—

having regard to the general budget of the European Union for the financial year 2011 (1),

—

having regard to the consolidated annual accounts of the European Union for the financial year 2011 (COM(2012) 436 – C7-0224/2012) (2),

—

having regard to the Commission’s report on the follow-up to the discharge for the 2010 financial year (COM(2012) 585), and to the Commission staff working documents accompanying that report (SWD(2012) 340 and SWD(2012) 330),

—

having regard to the Commission communication of 6 June 2012 entitled ‘Synthesis of the Commission’s management achievements in 2011’ (COM(2012) 281),

—

having regard to the Commission’s annual report to the discharge authority on internal audits carried out in 2011 (COM(2012) 563), and to the Commission staff working document accompanying that report (SWD(2012) 283),

—

having regard to the Annual Report of the Court of Auditors on the implementation of the budget concerning the financial year 2011, together with the institutions’ replies (3) (Annual Report), and to the Court of Auditors’ special reports,

—

having regard to the statement of assurance (4) as to the reliability of the accounts and the legality and regularity of the underlying transactions provided by the Court of Auditors for the financial year 2011 pursuant to Article 287 of the Treaty on the Functioning of the European Union,

—

having regard to the Council’s recommendation of 12 February 2013 on discharge to be given to the Commission in respect of the implementation of the budget for the financial year 2011 (05752/2013 – C7-0038/2013),

—

having regard to the Council’s recommendation of 12 February 2013 on discharge to be given to the executive agencies in respect of the implementation of the budget for the financial year 2011 (05754/2013 – C7-0039/2013),

—

having regard to Articles 317, 318 and 319 of the Treaty on the Functioning of the European Union and Article 106a of the Euratom Treaty,

—

having regard to Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities (5), and in particular Articles 55, 145, 146 and 147 thereof,

—

having regard to Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council of 25 October 2012 on the financial rules applicable to the general budget of the Union and repealing Council Regulation (EC, Euratom) No 1605/2002 (6), and in particular Articles 62, 164, 165 and 166 thereof,

—

having regard to Council Regulation (EC) No 58/2003 of 19 December 2002 laying down the statute for executive agencies to be entrusted with certain tasks in the management of Community programmes (7), and in particular Article 14(2) and (3) thereof,

—

having regard to Rule 76 of, and Annex VI to, its Rules of Procedure,

—

having regard to the report of the Committee on Budgetary Control and the opinions of the other committees concerned (A7-0116/2013),

A.

whereas Europe is facing an economic and financial crisis in addition to a crisis of confidence in its institutions, a situation which requires Parliament to be particularly rigorous when scrutinising the accounts of the Commission,

B.

whereas the Court of Auditors was, for the 18th time in a row, unable to grant a positive statement of assurance regarding the legality and regularity of the payments,

C.

whereas Member States are currently negotiating the new Multiannual Financial Framework (MFF) 2014-2020,

D.

whereas in a situation of limitation of resources, caused by the economic and financial crisis, considers the need for the so-called ‘Intelligent solidarity’ - the use of Union funds to implement reforms, observe financial discipline and ensure political and economic stability,

E.

whereas, according to the Treaty on the Functioning of the European Union (TFEU), the Commission bears the ultimate responsibility for the implementation of the Union budget, while Member States are required to sincerely cooperate with the Commission to ensure that the appropriations are used in accordance with the principles of sound financial management,

F.

whereas Article 287 TFEU provides that ‘[t]he Court of Auditors shall 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 …’,

G.

whereas performance audits measuring the extent to which spending has achieved the objectives pursued become ever more important,

H.

whereas the deficiencies in the customs system call for a better balance between reduced controls and an increase in ex post controls,

I.

whereas the Commission’s management should be presented fairly with a view to reinforcing public trust in the institutions,

J.

whereas the Europe 2020 strategy for growth and jobs is an overarching strategy covering the activities of almost all the Commission services in charge of the internal policies, and whereas 2011 was the first full year during which the strategy was implemented,

K.

whereas the interinstitutional dialogue provided for in Article 318 TFEU should be the opportunity to stimulate a new culture of performance inside the Commission,

L.

whereas the Committee on Budgetary Control should be more closely involved in monitoring Commission spending in future; looks forward to closer cooperation with the Court of Auditors in order to produce wide-ranging proposals on improving efficiency in audit procedures,

M.

whereas the powers and resources of the Committee on Budgetary Control in the discharge procedure should be examined and set out in detail in an own-initiative report,

1.

Calls on the Commission, with a view to granting of the discharge, to present to Parliament an action plan for the achievement of the following priority actions:

Communication of the Commission on the protection of the Union budget

Error rate in shared management

Calls on the Commission to:

DG AGRI

DG REGIO

Error rate in centralised management

DG Research

Evaluation report (Article 318 TFEU) and enhanced use of performance audits

Revenues and traditional own resources

In order to ensure proper protection of the Union’s financial interests, and with a view to equipping the Union with sufficient own resources for growth, the Commission should:

2.

Is alarmed by the magnitude of offshore financial activities, as revealed in the recent offshore leaks; calls on the Commission to take urgent measures to eliminate these possibilities of diverting thousands of billions of euro away from the normal financial circuit in order primarily to avoid tax and to hide illegal funds from the tax authorities in the Member States;

3.

Strongly suggests that the Commission should take measures to ensure that all banking activities related to advising on, and setting up, offshore structures are made illegal and that no bank within the European Union involved in such activities will or can receive European funding under any scheme or benefit from national support measures;

4.

Expects to receive, within two months, draft legislative proposals from the Commission to end the practice of the use of tax havens by individuals, companies and even public institutions;

5.

Welcomes the follow-up given by the Commission to Parliament’s request for greater transparency as regards the Financial Engineering Instruments (FEIs), in particular by making the reporting by Member States on financial and implementation issues in the relevant legislation a compulsory procedure (13), and notes that the Summary report on the progress made in financing and implementing FEIs announced by the Commission in its report on the follow-up to the discharge for the 2010 financial year (COM(2012) 585) was transmitted in due time to Parliament; further notes that the latter provides data on the description of the FEIs and their implementation arrangements, identification of the implementing entities and amounts of assistance paid to and by the FEIs;

6.

Notes that the amount of structural funds implemented through FEIs has continued to increase over the period 2007-2013, in particular for instruments targeting enterprises; points out that more than 90 % of the amounts actually disbursed to final recipients went to enterprises; asks the Commission to clarify what percentage of the amounts actually dispersed went to truly private enterprises, as opposed to majority publicly owned enterprises;

7.

Notes with concern that FEIs for urban development and energy efficiency/renewable energies account for only 17 % of the amount paid to all FEIs at the end of 2011 and, moreover, that the flow into concrete urban projects remained slow;

8.

Endorses the lessons learned by the Commission pursuant to the abovementioned summary report as to the Member States’ reporting, as follows:

9.

Notes that the Commission has charged a group of experts (14) to draft a report on the use of the ERDF in support of FEIs; considers this to be a first step and is worried that the expert evaluation network’s analysis reveals a number of serious problems, for example, the lack of evidence to determine whether the scale of support matches the size of the gaps in the market for loans and equity finance; the lack of evidence from which to assess whether the size of venture capital funds set up with ERDF support is large enough to be viable; the paucity of data on the costs of setting up and operating FEIs relative to non-repayable grants; and the complexity of the regulations and uncertainty surrounding their interpretation;

10.

Calls on the Commission to take concrete steps to significantly improve the use of the FEIs with a view to better protecting the Union’s financial interests;

11.

Reiterates that Parliament invited the Commission to evaluate objectively and critically the experiences with FEIs in the Cohesion policy for the programming period 2007-2013, to provide a risk assessment considering different FEIs separately, as well as taking into account the risk structure of beneficiaries of the FEIs, and to report annually to Parliament, in time for the respective discharge procedure, on the use of FEIs in Member States, including comparable indicators on the effectiveness, efficiency and economy of FEIs, and also on how the Commission coordinates, ensures consistency and mitigates the risk of overlapping across the policy areas;

12.

Regrets that the Commission constantly ignores Parliament’s long standing request to add the responsible Commissioner’s signature to the annual activity reports of his/her related Directorate-General; notes, however, that the Synthesis report is adopted by the College of Commissioners and contains a specific statement emphasising the Commission’s final responsibility for the management of its authorising officers on the basis of assurances and reservations made by them in their annual activity reports; is therefore of the opinion that the College, when adopting the Synthesis report, took note of the problems in the respective directorates-general and can be held responsible;

13.

Calls on the Commission to further improve the quality and comparability of the annual activity reports;

14.

Welcomes the fact that the Commission has given Parliament access to Member States’ annual summaries; deplores the fact, however, that only 17 Member States gave the Commission permission to do so; asks the Commission to communicate which steps and measures it will take to ensure that the remaining 10 Member States will also grant their permission;

15.

Welcomes the new rules introduced in Financial Regulation (EU, Euratom) No 966/2012 about the regular clearing of pre-financing and encourages the Commission to continue its efforts to follow the recommendations of the Court of Auditors as regards the relevant accounting data and methods;

16.

Recognises that the Commission’s proposals for the 2014-2020 programming period largely met Parliament’s concerns expressed in its resolution accompanying the discharge decision for the budget execution in 2008 (15), with the proposed introduction of net financial corrections to Member States as well as streamlined procedures and conditions under which payments can be interrupted or suspended; notes that those proposals also clarify certain eligibility rules and clearly prohibit the possibility for managing authorities to select projects physically completed or fully implemented before the funding application (so-called ‘retrospective projects’);

17.

Calls on the Commission to investigate the possibilities of setting up a correctional system for error prone spending areas, in which the total material value of errors in year n will be partially or entirely deducted from the yearly reimbursement requests made by accrediting organisations depending on the severity of the irregularities;

18.

Recalls that Article 287 TFEU provides: ‘The Court of Auditors shall 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 (…)’;

19.

Points out that in addition to delivering one opinion on the reliability of the accounts, the Court of Auditors delivers three on the legality and regularity of the underlying operations; takes the view that this plethora of opinions makes it more difficult for Members of the European Parliament to assess the Commission’s implementation of the budget;

20.

Points out that the Court of Auditors establishes, on the basis of its audits, the most likely error rate, which in 2011 stood at 3,9 % for payments; points out that on the basis of international auditing standards, the Court of Auditors takes 2 % as the materiality threshold as regards the generally acceptable rate of errors and that, if the most likely error rate is above this threshold, the Court of Auditors will give an adverse opinion;

21.

Points out that in accordance with international audit standards, the external auditor should set the materiality threshold for errors independently;

22.

Emphasises that a distinction must be drawn between errors and fraud and considers that in the vast majority of cases, errors stem from administrative mistakes, many of which are linked to the complexity of the Union and national rules, which can be corrected; reminds the Commission, however, that the current error rate is still unacceptably high and that Parliament has a zero-tolerance approach to errors;

23.

Highlights the fact that an error rate as such does not give a comprehensive view of the effectiveness of Union policies; is of the opinion, therefore, that compliance audits should be supplemented by performance audits evaluating the economy, efficiency and effectiveness of Union policy instruments; points to the fact that the U.S. Government Accountability Office concentrates more on performance than on compliance audits;

24.

Observes that there are some differences of views between the Court of Auditors and the Commission with regard to the way in which errors should be calculated, in particular as to whether pre-financing should be included or excluded, as to the handling of quantifiable and non-quantifiable errors and as to the way in which recoveries and financial corrections should be considered in the overall assessment of the financial impact of errors and the corrective capacity of systems; is of the opinion that the different approaches mirror the different roles respectively played by the institutions, namely the role of auditor on the one hand and manager on the other; requests that the Court of Auditors consider the possibility of separating these contested different categories of error rates in its next annual report and to qualify the recovery and financial corrections policies/results per sector;

25.

Understands that in the course of time, expertise and methodology can change; insists, however, that audit results need to remain comparable in order to enable Parliament to make a political assessment over a longer period of time;

26.

Calls, therefore, for closer cooperation between national audit institutions and the European Court of Auditors in connection with the auditing of shared-management arrangements, pursuant to Article 287(3) TFEU;

27.

Proposes that consideration should be given to having the national audit institutions deliver, in a capacity as independent external auditors and in accordance with international audit standards, national audit certificates in respect of the management of Union funds; these certificates would be submitted to the Member State governments with a view to their being produced as part of the discharge process, on the basis of an appropriate interinstitutional procedure to be established;

28.

Welcomes the fact that the annual accounts of the Union for the financial year 2011 present fairly, and in all material respects, the position of the Union as at 31 December 2011, and the results of its operations and its cash flows for the then completed year;

29.

Notes with satisfaction that revenue underlying the accounts for the year ended 31 December 2011 is legal and regular in all material respects;

30.

Notes with satisfaction that commitments underlying the accounts for the year ended 31 December 2011 are legal and regular in all material respects;

31.

Deeply regrets that payments remain materially affected by error;

32.

Understands that the basis for the adverse opinion of the Court of Auditors is the observation that the supervisory and control systems are only partially effective and that, as a result, payments are affected by a most likely error rate of 3,9 %;

33.

Notes with concern that the policy groups agriculture; market and direct support; rural development, environment, fisheries and health; regional policy, energy and transport; employment and social affairs, as well as research and other internal policies, are materially affected by error;

34.

Recalls that the most likely error rate for payments in the financial year 2010 was estimated at 3,7 % and in the financial year 2009 at 3,3 %; is dismayed about this increase because it reverses the positive trend observed in the years 2007, 2008 and 2009; calls on the Commission, therefore, to take the necessary steps to achieve a trend that shows a consistent decrease in the error rate; emphasises that Parliament is of the opinion that [r]eaching this target is an essential part of getting full value for EU expenditure in the future and progressing towards a positive DAS’ (16);

35.

Attributes this development mainly to the increase of the most likely error rate in the area of agriculture, and is concerned in particular about the high level of error in the rural development where the most likely error rate reported was 7,7 %;

36.

Calls on the Court of Auditors to adapt its special reports on specific fields of policy more than previously to facilitating comparisons with past periods;

37.

Regrets that the Council continues to refuse to cooperate with Parliament with regards to the Council discharge; believes that this leaves the Committee on Budgetary Control with very few instruments and that eventually, the Committee is forced to introduce its questions and requests for information about the budget of the Council to the Commission;

38.

Notes that the Council recommends to give discharge to the Commission in respect of the implementation of the general budget of the Union for the financial year 2011; notes that the Netherlands, Sweden and the United Kingdom have voted against granting discharge to the Commission for the execution of the Union’s budget for the financial year 2011; takes notice of these countries’ observations:

39.

Notes in this context the high number of the Commission’s reservations concerning the ERDF/CF management and control systems for the period 2007-2013 amongst others in the Netherlands and the United Kingdom; encourages the Council to draw conclusions from the observations by the Netherlands, Sweden and the United Kingdom by conducting a peer review of each of the Member States’ financial management and quality of performance;

40.

Emphasises that in accordance with Article 317 TFEU, the Commission is ultimately responsible for the implementation of the Union’s budget; points out that where the Commission implements the budget under shared management, implementation tasks are delegated to Member States pursuant to Article 53b of the Financial Regulation (EC, Euratom) No 1605/2002;

41.

Stresses that in this respect, the responsibility of the Directors-General is a cornerstone of the Commission’s present system for managing Union funds and emphasises the importance of fairly representing the management performances in their annual activity report;

42.

Recalls Parliament’s proposal, contained in its 2010 discharge resolution, for a full-time Commissioner for Budgetary Control in the 2014-2019 Commission;

43.

Expects that Member States are fully aware of their obligations, pursuant to Article 4(3) of the Treaty on European Union and pursuant to the principle of sincere cooperation, to assist in an active and effective way the Union in carrying out tasks which flow from the Treaties;

44.

Insists in this context on the importance of Article 53b of the Financial Regulation (EC, Euratom) No 1605/2002, which provides that, when implementing the budget, the Member States are to take all necessary measures, including legislative, regulatory and administrative measures, to protect the Union’s financial interests; stresses in this respect that Article 59(2) of the new Financial Regulation (EU, Euratom) No 966/2012 even specifies that these measures should include the following:(a) ensuring that actions financed from the budget are implemented correctly and effectively and in accordance with the applicable sector-specific rules for that purpose and (b) preventing, detecting and correcting irregularities and fraud;

45.

Notes that the current system does not ensure a full transparency of the beneficiaries of ERDF/CF support; in the current framework, the Commission provides a portal with access to lists of beneficiaries available on national websites, which are only in the respective national language and without following common criteria; expects the future regulation covering the structural instruments to ensure that Member States provide the data on the final beneficiaries of ERDF/CF funds to be published on the Commission’s official website in one of the three working languages of the Union and based on a set of common criteria to allow comparison and detection of errors;

46.

Points to the existence of significant differences in Member States’ administrative performance in the field of revenue and expenditure in shared management, especially related to detecting irregularities, fraud and errors and financial follow-up in both the customs field and spending of Union funds; notes that the Commission so far monitors administrative performance in a reactive way and on case level and thus, does not perform sufficient trend analysis to identify fields of risk; calls on the Commission to apply the method of trend analysis to identify financial risks and to take measures to improve Member States’ administrative performance;

47.

Welcomes the fact that, in accordance with Article 59(3), (4) and (5) of the new Financial Regulation (EU, Euratom) No 966/2012, Member States management authorities are in future to be required annually to provide the Commission with their accounts accompanied by a management declaration, an annual summary of their final audit report and of controls and an opinion from an independent audit body;

48.

Is convinced that the above mentioned declarations, in combination with the introduction of self-critical deliberation in the Council, which is lacking until now, and an even-handed and honest and open peer review among Member States would result in better and more effective budget execution, increase the performance of policies, programmes and projects and which will help to reinforce the solidarity between Member-States and replace mutual distrust, a result which is preferable to budget cuts to the detriment of economic recovery and the trust of the Union citizens in a common Europe;

49.

Welcomes the fact that Member States may, at the appropriate level, publish the above information, and – in addition – provide declarations signed at an appropriate level based on that information; calls on the Commission to assist the Member States in providing those voluntary management declarations as referred to in Article 59(5) of the new Financial Regulation (EU, Euratom) No 966/2012 by promoting best practices; insists that Parliament should receive both the management declarations and the voluntary declarations;

50.

Notes that the Commission should give guidance to Member States to draft meaningful annual summaries; notes that for this purpose, information given on operational programmes under shared management should be standardised as regards form and content; annual summaries should be put at the disposal of Parliament and should not only be made available in the language of the Member State, thus increasing transparency and accountability;

51.

Notes, however, that neither the Court of Auditors nor the Commission considers the annual summaries to be a valuable source of information at this stage for the purposes of assessing compliance by, or the performance of, beneficiaries; reiterates its request that the Commission should analyse the strengths and weaknesses of national control systems on the basis of the annual summaries received; considers that this situation is unacceptable and demands that the Commission take immediate action to ensure that the next annual summaries are useful for assessing the performance of beneficiaries;

52.

Points out that the annual summaries provided by the Member States ‘in [their] current form [have] been seen to provide little added value’ and that ‘the compliance elements of the current annual summary simply duplicate information readily available from other sources’ (17); urges, therefore, all Member States to increase the usefulness of their annual summaries by including an overall analysis of the results and an overall level of assurance statement to demonstrate their commitment to the sound financial management of Union funds and transparency; urges Austria, Belgium, Germany, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland and Spain in particular to follow without delay the example of the 15 Member States that have included an ‘overall level of assurance statement’ in their annual summaries for structural actions in the European Social Fund (ESF) and the ERDF (18) in order for the Committee on Budgetary Control to benefit from this information during the 2012 discharge procedure; expects that those Member-States who will not submit such a statement in time will submit a comprehensive statement explaining the reasons why;

53.

Calls on the Member States to issue national management declarations at the appropriate political level and asks the Commission to establish a template for such a declaration;

54.

Calls on the Commission to establish in the short term, in cooperation with Member States, a model for national management declarations which will make them meaningful and comparable; calls on the Commission to openly provide its opinion on those declarations; takes the view that such declarations should, inter alia, certify criteria (such as true and fair accounts, the effectiveness of management and control systems and the legality and regularity of underlying transactions) and specify the scope of assurance reservations and disclaimers; asks the Commission to present proposals for decreasing the burden of controls for those Member States or regions that perform consistently well, according to the annual reports of the Court of Auditors and to their own national management declarations; is of the opinion that the Court of Auditors and the Commission should be able to take account of the substance of national management declarations in their audit work;

55.

Notes the details set out on the following scoreboard regarding the two initiatives relating to the contributions of Member States in improving the effectiveness of shared management:

Scoreboard

56.

Notes that the total number of reservations included by the Directors-General of the Commission in their annual activity reports increased to 27 in 2011 from 17 in 2010 and that the estimated total financial impact of reservations increased to EUR 1 959 million or 1,5 % of the payments made in 2011 (2010: EUR 423 million, corresponding to 0,3 %);

57.

Is concerned that those developments reflect a high risk of errors in some areas, such as rural development, cohesion or the seventh framework programme as recognised by the Directors-General of the Commission, and corroborated by the audit results of the Court of Auditors;

58.

Takes note of the guidance given by the Secretary-General of the Commission and the Director-General of DG Budget to the Directors-General and heads of services of the Commission on how to calculate the residual error rate, which led to an improvement in some annual activity reports as pointed out by the Court of Auditors;

59.

Regrets, nevertheless, that the Court of Auditors found weaknesses in those instructions and their implementation, in particular as regards the residual error rate; urges the Commission, as a result of this, to adapt its guidance as an immediate priority;

60.

Recognises the progress made by the Commission in determining the extent to which transactions remain affected by error, but notes with disappointment that the Court of Auditors concluded that the residual error rate is not yet a reliable indicator;

61.

Encourages the Commission to make progress in disclosing more precise and reliable data concerning recoveries and financial corrections and to present information reconciling as far as possible the year in which payment is made, the year in which the related error is detected and the year in which recoveries or financial corrections are disclosed in the notes to the accounts (19);

62.

Welcomes the report by the Commission on financial corrections, including the amount actually recovered which was returned to the budget at closure 2000-2006 in regional policy which shows the impact of the financial corrections made during the programming period and at closure on the overall error rate of the 2000-2006 programming period;

63.

Calls on the Commission to extend this practice of reporting to the other policies managed by multiannual programmes;

64.

Recommends, in accordance with the view expressed by the Court of Auditors, that a clear link be established between amounts included in annual activity reports, in particular for establishing the residual error rate, and information on recoveries/financial corrections presented in the accounts;

65.

Notes that the Commission is able to provide an overview of the corrections of errors and irregularities made in 2011, in particular in that part of the budget that is implemented under the shared management mode (20);

66.

Suggests to the Commission that it should request its Directors-General to systematically gather those data and publish them in their annual activity reports;

67.

Calls on the Commission to issue in time for the respective discharge procedure annual communications to Parliament, the Council and the Court of Auditors listing, by country and programme, financial corrections and recoveries collected, in order to demonstrate its performance in the protection of the Union’s budget; calls on the Commission, on this basis, to draw up a performance ranking;

68.

Notes with concern that the abovementioned Note 6 attached to the consolidated accounts covers only financial corrections and recoveries performed at Union level, and that information on withdrawals, recoveries and pending recoveries of structural funds made by the Member States is not disclosed for reliability reasons ‘since doubts remain as to the quality and completeness of data submitted by some Member States and/or for some programmes’; calls on the Commission to make annually public in a communication all the amounts corrected the preceding year through financial corrections and recoveries for all management modes at the level of the Union and by the Member States;

69.

Is worried that the Commission itself confirms in the said Note 6 the assessment made by the Court of Auditors on the lack of reliability of supervisory and control systems of the Member States, and deeply regrets that this could affect the reliability of Commission management representations; calls on the Commission to ensure that data communicated by Member States are complete and fully reliable;

70.

Recalls in this context that, by adopting the Synthesis report on the basis of the assurances and reservations made by its Directors-General and heads of services in their annual activity reports, the Commission takes overall political responsibility for management of the Union budget (21);

71.

Welcomes the improvements brought to the overall opinion issued by the Commission’s Internal Auditor, which also underpin the Synthesis report, but notes that the positive opinion given by the Internal Auditor is based in particular on the assurance given in the annual activity reports by senior management of the Commission;

72.

Consequently, reiterates its previous demand that the Commission establish reliable and objective annual activity reports;

73.

Notes that the two policy areas prone to the highest error rates (rural development, environment, fisheries and health as well as regional policy, energy and transport) are mainly implemented under shared management, and regrets that the estimated most likely error rates amount to 7,7 % and 6 % respectively;

74.

Emphasises that the President of the Court of Auditors observed that ‘national authorities operate the first – and most important – line of defence in protecting the financial interests of EU citizens and that there needs to be a greater degree of commitment on the part of national authorities to the management and control of EU money’ (22); underlines in this context the co-responsibility of the Member States for better spending; considers, in addition, that the active involvement of the national parliaments, through respective committees for oversight the use of Union taxpayer’s money in the Member States (following the example of the Parliament’s Committee on Budgetary Control), not only at the level of the political and expert monitoring but also in the programming process of the new cohesion policy, would lead to a lower error rate level, better transparency and democratic legitimacy of the process of Union funds absorption;

75.

Deplores the fact that in 62 % of the audited regional policy transactions affected by error and in 76 % of the ESF audited transactions, sufficient information was available for the Member State authorities to have detected and corrected at least some of these errors before claiming reimbursement from the Commission and that in rural development, the Court of Auditors found that on-the-spot checks had not always been carried out properly; therefore calls on the Member States and the Commission to urgently reinforce first-level checks to address this unacceptably high level of mismanagement;

76.

Calls on the Council and the Coreper to see to it that on a regular basis, national control systems, in particular, and the co-responsibility of the Member States for better spending, in general, are put as specific points on the agenda of the competent Council meetings of ministers and discussed in the presence of the Commission;

77.

Calls, pursuant to the second subparagraph of Article 287(4) TFEU, for the Court of Auditors to deliver an opinion on the independence of the national audit authorities in the context of shared management;

78.

Notes that numerous errors derive from the incorrect application of national rules (in particular, as regards the ESF errors in 2011, breaches of national rules have contributed 86 % of the error rate), and that eligibility error (especially for grant beneficiaries) and breaches of public procurement rules (in particular for shared and indirectly managed funds) are the two main sources of errors;

79.

Welcomes, for this reason, the proposal for a directive of the European Parliament and of the Council on public procurement adopted by the Commission on 20 December 2011 (COM(2011) 896), as it aims at simplifying the rules and making them more flexible in order to increase the efficiency of public spending; notes nevertheless that the national rules on public procurement should also be simplified in accordance with Union legislation;

80.

Deplores the fact that errors can also derive from the addition to Union rules of national rules which are unnecessarily complex and therefore difficult to implement and verify by the Member States themselves, while creating an additional and artificial burden for the beneficiaries (‘gold plating’);

81.

Points out that such rules not only increase error rates unnecessarily, as all infringements will be considered an error in Union budget management even though it is the Member States that are responsible for these pointlessly complex rules, but could also lead to the Commission issuing recovery claims;

82.

Urges the Member States to identify and report to Parliament, in coordination with the Commission and in consultation with the Court of Auditors, those unnecessarily complex national rules in order to simplify them; notes that in this regard, the potential for elaboration of standard tender documentation on the public procurement procedures should be further explored;

83.

Calls on the Commission, where breaches of budgetary and competition law are known to have occurred in the Member States (particularly in the award of public contracts), to apply more stringent monitoring and conditions and, in case of doubt, to suspend financing from the Structural Funds immediately until compliance with the rules and hence a use of the funds which accords with Union law are guaranteed;

84.

Encourages the services of the Commission to launch a pilot action plan, as DG Employment did in policy sectors with a high error risk, aiming at identifying key areas where simplification could help to reduce the error rate at beneficiary level;

85.

Urges the Commission to develop additional instruments to facilitate the process of consultation with beneficiaries and to strengthen their direct feedback to the national authorities, in line with the efforts to simplify the national rules and to reduce the error rate;

86.

Once again requires the Commission to name the Member States responsible for the cumulative quantifiable errors identified; rejects the argument that the constraints imposed on the Court of Auditors by its statistical sample method, which effectively prevents the Court of Auditors from naming Member States with the highest error rate; calls on the Court of Auditors to compare its audit findings with those of the Commission in order to identify those Member States or regions most affected by the level and/or occurrence of errors;

87.

Notes the entry into force of the European Stability Mechanism but regrets that this mechanism was set up outside the Union’s institutional framework, as this precludes any democratic, political and budgetary control by the Union institutions and in particular by Parliament; emphasises the fact that the creation outside the institutions of the Union represents a setback in the evolution of the Union, essentially at the expense of Parliament, the Court of Auditors and the Court of Justice of the European Union; deems it essential that the ESM will be discussed at least once a year in a plenary debate in the presence of the Council and the Commission on the basis on the annual report from the ESM Board of Auditors;

88.

Calls on the Commission to report on and evaluate the anti-fraud strategies established within each directorate-general following the adoption of the Commission’s new Anti-Fraud Strategy (COM(2011) 376) and the Internal Action Plan (SEC(2011) 787) for its implementation in June 2011;

89.

Calls on the Commission to report how it intends to improve as soon as possible its provision to introduce a pro-active management of potential conflict of interests and ‘revolving doors’;

90.

Calls on the Commission to report how it has implemented Article 5(3) of the WHO Framework Convention on Tobacco Control and how it intends to improve and clarify existing rules;

91.

Calls on the Commission to provide Parliament as soon as possible with an overview about all (public and non-public) documents and all persons involved in the negotiations of the four cooperation agreements with the tobacco industry;

92.

Notes that the Union is a under signatory to the WHO Framework Convention on Tobacco Control (FCTC); deems the implementation of Article 5(3) as a legally binding obligation to the Union; calls on the Commission to report on how the provisions of Article 5(3) have been implemented in the Union and its institutions, especially considering the following question: how far does implementation follow guidelines set by the WHO to Article 5(3); questions how and why the Commission has deviated from those guidelines;

93.

Welcomes the high level of budget implementation, namely 99,3 % of commitment appropriations (the same as in 2010) and 98,6 % of payment appropriations (2010: 96,6 %) and the reduction of the overall surplus from EUR 4,5 billion in 2010 to EUR 1,5 billion in 2011;

94.

Is concerned by the acceleration in the rate of payment requests by the Member States towards the end of the year as regards the ESF, the ERDF and the Cohesion fund, because this prevents the Commission from requesting an amending budget from the budgetary authority in due time in order to increase the payment appropriations with a view to honouring the claims received; therefore asks the Commission to urge the Member States to transmit most of the claims as early as possible;

95.

Warns against the concentration of a significant proportion of payments in the month of December, which could affect the effectiveness of supervisory and control systems and increase the risk of error;

96.

Expresses concern about the significant increase in outstanding budgetary commitments from EUR 13 billion in 2010 to EUR 207 billion, mostly in cohesion policy, for the programming period 2007-2013;

97.

Insists that sufficient payment appropriations need to be made available in future years from the outset;

98.

Notes that the Court of Auditors, in its annual report, found that the revenue calculation was free from material error; is concerned, however, that as far as traditional own resources (TOR) are concerned, the Court of Auditors’ audit cannot cover undeclared imports or those that have escaped customs surveillance and that the annual report does not, therefore, provide an estimation of losses to the Union budget in that respect; suggests that the Court of Auditors issue a special report on undeclared imports based on a survey in at least 10 Member States and to adjust its working programme for 2013 accordingly;

99.

Is of the opinion that the Court of Auditors’ performance audit in the area of revenue is of particular value and encourages the Court of Auditors to concentrate more of its resources in this area; regrets that the annual report, around which much of the Court of Auditors’ work is centred, nevertheless provides little information as to the real situation as far as efficient collection of revenue is concerned; calls on the Court of Auditors to place greater emphasis in its annual report on the revenue audit, in order to present a comprehensive picture of the effectiveness of the revenue collection system in the Member States, and of the consequences of its inadequate functioning;

100.

Recalls that Parliament monitors the situation with regard to the collection of own resources in its own-initiative report on the protection of the Union’s financial interests, which is drafted annually on the basis of a Commission report;

101.

Is deeply concerned by the Court of Auditors’ conclusion that there are continuing weaknesses in national customs supervision and that it cannot, therefore, be ensured that the TOR recorded are complete and correct; finds it unacceptable that the control of customs procedures in Member States is not functioning properly; recalls that the correct operation of customs procedures has direct consequences in terms of the calculation of the value added tax; is deeply worried by the Court of Auditors’ finding in Special Report No 13/2011 that the application of customs procedure 42 (23) alone accounted for extrapolated losses of approximately EUR 2 200 million (24) in 2009 with regard to the seven Member States which were audited, representing 29 % of the VAT theoretically applicable on the taxable amount of all the imports made under customs procedure 42 in 2009 in those seven Member States;

102.

Stresses the Court of Auditors’ conclusion in Special Report No 13/2011 that ‘VAT evasion affects the financial interests of Member States; notes that it has an impact on the Union budget as it leads to lower VAT-based own resources. notes that this loss is compensated by the GNI-based own resource, distorting individual Member States’ contributions to the EU budget and that tax fraud undermines the functioning of the internal market and prevents fair competition’ (25);

103.

Emphasises that the Court of Auditors’ findings in Special Report No 13/2011 were corroborated by the conclusions of the fact-finding mission of Parliament’s Committee on Budgetary Control to the ports of Rotterdam and Antwerp, which took place on 19 and 20 September 2012; points out that the Union is a major trading block and that large European ports handle many ships; notes that as a result of logistical pressures, those ports rely on the procedures provided for in the customs regulation and that authorised economic operators gain in importance; notes, however, that Rotterdam, for example, the largest European port granted a high-level of simplified custom procedures to importers compared with other major ports in the Union; stresses that the simplification of customs procedures must include a proper and effective risk based policy approach leading to effective control systems avoiding the distortion of competition and that simplified procedures should be effectively monitored regularly by the Commission and Member States; notes that reduced controls could translate into major economic advantages for a port; stresses that any unjustified reduced control may seriously harm the Union’s financial interests and that of the Member States;

104.

Takes note of the initiatives taken by the Commission by way of follow-up to the Court of Auditors’ Special Report No 13/2011; regrets, however, that according to the First Eurofisc Activity Report for 2011 issued in May 2012, the main findings and observations of that Special Report are still outstanding; requests information before September 2013 on progress made;

105.

Is seriously concerned, in particular, by the finding of the Working Field 3 that in most Member States, tax administrations have no direct access to customs data and that automated cross-checking with tax data is, therefore, not possible;

106.

Regrets that Recommendation No 6 of Special Report No 13/2011, calling for the amendment of the VAT Directive in order to identify separately the intra-community supplies following imports under the procedure in question in the trader’s VAT recapitulative statement, has not been implemented by the Commission; notes that this would allow an effective reconciliation between the customs and tax data in the Member State of importation; requests information as to the reasons why this was not done;

107.

Deplores the fact that the Council has not acted upon the Court of Auditors’ recommendation to amend the VAT Directive in order to hold the importer (or his tax representative) jointly and severally liable for the VAT loss in the Member State of destination in cases where a complete and timely VAT recapitulative statement is not submitted by him;

108.

Calls on the Commission to intensify its efforts to remedy the situation with regard to the state of implementation of the Court of Auditors’ recommendations contained in its Special Report No 13/2011;

109.

Deplores the fact that the Commission and the Member States have been unable to ensure timely implementation of the Modernised Customs Code (MCC), which was supposed to become applicable on 24 June 2013 at the latest; stresses that any further delays will impede adequate protection of the Member States’ financial interests and, consequently, those of the Union itself; emphasises the fact that according to the Commission, this situation is due, to a considerable extent, to the fact that the Member States cannot agree on the most appropriate IT development methodology and that they are facing limitations in human and financial resources; is concerned that the Commission and the Member States are lagging behind this very important reform in the situation where the collection of own resources is less than satisfactory;

110.

Calls on the Commission to make an evaluation of the cost of postponing full application of the MCC, quantifying the budgetary consequences of such postponement;

111.

Points to a study commissioned by Parliament on the ‘Implementation of the Modernised Customs Code’ (26), from which it results that, in the best-case scenario, the entry into force of the MCC (which will be called the Union’s Customs Code if the recast proposal by the Commission is adopted) could take place in December 2017; reminds the Commission that the Union has exclusive competence in the area of the customs union and that it should, therefore, ensure compliance by the Member States; calls on the Commission, as a consequence, to step up its efforts to ensure that the MCC is implemented at the earliest possible date, and in any event to avoid the worst-case scenario indicated in the study for March 2033;

112.

Deplores the fact that two important initiatives aimed at combating VAT fraud, namely the proposal for a Council Directive amending Directive 2006/112/EC on the common system of value added tax as regards a quick reaction mechanism against VAT fraud (COM(2012) 428) and the proposal for a Council Directive amending Directive 2006/112/EC as regards an optional and temporary application of the reverse charge mechanism in relation to supplies of certain goods and services susceptible to fraud (COM(2009) 511), are blocked in the Council;

113.

Welcomes the fact that EUROFISC, a common operational structure allowing Member States to react rapidly to cross-border VAT fraud, became fully operational; notes that a specific working field was created in February 2011 in order to exchange targeted information on fraudulent transactions using the customs procedure 42;

114.

Calls on the Commission to strengthen its coordination with the Member States in order to collect reliable data on the customs and VAT gap in the respective countries and to report on a regular basis to Parliament in that regard;

115.

Welcomes the Commission’s Action Plan to strengthen the fight against tax fraud and tax evasion (COM(2012) 722); commends, in particular, the Commission’s proposal to set up a Quick Reaction Mechanism and insists that this would enable Member States to respond more swiftly and efficiently to VAT fraud; stresses that the potential cost of tax evasion and avoidance for Member States is estimated to amount to EUR 1 trillion every year while in comparison, the Union budget for 2011 in terms of appropriations for commitments amounted only to EUR 142,5 billion;

116.

Deplores the increase of the error rate to 4,0 % in the policy area ‘Agriculture and rural development’ covering the expenditures of the European Agricultural Guarantee Fund (EAGF) and the European Agricultural Fund for Rural Development (EAFRD) and of the policy groups environment, fisheries and health;

117.

Recalls that the deterioration of the state of play in agriculture and, in particular, in rural development, is the main cause of the increase of the most likely error rate for all payments in the financial year 2011;

118.

Notes that even though 0,2 % of this error rate has been generated by a change in the Court of Auditors’ methodology concerning the cross compliance infringements the error rate for the entire agriculture policy area increased between 2010 and 2011 in real terms by 1,5 %: from 2,3 % in 2010 to 3,8 % in 2011 (27);

119.

Takes note of the Court of Auditors’ approach which for the first time included cross compliance infringements in the calculation of the error rate as ‘cross- compliance obligations are substantive legal requirements that must be met by all recipients of direct aid and are the basic and in many cases the only conditions to be respected in order to justify the payments of full amount of direct payments’ (28); asks the Court of Auditors in this context to further explain and justify its changes of methodology; calls on the Commission and the Court of Auditors to agree on a consistent methodology with a view to rendering the yearly budget implementation figures more comparable;

120.

Takes note that the Court of Auditors restricts its audit only to certain Statutory Management Requirements and to the Good Agricultural and Environmental Condition requirements and that ‘the error rate must be used with great care and not be treated as an overall assessment of the respect of the cross compliance obligations by farmers’ (29);

121.

Notes that it is up to the Member States to define ‘good agricultural and ecological condition’ and to which acreage it will be applied; criticises strongly the fact that beneficiaries who very often are not farmers will receive direct payments; considers this to be an incorrect allocation of funds which could be saved;

122.

Takes note that Member States recovered EUR 172,7 million from the beneficiaries during the 2011 financial year and that the overall outstanding amount still to be recovered from the beneficiaries at year-end was EUR 1 206,9 million, of which EUR 458 million has been charged to the Member States for EAGF expenditure in line with the 50/50 rule; acknowledges that around EUR 25,7 million will be borne by the Union budget for cases reported irrecoverable during financial year 2011; points out that DG AGRI cleared all pending non-recovered cases dating from 2006 or 2002 by Decision 2011/272/EU (30) of 29 April 2011 and that following the application of the 50/50 rule, EUR 27,8 million was charged to the Member States while EUR 29,2 million was borne by the Union budget for reasons of irrecoverability;

123.

Welcomes the fact that for the first time, the Court of Auditors provides two specific assessments: on the market and direct support on the one hand, and on rural development on the other hand and considers that it provides a better insight into each policy area; calls on the Court of Auditors, however, to present the error rate for rural development separately from environment, fisheries and health and not on an aggregate basis;

124.

Welcomes the register providing information on beneficiaries of the Common Agricultural Policy payments in the Member States; considers this tool to be an important step towards more transparency in the agricultural sector; recalls, nevertheless, that in accordance with the ruling of the European Court of Justice of 9 November 2010 invalidating the legislation as regards natural persons (31), Commission Regulation (EC) No 259/2008 (32) has been modified limiting the obligation to publish information on the beneficiaries of CAP payments to legal persons; notes the Commission’s proposal for new transparency rules, adopted on 25 September 2012, to make it obligatory for Member States to disclose data of all beneficiaries including natural persons, except for beneficiaries whose annual aid does not exceed a certain de minimis threshold, taking into consideration the objections made in the judgment of the Court of Justice, in particular on data protection concerns;

125.

Takes note of the current practice in the management of Sapard funds, namely that funds are only exceptionally recovered in full if the fraudulent behaviour for a part of the project has artificially created the conditions without which the beneficiary would not have obtained support for the project at all; expresses concern about the current practice, recommended by the Commission to the Sapard agency, that a project of which a part has been affected by fraudulent behaviour can be deemed eligible for funding if the project is not deemed to be of an artificial nature, i.e. the percentage of the costs of all the affected elements does not exceed 50 % of the total costs of the entire project; is especially concerned about the lack of deterrence from fraudulent behaviour this practice exhibits;

126.

Regrets that the EAGF payments are not free from material error in 2011, the most likely error rate being estimated by the Court of Auditors at 2,9 %, and that the control systems audited by the Court of Auditors in Austria, Finland, Hungary, Italy and Spain were found to be only partially effective in assuring the legality and regularity of payments;

127.

Notes that the most frequent accuracy error relates to area over-declarations, most of which amount individually to less than 5 % and deplores that the larger error rates relate to cases where eligibility of permanent pasture was incorrectly assessed and recorded by Member States’ authorities in the Land and Parcel Identification System (LPIS);

128.

Endorses the recommendation of the Court of Auditors that the correct assessment of eligibility of permanent pasture should be ensured (33);

129.

Notes with disappointment that the Court of Auditors found that the effectiveness of the Integrated Administration and Control System (IACS) is adversely affected by inaccurate data in the various databases and also by an incorrect administrative treatment of claims by the paying agencies in certain Member States; reminds the Commission that the introduction of IACS led to a decrease in errors and calls on the Commission to remedy the situation without any delays using suspensions and interruptions of funding when necessary;

130.

Is concerned that the Commission, in its annual activity report, maintained its reservations concerning the IACS systems in Bulgaria and Portugal due to serious deficiencies; emphasises the fact that, given the importance of IACS for the management and control of agricultural expenditure, serious deficiencies in its set-up and operation exposes the Commission to reputational risk, even if the financial impact does not exceed the materiality threshold;

131.

Regrets that some systematic failures in the management and controls systems observed and reported already in previous years have not been remedied: incorrect classification of land use, overstatement of eligible land in LPIS or incorrect application of the obvious error concept;

132.

Deplores the fact that deficiencies were found by the Court of Auditors in on-the-spot measurements; insists that on-the-spot inspections should be of the quality necessary to identify the eligible area in a reliable manner (34).

133.

Regrets that the quality of the work performed by the certifying bodies audited by the Court of Auditors under the new voluntary procedure for the reinforcement of assurance is insufficient;

134.

Calls on the Commission to take all necessary actions so that paying agencies remedy weaknesses detected in their administration and control system; insists that the design and quality of the work to be performed by certifying bodies must be improved in order to provide reliable assessment of legality and regularity of operations in the paying agencies; asks the Commission to investigate if it is possible to cooperate with private individuals to verify cross compliance standards and reduce administrative burden;

135.

Regrets that payments in the policy sector ‘rural development, environment, fisheries and health’ are not free from material error in 2011, the most likely error being estimated by the Court of Auditors at 7,7 %, and that the examined supervisory and control systems were partially effective;

136.

Notes that the major part of the most likely error rate concern the eligibility of non-area-related measures such as modernisation of agricultural holdings and the setting up of basic services for the economy and rural population, partly due to the often complex rules and eligibility conditions;

137.

Expresses concern about the fact that many errors were detected when beneficiaries were public bodies, such as municipalities or the paying agency itself (35) and that those errors concerned issues such as declaring ineligible VAT or not complying with public procurement; calls, therefore, on the Commission and the Member States to ensure that the existing rules are better enforced;

138.

Reiterates its regrets that the Commission follows different methodologies to quantify public procurement errors in the two policy areas agriculture and cohesion both of which being furthermore not in line with the Court of Auditors’ methodology and calls on the Commission and the Court of Auditors to harmonise the treatment of public procurement errors in these two policy areas urgently (36);

139.

Notes that the Court of Auditors identifies significant problems concerning the implementation of cross-compliance requirements for the identification and registration of animals (37); calls on the Member States to improve the quality of checks throughout the year without imposing an additional administrative load on the beneficiaries;

140.

Regrets that weaknesses were identified by the Court of Auditors in the supervisory and control systems of the Member States for rural development and that the three elements audited were affected by deficiencies: i.e. the administrative and controls systems to ensure correct payment, the control systems based on physical on-the-spot checks and systems to ensure implementation and control of cross compliance;

141.

Calls on the Commission to take account of findings identified by the Court of Auditors when establishing the audit strategy of DG AGRI’s clearance of accounts;

142.

Is particularly worried about DG AGRI management representation as the Annual Activity report does not provide for an explanation of why the residual error rate for rural development had ‘increased significantly compared to the previous year’ (38);

143.

Notes that according to the Court of Auditors the DG AGRI residual error rate is much lower than the Court of Auditors’ finding because it is ‘based on figures reported by the Member States for 2010, and as identified in the Courts audit, Member States do no detect or report all ineligible expenditure due to weaknesses in their checks of paying agencies’ (39);

144.

Is particularly concerned by the fact that DG AGRI considers that ‘in general Member States are improving their management and control systems for rural expenditure’ (40) while the audit of the Court of Auditors shows that the supervisory and control systems in Denmark, Finland, Hungary, Italy and Spain were not effective or only partially effective (41); is of the opinion that such a big divergence between the assessments of the Commission and the Court of Auditors makes it difficult for the discharge authority to reach objective conclusions; insists on data exchange between the Court of Auditors and the Commission to facilitate coordinated back casting for past periods in order to ensure a reliable database for future comparisons; is convinced of the usefulness of tripartite meetings between the Court of Auditors, the Commission and representatives from Member States concerned when looking for common analysis;

145.

Calls, therefore, on the Commission to take the necessary measures in order to reduce the error rate in rural development and welcomes the fact that DG AGRI has set up a working group to assess the root causes of rural development errors and develop corrective actions for the current and future programming periods;

146.

Calls on the Commission, nevertheless, to set up an action plan to reduce the error rate not only by providing guidance and assistance to the Member States by means of best practice examples but also by increasing monitoring on the implementation of programmes and using sanctions such as interruptions and suspensions of payments in particular in rural development more effectively where needed;

147.

Calls on the Commission to further improve the quality control of accreditation criteria for paying agencies and certifying bodies;

148.

Fully supports the Court of Auditors’ recommendations that the rules and conditions for rural development should be further simplified and that Member States should ensure that existing rules are better enforced;

149.

Is concerned, in this context, about the presentation of environment and health policy areas together with rural development and fisheries in the annual report of the Court of Auditors on the implementation of the Union budget, as it is stated that the payments by year-end were affected by material errors; takes careful note that this conclusion concerns solely the area of rural development; requests that the Court of Auditors explore a different presentation in the future, which takes into account the good performance of the policy areas in the remit of the Parliament’s Committee on the Environment, Public Health and Food Safety;

150.

Considers the overall implementation rates of the budgetary headings for environment, climate action, public health and food safety as satisfactory; emphasises the fact that 2011 is the first budget year under the complete budget procedure laid down in TFEU; recalls, again, that only 0,76 % of the Union budget is dedicated to those policy instruments falling under the responsibility of the Committee on the Environment, Public Health and Food Safety, bearing in mind the clear Union added value in these fields and the support from Union citizens for the environmental and climate policies of the Union;

151.

Emphasises the fact that the overall rate of execution amounted to 99,92 % in the field of environment and climate action; notes, furthermore, that the implementation of payments was at a level of 88,05 %; takes note that for the first year, the implementation of budget lines for environment and climate action has been done by the Directorate-General ENV and the newly created Directorate-General CLIMA, becoming budgetary self-responsible in 2011;

152.

Is satisfied with the achievement of 99,82 % of the implementation of the LIFE+ operational budget showing the necessity and acceptance as single instrument promoting solely environmental protection; notes that in 2011, EUR 267 179 828 was dedicated to projects in Member States, EUR 8 997 284 supported the operational activities of NGOs, EUR 46 817 919 was used for measures intended to support the Commission’s role of initiating and monitoring policy and legislation development and EUR 17 589 277 was used for administrative support; intends further monitor the allocation of the LIFE+ funds among the three strands of its effective use;

153.

Is aware that the payment rate of LIFE+ actions under the responsibility of DG CLIMA in the first year reached only 58,23 %; takes note that this low consumption is due to the fact that the preparation of the 2011 budget was too optimistic and the requested amounts were too high; notes, furthermore, that final payment settlements were only requested in 2012; emphasises the fact that unused payment appropriations have been transferred to other budget lines in the context of the global transfer exercise taking place each year in November; is aware that in 2011, those payment appropriations have been used for the shortfalls for Cohesion budget lines;

154.

Considers the progress in the implementation of five Pilot Projects (PPs) and two Preparatory Actions (PAs), amounting all together to EUR 11 765 508, as satisfactory; is aware that the execution of those actions can be burdensome for the Commission, due to the small amounts available in relation to the necessary procedures for execution (e.g. action plan, call for proposals); encourages the Commission to focus in the future on PPs and PAs with true added value for the Union;

155.

Takes note of the implementation level of 95,1 % for budget chapter 17 04 — Food and feed safety, animal health, animal welfare and plant health; is aware that full implementation was not necessary due to lower costs for bluetongue vaccination compared to the forecasts by Member States, due to the shift of some Member States to voluntary, farmer financed programmes and due to a decrease in BSE cases; observes the increase in payment execution to 98,1 % compared to 90,5 % in 2010; encourages the Commission to strengthen the cooperation with Member States in order to receive the best and most accurate data for the forecasts in this policy area;

156.

Takes note of the communication from the Commission to Parliament, the Council and the Court of Auditors on the annual accounts of the European Union for the financial year 2011; takes note of the Annual Report of the Court of Auditors concerning the financial year 2011; believes that the area of maritime affairs and fisheries does not figure prominently in those documents;

157.

Expresses its satisfaction that the implementation for Title 11 of the budget was globally satisfactory with an implementation rate of 97 % for commitment appropriations and 95 % for payment appropriations; notes, furthermore, that the Court of Auditors had no major observations on DG MARE’s Annual Activity Report;

158.

Calls on the Court of Auditors to present the error rate for fisheries separately from environment, rural development and health, and not on an aggregate basis;

159.

Recalls that in 2010, there was insufficient monitoring of catches under fisheries partnership agreements which resulted in additional payments to cover catches in excess of the negotiated quota; welcomes, therefore, the action taken by DG MARE to improve the monitoring of catches under fisheries partnership agreements, which will hopefully prevent a recurrence of this issue highlighted by the Court of Auditors; notes that the overfished amounts in 2010 were deducted from the 2011 quota;

160.

Urges the Court of Auditors once again to include an audit on the external dimension of the common fisheries policy in its work programme;

161.

Notes the reservations made in DG MARE’s Annual Activity Report in respect of the European Fisheries Fund (EFF) following the Court of Auditors’ special report 12/2011 regarding investments on board funded under Article 25(2) of Regulation (EC) No 1198/2006 (42) which increased the ability of vessels to catch fish; understands that DG MARE has been working with Member States to address the identified problems by reviewing the projects funded under this provision of the EFF with the aim of eliminating ineligible expenditure;

162.

Questions the technical assessment methods that led to certain expenditure under Article 25(2) of Regulation (EC) No 1198/2006 being declared ineligible on the grounds that it would increase capacity when the expenditure concerned were, in fact, designed to modernise fishing activity; calls on the Commission to propose a fresh definition of capacity, in particular in order to avoid this kind of re-interpretation in the future;

163.

Expresses its deep concern that public aid has been used to increase the vessels’ ability to catch fish and thus increased overcapacity in the Union fisheries sector;

164.

Notes the second reservation in DG MARE’s Annual Activity Report regarding the management and control of the implementation of the EFF in the Czech Republic, Finland, Italy, the Netherlands, Romania, Slovakia, Spain and in Sweden;

165.

Considers that in the future, the Annual Report of the Court of Auditors should have a separate breakdown for the figures relating to DG MARE in order to increase transparency and that the number of tests should be increased in order to ensure higher general accuracy from the sample;

166.

Urges the Member States to take all necessary action to address the identified problems and thereby, make it possible to lift the existing reservations;

167.

Deplores the fact that the Court of Auditors estimated the most likely error rate in this spending area at 6 %, which is unacceptably high; notes that this error rate remains below those reported by the Court of Auditors for the period 2006-2008 due to reinforced control provisions and a strict policy of interruptions and suspensions when deficiencies were detected, in line with the Commission’s 2008 Action Plan;

168.

Is concerned about the fact that for 62 % of the regional policy transactions affected by error, sufficient information was available to Member States’ authorities to have detected and corrected at least some of the errors prior to certifying the expenditure to the Commission; calls, therefore, on the Commission to urge the Member States to improve their management and control systems in order to detect and correct errors at national level; considers this to be a command imposed by the principle of sound financial management (‘better spending’); emphasises that deficient national management and control systems must have net corrections as a consequence;

169.

Notes that the Court of Auditors assessed the work of seven national and regional audit authorities, each from different Member States, and concluded that the audit authorities in Greece, Hungary, Latvia and Portugal were effective, that the audit authorities in Italy-Sicily and Romania were partially effective and that the audit authority in the Czech Republic was ineffective;

170.

Calls on the Commission to use all available instruments over the next programming period 2014-2020, as outlined in the Commission proposal (COM(2011) 615/2), in particular by means of delegated acts and implementing acts, with a view to setting out conditions which the national audit authorities shall fulfil and to adopting models for the audit strategy, the audit opinion and the annual control report, as well as the methodology for the sampling method;

171.

Regrets the fact that according to the 2011 Annual Activity Report of DG REGIO, the countries with the highest risk of incorrect payments for the 2007-2013 programming period are the Czech Republic (11,4 %), Romania (11,2 %) and Italy (8,6 %);

172.

Takes note that in 2011, the DG REGIO found serious deficiencies in five Member States: France, Austria, Italy, Romania and the Czech Republic; notes that whereas the difficulties in France and Austria have been identified by the national audit authorities themselves, the deficiencies in Italy, Romania and the Czech Republic were primarily linked to the architecture of the management and control systems;

173.

Welcomes the initiative taken by its responsible committee to invite the responsible ministers from the Member States with the weakest control system to Parliament with the view to explaining which measures the respective country has taken to remedy the situation; in this context, expresses its appreciation for the contribution made by the Czech Deputy Finance Minister in discussions with the responsible committee; considers his presence in the committee to be a first step towards the Member States assuming a more responsible role in managing Union funds; welcomes in this context first contacts with the Romanian authorities and the Italian Parliament;

174.

Takes note of the number of reservations (121 programmes) made by the Commission’s directorates-general and amounts at risk representing, according to the Commissioner, EUR 1 600 million; welcomes, at the same time, the fact that the increase is mainly due to a stricter approach followed by the Commission, including a general rule that an accumulated residual risk of 2 % would lead to a reservation for the programme concerned;

175.

Notes the high number of the Commission’s reservations concerning the ERDF/CF management and control systems for identified operational programmes for the period 2007-2013 in the following Member States: Austria, Bulgaria, the Czech Republic, Estonia, France, Germany, Greece, Hungary, Italy, Latvia, Lithuania, the Netherlands, Poland, Romania, Slovenia, Slovakia, Spain and United Kingdom due to significant issues regarding the effective functioning of management and control systems;

176.

Notes the Commission’s reservations for the 2000-2006 period concerning the CF management and control systems in Hungary and Spain, and concerning the ERDF linked to outstanding issues at closure stage in Spain, Germany, Ireland, Italy and Cross-Border programmes, all due to reputational reasons;

177.

Notes with concern that SMEs are underrepresented in receiving funds compared to large companies; invites the Commission and Member States to ensure that the eligibility rules, accounting obligations and their practical implementation do not prohibitively rule out the participation of SMEs;

178.

Is of the opinion that a swift implementation of workable FOI (Freedom of Information) laws across the Union is imperative, as is the systematic, proactive and centralised disclosure of data and documents, especially in relation to regional policy;

179.

Emphasises the fact that public procurement procedures and eligibility rules are particularly prone to error;

180.

Acknowledges the importance of managing authorities being adequately staffed; calls on Member States to pay attention to this requirement; in order to comply with their obligations pursuant to Article 53b(2) of the Financial Regulation (EC, Euratom) No 1605/2002 to take all necessary measures to protect the Union’s financial interests when implementing the budget;

181.

Points to the fact that the quantification of errors could give rise to a difference of treatment: notes that whereas the Court of Auditors looks at compliance, according to which rules were either adhered to or not, the Commission takes into consideration the financial impact of an error and financial corrections may vary accordingly;

182.

Emphasises the fact that a complex body of rules is often at the origin of errors; shares, therefore, the Commission’s approach to strive for simplification; warns against the risk which could stem from additional national regulations increasing the administrative burden (i.e. ‘gold plating’, complicated eligibility rules);

183.

Welcomes the Commission’s correction mechanisms which appropriately address errors and deficiencies detected over a multiannual period and at closure; notes that one third of ERDF programmes had payments blocked in the course of 2012 and following 121 reservations pronounced in 2011, DG REGIO has interrupted payment deadlines for 63 programmes, issued 115 warning letters and initiated suspension procedures for 60 of those programmes;

184.

Recalls that the financial corrections should not merely serve as a fine and that their application should have a positive impact on the long-term improvements of the management and control systems as well as on the recurrence of errors;

185.

Is concerned about the findings of the Court of Auditors that there is no assurance that financial correction mechanisms compensate for all operational programmes in an adequate manner and that all material issues are resolved; moreover the Court of Auditors found no evidence that financial correction mechanisms translate into lasting improvements to systems which would prevent recurrence of the errors uncovered; refers in this respect specifically to the Special Report No 3/2012 (43) (points 83 and 84); calls, therefore, on the Commission to provide a comprehensive assessment of the financial corrections made and their impact on the systems in respect of preventing the recurrence of the same errors (specifically of a systemic nature) in the future; calls on the Commission to inform Parliament about its conclusions by the end of 2013; invites the Commission to use all relevant findings during the next programming period 2014-2020 and to put forward proposals for amending regulations, as appropriate;

186.

Observes with satisfaction the continuous efforts of the Commission to reinforce and, at the same time, simplify the control provisions for cohesion policy; is of the opinion that the proposed measures for the 2014-2020 programming period such as specific ex-ante conditionalities, annual management declarations, certification of annual accounts, audit opinions or stricter rules for the substitution of ineligible expenditure should further contribute to the reduction of the level of error; supports the growing result orientation and the thematic concentration of cohesion policy that should assure high added value of the co-financed operations;

187.

Calls for payments from the Structural Funds to be subject to increased conditionality monitoring so as to ensure that the rules on the proper use of Structural Funds are complied with in all Member States;

188.

Calls on the Commission to assist Member States in drafting comprehensive, meaningful and comparable audit control reports, including a chapter on the contributions Union funds have made in the respective countries to attain the Europe 2020 objectives, both at national and regional level, considering each region’s individual potential for development and its possible transformation in an economic growth centre;

189.

In this context, draws the attention of the Commission and the Member States to the fact that under the Europe 2020 objectives operational programmes should increasingly be designed in such a way that its sub-objectives are specific, measurable, attainable, relevant and timely and, consequently, the programme lends itself to performance audits; notes that the establishment of a common system of result and impact indicators would contribute to the evaluation of the progress achieved under the different programmes in the context of their effectiveness and efficiency and not only in terms of their financial implementation;

190.

Reminds the Member States that due to the strict time limits for project execution, a mature project pipeline is required, especially for major infrastructure projects, in order to start their implementation at the beginning of the next programming period 2014-2020;

191.

Shares the Court of Auditors’ view that the Commission should further reinforce the present sanction system (interruption, suspension, financial corrections) by reducing the possibility of replacing ineligible expenditure with other expenditure during the next programming period thereby creating an additional incentive for Member States to detect and correct errors at an early stage;

192.

Calls on the Commission, in consultation with the Court of Auditors, to establish a transparent system which allows, on the one hand, taking into consideration annual financial corrections but also, on the other, financial corrections during the life span of a programming period;

193.

Calls on the Commission to assist Member States in rendering first-level controls and national audit authorities more effective by exchange of best practice and closer cooperation between the Commission, the Court of Auditors and national authorities (‘tripartite meetings’); considers, in addition, that the national audit authorities could put extra emphasis on the follow-up of the achieved results and effectiveness of Union funds absorption, rather than applying only a quantitative approach, regardless of the final project goals;

194.

Calls on the Commission to start the preparation of a ‘best practices’ manual from the current programming period, incorporating practical results, achieved effect and lessons learnt in order to optimise the absorption process and to decrease the level of error rates; notes that in this regard, the potential future beneficiaries for the next programming period 2014-2020, including Croatia, as well as potential candidate countries, would profit;

195.

Notes that in considering the implementation of the budget for the 2011 financial year, as in the previous year, the Court of Auditors focused mainly on cohesion and energy policies rather than on transport policy; stresses that transport policies are concerned with the development of the internal market, increased competition, innovation and the integration of transport networks;

196.

Notes that the EUR 51 million decrease in appropriations made in 2011 to the cooperation in Transport to the Clean Sky Joint Undertaking was due to the review of industrial policy approach and the decrease in payment appropriations of EUR 60 million for projects of common interests in the trans-European transport networks was made for timing reasons and to allow full use of the carryover from 2010; acknowledges that the reduction in cash-flow for Sesar Joint Undertaking was in line with the recommendation of the Court of Auditors;

197.

Is disappointed that following the low uptake of payment appropriations for transport safety in 2010 and the request to receive an explanation of this underspending from the Commission, no detailed information about the level of appropriations and their uptake in 2011 was provided;

198.

Notes that the characteristics of transport-related projects often leads to the concentration of a significant proportion of payments in a limited period, especially towards the end of the year and is concerned by the negative impact this can possibly have on the auditing exercise;

199.

Notes that the Court of Auditors estimated that the most likely error rate in this spending area was 2,2 % and that the Court of Auditors’ audit indicate weaknesses in particular in the ‘first level checks’ of the expenditures, which are the responsibility of the managing authorities and intermediate bodies in the Member States;

200.

Notes that in 2011, the Director-General issued reservations in his annual activity report with regard to operational programmes in Belgium, the Czech Republic, Germany, Italy, Spain, Latvia, Lithuania, Romania, Slovakia and the United Kingdom;

201.

Notes with satisfaction that the most likely error rate is close to the materiality threshold demonstrating that a consistent application of interruption, suspension and financial corrections has had a positive effect on the overall error rate;

202.

Is concerned about the fact that for 76 % of the regional policy transactions affected by error sufficient information was available to the Member States’ authorities to have detected and corrected at least some of the errors prior to certifying the expenditure to the Commission;

203.

Emphasises that it is the task of the national audit authorities to develop the necessary ‘internal self-control’ of rules and measures in order to detect and correct errors committed at the ‘first level’;

204.

Takes note of the number of reservations (24 programmes) made by the Commission’s DG ‘Employment’ (EMPL) in 2011 corresponding to EUR 57,7 million; notes, furthermore, that payments for 21 programmes were temporarily interrupted, valued at EUR 911 million; welcomes the strict approach followed by the Commission, including a general rule that an accumulated residual risk of 2 % would lead to a reservation for the programme concerned;

205.

Welcomes the fact that for the first time in 2011, the area of Employment and Social Affairs has been sampled and appraised separately from the Cohesion Policy chapter; welcomes the decreased error rate for this policy field, which stands at 2,2 %, compared to 3,9 % average for all policy fields; notes, however, that ineligible costs were reimbursed;

206.

Recalls the need to monitor and measure the performance of financial instruments against policy goals — Europe 2020 objectives — in order to be able to identify shortcomings and to make progress; calls for performance information and data be available on annual basis; is of the opinion that in context of the current economic and financial crisis the need for multi-criteria performance data on ESF interventions is crucial;

207.

Regrets that despite reinforcements of ESF budget lines by means of transfers between budget lines and via the Amending Budget, EUR 2,7 billion of outstanding payments to the beneficiaries could not be paid due to insufficient payments appropriations; calls on the Commission to propose, and on the Council to agree on, accurate payment appropriations in annual budgetary procedure in order to avoid uncertainty and unnecessary procedural burden on the budgetary authority and provide beneficiaries with timely payments;

208.

Welcomes the fact that for the ESF, an amount of EUR 3,25 million was added to the Operational Technical Assistance line in order to mobilise specific expertise and directly support the implementation of a Greek ESF Operational Programme;

209.

Stresses that the effectiveness and quality of work of ESF audit institutions needs to be improved;

210.

Notes that the share of spending on employment strand within the Progress programme is slightly lower than the share it has in the programme; following the conclusions of the evaluation report (44) considers that spending on policy advice, research and analysis and policy debate on employment should be increased;

211.

Reiterates its call to ensure, in the light of implementation, an orderly progression of the total appropriations for payments in relation to the appropriations for commitments, so as to avoid any abnormal evolution of outstanding commitments (RAL) (65 % of the total volume of the Cohesion Funds at the end of 2011);

212.

Notes that the Court of Auditors detected the reimbursement of ineligible costs in 13 % of the 180 transactions audited in the ESF and that such errors account for 77 % of all quantifiable errors and make up approximately 73 % of the estimated error rate for this policy group;

213.

Is deeply worried that 86 % of the error rate calculated by the Court of Auditors at Union level for the ESF derives from the incorrect application of national rules, varying from clerical mistakes to unnecessarily complex rules (‘gold plating’) to insufficient first level controls;

214.

Is of the opinion that the Commission’s correction mechanisms addresses appropriately errors and deficiencies detected over a multi-annual period and at closure; notes that up to November 2012, the Commission adopted, in addition to measures taken in 2011, two suspension decisions and 34 interruptions; the latter represent a value of EUR 153 million; notes, furthermore, that the Commission imposed EUR 153 million of financial corrections until November 2012;

215.

Recognises that Member States have to submit three closure documents: a certified statement of final expenditure, including final payment application, a final report on implementation, and a declaration on winding-up of the assistance; for the programming period 239 operational programmes are concerned;

216.

Takes note that 149 programmes (62 %) have been closed by the end of October 2012; notes that commitment appropriations amounting to EUR 1 889 million were still open;

217.

Welcomes the development by DG EMPL and REGIO of smart IT tools for the prevention, detection and investigation of fraud such as ARACHNE Risk Scoring Tool; points out that a pilot exercise was carried out in Belgium, Portugal and Hungary which led to the further development of the initial risk scoring tool with modules capable of enriching the data with external publicly available information; understands that the ARACHNE tool will be ready in Spring 2013 while by the end of 2013, all Member States will be able to use the tool on a voluntary basis;

218.

Calls on the Commission to assist Member States in drafting comprehensive, meaningful and comparable audit control reports, including a chapter on the contribution Union funds made in the respective Member State to attain the Europe 2020 objectives;

219.

Draws the attention, in this context, of the Commission and the Member States to the fact that under the Europe 2020 objectives operational programmes should increasingly be designed in such a way that their sub-objectives are specific, measurable, attainable, relevant and timely and, consequently, the programme lends itself to performance audits;

220.

Shares the Court of Auditors’ view that the Commission should further reinforce the present sanction system (interruption, suspension, financial corrections) by reducing the possibility of replacing ineligible expenditure with other expenditure during the next programming period thereby creating an additional incentive for Member States to detect and correct errors at an early stage;

221.

Calls on the Commission and the Court of Auditors to establish a transparent system which allows, on the one hand, to take into consideration annual financial corrections but also, on the other, financial corrections during the life span of a programming period;

222.

Calls on the Commission to assist Member States in rendering first-level controls and national audit authorities more effective by exchange of best practice and closer cooperation between the Commission, the Court and national authorities (‘tripartite meetings’); welcomes tripartite meetings as an important part in the contradictory process aiming at enhanced cooperation among the parties resulting in a more effective detection and correction of errors, in particular with regard to the ESF;

223.

Agrees with the Commission that particular emphasis should be given to:

224.

Notes with concern the interim Commission’s report on the progress made by Romania under the Cooperation and Verification Mechanism, especially in the light of Romania’s capability to protect the financial interest of the Union; is concerned by the reports assessment that only limited progress has been achieved in the prevention and sanctioning of corruption related to public procurement; stresses the importance of the report’s suggestion that the Government materialises the appointment of a new leadership for the prosecution and the National Anti-corruption Agency (DNA); calls on the Commission to steadfastly and determinedly insist, as far as the Romanian Government is concerned, that the Commission’s recommendations are complied with and clarified; expects, finally, a series of measures from the Commission, in cooperation with the Romanian government, aimed at improving the integrity of the Romanian legal system;

225.

Notes with concern the Commission’s Report on the progress made by Bulgaria under the Cooperation and Verification Mechanism with a view to further efforts needed in order to demonstrate tangible results in the monitored sectors; calls upon the effective implementation of the established legislative and institutional framework; notes with concern the Report’s statement that the Supreme Judicial Council (SJC) has not used the new powers given to it accordingly, aimed at effectively managing and leading the judiciary through a comprehensive reform process; welcomes the efforts by the Bulgarian government to renew the SJC with a mandate able of implementing fundamental reform through the following new rules: public hearings of the candidates for SJC, clear criteria for their professional and educational qualification and vision for the efficiency, accountability and integrity of the judiciary; acknowledges the fact that the new specialised structures put in place illustrate a commitment to adapting the current structures to tackle organised crime more effectively; takes note, however, that the Report suggests that these new instruments have not yet delivered the expected results regarding important cases; notes with great concern that investigations into alleged corruption and abuse of office by magistrates have received a particular weak response from the judiciary; is fearful, furthermore, that a weak implementation of Public Procurement legislation could result in an important source of corruption, serious violations of Union procurement rules as well as a poor delivery of public goods with a European added value and waste of Union public money; welcomes the amended public procurement law, establishing the ex-ante control on tender procedures to guarantee the proper spending of the public resources; calls on the Commission steadfastly and determinedly to insist, as far as the Bulgarian institutions are concerned, that the Commission’s recommendations are complied with; expects, finally, a series of measures from the Commission, in cooperation with the Bulgarian judiciary, to improve the integrity of the Bulgarian legal system;

226.

Takes note that an Action plan has been implemented by the Czech government in 2012; notes with concern the centralisation of the audit activities under the main audit authority in the Czech Ministry of Finance since the Court of Auditors reported that this audit authority was ineffective; calls on the Commission to report to the discharge authority on adjustments concerning the staff of the audit authority, based on the Czech Government’s analysis, as requested in the Action Plan;

227.

Takes note that the Commission has not applied any corrections due to the ineffectiveness of the audit system in the Czech Republic; notes, however, that the Commission applied corrections for some of the operational programmes, mainly due to shortcomings in the functioning of the management and control systems (errors in public procurement and the selection of operations); notes that the corrections applied can be allocated to other projects; is worried about information reported initially by the Court of Auditors which suggested that the Czech Ministry of Finance used its role as an audit authority and certification authority to influence the final error rate; requests that the Commission report back to Parliament in detail on the matter; calls on the Commission to elaborate in cooperation with the Czech Government and to follow up on the implementation of an existing Action plan that tackles the shortcomings in the Audit system at the core;

228.

Stresses that under Article 8 TFEU, the promotion of equality between men and women is a fundamental principle of the Union; reiterates its demand for the implementation of gender budgeting by all stakeholders in the Union budgetary procedure; calls, therefore, on the Court of Auditors to assess the implementation of the Union budget from the gender perspective, where applicable;

229.

Regrets that the annual report contains no observations from the Court of Auditors or any replies from the Commission regarding spending related to the promotion of equality between women and men;

230.

Notes the Court of Auditors’ numerous observations, as well as the Commission’s replies on the chapter of employment and social affairs, the policy area primarily covering gender equality; asks the Court of Auditors to provide specific details if any of the observations concerning spending related to gender equality;

231.

Reiterates its call for further efforts to develop gender-specific data, which allow proper monitoring of how budgetary allocations affect the economic and social opportunities of women and men, that can be included in the reports on the implementation of the budget; underlines that the new Multiannual Financial Framework provides an opportunity to develop and introduce such data, and implement gender budgeting as a tool for good governance;

232.

Stresses that the Union’s resources must be managed in line with the principles of transparency and good governance; notes the Court of Auditors’ finding that payments for the 2011 financial year are free from material error under heading 4 of the budget but that interim and final payments are affected by material error; further notes that not all errors were quantifiable;

233.

Points out the specific nature of the financing of the Union’s external assistance, which, although it must be subject to the same rules and oversight requirements as the rest of the Union budget, is put in place partly by persons and entities external to the Union under sometimes difficult conditions, while needing to remain reactive and adaptable to crises and requirements;

234.

Supports all the Court of Auditors’ recommendations in respect of the chapter on ‘External relations, aid and enlargement’, in particular the recommendations concerning the Directorate-General of the Service for Foreign Policy Instruments (FPI) and the necessary improvements it needs to make to the management of the budget for the common foreign and security policy;

235.

Stresses the need for greater transparency in the management of funds allocated to election observation missions; calls on the Commission to send a report to the budgetary authority for each financial year on the costs incurred for each mission, detailing all the budget items, including costs associated with external service providers;

236.

Draws attention to the need to re-use election observation mission materials (furniture, computers, etc.) in other electoral missions or by Union delegations in order to maximise their use;

237.

Welcomes the development of an improved budget support risk management framework by the Commission (in full application from 1 January 2013) as part of the new budget support guidelines in response to a key recommendation from the Court of Auditors;

238.

Notes, however, in respect of budget support, the reservations and warnings issued by the Court of Auditors concerning the inherent risks of irregularity, fraud and corruption; reiterates its very firm belief that budget support, while remaining an important channel for external aid, must be subject to robust political, legal and audit-related preconditions;

239.

Welcomes the results of the evaluation report of the effectiveness of the Union aid channelled through civil society organisations (CSO-s); draws attention to one of the main recommendations of the report to reduce the negative impact of cumbersome procedures on the effectiveness of the programmes implemented by CSO-s and welcomes the fact that new options are put in place to simplify access to funding;

240.

Welcomes the fact that the Commission regards the visibility of Union’s projects as a key element in good project implementation and that it has been made obligatory to prepare a communication plan for each project;

241.

Notes with satisfaction that the Court of Auditors’ estimated error rate for external aid under the Union’s budget has been below materiality for two consecutive years; is concerned, however, that interim and final payments were affected by material error and that the overall frequency of errors in payments detected by the Court was higher than in the two previous years (33 % in 2011, up from 23 % in 2010 and 22 % in 2009);

242.

Is concerned that EuropeAid’s and DG ECHO’s supervisory and control systems were again found to be only partially effective; points, in particular, to the need to improve those systems in delegations; calls on the Commission to set aside sufficient resources for delegation staff to perform monitoring and supervision activities in a timely and satisfactory manner; welcomes the introduction of the new version of the six-monthly External Assistance Management Report in July 2011, which aims to strengthen the accountability links between delegations and EuropeAid headquarters;

243.

Reiterates its concerns about the high frequency of encoding errors in the external aid management information system (CRIS), which may compromise the reliability of the data used for the preparation of the annual accounts; calls on the Commission to continue investing in the improvement of data quality and the development of CRIS functionalities, in particular linking audit findings to the recovery of funds (45);

244.

Looks forward to seeing the first results of the Commission’s new methodology for calculating the residual error rate, to be applied for the first time across the external relations directorates in the financial year 2012;

245.

Joins the Court of Auditors in its strong concerns about the inadequacy of staff resources for aid management, in particular in EuropeAid’s Internal Audit Unit and delegations, and the potential detrimental effects of the high turnover rate of contractual staff in headquarters and the Commission reorganisation of mid-2011 on aid management; appeals to Council, as the other arm of the budgetary authority, to take its responsibility in ensuring that aid can continue to be managed in accordance with the highest standards in future years;

246.

Notes that in 2011, the first full year of operation of the European External Action Service (EEAS), EEAS and Commission staff in delegations were separated in terms of their allocation and funding; is concerned that in 2011, at least 43 person-years allocated to EuropeAid were used by the EEAS, over and above the agreed flexibility limits defined in the Working Arrangements negotiated between both organisations; urges the EEAS and the Commission to fully respect the Working Arrangements, seeing in particular to the fact that EuropeAid staff focus on ensuring appropriate aid management, in order to avoid putting the sound financial management of Union’s assistance at risk;

247.

Emphasises the fact that the envisaged reinforcement of EuropeAid staffing in the Neighbourhood region should not be achieved by a reduction and transfer to the neighbourhood of staff managing Union’s aid to Least Developed Countries and other Low Income Countries in other regions; is of the opinion that if additional needs arise, they must be met with additional staff;

248.

Urges the Commission and the EEAS to focus more on results and impact measurement in the design of the new spending programmes under the next Multiannual Financial Framework (MFF) for the period 2014-2020, inter alia, by using pre-defined, country-specific, clear, transparent and measurable indicators adapted to the specificities and objectives of each instrument; supports the Court of Auditors’ recommendation that the Commission should define policy objectives to demonstrate better how it secures Union added value during the next programming period; reiterates its call for associating all relevant stakeholders, including civil society and local authorities in partner countries, in the evaluation phase of Union’s assistance;

249.

Is concerned by the difference in the methodologies applied by the Court of Auditors for the calculation of the error rate for transactions for external relations, aid and enlargement in the general budget on the one hand and for the level of error for payments from the EDFs on the other hand; takes note that the Court of Auditors has decided to align its methodology from 2012 onwards in order to provide Parliament with a uniform picture of the activities in the area of the external action of the Union;

250.

Following the creation of the EEAS, requests a clear allocation and coordination of roles and responsibilities of the Commission and the EEAS as regards programming and implementation of the budget in third countries;

251.

Asks the Commission to report before July 2013 on the number of NGOs to which the Union contributes but which do not generate any revenue other than funding from government agencies;

252.

Calls for a detailed summary of the allocation of funding in Libya; calls for clarification as to whether the subdelegation of the Union ambassador in Libya has been revoked;

253.

Calls on the Commission to use a ‘traffic light’ system in the progress reports, for ease of reference, in order to show what has improved or deteriorated from one year to the next;

254.

Is concerned to find that the performance indicators for the budget support to the Republic of Haiti have not been made public; urges the Commission to make public those indicators and the respective assessments of the Government of Haiti’s performance in order to qualify for budget support;

255.

Notes that new criteria for budget support are set out in the Commission’s policy ‘The future approach to EU budget support to third countries’; calls on the Commission to apply these criteria from 2013 onwards in a transparent way to the budget support for the Government of Haiti;

256.

Deeply regrets that, in spite of what was promised, the Commission has still not published a list of Union funded projects in Haiti; calls on the Commission to publish this list without delay and to provide an assessment of the sustainability of these projects in a five-year perspective;

257.

Urges the Commission to carry out the postponed first ever overall impact evaluation of the Union’s aid programme for Haiti in 2013 and to produce a report on this for the discharge authority;

258.

Is concerned about the findings of the Court of Auditors, contained in its Special Reports Nos 1/2012 and 13/2012 on the Effectiveness of European Union Development Aid for Food security in Sub-Saharan Africa and on the European Union Development Assistance for Drinking Water Supply and Basic Sanitation in Sub-Saharan Countries respectively, which raise concerns about sustainability of the Union aid; welcomes the Court of Auditors’ recommendations contained in those reports and urges the Commission to take those recommendations on board in order to maximise the benefits from Union’s development expenditure;

259.

Welcomes the creation, under the new Financial Regulation (EU, Euratom) No 966/2012, of Union Trust Funds, which will increase the visibility of Union action and allow for stricter control over the delivery chain of Union funds; asks the Commission to report to Parliament on the effectiveness of those funds;

260.

Is concerned that the research framework programmes are implemented under centralised direct and centralised indirect management involving six Commission directorates-general and two executive agencies; notes that in addition, parts of the budget are implemented under indirect centralised management by joint undertakings and the European Investment Bank;

261.

Regrets that the large number of Commission services involved in that policy area renders decision-making and the lines of responsibilities opaque; calls on the Commission to review the distribution of Commissioners’ portfolios in order to better reflect competences distribution of the committees of Parliament and, as it is, wide spread practice in Member States;

262.

Is concerned about the delay in dismantling the Ignalina Nuclear Power Plant (INPP) in Lithuania, due to conflicts between the authorities and the contractors; welcomes and supports the fact that the Commission and the international donor community decided to suspend financial support for the project, in line with the recommendations of Parliament’s Committee on Budgetary Control, until the conflict has been solved;

263.

Is deeply concerned by the current deficiency in viable knowledge on the amounts necessary to complete the whole decommissioning process; acknowledges that considerable amounts are still needed in this process and deplores the fact that Member States have failed to set up the necessary mechanisms to ensure this additional funding; reiterates and stresses that the final responsibility for the safe closure of nuclear power plants lies with the Member State in which the power plant is situated; notes that failure to comply with this obligation puts Union citizens at risk;

264.

Notes that the European Bank for Reconstruction and Development (EBRD) commissioned expert reports from Swedish experts (SKB), among others, which confirmed that GNS fuel elements containers are safe; notes with concern that this documentation for the fuel element containers, which has long been available, was not forwarded to the Lithuanian Approval Authority; notes that as long as the fuel elements are not stored in the containers, the Ignalina power station must be administered as if it were in operation, which means that the 2 000 or so employees must continue to be financed by the Union; calls on the Commission to accept no excuses from the Lithuanian Government which would cause the authorisation and the project to be further delayed; asks that the Commission set down a rigid timetable and threaten to impose sanctions if it is not adhered to;

265.

Calls on Bulgaria, Lithuania and Slovakia to establish decommissioning plans, including detailed financial envelopes, explaining how the closure of the nuclear power plants will be financed;

266.

Notes that the Court of Auditors estimated the most likely error rate in a spending area that is mainly under centralised management at 3 % in 2011, which is more than twice as high as in 2010 with 1,4 %;

267.

Notes that the principle risk of irregularity is that beneficiaries may overstate eligible costs; such a risk is exacerbated by the complexity of rules for calculating eligible costs; in addition in certain areas the implementing bodies apply rules differently; ineligible personnel costs and costs linked to commercial activities represent additional sources of error; regrets that the Commission did not react in time;

268.

Finds it unacceptable that the Court of Auditors also found weaknesses in the work of independent auditors certifying cost claims of beneficiaries: in 25 out of 31 cases where auditors had issued an unqualified opinion the Court of Auditors detected errors; is worried by such a manifest lack of professionalism;

269.

Is satisfied, however, that the Court of Auditors considers the ex-post audits to be effective;

270.

Deplores the fact that the Court of Auditors found the supervisory and control systems under the Competitiveness and Innovation Framework Programme (CIP) — ICT Policy Support programme (ICT-PSP) to be ineffective; calls on the Commission to bring these supervisory and control systems up to speed without delay;

271.

Takes note of the Court of Auditors’ conclusions that the payments for the year ended 31 December 2011 for research and other internal policies were affected by material error and that the examined supervisory and control systems for research and other internal policies were partially effective; regrets that the Court of Auditors’ report provides no detailed information on the expenditure for the area of freedom, security and justice;

272.

Emphasises the high importance of chapter 18 02 – Solidarity – External borders, return, visa policy and free movement of people for the security and economy of the Union; calls on the Commission to improve its budgetary planning;

273.

Takes note of the reservations made by the Commission’s Directorate-General for Home Affairs in its annual activity report of 2011 regarding the reputational risks due to delays in implementing SIS II; takes note of the financial risk resulting from the residual error rate in the non-audited population of grants of the financial programmes ‘Prevention, preparedness and consequence management of terrorism and other security related risks’ and ‘Prevention of and fight against crime’; calls on the Commission to pursue the corrective measures announced;

274.

Recognises that the number of participants in the seventh framework programme (FP7) has significantly increased to almost 20 000 and that inexperience, in combination with a complex set of rules, could lead to errors; encourages the Commission to continue to provide guidance and feedback to participants;

275.

Finds it incomprehensible that auditors of beneficiaries submit erroneous certificates on the financial statements; believes that the Commission must focus on giving guidance on the professional qualifications of private auditors and providing additional expertise;

276.

Notes the examples given by the Court of Auditors on errors in declarations of personnel and indirect costs; notes that the Horizon 2020 programme proposal introduced significant simplifications of the rules for these cost categories; considers that these simplifications are essential if there is to be a significant reduction in the error rate;

277.

Acknowledges that the Commission, when reviewing the ex ante control procedures, undertakes to strike a balance between early approval and control;

278.

Notes furthermore that under the FP7 audit strategy beneficiaries receiving 48 % of the FP7 budget have been audited;

279.

Also takes note of the fact that the Commission uses the simplified extrapolation procedure, based on flat rates, for corrections, which could speed up the recovery process if the beneficiaries cooperate fully;

280.

Urges the Commission to improve cooperation among all the directorates-general and other bodies involved, and render the division of labour, decision-making procedures and lines of responsibility between them more transparent;

281.

Fully supports the Court of Auditors’ recommendations

282.

Calls on the Education, Audiovisual and Culture Executive Agency (EACEA) to revise the one-sided and inadequate financial ratios established in order to evaluate the financial situation of beneficiaries and to decide upon the level of grant instalments, even jeopardising projects selected by not granting the usual payment of first instalments and waiting till the project is finished and reported back; reminds the EACEA that the efficient monitoring and control of projects includes a realistic assessment of the environment of small and medium enterprises and very small organisations;

283.

Is concerned by the significant errors in the underlying transactions by the EACEA in the context of the Lifelong Learning Programme (2007–2013) that were found through ex-post controls; notes that these errors are mainly due to the lack of adequate justifying documents from beneficiaries and the non-respect of eligibility rules; encourages the EACEA to further improve its control systems, to adapt them to the different kinds of beneficiaries, and to raise awareness of their financial obligations and controls;

284.

Welcomes the improvements to the management and control systems of the National Agencies and National Authorities and the fact that the error rate for the implementation of the programmes through National Agencies in 2011 has dropped down to 1 %, significantly lower than in previous years;

285.

Regrets that for the fourth consecutive year, the Commission’s Directorate-General for Communication still has a reservation in the Annual Activity Report regarding the non-compliance with copyright legislation despite the action plan adopted in 2009;

286.

Notes the successful actions that the Commission has undertaken in the field of sport; nevertheless calls upon the Commission to be more ambitious with the tools and budget it has, in order to prepare for the sports programme in 2014;

287.

Calls on the Commission not to reimburse any more travel costs of advisors to Commissioners whose work has not produced any tangible findings until an added value of their work can be proven;

288.

Notes with concern the finding of the Court of Auditors that in 15 out of 28 audited cases, the information available in the Office for Administration and Payment of Individual entitlements (PMO) on the personal and family situation of the staff members was not up to date; recommends that the Commission follow up the recommendation of the Court of Auditors to request staff to deliver at appropriate intervals documents confirming their personal situation and that it implements a system for the timely monitoring of these documents;

289.

Calls on the Commission to execute an in-depth study on the differences in required qualifications and the granted privileges, working conditions, allowances, entitled vacation days as well as pay levels for positions for civil servants and foreign services between Union and Member States located in the same working place and on the question of whether these differences legitimise the differences in remuneration of delegated national compared with Union civil servants, taking into account the relevant applicable tax system by comparing cases with standardised family situations;

290.

Notes with concern that the Commission is unable to give a full overview of the costs incurred for hiring external staff and temporary agents on a yearly basis; requests that those costs are systematically monitored and requests that they are made publically available;

291.

Calls on the Commission to make more use of the available technologies such as teleconferences and teleworking in order to reduce the costs of buildings and travel; requests the Commission to estimate possible financial savings which could be achieved with the increased use of these technologies and to submit the results to Parliament by September 2013;

292.

Demands the establishment of an interinstitutional database for studies, so as to avoid multiple financing of the same issues and to achieve an exchange of results;

293.

Has been informed by the OLAF Supervisory Committee about breaches of fundamental rights during OLAF investigations; is very concerned about the information received in this regard and calls for full transparency concerning these incidents, regardless of the identity of the person(s) involved;

294.

Notes the numerous attempts made to obscure clarification of the allegations made about OLAF’s investigation methods; regards this as inappropriate and demands full clarification of these allegations;

295.

Is concerned about the criticisms, mainly voiced in scientific publications, of the Eurobarometer’s survey methods and calls on the Commission to give a detailed opinion of those criticisms;

296.

Welcomes the fact that the Court of Auditors presents a report on ‘getting results from the budget’ for the second time; asks the Court of Auditors to extend its assessment to other services of the Commission, in particular DG EMPL, DG MARE and to the Secretariat general of the Commission;

297.

Notes that the report on the evaluation of the Union’s finances based on the results achieved (COM(2012) 675) has been adopted by the Commission on 21 November 2012, thus giving both Parliament and the Court of Auditors only a limited time to review and reply; reiterates its previous request to the Commission to present the evaluation report in the competent committee and plenary when the Court of Auditors’ Annual Report is presented;

298.

Considers that progress concerning the evaluation report relating to the financial year 2011 has been made as that report provides certain performance-related information which became available in 2011 for funding under all of the main budget headings and summarises evaluation results on certain financial programmes for each budget heading;

299.

Regrets, nevertheless, that this report provides only summaries of various evaluations relating to different programmes and covering divergent timeframe, without any comprehensive assessment of the results achieved in 2011 by the Commission when pursuing its policies;

300.

Shares the view of the Court of Auditors (46) that the evaluation report does not yet provide sufficient evidence and reliable information on achievements resulting from the policies of the Union and, therefore, can not fulfil the role which it should play in the context of the discharge procedure;

301.

Notes with satisfaction that some evaluations contributed to improve final impact of the programmes; encourages the Commission to take on board the main findings of those evaluations when shaping its policies;

302.

Calls on the Commission to inform the budgetary authority on an annual basis about the development of accounts outside the Union budget, including their cash-flow development as well as the purpose of each account;

303.

Points out that the presentation of those summaries by budget headings following the structure of the 2007-2013 Multiannual Financial Framework does not constitute as such an evaluation on Union’s finances;

304.

Considers that the structure of the report consisting of a variety of summary assessments presented, comprising interim, mid-term, ex post, and final evaluation, makes it difficult to draw consistent conclusions in terms of performance;

305.

Notes that according to the Commission itself, impact evaluations on the programmes usually refer to funds committed at least three to five years previously; insists on receiving an evaluation focussing on the performance observed in the preceding financial year, i.e. measures taken to accomplish the Europe 2020 objectives annually, in full accordance with Article 318 TFEU;

306.

Calls on the Commission to broaden the coverage of its assessment and to develop a real cost effectiveness approach aiming at measuring the results obtained in pursuing its political objectives on the basis of the finances and staff devoted to the realisation of those objectives;

307.

Calls on the Commission to ensure that evaluations are conducted independently; notes that the resulting reports should be shared as soon as possible with the relevant committees of Parliament;

308.

Asks the Commission to outline in time for the discharge procedure 2012 a new system of management and performance information including the design and the role of the evaluation report taking on board the recommendations of Parliament as developed in paragraphs 327 and 328 of this resolution and to present it to the discharge authority;

309.

Asks the Commission for this purpose to establish a reliable system of data collection on the performance to identify outcomes and impacts when they arise (47);

310.

Welcomes the improvements noted by the Court of Auditors in the Commission’s self-assessment of performance in its annual activity reports, in particular as regards reporting on policy achievements in the first part of those reports;

311.

Regrets, nevertheless, that the limited number of general objectives and impact indicators that the Directions General are requested to define remain affected by weaknesses limiting their usefulness (48);

312.

Also regrets that most indicators and targets related to the entire 2007-2013 period do not use interim indicators or milestones; insists in this context that impact indicators should have deadlines and quantified targets associated;

313.

Is worried that the directorates-general of the Commission did not set nor report on objectives for operational activities relating to economy including the cost of inputs or efficiency and the relation between inputs, outputs and results;

314.

Reminds the Commission of the rules concerning the rotation of senior staff in the Commission administration; confirms the need for those requirements in order to create transparency and avoid taking information hostage; calls on the Commission to implement this principle across the board and underlines the importance of leading by example and the taking of responsibility at the highest levels;

315.

Regrets also that the description of the policy achievements in part 1 of the annual activity reports is not sufficiently results-oriented and that the Court of Auditors’ examination of management plan and annual activity reports did not reveal any significant progress in this area;

316.

Insists on the need to ensure the consistency between the objectives, indicators and targets foreseen in the management plan and reported on in the annual activity reports;

317.

Insists also on the need to explain why the performance achieved did not meet the relevant objective or target in the annual activity report;

318.

Points out that according to points 10.17 and 10.18 of the Court of Auditors’ Annual Report, the accuracy of the evaluation performed by DG AGRI and DG REGIO is largely reliant on the quality of data supplied by the Member States; encourages the Commission services to issue guidelines on data input and to envisage to provide Member States with incentives to supply high quality performance data;

319.

Notes that according to the annual activity reports of the Commission Secretary-General, the Directors-General of the Commission have ‘aligned’ the general and specific objectives in their management plans with the Europe 2020 strategy for Growths and Jobs;

320.

Reiterates the fact that Europe 2020 (49), launched by President Barroso in 2010, is the main project of the Commission, aimed at delivering growth that is smart, sustainable and inclusive; points out that this strategy is focused on five ambitious goals, measured by quantified targets in the areas of employment, innovation, education, poverty and climate/energy;

321.

Notes that Eurostat is responsible for ensuring the statistical support for the strategy in particular in producing and supplying the relevant statistical data and ensuring high quality standards for data;

322.

Notes that Eurostat again failed to deal properly with sensitive information, for example in the case of the data on Greece; calls on the Commission to undertake more stringent quality reviews and ensure that Eurostat guarantees that it will be accurate in its presentation of statistical data; calls for a report on this matter to be produced by March 2014;

323.

Insists on the need to strengthen the credibility of the European statistical system; welcomes the recommendations made in this regard by the Court of Auditors in its Special Report No 12/2012 to move ‘towards a system of European Statistics which guarantees professional independence, sufficient resources and strong supervision including sanctions for cases where quality standards are not respected’ (50);

324.

Underlines that the Union growth and jobs strategy is not based on activities led by each individual DG but encompasses seven cross-cutting flagships initiatives which are implemented each time by several directorates-general resulting into challenges concerning coordination and cooperation within the Commission;

325.

Notes that the coordination between the services of the Commission in the framework of the flagship initiatives has taken various forms of inter services consultation, sometimes informal ones (51); deplores, nevertheless, that the nine groups of Commissioners set up by President Barroso in April 2010 met only on rare occasions (52), resulting in an insufficient use of this new mode of coordination in 2011; deplores the fact that no specific mechanism has been installed to ensure a satisfactory coordination of the implementation of all the flagships initiatives;

326.

Regrets that the launching of the Europe 2020 Strategy in 2010 did not coincide with the time frame of the new programming period 2014-2020 and deplores that this will cause some delay in the achievement of the strategy, in those cases where the Member States have not managed to adapt their national and Union funded programmes for sustainable, smart and inclusive growth;

327.

Asks all the services of the Commission involved in the Europe 2020 Strategy to define in their management plan a limited number of simple targets, meeting the requirements of the Court of Auditors in terms of relevance, comparability and reliability in order to annually measure in their annual activity reports the performance of the Commission in the achievement of the Strategy;

328.

Asks the Commission to fundamentally modify the structure of its evaluation report foreseen by Article 318 TFEU, distinguishing the internal policies from the external ones and focussing inside the ‘internal policies part’ of this report on the Europe 2020 strategy as being the growth and jobs, the economic and social policy of the Union; insists that the emphasis should be put on the progress made in the achievement of the flagships initiatives;

329.

Endorses the main conclusions drawn by the Court of Auditors as regards the results of its audits on performance:

330.

Notes with satisfaction that the Commission has a system in place to follow-up all recommendations of the Court of Auditors’ special reports on performance audit (see Special Report No 19/2012 (53)); requests that the Commission strengthen the follow-up in order to respond in a timely efficient and effective manner to the recommendations of the Court of Auditors and the discharge authority;

331.

Welcomes the fact that its Committee on Budgetary Control drew up separate working documents or reports on the Court of Auditors’ individual special reports, the findings of which can be consulted in a separate document (54);

332.

Is of the opinion that the political appreciation of findings in the special reports should be an integral part of the discharge procedure;

333.

Welcomes, therefore, the ongoing consultations among its Committee on Budgetary Control, the Conference of Committee Chairs and the Conference of Presidents with a view to identifying the most appropriate way of taking the findings of the special reports into consideration, thereby benefitting to the fullest from the audit work of the Court of Auditors;

334.

Calls on its bodies to find a viable and lasting solution in time for the 2012 discharge procedure.

—

having regard to the general budget of the European Union for the financial year 2011 (1),

—

having regard to the consolidated annual accounts of the European Union for the financial year 2011 (COM(2012) 436 – C7-0224/2012) (2),

—

having regard to the Annual Report of the Court of Auditors on the implementation of the budget concerning the financial year 2011, together with the institutions’ replies (3), and to the Court of Auditors’ special reports,

—

having regard to the statement of assurance (4) as to the reliability of the accounts and the legality and regularity of the underlying transactions provided by the Court of Auditors for the financial year 2011 pursuant to Article 287 of the Treaty on the Functioning of the European Union,

—

having regard to its Decision of 17 April 2013 on discharge in respect of the implementation of the general budget of the European Union for the financial year 2011, Section III – Commission (5) and to its resolution with observations that forms an integral part of that Decision,

—

having regard to the special reports of the Court of Auditors drawn up pursuant to second subparagraph of Article 287(4) of the Treaty on the Functioning of the European Union,

—

having regard to the Council’s recommendation of 12 February 2013 on discharge to be given to the Commission in respect of the implementation of the general budget of the European Union for the financial year 2011 (05752/2013 – C7-0038/2013),

—

having regard to Articles 317, 318 and 319 of the Treaty on the Functioning of the European Union and Article 106a of the Euratom Treaty,

—

having regard to Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities (6), and in particular Articles 55, 145, 146 and 147 thereof,

—

having regard to Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council of 25 October 2012 on the financial rules applicable to the general budget of the Union and repealing Council Regulation (EC, Euratom) No 1605/2002 (7), and in particular Articles 62, 164, 165 and 166 thereof,

—

having regard to Rule 76 of, and Annex VI to, its Rules of Procedure,

—

having regard to the report of the Committee on Budgetary Control (A7-0096/2013),

A.

whereas, pursuant to Article 17(1) of the Treaty on European Union, the Commission shall execute the budget and manage programmes and shall do so, pursuant to Article 317 of the Treaty on the Functioning of the European Union, in cooperation with the Member States, on its own responsibility, having regard to the principle of sound financial management,

B.

whereas the special reports of the Court of Auditors provide information on issues of concern related to the implementation of funds, which are thus useful for Parliament in exercising its role of discharge authority,

C.

whereas its observations on the special reports of the Court of Auditors form an integral part of Parliament’s abovementioned Decision of 17 April 2013 on discharge in respect of the implementation of the general budget of the European Union for the financial year 2011, Section III – Commission,

1.

Welcomes the Court of Auditors’ report and notes its damning appraisal of the measures undertaken by both the Commission and Member States;

2.

Emphasises the fact that the Common Fisheries Policy (CFP) claims to promote sustainable fishing, which implies the long-term viability of the fishing sector and a balance between fishing resources and the capacity of the fishing fleet in order to avoid overexploitation of fish stocks;

3.

Takes note that although the reduction of fishing overcapacity has been a recurrent theme in previous reforms of the CFP and has been addressed in the Court of Auditors’ Special Reports No 3/1993 and No 7/2007, the expensive measures taken to date to reduce fishing overcapacity by adapting the fishing fleet to fishing resources have been unsuccessful;

4.

Recognises that from 1995, the trend for Union fish catches has been declining and that, according to the Commission’s Green Paper on reform of the CFP of 22 April 2009 (COM(2009) 163), this decline is largely due to overfishing and forms part of a vicious circle involving fishing overcapacity and low economic performance of the fishing fleets;

5.

Is concerned that since the last reform of the CFP in 2002, fish catches have declined by 1 000 000 tonnes and jobs in the fishing sector have declined from 421 000 to 351 000;

6.

Notes that although there is no official definition of overcapacity, declining catches and lost jobs caused by overfished fish stocks demonstrate de facto overcapacity; calls on the Commission to therefore define overcapacity and consider more relevant and robust measures to facilitate actions to balance fishing capacity with fishing opportunities;

7.

Believes that it is essential that the Commission urgently draft a report containing the data on existing overcapacity in the Union, broken down by fishery and country;

8.

Is concerned, furthermore, that fleet capacity ceilings, as a measure to restrict the size of the fishing fleet, have become irrelevant since the actual fleet size is well under the ceilings and could even be 200 000 tonnes bigger, while still complying with the rules; stresses that at the same time, due to technological advances, the fishing capacity of the fleets has increased with an average of 3 % per year during the last decade;

9.

Notes that the CFP measures vessel capacity in terms of power (kilowatt) and size (gross tonnage) and that, however, these measures do not take into account technological progress in fishing methods, which complicates the task of setting appropriate targets for its reduction; notes that the Commission wants to maintain these static parameters until the end of 2015;

10.

Calls on the Commission to enforce the Member States’ obligation to correctly update their fleet register, and to establish the obligation to report on their efforts to balance fishing capacity with fishing opportunities;

11.

Notes that in terms of reducing fishing capacity, the Commission’s new proposal for the CFP is founded on a new, market-based approach (schemes for granting transferable fishing rights) since the Commission has reached the conclusion that these schemes have a positive role to play in reducing fishing overcapacity;

12.

Expresses its concern at the shortcomings encountered in the rules for the treatment of fishing rights when fishing vessels are scrapped with public aid, and at the failure to define clear and effective criteria for selecting vessels; considers that the scrapping schemes have, in part, been poorly implemented, with examples of taxpayers’ money being used for the scrapping of already inactive vessels or even being used indirectly for building new vessels; notes, however, that some Member States have had scrapping schemes that have fulfilled their purpose; stresses, therefore, the need of strict safeguards when using scrapping schemes, as a way of reducing overcapacity in order to avoid abuse;

13.

Regrets that investment on board fishing vessels, funded by the European Fisheries Fund (EFF), could increase the ability of individual vessels to catch fish; considers that the interpretative note, prepared by the Commission and sent to Member States following the Court of Auditors’ Special Report on the ability of the vessels to catch fish in which the Court of Auditors called for national authorities to enforce stricter checks before deciding on the funding of projects of investments on board, is insufficient;

14.

Notes that whereas point 36 of Special Report No 12/2011 says that, by the end of 2010, implementation of the EFF, in terms of expenditure certified by Member States, amounted to EUR 645 million, or 15 % of the amount available from 2007 to 2013, most of this amount was declared in 2010 and EUR 292 million had still not been paid by the Commission as at 31 December 2010, owing to the Council’s late adoption of Council Regulation (EC) No 1198/2006 of 27 July 2006 on the European Fisheries Fund (8) and the complexity involved in the initial setting-up of management and control systems by the Member States; notes that certified interim payments sent by Member States by the end of December 2011 amounted to 28 % (EUR 1 188 million) of the overall EFF allocation and welcomes the fact that the pace of absorption of the EFF is now picking up;

15.

Recommends that the Member States take measures to:

16.

Calls on the Commission to set effective fishing fleet capacity ceilings;

17.

Considers that a reform of the CFP is needed to regionalise its implementation and the management of its programmes and measures;

18.

Endorses the Court of Auditors’ recommendations that:

19.

Considers, moreover, that in the light of the Court of Auditors’ criticism, it has become clear that the EFF and CFP are currently an ineffective use of our common resources, and therefore welcomes the fact that the scheme will be reviewed in its entirety in the near future; highlights the importance, when re-structuring these schemes, of focusing on the areas within fisheries policy that can best be dealt with at Union level, such as the environmental aspects, rather than on various types of ineffective subsidy scheme;

20.

Welcomes the Court of Auditors’ Special Report No 13/2011;

21.

Recalls that the proper collection of value added tax (VAT) directly affects both the economies of Member States and the Union budget, as tax fraud, in particular VAT fraud, leads to exorbitant losses for the Union budget and the economies of Member States, thus exacerbating the debt crisis; points out that VAT fraud estimates amount to annual figures of around EUR 1 400 million;

22.

Believes that particularly in the current economic climate, the emphasis should move to more efficient and fairer revenue collection systems; emphasises that the improvement of such systems should be of the utmost priority for the Union and all Member States, in particular those facing the biggest economic difficulties;

23.

Recalls that according to a study carried out on behalf of the Commission, the estimated average VAT gap in the Union is 12 %; draws special attention to the fact that this VAT gap has been at an alarming level of 30 % and 22 % in Greece and Italy respectively, the Member States which are experiencing the most difficult debt crisis;

24.

Stresses that besides tax avoidance and losses due to insolvencies, the VAT gap is also attributable to fraud, non-transparent rules, incoherent control systems and non or partial implementation of Union law in Member States, and that VAT losses, translating into billions of euro, are largely compensated for by means of austerity measures, affecting citizens of the Union, and borne by citizens whose income is well documented and traceable;

25.

Is profoundly concerned about the Court of Auditors’ findings, in particular that the application of customs procedure 42 (9) alone accounted for the extrapolated losses of approximately EUR 2 200 million in the seven Member States audited by the Court of Auditors in 2009, representing 29 % of the VAT theoretically applicable on the taxable amount of all the imports made under customs procedure 42 in 2009 in those Member States;

26.

Notes with concern that the Court of Auditors found that the Union’s regulatory framework does not ensure the uniform and sound management of this VAT exemption by Member States’ customs authorities and that the regulatory framework does not ensure that the information concerning those transactions is always made available to the tax authorities in the Member State of destination, leaving the system vulnerable to misuse by organised crime and individual fraudsters, creating huge competition disadvantages for bona fide traders;

27.

Draws attention to the Court of Auditors’ finding that customs authorities in the audited Member States do not ensure the validity and completeness of data and the fulfilment of other exemption conditions;

28.

Is concerned that the Court of Auditors found serious deficiencies in the control of simplified customs procedures, which account for 70 % of all customs procedures, in particular, poor-quality or poorly documented audits and automated data-processing techniques for carrying out checks during the processing of simplified procedures which are of little use; points out that those deficiencies have led to unjustified losses to the Union budget and that the correct operation of customs has a direct impact on the calculation of VAT; deplores the fact that the Commission did not take appropriate measures to remedy this over the last 10 years but was hiding behind the rules, which seemed quite adequate on paper;

29.

Notes with regret that since its introduction, the VAT collection model has remained unchanged; believes that it is outdated, given the many changes to the technological and economic environment that have occurred;

30.

Urges the Commission and Member States to monitor and effectively respond to both existing and new trends in fraud, and requests that the Commission inform the Committee on Budgetary Control by September 2013 which temporary and permanent measures were taken on the basis of customs procedure 42, not only by the Union, but also at national level and their effect on the number of fraud cases; takes note of the Commission’s Green Paper on the future of VAT – Towards a simpler, more robust and efficient VAT system (COM(2010) 695), and calls for concrete proposals to be made on VAT reform;

31.

Calls on the Commission to urge Member States to simplify their law on VAT, introduce a standard form for the notification of the implementation of VAT to tax authorities and establish uniform and proper management of cases of exemption from VAT by the customs authorities of the Member States and to ensure the improved availability of those legislative texts translated into English, French and German as a minimum requirement;

32.

Deplores the postponement of the entry into force of the Modernised Customs Code (MCC) as provided for in the Commission’s proposal for a regulation of the European Parliament and of the Council laying down the Union Customs Code (COM(2012) 64), and considers the proposed new date of 31 December 2020 to be unacceptable; recalls that 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) (10) provided that the MCC would enter into force by 24 June 2013 and urges the Commission and Member States to take the necessary steps in order to speed up the preparation process;

33.

Strongly suggests to all Member States to take part in Working Field 3 of Eurofisc on fraudulent transactions using customs procedure 4200;

34.

Endorses the Commission’s proposal for a Council Directive amending Directive 2006/112/EC on the common system of value added tax as regards tax evasion linked to import and other cross-border transactions (COM(2008) 805), which aims to introduce joint liability of traders in intra-Union transactions, holding importers jointly and severally liable in cases where false, late or incomplete reporting of the transaction to the VAT authority has resulted in VAT loss and subjecting them to appropriate penalties;

35.

Stresses the importance of more intensive and rapid cooperation between Member States, better monitoring of exchanges of information and more direct contacts between local tax and customs offices, including by means of the online VAT Information Exchange System (VIES), so as to ensure that Member States provide efficient assistance to each other;

36.

Recommends to Member States that they give customs authorities online access to the VAT identification numbers contained in VIES without further delay, in order to enable the latter to fulfil their obligations to verify the VAT numbers collected in customs declarations; requests that the Commission keep Parliament’s competent committees and the Court of Auditors informed on a monthly basis on the developments in all Member States on preventing fraud under customs procedure 42;

37.

Calls on the Commission to create a system that would combine assistance in the customs area and administrative cooperation in the area of VAT to ensure effective information flows, so that the relevant authorities in one field are routinely informed about action in the other field; considers that this would make the cooperation between the competent authorities and the charging of VAT in the Member State of destination more effective and rapid;

38.

Stresses the role of e-government in increasing transparency and combating fraud and corruption, thereby safeguarding public funds; stresses that the Union is lagging behind its industrial partners, inter alia, due to a lack of interoperability of systems (11); stresses that the Union must step up its efforts to achieve a new generation of e-government;

39.

Points out that documented, electronic, non-cash transactions make participating in the black economy more difficult, and that a strong correlation appears to exist between the proportion of electronic payments in a country and its black economy (12); encourages the Member States to lower their thresholds for compulsory non-cash payments;

40.

Endorses the Court of Auditors’ recommendations, in particular:

calls on the Commission to report on a six-monthly basis on how and when it will implement those recommendations;

41.

Welcomes the Court of Auditors’ Special Report No 14/2011, and endorses the Court of Auditors’ conclusions, in particular its finding that ‘overall EU pre-accession assistance to Croatia is making a significant contribution to Croatia’s progress in building up its administrative capacity for managing increased EU funding post accession’; welcomes the significant and positive role of pre-accession assistance in preparing Croatian authorities for the management of cohesion and rural policies in the post-accession period;

42.

Regrets that the Court of Auditors’ report does not include sufficient information on levels of error or fraud and on the follow up, including judicial where necessary, as well as on the performance evaluation;

43.

Stresses, however, that the Court of Auditors concludes that ‘the assistance has only been partially successful so far in achieving its objectives and further progress in capacity building has to be supported in a number of key areas both before and after accession’; notes the Court of Auditors’ finding that ‘in most areas of pre-accession assistance, the Commission has not yet assessed Croatia’s capacity to be sufficient for it to authorise Croatia to implement the assistance without the Commission’s ex ante checks’ and that ‘despite recent progress made, procurement capacity and anti-corruption are two areas where there is a particular need to reinforce support to the Croatian authorities’;

44.

Is concerned, in view of some instances of lack of preparedness of administrations and institutions, and transition from accession to structural fund financing in previous accessions to the Union, how similar risks for Croatia could be avoided;

45.

Is concerned that, in addition to the Court of Auditors' significant focus on aligning legislation, continuous monitoring will be needed and measures need to be put in place to address:

46.

Endorses the Court of Auditors’ recommendations, and in particular invites the Commission and the Croatian authorities to work closely together so as to increase the priority given to building up procurement capacity by implementing plans for on- and off-the-job training, to take greater steps to meet capacity-building needs at regional and local level, and to develop further the assessment of project effectiveness, as well as to build up a portfolio of mature projects to be able to fully absorb the increased post-accession funding available, and also to take action in relation to rural development programmes, and to strengthen anti-corruption measures;

47.

Endorses the Court of Auditors’ recommendation to the Commission to take into account the lessons learned from its pre-accession assistance to Croatia in its pre-accession assistance to other countries wherever applicable;

48.

Welcomes the Commissions assessment in its Monitoring report on Croatia’s accession preparations of 24 April 2012 stating that ‘Overall, Croatia’s preparations for EU membership are on track. Croatia has reached a considerable degree of alignment with the acquis. Further progress has been achieved since the 2011 progress report and the last update of the monitoring tables in autumn 2011. Nevertheless the Commission has identified a limited number of issues requiring further efforts’ (13);

49.

Notes that a number of outstanding issues still remain to be addressed in several of the acquis chapters; in particular, attention is to be paid to legislative alignment in secondary legislation concerning public procurement, especially in the field of defence procurement, and also to the proper implementation of the newly adopted legislation, especially at local level, also with a view to the future management of the Structural Funds;

50.

Notes also that continued efforts are needed in the field of financial control in order to improve the overall functioning of the public internal financial control and external audit at central and local level, as well as in the field of financial and budgetary provisions, where it is necessary to continue building up capacity to coordinate the overall system of own resources efficiently after accession, and to step up modernisation of the customs control strategy focusing more on post-clearance controls;

51.

Emphasises that increased efforts are needed in some areas, in particular, agriculture and rural development, where attention must be given to further legislative alignment and strengthening of administrative capacity in the areas of direct payments and rural development;

52.

Is concerned of the low absorption of Sapard and IPARD funding — some sectors were particularly under-represented in the implementation of Measure 1 (Investment in agricultural holdings), notably the milk sector, greenhouses sector and fruits and vegetable sector; considers that this points to serious weaknesses in the capacity and preparedness of these sectors to absorb future Union funds;

53.

Notes the delays in the implementation of pre-accession assistance; welcomes the progress achieved in addressing the issue and urges the Commission and Croatia’s authorities to continue improving the speed of implementing assistance, especially by strengthening capacity-building; stresses that capacity-building in the framework of pre-accession assistance should target central institutions as well as regional and local structures; is concerned that, in the case of Croatia, insufficient attention to the latter may result in them lacking adequate administrative capacity and experience to implement Union assistance;

54.

Reiterates that the purpose of pre-accession assistance is, inter alia, to bolster the candidate states’ capacity to absorb future Union funding in an efficient and transparent manner; welcomes, therefore, the new approaches used by the Commission in planning pre-accession assistance to Croatia, such as linking specific capacity-building projects to accession negotiations, allowing for multiannual operational programmes;

55.

Calls on the Commission to maximise the potential for institutional learning and capacity-building in candidate and potential candidate states, notably by further aligning the procedures of pre-accession assistance with those used under the Structural Fund, the European Social Fund, and the European Agricultural Fund for Rural Development;

56.

Also notes that with regard to regional policy and coordination of structural instruments, further sustained efforts need to focus on effectively implementing the plans to increase administrative capacity for future cohesion policy implementation and to develop a mature project pipeline;

57.

Invites the Croatian authorities to take measures addressing the abovementioned concerns, and calls on the Commission to report on Croatia’s progress in tackling these and other outstanding issues;

58.

Commends the progress made by Croatia in reinforcing its institutional and administrative capacity and consolidating the management of pre-accession assistance;

59.

Welcomes the establishment of the Croatian Ministry of Regional Development and EU Funds in December 2011 and the fact that the Minister of Regional Development and EU Funds has also been appointed to serve as a Deputy Prime Minister, which shows the commitment of the new government to the issues of regional development and utilisation of the Union funds;

60.

Notes that Croatia has put considerable effort into the establishment of a sound financial management and control system, which should result in the expected waiver of ex ante controls in the second half of 2012; stresses, however, that further sustained action is needed, given that, in most areas, the Commission has not yet authorised Croatia to implement pre-accession assistance without ex ante checks;

61.

Welcomes the fact that as of January 2012, the new Act on Public Procurement has entered into force, ensuring increased transparency, and that 2011 saw the realisation of the IPA 2008 Twinning Light facility project ‘Strengthening Capacities to Remedy Irregularities in Public Procurement Procedures’, which included, inter alia, efforts with regard to awareness-raising;

62.

Urges the Commission and the Croatian authorities to prioritise the build-up of robust public procurement capacities; emphasises, in this context, that the fight against corruption plays a central role in the entire accession process, and failure to implement preventive anti-corruption measures will impede the future absorption of Union assistance;

63.

Stresses that decommissioning will be an increasingly important issue in the coming years because one third of the 133 nuclear reactors operating in 14 Member States are to be shut down by 2025 (14);

64.

Calls on its Committee on Budgets and on the Committee on Industry, Research and Energy to take into consideration the findings of the Committee on Budgetary Control for the negotiations of the new Multiannual Financial Framework (2014-2020);

65.

Considers that the Court of Auditors’ findings can be summarised as follows:

66.

Notes, furthermore, that the funding scheme put forward by the Commission was not the subject of a comprehensive ex-ante evaluation;

67.

Acknowledges that the situation described in the Court of Auditors’ report refers to the period until the end of 2010 and that subsequently, the Commission has taken a number of initiatives;

68.

Notes that the Union’s overall objective in the nuclear field is to maximise nuclear safety;

69.

Notes the Commission’s opinion that it has put in place a procedural framework that sets specific objectives, defines roles and responsibilities and clearly defines the reporting and supervision requirements (16);

70.

Notes the Commission’s reply explaining that the needs assessment was part of the impact assessment (SEC(2011) 1387) conducted in 2011; notes that the impact assessment covered progress achieved so far, remaining challenges and an overview of the funding situation;

71.

Recalls that the Accession Treaties of Bulgaria and Slovakia establish the limits for providing Union financial assistance to 2009 and 2006 respectively;

72.

Welcomes the proposal for a Council Regulation on Union support for the nuclear decommissioning assistance programme in Bulgaria, Lithuania and Slovakia (COM(2011) 783) that draws on extensive consultation with stakeholders, the Member States concerned — Bulgaria, Lithuania and Slovakia — and expert groups in decommissioning; welcomes the fact that the findings of Parliament’s Resolution of 5 April 2011 (17) and the conclusion and recommendations from the Court of Auditors’ decommissioning performance audit of 2011 were used as input;

73.

Observes that experts called for a solid and complete detailed decommissioning plan as the basis for the implementation of further Union support, including full costing estimates up to the completion date for decommissioning; considers that a clear indication of national co-financing and the way to secure this national funding in the long term should be provided;

74.

Notes with satisfaction that the key milestones, as defined in the Commission’s abovementioned impact assessment (18), were explicitly supported by stakeholders, as well as targeting Union support on the accomplishment of concrete milestones with the highest Union added value; notes that compliance procedures and close cost monitoring should be considered from the outset;

75.

Reiterates and stresses mutual commitments taken by the Union and Bulgaria, Slovakia and Lithuania with regard to decommissioning of, respectively, four units of Kozloduy Nuclear Power Plant, Unit 1 and Unit 2 of Bohunice V1 Nuclear Power Plant and Units 1 and 2 of the Ignalina Nuclear Power Plant;

76.

Deplores the fact that in the case of Ignalina nuclear power plant, highly relevant projects such as B1 and B234 have encountered serious delays due to technical and commercial disputes, which have generated extensive economical damage, as well as discontinuity in the decommissioning process;

77.

Believes the roadmap with agreed technical solutions decided upon in July 2012 by Ignalina nuclear power plant and NUKEM/GNS to be an important step forward in the process of overcoming the stalemate related to the B1 interim spent fuel storage facility;

78.

Deplores the fact that the detailed progress report on the implementation of the roadmap, expected on 5 October 2012, has not met the deadline;