STANDING COMMITTEE 213 SC 05 E   Original: English NAT O   Pa rl ia me n ta ry  As s e mb l y NATURE AND LEVELS OF RESERVES AND PROVISIONS International Secretariat October 2005

213 SC 05 E 1 Reserves and Provisions 1. The auditors have observed that there does not appear to be a continuing need for each of the presently established reserve accounts, and that the nature and the level of reserves and provisions should be re-assessed by the Treasurer and the Secretary General of the Assembly. 2. The  Treasurer  and  the  Secretary  General  concur  with  the  audit  opinion  and  this  document presents their proposal for restructuring the reserve accounts. 3. Two reserves - the Emergency Reserve and the Unemployment Fund – should remain in their present form.  The Emergency Reserve is mandated by the Assembly’s Financial Regulations¹ and is intended to provide a reserve in the event that the Assembly has to deal with a severe difficulty such as the failure of a large contributing nation to pay its contribution or other unforeseen circumstances.   The Unemployment fund also should remain as a separate reserve because it is mandated by Belgian law. 4. It  is  proposed that the  other eight  provisions  should  be grouped  according to  the four  budget chapters.  Thus, the existing three provisions currently set aside for specific purposes under Chapter 1 (Personnel) and the three set aside under Chapter 2 (Operating Costs) should be grouped into one provision for each of those Chapters.  Both Chapter 3 (Sessions) and Chapter 4 (Missions, Seminars, and External Relations) each have one provision allocated to a specific budget Article: each of these would be re-designated as a provision for the relevant Chapter.  The current and proposed allocations are shown in the table below. 5. This restructuring will make the use of provisions more flexible, but it should be stressed that this proposal has no effect on the rules and procedures governing the use of the provisions. These are explained in the appendix. CURRENT AND PROPOSED STRUCTURE OF PROVISIONS Current Proposed Chapter 1 Personnel Provision 76.436,87 - Social Fund 37.447,69 - Legal advice and litigation 23.424,87 - Recruitment expenses 15.564,31 Chapter 2 Operating Provision 102.201,95 - Renewal Car 14.667,87 - Computer equipment 39.665,70 - Alterations of headquarters 47.868,38 Chapter 3 Session Provision 35.215,00 - Transatlantic provision Chapter 4 Meetings & Seminars Provision 218.060,55 - Rose Roth provision Subtotal 431.914,37 Emergency Fund 667.849,64 Unemployment Fund 16.463,30 Total 1.116.227,31 1 Extracts from the Financial Regulations appear in the appendix to this document

213 SC 05 E 2 6. If the Standing Committee agrees, this new designation of the provisions will be introduced as from  2006.    At  the  meeting  of  the  Standing  Committee  in  March,  the  Treasurer  will,  as  usual, present  his  proposals  for  reallocating  the  previous  year’s  surplus  and  will,  if  necessary,  make recommendations for adjusting the provisions according to the new headings.

213 SC 05 E Appendix 3 Extracts from the Financial Regulations  [245 GEN 04 E] The financial rules explain the use of reserves and provisions as follows: Article 13 The  Assembly  shall  establish  Reserves  in  order  to  meet  obligations  mandated  either  by  the Financial Regulations under Article 14 or applicable Belgian law, and Provisions to provide funding for foreseen expenditures additional to normal budgetary articles. Article 14 Reserves shall include an “Emergency Reserve” to enable the Assembly to continue to function in the  event  that  an  unforeseeable  and  exceptional  funding  shortfall  occurs  such  as  a  national contribution not being received.  The Emergency Reserve shall amount to between 20% and 25% of the total national contributions to the budget of the current financial year. Article 15 The  Emergency  Reserve  shall  only  be  used  with  the  authorisation  of  the  President  and  the Treasurer.    The  Treasurer  shall  inform  the  Standing  Committee  of  any  use  of  the  Emergency Reserve. Article 16 Provisions shall be established to facilitate multi-year planning for contingencies that do not occur annually and which are expected to result in expenses above those foreseen in the annual budget.   Such   Provisions   shall   be   established   on   the   recommendation   of   the   Treasurer   to   fund contingencies which are expected to exceed 25% of the amount allocated to the relevant article in the budget.  Expenditure made from such Provisions shall be recorded in the Financial Statements. Article 17 The purposes and levels of Reserves and Provisions shall be re-assessed by the Treasurer  and the Secretary General.  The Treasurer shall present these for approval by the Standing Committee at its first meeting of the year. Extracts  from  the  implementing  rules  and  procedures  for  financial  transactions  and  budget execution: D. Release of Reserves and Provisions Release of the Assembly’s Reserves and Provisions shall take place with the written approval of the  Secretary  General  who  shall  specify  the  amount  to  be  released  from  the  Reserves  and Provisions and the budget article to which it should be added. The  funds  thus  added  to  a  budget  article  will  be  subject  to  the  normal  procedures  for  budget execution.      The   Financial   Statements   shall   clearly   indicate   all   transfers   from   Reserves   and Provisions and the budget articles to which they are added. __________________