(1)

Article 3(2)(f) of Council Regulation (EC) No 1290/2005 of 21 June 2005 on the financing of the common agricultural policy (2) provides that European Agricultural Guarantee Fund (EAGF) expenditure relating to fisheries markets is to be managed in a centralised manner.

(2)

Article 35 of Regulation (EC) No 104/2000 specifies the types of expenditure that are incurred by the Member States.

(3)

The financing of this expenditure follows the rules of centralised direct management between the Commission and the Member States.

(4)

In order to ensure that Community funds are soundly managed and to protect the financial interests of the Community, Regulation (EC) No 1290/2005 contains certain obligations for Member States concerning the management and control of these funds, as well as providing information regarding their legal and administrative framework for fulfilment of these obligations and to recover undue amounts if irregularities are detected in the management of these funds. Furthermore, the Communities' financial interests in relation to the expenditure financed under Article 35 of Regulation (EC) No 104/2000 are protected by the relevant rules pertaining to the protection of those interests in Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities (3), Regulation (EC) No 1073/1999 of the European Parliament and of the Council of 25 May 1999 concerning investigations conducted by the European Anti-Fraud Office (OLAF) (4), Council Regulation (Euratom, EC) No 2185/96 of 11 November 1996 concerning on-the-spot checks and inspections carried out by the Commission in order to protect the European Communities' financial interests against fraud and other irregularities (5) and Council Regulation (EC, Euratom) No 2988/95 of 18 December 1995 on the protection of the European Communities financial interests (6).

(5)

To ensure sound management of financial flows, in particular because the Member States themselves mobilise, in a first step, the funds to cover the expenditure referred to in Article 35 of Regulation (EC) No 104/2000 before the Commission reimburses their expenditure on a biannual basis, the Member States should collect the relevant information concerning the expenditure and transmit it to the Commission together with the declaration of expenditure.

(6)

The Commission should reimburse Member States biannually on the basis of those declarations of expenditure and the supporting documents to that declaration.

(7)

To enable the Commission to make efficient use of information from the Member States, that information should be sent electronically.

(8)

To avoid the application of different exchange rates for aid paid to producer organisations in currencies other than the euro, on the one hand, and in the declaration of expenditure, on the other, Member States concerned should apply the same exchange rate in their declarations of expenditure as that used when making those payments to the beneficiaries. The exchange rates applicable must be laid down according to operative events as defined by Commission Regulation (EC) No 1925/2000 establishing the operative events for the exchange rates to be applied when calculating certain amounts provided for by the mechanisms of Council Regulation (EC) No 104/2000 on the common organisation of the market in fishery and aquaculture products (7).

(9)

In order to provide a legal basis for the payments made in the first reference period, it is appropriate to apply this Regulation with retroactive effect as from 16 October 2006,