Special Report No 12/98 on the implementation of the operational programmes relating to the promotion of rural development in the Objective 5b areas together with the Commission's replies (Submitted pursuant to Article 188c(4)(2) of the EC Treaty)
Date: 1998-09-17
Institutions: European Court of Auditors
Subjects: Community support framework, EU aid, Structural Funds, operational programme, regional policy, rural development

C  356/18

EN

Official  Journal  of  the  European  Communities

20.11.98

SPECIAL  REPORT  No  12/98

on  the  implementation  of  the  operational  programmes  relating  to  the  promotion  of  rural
development  in  the  Objective  5b  areas  together  with  the  Commission’s  replies

(Submitted  pursuant  to  Article  188c(4)(2)  of  the  EC  Treaty)

(98/C  356/02)

CONTENTS

Paragraph
reference

Page

1.  Objectives  and  scope  of  the  audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1.1 — 1.4

2.  Summary  of  the  main  observations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2.1 — 2.13

3.  Situation  in  respect  of  the  closure  of  the  OPs . . . . . . . . . . . . . . . . . . . . . . . . .

3.1 — 3.9

4.  Certificates  of  expenditure  and  progress  reports . . . . . . . . . . . . . . . . . . . . . . .

4.1 — 4.9

Reliability  of  the  certificates  of  expenditure . . . . . . . . . . . . . . . . . . . . . . . . .

4.2 — 4.4

Progress  reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4.5 — 4.9

5.  Management  and  monitoring  systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5.1 — 5.37

Implementation  of  the  OPs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5.1 — 5.25

Programming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5.2 — 5.6

Reprogramming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5.7 — 5.9

Application  of  basic  concepts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5.10 — 5.11

Selection  of  actions  and  beneficiaries

. . . . . . . . . . . . . . . . . . . . . . . . . . . .

5.12

Monitoring  mechanisms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial monitoring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Physical monitoring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Technical assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5.13 — 5.25
5.14 — 5.18
5.19 — 5.21
5.22 — 5.25

Audits

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5.26 — 5.31

Evaluation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5.32 — 5.33

Transition  to  the  second  period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5.34 — 5.37

6.  Conclusion  and  recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6.1 — 6.7

19

19

20

24

24

24

25

25

25

25

26

26

26
26
27
27

28

28

28

28

Annex . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

30

Commission’s replies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

32

20.11.98

EN

Official  Journal  of  the  European  Communities

C  356/19

1.  OBJECTIVES  AND  SCOPE  OF  THE  AUDIT

1.1. The  audit  conducted  by  the  Court  covered  the
closure of the operational programmes (OPs) covering the
first  programming  period  of  the  reform  of  the  Structural
Funds  (FS)  which  was  approved  in  1988 (1)  (1989  to
1993)  to  promote  the  development  of  rural  areas  in
Objective 5b regions, and, in particular, on examining the
management  of  Community  appropriations  from  the
EAGGF Guidance Section used for the implementation of
the  OPs,  in  respect  of  both  the  legality/regularity  of  the
financial
transactions  and 
management.

soundness  of 

the 

the 

1.2. The  audit  examined  the  following:

(a)  the  situation  in  respect  of  the  closure  of  the  OPs;

(b) the reliability of the certificates of expenditure and of

the  progress  reports;

(c)  the  quality  of  the  management  and  monitoring

systems  of  the  OPs;

(c)  the  transition  to  the  second  period  of  programming

(1994  to  1999).

in 

the 

conducted 

1.3. The  audit  was 
relevant
departments  of  the  Commission  and  the  Member  States.
It  concentrated,  in  particular,  on  a  sample  of  12  OPs,
some of which had been closed and some not, which had
received  ECU  388,3  million  of  aid,  or  36 %  of  the  total
EAGGF-Guidance  contribution  to  Objective  5b.  Audit
visits  covering  60  measures  and  272  projects,  of  which
101  were  carried  out  on  the  final  beneficiaries’  premises,
took  place  in  Germany,  Spain,  France,  Italy  and  the
Netherlands.

1.4. Annex  1  contains  a  summary  of  the  underlying
principles  of  the  reform,  of  its  objectives  and  the  main
elements  of  its  implementation.

2.2.
In  seven  cases  out  of  11  of  the  12  OPs  in  the
sample,  the  certificates  of  expenditure  forwarded  by  the
Member  States  to  the  Commission  in  support  of  their
requests  for  payment  of  the  balance  did  not  correspond
to  the  actual  expenditure  because  there  were  disparities
between  the  amount  of  EAGGF  appropriations  received
and the amount utilised, because estimates of expenditure
were taken into account or because it was not possible to
validate the list of projects submitted (see paragraphs 4.1
to  4.4).

2.3. The  progress  reports  for  the  OPs  do  not  allow  the
Commission  to  form  a  precise  idea  of  the  progress  made
as the physical indicators are inadequate and the financial
data  too  general  (see  paragraphs  4.5  to  4.9).

2.4. This  situation  has  its  roots  in  a  series  of  delays
which  led  to  a  concentration  of  operations  at  the  end  of
the  period.  These  delays  occurred  from  the  very  start  of
programming  the  operations  and  their  negative  effects
were  not  rectified  by  the  management  and  monitoring
systems.

2.5. The  Commission  took  no  decision  in  1989,  in
respect  of  the  initial  programming,  on  the  58  OPs
concerned,  only  adopting  five  of  them  in  1990,  50  in
1991,  and  two  in  1992.  The  last  OP  was  not  approved
until 1993, in the final year of the period (see paragraphs
5.1  to  5.4).

In  order  to  resolve  the  problems  posed  by  the
2.6.
shortening  of  the  period  of  implementation  of  the  OPs,
the  national  management  bodies  had  recourse  to  the
inclusion  of  projects  for  which  no  provision  had  been
made  at 
transfers  of  actions
programmed for the 1994 to 1999 period (see paragraphs
5.5  to  5.6).

the  outset,  and 

to 

the  end  of 

In  addition,  at 

2.7.
the
Commission  was  induced  to  grant,  almost  automatically,
deadline  extensions  and  amendments  to  the  contents  of
the  OPs.  These  practices  were  detrimental  to  the
coherence  of  the  programming  (see  paragraphs  5.7  to
5.9).

the  period, 

2.  SUMMARY  OF  THE  MAIN  OBSERVATIONS

2.1. Of  the  58  OPs  financed  within  the  framework  of
Objective  5b  under  the  EAGGF-Guidance,  only  12  were
closed  within  the  time  originally  planned.  At  the  end  of
1997, 32 had still not been closed (see paragraphs 3.1 to
3.9).

(1)  Council  Regulation  (EEC)  No  2052/88  of  24  June  1988
concerning  the  purpose  of  the  Funds  in  respect  of  structural
objectives,  their  effectiveness  and  the  coordination  of  their
interventions  with  one  another  and  with  the  funds  of  the
European  Investment  Bank  and  other  existing  financial
instruments  (OJ  L  185,  15.7.1988,  p.  9).

2.8. The  differences  of  opinion  as  to  the  definition  of
the  concept  of  a  commitment  led  to  a  situation  of
stalemate  which  prevented  the  closure  of  the  majority  of
the  OPs  in  one  Member  State  (see  paragraphs  5.10  to
5.11).

2.9. A  number  of  measures  and  beneficiaries  were
selected  just  before  expiry  of  the  eligibility  deadlines,
which  had  already  been  extended  once.  The  justification
for  the  selections  made  in  this  way  was  inadequate  (see
paragraph 5.12).

2.10. The  management  and  monitoring  mechanisms,
which  should  have  rectified  these  deficiencies,  proved
ineffective.  Either  the  Commission  did  not  devote  the
attention it should have to checking requests for payment

C  356/20

EN

Official  Journal  of  the  European  Communities

20.11.98

relating  to  the  balance  outstanding  of  each  annual
instalment,  which  was  reduced  to  a  simple  financial
exercise,  or  the  appropriations  provided  for  technical
assistance  were  used  for  other  purposes  (see  paragraphs
5.14  to  5.25).

2.11. These  weaknesses  were  accentuated  by 
the
inadequacy  of  the  on-the-spot  controls,  both  by  the
Commission’s  departments  and  by 
the  national
authorities  (see  paragraphs  5.26  to  5.31).

2.12. Moreover,  the  evaluations  carried  out  while  the
OPs were being implemented did not enable management
to  draw  any  lessons  from  them  (see  paragraphs  5.32  to
5.33).

2.13. Finally,  the  execution  of  the  actions  coincided,  to
a  large  extent,  with  the  start  of  the  programmes  of  the
second  period,  causing  confusion  between  the  two
periods and delays for the second (see paragraphs 5.34 to
5.37).

3.  SITUATION  IN  RESPECT  OF  THE  CLOSURE  OF  THE

OPs

3.1. Management  of  the  programmes  is  shared  between
the  Commission  and  the  Member  States.  For  the
Commission,  this  task  is  assigned  to  two  departments,
DG  VI/FI/3,  which  is  responsible  for  the  management  of
all  operational  matters,  and  DG  VI  G3,  which  is  mainly
responsible  for  financial  aspects  and  checking  the
statements  of  expenditure  by  the  Member  States  and  the
requests  for  commitment  or  payment.  In  the  Member
States  this  task  is  delegated  to  the  departments  named  in
the  programmes.

3.2. For  the  first  period  the  Commission  adopted
decisions  approving  Community  Support  Frameworks
(CSFs)  and  corresponding  OPs,  a  list  of  which  is  shown
in  Table  1.  In  this  way,  44  CSFs  were  approved  with  a
volume  of  appropriations  totalling  ECU  2 606,7  million
under 
the  EAGGF-Guidance
contribution  amounting  to  ECU  1 068,6  million  (41 %).
The  CSFs  gave  rise  to  74  OPs,  financed  from  one  Fund
or  more 
than  one  Fund,  and  EAGGF-Guidance
contributed  to  the  financing  of  58  of  them.

the  Structural  Funds, 

CSFs  AND  OPs  FOR  OBJECTIVE  5b  ADOPTED  FOR  THE  PERIOD  1989  to  1993

Table  1

EAGGF-Guidance

ERDF

ESF

(ECU  million)

TOTAL
STRUCTURAL  FUNDS

MS

REGION

OP

CSF

%

CSF

OP

%

CSF

OP

%

CSF

OP

%

Initial

Final

BE Hageland
BE Wallonia (three

3,16

3,42

3,60

single-Fund  OPs)

8,38

8,05

8,60

11,54

11,47

12,20

DK Denmark

5,00

4,50

3,80

30

42

37

18

18

38
45
56
41

26
47
42
41

4,23

4,90

7,06

8,10

11,29

13,00

12,20

10,80

12,20

10,80

15,25

17,70
108,17 103,20
15,60
43,30

16,51
54,62

11,80
15,53
3,38
10,22

14,60
9,90
0,80
20,20

40

39

40

51

51

54
42
40
42

66
36
22
57

4,16

3,70

5,51

4,00

9,67

7,70

5,80

6,70

5,80

6,70

3,16
60,22
2,73
17,75

3,53
4,94
1,26
1,52

2,70
31,80
1,40
18,10

1,60
4,80
1,30
0,50

30

19

23

31

31

8
13
4
17

7
17
36
1

11,55

12,20

20,95

20,70

32,50

32,90

23,00

21,30

23,00

21,30

28,75
257,20
38,00
107,97

32,90
246,00
38,70
104,00

19,53
31,23
5,85
36,47

22,00
27,80
3,60
35,30

0,5

0,9

1,5

1,0

1,0

1,5
11,0
1,7
4,7

1,0
1,2
0,2
1,6

5,00

4,50

3,80

10,34
88,81
18,76
35,60

4,21
10,76
1,21
24,74

11,21
88,81
20,33
38,57

4,21
11,66
1,40
13,11

12,50
111,00
21,70
42,60

5,80
13,10
1,50
14,60

194,41 189,30

222,80

44

235,49 225,30

44

95,10

62,20

12

525,00

510,30

22,9

90,64
11,22
23,22

71,23
8,64
19,89

81,50
8,60
15,30

71
45
58

31,00
6,80
4,40

29,30
8,80
11,00

25
46
42

13,71
6,39
1,77

4,80
1,90

4
10

135,35
24,41
29,39

115,60
19,30
26,30

5,2
0,9
1,2

Baden-Württemberg
Bavaria

Lower  Saxony

DE
DE
DE Hesse
DE
DE North

Rhine-Westphalia

DE Rhineland-Palatinate
DE
DE

Saarland
Schleswig-Holstein

ES

ES
ES

Aragon  (three
single-Fund  OPs)
Balearic Islands
Cantabria

20.11.98

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Official  Journal  of  the  European  Communities

EAGGF-Guidance

ERDF

ESF

C  356/21

(ECU  million)

TOTAL
STRUCTURAL  FUNDS

MS

REGION

OP

CSF

%

CSF

OP

%

CSF

OP

%

CSF

OP

%

Catalonia
La  Rioja

ES
ES
ES Madrid
Navarra
ES
ES
Basque  Country
ES Multi-regional

(two  OPs)

Alsace
Aquitania (three OPs -
North/Pyrenees/
Tourism)
Auvergne  (three
single-Fund  OPs)
Lower  Normandy
Burgundy
Brittany
Centre 
Champagne-
Ardennes
Franche-Comte´
Jura  (Bugey  two
OPs)
Languedoc-
Roussillon
Languedoc-
Roussillon  -  Aude/
He´rault
Languedoc-
Roussillon  -
Marketing  channels
forestry/timber
Languedoc-
Roussillon  -  Loze`re
Limousin
Lorraine
South  of
France-Pyrenees
Pays-de-Loire
Poitou-Charentes
(two  OPs  -  Arc
Est/Marais)
Provence-Alpes-Côte
d’Azur
Rhône-Alpes
Rhône-Alpes  -
Ain/Bresse
Rhône-Alpes  -
Arde`che
Rhône-Alpes  -
Drôme
Rhône-Alpes  -  Ise`re

FR
FR

FR

FR
FR
FR
FR
FR

FR
FR

FR

FR

FR

FR

FR
FR
FR

FR
FR

FR

FR
FR

FR

FR

IT

FR
FR Massif  central

Bolzano  (three
single-Fund  OPs)
Latium

IT
IT Marches
Piedmont
IT
Tuscany
IT
Trento
IT
Umbria
IT
Venice
IT

Initial

Final

26,60
7,40
5,81
13,83
6,18

17,32
6,55
4,12
13,73
4,65

19,60
7,10
4,70
17,30
5,80

184,90 146,13

159,90

3,80

4,11

5,00

40,05

41,59

48,30

43,85
21,97
30,79
13,58
11,87

32,26
23,81
26,32
14,72
10,26

4,87
2,57

5,28
2,79

43,85
25,50
36,30
15,70
12,40

5,60
3,00

11,66

12,64

13,20

47,69

12,13

13,70

71
61
61
76
62

60

63

58

56
48
63
51
50

47
67

44

57

5,00
4,00
3,90
4,00
2,00

5,80
4,60
3,00
4,30
3,10

61,10

69,90

1,31

1,80

21
39
39
19
33

26

23

4,47
0,36
0,74
2,10
0,46

2,10

1,10
0,50

8

5
5

36,07
11,76
10,45
19,93
8,64

27,50
11,70
7,70
22,70
9,40

9,00

24,60

100

9,00

24,60

39,00

35,00

1,99

1,20

38,42

20,50

25

16,54

14,30

32,60
13,63
15,00
34,76
6,03

15,80
16,80
17,70
9,20
10,40

3,70
0,66

5,10
0,80

6,28

8,80

20
32
31
30
42

43
18

29

25,93
12,66
6,93
8,94
5,83

19,30
11,00
3,90
5,80
1,90

1,98
1,82

1,30
0,70

8,03

8,10

31,81

6,90

29

14,71

3,60

13

15

17

24
21
7
19
8

11
16

27

15

285,00

264,80

7,10

8,00

95,01

83,10

102,38
48,26
52,72
57,28
23,73

10,55
5,05

78,95
53,30
57,90
30,70
24,70

12,00
4,50

25,97

30,10

94,21

24,20

1,2
0,5
0,3
1,0
0,4

1,1

11,9

0,4

3,7

3,5
2,4
2,6
1,4
1,1

0,5
0,2

1,3

1,1

10,26

11,90

58

5,70

28

2,80

14

20,40

0,9

0,95

0,90

49,96
7,41

20,43
42,11
8,03

61,72
8,29

60,74
8,98

24,60
52,70
8,70

66,10
11,30

21,41

21,55

23,00

40,72
26,82

30,35

37,00

3,09

3,30

14,86

16,00

4,88
3,41
2,48

5,30
3,60
2,60

449,02 418,03

489,55

24,91
39,75
26,64
4,24
24,91
10,78
21,90
31,77

18,29
29,73
18,64
3,32
25,50
7,11
14,37
31,49

25,70
26,60
14,80
4,90
22,20
10,30
22,20
48,40

184,90 148,45

175,10

75

58
61
43

64
57

51

52

66

66

60
65
38

56

43
55
38
56
46
52
49
53

49

0,30

13,30
17,60
6,40

24,76
6,72

63,51
3,51

27,70
6,40

25

31
21
31

27
32

18,05
5,17

12,38
6,19

4,70
15,40
5,30

9,00
2,20

11
18
26

9
11

1,20

42,60
85,70
20,40

92,77
19,30

137,61
17,99

102,80
19,90

12,95

14,90

33

10,49

7,20

16

44,85

45,10

21,02
18,30

26,60

38

10,21
8,16

7,30
6,80

10
100

71,95
53,28

1,70

8,40

3,60
1,90
4,20

34

34

40
35
62

70,90
6,80

5,00

24,40

8,90
5,50
6,80

0,1

1,9
3,8
0,9

4,6
0,9

2,0

3,2
0,3

0,2

1,1

0,4
0,2
0,3

334,96 252,50

29 176,01 131,80

15

960,00

873,85

39,2

27,17
32,22
21,06
3,06
21,17
5,70
12,10
22,92

31,30
13,90
17,20
3,30
19,80
6,60
19,30
34,90

52
29
45
38
41
34
42
38

1,64
12,77
11,02
0,90
8,65
2,84
5,86
11,02

2,70
7,70
6,60
0,60
5,90
2,80
4,10
7,80

145,40 146,30

41

54,70

38,20

5
16
17
7
12
14
9
9

11

53,72
84,74
58,72
8,20
54,73
19,32
39,86
65,71

59,70
48,20
38,60
8,80
47,90
19,70
45,60
91,10

2,7
2,2
1,7
0,4
2,1
0,9
2,0
4,1

385,00

359,60

16,1

C  356/22

EN

Official  Journal  of  the  European  Communities

EAGGF-Guidance

ERDF

ESF

20.11.98

(ECU  million)

TOTAL
STRUCTURAL  FUNDS

MS

REGION

OP

CSF

%

CSF

OP

%

CSF

OP

%

CSF

OP

%

Initial

Final

LU

Lac  de  la  Haute-Sûre

1,42

1,51

1,42

1,51

1,60

1,60

NL

Frisia

12,50

13,55

14,30

12,50

13,55

14,30

57

57

43

43

0,90

1,00

0,90

1,00

24,90

12,60

24,90

12,60

36

36

38

38

0,18

0,20

0,18

0,20

6,60

6,00

6,60

6,00

7

7

18

18

2,50

2,50

2,80

2,80

44,00

32,90

44,00

32,90

UK Devon  &  Cornwall

(two  OPs)

UK Dumfries  &

Galloway
UK Dyfed  Gwynedd

Powys

UK Highlands  &  Islands

59,49

30,20

75

14,95

10,20

25

74,44

40,40

12,00

13,60

91

1,87

1,30

9

13,87

14,90

106,44

33,60

86

14,95

5,60

14

121,39

39,20

of  Scotland

24,90

7,41

7,50

20

98,88

19,40

24,90

7,41

7,50

6

276,80

96,80

52

73

16,22

10,60

47,99

27,70

28

21

140,00

37,50

349,69

132,00

0,1

0,1

1,5

1,5

1,8

0,7

1,8

1,7

5,9

Total

1 068,59 940,35 1 086,75

49 1 103,04 828,20

37 435,06 315,50

14 2 606,69 2 230,45

100,0

Source:  OP  Decisions  and  DG  VI-FI.

3.3. 31  December  1993  was  the  final  date  set  for
Community  commitments  to  the  OPs  of  the  first  period.
The  national  payments  were  to  be  made  two  years  later,
at  the  latest,  and  the  Commission  was  to  pay  the
balances  outstanding  before  31  August  1996.  The
deadline  for  commitments  was  respected  but  not  the
deadline  for  Community  payments.

3.4. On 31 December 1993, the commitments under the
EAGGF-Guidance  for  the  OPs  came  to  ECU  1 084,96

million  (see  Table  2).  Whereas  it  should  have  been
staggered  over  a  period  of  five  years,  80 %  of  the  total
amount of appropriations was committed in the course of
the  last  two  years  of  the  programming  period.  If  the
de-commitments  recorded  on  31  December  1997  are
taken  into  account,  actual  commitments  come  to  ECU
1 072,64  million.  Payments  came 
to  ECU  988,79
million.

Table  2

EAGGF-Guidance

IMPLEMENTATION  OF  OBJECTIVE  5b  OPs  FOR  THE  PERIOD  1989  to  1993

(ECU  million)

MS

REGION

1990  to  1991

1992  to  1993

Total

Commitments

Decom-
mitments

Payments

1990  to  1993

1994  to  1997

Total

%

Amount

%

Amount

%

Amount Amount Amount

%

Amount

%

Amount

BE
BE

Hageland
Wallonia

DK

Denmark

DE
DE
DE
DE
DE

DE
DE
DE

Baden-Württemberg
Bavaria
Hesse
Lower  Saxony
North
Rhine-Westphalia
Rhineland-Palatinate
Saarland
Schleswig-Holstein

0,90
2,36

3,26

1,05

1,05

2,56
21,53
4,57
9,26

1,09
1,98

3,36

44,35

25
28

27

28

28

20
19
21
22

19
15

23

2,74
6,20

8,94

2,73

2,73

9,95
89,44
17,17
33,38

4,76
11,09
1,51
11,22

75
72

73

72

72

80
81
79
78

81
85
100
77

3,64
8,56

12,20

3,78

3,78

12,51
110,97
21,74
42,64

5,85
13,07
1,51
14,58

-0,30

-0,30

1,50
3,32

4,82

2,71

2,71

9,15
93,08
16,96
28,72

5,07
8,86
0,75
13,30

20 178,52

80

222,87

175,89

41
40

41

72

72

73
84
78
67

87
68
50
91

79

2,14
4,94

7,08

59
60

59

3,64
8,26

100,0
100,0

11,90

100,0

2,71

2,71

27

12,51
6 100,27
21,74
42,64

22
33

5,07
12,38
1,51
14,58

27
50
9

71,7

71,7

100,0
90,4
100,0
100,0

86,7
94,7
100,0
100,0

3,36
7,19
4,78
13,92

3,52
0,76
1,28

34,81

16 210,70

94,5

20.11.98

EN

Official  Journal  of  the  European  Communities

C  356/23

(ECU  million)

MS

REGION

1990  to  1991

1992  to  1993

Total

Commitments

Decom-
mitments

Payments

1990  to  1993

1994  to  1997

Total

Amount

%

Amount

%

Amount Amount Amount

%

Amount

%

Amount

ES
ES
ES
ES
ES
ES
ES
ES

FR
FR
FR
FR
FR
FR
FR
FR
FR
FR
FR
FR
FR
FR
FR

FR

FR
FR

FR
FR
FR
FR
FR
FR

FR
FR
FR

FR

IT
IT
IT
IT
IT
IT
IT
IT

Aragon
Balearic Islands
Cantabria
Catalonia
La  Rioja
Madrid
Navarre
Basque  country

(Jura

Ain  -  Bresse
Alsace
Aquitaine  -  North
Aquitaine  -  Pyrenees
Arde`che
Aude/He´rault
Auvergne
Lower  Normandy
Burgundy
Bresse  -  Revermont
Brittany
Centre 
Champagne-Ardennes
Drôme
Franche-Comte´
Bugey)
Franche-Comte´
(Jussey)
Ise`re
Languedoc-Roussillon
—  Marketing  channels
forestry/timber
Languedoc-Roussillon
Limousin
Lorraine
Loze`re
Massif  central
South  of  France
Pyrenees
Pays-de-Loire
Poitou-Charentes
Poitou-Charentes  —
Marais
Provence-Alpes-Côte
d’Azur

Trento
Tuscany
Bolzano
Umbria
Venice
Piedmont
Marches
Latium

LU

Lac  de  la  Haute-Sûre

NL

Frisia

UK

Highlands  &  Islands
of  Scotland

21,60
2,73
4,79
4,06
1,62
1,15
4,14
1,14

41,23

1,32
1,03
7,63
2,77
3,31
2,57
7,99
4,71
9,03
0,88
3,61
2,57
1,32
1,29

1,97

0,77
0,85

3,03
8,93
2,01
6,55
0,93

15,22
1,66
2,66

27
32
31
21
23
24
24
20

59,88
5,85
10,48
15,49
5,53
3,55
13,17
4,68

26 118,63

29
20
21
23
21
22
18
18
25
27
23
21
23
24

23

26
23

22
17
23
27
35

23
15
19

3,24
4,02
28,38
9,53
12,64
9,35
35,87
20,80
27,28
2,41
12,10
9,82
4,31
3,98

6,59

2,19
2,79

0,95
10,63
43,74
6,66
18,05
1,69

50,89
9,64
11,58

73
68
69
79
77
76
76
80

74

71
80
79
77
79
78
82
82
75
73
77
79
77
76

77

74
77

100
78
83
77
73
65

77
85
81

81,48
8,58
15,27
19,55
7,15
4,70
17,31
5,82

72,58
7,48
11,14
12,61
4,70
2,89
15,13
4,05

-1,65

-0,96
-0,18

-0,17

159,86

-2,96 130,58

-0,29

-0,02

-1,81

-0,12

4,56
5,05
36,01
12,30
15,95
11,92
43,86
25,51
36,31
3,29
15,71
12,39
5,63
5,27

8,56

2,96
3,64

0,95
13,66
52,67
8,67
24,60
2,62

66,11
11,30
14,24

4,04
3,49
27,52
10,39
13,43
6,07
39,19
17,97
25,07
2,80
11,35
8,44
4,03
3,90

6,48

2,21
3,09

0,47
8,02
40,68
6,25
18,17
2,00

47,46
8,67
9,58

4,39

25,38

8,78

100

8,78

6,94

19

30,09

101,55

21 388,00

2,36
4,89
5,64
2,96
7,95

2,09
4,99

23
22
22
13
16

14
19

7,92
17,35
20,04
19,24
40,49
4,69
12,71
21,58

30,88

18 144,02

0,52

0,52

3,90

3,90

1,18

1,18

33

33

27

27

16

16

1,08

1,08

10,35

10,35

6,37

6,37

81

79

77
78
78
87
84
100
86
81

82

68

68

73

73

84

84

37,03

489,55

-2,24 360,54

10,28
22,24
25,68
22,20
48,44
4,69
14,80
26,57

-1,12

-0,84
-2,60

6,57
11,12
16,47
11,10
24,62
3,34
7,40
13,28

174,90

-4,56

93,90

1,60

1,60

14,25

14,25

7,55

7,55

-0,51

-0,51

-1,05

-1,05

-1,21

-1,21

0,42

0,42

8,03

8,03

6,28

6,28

89
87
82
65
76
64
87
72

83

89
69
76
84
86
51
89
70
73
85
72
68
72
76

76

75
85

49
59
77
72
74
76

72
77
67

50

69

74

72
50
64
50
51
87
61
50

55

39

39

61

61

99

99

%

89,1
100,0
100,0
87,4
100,0
100,0
100,0
100,0

1,10
2,48
4,47
1,49
1,63
2,18
1,60

72,58
8,58
13,62
17,08
6,19
4,52
17,31
5,65

13
18
23
24
36
13
28

14,95

10 145,53

92,8

0,19
1,08
5,42
0,95
2,23
4,85
4,65
5,29
9,43
0,22
3,06
2,62
1,13
1,25

1,37

0,54
0,26

3,84
11,99
1,70
6,43
0,42

8,47
1,48
3,10

2,63

7,89

92,49

2,59
6,79
9,21
11,10
13,20
0,51

8,08

51,48

0,67

0,67

5,17

5,17

0,06

0,06

4,23
4,57
32,94
11,34
15,66
10,92
43,84
23,26
34,50
3,02
14,41
11,06
5,16
5,15

92,8
90,5
91,5
92,2
100,0
91,6
100,0
91,2
100,0
91,8
91,7
89,3
91,7
100,0

7,85

91,7

2,75
3,35

92,9
92,0

0,47
11,86
52,67
7,95
24,60
2,42

55,93
10,15
12,68

49,5
86,8
100,0
91,7
100,0
92,4

84,6
89,8
89,0

7,02

80,0

4
21
15
8
14
41
11
21
27
7
19
21
20
24

16

18
7

28
23
20
26
16

13
13
22

30

21

33,27

19 453,03

28
31
36
50
27
13

30

9,16
17,91
25,68
22,20
37,82
3,85
7,40
21,36

89,8

93,0

100,0
80,5
100,0
100,0
78,1
100,0
60,7
80,4

30 145,38

85,3

61

61

39

39

1

1

1,09

1,09

100,0

100,0

13,20

100,0

13,20

100,0

6,34

6,34

100,0

100,0

Total

227,40

21 857,56

79 1 084,96

-12,32 782,75

73 206,04

19 988,79

92,2

Source:  DG  VI-G3,  ARINCO,  SINCOM

C  356/24

EN

Official  Journal  of  the  European  Communities

20.11.98

3.5. On 31 December 1997, 26 OPs, or fewer than half,
had been closed. Of these only 12 were closed before the
deadlines  set  by  the  approval  decisions  for  the  OPs.

3.6. The  32  OPs  still  open  at  the  end  of  the  financial
year  1997  were  distributed  as  follows:

requirements  additional  to  those  just  mentioned.  In
practice,  a  programme  is  considered  to  be  closed  if  the
balance  of  all  its  annual  instalments  has  been  paid.  The
certificates  and  confirmation  concerning 
final
instalment  are  no  different  from  those  for  the  preceding
instalments.

the 

—  22  in  France  (out  of  28),

—  four  in  Italy  (out  of  eight),

—  three  in  Germany  (out  of  eight),

—  two  in  Spain  (out  of  eight),

—  one  in  Denmark  (out  of  one).

the  closure  dates 

3.7. France  had  obtained  from  the  Commission,  in  a
letter  of  10  December  1993,  an  extension  of  six  months
for 
for
payments (2).  These  new  deadlines  were  not  observed  in
the  case  of  22  OPs  and  France  had  to  supply  additional
information  on  the  expenditure  certified.

for  commitments  and 

3.8. For  eight  OPs  the  Member  States  did  not  observe
the  deadlines  for  forwarding  to  the  Commission  requests
for  the  payment  of  the  balance.  For  two  of  them,  the
requests  had  still  not  been  forwarded  at  the  close  of
1997.

In  sum,  delays  were  also  observed  in  the  payment
3.9.
of  balances  outstanding  both  for  the  contributions  from
the  ERDF  and  for  the  contributions  from  the  ESF.  As  a
result, only eight of the 74 Objective 5b OPs co-financed
by  the  Community  were  closed  on  31  October  1997.

4.  CERTIFICATES  OF  EXPENDITURE  AND  PROGRESS

REPORTS

4.1. Community payments are made on the strength of a
request  for  payment,  drawn  up  and  signed  by  the
national  authority  responsible (3).  The  payment  of  the
balance  outstanding  for  each  annual  instalment  requires,
in  addition,  the  submission  by  the  Member  State  of  a
report  on  the  progress  made  in  the  use  of  the  aid  from
the Fund  and confirmation  that  the  information  supplied
is  correct.

4.3. The  certificates  should  give  the  Commission  a  firm
guarantee  of  the  authenticity  and  eligibility  of  the
expenditure  declared.  An  examination  of  the  certificates
of  several  Member  States  shows  that:

(a) amounts were certified without supporting documents
to  confirm  their  authenticity  and  without  it  being
possible,  during  the  on-the-spot  checks,  to  establish
how  they  were  arrived  at;

(b) other  amounts  did  not  correspond  to  the  actual

expenditure;

(c) some  certified  expenditure  is  ineligible  because:

—  activities  carried  out  either  before  or  after  the  period
of  eligibility  were  submitted  for  Community  aid,

—  certain  activities  and  expenditure  are  of  a  type  that
the
to 

does  not  correspond 
regulations  of  the  Fund  or  of  the  programmes,

the  provisions  of 

—  operating  expenditure  relating  to  the  administrative
and  personnel  costs  was  taken  into  account,  in
the
particular  by  deductions  being  made 
amounts  paid  to  the  beneficiaries.

from 

this 

addition, 

expenditure  was 

In 
affected  by
shortcomings in the application of the procedures for the
award  of  public  contracts,  such  as  incomplete  technical
and  administrative  files  relating  to  the  awarding  of
contracts.

4.4. As  far  as  point  4.3.1  is  concerned,  for  the  Land  of
Bavaria,  which  is  the  main  beneficiary  of  the  structural
funds  for  Objective  5b,  receiving  more  than  10 %  of  the
Fund’s  aid,  the  Court  had  to  arrange  an  additional
on-the-spot  audit  in  order  to  obtain  the  supporting
documents  which  could  not  be  produced  during  the  first
audit.  However,  the  documents  placed  at  the  Court’s
disposal  during  this  supplementary  audit  proved  to  be
not  very  conclusive.

Reliability  of  the  certificate  of  expenditure

Progress  reports

4.2. From  the  point  of  view  of  the  Regulation,  the
impose  any
closure  of  a  programme  does  not 

(2)  By  decision  of  19  December  1995  for  the  Massif  Central

OP.

4.5. According  to  the  terms  of  Article  25  of  Regulation
(EEC) No 4253/88 (4), the Member States are required to
submit  progress  reports  to  the  Commission  in  respect  of
the  annual  instalments  and  a  final  report  within  six

(3)  With  the  exception  of  the  first  advance  on  the  first

instalment,  which  is  automatic.

(4)  OJ  L  374,  31.12.1988,  p.  1.

20.11.98

EN

Official  Journal  of  the  European  Communities

C  356/25

months of the completion of a programme. These reports
must  present  a  statement  of  the  progress  made  with  the
help,  amongst  other  things,  of  previously  specified
physical  and  financial  indicators.

—  the  OPs,  which  set  out  the  various  forms  of
intervention  to  give  concrete  form,  on  the  ground,  to
the  guidelines  laid  down  by  the  CSFs.

4.6. However,  these  reports  frequently  give  global
figures  which  have  been  requested  at  the  aggregate  level
and  which  do  not  permit  identification:

—  of  the  total  cost  of  the  projects,

—  of  ineligible  expenditure,

—  of  that  part  of  the  expenditure  which  represents

public  expenditure,

—  of  the  contribution  from  the  EAGGF  and/or  from  the

other  Funds.

4.7.
In  addition,  the  data  in  the  progress  reports  in
respect  of  the  programmes’  instalments  are  difficult  to
reconcile  with  the  certificates  of  expenditure,  by  reason
of  the  different  dates  of  issue.

4.8. The lack of detail and the impossibility of matching
the  data  with  the  certificates  mean  that  the  reports  are
deprived  of  much  of  their  value.  In  practice,  the
Commission  pays  the  balances  of  the  instalments  on  the
basis of the certificates after a very superficial analysis of
the  reports.

4.9. The reports, which are frequently not backed up by
physical  indicators,  do  not  provide  the  managers  at  the
Commission  with  the 
information  necessary  for  an
understanding of the actions. For this reason, the closure
of  the  annual  instalments  and  of  the  OPs  offers  no
assurance that the objectives set out in the OPs have been
achieved  but  constitutes  a  purely  formal  financial
exercise.

5.  MANAGEMENT  AND  MONITORING  SYSTEMS

Implementation  of  the  OPs

5.1. The  accumulation  of  successive  delays  from  the
start of programming (see paragraphs 5.3 to 5.4) made it
inevitable  that  operations  would  be  concentrated  at  the
end  of  the  period.  However,  the  reform  of  the  structural
funds  should,  in  principle,  have  led  to  coherent  planning
and  improved  management  of  the  Funds  as  well  as
permanent  monitoring  and  evaluation  of  the  actions.

Programming

5.2. Programming  centres  on:

—  the CSFs, which describe the objectives and define the
strategy  to  achieve  them  in  the  period  under  review,

5.3.
Implementation  can  only  be  achieved  in  the  time
stipulated  for  the  objectives  ascribed  to  the  CSFs  if  the
CSFs  and  the  OPs  are  adopted  sufficiently  early.
However, the CSFs were not adopted until mid-1990 and
the  long  periods  of  appraisal  of  the  OPs  were  often  in
excess  of  the  six  months  laid  down  in  Regulation  (EEC)
No  4253/88.  In  fact,  for  40  of  the  58  OPs  the  appraisal
period  exceeded  the  six  months  stipulated 
in  the
Regulation,  the  average  appraisal  period  lasting  eight
months  and,  in  two  cases,  22  months.

5.4. As  a  consequence,  while  the  planning  period  began
in  1989,  no  OP  was  approved  in  that  year,  five  were
approved in 1990, 50 were not approved until 1991, two
more  in  1992,  i.e.  one  year  before  the  end  of  the  initial
period,  and  the  last  one  was  not  adopted  until  1993.

5.5. The  shortening  of  the  implementing  period  which
resulted  from  the  initial  programming  forced  the  French
regions to select activities which had already been carried
out (5).  In  Lower  Normandy  more  than  32 %  of  public
expenditure  on  the  sub-measure  projects  analysed  results
from  this  practice,  the  audit  having  shown  that  these
projects  were  included  in  the  OP  a  posteriori.  Although
the  regulations  may  allow  this  expenditure,  taking
payments  made  during  the  period  of  eligibility  into
account,  this  practice  ran  counter  to  the  principle  of
programming  because  of  its  retroactive  nature  and  the
arbitrary  separation  of  the  actions  entered 
in  the
programme  by  placing  them  in  separate  categories  which
were  not  subject  to  the  same  rules.

5.6. To  avoid  the  risk  of  non-utilisation  of  Community
appropriations,  various  forms  of  adjustment  were  made
to 
the  actions.  The  Limousin  region  carried  out
adjustments by transferring actions to the OP which were
planned  for  the  new  SPD  and  by  replacing  cancelled
operations.  The  adjustments  carried  out  in  this  way,  in
contravention  of  the  eligibility  rules,  were  estimated  to
account  for  almost  2 %  of  the  amount  of  public
expenditure  declared.

Reprogramming

5.7. The  reform  introduced  an  element  of  flexibility  to
the  implementation  of  the  actions,  allowing,  within  the

(5)  This  practice  was  facilitated  by  the  alternative  payment
procedure,  which  requires  a  division  of  public  spending
appropriations 
between  Community 
national
counterpart  funds  and 
is  based  on  the  allocation  of
individual  projects  to  clearly  identifiable  sources  of  finance.

and 

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framework of the Commission/Member State partnership,
the  possibility  of  amending  the  original  programming.
This  is  why,  in  the  case  of  the  CSFs  adopted  for  the
implementation  of  Objective  5b,  34  CSFs  were  the
subject  of  amending  decisions.  When  applying  decisions
relating  to  the  OPs,  it  may  be  decided  to  revise  them,
depending on their volume, either by a simple decision by
the monitoring committee or by an amending decision by
the  Commission.

latter  procedure,  45  decisions  were 

5.8. Of  the  51  OPs  which  were  amended  according  to
the 
in
November  and  December  1993,  i.e.  during  the  two
months preceding the deadline. This type of practice does
not  constitute  real  reprogramming  but  an  acceptance,  on
the  part  of  the  Commission,  of  the  actual  situation.

taken 

5.9. The  amendments  by  the  monitoring  committees
concerned,  in  particular,  the  financial  plans  for  the
programmes,  as  well  as  the  content  of  the  measures.
These  alterations  at  the  end  of  the  period  indicate  an
initial
rigorous  approach  during 
insufficiently 
programming.

the 

Application  of  basic  concepts

5.10. According  to  the  French  authorities  the  decision
by  the  final  beneficiary  to  participate  in  the  execution  of
the OP constitutes a legal commitment giving entitlement
to  Community  financing  and  to  the  allocation  of
financial  support,  regardless  of  the  decision  of  the
national  authorities  responsible.  This  problem  with  the
application  of  the  Community  Regulations  and  with  the
decision,  on  the  part  of  the  Fund,  to  allocate  financial
support,  which  had  still  not  been  resolved  at  the  end  of
1997,  resulted  in  the  suspension  of  the  payment  of  the
balance  outstanding  to  22  OPs.

late  appearance  of 

5.11. The 
this  problem  raises
questions  about  the  effectiveness  of  the  partnership
between  the  Commission  and  this  Member  State,  the
principal  beneficiary  of  Objective  5b,  in  respect  of  the
management  and  the  monitoring  of  programmes.

Selection  of  actions  and  beneficiaries

(c)  the  application  of  different 

individual  rates  of
intervention  (from  17 %  to  75 %)  for  actions  of  a
similiar  nature  included  in  the  same  measure.

Monitoring  mechanisms

is 

out 

carried 

through 

the
5.13. Monitoring 
participation of the Community and national managers in
the  meetings  of  the  programme  monitoring  committees,
whose main task is to ensure that the actions conform to
the  provisions  of  the  regulations  and  programmes.
Monitoring  must  be  carried  out  on  the  basis  of  financial
and  physical  indicators.  Its  effectiveness  depends  on  the
quality  of  the  latter  and  on  the  transparency  of  the
management  of  the  funds.

Financial monitoring

5.14. According  to  the  provisions  of  Article  21  of
Regulation  (EEC)  No  4253/88,  every  advance  should  be
charged to the commitment for the corresponding annual
instalment.  However,  the  accounting  procedure  for
commitments  and  payments  employed  by  the  EAGGF
automatically pays the balance of the oldest commitments
in order to simplify matters (6). It is, however, contrary to
the  Fund  Regulation  as  well  as  to  the  Financial
Regulation.  It  distorts  the  principle  of  annuality  in
respect  of  the  annual  instalments  and  hinders  financial
analyses  in  the  course  of  the  programme.

the  annual 

5.15.
In  addition,  the  financial  mechanism  adopted
consists  of  payment  of  a  first  advance  for  each  annual
instalment  of  the  OPs  to  the  Member  State  concerned.
Then,  on  the  basis  of  certification  that  the  actual
expenditure  represents  50 %  of  the  amount  of  this  first
advance  payment,  a  second  advance  is  paid.  Lastly,  a
final certificate allows the Commission to pay the balance
of 
final
certification  by  the  Member  States  of  the  expenditure
actually  incurred  for  an  instalment,  the  Commission’s
payments are advances which, in accordance with Article
71 of the Financial Regulation, should have been entered
in  a  suspense  account.  However,  the  Commission  enters
the  advances  as 
the
Community’s  financial  statements  do  not  reflect  the
actual  implementation  of  the  programmes.

final  expenditure  and 

in  question.  Until 

instalment 

thus 

5.12. The  procedures  for  the  selection  by  the  national
from
managers  of  actions  and  beneficiaries  suffer 
inadequacies  in  the  criteria  applied.  In  addition  to  these
deficiencies,  the  following  findings  were  made:

(a)  the  allocation  of  Community  aid  under  the  OPs  to
actions  according  to  less  stringent  conditions  than
those  set  out  in  the  specific  regulations;

(b) insufficient  consideration  of  the  usefulness  of  the

5.16. The  payment  of  the  balance  of  an  intermediate
instalment  is  not  given  any  particular  attention.  In
practice,  the  Commission  gives  these  payments  the  same
treatment as the advances and only describes the balance
of  the  final  instalment  as  a  balance (7).  The  absence  of

(6)  In  this  connection,  see  the  special  reports  in  support  of  the
Statement  of  Assurance  for  1995  (paragraph  3.26)  and  for
1996  (paragraph  21.4).

(7)  See reply to paragraphs 3.34 to 3.35 of the 1995 DAS report

projects  and  of  their  viability;

quoted  above.

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the 

shortcomings  observed 

rigour,  particularly 
in
monitoring  the  financial  implementation  of  the  OP  and,
more 
specifically,  during  closure  of  each  annual
instalment,  leads  to  problems  during  final  closure  which
could have been settled well before if proper controls had
been  carried  out  at  the  time  the  annual  instalments  were
closed.

5.17. At  national  level,  the  start-up  difficulties  were
compounded by other difficulties generated, in particular,
by:

(a) the  absence  of  a  document  describing  all 

the
procedures,  from  the  submission  of  the  project  to  the
final  audit  of  the  declaration  of  expenditure;

(b) the  shortcomings  of  the  physical  monitoring,  which
was  not  able  to  detect,  apart  from  material  errors,
basic  anomalies  which  cast  doubt  on  the  quality  and
the  reliability  of  the  data  collected  and,  as  a
consequence,  the  validity  of  the  declarations  of
expenditure;

(c) inadequate  electronic  processing  of  the  data,  which
was  the  origin  of  the  difficulties  encountered  in  the
preparation  of  the  documentation  necessary  for  the
requests  for  payment  of  balances  and  for  the
drawing-up  of  the  final  report;

(d) the  multiplication  of  the  number  of  intermediaries
involved  in  the  administration  of  the  aid,  which
prolongs  the  time  required  for  payment  to  the  final
beneficiaries  and  makes  monitoring  more  difficult.

In  its  reply  to  Special  Report  No  4/90  on  the
5.18.
Integrated  Mediterranean  Programmes  (IMPs) (8),  the
Commission  mentioned  the  reluctance  of  the  national
authorities  to  supply  reliable  indicators  and  to  put  in
place  a  system  which  would  guarantee  ‘the  transparent
management  of  appropriations’.  The  audits  relating  to
the  implementation  of  Objective  5b  have  shown  that  the
situation  has  changed  little.

Physical monitoring

5.19. Monitoring of the implementation of the actions is
indispensable  to  enabling  the  partners  to  analyse  the  real
situations  and  to  intervene  in  time  to  correct  any
anomalies.  However,  this  monitoring  was  inadequate  for
the  actions  undertaken  in  the  course  of  the  first  period.
The  sometimes  mediocre  quality  of  the  closure  reports
bears  testimony  to  this  shortcoming.

—  the operations sheets for the actions were not kept up

to  date,

—  the  actions  planned  were  not  implemented,

—  no 

formal  analysis  of 

the 

reasons 

for 

this

non-implementation  had  been  made,

—  replacement  actions  had  also  been  implemented  with

no  regard  for  the  necessary  formalities.

implementation, 

5.21. During  on-the-spot  checks  it  was  not  always
possible to make a connection between the financial data
submitted 
in  the  reports  and  the  physical  reality
observed.  This  situation  resulted  from  the  acceptance  of
financing amounts which could not be related to the state
of  physical 
implementation
estimates  which  differed  from  the  situation  obtaining
after  implementation,  from  an  absence  of  activity  in  the
period  relating  to  the  expenditure,  non-compliance  with
the  contract  specifications  or  even  from  changes  to  the
objectives  specified  at  the  time  the  programme  was
approved.  In  other  cases,  systematic  recourse  to  the
utilisation  of  all-in  prices  in  support  of  expenditure
makes 
implementation
impossible.

cost  of 

finding 

from 

real 

the 

Technical assistance

for 

5.22. Appropriations 
technical  assistance  are
available  in  respect  of  management,  monitoring  and
evaluation  in  the  case  of  specific  measures,  in  order,  in
particular,  to  permit  the  installation  of  systems  for  the
collection,  collation  and  analysis  of  data.

these
5.23. The  Member  States 
appropriations  to  cover  costs  unconnected  with  the
objectives 
technical  assistance  was
intended,  in  particular  for  payment  of:

frequently  used 

for  which 

the 

(a)  the 

operating 

national
administrations managing the OPs, including officials’
salaries;

expenditure 

the 

of 

(b) the  operational  activities  of  public  bodies  with  no
connection  with  the  measures  set  out  in  the  OPs.

in 

the 

the 

because 

programmes 

the  real  cost  of 

5.24. Furthermore, 
technical
assistance  proved  to  be  greater  than  the  amounts  laid
operational
down 
appropriations were used for actions comparable to those
performed  by  the  technical  assistants.  Two  cases  of  this
kind  were  discovered  for  which  more  than  15 %  of  the
appropriations for operational measures were allocated to
management  and  incentives.  Though  they  were  intended
for  the  implementation  of  the  programme,  they  were  in
fact  used  for  technical  assistance.  This  diminished  the
impact  of  the  measures  concerned.

5.20. The  audits  carried  out  thus  revealed  cases  where:

(8)  OJ  C  298,  28.11.1990.

5.25. This  sort  of  situation  is,  moreover,  open  to
criticism  because  it  is  contrary  to  the  principle  of  the
specific  nature  of  appropriations,  makes  estimating  the
real  cost  of  the  technical  assistance  very  difficult  and  is

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tantamount  to  charging  the  operating  expenditure  of  the
national administrations, which is already covered by the
corresponding  national  budgets,  to  the  Community
budget.

5.33.
In  addition,  of  the  12  programmes  audited  by  the
Court, only one was the subject of an ex-post  evaluation
at  the  initiative  of  the  national  authorities.  As  for  the
others,  the  exercise  consisted  of  general  analyses  in
preparation  for  the  second  period  SPDs.

Audits

5.26. Commission  staff  carried  out  21  audit  visits  in
respect  of  23  of  the  58  OPs  under  Objective  5b  in  the
course  of  the  period  1992  to  1997.  The  reports  relating
to  several  weaknesses  and
to 
the
that  were 
shortcomings 
implementation  of  the  OPs.

these  audits  refer 

discovered 

during 

5.27. Bearing in mind these findings and the complexity
of  each  OP,  the  Commission  should  tighten  its  controls.
It  is  astonishing  that  the  Bavarian  OP,  in  spite  of  the
large  sums 
involved  (see  paragraph  4.4),  was  not
subjected  to  any  on-the-spot  audit.

5.28. The controls carried out by national officials were
few  in  number  and  only  covered  very  limited  fields.  By
way  of  example,  the  on-the-spot  inspections  recorded  by
the  authorities  responsible  for  a  measure  in  the  Land  of
Hessen  were  supported  by  incomplete  documentation.  In
one  specific  case  a  project  worth  ECU  2,7  million  had
been  closed,  financially,  without  the  obligatory  technical
controls  having  been  carried  out.  Nor  did  these  controls
give  rise  to  the  drawing  up  of  an  audit  report  in  all
cases.

audit 

In  two  cases,  the  checks  were  carried  out  by  an
5.29.
the
internal 
recommendations  made  to  the  national  managers  were
not  always  followed  up  and  the  Commission  was  not
informed  of  them.

department.  Nevertheless, 

5.30. The  OP  decided  on  for  the  benefit  of  Bavaria  was
audited  in  1994  by  the  Land’s  Court  of  Auditors.  The
report  contains  important  audit  findings.

5.31. Controls were sometimes entrusted to departments
which had appraised the files. This practice is contrary to
the separation of duties between management and control
departments.

Evaluation

Transition  to  the  second  period

5.34. The  distinguishing  features  of  the  SPDs  belonging
to the new period are the relaxation of the criteria for the
definition of the Objective 5b areas and an increase in the
number  of  small  areas,  which  was  the  exact  opposite  of
the reform’s Objective of greater concentration. The areas
eligible  for  Objective  5b  are  still  being  defined  with  no
regard  for  the  existing  administrative  and  economic
boundaries  for  which  statistical  data  are  available.  The
monitoring  of  the  expenditure  continues  to  be  complex
and it is impossible to assess the value of analyses of the
impact  of  certain  measures.

5.35. The  financial  plans  for  the  84  SPDs  approved
provided  for  ECU  1 791,4  million  for  commitment
appropriations  for  the  first  four  years  of  implementation
(1994  to  1997).  However,  the  implementation  of  the
programmes  had  already  been  delayed  and  only  ECU
1 440,2  million  was  committed  for  this  period.

5.36. The forecasts for the first year were easily fulfilled
thanks  to  the  automatic  commitment  of  the  first
instalment.  In  contrast,  for  1995,  the  estimates  were  far
from  being  achieved:  commitments  rose  to  ECU  249,5
million,  i.e.  56 %  of  the  ECU  441,9  million  for  which
provision  had  been  made.

5.37. The  implementation  of  the  OPs  often  coincided
with the start of the SDPs and, this being the case, certain
operations  were  spread  over  the  two  programming
periods.  Apart  from  the  exceptional  nature  of  this
practice,  the  audits  revealed  that  it  was  not  always
possible  in  reality  to  clearly  distinguish,  physically  and
financially,  between  the  two  phases  of  the  projects  and,
as a consequence, to justify their being linked to different
programming periods.

6.  CONCLUSION  AND  RECOMMENDATIONS

In  1994 

the  Commission  had  an  ex  post
5.32.
evaluation  conducted  pursuant 
to  Article  26  of
Regulation  (EEC)  No  4253/88.  This  involved  21  OPs.  In
reality,  this  exercise,  which  concentrated  on  OPs  which
were already being implemented, cannot be considered to
be  an  ex-post  evaluation.  Moreover,  the  evaluation  was
carried  out  without  any  coordination  with  the  regional
authorities  and  the  results  were  not  always  analysed
jointly  with  these  authorities.

6.1. The  considerable  delay  in  the  closure  of  the  OPs
should  prompt  the  Commission  and  the  Member  States
to  carry  out  an  in-depth  review  of  the  programming  and
monitoring  procedures.  As  for  implementation,  more
specifically,  the  practices  resorted  to  by  the  Member
States to make up for delays in the implementation of the
OPs, such as the application of broader selection criteria,
‘retroactive’ programming — meaning, in concrete terms,
bringing  in  sums  which  have  already  been  spent  —  and
reprogramming in order to authorise new expenditure, all

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suffer  from  a  lack  of  transparency  and  should  be
reviewed  (see  paragraphs  3.1  to  3.9).

6.2. The  certification  procedure  is  marred  by  a  large
number  of  inaccuracies  and  irregularities.  However,  as
the  certification  of  expenditure 
issued  by  a  public
authority  is  a  legal  act  which  constitutes  a  guarantee  for
whomsoever  receives  it  and  entails  the  liability  of  the
person  who  issues  it,  the  lack  of  reliability  of  these
certificates  should  lead  the  Commission  to  review  its
system  of  control  and  the  current  mechanisms  for  the
release  of  Community  payments  (see  paragraphs  4.1  to
4.9).

shortcomings 

reprogramming.  Concerning 

6.3. The  management  and  monitoring  system  revealed a
respect  of
certain  number  of 
the
programming  and 
practical  application  of  the  definitions  of  basic  concepts,
the  Commission  should  ensure  that  implementing  rules
are clearly laid down and check, from the very start, that
all  the  Member  States  accept  its  interpretation  (see
paragraphs  5.1  to  5.11).

in 

6.4. As for the mechanisms for selecting the actions and
the  beneficiaries,  clearly  defined  selection  criteria  are
necessary  to  give  a  solid  basis  for  the  decisions  by  the
managing  departments  and  to  ensure  consistency  in  the
granting  of  aid  to  the  various  types  of  intervention  and
transparent implementation of the actions (see paragraph
5.12).

6.5.
In  respect  of  financial  monitoring,  the  problems
encountered  during  the  closure  of  the  annual  instalments
should  have  been  resolved  in  stages  in  the  course  of  the
programme. One audit should be focused on the payment
of  the  balance  of  each  instalment,  as  this  offers  the
advantage  of  continuity  and  would  prevent  a  number  of
problems  at  the  end  of  the  programme  and  the  resulting
closure delays. It would lead to more consistent and more
effective  monitoring  and,  as  a  consequence,  to  better
management  of  the  actions  implemented  under  the  OPs
by 
(see
paragraphs  5.14  to  5.18).

the  Commission  and 

the  Member  States 

In 

for 
to 

several  cases  appropriations 
the  purpose  of  which 

technical
6.6.
assistance, 
improve
management, monitoring and evaluation of the OPs, were
used  for  other  purposes.  The  Commission  should  ensure
that  these  appropriations  are  only  allocated  to  the
purposes  for  which  they  were  provided.  Any  other  use  is
contrary to the budgetary principle of the specification of
appropriations  (5.22  to  5.25).

is 

6.7. Considering the inadequacy, or even the absence, of
checks  on  the  OPs,  closer  controls  by  the  Commission
should be programmed. Every OP should be subjected to
at  least  one  on-the-spot  check.  As  for  the  audits  by  the
Member  States,  an  audit  report  should  be  drawn  up
every  time  and  the  main  findings  of  these  reports  should
be brought to the attention of the Commission. Improved
coordination  of  the  Commission’s  and  the  Member
States’  audits  would  be  appropriate  (see  paragraphs  5.26
to  5.31).

This opinion was adopted by the Court of Auditors in Luxembourg at the Court meeting of 16
and  17  September  1998.

For  the  Court  of  Auditors

Bernhard  FRIEDMANN

President

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ANNEX

OBJECTIVE  5B  OF  THE  REFORMED  STRUCTURAL  FUNDS

1.  The  reform  of  the  Structural  Funds  rests  on  four  basic  principles:  concentration,  partnership,
programming  and  additionality.  These  are  the  four  guiding  principles  which  must  be  followed  in  order
to  achieve  the  six  objectives  assigned  to  the  Structural  Funds.

2.  The  EAGGF-Guidance  plays  a  part  in  the  achievement  of  three  of  these  objectives:

(a)  Objective  1,  which  aims  to  promote  development  and  adaptation  in  under-developed  regions;

(b) Objective  5,  which  covers  two  areas:

—  Objective 5a, which falls exclusively under the EAGGF-Guidance, to speed up the adaptation of

agricultural  structures,

—  Objective  5b,  which  involves  both  the  ERDF  and  the  ESF,  to  promote  the  development  of  rural

areas;

(c)  Objective  6,  which  aims  to  develop  regions  with  a  low  population  density  (this  objective  was
established  for  the  second  period  of  programming  following  the  accession  of  the  new  Member
States).

3.  The characteristic features of the rural areas eligible under Objective 5b are a high level of employment
in  agriculture,  as  a  percentage  of  total  employment,  and  a  low  level  of  economic  development  and
agricultural earnings. The actions planned, which are decided on according to the specific characteristics
of each Fund, aim to adapt and diversify the agricultural sector and to develop economic activities suited
to  the  rural  environment.  They  take  the  form,  in  particular,  of  aid  for  rural  and  tourist  infrastructures,
for  the  maintenance  of  the  countryside  and  the  environment  and  for  the  development  of  forestry
activities.  Objective  5b  covered  50  regions  during  the  first  period,  5 %  of  the  population  of  the
Community and 17 % of its surface area and, during the second, 89 regions, 8 % of the population and
25 %  of  its  area.

The  first  programming  period  (1989  to  1993)

4.  The  actions  of  the  first  period  were  implemented  in  three  main  stages:

(a)  the  Member  States  submitted  a  multi-annual  plan  which  contained  a  socio-economic  analysis,  a
description  of  the  planned  development  strategy,  proposed  intervention  priorities  and  an  evaluation
of  the  financing  requirements;

(b) the  Commission  approved  a  Community  Support  Framework  (CSF)  which  defined  the  intervention
priorities and presented an indicative financing plan and a survey of the forms of intervention to be
implemented;

(c)  the  Commission  decided  on  the  forms  of  intervention,  which  resulted  from  the  requests  for  aid  by
the Member States and from the CSFs, either in the form of Operational Programmes (OPs) or large
projects  or  global  subsidies,  or  even  in  the  form  of  co-financing  of  aid  schemes.

5.  As  far  as  Objective  5b  is  concerned,  the  Commission  endeavoured  to  implement  the  CSFs  during  the
first  programming  period  by  means  of  the  Operational  Programmes  (OPs).  The  OPs  are  defined  as  a
coherent  group  of  multi-annual  measures  for  the  implementation  of  which  application  may  be  made  to
one  or  more  Structural  Funds.

6.  The  Community  commitments  for  the  OPs  are  made  in  annual  instalments  based  on  the  approved
financing plans and on the progress made in implementation. The payments, generally an initial advance
payment  of  50 %  of  the  corresponding  commitment,  a  second  of  30 %  and  the  balance  of  20 %,  are
carried  out  according  to  the  release  thresholds  relating  to  the  eligible  expenditure  and  set  by  the
Commission.

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The  second  programming  period  (1994  to  1999)

7.  For  the  second  programming  period,  the  provisions  were  amended (1)  to  allow  the  Member  States  to
submit,  in  a  single  programming  document  (SPD),  the  information  required  in  respect  of  each
multi-annual plan and the information required in respect of the requests for aid. The submission of an
SPD  by  a  Member  State  leads  to  a  single  decision  by  the  Commission  on,  simultaneously,  the  CSF  and
the  aid  from  the  Funds.

(1)  Council  Regulation  (EEC)  No  2082/93  of  20  July  1993  amending  Regulation  (EEC)  No  4253/88  laying  down
provisions for the application of Regulation (EEC) No 2052/88 in respect of coordination with the interventions of the
various  Structural  Funds,  on  the  one  hand,  and  between  the  latter  and  those  of  the  European  Investment  Bank  and
other  existing  financial  instruments  on  the  other  (OJ  L  193,  31.7.1993,  p.  20).

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COMMISSION’S  REPLIES

1.  GENERAL

Objective 5b of the reform of the Funds seeks to promote
the  development  of  rural  areas  in  regions  not  covered  by
Objective 1. Eligible areas were selected on the basis of a
high  level  of  agricultural  employment,  low  agricultural
levels  of  social  and  economic
incomes  and 
Funds
development. 
(EAGGF-Guidance,  ERDF  and  ESF)  participated 
in
development of these areas each in its own sector, usually
in  the  framework  of  multi-fund  regional  programmes.

Structural 

three 

The 

low 

Programming  of  Objective  5b:  timing  and  content

Objetive  5b  was  implemented  in  accordance  with  the
timing  laid  down  by  the  reform  regulations,  i. e.  in  three
stages 
support
framework,  operational  programme)  plus  an  additional
stage  for  the  selection  of  areas  for  Objectives  2  and  5b.

plan,  Community 

(development 

Following  publication  in  the  Official  Journal  of  the
European  Communities  of  the  Council  Regulations  on
the  reform  at  the  end  of  1988,  eligible  rural  areas  were
selected  in  May  1989,  and  the  Member  States  presented
their development plans for rural areas in October 1989.
The  Commission  decided  on  its  financial  contribution  to
each  Member  State  at  the  end  of  1989.

After  negotiations  had  been  conducted  in  partnership  on
the  development  priorities  for  each  region  and  the  funds
to be allocated, the Commission adopted the Community
support frameworks in June 1990, opening up the way to
operational  programming.  By  the  end  of  1990  the
Member  States  had  presented  70 %  of  the  planned
programmes,  which  were  approved  in  1991.

In the programmes, the responsible  authorities  integrated
traditional  development  projects  previously  in  effect  in
the region together with new projects in accordance with
Article  4  of  the  basic  Regulation  (Community  action  is
regarded  as  complementing  or  contributing  to  the
corresponding  national  action).

The  planning  procedure  introduced  by  the  reform  of  the
Funds  changed  the  existing  structural  action  working
methods.  Under  the  programming  principle  each  project
had to be placed in the context of a development strategy
with  clearly  defined  objectives  and  priorities  for  action.
The  partnership  required  the  authorities  responsible  for
rural  development  at 
local,  regional,  national  and
Community  level  to  work  together.  In  the  case  of

multi-fund  programmes  —  a  majority  in  the  case  of
Objective  5b  —  the 
innovation  was  reinforced  by
involving  in  the  implementation  of  programmes  the
authorities 
regional
development  and  utilisation  of  human  resources.

agriculture, 

responsible 

for 

Implementation

The  Member  States  implemented  the  programmes  in
accordance  with  each  authority’s  procedures  for  the
selection  of  beneficiaries  or  examination  of  project
dossiers.

Given  their  regional  and  multi-disciplinary  nature  the
programmes  had  to  be  implemented  on  a  decentralised
basis  involving  a  number  of  bodies  responsible  for  rural
development.  This  required  a  major  coordination  effort
by  the  lead  departments  at  various  administrative  levels
and  complicated  the  financial  management  for  which  the
Member  State 
the
the  other  hand,  decentralisation
Commission.  On 
brought  implementation  closer  to  the  final  beneficiaries
thus  intensifying  the  programmes’  impact.

is  ultimately  accountable 

to 

Monitoring

to  ensure  proper 

Monitoring  committees  involving  the  national,  regional
and local authorities concerned and the Commission were
set  up 
the
programmes.  Being  involved  on  the  committee  was  a
novelty  for  most  of  the  authorities.  They  monitored  the
financial  and  physical  progress  of  projects  based  on
information in the annual reports drawn up by the bodies
responsible  for 
implementation.  They  also  proposed
amendments  to  programmes  wherever  necessary.

implementation  of 

The  authority  named 
in  the  programme  as  being
responsible  for  financial  implementation  receives  and
checks  the  statements  of  expenditure  from  the  various
management  bodies.  On  the  basis  of  this  information  it
submits  to  the  Commission  requests  for  advances  and
balances,  together  with  the  corresponding  certificates  of
expenditure  as  and  when  the  expenditure  attains  the  set
limits.

Assessment

As  soon  as  Objetive  5b  was  launched  the  Commission
was  aware  of  the  methodological  difficulties  likely  to
affect  the  assessment  of  the  programmes  concerned.
Therefore  it  immediately  set  up  a  methodological  study

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which,  based  on  analysis  of  certain  typical  programmes,
helped  to  identify  the  operations  which  would  make  it
possible  to  carry  out  an  operational  evaluation.  The
study  was  continued  in  1994  to  1995  and  covered  22
the  authorities
the  cooperation  of 
projects  with 
responsible  for  their 
implementation.  It  reflects  the
Commission’s  continuous  interest  in  assessing  operations
under  Objective  5b.

2.  SUMMARY  OF  THE  MAIN  OBSERVATIONS

provided they contribute to the objectives of the measure
concerned  and  meet  the  conditions  of  eligibility.

the
2.7. The  precise  nature  and 
amendments  referred  to  by  the  Court  are  examined  in
points  5.7  to  5.9.  In  the  Commission’s  view  these
amendments  were  fully  consistent  with  the  programming
procedure.

justification 

for 

2.8. The  precise  nature  of  the  problem  raised  by  the
Court  is  examined  in  point  5.10.

2.9. The  Court’s  comments  on  the  procedures  for  the
selection  of  projects  are  examined  in  detail  in  point
5.12.

2.1. The  factors  explaining  the  delays  are  described  in
points  5.2  to  5.4.

2.10. and 2.11. These aspects are considered in detail in
points  5.16  to  5.18  and  points  5.23  to  5.31.

2.2. The  Commission 
Member  States’  replies.

is  currently  examining 

the

2.3. The  main  purpose  of  the  progress  reports  is  to
inform  the  Commission  and  the  monitoring  committee
about progress in implementing the various measures and
problems  so  that  it  can  adopt  appropriate  decisions.  If
the  Commission  requests  more  detailed
necessary, 
for
information 
implementing  the  programmes.  See  also  point  4.6.

the  authorities 

responsible 

from 

It  was  impossible  to  avoid  the  concentration  of
2.4.
programmes at the end of the programming period given
the timetable for approval of Regulations and the type of
procedures  laid  down  in  the  Regulation.  The  level  of
financial  implementation  during  these  years  was  of  the
same order of magnitude as the annual average of current
programmes.

2.5. The  reasons  for  the  situation  described  by  the
Court  are  given 
in  the
introduction.

in  the  general  comments 

2.6. The  development  strategy  adopted  for  the  selected
rural  areas  must  necessarily  integrate  pre-existing  aid
schemes  whose  positive  effects  had  led  them  to  be
retained  for  the  1994  to  1999  phase.  Certain  Member
States  had  followed  the  practice  of  booking  to  the  1989
to  1993  programme  any  payments  made  in  respect  of
these  aid  schemes  during  its  period  of  eligibility.  The
Commission  considers  that  a  programme  is  a  set  of
coherent  measures  accompanied  by  quantified  objectives;
it is left to the authorities responsible for implementation
to  select  the  specific  projects  which  best  meet  the
objective  of  the  measure  in  question.  The  practices  to
legitimate
which  the  Court  refers  are  regarded  as 

2.12. The  assessment  process  under  Objective  5b,  its
pioneering  nature  and  the  way  in  which  national  and
regional  partners  were  associated  with  the  exercise  are
discussed  in  points  5.32  and  5.33.

2.13. The transition to the second period is discussed in
points  5.34  to  5.37.

3.  SITUATION  IN  RESPECT  OF  THE  CLOSURE  OF  THE

OPs

3.3. Article  21  of  Regulation  (EEC)  No  4253/88,  as
amended by Regulation (EEC) No 2082/93, provides that
the  Commission  will  make  payment  within  a  period
which in general will not extend two months beyond the
date  of  receipt  of  a  receivable  request.  Some  of  the
requests  needed  additional  complex  information  or  there
were  differences 
the
Commission  and  the  Member  State,  so  the  Commission
felt  it  was  preferable  to  exceed  the  deadline  in  order  to
examine  these  cases  in  depth.

the  criteria  applied  by 

in 

3.4. Since 
the  majority  of  programmes  were  not
approved  until  1991  the  commitments  were  bound  to  be
concentrated  in  the  first  two  years  of  the  programming
period.

3.5.  and  3.6. The  reasons  for  not  closing  OPs  left  open
in  each  country  are  as  follows.

—  France (22 out of 28 OPs are open): the Commission
could  not  accept 
interpretation  by  France
concerning  the  validity  of  certain  commitments,  and
the  use  of  EAGGF  appropriations  in  the  context  of
the  Limousin  OP.  These  problems  are  on  the  way  to
being resolved.

the 

—  Italy  (four  out  of  eight  OPs):  by  mid-1998  all  the
Italian  programmes  were  closed  except  for  those  in

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the Latium region where an extension was granted in
respect  of  certain  projects  suspended  on  judicial
grounds.  The  commitments  still  outstanding  for  three
OPs  will  be  cancelled  shortly.

—  Germany  (three  out  of  eight  OPs):  in  the  case  of  the
Rheinland-Pfalz  OP  the  unused  funds  (ECU  0,681
million),  which  had  been  shelved  pending  a  possible
challenge  by  the  Member  State  regarding  the  method
of calculation, will be released shortly. The other two
— Bavaria and North Rhine-Westphalia are still open
pending  examination.  The  Hessen  programme  has
been  closed  but  will  be  reopened  following  the
Court’s  comments.

—  Spain  (two  out  of  eight  OPs):  at  the  time  of
on-the-spot  checks  of  OPs  in  Aragon  and  Catalonia,
the  Commission  considered  certain  expenditure  was
not  eligible;  the  national  and  regional  authorities  of
Spain  have  submitted  additional  information  which
has  led  to  a  partial  change  of  position.  The  balance
should  be  paid  shortly,  as  soon  as  the  situation  is
finally clarified.

—  Denmark  (one  out  of  one  OP):  the  request  for  the
final balance presented by the Danish authorities was
incomplete  and  the  Commission  is  still  awaiting  the
additional  data  requested.

3.7. As  noted 
in  points  3.5  and  3.6  above,  the
Commission  has  found  certain  practices  it  considers  as
irregularities  in  the  French  OPs.  The  Commission  is
obliged  to  make  sure  that  the  conditions  laid  down  for
granting  Community  assistance  are  observed,  even  if  it
sometimes involves going beyond the deadlines laid down
in  the  Regulations.

3.8. The  Commission  regrets  the  failure  to  keep  to  the
statutory  deadline,  but  this  in  itself  is  not  sufficient  to
consider  the  request  for  payment  not  receivable.

4.  CERTIFICATES  OF  EXPENDITURE  AND  PROGRESS

REPORTS

Reliability  of  the  certificate  of  expenditure

4.2. When  closing  the  programme  the  Commission  has
additional  information  on  its  implementation  following
meetings of the monitoring committee and various annual
reports,  including  a  report  on  the  last  instalment  which
contains  consolidated  implementation  data  from  the
beginning  of  the  OP.

4.3. The  Commission  is  examining  the  findings  on
which  the  Court  bases  its  comments  regarding  the
validity  of  expenditure  certificates.  The  Commission
makes no secret of the fact that it sometimes finds errors,
the  Member  States’
negligence  or 

inaccuracies 

in 

certificates,  especially  in  the  case  of  programmes  such  as
those under Objective 5b covering a great variety of small
projects  which  have  to  be  implemented  by  a  wide  range
of  administrative  authorities.  These  findings  are  behind
most  of  the  delays  in  payment  of  the  balance  of
programmes  pointed  out  by  the  Court  in  Part  3.  The
Commission  agrees  with  the  Court  that  the  certificates
should  provide  a  firm  guarantee  of  the  authenticity  and
eligibility  of  the  expenditure  declared,  and  to  this  end
adopted  Regulation  (EC)  No  2064/97  (OJ  L  290,
23.10.1997,  p.  1).  It  includes  an  obligation  on  Member
States  to  present  no  later  than  when  requesting  the  final
payment  an  independent  auditor’s  statement  as  to  the
validity  of  the  request  for  final  payment  and  the  final
certificate  and 
the
expenditure  operations.

legality  and  regularity  of 

the 

4.4. The  German  authorities  have  responded  to  the
Court’s 
the
Commission has suspended payment of the balance of the
programme,  estimated  at  ECU  10  million.

Since  December 

comments. 

1997 

Progress  reports

financial 

4.6. Pursuant  to  Article  25  of  the  Regulation  on
coordination  and  implementing  provisions,  the  progress
reports  were  designed  as  instruments  to  include  physical
and 
the  progress  of
operations,  of  management  and  any  related  problems.
The financial information in the reports provides a guide
to  make 
the  progress  of
programmes.

indicators  showing 

it  possible 

to  check 

4.7. Progress  reports  and  certificates  of  expenditure  are
different  in  nature  and  purpose.  They  are  governed  by
two different articles in the coordination Regulation; they
usually  have  two  different  reference  dates  and  are  often
drawn  up  by  different  organisations.  Therefore  the
difficulty of reconciling the two documents should not be
interpreted  as  a  contradiction  between  them.

4.8. The  Commission  believes  that  progress  reports  are
not  intended  to  provide  specific  accounting  data.  The
annual  reports  are  very  useful  for  following  up  the
implementation  of  the  various  projects.

4.9. The  Commission  agrees  with  the  Court  that  these
annual  reports  should  be  complete  and  describe  in  full
the  progress  achieved  and  the  obstacles  encountered.  It
has  consistently  urged  the  authorities  concerned  to  make
sure  the  reports  are  properly  prepared  since  they  are  a
key  factor  in  the  efficient  operation  of  the  monitoring
committee.  The  average  quality  of  the  reports  has
improved considerably in the present 1994 to 1999 phase

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and  will  continue  to  improve  as  the  committees  become
more  experienced.  (See  comments  at  point  5.18.)  The
closure  of  annual  instalments  is  based  on  the  Member
State’s  expenditure  certificates  after  receipt  of  the  annual
report  which  has  to  be  endorsed  by  the  Commission.

presentation  of  the  aid  application  to  the  Commission  is
eligible.

Reprogramming

5.  MANAGEMENT  AND  MONITORING  SYSTEMS

Implementation  of  the  OPs 

5.1. Concentration  of  operations  at  the  end  of  a  period
is not in itself incompatible with a coherent programming
exercise,  sound  financial  management  and  continuous
monitoring  and  assessment  of  operations.  The  annual
rate  of  investments  in  1991  to  1993  was  of  the  same
order  of  magnitude  as  in  1994  to  1999.

Programming

time  needed 

to  5.4. The 

5.2. 
for  preparation,
examination and approval of programmes is explained in
the  general  comments 
introduction.  The
in 
Commission  considers  it  inevitable  that  this  time  should
be  required  in  the  context  of  a  reform  which  was  to
radically  change 
in
structural  operations.

the  working  methods  applied 

the 

5.5. and 5.6. The Court is referring to operations where
beneficiaries  were  selected  before  the  programmes  were
approved,  but  where  the  Community  payments  were
made  in  compliance  with  the  eligibility  dates  established
in the decision granting the aid. The same thing occurred
in  1994  during  the  transition  between  two  phases  of
planning  where  operations  planned  for  the  second  phase
received co-financing under the first programme replacing
other  cancelled  operations.  The  Commission  considers
this  procedure  to  be  perfectly  legitimate  provided  all  the
conditions  of  eligibility  are  met.  Pursuant  to  Article  5  of
the  basic  Regulation  (EEC)  No  2081/93  a  programme  is
regarded  as  a  set  of  consistent  measures  accompanied  by
implementation  objectives,  not  as  a  set  of  predefined
projects. To respect the planning principle and ensure the
smooth  implementation  of  the  measure,  the  physical  and
financial  outturn  and 
impact  objectives  must  be
achieved.

5.7.  to  5.9. The  Community  support  frameworks  and
OPs  of  Objective  5b  were  amended  in  response  to  a
in
number  of  different 
particular:

circumstances, 

including 

—  reconciling  the  CSFs:  this  entailed  comparing  the
amounts  at  constant  1989  prices  used  in  1989  to
1993  for  all  projects  covered  by  each  CSF  (OPs,
projects covered by various regulations making up the
outstanding  liabilities)  with  the  amount  at  constant
1989  prices  decided 
in  the  Community  support
framework.  The  difference,  whether  positive  or
negative,  resulting  from  the  comparison  was  to  be
passed  on  to  the  forms  of  assistance  in  force,

—  technical  adjustments  to  operational  programmes
with  a  view  to  planning  additional  appropriations
generated  by  the  deflator  (not  negligible  at  that  time)
and,  in  some  cases  the  very  significant  exchange  rate
fluctuations  between  the  national  currency  and  the
ECU  which  occurred  at  the  end  of  the  period  of
implementation  of  programmes,

—  extension  of  deadlines  for  commitment  and  payment

operations.

The  purpose  of  the  many  amendments,  which  could  be
interpreted  in  the  way  the  Court  has  done,  was  to  make
available  the  appropriations  provided  in  the  CSFs  and  to
adapt  Community  assistance  to  the  actual  situation
regarding  the  implementation  of  programmes.

Application  of  underlying  concepts

5.10. The  concept  of  legal  commitment  applied  by  the
French  authorities  did  not  comply  with  the  conditions
attached  to  this  concept  in  the  decisions  awarding
assistance. Consequently, and after thoroughly examining
the  problem,  the  Commission  demanded,  and  the  French
authorities  agreed,  that  the  concept  of  commitment
should  be  applied  correctly,  in  accordance  with  the
decisions  and  as  it  is  applied  in  all  the  Member  States.
The Commission will pay the balance of the programmes
in  question  when  it  has  checked  that  the  provisions  have
been  complied  with.

5.11. The  Commission  considers  it  positive  that  this
problem was detected: it demonstrates the efficacy of the
checking  system.

Furthermore,  even  if  the  operational  programming  phase
started  late,  the  planning  of  rural  development  measures
had  started  in  regions  as  soon  as  the  Objective  5b  areas
were  defined.  In  fact,  in  the  case  of  projects  and  aid
schemes, Article 15 of the coordination Regulation states
that  expenditure  incurred  in  the  six  months  preceding

Selection  of  actions  and  beneficiaries

5.12. With  the  Member  States  the  Commission 
is
looking  into  the  Court’s  remarks.  The  beneficiaries  are

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selected  by  Member  States  in  the  light  of  priority  and
suitability  criteria  usually  included  in  national  provisions
governing  the  application  of  aid,  approved 
in  the
framework  of  Community  Regulations.  Community
legislation  does  not  specify  cases  where  viability  studies
are necessary, nor their content. Such studies should take
account  of  the  scale  of  the  project  and  any  experience
with other similar projects. In the case of most Objective
5b  projects,  which  are  on  a  small  scale  and  often  with
well-tried  content,  direct  assessment  by  regional  or  local
authorities  is  more  appropriate.  Application  of  different
rates  of  assistance  is  the  main  instrument  available  to
public  authorities  to  classify  operations  in  the  light  of
their  value  and  coherence  with  the  development  policies
in  force.  Structural  Fund  Regulations  allow  for  different
rates  and  the  Commission  can  understand  that  the  rates
may  differ  from  one  region  to  another.

the  administrative  law  and  budgetary  traditions.  They
have  changed  considerably  since  the  beginning  of  the
reform  of  the  Funds,  largely  thanks  to  experience  gained
from  the  first  programmes.

(a)  There  are  no  regulations  calling  for  documents  such
as  those  referred  to  by  the  Court.  In  1991  some
Objective  5b 
regions  had  published  brochures
describing the procedures for potential beneficiaries to
receive  Community 
information
aid; 
operations  became  general  during  the  1994  to  1999
phase.

similar 

(b) and  (c) The  standard  of  administrative  management
has  been  considerably 
information
technology,  as  regards  both  the  management  of
programmes  and,  in  general  all  administrative  and
business activities.

improved  by 

Monitoring  mechanisms

Financial monitoring

5.14. Currently,  EAGGF-Guidance  charges  payments
against 
the
the  oldest  commitments  still  open 
programme  concerned.  This  practice  is  transparent  and
reduces  the  burden  of  management  as  the  Commission
pointed out in its reply to the DAS on the 1996 financial
year  (21.4  of  the  report).  The  Commission  does  not
consider  that  this  practice  is  incompatible  with  the
Structural  Fund  regulations.

in 

5.15.
In  the  case  raised  by  the  Court,  the  Commission
considers  that  although  the  terms  used  are  not  always
clear,  these  operations  should  be  regarded  as  ‘payments
on  account’  and  not  as  ‘advances’.  They  are  in  fact
budgetary  advances  consisting  of  final  albeit  partial
payments  pending 
final  settlement  and  which
therefore  represent  payments  on  account  within  the
meaning  of  Article  46  of  the  Financial  Regulation.
Entering  these  advances  in  a  suspense  account  would
im-
considerably 
plementation  of  payment  appropriations  and,  secondly,
would  swell  the  volume  of  outstanding  liabilities  in
budgetary accounting.

level  of  budgetary 

reduce 

the 

the 

(d) It  is  true  that  Objective  5b  was  implemented  in  a
highly  decentralised  manner,  even 
the
Member State itself continued to be the Commission’s
ultimate 
im-
especially 
plementation.  Although  this  made  management  more
cumbersome,  on  the  other  hand  it  enriched  the
implementation  of  programmes  and  intensified  their
impact.

financial 

contact, 

though 

for 

5.18. The  Objective  5b  programmes  were  monitored  on
the  basis  of  physical  indicators  for  the  various  measures,
although  the  diversity  of  planned  operations,  well  suited
to the precise requirements of each area, made it difficult
to  determine  a  precise  indicator  and  particularly  to  draw
comparisons  with  operations  of  other  programmes.  The
standard of findings varied, depending on the complexity
of  the  programmes  and  the  efforts  deployed  by  the
monitoring  mechanism.  Although  the  problem  had
occurred in the case of the IMPs, in the case of Objective
5b  the  Commission  did  not  notice  any  particular
reluctance to supply details on the part of the authorities
responsible  for  implementation.  Rather  it  encountered
some reservations regarding the usefulness of the exercise,
given the difficulty of determining the right indicators. At
present, after several years of research into the theory and
practice  of  assessment,  the  specialised  institutes  continue
to regard the selection of indicators as one of the critical
aspects  of  assessment.

5.16. The  fact  that  from  the  point  of  view  of  budget
implementation  payment  of  the  balance  of  an  instalment
does  not  give  rise  to  a  cancellation  of  commitment  in  no
way implies that the payment is treated like the payment
of  an  advance.  On  the  other  hand,  the  balance  of  an
instalment  is  paid  when  the  Commission  receives  the
annual progress report and  the  management  departments
endorse  the  contents.

Physical monitoring

5.19. Physical monitoring of programmes can always be
improved  provided  the  effort  is  proportionate  to  the
resources  invested.  The  Commission  and  the  Member
States  are  endeavouring  to  improve  this  aspect  and
significant  progress  has  been  achieved  as  a  result  of  the
experience  in  the  first  phase.

5.17. The administrative arrangements for structural aid
vary  from  one  Member  State  to  another  depending  on

5.20. Most  Objective  5b  programmes  include  many
private  initiative  projects  where  implementation  depends

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C  356/37

on  unforeseeable  outside  factors  beyond  the  control  of
the  authorities  concerned.  Therefore  flexible  procedures
are  needed  for  the  replacement  of  projects.

5.21. The  Commission  is  checking  the  cases  referred  to
in  the  Court’s  sector  letters.

Technical assistance

the 

regards 

5.23. The  Commission 
operating
expenditure  of  the  public  authorities  as  eligible  only
when it is additional expenditure, i. e. on top of ordinary
expenditure  and  relating  to  specific  additional  statutory
requirements  stemming  from  the 
implementation  of
programmes.  The  Commission  is  examining  the  cases  in
question.

it 

is 

impracticable  and  not  even
5.24. Sometimes 
for  material
separate  appropriations 
relevant 
investment  proper  from  the  cost  of  management  and
incentives  needed  to  implement  a  measure.

to 

size 

and 

regards 
administrative  organisation  of
implementation.  This  was  a  pioneering  approach  to
evaluation  and  was  the  first  contact  with  well-known
evaluation  institutes  in  Europe,  and  amounted  to  a  real
testing  ground  for  the  evaluation  of  programmes  under
other  objectives.  The  contracts  for  21  ex  post  evaluation
studies  were  concluded  in  1994  and  were  completed  in
1994  and  1995.  They  covered  programmes  where  the
period  for  commitment  of  operations  had  ended,  and
therefore all eligible operations were known, even if they
were  not  all  completed.  If  the  evaluations  had  been
delayed any further they would not have highlighted and
passed  on  the  experience  of  completed  programmes  and
would  not  have  been  useful  in  the  preparation  phase  of
the  1994  to  1999  programmes.  The  national,  regional
and  local  authorities  were  first  notified  of  the  launch  of
the  evaluations  and  the  results  of  the  call  for  tender
issued  by  the  Commission  to  select  the  evaluators.  This
gave  the  authorities  the  opportunity  to  benefit  from  the
analyses,  particularly  since  direct 
investigations  of
beneficiaries of measures were carried out, which is quite
rare  in  evaluation  work  and  which  provided  first-hand
information.  A  seminar  was  held  in  Brussels  on  3  May
1995,  with  the  participation  of  all  the  authorities
responsible for implementation, to consider the results of
the  work.

considers 

including
5.25. The  Commission 
estimated  incentives  in operational  measures  is  consistent
with  the  principle  of  specification.  In  addition,  only
additional  administrative  expenditure  directly  generated
by  monitoring  programmes 
covered  by
Community  co-financing.

can  be 

that 

Audits

5.26. and 5.27. The Commission uses the limited human
and  material  resources  available  to  perform  as  well  as
possible  the  tasks  entrusted  to  it  by  the  Treaties.  If  more
controls  had  been  carried  out  on  Objective  5b
programmes  other  equally  necessary  activities  would
certainly  have  suffered.

5.29.  to  5.31. The  national  authorities  responsible  for
implementing  programmes  are  competent  to  decide  on
the  best  follow-up  to  audit  findings.  In  any  case
Regulation  (EC)  No  2064/97  will  place  more  emphasis
on  audit  services  carrying  out  controls  in  Member
States.

Evaluation

5.32. and 5.33. From the initial stages of the application
of  Objective  5b  the  Commission  has  paid  particular
attention  to  evaluating  the  impact  of  programmes.  In
1992 it commissioned a group of consultants to carry out
an 
strong
methodological  slant,  on  11  Objective  5b  projects,
selected  in  such  a  way  as  to  cover  the  different  types  as

intermediate  evaluation 

study,  with  a 

Transition  to  the  second  period

5.34. For  the  purposes  of  Objective  5b  rural  areas  must
be defined within NUTS III regions to make sure projects
are  concentrated  in  areas  most  in  need.  The  drawbacks
noted by the Court, especially as regards impact analyses,
are  overcome  by  evaluators  using  appropriate  methods.

5.35. The Commission hopes that the delay noted by the
Court  (19,6 %  against  forecasts)  will  be  made  up  in  the
remaining  two  years.

5.36. The  Court  notes  that  1995  was  a  bad  year  from
the  point  of  view  of  financial  implementation.  This  was
due to start-up difficulties with new programmes flowing
from  the  administrative  implementation  of  the  new
operations (approval of aid schemes, invitations to tender
to  implement  projects)  and  a  lack  of  awareness  on  the
part  of  potential  beneficiaries.

5.37. The  Commission  can  see  no  reason  why  an
operation  or  measure  should  not  extend  over  two
programming periods, provided the projects or individual
expenditure  can  be  properly  identified.

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Official  Journal  of  the  European  Communities

20.11.98

6.  CONCLUSION  AND  RECOMMENDATIONS

6.1. A substantial revision took place in the preparation
of  the  1994  to  1999  programming  phase,  with  the
introduction  of  SPDs,  which  brought  the  planning  and
programming  phases  together  into  a  single  operation.  As
stated  in  points  5.5  and  5.6  the  Commission  considers
that  programming  is  based  on  measures,  not  individual
projects  and  this  is  what  must  be  respected.  There  is
therefore no question of retroactive programming, nor of
the  introduction  of  expenditure  already  executed  where
the  selection  of  specific  projects  does  not  coincide  with
the  programming  timetable.

6.4. The  Commission  has  always  called  for  transparent
criteria  for  the  selection  of  projects  within  each  measure.
However,  under  the  co-financing  system  beneficiaries  are
selected  by  the  authorities  responsible  for  implementing
each  measure  in  accordance  with  requirements  and
priority  criteria  established  by 
the  administrative
provisions  authorising  public  intervention.

6.5. The  Commission  pays  the  balance  of  annual
instalments on the basis of expenditure statements sent in
by  the  Member  States,  after  checking  annual  reports  and
in  agreement  with  the  departments  participating  in  the
monitoring  of  programmes.  It  is  inevitable,  although  not
sought  for,  that  data  relating  to  the  final  balance  can  be
identified  only  when  the  preparatory  work  for  payment
of  the  balance  is  carried  out.

6.2. As noted in point 4.3, Commission Regulation (EC)
No  2064/97  provides  for  instruments  to  improve  the
reliability  of  certificates  along  the  lines  noted  by  the
Court.

6.6. Technical  assistance  can  also  play  a  useful  part  in
organising, 
informing  potential  beneficiaries,  disse-
mination  and  demonstration  which  serve  to  improve
programme implementation.

6.3. The Commission considers that the problems raised
by the Court in point 5.10 of its report are due to failure
to  observe  one  of  the  Articles  of  the  Decision  awarding
the  assistance.  As  soon  as  the  facts  were  established,  the
Commission  had  sufficient  legal  grounds  on  which  to
request  compliance  with  the  relevant  provisions.

6.7. Regulation  (EC)  No  2064/97  is  in  line  with  the
Court’s  recommendations  in  that  it  requires  Member
States  to  present,  at  the  latest  with  the  request  for  the
balance  for  each  operation,  a  declaration  by  an  external
auditor  including  a  statement  about  the  results  of  the
checks  made.