Special Report An assessment of the 
arrangements for closure 
of the 2007-2013 cohesion 
and rural development 
programmesEN 2016  NO 36
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An assessment of the 
arrangements for closure 
of the 2007-2013 cohesion 
and rural development 
programmes
(pursuant to Article 287(4), second subparagraph, TFEU)Special ReportEN 2016  NO 36
02
 Audit team
The ECA’s special reports set out the results of its performance and compliance audits of specific budgetary areas or 
management topics. The ECA selects and designs these audit tasks to be of maximum impact by considering the risks 
to performance or compliance, the level of income or spending involved, forthcoming developments and political and 
public interest.
This performance audit was produced by Audit Chamber II ― headed by ECA Member Iliana Ivanova — which specialises 
in investment for cohesion, growth and inclusion spending areas. The audit was carried out in cooperation with Audit 
Chamber I which specialises in sustainable use of natural resources. The audit was led by the Reporting Member Ladislav 
Balko, supported by Branislav Urbanič, Head of Private Office; Niels-Erik Brokopp, Principal Manager; Mariya Zhekova, 
Head of Task; Charlotta Törneling, Deputy Head of Task; Milan Smid, Judit Oroszki and Maria Ploumaki, Auditors.
From left to right:  C. Törneling, B. Urbanič, J. Oroszki, M. Smid, L. Balko, N.-E. Brokopp, M. Zhekova.

03
 Contents
Paragraph
 Glossary
I-XV  Executive summary
1-14  Introduction
1-10  Closure of multiannual programmes in the cohesion and rural development policy areas
11-14  Responsibilities in the closure process: Member States and Commission
15-18  Audit scope and approach
19 -115  Observations
19-68  The rules for closure have improved but further steps are needed to make it more efficient and 
timely
21-29  Considerable changes in the closure arrangements since the 2000-2006 period in cohesion and rural 
development
30-45  Legality and regularity is taken into account for the closure of 2007-2013 programmes in cohesion, but is 
treated separately from closure for rural development
46-52  The achievement of outputs and results is not sufficiently taken into account at closure
53-56  A consolidated closure report on the legality and regularity of spending as well as the outputs and results 
achieved is not provided to the European Parliament and the Council
57-68  Closure is initiated only several years after the end of the programme period due to overlapping of 
eligibility periods
04 Contents 
69 -115  The Commission provided adequate and timely support to help Member States prepare for the 
closure of 2007-2013 programmes, but needs to remain vigilant to ensure a robust implementation 
by the Member States
69-88  The Commission issued comprehensive and timely guidance on the 2007-2013 closure
89-91  Certain requirements in the cohesion guidelines go beyond the regulatory provisions
92-103  Member States are satisfied with the Commission’s support, but coordination between national and 
regional authorities is essential
10 4 -115  The Commission needs to remain vigilant to guarantee the robustness of the 2007-2013 closure exercise
116 -141  Conclusions and recommendations
 Annex I — Legal basis for the closure of 2007-2013 programmes
 Annex II — Management and control of 2007-2013 programmes at Member State level
 Annex III  —  Evolution of the Commission’s assurance framework and closure arrangements 
over three periods
 Annex IV —  Overview of the main issues in need of further clarification for the 2007-2013 
closure - survey/interview responses by Member State authorities
  
Reply of the Commission
05
 Glossary
Annual activity report (AAR) : AARs indicate the results of operations by reference to objectives set, associated 
risks and the form of internal control, inter alia. Since the 2001 budget exercise for the Commission and since 2003 
for all European Union (EU) institutions, the ‘authorising officer by delegation’ must submit an AAR to his/her 
institution on the performance of his/her duties, together with financial and management information.
Clearance of accounts : A two-stage procedure, operated by the Commission, to ensure that the Member States 
carry out, in a proper manner, their responsibilities concerning payments made under the common agricultural 
policy (CAP). The procedure comprises an annual financial clearance of the accounts of each paying agency and 
a multiannual conformity clearance regarding the conformity of transactions with the EU rules.
Cohesion policy : Cohesion policy is one of the biggest policy areas on which the EU budget is spent. It aims to 
reduce development disparities between different regions, restructuring declining industrial areas and diversifying 
rural areas, and to encourage cross-border, transnational and interregional cooperation. It is funded from the 
European Regional Development Fund (ERDF), the European Social Fund (ESF) and the Cohesion Fund (CF).
Conformity clearance : Commission decisions on expenditure to be excluded from EU financing because they have 
not been effected in compliance with the EU rules. Such decisions generally cover expenditure incurred over more 
than one financial year.
European Structural and Investment Funds (ESIF) : The ESIFs are five separate funds that aim to reduce regional 
imbalances across the Union, with policy frameworks set for the 7-year MFF budgetary period. The funds are the 
European Regional Development Fund (ERDF) the European Social Fund (ESF) the Cohesion Fund (CF) the European 
Agricultural Fund for Rural Development (EAFRD) and the European Maritime and Fisheries Fund (EMFF).
Final balance : The amount paid or recovered at the closure of an operational programme or rural development 
programme, as defined in the closure guidelines.
Financial clearance : Annual Commission decision covering the completeness, accuracy and veracity of the annual 
accounts submitted by the accredited paying agencies. For the purpose of this decision, the Commission requires 
the accounts to be certified by independent certification bodies.
Financial corrections : The purpose of financial corrections is to protect the EU budget from the burden of 
erroneous or irregular expenditure. For expenditure under shared management, the task of recovering payments 
incorrectly made is primarily the responsibility of the Member State. Financial corrections can be made by 
withdrawing irregular expenditure from the Member State’s expenditure declarations or through recoveries from 
beneficiaries. Financial corrections may also be imposed by the Commission.
Financial instruments : A generic term for contracts which provide the holder with a claim on an obligor. The EU 
provides support for three possible types of financial instruments: equity, loan and guarantee instruments. Equity 
and loan instruments are contracts between an investor and an investee or between a lender and a borrower. 
Guarantees are contracts in which a guarantor guarantees the rights of an investor or a lender.
06 Glossary 
Major project : A project which comprises an economically indivisible series of works fulfilling a precise technical 
function, having clearly identified aims and whose total cost assessed when determining the contribution of the 
funds exceeds 50 million euros (for the 2007-2013 programme period). Commission approval is required at overall 
project level.
Materiality level : Auditors express an opinion as to whether financial statements are prepared, in all material 
respects, in conformity with a certain set of rules. The assessment of what is material is a matter of professional 
judgement. The materiality level used by the Commission is currently 2 %, which refers to the ratio of erroneous or 
irregular expenditure to the EU spending audited.
Multiannual financial framework (MFF) : The MFF establishes the spending priorities and maximum amounts 
that the EU may spend in particular areas over a fixed period of several years. The expenditure ceilings in the MFF 
regulation are always higher than those in the EU budget. The MFF also includes income sources for the EU budget 
and correction mechanisms for the period in question. The current MFF covers 2014-2020, while the previous ones 
covered 2007-2013  and  2000-2006 (Agenda 2000).
Net financial corrections : Financial corrections imposed by the Commission where the Member States are required 
to reimburse irregular funds to the EU budget, thus leading to a definitive reduction of funds to the Member State 
concerned.
Operation : A project, group of projects or other action selected according to the criteria laid down for the 
operational programme or rural development programme and implemented by one or more beneficiaries with 
a view to achieving the goals and objectives of the programme.
Operational programme (OP) : An OP sets out a Member State’s priorities and specific objectives and describes 
how funding (EU and national public and private co-financing) will be used during a given period (currently 
7 years) to finance projects. The projects within an OP must contribute to a certain number of objectives. OP 
funding may come from the ERDF, CF and/or ESF. The OP is prepared by the Member State and has to be approved 
by the Commission before any payments can be made from the EU budget. OPs can only be modified during the 
programme period if both parties agree.
Performance reserve : Resources constituting 6 % of the resources allocated to the ERDF, ESF and CF or to EAFRD, 
to be made available after the 2019 performance review if certain requirements are met or exceeded.
Recovery : One of two ways to implement a financial correction (the other being withdrawal). The Member State 
leaves the expenditure in the programme until the unduly paid amount is recovered from the beneficiaries and 
deducts it from the next expenditure declaration once recovery has been effected.
Residual risk rate : An estimate of the part of the cumulative expenditure declared, for each programme during 
the entire programme period, which is not legal and regular. The residual risk rate takes account of all financial 
corrections implemented since the start of the period and the total expenditure declared at closure.
07 Glossary 
Rural development policy : The second pillar of the common agricultural policy, co-financed by the EAFRD. The 
policy aim is to improve the countryside and the situation for people living there by enhancing competitiveness of 
the agricultural and forestry sector, improving the environment and quality of life in rural areas and encouraging 
diversification of the rural economy. This policy comprises area-related and non-area-related measures. The latter 
are typically investment measures, such as the modernisation of agricultural holdings and the setting up of public 
infrastructures in rural areas.
Rural development programme (RDP) : A programming document prepared by a Member State and approved 
by the Commission for use in planning and monitoring the implementation of the EU’s rural development policy 
at regional or national level. The RDP sets out the Member State’s priorities and specific objectives and describes 
how funding (EU and national public co-financing) will be used during a given period (currently 7 years). RDPs are 
co-financed by the EAFRD.
Shared management : A method of implementing the EU budget in which the Commission delegates 
implementation tasks to the Member States, while retaining final responsibility.
08
 Executive summary
I
Cohesion and rural development policy expenditure makes up a large part (approximately 44 %) of the overall Euro -
pean Union (EU) budget. The two policies have complementary objectives and are delivered through instruments 
with similar management and control systems.
II
EU spending is generally planned and implemented within a multiannual ‘financial framework’ (MFF) covering 
programming for a fixed period of several years. This period coincides with the programme periods for the cohesion 
and rural development areas. The three recent programme periods cover 2000-2006, 2007-2013 and 2014-2020.  Our 
audits during the 2007-2013 period showed that both cohesion and rural development are prone to material levels 
of irregular spending.
III
After the end of a programme period, cohesion and rural development programmes have to be closed and finan -
cially settled. This entails identifying the EU share in co-financing of any irregular expenditure and returning it to 
the EU budget. Both the Commission and the Member States have specific tasks and responsibilities in the closure 
process. These are prescribed in the regulations and further clarified in guidelines issued by the Commission.
IV
In this audit we examined whether the rules and procedures for the closure provide a basis for the Commission 
and Member States to close cohesion and rural development programmes in an efficient and timely manner. We 
compared the closure arrangements of three programme periods for the two policy areas and assessed in particu -
lar how the Commission obtains assurance that the final declaration contains expenditure that is legal and regular 
and used in accordance with the programme objectives. We also analysed the timeliness of the closure process and 
whether the budgetary authority is informed about the outcome of programme closure.
V
The closure arrangements in cohesion and rural development have evolved over those three programme periods. 
For the 2000-2006 period, the arrangements were the same for both areas. Expenditure was declared cumulatively 
and only accepted by the Commission at closure. In the 2007-2013 period, Member States were required to provide 
annual assurance to the Commission that expenditure on EU-funded operations was legal and regular, but this was 
implemented differently between the two areas.
VI
In the cohesion area, closure can generally be seen as denoting final acceptance that the expenditure is legal and 
regular. To allow this, the Commission calculates a residual risk rate for each programme, taking into account the 
financial corrections for the period as a whole. In rural development, however, programme expenditure was cleared 
annually and the Commission continues its verifications of legality and regularity even after the formal closure of 
the programme. Thus, closure is purely a financial transaction, with no acceptance of the expenditure as legal and 
regular and no calculation of a residual risk rate for each rural development programme.
VII
For the 2014-2020 period, the assurance framework has been further improved and aligned between the two spend -
ing areas. Annual acceptance of the accounts is now a feature of both policy areas. However, certain differences 
remain in terminology, timing, and deadlines.
09 Executive summary 
VIII
For the 2007-2013 period, we found that there is a limited focus on the achievement of outputs and results. While 
Member States’ reporting of their programme results is mandatory and duly evaluated by the Commission, payment 
of the final balance at closure is not directly linked to the actual achievement of outputs and results in either of the 
two areas.
IX
As to the time of closure, it coincides neither with the end of the programme period nor with that of the period 
of eligibility. Formal closure is generally initiated after the end of the eligibility period, when the next programme 
period is already running at full speed; depending on the circumstances, it can take several more years to be 
completed. The significant overlap between tasks for the different periods and the administrative difficulties faced 
when following up activities, some of which took place more than a decade earlier, pose a risk to the effectiveness 
of programme closure. In addition, the possibility to spend the programme budget up to two (n+2) and for the 
2014-2020 period even up to three (n+3) years after the end of the programme period creates a disincentive to start 
the programmes of the subsequent period.
X
Another concern relates to the Commission’s reporting on the outcome of programme closure in both areas. In 
particular, the Commission does not inform the budgetary authority about the final outcome of the closure process 
(the regularity of expenditure and the outputs and results achieved). Given that the EU’s budget system is built 
around multiannual programming, we consider that the Commission should provide the European Parliament and 
the Council with a consolidated closure report containing key information on the most relevant performance and 
compliance aspects of programme implementation.
XI
In order to ensure that the closure arrangements for the cohesion and rural development policy areas improve 
accountability and transparency in the use of EU funds, we recommend that the Commission:
− proposes to further align the regulatory provisions for closure between cohesion and rural development, aim -
ing at a harmonised annual assurance process in both areas;
− introduces a final acceptance by the Commission concerning the legality and regularity of expenditure and 
the outputs and results achieved once the programmes have been closed. This would include laying down 
procedures for calculating a residual risk rate at programme level and ensuring that the rate does not exceed 
the materiality threshold at closure, as well as assessing whether targets have been achieved and, if necessary, 
imposing financial corrections for underperformance;
− specifies how it will inform the budgetary authority about the outcome of the closure process; and
− eliminates the overlap of eligibility periods, aligning as far as possible the eligibility with the programme period, 
and requires programmes to be closed promptly after the end of the eligibility period (a maximum of 6 months 
for Member States to submit closure documents and a further 6 months for the Commission decision).
These recommendations should be implemented when preparing for the post-2020 legislative framework.
10 Executive summary 
XII
We also assessed whether the Commission provided adequate and timely guidance and support to Member States 
as they prepared for the closure of their 2007-2013 programmes. Overall, we found that the Commission’s closure 
guidelines for the 2007-2013 period in both cohesion and rural development provide an adequate basis for Mem -
ber States to prepare effectively for closure. The guidelines were timely, and comprehensive, and the Commission 
delivered additional support addressing the needs of Member States. The Member States were satisfied with the 
Commission’s support and considered, largely, that they were well prepared for the closure exercise.
XIII
We identified certain risks that need to be addressed during the 2007-2013 closure of cohesion and rural develop -
ment programmes. In particular, there are no binding deadlines for some areas relevant to closure which may con -
tribute to additional delays in the closure process. We also found that some requirements, namely those related to 
non-functioning projects and the reporting of a residual risk rate, help to mitigate the risks associated with closure. 
Others, such as the phasing of non-major projects, are necessary, but, as currently formulated may complicate the 
closure exercise. Lastly, we are concerned that checks at Member State and/or Commission level are not sufficient to 
ensure the legality and regularity at closure of expenditure concerning financial instruments, contractual advances 
and some state aid-relevant major projects.
XIV
The Commission therefore needs to remain vigilant to guarantee the robustness of the 2007-2013 closure exercise. 
To make sure that all risks are properly addressed during the closure of 2007-2013 cohesion and rural development 
programmes, we recommend that the Commission should ensure that:
- major project approval decisions are taken promptly, and
- Member States implement specific procedures to verify the eligibility of expenditure, in particular that related 
to financial instruments and contractual advances.
XV
We also recommend that the Member State managing authorities pay the full EU contribution to project beneficiar -
ies in a timely manner.
11
 Introduction
Closure of multiannual programmes in the cohesion 
and rural development policy areas
Programme periods and budget allocation
01 
Cohesion and rural development policy expenditure makes up a large part (ap -
proximately 44 %) of the overall EU budget. These and other EU spending policies 
are planned and implemented within a multiannual ‘financial framework’ (MFF) 
covering programming for a fixed period of several years. This period coincides 
with programme periods for the cohesion and rural development areas. The 
three last periods cover 2000-2006, 2007-2013  and  2014-2020.
02 
The cohesion and rural development areas have similar characteristics in terms of 
their delivery mechanisms, instruments and control systems. Both aim at reduc -
ing regional disparities (see Box 1 ) and for the 2014-2020 period both areas are 
financed by the European Structural and Investment Funds (ESIFs)1.1 Article 1 of Regulation (EU) No 
1303/2013 of the European 
Parliament and of the Council 
of 17 December 2013 laying 
down common provisions on 
the European Regional 
Development Fund, the 
European Social Fund, the 
Cohesion Fund, the European 
Agricultural Fund for Rural 
Development and the 
European Maritime and 
Fisheries Fund and laying 
down general provisions on 
the European Regional 
Development Fund, the 
European Social Fund, the 
Cohesion Fund and the 
European Maritime and 
Fisheries Fund and repealing 
Council Regulation (EC) No 
1083/2006 (OJ L 347, 
20.12.2013, p. 320).
Policy objectives of the cohesion and rural development policy areas
Cohesion policy aims to reduce development disparities between different regions, restructuring declining 
industrial areas and diversifying rural areas, and to encourage cross-border, transnational and interregional 
cooperation.
Rural development policy aims to improve the countryside and the situation for people living there by en -
hancing competitiveness of the agricultural and forestry sector, improving the environment and quality of life 
in rural areas and encouraging diversification of the rural economy.Box 1
12 Introduction 
03 
For the 2014-2020 programme period, around 460 billion euros was allocated to 
cohesion and rural development programmes from the EU budget, compared 
with around 430 billion euros for 2007-2013 and 300 billion euros for 2000-2006 
(see Figure 1 ). This represents approximately 40 % of the total EU budget for 
2000-2006, 44 % for 2007-2013 and 43 % for 2014-2020. Figure 1EU allocations for the 2000-2006, 2007-2013 and 2014-2020 periods (billion euro)
NB: The MFFs adjusted for 2006 (EU-25), 2013 (EU-27) and 2017 (EU-28) respectively were used to compile the diagram.
Source:  ECA based on Commission data.618
OPs440
OPs510
OPs
152
RDPs94
RDPs118
RDPs
Rural developmentCohesion2014-2020
2007-2013
2000-2006
500 400 300 200 100 0
13 Introduction 
Shared management of cohesion and rural development policies
04 
The responsibility for implementing cohesion and rural development policies is 
shared between the Member States and the European Commission. The Com -
mission approves multiannual programmes on the basis of Member States’ 
proposals.
05 
At the Commission, the Directorates-General for Regional and Urban Policy (DG 
REGIO), Employment, Social Affairs and Inclusion (DG EMPL) and Agriculture 
and Rural Development (DG AGRI) are responsible for the management of these 
policy areas. In the Member States, national and/or regional programme authori -
ties for cohesion and rural development are tasked with ensuring the legality and 
regularity of co-financed operations under the Commission’s supervision and 
final responsibility2.
Closure as the last step in the programme lifecycle
06 
The approval, implementation and closure of multiannual programmes are 
a cyclical process. The three stages in the life of a programme are explained in 
Figure 2 .
07 
Closure, the last stage in the lifecycle of a programme, is defined in the EU finan -
cial regulation and the sectoral regulations for both policy areas as taking place 
upon the payment of the balance which clears all preceding expenditure (also 
referred to as final balance) to the Member State or the recovery of sums paid in 
excess by the Commission3.2 Article 317 of the Treaty on the 
Functioning of the European 
Union (TFEU).
3 Article 90 of Regulation (EU, 
EURATOM) No 966/2012 of the 
European Parliament and of 
the Council of 25 October 2012 
on the financial rules 
applicable to the general 
budget of the Union and 
repealing Council Regulation 
(EC, Euratom) No 1605/2002 
(the Financial Regulation) (OJ 
L 298, 26.10.2012, p. 1); Article 
109(3) of the Rules of 
Application of the Financial 
Regulation; Article 89(5) of 
Council Regulation (EC) No 
1083/2006 laying down 
general provisions on the 
European Regional 
Development Fund, the 
European Social Fund and the 
Cohesion Fund (OJ L 210, 
31.7.2006, p. 25); and Article 37 
of Regulation (EU) No 
1306/2013 of the European 
Parliament and of the Council 
of 17 December 2013 on the 
financing, management and 
monitoring of the common 
agricultural policy and 
repealing Council Regulations 
(EEC) No 352/78, (EC) No 
165/94, (EC) No 2799/98, (EC) 
No 814/2000, (EC) No 
1290/2005 and (EC) 
No 485/2008 (OJ L 347, 
20.12.2013, p. 549).
14 Introduction Figure 2The lifecycle of multiannual programmes in cohesion and rural development
Source:  ECA.Current period
Next periodAfter the end of the period, the programmes have to be closed. 
For both policy areas, the closure of a programme is de/f_ined as the /f_inancial settlement through the payment of the /f_inal balance to the Member State or the recovery of sums paid in excess by the Commission.The Member States have 6 months (for rural development) or 15 months (for cohesion) to submit closure documents to the Commission.The Member States implement the programmes through selection of individual operations on the basis of agreed criteria. During the programming period the Member States reimburse the bene/f_iciaries for costs incurred based on expenditure declarations. These declarations are then aggregated into periodic payment claims certi/f_ied by the Member State authorities and submitted to the Commission 
for co-/f_inancing.
The Commission makes interim payments to the Member States based on these payment claims. The Member States have two years after the end of the programming periodto /f_inalise the implementation of the programmes, therefore the latest datefor making payments under the 2007-2013 period was 31 December 2015.The Member States prepare programmes for implementing the policy at national or regional level, which are approved by the Commission.In order to ensure liquidity so that funds are available for the support tobene/f_iciaries from the start of the programme the Commission provides pre-/f_inancing to the Member States.
Implementation
ClosureProgramme 
approval 
ClosureImplementationProgramme approval 
15 Introduction 
08 
However, ‘closure’ also refers to the process of terminating a programme, which 
involves the submission of documents by Member States to the Commission, 
resulting in the payment of the final balance. In both policy areas the terms of 
closure arrangements are set in the respective regulations, which are listed in 
Annex I .
09 
Closure is a crucial moment in the lifecycle of a programme because:
 ο the Commission is required to accept only expenditure implemented in ac -
cordance with the EU and national rules. In particular, this means that only 
expenditure used in accordance with the objectives of the programmes and 
spent in a legal and regular manner can be reimbursed from the EU budget; 
and
 ο Member States have to make sure that spending is in line with the applicable 
legal requirements and the principles of sound financial management. All 
irregular spending detected and corrected by the Commission after closure 
can result in a net reduction in EU funding for the programme. In rural devel -
opment, all such corrections have a net effect on the EU funding.
10 
At the same time, the EU regulations require the EU funds made available to co-
finance operations in the Member States to be spent within the deadlines speci -
fied in the regulations. The pressure on Member States to use up these funds 
increases as the end of the eligibility period approaches, since they could risk 
losing any unspent share of their initial allocation.
Responsibilities in the closure process: Member States 
and Commission
Member State authorities submit closure documents
11 
The authorities responsible for management and control of the 2007-2013 cohe -
sion and rural development programmes at Member State level are described in 
Annex II . Their respective responsibilities in the closure process are presented in 
Table 1 .
16 Introduction 
The responsibilities of Member State authorities at closure
Cohesion Rural development
(i)  The managing authority  sub -
mits a final implementation report 
which covers the full programme 
period1.(i)  The managing authority  submits the last annual pro -
gress report on implementation4.
(ii)  The certifying authority  sub -
mits an application for payment of 
the final balance and a statement 
of expenditure2.(ii)  The paying agency  submits the annual accounts for the 
last execution year5.
(iii)  The audit authority  assesses 
the validity of the application for 
payment of the final balance and 
the legality and regularity of the 
underlying transactions covered 
by the final statement of expendi -
ture, which is supported by a final 
control report3.
In its closure declaration, the audit 
authority has to disclose a residual 
risk rate per OP (or group of OPs) 
for the whole programme period. 
If this is above the Commission’s 
materiality level of 2 %, it would 
normally trigger a financial cor -
rection. Programmes should not 
be closed with a verified residual 
risk rate above the materiality 
threshold.(iii)  The certification body  submits an opinion and draws up 
a report on the completeness, accuracy and veracity of the 
last annual accounts and the functioning of the internal 
control system6.
1 Article 67 of Regulation (EC) No 1083/2006.
2 Article 61, 78 and 89 of Regulation (EC) No 1083/2006.
3 Article 62(1)(e) of Regulation (EC) No 1083/2006.
4 Article 82(1) of Regulation (EC) No 1698/2005 and Article 37 of Regulation (EU) No 1306/2013.
5 Article 7(3) and 37 of Regulation (EU) No 1306/2013.
6  Article 9 of Regulation (EU) No 1306/2013 and Article 5 of Commission Implementing Regulation (EU) No 908/2014 of 6 August 2014 laying 
down rules for the application of Regulation (EU) No 1306/2013 of the European Parliament and of the Council with regard to paying agencies 
and other bodies, financial management, clearance of accounts, rules on checks, securities and transparency (OJ L 255, 28.8.2014, p. 59).
Source:  ECA.Table 1
17 Introduction 
The Commission assesses and accepts closure documents
12 
In cohesion, for the 2007-2013 closure, the Commission has 5 months to analyse 
the documents submitted by the Member States and give an opinion on the final 
implementation report4 and the closure declaration5. Once these are accepted, 
the Commission has to pay the final balance within 45 calendar days6. During the 
programme period, verifications carried out by the Member States or the Com -
mission could lead to financial corrections for an OP . Generally, all unresolved 
issues relating to control activities and audit findings should be clarified and set -
tled during the closure process. However, the Commission can undertake further 
audit work which may result in financial corrections after the payment of the final 
balance7.
13 
In rural development, closure is, to a large extent, based on the annual financial 
clearance process: the Commission’s yearly verification of the certification body’s 
report and acceptance of the accounts. At closure, the Commission has 5 months 
to comment on the last annual progress report8. Once that report is considered 
to be receivable and the last annual accounts are cleared, the Commission has 
to pay the final balance within 6 months9. Throughout the programme period, 
in order to protect the EU budget from irregular expenditure, the Commission 
also carried out checks on the legality and regularity of expenditure (multiannual 
conformity clearance), which were independent of the financial clearance. These 
checks frequently resulted in net financial corrections and can still be carried out 
or finalised after closure of the RDPs.
14 
Whereas the deadline for Member State authorities to submit the closure docu -
ments for rural development was 30 June 2016, the deadline for cohesion was 
set at 30 March 2017. At the time of our audit, because of the different deadlines, 
the directorates-general were at different stages in their preparation. DG AGRI 
had finalised its internal manual and procedures for closure, but this task was still 
ongoing at DG REGIO and DG EMPL and scheduled for completion by the end of 
2016, before the deadline for the submission of closure documents.4 Article 67(4) of Regulation (EC) 
No 1083/2006.
5 Article 89(3) of Regulation (EC) 
No 1083/2006.
6 Article 89(4) of Regulation (EC) 
No 1083/2006.
7 Under Article 90 of Regulation 
(EC) No 1083/2006, the 
managing authority must 
ensure that all the supporting 
documents regarding 
expenditure and audits on the 
programme concerned are 
kept available for the 
Commission and the European 
Court of Auditors for a period 
of 3 years following the date of 
closure.
8 Article 82(3) of Council 
Regulation (EC) No 1698/2005 
of 20 September 2005 on 
support for rural development 
by the European Agricultural 
Fund for Rural Development 
(EAFRD) (OJ L 277, 21.10.2005, 
p. 1).
9 Article 37 of Regulation (EU) 
No 1306/2013.
18
 Audit scope and approach
15 
Through this audit we examined whether the rules and procedures for cohesion 
and rural development provide a basis for the Commission and Member States to 
close the programmes in an efficient and timely manner.
Firstly, we examined:
 ο whether the regulatory provisions governing closure in cohesion and rural 
development require the final acceptance of programme expenditure as 
legal and regular and assurance that outputs and results were achieved;
 ο whether the budgetary authority (the European Parliament and the Council) 
is informed about the outcome of the closure of multiannual spending pro -
grammes; and
 ο whether the closure process is timely.
Secondly, we assessed whether the Commission provided adequate and timely sup -
port to Member States to help them prepare for the closure of their 2007-2013 OPs 
and RDPs.
16 
Our audit focused on the strengths and weaknesses of the arrangements for clo -
sure of cohesion and rural development programmes for the 2007-2013 period, 
the lessons learnt from the closure of the 2000-2006 programmes and the extent 
to which the weaknesses identified for both periods have been addressed in the 
regulations for 2014-2020.
19 Audit scope and approach 
17 
The audit work consisted of the following elements:
 ο Analysis of the rules governing closure of the 2000-2006, 2007-2013 and 2014-
2020 programme periods;
 ο Analysis of the support the Commission provided to the Member States 
through guidance and training for the 2007-2013 closure;
 ο An electronic survey of national and regional authorities involved in the 
closure of the programmes to obtain their views on the rules, the Commis -
sion’s guidance and support and their own preparedness. The survey was 
carried out from November 2015 to January 2016. It was addressed to manag -
ing authorities and audit authorities in the cohesion policy area and paying 
agencies and certification bodies in the rural development policy area. 337 
of the 480 authorities invited to participate in the survey responded (around 
70 % response rate); and
 ο Interviews with representatives of Member State authorities that participated 
in the survey. Altogether we held interviews with 25 national and regional 
authorities for cohesion and 12 authorities for rural development.
18 
The audit work was carried out between September 2015 and September 2016.
20
 Observations
10 Called winding-up bodies 
(WuB) in the 2000-2006 
period.The rules for closure have improved but further steps 
are needed to make it more efficient and timely
19 
Closure is the last stage in the lifecycle of a multiannual programme. To ensure 
accountability and transparency, the Commission should accept the final expend -
iture to be legal and regular and to have been used in line with the programme 
objectives. Closure should take place as soon as possible after the end of the 
programme period and the Commission should report on the closure outcome to 
the budgetary authority.
20 
Given the similarities in the cohesion and rural development policy areas (in 
particular the non-area-related investment measures) and the fact that since 2014 
both are a part of European Structural and Investment Funds, closure arrange -
ments should be aligned in order to increase transparency and facilitate compari -
sons. Aligned closure arrangements would also facilitate the stakeholders’ un -
derstanding of the closure process. Lastly, common rules could lead to efficiency 
gains in the implementation of programmes.
Considerable changes in the closure arrangements since the 
2000-2006 period in cohesion and rural development
2000-2006 period: no annual assurance provided by the Member 
States in either of the policy areas
21 
For the 2000-2006 period the closure process and guidelines were common to 
cohesion and rural development and no annual assurance was provided by the 
Member State authorities in either policy area. At closure these authorities10 had 
to provide assurance, based on a sample check, as to the legality and regularity 
of all expenditure during the period. The Commission’s analysis and verifications 
led in many cases to requests for clarification or additional work at Member State 
level, which often extended the closure process. For example, for 14 % of ERDF 
operational programmes closure took more than 4 years. An overview of the time 
it took the Commission DGs to close 2000-2006 cohesion and rural development 
programmes is provided in Figure 3 .
21 Observations 
2007-2013 period: requirement for the Member States to provide 
annual assurance for both policy areas
22 
The 2007-2013 programme period brought a requirement for the Member States 
to present annual assurance in both policy areas. Providing the basis for pro -
gramme closure, these annual declarations were intended to make the process 
easier and quicker than in the previous period. In the cohesion area they took the 
form of annual control reports submitted by the audit authorities and accepted 
by the Commission. In rural development, the Commission developed the ‘clear -
ance of accounts’11 procedure for the final recognition of expenditure, comprising 
annual financial clearance and multiannual conformity clearance (see paragraph 
13). An overview of the responsible Member State authorities’ management and 
control tasks for the 2007-2013 programme period is presented in Annex II .11 Then introduced in Council 
Regulation (EC) No 1290/2005 
of 21 June 2005 on the 
financing of the common 
agricultural policy (OJ L 209, 
11.8.2005, p. 1); now Article 51 
of Regulation (EU) 
No 1306/2013.Number of programmes RDPs cumulative (%)ESF cumulative (%)ERDF cumulative (%)RDPs closedESF OPs closedERDF OPs closed
Time for closure(%)
> 4 years 3 to 4 years 2 to 3 years 1 to 2 years 6 months
to 1 year< 6 months140
120
100
80
60
40
20
0100
80
60
40
20
0Figure 3Time taken to close 2000-2006 OPs and RDPs
Source:  ECA based on Commission data.
22 Observations 
23 
In cohesion policy, during 2007-2013, expenditure was declared cumulatively 
from the start of the period and the Commission did not accept it annually. The 
annual control reports and audit opinions submitted by the audit authorities 
and accepted by the Commission nevertheless constituted an important part of 
the Commission’s annual assurance. The Commission also had the possibility of 
interrupting or suspending payments if there were doubts about the legality and 
regularity of expenditure. The system of annual control reports and opinions, 
together with the Commission’s acceptance of annual implementation reports, 
provide the foundation for the closure process.
24 
For rural development, on the other hand, the Commission did accept the dec -
larations of expenditure annually during the 2007-2013 period. The Commission 
was required to verify the certification body’s report and audit opinion and ac -
cept the accounts every year (annual financial clearance). This procedure covered 
not only the accounts but also the functioning of the paying agency’s internal 
control system and the statement of assurance issued by the agency’s director; 
however, it did not extend to the legality and regularity of expenditure. Indepen -
dently from this, the Commission was required to examine and accept the annual 
progress report on implementation. Programme closure in rural development is 
based on the annual accounts submitted by the Member States for each financial 
year in the programme period (2007 to 2015) and the corresponding acceptance 
by the Commission (financial clearance decisions). However, legality and regular -
ity are excluded from the scope of the annual financial clearance and instead 
covered by the multiannual conformity clearance procedure, which can continue 
even after closure. For rural development, closure can thus be seen as a process 
consisting of necessary steps throughout the implementation period and contin -
uing after the formal closure of an RDP , rather than a one-off exercise at a specific 
moment in time.
25 
The development of the management and control system over three programme 
periods (2000-2006, 2007-2013 and 2014-2020) for cohesion and rural develop -
ment relevant for closure is shown in Annex III . It also illustrates how the Member 
State authorities and the Commission provide monitoring information and assur -
ance over the three periods.
23 Observations 
2014-2020 period: Closure arrangements in cohesion and rural 
development again converging, but not yet fully aligned
26 
For the 2014-2020 programme period, an annual acceptance of accounts is ap -
plied in both cohesion and rural development12, bringing ‘annual closure’ in 
both policy areas. For cohesion, issues relating to the legality and regularity of 
expenditure are taken into account for the annual acceptance of accounts as long 
as they are detected and corrected by the national authorities before submit -
ting the accounts to the Commission, but can also be addressed at a subsequent 
stage by the multiannual conformity audits which then result in net financial 
corrections imposed by the Commission subject to specific conditions13. This 
generally corresponds to the process in place for rural development since the 
2007-2013 period. For rural development the annual assurance has been extend -
ed to legality and regularity as from 2015 the certification bodies are required to 
include these aspects in their annual reports. As in the case of cohesion policy, 
multiannual compliance audits with the possibility to apply net financial correc -
tions are carried out separately.
27 
In both policy areas, the closure of the 2014-2020 period will be almost identical 
to the annual acceptance of the accounts, with the difference that for cohesion 
a final implementation report will be required in addition to the annual docu -
ments14 submitted for the final year. For rural development, no additional docu -
ments will be required for closure; the format of reporting will be the same as for 
the annual exercise.
28 
For 2014-2020, the rules on assurance and closure have been further improved 
and aligned between the two spending areas. Notwithstanding efforts to stream -
line procedures through the common provisions regulation15, a few differences 
remain in the closure arrangements for the two policy areas. The main differ -
ences are listed in Table 2 .12 Article 84 of Regulation (EU) 
No 1303/2013.
13 Articles 139(5) and 145(7) of 
Regulation (EU) No 1303/2013.
14 Article 141 of Regulation (EU) 
No 1303/2013.
15 Regulation (EU) No 1303/2013.
24 Observations 
Differences in closure arrangements in the 2014-2020 period between cohesion and 
rural development
Topic Cohesion Rural development Differences
Terminology 
and roles of the 
Member State 
authoritiesThe tasks and responsibilities of manag -
ing authorities, certifying authorities 
and audit authorities are described in 
Annex II .
The 2014-2020 period introduces the new 
term ‘acceptance of accounts’1.The tasks and responsibilities of manag -
ing authorities, paying agencies and 
certification bodies are described in  
Annex II .
The term ‘acceptance of accounts’ from 
the common provisions regulation is 
applicable, but the specific rules for 
rural development maintain the terms 
‘clearance of accounts’2 and ‘conformity 
clearance’3.Although their tasks are broadly similar, 
the Member State authorities have dif -
ferent names and different roles in the 
respective policy areas.
The term ‘acceptance of accounts’ is used 
for cohesion, but for rural development 
‘clearance of accounts’ and ‘conformity 
clearance’ are also used.
Legality and 
regularityIn cohesion the initial pre-financing of 
the programmes is supplemented by 
annual pre-financing. 10 % of interim 
payments is systematically withheld to 
protect the EU budget from the effects 
of irregular expenditure. This amount is 
to be released upon acceptance of the 
annual accounts.
The legislation4 specifically states that 
issues of legality and regularity should 
not be taken into account for the annual 
acceptance of accounts.In rural development only initial pre-
financing is paid to the Member States, 
there is no annual pre-financing and 
no sum is withheld from the interim 
payments. However, the cumulative 
payments for a programme are capped 
at 95 % and the remaining 5 % is 
released only at the payment of the final 
balance.
The specific rules on rural develop -
ment expand annual reporting by the 
certification bodies on legality and 
regularity 5.While in rural development only initial 
pre-financing is paid to the Member 
States, this is supplemented with annual 
pre-financing in cohesion. In rural devel -
opment no part of the interim payment 
is withheld while in cohesion there is 
retention of 10 %. For rural development, 
on the other hand, payments for a pro -
gramme are capped at 95 % implementa -
tion, which is not the case for cohesion.
It is not clear for either area to what 
extent the Commission in practice will 
consider the legality and regularity for the 
annual acceptance.Table 2
1 Article 84 of Regulation (EU) No 1303/2013.
2 Article 51 of Regulation (EU) No 1306/2013.
3 Article 52 of Regulation (EU) No 1306/2013.
4 Article 139(5) of Regulation (EU) No 1303/2013.
5 Article 9 of Regulation (EU) No 1306/2013.
25 Observations 
29 
In essence, these differences mean that the closure will start later for cohesion 
than for rural development, and that the Member States will only have to submit 
a final implementation report to the Commission for programmes in the cohe -
sion area16. The closure process could also benefit from further alignment be -
tween the two policy areas.16 Article 141 of Regulation (EC) 
No 1303/2013.Table 2
Topic Cohesion Rural development Differences
Accounting year, 
financial year and 
the last annual 
accountsA new accounting year, 1 July-30 June6, 
has been introduced.
The last annual accounts have to cover 
expenditure up to the final eligibility 
date (31 December 2023)8; they will 
formally cover the accounting year from 
1 July 2023 to 30 June 2024.The accounting year remains 16 October- 
15 October7 as for the 2007-2013 period.
While the final eligibility date is the 
same (31 December 2023), the last an -
nual accounts will cover 15 October 2022 
to 31 December 2023.The accounting years cover different 
periods.
The period covered by the last annual 
accounts is different as well.
Deadlines The deadline for submission of the final 
documents for closure is 15 Febru -
ary 2025, 13.5 months after the final 
eligibility date of 31 December 2023.The deadline for submission of the final 
documents for closure is 30 June 2024, 
6 months after the final eligibility date 
of 31 December 2023.There are different deadlines for submis -
sion of the final documents for closure.
Closure documents A final implementation report has to be 
submitted9.No additional documents are required 
for closure.Unlike rural development, a  final imple -
mentation report has to be submitted for 
cohesion.
6 Article 2(29) of Regulation (EU) No 1303/2013.
7 Article 39 of Regulation (EU) No 1306/2013.
8 Article 65(2) of Regulation (EU) No 1303/2013.
9 Article 141 of Regulation (EU) No 1303/2013.
Source:  ECA.
26 Observations 
Legality and regularity is taken into account for the closure 
of 2007-2013 programmes in cohesion, but is treated 
separately from closure for rural development
The understanding and expected consequences of 2007-2013 
closure differ somewhat
The Member States interpret the purpose of closure more broadly than its 
definition in the legal framework
30 
The purpose of programme closure should be clearly stated in the regulations 
and communicated so as to foster a common understanding by the Commission 
and the Member States.
31 
Most respondents to our survey of Member State authorities replied that the 
purpose of closure was clear. However, their perception of the purpose of closure, 
in both policy areas, was broader than the definition given in the regulations (i.e. 
the payment of the final balance17). A significant proportion of respondents also 
identified other purposes of closure, such as ‘final verification that reimbursed 
expenditure is legal and regular’, ‘legal certainty for the Member State that de -
clared expenditure for the period is accepted by the European Commission’ and 
‘evaluation whether objectives were achieved’.
32 
In the cohesion area this broader view was shared by the Commission. According 
to DG REGIO and DG EMPL the payment of the final balance follows on from an 
examination of the programme achievements set out in the final implementation 
report, and is dependent on certification by the audit authority that the expendi -
ture declared to the Commission is legal and regular.17 Article 89(5) of Regulation (EC) 
No 1083/2006 for cohesion 
and Article 37 of Regulation 
(EU) 1306/2013 for rural 
development.
27 Observations 
33 
However, the perception that the closure of a cohesion programme offers legal 
certainty that the expenditure is accepted by the Commission is not supported 
by the regulations, as financial corrections are possible even after closure. In 
practice subsequent financial corrections need rarely to be applied. In rural 
development the expectation gap is rather greater, as post-closure conformity 
audits (potentially leading to financial corrections) are frequent and ‘real’ closure 
is not achieved until all audits have been finalised and settled through the Com -
mission’s financial correction decisions.
In cohesion, a cumulative residual risk rate is calculated during 
programme implementation and at closure to assess the 
legality and regularity of expenditure; this is not done for rural 
development
34 
In both areas, the Commission has established a framework for Member States to 
provide assurance of the legality and regularity of declared expenditure through -
out the programme period. At the end of the period, account being taken of any 
financial corrections, the expenditure should be legal and regular for the pro -
gramme as a whole. Calculation of a residual risk rate for the entire period would 
indicate the error remaining after allowing for all financial corrections and permit 
an assessment as to whether the level of irregular expenditure is below the 
Commission’s materiality threshold currently set at 2 % in both policy areas. The 
calculation and analysis of residual risk rate at programme level would also make 
it possible to identify the causes of the remaining error and allow further correc -
tive measures to bring irregular expenditure down to an acceptable level.
35 
In cohesion, we found that a residual risk rate is calculated at closure for each 
programme and the entire programme period, account being taken of financial 
corrections. DG REGIO and DG EMPL can impose additional financial corrections 
at closure if the verified residual risk rate for an OP is material.
28 Observations 
36 
In rural development, neither the certification bodies nor the Commission calcu -
late a residual risk rate at programme level after the impact of all financial correc -
tions. Because no such calculation is made annually or for the whole programme 
period, there is no assurance at closure that the risk is below the materiality level 
even after corrections. DG AGRI’s 2015 annual activity report states that ‘it can -
not be expected with any real certainty that a remaining financial risk below 2 % 
would be attainable with reasonable efforts for rural development’18.
37 
The DG AGRI annual activity report has details of the estimated amount at risk 
and the estimated corrective capacity19 for the EAFRD as a whole. This gives an 
indication of the remaining financial risk to the EU budget when all corrective ac -
tions are taken into account. However, this exercise is limited to a single financial 
year, and no calculations are done at this stage at programme or paying agency 
level. Moreover, in contrast to the way it is used in cohesion, the information is 
not used to ensure that the residual risk rate remains below the Commission’s 
materiality level.
38 
In neither policy area do the regulations for the 2014-2020 period require audit 
authorities and certification bodies to submit an audit opinion or a report for the 
whole programme period, or to calculate a residual risk rate for each programme 
at closure. We note, however, that annual residual error rates are reported by 
the audit authorities and error rates and incompliance rates by the certification 
bodies and are verified by the Commission. These take account of the financial 
corrections at Member State level.
There is no final acceptance of rural development expenditure as 
legal and regular at or after closure
39 
The final acceptance of programme expenditure as legal and regular would 
have certain practical implications. In particular, it would provide clarity for the 
Member States. It would also provide useful information for the discharge proce -
dure — the process through which the European Parliament, on a recommenda -
tion from the Council, grants to the Commission final approval of the way the 
EU budget has been implemented. Discharge is one of the means whereby the 
Parliament and the Council can hold the Commission accountable for the imple -
mentation of the EU budget20.18 Section 3.3 of the Directorate-
General for Agriculture and 
Rural Development Annual 
Activity Report 2015, p. 86 (Ref. 
Ares(2016)2325961 — 
19/05/2016).
19 The corrective capacity is 
calculated as an average of the 
previous 3 years’ financial 
corrections imposed by the 
Commission and recoveries 
from beneficiaries carried out 
by the Member States.
20 Article 319 of the Treaty on the 
Functioning of the European 
Union.
29 Observations 
40 
For cohesion, we examined the process which culminates in payment of the 
final balance for each OP . Generally speaking, all unresolved issues relating to 
the legality and regularity of expenditure should be clarified and settled before 
the closure of an OP . Having completed its assessment, the Commission sends 
a closure letter to the Member State stating the amount of expenditure which is 
accepted as eligible for the programme. This essentially amounts to final accept -
ance of that expenditure as legal and regular. As beneficiaries are required to 
keep documents for 3 years after programme closure, DG REGIO and DG EMPL 
can undertake audits after closure. However, in practice they very seldom do so.
41 
In rural development, the Commission recognises the final declaration of ex -
penditure through the clearance of accounts procedure, under which it takes 
annual financial clearance and multiannual conformity clearance decisions (see 
paragraph 13). We examined how these decisions are taken into account for the 
calculation of the final balance. Although all financial clearance decisions are 
taken into account for the final balance calculation, the conformity decisions are 
treated separately since they directly lower the available budget envelope (i.e. 
representing a net financial correction). This can occur even after the Commission 
has taken a formal decision to clear the last annual accounts of the programme.
42 
Conformity clearance decisions frequently contain financial corrections resulting 
from conformity audits carried out by the Commission throughout the period to 
verify that expenditure is in compliance with the rules. Conformity clearance is 
an essential element of DG AGRI’s clearance of accounts procedure; however, it is 
separate from the annual financial clearance procedure. Conformity audits can be 
carried out, and decisions taken, after programme closure. At the end of 2016, by 
which time the Commission expects to have taken most of its last annual clear -
ance of accounts decisions for 2007-2013, it estimates that around 80 conformity 
audits will still be ongoing.
43 
The fact that conformity clearance decisions can still be taken after closure 
means that the balance settled at closure21 is not necessarily ‘final’, as the out -
come of conformity audits might still lead the Commission to recover funds from 
the Member State.21 As defined in Article 37 of 
Regulation (EU) No 1306/2013.
30 Observations 
44 
In our Special Report No 7/201022, we noted that separating the annual financial 
clearance from the multiannual conformity clearance can provide some opera -
tional advantages. The Commission considered that splitting the procedure was 
necessary due to the length of conformity audits and would allow it to monitor 
the annual financial execution of programmes more closely. However, we criti -
cised the fact that the Commission does not prepare a summary recognising the 
expenditure of a specific year after all conformity audits have been finalised. 
We found that at closure such a summary does not exist either. Such a decision 
would acknowledge the net expenditure accepted after implementation of all 
financial corrections and at the same time inform the discharge authority. It 
would also furnish one of the elements necessary for the calculation of a residual 
risk rate at programme level for rural development. This issue has not been ad -
dressed by the Commission for the 2014-2020 period.
45 
For the 2014-2020 period the split between annual acceptance of the accounts 
and multiannual conformity audits is maintained and extended to the cohesion 
area23.
The achievement of outputs and results is not sufficiently 
taken into account at closure
46 
Closure should cover the final reporting and evaluation of the programme, 
including monitoring and analysis of the achievement of outputs and results for 
the entire period. Reliable data on the achievement of targets should be provid -
ed to the Commission to enable it to evaluate how efficiently and effectively EU 
funds were used during the period.22 Paragraphs 77, 81, 100 and 104 
of Special Report No 7/2010 
‘Audit of the clearance of 
accounts procedure’ ( http://
eca.europa.eu ).
23 Article 139(5) of Regulation 
(EU) No 1303/2013.
31 Observations 
2007-2013 period: Member States have to report on specific and 
verifiable targets, using the indicators defined in the programmes
47 
During the programme period, Member States were required to report on the 
progress made in implementing their programmes24. In this they were to include 
information about specific, verifiable targets, using the indicators defined in the 
programmes. The regulations also provided for a mid-term evaluation for RDPs 
(in 2010) and an ex post  evaluation in both policy areas (in 2015)25.
48 
At closure, reporting on the achievement of targets is a requirement in both pol -
icy areas — in the final implementation report for cohesion and the last annual 
progress report on implementation for rural development — before payment of 
the final balance (see Table 1 ). However, the amount of the final payment is not 
directly linked to the actual achievement of outputs and results.
49 
In cohesion, some Member State authorities indicated that it was unclear how 
operations not finalised by the closure deadline should be taken into account 
when reporting on performance. Others were uncertain about the possible finan -
cial consequences of not achieving the targets set in their programmes. Although 
the Commission replied to the Member States that there would be no automatic 
financial corrections if the indicators were not achieved, the responsible authori -
ties were still unsure about the approach taken by DG REGIO and DG EMPL.
50 
In rural development, some Member State authorities indicated that the rules for 
reporting on the outputs and results of operations financed under two pro -
gramme periods were still unclear.
51 
The Member States’ audit authorities and certification bodies indicated, through 
the survey and interviews, that they did not envisage verifying whether the 
targets were achieved or why they were not. This, combined with the authorities’ 
uncertainty about how to report on operations not finalised by the end of the 
programme period, represents a risk to the reliability and accuracy of the data 
reported on the achievement of targets for 2007-2013.24 In the annual implementation 
report for cohesion and the 
annual progress report on the 
implementation for rural 
development (see Annex II ).
25 Article 84 of Regulation (EC) 
No 1698/2005 and Article 49 of 
Regulation (EC) No 1083/2006.
32 Observations 
26 Article 20 and Article 22(2) of 
Regulation (EU) No 1303/2013.
27 Article 22(7) of Regulation (EU) 
No 1303/2013.
28 Paragraphs 3.61-3.65 of ECA’s 
annual report for 2014 (OJ 
C 373, 10.11.2015).2014-2020 period: Allocation of the performance reserve 
conditional on the achievement of the milestones of the 
programme at priority level
52 
For the 2014-2020 period, a stronger focus has been placed on outputs and 
results in the course of programme implementation and controls (including 
adoption of a programme and in evaluation and audit). This has been reinforced 
by the modification of the performance framework, including the reintroduction 
of a performance reserve amounting to 6 % of the programme budget. Allocation 
of the reserve is conditional on the achievement of milestones set at the level of 
programme priorities26. If targets are not achieved, the Commission may also ap -
ply financial corrections27. However, we have noted in a previous report a num -
ber of weaknesses in the design of the performance framework in both areas28. 
Moreover, it remains to be seen how the performance reserve will be applied in 
practice and what its actual impact will be.
A consolidated closure report on the legality and regularity 
of spending as well as the outputs and results achieved is not 
provided to the European Parliament and the Council
53 
The EU’s budget system is based on multiannual programming. To ensure there 
is accountability and transparency in programme implementation, the outcome 
of the closure process should be reported to the budgetary authority. Thus the 
Commission should inform the European Parliament and the Council of the final 
situation for the programme period in terms of the regularity of expenditure and 
the objectives achieved.
54 
Currently, a number of different documents are available to the budgetary au -
thority on programme implementation:
 ο Communication on the protection of the European Union budget;
 ο Annual activity reports for DGs AGRI, EMPL and REGIO;
 ο Annual synthesis report on the Commission’s management achievements;
 ο Ex post  evaluations of the achievement of OP and RDP objectives during the 
period;
33 Observations 
 ο Synthesis report on ex post  evaluation;
 ο Commission decisions on the conformity of expenditure with EU rules; and
 ο For rural development, the Commission’s annual financial clearance decisions 
(the last of which includes the final balance).
55 
The Commission reports to the budgetary authority through the Annual Activity 
Report of respective directorates-general on the basis of the annual state of play, 
but there is no specific report envisaged on the final outcome of closure for the 
programme period as a whole. This situation remains unchanged for the 2014-
2020 period.
56 
As regards the 2000-2006 period, we note that the Commission has issued an ad 
hoc report on the financial corrections and status of closure of the ERDF and ESF 
programmes and CF projects in 2013.
Closure is initiated only several years after the end of the 
programme period due to overlapping of eligibility periods
57 
Closure should take place as soon as possible after the end of the programme 
period so that the subsequent programmes can start promptly. To ensure effec -
tiveness at closure, it is also vital to allocate sufficient time and resources to the 
related tasks.
34 Observations 
Additional time to spend EU funding: from n+2  in 2000-2006 
period to n+3 in 2014-2020 period
58 
During the last three periods, the EU regulations have given Member States 
additional time to spend the funding allocated to them. In 2000-2006 and 2007-
2013, they were allowed to continue spending for 2 years beyond the end of 
the programme period. Thus the eligibility period for 2007-2013 continued until 
31 December 2015 (rather than the end of 2013).
59 
For 2014-2020, the eligibility period (time to spend the programme budget) has 
been extended by 3 years after the end of the programme period (n+3)29 instead 
of 2 years (n+2) allowed for the previous programme periods. As a result, the eli -
gibility period will end in 2023, a full 10 years after the adoption of the legislative 
framework by the European Parliament and the Council (in late 2013). This will 
be followed by the closure which adds, for cohesion, at least another 2 years. By 
then, the constellation of the European Parliament will have changed twice and 
possibly three times once closure has been finalised.
In cohesion Member States have more time to submit the closure 
documents
60 
The rules on the 2000-2006 closure allowed the eligibility period to be extended 
a further 6 or 12 months in individual cases. No such extensions were possible 
for 2007-2013 in either of the two policy areas, which is expected to lead to 
a shortening of the closure process. However, there is a major difference between 
cohesion and rural development in terms of the time allowed for the prepara -
tion and submission of closure documents to the Commission30: in cohesion the 
Member States are granted 15 months after the end of the eligibility period to do 
this, but in rural development they have only 6 months31. As a result, for the 2007-
2013 programme period, Member States have to complete the closure process 
by 31 March 2017 for cohesion and by 30 June 2016 for rural development (see 
Figure 4 ).29 Article 38 of Regulation (EU) 
No 1306/2013 and Article 65 of 
Regulation (EU) No 1303/2013.
30 Article 89(1) of Regulation (EC) 
No 1083/2006.
31 Article 37 of Regulation (EU) 
No 1306/2013 and Article 82(1) 
of Regulation (EC) No 
1698/2005.
35 Observations Figure 4
61 
This difference can be explained by the fact that, for rural development, a lot of 
the work has been already done during the period, so that closure mainly focuses 
on the last financial year. In contrast, for cohesion the closure exercise is more 
extensive and involves validation of the expenditure for the whole programme 
period (see also paragraphs 22 to 25).
62 
For 2014-2020, although the closure arrangements for the two policy areas are 
more closely aligned, cohesion continues to have a significantly longer deadline 
for submission of documents to the Commission: 13.5 months after the final eligi -
bility date, compared to 6 months for rural development.The timing of closure
Submission of 
closure documents
Rural developmentSubmission of 
closure documents
CohesionFinal eligibility
dateEnd of programming 
period
31 March 2017 30 June 2016 31 December 2015 31 December 2013 1 January 2007MS closure
activities rural
development
(6 months)
MS closure activities cohesion
(15 months)Extended eligibility (n+2) Programming period 2007-2013
Source:  ECA.
36 Observations 
64 
At the beginning of November 2016, the designation for 140 (out of 215) pro -
grammes for DG EMPL and 163 (out of 295) programmes for DG REGIO has been 
notified. Sixty-six programmes reporting to DG EMPL and 53 reporting to DG 
REGIO had submitted interim payment claims for 201632, showing that they were 
already implementing operations. In the Member States, therefore, the authori -
ties have generally begun implementing their 2014-2020 programmes. For 
a large majority of programmes, however, implementation has not started simply 
because unspent funding was still available under the 2007-2013 programmes for 
which the eligibility period ended only on 31 December 2015. This overlapping 
of the eligibility periods creates a disincentive to start the programmes of the 
subsequent period.The overlapping of eligibility periods contributes to a late start of 
subsequent programmes
63 
Many programmes for the 2014-2020 period were approved in 2015 or even 2016, 
as shown in Table 3 . Since the adoption of the legal base in December 2013, 
implementation for the new period has been in full swing in the Member States 
and has required the attention of the Commission DGs. Following the negotiation 
of the partnership agreements and the OPs and RDPs, in cohesion many Mem -
ber States are in the process of designating managing authorities and certifying 
authorities which have to be verified by the audit authorities. Notification of 
these designations to the Commission is a condition for the submission of interim 
payment claims. Table 3Adoption of programmes for the 2014-2020 period
Directorate-  
GeneralNumber of programmes adopted
2014 2015 2016 Total
DG REGIO 132 (45 %) 143 (48 %) 20 (7 %) 295
DG EMPL 153 (71 %) 62 (29 %) 215
DG AGRI 9 (8 %) 109 (92 %) 118
Total per year 294 (47 %) 314 (50 %) 20 (3 %) 628
Source:  ECA based on Commission data.32 Source:  Data provided by DG 
REGIO and DG EMPL.
37 Observations 
Overlapping of eligibility periods also increases the overall 
administrative burden of programme management and control at 
Member State and Commission level
65 
The Commission considers closure to be part of the regulatory requirements and 
does not separately budget for or monitor the cost of the closure exercise in  
either policy area. The Commission does not require the Member States to 
provide information on their own costs or resource requirements for the closure 
exercise; nor does it draw up a comprehensive estimate of the overall resource re -
quirements of its directorates-general. As the Member States see closure as part 
of their programme management responsibilities, they also do not separately 
estimate or monitor the resource requirements for closure in either policy area.
66 
The main concern expressed by the Member States through our survey and 
interviews was the time pressure generated both by the overlapping of eligibil -
ity periods and the work required for closure. Audit authorities and certification 
bodies in particular perceive this time pressure as a major risk. Some authori -
ties indicated that they were tackling the problem by hiring additional staff or 
outsourcing activities. However, owing to budget cuts several others were in no 
position to do this. Also the Commission has identified a need for additional staff 
resources during closure and is considering outsourcing certain tasks.
67 
Furthermore, some of the Member State authorities involved in closure had been 
adversely affected by administrative reorganisation leading to the laying off or 
reassignment of staff. There is therefore a serious risk that insufficient experi -
enced staff will be available for closure activities at national level.
68 
The 2014-2020 period will exacerbate the problem of implementing programmes 
related to two periods simultaneously, as expenditure will continue to be eli -
gible for 3 years after the end of the programme period instead of the 2 years 
allowed for 2007-2013. Assuming the subsequent period is not delayed, there -
fore, the work of Member States in connection with the annual acceptance of 
accounts of 2014-2020 programmes will overlap with the implementation of new 
programmes between 1 January 2021 and either 30 June 2024 (for rural develop -
ment) or 15 February 2025 (for cohesion).
38 Observations 
The Commission provided adequate and timely 
support to help Member States prepare for the closure 
of 2007-2013 programmes, but needs to remain 
vigilant to ensure a robust implementation by the 
Member States
The Commission issued comprehensive and timely guidance 
on the 2007-2013 closure
69 
Rules should be clear, simple and practical, and they should be easy to find in the 
regulations. A complex legal framework could increase the incidence of mistakes 
at closure if the authorities do not understand the requirements properly or 
interpret them differently from the Commission. It could also lead to inefficien -
cies if the Commission is required to issue clarifications to the Member States. To 
mitigate these risks, the Commission needs to prepare guidelines in advance that 
summarise and further clarify the provisions for closure. While the regulations 
provide a general framework for the programme period as a whole (program -
ming, financial management, audit, etcetera), the guidelines should focus more 
on technical and practical aspects of the Commission’s interpretation of the 
regulations.
The Commission’s guidelines facilitated understanding of the rules 
applicable to closure in both policy areas
70 
Our review of the legal framework showed that, for both policy areas, the rules 
on closure need to be taken from different regulations33. This is especially the 
case for rural development, where the many regulations relevant to closure add 
to the complexity. Moreover, the financial aspects of the 2007-2013 closure pro -
cess are covered by the new regulations adopted in 2013 and 2014 for the 2014-
2020 period34, while the eligibility conditions for expenditure are set out in the 
regulations for the 2007-2013 period35. Control arrangements36 and transitional 
rules37 are covered by still other regulations.33 The regulations defining the 
closure arrangements in the 
respective policy areas are 
listed in Annex I .
34 Regulation (EU) No 1306/2013, 
Commission Delegated 
Regulation (EU) No 907/2014 
of 11 March 2014 
supplementing Regulation 
(EU) No 1306/2013 of the 
European Parliament and of 
the Council with regard to 
paying agencies and other 
bodies, financial management, 
clearance of accounts, 
securities and use of euro (OJ 
L 255, 28.8.2014, p. 18) and 
Regulation (EU) No 908/2014.
35 Regulation (EC) No 1698/2005 
and Commission Regulation 
(EC) No 1974/2006 of 
15 December 2006 laying 
down detailed rules for the 
application of Council 
Regulation (EC) No 1698/2005 
on support for rural 
development by the European 
Agricultural Fund for Rural 
Development (EAFRD) (OJ 
L 368, 23.12.2006, p. 15).
36 Commission Regulation (EU) 
No 65/2011 of 27 January 2011 
laying down detailed rules for 
the implementation of Council 
Regulation (EC) No 1698/2005, 
as regards the implementation 
of control procedures as well 
as cross-compliance in respect 
of rural development support 
measures (OJ L 25, 28.1.2011, p. 
8) and (EU) No 908/2014.
37 Regulation (EU) No 1310/2013 
of the European Parliament 
and of the Council of 
17 December 2013 laying 
down certain transitional 
provisions on support for rural 
development by the European 
Agricultural Fund for Rural 
Development (EAFRD), 
amending Regulations (EU) No 
1305/2013, (EC) No 73/2009, 
(EU) No 1307/2013, (EU) No 
1306/2013 and (EU) No 
1308/2013 (OJ L 347, 
20.12.2013, p. 865); and 
Commission Delegated 
Regulation (EU) No 807/2014of 
11 March 2014 supplementing 
Regulation (EU) No 1305/2013 
of the European Parliament 
and of the Council on support 
for rural development by the 
European Agricultural Fund 
for Rural Development 
(EAFRD) and introducing 
transitional provisions (OJ 
L 227, 31.7.2014, p. 1).
39 Observations 
71 
For both policy areas, however, the Commission addressed the complexity of 
the legal framework by preparing closure guidelines. These summarise the key 
requirements and deadlines of the process and provide further clarifications, 
which were welcomed by the majority of the authorities involved in the closure 
exercise.
72 
Overall, we found that the Commission had issued comprehensive guidelines 
clarifying the applicable provisions in the regulations for both areas. Draft guide -
lines were presented to the Member States at an early stage, which gave them 
an opportunity to comment on the content. Table 4  shows the timeline for the 
adoption of guidelines in both policy areas. The amended guidelines included 
very few changes. Table 4Timeline for the adoption of closure guidelines
Cohesion Rural development
First draft of guidelines presented to 
the Member StatesJune 20121April 20134
Guidelines adopted March 20132March 20155
Amended guidelines adopted April 20153December 20156
1 At the Coordination Committee of the Funds meeting of 7 June 2012.
2  Commission Decision C(2013)1573 of 20 March 2013 on the approval of guidelines on the closure 
of operational programmes adopted for assistance from the European Regional Development 
Fund, the European Social Fund and the Cohesion Fund (2007-2013).
3  Commission Decision C(2015)2771 of 30 April 2015 amending Decision C(2013) 1573 of 20 March 
2013.
4 At the Rural Development Committee meeting of 19 April 2013.
5  Commission Decision C(2015)1399 of 5 March 2015 on the approval of guidelines on the closure 
of the rural development programmes adopted for assistance from the European Agricultural 
Fund for Rural Development (EAFRD) for the period 2007-2013.
6  Commission Decision C(2015)8866 of 11 December 2015 amending Decision C(2015) 1399 of 
5 March 2015.
Source:  ECA.
40 Observations 
73 
In both policy areas, the guidelines add clarifications and practical guidance 
on matters that were not covered in detail or were not sufficiently clear in the 
regulations.
74 
Almost all the authorities in both policy areas which participated in the survey 
considered that the Commission provided the guidelines sufficiently ahead of 
time to prepare for closure. Two thirds of the respondents indicated that the 
guidelines clarified many issues which were not sufficiently addressed in the reg -
ulations (see  Figure 5 ). Almost all authorities also found the guidelines to be clear 
regarding the organisation of closure, including responsibilities and deadlines.
75 
Around one fifth of the surveyed authorities indicated that they still needed fur -
ther guidance or clarification on specific issues. The areas for which 15 % or more 
of the respondents considered the guidance to be unclear or rather unclear are 
set out in Annex IV .Figure 5Survey responses by Member State authorities on whether sufficient clarification 
was provided in the Commission’s guidelines
Source:  ECA survey.
No opinion No
All issues are already clearly
dealt with in the regulationsYes 
67 %11 %
13 %9 %
41 Observations 
The absence of deadlines for certain aspects of the closure process 
could imperil the completion of closure on time
76 
Clear deadlines are an important feature of the rules governing closure, as they 
help to ensure that tasks are completed on time and the closure process as 
a whole is effective.
77 
Overall, the regulations included deadlines for most aspects, but in three areas 
there were no deadlines: for Member States’ replies to Commission questions on 
the closure documents, for the Commission’s approval of major projects, and for 
the public contribution paid by Member States to beneficiaries in the cohesion 
area.
No deadline in the regulations for Member State replies to Commission 
questions: risk of protracting closure
78 
If the closure documents are of good quality, the provisions in the regulations 
are sufficient to guarantee closure on schedule. However, if the Commission is 
not satisfied with the information provided by a Member State, the absence of 
a timeframe in the regulation for replies to the Commission’s questions could 
further protract the closure process.
79 
None of the regulations for the 2007-2013 period specify a deadline for Member 
States to reply to Commission questions on the closure documents. In cohesion, 
the guidelines set a deadline of 2 months in this respect, extendable on request 
by two more; the rural development guidelines contain no such provision.
42 Observations 
No deadline for the submission and approval of major projects in cohesion: 
complicates closure and poses a risk to the spending of funds
80 
For the 2007-2013 period, major projects in the cohesion area were defined as 
operations with a total cost exceeding 50 million euros38. As such projects involve 
significant EU funding, they had to be appraised and approved for financing by 
the Commission39.
81 
The regulatory framework for the 2007-2013 period contained no deadline for the 
submission of major project applications and, in practice, no final deadline for 
the Commission to adopt the related decisions. As of 15 November 2016, 19 major 
project applications from seven Member States were still pending approval by 
DG REGIO. The associated total eligible cost of these projects was 1 billion euros 
and the EU contribution was 854 million euros.
82 
A pending major project decision complicates the closure of an OP , as the manag -
ing and audit authorities do not know how to handle the expenditure in question 
when preparing the closure documents. Pending decisions also create legal un -
certainty for the Member State. In particular, with the closure deadline approach -
ing, if the Commission rejects a major project there is an increased risk that the 
Member State will not be able to replace it with other eligible expenditure, which 
may lead to difficulties in fully using up the EU contribution.
83 
For the 2014-2020 period, expenditure relating to a major project may be in -
cluded in a request for payment40 if the Commission is first notified of a positive 
appraisal by independent experts or after the submission for approval by the 
Commission. The Commission should adopt a decision on the approval of the 
financial contribution to the major project within 3 months41.38 Article 39 of Regulation (EC) 
No 1083/2006.
39 Article 41 of Regulation (EC) 
No 1083/2006.
40 Article 102(6) of Regulation 
(EU) No 1303/2013.
41 Article 102(1) and (2) of 
Regulation (EU) No 1303/2013.
43 Observations 
No deadline in cohesion for payment of the public contribution to 
beneficiaries: a reputational risk
84 
As a general rule, cohesion expenditure is eligible for EU co-financing if actually 
paid by a beneficiary to implement operations during the eligibility period42. 
Therefore it is not necessary for the beneficiary to have received the correspond -
ing public co-financing before the Member State claims reimbursement from the 
Commission.
85 
Managing authorities must ensure that beneficiaries receive the total amount of 
the public contribution as quickly as possible and in full43, but there is no specific 
deadline in the cohesion regulatory framework for 2007-2013 regarding pay -
ments to beneficiaries. Thus at closure the Member States can seek reimburse -
ment for expenditure which has not yet been paid to the beneficiaries44.
86 
We have previously drawn attention to serious delays in the payment of the 
public contribution to beneficiaries (see Box 2 ). The Commission does not require 
Member States to report at closure, or subsequently, what part of the public 
contribution has actually been disbursed. As a result, there is a possibility that 
beneficiaries will not receive the full contribution at the appropriate time, even 
if the Commission has paid its contribution in full to the Member State. In princi -
ple, this could mean, even after closure (in 2018 or later), that beneficiaries may 
still not have received the EU contribution to their projects. We consider that late 
payments are a considerable reputational risk for the EU.42 Articles 56(1) and 78(1) of 
Regulation (EC) No 1083/2006.
43 Article 80 of Regulation (EC) 
No 1083/2006.
44 Section 5.1.1 of the Cohesion 
closure guidelines.
Delayed payment of the EU contribution to beneficiaries
In France there were serious delays in the transfer of EU funds from the national authorities to regional bodies 
acting as beneficiaries: in two cases the delay was longer than 5 months45.
Under a project in Italy to draw up a report mapping training needs in various Italian regions, the beneficiary 
submitted the cost claim to the managing authority in March 2014. The costs included in the claim were certi -
fied by the national authorities and submitted to the Commission. Although the Commission settled the costs 
declared in June 2014, the beneficiary received the interim payment only 5 months later, in November 2014.
Similar cases were found in four more projects in Italy, one in France and six in the Netherlands46.
45 Box 6(3)(a) of the ECA’s annual report for 2013 (OJ C 398, 12.11.2014).
46 Box 6(5)(a) of the ECA’s annual report for 2014.Box 2
44 Observations 
87 
Unlike in cohesion, in rural development only expenditure for which the relevant 
aid has actually been paid to the beneficiary is eligible for the EU contribution47.
88 
For the 2014-2020 period, the regulation specifies that the public contribution to 
beneficiaries must be paid within 90 days of the date on which the beneficiary 
submits a payment claim48. The regulation also features a back-up clause requir -
ing the Member State to ensure, by the date of closure, that the amount of the 
public contribution paid to beneficiaries is at least equal to the contribution 
received from the EU budget49.
Certain requirements in the cohesion guidelines go beyond 
the regulatory provisions
89 
We found that the cohesion guidelines introduced some requirements which 
went beyond the regulatory provisions. The requirements in question related to 
financial instruments, non-functioning projects, the phasing of projects and the 
residual risk rate. They are presented in Table 5 , which also indicates how they 
are addressed in rural development and whether any changes have been made 
for 2014-2020. No additional requirements were introduced by the rural develop -
ment guidelines.
90 
Around 19 % of managing authorities and 24 % of audit authorities also noted in 
their replies to the survey that some requirements in the guidelines went beyond 
the provisions in the regulations.
91 
The requirements listed in Table 5  were all introduced to address specific short -
comings. The requirements concerning non-functioning projects and the report -
ing of a residual risk rate help to mitigate the risks associated with closure. The 
clarifications related to the phasing of non-major projects are needed, but, as 
formulated, may complicate the closure exercise. We have previously reported 
on the extension of the eligibility period for financial instruments through the 
Commission’s closure guidelines50 which poses a problem of the hierarchy of 
norms. The Commission contests this view and has refused to submit a legislative 
proposal amending Regulation (EC) No 1083/2006 so as to provide legal certainty 
to the Member States51.47 Article 71(1) of Regulation (EC) 
No 1698/2005.
48 Article 132 of Regulation (EU) 
No 1303/2013.
49 Article 129 of Regulation (EU) 
No 1303/2013.
50 Paragraph 6.45 of the ECA’s 
annual report for 2015, 
paragraph 6.52 of the ECA’s 
annual report for 2014 and 
paragraph 43 of SR 
No 19/2016.
51 Commission reply to 
paragraph 6.52 of the ECA’s 
annual report for 2014, 
paragraph 6.45 of the ECA’s 
annual report for 2015 and 
paragraph 43 of Special 
Report No 19/2016 
‘Implementing the EU budget 
through financial 
instruments — lessons to be 
learnt from the 2007-2013 
programme period’( http://eca.
europa.eu ).
45 Observations Table 5Requirements in the cohesion guidelines which go beyond the regulations
Topic Description of the issue in cohesion Approach in rural developmentApproach in 2014-2020 
period
Eligibility period for 
expenditure under 
financial instruments1In our 2015 annual report we noted that Article 
56(1) of Regulation (EC) No 1083/2006 established 
31 December 2015 as final date of eligibility for 
payments. In April 2015, the Commission decided to 
extend the eligibility period until 31 March 2017. It 
did this unilaterally, through a Commission decision 
amending the closure guidelines, instead of asking 
the Council and Parliament to amend the regula -
tion. Since there is still no legislation of sufficient 
hierarchy we consider disbursements made after 
31 December  2015 to be irregular2.No change to the eligibility period, 
which remains 31 December 2015 as 
for all other expenditure.In both policy areas, the 
expenditure under financial 
instruments generally has to 
have been actually paid or, in 
the case of guarantees, com -
mitted within the eligibility 
period3.
Phasing of major 
projects4 vs. non-major 
projects.The regulation provides for the phasing of major 
projects5 (splitting them into separate stages to be 
carried out in different programme periods), but 
the guidelines6 contain further rules on phasing 
covering the financing of non-major projects over 
two programme periods (2007-2013 and 2014-
2020). The requirements governing the financing 
of projects over two programme periods are more 
complicated and restrictive in cohesion than in rural 
development.The regulation does not provide for 
the division of projects into phases. 
Unfinished projects are generally 
eligible7 (without a  requirement 
relating to the total cost of the pro -
ject) for further co-financing in the 
new period based on the transitional 
rules. The cut-off point is the date of 
payment of expenditure.As with the 2007-2013 period, 
the regulations for the 2014-
2020 period cover only the 
phasing of major projects.
1 Payments from a financial instrument to final recipients, the reimbursement of management costs and the issuance of guarantees.
2 Paragraph 6.45 of the ECA’s annual report for 2015 (OJ C 375, 13.10.2016).
3  Article 42(1) of Regulation (EU) No 1303/2013: ‘at closure of a programme, the eligible expenditure of the financial instrument shall be the total 
amount of programme contributions effectively paid or, in the case of guarantees, committed by the financial instrument within the eligibil -
ity period’. This is subject to the exceptions in Article 42(2) and (3).
4 Article 39 of Regulation (EC) No 1083/2006 defines a major project as an operation whose total cost exceeds 50 million euros.
5 Article 40(d) of Regulation (EC) No 1083/2006.
6 Sections 3.3 and 3.4 of the Cohesion closure guidelines.
7 With the exception of three discontinued measures.
46 Observations 
Topic Description of the issue in cohesion Approach in rural developmentApproach in 2014-2020 
period
Definition and 
requirements for non-
functioning projectsNo legal requirement for operations to be func -
tioning by closure, hence a risk that operations 
receiving EU co-financing may never be completed. 
This requirement is introduced in the guidelines8. 
However, as an exception and under certain condi -
tions, non-functioning projects can be co-financed. 
They have to be completed by 31 March 2019; oth -
erwise the Commission will proceed with a financial 
correction.Unfinished projects are generally 
eligible as explained above.Still no requirement for 
operations to be functioning 
at closure.
Requirement to 
calculate a residual risk 
rateThe guidelines9 expand the regulatory requirement 
of calculation of an annual error rate to a require -
ment for the audit authorities to disclose a residual 
risk rate in the closure declaration for each OP . The 
residual risk rate at closure is defined as the sum of 
the annual residual risk amounts (taking account 
of withdrawals and recoveries) divided by the sum 
of the total expenditure declared at closure. The 
audit authorities should take into consideration 
the residual risk rate when formulating their audit 
opinion at closure. While this may mean a good 
deal of additional work for some audit authori -
ties, it provides the Commission with additional 
assurance that the remaining level of error for 
a programme is below materiality at closure.The regulations do not require cer -
tification bodies to submit an audit 
opinion or a report for the whole 
period, or to calculate a residual risk 
rate for the programme at closure.The regulations do not require 
audit authorities or certifica -
tion bodies to submit an audit 
opinion or a report for the 
whole period, or to calculate 
a residual risk rate for the 
programme at closure.Table 5
8  Section 3.5 ‘Non-functioning projects’: ‘at the time of the submission of the closure documents, Member States have to ensure that all pro -
jects included in the programme closure are functioning, meaning completed and in use, so considered as eligible’.
9  Annex VI of the Cohesion closure guidelines (Guidance on preparation for the final control report and closure declaration).
Source:  ECA.
47 Observations 
Member States are satisfied with the Commission’s support, 
but coordination between national and regional authorities 
is essential
92 
The Commission should help the authorities in the Member States to prepare 
for closure by providing timely and appropriate support in the form of training 
and ongoing clarification as and when issues arise. Member States should start 
their preparations well in advance and organise closure activities nationally and 
regionally at the appropriate time.
Member States are satisfied with the Commission’s support; 
overall, they consider themselves prepared for closure
93 
Our analysis showed that the Commission had provided adequate support, in 
the form of training, conferences, seminars, meetings and Q&A documents with 
a bearing on both policy areas. All the responsible authorities had access to these 
documents and were invited to attend a series of training sessions organised by 
the Commission.
94 
Most authorities that participated in our survey, from both policy areas, found 
the Commission’s training and support to be useful and reported that their ques -
tions were answered at the appropriate time. The majority of respondents were 
also satisfied with the type of support provided by the Commission, with just one 
tenth of all authorities expressing a preference for support to be given in some 
other way.
95 
Nearly one third of respondents (29 %) found the Commission’s support for the 
2007-2013 closure exercise to be an improvement on the 2000-2006 period (see 
Figure 6 ).
48 Observations 
96 
89 % of the respondents to the survey found themselves well prepared or fairly 
well prepared for closure as early as September 2015. A majority also indicated 
that they were ready or well advanced with the preparation of internal manuals 
and procedures. 85 % of respondents considered that they would have sufficient 
time to complete their tasks properly.
Coordination between different Member State authorities is 
perceived as a risk to the thorough completion of closure tasks
97 
In order to ensure the effectiveness and efficiency of closure, it is vital to set up 
an effective coordination process among the different authorities in a Member 
State. All authorities should have sufficient time to perform their closure tasks 
satisfactorily. Figure 6Member States’ view on the Commission’s support for the 2007-2013 closure exercise 
compared with 2000-20061
1  The replies of Bulgarian, Romanian and Croatian authorities have been excluded as they did not participate in the closure of the 2000-2006 
period.
Source:  ECA survey.
1 %
43 %27 %29 %
Not applicable or no opinion As before 
WorseBetter
49 Observations 
98 
The survey showed that 44 % of authorities with responsibilities in rural develop -
ment and 56 % of authorities in cohesion considered that coordination with other 
authorities posed a moderate or high risk to closure.
99 
Audit authorities and certification bodies in particular raised concerns as to 
whether the timetable agreed at national level would give them sufficient time 
to carry out their work satisfactorily. Appropriate agreed deadlines are of greater 
concern to these authorities than to managing authorities and paying agencies, 
as their tasks are carried out last.
100  
In cohesion, where the rules make certain types of expenditure eligible until the 
deadline for the submission of documents on 31 March 2017 (see paragraphs 106 
to 113) the closure process may leave insufficient time for the audit authorities to 
check final statements of expenditure. This is perceived as a particularly high risk.
101  
Especially for programmes which have not spent the full EU contribution, the 
timetable at Member State level might include a late deadline for the manag -
ing authority to submit final expenditure to the audit authority. Sometimes the 
agreed submission date is at the end of 2016, which increases the burden on the 
audit authority and can result in a limitation of scope in the audit opinion that 
needs to be issued by 31 March 2017. For such cases the Commission can either 
request the audit authority to carry out additional verifications of this expendi -
ture, which de facto means giving supplementary time to the audit authorities 
and prolonging the closure exercise, or impose financial corrections. It is unclear 
how such a limitation of scope will be considered for the calculation of the re -
sidual risk rate.
102  
Box 3  gives an example of a ‘good practice’ in the form of a timetable agreed by 
the various authorities.
50 Observations 
103  
Some respondents considered that the Commission should have set binding 
deadlines for all the authorities concerned. However, for the 2014-2020 period, 
timetabling the work of the various national and regional authorities remains the 
responsibility of the Member States.
The Commission needs to remain vigilant to guarantee the 
robustness of the 2007-2013 closure exercise
104  
Appropriate design and preparation are essential, but not sufficient, elements to 
ensure an effective and timely closure of cohesion and rural development pro -
grammes. This will mainly depend on the way the closure process is implemented 
in practice on the ground, on the quality of the closure documents submitted by 
the Member States and on the consistent and thorough examination by the Com -
mission within the deadlines set out in the regulations.A binding timetable agreed in a German region
In the German region of Schleswig-Holstein, the managing, certifying and audit authorities agreed on a time -
table which was binding for all three. The aim was to provide sufficient time for each authority to carry out its 
work.
Task Responsible authority Deadline
Submission of last interim payment claim to Commission MA, CA 29.4.2016
Finalisation of audits of operations AA 31.8.2016
Preparation of final payment claim MA, CA 30.11.2016
Final implementation report MA 30.11.2016
Audit of closure documents AA 31.1.2017
Approval by monitoring committee MA 20.2.2017
Submission of closure package to Commission MA, CA, AA 1.3.2017Box 3
51 Observations 
105  
In a previous audit of the initial phase of the 2000-2006 closure in the area of 
cohesion, we found that it was only partially effective because, in order to avoid 
financial corrections at closure, Member States had submitted declarations 
containing unjustified reductions in final error rates52. Despite improvements in 
the control framework, this risk is also present for the closure of the 2007-2013 
programme period. Moreover, we identified a number of risks that need to be 
particularly addressed during the 2007-2013 closure exercise.
Specific risks to the regularity of expenditure remain in relation to 
financial instruments, contractual advances and some state aid-
relevant major projects
A risk that the eligibility of expenditure under financial instruments will not 
be adequately verified at closure
106  
Financial instruments are a funding mechanism under the EU budget which may 
take the form of loans, guarantees or equity (or quasi-equity) investments. They 
are used both in cohesion and rural development.
107  
When a financial instrument was set up in the 2007-2013 period, an advance 
amount was paid to the instrument and the Commission reimbursed the EU 
contribution53 to the Member State. However, the eligible expenditure for finan -
cial instruments can be determined only at closure and comprises the actual 
amounts of loans, guarantees and equity investments provided to final recipients 
as well as eligible management costs and fees54. As audit authorities and certi -
fication bodies were not required to audit this expenditure during the period, 
there is a risk that this expenditure will not be checked adequately for eligibility. 
Allowing financial instruments in cohesion to provide financial support to final 
recipients until 31 March 2017 (see Table 5 ) further restricts the audit authori -
ties’ ability to obtain assurance that the expenditure is legal and regular (see also 
paragraph 100).
108  
For the 2014-2020 period, public contributions to a financial instrument are to be 
paid in tranches. The payment of a given tranche is conditional on the actual use 
of a certain percentage of the previous tranche55, with the audit authorities and 
certification bodies required to verify that use. However, the amount of eligible 
expenditure is still determined only at closure56. Taken together, these measures 
reduce the risk of the EU budget co-financing irregular expenditure.52 Paragraph 5.61 of the ECA’s 
annual report for 2011 (OJ 
C 344, 12.11.2012).
53 Article 56(2) of Regulation (EC) 
No 1083/2006 and Article 52 of 
Regulation (EC) No 1974/2006.
54 Article 78(6) of Regulation (EC) 
No 1083/2006 and Article 52(1) 
of Regulation (EC) No 
1974/2006.
55 Article 41(1) of Regulation (EU) 
No 1303/2013.
56 Article 42 of Regulation (EU) 
No 1303/2013.
52 Observations 
The arrangements for contractual advances in cohesion: a challenge for the 
verification of eligibility
109  
Contractual advances are payments on account relating to the execution of 
works or services in accordance with normal commercial law and practice on the 
basis of contracts entered into by a final beneficiary or final recipient.
110  
The Commission considers contractual advances paid by a beneficiary up to 
31 December 2015 as eligible expenditure as long as they are converted into 
actual expenditure before 31 March 2017. This payment has to be compliant with 
national rules and contractual obligations.
111 
The declaration of contractual advances, especially where these represent a high 
percentage of the contract value, introduces a significant risk that there will be 
ineligible expenditure at closure. To minimise this risk, it is necessary to exam -
ine very carefully whether high advance payments were made in accordance 
with commercial law and practice. The freedom to convert advances into actual 
expenditure at any time until 31 March 2017 also means that the audit authorities 
will often be unable to verify such expenditure and thus provide assurance as to 
its eligibility (see also paragraph 100).
112  
In view of the considerable risk associated with the declaration of contractual 
advances at closure, several Member States (for example Bulgaria, Denmark, Esto -
nia) have decided not to include them in their final payment claims.
113  
We note that the Commission also identified the eligibility of expenditure related 
to financial instruments and contractual advances as a risky area and in Septem -
ber 2016 provided further guidance on those issues to the audit authorities57.57 In presentations at the 
Homologue group meeting of 
the Commission and the audit 
authorities which took place in 
September 2016 in Budapest.
53 Observations 
Major projects approved before the end of 2012: a higher risk of non-
compliance with state aid rules
114  
Of the 918 major projects approved by the Commission for the 2007-2013 pro -
gramme period, decisions on 440 were adopted before the end of 2012. The 
Directorate-General for Competition did not systematically verify whether 
investments in public infrastructure concerned by these projects might involve 
state aid. In November 2012, the Commission issued a guidance note to Member 
States, stating that it did ‘not intend to examine systematically compliance with 
the State aid rules of major infrastructure projects covered by this note which 
have already been subject of a decision […] before the date of this note’58. In 
principle, it is thus possible for a Member State to have received a Commission 
decision approving a major project while being in breach of state aid rules59.
115  
Moreover, prior to 2012 and the clarifications provided by the European Court of 
Justice in a judgment on a state aid case (the Leipzig Halle  judgment), Member 
States rarely notified the Commission about investments in infrastructure60.58 European Commission; 
Guidance Note No 12-0059-01 
‘Verification of compliance 
with state aid rules in 
infrastructure cases’, 
21 November  2012.
59 Paragraph 71 of Special Report 
No 24/2016 ‘More efforts 
needed to raise awareness of 
and enforce compliance with 
State aid rules in cohesion 
policy’ ( http://eca.europa.eu ).
60 Paragraph 121 of Special 
Report No 24/2016.
54
 Conclusions and 
recommendations
The rules for closure have improved but further steps are 
needed to make it more efficient and timely
The closure arrangements in cohesion and rural development 
need to be still further aligned for the post-2020 period
116  
The concept of closure has evolved over the last three programme periods, in line 
with improvements to the management and control systems in both cohes-  
ion and rural development. Increasingly, assurance has been provided at regular 
intervals throughout the programme period, resulting in a reduced focus at the 
end of the period and limiting the work that needs to be carried out specifically 
at closure.
117  
In the 2000-2006 period, the closure arrangements were the same for both 
cohesion and for the investment-related measures under rural development 
and the two policy areas applied common guidelines. Expenditure was declared 
cumulatively and only accepted by the Commission at closure. The 2007-2013 
period placed more weight on annual assurance, but otherwise the two policy 
areas diverged, with the introduction of the annual acceptance of expenditure 
for the investment-related measures under rural development. For cohesion, the 
legality and regularity of expenditure was checked by the audit authorities and 
the Commission on an annual basis. Moreover, whenever necessary, the Commis -
sion could interrupt and suspend payments. However, expenditure continued 
to be declared cumulatively and is formally accepted by the Commission only at 
closure.
118  
For the 2014-2020 period, EU spending on both cohesion and rural development 
comes from the European Structural and Investment Funds (ESIFs). We welcome 
the alignment of assurance and closure arrangements between the policy areas, 
which has resulted from this change. The increased focus on providing assurance 
during the period and reducing the number of tasks specific to closure is a posi -
tive development, as it could also reduce the associated risks and could lead 
to a shorter closure process. Notwithstanding efforts to streamline procedures 
through the common provisions regulation, differences remain in the closure ar -
rangements between the two policy areas (see paragraphs 21 to 29).
55 Conclusions and recommendations 
Recommendation 1
In its legislative proposals for the post-2020 period the Commission should pro -
pose further alignment of the regulatory provisions for closure between cohesion 
and for the investment-related measures under rural development, aiming to 
achieve a harmonised annual assurance process in both areas.
Specifically, this alignment should aim for convergence in the terminology and 
roles of the Member State authorities active in the two policy areas, legality and 
regularity in the annual acceptance exercise and a standard accounting year.
Target implementation date: when preparing the post-2020 legislative 
proposals.
Closure, as defined in the regulations, does not yet encompass 
the Commission’s final acceptance of the legality and regularity of 
expenditure and the programmes’ results
Differences in expectations regarding the purpose and consequences of 
closure
119  
There is no definition of closure in the respective regulations for cohesion and 
rural development. The Commission has set out the modalities and practical con -
siderations in several guidance documents which were also discussed with the 
Member States. In cohesion, we found that the Commission and Member States 
have a similar view of the purpose of closure, both interpreting it more broadly 
than its definition in the regulations of providing only financial clearance. In rural 
development, however, the Member States’ understanding of closure is some -
what different from that of the Commission.
120  
In both areas, and in particular in that of rural development, there is an expecta -
tion gap owing to the Member States’ understanding that closure provides legal 
certainty as to the legality and regularity of the expenditure accepted by the 
Commission. Strictly speaking, however, this is not the case (see paragraphs 30 to 
33).
56 Conclusions and recommendations 
In the 2007-2013 period, final acceptance of programme expenditure for 
the period as legal and regular is only done for cohesion
121  
The 2007-2013 closure procedure for cohesion takes account of the results of all 
EU and national checks and audits of programme activities. Closure can therefore 
be seen as demonstrating acceptance that the expenditure for the period was le -
gal and regular. DG REGIO and DG EMPL may also carry out additional checks that 
can lead to financial corrections up to 3 years after closure, although in practice 
this only happens in exceptional cases. In contrast, in the area of rural develop -
ment conformity audits are still ongoing at closure, which is therefore purely 
a financial transaction with no acceptance of the expenditure as legal and regu -
lar. The Commission does not issue final acceptance of the expenditure as legal 
and regular, either annually or for the period as a whole. This situation remains 
unchanged for the 2014-2020 period (see paragraphs 39 to 45).
The Commission should inform the budgetary authority about the final 
outcome of the closure procedure
122  
Reporting on the outcome of public spending is a key accountability tool. The 
Commission reports to the budgetary authority through the Annual Activity 
Report of respective directorates-general on the basis of the annual state of play, 
but there is no specific report envisaged on the final outcome of closure for the 
programme period as a whole. This situation remains unchanged for the 2014-
2020 period.
123  
In the EU’s budget system, which is built on multiannual programming, we con -
sider that programme closure should entail a final acceptance by the Commission 
that the expenditure for the programme period as a whole was legal and regu -
lar, account being taken of the results of all EU and national checks and audits, 
together with a report on programme implementation and results. Information 
on these most relevant performance and compliance aspects should then also be 
reported to the budgetary authority. Such arrangements should be considered 
when preparing the legislative proposal for the post-2020 period (see paragraphs 
53 to 55).
57 Conclusions and recommendations 
A residual risk rate should be calculated to assess the legality and 
regularity of expenditure in the course of programme implementation and 
at closure
124  
We consider that the calculation of a residual risk rate for each cohesion pro -
gramme is an appropriate and useful measure which can provide assurance that 
the remaining error at closure does not exceed the materiality level.
125  
In rural development, however, we found that the current procedures do not en -
sure either through the annual or final clearance of accounts or after finalisation 
of the conformity audits that the residual error at programme level is below the 
Commission’s 2 % materiality threshold. The Commission does not calculate a re -
sidual risk rate at programme level taking into account the financial corrections 
resulting from conformity audits and thus there is no assurance that the remain -
ing error for a programme does not exceed the materiality level (see paragraphs 
34 to 38).
Closure should include an evaluation of programme performance and the 
achievement of outputs and results
126  
There was little emphasis on the achievement of outputs and results in the 
regulatory framework and design for the closure of the 2007-2013 period. Mem -
ber State authorities are required to report on the achievement of programme 
targets, but this information is usually not verified by audit authorities or certifi -
cation bodies. While the Commission is required to evaluate this reporting, the 
payment of a final balance is not directly linked to the achievement of targets.
127  
We welcome the increased focus on performance in the regulatory framework for 
the 2014-2020 period. One of the main changes is the re-introduction of a per -
formance reserve aiming to create a link between payments and achievement of 
outputs and results. It remains to be seen how the performance reserve will be 
applied in practice during the 2014-2020 period (see paragraphs 46 to 52).
58 Conclusions and recommendations 
Recommendation 2
In its legislative proposals for the post-2020 period, the Commission should 
introduce in the legislative proposals a final acceptance concerning the legality 
and regularity of programme expenditure and the outputs and results achieved 
at programme closure. In this connection, in both policy areas the Commission 
should:
- lay down procedures for calculating a residual risk rate at programme level 
after implementation of all financial corrections, and ensure that the rate 
does not exceed the materiality threshold at closure; and
- assess whether programme targets have been achieved and, if necessary, 
impose financial corrections for underperformance.
Target implementation date: when preparing the post-2020 legislative 
proposals.
Recommendation 3
In its legislative proposals for the post-2020 period, the Commission should speci -
fy how it will inform the budgetary authority about the outcome of the closure 
procedure once the Commission has issued its final acceptance.
Target implementation date: when preparing the post-2020 legislative 
proposals.
There should be no overlap of eligibility periods and closure should take 
place as soon as possible after the end of the eligibility period
128  
For the 2000-2006 and 2007-2013 periods the Member States had two additional 
years after the end of the period in which to spend the money allocated to them. 
For the 2014-2020 programme period, this has been extended to 3 years in addi -
tion to the original programme period of 7 years. As a result, the eligibility period 
will end in 2023, a full 10 years after the adoption of the legislative framework by 
the European Parliament and the Council (in late 2013). This will be followed by 
the closure which adds, for cohesion, at least another 2 years.
59 Conclusions and recommendations 
129  
Closure will always overlap with the subsequent period. We consider that the 
availability of human resources is a key challenge for the effective closure of 
programmes. This is why the time during which programmes of two programme 
periods are implemented simultaneously needs to be as short as possible to 
reduce the overall administrative burden. Moreover, the possibility to spend the 
programme budget after the end of a programme period creates a disincentive 
to start the programmes of the next period.
130  
We therefore consider that there should be no overlap of eligibility periods and 
the end of the eligibility period should coincide, as far as possible, with the be -
ginning of the subsequent programme period. This would increase the pressure 
on the Member States to spend EU funds in a timely and meaningful manner and 
would ensure a prompt start of the subsequent programme period. Simplified 
rules on phasing, particularly in the cohesion area, could alleviate the transition 
between the programme periods.
131  
In addition, the annual acceptance of the accounts is a feature of both policy 
areas for the 2014-2020 period, and as a result closure activities, in particular in 
cohesion, should be less onerous than in the past. However, we found that the 
time given Member State authorities for the preparation and submission of clo -
sure documents is still different in the two policy areas: 13.5 months for cohesion 
and 6 months for the rural development policy area (see paragraphs 58 to 68).
Recommendation 4
In its legislative proposals for the post-2020 period, the Commission should 
ensure that eligibility periods no longer overlap with the subsequent programme 
period and that the closure procedure is finalised promptly after the end of the 
eligibility period. Specifically, in both policy areas:
- the overlap of eligibility periods should be discontinued and the end of the 
eligibility period should coincide, as far a possible, with the beginning of the 
subsequent programme period;
- Member States should be required to submit all closure documents no later 
than 6 months after the final eligibility date; and
- the Commission should reduce the time needed for its decision on accept -
ance of the final implementation report and the last annual accounts, in -
cluding calculation of the final balance. A maximum of 6 months (12 months 
counted from the final eligibility date) should be sufficient.
Target implementation date: when preparing the post-2020 legislative 
proposals.
60 Conclusions and recommendations 
The Commission provided adequate and timely support to 
help Member States prepare for the closure of 2007-2013 
programmes, but needs to remain vigilant to ensure a robust 
implementation by the Member States
132  
Overall, we found that the closure guidelines helped Member States with their 
understanding and organisation of closure: in both policy areas they summarise 
the key requirements and deadlines to be found in a number of different regula -
tions and provide additional explanation where necessary. The Commission also 
delivered training on closure and support which generally addressed Member 
States’ needs at the appropriate time. The Member States generally consider 
themselves prepared for the closure exercise, and the Commission is finalising 
the necessary internal procedures.
Certain risks remain in respect of the 2007-2013 closure
133  
We identified certain risks that need to be particularly addressed during the 
2007-2013 closure exercise. For example, certain deadlines relating to closure are 
either not defined at all or only defined in the guidelines. This could contribute 
to an overly long closure process. Moreover, if payments to beneficiaries are 
delayed by a Member State, this could also lead to a reputational risk for the EU. 
Finally, as of mid-November 2016, major project applications corresponding to an 
EU contribution of 854 million euros had not yet been approved by the Commis -
sion (see paragraphs 70 to 88 and 93 to 96).
Recommendation 5
Member State managing authorities should ensure that all beneficiaries receive 
the full EU contribution to their ERDF, CF and ESF projects on time. The deadline 
set for the 2014-2020 programme period of 90 calendar days from the date of 
submission of a payment claim is appropriate in this regard.
Target implementation date: March 2017.
61 Conclusions and recommendations 
Recommendation 6
The Commission should adopt major project decisions still pending for the 2007-
2013 period promptly. For the 2014-2020 period, DG REGIO should formulate 
internal procedures to guarantee that major project decisions are taken quickly, 
in line with the regulatory deadline of 3 months.
Target implementation date: January 2017.
The Commission’s closure guidelines go beyond the regulatory 
provisions
134  
We found that the Commission’s closure guidelines for cohesion sometimes go 
beyond the requirements in the regulations. We have previously reported on the 
most serious such issue in relation to the extension of the eligibility period for 
financial instruments61. There are, however, a few other areas in which this is also 
the case.
135  
Some of these requirements, namely the requirement concerning function -
ing projects and the reporting of a residual risk rate, help to mitigate the risks 
associated with closure. Others, such as the phasing of non-major projects, are 
necessary but, as currently formulated, may complicate the closure exercise (see 
paragraphs 89 to 91).
The Commission needs to remain vigilant to guarantee the 
robustness of the 2007-2013 closure exercise
136  
Appropriate design and preparation are essential, but not sufficient, elements 
to ensure the effective and timely closure of cohesion and rural development 
programmes. Just as important are the way the closure process is implemented 
in practice, the quality of the closure documents submitted by Member States 
and the Commission’s examination of them in a consistent and thorough manner 
within the deadlines set in the regulations.61 Paragraph 6.45 of the ECA’s 
annual report for 2015, 
paragraph 6.52 of the ECA’s 
annual report for 2014 and 
paragraph 43 of SR 
No 19/2016.
62 Conclusions and recommendations 
137  
We found that coordination between different authorities in a Member State, 
including the careful timetabling of their work is crucial to the success of the 
closure exercise. Deadlines need to be agreed to allow sufficient time for audit 
authorities and certification bodies to provide sufficient assurance as to the eli -
gibility of all expenditure declared at closure. Furthermore it remains to be seen 
whether the deadlines agreed at national and regional level will be respected.
138  
In a previous audit of the initial phase of the 2000-2006 closure in the area of 
cohesion, we found that it was only partially effective because, in order to avoid 
financial corrections at closure, Member States had submitted declarations con -
taining unjustified reductions in final error rates. Despite improvements in the 
control framework, we consider that this risk is also present for the closure of the 
2007-2013 programme period.
139  
We have also observed in a previous report that the Commission, particularly at 
the beginning of the 2007-2013 programme period, did not systematically verify 
major projects for their compliance with state aid requirements 62. As a result, 
there is a risk that some EU co-financed major projects are incompatible with the 
internal market, also due to the fact that, prior to 2012, Member States rarely noti -
fied the Commission about investments in infrastructure.
140  
We recommended that the Commission ask audit authorities to check the state 
aid compliance of major projects approved before the end of 201263. The Com -
mission did not accept this recommendation, and we therefore consider that 
compliance with the state aid rules remains a risk for the closure of major pro -
jects approved before the end of 2012.
141  
We also consider that, in relation to financial instruments and contractual ad -
vances in particular, there is a remaining risk of ineligible expenditure being 
declared at closure (see paragraphs 97 to 115).62 Paragraph 71 of Special Report 
No 24/2016.
63 Recommendation 4(b) of 
Special Report No 24/2016.
63 Conclusions and recommendations 
Recommendation 7
At closure the Commission should ensure that Member States implement spe -
cific procedures to verify, in particular, the eligibility of expenditure relating to 
financial instruments and contractual advances. If audit authorities and certifica -
tion bodies are unable to provide sufficient assurance as to the eligibility of such 
expenditure, additional audit procedures may be necessary.
Target implementation date: March 2017.
This report was adopted by Chamber II, headed by Mrs Iliana IVANOVA, Member 
of the Court of Auditors, in Luxembourg at its meeting of 14 December 2016.
 For the Court of Auditors
 Klaus-Heiner LEHNE
 President
64
 Annexes
Legal basis for the closure of 2007-2013 programmes
The closure arrangements for 2007-2013 cohesion operational programmes are defined in:
 Ø Council Regulation (EC) No 1083/2006 of 11 July 2006 laying down general provisions on the European Regional 
Development Fund, the European Social Fund and the Cohesion Fund; and
 Ø Commission Regulation (EC) No 1828/2006 of 8 December 2006 setting out rules for the implementation of Council 
Regulation (EC) No 1083/2006 and of Regulation (EC) No 1080/2006 of the European Parliament and of the Council 
on the European Regional Development Fund.
The closure arrangements for 2007-2013 rural development programmes are given in:
 Ø European Parliament and Council Regulation (EU) No 1306/2013 of 17  December  2013 on the financing, manage -
ment and monitoring of the common agricultural policy and repealing Council Regulations (EEC) No 352/78, (EC) 
No 165/94, (EC) No 2799/98, (EC) No 814/2000, (EC) No 1290/2005 and (EC) No 485/2008;
 Ø Commission delegated regulation (EU) No 907/2014 of 11 March 2014 supplementing Regulation (EU) No 
1306/2013 of the European Parliament and of the Council with regard to paying agencies and other bodies, fi -
nancial management, clearance of accounts, securities and use of euro;
 Ø Commission implementing regulation (EU) No 908/2014 of 6 August 2014 laying down rules for the application of 
Regulation (EU) No 1306/2013 of the European Parliament and of the Council with regard to paying agencies and 
other bodies, financial management, clearance of accounts, rules on checks, securities and transparency;
 Ø European Parliament and Council Regulation (EU) No 1310/2013 of 17 December 2013 laying down certain tran -
sitional provisions on support for rural development by the European Agricultural Fund for Rural Development 
(EAFRD), amending Regulation (EU) No 1305/2013 of the European Parliament and of the Council as regards re -
sources and their distribution in respect of the year 2014 and amending Council Regulation (EC) No 73/2009 and 
Regulations (EU) No 1307/2013, (EU) No 1306/2013 and (EU) No 1308/2013 of the European Parliament and of the 
Council as regards their application in the year 2014;
 Ø Commission delegated regulation (EU) No 807/2014 of 11 March 2014 supplementing Regulation (EU) No 
1305/2013 of the European Parliament and of the Council on support for rural development by the European 
Agricultural Fund for Rural Development (EAFRD) and introducing transitional provisions;
 Ø Council regulation (EC) No 1698/2005 of 20 September 2005 on support for rural development by the European 
Agricultural Fund for Rural Development (EAFRD); Commission regulation (EC) No 1974/2006 of 15 December 2006 
laying down detailed rules for the application of Council Regulation (EC) No 1698/2005 on support for rural devel -
opment by the European Agricultural Fund for Rural Development (EAFRD); and
 Ø Commission regulation (EU) No 65/2011 of 27 January 2011 laying down detailed rules for the implementation 
of Council Regulation (EC) No 1698/2005, as regards the implementation of control procedures as well as cross-
compliance in respect of rural development support measures.Annex I
65 Annexes 
Management and control of 2007-2013 programmes at Member State level
In both cohesion and rural development, three types of authority are responsible in the Member States for the 
management and control of OPs/RDPs. These bodies work together, under Commission supervision and respon -
sibility1, to ensure the legality and regularity of:
Cohesion Rural development
(i) Managing authorities (MA)  are responsible for planning and implement -
ing an OP , including the selection of individual operations and programme 
evaluation. They also carry out first-level checks of operations and expendi -
ture. They submit annual implementation reports which have to be accepted 
by the Commission2.(i) Managing authorities (MA)  are responsible for planning, 
implementation, delivery and evaluation of an RDP . They submit 
annual progress reports on the implementation of the RDP to 
the Commission.
(ii) Certifying authorities (CA)  certify the legality and regularity of the ex -
penditure declared and submit interim payment claims to the Commission3.(ii) Paying agencies (PA)  are responsible for the management and 
control of expenditure. They should have a system of internal 
control which provides sufficient guarantees that payments are 
legal and regular. They submit quarterly payment claims to the 
Commission and prepare annual accounts.
(iii) Audit authorities (AA)  must be independent from the managing authority 
and certifying authority. They provide assurance to the Commission on the 
effective functioning of the management systems and internal controls for 
an OP and the legality and regularity of the expenditure certified by the 
certifying authorities. They are required to submit annual control reports to 
the Commission4, as well as an annual audit opinion covering the functioning 
of the systems and giving an estimated annual error rate; these have to be 
verified and accepted by the Commission5.(iii) Certification bodies (CB)  provide assurance to the Commis -
sion regarding the completeness, accuracy and veracity of the 
paying agency’s annual accounts and the proper functioning of 
its internal control system. They must be independent from the 
paying agency.
Since 2015, certification bodies have also to provide assurance 
on the legality and regularity of the expenditure for which 
reimbursement has been requested from the Commission.
1 Article 317 of the Treaty on the Functioning of the European Union.
2 Articles 67(1) and 67(3) of Regulation (EC) No 1083/2006. 
3 Article 61 of Regulation (EC) No 1083/2006.
4 Article 62(1)(d) of Regulation (EC) No 1083/2006.
5 Article 72(1) of Regulation (EC) No 1083/2006.
 
Source:  ECA.Annex II
66 Annexes 
Evolution of the Commission’s assurance framework and closure arrangements over 
three periods
(a) CohesionAnnex III
Commission: Audits on legality and regularityCohesion 2000-2006
Commission:
Possible audits
with net /f_inancial 
correctionsCommission: 
Acceptance of /f_inal implementationreport and winding-updeclaration, paymentof the /f_inal balanceMA: Final implementation report
PA: Certi/f_ied statement of 
/f_inal expenditureWuB : Declaration on 
winding-up of the assistance
(providing assurance for the whole periodMA: Annual implementation report
3 years 15 months 2 years01/2000 12/2006 ??? 03/2010 12/2008
Programming
period 7 yearsMultiannual assuranceCommission: Acceptance of  annual implementation reportPayment of the ﬁnal balance Submission of closure documents Final eligibility date End of programming period
Closure Annual monitoring and evaluation
Cohesion 2007-2013
Commission goal: 1 yearAA: Annual control report
and opinionCommission: Acceptance of annual control reportAnnual assurance
Commission:
Possible audits
with net /f_inancial 
correctionsCommission: Acceptance of /f_inal implementation report and closuredeclaration, paymentof the /f_inal balanceMA: Final implementation report
CA: Application for payment 
of the /f_inal balanceAA: Closure declarationMA: Annual 
implementation report
3 years 15 months 2 years01/2007 12/2013 ??? 03/2017 12/2015
Programming
period 7 yearsCommission: Audits on legality and regularityMultiannual assuranceCommission: Acceptance 
of annual implementation reportPayment of the ﬁnal balance Submission of closure documents Final eligibility date End of programming period
ClosureAnnual monitoring and evaluation
67 Annexes Annex III
Commission: Acceptance 
of annual implementation reportMA: Annual implementation reportCohesion 2014-2020
MA: Management declarationand annual summary of controls and auditsCA: Certi/f_ied accountsAA: Annual control reportand opinion on accountsCommission: Acceptance of annual accounts, calculation of the balanceAnnual assurance packageCommission: 
Acceptance of /f_inal implementation report and last annual accounts, calculation of the balance of the last yearAdditionally to annual assurance package:
MA: 
Final implementation report
3 years 13,5 months 3 years01/2014 12/2020 ??? 15/02/2025 12/2023
Programming
period 7 yearsCommission: Conformity audits with possible net /f_inancial correctionsMultiannual assurancePayment of the ﬁnal balance Submission of closure documents Final eligibility date End of programming period
Closure Annual monitoring and evaluation
68 Annexes 
(b) Rural developmentAnnex III
Commission: 
Acceptance of implementation reportMA: Annual progress report on implementation 
01/2018
2 yearsRD 2007-2013
Commission goal: 1 yearPA: Annual accounts, 
management declaration, annual summary of audits and controls
CB: Opinion and report on annual 
accountsCommission: Acceptance of the annual accounts, settlement of the balanceAnnual ﬁnancial clearanceCommission: Acceptance of /f_inal implementation report and last annualaccounts, calculation of
/f_inal balance
MA: Implementation 
report for last year
PA: Account for last 
execution yearCB: Opinion on the 
accounts of the last execution year
6 months 2 years01/2007 12/2013 06/2016 12/2015
Programming
period 7 yearsCommission: Conformity audits on legality and regularity with possible net /f_inancial correctionsMulti-annual conformity clearancePayment of the 
ﬁnal balance (expected)Submission of 
closure documentsFinal eligibility date End of programming period
Closure Annual monitoring and evaluation
Closure took on average 20 monthsRD 2000-2006
Commission:
Possible audits
with net /f_inancial 
correctionsCommission: 
Acceptance of /f_inal implementationreport and winding-updeclaration (for full period, calculation of the /f_inal balanceMA: Annual implementation report
PA: Certi/f_ied statement of 
/f_inal expenditureWuB : Declaration on 
winding-up of the assistance
(providing assurance for the whole period)MA: Annual implementation report
3 years 15 months 2 years01/2000 12/2006 ??? 03/2010 12/2008
Programming
period 7 yearsCommission: Audits on legality and regularityMultiannual assuranceCommission: 
Acceptance of annual implementation reportPayment of the ﬁnal balance Submission of closure documents Final eligibility date End of programming period
Closure Annual monitoring and evaluation
69 Annexes 
Source:  ECA.Annex III
PA: Management declaration, annual 
summary of controls and audits
CB: Opinion and report on annual 
accounts (including legality and regularity)Commission: Acceptance of annual implementation reportMA: Annual implementation report  
01/2026
2 yearsRD 2014-2020
Commission: Acceptanceof the annual accounts, calculation of the balanceAnnual ﬁnancial clearanceCommission: Acceptance of /f_inal implementation report and last annual accounts, calculation of balance of the last 
yearNo additional 
documents required
6 months 3 years01/2014 12/2020 30/06/2024 12/2023
Programming
period 7 yearsCommission: Conformity audits on legality and regularity with possible net /f_inancial correctionsMulti-annual conformity clearancePayment of the 
ﬁnal balance Submission of 
closure documentsFinal eligibility date End of programming period
Closure Annual monitoring and evaluation
70 Annexes 
Overview of the main issues in need of further clarification for the 2007-2013  
closure — survey/interview responses by Member State authorities1
Issues Cohesion Rural development
Calculation of residual error rate and consequences if it is above the materiality 
threshold (2 %)X X
Definition and treatment of anomalous errors X X
Financial instruments X X
Reporting on programme performance and potential consequences of failing to 
achieve targetsX X
Operations suspended due to legal or administrative proceedings X X
Further practical examples X
Non-functioning projects X
Revenue generating projects X
Reporting and taking account of withdrawals, recoveries and pending recoveries X
Transitional rules X
1 This list contains only issues that were reported as unclear or rather unclear by more than 15 % authorities.
Source:  ECA survey and interviews with Member State authorities.Annex IV
71 Reply of the Commission
Executive summary
II
The Commission is working with the Member States to address the causes of irregular spending. 
For cohesion policy the Court’s audits since 2009 have shown that the level of error for the 2007-2013 programming 
period is significantly lower than for the 2000-2006 programming period.
For rural development the error rate has also been decreasing over the last 3 years.
VI
In rural development the legality and regularity of EAFRD spending is ensured through the conformity clearance 
procedure, independently from the closure. If through the conformity clearance procedure enquiry deficiencies 
are identified in the management and control of the expenditure, the Commission applies financial corrections for 
expenditure effected for up to 24 months prior to notification by the Commission, in accordance with Article 52 of 
Regulation (EU) No 1306/2013.
Every year the Annual Activity Report of DG AGRI discloses both the estimated error rates of the transactions 
between Member States and the beneficiaries and the corrective capacity of the ex post  controls and procedures 
leading to recoveries from beneficiaries and net financial corrections. Comparing the two enables the Commission 
to conclude on the annual residual risk to the EU budget after all controls and corrections are taken into account.
The Commission maintains the view expressed in the 2015 Annual Activity Report of DG AGRI. Indeed, for the rural 
development policy, the need to ensure the legality and regularity must be balanced against the ambitious policy 
objectives, which sometimes led to a complex design of measures. The situation remains under close scrutiny and 
the Commission is committed to assist the Member States in combatting the root causes of errors.
VII
The Commission considers that the aligned yearly assurance on the accounts improves legality and regularity of 
payments and will contribute to swiftly closing the 2014-2020 programmes. 
VIII
The legal framework in place for cohesion policy 2007-2013 does not allow for conditioning payments on results 
or achievements. The closure guidelines require systematic reporting on indicators by priority axis where achieve -
ments diverge by more than 25 % from targets including a justification on why targets were not met and why cor -
rective actions were not taken. 
The Member States should provide explanations and justifications on the divergences on the achievement of the 
indicators. A financial correction could be decided on a case-by-case basis whereby divergences would disclose 
cases referred to in Article 99 of the general regulation (irregularities, serious deficiencies of management and con -
trol systems). 
The outputs and results oriented approach has been more extensively introduced in the period 2014-2020 for both 
policy areas.
Reply of the Commission 72
IX
The Commission is bound by the legal framework in place and decided by the legislator. 
An overlap between two periods is considered necessary given that many operations take several years to be imple -
mented and that there will always be a start-up phase and wrapping up phase for any programming period. 
The issue related to a final closure generating a high intensity of administrative work for authorities at the time they 
should focus on the start-up of new programmes has been already addressed in the 2014-2020 regulation through 
annual acceptance of accounts (see Commission reply to VII above).
In addition, the Commission has encouraged Member States to increase capacities related to closure and use alloca -
tions of technical assistance for 2007-2013 or 2014-2020 for this purpose.
The closure process started with preparation before the end of the eligibility period and has been in full swing 
immediately when the eligibility period ended. Indeed, Member States were given two extra years (3 years in the 
case of 2014-2020 programmes) to implement their programmes. 
The Commission considers that this allows better management and implementation of the programmes, lowers the 
pressure and workload on authorities involved and enables better transition between periods.
X
The Commission informs the budgetary authority about the progress of the closure process (regularity of expendi -
ture and outputs and results achieved) in the Annual Activity Report of directorates-general concerned. 
In addition, in 2013, DG REGIO and DG EMPL presented a report on closure and the overall level of financial correc -
tions at closure for 2000-2006 programmes for the attention of the discharge authority. 
Moreover, all financial clearance decisions on EAFRD are published in the Official Journal.
XI — First indent
The Commission does not accept this recommendation.
The Commission is not in a position at this stage to make any specific commitment in relation to legislative propos -
als for the post-2020 period.
A significant effort was already made to harmonise rules for the ESI Funds for the 2014-2020 period, both for the 
annual accounting years and at closure. The Commission will seek to further harmonise regulatory provisions 
between the funds, including on terminology, assurance and closure processes, whenever it enables improvement 
in the management of EU funds and it contributes to a simpler and more effective implementation in Member 
States and regions.
The Commission considers that alignment of arrangements in rural development and cohesion must not undermine 
the consistency of implementation of the CAP . The importance of preserving the synergies achieved between the 
two pillars (EAGF and EAFRD) was recognised by the legislator (Recital 4 of Regulation 1303/2013). For both pillars of 
the CAP , the conformity clearance is separate from the annual financial clearance.
Reply of the Commission 73
XI — Second indent
The Commission does not accept this recommendation.
The Commission is not in a position at this stage to make any specific commitment in relation to legislative propos -
als for the post-2020 period.
In cohesion policy the rules in place for the 2014-2020 programming period already provide for the elements 
requested by the Court. 
Regarding the second part of the recommendation on performance, Article 22.7 of the common provisions regula -
tion already enables the Commission to apply financial corrections when it establishes serious failure to achieve the 
targets relating to financial indicators, output indicators and key implementation steps set out in the performance 
framework.
The Commission considers that further alignment between different policy areas should not undermine the syner -
gies achieved in the management of the two Funds of the CAP-EAGF and EAFRD. The importance of preserving the 
synergies achieved between the two pillars (EAGF and EAFRD) was recognised by the legislator (Recital 4 of Regula -
tion 1303/2013) .
XI — Third indent
The Commission does not accept this recommendation.
The Commission will continue to inform the budgetary authority in full transparency about programme implemen -
tation, including about the outcome of closure. However, it is not in a position at this stage to make any specific 
commitment in relation to legislative proposals for the post-2020 period.
XI — Fourth indent
The Commission does not accept this recommendation.
The Commission strongly believes that discontinuing the overlap of eligibility periods will result in less policy 
implementation, will reduce the possibility for multiannual projects to be decided in the last year of implementa -
tion period by imposing additional administrative burden and will cause disruption in transition between periods. 
For EAFRD, this would negatively affect the smooth implementation of multiannual environmental commitments or 
business start-up projects based on multi-annual business plans.
XIII
For cohesion policy the key areas relevant to closure are the implementation (addressed with the final implementa -
tion report), the legality and regularity of the expenditure (addressed with the closure declaration and final control 
report) and finally the final statement of expenditure. For these key areas, the deadlines are indicated in the regula -
tion. In particular, the Commission has 5 months to inform the Member State of its opinion on the content of the 
final implementation report and the closure declaration. 
Reply of the Commission 74
For rural development the key deadlines are outlined in the legislation (e.g. delivery of the documents for closure, 
final payment). However, some deadlines are not specified which provide for sufficient time to ensure proper clo -
sure decision and protection of the EU budget. 
The Commission issued guidelines on closure which aimed to clarify the Commission's understanding of the appli -
cable provisions as well as its expectations. 
Concerning the specific risks at closure identified by the Court, the Commission has drawn the attention of pro -
gramme authorities, including audit authorities, to these risks. 
The Commission will apply financial corrections where necessary. 
XIV — First indent
The Commission accepts the recommendation.
XIV — Second indent
The Commission accepts the recommendation.
XV
The Commission notes that this recommendation is addressed to the Member States.
Introduction
02
For the 2007-2013 period cohesion and rural development policies have separate legal frameworks, different gov -
ernance of the programmes, distinct reimbursement mechanisms and independent policy objectives. 
09
Closure is a legal requirement set in the EU regulations. 
Under the multiannual control framework for 2007-2013 programmes under cohesion policy, Member States had to 
ensure that irregularities are prevented, detected and corrected throughout the programming period. If the Com -
mission detected additional irregularities, not yet corrected, it imposed additional financial corrections. 
09 — First indent
For rural development, in the framework of the annual financial clearance, the certification bodies are requested 
to present the Commission with an opinion on the annual accounts of the Paying Agencies, which the Commission 
accepts at this stage. At the time of the annual financial clearance exercise, the Commission is not required to con -
firm the legality and regularity of the expenditure. 
Legality and regularity of expenditure is further checked through the conformity clearance procedure that is carried 
out separately and independently from the closure exercise, as established by the legislator.
Conformity clearance procedures take around 2 years, a time period that is necessary to ensure a fully transparent 
process of arbitration, allowing for time to discuss findings and establish the risk to the EU budget to be covered by 
a net financial correction. 
Reply of the Commission 75
09 — Second indent
The Commission’s ad hoc decisions resulting from the conformity clearance procedure ensure that any identified 
non-eligible expenditure is excluded from financing and from being actually reimbursed by the EU budget (net 
financial corrections). In agriculture, including rural development, all financial corrections have a net effect on the 
EU funding.
Furthermore, the Member States for rural development are obliged to pursue the recovery of irregular expenditure 
from beneficiaries and refund that to the Commission even after closure.
14
DG REGIO and DG EMPL are on track to meet the year-end deadline for the completion and validation of their clo -
sure manuals and procedures. 
Observations
19
Closure is a legal requirement set in the EU regulations for which the Commission is preparing itself in the most 
efficient way. 
Regarding the 2007-2013 programming period for cohesion, the Member States authorities are requested to provide 
the closure documents to the Commission at the latest by 31 March 2017. The Commission has 5 months to provide 
Member States with its opinion on the final implementation report and the closure declaration. The final payment 
will be made only after an assessment of the closure documents to ensure that no material errors are left in the final 
statement of expenditure.
For rural development, the Commission must respect all legal rules fixed by the legislator, notably the independ -
ence of the closure procedure from the conformity clearance procedure applied to get assurance on legality and 
regularity of the CAP expenditure. The Commission shall also respect the deadline of paying the balance within 
6 months after the receipt of the relevant documents. Conformity clearance procedures take around 2 years, a time 
period that is necessary to ensure a fully transparent process of arbitration, allowing for time to discuss findings and 
establish the risk to the EU budget to be covered by a net financial correction.
The directorates-general report in their Annual Activity Reports on financial corrections carried out each year, 
including for closed programmes from the programming periods 1994-1999 and 2000-2006. These reports are pre -
sented to the budgetary authority in the frame of the discharge procedure.
20
In cohesion, a Task Force was set up for drafting the closure guidelines which included several key services in DG 
REGIO and DG EMPL. The guidelines and their modifications went through Inter Service Consultation and several 
consultations with national authorities.
The Commission considers that alignment of arrangements in rural development and cohesion must not undermine 
the consistency of implementation of the CAP . The importance of preserving the synergies achieved between the 
two pillars (EAGF and EAFRD) was recognised by the legislator (Recital 4 of Regulation 1303/20131). For both pillars of 
the CAP , the conformity clearance is independent from the closure.
1 ‘As regards the Common Agricultural Policy (CAP), significant synergies have already been obtained by harmonising and aligning management 
and control rules for the first pillar (European Agricultural Guarantee Fund — EAGF) and the second pillar (EAFRD) of the CAP. The strong link 
between the EAGF and the EAFRD should therefore be maintained and the structures already in place in the Member States preserved.’
Reply of the Commission 76
23
Each year the Commission analyses the Annual Control Reports and requests corrective measures in case of material 
annual error rates or cumulative residual risk (residual risk rates at closure).
The Commission has also adopted a robust policy of interruptions and suspensions of interim payments where seri -
ous deficiencies were found. This should reduce the workload at closure as many issues have already been identi -
fied and corrected during implementation. 
24
In rural development the closure exercise is a financial clearance exercise of the last execution year. A final balance 
is calculated and payable at closure only if all annual accounts of the programming period are cleared (financial 
clearance).
The legality and regularity of EAFRD spending is ensured through the conformity clearance procedure, indepen -
dently from the closure. If, through the conformity clearance procedure, deficiencies are identified in the manage -
ment and control of the expenditure, the Commission applies financial corrections for expenditure effected for up 
to 24 months prior to notification by the Commission, in accordance with Article 52 of Regulation (EU) No 1306/2013. 
See also Commission’s reply to paragraph 19.
28
In the case of cohesion funds the annual budgets of the Commission are protected with payment of only 90 % of 
interim expenditure. This is comparable to the 95 % rule for EAFRD at the end of the programing period (Article 34 
of Regulation 1306/2013).
EAFRD does not have this additional annually cleared pre-financing system and therefore does not need to with -
hold anything from the interim payments before 95  % implementation.
29
Potential further alignment should respect the need to preserve the consistency between the two pillars of the CAP .
See also Commission’s reply to paragraph 20.
32
For cohesion policy the purpose of closure is already clearly set out in the regulations for the 2014-2020 period.
Reply of the Commission 77
33
For cohesion policy the regulation foresees a period of 3 years after the payment of the balance to keep supporting 
documents and in that period audits can be carried out and consequently financial corrections applied.
For rural development beneficiaries have the obligations to maintain the co-financed investment for a period of 
5 years after the payment or the obligation of Member State to recover unduly spent amounts. The Commission 
must be in a position to check the compliance with these obligations and impose financial corrections in case of 
breaches. 
It is clearly set out in the guidelines for the closure of the 2007-2013 rural development programmes that the con -
formity audits continue to be carried out independently from the closure. The financial corrections do not influ -
ence the calculation of the final balance. The amounts of the financial corrections are established in Commission's 
conformity clearance decisions and executed by recovery orders (net financial corrections).
34
For rural development, there is no legal basis to impose financial corrections based on an estimated error rate and 
in order to reduce the error rate below the level of materiality. It can only be done by conformity clearance proce -
dure, which the Commission will carry out where appropriate. 
See also Commission’s reply to paragraph 36. 
35
For cohesion policy, the Commission is calculating the cumulative residual risk throughout the programming 
period, thus allowing for the reduction of the risk of errors below the materiality level at any moment in time during 
the programming period. The audit authorities are requested to disclose the residual risk rate at closure and, where 
material, programme authorities are requested to take the necessary additional financial corrections before submit -
ting their final closure declaration.
36
In the current legal framework for rural development, conformity clearance decisions can continue to be taken even 
after the closure of the programme. Therefore, the concept of a ‘residual risk rate at closure is currently not compat -
ible with the legislation underpinning the second pillar of the CAP . 
However, every year the annual activity report of DG AGRI discloses, both the estimated error rates of the transac -
tions between Member States and the beneficiaries and the corrective capacity of the ex post  controls and proce -
dures leading to recoveries from beneficiaries and net financial corrections. Comparing the two enables the Com -
mission to conclude on the annual residual risk to the EU budget after all controls and corrections are taken into 
account.
The Commission maintains the view expressed in the 2015 annual activity report of DG AGRI. Indeed, for the rural 
development policy, the need to ensure the legality and regularity must be balanced against the ambitious policy 
objectives, which sometimes led to a complex design of measures. The situation remains under close scrutiny and 
the Commission is committed to assist the Member States in combatting the root causes of errors.
Reply of the Commission 78
37
Every year the DG AGRI Annual Activity Report discloses an adjusted error rate and an estimated amount at risk 
for the rural development area. An adjusted error rate is calculated at Paying Agency level and then aggregated at 
Activity area. 
Under the current rules governing cap expenditure (including rural development), assurance on legality and regu -
larity results from the conformity clearance procedure and not from a calculation of a residual error rate at closure.
The conformity clearance procedure is launched when the total error at the fund level is reported by the certifica -
tion body as being above materiality. Financial corrections are applied when the certification bodies’ findings are 
confirmed. 
38
For 2014-2020 programmes, a block of expenditure is certified annually in the accounts which will be subject to an 
annual acceptance/clearance and to further examination of its legality and regularity. Expenditure is no longer certi -
fied cumulatively during the programming period and therefore there is no need to calculate a cumulative residual 
risk rate or to request an audit opinion concerning the whole programming period at closure. For the last year of the 
period, for cohesion the audit authorities will provide their annual residual risk rate and issue their last annual audit 
opinion based on it. For Rural Development the certification bodies will provide the error rates and the incompli -
ance rates in their last annual audit opinion. 
39
The European Parliament and the Council are informed in the Annual Activity Reports about the progress of the 
closure of cohesion and rural development programmes.
40
The Commission underlines that the closure process should serve to clarify and settle all open issues related to 
control activities and audit findings and considers that the cumulative audit work gathered during the program -
ming period and at closure will provide for a sufficient level of assurance at closure without the need to perform 
additional audit work thereafter. 
Concerning the 2007-2013 period, the audit plan in the last years 2015-2016 is clearly targeted at checking the level 
of preparation of the Member States for closure focusing on re-performance of audits carried out by audit authori -
ties but also including audits of risky operational programmes and of the reliability of the withdrawals and recover -
ies reported by Member States. Audits after closure are not excluded though, depending on the assessment of any 
remaining risk following the analysis of closure documents. 
43
The Commission considers that the current set-up of the conformity clearance procedure ensures an adequate pro -
tection of the financial interests of the EU budget.
See also Commission reply to paragraph 24.
Reply of the Commission 79
46
The Commission considers that the closure process would take much longer and would require much more 
resources if final reporting and evaluation of the programme, including monitoring and analysis of the achievement 
of outputs and results for the entire period is to be covered. 
48
The legal framework in place for cohesion policy 2007-2013 does not allow for conditioning payments on results or 
achievements. Section 5.2.6 of the closure guidelines requires systematic reporting on indicators by priority axis 
where achievements diverge by more than 25 % from targets including a justification on why targets were not met 
and why corrective actions were not taken. 
The Member States should provide explanations and justifications on the divergences on the achievement of the 
indicators. A financial correction could be decided on a case-by-case basis whereby divergences would disclose 
cases referred to in Article 99 of the general regulation (irregularities, serious deficiencies of management and con -
trol systems). 
The outputs and results-oriented approach has been more extensively introduced in the period 2014-2020 for both 
policy areas (see paragraph 52). This approach has been reinforced by the introduction of a performance reserve 
amounting to 6  % of the programme budget. The performance framework builds indeed on elements of the result 
orientation. Its objective is to give incentives to programme and priority managers to deliver what is under their 
control. It will reward programmes which progress well towards the objectives through the allocation of the per -
formance reserve, but will also trigger measures for priorities which fail to do so. There are milestones set for these 
indicators to be achieved by the end of 2018 and targets to be achieved by the end of 2023. Allocation of the reserve 
is conditional on the achievement of those milestones set at the level of programme priorities (Article 20 and Article 
22(2) of Regulation (EU) No 1303/2013). If targets are not achieved, the Commission may also apply financial correc -
tions with a link of the payments to the actual achievements of the outputs and results.
49
The Commission considers that section 3.5 of the closure guidelines clearly explains how to treat uncompleted 
operations. 
On the financial consequences of not achieving the targets set in the programmes, the Commission refers to the 
Questions and Answers on closure2 see replies to questions 200-205, where it explains that the Member State should 
report in the Final Implementation Report on the programme achievements as measured by physical and financial 
indicators and should provide information on indicators. And only if there is a significant divergence should an 
explanation and a justification be provided as requested by the closure guidelines.
See also Commission reply to paragraph 48.
2 http://ec.europa.eu/regional_policy/sources/docoffic/official/guidelines/closure_2007_2013/qa_closure20072013_en.pdf
Reply of the Commission 80
50
The Commission has provided relevant guidance to Member States on the subject, e.g. in the framework of the rural 
development committee and the evaluation expert group.
51
According to the closure guidelines for cohesion, at the time of submission of the closure documents, Member 
States have to ensure that all projects included in the programmes closure are functioning, meaning completed and 
in use. The Commission makes an exception for the non-functioning projects and phased projects which will be 
monitored (annexes III, IV and V). These will be a complement on the data reported on the achievement of targets.
More specifically, phasing and its concrete implementation has been subject of several replies provided under the 
‘questions and answers’ document on closure, closure trainings and specific support provided to the Member States 
in the context of the task force for better implementation.
For rural development the reporting on achievements of the targets is done in the last annual progress report (table 
G.3 submitted by the MS indicates the level of achievement of these targets). The ex post  evaluations will take into 
account these indicators and the achievements of the targets.
52
The Commission refers to its reply in paragraph 48.
The performance framework provides a mechanism for monitoring whether the implementation of the priorities 
is on track. The performance reserve provides an incentive to achieve the milestones, which necessarily are the 
precondition for obtaining the intended results. The performance reserve is only one of the elements supporting an 
increased focus on results. The core element of the results orientation is the intervention logic embedded in each 
programme with the output and result indicators associated. 
The Commission also refers to the observations of Chapter III of the Annual Report of the Court of Auditors for the 
year 2014. 
The Commission also notes that the ex post  evaluation of the programme is only required by 31 December 2024 
(Article 57 R1303/2013). Furthermore, conclusions stemming from the 2019 Implementation Report will assess the 
progress towards achieving the objectives of the programmes and its contribution to the Union strategy for smart, 
sustainable and inclusive growth. This will also be supported by the introduction of the performance review.
54
The Commission considers that the necessary accountability and transparency in programme implementation is 
annually provided in the Annual Activity Reports (AARs) of the respective DGs. These AARs disclose every year all 
financial and performance details for the programmes in question.
Reply of the Commission 81
55
Please refer to the Commission’s replies in paragraphs 54 and 39. 
56
The budgetary authority will be provided with information on the outcome of the 2007-2013 closure process in the 
Annual Activity Report of respective DGs.
Common Commission reply to paragraphs 57 and 58
The Commission acknowledges that closure should indeed take place as soon as possible, but still Member States 
need enough time to finalise their actions before submitting the closure package. In addition, closure can only start 
upon the submission of the closure documents. The Commission considers that it is vital to allocate sufficient time 
and resources to the related tasks.
There will always be overlap in work on two periods. Before one period ends work on another one has to start. 
There would be a risk that there would be a gap between programming periods.
Cohesion policy programmes are complex to manage and many circumstances change during the 7-year program -
ming period. This can cause delays in project preparation and implementation. An indication of this is the effect of 
the 2008 financial crisis where the commission allowed the Member States to extend the eligibility period further to 
complete projects which had been delayed by the crisis. Continuing the eligibility period beyond the 7-year pro -
gramming period gives Member States the possibility to complete delayed projects and thus maximise the impact 
of the union budget contribution.
59
The Commission notes that the 2014-2020 closure exercise will be simplified through the annual acceptance of 
accounts. This was a specific objective of the legislator when adopting the rules of 2014-2020, based on experience 
from previous periods.
The financial framework defines the annual budget commitments, which are distributed for 7 years. It is natural that 
in multiannual projects payments cannot exactly follow the same rhythm as the commitments.
Common Commission reply to paragraphs 60 to 62
The Commission notes that the deadlines mentioned by the Court are legal deadlines as provided in the general 
regulation for cohesion and these are legally binding for the Commission.
Reply of the Commission 82
64
It has to be noted that implementation on the ground may happen without EU payments being submitted.
Project selection and expenditure on the ground give a more accurate picture of implementation than EU pay -
ments. The project selection rate doubled in the first half of 2016 from 8 to 15 % and this proves that implemen -
tation on the ground has taken off. By June 2016, EUR 48 billion of EU funds has already been granted to some 
200  000 concrete projects already being implemented on the ground. Including national co-financing, over 
EUR 68 billion has already been invested in the real economy and is delivering jobs and growth across Europe. Some 
countries are significantly outperforming these figures (e.g. Denmark, Ireland, Finland and Sweden). The pre-financ -
ing amounts transferred largely cover expenditure on the ground. While overlapping of the periods may not help, 
the significant differences across Member States regarding implementation indicate that other factors are more 
pertinent in this regard (i.e. administrative capacities).
65
The Commission considers that transitional arrangements and overlapping periods are needed in order to ensure 
a smooth continuation of the policies and better programme implementation. Additional extension (from n+2 to 
n+3) provided more flexibility to implement programmes and ensure achieving policy goals. The overlap of the 
periods decreases pressure on resources and spikes in workload.
The Commission recalls that closure is a legal requirement foreseen in the EU regulations for which directorates- 
general prepare in the most efficient way, in a context of a reduction of staff, but the preparation of cost estimates 
or the follow-up on the costs of closure are not considered relevant or desirable. The Commission is not reporting 
any costs of specific activities but the overall administrative costs of its overall activities.
The Commission has raised awareness of the Member States on the importance of the resources allocated to closure 
through the different meetings with the Member States (i.e. Homologues Group meetings and annual coordination 
meetings) since 2014 and through the trainings and seminars given to all Member States on closure of 2007-2013 
programmes in cohesion. 
In the context of shared management, the resources allocated to closure are a responsibility of the Member States; 
they are responsible for their planning and monitoring. 
66
For both policy areas the technical assistance resources are also available for the purposes of the closure exercise 
and may finance closure-related activities irrespective of the period (i.e. 2014-2020 technical assistance resources 
are also available to carry out closure activities for 2007-2013).
The Commission also considers that the recommended deadlines in the closure guidelines aim to help the different 
authorities to perform their work in due time within the regulatory timeframe of closure.
If the overlapping period was reduced, the time pressures and peak workload would increase all the more.
Reply of the Commission 83
67
The issue of administrative reorganisation in national authorities was raised during the seminars organised in the 
Member States where the Commission has been repeating the need to have dedicated staff to deal with the closure 
work.
See also Commission replies to paragraphs 65 and 66.
68
The Commission notes that the closure process for the 2014-2020 programming period will be more simplified due 
to the annual acceptance of accounts and further examination of the legality and regularity aspects. In particular, 
the last year will only deal with the closure of the block of expenditure certified in relation to the last accounting 
year.
69
The Commission refers to its reply in paragraph 20.
70
In order to regulate the transitional arrangements there will always be the need to observe rules applicable for two 
different programming periods and most likely, some specific ones (in terms of derogations) to further specify or 
allow certain commitments or use of the funds. 
75
The Commission continued in 2016 to provide targeted assistance to Member State authorities which required it 
(2015 and 2016 sessions on closure in Homologue Group meetings with audit authorities, and additional written 
clarifications provided).
For EAFRD a Questions & Answers document was developed that addressed the most common questions and topics 
raised by the Member States. Additionally to the Closure conference another 2-day expert group for paying agen -
cies and certifying bodies was held in 2015.
77
Not all aspects of the contradictory procedures between the Commission and the Member States are indicated at 
the level of the general regulation for cohesion, nevertheless this was addressed in the closure guidelines. 
In order to accelerate the process, the closure guidelines provide Member States with 2 months to reply to the Com -
mission's questions plus two additional months, if requested. 
Payments to beneficiaries are dealt in Regulation 2007-2013 (Article 80 of the general regulation) even if the number 
of days is not reflected; it says it should be done as quickly as possible and in full. Regulation 2014-2020 has estab -
lished a deadline of 90 days to make the payments to the beneficiaries.
DG REGIO is currently adopting the remaining major project decisions with the intention of finishing them by the 
end of 2016. 
Reply of the Commission 84
78
The closure guidelines (point 5.2) for cohesion state a deadline for both the Commission and Member States regard -
ing the comments on the final report. Furthermore, the closure guidelines provide that in case the Member State 
is not able to improve the final report, the Commission will reject it and will carry out closure on the basis of the 
available documents. At the same time, the Commission may apply financial corrections in the context of Article 99 
of the general regulation. This possibility of rejection of the report by the Commission and the possibility to apply 
financial corrections is an incentive for the Member States to reply timely to the requests of the Commission. 
79
The Commission refers to its reply in paragraph 78.
For rural development the examination of the last annual progress report does not delay the closure process. The 
balance can be paid when all accounts are cleared and the annual progress report is considered receivable.
81
The Commission refers to its reply in paragraph 78.
82
A Member State either has expenditure exceeding the programme allocation or it does not depending on the 
implementation conditions and the approach to apply overbooking. This decision had to be made prior to the end 
date for eligibility, i.e. 31 December 2015. 
Common Commission reply to paragraphs 84 and 85
According to Article 80 of Regulation 1083/2006 the Member States should ensure that the beneficiaries receive 
the total amount of the public contribution as quickly as possible and in full. This is the message the Commission 
delivered to Member States during the closure seminars. This has been addressed in the 2014-2020 programming 
period (Article 132 of Regulation 1303/2013 which provides that subject to the availability of funding from initial 
and annual pre-financing and interim payments, the managing authority shall ensure that a beneficiary receives the 
total amount of eligible public expenditure due in full and no later than 90 days from the date of submission of the 
payment claim by the beneficiaries).
86
The Commission considers that the Member States mentioned in the example in Box 2 had either used a prudent 
approach for their payments to ESF beneficiaries (balance payment only after detailed verification of all expendi -
ture) or had paid advances at the request of the beneficiaries which allowed for the smooth execution of the pro -
jects concerned. 
Furthermore, the Commission notes that measures have been taken to avoid payment delays in the 2014-2020 pro -
gramming period (see Commission’s reply to paragraph 85).
Reply of the Commission 85
89
Guidelines aim to clarify the Commission’s understanding of the applicable provisions as well as its expectations; 
they therefore cannot be seen as an additional requirement. They also provide some recommendations to Member 
States which, if followed, should facilitate the closure process. In this way, the guidelines ensure better consistency 
and transparency of rule for Member States and as such provide assurance for Member States as regards the Com -
mission’s closure requirements. They establish a common understanding on how the Commission interprets the 
regulation that should help to avoid conflicts during the closure process between the Commission and the Member 
State. The guidelines are only binding for the Commission, not for the Member States. 
90
The Commission notes that the majority of the authorities consulted do not perceive that the guidelines impose 
additional requirements.
Furthermore, the points are not new requirements; however there was a need for clarification of certain details, in 
order to strengthen assurance on certain issues and on legality and regularity at closure.
91
The clarification regarding the completion of operation and its functionality at closure aims (in the spirit of Arti -
cle 57 of the general regulation) at the effective spending of the EU funds for the objectives defined in the pro -
grammes. The concept and treatment of non-functional projects has already been applied at the closure of the 
2000-2006 programmes. 
In relation to the residual risk rate, the closure guidelines clarifies that for the purposes of the audit opinion to be 
issued by the audit authority at closure, the latter can take into account the financial corrections applied before the 
submission of the closure documents. The commission itself calculates a cumulative error rate since 2011 and it has 
been a condition for the reservation in the annual activity reports. This further mitigates the risks at closure and 
provides information on the remaining level of errors in the cumulative certified expenditure (see paragraph 91).
The phasing concept was present in the closure guidelines from its first adoption. Phasing of projects is motivated 
by the need to ensure continuity of investments between programming periods, to reduce the artificial investment 
demand cycle (resulting in high prices) the 7-year programming cycle entails and to ensure fulfilment of the ulti -
mate objective. 
The Commission considers that the Closure Guidelines adequately clarify the specific rules for phasing of non-major 
projects and this will not complicate the closure process.
Regarding the financial instruments, the modification decision on the closure guidelines of the Commission does 
not affect the provisions of Regulation 1083/2006 according to which the contribution from the funds into financial 
instruments must have been paid at latest at 31 December 2015. Therefore, the guidelines have only provided clari -
fications under existing rules. See also Commission replies to, paragraph 6.45 and recommendation 3 of the Court’s 
2015 annual report. 
Reply of the Commission 86
Common Commission reply to paragraphs 98 and 99
The recommended deadlines in the Commission’s closure guidelines for cohesion aim to help the different authori -
ties to perform their work in due time.
It is the Member States’ responsibility to ensure appropriate division of tasks and coordination within the national 
administration.
Common Commission reply to paragraphs 100 and 101
In the ‘Questions and answers’ document on closure for the Member States (question 98) the Commission acknowl -
edges this time lag to be factored in by the managing authority regarding financial instruments in order to allow 
the certifying authority and audit authority to complete their work on time. It was recommended that the certifying 
authority sends the last interim payment claim (including the expenditure that will be certified at closure) to the 
audit authority by 30 June 2016 to enable it to perform the necessary audit work. The Commission has provided 
specific instructions to the audit authorities in that respect, e.g. in the Homologues Group Meeting held in Riga in 
September 2015. 
105
The Commission already pays special attention to the validation of the changes to previous reported error rates. For 
the more risky operational programmes, specific audit work is being carried out before closure. 
The Court has examined the Commission’s assessment of the error rates disclosed in the annual control reports 
provided by national authorities since 2010. 
107
In line with Article 78(6) of Regulation (EC) No 1083/2006, the funds’ contribution into financial instruments is 
included in the payment claims to the Commission. Following the Commission guidance, this expenditure should be 
always included in the audit population. In addition as set out in the agreed audit methodology, audit authorities 
may carry out thematic audits on financial instruments which cover both the constitution of the fund and the actual 
implementation of projects through the audit of a sample of transactions at the level of the financial intermediaries 
and/or final recipients. The audit authorities, for the purpose of the closure declaration, will have to obtain and pro -
vide assurance on the legality and regularity not only of the OP contribution paid into funds implementing financial 
instruments but also of the use of the OP contribution through underlying transactions implemented by the final 
recipients. 
For EAFRD, the Commission required that the certifying bodies confirm for the last clearance of accounts the eligi -
ble expenditure for financial instruments. 
The Commission refers to its reply in paragraph 100. 
Reply of the Commission 87
108
As regards rural development, the paying agencies and certification bodies should verify actual use of the previ -
ous tranche before granting following payment. In addition, exhaustive reporting requirements established under 
Article 46 of R1303/2013 also ensure proper implementation and sound financial management.
Common Commission reply to paragraphs 109 and 110
National and international standards require that advances are paid with contract signature. The payment of the 
advance is thus a prerequisite for the start of implementation of works and services. 
111
Contractual advances are only eligible insofar as they are paid following national rules and usual market practice. 
Therefore it is unlikely that these represent high percentages, if they do, there is a market-based reason for it. 
The Commission has established that advance payments are only eligible if the physical value of the corresponding 
implementation is at least equal to the advances at closure. This is an element to verify already through the man -
agement verifications. In this respect, the national authorities need to check that payments are done on the basis of 
the granting decision and that payments have been converted into real works or services.
This issue was already clarified during the 2000-2006 programming period.
The audit assurance provided by the audit authorities at closure will also cover the issue of the contractual advances 
and the fact that the managing authorities have verified their eligibility, as reminded to all audit authorities during 
2016 annual audit coordination meeting and in the Homologues Group Meeting in September 2016 (see paragraph 
113).
Common Commission reply to paragraphs 114 and 115
The Commission recalls that the obligation to notify state aid measures lies with the Member States and that the 
Commission decision on the major project is not a decision on compliance of the major project with state aid rules.
However, only for a limited number of major projects a state aid notification is necessary (a notification is not 
required, e.g. where no state aid involved or the project falls within the scope of a Block Exemption Regulation or an 
approved aid scheme).
Moreover, a distinction needs to be made between the situation before and after the Leipzig-Halle judgment and 
between the 2007-2013 and the 2014-2020 programming periods.
Reply of the Commission 88
The Commission also notes that the DG COMP was consulted in formal inter-service consultations by DG REGIO on 
major projects decisions already before the end of 2012, although not systematically.
Following the Leipzig-Halle judgement, DG REGIO and DG COMP have enhanced their cooperation in relation to 
the assessment of major project applications. The Commission stresses that there is no major project for which the 
Commission adopted a decision approving ERDF or CF funding in recent years and for which subsequently a nega -
tive decision under state aid rules was adopted. This shows that the cooperation arrangements put in place work 
well in practice. 
Conclusions and recommendations
Recommendation 1
The Commission does not accept this recommendation. 
The Commission is not in a position at this stage to make any specific commitment in relation to legislative propos -
als for the post-2020 period.
A significant effort was already made to harmonise rules for the ESI Funds for the 2014-2020 period, both for the 
annual accounting years and at closure. The Commission will seek to further harmonise regulatory provisions 
between the funds, including on terminology, assurance and closure processes, whenever it enables to improve the 
management of EU funds and it contributes to a simpler and more effective implementation in Member States and 
regions.
The Commission considers that alignment of arrangements in rural development and cohesion must not undermine 
the consistency of implementation of the CAP . The importance of preserving the synergies achieved between the 
two pillars (EAGF and EAFRD) was recognised by the legislator (Recital 4 of Regulation 1303/20133). For both pillars 
of the CAP , the conformity clearance is separate from the annual financial clearance.
Common Commission reply to paragraphs 119 and 120
For rural development, the Commission has not come across any complaints as to the expectation gap from the 
Member States. The closure exercise is a settlement of financial issues. It is a separate exercise from conformity 
clearance. 
In line with the applicable legislation (Article 52, Regulation 1306/2013), conformity clearance procedures cover 
a period of 24 months prior to launching the enquiry. Member States are acquainted with the set-up of the system. 
They are clearly informed about the period covered by each enquiry. Also in the previous programming period, in 
rural development, there were financial corrections adopted after the closure of the 2000-2006 period. Member 
States did not question the timing of the financial correction decisions.
3 ‘As regards the Common Agricultural Policy (CAP), significant synergies have already been obtained by harmonising and aligning management 
and control rules for the first pillar (European Agricultural Guarantee Fund — EAGF) and the second pillar (EAFRD) of the CAP. The strong link 
between the EAGF and the EAFRD should therefore be maintained and the structures already in place in the Member States preserved.’
Reply of the Commission 89
121
For CAP expenditure, including rural development, the distinction between on the one hand annual financial clear -
ance and closure procedures and, on the other hand, the conformity clearance procedure, has been established by 
the legislator for the 2007-2013 period and confirmed for the 2014-2020 period. The distinction between accounting 
and legality and regularity issues has proven to be effective and efficient. 
122
The Commission considers that such specific reporting on the final outcome of closure for the programme period as 
a whole can take place in the context of the Annual Activity Report of respective directorates-general. 
123
The Commission refers to its replies in paragraphs 40 and 54.
For cohesion policy, the Annual Activity Reports give details on internal processes aimed at ensuring adequate 
management of risk related to the legality and regularity of underlying transactions, taking into account multi-
annual character of programmes as well as the nature of the payments concerned. In this respect, for 2007-2013 the 
control objective is to ensure that the cumulative residual risk of each programme does not exceed 2 % on a cumu -
lative basis, based on all available audit results. For 2014-2020, the regulation introduces the annual acceptance of 
accounts and accordingly the annual acceptance by the Commission of blocks of legal and regular expenditure, as 
well as the acceptance of a final implementation report per programme as a condition for the acceptance of the 
final balance. 
For EAFRD, 2007-2013 and 2014-2020, the legislator has provided for closure based on the annual financial clearance 
of accounts with a possibility for application of financial corrections through conformity audits after payment of the 
final balance. The Annual Activity Reports will continue to give details on the performance of the rural development 
measures and report on compliance based on the annual financial clearance exercises and the results of conformity 
audits.
The Commission is not in a position at this stage to make any specific commitment in relation to legislative propos -
als for the post-2020 period.
125
For rural development, the Commission has set up processes aimed to ensure the adequate management of the 
risks relating to the legality and regularity of the underlying transactions, taking into account the multiannual char -
acter of programmes as well as the nature of the payments concerned with an objective that the remaining risk to 
the EU budget does not exceed 2 %.
The legality and regularity of expenditure is checked through the conformity clearance procedure that is carried 
out separately and independently from the closure exercise. As a result of a conformity clearance procedure, the 
financial corrections are imposed. 
In the current legal framework, conformity clearance decisions can continue to be taken even after the closure of 
the programme. 
Reply of the Commission 90
Common Commission reply to paragraphs 126 and 127
For the 2007-2013 period there is indeed no legal basis allowing the Commission to link directly the payment of the 
final balance at closure to the actual achievements at programme/priority axis level.
The fact that there is no close regulatory link between performance and payments does not mean that evaluation 
and performance assessment of programmes do not take place. 
For the 2014-2020 period the performance framework put in place will create a link between payments and achieve -
ment of outputs and results at priority axis level.
Recommendation 2
The Commission does not accept this recommendation. 
The Commission is not in a position at this stage to make any specific commitment in relation to legislative propos -
als for the post-2020 period. 
In cohesion policy the rules in place for the 2014-2020 programming period already provide for the elements 
requested by the Court under both indents. 
Regarding the second part of the recommendation on performance, Article 22.7 of the common provisions regula -
tion already enables the Commission to apply financial corrections when it establishes serious failure to achieve the 
targets relating to financial indicators, output indicators and key implementation steps set out in the performance 
framework.
The Commission considers that further alignment between different policy areas should not undermine the syner -
gies achieved in the management of the two funds of the CAP-EAGF and EAFRD. The importance of preserving the 
synergies achieved between the two pillars (EAGF and EAFRD) was recognised by the legislator (Recital 4 of Regula -
tion 1303/20134) .
Recommendation 3
The Commission does not accept this recommendation.
The Commission will continue to inform the budgetary authority in full transparency about programme implemen -
tation, including about the outcome of closure. However, it is not in a position at this stage to make any specific 
commitment in relation to legislative proposals for the post-2020 period.
4 ‘As regards the Common Agricultural Policy (CAP), significant synergies have already been obtained by harmonising and aligning management 
and control rules for the first pillar (European Agricultural Guarantee Fund — EAGF) and the second pillar (EAFRD) of the CAP. The strong link 
between the EAGF and the EAFRD should therefore be maintained and the structures already in place in the Member States preserved.’
Reply of the Commission 91
129
The Commission is bound by the legal framework in place, decided by the legislator. 
The overlap between two periods is necessary given that many operations take several years to be implemented 
and that there will always be a start-up phase and wrapping up phase. 
The Commission services have encouraged Member States to increase capacities related to closure and use alloca -
tions of technical assistance for 2007-2013 or 2014-2020 for this purpose.
The closure process started with preparation before the end of the eligibility period and has been in full swing 
immediately when the eligibility period ended. Indeed, Member States were given two extra years (3 years in case 
of 2014-2020 programmes) to implement their programmes. This allows better management and absorption of 
the programmes, taking account of the need for multiannual projects to be implemented, lowers the pressure and 
workload on authorities involved and enables better transition between periods.
130
The Commission strongly believes that discontinuing the overlap of eligibility periods will result in less policy 
implementation.
131
The shorter period given under rural development can be explained by the fact that the certification and clearance 
of accounts process has existed for over a decade, and in general terms it can be said that certification bodies and 
paying agencies understand the requirements.
The Commission believes there is a need for balance between alleviating administrative burden and providing 
assurance as to legality and regularity of expenditure.
Recommendation 4
The Commission does not accept this recommendation.
The Commission strongly believes that discontinuing the overlap of eligibility periods will result in less policy 
implementation, will reduce the possibility for multiannual projects to be decided in the last year of implementa -
tion period by imposing additional administrative burden and will cause disruption in transition between periods. 
For EAFRD, this would negatively affect the smooth implementation of multiannual environmental commitments or 
business start-up projects based on multi-annual business plans.
Reply of the Commission 92
133
The Commission considers that for all key areas relevant to closure there are deadlines specified. 
For cohesion policy the key areas relevant to closure are the implementation (addressed with the final implemen -
tation report), the legality and regularity of expenditure (addressed with the closure declaration and final control 
report) and finally the final statement of expenditure. For these areas, the deadlines are indicated in the regulation. 
In particular, the Commission has 5 months to inform the Member State of its opinion on the content of the final 
implementation report and the closure declaration. Concerning major projects in the 2007-2013 period, less than 
2 % of them remain to be approved.
For rural development the key deadlines are outlined (e.g. delivery of the documents for closure, final payment) in 
the legislation. However, some deadlines are not specified which provide for sufficient time to ensure proper clo -
sure decision and protection of the EU budget.
Recommendation 5
The Commission notes that this recommendation is addressed to the Member States.
Recommendation 6
The Commission accepts this recommendation.
The Commission is currently processing the remaining major project decisions for the 2007-2013 with the intention 
of adopting them as far as possible by the end of 2016. Procedures are in place to adopt major project decisions 
within 3 months as required by the regulations. Less than 2 % of all major projects in the 2007-2013 period remain to 
be approved. 
As regards the 2014-2020 programming period the Commission has accelerated the treatment of major projects 
which are currently being approved in an average of 110 days. 
Common Commission reply to paragraphs 134 and 135
In general, the closure guidelines cannot be seen as additional requirements but aim at clarifying the Commission’s 
understanding of the applicable provisions as well as its expectations. It also provides some recommendations to 
Member States which, if followed, should facilitate the closure process. In this way, the guidelines ensure better con -
sistency and transparency of rule for Member States and as such provide assurance for Member States as regards 
the Commission's closure requirements. 
The Commission notes that the Court considers such clarification as useful and appropriate for example for the 
residual risk rate (see paragraphs 123 and 135). 
The Commission has explained its position on the legal possibility offered in Article 78(6) of the General Regula -
tion for 2007-2013 to consider eligible expenditure for financial instruments at closure. See the Commission reply to 
Recommendation 3 of the Court’s 2015 Annual Report.
The Commission also refers to its reply in paragraph 89. 
Reply of the Commission 93
The Commission considers that the closure guidelines adequately clarify the specific rules for phasing of non-major 
projects and this will not complicate the closure process.
137
The Commission considers that the internal preparation for the closure is well on track in order to ensure a smooth 
closure process.
It is the Member States’ responsibility to ensure appropriate division of tasks and coordination within the national 
administration.
138
The Commission underlines that for the closure of the 2007-2013 period, the risk of unjustified reductions in final 
error rates reported by Member States is mitigated by the issuance of the annual control reports and the imple -
mentation of financial corrections when the residual error rates are above the materiality level. The Commission 
thoroughly analyses and validates the error rate reported by the audit authorities year on year and at closure. This 
process is annually reviewed by the Court.
Common Commission reply to paragraphs 139 and 140
It should be noted that only for a limited number of major projects a state aid notification is necessary (a notifica -
tion is not required, e.g. if no state aid involved or when the project falls within the scope of a Block Exemption 
Regulation or an approved aid scheme). 
The Commission refers to its reply to recommendation 4 in Special Report No 24/2016.
As regards the verification of the compliance of major projects with state aid rules, the Commission rejected the rec -
ommendation as it believed that it goes against the Commission’s objectives pursued through its guidance given to 
Member States in 2012 not to systematically re-examine the projects decided before that date — leaving it to Mem -
ber States the possibility to notify or not — and to provide stability to Member States and beneficiaries as regards 
the treatment of such projects.
141
For rural development, the Commission is aware that, as for any other measure managed by a Paying Agency, the 
risk of declaring ineligible expenditure is present in the financial instruments.
However, the Commission would like to underline that, already in previous audits it has warned Member States of 
possible irregular spending.
Audits dedicated to the closure of guarantee funds are already planned and may result in financial corrections, if 
necessary.
In relation to eligibility of expenditure relating to financial instruments and contractual advances, specific clarifica -
tions have been already provided to national authorities for their assurance at closure.
For cohesion policy, the Commission refers to its replies in paragraphs 100 and 107.
Reply of the Commission 94
Recommendation 7
The Commission accepts this recommendation. 
In relation to eligibility of expenditure relating to financial instruments and contractual advances, specific clarifica -
tions have been already provided to programme authorities for their assurance at closure.
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Event Date
Adoption of the Audit Planning Memorandum/Start of audit 15.9.2015
Official sending of draft report to Commission (or other auditee) 13.10.2016
Adoption of the final report after the adversarial procedure 14.12.2016
Commission’s (or other auditee’s) official replies received in all languages 25.1.2017
After the end of a programme period, cohesion and rural 
development programmes have to be closed and financially 
settled. Both the Commission and the Member States have 
specific tasks and responsibilities in the closure process. In 
this audit we examined whether the rules and procedures 
for the closure provide a basis for the Commission and 
Member States to close programmes in an efficient and 
timely manner. Overall, we found that the Commission’s 
closure guidelines for the 2007-2013 period in both 
cohesion and rural development provide an adequate basis 
for Member States to prepare effectively for closure but we 
identified some weaknesses and certain risks that need to 
be addressed during the closure exercise. We also make 
a number of recommendations concerning the post-2020 
legislative framework. 
EUROPEAN
COURT
OF AUDITORS