Commission Regulation (EC) No 438/2001
of 2 March 2001
laying down detailed rules for the implementation of Council Regulation (EC) No 1260/1999 as regards the management and control systems for assistance granted under the Structural Funds
THE COMMISSION OF THE EUROPEAN COMMUNITIES,
Having regard to the Treaty establishing the European Community,
Having regard to Council Regulation (EC) No 1260/1999 of 21 June 1999 laying down general provisions on the Structural Funds(1), and in particular Article 53(2) thereof,
After consulting the Committee set up pursuant to Article 147 of the Treaty,
After consulting the Committee on Agricultural Structures and Rural Development,
After consulting the Committee on Structures for Fisheries and Aquaculture,
Whereas:
(1) Article 38 of Regulation (EC) No 1260/1999 requires Member States to take a number of measures to ensure that Community funds are used efficiently and correctly and in accordance with the principles of sound financial management.
(2) For this purpose, it is necessary for Member States to provide adequate guidance regarding the organisation of the relevant functions of managing and paying authorities laid down by Articles 32 and 34 of Regulation (EC) No 1260/1999.
(3) Article 38 of Regulation (EC) No 1260/1999 requires the Member States to cooperate with the Commission in ensuring that they have smoothly running management and control systems and to give it all necessary assistance to undertake checks, including sample checks.
(4) In order to harmonise standards for the certification of expenditure for which payments from the Funds under Article 32(3) and (4) of Regulation (EC) No 1260/1999 are claimed, the content of such certificates should be laid down and the nature and quality of the information on which they rely specified.
(5) To enable the Commission to carry out the checks referred to in Article 38(2) of Regulation (EC) No 1260/1999, Member States should supply it on request with data which managing authorities require in order to fulfil the management, monitoring and evaluation requirements of that Regulation. It is necessary to lay down the content of such data and the format and means of transmission of computer files when data is supplied in electronic form in accordance with Article 18(3)(e) of the Regulation. The Commission should ensure that computerised and other data is kept confidential and secure.
(6) Commission Regulation (EC) No 2064/97 of 15 October 1997 establishing detailed arrangements for the implementation of Council Regulation (EEC) No 4253/88 as regards the financial control by Member States of operations co-financed by the Structural Funds(2), as amended by Regulation (EC) No 2406/98(3), should be replaced. However, the provisions of Regulation (EC) No 2064/97 should continue to apply to assistance granted for the programme period 1994 to 1999 under Council Regulation (EEC) No 2052/88(4), as last amended by Regulation (EC) No 3193/94(5).
(7) This Regulation should apply without prejudice to the provisions regarding on-site monitoring in the field of State aid laid down by Article 22 of Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for the application of Article 93 of the EC Treaty(6).
(8) This Regulation should apply without prejudice to the provisions of Council Regulation (Euratom, EC) No 2185/96 of 11 November 1996 concerning on-the-spot checks and inspections carried out by the Commission in order to protect the European Communities' financial interests against fraud and other irregularities(7).
(9) The provisions of Commission Regulation (EC) No 1681/94 of 11 July 1994 concerning irregularities and the recovery of sums wrongly paid in connection with the financing of the structural policies and the organisation of an information system in this field(8) apply to assistance granted under Regulation (EC) No 1260/1999 by virtue of the second paragraph of Article 54 and Article 38(1)(e) of that Regulation.
(10) This Regulation should apply in accordance with the principle of subsidiarity, as referred to in Article 8(3) of Regulation (EC) No 1260/1999, and without prejudice to the institutional, legal and financial systems of the Member State concerned, as referred to in the last paragraph of Article 34(1) of that Regulation.
(11) The measures provided for in this Regulation are in accordance with the opinion of the Committee for the Development and Conversion of Regions,
HAS ADOPTED THIS REGULATION:
CHAPTER I
Scope
Article 1
This Regulation lays down detailed rules for the implementation of Regulation (EC) No 1260/1999 as regards the management and control systems for assistance granted under the Structural Funds that is administered by the Member States.
CHAPTER II
Management and control systems
Article 2
1. Each Member State shall ensure that managing and paying authorities and intermediate bodies receive adequate guidance on the provision of management and control systems necessary to ensure the sound financial management of the Structural Funds in accordance with generally accepted principles and standards, and in particular to provide adequate assurance of the correctness, regularity and eligibility of claims on Community assistance.
2. For the purposes of this Regulation, "intermediate bodies" shall mean all public or private bodies or services acting under the responsibility of managing or paying authorities or performing tasks on their behalf in relation to final beneficiaries or the bodies or firms carrying out operations.
Article 3
The management and control systems of managing and paying authorities and intermediate bodies shall, subject to proportionality in relation to the volume of assistance administered, provide for:
(a) a clear definition, a clear allocation and, as necessary to ensure sound financial practice, an adequate separation of functions within the organisation concerned;
(b) effective systems for ensuring that the functions are performed in a satisfactory manner;
(c) in the case of intermediate bodies, reporting to the authority responsible on the performance of their tasks and the means employed.
Article 4
Management and control systems shall include procedures to verify the delivery of the products and services co-financed and the reality of expenditure claimed and to ensure compliance with the terms of the relevant Commission decision under Article 28 of Regulation (EC) No 1260/1999 and with applicable national and Community rules on, in particular, the eligibility of expenditure for support from the Structural Funds under the assistance concerned, public procurement, State aid (including the rules on the cumulations of aid), protection of the environment and equality of opportunity.
The procedures shall require the recording of verifications of individual operations on the spot. The records shall state the work done, the results of the verification and the measures taken in respect of discrepancies. Where any physical or administrative verifications are not exhaustive, but performed on a sample of operations, the records shall identify the operations selected and describe the sampling method.
Article 5
1. Member States shall, for each assistance, inform the Commission, within three months of the approval of the assistance or the entry into force of this Regulation, whichever is the later, of the organisation of the managing and paying authorities and intermediate bodies, of the management and control systems in place in these authorites and bodies and of improvements planned pursuant to the guidance referred to in Article 2(1).
2. The communication shall contain the following information in respect of each managing and paying authority and intermediate body:
(a) the functions vested in them;
(b) the allocation of functions between or within their departments, including between the managing and paying authority where they are the same body;
(c) the procedures by which claims for reimbursement of expenditure are received, verified, and validated, and by which payments to beneficiaries are authorised, executed and accounted for; and
(d) the provisions for the audit of management and control systems.
3. Where a common system applies in more than one assistance, a description of the common system may be communicated.
Article 6
The Commission shall, in cooperation with the Member State, satisfy itself that the management and control systems presented under Article 5 meet the standards required by Regulation (EC) No 1260/1999 and by this Regulation, and shall make known any obstacles which they present to the transparency of checks on the operation of the Funds and to the Commission's discharge of its responsibilities under Article 274 of the Treaty. Reviews of the operation of the systems shall be undertaken on a regular basis.
Article 7
1. Member States' management and control systems shall provide a sufficient audit trail.
2. An audit trail shall be considered sufficient where it permits:
(a) reconciliation of the summary amounts certified to the Commission with the individual expenditure records and supporting documents held at the various administrative levels and by final beneficiaries including, where the latter are not the final recipients of funding, the bodies or firms carrying out operations; and
(b) verification of the allocation and the transfers of the available Community and national funds.
An indicative description of the information requirements for a sufficient audit trail is given in Annex I.
3. The managing authority shall satisfy itself on the following points:
(a) that there are procedures to ensure that documents that are relevant to specific expenditure incurred and payments made under the assistance and required for a sufficient audit trail are held in accordance with the requirements of Article 38(6) of Regulation (EC) No 1260/1999 and with Annex I to this Regulation;
(b) that a record is maintained of the body holding them and its location; and
(c) that the documents are made available for inspection by the persons and bodies who would normally have the right to inspect such documents.
These persons and bodies shall be:
(i) the staff of the managing and paying authority and intermediate bodies who process payment claims;
(ii) the services undertaking audits of management and control systems;
(iii) the person or department of the paying authority responsible for certifying interim and final payment requests under Article 32(3) and (4) of Regulation (EC) No 1260/1999 and the person or department which issues the declaration under Article 38(1)(f); and
(iv) mandated officials of national audit institutions and the European Community.
They may require that extracts or copies of the documents or accounting records referred to in this paragraph be supplied to them.
Article 8
The managing or paying authority shall keep an account of amounts recoverable from payments of Community assistance already made, and ensure that the amounts are recovered without unjustified delay. After recovery, the paying authority shall repay the irregular payments recovered, together with interest received on account of late payment, by deducting the amounts concerned from its next statement of expenditure and request for payment to the Commission, or, if this is insufficient, by effecting a refund to the Community. The paying authority shall send the Commission once a year, in annex to the fourth quarterly report on recoveries supplied under Regulation (EC) No 1681/94, a statement of the amounts awaiting recovery at that date, classified by the year of initiation of the recovery proceedings.
CHAPTER III
Certification of expenditure
Article 9
1. The certificates of statements of interim and final expenditure referred to in Article 32(3) and (4) of Regulation (EC) No 1260/1999 shall be drawn up in the form prescribed in Annex II by a person or department within the paying authority that is functionally independent of any services that approve claims.
2. Before certifying a given statement of expenditure, the paying authority shall satisfy itself that the following conditions are fulfilled:
(a) the managing authority and intermediate bodies have fulfilled the requirements of Regulation (EC) No 1260/1999, in particular Article 38(1)(c) and (e) and Article 32(3) and (4), and observed the terms of the Commission's decision under Article 28 of the Regulation;
(b) the statement of expenditure includes only expenditure:
(i) that has been actually effected within the eligibility period laid down in the decision in the form of expenditure by final beneficiaries, within the meaning of paragraphs 1.2, 1.3 and 2 of Rule No 1 of the Annex to Commission Regulation (EC) No 1685/2000(9), which can be supported by receipted invoices or accounting documents of equivalent probative value;
(ii) that has been incurred in operations that were selected for funding under the particular assistance concerned in accordance with its selection criteria and procedures and have been subject to Community rules throughout the period during which the expenditure was incurred; and
(iii) from measures for which all State aid has been formally approved by the Commission, where relevant.
3. So that the sufficiency of the control systems and the audit trail can always be taken into account before a statement of expenditure is presented to the Commission, the managing authority shall ensure that the paying authority is kept informed of the procedures operated by the managing authority and by intermediate bodies to:
(a) verify the delivery of the products and services cofinanced and the reality of expenditure claimed;
(b) ensure compliance with the applicable rules; and
(c) maintain the audit trail.
4. In cases where the managing authority and the paying authority are or belong to the same body, this body shall ensure that procedures offering equivalent standards of control to those stipulated in paragraphs 2 and 3 are applied.
CHAPTER IV
Sample checks on operations
Article 10
1. Member States shall organise checks on operations on an appropriate sampling basis, designed in particular to:
(a) verify the effectiveness of the management and control systems in place;
(b) verify selectively, on the basis of risk analysis, expenditure declarations made at the various levels concerned.
2. The checks carried out before the winding-up of each assistance shall cover at least 5 % of the total eligible expenditure and be based on a representative sample of the operations approved, taking account of the requirements of paragraph 3. Member States shall seek to spread the implementation of the checks evenly over the period concerned. They shall ensure an appropriate separation of tasks as between such checks and implementation or payment procedures concerning operations.
3. The selection of the sample of operations to be checked shall take into account:
(a) the need to check an appropriate mix of types and sizes of operations;
(b) any risk factors which have been identified by national or Community checks;
(c) the concentration of operations under certain intermediate bodies or certain final beneficiaries, so that the main intermediate bodies and final beneficiaries are checked at least once before the winding-up of each assistance.
Article 11
Through the checks, the Member States shall endeavour to verify the following:
(a) the practical application and effectiveness of the management and control systems;
(b) for an adequate number of accounting records, the correspondence of those records with supporting documents held by intermediate bodies, final beneficiaries, and the bodies or firms carrying out the operations;
(c) the presence of a sufficient audit trail;
(d) for an adequate number of expenditure items, that the nature and timing of the relevant expenditure comply with Community provisions and correspond to the approved specifications of the operation and the works actually executed;
(e) that the use or intended use of the operation is consistent with the use described in the application for Community co-financing;
(f) that the Community financial contributions are within the limits provided for in Article 29 of Regulation (EC) No 1260/1999 and any other applicable Community provisions and are paid to final beneficiaries without any reductions or unjustified delay;
(g) that the appropriate national co-financing has in fact been made available; and
(h) that the co-financed operations have been implemented in accordance with Community rules and policies as required by Article 12 of Regulation (EC) No 1260/1999.
Article 12
The checks shall establish whether any problems encountered are of a systemic character, entailing a risk for other operations carried out by the same final beneficiary or administered by the same intermediate body. They shall also identify the causes of such situations, any further examination which may be required and the necessary corrective and preventive action.
Article 13
Member States shall inform the Commission by 30 June each year, and for the first time by 30 June 2001, of their application of Articles 10 to 12 in the previous calendar year and in addition provide any necessary completion or updating of the description of their management and control systems communicated under Article 5.
Article 14
The provisions of this chapter shall apply, mutatis mutandis, to amounts recoverable referred to in Article 8.
CHAPTER V
Declaration at winding-up of the assistance
Article 15
The person or department designated to issue declarations on winding-up of the assistance under Article 38(1)(f) of Regulation (EC) No 1260/1999 shall have a function independent of:
(a) the designated managing authority;
(b) the person or department within the paying authority responsible for drawing up the certificates referred to in Article 9(1);
(c) intermediate bodies.
It shall conduct its examination according to internationally accepted auditing standards. It shall be supplied by the managing and paying authorities and intermediate bodies with all information required and be given access to the records and supporting evidence necessary for drawing up the declaration.
Article 16
Declarations shall be based on an examination of the management and control systems, of the findings of checks already carried out and, when necessary, of a further sample check of transactions. The person or department issuing the declaration shall make all necessary enquiries to obtain reasonable assurance that the certified statement of expenditure is correct and that the underlying transactions are legal and regular.
Declarations shall be drawn up on the basis of the indicative model in Annex III and shall be accompanied by a report which shall include all relevant information to justify the declaration, including a summary of the findings of all checks carried out by national and Community bodies to which the declarant has had access.
Article 17
If the presence of important management or control weaknesses or the high frequency of irregularities encountered does not allow the provision of a positive overall assurance as to the validity of the request for payment of the final balance and the final certificate of expenditure, the declaration shall refer to these circumstances and shall estimate the extent of the problem and its financial impact.
In such a case the Commission may ask that a further check be carried out with a view to the identification and rectification of irregularities within a specified period of time.
CHAPTER VI
Form and content of accounting information to be held and communicated to the Commission on request
Article 18
1. The accounting records on operations referred to in Annex I shall as far as possible be held in computerised form. Such records shall be made available to the Commission on specific request for the purpose of carrying out documentary and on-the-spot checks, without prejudice to the requirements to communicate updatings of financial plans under Article 18(3)(c) of Regulation (EC) No 1260/1999 and financial information under Article 32 thereof.
2. The Commission shall agree with each Member State the content of computer records to be made available under paragraph 1, the means by which they are communicated, and the length of the period required to develop any necessary computer systems taking account of the agreement referred to in Article 18(3)(e) of Regulation (EC) No 1260/1999. The scope of the information that may be requested, and the preferred technical specifications for the transfer of computer files to the Commission, are indicated in Annexes IV and V.
3. At the written request of the Commission, the Member States shall deliver to the Commission the records referred to in paragraph 1 within 10 working days of receipt of the request. A different period may be agreed between the Commission and the Member State, particularly where the records are not available in computerised form.
4. The Commission shall ensure that the information forwarded by the Member States or collected by it in the course of on-the-spot inspections is kept confidential and secure in accordance with Article 287 of the Treaty and the Commission's rules on the use of and access to information.
5. Subject to the relevant national laws, Commission officials shall have access to all documents prepared either with a view to or following controls carried out under this Regulation and to the data held, including those stored in computer systems.
CHAPTER VII
General and final provisions
Article 19
In the case of forms of assistance where there are beneficiaries in more than one Member State, the Member States concerned shall agree with one another the necessary common arrangements to ensure sound financial management, taking account of national law, and shall inform the Commission of the arrangements agreed. The Commission and the Member States concerned shall provide one another with any necessary administrative assistance.
Article 20
The provisions of this Regulation are without prejudice to the obligation of Member States under Regulation (EC) No 1260/1999 to give the Commission sufficient information to appraise plans, including information on the measures taken to implement Article 34(1) of the Regulation, and to the Commission's right to require further information before adopting its decisions under Article 28 of the Regulation.
Article 21
Nothing in this Regulation shall prevent Member States applying rules more rigorous than those prescribed herein.
Article 22
Regulation (EC) No 2064/97 is hereby repealed.
Its provisions shall, however, continue to apply to assistance granted for the programme period 1994 to 1999 under Regulation (EEC) No 2052/88.
Article 23
This Regulation shall enter into force on the seventh day following its publication in the Official Journal of the European Communities.
This Regulation shall be binding in its entirety and directly applicable in all Member States.
Done at Brussels, 2 March 2001.