Proposal for a Council Regulation amending Regulation (EC) No 1258/1999 on the financing of the common agricultural policy
Date: 2002-06-11
Institutions: European Commission
Subjects: EU financing, closing of accounts, common agricultural policy, financial interests of members

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 11.06.2002
COM(2002) 293 final

2002/0125(CNS)

Proposal for a

COUNCIL REGULATION

amending Regulation (EC) No 1258/1999 on the financing
of the common agricultural policy

(presented by the Commission)

EXPLANATORY MEMORANDUM

Under Article 7(4) of Council Regulation (EC) No 1258/1999 of 17 May 1999 on the
financing of the common agricultural policy1, a decision to refuse financing may not involve
expenditure referred to in Article 2 of that Regulation effected prior to 24 months preceding
the Commission’s written communication of the results of those checks to the Member State.
As regards expenditure for a measure or action referred to in Article 3 of that Regulation, a
refusal to finance may not involve expenditure in respect of which the final payment was
effected prior to 24 months preceding the Commission’s written communication of the results
of those checks to the Member State concerned.

That Regulation is a recasting of Council Regulation (EEC) No 729/70 of 21 April 1970 on
the financing of the common agricultural policy2, into which the principle of a limit of
24 months was introduced by Council Regulation (EC) No 1287/95 of 22 May 19953.

The principle that financial corrections decided within the framework of the clearance of
accounts may not precede a certain period before the communication of the results of the
checks (except for the financial consequences of irregularities as referred to in Article 8(2) of
Regulation (EC) No 1258/1999 and national aids or infringements for which the procedures
laid down in Articles 88 and 226 of the Treaty have been initiated) stems from the report
issued on 25 January 1993 by the Commission’s working group on the reform of the
clearance of EAGGF-Guarantee Section accounts (BELLE Report).

The Belle Report called on the Commission to restrict the financial corrections resulting from
its checks to a limited number of financial years. It proposed limiting the possibility of
backdating corrections to a maximum of the two financial years prior to the date of
communication. It pointed out that, in terms of legal and financial security, this represented
considerable progress on the existing situation where, by juggling disjunctions and reserves,
at the end of several years a Commission inquiry might end up accumulating corrections for a
number of financial years.

In its proposal for a Council Regulation4 amending Regulation (EEC) No 729/70, which
introduced the clearance of accounts reform, the Commission proposed that corrections
involve expenditure effected prior to the two financial years preceding the
should not
communication, representing a maximum period of 36 months. However, the Council decided
not to follow the precise recommendation of the Belle Report on this point, but to limit the
period which corrections could involve to the 24 months preceding the communication rather
than the two financial years.

In its report on the budget discharge for 1999, the European Parliament subsequently called
for “the Commission to extend the clearance period for which financial recoveries can be
made from the current 24 months to 36 months”.

In the light of experience, although the principle of limiting the period in which corrections
can be backdated remains a useful element of the 1995 reform, the application of this
restriction poses a problem in terms of protecting the EU’s financial interests, as it places the

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2

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4

OJ L 160, 26.6.1999, p. 103.
OJ L 94, 28.4.1970, p. 13.
OJ L 125, 8.6.1995, p. 1.
OJ C 284, 12.10.1994, p. 5.

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Commission in the unsatisfactory position of being unable to recover money that has been
spent improperly, thus representing a financial loss to the Community budget.

It is therefore a legitimate objective to seek to ensure that this restriction is applied in a
manner which takes better account of the financial interests of the European Union. This may
be achieved in two ways. The first is increasing use of preventive missions so that, when a
new scheme is introduced or substantial changes are made to an existing scheme, any
deficiencies may be identified before the first expenditure is effected. The Commission is
already endeavouring to do this, but this measure is highly dependent on the human resources
available to the clearance of accounts department. The second, which is the subject of this
proposal for a Regulation, is to extend the reference period, which would reduce the amounts
of non-conform expenditure charged to the Community budget.

It is therefore proposed to extend to 36 months the maximum period between the start of
application of financial corrections and the date of communication of the result of the checks
referred to in the second subparagraph of Article 7(4) of Regulation (EC) No 1258/1999 to
the Member State.

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2002/0125(CNS)

Proposal for a

COUNCIL REGULATION

amending Regulation (EC) No 1258/1999 on the financing
of the common agricultural policy

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular
Article 37 thereof,

Having regard to the proposal from the Commission5,

Having regard to the opinion of the European Parliament6,

Having regard to the opinion of the Court of Auditors7,

Having regard to the opinion of the Economic and Social Committee8,

Whereas:

(1)

Under Article 7(4) of Council Regulation (EC) No 1258/1999 of 17 May 1999 on the
financing of the common agricultural policy9 a refusal to finance may not involve
expenditure referred to in Article 2 thereof effected prior to 24 months preceding the
Commission’s written communication of the results of the checks referred to in the
second subparagraph of Article 7(4) to the Member State concerned. As regards
expenditure for a measure or action referred to in Article 3 of that Regulation, a refusal
to finance may not involve expenditure in respect of which the final payment was
effected prior to 24 months preceding the Commission’s written communication of the
results of those checks to the Member State concerned.

(2)

In the light of experience acquired in order to ensure greater protection of the
this 24-month period should be increased to
Community’s financial
36 months.

interests,

(3)

Regulation (EC) No 1258/1999 should therefore be amended accordingly,

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9

OJ C …, …, p. …
OJ C …, …, p. …
OJ C …, …, p. …
OJ C …, …, p. …
OJ L 160, 26.6.1999, p. 103.

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HAS ADOPTED THIS REGULATION:

Article 1

In points (a) and (b) of the fifth subparagraph of Article 7(4) of Regulation (EC)
No 1258/1999, the words “24 months” are replaced by “36 months”.

Article 2

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

It shall apply to expenditure in respect of which the Commission’s written communication of
the result of the checks to the Member State dates after the entry into force of this Regulation,
excluding expenditure effected more than 24 months before the date of entry into force of this
Regulation.

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

Done at Brussels,

For the Council
The President

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FINANCIAL STATEMENT

BUDGET HEADING:
B1-3700

€

APPROPRIATIONS:
-

400 million

TITLE:
Council Regulation amending Regulation (EC) No 1258/1999 on the financing of the common
agricultural policy.

LEGAL BASIS:
Article 37 of the Treaty

AIMS:
In order to ensure greater protection of the Community’s financial interests, extend the clearance period
during which financial recoveries can be performed to 36 months instead of 24 months.

1.

2.

3.

4.

5.

FINANCIAL IMPLICATIONS

5.0

5.1

CHARGED TO THE EC BUDGET

NATIONAL AUTHORITIES
OTHER

EXPENDITURE
-
(REFUNDS/INTERVENTIONS)
-
-
REVENUE
-
(LEVIES/CUSTOMS DUTIES)
-

NATIONAL

OWN RESOURCES OF THE EC

5.0.1 ESTIMATED EXPENDITURE
5.1.1 ESTIMATED REVENUE

5.2 METHOD OF CALCULATION:

-

12 MONTH
PERIOD

(EUR million)
-

CURRENT
FINANCIAL
YEAR 2002
(EUR million)
-

FOLLOWING
FINANCIAL
YEAR 2003
(EUR million)
-

-

-

-

2004
-
-

2005
-
-

2006
-
-

2007
-
-

CAN THE PROJECT BE FINANCED FROM APPROPRIATIONS ENTERED IN THE
RELEVANT CHAPTER OF THE CURRENT BUDGET?

YES / NO

CAN THE PROJECT BE FINANCED BY TRANSFER BETWEEN CHAPTERS OF
THE CURRENT BUDGET?

6.0

6.1

YES / NO

YES / NO

YES / NO

6.2 WILL A SUPPLEMENTARY BUDGET BE NECESSARY?

6.3 WILL APPROPRIATIONS NEED TO BE ENTERED IN FUTURE BUDGETS?

OBSERVATIONS:

The measure as such has no financial impact.

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