MFF heading

Transactions subject to audit (billion EUR)

Estimated level of error 2015 (%)

Estimated level of error 2014 (%)

1a. Competitiveness

14,5

4,4

5,6

1b. Cohesion

53,9

5,2

5,7

2. Natural resources

58,6

2,9

3,6

4. Global Europe

6,9

2,8

2,7

5. Administration

9,0

0,6

0,5

Other

3,0

-

-

Total

145,9

3,8

4,4

Revenue

153,8

0

0

CHAPTER 1 – The statement of assurance and supporting information

Paragraphs

Observations in the 2015 Court's Annual Report

Member States' replies

Figure 1.1

2015 EU spending in each Member State as a share of gross national income (GNI) and general government expenditure.

Austria:  Action taken: NO; Action completed: ; Completion date: ;

Bulgaria: Action taken: ; Action completed: ; Completion date:

The information is for information purposes only and no measures are required.

Czech Republic: Action taken: ; Action completed: ; Completion date:

No comment, no specific finding.

Denmark: Action taken: ; Action completed: ; Completion date:

In our view, the figure depicts a factual situation, and any comments on whether action has been taken are therefore irrelevant.

Estonia: Action taken: YES; Action completed: YES; Completion date: 31/12/2014

Finland: Action taken: ; Action completed: ; Completion date:

No comments.

France: Action taken: OUI; Action completed: OUI; Completion date:N/A

Germany: Action taken: ; Action completed: ; Completion date:

For information purposes only; no answer required.

Hungary: Action taken: NO; Action completed: ; Completion date:

Factual finding that does not require action.

Ireland: Action taken: NO; Action completed: NO; Completion date:

No action required.

Latvia: Action taken: ; Action completed: ; Completion date:

No comment - statistical information provided

Luxembourg: Action taken: ; Action completed: ; Completion date:
n/a

Netherlands: Action taken: ; Action completed: ; Completion date:

Not applicable.

Poland: Action taken: ; Action completed: ; Completion date:

This observation does not include any specific reservations against Poland.

Portugal: Action taken: ; Action completed: ; Completion date:

Nothing relevant to report.

Slovakia: Action taken: ; Action completed: ; Completion date:

In our opinion, the text/graph conveys the state of play.

Sweden: Action taken: NO; Action completed: ; Completion date:

This observation does not require Sweden to take action.

United Kingdom: Action taken: n/a; Action completed: n/a; Completion date: n/a;

None.

Annex 1.3

Frequency of detected errors in audit sampling for the year 2015.

Austria:  Action taken: YES; Action completed: NO; Completion date: 31 March 2017;

A financial correction will be made with the final application for payment.

Bulgaria: Action taken: ; Action completed: ; Completion date:

The information is for information purposes only and no measures are required.

Czech Republic: Action taken: ; Action completed: ; Completion date:

No comment, no specific finding.

Denmark: Action taken: YES; Action completed: ; Completion date:

The Annex presents an overview of the errors detected in the Member States. No conclusive answer can thus be given on which measures have been taken.

Finland: Action taken: YES; Action completed: YES; Completion date:-

The inspection findings are explained in Annex II.

France: Action taken: OUI; Action completed: OUI pour FEAGA, NON pour FEADER; Completion date:

Concernant le FSE, les taux d’erreur constatés (100% ; 11,74% et 18,75%) sont importants. Cela s’explique par le caractère très ancien des dossiers ayant été sélectionnés (par exemple, le dossier pour lequel le taux de 100 % d’irrégularité est constaté a été conventionné en 2002) et par l’absence de pièces justificatives tenant à un défaut d’archivage après un nombre d’années non négligeable et la disparition de certaines structures initialement parties au contrat compte tenu des modifications institutionnelles intervenues.

Dans le cadre du plan d’actions FEAGA et de la réforme de 2015, les autorités françaises ont procédé à la refonte complète de leur SIPA. L’exercice a consisté en la photo interprétation de l’ensemble du territoire national afin d’identifier et d’exclure l’ensemble des SNA. En cas de doute, une visite rapide était organisée sur le terrain.

De plus conformément aux nouvelles dispositions réglementaires pour la campagne 2015 la notion de prorata a été introduite pour évaluer le taux d’admissibilité des parcelles peu productives.

Par ailleurs la procédure de contrôle administratif des aides aux ovins a été complétée et intègre depuis la campagne 2015 le contrôle du ratio de productivité.

Enfin, l’algorithme de calcul des droits à paiement a été mis en conformité.

S’agissant du FEADER, un plan d’actions est en cours et a d’ores et déjà donné lieu au cadrage du contrôle du caractère raisonnable des coûts.

En revanche, 6 des erreurs relevées par la Cour sur le développement rural concernent la question de la supervision du contrôle administratif du fait de l’absence de contrôle hiérarchique lors des contrôles administratifs sur le dossier audité.

Effectivement, comme elles l’ont expliqué à la Cour, les autorités françaises, dans un objectif d’efficience, avaient mis en place un dispositif de supervision des dossiers par sondage.

En l’espèce, les dossiers audités par la Cour n’avaient pas été sélectionnés au titre du plan de supervision.

La cour a considéré que le règlement 886/2006, annexe 1 point 2 A ii exigeait une supervision hiérarchique systématique de chaque dossier et que la pratique française était irrégulière.

Il convient de rappeler que le règlement 885/2006 a été remplacé par le règlement 907/2014.

Les dispositions précitées ont été précisées et dorénavant le travail de supervision hiérarchique peut être « fondé sur un échantillon, un système ou un programme, effectué par un membre de l’encadrement supérieur » ( cf annexe 1 point 2 A ii du reg 907/2014).

Les autorités françaises considèrent que l’évolution réglementaire valide la pratique française qui ne nécessite pas d’évolution.

Germany: Action taken: ; Action completed: ; Completion date:

See the answers in Annex II. It should be noted that any rectifications made by national authorities or any (corrective) measures already taken have not had any (positive) impact on the above figures.

Hungary: Action taken: YES; Action completed: ; Completion date: Continuous

We are monitoring the detected errors.

Ireland: Action taken: NO; Action completed: NO; Completion date:

With regard to heading 1, no errors were found in Ireland’s audit sampling. This is mainly due to the fact that Ireland’s funding programmes are primarily channelled through government departments and/or State bodies, and as such are subject to full national control and audits. With regard to heading 2, out of the eight transactions examined, zero were found to be affected by error. Therefore, no action required.

Latvia: Action taken: YES; Action completed: NO; Completion date:

The report on Audit No PF-7153 indicated that in one of the four projects checked a number of shortcomings had been ascertained relating to State aid (two of the three parts of the observation have been retained: the maximum aid intensity has been exceeded and there is no incentive effect that would justify increasing support by 10 %). When providing comments on the draft report, the Latvian authorities set out their arguments and provided supporting documentation, but the final audit report still contains the previously drafted findings. Therefore, following consultations with the authorities concerned, the ECA will be sent the managing authority’s position on the information contained in the report. Given that the European Commission is responsible for coordinating recommendations made in ECA audits, if necessary the information and views collated at national level will also be sent to the European Commission.

Lithuania: Action taken: YES; Action completed: ; Completion date:

See individual observations for answers.

Netherlands: Action taken: ; Action completed: ; Completion date:

Not applicable.

Poland: Action taken: ; Action completed: ; Completion date:

This observation does not include any specific reservations against Poland.

Portugal: Action taken: ; Action completed: ; Completion date:

Nothing relevant to report.

Romania: Action taken: YES; Action completed: NO; Completion date:

MFE (the Ministry of European Funds): For the Sectoral Operational Programme Human Resources Development, further to the audit recommendations, both the Managing and the Certifying and Paying Authorities apply corrections to the Payment Applications sent to COM for this operational programme, pursuant to the financial impact established further to the findings of the auditing entities included in the system and operation audit reports.

For the extrapolated error rates, the Certifying and Paying Authority applies flat-rate corrections for the affected categories within the Payment Applications sent to COM. Flat-rate corrections have been undertaken by the Government of Romania through the Decisions on the application of financial corrections under the Sectoral Operational Programme “Human Resources Development” (SOP HRD) 2007-2013. (e.g.: Government Decision No 652/2015).

Slovakia: Action taken: YES; Action completed: NO; Completion date:

Action was taken in response to the type of infringement. The way in which the action was taken is described below (Annex II).

Slovenia: Action taken: YES; Action completed: YES; Completion date:

Stated observation, which refers to Slovenia, was delivered and presented by ECA in the context of audit report OP SI-AT (audit code PF 7177). Since the national audit authority has already identified the problem before the audit has been carried out by the ECA, the recovery process has already started, and the error hasn't been quantitatively defined. More detailed information, concerning the aforementioned observation is stated in Annex II – Observation 1.

Spain: Action taken: ; Action completed: ; Completion date:

ERDF and COHESION

With regard to the Court’s observation 1.22 that most of the errors detected in 2015 are eligibility errors relating to reimbursable costs, we consider that the prior verification of expenditure succeeds in screening most of the ineligible expense declared, although audit tasks, which are much more detailed and exhaustive, detect non-eligible expenses that constitute irregularities. If the error rate exceeds 2 % the Programme is interrupted, the payments cease and the Programme does not resume until the necessary measures have been taken and all the irregular expenses have been withdrawn. These irregularities include any error in public procurement rules, not only the most serious. It is not true that ineligible projects, activities and beneficiaries are included, since the criteria for approving the projects are very rigorous and the assessment of the management systems very exhaustive.

As regards the Court’s observation No 1.40 that in 2015, €1.2 billion of the corrections and recoveries reported by the Commission were made ‘at source’ (applied before the expenditure was accepted), we would argue that the deductions of ineligible expenses refused in the administrative checks prior to certification of the eligible expenses are never deemed to be irregularities and are not therefore deemed to be withdrawn as irregular expenses.

Sweden: Action taken: NO; Action completed: ; Completion date:

This observation does not require Sweden to take action.

United Kingdom: Action taken: YES; Action completed: NO; Completion date: 

This table reports the number of errors detected in the audit sampling for 2014. As the ECA states, the examples provided in the annual report are for illustrative purposes and demonstrate the most typical errors found, and do not form a basis for conclusions to be drawn on the Member States, beneficiary states and/or regions concerned.

CHAPTER 2 – Budgetary and financial managemen

Paragraphs

Observations in the 2015 Court's Annual Report

Member States' replies

Paragraph 2.17 – footnote 20

The outstanding amount (‘stock’) of commitments equivalent to nearly two and half times the amount recorded in one year (the ‘flow’).

(20) For cohesion spending on operational programmes adopted under the 2007-2013 MFF automatic decommitment should be made on an N+2 basis for all Member States except Croatia, Romania and Slovakia (where an N+3 rule applies).

Romania: Action taken: YES (MFE+ROP (Regional Operational Programme)):; Action completed: NO (MFE); Completion date:

ROP: For the Regional Operational Programme 2007-2013, by the end of 2014, the implemented amounts were equivalent to or exceeded the cumulative annual allocation, also taking into consideration the top-up transferred by the European Commission.

In 2015, under the Regional Operational Programme 2007-2013, there was no risk of decommitment of foreign grants, the pre-financing granted that needed to be justified at the end of the programme implementation being deducted from the total allocated amounts.

The pre-financing granted under the Regional Operational Programme 2007-2013 will be partially closed through the final statement of expenditure.

MFE: The change in the application of the rule regarding the decommitment of funds for Romania and Slovakia was voted by the European Parliament on 20 November 2013. This change applied to commitments for 2011 and 2012, which means that Romania could spend the European funds allocated for 2011 by 31 December 2014 and those allocated for 2012 by 31 December 2015. The extension of the n+3 rule did not also result in the extension of the final deadline for the spending of the European funds allocated in the programming period 2007 – 2013, which remained unchanged, namely 31 December 2015.

As regards the amounts paid by COM as pre-financing, they will be fully cancelled from COM accounts upon closure of the operational programmes, pursuant to the terms of payment of the final balance, as provided by the European regulations applying to this programming period.

Slovakia: Action taken: ; Action completed: ; Completion date:

In our opinion, the text conveys the state of play.

COM reply to paragraph 2.18

For cohesion the final date of eligibility is 31 December 2015. Closure documents must be submitted by 31 March 2017. Regulation (EU) No 1083/2006 foresees that a share of 5 % of the total EU allocation is retained until closure of the programme.

The co-legislators decided to amend the regulation and extend the N+2 automatic de-commitment deadline for two Member States. This has reduced the pressure on these Member States to submit payment claims within a shorter reference period. Additionally, Croatia’s accession treaty allows an exception to the automatic de-commitment rule. It also provides for N + 3.

Finally, a taskforce for better implementation was set up in 2014 to help Member States optimise the use of the 2007-2013 Cohesion policy envelopes. Progress is being monitored by the Commission.

Paragraph 2.19 – footnote 23

Five Member States account for more than half of the unused commitments of ESI funds that have not led to payment.

(23) Czech Republic, Spain, Italy, Poland and Romania account for 27,9 billion euro out of 45,4 billion euro of the unused commitments of the ESI funds.

Czech Republic: Action taken: YES; Action completed: YES; Completion date: 31 December 2015 (implementation of projects yet to be completed)

The action take includes the use of a 10% flexibility limit in the context of individual priority axes. Another measure was the use of invoices on account, which helped to maximise implementation of the funds by the end of 2015. Based on discussions as part of the activities of the Commission’s Task Force on Better Implementation steps were taken to ensure that retrospective and uncompleted projects could be used. In the case of the three programmes, phased projects (large and small scale) were implemented. A further important factor in making the disbursement of EU funds more effective was strengthening communication with the beneficiaries. This, in addition the actual disbursement, has led to improvements in the quality of the projects themselves.

Poland: Action taken: ; Action completed: ; Completion date:

This observation does not include any specific reservations against Poland.

Romania: Action taken: YES- MFE+ROP; Action completed: NO- MFE; Completion date:

ROP: The projected absorption at ROP level is 93.14% of the amount allocated under the programme.

The estimated absorption, without considering the EC top-up support, is 85.53%.

The Managing Authority for the Regional Operational Programme 2007-2013 took the following measures in order to increase the absorption of foreign grants:

- identifying financial measures in order to ensure the financing of the beneficiaries’ own contribution within the project, namely loans taken out by the beneficiaries from the privatisation revenues, for the purpose of the complete fulfilment of the objectives and indicators of the projects and in order to ensure their operation;

- providing the necessary funding for payments through loans from other operational programmes and from the Fund for Temporary Unavailability set up at the Certifying and Paying Authority, which were covered subsequently from the foreign grants reimbursed by the European Commission;

- using the mechanism for the settlement of payment applications;

- covering the financial corrections from the state budget for beneficiaries whose public procurement contracts were endorsed by UCVAP (Public Procurement Verification and Coordination Unit) and ANRMAP (National Authority for Regulating and Monitoring Public Procurement).

MFE: Note: For the Cohesion Policy funds

The statement presented on 31 December 2015 regarding the absorption rate of European funds is not the final statement regarding the absorption rate for the financial period 2007–2013.

Although the eligibility period for expenditure made within operational programmes 2007-2013 ended on 31 December 2015, Romania, as any Member State having received EU grants in the period 2007-2013, may declare to the European Commission, by 31 March 2017, the expenditure made by the beneficiaries within the projects financed under these programmes. Thus, the final absorption rate may be determined only after COM has accepted the final closure package, to be sent by the Member State by the end of March 2017.

Spain: Action taken: ; Action completed: ; Completion date:

ERDF and COHESION

Firstly, the Operational Programmes relating to the 2007-2013 Financial Framework were already being concluded, since the eligibility deadline for expenditure was 31 December 2015. The cost statements were therefore quite a lot lower than the previous year. Many of the expenses implemented in 2015 were reserved for declaration in the 2014-2020 Programmes. However, the delay in approval of the Programmes and of the Management and Control Systems prevented expenditure from being certified in the period 2014-2020.

Secondly, an error rate of over 2 % in the Annual Audit Report means that payment of this Programme is interrupted and an Action Plan has to be designed to detect, remove and improve the management shortcomings that have led to this error rate. This procedure can take 6-8 months and this is what causes these significant delays in using the Funds. Specifically, in 2015 in the ERDF there were interruptions and suspensions of payments at some intermediate bodies which meant that it was not possible to declare the amounts corresponding to the expenditure implemented by these bodies. However, once the validated action plans had been implemented, the corresponding ERDF payments will be received.

ESF

With regard to Spain, there are two suspensions of payment of two intermediate bodies for significant amounts. Accordingly, until these suspensions are lifted, the amount of the payments represents a level of implementation much lower than the actual implementation level. In this connection, after the last interim payment application for all the ESF operational programmes under the 2007-2013 MFF, the percentage of expenditure declared for the ESF as of 30 June 2016 with regard to the updated amount of the programmed aid was 99.75 %.

EFF

The 2007-2013 EFF is currently in the closure process. The unused commitments were due to the economic crisis in Spain.

Figure 2.6

Absorption in % and totals of 2007-2013 MFF ESI funds at 31 December 2015.

Austria:
With regard to the ESF
Action taken: YES; Action completed: NO; Completion date: With regard to the ESF - 31 March 2017
With regard to the ESF and the final application for payment.

With regard to the ERDF
Action taken: NO; Action completed:; Completion date:
In accordance with the relevant provisions, applications for final payment should be submitted to the European Commission by 31 March 2017 at the latest. Until then, the European Commission will only reimburse 95 %. In the case of the ERDF, Austria has essentially reached the 95 % ceiling.

With regard to the EAFRD
Action taken: NO; Action completed:; Completion date:
The funds for the 2007-2013 EAFRD were fully utilised by Austria (100% absorption).

Bulgaria: Action taken: ; Action completed: ; Completion date:

The information is for information purposes only and no measures are required.

Cyprus: Action taken: YES; Action completed: YES; Completion date: 31/12/2015

As a Member State, we have been paid 95 % of the ESIF budget of the 2007-2013 MFF. The remaining 5 % will be paid to us after the closure of the programmes, i.e. after March 2017.

Czech Republic: Action taken:YES ; Action completed: YES; Completion date: 31 December 2015

See Comment 1.

Denmark: Action taken: YES; Action completed: NO ; Completion date:

As regards ERDF and ESF programmes, more than 95 % of commitments were taken up in 2016, while the remaining 5 % can be paid by the Commission only after submission of the final clearing of the programmes in March 2017. The closing date is thus March 2017.

Denmark absorbed 99 % of EAFRD funds and 91.5 % of EMFF funds.

Estonia: Action taken: YES; Action completed: NO; Completion date: 31/03/2017

The period is open.

Finland: Action taken: YES; Action completed: NO; Completion date:

The closure documents for the 2007-2013 programming period will be sent to the Commission in the course of March 2017.

France: Action taken: OUI; Action completed: NON; Completion date: Clôture des programmes 2007-2013

Germany: Action taken: ; Action completed: ; Completion date:

For information purposes only; no answer required.

Hungary: Action taken: NO; Action completed: ; Completion date:

Factual finding that does not require action.

Ireland: Action taken: NO; Action completed: NO; Completion date:

Ireland’s absorption rate is currently higher than the EU28 average and is on track to make final drawdown and enter the closure process. With regard to the scatter graph which shows total payments and commitments in billion euro, Ireland has a comparatively small ESIF commitment, so appears low on the graph. Ireland’s ESF / ERDF rate has increased 8% this round. No action is required.

Latvia: Action taken: YES; Action completed: NO; Completion date:

In terms of achieving its financial objectives, Latvia exceeds the average EU-28 level. In order to eliminate the risks associated with full use of EU fund financing, taking into account the options provided for in the Commission’s guidelines on the closure of operational programmes (C(2015)2771 of 30 April 2015), the time frame was extended for a number of activities, including large projects (more projects were extended following a decision at Government level in March 2016). The closure process is taking place during 2016, including the preparation of a final report for submission to the Commission, which is due to contain two non-functional projects and one project which is split into stages; the final declaration of expenditure is also being drawn up, as a result of which it is anticipated that Latvia will be able to receive 100 % EU fund financing. The results of completed measures will be reflected in the final declaration of expenditure, which Latvia will submit in accordance with regulatory provisions by 31 March 2017, at which point they will be deemed complete.

Lithuania: Action taken: YES; Action completed: NO; Completion date:

As regards implementation of the 2007-2013 operational programmes, more than 100 % of planned eligible expenditure in respect of operational programmes under the EU Structural Funds (European Regional Development Fund, Cohesion Fund, European Social Fund) had been declared to the European Commission on the basis of interim payment applications at the time of completion of the questionnaire. The closure documents (final implementation report for the operational programme, application for payment of the final balance and final statement of expenditure, closure declaration and final control report) are now being prepared for the operational programmes and must be submitted to the Commission by 31 March 2017.

Luxembourg: Action taken: ; Action completed: ; Completion date:

En ligne avec observation.

Netherlands: Action taken: ; Action completed: ; Completion date:

Not applicable.

Poland: Action taken: ; Action completed: ; Completion date:

This observation does not include any specific reservations against Poland.

Portugal: Action taken: ; Action completed: ; Completion date:

Nothing relevant to report.

Romania: Action taken: YES- MFE; Action completed:NO; Completion date:

Note: For the Cohesion Policy funds

The statement presented on 31 December 2015 regarding the absorption rate of European funds is not the final statement regarding the absorption rate for the financial period 2007–2013.

Although the eligibility period for expenditure made within operational programmes 2007-2013 ended on 31 December 2015, Romania, as any Member State having received EU grants in the period 2007-2013, may declare to the European Commission, by 31 March 2017, all eligible expenditure made by the beneficiaries within the projects financed under these programmes. Thus, the final absorption rate may be determined only after COM has accepted the final closure package, to be sent by the Member State by the end of March 2017.

To increase the absorption rate, the Romanian authorities took measures such as:

identifying retrospective projects, concluding related financing agreements and requesting reimbursement of eligible expenditure made under them;

project phasing: a series of major and non-major projects financed under the 2007–2013 financial framework, which were not concluded by the end of the eligibility period, could be staggered so that the expenditure for phase I has been declared, while the remaining works will be financed from the budget of 2014-2020 programmes;

Slovakia: Action taken: YES; Action completed: NO; Completion date:

In our opinion, the text/graph conveys the state of play.

Spain: Action taken: ; Action completed: ; Completion date:

EFF

The 2007-2013 EFF is currently in the closure process. The unused commitments were due to the economic crisis in Spain.

Sweden: Action taken: NO; Action completed: ; Completion date:

This observation does not require Sweden to take action.

United Kingdom: Action taken: n/a; Action completed: n/a; Completion date: n/a;

None.

Figure 2.6 – footnote 1

(1) Croatia acceded to the EU in July 2013. Absorption figures for Croatia are therefore not comparable to those of other Member States.

Figure 2.7

Unused commitments of ESI funds at 31 December 2015 as a percentage of 2015 general government expenditure.

Austria:
With regard to the ESF
Action taken: YES; Action completed: NO; Completion date: With regard to the ESF - 31 March 2017
With regard to the ESF and the final application for payment.

With regard to the ERDF
Action taken: NO; Action completed:; Completion date:
The ERDF programmes for 2014-2020 are at the early stages. The managing authorities have not yet submitted all of the Descriptions of the Management and Control Systems for designation. Designation is a pre-requisite for submitting applications for payment. In general, the detailed requirements of the European Commission (guidelines, etc.) have a major impact on the complexity of the systems.

With regard to the EAFRD
Action taken: NO; Action completed:; Completion date: 
The funds for the 2007-2013 EAFRD were fully utilised by Austria (100% absorption).

Bulgaria: Action taken: ; Action completed: ; Completion date:

The information is for information purposes only and no measures are required.

Czech Republic: Action taken: YES; Action completed: YES; Completion date: 31 December 2015

See Comment 1.

Denmark: Action taken:YES; Action completed: NO; Completion date:

Following the designation of the managing and certifying authorities for the 2014-20 ERDF and ESF programmes in December 2015, regular payment claims are now sent with a view to using the commitments, which are made available on an ongoing basis.

As regards the EAFRD, disbursement was somewhat lower in the first 2½ years of the current budget period than in the same period of the previous year. It is now expected that the 2014 tranche will be disbursed in 2016. The EMFF was rather slow off the mark because the legislation was delayed, but participation in the programme’s actions is generally high.

Finland: Action taken: NO; Action completed: NO; Completion date:-

The closure documents for the 2007-2013 programming period will be sent to the Commission in March 2017.

France: Action taken: OUI; Action completed: NON; Completion date: Clôture des programmes

Selon le tableau ci-dessus, la part des engagements FESI inutilisés est minime, inférieure à 2%. Ceci correspond très probablement aux reliquats d’opérations réalisées à un cout légèrement inférieur au montant prévisionnel.

Germany: Action taken: ; Action completed: ; Completion date:

For information purposes only; no answer required.

Hungary: Action taken: NO; Action completed: ; Completion date:

Factual finding that does not require action.

Ireland: Action taken: YES; Action completed: ; Completion date:

Ireland has a comparatively small ESIF commitment, where ESIF support as a whole makes a small portion of Ireland’s government expenditure, so outstanding commitments make up a very small proportion of government expenditure. Ireland has used most of the funds allocated for the 2007-2013 period and is on track to use all funds for the 2014-2020 period.

Latvia: Action taken: YES; Action completed: NO; Completion date:

In terms of achieving its financial objectives Latvia exceeds the average EU-28 level. In order to eliminate the risks associated with full use of EU fund financing, taking into account the options provided for in the Commission’s guidelines on the closure of operational programmes (C(2015)2771 of 30 April 2015), the time frame was extended for a number of activities, including large projects (more projects were extended following a decision at Government level in March 2016). The closure process is taking place during 2016, including the preparation of a final report for submission to the Commission, which is due to contain two non-functional projects and one project which is split into stages; the final declaration of expenditure is also being drawn up, as a result of which it is anticipated that Latvia will be able to receive 100 % EU fund financing. The results of completed measures will be reflected in the final declaration of expenditure, which Latvia will submit in accordance with regulatory provisions by 31 March 2017, at which point they will be deemed complete.

Lithuania: Action taken: YES; Action completed: NO; Completion date:

Undrawn ESI Fund commitments in respect of the 2007-2013 financing period made up a significant portion of general government expenditure at the end of 2015, as the ESI Fund resources allocated to Lithuania make up a relatively large share of total government expenditure in comparison with other EU Member States. However, at the time of completion of this questionnaire, more than 100 % of planned eligible expenditure in respect of operational programmes under the EU Structural Funds (European Regional Development Fund, Cohesion Fund, European Social Fund) had been declared to the European Commission on the basis of interim payment applications.

No Structural Fund commitments for 2014-2020 had been drawn by the end of 2015, as Lithuania had not yet finished auditing the management and control system authorities’ compliance with the criteria for their designation. Consequently, no expenditure incurred during project implementation had been declared to the European Commission. The speed of the process of designating management and control system authorities was affected by the rather complex and increasingly burdensome procedures and the ill-timed adoption of EU legislation and/or documents with an impact on the management and control system. Although the audit of the compliance of the management and control system authorities with the criteria for their designation had not yet been completed in 2015, this did not have a negative effect on the implementation of the operational programme, as projects were selected and implemented in accordance with procedures laid down in national legislation, and projects were implemented using advances from the European Commission and funds from the State Treasury. The audit of the compliance of the management and control system authorities with the criteria for their designation has now been completed, and Lithuania has already submitted a payment application to the Commission, on the basis of which it has received an interim payment.

Luxembourg: Action taken: ; Action completed: ; Completion date:

En ligne avec observation.

Netherlands: Action taken: ; Action completed: ; Completion date:

Not applicable.

Poland: Action taken: ; Action completed: ; Completion date:

This observation does not include any specific reservations against Poland.

Portugal: Action taken: ; Action completed: ; Completion date:

Nothing relevant to report.

Slovakia: Action taken: YES; Action completed: YES; Completion date: end of December 2015

Action to draw on EU resources under the 2007-2013 programming period was taken in collaboration with the Task Force set up by the Commission in 2014. The results of the action were periodically monitored at joint meetings between Slovakia and the Commission. In 2015, the last meeting was held in late December. At the same time, tasks laid down by Government Resolution 56/2014 required managing authorities exposed to risk to submit action plans in order to speed up the uptake and implementation of operational programmes on a two-monthly basis. When the eligibility of the 2007-2013 period ended, the task force’s activities came to a halt and the obligation to submit uptake action plans lapsed.

Spain: Action taken: ; Action completed: ; Completion date:

EFF

The 2007-2013 EFF is currently in the closure process. The unused commitments were due to the economic crisis in Spain.

Sweden: Action taken: NO; Action completed: ; Completion date:

This observation does not require Sweden to take action.

United Kingdom: Action taken: n/a; Action completed: n/a; Completion date: n/a;

None.

Figure 2.8

2007-2013 ESI Funds unused commitments and 2014-2020 pre-financing at the end of 2015.

Austria:

With regard to the ESF
Action taken: YES; Action completed: NO; Completion date: With regard to the ESF - 31 March 2017
With regard to the ESF and the final application for payment.

With regard to the EAFRD
Action taken: NO; Action completed:; Completion date: 
The funds for the 2007-2013 EAFRD were fully utilised by Austria (100% absorption).

Bulgaria: Action taken: ; Action completed: ; Completion date:

The information is for information purposes only and no measures are required.

Czech Republic: Action taken:YES; Action completed: YES; Completion date: 31 December 2015

See Comment 1.

Denmark: Action taken: YES; Action completed: NO; Completion date:

As regards ERDF and ESF programmes, more than 95 % of commitments were taken up in 2016, while the remaining 5 % can be paid by the Commission only after submission of the final clearing of the programmes in March 2017.

Following the designation of the managing and certifying authorities for the 2014-20 ERDF and ESF programmes in December 2015, regular payment claims are now sent with a view to using the pre-financing and commitments, which are made available on an ongoing basis.

As regards the EAFRD, disbursement was somewhat lower in the first 2½ years of the current budget period than in the same period of the previous year. It is now expected that the 2014 tranche will be disbursed in 2016. The EMFF was rather slow off the mark because the legislation was delayed, but participation in the programme’s actions is generally high.

Finland: Action taken: NO; Action completed: NO; Completion date:

The closure documents for the 2007-2013 programming period will be sent to the Commission in March 2017. The request for payment for the 2014-2020 programming period will be sent after the designation.

France: Action taken: OUI; Action completed: NON; Completion date: Clôture des programmes
Les préfinancements versés par la Commission européenne, qu’il soit initiaux ou annuels, ont permis d’effectuer les premiers versements aux bénéficiaires de projets européens soutenus. Le versement de ces préfinancements ont été indispensables au lancement de la programmation et de la bonne réalisation des premiers projets dans l’attente des désignations effectives et donc des appels de fonds.

Germany: Action taken: ; Action completed: ; Completion date:

For information purposes only; no answer required.

Hungary: Action taken: NO; Action completed: ; Completion date:

Factual finding that does not require action.

Ireland: Action taken: YES; Action completed: NO; Completion date:

Ireland has a comparatively small ESIF commitment, where ESIF support as a whole makes a small portion of Ireland’s government expenditure, so outstanding commitments make up a very small proportion of government expenditure. Ireland has used most of the funds allocated for the 2007-2013 period. In terms of drawing down our outstanding commitments, Ireland does not foresee any issues impacting ESI Fund programmes for the 2014-2020 period.

Latvia: Action taken: YES; Action completed: NO; Completion date:

In terms of achieving its financial objectives Latvia exceeds the average EU-28 level. In order to eliminate the risks associated with full use of EU fund financing, taking into account the options provided for in the Commission’s guidelines on the closure of operational programmes (C(2015)2771 of 30 April 2015), the time frame was extended for a number of activities, including large projects (more projects were extended following a decision at Government level in March 2016). The closure process is taking place during 2016, including the preparation of a final report for submission to the Commission, which is due to contain two non-functional projects and one project which is split into stages; the final declaration of expenditure is also being drawn up, as a result of which it is anticipated that Latvia will be able to receive 100 % EU fund financing. The results of completed measures will be reflected in the final declaration of expenditure, which Latvia will submit in accordance with regulatory provisions by 31 March 2017, at which point they will be deemed complete.

2) With regard to the 2014–2020 planning period, the slower rate of progress is linked to delays in complying with a number of preconditions for launching specific aid objectives (SAOs), and also in drawing up implementation conditions for SAOs under certain competent authorities for the purpose of starting the selection of project applications. The delays in drawing up implementation conditions relate to the lengthy coordination procedure for these conditions among the stakeholders, in particular social partners, and in some cases in connection with the need to coordinate specific issues with the European Commission (e.g. State aid conditions).

To speed up the flow of investments into the economy during the 2014-2020 programming period for EU funds, the decision-making process, and the coordination of documentation necessary for the introduction of specific aid objectives (SAOs), during the reference period the managing authority undertook a series of measures, including extensive use of EU fund Monitoring Committee and sub-Committee forums. In the next reference period the managing authority will carefully monitor any further deviations from the SAO schedule and will do everything it can both on a strategic level and in terms of implementation to speed up the progress of investments with regard to the aforementioned priority axes.

Lithuania: Action taken: ; Action completed: ; Completion date:

Lithuania’s outstanding commitments in respect of 2007-2013 are among the lowest of the EU Member States, because, at the time of completion of this questionnaire, more than 100 % of planned eligible expenditure in respect of operational programmes under the EU Structural Funds (European Regional Development Fund, Cohesion Fund, European Social Fund) had been declared to the European Commission on the basis of interim payment applications.

No Structural Fund commitments for 2014-2020 had been drawn by the end of 2015, as Lithuania had not yet finished auditing the management and control system authorities’ compliance with the criteria for their designation. Consequently, no expenditure incurred during project implementation had been declared to the European Commission. The speed of the process of designating management and control system authorities was affected by the rather complex and increasingly burdensome procedures and the ill-timed adoption of EU legislation and/or documents with an impact on the management and control system. Although the audit of the compliance of the management and control system authorities with the criteria for their designation had not yet been completed in 2015, this did not have a negative effect on the implementation of the operational programme, as projects were selected and implemented in accordance with procedures laid down in national legislation, and projects were implemented using advances from the European Commission and funds from the State Treasury. The audit of the compliance of the management and control system authorities with the criteria for their designation has now been completed, and Lithuania has already submitted payment applications to the Commission, on the basis of which it has received interim payments.

Luxembourg: Action taken: ; Action completed: ; Completion date:

En ligne avec observation.

Netherlands: Action taken: ; Action completed: ; Completion date:

Not applicable.

Poland: Action taken: ; Action completed: ; Completion date:

This observation does not include any specific reservations against Poland.

Portugal: Action taken: ; Action completed: ; Completion date:

Nothing relevant to report.

Romania: Action taken: YES- MFE; Action completed: NO; Completion date: 

MFE Note: For the Cohesion Policy funds

The statement presented on 31 December 2015 regarding the unused commitments of European funds is an interim statement for the financial period 2007–2013, given that, in 2016, COM made payments of over EUR 3.5 billion (under Sectoral Operational Programme Increase of Economic Competitiveness, Operational Programme on Technical Assistance, Sectoral Operational Programme Environment, Regional Operational Programme, Sectoral Operational Programme Human Resources Development, Sectoral Operational Programme Transport, Sectoral Operational Programme for Administrative Capacity Development).

Moreover, Romania, as any Member State having received EU grants in the period 2007-2013, may declare to the European Commission, by 31 March 2017, expenditure made by beneficiaries within the projects financed under these programmes, while COM may reimburse amounts after the final balance has been established.

Slovakia: Action taken: YES; Action completed: YES; Completion date: end of December 2015

Action to draw on EU resources under the 2007-2013 programming period was taken in collaboration with the Task Force set up by the Commission in 2014. The results of the action were periodically monitored at joint meetings between Slovakia and the Commission. In 2015, the last meeting was held in late December. At the same time, tasks laid down by Government Resolution 56/2014 required managing authorities exposed to risk to submit action plans in order to speed up the uptake and implementation of operational programmes on a two-monthly basis. When the eligibility of the 2007-2013 period ended, the task force’s activities came to a halt and the obligation to submit uptake action plans lapsed.

Spain: Action taken: YES; Action completed: ; Completion date:

ESF

With regard to the ESF, there were no payment claims in the period 2014-2020 due to the long process of designating the managing and certifying authorities and intermediate bodies, as was the case in most Member States. For this reason there was no consumption through payment claims for 2014-2020 pre-financing received from the European Commission. However, the pre-financing received served to make progress with the actions on the ground in all the operational programmes, although it has not yet been possible to include them in payment claims.

EFF

The 2007-2013 EFF is currently in the closure process. The unused commitments were due to the economic crisis in Spain. With regard to the initial 2014-2015 pre-financing for the EMFF, it was transferred to the Commission on 25 November 2015, once the Operational Programme had been approved by Commission Decision of 13 November 2015.

Sweden: Action taken: NO; Action completed: ; Completion date:

This observation does not require Sweden to take action.

United Kingdom: Action taken: n/a; Action completed: n/a; Completion date: n/a;

None.

Paragraph 2.31

According to the latest available report on financial instruments under shared management, describing the situation as at the end of 2014 (36), 6,8 billion euro of unutilised amounts remained in these instruments. Of this 80 % was concentrated in five Member States (37). Italy (3 billion euro) constituted 45 % of the total (38). During our examination of the balance sheet we asked the Commission to provide additional analysis on the use of these instruments in Italy up to 31 December 2015. This shows that 1,7 billion euro remained unutilised at 31 December 2015 for Italy.

Paragraph 2.31 – footnote 38

(38) Spain 0,9 billion euro (13 %), Greece 0,9 billion euro (13 %), United Kingdom 0,5 billion euro (7 %), Germany 0,3 billion euro (4 %) and other Member States 1,2 billion euro (18 %) made up the remainder.

Germany: Action taken: ; Action completed: ; Completion date:

For information purposes only; no answer required.

Greece: Action taken: YES; Action completed: NO; Completion date: 31/12/2016

Ministry of the Economy and Development: In addition to the fact that a Commission decision granted an extension until 31 December 2016 for completion, specifically for the 2007-2013 period financial instruments, and that this was for all EU Member States, not just Greece, in order to prevent the loss of resources which had been made available in financial engineering measures and programmes, and taking into account their stage of completion, as well as the forecast for the resources which they will ultimately absorb within the framework of the 2007-2013 NSRF, all administrative procedures were activated which were designed to achieve the timely release of resources which had not been expected to be absorbed. The departments continue to monitor the progress of the financial instruments on a monthly basis, until their completion, and they are collaborating closely and constantly with the managers of the funds, so that there is a possibility of immediate corrective intervention in the event that there is a possibility of deviation from the objectives. Following the release of these resources the completion percentage rose to approximately 84 %, at the end of August 2016.

Spain: Action taken: ; Action completed: ; Completion date:

ERDF

In the case of Spain, the ICO (Instituto de Crédito Oficial) manages a Financial Instrument called ICO Innovación-Fondo Tecnológico, with a total of €314 million and an amount of €1.4 million granted to final beneficiaries at 31 December 2015, i.e. 0.45 %. This low implementation in this Instrument weighed down the overall implementation of all the Financial Instruments in all the Operational Programmes, giving rise to a low percentage (37 %).

It must be borne in mind that if this Instrument is left out of consideration, the average implementation of the recent Financial Instruments improves significantly (47.93 % compared with an average of 75 % in the EU as a whole).

ESF

As regards the ESF, Spain plans to use financial instruments in two operational programmes in the 2014-2020 MFF. In 2015 and 2016 managers and technical staff from the managing and certifying authorities participated in various events organised by the European Commission to improve their training in these instruments.

United Kingdom: Action taken: n/a; Action completed: n/a; Completion date:; Any other comment: None

COM reply to paragraph 2.31

The Commission requested additional information from Italy by 31 December 2015. This information shows that 45 % for Italy remained unutilised as at 31 December 2015. The data obtained, checked against the bookings made in the 2015 Commission accounts, have been transmitted to the Court. Following the analysis, it appeared that there is no need to change the current methodology. However, implementation will be reassessed for the 2016 exercise.

CHAPTER 3 – Getting results from the EU budget

Paragraphs

Observations in the 2015 Court's Annual Report

Member States' replies

Paragraph 3.23

The Horizon 2020 legislation recognises the importance of building ‘synergies and complementarities between national and European research and innovation programmes’(20). Figure 3.3 below includes key messages from our cooperation (21) with the Supreme Audit Institutions (SAIs) of Bulgaria and Portugal: while there are some areas in which national and EU research programmes are complementary, our partners also found some problems at the national level.

Bulgaria:  Action taken: YES; Action completed: NO MESs;Completion date:

Portugal: Action taken: ; Action completed: ; Completion date:

Nothing relevant to report.

Figure 3.3

Examples of complementarities with national programmes including some identified weaknesses at national level.

Bulgaria: Action taken: YES; Action completed: NO; Completion date:

MESc: In order to increase the level and market orientation of research activities carried out by leading scientific organisations in Bulgaria and to overcome the deficiency of competitive and internationally recognised research complexes qualifying for modern infrastructure and high level of scientific studies in areas of interest to the Bulgarian economy, Operational Programme ‘Science and Education for Smart Growth’ 2014-2020 (SESG) launched two operations for construction and/or modernisation and development of Centres of Excellence (CoE) and Centres of Competence (CoC). These centres will create the best possible conditions for attracting highly qualified researchers to conduct top level research at European scale in the priority areas of the Innovation Strategy for Smart Specialisation (ISIS) and will significantly improve the potential for applied research, experimental development and innovations.

Proposed interventions will support construction, upgrading and operation of research centres at the highest level, where research, technological development and innovation are fully integrated in accordance with the best international standards and practices. The centres respond to the need to develop modern research facilities, which are orientated at areas with the greatest potential to increase the competitiveness of the Bulgarian economy. The development of the research and innovation capacity will create opportunities for new partnerships with the business and for developing new enterprises. Programmes for the development of Centres will be evaluated with a special focus on the proposed plans for original research at high level in the priority areas of ISIS.

Complementarity with Operational Programme ‘Innovation and Entrepreneurship’ (OP IE):

Support under OP SESG is aimed at the development of the infrastructure and human resources required to conduct applied research in the thematic areas of the Innovation Strategy for Smart Specialisation (ISIS). Research leading to the creation and dissemination of publicly available knowledge in the areas of ISIS will be carried out in the newly developed and modernised research infrastructure. This in turn will serve as an incentive and scientific basis for innovation activities of businesses. OP IE in turn will intervene to support the conducting of applied research and innovation aimed at developing or improvement of specific products and services in enterprises and their commercialisation using the developed capacity and research results.

Complementarity with Horizon 2020

OP SESG will provide support for building the research capacity of research organisations and higher education institutions through modernisation of their equipment and creating attractive conditions for researchers. A wider participation in Horizon 2020 can be expected as a result. Modernising the research environment will result in attracting world-class scientists who can attract additional grants from Horizon 2020.

The measures under OP SESG will support the participation of Bulgarian researchers in Horizon 2020, including in JPIs, ERA-NETs, the activities under the Widening Programme.

At the level of programming for OP SESG, demarcation should be done in terms of the development of partner facilities and research centres, etc., as such facilities will be financed under the Operational Programme only at national level.

Another opportunity for promoting complementarity between funds is the use of complementary or upgrading funding for projects that have already received funding under Horizon 2020.

Portugal: Action taken: ; Action completed: ; Completion date:

Nothing relevant to report.

COM reply to figure 3.3

The Commission supports Bulgaria actively both via the ‘Stairway to Excellence’ pilot (see above) and the new ‘lagging regions’ initiative (1) in order to improve its innovation eco-system and participation in Horizon 2020 via the implementation and evolution of the Bulgarian smart specialisation strategy. The European Commission presented in October 2015 key policy recommendations to help modernise the research and innovation sectors in Bulgaria. This was the first time that an EU Member State made voluntary use of the Horizon 2020 Policy Support Facility (PSF), a new instrument that gives governments practical support to identify, implement and evaluate those reforms needed to enhance the quality of their public research and innovation structures.

Bulgaria: Action taken: YES; Action completed: NO; Completion date:

MESc: In order to increase the level and market orientation of research activities carried out by leading scientific organisations in Bulgaria and to overcome the deficiency of competitive and internationally recognised research complexes qualifying for modern infrastructure and high level of scientific studies in areas of interest to the Bulgarian economy, Operational Programme ‘Science and Education for Smart Growth’ 2014—2020 (SESG) launched two operations for construction and/or modernisation and development of Centres of Excellence (CoE) and Centres of Competence (CoC). These centres will create the best possible conditions for attracting highly qualified researchers to conduct top level research at European scale in the priority areas of the Innovation Strategy for Smart Specialisation (ISIS) and will significantly improve the potential for applied research, experimental development and innovations.

Proposed interventions will support construction, upgrading and operation of research centres at the highest level, where research, technological development and innovation are fully integrated in accordance with the best international standards and practices. The centres respond to the need to develop modern research facilities, which are orientated at areas with the greatest potential to increase the competitiveness of the Bulgarian economy. The development of the research and innovation capacity will create opportunities for new partnerships with the business and for developing new enterprises. Programmes for the development of Centres will be evaluated with a special focus on the proposed plans for original research at high level in the priority areas of ISIS.

Complementarity with Operational Programme ‘Innovation and Entrepreneurship’ (OP IE):

Support under OP SESG is aimed at the development of the infrastructure and human resources required to conduct applied research in the thematic areas of the Innovation Strategy for Smart Specialisation (ISIS). Research leading to the creation and dissemination of publicly available knowledge in the areas of ISIS will be carried out in the newly developed and modernised research infrastructure. This in turn will serve as an incentive and scientific basis for innovation activities of businesses. OP IE in turn will intervene to support the conducting of applied research and innovation aimed at developing or improvement of specific products and services in enterprises and their commercialisation using the developed capacity and research results.

Complementarity with Horizon 2020

OP SESG will provide support for building the research capacity of research organisations and higher education institutions through modernisation of their equipment and creating attractive conditions for researchers. A wider participation in Horizon 2020 can be expected as a result. Modernising the research environment will result in attracting world-class scientists who can attract additional grants from Horizon 2020.

The measures under OP SESG will support the participation of Bulgarian researchers in Horizon 2020, including in JPIs, ERA-NETs, the activities under the Widening Programme.

At the level of programming for OP SESG, demarcation should be done in terms of the development of partner facilities and research centres, etc., as such facilities will be financed under the Operational Programme only at national level.

Another opportunity for promoting complementarity between funds is the use of complementary or upgrading funding for projects that have already received funding under Horizon 2020.

Paragraph 3.69

In 2015, we published three special reports in this area. Our report on financial assistance to countries in difficulties was a comprehensive analysis of the Commission’s management of the financial assistance provided to five Member States: Hungary, Latvia, Romania, Ireland and Portugal (56). Our conclusions were wide-ranging, drawing attention to the fact that, before the crisis, some warning signs went unnoticed by the Commission, with the result that it found itself unprepared when requests for financial assistance started to arrive. The Commission’s performance in then mobilising resources to deal with the crisis was mixed, although the Commission was generally successful in issuing debt on behalf of the EU to meet financing needs. The impact of the Commission’s action was that the Member States mostly met their deficit targets and generally continued with the reforms that had been sparked by the programme conditions. We made nine recommendations, covering all aspects of this issue.

Hungary:  Action taken: NO; Action completed: ; Completion date:

In the document referred to (special report No 18/2015: “Financial assistance provided to countries in difficulties” (http://eca.europa.eu)) the European Court of Auditors examined the success and soundness of the assistance provided by the European Commission for crisis management and drew up recommendations for the Commission. The actions regarding the measures thus had to be implemented not by the five Member States involved , but by the Commission.

Hungary did not draw down the entire BoP (Balance of Payments assistance) amount since market financing could be provided before the end of the programming period. In several areas, the Government formed in 2010 did away with the economic policy programme behind the BoP. However, within the framework of the changed economic policy target system and its instruments, the new Government built upon its structural reforms (Széll Kálmán Plan) to successfully decrease the external vulnerability of Hungary’s economy, reversed the trend of increasing debt, and from 2012 achieved a permanent deficit rate of less than 3 % of GDP.

Ireland: Action taken: YES; Action completed: ; Completion date:

An additional €3.6 million was received for structural funds for Ireland for the 2017-2020 period.  Ireland will continue to work with the Commission in order to improve communications.

Latvia: Action taken:YES; Action completed: YES; Completion date: End of 2012

The global financial and economic crisis also had a negative impact on the economic and budgetary situation in Latvia, resulting in a significant decrease in budgetary revenue, and reserves accumulated over previous years were not sufficient to cover expenditure. The financial and economic crisis proved that Latvia’s pre-crisis budgetary policy – living beyond one’s means – was not sustainable. During the period of rapid economic growth, there was a significant increase in tax revenue in the state budget, but this growth was closely linked to the growth in economic activity, and tax revenue was growing beyond the normal tax elasticities. The responsible course of action therefore would have been to keep this surplus revenue as a reserve for harder times, rather than spend it on the budget. However, this was not done.

As a result, Latvia had to ask for assistance from international bodies and substantially reform the budgetary policy employed hitherto. Given the European Commission’s limited experience in resolving these kinds of crises, certain methods and measures were perhaps not always best suited to Latvia’s specific situation. However, it is important to note that, although the impact of the financial crisis affected the economies of the European Union’s Member States in different ways, depending on the economic imbalances that existed in the pre-crisis period, a certain set of fiscal policy corrective measures and structural reforms could be applied horizontally to Member States affected by the crisis. The financial and economic crisis had a profound impact on the Latvian economy, so effective action had to be taken, which wasn’t perhaps very popular, but which was absolutely essential for overcoming the crisis and its effects. The extent of structural reforms applied during the period of the assistance programme was necessary for the future growth of the economy and for ensuring sustainable public finances. Therefore, in conclusion, despite the possible shortcomings of the assistance programme, its objective was achieved – economic growth was renewed and the budgetary policy model became more responsible and sustainable.

Portugal: Action taken: ; Action completed: ; Completion date:

Nothing relevant to report.

Paragraph 3.70

Greece was one of the Member States most associated with the financial crisis. We therefore published a report focusing specifically on the support provided by the Commission to help Greece implement financial reform (57). We concluded that the body set up by the Commission to deliver its support, the ‘Task Force for Greece’, had achieved its mandate overall in delivering assistance in line with the requirements of the Greek economic adjustment programmes. However, there were shortcomings and mixed results in terms of its influence on the progress of reforms.

Greece:  Action taken: YES; Action completed: NO; Completion date: 31/12/2016

Ministry of the Economy and Development: There was a proposal from the TFGR for a guarantees scheme for shared risk loans, there were consultations with the relevant sections of the Commission and the department, the scheme was discussed within the technical working group but was not put into practice, and it is therefore not possible to evaluate its usefulness when implemented.

Combination programmes were drafted but there were difficulties in putting them into practice, due, among other things, to:

delay in the issue of clear instructions by DG REGIO

difficulty in implementing the rules of DG COMP in the real economy and on the real market (e.g. directives for addressing the pre-condition of at least 25 % private participation in the implementation of the regional support rules)

In order to improve procedures, a joint information platform was created for XE users and the use of the State aid information system was made compulsory for the 2014-2020 Χ.Ε. too.

restrictions by the ERDF in relation to, for example:

the prohibition on the geographical redeployment of resources,

refinancing of existing loans – Documentation which was made public

Paragraph 3.70 – footnote 57

(57) Special report No 19/2015, ‘More attention to results needed to improve the delivery of technical assistance to Greece’ (http://eca.europa.eu).

Greece:  Action taken: YES; Action completed: NO; Completion date: 31/12/2016

Ministry of the Economy and Development: There was a proposal from the TFGR for a guarantees scheme for shared risk loans, there were consultations with the relevant sections of the Commission and the department, the scheme was discussed within the technical working group but was not put into practice, and it is therefore not possible to evaluate its usefulness when implemented.

Combination programmes were drafted but there were difficulties in putting them into practice, due, among other things, to:

delay in the issue of clear instructions by DG REGIO

difficulty in implementing the rules of DG COMP in the real economy and on the real market (e.g. directives for addressing the pre-condition of at least 25 % private participation in the implementation of the regional support rules)

In order to improve procedures, a joint information platform was created for XE users and the use of the State aid information system was made compulsory for the 2014-2020 Χ.Ε. too.

restrictions by the ERDF in relation to, for example:

the prohibition on the geographical redeployment of resources,

refinancing of existing loans – Documentation which was made public

COM reply to paragraph 3.70

The Commission acknowledges that the impact of technical assistance on the overall progress of reforms was mixed. This needs to be seen in the broader political context and taking into account the division of competences between Member States and the European Union Institutions. The implementation of the (structural) reforms was and remains the responsibility of the Greek authorities, whereas the ‘Task Force for Greece’ was available to advise/assist the Greek authorities where requested.

Greece:  Action taken: YES; Action completed: NO; Completion date: 31/12/2016

Ministry of the Economy and Development: There was a proposal from the TFGR for a guarantees scheme for shared risk loans, there were consultations with the relevant sections of the Commission and the department, the scheme was discussed within the technical working group but was not put into practice, and it is therefore not possible to evaluate its usefulness when implemented.

Combination programmes were drafted but there were difficulties in putting them into practice, due, among other things, to:

delay in the issue of clear instructions by DG REGIO

difficulty in implementing the rules of DG COMP in the real economy and on the real market (e.g. directives for addressing the pre-condition of at least 25 % private participation in the implementation of the regional support rules)

In order to improve procedures, a joint information platform was created for XE users and the use of the State aid information system was made compulsory for the 2014-2020 Χ.Ε. too.

restrictions by the ERDF in relation to, for example:

the prohibition on the geographical redeployment of resources,

refinancing of existing loans – Documentation which was made public

Paragraph 3.73 – footnote 61

We returned to this issue in our report later in 2015 on the Commission’s support for youth action teams (60), an initiative which brought national and Commission experts together in the eight Member States with the highest levels of youth unemployment (61).

(61) Ireland, Greece, Spain, Italy, Latvia, Lithuania, Portugal and Slovakia.

Ireland: Action taken: NO; Action completed: NO; Completion date:

In relation to youth unemployment, allocations have been provided by the Commission, however, drawdown is yet to take place.

Latvia: Action taken: YES; Action completed: NO; Completion date 31 December 2018:

2013 saw the drafting of documents necessary for implementing the Youth Employment Initiative, the granting of EU funds, meetings with social partners and other activities. An action group was set up with the objective of pushing the problem of youth unemployment to a higher political level, and channelling additional national and EU funding towards resolving this problem. This objective was met and Latvia began implementing the Youth Guarantee in early 2014. The was followed by the approval of the 2014–2020 Operational Programme ‘Growth and Employment’.

Lithuania: Action taken: YES; Action completed: NO; Completion date:

With a view to giving more aid to young people living in regions in which youth unemployment was higher than 25 % in 2012, a European Union financial measure, the ‘Youth Employment Initiative’, was approved and allocated a budget of EUR 6.4 billion for 2014-2020 (for all eligible Member States). In the 2014-2020 financing period, projects also started to be implemented in Lithuania under the Youth Employment Initiative. The projects have not yet been completed.

Portugal: Action taken: ; Action completed: ; Completion date:

Nothing relevant to report.

Slovakia: Action taken: YES; Action completed: NO; Completion date:

Ministry of Labour, Social Affairs and Family: Action is taken on an ongoing basis. Slovakia periodically provided the Commission, as required, with sufficient qualitative and quantitative information on how existing ESF and national measures for unemployed young people work in practice, with subsequent positive implications for their employability and their improved status on the labour market. Statistical Office figures for 2015 show that the youth unemployment rate declined much more than the reduction in the overall unemployment rate (3.3 percentage points versus 1.7 percentage points). Youth unemployment was 11.8 % lower in 2015 than in 2014. The unemployment rate in the 15-24 age group in 2015 (26.4 %) was 7.0 percentage points lower than in 2011 (33.4 %).

The assessment of operational programme changes proposed by Slovakia focused, besides budgetary aspects, on the ways in which the best use could be made of the resources. These suggestions of material aspects to boost employment were included in the proposals submitted for operational programme changes in Slovakia (specifically, the project solutions proposed under the Operational Programme Employment and Social Inclusion).

Spain: Action taken: ; Action completed: ; Completion date:

ESF

The recommendations in the Court of Auditors’ special report No 17/2015 on Youth Action Teams are already being addressed in the new 20142020 regulatory framework: Under Article 30 of Regulation (EU) No 1303/2013, amendments of operational programmes must be duly justified and must in particular set out the impact of the changes on achieving the objectives of Europe 2020; also, under Article 50 of the same Regulation, the annual reports must set out key information on implementation of the operational programmes and their priorities by reference to the financial data and common and specific indicators. Under Article 125, this information must also be provided to the monitoring committees.

Paragraph 3.74 – footnote 62

The environment and climate change, together with its implications for EU policies in a number of other areas, such as agriculture and energy, is one of the global challenges we are targeting in our 2013-2017 strategy. So our report on EUfunded waste water treatment plants in the Danube river basin examined whether EU support was helping Member States achieve its waste water policy objectives (62) — a key element of a successful environmental policy. We concluded that while EU financial support had played an important role in bringing forward water collection and treatment, this had not been sufficient to meet the relevant deadlines.

(62) Special report No 2/2015, ‘EU-funding of urban waste water treatment plants in the Danube river basin: further efforts needed in helping Member States to achieve EU waste water policy objectives’ (http://eca.europa.eu). The Member States covered by this audit were the Czech Republic, Hungary, Romania and Slovakia.

Czech Republic:  Action taken: YES; Action completed: NO; Completion date:

The main measure taken in the field of waste water and the cleaning thereof is the implementation and subsequent operation of projects supported by the Operational Programme Environment 2007-2013 programming period in Aid Areas 1.1 and 1.2 and the implementation and subsequent operation of projects supported by the Operational Programme Environment 2014-2020 programming period (specific target 1.1). Waste water collection and treatment have been prioritised under the two operational programmes, resulting in higher financial allocation.

Hungary: Action taken: NO; Action completed: ; Completion date:

Factual finding that does not require action.

Romania: Action taken: ; Action completed: ; Completion date:

MM (Ministry of Environment): We agree with the conclusion of this observation. Romania has intensified its efforts for the development and implementation of projects concerning the urban waste water collection and treatment so that it may comply with the terms undertaken within the European integration process.

Slovakia: Action taken:YES; Action completed: NO; Completion date:

Ministry of the Environment: The process of implementing Council Directive 91/271/EEC is still under way in Slovakia. Slovakia has concentrated maximum attention and financial resources into the building of public sewers and enhancing the efficiency of wastewater treatment plants in accordance with commitments enshrined in the Treaty of Accession of the Slovak Republic to the EU. Slovakia creates conditions for the building of the structures necessary for urban wastewater collection and treatment in accordance with the requirements of Council Directive 91/271/EEC. The Operational Programme Environmental Quality 2014-2020, too, includes continuing support for those agglomerations with a population equivalent of more than 2 000 under the National Programme of the Slovak Republic for the Implementation of Council Directive 91/271/EEC concerning urban waste water treatment that have yet to comply with that Directive’s requirements – EUR 400 million has been allocated from the EU and the central government budget (public resources). Other agglomerations with a population equivalent of below 2 000 will be covered by 2014-2020 operational programmes – the Integrated Regional Operational Programme and the Rural Development Programme (EU funds + the central government budget + the own resources of the applicant, i.e. the municipality or water company) – in order to improve the water quality in the Danube river basin.

Paragraph 3.75

A later report in 2015 then examined a different aspect of water quality in the Danube basin: progress by the same four Member States in meeting the requirements of the water framework directive (63), whose main objective from 2000 was to achieve good water quality by 2015 (with some exceptions possible). We concluded that the implementation of measures co-funded by the EU had led to little improvement in water quality. Indeed, while the introduction of river basin management plans as a tool for integrated water management had been a strength of the directive, in practice the Member States’ plans suffered from shortcomings in the identification of pollution pressures and in the definition of remedial measures.

Czech Republic: Action taken: YES; Action completed: NO; Completion date:

The main measure taken with a view to achieving good quality of water was the implementation and subsequent operation of projects supported by the Operational Programme Environment 2007-2013 programming period in Aid Areas 1.1 and 1.2 and the implementation and subsequent operation of projects supported by the Operational Programme Environment 2014-2020 programming period (specific target 1.1). Projects completed so far as part of the Operational Programme Environment 2007 - 2013 in Aid Areas 1.1 and 1.2 led to an improvement in the status of surface water and groundwater. This has been achieved by reducing the use of general and specific sources of pollution and eutrophication of surface water. This also led to ensuring problem-free supply of high-quality drinking water to the public.

The measures taken to improve the state of surface water and groundwater (improvement of the sewage system and wastewater treatment) are also presented in the approved river basin management plans for the period 2016 to 2021. These measures directly linked to improving water will be promoted as a matter of priority at the approval stage.

Hungary: Action taken: NO; Action completed: ; Completion date:

The ECA did not define any specific measures for the Member State. Accordingly, no actions were taken in response to the report.

Romania: Action taken: ; Action completed: ; Completion date:

We do not agree with the conclusion of this observation. The Management Plan identifies all pollution pressures and defines remedial measures. We are experiencing difficulties with the implementation of these measures.

Slovakia: Action taken: YES; Action completed: NO; Completion date:

Ministry of the Environment: Slovakia is currently implementing Council Directive 91/271/EEC. Slovakia has concentrated maximum attention and financial resources into the building of public sewers and enhancing the efficiency of wastewater treatment plants in accordance with commitments enshrined in the Treaty of Accession of the Slovak Republic to the EU. While Slovakia creates conditions for the building of the necessary structures, progress in the implementation of the Directive is mainly in the hands of infrastructure owners. 

As at 15 September 2015 (in the period leading up to the approval of the Danube and Vistula river basin management plans), projects financed by the Operational Programme Environment and concerning 164 agglomerations with a population equivalent of more than 2 000 had been completed or were in progress. There is a realistic prospect that, upon completion, they will make a major contribution to environmental protection and compliance with Slovakia’s commitments. The effects of this process are already being felt in the gradual rise in the numbers of inhabitants living in housing connected to public sewers and, in particular, in improvements in the parameters of the treated wastewater that is discharged and in reductions in the amount of pollution discharged into the aquatic environment.

In 2014, improvements were observed in the collection of wastewater via the sewage system In accordance with Article 3 of the Directive, all of the pollution generated in five agglomeration was collected by the sewage system. Compared to 2012, there was an increase both in the number of inhabitants connected to the sewage system and in the length (km) of the sewage system built. There were 63 agglomerations where pollution was not collected via the sewage system in 2012, a figure that had been reduced by seven in 2014. The quantity of pollution collected by individual appropriate systems and pollution that is neither collected nor treated is waning.

There have also been improvements in urban wastewater treatment. There were 13 more urban wastewater treatment plants in 2014 than in 2012. A rise (by 15) was also reported in the number of wastewater treatment plants where the quality of the urban wastewater that had been treated satisfied the Directive’s requirements for secondary treatment. In keeping with Article 4 of the Directive, 253 wastewater treatment plants satisfied technological and monitoring requirements. This was 10 more than in 2012. In 2014, evaluations were run on 83 plants treating wastewater from agglomerations with a population equivalent of more than 10 000. Of these, 53 satisfied technological and monitoring requirements. Compared to 2012, there were improvements at 10 wastewater treatment plants.

Wastewater collection and treatment activities are also priorities under the Danube and Vistula River Basin Management Plans (the 2016-2021 Slovak Water Plan). Measures under action plans to eliminate pollution caused by polluted or inadequately treated wastewater were proposed on the strength of an analysis of compliance with the requirements of Council Directive 91/271/EEC concerning urban waste water treatment (an assessment of compliance with the requirements of Articles 3, 4 and 5 of the Directive).

The Danube River Basin Management Plan requires measures for collecting systems and individual appropriate systems (to bring the collection of urban wastewater into conformity with Article 3 of Council Directive 91/271/EEC) in 123 agglomerations. Measures related to urban wastewater treatment (to achieve compliance with Articles 4 and 5 of the Directive) are required in 63 agglomerations (according to the figures for 2012).

The Vistula River Basin Management Plan requires measures in two agglomerations (to bring the collection of urban water into conformity with Article 3 of Council Directive 91/271/EEC). Measures related to urban wastewater treatment (to achieve compliance with Articles 4 and 5 of the Directive) are required in three agglomerations (according to the figures for 2012).

The implementation of measures under the Public Sewer Development Plan 2016-2021 (no specific measures have been stipulated) was proposed in the form of supplementary measures in the Danube and Vistula River Basin Management Plans.

There are agglomerations with a population equivalent of below 2 000 in Slovak protected areas and zones. If groundwater and surface water is to be protected from polluted or inadequately treated wastewater, measures also need to be taken to remove or eliminate pollution from point sources in those agglomerations where a body of water is in poor condition or where a body of water remains in good condition but a persistent upward trend in pollution has been detected. Other activities in agglomerations with a population equivalent of below 2 000 will be geared towards supporting the construction of wastewater treatment plants in those cases where a sewage system is already up and running (and covers at least 80 % of the entire agglomeration).

The Danube and Vistula River Basin Management Plans (the 2016-2021 Slovak Water Plan) include an outlook for the quantity of pollution discharged by agglomerations, using 2021 as a baseline.

Outlook as at 2021

The outlook as at 2021 has been drawn up with the assumption of compliance with the conditions laid down by the Treaty of Accession of the Slovak Republic to the EU regarding the implementation of Council Directive 91/271/EEC concerning urban waste water treatment. According to the Treaty, the requirements of Council Directive 91/271/EEC should be fulfilled by 31 December 2015, which is the (initial) deadline for the attainment of objectives under the Water Framework Directive, by 2021, and at the latest by 2027.

The following approach was taken to estimate the impacts of compliance with the requirements of Council Directive 91/271/EEC on the quantity of pollution discharged, measured by the BOD5 and CODCr indicators:

the quantity of pollution that is to be collected and subsequently eliminated at a wastewater treatment plant depends on the size of the agglomeration – the baseline was taken to be the sizes of agglomerations (expressed as the population equivalent) for 2010, as indicated in the National Programme for the Implementation of Council Directive 91/271/EEC, as amended by Commission Directive 98/15/EC and Regulation 1882/2003/EC of the European Parliament and of the Council – Update as at 31 December 2010;

The pollution generated, expressed as follows: BOD5 = 60 g/PE/day, CODCr = 120 g/PE/day, Ntotal = 11 g/PE/day, Ptotal = 1.5 g/PE/day. The specific generation as regards Ptotal takes account of the Regulation of the European Parliament and of the Council Amending Regulation (EC) No 648/2004 in relation to use of phosphates and other phosphorus compounds in household detergents; restrictions on the content of phosphates and other phosphorus compounds in consumer detergents will take effect on 30 June 2013.

Sewage disposal rate – 100 % of the agglomeration;

The efficiency of pollution elimination at urban wastewater treatment plants for the individual quality indicators, as set out in the following table

Table: Efficiency of the elimination of pollution from the wastewater treatment plants of agglomerations with a population equivalent of more than 2 000

The results of the calculation of the outlook as at 2021, covering the projected scenario for the individual sub-basins, are presented in the table below, which contains a comparison of the outlook as at 2021 versus 2011, as well as the baseline situation from 2005.

Table: Comparison of the outlook for the quantity of pollution discharged by agglomerations with the baseline situation

Source of data for 2005, 2011: Summary water records

Note: pollution discharged in 2005 and 2011 includes pollution from industrial undertakings, if connected to public sewers.

A comparison of the outlook as at 2021 with the previous period indicates that, on average for Slovakia as a whole, there has been an increase in the pollution entering surface water expressed by the pollution indicators examined.

The outlook figures should be viewed as the maximum permissible or the maximum possible pollution discharged upon compliance with the conditions laid down in the Treaty of Accession of the Slovak Republic to the EU, which incorporates steps to expand wastewater collection and treatment, including the introduction of technology to magnify reductions in nitrogen and phosphorus. However, the actual levels of pollution discharged, broken down by the various parameters and river basins, will always be below these indicative values because minimum limit requirements for reductions in the individual pollution components are applied in the calculations.

Estimate of costs

The costs of sewage systems and wastewater treatment plants in agglomerations with a population equivalent of more than 2000 up to 2021, taken for Slovakia as a whole, are estimated at EUR 748 million, of which EUR 635 million will be channelled into collecting systems and EUR 113 million into wastewater treatment plants.

Projected sources of financing: EU funds (Operational Programme Environmental Quality, Integrated Regional Operational Programme and the Rural Development Programme for 2014-2020) + the central government budget + own resources (applicant – the municipality or water company).

Measures to eliminate pollution from agriculture

Other measures to achieve good water conditions, as proposed in the Danube and Vistula River Basin Management Plans, are aimed at agriculture.

From 1 January 2016, an amendment to the Fertilisers Act took effect. This amendment includes selected farming principles currently applicable to vulnerable areas and requirements for the storage and application of liquid farm fertilisers outside of vulnerable areas (as pursued by the Commission in the field of water protection). Likewise, farming conditions in defined vulnerable areas are incorporated into the above amendment to the Fertilisers Act.

Cross-compliance rules will also contribute to the attainment of good water conditions. They will be applied in relation to direct payments and to payments for the Rural Development Programme 2014-2020. Cross-compliance rules are set out in Annex 2 to Government Regulation No 342/2014.

The new common agricultural policy 2014-2021 proposes, in its first pillar, further greening accounting for 30 % of the national envelope of direct payments. Greening is an environmental payment to promote sustainable production, where 30 % of the budgetary envelope is earmarked for binding measures that will help to address climate and environmental issues. Greening does not extend much beyond the framework of the current structure in place for agricultural production in Slovakia.

Most agricultural entities in Slovakia already meet conditions to ensure the green cover of the soil. In this respect, Greening is viewed in Slovakia as a legitimate public requirement in the performance of agriculture’s role in the handling of environmental issues:

crop diversification – intended to eliminate the cultivation of monocultures and the degradation of the soil and biodiversity;

permanent grassland – intended to protect and maintain permanent grassland, to increase the effectiveness of erosion control, to retain water in the countryside and the cycle thereof, etc.;

voluntary fallowing covering 7 % of arable land – intended to eliminate erosion and to retain water (grassy protective strips, terraces), etc.

These measures must be applied to all of the land (not only in organic farming systems), without exception; land used in this way is also widespread in the Slovak agriculture. The scope of the measures needs to be identified, declared and cultivated.

Measures to reduce the pollution of groundwater with pesticides are derived from national legislation (Act No 405/2011 on phytosanitary care and amending Act of the National Council of the Slovak Republic No 145/1995 on administration fees, as amended, and the related implementing regulations). The use of plant protection products is also enshrined in cross-compliance (Government Regulation No 342/2014 laying down rules for the granting of aid in agriculture in connection with schemes of decoupled direct payments).

The implementation of measures under the Rural Development Programme 2014–2020, on a voluntary basis, is proposed in the form of supplementary measures to eliminate pollution from agriculture.

Measures to eliminate pollution by priority and relevant substances

As at 2011, 37 establishments had been identified in Slovakia with the discharge of wastewater containing priority substances and substances relevant to Slovakia, and indirect discharge, i.e. via the wastewater treatment plants of other operators.

In total, 21 priority substances for which environmental quality standards (EQS) are defined at EU level (Directive 2008/105/EC) are permitted in the discharge of wastewater in Slovakia. That number includes seven priority dangerous substances for which measures need to be taken to stop or phase out discharge, emissions and leaks in a timetable of not more than 20 years.

To eliminate pollution with priority and relevant substances, measures have been proposed that stem from the pursuit of requirements under Council Directive 91/271/EEC concerning urban waste water treatment and Directive 2010/75/EU of the European Parliament and of the Council on industrial emissions (integrated pollution prevention and control).

Outlook as at 2021

The development of industry and economic activity is envisaged in all sub-basins. Despite this, the increased discharge of pollution from industrial undertakings is not anticipated. On the contrary, there is expected to be a fall in pollution characterised by the indicators of priority substances and substances relevant to Slovakia, provided that wastewater is discharged in accordance with the requirements of Act No 39/2013 on integrated pollution prevention and control and amending certain laws, and Implementing Decree of the Ministry of the Environment No 183/2013, which implements that Act.

More detailed information can be found in the Danube and Vistula River Basin Management Plans (2016-2021).

COM reply to paragraph 3.77

The Commission is taking concrete steps to remove the remaining market barriers to the internal energy market, in particular through regional cooperation frameworks involving different Member States and in the context of preparation of its market design initiative. With regard to infrastructure, it is important to note that:

(a) energy infrastructure is expected to be financed by the market, i.e. user tariffs approved by independent regulators; financial support from EU budget therefore should be the exception rather than the rule;

(b) where financial support has been allocated, security of supply has often been significantly improved. A good example are the Baltic States where support from both EEPR and CEF to key projects has not only increased security of supply in electricity but also helped wholesale prices to converge.

Estonia: Action taken: ; Action completed: ; Completion date:

Some of the projects are being implemented.

Latvia: Action taken: YES; Action completed: ; Completion date: 1) Measures are ongoing 2) 11 August 2011

The report published by the Court of Auditors on security of energy supply and the creation of the EU’s internal energy market states that: 1) the development of cross-border infrastructure requires cooperation amongst Member States; 2) Member States must ensure that their National Regulatory Authorities (NRAs) are independent and do not face restrictions on the scope of their role. The NRAs should have sufficient resources available for their activities, including allowing them to participate fully in EU-level cooperation activities.

1) During the Latvian Presidency of the Baltic Council of Ministers in 2016, several meetings of the Baltic Council of Ministers Energy committee were organised (29 January, 15 April, 3 June, 15 September, next meeting scheduled for 10 November) to address current issues in the field of energy, including cross-border electricity and gas infrastructure; work was also undertaken on the establishment of the regional gas market at meetings of regional gas groups (28 January, 29 March, 14–16 September, next meeting scheduled for 7 November). As Nordic Cooperation NB8 format coordinator Latvia also organised a meeting of NB8 ministers in cooperation with the Czech Republic, during its presidency of the Visegrad Group. At the meeting discussions were held about priority measures, inter alia with regard to energy.

2) On 11 August 2011 amendments to the Law on public service regulators entered into force, laying down that a regulator is an institutionally and functionally self-sufficient, autonomous body with full rights, is governed by public law and acts independently in implementing its legislatively approved budget. Until the entry into force of these amendments, the regulator as a body was under the supervision of the Ministry of the Economy.

The regulator’s decision-making entity is its board, whose members are appointed by the Saeima. The regulator’s decisions can be ruled unlawful and revoked only by a court. The regulator’s work is financed by state duties payable by registered traders for the regulation of public services, and this is calculated on the basis of the turnover from services subject to regulation.

Lithuania: Action taken:YES; Action completed: NO; Completion date:

With a view to removing obstacles to the creation of an internal energy market and thus increasing energy security for Lithuania (and for the EU as a whole), Lithuania took the following specific action:

1.Through infrastructure development. Lithuania has strengthened its security of energy supply by implementing major energy infrastructure projects:

(a) Following the entry into commercial service of the liquefied natural gas terminal in Klaipėda in January 2015, Lithuania diversified its gas imports.

(b) In December 2015, two interconnectors – with Sweden (NordBalt) and Poland (LitPol Link) – started operating. These projects had a positive effect on reducing energy prices (natural gas (for household heating) was 43 % cheaper than in 2012, while electricity was 17 % cheaper than in 2013, at a level comparable with 2009 prices).

(c) Lithuania’s physical isolation from the European gas network could come to an end in 2021, when the new bi-directional gas interconnector with Poland (GIPL) will be fully implemented. It will be the first gas interconnector between the eastern Baltic region and the continental European gas network. Once GIPL starts operating, security of energy supply will increase still further.

(d) The Baltic states have also agreed a common strategic goal, namely de-synchronisation from the Russian/Belarusian (i.e. IPS/UPS) electricity grid and synchronisation of their power systems with the European networks.

It should be stressed that the EU financial support granted (from the CEF (Connecting Europe Facility), the European Energy Programme for Recovery and EU structural aid resources) made a significant contribution towards the successful implementation of energy infrastructure projects. Consequently, there will continue to be a need for such support in future in order to implement important energy infrastructure projects that may not be commercially attractive and may not get market funding.

2.Through regional cooperation. The Baltic Energy Market Interconnection Plan (BEMIP) is a European Commission initiative to integrate the energy markets of the Baltic States – Lithuania, Latvia and Estonia – into the EU, thus completing the creation of the common EU internal energy market. The main aim of BEMIP is to create a properly functioning, integrated energy market, along with the necessary energy infrastructure, and to ensure that the energy market created in the Baltic region is competitive, sustainable and secure.

It should also be noted that: Lithuania still has the two most important projects to implement, namely GIPL and synchronisation with CEN (the Continental European Networks).

Paragraph 3.88

A key success factor for Horizon 2020 is effective synergy and complementarity between national and European research and innovation programmes. Our partners in the supreme audit institutions of Bulgaria and Portugal found that while there were areas of complementarity in their countries, there were also some problems at the national level (see paragraphs 3.22 and 3.23).

Bulgaria: Action taken: YES; Action completed: NO; Completion date:

Portugal: Action taken: ; Action completed: ; Completion date:

Nothing relevant to report.

Annex 3.1

Special reports adopted by the European Court of Auditors in 2015

Special report No 19/2015 ‘More attention to results needed to improve the delivery of technical assistance to Greece’.

CHAPTER 4 – Revenue

Paragraphs

Observations in the 2015 Court's Annual Report

Member States' replies

Paragraph 4.5.(a).(iv)

Annex 1.1 sets out the key elements of our audit approach and methodology. For the audit of revenue, the following specific points should be noted:

(a) We examined the following systems:

(iv) the TOR accounting systems (8) in three selected Member States (France, Italy and Lithuania) (9) and a review of their systems for post-clearance audits.

France: Action taken: OUI; Action completed: NON; Completion date:

La Cour n’a pas pris en compte les remarques de la France à ce sujet. Les autorités françaises contestent la représentativité de l’échantillon constitué et examiné par les auditeurs de la Cour (cf compléments ci-dessous).

En France, les contrôles après dédouanement, autrement appelés contrôles ex post, sont répartis entre les contrôles ex post de 1er niveau (« ex post 1 ») et les contrôles ex post de 2nd niveau (« ex post 2 »).

La vérification de la régularité de certaines opérations de dédouanement ne nécessite pas la présence de la marchandise et peut donc être reportée dans le temps. Ces opérations de vérifications sont effectuées dans le cadre de contrôles ex post de 1er niveau.

Réalisé suite à une analyse de risques, le contrôle ex post de 1er niveau permet d’accompagner la diminution du nombre de contrôles ex ante.

Le contrôle ex post de 1er niveau est généralement de nature documentaire. Il est destiné à s’assurer de la régularité des opérations douanières réalisées et du respect de la législation en vigueur. Il peut être effectué au bureau ou dans les locaux de l’opérateur. Il est circonscrit à la vérification de la présence des documents déclarés, de l’exactitude des énonciations de la déclaration en douane et des documents annexes, de la conformité des documents d’accompagnement. Il permet en outre le suivi de l’autogestion du crédit d’opérations diverses – COD – et des régimes économiques (régimes particuliers).

Dans le cadre des procédures domiciliées, les services de contrôle doivent examiner les déclarations de régularisation et les inscriptions en comptabilité commerciale correspondantes.

Ce type de contrôles a vocation à réduire le niveau des contrôles ex ante et à les reporter dans le temps afin de libérer plus rapidement la marchandise lors du dédouanement compte tenu en particulier de la dispense de présentation des documents.

La réalisation de ce contrôle relève de la compétence exclusive des bureaux de contrôle et du pôle contrôle des bureaux principaux. Toutefois, dans le cadre des PDU (Procédures de Dédouanement Uniques – nationales et communautaires), les pôles contrôle de chaque bureau impliqué (bureau de domiciliation et bureaux de rattachement) assurent en concertation la réalisation des contrôles ex post de 1er niveau.

Le contrôle ex post de 1er niveau est programmé et diligenté dans un délai maximum de 4 mois à compter de la délivrance du bon à enlever, période qui suffit à s’assurer du respect des obligations, notamment documentaires, des opérateurs et remplir l’objectif de contrôler des opérations récentes.

Néanmoins, lorsque le bureau décèle une irrégularité à l’occasion d’un contrôle ex post de 1er niveau, il est invité à poursuivre et à approfondir ses contrôles au-delà du délai de 4 mois à compter de la délivrance du bon à enlever, à condition que les irrégularités concernent un nombre limité de déclarations. Dans le cas contraire, sur décision du chef de POC (Pôle d’Orientation des Contrôles) et après étude du dossier par la CROC (Cellule Régionale d’Orientation des Contrôles) chargée de définir les orientations générales des contrôles ex post de 1er niveau, cette poursuite des contrôles est confiée au service régional d’enquêtes – SRE, notamment si une certaine technicité dont dispose les enquêteurs doit être mise en œuvre.

De fait, toute irrégularité constatée en ex ante ou en ex post 1 peut faire l’objet d’une recherche des antérieurs par la cellule de supervision en liaison avec la CROC en vue d’un contrôle ex post qui sera, selon le potentiel du dossier ou sa complexité, de 1er ou de 2nd niveau. L’information est diffusée au SRE de manière systématique.

Axé sur la lutte contre la fraude, le contrôle ex post de 2nd niveau prend la forme de contrôles approfondis de l’activité de commerce extérieur des entreprises ou d’enquêtes de toute nature portant sur des réglementations que la douane est chargée de faire appliquer.

Le contrôle ex post de 2nd niveau est diligenté au-delà du délai de 4 mois à compter de la délivrance du bon à enlever et ce jusqu’à la limite de la prescription de 3 ans (4 ans pour les contrôles FEAGA).

Le contrôle ex post de 2nd niveau relève de la compétence exclusive de la direction des enquêtes douanières - DED et des SRE, mais si des irrégularités pouvant concerner un nombre limité de déclarations sont décelées par le bureau à l’occasion d’un contrôle ex post de 1er niveau, ce dernier peut poursuivre ce contrôle après autorisation du chef de POC qui en informe le SRE.

La sélection des déclarations à contrôler est réalisée en privilégiant celles qui présentent un fort enjeu douanier ou fiscal.

Concernant les bases réglementaires (la norme) citées par les auditeurs de la Cour et en vigueur lors de la mission d’audit :

les autorités françaises soutiennent qu’en France, la majorité des contrôles après dédouanement effectués « afin de s’assurer de l’exactitude des énonciations de la déclaration » en vertu des dispositions de l’article 78 du code des douanes communautaire (CDC) sont, dans la terminologie nationale utilisée par les autorités douanières françaises, les contrôles ex post 1. En effet, la majorité des contrôles ex post 2, même si certains ont également cette vocation par extension de contrôles ex post 1, est dévolue à la lutte contre la fraude. Les contrôles ex post 2 qui font appel à des compétences spécifiques dont seuls les services d’enquêtes disposent ne sont donc pas des contrôles de régularité tels que définis par l’article 78 du CDC, norme sur laquelle les auditeurs de la Cour se sont appuyés pour réaliser leur audit.

Compte tenu de ce qui précède, il est normal que ces contrôles figurent dans le rapport annuel relatif à l’activité de contrôle des RPT. Toutefois, dans le rapport, l’information chiffrée se rapporte à l’ensemble des contrôles ex post 2 réalisés annuellement, sans distinction entre les contrôles de régularité et les contrôles à visée LCF, celle-ci étant impossible à réaliser en l’état actuel du système d’information (SI) douanier national. Les contrôles ex post 2 de régularité étant moins nombreux que ceux à visée LCF, ils sont encore moins nombreux rapportés au nombre de contrôles ex post 1 (inférieurs à 7,93 % sur la base des données quantitatives pour le rapport annuel 2014 cité par les auditeurs) et encore moins nombreux rapportés au nombre de contrôles a posteriori (inférieurs à 6,84 % sur la base des données quantitatives pour le rapport annuel 2014 cité par les auditeurs). Par conséquent, les contrôles ex post 2 de régularité ne peuvent être considérés comme représentatifs des contrôles a posteriori réalisés en France en vertu des dispositions de l’article 78 du CDC.

Ainsi, compte tenu de l’introduction de ce biais majeur, les autorités françaises considèrent l’échantillon de contrôles ex post 2 sélectionné par les auditeurs de la Cour comme non représentatif des contrôles de régularité a posteriori qu’elles effectuent (contrôles réalisés majoritairement en ex post 1), base normative retenue par les auditeurs pour évaluer la surveillance douanière au niveau national.

Italy: Action taken: ; Action completed: ; Completion date:

No measures for adoption were found.

Paragraph 4.5.(a).(iv) - footnote 9

(9) These three Member States were selected on account of the significant size of their TOR contribution, and taking into consideration a rotational approach.

France: Action taken: OUI; Action completed: NON; Completion date:

La Cour n’a pas pris en compte les remarques de la France à ce sujet. Les autorités françaises contestent la représentativité de l’échantillon constitué et examiné par les auditeurs de la Cour (cf compléments ci-dessous).

En France, les contrôles après dédouanement, autrement appelés contrôles ex post, sont répartis entre les contrôles ex post de 1er niveau (« ex post 1 ») et les contrôles ex post de 2nd niveau (« ex post 2 »).

La vérification de la régularité de certaines opérations de dédouanement ne nécessite pas la présence de la marchandise et peut donc être reportée dans le temps. Ces opérations de vérifications sont effectuées dans le cadre de contrôles ex post de 1er niveau.

Réalisé suite à une analyse de risques, le contrôle ex post de 1er niveau permet d’accompagner la diminution du nombre de contrôles ex ante.

Le contrôle ex post de 1er niveau est généralement de nature documentaire. Il est destiné à s’assurer de la régularité des opérations douanières réalisées et du respect de la législation en vigueur. Il peut être effectué au bureau ou dans les locaux de l’opérateur. Il est circonscrit à la vérification de la présence des documents déclarés, de l’exactitude des énonciations de la déclaration en douane et des documents annexes, de la conformité des documents d’accompagnement. Il permet en outre le suivi de l’autogestion du crédit d’opérations diverses – COD – et des régimes économiques (régimes particuliers).

Dans le cadre des procédures domiciliées, les services de contrôle doivent examiner les déclarations de régularisation et les inscriptions en comptabilité commerciale correspondantes.

Ce type de contrôles a vocation à réduire le niveau des contrôles ex ante et à les reporter dans le temps afin de libérer plus rapidement la marchandise lors du dédouanement compte tenu en particulier de la dispense de présentation des documents.

La réalisation de ce contrôle relève de la compétence exclusive des bureaux de contrôle et du pôle contrôle des bureaux principaux. Toutefois, dans le cadre des PDU (Procédures de Dédouanement Uniques – nationales et communautaires), les pôles contrôle de chaque bureau impliqué (bureau de domiciliation et bureaux de rattachement) assurent en concertation la réalisation des contrôles ex post de 1er niveau.

Le contrôle ex post de 1er niveau est programmé et diligenté dans un délai maximum de 4 mois à compter de la délivrance du bon à enlever, période qui suffit à s’assurer du respect des obligations, notamment documentaires, des opérateurs et remplir l’objectif de contrôler des opérations récentes.

Néanmoins, lorsque le bureau décèle une irrégularité à l’occasion d’un contrôle ex post de 1er niveau, il est invité à poursuivre et à approfondir ses contrôles au-delà du délai de 4 mois à compter de la délivrance du bon à enlever, à condition que les irrégularités concernent un nombre limité de déclarations. Dans le cas contraire, sur décision du chef de POC (Pôle d’Orientation des Contrôles) et après étude du dossier par la CROC (Cellule Régionale d’Orientation des Contrôles) chargée de définir les orientations générales des contrôles ex post de 1er niveau, cette poursuite des contrôles est confiée au service régional d’enquêtes – SRE, notamment si une certaine technicité dont dispose les enquêteurs doit être mise en œuvre.

De fait, toute irrégularité constatée en ex ante ou en ex post 1 peut faire l’objet d’une recherche des antérieurs par la cellule de supervision en liaison avec la CROC en vue d’un contrôle ex post qui sera, selon le potentiel du dossier ou sa complexité, de 1er ou de 2nd niveau. L’information est diffusée au SRE de manière systématique.

Axé sur la lutte contre la fraude, le contrôle ex post de 2nd niveau prend la forme de contrôles approfondis de l’activité de commerce extérieur des entreprises ou d’enquêtes de toute nature portant sur des réglementations que la douane est chargée de faire appliquer.

Le contrôle ex post de 2nd niveau est diligenté au-delà du délai de 4 mois à compter de la délivrance du bon à enlever et ce jusqu’à la limite de la prescription de 3 ans (4 ans pour les contrôles FEAGA).

Le contrôle ex post de 2nd niveau relève de la compétence exclusive de la direction des enquêtes douanières - DED et des SRE, mais si des irrégularités pouvant concerner un nombre limité de déclarations sont décelées par le bureau à l’occasion d’un contrôle ex post de 1er niveau, ce dernier peut poursuivre ce contrôle après autorisation du chef de POC qui en informe le SRE.

La sélection des déclarations à contrôler est réalisée en privilégiant celles qui présentent un fort enjeu douanier ou fiscal.

Concernant les bases réglementaires (la norme) citées par les auditeurs de la Cour et en vigueur lors de la mission d’audit :

les autorités françaises soutiennent qu’en France, la majorité des contrôles après dédouanement effectués « afin de s’assurer de l’exactitude des énonciations de la déclaration » en vertu des dispositions de l’article 78 du code des douanes communautaire (CDC) sont, dans la terminologie nationale utilisée par les autorités douanières françaises, les contrôles ex post 1. En effet, la majorité des contrôles ex post 2, même si certains ont également cette vocation par extension de contrôles ex post 1, est dévolue à la lutte contre la fraude. Les contrôles ex post 2 qui font appel à des compétences spécifiques dont seuls les services d’enquêtes disposent ne sont donc pas des contrôles de régularité tels que définis par l’article 78 du CDC, norme sur laquelle les auditeurs de la Cour se sont appuyés pour réaliser leur audit.

Compte tenu de ce qui précède, il est normal que ces contrôles figurent dans le rapport annuel relatif à l’activité de contrôle des RPT. Toutefois, dans le rapport, l’information chiffrée se rapporte à l’ensemble des contrôles ex post 2 réalisés annuellement, sans distinction entre les contrôles de régularité et les contrôles à visée LCF, celle-ci étant impossible à réaliser en l’état actuel du système d’information (SI) douanier national. Les contrôles ex post 2 de régularité étant moins nombreux que ceux à visée LCF, ils sont encore moins nombreux rapportés au nombre de contrôles ex post 1 (inférieurs à 7,93 % sur la base des données quantitatives pour le rapport annuel 2014 cité par les auditeurs) et encore moins nombreux rapportés au nombre de contrôles a posteriori (inférieurs à 6,84 % sur la base des données quantitatives pour le rapport annuel 2014 cité par les auditeurs). Par conséquent, les contrôles ex post 2 de régularité ne peuvent être considérés comme représentatifs des contrôles a posteriori réalisés en France en vertu des dispositions de l’article 78 du CDC.

Ainsi, compte tenu de l’introduction de ce biais majeur, les autorités françaises considèrent l’échantillon de contrôles ex post 2 sélectionné par les auditeurs de la Cour comme non représentatif des contrôles de régularité a posteriori qu’elles effectuent (contrôles réalisés majoritairement en ex post 1), base normative retenue par les auditeurs pour évaluer la surveillance douanière au niveau national.

Italy: Action taken: ; Action completed: ; Completion date:

No measures for adoption were found.

Paragraph 4.10

In the course of 2015, the Commission lifted 184 reservations (67 transaction-specific and 117 transversalspecific), including the long outstanding transaction-specific GNP reservation on Greece, relating to the 1995-2001 period (17). We did not identify serious problems in the sample of lifted reservations that we analysed. At the end of 2015, there were 55 reservations covering discrete elements of the Member States’ compilations (see Figure 4.2), of which 39 were transaction-specific and 16 transversal-specific.

Greece: Action taken: YES; Action completed: YES; Completion date: 13/11/2015 (Elstat)

Title above paragraph 4.12

There are still general reservations on Greek GNI data covering 2008 and 2009

Greece: Action taken: YES; Action completed: NO; Completion date: In cooperation with Eurostat

Elstat: Elstat sent the data to Eurostat for the years 2008 and 2009 in August 2014.

We would point out that the data for 2008 and 2009 and the relevant documentation, sent in August 2014, are based on results of surveys and not on preliminary evaluations, since the final data from surveys were available and the requisite quality checks had also been carried out.

During November 2014 a Eurostat mission was carried out at Elstat, during which direct verification was performed on the 2008 and 2009 data and the documentation that had been sent.

In addition, in September 2016 the data and the documentation for 2002-2009 were sent, in accordance with the requirements of the programme for forwarding the 2016 GNI questionnaire.

We are waiting for a technical opinion to be drafted, so that the general reservation for 2008 and 2009 may be lifted.

Paragraph 4.12

The only general reservations in place at the end of 2015 were on Greek GNI data for the years 2008 and 2009. Although progress had been made in addressing these reservations, they were not lifted. However, during 2015, the Commission continued to follow closely the problems with Greece’s compilation of national accounts and kept the technical assistance programme that had been set up in 2014 with the objective of creating an independent and stronger national statistical authority. This work improves the reliability of the Greek GNI data. It is important, as the quality of that data can have an impact on all Member States’ individual contributions in terms of GNI-based own resources (see footnote 4).

Greece: Action taken: YES; Action completed: NO; Completion date: In cooperation with Eurostat

Elstat: Elstat sent the data to Eurostat for the years 2008 and 2009 in August 2014.

We would point out that the data for 2008 and 2009 and the relevant documentation, sent in August 2014, are based on results of surveys and not on preliminary evaluations, since the final data from surveys were available and the requisite quality checks had also been carried out.

During November 2014 a Eurostat mission was carried out at Elstat, during which direct verification was performed on the 2008 and 2009 data and the documentation that had been sent.

In addition, in September 2016 the data and the documentation for 2002-2009 were sent, in accordance with the requirements of the programme for forwarding the 2016 GNI questionnaire.

We are waiting for a technical opinion to be drafted, so that the general reservation for 2008 and 2009 may be lifted.

Paragraph 4.16

The quality, scope and results of the post-clearance audits varied substantially across the three Member States visited. A specific case is France, where, for post-clearance audits, a debt can be notified more than three years after it was incurred. This approach differs from that in other Member States because the audits are, according to French legislation, always linked to the ‘prevention and pursuit of customs law infringements’and are thus liable to give rise to criminal proceedings. Therefore, the French authorities interrupt the three year timebarring period during post-clearance audits (26).

France: Action taken: OUI; Action completed: NON; Completion date: 

Sans objet pour l’État membre : aucune mesure/action à mettre en œuvre (cf. ci-dessous).

S’agissant de l’application du CDC, l’article 221, paragraphe 3, précise que le délai de 3 ans n’est pas applicable dès lors que la dette douanière est née du fait d’un acte qui était passible, au moment où il a été commis, de poursuites judiciaires répressives. Dans ces conditions, la Cour de cassation française a pu considérer que la notification d’un procès-verbal de douane interrompait le délai de reprise. Cette jurisprudence a été intégrée dans le code des douanes national. Elle est en parfaite cohérence avec le CDC ;

S’agissant de l’application du code des douanes de l’Union (CDU), l’article 103 permet aux États membres (EM) de porter le délai de reprise de 3 à 5 ans, avec un maximum de 10 ans, dès lors que la dette douanière est née du fait d’un acte qui était passible, au moment où il a été commis, de poursuite judiciaires répressives. En conformité avec cet article, le délai de reprise a été porté en France à 5 ans et il peut être interrompu par un procès-verbal de douane jusqu’à un maximum de 10 ans. Cette disposition est en parfaite conformité avec le CDU.

Les autorités françaises rappellent que la Cour de justice de l’Union (CJUE), dans un arrêt du 18 décembre 2007 (Zefeser), aff. C-62/06, a précisé :

- la lettre de l'article 3, paragraphe 1, du règlement n° 1697/79 (soit l'article 221, paragraphe 3, du CDC devenu depuis l'article 103, paragraphe 2, du CDU) vise les autorités compétentes, celles-ci ne pouvant être que les autorités qui n'ont pu recouvrer les droits dus du fait même de l'existence de l'acte passible de poursuites judiciaires répressives ;

- la qualification d'acte passible de poursuites judiciaires répressives, au sens de cet article, n'est effectuée que dans le cadre et aux fins d'une procédure de nature administrative ayant pour unique but de permettre auxdites autorités de remédier à une perception incorrecte ou insuffisante, de la dette douanière ;

- en l'absence de réglementation communautaire, la CJUE indique également qu'il appartient à l'ordre judiciaire interne de déterminer les conditions permettant aux redevables de contester l'application de la dérogation au délai de prescription de 3 ans.

Une telle interprétation peut être étendue à l'article 221 du CDC mais également à l'article 103 du CDU.

Dans ces conditions, dès lors que la qualification d'acte passible de poursuites répressives relève de la compétence des EM, il va de soi que les conséquences d'une telle qualification relève également de la compétence des EM.

Paragraph 4.18

The Commission detected shortcomings in the Member States’ management of the B accounts in 17 out of 22 Member States visited. As in previous years, we also found inefficiencies in the management of the B accounts (28). We noted good practices in Lithuania, even though debt recovery was not always successful (see Figure 4.3). In Italy some systematic weaknesses need to be addressed. The Italian authorities could not confirm that all the amounts collected from the B accounts were included in the correct A account statement. The Commission identified two other Member States (Belgium and France) with similar inconsistencies between the A and B accounts statements. These shortcomings did not affect the reliability of the overall amounts as disclosed in the consolidated accounts of the European Union.

Belgium: Action taken: YES; Action completed: NO; Completion date: 31/01/2017

The old ‘B’ account will also be integrated in the automated system (PLDA); as a result, the same number of manual errors may still occur. However, the Commission is demanding further automation but the necessary budgets need to be provided.

- The last statements were corrected and transferred to the Treasury. A mix-up in communications meant that the Commission received the wrong statements. This was verified and approved by the Commission during an audit in October 2016. A detailed action plan was also requested that should set out how such problems can be avoided in future.

France: Action taken: OUI; Action completed: NON; Completion date:

Les autorités françaises informent les services de la Commission que les incohérences constatées entre les relevés de comptabilité normale et séparée sont liées à l’organisation actuelle du circuit de mise à disposition, particulièrement pour ce qui concerne les mises à disposition faisant suite à rapport d’inspection communautaire, décision de remises/remboursements, admissions en non-valeur ou contestations judiciaires.

La mise à disposition pour les cas précités n’apparaît pas dans le relevé de comptabilité normale, comme requis par la décision 245/97/CE, mais dans les relevés relatifs à la TVA.

Les autorités françaises précisent que le schéma de mise à disposition fait l’objet d’une réflexion en vue de sa refonte et de sa mise en conformité avec la décision précitée.

Comme évoqué par les services de la Commission, les autorités françaises précisent que, en dépit de cette insuffisance, aucun impact sur la fiabilité des montants globaux figurant dans les comptes consolidés de l’Union européenne ne peut être constaté.

Italy: Action taken: YES; Action completed: ; Completion date:

Lithuania: Action taken: ; Action completed: ; Completion date:

See comments with regard to observation 3.

Figure 4.3

There is no effective instrument for debt recovery from companies registered outside the EU or from citizens of countries outside the EU.

Lithuania: Action taken: NO; Action completed: ; Completion date:

The Lithuanian Customs Service agrees with the ECA auditors’ finding that there is limited scope for recovering debts from debtors from non-EU Member States. A detailed answer from the Lithuanian Customs Service on this matter was sent to the ECA on 15 March 2016 by letter ref. (13.19/13)3B-2992 from the Customs Department under the Ministry of Finance.

Paragraph 4.19 - footnote 30

The Commission’s inspections in Member States may result in the national authorities having to take steps because of non-compliance with EU customs rules. These are known as open points. These open points can have a potential financial impact. At the end of 2015 a total of 325 points (see Figure 4.2) were open (30).

(30) 44 points had been open for more than five years. The oldest points still open dated back to 2002 and concerned Germany, Greece and Portugal.

Germany: Action taken: YES; Action completed: NO; Completion date:

Portugal: Action taken: YES; The Tax and Customs Authority is monitoring the situation regarding the open points referred to in the reports drawn up by the Commission pursuant to Article 18 of Regulation (EC, Euratom) No 1150/2000. Action completed: NO; The Commission requested additional information on a number of points. Some other points are being finalised and amounts have been made available to the Commission while awaiting the request for payment of the interest due; Completion date:

Aside from following up the reports on the open points as of 31 December 2015, the Tax and Customs Authority has also examined the cases relating to the inspections carried out in 2015 and 2016.

Annex 4.2

Follow-up of previous recommendations for revenue.

The Commission should put in place and closely monitor a detailed action plan with clear milestones to address the problems in the compilation of Greece’s national accounts.

Greece: Action taken: YES; Action completed: NO; Completion date: In collaboration with Eurostat

Elstat: Elstat is working with Eurostat concerning the implementation of actions with the aim of continuously improving the drafting of the annual and quarterly national accounts. These actions form part of the Joint Overall Statistical Greek Action Plan (JOSGAP), which was drawn up in 2010 by the Commission and the Greek authorities. Pillar Β of the action plan includes a set of actions relating to strengthening the national accounts.

One of the actions is to implement a programmes upgrade for the annual national accounts and the upgrading of regional and quarterly national accounts, as well as the improvement of sectoral accounts. In order to achieve the objective, a series of visits by experts has been organised, in order to provide technical support on the annual and quarterly national accounts, and further visits are continuing. Meanwhile, an important factor contributing to the improvement of the quality of production is the continuing strengthening and training of Elstat’s workforce. These staff members are responsible for the drafting of the national accounts.

COM reply to Annex 4.2

The existing statistical action plan for Greece, JOSGAP, will be supplemented by a specific plan for National Accounts during 2016.

Greece: Action taken: YES; Action completed: NO; Completion date: In collaboration with Eurostat

Elstat: Elstat is working with Eurostat concerning the implementation of actions with the aim of continuously improving the drafting of the annual and quarterly national accounts. These actions form part of the Joint Overall Statistical Greek Action Plan (JOSGAP), which was drawn up in 2010 by the Commission and the Greek authorities. Pillar Β of the action plan includes a set of actions relating to strengthening the national accounts.

One of the actions is to implement a programmes upgrade for the annual national accounts and the upgrading of regional and quarterly national accounts, as well as the improvement of sectoral accounts. In order to achieve the objective, a series of visits by experts has been organised, in order to provide technical support on the annual and quarterly national accounts, and further visits are continuing. Meanwhile, an important factor contributing to the improvement of the quality of production is the continuing strengthening and training of Elstat’s workforce. These staff members are responsible for the drafting of the national accounts.

Annex 4.3

Number of outstanding GNI reservations, VAT reservations and TOR open points by Member State at 31.12.2015.

Austria:
a. With regard to VAT
Action taken: NO; Action completed: NO; Completion date:
Regarding the 4 VAT reservations:

b. With regard to TOR
Action taken: YES; Action completed: NO; Completion date: 26 January 2016 and 29 January 2016.

Three open issues were resolved by letters from the Commission dated 26 January 2016 and 29 January 2016. On 7 April 2016, an opinion was sent to the Commission regarding two open issues.

Belgium: Action taken: YES; Action completed: NO; Completion date:

Réserve 1 : Correction relative aux agriculteurs forfaitaires

Pour les années 2013 et 2014, tout comme pour le dossier 2015, une nouvelle méthode de calcul a été appliquée qui utilise les listings clients afin de répartir le chiffre d’affaires et la TVA déductible entre d’une part les agriculteurs/sylviculteurs forfaitaires et d’autre part les agriculteurs/sylviculteurs qui ne relèvent pas de ce système.

La question relative à de plus amples informations concernant les ventes directes et l’autoconsommation des sylviculteurs a été posée aux fédérations sectorielles, mais jusqu’à présent celles-ci n’ont pas réagi. La question sera réitérée et également envoyée aux Régions (qui sont compétentes en matière d’agriculture et de sylviculture).

Réserve 2 : Exonération de la consommation à bord des moyens de transport

La problématique juridique sous-jacente remonte déjà en 2009 et a été discutée, dans un contexte plus global, à plusieurs reprises avec les Etats membres (e.g. Workshop Fiscalis en 2015 à Ankara) sans que les services de la Commission européenne ont définitivement et clairement arrêté leur position. L’administration fiscale belge insistera dès lors auprès des services de la Commission européenne de clarifier définitivement leur position juridique en la matière afin que le dossier qui fait l’objet d’une réserve au niveau des ressources propres depuis des années peut finalement être clôturé.

Entretemps, en vue du calcul d’une compensation éventuelle, il ressort d’études prospectives antérieures que la problématique se limite à une seule entreprise qui est effectivement active sous plusieurs personnalités juridiques (belge et autres). L’administration fiscale belge vérifiera, via les bureaux de contrôle compétents, si des informations peuvent être collectées permettant d’esquisser une image fiable de l’ampleur de la problématique.

Réserve 3 : Exonération des activités des administrateurs de sociétés (infraction n° 2014/4123)

Le régime critiqué par les services de la Commission européenne concernait initialement aussi bien le régime applicable aux personnes morales qu’aux personnes physiques. Entretemps, le régime applicable aux personnes morales a été adapté conformément aux revendications de la Commission européenne. Par contre, en ce qui concerne le régime TVA applicables aux administrateurs personnes physiques, l’Etat belge maintient sa position que celui-ci est en conformité avec la directive TVA et la jurisprudence de la Cour de Justice de l’Union européenne y afférente. La procédure d’infraction est toujours en cours et l’Etat belge continuera à défendre son régime devant les instances européennes.

Etant donné qu’aucune information n’est disponible dans les bases de données en matière de TVA, une recherche sera effectuée dans les données des contributions directes. Il est probable que les informations concernant les administrateurs de sociétés ne puissent être trouvées directement dans les déclarations de ces contributions, mais bien, éventuellement, dans des fiches qui doivent être utilisées lors du remplissage de la déclaration. La question de savoir sous quelle forme et dans quelle mesure ces informations sont tenues à jour dans les bases de données du SPF Finances est encore incertaine.

Réserve 4 : Groupement TVA (Associations de frais) (EU-Pilot n° 6781/14)

Il sera examiné dans quelle mesure il est possible d’identifier ces associations et leur chiffre d’affaires. Depuis 2002, ces associations ne sont plus identifiées en tant que telles dans les bases de données du SPF Finances. En raison d’une modification législative, elles devront toutefois se faire connaître auprès de l’administration fiscale à partir de 2016.

-Report 9.0.2: payment made so report closed (shortcoming in ‘B’ account)

-Report 10.0.2 : payment made so report closed (shortcoming in ‘B’ account)

-Report 11.0.1: report closed following the National Forum's 'Globalisation’ sub-working group report (commissioned from IBM, due for completion by 2017) and introduced in light of the new UCC. The topic can be re-examined in RTO/AEO audits.

-Report 11.0.2: payment made so report closed (shortcoming in ‘B’ account)

-Report 13.0.1 (4 points still outstanding):

* investigation of ED still ongoing

* Recovery of duplicate entries audited by Deloitte at the request of the Commission; the Commission also verified this external report and issued a mandate for it to proceed with recovery.

* AAD&A submits half-yearly progress reports on the PLDA action plan.

* AAD&A submits half-yearly progress reports on the internal audit and audit of working procedures within the Single Office/BUEK.

* The other points have been concluded.

- Report 13.0.2 concluded by the Commission on 1/7/2016.

- Report 14.0.1, 14.0.2, 15.0.1 and 16.0.1 received and the reactions to the recommendations forwarded to the Commission. We await their replies.

* Report 14.0.1: 9 recommendations remain outstanding pending the Commission’s reaction to our replies.

* Report 14.0.2 (audit in February 2015): 11 recommendations remain outstanding pending the Commission’s reaction to our replies.

* Report 15.0.1 (audit in October 2015, report received in January 2016): 14 recommendations remain outstanding pending the Commission’s reaction to our replies.

* Report 16.0.1 (audit in March 2016): 14 recommendations remain outstanding pending the Commission’s reaction to our replies.

* Report 16.0.2 (audit in October 2016): report not yet received.

Bulgaria: Action taken: YES; Action completed: YES; Completion date: 31 December 2015 for NRA and 2016 for the Customs Agency

NRA: Bulgarian authorities — NRA, NSI and MF — have taken action for reducing the number of VAT reservations. As a result, during the inspection carried out by representatives of the EC at the beginning of 2015, 2 VAT reservations remained, and 5 reservations were lifted. The Bulgarian authorities expect that during the inspection expected in 2017 the existing reservations will be further reduced and the ultimate goal is for all VAT-based reservations to be lifted. Customs Agency:

The number of the TOR open points for Bulgaria as of 31 December 2015 was four. Of these:

- Two were related to sections 3.1 and 3.3 of report No 14-26-1 of the EC, and in relation to them in 2016 the Bulgarian customs authorities submitted the following opinions:

- regarding the follow-up on section 3.3 (a) of report No 14-26-1: with letter to the Ministry of Finance (MF) No 32-53467 of 25 February 2016;

- regarding the interest calculated under section 3.1: with letter to the MF No 32-58012 of 1 March 2016;

- regarding the follow-up on sections 3.1 and 3.3 (a) and (b) of report No 14-26-1: with letter to the MF No 32-114410 of 16 May 2016;

- regarding the follow-up on section 3.1 of report No 14-26-1: with letter to the MF No 32-149724 of 1 June 2016.

2. Two were related to sections 3.1 and 3.2 of Report No 15-26-1 of the EC. After the submission of the opinion of the Bulgarian customs authorities, they were closed with letter from the EC No BUDG/B/03TE (2016) 4057984 of 2 August 2016. Commission Services have decided to complete the work on report No 15-26-1.

NSI: Bulgaria submits to the Commission (Eurostat) on a regular basis (by 22 September each year), in the context of the national accounting procedures, figures for aggregate GNI and its components, and a report on the quality of the data in accordance with Article 2(2) of Council Regulation (EC, Euratom) No 1287/2003 of 15 July 2003 on the harmonisation of gross national income at market prices. Each year during the GNI Committee meeting in October, Member States confirm the data and the report on the quality of data containing basic information on data provided, submitted in September, any changes in the sources and methods for compiling the data in the national accounts, and any changes in the data revision policy.

During the Commission missions recommendations and reservations were made with regard to the GNI data for the period 2007—2010. In January 2013, after the completion of the Eurostat verification mechanism, an official letter from the Commission was received containing information regarding the problem areas and GNI data reservations for Bulgaria. Activities had to be implemented relating to the following: review of the methods for completeness of data; improvements in the method for calculating the indirectly measured housing services, consumption of fixed capital, gross fixed capital formation, an alternative method of calculation of output and intermediate consumption in construction services, compensation of employees to and from the institutional sector ‘Rest of World’, production and allocation of financial intermediation services indirectly measured, and implementation of adjustments for illegal activities. The work on all GNI data reservations was completed, and the last outstanding data reservation was accepted by Eurostat in 2016.

Croatia:

3.1.3. Action taken: YES; Action completed: YES; Completion date: 9.10.2015

Instruction 24/15 in HR and EN was sent to BUDG-Mailbox-B03@ec.europa.eu on 13 October 2015.

3.2.3. Action taken: YES; Action completed: YES; Completion date: 29.09.2016

A report on the Pilot project concerning the A & B accounts in 2016 was sent to BUDG-Mailbox-B03@ec.europa.eu on 29 September 2016. The report explains the sampling method in detail.

3.3.3. Action taken: YES; Action completed: YES; Completion date: 29.09.2016

Cyprus: Action taken: NO; Action completed: NO; Completion date:

Up to 31 December 2015 there were no reservations pending concerning VAT own resources. Therefore no action was taken to lift reservations. From 24 to 27 June 2014 a team of auditors from the European Commission’s DG Budget (DG Budget) and Eurostat (ESTAT) conducted an inspection of VAT Own Resources bases for the years 2011-2012. No reservations were raised after the inspection. Please note that the four reservations previously pending were lifted after an inspection of the VAT own resources bases for the years 2008-2010 carried out in 2012 by a team of auditors from the European Commission.

Czech Republic: Action taken: NO; Action completed: NO; Completion date:

All three open reservations are currently still at the stage of communication with the Commission and therefore it was not possible to take any action. One of the reservations was conditionally paid by the Member State because the Commission removed the interest.

Denmark: Action taken: YES; Action completed: NO ; Completion date:

The 16 open items concerning traditional own resources are described below.

As of 31 December 2015, 16 open items were recorded in six inspection reports. We inform you of the following in that regard.

Inspection report 2009-1-1 on inspection of own resources concerning transit and TIR

The open item in this report concerned information to be supplied to the Commission on two legal cases.

1.Item 3.1 BII. Two test cases.

Denmark considers this item to have been closed by letter ref. 15-001195 of 13 May 2016 from SKAT.

Inspection report 2011-1-1 on inspection of own resources concerning the local clearance procedure (import)

Two items in this inspection report remained open as of 31 December 2015.

1.Item 3.2. Insufficient information in the notifications under the local clearance procedure

Open. By letter of 4 May 2016 SKAT informed the Commission that the planned changes to the manifest system would be implemented no later than 1 September 2016. An email of 24 November 2016 from the process owner indicated that there had been a delay. The supplier could not include the update in the last release, as planned, but only in the November 2016 release, which is why the Commission has not yet received any information. The Commission will be informed as soon as the change is made.

2.Item 3.3. Weaknesses in the risk management strategy for compliance in relation to the local clearance procedure

Denmark considers this item to have been closed by the letter of 4 May 2016 to the Commission, in which SKAT confirmed the establishment of a nationwide operational task as of 1 April 2015 covering financial processes, including end-use and the local clearance procedure.

Inspection report 2011-1-2 on inspection of own resources: repayment, remission and non-recovery of duties

Two items in this inspection report remained open as of 31 December 2015. They are:

1.Item 3.1. Identifying the population of repayments and remissions and the impact on financial reporting

Denmark considers this item to be closed. Ref. 14-4987109 – see letter of 20 May 2015.

2.Item 3.2.5. Failure to comply with the statutory procedure for remissions and payments

Denmark considers this item to have been closed by the Commission letter of 21 December 2015 and by the settlement of the interest on late payment for items 3.1.3.3 and 3.1.3.4 in April 2016.

Inspection report 2012-1-1 on inspection of own resources concerning anti-dumping measures

Two items were open in this inspection report as of 31 December 2015. On 23 May 2016 SKAT sent the Commission reply ref. 14-0558293 concerning items 3.1b and 3.2.

1. Item 3.1b Unsatisfactory use of registration procedures

Denmark considers this item to have been closed by the letter of 23 May 2016 from SKAT to DG Budget. There is nothing to add about the case concerning footwear from Macao.

2. Item 3.2. Level of RIF risk information in risk analyses and checks during clearance

Denmark considers this item to have been closed by the letter of 23 May 2016 from SKAT to DG Budget. COM inquired about the TARIC codes the Danish authorities had chosen for verification and the code for exempted or privileged importers.

Inspection report 2013-1-1 on inspection of own resources – investigation of the reliability of the A and B accounts 2012

Four items were open in this report as of 31 December 2015.

1.Item 3.1. No assessment of liability for amounts written-off

Denmark considers this item to be closed, ref. 16-0214618. In the letter dated 21 March 2016 SKAT explained its actions to DG Budget.

2.Item 3.2. Errors in updating the B account

Open. SKAT replied to this by letter of 21 March 2016 to DG Budget (ref. 16- 0214618) and by letter of 22 May 2016. A ruling by the Eastern High Court is pending.

3.Item 3.4. Administrative error leading to remission

Denmark considers the item to be closed. SKAT explained the case in its letter ref. 16-0214618 of 21 March 2016. Interest on late payment will be settled for April 2016.

4.Item 3.5. Various problems with cases of repayment

Open. SKAT explained the case by letters of 30 May 2016 and 21 March 2016. Reply to DG Budget ref. 16-0214618. Not closed, since no letter has been received from the Commission.

Inspection report 2014-1-1 on inspection of own resources – end-use procedure

The report was issued in January 2015. Five items were open as of 31 December 2015. They were 3.1, 3.2, 3.3, 3.4 and 3.5. They are now closed.

1.Item 3.1. Shortcomings as regards single end-use authorisations and those that apply at the time of customs clearance

SKAT considers this item to have been closed by letter ref. 16-0472223 of 30 May 2016 to the Commission. SKAT found no errors in the material submitted, which is why the company was not asked to submit further material, since the missing digit is the reason why it was not possible to mention the goods on the permanent authorisation.

2.Item 3.2. Lack of checks during clearance and lack of monitoring of the assignment of goods to the prescribed end-use, or of other customs supervision measures

SKAT considers this item to have been closed by letter ref. 16-0472223 of 30 May 2016 to the Commission. The Commission requested additional information in the form of a consolidated spreadsheet containing the necessary information for each of the 34 customs declarations – the declaration, date of approval, recorded amounts, accounting and settlement date, etc. SKAT has prepared a spreadsheet for the declarations.

3.Item 3.3. Goods potentially cleared for end-use without authorisation owing to flaws in the IT-system

SKAT considers this item to have been closed by letter ref. 16-0472223 of 30 May 2016 to the Commission. The Commission requested additional information concerning the IT application and an explanation of the incident. It asked to be provided with the results for the 25 single declarations released without formal approval. The results were submitted to the Commission on 30 May 2016.

4.Item 3.4. Cases of financial liability relating to end-use

SKAT considers this item to have been closed by letter ref. 16-0472223 of 30 May 2016 to the Commission. The Commission asked SKAT to confirm that it had declared or deemed the amount of DKK 294 385.04 irrecoverable, and that it had thus already removed it, or would remove it, from the B account, in accordance with Article 17(2) of Regulation 1150/2000. In this regard, SKAT would report that on 11 May 2015 it sent a letter to the Commission explaining that the amount in question had been placed in the wrong column of the A account for January 2015. The letter is enclosed as Annex 3 to the letter of 30 May 2016 from SKAT. Interest on late payment was settled on 24 November 2016, ref. 15-0586782, DKK 7 546.75. Item 3.4.3. See Annex attached.

5.Item 3.5. Problems with end-use for particular goods

Closed by the Commission in letter ref.16-0472223 of 3 February 2016.

VAT reservations:

One reservation was open concerning business purchases of passenger cars, and two reservations concerning different aspects of passenger transport, one of which was entered by Denmark. Denmark has sent the Commission documentation concerning all three reservations, and they are expected to be examined in connection with the Commission’s audit visit to Denmark in 2017.

Estonia: Action taken: YES; Action completed: YES; Completion date: As at November 2016, this has been partially resolved. As far as the rest is concerned, please see ‘Any other comment’.

VAT base, item 4.2 ‘Passenger transport’. The reservation covering the years 2007–2014 will remain valid until the legal situation becomes clear;

TOR items 3.1a and 3.1b ‘Cases of potential financial responsibility’ – we will resolve these in December 2016; item 3.3 ‘Guarantee management’ was resolved in February 2016.

Finland: Action taken: YES; Action completed: NO; Completion date:

As regards the 10 open findings related to traditional own resources, the Member State has taken corrective measures and is working to resolve these points.

As regards VAT reservations, an inspection was carried out in October 2015, and as a result the number of VAT reservations decreased to three in 2016.

France: Action taken: OUI; Action completed: OUI/NON; Completion date: au fur et à mesure, au gré des échanges entre les autorités françaises et les services de la Commission (DG Budget). Certains points sont déjà clos tandis que d’autres nécessitent encore un suivi tant de la part des autorités françaises que des services de la Commission s’agissant des ressources propres traditionnelles (RPT).

S’agissant de la TVA, après la visite d’inspection de la Commission européenne de décembre 2015, trois réserves sur la déclaration ressource propre TVA demeurent : une réserve 2012-2014 sur la compensation 'XB.8 fourniture d'eau publique' relative à l'amélioration de la méthode concernée, une réserve 2008-2014 relative à l'infraction 2011-2015 (transport de biens entre la France continentale et la Corse) et une réserve 2011-2014 relative à l'infraction 2015/4135 (services rendus aux particuliers par les associations sans but lucratif). 

S’agissant des RPT, le nombre de points ouverts concernant les RPT au 31/12/2015 :

-sur la base des courriers de la DG Budget adressés aux autorités françaises en 2015, le nombre de points ouverts concernant les RPT au 31/12/2015 décompté par ces dernières s’élève à 35 (contre 43 au 01/01/2015). Ce chiffre est le résultat du solde des points clos (8 en 2015) et de points nouveaux (6 dans le rapport de contrôle n° 15-5-1) ;

-à la date de rédaction de la présente réponse des autorités françaises, ce nombre a été rapporté à 27 puisque 12 points ont été clos en 2016 (ce décompte ne tenant pas compte des clôtures partielles qui viennent toutefois s’ajouter au contingent de clôtures et témoignent de la dynamique des échanges entre la Commission et la France et des diligences des autorités françaises pour répondre de manière satisfaisante aux recommandations et aux requêtes de la Commission) quand 4 nouveaux points sont apparus avec le rapport n° 16-5-1.

De plus, comme indiqué en 2015 en réponse aux observations de la Cour dans son rapport annuel relatif à l’exécution du budget 2014, un grand nombre de points ouverts concerne des dossiers individuels relatifs à des montants inscrits en ou retirés de la comptabilité séparée – B. Ils sont clos au gré des mises à disposition des montants principaux éventuellement dus et des intérêts de retard exigibles, le cas échéant, à la demande exclusive des services de la Commission (DG Budget).

Par ailleurs, l’évocation de clôtures de points en cascade (2 ont bien été réalisées concernant le rapport n° 14-5-2) dans la réponse des autorités françaises susmentionnée a effectivement conduit à la clôture annoncée de 8 autres points, induisant la clôture complète de 2 rapports de contrôle (n° 09-5-2 et n° 10-5-2).

S’agissant des plus anciens rapports (06-5-1 et 10-5-1), les autorités françaises sont dans l’attente de la communication de montants d’intérêts de retard qui, une fois mis à disposition, devraient également venir clore ces points qui sont également corrélés entre eux (dernier point du rapport n° 06-5-1 (n° 3.3) traité en réalité dans le cadre du suivi du point n° 3.3 du rapport n° 10-5-1).

En outre, les autorités françaises souhaitent souligner le fait qu’elles suivent le traitement des points ouverts avec méthode et rigueur, dans le respect des délais fixés par la réglementation et que les raisons du maintien de certains points ouverts ne peut en aucun cas être imputé à un quelconque manque de diligence de leur part mais sont à rechercher dans la nature même des requêtes et recommandations formulées (demandes de réalisation d’enquêtes au périmètre très large (national et pluriannuel), demandes de refonte d’instructions nationales dans le contexte de changement de bases réglementaires (caducité du code des douanes communautaire – CDC – avec entrée en application du nouveau code des douanes de l’Union – CDU), etc.).

Enfin, sur les mesures prises, compte tenu de ce qui précède, les autorités françaises considèrent qu’elles les prennent de manière continue dans le suivi qu’elles assurent de ces points ouverts ; sur l’état d’achèvement des actions prises, s’agissant de mesures continues, elles ne peuvent connaître de date d’achèvement ; elles sont donc considérées comme achevées au gré de leur exécution.

Germany: Action taken: YES; Action completed: NO; Completion date:

Greece: Action taken: YES; Action completed: NO; Completion date:

Ministry of the Economy – Directorate for Implementation of Indirect Taxation: During the audit that is to be carried out in our country by the European Commission’s employees (auditors), from 12 to 16 December 2016, relating to VAT, the likelihood is that the reservations will be reduced.

Elstat: Throughout 2015 and up until July 2016 Elstat applied a detailed programme of work and actions in order to achieve the lifting of GNI/GDP reservations. During this programme Elstat worked intensively to resolve the issues that were linked to the reservations and submitted the data and documentation requested by Eurostat during 2015 and 2016.

Moreover, Elstat cooperated with Eurostat on addressing the reservations. In 2015 Eurostat made two visits to Elstat (in June and December), while in 2016 it made one visit (in May 2016).

During these visits direct verification was carried out on Elstat’s work, with the objective of lifting the reservations.

In addition, in September 2016 the data and documentation for the years 2002-2009 were sent, in accordance with the requirements of the programme for forwarding the 2016 GNI questionnaire.

We are waiting for a technical opinion to be drafted, so that all the reservations may be lifted except reservation 6, relating to the use of balance of payments data for shipping and marine transport, which must be re-examined, with the results being revised where necessary (for the years 2002-2010 and the reservation relating to FISIM (Financial Intermediation Services Ιndirectly Μeasured).

In order to address reservation 6, Elstat and the Bank of Greece are working together and each body has drafted an action plan, setting out plans to conduct joint work, and to exchange technical expertise and information. Both the action plans have the same objective, of drawing up and keeping a statistical register of shipping enterprises and vessels, following close cooperation between the two bodies. The register will be kept by each body for its own needs, as deriving from the annual work programme, and it will be made public on a regular basis, in accordance with harmonised procedures which will be the subject of collaboration between Elstat and the Bank of Greece, at the technical level.

An important aim of the action plans of both bodies is the creation of a joint working group involving representatives of senior management from Elstat and the Bank of Greece. There is a commitment to setting up this group, pursuant to the agreement of 27 July 2016 between the President of Elstat and the Director of the Bank of Greece, and the letter on the subject by the President of Elstat to the Director of the Bank of Greece, after which the settlement of individual matters relating to the cooperation in question is imminent.

The objective aim of the working group is to evaluate the consistency of the two registers and, by extension, of the information produced.

In order to address the reservation relating to FISIM, since May 2015 and throughout 2016 Elstat has been working together with Eurostat. Elstat
has submitted the data requested by Eurostat. Eurostat is in the process of examining the data.

Hungary: Action taken: YES; Action completed: ; Completion date: Continuous

The Hungarian authorities are cooperating with the Commission’s departments to overcome any reservations.

Ireland: Action taken: YES; Action completed: YES; Completion date:

Regarding VAT reservations, we continue to work closely with the European Commission, the Central Statistics Office and colleagues in other sections of the Revenue Commissioners of Ireland. We have responded to the Commission regarding the outstanding reservations and we expect several of the reservations to be lifted in the new year.

The GNI reservation relates to FISIM (financial intermediation services indirectly measured). We sent Eurostat our revised methodology in February 2016 and got confirmation last month from the desk officer adjudicating on FISIM that they approved of the use of new data sources and that the methodology meets the ESA requirements. A formal lifting of the reservation was pending until the new FISIM data was identified and explained in the annual GNI transmission (on 22 September 2016). This transmission included the detail of the GNI estimates for all years back to 2010, prepared for our annual National Income and Expenditure (NIE) publication.

Eurostat has subsequently prepared what it calls its technical opinion which will be sent to Ireland's Perm Rep to the EU, confirming that the reservation has been lifted.

Regarding the TOR open points, Revenue has noted with interest the Court of Auditors observations in relation to Traditional Own Resources. The 8 items shown in Annex 4.3 relate to ‘open points’ of reports, and not to reservations.  They are points of inspections reports which were open at 31.12.2015 and form part of the regular ongoing follow-up procedure of such reports. A number of these ‘open points’ have been dealt with since that date.

2011 inspection – A follow up report was received from DG BUDGET in Sept 2015. Three ‘open points’ remain. Two of the remaining open points relate to the charging of late payment interest. They will be closed once this interest has been paid. We are currently awaiting information from DG BUDGET on the exact amount involved. These amounts will be paid after the amounts requested are verified. It is also hoped that the third ‘open point’ will also be closed once Ireland have provided clarification to DG BUDGET on the matter.

2013 inspection – There were five ‘open points’ associated with this inspection. Ireland provided a response to DG BUDGET on these in early 2015.

Italy:

GNI reservations

Measure adopted: YES; Action completed: YES; Completion date: 11/12/2015

VAT reservations

Measure adopted: YES; Action completed: YES; Completion date: 9/12/2015

In October 2014 inspectors from the European Commission visited the Italian authorities to examine the annual VAT statements for 2011, 2012 and 2013. In the course of 2015 the Italian authorities sent the Commission the documents relating to the recalculations and corrections requested by the inspectors as part of their control visit. The audit resulted in a document dated December 2015 summarising the situation in Italy following the inspection.

Before the inspection the Commission had 8 reservations and the Italian authorities 3. Thanks to the work carried out by Italy in the course of 2015, the number of Commission reservations was reduced to 4, plus 2 on the Italian side. Of the 4 reservations on the Commission’s side, 2 related to the VAT receipts and are deemed to be long-standing.

In September 2015 the European Commission carried out an additional audit of the Italian authorities relating to the 2 reservations regarding VAT receipts (accounting adjustments in 1999-2003 and the reconciliation of refunds in 2006-2013). This, and the positive outcome of a special audit carried out by the Italian Court of Audit in 2015, succeeded in definitively lifting the two long-standing reservations. Confirmation of this result can be found in the European Commission’s summary document of 1 June 2016 (Ref. Ares(2016)2534376).

There are therefore 2 outstanding reservations (‘compensation on existing buildings and building land’ and ‘on-going infringement case no 2008/2010’) which will be addressed at the next control visit, planned for December 2016.

Latvia: Action taken: YES; Action completed: ; Completion date:

GNI: Intensive efforts continued in 2016 to enable the remaining GNI reservations to be lifted as soon as possible. The 2015 GNI questionnaire included the results of work on specific GNI reservations and cross-cutting issues (impact on the volume of GNI), and the quality report also provided a description of the work done on GNI reservations. Eurostat visited Latvia on 24–25 November 2015 (GNI information visit) to discuss open issues concerning the remaining GNI reservations. With further clarifications being provided after this visit, all necessary steps were taken to enable most of the remaining reservations to be lifted. 13 April 2016 saw the lifting of nine of the twelve remaining reservations (as they stood at 31 December 2015). Three reservations are still in force in 2016. These are interconnected and therefore can all be lifted simultaneously, but only when all the interconnected methodological requirements have been met. The 2016 GNI questionnaire included the results of work on the remaining GNI reservations (impact on the volume of GNI), and the quality report also provided a description of the work done on GNI reservations. The Central Statistical Board has therefore now applied all the necessary revisions to GNI data and has submitted all the necessary documentation for lifting these reservations. Further progress is dependent on how quickly Eurostat prepares all the necessary documentation in order to officially lift the three remaining reservations.

TOR: Completion date: 24 August 2016. In accordance with letter ref. BUDG/B/03/CT(2016)4764257 of 24 August 2016 on the follow-up to the TOR inspection, report item 3.1 on partial compliance with Article 17(2) of Regulation No 1150/2000 will be closed following calculation and settlement of late-payment interest, while item 3.2 regarding potential financial liability of the Member State was closed on 24 August 2016.

VAT: Completion date: 30 November 2015. The question of whether VAT exemption for accommodation management services is in compliance with the provisions of Council Directive 2006/112/EC of 28 November 2006 (the VAT Directive) was raised within the context of the EU Pilot 6103/14/TAXU procedure. The Commission's services sent their first request for information to the competent Latvian authorities on 11 February 2014, to which the Latvian authorities replied on 22 April 2014. Following receipt of this response, on 8 July 2014 the Commission's services sent a further request for information, to which the Latvian authorities replied on 6 August 2014. On 26 November 2014 the Latvian authorities received the Commission's letter of formal notice in infringement proceedings 2014/2233.

The letter setting out Latvia's position in response to the Commission's letter of formal notice in these infringement proceedings stated that, with a view to rectifying the infringement identified by the Commission and correctly applying the provisions of the VAT Directive, Latvia will amend the Value Added Tax Law by deleting Article 52(1)(25)(b), which provides for VAT exemption for accommodation management services.

In order to harmonise the Law on VAT with Directive 2006/112/EC and to implement the obligations placed on Latvia under Directive 2006/112/EC to prevent the inappropriate application of EU legislation, on 30 November 2015 amendments were adopted to the VAT Law, whereby from 1 July 2016 management services for dwellings provided to tenants are subject to the 21 % standard rate of VAT. 

Lithuania: Action taken: YES; Action completed: YES; Completion date: 16/2/2016

These observations by the European Commission, which were open on 31 December 2015, were resolved in 2016.

1)The observations made in points 3.1 and 3.2 of the European Commission’s Report No 11-20-1 of 9 January 2012 on the inspection of traditional own resources in Lithuania from 3 to 7 October 2011 were closed on 16 February 2016 by letter ref. BUDG/B/03/KV (2016) 808166 from the European Commission.

The observation made in point 3.1 of the European Commission’s Report No 14-20-1 of 5 September 2014 on the inspection of traditional own resources in Lithuania from 16 to 20 June 2014 was closed on 1 February 2016 by letter ref. BUDG/B/03/MK/ D(2016) 528319 from the European Commission.

Luxembourg: Réserves TVA: Action taken: OUI; Action completed: NON; Completion date: entre 29/10/2016 et 29/12/2016 (2 réserves TVA). Réserves RNB: Action taken: OUI; Action completed: OUI; Completion date: 17/12/2015. Réserves RPT: Action taken: OUI; Action completed: NON; Completion date:.

Réserves TVA

Suite au contrôle ressources propres TVA effectué en septembre par la DGBUDG, il est à prévoir que deux des trois réserves actuelles pourront être levées avant la fin de l'année. La troisième réserve est liée à une affaire pendante devant le CJUE (C-274/15 Commission c. Luxembourg). Aucune action n'est prévue en 2016 en ce qui concerne la réserve liée à l'affaire C-274/15, pendante devant la CJUE.

RPT :

Le 2 mai 2016, une prise de position concernant le point resté ouvert du rapport 13-8-1 a été envoyée à la Commission. En attente d’une réponse.

Réserves RNB

Dans une lettre adressée à la représentation permanente du Luxembourg auprès de l’UE (BUDG B4/LP/Ares(2015) M. Stefan Lehner a informé que toutes les réserves spécifiques et transversales sur le RNB luxembourgeois ont été levées. L’information a été transmise au STATEC par Eurostat à la date du 17 décembre 2015.

Malta: Action taken: YES; Action completed: NO; Completion date:

NSO addressed the outstanding reservation in the latest GNI quality report dated 4 October 2016. Once official confirmation by EUROSTAT is received, the pending reservation will be lifted.

Fuq “Punti miftuħa” tal-RPT: To date, 2 out of the 4 points have been addressed by the MT Government.

Netherlands: Action taken: YES; Action completed: NO; Completion date:

TOR: 3 of the 48 points that remained open on 31-12-2015 have been resolved in 2016. The other points are still the subject of correspondence between the Commission and the Netherlands. The points that remained unresolved on 31-12-2015 are or will be settled in bilateral talks between the European Commission and the Netherlands. In the case of 16 of the 48 points unresolved on 31-12-2015 the Netherlands was waiting for a reply or follow-up reply from the Commission. For 32 of the 48 open points the onus was on the Netherlands to reply to the Commission. In 2014 one subpart of one of the 48 points was settled. Because the other subparts of the point had not been resolved the entire point was still classified as open on 31-12-2015.

Poland: Action taken: YES; Action completed: NO; Completion date: In reference to GNI 14/04/2016, in reference to TZW 14/07/2015

GNI

The European Commission notified Polish authorities of its withdrawal of specific reservations 1‒3, 5‒8, 10 and 11 as well as horizontal reservations V and VIII related to Poland in its letter of 14 April 2016 (Ref. No: Ares (2016)1766182).

At the moment there are no reservations related to Poland’s GNI.

VAT

Since the reservations referred to in Annex 4.3 in Chapter 4 may be raised by Member States or the European Commission in respect of methodology used for calculations or data used for calculations related to establishing a VAT-based EU own fund basis, and work on resolving issues included therein and subsequent repeal thereof is a continuous process that relies on close cooperation between the administration of a Member State and the European Commission, in the opinion of Poland, Annex 4.3 should indicate three reservations related to VAT against Poland.

TOR

In the observation, the ECA indicated seven open points as at 31 December 2015, while Poland kindly explains that since September 2015, it has not been aware of any open point. The circumstances of the case are as follows: having conducted on 12–16 November 2012 an audit for the purposes of the Statement of Assurance for the financial year 2012 (DAS 2012) in respect of traditional own resources, the ECA made eight preliminary findings (in 17 points), which were presented in the letter of 6 February 2013 from the ECA to the Supreme Chamber of Control (NIK) – Ref. No PF-5410. Such preliminary findings, replies of Polish authorities, and the ECA’s letter with the analysis of letters from Polish authorities were forwarded to the European Commission’s DG Budget, which in its letter of 4 September 2015, No 3651543 informed that in response to the replies of Polish authorities (the last reply of Poland to the European Commission was included in the letter of 14 July 2015, No DC2.9021.13.2015.PXM), the Commission departments regarded preliminary findings sheet PF 5410/12 as closed.

Portugal: Action taken: YES; Action completed: NO; Completion date:

Having examined the remaining open points referred to in the reports drawn up by the Commission pursuant to Article 18 of Regulation (EC, Euratom) No 1150/2000, the Tax and Customs Authority has reached the following conclusions:

•    The Authority has drawn up new instructions regarding the accounting treatment to be applied when outstanding debt is time-barred. In accordance with Circular No 15383 of 15 July 2015, amounts must be declared non-recoverable once the debt is time-barred; the survey of cases where the amounts were corrected because of time-barring has been completed, and a proposal has been made to a higher level that the amounts in question be made available on a provisional basis.

•    The Commission requested additional information about a number of points, and those points are therefore still open.

•    There are also a number of cases that are now being finalised, as the amounts in question have already been made available to the Commission; in some of these cases, we are waiting to receive the request for payment of the interest due.

•    The cases relating to the 2015 and 2016 inspections have also been analysed.

As regards report No 15-10-1, we are awaiting the Commission’s opinion on the reply to letter No 81245 of 7 January 2015 (two open cases).

As regards report No 16-10-1, we are awaiting the Commission’s opinion on the reply to letter No 2468575 of 27 May 2015 (one open case).

Romania: Action taken: YES; Action completed: ; Completion date:

As to the GNI-based own resource, on 14 April 2016, as confirmed by COM letter Ref. Ares (2016)1765638/14 April 2016, all GNI-related reservations have been lifted. Practically, one may consider GNI reservations a closed action on 14.04.2016. The corresponding box was not, however, checked since the table also contained references to the other own resources. UCRBUE (Coordinating Unit for Relations with the European Union)

As to the VAT-based own resource, from the three reservations existing on 31.12.2015, two have been lifted (which is confirmed by COM Draft Conclusions No Ref. Ares 2869670 of 21 June 2016) and only the general joint COM – RO reservation regarding the automatic compensation remains in force. UCRBUE + INS (National Institute of Statistics)

As to the traditional own resources, there are 16 outstanding reservations in the inspection reports of the European Commission, drawn up in the period 2011-2015, as illustrated in the above table. General Customs Directorate + UCRBUE

Slovakia: Action taken: YES; Action completed: NO; Completion date:

Financial Directorate: TOR open points as at 31 December 2015 concern TOR inspections by the Commission (DG BUDGET) carried out in 2013 and 2014. The Financial Directorate and DG BUDGET are engaged in correspondence on all points in a bid to close those that are open. As at November 2016, all points from the 2013 inspection had been closed, and only one point from the 2014 inspection remained, in relation to which further communication is being held between the Financial Directorate and DG BUDGET.

Spain: Action taken: ; Action completed: ; Completion date:

With regard to the two reservations in VAT resources at 31-12-2015:

the European Commission withdrew the reservation concerning the weighted average rate in its summary document on the inspection visit of 3 May 2016 after receiving the necessary explanations and calculations from Spain.

the second reservation was notified officially to Spain for the first time by the document transmitting the VAT inspection report for 2012-2013 dated 27 August 2015. This reservation was the result of infringement proceeding No 2015/4105 on the exemption of certain services sold through gift boxes. The Spanish authorities are awaiting legal certainty on what the correct VAT treatment of these operations should be in order to assess and quantify a possible financial impact on the contribution of the VAT own resource. This reservation is the only one currently in force in the VAT resource for Spain.

With regard to the reservations concerning Traditional own resources at 31-12-2015:

Follow-up to the points pending arising from the inspections of traditional own resources is carried out by the European Commission (DG Budget) with the Member State in question.’

Sweden: Action taken: NO; Action completed: ; Completion date:

This observation does not require Sweden to take action.

United Kingdom: Action taken: YES; Action completed: YES; Completion date:

VAT Reservations (situation at 31st December 2015) = 10

GNI Reservation (situation at 31st December 2015) = 1

1. Transition from producer's prices to basic prices

The compilation process to make the transition from producer's prices to basic prices in order to value output in accordance with ESA95 should be reviewed.

The compilation process to make the transition from producer's prices to basic prices in order to value output in accordance with ESA95 should be reviewed. Furthermore, the consistency between the scope of taxes and subsidies in the aforementioned transition and the scope of taxes and subsidies from the government accounts used in the estimation of GDP should be ensured. Following ONS work to remedy this incorporated at Blue Book 2016 all the outstanding gross national income (GNI) reservations on a European System of Accounts 1995 (ESA 1995) basis have now been lifted.

VAT Reservations (situation at 31st December 2015) = 10

Six of the ten reservations were lifted in the Commission’s VAT Base Control Summary Report, issued in July 2016. The status of the four remaining reservations is as follows;

I)Gross receipts (period covered: 2012-14)

Discrepancies in the reconciliation and audit trail exercises were identified during the Commission’s 2015 control visit. A methodology for a new and more robust reconciliation has been developed while the audit trail issue is currently under investigation. Both topics will be discussed with the Commission during their 2017 control visit.

II)Small exempt firms (period covered: 2012-14)

Justification of the percentage of sales to final consumer and the input/output ratio is required. The issue is currently under investigation and is to be revised by April 2017.

III)Funeral services (period covered: 2012-14)

Validation of the data used against the underlying data sources is required. The matter is currently under investigation and will be discussed with the Commission during their 2017 control visit.

IV)Car compensation (period covered: 2009-14)

Validation of the data used against the underlying data sources. Significant work has been carried out to improve and simplify the methodology. The matter will be further discussed with the Commission during 2017.

TOR ‘open points’ (situation at 31st December 2015) = 23

The UK recognise that a number of points remain outstanding from previous inspections, many of which are complex in nature. The UK is committed to resolving them and remains in regular correspondence with the Commission via the usual channels.

CHAPTER 6 – Economic, social and territorial cohesion

Paragraphs

Observations in the 2015 Court's Annual Report

Member States' replies

Paragraph 6.3 - footnote 3

Spending under the MFF heading 1.b — ‘Economic, social and territorial cohesion’ aims to reduce development disparities between different regions, restructuring declining industrial areas and to encourage cross-border, transnational and interregional cooperation (2). The policy instruments that support the reinforcement of economic and social cohesion are the following:

- the Cohesion Fund (CF), which finances environment and transport projects in Member States with a per capita GNP of less than 90 % of the EU average (3).

(3) For both 2007-2013 and 2014-2020 programming periods, CF concerns Bulgaria, Czech Republic, Estonia, Greece, Croatia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Portugal, Romania, Slovenia and Slovakia. Spain was eligible for CF transitional support only during the 2007-2013 programming period.

Cyprus: Action taken: ; Action completed: ; Completion date:

With regard to the Cohesion Fund, Cyprus as a Member State will receive funding:

-for the 2007-2013 MFF in the order of EUR 213 204 484 (amount corresponding to the Community Budget). At 31 December 2015 funding of EUR 193 108 178 had been received;

-for the 2014-2020 MFF (in accordance with Commission implementing decision C(2014) 10084) in the order of EUR 269 541 702.

Czech Republic: Action taken: ; Action completed: ; Completion date:

No comment, no specific finding.

Estonia: Action taken: YES; Action completed: NO; Completion date: 31/03/2017

Hungary: Action taken: NO; Action completed: ; Completion date:

Factual finding; no action justified.

Latvia: Action taken: ; Action completed: ; Completion date:

No comment - statistical information provided

Poland: Action taken: ; Action completed: ; Completion date: 

This observation does not include any specific reservations against Poland.

Portugal: Action taken: ; Action completed: ; Completion date:

Nothing relevant to report.

Slovakia: Action taken: ; Action completed: ; Completion date:

In our opinion, the text conveys the state of play.

Slovenia: Action taken: YES; Action completed: YES; Completion date:

Slovenia is entitled to the KS funds within the FP 2007-2013 as well as within the FP 2014-2020. Detailed measures for the extraction of resources from the stated fund (for transport, environmental and energy infrastructure) are presented in OP ROPI (for the period of 2007-2013), as well as in the OP for the implementation of ECP in the period 2014-2020.

Paragraph 6.9(a) - footnote 8

Annex 1.1 sets out the key elements of our audit approach and methodology. For the audit of ‘Economic, social and territorial cohesion’ the following specific points should be noted:

(a) We examined a sample of 223 transactions (7) as defined in Annex 1.1, paragraph 7. The sample is designed to be representative of the range of spending under the MFF heading. In 2015, the sample consisted of transactions from 15 Member States (8).

(8) Bulgaria, Czech Republic, Germany, Greece, Spain, France, Italy, Latvia, Hungary, Austria, Poland, Portugal, Romania, Slovenia and United Kingdom (see Annex 1.3).

Austria:  Action taken: NO; Action completed: ; Completion date:

The CENTRAL EUROPE programme was audited in respect of the ERDF. The beneficiaries of this programme are not just in Austria, but also in eight other Member States. There were no financially quantifiable findings in the ECA audit.

Czech Republic: Action taken: ; Action completed: ; Completion date:

No comment, no specific finding.

France: Action taken: NON; Action completed: NON; Completion date:

Dans le cadre de la préparation de la déclaration d’assurance relative à l’exercice 2015 (réf. 1999FR053DO001), la Cour des comptes européenne a transmis, le 6 avril 2016, ses constatations préliminaires. La France n’a pas encore été rendue destinataire des conclusions de cet audit.

Germany: Action taken: ; Action completed: ; Completion date:

For information purposes only; no answer required.

Greece: Action taken: YES; Action completed: NO; Completion date: 31/12/2016

Hungary: Action taken: NO; Action completed: ; Completion date:

Factual finding; no action justified.

Latvia: Action taken: YES; Action completed: NO; Completion date:

The report on Audit No PF-7153 indicated that in one of the four projects checked a number of shortcomings had been ascertained relating to State aid (two of the three parts of the observation have been retained: the maximum aid intensity has been exceeded and there is no incentive effect that would justify increasing support by 10 %). When providing comments on the draft report, the Latvian authorities set out their arguments and provided supporting documentation, but the final audit report still contains the previously drafted findings. Therefore, following consultations with the authorities concerned, the ECA will be sent the managing authority’s position on the information contained in the report. Given that the coordination of recommendations made in ECA audits falls under the remit of the European Commission, if necessary the information and views collated at national level will also be sent to the European Commission.

Poland: Action taken: ; Action completed: ; Completion date: 

This observation does not include any specific reservations against Poland.

Portugal: Action taken: ; Action completed: ; Completion date:

Nothing relevant to report.

Romania: Action taken: ; Action completed: ; Completion date:

AA (Audit Authority): Regarding the Commission’s supervisory activities of audit authorities in the Member States, we specify that, between 09 November 2015 and 13 November 2015, European Commission auditors from DG REGIO carried out an audit mission at the office of the Audit Authority, the aim of which was to obtain reasonable assurance that the activity of the audit authority complied with the requirements of Council Regulation (EC) No 1083/06, particularly those under Article 62.1.(b) - Audit of operations. Furthermore, the auditors assessed the reliability of the results of the audit activity, presented in the annual control reports and in the annual opinions.

The scope of the audit covered the programmes Regional Operational Programme, Sectoral Operational Programme Increase of Economic Competitiveness, Sectoral Operational Programme Transport, Sectoral Operational Programme Environment, Operational Programme for Cross-Border Co-operation between Romania and Bulgaria.

Up to the date of this document, no final audit report has been issued, the provisional conclusion being, pursuant to the draft audit report, that, as far as Key Requirement No 3 (Adequate procedures for audits of operations) is concerned, the system works, but some improvements are needed (Category 2).

Slovenia: Action taken: ; Action completed: ; Completion date:

Slovenia or the MA has no other comment to ECP Goal 1, also no aditional comment to the scope of audits, carried out by the ECA, nor to the audit procedure and approach, whereabout the MA has no detailed knowledge. However, it is not within the competence of MA to comment on the correctness of the data; e.g. information about the size of the sample of the selected transactions and/or to which Member States these samples would reffer. In so far the EC requires a different response, we would sugest to address the request in clear and an unambiguous manner.

Spain: Action taken: ; Action completed: ; Completion date:

ERDF and COHESION

With regard to observation 6.5 in the Court of Auditors’ report on the risks to regularity for ERDF/CF expenditure when ineligible costs are declared, our experience year after year and the errors detected in audits of transactions require the Intermediate Bodies to increase the administrative checks on expenditure presumed to be eligible. Moreover, all this practice is reinforced with training of managers. All this tends to minimise the risk, though given the complexity and quantity of the numerous measures that the complex Spanish administration carries out under public procurement, minimisation is slow.

With regard to observation 6.7 in the Report concerning the fact that Member States’ authorities face greater risks to the regularity of transactions as the end of the eligibility period approaches, we would point out that Spain proposed to the EU making the ‘n+2 rule’ more flexible so that it can be shown that expenditure previously committed is implemented, although it is asked that compliance with this requirement should not be required by a specific date, pending the necessary checks of the eligibility of this expenditure.

Finally, concerning observation 6.14 on errors in the selection of projects and compliance with EU and national public procurement rules, it is true that most irregular expenditure relates to ineligible expenditure (late payment, failure to provide proof of payment, expenditure not directly related to the project and erroneous allocation of labour or indirect costs) and non-compliance with public procurement rules. However, we would point out that work is being done to remedy these errors and that they never affect large projects, since the Commission itself decides the selection criteria for those projects.

United Kingdom: Action taken: n/a; Action completed: n/a; Completion date:

This section describes the ECA audit scope and approach.

Paragraph 6.9(b) - footnote 9

Annex 1.1 sets out the key elements of our audit approach and methodology. For the audit of ‘Economic, social and territorial cohesion’ the following specific points should be noted:

(b) For financial instruments under shared management, we also reviewed their disbursement rates (i.e. the proportion of funds used at the level of final recipients). This was done on the basis of the Commission’s progress reporting for 2014 and our examination of seven ERDF financial instruments in seven Member States (9).

(9) Bulgaria, Greece, Spain, Italy, Hungary, Poland and United Kingdom.

Greece: Action taken: YES; Action completed: NO; Completion date: 31/12/2016

Hungary: Action taken: NO; Action completed: ; Completion date:

Factual finding; no action justified.

Poland: Action taken: ; Action completed: ; Completion date: 

This observation does not include any specific reservations against Poland.

Spain: Action taken: ; Action completed: ; Completion date:

Spain: Action taken: ; Action completed: ; Completion date:

ERDF and COHESION

With regard to observation 6.5 in the Court of Auditors’ report on the risks to regularity for ERDF/CF expenditure when ineligible costs are declared, our experience year after year and the errors detected in audits of transactions require the Intermediate Bodies to increase the administrative checks on expenditure presumed to be eligible. Moreover, all this practice is reinforced with training of managers. All this tends to minimise the risk, though given the complexity and quantity of the numerous measures that the complex Spanish administration carries out under public procurement, minimisation is slow.

With regard to observation 6.7 in the Report concerning the fact that Member States’ authorities face greater risks to the regularity of transactions as the end of the eligibility period approaches, we would point out that Spain proposed to the EU making the ‘n+2 rule’ more flexible so that it can be shown that expenditure previously committed is implemented, although it is asked that compliance with this requirement should not be required by a specific date, pending the necessary checks of the eligibility of this expenditure.

Finally, concerning observation 6.14 on errors in the selection of projects and compliance with EU and national public procurement rules, it is true that most irregular expenditure relates to ineligible expenditure (late payment, failure to provide proof of payment, expenditure not directly related to the project and erroneous allocation of labour or indirect costs) and non-compliance with public procurement rules. However, we would point out that work is being done to remedy these errors and that they never affect large projects, since the Commission itself decides the selection criteria for those projects.

United Kingdom: Action taken: n/a; Action completed: n/a; Completion date:

This section describes the ECA audit scope and approach.

Paragraph 6.9(c) - footnote 10

Annex 1.1 sets out the key elements of our audit approach and methodology. For the audit of ‘Economic, social and territorial cohesion’ the following specific points should be noted:

(c) We assessed other elements of internal controls and annual activity reports:

(i) the Commission’s supervisory activities of audit

authorities in 16 Member States (10);

(10) Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Germany, Estonia, Spain, France, Italy, Hungary, Poland, Portugal, Romania, Slovakia and United Kingdom.

Czech Republic: Action taken: ; Action completed: ; Completion date:

No comment, no specific finding.

Estonia: Action taken: YES; Action completed: YES; Completion date:

AA

France: Action taken: NON; Action completed: NON; Completion date:

Dans le cadre de la préparation de la déclaration d’assurance relative à l’exercice 2015 (réf. 1999FR053DO001), la Cour des comptes européenne a transmis, le 6 avril 2016, ses constatations préliminaires. La France n’a pas encore été rendue destinataire des conclusions de cet audit.

Germany: Action taken: ; Action completed: ; Completion date:

For information purposes only; no answer required.

Hungary: Action taken: NO; Action completed: ; Completion date:

Factual finding; no action justified.

Poland: Action taken: ; Action completed: ; Completion date: 

This observation does not include any specific reservations against Poland.

Portugal: Action taken: ; Action completed: ; Completion date:

Nothing relevant to report.

Romania: Action taken: ; Action completed: ; Completion date:

AA (Audit Authority): Regarding the Commission’s supervisory activities of audit authorities in the Member States, we specify that, between 09 November 2015 and 13 November 2015, European Commission auditors from DG REGIO carried out an audit mission at the office of the Audit Authority, the aim of which was to obtain reasonable assurance that the activity of the audit authority complied with the requirements of Council Regulation (EC) No 1083/06, particularly those under Article 62.1.(b) - Audit of operations. Furthermore, the auditors assessed the reliability of the results of the audit activity, presented in the annual control reports and in the annual opinions.

The scope of the audit covered the programmes Regional Operational Programme, Sectoral Operational Programme Increase of Economic Competitiveness, Sectoral Operational Programme Transport, Sectoral Operational Programme Environment, Operational Programme for Cross-Border Co-operation between Romania and Bulgaria.

Up to the date of this document, no final audit report has been issued, the provisional conclusion being, pursuant to the draft audit report, that, as far as Key Requirement No 3 (Adequate procedures for audits of operations) is concerned, the system works, but some improvements are needed (Category 2).

Slovakia: Action taken: ; Action completed: ; Completion date:

In our opinion, the text conveys the state of play.

Spain: Action taken: ; Action completed: ; Completion date:

ERDF and COHESION

With regard to observation 6.5 in the Court of Auditors’ report on the risks to regularity for ERDF/CF expenditure when ineligible costs are declared, our experience year after year and the errors detected in audits of transactions require the Intermediate Bodies to increase the administrative checks on expenditure presumed to be eligible. Moreover, all this practice is reinforced with training of managers. All this tends to minimise the risk, though given the complexity and quantity of the numerous measures that the complex Spanish administration carries out under public procurement, minimisation is slow.

With regard to observation 6.7 in the Report concerning the fact that Member States’ authorities face greater risks to the regularity of transactions as the end of the eligibility period approaches, we would point out that Spain proposed to the EU making the ‘n+2 rule’ more flexible so that it can be shown that expenditure previously committed is implemented, although it is asked that compliance with this requirement should not be required by a specific date, pending the necessary checks of the eligibility of this expenditure.

Finally, concerning observation 6.14 on errors in the selection of projects and compliance with EU and national public procurement rules, it is true that most irregular expenditure relates to ineligible expenditure (late payment, failure to provide proof of payment, expenditure not directly related to the project and erroneous allocation of labour or indirect costs) and non-compliance with public procurement rules. However, we would point out that work is being done to remedy these errors and that they never affect large projects, since the Commission itself decides the selection criteria for those projects.

United Kingdom: Action taken: n/a; Action completed: n/a; Completion date:

This section describes the ECA audit scope and approach.

Figure 6.3

Example of ineligible costs declared

United Kingdom: Action taken: n/a; Action completed: n/a; Completion date:

The ECA has used a UK project as a case study to illustrate the issues with EU projects that involve cost reimbursements. The ECA has not identified the project referred to here. Errors are often unintentional and minor compliance breaches of complex regulations; they do not usually represent fraud or negligence by claimants.

Figure 6.4

Example of ineligible project

Czech Republic: Action taken: NO; Action completed: NO; Completion date:

The OPEI MA is awaiting the Commission’s opinion as to how individual findings are passed on. The OPEI MA does not accept the ECA auditors’ conclusion regarding the size of entities applying for/benefitting from grants and the verification of the real owner of the project.

The beneficiary has complied with its obligation under the provisions laid down in the ‘Conditions for the provision of grants’ and notified the change of ownership structure (information on the project notice board in eAccount and ISOP 7-13, 9 February 2012). The OPEI MA believes that the change of ownership structure did not have any effect on SME status. Administrative verifications/checks by the intermediary body (IB) always assess the size of the company and any changes in that regard based on the document ‘Definition of SMEs’ i.e. the interpretation given in Recommendation 2003/361/EC of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises. The definition of an SME covers associations of companies up to 25 % of capital or voting rights. As for the partner enterprises (between 25 and 50 %), the figures are attributed to the applicant/beneficiary entity on a pro rata basis, whereas with connected/associated companies (share above 50 %) they count in full. In the case of an ownership stake of 20 + 2 % in Ekol spol. s r.o. this cannot, as the ECA says, constitute a dominant influence and accordingly this cannot be considered a case of connection with EnergoFuture a.s.

ANLP s.r.o., which has a dominant influence in EnergoFuture, a.s. (78 % ownership), keeps records of the commitment of CZK 61.7 million towards Ekol. We can agree that ANLP is not entirely independent of Ekol. The definition of SME in Recommendation No 2003/361/EC does not cover connected undertakings in case of outstanding commitments.

In the view of the OPEI MA and the IB this cannot be considered as a case of connected companies even via natural persons. Jaromír Kříž owns a marginal share of 0.5 % in Ekol and as a member of the Board of Directors he may represent EnergoFuture always jointly, rather than independently. Stanislav Veselý and Gustav Poslušný who have an ownership stake in Ekol are also chairman and member of the supervisory board of EnergoFuture. According to the Articles of Association of EnergoFuture, the supervisory board is a monitoring authority and does not in itself have any decisionmaking powers in relation to the direction or management of the company.

Poland: Action taken: ; Action completed: ; Completion date:

The information does not provide any specific example of a non-eligible project in Poland, and consequently, it is impossible to respond to specific allegations raised by the ECA. General clarifications relating to, for example, eligibility errors are provided in the answer to question 1.1 in Annex III.

Figure 6.5

Example of serious failure to comply with public procurement rules

Germany: Action taken: NO; Action completed: ; Completion date:

On 1 June 2016, the managing authority of the Federal Transport Programme sent an opinion to the European Court of Auditors (ECA) and the European Commission. Additional works (1.3 %) and modified works (89.3 %) were directly awarded to the same contractor via amendments to the contract. According to the legal interpretation of the aforementioned managing authority, Article 31 of Directive 2004/18/EC applies to additional works but not to modified works. The ECA’s final audit communication has not yet been issued.

United Kingdom: Action taken: n/a; Action completed: n/a; Completion date:

The UK is one of three countries the ECA has used as a case study to illustrate the issues with EU projects that involve cost reimbursements. The ECA has not identified the projects referred to here. Errors are often unintentional and minor compliance breaches of complex regulations; they do not usually represent fraud or negligence by claimants.

Paragraph 6.24 - footnote 21

In May 2016, the Commission has addressed letters of formal notice whereby the Commission reminds them of their overdue obligation to enact in national law the three EU directives to 20 out of the 28 Member States (21).

(21) The eight Member States that implemented all three new Directives are: Denmark, Germany, France, Italy, Hungary, Romania, Slovakia and the United Kingdom.

Denmark: Action taken: ; Action completed: ; Completion date:

Footnote 21 refers to the fact that Denmark is one of the eight Member States which have implemented all three Directives. We have no comments on this.

France: Action taken: OUI; Action completed: OUI; Completion date:

La transposition des directives en France a été effectuée dans les délais impartis par la Commission :

La directive 2014/23/UE a été transposée de manière complète par la publication des textes suivants : le décret n° 2014-1341 du 6 novembre 2014 modifiant le décret n° 2010-406 du 26 avril 2010 relatif aux contrats de concession de travaux publics et portant diverses dispositions en matière de commande publique ; l’ordonnance n° 2016-65 du 29 janvier 2016 relative aux contrats de concession ; la loi n° 2015-990 du 6 août 2015 pour la croissance, l’activité et l’égalité des chances économiques (article 209) ; le décret n° 2016-86 du 1er février 2016 relatif aux contrats de concession ; l’arrêté du 21 mars 2016 fixant le modèle d’avis pour la passation des contrats de concession ; l’avis relatif aux seuils de procédure et à la liste des autorités publiques centrales en droit de la commande publique ; l’avis relatif à la liste des activités qui sont des travaux en droit de la commande publique ; l’avis relatif aux contrats de la commande publique ayant pour objet des services sociaux et autres services spécifiques.

La directive 2014/24/UE et la directive 2014/25/UE ont été transposées de manière complète par la publication des textes suivants : l’ordonnance n° 2015-899 du 23 juillet 2015 relative aux marchés publics ; la loi n° 2014-1545 du 20 décembre 2014 relative à la simplification de la vie des entreprises et portant diverses dispositions de simplification et de clarification du droit et des procédures administratives (article 42) ; le décret n° 2016-360 du 25 mars 2016 relatif aux marchés publics ; le décret n° 2016-361 du 25 mars 2016 relatif aux marchés publics de défense ou de sécurité ; l’arrêté du 29 mars 2016 fixant la liste des renseignements et des documents pouvant être demandés aux candidats aux marchés publics ; l’avis relatif à la liste des dispositions internationales en matière de droit environnemental, social et du travail permettant de rejeter une offre comme anormalement basse en matière de marchés publics ; l’avis relatif à la nature et au contenu des spécifications techniques dans les marchés publics ; l’avis relatif aux seuils de procédure et à la liste des autorités publiques centrales en droit de la commande publique ; l’avis relatif à la liste des activités qui sont des travaux en droit de la commande publique ; l’avis relatif aux contrats de la commande publique ayant pour objet des services sociaux et autres services spécifiques.

Germany: Action taken: ; Action completed: ; Completion date:

For information purposes only; no answer required.

Hungary: Action taken: YES; Action completed: YES; Completion date: 01.11.2015

The most important measure and the most significant result in 2015 as regards public procurement was the passing of the new public procurement act (Act CXLIII of 2015 on Public Procurement) and its entry into force on 1 November 2015. By passing the new Public Procurement Act and its implementing regulations, Hungary was the first of the EU Member States to transpose all three of the new EU’s public procurement directives. These pieces of legislation were the result of wide social dialogue. Professional chambers, interest representation organisations, and external experts were all involved in the preparation of the draft legislation. Additionally, the PMO’s experts responsible for preparing the draft also consulted with the Commission’s experts on numerous occasions, both by video conferencing and in personal meetings. As a result of the above and the extended deadline for social consultation, many recommendations were included into the text. The parliamentary session held before the new Public Procurement Act was passed included consultations with the representatives of the parties in parliament. The draft was again amended to take into account their recommendations.

Romania: Action taken: YES-MFE; Action completed: YES; Completion date: 26/05/2016

MFE: Romania transposed the three European directives into national law, through three primary legislative acts, as follows:

1.Law No 98/2016 on public procurement;

2.Law No 99/2016 on sectoral procurement;

3.Law No 100/2016 on works and services concessions.

They were approved by the Parliament and signed into law, entering into force on 26 May 2016.

In June, the Government of Romania approved the secondary legislation, namely:

1.Government Decision No 395/2016 approving the implementing rules for the provisions regarding the award of public procurement contracts/framework agreements under Law No 98/2016 on public procurement;

2.Government Decision No 394/2016 approving the implementing rules for the provisions regarding the award of sectoral contracts/framework agreements under Law No 99/2016 on sectoral procurement.

The secondary legislation for services concessions will be also adopted by the end of this year.

Slovakia: Action taken: ; Action completed: ; Completion date:

In our opinion, the text conveys the state of play.

United Kingdom: Action taken: n/a; Action completed: n/a; Completion date:

The ECA has recognised the UK’s progress in enacting the new EU directives on public procurement.

Paragraph 6.28 - footnote 26

We identified this year seven ERDF/CF projects in five Member States that infringed the EU state aid rules (26). Where necessary, we requested and obtained a preliminary assessment by the Directorate-General for Competition. This assessment and the case law of the European Court of Justice were taken into account when classifying errors.

(26) Czech Republic, Italy, Latvia, Poland and United Kingdom.

Czech Republic: Action taken: NO; Action completed: NO; Completion date:

The MA of the programme does not accept the conclusion of the ECA’s auditors regarding infringement of EU State aid rules. The MA is of the opinion that the subsidy of 40 % complies with the call and the regional aid map. The OPEI MA is awaiting the Commission’s opinion as to how individual findings are passed on.

Latvia: Action taken: YES; Action completed: NO; Completion date:

Having assessed the information contained in the audit report along with DG COMP’s position on this issue, we consider that in Latvia’s case the Court of Auditors has not conducted a sufficient evaluation of whether financing provided by public bodies or public capital companies is deemed private assets to which the rules on State aid do not apply, and it has also not taken into account DG COMP's explanations regarding instances of increased intensity in the context of an incentive effect. We therefore consider that in Latvia’s case the State aid rules have not been infringed.

Poland: Action taken: NO; Action completed: NO; Completion date:

The Managing Authority for the Infrastructure and Environment Operational Programme (POIiŚ) has not received the final position of the ECA. The Managing Authority for POIiŚ does not agree with the allegations made by the ECA in the specific cases where the legality of State aid was questioned.

United Kingdom: Action taken: n/a; Action completed: n/a; Completion date:

The UK is one of five countries the ECA sampled where state aid infringements were found. The ECA has not identified the projects referred to here. Errors are often unintentional and minor compliance breaches of complex regulations; they do not usually represent fraud or negligence by claimants.

Figure 6.6

Example of a project infringing state aid rules

Latvia: Action taken: YES; Action completed: NO; Completion date:

Having assessed the information contained in the audit report along with DG COMP’s position on this issue, we consider that in Latvia’s case the Court of Auditors has not conducted a sufficient evaluation of whether financing provided by public bodies or public capital companies is deemed private assets to which the rules on State aid do not apply, and it has also not taken into account DG COMP's explanations regarding instances of increased intensity in the context of an incentive effect. We therefore consider that in Latvia’s case the State aid rules have not been infringed.

Poland:  Action taken: NO; Action completed: NO; Completion date:

The Managing Authority for POIiŚ does not agree with the allegations made by the ECA in its initial report. The Managing Authority for POIiŚ has not received the final position of the ECA.

United Kingdom: Action taken: n/a; Action completed: n/a; Completion date:

The UK is one of two countries the ECA has used as a case study to illustrate the issues with EU projects that infringe state aid rules. The ECA has not identified the projects referred to here. Errors are often unintentional and minor compliance breaches of complex regulations; they do not usually represent fraud or negligence by claimants.

Paragraph 6.33 - footnote 30

For example, the Court of Justice ruled in 2012 that VAT must be considered recoverable whenever an operator charges fees with VAT to the ultimate users of the infrastructure (30). We identified three cases where recoverable VAT was declared by public bodies as eligible cost (see Figure 6.7).

(30) Case T-89/10, Hungary v Commission, judgement of 20 September 2012 of the General Court.

Hungary: Action taken: YES; Action completed: NO; Completion date:

The Member State will take into consideration the judgment referred to in the finding and will proceed accordingly in similar cases.

Figure 6.7

Example of ineligible VAT

Germany: Action taken: ; Action completed: ; Completion date:

The Commission already has all the information at its disposal; see Annex II.

Hungary: Action taken: NO; Action completed: NO; Completion date:

The Commission’s English follow-up letter regarding the ECA audit was received by the Managing Authority on 05 October 2016. The Member State has 2 months to respond to the Commission’s letter or, if necessary, initiate corrective measures, starting from the time the letter is received in Hungarian. The end date of the action can therefore presently not be determined.

Paragraph 6.38

By the end of 2014, 1 025 financial instruments had been set up under 183 ERDF and ESF OPs in all but three Member States (Ireland, Croatia and Luxembourg). Taken together, they have an endowment of around 16 018 million euro (36).

Ireland: Action taken: YES; Action completed: NO; Completion date:

We appreciate the increasing emphasis on Financial Instruments for delivering EU funding across EU funding lines and we are engaged in examining opportunities across all relevant sectors. It should be noted that Ireland examined the potential for using FIs in the current ERDF programmes (including a feasibility study conducted by the EIB) and found that there was no scope for using FIs at present. The Irish EAFRD and EMFF MAs are currently undertaking an ex-ante assessment of FI use in their programmes and we await the results of that assessment.

Luxembourg: Action taken: ; Action completed: ; Completion date:

FEDER : La valeur de l’enveloppe financière est jugée trop faible pour recourir à des IFs. Il a été jugé que la mise en place d’IFs pour les POs au Luxembourg engendra des coûts supplémentaires et une complexité accrue (au niveau de la gestion, de l’administration et du contrôle) disproportionnés par rapport aux avantages éventuels.

Paragraph 6.42

Figure 6.8 presents the disbursement rates for financial instruments financed by ‘Economic, social and territorial cohesion’ as at 31 December 2014. Already in our last annual report we have pointed to the difficulties of several Member States to use the endowments of the financial instruments in full. We note particular problems with low disbursement rates in six Member States (Greece, Spain, Italy, Netherlands, Austria and Slovakia) compared to the EU average.

Austria: Action taken: NO; Action completed: ; Completion date:

Financial instruments were used in two ERDF programmes. However, it is important to note that these instruments were allocated very little funding from the outset, by comparison with the rest of Europe. Moreover, the actual use made of financial instruments, is only clear when the programme is closed. This will be on 31 March 2017.

Greece: Action taken: YES; Action completed: NO; Completion date: 31/12/2016

Ministry of the Economy and Development: for the financial instruments for the 2007-2013 period, the departments of the Ministry of the Economy and Development carried on continuous and persistent discussions and negotiations with the European Commission for the removal or mitigation of any difficulties that had been identified in terms of regulations in order to bring about the improvement of absorption. In addition to this, we would point to the achievement of the removal of the prohibition on the funding of capital movement, which was achieved at the end of 2012, and the possibility of combining subsidies with simultaneous funding from financial instruments, achieved in 2013. Negotiations with the European Commission are continuing even now, in order for it to become possible for pre-existing loans to be incorporated into the financial instruments of the new period. In addition, proposals are being examined in all areas in order to sketch out ways and means for funding that will satisfy the overwhelming majority of Greek enterprises. However, it should be pointed out that prior to the implementation of any of the above, care is taken to ensure that they are compatible with national and EU rules and that their implementation does not infringe competition rules.

Netherlands: Action taken: YES; Action completed: YES; Completion date:

In anticipation of the regulations for the new period (according to which payments follow the liquidity), the funds were not fully paid in all at once, for reasons of sound financial management. They were also launched late. Nevertheless, we can now state that all funds have been almost completely exhausted and virtually all the funds deposited have been converted into loans and contributions to final beneficiaries.

Slovakia: Action taken: YES; Action completed: NO; Completion date: runs (until the end of the eligibility of expenditure at the national level)

Ministry of Education, Science, Research and Sport: The managing authority is making every effort to ensure that financial resources contracted under the JEREMIE initiative are exhausted. As at August 2016, 53.44 % of the financial resources had been exhausted, a rise by 34 percentage points compared to the report presented in the infographic (Figure 6.8 of the 2015 Annual Report). To ensure that the allocation is exhausted, the managing authority is locked in intensive communication with the EIF’s successor for the JEREMIE initiative – Slovenská záručná a rozvojová banka Asset Management, a.s.

Ministry of Economy: Under the Operational Programme Competitiveness and Economic Growth, uptake within the scope of the JEREMIE financial instrument was increased by EUR 40 million (the payment claim of 16 November 2015) and within the scope of the JESSICA III financial instrument by EUR 59 million (the payment claim of 28 December 2015).

Spain: Action taken: ; Action completed: ; Completion date: 

ESF

As regards the ESF, Spain plans to use financial instruments in two operational programmes in the 2014-2020 MFF. In 2015 and 2016 managers and technical staff from the managing and certifying authorities participated in various events organised by the European Commission to improve their training in these instruments.

Figure 6.8

Disbursement rates for financial instruments financed by 'Economic, social, and territorial cohesion' as at 31 December 2014.

Austria:  Action taken: NO; Action completed: ; Completion date:

See comment to 6.42.

Bulgaria: Action taken: ; Action completed: ; Completion date:

ME: The overall budget of the JEREMIE initiative for the 2007—2013 programming period was MEUR 349. It was allocated for the implementation of five types of financial instruments: 1) First loss portfolio guarantee; 2) Portfolio risk sharing fund; 3) Entrepreneurship acceleration and seed funds; 4) Risk capital fund; and 5) Co-investment fund, with 17 financial operations. The agreement between the JEREMIE Holding Fund and the European Investment Fund (EIF) was signed in 2010, and the first instrument was launched at the end of 2011. The period 2013—2014 was characterised by initial maturity of financial instruments, which may explain the low levels of absorption. As stated in EIF reports as of 30 August, according to data from financial intermediaries as of 30 June 2016 (the end date for all financial operations under all financial instruments) the total amount of funds under negotiated transactions with financial intermediaries amounted to MEUR 362.85, of which MEUR 355.37 were actually allocated to SMEs and used for management fees. This represents more than 100 % utilisation of the entire portfolio. If necessary, the over-utilisation will be covered using receipts from recycled resources.

Cyprus:  Action taken: ; Action completed: ; Completion date: 

With regard to financial instruments, the disbursement rate at 31 December 2015 was 100 %.

Czech Republic: Action taken: ; Action completed: ; Completion date:

No comment, no specific finding.

Denmark:  Action taken: YES; Action completed: NO ; Completion date: 31/12/2016

The final payment for all financial instruments under the ERDF and ESF programmes for 2007-2013 will be made in 2016.

Estonia:  Action taken: YES; Action completed: NO ; Completion date: 31.03.2017

Finland:  Action taken: YES; Action completed: NO; Completion date:

Action fully achieved by the end of the programming period.

France: Action taken: NON; Action completed: NON; Completion date: Date de clôture des instruments financiers

Chaque autorité de gestion a pu prendre des mesures propres pour ses instruments, il n’y a pas d’action nationale. Les données actualisées ne seront connues qu’à la clôture des instruments financiers.

Germany: Action taken: ; Action completed: ; Completion date:

For information purposes only; no answer required.

Greece: Action taken: YES; Action completed: NO; Completion date: 31/12/2016

Ministry of the Economy and Development: In order to improve the rate of absorption of the financial instruments resources, actions have been taken such as:

•    a system of continuous detailed monitoring of progress in the implementation of the financial instruments has been put in place, making it possible to intervene immediately to provide instructions and corrective actions where these are required. The result of this was an increase in the absorption percentage of these resources to 50.42 % as at July 2015, compared with 9.25 % in the corresponding month in 2013. On the basis of this monitoring system, monthly progress reports are issued on progress in the implementation of the financial instruments.

•    in order to estimate more accurately the forecast absorption and the likely risk of losing resources, the body carried out in-depth analysis of the progress made in implementing the financial instruments, broken down by type and product, and by operational programme. The aim of the analysis was to examine in detail the level of completion and the prospect for each financial instrument, in conjunction with the absorption of the other actions in the national priority pillars, in order to reach a clear conclusion as to whether there was a risk of the resources not being absorbed in time. It emerged from this analysis that there was no clear risk of the loss of resources from the financial instruments, as even in the worst-case scenario of the resources which had been made available for them not being absorbed, the difference could be covered by other entrepreneurship actions.

•    simplification of the procedure for transferring resources between the EIB and banks in the former Hellenic Guarantee Fund of the European Investment Bank for Small and Medium Enterprises

•    an attempt to work together with the Ministry of the Economy in order to make it possible to issue a special type of tax clearance (without deduction) for financial engineering instruments actions.

•    transfer of ICT resources to traditional entrepreneurship actions in five transitional regions.

•    attempt at further simplification of procedures at all levels by the managers of the funds

Hungary: Action taken: NO; Action completed: ; Completion date:

Factual finding; no action justified.

Ireland: Action taken: YES; Action completed: NO; Completion date:

We appreciate the increasing emphasis on Financial Instruments for delivering EU funding across EU funding lines and we are engaged in examining opportunities across all relevant sectors. It should be noted that Ireland examined the potential for using FIs in the current ERDF programmes (including a feasibility study conducted by the EIB) and found that there was no scope for using FIs at present. The Irish EAFRD and EMFF MAs are currently undertaking an ex-ante assessment of FI use in their programmes and we await the results of that assessment.

Latvia: Action taken: YES; Action completed: NO; Completion date:

To ensure that 100 % of finances for activities under the 2007–2013 programming period financial instrument (FI) are utilised, their implementation has been extended to 31 October 2016 (the appropriate amendments have been made to the Cabinet Regulation on the implementation of activities and sub-activities). The closure process is taking place during 2016, including the preparation of a final report for submission to the Commission; the final declaration of expenditure is also being drawn up, as a result of which it is anticipated that Latvia will be able to receive 100 % EU fund financing. The results of completed measures will be reflected in the final declaration of expenditure, which Latvia will submit in accordance with regulatory provisions by 31 March 2017, at which point they will be deemed complete.

Lithuania:  Action taken: YES; Action completed: YES; Completion date: 31/12/2015

As at 31 December 2015, 100 % of EU structural fund resources allocated to the implementation of financial instruments had been used.

Luxembourg:  Action taken: ; Action completed: ; Completion date:

n/a

Netherlands:  Action taken: ; Action completed: ; Completion date:

Not applicable.

Poland: Action taken: ; Action completed: ; Completion date:

This observation does not include any specific reservations against Poland.

Portugal: Action taken: ; Action completed: ; Completion date:

Nothing relevant to report.

Slovakia:  Action taken: YES; Action completed: NO; Completion date:

Ministry of Education, Science, Research and Sport: The managing authority is making every effort to ensure that financial resources contracted under the JEREMIE initiative are exhausted. As at August 2016, 53.44 % of the financial resources had been exhausted, a rise by 34 percentage points compared to the report presented in the infographic (Figure 6.8 of the 2015 Annual Report). To ensure that the allocation is exhausted, the managing authority is locked in intensive communication with the EIF’s successor for the JEREMIE initiative – Slovenská záručná a rozvojová banka Asset Management, a.s.

Ministry of Economy: Under the Operational Programme Competitiveness and Economic Growth, uptake within the scope of the JEREMIE financial instrument was increased by EUR 40 million (the payment claim of 16 November 2015) and within the scope of the JESSICA III financial instrument by EUR 59 million (the payment claim of 28 December 2015).

Slovenia: Action taken: ; Action completed: ; Completion date:

Concerning the financial instruments (Observation 3) the MA checked about the level of payments in the context of cohesion policy. ECA indicates in its report, that the rate in Slovenia was 90%. From the quartal report, delivered to the EC by the MA, we can understand, that on the 31st December 2014 the 78% of the FI funds were allocated to the final recipients. The methodology of calculating this rate, used by the ECA, was not known to us, therefore we cannot claim, that the reported data is not false.

The finding of the ECA refers to the statement, that the rate is relatively low in average, however, considering the fact, that this rate is higher than the average in Slovenia, this finding is likely irrelevant for Slovenia. In Slovenia there were no special measures needed to be implemented in order to increase the absorption.

Sweden: Action taken: NO; Action completed: ; Completion date:

This observation does not require Sweden to take action.

United Kingdom: Action taken: n/a; Action completed: n/a; Completion date:

n/a - the map shows the rate of disbursement in Financial Instruments by Member State .

Figure 6.9

Example of an inleigible loan (ineligible recipent).

Hungary:  Action taken: NO; Action completed: ; Completion date:

The Managing Authority submitted its comments on the ECA audit in April 2016. The ECA’s final standpoint is not presently available to the MS so no corrective measures have yet been taken. The end date of the action can therefore presently not be determined.

Paragraph 6.81 - footnote 57

For the remaining two cases (1 %), we could not assess the output of the projects either because specific targets in the output objectives were not set at the stage of the approval of the project or the managing authority/intermediate body could not provide appropriate documentation to us to substantiate that such targets had been specified and communicated to the beneficiary (57). Therefore, we cannot assess whether or to what extent these projects contributed to the achievement of the OP objectives.

(57) These two projects were in Spain and Germany.

Germany:  Action taken: ; Action completed: ; Completion date:

For information purposes only; no answer required.

Spain:  Action taken:YES; Action completed: ; Completion date:

ESF

Under the new programming framework and in line with a result-oriented approach, all transactions must contribute to attaining a specific objective. The indicator values show whether these objectives have been achieved.

Figure 6.11

Example of a project which fully achieved its objectives.

Figure 6.12

Example of a project which did not achieve its objectives.

Poland:  Action taken: YES; Action completed: NO; Completion date:

This finding refers to project No POIG.01.04.00-06-029/11 SMF POLAND Sp. z o. o. The Implementing Body (Polska Agencja Rozwoju Przedsiębiorczości – PARP) and the Managing Authority for the Innovative Economy Operational Programme (POIG) did not agree with the ECA’s findings, and they informed the ECA thereof in their reply to preliminary findings. The reply to preliminary findings was forwarded to the European Commission for reference. As at 2 November 2016, neither the ECA, nor the European Commission has expressed its position towards the reply to preliminary findings. Irrespective of the above, the PARP terminated the project financing agreement with the beneficiary as of 2 June 2016 (failure to implement the project was stated as the reason for termination) and it is following the procedure to recover the funds handed over for the project implementation.

Paragraph 6.87

Our assessment in 15 Member States sampled showed that such cases were identified in 13 of them. However, the issue is particularly prevalent in Czech Republic, Spain, France, Italy, Latvia and Austria for ERDF/CF and Czech Republic, Germany, Spain and Poland for ESF. In these countries result indicators were not defined for more than half of the completed projects examined.

Austria:  Action taken: NO; Action completed: ; Completion date:

The findings of the ECA relate to projects in the transnational ETC CENTRAL EUROPE Programme. It is particularly difficult to define result indicators for the project types in the network programmes.

Czech Republic:  Action taken: NO; Action completed: NO; Completion date:

In accordance with the legislation in force for the period 2007-2013, the monitoring of the result indicators is required only at the level of the operational programme and priority axis level and not at project level. We therefore reject, in principle, the idea that that conclusion be presented as a finding in the context of the annual report. From the point of view of methodology, in terms of projects in the Czech Republic it is mandatory to look only at the main quantified indicator. The monitoring of result indicators in the projects is not obligatory in the Czech Republic as a whole or specifically according to the national methodology. When the indicator systems were developed, particular emphasis was put on the link between quantified and result indicators rather than the monitoring of result indicators already at project level. In view of the nature of result indicators, it is very often difficult to monitor and evaluate them in such detail.

France:  Action taken: OUI; Action completed: OUI; Completion date:

Pour la période 2007-2013, le suivi des réalisations était requis au niveau de chaque projet et c’est ce qui a été pleinement effectué par les autorités de gestion françaises. L’observation de la CCE mentionne l’absence du suivi des résultats ou de valeurs cibles dans les documents d’approbation des projets. Les résultats ont analysés à travers les différentes évaluations qui ont été conduites par les autorités de gestion pendant le programme. De ce fait, la notion de résultat est plus liée à une thématique ou bien à un type de soutien qu’au niveau de chaque projet individuellement.

Germany:  Action taken: ; Action completed: ; Completion date:

For information purposes only; no answer required.

Latvia:  Action taken: YES; Action completed: YES; Completion date: 11 November 2014

When drawing up the 2007–2013 programming documents, the strategic orientation referred to in the 2006 Commission working document 'INDICATIVE GUIDELINES ON EVALUATION METHODS: MONITORING AND EVALUATION INDICATORS Working Document No. 2'* was used for the purpose of determining result indicators, i.e. in contrast to output indicators, result indicators are mainly determined to reflect the total contribution of one or perhaps more activities to a sector’s development, assessing the outcome not only on the basis of project data, but using statistical sector information (e.g. passenger time savings in connection with improved roads, etc.). During the 2014–2020 programming period the Commission changed its approach and these improvements have in turn been made at national level in line with the Commission guidelines.

* http://ec.europa.eu/regional_policy/sources/docoffic/cocof/2006/cocof_06_0010_00_en.pdf .

On 11 November 2014 the Commission approved the operational programme ‘Growth and jobs’ setting out indicators, and a corresponding agreement has been reached with the Commission and the methodology for calculating indicators and data sources have been established.

Poland:  Action taken: ; Action completed: ; Completion date:

The observations were expressed in PF-7202 and PF-7209 reports. The Managing Authority for the Human Capital Operational Programme (POKL), acting also as the Managing Authority for the Knowledge Education Development Operational Programme (POWER), upholds its clarifications provided in response to the reports. According to the clarifications, the Human Capital Operational Programme (POKL) satisfies the requirements specified in Community provisions as it defines, for each priority axis, specific objectives quantified by appropriate indicators of output and result, for which targets were set. According to the European Commission’s guidelines, such indicators may be monitored with the use of various sources. For the majority of output indicators and few result indicators, the sources are beneficiaries’ data obtained from reporting at the project level. It is possible due to the specific nature of output indicators, which are achieved directly by beneficiaries in the course of project implementation. On the other hand, due to their specific nature and the necessity to assess the quality of measures taken, some result indicators are measured within evaluation studies commissioned by the Managing Authority / Intermediate Body or with the use of administrative data. Such approach is justified on the one hand by the necessity to provide objective data (collected or reviewed by an external entity), and on the other hand – by the necessity to assess the quality of support provided, which should be done in a wider context. The adopted system of POKL monitoring provides for various sources of monitoring the Programme’s results.

For some activities related especially to the return to the labour market, it is necessary to use indicators measured in an evaluation study or obtained from administrative data, which is reflected in the Programme provisions (Annex 3 POKL Monitoring indicators). For such activities, the intervention result was monitored in a holistic manner ‒ in an evaluation study entitled Study on the effectiveness of support provided as part of the regional component of POKL 2007–2013, which was conducted in several stages. The effectiveness and quality of support provided in projects targeted at professional activation and undertaking employment is monitored through indicators related to the taking-up of jobs by project participants (so-called employment effectiveness measured in the evaluation study) and through so-called activation indicators reflecting the proportion of unemployed people in a given group covered with various forms of professional activation (measured with the use of data from the Ministry of Family, Labour and Social Policy). It is impossible to measure both types of indicators at the level of a single project.

Another group of result indicators which are not monitored at the level of a single project are ‘coverage indicators’ that show the scale of support provided to a given target group; these are indicators measured in respect of the entire population (in the country) which may have been supported. Due to their nature and as it is necessary to refer to the entire population (e.g. the proportion of key employees of Public Employment Services who completed training sessions in the non-school system that are relevant for the regional labour market), for the purpose of calculating the indicators, it is required to refer to the entire population of key employees in a province or in a country, which is naturally impossible at the level of a single project implemented, for instance, in one district. In such scenario, a beneficiary is obliged to specify its own result indicator, which refers, for instance, to the number of people who obtained professional qualifications (certified qualifications). This group (of coverage indicators) includes also: the proportion of social welfare institution users who were covered by social contracts, the proportion of social welfare institution users at the age of professional activity and not working who, within the Priority, were covered by the activities aimed at active inclusion or effectiveness indicator – the proportion of beneficiaries who took up employment within 6 months after taking part in the project to the total number of people who took part in the projects, as referred to in the audit report.

It should be emphasised that in view of the circumstances (impossibility of measuring some results specified in the Programme at the level of a single project), beneficiaries were obliged to specify their own result indicators, which reflect the achievement of the project objective and a qualitative change that occurred following its implementation. Result indicators relating, among others, to the improvement of professional qualifications, physical fitness, selfconfidence or communication skills of project participants were specified in the grant application analysed (e.g. the number of people who experienced increase in self-confidence and belief in oneself, the number of people who improved their communication skills). The indicators were measured at the project implementation stage, and their final levels were stated in the final payment application.

Spain:  Action taken: YES; Action completed: ; Completion date:

ESF

Under the new programming framework, each transaction selected must meet the indicators set out in Annex I to Regulation (EU) No 1304/2013. It will thus be possible to measure the attainment of the specified values and the progress made after each transaction is completed.

ERDF

Of the 12 ERDF and Cohesion projects visited, only in two projects had the result indicators not been defined. It cannot therefore be claimed that this is a particularly frequent problem in Spain in relation to these funds (ERDF and Cohesion).

The two cases in which result indicators had not been defined related to sewerage works for which it was considered that the objectives of the Operational Programme had been met through output indicators and monitoring of the volume of water treated.

Furthermore, under the new programming framework, each transaction selected must meet the indicators set out in Annex I to Regulation (EU) No 1304/2013. It will thus be possible to measure the attainment of the specified values and the progress made after each transaction is completed.

CHAPTER 7 – Natural resources

Paragraphs

Observations in the 2015 Court's Annual Report

Member States' replies

Paragraph 7.8(a) - footnote 9

Annex 1.1 sets out the key elements of our audit approach and methodology. For the audit of ‘Natural resources’, the following specific points should be noted:

(a) We examined a sample of 180 transactions for EAGF and 179 transactions for ‘Rural development, environment, climate action and fisheries’ as defined in Annex 1.1, paragraph 7. Each sample is designed to be representative of the range of spending under the MFF heading for each of the two specific assessments (8). In 2015 the EAGF sample consisted of transactions from 18 Member States (9).

(9) Bulgaria, the Czech Republic, Denmark, Germany (Baden-Württemberg, Bavaria, Hesse, Lower Saxony, Schleswig Holstein), Ireland, Greece, Spain (Aragon, Castilla-La Mancha, Castilla y Léon, Extremadura and Madrid), France, Italy (AGEA, Calabria, Emilia-Romagna, Lombardy and Tuscany), Cyprus, Hungary, the Netherlands, Poland, Romania, Slovenia, Finland, Sweden and the United Kingdom (England).

Cyprus: Action taken: YES; Action completed: YES; Completion date: 06/2016

See comments in Annex II.

Czech Republic: Action taken: ; Action completed: ; Completion date:

No comment, no specific finding.

Denmark: Action taken: ; Action completed: ; Completion date:

Footnote 9 refers to the fact that Denmark and 17 other Member States were selected for audit. We have no comments on this.

Finland: Action taken: NO; Action completed: NO; Completion date:

France: Action taken: OUI; Action completed: OUI FEAGA, NON FEADER; Completion date:

N/A/ cf. réponse au chapitre 1 observation 2.

Germany: Action taken: ; Action completed: ; Completion date:

The Commission already has all the information at its disposal; see Annex II.

Hungary: Action taken: NO; Action completed: ; Completion date:

Factual finding that does not require action.

Italy: Action taken: YES; Action completed: YES; Completion date:

The enclosed replies (see Annex II) to the European Court of Auditors contain counter-arguments concerning the findings on the action of the paying agencies.

Netherlands: Action taken: ; Action completed: ; Completion date:

Not applicable.

Poland: Action taken: ; Action completed: ; Completion date:

This observation does not include any specific reservations against Poland.

Romania: Action taken: YES- AMPOPAM (Managing Authority for the Operational Programme for Fisheries and Maritime Affairs); Action completed: NO; Completion date:

AMPOPAM: ECA (the European Court of Auditors) carried out an audit mission for the Statement of Assurance for financial year 2015 between 18 and 22 January 2016.

Slovenia: Action taken: ; Action completed: ; Completion date:

The ECA revision for transactions of EAGF, completed in October 2015 (document PF-7387) did not reveal any errors or deviation on the reference sample. The ECA has sent out an oficial letter, regarding the completed revision, on 16th December2015 (document NR1065679SL0115PP7387). The MAFF or the AAMRD didn’t have to adopt any remedial measures.

Sweden: Action taken: NO; Action completed: ; Completion date:

This observation does not require Sweden to take action.

United Kingdom: Action taken: NO; Action completed: NO; Completion date: n/a

This confirms that the UK was visited as part of the ECA audit programme.

Paragraph 7.8(a) - footnote 10

Annex 1.1 sets out the key elements of our audit approach and methodology. For the audit of ‘Natural resources’, the following specific points should be noted:

(a) We examined a sample of 180 transactions for EAGF and 179 transactions for ‘Rural development, environment, climate action and fisheries’ as defined in Annex 1.1, paragraph 7. Each sample is designed to be representative of the range of spending under the MFF heading for each of the two specific assessments (8). In 2015 the EAGF sample consisted of transactions from 18 Member States (9). For the second specific assessment the sample consisted of 159 transactions for rural development and 20 other transactions including environment, climate action and fisheries from 17 Member States (10).

(10) Belgium (Wallonia), Bulgaria, the Czech Republic, Germany (Bavaria, Lower Saxony-Bremen and Rhineland-Palatinate), Greece, Spain (Andalusia, Castilla-La Mancha and Galicia), France (Burgundy and mainland), Italy (Apulia, Campania, National rural network programme and Sicily), Lithuania, Hungary, Austria, Poland, Portugal (mainland), Romania, Slovakia, Finland and the United Kingdom (England and Scotland). The sample also included eight transactions under direct management.

Austria:  Action taken: NO; Action completed: ; Completion date:

There were no ECA audit findings (for 10 sample elements) regarding EAFRD expenditure for 2015; the audit sample was error free.

Czech Republic: Action taken: ; Action completed: ; Completion date:

No comment, no specific finding.

Finland: Action taken: NO; Action completed: NO; Completion date:

France: Action taken: OUI; Action completed: OUI FEAGA, NON FEADER; Completion date:

cf. réponse au chapitre 1 observation 2.

Germany: Action taken: ; Action completed: ; Completion date:

The Commission already has all the information at its disposal; see Annex II.

Hungary: Action taken: NO; Action completed: ; Completion date:

Factual finding that does not require action.

Italy: Action taken: YES; Action completed: YES; Completion date:

The enclosed replies (see Annex II) to the European Court of Auditors contain counter-arguments concerning the findings on the action of the paying agencies.

Lithuania: Action taken: YES; Action completed: ; Completion date:

See individual observations for answers.

Poland: Action taken: ; Action completed: ; Completion date:

This observation does not include any specific reservations against Poland.

Portugal: Action taken: ; Action completed: ; Completion date:

Nothing relevant to report.

Romania: Action taken: YES- AMPOPAM (Managing Authority for the Operational Programme for Fisheries and Maritime Affairs); Action completed: NO; Completion date:

AMPOPAM: ECA (the European Court of Auditors) carried out an audit mission for the Statement of Assurance for financial year 2015 between 18 and 22 January 2016.

Slovakia: Action taken: ; Action completed: ; Completion date:

In our opinion, the text conveys the state of play.

United Kingdom: Action taken: NO; Action completed: NO; Completion date: n/a

This confirms that the UK was visited as part of the ECA audit programme.

Paragraph 7.8(b) - footnote 11

Annex 1.1 sets out the key elements of our audit approach and methodology. For the audit of ‘Natural resources’, the following specific points should be noted:

(b) We assessed selected internal control systems through a desk review of 24 Commission audits covering the EAGF and the EAFRD. We complemented this work by reperforming six of the Commission’s audits in the Member States concerned (11).

(11) Spain (Catalonia), Germany (Schleswig-Holstein), Finland, Lithuania, Malta, UK (Northern-Ireland).

Finland: Action taken: NO; Action completed: NO; Completion date:-

Germany: Action taken: ; Action completed: ; Completion date:

The Commission already has all the information at its disposal; see Annex II.

Lithuania: Action taken: YES; Action completed: ; Completion date:

See individual observations for answers.

United Kingdom: Action taken: NO; Action completed: NO; Completion date: n/a

This confirms that the UK was visited as part of the ECA audit programme.

Paragraph 7.8(b) - footnote 13

Annex 1.1 sets out the key elements of our audit approach and methodology. For the audit of ‘Natural resources’, the following specific points should be noted:

(b) We assessed selected internal control systems through a desk review of 24 Commission audits covering the EAGF and the EAFRD. We complemented this work by reperforming six of the Commission’s audits in the Member States concerned (11). We performed additional audit work in these six Member States for a limited number of riskprone areas relating to the EAGF and the EAFRD, as well as for cross-compliance (12). We also reviewed five Commission audits covering the common fisheries policy, and reperformed one (13).

(13) In Romania.

Romania: Action taken: YES- AMPOPAM (Managing Authority for the Operational Programme for Fisheries and Maritime Affairs); Action completed: NO; Completion date:

AMPOPAM: ECA (the European Court of Auditors) carried out an audit mission for the Statement of Assurance for financial year 2015 between 18 and 22 January 2016.

Figure 7.4

Example of irregular payments due to incorrect eligibility data in the LPIS.

Greece: Action taken: ; Action completed: ; Completion date:

OPEKEPE (Greek paying agency) – Special Department for the Rural Development Plan (RDP): the action plan implemented by Greece for the eligibility of permanent pasture – as referred to in figure 7.4 – began in 2012 and was completed in 2014. However, within the framework of updating the LPIS, which is a continuous process, the eligibility percentages are also updated (pro-rata) for the areas of permanent pasture and, of course, this is done in accordance with the relevant rules for the 2014-2020 period.

Italy: Action taken: YES; Action completed: YES; Completion date:

The enclosed replies (see Annex II) to the European Court of Auditors contain counter-arguments concerning the findings on the action of the paying agencies.

Spain: Action taken: YES; Action completed: YES; Completion date: 31/12/2015

In the 2015 period of allocation of basic payment entitlements, in Spain, the Autonomous Communities subject to improvement of the CAP 2013 (Andalucía, Asturias, Cantabria, Castilla La Mancha, Castilla y León, Extremadura, Madrid, Murcia, La Rioja and Valencia) implemented a CAP-2015 based on three factors (slope, soil and penetrability of vegetation) as a fundamental part of the Action Plan on Pastures (Article 41 of Regulation No 1306/2014), implemented by the European Commission to ensure that the eligibility of wooded and shrub pasture areas was reduced in line with EU regulations, thereby guaranteeing that basic payment entitlements were correctly allocated in 2015.

The CAP 2015 is an improved automatic eligibility coefficient that has significantly increased the precision of the soil cover by discounting a larger number of unproductive areas. It also includes an additional vegetation penetrability factor limiting the eligibility of areas with a high density of shrubs or woods. (This penetrability factor was estimated using the LiDAR airborne technology, based on the use of on-board sensors which act as transmitters and receivers of laser pulses. This makes it possible to obtain the reflection point coordinates of the land or vegetation and determine the height, density and structure of the vegetation with digital models.) The Action Plan, which included 11 specific actions to reduce eligibility and 7 additional measures to update the LPIS, was monitored strictly by the European Commission. This monitoring was carried out by sending indicators and information bi-monthly and holding three audits organised by Unit J3 of DG Agriculture in December 2014, March 2015 and March 2016. In this last mission, AA/2016/032, which took place on 1 to 4 March 2016, the Commission noted in its conclusions that the CAP-2015 methodology was rigorous and trustworthy and that it accurately reflected the eligibility of permanent pasture in Spain, although the Commission may deem it appropriate for the methodology to continue to be updated in future.

We would stress that the automatic CAP-2015 data were subject to an exhaustive quality and statistical validity check by the autonomous communities in June-October 2015, including both photointerpretation studies and numerous on-the-spot inspections. As a result of the implementation of the automatic CAP-2015 based on three factors and the implementation of its quality and statistical validity checks, the figures for eligibility of permanent pasture in Spain, as indicated in the Court of Auditors’ Report, decreased from 18.5 million hectares in 2013 to 6.4 million hectares in 2016.

United Kingdom: Action taken: YES; Action completed: NO; Completion date: n/a

These issues are addressed by the English Authorities’ Land Parcel Identification System action plan, which is on-going and monitored by the Commission.

COM reply to Figure 7.4

Example of irregular payments due to incorrect eligibility data in the LPIS.

Greece: Action taken: ; Action completed: ; Completion date:

OPEKEPE (Greek paying agency) – Special Department for the Rural Development Plan (RDP): the action plan implemented by Greece for the eligibility of permanent pasture – as referred to in figure 7.4 – began in 2012 and was completed in 2014. However, within the framework of updating the LPIS, which is a continuous process, the eligibility percentages are also updated (pro-rata) for the areas of permanent pasture and, of course, this is done in accordance with the relevant rules for the 2014-2020 period.

Spain: Action taken: YES; Action completed: YES; Completion date: 31/12/2015

In the 2015 period of allocation of basic payment entitlements, in Spain, the Autonomous Communities subject to improvement of the CAP 2013 (Andalucía, Asturias, Cantabria, Castilla La Mancha, Castilla y León, Extremadura, Madrid, Murcia, La Rioja and Valencia) implemented a CAP-2015 based on three factors (slope, soil and penetrability of vegetation) as a fundamental part of the Action Plan on Pastures (Article 41 of Regulation No 1306/2014), implemented by the European Commission to ensure that the eligibility of wooded and shrub pasture areas was reduced in line with EU regulations, thereby guaranteeing that basic payment entitlements were correctly allocated in 2015.

The CAP 2015 is an improved automatic eligibility coefficient that has significantly increased the precision of the soil cover by discounting a larger number of unproductive areas. It also includes an additional vegetation penetrability factor limiting the eligibility of areas with a high density of shrubs or woods. (This penetrability factor was estimated using the LiDAR airborne technology, based on the use of on-board sensors which act as transmitters and receivers of laser pulses. This makes it possible to obtain the reflection point coordinates of the land or vegetation and determine the height, density and structure of the vegetation with digital models.) The Action Plan, which included 11 specific actions to reduce eligibility and 7 additional measures to update the LPIS, was monitored strictly by the European Commission. This monitoring was carried out by sending indicators and information bi-monthly and holding three audits organised by Unit J3 of DG Agriculture in December 2014, March 2015 and March 2016. In this last mission, AA/2016/032, which took place on 1 to 4 March 2016, the Commission noted in its conclusions that the CAP-2015 methodology was rigorous and trustworthy and that it accurately reflected the eligibility of permanent pasture in Spain, although the Commission may deem it appropriate for the methodology to continue to be updated in future.

We would stress that the automatic CAP-2015 data were subject to an exhaustive quality and statistical validity check by the autonomous communities in June-October 2015, including both photointerpretation studies and numerous on-the-spot inspections. As a result of the implementation of the automatic CAP-2015 based on three factors and the implementation of its quality and statistical validity checks, the figures for eligibility of permanent pasture in Spain, as indicated in the Court of Auditors’ Report, decreased from 18.5 million hectares in 2013 to 6.4 million hectares in 2016.

United Kingdom: Action taken: YES; Action completed: NO; Completion date: n/a

These issues are addressed by the English Authorities’ Land Parcel Identification System action plan, which is on-going and monitored by the Commission.

Figure 7.5

Example of national eligibility criteria not complying with EU legislation.

France: Action taken: OUI; Action completed: OUI; Completion date: 29/04/2016 (pour la campagne PAC 2015)

Une photo interprétation systématique (y compris visites rapides) de l’intégralité du territoire national a été réalisée dans le cadre du plan d’actions FEAGA, évoqué par la Commission, pour les ilots ayant fait l’objet d’une demande d’aide. Ce plan d’actions a duré trois ans et est achevé depuis le 2/09/2016.

COM reply to Figure 7.5

Example of national eligibility criteria not complying with EU legislation.

France: Action taken: OUI; Action completed: OUI; Completion date: 29/04/2016 (pour la campagne PAC 2015)

Une photo interprétation systématique (y compris visites rapides) de l’intégralité du territoire national a été réalisée dans le cadre du plan d’actions FEAGA, évoqué par la Commission, pour les ilots ayant fait l’objet d’une demande d’aide. Ce plan d’actions a duré trois ans et est achevé depuis le 2/09/2016.

Figure 7.7

Example of ineligible expenditure or activity.

Germany: Action taken: ; Action completed: ; Completion date:

The Commission already has all the information at its disposal; see Annex II.

Italy: Action taken: YES; Action completed: YES; Completion date:

The enclosed replies (see Annex II) to the European Court of Auditors contain counter-arguments concerning the findings on the action of the paying agencies.

Poland: Action taken: ; Action completed: ; Completion date:

The information does not provide any specific example of an eligibility error in Poland, and consequently, it is impossible to respond to specific allegations raised by the ECA. General clarifications relating to, for example, eligibility errors are provided in the answer to question 1.1 in Annex III.

Romania: Action taken: YES- AFIR (Financing Agency for Rural Investments); Action completed: NO; Completion date:

The amounts wrongly paid to farmers have been recalculated. An audit mission has been initiated by the EC under inquiry number RD2/ 2016/ 031/ RO, for which the bilateral meeting of 06 September 2016 took place. Based on the comments in the Minutes of the bilateral meeting, the Romanian authorities will send additional information by 23 November 2016. Subsequently, the conciliation meeting will take place, further to which EC auditors will submit the final conclusion.

COM reply to Figure 7.7

Example of ineligible expenditure or activity.

Romania: Action taken: YES- AFIR (Financing Agency for Rural Investments); Action completed: NO; Completion date:

The amounts wrongly paid to farmers have been recalculated. An audit mission has been initiated by the EC under inquiry number RD2/ 2016/ 031/ RO, for which the bilateral meeting of 06 September 2016 took place. Based on the comments in the Minutes of the bilateral meeting, the Romanian authorities will send additional information by 23 November 2016. Subsequently, the conciliation meeting will take place, further to which EC auditors will submit the final conclusion.

Figure 7.8

Example of non-compliance with public procurement rules.

Germany: Action taken: ; Action completed: ; Completion date:

The Commission already has all the information at its disposal; see Annex II.

Greece: Action taken: ; Action completed: ; Completion date:

OPEKEPE (the Greek paying agency) – Special department for the RDP: the replies and the actions that have been undertaken concerning the observations on weaknesses in public procurement have been described comprehensively in the relevant points of Annex ΙΙ (see PF 7362 and the specific observations under number 15.P.NR2.1516-02 and 15.P.NR2.1516-05 ).

Italy: Action taken: YES; Action completed: YES; Completion date:

The enclosed replies (see Annex II) to the European Court of Auditors contain counter-arguments concerning the findings on the action of the paying agencies.

Romania: Action taken: YES; Action completed: NO; Completion date:

AFIR: A debt has been acknowledged for the project verified by the ECA, and the debt recovery procedure in ongoing.

We attach the Action plan for the reduction of the error rate (the 5th follow-up) describing the actions taken by AFIR in relation to public procurement.

COM reply to Figure 7.8

Example of non-compliance with public procurement rules.

Italy: Action taken: YES; Action completed: YES; Completion date:

The enclosed replies (see Annex II) to the European Court of Auditors contain counter-arguments concerning the findings on the action of the paying agencies.

Paragraph 7.32 - footnote 31

To check that the Commission’s conformity audits complied with international auditing standards (28) and the main regulatory provisions, we carried out desk reviews of a sample of 24 (29) out of 120 conformity audits (30) reported by DG AGRI in 2015. We also re-performed six of these 24 audits (31).

(31) Germany (Schleswig-Holstein), Spain (Catalonia), Lithuania, Malta, Finland, UK (Northern Ireland).

Finland: Action taken: NO; Action completed: NO; Completion date:

Germany: Action taken: ; Action completed: ; Completion date:

The Commission already has all the information at its disposal; see Annex II.

Lithuania: Action taken: YES; Action completed: ; Completion date:

See individual observations for answers.

United Kingdom: Action taken: NO; Action completed: NO; Completion date: N/A

This confirms that the UK (NI) was visited as part of the ECA audit programme.

Figure 7.9

Example of the weaknesses found concerning the LPIS.

United Kingdom: Action taken: YES; Action completed: NO; Completion date: n/a

These findings are being addressed as part of the Northern Ireland Authorities’ ongoing LPIS refresh programme, which is monitored by the EU Commission.

COM reply to Figure 7.9

Example of the weaknesses found concerning the LPIS.

United Kingdom: Action taken: YES; Action completed: NO; Completion date: n/a

These findings are being addressed as part of the Northern Ireland Authorities’ ongoing LPIS refresh programme, which is monitored by the EU Commission.

Paragraph 7.47

We found deficiencies, mainly relating to the reliability of control statistics and sampling, in five out of the six Member States visited. We found problems (e.g. incorrect calculation of sanctions or lack of checks on certain requirements) in 13 of the 63 control reports reviewed. Moreover, in Lithuania and the UK (Northern Ireland) in four of the 24 control reports sampled the sanctions were not correctly included in the control statistics. We give another example of the deficiencies we identified in Figure 7.10.

Lithuania: Action taken: YES; Action completed: YES; Completion date: 15/07/2016

The 2016 cross-compliance control statistics were compiled without grouping the management requirements together.

United Kingdom: Action taken: YES; Action completed: YES; Completion date:

Northern Irish Authorities have taken steps to ensure the accuracy of the statistical returns it sends to the European Commission.

Figure 7.10

Example of insufficient cross-compliance checks.

Lithuania: Action taken:YES; Action completed: YES; Completion date: 10/11/2016

Order No 3D-662 of the Minister for Agriculture of the Republic of Lithuania approving the management requirements for agricultural activities and the requirements for the use of fertilisers and plant protection products and appointing management control authorities was approved on 10 November 2016. It lays down the lower threshold for verifying requirements with regard to the implementation of the Nitrates Directive, so application and verification of the requirements will affect significantly more applicants, both those keeping livestock and those using fertiliser on their holdings.

COM reply to Figure 7.10

Example of insufficient cross-compliance checks.

Lithuania: Action taken:YES; Action completed: YES; Completion date: 10/11/2016

Order No 3D-662 of the Minister for Agriculture of the Republic of Lithuania approving the management requirements for agricultural activities and the requirements for the use of fertilisers and plant protection products and appointing management control authorities was approved on 10 November 2016. It lays down the lower threshold for verifying requirements with regard to the implementation of the Nitrates Directive, so application and verification of the requirements will affect significantly more applicants, both those keeping livestock and those using fertiliser on their holdings.

Paragraph 7.49

Our examination of systems in this area focused on audits carried out by the Commission (DG MARE). We carried out a desk review of a sample of five of the Commission's conformity audits. The Commission reported significant weaknesses in the systems of two (Italy and Romania) out of the five Member States concerned.

Figure 7.11

Procurement deficiencies in Romania.

Romania: Action taken: YES- AMPOP (Managing Authority for the Operational Programme for Fisheries); Action completed: NO; Completion date:

AMPOP: The irregularity procedure has been initiated for all procurement procedures included in the report of the above-mentioned audit mission. The 2 public procurement procedures are being investigated by the Ministry of Finance – DGIEF (Directorate-General for Economic and Financial Inspection).

For the period 2014-2020, the selection process has been revised pursuant to the issues included in the audit reports of DG-MARE.

COM reply to Figure 7.11

Procurement deficiencies in Romania.

Romania: Action taken: YES- AMPOP (Managing Authority for the Operational Programme for Fisheries); Action completed: NO; Completion date:

AMPOP: The irregularity procedure has been initiated for all procurement procedures included in the report of the above-mentioned audit mission. The 2 public procurement procedures are being investigated by the Ministry of Finance – DGIEF (Directorate-General for Economic and Financial Inspection).

For the period 2014-2020, the selection process has been revised pursuant to the issues included in the audit reports of DG-MARE.

Paragraph 7.52

On the basis of the 24 audits which it carried out in 2014 and 2015 and which were finalised at the time of our audit, DG MARE proposed two financial corrections. Our review of a sample of five of these audits revealed that in two cases (Italy and Romania) the financial corrections did not address all the deficiencies affecting the managing authorities’ internal control systems.

COM reply to paragraph 7.52

The Commission proposes financial corrections where it identifies significant deficiencies. It considers that appropriate levels of correction were applied for both Italy and Romania based on its own analysis. However, for Romania, it will assess the need for additional corrections based on the Court’s findings.

Paragraph 7.59

For EAFRD, the Commission almost tripled the average level of error reported by the Member States of 1,78 % to calculate the adjusted error rate of 4,99 %. The Commission has adjusted the error rates reported by 56 paying agencies out of 72 declaring EAFRD expenditure. We consider the adjusted error rate of 4,99 % to be broadly in line with our estimated level of error. The Commission has in recent years increased the number of its conformity audits of EAFRD expenditure and also launched horizontal audits targeting measures/paying agencies with similar risks. An example is an audit of public procurement which contributed to overall reservations being made for Germany and Spain.

Germany: Action taken: ; Action completed: ; Completion date:

Due to serious formal and methodological shortcomings, Germany finds the new audit approach and its conclusions unacceptable.

Paragraph 7.63

DG MARE sent out three pre-closure letters for three operational programs proposing to recover an amount of 53,6 million euro. This material amount is not disclosed in the AAR. The AAR includes reservations for five Member States, including Romania, which is in line with our audit findings. Our audit did not call into question the calculation of the error rates by DG MARE.

Romania: Action taken: YES (AMPOP); Action completed: YES; Completion date: 29.06.2016

In Payment Application 17 of 29 June 2016, ACP (the Certifying and Paying Authority) temporarily decertified the amount of EUR 1,295,195.70 (public contribution).

Figure 7.13

Examples of checking reasonabless of costs for the modernisation of agricultural holdings.

Slovakia: Action taken: YES; Action completed: NO; Completion date:

Ministry of Agriculture and Rural Development: The reasonableness of the pricing of individual items in civil engineering investments will be checked by means of a software tool via a publicly accessible price database prior to the conclusion of the Grant Agreement; this will also be included in the manual of the Programme Monitoring and Evaluation Department for the Rural Development Programme 2014-2020. Under the inspected Project No 110ZV1302565, on the basis of Expert Opinions 227/2015 and 96/2015, commissioned to determine the general value of silage troughs, it was demonstrated that the production price had not been unreasonable. The ‘concrete’ item was higher because multiple items (34) had been merged in the item ‘Concrete of foundation slabs free of C 25/30’ under the ‘Foundations’ part. Furthermore, after an examination of the case by the Agricultural Paying Agency, no infringement of the Public Procurement Act was demonstrated in relation to a conflict of interest identified by the European Court of Auditors. For the reasons outlined above, as the Agricultural Paying Agency does not possess relevant underlying documentation reliably demonstrating an infringement of legally binding national and EU regulations and the conditions for the granting of a contribution/aid from the final beneficiary, it did not launch the recovery of financial resources from the final beneficiary. All of the Agricultural Paying Agency’s explanations and opinions were sent to the European Court of Auditors. The investigation into the project involved an ad hoc meeting on 30 of March 2016 between representatives of the Agricultural Paying Agency and representatives of OLAF who had initiated the investigation into Project No 110ZV1302565. Once the results of this inspection have been received, the Agricultural Paying Agency will take further relevant steps. The case remains recorded as open in the Agricultural Paying Agency’s Action Plan to remedy the findings of audits and inspections.

COM reply to Figure 7.13

Examples of checking reasonabless of costs for the modernisation of agricultural holdings.

Slovakia: Action taken: YES; Action completed: NO; Completion date:

Ministry of Agriculture and Rural Development: The reasonableness of the pricing of individual items in civil engineering investments will be checked by means of a software tool via a publicly accessible price database prior to the conclusion of the Grant Agreement; this will also be included in the manual of the Programme Monitoring and Evaluation Department for the Rural Development Programme 2014-2020. Under the inspected Project No 110ZV1302565, on the basis of Expert Opinions 227/2015 and 96/2015, commissioned to determine the general value of silage troughs, it was demonstrated that the production price had not been unreasonable. The ‘concrete’ item was higher because multiple items (34) had been merged in the item ‘Concrete of foundation slabs free of C 25/30’ under the ‘Foundations’ part. Furthermore, after an examination of the case by the Agricultural Paying Agency, no infringement of the Public Procurement Act was demonstrated in relation to a conflict of interest identified by the European Court of Auditors. For the reasons outlined above, as the Agricultural Paying Agency does not possess relevant underlying documentation reliably demonstrating an infringement of legally binding national and EU regulations and the conditions for the granting of a contribution/aid from the final beneficiary, it did not launch the recovery of financial resources from the final beneficiary. All of the Agricultural Paying Agency’s explanations and opinions were sent to the European Court of Auditors. The investigation into the project involved an ad hoc meeting on 30 of March 2016 between representatives of the Agricultural Paying Agency and representatives of OLAF who had initiated the investigation into Project No 110ZV1302565. Once the results of this inspection have been received, the Agricultural Paying Agency will take further relevant steps. The case remains recorded as open in the Agricultural Paying Agency’s Action Plan to remedy the findings of audits and inspections.

Figure 7.14

Example of a project which included non-essential items.

Italy: Action taken: YES; Action completed: YES; Completion date:

The enclosed replies (see Annex II) to the European Court of Auditors contain counter-arguments concerning the findings on the action of the paying agencies.

Figure 7.15

Examples of targeting and selection.

Hungary: Action taken: NO; Action completed: ; Completion date:

The comment pertains to the application for support submitted for the 1st target area of the legal title ‘purchasing technological equipment for the purposes of modernisation (TBB)’ based on Decree 116/2013 of the Minister for Agriculture and Rural Development.

Based on Article 4(6)(a) of the aid decree, a score of at least of 15 points out of 30 had to be attained for purchasing high-value machinery. As a result, high professional conditions for eligibility were set that ensured that applicants which met the criteria are suitable for the comprehensive implementation of the aid’s target.

Stemming from the above, proposals could only be submitted by suitable clients who also met the stringent expectations pertaining to keeping animals (requirements checked by other authorities, such as the National Food Chain Safety Office).

If entitled clients met the criteria for eligibility, they also met several conditions for selection.

Notice 308/2013 of the MA are governing:

“proceeding in my competence as managing authority on the basis of Article 14(1)(cd) of Act XVII of 2007 on certain issues of procedures in relation to support for agricultural, rural development and fisheries and to other measures and Article 7(3) of Decree 116/2013 of 12 December of the Minister for Rural Development, as of 8:00 p.m. on 19 December 2013, I hereby suspend the period for submitting applications for aid on the basis of Decree 116/2013 of 12 December of the Minister for Rural Development for high-value purchases in area 1 due to a depletion of funds.”

The selection procedure was thus based on which of the undertakings with the minimum number of points submitted their applications by the deadline set by legislation (and the MA Notice).

Italy: Action taken: YES ; Action completed: YES; Completion date:

The enclosed replies (see Annex II) to the European Court of Auditors contain counter-arguments concerning the findings on the action of the paying agencies.

COM reply to Figure 7.15

Examples of targeting and selection.

Hungary: Action taken: NO; Action completed: ; Completion date:

The comment pertains to the application for support submitted for the 1st target area of the legal title ‘purchasing technological equipment for the purposes of modernisation (TBB)’ based on Decree 116/2013 of the Minister for Agriculture and Rural Development.

Based on Article 4(6)(a) of the aid decree, a score of at least of 15 points out of 30 had to be attained for purchasing high-value machinery. As a result, high professional conditions for eligibility were set that ensured that applicants which met the criteria are suitable for the comprehensive implementation of the aid’s target.

Stemming from the above, proposals could only be submitted by suitable clients who also met the stringent expectations pertaining to keeping animals (requirements checked by other authorities, such as the National Food Chain Safety Office).

If entitled clients met the criteria for eligibility, they also met several conditions for selection.

Notice 308/2013 of the MA are governing:

“proceeding in my competence as managing authority on the basis of Article 14(1)(cd) of Act XVII of 2007 on certain issues of procedures in relation to support for agricultural, rural development and fisheries and to other measures and Article 7(3) of Decree 116/2013 of 12 December of the Minister for Rural Development, as of 8:00 p.m. on 19 December 2013, I hereby suspend the period for submitting applications for aid on the basis of Decree 116/2013 of 12 December of the Minister for Rural Development for high-value purchases in area 1 due to a depletion of funds.”

The selection procedure was thus based on which of the undertakings with the minimum number of points submitted their applications by the deadline set by legislation (and the MA Notice).

Figure 7.16

Examples of links to EU priorities.

Italy: Action taken: YES ; Action completed: YES; Completion date:

The enclosed replies (see Annex II) to the European Court of Auditors contain counter-arguments concerning the findings on the action of the paying agencies.

Annex 7.2

Follow-up of previous recommendations for 'Natural resources'.

2013 - Recommendation 2: the Commission ensures that the reinforcement of assurance procedure is effectively applied in order to enhance the quality and comparability of the work performed by the audit bodies and that remedial action is taken in respect of the unjustified reduction by the Italian authorities of the on-the-spot inspection rate (see paragraphs 3.30 to 3.35).

2013 - Recommendation 3: the Commission actively monitors the application of remedial actions with regard to the deficiencies in the control system applicable to EU aid for producer groups in Poland (see paragraphs 3.36 to 3.38).

Poland: Action taken: YES; Action completed: NO; Completion date:

In the opinion of Poland, the European Commission has no grounds to suspend payments within the system of supporting groups of fruit and vegetable manufacturers as Poland is in the course of implementing the Corrective Action Plan within the mechanism of financial support for the initially recognised groups of fruit and vegetable manufacturers.

COM reply to Annex 7.2

The Commission considers the recommendation as implemented in most respects. The reinforcement of assurance procedure as such does not exist anymore. The Commission has introduced guidelines for the certification bodies in order to provide a reliable basis for the assessment of legality and regularity of expenditure. 2015 was the first year in which the certification bodies were required to produce an opinion on the legality and regularity of transactions. The Commission will build on the experience of this first year. Regarding specifically the weaknesses identified in Italy, the ongoing conformity procedure will ensure that any damage to the EU financial interest will be corrected.

CHAPTER 8 – Global Europe and Security and citizenship

Paragraphs

Observations in the 2015 Court's Annual Report

Member States' replies

Paragraph 8.42 - footnote 30

We performed a review of the main systems in the field of migration and security, under the responsibility of the Commission’s DG HOME (28). Concerning direct management, this included an examination of the Commission’s systems for grants and procurement (29). For shared management, this included an examination (30) of the Commission’s assessment of Member State systems for managing SOLID funds.

(30) We examined a sample of ten systems audits: the External Border Fund for Germany, France, Lithuania and Malta; the European Return Fund for France and the United Kingdom; the European Refugee Fund for Germany and the United Kingdom; and the European Fund for the integration of third country nationals for Italy and Poland. These programmes were selected from 2011 programmes which had been closed in 2014. We also examined the Commission’s planning of ex post audits of cleared Member State annual programmes.

France: Action taken: OUI; Action completed: OUI; Completion date:

Les audits ont conclu à un bon fonctionnement, aucune anomalie n’a été relevée.

Germany: Action taken: YES; Action completed: YES; Completion date: 31 January 2012

EU Refugee Fund: The following measures were taken by the competent authority:

•    checks on the use made of the funds were speeded up by bringing in external auditors

•    the project appraisal forms were revised or redrafted

•    in particular, the monitoring system was improved by publishing additional indicators.

There is no information to indicate that the External Borders Fund in Germany was audited by the ECA in 2015 or in previous years. The External Borders Fund was audited once by the ECA in 2012, but Germany was not included in the audit.

Poland: Action taken: ; Action completed: ; Completion date:

This observation does not include any specific reservations against Poland.

United Kingdom: Action taken: NO; Action completed: NO; Completion date: n/a

This confirms which funds were audited during UK visits.

Part A: Please reply to the general questions below

Question 1:

1. Legality & Regularity

Questions addressed to all Member States:

1.1. The 2015 Annual report of the European Court of Auditors (ECA) indicates that:

   For ERDF/CF expenditure a main risk is that beneficiaries declare costs which are ineligible according to national eligibility rules and/or the less    numerous eligibility provisions in the EU structural funds regulations. ERDF/CF spending is also subject to the generally    applicable EU    internal    market rules (mainly public procurement rules and State aid). In previous years, non-compliance with EU and/or national public procurement rules    when awarding contracts has been the main risk to the regularity of ERDF and CF spending (Chapter 6, paragraph 6.5).

   For ESF expenditure, the major risk relates to the intangible nature of the investments in human capital, and the involvement of multiple, often small-    scale, partners in the implementation of projects. These factors can lead to non-compliance with EU and/or national eligibility rules resulting in    ineligible costs being accepted by the systems in place (Chapter 6, paragraph 6.6).

   For EAGF expenditure, the main risks relate to direct aid paid for ineligible land or to ineligible beneficiaries (Chapter 7, paragraph    7.6). In    addition, for Member States' systems related to regularity of EAGF transactions the ECA reports that without calling into question IACS contribution    in preventing and reducing the levels of error, some of the key control functions that had been examined were affected by weaknesses. These related    to the LPIS, the administrative controls, the quality of on-the-spot inspections and the recovery procedures for incorrect payments (Chapter 7,    paragraph 7.41).

   For EAFRD expenditure, the main risks relate to ineligible expenditure due to non-compliance with often complex rules (including    procurement) and eligibility conditions, in particular for investment measures (Chapter 7, paragraph 7.6). In addition, for Member States' systems    related to regularity of transactions in rural development, the ECA identified deficiencies in administrative checks related    to eligibility conditions, in    particular those concerning public procurement. These system weaknesses were very similar to those found and reported in previous years. System    failures are an important cause of the errors detected during transaction testing (Chapter 7, paragraph 7.42).

   In the 2015 Annual report, the ECA reports concrete findings in relation to the above mentioned main risks (Chapters 6 and 7).

1.1.1. What are the main root causes in the major EU spending areas (common agricultural policy, regional and urban policy, employment, social affairs and inclusion) for the persisting risks and errors pointed out by the ECA in the domain of:

compliance with EU and national eligibility rules,

compliance with EU and national public procurement legislation, and

compliance with State aid rules ?

NB: In order to develop the replies, the following non-exhaustive list of examples for root causes of legality and regularity errors in EU expenditure may be considered (issues concerning the achievement of policy objectives and value added are covered under question 2 here below). Therefore, you are kindly invited to mark the extent of relevance of the examples per major EU spending area (common agricultural policy, regional and urban policy, employment, social affairs and inclusion) as it is perceived for your country and in addition to develop a narrative in your reply to question 1.1.1 here under:

Not relevant

Relevant in some respect

Relevant in most respect

Fully relevant

number and complexity of rules and gold-plating

incorrect transposition of applicable EU legislation into national laws

failure to observe the legal and procedural requirements stemming from EU and national legislation and rules

sufficient knowledge in applying procurement rules or State aid rules or other applicable EU legislation and rules (including conditions and eligibility criteria for the rural development measures, simplified cost options, reasonableness of costs, result-oriented agri-environment payments)

complex eligibility rules

weaknesses in the set of eligibility rules that may lead to potential for circumventing them

insufficient quality and up-date of the Land Parcel Identification System (LPIS)

mistakes in the aid applications

continued risks of misinterpretation of what is the eligible area for the basic payment scheme 

inefficient sanction mechanism for non-compliance or low sanction rate for non-compliance

need of raising awareness, targeted training, and, development and delivery of detailed methodological support and guidance for national and regional authorities and final beneficiaries

need of more or better resources and administrative capacity building

need of an improved quality of key aspects of the supervisory and control systems (better design and/or performance of administrative checks and on-the-spot controls and/or increase of the effectiveness of the work carried out by management verifications, audit authorities, paying agencies and certification bodies)

better use of the information necessary to detect and correct available in the supporting documents, as well as at the level of the beneficiary or a national/regional body

sufficiently robust action plans developed to address both the causes of errors and the weaknesses in the management and control systems and/or deficiencies in the EU spending

insufficient introduction of changes by new legal and/or regulatory and/or procedural frameworks likely to have a significant impact on the causes of errors

need of more initiatives for ensuring a genuine simplification for beneficiaries and programmes' implementation

knowledge and experience sharing, and dissemination of good practices at national and/or at EU level on improving widespread weaknesses/deficiencies/errors

expected results from actions that will not always be evident in short-term

1.1.2. What are the main lessons learned while addressing the risks and errors for the EU spending in relation to the following (please consider also the lessons learned in the light of the improvements for the current programming period 2014-2020):

compliance with EU and national eligibility rules,

compliance with EU and national public procurement legislation, and

compliance with State aid rules ?

1.1.3. What are the good practices that have been identified in your Member State, and that can be used as examples of success stories in the areas of the following (please consider success stories that can be promoted under the current programming period 2014-2020 like for instance the use of simplified cost options that could be a way to avoid errors by moving from reimbursement of costs incurred to payment by entitlement (i.e. based on the fulfilment of some pre-defined conditions)):

compliance with EU and national eligibility rules,

compliance with EU and national public procurement legislation, and

compliance with State aid rules ?

1.2. As in previous years, the ECA considers that for a large part of the transactions affected by quantifiable errors, Member States' authorities had sufficient information to prevent or detect and correct the errors before declaring or certifying the expenditure to the Commission (Chapter 6, paragraph 6.36 & Chapter 7, paragraphs 7.15 and 7.24).

1.2.1. What further measures have been implemented or planned in order to enhance the effectiveness of the checks carried out before declaring or certifying expenditure to the Commission ?

1.2.2. What further measures have been implemented or planned in order to enhance the effectiveness of actions to detect and correct errors concerning expenditure, which was previously declared or certified to the Commission ?

1.3. In the 2015 Annual report, the ECA reports (Chapter 1, paragraph 1.47) that the audit results show a strong relationship between the basis for payment and levels of error. The ECA continues to find that reimbursement spending is affected by much higher levels of error than spending on an entitlement basis.

1.3.1. What action has your Member State taken/planned to take to analyse the risks and estimated level of error in the major EU spending areas (common agricultural policy, regional and urban policy, employment, social affairs and inclusion) ?

1.3.2. Do you consider that there is a relationship between the basis for payment and levels of error in the major EU spending areas (common agricultural policy, regional and urban policy, employment, social affairs and inclusion) ?

   Yes – if "Yes" please describe

    No – if "No" please give reasons why not

Question 2:

2. Performance of the EU budget

Questions addressed to all Member States:

2.1. The 2015 Annual report of the ECA presents the audit work done in relation to the performance related assessment and analysis of the EU budget:

   In particular, the performance analysis (Chapter 3) focused on the Horizon 2020 programme, the strategic and performance framework in    which it    operates, and the links to the Europe 2020 strategy for smart, sustainable and inclusive growth.

2.1.1. How are the relations between the EU priorities in the context of the Europe 2020 strategy, including Horizon 2020, and the national priorities of your Member State linked and do they facilitate focus on performance ?

2.1.2. What measures have been undertaken to pursue synergies and complementarities between European structural and investment funds and national programmes ?

2.2. The 2015 Annual report of the ECA presents also performance related information and conclusions for the main spending policy areas of the EU budget in shared management, which are tailored to the specific policy and cover mainly, performance framework, results and indicators.

   The ECA presents its assessment on the number of projects that have fully or partially achieved their output and result objectives (Chapter 6,    paragraph 6.84). The ECA also indicates that as regards the 2014-2020 programming period, there is no legal requirement in the common provision    regulation for Member States to define result indicators at project level. Nevertheless, the ECA considers it good practice to define relevant result    indicators at project level that measure the contribution of the project to the achievement of the objectives set for the priority axis of the operational    programmes (Chapter 6, paragraph 6.89).

   The ECA continued its work on performance-related assessment of investment projects in the area of rural development. The ECA pointed out that as    main performance issues the insufficient evidence that costs are reasonable and deficiencies in targeting measures and selected projects, including    weak links to Europe 2020 objectives (Chapter 7, paragraphs 7.68 and 7.70).

2.2.1. What performance measurement system has been or will be established for the management of European structural and investment funds in order to:

link EU measures, operations or projects to EU priorities/Europe 2020 objectives and targets.

   2.2.2. What framework has been set-up in your Member State for the management of ESI Funds in order to achieve a result-oriented system and    impact of EU projects ?

2.2.3. Has your Member State taken actions to define or improve result indicators at EU project level ?

   Yes – if " Yes" please describe them

    No – if "No" please give reasons why not

2.2.4. What performance measurement system has been or will be established in order to:

monitor the achievement objectives at EU measure, operations or project level

monitor the output and result indicators at EU measure, operations or project level

Question 3:

3. Follow-up of recommendations formulated by the ECA

Questions addressed to all Member States:

3.1. In the 2015 Annual report, the ECA reports (Chapter 3, part 3) the results of the Court's audit on performance, including the follow-up of Court's recommendations. The ECA considers that there is a wide variation in the level of formal follow-up and only moderate evidence of changes in national policy and practice as a result of its recommendations (Chapter 3, paragraph 3.86).

3.1.1. Is there a framework or a system for the follow-up of ECA's recommendations which have been addressed to your Member State in Court's annual and special reports? How do you monitor and report on progress achieved towards to implementation of Court's recommendations ?

   Yes – if " Yes" please describe

    No – if "No" please give reasons why not 

Part B: Please enter any general comments you have concerning the 2015 Annual report

or general issues relating to the discharge procedure

Austria

Main root causes in the major EU spending areas (common agricultural policy, regional and urban policy, employment, social affairs and inclusion) for the persisting risks and errors pointed out by the ECA.

Main lessons learned while addressing the risks and errors for the EU spending.

n/a

Good practices and examples of success stories in the areas of compliance with EU and national eligibility rules, compliance with EU and national public procurement legislation, and compliance with State aid rules.

n/a

Further measures to enhance the effectiveness of the checks carried out before declaring or certifying expenditure to the Commission.

Both the types of controls and the role of the MA and CA before declaring expenditure to the European Commission are currently being overhauled in connection with the Descriptions of the Management and Control Systems for 2014-2020. Due to the requirement for an annual management declaration by the managing authority, control mechanisms must also be defined.

Further measures to enhance the effectiveness of actions to detect and correct errors concerning expenditure, which was previously declared or certified to the Commission.

n/a

Risk analysis and estimated level of error in the major EU spending areas (common agricultural policy, regional and urban policy, employment, social affairs and inclusion).

n/a

Relationship between the basis for payment and levels of error in the major EU spending areas (common agricultural policy, regional and urban policy, employment, social affairs and inclusion).

Yes.
With regard to agriculture: Area-related measures provide more options for administrative checks before payment.

No.
As ESI funds are based on the reimbursement principle, we do not have any experience of expenditure based on payment entitlements. That is why Member States cannot provide analyses or comparisons in this area of activity.

Links between EU priorities in the context of the Europe 2020 strategy, including Horizon 2020, and national priorities.

n/a

Measures to pursue synergies and complementarities between ESI Funds and national programmes .

n/a

Performance measurement system to link EU measures, operations or projects to EU priorities/Europe 2020 objectives and targets.

With regard to agriculture: there is a link with national provisions. A link at project level would, however, involve more bureaucracy.

Framework for the management of ESI Funds in order to achieve a result-oriented system and impact of EU projects.

With regard to agriculture: national provisions are in line with and take account of the relevant EU provisions.

Member State actions to define or improve result indicators at EU project level.

Yes.

With regard to agriculture: national provisions. With regard to Structural Funds programmes: in accordance with EU provisions, the managing authorities must define more relevant indicators for 2014-2020 for project selection and implementation. The indicator sets are determined for each programme and are recorded and analysed by the Monitoring System.

Performance measurement system to monitor the achievement objectives at EU measure, operations or project level and to monitor the output and result indicators at EU measure, operations or project level.

n/a

Framework or a system for the follow-up of ECA's recommendations addressed to Member States in Court's annual and special reports. Monitoring and reporting on progress achieved towards to implementation of Court's recommendations

Yes.

With regard to agriculture: The ECA findings are forwarded to the competent authorities. For the EAGF and EAFRD, the certification bodies are required to follow up the audit findings of the Commission and Court of Auditors.

In principle, no recommendations are made to specific Member States in the ECA's Annual or Special Reports. Descriptions of findings tend to remain very general and are often not aimed at a specific Member State or even a particular programme or project. This makes follow-up more difficult. In any event, for the ERDF, appropriate follow-up is given to the individual findings established during the audits.

Belgium

Main root causes in the major EU spending areas (common agricultural policy, regional and urban policy, employment, social affairs and inclusion) for the persisting risks and errors pointed out by the ECA.

Main lessons learned while addressing the risks and errors for the EU spending.

le respect des règles nationales et de l'UE en matière d'éligibilité; utilisation des coûts simplifiés

Measures impacting heavily on the environment or biodiversity often require a full set of conditions that it is not always easy to comply with or check. The removal of such conditions may reduce the error rate, but is also likely to contribute less positively to the environment or biodiversity. Strong guidance for beneficiaries may help in this respect, but makes life more difficult for the administration.

le respect de la législation nationale et de l'UE relative aux marchés publics; et formations disponibles pour les fonctionnaires, séances d’informations pour les bénéficiaires

It is worth alerting the beneficiary to the public-procurement requirements at an early stage of the process. However, comprehensively checking correct compliance with public-procurement legislation comes at a heavy administrative cost.

There is a great deal of ignorance as to when a notification is or is not required. The most difficult cases are small-scale projects in the social or tourism sector where it cannot be clearly determined whether or not aid distorts the market and should be regarded as State aid.

Good practices and examples of success stories in the areas of compliance with EU and national eligibility rules, compliance with EU and national public procurement legislation, and compliance with State aid rules.

le respect des règles nationales et de l'UE en matière d'éligibilité; identification dans une quinzaine de pages des règles d’éligibilité applicables à tous les projets cofinancés

Listing of common errors for beneficiaries, automated checking of digital file submissions, removal of conditions that are difficult to comply with or check, etc.

le respect de la législation nationale et de l'UE relative aux marchés publics; et large diffusion de guides, notamment, le guide d’orientation à destination des praticiens (comment éviter les erreurs les plus fréquentes commises dans le cadre des marchés publics de projets cofinancés par les Fonds structurels et d’investissement européens), mise à jour des notes d’orientations pour les travaux complémentaires / supplémentaires

In the case of specific EAFRD measures, the administration already asks the beneficiary early in the process how far he or she has progressed with public procurement. Training is organised for the departments managing the various EAFRD measures on public-procurement legislation compliance checks.

le respect des règles en matière d'aides d'État? Conscientisation accrue des collègues en charge des Fonds structurels sur cette matière, en particulier via l’instauration d’un point de contact unique

Further measures to enhance the effectiveness of the checks carried out before declaring or certifying expenditure to the Commission.

Il convient de noter que le taux d’erreur pour les programmes opérationnels FEDER « mainstream » est largement inférieur à 1%.

Contrôle sur pièces exhaustif et contrôle sur place mieux orienté, sur base de check-lists.

Additional digitalisation of case handling, organisation with managing departments of working groups on control requirements, etc.

Further measures to enhance the effectiveness of actions to detect and correct errors concerning expenditure, which was previously declared or certified to the Commission.

Il convient de noter que le taux d’erreur pour les programmes opérationnels FEDER « mainstream » est largement inférieur à 1%.

Vu le taux d’erreur, les mesures prises semblent correspondre à l’objectif fixé.

Risk analysis and estimated level of error in the major EU spending areas (common agricultural policy, regional and urban policy, employment, social affairs and inclusion).

L’analyse des risques peut se baser sur les différents audits de système de 2007-2013, qui se sont clôturés dans leur grande majorité favorablement, permettant ainsi une poursuite du système de gestion et de contrôle impliqué, dans un environnement sécurisé.

When drawing up the programme, each measure was examined in detail in terms of each condition’s controllability and verifiability.

Relationship between the basis for payment and levels of error in the major EU spending areas (common agricultural policy, regional and urban policy, employment, social affairs and inclusion).

Yes.

Awarding payments on the basis of surface area, for example, is often less constrained by extra eligibility conditions. The actual surface area can be certified accurately by indicating plots digitally. If aid is received for agri-environment management or project implementation purposes, there are often more varying compliance rules, the complexity of which is often greater, thereby increasing the risk of errors.

Non.

Dans le cadre de la gestion partagée, la responsabilité confié aux autorités de gestion peut être un gage de suivi approprié si les audits de système mis en place sont adéquats et suivis.

Links between EU priorities in the context of the Europe 2020 strategy, including Horizon 2020, and national priorities.

Il faut être conscient que le concours du FEDER dont la Wallonie bénéficie reste marginal par rapport aux valeurs cibles de la stratégie Europe 2020. Toutefois, les mesures prises et les projets retenus concourent évidemment à celles-ci.

Measures to pursue synergies and complementarities between ESI Funds and national programmes .

En Wallonie, des échanges d’informations sont réguliers entre les programmes cofinancés parles Fonds structurels et d’investissement européens et les autres programmes, comme le « plan Marshall » de relance pour la Wallonie. Par ailleurs, une participation croisée a été mise en place dans le processus de sélection.

Performance measurement system to link EU measures, operations or projects to EU priorities/Europe 2020 objectives and targets.

Des indicateurs financiers et de réalisation sont repris dans le programme opérationnel FEDER « Wallonie-2020.EU » pour le cadre de performance. Des cibles ont été définies par axes prioritaires et sont liées aux priorités d’investissements établies par l’UE. L’atteinte de ces cibles sera mesurée à partir des données fournies par les projets soutenus. Par exemple, l’indicateur « Entreprises soutenues » agrégera le nombre d’entreprises soutenues par le programme. Les porteurs de projets devront réaliser ce reporting au moins une fois par an auprès de l’autorité de gestion via leur rapport annuel.

Framework for the management of ESI Funds in order to achieve a result-oriented system and impact of EU projects.

Un système de suivi au niveau du programme opérationnel « Wallonie-2020.EU » a été mis en place, il s’agit d’un dispositif visant la collecte, l’analyse et la communication des informations en vue de disposer des données quantitatives et qualitatives sur la progression financière, les réalisations et les résultats directs et indirects des projets mis en œuvre au travers des différentes mesures du programme. Tous les acteurs sont impliqués dans le cadre de ce système de suivi qui contribue à l’approche orientée résultats.

Le système veille à détecter des problèmes éventuels de mise en œuvre et les régler au plus vite, obtenir des exemples de bonne pratique qui pourraient être généralisés, communiquer facilement sur les réalisations et les résultats engrangés et également à alimenter les différentes évaluations pour appuyer l’analyse des données et leur interprétation et ainsi aider à la prise de décision.

Les évaluations planifiées (plan d’évaluation du PO Wallon), le cadre de performance composé des indicateurs de réalisation les plus représentatifs de chaque axe prioritaire et des indicateurs financiers, ainsi que la responsabilisation accrue des bénéficiaires à l’atteinte des résultats font partie intégrante du système de suivi.

Member State actions to define or improve result indicators at EU project level.

Oui.

Sur la base des enseignements de la période précédente, un cadre d’indicateurs (indicateurs de réalisation et de résultat, communs et spécifiques) a été établi au niveau de chaque axe du PO en lien avec les priorités d’investissement. Dans le cadre de la sélection des projets, selon la mesure dans laquelle le projet s’inscrit, les bénéficiaires ont été tenus de quantifier / identifier au moins un indicateur de résultat et de réalisation. Cette exigence faisait partie des critères de sélection du Gouvernement wallon et visait également à ce que chaque projet contribue aux résultats attendus de la mesure. À une échelle plus micro, en plus des indicateurs repris dans leur fiche-projet, les bénéficiaires sont invités à valoriser les résultats et les impacts supplémentaires de leur(s) projet(s). L’autorité de gestion entend ainsi favoriser une dynamique de conscientisation des bénéficiaires sur l’orientation résultats de la programmation 2014-2020 et les responsabiliser davantage dans l’atteinte des objectifs fixés par la Wallonie.

Performance measurement system to monitor the achievement objectives at EU measure, operations or project level and to monitor the output and result indicators at EU measure, operations or project level.

Le système de suivi (cf. ci-avant) du programme opérationnel « Wallonie-2020.EU » a pour objectif de suivre la réalisation des objectifs et l’atteinte des cibles des indicateurs définis.

En outre des indicateurs « d’étapes » ont été définis afin de suivre la progression des réalisations en vue d’atteindre le résultat (« Actions de revitalisation urbaine finalisées » et son indicateur d’étape « Actions de revitalisation urbaine pour lesquelles les procédures précédant les travaux ont été réalisées »).

Enfin, des évaluations visant à évaluer l’atteinte des objectifs par axes (avec des focus emploi notamment) ont été planifiées dans le plan d’évaluation de la Wallonie validé par le Comité de suivi le 11 décembre 2015.

Framework or a system for the follow-up of ECA's recommendations addressed to Member States in Court's annual and special reports. Monitoring and reporting on progress achieved towards to implementation of Court's recommendations

Oui.
Présentation des recommandations aux acteurs concernés, intégration des conclusions applicables dans les procédures, etc.

Bulgaria

Main root causes in the major EU spending areas (common agricultural policy, regional and urban policy, employment, social affairs and inclusion) for the persisting risks and errors pointed out by the ECA.

Main lessons learned while addressing the risks and errors for the EU spending.

Ministry of the Economy: Compliance of the national public procurement legislation with the EU rules, and the correct transposition of EU directives are essential for the proper spending of EU funds and avoiding infringements justifying the imposing of financial corrections.

Ministry of the Economy - Compliance with State aid rules has an important role and is a condition for the granting of financial assistance. The complexity of the requirements for the different types of State aid creates difficulties for applicants and beneficiaries – SMEs in terms of the proper understanding and implementation of such requirements.

The MA observes the legal and procedural requirements stemming from EU and national legislation and the State aid rules, and in cases where applicants/beneficiaries do not observe them, the MA applies the required procedures for monitoring and corrective action. A lesson learned in relation to overcoming deficiencies is the need to ensure maximum connection between the eligibility requirements for applicants, envisaged in the Guidelines for Applicants, and the evaluation criteria and methodology for the specific procedure. The MA strives to achieve this with the help of controls introduced in the coordination procedure for the approval of the guidelines for applicants for each procedure.

PPA: The main lessons are the existence of adequate control by the responsible authorities and cooperation between authorities.

Good practices and examples of success stories in the areas of compliance with EU and national eligibility rules, compliance with EU and national public procurement legislation, and compliance with State aid rules.

Ministry of the Economy - After launching procedures for granting financial assistance, the Managing Authority conducts information campaigns for the target groups of the corresponding procedure, and after contracts with beneficiaries are signed, training on the execution of contracts is conducted.

M of the Economy: Guidelines for execution of grant contracts, presenting the most common errors in the field of public procurement, are developed and published in the website of the Managing Authority.

Participation in training events on the implementation of national and EU legislation in the field; regular preparation of information by audit authorities and the Managing Authority regarding the most common errors in implementing the rules and regulations.

At present the Managing Authority has no methodology or practice for the use of simplified costs, as they are not applicable to the operational programme.

As specified above, the MA has introduced a number of good practices that ensure compliance with the State/de minimis aid rules both in the course of the evaluation of applications for assistance and at the contracting stage. Examples include:

carrying out of official checks in the official registers of received State/de minimis aid — UMIS, UMIS 2020, Register of de minimis aid at the Ministry of Finance;

verification of the information regarding received State/de minimis aid declared in the Declaration of State/de minimis aid;

in the event that the applicant has calculated wrongly the intensity of the grant and/or arithmetic errors and/or discrepancies between amounts and percentages that would result in violation of the State/de minimis aid rules are found, a correction of budgets is automatically applied;

in the event that the assistance applied for exceeds the threshold for de minimis aid, the assistance requested is automatically reduced by the evaluation committee to the maximum amount without this resulting in rejection of the project proposal under the procedure.

As a positive example in the practice of the MA we can indicate that a check for compliance with the State/de minimis aid regimes is carried out with regard to all applicants at the evaluation stage, and with regard to applicants proposed for financing a further in-depth check is performed at the contracting stage. Thus we avoid unnecessary spending of resources associated with performing very thorough checks on applicants who are not proposed for financing.

SFA: With regard to operations for rural development (in connection with assessing whether costs are justified using the approach of assessing and comparing different (at least three) offers), a practice of sending requests for confirmation to tenderers is introduced in order to guarantee the authenticity of submitted offers.

MTIT&C: During the 2007—2013 a mechanism for simplified reporting of costs through vouchers for unemployed and employed individuals (Council of Ministers Decree No 251 of 2009), and a single cost standard for the provision of social services were introduced under OP HRD. The opportunity to provide training for employed and unemployed persons continues in OP HRD 2014—2020. The opportunities to apply other forms of simplified costs are currently explored. A study of historical data to establish the average market prices is envisaged. A new approach aimed at reducing the administrative burden is the fully electronic application for and reporting of the implementation of projects, which is a continuation of the electronic information collection and reporting that started during the previous programming period. The currently developed methodology for implementation and verification based on a sample of reported costs is aimed at reducing the administrative burden during the verification stage.

Further measures to enhance the effectiveness of the checks carried out before declaring or certifying expenditure to the Commission.

Ministry of the Economy: When beneficiaries declare costs for verification, a verifying team from the Managing Authority conducts on-the-spot verifications. The purpose of the verifications is to establish whether all assets have been delivered and whether the entire documentation relating to the project implementation is available at the beneficiary. In the course of management verifications, the principle of double checking, at the stages of verification of activities and verification of expenditure, is strictly observed.

Audit of EU Funds EA: The Audit Authority regularly shares its approach to the checks performed and, in particular, on checks performed in relation to public procurement. This approach has been approved by the European Commission and has been recommended by it for all authorities within the national system. In this connection the Audit Authority publishes and disseminates the check-lists for public procurement developed by it. During the period March—April 2015, with a letter from the Deputy Prime Minister for European Funds and Economic Policies to the competent national authorities, analytical information regarding detected irregularities in the field of public procurement and standard forms of check-lists developed by the Audit Authority were sent. The letter requires from competent national authorities to use the respective check-lists.

The Audit Authority also publishes analytical information regarding irregularities relating to public procurement, established by it in the course of audits of operations. This analysis contains information regarding the approach to the conducting of examinations, specific information regarding the types of irregularities found (including statistics and practical examples), and conclusions and recommendations.

NF: On 25 July 2016, Ordinance No H-3 of the Minister for Finance of 8 July 2016 laying down the rules of payment, verification and certification of expenditure, recovery and write-off of irregular expenditure and accounting, as well as the terms and rules of completion of end-of-year accounts under the operational programmes and the European territorial cooperation programmes, drawn up by the Certifying Authority pursuant to Article 7(4) of the Management of European Structural and Investment Funds Act and regulating the relationships between structures responsible for management and control, entered into force.

In addition to documentary checks for legality and regularity of expenditure, which are evenly distributed throughout the accounting year both to avoid concentration of workload at certain times and maintain a high level of effectiveness of such checks and to ensure the possibility of timely suspension of ineligible expenditure in the certification process to the European Commission, the Certifying Authority performs the following checks:

for quality control in Management Authorities;

inspections at the premises of beneficiaries and on-the-spot inspections at the location of the project implementation;

inspections of the public procurement procedures; with regard to these inspections, based on a risk analysis of the most common errors, the control procedure has been streamlined and both the number and the intensity of inspections have been increased.

An order of the Minister for Finance designated officials of the Certifying Authority authorised to access the risk scoring tool of the European Commission in the field of fraud and irregularities ARACHNE.

Further measures to enhance the effectiveness of actions to detect and correct errors concerning expenditure, which was previously declared or certified to the Commission.

In view of the need to enhance the knowledge and skills of officials involved in verification of expenditure on public procurement, in 2015 the Audit of EU Funds EA continued its practice of sharing the approach applied. The Audit Authority took part in training events presenting examples of irregularities from the practice of the Commission and national control authorities. In 2015, a total of 149 employees of Managing Authorities and beneficiaries of operational programmes participated in training regarding the approach of the Audit Authority to the inspection of public procurement.

Ministry of the Economy: Based on its experience so far, the Managing Authority has established that the most common errors made by beneficiaries are related to contractor selection procedures. For this reason, an opportunity is provided for preliminary review of the documentation, and in over 80 % of the cases beneficiaries use it. This mechanism contributes to increasing the effectiveness of actions for detecting and correcting errors at a stage where their influence can be limited or fully eliminated.

NF: At present the Certifying Authority is in the process of streamlining the analysis performed in order to identify a possible systemic nature of errors identified in the course of inspections.

Risk analysis and estimated level of error in the major EU spending areas (common agricultural policy, regional and urban policy, employment, social affairs and inclusion).

Directorate General ‘Urban and Regional Development’ (DG URD), MRDPW: In the field of further action it shall be noted that during the new programming period the Managing Authority of Operational Programme ‘Regional Development’ introduced the ARACHNE tool developed by the European Commission for the purposes of enhancing the measures against irregularities and fraud in the implementation of projects and increasing the reliability of the control systems, and identifying potentially high-risk situations before providing funding.

Ministry of the Economy: Regular risk assessments are carried out under Operational Programme ‘Development of the Competitiveness of the Bulgarian Economy’ 2007—2013 and Operational Programme ‘Innovations and Competitiveness’ 2014—2020, and risks are identified and documented in a risk register. Risks, including residual risk, are assessed and corrective actions are identified and followed up.

During the programming period 2014—2020 a new unified management information system for management and monitoring of EU funds in Bulgaria (UMIS 2020) was introduced and is used

. Project reporting and verification are fully electronic, which reduces the risk of errors in calculating and documenting expenditure subject to reimbursement.

To limit the risk of error in reimbursement of expenditure, the Managing Authority of Operational Programme ‘Development of the Competitiveness of the Bulgarian Economy’ 2007—2013 and Operational Programme ‘Innovations and Competitiveness’ 2014—2020 has introduced and implements procedures for checking the existence of registered irregularities or pending inspections of alerts of irregularities, and performs checks in the Early Detection and Exclusion System (EDES), which already contains some evidence of fraudulent practices of applicants/beneficiaries, in pursuance of the implementation of Regulation (EC, Euratom) No 1929 of the European Parliament and of the Council of 28 October 2015.

Furthermore, the Managing Authority has introduced a procedure for fraud risk assessment. An assessment of the fraud risk in the activity of the Managing Authority of Operational Programme ‘Innovations and Competitiveness’ 2014—2020 was carried out, and the results are presented in a report dated 28 October 2016. The risks relating to the process of certification and payments under the programme were identified and assessed.

Relationship between the basis for payment and levels of error in the major EU spending areas (common agricultural policy, regional and urban policy, employment, social affairs and inclusion).

Yes.

MESc: The level of error is set depending on the basis for payment and the related verification of eligibility of expenditure.

MTIT&C: According to the Annual Control Reports of the Audit Authority, the level of error under OP HRD 2007—2013 for each of the years was set below the reference 2 %. Systems audits show a high level of assurance on management and control. The European Court of Auditors has no findings and recommendations.

Links between EU priorities in the context of the Europe 2020 strategy, including Horizon 2020, and national priorities.

Bulgarian National Audit Office: The National Development Programme: Bulgaria 2020 is a long-term national programme document for the development of the Republic of Bulgaria, which is the basis for the programming of strategic documents related to the implementation of both national policies and policies of the EU. The document helps optimise the programming of the development of Bulgaria to 2020, providing the link between the national priorities of the Republic of Bulgaria and the objectives of the EU in the context of the Europe 2020 Strategy.

The link between the priorities in the national strategic and programming documents and these of the Europe 2020 Strategy is among the key aspects of studying and analysis in the performance audits carried out by the National Audit Office, including the performance audits of EU funds. A more clear focus on mechanisms for implementation and funding the implementation of priorities is necessary.

MTIT&C: Operational Programme ‘Human Resources Development’ 2014—2020 contributes actively to achieving two of the targets of the European Strategy for Smart, Sustainable, and Inclusive Growth Europe 2020. These are the targets in the fields of employment and the fight against poverty and social exclusion. The HRD OP strategy is set upon the following three pillars: better quality employment, reducing poverty and promoting social inclusion, and modernisation of public policies. The OP HRD strategy also corresponds with the objectives of the National Development Programme Bulgaria 2020, the National Reform Programme and the Partnership Agreement.

Operations under OP HRD are planned and developed fully in line with the Union strategy for smart, sustainable and inclusive growth and for the achievement of economic, social and territorial cohesion. The planned operations are fully in line with the Priority Axes and Investment priorities outlining specific goals framing the expected results of the implementation of OP HRD.

Measures to pursue synergies and complementarities between ESI Funds and national programmes .

MAF: To ensure complementarity of rural development measures and other programmes supported by ESIF, RDP 2014—2020 envisages, at the time of launching the programmes, to set up an interdepartmental working group to coordinate issues of demarcation and complementarity between individual programmes at all stages of the project cycle (selection of operations, programming, monitoring and evaluation). Currently a working group was established by Order No RD 09-742 of 30 September 2016 of the Minister for Agriculture and Food, which defines and follows a procedure on the procedure and manner of coordinating the complementarity process, a check for double financing and exchange of information between the competent institutions (the Managing Authorities of the Rural Development Programme for the period 2014—2020, Operational Programme ‘Regions in Growth’ and the Territorial Cooperation Programmes 2014—2020, and State Fund ‘Agriculture’ – Paying Agency). It is envisaged to set up an interdepartmental working group to coordinate issues of demarcation and complementarity of OP ‘Science and Education for Smart Growth’ with regard to research, support for innovations, education, training and education infrastructure.

Bulgarian National Audit Office: In 2016 the National Audit Office started three audits on the programming and contracting of the ESIF assistance through the focus of the National Development Programme: Bulgaria 2020. In the course of these audits, the methodology used in a parallel audit of the European Court of Auditors and audit institutions of other Member States was applied . The scope of audit included the activities for programming and contracting of assistance from the European Social Fund, the European Regional Development Fund and the European Agricultural Fund for Rural Development and how they contributed to achieving the objectives of the National Development Programme: ‘Bulgaria 2020’ for the period 1 January 2014 — 31 December 2016.

To evaluate the created prerequisites for effective and efficient use of the assistance from the European Union and to minimise in a timely manner the risks of the European Commission suspending interim payments, an audit of the fulfilment of the preliminary conditions for ESIS 2014—2020 is carried out.

The audit is included in the Audit Programme of the National Audit Office for year 2016, but at the same time is conducted as a parallel audit on the ‘Contribution of Structural Funds to achieving the targets of Europe 2020 in the fields of education and employment’, led by the ‘Structural Funds VII’ Working Group with the SAI Contact Committee. The Republic of Bulgaria is involved as an observer.

Performance measurement system to link EU measures, operations or projects to EU priorities/Europe 2020 objectives and targets.

MTIT&C: The OP HRD strategy corresponds with the objectives of the National Development Programme Bulgaria 2020, the National Reform Programme and the Partnership Agreement. The operational programme addresses the objectives of these documents regarding the quality of the workforce and investment in human resources, providing employment opportunities and raising labour income, reducing poverty and promoting social inclusion, improving the quality and effectiveness of health services, and strengthening the institutional environment in terms of labour market, social services, healthcare and equal opportunity and non-discrimination.

A large portion of the resources of the operational programme (60 %) is allocated for achieving the objectives of the employment policy. With support from the European Social Fund, solutions are sought to problems relating to the high level of unemployment among young people and older people and for reducing the high share of people not involved in training or employment. The support under OP HRD for the labour market area complements the national instruments aimed at supporting employment and reducing unemployment in Bulgaria.

The attainment of the targets of the Europe 2020 Strategy also depends on the contribution of the cohesion policy, and one of the areas of intervention enshrined in the European Platform against Poverty and Social Exclusion is the provision of funding from the European Social Fund to support policies for fighting poverty and promoting social inclusion. The other key priority of OP HRD is social inclusion and fight against poverty, financed under priority axis 2. Close to 40 % are allocated to this priority, thus providing resources for the national policies planned for the period until 2020, which are described in detail in the National Reform Programme and other relevant national strategic documents. These policies aim at addressing the considerable challenge in fighting poverty identified in Bulgaria.

SFA: With regard to rural development operations, with an order of the Minister for Agriculture and Food a working group was set up to coordinate the complementarity between RDP 2014—2020 and Operational Programme ‘Regions in Growth’ throughout the programming period of programme implementation in order not to allow double financing of expenditure.

MTIT&C: The strategy of Operational Programme ‘Transport and Transport Infrastructure’ 2014—2020 contributes to the targets of the Europe 2020 Strategy and is consistent with the guidelines for the development of the European transport policy and the Trans-European transport network, with the national policies, as well as with the conclusions and recommendations defined in the analysis of socio-economic development and the strategy of the Partnership Agreement.

Key documents related to the strategy of OPTTI 2014-2020 are as follows:

- The Strategy ‘Europe 2020’ for smart, sustainable and inclusive growth ensures that the objectives and priorities of OPTTI are in compliance with the EU targets to achieve economic, social and territorial cohesion. OPTTI contributes to all three pillars of the strategy with an emphasis on sustainable growth to promote a greener and more competitive economy with a more efficient use of resources, which, in relation to the transport sector, suggests modernisation and decarbonisation of the transport sector to achieve increased competitiveness through a combination of measures, such as intelligent traffic management through modern navigation and information systems for the Black Sea and the Danube River, better logistics, pursuing the reduction of CO2 emissions for motor vehicles, aviation and maritime sectors, setting common standards and developing the necessary infrastructure, and to the accelerating of the implementation of strategic projects with high added value for Europe, to address critical bottlenecks, in particular cross-border sections and intermodal nodes.

- The National Reform Programme, a national document, which is updated annually in the implementation of Strategy ‘Europe 2020’.

- The National Development Programme: Bulgaria 2020 (NDP BG2020) is the leading strategic and programming document detailing the objectives of the development policies of the country up to 2020.

- White Paper ‘Roadmap to a Single European Transport Area’ includes measures to ensure growth in transport and mobility support.

- The Guidelines for the development of the Trans-European Transport Network (Regulation (EU) No 1315/2013) aim to contribute to achieving the sustainable mobility of people and goods and promoting the development of the domestic market and the overall competitiveness of the European Community.

- The National Spatial Development Concept for the period 2013—2025 includes a set of priorities, one of which is to develop the national transport infrastructure as a part of the Trans-European Transport Network.

- The Strategy for the Development of the Transport System of the Republic of Bulgaria until 2020 defined the following objectives of the national transport policy:

Achieving economic efficiency

Development of sustainable transport sector

Improvement of the regional and social development and commitment

The overall objective of OPTTI 2014—2020, like that of OPT 2007—2013, is ‘Development of a sustainable transport system’, which is in compliance with the thematic objectives specified above.

The implementation of projects for developing the transport system, contributing to the effective connectivity of the transport network and to removing sections with insufficient capacity in it, reducing congestion, noise and pollution, improving safety, promoting the use of environmentally friendly modes of transport, will continue. The achievement of the overall objective of the programme and hence its contribution to TO 4 (Supporting the shifts towards a low-carbon economy in all sectors) and TO 7 (Promoting sustainable transport and removing sections with insufficient capacity in all key network infrastructures) will contribute to the realisation of the concept of competitive and sustainable transport system, as well as to achieving the desired sustainable mobility of people and goods, promoting the development of the domestic market and the overall competitiveness of the European Community, territorial, economic and social cohesion, public welfare, safety and security of European citizens, taking into account the environmental factors, such as climate change, air pollution and protected areas.

The implementation of the specific measures under OPTTI will have a particular impact and contribution to national targets on climate change. In the Third National Action Plan on Climate Change, the transport sector is identified as one of the major sources of greenhouse gas emissions. The reasons for this include the privatisation of road transport, the significant reduction of subsidies for railway transport and the closure of railway routes leading to a shift in the transport structure from rail to road. Private cars have the most significant contribution to greenhouse gas emissions followed by heavy duty vehicles. In 2009 private cars and heavy duty vehicles were respectively responsible for 60 % and 21 % of the total emissions of the transport sector. Additionally, after the completion of Line 3 of the Sofia Metro in 2020, the road traffic is expected to decrease by 21,000 vehicles/day, which will result in reduction of traffic congestions and will create conditions for increasing the average speed of public transport along the central routes.

The measures to be implemented under the Action Plan are focused on the following areas:

- Reduction of transport emissions - Reduction of fuel consumption

- Diversification of transport

- Informing and training consumers. OPTTI provides funding for the following specific measures with a direct effect on all four sectors, contributing to the achievement of national targets on climate change:

•    - Under priority axis 1 – increasing the share of railway transport;

•    - Under priority axis 2 – modernisation of existing road infrastructure to ensure optimum speed and optimum driving modes of automobile engines;

•    - Under priority axis 3 – reduction of the relative share of trips with private motor vehicles through improvement and development of urban public transport; increasing the share of public electric transport and development and construction of intermodal terminals for combined transport.

Seven specific objectives have been identified as part of the overall objective of OPTTI 2014-2020 and accordingly the investment priorities of TO 7 and TO 4.

The first specific objective is ‘Increasing railway traffic of passenger and freight through improving the quality of the TEN-T railway infrastructure’.

The second specific objective is ‘Removal of bottlenecks in the TEN-T road network’.

The third specific objective is ‘Increased intermodal transport’.

The fourth specific objective is ‘Increased use of metro’.

The fifth specific objective is ‘Improved transport management through introduction of innovative systems’.

The sixth specific objective is ‘Improved management of the railway network’.

The seventh specific objective is ‘Establishment of necessary conditions for successful completion of OPT 2007—2013 and implementation of OPTTI 2014—2020, strengthening the administrative capacity and public awareness’.

The strategy of OPTTI 2014—2020 ensures continuity and logical sequence of investments in programming period 2007—2013, guaranteeing the completion of main directions in which investments are already made. The following priority axes have been identified in the programme:

1.    Development of railway infrastructure along the ‘core’ TEN-T

2.    Development of road infrastructure along the ‘core’ and ‘comprehensive’ TEN-T

3.    Improvement of intermodal transport services for passengers and freights and development of sustainable urban transport

4.    Innovations in management and services – establishment of modern infrastructure for traffic management and transport safety and security improvement

5.    Technical Assistance.

In addition to the investments under OPTTI 2014—2020, it is planned to seek investments through public-private partnership, particularly for development of ports and airports. Investments for development of air, river and sea transport, planned for funding under OPTTI, are entirely directed towards the development of intelligent systems to improve services and management of air, river and sea transport. Also, where applicable, funding from the Connecting Europe Facility (CEF) will be used.

SFA: With regard to rural development operations related to investments in fixed assets, for the programming period 2014—2020 it is envisaged to apply only two approaches to assessing the reasonableness of costs: reference costs and comparing different (at least three) offers. It is not envisaged to apply exception based on the amount of the costs requested for assistance.

SFA: With regard to the cost of financing approved after conducted public procurement procedures, for the purpose of RDP 2014—2020 it is envisaged to develop Guidelines for the implementation of the Public Procurement Act, which the contracting entities eligible under different sub-measures of RDP 2014—2020 will be obliged to implement. The Managing Authority will develop standard criteria for award by types of investment activities in relation to the implementation of the procedures under the Public Procurement Act. These criteria will be coordinated with competent institutions (IPA, AOP) and will be included as part of the Guidelines. Control will be exercised in four stages: ex-ante control, ex-post control, control at the stage of authorisation for contract implementation, and, last, control at the stage of on-the-spot verification.

Framework for the management of ESI Funds in order to achieve a result-oriented system and impact of EU projects.

MTIT&C: The OP HRD strategy corresponds with the objectives of the National Development Programme Bulgaria 2020, the National Reform Programme and the Partnership Agreement. The operational programme addresses the objectives of these documents regarding the quality of the workforce and investment in human resources, providing employment opportunities and raising labour income, reducing poverty and promoting social inclusion, improving the quality and effectiveness of health services, and strengthening the institutional environment in terms of labour market, social services, healthcare and equal opportunity and non-discrimination.

A large portion of the resources of the operational programme (60 %) is allocated for achieving the objectives of the employment policy. With support from the European Social Fund, solutions are sought to problems relating to the high level of unemployment among young people and older people and for reducing the high share of people not involved in training or employment. The support under OP HRD for the labour market area complements the national instruments aimed at supporting employment and reducing unemployment in Bulgaria.

The attainment of the targets of the Europe 2020 Strategy also depends on the contribution of the cohesion policy, and one of the areas of intervention enshrined in the European Platform against Poverty and Social Exclusion is the provision of funding from the European Social Fund to support policies for fighting poverty and promoting social inclusion. The other key priority of OP HRD is social inclusion and fight against poverty, financed under priority axis 2. Close to 40 % are allocated to this priority, thus providing resources for the national policies planned for the period until 2020, which are described in detail in the National Reform Programme and other relevant national strategic documents. These policies aim at addressing the considerable challenge in fighting poverty identified in Bulgaria.

SFA: With regard to rural development operations, with an order of the Minister for Agriculture and Food a working group was set up to coordinate the complementarity between RDP 2014—2020 and Operational Programme ‘Regions in Growth’ throughout the programming period of programme implementation in order not to allow double financing of expenditure.

MTIT&C: The strategy of Operational Programme ‘Transport and Transport Infrastructure’ 2014—2020 contributes to the targets of the Europe 2020 Strategy and is consistent with the guidelines for the development of the European transport policy and the Trans-European transport network, with the national policies, as well as with the conclusions and recommendations defined in the analysis of socio-economic development and the strategy of the Partnership Agreement.

Key documents related to the strategy of OPTTI 2014-2020 are as follows:

- The Strategy ‘Europe 2020’ for smart, sustainable and inclusive growth ensures that the objectives and priorities of OPTTI are in compliance with the EU targets to achieve economic, social and territorial cohesion. OPTTI contributes to all three pillars of the strategy with an emphasis on sustainable growth to promote a greener and more competitive economy with a more efficient use of resources, which, in relation to the transport sector, suggests modernisation and decarbonisation of the transport sector to achieve increased competitiveness through a combination of measures, such as intelligent traffic management through modern navigation and information systems for the Black Sea and the Danube River, better logistics, pursuing the reduction of CO2 emissions for motor vehicles, aviation and maritime sectors, setting common standards and developing the necessary infrastructure, and to the accelerating of the implementation of strategic projects with high added value for Europe, to address critical bottlenecks, in particular cross-border sections and intermodal nodes.

- The National Reform Programme, a national document, which is updated annually in the implementation of Strategy ‘Europe 2020’.

- The National Development Programme: Bulgaria 2020 (NDP BG2020) is the leading strategic and programming document detailing the objectives of the development policies of the country up to 2020.

- White Paper ‘Roadmap to a Single European Transport Area’ includes measures to ensure growth in transport and mobility support.

- The Guidelines for the development of the Trans-European Transport Network (Regulation (EU) No 1315/2013) aim to contribute to achieving the sustainable mobility of people and goods and promoting the development of the domestic market and the overall competitiveness of the European Community.

- The National Spatial Development Concept for the period 2013—2025 includes a set of priorities, one of which is to develop the national transport infrastructure as a part of the Trans-European Transport Network.

- The Strategy for the Development of the Transport System of the Republic of Bulgaria until 2020 defined the following objectives of the national transport policy:

Achieving economic efficiency

Development of sustainable transport sector

Improvement of the regional and social development and commitment

The overall objective of OPTTI 2014—2020, like that of OPT 2007—2013, is ‘Development of a sustainable transport system’, which is in compliance with the thematic objectives specified above.

The implementation of projects for developing the transport system, contributing to the effective connectivity of the transport network and to removing sections with insufficient capacity in it, reducing congestion, noise and pollution, improving safety, promoting the use of environmentally friendly modes of transport, will continue. The achievement of the overall objective of the programme and hence its contribution to TO 4 (Supporting the shifts towards a low-carbon economy in all sectors) and TO 7 (Promoting sustainable transport and removing sections with insufficient capacity in all key network infrastructures) will contribute to the realisation of the concept of competitive and sustainable transport system, as well as to achieving the desired sustainable mobility of people and goods, promoting the development of the domestic market and the overall competitiveness of the European Community, territorial, economic and social cohesion, public welfare, safety and security of European citizens, taking into account the environmental factors, such as climate change, air pollution and protected areas.

The implementation of the specific measures under OPTTI will have a particular impact and contribution to national targets on
climate change. In the Third National Action Plan on Climate Change, the transport sector is identified as one of the major sources of greenhouse gas emissions. The reasons for this include the privatisation of road transport, the significant reduction of subsidies for railway transport and the closure of railway routes leading to a shift in the transport structure from rail to road. Private cars have the most significant contribution to greenhouse gas emissions followed by heavy duty vehicles. In 2009 private cars and heavy duty vehicles were respectively responsible for 60 % and 21 % of the total emissions of the transport sector. Additionally, after the completion of Line 3 of the Sofia Metro in 2020, the road traffic is expected to decrease by 21,000 vehicles/day, which will result in reduction of traffic congestions and will create conditions for increasing the average speed of public transport along the central routes.

The measures to be implemented under the Action Plan are focused on the following areas:

- Reduction of transport emissions

- Reduction of fuel consumption

- Diversification of transport

- Informing and training consumers.

OPTTI provides funding for the following specific measures with a direct effect on all four sectors, contributing to the achievement of national targets on climate change:

Under priority axis 1 – increasing the share of railway transport;

Under priority axis 2 – modernisation of existing road infrastructure to ensure optimum speed and optimum driving modes of automobile engines;

Under priority axis 3 – reduction of the relative share of trips with private motor vehicles through improvement and development of urban public transport; increasing the share of public electric transport and development and construction of intermodal terminals for combined transport.

Seven specific objectives have been identified as part of the overall objective of OPTTI 2014-2020 and accordingly the investment priorities of TO 7 and TO 4.

The first specific objective is ‘Increasing railway traffic of passenger and freight through improving the quality of the TENT railway infrastructure’.

The second specific objective is ‘Removal of bottlenecks in the TEN-T road network’.

The third specific objective is ‘Increased intermodal transport’.

The fourth specific objective is ‘Increased use of metro’.

The fifth specific objective is ‘Improved transport management through introduction of innovative systems’.

The sixth specific objective is ‘Improved management of the railway network’.

The seventh specific objective is ‘Establishment of necessary conditions for successful completion of OPT 2007—2013 and implementation of OPTTI 2014—2020, strengthening the administrative capacity and public awareness’.

The strategy of OPTTI 2014—2020 ensures continuity and logical sequence of investments in programming period 2007—2013, guaranteeing the completion of main directions in which investments are already made. The following priority axes have been identified in the programme:

1.    Development of railway infrastructure along the ‘core’ TEN-T

2.    Development of road infrastructure along the ‘core’ and ‘comprehensive’ TEN-T

3.    Improvement of intermodal transport services for passengers and freights and development of sustainable urban transport

4.    Innovations in management and services – establishment of modern infrastructure for traffic management and transport safety and security improvement

5.    Technical Assistance.

In addition to the investments under OPTTI 2014—2020, it is planned to seek investments through public-private partnership, particularly for development of ports and airports. Investments for development of air, river and sea transport, planned for funding under OPTTI, are entirely directed towards the development of intelligent systems to improve services and management of air, river and sea transport. Also, where applicable, funding from the Connecting Europe Facility (CEF) will be used.

SFA: With regard to rural development operations related to investments in fixed assets, for the programming period 2014—2020 it is envisaged to apply only two approaches to assessing the reasonableness of costs: reference costs and comparing different (at least three) offers. It is not envisaged to apply exception based on the amount of the costs requested for assistance.

SFA: With regard to the cost of financing approved after conducted public procurement procedures, for the purpose of RDP 2014—2020 it is envisaged to develop Guidelines for the implementation of the Public Procurement Act, which the contracting entities eligible under different sub-measures of RDP 2014—2020 will be obliged to implement. The Managing Authority will develop standard criteria for award by types of investment activities in relation to the implementation of the procedures under the Public Procurement Act. These criteria will be coordinated with competent institutions (IPA, AOP) and will be included as part of the Guidelines. Control will be exercised in four stages: ex-ante control, ex-post control, control at the stage of authorisation for contract implementation, and, last, control at the stage of on-the-spot verification.

Ministry of the Economy: During the 2007—2013 programming period the authorities responsible for coordination, management, control and audit of resources from the EU Structural Funds were designated in Council of Ministers Decision No 965 of 16 December 2005. During that programming period, the national regulatory framework for management of resources from the EU Structural Funds was regulated by by-laws and instructions of the Minister for Finance – DNF, which regulated the terms, conditions, procedure and time-limits for administration of the operational programmes by managing authorities and intermediate bodies (in cases of delegation of powers). Detailed rules for eligibility of expenditure under individual operational programmes were adopted with Council of Ministers Decrees. With regard to Operational Programme ‘Development of the Competitiveness of the Bulgarian Economy’ 2007—2013, co-financed through the European Regional Development Fund, the rules were stipulated in Council of Ministers Decree No 236 of 2007.

During the 2014—2020 programming period the authorities responsible for management, control, coordination and audit of European Structural and Investment Funds are designated in Council of Ministers Decision No 792 of 17 December 2013. The statutory framework provided for in the Management of European Structural and Investment Funds Act has been introduced and is implemented. By-laws (a Council of Ministers Decree and ordinances of the Council of Ministers, and an ordinance of the Minister for Finance) for the implementation of ZUSESIF have been adopted.

Member State actions to define or improve result indicators at EU project level.

MTIT&C: The OP HRD strategy corresponds with the objectives of the National Development Programme Bulgaria 2020, the National Reform Programme and the Partnership Agreement. The operational programme addresses the objectives of these documents regarding the quality of the workforce and investment in human resources, providing employment opportunities and raising labour income, reducing poverty and promoting social inclusion, improving the quality and effectiveness of health services, and strengthening the institutional environment in terms of labour market, social services, healthcare and equal opportunity and non-discrimination.

A large portion of the resources of the operational programme (60 %) is allocated for achieving the objectives of the employment policy. With support from the European Social Fund, solutions are sought to problems relating to the high level of unemployment among young people and older people and for reducing the high share of people not involved in training or employment. The support under OP HRD for the labour market area complements the national instruments aimed at supporting employment and reducing unemployment in Bulgaria.

The attainment of the targets of the Europe 2020 Strategy also depends on the contribution of the cohesion policy, and one of the areas of intervention enshrined in the European Platform against Poverty and Social Exclusion is the provision of funding from the European Social Fund to support policies for fighting poverty and promoting social inclusion. The other key priority of OP HRD is social inclusion and fight against poverty, financed under priority axis 2. Close to 40 % are allocated to this priority, thus providing resources for the national policies planned for the period until 2020, which are described in detail in the National Reform Programme and other relevant national strategic documents. These policies aim at addressing the considerable challenge in fighting poverty identified in Bulgaria.

DFZ: With regard to rural development operations, with an order of the Minister for Agriculture and Food a working group was set up to coordinate the complementarity between RDP 2014—2020 and Operational Programme ‘Regions in Growth’ throughout the programming period of programme implementation in order not to allow double financing of expenditure.

MTITC: The strategy of Operational Programme ‘Transport and Transport Infrastructure’ 2014—2020 contributes to the targets of the Europe 2020 Strategy and is consistent with the guidelines for the development of the European transport policy and the Trans-European transport network, with the national policies, as well as with the conclusions and recommendations defined in the analysis of socio-economic development and the strategy of the Partnership Agreement.

Key documents related to the strategy of OPTTI 2014-2020 are as follows:

- The Strategy ‘Europe 2020’ for smart, sustainable and inclusive growth ensures that the objectives and priorities of OPTTI are in compliance with the EU targets to achieve economic, social and territorial cohesion. OPTTI contributes to all three pillars of the strategy with an emphasis on sustainable growth to promote a greener and more competitive economy with a more efficient use of resources, which, in relation to the transport sector, suggests modernisation and decarbonisation of the transport sector to achieve increased competitiveness through a combination of measures, such as intelligent traffic management through modern navigation and information systems for the Black Sea and the Danube River, better logistics, pursuing the reduction of CO2 emissions for motor vehicles, aviation and maritime sectors, setting common standards and developing the necessary infrastructure, and to the accelerating of the implementation of strategic projects with high added value for Europe, to address critical bottlenecks, in particular cross-border sections and intermodal nodes.

- The National Reform Programme, a national document, which is updated annually in the implementation of Strategy ‘Europe 2020’.

- The National Development Programme: Bulgaria 2020 (NDP BG2020) is the leading strategic and programming document detailing the objectives of the development policies of the country up to 2020.

- White Paper ‘Roadmap to a Single European Transport Area’ includes measures to ensure growth in transport and mobility support.

- The Guidelines for the development of the Trans-European Transport Network (Regulation (EU) No 1315/2013) aim to contribute to achieving the sustainable mobility of people and goods and promoting the development of the domestic market and the overall competitiveness of the European Community.

- The National Spatial Development Concept for the period 2013—2025 includes a set of priorities, one of which is to develop the national transport infrastructure as a part of the Trans-European Transport Network.

- The Strategy for the Development of the Transport System of the Republic of Bulgaria until 2020 defined the following objectives of the national transport policy:

Achieving economic efficiency

Development of sustainable transport sector

Improvement of the regional and social development and commitment

The overall objective of OPTTI 2014—2020, like that of OPT 2007—2013, is ‘Development of a sustainable transport system’, which is in compliance with the thematic objectives specified above.

The implementation of projects for developing the transport system, contributing to the effective connectivity of the transport network and to removing sections with insufficient capacity in it, reducing congestion, noise and pollution, improving safety, promoting the use of environmentally friendly modes of transport, will continue. The achievement of the overall objective of the programme and hence its contribution to TO 4 (Supporting the shifts towards a low-carbon economy in all sectors) and TO 7 (Promoting sustainable transport and removing sections with insufficient capacity in all key network infrastructures) will contribute to the realisation of the concept of competitive and sustainable transport system, as well as to achieving the desired sustainable mobility of people and goods, promoting the development of the domestic market and the overall competitiveness of the European Community, territorial, economic and social cohesion, public welfare, safety and security of European citizens, taking into account the environmental factors, such as climate change, air pollution and protected areas.

The implementation of the specific measures under OPTTI will have a particular impact and contribution to national targets on
climate change. In the Third National Action Plan on Climate Change, the transport sector is identified as one of the major sources of greenhouse gas emissions. The reasons for this include the privatisation of road transport, the significant reduction of subsidies for railway transport and the closure of railway routes leading to a shift in the transport structure from rail to road. Private cars have the most significant contribution to greenhouse gas emissions followed by heavy duty vehicles. In 2009 private cars and heavy duty vehicles were respectively responsible for 60 % and 21 % of the total emissions of the transport sector. Additionally, after the completion of Line 3 of the Sofia Metro in 2020, the road traffic is expected to decrease by 21,000 vehicles/day, which will result in reduction of traffic congestions and will create conditions for increasing the average speed of public transport along the central routes.

The measures to be implemented under the Action Plan are focused on the following areas:

- Reduction of transport emissions

- Reduction of fuel consumption

- Diversification of transport

- Informing and training consumers.

OPTTI provides funding for the following specific measures with a direct effect on all four sectors, contributing to the achievement of national targets on climate change:

Under priority axis 1 – increasing the share of railway transport;

Under priority axis 2 – modernisation of existing road infrastructure to ensure optimum speed and optimum driving modes of automobile engines;

Under priority axis 3 – reduction of the relative share of trips with private motor vehicles through improvement and development of urban public transport; increasing the share of public electric transport and development and construction of intermodal terminals for combined transport.

Seven specific objectives have been identified as part of the overall objective of OPTTI 2014-2020 and accordingly the investment priorities of TO 7 and TO 4.

The first specific objective is ‘Increasing railway traffic of passenger and freight through improving the quality of the TENT railway infrastructure’.

The second specific objective is ‘Removal of bottlenecks in the TEN-T road network’.

The third specific objective is ‘Increased intermodal transport’.

The fourth specific objective is ‘Increased use of metro’.

The fifth specific objective is ‘Improved transport management through introduction of innovative systems’.

The sixth specific objective is ‘Improved management of the railway network’.

The seventh specific objective is ‘Establishment of necessary conditions for successful completion of OPT 2007—2013 and implementation of OPTTI 2014—2020, strengthening the administrative capacity and public awareness’.

The strategy of OPTTI 2014—2020 ensures continuity and logical sequence of investments in programming period 2007—2013, guaranteeing the completion of main directions in which investments are already made. The following priority axes have been identified in the programme:

1.    Development of railway infrastructure along the ‘core’ TEN-T

2.    Development of road infrastructure along the ‘core’ and ‘comprehensive’ TEN-T

3.    Improvement of intermodal transport services for passengers and freights and development of sustainable urban transport

4.    Innovations in management and services – establishment of modern infrastructure for traffic management and transport safety and security improvement

5.    Technical Assistance.

In addition to the investments under OPTTI 2014—2020, it is planned to seek investments through public-private partnership, particularly for development of ports and airports. Investments for development of air, river and sea transport, planned for funding under OPTTI, are entirely directed towards the development of intelligent systems to improve services and management of air, river and sea transport. Also, where applicable, funding from the Connecting Europe Facility (CEF) will be used.

SFA: With regard to rural development operations related to investments in fixed assets, for the programming period 2014—2020 it is envisaged to apply only two approaches to assessing the reasonableness of costs: reference costs and comparing different (at least three) offers. It is not envisaged to apply exception based on the amount of the costs requested for assistance.

SFA: With regard to the cost of financing approved after conducted public procurement procedures, for the purpose of RDP 2014—2020 it is envisaged to develop Guidelines for the implementation of the Public Procurement Act, which the contracting entities eligible under different sub-measures of RDP 2014—2020 will be obliged to implement. The Managing Authority will develop standard criteria for award by types of investment activities in relation to the implementation of the procedures under the Public Procurement Act. These criteria will be coordinated with competent institutions (IPA, AOP) and will be included as part of the Guidelines. Control will be exercised in four stages: ex-ante control, ex-post control, control at the stage of authorisation for contract implementation, and, last, control at the stage of on-the-spot verification.

Yes.

Ministry of the Economy: Results at project level are monitored with the help of performance indicators and result indicators. The procedures for the 2014—2020 programming period envisage the reporting of individual indicators at project level based on the financial results of beneficiaries for a period of three years after the completion of the project implementation. Achieved values will also be controlled in the cases of significant discrepancies between planned and achieved values, and penalties in the form of financial corrections will be imposed.

Performance measurement system to monitor the achievement objectives at EU measure, operations or project level and to monitor the output and result indicators at EU measure, operations or project level.

MTIT&C: The OP HRD strategy corresponds with the objectives of the National Development Programme Bulgaria 2020, the National Reform Programme and the Partnership Agreement. The operational programme addresses the objectives of these documents regarding the quality of the workforce and investment in human resources, providing employment opportunities and raising labour income, reducing poverty and promoting social inclusion, improving the quality and effectiveness of health services, and strengthening the institutional environment in terms of labour market, social services, healthcare and equal opportunity and non-discrimination.

A large portion of the resources of the operational programme (60 %) is allocated for achieving the objectives of the employment policy. With support from the European Social Fund, solutions are sought to problems relating to the high level of unemployment among young people and older people and for reducing the high share of people not involved in training or employment. The support under OP HRD for the labour market area complements the national instruments aimed at supporting employment and reducing unemployment in Bulgaria.

The attainment of the targets of the Europe 2020 Strategy also depends on the contribution of the cohesion policy, and one of the areas of intervention enshrined in the European Platform against Poverty and Social Exclusion is the provision of funding from the European Social Fund to support policies for fighting poverty and promoting social inclusion. The other key priority of OP HRD is social inclusion and fight against poverty, financed under priority axis 2. Close to 40 % are allocated to this priority, thus providing resources for the national policies planned for the period until 2020, which are described in detail in the National Reform Programme and other relevant national strategic documents. These policies aim at addressing the considerable challenge in fighting poverty identified in Bulgaria.

SFA: With regard to rural development operations, with an order of the Minister for Agriculture and Food a working group was set up to coordinate the complementarity between RDP 2014—2020 and Operational Programme ‘Regions in Growth’ throughout the programming period of programme implementation in order not to allow double financing of expenditure.

MTITC: The strategy of Operational Programme ‘Transport and Transport Infrastructure’ 2014—2020 contributes to the targets of the Europe 2020 Strategy and is consistent with the guidelines for the development of the European transport policy and the Trans-European transport network, with the national policies, as well as with the conclusions and recommendations defined in the analysis of socio-economic development and the strategy of the Partnership Agreement.

Key documents related to the strategy of OPTTI 2014-2020 are as follows:

- The Strategy ‘Europe 2020’ for smart, sustainable and inclusive growth ensures that the objectives and priorities of OPTTI are in compliance with the EU targets to achieve economic, social and territorial cohesion. OPTTI contributes to all three pillars of the strategy with an emphasis on sustainable growth to promote a greener and more competitive economy with a more efficient use of resources, which, in relation to the transport sector, suggests modernisation and decarbonisation of the transport sector to achieve increased competitiveness through a combination of measures, such as intelligent traffic management through modern navigation and information systems for the Black Sea and the Danube River, better logistics, pursuing the reduction of CO2 emissions for motor vehicles, aviation and maritime sectors, setting common standards and developing the necessary infrastructure, and to the accelerating of the implementation of strategic projects with high added value for Europe, to address critical bottlenecks, in particular cross-border sections and intermodal nodes.

- The National Reform Programme, a national document, which is updated annually in the implementation of Strategy ‘Europe 2020’.

- The National Development Programme: Bulgaria 2020 (NDP BG2020) is the leading strategic and programming document detailing the objectives of the development policies of the country up to 2020.

- White Paper ‘Roadmap to a Single European Transport Area’ includes measures to ensure growth in transport and mobility support.

- The Guidelines for the development of the Trans-European Transport Network (Regulation (EU) No 1315/2013) aim to contribute to achieving the sustainable mobility of people and goods and promoting the development of the domestic market and the overall competitiveness of the European Community.

- The National Spatial Development Concept for the period 2013—2025 includes a set of priorities, one of which is to develop the national transport infrastructure as a part of the Trans-European Transport Network.

- The Strategy for the Development of the Transport System of the Republic of Bulgaria until 2020 defined the following objectives of the national transport policy:

Achieving economic efficiency

Development of sustainable transport sector

Improvement of the regional and social development and commitment

The overall objective of OPTTI 2014—2020, like that of OPT 2007—2013, is ‘Development of a sustainable transport system’, which is in compliance with the thematic objectives specified above.

The implementation of projects for developing the transport system, contributing to the effective connectivity of the transport network and to removing sections with insufficient capacity in it, reducing congestion, noise and pollution, improving safety, promoting the use of environmentally friendly modes of transport, will continue. The achievement of the overall objective of the programme and hence its contribution to TO 4 (Supporting the shifts towards a low-carbon economy in all sectors) and TO 7 (Promoting sustainable transport and removing sections with insufficient capacity in all key network infrastructures) will contribute to the realisation of the concept of competitive and sustainable transport system, as well as to achieving the desired sustainable mobility of people and goods, promoting the development of the domestic market and the overall competitiveness of the European Community, territorial, economic and social cohesion, public welfare, safety and security of European citizens, taking into account the environmental factors, such as climate change, air pollution and protected areas.

The implementation of the specific measures under OPTTI will have a particular impact and contribution to national targets on
climate change. In the Third National Action Plan on Climate Change, the transport sector is identified as one of the major sources of greenhouse gas emissions. The reasons for this include the privatisation of road transport, the significant reduction of subsidies for railway transport and the closure of railway routes leading to a shift in the transport structure from rail to road. Private cars have the most significant contribution to greenhouse gas emissions followed by heavy duty vehicles. In 2009 private cars and heavy duty vehicles were respectively responsible for 60 % and 21 % of the total emissions of the transport sector. Additionally, after the completion of Line 3 of the Sofia Metro in 2020, the road traffic is expected to decrease by 21,000 vehicles/day, which will result in reduction of traffic congestions and will create conditions for increasing the average speed of public transport along the central routes.

The measures to be implemented under the Action Plan are focused on the following areas:

- Reduction of transport emissions

- Reduction of fuel consumption

- Diversification of transport

- Informing and training consumers.

OPTTI provides funding for the following specific measures with a direct effect on all four sectors, contributing to the achievement of national targets on climate change:

Under priority axis 1 – increasing the share of railway transport;

Under priority axis 2 – modernisation of existing road infrastructure to ensure optimum speed and optimum driving modes of automobile engines;

Under priority axis 3 – reduction of the relative share of trips with private motor vehicles through improvement and development of urban public transport; increasing the share of public electric transport and development and construction of intermodal terminals for combined transport.

Seven specific objectives have been identified as part of the overall objective of OPTTI 2014-2020 and accordingly the investment priorities of TO 7 and TO 4.

The first specific objective is ‘Increasing railway traffic of passenger and freight through improving the quality of the TENT railway infrastructure’.

The second specific objective is ‘Removal of bottlenecks in the TEN-T road network’.

The third specific objective is ‘Increased intermodal transport’.

The fourth specific objective is ‘Increased use of metro’.

The fifth specific objective is ‘Improved transport management through introduction of innovative systems’.

The sixth specific objective is ‘Improved management of the railway network’.

The seventh specific objective is ‘Establishment of necessary conditions for successful completion of OPT 2007—2013 and implementation of OPTTI 2014—2020, strengthening the administrative capacity and public awareness’.

The strategy of OPTTI 2014—2020 ensures continuity and logical sequence of investments in programming period 2007—2013, guaranteeing the completion of main directions in which investments are already made. The following priority axes have been identified in the programme:

1.    Development of railway infrastructure along the ‘core’ TEN-T

2.    Development of road infrastructure along the ‘core’ and ‘comprehensive’ TEN-T

3.    Improvement of intermodal transport services for passengers and freights and development of sustainable urban transport

4.    Innovations in management and services – establishment of modern infrastructure for traffic management and transport safety and security improvement

5.    Technical Assistance.

In addition to the investments under OPTTI 2014—2020, it is planned to seek investments through public-private partnership, particularly for development of ports and airports. Investments for development of air, river and sea transport, planned for funding under OPTTI, are entirely directed towards the development of intelligent systems to improve services and management of air, river and sea transport. Also, where applicable, funding from the Connecting Europe Facility (CEF) will be used.

SFA: With regard to rural development operations related to investments in fixed assets, for the programming period 2014—2020 it is envisaged to apply only two approaches to assessing the reasonableness of costs: reference costs and comparing different (at least three) offers. It is not envisaged to apply exception based on the amount of the costs requested for assistance.

SFA: With regard to the cost of financing approved after conducted public procurement procedures, for the purpose of RDP 2014—2020 it is envisaged to develop Guidelines for the implementation of the Public Procurement Act, which the contracting entities eligible under different sub-measures of RDP 2014—2020 will be obliged to implement. The Managing Authority will develop standard criteria for award by types of investment activities in relation to the implementation of the procedures under the Public Procurement Act. These criteria will be coordinated with competent institutions (IPA, AOP) and will be included as part of the Guidelines. Control will be exercised in four stages: ex-ante control, ex-post control, control at the stage of authorisation for contract implementation, and, last, control at the stage of on-the-spot verification.

ME: A system of indicators is developed under the programme. It is monitored at project level and is regularly updated.

Bulgarian National Audit Office: The Strategy for the Development of the National Audit Office during the period 2013—2017 sets the strengthening of the role of the institution for the proper management and absorption of EU funds as a priority objective. Appreciating the importance of Community funding for the socio-economic development and the implementation of the national strategic goals during the period until 2020, the National Audit Office decided to establish a separate structural unit for performance audit of resources from funds and programs of the European Union.

In the context of the approach, adopted at EU level, to target interventions in the programming period 2014—2020 at real reforms and results, the role of performance auditing for ensuring effective, efficient and economic use of EU structural and investment funds (ESIF) considerably increases. Appreciating this, in May 2015 the National Audit Office decided to establish a separate department for performance audit of resources from the European Union.

When performance audits are conducted, the international standards on auditing of Supreme Audit Institutions are applied. The methodology introduced in the Manual for the Implementation of the International Standards on Auditing is analogous to that used by the European Court of Auditors.

All final reports relating to the audit of EU funds are made available to the Chairperson of the Committee on European Affairs and Oversight of the European Funds at the National Assembly, the Deputy Prime Minister for European Funds and Economic policies, the European Court of Auditors and the European Commission.

MESc: UMIS 2020

MTIT&C: Only the evaluations of the programme, envisaged in the applicable regulation for the 2007—2013 period, are carried out under OP HRD.

Framework or a system for the follow-up of ECA's recommendations addressed to Member States in Court's annual and special reports. Monitoring and reporting on progress achieved towards to implementation of Court's recommendations

Yes.

Ministry of the Economy: The following procedure for follow-up on conducted audits and recommendations made is in place in the Managing Authority of Operational Programme ‘Development of the Competitiveness of the Bulgarian Economy’ 2007—2013 / Operational Programme ‘Innovations and Competitiveness’ 2014—2020:

A draft audit report containing preliminary observations of the European Court of Auditors (ECA) is received by the Managing Authority after having been forwarded by the Bulgarian National Audit Office, which, pursuant to the Rules for the Structure and Organisation of its activity, interacts with foreign SAIs, including the European Court of Auditors, and also assists, where appropriate, for the preparation and conduct of the audit missions of the European Court of Auditors. The Bulgarian National Audit Office also participates in the Contact Committee that brings together the heads of supreme audit institutions (SAIs) of the EU Member States and the European Court of Auditors. Daily contact is maintained through liaison officers appointed by each institution; working groups, networks and task forces are set up to provide assistance for the development of common positions and practices.

After the draft audit report forwarded by the Bulgarian National Audit Office is received by the MA, it is sent without delay to the heads of units, the competencies of which include the recommendations, so that they can prepare opinions on the findings. All comments are summarised, submitted for approval to the Head of the MA, and an official response containing further information and arguments is sent to the Bulgarian National Audit Office.

After the ECA provides a final report, it is received at the MA through the Bulgarian National Audit Office. This report is also sent to all responsible units at the MA so that they can take appropriate action according to their competencies.

For the purposes of following up on recommendations, the MA keeps a register of audit findings and recommendations made by all auditing institutions. All final audit reports, findings and recommendations related thereto are registered in the Register of Audit Findings and Recommendations, and the status of recommendations, the authority that made them, the deadline for taking action, and the planned corrective actions are indicated.

In addition, the implementation of recommendations contained in ECA reports is followed up by the Audit Authority — IA OSES, and by the Certifying Authority — National Fund Directorate at the Ministry of Finance.

MTITC: The MA keeps a register of recommendations from audits and the actions taken, including the deadlines for implementation. The implementation of recommendations and their status are reported to the Certifying Authority.

Simultaneously, each of the inspecting institutions at national level monitors the implementation of recommendations made:

The Audit Authority follows up on the implementation of recommendations made in the course of audits carried out by it and by the European Commission.

The Bulgarian National Audit Office follows up on the implementation of recommendations made by it.

The Internal Audit Unit follows up, on an annual basis, the status of recommendations made.

The Certifying Authority follows up on the status of the recommendations made as a result of on-the-spot verifications.

Croatia

Main root causes in the major EU spending areas (common agricultural policy, regional and urban policy, employment, social affairs and inclusion) for the persisting risks and errors pointed out by the ECA.

Main lessons learned while addressing the risks and errors for the EU spending.

In response to all three points: capacity building and better understanding of rules.

Good practices and examples of success stories in the areas of compliance with EU and national eligibility rules, compliance with EU and national public procurement legislation, and compliance with State aid rules.

Not applicable given the limited experience.

Further measures to enhance the effectiveness of the checks carried out before declaring or certifying expenditure to the Commission.

Additional checks and detailed and clear instructions.

Further measures to enhance the effectiveness of actions to detect and correct errors concerning expenditure, which was previously declared or certified to the Commission.

Improvement in procedures and re-checks.

Risk analysis and estimated level of error in the major EU spending areas (common agricultural policy, regional and urban policy, employment, social affairs and inclusion).

Not applicable.

Relationship between the basis for payment and levels of error in the major EU spending areas (common agricultural policy, regional and urban policy, employment, social affairs and inclusion).

Not applicable.

Links between EU priorities in the context of the Europe 2020 strategy, including Horizon 2020, and national priorities.

Measures to pursue synergies and complementarities between ESI Funds and national programmes .

Performance measurement system to link EU measures, operations or projects to EU priorities/Europe 2020 objectives and targets.

Framework for the management of ESI Funds in order to achieve a result-oriented system and impact of EU projects.

Member State actions to define or improve result indicators at EU project level.

Yes – if " Yes" please describe them

No – if "No" please give reasons why not

Performance measurement system to monitor the achievement objectives at EU measure, operations or project level and to monitor the output and result indicators at EU measure, operations or project level.

Framework or a system for the follow-up of ECA's recommendations addressed to Member States in Court's annual and special reports. Monitoring and reporting on progress achieved towards to implementation of Court's recommendations

No.

Given its experience with ECA audits, the activities were coordinated by the Ministry of Regional Development and EU Funds. 

Cyprus

Main root causes in the major EU spending areas (common agricultural policy, regional and urban policy, employment, social affairs and inclusion) for the persisting risks and errors pointed out by the ECA.

Main lessons learned while addressing the risks and errors for the EU spending.

For rural development: The main lesson learned from our experience is that the more detailed but simple the laws and procedures, the more efficiently the various measures are applied and errors minimised.

For cohesion: With regard to the eligibility of expenditure, it was found that there was a greater concentration of resources on checking small amounts, while large amounts with greater risk were not given a risk assessment or specially targeted. In the FP 2014-2020 efforts were more targeted as regards checks and an attempt to use simplified cost options in order to focus on the results of the operations.

On the subject of public procurement rules, error evaluation revealed that most of the findings related to the performance rather than to the awarding of contracts; therefore in the FP 2014-2020 checks were limited during the award stage to amounts over the Community thresholds, and checks were increased while contracts were being carried out, especially when there were changes to the contract terms.

Looking at state aid, weaknesses were found as regards maintaining investment, therefore for the FP 2014-2020 on-the-spot checks were intensified on projects after their completion.

Good practices and examples of success stories in the areas of compliance with EU and national eligibility rules, compliance with EU and national public procurement legislation, and compliance with State aid rules.

For rural development: With regard to investment measure 121 of the 2007-2013 Programming Period, application of ceilings for eligible costs led to fewer errors. Furthermore, the 100 % rate for on-the-spot checks which we as a Member State apply to investment measures leads to a further reduction in errors and minimises the risk to the European funds.

For cohesion: Looking at the eligibility of expenditure, a Central Agency for Administrative Checks on Expenditure has been set up, which will check the eligibility of expenditure of all public works contracts. Project expenditure will now be checked on a sample of certain cases with a large volume of expenditure per beneficiary payment request.

Looking at compliance with the rules on public procurement in Cyprus, the Public Procurement Directorate at the Treasury of the Republic is used as the certification body for the legality of tender documents, notice to tender and award of co-financed contracts (where they are above EU thresholds). Furthermore the e-procurement system, which includes controls, is in mandatory use by all the state contracting authorities.

Under the Funds Management and Control System, overall checking of projects is done on the spot and sampling is limited only to project-level activities.

Looking at state aid, all support schemes are checked centrally by the Managing Authority, which makes sure that the necessary procedures and safeguards are included before they are launched.

Further measures to enhance the effectiveness of the checks carried out before declaring or certifying expenditure to the Commission.

For rural development: Various cross-checks with other databases, 100 % checks on investment measures, cross-checks with other services, etc.

For cohesion: The Central Agency for Administrative Checks on Expenditure on public procurement contracts will enhance the effectiveness of the checks before declaration of expenditure to the EU, as it will apply a system of risk assessment which will make it possible to focus checks on risky categories of expenditure. Centralising the verification work will also achieve economies of scale, better knowledge transfer, better monitoring and staff training and ensure a focus on targeted measures after risk assessment. Emphasis will also be placed on simplifying procedures and developing simplified cost methods.

In parallel with the above structure the Treasury has established a Framework Agreement which can be used by all the agencies that manage co financed support schemes. Taking part in the Agreement are 10 audit firms which can support the project management agencies in checking applications for support submitted by beneficiaries.

For the other intermediaries involved in the management of the funds, training of the officers responsible will be intensified, both in procedures and in systems, and emphasis will be placed on sound financial management of the funds.

Further measures to enhance the effectiveness of actions to detect and correct errors concerning expenditure, which was previously declared or certified to the Commission.

For rural development: Stepping up of ex post controls with larger samples than those provided for in the regulations. Other investigations after any complaints. Checks with meaningful data that come after payment of the aid and lead to corrective payments.

For cohesion: For the FP 2014-2020, in view of the obligation to prepare annual accounts, management statements and reports relating to the identified weaknesses and findings following checks, and in view of the written assignment of work to intermediate agencies through delegation agreements, the Managing Authority has adopted a more rigorous system to monitor the adequacy of the intermediate agencies by means of random on-the-spot checks at the agencies that manage the programmes and projects. The system of checks and inspections has been built around an annual cycle of reporting to the EU in such a way that even after the certification of expenditure, the intermediate agencies continue on-site project checks. Reporting timetables have been set whereby the intermediate bodies complete their checks and certify the performance of the work assigned to them, having corrected any errors detected after the statement of expenditure to the EU, which are taken into account by the Managing Authority when drawing up the management statement. In addition all checks, findings and financial corrections are entered in the Information System by the competent authorities and automatically removed (or taken into account) both when drawing up payment requests to the EU and when preparing the annual financial statements.

Risk analysis and estimated level of error in the major EU spending areas (common agricultural policy, regional and urban policy, employment, social affairs and inclusion).

For rural development: Spending is restricted on the basis of rights.

For cohesion: A sampling methodology has been developed to carry out sample on-the-spot checks and sample checks on expenditure included in a beneficiary’s request for reimbursement in accordance with the European Commission’s guidelines, taking into account the assessment of the identified risks and implementing effective, preventive and proportionate measures to combat fraud. The sampling methodology, where applied, will be reviewed annually.

The risk factors assessed to determine the percentage of expenditure to be verified are:

•    the type of beneficiary

•    the type of project

•    the categories of expenditure included in the population to be verified,

•    the results (% irregular expenditure) of prior administrative checks on the project

The above are backed up and contributed to also by the risk assessment procedure carried out by a Risk Assessment Team in the Managing Authority.

Relationship between the basis for payment and levels of error in the major EU spending areas (common agricultural policy, regional and urban policy, employment, social affairs and inclusion).

Yes (for rural development and cohesion).

For rural development: Each main spending area has its own level of complexity, which has relevance to the levels of error.

For cohesion: There is absolutely no correlation between the basis for payment and levels of error, but we agree that the use of simplified cost options can reduce the levels of error. For example, in employment policy projects, where the total value of the projects is very small and the costs even lower, cost reimbursement based on payment documents adds no value. A check may be done on compliance with certain conditions of employment and, for example, a flat-rate payment may be made to the Beneficiary (e.g. support schemes where the project is the employment of an unemployed person for a predetermined period and the only cost of the project is the cost of the unemployed person). Of course on the other hand, through the reimbursement of actual expenditure a large number of cases were detected where there was an attempt to defraud the public purse, which would not have been detected if simplified cost options had been used.

Links between EU priorities in the context of the Europe 2020 strategy, including Horizon 2020, and national priorities.

For rural development: The EU priorities are to a large extent adapted to the national priorities and are described in the Partnership Agreement and in the Rural Development Programme 2014-2020.

For cohesion: The Operational Programmes financed by the ESI Funds are geared to contribute to achieving both the national development priorities and the objectives of the Europe 2020 strategy for smart, sustainable and inclusive growth The strategic objective of the Partnership Agreement is ‘the restructuring of the Cypriot economy, maintaining and creating new jobs and ensuring social cohesion.’ To achieve this goal, 11 thematic objectives have been selected, each of which contributes directly or indirectly to the objectives of the National Reform Programme for the Europe 2020 strategy.

With particular regard to the research and innovation sector, the ESI Funds co-finance a large number of measures under the National Smart Specialisation Strategy. This Strategy includes measures that contribute to achieving synergies between national research and innovation programmes and the EU ‘Horizon 2020’ programme. In this regard, the ERDF will finance the ‘Horizon 2020 - 2nd chance’ national programme, involving Cypriot proposals of very high quality, which were submitted and given a high score in the ‘Horizon 2020’ programme but did not secure funding because the budget was exhausted.

The Horizon 2020 actions included in this programme are: ‘ERC Starting Grant’, ‘ERC-Consolidator Grant’, ‘Marie Sklodοwska Curie Actions’ - Individual Fellowships (IFs)/ Standard European Fellowships (EFs) and ‘SME Instrument’.

Measures to pursue synergies and complementarities between ESI Funds and national programmes .

For rural development: Synergies are achieved through close cooperation of all the departments concerned under the coordination of the Directorate-General for European Programmes, Coordination and Development. Better coordination and maximum possible synergies between all the Funds is achieved mainly through the work of the Planning and Strategic Monitoring Steering Committee.

For cohesion: Synergies and complementarities between the ESI Funds and the national programs are achieved because all actions that receive funding, either from the ESI Funds or from national resources are part of sectoral national strategies (e.g. digital strategy, waste management strategy, strategy for adaptation to climate change, etc.). The implementation of each of the sectoral strategies in Cyprus is achieved by carrying out various measures, some of which are co-financed by the ESI Funds, while the rest will be financed from national resources.

Performance measurement system to link EU measures, operations or projects to EU priorities/Europe 2020 objectives and targets.

For rural development: Monitoring and evaluation of the Common Agricultural Policy is governed by the Common Monitoring and Evaluation Framework drawn up by the European Commission.

For cohesion: The system of indicators is already applied for monitoring projects financed by the ESI Funds with respect to the Cohesion Policy. That is, every project included must include output and outcome indicators at project level. Progress in achieving the indicators is then assessed during project implementation through project monitoring bulletins preparing automatically via the Information System. Progress of the indicators is checked by the Intermediate Bodies during their on-the-spot verification visits to the projects.

Framework for the management of ESI Funds in order to achieve a result-oriented system and impact of EU projects.

For rural development: Monitoring and evaluation of the Common Agricultural Policy is governed by the Common Monitoring and Evaluation Framework drawn up by the European Commission.

For cohesion: The project monitoring indicators are specified at least in the call issued by the Intermediary Bodies. The calls are issued for each investment priority. All the monitoring indicators of the Operational Programme as agreed with the EU on approval of each programme have been recorded in the system and have also been linked to key policies and investment priorities. When issuing a call for an investment priority, it is compulsory to use at least the programme indicators, and the projects included in the call must monitor at least the progress of these indicators in addition to any additional project monitoring indicators.

Member State actions to define or improve result indicators at EU project level.

Yes (for rural development and cohesion).

For rural development: The Managing Authority intends to launch a call for tender for parallel assessment of the RDP 2014-2020 to improve fulfilment of the obligations of the Common Monitoring and Evaluation Framework.

For cohesion: The result indicators are specified in the Operational Programmes and their progress is monitored via the Information System.

Performance measurement system to monitor the achievement objectives at EU measure, operations or project level and to monitor the output and result indicators at EU measure, operations or project level.

For rural development: Monitoring and evaluation of the Common Agricultural Policy is governed by the Common Monitoring and Evaluation Framework drawn up by the European Commission.

Framework or a system for the follow-up of ECA's recommendations addressed to Member States in Court's annual and special reports. Monitoring and reporting on progress achieved towards to implementation of Court's recommendations

Yes (for rural development and cohesion) – For rural development: There is a procedure for follow-up of the recommendations arising from all audits, including those by the Court of Auditors.

For cohesion: The reports and findings of all the audit bodies (whether national or EU, including the ECA) until their closure and implementation are monitored by the Managing Authority with the help of a team of accountants from the Treasury, which supports the Managing Authority in the financial management and control of Co-funded Programmes. This team keeps a central database in the Information System of the Funds to record all the findings and monitor implementation of the recommendations. Corrective measures are taken where they are implemented at the level of procedures, financial corrections are imposed and the findings are assessed in relation to the operation of the Management and Control System (e.g. changes to procedures, circulars, training, etc. are put forward).

Czech Republic

Main root causes in the major EU spending areas (common agricultural policy, regional and urban policy, employment, social affairs and inclusion) for the persisting risks and errors pointed out by the ECA.

Eligibility of expenditure, eligibility rules in addition to the rules of the other areas (in particular, public procurement, etc.) Failure to comply with the legal and procedural requirements normally follows from the excessive amount of law to be applied and the complexity thereof. Another issue is the combination of (incompatible) rules at EU and national rules.

Procurement is problematic particularly because of the complexity of the rules. For example, regarding smaller beneficiaries that are not contracting authorities and do not therefore experience difficulty with procurement, it is complicated under the law to award contracts above the threshold of CZK 2 million. Errors are, of course, made, even by the public authorities, most often when setting assessment criteria and evaluating tenders – where the biggest problem is largely subjective perception, which often renders the evaluation impossible to conduct – and when setting qualification requirements, where the problem occurs of having to uphold the principle of proportionality. In the future, the situation may be further complicated by the adoption of new Act No. 134/2016 on public procurement, which transposed the European directives on public procurement into Czech law. The law provides for completely new procedures for which there is no decision-making or interpretative practice. This often concerns procedures laid down at European Union level, in which the meaning of a provision is not entirely clear. In practice, until the new procedures have been bedded in, there may be a higher incidence of errors. There may also be additional changes to the interpretation of certain provisions and to penalties being imposed again, which at the time of the procedure were not deemed to be an error. This is also true of Act No 137/2006 on public procurement.

The main causes of the errors identified by the ECA are failure on the part of the beneficiary to comply with the requirements under national law (and the deliberate circumvention of those rules) which control systems are not always able to detect, in particular because of the limited possibilities of checks (e.g. checks on the size of enterprises); the balance of the funds provided still needs to be taken into account and the checks carried out are time-consuming.

Main lessons learned while addressing the risks and errors for the EU spending.

In order to lay down eligibility rules experience of previous programming periods has been harnessed by the MAs. For the selected programmes (in particular the OP financed by the ESF) there has recently been a marked increase in the use of indirect costs or unit costs in order to reduce the administrative burden involved with the declaration of expenditure.

Specific actions taken:

In the area of public procurement the main changes, following the experience from the 07-13 period, are the following measures:

A Public Procurement Act has been adopted ( https://www.portal-vz.cz/cs/Jak-na-zadavani-verejnych-zakazek/Legislativa-a-Judikatura/Legislativa/Narodni-legislativa/Aktualni-zneni-zakona-o-verejnych-zakazkach );

in the context of a uniform methodological environment public procurement rules are centrally and uniformly laid down in the methodological guidelines for the 2014-2020 programming period;

    stepping up training for applicants and beneficiaries and workers involved in the implementation structure in the area of public procurement;

    preparing the database of audit findings;

    uniform checklists drawn up for monitoring public procurement

General information:

    errors must be detected before expenditure is approved; ideally, when they can still be rectified (ex-ante controls);

    eligibility rules at EU level should, as far possible, be compliant with national and international rules;

    most importantly, national/international law on public procurement (and related generally binding legislation) should comply with EU law;

    more extensive use of the CEN database to check the reasonableness of expenditure or similar tools.

Specific actions taken:

    The National Coordination Authority issued Methodological Recommendations for State aid, drawn up in conjunction with the ÚOHS, which advises entities to set up an implementation structure for best practices in the administration of State aid, highlighting best practice in this field and warning of areas at risk.

    Greater use of block exemptions, pursuant to Regulation (EC) No 651/2014 (GBER), as this is a more transparent process without the need for the notification process.

    The National Coordination Authority provides advice for aid providers, e.g. harnessing experience in the area of State aid from other Member States.

Good practices and examples of success stories in the areas of compliance with EU and national eligibility rules, compliance with EU and national public procurement legislation, and compliance with State aid rules.

Based on the experience of the last programming period there was more widespread use of simplified reporting methods, along with efforts at national level to simplify the rules on eligibility of expenditure, whilst complying with all of the conditions laid down by the Commission. Some MAs (e.g. ROP SW) in the OP 2007-2013 used ‘contentious expenditure’, which significantly sped up disbursement to beneficiaries as regards resolving the eligibility of expenditure.

Monitoring of selected public procurement in the award procedure before the signature of the contract, thereby lowering the error rate in this area.

Further training and seminars for applicants and beneficiaries and/or setting uniform rules.

In terms of best practice in the field of State aid cooperation has been set up with the ÚOHS. We also submit questions to DG Competition and DG REGIO and we try to transfer experience and good practice between the Member States where we compare our State aid experiences. We regularly meet with the ÚOHS in the context of working groups and cooperation is also established in the development of guidance documents and recommendations for State aid. For example, in the context of the CAP various channels of communication with the beneficiaries proved useful, including cooperation with local agricultural organisations.