1989R4045 — EN — 01.07.2003 — 002.001 — 1
This document is meant purely as a documentation tool and the institutions do not assume any liability for its contents
►B COUNCILREGULATION(EEC)No4045/89
of21December 1989
on scrutiny by Member States of transactions forming part of the system of financing by the
Guarantee Section of the European Agricultural Guidance and Guarantee Fund and repealing
Directive 77/435/EEC
(OJ L 388, 30.12.1989, p. 18)
Amended by:
Official Journal
No page date
►M1 Council Regulation (EC) No 3094/94 of 12 December 1994 L 328 1 20.12.1994
►M2 Council Regulation (EC) No 3235/94 of 20 December 1994 L 338 16 28.12.1994
►M3 Council Regulation (EC) No 2154/2002 of 28 November 2002 L 328 4 5.12.2002
NB: This consolidated version contains references to the European unit of account and/or the ecu, which from 1 January 1999
should be understood as references to the euro — Council Regulation (EEC) No 3308/80 (OJ L 345, 20.12.1980, p. 1) andCouncil Regulation (EC) No 1103/97 (OJ L 162, 19.6.1997, p. 1).
▼B
COUNCILREGULATION(EEC)No4045/89
of21December 1989
on scrutiny by Member States of transactions forming part of the
system of financing by the Guarantee Section of the EuropeanAgricultural Guidance and Guarantee Fund and repealing Direc-
tive77/435/EEC
THE COUNCIL OF THE EUROPEAN COMMUNITIES,
Having regard to the Treaty establishing the European EconomicCommunity, and in particular Article 43 thereof,
Having regard to the proposal from the Commission (
1),
Having regard to the opinion of the European Parliament (2),
Whereas, under Article 8 of Council Regulation (EEC) No 729/70 of
21 April 1970 on the financing of the common agricultural policy (3),
as lastamended by Regulat ion (EEC) No 2048/88 (4), the Member
States take the measures necessary to satisfy themselves that transac-tions financed by the European Agricultural Guidance and GuaranteeFund (EAGGF) are actually carried out and are executed correctly, toprevent and deal with irregularities and to recover sums lost as a result
of irregularities or negligence;
Whereas scrutiny of the commercial documents of undertakings
received or making payments can be a very effective means of surveil-lance of transactions forming part of the system of financing by the
Guarantee Section of the EAGGF; whereas this scrutiny supplements
other inspections already carried out by the Member States; whereas,furthermore, national provisions relating to scrutiny which are moreextensive than those provided for in the Regulation are not affectedby this Regulation;
Whereas Member States must be encouraged to reinforce the scrutiny
of commercial documents of undertakings receiving or makingpayments which they have carried out in accordance with Directive77/435/EEC (
5);
Whereas the implementation by Member States of the rules arising
from Directive 77/435/EEC has disclosed the need for certain provi-sions of that Directive to be amended on the basis of experiencegained; whereas in view of the nature of the provisions concerned theamendments should be included in a Regulation;
Whereas the documents used as a basis for such scrutiny should be
determined in such a way as to enable a full scrutiny to be carried out;
Whereas the undertakings to be scrutinized must be selected on the
basis of the nature of the transactions carried out on their responsibility
and the breakdown of the undertakings receiving or making paymentsaccording to their financial importance in the system of financing bythe Guarantee Section of the EAGGF;
Whereas, furthermore, it is necessary to provide for a minimum
number of inspections of commercial documents; whereas this numbermust be determined by a method which precludes substantial differ-ences between the Member States by virtue of differences in thestructure of their expenditure under the Guarantee Section of the
EAGGF; whereas this method may be established by referring to the
number of undertakings of a certain importance in the system of finan-cing by the Guarantee Section of the EAGGF;
Whereas the powers of the officials responsible for scrutiny and the
obligations on undertakings to make commercial documents available1989R4045 — EN — 01.07.2003 — 002.001 — 2
(1) OJ No C 192, 29. 7. 1987, p. 15.
(2) OJ No C 291, 20. 11. 1989, p. 105.
(3) OJ No L 94, 28. 4. 1970, p. 13.
(4) OJ No L 185, 15. 7. 1988, p. 1.
(5) OJ No L 172, 12. 7. 1977, p. 17.
▼B
to such officials for a specified period and to supply such information
as may be requested by them should be defined; whereas it should alsobe stipulated that commercial documents may be seized in certain
cases;
Whereas it is necessary to organize cooperation among the Member
States on account of the international structure of agricultural trade
and with a view to the completion of the internal market; whereas it
is also necessary for a centralized documentation system concerningundertakings receiving or making payments established in third coun-tries to be set up at Community level;
Whereas, while it is the responsibility of the Member States in the first
instance to adopt their scrutiny programmes, it is necessary that theseprogrammes be communicated to the Commission so that it can assumeits supervisory and coordinating role and to ensure that the programmes
are adopted on the basis of appropriate criteria; whereas scrutiny can
thus be concentrated on sectors or undertakings where the risk of fraudis high;
Whereas the departments carrying out scrutiny pursuant to this Regula-
tion must be organized independently of the departments carrying out
scrutiny prior to payment;
Whereas it is essential that each Member State have a special depart-
ment responsible for monitoring the application of this Regulation and
for coordinating the scrutiny carried out in accordance with this Regu-lation; whereas the officials belonging to that department may makeinspections of undertakings in accordance with this Regulation;
Whereas encouragement for reinforcing the departments responsible for
the application of this Regulation should be provided in the form of atemporary, degressive Community contribution towards the expenditureincurred by Member States in engaging extra staff and towards the
costs of training staff and equipping the departments;
Whereas it is necessary for an estimate to be made of the amount of
the Community financing required for implementing this measure;whereas such amountforms partof t he financial forecastappearing in
point II of the Interinstitutional Agreement on budgetary discipline and
improvement of the budgetary procedure (
1) of 29 June 1988; whereas
the appropriations actually available will be determined under thebudgetary procedure in compliance with that agreement;
Whereas information collected during the scrutiny of commercial docu-
ments must be protected by professional secrecy;
Whereas arrangements should be made for an exchange of information
at Community level so that the results of the application of this Regu-lation can be used to greater effect,
HAS ADOPTED THIS REGULATION:
Article 1
1. This Regulation relates to scrutiny of the commercial documents
of those entities receiving or making payments relating directly or
indirectly to the system of financing by the Guarantee Section of theEAGGF, or their representatives, hereinafter called ‘undertakings’, inorder to ascertain whether transactions forming part of the system offinancing by the Guarantee Section of the EAGGF have actually beencarried out and have been executed correctly.
2. For the purposes of this Regulation ‘commercial documents’ shall
mean all books, registers, vouchers and supporting documents,accounts, production and quality records, and correspondence relatingto the undertaking's business activity, as well as commercial data, in1989R4045 — EN — 01.07.2003 — 002.001 — 3
(1) OJ No L 185, 15. 7. 1988, p. 33.▼M3
▼M1
▼M1
whatever form they may take, including electronically stored data, in so
far as these documents or data relate directly or indirectly to the trans-actions referred to in paragraph 1.
3. For the purposes of this Regulation ‘third party’ shall mean any
natural or legal person directly or indirectly connected with transac-tions carried out within the financing system by the EAGGFGuarantee Section.
4. This Regulation shall not apply to measures covered by the inte-
grated administration and control system established by Regulation(EEC) No 3508/92 (
1). The Commission shall, in accordance with
Article 19, establish a list of other measures to which this Regulation
does notapply.
5. Scrutinies of rural development measures and projects not expli-
citly excluded from the scope of such scrutinies, pursuant to the Annexto Regulation (EC) No 2311/2000 (
2), shall pay particular attention to
the special conditions governing the implementation of such measures
and projects.
Article 2
1. Member States shall carry out systematic scrutiny of the commer-
cial documents of undertakings taking account of the nature of thetransactions to be scrutinized. Member States shall ensure that theselection of undertakings for scrutiny gives the best possible assurance
of the effectiveness of the measures for preventing and detecting irre-
gularities under the system of financing by the Guarantee Section ofthe EAGGF. Inter alia the selection shall take account of the financial
importance of the undertakings in that system and other risk factors.
2. The scrutiny referred to in paragraph 1 shall apply, for each
period of scrutiny referred to in paragraph 4 to a number of undertak-
ings which may not be less than half the undertakings whose receipts
or payments, or the sum thereof, under the system of financing by theGuarantee Section of the EAGGF, amounted to more than►
M3EUR 150 000 ◄for the ►M1EAGGF financial year ◄
preceding the beginning of the period of scrutiny in question.
In relation to each current scrutiny period, commencing with the 1995/
96 scrutiny period, Member States shall, without prejudice to their obli-
gations defined in paragraph 1, select the undertakings to be scrutinizedon the basis of risk analysis in the export refunds sector, and for allother measures where it is practicable to do so. The Member Statesshall submit to the Commission their proposals for the use of risk
analysis. The proposals shall include all relevantinformat ion
concerning the approach to be followed, the techniques, the criteriaand the method of implementation; they shall be presented not laterthan 1 December of the year prior to commencement of the scrutinyperiod for which they are to be applied. The Member States shall takeaccount of the comments of the Commission on the proposals, which
shall be given within eight weeks of their receipt.
For the scrutiny period 1995/96, the proposals for risk analysis shall be
sent to the Commission not later than 1 February 1995.
For measures for which a Member State considers the use of risk
analysis not to be practicable, it shall be compulsory for undertakingsthe sum of whose receipts or payments or the sum of those twoamounts within the system of financing by the Guarantee Section of
the EAGGF was more than ►
M3EUR 350 000 ◄and which were
not scrutinized in accordance with this Regulation during either of thetwo preceding scrutiny periods, to be scrutinized.1989R4045 — EN — 01.07.2003 — 002.001 — 4
(1) OJ No L 355, 5. 12. 1992, p. 1.
(2) OJ L 265, 19.10.2000, p. 10.▼M3
▼B
▼M1
▼M1
Undertakings the sum of whose receipts or payments amounted to less
than►M3EUR 40 000 ◄shall be scrutinized in accordance with
this Regulation only for specific reasons to be indicated by the MemberStates in their annual programme as referred to in Article 10 or by the
Commission in any proposed amendment to that programme.
3. In appropriate cases, the scrutiny provided for in paragraph 1
shall be extended to natural and legal persons with which undertakingswithin the meaning of Article 1 are associated and to such other naturalor legal persons as may be relevant for the pursuit of the objectives set
outin Art icle 3.
4. The scrutiny period shall run from 1 July to 30 June of the
following year.
Scrutiny shall cover a period of at least 12 months ending during the
previous scrutiny period; it may be extended for periods, to be deter-mined by the Member State, preceding or following the 12-month
period.
5. The scrutiny carried out pursuant to this Regulation shall not
prejudice the inspections undertaken pursuant to ►
M1Article 6 of
Regulation (EEC) No 595/91 (1)◄or those undertaken pursuant to
Article 9 of Regulation (EEC) No 729/70.
Article 3
1. The accuracy of primary data under scrutiny shall be verified by
the number of cross-checks, including, where necessary, the commer-
cial documents of third parties, appropriate to the degree of risk
presented, including, inter alia:
— comparisons with the commercial documents of suppliers, custo-
mers, carriers and other third parties,
— physical checks, where appropriate, upon the quantity and nature of
stocks,
— comparison with the records of financial flows leading to or conse-
quent upon the transactions carried out within the financing system
by the EAGGF Guarantee section, and
— checks, in relation to bookkeeping, or records of financial move-
ments showing, at the time of the scrutiny, that the documentsheld by the paying agency as justification for the payment of aidto the beneficiary are accurate.
2. In particular, where undertakings are required to keep particular
book records of stock in accordance with Community or national provi-sions, scrutiny of these records shall, in appropriate cases include acomparison with the commercial documents and, where appropriate,with the actual quantities in stock.
3. In the selection of transactions to be checked, full account shall
be taken of the degree of risk presented.1989R4045 — EN — 01.07.2003 — 002.001 — 5
(1) OJ No L 67, 14. 3. 1991, p. 11.▼B
▼M1
▼B
▼M1
▼B
▼M3
▼B
▼M1
▼B
Article 4
Undertakings shall keep the commercial documents referred to in Arti-
cles 1 (2) and 3 for at least three years, starting from the end of the
year in which they were drawn up.
The Member States may prescribe a longer period for the retention of
these documents.
Article 5
1. The persons responsible for the undertaking, or a third party, shall
ensure that all commercial documents and additional information aresupplied to the officials responsible for the scrutiny or to the persons
empowered for that purpose. Electronically stored data shall be
provided on an appropriate data support medium.
2. The officials responsible for the scrutiny or the persons empow-
ered for that purpose may require that extracts or copies of the
documents referred to in paragraph 1 be supplied to them.
3. Where, during scrutiny carried out pursuant to this Regulation,
the commercial documents maintained by the undertaking are consid-ered inadequate for scrutiny purposes, the undertaking shall bedirected to maintain future such records as required by the Member
State responsible for the scrutiny, without prejudice to obligations laid
down in other Regulations relating to the sector concerned.
Member States shall determine the date as of which such records are to
be established.
Where all or part of the commercial documents required to be scruti-
nized pursuant to this Regulation are located with an undertaking in
the same commercial group, partnership or association of undertakings
managed on a unified basis as the undertaking scrutinized, whetherlocated inside or outside Community territory, the undertaking shallmake available these commercial documents to officials responsiblefor the scrutiny, at a place and time to be determined by the MemberStates responsible for carrying out the scrutiny.
Article 6
1. Member States shall ensure that officials responsible for the scru-
tiny shall be entitled to seize commercial documents, or have themseized. This rightshall be exercised wit h due regard for relevantnational provisions and shall not affect the application of rulesgoverning proceedings in criminal matters concerning the seizure of
documents.
2. Member States shall adopt appropriate measures to penalize
natural or legal persons who fail to fulfil their obligations under thisRegulation.
Article 7
1. Member States shall assist each other for the purposes of carrying
out the scrutiny provided for in Articles 2 and 3:
— where an undertaking or third party is established in a Member
State other than that in which payment of the amount in questionhas or should have been made or received,
— or other than that in which the documents and information required
for scrutiny are to be found.
The Commission may coordinate joint actions involving mutual assis-
tance between two or more Member States. Provisions for suchcoordination shall be established in accordance with Article 19.1989R4045 — EN — 01.07.2003 — 002.001 — 6
▼M1
▼B
▼M1
▼B
▼M1
▼M3
Where two or more Member States include in the programme sent in
under Article 10(1) a proposal for joint action involving extensivemutual assistance, the Commission may, on request, allow a reduction
of up to a maximum of 25 % of the minimum number of scrutinies as
determined under Article 2(2) for the Member States concerned.
2. During the first three months following the EAGGF financial year
of payment, Member States shall send a list of the undertakings
referred to in the first subparagraph of paragraph 1 to each MemberState in which such an undertaking is established. The list shall containall the details necessary to enable the Member State of destination toidentify the undertakings and to undertake its scrutiny obligations. TheMember State of destination shall be responsible for the scrutiny of
such undertakings in accordance with Article 2.
A copy of each list shall be sent to the Commission.The Member State receiving or making the payment may ask the
Member State in which the undertaking is established to scrutinizesome of the undertakings on that list pursuant to Article 2, indicating
why it is necessary to make such a request and in particular the risks
associated with it.
The Member State receiving the request shall take due account of the
risks associated with the undertaking, which shall be communicated bythe requesting Member State.
The requested Member State shall inform the requesting Member State
of the follow-up accorded to the request. Where scrutiny of an under-taking on the list takes place, the requested Member State that carriedout the scrutiny shall inform the requesting Member State of the resultsof that scrutiny at the latest three months after the end of the scrutinyperiod.
An overview of such requests shall be sent to the Commission on a
quarterly basis, within one month after the end of each quarter. TheCommission may demand that a copy of individual requests be
provided.
3. During the first three months following the EAGGF financial year
of payment, Member States shall send the Commission a list of under-takings established in a third country for which payment of the amount
in question has or should have been made or received in that Member
State.
4. If additional information is required in another Member State as
part of the scrutiny of an undertaking in accordance with Article 2,
and in particular cross-checks in accordance with Article 3, specificscrutiny requests may be made indicating the reasons for the request.An overview of such specific requests shall be sent to the Commissionon a quarterly basis within one month after the end of each quarter.The Commission may demand that a copy of individual requests be
provided.
The scrutiny request shall be met not later than six months after its
receipt; the results of the scrutiny shall be communicated without delayto the requesting Member State and to the Commission. The communi-cation to the Commission shall be on a quarterly basis within one
month after the end of each quarter.
5. In accordance with Article 19 the Commission shall determine
minimum requirements regarding the contents of the requests referredto in paragraphs 2 and 4.1989R4045 — EN — 01.07.2003 — 002.001 — 7
▼M1
▼M3
▼M1
▼M3
▼M1
▼B
Article 8
1. Information collected in the course of scrutiny as provided for in
this Regulation shall be protected by professional secrecy. It may notbe communicated to any persons other than those who, by reason oftheir duties in the Member States or in the institutions of the Commu-
nities, are required to have knowledge thereof for the purposes of
performing those duties.
2. This Article shall not prejudice national provisions relating to
legal proceedings.
Article 9
1. Before 1 January following the scrutiny period Member States
shall send the Commission a detailed report on the application of thisRegulation.
2. The report must set out any difficulties encountered and the
measures taken to overcome them and put forward, where appropriate,suggestions for improvements.
3. The Member States and the Commission shall have regular
exchanges of views on the application of this Regulation.
4. The Commission will evaluate annually the progress achieved, in
its annual report on the administration of the funds referred to inArticle 10 of Regulation (EEC) No 729/70.
5. The Commission shall submitbefore 31 December
►
M11996◄a report on the application of this Regulation.
►M1 ◄
Article 10
1. Member States shall draw up programmes for scrutinies to be
carried out pursuant to Article 2 during the subsequent scrutiny period.
2. Each year, before 15 April, the Member States shall send the
Commission their programme as referred to in paragraph 1 and shallspecify:
— the number of undertakings to be scrutinized and their breakdown
by sector on the basis of the amounts relating to them,
— the criteria adopted for drawing up the programme.
3. The programmes established by the Member States and forwarded
to the Commission, shall be implemented by the Member States, if,within►
M1eight◄weeks, the Commission has not made known
its comments.
4. Amendments made by the Member States to the programmes
shall be subject to the same procedure.
5. Exceptionally, at any stage, the Commission may request the
inclusion of a particular category of undertaking in the programme of
one or more Member States.
Article 11
1. In each Member State not later than 1 January 1991 a special
department is to be made responsible for monitoring the application ofthis Regulation and for,
— the performance of the scrutiny provided for herein by officials
employed directly by that special department, or
— the coordination and general surveillance of the scrutiny carried out
by officials belonging to other departments.
Member States may also provide that scrutinies to be carried out
pursuant to this Regulation are allocated between the special depart-1989R4045 — EN — 01.07.2003 — 002.001 — 8
▼M1
▼B
▼B
ment and other national departments, provided that the former is
responsible for their coordination.
2. The department or departments responsible for the application of
this Regulation must be organized in such a way as to be independent
of the departments or branches of departments responsible for the
payments and the scrutiny carried out prior to payment.
3. In order to ensure that this Regulation is properly applied the
special department referred to in paragraph 1 shall take all themeasures necessary.
4. The special department shall be responsible in addition for:— training the national officials responsible for carrying out the scru-
tiny referred to in this Regulation, in order to enable them toacquire sufficient knowledge for performing their duties,
— administering the scrutiny reports and any other documents relating
to the scrutinies carried out and provided for under this Regulation,
— the preparation and communication of the reports referred to in
Article 9 (1) and the programmes referred to in Article 10.
5. The special department shall be entrusted by the Member State
concerned with all the powers necessary to perform the tasks referred
to in paragraphs 3 and 4.
Itshall consistof a sufficientnumber of officials who are suit ably
trained to carry out those tasks.
6. This Article shall not apply when the minimum number of under-
takings to control, in accordance with Article 2 (2), is less than 10.
Article 18
The amounts in ecus appearing in this Regulation shall be converted
into national currencies by applying the rate of exchange operating onthe first working date of the year when the scrutiny period begins and
published in the C series of the Official Journal of the European
Communities .
Article 19
Detailed rules for the application of this Regulation shall be adopted
where necessary, in accordance with the procedure laid down in Article13 of Regulation (EEC) No 729/70.
Article 20
Article 9 of Regulation (EEC) No 729/70 shall apply to the scrutiny of
specific expenditure financed by the Community under this Regulation.
Article 21
►
M11.◄ In accordance with the relevant national laws,
Commission officials shall have access to all documents preparedeither with a view to or following the scrutiny organized under thisRegulation and to the data held, including those stored in the dataprocessing systems. ►
M1They shall be provided upon requeston an
appropriate data support medium. ◄
2. The scrutinies referred to in Article 2 shall be carried out by the
officials of the Member States.
Officials of the Commission may participate in these scrutinies. They
may not themselves exercise the powers of scrutiny accorded tonational officials; however, they shall have access to the same premisesand to the same documents as the officials of the Member States.1989R4045 — EN — 01.07.2003 — 002.001 — 9
▼M3
▼B
▼M1
▼M1
3. In the case of scrutinies taking place under Article 7, officials of
the requesting Member State may be present, with the agreement of therequested Member State, at the scrutiny in the requested Member State
and have access to the same premises and the same documents as the
officials of that Member State.
Officials of the requesting Member State present at scrutinies in the
requested Member State must at all times be able to furnish proof oftheir official capacity. The scrutinies shall at all times be carried outby officials of the requested Member State.
4. Where national provisions concerning criminal procedure reserve
certain acts for officials specifically designated by the national law, the
officials of the Commission, and the officials of the Member Statereferred to in paragraph 3, shall not take part in these acts. In anyevent, they shall not take apart in, in particular, visits to the home orthe formal interrogation of persons in the context of the criminal law
of the Member State. They shall, however, have access to information
thus obtained.
Article 22
1. Directive 77/435/EEC shall be repealed with effect from 1
January 1990. The scrutiny carried out from that date under that Direc-tive shall be deemed to be carried out in accordance with thisRegulation.
2. References made to Directive 77/435/EEC shall be deemed to be
made to this Regulation.
Article 23
This Regulation shall enter into force on the third day following its
publication in the Official Journal of the European Communities .
Itshall apply wit h effectfrom 1 January 1990.
This Regulation shall be binding in its entirety and directly applicable
in all Member States.1989R4045 — EN — 01.07.2003 — 002.001 — 10
▼B