# EUR-Lex - 52011SC1351 - EN

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# 52011SC1351

**COMMISSION STAFF WORKING PAPER /* SEC/2011/1351 final */**

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TABLE OF CONTENTS

INTRODUCTION....................................................................................................................... 4

European Parliament resolutions on 2009
discharge....................................................................... 5

Accounts............................................................................................................................. 6

Legality and regularity.......................................................................................................... 7

Recovery and correction mechanisms................................................................................. 10

Member State responsibility and transparency.................................................................... 14

Tolerable risk of errors...................................................................................................... 17

Commission's Internal Audit Service.................................................................................. 19

Single audit........................................................................................................................ 21

Transparency.................................................................................................................... 23

Evaluations........................................................................................................................ 26

Whistleblowers.................................................................................................................. 27

Reforms of the Staff Regulations of Officials
of the EU........................................................ 28

Agriculture and natural resources....................................................................................... 29

Cohesion........................................................................................................................... 32

Research, energy and transport.......................................................................................... 38

External aid, Development and Enlargement....................................................................... 42

Education and Citizenship.................................................................................................. 49

Economic and Financial Affairs.......................................................................................... 50

Comprehensive spending review........................................................................................ 53

Priority actions - general.................................................................................................... 54

Priority action - Reform of the current
discharge procedure................................................ 55

Priority action - National management
declarations............................................................. 56

Priority action - Completion of the
Commission's governance structure............................... 58

Priority action - Systematic activation of
interruption and suspension of payments as well as lifting of the measure  59

Priority action - Improvement of corrective
mechanisms..................................................... 61

Priority action - Performance evaluator.............................................................................. 63

Priority action - Introduction of a new
spending logic.......................................................... 64

Observations from committee on development................................................................... 65

Observations from committee on Employment and
Social Affairs........................................ 68

Observations from committee on Internal Market
and Consumer Protection........................ 70

Observations from committee on Transport and
Tourism.................................................... 72

Observations from committee on Civil
liberties, Justice and Home affairs............................. 74

Observations from committee on Culture and
Education..................................................... 75

Observations from committee on Environment,
Public Health and Food Safety.................... 76

Observations from committee on Foreign
Affairs................................................................ 78

Observations from committee on Regional
Development..................................................... 79

Part I - Special report N° 15/2009 on
"EU assistance implemented through United Nations organisations:
decision-making and monitoring"........................................................................................ 82

Part II - Special report N° 17/2009 on
"Vocational training actions for women co-financed by the European Social
Fund".................................................................................................................. 84

Part III - Special report N° 1/2010 on
"Are simplified customs procedures for imports effectively controlled?"      87

Part IV - Special report N° 2/2010 on
"The effectiveness of the Design Studies and Construction of New
Infrastructures support schemes under the Sixth Framework Programme for
Research"   90

Part V - Special report N° 3/2010 on
"Impact Assessments in the EU institutions: do they support
decision-making?"........................................................................................................................... 92

Part VI - Special report N° 4/2010 on
"Is the design and management of the mobility scheme of the Leonardo da
Vinci Programme likely to lead to effective results?".............................................. 95

Part VII - Special report N° 5/2010 on
"Implementation of the Leader approach for rural development"   97

Part VIII - Special report N° 6/2010 on
"Has the reform of the sugar market achieved its main objectives?"         99

Part IX - Special report N° 8/2010 on
"Improving transport performance on Trans-European rail axes: Have EU rail
infrastructure investments been effective?".......................................................... 101

Part X - Special report N° 9/2010 on "Is
EU Structural Measures spending on the supply of water for domestic consumption
used to best effect?"...................................................................... 106

Part XI - Special report N° 10/2010 on
"Specific measures for agriculture in favour of the outermost regions of
the Union and the smaller Aegean islands"................................................................ 107

European Development Funds......................................................................................... 109

Requests to the Commission concerning the
agencies........................................................ 120

INTRODUCTION

This Commission Staff Working Paper
completes the Report from the Commission to the European Parliament and the
Council on the Follow-up to 2009 Discharge. It presents in detail the answers
to the 213 specific requests made by the European Parliament in its Resolutions
forming an integral part of its Decisions on the 2009 Discharges.[1]

European
Parliament resolutions on 2009 discharge

Accounts

1.           (European Parliament, §3) The
EP considers it abnormal for the annual accounts to be presented with negative
own capital of EUR 44 700 000 000 and wonders whether the amounts to be
requested from Member States should not be entered as assets, given that the
estimated EUR 37 000 000 000 in staff pensions is clearly a commitment. The EP
notes the explanations provided by the Commission's Accounting Officer to the
effect that international accounting standards applicable to the public sector
have been complied with; proposes that consideration be given to creating a
Union pension fund to externalise financial commitments of this kind concerning
staff

Commission's
response:

As
mentioned previously, the existence of negative net assets is a consequence of
the application of accrual accounting to an institution that is funded by an
annual budget. These amounts are not receivables from the Member States at the
year-end. Furthermore, under the EU accounting rules (and also internationally
accepted accounting standards) guarantees such as those given by Member States
do not meet the definition of being an asset and so are not recorded in the
accounts as such, rather they are disclosed in the notes to the accounts. EU
accounting standards follow international standards. Modification of these EU
rules would therefore be contrary to international standards and so could lead
to a qualified opinion by the ECA.

Concerning
the study on the possibility to the creation of a pension fund: a thorough
analysis was done at the time of the review of the Staff Regulations (SR) in
2004 and the current solution was finally chosen and embedded in the SR.

2.           (European Parliament, §4)
The EP urges the Commission to eliminate the risk of misstatements in
the accounts in the future by dealing with the weaknesses identified by the
Court of Auditors without delay

Commission's
response:

It is
impossible to eliminate entirely the risk of misstatement in a set of accounts.
The Commission instead focuses on reducing this risk to an acceptable,
cost-efficient level. It has therefore put in place a robust accounting system
and surrounding rules and procedures that have, for the last 3 years, resulted
in a fully clean (unqualified opinion) on the reliability of the accounts
produced. This means that in the view of the Commission and the Court, these
accounts are free from material misstatement. Moreover, the Commission
continues to improve its methods and controls, through actions such as the
Accounting Quality project, so as to address the remarks of the Court and thus
reduce the risk of misstatements further.

Legality and
regularity

3.           (European Parliament, §6)
The EP notes that while Article 317TFEU states that the Commission
implements the Union budget on its own responsibility, in the present
understanding of ‘shared management’ most of the management functions are
carried out by national bodies not directly accountable at Union level and over
which the Commission has limited powers of enforcement; takes the view
therefore that these bodies are meant to be directly accountable at Union level
to the Commission; insists that this does not absolve the Commission of its
responsibility for the implementation of the Union budget but on the contrary
requires it to take a hard line with any Member States not fulfilling their
responsibilities under 'shared management'

Commission's
response:

The
Commission has taken the requested action and will demonstrate the impact of
this in the 2011 Annual Activity Reports of the Directors General.

Although
the Commission has the ultimate responsibility for the implementation of the
budget according to the Treaty, in the area of Cohesion, Member States are in
the first instance responsible for the legal and regular implementation of the
Structural Funds in shared management (art 70 of Regulation 1083/2006). The
accountability of the Member State and the assurance they provide to the
Commission have been strengthened in the current legislation, through the
establishment of an ex-ante approval procedure of the management and control
systems and the setting up of programme audit authorities.

The
current Structural Fund Regulations also provide the Commission with all
necessary tools to perform its supervisory role in case of non respect of their
obligations by Member States, and in particular:

-
interruptions and suspensions of interim payments and implementation of
financial corrections.

The
Commission exercised rigorously this supervisory role in 2010 by interrupting
63 (49 ERDF and 14 ESF) payment deadlines and adopting one suspension decision
for 2007-2013 operational programmes and five suspension decisions (ESF) on
2000-2006 operational programmes, where serious deficiencies or irregularities
have been detected. The Commission is pursuing this strict policy in 2011, with
54 interruptions of payment deadlines decided (40 for ERDF and 14 for ESF) by
30 June 2011. Furthermore, the Commission proposed in the revision of the
Financial Regulation in Article 56 to increase the accountability and ownership
of the bodies managing the funds, notably by introducing annual management
declarations of assurance, which already exist for agriculture. The declaration
is intended to provide a direct link of accountability between the managing
bodies and the Commission. The proposal is currently subject to inter-institutional
discussion, the final outcome will be subject to the legislative debate.

In the
area of agriculture, expenditure is managed and controlled through a system
which already includes, on the one hand, all the necessary building blocks to
guarantee a sound administration at Member States’ level and, on the other
hand, allows the Commission to audit the proper functioning of their management
and control systems and, if need be, to counter the risk of financial losses as
a result of any deficiencies in the set-up and operation of those systems
through clawing back expenditure from Member States under the conformity
clearance mechanism.

This
comprehensive system is based on four levels:

- a
compulsory administrative structure at the level of Member States, centred
around the establishment of accredited paying agencies;

- detailed
systems for controls by paying agencies before payment and dissuasive sanctions
to be applied by those paying agencies;

- ex-post
controls by independent audit bodies on the paying agencies' annual accounts
and the functioning of their internal control systems and by special
departments on aid measures other than direct aid payments;

-
clearance of accounts procedures operated by the Commission (annual accounting
(financial) clearance and multi-annual conformity clearance).

Taken
together, the four levels and the results that they produce are the basis for
the Commission to gain reasonable assurance as to the effective management of
the risk of error in the legality and regularity of the financial transactions
in respect of the final beneficiaries.

4.           (European Parliament, §7)
The EP calls, pursuant to Article 287(3) TFEU, as regards
shared-management controls, for cooperation to be stepped up between national
audit bodies and the Court of Auditors; proposes examination of the possibility
of national audit bodies, in their capacity as accredited and independent
external auditors, and with due regard for international audit standards, issuing
national audit certificates for the management of Union funds, which would be
submitted to Member State governments with a view to being produced during the
discharge process in accordance with an appropriate inter-institutional
procedure to be introduced

Commission's
response:

This
recommendation has been implemented by means of the Commission's proposal for
the triennial revision of the Financial Regulation, adopted in December 2010.
It includes a requirement for annual management declarations of assurance from
accredited bodies in the Member States, accompanied by an independent audit
opinion thereon. Under this proposal, it is for the Member States to decide
whether independent audit opinions are drawn up by its national Supreme Audit
Institution (SAI), another public sector auditor, or a private audit firm.

When
auditing the performance of a Managing Authority, the audit body designated by
the Member State will contribute to the internal control process piloted from
the Commission. It will apply international standards and a methodology agreed
by the Commission, and will necessarily be subject to controls from the
Commission, and in consequence subject to the scrutiny of the Court of Auditors
later on.

5.           (European Parliament, §14)
The EP calls on the Commission and the Member States to make annual
improvements in the most likely error rates in implementing the Union budget;
considers that the aim should be to bring the rate below the materiality
threshold, thus securing a positive statement of assurance from the Court of
Auditors

Commission's
response:

The
Commission agrees to do its utmost for further reducing error rates so as to
contribute as much as possible to increasing the European Court of Auditors
positive assessment of the budget. However, any development of the respective
percentages of the sectoral assessments will depend on a number of factors,
notably the effect of ongoing action plans, the effect of the 2007-2013
legislation, and the structure of the Court's annual report.

In
addition, it is inevitable that the error rates can oscillate around the target
set. Over years, improvements should be seen from the whole budget perspective.

6.           (European Parliament, §15
and §16) The EP recalls its invitations to the Commission to present
a proposal for the introduction of mandatory national management declarations
(NMDs) issued and signed at ministerial level, made public and duly audited by
an independent auditor so far as such declarations are a necessary and
indispensable first step to improve the efficiency of national systems and to
enhance national accountability for the use of Union money. The EP reiterates
that for Member States with federal systems or substantial decentralisation
such NMDs could take the form, in whole or in part, of a collation of regional
declarations, provided that each component declaration has been audited and
signed by an elected political office-holder; insists that the Commission will
present such a proposal by September 2011 irrespective of the fact that some
Member States might not yet agree with such an initiative. NMDs should contain
full information about the use of Union funds, and after the signing of NMDs at
ministerial level they should be made public

Commission's
response:

In the
Commission's view, management declarations, audited by an independent auditor,
as currently already the case for Agriculture, would be more appropriate for
obtaining assurance from Member States on the proper management of EU Funds
than any mandatory national declarations. For this reason, the Commission
proposal for the triennial revision of the Financial Regulation adopted in May
2010 included a requirement for annual management declarations of assurance from
accredited bodies in the Member States, accompanied by an independent audit
opinion thereon. If a Member State has accredited more than one body per policy
area, it should, in addition, provide the Commission with a synthesis report
with an overview at national level of all management declarations of assurance
and audit opinions thereon. The inter-institutional discussion on the revision
of the FR is currently ongoing.

Recovery and
correction mechanisms

7.           (European Parliament, §21)
The EP emphasises that the 'financial correction' mechanism should not
be used as an easy way of avoiding the use of a 'recovery' procedure and that
whenever possible a 'recovery' procedure should be pursued to ensure that those
who have benefitted from sums paid 'incorrectly' do not retain such funds;
recalls its request that all data concerning recoveries should be an integral
part of, and included in, the database of final beneficiaries

Commission's
response:

The
Commission is taking the requested action with exception of the second part of
the recommendation. It intends to take measures to that effect before
31/12/2012.

Under the
system of shared management in Cohesion, the Commission primarily cooperates
with Member States and regions for the set-up, management and control of
programmes. The management of projects is under the domain of the Member States and the programme authorities. Following this logic, financial corrections,
understood as corrections agreed between the Commission and Member States or decided by the Commission, always address the Member States and their
programmes and not directly the beneficiaries and their projects. In case of
financial corrections agreed between the Commission and Member States, the amount that is to be corrected is deducted from the following payment claim of the Member State to the Commission. In case of a financial correction which is made by a
Commission decision, a recovery order is issued by the Commission against the Member State. All this does not mean that the corrected amounts are born by the national
budgets and the taxpayers. The Member States are required to recover from
beneficiaries whenever possible.

In this
respect, the Commission will carry out in the second semester of 2011 a specific
audit enquiry on the Member States' systems for recoveries, in order to gain
assurance on the quality of data submitted in the annual statements on
recoveries and withdrawals by Member States and to verify where possible the
national recovery process.

The
Commission will not be taking action to include data on recoveries in the
database on final beneficiaries. The reason for this is that this database aims
at fulfilling the obligation of transparency set by art. 53 of the Financial
Regulation, but there is no legal basis to impose additional costs to Member
States to create automatic links and compatibility with the data stored in the
IT systems of the certifying authorities.

As regards
Agriculture, financial corrections are determined on the basis of the nature
and gravity of the infringement and the financial damage caused to the EU.
Where possible, the amount is calculated on the basis of the loss actually
caused or on the basis of an extrapolation. Where this is not possible,
flat-rates are used which take account of the severity of the deficiencies in
the national control systems in order to reflect the financial risk for the EU.
Where undue payments are or can be identified as a result of the conformity
clearance procedures, Member States are required to follow them up by recovery
actions against the final beneficiaries. However, even where this is not
possible because the financial corrections only relate to deficiencies in the
Member States' management and control systems, financial corrections are an
important means to improve these systems and, thus, to prevent or detect and
recover irregular payments to final beneficiaries. The conformity clearance
thereby contributes to the legality and regularity of the transactions at the
level of the final beneficiaries.

8.           (European Parliament, §24)
The EP Invites the Commission to refine the financial reporting
guidelines to ensure that all relevant information about the operation of the
multi-annual correction mechanisms is appropriately disclosed in the accounts;
further asks the Commission to keep Parliament informed on its efforts to
verify the work of the national audit authorities

Commission's
response:

The
Commission issued specific guidelines to the DGs concerning the reporting of
financial corrections at 31/12/2010. Additionally, the Commission provides
information about its verification of the work of the national audit
authorities in the context of the Annual Activity Reports of the Directors
General.

9.           (European Parliament, §26) The
EP believes that future rules applicable to the Union budget and programmes
should provide that unspent Union funds are not returned to the Member States
if a Member State has not paid back to the Union amounts incorrectly received
and invites the Commission to take into account any financial correction not
yet paid by the Member States before returning unspent annual budget
appropriations to the Member States

Commission's
response:

The EU budget
is by construction balanced. The balance from each financial year is entered in
the budget for the following financial year as revenue in the case of a surplus
or as a payment appropriation in the case of a deficit. In the former case,
such surplus decreases correspondingly Member States' contributions based on
the GNI resource. Nevertheless, the surplus calculations take into account the
amount of executed financial corrections.

10.         (European Parliament, §27)
The EP repeats its opinion from the 2008 discharge resolution, that
reallocation of ineligible expenditure should only be allowed if it was
discovered by the Member States themselves; further welcomes that the
Commission has made use of the new possibility to immediately suspend payments
and demands that suspension of payments continue to be used resolutely and
consistently, making the decisions taken and the reasons for them clear to
Parliament; calls on the Commission to develop a system which will punish
underperformers, and reward those who perform well, by reducing their
administrative burden

Commission's
response:

The
Commission is taking the requested action to resolutely and consistently
exercise its supervisory role. It intends to demonstrate measures taken to that
effect in the 2011 Annual Activity Reports of the Directors General.

However,
the Commission is not in the capacity to take measures with regard to the first
sentence of the request. The reason for that is that the current regulatory
framework does not provide for sanctions of this type, but for financial
corrections, as corrective measures to restore the regularity of expenditures
and to protect the EU budget. Furthermore, the Commission will make proposals
for the future regulations to encourage performance and to reduce
administrative burden while ensuring continuous high control standards.

The
Commission exercised rigorously this supervisory role in 2010 by interrupting
63 (49 ERDF and 14 ESF) payment deadlines and adopting six suspension decisions
for 2007-2013 and 2000-2006 ESF operational programmes, where serious
deficiencies or irregularities have been detected in the management of
Structural Funds. The Commission is pursuing this strict policy in 2011, with
54 interruptions of payment deadlines decided (40 for ERDF and14 for ESF) by 30
June 2011.

The
possibility to interrupt payments and impose financial corrections also acts as
an incentive for the Member State to improve the management and control systems
and implement the necessary financial corrections. Indeed in case a Member State applies the financial correction itself, it has the incentive to act fast,
because otherwise it penalises itself (outstanding payments are still blocked
and risk automatic de-commitment under the N+2/3 rule). Finally if the
correction is imposed by the Commission through a formal decision, it
represents a net reduction of allocations available for the Member State.

11.         (European Parliament, §28)
Provide Parliament with an analysis of the paying agencies' capacity to
deliver reliable data based, in addition, on ex-ante declarations and
on-the-spot checks, comparing those declarations and those checks with the
information given by the Court of Auditors, and to check the veracity of the
information provided by these bodies in the last four years

Commission's
response:

An
analysis of the information provided by paying agencies and verified by the
certification bodies is provided in the AAR on an annual basis. The Commission
wishes to point out, that the Court of Auditors only audits a small part of the
paying agencies every year and does not provide representative control
statistics per Member State, so such a comparison is not possible to draw.

12.         (European Parliament, §32)
The EP asks the Commission to carefully analyse the Member States'
reports on recoveries and, if necessary, carry out further training

Commission's
response:

The
Commission is taking the requested action. It intends to take measures to that
effect and to report results in the 2011 and 2012 Annual Activity Reports of
the Directors General.

The
Commission has planned an audit enquiry on recoveries in the area of Structural
Funds as from the second semester of 2011, to review for all Funds the
corrective mechanism systems put in place by certifying authorities and to
assess the assurance the Commission can place on the reported figures, for a
sample of programmes and Member States selected on the basis of a risk analysis.
The results of this enquiry will be reported in the 2011 and 2012 Annual
Activity Reports of the Directors General of the concerned services. Audit
findings will be communicated to the concerned Member States and additional
guidance and training will be provided, if necessary.

Member State responsibility and transparency

13.         (European Parliament, §33)
The EP notes with concern the slow pace of improvements to the
financial management of Union funds; at the same time takes note of the
repeated opinions of both the Court of Auditors and the Commission that the
quality of management and control systems differs widely between the Member
States and between the different programmes; calls on the Commission to systematically
account for these differences in control systems and to make available clear
evaluations of efforts by the Member States to detect irregularities so as to
make sure that those Member States detecting higher irregularities due to more
onerous control systems are not discredited at any point

Commission's
response:

The
Commission has taken the requested action.

The audit
efforts of the different Member States and programmes' audit authorities are
thoroughly analysed and have been for the first time disclosed in the 2011
Annual Activity Reports of the Directors General. The Commission also takes
into account the national audit efforts and actions taken by Member States to
follow-up such efforts for its follow-up of reported irregularities and error
rates. The annual report on the protection of the financial interests of the Union also takes into account such considerations.

14.         (European Parliament, §35)
The EP Invites the Commission to publish in the Synthesis Report an
assessment of the strengths and weaknesses of individual Member States'
management and control systems on the basis of the audit work it already
performs as well as other relevant available information; further invites the
Commission to include a progress report on the improvements in the discharge
information; calls on the Commission to establish a ‘scoreboard’ on the quality
of controls per Member State and policy area according to a matrix model per
Member State

Commission's
response:

The
Commission is of the view that it already reports extensively on the
effectiveness of management and control systems in the respective Annual
Activity Reports of the Directors General. The Annual activity reports for 2010
provide extensive information per Member state, per policy area and programming
period. The Commission has instructed the DGs concerned to systematically
provide in their Annual Activity Reports additional and detailed information on
the financial management by Member States, including information on financial
corrections and the assessment of the national control systems by operating
programme and Member State.

However,
the Commission does not agree with the suggestion that this information should
also be presented in the synthesis report, as it would be technically complex
to consolidate information from different policy areas and this would burden
the report with significantly technical data.

15.         (European Parliament, §36)
The EP urges the Commission on the basis of concrete data per Member State and per policy area, to report to Parliament on the effectiveness of
management and control mechanisms and to implement, together with the European
Anti-Fraud Office (OLAF), stricter control on the spending of Union money

Commission's
response:

The
Commission has instructed the DGs concerned to systematically provide in their
Annual Activity Reports detailed information on the financial management by
Member States, including information on financial corrections and the
assessment of the national control systems by operating programme and Member State. Therefore, the Commission is of the view that the Directors General of the
concerned Services already reports extensively on the effectiveness of
management and control systems in the respective Annual Activity Reports.

The
Commission will continue to rigorously exercise its supervisory role by
pressing Member States to address the deficiencies detected in their management
and control systems and also by applying interruptions and suspensions of
payments, as well as financial corrections whenever necessary. Interruptions of
payments have been increasingly used as this became a new legal tool, available
for the 2007-2013 programming period. The more rigorous policy towards financial
corrections when serious weaknesses are detected, is demonstrated through the
increase in the overall figure for financial corrections in 2008, 2009 and 2010
compared to the years before the 2008 Structural funds Action Plan.

The
cooperation with OLAF has been reinforced with the updated "Joint Fraud
Prevention Strategy for ERDF, ESF, CF and EFF 2010-2011" adopted by the
Structural Funds DGs and OLAF in July 2010. The objective of the strategy is to
reinforce fraud risk assessment; to provide more proactive guidance and support
for Member States in fraud prevention and fraud detection work and to raise the
level of fraud awareness in the Services and in the Member States.

16.         (European Parliament, §40)
The EP believes that a ‘scoreboard’ on the quality of controls per
Member State and policy area as requested would be an important element in such
an analysis and invites the Commission to follow-up on this request starting
with its Synthesis Report on 2011 and in time for the 2010 discharge procedure

Commission's
response:

The
Commission is of the view that it already reports extensively on the
effectiveness of management and control systems in the respective Annual
Activity Reports of the Directors General. The Annual activity reports for 2010
provide extensive information per Member State, per policy area and programming
period. The Commission has instructed the DGs concerned to systematically
provide in their Annual Activity Reports additional and detailed information on
the financial management by Member States, including information on financial
corrections and the assessment of the national control systems by operating
programme and Member State.

However,
the Commission does not agree with the suggestion that this information should
also be presented in the synthesis report, as it would be technically complex
to consolidate information from different policy areas and this would burden
the report with significantly technical data.

17.         (European Parliament, §42)
The EP invites the Commission to publish in the Synthesis Report clear
and unequivocal information on the value of recovery orders made against
individual Member States as well as a systematic presentation of the results of
recovery and correction mechanisms

Commission's
response:

In
February 2011 the Commission instructed the services operating in shared
management to report in their Annual Activity Reports information on financial
corrections split by Member State, programming period and fund. From now on,
this information will be provided annually in the AARs. Whereas the Commission
agrees to publish detailed information on financial corrections in the AARs, it
does not consider the synthesis report to be an appropriate vehicle to present
such data. Information on financial corrections per Member State and programming period is also disclosed in the notes to the annual accounts.

18.         (European Parliament, §46)
The EP requests the Commission to make the Member States' annual
summaries publicly available as part of next year's discharge procedure and
upgrade the information provided in these summaries to present a meaningful
picture of the Member States' financial management performance; underlines that
making the Member States' annual summaries publicly available should be
considered as a step towards NMDs

Commission's
response:

The
decision to make Annual Summaries public is for the Member States concerned.
The Commission is legally prevented from doing so unless the Member State concerned explicitly agrees.

Yet, the
Commission has instructed the DGs concerned to systematically provide in their
Annual Activity Reports additional and detailed information, including
information on financial corrections and the assessment of the national control
systems by operating programme and Member State.

This
information significantly increases transparency on financial management
performance by the Member States and largely contributes to meet the EP
information request.

Tolerable risk
of errors

19.         (European Parliament, §48)
The EP reaffirms that the Commission must pursue a zero-tolerance
approach to all cases of mismanagement and fraud

Commission's
response:

The
Commission does pursue a zero-tolerance approach to all cases of mismanagement
and fraud.

20.         (European Parliament, §50)
The EP invites the Commission to identify weaknesses in present
management and control systems as well as to analyse the cost and benefits of
various possible changes; underlines that where it is difficult to obtain a
sufficiently high level of compliance with scheme rules, a number of options
such as: simplification of the rules, re-designing the programme, tightening
controls, or terminating the programme, are possible

Commission's
response:

The
Commission is currently preparing the proposals for sectoral legislation for
the 2014-2020 programming period. It is considering already providing in the
legislative financial statements a description of the control system set up,
estimation on the cost and benefits of controls and the expected risk of
non-compliance with applicable rules.

21.         (European Parliament, §52)
The EP takes the view that a forward-looking approach to a possible
introduction of a comprehensive concept of ‘tolerable risk of error’ would
include in the Financial Regulation a requirement for the Commission to match
spending proposals with an assessment of the irregularity risks

Commission's
response:

The
inter-institutional discussion on the revision of the Financial Regulation is
currently ongoing. The Commission supports the Parliament's suggestion that an
assessment of the risk of irregularities should be considered at the time when
new spending proposals are put forward. In the framework of the preparation of
the new sectoral legislation for the 2014-2020 period, the Commission is
considering already providing in the legislative financial statements a
description of the control system set up, estimation on the cost and benefits
of controls and the expected risk of non-compliance with applicable rules.

22.         (European Parliament, §53)
The EP calls for a study of the distinction between the materiality
threshold, which is associated with the holding of an audit and therefore
subject to assessment by the Court of Auditors, and the acceptable error rate,
which is a concept associated with internal audits for which the Commission is
responsible

Commission's
response:

In the
Commission's view the two terms are already clearly defined in the DAS
methodology of the European Court of Auditors and in the Court's "single
audit model" opinion of 2/2004, so that a study on the subject would not
be required.

The
concept of materiality is recognised in the international auditing standards.
It is a concept that acknowledges that underlying transactions can rarely be
absolutely error free. The materiality threshold serves as an important factor
for auditors both in the calculation of sample sizes for substantive testing
and in the interpretation of the audit results achieved. Errors are deemed to
be material if they may affect the decisions of the stakeholders. The Court of
Auditors is independent in establishing its materiality level, but is required
according to international auditing standards to take account of stakeholders'
expectations.

The
tolerable risk of error, on the other hand, should be considered to be a management
tool which takes account of the cost and benefits of controls. The trade-off
between the costs of controls against the benefits they bring is a critical
aspect of a control strategy.

Commission's
Internal Audit Service

23.         (European Parliament, §55)
The EP invites the Commission to carry out an external quality review
of all the IAC in the Commission and to inform Parliament of the results

Commission's
response:

An
external quality review of the Internal Audit Capabilities has been launched
under the supervision of the Internal Audit Service. The correspondent results
are expected by the end of 2011.

24.         (European Parliament, §56)
The EP requests the Commission to split the hierarchical power between
people with accounting responsibility and those responsible for transferring
funds in application of the customary rules on security and separation of
powers for internal control in treasury management

Commission's
response:

The basic
objective of the segregation of duties between accounting and treasury
functions is to prevent the potential risk that inappropriate transactions be
carried out by the treasurer, resulting in economic losses for the organisation
that are then inappropriately accounted for by the accountant under the
authority of the treasurer, or vice versa. In the Commission's context the
treasury management activities that fall under the responsibility of the
Accounting Officer are limited in scope by the Financial Regulation and its
Implementing Rules. In particular the Commission's treasury cannot intervene or
make modifications in the payment authorisation or accounting process (which
falls under the responsibility of the Authorising Officers), and its responsibility
is limited to the technical execution of payment instructions initiated and
fully authorised by the relevant spending departments. The only transfers of
funds that can be initiated by the Commission's treasury are transfers between
its own bank accounts (that are instructed for cash management purposes). The
possibility therefore does not exist that funds be transferred to third parties
on the initiative of the Commission's treasury department. The above in
practice leaves the Commission's treasury operations without responsibilities
that could represent any significant potential conflict with those of its
Accountant. At the same time within the Commission's treasury department there
is a full segregation of duties between the tasks related to the reconciliation
of the bank accounts, and the payment execution tasks. The two profiles are
incompatible in the Commission's system, so that officials authorised to work
on the payment execution have no authorisation to post accounting entries and
vice versa. A recent audit of the Court of Auditors on the Commission's
treasury management (special report 5/2009) has not revealed any weaknesses or
potential risks in this area).

25.         (European Parliament, §57 and
§58) The EP notes the Commission annual report to the discharge
authority (COM(2010)0447) on internal audits carried out in 2009 and that the
Commission's internal auditor is of the opinion that an overview at the level
of the institution is necessary. The EP invites the Commission to make
appropriate bodies responsible for obtaining this overview and for making
appropriate recommendations whilst taking care not to reduce responsibility for
the implementation of each process; recommends that the Commission's governance
framework be adapted to allow for enhanced institutional overview; would
appreciate being informed in a timely manner about developments in this matter

Commission's
response:

The
Commission considers that the current governance framework provides a sound
basis for improving the performance of the financial actors within the
Commission. According to the Financial Regulation (Article 60) the operational
implementation of the budget is delegated by the College to the
Directors-General who, as Authorising Officers by Delegation, are responsible
for the achievement of their specific policy objectives and for the management
of the human and financial resources entrusted to them. The Annual Activity
Report and the Declaration of assurance are the main vehicles through which
they give account to the College on the performance of their duties and ensure
transparency to the discharge authorities. These management representations are
examined annually by the Court of Auditors and are made public. In the
Commission's view the Annual Activity Reports provide an unprecedented level of
institutional overview of the management of the Commission Services.

26.         (European Parliament, §59)
The EP invites the IAS to allocate part of its resources to an
examination of whether the spending by the main DGs is efficient, economical
and effective, thereby completing the current financial and compliance audits

Commission's
response:

As part of
its audit programme for 2011, the Internal Audit Service (IAS) has developed
its practice of carrying out a certain number of performance audits, focussing
on the effectiveness, efficiency and economy of use of EU resources. The
Commission agrees to invite the IAS to further develop these aspects in its future
audit programmes.

27.         (European Parliament, §60)
The EP invites the IAS to audit the methodology to be used for the
production of the Article 318 TFEU evaluation report and to assess the work
done

Commission's
response:

As part of
its audit programme for 2011, the Internal Audit Service (IAS) has developed
its practice of carrying out a certain number of performance audits, focussing
on the effectiveness, efficiency and economy of use of EU resources. The
Commission agrees to invite the IAS to further develop these aspects in its
future audit programmes.

Single audit

28.         (European Parliament, §61 and
§62) The EP urges the introduction of a single audit model whereby
audits are carried out, recorded and reported to a common standard - as
proposed by the Court of Auditors in its Opinion 2/2004 and repeatedly
supported by Parliament - where each level of control builds on the proceeding
one, with a view to reducing the burden on the auditee and enhancing the
quality of audit activities but without undermining the independence of the
audit bodies concerned; believes that internal controls should provide
reasonable assurance on the legality and regularity of transactions, and compliance
with the principles of economy, efficiency and effectiveness and underlines
that controls should be coordinated to avoid unnecessary duplication. The EP
invites the Commission to present a report on the feasibility of introducing a
single audit model applicable to the Union budget putting to an end the current
juxtaposition of national and Union internal control systems; invites the
Commission to adopt a risk-based approach for the auditing sampling rather than
an approach based on statistical sampling

Commission's
response:

The
Commission's Action Plan Towards an Integrated Internal Control Framework and
the Structural Funds Action Plan took account of the multiple recommendations
included in the Court's Opinion 2/2004. These recommendations covered the entire
control framework and were not limited to single audit, as the Court concluded
"there is no single recognised definition of ‘single audit’". The
Commission's framework now fulfils the requirement of the Court that there is
"a chain of control procedures, with each level having specific defined
objectives which take into account the work of the others".

The
structures in place therefore aim at avoiding unnecessary duplication, and do
not put into question the Court's role as external auditor, or the independence
of other bodies outside the internal control framework such as SAIs reporting to national parliaments.

The
Commission is already conducting ongoing activity with Member State administrations including the annual sharing of beneficiary data, in order to achieve the
maximum level of coordination between national and Union systems. All
management modes foresee a coherent interaction between institutions at
European, national, and regional level. The current level of positive
cooperation between control and audit bodies across the budget will continue to
be reinforced, but the work on the integrated control framework showed that
there are limitations preventing the introduction of a single model due to the
diverse nature of European level policies, management structures, and
heterogeneous beneficiaries.

Under the
Commission's governance model, it is the responsibility of each Authorising
Officer by Delegation to decide on his/her control strategy. This decision
encompasses the ex-post "audits" and the sampling strategy chosen.
Furthermore, there is no universally preferable sampling strategy, as the
decision depends on the objectives to be met in each given case.

In view of
the described activities which already take into account the Court's opinion 2/2004
on the single audit principle, there is no need for a feasibility report.

Transparency

29.         (European Parliament, §65 and
§66) The EP calls on the Commission to follow up on the request of
the Court of Justice (cases C-92/09 and C-93/09) and to swiftly propose
criteria where the public interest in transparency should override the
protection of personal data of Union funds' beneficiaries; recalls that the
Court of Justice has proposed criteria such as the periods during which natural
persons have received Union funds, the frequency of such aid or the nature and
amount of aid (Volker and Markus Schecke GbR, paragraph 89). The EP asks the
Commission to define the criteria mentioned by the Court of Justice in the Financial
Regulation, sectoral legislation or any other act in a way that allows a high
level of transparency, ensuring that data on beneficiaries falling under these
criteria can be published again; urges the Commission to monitor the Member
States' obligation to publish the data correctly and in a timely manner and
requests the Commission to present the results of its monitoring in the next
Synthesis Report

Commission's
response:

The Court
of Justice confirmed the respect of the principle of proportionality and the
legality of the publication relating to the data of legal persons. In its
judgment the Court did not question or cast doubt on the legality of the
publication of data of individuals benefiting from other EU funds. Moreover,
the Court did not question the validity of the Financial Regulation. The
concerned horizontal legislation continues to apply and Member States have the
obligation to implement it.

The
Commission will analyse and propose to the legislative authority the provisions
considered necessary to maintain the requested level of transparency and
foresee publication of information about beneficiaries of EU funds while
complying with the principle of proportionality in order to ensure the fair
balance between on the one hand, the need to inform the general public on the
use of the EU funds and, on the other hand, the right of the beneficiaries to
privacy and to protection of personal data. It is foreseen to take account of
the Court's judgment through parliamentary amendments in the framework of the
review of the Financial Regulation. A meeting between the Commission, the EDPS
and the EP was held to this effect. The Commission considers that the Synthesis
Report is not the correct instrument to report on the monitoring of this type
of actions, which result could be presented, if necessary, in the Annual
Activity Report of each service.

30.         (European Parliament, §67)
The EP recalls its request from its resolution on discharge for the
financial year 2008 to standardise the structure and presentation of
beneficiaries’ data on national, regional and international sites, including
details of recipients and their projects

Commission's
response:

The
Commission considers that it is fulfilling the requirements of transparency as
defined in Article 30 of the Financial Regulation (FR). It directly publishes
information related to beneficiaries of EU funds that it implements under
centralised management. This information is available through the Financial
Transparency System (FTS), a central online search engine.

As for EU
funds implemented in a non-centralised management mode by the Commission
implementing partners (Member States, third countries, international
organisations, etc.), the transparency requirements constitute a pre-condition
for the delegation of implementation of EU funds. The Commission considers that
it should remain so, as they are the best positioned to have full and reliable
information regarding the beneficiaries of the funds they manage.

Finally, a
project to publish from one central database, detailed and standardised
information on beneficiaries of EU funds under all management modes would be
extremely complex and costly to conduct, not only in terms of budget but also
in terms of human resources.

31.         (European Parliament, §68 and
§69) The EP reiterates its belief that transparency is one of the
main instruments in achieving legal and regular expenditure and believes that
the objective should be the creation of a single and comprehensive online
system (a central database) which can be accessed easily by any individual and
would therefore allow the public to have easy access to full and complete
information about the expenditure of the Union by budget line and by beneficiary;
insists that the Commission collect data regarding the beneficiaries of funds
in that central database and make the data collected easily accessible and
user-friendly; further requests that the data be published in a comparable,
machine-readable, searchable and open data format in one of the official
languages of the Union. The EP proposes, in order to increase transparency,
that the central database regarding the beneficiaries of funds shall make it
possible to visualise not only money flows in figures but also the connections
between the different actors in a project at different levels, whilst always
taking into account the protection of privacy.

Commission's
response:

The
Commission considers that it is fulfilling the requirements of transparency as
defined in Article 30 of the Financial Regulation (FR) and draws attention to
the fact that transparency must be balanced against limitations imposed by
personal data protection.

The
Commission directly publishes information related to beneficiaries of EU funds
that it implements under direct management. This information is available
through Financial Transparency System (FTS), a central online search engine.

As for EU
funds implemented indirectly by our implementing partners (Member States, third
countries, international organisations, etc.), the Commission has issued the
relevant instructions for standardisation of the information to be presented by
the various management authorities involved. For implementing partners, the
transparency requirements constitute a pre-condition for the delegation of
implementation of EU funds. The Commission considers that it should remain so,
as they are the best positioned to have full and reliable information regarding
the beneficiaries of the funds they manage. This is particularly relevant for
the publication of beneficiaries under shared management, which is clearly the
responsibility of Member States. A further coordinated initiative is not
envisaged at this point.

Evaluations

32.         (European Parliament, §72)
The EP calls on the Commission to review its systems for evaluating the
effectiveness of expenditure programmes to assess whether they are adding
value, delivering value for money, and achieving the objectives for which they
were established; insists that such evaluations should be both conducted and
then assessed independently; calls therefore for independent evaluations to be
submitted to Parliament and its relevant committees for scrutiny

Commission's
response:

The Commission
has a comprehensive framework for evaluation of EU activities and programmes.
In this framework, evaluations address the main evaluation issues including
effectiveness, efficiency, utility and EU added value. Procedures target full
transparency and objectivity. These include the generalised use of broadly
composed steering groups and quality assessments, and the involvement of
external consultants as well as external consultations, questionnaires and
meetings of stakeholders as a regular part of the process. Results are
systematically disseminated in line with the requirements of the Financial
Regulation. The Commission is committed to ensuring best practice in its
evaluation activities.

Whistleblowers

33.         (European Parliament, §75)
The EP calls on the Commission to review the briefing and training
given to staff regarding 'Title II: Rights and Obligations of officials' of the
Staff Regulations so as to ensure that all staff are fully conversant with its
terms and particularly with the obligations under Article 22a(96)
(whistleblowing); asks that the Commission provide details to Parliament's
competent committee of the work undertaken in this area

Commission's
response:

The
Commission has instructed the external training contractor earlier this year to
ensure that the whistleblowing rules are an integral part of the "Ethics
and integrity" training given to newcomers. In addition, all
newly recruited middle and senior managers are given a briefing concerning
the obligations incumbent on staff, which includes the whistleblowing rules.

Reforms of the
Staff Regulations of Officials of the EU

34.         (European Parliament, §79)
The EP notes that the reputation of the Union is strongly influenced by
the public perception of its civil service; notes that the last reform of the
Staff Regulations did not adapt its provisions to a changed working environment
nor lead to a remuneration policy that provides for equal pay for equal work;
notes that it contains out-dated perks and benefits; calls on the Commission to
present proposals for a comprehensive modernisation of the Staff Regulations,
including the end of out-dated perks and benefits

Commission's
response:

In June
2011 the Commission took note of a draft proposal amending the Staff
Regulations. This proposal strikes a balance between the necessary drive for
efficiency and economies and the ability of the institutions to deliver their
policies. This proposal foresees the adaptation of some individuals and
pecuniary rights (retirement age, new method of calculation of the adjustment
of salaries and pensions, the annual trip home, the travel days and travel
allowances, etc). In addition, this proposal also preserves the capacity of the
Institutions to attract and retain staff of the highest professional competence
in various fields of expertise who are able to work in a multicultural and
multilingual environment and who are ready to move and stay abroad with their
families.

This
proposal complements the 2004 civil service reform that made the EU staff law
one of the most modern of its time. A performance-oriented and merit-based new
career structure, a new contractual status for personnel fulfilling non-core
tasks, a reform of the pension system, new working methods and family-friendly
working conditions were just some of the numerous changes brought by the first
comprehensive reform of the European civil service law since 1968.

Agriculture and
natural resources

35.         (European Parliament, §82)
The EP calls upon the Commission to take steps to ensure that the
reduction in the error rate becomes a trend that is maintained year-on-year so
as to ensure that the irregularities cease

Commission's
response:

The Commission
considers that the reduction in the error rate in the domain of Agriculture can
already be considered as a trend. In this sense, an error rate which over the
recent years is close to 2% confirms the overall positive assessment of
previous years. The Commission will continue its efforts to reduce the error
rate below 2%.

36.         (European Parliament, §93)
The EP expects the Commission’s evaluation report to consider the
practice by MS of defining used farmland independently and illustrate it with
examples

Commission's
response:

Member
States are required to qualify land as farmland in accordance with the relevant
EU rules. The Commission follows up cases of non conformity via the clearance
of accounts procedure.

37.         (European Parliament, §94)
The EP invites the Commission to improve the reliability and
completeness of the data recorded in the Land Parcel Identification System and
update regularly Parliament about the progress

Commission's
response:

The
requested action has been taken.

The
Commission is on a continuing basis working, together with the Member States,
on actions to improve the reliability of information in the LPIS-GIS. As of
claim year 2010, Commission Regulation (EC) No 146/2010 introduced the
requirement for Member States to perform a quality assessment of the LPIS-GIS
on an annual basis according to pre-determined procedures and to report on the
results and the actions envisaged to, where required, improve the situation.
Whilst 2010 is the first year, this exercise has already been helpful for
Member States as regards identification of areas requiring attention.

38.         (European Parliament, §94)
The EP invites the Commission to take proactive measures to ensure that
all the IACS databases provide a reliable and full audit trail for all
modifications made, paying particular attention to those countries known to
have a poor record  and update regularly Parliament about the progress

Commission's
response:

The
requested action has been taken.

Annex I to
Regulation (EC) No 885/2006, as part of the accreditation criteria, already
requires that information regarding documentary evidence of the authorisation,
accounting and payment of claims shall be available in the paying agency to
ensure at all times a sufficiently detailed audit trail. These accreditation
criteria are checked by the certification bodies on an annual basis.

39.         (European Parliament, §94)
The EP invites the Commission to clarify and further enforce the rules
so that Union direct aid is not paid to claimants who have neither used the
land for farming nor maintained it in Good Agricultural and Environmental
Conditions  and update regularly Parliament about the progress

Commission's
response:

The
Commission is taking the requested action.

The issue
of the farmer definition has been addressed in the framework of the Health
Check by giving Member States the possibility to exclude natural or legal
persons from the direct payment schemes whose principal business objects do not
consist of exercising an agricultural activity or whose agricultural activities
are insignificant (Article 28(2) of Regulation (EC) No 73/2009).

In order
to be eligible for SPS payments, areas should be used for an agricultural
activity as defined in Regulation (EC) No 73/2009 which at least implies that
they should be maintained in Good agricultural and Environmental condition. The
issue of maintenance of the areas is being looked into with a view to the
reform of the CAP post 2013 as stipulated in the Commission Communication
"The CAP towards 2020: meeting the food, natural resources and territorial
challenges of the future".

40.         (European Parliament, §94)
The EP invites the Commission to review and improve the guidelines as
regards the work to be performed by certification bodies, in particular the
work related to the validation of the Member States' control and inspection statistics,
and to provide Parliament with the number and an assessment of the soundness of
the existing paying agencies  and update regularly Parliament about the
progress

Commission's
response:

The
requested action has been taken.

The
Commission considers the overall structure and reporting requirements of the
certification bodies to be appropriate. An assessment of paying agencies is
already provided in DG AGRI's AAR on an annual basis. With regard to the work
related to the control and inspection statistics, the Commission has already
put forward a system by which Member States can reinforce the overall framework
for gaining reasonable assurance as to the legality and regularity of
transactions at the level of the final beneficiary.

41.         (European Parliament, §94)
The EP invites the Commission to further reduce bureaucracy, to
simplify procedures and to avoid adverse effects on farmers arising from the
plethora of rules, which in some cases conflict and update regularly Parliament
about the progress

Commission's
response:

The
Commission is taking the requested action.

As of
October 2010, a number of simplification related activities have been carried
out.

However,
the Commission will continue its efforts to further reduce the administrative
burden and simplify the CAP. This objective will be particularly pursued in the
framework of the discussion on the CAP post-2013.

42.         (European Parliament, §95)
The EP is of the opinion that the tripartite meetings of the Court of
Auditors, the Commission and national authorities should be extended to the
policy area of agriculture and natural resources in order to facilitate a
harmonised interpretation and application of the rules regarding the management
and control of expenditure, as well as a coordinated approach between the
Commission and the Court of Auditors

Commission's
response:

The
Commission is taking the requested action.

DG AGRI
will propose tripartite meetings when they are expected to facilitate the
handling of individual DAS cases. However, the realisation of such meetings
depends on the willingness of all parties involved.

Cohesion

43.         (European Parliament, §98)
The EP asks the Commission to work decisively to improve and overcome
temporary flaws in the management and control systems

Commission's
response:

The
Commission is continuously taking the requested action. It intends to take
measures to that effect and report thereof by 31/03/2013 in the next Annual
Activity Reports of the Directors General.

The
Commission focuses its audits on high risk programmes and takes appropriate
actions, including interruptions and, if necessary, suspension of payments
and/or financial corrections. Figures provided to the European Parliament show
that the majority of corrections are concentrated on few Member States.
Furthermore, it puts in place national remedial action plans aiming at
improving the effectiveness of systems and remedying the causes of low performance
for those programmes and Member States which are concerned.

As
indicated in the Annual Activity Reports for 2010, the emphasis of the
reservations lies on some programmes in Member States (and in particular in
Spain and Italy as in a number of preceding exercises). Based on an analysis on
the main reasons behind the problems in these Member States, a pilot programme
with the Spanish authorities has been initiated for the ESF in March 2011 in
order to endeavour to identify root causes and implement effective mitigating
actions. In case this pilot project is successful, the actions may be extended
to the relevant programmes in Italy, too.

44.         (European Parliament, §105)
The EP asks the Commission and the Court of Auditors to set up a
platform for the consultation process on methodology used with regard to the
seriousness of the infringements detected in public procurement domain

Commission's
response:

The
Commission has taken the requested action.

The
Commission and its services have invited the Court to launch such a discussion
on the quantification of errors in public procurement since 2010. While the
assessment of errors in this area is usually the same between both
institutions, the Court explained that its quantification of errors linked to
public procurement is and will remain distinct from the quantification made by
the Commission and the Member States to establish the necessary, appropriate
and proportionate financial correction linked to such reported errors.

45.         (European Parliament, §107)
The EP asks the Commission to analyse the reasons for infringements of
public procurement rules and to cooperate decisively with the Member States to
overcome the difficulties identified

Commission's
response:

The
Commission is taking the requested action. It intends to take measures to that
effect before 31/12/2012.

In the
Single Market Act the Commission has undertaken to put forward proposals, by
2011.

Simplification
will be one of the main drivers of the forthcoming revision of the Directives.
The Commission is planning to issue its proposal by end-2011. Stakeholders and
interested parties have had opportunity to contribute to this process through
the consultation process launched with the Green Paper on the modernization of
EU public procurement policy.

Moreover,
the Commission has issued and discussed with the Member States in the Advisory
Committee on Public Procurement a report on more frequent errors on public
procurement identified through EC audits and reasons for taking financial
correction decisions linked to public procurement procedures (May 2011). Member
States were alerted about these recurrent audit findings and asked to share
good practices and proposals to overcome such recurrent deficiencies. This
initiative intends also to feed into the ongoing consultation on the
simplification/revision of the Directives.

46.         (European Parliament, §108)
The EP calls on the Council and the Commission to finalise the adoption
of the reform of the basic Union public procurement rules (Directives
2004/17/EC and 2004/18/EC) by 2012

Commission's
response:

Following
the consultation launched with the Green Paper on the modernisation of EU
public procurement policy, the Commission will make legislative proposals by
the end of the year, with a view to simplifying and updating the European
public procurement legislation.

47.         (European Parliament, §115)
The EP calls on Commission DGs to further improve their guidance to the
  Member States and developing good practices among national bodies

Commission's
response:

The
Commission is taking the requested action. It intends to take measures to that
effect and will report on actions taken in the 2011 Annual Activity Reports of
the Directors General.

For the
2007-2013 period the Commission has made a significant upfront investment in
terms of guidance (45 guidance notes have been discussed and agreed with Member
States), preventive training and support to the Member States. It will maintain
its efforts in this respect, for example through the preparation of
complementary guidance on annual control reports for the audit authorities, and
takes note of the Parliament's request to intensify its efforts. It has also
completed its guidance on financial engineering instruments in 2011.

Nonetheless,
it recalls that technical assistance monies are also provided to Member States
for them to develop their administrative capacity.

48.         (European Parliament, §117)
The EP requests the Commission to identify and spread best practices
amongst the Member States in order to allow an increased absorption of funds
and improved beneficiary cash-flow by amending and simplifying the Structural
Funds implementing regulations at national level

Commission's
response:

The
Commission is continuously taking the requested action. It intends to report on
the measures taken to that effect in the next Annual Activity Report of the
Directors General.

The
Commission regularly organises meetings with Member States authorities for
example the Committee on the Coordination of structural Funds (COCOF) or at
technical level like in the ESF Technical Working Group (TWG). The exchange of
best practices on simplification measures and the implementation of the Funds
are an essential part of those meetings.

49.         (European Parliament, §118)
The EP calls on all stakeholders in the Member States and in the Union
institutions to work together closely to deal with the phenomenon of organised
and planned frauds in the Structural Funds

Commission's
response:

The
Commission is taking the requested action. It intends to take measures to that
effect and to report in the next Annual Activity Reports of the Directors
General.

The level
of suspected fraud in structural funds is only 0,23% of the Cohesion Policy
budget.

In the
framework of their Mutual Understanding agreement DG REGIO, DG EMPL and OLAF
set up in 2008  a Joint Fraud Prevention Strategy for the European Regional
Development Fund (ERDF), the European Social Fund (ESF), the Cohesion Fund
(CF).The updated Strategy for 2010-2011 was adopted in July 2010 by DGs REGIO,
EMPL, MARE and OLAF. It foresees several actions aimed at strengthening the
capacity of these services to prevent fraud and to deal with potential cases of
fraud and also to perform analysis of fraud types, root causes of fraud and
modus operandi of fraudsters. OLAF established a Regional Risk Assessment for
one Italian region falling within the convergence objectives and carried out an
analysis of modus operandi of fraudsters in Structural Funds reflected in
document "Compendium of Common cases in the field of Structural
Funds".

The
Strategy document is reviewed bi-annually. Moreover, the Commission adopted in
June 2011 an anti-fraud strategy that covers the whole EU budget (COM(2011) 376
final). The Commission intends to propose to Member States in the next
programming period that they set up clear frameworks for fraud prevention under
cohesion policy, proportionate to the fraud risk assessments.

50.         (European Parliament, §120)
The EP invites the Commission to look, in connection with the revision
of the Financial Regulation, into the effectiveness of National Management
Declarations as incentives and/or deterrents and the advantages and
improvements they could bring in terms of sound financial management

Commission's
response:

The
Commission services have issued a working document (SEC(2011)250) providing an
analysis of national declarations in the assurance process on the execution of
the EU budget in shared management. The study contained an evaluation of the
national declarations currently issued by four Member States at political level
and identified key criteria which could – if observed – add value to management
declarations. The management declarations of assurance proposed by the
Commission in Art 56 of its proposal for the triennial revision of the
Financial Regulation, adopted in May 2010 incorporate these criteria. The
Commission's proposal has been subject to inter-institutional discussion.

In the
Commission's view, the management declarations proposed would provide the
Commission with substantial additional assurance as to the use of EU funds by
Member States and reinforce cooperation with Member States in the
implementation of the budget by underlining their control and audit obligations
stemming from the Lisbon Treaty (Article 317 TFEU). An annual management
declaration of assurance (complemented by and subject to an independent audit
opinion) signed by a senior national official would allow the relevant
Commission managers to take full account of the underlying declarations in
framing their own declarations of assurance in the DGs' Annual Activity
Reports. This would result in a single logical assurance chain in which the
assurance provided is derived directly from the management chain, thereby
offering greater assurance. A management declaration of assurance issued by
local managers would also have a positive impact on the level of error as audit
results show that the main causes of error can be traced to deficiencies in
first level management verifications.

51.         (European Parliament, §121)
The EP calls upon the Commission to intensify the contacts with the
Member States’ administrations for the purpose of a mutual exchange of
information to tackle pending questions without delay

Commission's
response:

The Commission
has taken the requested action.

The
Commission regularly organizes meetings with Member States' authorities such as
the Committee on the Coordination of structural Funds (COCOF), the ESF
Technical Working Group (TWG) or regular technical meetings of audit
authorities. The exchange of best practices on simplification measures, sound
financial management and the implementation of the Funds are an essential part
of those meetings. The Commission services are in permanent, daily close
contact with all programmes authorities.

52.         (European Parliament, §123)
The EP invites the Commission to include in the Financial Regulation a
request for mandatory NMDs issued and signed at ministerial level and duly
audited by an independent auditor as a vital first step towards greater
national accountability for Union expenditure

Commission's
response:

The
Commission has proposed the introduction of mandatory management declarations
of assurance in Art 56 of its proposal for the triennial revision of the
Financial Regulation. This proposal is currently subject to inter-institutional
discussion.

53.         (European Parliament, §124)
The EP recalls the need to ensure an efficient implementation of
regular, tripartite meetings under the budgetary procedure as mentioned in
Article 324 of the Treaty on the Functioning of the European Union

Commission's
response:

The
Commission, as it has done in the past, will continue to fully play its role as
defined by Art 324 TFEU.

54.         (European Parliament, §125)
The EP calls on the Commission to set up a working group with the
Member States to prepare uniform auditing standards in order to further enhance
the audit work of the certifying/auditing bodies

Commission's
response:

The
Commission has taken most of the requested action and will complete it by end
2012 and report on its results in the 2011 Annual Activity Reports of the
Directors General.

The
Commission prepared and discussed with the Member States in 2008 a detailed and
comprehensive guidance note on the certification function, providing practical
information and best practice on the organisation and functioning of the
certifying authorities, based on previous experience. Seminars for certifying
authorities, based on this guidance note, were held in 2008, 2009 and 2010.

The
Commission notes that the certifying authorities are not audit bodies and are
not functioning with auditing standards. The certification function does not
aim at directly auditing expenditure or systems, but at ensuring that only
legal, regular and eligible expenditure has been included in the payment claims
to the Commission and to this view, that the underlying controls have been
efficient.

Moreover,
the Commission has organised a technical meeting with all audit authorities on
6 May 2011 as a follow-up to its analysis of the first completed annual control
reports and audit opinions for 2010. Feedback was provided on discrepancies in
audit approaches and evaluation of audit results and reporting of error rates.
Follow-up will be provided in the form of additional guidance to be discussed
again with audit authorities in October 2011 in the next meeting, on time for
the next annual control report and audit opinion to be issued by the audit
authorities in December 2011, and by circulation of checklists on audits on
operations used by the Commission to help and enhance the methodology of the
national audit authorities.

Finally,
individual feedback was given to all audit authorities through the
recommendations made by the Commission under the review of the most important
audit authorities, and in the 2011 annual control coordination meetings with
all Member States and Funds.

55.         (European Parliament, §126)
The EP calls on the Commission to provide Parliament with the number
and an assessment of the soundness of the existing managing authorities

Commission's
response:

The
Commission has taken the requested action.

The number
of existing managing authorities for Structural and Cohesion Fund
programmes/projects for the 2007-2013 programming period is 280. Managing
authorities are assisted by hundreds of intermediate bodies.

The
functioning of the managing authorities and of selected intermediate bodies is
verified by Commission auditors in the framework of their audits on the
national managing and control systems on a risk basis, and by national audit
authorities on an annual basis. This is reflected in the Structural Funds DGs'
Annual Activity Reports for 2010, where the disclosure of information on the
assurance level per operational programme and per Member State has been
significantly improved.

Research,
energy and transport

56.         (European Parliament, §132)
The EP recalls that FP6 beneficiaries' cost statements submitted for
reimbursement shall be accompanied by an audit certificate issued by an
independent auditor certifying reasonable assurance that the declared costs
meet the eligibility requirements; draws attention to the fact that, by the
Commission’s own admission, the acceptability criteria adopted for obtaining
certification are too restrictive

Commission's
response:

This
recommendation addresses two different issues. The "restrictive"
criteria only concern the FP7 ex-ante cost methodology certification of average
personnel costs while the issue of the 'audit certificate issued by an
independent auditor certifying reasonable assurance that the declared costs
meet the eligibility requirements' relates to the FP6 ex-ante certification of
cost claims. Further, the procedures are different for each exercise: under FP7
beneficiaries submit an application for cost methodology certification, which
is subject to the Commission's approval. Once the certificate is accepted, it
is valid for the whole programme. Ex-post audits, if any, will be aimed at
verifying whether the certified methodology was used.  Under FP6, audit
certificates were requested to support the financial statements to give
reasonable assurance of the eligibility of the costs claims; ex-post audits
will verify once more whether the costs claimed fulfilled the eligibility
criteria.

As regards
the cost methodology certification, the Commission has recognised that the
acceptability criteria for receiving certification of the costing methodologies
are too stringent for most beneficiaries.

However,
substantial simplification has been already introduced by the Commission to
facilitate the use of average personnel costs by beneficiaries within the
overall existing legal framework. In this respect, following the Communication
on simplifying the implementation of the Research Framework Programmes (COM
(2010) 187 final of 29.04.2010) the Commission adopted a Decision of 24 January
2011 (C(2011) 174 final) on three measures for simplifying the implementation
of the framework programme. This decision allows beneficiaries to apply their
usual accounting methods when requesting reimbursement for average personnel
costs.

Furthermore,
the experience with ex-ante certification of cost methodologies will be taken
into account in the preparation of the rules for the next funding programme.

57.         (European Parliament, §136
part 1) The EP invites the Commission to ensure that the independent
auditors who have incorrectly certified cost statements are made aware of the
eligibility criteria for declared costs and if applicable held accountable. The
EP invites the Commission to review the operation of the system for the
certification of beneficiaries' costing methodologies

Commission's
response:

A formal
feedback process is in place to urge the audited beneficiaries to make their
certifying auditors aware of the Commission's audit findings and also referring
them to the relevant information where the eligibility requirements and
interpretations are publicly available.

The
decision on simplification adopted on 24 January 2011 has simplified the
costing methodologies certification: in respect of average personnel costs, the
new acceptability criteria may accommodate more methodologies. As regards the
system for certification, the Commission's experience will be taken into
account in the preparation of the rules for the next funding programme.

58.         (European Parliament, §136
part 2) The EP invites the Commission to reduce the backlog in
recovering undue amounts paid and to impose sanctions where necessary

Commission's
response:

The
Commission is continuously monitoring the procedures for recovering undue
amounts paid. In this respect, the Commission has considerably improved this
aspect of the FP management. For example concerning FP6 in DG RTD - despite the
completion of audits which added €13 million to the amount to be recovered in 2010
- the percentage of total adjustments in favour of the EU effectively recovered
has grown from 30,40% in 2008 to 55,61% in 2009 and to 67,87% by the end of
2010.

The
communication on the simplification of the recovery process in the framework of
the implementation of the audit strategy adopted on 15 December 2009 will
contribute to a better management of outstanding recoverable amounts.

The
Commission has continued to systematically apply liquidated damages on
beneficiaries which had over declared their costs. As an example, by the end of
2010, RTD had considered the application of liquidated damages in a total of
584 cases and had applied liquidated damages for a total of € 0,7 million.

59.         (European Parliament, §136
part 3) The EP invites the Commission to further simplify the
research funding rules, to significantly improve access to research funding for
SMEs and to ensure full accountability for the proper use of Union money

Commission's
response:

The
Commission is currently working on the preparation of the next Framework
Programme for Research and Innovation. In this context, the Commission will
present to the European Parliament and to the Council a proposal where the
aspects highlighted by the Parliament will be addressed.

Nevertheless,
following the Communication on simplifying the implementation of the Research
Framework Programmes (COM (2010) 187 final of 29.04.2010) the Commission
adopted a Decision of 24 January 2011 (C(2011) 174 final)  on three measures for
simplifying the implementation of the framework programme. One of them is
related to the SMEs, (chapter two on financing of SMEs owners and other natural
persons not receiving a salary). SMEs and natural persons participating in a
FP7 project have now the possibility to charge personnel costs corresponding
respectively to the work performed by a SME-owner or natural persons not
receiving a salary on the basis of a flat-rate.

60.         (European Parliament, § 137)
The EP reiterates its call on the Commission to provide legal certainty
by refraining from applying a stricter definition of the rules for
participation retroactively and by refraining from asking recipients to
recalculate financial statements already approved by Commission services, hence
reducing the need for ex-post audits and retroactive corrections; asks the
Commission rapidly to resolve prior situations arising from inspections in
progress, acting with discernment and respect for the principles of sound financial
management; recommends that disputes regarding such prior situations be
resolved by agreement between all parties, based for example on an independent
re-audit and/or with the intervention of an ad-hoc independent mediator

Commission's
response:

The Commission
has devised a control strategy aimed to ensure the legality and regularity of
Framework Programme expenditure on a multiannual basis for the detection and
correction of any errors which could not be identified before making the
payment. This is achieved by ex-post auditing and rigorously recovering any
amount found to be overpaid to the audited beneficiaries, even for non-audited
contracts.

This
control strategy responds to the Parliament's concern that the annual DAS on
research spending consistently reveals a material level of error in payments to
beneficiaries and in the Commission's supervisory and control systems, which do
not sufficiently mitigate the inherent risk of reimbursement of overstated
costs. The corrections proposed by the Commission do not result from the
application of new interpretations, but from the audit of cost statements
submitted by beneficiaries. Such audits merely verify compliance with the legal
and regulatory framework. Also "refraining from making any retroactive
changes" would mean that amounts receivable would not be recovered.
Moreover, the possibility of performing independent counter-audits exists since
the Commission Communication of 15 December 2009 - SEC(2009)1720.

Further,
the Commission has also re-assessed the eligibility of several taxes or charges
related to personnel costs, which gave rise to contestations. The additional
eligibility criteria are also listed in the Communication of 15 December 2009,
they are applicable to FP6 and FP7.

Moreover,
the decision on the simplification measures will have a significant impact on
the acceptance of personnel costs since beneficiaries are now allowed to charge
average personnel costs according to their own accounting practices and
SME-owners and natural persons who do not receive a salary have the possibility
to charge costs on the project on the basis of a flat-rate. Ex-post audits will
be carried out accordingly.

61.         (European Parliament, § 139)
The EP invites the Commission to ensure that the IAS exercises the same
powers over the bodies set up by the Union having a legal personality and
receiving contributions from the budget (Joint Undertakings) as those which it
exercises over Commission departments, in accordance with Article 185(3) of the
Financial Regulation

Commission's
response:

The IAS
contacted all JUs in December 2010 to inform them of the authority invested by
article 185 of FR on the internal auditor of the Commission in relation to
those entities. The IAS has sent all of them audit charters and carried out
risk assessments. Actual audit engagements will start in 2012.

62.         (European Parliament, §140)
FP8 should be based on a radical change of view including the
introduction of a bonus system partially replacing the current upfront payment
system and better access to venture capital in order to enhance efficiency

Commission's
response:

The
Commission is currently working on the preparation of the next Framework
Programme for Research and Innovation. In this context, the Commission will
present to the European Parliament and to the Council a proposal where the
aspects highlighted by the Parliament will be properly addressed.

This
proposal will also include future financial instruments for research and
innovation aiming at improving access to risk capital (Equity and Debt
finance). Furthermore, an integrated support scheme might be proposed aiming at
connecting EU grant funding with risk capital finance in order to better
support the transfer of Research and Development results to the market.

External aid,
Development and Enlargement

63.         (European Parliament, §147,
§148 and §149) The EP asks the Commission to cooperate with
candidate and potential candidate countries in order to improve management and
control systems, to promote best practices for fighting fraud, and to ensure
that their practices are in conformity with all Union rules and standards. The
EP invites the Commission to provide all potential candidate countries with the
necessary know-how and institutional knowledge to efficiently fight corruption
and continue the reforms needed.

The EP also
invites the Commission and candidate countries to improve dialogue and ensure
effective cooperation (in the framework of Commission's ex ante controls)

Commission's
response:

Concerning
the first part of the point, it has been considered for this reply that the
concept of verification mission relates to the activities to be performed in
the context of the conferral of management and the waiver of ex-ante controls
in the candidate countries benefiting of the instrument of pre-accession
assistance (IPA).

DG ELARG
has harmonised and compiled into a coherent body the full set of instructions
providing guidance for the process of conferral of management earlier
published.

This
global instruction clarifies the concepts, describes the roles and
responsibilities of the different actors and the steps to be taken at the
different stages of the process.

It can be
used both for the preparation of new conferral of management decisions as well
for the monitoring of those currently in force.

Concerning
the necessary know-how and the institutional knowledge provided to efficiently
fight corruption, the contribution of the Commission, through CARDS- and
IPA-funded projects has been the following:

ALBANIA:

A total
number of 53 projects have been carried out under CARDS and IPA in the areas of
justice and anti-corruption. In the area of judicial reform, the EU has allocated
€ 30,6 million under the CARDS programme and € 18,3 million under IPA
2007-2010. To date, € 28,2 million has been disbursed under CARDS and € 2,5
million under IPA. Domestic co-financing is foreseen to amount € 1,5 million.
The EU allocated € 0,6 million under the CARDS programme and € 2 million under
IPA 2007-2010 in the area of preventing, monitoring and combating corruption.
To date, € 0,5 million has been disbursed under CARDS and € 1,2 million under
IPA. Domestic co-financing is foreseen to amount € 0,1 million.

BOSNIA AND
  HERZEGOVINA:

A total of
62 projects on judicial reform and fighting corruption have been carried out
under CARDS and IPA. In the area of reform of the judicial systems, the EU has
allocated € 30,2 million under the CARDS programme 2002-2006 and € 24,2 million
under IPA 2007-2010. To date, € 28,9 million has been disbursed under CARDS and
€ 8,3 million under IPA. Domestic co-financing is foreseen to amount € 6,45
million, which concerns the project "Support to the construction of a
State high-security Prison in Bosnia and Herzegovina". The EU has
allocated € 177.750 under the CARDS programme 2002-2006 and € 3,9 million under
IPA 2007-2010 in the area of preventing, monitoring and combating corruption.
To date, approximately € 134.000 has been disbursed under CARDS and € 635.000
under IPA.

KOSOVO:

A total
number of 13 projects in the areas of justice and anti-corruption have been
carried out under CARDS and IPA. In the area of reform of the judicial systems,
the EU has allocated € 5,2 million under the CARDS programme and € 39 million
under IPA 2007-2010. To date, € 4,8 million has been disbursed under CARDS and
€ 4,1 million under IPA. The EU allocated € 1 million under the IPA 2007-2010
in the area of preventing, monitoring and combating corruption. To date, €
650.000 has been disbursed under IPA. Domestic co-financing is foreseen to
amount € 14,4 million.

MONTENEGRO:

A total of
10 projects on judicial reform and fighting corruption have been carried out in
  Montenegro under CARDS and IPA. The total pre-accession funds allocated to
the projects in the area of judiciary reform in Montenegro amount to
approximately € 412.000 under CARDS and € 3,4 million under IPA. To date € 4,7
million has been disbursed to the beneficiaries. The total estimated national
co-financing to the projects in this area amounts to € 50.000. The projects in
the area of preventing, monitoring and combating corruption in Montenegro amount to € 2,6 million under IPA. To date, € 1,7 million has been disbursed to
the beneficiaries in this area. The total estimated national co-financing to
the projects in this area amounts to approximately € 131.900.

SERBIA:

A total of
23 projects on judicial reform and fighting corruption have been carried out in
  Serbia under CARDS and IPA. In the area of judicial reform, the EU allocated
€ 5,3 million under the CARDS programme and € 19,5 million under IPA 2007-2010.
To date, € 3,5 million has been disbursed under IPA. The EU allocated € 1,3
million under the CARDS programme and € 2,4 million under IPA 2007-2010 in the
area of preventing, monitoring and combating corruption. No domestic
co-financing is foreseen in these areas.

MULTI-BENEFICIARY
COUNTRIES:

4
multi-beneficiaries projects on judicial reform and fighting corruption have
been prepared / carried out under CARDS and IPA. The EU allocated 2,8 million
EUR under the CARDS programme and 5 million EUR under IPA 2007-2010. To date,
2,5 million EUR have been disbursed under CARDS. Co-financing by the grant
beneficiary / contractor for the three CARDS projects is foreseen in the amount
10%.

Main
projects carried out include the "Assessment of Corruption and Crime in
the Western Balkan" project and the project "Strengthening the
prosecutors' network in the fight against organised crime and corruption".

64.         (European Parliament, §151)
The EP invites the Commission to give greater attention to and derive
full benefit from the follow-up of weaknesses revealed by its audits on
implementing partners and monitoring the extent of the use of humanitarian
procurement centres

Commission's
response:

The
Commission is taking the requested action in respect of:

- On the
use of the Humanitarian Procurement Centres (HPC): The HPC is just a tool
offered to DG ECHO partners to ease their procurement. For the 2010 reporting
exercise, launched in November 2010, the letter to HPC requesting the annual
documentation also requested statistical information on the orders invoiced to
DG ECHO Partners in the course of 2009. In addition, the HPCs have been
informed of the Commission's commitment to increase monitoring of the use of
HPCs by DG ECHO's Partners. Finally, DG ECHO has initiated measures to better
inform partners of the need to ensure that the reference number of the DG
ECHO-funded Action appears on the invoice issued by the HPC and will continue
enhancing the information provided to partners on their working relations with
HPC, with an emphasis on early procurement planning. These actions will permit
end of 2011 to have first indications, quantitative and qualitative, for
further follow-up.

- DG ECHO
ensures a systematic follow up of the audit recommendations at each next audit
visit of a partner be it at field or HQ level (every 2 to 4 years). A further
reinforcement of this follow-up procedure will be a burdensome for our partners
and of limited value.

65.         (European Parliament, §152)
The EP invites the successor of DG RELEX to complete its ex-post
control methodology and promptly address related recommendations made by the
internal auditor

Commission's
response:

The
methodology for ex-post controls has been completed and will be further
improved throughout 2011 based on experience gained from carrying out the
controls. All related recommendations made by the internal auditor are
considered to be implemented.

66.         (European Parliament, §153)
The EP invites DG ELARG to develop and put in place mechanisms to
facilitate the analysis and follow-up of the results of the verification
missions and to devote sufficient resources to the analysis of the outstanding
final declarations submitted by the Member States that have recently joined the
 Union

Commission's
response:

The
concept of verification mission relates to the activities to be performed in
the context of the conferral of management and the waiver of ex-ante controls
in the candidate countries benefiting of the instrument of pre-accession
assistance (IPA), not to the Cooperation and Verification Mechanism.

DG ELARG
has harmonised and compiled into a coherent body the full set of instructions
providing guidance for the process of conferral of management earlier
published.

This
global instruction clarifies the concepts, describes the roles and responsibilities
of the different actors and the steps to be taken at the different stages of
the process.

It can be
used both for the preparation of new conferral of management decisions as well
for the monitoring of those currently in force.

The
analysis of final declarations remain a priority for DG ELARG, and the Court of
Auditors has already noted in 2009 significant improvement in processing the
files, and the efforts have been continued since.

67.         (European Parliament, §154)
The EP invites DG ECHO to improve the assessments of the proposals'
documentation for humanitarian aid actions (such as the introduction of
standardised evaluation reports) and to report on its experience with the
implementation of the Food Facility in its Annual Activity Report for 2010

Commission's
response:

The
Commission is taking the requested action. It intends to take measures to that
effect before the 31/12/2011. The Commission has launched a working group on
the assessment of humanitarian aid proposals in early February 2011. It is
harmonising and streamlining the documentation of the assessment process by
giving a better overview of the entire process throughout a dashboard and
establishing common assessment criterion. Its conclusions will be validated by
the management and implemented as from 1 January 2012.

Main
figures on the implementation of the Food Facility are included in the Europe Aid Co-operation Office Annual Activity Report for 2010. More detailed information
on the implementation of the Food Facility is available in the 2011 Annual
Report on the European Union's development and external assistance policies on
EuropeAid website:

http://ec.europa.eu/europeaid/multimedia/publications/documents/annual-reports/2011/europeaid_annual_report_2011_en.pdf.

68.         (European Parliament, §156)
The EP asks the Commission to provide evidence that the money spent to
support candidate countries has been used effectively and to state whether
improved control mechanisms have actually led to increased sanctions against
corrupt actors, including in high-profile cases, whether laws are implemented
fully and whether reforms are sustained

Commission's
response:

Corruption,
conflicts of interest and other bad practices are now being tackled seriously
but have not been eradicated yet and hence still must be considered to be a
problem, but overall, it can be considered that there is visible and steady
progress.

Generally,
the legal framework has progressively been put in place and the renewed
institutions and systems established and becoming operational. Most of the
legal, judicial and administrative structures are now fully tested in daily
practice, as the examples underneath will show. These examples indeed indicate
that that a culture of political accountability is emerging through recent
judicial initiatives taken in the beneficiary countries.

In the Former Yugoslavian Republic of Macedonia three large-scale police operations were carried out
in 2010, leading to the arrest of numerous border police officers, doctors and
officials from the Pension and Disability Insurance Fund. Prison sentences were
imposed on some of the defendants in first-instance court-decisions. For the
others the investigation or the court proceedings are ongoing. More recently,
the State Anti-Corruption Commission initiated criminal procedures against six
current or former holders of public posts on suspicion that they have misused
their positions. One of them is the former director of the National Agency for
European Educational Programmes and Mobility. Last year, the European
Commission stopped all programmes that the Agency was implementing with EU
funds after it had been established that the director distributed funds in a
contentious manner.

In
Croatia, the former Prime Minister Sanader was arrested on suspicions of
corruption after USKOK, the local anti-corruption enforcement service requested
Parliament to lift Sanader's immunity as MP so that he could be arrested and
put in imprisonment while awaiting trial.

In
Albania, the former Prime Minister Meta resigned as minister of Economy, Trade
and Energy on 14 January 2011 following the publication of a video, filmed
secretly in March 2010, where he is shown pressuring the then Minister of Economy,
Trade and Energy, Dritan Prifti, to fix the tender for a hydroelectric power
plant, in return for which both Prifti and Meta would benefit financially. Meta
actually resigned from his position of Deputy PM and Minister freely, to be
able to address justice -as applicable - as an ordinary citizen.

Last but
not least, concerning Serbia, the arrest of former General Mladic and his
transfer for trial to the ICT in The Hague, even if less linked to corruption
facts, is worth being mentioned as well.

These examples
show that the awareness about good governance is now well present in the
Candidate Countries, that the money spent to support candidate countries has
been used effectively and that improved control mechanisms have actually led to
increased sanctions against corrupt actors, including in high-profile cases,
that laws are implemented fully and reforms sustained.

69.         (European Parliament, §157)
The EP asks the Commission to report on all measures taken to address
the weaknesses identified by the Court of Auditors in the decentralised
implementation system (DIS) in Croatia and Turkey; and to provide estimates of
the amount of expenditure at risk

Commission's
response:

Concerning
 Turkey (and to a similar extent Croatia) the Commission considers that it has
fulfilled the recommendation as it set up the following action plan in 2010 to
address the weaknesses identified by the Court:

1. The
Commission complements the current programming practice with a more sectoral
approach where appropriate, with sector strategies aiming at both improved
ownership and impact.

2. The
Commission is taking steps to follow up the recommendations of last year’s IPA
conference and the December 2010 Council conclusions on IPA to better link financial
assistance to political priorities.

3. The
Commission ensures that future projects have clearer objectives that result in
an improved intervention logic through more relevant and measurable indicators
and benchmarks.

4. Where
necessary, clearly defined conditionalities are used to ensure the Turkish
beneficiaries implement commitments necessary for financial assistance to
achieve results and impacts.

5.
Together with the Turkish and Croatian authorities, monitoring systems are
further improved to increase the focus on results and impact of projects under
implementation.

6. Further
actions are taken to address outstanding recommendations from audits and
evaluations to strengthen the management and control systems for DIS
(decentralised implementation).

7. Audits,
evaluations and close monitoring ensure that improvements are effective and
further adjustments are brought under way to the system if necessary.

Based on
the latest discussions, the Commission estimates that an amount of around 50
million euros is at serious risk in 2011 of not being contracted and paid in
time before the expiry of deadlines, which would mean that these funds are
decommitted, i.e. no longer available to Turkey.

Moreover,
the Commission has just adopted at the Joint Monitoring Committee on 5 July a
comprehensive reform of the monitoring system in Turkey.

70.         (European Parliament, §158)
The EP asks DG ELARG to step up its efforts to deal with the final
declarations for the PHARE programme, the CARDS programme, and the transition
facility and to proceed with the closure of these programmes prudently and in a
timely manner

Commission's
response:

In its
draft report of 2010, the Court of Auditors has welcomed the efforts made by DG
ELARG, however noting that the backlog has been reduced only partially. The
Commission considers that the backlog has been further considerably reduced in
2010, more then compensating the slight slowdown observed in 2009.

71.         (European Parliament, §161)
The EP invites the Commission to inform international organisations
that future Union assistance will be subject to the delivery of assurance
evidence in the form of a statement of assurance

Commission's
response:

The
Commission already has a satisfactory assurance mechanism to establish whether
international organisations' key control systems meet international standards.
In accordance with the Financial Regulation, International Organisations are
subject to a compliance assessment prior to proceeding with joint management.
In addition, verification missions of projects are conducted on the basis of a
risk analysis. As in practice a declaration of assurance would not be limited
to EU fundings, it would not bring substantial added value.

Education and
Citizenship

72.         (European Parliament, §168)
The EP invites the Commission to continue to reinforce the checks on
closures to ensure that errors are detected and corrected and prevent the
reoccurrence of previously identified errors

Commission's
response:

As
mentioned in the Commission's reply in the 2009 ECA Annual Report: the
Commission considers that the supervisory and control systems put in place for
the 2007-2013 period provide for a sound framework.

The
improvements of the systems in the area of Education and Culture made in 2009
(updated guidance for the National Authorities and reinforced on the spot audit
visits) are not reflected as the Court focussed on closure payments related to
actions from the previous programme generation that were not covered by the
current system (notably the audited actions related to the 2004/5 and 2005/6
academic years).

The
Commission emphasises that its closure in 2009 of projects from 2004/05 is
normal procedure. The longest of these projects ended in 2008 and were
submitted for closure by the National Agencies in the annual report 2008, which
the Commission received in 2009.

Economic and
Financial Affairs

73.         (European Parliament, §176)
The EP invites the Commission to look at the existing arrangements for
ex-ante verification, with a view to establishing how effective they are

Commission's
response:

The
checklists, accomplishing each transaction in DG ENTR, are developed and
reviewed by the Authorising Officer by Delegation and embrace all the necessary
checks corresponding to the level of risk. The weaknesses found by the Court
(e.g. not, or incorrectly, ticked boxes on the checklists) have no negative
impact on the effectiveness of the supervisory and control systems. The
percentage of the incorrectly ticked boxes is extremely small on the basis of
all ticked boxes. This had no material impact on the payments.

Nevertheless,
following the Court's observations, DG ENTR has reviewed and improved all its
checklists for ex-ante control of interim and final payments and reminded all
staff participating in workflows to ensure that all checklists are
comprehensibly filled after checks have been made.

The
Commission considers that the control systems in place are cost-efficient and
proportional to ensure consistent application of the financial circuits and the
legality and regularity of the transaction.

74.         (European Parliament, §176)
The EP invites the Commission to consider, in the light of experience,
whether the use of certification by an external auditor appointed by the
beneficiary is an effective control, and to look into alternative methods of
verification

Commission's
response:

Ex-ante
certification of cost claims by the beneficiaries' auditors was first
introduced under FP6. Experience has shown that, although FP6 audit
certificates did not provide the assurance initially expected, this ex-ante
control made a substantial contribution in reducing FP6 error rates compared
with FP5 as it was recognised by the Court in previous reports.

Further to
the observations from the Court and the past requests from the Parliament and
the Council the Commission has taken remedial action to improve the quality of
the audit certificates in FP7. FP7 audit certification is based on "agreed
upon procedures", which require the certifying auditor to perform
pre-defined procedures and report on that basis factual findings (as opposed to
merely providing an opinion on the eligibility of cost claims as under FP6).
This approach should lead to a reduction in errors of interpretation of the
eligibility rules by the auditors. Within DG Research a mid term review of this
novel cost claim certification system was carried out recently based largely on
a survey of the authorizing departments' experience. The first results on the
system of “agreed upon procedures” are positive. Although to date take up rates
for both types of methodology certificates have been very low, a similar kind
of review is being considered at the moment for the methodology certification
system.

The
Commission is currently working on the preparation of the next Framework
Programme for Research and Innovation. A key enabler to improve the effectiveness
of audit certification is to simplify the rules underpinning the eligibility of
cost claims submitted by beneficiaries. Simplification is catered for as a
general concern for the future research and innovation programme.

75.         (European Parliament, §176)
The EP invites the Commission to raise the certifying auditors'
awareness of expenditure eligibility rules to improve the reliability of the
audit certificates they issue, and, if applicable, holding such auditors accountable.

Commission's
response:

This
recommendation largely derives from the Court's findings on FP6 audit
certificates. Further to the observations from the Court and the past requests
from the Parliament and the Council the Commission has taken remedial action to
improve the quality and reliability of audit certificates in FP7 by introducing
an approach based "agreed upon procedures" (see reply to the previous
request). The Commission has also implemented measures to reinforce the
effectiveness of audit certificates by improving support to certifying entities
through participation in workshops and training courses, addressed towards
beneficiaries as well as operational services within the Commission. Exhaustive
Guidance Notes for auditors and beneficiaries on FP7 audit certificates are
available on CORDIS and regularly updated with the feedback from users.
Finally, the Commission's information approach is largely based on publication
of guidance and information through CORDIS, the functioning of the "Research
Enquiry Service" and the role of FP7 National Contact points for legal and
financial issues. Moreover, a formal feedback process is currently in place to
urge those beneficiaries who have been audited by the Commission to make their
certifying auditors aware of the Commission's audit findings and also referring
them to the relevant information where the eligibility requirements and
interpretations are publicly available. The certifying auditors are accountable
under prevailing professional obligations.

76.         (European Parliament, §176)
The EP invites the Commission to further improve the quality of its
ex-ante controls on the procurement procedures and interim/final payments and
ensure that ex-post controls functions are covered by work programmes

Commission's
response:

The
weaknesses noted by the Court with regard to the interim and final payments
were related to the design and filling of checklists. DG ENTR has reviewed and
improved all its checklists for procurement and ex-ante control of interim and
final payments and reminded to all staff participating in workflows to ensure
that all checklists are comprehensibly filled after checks have been made.

The
recommendation concerning lack of work programme regarding ex-post controls
relates to a finding of the Court for the year 2009 in policy area 01-Economic
and Financial Affairs. The delay in formalising the work programme for 2009 was
acknowledged at the time. However, this programme was largely defined and agreed
by DG ECFIN's Internal Control Management Group (ICMG) in February 2009 and its
implementation started from then. The programme for the following year was
agreed by the ICMG in January 2010 and formalised in March 2010.

Comprehensive
spending review

77.         (European Parliament, §177
and §178) The EP calls on the Commission to undertake urgently
during 2011 a comprehensive spending review of all areas of activity to ensure
all expenditure is delivering value for money in order to identify possible
savings which would reduce the pressure on the budget in this period of
austerity. The EP believes that all demands for increased expenditure in key
priority areas can be met by savings from existing programmes and that greater scrutiny
should therefore be made of outdated or ineffectual programmes to allow funds
to be reallocated

Commission's
response:

In the
context of the preparation of the 2012 Draft Budget Commission services
proceeded to an exhaustive examination of spending programmes in view of
identifying areas for redeployment. As a result, the Commission proposed
substantial margins within the various expenditure ceilings in view of serving
new political priorities during the course of the Budget procedure.

Priority actions
- general

78.         (European Parliament, §179)
The EP calls on the Commission to present to Parliament's competent
committee a plan presenting the actions that it intends to take regarding
reform of the current discharge procedure, NMDs, the completion of the
Commission's governance structure, systematic interruption and suspension of
payments as well as lifting of the measure and the improvement of the
corrective mechanisms

Commission's
response:

The
recommendation is partially accepted.

An
explanation on all the priority actions was transmitted to the budgetary
control Committee by Commissioner Šemeta on 24 February 2011.

On
National Management Declarations, the Commission's proposal in the Financial
Regulation (FR) for management declarations of assurance (Article 56 of the
proposal for a revised FR) was a first step towards meeting the Parliament's
request to have national declarations signed at political level. Such
management declarations would provide the Commission with substantial
additional assurance as to the use of EU funds by Member States. Once approved
and implemented by the Member States, the Commission is committed to assessing
the added-value of these management declarations after a reasonable period. On
this basis the Commission could envisage proposing the political endorsement of
the reporting and accountability process supporting and including the
managerial declaration of assurance.

The
Commission does not commit to an Action Plan on how to make National Management
Declarations mandatory, but will implement the two steps approach.

Regarding
the interruption/suspension of payments and the improvement of the corrective
mechanisms, the Commission services are instructed to timely interrupt payment
deadlines as soon as there is evidence to suggest a significant deficiency in
the management and control system supported by an audit report, as requested in
the legal basis (art. 91 Reg. 1083/2006). The systematic policy on interruption
and suspension of payments has already been illustrated in the examples brought
to the Committee on Budgetary Control of the European Parliament, which clearly
show that the sequence in the audit and legal steps triggering interruptions
and suspensions is followed systematically and without disruption by the
Commission.

Priority action
- Reform of the current discharge procedure

79.         (European Parliament, §180)
The EP calls on the Commission to organise an inter-institutional
discussion involving at the initial phase, at the highest level,
representatives of the Council, of the Commission, of the Court of Auditors and
of Parliament, and in the second phase representatives from the Member States,
from national parliaments and from supreme audit institutions, with a view to
embarking on a comprehensive debate on the current discharge procedure system

Commission's
response:

The rules
applicable to the discharge procedure, and in particular the time limits, are
set out in the Financial Regulation (FR). The shortening of the whole procedure
is part of the discussion on the current review of the Financial Regulation.

The
Commission has already invited the Discharge Authority, the Council and the
European Court of Auditors to set up a working group in order to elaborate on a
comprehensive reform of the discharge procedure, aiming at a shorter timetable
that leaves sufficient time for the institutions involved to prepare and
present their respective contributions. A conference could be organised to discuss
the conclusions of this working group.

80.         (European Parliament, §181)
The EP calls on the Commission to put forward proposals for reducing
the periods involved in the discharge process, so that the vote in plenary can
be held in the year following the financial year under review; encourages the
Court of Auditors and all institutions to shorten and strengthen the discharge
procedure, making it more transparent and understandable to Union taxpayers

Commission's
response:

The
Commission has already invited the Discharge Authority, the Council and the
European Court of Auditors to set up a working group in order to elaborate on a
comprehensive reform of the discharge procedure, aiming at a shorter timetable
that leaves sufficient time for the institutions involved to prepare and
present their respective contributions. A conference could be organised to
discuss the conclusions of this working group.

Priority action
- National management declarations

81.         (European Parliament, §189)
The EP invites the Commission to present a formal proposal for the
introduction of mandatory NMDs duly signed by each national finance minister
according to the following steps:

– an
analysis of the quality, completeness, objectivity, relevance and usefulness of
existing NMDs including an assessment of the added value of the information
given as well as possible shortcomings in them,

– the
drawing up of guidelines on the definition of common key aspects of NMDs
ensuring that they will be useful for both the Commission and the Court of
Auditors,

– the
establishment of a roadmap indicating the date at which the Member States shall
have completed the main steps in the process of introducing NMDs, as well as
the introduction in the Financial Regulation of mandatory NMDs by 1 January
2014, which marks the start of the new Financial Perspectives;

and proposes
that the substance of the NMDs should comply with international auditing
standards and should assist the audit by the Court of Auditors

Commission's
response:

In the
Commission's view, management declarations, audited by an independent auditor,
as currently already the case for Agriculture, would be more appropriate for
obtaining assurance from Member States on the proper management of EU Funds
than any mandatory national declarations. For this reason, the Commission
proposal for the triennial revision of the Financial Regulation adopted in May
2010 included a requirement for annual management declarations of assurance
from accredited bodies in the Member States, accompanied by an independent
audit opinion thereon. If a Member State has accredited more than one body per
policy area, it should, in addition, provide the Commission with a synthesis
report with an overview at national level of all management declarations of
assurance and audit opinions thereon. The inter-institutional discussion on the
revision of the FR is currently ongoing.

The
Commission services have issued a working document (SEC(2011)250) providing an
analysis of the assurance process on the execution of the EU budget in shared
management, an evaluation of the national declarations issued by four Member
States and guidance on how to add value to this assurance process. The study
concluded that there is no evidence of the impact that national declarations
had on the improvement of accountability at national level and that the
management declarations of assurance proposed for the revision of the Financial
Regulation are much more appropriate to obtain assurance from Member States
than the present voluntary national declarations.

Once the
revision of the Financial Regulation is approved and implemented by the Member
States, the Commission intends to assess the added-value of these management
declarations after a reasonable implementation period. On this basis, the
Commission could envisage proposing the political endorsement of the reporting
and accountability process supporting and including the managerial declaration
of assurance.

Priority action
- Completion of the Commission's governance structure

82.         (European Parliament, §191)
The EP invites the Commission to complete its governance structure by
adding the signature of the responsible Commissioner to the Director-General's
Annual Activity Report and by having the Synthesis Report - which also shall
include a "scoreboard" on the quality of controls per Member State
and policy area - signed by the President of the European Commission

Commission's
response:

The
Commission considers that the management responsibility assigned to Directors
General should not be diluted by adding signatures by the Commissioners in the
annual Activity Reports. Moreover, the standing instructions on the preparation
of the Annual Activity Reports were updated so that the Director General
clearly confirms that the main elements of his/her report and assurance
declaration, including the reservations envisaged, have been brought to the
attention of the Commissioner. The Commission considers that the AODs analysis
of the quality of Member States' management and control systems should be
presented in their AARs.

83.         (European Parliament, §192)
The EP notes that in order to complete the Commission's governance
structure it may have to undertake a strengthening of procedures to allow the
College to adopt the Synthesis Report and to allow the individual
Commissioners' involvement and participation in the preparation of the
Director-General's Annual Activity Report which includes the following measures
applicable for the financial year 2010:

– the
transmission to Parliament's competent committee and publication of the minutes
from the meeting at which the College adopts the Synthesis Report,

– the transmission
to Parliament's competent committee of the declaration from the
Director-General about his meeting with the responsible Commissioner explaining
clearly and completely the content of their deliberations on the Annual
Activity Reports as well as any reservations

Commission's
response:

The
Commission transmitted to the European Parliament the minutes of the meeting
(which are public) at which the College adopted the Synthesis Report.

Moreover,
the Commission believes that all Director-Generals complied with the standing
instructions on the preparation of the AARs and clearly confirmed that the main
elements of his/her report and assurance declaration, including the
reservations envisaged, have been brought to the attention of the Commissioner.

Priority action
- Systematic activation of interruption and suspension of payments as well as
lifting of the measure

84.         (European Parliament, §194,
§195 and §196) The EP invites the Commission to introduce a
systematic activation of interruptions and suspensions of payments as soon as
evidence suggests a significant deficiency in the functioning of the Member
States' management and control systems (without a decision of the Commission).

The EP
believes that the process leading to this shall include:

– the
transmission to Parliament's committee of clear information on all
interruptions and suspensions and the reasons,

– a
description of criteria applicable for all DGs and leaving no room for
interpretation whereby a systematic mechanism without prior decision on
political level shall be created,

– the
inclusion in the FR of the principle of systematic interruption and suspension
of payments triggered by evidence of significant deficiencies in the
functioning of the Member States' management and control system and the
development of comprehensive guidelines in order to avoid misunderstandings,

– the
transmission by the Commission of a copy of any recovery letter and any letter
announcing financial corrections to the national parliament and the national
supreme audit institution of the Member State concerned as well as to
Parliament's competent committee

Commission's
response:

The
Commission has taken the requested action with the exception of the
recommendation formulated in the last indent. Moreover suspensions will
continue to require a decision by the Commission.

Such
information has already been transmitted to the COCOBU by Commissioner Šemeta
letter of 24 February 2011.

The
Commission services have been instructed to proceed systematically and timely
and to interrupt payments as soon as there is relevant evidence suggesting a
significant deficiency in the management and control systems. Indeed, the
Commission exercised rigorously this supervisory role in 2010 by interrupting
63 (49 ERDF and 14 ESF) payment deadlines and adopting six suspension decisions
for 2000-2006 and 2007-2013 operational programmes, where serious deficiencies
or irregularities have been detected. The Commission is pursuing this strict
policy in 2011, with 54 interruptions of payment deadlines decided (40 for ERDF
and14 for ESF) by 30 June 2011.

The Annual
Activity Reports for 2010 of DG EMPL and REGIO provide for the full list of
interruption of payments adopted in 2010 and 2011 until the date of issuance of
the AARs.

The
Commission has transmitted to the Parliament (COCOBU) detailed information on
all actions undertaken in the framework of the 2008 Action Plan in structural
actions and in particular on decisions on suspensions and financial corrections,
and has satisfied all requests for information.

However,
the Commission will not be taking action in transmitting copies of any recovery
letter and any letter announcing financial corrections to the national
parliaments and the national supreme audit institutions of the Member States
concerned due to the heavy additional administrative burden this entails. The
Commission considers that it is up to the National Parliaments and National
Supreme Audit Institutions to obtain the requested information from their
national management and control authorities for the Structural Funds
responsible administrations who implement the Funds and programmes, in their
supervising role.

Finally,
the conditions for any interruption or suspension of payments should be laid
down in the sector specific rules to take account of the specificity of each
policy area. This principle is also included in Article 56 of the Commission
proposal for the triannual revision of the Financial Regulation.

Priority action
- Improvement of corrective mechanisms

85.         (European Parliament, §197
and §198) The EP insists that the Commission improve the corrective
mechanisms ensuring that the financial consequences of incorrectly made
payments are borne by the beneficiaries and not the taxpayers.

This shall
include the presentation to Parliament's competent committee of the following:

– a full
list of all financial corrections implemented since 2000, as well as
information on whether incorrectly received payments have been recovered or
replaced by other projects, in which case a qualitative assessment of these
replacement projects shall also be presented,

– the
measures to be taken following the ECA conclusion that "the Commission
does not always receive reliable information from Member States" (Annual
Report 2009, point 1.49), with a list of the concerned MS and the amounts as
well as with information on the results of the "standardized
procedure"(Commission's reply in Annual Report 2009, point 1.34)
introduced for the 2007-2013 period,

– an action
plan on how to better integrate and reconcile the Court of Auditors' findings
on annual error rates at the beneficiary level and the Commission's work on the
follow-up of those findings as well as the financial corrections and recoveries
made over the whole life-cycle of the different programmes up to the closure
procedure and including the identification of payments that may be subject to
further verification and clearance of accounts procedures and a better
follow-up of the Member States' recovery efforts

Commission's
response:

The
Commission has instructed the services operating shared management to report in
their Annual Activity Reports information on financial corrections, split by Member State. Services were invited to provide a clear split by Member State, programming period and fund. Note N°6 to the accounts was complemented with the
inclusion of a template showing cumulative figures at the end of 2010, covering
all Funds under shared management and how much of the financial corrections
were effectively recovered/implemented.

Commission
services were also instructed to focus their audits on the performance of MS
systems for recovery (timing, ratio, amounts) so that serious weaknesses in
this area will more effectively contribute to triggering the decision of
interrupting payments.

A special
audit module will be created to specifically cover performance for MS systems
for recoveries.  Audits will start in 2011 on a risk basis.

For the
next generation of programmes, proposals will be made in 2011 aiming at
compelling Member States to recover from final beneficiaries financial
corrections imposed on them and ensuring they have the legal instruments to
enforce their recovery orders and that the Commission has the legal basis to
check this obligation.

As regards
cohesion instrument, the Commission started to take action under its 2008
Action Plan and has already improved the reported amounts by Member States.
Moreover, the Commission is verifying the relevant data in the framework of
closure for 2000-2006 programmes. In case of doubts or inconsistencies in these
data, the Commission will suspend the final payment until it obtains complete
and coherent information.

The
Commission has transmitted to the Parliament (COCOBU) detailed information on
all actions undertaken in the framework of the 2008 Action Plan in structural
actions and in particular on decisions on suspensions and financial
corrections, and has satisfied all requests for information.

As regards
Agriculture, the conformity clearance system is designed to exclude expenditure
from EU financing which has not been executed in compliance with EU rules
(financial corrections). In contrast, it is not a mechanism by which irregular
payments to beneficiaries are recovered, which according to the principle of
shared management is the sole responsibility of Member States. Where undue
payments are or can be identified as a result of the conformity clearance
procedures, Member States are required to follow them up by recovery actions
against the final beneficiaries. However, even where this is not possible
because the financial corrections only relate to deficiencies in the Member
States' management and control systems, financial corrections are an important
means to improve these systems and, thus, to prevent or detect and recover
irregular payments to final beneficiaries. The conformity clearance thereby
contributes to the legality and regularity of the transactions at the level of
the final beneficiaries. If the Commission finds that a Member State does not pursue the recovery of irregular payments with the necessary diligence, it may
decide, and already has done so, to exclude the amounts at stake from EU
financing. Regular audits are carried out to verify whether Member States
comply with their obligations in this respect. Finally, the Commission
disagrees with the EP specific request to inform also the national parliaments
and SAI as it considers that it is up to the national parliaments and national
supreme audit institutions to obtain the requested information from their
national responsible administrations who implement the Funds and programmes,
under their supervising role.

In the
area of Structural Funds, the Commission will carry out in the second semester
of 2011 a specific audit enquiry with the objective to determine whether the
programmes certifying authorities have satisfactory arrangements in place for
recovering irregular amounts, keeping account for those recoveries and
appropriately reporting them to the Commission.

Priority action
- Performance evaluator

86.         (European Parliament, §199 -
§201) The EP invites the Commission to appoint a "performance
evaluator" with responsibility for the preparation of the evaluation
report required in accordance with Article 318 of the Treaty on the Functioning
of the European Union to be endorsed by the College of Commissioners in order
to establish a clear "ownership" of this report

The EP
believes that the methodology to be used for the production of this report
should be audited by the IAS which should also assess the work done, and that
the key performance indicators used by all departments in the Commission shall
be publicly available

The
evaluation report should be presented in Plenary during a debate at which the
Court of Auditors will also be invited to present its opinion

Commission's
response:

The
Commission is committed to present the evaluation report in full compliance
with Article 318 of the Treaty on the Functioning of the European Union (TFEU).
The Commission will use its established general working methods to produce this
report along with all of the other policy statements and documents that it
produces concerning evaluation issues. The Commission notes that the Internal Audit
Service exercises its own independent authority in programming its audit work.
The report will be published and transmitted to the EP by the Commission
according to established procedures.

Priority action
- Introduction of a new spending logic

87.         (European Parliament, §202)
The EP invites the Commission to introduce a new spending logic aimed
at improving the quality of spending and ensuring that funds provided by Union
taxpayers are spent both correctly and wisely, and including the following
principles:

–
establishing the Union budget on the basis of an examination of the proposed
policies, the 'delivery' costs for the bodies involved and the beneficiaries
and the objectives which could be achieved with the available funds,

– ensuring
that schemes and programmes are realistic and as simple as possible,

– ensuring
full and agreed accountability for spending,

and proposes
that the Commission, in cooperation with the Court of Auditors, study a
procedure with a view to obtaining an overall statement of assurance for each
Financial Perspective and, pending a legal basis to make such a procedure
mandatory, that it apply it voluntarily

Commission's
response:

As
outlined in 'A Budget for Europe 2020', the Commission will work with the
legislative authority to ensure that the principles of simplification, sound
financial management and accountability are fully integrated in future
programming activity. In this context, the Commission has already proposed
comprehensive simplification measures in the proposed revision of the FR. The
Commission will issue a dedicated Communication on simplification at the end of
2011 once all of its sector specific proposals have been tabled.

The
Commission considers that obtaining an overall statement of assurance for each
Financial Perspective would not add value to the existing annual governance
structure under which a full and agreed accountability process for spending is
already in place.

Observations
from committee on development

88.         (European Parliament, §204)
The EP urges DG ECHO to bolster its monitoring and follow-up capacity

Commission's
response:

The
requested action has been taken. The Commission ensures a systematic follow up
of the audit recommendations at each next DG ECHO audit visit of a partner be
it at field or HQ level (every 2 to 4 years) and critical observations are used
for the partner's annual evaluation.

89.         (European Parliament, §205)
The EP calls on the Commission to integrate environmental aspects more
comprehensively into development projects, including budget support programmes,
and to evaluate environmental mainstreaming in development cooperation; regrets
that these shortcomings may be due to staff shortages and looks forward to
progress with the advent of the European External Action Service

Commission's
response:

The
Commission agrees that the issue of environmental integration should be given
high priority. Work in this area will continue in close coordination and
harmonisation with EU Member States, in support of the aid effectiveness
agenda. It shall include in particular the following steps, which are mentioned
in EuropeAid's 2010 Annual Annual Report:

- further
work on indicators to monitor the effectiveness of a new environment strategy
and to assess environmental integration in the Commission's operations;

- overall
evaluation of environmental mainstreaming in development cooperation;

- revised
Budget Support guidelines including new guidance on cross-cutting issues;

- adoption
of an environment strategy integrating all the above elements.

90.         (European Parliament, §207)
The EP urges the Commission to help partner countries develop parliamentary
control and audit capacities and to increase transparency and public access to
information, in particular when aid is provided via budget support, in line
with the provisions of Article 25(1), point (b), of the DCI Regulation, and
invites the Commission to report regularly on progress achieved

Commission's
response:

The
support to national oversight bodies (Parliaments and Court of Auditors) has
considerably increased in the last five years. There have been three new
programmes approved in the last two years in DCI countries providing technical
assistance to improve national oversight bodies. Reporting on these activities
will be improved.

91.         (European Parliament, §208)
The EP calls once again on the Commission to demonstrate that it has
spent at least 20 % of development aid on basic and secondary education and
basic health, including safe access to water and sanitation; further suggests
that impact assessments accounting for this spending should be thoroughly
carried out in order to maximise the effectiveness of the programmes undertaken

Commission's
response:

The
Commissioner already sent the related statistics demonstrating the fulfilment
of the 20% of country level programmed aid under the DCI for basic and
secondary education and basic health to the European Parliament (Note CAB
11/SS/tm devco.g.8(2011)473250 dated 03/05/2011) to the Chair of the Committee
on Development; in this note the Commissioner also reported on programmed aid
for water and sanitation, which, however, was not part of the initial
programming benchmark of 20%. Impact assessment through appropriate results
monitoring is a permanent task of the Commission's aid effectiveness
monitoring; it has to happen at the beneficiary country level and data quality
and data availability as well as appropriate results reporting are permanent
objectives of the sector policy dialogue with the partner countries.

92.         (European Parliament, §209)
The EP invites the Commission to place greater emphasis on women's
health in developing countries in general, and improving maternal health in
particular, as this is the area where the Millennium Development Goals targets
are furthest from being met

Commission's
response:

The Commission
has substantially increased emphasis on women's health, including maternal
health. The Commission is part of the G8 Muskoka Initiative on Women's and
Children's Health of June 2010 with a pledge of EUR 50 million additional
funding (EDF). The Commission also fully supports the Global Strategy for
Women's and Children's Health for accelerated progress towards MDG 4 on
children's health and MDG 5 on maternal health and universal access to
reproductive health, which was launched by the UN Secretary General at the MDG
Summit of September 2010. At the MDG Summit the Commission announced a EUR 1
billion MDG Initiative (EDF) for the MDGs most lagging behind, including for
MDG 5. In addition the Commission has concluded a call for proposals on sexual
and reproductive health and rights and is preparing for support to the UNFPA
Global Programme on reproductive health commodity security under the Investing
in People Programme. The Commission is emphasising the rights of women and
girls in general and as part of the health and education agenda emphasising
gender equality and women empowerment.

93.         (European Parliament, §211)
The EP calls on the Commission to implement a more transparent and
objective process for selecting aid implementation channels

Commission's
response:

DG DEVCO
is currently updating and consolidating its three core operational guidance
(Project Cycle Management, Sector Policy Support Programme and Budget Support)
into one overall guidance for Project and Programme Cycle Management which will
include more structured guidance for context analysis at the country and sector
level that will feed into a risk management framework allowing authorising
officers to take more informed decisions on the most appropriate aid
implementation modalities to achieve objectives.

94.         (European Parliament, §212)
The EP urges the Commission to ensure better visibility for
Union-funded activities overseas

Commission's
response:

All
project financed by the EU are contractually required to provide adequate
visibility to the EU and to respect the visibility manual. The Commission is
monitoring the implementation of these requirements.

Observations
from committee on Employment and Social Affairs

95.         (European Parliament, §214)
The EP calls for greater efforts to reduce, in particular, instances of
the reimbursement of ineligible costs

Commission's
response:

The
current Structural Fund Regulation provides the Commission with all corrective
tools for the Commission to perform its supervisory role in case of serious
deficiency in the management and control system (and risk of reimbursement of
ineligible expenditure):

-
interruption of deadlines to proceed with interim payments without any delay by
the Director General where there is evidence to suggest a significant
deficiency in the management and control systems in a national or Commission
audit report or where it is necessary to carry out supplementary verifications
in relation to a serious irregularity in a payment claim not corrected by the
Member State;

-
suspension of interim payments by Commission decision at the level of the
operational programme or the priority axis in case of a serious deficiency in
the management and control systems or a serious irregularity in a payment claim
or in case of a serious breach of the Member State's obligations in relation to
management and control systems for reimbursement of irrecoverable amounts lost
due to its fault or negligence;

-
implementation of financial corrections by Commission decision (in the course
of ongoing operational programmes or at their closures).

In the
future regulation post 2013, the Commission will make all necessary proposals
to maintain and strengthen this strict approach to avoid ineligible payments.
The shift envisaged to a system of annual clearance of accounts for the
programming period post-2013 is intended to improve the assurance in the
Structural Funds, combining an annual audit opinion and immediate corrections
before certification to the Commission.

96.         (European Parliament, §215)
The EP calls on the Commission to contribute to improved financial
management by continuing the action programme to speed up decision-making
procedures in respect of financial corrections

Commission's
response:

Thanks to
the Action Plan adopted by the Commission to strengthen its supervisory role in
shared management, financial correction procedures have been implemented in a
more rigorous way, taking into account the regulatory deadlines provided to
Member States to present complementary information. The level of financial
corrections shows the Commission's response to the detection of significant
systems deficiencies in Member States and the reinforced follow-up to all audit
activity.

As regards
the reduction of loss to the EU budget by financial corrections, the
implementation of the Action Plan shows clearly that, as a result of the more
stringent financial correction procedures and targeted Commission audit
activity, the level of financial corrections for both 1994/99 and 2000/06
periods has increased, totalling EUR 3.678 billion for the two years since the
Action Plan 2008 and 2009, compared to a total of approximately EUR 3.567
billion for the years between 2000 and 2007.

Observations
from committee on Internal Market and Consumer Protection

97.         (European Parliament, §218)
The EP invites the Commission to Increase the publicity given to
available grants, especially as concerns the joint actions in the framework of
the Consumer Protection Cooperation Regulation, where no applications were
received

Commission's
response:

Since
2010, the Commission started to take the requested action and will continue
with the measures to that effect in the coming years.

The
Commission makes significant efforts to encourage CPC authorities to take part
in the joint actions in the framework of the CPC Regulation. The call for
proposals being open for about five months (from March to July), participation
is promoted by the Commission on numerous occasions such as at the CPN and CPC
Committee meetings. The Commission also makes contacts with MS via e-mail
and/or telephone to discuss potential topics of joint actions. However,
participation in these common activities requires financial contribution from
involved authorities and given the austerity measures taken on national level
in response to the crisis, some Member States find it difficult to join.

98.         (European Parliament, §219)
The EP asks the Commission to use the results of the Consumer Markets
Scoreboard in its policy-making in all relevant areas

Commission's
response:

The
Commission started to take the requested action and will continue with the
measures to that effect in the coming years. The Consumer Market Scoreboards
regularly provides data on the functioning of markets from a consumer
perspective. It also monitors consumer conditions in Member States and the development
of cross-border e-commerce. Subsequent studies are carried out to analyse
markets and to propose solutions. The results of the market monitoring process
have already been included in several initiatives in the fields of financial
services, energy and redress.

99.         (European Parliament, §222)
The EP urges the Commission to analyse the effectiveness of current
financing programmes for SMEs and facilitate their participation in Union
research programmes through the introduction of innovative financial
instruments in the Union budget

Commission's
response:

The
Commission launches on a regular basis evaluation exercises according to the
legal provisions. In this respect, very recently the Interim Evaluation of the
Seventh Framework Programme and the Interim Evaluation of Eurostars Programme
have addressed the effectiveness of current financing programmes for SMEs.

The
Commission is currently working on the preparation of the next Framework
Programme for Research and Innovation. In this context, it will present to the
European Parliament and to the Council a proposal where the aspects highlighted
by the Parliament will be addressed.

100.       (European Parliament, §223)
The EP asks the Commission to report back as soon as possible on the
follow-up given to the relevant judgments of the Court of Justice (point 2.22
of the ECA annual report on goods unlawfully introduced into Union territory)

Commission's
response:

The
Commission has examined the rulings of the ECJ in Elshani (Case C-459/07) and
Dansk Logistik (Case-C-230/08) and concluded that its current position can be
maintained.

101.       (European Parliament, §224)
The EP asks the Commission to pay particular attention when drafting
the implementing provisions of the Modernised Customs Code to the performance
of physical checks on goods, both for fiscal and safety/security purposes

Commission's
response:

Customs
controls including physical control are based on risk analysis. This is to be
confirmed in the Modernised Customs Code Implementing Provisions (MCCIP).

Implementation
of the MCC was envisaged for 24 June 2013. However, in order to ensure the
development and deployment of electronic systems and the alignment of the MCC
with the provisions of the Lisbon Treaty, the Commission intends to table a
proposal suggesting postponement of the date of application and 
implementation.

102.       (European Parliament, §224)
The EP asks for improvement of pre/post audit controls in respect of
simplified procedures and centralised clearance

Commission's
response:

The
Commission looks at this issue during monitoring visits in all Member States
which started in 2010 and which will end in 2013. The Commission reminds the
Member States to carry out sufficient controls (pre-audits, import and post
audit controls) in respect of simplified procedures and centralised clearance.

Observations
from committee on Transport and Tourism

103.       (European Parliament, §230)
The EP calls on the Commission to intensify its efforts to further
reduce the margin of error most probably between 2 and 5 %

Commission's
response:

In the
Commission's opinion, a DAS error rate around the middle of this range would be
acceptable and justified. The Commission does not currently intend to further
intensify controls.

104.       (European Parliament, §232)
The EP stresses that there is an urgent need for regional and transport
policies to be transparent through the provision of proper information to
taxpayers and budget authorities, and to be more closely coordinated,
particularly as regards TEN-T funding, as at present only cursory consideration
is given to the potential European added value of projects and consequently
funds are not used as effectively as possible to eliminate bottlenecks and
problems in connection with border crossings or inadequate connections

Commission's
response:

The requested
action has been taken. The White Paper adopted on 28 March 2011 (COM(2011)144
final) by the Commission addresses the major issues raised and advocates a new
funding framework for transport infrastructure:

- with
sufficient conditionality to provide support for the completion of the TEN-T
core network as well as other infrastructure programmes, encompassing the
investment strategies of both the TEN-T programmes and the Cohesion and
Structural Funds, and considering revenues from transport activities;

- by
providing EU support for developing and deploying technologies that improve
infrastructure use, efficiency and decarbonisation (new road network pricing
and tolling systems, ITS and capacity improvement programs);

- by
linking  TEN-T funding to progress towards the completion of the TEN-T core
network and on the pooling of national resources along corridors.

105.       (European Parliament, §233)
The EP insists that the procedures for selecting and approving transport
projects under the Cohesion Policy should be more soundly based

Commission's
response:

The
Commission has taken the requested action. The procedures for selecting and
approving projects are sound, particularly following the substantial overhaul
of the Regulatory framework for the 2007-2013 programming period, in
particular, through the application of the principles of programming for
Cohesion Fund projects and the new rules on major projects.

The
Commission continues to work on the improvement of procedures and is investing
significant resources through JASPERS to contribute to the improvement of
project preparation and appraisal. It should be recalled that Member States
have the main responsibility for selecting projects. Only projects above the
€50 million threshold, i.e. major projects, are adopted by the Commission after
their appraisal in accordance to the General Regulation, 1083/2006.

106.       (European Parliament, §234)
The EP supports the ECA recommendation that the Commission should
consider appointing further coordinators for the other priority projects

Commission's
response:

The
requested action has already been taken. The Court carried out its performance
audit in 2009 and early 2010. On 8 June 2010 the Commission appointed three new
coordinators. It has no plans to appoint further ones.

Observations
from committee on Civil liberties, Justice and Home affairs

107.       (European Parliament, §241)
The EP calls on the Commission to publish the mid-term evaluation
reports on the different funds and programmes as soon as possible

Commission's
response:

The
requested action has been taken by DG Justice and DG Home Affairs for their
respective programmes.

Concerning
the programmes managed by DG Justice, all mid-term evaluation reports were
adopted and published as follows: "Drugs prevention and information"
and "Fundamental rights and citizenship" programmes on 5 May 2011
(COM(2011)246 and COM(2011)249 respectively), "Fight against violence (Daphne III)" and "Criminal Justice" programmes on 11 May 2011 (COM(2011)254 and COM(2011)255 respectively) and "Civil Justice" programme on 15 June 2011 (COM(2011)351).

Concerning
the programmes managed by DG Home Affairs, the mid-term evaluation report for
the programmes "Prevention and fight against crime" and
"Prevention, preparedness and consequence management of terrorism and
other security related risks" was adopted and published on 16 June 2011
(COM(2011)318). The mid-term evaluations for the External Borders Fund,
European Return Fund and European Fund for the Integration of Third-country
Nationals will be shortly launched in inter-service consultation and the
reports are expected to be published in autumn 2011.

Observations
from committee on Culture and Education

108.       (European Parliament, §245)
The EP urges the Commission (and the Executive Agency and national
agencies) to continue their work on flexible procedures and further reducing
payment delays

Commission's
response:

The
Commission accepts the request and it has already been addressed in the
meantime.

Payment
delays are regularly reported to senior management and closely monitored.
Appropriate actions are taken when necessary. This has resulted in average
payment delays in 2011 that are below 25 days.

Observations
from committee on Environment, Public Health and Food Safety

109.       (European Parliament, §253)
The EP urges the Commission to develop further assistance to the Member
States in the estimation process as concerns emergency funds and funds related
to the occurrence of disasters

Commission's
response:

The
Commission has taken the requested action.

As for the
EU Solidarity Fund, all relevant information can be found on DG REGIO's
website:

http://ec.europa.eu/regional_policy/thefunds/solidarity/index_en.cfm.

There,
detailed guidance is given on how to apply for the fund.

If
national authorities of the affected Member State decide to submit an
application (no later than 10 weeks after the occurrence of the first damage)
the Commission provides on request the necessary legal and procedural advice.
Member States that wish to apply are strongly recommended to establish early
direct contacts with DG REGIO that can offer a range of advice that will help
to speed up the application procedure as much as possible. A preparatory
meeting between the body preparing the application and the Commission can be
set up. It needs to be noted that the estimation of total direct damages lies
in the responsibility of the national authorities and/or the body preparing the
application. The Commission will do an assessment of the plausibility of the damage
estimate that is presented but has no access to the required technical details
that would allow to provide assistance to the damage assessment itself.

110.       (European Parliament, §256)
The EP calls on the Commission to continue its efforts to improve
administrative procedures which have an impact on the implementation of
commitment and payment appropriations

Commission's
response:

DG ENV has
revised its intranet on public procurement, developed new reference documents
and intensified awareness-raising training for both operational and financial
officers. Actions agreed in the detailed management plan now have a target date
for launching the appropriate procedure. Those target dates are closely
monitored and a monthly subject of the Directors' Meeting. Financing decisions
are made at an earlier stage, which also allows for earlier publication. It is
the intention to have a first financing decision for 2012, covering 100% of the
amounts proposed in the DB (excluding new pilot projects and preparatory
actions) in order to allow launching the actions as soon as possible in the
previous year. This will also improve payment implementation.

111.       (European Parliament, §258)
The EP encourages all parties concerned at the agencies and in the
Institutions to improve mutual communication and work harder at public
relations

Commission's
response:

The
Commission started to take the requested action and will continue with measures
to that effect in the coming years.

The
measures related to communication with agencies include regular bilateral
meetings several times a year, mutual participation in committees and networks,
co-ordination of external communication as well as regular internal reporting.

With
regard to public relations, DG SANCO drafted a Communication Strategy including
an action plan communicated to the Commissioner in November 2010.

In
addition, DG SANCO continues its efforts per programme to connect with
stakeholders:

(1) for
the consumer programme, new initiatives are e.g. campaigns like the one for the
European Consumer Centre's Network which will take place between June and
October 2011, awareness raising initiatives like the pan-European initiative in
July 2011 concerning air passenger rights.

(2) for
the public health programme, the enhanced website has all the linguistic
versions on-line; in 2010 it reached the top 20 of EUROPA's websites.  As a new
initiative the crisis communication website was launched on 18 January 2011.

Since
2010, the Executive Agency for Health and Consumers (EAHC) is in a position to
generate and disseminate the first available project based information on the
public health programme (2008-2013) through fact sheets, brochures and thematic
videos.

112.       (European Parliament, §259)
The EP urges the Commission DG SANCO and DG ENV to annually report to
Parliament's respective committees within the discharge procedure on the
efficiency and effectiveness of the projects and programmes implemented

Commission's
response:

The
Commission started to take the requested action and will continue with the
measures to that effect in the coming years.

For the
public health programme, an annual report on its implementation in 2009 is
currently being finalised and will be made available for the next discharge
procedure.

However,
as most actions of both the consumer and the public health programme have a
multi-annual character, their efficiency and effectiveness are best evaluated
over a number of years rather than annually. To this end, mid-term and ex-post
evaluations are regularly conducted and made available to the discharge
authority.

Observations
from committee on Foreign Affairs

113.       (European Parliament, §265)
The EP invites DG ECHO to report on its experience with the
implementation of the Food Facility in its Annual Activity Report for 2010

Commission's
response:

Main
figures on the implementation of the Food Facility are included in Europe Aid Co-operation Office Annual Activity Report for 2010. More detailed information
on the implementation of the Food Facility is available in the 2011 Annual
Report on the European Union's development and external assistance policies on
EuropeAid website:

http://ec.europa.eu/europeaid/multimedia/publications/documents/annual-reports/2011/europeaid_annual_report_2011_en.pdf.

Observations
from committee on Regional Development

114.       (European Parliament, §266)
The EP calls for greater rules simplification and more technical
support to enable the Member States and regions to ensure more effective
implementation; points out that regional authorities must be given the
technical knowledge and skills by the Commission or by the Member States that
will enable them to improve the efficiency and effectiveness of the resources
made available to them

Commission's
response:

The
Commission is taking the requested action. It intends to take measures to that
effect before 31 December 2012, as soon as the need for additional guidance is
identified with the Member States.

The
Commission intends to pursue its simplification efforts when preparing its
proposal for the next regulatory framework applying to Structural Funds.

For the
2007-2013 period the Commission has made a significant upfront investment in
terms of guidance (45 guidance notes have been discussed and agreed with Member
States), preventive training and support to the Member States. It will maintain
its efforts in this respect, for example through the preparation of guidance
for the audit authorities and guidance on financial engineering instruments,
and takes note of the Parliament's request to intensify its efforts.
Nonetheless, it recalls that technical assistance monies are also provided to
Member States for them to develop their administrative capacity.

115.       (European Parliament, §267)
The EP recommends the simplification and reduction of public
procurement rules in order to reduce the overall incidence of errors

Commission's
response:

Following
the consultation launched with the Green Paper on the modernisation of EU
public procurement policy, the Commission will make legislative proposals by
the end of the year, with a view to simplifying and updating the European
public procurement legislation.

116.       (European Parliament, §268)
The EP asks for further details on missing information with regard to
reimbursements in 2009

Commission's
response:

The
Commission has taken the requested action.

The Annual
Activity Reports for 2010 of DG EMPL and REGIO provide for the full list of
interruption of payments adopted in 2010 and 2011 until the date of issuance of
the AARs as well as financial corrections for 2010 and cumulatively.
Furthermore, Note 6 to the Commission's annual accounts includes detailed
information on all reimbursements, recoveries and financial corrections.

The
Commission has transmitted to the Parliament (CONT Committee) detailed information
on all actions undertaken in the framework of the 2008 Action Plan in
structural actions and in particular on decisions on suspensions and financial
corrections, and has satisfied all requests for information.

In
addition, Commissioner Semeta has transmitted to the Parliament (CONT) on 24
February 2011 and in March 2011 additional requested information including a
memorandum on financial corrections and recoveries for 2009 and previous years.

117.       (European Parliament, §268)
The EP asks the Commission to propose a penalty system in case
information provided does not allow the Commission to establish legality and
regularity

Commission's
response:

The
Commission will not be taking the requested action.

The reason
for that is that the current regulatory framework does not provide for
penalties, but for financial corrections, as corrective measures to restore the
regularity of expenditures and to protect the EU budget.

The
possibility to interrupt payments and impose financial corrections also acts as
an incentive for the Member State to improve the management and control systems
and implement the necessary financial corrections. Indeed in case a Member State applies the financial correction itself, it has the incentive to act fast,
because otherwise it penalises itself (outstanding payments are still blocked
and risk automatic de-commitment under the N+2/3 rule). Finally if the
correction is imposed by the Commission through a formal decision, it
represents a net reduction of allocations available for the Member State.

118.       (European Parliament, §270)
In the context of the revision of the Financial Regulation, the EP
stresses the need to clarify rules and management schemes under shared
management, and in respect of cohesion policy that this clarification shall be
to the maximum extent possible in order to avoid contradictions to the
Financial Regulation

Commission's
response:

The
Commission's proposal for a revised Financial Regulation COM (2010) 815 of
22/12/2010 included proposals to clarify and strengthen the provisions on
shared management. The inter-institutional discussion is currently ongoing.

119.       (European Parliament, §271)
The EP calls on the Commission and the Member States to consider the
advisability of developing the 'contract of confidence' principle so as to be
able to scale down checks on systems that have proved their worth in combating
errors and fraud

Commission's
response:

The
Commission is taking the requested action. It intends to report on these
measures in the next Annual Activity Reports of the Directors General.

Through
the single audit principle, the 2007-2013 regulatory framework intends to allow
an enhanced co-operation between the Commission and the audit authorities of
the Member States (Art. 73 of Regulation 1083/2006) in order to make the best
use possible of resources and to avoid unjustified duplication of work. As the
concept of single audit also implies the obligation of re-performance of audits
of the lower level, in order to be able to rely on it, Commission auditors have
effectively re-performed national audits on operations and systems in the
framework of their review of the Member States audit authorities since 2009.
The preliminary results of this review were reported in the 2010 Annual
Activity Reports, and roadmaps to the implementation of Art. 73 (single
auditing) presented and discussed with audit authorities in 2009 and 2010.

Part I -
Special report N° 15/2009 on "EU assistance implemented through United
Nations organisations: decision-making and monitoring"

120.       (European Parliament, Court of
Auditors' special reports, §7) The EP calls on the Commission to
draw up clear selection criteria and processes which guarantee the choice of
the most efficient and effective aid delivery mechanisms in every case

Commission's
response:

DEVCO is
currently updating and consolidating its three core operational guidance (PCM,
SPSP and BS) into one overall guidance for Project and Programme Cycle
Management which will include more structured guidance for context analysis at
the country and sector level that will feed into a risk management framework
allowing authorising officers to take more informed decisions on the most
appropriate aid implementation modalities to achieve objectives.

121.       (European Parliament, Court of
Auditors' special reports, §8) The EP calls on the Commission to
monitor more thoroughly UN-implemented aid projects to ascertain their actual
impact and cost-effectiveness

Commission's
response:

The
Commission is monitoring UN-implemented projects in a number of ways. Result
oriented monitoring is based on sampling, with the coverage varying depending
on factors such as project size and accessibility to the project at field level
(due to security and other considerations). The coverage of projects may also
vary by region. The Commission has also initiated the development of joint
monitoring methods which could be carried out with UN agencies. In addition,
the EC succeeded in obtaining further assurance through audit work performed by
the UN. At the last FAFA Working Group (08/04/2011) it was concluded that, in
future the UN would inform the EC of internal and external audits undertaken or
planned by the UN. During the meeting, UN entities were encouraged by their own
members to share summaries of the internal audit reports with the donors. The
actual policy of the UN organisations as to whether such summaries could be
shared with the donors differs widely and is ultimately a decision for their
respective Governing Boards. UNDP's Excecutive Board recently took a decision
in this direction, opening up internal audits to donors and not only to UNDP
Member States. The Commission believes that the example of the largest EC
partner may be followed by other UN entities in the future. Some audit reports
have already been received.

122.       (European Parliament, Court of
Auditors' special reports, §14) The EP urges the Commission to
increase the amount of information on the implementation of the EDF at national
and regional level in the ACP countries and to ensure better visibility for all
Union-funded activities overseas

Commission's
response:

In the ACP
countries, we will raise awareness on the implementation of the EDF through
communication activities carried out at delegation level or from HQ e.g.
through the EU-Africa partnership website.

Part II - Special
report N° 17/2009 on "Vocational training actions for women co-financed by
the European Social Fund"

123.       (European Parliament, Court of
Auditors' special reports, SR §20) The EP recommends that, in
future, indicators be more focussed on gender equality, that clear targets be
established and that reliability of information be improved to ensure that
evaluations can be carried out effectively by the implementing authorities, the
  Member States and the Commission

Commission's
response:

The
quality of indicators is constantly improving. This has been one of the
Commission's major concerns for the 2007–13 programmes. Monitoring of
implementation of the 2007–13 programmes is enhanced by using agreed indicators
and the new SFC-2007 monitoring IT system.

For the
2000-2006 programmes, the Commission launched a study to analyse the relevance
and reliability of information in view of the ex-post evaluation 2000-2006.
This study was completed in July 2008 and concluded that there were important
information gaps in view of the ex-post evaluation of the ESF (2000-2006).

The
provisions of the General Regulation, and of the "Indicative Guidelines on
Evaluation Methods: Monitoring and Evaluation indicators" addressed to the
Member States in view of the preparation of their Operational Programmes,
appear to be in line with the recommendations of the ex-post evaluation of the
ESF (2000-2006) which was finalised and published in December 2010.

In close
consultation with the Member States, the Commission has developed a number of
output and results indicators. This indicators list will be inserted either in
the future ESF Regulation or in the Implementing Regulation as common
indicators, against which all Member States and all OP have to report.

In a
recent Commission evaluation study on the ESF support to gender equality, an
index on ESF policy efforts towards gender equality was developed and applied
to each Member State. This index was compared to the Gender Equality Index for
each Member State and provided a useful analysis by comparing the state of
development of gender equality and the way ESF is supporting gender equality in
each country. In the follow-up note on this evaluation study, the ESF
legislation and policy unit indicated that this analysis could be useful in the
ongoing monitoring of the current programming period and in the future
negotiations of the OPs in 2013.

124.       (European Parliament, Court of
Auditors' special reports, SR §21) The EP asks the Commission to
continue to verify the establishment by the Member States of appropriate and
feasible indicators in order to ensure that reliable data is collected, thereby
allowing meaningful conclusions to be drawn on the efficiency and effectiveness
of co-financed actions. The EP asks to be regularly informed of progress
achieved

Commission's
response:

Art. 37(1)
of the General Regulation stipulates that Operational Programmes shall set out
a limited number of output and result indicators linked with quantified
targets. The 2007-2013 OPs thus include output and result indicators. These
indicators are set at the level of OP priority axes. On the basis of these
indicators, if the provided data are sound and timely inserted in the IT system
SFC2007, the Commission measures progress in relation to the baseline situation
and the achievement of the targets of the priority axes.

125.       (European Parliament, Court of
Auditors' special reports, SR §23) The EP calls on the Commission to
continue to promote vocational training actions specifically for women

Commission's
response:

In line
with the Europe 2020 Strategy and the Employment Guidelines, investments in
skills will be one of the main priority areas for ESF intervention in the
Commission's proposals for the programming period post 2013. In accordance with
their National Reform Programme and taking into account their country specific
recommendations, Member States will be required to focus their ESF investments
on these policy areas where the needs are. This can include investments in
vocational training actions for women.

126.       (European Parliament, Court of
Auditors' special reports, SR §24) The EP urges the Commission to
follow up on the situation risen by the ECA in the Annual Report concerning
undue payments in the implementation of the Daphne II project; and ensure
proper implementation of the Daphne programme in the future

Commission's
response:

The case
mentioned by the Court in its 2009 Annual Report concerns certain unjustified
reimbursements in favour of a beneficiary of a grant in the framework of the
DAPHNE programme. These funds are being recovered by the Commission services.

In
addition, DG JUST has adopted and is putting in place a specific action plan
aimed at reducing the errors found as a result of an increased number of audits
during the years 2010 and 2011. The risk of error is further reduced by better
clarification of eligibility, management and payment rules for grants.

The action
plan is published under point 3.1.3 of the AAR of DG JUST and can be consulted
via:

http://ec.europa.eu/atwork/synthesis/aar/doc/justice_aar.pdf.

127.       (European Parliament, Court of
Auditors' special reports, SR §25) The EP reiterates its demand to
the Commission and the Court of Auditors that the information on gender
mainstreaming policies and gender-specific data be included in the budget
discharge report

Commission's
response:

The Commission
has taken the recommended action.

The
Commission has presented a Strategy for equality between women and men
(2010-2015) on 21 September 2010 (COM(2010) 491 final).

Concerning
the annual budget, the Commission has already taken appropriate measures ensuring
reporting on gender issues, when available, by exploiting existing tools,
structures and procedures. Starting from the preparation of the 2010
Preliminary Draft Budget, Commission services have been instructed to
integrate, when appropriate, gender-related information in the Activity
Statements justifying the budget proposal. Related trainings have included
specific guidelines as to how to introduce gender-related information in the
budget proposal, namely as specific objectives and/or result indicators. As a
result, Commission services concerned have produced gender-specific information
and used it to justify the relevant budget proposals.

Considering
that this practice has been maintained during the preparation of 2011 and 2012
Draft Budgets, thus for a third year running, it can be concluded that gender
issues are now integrated in the budget process and this action can be
considered as completed.

Part III -
Special report N° 1/2010 on "Are simplified customs procedures for imports
effectively controlled?"

128.       (European Parliament, Court of
Auditors' special reports, SR §28) The EP expects the Commission to
complete its guidelines for ex-post audits without any further delay and at the
latest by the end of 2011

Commission's
response:

The
Commission is taking the requested action and continues to work on its
guidelines for ex-post audits, in particular via a Customs 2013 Project Group
on "Single Authorization for simplified procedures" with a view to
complete them by end of 2011.

129.       (European Parliament, Court of
Auditors' special reports, SR §29) The EP calls on the Commission to
monitor thoroughly the implementation of the framework by the Member States

Commission's
response:

Progress
will be monitored through increased monitoring visits in all Member States
which have started in 2010 and will end in 2013.

The
Commission will examine the implementation of this framework in the course of
its future inspections.

130.       (European Parliament, Court of
Auditors' special reports, SR §30) The EP calls on the Commission to
further investigate the effectiveness of controls for simplified procedures in
the Member States, and in particular to investigate progress in the conduct by
the Member States of ex-post audits, and to present the results of such an
investigation to Parliament by the end of 2011 in respect of at least half of
the Member States and by the end of 2012 in respect of the remainder of the
Member States

Commission's
response:

The
Commission is taking the requested action and intends to present the results to
the European Parliament within set deadlines.

131.       (European Parliament, Court of
Auditors' special reports, SR §32) The EP calls on the Commission to
provide Parliament with estimates of losses in Traditional Own Resources as a
result of the current ineffective controls for simplified procedures in the
Member States

Commission's
response:

The
overall materiality and financial impact of the errors detected by the Court in
the 9 audited Member States, around €900 000, was low. In addition, the final
financial impact may be even lower as the traders concerned may yet provide the
supporting documentation that was missing during the Court's audit (The
Commission's follow-up of these cases is ongoing.)

132.       (European Parliament, Court of
Auditors' special reports, SR §33) The EP calls on the Commission to
analyse the Dutch idea for pre-authorisation audits, which were found by the
Court of Auditors to fully correspond to the Court's control model, and to
recommend the use of that model in other Member States and to inform Parliament
on progress made by September 2011

Commission's
response:

The
Commission has taken the requested action. The Dutch approach to
pre-authorisation audits has been studied during the monitoring visit to the Netherlands, which took place from 27 to 29 October 2010. The monitoring visit and the
input provided by the Netherlands helped to clarify the main concepts of the
Dutch approach (a risk management system based on a client management approach,
a pre-authorisation audit, continuous monitoring actions, a list of risk
indicators, statistical sampling methods, monitoring of its own activities by
the economic operator and of its internal control measures by the customs
administration and an audit performed by third parties, post-clearance audits).
The salient ideas of the Dutch approach will be incorporated in the next
version of the guidelines on Simplified procedures/Single Authorisation for
Simplified procedures (revision 6). 
The Commission has informed the Parliament of its findings via a letter of 13
October 2011.

133.       (European Parliament, Court of
Auditors' special reports, SR §34) The EP urges the Commission to
investigate in more detail the issue of abuse of
"super-simplifications" (notification waivers) and to provide
Parliament with detailed figures on the frequency of super-simplifications per Member State by the end of the discharge procedure for 2009. The EP also calls on the
Commission to define in more detail the special circumstances under which
traders may benefit from the notification waivers

Commission's
response:

The
Commission in its letter of 5 May 2011 provided the Parliament with the
information on the number of customs authorisations for simplified procedures
with a notification waiver granted in the Member States.

Criteria for
the notification waiver will be drafted in the Simplified Procedures/Single
Authorisation for Simplified Procedures (SP/SASP) guidelines.

134.       (European Parliament, Court of
Auditors' special reports, SR §35) The EP calls on the Commission to
examine by February 2011 the cases of Belgium, France, Ireland, Sweden and
United Kingdom, where traders were unable to provide the requested customs
documentation in the framework of ex-post audits, and to inform Parliament of
actions taken by those Member States in order to remedy the situation before
the end of the discharge procedure for 2009

Commission's
response:

All the
findings observed by the Court in its report are currently being followed-up
under the Commission's' normal follow-up procedure and the Commission is
prepared to inform the Parliament of the outcome of this follow-up.

An interim
report was sent to the Parliament in April 2011.

135.       (European Parliament, Court of
Auditors' special reports, SR §36) The EP calls on the Commission to
inform Parliament as to the steps taken to remedy a coherent Union policy of
sanctions to be imposed by Member States on traders who act in breach of the
rules on the simplified procedures

Commission's
response:

In Article
21 of the Modernized Customs Code, sanctions are prescribed for operators that
do not comply with the rules. In order to avoid trade diversion and unequal
treatment, it would be desirable that the level of sanctions is equivalent in
all Member States.

The
Commission is currently analysing the situation. A project group has assessed
the current situation in the Member States of national customs penalty regimes
in the field of criminal and non criminal offences and penalties in customs
matters. It is expected to complement this work by conducting a study
("Study: Data collection and comparative analysis concerning certain
customs matters") and an in-depth analysis of the impact of the different
sanction regimes.

The
Commission will evaluate the need for action on the basis of both of these
documents. In order to anticipate a possible need for action it has included a
"Legislative proposal on the approximation of customs infringements and
penalties (2012)" in the table attached to the Action Plan for Stockholm Programme, under the title: "Developing a core of common minimum
rules".

Part IV -
Special report N° 2/2010 on "The effectiveness of the Design Studies and
Construction of New Infrastructures support schemes under the Sixth Framework
Programme for Research"

136.       (European Parliament, Court of
Auditors' special reports, SR §40) The EP calls on the Commission to
further clarify the objective of reaching a critical mass and the way it was promoted
for technological development related to infrastructures

Commission's
response:

In a
context of scientific global competitiveness, the necessary efforts in the
field of research infrastructures are beyond the capacities of individual
Member States. The actions of the Commission have therefore been focussed on
the integration of resources (existing and new) to allow attractiveness of Europe and its capacity to face the grand challenges.

This has
been achieved recently through e.g. the creation of a European network of
biobanks (BBMRI), the European contribution to understanding the oceans (e.g.
EURO-ARGO), the monitoring of the ageing of population (SHARE), as well as
support to large-scale facilities of global relevance (X-FEL, European
Spallation Source, FAIR).

137.       (European Parliament, Court of
Auditors' special reports, SR §42) The EP calls on the Commission to
clarify the terms "European dimension" and "European added
value" further, in a specific and measurable manner and in this context,
to clarify in which way the funds spent under the CNI scheme

Commission's
response:

The
"European dimension" of a project funded under the CNI scheme was
ensured by requesting a level of participation and interest beyond purely
national or bilateral co-operations.

The
"Work Programme" clearly stated that "European added value
should be demonstrated in terms of an improved attractiveness for, and/or
improved services to, the research community in Europe (e.g. in terms of a wider
accessibility of the proposed infrastructure, of a more advanced technology, of
a more flexible adaptability to interdisciplinary studies, of a better
connectivity to the research community)".

138.       (European Parliament, Court of
Auditors' special reports, SR §45) The EP notes that there is a need
for practical steps to be taken by the Commission to adequately administer the
complementarity aspect, by carrying out inter alia checks for double financing
or ineligible co-financing

Commission's
response:

Research
Funds (FP) and Structural Funds (SF) are used by the research infrastructure
stakeholders in a complementary manner. SFs are used for the construction and
upgrade of facilities whereas the EC research funds are used in the ex-ante
phase and/or during the operational phase.

Regular
meetings are organised between the Commission services to inform them about
projects recommended for funding. This process ensures necessary cross-checking
to avoid any possible double financing.

The FP7
financial guidelines raise awareness of the beneficiaries on the compatibility
of FP7 projects with other sources of EU funding.

Part V -
Special report N° 3/2010 on "Impact Assessments in the EU institutions: do
they support decision-making?"

139.       (European Parliament, Court of
Auditors' special reports, SR §51) The EP encourages the Commission
to establish measures aimed at enhancing the transparency of the IA planning
process and believes that the Commission should not only explain the reasons
why an IA is needed, but also make public the reasons behind any decisions not
to carry out an IA (in particular in cases where its Impact Assessment Board
has identified the need to carry out an IA)

Commission's
response:

The
Commission already performs as recommended by the European Parliament. The
Commission publishes Roadmaps for all its legislative proposals. In these
Roadmaps the responsible Commission services provide adequate arguments to
justify the need to perform an impact assessment or not. This is then subject
to further scrutiny by the Secretariat-General/Impact Assessment Board. If the
latter identifies the need to carry out an impact assessment, the services have
to comply.

140.       (European Parliament, Court of
Auditors' special reports, SR §52) The EP is of the opinion that the
IAs should cover all legislative initiatives, including simplification and
comitology measures and invites all the parties involved to redefine the scope
of the IAs during the next inter-institutional talks

Commission's
response:

All
legislative proposals with significant impacts are covered by the Impact
Assessment requirement, including simplification and comitology measures. For
reasons of efficient use of scarce resources a general obligation for all
proposals would not be proportionate, and the effort has to be focused where it
matters the most.

141.       (European Parliament, Court of
Auditors' special reports, SR §53) The EP urges the Commission to
involve stakeholders, not only in the preparatory work of the IAs, but also to
consult the interested parties on draft IA reports, and, following the approach
taken by some OECD countries, to make draft IAs public

Commission's
response:

The 2009
Impact Assessment guidelines stipulate that Commission services should
encourage stakeholders to examine roadmaps and give early feedback on the plans
for impact assessments. The new guidelines also introduced the requirement that
stakeholders should be able to comment on a clear problem definition,
subsidiarity analysis, description of the possible options and their impacts.
The Impact Assessment Board will continue to check systematically the quality
of the reporting of the results of the stakeholder consultation. The proactive
use of roadmaps available for all important Commission initiatives and the
strengthened requirements for consultation together provide for improved
transparency and stakeholder involvement. The Commission considers that under
these circumstances, a consultation on a draft version of the impact assessment
report is superfluous.

142.       (European Parliament, Court of
Auditors' special reports, SR §54) The EP encourages the Commission
to improve the planning of the IA process in order to provide sufficient time
for IAB scrutiny

Commission's
response:

The
Commission has already expressed its awareness that further efforts by the
Commission services are necessary to ensure proper planning and sufficient time
for the Impact Assessment Board scrutiny process. The 2009 impact assessment
guidelines have introduced new requirements on this. The guidelines also make
clear that sufficient time needs to be foreseen in case the Impact Assessment
Board asks for further work or for the revised impact assessment to be
resubmitted. In the communication on the working Methods of the Commission for
2010–14 it is explicitly highlighted that the planning of adoptions should take
full account of the need to complete the impact assessment process in good time
and that in principle the positive assessment of the Impact Assessment Board 
is required before an inter-service consultation can be launched.

143.       (European Parliament, Court of
Auditors' special reports, SR §56) The EP notes the critical
comments on the lengthy and technical nature of the IAs, as well as on the
complexity of language used and believes that improvement in those areas would
enhance the usefulness of the IAs

Commission's
response:

The
Guidelines require Commission services to present their Impact Assessments in
an accessible way to non-expert readers, to serve as an adequate support for
decision-making by the Institutions. This is subject of close scrutiny by the
Impact Assessment Board. All Impact Assessments are accompanied by a concise
Executive Summary in which the main issues of relevance in the impact
assessment are presented for a broader public. More technical background is
provided in Annexes that can also be accessed by interested parties.

144.       (European Parliament, Court of
Auditors' special reports, SR §57) The EP notes that the
independence of IAs as they are currently carried out is questionable due to
the fact that the members of the Commission's Impact Assessment Board (IAB),
are appointed by, and subject to the instructions of, the Commission President

Commission's
response:

The Impact
Assessment Board is empowered by the Commission President to carry out an
independent assessment of the quality of Commission impact assessments. It
receives no instructions related to the substance of the cases under its review
from the President.  The special report of the European Court of Auditors found
that the Impact Assessment Board is contributing to the quality of the
Commission's impact assessment.

145.       (European Parliament, Court of
Auditors' special reports, SR §59) The EP stresses that IAs should
not take place only before the adoption of a legislative text but should also
be carried out after its adoption in order to evaluate more accurately whether
the objectives of a law have actually been achieved and whether a legal act
should be amended or retained

Commission's
response:

The
Commission identified the need to carry out ex-post evaluations for legislation
in its communication on ‘Responding to strategic needs: reinforcing the use of
evaluation’ (SEC(2007) 213 of 21  February 2007). Since January 2009, the
Commission’s impact assessment system and evaluation system have been placed
together under the same "Better Regulation Directorate" of the
Secretariat-General to ensure that the strategic and operational synergies between
the two systems are fully exploited. In the political guidelines for the new
Commission of September 2009, President Barroso announced his intent to
intensify efforts on ex-post evaluation. The aim is to check whether the
Commission’s proposals deliver what they promise and to enable the Commission
to revise and correct them where they fail to work as expected. Links between
impact assessment and ex-post evaluations will be reinforced. The evaluation
should be a reality check for the previous impact assessment. Over time a full
ex-post evaluation will become a requirement for the revision of important
legislative acts.

Part VI -
Special report N° 4/2010 on "Is the design and management of the mobility
scheme of the Leonardo da Vinci Programme likely to lead to effective
results?"

146.       (European Parliament, Court of
Auditors' special reports, SR §64) The EP is concerned by the
Commission's inability to assess how the objectives are being met three years
into the programme

Commission's
response:

The
Commission's revised proposal was adopted by the LLP Committee at its meeting
of 17 June 2010. On this basis, the relevant data will be matched with the now
established indicators. The Commission will provide a first report on these indicators
to the Committee in the course of 2011.

147.       (European Parliament, Court of
Auditors' special reports, SR §65) The EP calls on the Commission to
inform them of the progress in establishing a new user-friendly and effective
partner-search tool which would address applicants' difficulties in finding
host partners in other countries

Commission's
response:

The
Commission partly accepts the request. The Commission discontinued its previous
partner finding database due to quality assurance problems. While alternative
solutions to partner search mechanisms are currently being analysed, the
Commission emphasises that the lack of a partner search database does not
interfere with the successful implementation of the programme, as the demand by
far exceeds the budget available to support Leonardo mobility projects.

No tool
will be developed for the current programme generation but the possibility will
be considered as part of the preparation of the new programme generation.

148.       (European Parliament, Court of
Auditors' special reports, SR §66) The EP calls on the Commission to
ensure correct assessment of applications by further developing the assessment
handbook for evaluators and by integrating, into its quality and impact
monitoring visits to participating countries assessment checks of applications,
should the analysis of the added value of such checks prove positive

Commission's
response:

The
Commission is working on further developing the assessment handbook for
evaluators in connection with the new on-line application and revised
assessment form. The review of the assessment handbook for evaluators of LdV
mobility projects (annexed to the Guide for National Agencies) will be concluded
in autumn 2011 and any necessary revisions introduced.

The
Commission will inform about the progress in implementing this recommendation
no later than end of June 2012.

149.       (European Parliament, Court of
Auditors' special reports, SR §67) The EP calls on the Commission to
establish a comprehensive system for the measurement of the impact of the
programme and to improve the system for reporting on the results and effects of
the programme and, in particular, to finalise the LLPLink software application
for reporting on impact measurement without further delay, and to keep
Parliament informed of progress in that respect

Commission's
response:

The
Commission accepts the request and will inform about the progress in
implementing this recommendation no later than end of June 2012.

150.       (European Parliament, Court of
Auditors' special reports, SR §68) The EP calls on the Commission to
address the weaknesses of controls identified in the Court of Auditors' special
report

Commission's
response:

The
Commission accepts this overall request which refers to individual requests for
which the expected completion date is December 2011 or December 2014.

Part VII -
Special report N° 5/2010 on "Implementation of the Leader approach for
rural development"

151.       (European Parliament, Court of
Auditors' special reports, SR §72) The EP invites the Commission and
the Member States to ensure that the Financial Regulation is fully applied by
members of the LAG's project assessment and decision making committees

Commission's
response:

The
Commission has taken the requested action.

The
implementing regulation (Commission Reg. (EC) No. 1974/2006 2006 of 15 December
2006 laying down detailed rules for the application of Council Regulation (EC)
No 1698/2005 on support for rural development by the European Agricultural Fund
for Rural Development (EAFRD)) has been amended and includes a new provision
asking for the application of appropriate rules to guarantee transparency and
to avoid situations of conflicts of interest with regard to the decision-making
process. The amendment of the regulation was adopted on 14 July 2011.

The
Commission also promotes good practice through the "Guide on the
application of the Leader axis" in the sub-chapter on the project
selection procedure. This guidance document has been recently updated and
presented to the Member States at the Rural Development Committee on 8 December
2010.

152.       (European Parliament, Court of
Auditors' special reports, SR §73) The EP calls on the Commission to
ensure a clear definition of the notion of "interest in a project" 
and takes the view that detailed minutes of all decision making meetings should
become the norm, to allay concerns about unfairness in project selection and to
reinforce transparency and neutrality in decision making

Commission's
response:

The
Commission has taken the requested action.

The
implementing regulation (Commission Reg. (EC) No. 1974/2006 2006 of 15 December
2006 laying down detailed rules for the application of Council Regulation (EC)
No 1698/2005 on support for rural development by the European Agricultural Fund
for Rural Development (EAFRD)) has been amended and includes a new provision
asking for the application of appropriate rules to guarantee transparency and
to avoid situations of conflicts of interest with regard to the decision-making
process. The amendment of the regulation was adopted on 14 July 2011.

The
Commission also promotes good practice through the "Guide on the
application of the Leader axis" in the sub-chapter on the project
selection procedure. This guidance document has been recently updated and
presented to the Member States at the Rural Development Committee on 8 December
2010.

153.       (European Parliament, Court of
Auditors' special reports, SR §74) The EP believes that, to ensure
the "value-added" element of Leader, the Commission should further
encourage LAGs to undertake outreach work to identify local actors that are
able to develop more strategic projects in areas, such as currently happens in
Mecklenburg-Vorpommern (Germany) and Ireland

Commission's
response:

The
requested action has been taken.

This
possibility already exists and is available to all Member States (support for
'animating the territory' (stimulating local interest)). It will be further
encouraged for the next programming period.

154.       (European Parliament, Court of
Auditors' special reports, SR §75) The EP calls on the Commission to
introduce, without delay, measures that increase the transparency of project
selection, using the examples of Mecklenburg-Vorpommern (Germany) and  Pays de
la Loire (France) and believes that a system under which LAGs publish minutes
of project selection meetings on their websites should be introduced

Commission's
response:

The
Commission has taken the requested action.

The
implementing regulation (Commission Reg. (EC) No. 1974/2006 2006 of 15 December
2006 laying down detailed rules for the application of Council Regulation (EC)
No 1698/2005 on support for rural development by the European Agricultural Fund
for Rural Development (EAFRD)) has been amended and includes a new provision
asking for the application of appropriate rules to guarantee transparency and
to avoid situations of conflicts of interest with regard to the decision-making
process. The amendment of the regulation was adopted on 14 July 2011.

The
Commission also promotes good practice through the "Guide on the
application of the Leader axis" in the sub-chapter on the project
selection procedure. This guidance document has been recently updated and
presented to the Member States at the Rural Development Committee on 8 December
2010.

Part VIII -
Special report N° 6/2010 on "Has the reform of the sugar market achieved
its main objectives?"

155.       (European Parliament, Court of
Auditors' special reports, SR §79) The EP asks the Commission why
the big sugar producers who have renounced their quotas by accepting
compensation from the restructuring fund as a financial incentive to leave the
sector were not asked to provide information on the way that they used that
compensation

Commission's
response:

The
requested action has been taken.

The
principle of the reform was to leave the final decisions for keeping, reducing
or abandoning production, against the background of a future characterised by
substantially lower prices, to the individual sugar companies.

Financial
compensation was provided for companies that voluntarily decided to surrender
quota. Against this background, information on the current profitability and
prospects of every individual sugar producer in the EU was not relevant for the
purpose of implementing the reform.

Moreover,
such data would concern confidential aspects of private business, and
comparisons between companies based thereon would not be exempt from
controversy.

As regards
the effects of the reform, the gains in competitiveness of the EU sugar
industry are incontestable. EU sugar producers are now operating in an
environment with substantially lower institutional prices and production is
more concentrated in high profitability regions.

156.       (European Parliament, Court of
Auditors' special reports, SR §82) The EP calls on the Commission to
examine whether funds provided for the restructuring scheme were used for
relocation of some Union factories to third countries that receive preferential
treatment from the Union

Commission's
response:

The
Commission will not be taking the requested action.

The
purpose of the restructuring aid was to help those companies that did not
consider themselves competitive in the future to close down their factories
adequately. This includes not only the dismantling of industrial facilities but
also the redeployment of the workforce and the environmental restoration of the
site.

To receive
restructuring aid the operator must present a restructuring plan containing
detailed, concrete measures whose implementation is enforced by national
authorities. Only companies that have satisfactorily implemented these measures
are entitled to receive payments.

It is
nevertheless not the intention of the Commission to restrict the ability of EU
sugar companies to invest within the EU or everywhere else.

157.       (European Parliament, Court of
Auditors' special reports, SR §83) The EP queries whether the Commission
took any measures or initiatives during, or within the context of, the sugar
reform in order to ensure that reductions in the price of bulk sugar would be
passed on to the final consumer

Commission's
response:

The
Commission is taking the requested action.

The
Commission highlights that it was precisely in the wake of the 2006 reform that
a sugar price monitoring system was put in place, providing the market with
enhanced transparency.

In order
to shed more light on this issue, the Commission will shortly launch a study on
price transmission in the sugar sector. The procurement procedure is now under
preparation and a contract for the study is expected to be awarded by the end
of 2011.

158.       (European Parliament, Court of
Auditors' special reports, SR §86) The EP calls on the Commission to
give an indication of the impact of the diversification aid on the regions
affected

Commission's
response:

The
Commission will be taking the requested action.

The
Evaluation of CAP measures applied to the sugar sector should provide
information on the impact of the diversification aid in the regions affected by
restructuring.

The
publication of the evaluation is foreseen for the first quarter of 2012.

159.       (European Parliament, Court of
Auditors' special reports, SR §87) The Commission should propose a
series of measures to remove the rigidities and constraints in the current
quota system which affect adversely the competitiveness of growers and
producers

Commission's
response:

The
Commission is taking the requested action.

In its
Communication on the CAP towards 2020 (COM(2010) 672 final), the Commission
notes that the current regime expires by 2014/15 and, in order to bring about
increased efficiency, undertakes to examine various options for the future,
including a non-disruptive end of the quotas at the date to be defined. As
co-legislator, the European Parliament will be fully involved in this process.

Part IX -
Special report N° 8/2010 on "Improving transport performance on
Trans-European rail axes: Have EU rail infrastructure investments been
effective?"

160.       (European Parliament, Court of
Auditors' special reports, SR §90) The EP calls on the Commission to
determine the definition of Priority Projects according to demonstrable needs
in terms of existing and anticipated rail services

Commission's
response:

The
Commission is taking the requested action. It agrees that the definition of the
Priority Projects has not been based on an analysis of the actual and
anticipated traffic flows. It is important to note, however, that while such
studies have been carried out, both for individual projects and for the
network, they have yet to lead to conclusive results and so could not be used
as such. The Commission considers that providing a definitive description of
the main trans-European rail axes is likely to be particularly difficult, as
they are in a constant state of flux depending on migration, trade patterns and
the geopolitical context. The Commission, however, also shares the view that
the definition of the main network (core and comprehensive) should be based on
objective criteria. Therefore, in the future, Priority Projects should continue
to be based on political agreement between the Council and European Parliament,
but relying even more on the best available evidence (e.g. the Trans-European
Network for Transports Technical Database – TENtec - that intends to establish
a common working framework for the Commission, the TEN-T Executive Agency and
the Member States, as well as provides a common knowledge base for the TEN-T
network). The TEN-T revision includes an examination of the methodology for
defining the future TEN-T network. Moreover, when planning the future TEN-T
network, all relevant aspects would be taken into account: current and
projected traffic flows, economic and social cohesion aspects. The European
infrastructure policy should be driven by actual and future transport service
needs and support the emergence of innovative infrastructure development. On 19
October 2011, the Commission will adopt the proposal for new EU guidelines for
the TEN-T.

161.       (European Parliament, Court of
Auditors' special reports, SR §91) The EP calls on the Commission to
take necessary action in order to adapt the rail infrastructure to cater for
trans-European services while creating missing links at cross-border locations,
removing bottlenecks on important junctions and replacing or upgrading the old
rail infrastructure

Commission's
response:

The
Commission is taking the requested action. It is constantly working towards
this goal. It recognises that major discrepancies remain, especially between
Western and Eastern Member States, and bottlenecks and missing links will have
to be overcome in order to accomplish an efficient rail network at EU level.
The ongoing TEN-T policy revision is an opportunity for unifying the continent
by developing effective links so that all Member States enjoy full access to
the internal market. The future network will include projects which offer the
highest European added value – removing bottlenecks, tackling the missing links
between national networks – as well as innovative and intelligent projects.

The
Commission also concentrated in its yearly reporting on the bottlenecks and
missing links (latest report: Priority Projects 2010 – A Detailed Analysis,
available online at:

http://ec.europa.eu/transport/infrastructure/european_coordinators/doc/progress_report_longer_version_18jan2011_final2.pdf.

The
completion date is 2030.

162.       (European Parliament, Court of
Auditors' special reports, SR §92) The Commission should further
improve cooperation with the Member States in order for legislative measures
regarding rail safety and passenger rights, market opening and interoperability
at the Union level to be successfully transposed into national legislation

Commission's
response:

The
requested action has been taken. The Commission is already co-operating with
the Member States in order that legislative measures regarding rail safety and
passenger rights, market opening and interoperability at the Union level are
successfully transposed into national legislation.

163.       (European Parliament, Court of
Auditors' special reports, SR §94) The EP urges the Commission to
consult external rail infrastructure experts in order to better evaluate the
technical aspects of proposed projects prior to their approval under the
Cohesion Fund

Commission's
response:

The
requested action has been taken. In the 2007-2013 programming period, the
Commission has established JASPERS, together with the EIB, which provides
technical assistance to the new Member States in order to contribute to the
improvement of the quality of projects at an early stage. It also has contracts
with outside experts for technical advice in the appraisal of major projects.

164.       (European Parliament, Court of
Auditors' special reports, SR §95) The EP stresses the need to
promote better preparation of projects in order to reduce the risk of cost
escalations of future projects influenced by unforeseeable factors, such as
unexpectedly difficult geographical conditions, and environmental protection
requirements

Commission's
response:

The
requested action has been taken. The Commission agrees on the benefits of
thorough and detailed project preparation. The Commission would like to
underline that, according to the new model of financing decisions for the TEN-T
budget line for the period 2007-2013, the beneficiaries and project promoters
have had to submit a Strategic Action Plan (SAP) detailing how the project will
be implemented, including in terms of project planning, the risk management
plan and project governance since 2009. The TEN-T Executive Agency has already
developed guidelines on this issue and is working on the exchange of good
practices between beneficiaries.

165.       (European Parliament, Court of
Auditors' special reports, SR §96) The EP asks the Commission to
cooperate more closely with the Member States in order to make the necessary
improvements in future planning in order to avoid delays before infrastructure
becomes available for use

Commission's
response:

The
requested action has been taken. The Member States’ firm commitment is
essential to deliver the key Priority Projects and they have been at the centre
of the European Union's efforts - both financially and in terms of
coordination. The Commission is already cooperating closely with Member States
to make the necessary improvements in future planning and in particular,
identify mature projects which can be implemented without delays. Thus, Member
States are associated and their opinions taken into account at different
stages. The Commission counts on the strong support from Member States in the
policy review process – the actual network planning, the drafting of the
Guidelines and the designing of the implementation tools. The Commission MFF
proposal presented on 29 June 2011 contains a detailed list of projects,
elaborated in close cooperation with Member states.

166.       (European Parliament, Court of
Auditors' special reports, SR §98) The EP asks the Commission to
better assist the Member States in making progress to alleviate complications
which would facilitate improvements in developing trans-European transport
links and points out that the Union needs to play an important role in
promoting the interoperability of national networks along with efficient
financial support

Commission's
response:

The
requested action has been taken. The Commission is already assisting Member
States but acknowledges that progress towards interoperability is slow. Radical
harmonisation is not possible, given that rail infrastructure and rolling stock
have long lifetimes and the sector's investment costs need to remain realistic.

Nevertheless,
the amount of interoperable infrastructure and rolling stock is increasing and
the number of derogations requested by Member States from the Commission's
implementing legislation setting out Technical Specifications for
Interoperability (TSI) is limited. This shows that the existing TSIs are being
implemented successfully. This will benefit both TEN-T and Cohesion policy
funded projects.

The
Commission will continue to concentrate on the implementation of TSIs that will
deliver significant benefits in the short and medium term, such as telematics
applications in signalling, freight and passenger transport. It has also set up
corridor organisations to identify and tackle all issues that hamper the
competitiveness of rail freight along axes.

167.       (European Parliament, Court of
Auditors' special reports, SR §99) The EP calls on the Commission to
maintain the role currently played by the coordinators and to evaluate the
possibility of appointing more coordinators in the sections of Priority
Projects that face significant complications

Commission's
response:

The
requested action has been taken. The Commission will maintain the existing
coordinators and appointed three new ones on 8 June 2010, thus bringing their
number to nine.

168.       (European Parliament, Court of
Auditors' special reports, SR §100) The EP Is of the opinion that
the responsibilities of the TEN-T Executive Agency need to be extended in terms
of an increase of effective control and the evaluation procedure in respect of
the co-financing of Priority Projects

Commission's
response:

The
Commission is taking the requested action. It shares the Court's opinion that
the TEN-T Executive Agency’s delegation of powers has to meet the needs of an
efficiently and effectively implemented TEN-T budget line. In January 2009
TEN-T EA became fully responsible for the management of all open TEN-T projects
from both the 2000-2006 and 2007-2013 Financial Perspectives. In 2011 a
comprehensive review and evaluation of the Agency’s activities will be
undertaken by the Commission. The results of the evaluation of the TEN-T EA are
expected mid 2012.

169.       (European Parliament, Court of
Auditors' special reports, SR §101) The EP asks to improve the
concentration of TEN-T co-financing at cross-border in order to achieve the
elimination of the bottlenecks and the filling-in of missing links

Commission's
response:

The
requested action has been taken. This has already been taken on board since
June 2009 when the calls were launched. The Commission carried-out a mid-term
review of the TEN-T programme during the first half of 2011. The review
confirmed the concentration of cross-border and bottlenecks (60% of the MAP).
The Mid-term review concluded that the present policy should be continued and
reinforced.

170.       (European Parliament, Court of
Auditors' special reports, SR §102) The EP emphasises that all the
remaining problems and issues need to be evaluated while preparing for the
review of the TEN-T guidelines

Commission's
response:

The
Commission is taking the requested action. It agrees that the review of the
TEN-T guidelines is the right moment to renew the trans-European network policy
and the right moment to take stock of the work done and pave the way ahead
taking into account all the remaining problems. The core network will identify
projects that offer the highest European added value – removing bottlenecks and
tacking missing links – both along major axis, at national borders and at the
interconnection of modes – as well as intelligent and innovative projects.

171.       (European Parliament, Court of
Auditors' special reports, SR §103) The EP calls on the Commission
to review TEN-T policy in order to meet future challenges related to the
climate change objectives, further economic growth, and social and economic
cohesion

Commission's
response:

The
Commission is taking the requested action. In the TEN-T policy revision, it will
fully take into account all relevant aspects related to current and future
economic growth, economic and social cohesion and climate change objectives.

Part X -
Special report N° 9/2010 on "Is EU Structural Measures spending on the
supply of water for domestic consumption used to best effect?"

172.       (European Parliament, Court of
Auditors' special reports, SR §106) The EP invites the Commission to
further improve the use of guidance and checklists by providing clearer
criteria for assessing the grant applications in order to enhance the
effectiveness and consistency of the procedures and their results, as well as
to ensure proper follow-up action in cases of non-provision of required
information or action

Commission's
response:

The
Commission is taking the recommended action. It intends to take measures to
that effect before 31 March 2012.

For the
period 2007-13, the Commission has streamlined the internal appraisal of major
projects (projects in this sector above 50 million €), and without fulfilling
minimum requirements, projects cannot be co-financed. This is being addressed
through the use of checklists and specific training. The internal checklists
have also been made available to the relevant authorities in the Member States.

The EU
JASPERS facility provides technical assistance to the new Member States when
they are preparing major projects for the submission to the Commission.

Part XI -
Special report N° 10/2010 on "Specific measures for agriculture in favour
of the outermost regions of the Union and the smaller Aegean islands"

173.       (European Parliament, Court of
Auditors' special reports, §113) The EP requests that when measures
are framed at national level, due account must be taken of sustainable
objectives with a view to ruling out any overemphasis on superficial measures

Commission's
response:

The
requested action has been taken.

The
Commission, in the context of the report on the impact of the POSEI reform
adopted in September 2010, has recommended Member States to adopt a more
strategic approach when defining and proposing modifications to their
programmes. Due priority should be given to measures which would have a more
structural, long-lasting impact in the concerned regions.

174.       (European Parliament, Court of
Auditors' special reports, §113) The EP calls for sustainable
approaches to be developed with a view to guaranteeing the future viability of
farming in the regions concerned

Commission's
response:

The
requested action has been taken.

The
Commission, in the context of the report on the impact of the POSEI reform
adopted in September 2010, has recommended Member States to adopt a more
strategic approach when defining and proposing modifications to their
programmes. Due priority should be given to measures which would have a more
structural, long-lasting impact in the concerned regions.

175.       (European Parliament, Court of
Auditors' special reports, SR §115) The EP echoes the Court of
Auditors' in recommending a reduction in the period between assessments from
five years to one year, regardless of the annual implementation reports
submitted by the Member States to the Commission

Commission's
response:

The
Commission will not be taking the requested action.

The
Commission insists that the nature of the POSEI and smaller Aegean islands
programmes does not allow an annual in-depth global evaluation, which is
regularly carried out on a 5-years basis, as requested by the basic
regulations.

However,
the common indicators proposed by the Commission to the Member States will make
for more effective annual monitoring of programme performance. The first annual
reports on the implementation of the POSEI programs with the first data
referred to the common indicators requested by the Commission are expected from
the MS by 31 July 2011 (30 June from GR). At that point, the Commission's
services will be able to provide more coherent data on the progress of the
performance of the POSEI and PIME programs.

176.       (European Parliament, Court of
Auditors' special reports, §115) The EP requests to establish an
information management system to monitor the data collected by the Member
States on the basis of representative control indicators, making for a more
effective and more sustainable use of financial aid

Commission's
response:

The
requested action has been taken.

The
Commission has proposed common indicators to the Member States that will allow
a more effective annual monitoring of the programme performance. The first
annual reports on the implementation of the POSEI programs with the first data
referred to the common indicators requested by the Commission are expected from
the MS by 31 July 2011 (30 June from GR). At that point, the Commission's
services will be able to provide more coherent data on the progress of the
performance of the POSEI and PIME programs.

177.       (European Parliament, Court of
Auditors' special reports, §116) Calls on the Commission to
cooperate more effectively with the Member States

Commission's
response:

The
requested action has been taken.

The
Commission considers that the cooperation with Member States is already very
close and fruitful. Efforts will be maintained and increasingly focused in
assisting Member States improving the programmes' efficiency.

European
Development Funds

178.       (European Parliament, European
Development Funds, §5) The EP recalls the Commission's commitment to
ensuring that a benchmark of 20 % of its allocated assistance under the
Development Cooperation Instrument (DCI) is dedicated to basic and secondary
education and basic health and calls for reporting against the same benchmark
to be provided for the EDFs. The EP calls on the Commission to prioritise
support to strengthen health systems by focusing especially on targeting the
poorest people, to improve the quality of learning and to help establish a
policy framework which favours the poor and which is gender responsive; calls
on the Commission to take full account of the recommendations by the Court of
Auditors as formulated in its Special Reports No 10/2008 and 12/2010; calls on
the Commission to increase this share to 25 % in the future; urges the
Commission to place greater emphasis on maternal health and stresses the
importance of education and awareness of sexual and reproductive health as an
integral part of the women's health agenda

Commission's
response:

The
Commissioner already sent the related statistics demonstrating the fulfilment
of the 20% of country level programmed aid under the DCI for basic and
secondary education and basic health to the European Parliament (Note CAB
11/SS/tm devco.g.8(2011)473250 dated 03/05/2011) to the Chair of the Committee
on Development. Health systems strengthening and access by the poor through an
equity- and rights based approach are enshrined in the Commission's Global
Health Communication and are a regular feature of the Commission's programme
design, sector policy dialogue and EU coordination activities. The Commission
has taken full account of the reports of the European Court of Auditors (ECA)
on health and education and has shared its comments with the ECA and the EP. 
The quality of learning and issues of gender equality have been extensively
covered in the Commission's reply to the ECA SR 12/2010.  The Commission fully
agrees with the importance of education and awareness of sexual and
reproductive health as an integral part of the women's health agenda. As such
it is not only part of its support to health services and health systems
strengthening, but also to gender equality and women empowerment and to the
protection of women and girls against any form of violence as also covered in
the EU Gender Action Plan.

179.       (European Parliament, European
Development Funds, §7) The EP calls on the Commission to make
merit-based use of local- and European-based NGOs, in particular in cases where
the management of projects and programmes by NGOs and international
organisations (Multi-Donor Trust Funds) is more efficient and cost-effective
than management by the Commission and where their activity generates projects
that remain sustainable after the financial support has expired. The EP urges
the Commission to provide Parliament with clear information on the composition
of NGO's own resources for specific projects which are partly financed by the
EDF and by the NGOs themselves

Commission's
response:

The EP has
been always kept amply informed by the Commission about the EDF financing to
local and European-based NGOs. EU support to NGOs is as a general rule provided
through calls for proposals. This is a very competitive process based on
transparent procedures which allows the selection of the best projects and is
thus by definition based on merit. Sustainability aspects are always part of
the project assessment done by the evaluation committee. As for the financial
contribution from the NGO to the selected project, this can be provided through
own resources, private funds or other public funds outside the EDF or the EC
budget. It is the responsibility of the NGO to demonstrate the availability of
the co-financing.

180.       (European Parliament, European
Development Funds, §10) The EP underlines that the Commission's
follow-up of observations made by the Court of Auditors in a number of cases is
inadequate and calls on the Commission to inform Parliament's competent
committees on the actions it has taken to eliminate the shortcomings as
mentioned by the Court of Auditors

Commission's
response:

The
Commission gives the greatest priority to the follow-up of observations made by
the Court of Auditors. All key actions taken by the Commission in relation to
the follow-up of the Court of Auditors' recommendations for the EDF are
published in the first semester of year N+1 in the EuropeAid Annual Activity
Report which is publicly available on the Commission's Europa website
(http://ec.europa.eu/atwork/synthesis/aar/index_en.htm)

181.       (European Parliament, European
Development Funds, §11) The EP urges the Commission to pursue
energetically and to broaden existing training programmes for staff working in
Delegations and in the offices of national authorising officers

Commission's
response:

The EDF
trainings include 10 sessions per year (5 EN and 5 FR) for 25/27 persons per
session, and also 15 sessions per year for national and regional authorising
officers (each session also for 25/27 persons). Since the signature of the
contract in 2009 and until end 2011, 33 of those authorising officers will have
received the training. Have also been organised: regional trainings on financial
and contractual procedures, CRIS-EDF trainings in the delegations and a seminar
in Brussels in March 2011 for the finance, contract and audit sectors following
the revision of the Cotonou agreements.

182.       (European Parliament, European
Development Funds, §13 and §14) The Parliament notes the Court of
Auditors' remarks relating to an understatement of the amount of guarantees
received in respect of pre-financing and to an overstatement of the amount of
retention guarantees disclosed in the notes to the financial statements and
calls on the Commission to remedy these shortcomings without delay. The EP
calls on the Commission to explain on a case-by-case basis the reasons for
these under-and overstatements.

Commission's
response:

The
Court's observation regarding the understatement of the ongoing value of
pre-financing guarantees was based on a single error noted in a population of
39 contracts. One guarantee of € 3.5 million was not recorded in the accounting
system. Similarly, the Court's observation regarding the retention guarantees
was based on a single error identified in a sample of 10 contracts. The error
identified was a guarantee which had expired but which was still recorded in
the accounting system. The Authorising Officer has recorded the necessary
corrections in 2010. The Commission notes that neither of these two
observations has any impact on the net assets of the EDF, but only on the
disclosures in the Annual Accounts. Reinforced accounting quality controls
meant to identify and correct under- and overstatement of guarantees are being
carried since 2010.

183.       (European Parliament, European
Development Funds, §19) The EP calls on the Commission to enhance
ex-ante controls to prevent this type of error and possible losses as a result
of non-compliance with the bank guarantee rules

Commission's
response:

The
Financial Regulation (FR), including the rules on bank guarantees are at
present under revision. In anticipation thereof, DG DEVCO has already set up a
working group on the rules on bank guarantees with the aim of simplifying them.
Commission services will pay particular attention to the issue in cases where
contract amendments imply also adjustments of the amounts of bank guarantees.

184.       (European Parliament, European
Development Funds, §20) The EP invites EuropeAid to strengthen its
efforts in the areas of financial procedures and controls of implementing
organisations in future. The EP recalls also the recommendations of the Court
of Auditors that EuropeAid should continue its efforts to ensure that the
Delegations record data in the CRIS Audit in a comprehensive and timely manner

Commission's
response:

EuropeAid
has published (at the end of 2010) a 'Financial Management Toolkit'
specifically written to help implementing organisations strengthen their
financial management of EU funds. Specific actions have also been taken to
improve the comprehensive and timely input of data into CRIS (including the
audit module) including through the introduction of a CRIS/Web based reporting
tool to replace traditional (external assistance management) reports in July
2011.

185.       (European Parliament, European
Development Funds, §21) The EP calls on the Commission to address
without delays the Court of Auditors' finding that the monitoring and
supervision by Delegations is only partially effective. It deplores the lack of
capacity of most NAOs in beneficiary countries, which results in poorly
documented and ineffective checks, as well as the shortcomings in the financial
procedures and controls instituted by implementing organisations and
supervisors; shares the Court of Auditors' view that Delegations are subject to
resource constraints which often limit their capacity to perform certain
activities

Commission's
response:

EuropeAid
has published (at the end of 2010) a 'Financial Management Toolkit'
specifically written to help implementing organisations strengthen their
financial management of EU funds. In addition, the numerous training sessions
organised for national and regional authorising officers, specific training on
contractual and financial procedures, training in the handling of the CRIS data
base and a specific seminar for finance, contract and audit sectors in
delegations in March 2011 should all contribute to a better handling of
procedures in delegations. The new electronic standard reporting tool for the
delegations' EAMR (external assistance management reports) should also improve
consistency in procedures.

186.       (European Parliament, European
Development Funds, §22) The EP stresses its concern at the lack of
complementarity between the Commission's regional and national cooperation
strategies and emphasises that bringing regional and national strategies in
line with one another is essential to increase the effectiveness of the aid
provided

Commission's
response:

The
Commission has already taken steps to further improve coherence and consistency
between regional and national strategies, in particular through regional
seminars. Complementarity will be a key element in the mid-term reviews of the
10th EDF national strategies that are taking place in 2011, in which special
attention will be given to ensuring that the regional integration objectives
supported by the Regional Indicative Programmes (RIP) will be integrated in the
analysis of the National Indicative Programmes (NIP).

187.       (European Parliament, European
Development Funds, §23) The EP urges the Commission, during the
mid-term review of the regional strategies foreseen for the first half of 2011,
to take account of the regional cooperation situation and to pay special
attention to the possibility of revising the amounts allocated

Commission's
response:

The Mid
Term Review will include a review of the progress and problems in
implementation and lessons learned with a realistic assessment of what can be
implemented in the remaining period under the 10th EDF. In addition, the
specific objectives and policy dialogue in the regional context will be
considered and the strategic goals to be achieved with financial support at
regional level will be determined. Based on the outcome of this assessment,
different changes may be made to the Regional Indicative Programmes, either
related to the amounts of the regional envelopes (revising the global amount or
reallocation among focal sectors) or related to the nature of the financial
assistance to a region (revising priorities in intervention areas).

188.       (European Parliament, European
Development Funds, §26) As regards all issues addressed by the ECA
in its Special Report 18/2009, the EP asks the Commission to inform Parliament
about the measures being taken following the requests formulated by Parliament
in its resolution of 5 May 2010 accompanying its Decision on discharge to the
Seventh, Eighth, Ninth and 10th EDFs, before the start of the discharge
procedure 2010. The EP would also welcome a complete overview showing which of
these measures have been implemented effectively in the regions concerned

Commission's
response:

The
Commission has provided elaborate replies to the comments and recommendations
by the CoA. Several steps and actions were undertaken to make improvements in
specific areas identified and to take into account the accepted recommendations. 
The full overview of measures being taken following requests by Parliament can
be found in the answers to the recommendations issued by the European Court of
Auditors in RAD.

189.       (European Parliament, European
Development Funds, §29) The EP calls on the Commission to step up
capacity-building for East African and West African regional economic
organisations and their institutions, including support for national
parliaments and local civil society, and to encourage convergence between
regional blocs with a view to eliminating overlapping membership over time,
whilst taking care to respect partner countries' ownership of the process

Commission's
response:

The 10th
EDF regional integration programmes that are under preparation all include a
comprehensive capacity building component and a mechanism for better
coordination between the Regional Organisations within the same region and with
the States of the Region.

190.       (European Parliament, European
Development Funds, §30) The EP calls on the Commission and the
European External Action Service to allocate more resources in order to enable
Union Delegations to manage regional integration processes more effectively

Commission's
response:

The
Commission is aware of the need for more effective management and coordination
instruments: redeployment and reinforcement of staff have been implemented but
also specific operational guidelines have been developed and issued for a more
effective management and coordination of regional programmes.

191.       (European Parliament, European
Development Funds, §32) The EP insists that smaller states' fund
allocation, especially for the least-developed countries, should be more
focused on sustainable economic development, such as through wealth creation
mechanisms, so as to reduce the dependency on regional economic 'giants', such
as Nigeria in West Africa. The EP calls on the Commission to continue its
funding for regional programmes, otherwise known as Intra-ACP Programmes, which
cover several or all countries in a particular region

Commission's
response:

The
Commission agrees with the EP's call for putting emphasis in its cooperation
with LDCs on "wealth creation". The EU supports the existing agendas
for regional economic integration in the ACP region with the aim of creating
regional markets. Such regional markets will increase competition and
efficiency, and attract more investment. Equally, regional markets will
facilitate the integration of the ACP economy into the global market. The
Economic Partnership Agreements (EPA) between the EU and the ACP regions will
contribute to this process. The existing regional programmes regularly cover a
wide range of activities, including political and security related aspects, but
they also address economic and trade issues. In the case of West Africa the
regional programme is to a large extent designed to support the implementation
of the future EPA and to allow the region to address adaptation and adjustment
needs, and to draw maximum benefit from the trade liberalisation. The
Commission continues indeed to implement the Intra-ACP cooperation under the
10th EDF (2008-2013) with a financial envelope of EUR 2700 million.

192.       (European Parliament, European
Development Funds, §33) The EP asks the Commission to explain what
the policy in the past was as regards accrued interest and, if necessary, to
make proposals to amend the regulation in force without delay in line with the
principle that it should only be used for expenditure for projects

Commission's
response:

The
internal agreement stipulates in Article 1.6 that the interests generated by
the EDF funds have to be used in conformity with Article 6 of the same internal
agreement. That article defines the administrative expenditure connected with
putting in place the EDF by the Commission. It is specified that these charges
also include the expenditure relating to administrative support in the
headquarters and in delegations for actions in the framework of the ACP-EU
partnership and the association decision, not covered by the core tasks of the
European Public service.

This was
already the case for previous EDFs.

The
Commission confirms that in conformity with this article, no permanent staff
has been financed by the interests. This article is however the legal basis to
finance non permanent staff (contractual agents, local agents and interim
staff) at headquarters and in the delegations.

On 5
decisions already taken for the 10th EDF, 3 include charges relating to staff
(5 persons in total). The 2 decisions that are being finalised do not contain
charges relating to staff.

193.       (European Parliament, European
Development Funds, §34) The EP asks the Commission to provide
information concerning those cases in which the goals set for EU budget support
were accomplished and in which recipient countries' specific problems were
encountered

Commission's
response:

The
Commission has strengthened its reporting on budget support with specific
country fiches in the context of the 2010 Annual Report on External Assistance.
Those reports include information on results achieved and on difficulties
encountered.

194.       (European Parliament, European
Development Funds, §36) The EP calls on the Commission to continue
its efforts to substantiate its decisions concerning the eligibility of budget
support and to ensure that all financing agreements provide a comprehensive and
clear basis for the assessment of compliance with payment conditions

Commission's
response:

As noted
by the European Court of Auditors in the 2010 EDF discharge, the Commission has
made further progress towards a structured and formalised assessment of
countries' eligibility for budget support, noting great improvement for
commitments in the framework of the 10th EDF.

195.       (European Parliament, European
Development Funds, §37) As regards budget support payments, the EP
calls on the Commission to intensify audits and supervisory and control systems
and to monitor and report back on the extent to which these criteria are being
met, in line with the provisions of Article 25(1)(b) Regulation (EC) No
1905/2006

Commission's
response:

The
Commission scrutinises rigorously the disbursement conditions of each payment
file before taking any disbursement decision. A new format for Delegation’s
Public Finance Management Annual Monitoring Reports, including a new assessment
scheme for PFM reform progress was introduced in June 2010. The comparison of
achievements with clear and realistic priority objectives for the short (next
12 months) and medium term (next three years) by the recipient government
promotes structured and formalised assessment. It should be noted that
disbursements can be withheld until all conditions have been met. In 2010 alone
several budget support disbursements were withheld when progress towards
objectives had been considered insufficient and conditions remained unmet. Once
disbursed the EC budget support funds become part of the partner country's
global resources or budget and are used in accordance with partner countries'
public finance management systems. The country's authorities and more
specifically their Supreme Audit Institutions are responsible for the
supervision, control and auditing of their public funds and accounts. The
Commission is supporting those institutions as part of the public finance
management reforms efforts.

196.       (European Parliament, European
Development Funds, §40) The EP expects the Commission to strengthen
the monitoring and annual reporting on the compliance with the eligibility
criteria; recalls that capacity building projects within the scope of budgetary
support operations are subject to the same supervisory and control system as
any other project, which includes audits

Commission's
response:

The
Commission scrutinises rigorously the disbursement conditions of each payment
file before taking any disbursement decision. A new format for Delegation’s
Public Finance Management Annual Monitoring Reports, including a new assessment
scheme for PFM reform progress was introduced in June 2010. The comparison of achievements
with clear and realistic priority objectives for the short (next 12 months) and
medium term (next three years) by the recipient government promotes structured
and formalised assessment. The disbursements can be withheld until all
conditions have been met. In 2010 alone several budget support disbursements
were withheld when progress towards objectives had been considered insufficient
and conditions remained unmet. Audits of capacity building projects are
undertaken as with other projects.

197.       (European Parliament, European
Development Funds, §42) The EP urges the Commission to evaluate the
budget support payments with even greater rigour and to tighten up its payment
procedures from now on

Commission's
response:

The
Commission scrutinises rigorously the disbursement conditions of each payment
file before taking any disbursement decision. A new format for Delegation’s
Public Finance Management Annual Monitoring Reports, including a new assessment
scheme for PFM reform progress was introduced in June 2010. The disbursements
can be withheld until all conditions have been met. In 2010 alone several
budget support disbursements were withheld when progress towards objectives had
been considered insufficient and conditions remained unmet.

198.       (European Parliament, European
Development Funds, §43) The EP calls on the Commission to ensure
that the specific conditions for performance-based variable tranches clearly
specify the indicators, targets, calculation methods and verification sources
and that Delegations' reports provide a structured and formalised demonstration
of public finance management progress

Commission's
response:

The
Commission scrutinises rigorously the disbursement conditions of each payment
file before taking any disbursement decision. A new format for Delegation’s
Public Finance Management Annual Monitoring Reports, including a new assessment
scheme for PFM reform progress was introduced in June 2010 providing the format
for a structured assessment of PFM reforms. All 10th EDF Budget Support
Financing Agreements audited in 2010 by the European Court of Auditors specify
the indicators, targets, calculation methods and verification sources in a
clear and unambiguous manner.

199.       (European Parliament, European
Development Funds, §44) The EP calls on the Commission to take all
necessary measures in order to combat corruption in the beneficiary states

Commission's
response:

At country
level, the Commission will continue to support specific interventions in key
governance related areas which are essential for fighting corruption (support
to oversight, control and anti-corruption policies and institutions, justice
and security reform, democratisation, public sector reform, public finance
management reform). The Commission also intends to further mainstream
governance and anti-corruption in key areas of its cooperation, such as health,
water, education and infrastructures, to ensure that governance is taken into
account in all programmes. It is currently updating and consolidating the core
operational guidance (Project Cycle Management, Sector Policy Support
Programmes and Budget Support) into one overall set of guidance for Project and
Programme Cycle Management (PPCM). This guidance aims to better structure
country and sector context analysis and will introduce political economic
analysis both at country and at sector level so as to take more informed
decisions on objectives and expected results of its cooperation. The Commission
is carrying out a first test of its new political economy approach at country
level and aims to finalise a draft set of guidance on political economy
analysis by the end of 2011. The guidance will be disseminated to delegations
for further wider scale testing and feedback during 2012. As part of the PPCM
exercise, the Commission also aims to better integrate governance analysis for
sector programmes under the PPCM guidance. In addition, a more structured approach
is being developed for improving and supporting corruption assessment and
monitoring systems. EuropeAid is currently working on the following:

- A
concept Paper on "Supporting Anti-Corruption Reform in Partner Countries:
Concepts, Tools and Areas for Action", which is aimed at staff EU staff in
delegations and HQs to provide concrete tools and a framework to analyse and
assess corruption. The concept paper is to be published and sent to EU
delegations by end of 2011;

- The
Gateway project is designed for analysing corruption and monitoring
anti-corruption reforms, with the aim of developing a web portal (including
database), an interactive users' manual, training modules and an analytical
paper for facilitating the access and providing guidance for using the various
existing (anti-) corruption assessment and monitoring tools. This project seeks
to assist governance practitioners in their task of public policy reform and
evidence-based advocacy by providing them with guidance on how to best use the
ever-expanding variety of governance and (anti-) corruption assessment tools.
The public launching of the Gateway is foreseen for the end of January 2012.

Finally,
by continuing to use, when necessary, anti-corruption provisions of its
development and cooperation agreements (notably in the framework of article 97
of the Cotonou Agreement), the Commission can also undertake specific
consultations and dialogue in case of serious corruption cases, which could
lead to sanctions if appropriate measures are not put in place. This work is
ongoing.

200.       (European Parliament, European
Development Funds, §45) The EP reiterates its opinion that the
involvement of national parliaments, civil society and local authorities in
partner countries is indispensable in order to achieve genuine ownership of the
process and repeats its call on the Commission to make every effort in order to
improve dialogue with these bodies at all the different stages of the
programming process

Commission's
response:

As
signatory to the Paris Declaration (2005) and Accra Agenda for Action (2008) 
on aid effectiveness, the Commission is committed to the principle of ownership
namely to ensure that developing countries set their own development strategy.
In this regard, the Commission is holding systematic consultation with partners
countries stakeholders including National Parliaments, Civil Society and Local
Authorities. Furthermore, one of the thematic action undertaken in the
framework of the Development Cooperation Instrument, targets specifically civil
society organisations and local authorities. This is a continuous process that
takes place both at the beginning of the programming phases and in case of
mid-term reviews.

201.       (European Parliament, European
Development Funds, §46) The EP urges the Commission to help partner
countries develop parliamentary control and audit capacities and to involve
national parliaments, as well as local civil society partners

Commission's
response:

In line
with its policy to foster Country Ownership and democratic governance, the
Commission encourages and supports efforts of partner countries to develop
parliamentary control and audit capacities to oversee effectively the use of
public funds. Thus, the Commission has been and is supporting many capacity
building initiatives in this area and will report on this within its annual
reports on external assistance. A study on the support to parliaments in
external development and cooperation programmes has been finalised in October
2010 and includes an assessment of EC support to Parliaments in the ACP region
(covering 2000-2009) with a related database of projects, as well as a
practical guide to parliamentary support for EU Delegation and HQ staff called
"Engaging and Supporting Parliaments Worldwide". A parliamentary
support training module was piloted in September 2010 in collaboration with the
EP's Office for Promotion of Parliamentary Democracy (OPPD). Within the
practical guide a chapter is dedicated to parliamentary oversight with a focus
on budget control. The different results of the study have been made public and
can be accessed on the Development Cooperation EuropeAid Internet site. Work is
currently ongoing in reviewing EC support to parliaments outside the ACP
covering the Neighbourhood, Asia and Latin America. In addition the Commission
has done this year a mapping of all its support to supreme audit institutions
and parliamentary control finding 79 projects in 48 countries. In the framework
of the upcoming Budget Support Communication and the revision of the Budget
Support Guidelines an increased emphasis will be put on strengthening domestic
accountability with a central role for parliamentary control. The Commission
will continue to report on its work in this field on a regular basis.

202.       (European Parliament, European
Development Funds, §48) The EP urges the Commission to ensure better
visibility for Union-funded activities overseas

Commission's
response:

All
projects financed by the EU are contractually required to provide adequate
visibility to the EU and to respect the visibility manual. We are monitoring
the implementation of these requirements.

203.       (European Parliament, European
Development Funds, §52) EuropeAid should develop a key indicator of
the estimated financial impact of the uncorrected errors after all controls
have been implemented; EuropeAid should assess the cost-effectiveness of the
various controls; EuropeAid should ensure that the specific conditions for
payments are clearly defined and that Delegations' reports provide a formalised
demonstration of progress achieved in public finance management

Commission's
response:

In 2010 a
study defined a methodology to measure the residual error rate across DG DEVCO
activities after all controls, checks and audits have been carried out. In
Q2/2011 a pilot study was launched to test this methodology with a view to a
subsequent full implementation.

204.       (European Parliament, European
Development Funds, §62) The EP invites the Commission to monitor and
control closely the implementation of the Investment Facility with a view to
guaranteeing that it fulfils its objective as a development tool, and to inform
Parliament's Committee on Budgetary Control on a regular basis of its findings

Commission's
response:

In line
with the (revised) EIB External Mandate, Commission Services fully subscribe to
the need to align the IF operations with the EU principles on development and
the aid effectiveness agenda. Following the recent restructuring of EuropeAid
(1/6/2011), the creation of one Unit (DEVCO/C3) with overall reporting
responsibility on the management of the different Facilities is an important
and essential step in this direction. The discussion, to be led by the
Commission, on the "EU Platform" (report on its feasibility due for
mid-2012) will also inform help determine the eventual definition of the appropriate
framework. In addition, the EIB is currently developing a Monitoring and
Reporting Framework that will be applicable as of 2012 to all new projects, and
in parallel has started the process of revising the Operational Guidelines of
the IF, management of which is fully entrusted to the EIB. Commission Services
will strive to ensure, in the context of their IF monitoring tasks, that the
Reporting Framework and the revised the Operational Guidelines of the IF (end
2011) will provide to the EIB with the means to collect and report the
appropriate information.

Requests to the
Commission concerning the agencies

205.       (European Parliament,
performance, financial management and control of EU agencies, §17) The
EP asks the Commission to provide information on the existence and application
of regulations with respect to the relevant duties and obligations of officials
provided for in Article 16 of the Staff Regulations of Officials of the
European Union[1] ( so called "cooling-off periods") in all the
agencies

Commission's
response:

Article 16
Staff Regulation (SR) concerns obligations that apply to officials after
leaving the service. Articles 11 and 81 of the Conditions of Employment of
Other Servants (CEOS) extend the same obligations to temporary staff and
contract staff.

The
Commission has given effect to these provisions by Decision 85-2004 of 29 June
2004. An update of such decision is currently under examination.

In
accordance with Article 110 SR, agencies adopt implementing rules giving effect
to the SR or CEOS measures in agreement with the Commission. This implies that
each agency is bound to submit to the Commission any draft rule giving effect
to the SR before its adoption. The Commission keeps track of all such rules and
is accordingly in a position to inform the EP at any time of the rules
submitted and subsequently adopted by the agencies.

However in
theory it cannot be excluded that an agency adopts a rule giving effect to the
SR without seeking the agreement Commission. In that case, the Commission would
not be informed of the existence of that rule and, accordingly, the Commission
would not be in a position to inform the EP.

As regards
Article 16 SR in practice, all the rules submitted by agencies were aligned
onto Commission Decision 85-2004 referred to above. To date, a large majority
of agencies have adopted the rules in question. And since the Commission
considers that the rules on rights and obligations of officials (Title II of
the Staff Regulations) should apply by analogy the staff of agencies, the
Commission will invite the agencies to update their rules as soon as the
Commission has updated its own.

However,
the Commission is not in a position to give a favourable reply to the
recommendation insofar as it concerns the application of the rules referred to
above in the agencies.

According
to the Staff Regulations agencies have an independent status and the Appointing
Authority powers are exercised by themselves. As this includes the application
of statutory provisions, the Commission has no competence to review the
legality of individual acts adopted by agencies, nor is it informed thereon.

206.       (European Parliament,
performance, financial management and control of EU agencies, §20) The
EP calls on the Commission to provide Parliament with a detailed overview of
the criteria applied in order to ensure the independence of recruited staff, in
particular with respect to possible conflicts of interest, and to apply
dissuasive sanctions where any irregularity is found

Commission's
response:

A general
overview of the criteria applied to ensure independence of staff can be
provided. Such an overview would consist of the applicable provisions of the
Staff Regulations (Title II). However, a more detailed overview would also need
to take into account the details of the different ethics policies and other
specificities that are in force at the agencies. Such an overview would require
a disproportionate investment on the part of the Commission and is not likely
to add much to the general overview. The amendment also calls on the Commission
to apply dissuasive measures in case of irregularities. In light of the fact
that agencies are autonomous entities with their own legal personality, the Commission
is not competent to apply such measures.

207.       (European Parliament,
performance, financial management and control of EU agencies, §39) The
EP notes that the large size of certain agencies' Governing Boards and the high
turnover of their members could lead to an ineffective decision-making body;
calls, accordingly, on the Inter-institutional Working Group on Agencies to
address this issue; suggests also that consideration be given to the
possibility of merging Governing Boards for agencies working in related fields
to reduce amount spent on meetings

Commission's
response:

The
Inter-institutional Working Group on Agencies has addressed the issue of
large-size management boards and high turn-over of members by supporting the
introduction of a two-tier governance system, consisting of the Management
Board on the one hand and a smaller Executive Bureau on the other hand. The
latter would be composed of a limited number of Management Board members, with
the presence of a Commission representative. It would be more closely involved
in the running and monitoring of the agency, in particular with a view to
reinforcing supervision of administrative and budgetary management.

208.       (European Parliament,
performance, financial management and control of EU agencies, §43) The
EP calls on the Commission to increase its efforts to provide all necessary
administrative assistance to the relatively small agencies, in particular those
that were established recently and to make sure that all agencies work
efficiently

Commission's
response:

A
substantial number of Commission services are already available to all
agencies, including to the relatively small and recently established ones (e.g.
free service of Help Desk for financial and legal aspects related to the
Framework Financial Regulation, Help Desk for HR issues, internal audit by the
Internal Audit Service, certain services provided by the Paymaster Office –
PMO, training courses provided by Directorate General Human Resources, advice
on staff selection procedures provided by EPSO, etc.). Also, it is a standard
practice to designate a Commission official as interim Director and to second
(up to three) Commission officials to newly created agencies for a period of
1,5 years with a view to ensuring the agency start up. Moreover, the
Inter-institutional Working Group on Agencies agreed that services provided by
the Commission could be extended through adjustments of the current framework.

209.       (European Parliament,
performance, financial management and control of EU agencies, §56) The
EP requests the Inter-institutional Working Group on Agencies to come up with
an analysis and general advice regarding the effectiveness of the current
agencies, and to propose plans for comprehensive efficiency improvements with
regard to the type and the number of agencies

Commission's
response:

The
discussions within the Working Group aim at improving agencies' efficiency and
effectiveness overall, but the Group will not decide in detail on the specific
actions to be implemented. Specific actions are to be decided upon on a case by
case basis as a follow-up to the conclusions of the Group.

210.       (European Parliament,
performance, financial management and control of EU agencies, §59) The
EP calls for a moratorium on the creation of any further agencies at least
until the questions raised by the Inter-institutional Working Group on
Agencies' Common Statement and the discharge resolution of 5 May 2010 are
satisfactorily resolved

Commission's
response:

At present
the Commission does not have the intention to propose to the legislative
authority any constitutive act for a new regulatory agency.

211.       (European Parliament,
performance, financial management and control of EU agencies, §61 and §66) The
EP calls on the Commission to carry out an evaluation of all the Union agencies
aimed at detecting occurrences of overlapping activities and analysing, if
overlaps are identified, the possibility of a merger between the agencies
involved and to provide Parliament with a report on the issue by 31 December
2011

Commission's
response:

The
question of possible overlaps and synergies in the work of the respective
Agencies has already been addressed in the 2009 external evaluation of
decentralised agencies commissioned by the Commission.

The
Inter-institutional Working Group on Agencies (composed of representatives of
the European Parliament, Commission and Council) took into consideration the
possibility of merging smaller agencies to achieve economies of scale. Any
further concrete action would be undertaken as a follow-up to the conclusions
of the Inter-institutional Working Group. These conclusions will take the form
of a Common Understanding between the European Parliament, the Commission and
the Council.

212.       (European Parliament,
performance, financial management and control of EU agencies, §62) The
EP asks that the Inter-institutional Working Group on Agencies consider
grouping together some of the smaller agencies, which may not be suitable for
outright merger, in the same city and indeed possibly the same building so they
can benefit from common central resources to minimise the burden of overhead
and other costs

Commission's
response:

The
Inter-institutional Working Group on Agencies already took these questions into
consideration (e.g. advising merging smaller agencies to achieve economies of
scale or, when such an option is not suitable, sharing services between
agencies, either by proximity of locations or by policy area). Specific actions
are to be decided upon as a follow-up to the conclusions of the Group.

213.       (European Parliament, §40[2])
The EP recommends merging the College with Europol in the near future;
is convinced that the merger will engender greater rationality and efficiency
in expenditure; is convinced that the cost of keeping the College and Europol
separate would be higher than the cost of a merger. The EP reiterates its
request to the Commission to examine before 1 September 2011 the possibility of
attaching the College to Europol. The EP calls on the Council and the Commission
to provide the Parliament with a report on the merging of the College with
Europol by the end of 2011

Commission's
response:

As already
agreed in the Inter-Institutional Working Group on regulatory agencies, merging
agencies should be considered in cases where agencies' respective tasks are
overlapping, in cases where synergies can be contemplated or when agencies will
be more efficient and impactful if inserted in a bigger structure. However such
factors must be considered through in-depth analyses taking into account the
specific situation of each agency. This is why, on the basis of a recent
evaluation, the Commission has begun to assess the impact of options for
revising Council Decision 2005/681/JHA and will present the outcome of this
impact assessment in the course of 2012. The objective is that the Commission
presents to the European Parliament and to the Council a proposal which is
sound and well thought-through and which delivers to our citizens a body better
equipped to train law enforcement officials.

[1]               For each specific request a reference is given to the
relevant Parliament document: document references P7_TA(2011)0194 for the
general budget, P7_TA(2011)0195 on the ECA's Special
Reports, P7_TA(2011)0201 on the EDFs and P7_TA(2011)0163 as regards the
agencies. Documents are available at the following Web addresses:

http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT+TA+P7-TA-2011-0194+0+DOC+XML+V0//EN&language=EN#BKMD-87

[2]               This request to the Commission originates from the
specific Discharge resolution as regards the European Police College: document reference P7_TA(2011)0164.