[pic] | COMMISSION OF THE EUROPEAN COMMUNITIES |

Brussels, 6.7.2007

SEC(2007) 930

COMMISSION STAFF WORKING DOCUMENT Annex to the

REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Protection of the financial interests of the Communities – Fight against fraud – Annual report 2006 IMPLEMENTATION OF ARTICLE 280 OF THE TREATY BY THE MEMBER STATES IN 2006 [COM(2007) 390 final][SEC(2007) 938]

This document is intended to accompany the Commission’s Annual Report for the year 2006[1] on the protection of the European Communities’ financial interests and fight against fraud which is drafted in accordance with Article 280 of the Treaty.

In this document the services of the Commission make available all the answers given by the Member States to a questionnaire sent to them in preparation for the 2006 Annual Report.

TABLE OF CONTENTS

INTRODUCTION 4

1.1. Horizontal developments: 6

1.2. Own resources (including VAT): 12

1.3. Agricultural expenditure (expenditure financed by EAGGF - Guarantee Section): 16

1.4. Structural operations: 20

1.5. Description of key developments: 27

2. Risk assessment and risk management in the Member States 37

2.1. Guidelines for risk assessment and management 38

2.2. Specific databases for risky beneficiaries (which are different from or broaderin scope than the databases required by Community law) 81

2.3. Specific example of a risky beneficiaries database 86

2.4. Problems encountered in general in establishing or operating the riskbeneficiaries database 110

2.5. Databases for reliable beneficiaries 110

2.6. Risk Management: reduction in risk through establishment of an early-warning mechanism using internal whistleblowers 113

3. Recovery by offsetting 169

3.1. Offsetting an amount due and a Community claim 169

3.2. Offsetting between agricultural sectors and between programmes. 172

3.3. Offsetting between paying agencies: Can an amount owed by one payingagency be offset against a claim held by another paying agency? 175

3.4. Offsetting between national and Community sums: 177

3.5. Please indicate the amount of Community funds recovered by offsetting inabsolute terms and as a percentage of the total amount recovered in 2003,2004 and 2005? 179

3.6. Please indicate what proportion of the total amount of Community fundsrecovered by offsetting was offset against national funds in 2003, 2004and 2005? 187

3.7. Please indicate the amount due under Community legislation used to offsetnational claims in 2003, 2004 and 2005? 189

3.8. Access to databases: 190

IMPLEMENTATION OF ARTICLE 280 OF THE EC TREATY BY THE MEMBER STATES IN 2005

INTRODUCTION

The protection of the European Communities’ financial interests and the fight against fraud is an area in which responsibility is shared between the Community and the Member States. Consequently, each year the Commission draws up a report in cooperation with the Member States on the measures taken to implement this obligation, according to article 280 of the EC Treaty. This report is adressed to the European Parliament and the Council and is published.

The Commission bases its report on the measures taken by Member States described in their replies to the “Article 280” questionnaire. This questionnaire covers the period from 1 January to 31 December 2006.

The present document lists all the answers of Member States to the 2006 questionnaire.

Over time the report had become more and more voluminous. Both the Council and the European Parliament were concerned that its size was increasing and that it’s being annual, horizontal and multisectoral hampered a detailed assessment of all the aspects of the protection of the Community's financial interests by the Member States. Since 2003, the Commission has therefore applied a new approach. After the traditional question asking Member States to report on new measures taken in 2006, the questionnaire focuses on a few major themes. The aim is to gather information on topics which go beyond the measures taken in the course of a calendar year, thereby allowing a more detailed analysis of these topics. The topics change from year to year.

As always, the first part of the questionnaire asks Member States to list the legal instruments that give effect to Article 280 , i.e. measures to combat fraud and all illegal activities affecting the financial interests of the Community in the areas of own resources, agricultural expenditure and structural measures. The Member States has been asked to list only national measures and not those which simply transpose Community legislation, and to do so in brief so as to reduce the volume of the staff working document which incorporates the replies from the 25 Member States. At the end of this first question, Member States have the opportunity of giving a more detailed description of a few measures which they consider to have been the most important in the calendar year. As in the 2005 report, also this year the question on own resources covers not just traditional own resources but also VAT. Some Member States indicated to have a reservation about the inclusion of VAT in the questionnaire, so it has been agreed that it is open to Member States to answer this question. This year the United Kingdom expressed a reservation on the inclusion of VAT in the questionnaire.

The second question concerns a specific topic, covering certain aspects of the analysis and management of financial risks in the Member States. The protection of the financial interests of the Communities, as provided for by Article 280 of the EC Treaty, also comprises a preventive aspect. By identifying risks of fraud and other illegal activities potentially threatening Community expenditure in advance, the (national and Community) authorities managing Community expenditure can take the requisite measures to ensure that expenditure is not diverted from its original objective. Given the breadth of the topic of risk assessment and management, this questionnaire addresses more specifically two aspects – the establishment of databases on risky beneficiaries (“black lists”) and the rules governing the use of internal whistleblowers in administrative authorities.

The third part of the questionnaire concerns the second specific theme for the year, namely the recovery of sums wrongly paid . Where a fraud or other irregularity has been committed in relation to Community expenditure, the relevant administrative authority must recover the amount lost. The Member States provided information on this subject in the 2005 report. Analysis of that information has revealed that recovery by offsetting is practised in nearly all Member States. A number of practical issues concerning offsetting which were not dealt with specifically in last year’s questionnaire are covered in more detail this year.

Legal instruments that give effect to article 280 of the ec treaty — principal developments

Horizontal developments: Have there been any significant new legislative horizontal developments (not just implementing measures) contributing to the implementation of Article 280 of the Treaty in 2006? Member States are asked to list only national measures and not those which simply transpose Community legislation. |

If so, please indicate below: Type of instrument (e.g. law, regulation, decree), References of the legal instrument (number/date of publication in Official Gazette, etc.), References of the legal instrument or code that is amended (if any), Title of the legal instrument or a brief description (no longer than one or two sentences). |

BE | Federal Public Services (FPS)PUBLIC FINANCE DEPARTMENT I. Customs 1. The Act of 22 August 2006 (Moniteur belge / Belgisch Staatsblad, 6 December 2006) assented to the Convention on Mutual Administrative Assistance in customs matters between the Government of the Kingdom of Belgium and the Government of the Russian Federation, signed at Brussels on 2 October 2001. The Convention came into force on 1 December 2006. 2.The Act of 5 August 2006 assented to the Bilateral Agreement on Mutual Administrative Assistance in customs matters between the Government of the Democratic Republic of the Congo and the Government of the Kingdom of Belgium, signed at Brussels on 12 February 2004. The Agreement has not yet been published and is not yet in force. 3. On 27 October 2006 the Moniteur belge / Belgisch Staatsblad published the Royal Order of 5 October 2006 laying down measures for the control of cross-border transport of cash, which will apply from 15 June 2007. The first Chapter of the Order simply transposes Parliament and Council Regulation (EC) No 1889/2005 of 26 October 2005 on controls of cash entering or leaving the Community. The second Chapter transposes Special Recommendation IX of the Financial Action Task Force to combat money laundering and terrorist financing (FATF) as regards the cross-border transport of cash within the Community. FATF Special Recommendation IX requires Member States to introduce effective controls on cross-border cash movements above a specified threshold and to provide for penalties for breaches. It includes provisions implementing the Legislative Decree of 6 October 1944 organising the control of all transfers of goods and securities between Belgium and foreign countries. II. Direct taxes A. Measure to improve the use made of results of checks and inspections from abroad Addition of a subsection 3 in section 358 of the Income Tax Code (Programme Act of 20 July 2006, section 4, Moniteur belge / Belgisch Staatsblad, 28 July 2006) extending the period within which the tax or surtax must be established for results of checks and inspections from abroad. The time allowed is now 24 months from the date on which the Belgian authorities acquired knowledge of the results of the checks and inspections. B. Measure to allow firms to be closed down for a specified period in certain specific circumstances Addition of a section 421bis in the Income Tax Code 1992 and a section 88ter in the Value Added Tax Code (Programme Act of 27 December 2006, section 9, Moniteur belge / Belgisch Staatsblad, 28 December 2006). C. Measure introducing a system of joint liability of business managers in the event of specific breaches committed by the managers of their firms Addition of a section 442quater in the Income Tax Code and a section 93undecies C in the Value Added Tax Code (Programme Act of 20 July 2006, sections 14 and 15, Moniteur belge / Belgisch Staatsblad, 28 July 2006). D. Measure introducing a system of joint liability of company shareholders in certain specific circumstances Addition of a section 442ter in the Income Tax Code 1992 (Programme Act of 20 July 2006, section 23, Moniteur belge / Belgisch Staatsblad, 28 July 2006.) E. Measure to combat international fraud and boost international exchanges of information, in relation to undeclared commissions Adaptation of section 57(1°) of the Income Tax Code 1992 so that commissions, price reductions, trade discounts etc., paid or given on or after 01.01.2006, cannot be treated as professional costs unless they are vouched for by presentation of individual vouchers and a summary account drawn up in the form and within the period prescribed by His Majesty (Miscellaneous Provisions Act, 20 July 2006, sections 42 to 46, Moniteur belge / Belgisch Staatsblad, of 28 July 2006) |

CZ | An Act No 575/2006 amending Act No 353/2003 on excise duties was adopted. The aim of the amended act is to prevent tax evasion in respect of mineral oils, alcohol, beer and tobacco products. Czech Government Resolution No 1199/2006 on the Government's Anti-Corruption Strategy for the period 2006-2011 |

DE | The Land of Berlin enacted the Act to introduce and maintain the register of corrupt firms in Berlin (Corruption Register Act – KRG) of 19 April 2006, published in the Berlin Law Gazette, Vol. 62, No. 16, 3.5.2006. http://www.kulturbuch-verlag.de/Online/Gvbl/pdfl/2006/heft16/16re.pdf. The purpose of the Act is to establish a central information point and thereby gather and present information on the reliability of natural and legal persons in a register to support the efforts of public procurement authorities in the exercise of their duty to verify the reliability of tenderers, applicants and actual and potential contractors. |

EL | Law 3481/06 (Government Gazette 162/31-08-2006) “Amendments to the legislation on the national land and property register with regard to the awarding and implementation of contracts for works and studies and other provisions” |

ES | - LAW 36/2006 of 29 November 2006 on measures for the prevention of tax fraud (Official State Gazette No 286 of 30 November 2006). - ROYAL DECREE 887/2006 of 21 July 2006 adopting the Regulation under Law 38/2003 of 17 November 2003, the General Law on Grants (Official State Gazette of 25 July 2006). - LAW 16/2006 of 26 May 2006 regulating Spain's status as a national member of Eurojust and relations with Eurojust as an EU body (Official State Gazette No 126 of 27 May 2006). - LAW 18/2006 OF 5 June 2006 on the efficacy within the European Union of freezing orders and orders for the securing of evidence in criminal proceedings (Official State Gazette No 134 of 6 June 2006). - ORGANIC LAW 5/2006 of 5 June 2006 supplementing the Law on the efficacy within the European Union of freezing orders and orders for the securing of evidence in criminal proceedings, amending Organic Law 6/1985 of 1 July 1985 (Official State Gazette of 6 June 2006), promulgated by the judiciary. |

IT | Law No 286 of 24 November 2006 amending and converting into law Decree Law No 262 of 3 October 2006 establishing urgent provisions on taxation and financial matters, published in the Official Gazette of the Italian Republic (GURI), general series, No 223/L, ordinary supplement to No 277 of 28 November 2006: Article 1: Assessment, tackling tax evasion and avoidance, and strengthening the Financial Economic Administration. Article 2, paragraph 9: inserted Article 48a into Presidential Decree (DPR) No 602 of 29.09.1973. In addition, Law No 296 of 27 December 2006 on provisions for establishing the annual and multiannual state budget (2007 Finance Act) published in GURI No 299 of 27 December 2006, ordinary supplement No 244, states in paragraphs 1213 to 1222 that any financial consequences arsing from the infringement of Community legislation are subject to state compensation from the non-state public bodies responsible, referring in particular to the following situations: judgment handed down by the European Court of Justice within the meaning of Article 228(2) of the Treaty establishing the European Community; financial regulations applied by the European Commission on the basis of specific supranational rules in cases of gross negligence detected in the national management of Community structural funds. |

LV | Act on the European Union's Financial Instruments: the PHARE Programme and the Transition Facility, adopted on 15 June 2006. This Act lays down: 1) the officials responsible for the PHARE Programme and the Transition Facility, their rights and obligations; 2) provision for the management of the PHARE Programme and the Transition Facility; 3) adoption of and appeal against decisions by officials responsible for the PHARE Programme and the Transition Facility within the framework of a grant scheme; 4) other issues related to the management of the PHARE Programme and the Transition Facility (restrictions on persons involved in managing the PHARE Programme and the Transition Facility; information accessibility; State fees). Pursuant to the delegation under the Act the following Cabinet regulations have been approved: procedures for determining priorities and for drawing up and selecting project applications; procedures for the implementation, monitoring and assessment of the PHARE Programme and the Transition Facility; procedures for preparing and submitting reports aimed at providing for the implementation of the PHARE Programme and the Transition Facility; procedures for notifying incompatibilities in the management of the PHARE Programme and the Transition Facility. |

LV | The Public Procurement Act, adopted on 6 April 2006, in force from 1 May 2006. The Act consolidates the principles of openness in public procurement and free competition among suppliers as set out in Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004, and the principle of the efficient use of State and local authority funds. (This Act replaces the Act on Procurements for State and Local Authority Requirements). |

HU | Act V of 2006 on Public Company Information, Company Registration and Winding-up Proceedings This new act contains various provisions designed to ensure that companies are run transparently: These provisions include the following: the court of registration may take legal compliance measures to force a company to file (publish) its annual report; the Cégszolgálat (Company Service) keeps a public creditor protection register that is accessible to all. |

PL | Act of 17 December 2004 on liability for a breach of public finance order (Journal of Laws 2005, No. 14, item.114) The amendments to the Act on liability for a breach of the public finance order (Article 2) facilitate the cross-referencing of the terms used in the Act and the terms used under the Public Finances Act (Journal of Laws No. 249, item 2104, as amended). On this basis, the Act on liability for a breach of public finance order applies also to funds from the European Agricultural Guarantee Fund and the European Agricultural and Rural Development Fund. In addition, as a result of the amendment, the general scope of application of the Act also includes processes relating to settlements with the European Union budget. |

PT | Law 60-A/2005 of 30 December 2005 (State Budget 2006) amending the General Tax Act, in particular the following measures: Official accounting officers jointly assume secondary responsibility for tax debts when they are found to have been in breach of their duties to assume responsibility for technical adjustments. Previously such officers jointly assumed secondary responsibility only when an intentional breach of duties was detected. Publication of the list of main debtors by tax debt. Agreement between the Portuguese Tax Administration and the Spanish Tax Administration allowing information to be exchanged directly between regional departments in Portugal and Spain without having to pass through central departments. Decree-Law No 205/2006 of 27 October 2006, approving the framework law for the Ministry of Finance and Public Administration as part of the PRACE restructuring programme, reaffirms the IGF's remit to “act as the national partner of the European Commission in the fields of audit, financial control and financial irregularities”. |

SK | Slovak National Council Act No 261/2006 amending Act No 39/1993 governing the Supreme Audit Office of the Slovak Republic (in force from 20 April 2006) extending the remit of the Supreme Audit Office to cover auditing of municipalities and larger territorial units; making it a requirement for the entities audited to provide the Supreme Audit Office with a direct connection to the computer systems they operate and access to the data processed using these systems, across the full range of the Supreme Audit Office's powers; Supreme Audit Office directly connected to the computer system of the State Treasury. |

Own resources (including VAT): Have there been any significant new legislative developments (not just implementing measures) contributing to the implementation of Article 280 of the Treaty in 2006? Member States are asked to list only national measures and not those which simply transpose Community legislation. |

If so, please indicate below: Type of instrument (e.g. law, regulation, decree), References of the legal instrument (number/date of publication in Official Gazette, etc.), References of the legal instrument or code that is amended (if any), Title of the legal instrument or a brief description (no longer than one or two sentences) |

BE | FPS Public Finance Department a) Programme Act of 20 July 2006, Moniteur belge / Belgisch Staatsblad, 28 July 2006, 2nd edition) Sections 18, 19, 20, 21 and 22 of this Programme Act amend sections 1, 51bis, 59, 70(1bis) and 79 of the VAT Code to introduce measures to combat unfair practices and establish joint liability where the tax is not paid. The provisions that are amended concern the definition of the concept of unfair practice, evidence of an unfair practice and the consequences regarding the deduction of upstream tax. The measure to combat abuse of rights established by section 128 of the Programme Act of 27 December 2005 (Moniteur belge / Belgisch Staatsblad, 30 December 2005, 2nd edition) was repealed. Section 15 of that Programme Act adds section 93undecies C in the VAT Code to make business managers jointly liable where VAT is not paid by the company they manage (see above). b) Programme Act of 27 December 2006 (Moniteur belge / Belgisch Staatsblad, 28 December 2006, 3rd edition Sections 2, 4, 5, 6 and 7 of this Programme Act add sections 52bis, 88bis, 88ter, 89bis and 93undecies D respectively to the VAT Code, and section 3 replaces section 87(1) of the Code. These are measures to combat tax fraud and improve tax recovery rates. They concern the possibility of administrative provisional seizures of assets to guarantee the payment of VAT, of calling for security in rem or in personam, of ordering firms to be closed down in certain circumstances and of seizing assets in relation to tax bills that are challenged. Section 93undecies D provides for personal liability to tax in certain circumstances for public servants and officers of court responsible for public sales of movable property. Section 51 amends section 79(2) of the VAT Code. The taxable person is now obliged to repay to the State any VAT that was wrongfully deducted if at the time of the transaction he was aware, or should have been aware, that the tax payable in the chain of transactions was not paid or was not to be paid to the State out of a tax-evasion intention. |

DK | Act No 408 of 8 May 2006 amending various taxation acts, the Trading Authorisations for Foodshops. Act etc. The Act contains new rules on joint and several liability for VAT and reporting of firms and more stringent rules on the lodging of securities and forced liquidation of firms involved in VAT roundabout fraud. |

IE | No new developments. Ireland maintains its reservation about the inclusion of VAT in this questionnaire in line with the Cocolaf meeting in October 2005. |

ES | LAW 36 of 29 November 2006 introducing measures for the prevention of tax fraud (Official State Gazette No 286 of 30 November 2006). The Law amends, inter alia, Law 37/1992 of 28 December 1992 on value-added tax. |

IT | Law No 248 of 4 August 2006 amending and converting into law Decree Law No 223 of 4 July 2006, published in GURI No 186 of 11 August 2006 establishing urgent provisions for economic and social recovery, the containment and rationalisation of public expenditure and measures on the revenue side and to tackle tax evasion: Article 35: measures to tackle tax evasion and tax avoidance; Article 37: provisions on assessment, simplification and other measures of a financial nature; Article 38: measures to tackle illegal gaming. Law No 286 of 24 November 2006 – Article 1, paragraphs 2 and 9 and Article 2, paragraph 9 (see above) Law No 296 of 27 December 2006 – Article 1, paragraph 44 (see above) |

LV | Cabinet Regulation No 239 of 28 March 2006 on procedures by which the State Revenue Service removes persons from the State Revenue Service register of persons subject to value added tax. This Regulation expedites the exclusion of dishonest taxable persons who fail to meet the liabilities to which taxable persons are bound from the State Revenue Service register of persons subject to VAT. |

HU | Act LXXIV of 1992 governing VAT. In the case of release for free circulation, as of 1 September 2006 a tax bond must be furnished if the recipient of the goods is in another Member State. |

PL | Act of 18 October 2006 amending the Act on the Agricultural Market Agency and the organisation of certain agricultural markets and certain other legislative acts (Journal of Laws 2006, No. 208, item 1541). Pursuant to the abovementioned Act, the catalogue of receivables determined by the President of the Agricultural Market Agency (AMA –Agricultural Market Agency- the paying agency for CAP funds) by way of an administrative decision, in respect of which the AMA may apply the provisions of the Tax Ordinance, has been expanded to include new categories of outstanding receivables arising from payments in connection with regulation of the sugar market. The Act stipulates that receivables in respect of sugar payments are recovered by the President of the AMA. |

PT | Law No 33/2006 of 28 July 2006 (VAT Code) introduced a reverse charge mechanism to trade in waste, residues and scrap in order to minimise fraud and tax evasion in this branch of activity. It established a self-billing requirement in cases where taxable persons carry out transactions with individuals. Decree-Law No 211/2005 of 7 December 2005 amending Article 22 of the VAT rules for intra-Community transactions: in 2006 the Directorate-General for Customs and Excise was given responsibility for assessing and recovering the VAT payable on intra-Community purchases of new means of transport not subject to vehicle tax carried out by individuals, exempt taxable persons, the State and other legal persons governed by public law. This measure will prevent non-payment of VAT in such cases. Legislative Order No 53/2005 of the Ministry of Finance, which entered into force in 2006, lays down new procedures and inspections for VAT repayments, introducing risk-analysis techniques, the cross-checking of data and the selection of taxpayers for inspection. |

SI | Act Amending the Value Added Tax Act (Official Gazette No 108/2005; in effect since 1.1.2006). A new Article 59a was added to the existing law so that the tax administration can decide ex officio to suspend identification for VAT purposes if it finds that there is no longer any reason for it. This provides a legislative opportunity for cancelling identification for VAT purposes in the case of "missing traders". Tax Procedure Act – UPB2 No (Official Gazette No 21/2006; valid from 1.1.2006) The practice of a guarantee for VAT repayments is introduced into law in cases in which the tax authority doubts whether repayment of the tax is justified by the circumstances of the case. On the basis of these provisions, the tax authority may demand that a sufficient guarantee be furnished by the taxable person in these cases before the VAT is repaid. |

SK | International agreements, which are a means of protecting the financial interests of the Slovak Republic and the European Union and a tool for combating customs fraud: International Treaty No 2/2006 – Agreement between the Government of the Slovak Republic and the Government of the Republic of Slovenia on mutual assistance on customs matters; International Treaty No 70/2006 – Agreement between the Government of the Slovak Republic and the Government of the Republic of Albania on mutual assistance on customs matters; International Treaty No 635/2006 – Agreement between the Government of the Slovak Republic and the Government of the State of Israel on mutual assistance on customs matters. |

UK | The United Kingdom has a reservation on the inclusion of VAT in this questionnaire. |

Agricultural expenditure (expenditure financed by EAGGF - Guarantee Section): Have there been any significant new legislative developments (not just implementing measures) contributing to the implementation of Article 280 of the Treaty in 2006? Member States are asked to list only national measures and not those which simply transpose Community legislation. |

If so, please give a brief description below. Please indicate: Type of instrument (e.g. law, regulation, decree), References of the legal instrument (number/date of publication in Official Gazette, etc.), References of the legal instrument or code that is amended (if any), Title of the legal instrument or a brief description (no longer than one or two sentences), Whether the measures are general or apply to a specific sector of the EAGGF-Guarantee Section, and which one. |

BE | Ministerial Order (Flemish Minister of Institutional Reform, Agriculture, Fisheries and Rural Affairs); C − 2006/35523 / published in the Belgisch Staatsblad on 19.04.2006 / 176th year N° 124, p. 21047; Ministerial Order of 15 March 2006 on the autonomous management of farms and small-holdings and the artificial generation of payment terms; Guarantees for farmers’ unique identifiers; Valid generally throughout the Flemish Region. |

IT | Law No 81 of 11 March 2006 amending and converting the Decree Law of 10 January 2006 establishing urgent measures for the agriculture, agro-industry and fisheries sectors and in the field of business taxation, published in GURI No 59 of 11 March 2006 - Ordinary Supplement No 58: Article 4(4), paragraph 4: (requirement for the State Forestry Corps and the Central Anti-Fraud Inspectorate to carry out the checks laid down by Regulation (EEC) No 4045/89. |

LV | Cabinet Regulation No 203 of 14 March 2006 amending Cabinet Regulation No 1002 of 30 November 2004 on procedures for applying the programming document: the Latvian Rural Development Plan for the Implementation of the 2004-2006 Development Programme. The new version of the programming document referred to in paragraph 1 of this Regulation is not applicable to aid applicants who submitted applications before the Regulation came into force. It relates to specific aid measures under the Latvian Rural Development Plan for the Implementation of the 2004-2006 Development Programme. This Regulation amends the conditions for receipt relating to aid for less-favoured areas and defines the conditions for receipt relating to the agri-environmental sub-measure on the restriction of erosion. Cabinet Regulation No 221 of 21 March 2006 on the procedure for granting State and European Union aid for agriculture and rural development. This Regulation lays down the procedure by which State and EU aid for agriculture and rural development is granted. It relates to a specific branch of the European Agricultural Guidance and Guarantee Fund Guarantee division: to single area payments, complementary national direct payments and individual payments for sugar, agri-environmental measures (development of organic agriculture, maintenance of organic diversity in grasslands, establishment of buffer zones, restriction of erosion and the preservation of the genetic resources of livestock) with the aim of supporting less-favoured areas and areas with environmental protection restrictions. Cabinet Regulation No 406 of 16 May 2006 on the procedure for administering and monitoring State and European Union aid for agriculture and rural development. This Regulation lays down the procedure for administering and monitoring State and European Union aid from the European Agricultural Guidance and Guarantee Fund Guarantee division for agriculture and rural development measures, and the procedure for publishing information on beneficiaries of State and EU agricultural aid and the amount of aid received. It relates to a specific branch of the European Agricultural Guidance and Guarantee Fund Guarantee division: to single area payments, complementary national direct payments for areas under crops and forage areas, agri-environmental measures (development of organic agriculture, maintenance of organic diversity in grasslands, establishment of buffer zones, restriction of erosion and the preservation of the genetic resources of livestock) with the aim of supporting less-favoured areas and areas with environmental protection restrictions. Cabinet Regulation No 576 of 11 July 2006 amending Cabinet Regulation No 1002 of 30 November 2004 on procedures for applying the programming document: the Latvian Rural Development Plan for the Implementation of the 2004-2006 Development Programme. This Regulation lays down the procedure for implementing the programming document the Latvian Rural Development Plan for the Implementation of the 2004-2006 Development Programme. It relates to specific aid measures under the Latvian Rural Development Plan. Cabinet Regulation No 903 of 31 October 2006 amending Cabinet Regulation No 1002 of 30 November 2004 on procedures for applying the programming document: the Latvian Rural Development Plan for the Implementation of the 2004-2006 Development Programme. This Regulation relates to specific aid measures under the Latvian Rural Development Plan. |

MT | The only new significant legislative development in this regard during 2006 is Legal Notice 52 of 2006 - Income Tax Act (Cap. 123) Agricultural subsidies (Income Tax Exemption) Rules 2006. This was published in Government Gazette Malta No. 17884. An amendment relating directly to the Paying Agency (EAGGF – Guarantee Section) is in the process of being formally published; this concerns the composition of the Appeals Board where the Paying Agency had proposed a number of auxiliary board members. (see 1.5) |

PL | Act of 18 October 2006 amending the Act on the Agricultural Market Agency and the organisation of certain agricultural markets and certain other legislative acts (Journal of Laws 2006, No. 208, item 1541) Pursuant to the abovementioned Act, the catalogue of receivables determined by the President of the Agricultural Market Agency (AMA) by way of an administrative decision, in respect of which the AMA can apply the provisions of the Tax Ordinance, has been expanded to include new categories of receivables, i.e.: 1. outstanding payments in the form of the restructuring fee collected as part of the sugar industry restructuring mechanism, 2. outstanding payments in the form of penalty charges for failing to dispatch exports, and failing to issue a refund on potato starch manufactured in excess of the allocated production quota, 3. wrongly released securities paid in by undertakings involved in foreign trade. Regulation of the Council of Ministers of 21 July 2006 as regards the detailed terms of and procedure for writing off, deferring or dividing into instalments the repayment of sums obtained from the European Agricultural Guidance and Guarantee Fund and national funds allocated for implementation of the Common Agricultural Policy (Journal of Laws No. 134, item 941) The Regulation sets out detailed rules governing the writing off, deferring or dividing into instalments of sums due as referred to in Article 208(1)[2] of the Public Finances Act. The beneficiary of any aid from the above-mentioned funds may not count on amounts owed being written off or divided into instalments if it obtained the funds as a result of a crime (Paragraph 2 of the regulation). |

PT | Animal identification/public and animal health Decree-Law No 142/2006 of 27 July 2006 (D.R. (Portuguese Official Gazette), I Series, No 144 of 27 July 2006) set up a National Animal Information and Registration System (SNIRA), which lays down rules for the identification, registration and movement of bovine, ovine, caprine and porcine animals and establishes the legal framework for assembly centres, dealers and transporters and operating rules for the recovery of the carcases of animals which have died on the farm (SIRCA). Conditionality Decree No 438/2006 of 8 May 2006 (D.R. I Series-B of 8 May 2006) identifies the specialised control bodies and the national bodies responsible for new areas of conditionality. Under the programme for restructuring the central government administration (PRACE), Decree-Law No 209/2006, approving the framework law for the Ministry of Agriculture, Rural Development and Fisheries (published in DR, I series – No 208 of 27 October 2006) conferred on the Inspectorate-General for Agriculture and Fisheries (IGAP) responsibility for: carrying out the duties of "special department" under Council Regulation 4045/89 and implementing the ex post controls provided for in that Regulation, which had previously been carried out by a number of bodies, in particular the paying agency; along the same lines, carrying out ex post controls on operations financed by the EAFRD. |

SI | Agriculture Act (ZKme – UPB 1) –, Official Gazette No 51/06 of 18.5.2006 Articles 3f and 3g of this Act are directly related to the elimination of irregularities in the agricultural sector: Article 3f (overruling of decisions in accordance with the right of inspection) The control authority may overrule a decision in accordance with the right of inspection subject to the conditions, deadlines and grounds set out in the European Union regulation establishing the beneficiary's repayment obligation when excessive funds have been granted under the decision. Unless the European Union regulation fixes a different deadline of the type referred to in the previous sentence, the competent authority may overrule the decision within five years of its notification. Article 3g (renewal of procedure) A procedure which has been terminated by a decision against which there is no proper legal redress by administrative procedure may be renewed within five years of the decision being terminated if it is found that the beneficiary was issued a favourable decision on the basis of untruthful statements. |

Structural operations: Have there been any significant new legislative developments (not just implementing measures) contributing to the implementation of Article 280 of the Treaty in 2006? Member States are asked to list only national measures and not those which simply transpose Community legislation. |

If so, please give a brief description below. Please indicate: Type of instrument (e.g. law, regulation, decree), References of the legal instrument (number/date of publication in Official Gazette, etc.), References of the legal instrument or code that is amended (if any), Title of the legal instrument or a brief description (no longer than one or two sentences), Whether the measures are general or whether they apply to a specific fund and, if so, which one. |

EL | Joint Ministerial Decision No 15954/11.8.2006 (Government Gazette 1266/B/8.9.2006) of the Minister for Economic Affairs and Finance and the Minister for Development: “Procedure for the recovery of amounts unduly or illegally paid from national or EU resources for the implementation of programmes under the Third Community Support Framework for the 2000-2006 programming period” This Joint Ministerial Decision lays down the procedure to be followed, after a control has been carried out, to recover amounts unduly or illegally paid from the resources of the Pubic Investment Budget for the implementation of programmes co-financed by the ERDF and the ESF under the Third CSF (where the control is carried out by the departments of the Ministry of Development’s General Secretariat for Research and Technology, acting as final beneficiaries) and concerns the 2000-2006 Competitiveness Operational Programme, the Regional Operational Programmes and Community Initiatives. |

LV | Act on the Management of the European Union Structural Funds, adopted on 8 December 2005, in force from 1 January 2006. This Act lays down the rights and obligations of institutions involved in the management of the Structural Funds, the status of decisions adopted by the monitoring committee and the management committee, and procedures for adopting, contesting and appealing against decisions by institutions involved in the management of the Structural Funds. Pursuant to the delegation under the Act the following Cabinet regulations have been approved: the procedure by which institutions involved in managing the Structural Funds provide for the amendment of planning documents and the exploitation of the Structural Funds (preparation, submission and assessment of Structural Funds project applications or grant scheme project applications, and implementation of Structural Funds projects or grant scheme projects); procedures by which institutions involved in managing the European Union Structural Funds provide for the financial control and auditing of the Structural Funds; procedures for notifying incompatibilities in the implementation of projects financed by the Structural Funds and for adopting decisions on the exploitation of allocated finances; procedures by which institutions involved in managing the Structural Funds publish information on Structural Funds projects; procedures by which institutions involved in managing the Structural Funds generate publicity and ensure compliance with visual identity requirements; procedures by which institutions involved in managing the Structural Funds provide for the monitoring and evaluation of the Structural Funds; procedures by which provision is made in the State budget for the implementation of projects financed by the Structural Funds and for making payments; procedures by which institutions involved in managing the Structural Funds draw up and approve the national Structural Funds programme; procedures providing for the financial management of the Structural Funds; procedures by which institutions involved in managing the Structural Funds provide for the implementation, financial control and auditing of the activity "aid to producers' organisations" under the planning document measure "development of coastal fishing, socioeconomic measures, support for the acquisition of market outlets, and aid to producers' organisations"; application form for Structural Funds projects; project application guidelines for open competitions; grant schemes. Act on the management of European Union Cohesion Fund projects, adopted on 8 December 2005, in force from 1 January 2006. This Act provides for the preparation, approval, implementation and monitoring of environmental infrastructure and transport infrastructure projects financed through the Cohesion Fund and technical assistance projects linked to their implementation and management. The Act is applicable to projects financed through the Cohesion Fund and approved by the European Commission up to 31 December 2006. Pursuant to the delegation under the Act the following Cabinet regulations have been approved: procedure by which institutions involved in managing the Cohesion Fund notify infringements and incompatibilities in the implementation of projects; procedures for the calculation and reimbursement of incompatible expenses incurred within the framework of projects financed through the Cohesion Fund; procedures by which institutions involved in managing the Cohesion Fund carry out on-the-spot checks; procedures by which institutions involved in managing the Cohesion Fund carry out random checks of project expenses; procedures by which institutions involved in managing the Cohesion Fund prepare and put forward proposed amendments to financial memoranda or European Commission decisions. The following Cabinet regulations were adopted in 2006 on the basis of the Act on the Management of the European Union Structural Funds, in relation to all EU Structural Funds: Cabinet Regulation No 494 of 20 June 2006 on procedures providing for the financial management of the European Union Structural Funds (published in the official journal Latvijas Vēstnesis No 102 (3470) on 30 June 2006). This Cabinet Regulation replaces the State Treasure Order providing for compliance with the provisions of the Government Act and harmonising Latvian State legislation. Among other provisions, the Regulation stipulates a reduction in total eligible project expenditure where a second level intermediate authority has approved a smaller amount of requested eligible Structural Funds expenditure than was requested by the beneficiary of the Structural Funds because the beneficiary has incurred incompatible expenses. Cabinet Regulation No 538 of 27 June 2006 on the procedures by which institutions involved in managing the European Union Structural Funds provide for the financial control and auditing of the Structural Funds (published in the official journal Latvijas Vēstnesis No 112 (3480) on 18 July 2006). This Regulation replaces the Ministry of Finance Order providing for compliance with the provisions of the Government Act and harmonising Latvian State legislation. The Regulation lays down financial control and auditing measures for projects financed by the Structural Funds. Cabinet Regulation No 546 of 27 June 2006 on the procedures by which provision is made in the State budget for the implementation of projects financed by the Structural Funds and for making payments (published in the official journal Latvijas Vēstnesis No 102 (3470) on 30 June 2006). Among other provisions, the Regulation provides for the regulation of applications for the Structural Funds, for the checking of documents submitted in such applications and for the procedure by which payments are made to Structural Funds beneficiaries; it also lays down that the Cabinet of Ministers, the State Control Department and the central Government authority under whose budget State financing for a project's implementation was planned must be informed of any incompatibility with legislative provisions of expenses set out in a Structural Funds application, where the beneficiary of Structural Funds and grant financing is an institution under the State budget. Cabinet Regulation No 544 of 27 June 2006 on procedures for notifying incompatibilities in the implementation of projects financed by the Structural Funds and for adopting decisions on the exploitation of allocated finances (published in the official journal Latvijas Vēstnesis No 102 (3470) on 30 June 2006). This Regulation replaces Ministry of Finance Orders providing for compliance with the provisions of the Government Act and harmonising Latvian State legislation. Among other provisions the Regulation lays down provisions for intermediate authorities to provide the managing authority and the paying agency with reports listing all established incompatibilities. The Regulation lays down that the Cabinet of Ministers must be notified of any incompatible expenditure where the beneficiary of Structural Funds or grant financing responsible for the incurrence of incompatible expenditure is an institution under the State budget and it is not possible to withhold the incompatible expenditure incurred by the beneficiary of the Structural Funds or grant financing. |

HU | Government Decree 202/2006. (X.5.) amending Government Decree 360/2004 (XII.26) setting up financial settlement, accounting and control systems in connection with the receipt of assistance under National Development Plan operational programmes, the EQUAL Community Initiative programme and Cohesion Fund projects (Hungarian Gazette No 2006/122). Joint Decree 8/2006 (X.20.) amending Joint Decree 14/2004. (VIII.13.) TNM-GKM-FMM-FVM-PM on the general procedural rules governing utilisation of the structural funds and the Cohesion Fund (Hungarian Gazette No 2006/129). Government Decree 102/2006 (IV.28) governing the setting up and operation of monitoring systems for programmes implemented using certain types of financial assistance granted by the European Union or financed on the basis of certain international agreements (Hungarian Gazette No 50, vol. I). |

MT | There were no new significant legislative developments during 2006.It is pertinent to point out that the Managing Authority takes due responsibility in terms of financial management and control in the course of programming and implementing the EU Structural Funds Program as well as in the monitoring of projects that have been approved for funding .Subsequently, it rigorously applies both national legislation as well as EU Commission Regulations to counter fraud affecting the financial interest of both national as well as EU financial interests. |

PL | The Public Finances Act and the Act of 8 December 2006 amending the Public Finances Act and other legislative acts (Journal of Laws of 29.12.2006 , No. 249, item 1832) Two solutions have been introduced in order to protect monies from the structural funds, the Cohesion Fund, the European Fisheries Fund, and the European Agricultural Guidance and Guarantee Fund, Guarantee Section: - an administrative enforcement procedure has been introduced for the recovery of monies owed. This solution guarantees effectiveness and the possibility of faster recovery of monies owed than under the currently applicable civil law procedure. - the sanction consisting in a 3-year ban on granting new monies has been modified; if the funds are utilised in a manner contrary to their intended use, the beneficiary will be deprived of the possibility of obtaining monies from any of the above-mentioned funds for 3 years. Act of 13 July 2006 amending the National Development Plan Act and certain other legislative acts (Journal of Laws No. 149, item 1074) Pursuant to the Act of July 2006, amendments were made to the National Development Plan Act of 2004 (Journal of Laws No. 116, item 1206 and of 2005, No. 90, item 759 and No. 267, item 2251), which regulates all significant issues relating to implementation of the Structural Funds and the Cohesion Fund in Poland in relation to funds granted to Poland for 2004-2006. The amendments to the above-mentioned Act aimed to improve the flexibility and the operation of the systems for the management, implementation and control of programmes co-financed under the Structural Funds and the Cohesion Fund. The most significant amendment is the introduction of an entity ensuring the coordination of control actions under the Community Support Framework, i.e. the Committee for the Control and Audit of Structural Funds and the Cohesion Fund. The Committee was established pursuant to the regulation of the Minister for Regional Development of 4 October 2006 and, as the legislator intended, has become a forum for all entities participating in the Structural Funds and Cohesion Fund control system and other, independent State control authorities, as regards the coordination of methods and plans for exercising controls, as well as the summarising and exchange of inspection results. Experience to date regarding the Committee's operation indicates that it contributes in a measurable way to improving the control process carried out in connection with the implementation of Structural Funds and the Cohesion Fund. |

SI | Act Amending the Motor Vehicles Tax Act /ZDMV-B/, Official Gazette No 47/06, 9.5.2006 The amendment to the Act introduced an obligation to pay motor vehicle tax on used motor vehicles registered for the first time in Slovenia before a certificate of type approval is issued. This directly rules out the possibility of evading or not paying motor vehicle tax on used motor vehicles acquired from other EU Member States; at the same time the data on the motor vehicle tax assessed helps the tax authority in its analyses and controls of the accuracy of the VAT accounts in this sector. For the agricultural sector, see point 1.3. |

FI | The Structural Funds Act (No 1401/2006) of 29 December 2006 entered into force on 1 January 2007. This amended Act No 1353/1999. The Structural Funds Act is largely concerned with Structural Funds. |

Description of key developments: Member States are invited to describe the most important two or three measures (whether legislative or administrative) taken in the course of 2006 about which they would wish to provide more detailed information. These should be measures adopted on Member States’ own initiative and not measures which simply transpose Community legislation. |

In particular, Member States are asked to indicate: Type of measure (law, regulation, etc.) and references (number, date of adoption and/or publication, name of programme, etc.), Its scope (horizontal scope, specific field), Why it was needed, Improvements made to the existing system. |

BE | On 27 April 2006 the Walloon Government adopted an updated version of the circular on the administrative and financial management of programmes co-financed by the Structural Funds in the Wallonia and coordinated by the European Programmes Directorate. Provision is made in particular for the following: a) all checks and inspections are routinely entered in the Structural Funds management database, including all (documentary) checks on statements of claim and on-the-spot inspections. Where the repayment of subsidies is demanded as a result of the conclusions, the European Programmes Directorate must be informed of the follow-up action taken within two months so that it can comply with Regulation (EC) No 1681/1994 as amended by Regulation (EC) No 2035/2005; b) the authorities responsible on a functional basis send the European Programmes Directorate a detailed record of invoices or equivalent documents recording certified expenditure and the date of payments to final recipients in a specified electronic format. On 16 March the Walloon Government adopted an updated circular on the general principles of the concept of irregularity, chiefly in order to incorporate the changes made by Regulation 2035/2005 to Regulation (EC) No 1681/1994. In June and December 2006 the European Programmes Directorate of the Ministry of the Walloon Region updated the CD-ROM for functional authorities. The CD-ROM contains the Community provisions (general matters, eligibility, publicity, use of the Euro, management and control), the regional provisions (implementing rules and controls), programming documents, records of meetings, annual reports, list of useful web-sites. The CD-ROM was issued to the functional authorities (intermediate agencies) and the offices of the Ministers to whom they report. |

CZ | The Financial Control Bill was submitted to the Czech Chamber of Deputies in 2006. |

IE | A new computerised system (iFORIS) was introduced by the Department of Agriculture and Food (DAF), Forest Service in March 2006. The enhancements built into this system will further strengthen the financial controls of the Forest Service. |

EL | A. Circular No 13417/EYS/2488-28/3/2006 of the Special Service for the Coordination and Implementation of OPs containing “instructions on procedures for completing operations” B. Law 3481/06 (Government Gazette 162/31-08-2006) “Amendments to the legislation on the national land and property register with regard to the awarding and implementation of contracts for works and studies and other provisions” C. Decision No D17a/01/127/FN.443 (Government Gazette 1184/B/31.08.06) “Approval of improvement of model documents for public works tenders” |

ES | 1. Law 36/2006 introducing measures for the prevention of tax fraud. The Law amends a number of laws. The following amendments are particularly significant: - redefinition of the concept of a swap between companies. - new taxation standards for non-residents on revenue from tax havens or low-tax states or territories. - in the field of VAT, new standards for the modification of the tax base for transactions between related persons or entities and a new set of arrangements governing the secondary liability responsibility of groups of entities. - new tax control guarantees for transactions authorised by notaries. 2. ROYAL DECREE 887/2006 of 21 July 2006 adopting the Regulation under Law 38/2003 of 17 November 2003, the General Law on Grants (Official State Gazette, 25 July 2006) which, inter alia: - develops the National Grants Database set up by Law 38/2003, the General Law on Grants, which will help to improve efficiency and enable checks to be carried out on the accumulation and overlapping of grants, thereby facilitating planning, monitoring and checks; - sets up an Advisory Grants Council, a body with advisory powers as regards grants to public sector bodies and entities and potentially to bodies responsible for the administration of autonomous communities and local authorities, in order to standardise the applicable criteria, given the diversity of standards and differences of interpretation in this area; - develops procedures for refunds and the imposition of penalties. This national database has yet to be developed. |

IT | Law No 286 of 24 November 2006: Article 1 paragraph 2: new requirements for taxable persons that also use customs and excise warehouses as VAT warehouses; paragraph 9: identification of the documentation certifying the payment of VAT for vehicles purchased in the Community and outside it. Article 2 paragraph 9: this inserted Article 48a into DPR No 602 of 29 September 1973. It requires all public administrations and companies in majority public-ownership to check before paying any sums in excess of €10 000 whether the beneficiary has failed to fulfil payment obligations deriving from tax assessments totalling at least the same amount and if so, to inform the collection agent of this situation. The Ministry for Economic Affairs and Finance will issue a Regulation establishing detailed implementing arrangements. Law No 248 of 4 August 2006: Article 35 paragraph 7: provision for a criminal penalty (6 months to 2 years imprisonment) in cases of failure to pay VAT for amounts of more than €50000; paragraph 11: vehicles for which the VAT rebate is not allowed when, irrespective of the type-approval category and following adaptation, they are used for private passenger transport. This is, however, without prejudice to the exercise of the right to the rebate if the taxpayer can demonstrate that the purchase relates to the activity performed; paragraph 12: traceability of payments made to those in the craft and professional sectors, by making it obligatory to pay with electronic money, cheques, credit transfers or other bank or postal payment means, except when the unitary amounts are below a certain ceiling set on a sliding scale, starting at €1 000 on 1 July 2007 and ending at €100 as of 1 July 2009; paragraph 27: requirement for taxable persons referred to in Article 7 of DPR No 605 of 29 Septembers 1973, to notify the Tax Inspectorate by electronic means of the amounts paid under insurance contracts, and the beneficiaries' tax code and VAT number; paragraph 35: possibility for the Tax Agency to obtain data and documents, under the provisions of Article 51 of DPR No 633 of 1972, in order to identify the normal value declared for import, export or warehousing; paragraph 35a: requirement to sned the Revenue Agency by electronic means the copy of the contracts for acquiring the professional services of professional athletes. Article 37 paragraphs 8 and 9: requirement for the holders of VAT numbers to present customer and supplier lists; paragraph 18: as an amendment to Article 35 of DPR 633 of 1972, a provision is introduced whereby the allocation of a VAT number gives rise to automated feedback in order to identify the risk elements connected with the issuing of the said VAT number; paragraph 33: electronic transmission to the Revenue Agency of daily fees by retail traders and the like; paragraph 49: requirement to use computerised procedures for the payment of tax by holders of VAT numbers as of 1 January 2007. Article 38: Measures to tackle avoidance and evasion in the illegal gaming sector. Law No 296 of 27 December 2006: Article 1 paragraph 44: application, subject to prior Community authorisation, of the reverse-charge procedure to supplies of terminal equipment for the public land mobile communications service liable to concession tax, supplies of personal computers and their components and accessories and supplies of stone materials and products direct from quarries and mines. |

CY | No legislative measures were taken in the course of 2006. As regards administrative measures, the circular of the Paying Authority on dealing with irregularities arising from Structural Fund and Cohesion Fund projects was revised on 8 November 2006. Purpose: Implementation of a specific procedure enabling the various parties involved to report irregularities to the Paying Authority, which is responsible for notifying them to OLAF. This circular was issued to institute a common policy/common procedures, establish a timetable for providing information and lay down how to report (standardised reports) instances of irregularities to the Paying Authority so that it is in a position to inform the European Commission (OLAF). |

LV | The Public Procurement Act. The Act consolidates the principles of openness in public procurement and free competition among suppliers as set out in Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004, and the principle of the efficient use of State and local authority funds. |

HU | Government Decree 202/2006 (X.5) amending Government Decree 360/2004 (XII.26) setting up financial settlement, accounting and control systems in connection with the receipt of assistance under National Development Plan operational programmes, the EQUAL Community Initiative programme and Cohesion Fund projects (Hungarian Gazette No 2006/122). Under Article 47(3) of Government Decree 202/2006 (X.5) the OLAF Coordination Office is required to draw up and publish a manual for the handling of irregularities within 60 days of the entry into force of the Decree. A methodological manual on the procedures for handling irregularities in respect of Union resources was drawn up by the OLAF Coordination Office and the Finance Ministry's control system development directorate (CHU) and the parties concerned made arrangements for its publication on the Finance Ministry website. The methodological manual lays down detailed procedures for the examination and handling of irregularities committed by beneficiaries in connection with Union resources. The manual provides assistance for work in connection with irregularities in three areas: 1. creation of a requisite uniform procedure right from when an irregularity is first suspected up until measures are taken; 2. a procedure requiring the reporting of irregularities in accordance with EU rules; 3. a set of examples of typical instances of irregularities." |

MT | Own resources (including VAT) In November 2006, Parliament approved the first reading of a bill aimed at implementing budget measures for the financial year 2007. The title of the Act is the Budget Measures Implementation Act, 2007. The Scope of this Act is to secure the implementation of measures taken as part of the Budget 2007. Part V of this Act amends the VAT Act. Sub-article (5) of Article 63 provides that in cases where a person’s registration for VAT may create a risk for the revenue, the Commissioner may ask for the payment of a security by that person under the conditions approved by the Minister of Finance. These conditions will specify in which situations such security may be applied and provides for a flexible administrative control by the Minister in case such conditions need to be changed. Further to this measure, an amendment to Article 77 provides for criminal action against a person who is requested to submit a security under specific conditions as outlined in Article 63(5) and who operates his business without furnishing the required security. Another amendment to the VAT Act is that of sub-article (4) of Article 56 which provides for the sharing of information between the VAT Department, the authority for Eco-Contribution and the Customs Department. This measure will give access to more information. The amendment to Article 77 of the VAT Act is a measure to introduce an obligation on commercial banks to submit quarterly information to the VAT Department regarding payments they make directly to third parties on behalf of their clients who have loan facilities. This measure aims to curb abuses by suppliers in the construction industry. Paying Agency – EAGGF (Guarantee Section) As referred to in answer 1.3, an amendment which is in the process of being formally published concerns the composition of the Appeals Board, where the Paying Agency had proposed a number of auxiliary board members.The selection will be effected according to the issue to be tackled by the Appeals Board. The time-frames for the submissions of contestations by third parties with respect to the Paying Agency’s decisions will also be considered. The objective of these proposals is to attain a more effective and efficient appeals process. |

NL | The Ministry of Agriculture, the Natural Environment and Food Quality (LNV) reports that the number of paying agencies in the Netherlands has been reduced: there are now only two. One paying agency for rural development measures (POP 2) (Rural Areas Service - DLG) and one for other schemes (Schemes Service - DR). (Paying agency status was withdrawn from PZ (Dairy Products Marketing Board), PT (Horticulture Marketing Board), HPA (Marketing Board for Arable Products) and PVE (Marketing Boards for Livestock, Meat and Eggs) with effect from 15 October 2006. These former paying agencies now operate on behalf of the DR paying agency as “delegated bodies”. The reasons for the change are tied up with the need to reduce the number of paying agencies under Article 6 of Regulation (EC) No 1290/2005. The new structure with two paying agencies became operational on 16 October 2006, when a series of schemes were adapted to the new structure and agreements were entered into at a variety of levels regarding the interaction between paying agencies and delegated bodies (memoranda of understanding etc.). |

PL | Regulation of the Minister of Agriculture and Rural Development of 18 April 2006, amending the regulation as regards the Supplement to the Sectoral Operational Programme “Restructuring and modernisation of the food sector and development of rural areas in 2004-2006” (Journal of Laws of 2006, No. 69, item 488) The Regulation introduced changes relating to, among others, the criteria of access as regards measures 2.2 “Land consolidation” and 2.5 “Management of agricultural water resources”. The abovementioned changes consist in the introduction of a requirement that “a person seeking co-funding for the implementation of a project must not be in arrears with the payment of any taxes or social and health insurance contributions”. Therefore, in order to confirm or supplement the information which would have a material impact on the final evaluation of the project (Section 5.3.) “Assessment of the application for co-financing the implementation of a project”, it is necessary for the implementing authorities to require (at the stage when applications for the co-financing of the implementation of a project are being considered) the applicants to whom the provisions of the abovementioned Regulation apply to submit an up-to-date certificate issued by the head of the tax office, confirming lack of any tax arrears, and an up-to-date certificate from the Social Insurance Office, confirming lack of any arrears as regards social and health insurance contributions. The amendment made facilitates the elimination of any entities which are potentially risky due to their uncertain financial position and which do not guarantee the correct implementation of the project. |

PT | Legislative Order No 1/2006 of the Ministry of Finance and Public Administration, published in D.R. II Series of 11 July 2006, implementing a computer system for the completion of declaration formalities on the export or re-export of goods from the Community customs territory. The new system, known as STADA – Exportação (system for the automatic processing of customs export declarations), interacts with other systems and databases belonging to the Directorate General of Customs and Special Taxes (DGAIEC, Direcção-Geral das Alfândegas e Impostos Especiais), in particular the SSA (automatic selection system), to allow the computerised sorting of the declarations to be submitted for action/inspection by customs. Implementation of the SDS – Summary Declaration System, which carries out the computerised processing of means of transport and of goods presented to customs. At the same time a protocol was signed between the DGAIEC and the port authorities at the Ports of Lisbon, Douro and Leixões and Sines, to establish a link between the SDS and the Centralised Port System in order to allow traders to send electronically through this system the information required to complete formalities for the customs clearance of means of transport and the presentation of goods at customs. DGAIEC Circular No 65/2006, Series II, which lays down the methods to be used to implement accounting checks on the existence of "production materials" under Article 3 of Commission Regulation (EC) No 2315/92 and Article 2a of Commission Regulation (EC) No 1591/95 (export refunds for sugar added to products processed from fruit and vegetables). DGAIEC Circular No 34/2006, Series II, which lays down the procedures to be adopted where there are suspicions of counterfeit goods or other semi-public crimes under Articles 321 to 328 of the Industrial Property Code. Clean-up of the taxpayers' register (corporation tax and VAT): identification of legal persons which have been inactive since 2002, so that taxes shown on invoices of taxpayers not included in the active tax register cannot be taken into consideration, thereby curbing the practice of issuing false invoices. In connection with the EAGGF Guidance Section and the FIFG, the development and operational implementation at the Inspectorate-General for Agriculture and Fisheries (IGAP) of a database known as SISPAC (information system to support the planning of 1st and 2nd level inspection activity), which serves: to detect overlapping controls by cross-checking the data used as a basis for selecting the sample against the inspections (planned and implemented) in the SIGIFE (information system for managing Structural Funds and instruments, developed by the IGF); to select risky beneficiaries (using the tax identification number (NIF)) by cross-checking the data used as a basis for selecting the sample against the records of irregularities notified to the European Commission. After the test phase, a User's Guide was produced and the application was installed at managing authorities and 2nd level inspection bodies in the Autonomous Regions, which, as a rule, use it to select inspection samples for the 2007 annual plan. |

SI | For the agricultural sector, the Agriculture Act had to be amended to obtain a legal base for abolishing decisions in respect of which funds had to be repaid when there had been irregularities and the funds had been wrongly disbursed. |

SK | Principles for coordinating the planning and performance of ex post financial controls of European Union resources and resources from other financial assistance instruments from abroad (adopted by Slovak Government Resolution No 206 of 1 March 2006): establishing a uniform procedure for planning, performing and monitoring controls; coordination of the performance of ex post financial control with other audit bodies. The setting up of an Audit Body in the department for the control of EU financial resources as part of the public internal financial control system section of the Ministry of Finance of the Slovak Republic as a central body functionally independent of the management body and the certifying body (adopted by Slovak Government Resolution No 494 of 24 May 2006): entrusted with the job of carrying out independent verification functions at level II (verification of the management, control and declared expenditure systems) and the job of issuing declarations of winding-up of assistance and partial declarations of winding-up of assistance (level III); improving the effectiveness of the performance, procedures and overall quality of the independent verification and evaluation of management, procedures and all activities in the implementation of foreign assistance programmes in the Slovak Republic; responsible for the performance and coordination of the auditing of all entities involved in conducting auditing. Slovak Ministry of Finance guideline No 2/2006-NF on irregularities in the financial management of pre-accession and post-accession EU funds and other financial instruments |

UK | Guidance notes to Government Offices in the Regions for ERDF in England. GN1.19 (issued in April 2006) on the Completion of Article 9 Certificates.DG Regio audits declared non-compliance with Regulation 438/2001. This note clarifies the arrangements for compiling and signing the certificate of expenditure and introduces a further level of management control. GN2.6 (amended and issued November 2006) on the Article 4 Monitoring Assurance Framework. It introduces some important changes to elements of the framework that provides a comprehensive approach to the monitoring of projects so as to ensure compliance with the Regulation. This amendment has been necessary, following concerns by auditors from DG Regio. GN4.17 (issued in October 2006) on the closure of the ERDF funded elements of the 2000-06 round of structural funds programme and to be read in conjunction with the Regulation and the EC's "Guidance on the closure of assistance (2000-2006) from the Structural Funds". |

RISK ASSESSMENT AND RISK MANAGEMENT IN THE MEMBER STATES

When an economic operator makes a payment, he takes account of the associated risks: what is the likelihood that the payment will produce the desired effect? What is an acceptable degree of risk for the transaction concerned?

A public administration should ask itself the same questions when granting any kind of benefit (financial or other). Proper risk assessment and management help to ensure that taxpayers' money is spent as efficiently as possible on implementing policies.

As the topic is a complex one, this questionnaire is confined to certain specific aspects of risk assessment and management, namely early-warning and blacklisting systems and mechanisms for the use of internal whistleblowing. An analysis of the replies from Member States should contribute to a joint debate on these two aspects. It should also enable us to make a list of the best practices reported by Member States, which could serve as a source of inspiration for any future reforms at Community or national level.

The Commission/OLAF is currently reviewing European early-warning and blacklisting systems with a view to improving the management of certain risks associated, in particular, with public procurement systems and the protection of the Communities’ financial interests. We need to consider whether European early-warning and blacklisting policy needs improving and look at making the rules and procedures clearer and more transparent, while respecting individual rights.

Whistleblowing has increased in importance in recent years in a number of Member States, within the European Union and in various international organisations. Information supplied by a person working within an administrative authority can sometimes help to cast light on illegal acts that would otherwise have gone unnoticed by the authorities. Internal whistleblowing can help to reduce the risk of abuse and as such constitute an effective risk-management tool. We intend to outline the various systems that exist in the Member States as part of the 2006 report in order to give an overview of this topic.

Guidelines for risk assessment and management

2.1.1. Does your Member State have national guidelines (instructions or good practice guidelines) or rules specific to certain fields to help managers in assessing and managing the financial risks associated with awarding a benefit or a public contract? If so, in which fields?

Definition: Risk is understood to mean the likelihood that the award of a benefit (grant, administrative authorisation, etc.) or a public contract will be diverted from its objective by the beneficiary or will fail to achieve its objective for other reasons.

2.1.1. Guidelines for risk assessment and management: Does your Member State have national guidelines (instructions or good practice guidelines) or rules specific to certain fields to help managers in assessing and managing the financial risks associated with awarding a benefit or a public contract? If so, in which fields? |

BE | FPS Economic Affairs (EAGGF Guarantee Section): Belgian Office for Intervention and Restitution (BIRB): Customs keep a list of fraud cases, of which a copy is sent to BIRB every quarter. Some of the fraud cases concern sums paid out by BIRB. For past cases checks are made as to whether the relevant sums have been recovered. For the future account is taken of the information to hand. FPS Budget and Management Control: In matters within the remit of the FPS Budget and Management Control, there are ex ante checks organised by the Royal Order of 16 November 1994 on administrative and budgetary controls, and a posteriori checks at the initiative of the Court of Auditors. Section 55(2) of the Consolidated State Accounts Act provides that any person who receives a grant must vouch for the use made of the relevant sums unless the law releases him from that duty. Walloon region: The European Programmes Directorate notifies the authorities responsible on a functional basis of a vade-mecum setting out the procedures for management and control of projects co-financed by the Structural Funds. The vade-mecum particularly concerns the definition of eligible areas, project management, information to be sent to the European Programmes Directorate, first-level controls, eligibility of expenditure, working parties, definitions and main legal instruments. |

CZ | Act No 320/2001 on financial control in public administration (the Financial Control Act), as amended, governs the duty of heads of public administration bodies to promptly identify, assess and minimise operational, financial, legal and other risks arising in connection with the handling of public resources. Internal rules (methodological instructions, internal guidelines and manuals) provide for the analysis of developing risks. However, the risk analysis is not an analysis of the risks associated with the beneficiary, but an analysis of the financial risks of the granting body. |

DK | The Finance Ministry's Financial and Administrative Guidance Division (ØAV) issues information and guidance about the Finance Ministry's rules governing civil servants performing tasks in the areas of authorisation, accounting and financial management. Guidance also covers a range of questions concerning risk assessment and management, grant management, public contracts etc. Guidance is available on line at http://www.oav.dk/ |

DE | The provisions in the federal and Land budgetary procedure legislation and the verifications they demand offer an adequate basis for risk analysis or the proper approval of grants. National rules do not basically proceed from the assumption that applicants for grants from public funds are likely to be acting dishonestly. German authorities therefore take a thoroughly critical stance on the approach taken in the questionnaire that served as the basis for drafting this Report. Applicants for grants should not automatically be regarded as potential fraudsters. |

EE | In Estonia the Competition Act is in force. Procurement is dealt with on the basis of the Public Procurement Act. Pursuant to the Structural Assistance Act aid applications are subject to multi-level checks and assessments. These laws do not regulate risk assessment and management. |

IE | National guidelines: The National Public Procurement Policy Unit (NPPPU) circulates and publishes general guidance on public procurement issues. This guidance is published on the national public procurement website www.etenders.gov.ie under Guides / General Procurement Guidance covering items such as: Candidates or tenders who have been convicted of involvement in organised crime, of fraud, corruption or money laundering must be excluded from performing a public contract. All contracting authorities are reminded of the need for tax clearance of contractors as outlined in Department of Finance ‘Circular 22/95 Tax Clearance Procedures - Public Sector Contracts’. In terms of Risk Assessment national guidelines include: Peer review of Information Communication Technology projects in excess of €5million; There are formalised contract reviews by Departments and Agencies of projects over €30 million with the provision for audit by the Department of Finance; There is a general guidance for Capital Appraisal that projects be kept under review by a Project Manager and Project Board. Departmental guidelines: The Department of Agriculture and Food (DAF) compiles and updates Procedures Manuals on Financial Procedures, Accreditation and Irregularities.These are made available in hard copies and on the DAF intranet site for use by DAF paying divisions and other staff. The manuals gather together all the relevant EU and DAF requirements and procedures in these areas, thereby inter alia, contributing to sound financial management, including the prevention of financial irregularities. The Department of Enterprise, Trade and Employment (DETE) As paying authority for the ESF, the DETE follows the guidelines issued by the National Public Procurement Policy Unit. |

EL | There are legislative frameworks for risk assessment and management which operate in parallel with the Community framework on the basis of which all subsidies and public contracts are implemented. |

ES | General note on this section: although there are a number of individual databases at regional level (in one autonomous community or another), this section has been dealt with within the general framework. In addition, the National Grants Database set up by Law 38/2003, the General Law on Grants, has yet to be developed. Any information on its exact content and scope cannot therefore be provided. There are no specific national risk assessment and management guidelines which would enable risky beneficiaries to be identified and monitored. There are, however, rules in both the field of public contracting and the set of regulations on grants to prevent a contract being signed with or a grant being awarded to a company or entity which has failed to meet its obligations in the past. However, the award of a grant is subject in each individual case to an objective assessment of the project's viability; if a beneficiary has committed an irregularity, the case is followed up. |

FR | 1) The customs administration has long had a risk management framework for revenue which applies at all levels of customs activity to ensure that all regulations within its remit are respected in full, and more especially to ensure that taxes and duties are levied correctly. This risk management came into being as a result of the growth in electronic customs declarations and clearance. See below. 2) As regards the Ministry of Agriculture and the administration and monitoring of grants, circulars, operating manuals and manuals of procedure are provided for the administrator or controller of such instruments. These are drawn up by either the central administration or by the training departments of the paying bodies in conjunction with the Ministry of Agriculture. 3) Regarding structural measures, national policies are implemented using regulatory texts of the appropriate hierarchical level. Public aid is granted subject to controls under domestic law covering the area concerned. Teaching material for public administrators is drawn up and updated regularly. Administration and control guides for structural measures are drawn up at the beginning of the programming period by the administrative authorities in conjunction with national authorities, and improvements are made in the light of experience and developments in practice. |

IT | The national legislation for the performance of public works contracts, the area of operation of the National Operational Programme Transport (PON Trasporti) and the Community Initiative Programme (PIC) Urban II Italy – 2000/2006, is mainly found in Law No 109 of 11 February 1994 published in GURI No 41 of 19 February 1994 - Framework law on public works contracts and amendments and additions thereto and in the recent Single Text on works and services contracts, Legislative Decree No 163 of 12 April 2006, published in GURI No. 100 of 2 May 2006. This legislation is the reference framework for the public works manager and the administration in assessing and managing the financial risks associated with publicly transparent procedures for the tendering of contracts or services. In order to simplify the statutory requirements and following the conclusion of appropriate agreements and/or memoranda of understanding, the works Supervisory Authority has developed both the Business Register, established pursuant to DPR No 34 of 25 January 2000, and a computerised system for acquiring all information about public contracts, which uses enforcement cooperation criteria, known as SINAP – National public procurement information system. Under DPR No 34 of 25 January 2000. published in GURI No 49 of 29 February 2000, qualification is compulsory for anyone who executes public works contracts for an amount in excess of €150 000. The certificate of qualification issued under the above Regulation is a necessary and sufficient condition for proving the existence of the technical and financial capacity requirements for the award of public works contracts. The contracting authorities cannot require competitors to demonstrate qualification by any other means or procedures than those provided for in the DPR cited. In particular, Article 27 provides for the setting up of the computerised register of qualified firms at the Observatory for public works. In addition, there is the anti-Mafia legislation and the corresponding "certificate" which is a document certifying entry in the business register and containing the following wording – Clearance for the purposes of Article 10 of Law No 575 of 31 May 1965 and subsequent amendments. This certificate is issued by the C.C.I.A.A. using the Rome Prefecture's information system. Under Article 1, paragraph 1 of DPR No 252 of 3 June 1998, anti-Mafia documentation is required by the public sector bodies concerned and therefore, public administrations, bodies and undertakings supervised by the state or by another public body and companies or firms controlled by the State or by another public body and public works agents. The managing authorities of the National Operational Programme Security (PON Sicurezza) have an operating manual codifying the programme's whole management and control system. The purpose of the document, distributed to everyone involved in carrying out cofinanced activities, is to codify and harmonise processes in order to ensure sound financial management of projects. The manual recalls the legislation governing all types of goods and services contracts, including public procurement. The annex also contains checklists for control measures in preparation both for conclusion of the contract and the financing stage. The Second Level Control Authority drafts annual guidelines that describe the procedures for carrying out audit activities, as laid down in the "Manual for random checking of operations financed by the Community Structural Funds for the period 2000-06" drawn up by the Ministry for Economic Affairs and Finance, via the General Inspectorate for Financial Relations with the European Union of the General National Accounts Department. |

CY | There are no such national guidelines. |

LV | Project managers are familiar with the legislation regulating procurements (the Public Procurement Act, the Act on Procurements for State and Local Authority Requirements and other legislative acts). Pursuant to Cabinet Regulation No 546 of 27 June 2006 on the procedure by which provision is made in the State budget for the implementation of projects financed by the Structural Funds and for making payments, second level intermediate authorities review applications for the Structural Funds and assess the eligibility of expenditure. Compliance with the relevant procurement procedure is one of the prerequisites for expenditure to be acknowledged as eligible. The obligation to comply with public procurement legislation is also included in financing contracts. Some authorities have drafted risk management guidelines as an instrument to further the improvement of quality management system processes and the monitoring of procedures in EU co-financed projects. The following documents have been drawn up in relation to State aid: Cabinet Regulation No 103 on procedures for project submission and financing under the grant scheme "investment aid for business development in areas eligible for special assistance", and guidelines for the EU Structural Funds grant scheme "investment aid for business development in areas eligible for special assistance". |

LT | In Lithuania aid from EU Structural Funds is allocated in accordance with Lithuania's 2004-2006 Single Programming Document (SPD). General monitoring procedures relating to the allocation, evaluation and selection of projects to be financed under the SPD, payment of expenses in respect of these projects and their implementation (and also to public procurements run by project implementing agencies) are laid down in the rules on the administration and financing of Lithuania's 2004-2006 SPD measures and projects funded through these measures. |

LU | Yes: rules specific to the integrated management and control system for direct aid under the CAP. |

HU | There is no national framework for dealing with risks, although the legislation in force does lay down a requirement to set up a risk-handling procedure also covering various areas involving Union assistance. The budget legislation requires heads of budgetary agencies to set up a risk-analysis procedure at agencies coming under the scope of the budget. As regards assistance from the various structural funds and the Cohesion Fund, there are provisions at government decree level requiring the competent management authority and bodies involved to carry out on-the-spot checks, involving risk-analysis-based sampling, in respect of the utilisation of the assistance. |

MT | Aid Schemes (Structural Funds) In the selection of final recipients with respect to aid schemes (Structural Funds), relevant checklists are utilised to assess, amongst others, the economic viability and sustainability of the applicants. Pre-accession and Transitional Facility Programmes for Malta In the ambit of the pre-accession and transitional facility programmes for Malta, the National Authorising Office has prepared a ‘Risk Management Analysis.’ This has been prepared in view that the National Authorising Office wanted to identify the risks involved in the system in place and to take the necessary action to mitigate these risks. The Part V of the Budget Measures Implementation Act, which amends the VAT Act, provides in Sub-article (5) of Article 63 that in cases where a person’s registration for VAT may create a risk for the revenue, the Commissioner may ask for the payment of a security by that person under the conditions approved by the Minister of Finance. These conditions will specify in which situations such security may be applied and provides for a flexible administrative control by the Minister in case such conditions need to be changed. |

NL | The Ministry of Social Affairs and Employment (SZW) reports that the national grant award schemes for ESF3 and EQUAL and the Project Administration Manual of the relevant schemes serve as the framework. SZW also uses reference frameworks for the schemes, and the reference framework for embezzlement and misappropriation in relation to the schemes is updated every year. The Ministry of Economic Affairs (EZ) takes the following documents as its framework: 1) Letter dated 20-12-2006 to the management authorities concerning advice on tendering procedures incases below the threshold for the ERDF; 2) Scenario regarding irregularities in the Structural Funds (2000-2006). The Ministry of Agriculture, the Natural Environment and Food Quality (LNV): checks and inspections proceed as prescribed by the Community regulations. |

AT | In case of public procurement the bidder has to prove his or her reliability by extracts from registers of verdicts and the tax administration. It is based on the Act of public procurement. The target is to exclude bidders who have not complied with the rules in the past. In other areas there is no specific framework. |

PL | Entities from the public finance sector in Poland should operate on the basis of the Financial control standards issued by the Ministry of Finance. This obligation arises (Article 47(3) from the Public Finances Act. These standards have been based, amongst others, on the COSO (The Committee of Sponsoring Organisations) internal control model. In accordance with the Financial control standards, one of the five basic elements of the internal control system is Risk management. In the case of SOP-ICE (Structural Operational Programme" Improvement of the Competitiveness of Enterprises"; ERDF), each of the institutions participating in the implementation of the structural funds uses risk analysis in order to select projects for inspections on site (unless 100% of projects implemented are being inspected). The main risk factors in the risk analysis are: type of project, type of project company, total project budget, percentage of Community funds, complexity of the project, type of payment (advance payment, reimbursement), irregularities found and experience in the use of EU funds. In accordance with the principles of project selection under the IROP (ESF and ERDF), at the project evaluation and selection stage, the project and the documents attached to the application for co-funding are analysed in terms of the objective and subjective feasibility of the project. The project is assessed for, amongst others, compliance with the Programme and the Measure, eligibility of expenditure, the remaining budget of the project, the applicant’s financial condition (financial documents: balance sheet, profit and loss account, financial statements). The purpose of the analysis is to ascertain whether the potential Beneficiary will be able to implement the project and to determine the appropriate security for the correct implementation of contracts. This relates in particular to cases where the applicant is not an entity from the public finances sector. Projects the implementation of which requires the application of the Public Procurement Act are considered to be of higher risk. As from 2 June 2006, the “Guidelines of the IROP Managing Authority as regards the control over the application of public procurement provisions to the implementation of projects co-funded under the IROP”, entered into force. In order to minimise any potential risk of a public procurement order being awarded in gross breach of the Public Procurement Act, the IROP Managing Authority would recommend that a public procurement inspection be carried out, both in the form of ex ante and ex post inspections. In addition, from July 2006, the “Guidelines of the IROP Managing Authority as regards the monitoring/control inspection on site”[3] became effective. The purpose of the guidelines is to enhance and organise the measures relating to the performance of inspection duties by the control teams at the institutions carrying out inspections under Article 4. The guidelines specified the risk areas which must be taken into account during the risk analysis carried out for the purposes of the inspection. The HRD (Human Resources Development) Managing Authority (ESF fund) uses the procedure for the selection of projects to be co-funded which restricts the possibility of granting additional financing for the implementation of uncertain projects. This procedure consists of two stages and is carried out each time by the institution granting co-funding. During the first stage (formal evaluation), the application is verified for compliance with the provisions set forth in the Supplement to SOP-HRD (Structural Operational Programme "Human Resources Development"), e.g. compliance with the objectives of the Programme and types of projects, completeness of all the enclosures required, eligibility of the beneficiary and of the type of project, and as regards compliance with all the registration requirements. During the second stage (topical assessment), the contents of the application are verified (e.g. the budget of the project and the project implementation schedule). |

PT | Decree-Law No 54-A/2000 of 7 April 2000 defines the organisational structure responsible for managing, monitoring, assessing and verifying implementation of CSF III and structural measures under Community initiatives for Portugal in accordance with Council Regulation (EC) No 1260/99 of 21 June 1999. Article 17 of the Decree-Law provides that the (computer-based) CSF III information system includes an information subsystem for the management, monitoring and verification of implementation of CSF III and also an information subsystem for dissemination, which serves to provide the various recipients with relevant information through a variety of media. Responsibility for the continued existence, organisation and operation of the information system rests with the CSF III Management Committee, which also has the task of developing a module integrating the information systems of the various Community funds that provides a clear, integrated and updated view of CSF III. The IGFSE (European Social Fund Management Institute) is responsible for managing the information system for the European Social Fund. Its Information Systems Unit has the task of developing an information system which incorporates the physical and financial indicators required to manage, assess and verify the funds granted by the ESF. This system includes a database designed to provide information on the debt situation and suitability of bodies applying for ESF funding, which is used to assess and manage the financial risks involved in awarding a grant. It is up to the managers of the operational measures to examine and approve funding applications and take duly substantiated decisions to suspend, reduce or revoke funding already approved. One of the manager's duties is to ask the IGFSE, before a funding application is approved, for information on the applicant's suitability and any debts it has in the ESF field. In turn, the applicants' access to funding depends on meeting inter alia the following conditions: they do not have debts relating to taxes, social security contributions or the repayment of ESF funding; they have not been convicted by a final judgment in criminal proceedings for acts involving Structural Funds resources; otherwise they are barred from the right of access to public finance under the ESF for two years or for a period laid down in the court sentence; they are not charged in ongoing criminal proceedings, nor has serious evidence of financial, accounting or organisational irregularities been detected in inspections or audits; otherwise they may have access to public financial support only on condition that they produce a bank guarantee corresponding to the payment authorisation or the part of the payment authorisation in question, which must be valid until the final balance is