This document is an excerpt from the EUR-Lex website
Document 52011TA1110(01)
Annual Report of the Court of Auditors on the implementation of the budget concerning the financial year 2010, together with the institutions’ replies
Annual Report of the Court of Auditors on the implementation of the budget concerning the financial year 2010, together with the institutions’ replies
Annual Report of the Court of Auditors on the implementation of the budget concerning the financial year 2010, together with the institutions’ replies
OJ C 326, 10.11.2011, p. 1–250
(BG, ES, CS, DA, DE, ET, EL, EN, FR, IT, LV, LT, HU, MT, NL, PL, PT, RO, SK, SL, FI, SV)
10.11.2011 |
EN |
Official Journal of the European Union |
C 326/1 |
In accordance with the provisions of Article 287(1) and (4) of the TFEU and Articles 129 and 143 of Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities, as last amended by Regulation (EU, Euratom) No 1081/2010 of the European Parliament and of the Council, and Articles 139 and 156 of Council Regulation (EC) No 215/2008 of 18 February 2008 on the Financial Regulation applicable to the 10th European Development Fund
the Court of Auditors of the European Union, at its meeting of 8 September 2011, adopted its
ANNUAL REPORTS
concerning the financial year 2010.
The reports, together with the institutions' replies to the Court's observations, were transmitted to the authorities responsible for giving discharge and to the other institutions.
The Members of the Court of Auditors are:
Vítor Manuel da SILVA CALDEIRA (President), David BOSTOCK, Morten Louis LEVYSOHN, Ioannis SARMAS, Igors LUDBORŽS, Jan KINŠT, Kersti KALJULAID, Massimo VARI, Juan RAMALLO, Olavi ALA-NISSILÄ, Karel PINXTEN, Ovidiu ISPIR, Nadejda SANDOLOVA, Michel CRETIN, Harald NOACK, Henri GRETHEN, Eoin O'SHEA, Szabolcs FAZAKAS, Louis GALEA, Ladislav BALKO, Augustyn KUBIK, Milan Martin CVIKL, Rasa BUDBERGYTĖ, Lazaros S. LAZAROU, Gijs DE VRIES, Harald WÖGERBAUER, Hans Gustaf WESSBERG.
ANNUAL REPORT ON THE IMPLEMENTATION OF THE BUDGET
2011/C 326/01
TABLE OF CONTENTS
General introduction
Chapter 1 — |
The Statement of Assurance and supporting information |
Chapter 2 — |
Revenue |
Chapter 3 — |
Agriculture and Natural Resources |
Chapter 4 — |
Cohesion, Energy and Transport |
Chapter 5 — |
External aid, Development and Enlargement |
Chapter 6 — |
Research and other Internal Policies |
Chapter 7 — |
Administrative and other expenditure |
Chapter 8 — |
Getting results from the EU budget |
Annex — |
Financial information on the general budget |
GENERAL INTRODUCTION
0.1. |
The European Court of Auditors is the institution established by the Treaty to carry out the audit of European Union (EU) finances. As the EU’s external auditor it acts as the independent guardian of the financial interests of the citizens of the Union and contributes to improving EU financial management. More information on the Court can be found in its Annual Activity Report which, together with its special reports on EU spending programmes and revenue and its opinions on new or amended legislation, are available on its website: www.eca.europa.eu |
0.2. |
This is the Court’s 34th Annual Report on the implementation of the EU budget. It covers the 2010 financial year. A separate Annual Report covers the European Development Funds. |
0.3. |
The general budget of the EU is decided annually by the Council and the European Parliament. The Court’s Annual Report, together with its special reports, provides a basis for the discharge procedure, in which the European Parliament decides whether the European Commission has satisfactorily carried out its responsibilities for implementing the budget. The Court forwards its annual report to national parliaments at the same time as to the European Parliament and the Council. |
0.4. |
The central part of the annual report is the Court’s statement of assurance (the ‘DAS’) on the reliability of the annual accounts of the EU and on the legality and regularity of transactions (referred to in the report as ‘regularity of transactions’). The statement of assurance itself begins the report; the material which follows reports mainly on the audit work underlying the statement of assurance.
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0.5. |
The specific assessments are mainly based on: the results of the Court’s testing of the regularity of transactions; on an assessment of the effectiveness of the principal supervisory and control systems governing the revenue or expenditure involved; and on a review of the reliability of Commission management representations. |
0.6. |
This year’s Annual Report differs in a number of significant respects from its predecessors.
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0.7. |
The Commission’s replies to the Court’s observations — or those of other EU institutions and bodies, where appropriate — are presented within the document. In some of its replies the Commission reinterprets the Court’s findings or attributes to the Court conclusions which it has not reached. The Court’s description of its findings and conclusions takes into account the comments of the auditee. However it is the Court’s responsibility, as external auditor, to report its audit findings, to draw conclusions from those findings, and thus to provide an independent and impartial assessment of the reliability of the accounts as well as of the legality and regularity of transactions. |
(1) In particular ISSAI 1705 Modifications to the Opinion in the Independent Auditor’s Report and ISSAI 4200 Compliance Audit Related to the Audit of Financial Statements.
CHAPTER 1
The Statement of Assurance and supporting information
TABLE OF CONTENTS
The Court’s Statement of Assurance provided to the European Parliament and the Council — independent auditor’s report
Opinion on the reliability of the accounts
Opinion on the legality and regularity of the transactions underlying the accounts
Introduction
Audit findings for the 2010 financial year
Reliability of accounts
Regularity of transactions
Summary of the DAS specific assessments
Comparison with previous years’ results
Reliability of Commission management representations
Annual activity reports and declarations by Directors-General
Opinion of the Commission’s internal auditor
Synthesis report of the Commission
Implications of increased use of pre-financing
Budgetary management
THE COURT’S STATEMENT OF ASSURANCE PROVIDED TO THE EUROPEAN PARLIAMENT AND THE COUNCIL — INDEPENDENT AUDITOR’S REPORT |
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Reliability of the accounts |
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Legality and regularity of the transactions underlying the accounts |
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Revenue |
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Commitments |
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Payments |
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8 September 2011 |
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Vítor Manuel da SILVA CALDEIRA President |
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INTRODUCTION |
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AUDIT FINDINGS FOR THE 2010 FINANCIAL YEAR |
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Reliability of accounts |
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Regularity of transactions |
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Summary of the DAS specific assessments |
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Table 1.1 — Payments in 2010 by Annual Report chapters
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Table 1.2 — 2010 Summary of findings on regularity of transactions
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Comparison with previous years’ results |
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Reliability of Commission management representations |
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Annual activity reports and declarations by Directors-General |
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Opinion of the Commission’s internal auditor |
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Synthesis report of the Commission |
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1.24. |
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1.25. |
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IMPLICATIONS OF INCREASED USE OF PRE-FINANCING |
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Substantial increase of pre-financing between 2005 and 2010 |
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Table 1.3 — Evolution of pre-financing (50) and related accrued charges between 2005 and 2010 (in million euro)
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Inaccurate or incomplete data on pre-financing |
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BUDGETARY MANAGEMENT |
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1.41. |
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(1) The consolidated financial statements comprise the balance sheet, the economic outturn account, the cash flow table, the statement of changes in net assets and a summary of significant accounting policies and other explanatory notes (including segment reporting).
(2) The consolidated reports on implementation of the budget comprise the consolidated reports on implementation of the budget and a summary of budgetary principles and other explanatory notes.
(3) The accounting rules adopted by the Commission’s accounting officer are derived from International Public Sector Accounting Standards (IPSAS) issued by the International Federation of Accountants or, in their absence, International Accounting Standards (IAS)/International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board. In accordance with the Financial Regulation, the consolidated financial statements for the 2010 financial year were prepared (as they have been since the 2005 financial year) on the basis of these accounting rules adopted by the Commission’s accounting officer, which adapt accruals based accounting principles to the specific environment of the European Union, while the consolidated reports on implementation of the budget continue to be primarily based on cash movements.
(4) See OJ C 303, 9.11.2010, pp. 10-12.
(5) From French: ‘Déclaration d’assurance’.
(6) See Article 287 of the Treaty on the Functioning of the European Union.
(7) Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities (OJ L 248, 16.9.2002, p. 1), last amended by Regulation (EU, Euratom) No 1081/2010 of the European Parliament and of the Council (OJ L 311, 26.11.2010, p. 9), requires that the final accounts shall be sent before 31 July of the following financial year.
(8) See Annex 1.2 , point 1.
(9) The Research part of the former policy group Research, Energy and Transport was previously reported in Chapter 5, the former policy group Education and Citizenship was previously reported in Chapter 7 and the former policy group Economic and Financial Affairs was previously reported in Chapter 8 (for details see paragraph 6.1). Moreover, the Energy and Transport parts of the former policy group Research, Energy and Transport are now reported in Chapter 4 together with the former policy group Cohesion.
(10) For the scope of the audit of revenue, see paragraphs 2.7 to 2.13.
(11) Integrated Administration and Control System.
(12) See Table 1.2 of this Annual Report and Annexes x.1 for the different policy groups, as well as paragraphs 4.17 to 4.19 for Cohesion, of the 2009 Annual Report.
(13) In 2010, Energy and Transport constitute 7 % of the consolidated policy group (see also footnote 9).
(14) See also paragraph 1.26 of the 2009 Annual Report.
(15) The total number of reservations decreased from 20 in 2009 to 17 in 2010. It should be noted that in 2010, Directorate-General for Energy and Transport was split into two directorates-general (Directorate-General for Mobility and Transport and Directorate-General for Energy) and by consequence the 2009 reservation was carried forward as two reservations.
(16) See Annex 4.3 .
(17) See point 2.3 of ‘Communication from the Commission to the European Parliament, the Council, the Court of Auditors — Synthesis of the Commission’s management achievements in 2010’, COM(2011) 323 final of 1 June 2011: ‘The Commission’s Internal Auditor considers that, in 2010, the Commission has put into place governance, risk management and internal control procedures which are adequate to give reasonable assurance over the achievement of its financial objectives, with the exception of those areas of financial management over which Directors-General have expressed reservations in their declarations of assurance and subject to remarks about the management of the risks concerning errors in the underlying transactions’.
(18) Communication from the Commission to the European Parliament, the Council, the Court of Auditors — Synthesis of the Commission’s management achievements in 2010, COM(2011) 323 final of 1 June 2011.
(19) Pursuant to Article 317 of the Treaty on the Functioning of the European Union (TFEU).
(20) See Green Paper on the modernisation of the EU public procurement policy (directives 2004/18/EC and 2004/17/EC).
(21) See point 2.3 of COM(2011) 323 final of 1 June 2011.
(22) See paragraph 1.31 of the Court’s 2009 Annual Report.
(23) The cut-off exercise seeks to ensure that both revenue and expenditure are completely and accurately recorded in the correct accounting period.
(24) See paragraph 1.28, first indent, of the Court’s 2006 Annual Report, paragraphs 1.23, second indent, 1.24, second indent, and 1.26 of the 2007 Annual Report, paragraph 1.14 of the 2008 Annual Report and paragraph 1.12 of the 2009 Annual Report.
(25) In its Opinion No 6/2010 on a proposal for a regulation of the European Parliament and the Council on the Financial Regulation applicable to the general budget of the European Union, the Court stated its concerns as to the very high increase of uncleared pre-financing and the need for action.
(26) The International Public Sector Accounting Standard (IPSAS) 1 defines this principle as follows: ‘If information is to represent faithfully the transactions and other events that it purports to represent, it is necessary that they are accounted for and presented in accordance with their substance and economic reality and not merely their legal form. The substance of transactions or other events is not always consistent with their legal form’ (Appendix A, page 70 of ‘Handbook of International Public Sector Accounting Pronouncements 2011’, Volume 1). See also Article 124 of the Financial Regulation.
(27) See Council Regulation (EC) No 1083/2006 (OJ L 210, 31.7.2010, p. 25), Section 4, Article 44 and Commission Regulation (EC) No 1828/2006 (OJ L 371, 27.12.2006, p. 1), Section 8, Articles 43 to 46 for the European Regional Development Fund, the European Social Fund and the Cohesion Fund, Council Regulation (EC) No 1698/2005 (OJ L 277, 21.10.2005, p. 1), Article 71(5) and Commission Regulation (EC) No 1974/2006 (OJ L 368, 23.12.2006, p. 15), Articles 50 to 52 for the European Agricultural Fund for Rural Development.
(28) This amount consists of long-term pre-financing (3 820 million euro) and short-term pre-financing (955 million euro).
(29) See also paragraph 1.43 of the 2008 Annual Report.
(30) Appropriations carried over from 2009 amount to 0,3 billion euro for commitments and 1,8 billion euro for payments.
(31) Assigned revenue in 2010 (see also footnote 35) amounts to 5,4 billion euro for commitments and 5,8 billion euro for payments.
(32) The eight amending budgets approved during 2010 resulted in an overall 99 million euro increase in appropriations for commitments and a 19 million euro increase in appropriations for payments.
(33) According to the Interinstitutional Agreement between the European Parliament, the Council and the Commission on budgetary discipline and sound financial management (OJ C 139, 14.6.2006, p. 1), certain commitment appropriations entered in the budget such as the Emergency Aid Reserve, the European Union Solidarity Fund and the European Globalisation Adjustment Fund may be over and above the ceiling.
(34) Detailed information on budgetary implementation for 2010 can be obtained from Part II of the Annual Accounts of the European Union, financial year 2010, the Commission’s (Directorate-General for the Budget) documents ‘Report on budgetary and financial management accompanying the Community accounts - Financial year 2010’ as well as from the Report on the ‘Analysis of the budgetary implementation of the Structural and Cohesion Funds in 2010’.
(35) Assigned revenue cover inter alia refunds arising from recovery of amounts paid in error, which are re-allocated to their budget line of origin, contributions from EFTA members increasing budget lines, or revenue from third parties where agreements have been concluded involving a financial contribution to EU activities.
(36) ‘Report on budgetary and financial management accompanying the Community accounts — Financial year 2010’.
(37) Council Regulation (EC) No 1198/2006 (OJ L 223, 15.8.2006, p. 1) and Regulation (EC) No 1083/2006.
(38) See paragraphs 3.13, 3.15 and 3.22.
(39) Outstanding budgetary commitments arise as a direct consequence of differentiated expenditure, where expenditure programmes take a number of years to be completed and commitments are made in earlier years before the corresponding payments. As commitments are liquidated by payments, the long-term effect of commitments significantly exceeding payments results in an inevitable build up of outstanding commitments, with the situation being rolled forward each year.
(40) The budget distinguishes between two types of appropriation: non-differentiated appropriations and differentiated appropriations. Non-differentiated appropriations are used to finance operations of an annual nature, e.g. administrative expenditure. Differentiated appropriations were introduced to manage multiannual operations, the related payments can be made during the year of the commitment and during the following years. Differentiated appropriations are used mainly for the structural funds and the Cohesion Fund.
(41) For Cohesion see ‘Report on budgetary and financial management accompanying the Community accounts — Financial year 2010’, pp. 23, 36-41.
(42) The n + 2/n + 3 deadline requires automatic decommitment of all funds not spent or not covered by a payment request by the end of the second/third year following the year of allocation. As part of the ‘third simplification’ package, the n + 2/n + 3 rule was last amended for the 2007 commitments in Cohesion (see Regulation (EC) No 1083/2006, amended by Regulation (EU) No 539/2010 of the European Parliament and of the Council (OJ L 158, 24.6.2010, p. 1)). However, this had no significant impact on the utilisation rate of payment appropriations.
(43) The budgetary titles 14 and 24 to 31 of Section III of the general budget concerning primarily administrative expenditure are reported in the European Commission section of Chapter 7.
(44) Administrative expenditure is deducted from policy groups and shown separately under its own heading; this leads to differences in comparison to Chapters 3 to 6.
(45) The frequency of errors represents the proportion of the sample affected by quantifiable and non-quantifiable errors.
(46) Systems are classified as ‘partially effective’ where some control arrangements have been judged to work adequately whilst others have not. Consequently, taken as a whole, they might not succeed in restricting errors in the underlying transactions to an acceptable level. For details see the section ‘Audit scope and approach’ in Chapters 2 to 7.
(47) Reimbursed expenditure (see paragraph 3.16).
(48) Reimbursed expenditure (see paragraph 4.23).
(49) The difference between the payments in 2010 (122 231 million euro — see Table 1.1 ) and the total amount of the overall audited population in the context of the regularity of transactions corresponds to advances paid for the policy groups Agriculture and Natural Resources (851 million euro) and Cohesion, Energy and Transport (3 074 million euro) (see paragraphs 3.16 and 4.23).
(50) Prepaid expenditure for Financial Engeneering Instruments amounting to 4 775 million euro in 2010 and 2 153 million euro in 2009 are not included (see paragraphs 1.31 to 1.33).
ANNEX 1.1
AUDIT APPROACH AND METHODOLOGY
PART 1 — Audit approach and methodology for the reliability of accounts
1. |
In order to assess whether the consolidated accounts, consisting of the consolidated financial statements and the consolidated reports on the implementation of the budget (1) present fairly, in all material respects, the financial position of the European Union, and the results of operations and cash flows at the year end, the main assessment criteria are: (a) legality and regularity: the accounts are drawn up in accordance with the rules, and budgetary appropriations are available; (b) completeness: all revenue and expenditure transactions and all assets and liabilities (including off-balance sheet items) proper to the period are entered in the accounts; (c) reality of the transactions and existence of the assets and liabilities: each revenue and expenditure transaction is justified by an event which pertains to the entity and is proper to the period; the asset or liability exists at the balance sheet date and is proper to the reporting entity; (d) measurement and valuation: the revenue and expenditure transaction and the asset or liability is entered in the accounts at an appropriate value, bearing in mind the principle of prudence; (e) presentation of information: the revenue and expenditure transaction, asset or liability is disclosed and described in accordance with the applicable accounting rules and conventions and the principle of transparency. |
2. |
The audit consists of the following basic elements:
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PART 2 — Audit approach and methodology for the regularity of transactions
3. |
The approach taken by the Court to audit the regularity of the transactions underlying the accounts comprises:
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4. |
This is supplemented by evidence provided by the work of other auditors (where relevant) and an analysis of Commission management representations. |
How the Court tests transactions
5. |
The direct testing of transactions within each specific assessment (Chapters 2 to 7) is based on a representative sample of the receipts (in the case of revenue) and payments contained within the policy group concerned (2). This testing provides a statistical estimation of the extent to which the transactions in the population concerned are irregular. |
6. |
In order to determine the sample sizes necessary to produce a reliable result, the Court uses an audit assurance model. This involves an assessment of the risk of errors occurring in transactions (inherent risk) and the risk that the systems do not prevent or detect and correct such errors (control risk). |
7. |
Transaction testing involves a detailed check of each transaction selected by the samples, including determination of whether or not the claim or payment was correctly calculated and in compliance with the relevant rules and regulations. The Court samples the transactions recorded in the budgetary accounts and traces the payment down to the level of the final recipient (e.g. farmer, organiser of training course, or development aid project promoter) and tests compliance at each level. When the transaction (at any level) is incorrectly calculated or does not meet a regulatory requirement or contractual provision, it is considered to contain an error. |
How the Court evaluates and presents the results of transaction testing
8. |
Errors in transactions occur for a variety of reasons and take a number of different forms depending on the nature of the breach and specific rule or contractual requirement not followed. Errors in individual transactions do not always affect the total amount paid. |
9. |
The Court classifies errors as follows:
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10. |
Public procurement is one area where the Court often finds errors. EU public procurement law consists essentially of a series of procedural requirements. To ensure the basic principle of competition foreseen in the Treaty the contracts have to be advertised; bids must be evaluated according to specified criteria; contracts may not be artificially split to get below thresholds, etc. |
11. |
For its audit purposes the Court puts a value on failure to observe a procedural requirement. The Court:
The quantification by the Court may differ from that used by the Commission or Member States when deciding how to respond to misapplication of the public procurement rules. |
12. |
The Court expresses the frequency by which errors occur by presenting the proportion of the sample affected by quantifiable and non-quantifiable errors. This indicates how widespread errors are likely to be within the policy group as a whole. This information is given in Annexes x.1 to Chapters 2 to 7 when material error is present. |
13. |
On the basis of the errors which it has quantified, the Court, using standard statistical techniques, estimates the most likely rate of error (MLE) in each specific assessment and for spending from the budget as whole. The MLE is the weighted average of the percentage error rates found in the sample (6). The Court also estimates, again using standard statistical techniques, the range within which it is 95 % confident that the rate of error for the population lies in each specific assessment (and for spending as whole). This is the range between the lower error limit (LEL) and the upper error limit (UEL) (7) (see illustration below).
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14. |
The percentage of the shaded area below the curve indicates the probability that the true error rate of the population is between the LEL and the UEL. |
15. |
In planning its audit work, the Court seeks to undertake procedures allowing it to compare the estimated rate of error in the population with a planning materiality of 2 %. In assessing audit results, the Court is guided by this level of materiality and takes account of the nature, amount and context of errors when forming its audit opinion. |
How the Court assesses systems and reports the results
16. |
Supervisory and control systems are established by the Commission and member and beneficiary states in the case of shared or decentralised management, to manage the risks to the budget, including the regularity of transactions. Assessing the effectiveness of systems in ensuring regularity is therefore a key audit procedure, and particularly useful for identifying recommendations for improvement. |
17. |
Each policy group is subject to a multitude of individual systems, likewise revenue. The Court therefore normally selects a sample of systems to assess each year. The results of the systems assessments are presented in the form of a table called ‘Results of examination of systems’ given in Annexes x.2 to Chapters 2 to 7. Systems are classified as being effective in mitigating the risk of error in transactions, partially effective (when there are some weaknesses affecting operational effectiveness) or not effective (when weaknesses are pervasive and thereby completely undermine operating effectiveness). |
18. |
In addition and when supported by evidence, the Court provides an overall assessment of systems for the policy group (also provided in Annexes x.2 to Chapters 2 to 7), which takes into account both the assessment of selected systems, as well as the results of transaction testing. |
How the Court assesses Commission management representations and reports the results
19. |
As required by international auditing standards, the Court obtains a letter of representation from the Commission, confirming that the Commission has fulfilled its responsibilities, and disclosed all information that could be relevant to the auditor. This includes confirmation that the Commission has disclosed all information in respect to the assessment of the risk of fraud, all information in respect to fraud or suspected fraud of which the Commission is aware, and all material instances of non-compliance with laws and regulation. |
20. |
In addition, Chapters 2 to 7 consider the annual activity reports of relevant Directorates-General. These report on the achievement of policy objectives and the management and control systems in place to ensure the regularity of transactions and sound use of resources. Each annual activity report is accompanied by a declaration of the Director-General on inter alia the extent to which resources have been used for their intended purpose, and control procedures ensure the regularity of transactions (8). |
21. |
The Court assesses the annual activity reports and accompanying declarations in order to determine how far they provide a fair reflection of financial management in relation to regularity of transactions. The Court reports on the results of this assessment in the section ‘Reliability of Commission management representations’ in Chapters 2 to 7, and — in case of significant findings — by means of an observation following the conclusions on the regularity of transactions and effectiveness of systems. |
How the Court arrives at its opinions in the statement of assurance
22. |
The Court arrives at its opinion on the regularity of transactions underlying the European Union's accounts, set out in the statement of assurance, on the basis of all its audit work as reported in Chapters 2 to 7 of this report and including an assessment of the pervasiveness of error. A key element is the consideration of the results of testing of spending transactions. Taken together, the Court’s best estimate of the rate of error for overall spending in 2010 is 3,7 %. The Court has 95 % confidence that the rate of error for the population is between 2,6 % and 4,8 %. The error rate found in different policy areas varies as described in Chapters 3 to 7. The Court assessed error as pervasive — extending across the majority of spending areas. The Court gives an overall opinion on the regularity of commitments based on an additional horizontal sample. |
Irregularity or fraud
23. |
The overwhelming majority of errors arise from misapplication or misunderstanding of the often complex rules of EU expenditure schemes. If the Court has reason to suspect that fraudulent activity has taken place, it reports this to OLAF, the Union’s antifraud office, which is responsible for carrying out any resulting investigations. In fact, the Court reports around three cases per year to OLAF, based on its audit work. |
(1) Including the explanatory notes.
(2) Additionally to this, a horizontal representative sample of commitments is drawn and tested for compliance with the relevant rules and regulations.
(3) There are essentially two award systems: the lowest offer or the most advantageous offer.
(4) Examples of a quantifiable error: no or restricted competition (except where this is explicitly allowed by the legal framework) for the main or a supplementary contract; inappropriate assessment of bids with an impact on the outcome of the tender; substantial change of the contract scope; splitting of the contracts for different construction sites, which fulfil the same economical function. The Court applies in general a different approach to misapplication of the public purchasing directives by the EU institutions, on the grounds that the contracts concerned generally still remain valid. Such errors are not quantified in the DAS.
(5) Examples of a non-quantifiable error: inappropriate assessment of bids without impact on the outcome of the tender, formal weaknesses of tender procedure or tender specification, formal aspects of the transparency requirements not respected.
(6) , where ASI is the average sampling interval and i is the numbering of transactions in the sample.
(7) and , where t is the t-distribution factor, n is the sample size and s is the standard deviation of the percentage errors.
(8) Further information on these processes, as well as links to the most recent reports can be found at http://ec.europa.eu/atwork/synthesis/index_en.htm
ANNEX 1.2
FOLLOW-UP OF OBSERVATIONS OF PRIOR YEARS CONCERNING THE RELIABILITY OF ACCOUNTS
Observations raised in prior years |
Progress made |
Commission reply |
Court analysis |
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The accounting officer's letter of representation |
The accounting officer's letter of representation |
The accounting officer's letter of representation |
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The representation letters of the Commission’s accounting officer highlighted that the accounting officers of some consolidated entities had omitted or modified representations. In particular, the required information on the validation of the accounting and local systems was not provided. |
In respect of the 2010 consolidated accounts the Commission’s accounting officer:
However, the Commission’s accounting officer emphasised that in his view these points do not have a material impact on the Commission’s accounts. |
The lack of validations highlighted does not impact the reliability of the accounts. |
The Court has taken account of the overall assurance provided by the accounting officer’s letter of representation. The Court will follow up on the specific issues identified in the course of its future audits. |
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Pre-financing, accounts payable and cut-off procedures |
Pre-financing, accounts payable and cut-off procedures |
Pre-financing, accounts payable and cut-off procedures |
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For pre-financings, accounts payable and related cut-off the Court identified accounting errors with an immaterial financial impact overall but a high frequency. This underlines the need for further improvement in the basic accounting data at the level of certain Directorates-General. As regards accounting for amounts pre-financed, the Court also identified the following problems:
Furthermore some Directorates-General did not respect the requirement to register the invoices and cost statements within the five working days after their reception. |
The Commission continued to work on improving the accuracy of its accounting data through ongoing actions like the accounting quality project and the validation of local systems. Despite the efforts of the accounting officer’s services to improve the situation, the Court found that several Directorates-General in internal policies and external actions continue to record estimates in the accounts even when they have an adequate basis for clearing the corresponding pre-financings (see paragraph 1.29). The Court’s audit of representative samples of pre-financing and of invoices/cost claims identified again errors with an immaterial financial impact overall but a high frequency. Therefore, the Commission should continue to make further efforts to improve the basic accounting data at the level of certain Directorates-General. Despite improvements noted in the time taken to register new cost claims, some Directorates-General still do not fully respect the requirement of registering their invoices and cost claims promptly. |
See the Commission’s reply to paragraph 1.29. The Commission will continue to work on improving the accuracy of the accounting data through ongoing actions like the accounting quality projects. |
The Court will continue to follow up on the issues identified. Furthermore, a new issue arose in the 2010 audit concerning a significant number of cases where initially the Commission did not record properly payments as giving rise to an asset (e.g. financial engineering instruments). This issue has been addressed in the final accounts on receipt of information from Member States in June 2011 — see paragraph 1.32). The Commission has proposed to amend the current legal framework and will make appropriate proposals for the post-2013 period. |
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Disclosures concerning recoveries and financial corrections |
Disclosures concerning recoveries and financial corrections |
Disclosures concerning recoveries and financial corrections |
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Although the Commission has taken steps to increase and improve the information it provides on the corrective mechanisms applied to the EU budget, the information is not yet completely reliable because the Commission does not always receive reliable information from Member States. |
The Commission's on-the-spot controls showed that the systems for recording and reporting data are not yet completely reliable in all Member States. The Commission followed up any inconsistencies in these data and made recommendations to Member States for improvements. |
The reliability of data on recoveries received from Member States has improved in comparison to last year, but the Commission agrees it should be further improved. To this effect the Commission has launched beginning of 2011 an audit of the Member States’ systems for recoveries, based on the reporting made each year as at 31 March with the objective to improve reporting of national financial corrections to the Commission, and ensure completeness, accuracy and timeliness of reporting. |
The Court will continue to follow up on the issues identified. It maintains its position that, wherever it is possible, a reconciliation between errors and related recoveries and/or financial corrections should be provided. |
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Furthermore, the need to refine the financial reporting guidelines pertaining to what information is to be included and how it should be treated should be examined. |
Regarding the Court’s request to improve the guidelines on disclosure on recoveries and financial corrections, the Commission has issued a closure instruction which, however, should be further improved. |
The Commission will continue to improve the closure guidelines and instructions for the 2011 closure. |
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For some areas of expenditure, the Commission does not provide information reconciling the year in which the payment concerned is made, the year in which the related error is detected and the year in which the resulting financial correction is disclosed in the notes to the accounts. |
Information reconciling payments, errors and financial corrections is not yet presented. |
The Commission makes controls on all expenditure several years after the actual year of a given payment, primarily at programme closure. Also the financial correction may be the result of the detection of weaknesses in the control systems of Member States, in which case no direct link exists with payments. As a consequence it is neither possible nor relevant to reconcile the year of the payment concerned with the year the financial correction is disclosed in the notes to the accounts. The supporting documentation to be provided by the Member State at programme closure is defined in the legal framework. All supporting evidence regarding expenditure and audits are kept available to the Commission by the managing authority of the operational programme. |
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At year-end 2009, for Cohesion, a total amount of 2,3 billion euro still remained to be implemented (i.e. ‘cashed’ through the receipt of a repayment by the Commission or the deduction by the member state from payment claims). |
In 2010, for Cohesion, the amount not yet implemented has increased by some 0,2 billion euro (i.e. the amounts confirmed/decided but not yet implemented increased from 2 327 million euro in 2009 to 2 516 million euro in 2010). The low implementation rate of 71 % is explained by the ongoing closure process. Payment claims received end 2010 are not yet authorised, which means that the related financial corrections for a total amount of 2,3 billion euro cannot be taken into account in the 2010 implementation figures (see note 6 to the 2010 accounts, Section 6.3.3 ‘financial corrections — cumulative figures and implementation rate’). |
For some 2000-2006 programmes, it comes out from both the Court and the Commission’s results that doubts existed about the completeness and reliability of recorded and reported figures on withdrawals and recoveries. Even if improvements have been identified in all Member States over the years 2007-2010 by the Commission audits, the Commission remains prudent at closure and requested from all programmes authorities to report on the follow-up (including financial corrections) that was given at national level to all irregularities registered in the debtor’s ledger for each programme. The Commission will not close programmes until it assesses this information as coherent and complete. For the 2007-2013 regulatory framework, by 31 March of each year the Certifying Authority must send to the Commission a statement in relation to the preceding year, on financial corrections. These new reporting provisions system bring more reliable and uniform information in electronic format (via SFC 2007) on corrections carried out. Moreover, DG REGIO and DG EMPL have revised their audit strategies to include a specific module to audit the most risky national systems for recoveries, starting the second half of 2011. The Commission maintains its view that due to the multiannual character of the corrective systems for shared management programmes (financial corrections not always implemented the same year of their acceptance by the Member States), a reconciliation of payments, errors and financial corrections brings very little added value. Moreover, as the expenditure declaration system is cumulative over a multiannual period and in some cases they are system corrections, such reconciliation is nearly impossible. |
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Although the explanatory notes to the consolidated accounts contain information that some payments are likely to be corrected at a later date by the Commission's services or the Member States, the amounts and areas of expenditure which may be subject to further verification and clearance of accounts procedures are still not identified in the notes. |
Amounts subject to further verification and clearing are not yet disclosed in the notes to the consolidated accounts (contrary to quantifiable amounts of potential recoveries). |
As replied in previous years, the Financial Regulation allows the Commission to make controls on all expenditure for several years after the actual year of expenditure. The accounts should not imply that, because of controls in future years, all the expenditure concerned remains to be accepted. Otherwise, all budgetary expenditure would be considered provisional until an ex post check is made or the said limitation period has lapsed. Where the amounts of potential recoveries are quantifiable, they are disclosed in note 6 to the consolidated accounts. In agriculture, a financial clearance decision is taken around 6 months after the end of the financial year in question, through which the Commission establishes the amount of expenditure recognised as chargeable to the EU budget for that year. This role of the financial clearance decision is not called into question by the fact that subsequently financial corrections may be imposed on Member States through conformity decisions. The amount of expenditure which is likely to be excluded from EU financing by such future conformity decisions is disclosed in a note to the financial statements. Both quantifiable amounts of potential recoveries by the Member States and the amount of expenditure which is likely to be excluded from financing by future conformity decisions are booked as an asset (or disclosed as a contingent asset) in the Commission’s accounting system and in a note to the financial statements. The Commission considers that, for agriculture, the information on recoveries which it receives from Member States is reliable because it is certified by independent audit bodies. In Agriculture, the conformity decisions identify, for each financial correction, the year in which the payment concerned by that correction was made. Financial reporting in agriculture includes information on recoveries made by the Member States as well as corrections made by the Commission, on the amount of corrections decided per financial year and per calendar year, on the financial implementation of these corrections as well as on the corresponding amounts cashed, for EAGF as well as for Rural Development. |
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Transfer of assets of Galileo |
Transfer of assets of Galileo |
Transfer of assets of Galileo |
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The agreements for the transfer to the Union of the ownership of all assets created, developed or acquired for the Galileo programme are not yet fully implemented. As all expenditure incurred so far is treated as research expenses there is no impact on the balance sheet. However, the Commission should ensure that all information is available at the time when the transfer takes place in order to safeguard assets effectively. |
The Commission is working with the European Space Agency to ensure that at the time of the transfer all the necessary accounting and technical information will be available to guarantee a smooth handover. This transfer is foreseen at the end of the in orbit validation phase, expected to be in 2012. However, the Court draws attention to the reservation made by the responsible Director-General in his 2010 annual activity report concerning the reliability of the financial reporting by the European Space Agency. |
The Commission is closely monitoring the progress made by the European Space Agency on the implementation of its new accounting system and on the consequent improvement of their financial reporting. |
The Court will follow up on this issue. |
CHAPTER 2
Revenue
TABLE OF CONTENTS
Introduction
Specific characteristics of Revenue
Audit scope and approach
Traditional own resources
VAT- and GNI-based own resources
Regularity of transactions
Traditional own resources
VAT- and GNI-based own resources
Other revenue
Effectiveness of systems
Traditional own resources
VAT-based own resources
Long-outstanding reservations still exist but the backlog is being cleared
Delays in the monitoring of the application of the VAT directives
GNI-based own resources
General and specific reservations
Verification of GNI inventories in the Member States not yet complete
UK correction
Waivers of amounts to be recovered
Reliability of Commission Management Representations
Conclusions and recommendations
Conclusions
Recommendations
Follow-up of Special Report No 2/2008 concerning Binding Tariff Information
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INTRODUCTION |
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Table 2.1 — Revenue — Key information
Source: 2010 Accounts of the European Union. |
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Specific characteristics of Revenue |
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Audit scope and approach |
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REGULARITY OF TRANSACTIONS |
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Other revenue |
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VAT-based own resources |
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Long-outstanding reservations still exist but the backlog is being cleared |
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Table 2.2 — VAT reservations as at 31.12.2010
Source: European Commission. |
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General and specific reservations |
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Verification of GNI inventories in the Member States not yet complete |
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UK correction |
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2.32. |
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The consideration of the above-mentioned budgetary transactions would allow the allocation of expenditure to respect the ‘substance over form’ principle (see Annex 2.5 , in particular its paragraphs 3 to 5 and 10 to 11). |
But only at a cost the Commission finds unjustifiable. |
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Waivers of amounts to be recovered |
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Example 2.1 Evaluation of the contractors’ financial capacity In one case (amounting to about 500 000 euro) relating to the award of a FP5 (5th framework programme on research) grant, the capacity of a company to generate profit in its business was assessed to be negative. However, the Commission did not consider that financial guarantees were necessary to be able to conclude a grant agreement. The eventual waiver was made because the company was declared bankrupt. In a further 15 cases (6 million euro) relating to grant-awarding procedures for FP5 and external actions, the Commission could not provide evidence that it assessed the financial capacity of applicants. In eight of these cases, waivers were made due to the insolvency of beneficiaries. |
Example 2.1 Evaluation of the contractors’ financial capacity The case evoked by the Court dates back to 2001 and since then the financial viability checks have significantly improved since they were devised for FP5. More complex ratios were used for FP6 and are being used for FP7. In addition, the Commission adopted rules to ensure consistent verification of the existence and legal status of participants, as well as their operational and financial capacities (Commission Decision C(2007) 2466 of 13 June 2007), which are followed by the DGs concerned. The Commission considers that the necessary measures are now in place to minimise the risk of a similar situation occurring. Since the mandatory use of the Call for Proposals mechanism in 2003, the system for assessment of financial capacity of applicants has been reinforced and standardised. Grant applicants are now required to demonstrate that they have stable and sufficient sources of funding to maintain activity throughout the period during which the action is carried out and to participate in its funding, on the basis of supporting documents. |
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Example 2.2 Contract management The coordinator of the FP5 contract referred to above did not distribute the prefinancing payment to the other contractors responsible for the implementation of the project. The Commission did not ensure that the contractual conditions concerning the distribution of prefinancing were fulfilled. A large part of these funds could not be recovered and the amount receivable (500 000 euro) was waived, because of the bankruptcy of the coordinator three years later. In another case (145 000 euro) concerning the European Community Investment Partners (ECIP) financial instrument, extended periods (1998-2005) of administrative inaction in the Commission’s management of the contract were noted. |
Example 2.2 Contract management There had been administrative delays on the ECIP programme prior to 2005, since when EuropeAid's comprehensive liquidation process has recovered 35 million euro on 600 actions. For the case cited, 2/3 of the amount owed was recovered (by offsetting) and 145 000 euro was waived mainly because, despite repeated attempts since 2005 to establish the status of these files, it could not be established with certainty who had inherited the bank's responsibility following a consortium takeover. |
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Example 2.3 Establishment of recovery orders and recovery procedures In five waiver cases (2,5 million euro) there were unjustified delays in the establishment of recovery orders and/or in the starting of recovery procedures. These cases related to FP5 (1) and external actions (4), and the waivers were made due to insolvency of the debtor. In the above-mentioned case relating to the ECIP financial instrument the Commission did not take into account all the possibilities to offset. |
Example 2.3 Establishment of recovery orders and recovery procedures Many of the delays in the establishment of recoveries are due to unavoidable audit and legal processes. The Commission believes that its management has had no material negative impact on the actual recovery of amounts receivable. Also, the internal procedures have improved as regards the timely issuing of debit notes. In the ECIP case a potential additional offsetting was technically not possible in 2008 due to end of year accounting procedures. |
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RELIABILITY OF COMMISSION MANAGEMENT REPRESENTATIONS |
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CONCLUSIONS AND RECOMMENDATIONS |
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Conclusions |
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2.40. |
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Recommendations |
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2.41. |
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Following this review and the findings and conclusions for 2010, the Court recommends that the Commission: |
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FOLLOW-UP OF SPECIAL REPORT No 2/2008 CONCERNING BINDING TARIFF INFORMATION |
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Introduction |
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2.44. |
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Follow-up of the recommendations |
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Progress made: The number of staff dealing with BTI matters has been increased and the delays noted in resolving inconsistent tariff classifications have been reduced. |
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Progress made: The Commission was able to demonstrate that it was seeking to hold Member States accountable for losses resulting from the issue of incorrect BTI. New functions were introduced in the EBTI-3 database to better respect the legal provisions. The user interface of the public EBTI-3 database is now translated into all EU official languages (except Maltese and Irish) and the Thesaurus is being progressively updated. |
The Commission will continue to examine incorrect use of BTI that has a negative effect on Traditional Own Resources and, where appropriate, will hold the Member States financially responsible. |
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Progress made: The obligation for an importer to declare the BTI he has for the goods has been adopted (29) but will not be applicable until the IPMCC come into force. These provisions also aim to improve the management of the ‘period of grace’. |
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Progress made: During its monitoring visits, the Commission has followed up the instances of non-compliance with legal requirements and the weaknesses reported by the Court. |
The Commission is continuously monitoring the progress of the Member States and regularly addressing weaknesses in application of legal requirements. |
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Conclusions |
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(1) See Council Decision 2007/436/EC, Euratom of 7 June 2007 on the system of the European Communities’ own resources (OJ L 163, 23.6.2007, p. 17), and Council Regulation (EC, Euratom) No 1150/2000 of 22 May 2000 implementing Decision 2007/436/EC, Euratom on the system of the European Communities’ own resources (OJ L 130, 31.5.2000, p. 1), as last amended by Regulation (EC, Euratom) No 105/2009 (OJ L 36, 5.2.2009, p. 1).
(2) When duties or levies remain unpaid and no security has been provided, or they are covered by securities but have been challenged, Member States may suspend making these resources available by entering them in these separate accounts.
(3) Germany, the Netherlands, Austria and Sweden.
(4) The Netherlands and Sweden.
(5) EuropeAid Cooperation Office (AIDCO) which will become EuropeAid Development and Cooperation Directorate-General (DG DEVCO) in 2011, Directorates-General Competition (COMP) and Energy (ENER).
(6) Article 266(2) of the Customs Code Implementing Provisions: ‘On the condition that checks on the proper conduct of operations are thereby not affected, the customs authorities may: […] (b) in certain special circumstances, where the nature of the goods in question and the rapid turnover so warrant, exempt the holder of the authorization from the requirement to notify the competent customs office of each arrival of goods, […]’, Commission Regulation (EEC) No 2454/93 (OJ L 253, 11.10.1993, p. 1), as last amended by Regulation (EU) No 430/2010 (OJ L 125, 21.5.2010, p. 10).
(7) Belgium, Czech Republic, Germany, France, the Netherlands and Sweden.
(8) The Court calculates its estimate of error from a representative statistical sample. For the audit of Revenue, the Court has 95 % confidence that the rate of error in the population lies below 2 %.
(9) A monthly statement of Belgium. This Member State accounted for 9,5 % of total TOR in 2010.
(10) The definitive calculation of the UK correction of year n is entered in the budget of year n+4.
(11) For example paragraph 2.20 of the 2009 Annual Report.
(12) The United Kingdom.
(13) Italy, the Netherlands and the United Kingdom.
(14) The United Kingdom.
(15) This is made up of an increase of around 105 million euro, and a decrease of nearly 15 million euro.
(16) Council Directive 2008/8/EC of 12 February 2008, amending Directive 2006/112/EC as regards the place of supply of services (OJ L 44, 20.2.2008, p. 11), and Council Directive 2008/9/EC of 12 February 2008 laying down detailed rules for the refund of value added tax, provided for in Directive 2006/112/EC, to taxable persons not established in the Member State of refund but established in another Member State (OJ L 44, 20.2.2008, p. 23).
(17) Council Directive 2008/117/EC of 16 December 2008, amending Directive 2006/112/EC on the common system of value added tax to combat tax evasion connected with intra-Community transactions (OJ L 14, 20.1.2009, p. 7).
(18) Article 10(7) of Regulation (EC, Euratom) No 1150/2000, as amended, states that, after 30 September of the fourth year following a given financial year, any changes to GNP/GNI shall no longer be taken into account, except on points notified within this time limit either by the Commission or by the Member State. These points are known as reservations. A general reservation covers all the data of a Member State. All GNI data of Bulgaria and Romania are open in accordance with the four-year rule.
(19) In accordance with Article 3 of the Council Regulation (EC, Euratom) No 1287/2003 (OJ L 181, 19.7.2003, p. 1), Member States shall provide the Commission (Eurostat) with an inventory of the procedures and statistics used to calculate GNI and its components according to ESA 95.
(20) These open reservations concern Greece (1) and the United Kingdom (3) and mainly relate to methodological and compilation aspects.
(21) A specific reservation covers discrete elements of GNI (GNP until 2001) such as gross value added of selected activities, total final consumption expenditure or gross operating surplus and mixed income.
(22) See paragraph 2.28 of the 2009 Annual Report.
(23) Article 87 of Commission Regulation (EC, Euratom) No 2342/2002 of 23 December 2002 laying down detailed rules for the implementation of Council Regulation (EC, Euratom) No 1605/2002 on the Financial Regulation applicable to the general budget of the European Communities (OJ L 357, 31.12.2002, p. 1), as last amended by Regulation (EC, Euratom) No 478/2007 (OJ L 111, 28.4.2007, p. 13).
(24) For reasons explained in paragraphs 2.12 and 2.13, this conclusion does not provide an assessment of the quality of VAT or GNI data that were received by the Commission from Member States.
(25) Moreover, in December 2009, the Commission detected an error in its calculation of provisional estimates of the UK correction for years 2008 and 2009, representing an overestimation of 138 million euro (2,6 %) and 458 million euro (13 %) respectively. See paragraph 2.17 of the 2009 Annual Report. The corrected amounts have been taken into account in the framework of the calculation of updated estimates of the UK correction, carried out in 2010 (before the definitive amounts will be calculated in 2012 and 2013).
(26) OJ C 103, 24.4.2008, p. 1.
(27) European Parliament Decision of 23 April 2009 on the discharge for implementation of the European Union general budget for the financial year 2007, section III — Commission.
(28) 2881st Council meeting, Luxembourg, 23 and 24 June 2008.
(29) Regulation (EC) No 450/2008 of the European Parliament and of the Council of 23 April 2008 laying down the Community Customs Code (Modernised Customs Code) (OJ L 145, 4.6.2008, p. 1).
(30) Committee on Monetary, Financial and Balance of Payments Statistics.
ANNEX 2.1
RESULTS OF TRANSACTION TESTING FOR REVENUE
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2010 |
2009 |
2008 |
2007 |
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TOR |
VAT/GNI, corrections under Budget Title 1 |
Other revenue |
Total |
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SIZE AND STRUCTURE OF THE SAMPLE |
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Total transactions (of which): |
6 |
43 |
6 |
55 |
62 |
60 |
66 |
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recovery orders |
6 |
43 |
6 |
55 |
62 |
60 |
66 |
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RESULTS OF TESTING (1) |
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Proportion of transactions tested found to be: |
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Free of error |
100 % |
(6) |
100 % |
(43) |
100 % |
(6) |
100 % |
(55) |
95 % |
100 % |
100 % |
Affected by one or more errors |
0 % |
(0) |
0 % |
(0) |
0 % |
(0) |
0 % |
(0) |
5 % |
0 % |
0 % |
ESTIMATED IMPACT OF QUANTIFIABLE ERRORS |
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Most likely error rate (2) |
0 % |
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(1) Numbers quoted in brackets represent the actual number of transactions.
(2) As no material error was found, only the most likely error rate is presented.
ANNEX 2.2
RESULTS OF EXAMINATION OF SYSTEMS FOR REVENUE
Assessment of selected supervisory and control systems
System concerned |
Key internal controls (Commission) |
Key internal controls in Member States audited |
Overall assessment |
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Commission checks in Member States |
Commission calculation / desk checks of amounts receivable |
Commission management of reservations / budget implementation |
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TOR |
Effective |
Effective |
N/A |
Partially effective |
Effective |
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VAT/GNI |
Effective |
Effective |
Effective |
N/A |
Effective |
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UK correction |
N/A |
Partially effective |
N/A |
N/A |
Partially effective |
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Waivers |
N/A |
Effective |
Effective (1) |
N/A |
Effective |
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Fines and penalties |
N/A |
Effective |
N/A |
N/A |
Effective |
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Overall assessment of supervisory and control systems
Overall assessment |
2010 |
2009 |
2008 |
2007 |
Effective |
Effective |
Effective |
Effective |
(1) For the waivers made in 2010, the Court found weaknesses in the Commission's management in prior years which increased the risk that amounts receivable are not recovered.
ANNEX 2.3
RESULTS OF REVIEW OF COMMISSION MANAGEMENT REPRESENTATIONS FOR REVENUE
Main DGs concerned |
Nature of declaration given by Director-General (1) |
Reservations given |
Court observations |
Overall assessment of reliability |
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2010 |
2009 |
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BUDG |
without reservations concerning own resources |
N/A |
The significant system weakness revealed by the Court’s audit on the reliability of the accounts for TOR in Belgium was also found by the Commission’s inspection work. The Court considers that this weakness should have been mentioned in the Annual Activity Report of DG BUDG (see paragraph 2.37). The error which the Court detected in the Commission’s calculation of the 2006 definitive amount of the UK correction is described in the Annual Activity Report of DG BUDG, which sets out the additional control measures put in place subsequently. However, taking into account the Commission's own materiality criteria, in the Court’s view a reservation should have been made in the declaration of assurance of the Director-General of DG BUDG (see paragraph 2.38). |
B |
A |
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(1) By reference to the declaration of assurance of Director-General, he/she has reasonable assurance that the control procedures put in place give the necessary guarantees concerning the regularity of transactions.
A: |
the Director-General's declaration and the Annual Activity Report give a fair assessment of financial management in relation to regularity |
B: |
the Director-General's declaration and Annual Activity Report give a partially fair assessment of financial management in relation to regularity |
C: |
the Director-General's declaration and the Annual Activity Report do not give a fair assessment of financial management in relation to regularity |
ANNEX 2.4
RECOMMENDATION FOLLOW-UP TABLE FOR REVENUE
Year |
Court Recommendation |
Progress made |
Commission reply |
Court analysis |
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2009 |
In its 2009 Annual Report (paragraph 2.32), the Court drew attention to the audit results included in its Special Report No 1/2010 on simplified customs procedures for imports and reported that the Commission would need to take account of the conclusions from this report, together with the follow-up of its own findings from inspections of simplified procedures and Member States' control strategy, in its 2010 Annual Activity Report. |
The Commission recognised that weaknesses existed in Member States customs controls on simplified procedures. However, taking into account its ongoing inspection action, the generally positive response by the Member States to the Court's findings and the overall low financial impact of the errors detected, the Commission considered that there was no need to make a reservation in the declaration of the Director-General (included in the Annual Activity Report of DG BUDG) on this issue. |
The Commission has made an assessment of the weaknesses relating to simplified customs procedures in its Annual Activity Report for 2010. It is following up the action taken by the Member States in response to the findings of its own inspections and those of the Court's audits. Several Member States have already reported on the remedial action they have taken or are in the process of taking to address the control weaknesses found. This action will be verified in future inspections. The Commission has also carried out inspections of the Customs Control Strategy in all Member States and has prepared a thematic report on the weaknesses found from these inspections and from the Court's audit. It has presented a draft of this report in the December 2010 ACOR meeting. The Members States have been given time to furnish their observations on that draft and a final version of the report taking account of these observations will be discussed in the July 2011 ACOR meeting |
The Court takes note of this Commission's assessment and will make its own analysis together with the follow-up of its special report on simplified customs procedures for imports. |
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2009 |
In its 2009 Annual Report (paragraph 2.22), the Court took the view that debts incurred on goods seized after going beyond the first customs office situated inside the territory of the Community should be entered into the B accounts. This position, which was in line with the Court of Justice judgement of April 2009 (case number C-459/07), was not shared by the Commission. |
The Commission analyzed the recent judgment of the Court of Justice (in April 2010) on a similar issue (case number C-230/08). |
The Commission's position concerning the entry into the B accounts of customs debts incurred on seized goods differs from that of the Court of Auditors. The Commission position is based on Article 867a of Regulation (EEC) No 2454/93 implementing the EU Customs Code according to which goods seized and confiscated are to be considered to have been entered for the Customs Warehousing procedure in accordance with Article 98 of the Customs Code. For goods entered for this procedure the incurrence of the customs debt is considered as suspended and no entry in the accounts should take place. The Commission has examined the rulings of the ECJ in Elshani (Case C-459/07) and Dansk Logistik (Case C-230/08) and concluded that its current position can be maintained. |
The Court of Auditors maintains its view concerning the entry into the B accounts of customs debts incurred on seized goods. This view is corroborated by the two Court of Justice judgements. |
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In its 2009 Annual Report (paragraph 2.27), the Court reported that the Commission (in its report of January 2010 on Greek government deficit and debt statistics to the Ecofin Council) called into question the quality of Greek macroeconomic statistics, including those of National Accounts, and that the Commission and the Council raised doubts on the effective functioning of supervisory and control systems at the National Statistical Service of Greece, which also produces GNI data for the calculation of own resources. |
The Commission's thorough analysis of the potential impact of the issues which emerged from this deficit and debt verification on Greek data did not reveal a significant impact on GDP/GNI levels. The verification work carried out during 2010 by the Commission (Eurostat) on Greek fiscal data to follow up weaknesses reported in its report of January 2010 revealed an impact of between 0,5 % and 0,9 % on the level of the Greek GDP. |
The Commission's reply of spring 2010 to the Court's observation at the time of the preparation of the Court's 2009 Annual report referred to the findings of the report of January 2010, which did not address the issue of the reclassification of public corporations. The impact on GDP mentioned by the Court derives from the reclassification of public corporations, which resulted from work completed in November 2010. Therefore, there is no need to reconsider the Commission response to the observation included in the Court's Annual Report relating to the financial year 2009. Revisions to Member States' data for earlier years are followed by the Commission during the following years according well established GNI monitoring procedures. |
The assessment made by the Commission on the impact on GDP/GNI of the weaknesses relating to the Greek government deficit and debt statistics should take into account the results of its work completed in November 2010. |
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2009 |
In its 2006 Annual Report, the Court made observations on the revision to Greek GNI (paragraphs 4.24 to 4.26) and recommended in paragraph 4.32 that the Commission: |
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ANNEX 2.5
CALCULATION OF THE UNITED KINGDOM CORRECTION FOR 2006 AND SUBSEQUENT YEARS
1. |
The arrangements for calculating the United Kingdom correction in respect of 2006 are set out in the 2000 Own Resources Decision (1) and in a Commission working document endorsed by the Council when adopting the Own Resources Decision (2). |
2. |
The calculation of the United Kingdom correction involves a series of steps. |
3. |
The first step is obtained by
|
4. |
‘Uncapped VAT bases’ were the basis of the VAT-based own resources as it applied at the time when the United Kingdom correction was introduced. |
5. |
‘Allocated expenditure’ is expenditure from the Union budget which can be allocated to recipients in Member States. Thus it excludes expenditure outside the European Union or expenditure that cannot be allocated or identified. An amount corresponding to pre-accession expenditure in the Member States which acceded to the Union in 2004 is deducted from total allocated expenditure. |
6. |
The second stage in the calculation of the correction is to calculate the ‘UK advantage’ from changes in the VAT-based own resources made since the United Kingdom correction was introduced (reduction in the rate at which the VAT-based own resource is levied, ‘capping’ of VAT bases to 50 % of a Member State’s gross national income (GNI)) and from the introduction of the fourth own resource based on GNI. |
7. |
A detail in the calculation of the ‘UK advantage’ of relevance to the criticism made in paragraph 2.16 concerns the calculation of the uniform rate of the VAT-based own resources applicable in 2006. This involves deducting from a ‘maximum rate of call’ for VAT (0,50 % in 2006) a ‘frozen rate’, itself related to the size of United Kingdom rebate. The error mentioned in paragraph 2.16 is due to the fact that the Commission added the ‘frozen rate’ to the ‘maximum rate of call’ rather than deduct it. |
8. |
A further adjustment to the correction deducts ‘TOR windfall gains’. Member States retain 25 % of the yield of TOR; when the United Kingdom rebate was introduced the retention was 10 %. The correction is reduced to the extent that this reduces the United Kingdom’s own resource payments. |
9. |
The arrangements for calculating the United Kingdom correction in years subsequent to 2006 are set out in the 2007 Own Resources Decision (4) and in a new Commission working document endorsed by the Council (5). The post-2006 arrangements differ in some detailed respects from those relevant to the 2006 correction. |
10. |
In respect of allocated expenditure whose general principles do not change (as compared to the 2000 Own Resources Decision), two details should be noted in particular in the context of the criticisms made in paragraphs 2.31 to 2.33:
|
11. |
Paragraphs 2.31 to 2.33 indicate that the Commission did not take appropriate steps to include in the calculation total allocated expenditure or to allocate payments whenever possible. |
(1) Council Decision 2000/597/EC, Euratom of 29 September 2000 on the system of the European Communities’ own resources (OJ L 253, 7.10.2000, p. 42).
(2) Commission working document on calculation, financing, payment and entry in the budget of the correction of budgetary imbalances in accordance with Articles 4 and 5 of Decision 2000/597/EC (Reference 10646/00, Addendum 2 to ‘I/A’ Item Note dated 21 September 2000 from The General Secretariat of the Council to Permanent Representatives Committee/Council, Adoption of the Council Decision 2000/597/EC, Euratom on the system of the EU’s own resources).
(3) As set in Article 2(1)(c) of Decision 2000/597/EC, the VAT assessment bases to be taken into account for own resources should not exceed 50 % of GNP (until 2001)/GNI (from 2002).
(4) See Decision 2007/436/EC, Euratom.
(5) Commission working document on calculation, financing, payment and entry in the budget of the correction of budgetary imbalances in favour of the United Kingdom (Reference 9851/07, Addendum 2 to ‘I/A’ Item Note dated 23 May 2007 from The General Secretariat of the Council to Permanent Representatives Committee/Council, Adoption of the Council Decision 2007/436/EC, Euratom on the system of the EU’s own resources).
CHAPTER 3
Agriculture and Natural Resources
TABLE OF CONTENTS
Introduction
Specific characteristics of the policy group
Audit scope and approach
Regularity of transactions
Effectiveness of systems
Policy area Agriculture and rural development
Systems related to regularity of transactions
Systems related to recoveries and financial corrections
Policy areas Environment, Maritime Affairs and Fisheries, Health and Consumer Protection
Reliability of Commission management representations
Conclusions and recommendations
Conclusions
Recommendations
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INTRODUCTION |
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Table 3.1 — Agriculture and Natural Resources — key information 2010
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Specific characteristics of the policy group |
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Policy area agriculture and rural development |
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Policy areas Environment, Maritime Affairs and Fisheries, Health and Consumer Protection |
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Advances and interim/final payments |
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Significant reduction in payment appropriations — EAFRD |
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Audit scope and approach |
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REGULARITY OF TRANSACTIONS |
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Example of eligibility error — EAGF A payment was made to the national authorities of a Member State of an amount of 4,3 million euro for 1 965 tonnes of intervention butter (19) delivered as a means of payment (bartering) to successful bidders (20) in a second Member State under the EU food aid programme for deprived persons. In exchange for the butter the successful bidders (operators) had offered to supply various types of cheese and other milk products to deprived persons. Governing EU rules (21) provide that the operator is not allowed to put the butter on the market in the Member State where it was placed in intervention but must transfer the product to the second Member State: the objective of this requirement is to prevent the butter returning to the Member State where it was bought into intervention for market management purposes (22). The butter from intervention had been transferred to the border of the second Member State (23) where the EU control documents were cleared. The bulk of the butter, however, was not unloaded but immediately transported back to the original Member State where it was offered for sale on the domestic market in circumvention of the EU rules (24). |
Example of eligibility error — EAGF The Commission considers that the objective of the scheme — which is that food be delivered free of charge to most deprived persons — was fully achieved in this case, and the value of the cheese and butter provided to these persons exceeded the financial charge to the EU budget. It further considers that this case primarily concerns the effectiveness of a specific rule in the 2009 scheme which did not prohibit the re-transfer of the products, as in this case, to the first Member State by another operator, in line with the principle of free movement of goods. Therefore, although the underlying purpose of that provision was not fully achieved, the Commission sees no basis for recovery of the amounts in question. The problem was limited to the 2009 programme since no similar rules were included in the subsequent programmes. The Commission will, however, consider options to enhance the transparency of bartering arrangements, which are an essential component of the aid scheme for most deprived people and which the Commission therefore intends to continue in the future. |
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Example of accuracy error — EAGF The Court found that SPS payments to around 12 500 individual beneficiaries were made on the basis of an outdated LPIS leading to an overall overpayment of 11 million euro. Contrary to EU legislation the national authorities decided to charge the amount to the national budget rather than recovering overpayments from farmers, thus granting unapproved national aid. The individual payments to farmers are overstated and are therefore irregular. |
Example of accuracy error — EAGF The Commission is aware of these deficiencies in the LPIS in question and is pursuing them through conformity clearance procedures. It should be noted however, that according to Article 73(4) of Regulation (EC) No 796/2004, the repayment obligation of the farmer shall not apply if the payment was made by error of the competent authority or of another authority and if the error could not reasonably have been detected by the farmer. In any case, the decision of the national authorities to charge the amounts to the national budget ensured that the EU budget did not fund any undue expenditure. |
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Examples of eligibility error — EAFRD Disregard of procurement rules: An EAFRD project for the construction of a cycle path in which the beneficiary directly awarded part of the works. Due to the absence of a public procurement procedure, part of the payments related to this contract is irregular. Non-respect of specific eligibility criteria: a payment was made under the rural development measure ‘improvement of the economic value of forests’. The aim of the project was the ‘thinning’ of the tree density of the forest in order to improve the quality and thus the value of the timber. Two of the eligibility criteria which the beneficiary had to fulfil were: 1. the density of the trees before thinning should be at least 800 stems per hectare and 2. the works should be carried out between October and January so as to reduce plant health risks. These two eligibility criteria were not met: the density of the trees prior to the thinning exercise was 600, and the works were carried out between March and May. The payment is therefore irregular. |
Examples of eligibility error EAFRD Disregard of procurement rules: The Commission will pursue this case through the conformity clearance procedure. Non-respect of specific eligibility criteria: The Commission observes that the eligibility condition related to the period of the work seems to have been fixed by the regional authorities without a proper assessment of its justification and impact. It recommends to Member States to establish transparent procedures involving all those concerned when fixing at regional level, in addition to national rules, specific eligibility conditions. |
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Example of error in Environment, Maritime Affairs and Fisheries, Health and Consumer Protection DG ENV incorrectly deducted eligible personnel costs for a LIFE III project. This was partly offset by incorrectly accepting salaries paid outside the eligible project period. Furthermore, there was incomplete supporting documentation for the declared expenditure. |
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EFFECTIVENESS OF SYSTEMS |
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Policy area agriculture and rural development |
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Systems related to regularity of transactions |
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3.28. |
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Failing to abide by cross compliance requirements affects the full payment of EU direct aid as the recipients are under legal obligation to respect such requirements (see paragraph 3.6). |
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(I) Administrative procedures and controls to ensure correct payment including quality of databases |
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EAGF |
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Example 3.2 In Spain (Castilla-La Mancha and Extremadura) the Court observed cases of permanent pasture reference parcels which were recorded in the LPIS as being fully eligible although they were only partly covered with grass and the remainder with ineligible elements such as rocks, bush land, dense forest, etc. In Greece, there were cases where entire forests were regarded as permanent pasture and were therefore considered eligible for SPS payments. As a result, the eligible area recorded in LPIS and used for the cross-checks was often overstated. This adversely affected the quality of such cross-checks. |
Example 3.2 The Commission is aware of the situation in Greece and has requested the Greek authorities to remedy the problems. As regards the situation in Spain, the Commission has found similar problems to those referred to by the Court in other autonomous communities. However, the problems found in both Member States do not always systematically lead to irregular payments and where they have done so, the Commission is pursuing the matter through conformity clearance procedures. |
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Example 3.3 Under an EU restructuring plan sugar producers giving up all or part of their quota receive an aid per tonne of sugar quota in 2008/2009 renounced ranging from 218,75 euro (simple renunciation) to 625 euro (in the case of a full dismantling of a production facility). The producer must assign the abandoned quota to production facilities up to a maximum of the production capacity of those facilities. 10 % of the aid must be paid to the growers who as a result lose their delivery rights for sugar beet to the sugar producer. In France a sugar producer was granted aid for dismantling a production facility equivalent to 93 500 tonnes of quota renounced. However, immediately before applying for the aid, the beneficiary had applied for upgrading the production capacity of this facility from 72 000 to 93 500 tonnes and his request had been approved. However, the actual production of the plant had never exceeded 60 000 tonnes. The increase in capacity was artificially created to obtain the higher aid rate of 625 euros/tonne for a quantity of at least 21 500 tonnes. In addition, the 10 % of this aid was paid to growers who had never delivered sugar beet to the dismantled facility. |
Example 3.3 EU rules provide that the competent authority of the Member State decides on the eligibilty of each application for restructuring aid. In the framework of the restructuring plan of the producer referred to by the Court, it was agreed that a quantity of sugar production would be renounced and that this would be managed via full dismantlement of one production site with quota renunciation on a further three sites. EU rules further provide that restructuring plans submitted by applicants must specify for each factory concerned the amount of quota to be renounced, ‘which shall be lower than or equal to the production capacity’ to be fully or partially dismantled. The rules do not specify how the production capacity has to be established and Member States are therefore in principle free to determine which is the most appropriate method. The French authorities have confirmed that the methodology used was to determine the production capacity of a factory, not its effective production at a given moment in time. However, the Commission is pursuing the case in the context of an ongoing conformity clearance procedure with a view to determining if EU rules have been fully respected. |
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EAFRD |
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(II) Control systems based on on-the spot checks |
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Example 3.4 In Bulgaria, Greece, Romania, the Czech Republic and the Netherlands the Court re-performed parcel measurements carried out by national inspectors. The eligible areas reported by the national inspectors were found to be incorrect for 13 out of 43 parcels in Bulgaria, 6 out of 32 parcels in Greece, 12 out of 29 parcels in Romania, 35 out of 67 parcels in the Czech Republic and 16 out of 174 parcels in the Netherlands. However, in the cases examined the financial effects were limited. |
Example 3.4 For Greece the problem is limited to the issue of pasture areas and this issue is followed up under the conformity clearance procedure. |
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(III) System to ensure implementation and control of cross compliance |
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Systems related to recoveries and financial corrections |
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Recovery cases |
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The Commission’s clearance of accounts procedure |
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Validation of paying agencies’ inspection results |
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Policy areas Environment, Maritime Affairs and Fisheries, Health and Consumer Protection |
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Internal Control System of DG ENV |
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RELIABILITY OF COMMISSION MANAGEMENT REPRESENTATIONS |
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CONCLUSIONS AND RECOMMENDATIONS |
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Conclusions |
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Recommendations |
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3.57. |
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3.58. |
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(1) Article 39 of the Treaty on the Functioning of the European Union.
(2) Council Regulation (EC) No 1290/2005 of 21 June 2005 on the financing of the common agricultural policy (OJ L 209, 11.8.2005, p. 1).
(3) With the exception of certain measures such as promotion measures and the school fruit scheme which are co-financed.
(4) The number and value of each farmer’s entitlement was calculated by the national authorities according to one of the models provided for under EU legislation. Under the historical model each farmer is granted entitlements based on the average amount of aid received and area farmed during the reference period 2000 to 2002. Under the regional model all entitlements of a region have the same flat-rate value and the farmer is allocated an entitlement for every eligible hectare declared in the first year of application. The hybrid model combines the historical element with a flat rate amount and, if it is dynamic, the historical component decreases each year until it becomes a predominantly flat rate-system.
(5) Bulgaria, Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Poland, Romania and Slovakia.
(6) This amount entails expenditure in respect of previous programming period as well as pre-accession instruments.
(7) Council Regulation (EC) No 73/2009 (OJ L 30, 31.1.2009, p. 16).
(8) Whilst GAEC standards, as referred to in Annex III to Regulation (EC) No 73/2009, apply in all Member States, Statutory Management Requirements (SMRs) as referred to in Annex II to that Regulation are mandatory only in EU-15. For the EU-10, SMRs are being phased in between 2009 and 2013, and for EU-2 between 2012 and 2014.
(9) According to Articles 66 and 67 of Commission Regulation (EC) No 796/2004 (OJ L 141, 30.4.2004, p. 18), the level of the reduction per SMR or GAEC not complied with can vary between 1 % and 5 % in case of negligence and can lead to full rejection of the aid in case of intentional non-compliance.
(10) See Article 1 and Article 2(a) and (c) of Regulation (EC) No 73/2009.
(11) Number of Paying Agencies: 82 at the beginning of financial year 2010, 81 at the end of financial year 2010 (source: AAR DG AGRI, p. 32).
(12) Regulation (EC) No 614/2007 of the European Parliament and of the Council (OJ L 149, 9.6.2007, p. 1).
(13) The Financial Instrument for the Fisheries Guidance (FIFG) has been replaced by the EFF for the current programming period (2007-2013) — Council Regulation (EC) No 1198/2006 (OJ L 223, 15.8.2006, p. 1).
(14) This amount includes expenditure in respect of previous programming periods, in particular for the FIFG.
(15) Redeployed for other programmes through a Global Transfer of appropriations.
(16) In arriving at its estimate of error, the Court weighted the results of the Dutch and Czech samples of transactions to reflect the share of CAP spending which took place in the Netherlands and the Czech Republic respectively.
(17) The Court calculates its estimate of error from a representative statistical sample. The figure quoted is the best estimate (known as the MLE). The Court has 95 % confidence that the rate of error in the population lies between 0,8 % and 3,8 % (the lower and upper error limits respectively).
(18) Under the Court’s current approach these advance payments were not part of the sampled population. Although irregular these payments have no effect on whether correct amounts are paid to final beneficiaries.
(19) This amount is part of global payments to this Member State of 21,6 million euro for a total quantity of intervention butter of 9 894 tonnes.
(20) Bidders are invited to submit their bids for delivery of a product in exchange for butter from intervention stocks.
(21) Article 5(2) of Commission Regulation (EC) No 1111/2009 (OJ L 306, 20.11.2009, p. 5).
(22) Recital 7 of Regulation (EC) No 1111/2009.
(23) The total amount borne by the EU budget for transporting the 9 894 tonnes of butter amounted to 0,9 million euro.
(24) In its Special Report No 6/2009 on EU food aid for deprived persons the Court already considered that bartering arrangements using intervention stocks are inappropriate, do not always guarantee transparency, are not always cost effective and that they should be discontinued.
(25) Regulation (EC) No 73/2009 and Commission Regulation (EC) No 1122/2009 (OJ L 316, 2.12.2009, p. 65).
(26) Commission Regulation (EC) No 1975/2006 of 7 December 2006 laying down detailed rules for the implementation of Council Regulation (EC) No 1698/2005, as regards the implementation of control procedures as well as cross compliance in respect of rural development support measures (OJ L 368, 23.12.2006, p. 74).
(27) Article 11 of Regulation (EC) No 1975/2006 and Article 24 of Regulation (EC) No 796/2004.
(28) Article 17 of Regulation (EC) No 73/2009 provides that the system for agricultural parcels shall be established on the basis of maps or land registry documents or other cartographic references. Use shall be made of computerised geographical information system techniques, including preferably aerial or spatial orthoimagery, with a homogenous standard guaranteeing accuracy at least equivalent to cartography at a scale of 1:10 000.
(29) Article 2 of Commission Regulation (EC) No 1120/2009 (OJ L 316, 2.12.2009, p. 1) provides that permanent pasture means land used to grow grasses or other herbaceous forage naturally or through cultivation. This means that areas without grass/herbaceous vegetation cover, such as woods, rocks, ponds, paths are not part of the permanent pasture area and as a result, are to be eliminated from the eligible area as defined by Article 34(2) and Article 2(h) of Regulation (EC) No 73/2009.
(30) These failures had only a limited impact in the Netherlands and the Dutch authorities have taken adequate remedial action as of claim year 2010.
(31) For rural development measures under the 2007-2013 programming period, the detailed requirements for administrative checks are defined by Regulation (EC) No 1975/2006.
(32) Referred to in Title II of Regulation (EC) No 1975/2006.
(33) Article 12 of Regulation (EC) No 1975/2006 and Article 30 of Regulation (EC) No 1122/2009.
(34) Special Report No 8/2011.
(35) On a monthly basis for EAGF and a quarterly basis for EAFRD.
(36) Special Report No 7/2010.
(37) See example 3.4.
(38) Greece and Netherlands.
(39) Bulgaria and Romania.
(40) The calculation is based on information provided by all Member States with the exception of Cyprus and Portugal, which were not able to comply with the new reporting standards for the financially important agri-environmental measures. However, even if these two Member States should have higher than average error rates, their impact would in all likelihood not increase the residual error rate for rural development as a whole above the 2 % materiality threshold.
(41) The audit of administrative expenditure is reported in Chapter 7.
Source: 2010 Annual Accounts of the European Union.
ANNEX 3.1
RESULTS OF TRANSACTION TESTING FOR AGRICULTURE
|
2010 |
2009 |
2008 |
2007 |
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EAGF |
RD |
SANCO, ENV, MARE |
Total |
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SIZE AND STRUCTURE OF THE SAMPLE (1) |
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Total transactions (of which): |
146 |
80 |
12 |
238 |
241 |
204 |
196 |
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Advances |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
||||
Interim/Final payments |
146 |
80 |
12 |
238 |
241 |
204 |
196 |
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Proportion of transactions tested found to be: |
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Free of error |
73 % |
(107) |
50 % |
(40) |
33 % |
(4) |
63 % |
(151) |
73 % |
68 % |
69 % |
Affected by one or more errors |
27 % |
(39) |
50 % |
(40) |
67 % |
(8) |
37 % |
(87) |
27 % |
32 % |
31 % |
Analysis of transactions affected by error |
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Analysis by type of expenditure |
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Advances |
0 % |
(0) |
0 % |
(0) |
0 % |
(0) |
0 % |
(0) |
0 % |
0 % |
0 % |
Interim/Final payments |
100 % |
(39) |
100 % |
(40) |
100 % |
(8) |
100 % |
(87) |
100 % |
100 % |
100 % |
Analysis by type of error |
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Non-Quantifiable errors: |
26 % |
(10) |
48 % |
(19) |
50 % |
(4) |
38 % |
(33) |
36 % |
32 % |
36 % |
Quantifiable errors: |
74 % |
(29) |
52 % |
(21) |
50 % |
(4) |
62 % |
(54) |
64 % |
68 % |
64 % |
Eligibility |
3 % |
(1) |
48 % |
(10) |
100 % |
(4) |
28 % |
(15) |
17 % |
20 % |
36 % |
Occurrence |
0 % |
(0) |
0 % |
(0) |
0 % |
(0) |
0 % |
(0) |
2 % |
2 % |
3 % |
Accuracy |
97 % |
(28) |
52 % |
(11) |
0 % |
(0) |
72 % |
(39) |
81 % |
78 % |
61 % |
ESTIMATED IMPACT OF QUANTIFIABLE ERRORS (4) |
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Most likely error rate: |
2,3 % |
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Lower error limit |
0,8 % |
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Upper error limit |
3,8 % |
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(1) These parts of the table refer only to the sample mentioned in the first indent of paragraph 3.16 and exclude transactions examined in the framework of the coordinated audits.
(2) To improve insight into areas with different risk profiles within the policy group, the sample was split up into segments.
(3) Numbers quoted in brackets represent the actual number of transactions.
(4) The results of the examination of the transactions examined in the framework of the coordinated audits are included in the calculation of the error rate.
ANNEX 3.2
RESULTS OF EXAMINATION OF SYSTEMS FOR AGRICULTURE AND NATURAL RESOURCES
3.2.1 Assessment of selected supervisory and control systems (IACS) — EAGF
Member State (Paying agency) |
Scheme |
IACS related Expenditure (= national ceiling — Annex VIII to Regulation (EC) No 73/2009) (1 000 euro) |
Administrative procedures and controls to ensure correct payment including quality of databases |
On-the-spot inspection methodology, selection, execution, quality control and reporting of individual results |
Implementation and control of GAEC/Cross-compliance |
Overall assessment |
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Germany (Niedersachsen) |
SPS |
5 770 254 |
Effective |
Partially effective C |
Partially effective b |
Effective |
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Germany (Sachsen) |
SPS |
5 770 254 |
Effective |
Effective |
Partially effective b |
Effective |
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Spain (Castilla-La Mancha) |
SPS |
4 858 043 |
Partially effective 1, 2, 3, 4 |
Partially effective A, B |
Effective |
Partially effective |
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Spain (Extramadura) |
SPS |
4 858 043 |
Partially effective 1, 4, 5, 6 |
Partially effective C |
Partially effective a |
Partially effective |
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United Kingdom (Wales) |
SPS |
3 985 895 |
Effective |
Partially effective B, D |
Partially effective b |
Effective |
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The Netherlands |
SPS |
853 090 |
Effective |
Partially effective D |
Partially effective a |
Effective |
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N.B. The overall assessment cannot be any better than the assessment of the administrative procedures and controls.
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3.2.2 Assessment of selected supervisory and control systems — Rural development
Member State (Paying agency) |
Administrative procedures and controls to ensure correct payment including quality of databases |
On-the-spot inspection methodology, selection, execution, quality control and reporting of individual results |
Implementation and control of GAEC/Cross-compliance |
Overall assessment |
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France |
Not effective 1, 2, 3 |
Partially effective A, B, C |
Partially effective c |
Not effective |
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Germany (Mecklenburg-Vorpommern) |
Effective |
Effective |
Partially effective b |
Effective |
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Italy (Tuscany) |
Partially effective 2, 3 |
Partially effective A, B, C |
Partially effective a |
Partially effective |
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Latvia |
Not effective 2, 3, 4 |
Effective |
Effective d |
Not effective |
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Poland |
Partially effective 2, 3, 4 |
Effective B |
Partially effective b |
Partially effective |
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Portugal |
Partially effective 3, 4 |
Partially effective B, C, D |
Partially effective a |
Partially effective |
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Romania |
Partially effective 2, 3, 4 |
Partially effective 3, C |
Effective |
Partially effective |
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UK (Scotland) |
Partially effective 1 |
Partially effective 1, C, D |
Partially effective 1, c, d |
Partially effective |
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Czech Republic |
Partially effective 2, 3, 5 |
Partially effective C, E, a |
Partially effective a, c, e, E |
Partially effective |
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Overall assessment of supervisory and control systems
Overall assessment |
2010 |
2009 |
2008 |
2007 |
Partially effective |
Partially effective |
Partially effective |
Partially effective |
ANNEX 3.3
RESULTS OF REVIEW OF COMMISSION MANAGEMENT REPRESENTATIONS FOR AGRICULTURE AND NATURAL RESOURCES
Main DGs concerned |
Nature of declaration given by Director-General (1) |
Reservations given |
Court observations |
Overall assessment of reliability |
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2010 |
2009 |
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DG AGRI |
with reservations |
Serious deficiencies in the IACS in Bulgaria, Portugal and Romania |
The maintenance of the reservations is consistent with the Court's finding in these Member States. The declaration of assurance in DG AGRI's 2009 AAR contained a reservation on the expenditure for rural development measures under Axis 2 (improving the environment and the countryside) of the 2007-2013 programming period. In the 2010 AAR, DG AGRI did not carry over this reservation. The Court found that this reservation should have been maintained because:
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B |
B |
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DG CLIMA |
with reservation |
Reservation on reputational grounds related to a significant security breach identified in the national registries of the EU Emissions Trading System. |
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A |
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DG ENV |
without reservations |
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DG ENV did not maintain its reservation although the error rate of ex-post audits, which caused the reservation in 2009, increased from 5,97 % to 7,14 %. DG ENV justified this with assumptions on the effect of the sampling method on the error rate which could not be proven. |
B |
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DG MARE |
with reservations |
Management and control systems for the FIFG Operational Programmes in Germany Objective 1. |
DG MARE dropped its reservation for UK — Wales and Valleys although the UK authorities did not accept the correction entirely. |
B |
B |
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DG SANCO |
without reservations |
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Although audits of the Court and of IAC revealed significant weaknesses, DG SANCO did not issue a reservation. |
B |
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(1) By reference to the Declaration of Assurance of the Director-General, he/she has reasonable assurance that the control procedures put in place give the necessary guarantees concerning the regularity of transactions.
A: |
the Director-General's declaration and the annual activity report give a fair assessment of financial management in relation to regularity. |
B: |
the Director-General's declaration and annual activity report give a partially fair assessment of financial management in relation to regularity. |
C: |
the Director-General's declaration and the annual activity report do not give a fair assessment of financial management in relation to regularity. |
ANNEX 3.4
FOLLOW-UP OF PREVIOUS RECOMMENDATIONS FOR AGRICULTURE AND NATURAL RESOURCES
Year |
Court Recommendation |
Progress made |
Commission reply |
Court analysis |
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2008 and 2009 |
The Court recommends that the systems weaknesses identified are resolved. In this regard, the most urgent deficiencies to be addressed for the SPS and SAPS are (paragraph 3.73 of the 2009 AR (1)): |
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As of claim year 2010 Commission Regulation (EU) No 146/2010 introduced the requirement for Member States to annually assess the quality of their LPIS. The result of the assessment and eventual remedial actions have to be reported annually to the Commission. As regards the reliability of the entitlement database the new regulation provides that entitlements allocated before 2009 shall be deemed legal and regular as of claim year 2010. |
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This new requirement is a useful step towards a better quality of the LPIS in the Member States. The Court will follow the implementation of this requirement in its future audits. The Court welcomes the new provision which introduces legal certainty. |
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No progress has been made. |
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Council Regulation (EC) No 73/2009 stipulates that from 2010 Member States may establish appropriate objective and non-discriminatory criteria to ensure that no direct payments are granted to a natural or legal person:
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As this requirement has been left to the discretion of the Member States, the Court considers that the risk of payments to claimants who have neither used the land for farming nor maintained it in GAEC still exists. |
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2008 and 2009 |
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No progress has been made. |
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Further efforts are required in the area of rural development to further simplify the rules and conditions (paragraph 3.74 of the 2009 AR and 5.66 of the 2008 AR). |
Simplification received significant attention in 2010. Apart from discussions in the more general context of the debate on the future of the CAP, the following actions took place for pillar 2. Simplification was discussed in six of the eight meetings of the committee on rural development held in 2010. These discussions were based on contributions from the Member States and working documents prepared by the Commission. A key item of these discussions concerned eligibility rules. Such issues were also being considered at the simplification experts group. In September 2010, a seminar took place on ‘ensuring good management of rural development programs 2007-2013’. In addition, a study was launched on ‘red tape for beneficiaries in the second pillar’ aiming to reduce administrative burdens associated with rural development. |
In response to the list of 39 simplification suggestions, put forward by Member States during the Council meeting of April 2009, the Commission carried out the following simplification related activities: First, in October 2010 the Commission adopted a proposal to amend Council Regulation (EC) No 1698/2005 in order to:
The proposal is currently pending before the EP and the Council. Secondly, also in response to the list of 39 simplification suggestions, the provisions on control procedures and cross-compliance have been clarified and precise obligations have been spelled out in the implementing rules, in the context of a recast (Regulation (EU) No 65/2011). Other significant simplification efforts in the area of rural development are indeed targeting the next programming period, which can be explained by the fact that it is difficult to introduce major changes while the programs are running. Finally, once the results of the study on administrative burden in the II Pillar are known, these could be taken into account by the Commission and Member States in order to further reduce the level of red tape to beneficiaries. |
Considerable efforts were undertaken in 2010 to discuss and analyse the simplification of rules and conditions. This will provide a useful input to streamline rural development in the next programming period. This has, however, not yet led to concrete simplification actions in the current programming period. |
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2008 and 2009 |
Effective measures need to be taken, together with the concerned national authorities, to avoid the payment of ineligible expenditure for fisheries projects (paragraph 3.76 of the 2009 AR (2)). |
The controls over eligible expenditure required under the European Fisheries Fund have been strengthened compared with the controls carried out under the previous Financial Instrument for Fisheries Guidance. |
DG MARE Audit activity in 2010 did not detect a material amount of ineligible expenditure. |
The Court will follow the revised control arrangements in its future audits. |
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Internal controls on payments for animal disease eradication and monitoring programmes to the Member States require a clear segregation of functions between the Commission services and the development of appropriate formal control procedures (paragraph 3.76 of the 2009 AR). |
The Commission services clarified the segregation of functions and started a project to simplify the legal base for the programmes. |
Clarifications and simplifications were already introduced into Commission Decision 2010/712/EU on the financial contribution for the eradication programmes. In 2012, the Commission will also propose modifications to Council Decision 90/424/EEC which is the legal base for reimbursing eligible costs under the eradication programmes. |
The Court will follow the revised control arrangements in its future audits. |
(1) Similar recommendations were made in paragraph 5.65 of the 2008 AR.
(2) Similar recommendations were made in paragraph 5.67 of the 2008 AR.
CHAPTER 4
Cohesion, Energy and Transport
TABLE OF CONTENTS
Introduction
Specific characteristics of the policy group
Policy objectives
Policy instruments
Risks to regularity
Audit scope and approach
Regularity of transactions
Effectiveness of systems
Reliability of Commission management representations
Conclusions and recommendations
Conclusions
Recommendations
Follow-up of previous special reports
Follow-up of Special Report No 1/2006 on the contribution of the European Social Fund in combating early school leaving
Follow-up of Special Report No 10/2006 on ex-post evaluations of Objectives 1 and 3 programmes 1994-1999 (Structural Funds)
Follow-up of Special Report No 7/2009 on the management of the Galileo programme's development and validation phase
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INTRODUCTION |
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Table 4.1 — Cohesion, Energy and Transport — Key information 2010
Source: 2010 annual accounts of the European Union. |
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Specific characteristics of the policy group |
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Policy objectives |
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Cohesion policy |
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Energy and Transport |
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Policy instruments |
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Regional policy |
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Employment and Social Affairs |
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Management and control of spending by ERDF, ESF and CF |
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Energy and transport |
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Management and control of energy and transport spending |
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Risks to regularity |
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Audit scope and approach |
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REGULARITY OF TRANSACTIONS |
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One fifth of transactions affected by breaches of public procurement rules |
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Example 4.1 Serious failures to respect public procurement rules
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Ineligible projects account for more than a third of the estimated error rate |
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Example 4.2 Ineligible projects
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More than half of all quantifiable errors are due to the declaration of various ineligible costs |
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Example 4.3 Declaration of various ineligible costs
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Specific weaknesses in the set-up of financial engineering instruments |
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Example 4.4 Compliance errors in relation to financial engineering instruments
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EFFECTIVENESS OF SYSTEMS |
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The work of most of the AAs examined is considered to be partially effective |
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The Commission’s examination of AAs was generally satisfactory |
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RELIABILITY OF COMMISSION MANAGEMENT REPRESENTATIONS |
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CONCLUSIONS AND RECOMMENDATIONS |
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Conclusions |
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Recommendations |
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4.49. |
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4.50. |
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FOLLOW-UP OF PREVIOUS SPECIAL REPORTS |
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Follow-up of Special Report No 1/2006 on the contribution of the European Social Fund in combating early school leaving |
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Follow-up of Special Report No 10/2006 on ex-post evaluations of Objectives 1 and 3 programmes 1994-1999 (Structural Funds) |
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Follow-up of Special Report No 7/2009 on the management of the Galileo programme's development and validation phase |
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(1) In 2010, 32,8 billion euro or 88 % related to the 2007-2013 programming period, while 4,3 billion euro (12 %) were for the 2000-2006 period. For the CF and the ESF, additional prefinancing payments of 0,4 billion euro and 0,37 billion euro respectively were made in 2010 as part of measures to address the financial crisis. Also, prefinancing payments of 0,6 billion euro were made to energy projects under the European Energy Programme for Recovery (EEPR).
(2) IBs are public or private bodies acting under the responsibility of a MA and carrying out duties on their behalf vis-à-vis beneficiaries implementing operations.
(3) Article 39(2) of Council Regulation (EC) No 1260/1999 (OJ L 161, 26.6.1999, p. 1); Articles 91 and 92 of Council Regulation (EC) No 1083/2006 (OJ L 210, 31.7.2006, p. 25).
(4) Article 99 of Regulation (EC) No 1083/2006.
(5) TEN-Transport Executive Agency, Executive Agency for Competitiveness & Innovation and SESAR (Single European Sky Air Traffic Management Research) Joint Undertaking.
(6) This sample comprises 243 payments made to 229 Cohesion projects (ERDF: 143, ESF: 60, CF: 20 and Instrument for Structural Policies for Pre-Accession (ISPA): 6), 6 non-ESF social and employment projects and 8 Energy and Transport projects. 205 of the payments to Cohesion projects relate to the 2007-2013 programming period and 24 to the 2000-2006 period. The sample was drawn from all payments, with the exception of advances which amounted to 3,1 billion euro in 2010.
(7) The Court calculates its estimate of error from a representative statistical sample. The figure quoted is the best estimate (known as the MLE). The Court has 95 % confidence that the rate of error in the population lies between 4,7 % and 10,7 % (the lower and upper error limits respectively).
(8) Further information regarding the Court's approach to the quantification of public procurement errors is set out in Annex 1.1 , paragraphs 1.10 and 1.11.
(9) Article 44 of Regulation (EC) No 1083/2006.
(10) JEREMIE is an initiative of the Commission together with the European Investment Bank (EIB) and the European Investment Fund (EIF) to support additional financing sources for micro, small and medium-sized enterprises.
(11) JESSICA is an initiative developed by the Commission and the EIB to make repayable investments (in the form of equity, loans or guarantees) in urban development. These investments are delivered to projects via Urban Development Funds and, if required, Holding Funds.
(12) 81 AAs for 317 ERDF and CF OPs and 94 AAs for 117 ESF OPs. 63 of these AAs are common for all three funds.
(13) In view of the state of progress of the programme, Recommendations 2(b), 3, 4(c), 4(d) and 5 were not included to this follow-up.
(14) A lower error limit of 11-12 % compared to 4,7 % in 2010.
(15) Regulation (EC) No 683/2008 of the European Parliament and of the Council of 9 July 2008 on the further implementation of the European satellite navigation programmes (EGNOS and Galileo).
(16) The audit of administrative expenditure is reported in chapter 7.
ANNEX 4.1
RESULTS OF TRANSACTION TESTING FOR COHESION, ENERGY AND TRANSPORT
|
2010 |
2009 |
2008 |
2007 |
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Employment and social affairs |
Regional policy |
Energy and Transport |
Total |
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ESF |
Other social matters |
ERDF |
CF |
ISPA |
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SIZE AND STRUCTURE OF THE SAMPLE |
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Total transactions (of which): |
60 |
6 |
143 |
20 |
6 |
8 |
243 |
209 |
189 |
217 |
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Advances |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
20 |
9 |
10 |
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Interim/Final payments |
60 |
6 |
143 |
20 |
6 |
8 |
243 |
189 |
180 |
207 |
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Proportion of transactions tested found to be: |
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Free of error |
70 % |
(42) |
100 % |
(6) |
47 % |
(67) |
25 % |
(5) |
17 % |
(1) |
37 % |
(3) |
51 % |
(124) |
67 % |
58 % |
50 % |
Affected by one or more errors |
30 % |
(18) |
0 % |
(0) |
53 % |
(76) |
75 % |
(15) |
83 % |
(5) |
63 % |
(5) |
49 % |
(119) |
33 % |
42 % |
50 % |
Analysis of transactions affected by error |
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Analysis by type of expenditure |
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Advances |
n.a. |
n.a. |
n.a. |
n.a. |
n.a. |
n.a. |
n.a. |
3 % |
0 % |
1 % |
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Interim/Final payments |
97 % |
100 % |
99 % |
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Analysis by type of error |
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Non-Quantifiable errors: |
39 % |
(7) |
0 % |
(0) |
55 % |
(42) |
93 % |
(14) |
80 % |
(4) |
20 % |
(1) |
57 % |
(68) |
50 % |
42 % |
33 % |
Quantifiable errors: |
61 % |
(11) |
0 % |
(0) |
45 % |
(34) |
7 % |
(1) |
20 % |
(1) |
80 % |
(4) |
43 % |
(51) |
50 % |
58 % |
67 % |
Eligibility |
91 % |
(10) |
0 % |
(0) |
100 % |
(34) |
100 % |
(1) |
100 % |
(1) |
75 % |
(3) |
96 % |
(49) |
69 % |
89 % |
78 % |
Occurrence |
9 % |
(1) |
0 % |
(0) |
0 % |
(0) |
0 % |
(0) |
0 % |
(0) |
0 % |
(0) |
2 % |
(1) |
0 % |
0 % |
12 % |
Accuracy |
0 % |
(0) |
0 % |
(0) |
0 % |
(0) |
0 % |
(0) |
0 % |
(0) |
25 % |
(1) |
2 % |
(1) |
31 % |
11 % |
10 % |
ESTIMATED IMPACT OF QUANTIFIABLE ERRORS |
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Most likely error rate: |
7,7 % |
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Lower error limit |
4,7 % |
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|
|
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Upper error limit |
10,7 % |
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|
|
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n.a.: not applicable. |
(1) To improve insight into areas with different risk profiles within the policy group, the sample was split up into segments.
(2) Numbers quoted in brackets represent the actual number of transactions.
n.a.: not applicable.
ANNEX 4.2
RESULTS OF EXAMINATION OF SYSTEMS FOR COHESION, ENERGY AND TRANSPORT
Assessment of selected supervisory and control systems: Audit authorities (AA) — Compliance with key regulatory requirements and effectiveness in ensuring the regularity of operations
Key requirements tested by the Court |
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Audit Authority ERDF/ESF — France |
Audit Authority ERDF/ESF — UK/Northern Ireland |
Audit Authority ERDF/ESF — Italy (Sardinia) |
Audit Authority ERDF/CF — Poland |
Audit Authority ERDF/CF — Spain (Andalucia and Valencia) |
Audit Authority ESF — Poland |
Audit Authority ESF — Spain (Andalucia) |
Audit Authority ESF — Germany (Bund) |
General aspects |
The set up of the management and control systems of the operational programme provides for an appropriate definition, allocation and separation of functions within the AA and between the AA and other competent management and control bodies |
Compliant |
Compliant |
Partially compliant |
Compliant |
Compliant |
Compliant |
Partially compliant |
Partially compliant |
Audit manual coverage |
Existence of audit manual (for both audits on systems and audits on operations), which is in accordance with internationally accepted audit standards and clearly describes the audit procedures |
Compliant |
Partially compliant |
Compliant |
Compliant |
Compliant |
Compliant |
Compliant |
Compliant |
Audit methodology for systems audit |
The audit work carried out by the AA to evaluate the effective functioning of the management and control system is based on a checklist that contains questions that verify key requirements of the applicable regulations (specified for MAs, IBs and CAs) and appropriate assessment criteria for each of these key requirements |
Compliant |
Compliant |
Compliant |
Compliant |
Compliant |
Compliant |
Compliant |
Compliant |
Review of audits on systems |
The AA’s audit plan had been implemented in accordance with the approved audit strategy for the period, audits on systems were carried out in accordance with the methodology established by the AA and all phases of the audits on systems were properly documented |
Effective |
Partially effective |
Partially effective |
Effective |
Effective |
Effective |
Effective |
Effective |
Sampling methodology for audits of operations |
An appropriate sampling methodology for audits of operations has been specified to draw the sample of operations to be audited for the period under review |
Partially compliant |
Compliant |
Partially compliant |
Compliant |
Compliant |
Compliant |
Partially compliant |
Partially compliant |
Drawing of sample for audits of operations |
The sampling methodology for audits of operations has been used as specified to draw the sample of operations to be audited for the period under review |
Effective |
Effective |
Not effective |
Effective |
Effective |
Effective |
Effective |
Partially effective |
Audit methodology for audits of operations |
The audit work carried out to examine the regularity of operations is based on a checklist that contains questions that verify the requirements of the applicable regulation at a sufficient level of detail to address the associated risks |
Partially compliant |
Partially compliant |
Partially compliant |
Partially compliant |
Partially compliant |
Compliant |
Compliant |
Partially compliant |
Review of audits of operations |
The audits of operations had been implemented in accordance with the sample selected for the period, were carried out in accordance with the methodology established by the AA and all phases of the audits of operations were properly documented |
Effective |
Partially effective |
Not effective |
Effective |
Partially effective |
Effective |
Effective |
Effective |
Re-performance of audits on operations |
A re-performance by the Court of the AA’s audits of operations resulted in findings similar to those of the AA, as reported to the Commission |
Effective |
Partially effective |
Partially effective |
Effective |
Partially effective |
Effective |
Effective |
Partially effective |
Annual control report and audit opinion |
The annual control report and audit opinion were established in accordance with the regulatory requirements and the guidance agreed between the Commission and the Member States, and the report and opinion are consistent with the results of the audits on systems and audits on operations carried out by the AA |
Compliant |
Partially compliant |
Partially compliant |
Compliant |
Compliant |
Compliant |
Partially compliant |
Partially compliant |
Overall assessment |
|
Effective |
Partially effective |
Not effective |
Effective |
Partially effective |
Effective |
Partially effective |
Partially effective |
ANNEX 4.3
RESULTS OF REVIEW OF COMMISSION MANAGEMENT REPRESENTATIONS FOR COHESION, ENERGY AND TRANSPORT
Main DGs concerned |
Nature of declaration given by Director-General (2) |
Reservations given |
Court observations |
Overall assessment of reliability |
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2010 |
2009 |
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REGIO |
with a reservation |
Reservation on the legality and regularity of the underlying transactions for expenditure declared for ERDF and CF in several Member States, based on deficiencies in key elements of the management and control systems for both funds which have not been subject to sufficient control and corrective measures by the national authorities. For the 2000-2006 period, the reservation concerns 21 OPs in six Member States (INTERREG excepted) and two CF projects in two Member States and is quantified at 679,4 million euro or 15,8 % of the interim payments of the year. For this programming period, the EU contribution at risk is estimated in the range between 32,5 and 68,8 million euro, i.e. between 0,8 % and 1,5 % of the interim payments of the year (4 297,3 million). For the 2007-2013 period, the reservation concerns 69 OPs in 10 Member States and 11 ETC OPs. This is quantified at 3 417,1 million euro or 13,4 % of the interim payments of the year. For this programming period, the EU contribution at risk is estimated in the range between 203,7 and 423,9 million euro, i.e. between 0,8 % and 1,6 % of the interim payments of the year (25 527,8 million euro). |
The Court considers that the Director-General's declaration and the Annual Activity Report are as a whole established according to the applicable Commission guidelines. The Court recognises that DG REGIO provided additional information as compared to 2009 regarding disclosure of amounts at risk per OP. The Court notes however that its own error rate is significantly higher than the reservations quantified by the Director-General. DG REGIO issued reservations with a quantifiable impact for both programming periods. The quantification is based on the assumption that, whenever the estimated amount at risk is below the 5 % payment retention in place for any operational programme, the controls in place for the OP closure would appropriately mitigate the risk. The Court considers that this approach may lead to an underestimation of the amounts at risk. Finally, 2 823 million euro of financial corrections were reported as implemented in 2010. However, concerning in particular closures of 2000-2006 OPs, not all validation and verification procedures were completed at year end. Indeed, in the Commission’s note 6 to the 2010 accounts only 563 million euro were classified as implemented (see also Annex 1.2 , Point 3). |
B |
A |
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EMPL |
with a reservation |
Reservation on the legality and regularity of the underlying transactions for expenditure declared for specific ESF OPs in several Member States, based on deficiencies in key elements of the management and control systems for OPs which have not been subject to sufficient control and corrective measures by the national authorities. For the 2000-2006 period, the reservation concerns 13 OPs in four Member States and is quantified as 0,4 million euro or 0,14 % of the interim payments of the year. For the 2007-2013 period, the reservation concerns 30 OPs in nine Member States and is quantified as 71,6 million euro or 1,13 % of the interim payments of the year. |
The Court considers that the Director-General's declaration and the Annual Activity Report are as a whole established according to the applicable Commission guidelines. The Court recognises that DG EMPL provided additional information as compared to 2009 regarding disclosure of amounts at risk per operational programme. DG EMPL issued reservations with a quantifiable impact for both periods. The quantification is based on the assumption that, whenever the estimated amount at risk is below the 5 % payment retention in place for any operational programme, the controls in place for the OP closure would appropriately mitigate the risk. The Court considers that this approach may lead to an underestimation of the amounts at risk. |
A |
A |
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MOVE |
with a reservation |
Reservation concerning the rate of residual errors with regard to the accuracy of cost claims in Research Sixth Framework Programme (FP6) contracts: the residual error rate observed by ex-post controls is higher than the control objective (2 %). The residual error rate of 4,42 % corresponds to an amount of 1,15 million euro potentially at risk, representing 1,95 % of the FP6 payments and 0,5 % of total payments made by DG MOVE in 2010. |
The Court considers that the Director-General's declaration and the Annual Activity Report are established according to the applicable Commission guidelines. |
A |
A (1) |
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ENER |
with a reservation |
Reservation concerning the rate of residual errors with regard to the accuracy of cost claims in Research Sixth Framework Programme (FP6) contracts: the residual error rate observed by ex-post controls is higher than the control objective (2 %). The residual error rate of 4,42 % corresponds to an amount of 1,7 million euro potentially at risk, representing 1,12 % of the FP6 payments and 0,15 % of total payments made by DG ENER in 2010. |
The Court considers that the Director-General's declaration and the Annual Activity Report are established according to the applicable Commission guidelines. |
A |
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(1) Annex 5.3 to the 2009 Annual Report presented the results of the review of DG TREN’s Annual Activity Report. DG TREN was split into DG MOVE and DG ENER in February 2010.
(2) By reference to the declaration of assurance of the Director-General, he/she has reasonable assurance that the control procedures put in place give the necessary guarantees concerning the regularity of transactions.
A: |
the Director-General's declaration and the Annual Activity Report give a fair assessment of financial management in relation to regularity. |
B: |
the Director-General's declaration and Annual Activity Report give a partially fair assessment of financial management in relation to regularity. |
C: |
the Director-General's declaration and the Annual Activity Report do not give a fair assessment of financial management in relation to regularity. |
ANNEX 4.4
RECOMMENDATIONS FOLLOW-UP TABLE FOR COHESION, ENERGY AND TRANSPORT
Year |
Court Recommendation |
Progress made |
Commission reply |
Court analysis |
Cohesion: |
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2009 |
The Commission should monitor compliance with the eligibility requirements for EU funding, including the correct application of the EU and national public procurement rules (see the 2009 Annual Report, paragraph 4.38) |
Audits on the implementation of public procurement rules are currently carried out under a specific enquiry for the Cohesion Fund for 2000-2006 projects and an enquiry for the 2007-2013 OPs. The Commission has also issued guidance and provided training to Member States' managing and audit authorities (e.g. ‘train the trainers seminars’, bilateral training sessions for MAs and AAs). In January 2011 the Commission has published a Green Paper on the modernisation of EU public procurement policies (COM(2011) 15 final). The Commission's evaluation of the EU public procurement legislative framework is expected to be finalised in 2011. |
The Commission considers that this recommendation has been implemented through the various ongoing actions as described by the Court. See Commission reply to paragraph 4.50, Recommendation 1. Please see also the Commission replies to paragraphs 4.20, 4.21 and 4.29 on the provision of training and guidance. |
The Court considers that the recommendation is implemented with regard to training and guidance, as long as the Commission continues its current policy. The Court will follow up the specific measures specified for public procurement (see also Opinion No 4/2011 (1)). |
Cohesion: |
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2008 |
The Commission should ensure, through its supervision, an effective functioning of the national management and control systems (see the 2008 Annual Report, paragraphs 6.37(a) and (c); the 2009 Annual Report, paragraph 4.37(c)) |
Subject to general provisions set out in the Structural funds Regulations, eligibility rules are specified at national and, in some cases, OP level. The Commission has reviewed changes to such rules introduced by Member States in 2010. The Commission examined Audit Authorities for the 2007-2013 OPs in 2010 and continued to carry out specific audits of systems and projects. The 2010 AARs provide a detailed assessment per 2007-2013 OP, mainly based on the information contained in the Annual Control Reports established by the AAs and the audit work carried out by the Commission. |
The Commission considers that this recommendation has been implemented (see Commission reply to paragraph 4.50, Recommendation 2). Please see also the Commission replies to paragraphs 4.42, 4.43 and 4.44 regarding its examination of AAs. DG REGIO and DG EMPL consider they have properly followed up all reservations expressed for the 2007-2013 programmes in their respective AARs. |
The Court considers that the recommendation is implemented, as long as the Commission continues its current policy. |
Cohesion: |
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2008 |
The Commission should encourage national authorities to rigorously apply the corrective mechanisms prior to certification of the expenditure to the Commission (see the 2008 Annual Report, paragraphs 6.37(b) and (d); the 2009 Annual Report, paragraphs 4.37(a) and (b)) |
The Commission has increased its use of the provision in the 2007-2013 Structural Funds Regulations to interrupt or suspend payments when there is evidence to suggest significant deficiencies (or irregularities not yet corrected) in an audit report. This provides a further incentive to Member States to take all necessary corrective actions in a timely manner. The Commission also introduced changes to the reporting by Member States of recoveries and withdrawals under the 2007-2013 programmes (Annex XI to Commission Regulation (EC) No 1828/2006). Detailed information on payment interruptions and suspensions is disclosed in the 2010 AAR for both DG REGIO and DG EMPL. |
The Commission considers that this recommendation has been implemented (see Commission reply to paragraph 4.50, Recommendation 2). |
The Court considers that the recommendation is implemented, as long as the Commission continues its current policy. |
(1) Opinion No 4/2011 on the Commission’s Green Paper on the Modernisation of Public Procurement Policy (OJ C 195, 2.7.2011, p. 1).
ANNEX 4.5a
FOLLOW-UP OF SPECIAL REPORT No 1/2006: ANALYSIS OF ACTIONS TAKEN TO ADDRESS THE COURT’S RECOMMENDATIONS
Initial recommendations |
Overall assessment of actions taken |
Remaining or additional weaknesses |
Commission’s reply |
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These recommendations have been mostly implemented, albeit several years after the Court’s Report. In June 2011, the Council adopted a Recommendation on ‘Policies to reduce early school leaving’ which aims to help policy makers in Member States understand the phenomenon and factors contributing to it. General guidance concerning the Structural Funds is also provided to Member States. |
The main corrective action aimed specifically at early school leaving, which was adopted by the Council only in 2011, has not yet produced significant effect. |
In the context of the Europe 2020 Strategy, the Commission launched in early 2011 an action plan to reduce early school leaving including a proposal for a Council Recommendation (approved in June 2011) on policies against early school leaving. This recommendation contains guidelines to help Member States develop comprehensive and evidence-based policies to reduce early school leaving. The work on the action plan started effectively already in 2006 with establishing the cluster on ‘Access and Social Inclusion in Lifelong Learning’ and with defining the work programme of this cluster. The action plan as adopted by the Commission in 2011 is based on the cluster's work and several comparative studies on early school leaving in Europe (conducted between 2006 and 2009). |
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This recommendation has not yet been implemented. For the next programming period, the Commission expects that the added value of the EU financing will also be subject to analysis in its audits (1). |
The Commission has not yet expanded the scope of its audit activity to also analyse the added value of EU financing. |
Within the preparation of the draft regulations for the next programming period, it is envisaged to put a greater emphasis on the output, funding mechanisms being, to a large extent, aimed at rewarding output/outcome rather than input. A part of the Commission’s audit resources would therefore need to be re-oriented towards performance audit instead of the current compliance/financial audits. |
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This recommendation has been implemented only insofar as the Commission has made a statement of principle. The general provisions on programming and ex-ante evaluation for 2007-2013 address in principle the Court’s recommendation. The issue has been also addressed in the context of the recent Budget review. However, a clear link between the specific priorities and objectives regarding early school leaving and the level of funding allocated is still not present in the Operational Programmes. |
The issue remains relevant for the next financial framework. |
ESF operational programmes contain a clear link between the retained priorities, the objectives to be achieved, which are also translated into quantified targets at priority axis level, as foreseen in the regulatory framework and the level of funding required for achieving the objectives. |
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This recommendation has been largely implemented. In the context of the Europe 2020 strategy, four 4 after the publication of the Special Report, Member States agreed to set national targets, taking into account their starting position and national circumstances. |
One Member State has not defined its specific target. |
The preparation of the programming period post-2013 was the first opportunity for the Commission to implement this recommendation. Within the 2020 Strategy, the definition of national targets is the product of a dialogue with the European Commission in order to check consistency with EU headline targets. Each country sets its national targets in its national reform programme which is due in April each year. All Member States, except the UK, have set national targets on early school leaving in the 2011 National Reform Programmes submitted to the Commission in April/May 2011). |
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This recommendation has been implemented. Under the Open Method of Coordination, a group of experts from Member States specialising in ‘Access and Social Inclusion in Education’ was set up within the work programme ‘Education and Training 2010’, adopted in 2003. Since 2006, the group conducted peer-learning activities in different Member States. The Commission has recently proposed the setting-up of a new thematic working group on early school leaving. |
The new thematic group on the topic of early school leaving has yet to be set up. |
Under the Open Method of Coordination, a ‘Cluster’ of experts from Member States specialising in ‘Access and Social Inclusion in Education’ was set up within the work programme Education and Training 2010, adopted by the Council in 2003. The Commission will set up a European-level expert group (in the framework of EU 2020). This group will continue the work of the former cluster on ‘Access and Social Inclusion in Lifelong Learning’, focussing on early school leaving and further developing the existing guidance documents. |
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This recommendation has been implemented. Since the publication of the Special Report, Member States have organised conferences on the integration of young people into the labour market, including early school leaving, where new models have been presented. |
The Commission should continue to encourage actions promoting innovative use of ESF. |
The Commission continues its activities to promote the innovative use of ESF. |
(1) This orientation is reflected in the Communication of the Commission of 19 October 2010 on the EU Budget review (COM(2010) 700 final) and in the 5th report on Economic, Social and Territorial Cohesion.
ANNEX 4.5b
FOLLOW-UP OF SPECIAL REPORT No 10/2006: ANALYSIS OF ACTIONS TAKEN TO ADDRESS THE COURT’S RECOMMENDATIONS
Initial recommendations (Paragraphs 119 to 123 of the Special Report) |
Overall assessment of actions taken (2000-2006 ex-post evaluations) |
Remaining or additional weaknesses (upcoming 2007-2013 ex-post evaluations) |
Commission’s reply |
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Recommendation 1 |
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A reappraisal of the scope, procedures and approach used in ex-post assessments needs to be done with some urgency, before the next batch of contracts for ex-post evaluations are issued (…). |
For both DGs, there has been a shift from an approach analysing Member States to one based on key thematic areas in order to better focus on strategic issues in a Union of 27 Member States. For DG EMPL, analysis is summarised via key evaluation questions. |
DG REGIO’s analysis should be summarised according to issues of strategic interest to stakeholders. Energy should be included as a theme. The Europe 2020 goals should be taken into account. |
The ex-post evaluation 2000-2006 includes a synthesis report that brings together essential findings from the significant number of evaluations undertaken as part of the ex-post exercise. For a future ex-post evaluation the most important features of the current programming period will be taken into account. DG REGIO recalls that the Europe 2020 strategy was adopted only in 2010, several years after the current programmes had been approved by the Commission. The issue of renewable energy has been addressed in a recent work undertaken by DG REGIO. |
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Recommendation 2 |
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To improve the evaluation process, better quality control procedures need to be introduced and effectively applied by the Commission (…). Such procedures should ensure: |
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A series of measures targeted to entities carrying out ex post were taken. |
Further efforts are required to improve the availability, relevance and reliability of information concerning project performance. |
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Both DGs included key evaluation considerations in the 2000-2006 Terms of Reference. |
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Appropriate resources were allocated by both DGs to ex-post evaluation. |
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Both DGs improved quality control by issuing guidance notes, allocating more resources, setting up panels of independent experts, and holding regular steering group meetings. |
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Recommendation 3 |
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Particular attention needs to be reserved to the choice of appropriate techniques for assessing and measuring the economic impact (…). |
DG REGIO used two macro-economic models and introduced counterfactual analysis as a method of impact evaluation (1). |
The current practice of using macro-economic models derived GDP growth for measuring the success of Cohesion Policy should be complemented by the use of social and environmental indicators. DG REGIO should expand its use of counterfactual analysis and DG EMPL should introduce it. The Commission should support its use by Member States. |
DG REGIO agrees that macroeconomic models will continue to play an important role in understanding the effects of cohesion policy. DG REGIO is looking into the question which models are best suited to reflect the range of its policy objectives. DG REGIO agrees on the further expansion of the use of counterfactual analysis. DG EMPL works on counterfactuals is ongoing (see reply to paragraph 4.56). |
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Recommendation 4 |
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Greater emphasis needs to be placed on establishing linkages between the ex-post assessments and thematic studies and to ensure that results are consistent with each other. |
See Recommendation 1. |
See Recommendation 1. |
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Recommendation 5 |
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A number of recommendations for future assessments more particularly for Objective 1 Regions may be made, namely: |
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This issue mainly concerns Regional Policy. DG REGIO carried out an assessment of the impact of Structural Funds on private sector spending, however, this was limited to investments in research and development. |
DG REGIO should continue to explore how private sector investment can be stimulated. |
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In the 2007-2013 period, an emphasis was put on financial engineering techniques in the fields of venture capital, loans and interest rate subsidies and urban regeneration. |
The Commission should further explore the potential for providing finance via instruments other than grants. |
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DG REGIO set up a database of infrastructure unit costs but it is not yet in use. |
DG REGIO should complete the unit costs database. DG EMPL should encourage Member States to establish databases about training project unit cost and key features. |
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DG REGIO commissioned a Workpackage on management and implementation systems which it intends to take into account for the design of the period starting in 2014. |
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Although mid-term evaluations were mandatory, Member States’ evaluations were mostly compliance-oriented rather than outputs- and outcomes-oriented. |
The Commission should require Member States make performance driven internal evaluations, and, to this end, facilitate the exchange of good practice. |
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(1) Counterfactual analysis is a comparison between what actually happened and what would have happened in the absence of the intervention.
ANNEX 4.5c
FOLLOW-UP OF SPECIAL REPORT No 7/2009: ANALYSIS OF ACTIONS TAKEN TO ADDRESS THE COURT’S RECOMMENDATIONS
Initial recommendations |
Overall assessment of actions taken |
Remaining or additional weaknesses |
Commission’s reply |
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Recommendation 1 |
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To gain authority as a programme manager, the Commission should adapt its resources and its legal and financial instruments to the specificities of the development and management of an industrial programme: |
This recommendation has been partially implemented. |
There are a number of decisions that are important for the success of the programme which have not yet been taken (namely, a clear definition of strategic and operational objectives, and overall programme financing and cost-sharing models). |
The European Commission, being responsible for the management of the GNSS programmes, put in place the required legal and technical framework to implement it, taking into account the Court's recommendations. In the framework of the preparations for the new Multiannual Financial Framework (MFF), the Commission will present a new legislative proposal for further implementation of the Galileo and EGNOS programmes. It will include, inter alia, the framework for their governance and an updated definition of the budgetary resources needed. The Transport Council conclusions of March 2011, as well as the European Parliament Resolution of June 2011, both support the financing of the programmes from the EU budget. An extrapolation of the programmes' budget, without knowing the future financing public support, does not provide an adequate overall image for drawing conclusions about the total net financial costs. |
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Recommendation 2 |
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The Commission should urgently clarify the programme’s political objectives and translate them into strategic and operational objectives that will provide Galileo with a solid roadmap from now until beyond full deployment. For example:
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This recommendation has not been implemented. The Commission has requested Member States to clarify the programme’s political objectives (particularly the Public Regulated Services and Safety-of-Life services) so that they can be translated into final strategic and operational objectives. However, a common position has not yet been agreed and this is delaying important decisions for the detailed planning of the programme. |
The programme’s political objectives should be urgently clarified and translated into strategic and operational objectives. |
The Commission considers that the overall political and strategic objectives for the Galileo programme have been clarified with Regulation (EC) No 683/2008 (1). The operational objectives, as Public Regulated Service, Safety-of-Life service, Search and Rescue service and Commercial Service are currently under preparation and will be adopted in 2011 and 2012. |
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Recommendation 4 |
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The Commission should ensure that the following issues are addressed: |
This recommendation has been partially implemented. |
In order to allow technical testing, the final specification of Galileo services needs to be fixed. The legal and regulatory framework should be completed, including a third-party liability policy. |
In the framework of the preparations for the new Multiannual Financial Framework (MFF), the Commission will present a new legislative proposal for further implementation of the Galileo and EGNOS programmes. It will include, inter alia, the framework for their governance and an updated definition of the budgetary resources needed. The detailed regulations are currently under preparation and will be adopted by the end of 2011 and 2012. |
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(1) Regulation (EC) No 683/2008 of the European Parliament and of the Council of 9 July 2008 on the further implementation of the European satellite navigation programmes (EGNOS and Galileo).
CHAPTER 5
External aid, Development and Enlargement
TABLE OF CONTENTS
Introduction
Specific characteristics of the policy group
EuropeAid
DG RELEX
DG ELARG
DG ECHO
Audit scope and approach
Regularity of transactions
Effectiveness of systems
DG ELARG
DG ECHO
Reliability of Commission management representations
Conclusions and recommendations
Follow-up of Special Report No 9/2008 on the effectiveness of EU support in the area of freedom, security and justice for Belarus, Moldova and Ukraine
Introduction
Follow-up of the recommendations
Conclusions
Follow-up of Special Report No 10/2008 on EC Development Assistance to Health Services in Sub-Saharan Africa
Introduction
Follow-up of the recommendations
Recommendations on the allocation and prioritisation of resources
Recommendations on the management and effectiveness of instruments
Conclusions
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INTRODUCTION |
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Specific characteristics of the policy group |
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EuropeAid |
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Table 5.1 — External Aid, Development and Enlargement — key information 2010
Source: 2010 annual accounts of the European Union. |
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DG RELEX |
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DG ELARG |
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DG ECHO |
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Audit scope and approach |
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REGULARITY OF TRANSACTIONS |
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Example 5.1 Works carried out outside the implementation period (Serbia) One of the transactions audited was an interim payment made under a works contract for the rehabilitation and extension of a waste water treatment plant. The operational deadline for the works to be completed was 5 March 2009. However, the works related to the audited payment were carried out outside the implementation period established by the contract and in a different period than the one mentioned in the expenditure certificate. The payment of over 800 000 euro is therefore considered ineligible. Interim payments higher than foreseen in the contract The special conditions of a contract for technical on-site assistance in Ukraine stipulated that interim payments should not exceed 90 % of the total value of the contract. The Commission made interim payments up to 96 % of the amount contracted, leading to an overpayment of 309 478 euro. |
Example 5.1 Works carried out outside the implementation period (Serbia) In case of works where at the end of the contractual deadline the Engineer considers that the works have not been carried out or do not meet the required specifications, the employer is entitled to ask for the completion of the works. In this specific case, the Commission retained the outstanding payments until the works met the standards required in the contract. Interim payments higher than foreseen in the contract The Commission accepts that a calculation error was made. However this payment — which brought the total of advances to 96 % rather than the correct 90 % ceiling — would have no residual financial impact on the EC Budget as, at the final payment stage, the payment would be reduced by a commensurate amount or a recovery initiated (supported by the bank’s financial guarantee). This example reflects the multiannuality of the Commission’s control architecture. |
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Example 5.2 Errors in a final payment not detected by Commission controls For a final payment to a project providing support to rural families in the production and marketing of organic cashew nuts in Nicaragua, there were several types of errors concerning the expenditure declared: amounts declared in the final report not documented in the accounting records; missing invoices and proofs of payment; non-compliance with procurement rules and missing certificates of origin. Based on the errors found, 157 629,89 euro or 21,7 % of the total costs of the project were considered to be ineligible. None of these errors were detected by the Commission at the stage of final payment. |
Example 5.2 Errors in a final payment not detected by the Commission In the example given EuropeAid’s planned controls had not yet finished. The contract in question had already been earmarked for an additional ex-post audit (on top of the mandatory auditors’ expenditure verification at final payment) in the 2010 Audit Plan based on the Delegation’s own risk assessment (in 2009). This audit (which found 0,28 million euro of expenditure to be ineligible) had not yet been finalised at the time of the Court’s visit (which found 0,16 million euro to be ineligible). A recovery process has already been initiated by the Delegation based on its own audit as well as the ECA visit. This example demonstrates both the substantial coverage of EU controls (given that this 0,7 million euro project received three sets of auditors for the EU during 2009/2010) and the effectiveness of EuropeAid’s mandatory audit methodology including the annual risk assessment. |
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EFFECTIVENESS OF SYSTEMS |
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DG ELARG |
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Ex-ante controls |
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Internal audit |
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DG ECHO |
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Example 5.3 Extended eligibility criteria The general conditions for contribution agreements under the FAFA and FPA accept as eligible some expenditure incurred outside the action’s specific implementation period. Fixed assets (e.g. cars) financed under one project are eligible even though they may be mainly used for a subsequent EU project. Asset depreciation can also be eligible, which means that controls are necessary to address the risk that the fixed asset itself has not been covered by another source of funds. Therefore it can be difficult to know the total real costs of a specific action. Flexible interpretation of eligibility for co-financed actions In the case of multi-donors actions implemented by UN organisations, the Commission applies the ‘notional approach’. Under this approach, the Commission’s contribution — generally a fixed amount — is paid in full as long as there is sufficient eligible expenditure to cover it and the overall objectives of the action have been attained. If another donor has the same eligibility conditions than the Commission, there might be a risk that the same expenditure is presented twice (double-eligibility risk), to the Commission and to the other donor. |
Example 5.3 Extended eligibility criteria Expenditures incurred outside the action specific implementation period relate mainly to the constitution of food or humanitarian equipment stocks, which is considered by the Commission as an acceptable practice in order to ensure rapid initiation and distribution of humanitarian aid. As regards the purchase at a late stage of a project is concerned, this is due to the very nature and short duration of humanitarian action. However, in each and every case where there is a purchase near the end of a project, the facts are examined on a case by case basis, including the dimension of donation/transfer at the end of the running project, in order to assess whether the purchase is necessary and reasonable. Flexible interpretation of eligibility for co-financed actions The notional approach has been developed to guarantee that the legal requirements applicable to EU funding in external actions are met while reconciling the obligation to spend EU funds in the most efficient way, in accordance with the principle of sound financial management. The Commission mitigates the mentioned risk by its coordinating role in the humanitarian field, the presence of its experts in the field and the review of global action’s financial overview provided by the UN organisation. |
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RELIABILITY OF COMMISSION MANAGEMENT REPRESENTATIONS |
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CONCLUSIONS AND RECOMMENDATIONS |
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Conclusions |
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Recommendations |
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5.37. |
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FOLLOW-UP OF SPECIAL REPORT No 9/2008 ON THE EFFECTIVENESS OF EU SUPPORT IN THE AREA OF FREEDOM, SECURITY AND JUSTICE FOR BELARUS, MOLDOVA AND UKRAINE |
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Introduction |
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Follow-up of the recommendations |
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Conclusions |
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FOLLOW-UP OF SPECIAL REPORT No 10/2008 ON EC DEVELOPMENT ASSISTANCE TO HEALTH SERVICES IN SUB-SAHARAN AFRICA |
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Introduction |
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Follow-up of the recommendations |
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Recommendations on the allocation and prioritisation of resources |
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Recommendations on the management and effectiveness of instruments |
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Conclusions |
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(1) Aid provided through the European Development Funds is reported separately as it is not financed from the General Budget.
(2) As of 1 January 2011, EuropeAid and the Directorate-General for Development (DG DEV) merged under the new name of Directorate-General for Development and Cooperation — EuropeAid (DG DEVCO).
(3) As of 1 January 2011, DG RELEX ceased to exist and was, to a large extent, integrated into the European External Action Service (EEAS). In addition, a new service was created to manage the Foreign Policy Instruments (FPI).
(4) Phare was the main financial instrument of the pre-accession strategy for Central and Eastern European countries. The Cards programme is Community Assistance for Reconstruction, Development and Stability in the Balkans.
(5) Council Regulation (EC) No 1257/96 (OJ L 163, 2.7.1996, p. 1).
(6) It is aimed at supporting the efforts of the Member States, EFTA, candidate countries and third countries on response, preparedness and prevention actions with regard to natural and man-made disasters, acts of terrorism and technological, radiological or environmental accidents.
(7) Clearing procedures include follow-up of corrective actions and ex-post controls.
(8) The Court calculates its estimate of error from a representative statistical sample. The figure quoted is the best estimate (known as MLE). The Court has 95 % confidence that the rate of error in the population lies between 0,1 % and 3,3 % (the lower and upper error limits respectively).
(9) One of the procurements with error was carried out by the former European Agency for Reconstruction.
(10) Annual Assurance Strategies defined and designed by each Authorising officer by sub-delegation (Directors in headquarter and Heads of delegation) and a policy of ex-post controls for centrally managed contracts.
(11) Guidelines for the accreditation leading to the conferral of management in decentralised management; checklists for the ‘certified correct’ of payments and final declarations and policy for clearance of accounts.
(12) One of the procurements with error was carried out by the former European Agency for Reconstruction.
(13) 17 out of 35 (49 %) of the reviewed transactions were affected by encoding errors in CRIS. The most frequent errors relate to the incomplete or inaccurate encoding of the dates of implementation and wrong classification of the types of payments.
(14) See paragraphs 5.13 to 5.16.
(15) Council of the European Union: Draft Council conclusions 6932/09 of 26 February 2009.
(16) European Parliament: Resolution of the European Parliament of 23 April 2009 with observations forming an integral part of the Decision on the discharge for implementation of the European Union general budget for the financial year 2007, Section III — Commission and executive agencies (P6_TA(2009) 289).
(17) European Commission: Commission staff working document accompanying the report from the Commission to the European Parliament on the follow-up to 2007 Discharge Decision (SEC(2009) 1427 final, 16.10.2009).
(18) See Special Report No 11/2010 on the Commission’s management of General Budget Support in ACP, Latin American and Asian Countries.
(19) Council conclusions of 23 April 2009 on Special Report No 10/2008 concerning EC Development Assistance to Health Services in Sub-Saharan Africa together with the Commission's replies.
(20) European Parliament resolution of 12 March 2009 on an approach to ‘EC development assistance to health services in sub-Saharan Africa’. (P6_TA PROV(2009) 138).
(21) MDG 1c): Reduce by half the people who suffer from hunger and MDG 7c): Halve the proportion of people without sustainable access to safe drinking water and basic sanitation.
(22) COM(2010) 128 final, Brussels, 31.3.2010.
(23) The Commission allocated approximately 1 500 million euro to MDG Contracts in eight countries. These programmes provide general budget support over an extended six-year period and are intended to have a strong focus on the MDGs.
(24) Green Paper: ‘The future of EU Budget support to third countries’ (COM(2010) 586 final), Brussels, 19.10.2010.
(25) The audit of administrative expenditure is reported in chapter 7.
ANNEX 5.1
RESULTS OF TRANSACTION TESTING FOR EXTERNAL AID, DEVELOPMENT AND ENLARGEMENT
|
2010 |
2009 |
2008 |
2007 |
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EuropeAid |
RELEX |
ELARG |
ECHO |
DEV |
Total |
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SIZE AND STRUCTURE OF THE SAMPLE |
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Total transactions (of which): |
92 |
14 |
35 |
22 |
2 |
165 |
180 |
180 |
145 |
||||||
Advances |
43 |
12 |
8 |
12 |
0 |
75 |
83 |
71 |
46 |
||||||
Interim/Final payments |
49 |
2 |
27 |
10 |
2 |
90 |
97 |
109 |
99 |
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Proportion of transactions tested found to be: |
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Free of error |
79 % |
(73) |
100 % |
(14) |
74 % |
(26) |
64 % |
(14) |
0 % |
— |
77 % |
(127) |
87 % |
73 % |
74 % |
Affected by one or more errors |
21 % |
(19) |
0 % |
— |
26 % |
(9) |
36 % |
(8) |
100 % |
(2) |
23 % |
(38) |
13 % |
27 % |
26 % |
Analysis of transactions affected by error |
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Analysis by type of expenditure |
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Advances |
16 % |
(3) |
0 % |
— |
11 % |
(1) |
0 % |
— |
0 % |
— |
11 % |
(4) |
17 % |
19 % |
19 % |
Interim/Final payments |
84 % |
(16) |
0 % |
— |
89 % |
(8) |
100 % |
(8) |
100 % |
(2) |
89 % |
(34) |
83 % |
81 % |
81 % |
Analysis by type of error |
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Non-Quantifiable errors: |
53 % |
(10) |
0 % |
— |
78 % |
(7) |
38 % |
(3) |
0 % |
— |
53 % |
(20) |
74 % |
60 % |
73 % |
Quantifiable errors: |
47 % |
(9) |
0 % |
— |
22 % |
(2) |
62 % |
(5) |
100 % |
(2) |
47 % |
(18) |
26 % |
40 % |
27 % |
Eligibility |
67 % |
(6) |
0 % |
— |
100 % |
(2) |
100 % |
(5) |
0 % |
— |
72 % |
(13) |
100 % |
79 % |
100 % |
Occurrence |
22 % |
(2) |
0 % |
— |
0 % |
— |
0 % |
— |
50 % |
(1) |
17 % |
(3) |
(0) |
21 % |
(0) |
Accuracy |
11 % |
(1) |
0 % |
— |
0 % |
— |
0 % |
— |
50 % |
(1) |
11 % |
(2) |
(0) |
(0) |
(0) |
ESTIMATED IMPACT OF QUANTIFIABLE ERRORS |
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Most likely error rate |
1,7 % |
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Lower error limit |
0,1 % |
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Upper error limit |
3,3 % |
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(1) To improve insight into areas with different risk profiles within the policy group, the sample was split up into segments.
(2) Numbers quoted in brackets represent the actual number of transactions.
ANNEX 5.2
RESULTS OF EXAMINATION OF SYSTEMS FOR EXTERNAL AID, DEVELOPMENT AND ENLARGEMENT
Assessment of selected supervisory and control systems of EuropeAid
|
Control environment |
Ex-ante controls |
Monitoring and supervision |
External audits and clearing procedures |
Internal audit |
Overall assessment |
Central Systems |
Effective |
Partially effective |
Effective |
Effective |
Effective |
Partially effective |
Delegation |
Effective |
Partially effective |
Partially effective |
Partially effective |
N/A |
Assessment of selected supervisory and control systems of DG ELARG
Ex-ante controls |
Monitoring and supervision |
External audits and clearing procedures |
Internal audit |
Overall assessment |
Partially effective |
Effective |
Effective |
Effective |
Partially effective |
Overall assessment of supervisory and control systems
Overall assessment |
2010 |
2009 |
2008 |
2007 |
Partially effective |
Partially effective |
Partially effective |
Partially effective |
ANNEX 5.3
RESULTS OF REVIEW OF COMMISSION MANAGEMENT REPRESENTATIONS FOR EXTERNAL AID, DEVELOPMENT AND ENLARGEMENT
Main DGs concerned |
Nature of declaration given by the Director-General (1) |
Reservations given |
Court observations |
Overall assessment of reliability |
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2010 |
2009 |
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ELARG |
without reservations |
N/A |
The calculation of the residual error rate (RER) is limited to decentralised management mode which represents only 30 % of the payments carried out in 2010 by DG ELARG. The Court’s audit found that there remain matters that still need to be addressed. |
B |
A |
||||||
EuropeAid |
without reservations |
N/A |
EuropeAid has set up a comprehensive control strategy and continued to bring significant improvements to the design and implementation of its supervisory and control systems. However, the Court’s audit found that there remain weknesses in certain controls and that the payments were affected by material error. |
B |
B |
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|
(1) By reference to the declaration of assurance of the Director-General, he/she has reasonable assurance that the control procedures put in place give the necessary guarantees concerning the regularity of transactions.
A: |
the Director-General’s declaration and the annual activity report give a fair assessment of financial management in relation to regularity. |
B: |
the Director-General’s declaration and annual activity report give a partially fair assessment of financial management in relation to regularity. |
C: |
the Director-General’s declaration and the annual activity report do not give a fair assessment of financial management in relation to regularity. |
ANNEX 5.4
FOLLOW-UP OF PREVIOUS RECOMMENDATIONS FOR EXTERNAL AID, DEVELOPMENT AND ENLARGEMENT
Year |
Court Recommendation |
Progress made |
Commission reply |
Court analysis |
2009 |
DG RELEX should consolidate its ex-post control methodology and promptly address the recommendations made by the internal auditor in that respect. |
Following an Action Plan DG RELEX has introduced improvements to the ex-post control methodology. However, part of the foreseen mitigating measures can only be implemented in 2011 under the management of the new Service for Foreign Policy Instruments (FPI). |
|
|
DG RELEX should devote sufficient resources to the analysis and closure of the old RRM and the CFSP contracts for which the implementation deadlines have already expired. |
A considerable number of old RRM files were closed. For CFSP, although the problem has been addressed (25 of the 133 projects open beginning 2010 were closed) there is still a significant backlog. |
Close follow-up of the closure of old projects is part of the action plan which was established following the IAS/IAC audit of CFSP. The situation of all old and ended contracts is reviewed on a regular basis and appropriate action is taken in order to close projects which have ended. The number of CFSP projects has been increasing steadily together with the substantial increase of the CFSP budget over the last years (e.g. there were 51 new contracts in 2010) and this might give the false impression that the situation is not improving. |
The Court takes note of the Commission’s reply. |
|
DG ELARG should provide more specific guidance for the ‘conferral of management powers’ procedure to clarify better the roles of the different Commission actors in the process. |
DG ELARG developed new guidance by the end of 2010. However that new guidance will only be applicable in 2011 and the Court considers that they are not sufficiently detailed. |
The inititiaves that were taken after the recommendations were issued in July involved very intensive coordination and mutual consultation, and resulted in a set of instructions that was published timely in order to meet the 2010 deadline. |
The Court takes note of the Commission’s reply. |
|
DG ELARG should review its internal control checklists in order to document all the checks carried out. |
New internal control checklists were developed in DG ELARG headquarters, but their full use at EU delegations in the enlargement countries still needs to be ensured. |
The necessary efforts have been made to ensure theirs full use in the Delegations. |
||
DG ELARG should take measures to improve the quality of the data entered in its management information systems (e.g. regular analysis and verification of the quality of the data). |
The Court’s review of systems and transactions did not note relevant improvements in the data quality. DG ELARG should establish an action plan to properly implement this recommendation. |
Staff at HQ and Del has been motivated to ensure proper encoding of the data, but in general, the problems noted go beyond the scope of the ELARG-owned information systems, so that solutions need to be sought at a Commission-wide level. |
The Court takes note of the Commission’s reply. |
|
DG ELARG should develop and put in place mechanisms to facilitate the analysis and follow up of the results of the monitoring missions carried out. |
This recommendation has not yet been addressed by DG ELARG. In 2010, this weakness was confirmed in all the visited EU delegations in enlargement countries. |
The recommendation started to be addressed in 2010 but, according to its very nature, its results cannot be witnessed as such from the outset. |
The Court takes note of the Commission’s reply. |
|
2009 |
DG ELARG should continue to devote sufficient resources to the analysis of the outstanding final declarations submitted under PHARE and the Transition Facility in the new Member States. |
The Court welcomes the effort of DG ELARG, but the backlog of final declarations has been reduced only partially. |
As a result of the priority given to the assessment of Final Declaration from the 12 new Member States, the backlog has been further considerably reduced in 2010, more then compensating the slight slowdown observed in 2009. |
The Court takes note of the Commission’s reply. |
DG ECHO should improve the documentation of assessments of proposals for humanitarian aid actions (e.g. the introduction of standardised evaluation reports). |
DG ECHO started the development of a standardised procedure to justify the assessments of proposals. However, it is envisaged to introduce a new procedure only in 2011 introduced and the standardised evaluation report is one of the options under consideration. |
A working group on the assessment of humanitarian aid proposals has been launched in early February 2011. It is aiming, amongst others, at harmonising and streamlining the documentation of the assessment process by giving a better overview of the entire process throughout a dashboard and establishing common assessment criterion. This will be implemented in 2011. |
The Court takes note of the Commission’s reply. |
|
DG ECHO should define and put in place a mechanism for collecting and analysing the data concerning the use of the ‘Humanitarian Procurement Centres’ (HPCs) by its partners. |
DG ECHO found the Court’s recommendation useful but did not consider it as a priority. HPCs were informed about the need to provide detailed information on the extent to which their services are used by ECHO’s partners. A new procedure will be developed in the future. |
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CHAPTER 6
Research and other Internal Policies
TABLE OF CONTENTS
Introduction
Specific characteristics of the policy group
Research Framework Programmes
The Lifelong Learning Programme
Audit scope and approach
Regularity of transactions
Effectiveness of systems
Research Framework Programmes
Ex-ante desk checks
Audit certification of cost claims
Ex-ante certification of beneficiaries’ costing methodologies under FP7
The Commission’s ex-post audit strategy
Systems related to recoveries and financial corrections
Other Internal Policies
Systems for the Lifelong Learning Programme — Erasmus
Reliability of Commission management representations
Conclusions and recommendations
Conclusions
Recommendations
Results of the audit of the guarantee fund for external Actions
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INTRODUCTION |
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Table 6.1 — Research and other Internal Policies — key information 2010
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Specific characteristics of the policy group |
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Research Framework Programmes |
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The Lifelong Learning Programme |
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Audit scope and approach |
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REGULARITY OF TRANSACTIONS |
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Example 6.1 Ineligible costs and incorrectly calculated costs A beneficiary managing an FP6 project claimed overheads using a flat rate which was based on direct staff costs. Following an ex-post audit carried out in 2007, the beneficiary changed its allocation of overheads methodology without fully and correctly implementing the recommendations made by the ex-post auditors. Errors and inconsistencies, noted during the Court’s audit led to an over-claim of 731 652 euro. The beneficiary also claimed reimbursement of ineligible subsistence costs and ineligible indirect taxes, and charged the costs of computer equipment to the project without applying its normal accounting policy for depreciation. These resulted in an over-claim of 10 079 euro. The overall error, net of an underdeclaration in staff costs, amounted to 13 % of the declared costs. |
Example 6.1 Ineligible costs and incorrectly calculated costs The Commission is proceeding with the usual contradictory procedure with the beneficiary. The beneficiary has informed the Commission that it does not agree with some of the findings of the Court, in particular concerning the overhead rate calculation. The Commission has asked the beneficiary for additional information so that it can decide whether it needs to make financial adjustments and for which amount. |
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EFFECTIVENESS OF SYSTEMS |
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Research Framework Programmes |
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Ex-ante desk checks |
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Example 6.2 Ex-ante weakness The beneficiary of an FP6 project calculated the staff costs charged to the project on the basis of budgeted average hourly rates for three categories of staff: senior engineer, scientific graduate engineer and technician. The recalculation of staff costs using the actual hourly rate showed a significant divergence in the hourly rate, leading to an over-claim of 65 185 euro for total declared staff costs of 508 452 euro. Despite the fact that it was evident from the documentation that the beneficiary was using average hourly rates, the Commission did not query the amount declared. |
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Audit certification of cost claims |
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Ex-ante certification of beneficiaries’ costing methodologies under FP7 |
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The Commission’s ex-post audit strategy |
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Table 6.2 — Implementation of the Commission’s ex-post audit strategy
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Residual error rates |
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Reliance on the work of external auditors |
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Systems related to recoveries and financial corrections |
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Systems for the Lifelong Learning Programme — Erasmus |
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Checks implemented by the Commission |
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RELIABILITY OF COMMISSION MANAGEMENT REPRESENTATIONS |
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CONCLUSIONS AND RECOMMENDATIONS |
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Conclusions |
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Recommendations |
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6.51. |
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RESULTS OF THE AUDIT OF THE GUARANTEE FUND FOR EXTERNAL ACTIONS |
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(1) Council Regulation (EC, Euratom) No 480/2009 of 25 May 2009 establishing a Guarantee Fund for external actions (OJ L 145, 10.6.2009, p. 10) stipulates in its recitals that the financial management of the Guarantee Fund should be subject to audit by the Court of Auditors in accordance with the procedures agreed upon by the Court of Auditors, the Commission and the European Investment Bank.
(2) The European Research Area is composed of all research and development activities, programmes and policies in Europe which involve a transnational perspective. Together, they enable researchers, research institutions and businesses to increasingly circulate, compete and cooperate across borders.
(3) The Seventh Framework Programme bundles all research-related EU initiatives together under a common roof playing a crucial role in reaching the goals of growth, competitiveness and employment. It is also a key pillar for the European Research Area.
(4) The European Union JUs involved in the management of research FPs are: (i) the European JU for ITER and the Development of Fusion Energy; (ii) the Clean Sky JU; (iii) the ARTEMIS JU; (iv) the Innovative Medicines Initiative JU; (v) the ENIAC JU and (vi) the Fuel Cells and Hydrogen JU. The European Union Executive Agencies involved in the management of research FPs are: (i) the Executive Agency for Competitiveness and Innovation; (ii) the Education, Audiovisual and Culture Executive Agency; (iii) the Research Executive Agency and (iv) the European Research Council Executive Agency.
(5) National Agencies are structures set up at national level for the management of the implementation of the Lifelong Learning programme at Member State level. They have legal personality and are governed by the law of the Member State concerned. They are responsible for the management of the decentralised parts of the programme, namely for the evaluation, selection and management of projects.
(6) Participating organisations are usually universities, schools or colleges, who manage payments to beneficiaries such as students or teachers.
(7) The 43 payments consist of 31 advances, eight interim and final payments, three single and one regularisation payment.
(8) 61 interim or final payments and 36 advances for FP6 and FP7.
(9) The Court calculates its estimate of error from a representative statistical sample. The figure quoted is the best estimate (known as the MLE). The Court has 95 % confidence that the rate of error in the population lies between 0,6 % and 2,1 % (the lower and upper error limits respectively).
(10) Overall, the findings on the regularity of transactions are consistent with the results of the Commission’s own representative audits (see paragraph 6.32).
(11) Type of weaknesses noted: (i) authorisation of the project start date without a written request from the beneficiary before the grant agreement was signed; (ii) the late notification of the Commission funding decision to the unsuccessful applicants and (iii) failure to check the interest generated by the pre-financing.
(12) These detailed ex-ante desk checks involve requesting and examining supporting documentation.
(13) The Commission can suspend a payment by informing the beneficiary in writing that the report or the invoice/request for payment cannot be approved and stating the reason why (e.g. explaining that the supporting documents are incomplete).
(14) As a cumulative figure for all previous payments to a beneficiary within a given project for which a certificate has not been submitted.
(15) Optional for any beneficiary intending to declare average personnel costs in its cost claims. On 24 January 2011, the Commission adopted new criteria for the use of average personnel costs. Beneficiaries are no longer required to submit a certificate on average personnel costs for approval as a prior condition for the eligibility of the personnel costs. Nevertheless, the certificate on average personnel costs remains as an option, offering beneficiaries the possibility of obtaining prior assurance as to the compatibility of the methodology in place with FP7 rules.
(16) Optional for a limited number of beneficiaries of multiple grants fulfilling certain eligibility criteria.
(17) The Court noted that in one case personnel and indirect costs included ineligible costs according to FP7 criteria or average personnel costs were in fact not calculated according to the methodology presented by the beneficiary. In the other case, the external auditor certified that the audit procedures were carried in connection with a specific grant whereas in reality the audit work was based on another sample.
(18) For example, in the area of corrective audits, DG INFSO has developed elaborate risk-based auditing methods which are based on intelligent data gathering, risk assessment and risk-specific audit procedures. In 2010, the average error rate of DG INFSO’s risk-based audits was 30 %.
(19) I.e. the level of errors which remain undetected and thus uncorrected.
(20) Commission Decision C(2007) 1807, Article 8(3), stipulates that ‘the national authority shall establish the system of secondary controls whose objective is to give reasonable assurance that the systems and primary controls are effective. It may entrust performance of secondary controls to an external audit body’.
(21) Chapter 9, paragraphs 9.22 to 9.24.
(22) For NAUs 13 qualifications have been classified as very important and 14 important, while in 2009 three were critical, 15 very important and three important. For NAs the numbers are respectively: one critical, 44 very important and 66 important in 2010 against 75 very important and 35 important in 2009.
(23) See paragraphs 6.12 and 6.13.
(24) Council Regulation (EC, Euratom) No 2728/94 of 31 October 1994 establishing a Guarantee Fund for external actions (OJ L 293, 12.11.1994, p. 1), as last amended by Regulation (EC, Euratom) No 89/2007 (OJ L 22, 31.1.2007, p. 1).
(25) Principally the EIB, but also Euratom external lending and EC macro financial assistance (MFA) loans to third countries.
(26) Article 6 of Regulation (EC, Euratom) No 2728/94 and the EIB receives an annual management fee for the services provided.
(27) COM(2010) 187 final of 29 April 2010 — Simplifying the implementation of the Research Framework Programmes.
(28) Advances under the Seventh Framework Programme (2007-13) and under the Lifelong Learning Programme amounted to 3 166 million euro and 1 139 million euro respectively.
(29) Interim/final payments under the Seventh Framework Programme (2007-13) and the Lifelong Learning Programme amounted to 1 442 million euro and 83 million euro respectively.
Source: 2010 annual accounts of the European Union.
ANNEX 6.1
RESULTS OF TRANSACTION TESTING FOR RESEARCH AND OTHER INTERNAL POLICIES (1)
|
2010 |
2009 |
2008 |
2007 |
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FP6 |
FP7 |
LLP |
Other |
Total |
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SIZE AND STRUCTURE OF THE SAMPLE |
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Total transactions (of which): |
28 |
69 |
12 |
41 |
150 |
351 |
361 |
348 |
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Advances |
4 |
32 |
12 |
29 |
77 |
125 |
237 |
159 |
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Interim/Final payments |
24 |
37 |
0 |
12 |
73 |
226 |
124 |
189 |
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Proportion of transactions tested found to be: |
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Free of error |
29 % |
(8) |
54 % |
(37) |
100 % |
(12) |
85 % |
(35) |
61 % |
(92) |
72 % |
86 % |
68 % |
Affected by one or more errors |
71 % |
(20) |
46 % |
(32) |
0 % |
(0) |
15 % |
(6) |
39 % |
(58) |
28 % |
14 % |
32 % |
Analysis of transactions affected by error |
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Analysis by type of expenditure |
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Advances |
5 % |
(1) |
9 % |
(3) |
0 % |
(0) |
50 % |
(3) |
12 % |
(7) |
9 % |
19 % |
17 % |
Interim/Final payments |
95 % |
(19) |
91 % |
(29) |
0 % |
(0) |
50 % |
(3) |
88 % |
(51) |
91 % |
81 % |
83 % |
Analysis by type of error |
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Non-Quantifiable errors: |
15 % |
(3) |
37 % |
(12) |
0 % |
(0) |
67 % |
(4) |
33 % |
(19) |
35 % |
34 % |
41 % |
Quantifiable errors: |
85 % |
(17) |
63 % |
(20) |
0 % |
(0) |
33 % |
(2) |
67 % |
(39) |
65 % |
66 % |
59 % |
Eligibility |
100 % |
(17) |
95 % |
(19) |
0 % |
(0) |
100 % |
(2) |
97 % |
(38) |
55 % |
65 % |
80 % |
Occurrence |
0 % |
(0) |
0 % |
(0) |
0 % |
(0) |
0 % |
(0) |
0 % |
(0) |
6 % |
3 % |
2 % |
Accuracy |
0 % |
(0) |
5 % |
(1) |
0 % |
(0) |
0 % |
(0) |
3 % |
(1) |
39 % |
32 % |
18 % |
ESTIMATED IMPACT OF QUANTIFIABLE ERRORS |
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Most likely error rate |
1,4 % |
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Lower error limit |
0,6 % |
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Upper error limit |
2,1 % |
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(1) For 2010, the new policy group Research and other Internal Policies consists of policy groups/areas which in the 2009 Annual Report were part of other specific assessments. For details refer to Chapter 1, paragraph 1.12.
(2) To improve insight into areas with different risk profiles within the policy group, the sample was split up into segments.
(3) Numbers quoted in brackets represent the actual number of transactions.
ANNEX 6.2
RESULTS OF EXAMINATION OF SYSTEMS FOR RESEARCH AND OTHER INTERNAL POLICIES
Assessment of selected supervisory and control systems
System concerned |
Ex-ante desk checks |
Audit certification |
Ex-ante certification |
Ex-post financial audits |
Implementation of recoveries and financial corrections |
Overall assessment |
Research Framework Programmes |
Partially effective |
Partially effective |
Partially effective |
Effective |
Effective |
Partially effective |
System concerned |
Secondary controls |
Primary controls |
Commission’s controls |
Commission’s monitoring system |
Overall assessment |
Lifelong Learning Programme |
Partially effective |
Partially effective |
Effective |
Effective |
Partially effective |
Specific assessment for Lifelong Learning Programme per Member State and controls
|
DAS 2010 |
DAS 2008 |
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Member State concerned |
Secondary controls |
Primary controls |
Overall assessment |
Overall assessment |
Belgium (EPOS (1)) |
Effective |
Partially effective |
Partially effective |
Partially effective |
Poland (FRSE (2)) |
Partially effective |
Effective |
Partially effective |
Partially effective |
Germany (DAAD (3)) |
Effective |
Effective |
Effective |
Partially effective |
Spain (OAPEE (4)) |
Effective |
Partially effective |
Partially effective |
Partially effective |
United Kingdom (British Council) |
Effective |
Partially effective |
Partially effective |
N/A |
France (2e2f (5)) |
Partially effective |
Effective |
Partially effective |
N/A |
The Netherlands (Nuffic (6)) |
Effective |
Effective |
Effective |
N/A |
Greece (IKY (7)) |
Partially effective |
Partially effective |
Partially effective |
N/A |
Austria (OEAD (8)) |
Effective |
Effective |
Effective |
N/A |
Sweden (Internationella programkontoret) |
Effective |
Partially Effective |
Partially Effective |
N/A |
Overall assessment |
2010 |
2009 |
2008 |
2007 |
Partially effective |
Partially effective |
Partially effective |
Partially effective |
(1) Europese Programma’s voor Onderwijs, Opleiding en Samenwerking — Agentschap.
(2) Fundacja Rozwoju Systemu Edukacji.
(3) Nationale Agentur für EU Hochschulzusammenarbeit Deutscher Akademischer Austauschdienst e. V.
(4) Organismo Autónomo Programas Educativos Europeos.
(5) Agence Europe Éducation Formation France.
(6) Nederlands Nationaal Agentschap voor het Leven Lang Leren programma.
(7) Greek State Scholarship’s Foundation I.K.Y.
(8) Österreichischer Austauschdienst — GmbH.
ANNEX 6.3
RESULTS OF REVIEW OF COMMISSION MANAGEMENT REPRESENTATIONS FOR RESEARCH AND OTHER INTERNAL POLICIES
Main DGs concerned |
Nature of declaration given by director-general (1) |
Reservations given |
Court observations |
Overall assessment of reliability |
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2010 |
2009 |
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RTD |
with reservation |
Reservation concerning the rate of residual error with regard to the accuracy of cost claims under FP6 grants. |
|
A |
A |
||||||
INFSO |
without reservation |
— |
Although in 2010 the cumulative rate detected and the residual error rate on cost claims under FP6 grants reached 3,94 % and 2,2 % respectively, the reservation regarding the accuracy of FP6 cost claims was lifted. |
B |
A |
||||||
ENTR |
with reservation |
|
— |
A |
A |
||||||
EAC |
with reservation |
Too high error rate in centralised direct management, due to lack of justifying documents for cost claims, mainly concerning projects from the previous generation of programmes (continuation of 2009 reservation). |
— |
A |
A |
||||||
ERCEA |
without reservation |
— |
— |
A |
N/A |
||||||
REA |
without reservation |
— |
— |
A |
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(1) By reference to the declaration by the assurance of Director-General, he/she has reasonable assurance that the control procedures put in place give the necessary guarantees concerning the regularity of transactions.
A: |
the Director-General’s declaration and the Annual Activity Report give a fair assessment of financial management in relation to regularity. |
B: |
the Director-General’s declaration and Annual Activity Report give a partially fair assessment of financial management in relation to regularity. |
C: |
the Director-General’s declaration and the Annual Activity Report do not give a fair assessment of financial management in relation to regularity. |
ANNEX 6.4
FOLLOW-UP OF PREVIOUS RECOMMENDATIONS FOR RESEARCH AND OTHER INTERNAL POLICIES
Year |
Court Recommendation |
Progress made |
Commission reply |
Court analysis |
2009 |
The Commission should raise the certifying auditors’ awareness of the eligibility of expenditure with the aim of improving the reliability of the audit certificates they issue (paragraph 8.32). |
The inherent complexity of the eligibility criteria impacts on the work performed by the external auditors mandated by the beneficiaries to issue audit certificates. The Commission considers that for FP7 the introduction of ‘agreed upon procedures’ will increase the certifying auditors’ awareness of the eligibility of expenditure and thus improve the reliability of the audit certificates. This remains to be confirmed. Except for DG ENTR, the Commission does not formally communicate with the external auditors by providing feedback when it has been proved, either as a result of the Court’s audits or its own, that the certificate issued was unreliable. This is an effective way of raising the certifying auditors’ awareness of the expenditure eligibility issues which the auditors may have overlooked. |
The Commission monitors the reliability of the audit certificates. However, at this stage it is still too early to conclude if there is a significant decrease in errors. The Commission recently approved a decision to simplify the acceptance of average costing methodologies for claiming personnel costs. This decision is indeed expected to significantly simplify and facilitate the management of the research programmes. A formal feedback process is in place to urge the audited beneficiaries to make their certifying auditors aware of the Commission’s audit findings and also referring them to the relevant information where the eligibility requirements and interpretations are publicly available. |
The Court takes note of the Commission’s reply |
The Court recommends that the Commission continues to reinforce the checks on closures to ensure that errors are detected and corrected and prevent the recurrence of previously identified errors (paragraph 7.20). |
The Commission has made efforts in this area, particularly with the introduction of the Lifelong Learning Programme for the period 2007-2013. The errors detected by the Court for 2009 related to the Socrates II programme which was the predecessor of the Lifelong Learning Programme. The Commission has followed up all quantifiable errors and recovered non-eligible amounts. |
The Commission welcomes the progress noted by the Court. |
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2008 |
The Commission should ensure rigorous application of the controls, in particular by imposing penalties where appropriate and making recoveries or adjustments in cases of undue reimbursement of claimed costs (paragraph 7.42). |
The Commission made considerable efforts in this area. This included an increased ex-post audit effort, which is the key element of the control strategy, and issuing recoveries or setting off against future payments any amounts found to have been overpaid to beneficiaries. During 2010, the Court observed a significant increase in the amounts of liquidated damages due to the Commission as a result of a beneficiary overstating its declared costs. |
The Commission continues with its efforts to implement audit results, by recovering over-claimed amounts, imposing liquidated damages and furthermore, constantly monitoring the progress made in this area. Moreover, the Commission following the recommendation of the Court is consistently imposing liquidated damages in all cases in which overstated costs claims have resulted in unjustified financial contributions. |
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2008 |
The Commission should engage in closer supervision of the annual ex-post declaration process with direct verification that the controls described are adequate and fully applied (paragraph 9.34). |
Overall, the Commission has made efforts in this area. Although systems audit visits and monitoring visits have decreased somewhat, there has been a significant increase in the number of financial audits. In 2010 DG EAC conducted systems audit visits to 8 countries (11 countries in 2009) and financial ex-post on-the-spot audits of 15 agreements with the National Agencies (5 financial audits in 2009). It also performed 47 monitoring visits in 2010 (against 58 in 2009). |
The Commission welcomes the progress noted by the Court. |
The Court takes note of the Commission’s reply |
CHAPTER 7
Administrative and other expenditure
TABLE OF CONTENTS
Introduction
Specific characteristics of the policy group
Audit scope and approach
Regularity of transactions
Effectiveness of systems
Reliability of Commission management representations
Observations on specific institutions and bodies
Parliament
European Council and Council
Commission
Court of Justice
Court of Auditors
European Economic and Social Committee
Committee of the Regions
European Ombudsman
European Data Protection Supervisor
Conclusions and recommendations
Conclusions
Recommendations
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INTRODUCTION |
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Table 7.1 — Administrative and other expenditure of the Institutions and bodies — Key information
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Specific characteristics of the policy group |
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Audit scope and approach |
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REGULARITY OF TRANSACTIONS |
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EFFECTIVENESS OF SYSTEMS |
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RELIABILITY OF COMMISSION MANAGEMENT REPRESENTATIONS |
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OBSERVATIONS ON SPECIFIC INSTITUTIONS AND BODIES |
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Parliament |
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Management of the subsidy scheme for visitors’ groups |
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Employment of contract agents |
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Procurement |
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Organisation and functioning of political groups |
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Performance of the ex-ante verification |
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European Council and Council |
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Financing of the ‘Residence Palace’ building project |
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Commission |
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Procurement |
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Court of Justice |
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Court of Auditors |
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European Economic and Social Committee |
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Reimbursement of travel expenses to Members of the Committee |
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Procurement |
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Committee of the Regions |
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Employment of permanent staff |
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Procurement |
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European Ombudsman |
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European Data Protection Supervisor |
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Organisation of an internal competition |
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CONCLUSIONS AND RECOMMENDATIONS |
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Conclusions |
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Recommendations |
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(1) The Court’s Specific Annual Report on the European Schools is submitted to the Board of Governors of the European Schools, and is copied to the European Parliament, the Council and the Commission.
(2) Ex-ante and ex-post controls, internal audit function, exception reporting and internal control standards.
(3) PricewaterhouseCoopers, Société à responsabilité limitée, réviseur d'entreprises.
(4) Systems are taken as a whole across the Institutions and bodies referred to in paragraph 7.1.
(5) See the audit report on the financial statements referred to in paragraph 7.8.
ANNEX 7.1
RESULTS OF TRANSACTION TESTING FOR ADMINISTRATIVE EXPENDITURE
|
2010 |
2009 |
2008 |
2007 |
|||||||
Expenses related to staff |
Expenses related to buildings |
Other expenses |
Total |
||||||||
SIZE AND STRUCTURE OF THE SAMPLE |
|||||||||||
Total transactions (of which): |
33 |
7 |
18 |
58 |
57 |
57 |
56 |
||||
Advances |
0 |
1 |
3 |
4 |
2 |
0 |
0 |
||||
Interim/final payments |
33 |
6 |
15 |
54 |
55 |
57 |
56 |
||||
Proportion of transactions tested found to be: |
|||||||||||
Free of error |
94 % |
(31) |
100 % |
(7) |
89 % |
(16) |
93 % |
(54) |
93 % |
91 % |
95 % |
Affected by one or more errors |
6 % |
(2) |
0 % |
(0) |
11 % |
(2) |
7 % |
(4) |
7 % |
9 % |
5 % |
Analysis of transactions affected by error |
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Analysis by type of expenditure |
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Advances |
0 % |
(0) |
0 % |
(0) |
50 % |
(1) |
25 % |
(1) |
N/A |
N/A |
N/A |
Interim/Final payments |
100 % |
(2) |
0 % |
(0) |
50 % |
(1) |
75 % |
(3) |
N/A |
N/A |
N/A |
Analysis by type of error |
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Non-Quantifiable errors: |
50 % |
(1) |
0 % |
(0) |
100 % |
(2) |
75 % |
(3) |
N/A |
N/A |
N/A |
Quantifiable errors: |
50 % |
(1) |
0 % |
(0) |
0 % |
(0) |
25 % |
(1) |
N/A |
N/A |
N/A |
Eligibility |
0 % |
(0) |
0 % |
(0) |
0 % |
(0) |
0 % |
(0) |
N/A |
N/A |
N/A |
Occurrence |
0 % |
(0) |
0 % |
(0) |
0 % |
(0) |
0 % |
(0) |
N/A |
N/A |
N/A |
Accuracy |
100 % |
(1) |
0 % |
(0) |
0 % |
(0) |
100 % |
(1) |
N/A |
N/A |
N/A |
ESTIMATED IMPACT OF QUANTIFIABLE ERRORS |
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Most likely error rate |
0,4 % |
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Lower error limit |
0,0 % |
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Upper error limit |
1,1 % |
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(1) To improve insight into areas with different risk profiles within the policy group, the sample was split up into segments.
(2) Numbers quoted in brackets represent the actual number of transactions
ANNEX 7.2
RESULTS OF EXAMINATION OF SYSTEMS FOR ADMINISTRATIVE EXPENDITURE
Overall assessment of supervisory and control systems
Overall assessment |
2010 |
2009 |
2008 |
2007 |
Effective |
Effective |
Effective |
Effective |
ANNEX 7.3
RESULTS OF REVIEW OF COMMISSION MANAGEMENT REPRESENTATIONS FOR ADMINISTRATIVE EXPENDITURE
Main DGs concerned |
Nature of declaration given by Director-General (1) |
Reservations given |
Court observations |
Overall assessment of reliability |
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2010 |
2009 |
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PMO |
without reservations |
N/A |
— |
A |
A |
||||||
OIB |
without reservations |
N/A |
— |
A |
A |
||||||
OIL |
without reservations |
N/A |
— |
A |
A |
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DIGIT |
without reservations |
N/A |
— |
A |
A |
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|
(1) By reference to the declaration of assurance of Director-General, he/she has reasonable assurance that the control procedures put in place give the necessary guarantees concerning the regularity of transactions.
A: |
the Director-General's declaration and the annual activity report give a fair assessment of financial management in relation to regularity. |
B: |
the Director-General's declaration and the annual activity report give a partially fair assessment of financial management in relation to regularity. |
C: |
the Director-General's declaration and the annual activity report do not give a fair assessment of financial management in relation to regularity. |
ANNEX 7.4
FOLLOW-UP OF PREVIOUS RECOMMENDATIONS FOR ADMINISTRATIVE EXPENDITURE
Year |
Court Recommendation |
Progress made |
Institution reply |
Court analysis |
2009 |
Parliament Payment of social allowances to staff members Staff should be requested to deliver at appropriate intervals documents confirming their personal situation. In addition, the Parliament should implement a system for the timely monitoring and control of these documents. |
Parliament implemented measures to mitigate the risk: launching of a campaign to check eligibility for some allowances, which led to the recovery of more than 70 000 euro; implementation of an automated control tool (‘electronic fiche’) allowing an annual verification of the staff's personal and administrative data; and performance of checks on the establishment of individual entitlements during recruitment procedures or when staff change category. |
Parliament will continue to monitor closely these issues, particularly the efficiency of the yearly verification. |
The Court takes note of the measures taken by the Parliament. |
Commission — DG Relex Payment of social allowances and benefits to staff members Staff should be requested to deliver at appropriate intervals to the Commission’s services documents proving their personal situation. In addition, DG RELEX should implement a system for the timely monitoring and control of these documents. |
For the Commission, DG RELEX stated that the creation of the EEAS will be an opportunity to remind staff of the obligations to update files when rights are concerned. Staff have been informed about this. Further checks will be made and there will be contacts between the ex-post control function and the units responsible to see if the recently introduced ACL software will allow the extraction of statistical samples for checks to be made by the units dealing with staff in Delegations. |
|
The Court takes note of the measures taken by the Commission. |
|
European Data Protection Supervisor Payment of social allowances to staff members Staff should be requested to deliver at appropriate intervals documents proving their personal situation. In this respect, the European Data Protection Supervisor should improve its system for the timely monitoring and control of these documents. |
The EDPS has corrected the errors noted in the 2009 DAS and in 2010 and 2011 has implemented tools for better management of the allowances (formal contacts within the EDPS and with the PMO and yearly information fiche). |
The form relating to household allowance without child is sent to the PMO for checking and updating of the information. A copy is kept in the personal file. The EDPS will continue improving the management of those allowances. |
The Court takes note of the measures taken by the EDPS. |
CHAPTER 8
Getting results from the EU budget
TABLE OF CONTENTS
Introduction
The Commission’s self-assessment on performance
Introduction
The Directorates-General's reporting on the achievements of the year
Agriculture and Rural Development
Regional policy
Research and Innovation
The Court’s observations on Directorates-General's reporting
Relevance of performance information
Comparability of performance information
Reliability of performance information
The Court’s Special Reports on performance
Introduction
Court’s observations concerning the process of producing results
Strategic planning
Identification of needs
Link between objectives and measures
Relevant, sufficient and proportionate means
Budget and time frame
Controls and performance monitoring
Court’s observations concerning achievements and reporting
Achievement of the objectives set
Reporting on performance
Conclusions and recommendations
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INTRODUCTION |
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THE COMMISSION’S SELF-ASSESSMENT ON PERFORMANCE |
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Introduction |
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The Directorates-General's reporting on the achievements of the year |
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Agriculture and Rural Development |
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Regional policy |
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Research and Innovation |
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The Court’s observations on Directorates-General's reporting |
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Relevance of performance information |
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A coherent set of objectives, indicators and targets focussing on effectiveness, but results need to be more thoroughly analysed |
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Currently the Management Plan does not foresee objectives and indicators to measure economy and efficiency |
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In some areas targets not sufficiently quantified or specific |
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Interim milestones for multiannual targets not defined in some areas |
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Description of policy achievements provided limited information on results and impacts |
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Comparability of performance information |
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For DG AGRI and DG RTD, the objectives, indicators and targets set in the Management Plan were generally the ones used for reporting |
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For DG REGIO, explanations were often not provided in the Annual Activity Report on the adjustments made to indicators and targets |
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Reliability of performance information |
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17 out of 31 indicators traced back to a reliable source of information |
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Weaknesses in the control system impairing reliability in the areas of regional policy and rural development |
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THE COURT’S SPECIAL REPORTS ON PERFORMANCE |
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Introduction |
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Special Reports adopted by the Court of Auditors in 2010 (22)
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Court’s observations concerning the process of producing results |
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Strategic planning |
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Identification of needs |
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Link between objectives and measures |
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Relevant, sufficient and proportionate means |
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Budget and time frame |
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Controls and performance monitoring |
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Court’s observations concerning achievements and reporting |
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Achievement of the objectives set |
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Reporting on performance |
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CONCLUSIONS AND RECOMMENDATIONS |
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(1) Including, in paragraphs 8.5 to 8.14, a summary of the Directors-General's reporting in the Annual Activity Reports for the selected sample.
(2) Article 60(7) of the Financial Regulation provides that the Annual Activity Reports ‘shall indicate the results of the operations by reference to the objectives set, the risks associated with these operations, the use made of resources provided and the efficiency and effectiveness of the internal control system’.
(3) The Court’s Special Reports cover the EU budget, as well as the European Development Funds.
(4) Article 27 of the Financial Regulation states that:
‘1. |
Budget appropriations shall be used in accordance with the principle of sound financial management, namely in accordance with the principles of economy, efficiency and effectiveness. |
2. |
The principle of economy requires that the resources used by the institution for the pursuit of its activities shall be made available in due time, in appropriate quantity and quality and at the best price. The principle of efficiency is concerned with the best relationship between resources employed and results achieved. The principle of effectiveness is concerned with attaining the specific objectives set and achieving the intended results.’ |
(5) The sample of three Directorates-General represented more than 70 % of the payments made by the EU in 2010 (DG AGRI: 55,5 billion euro, DG REGIO 30,6 billion euro, DG RTD 3,5 billion euro).
(6) Whether the indicators were coherent with the policy objectives and management mode, and linked to quantified target.
(7) Whether indicators selected at planning stage were later used for reporting and any change explained.
(8) Whether the Director-General could support having reasonable assurance on the information reported.
(9) Cohesion Policy regroups Regional Policy managed by DG REGIO and the European Social Fund managed by DG Employment, Social Affairs and Inclusion.
(10) http://ec.europa.eu/regional_policy/sources/docoffic/official/reports/cohesion5/index_en.cfm
(11) This figure refers to the period from January to October 2010 (see footnote 4 of the Annual Activity Report).
(12) Such as, for instance, operational priorities 2010 ‘1.1 To take actions to facilitate the high quality implementation of programmes by national and regional bodies’ or ‘1.2 To takes actions together with Member States and candidate countries to ensure a good absorption and use of resources’.
(13) Except in the area of the legality of expenditure, where the achievement of an error rate oscillating around 2 % was mentioned as an outcome of the systems set in place.
(14) Out of the 11 impact indicators in DG AGRI’s Management Plan, two were replaced by another and one target was modified in the Annual Activity Report. DG RTD modified two results indicators and dropped another. None of these changes were explained in the respective Annual Activity Reports.
(15) Reduction in greenhouse gas emissions, additional capacity of renewable energy production, number of people benefiting from flood protection measures, number of people benefiting from forest fire protection, additional population covered by broadband access, number of projects respecting two of cross-border criteria.
(16) Number of schools reconstructed.
(17) The setting up of enterprises, the accessibility gain (kilometres of reconstructed rail and roads), the additional population served by new/renovated wastewater projects, the Research jobs created and the number of benefiting students form improved education infrastructure.
(18) The indicators were selected so as to as ensure a high coverage of the main objectives of each DG.
(19) The other two indicators were an indicator on the convergence towards Lisbon objectives in the regions based on Eurostat data that was significantly revised over the year, and an indicator on the number of research infrastructure built and operated jointly at EU level, that included data on infrastructure not yet built.
(20) This issue did not concern the indicators for rural development for which a common set of indicators had been defined in Article 62 of Commission Regulation (EC) No 1974/2006 (OJ L 368, 23.12.2006, p. 15).
(21) Verifying unit scales, identifying typing errors, and comparing data reported at programme or measure level with other information provided in the reporting.
(22) The Special Reports are available on the Court’s website at the following address: http://eca.europa.eu/portal/page/portal/publications/auditreportsandopinions/specialreports
(23) SR No 12/2010, paragraph 69; SR No 13/2010, paragraph 68; SR No 5/2010, paragraph 26; SR No 11/2010, paragraphs 56 and 96; SR No 3/2010, paragraph 87; SR No 4/2010, paragraphs 48, 50, 61 and 62.
(24) SR No 8/2010, paragraph 63; SR No 9/2010, paragraph 72; SR No 13/2010, paragraph 70; SR No 5/2010, paragraph 48.
(25) SR No 10/2010, paragraph 34; SR 3/2010, paragraph 60; SR No 6/2010, paragraphs 94 and 96.
(26) SR No 12/2010, paragraph 66; SR No 7/2010, paragraph 90; SR No 9/2010, paragraph 53.
(27) SR No 8/2010, paragraph 46; SR No 9/2010, paragraph 51; SR No 5/2010, paragraph 71.
(28) SR No 12/2010, paragraph 62; SR No 5/2010, paragraph 31; SR No 10/2010, paragraph 79; SR No 10/2010, paragraph 40.
(29) SR No 4/2010, paragraph 41; SR No 5/2010, paragraph 100.
(30) Article 60(7), second subparagraph, of the Financial Regulation.
(31) Communication ‘Cohesion policy: Strategic Report 2010 on the implementation of the programmes 2007-2013’ (COM(2010) 110 final, 31.3.2010), p. 13; Communication ‘Regional Policy contributing to smart growth in Europe 2020’ (COM(2010) 553 final, 6.10.2010), p. 7.
ANNEX
Financial information on the general budget
CONTENTS
BACKGROUND INFORMATION ON THE BUDGET
1. |
Establishment of the budget |
2. |
Legal basis |
3. |
Budgetary principles laid down in the Treaties and the Financial Regulation |
4. |
Content and structure of the budget |
5. |
Financing of the budget (budgetary revenue) |
6. |
Types of budget appropriation |
7. |
Implementation of the budget |
7.1. |
Responsibility for implementation |
7.2. |
Implementation of revenue |
7.3. |
Implementation of expenditure |
7.4. |
The consolidated statements on budgetary implementation and determination of the balance of the financial year |
8. |
Presentation of the accounts |
9. |
External audit |
10. |
Discharge and follow-up |
EXPLANATORY NOTES
Sources of financial data
Monetary unit
Abbreviations and symbols
DIAGRAMS RELATED TO THE BUDGET AND THE CONSOLIDATED ACCOUNTS FOR THE FINANCIAL YEAR 2010
BACKGROUND INFORMATION ON THE BUDGET
1. ESTABLISHMENT OF THE BUDGET
The budget comprises the revenue and the expenditure of the European Union as approved by the Council and the European Parliament. It also includes the common foreign and security policy, as well as all other expenditure that the Council considers should be borne by the budget for the purpose of implementing these policies.
2. LEGAL BASIS
The budget is governed by the financial provisions of the Treaties (Articles 310 to 325 TFEU and 106a EAEC) (1) and by the financial regulations (2).
3. BUDGETARY PRINCIPLES LAID DOWN IN THE TREATIES AND THE FINANCIAL REGULATION
All items of European Union revenue and expenditure are to be included in a single budget (unity and accuracy). The budget is authorised for one financial year only (annuality). Budgetary revenue and expenditure must balance (equilibrium). The accounts are established, implemented and presented in euro (unit of account). Revenue is to be used without distinction to finance all expenditure and, like the expenditure, is to be entered in full in the budget and subsequently in the financial statements without any adjustment of one item against another (universality). The appropriations are earmarked for specific purposes by title and chapter; the chapters are further subdivided into articles and items (specification). The budgetary appropriations are to be used in accordance with the principles of economy, efficiency and effectiveness (sound financial management). The budget is established and implemented and the accounts are presented in observance of the principle of transparency (transparency). There are some exceptions to these general principles.
4. CONTENT AND STRUCTURE OF THE BUDGET
The budget consists of a ‘Summary statement of revenue and expenditure’ and sections divided into ‘Statements of revenue and expenditure’ for each institution. The nine sections are: (I) Parliament; (II) Council; (III) Commission; (IV) Court of Justice; (V) Court of Auditors; (VI) Economic and Social Committee; (VII) Committee of the Regions; (VIII) European Ombudsman and (IX) European Data-protection Supervisor.
Within each section, items of revenue and expenditure are classified under budget headings (titles, chapters, articles and, where applicable, items) according to their type or the use to which they are to be applied.
5. FINANCING OF THE BUDGET (BUDGETARY REVENUE)
The budget is mainly financed from the European Union own resources: GNI-based own resources; own resources accruing from VAT; customs duties; agricultural duties and sugar and isoglucose levies (3).
Besides own resources, there are other items of revenue (see Diagram I ).
6. TYPES OF BUDGET APPROPRIATION
To cover estimated expenditure, the following types of budget appropriation are distinguished in the budget:
(a) |
differentiated appropriations (DA) are used to finance multiannual activities in certain budgetary areas. They comprise commitment appropriations (CA) and payment appropriations (PA):
|
(b) |
non-differentiated appropriations (NDA) make it possible to ensure the commitment and payment of expenditure relating to annual activities during each financial year. |
It is thus important to establish the following two totals for each financial year:
(a) |
the total of appropriations for commitments (AFC) (4) = non-differentiated appropriations (NDA) + commitment appropriations (CA) (4); |
(b) |
the total of appropriations for payments (AFP) (4) = non-differentiated appropriations (NDA) + payment appropriations (PA) (4). |
Revenue raised in the budget is intended to cover the total appropriations for payments. Commitment appropriations do not need to be covered by revenue.
The following simplified presentation (with illustrative amounts) shows the impact of these types of appropriations in each budget year.
7. IMPLEMENTATION OF THE BUDGET
7.1. Responsibility for implementation
The Commission implements the budget on its own responsibility in accordance with the Financial Regulation and within the limits of the allotted appropriations; it also confers upon the other institutions the requisite powers for the implementation of the sections of the budget relating to them (5). The Financial Regulation lays down the implementation procedures and, in particular, the responsibilities of the authorising officers, accounting officers, administrators of imprest accounts and internal auditors of the institutions. In the two largest areas of expenditure (EAGF and Cohesion) the management of European Union funds is shared with the Member States.
7.2. Implementation of revenue
The estimated revenue is entered in the budget subject to changes deriving from amending budgets.
The budgetary implementation of revenue consists of establishing the entitlements and recovering the revenue due to the European Union (own resources and other revenue). It is governed by certain special provisions (6). The actual revenue of a financial year is defined as the total of sums collected against entitlements established during the current financial year and sums collected against entitlements still to be recovered from previous financial years.
7.3. Implementation of expenditure
The estimated expenditure is entered in the budget.
The budgetary implementation of expenditure, i.e. the evolution and utilisation of appropriations, may be summarised as follows:
(a) |
appropriations for commitments: (i) evolution of appropriations: the total appropriations for commitments available in a financial year are made up as follows: initial budget (NDA and CA) + amending budgets + assigned revenue + transfers + appropriations for commitments carried over from the preceding financial year + released commitment appropriations from preceding financial years which have been made available again; (ii) utilisation of appropriations: the final appropriations for commitments are available in the financial year for use in the form of commitments entered into (appropriations for commitments utilised = amount of commitments entered into); (iii) carry-overs of appropriations from one financial year to the next financial year: appropriations belonging to the financial year which have not been utilised may be carried over to the next financial year following a decision by the institution concerned. Appropriations available as assigned revenue are automatically carried over; (iv) cancellation of appropriations: the balance is cancelled; |
(b) |
appropriations for payments: (i) evolution of appropriations: the total appropriations for payments available in a financial year are made up as follows: initial budget (NDA and PA) + amending budgets + assigned revenue + transfers + appropriations carried over from the previous financial year in the form of automatic carry-overs or non-automatic carry-overs; (ii) utilisation of appropriations of the financial year: the appropriations for payments of the financial year are available in the financial year for use as payments. They do not include appropriations carried over from the previous financial year (utilised appropriations for payments = amount of payments made against the appropriations of the financial year); (iii) carry-overs of appropriations from one financial year to the next financial year: unutilised appropriations of the financial year may be carried over to the next financial year following a decision by the institution concerned. Appropriations available as assigned revenue are automatically carried over; (iv) cancellation of appropriations: the balance is cancelled; (v) total payments during the financial year: payments against appropriations for payments of the financial year + payments against appropriations for payments carried over from the preceding financial year; (vi) actual expenditure charged to a financial year: expenditure in the consolidated statements on budgetary implementation (see paragraph 7.4) = payments against appropriations for payments of the financial year + appropriations for payments of the financial year carried over to the following financial year. |
7.4. The consolidated statements on budgetary implementation and determination of the balance of the financial year
The consolidated statements on budgetary implementation are drawn up after the closure of each financial year. They determine the balance of the year, which is entered in the budget of the next financial year through an amending budget.
8. PRESENTATION OF THE ACCOUNTS
The accounts for a given financial year are forwarded to the Parliament, the Council and the Court of Auditors; these accounts comprise financial statements and statements on budgetary implementation, together with a report on the budgetary and financial management. The provisional accounts are forwarded not later than 31 March of the following year; the final accounts are due on 31 July of that year.
9. EXTERNAL AUDIT
Since 1977 the external audit of the budget has been carried out by the Court of Auditors of the European Union (7). The Court of Auditors examines the accounts of all revenue and expenditure of the budget. It must provide the European Parliament and the Council with a statement of assurance as to the reliability of the accounts and the legality and regularity of the underlying transactions. It also considers whether revenue has been received and expenditure incurred in a lawful and regular manner, and whether the financial management has been sound. The audits may be carried out before the closure of the financial year in question and are performed on the basis of records and, where necessary, on the spot in the institutions of the Union, in the Member States and in third countries. The Court of Auditors draws up an annual report for each financial year and may also, at any time, submit its observations on specific questions and deliver opinions at the request of any of the institutions of the Union.
10. DISCHARGE AND FOLLOW-UP
Since 1977 the following provisions have been applicable (8): Parliament, on the recommendation of the Council, gives, before 30 April of the second year following the financial year in question, discharge to the Commission in respect of its implementation of the budget. To this end, the Council and Parliament in turn examine the accounts presented by the Commission and the annual report and special reports of the Court of Auditors. The institutions must take appropriate action in response to the comments appearing in the decisions giving discharge and report on the measures taken.
EXPLANATORY NOTES
SOURCES OF FINANCIAL DATA
The financial data contained in this Annex have been drawn from the annual accounts of the European Union and from other financial records provided by the Commission. The geographical distribution is in accordance with the country codes in the Commission's system of accounting information (ABAC). As the Commission points out, all the figures given by Member State — for both revenue and expenditure — are the result of arithmetic that gives an incomplete view of the benefits that each State derives from the Union. They must therefore be interpreted with circumspection.
MONETARY UNIT
All the financial data are presented in millions of euro. The totals are rounded from each exact value and will not therefore necessarily represent the sum of the rounded figures.
ABBREVIATIONS AND SYMBOLS
AFC |
Appropriations for commitments |
AFP |
Appropriations for payments |
AT |
Austria |
BE |
Belgium |
BG |
Bulgaria |
CA |
Commitment appropriations |
CY |
Cyprus |
CZ |
Czech Republic |
DA |
Differentiated appropriations |
DE |
Germany |
DIA |
Diagram referred to within other diagrams (e.g. DIA III) |
DK |
Denmark |
EAEC or Euratom |
European Atomic Energy Community |
EC |
European Community(ies) |
EE |
Estonia |
EFTA |
European Free Trade Association |
EL |
Greece |
ES |
Spain |
EU |
European Union |
EU-27 |
Total for the 27 Member States of the European Union |
FI |
Finland |
FR |
France |
FINREG |
Financial Regulation of 25 June 2002 |
GNI |
Gross National Income |
HU |
Hungary |
IE |
Ireland |
IT |
Italy |
LT |
Lithuania |
LU |
Luxembourg |
LV |
Latvia |
MT |
Malta |
NDA |
Non-differentiated appropriations |
NL |
Netherlands |
OJ |
Official Journal of the European Union |
PA |
Payment appropriations |
PL |
Poland |
PT |
Portugal |
RO |
Romania |
S |
Budgetary section |
SE |
Sweden |
SI |
Slovenia |
SK |
Slovakia |
T |
Budgetary title |
TFEU |
Treaty on the Functioning of the European Union |
UK |
United Kingdom |
VAT |
Value-added tax |
0,0 |
Data between zero and 0,05 |
— |
Lack of data |
DIAGRAMS RELATED TO THE BUDGET AND THE CONSOLIDATED ACCOUNTS FOR THE FINANCIAL YEAR 2010
DIA I |
Budget 2010 — Estimated revenue and final appropriations for payments |
DIA II |
Budget 2010 — Appropriations for commitments |
DIA III |
Appropriations for commitments available in 2010 and utilisation thereof |
DIA IV |
Appropriations for payments available in 2010 and utilisation thereof |
DIA V |
Own resources in 2010, by Member State |
DIA VI |
Payments made in 2010, in each Member State |
DIA VII |
Consolidated balance sheet |
DIA VIII |
Consolidated economic outturn account |
Diagram III
Appropriations for commitments available in 2010 and utilisation thereof
(million euro and %) |
|||||||||
Sections (S) and titles (T) corresponding to the 2010 budgetary nomenclature and financial framework headings |
Final appropriations |
Utilisation of appropriations |
|||||||
Amount (9) |
Commitments entered into |
Utilisation rate (%) |
Carry-overs to 2011 |
Rate (%) |
Cancellations |
Rate (%) |
|||
(a) |
(b) |
(b)/(a) |
(c) |
(c)/(a) |
(d) = (a) – (b) – (c) |
(d)/(a) |
|||
Budgetary nomenclature |
|||||||||
|
1 752,4 |
1 585,8 |
90,5 |
110,6 |
6,3 |
55,9 |
3,2 |
||
|
703,3 |
633,5 |
90,1 |
29,1 |
4,1 |
40,7 |
5,8 |
||
|
144 100,2 |
139 832,5 |
97,0 |
3 645,3 |
2,5 |
622,4 |
0,4 |
||
|
455,0 |
450,8 |
99,1 |
1,5 |
0,3 |
2,7 |
0,6 |
||
|
907,0 |
844,7 |
93,1 |
51,5 |
5,7 |
10,7 |
1,2 |
||
|
95,3 |
92,3 |
96,9 |
2,1 |
2,2 |
0,9 |
1,0 |
||
|
11 414,0 |
11 378,1 |
99,7 |
25,9 |
0,2 |
10,0 |
0,1 |
||
|
60 878,5 |
58 880,4 |
96,7 |
1 967,2 |
3,2 |
30,8 |
0,1 |
||
|
5 089,4 |
4 863,9 |
95,6 |
215,3 |
4,2 |
10,1 |
0,2 |
||
|
494,3 |
458,7 |
92,8 |
12,9 |
2,6 |
22,8 |
4,6 |
||
|
5 911,7 |
5 544,6 |
93,8 |
366,0 |
6,2 |
1,1 |
0,0 |
||
|
1 816,9 |
1 692,0 |
93,1 |
121,0 |
6,7 |
4,0 |
0,2 |
||
|
847,2 |
461,7 |
54,5 |
385,2 |
45,5 |
0,4 |
0,0 |
||
|
1 005,2 |
977,1 |
97,2 |
3,2 |
0,3 |
25,0 |
2,5 |
||
|
77,6 |
76,2 |
98,2 |
1,3 |
1,6 |
0,1 |
0,1 |
||
|
39 020,1 |
38 980,7 |
99,9 |
23,4 |
0,1 |
16,0 |
0,0 |
||
|
139,0 |
132,8 |
95,5 |
1,6 |
1,1 |
4,6 |
3,3 |
||
|
1 816,7 |
1 641,0 |
90,3 |
173,0 |
9,5 |
2,7 |
0,2 |
||
|
222,8 |
217,3 |
97,5 |
1,8 |
0,8 |
3,7 |
1,7 |
||
|
703,5 |
676,0 |
96,1 |
8,7 |
1,2 |
18,7 |
2,7 |
||
|
1 128,1 |
1 070,0 |
94,8 |
53,1 |
4,7 |
5,0 |
0,4 |
||
|
4 449,7 |
4 358,8 |
98,0 |
85,8 |
1,9 |
5,0 |
0,1 |
||
|
80,5 |
78,2 |
97,1 |
1,3 |
1,6 |
1,1 |
1,4 |
||
|
1 737,1 |
1 686,2 |
97,1 |
49,1 |
2,8 |
1,8 |
0,1 |
||
|
1 035,2 |
1 023,4 |
98,9 |
10,1 |
1,0 |
1,6 |
0,2 |
||
|
1 069,7 |
1 058,0 |
98,9 |
2,1 |
0,2 |
9,6 |
0,9 |
||
|
77,7 |
76,7 |
98,8 |
0,0 |
0,0 |
0,9 |
1,2 |
||
|
198,6 |
192,9 |
97,1 |
4,4 |
2,2 |
1,4 |
0,7 |
||
|
1 111,3 |
1 070,4 |
96,3 |
38,2 |
3,4 |
2,6 |
0,2 |
||
|
67,0 |
63,5 |
94,7 |
2,7 |
4,0 |
0,9 |
1,3 |
||
|
11,6 |
11,2 |
96,3 |
0,3 |
2,6 |
0,1 |
1,2 |
||
|
152,9 |
138,7 |
90,7 |
7,8 |
5,1 |
6,4 |
4,2 |
||
|
1 209,6 |
1 205,2 |
99,6 |
0,0 |
0,0 |
4,5 |
0,4 |
||
|
461,7 |
431,2 |
93,4 |
28,8 |
6,2 |
1,7 |
0,4 |
||
|
415,3 |
— |
— |
— |
— |
415,3 |
100,0 |
||
|
331,5 |
324,5 |
97,9 |
1,5 |
0,4 |
5,5 |
1,7 |
||
|
148,6 |
138,2 |
93,0 |
0,4 |
0,3 |
10,0 |
6,7 |
||
|
127,2 |
124,7 |
98,0 |
0,2 |
0,1 |
2,4 |
1,9 |
||
|
90,8 |
90,3 |
99,4 |
0,0 |
0,0 |
0,5 |
0,6 |
||
|
9,3 |
8,4 |
89,7 |
— |
— |
1,0 |
10,3 |
||
|
7,1 |
5,9 |
82,7 |
— |
— |
1,2 |
17,3 |
||
Grand total appropriations for commitments |
147 270,4 |
142 743,8 |
96,9 |
3 787,0 |
2,6 |
739,6 |
0,5 |
||
Financial Framework |
|||||||||
|
66 243,2 |
64 453,3 |
97,3 |
1 311,9 |
2,0 |
478,0 |
0,7 |
||
|
62 311,6 |
60 250,8 |
96,7 |
1 969,9 |
3,2 |
91,0 |
0,1 |
||
|
1 905,8 |
1 795,2 |
94,2 |
97,5 |
5,1 |
13,1 |
0,7 |
||
|
8 417,9 |
8 247,2 |
98,0 |
154,2 |
1,8 |
16,5 |
0,2 |
||
|
8 391,9 |
7 997,3 |
95,3 |
253,7 |
3,0 |
141,0 |
1,7 |
||
|
— |
— |
— |
— |
— |
— |
— |
||
Grand total appropriations for commitments |
147 270,4 |
142 743,8 |
96,9 |
3 787,0 |
2,6 |
739,6 |
0,5 |
||
Grand total appropriations for payments |
130 527,0 |
122 230,7 |
93,6 |
5 557,4 |
4,3 |
2 739,0 |
2,1 |
Diagram IV
Appropriations for payments available in 2010 and utilisation thereof
(million euro and %) |
|||||||||
Sections (S) and titles (T) corresponding to the 2010 budgetary nomenclature and financial framework headings |
Final appropriations (10) |
Utilisation of appropriations |
|||||||
Payments made in 2010 |
Utilisation rate (%) |
Carry-overs to 2011 |
Rate (%) |
Cancellations |
Rate (%) |
||||
(a) |
(b) |
(b)/(a) |
(c) |
(c)/(a) |
(d) = (a) – (b) – (c) |
(d)/(a) |
|||
Budgetary nomenclature |
|||||||||
|
1 938,1 |
1 506,6 |
77,7 |
350,9 |
18,1 |
80,7 |
4,2 |
||
|
748,4 |
620,3 |
82,9 |
80,5 |
10,8 |
47,5 |
6,3 |
||
|
127 031,1 |
119 373,9 |
94,0 |
5 073,0 |
4,0 |
2 584,2 |
2,0 |
||
|
400,5 |
288,8 |
72,1 |
67,4 |
16,8 |
44,3 |
11,1 |
||
|
770,9 |
658,0 |
85,4 |
98,7 |
12,8 |
14,2 |
1,8 |
||
|
103,5 |
91,9 |
88,8 |
9,8 |
9,5 |
1,8 |
1,7 |
||
|
8 543,3 |
7 481,1 |
87,6 |
43,4 |
0,5 |
1 018,9 |
11,9 |
||
|
58 421,2 |
55 611,3 |
95,2 |
2 324,8 |
4,0 |
485,1 |
0,8 |
||
|
3 369,2 |
2 858,9 |
84,9 |
187,2 |
5,6 |
323,1 |
9,6 |
||
|
438,0 |
358,2 |
81,8 |
23,8 |
5,4 |
56,0 |
12,8 |
||
|
5 369,2 |
4 506,5 |
83,9 |
848,2 |
15,8 |
14,5 |
0,3 |
||
|
1 986,3 |
1 786,3 |
89,9 |
196,9 |
9,9 |
3,1 |
0,2 |
||
|
789,3 |
438,2 |
55,5 |
344,0 |
43,6 |
7,2 |
0,9 |
||
|
827,4 |
655,6 |
79,2 |
39,2 |
4,7 |
132,6 |
16,0 |
||
|
79,9 |
70,8 |
88,7 |
7,0 |
8,8 |
2,0 |
2,5 |
||
|
30 709,4 |
30 622,6 |
99,7 |
79,1 |
0,3 |
7,7 |
0,0 |
||
|
135,7 |
125,6 |
92,5 |
9,5 |
7,0 |
0,7 |
0,5 |
||
|
1 782,8 |
1 571,7 |
88,2 |
205,3 |
11,5 |
5,9 |
0,3 |
||
|
230,8 |
206,0 |
89,2 |
14,1 |
6,1 |
10,8 |
4,7 |
||
|
664,5 |
590,4 |
88,8 |
44,5 |
6,7 |
29,6 |
4,5 |
||
|
839,8 |
744,9 |
88,7 |
71,2 |
8,5 |
23,7 |
2,8 |
||
|
3 867,5 |
3 683,0 |
95,2 |
83,5 |
2,2 |
101,0 |
2,6 |
||
|
90,4 |
76,9 |
85,1 |
6,3 |
7,0 |
7,2 |
7,9 |
||
|
1 818,8 |
1 707,8 |
93,9 |
55,2 |
3,0 |
55,8 |
3,1 |
||
|
1 152,5 |
1 130,2 |
98,1 |
16,0 |
1,4 |
6,3 |
0,5 |
||
|
977,8 |
970,9 |
99,3 |
5,9 |
0,6 |
0,9 |
0,1 |
||
|
82,3 |
72,7 |
88,3 |
7,0 |
8,5 |
2,6 |
3,1 |
||
|
214,5 |
188,7 |
87,9 |
22,3 |
10,4 |
3,6 |
1,7 |
||
|
1 239,4 |
1 044,0 |
84,2 |
176,8 |
14,3 |
18,5 |
1,5 |
||
|
77,2 |
64,7 |
83,8 |
11,2 |
14,5 |
1,3 |
1,7 |
||
|
12,3 |
10,6 |
86,6 |
1,4 |
11,8 |
0,2 |
1,6 |
||
|
148,0 |
125,8 |
85,0 |
16,6 |
11,2 |
5,6 |
3,8 |
||
|
1 209,6 |
1 205,2 |
99,6 |
0,0 |
0,0 |
4,5 |
0,4 |
||
|
486,1 |
426,5 |
87,7 |
56,6 |
11,6 |
2,9 |
0,6 |
||
|
192,9 |
— |
— |
— |
— |
192,9 |
100,0 |
||
|
349,7 |
323,1 |
92,4 |
18,3 |
5,2 |
8,3 |
2,4 |
||
|
209,8 |
182,4 |
86,9 |
16,7 |
7,9 |
10,8 |
5,2 |
||
|
134,4 |
121,5 |
90,4 |
9,3 |
7,0 |
3,6 |
2,7 |
||
|
97,2 |
89,4 |
92,0 |
6,7 |
6,9 |
1,0 |
1,1 |
||
|
10,1 |
8,5 |
84,3 |
0,5 |
5,2 |
1,1 |
10,5 |
||
|
8,2 |
5,0 |
61,1 |
1,4 |
16,8 |
1,8 |
22,1 |
||
Grand total appropriations for payments |
130 527,0 |
122 230,7 |
93,6 |
5 557,4 |
4,3 |
2 739,0 |
2,1 |
||
Financial Framework |
|||||||||
|
52 103,0 |
48 828,0 |
93,7 |
1 905,3 |
3,7 |
1 369,7 |
2,6 |
||
|
59 630,4 |
56 647,3 |
95,0 |
2 381,9 |
4,0 |
601,2 |
1,0 |
||
|
1 616,6 |
1 373,0 |
84,9 |
199,3 |
12,3 |
44,4 |
2,7 |
||
|
8 101,2 |
7 486,5 |
92,4 |
114,1 |
1,4 |
500,6 |
6,2 |
||
|
9 075,8 |
7 895,8 |
87,0 |
956,8 |
10,5 |
223,1 |
2,5 |
||
|
— |
— |
— |
— |
— |
— |
— |
||
Grand total appropriations for payments |
130 527,0 |
122 230,7 |
93,6 |
5 557,4 |
4,3 |
2 739,0 |
2,1 |
Diagram V
Own resources in 2010, by Member State
(million euro and %) |
||||||||||||||||||||||||||||||
Revenue Outturn |
||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||
|
BE |
BG |
CZ |
DK |
DE |
EE |
IE |
EL |
ES |
FR |
IT |
CY |
LV |
LT |
LU |
HU |
MT |
NL |
AT |
PL |
PT |
RO |
SI |
SK |
FI |
SE |
UK (11) |
EU-27 (13) |
||
|
1 489,6 |
42,4 |
189,4 |
306,8 |
3 064,5 |
17,2 |
185,6 |
215,4 |
1 158,1 |
1 407,3 |
1 668,0 |
26,4 |
16,8 |
39,1 |
12,7 |
92,6 |
9,8 |
1 749,2 |
166,6 |
317,8 |
134,2 |
100,9 |
66,6 |
107,3 |
127,0 |
434,3 |
2 513,5 |
15 659,3 |
||
|
439,2 |
46,0 |
180,9 |
256,9 |
1 586,9 |
19,7 |
193,8 |
293,6 |
760,4 |
2 380,6 |
1 558,9 |
24,9 |
13,7 |
31,6 |
39,3 |
119,4 |
8,1 |
202,3 |
287,1 |
518,3 |
281,7 |
124,1 |
50,1 |
53,4 |
226,7 |
149,5 |
2 629,0 |
12 475,9 |
||
|
2 662,4 |
247,2 |
1 051,4 |
1 705,7 |
18 703,8 |
98,9 |
950,1 |
1 616,9 |
7 611,3 |
14 762,0 |
11 386,6 |
124,3 |
133,9 |
186,4 |
196,6 |
702,2 |
40,4 |
4 219,2 |
2 131,7 |
2 630,9 |
1 344,0 |
859,6 |
250,9 |
450,1 |
1 256,0 |
2 771,6 |
12 963,4 |
91 057,7 |
||
|
168,4 |
14,7 |
66,8 |
95,2 |
249,6 |
5,6 |
56,1 |
168,5 |
496,2 |
897,6 |
615,7 |
7,7 |
9,5 |
10,2 |
10,7 |
34,6 |
2,6 |
54,9 |
22,7 |
167,0 |
77,2 |
50,6 |
16,6 |
32,3 |
80,6 |
36,2 |
–3 562,7 |
– 114,8 |
||
|
23,6 |
2,2 |
9,2 |
15,9 |
167,8 |
0,9 |
8,6 |
15,6 |
69,4 |
133,4 |
103,1 |
1,1 |
1,2 |
1,8 |
1,9 |
6,2 |
0,4 |
– 612,1 |
18,9 |
22,9 |
10,8 |
8,0 |
2,3 |
4,4 |
11,8 |
– 148,5 |
116,1 |
–3,2 |
||
|
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
||
TOTAL |
4 783,2 |
352,6 |
1 497,7 |
2 380,5 |
23 772,6 |
142,4 |
1 394,3 |
2 310,1 |
10 095,4 |
19 580,8 |
15 332,4 |
184,5 |
175,0 |
269,1 |
261,2 |
955,0 |
61,2 |
5 613,6 |
2 626,9 |
3 656,8 |
1 847,9 |
1 143,1 |
386,6 |
647,3 |
1 702,2 |
3 243,1 |
14 659,4 |
119 074,9 |
||
|
4,0 % |
0,3 % |
1,3 % |
2,0 % |
20,0 % |
0,1 % |
1,2 % |
1,9 % |
8,5 % |
16,4 % |
12,9 % |
0,2 % |
0,1 % |
0,2 % |
0,2 % |
0,8 % |
0,1 % |
4,7 % |
2,2 % |
3,1 % |
1,6 % |
1,0 % |
0,3 % |
0,5 % |
1,4 % |
2,7 % |
12,3 % |
100,0 % |
Diagram VI
Payments made in 2010, in each Member State (14)
Note: Payments made in 2010 = payments against 2010 operating appropriations plus payments against carry-overs from 2009.
(million euro and %) |
|||||||||||||||||||||||||||||||
Financial framework headings |
|||||||||||||||||||||||||||||||
|
|||||||||||||||||||||||||||||||
|
BE |
BG |
CZ |
DK |
DE |
EE |
IE |
EL |
ES |
FR |
IT |
CY |
LV |
LT |
LU (16) |
HU |
MT |
NL |
AT |
PL |
PT |
RO |
SI |
SK |
FI |
SE |
UK |
Third Countries and misc. (15) |
Total |
||
|
1 005,0 |
466,0 |
2 315,3 |
301,3 |
4 202,7 |
605,4 |
278,5 |
2 710,7 |
5 957,1 |
2 943,6 |
3 208,0 |
86,7 |
540,0 |
1 025,4 |
110,9 |
2 164,2 |
72,1 |
745,7 |
367,1 |
7 958,0 |
3 051,0 |
566,1 |
518,8 |
1 208,9 |
349,7 |
449,6 |
2 459,1 |
3 161,2 |
48 828,0 |
||
Competitiveness |
803,4 |
68,8 |
83,0 |
234,5 |
1 199,1 |
39,6 |
180,2 |
163,4 |
831,9 |
1 469,2 |
640,5 |
19,8 |
31,0 |
122,6 |
102,3 |
78,0 |
6,2 |
513,1 |
204,9 |
177,0 |
167,1 |
53,9 |
43,0 |
112,8 |
196,3 |
252,0 |
789,2 |
3 066,1 |
11 648,9 |
||
Cohesion |
201,5 |
397,1 |
2 232,3 |
66,8 |
3 003,7 |
565,8 |
98,3 |
2 547,2 |
5 125,2 |
1 474,5 |
2 567,5 |
66,9 |
509,0 |
902,8 |
8,6 |
2 086,2 |
66,0 |
232,6 |
162,2 |
7 781,0 |
2 883,9 |
512,2 |
475,8 |
1 096,1 |
153,4 |
197,5 |
1 669,8 |
95,0 |
37 179,1 |
||
|
841,5 |
575,1 |
1 062,2 |
1 153,9 |
6 968,5 |
179,7 |
1 718,4 |
2 942,5 |
7 185,3 |
9 889,1 |
5 832,6 |
72,8 |
287,2 |
544,1 |
58,0 |
1 430,3 |
22,1 |
1 125,5 |
1 356,7 |
3 697,9 |
1 267,8 |
1 439,5 |
209,1 |
679,9 |
909,8 |
1 064,4 |
3 978,7 |
154,9 |
56 647,3 |
||
|
147,0 |
21,6 |
14,4 |
13,2 |
86,4 |
9,4 |
27,5 |
42,3 |
54,7 |
139,0 |
166,0 |
5,8 |
8,7 |
18,1 |
12,8 |
23,3 |
10,8 |
148,6 |
47,7 |
108,0 |
29,6 |
14,6 |
12,9 |
8,8 |
15,6 |
78,2 |
68,7 |
39,3 |
1 373,0 |
||
|
184,9 |
144,2 |
3,5 |
1,6 |
71,4 |
4,1 |
1,3 |
4,2 |
34,4 |
43,8 |
37,3 |
40,3 |
1,9 |
2,0 |
0,4 |
3,1 |
— |
12,8 |
20,4 |
30,1 |
3,1 |
278,3 |
4,2 |
1,1 |
6,4 |
16,9 |
30,2 |
6 504,4 |
7 486,5 |
||
|
4 294,5 |
14,6 |
18,7 |
52,5 |
193,4 |
9,1 |
44,4 |
41,7 |
88,6 |
337,0 |
269,8 |
8,2 |
10,0 |
11,8 |
1 346,0 |
33,0 |
7,7 |
87,4 |
20,8 |
31,7 |
30,3 |
22,5 |
9,4 |
11,5 |
23,4 |
28,8 |
139,3 |
709,9 |
7 895,8 |
||
|
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
||
TOTAL |
6 472,8 |
1 221,5 |
3 414,1 |
1 522,6 |
11 522,5 |
807,7 |
2 070,1 |
5 741,3 |
13 320,1 |
13 352,6 |
9 513,7 |
213,8 |
847,7 |
1 601,4 |
1 528,1 |
3 653,9 |
112,6 |
2 120,0 |
1 812,7 |
11 825,7 |
4 381,8 |
2 321,1 |
754,3 |
1 910,2 |
1 304,9 |
1 637,8 |
6 675,9 |
10 569,7 |
122 230,7 |
||
|
5,3 % |
1,0 % |
2,8 % |
1,2 % |
9,4 % |
0,7 % |
1,7 % |
4,7 % |
10,9 % |
10,9 % |
7,8 % |
0,2 % |
0,7 % |
1,3 % |
1,3 % |
3,0 % |
0,1 % |
1,7 % |
1,5 % |
9,7 % |
3,6 % |
1,9 % |
0,6 % |
1,6 % |
1,1 % |
1,3 % |
5,5 % |
8,6 % |
100,0 % |
Diagram VII
Consolidated balance sheet (17)
(million euro) |
||
|
31.12.2010 |
31.12.2009 |
Non-current assets: |
||
Intangible assets |
108 |
72 |
Property, plant and equipment |
4 813 |
4 859 |
Long-term investments |
2 555 |
2 379 |
Loans |
11 640 |
10 764 |
Long-term pre-financing |
44 118 |
41 544 |
Long-term receivables |
40 |
55 |
|
63 274 |
59 673 |
Current assets: |
||
Inventories |
91 |
77 |
Short-term investments |
2 331 |
1 791 |
Short-term pre-financing |
10 078 |
9 436 |
Short-term receivables |
13 501 |
8 958 |
Cash and cash equivalents |
22 063 |
23 372 |
|
48 064 |
43 634 |
Total assets |
111 338 |
103 307 |
Non-current liabilities: |
||
Employee benefits |
(37 172) |
(37 242) |
Long-term provisions |
(1 317) |
(1 469) |
Long-term financial liabilities |
(11 445) |
(10 559) |
Other long-term liabilities |
(2 104) |
(2 178) |
|
(52 038) |
(51 448) |
Current liabilities: |
||
Short-term provisions |
(214) |
(213) |
Short-term financial liabilities |
(2 004) |
(40) |
Accounts payable |
(84 529) |
(93 884) |
|
(86 747) |
(94 137) |
Total liabilities |
(138 785) |
(145 585) |
Net assets |
(27 447) |
(42 278) |
Reserves |
3 484 |
3 323 |
Amounts to be called from Member States |
(30 931) |
(45 601) |
Net assets |
(27 447) |
(42 278) |
Diagram VIII
Consolidated economic outturn account (18)
(million euro) |
||
|
2010 |
2009 |
Operating revenue |
||
Own resource and contributions revenue |
122 328 |
110 537 |
Other operating revenue |
8 188 |
7 532 |
|
130 516 |
118 069 |
Operating expenses |
||
Administrative expenses |
(8 614) |
(8 133) |
Operating expenses |
(103 764) |
(102 504) |
|
(112 378) |
(110 637) |
Surplus from operating activities |
18 138 |
7 432 |
Financial revenue |
1 178 |
835 |
Financial expenses |
(661) |
(594) |
Movement in employee benefits liability |
(1 003) |
(683) |
Share of net surplus (deficit) of associates and joint ventures |
(420) |
(103) |
Economic outturn for the year |
17 232 |
6 887 |
(1) See list of abbreviations in the Explanatory Notes.
(2) Mainly the Financial Regulation (FINREG) of 25 June 2002 (OJ L 248, 16.9.2002).
(3) Principal legal acts relating to own resources: Council Decision 2007/436/EC, Euratom (OJ L 163, 23.6.2007, p. 17); Council Decision 2000/597/EC, Euratom (OJ L 253, 7.10.2000, p. 42); Council Regulation (EC, Euratom) No 1150/2000 (OJ L 130, 31.5.2000, p. 1).
(4) It is important to note the differences between ‘appropriations for commitments’ and ‘commitment appropriations’ and between ‘appropriations for payments’ and ‘payment appropriations’. The two terms ‘commitment appropriations’ and ‘payment appropriations’ are used exclusively in the context of differentiated appropriations.
(5) See Articles 317 TFEU, 106a EAEC and 50 of the FINREG.
(6) See Articles 69 to 74 of the FINREG and Regulation (EC, Euratom) No 1150/2000.
(7) See Articles 285 to 287 TFEU, 106a EAEC and Articles 139 to 147 of the FINREG.
(8) See Articles 319 TFEU and 106a EAEC.
(9) Final budget appropriations after taking account of transfers between budget headings, appropriations relating to assigned revenue or similar and appropriations carried over from the previous financial year.
(10) Final budget appropriations after taking account of transfers between budget headings, appropriations relating to assigned revenue or similar and appropriations carried over from the previous financial year.
(11) For the United Kingdom a correction (3 562,7 million euro) is applied to the gross amount of own resources (18 222 million euro). The financing of this adjustment is borne by the other Member States.
(12) For the Netherlands and Sweden a gross reduction in their annual GNI contribution is granted for the period 2007-2013. For 2010 their amounts are respectively 612,1 and 148,5 million euro.
(13) The differences between the amounts presented in the diagram and the ones presented in chapter 2 - table 2.1 represent the adjustments for VAT balances, GNI balances and the UK correction allocated to the corresponding titles and countries.
(14) The geographical breakdown is not by payments made to the Member States but by expenditure according to the data in the Commission's computerised accounting system ABAC (except for the heading Administration which was provided directly by DG Budget).
(15) The amounts under ‘Third Countries and miscellaneous’ mainly include expenditure related to the projects implemented outside the Union and participation by third countries. Expenditure in respect of which the geographical distribution could not be made is also included.
(16) The amount presented for Luxembourg includes a negative adjustment of 136 million euro, representing operational payments for which Luxembourg is not the actual beneficiary.
(17) The balance sheet is presented using the layout as in the Annual Accounts of the European Union.
(18) The economic outturn account is presented using the layout as in the Annual Accounts of the European Union.