# EUR-Lex - 52014DC0688 - EN

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# 52014DC0688

**COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL AND TO THE EUROPEAN COURT OF AUDITORS ON THE ADOPTION OF THE INTERINSTITUTIONAL WORKING GROUP RECOMMENDATIONS FOR THE ESTABLISHMENT AND USE OF NATIONAL DECLARATIONS /* COM/2014/0688 final */**

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Communication
from the Commission to the European Parliament, to the Council and to the
European Court of Auditors
on the adoption of the Interinstitutional Working Group recommendations for the
establishment and use of national declarations

The
Commission has continuously and consistently introduced new measures to
improve, together with the Member States, the sound and efficient management of
European Union (EU) funds. Yet, the situation at present is still not fully
satisfactory because error rates remain high in shared management and further
improvements are required.

National
declarations proved to be a major issue for both European Parliament (EP) and
the Council and a very sensitive issue to most Member States. The final
provisions of the Financial Regulation (FR)[1]
require Member States bodies entrusted with the management of EU funds to
provide (as from 2014) the Commission annually with a management declaration
but foresaw that Member States may also provide in addition “declarations
signed at the appropriate level”.

It
is the Commission’s view that national declarations can be a building block for
the Commission’s overall assurance provided that several requirements are
fulfilled to guarantee their reliability and added value. In this line, a national
declaration should be more than a summary of findings of audit bodies at
community and national level. It should add value by strengthening the
provision of assurance in the management of EU funds, demonstrating the
political commitment towards sound financial management, its timing should fit
in the EU control and reporting cycle and it should be transparent enough to
raise awareness about the control systems of the EU funds in the Member States.

Furthermore,
an enhanced accountability system with the introduction of national
declarations is one element in an overall strategy to improve EU financial
management (cf. the 2012 discharge resolutions).

Within
this context the Commission launched the idea of the creation of a working
group together with the EP and the Council (with a view to issue
recommendations on the structure and a template) and presented a declaration
stating that it was prepared to examine the EP request to establish a template
for national management declarations to be issued by Member States at the
appropriate political level.

The
closing meeting of the Interinstitutional Working Group was dedicated to the discussion
and adoption of its recommendations on National Declarations. The Commission
reminds that, at present, there is no legal obligation for Member States to
provide national declarations. Yet, although remaining voluntary, the results
of the working group include a set of concrete criteria which can be used in
practice and are sufficiently flexible to accommodate specific national
requirements relating to national declarations.

The
Commission endorses the recommendations set by the Interinstitutional Working
Group and strongly supports the use of National declarations as a
public accountability instrument between the national Governments and the
national Parliaments, because their importance and visibility as well as their
potential for raising awareness about the control systems of the EU funds in
the Member States are greater than those of the management declarations. The Commission
is willing to explore ways to further promote these national (political)
declarations following the adoption of the recommendations issued by the
Interinstitutional Working Group.

[1]
    Regulation (EU, Euratom) N° 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) N°
1605/2002, OJ L298, 26.10.12, p.1.

Recommendations
for the establishment and the use of voluntary National declarations in the
framework of Article 59.5 of the Financial Regulation

Introduction
and scope

Article
59.5 of the Financial Regulation, which covers Shared Management with Member
States, has introduced the possibility for Member States to provide a voluntary
National Declaration in addition to the obligatory management declarations as
provided by the bodies designated by the Member States to be responsible for
the management and control of Union funds.

Following a
request of the European Parliament in the discharge resolution on the financial
year 2011, the European Commission established a Working Group with
participants from the European Parliament, the Council and the European Commission
to establish practical recommendations supporting Member States who are
reflecting on the possibility of establishing a national declaration. Consequently,
the recommendations, included in the present text, should be addressed to
Member States who are providing or wish to provide national declarations pursuant
to Art. 59 (5) last subparagraph of the Financial Regulation.

The
Working Group met twice at institutional level and four times at technical
level. The documents related to its activities are published at the following
URL address: http://ec.europa.eu/budget/biblio/documents/iwgnd/index_en.cfm.
This note summarises the current results of the presentations and discussions
in the working group.

In
parallel with the Working Group, work is also ongoing to establish the
provisions and templates for the management declarations. The relevant
proposals for Implementing Regulations are foreseen to be finalised in the
second half of 2014. In view of the close link between management declarations
and national declarations, the recommendations included in this document may require
further review to reflect the final provisions of these legal acts once they
are adopted and to take into consideration national considerations if needed. The
first part of this document presents the recommendations from the Working Group
on the structure and content of the National Declaration and on other important
considerations for the use of it such as the choice of the addressees, the
timing, the publication and the follow-up.

The
second part presents general criteria which should ideally be taken into
account when drafting a national declaration in order to increase the usefulness
for the National and/or European bodies to which it will be addressed.

The
third and last part provides an example of a text of a national declaration
illustrating what it could include.

The
term "national" authorities, covers also the federal, sub-federal or regional
levels (or equivalent level according to the constitutional arrangements) where
appropriate.

Part
 I. Recommendations:

Structure
and content of the National Declaration

Article
59 of the Financial Regulation (FR) has introduced a new mandatory and
comprehensive reporting instrument for the national bodies in charge of the
management and control of the programmes under shared-management: the annual
management declaration. While the FR describes the general principles inherent
to these management declarations, the implementing acts (which are foreseen to
be adopted before the end of the year 2014) will lay down the specific rules on
the work and checks underlying these declarations.

In
order to avoid duplication and parallel reporting processes, the Working Group therefore
recommends structuring the National Declaration around two main components: 1)
the management declarations and their annexes and 2) the national declaration
itself signed at the appropriate level in the Member States. This approach is
in accordance with the wording of article 59 (5) b, last paragraph that states that
Member States may provide "national declarations" based on the
information included in the annual management declaration and its annexes. The
national declaration can replicate this information directly or base itself on
it indirectly. Furthermore, in view of possible additional national information
requirements, Member States are not restricted to the content of the
recommendations, but may also include additional information in the declaration
which is deemed necessary in a national context.

Who
should sign the national declaration?

The
Working Group recommends that the signatory "at the appropriate, preferably
political, level" should be ideally empowered with oversight authority on
the entities issuing the management declarations, being directly or, in case the
national declaration is signed on behalf of the whole government, indirectly. The
signatory should not only acknowledge the assurance declared and the reports
submitted by management but also, in case weaknesses are reported that deserve
corrective actions, he or she should have if possible the capacity to initiate
processes or take decisions in order to facilitate/enable the implementation of
those actions and have the legal mandate to enforce relevant actions.

Alternatively,
different approaches may exist depending on the member states’ specific constitutional
requirements, responsibilities and accountability structures.

To
whom should the national declaration be addressed?

National
elected officials in the executive branch are not accountable to the
Commission, but to the relevant national or regional/sub-federal legislative
body, depending on the political structures of each MS. In consequence, the
working group recommends that the declarations are addressed to and be debated and/or
followed-up at the relevant legislative level. This could for instance be
achieved by foreseeing the national declaration in a national legislative or
regulatory instrument or, alternatively, by means of a report or opinion of the
Supreme Audit Institution, which would prompt the debate within the relevant
deliberative forum.  A copy of the declarations should be sent to the
Commission.

Timing
for delivery of the national declaration

As
regards the timing and to maximise its value for the reinforcement of
the assurance and accountability chain, the national declaration should be
ideally issued as soon as possible after the management declaration and the
reports attached as required in FR Art. 59. Yet, in reality this is not always feasible
as the timing of a national declaration may depend on other external factors
(such as the follow-up of previous actions, external assessments, parliamentary
scrutiny or timelines set out in national legislative or regulatory provisions).
If this is the case, it would be desirable that the declaration is issued
before the adoption of the synthesis report (re FR Art. 66.9) by the Commission
in June of the year n+1. Nevertheless, any delivery after that can always be considered
for potential use in the subsequent budgetary assurance cycle.

Publicity

The
working group recommends that the Member States declarations are made public.
This will raise the visibility of the commitment of elected representatives
towards taking overall political responsibility and enhance accountability for
EU funds. A high level of transparency would also strengthen their potential
for raising awareness about the control systems of the EU funds in the MS. For
these reasons the working group encourages MS to pursue a high level of
publicity.

Incentive
for MS to issue a national declaration

The
submission of national declarations in addition to the mandatory reporting
tools required by Art 59.5 could be an appropriate basis to streamline the
control procedure, for example when setting out the risk criteria used to
determine the risk profile of a MS within the context of a risk-assessment
performed for an audit, or to allow Member States a degree of discretion in
determining the audit scope and method taking into account the minimum
requirements of the International Standards on Auditing (ISA’s)without
prejudice to the relevant legislative provisions. Yet, the Commission is
determined to respect the general principle “of equal treatment” in accordance
with the Statement issued by the Commission concerning the last sub-paragraph
of FR Art. 59(5). Therefore any easing of control intensity or frequency would only
be possible if the Member States' control performance has been assessed by the
Commission as being indeed satisfactory, the voluntary national declaration
meeting all requirements. Where there will be evidences that the issuance of a
National Declaration has a positive and lasting impact on the good performance
of national authorities, the working group recommends that the declaration should
be used in the evaluation of the effective functioning of management and
control systems of the Member States and if all principles are fulfilled, be
used as a building block in the assurance process of the Commission.

Further
assistance and monitoring

The
Working Group recommends the Commission to continue providing support and
feedback to Member States who issue already or are interested in issuing a
national declaration. In this framework the Commission should collect best
practices and report on them through the annual activity reports of the DGs
concerned and the synthesis report of the Commission. Other possible tools such
as a “handbook” or information sessions in the relevant fora could be
conceived. The Working Group also encourages the Commission to adopt a uniform
approach by all DGs to national declarations. Including reporting information
in these public documents would also allow monitoring the evolution over time.

Part
II. General Criteria:

Based
on the recommendations referred above, the National declaration should as much
as possible include at least the following elements:

Refer
to the EU and national legislative or regulatory basis of the Member State (if applicable).

Be
addressed to the relevant national legislative chamber or level, and
communicated to the Commission.

Identify
the signatory, her or his function and whether
the declaration is signed on a personal basis or on behalf of the
national or regional government (or equivalent appropriate level according
to the constitutional arrangements), in accordance with the legislation or the
prevailing practices in the Member State concerned. Where applicable, the existing
accountability link between the signatory and the directors/heads of the agencies
or bodies responsible for the management should be mentioned explicitly.

The
sources of information on which the national declaration is based. The
declaration should be based on the management declarations and other reports
required in FR 59.5: the annual accounts, the independent audit opinion(s) and
the annual summary of audits and controls. The FR now requires the annual
summary of audits and controls to also include the analysis of the nature and
extent of errors and system weaknesses identified as well as the corrective
action taken or planned. In addition, it would be desirable to complement this
with a wider reference such as "the information at my disposal" which
would prevent that a known relevant fact, not explicitly reported by
management, could be deliberately ignored.

Scope
of the assurance: The Commission needs to provide
assurance on the five internal control objectives listed in the Financial Regulation
Art. 32: legality and regularity; effectiveness efficiency and economy; fraud
prevention and correction; safeguarding of assets and; reliability of
reporting. This is done by management. It is suggested having a general
formulation in the national declaration instead of covering explicitly all
control objectives as in some cases declarations may not cover all five control
objectives.

The
added value of the national declaration at the "appropriate level"
results mainly from the reinforcement of the commitment by management to
address system weaknesses and the involvement of the relevant legislative level
of the Member State. Therefore, the national declaration should contain an explicit
reference to the errors and system weaknesses and a commitment to back
management for the timely implementation of the remedial measures. This
backing could consist of: political instructions to the various administrative
departments concerned and, where appropriate, allocation of resources and/or
promotion of regulatory reform (e.g. simplification). Any additional
information included as a result of parliamentary requirements may also
increase the assurance given by the national declaration. Such complementary
information could e.g. concern any national measures taken to protect the
financial interests of the EU or external assessments by the national audit institutions.
The Commission is recommended to take as much as possible any such information
into account in building its assurance. Finally, independent assurance should
be sought to be provided by an independent auditor (Supreme Audit Institution).

Part
III. Illustrative examples:

The working
group takes note of the following illustrative examples proposed for possible
use. Alternatively, different approaches may exist depending on the Member
States’ specific constitutional requirements, responsibilities and
accountability structures, in so far they include the essential elements
referred to in the recommendations and general criteria under parts I and II.

Illustrative
example 1

Having
regard to the provisions of [national legislative or regulatory reference]

I
the undersigned, in my position of and responsibility as [                 ],
on behalf of [           ], and based on the information at my disposal, hereby
declare that

I
have taken note/acknowledged (of) the management declarations, signed by the directors/heads
of the agencies or bodies, in which they declare having assurance on [the
completeness and accuracy of the information presented in the accounts, the use
of the expenditure for its intended purpose and the management and control
system put in place to guarantee the legality and regularity of the underlying
transactions], joint to this declaration and listed in the annex. In my
position as [                 ] I am accountable for the oversight of the
government agencies and other bodies entrusted with the management of the EU
budget appropriations covered by these declarations, for a total amount of
[              ] for the reporting period detailed in the Annex.

I
(on behalf of the Government of........) take overall political responsibility for
the management of these EU budget appropriations, based on the information at
my disposal, on the assurances declared by management and their accompanying reports[1].

I
have examined the nature and extent of the irregularities and system deficiencies
reported for the agencies and bodies in the annual summaries attached to the
management declarations, as well as the remedial actions taken, on-going or
planned by management to address them. Based on my own judgement and all
information available to me, I have reasonable assurance that these measures
would effectively address the weaknesses identified and I have taken
appropriate action to support the management of the agencies and bodies concerned
to implement them without undue delay.

Place
and date

Signature

Annex

Section
A

Agencies
and bodies submitting management declarations free of material errors or system
weaknesses.

Agency
/ programme managed/ expenditure for the financial year.

Section
B

Agencies
and bodies submitting management declarations including material errors or
system weaknesses.

Agency
/ programme managed / expenditure for the financial year.

Illustrative
example no. 2

Part I Accountability

This
part contains a description of the prerequisites on which the declaration is
issued and the scope of assurance. The text should include a description of the
relevant EU-legislation as well as a description of the public administration
and the internal control framework. This framework guarantees a sound financial
management of the EU funds within the Member State and compliance with all
applicable laws and regulations.

Part II Summary
of accounts

The
summary of accounts for EU funds consists of an income statement, a balance
sheet and a cash flow statement of outcomes under appropriations and income
headings. There should also be a description of the accounting principles used
in the summary of accounts.

Part III
Assessment of the internal control system

This
part summarises the documents which assess the internal control systems of the
managing/responsible authorities. It consists of:

- 
the declarations concerning accounts and
assessments of internal control presented by the managements of authorities
responsible for managing EU funds in their annual reports,

- 
the results of audits of the
declarations from the National Audit Office/Supreme Audit Institution,

- 
the management declarations from
managing authorities and

- 
the results of audits from the national
audit authority/authorities for the EU programmes.

Reported
irregularities and system deficiencies shall be described as well as remedial
actions taken, ongoing or planned by management or signatory to address them.

Part IV The
declaration

This
part summarises the evaluation made on the basis of the accounts, the system of
internal control, the declarations and audits summarised in Part III [including
possible weaknesses and errors]. Based on this, the signatory submits the
following declaration:

True
and fair accounts

The
summary of the EU accounts, consisting of an income statement, balance sheet and
cash flow statement, has been drawn up in accordance with generally accepted
accounting principles in [the MS]. [The signatory] makes the assessment that,
in all essential respects, [except for the funds...] the accounts are true and
fair.

Satisfactory
internal control

[The
signatory] makes the assessment that a regulatory framework for [central
government] is in place to ensure satisfactory internal control of EU funds.

Illustrative
example no. 3

Part I Signing

Having regard to
the [Member State] Council of Ministers decision d.d. [date], I hereby declare,
on behalf of 
[responsible for issuing the National Declaration] in my position and
responsibility as [function of signatory of the National Declaration],
concerning the financial management of resources for the following funds in
shared management and based on the information at my disposal, that 
(per fund under shared management):

Part
II Content of declaration

1. The
functioning of the systems set up in the member state [name of member state],
including measures for the management and control of resources from the [name
fund] for the financial year [year], provide, to the best of my knowledge,
reasonable assurance on the legality and regularity of underlying transactions,
as well as of the eligibility of payment claims [with the exception of:
mentioning deficiencies in the functioning of the systems]

2. The
expenditure and revenue up to a total amount of € [amount] debit or credit to
the [name fund] as included in the consolidation statement issued by [issuing
authority] and in payment claims to the Commission covering the financial year
[year], are, to my best knowledge, legal, regular, correct and complete up to
the level of the final beneficiary [if materiality threshold is exceeded:
excluding an amount of € [amount] [%] of irregular expenditure]

3. Pending
claims up to a total amount of € [amount] for the [name fund] as included in
the consolidation statement issued by [issuing authority] and in payment claims
to the Commission covering the financial year [year] are, to the best of my
knowledge, legal, regular, correct and complete.

Part
III Scope

According to the best of my knowledge,
surveys and corrections on the approval of payment claims to the Commission are
accounted for in the annex. The confirmations and reservations in this
declaration are restricted to matters of material consequence, and are a direct
result of audits and bar inherent insecurities due to the interpretation of
EU-legislation.

<Signature>

Explanatory note

Accountability threshold
Mentioning of criteria and a
tolerability threshold that apply for reporting special points of interest.
It will be specified when the tolerability threshold
is exceeded on fund level.

Approval European Commission
In the end the European Commission decides
on the EU-conformity of national implementation and execution of
EU-legislation. Consequently, there is an inherent risk regarding the scope and
size of corrections by the Commission.

Weaknesses and remedial actions per
fund

a.......
b.......
etc.