Opinion No 9/2002 concerning the financing of the common agricultural policy
Date: 2002-09-25
Institutions: European Court of Auditors
Subjects: EU financing, agricultural expenditure, closing of accounts, common agricultural policy

21.11.2002

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Official Journal of the European Communities

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I

(Information)

COURT OF AUDITORS

OPINION No 9/2002

concerning the financing of the common agricultural policy

(pursuant to the second subparagraph of Article 248(4) of the EC Treaty)

(2002/C 285/01)

EXPLANATORY MEMORANDUM

Under the procedure for clearing the accounts of the European
Agricultural Guidance and Guarantee Fund, the Commission
decides whether expenditure by the Member States’ paying agen-
cies to carry out the common agricultural policy is in conformity
with the relevant regulations and can be definitively charged to
the Community budget or should be disallowed.

At the moment disallowance is only permitted in respect of
expenditure taking place in the 24 months before the Commis-
sion notifies a Member State that expenditure appears to have
been irregularly incurred. The Court has criticised the two-year
time limit as unrealistically short (for example the Commission’s
clearance of accounts unit examines all expenditure on a three-
year cycle).

The Commission proposes to extend the retrospective time limit
from two to three years. The attached Opinion supports this pro-
posal and suggests no amendments.

THE COURT OF AUDITORS OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Commu-
nity and in particular Articles 248(4) and 279 thereof,

Having regard to the Financial Regulation applicable to the gen-
eral budget of the European Communities (1), as amended by
Council Regulation (EC, ECSC, Euratom) No 2673/1999 of
13 December 1999 (2), and in particular Articles 4, 19(6) and
102(3) thereof,

Having regard to the proposal for a Council Regulation amend-
ing Council Regulation (EC) No 1258/1999 on the financing of
the common agricultural policy (3),

Having regard to the Commission’s request, dated 11 June 2002
for the Court of Auditors’ opinion on this proposal,

HAS ADOPTED THE FOLLOWING OPINION:

The Court of Auditors welcomes the Commission’s proposal to
amend the Council Regulation on the financing of the common
agricultural policy in order to extend the maximum period to
which a correction to expenditure may be applied from 24 months
to 36 months preceding the Commission’s written notification of
the results of its checks to the Member State concerned.

In its Special Report No 22/2000 on evaluation of the reformed
clearance of accounts procedure (4) (see paragraph 89), the Court
has pointed out the negative effect of the 24 month rule on the
total amount of corrections made.

This modification will reduce the risk that weaknesses detected in
Member States’ systems may not be penalised simply because the
Commission has not been able to cover all areas of expenditure
within a two-year cycle. Indeed, the 36-month limit is more
closely in line with the Commission’s current capacity to check all
expenditure on a cyclical basis.

(1) OJ L 356, 31.12.1977, p. 1.
(2) OJ L 326, 18.12.1999, p. 1.

(3) Commission Document reference 2002/0125 (CNS) — COM(2002)

293 final.

(4) OJ C 69, 2.3.2001, p. 23.

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It remains important for the Commission to ensure that it com-
municates its findings to the Member States in a timely manner,
unfortunately this has not always been the case (see Annual
Report concerning the financial year 2000, paragraph 2.58 (1)).

The Court has no proposals to amend the Commission’s text. The
annexed table shows the change proposed by the Commission
and the reason for the Court’s endorsement.

This Opinion was adopted by the Court of Auditors in Luxembourg at its meeting of 25 and 26 Septem-
ber 2002.

For the Court of Auditors

Juan Manuel FABRA VALLÉS

President

(1) OJ C 359, 15.12.2001, p. 77.

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Extant legislation

Commission’s proposal

Court’s comment

ANNEX

Council Regulation (EC) No 1258/1999 of
17 May 1999 on the financing of the common
agricultural policy

Point b of the fifth subparagraph of Article 7(4)

Article 1

‘expenditure for a measure or action referred to
in Article 3 in respect of which the final pay-
ment was effected prior to 24 months preced-
ing the Commission’s written communication
of the results of those checks to the Member
State concerned.’

Point b of the fifth subparagraph of Article 7(4)
to read:

‘expenditure for a measure or action referred
to in Article 3 in respect of which the final
payment was effected prior to 36 months
preceding the Commission’s written com-
munication of the results of those checks to
the Member State concerned.’

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 communica-
tion 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.

By extending the period from 24 to
36 months the Community’s
financial interests will be better
protected. The risk of loss to the
Fund due to the cut-off of 24
months will be greatly reduced
since the Commission’s checks on
the main expenditure areas are
more likely to be completed within
such a three-year time frame.

This is an appropriate rider since it
ensures that there is no retrospec-
tive effect on corrections for which
procedures are under way.