Commission Regulation (EC) No 2304/2002 of 20 December 2002 implementing Council Decision 2001/822/EC on the association of the overseas countries and territories with the European Community ('Overseas Association Decision')
Date: 2002-12-20
Institutions: European Commission
Subjects: EU programme, European Development Fund, aid system, association agreement (EU), financial aid, overseas countries and territories, regional integration

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COMMISSION REGULATION (EC) No 2304/2002

of 20 December 2002

implementing Council Decision 2001/822/EC on the association of the overseas countries and terri-
tories with the European Community ('Overseas Association Decision')

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

(4)

Having regard to the Treaty establishing the European
Community,

Having regard to Council Decision 2001/822/EC (1), and in
particular Article 23 thereof,

Having regard to the Internal Agreement between Representa-
tives of the Governments of the Member States, meeting within
the Council, on the Financing and Administration of Commu-
nity Aid under the Financial Protocol to the Partnership Agree-
ment between the African, Caribbean and Pacific States and the
European Community and its Member States signed in Cotonou
(Benin) on 23 June 2000 and the allocation of financial assis-
tance for the Overseas Countries and Territories to which Part
Four of the EC Treaty applies (2),

Having regard to the Council Regulation on a Financial Regula-
tion for the European Development Fund (3)
(EDF Financial
Regulation),

Whereas:

(5)

(6)

(7)

Provisions should be established for the preparation of
the SPD,
its follow-up, audit, evaluation, review and
implementation, as well as for reporting and financial
corrections. Such provisions should cover the participa-
tion of the Commission in those activities. Subject to
any necessary adaptation to the specific OCT situation,
they should be consistent with the corresponding ones
in the context of structural funds, in order to enhance
and facilitate the effectiveness of the Commission partici-
pation.

In order to facilitate regional cooperation and integration
between the OCT and the ACP countries, identical rules
should in principle apply. However, taking into account
the geographical situation of certain OCT, which in
practice cannot establish close cooperation with ACP
countries or other OCT, the possibility should also be
provided for regional funds to be allocated at the request
of only one OCT.

The measures provided for in this Regulation have been
subject to consultation with the OCTs.

The measures provided for in this Regulation are in
accordance with the opinion of the EDF-OCT Committee
established by Article 24 of the Overseas Association
Decision,

(1)

(2)

(3)

Decision 2001/822/EC (Overseas Association Decision)
requires the Commission to adopt implementing provi-
sions concerning Part III and Annexes II(A) to (D) in
cooperation with the overseas countries and territories
(OCT) within the framework of the partnership proce-
dure. In particular, Article 4 lays down that OCT shall
have primary responsibility for the preparation of Single
Programming Documents
cooperation
programmes.

(SPD)

and

The provisions adopted by the Commission pursuant to
Article 23 of the Overseas Association Decision should
be consistent with the principles of sound financial
management, partnership, complementarity and subsi-
diarity and ensure ownership by the OCT of the devel-
opment process as well as adequate monitoring and
auditing by the OCT themselves and the Commission.

Taking into account the specific needs, capabilities and
constraints of the OCT, financial assistance should be
granted to the OCT as budgetary support, provided the
OCT management of public expenditure presents suffi-
cient transparency, accountability and effectiveness. In
addition,
there
should satisfy to the standards of
the EDF Financial
Regulation as to transparency and openness. Alterna-
tively to budgetary support, financial assistance may be
provided as support for projects or programmes when
this is deemed to ensure a more effective or safer imple-
mentation.

the public procurement procedures

(1) OJ L 314, 30.11.2001, p. 1.
(2) OJ L 317, 15.12.2002, p. 355.
(3) Not yet published — COM (2002)290 final, 11.06.2002.

HAS ADOPTED THIS REGULATION:

PART 1

SUBJECT MATTER AND PRINCIPLES

Article 1

Subject matter

This Regulation lays down the procedures for the program-
ming, implementation and control of the Community financial
assistance to the OCT managed by the Commission under the
Ninth European Development Fund (EDF), in accordance with
the provisions of the Overseas Association Decision and the
EDF Financial Regulation.

Article 2

Complementarity and partnership

1.
The programming, implementing, monitoring and evalua-
tion of EDF support shall be carried out in close consultation
the Member States concerned and the
between the OCT,
Commission.

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The OCT shall ensure that all the actors of cooperation
2.
listed in Article 5(1), second and third indent of the Overseas
Association Decision are adequately consulted during the
programming process.

Any divergences between the country's own analysis and the
Community's shall be noted.

The OCT, the Member States concerned and the Commis-
3.
sion shall promote coordination and consistency between both
measures undertaken pursuant to this Regulation, measures
undertaken with contributions from the Community budget,
and operations undertaken by the European Investment Bank,
other
States
concerned.

and the Member

international

institutions

PART II

PROGRAMMABLE AND NON-PROGRAMMABLE AID

CHAPTER 1

Programmable aid

Article 3

Territorial programming

the Overseas Association Decision shall

Operations financed by non-repayable aid within the frame-
work of
be
programmed as soon as possible after the entry into force of
this Regulation by means of the adoption of a Single Program-
ming Document (SPD) following the model in the Annex to the
present Regulation.

Article 4

Preparation of the SPD

The competent OCT authorities shall prepare a proposal
1.
for the SPD following consultations with the widest possible
range of stakeholders in the development process, and shall
draw on lessons learned and best practices.

Each proposal for a SPD shall be adapted to the needs and
respond to the specific circumstances of each OCT. It shall
prioritise activities and build local ownership of cooperation
programmes.

The proposal shall be submitted to the Commission not later
than 12 months after the entry into force of this Regulation.

2.
The proposal for the draft SPD shall be the subject of an
exchange of views between the OCT and Member State
concerned and the Commission, via, if applicable, the relevant
Delegation.

The OCT shall provide all the necessary information, including
the results of any feasibility studies, to make the appraisal of
the draft SPD by the Commission as effective as possible.

3.
The OCT authorities shall, in particular, indicate to the
Commission at the earliest possible stage whether they require
that EDF financial allocation be provided as budgetary support.

Article 5

Commission's appraisal of the SPD

The Commission shall appraise the proposal for the SPD to
determine whether it contains all the elements required and is
consistent with the aims of the Overseas Association Decision,
this Regulation and the relevant Community policies. It shall
inform the European Investment Bank on the draft received.

to a preliminary assessment of

In particular, the Commission shall decide whether EDF finan-
cial assistance is to be granted by means of budgetary support,
subject
the transparency,
accountability and effectiveness of public expenditure manage-
ment and of the openness and transparency of public procure-
ment in accordance with the standards set out in the EDF
Financial Regulation, or as support for programmes or projects.

Article 6

Regional programmes

1.
The financial support for regional cooperation and inte-
gration laid down in Article 1(1)(a)(ii) of Annex II(A) to the
Overseas Association Decision shall be allocated on the basis of
programme proposals submitted by one or more OCT in accor-
dance with Article 16 of the ‘Overseas Association’ Decision.

Proposals shall be the result of an exchange of views
2.
between the Commission and the OCT Territorial Authorising
Officers appointed in accordance with Article 14 of this Regu-
lation or their representatives,
including, where appropriate,
consultation with eligible non-State actors.

They shall be submitted to the Commission by 30 September
2003.

In its assessment of the proposals, the Commission shall take
particular account of the anticipated impact on the integration
of the beneficiary OCT within the region to which they belong.
Commitment of expenditure shall be preceded by a Commis-
for projects and
sion financing decision covering support
programmes.

3. Where any balance remains after the first allocation, addi-
tional proposals may be submitted twice a year, except in cases
of particular urgency, and for the first time by 31 December
2003 and 30 June 2004 respectively.

4.
In order to achieve an adequate scale and to increase effi-
ciency, regional and territorial funds may be mixed for finan-
cing regional programmes with a distinct territorial compo-
nent.

Articles 8 and 16 to 30 apply to regional programmes

5.
mutatis mutandis.

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CHAPTER 2

Non-programmable aid

Article 7

Use of the reserve 'C'

1.
The Commission shall allocate the resources from the
reserve 'C' for the purposes referred to in Article 3(3)(b) or (c)
of Annex II(A) to the Overseas Association Decision on the
basis of the mid-term review referred to in Article 22 of this
Regulation, or, in the case of Greenland, the mid-term review
referred to in Article 3(2) of Annex II to the Overseas Associa-
tion Decision. The Commission shall adjust the indicative allo-
cations in Article 3(4) of Annex II(A) to the Overseas Associa-
tion Decision accordingly and inform the OCTs and the
Member States of its decision regarding the new allocations.

2.
For the purposes of committing the resources laid down
in Article 28 and Annex II D of the Overseas Association Deci-
sion, any OCT which considers itself to be eligible for the
support laid down therein shall submit a complete request on
the forms made available by the Commission and include all
the information needed for it to be assessed.

The request shall be submitted to the Commission at the latest
by 30 April of the year following the year for which the addi-
tional support is required.

The Commission shall
possible time of its decision.

inform the OCT within the shortest

PART III

IMPLEMENTATION

CHAPTER 1

Financial procedures

Article 8

Commitments

Article 9

Paying agents

The financial institutions in the OCT with which the Commis-
sion opens accounts in accordance with Part I, Title III, Chapter
3, Section 4 of the EDF Financial Regulation for the purposes
of implementing cooperation with the OCT shall exercise the
functions of ‘Paying Agents’.

Interest shall be payable on funds deposited with Paying Agents
in the Community.

The Paying Agents shall receive no remuneration for their
services and no interest shall be payable on deposited funds.

CHAPTER 2

Contracts

Article 10

General regulations for contracts

The procedures governing the award of contracts shall be

1.
indicated in the financing agreements.

2. Where financial assistance is granted by means of
budgetary support, the procedures for public procurement of
the OCT in question shall apply.

3.
In all other cases, award of contract shall follow the
provisions laid down in Article 75 (1)(1) of the EDF Financial
Regulation.

Article 11

Tax and customs arrangements

1.
OCT shall apply for contracts implementing programmes
or projects financed by EDF tax and customs arrangements no
less favourable than the arrangements they apply to the most
favoured States or
international development organisations
with which they have relations. For the purposes of deter-
mining the most-favoured-nation (MFN)
treatment, account
shall not be taken of arrangements applied by the OCT
concerned to other OCT or ACP States, or to other developing
countries.

Subject

2.
contracts financed by the Community:

to paragraph 1,

the following shall apply to

1.
Expenditure on financial assistance for the OCT shall be
committed by the Commission in accordance with the EDF
Financial Regulation.

2. Within the scope of the SPD, commitment of expenditure
shall be preceded by a Commission financing decision covering
budgetary support or support for projects and programmes.

3.
Outside the scope of the SPD, expenditure related to the
non-allocated reserve ‘C’ set aside in accordance with Article
3(3) of Annex II(A) to the Overseas Association Decision shall
be committed by the Commission and implemented in accor-
dance with Article 15 and 54 of the EDF Financial Regulation.

(a) the contract shall not be subject in the beneficiary OCT to
stamp or registration duties or to fiscal charges having
equivalent effect, whether such charges already exist or are
to be instituted in the future; however, such contracts shall
be registered in accordance with the laws in force in the
OCT and a fee corresponding to the service rendered may
be charged therefor;

(b) profits and/or income arising from the performance of
contracts shall be taxable according to the internal fiscal
arrangements of the OCT concerned, provided that the
natural or legal persons who realise such profit and/or
income have a permanent place of business in that State, or
that the performance of the contract takes longer than six
months;

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(c) enterprises having to import professional equipment

in
order to carry out works contracts shall, if they so request,
benefit from the system of temporary admission as laid
down by the national legislation of the beneficiary OCT in
respect of the said equipment;

(d) any professional equipment needed to carry out the tasks
defined in a service contract shall be temporarily admitted
into the beneficiary OCT in accordance with its national
legislation free of customs duties, taxes or fiscal charges
having equivalent effect where such duties and charges do
not constitute remuneration for services rendered;

(e) imports under supply contracts shall be admitted into the
beneficiary OCT without customs duties, taxes or fiscal
charges having equivalent effect. The contract for supplies
originating in the OCT concerned shall be concluded on
the basis of the ex-works price of the supplies, to which
may be added such internal fiscal charges as may be applic-
able to those supplies in the OCT;

(f) fuels, lubricants and hydrocarbon binders and all materials
used in the performance of works contracts shall be
deemed to have been purchased on the local market and
shall be subject to fiscal rules applicable under the national
legislation in force in the beneficiary OCT; and

(g) personal and household effects imported for use by natural
persons, other than those recruited locally, engaged in
carrying out the tasks defined in a service contract, as well
as members of their families, shall be exempt from customs
or import duties, taxes and other fiscal charges having
equivalent effect, within the limit of the national legislation
in force in the beneficiary OCT.

3.
Any matter not covered by paragraphs 1 and 2 on tax
and customs arrangements shall remain subject to the legisla-
tion of the OCT concerned.

CHAPTER 3

Management and executing agents

Article 12

Implementing procedures

Without prejudice
implementing
to the procedures
budgetary support referred to in Articles 8(2) and 10(2),
programmes and projects financed according to this Regulation
shall be implemented in accordance with Articles 13, 14 and
15.

for

The Head of Delegation,
2.
Territorial Authorising Officer, shall:

in close cooperation with the

(a) at the request of the OCT concerned, participate and give
assistance in the preparation of projects and programmes
and in negotiating technical assistance contracts;

(b) participate

in appraising projects

and programmes,
preparing tender dossiers and seeking ways to simplify
project and programme appraisal and implementation
procedures;

(c) prepare financing proposals;

(d) approve, before the Territorial Authorising Officer issues
them, the local open invitation to tender and the emer-
gency assistance contract dossiers within 30 days of
receiving them from the Territorial Authorising Officer;

(e) be present at the opening of tenders and receive copies of

them and of the results of their examination;

(f) approve, within 30 days, the Territorial Authorising Offi-
cer's proposal for the placing of local open tenders, direct
agreement
contracts,
emergency
service contracts and works contracts with a value less
than EUR 5 million and supply contracts with a value less
than EUR 1 million;

assistance

contracts,

(g) for all other contracts not covered by the above, approve,
the Territorial Authorising Officer's
the contract wherever the

within 30 days,
proposal
following conditions are fulfilled:

for the placing of

(i) the tender selected is the lowest of those conforming

to the requirements of the tender dossier;

(ii) the tender selected meets all
stated in the tender dossier; and

the selection criteria

(iii) the

tender

selected does not

exceed the

sum

earmarked for the contract;

(h) where the conditions set out

in paragraph g are not
fulfilled, forward the proposal to the Chief Authorising
Officer, who shall decide thereon within 60 days of receipt
from the Head of Delegation. Where the price of the
selected tender exceeds
the
contract, the Chief Authorising Officer shall, upon giving
approval
to the award, make the necessary financial
commitment;

the sum earmarked for

Article 13

Delegations

(i) endorse contracts and estimates in the case of direct
labour, riders thereto as well as payment authorisations
issued by the Territorial Authorising Officer;

1. Where the Commission is represented by a Delegation
under the authority of a Head of Delegation, it shall inform the
OCT concerned accordingly. In such cases, Articles 22(2) and
67 of the EDF Financial Regulation concerning authorising offi-
cers and accounting officers by subdelegation shall apply.

(j) ensure that the projects and programmes financed from
the resources of the Fund managed by the Commission are
properly implemented from a financial and technical view-
point;

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(k) cooperate with the authorities of the OCT where he repre-
sents the Commission in evaluating operations on a
regular basis;

(l) provide the OCT with all the information and relevant
documents on the procedures for implementing develop-
ment finance cooperation, especially as regards appraisal
criteria and tender evaluation criteria; and

(m) inform the OCT authorities, on a regular basis, of Commu-
nity activities which may directly concern cooperation
between the Community and the OCT.

During the execution of operations and subject to the
3.
requirement to inform the Head of Delegation the Territorial
Authorising Officer shall enjoy decision-making powers on the
following:

(a) technical adjustments and alterations in matters of detail so
long as they do not affect the technical solution adopted
and remain within the limits of the reserve for adjustments;

(b) alterations to estimates during execution;

(c) transfers from item to item within estimates;

Any further delegation of administrative and/or financial
3.
powers to the Head of Delegation other than described in this
Article shall be notified to the Territorial Authorising Officers.

(d) changes of site for multiple-unit projects or programmes
where justified on technical, economic or social grounds;

Article 14

(f) acts discharging guarantors;

(e) imposition or remission of penalties for delay;

Territorial Authorising Officer

(g) purchase of goods, irrespective of their origin, on the local

market;

1.
The Government of each OCT shall appoint a Territorial
Authorising Officer to represent it in all operations financed
from the resources of the Fund managed by the Commission
and the Bank. The Territorial Authorising Officer may delegate
some of these functions and shall inform the Chief Authorising
Officer of any such delegation.

The functions of the Territorial Authorising Officer shall

2.
be as follows:

(a) in close cooperation with the Head of Delegation, be
responsible for the preparation, submission and appraisal
of projects and programmes;

(b) in close cooperation with the Head of Delegation,

issue
invitations for local open tenders, receive tenders, both
local and international (open and restricted), preside over
the examination of tenders, establish the results of this
examination, sign contracts and riders thereto and approve
expenditure;

(c) submit, before issuing local open invitations to tender, the
invitation to tender dossier to the Head of Delegation, who
shall give his agreement within 30 days;

(d) complete the evaluation of

tenders within the tender
taking into consideration the period

validity period,
required for the approval of contracts;

(e) transmit the results of the examination of and a proposal
for placing the contract to the Head of Delegation for his
approval within the time limits set out in Article 15(f);

(h) use of construction equipment and machinery not origi-
nating in the OCT, Member States or ACP States provided
there is no production of comparable equipment and
machinery in the OCT, Member States or ACP States;

(i) subcontracting;

(j) final acceptance, provided that the Head of Delegation is
present at provisional acceptance, endorses
the corre-
sponding minutes and, where appropriate, is present at the
final acceptance, in particular where the extent of the reser-
vations recorded at the provisional acceptance necessitates
major additional work; and

(k) hiring of consultants and other technical assistance experts.

4.

In addition the Territorial Authorising Officer shall:

(a) draw up and, after obtaining the approval of the Moni-
toring Committee, submit to the Commission the annual
implementation report;

(b) carry out the mid-term review referred to in Article 22;

(c) ensure that those bodies taking part in the management
and implementation of EDF programmes maintain either a
separate accounting system or an adequate accounting code
for all transactions relating to the assistance; and

(d) take any necessary measures to ensure the implementation

(f) clear and authorise expenditure within the limits of the

of Articles 16, 19, 24 and 30.

funds assigned to him; and

(g) during the execution of operations, make any adaptation
arrangements necessary to ensure proper implementation
of approved projects or programmes from an economic
and technical viewpoint.

5. When the annual
implementation report referred to in
Article 21 is submitted, the Commission and the Territorial
Authorising Officer shall review the main outcomes of the
previous year.

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After this review, the Commission may make comments to the
Territorial Authorising Officer. The Territorial Authorising
Officer shall inform the Commission of any action taken on
these comments. Where in duly substantiated cases
the
Commission considers that the measures taken are inadequate,
it may make recommendations to the OCT and the Territorial
Authorising Officer for adjustments aimed at improving the
effectiveness of the monitoring or management arrangements,
together with the reasons for any such recommendations.

(c) guarantee that assistance is managed in accordance with all
the applicable rules and that
their
disposal are used in accordance with the principles of
sound financial management;

the funds placed at

(d) certify that the declarations of expenditure presented to the
Commission are accurate and that
from
accounting systems based on verifiable supporting docu-
ments;

they result

On receiving any such recommendations,
the Territorial
Authorising Officer shall subsequently demonstrate the steps
taken to improve the monitoring or management arrangements
or shall explain why no such steps have been taken.

Article 15

Regional stakeholders

(e) present

to the Commission, when each programming
period is wound up, a declaration drawn up by a person or
department having a function independent of the desig-
nated managing authority. This declaration shall summarise
the conclusions of the checks carried out during previous
years and shall assess the validity of the application for
payment of the final balance and the legality and regularity
of the transactions covered by the final certificate of expen-
diture. The OCT may attach their own opinion to this certi-
ficate if they consider it necessary;

Proposals for a regional programme shall be submitted

1.
by:

(a) at least two OCT Territorial Authorising Officers; or

(f) cooperate with the Commission to ensure that EDF
resources are used in accordance with the principles of
sound financial management;

(b) exceptionally, one OCT Territorial Authorising Officer
where only one OCT is involved in an action mentioned in
Article 16(1)(b) to (e) of the ‘Overseas Association’ Deci-
sion.

(g) prevent, detect and correct irregularities, notify these to the
Commission, in accordance with the rules, and keep the
Commission informed of the progress of administrative and
legal proceedings;

2.
Regional programmes shall be implemented by the Terri-
torial Authorising Officer or organisation designated in the
proposal.

(h) recover any amounts lost as a result of an irregularity
detected and, where appropriate, charge interest on late
payments;

PART IV

MONITORING, REVIEW, AUDITING AND EVALUATION

CHAPTER 1

Monitoring

Article 16

OCT responsibility

(i) take all the necessary measures to ensure compliance with
the provisions of the indicative programme, including that
the timetable of commitments and disbursements agreed at
the time of programming is met; and

(j) investigate any causes of delay in implementation and

propose suitable measures to remedy the situation.

Each year an audit plan and a summary of the findings of

2.
the audits carried out shall be sent to the Commission.

Audit reports will be at the disposal of the Commission.

1. Without prejudice to the Commission's responsibility for
implementing the Community financial support, the OCT shall
take responsibility in the first instance for the financial control
of such support.

To that end, the Territorial Authorising Officer shall:

(a) set up and implement management and control arrange-
ments in such a way as to ensure that Community funds
are being used efficiently and correctly. Appropriate
internal and external financial controls are to be carried out
in accordance with internationally accepted audit standards
by the competent financial control authority, which must
be independent for the purposes of performing this func-
tion;

Article 17

Coordination

The Commission and the OCT, represented by the Terri-
1.
torial Authorising Officer, shall cooperate and coordinate plans,
methods and implementation of checks so as to maximise the
usefulness of the checks carried out. They shall
immediately
exchange the results of the checks carried out.

At least once a year the following shall be examined and

2.
assessed:

(b) provide the Commission with a description of

these

(a) the results of the checks carried out by the OCT and the

arrangements;

Commission;

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(b) any comments made by other national or Community

(c) consider and approve the annual and final implementation

control bodies or institutions;

reports before they are sent to the Commission;

(c) the financial impact of any irregularities noted, the steps
already taken or still required to correct them and, where
necessary, adjustments to the management and control
systems.

3.
Following the examination and assessment under para-
graph 2, and without prejudice to the measures to be taken
immediately by the OCT under Article 16, the Commission
may make observations, particularly regarding the financial
impact of any irregularities detected.

These observations shall be addressed to the Territorial Author-
ising Officer of the OCT concerned and be accompanied, where
necessary, by requests for corrective measures to remedy the
management shortcomings found and address those irregulari-
ties detected which have not already been corrected.

The OCT shall have the opportunity to comment on these
observations.

Article 18

Monitoring Committees

A Monitoring Committee shall supervise the implementa-

1.
tion of each SPD.

The OCT authorities shall set up the Monitoring Committee no
more than three months after the approval of the SPD.

The Monitoring Committee shall be chaired by the Terri-

2.
torial Authorising Officer or his representative.

A representative of the Commission, and, where appropriate, of
the European Investment Bank, may participate in the work of
the Monitoring Committee in an advisory capacity.

The authorities or bodies designated by the OCT, the Commis-
sion, the Member State concerned and, where appropriate, the
European Investment Bank and/or any other co-financing insti-
tution shall be represented in the committee. Where regional
and local authorities and private enterprises are responsible for
the implementation of a project and where they are directly
concerned by a project, they shall also be represented in such
committees.

The Monitoring Committee shall draw up its own rules of
3.
procedure within the institutional,
legal and financial frame-
work of the OCT concerned and agree on them with the Terri-
torial Authorising Officer.

4.
For the meetings of the monitoring committee the Terri-
torial Authorising Officer shall submit progress reports in
accordance with the standard model provided by the Commis-
sion. The report shall be received by the Commission 15
working days ahead of the scheduled meeting.

In order to verify the effectiveness and quality of the

5.
implementation of assistance the Monitoring Committee shall:

(a) periodically review the progress made towards achieving

the specific objectives of the SPD;

(b) examine the mid-term review referred to in Article 22

before it is sent to the Commission;

(d) consider and approve any proposal to amend the contents

of the SPD.

Article 19

Monitoring indicators

The Territorial Authorising Officer
and the Monitoring
Committee shall carry out the monitoring by reference to indi-
cators specified in the SPD.

The indicators shall take account of the indicative methodology
made available by the Commission.

They shall relate to the specific character of the projects and
their objectives and show:

(a) inputs, outputs, outcome and as far as possible impacts;

(b) the stage reached in assistance in terms of physical imple-

mentation;

(c) the progress of the financing plan.

CHAPTER 2

Review

Article 20

Review process

1.
Financial cooperation shall be sufficiently flexible to
ensure that operations are kept constantly in line with the
the Overseas Association Decision and take
objectives of
account of any changes occurring in the economic situation,
priorities and objectives of the OCT concerned, in particular by
means of the annual implementation report and the mid-term
or, if applicable, the annual review SPD referred to in Article
21(5).

2.
In the exceptional circumstances referred to in the provi-
sions on humanitarian and emergency assistance, the review
may be carried out at the request of either Party.

Article 21

Annual implementation report

The Territorial Authorising Officer shall submit annual
1.
implementation reports
to the Commission within three
months of the end of each full year of implementation from
the adoption of the SPD.

The annual

2.
implementation report on the SPD shall
consist of a joint assessment of the implementation of the
programme and take into account the results of the relevant
activities of monitoring and evaluation.

This report shall be made locally and shall be finalised
the Monitoring
the Head of Delegation

3.
between the Territorial Authorising Officer,
Committee
concerned within a period of 60 days.

applicable,

and,

if

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4.

It shall in particular include an assessment of:

(a) the results achieved in the focal sector(s) measured against
the identified targets and impact indicators and sectoral
policy commitments;

(b) any projects and programmes outside the focal sector(s)

and/or part of multi-annual programmes;

(c) the use of any resources set aside for non-State actors;

(d) the effective implementation of current operations and the
to which the timetable for commitments and

extent
payments has been met; and

(e) any extension of programming to cover the years ahead.

5. Where appropriate, an annual review shall be carried on
the basis of the report at the occasion of a partnership meeting,
as laid down in Article 7 of the Overseas Association Decision.

Article 22

Mid-term review

1.
The mid-term review shall be organised to examine the
initial results of the SPD, their relevance and the extent to
which the targets have been attained.

It shall also assess the use made of financial resources and the
operation of monitoring and implementation.

The mid-term review shall be carried out under the
in cooperation with the
State
the Member

2.
responsibility of
Territorial Authorising Officer
concerned.

the Commission,

and

It shall be carried out in general between 24 and 36 months
after the entry into force of this Regulation by an independent
assessor, submitted to the Monitoring Committee and then sent
to the Commission. A different deadline may be set in the SPD,
in particular in respect of the indicators adopted in the event of
budgetary support.

3.
The Commission shall examine the relevance and quality
of the review on the basis of criteria defined in the SPD,
including in respect of the EDF financial allocation.

CHAPTER 3

Audits

Article 23

Audits

1. 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 on the operations financed by
systems at a
the EDF and on management and control
minimum of one working day's notice.

The Commission shall give notice to the OCT concerned with a
view to obtaining all
the assistance necessary. Officials or
servants of the OCT concerned may take part in such checks.
The Commission may require the OCT concerned to carry out
an on-the-spot check to verify the correctness of one or more
transactions. Commission officials or servants may take part in
such checks.

The beneficiary countries shall assist

2.
the Commission
services and the Court of Auditors in the performance of audits
relating to the utilisation of EDF resources.

Article 24

Audit trail

OCT management and control systems shall provide a
in accordance with the conditions laid

1.
sufficient audit trail,
down in each financing agreement.

2.

A sufficient audit trail is present where:

(a) accounting records kept at the appropriate management
level provide detailed information of expenditure actually
incurred in EDF-financed operations. The
accounting
records show the date they were created, the amount of
the nature of the supporting
each item of expenditure,
documents and the date and method of payment. The
necessary documentary evidence (e.g. invoices) is attached;

(b) the technical specifications and financial plan of the opera-
tion, progress reports, the documents concerning the grant
approval and tendering and contracting procedures, and
reports on inspections of the products and services financed
are also kept at the appropriate management level;

(c) in the case of computerised transfer of accounting data, all
the authorities and bodies concerned obtain sufficient infor-
mation from the lower level to justify their accounting
records and the sums reported upwards, so as to ensure a
sufficient audit trail from the total summary amounts certi-
fied to the Commission down to the individual expenditure
items and the supporting documents at the level of the final
beneficiaries and the bodies and firms carrying out the
operations;

the Territorial Authorising Officer shall take any measures

3.
needed to implement this Article.

CHAPTER 4

Evaluation

Article 25

Evaluation

1.
The evaluation of the SPD shall cover the utilisation of
resources, the effectiveness and efficiency of the assistance and
its impact and shall draw conclusions and recommendations,
using notably evaluation results already available.

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It shall cover the factors contributing to the success or failure
of
including
their sustainability.

implementation and achievements and results,

Evaluations of the SPD shall be the responsibility of the

2.
Commission, in coordination with the Monitoring Committee.

The evaluation programme should be outlined in the

3.
SPD.

Evaluations shall, in particular:

(a) provide regular and independent assessments of the Fund's
operations and activities by comparing planned results and
objectives with actual achievements; and thereby

(b) enable OCT, Member States and the Commission to feed
the lessons of experience back into the design and execu-
tion of future policies and operations.

The results of the evaluation shall be made available to

4.
the public.

Article 26

Evaluation procedures

(b) all or part of the SPD justifies neither part nor the whole of

the EDF contribution; or

(c) there are serious failings in the management or control

systems which could lead to systemic irregularities.

2.
The period of time within which the OCT concerned may
respond to a request to submit its comments and, where appro-
priate, make corrections, shall be two months, except in duly
justified cases where a longer period may be agreed by the
Commission.

3. Where the OCT objects to the observations made by the
Commission, the OCT and the Member State concerned shall
be invited to a partnership meeting by the Commission,
in
which all sides shall try to reach an agreement on the observa-
tions and the conclusions to be drawn from them.

Whenever the OCT objects to the observations made by the
Commission and an ad hoc partnership meeting takes place,
the three-month period under paragraph 5 within which the
Commission may take a decision shall begin to run from the
date of the partnership meeting.

Without prejudice to evaluations carried out by the OCT or the
Commission, evaluations of programmes, projects or other
activities implementing the SPD may be performed jointly by
the OCT and the Commission, in cooperation with the Member
State concerned.

4. Where the Commission proposes financial corrections,
the OCT 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 assess-
ment.

PART V

FINANCIAL ADAPTATIONS

Article 27

Adaptation of EDF allocations

Using the results of monitoring, audit and evaluations as a basis
the Monitoring
and taking account of
Committee,
the amounts and
conditions of the initial SPD on its own initiative or on a
proposal from the OCT concerned in the light of the current
needs and performance of that OCT.

the Commission may adjust

the comments of

This adaptation shall normally take place on the occasion of
in accordance with the procedure laid
the mid-term review,
the Overseas Association Decision,
down in Article 24 of
between 24 and 36 months after the entry into force of this
Regulation or,
in the shortest
possible time.

in the case of

irregularities,

Article 28

Suspension of payments

Except in duly justified cases, the time allowed for this exami-
nation shall not exceed a further period of two months after
the two-month period referred to in paragraph 1.

The Commissions shall take account of any evidence supplied
by the OCT within the time limits.

At the end of the period set out in paragraph 2, the
5.
Commission shall, where no agreement has been reached and
the OCT has not made the corrections, take account of any
comments made by the OCT and Member States and decide
within three months to:

(a) reduce the payments; or

(b) make the financial corrections required by cancelling all or

part of the EDF allocation.

6. Without prejudice to paragraphs 1 to 5, the Commission
may, after due verification, suspend all or part of an interim
payment where it finds that the expenditure concerned is linked
to a serious irregularity which has not been corrected and that
immediate action is needed.

The Commission shall suspend the payments and, stating
1.
its reasons, request that the OCT submit its comments and,
where appropriate, carry out any corrections, within a specified
period of time where, after completing the necessary checks, it
concludes that:

(a) an OCT has not complied with its obligations; or

The Commission shall inform the OCT concerned of the action
taken and the reasons for it. Where, after five months, the
reasons for the suspension persists or the OCT concerned has
not notified the Commission of the measures taken to correct
the serious irregularity, the provisions laid down in Article 30
shall apply.

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Article 29

Recovery and repayments

1.
Any repayment due to be made to the Commission shall
be made by the due date indicated in the order for recovery
drawn up in accordance with Article 45 of the EDF Financial
Regulation. 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.

3.
The Territorial Authorising Officer shall keep an account
of amounts recoverable from payments of Community assis-
tance already made, and ensure that the amounts are recovered
without unjustified delay.

The beneficiary shall repay any amount
to be recovered,
together with interest received on account of late payment, by
deducting the amounts concerned from its next statement of
expenditure and request for payment to the Commission, or,
where this is insufficient, by making a refund to the Commu-
nity.

The Territorial Authorising Officer shall send the Commission
a statement once a year of the amounts awaiting recovery at
that date, classified by the year of initiation of the recovery
proceedings.

PART VI

FINAL PROVISIONS

Article 30

Information and publicity

OCT shall ensure that adequate publicity is given to the

1.
EDF programmes with a view to:

(a) making the general public aware of the role played by the

Community in relation to those programmes;

(b) making potential beneficiaries and professional organisa-

tions aware of the possibilities afforded.

shall ensure,

Beneficiary countries

2.
that
directly visible display panels are erected showing physical
together with the
projects
Community logo, and that representatives of the Community
institutions are duly involved in the most important public
activities connected with EDF-supported programmes.

financed by the Community,

in particular,

Article 31

Entry into force

This Regulation shall enter into force on the day of its publica-
tion 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 Brussels, 20 December 2002.

For the Commission

Poul NIELSON

Member of the Commission