Commission Regulation (EC) No 2222/2000 of 7 June 2000 laying down financial rules for the application of Council Regulation (EC) No 1268/1999 on Community support for pre-accession measures for agriculture and rural development in the applicant countries of central and eastern Europe in the pre-accession period
Date: 2000-06-07
Institutions: European Commission
Subjects: Central and Eastern Europe, EU aid, coordination of aid, financial aid, pre-accession aid

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COMMISSION REGULATION (EC) No 2222/2000

of 7 June 2000

laying down financial rules for the application of Council Regulation (EC) No 1268/1999 on
Community support for pre-accession measures for agriculture and rural development in the
applicant countries of central and eastern Europe in the pre-accession period

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

(3)

Having regard to the Treaty establishing the European
Community,

Having regard to Council Regulation (EC) No 1268/1999 of 21
June 1999 on Community support for pre-accession measures
for agriculture and rural development in the applicant coun-
tries of central and eastern Europe in the pre-accession
period (1), and in particular Articles 9(2) and 12(2) thereof,

Whereas:

(1)

(2)

Article 11(1) of Council Regulation (EC) No 1266/
1999 (2) on co-ordinating aid to the applicant countries
in the framework of the pre-accession strategy stipulates
that the Commission shall implement the Community
aid in accordance with the rules of the Financial Regula-
tion applicable to the general budget of the European
Communities (3), and in particular Article 114 thereof,
Article 9(1) of Council Regulation (EC) No 1268/1999
stipulates that the financial support shall comply with
the principles laid down in Council Regulation (EC) No
1258/1999 of 17 May 1999 on the financing of the
common
Regulation
concerns both the Guarantee and Guidance sections of
the European Agriculture Guarantee and Guidance Fund
but sets out, in particular specific provisions relating to
the Guarantee section which falls under Title VIII of the
Financial Regulation,

agricultural

policy (4).

That

It is envisaged that implementation of Sapard should
have an institution building effect
in the countries
concerned. The Special Accession Programme for Agri-
culture and Rural Development (Sapard) will require, for
each of the 10 applicant countries referred to in Article
1(1) of Regulation (EC) No 1268/1999, the follow up of
numerous projects, each of which is generally of limited
financial dimension. Delegation of management tasks to
the applicant country is desirable and Article 12(2) of
Regulation (EC) No 1266/1999 provides for the poss-
ibility to confer such management
to the applicant
country. Sapard management should therefore be orga-
nised through agencies in the applicant countries in
accordance with that decentralised approach.

(4)

(5)

(6)

(7)

The minimum criteria and conditions for the application
of decentralised management under Article 12(2) of
Regulation (EC) No 1266/1999 are laid down in the
Annex to that Regulation. Those criteria and conditions
reflect those that paying agencies must fulfil to be in
conformity with the EAGGF Guarantee rules laid down
in the Annex to Commission Regulation (EC) No 1663/
95 (5), as last amended by Regulation (EC) No 2245/
1999 (6), in the light of the above, the agency established
by each applicant country should be organised in
conformity with EAGGF-Guarantee provisions.

EAGGF Guarantee provisions laid down in Regulation
(EC) No 1663/95 concern mainly the payment function.
The agencies in the applicant countries however will
need to dispose of both that function plus an imple-
mentation function, appropriate criteria necessary also
for that function therefore need to be laid down.

It is appropriate that accreditation may also be provi-
sionally granted subject
to the respect of essential/
minimum criteria.

For the Commission to waive the ex ante approval stipu-
lated in Article 12(1) of Regulation (EC) No 1266/1999
and to confer management of the aid on an applicant
country, the national accreditation of the Sapard agency
in the applicant country needs to be approved.

It is appropriate, where possible, to use existing struc-
tures in applicant countries for certain financial opera-
tions in each of
these countries there is already a
national fund through which PHARE monies are trans-
ferred and paragraph 2(v) of the Annex to Regulation
(EC) No 1266/1999 provides that the national author-
ising officer shall bear the full financial responsibility
and liability for the funds. It is therefore appropriate for
Sapard purposes that the national fund in each applicant
country be the competent authority which accredits the
Sapard agency and supervises subsequent compliance
with the accreditation criteria. The national authorising
officer shall be the contact point for financial informa-
tion between the Commission and the applicant country.

(8)

Council Regulation No 1260/1999 of 21 June 1999
laying down general provisions on the Structural
Funds (7) provides in its Article 31(2)
the first
commitment shall be made when the Commission lays

that

(1) OJ L 161, 26.6.1999, p. 87.
(2) OJ L 161, 26.6.1999, p. 68.
(3) OJ L 356, 31.12.1977, p. 1.
(4) OJ L 160, 26.6.1999, p. 103.

(5) OJ L 158, 8.7.1995, p. 6.
(6) OJ L 273, 23.10.1999, p. 5.
(7) OJ L 161, 26.6.1999, p. 1.

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down its decision approving the assistance. That model
may, under these circumstances and with respect to the
triggering of the Community budget commitment, be
considered as an appropriate model to be applied mutatis
mutandis to Sapard.

Article 12(2) of Regulation (EC) No 1266/1999 foresees
execution of ex post controls by the Commission.The
EAGGF clearance of accounts procedure is an efficient
system to audit payments of the decentralised agencies
and, if necessary, to recover irregular or undue payments
from the applicant countries.

Sapard implementing rules should be fixed in bilateral
agreements to be concluded between the Commission
and each applicant country. The Commission and each
applicant country should therefore draw up a multi-
annual
in which the conditions
determining the use of the Sapard contribution will be
set out. Annual financing agreements should set out the
financial contribution of the Community.

financing agreement

To protect the financial
interests of the Community,
applicant countries should have similar obligations as
Member States with regard to controls carried out by
Community agents on the Sapard monies.

The measures provided for in this Regulation are in
accordance with the opinion of the Committee of the
European Agriculture Guarantee and Guidance Fund
(EAGGF),

(9)

(10)

(11)

(12)

HAS ADOPTED THIS REGULATION:

CHAPTER 1

GENERAL PROVISIONS

Article 1

Scope of the present Regulation

1.
This Regulation lays down the conditions under which
management of the aid provided under Regulation (EC) No
1268/1999 is conferred to agencies in the 10 applicant coun-
tries referred to in Article 1(1) of that Regulation as provided
for under Article 12(2) of Regulation (EC) No 1266/1999.

2.
The Commission intends to require the applicant coun-
tries to respect these conditions by including them in financing
agreements negotiated with each country.

Article 2

Definitions

For the purposes of this Regulation:

(a) ‘applicant countries’ means the countries listed in Article

1(1) of Regulation (EC) No 1268/1999;

(b) ‘national fund’ means the body appointed by the applicant
country and placed under the responsibility of the national
authorising officer bearing the full financial responsibility
and liability for the funds, which acts as the competent
authority. The national authorising officer is the contact

point for financial information sent between the Commis-
sion and the applicant country;

(c) ‘competent authority’ means the body,

in the applicant

country,

(i) issuing, monitoring and withdrawing accreditation of
the Sapard agency for the purposes of Article 1(2) of
Regulation (EC) No 1663/95; and

(ii) appointing a certifying body;

(d) ‘Sapard agency’ means the body established by the appli-
cant country and operating under its responsibility which
discharges two functions: an implementing function and a
paying function. Only one Sapard agency may be accred-
ited at any time in each applicant country;

(e) ‘certifying Body’ means the body which is operationally
independent of the Sapard agency and establishes the attes-
tation of the accounts, reports on the management and
control systems and verifies the co-financing elements;

(f) ‘multiannual
setting out
Sapard co-financing;

financing agreement’ means the agreement
the relevant provisions to be respected for

(g) ‘annual financing agreement’ means the agreement setting
out the financial allocation for the year in question on the
basis of
the appropriations entered in the Community
budget and supplements and amends, as appropriate,
provisions laid down in the multiannual financing agree-
ment;

(h) ‘Sapard euro account’ means the account opened by the
national authorising officer under their responsibility in a
financial or
treasury institution bearing interest under
normal commercial conditions to receive payments referred
to in Article 8 and used exclusively for Sapard transactions
and maintained in euro;

(i) ‘financial year’ means the calendar year 1 January to 31

December.

CHAPTER 2

CONFERRAL OF MANAGEMENT

Article 3

Conferral of management of aid

1.
The Commission shall verify compliance with the condi-
tions of Article 12(2) of Regulation (EC) No 1266/1999, here-
inafter referred to as ‘the conditions’, and the provisions of
Articles 4 to 6 of and the Annex to this Regulation prior to
deciding on conferral of management of aid to the applicant
countries.

For the establishment of compliance with the conditions and
with the provisions mentioned in the first subparagraph, the
Commission shall:

— examine the national fund procedures and structures related
the Sapard programme and
to the implementation of
Sapard agency procedures and structures and, where appro-
priate, procedures and structures of other bodies to which
tasks may have been delegated in accordance with Articles
4(4), 5(3) and 6(2),

— carry out verifications on-the-spot.

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The decision to confer management on an agency may be
2.
made on a provisional basis, provided there is compliance with
the conditions and with the functions and criteria of the Annex
to this Regulation and the provisions of Articles 4 to 6.

The Commission shall monitor continued compliance
3.
with the conditions and provisions of this Regulation including
the Annex. If, at any stage, they are found to be no longer
fulfilled, the Commission shall immediately revoke the decision
and shall:

— cease to undertake any new financial obligations on the

part of the Community,

— cease to transfer monies to the applicant country and
— if appropriate, make financial corrections against the appli-

cant country.

Article 4

Tasks of the competent authority

1.
The tasks of the competent authority shall include those
set out in Article 1(3), (4), (6) and (7) of Regulation (EC) No
1663/95 mutatis mutandis. Accreditation may be provisionally
granted for a period to be fixed in relation to the seriousness of
the problem pending the implementation of any requisite
changes to the administrative and accounting arrangements.

2.
The decision of the competent authority to accredit the
Sapard agency shall be taken on the basis of an examination
covering the administrative, payment, control and accounting
procedures and structures, which includes the arrangements
regarding the selection of projects, tendering, contracting and
the respect of procurement rules taking account of the criteria
set out in the Annex. The examination shall be conducted
according to internationally accepted auditing standards.
In
instances where a provisional accreditation is envisaged, there
must be satisfactory compliance with the provisions of the
Annex, in particular with the obligations for written proced-
ures, segregation of duties, pre-project approval and pre-
payment checks, payment procedures, accounting procedures,
computer security, internal audit and where appropriate public
procurement provisions.

3.
The competent authority shall monitor accreditation and
withdraw it, without delay, if the accreditation criteria are no
longer fulfilled and shall inform immediately the Commission.

4.
The competent authority may delegate the examination
task referred to in paragraph 2 to other bodies. In all cases the
national authorising officer retains overall responsibility.

Article 5

Tasks of the Sapard agency

The implementation task of

1.
comprise:

the Sapard agency shall

— call for applications,
— project selection,
— checking of applications for approval of projects against
terms and conditions, eligibility and against the content of
the approved Sapard agriculture and rural development
programme, hereinafter referred to as ‘the programme’,

including, where appropriate, public procurement provi-
sions,

— laying down contractual obligations between the agency
and potential beneficiaries and the issue of approval to
commence work,

— execution of on-the-spot
following project approval,

checks both prior

to and

— follow-up action to ensure progress of projects being

implemented,

— reporting of progress of measures being implemented

against indicators.

2.

The payment task of the Sapard agency shall comprise:

— checking of payment claims,

— execution of on-the-spot checks to establish eligibility for

payment,

— authorisation of payment,

— execution of payment,

— accounting of commitment and payment,

— where applicable, controls on beneficiaries after payment of
aid to establish whether the terms and conditions of the
grants continue to be respected.

3. Where functions of implementation and payment are not
discharged within a single administrative structure, they may be
carried out by other parties provided the provisions of para-
graph 2.3 of the Annex are respected. However, in no case may
the execution of payment and of accounting of commitment
and payment be delegated. The project approval, on-the-spot
controls and payment processes must be based on an appro-
priate segregation of duties.

Any proposed changes

4.
in the implementing and/or
paying arrangements of the Sapard agency after its accredita-
tion shall be submitted by the competent authority to the
Commission.

5. Where the Sapard agency does not also discharge the
functions of the managing authority provided for in Article 9
of Commission Regulation (EC) No 2759/1999 (1),
it shall
communicate to that authority the information necessary to
perform its functions.

Article 6

Tasks of the certifying body

1.

The tasks of the certifying body shall

include

— delivery of an attestation on the annual account of the
Sapard agency as well as the Sapard euro account,

— reporting on an annual basis on the adequacy of manage-
ment and control systems of the Sapard agency as regards
their capability to ensure conformity of expenditure with
the provisions of Article 8(1),

(1) OJ L 331, 23.12.1999, p. 51.

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— verification of the existence and correctness of the national

co-financing element referred to in Article 9(1).

2.
In performing those tasks, the certifying body shall act in
accordance with the provisions of Article 3 of Regulation (EC)
No 1663/95 and guidelines set by the Commission. Where the
body appointed is the national audit office or equivalent,
it
may delegate some or all of the examination tasks referred to
in Article 3(1) of Regulation (EC) No 1663/95 to other bodies,
provided the tasks are discharged effectively. The certifying
body in all cases retains overall responsibility.

3.
The attestation on the annual accounts and the audit
report referred to in Article 3(1) of Regulation (EC) No 1663/
95 and Article 13(1) shall be drawn up before 15 April of the
following year and communicated to the Commission by 30
April at the latest.

CHAPTER 3

PAYMENT AND CONTROL

Article 7

Budget commitments

The Commission decision authorising signature of each
1.
annual financing agreement shall give rise to commitment of
the appropriations in the Community budget.

2.
The first annual financing agreement may only be signed
on behalf of the Commission when the following conditions
have been met:

— the programme has been approved by the Commission,

and,

— the multiannual financing agreement has been signed by

both parties.

3.
The Commission shall decommit any part of a commit-
ment according to the rule fixed in the second subparagraph of
Article 31(2) of Regulation (EC) No 1260/1999 and taking
account of the requirements of Article 10.

Article 8

Payments from the Commission

1.
Only Sapard assistance granted in accordance with the
provisions of the Programme approved by the Commission, of
the multiannual and annual
financing agreements and in
accordance with the Commission decision referred to Article
3(1), shall be subject to co-financing by the Community.

2.
Payments shall be made in euro to the Sapard euro
account, and in accordance with the provisions of Article
32(1), th second subparagraph of Article 32(2), Article 32(3)
with the exception of subparagraphs (a), (d) and the second and
subparagraphs, and in accordance with Article
third last
32(4)(a) and (b) of Regulation (EC) No. 1260/1999.

3.
The Commission shall make an initial payment, on
account, to the Sapard euro account. This payment, which may
be made in more than one instalment, shall not exceed 49 % of

the first annual allocation to the applicant country concerned,
set out in the Annex to Commission Decision (EC) No 1999/
595/EC (1). The payment shall be made on condition that the
Sapard agency accreditation has been subject to the decision
referred to in Article 3(1), and after conclusion of the multi-
annual financing agreement and first annual financing agree-
ment. The payment shall be repaid if no payment application
in accordance with Article 10 is received by the Commission
within 18 months of the date of that payment.

Subsequent payments shall be made in accordance with

4.
the rules provided for in Article 10.

Conversion costs, bank charges and exchange losses shall

5.
not be subject to Community co-financing.

Article 9

Payments from the Sapard agency

1.

Payments from the Sapard agency to the beneficiary shall:

— be made in national currency and debited as appropriate
against the Sapard euro account. The payable order(s) to
the beneficiary(ies) shall as a general rule be issued within
five days of this debit,

— be based on declarations of expenditure incurred by the
include only projects
the

beneficiary. Such declarations shall
selected and expenditure paid from the date of
Commission decision referred to in Article 3(1).

The Community contribution shall be made simultaneously
with the national contribution. However, in the case of benefi-
ciaries in the public sector,
the national contribution may
precede that of the Community.

2.
The total public contribution to the individual measures
and to the grants at project level shall be readily identifiable at
the level of the Sapard agency.

3.
The Sapard agency shall maintain records of each
payment which shall include at least the following information:

— amount in national currency,
— the corresponding amount in euro.

4.
Any overpayment, namely amounts in excess of the sum
due, noted by the Sapard agency, shall be recorded without
delay in the Sapard euro account and subtracted from the
applications for payment to the Commission referred to in
Article 10.

5.
The final balance of the assistance shall be paid in accord-
ance with Article 32(4)(a) and (b) of Regulation (EC) No 1260/
1999 and after the decisions referred to in Articles 13 and 14
have been adopted.

6.
The Sapard agency shall ensure timely treatment of
payment requests by beneficiaries. In cases where the interval
between receipt of the complete supporting documents and
issuing of
three months,
Community co-financing may be reduced in accordance with
the provisions of Article 4(2) of Regulation (EC) No 296/
96 (2).

the payment order

exceeds

(1) OJ L 226, 27.8.1999, p. 23.
(2) OJ L 39, 17.2.1996, p. 5.

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Article 10

Article 12

Application for payment from the Community

Commission initiative measures

The Commission shall

1.
take into consideration only
payment applications drawn up by the Sapard agency on a
quarterly basis, presented in accordance with a form established
by the Commission and transmitted by the national authorising
officer to the Commission within one month of the end of
each quarter. However, supplementary applications may be
submitted only if justified on the basis of the risk of the net
balance in the Sapard euro account being exhausted before the
next quarterly application has been processed.

The applications shall include at least the following infor-

2.
mation:

— the amount of expenditure paid by the Sapard agency to
beneficiaries in the previous quarter, broken down in both
national currency and euro by measure and the national
and Community contribution,

— the balance of Community funds in the Sapard euro

account following the most recent debit,

— details of debts to be collected.

3.
The Commission shall verify the payment applications
taking account of the conditions set out in Article 32(3)(b), (c),
(e) and (f) of Regulation (EC) No 1260/1999.

Expenditure declared in the payment applications shall be
4.
reimbursed by the Commission within,
two
months of an acceptable payment application being received by
it, subject to the verifications referred to in paragraph (3).

in principle,

Article 11

Exchange rate and interest

1.
The conversion rate between euro and national currency
shall be the exchange rate published by the European Central
Bank:

— for payments by the Sapard agency, on the last but one
working day at the Commission in the month preceding
the month during which the expenditure was recorded in
the accounts of the Sapard agency. The date the payment
order is issued to the beneficiary shall be the date shown in
the accounts,

— for overpayments by the Sapard agency, on the last but one
working day at the Commission in the month preceding
the month during which the overpayment was first noted,
fixed by the clearance of accounts and
conformity clearance decisions, on the last but one working
day at the Commission in the month preceding the month
during which the decision was taken.

— for amounts

2. Where the timelimits in Article 13(5) and 14(4) are not
respected, any outstanding amount shall generate interest at a
rate equal
three month deposits
published by the European Central Bank plus 1,5 % points.
That rate shall be the monthly average of the month in which
the decision referred to in these articles was notified.

to the Euribor

rate for

3.
Interest earned on the Sapard euro account shall be used
exclusively for the programme. Such interest shall not be
subject to reduction due to charges levied except those of a
fiscal nature.

In cases where the Commission does not allocate all the annual
allocation provided for in Article 7(4) of Regulation (EC) No
1268/1999 to the applicant country, use of the amount not so
allocated shall be decided by the Commission on the basis of
ad-hoc decisions.

Article 13

Clearance of accounts decision

1. Without prejudice to decisions referred to in Article 14,
for each financial year an annual declaration presented in
accordance with a form established by the Commission
together with a certificate and an audit report as required by
Article 6(1)(b) of Regulation (EC) No 1258/1999, Article 4 and
Article 5(1)(a), (c) and (e), and Article 5(2) of Regulation (EC)
No 1663/95 shall be drawn up by the applicant country and
transmitted to the Commission by the national authorising
officer.

2.
The Commission shall receive the documents referred to
in paragraph 1 by 30 April of the year following the financial
year concerned.

The provisions fixed in the first and second last sentence of
Article 7(1), Article 7(2)(c), and Article 7(3) and (4) of Regula-
tion (EC) No 296/96 are applicable. For the financial year ‘n’,
all transactions recorded in the accounts of the Sapard agency
in the financial year ‘n’ are taken into consideration.

3.
The Commission shall, before the 30 September of the
year following the financial year concerned, clear the account
of the Sapard agency in accordance with the provisions of
Article 7(3) of Regulation (EC) No 1258/1999 and Article 7 of
Regulation (EC) No 1663/95 hereinafter referred to as ‘the
clearance of accounts decision’. The clearance of accounts
decision shall also cover the clearance of the Sapard euro
account. It shall also clear the amounts to be credited to the
Sapard euro account
in accordance with Article 9(4) and
Article 11(3).

4.
The Commission shall communicate to the applicant
country concerned the results of its verifications of the infor-
mation supplied, before 31 July following the end of the finan-
cial year. If, for reasons attributable to the applicant country
concerned, the Commission is unable to clear the accounts of
an applicant country before 30 September, the Commission
further enquiries it
shall notify the applicant country of
proposes to undertake.

The amount fixed by the clearance of accounts decision
5.
the
shall normally be added to or deducted from one of
subsequent payments from the Commission to the applicant
country. However in cases where the amount to de deducted,
fixed by this decision, exceeds the level of possible subsequent
payments, the amount not covered by the balance shall be
credited to the Commission in euro within two months of
notification of the decision. The Commission may however, on
a case by case basis, decide that any amount to be credited to it
shall be offset against payments due to be made by the
Commission to the applicant country under any Community
instrument.

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Article 14

Conformity clearance decision

1.
The Commission shall decide on the expenditure to be
excluded from Community cofinancing where it finds that
expenditure has not been effected in compliance with the rules
referred to in Article 8(1) hereinafter
referred to as the
‘conformity clearance decision’.

2.
The conformity clearance procedures shall be executed in
accordance with the mechanisms and procedures in force for
the application of Article 7(4) of Regulation (EC) No 1258/
1999 and Article 8 of Regulation (EC) No 1663/95.

3.
A financial correction may include application of flat rate
corrections in cases where controls have not correctly been
established or executed by the Sapard agency and refusal of
compensation of the foreseen financial correction with expen-
diture for other projects.

The amount

4.
to be recovered in accordance with the
conformity clearance decision under paragraph 1, shall be
communicated to the national authorising officer who ensures
that the amount is credited to the Commission in euro within
two months of notification of the decision. The amount in the
decision shall not be reallocated to the Sapard programme. The

Commission may however, on a case-by-case basis, decide that
any amount to be credited to it shall be offset against payments
due to be made by the Commission to the applicant country
under any Community instrument.

Article 15

Recording and control provision

1.
Documents shall be kept by the Sapard agency and the
national fund at the disposal of the Commission for a period of
five years after the date of final payment to the beneficiary has
been made.

2. When controls are carried out under Article 9 of Regula-
the provisions of Regulation
tion (EC) No 1268/1999,
(Euratom, EC) No 2185/96 (1) and of Article 8(1) and (2), and
Article 9(1) and (2) of Regulation (EC) No 1258/1999, shall
apply mutatis mutandis
the Sapard
programme.

the execution of

for

3.
Applicant countries will be required to apply the rules
contained in Commission Regulation (EC) No 1681/94 (2)
concerning irregularities and the organisation of an informa-
tion system in this field.

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

Done at Brussels, 7 June 2000.

For the Commission

Franz FISCHLER

Member of the Commission

(1) OJ L 292, 15.11.1996, p. 2.
(2) OJ L 178, 12.7.1994, p. 43.

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FUNCTIONS AND CRITERIA FOR ACCREDITATION AS A SAPARD AGENCY

ANNEX

1.

FUNCTIONS

The Sapard agency shall execute the following principal functions in respect of Sapard expenditure:

1.1.

1.2.

1.3.

1.4.

authorisation of commitments and payments: the objective of this function is the establishment of the amount that
shall be paid to a claimant or supplier in conformity with the financing agreement rules, in particular those
concerning the eligibility of applications for approval and claims for payment, compliance with commitments
entered into concerning project approvals, tendering and contracting procedures, and verification of the work
carried out or services supplied;

execution of payments: the objective of this function is the issuing of an instruction to the agency's bankers, or, in
appropriate cases, a governmental payments office, to pay the authorised amount to the claimant or supplier (or
their assignee);

accounting for commitments and payments: the objective of this function is the recording of the commitment and
payment in the agency's separate books of accounts of Sapard expenditure, which will normally be in the form of
an electronic data processing system, and the preparation of periodic summaries of expenditure, including the
periodic and annual declarations to the Commission. The books of account shall also record details of debts to be
recovered;

control: the objective of this function is to verify the facts on which applications and claims are based in order to
review their compliance with the financing agreement rules and the terms and conditions of the commitment. this
control shall, where appropriate, include pre-project selection checks, remeasurement, checks on quantity and
quality of goods or services delivered, an analysis or a sample control, pre-payment checks and any special
provisions mentioned in the financing agreement rules as to the eligibility of the expenditure etc. In order to
establish eligibility, these controls shall require, where appropriate, examinations of a technical nature, which can
involve economic financial assessments and checks of a specific agricultural, technical or scientific nature;

1.5.

reporting: the objective of this function is to ensure that progress of the individual projects and measures is
reported in a way which ensure the effective and efficient implementation of the measure.

2.

CRITERIA

2.1.

The Sapard agency's administrative structure shall provide for the separation of the three functions of author-
isation, execution and accounting, each of which shall be the responsibility of a separate administrative sub-unit,
the responsibilities of which are defined in an organisation chart.

2.2.

The Sapard agency shall adopt the following procedures or those offering equivalent guarantees:

2.2.1. the Sapard agency shall

lay down detailed written procedures for the receipt, recording and processing of
applications for project approval, claims, invoices and supporting documents and control reports inclusive of a
description of all documents to be used.

These procedures should ensure that only claims for payment or projects selected which comply with the criteria
are processed;

2.2.2. the division of duties shall be such that no official has responsibility at any time, for any project, for more than
one of the responsibilities for approving projects, authorising payment, paying or accounting for sums, and that no
official performs one of those tasks without their work coming under the supervision of a second official. The
responsibilities of each official shall be defined in writing, including the setting of financial limits to his authority.
Staff training shall be appropriate, and there shall be a policy for rotating staff
in sensitive positions, or
alternatively for increased supervision;

2.2.3. each official responsible for authorisation shall have at their disposal a detailed check-list of the verifications
required to be undertaken, and shall include in the supporting documents of the claim their attestation that these
checks have been performed. This attestation may be made by electronic means subject to the conditions referred
to in subparagraph 2.2.6.

There shall be evidence of review of the work by a more senior member of staff. The analysis, the appraisal and
approval of the projects is to be evidenced in writing. The analysis of the project should be guided by the
principles of sound efficient management;

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2.2.4. an application/claim shall be authorised only after sufficient checks have been made to verifiy that it complies with
financing agreement rules and the content of the Sapard programme. These checks shall include those required by
the rules governing the specific measure under which aid is claimed, and those required to prevent and detect fraud
and irregularity with particular regard to the risks presented.

As part of the authorisation function, applications shall be subject to checks which establish adherence to terms
and conditions, eligibility, completeness of documents, correctness of supporting documents, date of receipt, etc.

All checks to be undertaken shall be specified in a checklist, and their performance shall be attested for each
application/claim, or for each batch of applications/claims.

As regards the services/the goods delivered the control should consist of:

— documentary control: to ensure that data on quantity, quality and price of the goods or services on the invoice

reconcile with those ordered,

— physical control: to ensure that the quantity and quality of the goods or services match those mentioned in the

invoice/claim form.

This control can also be performed on a continuous basis during the delivery of the services, i.e. when initial or
interim payments are made;

2.2.5. procedures should ensure that payment is made only to the claimant, to their bank account or to their assignee.
The payment shall be executed by the agency's banker, or, as appropriate, a governmental payments office, or the
cheque mailed, within five working days of the date of charge to the Sapard bank account. Procedures shall be
adopted to ensure that all payments for which transfers are not executed, or cheques not cashed, are credited to
Sapard euro account. No payments shall be made in cash. The approval of the authorising official and/or their
supervisor may be made by electronic means, provided an appropriate level of security over these means is
ensured, and the identity of the signatory is entered in the electronic records;

2.2.6. where applications, claims or invoices are processed using a computer system, access to the computer system shall

be protected and controlled in such a way that:

— all information entered, modified, or validated, except by authorised officials to whom individual passwords are

attributed,

— no data may be entered, modified, or validated, except by authorised officials to whom individual passwords

are attributed,

— the identity of each official entering, or modifying, data or programmes is recorded in an operations log.
Passwords shall be changed regularly to avoid misuse. Computer systems shall be protected from unauthorised
access by physical controls, and the data shall be backed up by copies stored in a separate, safeguarded
location. Data entry shall be checked by logical checks aimed at detecting inconsistent or extraordinary data;

2.2.7. procedures should ensure that changes in rates of aid or terms and conditions for the grant of aid are recorded and

the instructions, databases and checklists updated in good time.

2.3.

part or all of the authorisation and the control function may be delegated to other bodies provided that the
following conditions are fulfilled:

2.3.1. the responsibilities and obligations of these other bodies, notably concerning the control and verification of the

compliance with financing agreement rules, are clearly defined;

2.3.2. the bodies dispose of effective systems for ensuring that they fulfil their responsibilities in a satisfactory manner;

2.3.3. the bodies explicity confirm to the agency that they in fact fulfil their responsibilities and describe the means

employed;

2.3.4. the Sapard agency is informed on a regular and timely basis of the results of controls effected, so that the
sufficiency of these controls may always be taken into account before a claim is authorised, settled or an invoice is
paid. The work performed shall be described in detail in a report accompanying each application and claim, batch
of applications and claims or, when appropriate, in a report covering one year. The report shall be accompanied by
an attestation of the eligibility of the approved applications and claims and of the nature, scope and limits of the
work done. Physical and/or administrative checks performed shall be identified, the method described, the results
of all
inspections and the measures taken in respect of discrepancies and irregularities reported upon. The
supporting documents submitted to the agency shall be sufficient to provide assurance that all the required checks
on the eligibility of the claims or invoices authorised for payment have been performed;

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2.3.5. the Sapard agency should be satisfied before the project approval and before the payment of the expenditure, that

the other bodies have followed procedures which comply with the criteria set out in this Annex;

2.3.6. criteria for assessing applications and their order of priority shall be clearly defined and documented;

2.3.7. where documents relating to the claims authorised, expenditure committed and controls effected are retained by
the other bodies, both these bodies and the agency shall set up procedures to ensure that the location of all such
documents that are relevant to specific payments made by the agency is recorded, and that these documents may
be made available for inspection at the agency's offices at the request of the persons and bodies who would
normally have the right to inspect such documents, which include:

— the agency's staff who deal with the claim,

— the agency's internal audit service,

— the certifying body that attests the agency's annual declaration,

— mandated officials of the European Union;

2.3.8. written agreements must be concluded between the Sapard agency and bodies to which functions of the Sapard
agency have been delegated. Such agreements should clearly identify the functions to be performed by the
delegated body and the type of supporting documents and reports to be sent to the Sapard agency within specified
time limits. The overall system including the delegated functions performed by other bodies should be set out in an
organisation chart.

The agreement should provide for access by officials of the Commission and the Court of Auditors to information
held by these delegated bodies and for the investigation by such officials of applciations including the carrying out
of checks on projects and recipients of aid.

2.4. Accounting procedures shall ensure that declarations of expenditure to the Commission are complete, accurate
(correct project or account heading) and timely, and that any errors or omissions are detected and corrected, in
particular through cheks and reconciliation performed at intervals not exceeding three months.

The Sapard agency's accounting procedure shall ensure that the accounting system can produce, in euro and
national currency, for each regional office, per project, contract or measure/sub-measure, the total cost, the
committed expenditure, part payments and balance payments. Deadlines shall be set for the cancellation of
commitments where work has not been completed within an agreed timetable. These cancellations shall be
appropriately recorded in the accounting system.

The Sapard agency shall dispose of an internal audit service. The objective of this service or equivalent procedure is
to ensure that the agency's system of internal control operates effectively; the internal audit service shall be
independent of the agency's other departments and shall report directly to the agency's top management. The
internal audit service shall verify that procedures adopted by the agency are adequate to ensure that compliance
with the programme and financing agreement is verified, and that accounts are accurate, complete and timely.
Verifications may be limited to selected measures/sub-measures and to samples of transactions provided that an
audit plan ensures that all significant areas, including the departments/bodies responsible for authorisation and
those departments to which functions have been delegated, are covered over a period not exceeding three years.
The service's work shall be performed according to internationally accepted auditing standards, shall be recorded in
working papers and shall result in reports and recommendations addressed to the agency's top management. The
audit plans and reports shall be made available to the certifying body and to officials of the European Union
mandated to undertake financial audits and for the sole purpose of appraising the effectiveness of the internal audit
function.

The rules for the procurement by public bodies of services, works and supplies in the applicant country shall be in
accordance with the rules set out in the Commission annual (1) entitled ‘Service, supply and work contracts
concluded within the framework of Community cooperation for the third countries’ with the exception of the
requirement for ex ante approval by the Commission.

Services, works, machinery and supplies procured by private undertakings must originate in the Community or in
the countries referred to in Article 1(1) of Regulation (EC) No 1268/1999. The same goes for supplies and
equipment purchased by a contractor for works or service contracts if the supplies and equipment are destined to
become the property of the project once the contract has been completed.

2.5.

2.6.

2.7.

2.8. As regards in particular forfeited guarantees, reimbursed payments, etc., the agency shall set up a system for the
recognition of all amounts due to the Sapard euro acocunt and for the recording in a debtors ledger of all such
debst prior to their receipt. The debtors ledger shall be inspected at regular intervals with the aim of taking action
to collect debts that are overdue.

(1) SEC (1999) 1801 final

‘Service, supply and work contracts concluded within the framework of Community cooperation for the

third countries’.

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2.9.

The Sapard agency shall publicise the availability of support to all potential project managers/operators so that
they obtain as wide as possible selection of potential project managers/operators. Standard application forms with
clear guidelines for completion and conditions for eligibity shall be drawn up in advance of the launch of the
scheme.

2.10. Timely processing of applications from beneficiaries.

2.11. The Sapard agency will install an appropriate system to report progress of each project and measure towards
pre-defined indicators. Where appropriate these indicators shall, with the approval of the monitoring committee,
be revised.

Action is to be taken in instances where delays in meeting pre-defined targets arise. Proper records shall be kept of
all action taken.

An appropriate management information system shall be used for the speedy generation of appropriate reports on
the projects and measures. These reports shall be made available to the managing authority, the monitoring
committee and the Commission on request.