Part 1: General analysis of activities

1. Introduction

As required by Article 45(2) of Council Regulation (EC) No 1260/1999, this report sets out to give an overview of the implementation of the Structural Funds (2000‑2006) in 2010.

2010 was the eleventh year in which Structural Funds programmes and projects for the 2000-2006 programming period were implemented. Altogether 226 Objective 1 and Objective 2, 47 Objective 3, 12 Financial Instrument for Fisheries Guidance (FIFG) (outside Objective 1), 81 INTERREG, 71 URBAN, 27 EQUAL, 73 LEADER+ and 181 Innovative Action programmes were managed in 2010.

Even though no further commitments could be made in 2010, sums were disbursed in respect of 2000-2006 Structural Funds assistance. Implementation of the 2010 budget was excellent. In terms of payment appropriations, 100.0 % of the European Regional Development Fund (ERDF) , 97.0% of the European Social Fund (ESF), 30.7 % of the European Agricultural Guidance and Guarantee Fund (EAGGF)-Guidance budget available at the end of 2010 (after a reduction of EUR 13.9 million — see section 2.1.3 below) and 100.0% of FIFG resources were used (compared to 100.0 % ERDF, 97.0 % ESF, 97.9 % EAGGF and 69.5 % FIFG in 2009).

The low budget execution of EAGGF-Guidance in 2010 was due to the fact that 112 out of a total of 152 programmes had already reached the 95 % ceiling for interim payments at the beginning of the year. In these cases, no further payments were possible in 2010 until closure (see section 2.1.3 below). The Commission proposed in September 2010 the transfer of another EUR 345.4 million of payment appropriations, but this transfer was ultimately not accomplished.

In 2010, the closure process started for most 2000-2006 ERDF operational programmes. Most of the related closure documents were submitted by Member States in September 2010. The general framework for the closure of 2000‑2006 Structural Funds assistance was set out in Commission Decision C(2006)3424 in 2006, amended by Commission Decisions C(2008)1362 and C(2009)960.

In view of the financial crisis and the recovery package proposed by the Commission, an extension of six (or twelve) months has been granted on a programme‑by‑programme basis for those Member States which opted for it. This flexibility allowed Member States and regions to maximise the absorption of the allocated funds by addressing unexpected programme implementation challenges and, consequently, achieve the objectives of the programmes.

For those programmes that an extension of the eligibility period was granted, the deadline for the submission of the closure documents was also extended to September 2010. Some Greek and Cross-border programmes were granted a 12-month extension. Their closures documents will have to be submitted to the Commission by end of March 2011

The Commission has 5 months to asses the Final Report and the winding up declaration and once declared acceptable it can proceed to make the final payment. The closure of operational programmes is an important and time-consuming process involving audit and operational units of DG Regional Policy, to assess the quality of the results delivered by programmes and to check the legality and regularity of final expenditure declared to the Commission for reimbursement (final clearance of all payments made).

The ERDF 2000-2006 closure task force, set up in autumn 2009, closely monitored the process. As of 31 December 2010, a proposal for closure was sent to Member States for 25 programmes. The closure of the remaining 354 is a work in progress and it is expected that the majority of these programmes will be closed within 2011.

As regards the 2000-2006 Regional Innovative Actions Programmes, 24 were closed in 2010 bringing the total number of programmes closed so far to 176. Only 5 programmes remain to be closed (2 in France, 2 in Portugal and 1 in Italy) out of a total of 181 programmes adopted

Concerning Cohesion Fund projects, some 348 projects out of a total of 1143 projects were closed by the end of 2010. The closure process will intensify in 2011-2012 since the deadline for expenditure on the ground was 31 December 2010. In the light of financial crisis, the Commission decided in April 2110 to give the possibility to a limited number of projects to extend their eligibility in 2011 or 2012.

For the projects still open, the financial implementations generally improved throughout 2010. The incidence of high risk projects (projects with a serious possibility of not being completed within the currently valid eligibility deadline) was concentrated in a relatively small number of countries. Similar to 2009, high risk projects continued to be mainly in the environment sector (16% of high risk projects for environment compared to an average of 13% of all projects).

In addition to the implementation of 2000-2006 Structural Funds programmes and projects and preparation for their closure, in 2010 the Commission was also heavily involved in implementing 434 programmes (317 ERDF, 117 ESF)[1] for the 2007‑2013 period.

In 2010, the Commission completed the ex post evaluation of ERDF interventions in objective 1 and 2 regions. The synthesis report of the all work was published and presented to the public in April 2010[2]. The ex post evaluations of the ESF and EQUAL were completed in 2010, and their results presented to the Member States. The European Agricultural Guidance and Guarantee Fund (EAGGF) Guidance Section and LEADER+ are evaluated separately. In 2010 the ex post evaluation of LEADER+ was completed and the ex-post evaluation of 2000-2006 rural development programmes was launched. As for the Financial Instrument for Fisheries Guidance (FIFG), the ex post evaluation was undertaken in 2009 and is available on the website[3].

Sharing of experience was promoted, notably through interregional and urban networks and the conference "Regions for Economic Change: building sustainable growth" on 20th and 21st May with 755 participants from all 27 countries. At this occasion, three papers were drafted on: i) Good practice in the use of ICT, ii) Good practice in promoting energy efficiency and iii) Good practice in managing Brownfield sites and buildings. Also, RegioStars awards were granted for the third time to good practice innovation projects from the periods 2000-2006 and 2007-2013 in different categories: ICT (Applications for e-inclusion & for SMEs, Broadband coverage in less developed regions of rural areas) – CityStars (Innovative use of brownfield sites in an urban context & Integration of migrants or marginalised groups in urban areas).

The 8th edition of OPEN DAYS ‘European week of regions and cities’ took place 4-7 October 2010 and brought together 5,900 local, regional, national and European decision makers and experts in the field of regional and local development (including 330 journalists). In addition to this 263 local events were organised in 33 countries. The OPEN DAYS, organised jointly by the Commission and the Committee of the Regions, is an arena for cooperation and networking, for sharing knowledge and experience, and offers regions and cities a possibility to showcase their achievements. It also offers the ideal opportunity to highlight the synergies between cohesion policy and other EU policies.

The Belgian presidency organised a two-day conference (18 and 19 November 2010) on "The role of the ESF in the fight against poverty and social exclusion". Work sessions were organised over two half days. The conclusions, among others, highlighted the role of the ESF as a policy instrument in the fight against poverty and social exclusion. The focus of the ESF on the development of competences with a special attention to those furthest away from the labour market was also underlined as well as the need for the ESF to continue to pay attention to gender equality and equal opportunities as transversal points of attention.

2. Analysis of implementation 2.1. Budget Implementation 2.1.1. ERDF

In spite of the financial downturn, 2010 was an excellent year in terms of budgetary execution. The overall absorption rate reached 100.0% or EUR 1,694 million reimbursed to operational programmes.

While the execution under Objective 2 was higher than initially voted (EUR 230 million instead of EUR 104 million), payments to Objective 1 and Interreg programmes were lower than originally foreseen (for Objective 1, EUR 1,348 million instead of EUR 2,077 million and for Interreg EUR 90 million instead of EUR 202 million), mainly due to a transfer of appropriations during the global transfer to reinforce the 2007-2013 appropriations.

In total for other programmes (Urban, Innovative actions), EUR 25 millions were paid.

DG REGIO is managing previous and current programming periods in parallel. After a slow start-up of the 2007-2013 programmes, payment claims have been accelerating during 2010. This trend combined with the fact that most 2000-2006 programmes had reached the 95% ceiling for interim payments led to a transfer of appropriations from the 2000-2006 period to the 2007-2013 period. This allowed for the 100.0% execution of payment appropriations for ERDF programmes financed under both programming periods.

Closures

In 2010, the closure process started for most 2000-2006 ERDF operational programmes. The bulk of the related closure documents were submitted by Member States in September 2010. This was due to the extension of six months granted by the Commission for the final date of eligibility of expenditure. Some Greek and Cross-border programmes were granted a 12-month extension. Their closures documents will have to be submitted to the Commission by end of March 2011.

Out of 379 programmes, 281 (or 74%) representing 90% of ERDF funds have chosen to extend their eligibility dates. As at 31 December 2010, closures documents were received for 356 programmes. The responsible units are currently analysing the Winding-up Declarations and Final reports.

A proposal for closure had been sent to Member States for 25 programmes while the remaining 354 will be closed during 2011 and 2012.

Programmes closed at end 2010:

Objective / Initiative || Country || File Reference || File title || Amount paid

Interreg || CB || 2000CB160PC020 || Karelia || 376,306.86

|| CB || 2000CB160PC001 || PIC Interreg III || 77,658.23

|| CB || 2000CB160PC002 || PIC Interreg III || 214,931.63

|| CB || 2000RG160PC020 || Alpine Space || 716,562.38

|| CB || 2000RG160PC019 || Wallonie-Lorraine-Lux || 344,477.01

|| CB || 2001RG160PC013 || ESPON 2006 || 20,042.19

|| CB || 2000RG160PC016 || IT-AT || 1,739,158.10

Objective 1 || DE || 2000DE161PO001 || PO obj. 1 Transport || 83,050,000.00

Objective 2 || AT || 2000AT162DO007 || DOCUP obj. 2 Tirol || 2,332,700.00

|| AT || 2000AT162DO004 || DOCUP obj. 2 Salzburg || 926,650.00

|| AT || 2000AT162DO002 || DOCUP obj. 2 Niederösterrreich || 9,248,350.00

|| AT || 2000AT162DO001 || DOCUP obj. 2 Kärnten || 4,249,550.00

|| AT || 2000AT162DO005 || DOCUP obj. 2 Vorarlberg || 861,378.51

|| SE || 2000SE162DO001 || DOCUP obj. 2 Öarna || 335,379.85

|| GB || 2000GB162DO001 || Gibraltar || 437,180.00

Urban || IT || 2001IT160PC010 || Torino-Italy || 544,647.45

|| DE || 2000DE160PC107 || Leipzig || 210,190.72

|| DE || 2000DE160PC108 || Luckenwalde || 711,206.41

|| DE || 2000DE160PC103 || Dortmund || 163,066.31

|| DE || 2000DE160PC100 || Berlin || 755,987.60

|| IT || 2001IT160PC001 || Carrara-Italy || 448,855.90

|| DE || 2000DE160PC106 || Kiel || 387,156.69

|| FR || 2000FR160PC007 || Strasbourg || 14,946.99

|| FR || 2000FR160PC006 || Le Havre || 538,488.29

|| DE || 2000DE160PC102 || Dessau || 755,987.60

TOTAL || || 25 || || 109,460,858.72

As regards the Regional Programmes of Innovative Actions, 24 were closed in 2010 bringing the total number of programmes closed so far to 176. Therefore, only 5 programmes remain to be closed (2 in France, 2 in Portugal and 1 in Italy) out of a total of 181 programmes adopted.

For the entire 2000-2006 period, EUR 123,339 million have been paid to Member States as of 31 December 2010. This represents an average absorption rate for all Member States of 95.2% of the EUR 129,600 million overall allocation. Most of the remaining payments concern payments of balances for the closure of programmes.

RAL

At the end of 2010, commitments from previous years on which payments were still to be made (RAL) amounted to EUR 6,751 million for ERDF compared with EUR 8,400 million at end 2009. This represents 5.2% of the total amount committed for ERDF. A further decrease of the RAL is foreseen with the payment of final balances in the coming years.

‘n+2’ rule

In 2010, as in the previous year, the so-called ‘n+2’ rule did not apply. As a general rule, the last commitment tranche (i.e. 2006) will be used to execute final payments once the closure of the programme is agreed between the Member State and the Commission. Accordingly, the amount to be decommitted will only be calculated at the closure stage of the operational programme[4].

2.1.2. ESF

Budget Implementation

For the 2000-2006 programming period, the payment credits consumption during 2010 reached EUR 318 million. This corresponds to 26, 42 % of the annual payment credits allocation.

This is due to the fact that the closure exercise for 2000-2006 programmes has begun and the first submission deadline for closure documents was March-2010. Interim payments have been therefore processed for the programmes that did not reach the 95% treshold before closure then interim payments execution was rather limited.

The under-execution is due to the low consumption of the OPs from 2000-2006 period. It amounts to EUR 882 million (or 73, 58 % of 2010 payment appropriation), of which EUR 259 million concern C1 payment appropriations and EUR 623 million C2 payments appropriations carried forward from 2009.. The suspended/interrupted payments, following the audit results, for 21 out of 38 programmes put into reserve (AAR 2009) remained blocked and, in those cases, the financial suspension/correction procedure is foreseen to be merged with the final payments processed in the context of 2000-2006 closure.

The total outstanding commitments (RAL) at the end of 2010 stood at EUR 3 002 million (compared to EUR 4 700 million in 2009). This represents 4, 38% of total commitments for the period 2000-2006. The RAL has been consumed by interim payments, a few final payments and an automatic de-commitment of the unused RAL has been processed for an amount of EUR 1,461 million under closure exercise.

In 2010, as in the previous year, the so-called ‘n+2’ rule did not apply and the concerned RAL has been decreased by de-committments for the programming period 2000‑2006 at the closure of the operational programmes according to the provisions set in the Article 105(3) of Regulation (EC) No 1083/2006.

For the whole period, at the end of 2010 EUR 64 118 million have been paid to Member States. This represents an absorption rate for all Member States of 93, 47% of the EUR 68 600 million overall allocation.

Closure

There are 239 ESF operational programmes to be closed within the 2000-2006 programming period.

According to the regulation, payments for the 2000-2006 period could continue until the end of 2008. However, in view of the financial crisis and the recovery package proposed by the Commission, an extension of six (or twelve) months was granted on a programme-by-programme basis for the Member States which opted for it. Out of 91 programmes where the Directorate-General for Employment, Social Affairs and Equal Opportunities is ‘Chef de file’, 68 chose to extend their eligibility dates.

The Commission has allowed the Member States to request extension of the programmes up to 30 June 2009 following the financial and economic crisis as long as the request was substantiated and sent to the Commission before 31/12/2008.

In the event that the deadline for eligibility of expenditure wa extended, the deadline for submission of the closure documents was extended accordingly.

Therefore the following submission deadlines have become effective: 31/03/2010, 21/07/2010, 30/09/2010, 31/03/2011 and 30/09/2011under regulation in force.

All submitted closure documents have been received in due time as per the following Table 1.

In total for 229 programmes under closure in 2010 all closure documents have been submitted in the required deadline.

Table 1: Number of programmes to be submitted under submission deadlines and and closure progress of ESF programmes for 2000-2006 programming period

For 10 programmes from submission deadline 31/03/2010 a total closure has been completed and accepted by the Member States. This represents: 7 payments, 1 balance 0 and 2 recoveries, see following Table 2.

Table 2: Closure progress of ESF programmes for 2000-2006 programming period

Under closure process for 2000-2006 programmes the Commission has five months[5] from the receipt of the final report in which to advise the Member State if it is not satisfied with the final report, including the coherence of financial information, and the reasons for its dissatisfaction, failing which the final report will be deemed to have been accepted.

It is noted that the Structural Funds Regulations indicates only one deadline for the analysis of the documents – five months for the final report – whereas no deadline is stipulated for the winding-up declaration or the certified statement of final expenditure. The assessment of the latter two closure documents have to be realised within a "reasonable period" according to the interpretation of the Legal Service (note JUR (2008) 15308 LF of 22 May 2008).

The closure process and its implementation on the gound was closely monitored in DG EMPL by the ESF 2000-2006 closure task force, set up in early begining of 2009.

In 2010, in addition to provided guidelines refferring to the general framework for the closure of 2000‑2006 Structural Funds assistance set out in Commission Decision C(2006)3424 in 2006, amended by Commission Decisions C(2008)1362 and C(2009)960; DG EMPL approved the guidance package for ESF 2000-2006 closures including establishment of the Closure Monitoring Group and the Closure Working Group.

Both groups are important platforms to deal with the closure of the ESF 2000-2006 programming period to speed up the process and ensure consistency and transparency of treatment of closure files.

The closure of the remaining 229 programmes is a work in progress and it is expected that the a major part of these programmes will be closed by the end of 2011.

2.1.3. EAGGF

The total amount paid in 2010 was EUR 168.3 million or 30.7% of the budget available at the end of the year (an amount of EUR 13.9 million was transferred during the year to other budget lines outside the EAGGF). The execution rate as regards the initial budget for payment appropriations would be 29.9%.

In absolute terms, the amount paid in 2010 is far below the amount paid in 2009 (EUR 300 million less). Three main reasons are behind this reduction:

– The rural development programmes financed by EAGGF-Guidance have followed a very high rhythm of implementation in previous years. At the end of 2009, 94% of the EAGGF-Guidance contribution programmed for the whole period had already been paid, and a substantial number of programmes (112 out of a total of 152), had already reached the 95 % ceiling for interim payments. In these cases, no further payments were possible in 2010 until closure.

– In 2010 the closure of 2000 – 2006 EAGGF-Guidance programmes started and by the end of the year 19 programmes (out of a total of 152 programmes), were closed.

– The low EAGGF-Guidance expenditure in 2010 was very largely compensated by EUR 11.12 billion of EAFRD expenditure under the rural development programming 2007-2013 (which is EUR 2.91 billion more than in the year 2009).

The EAGGF-Guidance outstanding commitments (RAL) at the end of 2010 amounted to EUR 1,183.3 million, equivalent to 5.3% of the whole allocation 2000-2006. This amount is EUR 171.3 million lower than the EUR 1,354.6 billion RAL at the end of 2009.

2.1.4. FIFG

The overall absorption rate for payments was 100 %, with EUR 10 million being disbursed to Member States.

Concerning the execution level of payment appropriations, EUR 10 million was paid under Objective 1, no payment was made outside Objective 1.

The total RAL for the FIFG at the end of 2010 reached EUR 296,44 million (compared with EUR 306,41 million in 2009). This represents 7.5 % of total commitments for the period 2000-2006.

For the whole period, as at the end of 2010, EUR 3 639 million have been paid to Member States. This represents an absorption rate for all Member States of 92.5 % of the EUR 3 935 million overall allocation.

2.2. Programme Implementation 2.2.1. Objective 1

Expenditure on Objective 1 programmes followed much the same path as in 2009 (for details, see part 5). Objective 1 programmes focused on basic infrastructure projects (40.2 %), with almost half of all investment in this category spent on transport infrastructure (49.9 %). More than a third (34.9 %) of Objective 1 resources was invested in the productive environment, where the focus continues to be on assisting SMEs and the craft sector (26.6 %). Projects geared to human resources account for 22.5 % of resources in Objective 1 regions. The main areas of assistance in this field are almost equally split between labour market policies (30.6 %) and education, and vocational training (31.2 %).

2.2.2. Objective 2

The main focus of programmes in Objective 2 regions continues to be on productive investments, with over half of all financial resources devoted to this category (55.4 %). Within this field, assistance to SMEs and the craft sector is the most dominant (55.6 %). The second most supported field is basic infrastructure, with 29.2 % of all Objective 2 resources. Unlike Objective 1 programmes, the most important areas in financial terms are planning and rehabilitation of areas (45.6 %). In the category of human resources (10.5 % of all investment in Objective 2 regions), workforce flexibility, entrepreneurial activity, innovation, information and communication technologies are the main fields of investment (31.6 %).

2.2.3. Objective 3

ESF programme implementation in 2010 continued to be focused on the European Employment Strategy, particularly on the measures aimed at improving employability in the labour market (30,9 % of certified expenditure), lifelong learning (activities developing educational and vocational training represented 31;2 % of certified expenditure), social inclusion (13;3 % of certified expenditure), equal opportunities (5.2 % of certified expenditure) and entrepreneurial activities, workforce flexibility, innovation, information and communication technologies (19,05%)

2.2.4. Fisheries outside Objective 1

Expenditure of the FIFG programmes outside Objective 1 focused on the processing, marketing and promoting of fisheries products (26.7 %). The second most important measure was adjustment of the fishing effort (17.8 %), followed by the renewal and modernisation of the fishing fleet (17.5 %), fishing port facilities (16.9 %) and actions by professionals (vocational training, small coastal fishing) (12.8 %).

2.2.5. Community Initiatives 2.2.5.1. INTERREG

INTERREG supports cross-border, transnational and interregional cooperation to encourage the harmonious, balanced and sustainable development of the EU. By the end of 2010 the 81 INTERREG III/Neighbourhood programmes had selected about 19 000 projects and networks aimed at reducing the effects of national borders, language barriers and cultural differences and developing border areas, supporting strategic development and territorial integration across larger zones of the EU and better integration with its neighbours. Effectiveness of regional development policies and instruments was also supported by sharing of good practice and exchange of experience.

The first 54 INTERREG III programmes were adopted in 2001 and were followed by 15 programmes in 2002 and 3 in 2003. Enlargement increased the overall number of EU borders and resulted in nine new programmes being adopted in 2004, many of which are Neighbourhood Programmes. In 2004 most programmes were modified to take account of the mid-term evaluations and the distribution of indexation funds.

For some programmes changes were also necessary due to enlargement and/or integration of the Neighbourhood Programme concept. Some ‘n+2’ decommitments and results of the updates of the mid-term evaluations contributed to further programme modifications in the following years. By the end of 2010, the payment absorption rate was about 92 %. Due to the more specific and challenging nature of cooperation programmes, project decommitments due to the ‘n+2’ rule could not be avoided for some programmes. In total EUR 135.0 million was decommitted during the programming period due to the automatic decommitment rule.

In 2010, the closure process for 81 INTERREG III/Neighbourhood programmes has been started. By the end of reporting year 64 programmes have been submitted to the Commission. The Commission services worked in close cooperation with the authorities responsible for programme implementation in order to conclude the closing procedure. Within 2010, closure of 3 programmes has been finalised. The remaining 17 programmes, due to extended final dater of eligibility of expenditure affected by the financial crisis and prolonged eligibility for the Technical assistance priority are expected to enter the closure procedure by 31 March 2011.

Due to their international nature, financial control and audit are challenging for INTERREG programmes. Audit findings have called for some programmes to develop action plans on how to improve their financial control and audit systems. The implementation of these action plans has been closely monitored.

2.2.5.2. EQUAL

The EQUAL Community Initiative focused on supporting innovative, transnational projects aimed at tackling discrimination and disadvantage in the labour market. These projects were created to generate and test new ideas with the aim of finding new ways of fighting all forms of discrimination and inequality within and beyond the labour market.

The principles underpinning EQUAL projects were the following: Partnership, Innovation, Empowerment, Transnational cooperation and Mainstreaming

EQUAL was structured according to thematic fields defined within the four pillars of the European Employment Strategy (EES): Employability, Entrepreneurship, Adaptability and Equal opportunities. In addition to these pillars, the programme supported a further theme of activities to help the integration of asylum seekers.

It was implemented by all Member States, following common guidelines established by the Commission. The programme stood for €3 bn investment of the ESF in labour market development and social inclusion and has helped to make the ESF a more effective, efficient and relevant instrument for contributing to the Lisbon reform strategy to create more and better jobs. EQUAL has provided evidence for innovative and adaptable policy strategies and delivery mechanisms that bring greater inclusiveness to Europe’s diverse labour markets, based on the efforts and achievements of 3,480 development partnerships with more than 20,000 partners, reaching over 200,000 persons in Europe.

The EQUAL Community Initiative programmes were administratively closed in 2008 in most Member States. Only a few asked for an extension of the final date of eligibility into 2009 in order to achieve a higher absorption rate and to continue mainstreaming actions. In 2010 the administartive closure process was continued and by the end of the year 4 closures of EQUAL Operational programmes were completed.

2.2.5.3. URBAN

In 2010, URBACT I programme has been closed. The URBACT Programme reported a total eligible cost of 25 043 714€ of which a total of 15 386 591€ ERDF was claimed, this represents an ERDF under-spend of 2 644 526€ or 14.67%.

The URBACT II programme, the Urban Development Network Programme under the European Territorial Cooperation Objective, is an exchange and learning programme for cities based on the good experiences with the URBACT I programme. In 2010, work on the management of the URBACT II programme continued by way of monitoring committees and reporting procedures.

After having launched the first call for proposals in 2007, in total, 19 thematic networks and 6 working groups were launched. In 2010, five working group closed their projects. All the partners produced and submitted their Local Action Plans. The remaining one working group and the 19 thematic networks got close to the end of their implementation phase. They consolidated their work in the implementation phase by elaborating and starting to implement Local Action Plans in close cooperation with Local Support Groups.

In 2009, a second call for proposals was launched and another thirteen thematic networks and three working groups started the development phase. In 2010 they all finished this first phase and applied for the implementation phase. Due to not having met the eligibility criteria for the implementation phase, only nine thematic networks were able to start the implementation phase in 2010.

So far 30 thematic networks and seven working groups (in 2009 there was an additional call for the establishment of a working group to facilitate the implementation of integrated sustainable urban development according to the Leipzig Charter) have been working under the programme. Together with the two Pilot Fast Track Networks and the working groups and thematic networks that finished their projects at the end of the development phase of the second call, the projects have gathered 333 partners (cities, Member States, regional authorities, universities, NGOs) from 28 countries (26 Member States plus Norway and Switzerland).

The creation of strong links between cities and their managing authorities is the guiding principle of the entire URBACT II programme. Following the two calls for projects launched under URBACT II, the Managing Authorities signed letters declaring their intent to cooperation with 240 URBACT partners.

The URBACT II programme is one of the main instruments of the Regions for Economic Change initiative, aiming at faster implementation of best practice and innovative concepts. In this framework, the Commission in 2010 actively supported six running Fast Track Networks of the first call and selected and labelled two networks of the second call. Several Commission services, led by the Directorate-General for Regional Policy (and one network led by the Directorate-General for Health and Consumers), are involved in the Fast Track Network activities and support the project partners in implementing their Local Action Plans through regional or national Operational Programmes.

2.2.5.4. LEADER+

The Community Initiative Leader+ consisted of three activities: implementation of local development strategies by public private partnerships, cooperation between rural territories and networking. 73 Leader+ programmes for the EU 15 were approved for the period 2000-2006. (Recently acceded EU Member States had the option of integrating Leader+ type measures into their EAGGF Objective 1 programmes.)

By the end of 2010, 14 LEADER+ programmes were closed and 8 closure letters had been sent to Member States

2.2.6. Innovative Actions 2.2.6.1. ERDF

The Directorate-General for Regional Policy also managed 181 Regional Programmes of Innovative Actions (by 31 December 2010, 171 had been closed, 24 of them during 2010). These programmes helped to promote strategic innovation in the regions, by experimenting with innovative methods and practices designed to improve the level of innovation and the quality of EU assistance under three themes: knowledge and technological innovation, information society and sustainable development. In December 2010, the European Policy Evaluation Consortium (EPEC) delivered conclusions of a study on Policy lessons from experience with the Regional Programme for Innovative Actions in the fields of innovation, sustainable development and information society.

2.2.6.2. ESF

The remaining Innovative Actions for 2005 and 2006 projects were completed as planned and closed in 2010.

3. Consistency and coordination 3.1. Consistency with other Community policies

Previous reports have given details of developments to maintain consistency between cohesion policy and other EU policy priorities such as competition policy, internal market, environment, transport and gender equality objectives. There were no specific changes in requirements or expectations on managing authorities as the 2000-2006 programmes entered the final months of implementation.

For the future programming period, thematic inter services taskforces have been implemented to ensure coherence of Structural Funds’ policies in following fields: “Smart growth”, “Sustainable development”, "Education", "Employment and Social inclusion", “Transport”. (NB in early 2011)

3.2. Coordination of instruments 3.2.1. The Structural Funds and the Cohesion Fund

Aid granted by the Cohesion Fund provides financing for transport infrastructure projects in the fields of trans-European networks and the environment. The Cohesion Fund enables the beneficiary Member States to channel significant public investment into these two fields of common interest, while meeting the objectives of reducing the budget deficits set out in the convergence and stability programmes drawn up as part of Economic and Monetary Union.

Following the enlargement of the European Union in May 2004, the ten new Member States are covered by the Cohesion Fund. In the period 2000-2006, before the latest enlargement on 1 January 2007 to include Romania and Bulgaria, there were 13 beneficiary Member States. As a result of its economic growth, Ireland has not been eligible for the Fund since 1 January 2004.

The principal instrument for coordinating funding under the Cohesion Fund and the Structural Funds is the national strategic reference framework (SRF), which covers the whole of the 2000-2006 period. Council Regulation (EC) No 1265/1999 amending Annex II to Regulation (EC) No 1164/94 provides that ‘Member States shall also provide the results of the environmental impact assessment in conformity with Community legislation, and their consistency with a general environmental or transport strategy at administrative unit or sector level’.

The four ‘old’ Member States benefiting from the Cohesion Fund presented their SRFs for the environment and transport sectors at the end of 2000. The ten new Member States submitted theirs during the first half of 2004. Since then, decisions to finance projects by the Cohesion Fund have been subject to a verification process to avoid duplication with programmes adopted under the Structural Funds. In addition, SRFs improve the complementarity between the two instruments.

Thus, in certain cases, these SRFs form an integral part of the programmes approved under the Structural Funds for the period 2000-2006; this improves coordination between funding under the Cohesion Fund and the Structural Funds.

3.2.2. The Structural Funds and the EIB/EIF

Since the implementation of the 2000-2006 period entered the closure phase in 2010, there is nothing to report.

4. Evaluations

In 2010, the Commission continued to carry out evaluations to support decision‑making under the Cohesion Policy.

ERDF

In 2010, the Commission completed the ex post evaluation of ERDF interventions in objective 1 and 2 regions. The synthesis report of the all work was published and presented to the public in April 2010.

The ex post evaluations of the Community Initiatives URBAN and Interreg were also completed in 2010.

The ex post evaluation of the URBAN Community Initiative provided evidence of the added value of this aspect of the policy and supported the proposals by the Commission for a stronger urban agenda in the future policy. Successful projects were characterised by local leadership (80% of URBAN programmes) and local ownership. They were selected in line with local perceptions of need, with commitment from local players and delivered in partnership with local people. Unsuccessful projects were usually imposed from above, with little local ownership and involvement.

The ex post evaluation of the INTERREG III Community Initiative concluded that it was about much more than mutual learning, although this too was important. Financially larger programmes generated significant investments and achieved lasting tangible impacts, while smaller programmes achieved mostly intangible impacts on territorial development. INTERREG generated important soft leverage effects – actor mobilisation, an increased inter-cultural understanding and development of social capital.

In addition other evaluations were launched in 2010 and are currently underway. Three of them are studies on Counterfactual Impact Evaluation of Cohesion Policy:

· Examples from enterprise support, with the aim to assemble and use support and outcome data for assistance to enterprise in Member States. The study will use econometric analysis to estimate the impact of ERDF enterprise assistance

· Examples from support to innovation and research: aiming to document the process of combining beneficiary data, firm-level economic data and innovation and research data for the purposes of counterfactual impact evaluation, to see where it is possible and to give a practical guide to the kind of issues which arise.

· Data-linking and impact evaluation in N. Ireland: looking to document work currently underway preparing and linking various datasets in Northern Ireland, as well as to perform an impact evaluation using these datasets.

Two thematic studies were also launched. The first one concerns local development, in order to assess the contribution of local development to the effective delivery of Cohesion Policy and to provide lessons for the future and on territories with specific. The second one concerns regions with specific geographic features, with a view to examine the extent to which cohesion policy interventions are and have been appropriate in mountainous, islands and sparsely populated regions

Another study launched in 2010 concerns the evaluation of Innovation activities, to provide a state of the art of the evaluation of innovation in Member States and an analysis of the advantages and limits of available methodologies for assessing different kinds of innovation activities, to conduct a series of case studies on good quality evaluations, as well as to draft guidance for managing authorities to support their evaluation activities.

ESF

The ex post evaluation of the ESF (2000-2006) was completed in 2010. It consists of 1 preparatory study, 2 thematic studies (a - ESF support to the Open Method of Coordination in social protection and social inclusion; b - The impact of the ESF on the functionning of the labour market and investment in human capital infrastructure through support to systems and structures), and 2 main evaluations on the ESF and EQUAL. All the evaluation reports have been published1.

Besides the ex post evaluation, the following evaluations and studies were completed in 2010 or beginning of 2011:

- Evaluation of the ESF contribution to the European Employment Strategy. The evaluation confirmed that the ESF is an essential instrument to implement and disseminate concepts and reforms linked to the EES;

- Evaluation of the capacity of the ESF delivery system to attract and support operational programme target groups. The evaluation found that in some cases the delivery systems put in place by Member States have a limited capacity to attract and support certain OP target groups. This is especially true for target groups that face multiple barriers to enter the labour market;

- Evaluation of ESF support to the integration of the ethnic minorities and migrants in the labour market. A key conclusion of this evaluation was that there is an increased attention to promoting the labour market and social inclusion of migrants and minorities in ESF in the 2007-2013 period compared with 2000-2006;

- Evaluation of ESF support to Gender Equality. The evaluation confirmed the European Added Value in the ESF's support to gender equality policy, which is mostly visible in terms of capacity building and support for the creation of a recognised and autonomous policy space for gender equality;

- ESF implementation in the 2007-2013 period - template for EC reporting and 2008 outline report. The study has developed a template to report on the use and performance of the European Social Fund (ESF) since the beginning of the current programming period in 2007, as notified by Member States to the Commission through the SFC 2007 platform. It also proposes a limited set of aggregated common indicators.

In addition, the following evaluations and studies were launched in 2010 and are currently underway:

- Developing logics of intervention and related common indicators for the next ESF operational programmes. The purpose of the study is threefold: (1) to develop methodologies for establishing logics of intervention at the most suitable level for the ESF; (2) to develop logics of intervention by way of example for three selected policy areas: access to employment; social inclusion and poverty; institutional capacity and governance; (3) to develop common indicators relevant for all ESF policy fields;

- Evaluation of ESF support to Lifelong Learning. This evaluation focuses on how ESF Lifelong Learning activities could better support the sustainable integration of young job seekers, low-skilled workers and older workers into the labour market;

- Evaluation of the reaction of the ESF to the economic and financial crisis. The purpose is to assess if the economic crisis has had an impact on the ESF spending, at which level it had an impact, if the ESF is sufficiently flexible to react to such challenges and at which stage of the crisis is the ESF best placed to intervene.

Furthermore, DG Employment launched an ESF Evaluation expert network The purpose of the network is to aggregate and synthesise the ESF evaluations carried out by the Member States, as well as to deliver policy analysis and evidence on the performance of ESF.

In 2010, DG Employment continued to hold ESF Evaluation Partnership meetings to which it invited all Member States’ evaluation functions. The main objective of these meetings is to steer and capitalise on evaluation of actions supported by the ESF. In 2010, the Evaluation Partnership met three times

EAGGF

Ex-post evaluation of LEADER+

The ex post evaluation of Leader+ was completed in 2010. This evaluation covers the Leader+ programmes, as specified by Council Regulation (EC) No 1260/99, and the Leader+-type measures included in transitional rural development programmes for the period 2004-2006 (EU-10).

The purpose of this evaluation is to assess the effectiveness, efficiency, relevance and sustainability of Leader+ programmes and Leader+-type measures as implemented in the EU-15 and EU-10 respectively.

The evaluation concluded that Leader+ was an important complement to mainstream policies and has contributed to economic diversification, quality of life and enhancement of the natural and built environment of rural areas. Its flexibility and sensitivity to local needs distinguished Leader+ from other interventions, and exploited potential unreachable through more conventional channels. It successfully promoted multi-sectoral integrated development and contributed to strengthening the local economy and social capital in rural areas. Leader+ had significant positive effects on local governance capacity. LAG autonomy was considered an important factor in the effectiveness of the policy.

The recommendations of the report included increasing the focus on long-term development, increasing resilience and adaptive capacity as compared to short-term job creation and productivity gains; increasing the autonomy of LAGs; taking additional account of the needs of minority or marginalised groups; encouraging further networking and cooperation between LAGs; increasing capacity building and ensuring continuity between programming periods.

Ex-post evaluation of 2000-2006 Rural Development Programmes

In 2010 the Commission launched the ex-post evaluation of 2000-2006 rural development programmes. This evaluation consists of a synthesis of individual programme-specific ex-post evaluation reports for EAGGF-Guarantee co-financed EU15 RDPs, and for EU10 2004-2006 Transitional Rural Development Instrument programmes, together with the evaluation of EAGGF-Guidance co-finanded rural development measures implemented throughout Objective 1 regions and EAGGF-Guarantee co-financed rural development measures implemetned within Objective 2 regions in France. All of these were implemetnd within the framework of Council Regulation (EC) No 1257/99. It will be completed during 2011.

The evaluation will assess the relevance, coherence, effectiveness and efficiency of the different measures and programmes. It will seek to identify examples of good practice and to make recomendations for future policy design. It will consist of documentary analysis, surveys of Mananging Authorities and Monitoring Committee members and case studies of selected programming areas. The findings and conclusions will be structured according to eight themes: relevance of the policy objectives; coherence between the measures and policy objectives; complementarity between rural development and other support instruments; coverage, content and consistency of programmes; results, impact, effectiveness and efficiency of support; delivery systems; monitoring and evaluation; and impact achieved in relation to new priorities.

5. Controls 5.1. ERDF

Audit work

Assurance on 2000-2006 ERDF (mainstream and INTERREG) programmes has been built up gradually over the years.

First, the effective functioning of the Member States' management and control systems has been the subject of wide-ranging audits since 2004 covering key elements of management and control. In terms of coverage, the programmes audited represent 43% of the number of the mainstream programmes and 76% of the decided ERDF contribution. As regards INTERREG, a separate audit enquiry launched in 2006 was concluded in 2010 for the 23 programmes examined (28% of total programmes) representing 54 % of the decided contribution.

Second, an extensive preparatory enquiry was carried out from 2007 to 2010 to review the winding-up bodies (WUB) in order to verify the assurance which can be placed on their closure work underpinning the winding-up declarations (WUD), to verify the preparation of Member States for closure and to identify and mitigate related risks. The objective was to reach conclusions as to whether the audit work of the national bodies can be relied on as a main source of assurance for the remainder of the programming period and whether the winding up declaration will be based on adequate audit work and will be a reliable source of assurance at programme closure. The 42 audits carried out under this enquiry, together with audit missions done on the winding-up body as part of regular systems audits which started in 2004, resulted in a coverage of winding-up bodies in charge of approximately 85% of the decided amount of the 2000-2006 programmes at the end of 2010.

Third, an extensive preparatory enquiry was carried out from 2007 to review the Winding-Up Bodies (WUB) in order to verify the assurance which can be placed on their closure work underpinning the winding-up declarations, to verify the preparation of Member States for closure and to identify and mitigate related risks. The 42 audits (including three in 2010) carried out under this enquiry, together with work done on the WUB as part of systems audits, resulted in coverage of WUB in charge of approximately 85% of the decided amount of the 2000-2006 programmes at the end of 2010.

Finally, during 2010, four audit missions were carried out to follow up previous ERDF systems audits (mainly implementation of remedial action plans following the detection of systems deficiencies) in three countries: in Spain (1), Germany (1) and Italy (2).

Other audit work carried out in 2010 for the 2000-2006 programming period included the examination of the 86 systems audit reports received from national auditors, eleven annual control reports received under Article 13 of Regulation No. 438/2001 (2009 was the last year where submission of annual control report summarising all audit work carried out in the year was obligatory, before submission of the closure documents by Member States for most programmes in 2010). Assessment letters were sent to all the Member States with observations and, where necessary, requests for additional information in order to be able to draw as much assurance as possible from the results of national audit work.

The closure process of programmes started in 2010 with the submission to the Commission of closure documents for most programmes (final implementation report, final declaration of expenditure and winding-up declaration summarising the audit findings over the programming period).

The analysis of winding-up declarations (WUDs) received from Member States started in 2010. The total number of ERDF programmes to close for 2000-2006 period is 379. There were 350 WUDs due and received by end 2010, the remaining 29 being due by March 2011 (one received in advance by end 2010). The analysis of WUD also takes into account any overall analysis or statement of assurance supplied in the annual summaries, where available. By end 2010, 279 WUDs had been analysed: 165 (47%) WUD have been accepted and for 114 (33%) WUD the analysis was interrupted in order to request additional clarifications or audit work from the Member States. The analysis was ongoing for the remaining 71 (20%) WUD.

The Winding-Up Bodies classified their audit opinions as: unqualified, qualified, and adverse or disclaimer in line with the closure guidance. DG Regional Policy undertook an in depth analysis and further classified the reported qualified opinions into "reasonable assurance with moderate impact" or "limited assurance", depending on the seriousness of qualifications reported by the WUB. The categorisation is provisional as outstanding issues will be cleared in the coming months. DG Regional Policy agreed with the opinions expressed in the WUDs in 261 cases (74%)[6] and reclassified the opinion in 92 cases (26%). For the latter programmes, this means that DG Regional Policy considered that it could not entirely rely on the work or opinion of the Winding-Up Body to draw its assurance or took into account additional audit information at its disposal (for one programme).

Finally, in order to complete all the above audit work, an enquiry on the closure of ERDF assistance for 2000-2006 is planned in 2011. Following an analysis of the residual risk for closure, on the basis of the audit work carried throughout the programming period and the result of the assessment of the WUDs, DG Regional Policy plans to carry out closure audits in 2011 in nine Member States (CZ, DE, ES, IE, EL, IT, PT, SK and the UK).

In 2010, for INTERREG., following the reservations expressed in Annual Activity Report 2009 on 15 INTERREG III programmes, following an extensive audit enquiry carried out between 2006 and 2009 for 23 programmes representing 54% of the ERDF amounts committed, appropriate action was taken to address the remaining risks. In its Annual Activity Report 2010, DG REGIO maintains a reservation until closure of programmes for nine programmes.

Impact of controls

In exercising its supervisory role, the Directorate-General for Regional Policy had established a policy in 2008[7] to ensure more rapid adoption of decisions to suspend payment and make financial corrections when serious systems weaknesses are detected which endanger the reimbursements of Funds made to Member States. The more rigorous approach continued in 2010 even though no additional suspension was decided in 2010 (since 1994-1999 programmes are now closed and most 2000-2006 programmes reached the 95% threshold for payments , meaning no Commission payment necessary before closure and where necessary, financial corrections decisions will be taken at closure). Three suspension decisions (for two German and one Interreg 2000-2006 programmes) remained in force at year end as the identified deficiencies (management verifications and audit function) were not solved and the closure procedure is interrupted (DE). (In the case of the Interreg DK/SE programme, payment will be resumed when it is agreed to implement the necessary financial corrections following audit results at closure (Interreg DK/SE programme).)

This raises the total ERDF financial corrections decided/ agreed following in 2008-2010 to EUR (2 900 plus X 2010) XX million and the cumulative corrections in the period 2000-2010 to EUR YY (5 400 million plus Y 2010) for the financial corrections made by the Commission and by the Member States, as a result of Commission or Court of Auditors audit activity or OLAF investigations.

In 2010, many of the procedures in progress in the previous years were finalised for ERDF with the application of financial corrections or the adjustments of the amounts. Furthermore, 2010 was a transition year for the two programming periods; the conclusion of procedures for 2000-2006 leading to a decrease of amounts in progress and the initiation of new procedures (somewhat less at this stage) for 2007-2013. Thus, the amounts of financial corrections in progress this year are lower compared to the previous year. At the end of 2010, suspension and correction procedures were in progress for a total number of approximately 117 ERDF programmes, with an estimated amount of approximately EUR 559 million.

Concerning the ESF, most of the EUR 9 million of new cases refers to the 2000-2006 programming period as all the operational programmes concerned are reaching their closure phase. The processing of financial corrections will be dealt with in the closure process. Nevertheless, half of the on-going procedures concern the 2007-2013 programming period. These were estimated to be at EUR 1 (provisional amount) as the amount to be corrected still needs to be identified.

In addition to the above-mentioned figure, an amount of EUR 1 437 million has been reported by Member States and represents potential recoveries following the detection of irregular claims on structural funds notified to OLAF under regulation No. 1681/94. However the prospects of recovery in individual cases cannot be assessed with sufficient accuracy based on the information forwarded by Member States. In addition there is a risk of overlap with the figures above-disclosed which is difficult to quantify as Member States are not obliged to distinguish in their reporting between potential recoveries and those resulting from their own controls.

Part 6 of this report provides further information and details on the financial corrections and recoveries in the structural funds for 2010 by fund and country, as well as cumulatively up to the end of 2010.

Annual summaries

Annual summaries were received for the fourth consecutive year in February 2011 as per Article 53b(3) of the amended Financial Regulation and were assessed by the Directorates-General responsible for structural actions.

The European Court of Auditors reported in its 2008 and 2009 Annual Reports that the Commission supervised the annual summaries exercise well. The Commission revised the guidance for the 2009 Summaries (submitted in February 2010) and reiterated its encouragement to the Member States to add value to the summaries by providing additional information which is not communicated in other reports. This can be done by analysing the functioning of systems, diagnosing problems and their solutions, describing good practices and providing a declaration as to the degree of assurance the Member States derive from their systems. The revised guidance note takes on board some of the recommendations formulated in the study of 5 June 2009 on the annual summaries commissioned by the European Parliament. Finally, the Commission, as recommended by the European Parliament in its 2008 discharge resolution, commissioned an external study to take stock of the added value of annual summaries after three consecutive exercises and to envisage the possible contribution of annual summaries to the assurance building process, particularly in view of the revision of the Financial Regulation.

The external, independent analysis done by the consultancy firm on the Member States' annual summaries submitted from 2007 to 2009 was based on desk reviews of submitted documents, on meetings with European Commission audit representatives and with a sample of Member State audit authorities and on the review of national declarations and annual control reports. The study, which was finalised in April 2011 and made public thereafter, concluded that the annual summary in its current form has provided little added value. It also confirmed that whilst there were improvements in the compliance elements of the summary over the three year process, the same was not true of voluntary disclosures, which have remained limited.

Following the analysis of the annual summaries received for 2010, the Commission services noted that twenty-six Member States have complied with the minimum requirements of the Financial Regulation regarding information to be provided. Where necessary, Member States which have not completely followed the recommendations in the Commission's guidance note, have been requested to provide the additional information. For one Member State (Spain), there were non-compliance issues (major elements of the annual summary were missing for 2000-2006 programming period), therefore the Commission have requested a revised annual summary.

Sixteen Member States have provided an overall analysis and eleven Member States have provided a statement of overall level of assurance, following the Commission recommendations to maximise the value of the annual summaries. In such cases, the Directorate General has used this to corroborate its own assessment of the national management and control systems or to complete information provided to the Commission in the ACR, in some cases. Namely, Bulgaria, Czech Republic, Greece and Romania reported in their overall analysis similar weaknesses as the ones identified by DG Regional Policy for programmes put in the reservations, without though providing a similar level of overall assurance. The other Member States that have programmes in the 2010 list of reservations did not provide an overall level of assurance.

National declarations

Four Member States - the Netherlands, the U.K., Denmark and Sweden – submitted national declarations on a voluntary basis to the Commission. The Commission supports these initiatives and encourages these Member States to share the process they follow in order for the Commission to be able to optimise the assurance it may draw from their declarations. Public declarations issued at senior national level make the control process in the Member States more transparent and help identify changes needed to make the system more effective.

The Commission services elaborated guidance on national declarations for the use of Member States authorities, made available to Member States in March 2011. This guidance points the key issues to be solved in order for national declarations to provide added value to the Commission assurance process: format, report on ongoing work and audit opinion supporting the declaration, timing of submission. The guidance, while encouraging Member States to develop such national declarations that would fulfil the conditions for adding value to the Commission assurance building process, also concludes that the Commission proposal on management declarations in the revised Financial Regulation, signed at the operational level, may constitute a first more practical and useful step that could later be endorsed at a political level in the Member States.

Communication of follow-up to the action plan to strengthen the Commission’s supervisory role

Following the 2006 Annual report of the European Court of Auditors (ECA), the Commission adopted in February 2008 and put in place a comprehensive Action Plan to strengthen the Commission's supervisory role in the system of shared management of the Structural Funds and the Cohesion Fund. The overall aim was to reduce the level of error in expenditure claims certified to the Commission for co-financing under structural actions. The actions should also prevent loss to the EU budget through the application of financial corrections. The Action Plan set out 37 actions, under 10 main headings. As regards the 2000-2006 programming period the main objectives were to focus audit resources on high-risk bodies so as to reduce the potential residual risk, to follow-up Member States' action plans to remedy deficiencies in management and control systems and to bring to conclusion suspension and financial correction procedures. Preventive actions for the 2007-2013 programming period comprised the review of compliance assessment reports and opinions, the review of national audit strategies, actions on simplification and review and clarification on eligibility issues as well as awareness-raising in relation to public procurement rules.

The Commission published in February 2010 a report[8] to assess the first impact of the Action Plan. The report was presented to the Budgetary Control Committee of the European Parliament and to the Structural Funds working group of the European Council.

The implementation of the actions had an overall positive impact. The Commission has now a strengthened position to supervise the management of the Structural and Cohesion Funds. There are three areas which provide evidence of the tangible impact of the actions implemented:

Reduced level of error in expenditure claims certified to the Commission: the results of a Commission audit enquiry performed in 2009 on the 2007-2013 programmes provide an indication that the enhanced control provisions for the 2007-2013 regulatory framework and the preventive measures taken by the Commission have started to produce results on the error rate. The results presented by the Court in its Annual Report for 2009 came to confirm this indication: the least error rate reported for 2009 is at 3%, compared to 11% in 2008 and 2007;

The improved supervisory role of the Commission increases the effectiveness of the multi-annual control systems and reduces the residual risk of error after closure of the programmes. The results of the audit closure enquiry on 1994-1999 programmes showed that for those programmes the residual risk at closure was substantially reduced;

Reduced risk of loss to the EU budget by financial corrections: The value of financial corrections for the 1994-1999 and 2000-2006 periods substantially increased in the years 2008 and 2009, compared to the years 2000-2007. The level of financial corrections shows the rigorous Commission response to the detection of significant systems deficiencies in the Member States.

The Joint Audit Strategy of the Commission's services responsible for Cohesion will continue to build on the achievements of the Action Plan and provides a solid base in streamlining the overall audit approach to strengthen the Commission's supervisory role in shared management of structural actions and focus on high risk Member States and issues.

The Commission is maintaining the momentum generated by the Action Plan by continuing its rigorous actions and, in a system of shared management, by ensuring that the Member States continue to demonstrate their accountability and take responsibility for the use of EU funds. The Commission considers it essential that Member States add value to the current arrangements to maximize the assurance available, in the absence of a mandatory statement of management assurance.

5.2. ESF

Results of the audit activities concerning the programming period 2000-2006

5.2.1. Audit coverage 2000-2006 period

During the 2000-06 programming period, the work carried out by the audit directorate included the assessment of management and control system descriptions, analysis of national system audit reports and annual control reports in the context of annual bilateral coordination meetings, and three main audit enquiries:

– An enquiry on the verification of effective functioning of the management and control systems in the Member States, where the objective was to obtain reasonable assurance that the systems are functioning effectively to prevent and detect errors and irregularities and ensure the legality and regularity of the underlying operations and the accuracy of the expenditure declared to the Commission.

– An enquiry on project expenditure to obtain reasonable assurance on the compliance with the legislative framework as far as it concerns the conformity with EC law on legality and regularity of the expenditure incurred in the Member States.

– An enquiry to review the work of the Winding-up Bodies in the Member States in preparation for the closure of 2000-06 programmes, where the objective was to obtain reasonable assurance that the work carried out by the Winding-up Bodies, and the systems and procedures put in place for the provision of the winding-up declaration were compliant with the requirements of Regulation 438/2001 and the Closure Guidelines, in order to be able to conclude whether the systems and procedures set up and the work carried out provide a reliable source of assurance for the remainder of the programming period and in the context of programme closure.

As a result of the above audit enquiries, at the end of 2009, the audit units had carried out missions on the spot in Member states covering 94,88% of the Operational Programmes (Note: Figures to be updated in line with 2009 country fiches)

This audit coverage was considered adequate to be able to conclude that existing systemic deficiencies presenting a material risk had been identified at the end of 2009. Accordingly, through the completion of follow-up work and of action plans with certain Member states, including the application of financial corrections when required, the Commission should be able to obtain assurance prior to programme closure that the risks have been adequately addressed. This also led to the decision not to carry out any system audit work in 2010 outside certain follow up work.

From April 2010 onwards, the audit units have been involved in the analysis of the Winding up declaration. The results of this analysis work have, and will continue, to be sent to the geographical desks as input for their closure activities and as a basis of assurance for the assessment of the final payment. The analysis work has suffered a slight delay due to the fact that much of the work was outsourced to an external audit company. The overall assessment of the winding-up documents was carried out by DG EMPL auditors. In many cases, the winding-up bodies did not send the information in the format requested by the Commission, hence requiring longer analysis work. Secondly, the EMPL auditors are carefully assessing the level of residual error in the programmes while ensuring an equal treatment across Operational Programmes and Member States

5.2.2. . Audit work in 2010

Considering the stage of implementation of the 2000-2006 programming period's Operational Programmes, no further audits of management and control systems were organised. Instead, the audit work focused on the follow up of irregularities and the reservations issued in the AAR 2009. In this respect, 2 audit missions were carried out. The breakdown of these audits is as follows:

– System audit of O.P. 2000ES053PO311: Iniciativa Impresarial – Follow up from the ECA DAS 2008;

– - Follow up of O.P. 2000GR051PO003: Health and Prevention in Greece.

– As far as the other Operational Programmes under reservation are concerned, suspension and correction procedures were launched by the geographical desks.

5.3. EAGGF

The Directorate-General for Agriculture and Rural Development followed the same basic approach as the Directorate-General for Regional Policy and shared the same general objectives.

As regards the 1994-1999 period, the planned ex-post audit programme for this period was already completed in 2006. The last financial correction procedures were completed in 2009 (the last Commission Decision adopted in February 2010).

As regards programmes financed by EAGGF Guidance for the 2000-2006 programming period the deadline for payments by Member States was 31 December 2009 at the latest.

In total, at the end of 2010, 103 programmes out of the 152 were subject to audit (67.8%), covering €21.7 billion (96.4%) of total programmed expenditure. The total number of programmes which were subject to a follow-up audit was 44. During 2010 all those audits were closed.

Consequently, pre-closure activities have been started. In accordance with Article 38 (1) (f) of Council Regulation (EC) No 1260/1999 Member States have to submit a declaration drawn up by a person or department having a function independent of the designated managing authority summarizing the conclusions of the checks carried out during previous years and assessing the validity of the application for payment of the final balance and the legality and regularity of the transactions covered by the final certificate of expenditure.

By 31 December 2010, the examination of those winding-up declarations submitted by Member States was finalized as regards 78 programmes, representing 51.3% of the total number of programmes.

5.4. FIFG

As regards the 1994-1999 period, the three FIFG audits carried out in 2010 covered three operational programmes. For Spain, the audit was focused on the Management and control systems for specific measures and consequently, the results are not extrapolated to the whole programme. For the Netherlands the audit was focused on the effective implementation of the Action plan decided following an audit in 2008. For Germany (Bremen) the audit was focused on closure and the work of the Winding-up body. The audits tested key controls in place in the Management and Control Systems, combined with sample checks of projects by desk review at the level of the Managing authorities and on-the-spot visits to projects and beneficiaries. These audits indicated that out of the programmes/systems audited by DG MARE in 2010, one worked with some improvements needed, one worked but needed significant improvement and part of one system did not work.

In total, 50 projects were checked by desk reviews and/or on the spot for a total eligible amount checked of €70.2 million with FIFG participation of €15.3 million. From the project audits no ineligible amounts were identified.

It should be noted that no payments were made in 2010 in respect of the programmes referred to above, where weaknesses were identified. The identified weaknesses and the financial risks for the FIFG contribution paid to the programmes are being addressed in the closure exercise.

Since the beginning of the 2000-2006 programming period, DG MARE has carried out a total of 58 audit missions covering all its mono-fund programmes (18 programmes representing an initial budget contribution of €3,608.73 million – 87.4% of the total 2000-2006 budget) as well as 18 multi-fund programmes representing a contribution of €374.58 million - 9.2% of total 2000-2006 initial budget. In total, DG MARE systems audits have covered programmes representing 96.6% of the total FIFG initial contribution for 2000-2006. For the remaining programmes, the assurance is gained from other Structural Funds DGs' audit work and/or national audits.

The work on the closure process of programmes started in 2010 with the submission, at the end of September 2010, of all the closure documents for the 60 Operational Programmes except for the Greek programme where an extension of one year had been granted.

By the end of 2010, 17 Winding up declarations had been analysed: 9 had been accepted, for 8 the analysis was interrupted and additional information was requested and for the remaining 43 the analysis was ongoing. From the 9 which have been accepted, the opinion for 8 was unqualified and for one the opinion was qualified (and for which a financial correction will be proposed).

5.5. OLAF

In 2010, OLAF undertook 53 missions in the Member States relating to measures co-financed by the Structural Funds. During these missions on-the-spot checks[9] were carried out on 52 economic operators and 6 other types of missions were carried out to gather information or to assist either national administrations or judicial authorities. As was the case in previous years, typical problems identified by OLAF in the course of 2010 included false declarations, false invoicing and failure to abide by public procurement rules as well as specified instances of conflict of interest in certain tendering procedures.

In 2010, Members States communicated to the Commission, in accordance with Regulation (EC) N° 1681/94[10] as amended[11] and Regulation (EC) N° 1828/2006[12] as amended[13], some 6,910[14] notifications of irregularities involving € 1.546 billion affecting co-financed measures of the 1994-99, 2000-2006 and 2007-2013 programming periods.

8 notifications concern the 1994-99 programming period with a financial impact of approximately € 3.2 million. 5,883 notifications concern the 2000-2006 programming period with a financial impact of approximately € 1,04 billion. For the programming period 2007-2013, 1,019 irregularities were reported, involving an irregular amount of € 416 million.

Member States have informed the Commission that administrative and/or judicial procedures have been concluded at national level for 4,072 cases and an amount of € 711 million has been recovered.

In 2010, both the number of notifications and the involved amounts increased by around 42% and 26% respectively, as compared to the year before. The main explanation for this situation seems to be the preparation of the closure of the programmes for the programming period 2000-2006 and the increase of irregularities in relation to the programming period 2007-2013, which is now in its full implementation phase.

The most frequent types of irregularities reported is “non-eligible expenditure”, and secondary, “infringement of rules concerned with public procurement” and “Missing or incomplete supporting documents”.

The figures demonstrate an increased awareness and a better reporting by the Member States in conformity with their Community law obligations.

6. Committees assisting the Commission 6.1. COCOF

There were no COCOF related activities in 2010 concerning the implementation of the 2000 -2006 period.

6.2. ESF Committee

The ESF Committee, pursuant to Article 163 of the Treaty, assists the Commission in administrating the Eupen Social Fund. The Committee is presided over by a Member of the Commission and is composed of representatives of governments, trade unions and employers’ organisations. In 2010 there were three Plenary Sessions and six Technical Working Group mettins.

In 2010, the Committee was consulted on a number of issues, including on ESF support for social partners, Budget Review and 5th Cohesion Report as well as the Future of the ESF. . The ESF Committee also discussed further the Europe 2020 Strategy, the flagship initiatives "Agenda for New Skils and Jobs" and "Youth on the move".. The adhoc group set up by the Committee in 2009 to reflect on the future of the ESF for the next programming period (2014-2020) continued its work and the Committee drafted an Opinion on the future of the ESF in the context of the 5th Cohesion Report and Budget Review..

The ESF Committee Technical Working Group (TWG) continued discussing, among other issues, the simplification of the General Regulation, the ESF Regulation and the implementation of the simplified cost options (flat rates, standard scales of unit costs, lump sums). The Commission followed up on the new PROGRESS microfinance facility aiming at providing for microcredit to small businesses and to people who have lost their jobs and want to start their own small businesses. The Commission presented also the assessment of the use of EU funds for Roma integration. The ESF TWG pursued its programme of mutual learning concerning financial engineering, ESF support to young people, ESF and public tendering, quality of deliverables as well as ESF and administrative capacity reinforcement. .The ESF TWG concentrated also during the 2010 meetings on the future of the Cohesion Policy with the 5th Cohesion Report and Budget review as well as on Europe2020.

6.3. Committee on Agricultural Structures and Rural Development (STAR)

The STAR Committee met six times in 2010 and gave one favourable opinion on the two following decisions: Draft DECISION of the Commission exempting certain cases of irregularity arising from operations co-financed by the Structural Funds and the Cohesion Fund for the 2000-2006 programming period from the special reporting requirements laid down by Article 5(2) of Regulation (EC) No 1681/94 and by Article 5(2) of Regulation (EC) No 1831/94, and the Draft DECISION of the Commission concerning the financial consequences for the Union budget exempting certain cases of irregularity arising from operations co-financed by the Structural Funds and the Cohesion Fund for the 2000-2006 programming period from the special reporting requirements laid down by Article 5(2) of Regulation (EC) No 1681/94 and by Article 5(2) of Regulation (EC) No 1831/94.

6.4. Committee on Structures for Fisheries and Aquaculture (CSFA)

The Committee on Structures for Fisheries and Aquaculture (CSFA) met twice in 2010. Main points discussed at the meetings include ex-post evaluation and the closure of the FIFG.

Part 2: Analysis by Member State

1. Belgium

2000-2006 programming period

1.1. Objectives 1 and 2

For the single Belgian programme (Hainaut) under Objective 1, an extension of the eligibility period by six months until June 2009 was granted by the Commission.

All 7 Belgian Objective 2 programmes also asked for a six-month extension of the eligibility period until June 2009, which was granted by the Commission.

Total appropriation for the Belgian ERDF programmes was EUR 416.3 million.

Total appropriation for the Belgian ESF programmes was EUR 248.7 million.

Due to the sixth-month extension of the eligibility period, in early 2010 all regions kept on working with the objective of zero losses at closure and the Commission organised technical meetings in some regions with the objective of fully explaining closure rules. In late September, all closure documents were transmitted by the three Belgian authorities and closure procedures started immediately. Following assessment of the final reports, complementary information has been asked to the managing authorities. Observations have been made on each final report and responses are expected before the end of spring. The analysis of all winding up declarations was interrupted in view of obtaining additional information or the results of additional audit work.

The commitment rate for the ERDF and ESF was 100% for both Objective 1 and Objective 2 regions. The average payments rate for the ERDF was 94,80% for Objective 1 and Objective 2 regions, or a total of EUR 393,7 million bringing the balance between the total ERDF committed and the total ERDF paid to EUR 22.5 million.

The EAGGF-Guidance contribution to the Objective 1 programme (a commitment of some EUR 41.8 million) achieved a final payment rate of 96.70%. A pre-closure report for the EAGGF Guidance contribution was sent in March 2011.

The average payments rate for the ESF was 95,00 % for Objective 1 and 93,17 % for Objective 2 regions of the total ESF appropriation.

1.2. Objective 3

There are five ESF-only operational programmes covering respectively Flanders, Belgium fédérale, French-speaking Wallonia, German-speaking Wallonia and Bruxelles Capitale) totalling appropriations of EUR 796.4 million. An absorption rate of 94.9 % was achieved, representing EUR 755.8 million.

For the Federal Single Programming Document (SPD), the total ESF budget amounts to EUR 70.1 million. Payments at the end of 2010 amount to EUR 65.3 million (93.1 % of the total ESF appropriation). The Flemish programme has a total ESF budget of EUR 392.5 million. The entire budget was allocated to projects. Payments at the end of 2010 amounted to EUR 372.9 million. The Wallonia-French Community programme has a total ESF budget of EUR 297.9 million (95% of the total ESF appropriation). Total payments at the end of 2010 amounted to EUR 283 million (95.0 % of the total budget). The ESF budget for the Brussels region amounts to EUR 24.7 million, 95.0 % of which was paid at the end of 2010.

For the four above-mentioned programmes, closure documents were received end of September and additional information has been asked to the respective managing authorities and Winding up Bodies.

The German-speaking Community has a separate Objective 3 programme, with a total ESF budget of EUR 11.2 million.. The implementation of this programme was finalised at the end of 2006. . Closure documents were received in due time end March and programme was fully closed in November 2011 with a payment of 100% of the total ESF appropriation.

1.3. Fisheries outside Objective 1

The total FIFG allocation to the fisheries programme is EUR 21.3 million. A last payment claim of EUR 3.6 million was sent to the Commission. Over the whole programming period the Commission paid EUR 19.6 million, with the total reimbursement rate reaching 91.9 %.

The closure documents were received on 20 April 2010. The assessment of the documents is ongoing.

1.4. Community Initiatives 1.4.1. Equal

The ESF appropriation for the two EQUAL programmes in Belgium — one for the French and German-speaking community, and one for the Dutch-speaking Community — amounts to EUR 68.2 million. The programme covering the French-German speaking community proceeded without any major difficulty in 2010. In financial terms, the rate of execution of the ESF part of the programme at the end of 2010 was 95 %. The rate of execution of the Dutch-speaking EQUAL programme was 83.4 % at the end of 2010. The two EQUAL programmes supported around 125 projects, mainly in fields such as employability, adaptability, life-long learning and social economy. Closure documents were received end of September and additional information has been asked to the respective managing authorities and Winding up Bodies.

1.4.2. Leader

Belgium has two Leader+ programmes: one for Flanders, involving total public expenditure of EUR 7.9 million and one for Wallonia, involving total public expenditure of EUR 20.7 million. For both programmes, the allocated funds have been fully committed. Total financial execution came to EUR 13.2 million, i.e. 92.7 % of total EAGGF-Guidance expenditure earmarked for the period 2000-2006.

For the Flemish programme, closure documents were transmitted before end March 2010 and the final payment was made in February 2011. For the Walloon programme, due to the sixth-month extension of the eligibility period, closure documents were transmitted before the end September 2010 and their analysis was finalized in April 2011.

1.4.3. Urban

The three URBAN II programmes in Belgium have an appropriation of EUR 21.4 million and relate to the cities of Antwerp, Sambreville and Brussels. Each programme originally received EUR 7.2 million from ERDF, but due to the ‘n+2’ rule the contribution was reduced to EUR 7.1 million for Antwerp and to EUR 7.1 million for Brussels. Total expenditure for all URBAN programmes was EUR 20.3 million, or 95.0 % absorption rate, leaving a balance to between committed and paid appropriations of EUR 44.9 million.

Due to the sixth-month extension of the eligibility period, for all URBAN II programmes, closure documents have been transmitted before end September and closure procedures started immediately. Following assessment of the final reports, complementary information has been asked to the managing authorities. Observations were made on each final report and responses are expected before the end of spring. The analysis of the winding up declarations for all Belgian Urban programmes was interrupted in view of obtaining additional information or the results of additional audit work.

2. Cyprus 2.1. Objective 2

One Objective 2 Single Programming Document (SPD) was co-financed by the ERDF amounting to some EUR 28 million Community contribution.

The payments made by the ERDF (including the advance) amount to approximately EUR 26.6 million (absorption rate 95%), which results to a RAL of some EUR 1.4 million of Community Contribution. During the year 2010 no payment was executed as the 95% ceiling for payments was already reached in 2009.

Following the 6-month extension of the final eligibility date to 30 June 2009 in the framework of the financial crisis, the closure documents were submitted on 29 September 2010 which is within the 15-month deadline of 30 September 2010. The assessments of these documents have been completed resulting to the acceptance of the documents.

The final payment procedure was completed end March 2011.

Taking into consideration, that the final date of eligibility of expenditure was set on 30 June 2009, no monitoring committee took place and no annual implementation report had to be submitted. However, for the utmost preparation of the closure documents, Unit I3 provided during the year 2010 assistance to the Cypriot services.

2.2. Objective 3

Following the 6-month extension of the eligibility period of the Single Programming Document for Objective 3 (up to 30 June 2009), the closure documents were submitted on 28 September 2010 and procedures for closure started immediately. Following the assessment of all closure documents, it was concluded that the final payment application as sent by the Cypriot authorities concerned an amount that was higher than the amount to be paid because it included the clearing amount. As this is a calculation error, it will not be included in the final payment request. With regard to irregularities, there are no pending issues.

The Final Report was accepted in December 2010, and the closure procedure is currently nearing its completion. The final payment is expected for July 2011.

All payments made by the ESF (including the advance and final payments) have reached the committed amount of EUR 21,945,197 million (absorption rate of 100%).

Considering that the final date of eligibility of expenditure was set for 30 June 2009, no Monitoring Committee meeting took place in the course of 2010 and no annual implementation report was submitted for 2010. However, the issue of closure remained on the agenda of the annual review meeting and of technical meetings with the Cypriot authorities.

2.3. Fisheries outside Objective 1

The Fisheries Operational Programme for Cyprus (A Single Programming Document), adopted by the Commission in 2004, arrived at the and of its implementation.

Payments from the Commission to the Member State had reached the level of 95.0 % of the planned FIFG contribution.

Taking into consideration that the final date of eligibility of expenditures was set on 30 June 2009, no monitoring committee took place and no annual implementation report had to be submitted.

Following the 6-month extension of the final eligibility date to 30 June 2009 in the framework of the financial crisis, the closure documents were submitted on 30 september 2010 which is within the 15-month deadline. The assessment of these documents is still on going. The Commission's services, in close cooperation with the Cypriot relevant authorities, estimate to be able to complete the closure before the end of 2011.

2.4. Community Initiatives 2.4.1. Equal

Following the 6-month extension of the eligibility periodof the Community Initiative Programme EQUAL for Cyprus, the closure documents were submitted on 28 September 2010 and procedures for closure started immediately. Following the assessment of all closure documents, it was concluded that the final payment application as sent by the Cypriot Authorities concerned an amount that was higher than the amount to be paid because it included the clearing amount. As this is a calculation error, it will not be included in the final payment request. With regard to irregularities, there are no pending issues (OLAF).

The Final Report was accepted in December 2010, and the closure procedure is currently nearing its completion. The final payment is expected for July 2011.

All ESF payments (including the advance and the final payments) will reach the amount of EUR 1,807,393 million (absorption rate of 99.92%).

Considering that the final date of eligibility of expenditure was set for 30 June 2009, no Monitoring Committee meeting took place in the course of 2010 and no annual implementation report was submitted for 2010. However, the issue of closure remained on the agenda of the annual review meeting and of technical meetings with the Cypriot authorities.

3. Czech Republic

2000-2006 programming period

During 2010, the activities of all managing authorities concentrated on the finalisation of the programme closure. For most operational programmes, the budget realised on the ground exceeded 100% (due to overbooking) already in 2009. The payment rate (paid out/decided by the Commission) corresponds to 95% of the total 2004-2006 budget.

The final implementation reports together with final payment claims and winding-up declarations were submitted for each operational programme in due time. All of them were deemed admissible. The closure procedure was then started

3.1. Objective 1

The Community Support Framework for the period 2004-2006 covers a total budget of EUR 1 954 million, of which EUR 1 454 million is contributed by the Structural Funds (63% ERDF, 25% ESF, 11.5% EAGGF and 0.5% FIFG). Five Operational Programmes are implemented under the CSF.

The CSF Managing Authority, at the Ministry for Regional Development, is responsible for the effectiveness, correct management and delivery of the support provided by the Structural Funds in the Czech Republic.

No monitoring committee took place in 2010. Major activities of the Managing Authority focused on assistance to individual operational programmes for the closure exercise.

The Joint Regional Operational Programme (JROP) is the largest Czech programme with a share of 31.2 % (EUR 454 million) of the total Objective 1 allocation (28 % ERDF and 3.2 % ESF). In 2010 no monitoring committee was held, the managing authority focused on finalisation of the programme closure. No payment claim was executed in 2010 since already in 2008 the ceiling of 95% was reached. All closure documents were submitted to the Commission in due time by the end of September 2010 with overbooking of the programme. The JROP is the Czech OP with the highest number of irregularities which is partially consequence of a rather complex implementation structure. The most successful measures in terms of absorption were projects of regional transport infrastructure, urban regeneration and tourism

The Human Resource Development Operational Programme accounts for a share of 21.2 % (EUR 318.8 million ESF contribution) of the total Objective 1 allocation. No monitoring committee took place in 2010. One payment claim was executed in 2010 after which the ceiling of 95% was reached. All closure documents were submitted to the Commission in due time by the end of September 2010. The final report is acceptable except the table of irregularities where some further clarifications are required

The Operational Programme Industry and Enterprise is the third largest programme with 17.9% (only ERDF) of the total Objective 1 allocation. No monitoring committee took place in 2010 as the managing authority concentrated on the finalisation of the programme closure. No payment claim was executed in 2010 since the ceiling of 95% was reached already in 2008. All closure documents were submitted to the Commission in due time. During the whole programming period, the most popular measures remained schemes supporting small and medium-sized enterprises, innovation schemes and two loan schemes aimed at starting entrepreneurs and firms in the initial development stage. The support schemes targeting energy saving and renewable sources of energy had been lagging behind at the beginning but caught up in the second part of the programming period.

The Operational Programme Infrastructure (OPI) is the fourth largest OP, with almost 16.9 % (only ERDF) of the Objective 1 budget allocation. One by mail voting of the monitoring committee was organized for this programme in 2010. The preparation for closure took place in 2009. The closure documents were approved by the monitoring committee on 3 February 2010 during a mail vote. The closure documents were all submitted on 7 October 2010. This programme fully absorbed the allocated funds. By the end of the eligibility period, the absorption rate on the ground reached 115.0 %. The most successful interventions in terms of absorption and the most popular were transport axes 1 and 2. Axis 1 was for transport infrastructure projects, whereas axis 2 focused on reducing the negative impact of transport on the environment.

The Operational Programme Rural Development and Multifunctional Agriculture accounts for a share of 11.5 % of the total Objective 1 allocation, with a contribution from the EAGGF Guidance section of EUR 170 million. The main intervention areas were investments in agricultural holdings and the support for promoting adaptation and development of rural areas. In 2010, no Monitoring Committee was held and no amount was paid out by the Commission as 95.0 % of the total programmed amount had already been paid in July 2008. All closure documents were submitted to the Commission in due time, by the end of March 2010.

Fisheries

The implementation of the FIFG in the Czech Republic finished in 2007 using up the allocations committed up to almost 92.0 %, with the 2006 allocation reallocated in favour of the EAGGF measures under the two-fund OP. The last interim payment in 2008 reached the 95.0 % payment limit during the implementation period. Closure can proceed as this programme was not extended, with the closure documents for FIFG received in April 2010.

3.2. Objective 2

The Single Programming Document Objective 2 Prague (SPD2 Prague) receives support of EUR 71.3 million from the Structural Funds. In 2010 no monitoring committee was organised, the managing authority focused on finalisation of the programme closure. No payment claim was executed in 2010 since the ceiling of 95% was reached already in 2009. All closure documents were submitted to the Commission in due time by the end of September 2010 with slight overbooking of the programme. The most successful measures in terms of absorption were projects of regeneration of damaged and unsuitably used area, public infrastructure improving the quality of life mainly in housing estates and projects improving the quality of partnership between the public and private sectors, non-profit sector, science and research

3.3. Objective 3

The Single Programming Document Prague Objective 3 receives support of EUR 58.8 million from the Structural Funds. No monitoring committee took place in 2010 and no payment claim was executed since already in 2009 the ceiling of 95% was reached. All closure documents were submitted to the Commission in due time by the end of September 2010. The final report is acceptable except the table of irregularities where some further clarifications are required.

3.4. Community Initiatives

The Community initiative EQUAL has an ESF allocation of EUR 32.1 million from the Structural Funds (ESF only). No monitoring committee took place in 2010 and no payment claim was executed since already in 2008 the ceiling of 95% was reached. All closure documents were submitted to the Commission in due time by the end of September 2010. The final report is acceptable except the table of irregularities where some further clarifications are required.

4. Germany

2000-2006 programming period

A total number of 22 programmes submitted their closure documents in 2010 to the Commission. At year end, 21 of these closure files are under instruction. The national objective 1 transport programme was closed in December 2010. The final date for eligibility of expenditure of Structural Funds interventions, normally set at 31 December 2008, was extended at Germany’s request to 30 June 2009. This was confirmed by Commission decision of February 2009. In addition, for the three Federal ESF programmes the final date for the eligibility of expenditure was extended to 30 April 2009. This extension gave the regions concerned the possibility of funding projects for an additional six months, which was intended to mitigate possible impacts of the unprecedented economic and financial crisis on programme execution.

As a result of the exercise, the Commission expects a positive effect on the overall quality of programme execution, in physical and financial terms, as measured by key indicators such as jobs created and investment volume co-financed. As for financial execution, the overall majority of German programmes were ‘on schedule’. This means that 95.0 % of their total ERDF contributions, that is the maximum amount of payment which can be claimed prior to closure, have been paid by the Commission, whereas three programmes had their contribution limited below the 95.0% threshold because of open audit issues. For these programmes, however, the expenditure required for receiving the full ERDF contribution was in most cases declared at closure. For the ESF contributions, 94.9 % have already been paid out

4.1. Objective 1

Overall, financial absorption in the German Objective 1 regions was very satisfactory. For all but one programme, total payments attained the 95.0 % payment limit for total ERDF and ESF commitments for the 2000-2006 programming period according to Article 32(4) of Regulation No 1260/1999.

For several reasons the ERDF Objective 1 programme for Berlin did not fully meet the 95.0 % payment limit for the ERDF. Regarding the final payment claim further information on irregularities is required. Additionally the European Court of Auditors report on financial engineering instrument contains findings which may affect the final payment.

The overall physical and financial implementation in the German Objective 1 regions was good and, in general, the core targets as set in the programmes can be expected to have been globally attained

The payments of the ESF share of the Objective 1 programmes reached the 95.0 % payment limit (including advance payments). A final absorption rate of about 98.0 % is to be expected. The closure documents were received in due time.

Since the beginning of the period, more than 2.7 million people have participate