Commission Regulation (EC) No 448/2001 of 2 March 2001 laying down detailed rules for the implementation of Council Regulation (EC) No 1260/1999 as regards the procedure for making financial corrections to assistance granted under the Structural Funds
Date: 2001-03-02
Institutions: European Commission
Subjects: EU Member State, Structural Funds, co-financing, management, regional aid, structural policy

6.3.2001

EN

Official Journal of the European Communities

L 64/13

COMMISSION REGULATION (EC) No 448/2001

of 2 March 2001

laying down detailed rules for the implementation of Council Regulation (EC) No 1260/1999 as
regards the procedure for making financial corrections to assistance granted under the Structural
Funds

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European
Community,

Having regard to Council Regulation (EC) No 1260/1999 of 21
June 1999 laying down general provisions on the Structural
Funds (1), and in particular Article 53(2) thereof,

After consulting the Committee set up pursuant to Article 147
of the Treaty,

90 should continue to apply to assistance granted for
the programme period 1994-99 under Council Regula-
tion (EEC) No 2052/88 (3), as last amended by Regula-
tion (EC) No 3193/94 (4).

This Regulation should be without prejudice to the
provisions regarding the recovery of State aid laid down
in Article 14 of Council Regulation (EC) No 659/1999
of 22 March 1999 laying down detailed rules for the
application of Article 93 of the EC Treaty (5).

The measures provided for in this Regulation are in
accordance with the opinion of the Committee for the
Development and Conversion of Regions,

(6)

(7)

After consulting the Committee on Agricultural Structures and
Rural Development,

HAS ADOPTED THIS REGULATION:

After consulting the Committee on Structures for Fisheries and
Aquaculture,

Whereas:

(1)

(2)

(3)

(4)

(5)

Article 39(1) of Regulation (EC) No 1260/1999 requires
the Member States to make financial corrections in
connection with individual or systemic irregularities, by
cancelling all or part of the Community contribution.

In order to ensure a uniform application of this provi-
sion throughout the Community, provisions should be
laid down for determining such corrections and for
reporting to the Commission.

Provisions should be laid down concerning the amount
of the financial corrections the Commission may make
under Article 39(3) of Regulation (EC) No 1260/1999 in
cases where a Member State has failed to comply with
its obligations under Article 39(1) or Article 38.

Detailed provisions concerning the procedure under
Article 39(2) of Regulation (EC) No 1260/1999 should
be laid down and the same procedure should be applied
in the cases referred to in Article 38(5) of the Regula-
tion.

Commission Regulation (EEC) No 1865/90 of 2 July
1990 concerning interest on account of late payment to
be charged in the event of late repayment of assistance
from the Structural Funds (2)
replaced.
However, the provisions of Regulation (EEC) No 1865/

should be

(1) OJ L 161, 26.6.1999, p. 1.
(2) OJ L 170, 3.7.1990, p. 35.

CHAPTER I

Scope

Article 1

This Regulation lays down detailed rules for the implementa-
tion of Regulation (EC) No 1260/1999 as regards the proce-
dure for making financial corrections to assistance granted
under the Structural Funds that is administered by the Member
States.

CHAPTER II

Financial corrections by Member States

Article 2

1.
In the case of systemic irregularities, enquiries under
Article 39(1) of Regulation (EC) No 1260/1999 shall cover all
the operations liable to be affected.

2. When cancelling all or part of the Community contribu-
tion, Member States shall take into account the nature and
gravity of the irregularities and the financial loss to the Funds.

3. Member States shall send to the Commission, as an annex
to the last quarterly report of each year supplied under
Commission Regulation (EC) No 1681/94 (6), a list of cancella-
tion proceedings initiated in the past year, together with infor-
mation on the steps already taken or still required, where
appropriate, to adjust the management and control systems.

Article 3

1. When amounts are to be recovered following a cancella-
tion under Article 39(1) of Regulation (EC) No 1260/1999, the
competent service or body shall initiate recovery proceedings

(3) OJ L 185, 15.7.1988, p. 9.
(4) OJ L 337, 24.12.1994, p. 11.
(5) OJ L 83, 27.3.1999, p. 1.
(6) OJ L 178, 12.7.1994, p. 43.

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6.3.2001

and notify the paying and managing authorities thereof. Recov-
eries shall be reported and accounted for in accordance with
Article 8 of Commission Regulation (EC) No 438/2001 (1).

The contribution of the Funds cancelled in accordance
2.
with paragraph 1 may not be re-used for the operation or
operations that were the subject of the correction, nor, where a
financial correction is made for a systemic error, for operations
where this systemic error occurred. Member States shall inform
the Commission in the report referred to in Article 2(3) of how
they have decided or propose to re-use the funds cancelled and,
if appropriate, to amend the financial plan for the assistance.

CHAPTER III

Financial corrections by the Commission

Article 4

The amount of

1.
financial corrections made by the
Commission under Article 39(3) of Regulation (EC) No 1260/
1999 for individual or systemic irregularities shall be assessed
wherever possible and practicable on the basis of individual
to the amount of expenditure wrongly
files and be equal
charged to the Funds, having regard to the principle of propor-
tionality.

2. When it is not possible or practicable to quantify the
amount of irregular expenditure precisely, or when it would be
disproportionate to cancel the expenditure in question entirely,
and the Commission therefore bases its financial corrections on
extrapolation or a flat rate,

it shall proceed as follows:

(a) in the case of extrapolation, it shall use a representative

sample of transactions with like characteristics;

(b) in the case of a flat rate, it shall assess the importance of
the infringement of rules and the extent and financial
implications of the irregularity established.

3. Where the Commission bases its position on the facts
established by auditors other than those of its own services, it
shall draw its own conclusions
financial
consequences, after examining the measures taken by the
Member State concerned under Article 39(1) of Regulation (EC)
No 1260/1999, the reports supplied under Regulation (EC) No
1681/94, and any replies from the Member State.

regarding their

Article 5

The period of

1.
time within which the Member State
concerned may respond to a request under the first subpara-
graph of Article 39(2) of Regulation (EC) No 1260/1999 to
submit its comments and, where appropriate, make correc-
tions, shall be two months, except in duly justified cases where
a longer period may be agreed by the Commission.

(1) OJ L 63, 3.3.2001, p. 21.

2. Where the Commission proposes financial corrections on
the basis of extrapolation or at a flat rate, the Member State
shall be given the opportunity to demonstrate, through an
examination of the files concerned, that the actual extent of
irregularity was less than the Commission's assessment.
In
agreement with the Commission, the Member State may limit
the scope of this examination to an appropriate proportion or
sample of the files concerned. Except in duly justified cases, the
time allowed for this examination shall not exceed a further
period of two months after the two-month period referred to
in paragraph 1. The results of such examination shall be exam-
ined in the manner specified in the second subparagraph of
Article 39(2) of Regulation (EC) No 1260/1999. The Commis-
sion shall
take account of any evidence supplied by the
Member State within the time limits.

3. Whenever the Member State objects to the observations
made by the Commission and a hearing takes place under the
second subparagraph of Article 39(2) of Regulation (EC) No
1260/1999,
three-month period within which the
Commission may take a decision under Article 39(3) of that
Regulation shall begin to run from the date of the hearing.

the

Article 6

In cases in which the Commission has suspended payments
under Article 38(5) of Regulation (EC) No 1260/1999, the
Commission and the Member State concerned shall endeavour
to reach agreement within the five-month period referred to in
Article 38(5) of Regulation (EC) No 1260/1999 in accordance
with the procedure and time limits set out in Article 5(1) and
(2). If no agreement is reached, Article 5(3) shall apply.

Article 7

1.
Any repayment due to be made to the Commission
pursuant to Article 39(4) of Regulation (EC) No 1260/1999
shall be effected before the due date indicated in the order for
recovery drawn up in accordance with Article 28 of the Finan-
cial Regulation applicable to the general budget of the Euro-
pean Communities. This due date shall be the last day of the
second month following the issuing of the order.

2.
Any delay in effecting repayment shall give rise to interest
on account of late payment, starting on the due date referred to
in paragraph 1 and ending on the date of actual payment. The
rate of such interest shall be one and a half percentage points
above the rate applied by the European Central Bank in its
main refinancing operations on the first working day of the
month in which the due date falls.

A financial correction under Article 39(3) of Regulation
3.
(EC) No 1260/1999 shall not prejudice the Member State's
obligation to pursue recoveries under Article 38(1)(h) of Regu-
lation (EC) No 1260/1999 and Article 3(1) of this Regulation
and to recover state aid under Article 14 of Regulation (EC) No
659/1999.

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CHAPTER IV

Final provisions

Article 8

Regulation (EEC) No 1865/90 is hereby repealed.

Its provisions shall however continue to apply to assistance granted for the programme period 1994-99
under Regulation (EEC) No 2052/88.

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

Article 9

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

Done at Brussels, 2 March 2001.

For the Commission

Michel BARNIER

Member of the Commission