2006R1828 — EN — 01.12.2011 — 003.001

This document is meant purely as a documentation tool and the institutions do not assume any liability for its contents

Amended by:





Corrected by:









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COMMISSION REGULATION (EC) No 1828/2006

of 8 December 2006

setting out rules for the implementation of Council Regulation (EC) No 1083/2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund and of Regulation (EC) No 1080/2006 of the European Parliament and of the Council on the European Regional Development Fund







THE COMMISSION OF THE EUROPEAN COMMUNITIES, Having regard to the Treaty establishing the European Community, Having regard to Council Regulation (EC) No 1083/2006 of 11 July 2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund and repealing Regulation (EC) No 1260/1999 ( 1 ), and in particular Article 37(1)(d), the third paragraph of Article 44, Articles 59(6), 60(b) and 66(3), Article 67(2)(c), Articles 69(1), 70(3), 71(5), 72(2), 74(2) and 76(4) and the second subparagraph of Article 99(5) thereof, Having regard to Regulation (EC) No 1080/2006 of the European Parliament and of the Council of 5 July 2006 on the European Regional Development Fund and repealing Regulation (EC) No 1783/1999 ( 2 ), and in particular the second subparagraph of Article 7(2) and the second paragraph of Article 13 thereof, Whereas: (1) Regulation (EC) No 1083/2006 replaces Council Regulation (EC) No 1260/1999 of 21 June 1999 laying down general provisions on the Structural Funds ( 3 ), and Regulation (EC) No 1080/2006 replaces Regulation (EC) No 1783/1999 of the European Parliament and of the Council of 12 July 1999 on the European Regional Development Fund ( 4 ), both Regulations taking into account new developments in the field of Structural Funds. It is therefore appropriate also to lay down new provisions implementing Regulations (EC) No 1080/2006 and (EC) No 1083/2006. (2) Experience has shown that citizens of the European Union are insufficiently aware of the role played by the Community in funding programmes aimed at reinforcing economic competitiveness, creating jobs and strengthening internal cohesion. It is therefore appropriate to provide for the preparation of a communication plan which identifies in detail the information and publicity measures necessary to bridge this communication and information gap. For the same purpose, it is also necessary to identify the responsibilities and the roles that should be played by each of the actors involved. (3) In order to guarantee that information on possible funding opportunities is disseminated widely to all interested parties and for the sake of transparency, the minimum content of the information measures needed to inform potential beneficiaries about the financing opportunities offered jointly by the Community and the Member States through the Funds should be set out, including an obligation to publicise the steps that a potential beneficiary should take to submit an application for funding and the selection criteria that will be used. (4) In order to enhance transparency regarding use of the Funds, the list of beneficiaries, the names of the operations and the amount of public funding allocated to operations should be published, electronically or otherwise. (5) In order to ensure a better implementation of the information measures and to allow a better exchange of information between the Member States and the Commission on the information and publicity strategies and results, contact persons responsible for the information and publicity measures should be designated and should participate in appropriate Community networks. (6) For the purposes of Articles 37 and 67 of Regulation (EC) No 1083/2006, it is necessary to lay down detailed rules and categories to allow the Member States to submit to the Commission uniform information on the programmed use of the Funds, as well as information on the cumulative allocation of the Funds by categories throughout the life of a programme, and to enable the Commission to inform the other Institutions and the citizens of the European Union in an appropriate manner about the use of the Funds, including the achievement of the targets set out in Article 9(3) of Regulation (EC) No 1083/2006. (7) With regard to Article 60 of Regulation (EC) No 1083/2006 and in the light of the experience gained, it is necessary to lay down the obligations which the managing authorities should have with regard to beneficiaries in the phase leading to the selection and approval of the operations to be funded, with regard to the aspects which the verifications of the expenditure declared by the beneficiary should cover, including administrative verifications of the applications for reimbursement, and on-the-spot verifications of individual operations and with regard to the conditions to be observed when on-the-spot verifications are carried out on a sample basis. (8) It is also necessary to set out in detail the information which should be included in the accounting records of operations and the information to be kept as data on implementation which the managing authorities should record, store and send to the Commission upon request. (9) In order to ensure that expenditure under operational programmes can be properly audited, it is necessary to set out the criteria with which an audit trail should comply so as to be considered adequate. (10) The audit of operations is carried out under the responsibility of the audit authority. To ensure that the scope and effectiveness of those audits are adequate and that they are carried out according to the same standards in all Member States, it is necessary to set out the conditions which those audits should fulfil. (11) Experience has shown that it is necessary to set out in detail the basis for the sampling of operations to be audited, which the audit authority should observe in establishing or approving the sampling method, including certain technical criteria to be used for a random statistical sample and factors to be taken into account for a complementary sample. (12) In order to simplify and harmonise standards for the preparation and presentation of the audit strategy, the annual control report and the closure declarations for which the audit authority is responsible pursuant to Article 62 of Regulation (EC) No 1083/2006, it is necessary to make detailed provision about their content and specify the nature and quality of the information on which they rely. (13) In order to ensure the most effective application of Article 90 of Regulation (EC) No 1083/2006 with regard to the availability of documents and the right of the Court of Auditors and the Commission to have access to all supporting documents regarding expenditure and audits, managing authorities should ensure that information on the identity and location of the bodies holding the supporting documents is readily available and those documents should be readily supplied to a minimum list of persons and bodies. For the same purpose, it is necessary to set out which data carriers can be considered as commonly accepted for the purpose of keeping such documents. To this end, the national authorities should lay down the procedures necessary to ensure that the documents kept are in conformity with the originals, when this is relevant, and can be relied on for audit purposes. (14) In order to harmonise standards for the certification of expenditure and for the preparation of applications for payments, the content of such certificates and applications should be laid down and the nature and quality of the information on which they rely specified. Detailed procedures should be set out for keeping, in accordance with Article 61(f) of Regulation (EC) No 1083/2006, an account of amounts recoverable and of amounts withdrawn following cancellation of all or part of the contribution for an operation and for informing the Commission accordingly. (15) Pursuant to Article 71 of Regulation (EC) No 1083/2006, the Member States are, before the submission of the first interim application for payment or at least within twelve months of the approval of each operational programme, to submit to the Commission a description of the management and control systems, a report setting out the results of an assessment of the systems set up and an opinion on their compliance with the provisions of that Regulation on management and control systems. Since those documents are among the principal elements on which the Commission relies, in the context of the shared management of the Community budget, to satisfy itself that the financial assistance concerned is used by the Member States in accordance with the applicable rules and principles necessary for protecting the Community's financial interests, it is necessary to set out in detail the information that such documents should contain and the basis for the assessment and the opinion. (16) Operational programmes funded under the European territorial cooperation objective referred to in Article 3 of Regulation (EC) No 1083/2006 are presented by two or more Member States and have specific features, which are laid down in Regulation (EC) No 1080/2006. It is therefore appropriate to set out the specific information which the description of the management and control system for those programmes should contain. (17) Article 74 of Regulation (EC) No 1083/2006 provides, inter alia, that for operational programmes for which the total eligible public expenditure does not exceed EUR 750 million and for which the level of Community co-financing does not exceed 40 % of the total public expenditure, a Member State may choose to rely more on national bodies and rules for carrying out certain functions related to the control and audit requirements. It is therefore necessary to set out which verifications, which audits of operations and which obligations can be carried out and executed according to national rules and by national bodies. (18) As part of their management and control obligations Member States are required to report and monitor irregularities. Detailed rules to implement that requirement were laid down in 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 ( 5 ), and Commission Regulation (EC) No 1831/94 of 26 July 1994 concerning irregularities and the recovery of sums wrongly paid in connection with the financing of the Cohesion Fund and the organisation of an information system in this field ( 6 ). It is appropriate, for reasons of clarity and simplification, to incorporate those rules into this Regulation. (19) Provision should be made for the Commission to reimburse judicial costs when it requests a Member State to initiate or continue legal proceedings with a view to recovering amounts unduly paid following an irregularity, and for it to be supplied with information enabling it to decide on the apportionment of the loss from irrecoverable amounts pursuant to Article 70(2) of Regulation (EC) No 1083/2006. Regular contact should also be provided for between the Commission and the Member States on the subject of irregularities, for the use of the information supplied for making risk analyses and compiling reports, and for the provision of information to the relevant committees. (20) In order to limit the administrative burden imposed by the reporting system while safeguarding the necessary level of information, Member States should, without prejudice to the obligations arising directly from Article 61(f) of Regulation (EC) No 1083/2006, not be obliged to report irregularities involving amounts below a certain threshold unless the Commission expressly so requests. (21) In the light of Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995 on the protection of individuals with regard to the processing of personal data and on the free movement of such data ( 7 ) and Regulation (EC) No 45/2001 of the European Parliament and of the Council of 18 December 2000 on the protection of individuals with regard to the processing of personal data by the Community institutions and bodies and on the free movement of such data ( 8 ), it is necessary to provide, in relation to the information and publicity measures and the audit work pursuant to this Regulation, that the Commission and the Member States should prevent any unauthorised disclosure of or access to personal data, and to specify the purpose for which the Commission and the Member States can process such data. (22) For reasons of legal certainty and of equal treatment of all Member States, it is necessary to fix the rate applicable to the financial correction which the Commission may make when a Member State does not comply with its obligation to maintain in all the regions concerned during the programming period an agreed target level of public or equivalent structural expenditure. For reasons of simplification and proportionality, no financial correction should be applied if the difference between the agreed target level and the level achieved is equal to or less than 3 % of the agreed target level (de minimis threshold); for the same reasons, when the difference between the two levels is higher that 3 % of the agreed target level, the rate should be calculated by subtracting that de minimis threshold. (23) The use of electronic means for the exchange of information and financial data leads to simplification, increased efficiency and transparency and to savings in time. In order to exploit these advantages fully, while preserving the security of exchanges, a common computer system should be established as well as a list of documents of common interest to the Commission and the Member States. It is therefore necessary to specify the format each document should have and to provide a detailed description of the information such documents should contain. For the same reasons, it is necessary to specify how such a computer system functions with regard to the identification of the party responsible for uploading the documents and any updates thereto. (24) In the framework of Directive 1999/93/EC of the European Parliament and of the Council of 13 December 1999 on a Community framework for electronic signatures ( 9 ), taking account of the level of security and confidentiality required for the financial management of the use of the Funds, of the state of the art and of a cost-benefit analysis, it is necessary to require the use of an electronic signature. (25) In order to ensure the quick development and proper functioning of the common computer system, the cost of its development should be financed by the budget of European Communities pursuant to Article 45 of Regulation (EC) No 1083/2006, and the costs of the interface with national, regional, and local computer systems should be eligible for a financial contribution from the funds pursuant to Article 46 of the same Regulation. (26) Building on the experience of the 2000-2006 programming period, it is necessary to set out in detail the conditions which financial engineering instruments should fulfil to be funded under an operational programme, it being understood that contributions to financial engineering instruments from the operational programme and other public sources, as well as the investments made by financial engineering instruments in individual enterprises, are subject to the rules on State aid including the Community Guidelines on State aid to promote risk capital investments in small and medium- sized enterprises ( 10 ). (27) It is necessary to adopt the list of criteria to be used for identifying the areas where expenditure on housing can be eligible for a contribution from the European Regional Development Fund pursuant to Article 7(2) of Regulation (EC) No 1080/2006 and the list of eligible interventions. Given the diversity of the situations prevailing in the Member States concerned, it is appropriate to establish a list of criteria for identifying the areas experiencing or threatened by physical deterioration and social exclusion where investment in housing may be eligible for co-financing. It is also appropriate to set out that, in the case of multi-family housing or housing designated for low-income households or people with special needs, the interventions eligible for co-financing should be those aimed at renovating the common parts of multi-family residential buildings or at delivering modern social housing of good quality through investing in the renovation and change of use of existing buildings owned by public authorities or non-profit operators. (28) Article 56(4) of Regulation (EC) No 1083/2006 provides that rules on the eligibility of expenditure are to be laid down at national level, subject to the exceptions provided in the specific regulations for each Fund. With regard to Article 13 of Regulation (EC) No 1080/2006, common rules on the eligibility of expenditure should be laid down which are applicable to operational programmes under the European territorial cooperation objective in order to ensure consistency between the rules applicable to projects implemented in different Member States. Building upon experience with similar programmes in the programming period 2000-2006, it is appropriate to lay down common rules for the categories of expenditure for which national rules are most likely to differ. In order to reduce the administrative burden on beneficiaries and programme authorities, flat rates for overheads should under certain conditions be eligible. (29) Regulations (EC) No 1681/94 and (EC) No 1831/94 as well as Commission Regulations (EC) No 1159/2000 of 30 May 2000 on information and publicity measures to be carried out by the Member States concerning assistance from the Structural Funds ( 11 ), (EC) No 1685/2000 of 28 July 2000 laying down detailed rules for the implementation of Council Regulation (EC) No 1260/1999 as regards eligibility of expenditure of operations co-financed by the Structural Funds ( 12 ), (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 ( 13 ), (EC) No 448/2001 of 2 March 2001 laying down detailed rules for the implementation of Council Regulation (EC) No 1260/1999 as regards the procedure for making financial corrections to assistance granted under the Structural Funds ( 14 ), (EC) No 1386/2002 of 29 July 2002 laying down detailed rules for the implementation of Council Regulation (EC) No 1164/94 as regards the management and control systems for assistance granted from the Cohesion Fund and the procedure for making financial corrections ( 15 ), (EC) No 16/2003 of 6 January 2003 laying down special detailed rules for implementing Council Regulation (EC) No 1164/94 as regards eligibility of expenditure in the context of measures part-financed by the Cohesion Fund ( 16 ) and (EC) No 621/2004 of 1 April 2004 laying down rules for implementing Council Regulation (EC) No 1164/94 as regards information and publicity measures concerning the activities of the Cohesion Fund ( 17 ) should be repealed. (30) The measures provided for in this Regulation are in accordance with the opinion of the Coordination Committee of the Funds, Whereas: HAS ADOPTED THIS REGULATION:







CONTENTS CHAPTER I: INTRODUCTION Article 1: Subject matter CHAPTER II: PROVISIONS IMPLEMENTING REGULATION (EC) No 1083/2006 SECTION 1: INFORMATION AND PUBLICITY Article 2: Preparation of the communication plan Article 3: Examination of compatibility of the communication plan Article 4: Implementation and monitoring of the communication plan Article 5: Information measures for potential beneficiaries Article 6: Information measures for beneficiaries Article 7: Responsibilities of the managing authority relating to information and publicity measures for the public Article 8: Responsibilities of beneficiaries relating to information and publicity measures for the public Article 9: Technical characteristics of information and publicity measures for the operation Article 10: Network and exchange of experience SECTION 2: INFORMATION ON USE OF THE FUNDS Article 11: Indicative breakdown of use of the Funds SECTION 3: MANAGEMENT AND CONTROL SYSTEMS Article 12: Intermediate bodies Article 13: Managing authority and controllers Article 14: Accounting records Article 15: Audit trail Article 16: Audits of operations Article 17: Sampling Article 18: Documents presented by the audit authority Article 19: Availability of documents Article 20: Documents submitted by the certifying authority Article 21: Description of management and control systems Article 22: Information concerning the managing authority, the certifying authority and intermediate bodies Article 23: Information concerning the audit authority and bodies carrying out audits Article 24: Description of the management and control systems of the European territorial cooperation objective Article 25: Assessment of management and control systems Article 26: Derogations concerning operational programmes referred to in Article 74 of Regulation (EC) No 1083/2006 SECTION 4: IRREGULARITIES Article 27: Definitions Article 28: Initial reporting — derogations Article 29: Urgent cases Article 30: Follow-up reporting Article 31: Electronic transmission Article 32: Reimbursement of judicial costs Article 33: Co-operation with Member States Article 34: Use of information Article 36: Irregularities under the reporting threshold SECTION 5: PERSONAL DATA Article 37: Protection of personal data SECTION 6: FINANCIAL CORRECTION FOR NON-RESPECT OF ADDITIONALITY Article 38: Rates of financial correction SECTION 7: ELECTRONIC EXCHANGE OF DATA Article 39: Computer system for data exchange Article 40: Content of computer system for data exchange Article 41: Functioning of computer system for data exchange Article 42: Transmission of data through the computer system for data exchange SECTION 8: FINANCIAL ENGINEERING INSTRUMENTS Article 43: General provisions Article 44: Holding funds Article 45: Additional provisions applicable to financial engineering instruments for enterprises Article 46: Urban development funds CHAPTER III: PROVISIONS IMPLEMENTING REGULATION (EC) No 1080/2006 SECTION 1: ELIGIBILITY OF EXPENDITURE ON HOUSING Article 47: Interventions in the field of housing SECTION 2: RULES OF ELIGIBILITY APPLICABLE TO OPERATIONAL PROGRAMMES FOR THE EUROPEAN TERRITORIAL COOPERATION OBJECTIVE Article 48: Rules on eligibility of expenditure Article 49: Financial charges and guarantee costs Article 50: Expenditure by public authorities relating to the implementation of operations Article 51: In-kind contributions Article 52: Overheads Article 53: Depreciation CHAPTER IV: FINAL PROVISIONS Article 54: Repeal Article 55: Entry into force LIST OF ANNEXES Annex I: Instructions for creating the emblem and a definition of the standard colours Annex II: Categorisation of funds assistance for 2007-2013 Part A: Codes by dimension Part B: Indicative breakdown of the Community contribution by category in the operational programme Part C: Cumulative breakdown of allocations of the Community contribution by category in the annual and final report on implementation Annex III: List of data on operations to be communicated on request to the Commission for the purpose of documentary and on-the-spot checks pursuant to Article 14 Annex IV: Technical parameters for random statistical sampling pursuant to Article 17 (Sampling) Annex V: Model audit strategy under Article 62(1)(c) of Regulation (EC) No 1083/2006 Annex VI: Model annual control report pursuant to Article 62(1)(d)(i) of Council Regulation (EC) No 1083/2006 and Article 18(2) of the present Regulation Annex VII: Model annual opinion pursuant to Article 62(1)(d)(ii) of Council Regulation (EC) No 1083/2006 and Article 18(2) of the present Regulation Annex VIII: Model final control report and closure declaration for operational programmes pursuant to Article 62(1)(e) of Council Regulation (EC) No 1083/2006 and Article 18(3) of the present Regulation Part A: Model financial control report Part B: Closure declaration Annex IX: Model declaration for the partial closure of operational programmes pursuant to Article 18(5) Annex X: Certificate and statement of expenditure and application for interim payment Annex XI: Annual statement on withdrawn and recovered amounts, pending recoveries and irrecoverable amounts (Article 20(2)) Annex XII: Description of management and control systems Annex XIII: Model opinion issued pursuant to Article 71(2) of Council Regulation (EC) No 1083/2006 and Article 25 of the present Regulation on the compliance of management and control systems Annex XIV: Model statement of expenditure for a partial closure Annex XV: Financial table for the national strategic reference framework (NSRF) — indicative annual allocation by fund and operational programme (OP) Annex XVI: Financing plans for the operational programme Annex XVII: Forecast of likely payment applications Annex XVIII: Annual and final reporting Annex XIX: Verification of additionality for 2007 to 2013 convergence objective — ex ante verification Annex XX: Major project structured data to be encoded Annex XXI: Major project request for confirmation of assistance under articles 39 to 41 of regulation (ec) no 1083/2006 — European Regional Development Fund/Cohesion Fund — infrastructure investment Annex XXII: Major project request for confirmation of assistance under articles 39 to 41 of regulation (ec) no 1083/2006 — European Regional Development Fund/Cohesion Fund — Productive investment Annex XXIII: Data on participants in ESF operations







CHAPTER I

INTRODUCTION

Article 1

Subject matter

This Regulation lays down rules for the implementation of Regulation (EC) No 1083/2006 and Regulation (EC) No 1080/2006 as regards the following:

(a) information and publicity;

(b) information on use of the Funds;

(c) management and control systems;

(d) irregularities;

(e) personal data;

(f) financial corrections for non-respect of additionality;

(g) electronic exchange of data;

(h) financial engineering instruments;

(i) eligibility of housing;

(j) eligibility of operational programmes for the European territorial cooperation objective as referred to in Article 3(2)(c) of Regulation (EC) No 1083/2006.







CHAPTER II

PROVISIONS IMPLEMENTING REGULATION (EC) No 1083/2006







Section 1

Information and publicity

Article 2

Preparation of the communication plan

1. A communication plan, as well as any major amendments to it, shall be drawn up by the managing authority for the operational programme for which it is responsible or by the Member State to cover several or all operational programmes co-financed by the European Regional Development Fund (ERDF), the European Social Fund (ESF) or the Cohesion Fund.

2. The communication plan shall include at least the following:

(a) the aims and target groups;

(b) the strategy and content of the information and publicity measures to be taken by the Member State or the managing authority, aimed at potential beneficiaries, beneficiaries and the public, having regard to the added value of Community assistance at national, regional and local level;

(c) the indicative budget for implementation of the plan;

(d) the administrative departments or bodies responsible for implementation of the information and publicity measures;

(e) an indication of how the information and publicity measures are to be evaluated in terms of visibility and awareness of operational programmes and of the role played by the Community.

Article 3

Examination of compatibility of the communication plan

The Member State or the managing authority shall submit the communication plan to the Commission within four months of the date of adoption of the operational programme or, where the communication plan covers two or more operational programmes, of the date of adoption of the last of these operational programmes.

In the absence of observations made by the Commission within two months of receipt of the communication plan, the plan shall be deemed to comply with Article 2(2).

If the Commission sends observations within two months of receipt of the communication plan, the Member State or the managing authority shall within two months send a revised communication plan to the Commission.

In the absence of further observations by the Commission within two months of submission of a revised communication plan, it shall be considered that the communication plan may be implemented.

The Member State or the managing authority shall commence the information and publicity activities provided for in Articles 5, 6 and 7, where relevant, even in the absence of the final version of the communication plan.

Article 4

Implementation and monitoring of the communication plan

1. The managing authority shall inform the monitoring committee for each operational programme of the following:

(a) the communication plan and progress in its implementation;

(b) information and publicity measures carried out;

(c) the means of communication used.

The managing authority shall provide the monitoring committee with examples of such measures.

2. The annual reports and the final report on implementation of an operational programme, referred to in Article 67 of Regulation (EC) No 1083/2006, shall include:

(a) examples of information and publicity measures for the operational programme carried out when implementing the communication plan;

(b) the arrangements for the information and publicity measures referred to in Article 7(2)(d) including, where applicable, the electronic address at which such data may be found;

(c) the content of any major amendments to the communication plan.

The annual implementation report for the year 2010 and the final implementation report shall contain a chapter assessing the results of the information and publicity measures in terms of visibility and awareness of operational programmes and of the role played by the Community, as provided for in Article 2(2)(e).

3. The means used for implementing, monitoring and evaluating the communication plan shall be proportional to the information and publicity measures identified in the communication plan.

Article 5

Information measures for potential beneficiaries

1. The managing authority shall, in accordance with the communication plan, ensure that the operational programme is disseminated widely, with details of the financial contributions from the Funds concerned, and that it is made available to all interested parties.

It shall in addition ensure that information on the financing opportunities offered by joint assistance from the Community and the Member State through the operational programme is disseminated as widely as possible.

2. The managing authority shall provide potential beneficiaries with clear and detailed information on at least the following:

(a) the conditions of eligibility to be met in order to qualify for financing under an operational programme;

(b) a description of the procedures for examining applications for funding and of the time periods involved;

(c) the criteria for selecting the operations to be financed;

(d) the contacts at national, regional or local level who can provide information on the operational programmes.

In addition, the managing authority shall inform potential beneficiaries of the publication provided for in Article 7(2)(d).

3. The managing authority shall involve in information and publicity measures, in accordance with national laws and practices, at least one of the following bodies that can widely disseminate the information listed in paragraph 2:

(a) national, regional and local authorities and development agencies;

(b) trade and professional associations;

(c) economic and social partners;

(d) non-governmental organisations;

(e) organisations representing business;

(f) information centres on Europe as well as Commission representations in the Member States;

(g) educational institutions.

Article 6

Information measures for beneficiaries

The managing authority shall inform beneficiaries that acceptance of funding is also an acceptance of their inclusion in the list of beneficiaries published in accordance with Article 7(2)(d).

Article 7

Responsibilities of the managing authority relating to information and publicity measures for the public

1. The managing authority shall ensure that the information and publicity measures are implemented in accordance with the communication plan and that they aim at the widest possible media coverage using various forms and methods of communication at the appropriate territorial level.

2. The managing authority shall be responsible for organising at least the following information and publicity measures:

(a) a major information activity publicising the launch of an operational programme, even in the absence of the final version of the communication plan;

(b) at least one major information activity a year, as set out in the communication plan, presenting the achievements of the operational programme(s) including, where relevant, major projects;

(c) flying the flag of the European Union for one week starting 9 May, in front of the premises of each managing authority;

(d) the publication, electronically or otherwise, of the list of beneficiaries, the names of the operations and the amount of public funding allocated to the operations.

Participants in an operation of the ESF shall not be named.

Article 8

Responsibilities of beneficiaries relating to information and publicity measures for the public

1. The beneficiary shall be responsible for informing the public, by means of the measures laid down in paragraphs 2, 3 and 4, about the assistance obtained from the Funds.

2. The beneficiary shall put up a permanent explanatory plaque that is visible and of significant size no later than six months after completion of an operation that fulfils the following conditions:

(a) the total public contribution to the operation exceeds EUR 500 000 ;

(b) the operation consists in the purchase of a physical object or in the financing of infrastructure or of construction operations.

The plaque shall state the type and name of the operation, in addition to the information referred to in Article 9. ►M1 The information referred to in Article 9 shall take up at least 25 % of the plaque. ◄

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Where it is not possible to place a permanent explanatory plaque on a physical object as referred to in point (b) of the first subparagraph, other appropriate measures shall be taken in order to publicise the Community contribution.

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3. The beneficiary shall, during the implementation of the operation, put up a billboard at the site of each operation which fulfils the following conditions:

(a) the total public contribution to the operation exceeds EUR 500 000 ;

(b) the operation consists in the financing of infrastructure or of construction operations.

The information referred to in Article 9 shall take up at least 25 % of the billboard.

When the operation is completed, the billboard shall be replaced by the permanent explanatory plaque referred to in paragraph 2.

4. Where an operation receives funding under an operational programme co-financed by the ESF and, in appropriate cases, where an operation receives funding under the ERDF or the Cohesion Fund, the beneficiary shall ensure that those taking part in the operation have been informed of that funding.

The beneficiary shall provide clear notice to the effect that the operation being implemented has been selected under an operational programme co-financed by the ESF, the ERDF or the Cohesion Fund.

Any document, including any attendance or other certificate, concerning such an operation shall include a statement to the effect that the operational programme was co-financed by the ESF or, where appropriate, the ERDF or the Cohesion Fund.

Article 9

Technical characteristics of information and publicity measures for the operation

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All information and publicity measures provided by managing authorities or beneficiaries and aimed at beneficiaries, potential beneficiaries and the public shall include the following:

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(a) the emblem of the European Union, in accordance with the graphic standards set out in Annex I, and reference to the European Union;

(b) reference to the Fund concerned: (i) for the ERDF: ‘European Regional Development Fund’; (ii) for the Cohesion Fund: ‘Cohesion Fund’; (iii) for the ESF: ‘European Social Fund’;

(c) a statement chosen by the managing authority, highlighting the added value of the intervention of the Community, and preferably ‘Investing in your future’.

For small promotional objects, points (b) and (c) shall not apply.

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Where an information or publicity measure promotes several operations co-financed by more than one Fund, the reference provided for in point (b) of the first paragraph shall not be required.

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Article 10

Network and exchange of experience

1. Each managing authority shall designate the contact persons to be responsible for information and publicity and shall inform the Commission accordingly. In addition, Member States may designate a single contact person for all operational programmes.

2. Community networks comprising the persons designated under paragraph 1 may be set up to ensure exchanges of good practice, including the results of implementation of the communication plan, and exchanges of experience in implementing the information and publicity measures under this Section.

3. Exchanges of experience in the field of information and publicity may be supported through technical assistance pursuant to Article 45 of Regulation (EC) No 1083/2006.







Section 2

Information on use of the Funds

Article 11

Indicative breakdown of use of the Funds

1. Member States shall submit to the Commission the indicative breakdown by category of the programmed use of the Funds at operational programme level, as referred to in Article 37(1)(d) of Regulation (EC) No 1083/2006 and Article 12(5) of Regulation (EC) No 1080/2006, in accordance with Parts A and B of Annex II to this Regulation.

2. The annual and final implementation reports referred to in Article 67 of Regulation (EC) No 1083/2006 shall contain updated information at operational programme level on the cumulative allocation of the Funds by categories, as from the start of the operational programme, to the operations selected under the operational programme, presented for each combination of codes, in accordance with Parts A and C of Annex II to this Regulation.

3. The data provided by Member States pursuant to paragraphs 1 and 2 shall be used by the Commission only for information purposes.







Section 3

Management and control systems

Article 12

Intermediate bodies

Where one or more of the tasks of a managing authority or certifying authority are performed by an intermediate body, the relevant arrangements shall be formally recorded in writing.

The provisions of this Regulation concerning the managing authority and certifying authority shall apply to the intermediate body.

Article 13

►M1 Managing authority and controllers ◄

1. For the purposes of the selection and approval of operations pursuant to Article 60(a) of Regulation (EC) No 1083/2006, the managing authority shall ensure that beneficiaries are informed of the specific conditions concerning the products or services to be delivered under the operation, the financing plan, the time-limit for execution and the financial and other information to be kept and communicated.

It shall satisfy itself that the beneficiary has the capacity to fulfil these conditions before the approval decision is taken.

2. ►M1 The verifications to be carried out by the managing authority pursuant to Article 60(b) of Regulation (EC) No 1083/2006, or by the relevant controllers designated by Member States in the case of the European territorial cooperation objective programmes pursuant to Article 16 of Regulation (EC) No 1080/2006, shall cover, as appropriate, administrative, financial, technical and physical aspects of operations. ◄

Verifications shall ensure that the expenditure declared is real, that the products or services have been delivered in accordance with the approval decision, that the applications for reimbursement by the beneficiary are correct and that the operations and expenditure comply with Community and national rules. They shall include procedures to avoid double-financing of expenditure with other Community or national schemes and with other programming periods.

Verifications shall include the following procedures:

(a) administrative verifications in respect of each application for reimbursement by beneficiaries;

(b) on-the-spot verifications of individual operations.

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3. Where on-the-spot verifications pursuant to point (b) of the third subparagraph of paragraph 2 are carried out on a sample basis for an operational programme, the managing authority, or the relevant controllers in the case of European territorial cooperation objective programmes, shall keep records describing and justifying the sampling method and identifying the operations or transactions selected for verification.

The managing authority, or the relevant controllers in the case of European territorial cooperation objective programmes, shall determine the size of the sample in order to achieve reasonable assurance as to the legality and regularity of the underlying transactions, having regard to the level of risk identified by the managing authority, or the relevant controllers as appropriate, for the type of beneficiaries and operations concerned. The managing authorities or the relevant controllers shall review the sampling method each year.

4. The managing authority, or the relevant controllers in the case of European territorial cooperation objective programmes, shall establish written standards and procedures for the verifications carried out pursuant to paragraph 2 and shall keep records for each verification, stating the work performed, the date and the results of the verification, and the measures taken in respect of irregularities detected.

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5. Where the managing authority is also a beneficiary under the operational programme, arrangements for the verifications referred to in paragraphs 2, 3 and 4 shall ensure adequate separation of functions in accordance with Article 58(b) of Regulation (EC) No 1083/2006.

Article 14

Accounting records

1. The accounting records of operations and the data on implementation referred to in Article 60(c) of Regulation (EC) No 1083/2006 shall include the information set out in Annex III to this Regulation.

The managing, certifying and audit authorities and the bodies referred to in Article 62(3) of Regulation (EC) No 1083/2006 shall have access to that information.

2. At the written request of the Commission, the Member State shall provide the Commission with the information referred to in paragraph 1 within 15 working days of receipt of the request, or any other agreed period, for the purpose of carrying out documentary and on-the-spot checks.

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3. In the accounting records maintained in accordance with Article 61(f) of Regulation (EC) No 1083/2006, any amount related to an irregularity reported to the Commission under Article 28 of this Regulation shall be identified by the reference number attributed to that irregularity or by any other adequate method.

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Article 15

Audit trail

For the purposes of Article 60(f) of Regulation (EC) No 1083/2006, an audit trail shall be considered adequate where, for the operational programme concerned, it complies with the following criteria:

(a) it permits the aggregate amounts certified to the Commission to be reconciled with the detailed accounting records and supporting documents held by the certifying authority, managing authority, intermediate bodies and beneficiaries as regards operations co-financed under the operational programme;

(b) it permits verification of payment of the public contribution to the beneficiary;

(c) it permits verification of application of the selection criteria established by the monitoring committee for the operational programme;

(d) it contains in respect of each operation, as appropriate, the technical specifications and financing plan, documents concerning the grant approval, documents relating to public procurement procedures, progress reports and reports on verifications and audits carried out.

Article 16

Audits of operations

1. The audits referred to in Article 62(1)(b) of Regulation (EC) No 1083/2006 shall be carried out each 12-month period from 1 July 2008 on a sample of operations selected by a method established or approved by the audit authority in accordance with Article 17 of this Regulation.

The audits shall be carried out on-the-spot on the basis of documentation and records held by the beneficiary.

2. The audits shall verify that the following conditions are fulfilled:

(a) the operation meets the selection criteria for the operational programme, has been implemented in accordance with the approval decision and fulfils any applicable conditions concerning its functionality and use or the objectives to be attained;

(b) the expenditure declared corresponds to the accounting records and supporting documents held by the beneficiary;

(c) the expenditure declared by the beneficiary is in compliance with Community and national rules;

(d) the public contribution has been paid to the beneficiary in accordance with Article 80 of Regulation (EC) No 1083/2006.

3. Where problems detected appear to be systemic in nature and therefore entail a risk for other operations under the operational programme, the audit authority shall ensure that further examination is carried out, including additional audits where necessary, to establish the scale of such problems. The necessary preventive and corrective action shall be taken by the relevant authorities.

4. Only expenditure falling within the scope of an audit carried out pursuant to paragraph 1 shall be counted towards the amount of expenditure audited, for the purposes of reporting in the tables in point 9 of Annex VI and point 9 of Annex VIII.

Article 17

Sampling

1. The sample of operations to be audited each year shall in the first instance be based on a random statistical sampling method as set out in paragraphs 2, 3 and 4. Additional operations may be selected as a complementary sample as set out in paragraphs 5 and 6.

2. The method used to select the sample and to draw conclusions from the results shall take account of internationally accepted audit standards and be documented. Having regard to the amount of expenditure, the number and type of operations and other relevant factors, the audit authority shall determine the appropriate statistical sampling method to apply. The technical parameters of the sample shall be determined in accordance with Annex IV.

3. The sample to be audited each twelve-month period shall be selected from those operations for which, during the year preceding the year in which the annual control report pursuant to Article 18(2) is communicated to the Commission, expenditure has been declared to the Commission for the operational programme or, where appropriate, for the operational programmes covered by a common management and control system. For the first 12-month period, the audit authority may decide to group the operations for which expenditure has been declared to the Commission in 2007 and 2008 as a basis for the selection of the operations to be audited.

4. The audit authority shall draw conclusions on the basis of the results of the audits relating to expenditure declared to the Commission during the year referred to in paragraph 3 and communicate them to the Commission in the annual control report.

In operational programmes for which the projected error rate is above the materiality level, the audit authority shall analyse its significance and take the necessary actions, including making appropriate recommendations, which will be communicated in the annual control report.

5. The audit authority shall regularly review the coverage provided by the random sample, having regard in particular to the need to have sufficient audit assurance for the declarations to be provided at partial and final closure for each operational programme.

It shall decide on the basis of professional judgment whether it is necessary to audit a complementary sample of additional operations in order to take account of specific risk factors identified and to guarantee for each programme sufficient coverage of different types of operation, beneficiaries, intermediate bodies and priority axes.

6. The audit authority shall draw conclusions on the basis of the results of the audits of the complementary sample and communicate them to the Commission in the annual control report.

Where the number of detected irregularities is high or where systemic irregularities have been detected, the audit authority shall analyse the significance thereof and take the necessary actions, including making appropriate recommendations, which shall be communicated in the annual control report.

The results of the audits on the complementary sample shall be analysed separately from those of the random sample. In particular, irregularities detected in the complementary sample shall not be taken into account when the error rate of the random sample is calculated.

Article 18

Documents presented by the audit authority

1. The audit strategy referred to in Article 62(1)(c) of Regulation (EC) No 1083/2006 shall be established in accordance with the model in Annex V to this Regulation. It shall be updated and reviewed annually and, if necessary, during the course of the year.

2. The annual control report and the opinion referred to in Article 62(1)(d) of Regulation (EC) No 1083/2006 shall be based on the systems audits and audits of operations carried out pursuant to Article 62(1)(a) and (b) of that Regulation in accordance with the audit strategy and shall be drawn up in accordance with the models set out in Annexes VI and VII to this Regulation.

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For European territorial cooperation objective programmes, the annual control report and the opinion shall cover the whole of the programme and all programme expenditure eligible for a contribution from the ERDF.

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3. The closure declaration referred to in Article 62(1)(e) of Regulation (EC) No 1083/2006 shall be based on all the audit work carried out by, or under the responsibility of, the audit authority in accordance with the audit strategy. The closure declaration and final control report shall be drawn up in accordance with the model set out in Annex VIII to this Regulation.

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For European territorial cooperation objective programmes, the closure declaration and final control report shall cover the whole of the programme and all programme expenditure eligible for contribution from the ERDF.

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4. If there is a limitation in the scope of examination or if the level of irregular expenditure detected does not allow the provision of an unqualified opinion for the annual opinion referred to in Article 62(1)(d) of Regulation (EC) No 1083/2006 or in the closure declaration referred to in point (e) of that Article, the audit authority shall give the reasons and estimate the scale of the problem and its financial impact.

5. In the event of partial closure of an operational programme, the declaration relating to the legality and regularity of the transactions covered by the statement of expenditure referred to in Article 88 of Regulation (EC) No 1083/2006 shall be drawn up by the audit authority in accordance with the model in Annex IX to this Regulation and submitted with the opinion referred to in Article 62(1)(d)(ii) of Regulation (EC) No 1083/2006.

Article 19

Availability of documents

1. For the purposes of Article 90 of Regulation (EC) No 1083/2006, the managing authority shall ensure that a record is available of the identity and location of bodies holding the supporting documents relating to expenditure and audits, which includes all documents required for an adequate audit trail.

2. The managing authority shall ensure that the documents referred to in paragraph 1 are made available for inspection by, and extracts or copies thereof are supplied to, persons and bodies entitled thereto, including at least authorised staff of the managing authority, certifying authority, intermediate bodies and audit authority and the bodies referred to in Article 62(3) of Regulation (EC) No 1083/2006, and authorised officials of the Community and their authorised representatives.

3. The managing authority shall keep information necessary for the purposes of evaluation and reporting, including the information referred to in Article 14, in relation to operations referred to in Article 90(2) of Regulation (EC) No 1083/2006 for the whole of the period referred to in paragraph (1)(a) of that Article.

4. The following at least shall be considered commonly accepted data carriers as referred to in Article 90 of Regulation (EC) No 1083/2006:

(a) photocopies of original documents;

(b) microfiches of original documents;

(c) electronic versions of original documents;

(d) documents existing in electronic version only.

5. The procedure for certification of conformity of documents held on commonly accepted data carriers with the original document shall be laid down by the national authorities and shall ensure that the versions held comply with national legal requirements and can be relied on for audit purposes.

6. Where documents exist in electronic version only, the computer systems used must meet accepted security standards that ensure that the documents held comply with national legal requirements and can be relied on for audit purposes.

Article 20

Documents submitted by the certifying authority

1. Certified statements of expenditure and payment applications referred to in Article 61(a) of Regulation (EC) No 1083/2006 shall be drawn up in the format in Annex X to this Regulation and transmitted to the Commission.

2. ►M1 By 31 March 2010 and by 31 March of each year thereafter, the certifying authority shall send a statement to the Commission in the format set out in Annex XI, identifying for each priority axis of the operational programme: ◄

(a) the amounts withdrawn from statements of expenditure submitted during the preceding year following cancellation of all or part of the public contribution for an operation;

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(b) the amounts recovered which have been deducted from statements of expenditure submitted during the preceding year;

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(c) a statement of amounts to be recovered as at 31 December of the preceding year, classified by the year in which recovery orders were issued;

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(d) a list of amounts for which it was established during the preceding year that they cannot be recovered or which are not expected to be recovered, classified by the year in which the recovery orders were issued.

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For the purposes of points (a), (b) and (c) of the first subparagraph, aggregate amounts related to irregularities reported to the Commission under Article 28 shall be provided for each priority axis.

For the purposes of point (d) of the first subparagraph, any amount related to an irregularity reported to the Commission under Article 28 shall be identified by the reference number of that irregularity or by any other adequate method.

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2a. For each amount referred to in point (d) of the first subparagraph of paragraph 2 the certifying authority shall indicate whether it requests the Community share to be borne by the general budget of the European Union.

If, within one year from the date of the submission of the statement, the Commission does not request information for the purposes of Article 70(2) of Regulation (EC) No 1083/2006, inform the Member State in writing about its intention to open an enquiry in respect of that amount or request that the Member State continue the recovery procedure, the Community share shall be borne by the general budget of the European Union.

The time limit of one year shall not apply in cases of suspected or established fraud.

2b. For the purposes of the statement provided for in paragraph 2, Member States which have not adopted the euro as their currency by the date when the statement is submitted shall convert amounts in national currency into euro using the exchange rate referred to in Article 81(3) of Regulation (EC) No 1083/2006. Where the amounts relate to expenditure registered in the accounts of the certifying authority during more than one month, the exchange rate in the month during which expenditure was last registered may be used.

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3. In order to proceed to the partial closure of an operational programme, the certifying authority shall send to the Commission a statement of expenditure referred to in Article 88 of Regulation (EC) No 1083/2006 in the format set out in Annex XIV to this Regulation.

Article 21

Description of management and control systems

1. The description of the management and control systems for operational programmes referred to in Article 71(1) of Regulation (EC) No 1083/2006 shall contain information on the matters referred to in Article 58 of that Regulation in respect of each operational programme, and the information set out in Articles 22, 23, and, where applicable, Article 24 of this Regulation.

That information shall be submitted in accordance with the model set out in Annex XII.

2. The description of the management and control systems of operational programmes under the European territorial cooperation objective shall be provided by the Member State on whose territory the managing authority is located.

Article 22

Information concerning the managing authority, the certifying authority and intermediate bodies

As regards the managing authority, the certifying authority and each intermediate body, the Member State shall provide to the Commission the following information:

(a) a description of the tasks entrusted to them;

(b) the organisation chart of each of them, a description of the allocation of tasks between or within their departments, and the indicative number of posts allocated;

(c) the procedures for selecting and approving operations;

(d) the procedures by which beneficiaries' applications for reimbursement are received, verified and validated, and in particular the rules and procedures laid down for verification purposes in Article 13, and the procedures by which payments to beneficiaries are authorised, executed and entered in the accounts;

(e) the procedures by which statements of expenditure are drawn up, certified and submitted to the Commission;

(f) reference to the written procedures established for the purposes of points (c), (d) and (e);

(g) eligibility rules laid down by the Member State and applicable to the operational programme;

(h) the system for keeping the detailed accounting records of operations and data on implementation referred to in Article 14(1), under the operational programme.

Article 23

Information concerning the audit authority and bodies carrying out audits

As regards the audit authority and the bodies referred to in Article 62(3) of Regulation (EC) No 1083/2006, the Member State shall provide to the Commission the following information:

(a) a description of their respective tasks and their inter-relationship, including, where applicable, the relation with the coordination body referred to in Article 73(1) of Regulation (EC) No 1083/2006;

(b) the organisation chart of the audit authority and of each of the bodies involved in carrying out audits concerning the operational programme, describing how their independence is ensured, the indicative number of posts allocated and the qualifications or experience required;

(c) the procedures for monitoring the implementation of recommendations and corrective measures resulting from audit reports;

(d) the procedures, where appropriate, for the supervision by the audit authority of the work of bodies involved in carrying out audits concerning the operational programme;

(e) the procedures for the preparation of the annual control report and closure declarations.

Article 24

Description of the management and control systems of the European territorial cooperation objective

In addition to the information set out in Articles 21, 22 and 23, the description of the management and control system shall include the arrangements agreed between the Member States for the following purposes:

(a) to provide the managing authority with access to all the information which it requires to discharge its responsibilities pursuant to Article 60 of Regulation (EC) No 1083/2006 and Article 15 of Regulation (EC) No 1080/2006;

(b) to provide the certifying authority with access to all the information which it requires to discharge its responsibilities pursuant to Article 61 of Regulation (EC) No 1083/2006;

(c) to provide the audit authority with access to all the information which it requires to discharge its responsibilities pursuant to Article 62 of Regulation (EC) No 1083/2006 and Article 14(2) of Regulation (EC) No 1080/2006;

(d) to ensure compliance by the Member States with their obligations as regards the recovery of amounts unduly paid as set out in Article 17(2) of Regulation (EC) No 1080/2006;

(e) to ensure the legality and regularity of expenditure paid outside the Community and included in the statement of expenditure, where the Member States taking part in a programme avail themselves of the flexibility allowed by Article 21(3) of Regulation (EC) No 1080/2006, in order to allow the managing authority, the certifying authority and the audit authority to exercise their responsibilities as regards expenditure paid in third countries and the arrangements for recovering amounts unduly paid relating to irregularities.

Article 25

Assessment of management and control systems

The report referred to in Article 71(2) of Regulation (EC) No 1083/2006 shall be based on an examination of the systems description, of relevant documents concerning the systems and of the system for keeping accounting records and data on implementation of operations, and on interviews with the staff in the main bodies considered important by the audit authority or other body responsible for the report in order to complete, clarify or verify the information.

The opinion referred to in Article 71(2) of Regulation (EC) No 1083/2006 shall be drawn up in accordance with the model set out in Annex XIII to this Regulation.

Where the management and control systems concerned are essentially the same as those in place for assistance approved pursuant to Regulation (EC) No 1260/1999, account may be taken of the results of audits carried out by national and Community auditors in relation to those systems for the purpose of establishing the report and opinion pursuant to Article 71(2) of Regulation (EC) No 1083/2006.

Article 26

Derogations concerning operational programmes referred to in Article 74 of Regulation (EC) No 1083/2006

1. For operational programmes in respect of which a Member State has exercised the option referred to in the first subparagraph of Article 74(2) of Regulation (EC) No 1083/2006, paragraphs 2 to 5 of this Article shall apply.

2. The verifications referred to in Article 13(2) of this Regulation shall be carried out by the national body referred to in Article 74(2) of Regulation (EC) No 1083/2006.

3. The audits of operations referred to in point (b) of Article 62(1) of Regulation (EC) No 1083/2006 shall be carried out in accordance with national procedures. Articles 16 and 17 of this Regulation shall not apply.

4. Article 18(2) to (5) of this Regulation shall apply, mutatis mutandis, to the preparation of the documents issued by the national body referred to in Article 74(2) of Regulation (EC) No 1083/2006.

5. The annual control report and the annual opinion shall be drawn up following, as appropriate, the models set out in Annexes VI and VII to this Regulation.

The obligations laid down in Article 20(2) of this Regulation shall be carried out by the national body referred to in Article 74(2) of Regulation (EC) No 1083/2006.

The statement of expenditure shall be drawn up following the models set out in Annexes X and XIV to this Regulation.

6. The information to be included in the description of the management and control systems referred to in Articles 21(1), 22 and 23 of this Regulation shall, where applicable, include the information concerning the national bodies referred to in Article 74(2) of Regulation (EC) No 1083/2006.







Section 4

Irregularities

Article 27

Definitions

For the purposes of this section, the following definitions shall apply:

(a) ‘economic operator’ means any natural or legal person or other entity taking part in the implementation of assistance from the Funds, with the exception of a Member State exercising its prerogatives as a public authority;

(b) ‘primary administrative or judicial finding’ means a first written assessment by a competent authority, either administrative or judicial, concluding on the basis of specific facts that an irregularity has been committed, without prejudice to the possibility that this conclusion may subsequently have to be revised or withdrawn as a result of developments in the course of the administrative or judicial procedure;

(c) ‘suspected fraud’ means an irregularity giving rise to the initiation of administrative or judicial proceedings at national level in order to establish the presence of intentional behaviour, in particular fraud, as referred to in Article 1(1)(a) of the Convention drawn up on the basis of Article K.3 of the Treaty on European Union, on the protection of the European Communities' financial interests ( 18 );

(d) ‘bankruptcy’ means insolvency proceedings within the meaning of Article 2(a) of Council Regulation (EC) No 1346/2000 ( 19 ).

Article 28

Initial reporting — derogations

1. Without prejudice to the other obligations pursuant to Article 70 of Regulation (EC) No 1083/2006, within two months following the end of each quarter, Member States shall report to the Commission any irregularities which have been the subject of a primary administrative or judicial finding.

In that report Member States shall in all cases give details concerning the following:

(a) the Fund, objective, operational programme, priority axis and operation concerned and the Common Identification Code (CCI) number;

(b) the provision which has been infringed;

(c) the date and source of the first information leading to suspicion that an irregularity has been committed;

(d) the practices employed in committing the irregularity;

(e) where appropriate, whether the practice gives rise to a suspicion of fraud;

(f) the manner in which the irregularity was discovered;

(g) where appropriate, the Member States and third countries involved;

(h) the period during which, or the moment at which, the irregularity was committed;

(i) the national authorities or bodies which drew up the official report on the irregularity and the authorities responsible for administrative or judicial follow-up;

(j) the date on which the primary administrative or judicial finding on the irregularity was established;

(k) the identity of the natural and legal persons involved or of any other participating entities, except where this information is irrelevant for the purposes of combating irregularities, given the nature of the irregularity concerned;

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(l) the total eligible expenditure and the public contribution approved for the operation together with the corresponding amount of the Community contribution calculated by application of the co-financing rate of the priority axis;

(m) the expenditure and the public contribution certified to the Commission which are affected by the irregularity and the corresponding amount of the Community contribution at risk calculated by application of the co-financing rate of the priority axis;

(n) in case of a suspected fraud and where no payment of the public contribution has been made to the persons or other entities identified pursuant to point (k), the amounts which would have been unduly paid had the irregularity not been identified;

(o) the code of region or area where the operation has been located or carried out, by specifying the NUTS level or otherwise;

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(p) the nature of the irregular expenditure.

2. By way of derogation from paragraph 1, the following cases need not be reported:

(a) cases where the irregularity consists solely in the failure to execute, in whole or in part, an operation included in the co-financed operational programme owing to the bankruptcy of the beneficiary;

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(b) cases brought to the attention of the managing authority or certifying authority by the beneficiary voluntarily and before detection by either of them, whether before or after the inclusion of the expenditure concerned in a certified statement submitted to the Commission;

(c) cases which are detected and corrected by the managing authority or certifying authority before inclusion of the expenditure concerned in a statement of expenditure submitted to the Commission.

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However, irregularities preceding a bankruptcy and cases of suspected fraud must be reported.

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3. Where some of the information referred to in paragraph 1, and in particular information concerning the practices employed in committing the irregularity and the manner in which it was discovered, is not available or needs to be rectified, Member States shall as far as possible supply the missing or correct information when forwarding subsequent quarterly reports of irregularities to the Commission.

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4. Irregularities relating to operational programmes under the European territorial cooperation objective shall be reported by the Member State in which the expenditure is paid by the beneficiary in implementing the operation. The Member State shall at the same time inform the managing authority, the certifying authority for the programme and the audit authority.

5. If national provisions provide for the confidentiality of investigations, communication of the information shall be subject to the authorisation of the competent court or tribunal.

6. Where a Member State has no irregularities to report pursuant to paragraph 1, it shall inform the Commission of that fact within the time limit set out in that paragraph.

Article 29

Urgent cases

Each Member State shall immediately report to the Commission and, where necessary, to the other Member States concerned, any irregularities discovered or supposed to have occurred, where it is feared that they may very quickly have repercussions outside its territory or they show that a new malpractice has been employed.

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Article 30

Follow-up reporting

1. In addition to the information referred to in Article 28(1), Member States shall provide the Commission within two months following the end of each quarter, with reference to any previous report made pursuant to that Article, with details concerning the initiation, conclusion or abandonment of any procedures for imposing administrative or criminal penalties related to the reported irregularities as well as of the outcome of such procedures.

With regard to irregularities for which penalties have been imposed, Member States shall also indicate the following:

(a) whether the penalties are of an administrative or a criminal nature;

(b) whether the penalties result from a breach of Community or national law;

(c) the provisions in which the penalties are laid down;

(d) whether fraud was established.

2. At the written request of the Commission, the Member State shall provide information in relation to a specific irregularity or group of irregularities.

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Article 31

Electronic transmission

The information referred to in Articles 28, 29 and 30(1) shall be sent, whenever it is possible to do so, by electronic means, using the module provided by the Commission for this purpose via a secure connection.

Article 32

Reimbursement of judicial costs

Where the competent authorities of a Member State decide, at the express request of the Commission, to initiate or continue judicial proceedings with a view to recovering amounts unduly paid, the Commission may undertake to reimburse to the Member State all or part of the judicial costs and costs arising directly from the proceedings, on presentation of documentary evidence, even if the proceedings are unsuccessful.

Article 33

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1. The Commission shall maintain appropriate contacts with the Member States concerned for the purpose of supplementing the information supplied on the irregularities referred to in Article 28, on the procedures referred to in Article 30, and, in particular, on the possibility of recovery.

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2. Without prejudice to the contacts referred to in paragraph 1, where the Commission considers that, due to the nature of the irregularity, identical or similar practices could occur in other Member States, it shall submit the matter to the advisory Committee for the Coordination of Fraud Prevention set up by Commission Decision 94/140/EC ( 20 ).

The Commission shall, each year, inform that Committee and the committees referred to in Articles 103 and 104 of Regulation (EC) No 1083/2006 of the order of magnitude of the Funds affected by the irregularities which have been discovered and of the various categories of irregularities, broken down by type and number.

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3. The Commission shall organise information meetings at Community level for representatives of the Member States in order to examine with them the information obtained pursuant to Articles 28, 29 and 30, and paragraph 1 of this Article. The examination shall focus on the lessons to be learned from the information in connection with irregularities, preventive measures and judicial proceedings.

4. At the request of a Member State or of the Commission, the Member States and the Commission shall consult one another for the purpose of closing any loopholes prejudicial to Community interests, which become apparent in the course of the enforcement of provisions in force.

Article 34

Use of information

The Commission may use any information of a general or operational nature communicated by Member States under this Regulation to perform risk analyses and may, on the basis of the information obtained, produce reports and develop early-warning systems serving to identify risks more effectively.

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Article 36

Irregularities under the reporting threshold

1. Where the irregularities relate to amounts of less than EUR 10 000 chargeable to the general budget of the European Communities, Member States shall not send the Commission the information provided for in Articles 28 and 30, unless the Commission expressly requests it.

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2. Member States which have not adopted the euro as their currency by the date when the report under Article 28(1) is submitted shall convert amounts in national currency into euro using the exchange rate referred to in Article 81(3) of Regulation (EC) No 1083/2006.

Where the amounts relate to expenditure registered in the accounts of the certifying authority during a period of more than one month, the exchange rate in the month during which expenditure was last registered may be used. Where the expenditure has not been registered in the accounts of the certifying authority, the most recent accounting exchange rate published electronically by the Commission shall be used.

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Section 5

Personal data

Article 37

Protection of personal data

1. Member States and the Commission shall take all necessary measures to prevent any unauthorised disclosure of, or access to, the information referred to in Article 14(1), information collected by the Commission in the course of its audits and information referred to in Section 4.

2. The information referred to in Article 14(1), together with information collected by the Commission in the course of its audits, shall be used by the Commission for the sole purpose of fulfilling its responsibilities pursuant to Article 72 of Regulation (EC) No 1083/2006. The European Court of Auditors and the European Anti-Fraud Office shall have access to that information.

3. The information referred to in Section 4 may not be sent to persons other than those in the Member States or within the Community institutions whose duties require that they have access to it, unless the Member State supplying such information has expressly so agreed.

4. Any personal data included in the information referred to in Article 7(2) (d) shall be processed only for the purpose specified in that Article.







Section 6

Financial correction for non-respect of additionality

Article 38

Rates of financial correction

1. Where the Commission makes a financial correction in accordance with Article 99(5) of Regulation (EC) No 1083/2006, the correction shall be calculated in accordance with paragraph 2 of this Article.

2. The rate of financial correction shall be obtained by subtracting 3 percentage points from the difference between the agreed target level and the level achieved, expressed as a percentage of the agreed target level, and then dividing the result by 10.

The financial correction shall be determined by applying that rate of financial correction to the Structural Fund contribution to the Member State concerned under the convergence objective for the full programming period.

3. If the difference between the agreed target level and the level achieved, expressed as a percentage of the agreed target level, referred to in paragraph 2, is 3 % or less, no financial correction shall be made.

4. The financial correction shall not exceed 5 % of the Structural Fund allocation to the Member State concerned under the convergence objective for the full programming period.







Section 7

Electronic exchange of data

Article 39

Computer system for data exchange

For the purposes of Articles 66 and 76 of Regulation (EC) No 1083/2006, a computer system for exchange of data shall be established as a tool for the exchange of all data relating to the operational programme.

The exchange of data between each Member State and the Commission shall be carried out using a computer system established by the Commission which permits the secure exchange of data between the Commission and each Member State.

The Member States shall be involved in the further development of the computer system for data exchange.

Article 40

Content of computer system for data exchange

1. The computer system for data exchange shall contain information of common interest to the Commission and the Member States, and at least the following data necessary for financial transactions:

(a) the indicative annual allocation of each Fund in each operational programme, as set out in the national strategic reference framework, in accordance with the model set out in Annex XV;

(b) the financing plans for operational programmes, in accordance with the model set out in Annex XVI;

(c) statements of expenditure and applications for payment, in accordance with the model set out in Annex X;

(d) annual forecasts of likely payment of expenditure, in accordance with the model set out in Annex XVII;

(e) the financial section of the annual reports and final implementation reports, in accordance with the model set out in Annex XVIII, point 2.1.

2. In addition to paragraph 1, the computer system for data exchange shall contain at least the following documents and data of common interest enabling monitoring to be carried out:

(a) the national strategic reference framework referred to in Article 27(1) of Regulation (EC) No 1083/2006;

(b) data establishing compliance with additionality, in accordance with the model set out in Annex XIX;

(c) the operational programmes, including data concerning categorisation following the model set out in Part B of Annex II and in accordance with the tables set out in Part A of Annex II;

(d) the Commission decisions concerning the contribution of the Funds;

(e) the requests for assistance for major projects referred to in Articles 39, 40 and 41 of Regulation (EC) No 1083/2006, in accordance with Annexes XXI and XXII to this Regulation, together with selected data from those Annexes identified in Annex XX;

(f) the implementing reports in accordance with Annex XVIII, including data concerning categorisation following the model set out in Part C of Annex II and in accordance with the tables set out in Part A of Annex II;

(g) data on participants in ESF operations by priority, in accordance with the model set out in Annex XXIII;

(h) the description of management and control systems, in accordance with the model set out in Annex XII;

(i) the audit strategy, in accordance with the model set out in Annex V;

(j) the reports and opinions on audits, in accordance with the models set out in Annexes VI, VII, VIII, IX and XIII, and correspondence between the Commission and each Member State;

(k) the statements of expenditure concerning partial closure, in accordance with the model set out in Annex XIV;

(l) the annual statement on withdrawn and recovered amounts and pending recoveries, in accordance with Annex XI;

(m) the communication plan referred to in Article 2.

3. The data referred to in paragraphs 1 and 2 shall, where applicable, be transmitted in the format given in the Annexes.

Article 41

Functioning of computer system for data exchange

1. The Commission and the authorities designated by the Member State pursuant to Regulation (EC) No 1083/2006, as well as the bodies to which that task has been delegated, shall record into the computer system for data exchange the documents for which they are responsible, and any updates thereto, in the format required.

2. Member States shall centralise and send to the Commission requests for access rights to the computer system for data exchange.

3. Exchanges of data and transactions shall bear an electronic signature within the meaning of Directive 1999/93/EC. The Member States and the Commission shall recognise the legal effectiveness and admissibility of the electronic signature used in the computer system for data exchange as evidence in legal proceedings.

4. The cost of developing the computer system for data exchange shall be financed by the general budget of the European Communities pursuant to Article 45 of Regulation (EC) No 1083/2006.

Any costs of an interface between the common computer system for data exchange and national, regional and local computer systems, and any costs of adapting national, regional and local systems to requirements pursuant to Regulation (EC) No 1083/2006, shall be eligible pursuant to Article 46 of that Regulation.

Article 42

Transmission of data through the computer system for data exchange

1. The computer system for data exchange shall be accessible to the Member States and the Commission either directly or via an interface for automatic synchronisation and recording of data with national, regional and local computer management systems.

2. The date taken into account for the forwarding of documents to the Commission shall be the date on which the Member State records the documents into the computer system for data exchange.

3. In cases of force majeure, and in particular of malfunctioning of the computer system for data exchange or a lack of a lasting connection, the Member State concerned may forward to the Commission the documents required by Regulation (EC) No 1083/2006 in hard copy, using the forms set out in Annexes II, V, VI, VII, IX, X, XII, XIII, XIV, XV, XVI, XVII, XVIII, XIX, XX, XXI, XXII and XXIII to this Regulation. As soon as the cause of force majeure ceases, the Member State shall record the corresponding documents into the computer system for data exchange without delay.

By way of derogation from paragraph 2, the date taken into account for forwarding shall be deemed to be the date of sending of the documents in hard copy.







Section 8

Financial engineering instruments

Article 43

►M1 General provisions ◄

▼M2

1. Articles 43 to 46 shall apply to financial engineering instruments in the form of actions which make repayable investments, or provide guarantees for repayable investments, or both, in the following:

(a) enterprises, primarily small and medium-sized enterprises (SMEs), including micro-enterprises, as defined in Commission Recommendation 2003/361/EC ( 21 ) as of 1 January 2005;

(b) public-private partnerships or other urban projects included in integrated plans for sustainable urban development, in the case of urban development funds;

(c) funds or other incentive schemes for energy efficiency and use of renewable energy in buildings, including in existing housing.

▼M1

2. Financial engineering instruments, including holding funds, shall be independent legal entities governed by agreements between the co-financing partners or shareholders or as a separate block of finance within a financial institution.

Where the financial engineering instrument is within a financial institution, it shall be set up as a separate block of finance, subject to specific implementation rules within the financial institution, stipulating, in particular, that separate accounts are kept which distinguish the new resources invested in the financial engineering instrument, including those contributed by the operational programme, from those initially available in the institution.

The Commission may not become a co-financing partner or shareholder in financial engineering instruments.

3. When managing authorities or holding funds select financial engineering instruments, the financial engineering instruments shall submit a business plan or other appropriate document.

The terms and conditions for contributions from operational programmes to financial engineering instruments shall be set out in a funding agreement, to be concluded between the duly mandated representative of the financial engineering instrument and the Member State or the managing authority, or the holding fund where applicable.

The funding agreement shall include at least the following elements:

(a) the investment strategy and planning;

(b) provisions for monitoring of implementation;

(c) an exit policy for the contribution from the operational programme out of the financial engineering instrument;

(d) provisions for the winding-up of the financial engineering instrument, including the reutilisation of resources returned to the financial engineering instrument from investments or left over after all guarantees have been honoured that are attributable to the contribution from the operational programme.

▼C1

4. ►M1 Management costs may not exceed, on a yearly average, for the duration of the assistance any of the following thresholds, unless a higher percentage proves necessary following a competitive tender, in accordance with applicable rules: ◄

(a) 2 % of the capital contributed from the operational programme to holding funds, or of the capital contributed from the operational programme or holding fund to the guarantee funds;

(b) 3 % of the capital contributed from the operational programme or the holding fund to the financial engineering instrument in all other cases, with the exception of micro-credit instruments directed at micro-enterprises;

(c) 4 % of the capital contributed from the operational programme or the holding fund to micro-credit instruments directed at micro-enterprises.

▼M1

5. Returns from equity, loans and other repayable investments, and from guarantees for repayable investments, less a pro rata share of the management costs and performance incentives, may be allocated preferentially to investors operating under the market economy investor principle. Such returns may be allocated up to the level of remuneration laid down in the by-laws of the financial engineering instruments, and they shall then be allocated proportionally among all co-financing partners or shareholders.

▼M2

6. Enterprises, public private partnerships and other projects included in an integrated plan for sustainable urban development, as well as operations for energy efficiency and use of renewable energy in buildings, including in existing housing which are supported by financial engineering instruments, may also receive a grant or other assistance from an operational programme.

▼M1

7. Managing authorities shall take precautions to minimise distortion of competition in the venture capital or lending markets and the private guarantee market.

▼C1

Article 44

►M1 Holding funds ◄

1. Where the Structural Funds finance financial engineering instruments organised through holding funds, the Member State or managing authority shall conclude a funding agreement with the holding fund, setting out the funding arrangements and objectives.

The funding agreement shall, where appropriate, take account of the following:

▼M2

(a) as regards financial engineering instruments supporting enterprises, primarily SMEs, including micro-enterprises, the conclusions of an evaluation of gaps between supply of such instruments, and demand for such instruments;

▼C1

(b) as regards urban development funds, urban development studies or evaluations and integrated urban development plans included in operational programmes;

▼M2

(c) as regards funds or other incentive schemes for energy efficiency and use of renewable energy in buildings, including in existing housing the relevant Union and national regulatory frameworks and the relevant national strategies.

▼M1

2. The funding agreement referred to in paragraph 1 shall, in particular, make provision for:

(a) the terms and conditions for contributions from the operational programme to the holding fund;

(b) calls for expression of interest addressed to financial engineering instruments in accordance with applicable rules;

(c) the appraisal and selection of financial engineering instruments by the holding fund;

(d) the setting up and monitoring of the investment policy or the targeted urban development plans and actions;

(e) reporting by the holding fund to Member States or managing authorities;

(f) monitoring of the implementation of investments;

(g) audit requirements;

(h) an exit policy for the holding fund out of the financial engineering instruments;

(i) the provisions for the winding-up of the holding fund, including the reutilisation of resources returned from investments made or left over after all guarantees have been honoured which are attributable to the contribution from the operational programme.

In the case of financial engineering instruments supporting enterprises, the provisions on the setting up and monitoring of the investment policy referred to in point (d) of the first subparagraph shall comprise at least an indication of the targeted enterprises and the financial engineering products to be supported.

▼M1 —————

▼M3

Article 45

Additional provisions applicable to financial engineering instruments for enterprises

Financial engineering instruments for enterprises referred to in Article 43(1)(a) shall invest only in activities which the managers of the financial engineering instruments judge potentially economically viable.

They shall not invest in firms in difficulty within the meaning of the Community Guidelines on State aid for rescuing and restructuring firms in difficulty ( 22 ) as of 10 October 2004.

▼C1

Article 46

►M1 Urban development funds ◄

▼M1

1. Where Structural Funds finance urban development funds, those funds shall invest in public-private partnerships or other projects included in an integrated plan for sustainable urban development. Such public-private partnerships or other projects shall not include the creation and development of financial engineering instruments such as venture capital, loan and guarantee funds for enterprises.

2. For the purposes of paragraph 1, urban development funds shall invest by means of loans and guarantees, or equivalent instruments and by means of equity.

▼C1

3. Where Structural Funds finance urban development funds, the funds concerned shall not re-finance acquisitions or participations in projects already completed.







CHAPTER III

PROVISIONS IMPLEMENTING REGULATION (EC) No 1080/2006







Section 1

Eligibility of expenditure on housing

▼M1

Article 47

Interventions in the field of housing

1. In determining areas referred to in point (a) of the first subparagraph of Article 7(2) of Regulation (EC) No 1080/2006, Member States shall take into consideration at least one of the following criteria:

(a) a high level of poverty and exclusion;

(b) a high level of long-term unemployment;

(c) precarious demographic trends;

(d) a low level of education, significant skills deficiencies and high dropout rates from school;

(e) a high level of criminality and delinquency;

(f) a particularly rundown environment;

(g) a low level of economic activity;

(h) a high number of immigrants, ethnic and minority groups, or refugees;

(i) a comparatively low level of housing value;

(j) a low level of energy performance in buildings.

▼M2

2. Having regard to Article 7(2) of Regulation (EC) No 1080/2006, expenditure for housing in favour of marginalized communities shall be eligible only if the following conditions are fulfilled:

(a) such housing investment is part of an integrated approach and support for housing interventions for marginalized communities takes place together with other types of interventions including interventions in the areas of education, health, social inclusion and employment;

(b) the physical location of such housing ensures spatial integration of these communities into mainstream society and does not contribute to segregation, isolation and exclusion.

▼C1







Section 2

Rules of eligibility applicable to operational programmes for the European territorial cooperation objective

Article 48

Rules on eligibility of expenditure

Without prejudice to the list of ineligible expenditure in Article 7 of Regulation (EC) No 1080/2006, Articles 49 to 53 of this Regulation shall apply in accordance with Article 13 of Regulation (EC) No 1080/2006 to the determination of the eligibility of expenditure under operations selected as part of an operational programme under the European territorial cooperation objective.

Article 49

Financial charges and guarantee costs

The following charges and costs shall be eligible for a contribution from the ERDF:

(a) charges for transnational financial transactions;

(b) where the implementation of an operation requires a separate account or accounts to be opened, the bank charges for opening and administering the account or accounts;

(c) legal consultancy fees, notarial fees, costs of technical and financial experts, and accountancy and audit costs, if they are directly linked to the co-financed operation and are necessary for its preparation or implementation or, in the case of accounting and audit costs, if they relate to requirements imposed by the managing authority;

(d) the cost of guarantees provided by a bank or other financial institution to the extent to which the guarantees are required by national or Community legislation.

Fines, financial penalties and expenditure on legal disputes shall not be eligible.

Article 50

Expenditure by public authorities relating to the implementation of operations

1. In addition to technical assistance for the operational programme pursuant to Article 46 of Regulation (EC) No 1083/2006, the following expenditure paid by public authorities in the preparation or implementation of an operation shall be eligible:

(a) the costs of professional services provided by a public authority other than the beneficiary in the preparation or implementation of an operation;

(b) the costs of the provision of services relating to the preparation and implementation of an operation provided by a public authority which is itself the beneficiary and which is executing an operation for its own account without recourse to outside service-providers.

2. The public authority concerned shall either invoice the costs referred to in paragraph 1(a) to the beneficiary or certify those costs on the basis of documents of equivalent probative value which permit the identification of real costs paid by that authority for that operation.

▼M1

3. The costs referred to in point (b) of paragraph 1 shall be eligible if they do not arise from statutory responsibilities of the public authority or its day-to-day management, monitoring and control tasks and relate either to expenditure actually and directly paid for the co-financed operation or to in-kind contributions, as referred to in Article 51.

▼C1

Article 51

In-kind contributions

1. In-kind contributions of a public or private beneficiary shall be eligible expenditure if they fulfil the following conditions:

(a) they consist of the provision of land or real estate, equipment or raw materials, research or professional work or unpaid voluntary work;

(b) their value can be independently assessed and audited.

2. In the case of the provision of land or real estate, the value shall be certified by an independent qualified valuer or duly authorised official body.

3. In the case of unpaid voluntary work, the value of that work shall be determined taking into account the time spent and the hourly and daily rates of remuneration for equivalent work.

Article 52

Overheads

Overheads shall be eligible provided that they are based on real costs attributable to the implementation of the operation concerned or on the average real costs attributable to operations of the same type.

Flat rates based on average costs may not exceed 25 % of those direct costs of an operation which can affect the level of overheads. The calculation of flat rates shall be properly documented and periodically reviewed.

▼M1

The first and second paragraphs shall only apply to operations approved before 13 October 2009 and where the option available to Member States in Article 7(4)(i) of Regulation (EC) No 1080/2006 has not been exercised.

▼C1

Article 53

Depreciation

The depreciation expenditure of depreciable assets directly used for an operation, and incurred during the period of its co-financing, shall be eligible, provided that the acquisition of the assets is not declared as eligible expenditure.







CHAPTER IV

FINAL PROVISIONS

Article 54

Repeal

1. Regulations (EC) No 1681/94, (EC) No 1159/2000, (EC) No 1685/2000, (EC) No 438/2001 and (EC) No 448/2001 are hereby repealed.

References to the repealed Regulations shall be construed as references to this Regulation.

The provisions of the repealed Regulations shall continue to apply to assistance approved pursuant to Regulation (EC) No 1260/1999.

2. Regulations (EC) No 1831/94, (EC) No 1386/2002, (EC) No 16/2003 and (EC) No 621/2004 are hereby repealed.

References to the repealed Regulations shall be construed as references to this Regulation.

The provisions of the repealed Regulations shall continue to apply to decisions adopted pursuant to Regulation (EC) No 1164/94.

Article 55

Entry into force