Monitoring of operations concerning European Agricultural Guarantee Fund (EAGF) expenditure

For transactions financed by the European Agricultural Guarantee Fund (EAGF), which replaced the Guarantee Section of the European Agricultural Guidance and Guarantee Fund (EAGGF) in 2007, Member States are responsible for preventing and following up irregularities, as well as recovering amounts lost as a result of irregularities and negligence. The Regulation assists Member States in this connection and is aimed at reinforcing checks on the commercial documents * of undertakings receiving payments from or making payments to the EAGF and at defining the powers of the officials responsible for scrutiny.

ACT

Council Regulation (EEC) No 4045/89 of 21 December 1989 on scrutiny by Member States of transactions forming part of the system of financing by the Guarantee Section of the European Agricultural Guidance and Guarantee Fund and repealing Directive 77/435/EEC [See amending acts].

SUMMARY

This Regulation concerns scrutiny aimed at ascertaining whether transactions forming a direct or indirect part of the system of financing by the European Agricultural Guarantee Fund (EAGF), which replaced the Guarantee Section of the European Agricultural Guidance and Guarantee Fund (EAGGF) on 1 January 2007, have actually been carried out and have been executed correctly.

Scrutiny of the documents of undertakings

Member States are to carry out scrutiny of the commercial documents of undertakings, taking account of the nature of the transactions to be scrutinised. They must ensure that the selection of undertakings for scrutiny gives the best possible assurance of the effectiveness of the measures for preventing and detecting irregularities under the system of financing by the EAGF. Selection must take account of the financial importance of the undertakings in that system and the results of the risk analysis applied to the export refund sector and to all other measures to which it is applicable.

Undertakings must keep commercial documents for at least three years, starting from the end of the year in which they were drawn up. Member States may prescribe a longer period for the retention of these documents.

Member States must ensure that the officials responsible for scrutiny are entitled to seize commercial documents, or have them seized. This right is to be exercised with due regard for relevant national provisions and must not affect the application of rules governing proceedings in criminal matters concerning the seizure of documents.

Mutual assistance

The Commission may coordinate joint actions involving mutual assistance between two or more Member States for the purposes of carrying out a scrutiny where an undertaking or third party * is established in a Member State:

• other than that in which payment of the amount in question has or should have been made or received; or
• other than that in which the documents required for scrutiny are to be found.

Scrutiny programme

Each year, Member States must draw up programmes for the scrutinies to be carried out during the subsequent scrutiny period and send them to the Commission. The programmes must specify the number of undertakings to be scrutinised and their breakdown by sector, as well as the criteria adopted for drawing up the programme.

Monitoring the application of the Regulation

In each Member State a special department is to be in charge of monitoring the application of this Regulation. It is responsible for either the performance of the scrutiny to be carried out by officials employed directly by that special department or for the coordination and general surveillance of the scrutiny carried out by officials belonging to other departments.

Member States may also provide that the scrutinies to be carried out are allocated between the special department and other national departments, provided that the former is responsible for their coordination. The departments responsible for applying this Regulation are independent of the departments responsible for payments and for the scrutinies carried out prior to payment.

Even if the scrutinies are carried out by officials of the Member States, Commission officials may participate in these scrutinies, in which case they will have access to the same premises and to the same documents as the officials of the Member States. They may not themselves exercise the powers of scrutiny accorded to national officials.

RELATED ACTS

Commission Regulation (EC) No 4/2004 of 23 December 2003 laying down detailed rules for the application of Council Regulation (EEC) No 4045/89 on scrutiny by Member States of transactions forming part of the system of financing by the Guarantee Section of the European Agricultural Guidance and Guarantee Fund [Official Journal L 2, 6.1.2004]. See consolidated version (pdf)

Commission Regulation (EC) No 2311/2000 of 18 October 2000 establishing the list of measures to which Council Regulation (EEC) No 4045/89 does not apply and repealing Decision 96/284/EC [Official Journal L 265, 19.10.2000].

Report from the Commission to the European Parliament and the Council on EAGF expenditure, Early warning system No 8/2007 [COM(2007) 544 final - Not published in the Official Journal]. This report illustrates the budgetary situation for the period from 16 October to 30 June 2007. It sets out the actual level of execution of the budget in accordance with the early warning and monitoring system laid down in the Regulation on the financing of the common agricultural policy.

Last updated: 21.11.2007