. In this respect the Committee stressed that the existing conditions of service, regulated by the Committee of Ministers Resolution Res(2004)50 already made provisions for social protection and that the “all inclusive (article 5) annual salary of judges (article 1)” included adequate resources for so doing.

45. The Committee noted that the Judges were a very specific small population who generally had a relatively short period of service in the Organisation. The Committee considered that it was not appropriate to foresee the inclusion of the judges within the existing staff pension scheme as it is designed for employees who generally accomplish a high proportion (or even all) of their career within the Organisation. The Committee also considered that it is not appropriate to also foresee, within the framework of the existing scheme, specific regulations in respect of pension rights of judges.

46. The Committee noted that the annual budgetary costs of the proposals of the Secretary General were marginally lower (-0.31%) than existing arrangements (cf. CM(2009)40 rev). However, the Committee also noted that the actuarial study carried out by the JPAS had shown that the rate of contribution that should be paid by judges to finance their share of the cost of benefits under the scheme would normally be 11.1% of pensionable salary. The JPAS had nevertheless considered that, due to the limited number of people concerned, it would be reasonable to apply the rate of 9.2% which was currently paid by staff members of the pension scheme. The Committee did not share this view given the number of judges who would be concerned in the medium to long term. The Committee also noted that the actuarial study had also shown that the contributions of the member states to the Pension Reserve Fund would increase by 0.04% and that while the actuaries regarded this as a “negligible impact”, the inherent risk of a benefits defined scheme would fall on scheme members and the member states.

47. Furthermore, the Committee recalled that it would be examining, at the request of the Committee of Ministers, a document on “Possible developments in the Council of Europe's pension schemes” GR-PBA(2009)4 at its September meeting. The Committee felt that whilst there were ongoing discussions on possible developments in relation to pensions it was inappropriate to propose that a new category of member should enter the existing pension scheme.

48. The Committee also noted that Protocol 14 to the European Convention of Human Rights, which had not yet entered into force, provided for a revised period of service for judges, comprising a non-renewable mandate lasting 9 years. The Committee felt that if these changes would affect the period of service of judges it would be more appropriate to consider the introduction of any eventual changes in respect of pension provision at the same time as this change.

49. The Committee wondered whether, given the number of judges and their specific situation, it would not be more appropriate for them to make their own arrangements in respect of pension and health care provision in a concerted manner with private pension and health care providers. The Committee also wondered whether or not it might be possible to allow the Judges to join the Organisation’s health care scheme during their period of service whilst continuing to provide individually for their pension provision.

50. Finally, the Committee noted that the proposal for the judges to benefit from a pension after five years of service could only find an equivalent in the regime for specially appointed officials.

51. Consequently the Committee could not recommend the adoption by the Committee of Ministers of the proposals of the Secretary General in relation to the Judges’ conditions of service.

VIII. THE SITUATION OF THE PENSION RESERVE FUND AND EXCHANGES OF VIEW WITH M. PETAUTON, PRESIDENT OF THE MANAGEMENT BOARD OF THE PENSION RESERVE FUND

52. The Budget Committee held an exchange of views with Mr Petauton, Chairman of the Management Board of the Pension Reserve Fund.

53. Mr Petauton presented the content of the documents CM(2008)148corr and CM(2009)69 and pointed out that the the day-to-day management of the fund was carried out by managers designated by the Management Board in line with the investment strategy approved by the Committee of Ministers.

54 Mr Petauton said that because of the prevailing economic climate, the Fund had not performed to initial expectations, but it nevertheless scored slightly higher than the professional bench-mark for the period. He also pointed out that the results achieved were consistent with the results of a normal distribution of expected returns and therefore gave no cause for concern.

55. He said that the investment strategy for the fund might be revised in 2010 on condition that the global context had stabilised.

IX. ADMINISTRATIVE CHARGES

56. The Committee took note of the information provided in document P-Bud(2009)1. It considered that the proposed level of administrative charges was too low in comparison with other international organisations and asked the Secretariat to continue detailed consideration of this matter in order to ensure greater budgetary transparency both for Joint Programmes with the European Commission and Voluntary Contributions. Any new study should show all the costs involved, in particular those relating to management and support staff in the operational entities and pension liabilities.

57. The Committee intends to come back to this matter once a revised version of the document is available and expressed the wish that any new measures could be applied in 2010.

X. THE SITUATION OF THE ORGANISATION’S BUILDINGS

58. The Committee was given information on the latest developments with regard to the Organisation's buildings, in particular the situation concerning B Building and the EDQM's former building in la Meinau. Pending a decision by the Committee of Ministers on the Court's enhancement programme, B Building was being left in its current state. It was pointed out that the building could provide work space for about 200 people, and its renovation would therefore make it possible to house the additional staff requested by the Court in its reinforcement plan.

59. With regard to the building in la Meinau, the Committee took note of the fact that, following the Committee of Ministers' decision authorising its sale, for reasons of transparency it had been offered for sale by auction on 12 May 2009 at a starting price of 5.97 million Euros. This auction had been unsuccessful on account of the current economic context and the fact that the building is currently designated solely for tertiary/Laboratory use. It was therefore proposed to apply for an extension of the designated use to include commercial activities and/or residential use and to ask for another valuation of the building. Another public auction will take place in the near future. The Committee had no objection to this procedure.

XI. CONTROLING THE EVOLUTION OF THE PAYROLL

60. The Committee discussed the way in which the salary ceiling is currently used within the Council of Europe budgetary process. The Committee recalled that the Committee of Ministers had decided on the guidelines for the drawing up of the proposed salary ceiling following the work of a thematic co-ordinator working group (TCSAL) in 2007 and the salary ceiling was introduced for the 2008 budget.

61. The Committee noted that the salary ceiling set was essentially a result of the individual decisions of the Committee of Ministers in respect of staffing levels to be allocated to different areas of the budget. In a period during which the Committee of Ministers priorities lay with reinforcing labour intensive areas such as the Court of Human Rights, the Commissioner for Human Rights and the Department for the Execution of Judgments a detailed examination of all staffing proposals was considered by the Deputies to be the most appropriate approach, with the salary ceiling being a function of those deliberations and decisions.

62. The Committee noted that for the 2008 budget the Committee of Ministers had reduced the starting point for the 2008 salary ceiling by the level of under spending of total salary appropriations in 2007. The Committee noted that this approach needed to take into account the requirement to leave some appropriations “unused” in order to meet the negative reserve, nevertheless, the Committee recommended that, in future, the Committee of Ministers take actual expenditure in the year prior to the budget year (year N) to be the baseline for setting the salary ceiling of the budget year in question (year N+1).

63. The Committee noted that obligatory adjustments (due to the current age structure of staff) in staff related expenditure amounted to € 1.1M. They welcomed the fact that, in order to control staff costs in 2010 this increase had been compensated by the suppression of 12 posts and 7 positions within the Ordinary Budget.

64. The Committee noted that the Committee of Ministers also exercises control over staff numbers as it approves each year the table of posts in the General Budget and the Partial Agreements. In this respect the Budget Committee noted that apart from posts whose creation had already been approved in the framework of previous Court enhancement programmes and the transformation of a number of positions into posts (which has no effect on overall staff numbers) no additional posts had been created in 2009. As mentioned above the Committee noted that the priorities proposals for 2010 included the suppression of 12 posts and 7 positions.

65. The Committee noted however that the salary ceiling is not used as an active tool for the management of total salary costs as from the beginning of the budget process. The salary ceiling could be included in the priorities of the Secretary General and constitute a firm restriction in terms of staff costs during the preparation of the budget, as the Committee had initially suggested – also linking the ceiling with a limitation on staff numbers.

XII. MODIFICATION OF THE DIRECTORATE OF LOGISTICS’ INVESTMENT PROGRAMME

66. The Committee took note of the information contained in document P-Bud(2009)4; it recommended the €435 000 increase in the budget for the fire safety project in the Palais de l’Europe and the financing of this increase through redeployment of existing appropriations in the 2009 investment programme. The resulting modifications to the investment budget for 2009 are set out in Appendix II.

XIII. ANY OTHER BUSINESS

67. Dates of next meetings: 14 – 18 September 2009 and 5 – 9 October 2009.

68. Following the silent procedure in respect of the procedure for the nomination of the external auditor, the Committee approved the modified text as presented in Appendix III.

Appendix I
Presentation by the Secretary General

BUDGET PRIORITIES DOCUMENT
7 May 2009

Some people say that in an economic crisis, the work of the Council of Europe is even more important than at other times, and that the Budget of the Council of Europe should be increased. Certainly it is true that the importance of the work of the Council of Europe can be seen more clearly during an economic crisis because one of the important consequences of an economic crisis is a reduction in confidence and trust in democratic institutions and democracy itself. An economic crisis also carries with it a greater risk of social tensions, racism and discrimination against minority groups. However to say that our work is more important in times of economic crisis underestimates the importance of working to build greater social cohesion before an economic crisis in order to reduce social tensions during the crisis. However I do agree that an economic crisis is not the time to cut back on our work in order to reduce our Budget.

At the same time, I accept that our member States do not want to increase their contributions to the Council of Europe for the time being, and I have therefore proposed an Ordinary Budget based on zero real growth.

Having said all that, it does of course create a major problem for the organisation for 4 reasons:

1. Historically, the Council of Europe has used underspending in one year to fund the budget in subsequent years so that underspending in 2007, for example, helped to fund the budget in 2009. In preparing next year’s budget, we have a major problem because our underspending in 2008 was a record low. Paradoxically, this is the result of better management in terms of both better budgeting and better performance. During the last 4 years, we have become much better at both estimating the cost of what we plan to do and actually doing it – by that, I mean not only doing it more efficiently and effectively but actually doing it. Our management information systems leave a lot to be desired, but it is clear from the statistics that there has been a significant improvement in doing what we plan to do – in other words, in actual delivery of our projects and programmes.

But the result is that our expenditure is much closer to budget, and our underspending in 2008 was only 0.5 million Euros – a quarter of 1% of the Ordinary Budget.

2. we have a reduction in interest rates which means that we will receive less interest on our reserves.

3. we have a problem as a result of our salary structure combined with the age structure of our staff. As you know, our staff receive annual or bi-annual increases in their salaries – known as steps. Their salaries are not only adjusted for inflation and other factors each year on the basis of recommendations by CCR. The salary of each member of staff is determined according to a band of salaries related to the grade of the job. The band for each grade contains several steps, and progression is automatic until the individual receives the maximum for the grade. In theory, the increased expenditure resulting from steps is covered by the fact that someone who retires is normally on the top step and is replaced by someone on the bottom step. However the enlargement of the membership of the Council of Europe resulted in an increase in the number of staff in the 1990’s. The new staff tended to be younger people and resulted in a lower average age for our staff as a whole. Extra staff at the Court in recent years will have had a similar effect. And we have very few people retiring or leaving for other reasons. The nett effect is an increase of more than 1 million euros in staff expenditure.

4. The fourth reason for the budget problem concerns the Court. As you know, the Court has asked for another 3 year enhancement programme. A document with an estimate of the additional costs has been prepared and was issued this week for discussion at a meeting of GR-PBA on 28 May. The effect of this request has not been taken into account in the Budget Priorities document – not least because it cannot take effect until 2011 even if the request is approved now. But even without this request, we need to provide some extra resources for the Court as a result of the previous enhancement programme.

The total effect of all these factors is that in the context of a zero real growth budget, we need to re-deploy 4.5 million Euros.

Subject to your approval, this is what the Secretariat has done, and I am very grateful to all of them for their help.

But it has not only been a question of balancing the Budget. As the table in Appendix III shows, we have also re-deployed resources within our Programme of Activities. The effect is a shift in resources towards Human Rights and the Rule of Law. Specifically, this means extra money and an extra member of staff for the Commissioner for Human Rights, the same thing for MONEYVAL, and more money for our work on Media and Gender Equality, and follow-up to the Ministerial Conferences in Lanzarote, Tromso and Bucharest.

Before I finish there are 2 detailed points which I need to clarify.

1. The budget proposals include the effect of the transfer of the responsibility for Information Offices in member states of the European Union – that is a transfer from the Budget of the Council of Europe to the member states themselves. It is proposed to re-deploy this money to Human Rights and the Rule of Law.

2. Although paragraphs 11–12 of the Budget Priorities document refer to the cost of paying daily allowances to Government representatives who attend meetings of the 21 Steering Committees and their subordinate bodies – a cost of 850, 000 Euros per annum – and I note that if these daily allowances I emphasise daily allowances – (not the cost of travel) – if these daily allowances were paid by the Governments themselves as happens in other international organisations, then another 850,000 Euros would be available for spending on activities connected with our core values. However the purpose of paragraphs 11-12 is to draw this issue to the attention of member Governments. I have not included this amount of 850,000 Euros in my Budget proposals.

In conclusion, these Budget proposals balance expenditure and income within the constraints of zero real growth,

- continue the drive of the last 5 years for greater efficiency and effectiveness

- and also continue the significant re-deployment of resources which has taken place during this period,

- extend our work on Human Rights and the Rule of Law

- and consolidate our work elsewhere.

***

Appendix II

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Appendix III

PART VI – EXTERNAL AUDITOR2

Article 71

The External Auditor shall be head of the supreme audit institution of a member state, as properly represented according to national legislation of this member State, and shall be appointed by the Committee of Ministers for a period of five years, not renewable.

The External Auditor may not otherwise be removed during his or her its tenure of office, except by the Committee of Ministers, upon the proposal of one or more member states.

For the purpose of conducting a local or special examination, the External Auditor may engage the services of the supreme audit institution of another member state.

The External Auditor shall be completely independent and solely responsible for the conduct of the audit.

The Organisation shall afford to the External Auditor such facilities and technical assistance as he or she it may consider necessary for the performance of his or her its duties.

Article 72

The audit shall be conducted in conformity with generally accepted international auditing standards.

The audit shall be conducted at the headquarters of the Organisation and any other premises of the Organisation as deemed necessary.

The External Auditor and his or her its staff shall have free access to all vouchers, books, documents and files which he or she it considers necessary to examine for the purpose of the audit. He or she It may ask the Organisation's officials for any information he or she it thinks necessary. The External Auditor and his or her its staff shall not disclose any information of a confidential or restricted nature, which has been made available and shall not make use of it except in direct connection with the performance of the audit. The External Auditor may draw the attention of the Committee of Ministers to any denial of information, which in his or her its opinion was required for the purpose of the audit.

Article 73

The duties of the External Auditor shall be to satisfy him or her itself that the financial statements present fairly in all material aspects the financial position and the results of operations and cash flows of the Organisation and have been prepared in accordance with IPSAS; and that the budgetary management accounts present fairly in all material respects the financial records and transactions of the Organisation and have been prepared in accordance with the Financial Regulations and any other rules or applicable directives laid down by the Committee of Ministers. The External Auditor will make observations with respect to the economy, efficiency and effectiveness of the financial procedures, the accounting system and the administration and management of the Organisation.

In carrying out verifications the External Auditor shall in particular satisfy him or her itself that:

- the annual accounts are in accordance with the accounting records of the Organisation;
- the accounting system and the annual accounts cover all financial transactions effected by the Organisation in the course of the year;
- budgetary expenditure has been in conformity with the purposes of, and within the limits of, the appropriations as shown in the budget, amended as appropriate;

      - any special funds created and any receipts applied to special purposes, in pursuance of Article 4, second and third paragraphs, have been administered in accordance with the rules governing them;

- transactions are vouched for by appropriate supporting documents;
- certificates of funds and securities placed on deposit are periodically obtained from the depositaries and that periodic certificates of verification of cash in hand are held;
- inventories are kept in good order and are subject to proper supervision;
- internal controls, including internal audit, are adequate and reliable.

Article 74

The External Auditor shall express and sign opinions on the financial statements and the budgetary management accounts no later than 30 June following the financial year to which they relate, which shall:

- identify the accounts examined;
- describe the nature and scope of the audit; and
- address, as appropriate, whether:

    a) the financial statements present fairly the financial position of the Council of Europe at the end of the financial year and the results of its operations in that year; and the budgetary management accounts properly reflect the financial records and transactions of the Organisation;
    b) the financial statements were prepared in accordance with International Public Sector Accounting Standards and the stated accounting policies set out in the notes to the financial statements; and the budgetary management accounts were prepared in accordance with the Financial Regulations and any other rules or applicable directives laid down by the Committee of Ministers;
    c) the accounting principles were applied on a consistent basis from year to year;
    d) transactions were in accordance with the Financial Regulations and budgetary authorisations.

The External Auditor shall present, by 30 June at the latest, a report to the Committee of Ministers, in which he or she it shall set forth his or her its views and observations on the annual accounts and any other matter referred to in Articles 73 and 74 above.

The report shall include:

a) the nature and scope of his or her the External Auditor's examination and of any changes in the nature and scope of such examination, including whether he or she it has obtained all the information and explanations required;

b) matters affecting the completeness or accuracy of the annual accounts such as:

- any income or receivables which have not been properly accounted for;
- expenditure not properly substantiated;

c) other matters to be brought to the notice of the Committee of Ministers, such as:

- cases of fraud or presumptive fraud;
- wasteful or improper expenditure of the Organisation’s financial or other assets (notwithstanding that the accounting for the transactions may be correct);
- expenditure likely to commit the Organisation to further outlay on a large scale;
- any defect in the general system or detailed regulations governing the control of receipts and expenditure or of supplies, equipment and materials of the Organisation or of those for which the Organisation is responsible;
- expenditure not in conformity with appropriations, as amended by duly authorised transfers between appropriations;
- expenditure in excess of appropriations, as amended by duly authorised transfers;

d) the accuracy or otherwise, as determined by stocktaking and examination, of quantitative records relating to supplies, equipment and material of the Organisation or for which the Organisation is responsible; and

e) transactions accounted for in a previous financial year, concerning which further information has been obtained, or transactions in a later financial year concerning which it is considered desirable that the Committee of Ministers should be informed at an early stage.

The External Auditor shall not include any observations in the audit report without first affording the Secretary General an opportunity to comment on the matter under observation. Audit comments arising during the examination of the accounts shall be immediately communicated to the Secretary General and the Treasurer.

The External Auditor's report shall be transmitted to the Committee of Ministers together with the audited annual accounts.

The External Auditor or his or her deputy shall present the external audit report shall be presented to the Committee of Ministers by the head of the supreme audit institution appointed as External Auditor or, in case of unforeseen difficulties, by another high official holding an equivalent function of representation.

* * *

EXTERNAL AUDITOR

PROCEDURE FOR THE APPOINTMENT OF THE EXTERNAL AUDITOR3

1. Duration of term of office

The External Auditor shall be appointed to audit five financial years.

2. Presentation of candidates – Timetable

- in principle, a new External Auditor should be appointed at a December meeting of the Deputies which precedes the first year of the new External Auditor’s term of office;

- the Secretariat shall notify governments of the upcoming appointment of an External Auditor before 30 June of the last financial year on which the outgoing External Auditor is to report and candidatures should be deposited with the Secretariat before 15 October of that year;

- at the last meeting of the Deputies in September, the Secretariat will remind them of this time limit and inform them of candidatures already received;

- a document listing the candidatures received by 15 October shall be issued immediately after that date; it will set out the candidates supreme audit institutions, together with their curricula vitae, and the Secretariat’s appraisal of the criteria detailed in paragraph 3 below;

- if an External Auditor does not complete his or her its full term of office of five years, the procedure for the appointment of a new External Auditor for another five-year period should be initiated without delay.

3. Selection criteria

The selection process shall be guided primarily by quality of audit service, professional expertise and experience in auditing international organisations. Audit fees will be considered only after satisfactory appraisal of the quality aspect.

The candidatures shall include the following, in one of the official languages of the Organisation:

      - details of national legislation ensuring independence of the head of the supreme audit institution in his or her its own country;
      - a curriculum vitae of the candidate;

    - details of the national and international activities of the supreme audit institution, with an indication of the range of audits completed and the audit specialities that could be of benefit to the Council of Europe;

- a copy of the last annual report of the supreme audit institution;
- a description of the audit approach, the number and level of staff to be involved in the audit and
an indication of their level of proficiency in one of the official languages of the Organisation;
- an estimate of the total number of auditor-days which would be devoted to the audit per year;

    - a proposed audit fee (expressed in euro) covering the audit related salaries, support costs and travel costs.

The Audit Committee shall provide an advisory opinion to the Committee of Ministers on the candidatures received, on the basis of an objective evaluation of their conformity with the selection criteria. The Committee of Ministers may request the Audit Committee to express a preference for a candidature.

4. Voting procedure

- if only one candidate is proposed, his or her its appointment can be made without a vote unless there is an objection;

- in the case of two or more candidates being proposed, the Deputies start the selection (or elimination) procedure by holding an indicative vote by secret ballot. Subsequent procedure is then decided in the light of the outcome of the indicative vote, or subsequent indicative votes by secret ballot if they appear to be necessary;

- the ballot papers used for the secret indicative votes referred to in the preceding paragraph shall list the candidates in alphabetical order of member states family name and without indication of titles. The chairperson will indicate during the meeting at which moment the Secretariat should distribute the ballot papers.

***

Appendix IV

BUDGET COMMITTEE

May session 2009

Wednesday 13 May at 9.00 a.m. –Friday 15 May 2009

Room 7, Palais de l’Europe

REVISED AGENDA

Item 1 Opening of the meeting

Item 2 Election of Chairperson and Vice-Chairperson of the Committee

Item 3 Examination of the following documents:

      - Report of the October 2008 meeting

      CM(2008)138: Meeting report of the Budget Committee – October 2008 session

      - Minutes of the October 2008 meeting

      P-Bud(2008)CR3: Budget Committee - Minutes of the October 2008 session

Item 4 Presentation of changes made by the Deputies to the draft budget for 2009
before its approval

      P-Bud(2009)2: Summary of the modifications made by the Deputies to the 2009 draft budget examined by the Budget Committee

Item 5 Execution of the 2008 budget - RBB and PMM results

      CM/Inf(2009)10: Budgets of the Council of Europe for the financial year 2008 - Progress Review Report 1
      CM/Inf(2009)12: Programme of Activities 2008 - Progress Review Report 1
      P-Bud(2009)3: Budgetary Execution of the 2008 Ordinary Budget

Item 6 Exchange of views with the Internal Auditor

      Follow-up of the Study on the efficiency and effectiveness of committees and study on staff/activities ratio and working methods
      Presentation of Internal Audit 2008 activities

Item 7 Examination of the priorities for 2010 and exchange of views with the Secretary General
Mr. Terry Davis

      CM(2009)67 : Priorities for 2010 – Budgetary implications

Item 8 Judges’ conditions of service

      CM(2009)40: Judges’ conditions of service
      DD(2009)123 – letter from the president of the Court to the Chair of the GR-PBA concerning the Secretary General’s proposal
      DD(2009)138 – letter from the Secretary General to the Chair of the GR-PBA commenting the above letter
      DD(2008)625 – exchanges of correspondence between the Secretary General and the President of the Court and a letter from the Secretary General to the Chair of the CL-CEDH
      DD(2008)547 – document prepared by the European Court of Human Rights: Proposal to the Committee of Ministers on Judges’ Social Security

Item 9 The situation of the Pension Reserve Fund and exchanges of view with M. Petauton, President of the Management Board of the Pension Reserve Fund

      CM(2008)148corr: Pension Reserve Fund – 4th report of the Management Board to the Committee of Ministers
      CM(2009)69: Pension Reserve Fund - 1st report for 2009 of the Management Board to the Committee of Ministers

Item 10 Administrative charges

      P-Bud (2009)1: Analysis of management of extrabudgetary resources from a financial standpoint

Item 11 The situation of the Organisation’s buildings

      B Building
      Old Pharmacopoeia building cession

Item 12 Controlling the evolution of the payroll

      CM(2007)106 final The Council of Europe's annual "salary ceiling", guidelines

Item 13 Modification of the Directorate of Logistics’ investment programme

      P-Bud(2009)4: Note on the Directorate of Logistics’ investment programme

Item 14 Any other business

      Silent procedure follow-up
      Change of dates of the September and October session of the Budget Committee

Additional Information Documents:

Title of Document

Resolution Res(2005)47 on committees and subordinate bodies, their terms of reference and working methods

P-Bud(2009)5
: Budgetary Situation - by Vote - on 30 April 2009

P-Bud(2009)6:
Budgetary Situation - Partial Agreements on 30 April 2009

CM/Del/Dec(2006)283: Extract from Adopted decisions

CM(2008)130vol.Icorr3: Draft Budget for 2009 – Volume 1

Memorandum du Comité du Personnel
Commentaires du Comité du Personnel sur le projet de résolution du Comité des Ministres sur les conditions d’emploi des juges de la Cour européenne des Droits de l’Homme (available only in French)

SCAP/EG(2009)E37: Study on the introduction of a pension scheme for judges of the European Court of Human Rights

***

Appendix V

BUDGET COMMITTEE

May session 2009

(13-15 May 2009)

LIST OF PARTICIPANTS

STATES

MEMBERS

Austria

Mr Christoph JACKWERTH

Belgium

Ms Anne VAN NIEUWENBURG

France

Ms Marie-Chantal MUSSET

Germany

Mr Michael LAUMANNS (Substitute)

Italy

Mr Claudio DE ROSE

Poland

Mr Bartosz BURACZYŃSKI (Substitute)

Romania

Mr Stefan PETRESCU

Russian Federation

Mr Andrei Vitalievitch KOVALENKO

Sweden

Mr Åke HJALMARSSON

Turkey

Mr Fikret DEMIR

United Kingdom

Ms Joycelyn BUCHAN

Note 1 This document has been classified restricted until examination by the Committee of Ministers.
Note 2 [Revised at the Deputies' … meeting (… 2009).]
Note 3 Procedure adopted by the Deputies at their 838th meeting (30 April 2003) [and revised at the Deputies' 1052nd meeting (25 March 2009)].


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