1. EuropeAid 1 Revision of Financial Regulation: Trust Funds Brussels, 16 November 2010

2. EuropeAid 2 SUMMARY 1.RATIONALE OF THE PROPOSAL 2.INVOLVEMENT OF DONORS 3.MANAGEMENT OF THE TRUST FUND

3. EuropeAid 3 1 RATIONALE OF THE PROPOSAL

4. EuropeAid 4 Rationale 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.

5. EuropeAid 5 Rationale of the proposal Trust Fund will remain exceptional: o Limited scope: emergency, post-emergency, thematic actions. o Only where there is agreement between donors o 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

6. EuropeAid 6 Rationale 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

7. EuropeAid 7 2 INVOLVEMENT OF DONORS

8. EuropeAid 8 Involvement of donors Establishment: involvement at two levels: o Donors: agreement to establish a EU Trust Fund o 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 Board o All Member States represented in Committee: approval of Financing Decisions (i.e. additional EU Contribution, extension of duration)

9. EuropeAid 9 Involvement 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 donors o Any extension is requested by Management Board o After expiration of duration: Commission takes formal decision

10. EuropeAid 10 3 MANAGEMENT OF THE TRUST FUND

11. EuropeAid 11 Management of the Trust Fund Regulatory framework Outside the EU Budget BUT Financial Regulation rules apply: o Grants o Procurement o Financial Instruments o Methods of implementation: direct or indirect

12. EuropeAid 12 Management of the Trust Fund Accounts 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

13. EuropeAid 13 Management of the Trust Fund Audit 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

14. EuropeAid 14 Management of the Trust Fund Reporting 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

15. EuropeAid 15 Management of the Trust Fund Management 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

16. EuropeAid 16 Further information On EuropeAid: http://ec.europa.eu/europeaid/index_en.htm On the speakers: Javier RAYA AGUADO Head of Contractual matters section Javier.RAYA-AGUADO@ec.europa.eu Dolores DOMINGUEZ PEREZ Contractual matters section Dolores.DOMINGUEZ-PEREZ@ec.europa.eu Unit G7: Financial and contractual matters, and legal affairs