Council Regulation (EC) No 1267/1999 of 21 June 1999 establishing an Instrument for Structural Policies for Pre-accession
Date: 1999-06-21
Institutions: Council of the European Union
Subjects: EU financial instrument, Structural Funds, accession to the European Union, enlargement of the Union, third country

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COUNCIL REGULATION (EC) No 1267/1999

of 21 June 1999

establishing an Instrument for Structural Policies for Pre-accession

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European
Community, and in particular Article 308 thereof,

Having
regard
Commission (1),

to

the

proposal

from the

Having regard to the opinion of
Parliament (2),

the European

Having regard to the opinion of the Economic and
Social Committee (3),

Having regard to the opinion of the Committee of the
Regions (4),

(1) Whereas the conclusions of

the Luxembourg
European Council of 12 and 13 December 1997
provide for an enhanced pre-accession strategy
for the applicant countries of central and eastern
Europe, and a specific pre-accession strategy for
Cyprus;

(2) Whereas the conclusions of

the Luxembourg
European Council of 12 and 13 December 1997
provide that the assistance provided for in this
Regulation is to be granted for the time being to
the 10 applicant countries of central and eastern
Europe;

(3) Whereas Council Regulation (EC) No 622/98 of
16 March 1998 on assistance to the applicant
States in the framework of
the pre-accession
strategy, and in particular on the establishment
of Accession Partnerships (5), provides that those
partnerships are to comprise a single framework
for the priority areas and all available resources
for pre-accession assistance;

(4) Whereas

the pre-accession strategy includes
provision for an Instrument
for Structural
Policies for Pre-accession (ISPA), which will be
directed towards aligning applicant countries on
Community infrastructure standards and provide
environmental
a
measures, and transport infrastructure measures;

contribution

financial

for

for

assistance

together with

pre-accession measures

(5) Whereas assistance from the Community under
ISPA,
from the
Community under Council Regulation (EEC)
No 3906/89 of 18 December 1989 on economic
aid to the Republic of Hungary and the Polish
People’s Republic (6), and assistance from the
Community under Council Regulation (EC)
No 1268/1999 of 21 June 1999 on Community
support
for
in the
agricultural
applicant countries of central and eastern Europe
be
in
coordinated within the framework of Council
Regulation (EC) No 1266/1999 of 21 June 1999
on coordinating aid to the applicant countries in
the framework of the pre-accession strategy and
amending Regulation (EEC) No 3906/89 (8) and
to be subject to the conditionality provisions of
Regulation (EC) No 622/98 and of the individual
decisions on Accession Partnerships;

and rural development

pre-accession

period (7)

the

to

is

(6) Whereas an equal balance should be the aim
infrastructure
environmental
specific

between financing for transport
measures
measures,
situations in the beneficiary countries;

and
financing
taking into account

the

for

(7) Whereas the Community assistance under ISPA
should facilitate the implementation by the
applicant countries of the acquis communautaire
in the field of the environment and contribute to
sustainable development in these countries;

(8) Whereas Decision No 1692/96/EC of

European Parliament and of

the
the Council of

(1) OJ C 164, 29.5.1998, p. 4.
(2) Opinion delivered on 6 May 1999 (not yet published in

the Official Journal).
(3) OJ C 407, 28.12.1998.
(4) OJ C 373, 2.12.1998.
(5) OJ L 85, 20.3.1998, p. 1.

(6) OJ L 375, 23.12.1989, p. 11. Regulation as last amended
by Regulation (EC) No 753/96 (OJ L 103, 26.4.1996,
p. 5).

(7) See page 87 of this Official Journal.
(8) See page 68 of this Official Journal.

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23 July 1996 on Community guidelines for the
development of
the trans-European transport
network (1) describes the criteria for projects of
common interest, which should be used, where
appropriate, for selecting the measures eligible
under this Regulation;

(15) Whereas, during the transitional period from
1 January 1999 until 31 December 2001, each
reference made to the euro should as a general
rule also be read as a reference to the euro as a
monetary unit as in Article 2, second sentence, of
Council Regulation (EC) No 974/98 of 3 May
1998 on the introduction of the euro (2);

(9) Whereas

(TINA)

the Transport

Infrastructure Needs
initiated by the Council
Assessment
should facilitate the process of selecting priority
a
measures
pan-European
developing
for
transport network during
the pre-accession
period;

(10) Whereas provision should be made for

the
Commission to make an indicative allocation of
the total resources from the Community under
ISPA available for commitment between the
applicant countries in order to facilitate the
preparation of measures;

(11) Whereas paragraph 17 of the conclusions of the
Luxembourg European Council of 12 and
13 December 1997 provides
financial
involved in the
support
enlargement process will be based,
in the
allocation of aid, on the principle of equal
treatment,
independently of time of accession,
with particular attention being paid to countries
with the greatest need;

countries

to the

that

to strengthen the

(12) Whereas the rates of assistance provided from
in
the Community under ISPA should be set
order
effect of
resources, promote co-financing and the use of
private sources of finance and to take account of
the capacity of measures to generate substantial
net revenue;

leverage

(13) Whereas, as

regards Community assistance,
maximum transparency must be ensured in the
and
implementation of
stringent controls must be applied to the use of
appropriations;

assistance,

financial

(14) Whereas,

in

of

the

the

interest

proper
management of Community assistance granted
under
ISPA, provision should be made for
effective methods of appraising, monitoring,
evaluating and controlling operations, specifying
the principle governing the evaluation, defining
the nature of and the rules governing the
monitoring, and laying down the action to be
taken in response to irregularities or failures to
comply with one of the conditions laid down
when assistance under ISPA was granted;

(16) Whereas for the purpose of the implementation
of this Regulation the Commission should be
assisted by a management committee;

(17) Whereas the implementation of

the measures
provided for by this Regulation will help to
achieve the Community’s aims; whereas
the
Treaty does not provide, for the adoption of this
Regulation,
of
Article 308,

powers

other

those

than

HAS ADOPTED THIS REGULATION:

Article 1

Definition and objective

The Instrument for Structural Policies for Pre-
1.
accession, hereinafter referred to as (cid:28)ISPA’ is hereby
established.

ISPA shall provide assistance to contribute to the
preparation for accession to the European Union of
the following applicant countries: Bulgaria, Czech
Republic, Estonia, Hungary, Latvia, Lithuania, Poland,
Romania, Slovakia and Slovenia, hereinafter referred
in the area of
to as
economic and social cohesion, concerning environment
and transport policies
in accordance with the
provisions of this Regulation.

the (cid:28)beneficiary countries’,

2.
The Community assistance granted under ISPA
shall contribute to the objectives laid down in the
Accession Partnership for each beneficiary country and
for
to corresponding national programmes
the
transport
the environment and of
improvement of
infrastructure networks.

Article 2

Eligible measures

The Community assistance financed under ISPA
1.
shall include projects, stages of a project which are

(1) OJ L 228, 9.9.1996, p. 1.

(2) OJ L 139, 11.5.1998, p. 1.

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technically and financially independent, groups of
projects or project schemes in the field of environment
or transport, hereinafter referred to collectively as
(cid:28)measures’. A stage of a project may also cover
preliminary, feasibility and technical studies needed for
carrying out a project.

The Community shall provide assistance under
the objectives mentioned in

2.
ISPA in the light of
Article 1 for the following:

(a) environmental measures enabling the beneficiary
countries to comply with the requirements of
Community environmental
law and with the
objectives of the Accession Partnerships;

(b)

transport infrastructure measures which promote
sustainable mobility, and in particular those that
constitute projects of common interest based on
the criteria of Decision No 1692/96/EC and those
which enable the beneficiary countries to comply
with the objectives of the Accession Partnerships;
this includes interconnection and interoperability
of national networks as well as with the trans-
European networks together with access to such
networks.

impact

in the

in the

Measures shall be of a sufficient scale to have a
environmental
significant
field of
transport
protection or
improvement of
infrastructure networks. The
each
total
in principle not be less than EUR 5
measure shall
million. In duly justified cases, taking into account the
specific circumstances concerned, the total cost of a
measure may be less than EUR 5 million.

cost of

3.
A balance shall be struck between measures in
the field of the environment and measures relating to
transport infrastructure.

4.

Assistance may also be granted for:

(a) preliminary studies related to eligible measures,
their

necessary

for

including
implementation, and

those

(ii) measures and studies which contribute to the
appraisal, monitoring, evaluation or control
of projects and to strengthening and ensuring
the coordination and consistency of projects
with the Accession Partnerships, and

(iii) measures and studies

to ensure effective
project management and implementation and
to make any necessary adjustments.

Article 3

Financial resources

Community assistance under ISPA shall be granted
during the period from 2000 to 2006.

The annual appropriations shall be authorised by the
budgetary authority within the limits of the financial
perspectives.

Article 4

Indicative allocation

An indicative allocation between beneficiary countries
of the total Community assistance under ISPA shall be
made by the Commission, acting in accordance with
the procedure laid down in Article 14, on the basis of
the
capita GDP in
purchasing power parities and surface area.

criteria of population, per

This allocation may be adjusted to take account of the
performance
the
in previous years of
beneficiary countries in implementing ISPA measures.
Due account shall also be taken of the countries’
respective deficiencies in environment and transport
infrastructure.

each of

Article 5

Compatibility with Community policies

(b)

technical support measures, including information
and publicity actions, particularly:

(i) horizontal measures

such as comparative
studies to assess the impact of Community
assistance;

1. Measures
financed by the Community under
ISPA shall comply with the provisions set out in the
Europe Agreements, including the implementing rules
for the application of the provisions on State aids, and
shall contribute to the achievement of Community
policies, particularly those concerning environmental
protection and improvement,
transport and trans-
European networks.

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2.
The Commission shall ensure coordination and
consistency between measures undertaken pursuant to
this Regulation and measures undertaken with
contributions from the Community budget, including
contributions from Community initiatives for cross-
border transnational and interregional cooperation,
the operations of the European Investment Bank (EIB),
including through its pre-accession facility as well as
the other financial instruments of the Community and
inform the Committee established under Article 14
hereof.

3. Measures which generate revenues in accordance
with paragraph 2(b) shall be those concerning:

(a)

infrastructure the use of which involves fees borne
by users;

(b) productive investments in the environment sector.

The Commission shall seek coordination and
3.
consistency between measures undertaken in the
beneficiary countries pursuant to this Regulation and
the
for
the
Reconstruction and Development (EBRD), the World
Bank and other such financial institutions and inform
the Committee established under Article 14 hereof.

operations

European

Bank

of

Preliminary

4.
support
measure, may be financed exceptionally at 100 % of
the total cost.

technical

studies

and

Total expenditure carried out at
the Commission’s
initiative or on behalf of the Commission pursuant to
the total
this paragraph may not exceed 2 % of
allocation to ISPA.

Article 6

Article 7

Forms and rate of assistance

Appraisal and approval of measures

1.
Community assistance under ISPA may take the
form of non-repayable direct assistance, repayable
assistance or any other form of assistance.

1.
The Commission shall adopt decisions on the
measures to be financed under ISPA in accordance
with the procedure laid down in Article 14.

Assistance repaid to the managing authority or to
another public authority shall be reapplied for the
same purpose.

2.
The rate of Community assistance granted under
ISPA may be up to 75 % of public or equivalent
expenditure,
including expenditure by bodies whose
activities are undertaken within an administrative or
legal framework by virtue of which they are regarded
as equivalent to public bodies. The Commission may
decide, in accordance with the procedure laid down in
in
Article 14, to increase this rate to up to 85 %,
particular where it considers that a rate higher than
75 % is required for realising projects essential for
achieving the general objectives of ISPA.

Save in the case of repayable assistance or when there
is a substantial Community interest,
the rate of
assistance shall be reduced to take into account:

(a)

the availability of co-financing;

(b)

the measure’s capacity to generate revenues, and

(c) an appropriate application of the polluter-pays

principle.

for

The

countries

beneficiary

submit
2.
to the Commission.
applications
However,
the Commission may grant assistance
pursuant to Article 2(4) on its own initiative, where
there is an overriding Community interest.

assistance

shall

3.

Applications shall contain:

(a)

the information set out in Annex I;

(b) all relevant information proving that the measures
comply with this Regulation and with the criteria
set out in Annex II, and in particular that there
are medium-term economic and social benefits
commensurate with the resources deployed.

4. On receipt of an application for assistance and
before approving a measure, the Commission shall
carry out a thorough appraisal in order to assess the
measure’s compliance with the criteria set out
in
Annex II.

Commission decisions approving measures shall
5.
determine the amount of financial assistance and lay
down a financing plan together with all the provisions
and conditions necessary for the implementation of the
measures.

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6.
The combined assistance under ISPA and other
Community aid for a measure shall not exceed 90 %
of the total expenditure relating to that measure.

The Commission shall adopt detailed rules on
payments in accordance with the procedure laid down
in Article 14.

7.
The Commission shall adopt common rules for
the eligibility of expenditure in accordance with the
procedure laid down in Article 14.

The details of
shall be

the payment mechanism for
4.
measures
financing
laid down in the
memorandum with each beneficiary country.

Article 8

Commitments and payments

Article 9

Management and control

The Commission shall

implement expenditure
1.
under
ISPA in accordance with the Financial
Regulation applicable to the general budget of the
European Communities on the basis of the financing
memorandum to
the
Commission and the beneficiary country.

between

drawn

up

be

The Commission shall require the beneficiary

1.
countries:

(a)

to establish as from 1 January 2000 and in any
event not later than 1 January 2002, management
and control systems which ensure:

However, annual budgetary commitments in respect of
assistance granted to measures shall be carried out in
one of the following two ways:

(a) commitments in respect of the measures referred
to in Article 2(2) to be carried out over a period
of two or more years shall, as a general rule and
(b), be effected in annual
subject
instalments.

to point

The commitments in respect of the first annual
instalment shall be made when the financing
memorandum is drawn up. Commitments
in
respect of subsequent annual instalments shall be
based on the initial or revised financing plan for
the measure and in principle be granted at the
start of each financial year and at the latest by
1 April of
the year in question according to
forecast expenditure for this year;

(b)

for measures with a duration of less than two
years or for which the Community assistance does
not exceed EUR 20 million a first commitment of
up to 80 % of the assistance granted may take
place when the financing memorandum is drawn
up. The remainder will be committed subject to
the state of the implementation of the measure.

Except in duly justified cases, assistance granted
2.
to a measure where substantial work has not begun
within the
specified contractual period shall be
cancelled.

Payments of

financial assistance for measures
3.
may take
form either of advances or of
intermediate payments or payments of balances in
respect of expenditure certified and actually paid.

the

(i)

(ii)

the proper implementation of the assistance
granted under this Regulation in accordance
with the principles of
sound financial
management,

separation

the
management and control,

of

the

functions

of

(iii) that expenditure declarations presented to the
Commission are accurate and emanate from
accounting systems based on supporting
documents which are open to verification;

(b)

to verify on a regular basis that the measures
financed by the Community have been properly
carried out;

(c)

to prevent irregularities and take action against
them;

(d)

to recover any amounts
irregularity or negligence.

lost as a result of

2. Without prejudice to checks carried out by
beneficiary countries, the Commission and the Court
of Auditors may, through their own staff or duly
authorised representatives,
carry out on-the-spot
technical or financial audits, including sample checks
and final audits.

3.
the
The detailed implementing provisions of
principles established in paragraphs 1 and 2 shall be
together
contained in the financing memorandum,
for
with
coordination of programming and methodology of
control between the Commission and the beneficiary
country. The Commission shall inform the Committee
established under Article 14 hereof.

arrangements

cooperation

and

for

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4.
The financing memorandum shall also contain
provisions concerning the reduction, suspension and
cancellation of assistance where the implementation of
a measure does not justify either a part or the whole
of the assistance allocated.

In implementing this Regulation, the Commission
5.
shall ensure that
the principles of sound financial
management are adhered to, with particular reference
to the elements set out in Annex III.

Article 10

Use of the euro

The amounts in the applications for assistance,
1.
together with the relevant financing plan, shall be
expressed in euro.

The amounts of assistance and the financing
2.
plans approved by the Commission shall be expressed
in euro.

3. Declarations of expenditure in support of the
corresponding payment applications shall be expressed
in euro.

of

Payments

4.
the
financial
Commission shall be made in euro to the authority
designated by the beneficiary country to receive such
payments.

assistance

by

Article 11

Monitoring and ex-post evaluation

The Commission shall ensure that
the beneficiary
countries are regularly informed of the activities of
ISPA.

Article 13

Information and publicity

The

countries

beneficiary

1.
for
implementing measures for which the Community has
granted financial assistance under ISPA shall ensure
that adequate publicity is given to the measure with a
view to:

responsible

(a) making the general public aware of

the role
played by the Community in relation to the
measures;

(b) making potential beneficiaries and professional
organisations aware of the possibilities afforded
by the measures.

Beneficiary countries shall ensure, in particular, that
directly visible display panels are erected showing that
the measures are being co-financed by the Community,
together with the Community
and that
representatives of the Community institutions are duly
involved in the most
important public activities
connected with Community assistance granted under
ISPA.

logo,

They shall
initiatives taken under this paragraph.

inform the Commission annually of the

2.
The Commission shall adopt detailed rules on
information and publicity acting in accordance with
the procedure laid down in Article 14.

The beneficiary countries and the Commission shall
ensure that the implementation of measures under this
Regulation is monitored and evaluated in accordance
with the provisions in Annex IV.

It shall inform the European Parliament thereof and
shall publish them in the Official Journal of
the
European Communities.

Article 12

Annual report

Article 14

Committee

The Commission shall present an annual report on
Community assistance granted under ISPA to the
European Parliament, the Council, the Economic and
Social Committee and the Committee of the Regions.
The annual report shall contain the information set
out in Annex V.

be

shall

assisted

committee

The Commission

a
1.
Management
the
representatives of the Member States and chaired by
the Commission, hereinafter
the representative of
(cid:28)the Committee’. The European
referred to as
Investment
non-voting
representative.

composed

appoint

Bank

shall

by

of

a

The European Parliament shall deliver an opinion on
the report within three months. The Commission shall
report on the manner in which that opinion has been
taken into account.

The representative of

2.
the Commission shall
submit to the Committee a draft of the measures to be
taken. The Committee shall deliver its opinion on the

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draft, within a time limit which the Chairman may lay
down, according to the urgency of the matter. The
opinion shall be delivered by the majority laid down
in Article 205(2) of the Treaty in the case of decisions
which the Council is required to adopt on a proposal
from the Commission. The votes of the representatives
of the Member States within the Committee shall be
weighted in the manner set out in that Article. The
Chairman shall not vote.

3.

(a) The Commission shall adopt measures which

shall apply immediately.

(b) However,

if

these measures are not

in
accordance with
the
the
Committee, they shall be communicated by
the Commission to the Council forthwith. In
that event:

opinion

of

— the Commission shall defer application of
the measures which it has decided for a
period to be laid down in each act
adopted by the Council but which may in
no case exceed three months from the
date of communication,

— the Council,

a qualified
acting by
majority, may take a differnet decision
within the time-limit referred to in the
preceding indent.

Article 15

Reallocation of resources

On accession to the European Union, a country shall
lose its entitlement to support under this Regulation.
Resources made available as a result of an applicant
country acceding to the European Union shall be
listed in
reallocated to other applicant countries
Article 1(1). Reallocation shall be based on applicant
countries’ need and capacity for absorbing assistance
and on the criteria laid down in Article 4.

The Council, acting by qualified majority on a
proposal from the Commission, shall take a decision
outlining the general approach for reallocation.

In the light of the decision referred to in the second
paragraph by the Council,
the Commission shall
decide on the reallocation of available resources
among the other beneficiaries in accordance with the
procedure laid down in Article 14.

Article 16

Final and transitional provisions

shall

acting on a proposal

The Council,
Commission,
31 December 2006. It shall act on the proposal
accordance with
Article 308 of the Treaty.

from the
re-examine this Regulation by
in
in

procedure

down

laid

the

The Committee may examine any question
4.
relating to the implementation of
this Regulation
which is put to it by its Chairman, including at the
request of the representative of a Member State.

Article 17

Entry into force

The Committee shall adopt its rules of procedure

5.
by a qualified majority.

This Regulation shall enter into force on the day
following its publication in the Official Journal of the
European Communities.

This Regulation shall be binding in its entirety and directly applicable in all Member
States.

Done at Luxembourg, 21 June 1999.

For the Council

The President

G.VERHEUGEN

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ANNEX I

Content of applications (Article 7(3)(a))

Applications are to contain the following information:

1. the name of the body responsible for implementation, the nature of the measure and a description

thereof;

2. the cost and location of the measure, including, where applicable, an indication of the inter-

connection and interoperability of measures situated on the same transport axis;

3. the timetable for implementation of the work;

4. a cost-benefit analysis, including the direct and indirect effects on employment to be quantified

where they lend themselves to be quantified;

5. assessment of the environmental

impact similar to the assessment provided for in Council
Directive 85/337/EEC of 27 June on the assessment of the effects of certain public and private
projects on the environment (1);

6.

information on compliance with competition law and public contract rules;

7. the financing plan including, where possible,

information on the economic viability of the
measure, and the total financing the beneficiary country is seeking from ISPA, the EIB including
its pre-accession facility and any other Community or Member State source, the EBRD and the
World Bank;

8. the compatibility of measures with Community policies;

9.

information on the arrangements for ensuring the efficient use and maintenance of facilities;

10. (environmental measures) information on the place and priority of the measure within the
national environmental strategy as laid down in the national programme for the adoption of the
acquis communautaire;

11. (transport measures) information on the national transport development strategy and the place
and priority of the measures within that strategy, including the degree of coherence with the
guidelines for the trans-European networks and the pan-European transport policy.

(1) OJ L 175, 5.7.1985, p. 40. Directive as amended by Directive 97/11/EC (OJ L 73, 14.3.1997, p. 5).

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ANNEX II

Appraisal of measures (Article 7(3)(b) and (4))

A.

In appraising the measures, the following criteria are to be applied to ensure their high quality in
accordance with Article 2:

1.

their economic and social benefits, including their potential for leverage of private financing,
which will be commensurate with the resources deployed; an assessment will be made in the
light of a cost-benefit analysis;

2.

the arrangements for ensuring effective management of the measures;

3.

the priorities established by the Accession Partnerships for the areas of intervention;

4.

the contribution which measures make to the implementation of Community policy on the
environment and the result of the environmental impact assessment referred to in Annex I;

5.

the contribution of measures to trans-European networks and common transport policies;

6.

the establishment of an appropriate balance between the fields of the environment and
transport infrastructure;

7.

consideration of possible alternative forms of financing as referred to in Article 6.

B. The Commission may invite the EIB, EBRD or World Bank to contribute to the appraisal of
measures as necessary. The Commission is to examine applications for assistance to verify in
particular that
the administrative and financial mechanisms are adequate for the effective
implementation of the measure.

C. The Commission is to appraise measures to determine their anticipated impact in terms of the
objectives of this Regulation, using appropriate quantified indicators. The beneficiary countries are
to provide all necessary information, as set out in Annex I, including the results of their feasibility
studies and appraisals, an indication of alternatives not pursued and the coordination of measures
of common interest situated on the same transport route, to make this appraisal as effective as
possible.

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ANNEX III

Financial management and control (Article 9(5))

1.

In each beneficiary country, a central entity is to be designated through which Community funds
granted under ISPA is to be channelled.

The head of this entity is to have overall responsibility for the management of the funds within the
beneficiary country in question.

2. Management and control systems of beneficiary countries are to provide a sufficient audit trail in

order to allow, in particular, for:

— reconciliation of the summary accounts certified to the Commission with the accounting

records and supporting documents at the various administrative levels,

— verification of the transfers of the available Community and other funds,

— examination of the technical and financial plans of the project, progress reports, tendering and

contracting procedures at the various administrative levels.

3. The procedure to be followed for the award of works, supply or service contracts are to be
specified in the financing memorandum and are to respect the key principles laid down in Title IX
of the Financial Regulation and in particular:

— measures covered by a financing memorandum are to be implemented by the beneficiary
country in close collaboration with the Commission, which will retain responsibility for the
utilisation of appropriations,

— the Commission in close collaboration with the beneficiary country,

is to ensure that
participants in tendering procedures can compete on an equal footing, that there is no
discrimination and that the tender selected is economically the most advantageous.

However, pursuant to Article 12 of Council Regulation (EC) No 1266/1999, the appropriations
may be the subject of extended decentralised management, in particular as regards the ex-ante
approval by the Commission of launching of tenders, the evaluation of bids and the award of
contracts and financial management.

These provisions, to be established in the financing memorandum with the beneficiary country, are
to take account of their quantitative and qualitative financial management and financial control
capacity.

4. Appropriate internal and external financial controls are to be carried out in accordance with
internationally accepted audit standards by the competent national financial control authority,
which must be independent in order to perform this function. Each year an audit plan and a
summary of the findings of the audits carried out is to be sent to the Commission. Audit reports
will be at the disposal of the Commission.

The Commission and the beneficiary country are to cooperate in order to coordinate programmes
and methods relating to audits, so as to maximise the usefulness of those carried out.

The beneficiary country is to ensure that when checks are performed by Commission staff, or its
duly authorised representatives, these persons have the right to inspect on-the-spot all relevant
documentation and accounts pertaining to items financed under the financing memorandum. The
beneficiary countries are to assist the Court of Auditors to carry out audits relating to the
utilisation of funds granted under ISPA.

The responsible authorities are to keep available all
the supporting documents regarding
expenditure on any project for a period of five years following the last payment in respect of a
project.

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5. The financing memorandum with each beneficiary country is to contain the following provisions

for financial corrections:

If the implementation of a measure appears not to justify either a part or the whole of the
assistance allocated, the Commission is to conduct an appropriate examination of the case, in
particular requesting the beneficiary country to submit its comments within a specified period of
time and to correct any irregularity.

Following the examination referred to in paragraph 1, the Commission may reduce, suspend or
cancel assistance in respect of the measures concerned if the examination reveals irregularity, an
improper combination of funds or a failure to comply with one of the conditions in the decision to
grant assistance, and in particular any significant change affecting the nature or conditions of
implementation of the measure for which the Commission’s approval has not been sought. Any
reduction or cancellation of the assistance is to give rise to recovery of the sums paid.

Where the Commission considers that an irregularity has not been corrected or that all or part of
an operation does not justify either all or part of the assistance granted to it, the Commission is to
conduct a suitable examination of the case and request the beneficiary country to submit its
comments within a specified period. After the examination, if no corrective measures have been
undertaken by the beneficiary country, the Commission may:

(a) reduce or cancel any advance;

(b) cancel all or part of the assistance granted to the measure.

The Commission is to determine the size of a correction taking into account the nature of the
irregularity and the extent of any failures in the management and control systems. Any sum to be
recovered for grant of undue entitlement is to be repaid to the Commission. To such a sum is to
be added interest on account of late repayment in accordance with arrangements to be adopted by
the Commission.

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Official Journal of the European Communities

26.6.1999

ANNEX IV

Monitoring and ex-post evaluation (Article 11)

A. Monitoring is to be carried out by means of jointly agreed reporting procedures, sample checks
and the establishment of ad hoc committees. It is to be carried out by reference to physical and
financial indicators. The indicators will relate to the specific character of the project and its
objectives. They will be arranged in such a way as to show the stage reached in the measure in
relation to the plan and objectives originally laid down and the progress achieved on the
management side and any related problems.

B. These committees are to be set up by arrangement between the beneficiary country concerned and
the Commission. The authorities or bodies designated by the beneficiary country, the Commission
and where appropriate, the EIB will be represented on the committees. Where regional and local
authorities and private enterprises are competent for the execution of a project and where they are
directly concerned by a project they will also be represented on such committees.

C. For each measure, the authority or body responsible for the measure is to submit progress reports

to the Commission within three months of the end of each full year of implementation.

D. On the basis of the results of monitoring and taking account of the comments of the monitoring
committee, the Commission is to adjust the amounts and conditions for granting assistance as
initially approved, as well as the financing plan envisaged, if necessary on a proposal by the
beneficiary countries.

The Commission will define the appropriate arrangements for these adjustments differentiating
them according to their nature and importance.

E. The authority or body responsible for the measure is to submit a final report to the Commission
within six months of completion of the measure or stage of project. The final report will contain
the following:

1. a description of the work undertaken, accompanied by physical indicators, quantification of
expenditure by category of work and the measures taken with regard to the specific clauses
contained in the decision to grant assistance;

2.

certification of the conformity of the work with the decision granting assistance;

3. a first assessment of the extent to which the expected results have been achieved, including

notably:

(a)

the effective date of implementation of the measure;

(b) an indication of the wax in which the measure will be managed once completed;

(c) confirmation, if appropriate, of financial forecasts, especially as regards operating costs

and expected revenues;

(d) confirmation of the socioeconomic forecast, especially the expected costs and benefits;

(e) an indication of the actions taken to ensure protection of the environment and their cost.

4.

information relating to publicity actions.

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F. Ex-post evaluation is to cover the utilisation of resources and the effectiveness and efficiency of
assistance and its impact. It is to cover the factors contributing to the success or failure of
implementation of measures and the achievements and results. After the completion of measures,
the Commission and the beneficiary countries will therefore evaluate the manner, including the
efficient and effective use of resources, in which they have been carried out. The evaluation will
impact of their implementation in order to assess whether the original
also cover the actual
objectives have been achieved. This evaluation will, inter alia, address the contribution made by
measures to the implementation of Community policies on the environment or to the contribution
of
trans-European networks and common transport policies, and they will also assess the
environmental impact of the measures.

G. For the greater effectiveness of Community assistance granted under ISPA, the Commission is to
ensure that in administering ISPA particular attention is paid to transparency of management.

H. The detailed rules for monitoring and evaluation are to be laid down in the Commission decisions

approving the measures.

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Official Journal of the European Communities

26.6.1999

ANNEX V

Annual report from the Commission (Article 12)

The annual report is to provide information on the following:

1. financial assistance committed and paid by the Community under ISPA with an annual

breakdown by beneficiary country by type of project (environment or transport);

2. the contribution which the Community assistance under ISPA made to the efforts of

the
beneficiary countries to implement Community environment policy and to strengthen trans-
European transport infrastructure networks; the balance between measures in the field of the
environment and measures relating to transport infrastructure;

3. assessment of

the compatibility of operations of Community assistance under ISPA with
Community policies, including those concerning environmental protection, transport, competition
and the award of public contracts;

4. the measures taken to ensure coordination and consistency between measures financed through
ISPA and measures financed with contribution from the Community budget, the EIB and the other
financial instruments of the Community;

5. the investment efforts of the beneficiary countries in the fields of environmental protection and

transport infrastructure;

6. the preparatory studies and technical support measures financed;

7. the results of appraisal, monitoring and evaluation of measures, including information on any

adjustment of measures to accord with the results of appraisal, monitoring and evaluation;

8. the contribution of the EIB to the evaluation of measures;

9. summary of

information on the results of checks carried out,

irregularities

found and

administrative and judicial proceedings in progress;

10.

information on publicity actions.