EUROPEAN COMMISSION Brussels, 17.10.2016 SWD(2016) 338 final COMMISSION STAFF WORKING DOCUMENT Accompanying the document REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND TO THE COUNCIL on the follow-up to 2014 discharge - Replies to requests from the European Parliament {COM(2016) 674 final}

{SWD(2016) 339 final}



Table of Contents INTRODUCTION European Parliament resolutions on 2014 discharge Commission commitments with regard to discharge priorities Strategy and mission: continuity and innovation Follow-up of the 2013 Commission´s discharge Position of the Court: The Court's statement of assurance General budgetary and financial management Budgetary performance Evaluation and analysis of the main results of 2014 Union budget Revenue Competitiveness for growth and jobs Economic, social and territorial cohesion Natural resources Global Europe Administration Others General results and policy recommendations

Foreign Affairs Committee's opinions Development and Cooperation Committee's opinions Employment and Social Affairs Committee's opinions Transport and Tourism Committee's opinions Regional Development Committee's opinions Agriculture and Rural Development Committee's opinions Fisheries Committee's opinions Culture and Education Committee's opinions Civil liberties, Justice and Home Affairs Committee's opinions Gender issues Committee's opinions Part I – Special Report No 18/2014 of the Court of Auditors entitled "EuropeAid’s evaluation and results-oriented monitoring systems" Part III – Special Report No 23/2014 of the Court of Auditors entitled "Errors in rural development spending: what are the causes and how are they being addressed?" Part IV – Special Report No 24/2014 of the Court of Auditors entitled "Is EU support for preventing and restoring damage to forests caused by fire and natural disasters well managed?" Part V – Special Report No 1/2015 of the Court of Auditors entitled "Inland Waterway Transport in Europe: No significant improvements in modal share and navigability conditions since 2001" Part VI – Special Report No 2/2015 of the Court of Auditors entitled "EU-funding of Urban Waste Water Treatment plants in Danube river basin: further efforts needed in helping Member States to achieve EU waste water policy objectives" Part VII – Special Report No 3/2015 of the Court of Auditors entitled "EU Youth Guarantee: first steps taken but implementation risks ahead" Part VIII – Special Report No 4/2015 of the Court of Auditors entitled "Technical assistance: what contribution has it made to agriculture and rural development?" Part IX – Special Report No 5/2015 of the Court of Auditors entitled "Are financial instruments a successful and promising tool in the rural development area?" Part X – Special Report No 6/2015 of the Court of Auditors entitled "The integrity and implementation of the EU ETS" Part XI – Special Report No 7/2015 of the Court of Auditors entitled "The EU police mission in Afghanistan: mixed results"

Part XIII – Special Report No 9/2015 of the Court of Auditors entitled "EU support for the fight against torture and the abolition of the death penalty" Part XIV – Special Report No 10/2015 of the Court of Auditors entitled "Efforts to address problems with public procurement in EU cohesion expenditure should be intensified" Part XV – Special Report No 11/2015 of the Court of Auditors entitled "Are the Fisheries Partnership Agreements well managed by the Commission?" Part XVI – Special Report No 12/2015 of the Court of Auditors entitled "The EU priority of promoting a knowledge-based rural economy has been affected by poor management of knowledge-transfer and advisory measures" Part XVII – Special Report No 13/2015 of the Court of Auditors entitled "EU Support to timber-producing countries under the FLEGT Action Plan" Part XVIII – Special Report No 14/2015 of the Court of Auditors entitled "The ACP Investment Facility: does it provide added-value?" Part XIX – Special Report No 15/2015 of the Court of Auditors entitled "EU Energy Facility support for renewable energy in East Africa" Part XX – Special Report No 16/2015 of the Court of Auditors entitled "Improving the security of energy supply by developing the internal energy market: more efforts needed" Part XXI – Special Report No 17/2015 of the Court of Auditors entitled "Commission's support of youth action teams: redirection of ESF funding achieved, but insufficient focus on results" Part XXII – Special Report No 20/2015 of the Court of Auditors entitled "The cost-effectiveness of EU Rural Development support for non-productive investments in agriculture" European External Action Service European Council and Council Performance, financial management and control of EU agencies Agencies



INTRODUCTION This Commission Staff Working Paper completes the Report from the Commission to the European Parliament and the Council on the Follow-up to the 2014 discharge. It presents in detail the answers to 350 specific requests made by the European Parliament in its Resolution forming an integral part of its Decisions on the 2014 Discharge .

European Parliament resolutions on 2014 discharge

Commission commitments with regard to discharge priorities 1.(§ 4 - 2014/PAR/0238) The European Parliament calls again on the Commission to submit a communication to the Parliament in time for the mid-term review of the MFF with proposals on how the new and potential challenges requiring Union budgetary support could be met and explaining how it will in future reconcile long-term political objectives (such as the Europe 2020 Strategy) with the future, post-2020, MFF. Commission's response: The mid-term review of the MFF adopted on 14 September 2016 examines the functioning of the current MFF, and includes proposals to improve the delivery on EU priorities, including on its ability to respond to the major challenges facing the EU. The proposals for the post-2020 MFF are due before 1 January 2018. 2.(§ 5 and § 134 - 2014/PAR/0239) The European Parliament reminds the Commission that the Court of Auditors ("the Court") has been asking for the establishment of a long-term cash flow plan for several years; calls on the Commission to submit such a plan before the end of 2016. Commission's response: In its communication on the mid-term review of the MFF, the Commission has presented a payment forecast assessing the sustainability of the current ceilings and including the estimate of de-commitments and the evolution of the RAL until the end of the current MFF. 3.(§ 6 - 2014/PAR/0240) The European Parliament calls on the Commission to revise the Code of Conduct for Commissioners in light of demands made in the 2014 Commission discharge resolution in time for the 2015 Commission discharge procedure. Commission's response: Please refer to the replies provided to recommendations 2014/PAR/389-391-392-578. 4.(§ 7 - 2014/PAR/0241) The European Parliament urges the Commission not to adopt the new framework for Commission expert groups until a meeting of Vice-President Timmermans, the European Ombudsman, key Members of Parliament and civil society has taken place to discuss the final issues concerning both the contents of the new horizontal rules and their implementation. Commission's response: First Vice-President Timmermans has engaged both in meetings and in writing with several Members of the Parliament, the Ombudsman and civil society organisations, ahead of the adoption of the new framework for Commission expert groups (C(2016) 3300 and 3301). 5.(§ 8 - 2014/PAR/0242) The European Parliament calls on the Commission to instruct its directorates general to publish all country specific recommendations they have issued in the context of the European semester in their respective annual activity reports.

Commission's response: The Directorates-General of the Commission do not individually issue country-specific recommendations. The recommendations are proposed by the Commission and then formally adopted by the Council after discussion in the relevant committees and Council formations. Detailed and comprehensive reporting on their implementation takes place in the context of the country reports of the European Semester, which are produced annually. Eurostat also publishes yearly updates of the developments regarding the main indicators of the Europe 2020 Strategy. Where relevant, a Directorate General reports in its annual activity report on its contribution to the European Semester, including on how its activities contribute to the annual process leading to country-specific recommendations to Member States. Distinction should be made between the reporting on the indicators measuring progress on the Europe 2020 strategy in these reports and the reporting in the annual activity reports of the DGs presenting the results of actions taken by the DG by reference to the objectives set in the management plans. The annual activity reports are not intended to provide a comprehensive and detailed reporting on the implementation of country-specific recommendations. Strategy and mission: continuity and innovation 6.(§ 24 - 2014/PAR/0243) The European Parliament recalls that in its resolutions accompanying the discharge decisions, the Parliament has since 2013 asked the Commission to focus its implementation of Article 318 of the Treaty on the Functioning of the European Union (TFEU) – concerning its evaluation report – on the implementation of the Union´s ten-year growth and jobs strategy and its real performance and results (reference made to European Parliament Resolution of 17 April 2013 with observations forming an integral part of the decisions on Discharge in respect of the implementation of the general budget of the Union for the financial year 2011, section III Commission and executive agencies (OJ L 308, 16.11.2013, p. 27), paragraph 328; European Parliament Resolution of 3 April 2014 concerning discharge for the financial year 2012 (OJ L 266, 5.9.2014, p. 32) paragraphs 314 and 315; European Parliament Resolution of 29 April 2015 concerning discharge for the financial year 2013 (OJ L 255, 30.9.2015, p. 27) paragraph 305). Commission's response: Section 1 of the new Annual Management and Performance Report corresponds to the former Article 318 Evaluation Report required by the Treaty on the Functioning of the European Union (TFEU). The new Report presents the links with the Europe 2020 Strategy: 1) for the 2014-2020 programmes, while they are still in an early stage of implementation and it is too early for them to have produced results, the report presents the links between these programmes' objectives and the Europe 2020 Strategy; 2) for the 2007-2013 programmes, the text on the achievements under the budget headings most directly linked to Europe 2020 (1A, 1B, and 2) is structured around the Europe 2020 priorities of smart, sustainable and inclusive growth, showing to the extent possible the contribution of the EU budget to the Strategy’s objectives. As indicated in the 2013 edition of the Article 318 Evaluation Report, the Europe 2020 Strategy had not been adopted when the 2007-2013 MFF programmes were designed and their monitoring, reporting and evaluation arrangements were not therefore intended to provide a link between the achievements of the programmes and those of the Strategy. 7.(§ 36 - 2014/PAR/0244) The European Parliament calls on the Commission to make fuller use of the scope afforded by existing legislation with regard to the performance reserve so as genuinely to create a financial incentive to improve financial management in practice; calls furthermore for greater use to be made of the performance reserve as an instrument to increase the element which is conditional on performance when the legislation is next revised (reference made to point 3.65 of the Court's annual report for 2014). Commission's response: The Commission partially accepts this recommendation. The Commission will make a full use of the possibilities offered by the legal basis concerning the performance reserve. It considers that the present legal framework already gives sufficient incentive to Member States to enhance performance, the performance reserve being only one of the elements supporting an increased focus on results. 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 assessment of the strengths and weaknesses of the current framework will be carried out for the preparation of the post 2020 legislation. While the Commission is not in a position to commit itself to make specific proposals to the legislator for the next period at that stage, it will consider if further strengthening of the performance reserve rules is needed for achieving the most effective use of EU Funds. 8.(§ 38 (a) - 2014/PAR/0245) The European Parliament requests that the Commission consider making proposals with a view to: (a) better aligning the MFF to the Europe 2020 strategy and proposing its revision if needed to better match the Europe 2020 Strategy. Commission's response: The Commission refers to the letter of Vice-President Georgieva to the 2014 discharge rapporteur, Ms Dlabajova, of 11 March 2016 (cf. par 1a), which points to efforts already done to ensure coherence between policy objectives and the financial framework for the 2014-2020 MFF period and to the opportunity offered with the mid-term revision of the current MFF for a discussion at political level on how best to balance budgetary means with political priorities. The Commission also refers to its earlier replies to chapter 3 (cf. par 3.8 and recommendation 1) of the 2014 Court of Auditor's annual report. 9.(§ 38 (b) - 2014/PAR/0246) The European Parliament requests that the Commission consider making proposals with a view to:

(b) reflecting the high-level political goals of the Europe 2020 Strategy in Union-level objectives. Commission's response: Common reply to recommendations 2014/PAR/0246 and 0247. The Commission refers to the letter of VP Georgieva to Ms Dlabajova of 11 March 2016 (cf. par 1b), which indicates the actions launched to strengthen the link between the actions of the European and Structural Investment Funds (ESIF) and the Europe 2020 strategy. It equally provides a comprehensive overview of the reporting modalities put in place thereto. 10.(§ 38 (c) - 2014/PAR/0247) The European Parliament requests that the Commission consider making proposals with a view to: (c) making sure that partnership agreements and programmes translate the Union-level objectives into thematic objectives that can be linked to operational objectives at the level of the Member States or in the programmes directly managed by the Commission. Commission's response: Please refer to the reply to recommendation 2014/PAR/0246. 11.(§ 39 (a) - 2014/PAR/0248) The European Parliament asks the Commission to propose to the legislator that: (a) Member States include in their partnership agreements and programmes a statement of the quantifiable results that the funding is intended to achieve, where appropriate. Commission's response: The Commission partially accepts this recommendation. Given that the 2014-2020 partnership agreements and programmes have only just been put in place, it would be premature to propose changes before the effective implementation of the new performance related provisions can be fully assessed. The assessment of the strengths and weaknesses of the current framework will be carried out for the preparation of the post 2020 multiannual financial framework (MFF). While the Commission is not in a position to commit itself to make specific proposals to the legislator for the next MFF, it will take into account the Court's and Parliament’s suggestions, together with the results of the studies which will be carried out examining the effectiveness of the different mechanisms for strengthening the focus on results in the Common Provisions Regulation, with a view to preparing evidence-based proposals for post 2020 to achieve the most effective use of EU Funds.

12.(§ 39 (b) - 2014/PAR/0249) The European Parliament asks the Commission to propose to the legislator that: (b) all partnership agreements and programmes include common results indicators, where possible shared by different funds, designed to monitor progress at the local, Member-State and Union level. Commission's response: The Commission partially accepts this recommendation. Where common output indicators can be used (i.e. where they are relevant) the regulation in force requires that they are used and the Commission has insisted on this in the negotiations. The Commission sees only marginal possibilities for common indicators across the other funds because of the different missions of the funds and the different types of investment they support. As regards the European Fund for Rural Development (EAFRD), a common set of context, result and output indicators apply for all programmes (see Annex IV regulation (EU) No 808/2014). Given that the 2014-2020 partnership agreements and programmes have only just been put in place, it would be premature to propose changes before the effective implementation of the new performance-related provisions can be fully assessed. The assessment of the strengths and weaknesses of the current framework will be carried out for the preparation of the post 2020 multiannual financial framework (MFF). While the Commission is not in a position to commit itself to make specific proposals to the legislator for the next MFF, it will take into account the Court' and Parliament’s suggestions, together with the results of the studies which will be carried out examining the effectiveness of the different mechanisms for strengthening the focus on results in the Common Provisions Regulation, with a view to preparing evidence-based proposals for post 2020 to achieve the most effective use of EU Funds. 13.(§ 39 (c) - 2014/PAR/0250) The European Parliament asks the Commission to propose to the legislator that: (c) the performance framework be based as far as possible on these common results indicators. Commission's response: The Commission partially accepts this recommendation. The Commission considers that the performance framework cannot solely be based on the result indicators because of the timing issue (results can only be assessed in some cases a considerable time after outputs) and because of the influence of external factors. The performance framework is the outcome of a legislative process and has been agreed by the co-legislators. Given that the 2014-2020 partnership agreements and programmes have only just been put in place, it would be premature to propose changes before the effective implementation of the new performance related provisions can be fully assessed. The assessment of the strengths and weaknesses of the current framework will be carried out for the preparation of the post 2020 multiannual financial framework (MFF). While the Commission is not in a position to commit itself to make specific proposals to the legislator for the next MFF, it will take into account the Court' and Parliament’s suggestions, together with the results of the studies which will be carried out examining the effectiveness of the different mechanisms for strengthening the focus on results in the Common Provisions Regulation, with a view to preparing evidence-based proposals for post 2020 to achieve the most effective use of EU Funds. 14.(§ 40 and § 43 (c) - 2014/PAR/0251) The European Parliament asks the Commission to include in the next evaluation reports provided for in Article 318 TFEU an analysis of the efficiency, the effectiveness and the results achieved in terms of growth and jobs by the investment plan of EUR 315 billion announced by the President of the Commission Jean-Claude Juncker, on 26 November 2014 in the plenary session of the Parliament.

Commission's response: The first Annual Management and Performance Report (covering the former Article 318 Evaluation Report under its Section 1) provides an account on the progress made so far under the Investment Plan for Europe. The Commission envisages continuing to report on the performance of the EU budget contribution to the EFSI in future editions of Management and Performance Report. Separate, more extensive, reporting on the performance of EFSI will be provided as foreseen by the evaluation and reporting provisions in the EFSI Regulation (e.g. in spring 2016 the Commission submitted its first Report on the management of the guarantee fund of the EFSI in 2015 (Report on the management of the guarantee fund of the EFSI, adopted on 31 May 2016, COM(2016) 353 and Communication on the Investment Plan for Europe, adopted on 1 June 2016, COM(2016) 359). The Commission recalls that in line with these provisions EFSI is established as an EIB facility and account, and that the EIB shall report to the European Parliament and the Council on EIB financing and investment operations covered by the EFSI Regulation. Follow-up of the 2013 Commission´s discharge 15.(§ 43 (a) - 2014/PAR/0252) The European Parliament notes with concern that implementation of the following recommendations and requirements in the 2013 Commission discharge is still pending: (a) a sanction system if Member States transmit incorrect programme information and declarations and in the case of false or incorrect reporting by paying agencies including the three following dimensions, namely inspection statistics, statements by the paying agencies, and the work carried out by the certification bodies. Commission's response: The same recommendation was rejected in 2013 discharge. The following justification was given at the time: The Commission is concerned about allegations of "false" or "incorrect" reporting by Paying Agencies and Certification Bodies, as it is not aware of cases where the Member States provided false information to the Commission; Member States appear to simply provide the actual results of their actual controls. The control systems may be deficient but this does not mean that the reporting is false or incorrect. To manage the problem of errors going undetected by the Member States, DG AGRI systematically adjusts the error rate in all cases where there is evidence that the control system is deficient. The Financial Regulation (Article 59.6 of R. 966/2012) does not provide for sanctions against Member States in case of incorrect reporting, but only for corrections in case the applicable rules were breached. Changes such as those recommended by the Committee would necessitate a review of the Financial Regulation. The Commission has already at its disposal and makes full use of a series of preventive and corrective measures available under the legal framework in cases where control systems are partially effective or ineffective: net financial corrections that protect the EU budget, and, where remedial actions are not implemented, suspension/reduction of the payments to the Member State. 16.(§ 43 (b) - 2014/PAR/0253) The European Parliament notes with concern that implementation of the following recommendations and requirements in the 2013 Commission discharge is still pending: (b) publishing, where they have voluntarily decided to present them, not only the national declarations but also the annual summaries and management declarations, as "confidential documents" where applicable, in order to give more insight into and achieve a real improvement in financial management; however it is still not clear how effective these measures will be considering the differences in Member's State structures and the political accountability of the different national authorities. Commission's response: Annual summaries cannot be published or be made public unless prior authorisation of the Member States concerned has been obtained. The same applies to the management declarations which will be submitted as from the new programming period. Any disclosure of the documents must comply with the rules laid down in the Regulation (EC) No 1049/2001 of the European Parliament and of the Council regarding public access to European Parliament, Council and Commission documents, as well as in the Framework Agreement on relations between the European Parliament and the European Commission (L 304/47 - Annex II; forwarding of confidential information to Parliament, point 1.2.3). Given the fact that the management declarations will be submitted at the level of managing authorities, resulting thus in a high number of declarations it would not be appropriate to systematically translate and submit the declarations to the European Parliament. However, the EP will be informed on the results of the Commission's assessment of the assurance reporting provided by the Member States, including management declarations, in the respective AAR each year.

Concerning the national declarations it is exclusively for the Member States issuing the national declarations to decide whether they publish their declarations. The current national declarations issued by the Netherlands, Sweden and Denmark are made public by the national authorities and can be found on their respective websites. 17.(§ 44 - 2014/PAR/0254) The European Parliament notes with concern that only 20 recommendations were implemented fully, 26 recommendations are being implemented in most respects and 19 are being implemented in some respects out of 65 of the Court's recommendations made in years 2011-2012; calls on the Commission to adopt Parliament's recommendations and requirements and to continue implementing the Court's recommendations. Commission's response: The Commission is committed to ensuring that recommendations made by the European Parliament and the Court in its reports, and accepted by the Commission, are systematically implemented and followed-up. It will strive to further shorten the delays with which these recommendations are implemented. 18.(§ 45 and § 288 of Part XXIV – Special Report No 2/2016 of the Court of Auditors entitled "2014 report on the follow-up of the European Court of Auditors' Special Reports" - 2014/PAR/0255) The European Parliament stresses that from the point of view of the Parliament it is unsatisfactory when adversarial procedures end with the Commission and the Court drawing different conclusions; calls therefore on both institutions to avoid such an outcome. Commission's response: The Commission is always willing to accept the Court's audit observations mentioned in its Special Reports, when they are based on facts and sound professional judgment. In this context, the Commission will follow the resulting recommendations. Furthermore, the conclusions the Court draws from its audits have to be fair, balanced and within the limits set by the legal framework. In order to overcome differences within the DAS exercises and also in response to similar requests by the European Parliament and the Council in previous discharge procedures, the Court and the Commission discussed specific methodological issues in order to find a joint position. An agreement was reached on the assessment of deficiencies detected in public procurement procedures and cross compliance requirements. This agreement will also help to considerably narrow the gap between the Court's and the Commission's conclusions. 19.(§ 46 - 2014/PAR/0256) The European Parliament requests an action plan from the Commission with deadlines and objectives to strengthen the prevention of these recurrent errors. Commission's response: The Commission will assess the need for taking further action to strengthen the prevention of the recurrent errors identified. Taking in consideration that within the new Financial Framework a number of measures have already been taken at legislative level to reduce the number of errors, the Commission will also have to assess the situation under those new rules and to determine if complementary action has to be taken. Position of the Court: The Court's statement of assurance 20.(§ 52 - 2014/PAR/0257) The European Parliament notes that if the corrective measures taken by the Member States and the Commission had not been applied to the payments audited by the Court, the overall estimated level of error would have been 5,5 % rather than 4,4 %; urges therefore the Commission, authorities in the Member States or independent auditors to use all information available to prevent, detect and correct possible errors. Commission's response: The Commission notes that this recommendation is also addressed to the Member States.

The Commission is continuously taking measures to ensure that all available information is used to prevent, detect and correct possible errors. The Commission is already taking into account for its financial decisions and its audit work all available information. This will continue also in the future. The Commission exercises further its supervisory role towards the Member States in shared management through guidance and corrective measures (interruptions/suspensions or net financial corrections). For Cohesion policy, this role will be strengthened even more in 2014-2020 with the annual closure of accounts. For the management of the Common Agricultural Policy, the annual clearance of accounts has been in place since the 2007-2013 period. Now the assurance is further enhanced by the new role of Certification Bodies who provide independent audit opinion on legality and regularity of transactions in the Member States' annual accounts. 21.(§ 58 - 2014/PAR/0258) The European Parliament calls on the Commission to revise the method for calculating the corrective capacity in time for the 2015 discharge procedure. Commission's response: In the 2015 annual management and performance report of the EU budget the Commission has reported on the estimated future corrections. These represent the amount of expenditure in breach of applicable regulatory and contractual provisions, that the DG conservatively estimates it will identify and correct through controls implemented after the payment is authorised. As a general rule, the estimates are based on the average amount of financial corrections and recoveries, and adjusted when necessary in particular to neutralise elements which are no longer valid under the new legal framework and one-off events. For 2015, the resulting estimated future corrections represent between 1.5 % and 1.9 % of the total relevant expenditure. 22.(§ 61 - 2014/PAR/0259) The European Parliament asks the Commission in cooperation with the Member States to assess for each policy domain and for the Union budget as a whole, the level of error remaining after all corrective measures, taking into account the multi-annual nature of programmes. Commission's response: In the 2015 annual management and performance report of the EU budget the Commission has reported for the first time on the estimated amount at risk at payment for the 2015 expenditure, the estimated future corrections and the resulting estimated amount at risk at closure per policy area and for the EU budget as a whole. The amount at risk at closure represents the Commission management's view at the end of the financial year on the performance of the controls implemented before payment (preventative, ex-ante) and after payment (corrective, ex-post). It appropriately reflects the fact that the control cycle is multiannual and that further corrective measures can be implemented until closure. For some programmes (e.g. EAFRD and ESIF) financial corrections are still possible even after the closure. In those cases, such corrections are considered to be inherently part of the estimated future corrections which will limit the amount at risk at closure. The estimated amount at risk at closure after implementation of all corrective measures represents between 0.8 % and 1.3 % of total 2015-expenditure. Thus, the multiannual corrective mechanisms will adequately protect the EU budget from expenditure in breach of law. 23.(§ 62 - 2014/PAR/0260) The European Parliament calls on the Commission to apply strictly Article 32(5) of the new Financial Regulation if the level of error is persistently high, and consequently to identify the weaknesses in the control systems, analyse the costs and benefits of possible corrective measures and take or propose appropriate action in terms of simplification, improvement of control systems and redesign of programmes or delivery systems before the mid-term review of the 2014-2020 programming period. Commission's response: Based on the lessons learnt regarding the weaknesses in the control systems of the previous MFF, the Commission reviewed the legislation for the new period and made proposals with the aim to improving the control systems and reducing further the level of the error, while considering appropriate cost-benefit ratio of controls. Notwithstanding, not all of the Commission proposals have been retained by the legislator. The Commission will carry out analyses of “areas of persistently high levels of errors” and report on the root causes and on measures taken to address them, while ensuring cost-effectiveness of controls. In this respect, the Commission is committed to continue to closely coordinate with the Member States and other entities entrusted with the implementation of the EU budget, to identify areas where concerted action is necessary or is considered likely to be beneficial.

24.(§ 69 - 2014/PAR/0261) The European Parliament requests the director general of DG DEVCO to provide a more risk differentiated assurance in his annual activity report and to subsequently direct more of their control resources towards areas covered by specific reservations. Commission's response: The requested action has been taken. A more risk-differentiated assurance was given in the DG DEVCO 2015 Annual Activity Report produced in March 2016. An action plan is being drawn up to take into account the specific areas for which a reservation was issued. General budgetary and financial management 25.(§ 74 - 2014/PAR/0262) The European Parliament recommends that the rules and regulations be verified via a regulatory impact assessment (RIA) process to test their compatibility and compliance with Union needs and targets, as in the case of cost reimbursement schemes, while the most typical example of errors include payments for ineligible costs (41 %) and errors in public procurement (27 %); notes that those errors can differ from a fraud or an act of deliberate deception to gain benefit. Commission's response: The Financial Regulation 966/2002 (article 30) already requires that an ex-ante evaluation be carried out for all programmes or activities occasioning significant budget expenditure. The requirements of the Financial Regulation and its delegated acts as to the content of the ex-ante evaluation cover the principles of sound financial management which are also embedded in the impact assessment process for financial programmes and instruments. These rules and principles are set out in the Commission's Better Regulation Guidelines, which include demonstrating the EU added value, assessing the cost-effectiveness (efficiency) of a proposal, and setting out the policy and management objectives to be achieved (such as measures necessary to safeguard the financial interests of the Union in the field of fraud prevention, detection, investigation, reparation and sanctions). 26.(§ 78 - 2014/PAR/0263) The European Parliament expresses concern at the rate of absorption of funds in Member States, which varies between 50 % and 92 %; calls on the Commission to present a thorough analysis of why it is that some regions still exhibit low rates of absorption and to assess specific ways of remedying the structural problems underlying those imbalances. Commission's response: The Commission put in place in November 2014 a Task Force for Better Implementation (TFBI) with the mandate to help countries with significantly lower-than-average absorption rates to improve and accelerate implementation. The TFBI assessed the situation in each of the 8 Member States covered (BG, RO, CZ, SK, HU, IT, HR, SI), identified the bottlenecks hampering successful implementation, defined country and programme-specific concrete action plans - containing quantifiable milestones and implementation targets - and closely monitored their implementation through missions and high-level and technical-level meetings with the concerned Member States. It also fostered exchange of experience and good practices among the participants and assisted Member States to combine the maximisation of the use of the available flexibility provisions following the line requested by the European Council in December 2014 and ensured a better spending of the funds. Among the actions undertaken to solve the challenges faced were the following:  - identification of new projects that can be selected and implemented quickly;  - identification of specific well-performing priorities that can absorb more than initially identified or well-implemented projects which can be expanded;  - projects initially planned for the new 2014-2020 programmes where some parts can be implemented under the 2007-2013 programmes (phased projects);  - number of programme or project modifications undertaken (and ongoing).

In this context, following the conclusions of the European Council in December 2014, the optimal use of flexibility provided within the Closure Guidelines has played an important role. The following additional measures are the most widely used in the countries concerned:  - the possibilities to compensate lower absorption in one priority by over declaration of expenditures in performing priorities (10% flexibility),  - flexible arrangements regarding phasing of projects between the 2007-2013 and the next period or  - disbursement of funds from financial instruments to final recipients theoretically till closure (in practice till summer 2016 to leave time for the necessary check by the national authorities). The impact of the work of the TFBI is quite visible as the rhythm of implementation has further accelerated in 2015 and 2016 and as of July 2016, all Member States except 6 had reached or exceeded an overall implementation rate of 90% for ERDF/CF operational programmes. Malta, Italy and Romania are still experiencing some delays (implementation rates of 75%, 76% and 77% respectively). While the situation for Croatia seems remains challenging (52%), the latter has however another year of implementation ahead. The Commission will be able to fully appreciate the impact the TFBI had on the optimum use of the 2007-2013 allocations at closure. For the time being, it can be confirmed that, contrary to some earlier forecasts, none of the three countries concerned by automatic rules leading to losing funds at the end of 2015 (Slovakia, Croatia and Romania) have lost ERDF or Cohesion Fund resources. In the medium-term, the Commission intends to ensure that full benefit is drawn from the work of the TFBI and will focus on delivering a more pro-active, hands-on, targeted approach to advice and support for Member States, ensuring that the progress made, and the lessons learnt, help to provide a better implementation of funds in 2014-2020. 27.(§ 79 - 2014/PAR/0264) The European Parliament appreciates the innovative nature of the Court's 2014 annual report which included a results- and performance- based approach, assessing the application and orientation of Union budgetary interventions against the Europe 2020 Strategy priorities; considers that a results- and performance- based approach should be applied in the coming years, when drafting country-specific recommendations (CSRs) in the context of the European Semester. Commission's response: The country-specific recommendations provide policy guidance to the Member States that should be implemented within a 12-18 month time frame. They put the focus on what to achieve, instead of prescribing how to achieve it. The European Semester is a politically driven and focused process, underpinned by technical analysis. It is predominantly a qualitative exercise, not a mathematical one. In particular, the country-specific recommendations are about quality, not quantity. Not all reforms – particularly the kind of wide-ranging structural reforms in the country-specific recommendations – lend themselves to quantitative targets, for example in areas such as pension reform and improving the quality of public administration. That said, there is an explicit link between the use of the EU budget in the Member States and the promotion of policy reforms. In accordance with the legal framework covering the European Structural and Investment (ESI) Funds, the programmes co-financed by ESI Funds for the period 2014-2020 address all relevant country-specific recommendations in the context of the European Semester. The operational programmes have been closely aligned with past country-specific recommendations and their approval has been subject to the implementation of a number of reforms (ex ante conditionalities) in order to facilitate the use and effectiveness of ESI Funds. Budgetary performance 28.(§ 83 - 2014/PAR/0265) The European Parliament recommends a continuation of the process of simplification of both procedures and budgetary content leading to a reduction of excessive administrative burdens and to limitations on gold-plating in particular Member States. Commission's response: The Commission continues to pursue further simplification and rationalisation in the domain of financial management, control, accounting and audit. Simple, accessible funding is among the core objectives of the Commission's Budget Focused on Results Strategy. The Simplification Scoreboard has been re-launched - for the first time, simplification of budget implementation will be monitored not only at Commission level but also at Member State level. Work has also continued to simplify financial rules in view of preparing a simplification package together with the Mid-Term Review of the MFF. A number of fund-specific simplification initiatives have also been launched such as a large-scale simplification of the CAP, as well as the set up of a High-level Group monitoring simplification for beneficiaries of ESI Funds. Regulatory simplification is also one of the cornerstones of the Commission's better regulation agenda and the REFIT programme. The Interinstitutional Agreement on Better Law-making between the Commission, EP and Council signed and entered into force on 13 April 2016 calls upon the Member States to communicate clearly to their public when they adopt measures to transpose or implement Union legislation or to ensure the implementation of the Union budget. 29.(§ 84 - 2014/PAR/0266) The European Parliament recommends an improvement in the budgetary procedure in terms of providing performance information and management, including the cost effectiveness of controls, declaration of assurance and discharge, project databases and communication.

Commission's response: Lessons have been drawn and concrete developments have been made in 2016 to improve the reporting on performance and make it more useful for decision-makers. In particular, the structure and content of Programme Statements accompanying the Draft Budget 2017 were modified providing more focused picture on the programmes' progress. They include both ex-ante and ex-post information on programmes' performance including outputs and results and the progress toward their targets. In addition to the performance information required by the Financial Regulation, two new sections have been added: one on updated information on the programme implementation, and the second one on the summary of the conclusions from the evaluations of the previous MFF programmes. Commission's progress on improved performance reporting is also evidenced in 2016 with the Annual Management and Performance Report for the 2015 EU Budget. This report combines for the first year two former reports: the Evaluation Report produced in accordance with Article 318 of the Treaty on the Functioning of the European Union; and the Synthesis Report required by Article 66 (9) of the Financial Regulation. Bringing together information on the performance and management of the EU budget, the report provides a comprehensive overview of how the EU budget supports the Union's political priorities, and of the role the Commission plays in fostering a culture of performance and in ensuring and promoting the highest standards of budgetary management. The report is an important part of the Commission's contribution to the annual budgetary discharge process and includes two main sections: • Section 1 summarises the performance of the budget based on the evidence available in 2015 on the results achieved with the EU budget. For each of the budget headings, it provides information on the progress of the 2014-2020 MFF programmes and the latest available evidence on the results of the 2007-2013 MFF programmes; • Section 2 describes the Commission's management of the EU budget in 2015 summarising information on the achievement of the internal control objectives; managing legality and regularity risks; the cost effectiveness of controls; and anti-fraud strategies. As to legality and regularity, the Commission presents for the first time a consolidated estimation of the amount at risk at closure, i.e. the estimated level of error after all corrective measures have been implemented at the closure of the programmes. Alongside the developments made on reporting the performance of the EU budget the Commission has also worked at improving its communication on its efforts to make the EU budget more focussed on its results. For this purpose a high-level conference on 'Budget Focused on Results' is organised every year since September 2015 to better understand stakeholders' expectations and visions for the present and future of the EU budget and to share best practices. This is complemented by a series of expert meetings on performance-based budgeting where the Commission is pooling the expertise from the Member States, international organisations and other European institutions to identify elements of performance-based budgeting useful for the EU budget. Finally, the Commission has launched a new initiative for the Web application to communicate examples on how the EU Budget is spent and makes the difference. It includes already more than 850 projects in Europe and beyond covering all kinds of funding areas: the projects cover all the areas covered by the EU Budget such Agriculture, Transport, Development, Competitiveness, Economic governance, Research and so for. Notwithstanding the progress achieved in 2016, the Commission remains committed to continuously improving year-on-year the quality of information on the performance and management of the EU budget which is provided to the Budget Authority. 30.(§ 85 - 2014/PAR/0267) The European Parliament calls on the Commission to improve communication and cooperation between actors involved in budget planning, implementation and discharge, and with the wider public, by aligning expectations, sharing experiences on implementation and reporting on the attainment of results. Commission's response: There are many actors involved in the budget planning, implementation and daily management of the EU funds leading to the discharge. At every step of the budgetary cycle, the Commission cooperates with different actors and stakeholders in order to efficiently manage EU Budget: 1) The preparation of the Budget is preceded with the consultation with the European Parliament and the Council at the Trialogue meetings and follows the Budgetary Authorities' guidelines related to the draft budget for the year in question. DG BUDG coordinates the preparation of the Draft Budget but all DGs/Services are appropriately consulted and the Draft Budget is adopted by the College. 2) After the submission of the Draft Budget to the Budgetary Authorities, the Commission holds many meeting with the Council, the Parliament or both at the Trialogue meetings in order to explain the proposal, discuss it and find a consensus leading to the final adoption of the Budget. 3) During the budgetary year, the Commission is also active in communication and is available for the discussions, not only with the Budgetary Authority but also with the Court of Auditors and other stakeholders. In addition, the Commission prepares regularly various the reports which are requested by the Financial Regulation. In parallel, the EU Budget Focused on Result (BFOR) imitative launched by Vice- President Kristalina Georgieva in 2015 recognized the communication on the EU budget matters with all stakeholder involved as one of the most important work streams of that initiative. Within this framework, the Commission has made an important investment for improving it planning, implementation and discharge activities. In particular some actions can be mentioned: -On the planning side with the definition of the Strategic Plan and Management Plan the Commission has more streamlined and centred the activities of its services on the priorities of the Commission and the competencies of the DGs with a clearer framework for the Commission and DGs' accountability: general objectives have been defined at Commission level and specific objectives at levels corresponding to the DGs' accountability, DGs' operational priorities have a clear distinction between attribution and contribution for policy and programmes' results.

-On the implementation side, Programme reporting is consolidated into Programme Statements accompanying the draft budget including programme implementation update and lessons learned from evaluations. The structure and content of Programme Statements were modified providing more focused picture on the programmes' progress. They include both ex-ante and ex-post information on programmes' performance including outputs and results and the progress toward their targets. In addition to the performance information required by the Financial Regulation, two new sections have been added: one on updated information on the programme implementation, and the second one on the summary of the conclusions from the evaluations of the previous MFF programmes -On the discharge side, for 2015, for the first time, the Commission reported on the EU budget in an integrated package: EU Budget Integrated Financial Reporting Package 2015, which includes four reports, providing key and detailed information for the reporting year on revenue, expenditure, management and performance, notably. The Commission considers that this package is an example of the Commission's unwavering commitment to the highest standards of financial transparency and accountability. In its view, bringing these four specific reports together in one integrated package demonstrates the Commission's effort to provide streamlined yet comprehensive information on revenue, expenditure, management and performance of the EU budget. Collaboration with stakeholders have been further enlarged and reinforced with the launching of the expert’s meeting on performance based budgeting. This group bring together experts from the European Parliament, Member States dealing with budgetary matters, representatives from the Court of Auditors and Commission services with a view to better understand stakeholders' expectations and visions for the present and future of the EU budget and to enable discussion, exchange of point of view and practices at technical level on issue pertaining the EU Budget performance framework. The first meeting has launched this process and the second meeting focused on performance indicators. The communication on the EU Budget performance has been a continued effort: in this areas can be mentioned the 2015 Conference on EU Budget focused on results one of the flagship events of the BFOR initiatives offering a high-level discussion on key questions on the European budget policy agenda and bringing participants from various Institutions, International Organizations, journalists and citizens interested in the topic with the EP represented at speakers’ level. This year another BFOR Conference will take place the 27th September. Finally, the Commission has launched a new initiative, the EU Results Web application to communicate examples on how the EU Budget is spent and makes the difference. It includes already more than 850 projects in Europe and beyond covering all kinds of funding areas: the projects cover all the areas covered by the EU Budget such Agriculture, Transport, Development, Competitiveness, Economic governance, Research and so for. Notwithstanding the progress the Commission remains committed to continuously improving its dialogue with all actors involved. 31.(§ 86 - 2014/PAR/0268) The European Parliament calls on the Commission to consider using tools such as social media, surveys and focus groups to measure public awareness and assess ways to improve their communications strategy in future regarding the results of the projects to the citizens. Commission's response: DG COMM already uses and will continue to use all three tools mentioned. Measuring public awareness to improve communication actions is kept under constant review, including each year at the annual “EU Budget for Results” conference". 32.(§ 88 - 2014/PAR/0269) The European Parliament recommends corresponding improvements in areas such as the alignment of control intensity with risk, mapping performance reporting or the reliability of control results reported by Member States. Commission's response: The Commission is continuously working at improving the cost-efficiency of its control through a better risk based approach and also through its efforts in simplifying rules. In particular, all Commission departments have been invited to review their control systems in order to ensure that they are risk-based, taking into account their cost-effectiveness and having due regard to the management environment and the nature of the actions financed. By the end of 2015, 25 departments had done so; half had taken measures to improve cost-efficiency while the others concluded that no changes were needed. The remaining departments are expected to implement measures or carry out their review in 2016. As regards the reliability of the control results reported by Member States, the DGs implementing the budget in shared management remain committed to further strengthen the methodology used to assess the reliability of the data transmitted by the relevant national authorities. 33.(§ 90 - 2014/PAR/0270) The European Parliament recommends focusing on the performance-based approach and on the issue of market imperfections/failures, as this approach helps focus Union funding interventions on areas where criteria of economy, efficiency and effectiveness are best accommodated; points out that the design should be tailored to a set of different market imperfection/failure types, one connected with information asymmetry and the other related to commercial assessments of return that broadly do not include all positive externalities and wider social benefits whereas both are justifiably supported by Union funding. Commission's response: The Juncker Commission aims to develop a stronger performance culture in relation to the EU budget. One of its top priorities is to ensure that the budget focuses on delivering tangible results for the benefit of citizens. To this end a network of Commissioners has been established (‘an EU budget focused on results’) to enhance the performance based approach to Union funding interventions, which among others, includes economy, efficiency and effectiveness considerations. Supporting competiveness and employment is one of the priorities of the EU 2020 strategy upon which the operational programmes have been agreed with MS and largely implemented by them. In line with the agreed pragmatic approach to focus on results, the Commission has also undertaken a collaboration with the European Parliament, the Council and the European Court of Auditors to discuss specific aspects of performance based budgeting.

34.(§ 92 - 2014/PAR/0271) The European Parliament calls urgently for clarification as to how much money was paid from Union funds to media undertakings in each Member State, which undertakings have received payments and whether the reason was to publicise the funds or another reason. Commission's response: Media companies may receive Structural Funds monies in two main ways: • In the 2007-2013 programmes technical assistance support to the information and communication activities of programmes often involve service contracts signed by the Commission with different media enterprises (delivery of services against payment). These activities are part of an overall programmed budget of EUR 1.7 billion (0.6% of ERDF/CF) for " Evaluation and studies; information and communication" across all Member States. • Media companies may also be beneficiaries of grants or other public aid under different innovation and business support measures of co-funded programmes implemented by the Member States. However, for Cohesion Policy under shared management the Commission has the responsibility to manage programmes and not projects. Therefore, it does not dispose of data giving a systematic overview of such media related support. Having said that, Regulation (EC) 1828/2006, Article 7(2)(d) requires the managing authorities to publish a list of beneficiaries, the names of operations and the amount of public funding allocated to the operations. Such publications are done for all programmes under Cohesion Policy for the period 2007-2013. This requirement continues to apply to the 2014-2020 period (Article 115(2) of the Regulation (EU) 1303/2013). For the European Regional Development Fund and for the Cohesion Fund, the Commission provides an overview to the national internet sites on which the above lists are published: http://ec.europa.eu/regional_policy/en/atlas/beneficiaries/ 35.(§ 95 - 2014/PAR/0272) The European Parliament underlines that the better Member States strive to fulfil the national and quantified Europe 2020 Strategy targets, the more Union budgetary spending can be targeted, and the more those targets will reflect the real Union economic, social, territorial and environmental needs, the better the Union will ensure an environment for sound financial management; in this context, recommends the creation of a permanent platform composed of the Commission, national governments´ representations, including the permanent representations to the Union, regional governments and authorities. Commission's response: Under shared management the necessary arrangements to implement the EU budget between the Commission and the Member States already exist and structures that allow the Commission and the Member States to exchange information are already in place such as: Monitoring Committees of the individual operational programmes (where Member States and local authorities, non-governmental organisations, social partners and the Commission are represented); the European Structural and Investment Funds expert groups in the Council or the Commission-run networks (e.g. Evaluation Networks of DG REGIO and DG EMPL), which also serve as a platform for exchange of views between the Commission and the Member States. In addition, Member States were invited to focus their 2014-2020 Partnership Agreements with the Commission on contributing to the Europe 2020 Strategy. Finally and in the framework of the Commission's initiative " EU Budget Focused on Results", the Commission also set up an inter-institutional working group that gathers representatives from the Member States, the European Parliament, the European Court of Auditors, international organisations and the Commission with the objectives to exchange knowledge and best practices and achieve a common understanding on budget performance framework and concepts. 36.(§ 98 - 2014/PAR/0273) The European Parliament calls on the Commission to provide guidance to the Member States so that partnership agreements and operational programmes transpose more fully the Europe 2020 Strategy and also implement the concept of common results indicators as proposed in the Court’s 2014 annual report. Commission's response: The Commission accepts this recommendation in its part concerning the alignment of ESI Funds to the Europe 2020 Strategy and rejects it in its part concerning the proposed concept of common result indicators. Regarding the transposition of the Europe 2020 Strategy in operational programmes, the Commission considers that ESI Funds do contribute to the achievement of the political priorities of the Union and there is an explicit link to the Europe 2020 Strategy through the thematic objectives. However, the latter was conceived as a broad development strategy for the Union, not only for the EU budget. The Commission does not recommend a mechanistic approach in applying the Europe 2020 targets to the EU budget. Nevertheless, any modification of partnership agreements and operational programmes should take into account the contribution of ESI Funds to the Europe 2020 Strategy. This approach will be applied during the implementation of the 2014-2020 period.

Regarding common result indicators, they are set in all programmes across all funds. It was not considered however relevant to have common result indicators across the ESI Funds due to the variety in the types of investments and changes targeted. The Commission will assess and report on results based on the relevant indicators identified for each priority within programmes, but not through a simple aggregation of information across all funds, which is not considered useful due to the variety of expected results. 37.(§ 101 - 2014/PAR/0274) The European Parliament urges the Commission to strengthen the negotiations with the Member States regarding the necessity of publishing national declarations and annual summaries. Commission's response: Annual summaries cannot be published or be made public, unless the European Parliament has obtained the prior authorisation of the Member States concerned. Any disclosure of the documents must comply with the rules laid down in the Regulation (EC) No 1049/2001 of the European Parliament and of the Council regarding public access to European Parliament, Council and Commission documents, as well as in the Framework Agreement on relations between the European Parliament and the European Commission (L 304/47 - Annex II; forwarding of confidential information to Parliament, point 1.2.3). The 2013 annual summaries were translated and submitted to the European Parliament in May 2015. To date, the Commission has received the approval of seventeen Member States for the transmission of the annual summaries to the European Parliament: Belgium, Bulgaria, Czech Republic, Denmark, Estonia, Greece, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Romania, Slovenia, Slovakia, Sweden, United Kingdom, and recently Hungary. Sweden has requested that publication of its annual summary would be accompanied by its national declaration. However, the EP will be informed on the results of the Commission's assessment of the assurance reporting provided by the Member States, including management declarations, in the respective AAR each year. Concerning the national declarations it is exclusively for the Member States issuing the national declarations to decide whether they publish their declarations. The current national declarations issued by the Netherlands, Sweden and Denmark are made public by the national authorities and can be found on their respective websites. 38.(§ 109 - 2014/PAR/0275) The European Parliament recommends that the Commission fit all reporting arrangements into a single coherent system to protect the financial interests of the Union, thereby making the fight against fraud and corruption more effective Commission's response: With regard to the reporting for the protection of the financial interests of the Union, coherent systems are already in place, managed by the competent service, and have been integrated to the maximum extent possible. Regarding the expenditure areas of the budget, a legislative package (4 delegated and 4 implementing acts) concerning the reporting of irregularities (including suspected fraud) was adopted in 2015, covering all areas of shared management. Furthermore, in April 2016 a new version of the IT tool known as the Irregularity Management System, managed and maintained by OLAF, was released to further streamline the reporting of irregularities. Irregularities concerning Traditional Own Resources (TOR) are reported via an IT system known as OWNRES and managed and maintained by DG BUDG via the OWNRES application while the Commission follows the cases related to direct expenditure through the Commission's Accrual Based Accounting System (ABAC). All the results are reported and analysed in the Commission's Annual Report on the protection of the EU's financial interests. Integrating all reporting arrangements into one system would be practically difficult and not necessarily desirable given that the existing systems relate to different budget areas and management modes. 39.(§ 110 - 2014/PAR/0276) The European Parliament calls on the Commission to improve legislation in this regard (transparency), making it compulsory to publish data relating to all the beneficiaries of Union funding, including data on subcontracts. Commission's response: In making the rules (Art. 35 of the Financial Regulation), the Commission had to make a balancing test in order to comply with the case-law of the Court of Justice (Joined cases C-92/09 and C-93-09, known as the "Schecke" case). The obligation to disclose the information on recipients must be waived if it risks threatening the rights and freedoms of individuals concerned, as protected by the Charter of Fundamental Rights of the European Union, or harm the commercial interests of the recipients, as in the case of grants, procurements, and prizes. When it comes to the implementation of the principle of transparency, the Commission thrives to increase the transparency vis à vis the citizen of the Union, unless when the level of publication went beyond the protection of personal data as it was previously the case in the agricultural sector before the Court invalidated the relevant provisions. In the same spirit, the rules of application of the Financial Regulation (Article 21) foresee that the publication should be waived for contract below Euro 15.000 and for scholarships and other direct support paid to natural persons in most need. It is justified by the fact that a rather small amount of natural persons are concerned by these spending. Furthermore, the proposal for a revision of the Financial Regulation adopted by the Commission on 14 September 2016 resorts to publishing aggregated data (policy area, type of support, type of beneficiary) about certain beneficiaries of financial instruments, in order to respond to input from entrusted entities that individual data publication is too burdensome.

40.(§ 111 - 2014/PAR/0277) The European Parliament urges the Commission to join the Criminal Law Convention on Corruption (ETS No. 173) of the Council of Europe and to speed up the negotiations on the participation of the Union in the Group of States against Corruption (GRECO), in order to contribute to more co-ordinated anti-corruption policies in Europe. Commission's response: On the EU accession to the Council of Europe Criminal Law Convention on Corruption (CETS No.: 173), Additional Protocol to the Criminal Law Convention on Corruption (CETS No.: 191) and Civil Law Convention on Corruption (CETS No.: 174: EU accession had been considered at the end of the 1990's until 2004. At the time, it was concluded that the issue should no longer be pursued until the then Constitutional Treaty (subsequently Lisbon Treaty) would be in force. Following the entry into force of the Lisbon Treaty, EU accession to these Conventions may be revisited, although no Commission decision has been taken in this respect, nor discussion taken place on this in Council or Parliament. It would require in any event a thorough assessment of the impact (political, legal etc.) of such accessions. On the EU participation to the Council of Europe Group of States against Corruption (GRECO): The Commission has set out its position on the EU participation in GRECO in 2012. Still, EU participation in GRECO is blocked on a legal basis divergence between the Commission and the Council. The Commission's interpretation is that accession to GRECO would be possible only on the basis of Art. 220 TFEU - the Treaty article on cooperation with international organisations. This legal basis is however rejected unanimously by the Council, insisting on full EU membership based on Art. 218 TFEU (the Treaty article on the conclusion of agreements with international organisations). The Commission has been in touch with the Council of Europe. The GRECO Plenary has expressed its willingness to explore the possibility to pursue ad hoc cooperation pending formal accession. 41.(§ 112 - 2014/PAR/0278) The European Parliament calls on the Commission to assume full responsibility for the recovery of funds unduly paid into the Union's budget and to establish uniform reporting principles in all Member States with a view to ensuring comparable, reliable and adequate data collection. Commission's response: Done - the Commission has always taken responsibility for the protection of the EU budget by putting in place the appropriate controls, both preventive and corrective. This controls are tailored to fit the relevant policy areas, in compliance with he underlying legislation. The explanation and results of these activities are detailed each year in both the Communication on the protection of the EU budget and the Annual Management and Performance Report. 42.(§ 113 - 2014/PAR/0279) The European Parliament calls on the Commission to clarify the relations between Eurojust, the European Public Prosecutor's Office (EPPO) and European Anti-Fraud Office (OLAF) and to examine the possibility of a stronger integrated approach of these agencies in order to make investigations more effective (reference made to COM(2013)0534 - 2013/0255(APP), point 29). Commission's response: The relations between the EPPO and OLAF and between the EPPO and Eurojust are addressed in the provisions of the EPPO Regulation submitted to the JHA Council on 9 June, and which received "broad conceptual support". The Commission supports those provisions, based on close cooperation and on the complementarity of the respective mandates and competences of the three bodies. Such an approach would ensure a high level of protection of the EU's financial interests. 43.(§ 114 - 2014/PAR/0280) The European Parliament urges the Commission, however, to take into account the recommendations both of the European Ombudsman concerning the composition of the expert groups and of the study 'Composition of the Commission's expert groups and the status of the register of expert groups' when drafting amendments to the current horizontal rules governing expert groups, in order to create a more systematic and transparent approach; requests that the Commission engage in a dialogue with Parliament before the rules are formally adopted, especially in relation to the upcoming report of the Committee on Budgetary Control and the Committee on Legal Affairs on this matter. Commission's response: The new framework for Commission expert groups is close to the Ombudsman’s approach, but not identical. See also reply to 2014/PAR/0241. 44.(§ 115 - 2014/PAR/0281) The European Parliament calls on the Commission to take appropriate measures and on OLAF to continue to support the Member States in improving their performance in the prevention and detection of fraud against European funds. Commission's response: The Commission and OLAF cooperate closely with the Member States in order to improve their ability to identify and prevent fraud against Union funds, by providing them with practical tools to recognise red flags and equipping them with IT tools, e.g. the Irregularity Management System and ARACHNE. OLAF shares good practices in fraud prevention, detection, and investigation in regular fora and develops, together with Member States experts, practical guidance documents in this respect. In 2015 for example, two practical documents were prepared, one for funds managers regarding 'conflicts of interests' and a second one on the 'national anti-fraud strategies'. A third document concerning the role of auditors in preventing and detecting fraud was presented in the framework of the annual coordination meetings with the ESIF audit authorities during 2015. From 2017, the Commission will make the Irregularity Management System also available for the purpose of transmission of information related to risks threatening the EU financial interests by entities implementing the budget under shared management.

Based on its investigative experience, OLAF conducts comprehensive trainings for Member States authorities regarding fraud prevention, risk assessment and analysis of irregularities and suspected fraud. For example, over the past two years OLAF chaired or participated in workshops on fraud prevention and detection in seminars organised by DG REGIO in 12 different locations covering 14 Member States. In the last quarter of 2015, OLAF provided training on fraud prevention to competent authorities of all Member States in the framework of training seminars on the updated system of the Irregularity Management System. 45.(§ 116 - 2014/PAR/0282) The European Parliament Invites the Commission to develop a system of strict indicators and uniform criteria; s concerned about the reliability and quality of data coming from the Member States; calls on the Commission, therefore, to work closely with Member States to guarantee comprehensive, exact and reliable data keeping in mind the goal of full implementation of the Single Audit Scheme. Commission's response: The Commission has already replied in the context of the follow-up given by the Commission on the EP Resolution for the Protection of the Financial Interests of the EU Budget – (SP(2016)349 dated 04/07/2016)”. 46.(§ 117 - 2014/PAR/0283) The European Parliament reiterates its request that the Commission report biannually to Parliament and to the Council on the implementation by the Union institutions of their internal anti-corruption policies, and is looking forward to reading the next report in early 2016; asks the Commission to add a chapter on the performance of the Union institutions in fighting corruption and is of the opinion that the Commission's future anti-corruption reports should always cover all the Union institutions and bodies. Commission's response: Pursuant to COM Decision C(2011) 3673 final of 6.6.2011 "Establishing an EU Anti-corruption reporting mechanism for periodic assessment", the Commission should publish a report every two years assessing anti-corruption efforts in the Member States with a view to fostering political will, helping to step up anti-corruption efforts and reinforcing mutual trust among the Member States. The EU Anti-Corruption Report is a Commission document. As such, it could not be considered a methodologically sound assessment of the Union institutions and their internal anti-corruption policies; this should be achieved through an external and independent assessment However, as a party to UNCAC —the UN Convention Against Corruption— the EU is under an obligation to participate in the UNCAC review mechanism, which will cover both the EU institutions and relevant EU policies and legislations. 47.(§ 119 - 2014/PAR/0284) The European Parliament calls for switching from a voluntary to a mandatory Union register for all lobbyists performing their activities towards the Commission. Commission's response: The proposal for a mandatory Transparency Register based on an Interinstitutional Agreement between European Parliament, the Council of the EU and the European Commission was adopted by the Commission on 28 September 2016. 48.(§ 121 - 2014/PAR/0285) The European Parliament demands that in its second anti-corruption report, at the latest, the Commission carries out further analysis at the level of both the Union institutions and the Member States of the environment in which policies are implemented, in order to identify inherent critical factors, vulnerable areas and risk factors conducive to corruption. Commission's response: Pursuant to COM Decision C(2011) 3673 final of 6.6.2011 "Establishing an EU Anti-corruption reporting mechanism for periodic assessment", the Commission should publish a report every two years assessing anti-corruption efforts in the Member States with a view to fostering political will, helping to step up anti-corruption efforts and reinforcing mutual trust among the Member States. The EU Anti-Corruption Report is a Commission document. As such, it could not be considered a methodologically sound assessment of the Union institutions and their internal anti-corruption policies; this should be achieved through an external and independent assessment However, as a party to UNCAC —the UN Convention Against Corruption— the EU is under an obligation to participate in the UNCAC review mechanism, which will cover both the EU institutions and relevant EU policies and legislations. 49.(§ 122 - 2014/PAR/0286) The European Parliament calls upon the Commission to fulfil without delay its reporting obligations under the UN Convention against Corruption. Commission's response:

The EU is a party to UNCAC —the UN Convention Against Corruption. The Commission will therefore take the necessary steps for the EU to participate in the UNCAC review mechanism, and notably a self-assessment. 50.(§ 126 - 2014/PAR/0287) The European Parliament asks the Commission to evaluate switching from a reimbursement scheme to an entitlement scheme where appropriate, as a means of simplification. Commission's response: The Commission always assesses the possible cost systems which are most adapted to the funding scheme proposed when drafting basic acts and putting in place their implementation framework. The Commission also considers that the potentially negative impact of complicated eligibility rules on the risk of error for reimbursement schemes is significantly mitigated when simplified cost options (SCOs) are used and has already invested significant efforts to expand the use of SCOs in cohesion policy and notably the ESF. The Commission will also continue to support Member States' efforts in this context. In parallel the Commission launched an important exercise on simplification whose results will be addressed in the framework of the "omnibus regulation" and the revision of the Financial Regulation, the use of simplified forms of grants (unit costs, lump sums, flat rates) is facilitated by: 1) lowering of the level of authorisation (from the Commission to the Authorising officer), 2) by allowing for the use of expert judgement when setting-up unit costs in case where sufficient data are missing, 3) by expressly providing the possibility to use a lump sum covering an entire action ("single lump sum"). In addition, a new category of Union contribution is added as an option where the financing is not linked to costs of the relevant operations but rather based either: i) on the fulfilment of certain conditions ex ante as set out in the basic act [or Commission Decisions], and/or ii) on the achievement of results measured through performance indicators. The proposals above (increased use of SCOs, single lump sums and new contributions) will offer the possibility to all policy areas to switch from a reimbursement scheme to a real "entitlement scheme", where appropriate, as a means of simplification. Entitlements programmes already exist today in direct aid to farmers, budget support in the area of external aid or certain student and research fellowships. Evaluation and analysis of the main results of 2014 Union budget 51.(§ 129 - 2014/PAR/0288) The European Parliament requests that identifying the real effects of the Union budget utilisation on Union macroeconomic indicators becomes a subject of discharge procedures. Commission's response: The new Annual Management and Performance Report, being one of the reports contributing to the annual budgetary discharge process, presents evidence available on the results achieved with the EU budget. It includes a summary account of progress on Europe 2020 headline targets and relevant indicators and covers both the implementation of the 2014-2020 programmes and the results from the 2007-2013 programmes. At the same time, detailed and comprehensive reporting on Member States' performance towards their national Europe 2020 strategy targets takes place in the context of the Country Reports of the European Semester, as well as in the yearly updates on the Europe 2020 main indicators published by Eurostat. 52.(§ 132 - 2014/PAR/0289) The European Parliament calls upon the Commission to consider in its budgetary and financial management the capacity constraints in some Member States, in order to avoid the under-utilisation of funds and to increase the absorption rates, especially in the area of the ESIFs. Commission's response: The Commission refers to its reply provided on recommendation 2014/PAR/0263.

53.(§ 133 - 2014/PAR/0290) The European Parliament requests that the Commission take measures to reduce outstanding commitments, including a timely closure of the 2007-2013 programmes and a reduction of cash held by fiduciaries. Commission's response: For Cohesion Policy, the outstanding commitments for the period 2007-2013 decreased in 2014, thus making the end of an upward trend observed until end 2013. It could have been reduced even more if the Commission's ability to honour payment claims received late in the year had not been limited by the lack of payment appropriations. The decrease of outstanding commitments in 2014 is due to the high level of payments made for the 2007-2013 programmes coming towards the end of their eligibility period. See also the Commission reply to recommendation 2014/PAR/0263 regarding actions performed by the Task force for Better Implementation. On the reduction of cash held by fiduciaries, in the 2014-2020 programming period each application for interim payment for financial instruments submitted during the eligibility period shall not exceed 25 % of the total amount of the programme contribution committed to the financial instrument. Subsequent payments are made only when the majority of the previous payments have reached final recipients (such as SMEs). Oversizing and low disbursement rates of financial instruments should therefore be less common also due to the obligatory ex-ante assessment for financial instruments, which will aim at identifying market failures and propose solutions to address them. 54.(§ 135 - 2014/PAR/0291) The European Parliament urges the Commission to come up with a proposal to revise the MFF regulation in order to fix, among other matters, the RAL. Commission's response: The issue of RAL has to be separated from the issue of an abnormal backlog resulting from a lack of payment appropriations. The existence of RAL is unavoidable in the budgetary system with differentiated implementation of commitments (where RAL represents simply the stock of on-going projects) but an orderly progression between the appropriations in commitments and payments needs to be ensure. Backlog represents the amount of outstanding bills at the end of the year. The difficulties of 2014 and 2015 with an abnormal backlog at the end of the year were addressed in the Payment plan proposed by the Commission and agreed by the Council and the EP. The abnormal backlog will disappear at the end of 2016. As regards the future evolution of RAL, the Commission has presented a payment forecast assessing the sustainability of the current ceilings and including the estimate of de-commitments and the evolution of RAL until the end of the current MFF in the framework of the mid-term review of the MFF. Revenue 55.(§ 144 - 2014/PAR/0292) The European Parliament calls therefore on the Commission to declare that GNI data submitted by Member States are reliable and their contributions therefore correct. Commission's response: Each year, the GNI Committee, composed of the Member States and chaired by the Commission, issues an opinion on the appropriateness of GNI data for own resources purposes with respect to reliability, comparability and exhaustiveness. As usual, this opinion was favourable in 2014. 56.(§ 147 - 2014/PAR/0293) The European Parliament asks the Commission to propose legislative amendments enabling effective cross-checks between customs and tax data and to focus its monitoring of Member States on improving the timeliness of their replies to information requests and the reliability of the VAT Information Exchange System.

Commission's response: The Commission issued a VAT action plan in April 2016 that announced measures to tackle the VAT gap, inter alia conducting monitoring visits in 2017. Concerning the effective cross checks between customs and tax data, reference is made to the comment on §114 of the ECA's Special report 24/2015 and the Commission's reply. 57.(§ 148 - 2014/PAR/0294) The European Parliament asks the Commission to provide analysis regarding the future of Union funding evaluating the adequacy of the own resource base. Commission's response: As part of the agreement on the 2014-2020 Multiannual Financial Framework, a High Level Group on Own Resources (HLGOR) was established in order to further the reflections on possible reforms of the financing of the EU budget. According to a joint declaration, the system of own resources should be simple, transparent and subject to democratic accountability. The Commission appointed three members to participate in the HLGOR (FVP Timmermans, VP Georgieva, Commissioner Moscovici) and they are actively involved in the ongoing work. While they are not formally representing the Commission in order to allow for an independent, forward-looking debate, the three Commission members will ensure that the reflections and the final report and recommendations of the HLGOR will feed into the subsequent Commission deliberations in a consistent and coherent manner. The debates and analyses comprise evaluation of the present system, including the GNI- and VAT-based own resources as well as the assessment of alternative financing sources. An external study on the potential and the limitations of reforming the financing of the EU Budget has been commissioned. It will inform the work of the HLGOR. The final report of the HLGOR is expected by the end of 2016. The Commission will take it into account when assessing whether legislative initiatives are appropriate in a post-2020 perspective. 58.(§ 151 (b) - 2014/PAR/0295) The European Parliament points out that changes resulting from the work on reservations would have been mitigated if the Commission´s verification cycle had been shorter and recalls that the Parliament urged the Commission in its resolution of 29 April 2015 concerning discharge for the financial year 2013: (b) to limit the use of general reservations to exceptional cases Commission's response: The Commission accepts the recommendation. The target for the completion of the next verification cycle is under 4 years, i.e. by end 2019. An annex to the Memorandum of Understanding between DG Budget and Eurostat was signed in April 2013 with a view to reducing significantly the number of general reservations. 59.(§ 154 (a) and § 151 (a) - 2014/PAR/0296) The European Parliament asks the Commission to take measures to reduce the number of years covered by reservations at the end of next verification cycle for GNI-based contributions. Commission's response: The Commission accepts the recommendation.

The verification cycle will be shortened and reservations will be set and addressed at an earlier stage (in the course of the verification cycle). 60.(§ 154 (b) - 2014/PAR/0297) The European Parliament asks the Commission to put in place the arrangements needed to reduce the impact of revisions of methods and sources presented by Member States for the compilation of their GNI. Commission's response: The Commission accepts the recommendation. In the current verification cycle (2016-9), which will be shorter than previously, reservations will be set earlier in the process, with a shorter deadline. Thus, the number of years covered by them will be fewer. The procedures, including the timetable, can be found in the following CIRCABC library: "CIRCABC > Eurostat > Monitoring GNI for own resource purposes >Library > GNI Committee meetings > ESA 2010 control cycle framework documents. https://circabc.europa.eu/faces/jsp/extension/wai/navigation/container.jsp 61.(§ 154 (c) - 2014/PAR/0298) The European Parliament asks the Commission to improve the existing guidance given to Member States' customs authorities as to the checks they make (in particular the post clearance audits). Commission's response: The Commission has updated – in close cooperation with Member States experts – the Audit guide for customs' post clearance audits. Additionally, within the framework of the EU Strategy and Action Plan for customs risk management the Commission is addressing further the Court's observations by establishing legally binding financial risk criteria. 62.(§ 154 (d) - 2014/PAR/0299) The European Parliament asks the Commission to ensure that Member states have the appropriate systems in place for preparing and managing their statements of customs duties and sugar levies. Commission's response: In the course of its inspections of traditional own resources the Commission regularly ensures that Member States have appropriate systems in place for preparing and managing their statements of customs duties and sugar levies, and it will continue to do so. 63.(§ 154 (e) - 2014/PAR/0300) The European Parliament asks the Commission to extend the risk assessment capacity of Eurofisc to cover the VIES system (transnational VAT information exchange system). Commission's response: The Commission is following up on the May 25 ECOFIN conclusions and providing the IT and financial support to Eurofisc in this field. Competitiveness for growth and jobs

64.(§ 162 - 2014/PAR/0301) The European Parliament Is pleased that the Commission was able to meet most targets of the key performance indicators (KPI); doubts however, that the target of investing, by 2020, 3 % of the Union GDP in research and development can be met; calls on all Member States to rise to the challenge; notes that the situation seems to be particularly difficult for Croatia, Finland, Luxembourg Portugal, Romania, Spain and Sweden; calls upon the Commission to draw the necessary conclusion for the forthcoming mid-term revision of the MFF to be presented by the end of 2016. Commission's response: The Commission continues to follow up the performance of Member states in meeting their targets, most notably in the European Semester process. In its communication on the mid-term review/revision of the MFF, the Commission proposed to further boost growth and jobs via more money for highly performing programmes, including Horizon 2020. 65.(§ 168 - 2014/PAR/0302) The European Parliament calls on the Commission to take more incisive measures to ensure that external audit certificates more accurately reflect the error rate. Commission's response: The Commission has already addressed this request as follows: First, the Commission has sent a letter to all beneficiaries of the Horizon 2020 and FP7 asking them to pay special attention to the 10 most common errors that the Commission has identified from its own audits or from those of the Court of Auditors. In the same spirit, the Common Audit Service for H2020 sometimes encounters cases of errors which should have been prevented by certification. When the errors encountered exceed 2% of the financial statement, the certifying auditor is informed of the shortcomings. Second, the Commission continues providing advice and information related to the legal aspects of the Framework programmes to all the beneficiaries – and their certifying auditors - that are addressing specific questions associated with their particular projects they are handling. The Commission has organized a series of meetings targeting beneficiaries and independent certifying auditors (>300) to raise awareness of the most common errors. In addition, feedback has been provided to certifying auditors who have made errors, and a clearer template for audit certificates has been provided in Horizon 2020. The Commission will continue to provide guidance to its auditors, and to work on further improvements in the overall process. In addition, the Commission is currently providing ad-hoc training to staff on the most relevant findings reported by the Court of Auditors. 66.(§ 182 - 2014/PAR/0303) The European Parliament deplores the recent press reports casting doubt on DG RTD's ability to protect the financial interests of the Union in an effective manner; calls on the Commission to clarify the circumstances that have been well documented in the media and point to a clear case of maladministration and unequivocal damage to the Union's financial interests and reputation. Commission's response: The Commission has already supplied detailed documents and explanations to the European Parliament on the cases mentioned in the media. The Commission considers that it protects the financial interests of the Union effectively, and has done so in the cases raised. The Commission is ready to provide additional information to Parliament on any topic of their interest within the terms of the established inter institutional procedures. 67.(§ 188 - 2014/PAR/0304) The European Parliament asks the Commission to transmit to the Parliament the action plan presented to the ITER Council in November.

Commission's response: The Commission accepts the request with the following clarification. The schedule presented by the IO Director General at the ITER Council in November 2015 was not accepted by the ITER Council. The Commission has already transmitted to the EP (to the Chair of the Committee on Budgetary Control and to the Chair of the Committee on Industry, Research and Energy) the report of “the ITER Working Group on the Independent Review of the Update Long-Term Schedule and Human Resources” with an information note on the outcome of the Extraordinary ITER Council meeting that defines the path to the establishment on the new ITER Baseline. Therefore no further action is considered necessary on this request. 68.(§ 189 - 2014/PAR/0305) The European Parliament insists to receive from the Commission, by June 2016, an update on a long term project schedule and associated costs for ITER in preparation of budgetary decisions for the following year; recalls that for 2016 payment appropriation at a level of almost EUR 475 million have been set aside for ITER. Commission's response: The Commission accepts the request. Following the meeting of the ITER Council in June 2016, the Commission is preparing information for the EP and Council on the agreed update of the long term schedule, the estimated cost impact and the way to the approval of a new Baseline for the ITER project. 69.(§ 191 - 2014/PAR/0306) The European Parliament asks the Commission to present information in future discharge procedures about the implementation of the InnovFin which covers the Union budget share taking part in this financial instrument. Commission's response: Information on InnovFin is already made available to the public and to the Parliament, including in the discharge procedure. Information regarding the different InnovFin financial instruments is provided to the European Council and the European Parliament during the annual budgetary procedure through the reports foreseen by the Financial Regulation. In line with Article 38(5) of the Financial Regulation, a Working Document part X focuses on quantitative aspects. A qualitative description of the performance of instruments is included in the report “Financial Instruments implementation” according to Article 140(8) of the Financial Regulation. InnovFin is subject to the audit of the European Court of Auditors, who may choose to report on it in their Annual Report. During the discharge process members of the CONT committee may, and have, ask questions about InnovFin. 70.(§ 195 (a) - 2014/PAR/0307) The European Parliament concludes that the Commission should: (a) adopt a set of measures to reduce the relatively high error rate in this area, improve data and information management to analyse also very advanced R&D&I projects and test their real impact against the potential of Horizon 2020. Commission's response: The Commission continues to work to reduce errors. The errors detected in FP7 impact personnel costs, calculation of overheads and unsubstantiated other costs. Because this is “exacerbated” by the complexity of the FP7 rules for calculating eligible costs, the Commission took several measures in order to mitigate the impact of these errors: communication campaign to remind beneficiaries and their certifying auditors of the eligibility rules, communication to all registered FP7 beneficiaries about the 10 most common errors in cost claims, set up of a help desk and improvement of the Guide to Financial Issues for FP7 explaining the rules of eligibility to eliminate misunderstandings. In addition the Commission services have regular meetings with the National Contact Points which amongst other issues the eligibility of costs including personal costs are regularly dealt with. Furthermore at the end of 2011 the Commission did decide on some simplifications, two of which affected personnel costs: 1) it allowed SME owner-managers to claim costs in accordance with Marie Curie rates and 2) it simplified the rules for the declaration of average personnel costs.

Training is being provided to officials in order to improve the effectiveness of ex-ante controls carried out before payments and to raise the awareness on how to detect cases of fraud. Monitoring of the effectiveness and results of Horizon 2020 projects is ongoing, most notably through the Annual Monitoring Report. The impact of Horizon 2020 will be assessed through evaluations. However the Commission does not share the idea that an error rate above 2% is, by definition, "high". In making its proposal for Horizon 2020, the Commission informed the budgetary authority (in the financial statement accompanying the proposed legislation) that an error rate below 2% could not be expected. The fact that the error rate for research will not be below 2% has also been underlined several times by DG RTD and its Commissioner in the discharge procedure. In the discharge 2014, to go alongside the criticisms of the error rate, paragraph 177 reads: "[the EP] Remains convinced that the Commission must continue to strive for an acceptable balance between the attractiveness of programmes to participants and the legitimate necessity of accountability and financial control; recalls, in this connection, the statement of the Direc