EN    EN EN 
internal reference 
 
EN    EN  COMMISSION OF THE E UROPEAN COMMUNITIES 
Brussels, 10.12.2009 
SEC(2009) 1700 final 
COMMISSION STAFF WORKING DOCUMENT 
accompanying the REPORT FROM TH E COMMISSION TO TH E COUNCIL on the 
follow-up to 2007 discharge procedure 
 
 
{COM(2009) 682}  
 
EN    EN TABLE OF CONTENTS 
INTRODUCTION................................................................................................................... ... 1 
Council Recommendation on the 2007 discharge...................................................................... 2 
Introduction................................................................................................................... .... 3 
Chapter 1 - The Statement of Assuran ce (DAS) and supporting information.................. 5 
Chapter 2 - Commission inte rnal control system.............................................................. 6 
Chapter 3 - Budgetary Management............................................................................... 12 Chapter 4 - Revenue ....................................................................................................... 16 Chapter 5 - Agriculture and Natural Resources.............................................................. 17 Chapter 6 - Cohesion ...................................................................................................... 20 Chapter 7 - Research, Energy and Transport.................................................................. 23 Chapter 8 - External aid, Development and Enlargement .............................................. 26 Chapter 9 - Educati on and Citizenship ........................................................................... 32 
Chapter 10 - Economic and Financial Affairs ................................................................ 35 Chapter 11 - Administrative and other expenditure........................................................ 37 Special Report No. 6/2007 on the effectiveness of technical assistance in the context of 
capacity development ....................................................................................... 41 
Special Report No. 7/2007 on the control, inspection and sanction systems relating to 
the rules on conservation of Commu nity fisheries resources ........................... 42 
Special Report No. 9/2007 concerning "Evalu ating the EU Research and Technological 
Development (RTD) framework programmes - could the Commission's approach be improved?" ................................................................................... 44 
Special Report No. 1/2008 concerning the pr ocedures for the preliminary examination 
and evaluation of major investment  projects for the 1994-1999 and 2000-2006 
programming periods........................................................................................ 47 
Special Report No. 2/2008 on Binding Tariff Information ............................................ 48 Special Report No. 3/2008 on the Eu ropean Union Solidarity Fund.............................. 49 
Special Report No. 4/2008 concerning the implementation of milk quotas in the 
Member States which joined the European Union on 1 May 2004.................. 50 
Special Report No. 5/2008 "The European  Union's agencies: Getting results" ............. 51 
Special Report No. 6/2008 "European Comm ission Rehabilitation Aid following the 
Tsunami and Hurricane Mitch" ........................................................................ 53 
 
EN    EN European Development Funds........................................................................................ 55 
Requests concerning individual agencies ....................................................................... 57 
 
EN 1   EN INTRODUCTION 
This Commission Staff Working Document completes the Report from the Commission to the 
Council on the Follow-up to 2007 Discharge decisions {COM (2009) 682}. It presents in 
detail the answers to the 90 specific reque sts made by the Council in the comments 
accompanying its Recommendations on the 2007 Discharges.1 
                                                 
1 For each specific recommendation a reference is given to the relevant Council document. The 
references for recommendations 1 to 65 are all for C ouncil document 5587/09 "Discharge to be given to 
the Commission in respect of the implementation of the budget for the financial year 2007". 
 
EN 2   EN Council Recommendation on the 2007 discharge 
 
EN 3   EN Introduction 
1. The Council stresses the importance of fu rther simplification of legislation without 
diluting the level of assurance provided by im proved controls in or der to continue to 
make progress towards achieving an unqualifie d DAS in all areas of the budget. In 
this context, the Council invites the Commission to make proposals aiming at 
simplification of the procedures incl uding the general ru les governing the 
programmes and specific rules concerning th e particular characteristics of the 
programmes.  (§ 2, page 5)  
Commission's response:  
The Commission has proposed measures to simplify some of the present rules and 
is exploring the scope for further simplifications, as explained in detail below. 
The procedure for acceptance of the Commission proposals for further 
modifications to the 2007-2013 regulations to include provisions for flat rates and 
lump sums is now finalised for the Stru ctural Funds. Furthermore, the amended 
Commission Regulation was adopted in Se ptember 2009. It introduces important 
simplifications in financial reporting, publicity and audit requirements. In 
addition, the Commission is working, with th e assistance of external experts, to 
find areas of further simplification in  the working methods for the period 2007-
2013.  
The 7th Framework Programme (FP7) in the Research area has brought about a 
number of important simplifications alre ady. The introduction of the participants 
guarantee fund considerably reduced the numbers of ex-ante fi nancial checks, the 
use of protective measures and the numbe r of required audit certificates. The 
unique registration facility for participan ts avoids repeated requests to 
beneficiaries and improves data quality and coherence in all grant management 
systems. The project reporting was streamlined, including reduced data 
requirements, simplified reporting guides  and longer reporting periods. Further 
improvements will be achieved by the gr adual introduction of fully electronic 
exchange systems for the whole chai n of proposal and grant management 
processes in the frame of  the e-FP7 initiative. 
The CAP Health Check agreem ent brings further simplification (e.g. reducing the 
types of entitlements, possibility to me rge entitlements). The Commission has also 
taken action in several ways to improve th e situation in rural development: The 
Council Regulation 1290/2005 gave way for the-post 2007 period  to align the 
management and control system for the expenditure under the newly created 
European Agricultural Fund for Rura l Development (EAFRD) with the EAGF 
system. Thus, the advantages of the EAGF sy stem that are largely recognized will 
also cover the rural development expenditure. In addition, the Commission issued in 
October 2009 a report with the reactions to  the 39 simplification suggestions which 
Member States jointly submitted to the Commi ssion in April. The working document 
provides information on the outcome of the as sessment process and a state-of-play on the 
progress made since March 2009.The report will  be discussed during the Agriculture 
Council in December.  
 
EN 4   EN The Commission will also consider the sc ope for introducing further simplification 
of eligibility rules in the triennial revisi on of the Financial Regulation which it will 
propose in 2010. It could focus in particular  on grants, in particular eligibility 
rules; management methods, whose provisions have become increasingly complex 
and which are crucial to improve the effi ciency and delivery of external aid in 
particular; and control measures. It will  also study principles for further 
simplifying sectoral legislation for the next  round of basic acts, those to come into 
force from 2014. 
2. The Council awaits the presentation of  the "Impact report on the Commission's 
Action plan towards an Integrated Intern al Control Framework" introduced in 2006. 
The Council acknowledges that the Commi ssion has been able to demonstrate a 
consistently high degree of implementation on internal control standards since 2004 
and that by the end of 2007, it had implemen ted more than two thirds of the sub-
actions in its "Action plan towards an In tegrated Internal Control Framework". The 
Council welcomes the progress achieved thr ough the action plan and looks forward 
to the impact report due by the beginning of February 2009.  (§ 3, page 5 and § 3, 1st 
paragraph, page 11)  
Commission's response:  
An impact report on the action plan towa rds an integrated internal control 
framework was adopted by the Commission  in early 2009 (COM(2009)43). As of 
year end 2008, 13 of the 16 original acti ons had been completed, whereas three 
could not be implemented or were t aken forward in other ways. The report 
presented an assessment of the impac t based on specific quantitative and 
qualitative indicators, action by action. It should be noted that the impact of all 
these actions must be assessed in a mid to long term perspective and that the 
impact of individual actions on  error rates is difficult to  isolate from the impact of 
other initiatives to improve control systems. 
 
EN 5   EN Chapter 1 - The Statement of Assuran ce (DAS) and supporting information 
3. The Council encourages the Commission to assure that [the] high quality of 
Community accounts is maintained, […] i nvites it to continue removing the 
weaknesses in the accounting system that sti ll put at risk the quality of financial 
information and to continue improving the information in the notes in the accounts on the correction mechanisms concerning undue payments. As regards the consolidated balance sheet as at 31 D ecember 2007 and the consolidated economic 
outturn account, the Council calls on the Commission to pay due attention to the 
remarks presented by the Court in order to improve the completeness and accuracy of the basic accounting data.  (§ 1, 1st-3rd paragraphs, page 7)  
Commission's response:
 
The Commission always considers the rema rks and recommendations of the Court 
so as to improve its financial systems an d ultimately its accounts. With regard to 
the information on financial recoveries, a new IT tool was pu t in place during 
2008 to improve the reliability and comp leteness of such information. 
4. As regards the progress made towards an effective Community Internal Control 
Framework, the Council invites the Cour t and the Commission to continue to 
cooperate towards a common  understanding on the probability of correction of 
payments within multiannual programmes during the programme period.  (§ 3, 3rd 
paragraph, page 9)  
Commission's response:  
The Commission has stepped up its action to  work to secure reliable information 
from Member States on financial corrections and recoveries they carry out. It has 
taken actions to ensure that Member Stat es fulfil their obligations concerning the 
quality of reporting on recoveries and fi nancial corrections. It has significantly 
increased the volume of financial co rrections relating to 2000-2006 programmes 
and projects applied in 2008 for ERDF, ES F and Cohesion Fund – from 288 
million EUR in 2007 to over 1,5 billion in 2008. The Commission has provided 
quarterly reports in 2008 on the implementa tion of the action plan to strengthen 
the Commission's supervisory role under shared management of structural actions 
(COM(2008) 97), including information on corrections and recoveries imposed by 
the Commission, and reported results of the Action Plan in January and October 
2009, (COM(2009)42 and SEC(2009)1463).  
Furthermore, the Commission's accounting system was revamped to allow, from 
2008, full reporting on the correction of  errors found by the Commission, 
including those relating to payments of  earlier years. This information, 
retroactively encoded for all recoveries an d adjustments to cost claims launched in 
2008, has been reported in the 2008 accounts,  presented in March 2009. This will 
allow, inter alia, the year in which an e rror occurred to be compared with the year 
of detection and will be a basis for asse ssing the effectivenes s of multi-annual 
recovery systems. 
 
EN 6   EN Chapter 2 - Commission internal control system 
5. As regards the Synthesis report of the Commission, the Council notes that the 
Commission itself acknowledges that further efforts are needed to resolve a number 
of weaknesses and therefore it encourages the Commission to take all the necessary 
remedial measures and strongly supports its enhanced efforts to address the 
remaining deficiencies effectively. The Council strongly encourages the Commission 
to continue to improve the annual activ ity reports, in particular regarding the 
identification of continuing weaknesses in th e assessments provided in the reports of 
some DGs.  (§1, 1st-2nd paragraphs, page 10)  
Commission's response:  
The Commission delivered on the commi tments undertaken in the 2007 Synthesis 
Report. It took further steps to ensure that reports and decl arations present a 
consistent assessment of supervisory and co ntrol systems, with clear explanations 
made of the reasons and control proce sses leading to the absence, presence or 
removal of reservations. For the first t ime, preliminary meetings between central 
services and operational departments took place prior to the formal peer-review 
process, in order to identify problematic i ssues at an early stage and offer guidance 
in a timely way. During the peer-review process, weaknesses identified were 
addressed at the appropriate level. Also, for the first time, Commission services 
were explicitly required to draw a conclusi on on the effectiveness of their internal 
control systems in the annual activity repo rts. Almost all se rvices included a 
specific conclusion on the o verall effectiveness of their internal control system and 
where relevant identified actions to address weaknesses. These actions concern 
both Commission services and implementing partners (notably the Member States). 
In order to improve the quality of annual ac tivity reports further, in the Synthesis 
Report 2008 the Commission has instructed the Secretariat-General and the 
Directorate-General for Budget to carry ou t an assessment of the factors affecting 
the quality of annual activity reports an d to promote measures to improve their 
quality in time for the report on 2009 activities. 
6. As regards annual summaries of available audits and declarations, the Council notes 
the Court's conclusion that the annual summaries do not yet provide a reliable 
assessment of the functioning and effectiv eness of the superv isory and control 
systems. The Council joins the Court in en couraging the Commission to add value to 
the process by identifying common problems,  possible solutions and best practices 
and using this information in its supervisory role.  (§2, 2nd paragraph, page 11)  
Commission's response:  
The Commission is taking  the requested action. 
In the revised guidance note it issu ed for the 2008 Annual Summaries the 
Commission encouraged Member States to increase the added value of the 
summaries by analysing thei r systems, identifying common problems and solutions 
and describing best practices. It also recommended Member States to provide a 
statement of assurance on their systems.  Some Member States followed these 
recommendations in their 2008 Summaries. As the analysis in the Directorates’ 
 
EN 7   EN General Annual Activity Reports shows, while  only a few attached statements of 
assurance, a considerable number provided some degree of analysis of their 
systems.  
The Commission’s departments use the in formation provided in the Summaries 
together with that from other sources in arriving at the assessments of the quality 
of Member States’ systems for using EU  funds which the Directorates General 
publish in their Annual Activity Reports.  
The Commission has again revised the guid ance note to Member States. In the 
updated note, the Commission simplifies the reporting by taking out some 
information already provided in other repor ts, it builds up the part on the overall 
analysis and explains the incentives for using this option. Despite the weak legal 
framework, the Commission w ill continue to encourage Member States to make a 
genuine contribution to building up its assurance on the effective functioning of 
systems. 
7. The Council acknowledges that, as stated by the Commission, any simplification of 
the rules, and all improvements to the Commission's controls, will take time to have an effect on the prevention, detection and co rrection of errors. Nonetheless, it calls 
on the Commission to take all the necessary  measures for a further improvement of 
control systems including all control levels an d to ensure that the measures contained 
in the "Action plan on the Integrated Intern al Control Framework" have a real impact 
on the supervisory and control systems.  (§ 3, 1st paragraph, page 12)  
Commission's response:
 
An impact report on the action plan towa rds an integrated internal control 
framework was adopted by the Commission  in early 2009 (COM(2009)43). As of 
year end 2008, 13 of the 16 original acti ons had been completed whereas three 
could not be implemented or were t aken forward in other ways. The report 
presented the assessment of the impact based on specific quantitative and 
qualitative indicators, action by action. 
The Commission is also taking forward ot her actions to improve the supervisory 
and control systems, such as the action plan to strengthen the Commission's 
supervisory role under shared manage ment of structural actions. A report 
(COM(2009)42) on the implementation of the structural funds action plan was 
adopted in early 2009. The Commission adopted in October 2009 a follow-up 
report on the actions carried out in 2009 and will publish a report on the first 
impact of the Action Plan at the beginning of 2010.  
The Commission is continuing its efforts to improve the supervisory and control 
systems. The 2008 Annual Activity Reports of the Commission services contain 
action plans to improve the effectiveness of  specific internal  control systems. 
8. The Council recalls the ut most importance of training for the staff involved in 
controls, at all levels, and it invites the Commission to implement all the appropriate 
measures in order to strengthen their capacities.  (§ 3, 2nd paragraph, page 12)  
 
EN 8   EN Commission's response:  
In the area of Cohesion policy, the Commission has invested considerably in 
providing guidance and training to Me mber States both for the 2000-2006 and 
2007-2013 periods, for example on day-to-da y checks by management bodies and 
supervision by certifying bodies. 
The Commission has also organised traini ng sessions in the area of internal 
control for Member States, including a seminar in June 2008 which was attended 
by over 500 delegates from Member States . The Commission will continue to work 
on improving the effectiven ess of the first level controls on national and sub-
national level. Following the seminar organised in 2008 for the managing and 
certifying authorities, the Directorates-G eneral for Regional Policy, and for 
Employment, Social Affairs and Equal Opportunities organised in June 2009 a 
similar seminar aimed at training on imp lementation, but also audit and control 
issues specific to the managing and certi fying authorities. The objective of the 
seminar was to train assigned individuals who will then go back to their Member 
State to train their colleagues ("train-the-trainer" seminar). 
Within the Commission, an extensive training programme is delivered to staff 
involved in control activities. Advice on control issues is al so available via the 
Central Financial Service of the Directorate-General for Budget. 
9. The Council urges the Commission to work closely with the Court of Auditors and 
the Member States when establishing gui delines and various procedures for the 
implementation of programmes in order to achieve a common understanding of rules and procedures and a common approach for their implementation. The Council 
invites the Commission to intensify its  communication and cooperation with the 
Court in order to promote common unders tanding of legal provisions and to avoid 
differences in interpretation between the two institutions particularly for the 
compilation of management and control repo rts. Such a dialogue  is particularly 
important at the beginning of a programmi ng period and could contribute to reducing 
the level of error. In addition, the C ouncil encourages the Commission to share 
experience of best practice with regard to the correct  implementation of legal 
provisions with and between Member States in order to prevent any 
misinterpretation. The Council considers that  rules applying to a given programming 
period should not be applied retroactively to previous periods and also that the 
interpretation must be based on the logic a nd principles applicable to the respective 
programming period.  (§ 3, 2nd-4th paragraphs, page 12)  
Commission's response:
 
The Commission is taking  the requested action. 
The Commission works closely with the Me mber States and the Court of Auditors 
on the guidance it issues on the rules and procedures governing the use of 
Cohesion policy funding. It routinely co nsults Member States on guidance 
documents through the various management  and technical committees. The Court 
is invited to attend such meetings as we ll. On important issues or new procedures 
the Commission seeks the Court’s opinion specifically, as it is doing for example 
on the new provisions for simplified cost options such as flat rates. The 
 
EN 9   EN Commission also organises training events for Member States to help disseminate 
guidance and spread good practices. An example was the “Train the trainers” 
seminar, with various specialised worksh ops, which was held in Brussels on 9 
June 2009.  
The Commission and the Court of Aud itors have put their cooperation on a 
permanent footing with so-called ”inter -institutional colloquia” at which they 
discuss questions of mutual concern su ch as audit metho dology and assessment 
and interpretation issues. Such colloquia are held on average twice a year. The 
most recent one took place on 26 March 2009.  
Some of the issues discussed are prepared by joint working groups. Such a 
working group developed a harmonised systems assessment methodology, which 
lays down the criteria to be applied in arri ving at opinions on th e quality of systems 
in system audits. Member States' audit authorities have been encouraged to apply 
the same methodology. There is also a st anding working group on interpretation 
questions. This attempts to resolve differen ces of interpretation that arise in the 
discussion of the audit findings underly ing the Court’s annual report. Topics 
currently being discussed include the provis ions on taking account of revenue and 
overheads in the 2000-06 peri od. Since last year the DA S findings reported in its 
annual report have been discussed beforehand  in tripartite meet ings involving the 
Court, the Commission and the Member State. 
The Commission endeavours always to judge actions by the standards applicable at 
the relevant time. 
10. The Council invites all actors involved to  work towards common audit standards and 
coordinating audits and reciprocal accep tance of results between Commission and 
Member States, based on the single audit model and bearing in mind the principles 
behind the contracts of confid ence, within the current legi slative framework and with 
due respect to the differences in the syst ems of Member States and the independence 
of their audit institutions, at all levels.  (§ 3, 5th paragraph, page 12)  
Commission's response:  
The Commission is taking  the requested action. 
The legislation for Cohesion policy in the 2007-13 period has made progress in 
several areas towards common audit standards and procedures permitting reliance 
on the results of audit work done by  the Member States. A standard audit 
methodology based on statisti cal sampling is laid down for their work, which can 
be adjusted to national circumstances and systems. The Member States have to 
issue an annual audit opinion based on this work and to report on the results in a 
standard format stating the error rate detected. The timing of the annual audit 
work and of the report on the results ha s been changed to allow the report to be 
taken into consideration in the Commission’s assessments of Member States’ 
systems in the Directorat es’ General Annual Activity Reports. Annual bilateral 
audit coordination meetings are continui ng as in the 2000-06 period, but on the 
basis of more recent results arrived at by harmonised methods  and with reference 
to the assessment of the compliance of the systems with regulatory requirements 
carried out at the beginning of programme  implementation. In addition, there are 
 
EN 10   EN two technical meetings with the Member  States’ audit authorities every year to 
discuss general issues. 
The key guidance documents for control and audit work are being collected into an 
Audit Reference Manual, the last chapter of which was presented to the Member 
States in May 2009. 
These developments will allow the Commissi on to rely on Member States’ audit 
work, in line with the single  audit model, more readily than in the 2000-06 period. 
It will be able to concentrate its finite  audit resources on high-risk areas, while 
applying the “contract of confidence” approach of reliance on national audit work 
to other Member States and programmes. 
11. The Council recalls that the controls and the assurance they provide should be 
improved by building on existing control st ructures and promoting simplification 
with a view to improving th e cost-benefit ratio and urge s the Commission to assess 
the costs of control by area of expenditure. In addition, the Council reiterates the fact 
that it is essential that the whole process aimed at reducing the level of error should not necessarily mean that, as a result, th ere is an increase in administrative and 
control costs.  (§ 3, 1st paragraph, page 13)  
Commission's response:
 
The results from the study on  the costs of controls in cohesion policy and rural 
development were incorporated in the methodology used in the Commission's 
communication to the European Parliament, the Council and the European Court 
of Auditors "Towards a common understanding  of the concept of tolerable risk of 
error" (COM(2008) 866). 
Further data-gathering will be needed to underlie firm proposals on tolerable risk. 
The nature of the work required and ti ming will vary according to the different 
policy areas and will be focused on expe nditure governed by 2007-13 legislation. 
As the statistics on the costs of control from this programming period will become 
progressively available over the next two years, the Commission plans to provide 
analyses of the tolerable risk of error, for the different polic y areas, progressively 
in the time period until  the end of year 2012.  
The Commission is well aware that the pu rpose of introducing the concept of a 
tolerable risk of error is not to increase co ntrol costs, but rather to define the cost 
effective level of control taking account of risk. 
12. To achieve well functioning supervisory and control systems, the Council encourages 
the Commission to pursue its efforts to ensure that its supervisory and control 
systems address the risks effectively on all levels of implementation and mitigate the risk that the control systems in the Memb er States do not colle ct all unduly paid 
amounts. The Council takes note of the co mmunication from the Commission to the 
European Parliament, the Council and the Court of Auditors "Towards a common 
understanding of the concept of  tolerable risk of error" and considers it an element 
for a thorough discussion to be held with  the European Parliament, the Commission, 
the Court of Auditors and all relevant  actors, once the Council has defined its 
position.  (§ 3, 2nd-3rd paragraphs, page 13)  
 
EN 11   EN Commission's response:  
The Commission is continuing to take action to improve the supervisory and 
control systems in the area of Cohesion  policy, following th e action plan to 
strengthen the Commission's supervisor y role under shared management of 
structural actions. A report (COM(2009)  42) on the implementation of the 
structural funds action plan was adopt ed in early 2009. The Commission adopted 
in October 2009 a follow-up report on th e actions carried out in 2009 and will 
publish a report on the first impact of th e Action Plan at the beginning of 2010. It 
is expected that the full impact of thos e actions on the error rates will become 
visible in the medium- to long-term. 
Outside the 2008 structural funds action plan , the Commission is also continuing 
its efforts to improve the supervisory and control systems. The 2008 Annual 
Activity Reports of the Commission services contain action plans to improve the 
effectiveness of specific internal co ntrol systems. The new elements of 
simplifications introduced in the regula tory framework for the 2007-2013 period 
should also increase effectiveness and he lp reducing the number of errors in the 
implementation of the Structural Funds. Fu rthermore, the Structural Funds' Joint 
Audit Strategy aims at implementing the si ngle audit principle as defined by the 
European Court of Auditors. This should  contribute to an increase of the 
efficiency of the supervisory and control systems implemented by the Commission.  
The Commission considers that a future in troduction of the concept of a tolerable 
risk of error will provide a clear view on the cost-effectiveness of the overall 
control system, and is taking this forward in the light of the positive reaction in the 
2007 Discharge resolution. The nature of th e work required an d timing will vary 
according to the different policy area s and their multi-annual execution: for 
Cohesion policy the aim will be to study 2010, the first year when the majority of 
expenditure will be governed by the streng thened control provisions in the 2007-13 
legislation. 
 
EN 12   EN Chapter 3 - Budgetary Management 
13. While recalling the joint declaration on Implementation of the Cohesion Policy 
adopted at the conciliation meeting on 21 November 2008, the Council calls on the 
Commission to make every effort to avoi d delays in the examination of major 
projects and the management and contro l systems which could have an adverse 
impact on the future implementation of the budget.  (2nd paragraph, page 14)  
Commission's response:  
The Commission is taking the requested action. DG REGIO has put in place well-
defined procedures to perform the qua lity checks of major project applications 
within the time required by the Genera l Regulation (1083/2006). It uses specific 
ICT tools to monitor the work flow in treating major projects submitted by the 
Member States. 
The Commission examines the complian ce assessment reports and opinions 
submitted by Member States, which ar e due within 12 months of programme 
approval, in order to confir m that the management and control systems set up by 
the Member States for the 2007-2013 programming period fully comply with 
regulatory requirements. Until the Commis sion has approved the assessment, it 
will not reimburse interim payment claims. 
By the end of September 2009 the Commission had received compliance 
assessment reports from Member States covering 405 programmes, representing 
more than 93% of the total progra mmes. It had accepted the compliance 
assessments for 74% of the programmes received and rej ected 19% which have to 
be re-submitted after correction by the Member States. The remainder have been 
interrupted or are still subject to exa mination. The 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 mandat ory key elements, and inconsistencies 
between the findings in the report of th e compliance assessment body and the final 
opinion. Few cases have raised fundamenta l structural or capacity problems. The 
Commission is actively following up the cases, which have been rejected or not yet 
submitted, with national authorities in or der to have them approved by the end of 
the year. 
14. While noting that the budgeta ry surplus continues to decrease, the Council reiterates 
that a realistic and suffici ent budgeting from the stage of  the preliminary draft budget 
onwards, which limits to the largest extent pos sible the need to recourse to amending 
budgets to reduce appropriations for paymen ts, remains an essential element of good 
budgetary management.  (3rd paragraph, page 14)  
Commission's response:  
The Commission will take the requested ac tion. For instance, the Commission, in 
order to achieve a realistic and sufficient budgeting, is yearly making a synthesis 
on the under-implementation in the contex t of the Budget Forecast alert procedure 
(Chapter "Lessons to be learne d" of the Information note). 
 
EN 13   EN 15. The Council notes that the accuracy of Me mber States' expenditure forecasts in the 
area of "Structural Funds" c ontinues to improve and enc ourages the Commission and 
the Member States to cooperate closely in view of improving accu racy even further, 
thus making these forecasts a usef ul tool for budgeting purposes.  (4th paragraph, 
page 14)  
Commission's response:  
The Commission is taking the requested actio n. It is continuing  to analyse Member 
States’ forecasts against the ou tturns, to report on the results in its annual report 
on budgetary execution of the Structur al Funds, and to take up major 
discrepancies with the Member States con cerned with a view to reducing the gaps. 
16. Notwithstanding that 2007 is  the first year of the ne w programming period, the 
Council notes with great concern that th e overall level of outstanding budgetary 
commitments (RAL) continues to increase.  The Council, nevertheless, notes with 
satisfaction a decrease of RAL for Structural Funds for the 2000-2006 programming 
period and calls on the Commission to continue  with its efforts so as to avoid any 
delays in the closure of these programmes which could have a negative impact on the 
implementation of the approved progra mmes for the new programming period.  (1st 
paragraph, page 15)  
Commission's response:  
The Commission is taking the requested action. It has done considerable work to 
prepare for closure of 2000-06 programmes. It  issued guidelines on the closure of 
Structural Fund programmes in 2006 and for Cohesion Fund projects in 2008. In 
September 2008 it organized a large semin ar “Towards a successful closure of 
2000-06 programmes,” which was attended by  over 700 delegates from all Member 
States. It published answers to the numer ous questions asked at the seminar about 
aspects of closure in January 2009. On  11 December 2009 a technical meeting 
with Member States' winding-up bodies is planned, with the specific subject of 
preparation for closure 2000-2006. The Directorates General concerned have also 
put in place their internal procedures in readiness for the surge of closure 
documentation which will occur in the autu mn of 2010, following the extension of 
the eligibility period for 2000-06 progra mmes until June 2009 for many Member 
States. 
17. As regards the analysis of the data refe rring to RAL, the Council shares the Court's 
view that further improvements are po ssible and, conseque ntly, calls on the 
Commission to improve its report on budgetary and financial management.  (1st 
paragraph, page 15)  
Commission's response:  
The Commission has taken the requested ac tion. In the Report on budgetary and 
financial management 2008, the outstandin g commitments (RAL) were analysed 
together with the cumulative implem entation of the relevant Community 
programmes. The distinction of the RAL between the current and the previous 
financial programming periods was made , as recommended by the Court of 
Auditors. 
 
EN 14   EN 18. The Council acknowledges that the "n+2" ru le has had the intended effect of 
encouraging the timely liqui dation of commitments. The Council notes the Court's 
observation on the risk concerning the legality and regularity of underlying 
transactions if the accelerat ed payment process to reduce outstanding commitments 
were to be achieved by appl ying less strict internal contro l procedures. Therefore, the 
Council calls on the Commission and the Member States to take full account of this 
risk. In this respect, the Council also calls on the Member  States to give additional 
attention to ensuring timely liquidation of commitments in line with the relevant procedures foreseen by the legislation and without compromising the quality of 
control procedures.  (2nd paragraph, page 15)  
Commission's response:
 
The requested action has been taken. The Commission discourages Member States 
from declaring expenditure without carryi ng out the usual controls in order to 
avoid de-commitments under the n+2 rule. For example, in connection with 
projects included in programming retros pectively, the Commission continuously 
reminds Member States to en sure that projects fulfil the normal selection criteria, 
that the use of EU funding is publicised  and that the projects are subject to the 
normal checks. Other means of avoiding  automatic de-commitments under the n+2 
rule, such as front-loading the payment of grants in the early yea rs of projects, are 
also strictly regulated. 
19. In respect of information on the implemen tation of the budget, the Council shares the 
Court's view that the figures mentioned in the different documents are not fully 
consistent and vary slightly. Consequently, it encourages the Commission to increase 
transparency, consistency and comparabil ity of the information on implementation 
and surplus from now on by providing clear de finitions and explanations of concepts 
and calculation methods used. The Council co nsiders it appropriate to present all 
information needed to calculate differe nt utilisation rate s throughout the whole 
budgetary procedure, from the preliminar y draft budget to the total authorised 
appropriations.  (3rd paragraph, page 15)  
Commission's response:  
The Commission has taken the requested action. The implementation reporting of 
the annual accounts and the Report on bu dgetary and financial management is 
now standardised. Concepts like current (unused) reserve, carryovers, assigned 
revenue, other institutions are treated exactly in the same way. 
Utilisation rates most often refer to fi nal appropriations which are generally the 
most relevant for analysing the budgetary management. Nevertheless, the 
appropriations of the year (initial budget)  are transparently presented in all 
Commission reports. 
20. The Council acknowledges the substantia l efforts made and the important 
improvements achieved by the Member Stat es and the Commission in providing 
complete, accurate and timely information on financial corrections and recoveries. 
However, it notes the Court's observations  on the remaining deficiencies in the 
overall information available. The Counc il shares the Court's opinion that the 
Commission's initiative to record complete da ta on recoveries in the central financial 
 
EN 15   EN and accounting system as from 2008 is a positive development. The Council 
encourages the Member States and the Co mmission to further improve, in line with 
the Court's recommendations, the completene ss and accuracy of information with the 
aim of providing reliable evidence allowing the Court to assess the effectiveness of 
the multiannual correction mechanisms for EU spending.  (1st paragraph, page 16)  
Commission's response:  
Changes have been made to the ABAC financial system in 2008 to allow the 
tracing of recoveries to specific errors or i rregularities detected. This has allowed it 
to already present more complete and reliable r ecovery figures in the 2008 
accounts. Thus the Commission will contin ue to include in the notes to the 
accounts its own financial corrections. Th e Commission commits itself to continue 
the efforts to improve the qua lity of information produced by the Member States on 
financial corrections, withdrawals and recover ies. This information is included in 
Annex to the annual report on the implement ation of the Structural Funds. It will 
continue to report to the budgeta ry authority on this issue. 
Furthermore, the Commission will pursue on going efforts and will not hesitate to 
proceed to financial corrections where n ecessary. Within the legal framework, the 
Commission has taken steps, under the Action plan of 19 February 2008 to 
strengthen its supervision of Member Stat es in relation to shared management of 
structural actions, to ensure that irregula rities found in the implementation of the 
Structural Funds are dealt with as soon  as they are detected and financial 
corrections are applied promptly. 
 
EN 16   EN Chapter 4 - Revenue 
21. As regards long-outstanding reservations  in particular regarding the VAT own 
resources, the Council, while  noting that the Commission has adopted an approach 
that categorises the reservations in a framework which allows priorities to be identified, encourages the Commission to c ontinue its efforts towards an effective 
implementation, in cooperation with the Memb er States, in order to speed up its work 
on lifting VAT reservations.  (§ 2, 1st paragraph, page 17)  
Commission's response:
 
In their annual report the Court of Audito rs specifically referred to 34 reservations 
which had been outstanding too lon g. Beginning in mid-2008 the Commission 
categorised all outstanding reservations a ccording to risk crit eria including those 
cases specifically mentioned. Management visits were introduced to progress the 
most critical items. As a result of this ac tion 11 of those oldest reservations have 
been lifted. A further 10 are considered lo w-risk at present and will be pursued via 
the bi-annual control cycles or other ad-ho c contacts. Turning to the remainder of 
those specified cases; action is already und erway with the relevant Member States 
with a view to finalising or significan tly advancing the item s for a further 6, and 
two more management reviews will be co nsidered in early 2010 to deal with the 
remaining 7 items. 
 
 
EN 17   EN Chapter 5 - Agriculture and Natural Resources 
22. The Commission and the Member States should continue to make efforts in 
strengthening their supervisory and cont rol systems, which the Court again found 
only partially effective, thus further reduc ing the error rates. The Council urges the 
full implementation of controls and check s under IACS in all Member States and 
calls on the Commission to thoroughly follow- up in the conformity clearance all the 
errors noted in its audits. Mechanisms ensuring effective and rapid recovery actions against beneficiaries having received irregul ar payments should also be reinforced.  
(1st paragraph and § 1, 3rd paragraph, page 19)  
Commission's response:
 
The Commission has taken the requested action.  
The Commission has taken action in the rural development area, where most of 
the errors appear (the EAGF part of agric ulture expenditure has an error rate 
below materiality). 
Member States are obliged to ensure th at all rural development measures are 
verifiable and controllable. Member States  must also make sure that the rules 
concerning eligibility are respected.  
Council Regulation 1290/2005 provides for the-post 2007 period to align the 
management and control system for the expenditure under the newly created 
European Agricultural Fund for Rura l Development (EAFRD) with the EAGF 
system. Thus, in the future, the advantage s of the EAGF system that are largely 
recognized will also cover the ru ral development expenditure.  
Regarding IACS Greece has now complied with its action plan and has created a 
new, operational LPIS. The new system will be used by the Greek authorities for 
the first time during the 2009 claims pro cedure. The Commission will continue to 
closely monitor the IACS procedure in Greece. Also, the ongoing conformity 
clearance procedures covering the financia l risks resulting from deficiencies for 
the years 2006-2008 will continue. For the fu ture, the Commission confirms it will 
apply appropriate measures proportion ate to the eventual weaknesses. 
Concerning recoveries, the new 50/50 rule enshrined in Article 32(5) of Council 
Regulation (EC) No 1290/2005 is a strong incentive for Member States to ensure 
an expeditious and effective recovery of irregular payments from the final 
beneficiaries.  
However, where recovery from final bene ficiaries is not possible because the 
problems identified only relate to deficien cies in the Member States' management 
and control systems the financial corrections imposed on Member States through 
the conformity clearance mechanism are an important incentive for Member 
States to improve these sy stems and, thus, to preven t or detect and recover 
irregular payments to final beneficiaries.  The conformity clearance thereby also 
contributes to the legality and regularity of  the transactions at the level of the final 
beneficiaries. 
 
EN 18   EN 23. As regards rural development, the Council strongly calls for a simplification of 
complex rules and more precise definitions of  eligibility criteria, especially for agri-
environmental schemes, at Commission level fi rst, but also at national level, in the 
context of the rural development plans. This  effort should lead to the establishment 
of a set of verifiable indicators, keeping in mind the need to guarantee the substance 
of existing commitments. The transmissi on of more comprehensive and clear 
instructions and guidelin es to all stakeholders, as well as the organisation of training 
actions are crucial in view of stream lining the applicatio n and harmonising the 
interpretation and the scope of the existing rules.  (§ 2, 4th-5th paragraphs, page 20)  
Commission's response:  
The requested action has been taken in the rural development area, where most of 
the errors appear (the EAGF part of agric ulture expenditure has an error rate 
below materiality). 
- Member States are obliged to ensure that all rural development measures are 
verifiable and controllable. Member States  must also make sure that the rules 
concerning eligibility are respected.  
- These issues were discussed intensel y between the Commissi on and the National 
Authorities before the rural devel opment programmes for 2007-2013 were 
approved. 
- The Commission has given extra guid ance to Member States on how to 
implement agri-environment measures. 
- Audit missions will take a closer look at the origin of  higher error rates in agri-
environmental measures. 
- The higher error rates in rural development, in particular agri-environmental 
measures seem to be due to the complex nature of the policy rather than problems 
in the controls. 
The Council Regulation 1290/2005 provides for the-post 2007 period to align the 
management and control system for the expenditure under the newly created 
European Agricultural Fund for Rura l Development (EAFRD) with the EAGF 
system. Thus, the advantages of the EAGF sy stem that are largely recognized will 
also cover the rural development expenditure. 
24. As regards the Commission's clearance of accounts, the Council encourages the 
Commission to pursue its efforts in followi ng up the application of the "50/50 rule" 
(specified in Article 32(5) of Regulati on (EC) No. 1290/2005). In the context of the 
conformity clearance, the Council emphasises once again th e importance of financial 
corrections which contribute considerably to safeguarding the Co mmunity's financial 
interests, acting also as an important incen tive for Member States to improve their 
management and control systems. The Council  joins the Court in noting the fact that 
in 2007 the certifying bodies' work was exte nded and that opinions on the paying 
agencies' Directors Statements of Assuran ce and on internal control procedures were 
required. It encourages the progress in th e direction of improving the accountability 
 
EN 19   EN of paying agencies and increasing the transparency and ownership of the control 
results.  (§ 3, page 21)  
Commission's response:  
The Commission welcomes the Council's support for the application of the 50/50 
rule - and that it provides a strong in centive for Member States to ensure an 
expeditious and effective recovery of irregular payments from the final 
beneficiaries, and the support for conformity  clearance as a tool to shielding the 
Community budget from expenditure that should not be charged to it.  
The Commission furthermore welcomes th e acknowledgment by the Council on 
the improvements in the accountability of Paying Agencies and the progress that 
has been made. In line with this devel opment, DG AGRI reports in its Annual 
Activity Report for 2008 on the assessment of the declaration of assurance from 
the different Paying Agencies, and, wher e a Member State has accredited more 
than one Paying Agency, of the annual summaries from the coordinating bodies. 
25. As regards the errors in the payments audited, which, in the case of "Environment", 
caused the Directorate-General for Environm ent to make a reserv ation in its Annual 
Activity Report, the Council emphasises th e importance of prompt and thorough ex-
post audits to detect in eligible expenditure and/ or inadequate supporting 
documentation, in order to allow the necessary  corrections. This applies particularly 
to projects financed through the LIFE inst rument, although the situation matured and 
improved in 2007 with respect to the cont rol systems and the alert mechanisms.  (§ 4, 
2nd paragraph, page 21)  
Commission's response:  
The requested actions have been taken. The Directorate General of Environment 
has increased the staff of its audit te am and used a framework contract for 
external auditors. Subsequently the numbe r of audit reports issued in 2008 has 
increased from 16 to 26 and the amount of payments audited from €10,6 millions 
to €31,5 millions compared to 2007. Those fi gures are confirmed by the results at 
31/5/2009 with 15 reports and €13,9 millions of payments audited. 
 
EN 20   EN Chapter 6 - Cohesion 
26. The Commission shall, together with improving its supervisory systems and 
providing guidance to the Member States, actively encourage and facilitate simplification which shall ultimately lead to reducing both the occurrence of errors and the administrative burden at all levels . The Council notes that further work has 
been considered regarding issues such as the use of a flat rate , partial closure and 
eligibility rules fixed at national level and expects to see their beneficial effects for future discharge procedures related to th e new programming peri od. In this context, 
the Council welcomes the action taken rega rding simplification in the framework of 
the 2008 recovery plan to reduce regulatory and administrative burdens, such as the clarification of provisions facilitating the launch of financial engineering instruments 
and the simplification in relation to broadening the use of flat rates and lump sum costs. The Council encourages the Commi ssion, in close cooperation with Member 
States, to continue in this way and to explore new possibilities for simplification.  (§ 
1, pages 22-23)  
Commission's response:
 
The Commission is taking  the requested action. 
A number of simplifications proposed by the Commission have already been 
introduced by amendment of the Counc il regulations (see Regulations 1341/2008 
and 396 and 397/2009. These concern revenue-g enerating projects and, the use of 
flat rates and lump sums for certain output s. Simplifications were also included in 
amendments to the Council regulations to allow quicker disbursement of Cohesion 
policy funds in response to the econo mic downturn (Regulation 284/2009) The 
Commission is about to propose a second  batch of amendments to simplify 
application of the Council regulations, with regard inter alia to minimum 
operating periods for investments and par tial closure. The Commission also 
amended its implementing regulation, for example to streamline the requirements 
on reporting irregularities and irrecoverable  amounts, publicity and audit issues. 
The simplification proposals have emerged from a joint working group of Member 
State and Commission representatives. Where necessary, the Commission is 
issuing guidance on application of the simp lified provisions, for example on flat 
rates and revenue-gener ating investments. 
27. The Council urges all actors in the accounta bility chain to further intensify their 
efforts so that significant pr ogress can be achieved and made visible in the short 
term. The Council invites them to make good  use of all preventive and corrective 
measures available, while striking the balance between the need for controls and the administrative costs they entail. In this  context, the Council recalls the joint 
declaration by the European Parliament, the Council and the Commission regarding 
the implementation of the Cohesion Policy and invites all the actors involved to do their utmost to fully comply with it.  (3rd paragraph, page 22, and § 2, 1st-3rd 
paragraph, page 23)  
Commission's response:
 
The Commission is taking  the requested action. 
 
EN 21   EN The approach of the Commission to improve th e effectiveness of the control system 
for Cohesion Policy continues to invo lve both preventive and corrective action. 
With regard to the 2000-06 programmes now about to be closed, the focus is on 
removing irregular expenditure through fi nancial corrections and on the work of 
winding-up bodies to ensure that the residual risk of  irregular expenditure in 
closed programmes is low. For the 2007-13 period the preventive phase is 
continuing with the completion of the compliance assessment procedure for the 
new programmes, the provision of guidan ce and training, and simplification of 
operating conditions. In the second ha lf of 2009, the Commission carried out 
sample audits of the first expenditure of the new period. The results will be 
published in early 2010. 
The cooperation between Member States and the Commission with regard to the 
new period programmes has been intensifie d compared with the past. The full 
range of activities being carried on to imp rove the situation is described in the 
report on the implementation of the Action Plan to strengthen the Commission’s 
supervisory role in the shared manageme nt of structural actions expenditure 
(COM(2009) 42). 
28. The Council regrets the Court's conclu sion that the main  objective of the 
Commission's supervision to ensure that Me mber States establish and operate control 
systems in compliance with underlying re gulations is not yet achieved. Though 
acknowledging that in the major ity of cases the audits have been adequately planned 
and carried out and the relevant corrections applied, it notes with concern that in a 
number of cases corrective action has b een taken too late, thus reducing the 
effectiveness of the supervis ion procedure. In the Council' s view, it is essential that 
the Commission's audit activity is effective and that the Commission puts in place an effective system to carry out its supervisory role.  (§ 2, 4th-5th paragraphs, page 24)  
Commission's response:
 
The Commission is taking the requested action. In most cases appropriate action to 
follow up the results of audits is t aken in a reasonable time period. Under the 
Action Plan to strengthen its supervisory role, the Commission has taken action to 
speed up its procedures and reduce unnecessary delays in the application of 
payment suspensions and financial corrections following audits. This has been 
reflected in a large increase in the num ber of suspension decisions and in the 
volume of financial corrections resulting from the Commission's or the Court of 
Auditors' audit work in 2008 compared with 2007. Reference is made to the 
Commission's report on the implementatio n of the Action Plan (COM(2009) 42).  
The Court's findings indicate that the Commission's supervision has not yet had 
the desired impact. Nevertheless, th e assessment of the Member States' 
management and control systems in th e 2007 report represented a significant 
improvement from the previous year's report. 
29. The Commission should make, where appropri ate, an effective us e of the corrective 
instruments at its disposal, such as payment suspensions , financial corrections and 
recoveries. This would act as a deterrent a nd thus have an important positive impact 
on the legality and regularity of expe nditure. The Council underlines that both 
reinforced controls at the Member State level and more effective supervision by the 
 
EN 22   EN Commission should respect  the principle of proportionali ty of controls to the risks 
and the benefits from control in  relation to the costs involved.  (§3, 1st paragraph, 
page 25)  
Commission's response:  
The Commission is taking the requested action. The figures for suspensions and 
financial corrections in 2008 show a mark ed increase. In 2008 it took 10 formal 
payment suspension decisions, as against only one in 2007. The volume of 
financial corrections applied in 2008 as a result of the Commission's or the Court 
of Auditors' audit work also rose sharply to €1,587 million from €396 million in 
the previous year. 
With regard to the proportio nality of controls, refe rence is made to the 
Commission's communication "Towards a common understanding of the concept 
of tolerable risk of error" (COM(2008) 866), which puts forward a framework for 
setting the level of controls by re ference to their costs and benefits. 
 
EN 23   EN Chapter 7 - Research, Energy and Transport 
30. The Council stresses the importance of a substantial simplific ation of the legal 
framework which should be regarded as a general guidance principle for the new 
programming period. The Council calls on the Commission to use all possible opportunities to further simplif y and clarify the rules for the calculation and reporting 
of costs, which should subsequently reduce the uncertainty about the eligibility of 
expenditure resulting from possible different interpretation of the often complex legal framework. Moreover, the Council stress es the need to use more extensively 
financing methods which are based on lump sums and on the achievement of results, 
wherever they are suitable.  (§ 1, page 26)  
Commission's response:
 
The Commission agrees to the general need for more profound simplifications and 
asks the legislator to support the adaptatio ns to the legal basis (revision of the 
Financial Regulation, Framework programme  participation rules) that would be 
necessary in this respect for the prepar ation of the 8th Framework Programme.  
FP7 has brought about a number of impor tant simplifications already. The 
introduction of the participants guarantee fund allowed to considerably reduce the 
numbers of ex-ante financial checking, the use of protective measures and 
replaced the collective financial responsibi lity of the contractors as laid down in 
FP6. The introduction of the Certification on the Methodology in FP7 contributes 
to the reduction of required certificates  and will limit ex-post controls. Further 
improvements will be achieved by the gr adual introduction of fully electronic 
exchange systems for the whole chai n of proposal and grant management 
processes in the frame of  the e-FP7 initiative.  
As regards the more extensive use of lump sums and flat rates, a first tangible step 
was taken on 4 June 2007, when the Co mmission decided on lump sums for 
International Cooperation Partner Countries' beneficiaries. The Commission 
continues to work towards a simplificat ion of the cost reimbursement system, 
gradually introducing the use of flat rates and lump-sums where appropriate (for 
example for subsistence and accommodation costs). Further steps would be taken 
after careful consideration of their likely consequences and with due regard to the 
principle of sound financial management. 
31. The Council considers that controls need to be reinforced to  identify any possible 
overstatement of eligible costs (with par ticular attention to personnel and indirect 
costs) as well as co sts declared without justification or with out adequate supporting 
evidence. It asks the Commission to continue its approach of an increased number of 
on-the-spot audits, targeted  according to budgetary impact, aiming at a further 
reduction of the risk to legality and regular ity and at the elimination of systematic 
errors.  (§ 2, 1st paragraph, page 26)  
Commission's response:  
The Commission has devised a control stra tegy aimed to ensure the legality and 
regularity of the 6th Framework Programme on a multiannual basis. It is based on 
 
EN 24   EN the detection and correction of errors which could not be identified before making 
the payment. This is achieved by ex-post auditing and recovering amounts found to 
be overpaid to the audited beneficiaries,  including for non-au dited contracts where 
the same problems have been identif ied. The research DGs have recently 
elaborated the control strategy for FP7. 
32. The Council underlines the importance of improving the quality and reliability of 
external audit certif icates. It invites th e Commission to provide additional support to 
beneficiaries and certifying auditors on the audit work to be performed, including the 
certification of the cost methodology. In  parallel, the Council emphasises the 
necessity of a timely explan ation of new methods and procedures and asks the 
Commission to provide regular informati on by all means to the relevant actors. 
Existing provisions need to be simplified as  well and, together with the guidelines, 
they have to be properly understood through appropriate training in time.  (§ 2, 1st-
2nd paragraphs, page 27)  
Commission's response:  
The distinct feature of FP7 compared to FP6 is that the audit certification, both at 
the level of cost statements and at the level of the cost methodology certification 
process is based on compulsory certifi cate models, which are part of the FP7 
model grant agreement. In the context of FP7, the Commission introduced agreed-
upon-procedures on the basis of intern ational audit and accounting standards. 
These procedures consist of a compulsory set of procedures to be performed by 
auditors involved in the certification pro cess. Auditors are therefore not requested 
to provide an assurance opinion anymore but to perform a set of procedures in 
order to provide an independent report on factual findings, which will be the basis 
for the Commission to assess the eligibil ity of costs and/or the methodology. 
Moreover the Commission established in close collaboration with the European 
Federation of Accountants FAQ and FP7 gu idance notes for the beneficiaries and 
auditors involved in the audit certification . While participating in conferences and 
workshops to raise awareness on the FP 7 certification process, the Commission 
also launched in 2007 specific pages dedicate d to audit and certification policy on 
CORDIS. FP7 prospective beneficiaries and certifying auditors can easily retrieve 
audit supporting documents and can get support through the enquiry service 
established to deal with requests on FP7 issues.  
The Commission's information-approach is  largely based on  publication of 
guidance and information through CORDIS , the functioning of the "Research 
Enquiry Service" and the role of the Nationa l Contact Points. In view of the size of 
the RTD Framework Programme bene ficiaries community (some 15.000 
organisations), specific training for th e beneficiaries cannot realistically be 
envisaged with the existing resources and structures. 
33. The Council calls on the Commission to continue the implementation of the 
measures envisaged in the framework of  the common audit strategy, aiming at a 
refinement of certification and risk ev aluation methodologies, the harmonisation of 
procedures and a more effective coopera tion between the diffe rent Commission 
services.  (§ 2, 3rd paragraph, page 27)  
 
EN 25   EN Commission's response:  
The research DGs are implementing the common audit strategy for FP6 in a 
coordinated way and have recently elaborated the common audit strategy for FP7. 
34. The Council urges the Commission to ensure timely payments to beneficiaries.  (§ 2, 
4th paragraph, page 27)  
Commission's response:  
The Commission continues taking appropr iate measures to comply with the 
Council's request related to delayed payments to beneficiaries and to comply with 
the time limits for expenditure operations  set out in the Financial Regulation. The 
efforts made have increased the percentage of payments made on time. The issue is 
being monitored closely and receives th e highest attention to ensure further 
improvement. 
35. The Council invites the Co mmission to remedy the persisting shortcomings in the 
management information on audit resu lts and their timely and effective 
implementation. It asks the Commission to  improve the monitoring tools and the 
follow-up of detected errors, the supervisio n of corrective action and the recovery of 
amounts unduly paid to beneficiaries. In th is context, the Council is also of the 
opinion that more effective use should be made of the available sanction mechanisms 
and that they should be used as an incentiv e for beneficiaries to improve the quality 
of their cost statements.  (§ 3, 2nd-3rd paragraphs, page 27)  
Commission's response:  
Audit results are shared among research DGs  through an internal Wiki site, which 
allows each DG to be informed of each  other's audit results. Regular meetings 
among DGs are also held in order to  implement the common audit strategy. 
As far as the implementation of the audit results is concerned, research DGs have 
made structural changes to improve previous shortcomings, such as, for example, 
increasing the resources dedicate d to the follow-up of audits. 
Regarding sanction mechanisms, guidance for the claiming of liquidated damages 
from beneficiaries has been  developed at the beginning  of 2009 and is currently 
being implemented. 
 
EN 26   EN Chapter 8 - External aid, Development and Enlargement 
36. The Council, while acknowledging the Commission's continuous efforts to mitigate 
the problems identified in this area, calls on it to continue the work done, to enhance its efforts as well as to take all the nece ssary measures to decrease the material level 
of error significantly. In this context,  the Council is awar e that, due to the 
multiannual nature of the programmes, the er rors detected during the course of a 
project can be remedied in a year late r than the one under examination. The Council 
considers that the Commission should enhanc e its audit strategy by ensuring a better 
coverage of operations at implementing organisations' level.  (3rd paragraph, page 
28) 
Commission's response:
 
An in-depth cost/benefit anal ysis is needed in order to  investigate possibilities for 
further reductions in the material level of error. The Commission will submit a 
report to Parliament and Council based on the findings of the tolerable risk/cost-
effectiveness studies for external actio n and a review of the AIDCO control 
strategy will follow. As regards audit, EuropeAid's Annual Audit Plans (AAP) are 
the main pillars of the Commission's aud it strategy for external operations. The 
methodology to establish the AAP underwe nt a major revision in 2008. This has 
resulted in a more coherent and transpar ent AAP 2009, giving a better insight into 
the composition of the portfolio of external  aid contracts, audit coverage and other 
control measures. More improvements in the planning process including further 
guidance on audit coverage are being pr epared and will become operational for 
the annual audit planning process 2010. 
37. The Council encourages the Commission to continue to closely monitor the 
beneficiary countries' systems and we lcomes the action plan set up by the 
Commission to ensure that  improvements take place.  (§ 1, 2nd paragraph, page 28)  
Commission's response:  
The Commission is taking the requested action. The measures taken by the 
implementing agencies following the ac tion plans are closely monitored and 
audited to verify that they le ad to the desired improvements. 
38. Regarding budget support, the Council is fu lly aware of the neces sity to strike a 
balance between the achievement of objectives and the need for most precise conditions for payments; however, the Counc il encourages the Commission to pursue 
its work to strengthen the indicators in order to carry out a more rigorous assessment 
and to provide a clear link between funding and performance, to achieve a more 
result oriented approach.  (§ 1, 2nd paragraph, page 29)  
Commission's response:
 
The Commission recognises the need to inject further discipline into the design 
and measurement of indicators in th e budget support operations. General Budget 
Support Guidelines are currently being revised to improve the design and 
 
EN 27   EN assessment of eligibility cond itions and specific results oriented indicators in order 
to achieve a more rigorous results orientated approach. 
39. Regarding budget support, the Council stre sses the need for additional training and 
urges the Commission to do its utmost to pr ovide adequate support and expertise, in 
particular to all staff on the field in or der to improve their performance and their 
capabilities.  (§ 1, 3rd paragraph, page 29)  
Commission's response:  
In recent years the Commission has investe d heavily in a solid training programme 
on Budget Support. In the 3 year period 2006-2008 54 budget support training 
courses have been delivered, reaching more than 1200 staff. Budget support 
training delivered in the field has increased from 7 available courses in 2006 to 14 
in 2007 and 24 in 2008. This is in addition  to HQ training where the average 
participation from Delegations is 40%. This  training programme will be continued 
and where required be strengthened.  
In addition a joint learni ng programme has been d eveloped with other donors 
(within the context of the network Train4 Dev) on Sector Wide approaches, and a 
total of 22 training sessions, in principl e taking place overseas, has reached an 
additional 1000 staff from January 2006 to May 2009. 
40. The Council notes with deep concern th e recurrent weaknesses in the systems 
designed to ensure the legali ty and regularity of External  actions expenditure at the 
level of project implementing organisations  and asks the Commission to take the 
necessary steps to remedy this situation. 
 Although noting the efforts made by the Co mmission regarding th e clarification of 
the terms of reference for audits, and in particular the tendering and public 
procurements, as well as the monitoring of the compliance with them, the eligibility of costs and the required documentation for the allocation of  expenditure, the 
Council encourages the Commission to furt her enhance its action and urges it to 
provide for more training a nd support to project finance staff and to increase the 
active monitoring of their work by Commission's delegations.  (§ 2, 1st-2nd 
paragraphs, page 29)  
Commission's response:
 
The availability of standard terms of re ference ('ToR') for financial and systems 
audits since 1st October 2007 is a major st ep forward in the process of obtaining 
better quality audits and ensuring the le gality and regularity of transactions. 
Guidelines for Audit Task management became available in November 2008 and 
an advanced training module was developed and delivered (twice) in 2008.However 
EuropeAid's annual review of audit repor ts (which echo the findings of 2006 and 
2007) confirm that the root causes for financial findings are weaknesses in the 
financial management and internal contro l systems of EC funds' beneficiaries. 
EuropeAid has examined the recommendations  made by the exte rnal auditors and 
has started work on response measures  which include the development of a 
Financial Management Toolkit for use by beneficiaries of EC external aid 
projects. 
 
EN 28   EN 41. The Council invites the Commission to purs ue and deepen its ac tion to simplify and 
standardise partnership agreements and the related documentation; the Council 
expects to see the positive effects of  these measures in the coming years.  (§ 2, 1st 
paragraph, page 30)  
Commission's response:  
The requested action has been taken by the Commission. DG ECHO has already a 
long tradition of framework partnership agreements in order to implement 
efficient and effective Humanitarian Aid actions (Framework Partnership 
Agreement for contracts with ONGs and Financial and Administrative Framework 
Agreement for contracts with United Natio ns). The last framework contract has 
been launched from January 1st, 2008 and addresses the need to simplify and to 
increase the flexibility of the contract ual instruments with our partners. The 
overall aim of the new FPA was to impro ve the implementation of humanitarian 
aid with a focus on results-driven appr oach. Moreover, and wherever possible, 
current rules and procedures were simplifi ed. In that context, and to better take 
account of the diversity of DG ECHO par tners and establish a more effective 
control environment as imposed by the Financial Regulation, the new FPA 
establishes two differentiated control m echanisms of the humanitarian actions: 
"Action related monitoring" ("A") and "Prior assessment of own Procedures" 
("P") control mechanisms. 
The appraisal of the contro l mechanism to be applied to FPA-agreements is 
decided by assessing three main domains , being the financial strength of the 
organisation, the internal control and risk management procedures and the 
procurement rules. An annual assessment of the partners is foreseen and may lead 
to a change in control mech anisms to be applied. When a partner is subject to the 
"P" control mechanism, it applies its ow n procurement procedures for DG ECHO 
funded actions. In addition, In the context of the new FPA, a whole program of 
training, guidelines and interpretative fact -sheets have been put in place as well for 
the operational desks and finance officers of the Commission as for our partners, 
in headquarter and in the field. This co ntractual and adminis trative framework 
evolved to a real spirit of partnership and strength ens the impact of the EC's 
efforts in humanitarian aid. 
42. As regards the funds channelled through United Nations organisations, the Council 
insists on the need for a cl oser control by the Commissi on, to make sure that the 
implementation of EU funds is dealt with  adequately and that  there is a clear 
understanding by all acto rs of the rules and procedures of control to be carried out 
and of the standards to be met, in order to fully achieve the objectives of the EU 
policies and action. In this c ontext, the Council regrets the impossibility for the Court 
to assess the full value of the verification missions carried out by the Commission in 2007 because of insufficient or untimely reporting. Nonetheless, the Council takes 
note of the positive evolution of the rela tionship between the Commission, the Court 
and the United Nations and welcomes th e strengthened coopera tion developed in 
2008 between the three organisations and e xpects to see its beneficial effects 
reflected on the ground and in the future reports.  (§ 2, 2nd-3rd paragraphs, page 30)  
 
EN 29   EN Commission's response:  
The Terms of Reference for verification missions were agreed between the UN and 
the Commission in April 2009  and the Commission also believes that the efforts 
made to explain the operation of the verification clause in Contribution 
Agreements with the UN - including throug h training - will help to ensure that 
misunderstanding are avoided in UN country offices and de legations. The fact that 
at the time of drafting th e 2007 DAS the majority of ve rification reports were not 
finalised is primarily linked  to the cycle of the verifica tion annual plan. As is the 
case for audits, the verification mis sions cycle from programming to the 
finalisation of the report do not f it the annual calendar. The Commission 
underlines that out of the 39 AIDCO pl anned UN verification missions for 2007, 
37 reports have been finalised. All EuropeAi d finalised verification mission reports 
were sent to the Court. As far as ECHO is concerned, all reports have been 
finalised for the 18 projects verified in 2007. 
43. As far as the Enlargement policies are concerned, the Council regrets weaknesses 
detected in some implemen ting organisations, while taki ng note of the improvements 
made in the course of 2008 to redress the situation under the impulse of the 
Commission. The Council encourages the Co mmission to continue its monitoring 
and to closely follow up th e evolution of this case.  (§ 2, 4th paragraph, page 30)  
Commission's response:  
Further to a request of the Commission, th e national authorities  have taken action. 
The segregation of functions has meanwhile  been implemented and staffing levels 
increased substantially. Constant monitoring and further follow-up of the systems 
remain key priorities for the Commission. 
44. Regarding ex-post controls in the field of Enlargement policies, the Council shares 
the Court's view that the procedures should be speeded up and the delays in obtaining 
final replies on closur e audits should be reduced. Th erefore, the Council calls on the 
Commission to take all the appropriate m easures and to provide all the necessary 
supports to partners in or der to shorten the delays.  (§ 2, 5th paragraph, page 30)  
Commission's response:  
The Commission is taking the requested action. The Commission however stresses 
that longer delays have to be occasionally  accepted due to th e complexity of the 
findings and as a consequence of the need of accuracy in the application of 
possible financial corrections. 
45. The Council notes the improvements achieved in 2007 concerning the external audits 
at project level, although thei r quality is still not always  sufficient, and encourages 
the Commission to pursue its efforts, to prevent the occurrence of such weaknesses, 
in particular for new contracts. 
 As for additional risk-based projects audits, the Council calls on the Commission to 
further develop procedures to derive full benefit from it. The Council invites the Commission to collect and analyse the result s of the whole programme of audits to 
 
EN 30   EN control quality and to make best use of lessons learned.  (§ 3, 1st-2nd paragraphs, 
page 31)  
Commission's response:  
EuropeAid's Annual Audit Plan (AAP) is bas ed on an analysis of the composition 
of the entire population of external ai d contracts and the use of top-down and 
bottom-up risk-analysis is an important element of the planning process. The 
Commission monitors the implementation of  the AAPs and has carried out quality 
reviews of its EDF external audit repor ts since 2005. The follow-up to the main 
findings in these annual repor ts has led to significant im provements in the use of 
standard terms of reference for audits and the quality of audit reports. The quality 
review system is annually reviewed an d it was significantly improved in 2008 and 
2009 on the basis of lessons learned. Thus th e quality of audits and audit reports is 
improving steadily. 
46. The Council underlines the importance of fi eld audits for all types of partners and 
notes that the Commission has increased them in 2007. The Council underlines the 
need to achieve a better balance between h eadquarter and on the-spot audits of the 
implementing partners, for a better view of the reality of project expenditure. The 
Council encourages the Commission to pursue its efforts in this field, though keeping 
in mind the principle of proportionality.  (§ 3, 3rd paragraph, page 31, and §4, 3rd 
paragraph, page 32)  
Commission's response:  
The requested action has been taken. In  line with the requirements of the 
Financial Regulations, DG ECHO undertake s audits of partner organisations 
adhering to the FPA. The audit strategy is risk based which considers financial 
and operational strengths of the partners,  the results of past audits, assessments 
and feedback received from ECHO staff. The strategy also ensures that all 
partners are audited over a 2 to 3 years cycle depending on whether the partner 
has been classified as having 'A' or 'P' control mechanisms. The audits themselves 
follow a 2-track approach: audits are performed both at DG ECHO partners' 
headquarters for finalised projects (at least once every thr ee to four years and 
more frequently where higher risk is determined or the partner receives significant 
DG ECHO funds) and in the field for on going projects (determined by an 
assessment of risk and the past coverage of the partner concerned). Headquarters 
audits consist of two phases. Firstly, an analysis of partners’  internal control 
systems and in particular the financial syst ems put in place to record and account 
for expenditures incurred on DG ECHO funded projects. Secondly, a control of 
expenditures against supporting do cuments for a sample of contracts. The level of 
transactions controlled is based on the results of the assessment of the internal 
control system. The results of the audits are used for the periodic assessments of 
the partners and for ensuring the eligibil ity of the funds claimed. The later may 
also lead to a recovery of f unds due to the Commission. 
The number of field audits had already b een increased in 2007 fr om 20 in 2006 to 
37 in 2007. For 2008, 47 field audits were initiated and 31 reports finalised. In 
2009, 40 to 45 field audits are planned.  
 
EN 31   EN In addition to these financial audits which are carried out by external auditors, the 
monitoring of projects is also undertaken through DG ECHO which supervises 
projects and draw up regular reports (notably through a wo rldwide network of 
around 100 field experts continuously working for DG ECHO. These 
Humanitarian Aid specialists are permanentl y on the ground in order to facilitate 
and maximise the benefits of the hum anitarian operations financed by the 
Commission).  
Moreover, since 2007, each project is supposed to be visited at least once during its 
lifetime. In 2007 and 2008, 90% of projects we re directly monitored in the field, the 
remaining 10% being projects where access, security and nature of project did not 
permit direct monitoring. 
Therefore, audits have to be appreciat ed in the context of DG ECHO's overall 
control strategy which also includes th e follow-up carried out by its headquarter 
staff and the analysis of the informatio n provided by partners in their various 
reports. Indeed, the information which result s from such controls is used by the 
external auditors when audits are ca rried out at partners' headquarters. 
47. The Council notes the improvement achieve d in the enlargement field regarding 
Extended Decentralise Implementation System  (EDIS), thanks to the implementation 
by the Commission of a close monitoring, however, the Council shares the Court's view that the efforts at the level of na tional supervisory and control systems should 
continue under the close m onitoring of the Commission.  (§ 4, 1st paragraph, page 
32) 
Commission's response:
 
The Commission is taking the requested acti on. It will continue to closely monitor 
the beneficiary country systems, and actions plans have already been set up to 
ensure that improvements take place. 
 
EN 32   EN Chapter 9 - Education and Citizenship 
48. The Council calls on the Commission to enhance the simplification of the often 
complicated legal framework by establishi ng clearer eligibility  criteria and easier 
rules for the calculation of elig ible expenditure, in particul ar personnel costs, in order 
to reduce the error rate a nd to improve the correctness of the declared cost.  (2nd 
paragraph, page 33)  
Commission's response:  
The requested action has been taken. The design of the new programmes 2007-
2013 has taken into account the Court of Auditors' recommendations of previous 
years to simplify the rules and to make extensive use of lump sum financing. 
49. The Council welcomes the Commission's effo rts in establishing an  integrated audit 
system in the areas of education and culture  as well as justice, freedom and security, 
with a strong link between national agenci es and the Commission and an increased 
liability on the Member States' side. It invites the Commission to verify in further detail the certification of management struct ures carried out by national entities, with 
the intention of obtaining more reliability from the supervision by the Member States. Furthermore, it urges the Commission to make sure that the ex-ante and ex-
post declarations of assurance by Member State entities in respect of their own 
financial management of Community expenditure constitute a real added value.  (§ 1, 
1st paragraph, page 33)  
Commission's response:
 
The requested action has been taken. All ex-ante and ex-post declarations of 
assurance have been received and analysed  and open qualifications have been 
followed-up systematically. 
In addition more precise guidelines for th e yearly declarations have been issued 
and specific meetings with the National Authorities have been organised in March 
and in November 2008. Both actions contribute  to a higher level of reliability and 
to a real added value of the ex-post declarations. 
50. The Council notes with satisfaction that progress has been achieved by an increased 
number of monitoring visits in Member St ates. This has enabled the Commission to 
check in a timely manner the description and effective operation of management and 
control procedures on the spot and to ensure  the application of key internal control 
features. The Council encourages the Commi ssion to move forward in this direction 
and to refine the control obj ectives. It stresses the impor tance of establishing exact 
criteria for the assessment procedure, to  foresee precautionary measures, including 
financial corrections, in the contractual relationship with na tional agencies, to 
monitor systematically the progress made by the Member States and to follow up 
scrupulously the implementation of the necessary remedial actions.  (§ 1, 1st-2nd 
paragraphs, page 34)  
 
EN 33   EN Commission's response:  
The requested action has been taken. Control objectives for the primary controls 
are set in the "Guide for National Agencies" which is an integral part of the single 
agreement between the Commission and the National Agencies. 
Control objectives for the secondary cont rols (to be performed by the National 
Authorities) are set in the Guidelines for National Authorities issued in 2007 and 
updated in March 2009. 
An enhanced follow-up of corrective actions has been ensured by using a rating 
method; a clear link between the rating an d the precautionary measures to take 
has been established and is effectively applied. Remedial actions are followed-up 
during the assessment of th e declarations of assuran ce and during monitoring 
visits on the spot. 
51. As regards communications expenditu re, the Council asks the Commission to 
reinforce the ex-ante control system, by improving the rules and by increasing the 
general level of supervision, in order to  achieve a higher effectiveness of the 
controls. In this context it notes with satisfaction the Commission's commitment to 
provide adequate check lists to be used consistently.  (§ 2, 1st paragraph, page 34)  
Commission's response:  
The Commission has carried out the action required. An ex-ante and ex-post 
control unit was set up in November 2007 and an action plan was drawn up in 
DG COMM to tighten up the top-level ex an te controls and supervision carried out 
by the authorising officers by  subdelegation. All the pe rsons involved have already 
been provided with adequate check lists. 
52. The Council recalls its recommendations fo r the Commission to en sure an efficient 
monitoring of payment times with the ai m of reducing the delays in payments.  (§ 3, 
1st paragraph, page 34)  
Commission's response:  
The requested action has been impl emented. During 2008, DG EAC has taken 
further measures to closely monitor th e development of payment delays. The 
monthly reporting to management has b een extended and includes both the 
average payment delays as well as an analysis of payments made within the 
different contractual time limi ts or exceeding those limits.  
The regular follow-up of payment delays has resulted in a clear reduction of the 
average payment time (an average in  2007 of 38,80 days for procurement and 
54,12 days for grants is down to a total average of 28,89 days in 2008). 
53. The Council urges the Commission to comple te as soon as possibl e the sharing of ex-
post audit results with the aim of increa sing the efficiency and effectiveness of 
audits.  (§ 3, 2nd paragraph, page 34)  
 
EN 34   EN Commission's response:  
The requested action has been taken. The results of audits launched from the 
beginning of 2008 are now inserted in ABA C tracking and therefore accessible for 
other DGs. 
 
EN 35   EN Chapter 10 - Economic and Financial Affairs 
54. The Council underlines th e importance of further si mplifying and harmonising the 
cost calculation methodology and the rules fo r cost eligibility, particularly with 
regard to the eligibility peri od. In addition, the requirement to use actual cost figures 
and the need to provide supporting evidence to justify th e claimed cost should be 
pointed out more clearly. These proposed m easures are aimed at a further reduction 
of the error rate, but should not result in a reduced level of contro l if this cannot be 
clearly justified.  (2nd and 3rd paragraphs, page 35)  
Commission's response:  
The Commission agrees to the general need for more profound simplifications and 
asks the legislator to support the adaptatio ns to the legal basis (revision of the 
Financial regulation, Framework participatio n rules) that would be necessary in 
this respect for preparation of the 8t h Framework Programme. FP7 has brought 
about a number of important simplifi cations already and the Commission 
continues to work towards a simplificat ion of the cost reimbursement system, 
gradually introducing the use of flat ra tes and lump sums where appropriate. In 
this sense, the Commission has adopted a decision in March 2009 on the use of flat 
rates to cover subsistence and accommodation costs (rel ated to travel for the 
implementation of a project) providing the po ssibility to do so is  indicated in the 
work Programme. Further steps will be take n to inform beneficiaries and auditors 
about frequently committed errors. 
55. The Council invites the Comm ission to further strengthen  the ex-ante checks of the 
cost statements submitted by beneficiaries for interim and final payments of grants, taking into account cost benef it considerations, in order to support the identification 
of errors as regards not only accuracy but  also eligibility and occurrence of the 
declared cost.  (§ 1, 1st paragraph, page 35)  
Commission's response:
 
The inherent complexity of the funding mechanisms provided by the applicable 
regulatory framework limits the scope of the desk reviews that can reasonably be 
made before reimbursement of expenditure. Therefore the Commission has 
significantly reinforced its ex post co ntrols and put in place a common audit 
strategy. The research DGs have recently elaborated the control strategy for FP7. 
56. The Council considers that it  is essential to increase the number of on-the-spot audits 
and desk controls, with part icular attention to areas of high risk or major budgetary 
impact, to improve the correctness of cost  statements and to reduce the risk to 
legality and regularity of grants to beneficiaries.  (§ 1, 2nd paragraph, page 35)  
Commission's response:  
The Commission has devised a control stra tegy aimed to ensure the legality and 
regularity of the 6th Framework Programme  on a multiannual basis. It is focussed 
on the detection and correction of any e rrors which could not be identified before 
making the payment. This is achieved by ex-post auditing and thoroughly 
 
EN 36   EN recovering any amount found to be overpaid to the audited beneficiaries, even for 
non-audited contracts. The research DGs  have recently elaborated the control 
strategy for FP7. 
57. The Council suggests the Commission to l ook into possibilities of  reducing the risk 
of double financing of the sa me cost by the general budget , as stipulated by the 
Financial Regulation.  (§ 2, 1st paragraph, page 36)  
Commission's response:  
Commission proposals for the basic acts est ablishing grant funding indicate that 
financing of the action can only come from one Commission source (or in 
exceptional cases where funding from diff erent sources are possible these can only 
be applied to specific different types of co sts). The Financial Re gulation (Art 78) 
also provides for the respect of sound fi nancial management principles when legal 
commitments are made. In addition, the Commission's audit services and the 
Commission anti-fraud service (OLAF) are attentive to possible double financing 
and carry out investigations as appropriate. 
58. The Council stresses the importance of in creasing the quality and reliability of the 
audit certificates provided by the final benefi ciaries, through deta iled explanation of 
the cost methodology and support of the audit certification process to be performed. 
Furthermore, it recalls the importance of the independen ce of the certifying auditors.  
(§ 3, 1st paragraph, page 36)  
Commission's response:  
A number of actions have been taken to impr ove the quality of au dit certificates for 
FP6, such as the issuing of guidance no tes for the beneficiaries and certifying 
auditors, the creation of a task force for the handling of audit certificates, and by 
certifying auditors' participation in wo rkshops and training courses. When 
significant errors in audit certificates are detected the certifying auditors are 
informed about the correct  amounts and methodology. For FP7 the reliability of 
audit certificates is being improved by  means of the use of 'agreed upon 
procedures', setting out in detail the aud it work to be performed by the certifying 
auditors. 
 
EN 37   EN Chapter 11 - Administrative and other expenditure 
59. The Council is seriously concerned about the lack of uniform application of rules 
affecting the staff across the institutions. Most notably, the Court's audit revealed 
significant differences in the application of  the multiplication factor applicable to 
salaries as defined in the St aff Regulations. Such differen ces are not in line with the 
principle of equality of treatment for all staff since staff of some institutions may 
benefit from an advantage the others do not. This can also have a potentially non-
negligible impact on the EU budget. Ther efore, the Council en courages all the 
institutions to agree on a uniform appr oach to the application of the Staff 
Regulations, for example by means of common interinstitutional guidelines. Furthermore, the Council expects all the in stitutions to respect the rulings of the 
Court of Justice in this respect.  (§ 1, 2nd paragraph, page 37)  
Commission's response:
 
The Commission shares the Council's position and will actively support any 
initiative taken in this direction. 
It goes without saying that the Commission  respects the rulings of the Court of 
Justice in these matters. 
60. The Council notes the Court's findings  on the payments on carried over 
appropriations and urges all the institutions to comply strictly with the provisions on 
the principle of annuality as stip ulated by the Financial Regulation.  (§ 1, 4th 
paragraph, page 37)  
Commission's response:  
The Commission took immediate action end of 2008. It applies now fully the 
principle of annuality in the limits fo reseen by the financial regulation. 
Nonetheless, the Commission is analysing th e possibility to intr oduce in the revised 
financial regulation an amendment allowing some appropriations linked to 
building costs to be carried over fo r more than one year, if necessary. 
61. In respect of the Communities' pension liabi lities, the Council re calls its conclusions 
on the discharge for the financial year 2006 and insists that th e Commission provides 
an updated estimate of annual Communities' pension expenditure at least up to 2013 
well before the preliminary draft budget for the financial year 2010.  (§ 2, 1st 
paragraph, page 38)  
Commission's response:  
This kind of information is always in cluded in the Preliminary Draft Budget 
(PDB) documents discussed w ith the budgetary authority. 
An updated estimate of annual Communiti es' pension expenditure up to 2013 is 
included in Document V of the stat ement of estimates of the European 
Commission for the financial year 2010 (SEC(2009)610). 
 
EN 38   EN 62. The Council also recalls its request for regular annual information on building needs 
as specified in the Council's conclusions  on the Court's Special  Report No. 2/2007 
concerning the institutions' expenditure on buildings. This annual information should 
be made available by all the institutions each year before the presentation of the preliminary draft budget.  (§ 2, 2nd paragraph, page 38)  
Commission's response:
 
The Commission has already taken the requ ested action. Information on building 
needs is provided on two separate occasi ons: with the prel iminary draft budget 
(PDB) and for each building project w ith significant financial implications. 
As a standard part of the information pr ovided with the PDB, the Commission 
gives all the details concerning the real es tate situation (list of buildings including 
new and abandoned buildings, m², contract s, costs). Subsequently to the EP's 
resolution on the 2008 Draft budget, the Commission has forwarded to the 
budgetary authority the 2009-2011 planning in this area. 
Pursuant to Article 179 (3) of the Fina ncial Regulation, the Commission always 
informs the budgetary authority for a ll building projects with a significant 
financial implication for the budget and this  information is given in advance of the 
legal commitment and contains an updated  planning. Pursuant to Art. 263 of the 
Implementing Rules, the Commission info rms at the same time the budgetary 
authority of its schedule  for building projects. 
63. The Council appreciates the increasing ro le played by the Commission in assisting 
and supervising the financial manageme nt of the agencies and encourages 
Commission and agencies to continue working together in this direction. It invites the Commission to further intensify its assi stance to the agencies, in particular by 
sharing expertise and by providing acce ss to existing accounting systems and 
framework contracts, with th e aim of remedying the report ed weaknesses. It stresses 
the importance of coordination and superv ision by the Commission, in particular of 
the day to day management of fu nds attributed to the agencies.  (§ 3, 2nd paragraph, 
page 39)  
Commission's response:
 
The Commission provides wide-ranging assi stance to agencies in several areas, 
particularly regarding budgetary (notably:  annual budgetary procedure, including 
activity-based management, financia l management and accounting) and 
administrative issues (for example: im plementing provisions for the staff 
regulations and staff policy plan). 
Moreover, the Commission has improved  its co-operation with the agencies 
concerning the participation of its repr esentatives in the Management Boards, 
Memoranda of Understanding and services provided. 
In practice, agencies receive the same type  of assistance than Commission services 
concerning budgetary and financial man agement issues, through the CFS Central 
Financial Service) helpdesk, the accounting services of the Commission, internet 
tools and training, to which they have already full access.  
 
EN 39   EN In particular, detailed guidance on proc urement and other financial management 
issues is made available on a dedicated website. 
Agencies also already have access to a number of framework contracts of the 
Commission, provided they are listed as potential contracting authorities in the 
tender documents - as for any inde pendent entity (equivalent to an 
interinstitutional contract).  
Finally, agencies are encouraged to sign  a number of service-level agreements 
with all horizontal Commission Director ates-General for support services, notably 
those relating to buildings and security , IT systems (including ABAC where 22 out 
of 31 agencies are already us ing this central system, with  2 more scheduled to join 
by the end of 2009 and 5 more during 2010), general and language training, 
medical services etc. 
The Commission undertook a review of th e support it offers to agencies, which 
resulted in a document mapping all the services currently delivered by the 
Commission. This exercise had a twofold purpos e: first, to ensure that agencies are 
aware of the full scope of services that  the Commission offers; and second, to 
identify areas where assistance can be imp roved and rendered more efficient. This 
mapping exercise was done in close cooperation with the agencies via the 
TROIKA. The final document will be distributed to agencies soon. Further steps 
can be undertaken on that basis. 
The Commission will take into account th e results of the Interinstitutional 
Working Group in order to adjust its assistance further. 
64. The Council welcomes the Commission's new approach to taking the agencies' 
unused appropriations into account when es tablishing the preliminary draft budget 
2009, and considers it as a huge improvement. It urges the Commission to continue 
with this principle also in the coming budge tary procedures, with the aim of bringing 
down the agencies' annual surpluses. It ur ges the Commission as well to carefully 
check, and if necessary revise, the require ments of funds and posts as proposed by 
the agencies taking into account prove n problems with implementation and 
recruitment with the aim of presenting a realistic budget proposal.  (§ 3, 4th 
paragraph, page 39)  
Commission's response:  
The Commission has taken the requested action. 
It has taken the Council's recommendation into account when preparing its 2010 
PDB request, as explained in more detail  in the dedicated PDB Working Document 
on agencies (section 2.1 decentralised agencies). 
65. The Council has noted with  interest the Commission' s Communication on European 
agencies published in Marc h 2008. The Council recalls its  declaration of 17 July 
2008 laying down the elements on which the evaluation of the agencies should be 
based. Moreover, the Council has committed itself to actively participate in the 
evaluation process initiated by the Commissi on and recalls in this respect the joint 
declaration regarding the cr eation of an Interi nstitutional working group on agencies 
 
EN 40   EN adopted on 21 November 2008 which constitutes a good basis for the work to be 
carried out. The Council welcomes the decision that it will be attributed to independent external experts. It looks fo rward to the outcome of the evaluation and 
expects concrete proposals for improving the functioning and the transparency of the 
agencies.  (§ 3, 3rd paragraph, page 40)  
Commission's response:
 
The evaluation of EU decentralised agencies was launched in December 2008. The 
Terms of Reference take into account th e declarations of the Council and the 
European Parliament. These institutions are involved in the evaluation process 
through the Reference Group. The results of the evaluation will be available by 
end 2009. 
 
EN 41   EN Special Report No. 6/2007 on the effectiveness of technical assistance in the context of 
capacity development 
66. "The Council invites the Commission to: - inform the Council of  progress made with 
the Strategy on Technical Cooperation; 
 - consider that local ownership involves the use of the partner countries' public 
financial management and procurement sy stems to the maximum extent possible; 
where use of those systems is not feasible, additional safeguards and measures should be established in ways that strengt hen rather than undermine those systems; 
 - examine how the participation of t echnical assistance experts from public 
institutions and local/regional organisati ons can be improved within the boundaries 
of existing public procurement procedures; 
 - ensure that a capacity needs assessme nt, including an institutional capacity needs 
assessment, is properly carried out in the preparation of the programmes, the process 
being led to the greatest extent  possible by the partner country.  (DOC 5587/09 ADD 
2, Annex 1, § 11, page 4)  
Commission's response:
 
A report on the "State of progress on th e implementation of the Reform on TC" 
was issued on the 30th of March 2009, and Guidelines on "Making Technical 
Cooperation more effective" on the 20th May 2009. An updated progress report 
was issued in October 2009. 
 
EN 42   EN Special Report No. 7/2007 on the control, insp ection and sanction systems relating to the 
rules on conservation of Community fisheries resources 
67. The Council notes that, in its replies, th e Commission has indicated that many of the 
issues raised by the Court will be addresse d in the revision of the Control Regulation 
planned for autumn 2008. The Council looks forward to receiving this Proposal and 
addressing those issues. The Council recalls that, in the context of better regulation 
and simplification, the rules of the CFP should be simple, enforceable and cost-
effective. It invites the Commission to take this into account when preparing the above Proposal.  (DOC 5587/09 ADD 2, Annex 2, §§ 10-11, page 5)  
Commission's response:
 
The proposal for a Council regulation esta blishing a Community control system 
for ensuring compliance with the rules of  the CFP (Control re gulation) presented 
in November 2008, has been approved by Council on 19 October 2009 and will 
enter into force on 1 January 2010. The new Control regulation answers all the 
recommendations of the Court of Auditors and received broad support from the 
European Parliament, the Committee of th e regions, and the European Economic 
and Social Committee. Moreover, in th e light of the proposed reduction of 
administrative burden the reform has been fully supported by the High Level 
Group of Independent Stakeholders on Administrative Burdens. 
The main elements of the new Control regulation are: 
- The new Control regulation will make fo r uniformity in the implementation of 
control policy, while respecting and co nsidering diversity and the specific 
characteristics of different fleets. Contro l and inspection will be focused where it is 
most effective, through an approach based on systematic risk analysis. Inspection 
procedures will be standardised and harm onised for all stages along the chain, 
including transport and marketing. Use of modern data-processing and 
communications technologies will be exte nded. Where possible, data processing 
will be automated, and subject to system atic and comprehensive cross-checking. 
The result will be a system which is more effectively targeted, more effective, and 
also less costly and burdensome to operate. 
- The new Control regulation ensures the es tablishment of a genuine level-playing 
field for all operators and m akes sure that those who break the rules no longer 
benefit from doing so. A point system for serious infringements will be introduced, 
which can lead to fishing licence being suspended, or even withdrawn, after a 
certain number of points has been accumu lated. New, more effective systems for 
sharing control data will be introduced (including the establishment of national 
databases for serious infringements, and for inspection), and the mandate of the 
Community Fisheries Control Agency will be ex tended, to enable it to play its role 
more effectively. 
- The new Control regulation will ensure th at the Commission adh eres to its core 
activity of controlling and verifying the im plementation of the rules of the CFP by 
Member States, as it reinforces its capacity to intervene proportio nately to the level 
of non-compliance by the Member States . Commission officials will be given 
 
EN 43   EN extended inspection powers, allowing them  to carry out inspect ions on their own 
initiative without prior notification. The Commission's powers to close fisheries 
when quotas are exhausted are strength ened. In the same vein, the regulation 
extends the possibility for th e Commission to proceed to deduction of future fishing 
opportunities, whenever those are overshot. This will convince national fishing 
industries that compliance with Common Fisheries Policy rules by their national 
administrations is also in their interest. The Commission will also be able to 
impose financial sanctions on Member States for poor management of their 
obligations under the Common Fisheries Policy, including withholding funding 
granted under the European Fisheries Fund  or to support their control systems. 
 
EN 44   EN Special Report No. 9/2007 concerning "Evalua ting the EU Research and Technological 
Development (RTD) framework programmes - could the Commission's approach be 
improved?" 
68. The Council invites the Commission to pay utmost attention to the recommendations 
of the Special Report and in pa rticular to: (a) ensure greater clarity in the intervention 
logic in the conception and implementation of framework programmes in the context 
of relevant Community deci sion making procedures, in pa rticular at programme and 
project level, with coherent and bette r defined scientific and socio-economic 
objectives which should be sp ecific, measurable, achievable, relevant and timed, and 
balanced performance indicators, whilst taki ng into account the specific nature of 
RTD activities.  (DOC 5587/09 ADD 2, Annex 3, § 9 (a), page 8)  
Commission's response:  
Significant progress was made with the FP 7 legislation (adopted by the European 
Parliament and the Council in 2006) which provides a more explicit intervention 
logic than for previous framework programme s. This is further reflected in the 
detail of the FP7 work programmes, which notably provide expected impact 
statements. The elaboration of future fram ework programmes, in particular in any 
Impact Assessments, will build on this progress in setting clear and robust 
objectives, supported by appropria te performance indicators. 
69. The Council invites the Commission to pay utmost attention to the recommendations 
of the Special Report and in  particular to: (b) establ ish a unified and coherent 
evaluation strategy across the releva nt Commission services including the 
appropriate evaluation methodologies and t echniques and, to th is end, prepare a 
manual for the evaluation of framework progr amme activities, and in this context 
further develop the use of evaluation panels with the assistance of external experts 
with a view to ensuring the n ecessary level of independence.  (DOC 5587/09 ADD 2, 
Annex 3, § 9 (b), page 8)  
Commission's response:  
The Commission has further developed its evaluation strategy for FP7 based on 
the proposals in the FP7 Impact Assessment.  In particular, there have been new 
evaluation exercises (monitoring, FP6 ex post); a wider range of supporting 
evaluation studies (more than 30 for the FP6 ex post evaluation); new types of 
evaluation studies (network analysis, biblio metrics), stronger links with evaluation 
in the EU Member States (re-launch of  the European RTD evaluation Network); 
and improved systems for routine collectio n of data (revision of the projects' 
reporting guidelines). This has been ac hieved through strengthened coordination 
between Commission services, such as th e work which led to the FP6 ex post 
evaluation in 2008. The proposed manual for evaluation is one of the options 
under review following the recent completio n of a study on tools and indicators for 
framework programme evaluation. The Commission remains very supportive of 
the role to be played by properly config ured and independent panels of experts for 
evaluations, as was shown by the highly e ffective recent work carried out by the 
panel in charge of the FP6 ex post evaluation. 
 
EN 45   EN 70. The Council invites the Commission to pay utmost attention to the recommendations 
of the Special Report and in particular to: (c) consider options for a more centralised 
evaluation and reinforced coordination be tween the relevant Commission services, 
including the possibility of esta blishing a joint evaluation office.  (DOC 5587/09 
ADD 2, Annex 3, § 9 (c), page 9)  
Commission's response:  
The Commission has previously stated and co ntinues to hold the view that it does 
not consider it necessary to set up a joint eva luation office. It will continue to keep 
this issue under review including other means to enhance coordination both at the 
day to day and strategic levels. 
71. The Council invites the Commission to pay utmost attention to the recommendations 
of the Special Report and in particular to: (d) optimise the collection, analysis and 
use of evaluation data in such a way to better measure the achievement of programme objectives in terms of outputs,  outcomes and socio-economic impacts, 
whilst avoiding undue administrative burden for participants, and also maximising 
the usefulness of such data for decision making at European, na tional and regional 
level.  (DOC 5587/09 ADD 2, Annex 3, § 9 (d), page 9)  
Commission's response:
 
Significant improvements have been instituted under FP7 with new and 
streamlined means for gathering data system atically from projects on research 
outputs and outcomes. Such data will be available from projects on their 
completion, at which time it is expected to significantly enhance the potential for 
detailed analysis and evaluation work. 
72. The Council invites the Commission to pay utmost attention to the recommendations 
of the Special Report and in particular to: (e) establish the type and scope of 
evaluation in particular to gi ve greater attention to assessing long-term impact of past 
and present framework programmes with  a particular emphasis on European 
competitiveness; ensure timely and sufficient information on the results to stakeholders with a view to taking future policy decisions.  (DOC 5587/09 ADD 2, 
Annex 3, § 9 (e), page 9)  
Commission's response:
 
Work is in progress to develop an evalu ation study addressed specifically at 
assessing the long-term impacts of fr amework programme research. This is 
expected to be available in time for in put to the design and preparation of FP8. 
73. The Council invites the Commission to inform the Council and the European 
Parliament on the steps taken with regard to the recommendations of the Court of 
Auditors to improve the monitoring and ev aluation of the framework programmes by 
end 2008, and to present the evaluation strategy for FP7 in a timely manner.  (DOC 
5587/09 ADD 2, Annex 3, § 10, page 9)  
 
EN 46   EN Commission's response:  
A new system of FP monitoring was instituted in 2008 based predominantly on 
indicators, and replacing the previous pan el-based monitoring system. Reports are 
published annually and are available at 
http://ec.europa.eu/resear ch/evaluations/index_en.cfm?pg=fp7-monitoring . It is 
expected that this will ensure a more co nsistent and evolving picture of framework 
programme implementation and as such provide strong support to future FP 
evaluations. 
74. The Council invites the Member States and the Commission, taking into account the 
political priority given to governance in th e European Research Area, to strengthen 
their cooperation and the exchange of a pproaches and expertise concerning the 
evaluation of the impact of the national participation in the framework programmes 
and the national research a nd innovation programmes , for example by the "European 
RTD evaluation network", in order to pr omote more coherence among these impact 
studies of the Commission and the Member States.  (DOC 5587/09 ADD 2, Annex 3, 
§ 12, page 9)  
Commission's response:  
The European RTD Evaluation Network has been re-launched, including two 
representatives per country, and provid ing a major forum for discussions on 
research evaluation between the Member  States, Associated States and the 
Commission. A new programme of joint work has been agreed which places 
research evaluation of the ERA at the top of the agenda. 
 
EN 47   EN Special Report No. 1/2008 concerning the procedures for the preliminary examination 
and evaluation of major investment  projects for the 1994-1999 and 2000-2006 
programming periods 
75. The Council regrets the weaknesses identifi ed by the Court of Auditors and agrees 
with the need to remedy the shortcomings in the preliminary examination procedures 
for major projects as identified by the C ourt of Auditors which shall ultimately 
contribute to increase the real added value of the approval process for major projects 
as implemented by the Commission; 
 The Council stresses the importance of improvements of the system, and welcomes 
the Commission's will to find solutions to problems identified by the Court and invites it to continue its increased effort s on the basis of the re gulatory framework set 
up for the period 2007–2013.  (DOC 5587/09 ADD 2, Annex 4, §§ 6-7, page 10)  
Commission's response:
 
The Commission is taking the requested ac tion. Given their individual size, major 
projects represent an important part of the regional policy interventions in the 
Member States. Therefore, the Commission considers that their specific assessment 
is of utmost importance. Under the 2007-2013 programming period, several 
improvements have been introduced that enable a better and harmonized 
assessment of major project applications  submitted by the Member States:  
- standardized application forms including de tailed information on the projects are 
now systematically used by Member States; 
- the data concerning all major projec ts submitted are computerized, which 
facilitates consistent assessment and ongoing checks by the Commission services; 
- a team dedicated to the assessment of ma jor project applications has been set up 
in the Directorate-General for Region al Policy to support the work of the 
geographical units; 
- the JASPERS instrument is now operatio nal and its staff are involved in the 
preparation of major project applications on behalf of the Member States; and 
A framework contract has been signed with external consultants to provide specific 
technical assistance. 
 
EN 48   EN Special Report No. 2/2008 on Binding Tariff Information 
76. The Council considers that the number of BTIs which needed to be invalidated, in 
comparison with the total BTIs issued over the period reviewed by the Court, is very 
low, and stresses that invalidation is a legiti mate process related to BTIs and that the 
possible financial responsibil ity of Member States, if any, should be assessed with 
the utmost caution.  (DOC 5587/09 ADD 2, Annex 5, § 6, page 11)  
Commission's response:  
The Commission will continue to carefully examine the issue of potential financial 
responsibility where it becomes aware of incorrectly issued BTI via its inspections, 
investigations and documentary controls. 
77. The Council invites the Commission to fu rther improve the BTI system and to 
monitor its implementation and application in the Member States.  (DOC 5587/09 
ADD 2, Annex 5, § 7, page 11)  
Commission's response:  
The Commission is taking the requested action. The draft of the Implementing 
Provisions of the Modernised Customs C ode (IPMCC) concerning the BTI system 
was revised during the meeting with Memb er States' representatives in the BTI-
Committee in September 2009. Further cons ultations of the IPMCC within the 
Commission are on-going and should be finalised with a vote in the Committee 
expected to take place in 2011. 
 
EN 49   EN Special Report No. 3/2008 on the European Union Solidarity Fund 
78. The Council calls upon the Commission to  have regard to the remaining 
recommendations of the Special Report.  (DOC 5587/09 ADD 2, Annex 6, § 6, page 
13) 
Commission's response:  
The Commission is taking the requested action. Already shortly after the adoption 
of the regulation in 2002, it published guidelines for applic ant countries and 
explained in detail in what way it applies the provisions of the Regulation. In order 
to simplify the procedure and to help  avoid delays in the submission of 
information, the Commission developed a standard application form as well as a 
detailed guidance note for applications. Follo wing the report from the Court, these 
guidelines have been updated, warning applicant bodies of po ssible sources of 
delays, as suggested by the Court. Both  the standard applic ation form and the 
guidance note are available on a special "Solidarity Fund" site (on the InfoRegio 
website), which has equally been completely  revised following the report from the 
Court of Auditors, and which now contains the direct contact points within the 
Commission. This will facilitate direct cont act with the body pre paring the request, 
as suggested by the Court. 
 
EN 50   EN Special Report No. 4/2008 concerning the impl ementation of milk quotas in the Member 
States which joined the European Union on 1 May 2004 
79. The Council recognises that it is up to the Commission and the Member States to 
continue to ensure that appropriate correctiv e action is taken and th at proper controls 
are carried out at the most opportune time.  (DOC 5587/09 ADD 2, Annex 7, § 4, page 
14) 
Commission's response:  
The requested action has been taken. The Commission services are continuously 
taking all necessary action to ensure th e effective monitoring of the milk quota 
regime. During missions/bilateral contac ts, Member States have been reminded 
that producer controls must be at least partially carried out in-year. 
 
EN 51   EN Special Report No. 5/2008 "The European  Union's agencies: Getting results" 
80. The Council underlines the importance for the Member States to take an active 
supervisory role in the decentralised agen cies' governing bodies in order to improve 
good governance and sound financial management and to ensure the economic, efficient and effective implementation of Eu ropean policies. This should also apply 
to the Commission when represented in those governing bodies. The Council asks 
the Commission to exercise, with due respect of the autonomy of the decentralised agencies, more effective supervision and mon itoring on agencies in order to ensure in 
particular more transparency as regard s staffing levels and recruitment, better 
planning of budgetary and fina ncial management as well as  an effective and efficient 
control and accountability framework.  (DOC 5587/09 ADD 2, Annex 8, §§ 9-10, 
page 16-17)  
Commission's response:
 
The Commission will continue to play an active role via its representatives on the 
agencies' Management Boards (when repres ented) with a view to contributing to 
the improvement of good governance and sound financial management. 
The role of the three institutions (Co mmission, Parliament and Council) with 
regard to monitoring and supervision over  agencies will be discussed within the 
inter-institutional working group. Th e Commission will try to improve its 
mechanisms in the light of the co nclusions of those discussions. 
81. The Council invites the Commission, while  acknowledging the considerable efforts 
already made, to continue providing as sistance to the agencies in the most 
appropriate form. In this context, the Counc il also underlines that particular attention 
should be paid to dissemination of best pr actices, proper application of procedures 
for awarding contracts and appropriate training for the members of agencies' 
governing bodies. It welcomes the co mmitment of the Commission in its 
communication "European agencies - The way forward" to undertake a review of its 
internal systems governing its relations w ith agencies, as well as the methodology for 
conducting impact assessment of agencies.  (DOC 5587/09 ADD 2, Annex 8, § 11, 
page 17)  
Commission's response:  
The Commission fully suppor ts the idea of best pr actice exchange allowing 
agencies to benefit from the experience gaine d by the Commission services, as well 
as from each other. Training on financ ial and administrative matters given by the 
respective Commission services is open to  agency staff, often upon signing a 
Service Level Agreement. The Commission encourages participation in those 
trainings. 
In the context of the review of the Commission's internal systems governing 
relations with agencies, the Commission has undertaken a set of initiatives meant 
to improve cooperation. Those concer n the participation of the Commission 
representatives in the Management B oards, the scope of the Memoranda of 
 
EN 52   EN Understanding, a review of the services pr ovided and guidelines on setting-up of 
new agencies. 
In January 2009 the Commission adopted re vised impact assessment guidelines. 
They should contribute to the better de sign and assessment of policy options 
involving the creation of new agencies, as well as the modification or closure of 
existing agencies. Agencies can also, of  course, use the Commission guidelines 
when carrying out their own impact assessments. 
82. The Council recalls its st atement of 17 July 2008 in which it welcomed the 
commitment of the Commission as announced in its above-mentioned communication to launch a thorough evaluati on of the regulatory agencies, by the 
end of 2009. It expects once again that this  evaluation will provi de to the budgetary 
authority adequate tools and means to assess , in the context of the allocation of the 
Community contribution during the annual bud getary procedure, the comparability 
of performance targets, administrative and operational expenditure, evolution of the 
staff (types and vacancy rate) and impact of the size of the agency.  (DOC 5587/09 
ADD 2, Annex 8, § 12, page 17)  
Commission's response:
 
The results of the evaluation of the syst em of EU decentralised agencies are 
expected by end 2009. Once the evaluation is completed, the Commission will 
report to Council and Parliament on its findings, as announced in the March 
Communication on agencies of 2008.  
The ongoing evaluation of the system of EU  decentralised agencies is expected to 
improve the situation as regard the ava ilability of comparable information across 
agencies with regard to performance and efficiency. The impact of agency's size 
and staff policy will also be taken into account in the evaluation. 
 
EN 53   EN Special Report No. 6/2008 "European Commi ssion Rehabilitation Aid following the 
Tsunami and Hurricane Mitch" 
83. While the Council regrets the significan t delays in the implementation of 
rehabilitation aid following Hurricane Mitch, it notes with satisfaction the 
improvement in the Commission respons e to the Tsunami. This improvement 
concerns, in particular, the evaluation of  needs in conjunction with the beneficiary 
entities, implementation times, and the useful ness and sustainability of the measures 
implemented. Progress remains to be made, how ever, in particular to ensure efficient 
monitoring of the implementa tion of aid and to strength en the links between the 
humanitarian response, reha bilitation and development. 
 The Council emphasises the importance of continuing to learn lessons from past 
experience with a view to further improvi ng Commission action in  the area of post-
disaster rehabilitation aid.  (DOC 5587/09 ADD 2, Annex 9, §§ 2-3, page 18)  
Commission's response:  
The Commission agrees that progress remains to be made in ensuring a coherent 
transition between post disaster human itarian response and longer term 
rehabilitation and development approache s. EuropeAid will re-launch the inter-
services group working on Linking Relief Rehabilitation and Development in order 
to identify best practices and lessons le arned notably on issues related to the 
comments of the European Court of Auditors. 
84. The Council invites the Commission to con tinue to build on its approach adopted 
after the Tsunami, while improving it in the light of the Court's recommendations, so as to enable the rapid design of rehabi litation projects in conjunction with the 
beneficiaries in order to enha nce ownership and sustainability.  (DOC 5587/09 ADD 
2, Annex 9, § 4, page 18)  
Commission's response:
 
The Commission believes that its response  to the tsunami has evolved to include 
more rapid design of rehabilitation projects and better coordination and 
consultation with beneficiary countries at national and local level. This was noted 
by the European Court of Auditors (Section III of the Executive Summary and 
paragraphs 17 to 22). The Commission also ag rees on the need to build on this 
multi-donor coordinated approach and w ill endeavour to apply it whenever the 
preconditions exist. 
85. The Council also emphasises that givi ng consideration to disaster prevention 
measures, in both the rehabil itation and development aid phases, is essential for the 
sustainability of the measures  implemented. It reiterates its intention to adopt in 
2008, on the basis of proposals to be presen ted by the Commission, an EU strategy to 
reduce the risk of disaster s in developing countries.  (DOC 5587/09 ADD 2, Annex 9, 
§ 5, page 19)  
 
EN 54   EN Commission's response:  
The Commission adopted a proposal for an EU strategy for disaster risk reduction 
(DRR) in developing countries in a package  with a communication on disaster 
prevention (within the EU) on 23 Febr uary 2009. Council conclusions endorsing 
the Strategy were adopted on 18 May, requ esting also an implementation plan. The 
following implementation priorities are to  be addressed by the plan: Dialogue on 
DRR; Regional Action Plans on DRR; an d Integration of DRR and support for key 
DRR investment. Linkages to climate ch ange adaptation will be addressed under 
all the priorities as appropriate. The Commis sion is supporting efforts on reducing 
the risk of disasters in developing countries through sustainable rural 
development, activities linked to climate change and the sustainable development 
of natural resources (e.g. 40 millions devote d to Pakistan to strengthen sustainable 
rural development in the refugee af fected and hosting areas in 2009). 
 
EN 55   EN European Development Funds 
86. The Council invites the Commission to cont inue with its refo rm efforts and to 
remedy the shortcomings identified by the C ourt as regards the reliability of the 
accounts.  (Doc. 5047/09, ANNEX, page 6, 2nd indent)  
Commission's response:  
The Commission has ordered a study from an independent audit group to check 
the validity of the method used. The conclusion s of this study show that, in the vast 
majority of cases, the assumptions used to estimate the amount of invoices 
receivable are correct. However, the stud y recommends a different approach in a 
limited number of cases. The study findings  have been sent to the Court and the 
Commission has undertaken to apply the recommendations in respect of the 2009 
financial year. 
87. The Council reiterates the importance of th e fact that, in the procedures for granting 
budgetary support and before making tran sfers of funds, the Commission should 
ensure that the conditions of the Cotonou Agreement and of the financing agreements are met. In this respect, it welcomes the Commission intention of promoting more intense dialogue with Members States on BS, inter alia, by 
organising technical seminars in the near future.  (Doc. 5047/09, ANNEX, page 6, 3rd 
indent)  
Commission's response:
 
The Commission is fully in agreement on  the need to adhere strictly to the 
conditions set out in the Cotonou Agr eement and in Financing Agreements 
concerning budget support. Steps have also  been taken to improve the structure 
and clarity of Financing Agreements under the 10th EDF approved from 2008. In 
addition, the Commission has indeed organised an ongoing programme of 4 
technical seminars on budget support issues with EU Member States since 2007, 
the most recent of which concerned a dialogue on budget support for fragile states 
in February 2009. 
88. The Council stresses the importance of being regularly informed on the 
Commission's evaluation of the effects of such  measures, particularly as regards risk 
management, analysis of the internal cont rol system, the audit of transactions and 
budget support.  (Doc. 5047/09, ANNEX, page 6, 4th indent)  
Commission's response:  
The Commission agrees on the importance of regular information being made 
available on EDF matters. The Commission gives regular updates to EU Member 
States in the context of EDF committees  e.g. a presentation of expected 2009 
budgetary support disbursements on th e occasion of the 25 March 2009 EDF 
Committee. The Commission's Annual Ac tivity Reports for EuropeAid and DG 
Development, the European Development Funds Financial Management Report, 
the European Development Funds Financia l Report and the Annual Report on the 
European Community's Development and Ex ternal Assistance Policies and their 
 
EN 56   EN Implementation inform the European inst itutions and the wider public on these 
issues on an annual basis. Moreover, the Commission intends to provide more in-
depth coverage of budget support issues in future annual reports on the 'European 
Community's Development and Extern al Assistance Policies and their 
Implementation'. This should provide information on results, analysis and 
assessment of risk and will draw on ava ilable public finance management (PFM) 
diagnostics. 
 
EN 57   EN Requests concerning individual agencies 
89. As regards the European Agency for Reconstruction, the Council supports the 
Court's recommendation concerning the ha ndover of programmes from the Agency 
to the Commission, and calls on both entities to sign a Memorandum of 
Understanding, in order to formalise and facili tate the transfer of all programmes and 
items and to ensure that all items are refl ected correctly on the Agency's accounts. In 
this context, the Council draws the attenti on to the fact that the accumulated surplus 
shown on the balance sheet at 31 December 2007 have also to be taken over and managed by the Commission at the end of the Agency's mandate.  (DOC 5588/09 
ADD 1, Annex 9, 4th-5th paragraphs, page 29)  
Commission's response:
 
(a) how the unused budgetary appropriations will be implemented; 
As the Agency has managed assistance programmes to be implemented over 
several years, at the end of each year there were naturally unused budgetary 
appropriations corresponding to the ongoi ng programmes. The unused budgetary 
appropriations shown in the Agency's balance sheet at 31 December 2007 have 
been implemented by the Agency duri ng 2008 for the approved purpose, EC 
assistance to western Balkan countries. In line with the planned and approved 
schedules of implementation, therefore wi thout any delays, at the closure of the 
Agency one year later, there were stil l some of these multi-annual programmes 
ongoing with some remaining funds to en able finishing the implementation of 
these programmes by the Commission Delegations.  
(b) whether a memorandum of understanding covering all items in the Agency's 
balance sheet has been concluded betw een the Agency and the Commission, or 
how the Commission has otherwise ensured th e completeness of the transfer of all 
files and items; 
The question is not applicabl e for the balance sheet in question (31/12/2007) as the 
Agency continued in activity in 2008. For the items in the balance sheet of the 
Agency one year later, indeed a memorand um of understanding covering all items 
has been concluded between the Agency and the Commission. 
(c) how the accumulated surplus of EUR 180 000 000 shown in the Agency's 
balance sheet at 31 December 2007 w ill be managed by the Commission. 
The €180 million in the Balance Sheet of the EAR’s final accounts 2007 have been 
managed by the Agency during 2008. The accounting designation of "surplus" 
corresponds to the open pre-financing at  31/12/2007. In simpler words, this means 
advance payments to contractors in the fr amework of the projects of assistance. 
The Agency transformed these advance pay ments into expenditure during 2008 
once the services or supplies have been delivered. 
90. As regards the European Global Navigati on Satellite System (GNSS) Supervisory 
Authority, the Council invites the Authorit y and the Commission to do their utmost 
to ensure the transfer of all assets of the Galileo project to the Commission as soon as 
 
EN 58   EN possible, with due respect of all the financia l provisions and procedures in force, and 
it expects substantial improvements of the Authority's accounts for 2009.  (DOC 
5588/09 ADD 1, Annex 20, 5th paragraph, page 63)  
Commission's response:  
The Commission is currently working toge ther with the European Space Agency 
and the European GNSS Supervisory Authority  (GSA) to ensure that assets from 
the EGNOS system and the relevant assets of the GSA are transferred to the 
Commission and properly recorded in the a ccounts. The transfer of the assets of 
the Galileo programme from ESA to the Comm ission is not foreseen to begin until 
the end of 2010. As the GSA is an independent body set up by Community law the 
Commission is not responsible for its accounts.