EN    EN EN 
EN    EN  COMMISSION OF THE E UROPEAN COMMUNITIES 
Brussels, 5.11.2008 
SEC(2008) 2756 
  
COMMUNICATION TO THE COMMISSION 
Communication from Commissioners Hübner and Špidla to the Commission giving an 
interim progress report on the action plan to strengthen the Commission's supervisory 
role under shared management of structural actions 
{SEC(2008) 2755} 
EN 2   EN COMMUNICATION TO THE COMMISSION 
Communication from Commissioners Hübner and Špidla to the Commission giving an 
interim progress report on the action plan  to strengthen the Commission's supervisory 
role under shared management of structural actions 
1. E XECUTIVE SUMMARY  
In response to the conclusions of the Eu ropean Court of Auditors in its Annual 
Report for 2006 on the high leve l of errors in reimburseme nts for structural actions 
and weaknesses in the Member States management and control systems, the 
Commission adopted an action plan on 19 February 2008 to strengthen its 
supervision of Member States. Based on th e recommendations made by the Court of 
Auditors, the Action Plan sets out 37 acti ons, under 10 main headings, to be carried 
out by the end of 2008. 
The actions cover preventive measures to  achieve more effective controls by 
Member States, corrective measures to en sure that irregular reimbursements are 
detected and recovered for the EU budget, and measures to improve the quality of 
reporting of key data by Member Stat es and by the Commission essential for 
monitoring the effectiveness of multi-annual cont rol systems. The approach is to 
reduce the residual risk of error by appl ying measures on one side to improve 
supervisory and control systems to reduc e the occurrence of error and by taking 
actions on the other side which will increase the rate of recovery. 
The Commission has reported to the Europ ean Parliament on progress on the Action 
Plan by the transmission on a quarterly basis of monitori ng tables whose format had 
been previously discussed with the Europ ean Court of Auditors. The reports for the 
first two quarters were  sent to Parliament on 30 Apr il and 10 July 2008 and the main 
results were presented to the Budgeta ry Control Committee of the European 
Parliament by Commissioner Špidla and Commissioner Hübner on 2 June and 10 
July respectively. The Comm ittee expressed its satisfaction with progress and with 
the evident commitment of the Commission to achieving the planned targets on schedule. The present communication will be se nt to the European Parliament as the 
third quarterly report. The Commission is also reporting on a quart erly basis to the 
European Parliament the financial corre ctions resulting from the Commission's 
actions. 
This interim progress report sets out the out puts of the Action Plan achieved up to 30 
September 2008, with reference to the indi cators fixed for each action. The progress 
on each action is set out in  section 2 of the communication. A summary of the 
financial corrections and payment suspensi ons applied and in progress in 2008 is set 
out in annex 1. 
As at the end of the third quarter, 18 of the 37 actions in the Action Plan have been 
completed, and progress on the remaining actions is well-advanced to meet the target set for the end of the year. In a few cases  under the actions relating to the follow up 
EN 3   EN of remedial action plans and financial corr ection procedures, the targeted outputs will 
not be fully achieved by the end of 2008, for reasons set out in section 2. 
The completed actions include the following: – DG REGIO and DG EMPL provi ded in their Annual Activity Reports for 2007 
complete details of follow up on deficiencies detected, action plans and financial corrections and suspensions, and justification of  the inclusion or 
otherwise of a programme in the reservation. 
– The Commission carried out the asse ssment of the Annual Summaries 
submitted by Member States, followed up compliance issues and launched an infringement procedure in the one case of  serious failure to meet the regulatory 
requirements (Germany). 
– DG REGIO and DG EMPL have put in place and implemented a policy of 
suspending payments by Commission deci sion as soon as possible following 
detection of serious weaknesses in nati onal systems in order to increase the 
impact of Commission audit activity. 
– DG REGIO and DG EMPL establishe d procedures and improved IT 
applications in order to improve the monitoring of audit recommendations and 
therefore reinforce the impact  of their audit activity. 
– A seminar in September 2008 and numerous bilateral meetings have raised 
Member States' awareness of the cl osure guidelines for the 2000-2006 period 
issued by the Commission in 2006. 
– The Commission issued guidance notes and organised a seminar in June 2008 
to promote improvement in primary controls at national level. 
The main conclusions to be drawn from the progress on the individual actions of 
the Action Plan are : 
– The responsible DGs have taken steps to execute the actions in the Action Plan 
in accordance with the time frame set out, and, with the few exceptions 
indicated, the actions are on track to be completed by the deadlines fixed. 
– The Commission has demonstrated the more  rigorous approach required in the 
exercise of its supervisory role through the adoption of 11 decisions on financial corrections and 6 decisions to suspend payments under Actions 1.2 
and 1.3. (see annex 2). The increased nu mber and more rapid adoption of 
suspension decisions follow ing the detection of serious  deficiencies also shows 
that the new procedures unde r Action 8.1 are taking effect
1. 
– The Commission has advanced satisfactoril y in its core activity of audit and 
follow-up work directed at the 2000-2006 programme period. 38 audits of high 
risk management bodies have been carried out, and the follow up of 10 
                                                 
1 For the 3 suspension decisions af fected by the revised procedures, the average time from final audit 
position to decision was 7 months. 
EN 4   EN remedial action plans has been concluded. This activity serves the priority aim 
of ensuring that irregular expenditure is  removed from reimbursements to these 
programmes and projects. 
– The intensity of this activity is shown by the increased volume of financial 
corrections relating to 2000-2006 programme s and projects already applied in 
2008 (EUR 680 million). The overall figure for financial corrections for the first 3 quarters of 2008 resulting from the Commission's activity is EUR 843 
million, compared with EUR 287 million for the whole of 2007 (see annex 1). 
The current estimate of potential financial corrections likely to result from the suspension and correction procedures underway is at least EUR 1.5 billion. 
– The Commission is applying in line w ith the regulations for the 2007-2013 
period the reinforced preventive measures to  ensure that reliable systems are in 
place at the outset, through the rigorous  scrutiny of compliance assessment 
reports for 103 programmes and audit strategies submitted for 296 programmes. 
– The execution of the actions linked to  improved reporting – Annual Activity 
Reports, reporting on financial correc tions, and annual summaries - have 
strengthened the assurance process for structural actions. 
Apart from the corrective measures coveri ng the programmes and projects identified 
in the Action Plan, the Commission is also taking action on other cases for which DG 
REGIO and DG EMPL entered reservations  in their 2007 Annual Activity Reports. 
The 2 responsible DGs are following up re medial actions for 95 programmes, have 
launched suspension or correction procedur es covering 37 programmes, and have 
completed the follow up on 21 programmes. 
The impact of the Action Pl an cannot yet be measured in relation to an actual 
reduction in the error rate at the level of  interim reimbursements. As was explained 
in the Communication on the Action Plan  (point 8.2), for the 2000-2006 period, 
errors already committed will continue to affect payments which will be made up to 
2010 and, for the Cohesion Fund, up to 2012. However, by increasing the 
effectiveness of the post-payment controls  undertaken by the Member States and the 
impact of the Commission's audit activ ity, the work done under the Action Plan 
should increase the level of  correction of these past errors by the time the 2000-06 
programmes and projects are closed. At th e same time, for the 2007-13 period, the 
Action Plan should ensure that the Member States' systems function effectively from 
the beginning of the programme implementati on, or, if not, that deficiencies are 
detected early so that correct ive measures can be applied. 
The data to make it possible to  carry out a first ev aluation of the impact in relation to 
the error rate in reimbursements to the F unds will be available at the end of 2009 for 
expenditure for the new pr ogrammes of the 2007-2013 perio d, and at the end of 2010 
for the closure of programmes of the 2000-2006 period. 
Overall, the results set out in this prog ress report show that under the Action 
Plan the Commission is exercising its supervisory role more effectively to address both the causes and effects of  the high rate of error found by the 
European Court of Auditors in structural actions expenditure. 
EN 5   EN 2. P ROGRESS AND IMPACT OF THE ACTION PLAN  
 Action 1 – Actions under the joint audit strategy for 2000-2006 
 1.1. Targeted audits on 55 high risk management bodies 
Action in progress 
DG REGIO and DG EMPL have carried ou t 38 of the planned audits up to 30 
September 2008 and have sent out reports on 20 of the audits. The effective results on the 20 audits already reported are that in 4 cases there is a positive conclusion on the functioning of the system, in 2 cas es the opinion was adverse and the 
Commission has launched a pr ocedure to suspend payments and apply financial 
corrections, and in the othe r 14 cases the Commission aud itors have given a qualified 
opinion and are following up the audit findi ngs with the national authorities to 
determine the corrective measures required. Most of the audits relate to Member 
States and programmes and projects for which the 2007 Annual Activity Reports 
entered reservations. The follow-up of the audits through to possible suspensions of 
payments and financial corrections will continue into 2009, where necessary. The remaining 17 audits are scheduled to ta ke place between October and December 
2008. 
 1.2. Follow up of 27 remedial action plans 
Action in progress 
DG REGIO and DG EMPL have completed the follow up on 10 of the 27 action 
plans which were under way in 2007. The 27 action plans cover 32% of the total 
committed amounts for 2000-06 programmes. The effective results of the 10 action plans completed are as follows:  
– in 9 cases there is a positive conclusion on the completion of the required 
actions and on the functioning of the sy stem, including in ce rtain cases on the 
application of financial corrections by th e Member State at the request of the 
Commission; 
– in 1 case the remedial action plan resulted in the application of financial 
corrections by Commission decision.  
Of the 17 action plans not yet concluded: – the Commission has suspended payments or launched a procedure to suspend 
payments in 8 cases; 
– it will review Member States reports or carry out audits before the end of the 
year to check implementa tion in a further 9 cases. 
The DGs will have completed the follow up by the end of the year by taking a final 
position either that the action plan has been satisfactorily executed or that a suspension and financial correction procedur e should be launched, except in 3 cases 
where the deadline for completing the remedial action plans has been extended. They 
EN 6   EN will conclude any consequent suspension and financial correction procedures in 
2009. 
 1.3. Conclude 20 suspension and financial correction procedures for 2000-2006 
and 34 procedures for 1994-1999 
Action in progress 
1.3 a) 2000-2006 period 
The 20 open suspension and correction proc edures related in total to 32 ERDF 
programmes and 12 ESF programmes and 60 Cohesion Fund projects. DG REGIO 
and DG EMPL have brought to a conclusion  8 of the procedures and 4 procedures 
have been partially concluded. The results in terms of programmes and projects for 
these 12 procedures are as follows: 
– Commission decisions to  apply financial corrections amounting to 
approximately EUR 58 million have been  adopted for 54 programmes/projects; 
– Member States accepted financial co rrections amounting to approximately 
EUR 20 million for 11 programmes/projects; and 
– the procedure was closed with no correction for 8 programmes/projects 
because the Commission was able to accept the arguments presented by the Member State. 
Under the procedures not yet conclude d covering 31 programmes/projects, the 
Commission has adopted suspension deci sions for 6 programmes/projects. The 
remaining cases are well advanced a nd except for 4 Cohe sion Fund projects, 
Commission decisions to susp end or correct will be ta ken by the end of the year. 
Where suspension decisions have been a dopted in 2008, in cases where the Member 
State does not carry out the required action, the financial correcti on will be applied in 
2009. 
1.3 b) 1994-1999 period 
The 34 procedures referred to in the Action Plan concern ERDF and result from 
closure audits. DG REGIO has brought to a conclusion 7 of these procedures with 
financial corrections amounting in total to  EUR 19.5 million and expects to conclude 
a further 17 cases before the end of 2008 with estimated corrections of EUR 1.5 billion. It is likely that 10 out of th e 34 procedures for 1994- 99 programmes will not 
be finalised by the end of 2008 but by the e nd of the first quarter of 2009. This is 
because each audit covered approximately 40 projects, the follow up generates voluminous documentation and complex legal issues have been raised in certain 
cases. Furthermore the concentration of cases  in a small number of Member States 
has led to delays in fixing the hearing with  the Member State which is an essential 
part of the rights of the defence for the Me mber State which must be respected before 
a correction is applied. 
In addition, DG EMPL is currently e ngaged in completing 7 further financial 
correction procedures on 15 ESF programmes of the 1994-1999 period. 
EN 7   EN  1.4. Follow up of DAS error cases for 2006 
Action in progress  
DG REGIO and DG EMPL have taken a final position on 47 of the 74 cases. In 23 
cases, the Member State has itself made th e required correction. In 14 cases the DGs 
have launched a financial correction proce dure or are about to do so. In 10 cases the 
case was closed with no correction, as the Commission was able to accept the further 
evidence submitted by the Member State. For the remaining cases, the Commission 
has been delayed in reaching a final positi on because of the need to obtain further 
information from the responsible authorities,  but it will achieve this target by the end 
of the year . 
 Action 2 – Actions under Action Plan toward an Integrated Internal Control 
Framework 
 2.1. Action 9 - Constructing effective to ols for sharing audit and control results 
Action in progress 
The audit results under the enquiry to review the wo rk of winding-up bodies (see 
action 3.1) are being shared between DG REGIO and DG EMPL. 
 2.2. Action 10 – Conduct initial estimation and analysis of costs of controls for 
ERDF 
Action completed 
DG REGIO sent the report on the results of th e survey of the costs of controls in 
ERDF to DG BUDG in May 2008 to be used in the preparation of the 
communication on tolerable risk. 
 2.3. Action 11N – Examine the reliability  of national repo rting systems for 
recoveries and financ ial corrections 
Action in progress 
See Action 6.2 below. 
 2.4. Action 14b – Provide guidelines for bene ficiaries and/or interm ediate levels on 
controls and responsibili ties in the control chain 
Action completed 
See Action 5.1 below. 
 2.5. Action 15 – Promote “Contracts of Confidence”  
Action partially completed 
One new contract of confidence will be signed by the Commission with Cyprus for 
ERDF and Cohesion Fund by the end of No vember 2008. Two other contracts are 
currently being negotiated (E SF UK/England and Denmark). 
EN 8   EN  2.6. Action 16 – Co-ordination of audit standards 
Action partially completed 
The Commission has finalised the guida nce documents on sampling and systems 
assessment methodology, and DG REGIO and DG EMPL are now drafting further 
sections of the Structural Funds audit ma nual which will be discussed with national 
audit authorities at a tech nical meeting in December 2008. 
 Action 3 – Preventive actions for cl osure of 2000-2006 programmes and projects 
 3.1. Audit enquiry on 36 winding up bodies 
Action in progress  
Up to the end of September 2008 DG REGI O and DG EMPL have carried out 22 of 
the 36 planned audits of winding-up bodies which will be responsible for issuing 
declarations on the legality and regularity of expenditure  before the closure of 2000-
2006 programmes, and they will complete the remaining planned missions by the end of the year. The conclusions to date are that there are some deficiencies in the 
winding-up bodies' preparation for closure and the Commission will follow-up on its 
recommendations to verify that these i ssues are corrected so that the winding up 
declarations submitted at closure can be relied on. The follow-up will continue in 
2009. 
 3.2. Internal procedures to ensure ri gorous examination of closure documents 
Action partially completed  
The internal procedures for the closure pr ocess have been finalised in DG REGIO, 
and will be followed by DG EMPL to co mplete and align its own internal 
procedures. These procedures put emphasis in  particular on the assessment of the 
reliability of the winding up declarati ons, and on the examination of reported 
irregularities and financial corrections for each programme. 
 3.3. Raise awareness of Member States of closure guideline s issued by the 
Commission in 2006 
Action completed  
DG REGIO and DG EMPL organised a seminar entirely dedicated to closure issues 
on the control of Structural Funds on 10 June 2008 which was attended by over 500 
participants from national au thorities (see Action 5.1). At  this seminar Commission 
speakers presented key issues for the prep aration of closure of  Structural Funds 
programmes. 
DG REGIO and DG EMPL organised a se cond seminar entitled "Towards a 
successful closure of Stru ctural Funds programmes 2000-2006" in Brussels on 15 
September, which covered in detail all el ements of the programme closure process. 
Over 700 representatives from all Member St ates participated. The topic of closure 
has also been discussed at 30 annual bi lateral meetings with managing authorities 
and control bodies of Structural Funds si nce the beginning of 2008, and has been the 
EN 9   EN subject of specific bilateral seminars in 10 Member States (HU, FR, DK, LT, IT, CY, 
SK, GR, BE, PL,) and in a special Inte rreg seminar. Following up on the 15 
September seminar, on 21 October a specific session of the Technical Working Group of the ESF Committee, gathering all ESF national coordinators, was dedicated 
to the issue of management ac tions to be taken before the end of the eligibility period 
in order to ensure a proper  closure for 2000/2006 programmes. 
 Action 4 – Preventive actions for the 2007-2013 programming period 
 4.1. Review of compliance as sessment reports and opinions 
Action in progress  
The Commission scrutinises the complia nce assessment reports and opinions 
submitted by Member States, which are due within 12 months of programme 
approval, in order to confirm that the control systems set up by the Member States comply with regulatory requirements. Until the Commission has approved the 
assessment, it will not reimburse interim payment claims. 
By the end of September the Commissi on had received compliance assessment 
reports from Member States coveri ng 103 of the 431 approved programmes, 
representing the majority due at that da te. Of these it has accepted the assessments 
for 20 programmes and rejected those for 32 programmes (which will be re-submitted after correction. The remainder have been interrupted or are still subject to examination. The provisional conclusion is that the Commission guidance issued in 
2007 has generally been followed. The reasons for rejection and interruption are related in particular to the failure to  provide adequate information on certain 
mandatory elements, and inconsistencies be tween the findings in the report of the 
compliance assessment body and the fina l opinion. Few cases have raised 
fundamental structural or capacity problems.  
 4.2. Review of national audit strategies 
Action in progress  
Audit authorities are required to submit their audit strategies within nine months of 
programme approval for approval by the Co mmission. As at end of September 2008, 
the Commission had received the audit stra tegies covering 296 of the 431 approved 
programmes, representing the majority due at that date. It had accepted the strategies 
of 50 programmes and rejected those of 89 programmes (which will be re-submitted after correction). The remainder are interrupted or still under examination. The reasons for rejection and interruption include insufficient information to establish the independence of the audit authority, missi ng or unclear sampling method, incomplete 
risk analysis, and insufficien t information on audit resources. In general the issues 
raised are not fundamental w eaknesses in the strategies bu t particular points to be 
completed or improved. 
 4.3. Actions on simplification 
Action partially completed  
EN 10   EN a) DG REGIO and DG EMPL will present the guidance note on partial closure under 
Article 88 of Council Regulation (EC) No 1083/2006 to the Fund Coordination 
Committee (COCOF) before the end of 2008. 
b) The guidance note on the us e of flat rate for indirect  costs for ESF under Article 
11(3)(b) of Council Regulation (EC) No  1081/2006 was finali sed by DG EMPL in 
September 2007, after discussions with the Member States and agreement with the 
European Court of Auditors. As at 30 September 2008, 23 Member States had declared their intention to implement th is ESF rule for all or part of their 
programmes. The use of flat rates was al so discussed in late 2007 and in 2008 in 3 
meetings of the technical wo rking group of the ESF Committee, in 4 annual meetings 
with Member States and in specific bilateral meetings with the Czech Republic, Portugal, Lithuania and Wales. DG EMPL committed itself to provide feedback to 
all interested Member States on their draft national implementing rules on the use of flat rates in order to avoi d retroactive problems in the implementation of the rule. 
 4.4. Review and clarificatio n on eligibility issues 
Action partially completed  
a) The Commission has prepared a draft of  the brochure making a compilation of the 
Community eligibility ru les which will be published before the end of 2008. 
b) and c) The Commission services have finalised the guidance notes on revenue-
generating projects and Stat e Aid rules. In Septembe r 2008 the Commission adopted 
a proposal to amend Article 55 of Council Regulation (EC) No 1083/2006 in order to 
simplify the rules concerning revenue generating operations. 
 4.5. Public procurement rules – raise awareness by organising workshops 
Action completed  
The Commission organised special workshops on this topic, which continues to be a 
common source of irregularity in the use of EU funds fo r structural actions, in 
Budapest, Hungary (4/4/08) and in Sofia,  Bulgaria (26/6/08). Following a workshop 
dedicated to the use of pub lic procurement in the field of ESF activities in 2006, DG 
EMPL organised a follow-up discussion and exchange of nationa l good prac tices in 
this field during the meeting of the technical working group of the ESF Committee on 6 May 2008. 
 Action 5 – Improvement of primary controls 
 5.1. Seminar for managing and certifying authorities 
Action completed  
DG REGIO and DG EMPL organised a semi nar entitled "Control of structural 
actions – meeting the challenge" in Bru ssels on 10 June 2008. Over 500 participants 
from managing and certifying authoritie s of all Member States and regions 
participated, as well as representatives from the European Parliament and the European Court of Auditors. At the seminar the Commission presented good 
practices concerning the role  of managing and certifying authorities in the 2007-2013 
EN 11   EN period based on the revised guidance notes  described under action 5.2 and on the 
experience of the implementation of th e 2000-2006 programmes. The importance of 
effective communication of the applicable ru les to beneficiaries in order to prevent 
errors was emphasised. The Co mmission will present to COCOF in November a plan 
for improving communication on management a nd control issues based on feedback 
provided by Member States following the seminar. 
 5.2. Guidance on good practice for primary c ontrols and the cert ification function 
Action completed  
The Commission issued in May and J une 2008 new guidance documents for 
managing authorities and certifying aut horities after detailed discussion with 
Member States. These formed the basis for presentations and discussions in the seminar of 10 June (see action 5.1). 
 5.3. Self-assessment tool for managing authorities on compliance 
Action completed  
The Commission presented a self-assessment to ol to Member States at the seminar of 
10 June, with the aim of making it easier  for managing authorities to assess 
themselves directly against regulatory benchmarks on key elements of internal control. Two pilot studies have subsequent ly been carried out. In the light of the 
results, the tool is being modified and w ill be distributed to Member States by the 
end of the year. 
 Action 6 – Improve reporting on financial corrections by Member States 
 6.1. Follow up on data reported by Member States to complete gaps and correct 
inaccuracies 
Action completed  
DG REGIO, as lead DG, aggregated the data on financial corrections in all Funds 
reported by Member States  in March/April 2008 and the Commission reported the 
results to the European Parliament with  the second quarterly report on financial 
corrections. The total amounts of corrections (withdrawal s and recoveries) reported 
for the year 2007 were EUR 407 million and EUR 136 million respectively. The cumulative total for the whole of the 2000-2006 period comes to nearly EUR 1.6 billion (EUR 1.1 billion withdrawal s, nearly EUR 500 million recoveries). 
The results will be presente d in detail in an annex to  the 2007 Annual Report on the 
Implementation of the Structural Funds to be published in October. DG REGIO has written to all concerned Member States to ask them to fill gaps and clarify apparent anomalies. 
 6.2. Verification of reported data on co rrections in 10 Member States  
Action in progress  
DG REGIO as lead DG has carried out, with assistance from exte rnal contractors, 
on-the-spot verifications of  data for all Funds in 3 Member States. The overall 
EN 12   EN conclusion from the review of the reco rding and reporting systems and the random 
samples of supporting documents is that th e data on withdrawals, recoveries and 
pending recoveries submitted by the relevant authorities in these Member States can be considered generally reliable and complete. Recommendations to improve 
procedures in the future are being made a nd will be closely m onitored. Verifications 
in a further 7 Member States will take place in October-November for all Funds. 
 Action 7 – Improve reporting by Commi ssion on impact of audit activity 
 7.1. Modification of IT applications and  procedures – SYSAUDIT in DG REGIO, 
full implementation of A-REP in DG EMPL 
Action completed 
In DG REGIO the reports obtained from SY SAUDIT have been improved in order to 
strengthen the follow up of audits carried out. 
In DG EMPL the A-REP application has b een fully implemented since April 2008, 
in order to provide better follow up a nd monitoring of all Community audit 
recommendations and to documen t such follow-up activities. 
 7.2. Modification of IT applications  and procedures – quarterly reporting on 
financial corrections to DG BUDG 
Action partially completed 
Improvements to the IT application SY SAUDIT used by DG REGIO for the follow 
up of financial correction procedures ha ve been put in production to provide 
enhanced facilities for monito ring of the process. For th e purpose of better and more 
automatic reporting specific modules on au dits and on suspension and financial 
corrections have been put in  production in A-REP and will  be available before the 
end of the year. 
DG REGIO and DG EMPL, in consultation with DG BUDG, DG AGRI and DG 
MARE, have put in place procedures to improve the completeness and accuracy of 
reporting on financial corrections resulti ng from the Commission activity. Quarterly 
reports have been provided to DG BUDG, which has prepared and transmitted global 
reports to the Budgetary Control Co mmittee of the European Parliament. 
The Commission Internal Audit Service is currently undertaking a review of these 
procedures and the DGs will take any further actions required to implement agreed recommendations. 
 Action 8 – Increase impact of Commission audit activity 
 8.1. Establish and implement policy of suspending payments by Commission as 
soon as possible following detection of serious weaknesses in national systems 
Action completed 
The Director Generals of  DG REGIO and DG EMPL have respectively issued 
coordinated instructions to their servic es to implement a policy of launching the 
EN 13   EN procedure for suspension of payments imme diately following the detection of serious 
deficiencies in a national system. Monitori ng of the timeliness of the application of 
suspensions is carried out using the monitoring tools re ferred to in Action 7.  
 8.2. Modify internal procedures for susp ension and financial corrections to speed 
up application 
Action partially completed  
DG REGIO and DG EMPL put in place new internal procedures for the application 
of suspensions and financial correcti ons by the Commission in April 2008. These 
provide for a streamlining of internal pro cedures to reduce unnecessary delays in the 
application of suspension and financial co rrections. In the case of DG EMPL the 
existing manual will be updated to incorporate the new procedures by the end of the year. The procedures provide DG REGIO a nd DG EMPL with the means to respect 
the deadlines fixed for suspensions and fina ncial corrections in the Action Plan for 
audits carried out from 2007. These are 6 months from the final position on audit 
findings until the adoption of a formal pa yments suspension decision and 24 months 
between the audit and a formal Commissi on financial correction decision. The new 
procedures are already having an impact
2. 
The Commission Internal Audit Service is currently undertaking a review of these 
procedures and the DGs will take any further actions required to implement agreed recommendations. 
 Action 9 – Improve assurance from AAR 
Action completed  
DG REGIO and DG EMPL fully implemented  in the drafting of their 2007 Annual 
Activity Reports all the actions listed in the Action Plan, which took account of 
recommendations by the European Court of Auditors.   
 Action 10 – Maximise value of annual summaries 
Action completed  
The Commission carried out a detailed  and timely assessment of the annual 
summaries received, and reported on the re sults to the Budgetary Control Committee 
of the European Parliament by letters of 22 February, 25 March and 21 April 2008. 
The Commission analysed the summaries in relation to the respect for the minimum 
regulatory requirements as well as for the added value provided and took measures to 
follow up any shortcomings in  quality as well as non-respect of the minimum legal 
requirements. DG REGIO a nd DG EMPL took the results into account when 
finalising their assessments of national sy stems for their Annual Activity Reports. 
The Commission has launched an infringeme nt procedure against the one Member 
State which failed to submit a compliant  annual summary. It presented on 26 
                                                
 
2 For the 3 suspensions affected by the revised pr ocedures, the average time from final audit position to 
decision was 7 months, and for the one financial correction procedure affected by the revised 
procedures the time between the audit and the correction decision was 18 months. 
EN 14   EN September 2008 revised guidance to Member  States in the COCOF for the 2008 
exercise, with the aim both of streamlini ng the process for Member States and of 
reinforcing the value added elements of the annual summaries in order to maximise the contribution made to building up assurance on the Funds.
 
EN 15   EN Annex 1 – Summary of financial correctio n and suspension procedures in 2008 
Suspension 
procedures underway Financial corrections 
underway Fund/period Financial 
corrections accepted by Member State (in EUR million) Financial 
corrections by Commission decision (in EUR million) Number of 
Commission suspension decisions  
Number of 
programmes/ projects Number of 
programmes/projects 
ERDF 2000-06 379 25 3 47 2 
CF 2000-06 11 36 1 8 27 
ESF 2000-06 229 0 3 15 8 
ERDF 1994-99 7 100 n/a n/a 25 
CF 1994-99 1 31 n/a n/a 1 
ESF 1994-99 0 24 n/a n/a 7 
Grand total for 2008 627 216 7 70 70 
Total for 2007 223 64 1 
 
EN 16   EN Annex 2 – Details of financial correction and suspension decisions in 2008 (to 30.9.2008) 
 Member State Programme 
period Fund Programme Amount 
(M EURO) Cross reference 
to the action in 
the Action Plan 
Financial 
corrections  Germany 1994-1999 ERDF Berlin 12.90 1.3b 
 * Germany 1994-1999 ERDF Thüringen 81.43  
 * United Kingdom 1994-1999 ERDF West Midlands Obj 2 0.33  
 Portugal 1994-1999 ERDF Alentejo 0.35 1.3b 
 Portugal 1994-1999 ERDF Iniciativa para a 
Modernização da Indútria Têxtil (IC IMIT) 5.58 1.3b 
    Sub-total 100.42  
 * Spain 1994-1999 CF – 3.11  
 * Spain 1994-1999 CF – 23.20  
 * Greece 1994-1999 CF – 5.15  
    Sub-total 31.46  
 United Kingdom 2000-2006 ERDF North West + URBAN/Sub-
total 24.8 1.2 
1.3a 
 
EN 17   EN  * Portugal 2000-2006 CF – 1.55  
 Spain 2000-2006 CF – 1.52 1.3a 
 Spain 2000-2006 CF – 6.38 1.3a 
 Spain 2000-2006 CF – 0.19 1.3a 
 Spain 2000-2006 CF – 0.77 1.3a 
 Spain 2000-2006 CF – 1.07 1.3a 
 Spain 2000-2006 CF – 1.24 1.3a 
 Greece 2000-2006 CF – 23.26 1.3a 
    Sub-total 35.95  
 * France 1994-1999 ESF Guadeloupe 9.19  
 * Ireland 1994-1999 ESF Employment Community 
Initiative 12.72  
 * United Kingdom 1994-1999 ESF Resider Obj2 0.57  
 * United Kingdom 1994-1999 ESF Northern Uplands Obj 5 1.19  
    Sub-total 23.67  
    Grand total for 2008 216.3  
Suspensions  Italy 2000-2006 ERDF Puglia - 1.2 
 
EN 18   EN 1.3a 
 Interreg 2000-2006 ERDF France/UK - 1.3a 
 Interreg 2000-2006 ERDF Medocc - 1.3a 
 * Bulgaria 2000-2006 CF Projects in road sector -  
 Italy 2000-2006 ESF Calabria Obj 1 - 1.3a 
 Luxembourg 2000-2006 ESF Obj 3 - 1.3a 
 UK-Scotland 2000-2006 ESF Obj 2 and Obj 3 - 1.2 
1.3a 
* Not under Action Plan.