EUROPEAN UNION ACCOUNTING RULE 16 PRESENTATION OF BUDGET - PDF document

EUROPEAN COMMISSION Budget Budget execution Accounting EUROPEAN UNION ACCOUNTING RULE 16 PRESENTATION OF BUDGET INFORMATION IN ANNUAL ACCOUNTS

EUROPEAN COMMISSION Budget Budget execution Accounting Version: 1 EU A CCOUNTING R ULE 16: P RESENTATION OF B UDGET I NFORMATION Date: December 2008 IN A NNUAL A CCOUNTS Page 2 of 9 I N D E X 1. Introduction ................................................................................................................................... 3 1.1 Reasons for issuing this accounting rule .............................................................................. 3 1.2 Applicability......................................................................................................................... 3 1.3 Disclosure............................................................................................................................. 3 1.4 Budget and general accounts in the European Union .......................................................... 4 2. Objective ....................................................................................................................................... 4 3. Scope ............................................................................................................................................. 4 4. Definitions..................................................................................................................................... 4 5. Presentation of budget information in financial statements .......................................................... 6 5.1 Comparison of budget and actual amounts .......................................................................... 6 5.2 Level of aggregation ............................................................................................................ 7 5.3 Changes from original to final budget ................................................................................. 7 5.4 Comparable basis ................................................................................................................. 7 5.5 Financial framework ............................................................................................................ 7 5.6 Reconciliation of actual amounts on a comparable basis and actual amounts in the financial statements .......................................................................................................................... 8 6. Disclosures .................................................................................................................................... 8 7. Effective date ................................................................................................................................ 9 8. Reference to other rules ................................................................................................................ 9

EUROPEAN COMMISSION Budget Budget execution Accounting Version: 1 EU A CCOUNTING R ULE 16: P RESENTATION OF B UDGET I NFORMATION Date: December 2008 IN A NNUAL A CCOUNTS Page 3 of 9 1. Introduction 1.1 Reasons for issuing this accounting rule This accounting rule is based on International Public Sector Accounting Standard (IPSAS) 24 “Presentation of Budget Information in Financial Statements”, which was issued by the International Public Sector Accounting Standards Board (IPSASB) in December 2006. Prior to the issue of IPSAS 24, neither the European Union (“EU”) Accounting Rule 2 nor IPSAS 1 “Presentation of Financial Statements” required disclosure of a comparison when the budget is not prepared or presented on the same basis as the financial statements, nor was there guidance on the details to be disclosed or the manner of presentation if the EU elected to make such a comparison. 1.2 Applicability This rule applies to the EU consolidated accounts, as well as the individual accounts of the EU Institutions and Agencies consolidated therein if these entities’ annual budgets are publicly available. The rule requires these entities to make certain disclosures about budget and actual amounts in their annual accounts or other reports. It does not require that these entities make publicly available their approved budgets, nor does it specify requirements for the formulation or presentation of approved budgets that are made publicly available. This rule identifies disclosures that are to be made by these entities concerning their compliance with, and performance against, their approved budget(s) whether or not the budget and the financial statements are prepared and presented on the same basis. 1.3 Disclosure This accounting rule requires that the annual accounts of the EU and its consolidated Institutions and Agencies that make their approved budget(s) publicly available include: (a) A comparison of actual amounts with amounts in the original and final budget. This comparison is to be made on the same basis of accounting as adopted for the budget, even if that basis is different from the basis adopted for the financial statements; (b) An explanation of material differences between budget and actual amounts, unless such explanation is included in other public documents issued in conjunction with the annual accounts; (c) A reconciliation of actual amounts on a budget basis, with actual amounts presented in the financial statements when the accounting and budget basis differ. This rule also requires disclosure of an explanation of the reasons for differences between the original and final budget, including whether those differences arise from reallocations within the budget or other factors such as policy shifts, natural disasters, or other unforeseen events. These disclosures may be made in notes to the annual accounts or in a report issued before, in conjunction with, or at the same time as the annual accounts.

EUROPEAN COMMISSION Budget Budget execution Accounting Version: 1 EU A CCOUNTING R ULE 16: P RESENTATION OF B UDGET I NFORMATION Date: December 2008 IN A NNUAL A CCOUNTS Page 4 of 9 1.4 Budget and general accounts in the European Union It should be noted that under the Financial Regulation (FR) applicable to the general budget of the European Union, the accounts consist of the general accounts and the budgetary accounts, presented and kept in euros (see Article 132 FR), each following different principles. Furthermore, and in accordance with Article 121 FR, the annual accounts of the EU comprise two main elements: (1) the financial statements (general accounting) and (2) the reports on the implementation of the budget (budgetary accounting). The general accounts are kept in accordance with accrual accounting principles, which means that the effects of transactions and other events are recognised when those transactions or events occur. The budgetary accounts are kept according to modified cash accounting rules. As in any cash accounting system, payments made and revenue received are recorded. The term “modified” cash accounting is used as payment appropriations carried over are also recorded. The budgetary accounts are used to produce the budgetary outturn account and reports on budget implementation. 2. Objective Compliance with the requirements of this accounting rule will ensure that the EU and its consolidated Institutions and Agencies discharge their accountability obligations and enhance the transparency of their financial statements by demonstrating compliance with the approved budget(s) for which they are held publicly accountable. 3. Scope The EU and its consolidated Institutions and Agencies which prepare and present financial statements under the accrual basis of accounting shall apply this accounting rule. This rule applies only to those entities that make publicly available their approved budget(s). 4. Definitions The following terms are used in this accounting rule with the specified meanings: Accounting basis means the accrual or cash basis of accounting as defined in the Accrual Basis International Public Sector Accounting Standard and the Cash Basis International Public Sector Accounting Standard. Annual budget means an approved budget for one year. It does not include published forward estimates or projections for periods beyond the budget period.