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EuropeAidRevision of Revision of

Financial Regulation: Trust FundsFinancial Regulation: Trust Funds

Brussels, 16 November 2010Brussels, 16 November 2010

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EuropeAidSUMMARY

1. RATIONALE OF THE PROPOSAL

2. INVOLVEMENT OF DONORS

3. MANAGEMENT OF THE TRUST FUND

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EuropeAid

1RATIONALE OF THE PROPOSAL

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EuropeAidRationale of the proposal

• Trust funds constitute a commonly used mechanism for aid delivery:

o 100% of the EU financial contributions to the World Bank;o 26% of the EU financial contributions to the United

Nations.

• EU budget currently contributes to 71 development-related trust funds / EUR 2.5 billion.

• Request by European Parliament in 2007 and 2008 discharge procedures: more visibility and enhanced control of funds.

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EuropeAidRationale of the proposal

• Trust Fund will remain exceptional:

o Limited scope: emergency, post-emergency, thematic actions.

o Only where there is agreement between donorso EU has an added value compared to other alternatives

• Not designed to replace the use of third organisations.

• Trust Fund addresses the constraints of Assigned Revenues

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EuropeAidRationale of the proposal

• Why are Trust Funds placed in a special account outside the EU Budget?

o own purpose and nature of Trust Funds: accounts detached from the budget of the managing organisation

o Shared decision-making structure: Management Board

o Rules on receipt of funds from other donors into the EU budget and the decision-making relating to the commitment of EU funds are slow and cumbersome

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EuropeAid

2INVOLVEMENT OF DONORS

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EuropeAidInvolvement of donors

• Establishment: involvement at two levels:

o Donors: agreement to establish a EU Trust Fundo All Member States: participation in approval of the Programming Documents and

Financing Decision establishing the Trust Fund (Committee)

• During life of Trust Fund:o Donors represented in Management Boardo All Member States represented in Committee: approval of Financing Decisions (i.e.

additional EU Contribution, extension of duration)

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EuropeAidInvolvement of donors

• Role of Management Board:o decide on the activities to be financed and approve the

report and the accounts of the Trust Fund o Commission has veto power: it is responsible for execution

of funds: in order to ensure consistency with political and operational framework and the financial rules

• Liquidation:o Duration initially agreed by donorso Any extension is requested by Management Boardo After expiration of duration: Commission takes formal

decision

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EuropeAid

3MANAGEMENT OF THE TRUST FUND

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EuropeAidManagement of the Trust FundRegulatory framework

• Outside the EU Budget BUT Financial Regulation rules apply:

o Grantso Procuremento Financial Instruments

o Methods of implementation: direct or indirect

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EuropeAidManagement of the Trust FundAccounts

• The accounting officer of the Trust Fund is the Accounting Officer of the Commission;

• The bank account management will be done following the rules established by the Accounting Officer;

• Trust fund accounts will be consolidated in the Commission's annual accounts;

• Trust fund accounts approved by Management Board

• Accounts presented to the budgetary authority within the discharge procedure of the Commission

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EuropeAidManagement of the Trust FundAudit

• Commission's internal auditor shall have the same powers as regards any other actions carried out by the Commission;

• European Court of Auditor shall have the same unrestricted powers as regards any other actions carried out by the Commission;

• External audit every year: beyond practice by main Trust Fund managers

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EuropeAidManagement of the Trust FundReporting

• Reporting (both narrative and financial) will be twice a year (instead of a yearly report in case of international organisations)

• Annual report approved by Management Board

• Report is presented to the budgetary authority within the discharge procedure of the Commission

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EuropeAidManagement of the Trust FundManagement fee

• Donors charged up to 7% of contribution as management fee

• Maximum fee based on EU cap on indirect costs to delegatee entities

• Actual fee calculated on extra costs entailed by Trust Fund

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EuropeAidFurther information• On EuropeAid:http://ec.europa.eu/europeaid/index_en.htm

• On the speakers:

Javier RAYA AGUADOHead of Contractual matters sectionJavier.RAYA-AGUADO@ec.europa.eu

Dolores DOMINGUEZ PEREZContractual matters sectionDolores.DOMINGUEZ-PEREZ@ec.europa.eu

Unit G7: Financial and contractual matters, and legal affairs