Special Report No 21/98 concerning the accreditation and certification procedure as applied to the 1996 clearance of accounts for EAGGF-Guarantee expenditure, together with the replies of the Commission (submitted pursuant to Article 188c (4) (2) of the EC Treaty)
Date: 1998-10-15
Institutions: European Court of Auditors
Subjects: EAGGF Guarantee Section, agricultural expenditure, budgetary control, closing of accounts, management accounting

14.12.98

EN

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I

(Information)

COURT  OF  AUDITORS

SPECIAL  REPORT  No  21/98

concerning  the  accreditation  and  certification  procedure  as  applied  to  the  1996  clearance  of
accounts  for  EAGGF-Guarantee  expenditure,  together  with  the  replies  of  the  Commission

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

(98/C  389/01)

TABLE  OF  CONTENTS

Paragraph(s)

Page

EXECUTIVE  SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1.  INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1.1 — 1.6

The  regulatory  context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1.1 — 1.5

The  Court’s  audit  scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1.6

2.  ACCREDITATION  OF  PAYING  AGENCIES . . . . . . . . . . . . . . . . . . . . . . . . .

2.1 — 2.11

Structural  development  of  paying  agencies . . . . . . . . . . . . . . . . . . . . . . . . . .

2.1 — 2.5

Significant accreditation criteria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2.6 — 2.7

Weaknesses  affecting  accreditation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2.8 — 2.11

3.  CERTIFICATION  OF  ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3.1 — 3.19

The  certifying  bodies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3.1 — 3.2

The  Commission’s  guidelines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3.3

Problems  and  delays  in  obtaining  certified  accounts . . . . . . . . . . . . . . . . . .

3.4 — 3.17

Problems  in  obtaining  data  on  the  amounts  to  be  recovered . . . . . . . . . . .

3.18 — 3.19

4.  THE  DECISIONS  CONCERNING  CLEARANCE  OF  ACCOUNTS  FOR
1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4.1 — 4.17

The  Commission’s  first  clearance  decision . . . . . . . . . . . . . . . . . . . . . . . . . .

4.1 — 4.2

The  Commission’s  second  clearance  decision . . . . . . . . . . . . . . . . . . . . . . . .

4.3 — 4.4

Modification  of  the  amounts  declared . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4.5 — 4.6

Adjustment  to  the  annual  declaration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4.7

Financial  corrections  made  by  the  responsible  finance  division . . . . . . . . .

4.8 — 4.17

Corrections  in  respect  of  late  payments . . . . . . . . . . . . . . . . . . . . . . . . . .

4.8 — 4.11

Corrections  for  various  items  of  ineligible  expenditure . . . . . . . . . . . . . .

4.12 — 4.17

5.  CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5.1 — 5.11

TABLES  1 — 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Replies  of  the  Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2

3

3

4

4

4

5

5

6

6

6

6

8

8

8

8

9

9

9

9

10

10

12

38

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EXECUTIVE  SUMMARY

New  procedures  were  applicable  for  the  first  time  to  the  accreditation  of  paying  agencies  and
the clearance of accounts concerning EAGGF-Guarantee expenditure for the budget year 1996.
The  Court  reviewed  and  evaluated  the  work  carried  out  by  the  Commission’s  services  and
checked  whether  the  new  rules  had  been  applied  properly.  The  new  procedures  should  be
evaluated  not  only  on  their  results  for  the  first  year,  but  also  on  the  initiatives  taken  in  the
meantime  by  the  Commission  and  Member  States  to  improve  the  situation.

Although Member States were required to accredit their paying agencies by 16 October 1995, at
the beginning of the 1996 financial year only 50 out of 66 paying agencies had been accredited.
90  paying  agencies  were  finally  accredited  in  1997,  some  of  them  being  responsible  for  very
little  expenditure.  Greater  efforts  should  be  made  by  some  Member  States  to  limit  the  number
of  paying  agencies.

The  Court’s  audit  in  1997  revealed  weaknesses  at  many  of  the  paying  agencies  visited.
Weaknesses  in  internal  control,  lack  of  security  for  EDP  systems  and  shortcomings  in  the
monitoring  of  delegated  services  by  the  paying  agencies,  as  well  as  in  the  accounting,  were
identified, shortcomings that should have led the Member States concerned to take appropriate
action.  Certified  accounts  were  supposed  to  be  forwarded  by  10  February  1997,  but  in  many
cases  the  Commission  found  that  the  certified  accounts  were  submitted  late  or  were
unsatisfactory. Two Member States, (United Kingdom and Greece), did not present any certified
account on time. In the case of Spain the certifying body did not manage to express an opinion
concerning  most  expenditure  incurred  at  regional  level  on  time,  and  it  was  later  audited  by
private  external  auditors.

To  assist  certifying  bodies  with  their  work  the  Commission  made  guidelines  concerning
certification  of  the  accounts  available  to  the  certifying  bodies,  but  that  was  done  too  late  (in
September  1996,  when  most  of  their  audit  work  should  have  commenced).  If  they  had  been
communicated  in  time,  a  number  of  misunderstandings  and  delays  could  have  been  avoided.

Because of the weaknesses and delays in some Member States, the clearance decision of 5 May
1997,  which  should  have  been  taken  by  30  April  1997,  according  to  the  Regulation,  covered
only  33 %  of  the  expenditure.  The  rest  was  cleared  under  the  decision  of  30  July  1997,  after
supplementary  auditing  work  had  been  carried  out  by  the  various  certifying  bodies.

In the end all of the certified accounts were cleared by the Commission, in spite of the varying
quality of the accounts presented. However, in this decision, the Commission did not take into
account most of the qualifications in the certificates totalling a minimum of ECU 43,3 million.
Furthermore  financial  corrections  of  ECU  77,3  million  previously  made  by  the  Commission’s
finance division in the context of its daily management of EAGGF-Guarantee expenditure were
reduced  to  ECU  55,1  million  in  the  clearance  decision.

The  decisions  of  clearance  of  accounts  taken  by  the  Commission  on  1996  expenditures  do  not
prevent  the  Commission  from  disallowing  amounts  at  a  later  date  on  the  basis  of  subsequent
compliance audits. Appropriate internal control procedures at the Commission must ensure that
corrections  are  adequately  documented  and  that  weaknesses  identified  will  be  systematically
followed  up  during  the  subsequent  compliance  audit.

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1.  INTRODUCTION

The  regulatory  context

1.1. 1996  was  the  first  year  of  the  implementation  of
the  new  procedures  for  the  certification  of  accounts  of
EAGGF  expenditures  and  the  accreditation  of  paying
agencies.  It  required,  both  from  the  Member  States  and
the  Commission,  great  efforts  to  adapt  themselves  to  the
new  legal  aspects.  The  new  procedures  should  not  be
evaluated  only  on  the  results  for  the  first  year.  The
Commission  has  pursued 
its  efforts  to  get  better
certificates,  especially  by  organising  meetings  with
certifying  bodies  and  by  issuing  new  practical  guidelines.
This  should  have  a  positive  impact  in  the  years  to
come.

1.2. Paying agencies are the designated authorities of the
Member  States  which  administer  EAGGF-Guarantee
measures  and  make  the  relevant  payments  to  the
beneficiaries.  Under  Regulation  (EEC)  No  729/70  of  21
April 1970 (1) the Commission reimburses,  on a monthly
basis,  the  amounts  spent  and  declared  by  the  agencies,
which  totalled  ECU  39 010,9  million  in  1996.

1.3. A  clearance-of-accounts  decision  determines  the
amount  of  each  Member  State’s  expenditure  that  is
recognised  as  being  chargeable  to  the  EAGGF-Guarantee
Section.  It  also  takes  into  account  any  reductions  and
suspensions  of  advances  for  the  year  in  question (2),
including  reductions  for  late  payments,  as  referred  to  in
the  second  subparagraph  of  Article  4(3)  of  Regulation
(EC)  No  296/96 (3).

clearance-of-accounts 

procedures  were
1.4. The 
modified  for  the  first  time  for  the  EAGGF  financial  year
1996 (4).  Council  Regulation  (EC)  No  1287/95  of  22
May  1995 (5)  (amending  Council  Regulation  (EEC)  No
729/70) and Commission Regulation (EC) No 1663/95 of
7  July  1995 (6)  introduced  the  following  new  rules (7):

(a)  only  expenditure 

incurred  by  accredited  paying
agencies  was  to  be  eligible  for  Community  financing;

(b) the  number  of  paying  agencies  within  each  Member
State was to be kept to a minimum; where more than

one  paying  agency  was  accredited,  a  coordinating
body  had  to  be  established;

(c) the  competent  Member  State  authorities (8)  were
required  to  accredit  their  paying  agencies  by  the
beginning  of  the  EAGGF  budget  year  1996;  before
accreditation  was  granted,  the  competent  authority
was  to  verify  that  the  paying  agency  fulfilled  the
stipulated  requirements (9);

sufficient  assurance  as 

(d) the  administrative  structure,  internal  controls  and
organisational  principles  of  the  paying  agency  must
its  proper
provide 
functioning; an internal audit department must ensure
that  its  system  of  internal  control  works  effectively,
and  a  technical  department  has  to  verify  the  facts  on
which  the  payments  to  beneficiaries  are  based;

to 

it  has  to  carry  out 

(e) a  certifying  body,  operationally  independent  of  the
paying  and  coordinating  agencies,  had 
to  be
appointed;  this  certifying  body  must  certify  that  the
annual  accounts  of  the  paying  agency  are  true,
complete  and  accurate; 
its
examinations 
internationally
in  accordance  with 
accepted auditing standards. According to Article 3 of
Commission  Regulation 
the
certificate  has  to  be  based  on  an  examination  of
procedures  and  of  a  sample  of  transactions.  It  is  to
cover  compliance  of  payments  with  Community  rules
only  as  regards  the  capability  of  the  paying  agencies’
such
administrative 
compliance  has  been  verified  before  a  payment  is
made;

(EC)  No  1663/95, 

structures 

ensure 

that 

to 

(f)  the  clearance-of-accounts  decision  does  not  prevent
the  Commission  from  disallowing  expenditure  at  a
later  date  whenever  it  finds  that  expenditure  has  not
been  effected  in  accordance  with  Community  rules.
Such  disallowances  are  in  principle  the  subject  of
separate  Commission  decision  to  exclude  expenditure
which  does  not  comply  with  Community  rules
(compliance decision). However, this kind of decision
cannot  apply  to  expenditure  incurred  more  than  24
months  prior 
the  Commission’s  written
communication  to  Member  States  in  this  regard.

to 

to 

annual
1.5. According 
EAGGF-Guarantee  accounts  and  the  certificates  and
reports  of  the  certifying  bodies  were  to  be  sent  to  the
Commission  by  10  February  of  the  following  year.  The

the  Regulation, 

the 

(1)  OJ  L  94,  28.4.1970,  p.  13.
(2)  See  Commission  Regulation  (EC)  No  896/97  of  20  June
1997  amending  Commission  Regulation  (EC)  No  1663/95
(OJ  L  182,  21.5.1997,  p.  8).

(3)  OJ  L  39,  17.2.1996,  p.  5.
(4)  16.10.1995  to  15.10.1996.
(5)  OJ  L  125,  8.6.1995,  p.  1.
(6)  OJ  L  158,  8.7.1995,  p.  6.
(7)  See  also  opinion  of  the  Court  of  Auditors  No  5/94  of  15

December  1994,  OJ  C  383,  31.12.1994.

(8)  The  authority  responsible  is  the  authority  granting  the
accreditation,  which  is  the  Ministry  of  Agriculture  in  most
Member  States.  In  Germany  and  Spain  the  authorities
responsible 
included  the  authorities  of  the  Länder  or
autonomous  regions.

(9)  Provisional  accreditation  is  possible  in  cases  where  problems
arise 
fulfilling  accreditation  criteria.  The  authority
responsible  has  to  fix  a  time  limit  for  improvement  in  the
light  of  the  seriousness  of  the  problem(s)  detected.

in 

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Commission  had  to  communicate  to  the  Member  States
the results of its verification of the information submitted
by  31  March  and  to  take  its  decision  concerning  the
clearance  of  the  accounts  by  30  April.  However,  two
decisions  concerning  the  clearance  of  accounts  for  1996
were  adopted  by  the  Commission,  on  5  May  1997 (10)
and  on  30  July  1997 (11),  owing  to  the  fact  that  some
paying  agencies  and  certifying  bodies  could  not  meet  the
deadlines  for  the  presentation  of  their  certified  accounts
and  that  the  Commission  asked  for  some  extra  work  to
be  done  by  certain  certifying  bodies.  Such  an  evaluation
of  the  work  of  certifying  bodies  is  inevitable  if  reliance
has to be put on the work of other auditors. No decision
to  disallow  expenditure  incurred  in  contravention  of
Community  rules  has  yet  been  taken  under  the  new
system.

The  Court’s  audit  scope

1.6. The  Court  checked  whether  the  new  rules  on  the
accreditation  of  paying  agencies  and  the  certification  of
accounts  had  been  applied  properly.  Particular  attention
was  paid  to  the  respect  of  accredition  criteria  by  the
Member  States,  the  functioning  of  the  internal  audit  unit
of the paying agencies as well as the certificates issued by
the  certifying  bodies.  Furthermore,  the  Court  reviewed
and evaluated the work done by the Commission services
in  the  context  of  its  two  clearance  of  accounts  decisions
on  1996.

2.2. One  of  the  objectives  of  the  new  regulation  was  to
limit  the  number  of  paying  agencies.  However,  the
number  of  accredited  paying  agencies  stood  at  90  in
1997.  The  Court  considers  that  greater  efforts  should
have  been  made  to  comply  with  this  objective,  in
particular  as  concerns  the  accreditation  of  additional
regional  paying  agencies  in  a  number  of  Member  States.

2.3.
In some cases, the Ministries of Agriculture granted
accreditation to units within the Ministry (Belgium, some
German  Länder,  in  most  of  the  Spanish  regions,  Ireland,
Austria  and  Finland).  France  (with  the  exception  of  the
services  de´concentre´s)  and  the  Netherlands  maintained
centralised  paying  agencies  for  the  various  agricultural
sectors.  Germany  established  paying  agencies  in  each  of
the  Länder  and  some  Länder  even  established  several
paying  agencies (14). 
In  1996  Spain  accredited  17
additional  regional  paying  agencies (15).  The  United
Kingdom  accredited 
for
England,  Wales  (2  agencies),  Scotland  and  Northern
Ireland.  Some  Member  States  including  Belgium  and
Austria (see Table 1) regionalised only a small portion of
the  Guarantee  expenditure.  In  nearly  all  Member  States,
although  payments  may  be  effected  at  central  level,
regional authorities play an important role in the control
and  administration  of  the  various  aid  schemes.

separate  paying  agencies 

2.  ACCREDITATION  OF  PAYING  AGENCIES

Structural  development  of  paying  agencies

2.1. All  paying  agencies  should  have  been  accredited  by
16  October  1995,  but  at  that  date  only  50  out  of  66
paying agencies had ben accredited, and most of them on
a  provisional  basis.  With  regard  to  the  1996  payments,
80  agencies  were  finally  accredited,  even  though  some  of
them  were  responsible  for  very  limited  expenditure.  One
paying  agency  did  not  declare  any  expenditure  at  all  in
1996  and  two  declared  less  than  ECU  100 000 (12).  Five
paying  agencies  accounted  for  nearly  half  of  the  total
expenditure (13) and 25 agencies accounted for more than
90 %  of  the  expenditure  (see  Table  1).

2.4. Council  Regulation  (EC)  No  1287/95  (amending
Regulation  (EEC)  No  729/70)  stipulates  that  the  paying
agency  shall  execute  the  payments  to  final  beneficiaries.
No  delegation  is  provided  for.  Although  five  German
Länder 
(Baden-Württemberg,  Brandenburg,  Hessen,
Lower Saxony and Saxony) accredited their Ministries of
Agriculture  as  paying  agencies,  most  of  the  payments
were  made  by  other  public  bodies  within 
the
administration of the Länder. In Spain, the paying agency
FEGA  claimed  for  payments  which  had  actually  been
made  directly  by  a  number  of  regional  authorities  that
had  not  been  accredited  paying  agencies  in  1996.  The
French  central  paying  agency,  services  de´concentre´s  du
Tre´sor  et  du  Ministe`re  de  l’agriculture,  de  la  peˆche  et  de
l’alimentation,  does  not  make  any  payments  centrally

(10) Commission Decision 97/316/EC of 5 May 1997 (OJ L 138,

29.5.1997,  p.  24).

(11) Commission decision 97/609/EC of 30 July 1997 (OJ L 245,

9.9.1997,  p.  25).

(12) Germany  —  Bavaria:  StMLU;  Austria  —  Vorarlberg:

Landesamt;  Netherlands:  MVO.

(13) The  largest  agencies  in  terms  of  expenditure  claimed  during
1996  were  AIMA  (Italy),  FEGA  (Spain),  ONIC  (France),
IBEA  (United  Kingdom)  and  GEDIDAGEP  (Greece).

(14) The  authorities  of  the  German  Länder  are  also  the
authorities  responsible  for  granting  accreditation  to  their
paying  agencies  (Annex  II  to  Council  document  4427/95  on
the  Coreper  meeting  of  18.1.1995  concerning  declarations).
(15) Three  of  the  17  new  agencies  had  already  started  operating
as  paying  agencies  in  1996  (Catalonia  and  Basque  Country
Navarre),  whereas  the  remainder  started  operating  as  of  the
budget  year  1997.

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since  they  are  made  at  regional  level  by  each  of  the
De´partements,  which  are  not  accredited.

(f)  inadequate  computer  security;

2.5. The minutes of the Council of Ministers meeting of
26 January 1995, Annex II (16), allows paying agencies in
the  German  Länder  to  delegate  the  execution  of  certain
payments,  notably 
to
(Vorschuß-
imprest-account  managers 
additional 
verwalter).  Commission  Regulation  (EEC)  No  1663/95
does  not  provide  for  the  delegation  of  the  payment
function  to  other  bodies.

for  accompanying  measures, 

Significant accreditation criteria

by 

for 

authorities 

responsible 

2.6. The 
granting
accreditation  are  decided  by  the  Member  States.  Neither
the authority responsible nor the paying agency has to be
the  Commission (17).  Commission
approved 
Regulation  (EC)  No  1663/95  stipulates  that  Article  4(4)
of  Council  Regulation  (EEC)  No  729/70  shall  be  applied
in  case  of  non-respect  of  any  criteria  of  significant
relevance  to  the  paying  agency’s  operation.  According  to
this  Article  responsible  authorities  may  not  grant  or
maintain  accreditation  when  one  or  more  of  the
conditions  for  accreditation  are  not,  or  are  no  longer,
fulfilled,  unless  the  paying  agency  makes  adjustments
within  a  time  limit.  Its  duration,  as  well  as  the  length  of
the  provisional  accreditation,  has  to  be  decided  by  the
authority  responsible  in  the  light  of  the  problems  found.
The  Regulation  does  not  specify  a  time  limit.

in  a
2.7. These  significant  criteria  are  described 
Commission  working  document, 
to  assist
certifying bodies and accreditation authorities to evaluate
the  seriousness  of  deficiencies  found, (18)  as:

intended 

(a)  lack  of  written  procedures;

(b) inadequate  or  absence  of  segregation  of  duties;

(c)  failure  to  implement  pre-payment  checks;

(d) lack  of 

satisfactory  payment  and  accountancy

procedures;

(e)  unsatisfactory accounting procedures, such as the lack
of  audit  trail,  weaknesses  in  debtors  ledgers  and
accounting  for  intervention  stocks;

(16) The  Council,  Agrifin  12,  Fin  30,  4427/95  of  26  January
1995: Results of the Committee of Permanent Representative
Work  on  18  January  1995.

(17) The  Court’s  suggestion  was  not  taken  into  account  (see
Opinion  No  5/94  of  15  December  1994,  OJ  C  383,
31.12.1994).

(18) Working  Document  VI/5168/96  (rev.1),  ACC  83  c.

(g) non-functioning  of  internal  audit;

(h) lack  of  agreements  governing 
functions  and/or  technical  services.

the  authorisation

Weaknesses  affecting  accreditation

2.8. The  act  of  accreditation  does  not  require  formal
approval by the Commission. However, to check whether
the  applicable  conditions  were  met  in  respect  of  1996,
the Commission visited 36 paying agencies, concentrating
on  the  most  important  ones  (more  than  80 %  of  the
expenditure was covered). The visits revealed weaknesses
which  should  have  prevented  the  granting  of  full
accreditation. Typical weaknesses (19)  reported  concerned
the  accounting  and  EDP  systems,  which  were  either
inadequate  or  insecure,  as  well  as  deficiencies  in  the
internal  procedures  and  controls.  Table  2  indicates  the
weaknesses  reported  in  this  respect.

2.9. Criteria  of  significant  relevance  were  not  officially
communicated to the Member States until September and
October  1996,  one  year  after  the  initial  deadline  for
accreditation, when the EAGGF financial year had nearly
ended  and  paying  agencies  had  already  been  accredited.
However, this does not excuse the authorities responsible
in  the  Member  States  from  not  having  carried  out  their
responsibilities properly.

2.10. Even  in  1997  many  of  the  reported  problems
remained unsolved. Up to the end of 1997 only Italy had
withdrawn  the  accreditation  of  one  paying  agency (20)
which  was  only  responsible  for  one  particular  measure.
The  responsibility  for  this  measure  has  been  transferred
to  the  central  paying  agency  AIMA  in  order  to  meet  the
organisational requirements.

2.11. The  Court  audit,  carried  out  in  1997,  confirmed
the Commission’s findings (see Table 3). Although paying
agencies’ systems had generally improved, there were still
major  shortcomings  at  nearly  all  of  the  agencies  visited.
lack  of  EDP  security  and
Weak 
inadequate  monitoring  by 
the  paying  agencies  of
delegated  services,  as  well  as  accounting  problems,  were

internal  control, 

(19) Working  Document  VI/8950/96  of  19  November  1996:
Report on the application of Regulation (EC) No 1663/95 in
respect  of  the  accreditation  of  paying  agencies.

(20) The  responsibilities  of  the  paying  agency  IGFOR  (Ministero

del  Tesoro)  have  been  transferred  to  AIMA.

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identified. These ought to have led to the application, by
the  Member  States  concerned,  of  Article  4(4)  of
Regulation  (EEC)  No  729/70,  i. e.  the  withdrawal  of
accreditation  by  the  authorities  concerned  or  immediate
remedial action.

3.  CERTIFICATION  OF  ACCOUNTS

The  certifying  bodies

3.1. The  legal  status  of  the  certifying  bodies  in  the
Member  States  varies  significantly.  National  audit
institutions,  other  public  bodies,  internal  audit  units  and
also  private  external  auditors  were  appointed  for  this
purpose  (see  Table  1).

3.2. The  independence  of  certifying  auditors  is  a  basic
requirement  of  international  audit  standards.  According
to Regulation (EC) No 1663/95 the certifying body must
be  operationally  independent  of  the  paying  agency.
However,  the  internal  audit  unit  of  the  Danish  paying
agency  was  appointed  as  the  certifying  body.  This
approach  was  also  taken  in  the  case  of  several  German
and Austrian paying agencies. Internal audit units are not
by definition independent vis-à-vis the paying agencies to
which  they  belong,  particularly  when  they  form  part  of
its  hierarchical  structure.  However,  the  Commission
accepted  this  situation.

The  Commission’s  guidelines

3.3. Commission  Regulation  (EC)  No  1663/95  provides
criteria  of  a  very  general  nature  as  regards  the  certificate
and  the  related  audit  report.  The  Commission  only
these
communicated  detailed  guidelines  concerning 
criteria for an experts group meeting in September 1996.
However,  the  final  version  was  distributed 
in  all
languages  to  the  certifying  bodies  only  in  December
1996, at a time when part of the audit work had already
been  carried  out (21).  Accordingly,  these  guidelines  —
which  are  seen  as  very  useful  by  the  certifying  bodies  —
had only a limited impact on the 1996 certificates, which
provides  a  part  of  the  explanation  for  the  weaknesses
found  in  many  audit  reports  and  the  unsatisfactory
certification  work  carried  out  in  connection  with  the
1996  accounts  which  are  described  below.

(21) According  to  the  Commission’s  guidelines  on  the  certificate
concerning 
expenditure,
materiality  should  be  in  the  range  of  0,5  to  1  %  with  a
confidence level of 95 %. The minimum materiality reporting
level  was  fixed  at  ECU  50 000.

agencies’  1996 

the  paying 

Problems  and  delays  in  obtaining  certified  accounts

to  be 

submitted 

(EC)  No  1663/95 

stipulates 
to 

that
3.4. Regulation 
certified  accounts  have 
the
Commission  by  10  February  1997.  The  deadline  was
respected by most paying agencies, but in many cases the
information  was  incomplete  or  the  extent  of  the  audit
insufficient.  The  Commission  was  consequently  not  in  a
position to accept the certificates and/or the audit reports
as  the  basis  for  the  clearance-of-accounts  decision.  It
therefore  requested  that  supplementary  work  be  carried
out,  which  many  paying  agencies  and  their  certifying
bodies  were  unable  to  perform  in  time  for  the  first
clearance-of-accounts  decision  on  5  May  1997.  The
Commission  fixed  a  later  deadline,  towards  the  end  of
June  1997.  A  second  clearance-of-accounts  decision  was
taken  on  30  July  1997.

3.5. The  internal  German  guideline  for  the  certification
audit  in  the  German  Länder  allowed  the  sample  to  be
limited to covering only certain categories of expenditure.
Although this guideline had been sent to the Commission
early in 1996, the Commission did not react at that time.
The accounts and certificates were finally accepted by the
Commission  because  additional  audit  work  had  been
carried out at its request and finalised in time for the first
clearance decision, with the exception of the accounts for
Saxony  and  Rheinland-Pfalz,  which  were  cleared  under
the  second  clearance  decision.

3.6.
In  October  1997,  the  Court’s  audit  of  the  accounts
of  three  German  Länder  (Lower  Saxony,  Saxony-Anhalt
and  Schleswig-Holstein)  revealed  reconciliation  problems
in  the  area  of  co-financed  measures.  In  addition,  in  the
case  of  the  Land  of  Saxony-Anhalt,  an  unqualified
certificate was issued even though the certifying body had
questioned  the  eligibily  of  an  amount  of  DEM  13,8
million  (approximately  ECU  6,8  million)  in  its  report.

3.7. The certified accounts for Greece were not delivered
until  the  middle  of  April  1997,  hence  the  corresponding
expenditure  could  not  be  taken  into  account  in  the  first
clearance decision of 5 May. The accounts did not reflect
the  results  of  the  certification  audit,  so  the  Commission
corrected  them  and  they  were  cleared  under  the  second
decision  of  30  July  1997.

3.8. With  regard  to  Spain,  the  certification  reports
revealed  serious  problems  and  the  Commission  asked  for
additional  audit  work  to  be  carried  out:

(a)  in  the  case  of  the  paying  agency  FEGA  (declared
expenditure  ECU  4 196,4  million), 
substantive
amounts  were  not  certified  because  the  certifying

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body had not been able to examine the procedures for
payments  of  ESP  507 000  million  (approximately
ECU  3  165  million)  made  at  regional  level  on  behalf
of  the  paying  agency.  Furthermore,  no  information
was  available  concerning  checks  on  export  refunds
and  technical  services;

that  additional  audit  work  be  carried  out  by  the
certifying bodies. The revised reports issued in June 1997
revealed  two  main  problems:

(a) with  regard  to  AIMA,  the  correctness  of  the  alcohol

stocks;

(b) with  regard  to  the  paying  agencies  DGDR  (declared
expenditure  ECU  43,6  million)  and  FROM  (declared
expenditure  ECU  2,0  million),  the  certifying  body
could not express an opinion on expenditure incurred
by  the  regions  on  the  paying  agencies’  behalf;

(c)  as  for  the  region  of  Catalonia  (declared  expenditure
ECU  71,2  million),  the  Commission  requested  that
supplementary  audit  work  be  carried  out  and  the
sample  size  increased (22).

3.9. After additional confirmation had been provided by
the  Spanish  authorities,  all  of  the  amounts  were  finally
cleared  under  the  second  clearance  decision.

3.10. To  cope  with  the  problems  connected  with
expenditure  claimed  by  FEGA,  FROM  and  DGDR,  but
managed  and/or  paid  at  regional  level,  the  Spanish
authorities had appointed a private auditing firm to audit
additional samples at regional level in June 1997. On the
basis  of  its  final  report,  dated  7  July  1997,  all  of  the
expenditure  claimed  was  certified  by 
the  Spanish
authorities on 11 July 1997 and 15 July 1997. However,
the  Court’s  audit  of  September  1997  revealed  that  there
was no evidence of reconciliation between final payments
by  autonomous  regions,  the  data  in  the  accounts  of
FEGA and the amounts claimed from the Commission on
the  basis  of  funds  transferred  to  regions.

In  France 

the  certifying  body  only  became
3.11.
operational 
in  October  1996,  but  even  then  was
under-staffed. The first certificate issued was based solely
on  a  review  of  reports  concerning  the  systems  and  not
samples  of  transactions,  as  required  under  Regulation
(EC)  No  1663/95.  This  situation  was  brought  to  the
attention  of  the  Commission  by  the  French  authorities.
Complementary  audit  work  based  on  the  testing  of
transactions  was  therefore  requested  by  the  Commission,
and  the  corresponding  reports  were  made  available  in
time  for  the  second  clearance  decision.

3.12.
In  the  case  of  three  paying  agencies  in  Italy
(AIMA,  DCCC  and  IGFOR)  the  Commission  requested

(22) The  initial  certificate  was  based  on  40  samples.  The  second
document,  following  supplementary  audit  work,  was  based
on  1  661  samples.

(by 

(b) in  the  case  of  DCCC,  the  revised  audit  report
mentions  that  the  sample  size  —  determined  on  the
basis  of  a  confidence  level  of  95 %  —  amounted  to
1 112  transactions.  This  initial  sample  size  had  been
reduced 
the
following  grounds:  20 %  for  existing  routines,  20 %
for  the  staff’s  lengthy  experience,  20 %  for  the  staff’s
professionalism,  20 %  because  of  existing  internal
controls and 12 % because of the EDP support) to 93.
The  Commission  did  not  question  these  calculations
and  cleared  the  certified  accounts;

following  percentages  on 

the 

3.13. Furthermore,  Italy  claimed  expenditure  on  behalf
of  the  Ministry  of  Agriculture,  which  was  not  an
accredited  paying  agency.  The  Commission  nevertheless
accepted  the  claimed  amount  of  ITL  1 895 331 293
(ECU 997 977,43)  in  its  second  decision  concerning  the
clearance  of  the  accounts.

3.14. The  accounts  presented  by  the  Austrian  paying
agency  AMA  were  cleared  after  additional  audit  work
had  been  carried  out.  However,  the  Court’s  audit  in
October  1997  revealed  weaknesses  and  problems  with
the  reconciliation  of  the  amounts  claimed  from  the
EAGGF-Guarantee  and  the  bank  accounts,  owing  to  the
various  amounts  that  had  been  recovered  by  off-setting.
These  latter  amounts  need  to  be  distinguished  from
recoveries  made  by  off-setting  in  the  national  accounts.

3.15. The Commission also asked the certifying body in
Portugal to carry out additional audit work because only
30 % of the sample transactions had been audited by the
certifying  body,  owing  to  a  lack  of  time.  The  amounts
were  finally  cleared  following  supplementary  audit  work
by  the  certifying  body.

3.16. The paying agencies in the United  Kingdom  could
not  deliver  reconciled  annual  accounts  and,  as  a
consequence,  the  certifying  body  could  not  issue  any
certificate  on  time.  The  corresponding  documents  were
sent  to  the  Commission  in  June  1997,  followed  by  some
supplementary  information  in  July  1997.  The  necessary
adjustments  to  the  accounts,  identified  by  the  certifying
body,  had  not  been  made  by  the  paying  agencies,  hence
the  Commission  corrected  the  latter’s  accounts  in  its
clearance decision.

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3.17. The  audit  by  the  Court  in  September  1997 (23)
confirmed  the  persistent  weaknesses  in  the  accounting
systems  of  the  paying  agencies  mentioned  by  the
certifying  body  :

(a)  the  failure  to  keep  separate  accounts  in  respect  of

EAGGF  expenditure;

(b) the non-submission by each paying agency of periodic
summaries  of  expenditure,  including  the  monthly
declaration  to  the  Commission (24);

(c)  the  absence  of  debtors’  ledgers  and  the  lack  of
effective  procedures  to  ensure  that  all  payments  for
which  transfers  are  not  executed  or  cheques  are  not
cashed  and  amounts 
recovered  are  promptly
re-credited  to  the  Commission.  The  Scottish  paying
agency  did  not  reallocate  the  amounts  for  uncashed
cheques  to  the  Commission’s  accounts.  Since  there
were  no  specific  accounting  records  available,  the
amounts  in  question  could  not  be  quantified.

Problems  in  obtaining  data  on  the  amounts  to  be
recovered

3.18. The  guideline  annexed  to  Commission  Regulation
(EC)  No  1663/95  stipulates  that  the  accounts  are  to
record  debtors.  This  is  a  criteria  for  accreditation.
However, in 1996 most paying agencies were not able to
identify  the  total  of  the  amounts  to  be  recovered,  either
because a debtors ledger did not exist or information was
not  held  centrally.

3.19. The  Commission  then  asked  Member  States  to
submit, with the April 1997 declaration of expenditure, a
table (Table 105) indicating the amounts to be recovered.
No information was submitted by Germany, Finland and
Portugal.  Incomplete  information  was  submitted  by  the
Netherlands  (one  paying  agency  was  missing)  and  by  the
United  Kingdom  (the  data  for  the  five  largest  paying
agencies  were  missing) (25).  The  Austrian  paying  agency
AMA  was  able  to  quantify  the  amounts  recovered,  but
not  the  amounts  outstanding.  The  largest  amount  to  be
recovered  was  notified  by  the  Italian  paying  agency
DCCC:  ITL  443  150  254  004  (about  ECU  220  million),
98 %  of  which  is  accounted  for  by  cases  subject  to  legal
proceedings.

(23) The  Court’s  audit  concerned  the  paying  agencies  SOAFD
(Scotland),  MAFF  (England)  and  the  International  Board
(United  Kingdom).

(24) A statement has been issued to the effect that separate claims
may  only  be  submitted  from  the  EAGGF  budget  year  1998
onwards.

(25) The  total  debtors  figure  for  the  paying  agencies  that
submitted  their  records  amounted  to  ECU  489  million.

4.  THE  CLEARANCE-OF-ACCOUNTS  DECISIONS  FOR

1996

The  Commission’s  first  clearance  decision

In  the  first  clearance-of-accounts  decision (26)  the
4.1.
Commission  accepted  all  expenditure  claimed  by
Belgium,  Denmark, 
Luxembourg,  The
Ireland, 
Netherlands,  Austria,  Finland  and  Sweden,  and  most  of
the  expenditure  for  Germany.  In  Italy’s  case,  only  the
expenditure  claimed  by  one  small  paying  agency  (Ente
Risi) was accepted, whereas for Spain only the claims for
the regions of Navarre and Basque Country were cleared.
For the remaining paying agencies either additional audit
work,  requested  by  the  Commission,  was  pending  or  the
accounts  were  not  sent  in  time.

4.2. The  Commission’s  first  decision  concerning  the
integrality,  exactitude  and  veracity  of  the  accounts
therefore  covered  only  ECU  12 931,9  million,  or  some
33 %  of  the  total  expenditure  of  paying  agencies  for  the
financial  year  1996.

The  Commission’s  second  clearance  decision

to 

regard 

the  other  paying  agencies
4.3. With 
(representing 67 % of the total expenditure declared), the
clearance-of-accounts  decision  was  taken  on  30  July
1997 (27).  With  the  exception  of  certain  adjustments  and
corrections  indicated  below,  all  certified  accounts  were
cleared  by  the  Commission.  However,  the  Commission
did  not  include  in  the  amounts  disallowed  most  of  the
qualifications  in  the  certificates  totalling  a  minimum  of
ECU  43,3  million.  The  analysis  of  the  weaknesses
detected by the certifying bodies in the paying agencies is
shown  in  Table  4.

4.4. The  two  decisions  do  not  prevent  the  Commission
from  disallowing  expenditure  at  a  later  date  on  the  basis
of  subsequent  compliance  audits.  Such  a  disallowance
may  not  involve  expenditure  effected  prior  to  24  months
preceding  the  Commission’s  written  communication  of
the  results  of  its  checks.  To  date,  no  clearance  of
accounts  decision  based  on  this  compliance  audit  has
been  taken  by  the  Commission.

(26) Commission Decision 97/316/EC of 5 May 1997 (OJ L 138,

29.5.1997,  p.  24).

(27) Commission Decision 97/609/EC of 30 July 1997 (OJ L 245,

9.9.1997,  p.  25).

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Modification  of  the  amounts  declared

4.5. The  sole  amendments  that  were  made  to  amounts
claimed 
into
account  by  the  Commission  were:

in  the  annual  declarations  and  taken 

(a)  adjustments  to  the  annual  declarations,  in  order  to
adapt  the  declared  amounts  to  the  amounts  certified;

(b) financial corrections made by the Commission finance

division  responsible  in  respect  of:

(e) as  regards  the  United  Kingdom,  negative  adjustments
of  GBP  7 411 866,51  (approximately  ECU  10,9
million)  were  made  in  order  to  reconcile  the  paying
agencies’s data with the certified accounts and to take
into  account  various  amounts  previously  considered
ineligible  by  the  Commission.

Financial  corrections  made  by  the  finance  division
responsible

(i)  late payments;

Corrections  in  respect  of  late  payments

(ii) various  items  of  ineligible  expenditure  in  the

monthly declarations.

in 

the 

cases 

4.6. Moreover, 
financial
some 
corrections (28)  were  sometimes  amended  again  by  the
Commission  department  responsible  for  the  clearance  of
accounts (29).  The  absence  of  a  clear-cut  procedure  in  a
system  involving  several  Commission  departments  for
successive  corrections  has  led  to  confusion  and  a  lack  of
transparency.

Adjustment  to  the  annual  declarations

4.7. Member  States’  accounts  were  adjusted  by  the
Commission  as  follows:

(a)  with 

an 

regard 

amount 

to  Greece, 

of
GRD 148 393 325 (approximately ECU 480 000) was
deducted  by  the  Commission,  mainly  because  of
discrepancies 
storage.  This
concerning  public 
deduction  by  the  Commission  is  far  greater  than  the
corrections  suggested  by  the  certifying  body  -  GRD
21 202 319  (approximately  ECU  68 000);

(b) In  Spain’s  case,  an  amount  of  ESP  10 219 598
(approximately  ECU  60 000)  was  added  to  take  into
account  an  amount  declared  as  a  correction  to  the
annual  declaration  by  the  Spanish  authorities;

(c)  in  the  case  of  the  Netherlands,  NLG  411 675
(approximately  ECU  190 000)  were  deducted  to
adjust 
the  amounts
certified;

the  amounts  declared 

to 

(d) as  for  Portugal,  the  Commission  did  not  accept  a
claim for interest of PTE 294 990 678 (approximately
ECU 1,5 million) under Regulation (EC) No 2975/95,
as  the  legal  basis  was  no  longer  valid;

4.8. Commission  Regulation  (EC)  No  296/96  stipulates
that  advances  to  Member  States  for  expenditure  made
after  the  deadlines  laid  down  in  the  corresponding
regulations  shall  be  reduced  by  between  10 %  and
100 %, depending on the delays involved. There is a 4 %
threshold  up  to  which  no  reduction  is  made.  The
Commission  can,  however,  apply  smaller  reductions  in
exceptional circumstances or for justified reasons. Checks
on compliance with the deadlines are made three times a
year  (31  January,  30  April  and  31  August)  on  the  basis
of  the  Member  States’  declarations.  However, 
late
payments  in  September  and  during  the  first  half  of
October  are  to  be  included  in  the  clearance-of-accounts
decision,  except  where  they  are  noted  before  the  final
decision  concerning 
to
advances  is  issued (30)  and  therefore  booked  only  in  the
accounts  of  year  ‘n+1’.  This  procedure  conflicts  with  the
principle  of  budget  annuality.  The  amount  involved  is
ECU  4,5  million.

financial  year  relating 

the 

4.9. Table  5  shows  the  financial  corrections  for  late
payments  for  1996  that  were  included  in  the  second
clearance-of-accounts decision.

in  a 

4.10. With  regard  to  Italy, 
letter  dated  23
December  1996,  the  Commission  made  a  commitment
not  to  impose  penalties  in  respect  of  late  payments
connected  with  all  per-hectare  subsidies,  which  totalled
ITL  66 634 270 561  (approximately  ECU  33,5  million),
because the delays were due mainly to additional controls
being  carried  out  at  the  Commission’s  request (31).

In 

the  case  of 

the  United  Kingdom, 

4.11.
the
Commission  applied  a  negative  correction  of  GBP
177 683,03  (approximately  ECU  0,3  million)  for  late
payments.  It  should  be  noted  that  this  calculation  might
be affected by the fact that the United Kingdom declared
its  expenditure  on  the  basis  of  fundings  and  not  on  the
actual  payments  which  are  made  later.

(28) Division  DGVI/G/2:  Management 

of 

agricultural

expenditure.

(29) Division  DGVI/A1/3:  Clearance  of  accounts.

(30) Article  4(3)  of  Commission  Regulation  (EC)  No  296/95.
(31) No provision was made in the accounts for this Commission
commitment  (observed  by  the  Court  in  the  context  of  the
DAS  1996).

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Corrections  for  various  items  of  ineligible  expenditure

4.12. Some  ECU  27,3  million  was  rejected  as  late  as  14
July 1997,  although  a  corresponding  decision could have
been  taken  earlier,  and  at  least  before  the  first  clearance
of  accounts  decision (32).  Other  amounts  were  rejected
during  1996.  Although  the  clearance  decision  should
reflect these amounts, the Court’s audit revealed that this
was not always the case. Table 6 provides an overview of
the  financial  corrections  made  in  the  context  of  the
clearance-of-accounts decision.

4.13. With  regard  to  Denmark,  a  negative  correction  of
(aproximately  ECU  380 000)
DKK  2 873 870,96 
established  on  14  July  1997  in  respect  of  public  storage
of  bread-making  wheat  was  not  deducted  under  the
clearance  decision  because  the  Danish  accounts  had
already  been  cleared  under  the  first  decision  of  5  May
1997.  The  Commission  therefore  omitted  to  make  a
correction  under  the  second  clearance  decision.

4.14. For public storage in Italy, there were uncertainties
as  to  the  exact  amounts  to  take  into  account  in  the
clearance  decision.  Total  expenditure  may  be  around
finally
ECU  0,4  million 
reimbursed  by  the  Commission.  A  compliance  audit
should  be  carried  out 
the  correct
amount (33).

to  establish 

the  amount 

lower 

than 

by 

finally 

covered 

that  were 

4.15. The  evaluation  of  the  various  calculations  and
amounts 
the
clearance-of-accounts decision revealed that the approach
applied  prior  to  the  decision  being  taken  was  not  always
consistent.  Furthermore,  there  was  an  apparent  lack  of
documentation  justifying  the  second  clearance  decision,
partly  due  to  extreme  time  pressure  and  the  limited
number of staff assigned to this task. Lastly, the amounts
declared  were  cleared,  despite  the  existence  of  qualified
certificates  or  the  weaknesses  described  in  the  audit
reports.

(32) The  amounts  in  question  concern  corrections  for  Denmark
(-DKK  2  873  870,96,  approximately  ECU  0,4  million),
France  (-  FRF  2  540  376,36,  approximately  ECU  0,4
million), Greece (- GRD 1 577 481 460, approximately ECU
5,1 million) and Italy (- ITL 41 350 131 560, approximately
ECU  21,4  million),  totalling  approximately  -  ECU  27,3
million.

(33) If  there  were  doubts  concerning  the  necessary  corrections
that were already partly or fully anticipated in respect of the
annual  claim,  no  accounts  clearance  decision  should  have
been  taken  until  additional  clarification  had  been  obtained.
Alternatively,  the  final  judgement  could  have  been  made  in
the  context  of  the  compliance  audit.

of 

expenditure 

4.16. Disallowances 
(‘financial
corrections’)  were  based  mainly  on  previous  decisions
taken  by  the  finance  division  in  the  context  of  its  daily
management  of  EAGGF-Guarantee  expenditure.  Their
negative  and  positive  corrections  for  1996  totalled  ECU
77,3  million  out  of  which,  however,  only  ECU  55,1
million  was  taken  into  account  in  the  clearance  decision
(see  Table  6).

4.17. Table  7  details  by  paying  agency  and  by  amount
the  clearance-of-accounts  decision  of  5  May  1997  and
that  of  30  July  1997.

5.  CONCLUSION

5.1. Both the Member States and the Commission made
significant  efforts  to  comply  with  the  new  Regulation.
However,  the  Court’s  audit  revealed  the  existence  of
major  shortcomings  in  a  number  of  paying  agencies  to
which  accreditation  had  been  granted  (see  paragraph
2.11).

to 

regard 

5.2. With 
the  compliance  of  EAGGF
expenditure to Community rules, no decision to disallow
expenditure  incurred  in  contravention  of  community
the  new  system
rules  has  yet  been 
(paragraph  1.5).  Such  a  decision  cannot  be  made  in
respect  of  expenditure  effected  more  than  24  months
prior 
the  Commission’s  written  communication
(paragraph 1.4 (f)). At this moment, a final judgement of
the  financial  consequences  cannot  be  made.

taken  under 

to 

5.3. The  clearance-of-accounts  decision  of  5  May  1997
covered  only  33 %  of  the  expenditure,  because  some
certified  accounts  were  communicated 
late  or  were
considered  unsatisfactory  (see  paragraph  4.2).  In  some
cases  the  certificate  and  accompanying  report  were
unsatisfactory,  which  meant  the  Commission  had  to  ask
that additional audit work be carried out (see paragraphs
3.4 — 3.17). The regulation should be amended in order
to  stipulate  the  possibility  of  applying  penalties  when
certificates  or  the  certified  accounts  are  presented  late  or
are  incomplete.

5.4. With  regard  to  the  second  clearance  decision  of  30
July  1997,  some  of  the  information  only  arrived  during
the course of July, so that the Commission had little time
to  examine  it  in  depth  and  to  document  it  properly  (see
paragraphs  3.10,  3.16  and  4.14).

14.12.98

EN

Official  Journal  of  the  European  Communities

C  389/11

5.5. The  evaluation  of  the  various  calculations  and
amounts  that  were  finally  included  in  the  clearance-of-
accounts  decisions  revealed  that  the  approach  applied  to
the  decisions  being  taken  was  not  always  consistent  (see
paragraphs  4.10,  4.11  and  4.13).

It  is  important  that  weaknesses  identified  are
the  compliance

5.6.
systematically 
clearance  procedure  (see  paragraphs  4.6  and  4.15).

followed  up  under 

for  1996,  despite 

5.9. While  the  certified  accounts  submitted  by  the
paying  agencies  were  of  varying  quality,  the  Commission
accepted  all  of  the  accounts  presented  by  the  Member
States 
the
certificates.  The  Commission  claims  that  the  compliance
of  expenditure  may  be  subject  to  subsequent  clearance
decisions, 
in  accordance  with  Article  5  (2)  (c)  of
Regulation (EEC) No 729/70. To date no decision of this
type  based  on  compliance  audit  has  been  taken  by  the
Commission  (see  paragraph  4.3  —  4.4).

the  qualifications 

in 

communicated 

communicated 

5.7. The  Commission 
important
documents  to  the  Member  States  late.  If  the  documents
had  been 
earlier,  a  number  of
misunderstandings  and  problems  connected  with  the
certification  of  accounts  could  had  been  avoided  (see
paragraphs  2.9  and  3.3).  Decisions  on  the  basis  of
Regulation (EC) No 296/96 must be taken earlier, so that
they  may  be  accounted  for  in  the  clearance-of-accounts
decision  (see  paragraph  4.12).

5.10. The  aim  of  Council  Regulation  (EC)  No  1287/95
(amending  Council  Regulation  (EC)  No  729/70)  was  to
minimise  the  number  of  paying  agencies.  However,
sometimes  even  very  small  units  that  could  not  possibly
meet  the  requirements  of  the  Regulation  were  set  up.
Greater  effort  should  be  made  to  reduce  the  number  of
paying  agencies  (see  paragraphs  2.1  —  2.3).

5.8.
In  a  number  of  cases  the  certification  is  carried  out
by  the  paying  agency’s  internal  auditors  who  are  by
definition not independent, which they are required to be,
both  under  the  Regulation  (see  paragraph  3.2)  and  the
internationally  accepted  auditing  standards.

5.11. As  regards  the  corrections  for  late  payments
(Commission  Regulation  (EC)  No  296/96),  the  system  of
having separate procedures for corrections in the advance
payments  up  to  August,  on  the  one  hand,  and  for
September  and  October  corrections  under  the  clearance
decision, on the other, breaches the rule of annuality (see
paragraph  4.8).

This  report  was  adopted  by  the  Court  of  Auditors  in  Luxembourg  at  its  meeting  of  14  and  15
October  1998.

For  the  Court  of  Auditors

Bernhard  FRIEDMANN

President

Table  1

Situation  by  Member  State

Member  State

Paying agency

Competent  authority  granting
accreditation

Responsibility

Regional (1)

Sectorial

Expenditure  paid
(monthly
advances)
1996
(million  ECU)

Certifying  body

Nature  of
certifying body

BELGIUM

BIRB

DG  3

Region  Wallonne

Vlaamse Gemeenschap

Ministry  of  Agriculture

Ministry  of  Agriculture

Walloon  Government

Minister-President  van  de
Vlaamse regering

Export  refunds

828,4 Ernst  &  Young

New  CAP  and  other  intervention

316,7 Ernst  &  Young

Wallonia

Flanders

Environment
Environment (2)

0,5 Dir.  Budget

0,0 Afdeling Accounting

Total

1 145,6

DENMARK

EU  Direktoratet

Ministry  of  Agriculture

All

1 355,7 Internal  audit

GERMANY

BLE

HH-Jonas

MLR  -  Baden-Württemberg

STMELF  -  Bayern

STMELU  -  Bayern

SEN-WIRT  -  Berlin

MELF  -  Brandenburg

SEN-WIRT  -  Bremen

Ministry  of  Agriculture

Ministry  of  Finance

Ministry  of  Agriculture  of  the
Land

Ministry  of  Agriculture  of  the
Land

Ministry  of  Environment  of  the
Land

Senator  for  Economy  of  the
Land

Ministry  of  Agriculture  of  the
Land

Senator  for  Economy  of  the
Land

Public  storage

Export  refunds

840,4 Unit  for  certification

1 012,9 Unit  for  certification

Baden-Württemberg

New  CAP  and  other  intervention

326,1 Internal  audit

Bayern

Bayern

Berlin

New  CAP  and  other  intervention

769,0 Internal  audit

Environment

0,0 Internal  audit

New  CAP  and  other  intervention

2,1 Internal  audit

Brandenburg

New  CAP  and  other  intervention

324,0 Internal  audit

Bremen

New  CAP  and  other  intervention

1,5 Internal  audit

BEH-WIRT  -  Hamburg

The  Senat  of  the  Land

MILFN  -  Hessen

Ministry  of  the  Interior  and
Agriculture  of  the  Land

Hamburg

Hessen

New  CAP  and  other  intervention

3,2 Internal  audit

New  CAP  and  other  intervention

180,4 Internal  audit

MELF  -  Mecklenburg-West
Pomerania

Ministry  of  Agriculture  of  the
Land

Mecklenburg-West
Pomerania

New  CAP  and  other  intervention

393,4 Internal  audit

LÖBF  -  Lower  Saxony

LEJ  -  NRW  (Land)

LÖBF  -  NRW  (Land)

LWK  Münst.  -  NRW
(Westphalia)

Ministry  of  Agriculture  of  the
Land

Ministry  of  Environment  and
Agriculture  of  the  Land

Ministry  of  Environment  and
Agriculture  of  the  Land

Ministry  of  Environment  and
Agriculture  of  the  Land

Lower  Saxony

New  CAP  and  other  intervention

576,2 Internal  audit

NRW  (Land)

Environment (4)

0,0 Ministry  Ref.  IB2

NRW  (Land)

Milk (4)

0,0 Ministry  Ref.  IB2

NRW  (Westphalia)

New  CAP  and  other  intervention

370,7 Ministry  Ref.  IB2

LWK  Bonn  -  NRW  (Rheinland) Ministry  of  Environment  and

NRW  (Rheinland)

MWVLW  -  Rheinland-Pfalz

MIUEV  -  Saarland

Agriculture  of  the  Land
Ministry  of  Economy  and
Agriculture  of  the  Land
Ministry  of  Environment  and
Transport  of  the  Land

Rheinland  and  Pfalz

New  CAP  and  other
intervention (4)
New  CAP  and  other  intervention

0,0 Ministry  Ref.  IB2

135,0 Internal  audit

Saarland

New  CAP  and  other  intervention

14,0 Internal  audit

1

1

4

4

3

4

4

3

3

3

3

3

3

3

3

3

3

4

4

4

4

3

3

C

3
8
9
1
2

/

E
N

O

f
f
i
c
i
a
l

J
o
u
r
n
a
l

o
f

t
h
e

E
u
r
o
p
e
a
n

C
o
m
m
u
n
i
t
i
e
s

.

1
4
1
2
9
8

.

 
 
 
 
 
 
STMELF  -  Saxony

MELF  -  Saxony-Anhalt

MELFF  -  Schleswig-Holstein
M.  N.+UMW.  -
Schleswig-Holstein
LAND.VAMT  -  Thuringia

Previous  years’  clearance  of
accounts

Ministry  of  Agriculture  of  the
Land
Ministry  of  Agriculture  of  the
Land
Ministry  of  Finance  of  the  Land
Ministry  of  Finace  of  the  Land

Ministry  of  Agriculture  of  the
Land

Saxony

New  CAP  and  other  intervention

281,7 Prüfdienst

Sachsen-Anhalt

New  CAP  and  other  intervention

355,9 Ref.  13  of  the  Ministry

Schleswig-Holstein
Schleswig-Holstein

New  CAP  and  other  intervention
Environment

256,6 Internal  audit  MELFF

1,1 Innenrev.  MNU

Thuringia

New  CAP  and  other  intervention

248,6 Ministry  of  Agriculture

Total

GREECE

GE-DIDAGEP

Ministry  of  Agriculture

SPAIN

FEGA
DGDR  (activity  ceased  during
1996)
FROM
Dep.  Agr.  -  Catalonia

Dep.  Agr.  -  Basque  Country

Dir.  Agr.  -  Navarre

Dep.  Agr.  -  Aragon

Con.  Agr.  -  Balearic  Islands

Con.  Agr.  -  Valencia

Con.  Agr.  -  Canary  Islands

Dir.  Agri.  -  Cantabria

Con.  Agr.  -  Galicia

Con.  Agr.  -  Murcia

Con.  Agr.  -  La  Rioja

Con.  Agr.  -  Castile-La  Mancha

Con.  Agr.  -  Extremadura

Con.  Agr.  -  Asturias

Con.  Agr.  -  Andalusia

Con.  Agr.  -  Castile-Leon

Ministry  of  Agriculture
Ministry  of  Agriculture

Ministry  of  Agriculture
Consejero  of  Agriculture  of  the
Region
Consejero  of  Agriculture  of  the
Region
Comunidad  Autónoma  de
Navarre
Consejero  of  Agriculture  of  the
Region
Consejero  of  Agriculture  of  the
Region
Consejero  of  Agriculture  of  the
Region
Consejero  of  Agriculture  of  the
Region
Consejero  of  Agriculture  of  the
Region
Consejero  of  Agriculture  of  the
Region
Gobierno  Regional  Murcia

Consejero  of  Agriculture  of  the
Region
Consejo  de  Gobierno  de  Castilla
-  La  Mancha
Consejero  of  Agriculture  of  the
Region
Consejero  of  Agriculture  of  the
Region
Consejero  of  Agriculture  of  the
Region
Consejero  of  Agriculture  of  the
Region

Con.  Agr.  -  Madrid

Consejero  de  Economia  y  Empleo Madrid

Previous  years’  clearance  of
accounts

Total

All

All

−45,4

6 047,5

2 787,6 Moore  Stephens

New  CAP  and  other  intervention
accompanying measures

4 196,4 Ministerio  de  Economía

43,6

Catalonia

fish  +  aquaculture
New  CAP  and  other  intervention

2,0 Ministerio  de  Economia
71,2 Adm.  de  la  Diputación

Basque  Country

New  CAP  and  other  intervention

11,1 Oficina  de  Control

Navarre

Aragon

Balearic Islands

Valencia

Canary  Islands

Cantabria

Galicia

Murcia

La Rioja

Castile-La Mancha

Extremadura

Asturias

Andalusia

Castile-Leon

New  CAP  and  other  intervention

11,1 Servicio  Interno

New  CAP  and  other
intervention (2)
New  CAP  and  other
intervention (2)
New  CAP  and  other
intervention (2)
New  CAP  and  other
intervention (2)
New  CAP  and  other
intervention (2)
New  CAP  and  other
intervention (2)
New  CAP  and  other
intervention (2)
New  CAP  and  other
intervention (2)
New  CAP  and  other
intervention (2)
New  CAP  and  other
intervention (2)
New  CAP  and  other
intervention (2)
New  CAP  and  other
intervention (2)
New  CAP  and  other
intervention (2)
New  CAP  and  other
intervention (2)
All

0,0 Dep.  de  Aragón

0,0 Int.  Gov.  Baleares

0,0 Int.  Gen.  Valenciana

0,0 Consej.  de  Economía

0,0 Adm.  de  la  Diputacion

0,0 Int.  Com.  Galicia

0,0 Int.  Gen.  Murcia

0,0 Int.  Gen.  La  Rioja

0,0 Int.  Gen.  Castilla-La  Mancha

0,0 Int.  Gen.  Extremadura

0,0 Int.  Gen.  Asturias

0,0 Int.  Gen.  Andalucia

0,0 Int.  Gen.  Castilla  y  Leon

0,0 Int.  Gen.  Madrid

−288,5

4 046,9

3

3

3
3

4

1

4
4

4
4

4

4

4

4

4

4

4

4

4

4

4

4

4

4

4

4

.

1
4
1
2
9
8

.

E
N

O

f
f
i
c
i
a
l

J
o
u
r
n
a
l

o
f

t
h
e

E
u
r
o
p
e
a
n

C
o
m
m
u
n
i
t
i
e
s

C

3
8
9

/

1
3

 
 
 
 
 
 
Member  State

Paying agency

Competent  authority  granting
accreditation

Responsibility

Regional (1)

Sectorial

Expenditure  paid
(monthly
advances)
1996
(million  ECU)

Certifying  body

Nature  of
certifying body

FRANCE

CNASEA

FIOM

FIRS

Ministry  of  Agriculture

Ministry  of  Agriculture

Ministry  of  Agriculture

Services  de´concentre´s

Ministry  of  Agriculture

ODEADOM

OFIVAL

ONIC

ONIFLOHR

ONILAIT

ONIVINS

SAV

SIDO

Previous  years’  clearance  of
accounts

Ministry  of  Agriculture

Ministry  of  Agriculture

Ministry  of  Agriculture

Ministry  of  Agriculture

Ministry  of  Agriculture

Ministry  of  Agriculture

Ministry  of  Agriculture

Ministry  of  Agriculture

Total

IRELAND

DAFF

ITALY

AIMA

DCCC/Dog.

Min.Tres  -  IGFOR

ENR

Previous  years’  clearance  of
accounts

The  Minister  for  Agriculture,
Food  and  Forestry

Ministerio  delle  Risorse  Agricole,
Alimentari  e  Forestali

Ministero  delle  Finanze

Ministerio  delle  Risorse  Agricole,
Alimentari  e  Forestali

Ministero  delle  Risorse  Agricole,
Alimentari  e  Forestali

Structural  aid

Fish

Sugar

Suckler  cows

Bananas

Meat/animals

Cereals,  per  hectare  aids

Fruit  and  vegetables

Milk

Wine

Alcohol

222,3 Certifying  body

10,7 Certifying  body

521,9 Certifying  body

880,0 Certifying  body

73,8 Certifying  body

1 248,0 Certifying  body

3 849,9 Certifying  body

295,8 Certifying  body

863,6 Certifying  body

97,1 Certifying  body

90,1 Certifying  body

Oil  seeds  including  hectare  aids

1 478,3 Certifying  body

All

All

−74,0

9 557,6

1 699,5 Arthur  Andersen

All,  except  those  listed  below

4 291,6 Reconta  Ernst  &  Young

Export  refunds

Grubbing  up  of  wine (2)

340,8 Ragioneria  dello  Stato

171,8 Ragioneria  dello  Stato

Rice

8,8 Coopers  &  Lybrand

All  –  Apurement

−593,2

Total

4 219,9

LUXEMBOURG

Min. Agric.

Ministry  of  Finance

All

19,7 Min.  Fin.  –  inspec.  gen.

THE
NEDERLANDS

DLB 

HPA

LASER

MVO

PGF

PPE

Ministry  of  Agriculture

(LLB/LBL)  structural  exp

5,3 Acountantsdienst  ministerie

Ministry  of  Agriculture

Ministry  of  Agriculture

Ministry  of  Agriculture

Ministry  of  Agriculture

Ministry  of  Agriculture

Agricultural and vegetable
products

377,4 Acountantsdienst  ministerie

New  CAP  and  other  intervention

389,2 Acountantsdienst  ministerie

Fat  and  oil

Fruit  and  vegetables

0,1 Acountantsdienst  ministerie

11,5 Acountantsdienst  ministerie

Merged  with  PVV  to  PVE

0,0 Acountantsdienst  ministerie

4

4

4

4

4

4

4

4

4

4

4

4

1

1

4

4

1

4

4

4

4

4

4

4

C

3
8
9
1
4

/

E
N

O

f
f
i
c
i
a
l

J
o
u
r
n
a
l

o
f

t
h
e

E
u
r
o
p
e
a
n

C
o
m
m
u
n
i
t
i
e
s

.

1
4
1
2
9
8

.

 
 
 
 
 
 
PVE  (ex  PVV)

Ministry  of  Agriculture

Meat,  poultry  and  eggs

210,3 Acountantsdienst  ministerie

PVI

PZ

STOAS

Previous  years’  Clearance  of
Accounts

Ministry  of  Agriculture

Ministry  of  Agriculture

Ministry  of  Agriculture

Fish

Milk

Training

All

Total

AUSTRIA

AMA

BMLF-wine

ZA Salzb.

Ministry  of  Agriculture

Ministry  of  Agriculture

Ministry  of  Finance

Landesamt  —  Land  Salzburg

Ministry  of  Agriculture

Land  Salzburg

Forestry

Landesamt  —  Land  Tyrol

Ministry  of  Agriculture

Land  Tyrol

Forestry

Landesamt  —  Land  Vorarlberg Ministry  of  Agriculture

Land  Vorarlberg

Forestry

Total

All  except  those  listed  below

1 139,1 Internal  audit  of  Ministry

Wine

Export  refunds

0,1 Acountantsdienst  ministerie

536,8 Acountantsdienst  ministerie

2,6 Acountantsdienst  ministerie

2,1

1 535,4

2,7 Internal  audit  of  Ministry

69,8 Ministry  of  Finance

0,3 Internal  audit

0,4 Prüf  Buchhaltung

0,0 Gebarungskontrolle

1 212,2

PORTUGAL

IFADAP

INGA

Ministry  of  Finance

Ministry  of  Finance

Fish  and  accompanying  measures

70,4 Inspeçao  Geral  Finanças

All  except  above

575,0 Inspeçao  Geral  Finanças

Total

FINLAND

Ministry  of  Agriculture

Ministry  of  Agriculture  and
Forestry

SWEDEN

SJV

The  Government

All

All

645,4

647,5 Coopers  &  Lybrand

622,2 Court  of  auditors  (RRV)

UNITED
KINGDOM

Countryside  Commission  (CC)

Minister  of  Agriculture,  Fisheries
and  Food  and  Secretaries  of  State

England

Environment (3) (4)

National  audit  Office

Contryside  Commission  for
Wales

Minister  of  Agriculture,  Fisheries
and  Food  and  Secretaries  of  State

Wales

Environment (4)

National  audit  Office

Forestry  Commission

IBEA

MAFF

DANI

SOAD

Minister  of  Agriculture,  Fisheries
and  Food  and  Secretaries  of  State

Minister  of  Agriculture,  Fisheries
and  Food  and  Secretaries  of  State

Forestation  and  environment (4)

0,0 National  audit  Office

Export  refunds  and  public
storage

3 468,2 National  audit  Office

Minister  of  Agriculture,  Fisheries
and  Food  and  Secretaries  of  State

England

New  CAP  and  accompanying
measures (4)

Minister  of  Agriculture,  Fisheries
and  Food  and  Secretaries  of  State

Northern  Ireland

New  CAP  and  accompanying
measures (4)

Minister  of  Agriculture,  Fisheries
and  Food  and  Secretaries  of  State

Scotland

New  CAP  and  accompanying
measures (4)

0,0 National  audit  Office

0,0 National  audit  Office

0,0 National  audit  Office

4

4

4

4

4

4

4

3

4

3

4

4

1

2

2

2

2

2

2

2

2

.

1
4
1
2
9
8

.

E
N

O

f
f
i
c
i
a
l

J
o
u
r
n
a
l

o
f

t
h
e

E
u
r
o
p
e
a
n

C
o
m
m
u
n
i
t
i
e
s

C

3
8
9

/

1
5

 
 
 
 
 
 
Member  State

Paying agency

Competent  authority  granting
accreditation

Responsibility

Regional (1)

Sectorial

Expenditure  paid
(monthly
advances)
1996
(million  ECU)

Certifying  body

Nature  of
certifying body

WOAD

Minister  of  Agriculture,  Fisheries
and  Food  and  Secretaries  of  State

Wales

New  CAP  and  accompanying
measures (4)

0,0 National  audit  Office

2

Total

TOTAL  —  COMMUNITY

(5)

3 468,2

39 010,9

(1)  Unless  otherwise  indicated,  the  paying  agency  is  responsible  for  the  whole  country.
(2)  New  paying  agency  1997.  No  financial  claim  in  1996.
(3)  Paying  agency  ceased  its  activity.
(4)  No  separate  financial  claim  made  in  1996.
(5)  The  amount  paid  ECU  39 010,8  million  is  lower  than  the  amount  declared  and  committed  (ECU  39 040,8  million)  due  to  a  suspension  of  ECU  29,2  million  for  Greece).
Key  to  ‘Nature  of  certifying  body’:
1  —  External  auditor.
2  —  National  audit  Institution.
3  —  Internal  audit  division  of  the  paying  agency.
4  —  Other  public  body,  e.g.  accountancy  service  of  the  Ministry  of  Agriculture

Source:  Court  of  Auditors,  based  on  miscellaneous  documents  of  the  Commission

C

3
8
9
1
6

/

E
N

O

f
f
i
c
i
a
l

J
o
u
r
n
a
l

o
f

t
h
e

E
u
r
o
p
e
a
n

C
o
m
m
u
n
i
t
i
e
s

.

1
4
1
2
9
8

.

 
 
 
 
 
 
14.12.98

EN

Official  Journal  of  the  European  Communities

C  389/17

Main  weakneses  idenfied  by  the  Commission  in  the  visited  paying  agencies  during  1996

Table  2

Member  State

Paying agency

BELGIUM

BIRB
DG  3

DENMARK

EU  Direktoratet

GERMANY

GREECE

SPAIN

FRANCE

HH-Jonas
BLE
Bayern
Brandenburg
Lower  Saxony
Schleswig-Holstein

GE-DIDAGEP

FEGA
FROM

ONIFLOHR
ONILAIT
ONIVINS
FIRS
OFIVAL
SIDO
ONIC

IRELAND

DAFF

ITALY

AIMA
DCCC/Dog.

LUXEMBOURG

Min. Agric.

THE 
NETHERLANDS

AUSTRIA

PORTUGAL

FINLAND

SWEDEN

UNITED
KINGDOM

PGF
PZ
HPA
LASER

AMA
BMLF-wine

INGA
IFADAP

Ministry  of  Agriculture

SJV

IBEA
SOAEFD
MAFF

Areas  of  weaknesses  identified (1)

Written
procedures

Segre-
gation  of
duties

Payment
checks
and
procedures

Accoun-
ting
procedures
and
reconcil-
iation

Debtors
ledger (2)

EDP
security

Internal
audit

Technical
service

×

×

×

×

×

×

×

×
×
×

×

×
×

×

×

×

×
×

×
×

×

×

×

×

×

×

×

×

×

×
×

×

×

×

×

×

×
×

×

×

×

×
×
×

×

×
×
×

×

×
×

×
×
×

×

×

×

×

×
×

×

×

×
×

×

×

×
×
×
×

×

×

×
×
×
×
×
×
×

×

×
×

×

×
×

×
×

×

×

×

×
×

×

×
×

×
×
×

×

×

×
×
×
×
×
×
×

×
×

×

×
×

×

×

×

×

×

×

×

×

×
×

×
×
×
×
×
×
×

×

×
×

×
×
×

×
×

×

(1)  In  relation  to  the  criteria  of  significant  relevance  as  outlined  in  the  Commission’s  document  VI/5168/96  rev.  1.
(2)  Observations  concerning  weaknesses  of  debtors  ledgers  are  reported  separately  because  of  the  number  of  problems  found.  In  the  criteria  of  significant

relevance,  this  is  a  subpoint  of  accounting  procedures.

Source:  Reports  and  working  documents  of  the  Commission

C  389/18

EN

Official  Journal  of  the  European  Communities

14.12.98

Summary  of  weaknesses  of  paying  agencies  reported  by  the  Court  during  1997

Table  3

Member State/Paying agency

General remarks

Observations  on  points  of  significant  relevance

BELGIUM

BIRB

The  paying  agency  was  granted  provisional
accreditation  during  1997  (audit  visit  by  the
Court:  February  1997).

Technical  services:  the  paying  agency  had  no
influence  on 
inspections  made  by  other  units
(customs,  veterinary  services);  an  agreement  with
technical  services  was  only  concluded  during  1997.

EDP:  new  system  only  operational  from  1998,  old
systems  are  not  designed  for  the  structure  of  the
paying  agency.  No  efficient  follow  up  of  securities
and  guarantees.

Debtors: 
improved.

follow  up  of  debtors  need 

to  be

DG  3

The  paying  agency  was  granted  provisional
accreditation  during  1997  (audit  visit  by  the
Court:  February  1997).

EDP:  new  system  scheduled  for  1996  but  for
budgetary  reasons  not  operational.  Not  compatible
with  existing  systems.  Security  weaknesses,  such  as
absence  of  individual  passwords.

Checklists:  must  be  be  adapted  to  the  various
measures.

Debtors:  no  periodic  follow  up.

DENMARK

EU  DIREKTORATET

sole  paying 

EU  Directoratet  was  accredited  on  13.10.1995  as
agency.  Although
Denmark’s 
accreditation 
letter  contained  a  number  of
conditions  which  are  expected  to  be  satisfied
within  a 
limit,  no  provisional
accreditation  was  granted.  These  conditions
include  new  export  refund  system  by  16.10.1997,
the  implementation  of  check  lists  by  16.10.1996
and  improvement  of  the  system  of  guarantees.

fixed 

time 

Internal  audit/certifying  body:  the  combination  of
the two functions is not adequate. Functions should
be  kept  separate.  Internal  audit  only  reached  its
planned  staffing  level  around  the  end  of  1996.

Payment  system:  customs  and  tax  administration
was  not  accredited  as  paying  agency  but  deals  with
sugar  payments  and  revenue.  Taking  this  into
consideration  in  the  context  of  accreditation  was
forgotten.  Delegated  (authorisation  and  technical)
services:  seven  agreements  with  delegated  services
were  signed,  eight  were  still  outstanding  during  the
audit  of  the  Court  (although  they  were  in  force
from  16.10.1995).

Debtors: different treatment of debtors according to
the  sectors  concerned,  a  considerable  number  of
debtors  due  to  wrong  payments  of  export  refunds.

Per hectare aids: weakness of monitoring, some 100
cases  were  paid  although  initially  planned  for
inspection.  The  selection  was  left  to  the  technical
service  although  this  should  had  been  done  by  the
paying  agency.  The 
system  was,
furthermore,  not  updated.

computer 

14.12.98

EN

Official  Journal  of  the  European  Communities

C  389/19

Member State/Paying agency

General remarks

Observations  on  points  of  significant  relevance

GERMANY

Land  Lower  Saxony

Ministry  of  Agriculture
(Ministerium  für
Ernährung  Landwirtschaft
und  Forster)

is 

the
The  Land’s  Ministry  of  Agriculture 
accredited  paying  agency 
from  16.10.1995.
However,  the  unit  of  the  Ministry  which  is  the
paying  agency  consists  of  only  2  persons.
Administration  of  the  agricultural  measures  is
Bezirksregierungen
decentralised 
(chambers 
für
Agrarstruktur  (offices  for  agricultural  structures).
Payments  are  executed  by  a  separate  unit  and
there  is  furthermore  one  unit  acting  as  imprest
account  manager  (audit  visit  by  the  Court:
October  1997).  Relatively  high  error  rate  for
IACS  measures.

for  agriculture)  and  Ämter 

through 

Paying agency its structure is not adequate (the unit
does  not  pay  and  does  not  make  the  declaration
table  104),  the  monitoring  of  the  many  delegated
services  needs  to  be  improved,  EDP:  security  needs
improvement  (notably  access  rights),

Financial  aspects:  The  claim  for  1996  included
amounts already paid in 1995 by units that are not
accredited or delegated for this purpose from 1996,
claim is based partly on amounts that were not fully
paid  (beneficiaries  were  charged  for  administrative
costs).  Reconciliation  problems  during  the  audit  for
the expenditure claimed for co-financed measures in
1996.

Debtors:  follow  up  to  be  improved,  co-financed
measures  are  only  registered  after  recoveries  are
cashed.

the  various  weaknesses 

Given 
identified  only
provisional  accreditation  should  have  been  granted
to  this  paying  agency.

Certifying  body:  independence  to  be  improved.

Land  Saxony-Anhalt

Ministry  of  Agriculture
(Ministerium  für
Raumordnung,
Landwirtschaft  und
Umwelt)

Provisional  accreditation  for  1996  budget  year,
fully  accredited  for  1997  budget  year.  (audit  visit
by  the  Court:  October  1997)  For  per  hectare  aid
need  to  follow  up  also  old  claims  (prior  to  1996)
in  case  of  irregularities  found. 

EDP:  internal  controls  of  decentralised  data  for
payment  to  be  formalised.

Delegated services: monitoring by the paying agency
to  be  improved.

Financial  aspects: 
expenditure 
measures.

claimed 

reconciliation  problems 
1996 

for
co-financed

for 

Debtors 
ledger:  until  August  1997  co-financed
measures were only registered after the recovery has
been  cashed.

Certifying  body/internal  audit:  independence  to  be
improved.

Land
Schleswig-Holstein

Ministry  of  Agriculture
(Ministerium  für  ländliche
Räume,  Landwirtschaft,
Ernährung  und
Tourismus)

Accredited  paying  agency  from  1996  budget  year
(audit  visit  by  the  Court:  October  1997).

the  various  measures 

Administration  of 
is
decentralised (local Ämter) but payments are finally
authorised  by  the  paying  agency,  except  certain
co-financed  measures  paid  through  the  Chambers
for  Agriculture  which  is  considered  also  as  imprest
account  manager  (Vorschußverwalter),  but  there
was  no 
respect.
Monitoring  of  delegated  services  to  be  improved.

formal  convention 

this 

in 

C  389/20

EN

Official  Journal  of  the  European  Communities

14.12.98

Member State/Paying agency

General remarks

Observations  on  points  of  significant  relevance

Ministry  for  the
environment
(Ministerium  für  Natur
und  Umwelt)

Small paying agency (annual payments some ECU
1,1  million),  accredited  from  1996  budget  year
(audit  visit  by  the  Court:  October  1997).

Debtors  ledger:  new  procedures  from  July  1997  to
ensure  completeness.

EDP  security:  decentralised  EDP  approach  requires
intensified  monitoring 
approach
planned  for  1998).

(centralised 

Suspense  accounts:  routine  for  follow  up  needed.

Certifying  body/internal  audit:  independence  to  be
improved.

The paying agency itself does not execute payments,
measures  are  executed  by  one  delegated  local  Amt
(Husum)  and  by  one  company  under  private  law
(SHL)  that  acts  also  as  imprest  account  manager
(Vorschußverwalter).

Administrative  principles 
(Halligprogramm)  were 
accreditation 
procedures  from  1997).

for  one  programme
line  with
not 
(improved

in 

criteria  during  1996 

General observation for all
the
paying  agencies  of 
German  Länder

Monitoring  of  delegated 
improved  and  better  documented.

services 

should  be

General  observation  for  all  Länder:  Payments  are
carried  out  via  the  Federal  Treasury  (Bundeskasse)
in  Frankfurt.  They  issue  extracts  indicating  the
execution  of  payment.  A  control  system  should
allow an annual certified statement as to the respect
of payment criteria and the reliability of the extracts
issued  by  the  Bundeskasse.

GREECE

GEDIDAGEP

Gedidagep  is  the  sole  paying  agency  in  Greece.
After  provisional  accreditation  for  1996  budget
year  it  was  granted  full  accreditation  from  1997
budget  year.

Written  procedures:  were  fully  completed  only  in
1997.  Definition  of  responsibilities  as  well  as
detailed  check  lists  were  only  in  some  cases  in  use
and  not  laid  down  in  writing.

Pre-payment  checks:  are  delegated  to  other  bodies
but  Gedidagep  has  practically  not  exercised  any
review  and  control  on  the  delegated  organisation
(lack  of  monitoring).

Payments:  Contrary 
(EC)  No
1633/95  amounts  up  to  GRD  100 000  are  paid  in
cash  to  the  claimants.

to  Regulation 

EDP  system  lacks  essential  features  for  ensuring
reliable  results  and  information.

The  internal  control  procedures  as  a  whole  did  not
have  all  the  characteristics  of  an  efficient  internal
control  system.  Internal  audit:  not  operational
during  1996. 

14.12.98

EN

Official  Journal  of  the  European  Communities

C  389/21

Member State/Paying agency

General remarks

Observations  on  points  of  significant  relevance

SPAIN

FEGA  (Fondo  Espana  de
Garantia  Agraria/Spanish
Agricultural 
Guarantee
Fund)

(Fondo 

de
FROM 
Regulación y Organización
del  Mercado  de  Productos
de 
la  Pesca  y  Cultivos
Marinos)

Central  paying  agency  for  most  measures  during
1996 
for  non-regionalised
expenditure  such  as  second  category  intervention)

responsible 

(now 

Date of visit of the Court: September 1997. There
is  an  apparent  lack  of  coordination  between  the
autonomous regions on one side and FEGA on the
other,  even  during  1996  when  FEGA  was  the
responsible  paying  agency  and  should  have
monitored  activities  by  delegated  services.

Weaknesses of IACS cattle registration system (no
feed  back  from  regions).

the 

fish 

sector,  date  of  accreditation
For 
7.12.1995  Date  of  visit  of  the  Court’s  visit:
September  1997.

Internal  audit:  only  operational  from  1997,  lack  of
coordination  with  internal  audit  units  at  regional
level.

Separation  of  functions:  person  who  prepares
payment orders is also responsible for reconciliation
of bank accounts, no full reconciliation of accounts,
data  base,  bank  statements.

differences 

Accounting  weaknesses: 
between
accounts  and  computer  data  base,  differences
mainly  due  to  repayments  which  are  not  corrected
in  the  database  and  payments  mistakenly  charged.
Although  FEGA  was  accredited  paying  agency,
payments  were  made  by  a  number  of  autonomous
regions  that  were  not  paying  agencies,  on  the  basis
of  specific  contracts.  There  is  no  reconciliation
between  final  payments  by  ARs,  the  data  in  the
accounts  of  FEGA  and  the  data  declared  in  Table
104.

Technical  services:  cooperation  agreements  with
regional  inspection  units  were  still  outstanding  for
some  regions.  Control  weaknesses  for  intervention
stocks.

Certification  of  accounts:  not  sufficient  for  1996,
two different control steps at central and at regional
level, regional amounts were not reconciled with the
transfers  from  the  central  level  to  the  regions.  Lack
of  coordination  between  certifying  body  and
internal audit.

Certification  of  accounts:  there  was  no  certificate
issued  for  regional  payment,  finally  audited  by  an
external private auditor. But as in the case of FEGA
there  is  no  trace  of  reconciliation  between  the
amounts claimed from the Commission (Table 104)
on  the  basis  of  fundings  (transfers  to  the  regions)
and the amounts audited at regional level. The same
remark  concerns  also  DGDR,  paying  agency  from
16.10.1995  to  31.12.1995.

CASTILE-LEON
Consejeria  de  Agricultura
y  Ganaderia  de  la  CA  de
Castilla  León

Regional  paying  agency  from  1997,  provisionally
accredited  from  16.10.1996.  From  16.4.1997
(expiry  of  provisional  accreditation)  to  11.9.1997
(date of definitive accreditation) the paying agency
operated  without  valid  accreditation.  Date  of  the
Court’s  visit:  September  1997.

some 

EDP  weaknesses:  despite 
improvements
during  1997  there  are  still  problems  concerning
separation 
of
programmes,  integration  of  databases  and  the  need
to  update  contingency  plans.

harmonisation 

functions, 

of 

Pre-payment  checks/Payment  security:  payments
were  made  despite  on-the-spot  inspection  revealed
that  no  payment  should  be  made.

C  389/22

EN

Official  Journal  of  the  European  Communities

14.12.98

Member State/Paying agency

General remarks

Observations  on  points  of  significant  relevance

FAGA  (ANDALUSIA)
Fondo 
Garantia Agraria

Andaluz 

de

Regional  paying  agency  from  1997,  accredited
from  16.10.1996.  Date  of  the  Court’s  visit:
September  1997.

FRANCE

General  remarks 
French  paying  agencies

to  all

Services  de´concentre´s  du
tre´sor  et  du  ministe`re  de
l’agriculture,  de  la  peˆche
de l’alimentation

CNASEA,  SIDO,  FIRS,
ONILAIT,  OFIVAL

All  paying  agencies  except
ONIC

IRELAND

Reconciliation  of  accounts:  Table  104  is  based  on
information  obtained  from  the  Department  for
Economic  and  Financial  Affairs  but  not  on
information  contained  in  the  accounts.  Repayments
are  monitored  by  another  unit,  DAFA.

Debtors  ledger:  incomplete.

Internal  audit:  the  auditors  work  on  temporary
contracts,  their  professional  independence  is  not
guaranteed. 

EDP  security:  contingency  plan  still  not  available.

In  total  10  of  the  12  paying  agencies  were  fully
accredited from 16 October 1996. Accreditation for
FIOM and ODEADOM was still provisional during
1997 because of ongoing systems and organisational
weaknesses.

Technical services: there were no written delegations
for  the  control  services  undertaken  by  French
customs  on  behalf  of  the  paying  agencies.

For this paying agency the payments and accounting
are  carried  out  through  94  French  departments
which 
in  fact  can  each  be  considered  as  a
(non-accredited)  paying  agency  because  they  carry
out  functions  which,  according  to  Regulation  (EC)
No  1663/95,  cannot  be  delegated.

According  to  the  internal  reports  of  the  French
inspection  body  (corps  de  contrôle  du  ministe`re  de
l’agriculture  et  du  tre´sor)  these  paying  agencies  did
not meet the accreditation criteria in full, they were
nevertheless  fully  accredited  from  October  1996.

None  of  the  internal  audit  services  except  ONIC
was  operational  in  1996,  notably  risk  analysis  and
annual  and  five-year  audit  planning  was  missing.

DAFF 
Agriculture, 
Forestry)

(Department 

Food 

of
and

Sole  paying  agency  for  Ireland.  Court’s  audit:
November  1997.

Reconciliation of expenditure: at the moment of the
Court’s  audit  visit  in  November  1997  the  accounts
reconciliation  for  expenditure  procedure  for  public
storage  had  only  been  carried  out  in  respect  of  the
first  quarter  of  the  EAGGF  year.  Weaknesses  of
procedures  are  notably  reported  in  the  context  of
beef  intervention  and  related  to  the  land  parcel
identification system.

14.12.98

EN

Official  Journal  of  the  European  Communities

C  389/23

Member State/Paying agency

General remarks

Observations  on  points  of  significant  relevance

ITALY

AIMA  (Azienda  di  Stato
per 
interventi  nel
gli 
mercato agricola)

The  paying  agency  is  responsible  for  nearly  all
first  and  second  category  intervention  and  have
been  granted  provisional  accreditation 
since
28.11.1995.  Date  of  the  Court’s  audit:  March
1997.

Payment  system:  improved  system  from  July  1996,
only  from  this  date  does  it  allow  the  verification  of
individual  payments  made  to  beneficiaries  and  the
follow-up  of  cheques  cashed.

Internal audit was only operational in the middle of
1997.

Check lists for pre payment checks: were not in use
in  1996  and  announced  for  July  1997.

Delegated  services:  need  to  improve  the  monitoring
of  these  services.

Public  storage:  major  weaknesses  and  absence  of
adequate  controls  on  stocks,  non  respect  of
accreditation  criteria  in  this  area  (in  the  meantime
the Court has been informed about new procedures
and  improvements  applicable  from  1998  budget
year).

DCCC 
compartimentale  per 
contabilità centralizzate)

(Direzione
le

The  agency  is  responsible  for  the  management  of
export  refunds.  The  paying  agency  was  granted
provisional  accreditation  from  16.10.1995  and
was  fully  accredited  from  1.3.1996.  Date  of  the
Court’s  audit:  March  1997.

The  paying  agency  did  not  take  adequate  action  to
improve the system during 1996. Export documents
and  laboratory  documents  were  sent  to  the  paying
agencies  by  the  exporters  and  not  by  the  local
customs  offices.

The internal audit service limited its activities to the
follow  up  of  payments  at  the  level  of  DCCC  but
was  not  allowed  to  verify  the  activities  of  customs
and laboratories.

EDP:  The  new  system  was  not  operational  for
cereals  and  non-annex  II  products,  there  were  also
considerable  payment  delays.

Check  lists  for  pre-payment  checks  were  still  to  be
improved.

Debtors ledger was not up to date (in the meantime
the Court has been informed about new procedures
and  improvements  applicable  from  1998  budget
year).

LUXEMBOURG

Ministry  of  Agriculture
(Ministe`re  de  l’Agriculture
de 
la  viticulture  et  du
de´veloppemtn  rural)

sole  paying  agency 

The 
in  Luxembourg.
Provisional accreditation for 1996, from 1997 full
accreditation  was  granted.  Court’s  visit  in  May
1997.

Check  lists  for  pre  payment  checks:  were  not  yet
available,

Debtors  ledger  incomplete  (pending  cases  missing)

Technical services: the EDP system does not register
the  results  of  inspections  carried  out.

C  389/24

EN

Official  Journal  of  the  European  Communities

14.12.98

Member State/Paying agency

General remarks

Observations  on  points  of  significant  relevance

AUSTRIA

AMA 
Austria)

(Agrarmarkt

The  paying  agency  is  responsible  for  most  of  the
EAGGF  measures  in  Austria.  From  1996  the
agency  was 
full
accreditation  has  been  granted  since  July  1997.
Audit  visit  of  the  Court:  October  1997.

provisionally 

accredited, 

of  Regulation 

Debtors’  ledger:  there  is  no  debtors’  ledger  in  the
sense 
1663/95,
quantification  of  outstanding  recoveries  for  the
FEOGA 
system  being
possible.  New 
implemented  and  will  be  operational  during  1998.

(EC)  No 

not 

Financial  aspects:  reconciliation  problems  between
amounts  claimed  from  EAGGF  and  the  bank
accounts.

Delegated  and  technical  services:  monitoring  by  the
paying  agency  shall  be  improved.

EDP  security  (other  than  IACS  measures)  to  be
improved. 

Ministry  of  Agriculture,
paying  agency  for  wine
(Bundesministerium 
für
Land- und Forstwirtschaft,
Abteilung 
VI/B/8,
Zahlstelle  Wein)

Small  paying  agency  dealing  with  measures  in  the
wine sector. Fully accredited since February 1997.
Court’s  audit  visit:  October  1997.

Certifying  body:  improvement  of  its  organisational
independence  should  be  considered.

Zollamt  Salzburg

Paying  agency  responsible  for  export  refunds.
Fully  accredited  since  November  1995.  Court’s
audit  visit:  October  1997

Land  Salzburg:  Amt  der
Salzburger
Landesregierung

agency 

Paying 
co-financed
responsible 
measures  (forestation)  in  the  Land  of  Salzburg.
Provisional 
fully
accredited  on  20.2.1997.

accreditation 

21.2.1996, 

for 

Full  accreditation  was  granted  too  early  given  the
various  weaknesses  that  existed  at  the  time  of  the
accreditation.  The  following  points  still  need  to  be
improved:

Internal  audit  was  operational  only  from  1997.  Its
task  is  limited  to  the  verification  at  the  level  of  the
paying  agency  but  does  not 
include  audit  of
technical  services,  such  as  customs  offices.

The organisation of the certifying body is not in line
with  the  requirements  of  Regulation  (EC)  No
1663/95.  Its  organisational  independence  is  not
assured.

The  paying  agency  cannot  directly  monitor  the
quality  of  the  delegated  services,  such  as  the
technical  services  carried  out  by  local  customs
stations. 

Internal  audit:  no  activity  during  1997

Separation  of  functions  not  assured.

No  separate  pre-payment  check  by  a  second  person
(the  check  by  the  cashier  is  only  a  formal,  not  a
material  one).

No permanent reconciliation of expenditure claimed
with  bank  accounts.

Dossiers  on  the  aid  cases  sent  back  to  the
beneficiaries,  but  no  copies  kept  and  no  proof  of
the  sending  back  of  the  files  available.

Application  of  Article  4(4)  of  Regulation  (EC)  No
729/70  required. 

14.12.98

EN

Official  Journal  of  the  European  Communities

C  389/25

Member State/Paying agency

General remarks

Observations  on  points  of  significant  relevance

FINLAND

Ministry  of  Agriculture
and  Forestry 
ja
(Maa- 
metsätalousministeriö)

SWEDEN

The  Ministry  of  Agriculture  is  the  sole  paying
agency  in  Finland.  Provisional  accreditation  was
granted  up  to  15.10.1997  by  a  decision  of  the
Ministry  of  Agriculture  dated  12.10.1995.
However,  by  a  decision  dated  29.8.1997  full
accreditation  was  granted  from  1.9.1997.

Delegated services: the paying agency acts as paying
agency  although  the  450  municipalities  perform
most  of  the  administrative  and  control  functions  in
respect  of  EAGGF  aid  schemes.  The  Court’s  audit
showed  that  control  procedures  at  local  level  were
not  satisfactory  to  meet  the  requirements  for
payments  in  the  context  of  EAGGF  Guarantee.
(Efforts  have  been  undertaken  during  1997  to
improve  the  situation.)

Board 

Swedish 
Agriculture 
Jordbrugsverket  -  SJV)

of
(Svenska

SJV  is  the  sole  Swedish  paying  agency.  After
provisional accreditation for 1996 budget year full
accreditation  was  granted  in  October  1996,  for
the  1997  budget  year.

UNITED  KINGDOM

Intervention  Board
MAFF  (Ministry  of
Agriculture)
SOAD  (Scotland)

Three  paying  agencies  were  visited  in  the  context
of  a  specific  audit  of  the  Court  in  September
1997.  For  the  paying  agencies  in  the  UK,  the
Intervention  Board,  acting  also  as  coordinating
body,  provides 
statements  of
the  monthly 
expenditure  (Table  104)  on  the  basis  of  undings.
reconciliation  problems  with  actual
Severe 
expenditure  exist.  The  observations  on 
the
accounting  system  concern  therefore  all  paying
agencies  in  the  UK  and  not  only  the  three  units
visited.

Accreditation  and  the  related  audit  by  the  national
authorities  was  carried  out  in  compliance  with
Regulation  (EC)  No  1663/95.

Reconciliation  of  annual  accounts  1996  was
difficult  (although  possible),  but  the  system  should
be  more  transparent.

Major work is carried out at the level of the County
councils.  SJV  should  improve  the  monitoring  of
these  units  in  the  context  of  the  per  hectare  aid  for
arable  crops.

The  principal  problems  in  the  UK  are  problems  of
the  accounting  system:

—  failure  to  keep  separate  books  of  account,

—  the  non-submission  on  the  part  of  each  paying
agency  of  periodic  summaries  of  expenditure
including 
the
Commission,

the  monthly  declarations 

to 

—  the  lack  of  books  of  accounts  recording  the
assets  financed  concerning  debtors  and  the  lack
that  all
of  effective  procedures 
payments  for  which  transfers  are  not  executed,
or cheques not cashed, or recoveries taken in are
re-credited  to  the  Commisison.

to  ensure 

As  regards  the  paying  agency  SOAD  the  payments
are  carried  out  by  the  finance  group  (SOAFD)
which  does  not  have  a  separate  book  of  accounts.
The  audit  revealed,  furthermore,  weaknesses  of
monitoring 
administrative
weaknesses  in  application  of  the  IACS  system.

local  offices 

and 

Note:  The  DAS  missions  to  the  Netherlands  did  not  lead  to  specific  remarks  as  regards  accreditation  and  accounting  with  the  exception  of  the  paying
agency LASER (weaknesses in the accounting system which did not allow the allocation of expenditure to sub-headings on a monthly basis. Global
reconcilation  was  possible.  System  improved  from  1997).

Source:  Post-audit  letters  of  the  Court  of  Auditors.

Table  4

Analysis  of  the  products  of  the  certifying  bodies

C

3
8
9
2
6

/

Member  State

Paying agency

Certifying  body

Certification
unqualified

First
certificate
accepted

Additional
work
requested

Nature

Reservation  raised  by  the  certifying  body

Segregation
of  duties

Pre-payment
checks

Reconcilia-
tion

Debtors
ledger

EDP

Internal
audit

Technical
services

Intervention
stocks

E
N

Yes 

No

×

BELGIUM

BIRB

DG  3

Wallonia

Flanders

Ernst  &  Young

Ernst  &  Young

Directorate  budget

No  expenditure  1996

DENMARK

EU  Direktoratet

Internal  audit

GERMANY

BLE

HH-Jonas

MLR  -
Baden-Württemberg

Internal  audit

Internal  audit

Internal  audit

STMELF  -  Bayern

Internal  audit

STMELU  -  Bayern

No  expenditure  claimed
1996

SEN-WIRT  -  Berlin

Internal  audit

MELF  -  Brandenburg

Internal  audit

SEN-WIRT  -  Bremen

Internal  audit

BEH-WIRT  -  Hamburg

Internal  audit

MILFN  -  Hessen

Internal  audit

MELF  -
Mecklenburg-West
Pomerania

Internal  audit

LÖBF  -  Lower  Saxony

Internal  audit

LEJ  -  NRW  (Land)

LÖBF  -  NRW  (Land)

Ministry  of  Agriculture
Ref.IB2

Ministry  of  Agriculture
Ref.IB2

LWK  Münster  -  NRW  Ministry  of  Agriculture

Ref.IB2

LWK  Bonn  -  NRW

Ministry  of  Agriculture
Ref.IB2

MWVLW  -  Rheinland
and  Pfalz

Internal  audit

MIUEV  -  Saarland

Internal  audit

2

2

5

4

4

4

4

4

4

4

4

4

4

4

4

4

5

5

5

5

4

4

No (6)

Yes (9)

No

No

Yes

Yes 

Yes

Yes

Yes

Yes

Yes

No

Yes

Yes (9)

Yes

Yes 

No

Yes

Yes (9)

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes 

Yes (9)

Yes (9)

Yes (9)

Yes (9)

Yes (9)

Yes (9)

Yes 

Yes 

No

Yes

Yes

Yes

Yes

Yes

Yes

No

No

Yes

Yes (9)

Yes

Yes

Yes

Yes

Yes (9)

Yes (9)

Yes (9)

Yes

Yes

Yes

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

O

f
f
i
c
i
a
l

J
o
u
r
n
a
l

o
f

t
h
e

E
u
r
o
p
e
a
n

C
o
m
m
u
n
i
t
i
e
s

×

×

×

×

×

.

1
4
1
2
9
8

.

 
 
 
 
 
 
Yes

Yes

Yes

Yes

Yes

Yes

No

No

No

No

Yes

Yes

Yes (9)

Yes 

Yes (9)

Yes 

Yes

Yes

Yes

No

Yes (9)

Yes

No

No

No

No

No

Yes

Yes

Yes

Yes

Yes

Yes

Yes

No

No

×

×

×

×

×

×

(1)

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

STMELF  -  Saxony

Prüfdienst

MELF  -  Saxony-Anhalt Ref.  13  of  the  Ministry

MELFF  -
Schleswig-Holstein

M.  N.+UMW.  -
Schleswig-Holstein

LAND.VAMT  -
Thuringia

Internal  audit  MELFF

Innerev.  MNU

Ministry Agriculture

GREECE:

GE-DIDAGEP

Moore  Stephens

SPAIN:

FEGA

DGDR

FROM

Ministerio  de  Economía

Ministerio  de  Economía

Ministerio  de  Economía

Dep.  Agr.  -  Catalonia

Adm.  de  la  Diputación

Dep.  Agr.  -  Basque
Country

Oficina  de  Control

Dir.  Agr.  -  Navarre

Servicio  Interno

Dep.  Agr.  -  Aragon

No  payment  claimed
1996

Con.  Agr.  -  Balearic
Islands

No  payment  claimed
1996

Con.  Agr.  -  Valencia

No  payment  claimed
1996

Con.  Agr.  -  Canary
Islands

No  payment  claimed
1996

Dir.  Agri.  -  Cantabria

Con.  Agr.  -  Galicia

Con.  Agr.  -  Murcia

Con.  Agr.  -  La  Rioja

No  payment  claimed
1996

No  payment  claimed
1996

No  payment  claimed
1996

No  payment  claimed
1996

Con.  Agr.  -  Castile-La
Mancha

No  payment  claimed
1996

Con.  Agr.  -
Extremadura

Con.  Agr.  -  Asturias

Con.  Agr.  -  Andalusia

Con.  Agr.  -
Castile-Leon

Con.  Agr.  -  Madrid

No  payment  claimed
1996

No  payment  claimed
1996

No  payment  claimed
1996

No  payment  claimed
1996

No  payment  claimed
1996

4

4

4

4

5

2

5

5

5

5

5

5

5

5

5

5

5

5

5

5

5

5

5

5

5

5

.

1
4
1
2
9
8

.

E
N

O

f
f
i
c
i
a
l

J
o
u
r
n
a
l

o
f

t
h
e

E
u
r
o
p
e
a
n

C
o
m
m
u
n
i
t
i
e
s

C

3
8
9

/

2
7

 
 
 
 
 
 
Member  State

Paying agency

Certifying  body

Certification
unqualified

First
certificate
accepted

Additional
work
requested

Nature

Reservation  raised  by  the  certifying  body

Segregation
of  duties

Pre-payment
checks

Reconcilia-
tion

Debtors
ledger

EDP

Internal
audit

Technical
services

Intervention
stocks

FRANCE:

CNASEA

FIOM

FIRS

Certifying  body

Certifying  body

Certifying  body

Services  de´concentre´s

Certifying  body

ODEADOM

OFIVAL

ONIC

ONIFLOHR

ONILAIT

ONIVINS

SAV

SIDO

Certifying  body

Certifying  body

Certifying  body

Certifying  body

Certifying  body

Certifying  body

Certifying  body

Certifying  body

IRELAND:

DAFF

Arthur  Andersen

ITALY:

AIMA

DCCC/Dog.

IGFOR

ENR

LUXEMBOURG: Min. Agric.

THE
NETHERLANDS:

DLB

HPA

LASER

MVO

PGF

PPE (2)

PVE  (exPVV)

PVI

PZ

STOAS

Reconta  Ernst  &
Young

Raggioneria  del  Stato

Raggioneria  del  Stato

Coopers  &  Lybrand

Ministry  of  Finance  —
inspectorate general

Accountantsdienst
ministerie

Accountantsdienst
ministerie

Accountantsdienst
ministerie

Accountantsdienst
ministerie

Accountantsdienst
ministerie

Merged  with  PVE

Accountantsdienst
ministerie

Accountantsdienst
ministerie

Accountantsdienst
ministerie

Accountantsdienst
ministerie

5

5

5

5

5

5

5

5

5

5

5

5

2

2

5

5

2

5

5

5

5

5

5

5

5

5

5

5

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

No

Yes

No

No

No

No

No

No

No

No

No

No

No

No

No

No (6)

Yes 

No

Yes

No

Yes

No

No

No

No

Yes

No

No

No

No

Yes

Yes

Yes (9)

Yes

Yes (8)

Yes

Yes (9)

No

Yes

No (7)

Yes (8)

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

No

Yes

Yes

Yes

No

No

Yes

No

Yes

No

No

Yes

Yes

No

No

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

C

3
8
9
2
8

/

E
N

O

f
f
i
c
i
a
l

J
o
u
r
n
a
l

o
f

t
h
e

E
u
r
o
p
e
a
n

C
o
m
m
u
n
i
t
i
e
s

.

1
4
1
2
9
8

.

 
 
 
 
 
 
AUSTRIA:

AMA

BMLF-wine

Internal  audit  of
Ministry
Internal  audit  of
Ministry
Ministry  of  finance
Internal  audit
Prüf  Buchhaltung

ZA Salzburg
Landesamt  -  Salzburg
Landesamt  -  Tyrol
Landesamt  -  Vorarlberg Gebarungskontrolle

PORTUGAL:

IFADAP
INGA

Inspeçao  Geral  Finanças
Inspeçao  Geral  Finanças

FINLAND:

Ministry  og  Agriculture Coopers  &  Lybrand

SWEDEN:

SJV

Court  of  auditors
(RRV)

UNITED
KINGDOM:

Countryside
Commission
Countryside
Commission  for  Wales
Forestry  Commission
IBEA
MAFF
DANI
SOAD
WOAD

National  Audit  Office

National  Audit  Office

National  Audit  Office
National  Audit  Office
National  Audit  Office
National  Audit  Office
National  Audit  Office
National  Audit  Office

5

5

5
4
5
4

5
5

2

3

3

3

3
3
3
3
3
3

Yes

Yes

Yes
Yes
Yes
Yes

No
No

Yes

Yes

Yes

Yes

Yes
No
No
Yes
No
Yes

No 

Yes 

Yes 
Yes 
Yes
Yes 

Yes
Yes

Yes 

Yes 

n.d.

n.d.

n.d.
n.d.
n.d.
n.d.
n.d.
n.d.

Yes

No

No
No
Yes
No

Yes
Yes

Yes

Yes

No

No

No
No
No
No
No
No

×

×
×

×

×
×

×

×

×
×
×
×

×

×

×

×

×

×

×

×

×
×

×
×

×

×

×

×

×

×

×

×

×

×
×

×

(1)  Observation  revised  during  on  the  spot  audit,  but  not  mentioned  in  the  certificate.
Key  to  ‘Nature  of  certifying  body’:
(2)  External  auditor.
(3)  National  audit  institution.
(4)  Internal  audit  division  of  the  paying  agency.
(5)  Other  public  body,  e.g.  accountancy  service  of  the  Ministry  of  Agriculture.
Key  to  ‘Qualified’  certification:
(6)  Qualified-limitation  on  scope.
(7)  Adverse.
Key  to  ‘Accepted  certificate’:
(8)  Audit  certificate  accepted  but  financial  consequences.
(9)  Audit  certificate  accepted  but  reserves.
Source:  Court  of  Auditors,  based  on  assessment  of  supporting  documents  of  the  Commission

.

1
4
1
2
9
8

.

E
N

O

f
f
i
c
i
a
l

J
o
u
r
n
a
l

o
f

t
h
e

E
u
r
o
p
e
a
n

C
o
m
m
u
n
i
t
i
e
s

C

3
8
9

/

2
9

 
 
 
 
 
 
Financial  corrections  for  the  non-respect  of  payment  deadlines  1996

Table  5

Budget  item

Belgium
national
currency

Denmark
national
currency

Germany
national
currency

Greece
national
currency

Spain
national
currency

France
national
currency

Ireland
national
currency

Italy
national
currency

Portugal
national
currency

United  Kingdom
national
currency

Total (1)
ECU

B01-1 0 2 9-041 Other
interventions  -  special  aid  to
Portugal

B01-1 0 4 0-003 Small
products,  maize,  1995/1996

B01-1 0 4 1-002 Small
products,  cereals,  1994/1995

B01-1 0 4 1-003 Small
products,  cereals,  1995/1996

B01-1 0 4 2-012 Small
products,  oil  seeds  1994/1995

B01-1 0 5 1-001 Cereals,
1993/1994

B01-1 0 5 1-002 Cereals,
1994/1995

B01-1 0 5 2-003 Oil  seeds,
1995/1996

B01-1 0 5 2-012 Oil  seeds,
1994/1995

B01-1 0 5 3-002 Peas,  beans,
lupins,  1994/1995

B01-1 0 5 5-001 Durum  wheat,
1993/1994

B01-1 0 5 5-002 Durum  wheat,
1994/1995

B01-1 0 6 0-001 Set  aside,
1993/1994

B01-1 0 6 0-002 Set  aside,
1994/1995

B01-1 2 1 0-061 Products,  aid
olive  oil,  1994/1995

B01-1 2 1 0-070 Products,  aid
olive  oil,  1993/1994

B01-1 2 1 0-071 Products,  aid
olive  oil,  1994/1995

B01-1 2 1 0-114 Products,  aid
olive  oil,  1993/1994

B01-1 2 1 0-134 Products,  aid
olive  oil,  1993/1994

B01-1 2 1 0-144 Products,  aid
olive  oil,  1994/1995

21 675 941,00

31 134 395,00

294 708,02

4 469 108,00

22 841,43

25 211,51

30 235,79

24 038 232,00

3 363 927,00

52 310 851,00

565 382 379,00

2 902 766,92

150 357,36

21 039,48

133 308,57

487 401,53

1 184 215,45

141 661 209,00

76 179 738,00

1 437 527,52

87 693 128,00

448 195,97

5 664 759,00

10 356 687,00

78 184 726,00

1 964 905,00

46 237 735,00

35 425,83

64 780,31

488 978,67

12 284,93

289 213,60

79 918 681,00

106 078 664,00

402 298 735,00

1 127 353,61

5 576 199,00

3 866 238,00

3 527 162,00

114 628 395,00

2 735 426 935,00

34 870,08

18 027,18

57 675,82

1 376 343,14

12 570,11

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B01-1 6 1 0-008 Priv.  storage
wine,  1994/1995

B01-1 6 1 0-017 Priv.  storage
grape  must,  1993/1994

B01-1 6 1 0-018 Priv.  storage
grape  must,  1994/1995

B01-1 8 0 0-014 Seeds,
legumes,  1995

B01-2 0 6 7-002 Milk  quotas,
temp.  susp.,  1988/1989

B01-2 1 2 0-010 Suckler  cows,
1993

5 193 131,00

5 731 932,00

129 941 962,00

4 105 671,00

105 000,78

153 277 095,00

361 443 635,00

261 262 473,00

77 122,10

181 862,09

131 460,27

53 460,19

24 282 936,00

573 377,33

8 546 894,00

50 656 449,00

B01-2 1 2 0-011 Suckler  cows,
1994

B01-2 1 2 0-012 Suckler  cows,
1995

B01-2 1 2 1-110 Suckler  cows,
supplementary,  1993

B01-2 1 2 1-111 Suckler  cows,
supplementary,  1994

B01-2 1 2 1-112 Suckler  cows,
supplementary,  1995

B01-2 1 2 2-007 Special  beef
premiums,  1993

B01-2 1 2 2-008 Special  beef
premiums,  1994

B01-2 1 2 5-001 Extensive
premiums,  1993

B01-2 1 2 5-002 Extensive
premiums,  1994

B01-2 1 2 5-003 Extensive
premiums,  1994

B01-2 1 2 7-001
Complementary  premiums,
Portugal,  1993

B01-2 1 2 7-003
Complementary  premiums,
Portugal,  1994

B01-2 2 2 0-020 Ewe  and  goat
premiums,  1994

B01-3 8 0 2-006 Cotton,  small
producers,  1994/1995

B01-3 8 0 4-003 Suckler  cows,
mixed  h.,  1992/1993

747 008,46

11 255 550,00

380 411 386,00

1 275 279 338,00

3 163 185,55

70 851 799,00

363 015,77

28 781 609,00

119 101 688,00

145 813,85

338 601 050,00

143 650,19

180 026,83

939 719,02

22 038,83

124 642,27

45 767 060,00

8 514 280,00

395 403,45

6 710 725,00

371 185 885,00

210 461,69

68 077 657,00

201 090,30

3 995 184,00

694 321,63

258 274,20

171 099,84

13 424 888,00

167 661 204,00

1 058 450,04

752 406 813,00

2 905 342,18

13 417 190,00

68 735,85

2 924 931,00

14 955,12

8 415 172,00

43 107,84

20 636,93

87 499,89

20 358,81

6 347 383,00

13 988 957,00

3 254 844,00

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Budget  item

Belgium
national
currency

Denmark
national
currency

Germany
national
currency

Greece
national
currency

Spain
national
currency

France
national
currency

Ireland
national
currency

Italy
national
currency

Portugal
national
currency

United  Kingdom
national
currency

Total (1)
ECU

B01-3 8 0 4-004 Suckler  cows,
mixed  h.,  1993

B01-3 8 0 4-005 Suckler  cows,
mixed  h.,  1994

B01-3 8 0 4-006 Suckler  cows,
mixed  h.,  1995

B01-3 8 0 5-020 Ewe
premiums, disadvantaged
regions,  1994

53 944 048,00

13 208,06

353 788,03

106 639 494,00

2 020 935 311,00

19 162,95

1 729 509,55

34 703 050,00

4 040 764,00

8 147 139,00

214 497,02

63 742,20

Total

5 193 131,00

2 189 498,11

295 742,11

131 296 161,00 1 586 795 314,00

289 464,04

1 272 748,40 8 916 687 627,00

904 893 073,00

177 683,03 21 925 226,26

of  which  to  be  refused
1/9-15/10/1996

1 758 745,00

19 248,17

12 416,81

339 541,00

53 961 111,00

74 301,19

29 171,35 2 317 922 416,00

568 338 320,00

5 894,02

ECU  per  Member  State

132 382,14

299 672,89

155 917,01

426 893,11

9 920 908,82

44 423,07

1 569 165,74

4 523 147,22

4 639 208,82

213 507,43 21 925 226,26

(1)  No  corrections  were  made  for  Luxembourg,  the  Netherlands,  Austria,  Sweden  and  Finland.
Source:  Working  document  of  the  Commission.

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Table  6

Overview  of  the  financial  corrections

Member  State

Correction  for  late
payment,
(see  Table  5) (*)

Correction  following
decision  of  14/7/1997,
DG  VI  G2 (*)

Other  correction (*)

Total

Total  included  in  the  clearance  decision

National currency

million  ECU (4)

National currency

million  ECU (4)

Belgium

Denmark

Germany

Greece

Spain

France

Ireland

Italy

Luxembourg

The  Netherlands

Austria

Portugal

Finland

Sweden

− 5 193 131,00

0,00

− 2 189 498,11

− 2 873 870,96 (1)

0,00

0,00

− 5 193 131,00

− 5 063 369,07

− 295 742,11

0,00

545,82

− 295 196,29

− 0,13

− 0,68

− 0,16

− 5 193 131,00

− 2 189 498,11

− 295 196,29

− 131 296 161,00

− 1 577 481 460,00

− 8 802 781 904,00

− 10 511 559 525,00

− 33,94

− 10 511 559 525,00

− 1 586 795 314,00

0,00

− 289 464,04

− 2 540 376,36

− 1 272 748,40

0,00

− 8 916 687 627,00

− 41 350 131 560,00 (2)

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

− 1 586 795 314,00

− 2 829 840,40

− 1 272 748,40

− 9,92

− 0,43

− 1,57

− 1 586 795 314,00

− 2 829 840,00

− 1 272 748,00

− 50 266 819 187,00

− 26,00

− 8 083 763 077,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

− 904 893 073,00

− 2 241 439,00

− 495 713 712,00

− 1 402 848 224,00 (3)

− 7,13

− 1 402 848 224,00

0,00

0,00

United  Kingdom

− 177 583,03

TOTAL

0,00

0,00

0,00

0,00

0,00

0,00

0,00

2 383 253,79

2 205 670,76

0,00

0,00

2 205 670,76

0,00

0,00

2,63

− 77,33

(1)  The  financial  correction  of  14.7.1997  for  Denmark  was  not  included  in  the  accounts  clearance  decision.
(2)  Only  JTL  8 083 763 077  were  included  in  the  clearance  decision  beacause  of  a  modification  made  by  the  division  DGVIA1.
(3)  Furthermore,  a  claim  for  interest  of  PTE  294 990 678  was  not  accepted.
(4)  Exchange  rates  for  the  advance  payments  during  1996  (if  appropriate)  and  rates  applicable  for  the  clearance  decision.
(*)  Amounts  in  national  currency.

Source:  Court  of  Auditors  and  working  documents  of  the  Commission.

− 0,13

− 0,30

− 0,16

− 33,94

− 9,92

− 0,43

− 1,57

− 4,10

0,00

0,00

0,00

− 7,13

0,00

0,00

2,63

− 55,05

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Expenditure  claimed  for  1996  per  paying  agency  and  approved  by  the  Commission

Table  7

Member  State

Paying agency

Annual declaration
Expenditure  cleared  in

Decision  of  5  May
1997 (*)

Decision  of  30  July
1997 (*)

Adjustments (1)
(*)

Adjusted cleared
expenditure (*)

Financial
correction (2) (*)

Total, including
reductions  and
suspensions (*)

Advances paid

Amounts  to  be  recovered  from  (−)  or
paid  to  (+)  Member  States

National currency

ECU

National currency

ECU

1

2

3

4  (= 1 + 2 + 3)

5

6  (= 4 + 5)

7

8

9  (= 6 − 7)

10

BELGIUM
BIRB

DG  3

32 341 253 774,00

12 346 613 231,00

Region  Wallone

17 571 955,00

Waamse Gemeenschap

0,00

Total  -  Belgium

44 705 438 960,00

DENMARK
EU  Direkt.

GERMANY
BLE

HH-Jonas

MLR  -
Baden-Württemberg

9 908 565 701,48

1 599 644 495,25

1 923 631 859,40

616 078 966,66

STMELF  -  Bayern

1 453 144 674,77

STMELU  -  Bayern

0,00

SEN-WIRT  -  Berlin

4 015 368,83

MELF  -  Brandenburg

612 067 461,18

SEN-WIRT  -  Bremen

BEH-WIRT  -  Hamburg

2 859 580,76

6 091 492,28

MILFN  -  Hessen

341 100 538,40

MELF  -
Mecklenburg-West
Pomerancia

743 462 197,40

LÖBF  -  Lower  Saxony

1 088 116 097,90

17 998 116,45

240 189,75

170 281 130,98

510 619 278,95

LEJ  -  NRW  (Land)

LÖBF  -  NRW  (Land)

LWK  Münst -  NRW
(Westphalia)

LWK  Bonn  -  NRW
(Rheinland)

MWVLW  -  Rheinland
and  Pfalz

MIUEV  -  Saarland

STMELF  -  Saxony

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

32 341 253 774,00

−5 193 131,00

32 336 060 643,00

32 337 819 388,00

828 376 095,52

−1 758 745,00

−43 534,91

12 346 613 231,00

0,00

12 346 613 231,00

12 346 613 231,00

316 736 007,51

0,00

0,00

17 571 955,00

18 860 494,00

480 081,98

−1 288 539,00

−31 895,71

0,00

0,00

0,00

0,00

0,00

0,00

0,00

44 705 438 960,00

−5 193 131,00

44 682 673 874,00

44 703 293 113,00

1 145 592 185,00

−3 047 284,00

−75 430,62

9 908 565 701,48

−2 189 498,11

9 906 376 203,37

9 906 470 474,62

1 355 749 397,61

−94 271,25

−12 647,80

1 599 644 495,25

−12 416,81

1 599 632 078,44

1 600 319 235,49

840 382 971,70

−687 157,05

−351 025,53

1 923 631 859,40

545,82

1 923 632 405,22

1 923 551 363,87

1 012 927 084,49

81 041,35

41 398,95

616 078 966,66

−26 187,34

616 052 779,32

616 052 779,32

326 109 639,67

1 453 144 674,77

0,00

4 015 368,83

612 067 461,18

2 859 580,76

0,00

0,00

0,00

0,00

0,00

1 453 144 674,77

1 453 144 674,77

769 036 218,05

0,00

0,00

0,00

4 015 368,83

4 015 368,83

2 110 863,08

612 067 461,18

612 067 461,18

323 996 866,62

2 859 580,76

2 859 580,76

1 508 047,94

6 091 492,28

−2 754,57

6 088 737,71

6 088 737,71

3 204 302,54

341 100 538,40

−52 671,32

341 047 867,08

341 047 867,08

180 395 853,00

743 462 197,40

0,00

743 462 197,40

743 462 197,40

393 379 678,84

1 088 116 097,90

−93 669,95

1 088 022 427,95

1 088 022 427,95

576 182 020,59

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

17 998 116,45

240 189,75

0,00

0,00

17 998 116,45

240 189,75

0,00

0,00

0,00

0,00

17 998 116,45

9 194 111,30

240 189,75

122 697,91

170 281 130,98

−26 854,52

170 254 276,46

699 158 885,98

370 740 820,54

−528 904 609,52

−270 184 263,92

510 619 278,95

0,00

510 619 278,95

0,00

0,00

510 619 278,95

260 843 432,90

0,00

255 448 030,59

255 448 030,59

−9 376,39

255 438 654,20

255 438 654,20

135 025 110,58

26 601 332,68

0,00

26 601 332,68

−1 372,17

26 599 960,51

26 599 960,51

14 035 002,95

0,00

531 839 110,29

531 839 110,29

−4 449,42

531 834 660,87

531 834 660,87

281 684 755,12

MELF  -  Saxony-Anhalt

671 235 554,96

MELFF  -  Schleswig-
Holstein

M. N.+UMW  -
Schleswig-Holstein

484 657 952,66

2 121 469,83

0,00

0,00

0,00

671 235 554,96

−1 412,60

671 234 142,36

671 234 142,36

355 855 695,64

484 657 952,66

−50 937,44

484 607 015,22

484 607 015,22

256 593 462,00

2 121 469,83

0,00

2 121 469,83

2 121 469,83

1 125 008,52

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

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LAND. VAMT  -
Thuringia

Previous years’ clearance
of  accounts

469 769 255,27

−86 937 734,08

0,00

0,00

469 769 255,27

−13 639,58

469 755 615,69

469 755 615,69

248 606 352,24

−86 937 734,08

0,00

−86 937 734,08

−86 937 734,08

−45 417 505,10

0,00

0,00

0,00

0,00

Total  -  Germany

10 656 799 280,28

787 287 140,88

11 444 086 421,16

−295 196,29

11 443 791 224,87

11 444 444 364,94

6 047 482 249,02

−653 140,07

−333 648,39

.

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1
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.

0,00

865 918 604 800,00 −148 393 325,00

865 770 211 475,00 −10 511 559 525,00

855 258 651 950,00

856 984 866 276,00

2 787 533 983,47

−1 726 214 326,00

−5 556 728,69

0,00

0,00

0,00

673 384 888 619,00

10 219 598,00

673 395 108 217,00

−1 585 066 308,00

671 810 041 909,00

672 068 754 580,00

4 196 401 817,77

−258 712 671,00

6 941 503 608,00

316 100 610,00

6 941 503 608,00

316 100 610,00

0,00

0,00

6 941 503 608,00

6 936 621 636,00

43 560 735,80

4 881 972,00

316 100 610,00

316 100 610,00

1 952 757,37

−354 809,84

29 437,13

E
N

−46 636 438 601,00

0,00

−46 636 438 601,00

0,00

−46 636 438 601,00

−46 636 438 601,00

−288 489 982,79

0,00

11 525 459 389,00

11 525 459 389,00

−1 729 006,00

11 523 730 383,00

11 523 730 383,00

71 228 586,97

1 797 547 846,00

1 792 738 680,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

1 797 547 846,00

1 792 738 680,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

1 797 547 846,00

1 797 547 846,00

11 138 581,70

1 792 738 680,00

1 792 738 680,00

11 097 431,72

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

GREECE
GE-DIDAGEP

SPAIN:
FEGA

DGDR

FROM

Previous years’ clearance
of  accounts

Dep. Agr.

-  Catalonia (3)

Dep. Agr.
Country

Dir. Agr.

Dep. Agr.

Con. Agr.
Islands (3)

-  Basque

- Navarre
-  Aragon (3)

-  Balearic

Con. Agr.

-  Valencia (3)

Con. Agr.
Islands (3)

-  Canary

Dir Agri

Con. Agr.

Con. Agr.

Con. Agr.

-  Cantabria (3)
- Galicia (3)
-  Murcia (1)
-  La  Rioja (3)

Con. Agr.
Mancha (3)

-  Castile-La

Con. Agr.
Extremadura (3)

-

Con. Agr.

-  Asturias (3)

Con. Agr.
-
Andalusia (3)

Con. Agr.
Castile-Leon (3)

-

Con. Agr.

-  Madrid (3)

Total  -  Spain

−43 046 152 075,00

692 167 952 226,00

10 219 598,00

649 132 019 749,00

−1 586 795 314,00

647 545 224 435,00

647 799 055 134,00

4 046 889 928,54

−253 830 699,00

−325 372,71

FRANCE:
CNASEA

FIOM

FIRS

Services de´concentre´s

ODEADOM

OFIVAL

ONIC

ONIFLOHR

ONILAIT

ONIVINS

SAV

SIDO

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

1 442 996 452,21

69 368 968,46

3 385 949 767,33

5 710 637 098,07

478 793 340,93

8 098 706 668,68

24 949 681 613,01

1 919 404 772,25

5 599 248 432,57

630 326 015,17

584 106 726,12

9 594 423 526,29

Previous years’ clearance
of  accounts.

−479 811 600,91

0,00

1 442 996 452,21

69 368 968,46

3 385 949 767,33

0,00

0,00

0,00

1 442 996 452,21

1 443 852 716,85

222 326 433,16

−856 264,64

−130 128,87

69 368 968,46

69 368 968,46

10 690 704,68

3 385 949 767,33

3 385 949 767,33

521 911 256,00

0,00

0,00

0,00

0,00

5 710 637 098,07

−289 464,04

5 710 347 634,03

5 703 068 009,55

880 062 886,06

7 279 624,48

1 106 304,39

478 793 340,93

8 098 706 668,68

24 949 681 613,01

1 919 404 772,25

0,00

0,00

0,00

0,00

478 793 340,93

478 793 340,93

73 808 467,95

0,00

0,00

8 098 706 668,68

8 098 491 505,83

1 247 927 025,91

215 162,85

32 698,89

24 949 681 613,01

24 949 681 613,01

3 849 947 377,15

1 919 404 772,25

1 919 404 772,25

295 847 651,96

0,00

0,00

0,00

0,00

5 599 248 432,57

−2 540 376,36

5 596 708 056,21

5 599 248 432,57

863 611 543,30

−2 540 376,36

−386 067,92

630 326 015,17

584 106 726,12

9 594 423 526,29

−479 811 600,91

0,00

0,00

0,00

0,00

630 326 015,17

630 324 137,41

97 142 627,53

1 877,76

285,37

584 106 726,12

584 106 726,12

90 067 907,95

9 594 423 526,29

9 594 423 526,29

1 478 292 033,08

−479 811 600,91

−479 811 600,91

−74 008 224,45

0,00

0,00

0,00

0,00

0,00

0,00

Total  -  France

−479 811 600,91

62 463 643 381,09

61 983 831 780,18

−2 829 840,40

61 981 001 939,78

61 976 901 915,69

9 557 627 690,27

4 100 024,09

623 091,84

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Member  State

Paying agency

Annual declaration
Expenditure  cleared  in

Decision  of  5  May
1997 (*)

Decision  of  30  July
1997 (*)

Adjustments (1)
(*)

Adjusted cleared
expenditure (*)

Financial
correction (2) (*)

Total, including
reductions  and
suspensions (*)

Advances paid

Amounts  to  be  recovered  from  (−)  or
paid  to  (+)  Member  States

National currency

ECU

National currency

ECU

1

2

3

4  (= 1 + 2 + 3)

5

6  (= 4 + 5)

7

8

9  (= 6 − 7)

10

IRELAND:
DAFF

ITALY:
AIMA

DCCC/Dog.

Ministry  of  Agric.  -
other (4)

ENR

IGFOR

Previous years’ clearance
of  accounts

1 357 589 858,65

0,00

1 357 589 858,65

−1 272 748,40

1 356 317 110,25

1 364 455 544,68

1 699 515 507,34

−8 138 434,43

−10 774 103,33

0,00 8 681 647 954 929,00

8 681 647 954 929,00

−8 083 763 077,00

8 673 564 191 852,00

8 637 884 829 507,00

4 291 612 634,47

35 679 362 345,00

18 356 877,05

0,00

675 602 631 178,00

675 602 631 178,00

0,00

675 602 631 178,00

675 602 946 398,00

340 803 499,03

−315 220,00

−162,64

0,00

1 895 331 293,00

1 895 331 293,00

17 215 685 525,00

0,00

0,00

352 434 367 507,00

17 215 685 525,00

352 434 367 507,00

0,00

0,00

0,00

1 895 331 293,00

1 895 331 293,00

977 907,43

17 215 685 525,00

17 215 685 525,00

8 824 348,14

352 434 367 507,00

352 434 367 507,00

171 810 740,59

0,00

0,00

0,00

0,00

−1 149 369 727 187,00

0,00

−1 149 369 727 187,00

0,00 −1 149 369 727 187,00 −1 148 426 860 350,00

−593 189 481,34

−942 866 837,00

−487 012,90

Total  -  Italy −1 132 154 041 662,00 9 711 580 284 907,00

8 579 426 243 245,00

−8 083 763 077,00

8 571 342 480 168,00

8 534 710 968 587,00

4 219 861 740,89

36 631 511 581,00

18 847 608,94

LUXEMBOURG:
Min. Agric.

THE  NETHERLANDS:
DLB  (LLB/LBL)

HPA

LASER

MVO

PGF

PPE (2)

PVE  (exPVV)

PVI

PZ

STOAS

LEF  -  Clearance

767 426 497,00

10 968 098,16

802 434 672,00

828 715 021,70

161 026,52

24 457 208,21

0,00

447 624 251,84

320 777,49

1 141 416 566,58

5 664 614,50

4 503 695,10

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

767 426 497,00

0,00

767 426 497,00

767 426 497,00

19 706 980,78

0,00

0,00

10 968 098,16

802 434 672,00

−387 953,00

828 327 068,70

−23 722,00

24 433 486,21

161 026,52

0,00

447 624 251,84

320 777,49

1 141 416 566,58

5 664 614,50

4 503 695,10

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

10 968 098,16

11 224 859,61

5 253 378,42

−256 761,45

−116 587,33

802 434 672,00

802 434 672,00

377 445 801,03

0,00

0,00

828 327 068,70

828 743 332,10

389 174 142,59

−416 263,40

−189 012,17

161 026,52

161 026,52

75 706,91

0,00

0,00

24 433 486,21

24 467 809,60

11 513 536,96

−34 323,39

−15 585,18

0,00

0,00

0,00

447 624 251,84

447 624 251,84

210 292 540,96

320 777,49

320 777,49

149 912,94

0,00

0,00

0,00

0,00

0,00

0,00

1 141 416 566,58

1 141 427 352,14

536 759 933,29

−10 785,56

−4 897,39

5 664 614,50

4 503 695,10

5 664 614,50

2 633 424,61

4 503 695,10

2 102 388,73

0,00

0,00

0,00

0,00

Total  -  Netherlands

3 266 265 932,10

0,00

−411 675,00

3 265 854 257,10

0,00

3 265 854 257,10

3 266 572 390,90

1 535 400 766,44

−718 133,80

−326 082,07

AUSTRIA:
AMA

BMLF-wine

ZA Salzb.

Landesamt  -  Land  Salzb.

Landesamt  -  Land  Tirol

Landesamt-  Land
Vorarlberg

15 263 275 084,19

36 579 740,69

935 145 372,00

3 839 076,75

4 840 106,00

2 029,00

Total  -  Austria

16 243 681 408,63

0,00

0,00

0,00

0,00

0,00

0,00

0,00

15 263 275 084,19

36 579 740,69

935 145 372,00

3 839 076,75

4 840 106,00

2 029,00

0,00

0,00

0,00

0,00

0,00

0,00

15 263 275 084,19

15 250 943 164,42

1 139 064 104,87

12 331 919,77

895 102,73

36 579 740,69

36 579 740,69

2 727 937,07

935 145 372,00

935 145 372,00

69 795 783,59

0,00

0,00

0,00

0,00

3 839 076,75

4 840 106,00

4 007 274,50

4 840 106,00

295 414,97

357 169,51

2 029,00

2 029,00

149,58

−168 197,75

−12 208,50

0,00

0,00

0,00

0,00

16 243 681 408,63

0,00

16 243 681 408,63

16 231 517 686,61

1 212 240 559,59

12 163 722,02

882 894,23

PORTUGAL:
IFADAP

INGA

Declaration interest

0,00

0,00

0,00

13 771 836 169,00

113 665 949 104,00

13 771 836 169,00

0,00

13 771 836 169,00

13 771 836 169,00

70 352 867,90

0,00

0,00

113 665 949 104,00

−1 402 848 224,00

112 263 100 880,00

112 833 680 639,00

575 040 733,77

−570 579 759,00

−2 877 223,23

294 990 678,00 −294 990 678,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

Total  -  Portugal

0,00

127 732 775 951,00 −294 990 678,00

127 437 785 273,00

−1 402 848 224,00

126 034 937 049,00

126 605 516 808,00

645 393 601,67

−570 579 759,00

−2 877 223,23

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FINLAND:
Ministry  of  Agriculture

3 704 810 041,77

SWEDEN:
SJV

5 355 212 599,94

0,00

0,00

3 704 810 041,77

0,00

3 704 810 041,77

3 704 831 777,93

647 495 805,87

−21 736,16

−3 688,94

5 355 212 599,94

0,00

5 355 212 599,94

5 355 212 599,94

622 209 998,04

0,00

0,00

.

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1
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UNITED  KINGDOM:
Countryside
Commission (5)

Countryside  Commission
for  Wales (5)
Forestry  Commission (5)
Intervention  Board (5)
MAFF  -  England (5)
DANI  -  North.  Ireland (5)
SOAFD  -  Scotland (5)
WOAD  -  Wales (5)

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

2 154 248,54

−4 488,00

2 149 760,54

964 112,04

0,00

964 112,04

15 666 652,45

−234 773,00

15 431 879,45

0,00

0,00

0,00

2 149 760,54

964 112,04

15 431 879,45

0,00

0,00

0,00

0,00

0,00

0,00

2 149 760,54

3 123 889,59

964 112,04

1 400 983,74

E
N

15 431 879,45

22 424 584,83

612 597 345,29

−2 552 006,73

610 045 338,56

2 205 570,76

612 250 909,32

2 878 415 943,20

3 468 153 594,18

−2 266 165 033,88

−3 293 040 889,99

1 545 410 049,64

−451 313,28

1 544 958 736,36

149 086 524,95

−129 536,83

148 956 988,12

366 567 011,60

−3 775 302,92

362 791 708,68

180 132 777,16

−264 445,75

179 868 331,41

0,00

0,00

0,00

0,00

1 544 958 736,36

148 956 988,12

362 791 708,68

179 868 331,41

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

1 544 958 736,36

2 245 031 679,57

148 956 988,12

216 454 426,49

362 791 708,68

527 184 875,49

179 868 331,41

261 372 742,63

Total  -  UK

0,00

2 872 578 721,67

−7 411 866,51

2 865 166 855,16

2 205 570,76

2 867 372 425,92

2 878 415 943,20

3 468 153 594,18

−11 043 517,28

−16 047 707,66

TOTAL  -
COMMUNITY

39 010 853 988,73

−15 979 038,42

(1)  Adjustments  for  accounting  corrections.
(2)  Modifications,  reductions  and  suspensions  for  the  whole  financial  year.
(3)  No  paying  agency  in  1996,  corresponding  amounts  included  in  claim  of  FEGA.
(4) 
(5)  Monthly  advances  cannot  be  allocated  to  individual  paying  agencies  because  there  were  only  golbal  declarations  /  payments  made.

Italian  Ministry  of  Agriculture  is  not  accredited  as  paying  agency.

Note:  For  amounts  to  be  recovered  the  ecu  values  are  partly  approximate  because  the  rates  applicable  for  the  last  instalment  are  not  yet  fixed.

(*)  Amounts  in  national  currency.

Source: Work  of  the  Court  of  Auditors  from  miscellaneous  documents  of  the  Commission.

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C  389/38

EN

Official  Journal  of  the  European  Communities

14.12.98

COMMISSION’S  REPLIES

GENERAL  COMMENTS

The  Court’s  report  concerns  the  clearance  of  accounts  in  the  first  year  of  the  reform  of  the
clearance  of  accounts  procedure (1).

Inevitably,  difficulties  were  experienced  in  the  first  year  of  a  major  reform.  Certain  paying
agencies took a long time to make the changes required to meet the accreditation criteria listed
in  the  Annex  to  Regulation  (EC)  No  1663/95.  A  very  small  number  failed  to  prepare  their
accounts  in  time  for  the  deadlines.  Certain  certifying  bodies  failed  to  complete  their  audits  by
the  deadlines  or  performed  audit  work  which  was  insufficient  in  volume  or  scope.

During  most  of  this  first  year,  the  Commission  monitored  the  Member  States’  accreditation
procedures particularly closely. They ensured that the criteria were being uniformly applied, and
that  paying  agencies  were  putting  the  requisite,  often  very  substantial,  improvements  in  place
within  reasonable  time  limits,  as  laid  down  by  Article  4(4)  of  Regulation  No  729/70.

From  the  end  of  the  first  year,  the  Commission  concentrated  more  on  monitoring  the  work  of
the  certification  bodies.  They  ensured  that  all  worked  to  high  professional  standards,  that  a
uniform  level  of  audit  work  was  being  performed,  and  that  the  financial  effect  of  the  auditors’
findings  was  being  evaluated.  They  insisted  that  the  required  audit  work  be  completed  before
agreeing to propose that the accounts concerned be cleared, with the result that the accounts of
many  paying  agencies  could  not  be  cleared  until  three  months  after  the  Regulation  time  limit.

The  very  considerable  efforts  made  by  all  concerned  in  the  Member  States,  and  by  the
Commission,  bore  fruit  in  1997,  when  virtually  all  paying  agencies  were  fully  accredited,  all
accounts and  reports were  received  in good time and all accounts were cleared within the time
limit. In 1998, the Commission continues to give the highest priority to ensuring the continued
success of the reform, in the expectation that the improved controls will result in a high level of
compliance with Community rules, and in as low a rate of irregularity as can be expected in the
complex  environment  of  the  CAP.

EXECUTIVE  SUMMARY

The  reformed  procedure  requires  each  paying  agency  to  assume  full  responsibility  for  the
payments it executes and to ensure that claims are properly checked before authorisation. If, for
reasons  peculiar  to  the  Member  State  concerned,  a  paying  agency  cannot  discharge  this
responsibility  in  respect  of  any  category  of  expenditure,  then  the  department  which  can
discharge it must be designated as paying agency and must satisfy the accreditation criteria. As a
result  of  the  reform,  the  control  structures  in  each  Member  State  are  less  fragmented  and  far
more  transparent,  and  the  responsibilities  of  each  department  concerned  are  now  clearly
defined.  This  does  not  mean  that  there  is  no  further  scope  for  reduction  in  the  number  of
paying  agencies,  and  the  Commission  will  encourage  Member  States  to  keep  to  the  lowest
possible  number.

(1)  Regulation  (EC)  No  1287/95  of  22  May  1995  (OJ  L  125,  8.6.1995)  amending  Council  Regulation
(EEC)  No  729/70,  and  Commission  Regulation  (EC)  No  1663/95  of  7  July  1995  (OJ  L  158,
8.7.1995).

14.12.98

EN

Official  Journal  of  the  European  Communities

C  389/39

The  Commission  insists  that  in  their  subsequent  year’s  audit  report  the  certification  bodies
follow  up  the  corrective  measures  required  of  each  paying  agency  and,  if  a  risk  of  loss  to  the
Fund persists, it will take an appropriate decision under the compliance procedure. In the audits
of  the  1997  accounts,  many  of  the  shortcomings  were  found  to  have  been  remedied.

The  Member  States  showed  a  much  higher  level  of  compliance  with  the  legal  requirements  in
the  procedure  for  clearing  the  1997  financial  year,  and  the  accounts  of  virtually  all  the  paying
agencies  were  cleared  within  the  time  limits.  The  guidelines  to  which  the  Court  refers  were
discussed  with  representatives  of  each  Member  State  in  September  1996,  in  reasonably  good
time  to  assist  the  auditors.  The  Commission’s  close  monitoring  of  the  accreditation  procedures
had  until  then  prevented  attention  being  devoted  to  the  certification  procedure.

Shortcomings  detected  in  relation  to  compliance  with  the  accreditation  criteria  do  not,  in
themselves,  prevent  the  Commission  from  clearing  the  paying  agencies’  accounts.  Deadlines
must  be  set  by  which  each  paying  agency  concerned  must  take  corrective  action,  any
irregularities  occasioned  by  the  failures  must  be  recovered  and  any  financial  consequences  will
be  drawn  in  a  later  compliance  decision  under  Article  5(2)(c)  of  Regulation  (EEC)  No  729/70.
The  Member  States  continuously  submit  new  information  which  leads  to  adjustments  in  the
amounts  of  correction  applied  at  each  stage  of  the  various  procedures.

The  Commission  closely  monitors  the  effectiveness  of  the  corrective  measures  required  of  each
paying agency and recovery of any undue payments occasioned by the shortcomings. If a risk of
loss  to  the  Fund  persists,  it  will  take  an  appropriate  decision  under  the  compliance  procedure.
Many  of  the  shortcomings  have  been  found  to  have  been  remedied.

2.  ACCREDITATION  OF  PAYING  AGENCIES

Structural  development  of  paying  agencies

2.1  to  2.3. The  Commission  regrets  that  not  all  paying
agencies had been accredited by the Member States by 16
October  1995,  the  day  on  which  the  reform  took  effect.
To  refuse  payments  to  paying  agencies  that  had  not  met
this deadline would, however, have been disproportionate
to  the  desired  effect.  The  Commission  considered  that  it
was  more  important  that  the  review  of  procedures  prior
to accreditation was properly carried out, even if it meant
that  formal  accreditation  was  granted  later  than  strictly
required.

received 

accounting 

Before 
the  reform,  many  paying  agencies  merely
from
centralised 
information 
departments or bodies over which they had no powers of
control  or  enquiry  (those  in  Greece,  Spain,  Italy  and  the
UK  in  particular).  The  Court  itself  reported  on  this
(AR  1990).  The  reformed
unsatisfactory  situation 
procedure  requires  each  paying  agency  to  assume  full
responsibility  for  the  payments  it  executes  and  to  ensure
that  claims  are  properly  checked  before  authorisation.  If
for  reasons  peculiar  to  the  Member  State  concerned,  a

paying  agency  cannot  discharge  this  responsibility  in
respect of any category of expenditure, then a department
which  can  discharge  it  must  be  designated  as  paying
agency  and  must  satisfy  the  accreditation  criteria.  In
Germany  and  Spain,  for  example,  the  constitution  gives
the  regional  governments  autonomous  powers  which
must  be  respected  by  national  government  departments.
The  paying  agencies  established  at  national  level  cannot
assume  responsibility  for  claims  administered  by  the
regional  authorities,  so  these  regions  are  required  to
designate  departments  which 
this
responsibility.  They  must  ensure  that  the  departments
concerned comply with the accreditation criteria and that
their  annual  accounts  are  certified.  In  order  to  meet  the
objective of keeping the number of paying agencies down
to  a  strict  minimum,  each  Member  State  is,  however,
encouraged  to  designate  only  one  paying  agency  in  each
independent  region.

take  on 

can 

As  a  result  of  the  reform,  the  control  structures  in  each
Member  State  are  now  less  fragmented  and  far  more
transparent  and  the  responsibilities  of  each  department
concerned  are  now  clearly  defined.  This  does  not  mean
that there is no further scope for reduction in the number
of  paying  agencies,  and  the  Commission  will  encourage
Member  States  to  keep  to  the  lowest  possible  number.

C  389/40

EN

Official  Journal  of  the  European  Communities

14.12.98

2.4. Each  Member  State  has  developed  different
structures for the implementation and control of EAGGF
Guarantee  schemes.  As  far  as  possible,  the  Commission
has attempted to accommodate  these different  structures,
provided  the  objectives  laid  down  in  the  accreditation
guidelines  are  met.

allow 

agencies  which 

2.5. The  Commission  accepted  the  accreditation  of  the
by
paying 
imprest-account  holders  only  on  condition  that  the
amounts  concerned  are  limited,  and  that  the  central
department  could  issue  binding  instructions,  would  keep
detailed  central  accounts  and  was  in  a  position  to
supervise 
its  technical
departments  and  by  internal  audit.

implementation  both  through 

payments 

separate  departments  be  created  to  undertake  internal
audits and the certification of accounts. In all such cases,
the  Commission  required  additional  assurances  from  the
Member States as to the independence of the departments
certifying the accounts. So far, there has been no evidence
of certifying bodies, in their reports, giving a biased view
of  the  situation  as  regards  the  accounts  and  the  proper
functioning of such paying agencies. The Commission has
followed  the  work  of  these  certifying  bodies  closely  and,
is  evidence  of  certifying  bodies  behaving
if  there 
improperly (in not disclosing problems in their reports to
the Commission, for example), then a change of auditors
will  be  required.  To  date,  and  despite  a  large  number  of
on-the-spot  inspections,  no  evidence  of  this  sort  has
emerged.

Significant accreditation criteria and weaknesses affecting
accreditation

The  Commission’s  guidelines

to  2.11. The  Commission  will  give  detailed
2.6 
consideration  to  the  Court’s  findings  as  presented  in  its
Table 3. As some of the comments on that table indicate,
significant  improvements  have  been  made  throughout
1997  and  1998.  The  Commission  stresses  that  the
is  based  on  the
clearance  of  accounts  for  1996 
to  meet  all 
certification  of  accounts.  Failure 
the
accreditation  criteria  does  not, 
itself,  prevent  a
clearance  certificate  being  issued.

in 

inform 

(EEC)  No  729/70  and 

The  Commission  found  that  during  1996  there  were  still
major  shortcomings  at  a  number  of  paying  agencies.  In
each  case  where  such  shortcomings  were  established,  the
Commission  sent  letters  to  the  Member  States  requesting
to  apply  Article  4(4)  of
them,  where  necessary, 
Regulation 
the
to 
Commission of the remedial measures decided on and the
deadlines  fixed  for  each  of  them.  Some  of  the  action
required,  such  as  concluding  protocols  with  other  bodies
in  the  case  of  delegation  of  duties,  the  recruitment  and
training  of  additional 
internal  audit  staff  and  the
development  of  new  accounting  systems,  cannot  be
completed  in  a  very  short  space  of  time.  In  many  such
cases, only provisional accreditation was granted, and the
Commission  has  continued  to  monitor  the  paying
agencies  to  ensure  that  progress  is  being  made  and
deadlines  are  respected.  A  much  improved  situation
prevailed  when  the  1997  accounts  were  cleared.

3.  CERTIFICATION  OF  ACCOUNTS

The  certifying  bodies

3.3. Regulation  (EC)  No  1663/95,  together  with  its
Annex,  provides  the  framework  for  the  auditing  of
EAGGF  accounts.  The  many  missions  carried  out  by  the
Commission  in  respect  of  the  accreditation  procedure
were used as an occasion to discuss audit issues with the
certifying  bodies  appointed  by  the  Member  States.

On  the  basis  of  the  experience  gained  from  the
accreditation missions, the Commission found it useful to
supply  the  certifying  bodies  with  further  information  as
to  what  was  expected  of  them.  This  was  particularly
relevant for smaller and newer paying agencies which had
not  yet  been  audited  by  the  Commission.  An  expert
group  meeting  for  the  certifying  bodies  was  therefore
held on 9 September 1996, before most of the audit work
for  the  certification  of  the  accounts  was  done.  At  the
meeting  the  detailed  guidelines  to  which  the  Court  is
referring were made available to, and discussed with, the
representatives  of  the  certifying  bodies.  The  Commission
is  constantly  evaluating  how  the  certification  process  can
be  improved.

Problems  and  delays  in  obtaining  certified  accounts

3.4. The  Commission 
insisted  on  receiving  reliable
accounts  and  evidence  of  satisfactory  audit  work  before
clearing  the  accounts,  even  though  this  meant  delaying  a
decision  on  a  number  of  paying  agencies.  The  deadlines
for  clearance  of  the  1997  accounts  were  met,  and  only
one decision was taken (on 29 April 1998) to clear all the
paying agencies’ accounts materially.

in  principle  the
3.2. The  Commission  agrees  that 
certifying body should be fully independent of the paying
agency.  However, 
the
Commission  accepted  that  the  administrative  burden
should  be  kept  to  the  minimum,  and  did  not  insist  that

for  small  paying  agencies, 

3.5  to  3.17. The  Commission  stresses  that  the  accounts
of  all  paying  agencies  were  cleared  only  after  sufficient
evidence  was  obtained,  where  necessary  by  means  of

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further  audit  missions,  and  that  these  accounts  were
materially  true,  complete  and  accurate.  As  regards  the
comments  on  Italy  at  point  3.13,  the  Commission,  after
carrying out its checks, included the amount concerned in
the  negative  expenditure  declared  by  the  Ministry  of
Agriculture  and  considers  this  a  reasonable  solution.  In
1997  this  expenditure  was  no  longer  declared  by  the
Ministry  but  by  a  properly  registered  paying  agency.

3.18  to  3.19. The  Member  States  are  not  yet  legally
obliged  to  supply  the  table  referred  to  by  the  Court  at
point  3.19.  After  a  trial  period,  the  Commission  intends
to  draw  up  legislation  to  make  the  reporting  of  debts
compulsory,  so  that  it  has  figures  for  the  sums  owing  to
the  Community.

The  situation  regarding  the  recording  and  recovery  of
debts  remains  unsatisfactory  in  many  paying  agencies.
The  Commission  has  now  issued  a  further  guideline  on
this  subject,  and  has  begun  internal  discussions  on  the
respect  of
possibility  of  applying  corrections 
long-outstanding  cases.  Audit  missions  during  1998  are
concentrating  further  on  this  matter.

in 

4.  THE  DECISIONS  CONCERNING  CLEARANCE  OF

ACCOUNTS  FOR  1996

The  Commission’s  first  clearance  decision

4.1  to  4.2. The  delays  experienced  in  respect  of  1996
did  not  occur  in  the  clearance  of  1997,  on  which,  in  the
case  of  virtually  all  paying  agencies,  the  decisions  were
taken  within  the  statutory  time  limit.

The  Commission’s  second  clearance  decision

4.3. Only  expenditure  that  has  clearly  been  committed
in  breach  of  the  rules  can  be  excluded  from  clearance
under 
the  budgetary  discipline  provisions.  The
qualifications  referred  to  by  the  Court  have  been  or  will
be followed up by the Commission and, where necessary,
financial  corrections  will  be  proposed  under 
the
compliance  procedure  provided  for  in  Article  5(2)(c)  of
Regulation  (EEC)  No  729/70.

4.4. The 24-month time limit for applying corrections in
cases  of  non-compliance  is  reckoned  as  from  the  date  of
notification  of  the  Commission’s  findings.  In  respect  of
all  relevant  cases,  letters  have  been  sent  to  the  Member
States.  These  are  being  followed  by  bilateral  discussions
and  then,  if  necessary,  by  a  report  from  the  conciliation
body.  This  procedure,  which  is  designed  to  ensure  that
corrections  proposed  by  the  Commission  are  fair  and

equitable  and  to  allow  the  Member  States  a  proper  right
of  reply,  takes  a  considerable  amount  of  time.

Modification  of  the  amounts  declared

4.5  to  4.6. The  Commission  accepts  that  there  were
some  difficulties  due  to  this  being  the  first  year  of
application,  where  the  new  procedures  overlapped  with
the  old.  The  situation  has  been  and  continues  to  be
improved.  Furthermore,  the  Member  States  continuously
submit  new  information  which  leads  to  adjustments  in
the  amounts  of  correction  applied  at  each  stage  in  the
various  procedures.

Adjustment  to  the  annual  declaration

4.7(a) Following a control mission, the Commission was
unhappy  with  some  of  the  evidence  presented.  A  further
reduction  was  therefore  made  to  the  accounts.

4.7(b) The  amount  added  to  the  Spanish  declaration
was  part  of  the  amount  certified  by  the  certifying  body
and  the  Commission  was  therefore  able  to  accept  it.

4.7(e) The  Commission  very  carefully  examined  the
many  adjustments  made  to  the  accounts  of  the  paying
in  the  United  Kingdom,  and  refused  the
agencies 
expenditure  wherever 
the  explanation  given  was
inadequate.

Financial  corrections  made  by  the  responsible  finance
division

4.8. The  legal  requirements  laid  down  in  the  rules  for
budgetary  discipline  mean  that  reductions  following  late
payments  in  September  and  during  the  first  half  of
October  cannot  be  decided  on  in  time  to  be  booked  in
the  same  financial  year.

In 

realities, 

recognition  of  accounting 

4.11.
the
accreditation  criteria  allow  paying  agencies  to  book
expenditure up to five days before it is executed. If these
five  days  are  at  the  end  of  a  month,  then  this  practice
may  have  the  effect  of  changing  the  reference  month  for
the calculation of corrections in respect of late payments.
The  United  Kingdom  should  not  exceed  this  limit.

4.12  to  4.13. The  corrections  effected  pursuant  to
Article  7(6)  of  Regulation  (EC)  No  296/96  relate  to  the
public  storage  accounts  sent  to  the  Commission  as  13th
declarations  on  20  December  pursuant  to  Article  5(2)  of
the  same  Regulation  and  drawn  up  for  the  whole
financial year.

C  389/42

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Article  7  of  Regulation  (EC)  No  1663/95  requires
corrections to the Member States’ accounts such as those
mentioned  by  the  Court  to  be  notified  to  them  by  31
March  of  the  following  year  and  charged  by  the
in  a  decision  before  30  April.  The
Commission 
notifications  regarding  1996  expenditure  were  late,  but
the  deadlines  were  met  in  the  1997  clearance  procedure.

Such  corrections  may  relate  both  to  the  accounting
aspects  and  to  questions  of  conformity  detected  in  the
course  of  the  year  or  on 
inspection  of  the  13th
declaration  and  incorporated  by  the  Member  States  or
not  incorporated  in  the  account  clearance  declaration.

Where  a  Member  State’s  clearance  declaration  does  not
incorporate  these  corrections,  they  are  confirmed  during
the  accounts  clearance  if  this  takes  place  after  the
decision  taken  under  Regulation  (EC)  No  296/96.  This
was  done  with  Greece,  France  and  Portugal.

If,  on  the  other  hand,  a  Member  State  has  not
incorporated  the  corrections  but  the  accounts  clearance
decision  has  already  been  taken,  the  financial  effects  are
in  any  case  shown  in  the  accounts  for  the  same  year  but
against  the  budgetary  heading  concerned  rather  than  the
heading  for  clearance.  This  happened  with  Denmark  (see
point  4.13).  The  deduction  of  advances  was  made  in
August  1997,  and  will  be  confirmed  under 
the
compliance  conformity  clearance  procedure.

4.14. The  Commission  will  follow  up  the  case  in  the
context  of  the  compliance  audits.

4.15. All  qualifications  in  the  accounts  were  carefully
examined  in  the  short  time  available  (see  reply  to  point
4.3)  and,  where 
evidence  of
there  was 
non-compliance, corrections were or will be made. Where
the  qualifications  were  either  based  on  an  incorrect
evaluation  by  certifying  bodies,  or  where  more  evidence
was  needed,  no  correction  was  made  in  this  clearance
decision,  but  this  is  without  prejudice  to  subsequent
compliance decisions.

clear 

4.16. The  Member  States  continuously  present  new
information  which  leads  to  adjustments  in  the  amounts
of  correction  applied  at  each  stage  in  the  various
procedures.  The  Member  States  mainly  concerned  by  the
in  the  monthly
reduction 
advances  and  the  annual  decision  were  Denmark  and
Italy.  A  reply  regarding  Denmark  is  given  in  point  4.13.
The  Italian  case  is  explained  in  the  Court’s  text  in  point
4.10  (a  refund  of  ECU  33,5  million)  and  by  the  many

in  the  corrections  made 

adjustments  required  to  Italy’s  declarations  of  public
storage  expenditure.

5.  CONCLUSION

5.1. All  major  shortcomings  identified  in  1996  have
been  thoroughly  analysed  in  respect  of  undue  payments,
follow-up  has  been  closely  monitored.
and 
Significant  improvements  were  noted  when  clearing  the
1997  accounts.

their 

5.2. As  explained  in  the  reply  to  4.4,  the  procedure  for
applying  conformity  corrections  takes  the  time  necessary
to  allow  for  the  exercise  of  the  Member  States’  rights  of
reply  and  appeal  to  the  conciliation  body.  It  is  expected
that  the  total  corrections  for  1996  will  be  of  the  same
order  of  magnitude  as  in  previous  years.  If  the  clearance
reform is successful, the level of corrections should fall in
later  years,  as  Member  States  improve  their  level  of
compliance  with  Community  rules.

5.3  to  5.4. Two  clearance  decisions  had  to  be  taken  for
1996. However, in view of the radical reform of the rules
for  the  clearance  procedure,  of  the  fact  that  certification
audits  had  to  be  conducted  for  the  first  time,  and  of  the
findings  resulting  from  the  analysis  of  both  certification
reports  and  accounts,  it  was  necessary,  in  the  case  of  a
number of paying agencies, to require that supplementary
audit work be carried out. Since a proposal for clearance
of  the  accounts  can  only  be  made  on  the  basis  of
satisfactory  evidence 
they  are  accurate,  all
information  received  needed  time  to  be  examined
carefully  before  conclusions  were  drawn.

that 

The  clearance  decision  for  the  1997  financial  year  was
taken  on  29  April  1998  and  covered  expenditure  by
virtually  all  the  paying  agencies.  A  regulation  allowing
the  application  of  penalties  where  clearance  documents
are  late  or  incomplete  is  currently  being  prepared.

5.5. The Commission considers that each case was dealt
with  correctly 
information
available  at  the  time  of  each  decision,  and  refers  to  the
replies  to  the  relevant  paragraphs.

in  accordance  with  the 

5.6. The  Commission  insists  that  in  their  subsequent
year’s  audit  report  the  certification  bodies  follow  up  the
corrective  measures  required  of  each  paying  agency,  and,
if  a  risk  of  loss  to  the  Fund  persists,  it  will  take  an
appropriate  decision  under  the  compliance  procedure.

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5.7. The  documents  to  which  the  Court  refers  were
guidelines  for  the  certification  bodies  and  accreditation
authorities  which  were  discussed  with  representatives  of
each  in  September  1996,  in  reasonably  good  time  to
assist the auditors. The Commission’s close monitoring of
the  accreditation  procedures  had  until  then  prevented
attention  being  devoted  to  the  certification  procedure.

followed  by  bilateral  discussions  and  then,  if  necessary,
by  a  report  from  the  conciliation  body.  This  procedure,
which  is  designed  to  ensure  that  corrections  proposed  by
the  Commission  are  fair  and  equitable  and  to  allow  the
takes  a
Member  States  a  proper  right  of  reply, 
considerable  amount  of  time.

5.8. The  Commission  accepts  that  the  same  body
undertakes  internal  audits  and  certifies  paying  agencies’
accounts only on the strict condition that the certification
audits  are  carried  out  in  a  professional  and  independent
manner,  that  such  audits  have  the  required  scope,  and
that  the  reporting  is  complete.  The  Commission  has
monitored  the  work  of  these  certifying  bodies  closely
and,  if  there  is  evidence  of  certifying  bodies  behaving
improperly (in not disclosing problems in their reports to
the Commission, for example), then a change of auditors
will  be  required.  To  date,  and  despite  a  large  number  of
on-the-spot  inspections,  no  evidence  of  this  sort  has
emerged.

5.10. The  reformed  procedure  requires  each  paying
agency  to  assume  full  responsibility  for  the  payments  it
executes,  and  to  ensure  that  claims  are  properly  checked
before  authorisation.  If  for  reasons  peculiar  to  the
Member  State  concerned,  a  paying  agency  cannot
discharge  this  responsibility  in  respect  of  any  category  of
expenditure,  then  the  department  which  can  discharge  it
must be designated as paying agency and must satisfy the
accreditation  criteria.  As  a  result  of  the  reform,  the
less
control  structures 
fragmented  and 
the
responsibilities  of  each  department  concerned  are  now
clearly  defined.  This  does  not  mean  that  there  is  no
further  scope  for  reduction  in  the  number  of  paying
agencies,  and  the  Commission  will  encourage  Member
States  to  keep  to  the  lowest  possible  number.

in  each  Member  State  are 
transparent,  and 
far  more 

5.9. Where  necessary,  financial  corrections  will  be
proposed under the conformity procedure provided for in
Article  5(2)(c)  of  Regulation  (EEC)  No  729/70.  The
24-month  time  limit  for  applying  corrections  in  cases  of
non-conformity  is  reckoned  from  the  date  of  notification
of  the  Commission’s  findings.  For  all  relevant  cases
letters  have  been  sent  to  the  Member  States.  These  are

5.11. The  legal  requirements  laid  down  in  the  rules  for
budgetary  discipline  mean  that  reductions  following  late
payments  in  September  and  during  the  first  half  of
October  cannot  be  decided  on  in  time  to  be  booked  in
the  same  financial  year.