Commission Regulation (EC) No 718/2007 of 12 June 2007 implementing Council Regulation (EC) No 1085/2006 establishing an instrument for pre-accession assistance (IPA)
Date: 2007-06-12
Institutions: European Commission
Subjects: Community acquis, EU aid, EU financing, candidate, foreign aid, pre-accession aid

29.6.2007

EN

Official Journal of the European Union

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I

(Acts adopted under the EC Treaty/Euratom Treaty whose publication is obligatory)

REGULATIONS

COMMISSION REGULATION (EC) No 718/2007

of 12 June 2007

implementing Council Regulation (EC) No 1085/2006 establishing an instrument for pre-accession
assistance (IPA)

CONTENTS

Part I

Title I

Common provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Principles and general framework for assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chapter I

Subject matter and principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chapter II

General framework for implementation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Title II

Common rules for implementation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chapter I

Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chapter II

Management and control systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 1

Decentralised management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 2

Other forms of management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chapter III

Financial contribution by the European Community . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chapter IV

Financial management

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 1

Budgetary commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 2

Rules for decentralised management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 3

Rules for centralised and joint management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chapter V

Evaluation and monitoring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chapter VI

Publicity, visibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part II

Title I

Specific provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Transition assistance and institution building component . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chapter I

Object of assistance and eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chapter II

Programming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chapter III

Implementation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 1

Framework for implementation and principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 2

Financial management

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 3

Evaluation and monitoring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4

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Title II

Cross–border cooperation component . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chapter I

Object of assistance and eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chapter II

Programming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 1

Programmes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 2

Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chapter III

Implementation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 1

General provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 2

Cross-border programmes between beneficiary countries and Member States . . . . . . . . . . . . . . . . . . .

Section 3

Cross-border programmes among beneficiary countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Title III

Regional development and human resources development components . . . . . . . . . . . . . . . . . . . . . . . .

Chapter I

Object of assistance and eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 1

Regional development component

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 2

Human resources development component . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chapter II

Programming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

28

28

30

30

32

33

33

34

46

48

48

48

49

51

Chapter III

Implementation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

53

Section 1

General rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 2

Financial management

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 3

Evaluation and monitoring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Title IV

Rural development component . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chapter I

Object of assistance and eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 1

Object of assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 2

General requirements on eligibility and aid intensities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 3

Eligibility and specific requirements for assistance under Priority Axis 1 . . . . . . . . . . . . . . . . . . . . . . . .

Section 4

Eligibility and specific requirements under Priority Axis 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 5

Eligibility and specific requirements under Priority Axis 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 6

Technical assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chapter II

Programming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chapter III

Implementation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 1

Principles and financial management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 2

Evaluation and monitoring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part III

Annex

Final provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Accreditation criteria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Commu-
nity,

Having regard to Council Regulation (EC) No 1085/2006 of
17 July 2006 establishing an instrument
for pre-accession
assistance (IPA) (1) and in particular Article 3(3) thereof,

Whereas:

(1)

The purpose of Regulation (EC) No 1085/2006 (hereinafter
referred to as ‘the IPA Regulation’)
is to provide pre-
accession assistance to beneficiary countries and support
them in their transition from Annex II to Annex I of that
Regulation and through to membership of the European
Union.

(2) Given that the IPA Regulation is the sole pre-accession
instrument for the 2007 to 2013 period, the rules for the
programming and delivery of assistance within the frame-
work of that Regulation should be streamlined and brought
together in one single implementing regulation covering all
five components established in the IPA Regulation (here-
inafter referred to as ‘the IPA components’).

(3)

To ensure coherence, coordination and efficiency, especially
in the context of
the Commission
the action plan of
towards an Integrated Internal Control Framework, com-
mon rules for the implementation of assistance under the
IPA Regulation are required for all five IPA components.
IPA components
The specific features of the individual
should nevertheless be taken into account.

to
reconciliation and reconstruction,
sustainable development and poverty reduction, as well as
to a high level of environmental protection in these
countries.

and contribute

(7) Assistance for candidate countries should additionally focus
on the adoption and implementation of the full acquis
communautaire, and compliance with the accession criteria;
it should also help prepare candidate countries for the
programming, management and implementation of
the
European Regional Development Fund, Cohesion Fund,
European Social Fund and Rural Development that will be
made available to them upon accession.

(8) Assistance for potential candidate countries should pro-
mote a degree of alignment with the acquis communautaire
and approximation with the Accession criteria, as well as
operations of a similar nature to those which will be
available for candidate countries under the IPA components
concerning regional development, human resources devel-
opment and rural development.

(9)

In order to guarantee consistency, complementarity and
concentration of assistance, the coherence and coordina-
tion of actions carried out in a given country under the
different IPA components should be ensured at the multi-
annual planning level provided for by Article 6 of the IPA
Regulation.

(10) The Commission and the beneficiary countries should sign
framework agreements in order to lay down the principles
for their cooperation under this Regulation.

(4) Differences in the socio-economic, cultural and political
contexts within beneficiary countries should also be taken
into account, since such differences give rise to a need for a
specific approach and differentiated support depending
upon a country's status as candidate or potential candidate
country, political and economic context, needs, and
absorption and management capacities.

(5) Assistance granted under the IPA Regulation should be in
conformity with Community policies and actions in the
field of external assistance.

(11)

(12)

It needs to be made clear which of
the management
methods laid down in Council Regulation (EC, Euratom)
No 1605/2002 of 25 June 2002 on the Financial
Regulation applicable to the general budget of the European
Communities (2) shall apply in relation to each of
the
components as provided for under the IPA Regulation.

In particular, as the IPA Regulation provides for assistance
in the context of the pre-accession process, decentralised
management of funds should be applied, where possible, in
its implementation, with a view to enhancing ownership of
the management of assistance by the beneficiary countries.
It should, however, be possible to apply centralised, joint
and shared management where appropriate.

(6) Assistance should fall within the scope laid down in
Article 2 of the IPA Regulation. It should be targeted to
support a wide range of institution building measures in all
beneficiary countries.
It should strengthen democratic
institutions and the rule of law, reform public administra-
tion, carry out economic reforms, respect human and
minority rights, encourage gender equality and non-
discrimination, promote civil rights and the development
of civil society, support advanced regional cooperation and

(1) OJ L 210, 31.7.2006, p. 82.

(13)

In the event of decentralised management, the respective
roles of and requirements from the Commission and the
beneficiary countries need to be made clear. The provisions
relating to the beneficiary countries should be included in
the framework, sectoral or financing agreements.

(2) OJ L 248, 16.09.2002, p. 1. Regulation as amended by Regulation
(EC, Euratom) No 1995/2006 (OJ L 390, 30.12.2006, p. 1).

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(14)

(15)

It is necessary to lay down detailed rules for the financial
management of funds under the IPA Regulation according
to which management method is to be applied to the
implementation of the assistance. The obligations of the
beneficiary countries in this respect should be laid down in
the framework, sectoral or financing agreements.

In addition to the general evaluation of the IPA Regulation
as provided for in Article 22 thereof, assistance under the
said regulation should be monitored and evaluated
regularly. The programmes should in particular be subject
to evaluation by specific monitoring committees, and the
overall
IPA
implementation of assistance under
Regulation should be supervised on a regular basis.

the

(16) The visibility of the IPA assistance programmes and their
the beneficiary countries is
impact on the citizens of
essential to ensure public awareness of EU action and to
create a consistent image of the measures concerned in all
beneficiary countries, in line with the action plan of the
Commission 'Communicating Europe', the white paper of
the Commission on a European communication policy and
the enlargement communication strategy for 2005 to
2009.

(17) As the IPA Regulation applies from 1 January 2007, the
Commission rules for the implementation of that Regula-
tion should apply from 1 January 2007 as well.

(18) The provisions

laid down in this Regulation are in

accordance with the opinion of the IPA Committee,

HAS ADOPTED THIS REGULATION:

PART I

COMMON PROVISIONS

TITLE I

PRINCIPLES AND GENERAL FRAMEWORK FOR ASSISTANCE

CHAPTER I

Subject matter and principles

Article 1

Subject matter

Article 2

Definitions

For the purposes of this Regulation, the following definitions
shall apply:

1.

2.

3.

4.

5.

6.

‘beneficiary country’: any country listed in either of the
annexes I and II to the IPA Regulation;

‘enlargement package’: set of documents presented each
year to the Council and the European Parliament by the
the strategic and political part of which
Commission,
consists of
the
the revisions, where appropriate, of
accession partnerships and the European partnerships, the
regular reports established by country and the Commis-
sion's strategy paper. A multi-annual
indicative financial
framework completes the package;

‘framework agreement’: agreement concluded between the
Commission and the beneficiary country and applying to
all
laying down the principles of the
cooperation of the beneficiary country and the Commis-
sion under this Regulation;

IPA components,

‘sectoral agreement’: an agreement relating to a specific IPA
component drawn up, where appropriate, between the
Commission and the beneficiary country, and setting out
the relevant provisions to be respected which are not
contained in the country specific framework agreement or
financing agreements;

‘financing agreement’: annual or multi–annual agreement
concluded between the Commission and the beneficiary
country,
following a Commission financing decision
approving the Community contribution to a programme
or an operation falling within the scope of this Regulation;

‘irregularity’: any infringement of a provision of applicable
rules and contracts resulting from an act or an omission by
an economic operator which has, or would have, the effect
of prejudicing the general budget of the European Union by
charging an unjustified item of expenditure to the general
budget;

7.

‘financial year’: from 1 January to 31 December;

8.

‘final beneficiary’: body or firm, whether public or private,
responsible for initiating or initiating and implementing
operations. In the context of aid schemes, final beneficiaries
are public or private firms carrying out an individual
project and receiving public aid;

This Regulation lays down the implementing rules governing the
provision by the Community of pre-accession assistance
established by Council Regulation (EC) No 1085/2006 (IPA),
the ‘IPA Regulation’.

9.

‘Community contribution’: the part of the eligible expen-
diture which is financed by the Community;

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10.

11.

‘euro account’: interest bearing bank account opened by the
national fund in a financial or treasury institution, on
behalf of the beneficiary country and under its responsi-
bility, to receive payments from the Commission;

expenditure’: any public

‘public
contribution to the
financing of operations whose origin is the European
Community or the budget of the public authorities of the
beneficiary country and any contribution to the financing
of operations whose origin is the budget of public law
bodies or associations of one or more regional or local
authorities or public law bodies;

Article 4

Priorities for assistance

Assistance for a given beneficiary country shall be based on the
priorities identified in the following documents, where they exist:

— the European partnership,

— the accession partnership,

— the national programme for the adoption of the acquis,

12.

‘total expenditure’: the public expenditure and any private
contribution to the financing of operations.

— the reports and strategy paper contained in the annual

enlargement package of the Commission,

Article 3

— the stabilisation and association agreement,

Principles of assistance

— the negotiation framework.

The Commission shall ensure that the following principles apply
in relation to assistance under the IPA Regulation:

— Assistance granted shall respect the principles of coherence,
complementarity, coordination, partnership and concentra-
tion.

Account shall also be taken of the priorities set out in the
national strategies where they are compatible with the pre-
accession objectives and scope as
laid down in the IPA
Regulation.

CHAPTER II

General framework for implementation

— Assistance shall be coherent with EU policies and shall

support alignment to the acquis communautaire.

Article 5

— Assistance shall comply with the budgetary principles laid
down in the Council Regulation (EC, Euratom) No 1605/
2002.

— Assistance shall be consistent with the needs identified in
the enlargement process and absorption capacities of the
beneficiary country. It shall also take account of lessons
learned.

— The ownership of the programming and implementation of
assistance by the beneficiary country shall be strongly
encouraged and adequate visibility of EU intervention shall
be ensured.

— Operations shall be properly prepared, with clear and
verifiable objectives, which are to be achieved within a
given period.

— Any discrimination based on sex, racial or ethnic origin,
religion or belief, disability, age or sexual orientation shall
be prevented during the various stages of the implementa-
tion of assistance.

— The objectives of pre-accession assistance shall be pursued
in the framework of sustainable development and the
the goal of protecting and
Community promotion of
improving the environment.

Multi-annual indicative planning documents

1. The multi-annual indicative planning document shall ensure
the necessary coherence and complementarity between the IPA
components in a given beneficiary country. In particular, it shall
reflect the principles set out in Article 9.

In accordance with the provisions of Article 20(3) of the IPA
2.
Regulation and in the context of the consultation laid down in
Article 6(1) of that Regulation, the Commission shall endeavour
to allow sufficient time for the relevant stakeholders, including
Member States, to provide their comments on the document.

3. Multi-annual indicative planning documents shall include,
for each country concerned:

(a)

(b)

(c)

(d)

a general background, including a brief description of the
consultation process with and within the beneficiary
country;

a description of the European Union cooperation objectives
in the country concerned;

a consolidated assessment of the challenges, needs and
relative importance of the priorities for assistance;

an overview of past and ongoing European Union
cooperation, including an analysis of needs and absorption
capacity and lessons learned, and the relevant activities of
other donors, where this information is available;

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(e)

(f)

for each component, a description of how the consolidated
assessment as referred to in point (c) above is translated into
strategic choices and a description of
the major areas
selected for assistance in the country concerned, and of the
results anticipated;

indicative financial allocations for
intervention under each IPA component.

the major areas of

4. Regional and horizontal programmes may be covered by
separate and specific multi-beneficiary multi-annual
indicative
planning documents.

Article 6

Multi-annual or annual programmes

indicative planning documents

1. Multi-annual
shall be
implemented through multi-annual or, depending on the
component, annual programmes, as laid down in Article 7 of
the IPA Regulation.

2. Multi-annual programmes or annual programmes shall
consist in documents submitted by the beneficiary country, or
prepared by the Commission in the case of regional and
horizontal programmes, and adopted by the Commission.
Programmes shall present a coherent set of priority axes, any
appropriate measures or operations and a description of the
financial contribution which are needed in order to implement
indicative planning
the strategies defined in the multi-annual
documents.

Programmes are subdivided into priority axes, each of which
defines a global objective to attain, and which, depending on the
IPA component considered, shall be implemented through
measures, which may be subdivided into operations, or directly
through operations.

Operations shall comprise a project or a group of projects
implemented by the Commission, or initiated or initiated and
implemented by one or more final beneficiaries, allowing
achievement of the goals of the measure and/or the priority
axis to which it relates.

may be complemented by a sectoral agreement, or sectoral
agreements, covering component specific provisions.

2. Assistance under the IPA Regulation can only be granted to
the beneficiary country after the framework agreement referred
to in paragraph 1 has been concluded and has entered into force.

Where a sectoral agreement has been concluded with the
beneficiary country, assistance under the IPA Regulation can only
be granted, under the IPA component concerned by the sectoral
agreement, after the entry into force of the framework agreement
and the sectoral agreement.

By way of derogation from the first subparagraph, where no
framework agreement is concluded or where the framework
agreement in force concluded under Council Regulations (EEC)
No 3906/89 (1), (EC) No 1267/1999 (2), (EC) No 1268/1999 (3),
(EC) No 2500/2001 (4) or (EC) No 2666/2000 (5) does not lay
down the minimum provisions listed in paragraph 3, those
shall be set down in the financing
minimum provisions
agreements.

3. The framework agreement shall lay down, in particular, the
provisions concerning:

(a)

the general rules for Community financial assistance;

(b)

(c)

the establishment of the structures and authorities needed
for management and mentioned in Articles 21, 32 and 33
and any other relevant specific bodies;

common responsibilities of

the
aforementioned
structures, authorities and bodies, in conformity with the
principles set out in Articles 22, 23, 24, 25, 26, 28 and 29;

the

(d)

control requirements and conditions for:

(i)

(ii)

the accreditation and the monitoring of the accred-
itation of
the national authorising officer by the
competent accrediting officer, in conformity with the
principles set out in Articles 11, 12 and 15;

the accreditation and the monitoring of the accred-
itation of
the operating structure by the national
authorising officer, in conformity with the principles
set out in Articles 11, 13 and 16;

(iii)

the conferral of management powers by the Commis-
sion,
in conformity with the principles set out in
Articles 11, 14 and 17;

the establishment of an annual statement of assurance by
the national authorising officer, as set out in Article 27;

procurement rules,
in conformity with Regulation (EC,
Euratom) No 1605/2002 and Commission Regulation (EC,
Euratom) No 2342/2002 (6) laying down detailed rules for
the implementation of Regulation (EC, Euratom) No 1605/
2002;

In line with Article 20 of the IPA Regulation, the relevant
3.
stakeholders, including Member States, shall be consulted in the
process of programming, in accordance with the provisions laid
down in Part II. The Commission and/or the beneficiary country
shall endeavour to allow sufficient time for the interested parties
to provide their comments in this context.

(e)

(f)

Article 7

Framework agreements and sectoral agreements

1. The Commission and the beneficiary country shall conclude
a framework agreement, in order to set out and agree on the
rules for cooperation concerning EC financial assistance to the
beneficiary country. Where necessary, the framework agreement

(1) OJ L 375, 23.12.1989, p. 11.
(2) OJ L 161, 26.6.1999, p. 73.
(3) OJ L 161, 26.06.1999, p. 87.
(4) OJ L 342, 27.12.2001, p. 1.
(5) OJ L 306, 07.12.2000, p. 1.
(6) OJ L 357, 31.12.2002, p. 1.

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(g)

(h)

(i)

(j)

the closure of programmes as set down in Articles 47 and
56,

the definitions of irregularity in conformity with Article 2,
in
of fraud, and that of active and passive corruption,
keeping with those contained in Community legislation; the
obligation of the beneficiary country to take appropriate
preventive measures against active and passive corruption,
anti-fraud measures and corrective actions; the rules for
recovery of funds in case of irregularity or fraud;

recoveries and financial corrections and adjustments,
conformity with Articles 49 and 50;

in

(b)

(c)

the terms on which the assistance is managed, including the
relevant methods and responsibilities for implementing the
annual or multi-annual programme and/or operations;

relating to the establishment and regular
provisions
updating, by the beneficiary country, of a roadmap with
indicative benchmarks and time limits to achieve decen-
tralisation without ex ante controls by the Commission as
referred to in Articles 14 and 18.

TITLE II

COMMON RULES FOR IMPLEMENTATION

the rules
Commission and the European Court of Auditors;

supervision, control and audit by the

for

(k)

the rules on taxes, customs duties and other fiscal charges;

CHAPTER I

Principles

Article 9

(l)

information and publicity requirements.

Coherence of implementation of assistance

4. A sectoral agreement related to a specific IPA component
and complementing the framework agreement may, where
appropriate, be concluded. Without prejudice to the arrange-
ments laid down in the framework agreement, it shall include
detailed and specific provisions for the management, evaluation
and control of the component concerned.

In a given beneficiary country, the framework agreement
financing agreements as provided for in

5.
shall apply to all
Article 8.

the sectoral agreement related to a given
Where it exists,
component shall apply to all the financing agreements concluded
in the framework of that component.

Article 8

Financing decisions and agreements

1. The Commission decisions adopting multi-annual or annual
programmes shall meet the requirements necessary to constitute
financing decisions
in accordance with Article 75(2) of
Regulation (EC, Euratom) No 1605/2002.

1. Assistance under the IPA Regulation shall be consistent and
coordinated within and between the IPA components, both at
planning and programming levels.

2. Any overlap between actions covered by different compo-
nents shall be avoided and no expenditure shall be financed
under more than one operation.

Article 10

General principles for implementation of assistance

1. Unless otherwise provided for in paragraph 2, 3 and 4,
decentralised management, where the Commission confers the
management of certain actions on the beneficiary country, while
retaining overall final responsibility for general budget execution
in accordance with Article 53c of Regulation (EC, Euratom)
No 1605/2002 and the relevant provisions of the EC Treaties,
shall apply to the implementation of assistance under the IPA
Regulation.

the purposes of assistance under

For
decentralised management
contracting and payments.

shall

cover at

the IPA Regulation,
tendering,

least

2. Where required by the financing decision, the Commission
and the beneficiary country concerned shall conclude a financing
agreement. Financing agreements may be concluded on an
annual or multi-annual basis in accordance with Article 39.

In the event of decentralised management, operations shall be
implemented in accordance with the provisions laid down in
Article 53c of Regulation (EC, Euratom) No 1605/2002.

Each programme forms an integral part of the financing

3.
agreement.

4.

Financing agreements shall lay down:

2. Centralised management as defined in Article 53a of
Regulation (EC, Euratom) No 1605/2002 may be used under
the transition assistance and institution building component, in
particular for regional and horizontal programmes, and under
the cross-border cooperation component. It may also be used for
technical assistance under any of the IPA components.

(a)

provisions by which the beneficiary country accepts the
assistance of the Community and agrees to the rules and
related to such
procedures
assistance;

concerning disbursement

Under centralised management, operations shall be implemented
in accordance with the provisions laid down in Articles 53(a),
53a and 54 to 57 of Regulation (EC, Euratom) No 1605/2002.

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Joint management, as defined in Article 53d of Regulation
3.
(EC, Euratom) No 1605/2002 may be used under the transition
assistance and institution building component, in particular for
regional and horizontal programmes, for programmes involving
international organisations.

persons to exercise the duties associated with that responsibility,
including in cases where there is no hierarchical link between
them and the bodies participating in that activity. The beneficiary
country shall,
in particular, provide those persons with the
authority to establish, through formal working arrangements
between them and the bodies concerned:

In the event of joint management with international organisa-
tions, operations shall be implemented in accordance with the
provisions laid down in Articles 53(c) and 53d of Regulation (EC,
Euratom) No 1605/2002.

4.
Shared management as defined in Article 53b of Regulation
(EC, Euratom) No 1605/2002 may be used under the cross-
border cooperation component, for cross-border programmes
involving Member States.

Under shared management with a Member State, operations shall
be implemented in accordance with the provisions laid down in
Articles 53(b), 53b and Title II of Part two of Regulation (EC,
Euratom) No 1605/2002.

CHAPTER II

Management and control systems

S e c t i o n 1

D e c e n t r a l i s e d m a n a g e m e n t

S u b - s e c t i o n 1

A c c r e d i t a t i o n a n d c o n f e r r a l o f m a n a g e m e n t
p o w e r s

Article 11

Common requirements

1. Before deciding to confer management powers relating to a
component, a programme or a measure on the beneficiary
country, the Commission shall satisfy itself that the country
concerned meets the conditions referred to in Article 56(2) of
Regulation (EC, Euratom) No 1605/2002, in particular as regards
the management and control systems established, and that the
accreditations as laid down in Articles 12 and 13 are in force.

2.
For that purpose, the management and control systems set
up in the beneficiary country shall provide for effective controls
in at least the areas set out in the Annex. Provisions on other
areas which have been laid down in the sectoral or financing
agreements shall apply in addition to this Regulation.

3. Where specific persons have been given responsibility for an
implementation and
activity in relation to the management,
control of programmes, the beneficiary country shall enable such

(a)

an appropriate system for the exchange of information,
including the power to require information and a right of
access to documents and staff on the spot if necessary;

(b)

the standards to be met;

(c)

the procedures to be followed.

4. Any other component specific requirements which have
been established in sectoral agreements or
the financing
agreements shall apply in addition to this Regulation.

Article 12

Accreditation of the national authorising officer and the
national fund

the accreditation of

1. The competent accrediting officer as referred to in Article 24
shall be responsible for
the national
authorising officer described in Article 25, both as the head of
the national fund in accordance with Article 25(2)(a) and with
regard to his capacity to fulfil the responsibilities laid down in
Article 25(2)(b). The accreditation of the national authorising
officer shall cover the national fund described in Article 26.

Prior to accrediting the national authorising officer, the
2.
the
competent accrediting officer shall satisfy himself
applicable requirements set out
in Article 11 are fulfilled,
supported by an audit opinion drawn up by an external auditor
functionally independent from all actors in the management and
control systems. The audit opinion shall be based on examina-
tions conducted according to internationally accepted auditing
standards.

that

3. The competent accrediting officer shall notify the Commis-
sion of the accreditation of the national authorising officer, not
the first
later than the notification of
operating structure as described in Article 13(3). The competent
accrediting officer shall provide all relevant supporting informa-
tion required by the Commission.

the accreditation of

4. The competent accrediting officer shall immediately inform
the Commission of any changes concerning the national
authorising officer or the national fund. Where a change affects
the national authorising officer or the national fund in relation to
the
the applicable requirements as set out

in Article 11,

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competent accrediting officer shall send to the Commission an
assessment of the consequences of such a change on the validity
of the accreditation. Where such a change is significant, the
competent accrediting officer shall also notify the Commission
of his decision concerning the accreditation.

Article 13

Accreditation of the operating structure

1. The national authorising officer shall be responsible for the
accreditation of
the operating structures as referred to in
Article 28.

Prior to accrediting an operating structure, the national
2.
authorising officer shall satisfy himself that the requirements set
out
in Article 11 are fulfilled by the operating structure
concerned. This assurance shall be supported by an audit
opinion drawn up by an external auditor functionally indepen-
dent from all actors in the management and control systems. The
audit opinion shall be based on examinations conducted
according to internationally accepted auditing standards.

3. The national authorising officer shall notify the Commission
of the accreditation of the operating structures and shall provide
all relevant supporting information required by the Commission,
including a description of the management and control systems.

Article 14

Conferral of management powers by the Commission

1. Before the conferral of management powers, the Commis-
sion shall review the accreditations referred to in Articles 12 and
13 and examine the procedures and structures of any of the
bodies or authorities concerned within the beneficiary country.
This may include on-the-spot verifications by its services or
subcontracted to an audit firm.

2. The Commission may, in its decision to confer management
powers, set further conditions, with a view to ensuring that the
requirements referred to in Article 11 are met. These further
conditions must be fulfilled within a fixed period determined by
the Commission for the conferral of management powers to
remain effective.

3. The Commission Decision on the conferral of management
powers shall lay down the list of the ex ante controls, if any, to be
performed by the Commission on the tendering of contracts,
launch of calls for proposals and the award of contracts and
grants. This
the
programme. The ex ante controls shall apply, depending on the
component or programme, until the Commission allows for
decentralised management without ex ante controls as referred to
in Article 18.

list may vary with the component or

4. The Commission Decision may lay down provisions
concerning the suspension or withdrawal of the conferral of
management powers in relation to specific bodies or authorities.

Article 15

Withdrawal or suspension of the accreditation of the
national authorising officer and the national fund

1. After the conferral of management powers by the Commis-
sion, the competent accrediting officer shall be responsible for

monitoring the continuing fulfilment of all the requirements for
this accreditation to be maintained and shall
inform the
Commission of any significant change related thereto.

If any of the applicable requirements set out in Article 11 are
2.
not, or are no longer, fulfilled, the competent accrediting officer
shall either suspend or withdraw the accreditation of the national
authorising officer, and shall immediately inform the Commis-
sion of his decision and of the reasons for his decision. The
competent accrediting officer shall assure himself that those
requirements are again fulfilled before restoring the accreditation.
This assurance shall be supported by an audit opinion as
specified in Article 12(2).

3. Where the accreditation of the national authorising officer is
withdrawn or suspended by the competent accrediting officer,
the provisions of this paragraph shall apply.

The Commission shall cease to make transfers of funds to the
beneficiary country during the period when the accreditation is
not in force.

During the period when the accreditation is not in force, all the
euro accounts or
the components
the euro accounts for
concerned shall be blocked and no payment made by the
National Fund from those euros accounts which are blocked shall
be considered eligible for Community funding.

Without prejudice to any other
the
Commission may make financial corrections as laid down in
Article 49 against the beneficiary country in respect of its past
non-compliance with the requirements for the conferral of
management powers.

financial corrections,

Article 16

Withdrawal or suspension of the accreditation of the
operating structures

1. After the conferral of management powers by the Commis-
sion, the national authorising officer shall be responsible for
monitoring the continuing fulfilment of all the requirements for
inform the
this accreditation to be maintained and shall
Commission and the competent accrediting officer of any
significant change related thereto.

If any of the requirements set out in Article 11 are not, or
2.
are no longer, fulfilled, the national authorising officer shall
either suspend or withdraw the accreditation of the operating
structure concerned, and shall immediately inform the Commis-
sion and the competent accrediting officer of his decision and of
the reasons for his decision.

The national authorising officer shall assure himself that those
requirements are again fulfilled before restoring the accreditation
concerned. This assurance shall be supported by an audit opinion
as referred to in Article 13(2).

3. Where the accreditation of an operating structure is
withdrawn or suspended by the national authorising officer,
the provisions of this paragraph shall apply.

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The Commission shall make no transfers to the beneficiary
country of
relating to programmes or operations
implemented by the operating structure concerned while its
accreditation is suspended or withdrawn.

funds

2. Before dispensing with the ex ante controls laid down in the
Commission Decision on conferral of management powers, the
Commission shall satisfy itself of the effective functioning of the
management and control system concerned in accordance with
the relevant Community and national rules.

the
Without prejudice to any other
Commission may make financial corrections as laid down in
Article 49 against the beneficiary country in respect of its past
non-compliance with the requirements and conditions for the
conferral of management powers.

financial corrections,

3.
In particular, the Commission shall monitor the implemen-
tation, by the beneficiary country, of the roadmap included in the
financing agreement as laid down in Article 8(4)(c), which may
refer to a phased waiver of different types of ex ante controls.

No new legal commitments made by the operating structure
concerned shall be considered eligible during the period when
the accreditation is not in force.

4. The Commission shall
the results
achieved by the beneficiary country in this context, in particular
in the provision of assistance and in the negotiation process.

take due account of

The national authorising officer shall be responsible for taking
any appropriate safeguard measures regarding payments made or
contracts signed by the operating structure concerned.

Article 19

Anti-fraud measures

Article 17

Withdrawal or suspension of conferral of management
powers

1. The Commission shall monitor compliance with the
requirements set out in Article 11.

2.
Irrespective of the decision by the competent accrediting
officer to maintain, suspend or withdraw the accreditation of the
national authorising officer, or of the decision by the national
authorising officer
to maintain, suspend or withdraw the
accreditation of the operating structure, the Commission may
withdraw or suspend the conferral of management powers at any
time, in particular in the event that any of the requirements
mentioned in Article 11 are not, or no longer, fulfilled.

3. Where the conferral of management powers is withdrawn or
suspended by the Commission, the provisions of this paragraph
shall apply.

The Commission shall cease to make transfers of funds to the
beneficiary country.

the
Without prejudice to any other
Commission may make financial corrections as laid down in
Article 49 against the beneficiary country in respect of its past
non-compliance with the requirements for the conferral of
management powers.

financial corrections,

The Commission may lay down other consequences of such a
suspension or withdrawal in a specific Commission Decision.

1. Beneficiary countries shall ensure investigation and effective
treatment of suspected cases of fraud and irregularities and shall
ensure the functioning of a control and reporting mechanism
equivalent to that referred to in Commission Regulation (EC)
No 1828/2006 (1). In the case of suspected fraud or irregularity,
the Commission shall be informed without delay.

Furthermore, beneficiary countries shall take any appro-
2.
priate measure to prevent and counter any active or passive
corruption practices at any stage of the procurement procedure
or grant award procedure or during the implementation of
corresponding contracts.

Article 20

Audit trail

The national authorising officer shall ensure that all the relevant
information is available to ensure at all times a sufficiently
detailed audit trail. This information shall include documentary
evidence of the authorisation of payment applications, of the
the
accounting and payment of such applications, and of
treatment of advances, guarantees and debts.

S u b - s e c t i o n 2

S t r u c t u r e s a n d a u t h o r i t i e s

Article 21

Designation

1. The beneficiary country shall designate the following
different bodies and authorities:

Article 18

(a)

a national IPA coordinator,

Decentralisation without ex ante controls by the
Commission

1. Decentralisation without ex ante controls by the Commission
shall be the objective for
IPA
components where assistance is implemented on a decentralised
basis in accordance with Article 10. The timing for attainment of
this objective may vary depending on the IPA Component
concerned.

the implementation of all

(b)

a strategic coordinator
the regional development
component and the human resources development com-
ponent,

for

(c)

a competent accrediting officer,

(1) OJ L 371, 27.12.2006, p. 1.

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(d)

a national authorising officer,

Article 23

(e)

a national fund,

(f)

an operating structure by IPA component or programme,

(g)

an audit authority.

2. The beneficiary country shall ensure that appropriate
segregation of duties applies to the bodies and authorities under
points (a) to (g) of paragraph 1, in accordance with Article 56(2)
of Regulation (EC, Euratom) No 1605/2002.

3. The Commission shall confer management powers on the
beneficiary country,
this
Regulation, only after the bodies and authorities referred to in
paragraph 1 have been designated and put in place.

in accordance with Article 14 of

Article 22

Functions and responsibilities of the national IPA
coordinator

IPA coordinator shall be appointed by the
1. A national
beneficiary country. He shall be a high-ranking official in the
government or
the beneficiary
the state administration of
country, who shall ensure the overall coordination of assistance
under the IPA Regulation.

2. He shall, in particular:

(a)

ensure partnership between the Commission and the
beneficiary country, and a close link between the general
accession process and the use of assistance under the IPA
Regulation;

(b)

bear overall responsibility for:

— the coherence and coordination of the programmes

provided under this Regulation,

— the annual programming for the transition assistance
and institution building component at national level,

— the coordination of the participation of the bene-
ficiary country in the relevant cross-border pro-
grammes, both with Member States and with other
beneficiary countries, as well as in the transnational,
interregional or sea basins programmes under other
Community instruments. The national IPA coordina-
tor may delegate the tasks relating to this coordination
to a cross-border cooperation coordinator,

(c)

draw up and, after examination by the IPA monitoring
committee, submit the IPA annual and final reports on
to the
implementation as defined in Article 61(3)
Commission with a copy to the national authorising officer.

Functions and responsibilities of the strategic coordinator

1. A strategic coordinator shall be appointed by the beneficiary
country to ensure the coordination of the regional development
component and human resources development component
under the responsibility of the national IPA coordinator. The
strategic coordinator
shall be an entity within the state
the beneficiary country, with no direct
administration of
involvement in the implementation of components concerned.

2. The strategic coordinator shall, in particular:

(a)

(b)

(c)

coordinate assistance granted under the regional develop-
ment component and the human resources development
component;

the strategic coherence framework as defined in

draft
Article 154;

ensure
programmes.

coordination between sectoral

strategies

and

Article 24

Responsibilities of the competent accrediting officer

1. A competent accrediting officer shall be appointed by the
beneficiary country. He shall be a high-ranking official in the
government or
the beneficiary
the state administration of
country.

2. The competent accrediting officer shall be responsible for
issuing, monitoring and suspending or withdrawing the
accreditation of the national authorising officer and the national
fund, in accordance with Articles 12 and 15.

Article 25

Functions and responsibilities of the national authorising
officer

1. A national authorising officer shall be appointed by the
beneficiary country. He shall be a high-ranking official in the
government or
the beneficiary
the state administration of
country.

2. The national authorising officer shall:

(a)

as the head of the national fund, bear overall responsibility
for the financial management of EU funds in the beneficiary
country; he shall be responsible for
the legality and
regularity of the underlying transactions;

(b)

be responsible for the effective functioning of management
and control systems under the IPA Regulation.

(a)

(b)

(c)

(d)

(a)

(b)

(c)

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For the purposes of paragraph 2(a), the national authorising

3.
officer shall in particular fulfil the following tasks:

provide assurance about
underlying transactions;

the regularity and legality of

draw up and submit to the Commission certified statements
of expenditure and payment applications;
the national
authorising officer shall bear overall responsibility for the
accuracy of the payment application and for the transfer of
funds to the operating structures and/or final beneficiaries;

The national fund shall act as a central treasury and be in charge
of tasks of financial management of assistance under the IPA
Regulation, under the responsibility of the national authorising
officer.

It shall in particular be in charge of organising the bank accounts,
requesting funds from the Commission, authorising the transfer
of
funds received from the Commission to the operating
structures or to the final beneficiaries, and the financial reporting
to the Commission.

verify the existence and correctness of the co-financing
elements;

Article 27

ensure the identification and immediate communication of
any irregularity;

(e) make the financial adjustments required in connection with
irregularities detected, according to the provisions of
Article 50;

(f)

be the contact point for financial information sent between
the Commission and the beneficiary country.

For the purposes of paragraph 2(b), the national authorising

4.
officer shall in particular fulfil the following tasks:

Statement of assurance by the national authorising officer

In accordance with Article 25(5), the national authorising
1.
officer shall make an annual management declaration, which
shall take the form of a statement of assurance to be presented to
the Commission by 28 February each year. He shall forward a
copy of the statement of assurance to the competent accrediting
officer.

2. The statement of assurance shall be based on the national
authorising officer's actual supervision of the management and
control systems throughout the financial year.

be responsible for issuing, monitoring and suspending or
withdrawing the accreditation of the operating structures;

3. The statement of assurance shall be drawn up as specified in
the framework agreement, and shall include:

ensure the existence and effective functioning of systems of
management of assistance under the IPA Regulation;

ensure that the system of internal control concerning the
management of funds is effective and efficient;

(d)

report on the management and control systems;

(e)

(f)

(g)

ensure that a proper reporting and information system is
functioning;

follow-up the findings of audit reports from the audit
authority, in accordance with Article 30(1);

immediately notify the Commission, with a copy of the
notification to the competent accrediting officer, of any
significant change concerning the management and control
systems.

5.
Pursuant to the responsibilities laid down in paragraphs 2(a)
and (b), the national authorising officer shall draw up an annual
statement of assurance, as defined in Article 27.

Article 26

The national fund

(a)

a confirmation of the effective functioning of the manage-
ment and control systems;

(b)

a confirmation regarding the legality and regularity of
underlying transactions;

(c)

information concerning any changes
in systems and
controls, and elements of supporting accounting informa-
tion.

4.
If the confirmations required in accordance with points (a)
and (b) of paragraph 3 are not available, the national authorising
officer shall inform the Commission of the reasons and potential
consequences, as well as of the actions being taken to remedy the
situation and to protect the interests of the Community. He shall
forward a copy of this information to the competent accrediting
officer.

Article 28

Functions and responsibilities of the operating structure

The national fund shall be a body located in a state level Ministry
of the beneficiary country with central budgetary competence.

1.
For each IPA component or programme, an operating
structure shall be established to deal with the management and
implementation of assistance under the IPA Regulation.

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The operating structure shall be a body or a collection of bodies
within the administration of the beneficiary country.

(m) ensuring compliance with the information and publicity

requirements.

2. The operating structure shall be responsible for managing
and implementing the programme or programmes concerned in
accordance with the principle of sound financial management.
For those purposes, it shall carry out a number of functions that
include:

3. The heads of the bodies constituting the operating structure
shall be clearly designated and shall be responsible for the tasks
assigned to their respective bodies, in accordance with Article 11
(3).

(a)

drafting the annual or multi-annual programmes;

(b) monitoring programme implementation and guiding the
work of the sectoral monitoring committee as defined in
Article 59, notably by providing the documents necessary
for monitoring the quality of
the
programmes;

implementation of

drawing up the sectoral annual and final implementation
reports defined in Article 61(1) and, after their examination
by the sectoral monitoring committee, submitting them to
the Commission, to the national IPA coordinator and to the
national authorising officer;

ensuring that operations are selected for funding and
approved in accordance with the criteria and mechanisms
applicable to the programmes, and that they comply with
the relevant Community and national rules;

setting up procedures to ensure the retention of all
documents required to ensure an adequate audit trail, in
accordance with Article 20;

Article 29

Functions and responsibilities of the audit authority

1. An audit authority, functionally independent from all actors
in the management and control systems and complying with
internationally accepted audit standards, shall be designated by
the beneficiary country. The audit authority shall be responsible
for verifying the effective and sound functioning of
the
management and control systems.

2. The audit authority, under the responsibility of its head, shall
in particular:

(a)

during the course of each year, establish and fulfil an annual
audit work plan which encompasses audits aimed at
verifying:

— the effective functioning of

the management and

control systems,

— the reliability of accounting information provided to

the Commission.

arranging for tendering procedures, grant award proce-
dures, the ensuing contracting, and making payments to,
and recovery from, the final beneficiary;

The audit work shall
include audits of an appropriate
sample of operations or transactions, and an examination
of procedures.

ensuring that all bodies involved in the implementation of
operations maintain a separate accounting system or a
separate accounting codification;

The annual audit work plan shall be submitted to the
national authorising officer and the Commission before the
start of the year in question.

ensuring that the national fund and the national authoris-
receive all necessary information on the
ing officer
procedures and verifications carried out
in relation to
expenditure;

setting up, maintaining and updating the reporting and
information system;

carrying out verifications to ensure that the expenditure
declared has actually been incurred in accordance with
applicable rules,
services have been
delivered in accordance with the approval decision, and
the payment requests by the final beneficiary are correct.
These verifications shall cover administrative,
financial,
technical and physical aspects of operations, as appropriate;

the products or

(k)

ensuring internal audit of its different constituting bodies;

(l)

ensuring irregularity reporting;

(b)

submit the following:

— an annual audit activity report following the model to
be found in the framework agreement, setting out the
resources used by the audit authority, and a summary
of any weaknesses found in the management and
control systems or in transaction findings from the
audits carried out in accordance with the annual audit
work plan during the previous 12 month period,
ending on 30 September of the year concerned. The
annual audit activity report shall be addressed to the
Commission, the national authorising officer, and the
competent accrediting officer, by 31 December each
year. The first such report shall cover the period from
this regulation up until
the entry into force of
30 November 2007,

— an annual opinion following the model set out in the
framework agreement as to whether the management
and control systems functions effectively and con-

(c)

(d)

(e)

(f)

(g)

(h)

(i)

(j)

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forms to the requirements of this Regulation and/or
any other agreements between the Commission and
the beneficiary country. This opinion shall be
addressed to the Commission, the national authoris-
ing officer, and the competent accrediting officer. It
shall cover the same period and have the same
deadline as the annual audit activity report,

— an opinion on any final statement of expenditure
submitted to the Commission by the national
authorising officer, for the closure of any programme
or of any part thereof. Where appropriate, the final
statement of expenditure may include payment
applications
submitted
in the form of accounts
annually. The opinion on any final statement of
expenditure shall follow the model provided in annex
to the framework agreement.
It shall address the
the final payment application and the
validity of
information, and, where
accuracy of
appropriate, be supported by a final audit activity
report. It shall be sent to the Commission and to the
competent accrediting officer, at the same time as the
relevant final statement of expenditure submitted by
the national authorising officer, or at least within three
months of the submission of that final statement of
expenditure.

the financial

Article 31

Specific bodies

Within the overall framework defined by the structures and
authorities as set out in Article 21, the functions described in
Article 28 may be grouped and assigned to specific bodies within
or outside the operating structures initially designated. This
grouping and assignation shall respect the appropriate segrega-
tion of duties imposed by Regulation (EC, Euratom) No 1605/
2002 and ensure that the final responsibility for the functions
described in the said Article shall remain with the operating
structure initially designated. Such a restructuring shall be
formalised in written agreements and shall be subject
to
accreditation by the national authorising officer and the conferral
of management by the Commission.

S e c t i o n 2

O t h e r f o r m s o f m a n a g e m e n t

Article 32

Structures and authorities for centralised or joint
management

Further specific requirements for the annual audit work plan
and/or the reports and opinions mentioned in paragraph (b) may
be set out in the sectoral or financing agreements.

With regard to the methodology for the audit work, reports and
audit opinions required by this Article, the audit authority shall
comply with international standards on auditing, in particular as
regards the areas of risk assessment, audit materiality and
sampling. That methodology may be complemented by any
further guidance and definitions from the Commission, notably
in relation to an appropriate general approach to sampling,
confidence levels and materiality.

Article 30

Follow-up of the audit authority reports

1.
Following receipt of the reports and opinions referred to in
the first and second indents of Article 29 (2) (b), the national
authorising officer shall:

joint management,

In the event of centralised or

1.
the
beneficiary country shall designate a national IPA coordinator,
who shall act as the representative of the beneficiary country vis-
à-vis the Commission. He shall ensure that a close link is
maintained between the Commission and the beneficiary
country, with regard both to the general accession process and
to EU pre-accession assistance under IPA.

The national
IPA coordinator shall also be responsible for
coordinating the beneficiary country's participation in the
relevant cross-border programmes, both with Member States
and with other beneficiary countries, as well as in the trans-
national, interregional or sea basins programmes under other
Community instruments. He may delegate the tasks relating to
this latter responsibility to a cross-border cooperation coordi-
nator.

2.
In the case of the cross-border cooperation component,
operating structures shall be designated and put in place by the
in accordance with the provisions of
beneficiary country,
Article 139.

Article 33

(a)

decide whether any improvements to the management and
control systems are required, record the decisions in that
respect and ensure the timely implementation of those
improvements;

(b) make any necessary adjustments to the payment applica-

tions to the Commission.

Structures and authorities for shared management

In the case of cross–border programmes implemented through
the following
shared management with a Member State,
structures shall be put in place in one of the Member States
participating in the cross–border programme, as set out in
Article 102:

2. The Commission may decide either to take follow-up action
itself in response to the reports and opinions, for example by
initiating a financial correction procedure, or to require the
beneficiary country to take action, while informing the national
authorising officer and the competent accrediting officer of its
decision.

— a single managing authority,

— a single certifying authority,

— a single audit authority.

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CHAPTER III

(i)

contributions in kind.

Financial contribution by the European Community

Article 34

Eligibility of expenditure

In the event of decentralised management, notwithstanding
1.
accreditations by the competent accrediting officer and the
national authorising officer, contracts and addenda signed,
expenditure incurred and payments made by the national
authorities shall not be eligible for funding under the IPA
to the conferral of management on the
Regulation prior
concerned structures and authorities by the Commission, unless
otherwise provided in paragraph 2.

Expenditure financed under this Regulation shall not be the

4.
subject of any other financing under the Community budget.

Article 35

Treatment of receipts

1. Receipts for the purposes of this Regulation include revenue
earned by an operation, during the period of its co-financing,
from sales, rentals, services, enrolment fees or other equivalent
receipts with the exception of:

The final date for the eligibility of expenditure shall be laid down
in Part II or in the financing agreements where necessary.

(a)

receipts generated throughout the economic lifetime of the
co-financed investments in the case of investment in firms;

2. Technical assistance to support the setting up of manage-
ment and control systems may be eligible prior to the initial
conferral of management,
incurred after
for
1 January 2007.

expenditure

(b)

receipts generated within the framework of a financial
engineering measure,
including venture capital and loan
funds, guarantee funds, leasing;

Launch of calls for proposals or calls for tenders may also be
eligible prior the initial conferral of management and after
1 January 2007, subject to this initial conferral of management
being in place within the time limits defined in a reserve clause to
be inserted in the operations or calls concerned, and subject to
prior approval of the documents concerned by the Commission.
The calls for proposal or calls for tender concerned may be
cancelled or modified depending on the decision on conferral of
management.

3. The following expenditure shall not be eligible under the IPA
Regulation:

(c) where applicable, contributions from the private sector to
the co-financing of operations, which shall be shown
alongside public contribution in the financial tables of the
programme.

2. Receipts as defined in paragraph 1 represent income which
shall be deducted from the amount of eligible expenditure for the
the
operation concerned. No later
programme, such receipts shall be deducted from the relevant
operation's eligible expenditure in their entirety or pro-rata,
depending on whether they were generated entirely or only in
part by the co-financed operation.

closure of

than the

(a)

taxes, including value added taxes;

3. This Article shall not apply to:

(b)

customs and import duties, or any other charges;

— the rural development component,

(c)

purchase, rent or leasing of land and existing buildings;

(d)

fines, financial penalties and expenses of litigation;

— revenue-generating infrastructures as defined in Article 150.

(e)

operating costs;

(f)

second hand equipment;

Article 36

Property of interest

(g)

bank charges, costs of guarantees and similar charges;

(h)

conversion costs, charges and exchange losses associated
with any of the component specific euro accounts, as well
as other purely financial expenses;

Any interest earned on any of the component-specific euro
accounts remains the property of
the beneficiary country.
Interest generated by the financing by the Community of a
programme shall be posted exclusively to that programme, being
regarded as a resource for the beneficiary country in the form of
a national public contribution, and shall be declared to the
Commission, at the time of the final closure of the programme.

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Article 37

Community financing

S e c t i o n 2

R u l e s f o r d e c e n t r a l i s e d m a n a g e m e n t

1. The financial contribution from the Community towards
expenditure under the multi- annual or annual programmes shall
be determined in accordance with the allocations proposed in
the multi-annual indicative financial framework under Article 5
of the IPA Regulation.

2. All operations receiving assistance under the various IPA
components shall require national and Community contribu-
tions.

Article 38

Article 40

Payments

1.
Payment by the Commission of the Community contribu-
tion shall be made within the limits of the funds available. In the
case of multi-annual programmes, each payment shall be posted
to the earliest open budget commitments of the IPA component
concerned.

Payments shall

2.
payments and payment of the final balance.

take the form of pre-financing,

interim

Aid intensities and rate of Community contribution

1. The Community contribution shall be calculated in relation
to the eligible expenditure as defined in Part II for each IPA
component.

3. By 28 February each year, the beneficiary country shall send
to the Commission a forecast of its likely payment applications
for the financial year concerned and for the subsequent financial
year, in relation to each IPA component or programme. The
Commission may ask for an update of
the forecast as
appropriate.

2.
Financing decisions adopting the annual or multi-annual
programmes for each IPA component shall set the maximum
the Community contribution and the
indicative amount of
subsequent maximum rate for each priority axis.

4.
Exchange of information concerning financial transactions
between the Commission and the authorities and structures
referred to in Article 21 shall, where appropriate, be made by
electronic means, using procedures agreed upon between the
Commission and the beneficiary country.

CHAPTER IV

Financial management

S e c t i o n 1

B u d g e t a r y c o m m i t m e n t s

Article 39

Principles

1. A budgetary commitment corresponding to the amount of
the legal commitment, which shall take the form of a financing
agreement with the beneficiary country concerned, shall be
adopted on the basis of financing decisions adopting annual
programmes.

2.
Financing decisions adopting multi-annual programmes may
provide for the conclusion of multi-annual legal commitments
which shall take the form of financing agreements with the
beneficiary country concerned.

The budgetary commitment corresponding to the amount of the
legal commitment may in such cases be broken down over
several years into annual
instalments, where the financing
decision so provides and taking account of the multi-annual
indicative financial
framework. The corresponding financing
decision and financing agreement shall set out this breakdown in
appropriate financial tables.

5. The combined total of pre-financing and interim payments
shall not exceed 95 % of the Community contribution as set out
in the financial table of each programme.

6. When the ceiling referred to in paragraph 5 is reached, the
national authorising officer shall continue transmitting to the
Commission any certified statement of expenditure, as well as
information about the amounts recovered.

in certified statements of expenditure,

7. Amounts set out in the programmes submitted by the
beneficiary country,
in
payment applications and in expenditure mentioned in the
implementation reports, shall be denominated in euro. Bene-
ficiary countries shall convert
the amounts of expenditure
incurred in national currency into euro using the monthly
accounting rate of the euro established by the Commission for
the month during which the expenditure was registered in the
accounts of the operating structure concerned.

8.
Payments by the Commission to the national fund shall be
made to the euro account, in accordance with the provisions laid
down in Articles 41, 42, 43, 44 and 45 and in the framework,
sectoral or financing agreements. One euro account shall be
opened for each of
the IPA programmes concerned, or, as
appropriate, IPA components, and shall be used exclusively for
transactions relating to that programme or component.

9. Beneficiary countries shall ensure that the final beneficiaries
receive the total amount of the public contribution in due time
and in full. No specific charge or other charge with equivalent
effect shall be levied which would reduce these amounts for the
final beneficiaries.

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10. The expenditure may be covered by Community financing
only if it has been incurred and paid by the final beneficiary.
Expenditure paid by final beneficiaries shall be substantiated by
receipted invoices or accounting documents of equivalent
probative value or other relevant documents, where, according
to the programme, assistance is not a function of expenditure.
Expenditure must have been certified by the national authorising
officer.

Article 41

Acceptability of applications for payment

In order for the Commission to approve a payment application,
the minimum requirements set out in Articles 42(1), 43(1) and
45(1) must be fulfilled.

Article 42

Pre-financing

(b)

(c)

(d)

1.
In the case of a payment application for a pre-financing
payment, the minimum requirements referred to in Article 41
are the following:

(a)

(b)

the national authorising officer has notified to the
Commission the opening of the euro account concerned;

(e)

the accreditations delivered by the competent accrediting
officer and the national authorising officer are in force and
the conferral of management by the Commission remains
valid;

the statement of
relating to the payment
expenditure shall be certified by the national authorising
officer;

in question;

the ceilings for Community assistance under each priority
axis, as laid down in the Commission financing decision,
have been respected;

the operating structure has sent to the Commission the
sectoral annual
implementation reports as referred to
Article 61(1), including the most recent one;

to the Commission,

the audit authority has sent
in
accordance with the first and second indent of Article 29
(2)(b), the most recent annual audit activity report and
opinion on the conformity of the management and control
systems in place with the requirements of this Regulation
and/or those of any agreement between the Commission
and the beneficiary country;

the accreditations delivered by the competent accrediting
officer and the national authorising officer are in force, and
the conferral of management by the Commission remains
valid.

(c)

the relevant financing agreement has entered into force.

Pre-financing payments shall represent a given percentage of
2.
the Community contribution to the programme concerned, as
specified in Part II of this Regulation. In the event of multi-
annual programmes, the pre-financing may be split between
several financial years.

3. The total amount paid as pre-financing shall be reimbursed
to the Commission if no payment application for the programme
concerned is sent within 15 months of the date on which the
Commission pays the first pre-financing amount. The Commu-
nity contribution to the programme concerned shall not be
affected by such reimbursement.

4. The total pre-financing amount shall be cleared at the latest
when the programme is closed. Throughout the lifetime of the
programme, the national authorising officer shall use the pre-
financing payment only to pay the Community contribution to
expenditure in compliance with this Regulation.

Article 43

Interim payments

If one or more of the conditions mentioned in this paragraph are
not met, the beneficiary country shall, when so requested by the
Commission and within the time limit fixed by the Commission,
take the necessary steps to remedy the situation.

2.
If it appears that the rules applicable have not been complied
with or that Community funds have been improperly used, the
Commission may reduce interim payments to the beneficiary
country or temporarily suspend them, in accordance with the
provisions of Article 46. It shall inform the beneficiary country
accordingly.

3. The suspension or reduction of
interim payments shall
comply with the principle of proportionality and shall be
without prejudice to the decisions of conformity and clearance-
of-account decisions and financial corrections.

Article 44

Calculation of payments

In the case of a payment application for an interim payment,
1.
the minimum requirements referred to in Article 41 are the
following:

(a)

the national authorising officer has sent to the Commission
a payment application and a statement of expenditure

Payments shall be calculated on the basis of the Community
contribution to the financing of the operations concerned, up to
the amount obtained by applying the co-financing rate laid down
for each priority axis in the financing decision to the eligible
expenditure, subject to the maximum Community contribution
attached to each priority axis.

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Article 45

Payment of the final balance

If those measures have not been taken by the beneficiary country,
the Commission may decide to cancel all or part of
the
Community contribution to the programme in accordance with
Article 51.

1.
In the case of the payment of the final balance, the deadline
set down in Article 166 of Regulation (EC, Euratom) No 1605/
2002 shall apply and the minimum requirements referred to in
Article 41 are the following:

Article 47

Closure of a programme

(a)

(b)

(c)

(d)

the national authorising officer has sent to the Commission
a final payment application and a final statement of
expenditure; the final statement of expenditure shall be
certified by the national authorising officer;

1. After an application for final payment has been received by
the Commission, a programme is considered closed as soon as
one of the following occurs:

the operating structure has sent to the Commission the
sectoral final reports for the programme concerned, as
referred to in Article 61(1);

the audit authority has sent
in
accordance with the third indent of Article 29(2)(b), an
opinion on any final statement of expenditure, supported
by a final activity report;

to the Commission,

the accreditations delivered by the competent accrediting
officer and the national authorising officer are in force and
the conferral of management by the Commission remains
valid.

— payment of the final balance due by the Commission,

— issuance of a recovery order by the Commission,

— de-commitment of appropriations by the Commission.

2. The closure of a programme does not prejudice the
Commission's right to undertake a financial correction at a later
stage.

3. The closure of a programme does not affect the obligations
the beneficiary country to continue to retain related
of
documents, in accordance with Article 48.

2. That part of budget commitments referring to multi-annual
programmes still open on 31 December 2017, for which the
documents referred to in paragraph 1 have not been transmitted
to the Commission by 31 December 2018, shall be automatically
de-committed.

Article 48

Retention of documents

Article 46

Suspension of payments

All documents related to a given programme shall be retained by
the beneficiary country for at least three years after the closure of
the programme. This period shall be interrupted either in the
case of legal proceedings or at the duly motivated request of the
Commission.

1. All or part of the payments may be suspended by the
Commission where:

there is a serious deficiency in the management and control
system of the programme which affects the reliability of the
procedure for certification of payments and for which
corrective measures have not been taken; or

expenditure in a certified statement of expenditure is linked
to a serious irregularity which has not been corrected; or

(a)

(b)

(c)

Article 49

Financial corrections

In order to ensure that the funds are used in accordance with
1.
the applicable rules, the Commission shall apply clearance-of-
accounts procedures or financial correction mechanisms in
accordance with Articles 53b(4) and 53c(2)of Regulation (EC,
Euratom) No 1605/2002 and as detailed in the framework or,
where they exist, sectoral agreements.

clarifications are needed regarding the information con-
tained in the declaration of expenditure.

2. A financial correction may arise following:

2. The beneficiary country shall be given the opportunity to
present its observations within a period of two months before
the Commission decides on a suspension in accordance with
paragraph 1.

3. The Commission shall end the suspension when the
beneficiary country has taken the necessary measures to remedy
irregularity or lack of clarity referred to in
the deficiency,
paragraph 1.

(a)

identification of a specific irregularity, including fraud; or

(b)

identification of a weakness or deficiency in the manage-
ment and control systems of the beneficiary country.

If

the Commission finds

3.
the
programmes covered by this Regulation has been incurred in a
it shall decide what
way that has infringed applicable rules,
amounts are to be excluded from Community financing.

that expenditure under

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4. The calculation and establishment of any such corrections,
the related recoveries,
as well as
shall be made by the
Commission,
following the criteria and procedures provided
for in Articles 51, 52 and 53. Other provisions on financial
corrections which have been set down in sectoral or financing
agreements shall apply in addition to this Regulation.

Article 50

Financial adjustments

1. The national authorising officer, who bears in the first
instance the responsibility for investigating irregularities, shall
make the financial adjustments where irregularities or negligence
are detected in operations or operational programmes, by
cancelling all or part of the Community contribution to the
operations or
the operational programmes concerned. The
national authorising officer shall take into account the nature
and gravity of the irregularities and the financial
loss to the
Community contribution.

In case of an irregularity, the national authorising officer
2.
shall recover the Community contribution paid to the beneficiary
in accordance with national recovery procedures.

Article 51

Criteria for financial corrections

the documentation
appropriate proportion or
concerned. Except in duly justified cases, the time allowed for
this examination shall not exceed a period of two months after
the two-month period referred to in the first subparagraph.

sample of

2. The Commission shall take account of any evidence supplied
by the beneficiary country within the time limits mentioned in
paragraph 1.

3. The Commission shall endeavour to take a decision on the
financial correction within six months after opening the
procedure as set out in paragraph 1.

Article 53

Repayment

1. Any repayment to the general budget of the European Union
shall be effected before the due date indicated in the recovery
order drawn up in accordance with Article 72 of Regulation (EC,
Euratom) No 1605/2002. The due date shall be the last day of
the second month following the issuing of the order.

2. Any delay in repayment shall give rise to interest on account
of late payment, starting on the due date 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.

1. The Commission may make financial corrections, by
cancelling all or part of
the Community contribution to a
programme, in the situations referred to in Article 49(2).

Article 54

Re-use of Community contribution

2. Where individual cases of irregularity are identified, the
Commission shall take into account the systemic nature of the
irregularity to determine whether a flat-rate or extrapolated
financial correction should be applied.

1. The resources from the Community contribution cancelled
according to Article 49 shall be paid to the Community Budget,
including interest thereon.

3. The Commission shall, when deciding the amount of a
correction, take into account the nature and gravity of the
irregularity and/or the extent and financial implications of the
weaknesses or the deficiencies found in the management and
control system in the programme concerned.

2. The contribution cancelled or recovered in accordance with
Article 50 may not be re-used for the operation or operations
that were the subject of the recovery or the adjustment, nor,
where the recovery or adjustment
is made for a systemic
irregularity, for existing operations within the whole or part of
the priority axis in which the systemic irregularity occurred.

Article 52

S e c t i o n 3

Procedure for financial correction

R u l e s f o r c e n t r a l i s e d a n d j o i n t m a n a g e m e n t

the
1. Before taking a decision on a financial correction,
Commission shall inform the national authorising officer of its
provisional conclusions and requesting his comments within two
months.

Where the Commission proposes a financial correction on the
basis of extrapolation or at a flat rate, the beneficiary country
shall be given the opportunity to establish the actual extent of
the irregularity, through an examination of the documentation
concerned. In agreement with the Commission, the beneficiary
this examination to an
country may limit

the scope of

Article 55

Payments

Payment of the Community contribution by the Commis-

1.
sion shall be made within the limits of the funds available.

2.
In accordance with Article 81 of Regulation (EC, Euratom)
No 1605/2002, payments shall be made on production of proof
that the relevant operation is in accordance with the provisions
of the IPA Regulation, this Regulation, the contract or the grant.

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3. The appropriations needed to cover expenditure as indicated
in the annual programmes shall be made available through one
or more of the following actions: payment of the entire amount
due; pre-financing; one or more interim payments; and payment
of the balance of the amounts due.

8. The Commission shall develop evaluation methods, includ-
ing quality standards and using objective and measurable
indicators.

Article 58

Payments by the Commission shall be made whenever

4.
possible in euro to a euro account.

Monitoring in the case of decentralised management

Article 56

Closure of a programme

1. A programme is closed when all the contracts and grants
funded by this programme have been closed.

In the case of decentralised management, the beneficiary
1.
country shall, within six months after the entry into force of this
Regulation, set up an IPA monitoring committee, in agreement
with the national IPA coordinator and the Commission, to ensure
coherence and coordination in the implementation of the IPA
components.

2. After a final payment application has been received, a
contract or grant is considered closed as soon as one of the
events referred to in Article 47(1) occurs.

3. The closure of a contract or grant does not prejudice the
Commission's right to undertake a financial correction at a later
stage.

2. The IPA monitoring committee shall satisfy itself as to the
overall effectiveness, quality and coherence of the implementa-
tion of all programmes and operations towards meeting the
objectives set out in the financing agreements as well as in the
multi-annual indicative planning documents. For this purpose, it
shall base itself on the elements given by the sectoral monitoring
committees, as provided for in Article 59(3).

CHAPTER V

Evaluation and monitoring

Article 57

Evaluation

1.
Evaluations shall aim to improve the quality, effectiveness
and consistency of the assistance from Community funds and the
strategy and implementation of the programmes.

2. Multi-annual indicative planning documents, as described in
Article 5, shall be subject to regular ex ante evaluation, carried
out by the Commission.

3. The Commission may also carry out strategic evaluations.

Programmes shall be subject to ex ante evaluations, as well as
4.
interim and, where relevant, ex post evaluations in accordance
with the specific provisions
laid down under each IPA
component in Part II and Article 21 of Commission Regulation
(EC, Euratom) No 2342/2002.

3. The IPA monitoring committee may make proposals to the
IPA coordinator and the national
Commission, the national
authorising officer for any actions to ensure the coherence and
coordination between the programmes and operations imple-
mented under the different components, as well as for any cross-
component corrective measures needed to ensure the achieve-
ment of the global objectives of the assistance provided, and to
enhance its overall efficiency. It may also make proposals to the
relevant sectoral monitoring committee(s) for decisions on any
corrective measures to ensure the achievements of programme
objectives and enhance the efficiency of assistance provided
under the programmes or IPA component(s) concerned.

4. The IPA monitoring committee shall adopt its internal rules
of procedure in compliance with a monitoring committee
mandate established by the Commission, and within the
institutional, legal and financial framework of the beneficiary
country concerned.

5. Unless otherwise provided in the monitoring committee
mandate set out by the Commission, the provisions of this
paragraph shall apply.

5. During the period of implementation of a programme, at
least one interim evaluation shall be carried out, and specifically
when the monitoring of
the programme reveals significant
departure from the goals initially set.

The IPA monitoring committee shall include among its members
representatives of the Commission, the national IPA coordinator,
the national authorising officer, representatives of the operating
structures, and the strategic coordinator.

6.
Ex post evaluation of the implementation of assistance shall
be the responsibility of the Commission. Ex post evaluation shall
include identifiable IPA component-specific results. In the event
of joint management, ex post evaluation may be jointly carried
out with other donors.

A representative of
coordinator
meetings.

shall co-chair

the Commission and the national

IPA
the IPA monitoring committee

7. The results of ex ante and interim evaluation shall be taken
into account in the programming and implementation cycle.

The IPA monitoring committee shall meet at least once a year.
Intermediate meetings may also be convened, in particular on a
thematic basis.

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Article 59

Sectoral monitoring committees in the case of decentralised
management

1. The IPA monitoring committee shall be assisted by sectoral
monitoring committees set up under the IPA components within
six months after the entry into force of this Regulation,
in
accordance with the specific provisions laid down in Part II. The
sectoral monitoring committees shall be attached to programmes
or components. They may include representatives of civil society,
where appropriate.

the implementation of

Each sectoral monitoring committee shall satisfy itself as to
2.
the effectiveness and quality of
the
programmes and operations concerned, in accordance with the
specific provisions laid down for each component in Part II, and
for the related sectoral and/or financing agreements. It may make
proposals to the Commission and the national IPA coordinator,
with a copy to the national authorising officer, for decisions on
achievements of
any corrective measures
programme objectives and enhance the efficiency of
the
assistance provided.

to ensure

the

3. The sectoral monitoring committees shall report to the IPA
monitoring committee. They shall provide the IPA monitoring
committee in particular with information relating to:

(a)

this shall

the progress made in implementing the programmes, by
priority axis and, where relevant, by measures or opera-
tions;
financial
implementation indicators, and other factors and shall be
established with a view to improving the implementation of
the programmes;

include the results achieved,

2. The reports referred to in paragraph 1 shall be sent to the
national IPA coordinator, the national authorising officer and to
the Commission, after examination by the sectoral monitoring
committees.

3. On the basis of the reports referred to in paragraph 1, the
national IPA coordinator shall send to the Commission and the
national authorising officer, after examination by the IPA
monitoring committee, annual and final
reports on the
implementation of assistance under the IPA Regulation.

4. The annual
report on implementation referred to in
paragraph 3, which shall be sent by 31 August each year and
for the first time in 2008, shall synthesise the different sectoral
annual reports issued under the different components and shall
include information about:

(a)

progress made in implementing Community assistance, in
relation to the priorities set up in the multi-annual
indicative planning document and the different pro-
grammes;

(b)

financial implementation of Community assistance.

5. The final report on the implementation as referred to in
paragraph 3 shall cover the whole period of implementation and
may include the latest annual report mentioned in paragraph 4.

CHAPTER VI

Publicity, visibility

Article 62

Information and publicity

(b)

any aspects of the functioning of the management and
control systems raised by the audit authority, the national
authorising officer or the competent accrediting officer.

Article 60

Monitoring in the case of centralised and joint management

In the case of centralised and joint management, the Commission
may undertake any actions it deems necessary to monitor the
programmes concerned. In the case of joint management, these
actions may be carried out
jointly with the international
organisation(s) concerned.

Article 61

Annual and final reports on implementation

1. The operating structures shall draw up a sectoral annual
report and a sectoral final report on the implementation of the
programmes for which they are responsible, in compliance with
the procedures defined in Part II for each IPA component.

The sectoral annual reports on implementation shall cover the
financial year. The sectoral final reports on implementation shall
cover the whole period of implementation and may include the
last sectoral annual report.

the beneficiary country and the national

1.
In the case of centralised and joint management, informa-
tion on programmes and operations shall be provided by the
Commission, with the assistance of the national IPA coordinator
as appropriate. In the case of decentralised management, and in
all cases for programmes or part of programmes under the cross-
border cooperation component not implemented through shared
management,
IPA
coordinator shall provide information on and publicise pro-
grammes and operations. In the case of shared management, the
Member States, the beneficiary countries and the managing
authority as referred to in Article 103, shall provide information
on and publicise programmes and operations. The information
shall be addressed to the citizens and beneficiaries, with the aim
the Community and ensuring
of highlighting the role of
transparency.

2.
In the case of decentralised management, the operating
structures shall be responsible for organising the publication of
the list of the final beneficiaries, the names of the operations and
the amount of Community funding allocated to operations. They
shall ensure that the final beneficiary is informed that acceptance
of funding is also an acceptance of their inclusion in the list of
beneficiaries published. Any personal data included in this list
shall be processed in accordance with the requirements of
Regulation (EC) No 45/2001 of the European Parliament and of
the Council (1).

(1) OJ L 8, 12.1.2001, p. 1.

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In accordance with Article 90 of Regulation (EC, Euratom)
3.
No 1650/2002,
the Commision shall publish the relevant
information on the contracts. The Commission shall publish the
results of the tender procedure in the Official
the
European Union, on the EuropeAid website and in any other
appropriate media, in accordance with the applicable contract
procedures for Community external actions.

Journal of

Article 63

Visibility

1. The Commission and the relevant national, regional or local
authorities of the beneficiary countries shall agree on a coherent
set of activities to make available, and publicise, in the beneficiary
countries, information about assistance under the IPA Regula-
tion.

The procedures
specified in the sectoral or financing agreements.

implementing such activities

for

shall be

2.
Implementation of the activities referred to in paragraph 1
shall be the responsibility of the final beneficiaries, and shall be
funded from the amount allocated to the relevant programmes
or operations.

PART II

SPECIFIC PROVISIONS

TITLE I

TRANSITION ASSISTANCE AND INSTITUTION BUILDING
COMPONENT

(e) modernisation of

the regulatory framework,

including
support for investment to equip key institutions whose
infrastructures or capacity to monitor and enforce legisla-
tion need strengthening;

(f)

(g)

(h)

(i)

(j)

(k)

establishment or reinforcement of financial control sys-
tems;

strengthening of the market economy, notably by helping
self-organisation of economic actors and directly support-
ing economic activity, including through assistance to the
private sector and help in industrial restructuring, as well as
diversifying the economy, modernising key sectors and
improving specific areas;

development of civil society and dialogue between the
government and non-governmental bodies to promote
democracy, the rule of law, human rights, respect for and
protection of minorities, as well as civil society dialogue;

establishment of social dialogue as an element of good
fair and just working
governance and to promote
conditions;

promotion of minority integration,
confidence-building measures on all levels of society;

reconciliation and

the polluter-pays principle,

environmental policy, based on a high level of protection,
promotion of
sustainable
utilisation of natural resources, energy efficiency, renewable
sources and the progressive adoption of the Community
policy in all areas including climate change;

CHAPTER I

(l)

improvement of access to financial facilities for small and
medium- scale enterprises and public administrations;

Object of assistance and eligibility

(m)

Article 64

Areas of assistance

1. Assistance under this component may be granted to the
beneficiary countries in particular in the following areas:

(n)

(a)

(b)

strengthening of democratic institutions and the rule of
law;

promotion and protection of the fundamental rights and
freedoms contained in the European Charter of Funda-
mental Rights;

(c)

public administration reform;

(d)

reform in the field of justice and home affairs, such as
reform of the legal system, the police, the prosecution, the
judiciary, the penitentiary systems, and the customs and
border control
system, with particular emphasis on
improving the fight against corruption, organised crime,
terrorism, and illegal migration, and establishing informa-
tion systems linked to these areas;

institution building in the field of nuclear safety, radioactive
waste management and radiation protection, in line with
the
and European Union best
practices;

communautaire

acquis

for participation in community programmes,
support
notably those aimed at increasing awareness of European
citizenship, and preparation for participation in Commu-
nity agencies.

In addition to the areas covered in paragraph 1, assistance
2.
may also be granted under this component
to beneficiary
countries listed in Annex II to the IPA Regulation, for the
following areas:

(a)

(b)

in accordance with Article 2(3)(b) of the IPA Regulation,
social, economic and territorial development
including,
inter alia, investments in the areas of regional development,
human resources development, and rural development;

removal of obstacles to social inclusion and support for
in particular through actions
inclusive labour markets,
fighting against
improving living standards,
aiming at
unemployment and empowering human resources;

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(c)

(d)

(e)

support
improvement of business-related infrastructures;

to productive sector and services and to the

been signed, except
Regulation (EC, Euratom) No 1605/2002.

in the cases explicitly provided for in

adaptation, reform or, where appropriate, establishment of
educational systems and professional training systems;

In addition to the rules set out in Article 34(3), the following

2.
expenditure shall not be eligible:

improvement of access
transport, information, energy and other networks;

to, and interconnections of,

(a)

any leasing costs;

(f)

reform of health care systems;

(b)

depreciation costs.

(g)

improvement of information and communication systems.

Article 65

Forms of assistance

1. Assistance under this component may,
provided through:

in particular, be

(a)

administrative cooperation measures for the purpose of
training and information exchange involving public-sector
experts dispatched from Member States or international
organisations,
in particular through twinning, twinning
light and TAIEX;

(b)

technical assistance;

(c)

investments in the regulatory infrastructure,
including
independent external multilateral institutions, in particular
to support alignment with European Union norms and
standards. This shall be aimed at key regulatory institutions
and made on the basis of a clear strategy for public
administrative reform and alignment with the acquis;

(d)

grant schemes;

(e)

project preparation facilities;

(f)

(g)

implementation of finance facilities in cooperation with
financial institutions;

budgetary support, in accordance with the provisions of
Article 15(1) of the IPA Regulation.

For beneficiary countries listed in Annex II to the IPA
2.
Regulation, assistance under
this component may also be
provided through measures and actions of a similar nature as
those foreseen under the regional development, human resources
development and rural development components,
including
investment type operations.

3. Assistance may also be used to cover the costs of the
Community's contribution to international missions, initiatives
or organisations active in the interest of the beneficiary country,
including administrative costs.

Article 66

Eligibility of expenditure

3. By way of derogation from Article 34(3), it shall be decided
on a case by case basis whether the following expenditure is
eligible:

(a)

operating costs, including rental costs, exclusively related to
the period of co-financing of the operation;

(b)

value added taxes, if the following conditions are fulfilled:

(i)

(ii)

the value added taxes are not recoverable by any
means;

it is established that they are borne by the final
beneficiary, and

(iii)

they are clearly identified in the project proposal.

Article 67

Aid intensities and rate of Community contribution

1.
For the purposes of this component, the eligible expenditure
as referred to in Article 38(1) shall be based on the public
expenditure in the case of decentralised management, and on the
total expenditure in the case of centralised and joint manage-
ment.

2.
In the case of decentralised management, in addition to the
general rules set out in Articles 37 and 38, this paragraph shall
apply to assistance under this component.

In the event of grants, final beneficiaries may be required to
contribute to the operation's eligible costs. In the case of an
investment operation, the Community contribution shall not
exceed 75 % of the public expenditure, the other 25 % being
provided from public funds in the beneficiary country.
In
exceptional and duly justified cases, however, the Community
contribution can exceed 75 % of the public expenditure.

Institution building activities shall require a degree of co-
financing by the final beneficiary and/or public funds in the
beneficiary country. In duly justified cases, however, institution
building activities may be financed up to 100 % by Community
funds.

Expenditure under this component shall be eligible if it has
1.
been incurred after the procurements, contracts and grants have

Assistance provided through administrative cooperation mea-
sures as referred to in Article 65(1)(a) may be funded 100 % by
Community funds.

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In the event of centralised or

the
3.
Commission shall decide the rate of the Community contribu-
tion, which may amount to 100 % of the eligible expenditure.

joint management,

CHAPTER II

Programming

Article 68

3. The participation of beneficiary countries in Community
programmes shall follow the specific terms and conditions set
out for each such programme in the memorandum of under-
standing to be concluded by the Commission and the beneficiary
country,
in accordance with the agreements establishing the
general principles for participation of the beneficiary countries in
Community programmes. It shall include provisions on both the
total amount of the beneficiary country's contribution and the
amount funded by assistance under the IPA regulation.

Programming framework

Article 71

Assistance shall in principle take the form of:

— national programmes,

— regional and horizontal programmes and facilities.

Article 69

National programmes

1. National programmes shall be adopted annually by the
Commission on the basis of project proposals
from the
beneficiary country, which shall take into account the principles
and priorities set out in the multi-annual indicative planning
documents referred to in Article 5.

2.
Project proposals shall in particular list the priority axes to
be covered in the beneficiary country concerned, which may
include the areas of assistance laid down in Article 64. The
relevant stakeholders shall be consulted while the project
proposals are being drafted.

3.
Each year, following discussions between the Commission
and the beneficiary country about the project proposals, project
fiches shall be submitted to the Commission by the beneficiary
country. The project fiches shall set out clearly the priority axes,
the envisaged operations and their chosen implementing
methods. Financing proposals
shall be prepared by the
Commission in view of the project fiches.

Financing proposals shall be adopted by means of a

4.
financing decision, in accordance with Article 8.

5. A financing agreement as provided for in Article 8 shall be
concluded by the Commission and the beneficiary country.

Article 70

Participation in Community programmes within national
programmes

1. Assistance may be granted to support the participation of
beneficiary countries in Community programmes. The participa-
tion shall be set down in the national programmes.

2. The total funds given in Community support for participa-
tion in Community programmes shall not exceed the limit set
down in the national programme.

Participation in Community agencies within national
programmes

1. Assistance may be granted to support the participation of
the beneficiary countries in Community agencies. The participa-
tion shall be set down in the national programmes.

2. The beneficiary countries may be invited to participate on an
ad hoc basis in the work of various Community agencies. The
costs of their participation may be funded by assistance provided
under the IPA Regulation in a similar way to that applicable to
participation in Community programmes.

Article 72

Regional and horizontal programmes

1. The Commission shall draw up regional and horizontal
programmes, in full coherence and coordination with national
programmes, on the basis of the relevant multi-annual indicative
planning documents and in consultation with the relevant
stakeholders.

2. The regional and horizontal programmes shall be designed
to promote regional cooperation and to strengthen multi-
country exchanges in the beneficiary countries, and to support
initiatives encouraging beneficiary countries to cooperate in
areas of common interest.

3. The regional programme shall cover beneficiary countries in
the Western Balkans. The programme shall in particular target
reconciliation, reconstruction and political cooperation in the
Region, with a view to supporting the implementation of the
Stability Pact for South East Europe.

4. Horizontal programmes shall cover some or all beneficiary
countries in areas of common interest where assistance can be
implemented more effectively and economically through such
programmes than through national programmes.

5. Under the regional and horizontal programmes, assistance
may be granted in areas such as project preparation facility,
support to civil society, customs, support for small and medium-
finance facilities and municipal
scale enterprises, municipal
information and com-
infrastructure, statistics, nuclear safety,
munication.

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CHAPTER III

Implementation

S e c t i o n 1

F r a m e w o r k f o r i m p l e m e n t a t i o n a n d
p r i n c i p l e s

Article 73

General principles

1. Assistance under this component shall be granted through
centralised, decentralised or joint management,
in accordance
with Articles 53 of Regulation (EC, Euratom) No 1605/2002.

2. The objective shall be decentralised management where
national programmes are concerned.

3. Regional and horizontal programmes shall be implemented
by the Commission on a centralised basis or by joint manage-
ment with international organisations as defined by Article 43d
of Regulation (EC, Euratom) No 1605/2002.

Article 74

Structure and authorities in the event of centralised and
joint management

In the event of centralised or joint management, the national IPA
coordinator shall be the sole contact person of the Commission,
in accordance with Article 32.

Article 75

Structure and authorities in the event of decentralised
management

in the event of decentralised management,

1. Where,
in
accordance with Article 22(2)(b), the national IPA coordinator
exercises his
this
component at national level, he shall carry out the following
tasks:

the programming of

responsibility for

(a)

(b)

organise the preparation of the project proposals as referred
to in Article 69,

elaborate and present to the Commission the project fiches
referred to in Article 69,

(c) monitor

the technical execution of

the national pro-

grammes.

2.
In accordance with Article 31, the operating structure shall
consist of one or more implementing agencies, which shall be
established within the national administration of the beneficiary
country or under its direct control.

The national authorising officer shall, after consulting the
IPA coordinator, designate programme authorising
national
officers to head the implementing agencies.

The programme authorising officers shall be officials within the
state administration of the beneficiary country. They shall be
responsible for the activities carried out by the implementing
agencies in accordance with Article 28.

Programme authorising officers shall designate officials
3.
within the national administration as senior programme officers.
Under the overall responsibility of the programme authorising
officer concerned, senior programme officers shall carry out the
following tasks:

(a)

(b)

be responsible for the technical aspect of the operations
within line ministries,

assist the programme authorising officers in the good and
timely preparation and implementation of operations at
technical level,

(c)

be in charge of the coordination within each priority axis
set down in the beneficiary country's project proposal.

Article 76

Accreditation of the operating structure and conferral of
management powers

1. Where Community funds have been managed by existing
national bodies in the beneficiary countries under Regulation
(EEC) No 3906/89 or Regulation (EC) No 2500/2001 prior to
the date of entry into force of this Regulation, those bodies
(hereinafter referred to as the ‘existing national bodies’) shall
manage funds under the transition assistance and institution
building component, until the Commission adopts a Decision on
conferral of management powers.

In no case the existing national bodies can manage funds
2.
under the transition assistance and institution building compo-
nent without a conferral of management powers under this
Regulation for more than one year from the entry into force of
this Regulation.

3. The Commission shall decide whether to confer manage-
ment powers on the existing national bodies in particular having
regard to the list of deviations submitted in accordance with
paragraph 4 and the decision taken by the national authorising
officer in accordance with paragraph 5.

4. The national authorising officer shall carry out an assess-
ment of the operating structure, which include the existing
national bodies, with regard to the requirements referred to in
Article 11.
In particular, he shall establish a list of any
requirements under this Regulation, as set out in Article 11,
which the operating structure does not comply with, based on an
opinion of an external auditor functionally independent from all
actors in the management and control system.

The list of deviations shall be sent to the Commission at the latest
four months after the entry into force of this Regulation.

5. Where the non-compliance referred to in paragraph 4 is
deemed to be compatible with the efficient and effective
functioning of the operating structures, the national authorising
officer may decide to accredit the bodies concerned under this
Regulation.

At the latest five months after the entry into force of this
Regulation, he shall send to the Commission a decision relating

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to the accreditation of the bodies concerned. This decision shall
include a roadmap, with time bound objectives, laying down the
steps to be taken to remedy the non-compliance as set out in the
list referred to in paragraph 4. The roadmap shall be agreed with
the Commission.

the financial
programme or agency budget, of
contribution of the beneficiary country which is financed under
IPA. The payment shall be made by the national fund in the case
of decentralised management and by the Commission in the case
of centralised management.

the part of

6. Where the non-compliance referred to in paragraph 4 is not
deemed to be compatible with the efficient and effective
functioning of an operating structure, the national authorising
the
officer shall proceed to establish an accreditation for
operating structure concerned, in accordance with the provisions
of Article 13.

In the event the Commission decides to confer management
7.
powers on the existing national bodies under this Regulation, the
Commission Decision may lay down further conditions on the
national authorities.
further conditions, the
Commission shall set a time limit for compliance by the national
authorities for the conferral of management powers to remain
effective. The Commission Decision shall also lay down the list of
ex ante controls as referred to in Articles 14(3).

In the event of

Irrespective of the national authorising officer's decision, the
8.
Commission may decide to maintain, suspend, or withdraw the
conferral of management powers on any of the bodies concerned
at any time.

9. At all stages, the national authorising officer shall ensure
that all the information required by the Commission is provided
by the beneficiary country.

Article 77

Implementation principles in the event of twinning projects

1. Twinning projects shall be set up in the form of a grant,
whereby the selected Member State administrations agree to
provide the requested public sector expertise against
the
reimbursement of the expenses thus incurred.

The grant may in particular provide for
the long term
secondment of an official assigned to provide full time counsel
to the administration of the beneficiary country as resident
twinning advisor.

The twinning grant shall be established in accordance with
relevant provisions of Part One, Title VI on grants of Regulation
(EC, Euratom) No 1605/2002 and Commission Regulation (EC,
Euratom) No 2342/2002.

2. A twinning manual including notably a system of fixed rates
and prices for the reimbursement of the provided public sector
expertise by the selected Member State administrations shall be
established by the Commission and updated regularly.

Article 78

S e c t i o n 2

F i n a n c i a l m a n a g e m e n t

Article 79

Payments under decentralised management

1. By way of derogation from Article 40(6), when the ceiling of
95 % is reached,
the national authorising officer shall only
submit a new certified statement of expenditure and information
about the amounts recovered when he requests the payment of
the final balance.

Pre-financing shall

in principle represent 50 % of

2.
the
Community contribution to the programme concerned. It may
be paid in yearly instalments. The rate of 50 % may be raised if
the national authorising officer demonstrates that the resulting
amount will not cover the pre-financing of the contracts and
grants signed at national level.

3. The amount to be pre-financed shall be calculated as the
sum of the estimate of the amount to be contracted by year, and
the actual amount for which contractual obligations have been
entered into in the previous years. With the exception of that
concerning participation in Community programmes and
agencies, pre-financing shall only be paid once the first call for
tender or call for proposals is launched.

4. The payments for the participation in Community pro-
grammes and agencies may amount to 100 % of the Community
contribution relating to this participation.

Article 80

Retention of documents

By way of derogation from Article 48, written records of the
entire procurement, grant award and contracting procedure
under
this component shall be retained by the operating
structure for a period of at least seven years from the payment
of the balance of the contract.

Article 81

Property of interest

Implementation principles in the event of participation in
Community programmes and agencies

In the case of participation in Community programmes and
agencies, implementation shall consist in the payment, to the

By way of derogation from Article 36, interest generated by the
financing by the Community of a programme shall be declared
to the Commission whenever a payment application is submitted
to the Commission.

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S e c t i o n 3

E v a l u a t i o n a n d m o n i t o r i n g

In accordance with Article 59(2), the TAIB committee shall
4.
satisfy itself as to the effectiveness and quality of the programmes
and operations concerned by, in particular:

Article 82

Evaluation

transition assistance and
1. All programmes under
institution building component shall be subject to interim and/
or
in accordance with Article 21 of
Commission Regulation (EC, Euratom) No 2342/2002.

ex post evaluation,

the

(a)

(b)

(c)

reviewing implementation status reports detailing financial
and operational progress of the programmes;

reviewing the achievement of objectives and results of the
programmes;

reviewing procurement plans as well as relevant evaluation
recommendations;

Prior

2.
to the conferral of management powers on the
beneficiary country, both interim and ex post evaluations shall be
carried out. These shall be performed by the Commission.

(d)

discussing problematic issues and operations;

(e)

proposing corrective actions as appropriate;

After the conferral of management powers, the responsibility for
carrying out interim evaluations shall lie with the beneficiary
country, without prejudice to the Commission's rights
to
perform any ad hoc interim evaluations of the programmes it
deems necessary.

Ex post evaluation shall remain a prerogative of the Commission
to the
even after
beneficiary country.

the conferral of management powers

3.
In line with Article 22 of the IPA Regulation, the executive
summaries relating to interim evaluation and the ex post
evaluation reports shall be sent
to the IPA Committee for
discussion.

Article 83

Monitoring

1.
In the event of decentralised management, in accordance
with Article 59, the national IPA coordinator shall establish a
sectoral monitoring committee for the transition assistance and
institution building component, hereinafter referred to as the
‘TAIB committee’.

2. The TAIB committee shall meet at least twice a year, at the
initiative of the beneficiary country or the Commission. It shall
draw up its rules of procedure, in compliance with a sectoral
monitoring committee mandate set out by the Commission, and
legal and financial framework of the
within the institutional,
beneficiary country concerned.
It shall adopt these rules of
procedure in agreement with the national IPA coordinator, the
national authorising officer and the IPA monitoring committee.

3. The TAIB committee shall be chaired by the national IPA
coordinator. Its members shall include the national authorising
officer, the programme authorising officers and, where appro-
priate, other representatives of the operating structure, repre-
sentatives of the Commission, as well as, where appropriate,
representatives of international financial
institutions and civil
society, designated by the beneficiary country in agreement with
the Commission.

(f)

(g)

reviewing the cases of fraud and irregularities and present
the measures taken to recover the funds and to avoid the
recurrence of similar cases;

reviewing the annual audit work plan prepared by the audit
authority and the findings and recommendations of the
audits carried out.

5. The TAIB committee shall monitor all ongoing programmes
under this component. In the case of,
investment
operations, transfer of assets or privatisations, the beneficiary
country shall monitor the programmes until their closure and
shall notify the TAIB committee of any changes to the results of
these programmes that significantly affect their impact, sustain-
ability and ownership.

inter alia,

6. The TAIB committee may be assisted by sectoral monitoring
sub-committees, set up by the beneficiary country to monitor
programmes and operations of this component, grouped by
monitoring sectors. Sub-committees shall report to the TAIB
committee. They shall draw up and adopt their internal rules of
procedure, in compliance with a mandate to be set out by the
Commission.

Article 84

Sectoral annual and final reports on implementation

In the event of decentralised management, the operating
1.
structure
IPA
coordinator and the national authorising officer a sectoral
annual report by 30 June each year.

send the Commission,

the national

shall

2. A sectoral final report shall be submitted to the Commis-
sion, the national IPA coordinator and the national authorising
officer at the latest 6 months after the closure of the programme.
the whole period of
The sectoral
implementation and include the last sectoral annual report.

final report shall cover

3. The sectoral
shall be examined by the TAIB
committee prior to their transmission to the Commission, the
national IPA coordinator and the national authorising officer.

reports

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4. The sectoral reports shall include the following information:

cooperation shall pursue one or more of the following broad
objectives:

(a)

(b)

(c)

quantitative and qualitative elements about the progress
made in implementing the programme, priority axes or
operations, in relation to specific, verifiable targets;

detailed information about the financial implementation of
the programme;

information on the steps taken by the operating structure
or
the TAIB committee to ensure the quality and
effectiveness of implementation, in particular:

(i)

(ii)

the monitoring and evaluation measures,
data collection arrangements;

including

a summary of any significant problems encountered
in implementing the programme and any subsequent
measures taken;

(iii)

the use made of technical assistance;

(d)

information on the activities to provide information on and
publicise the programme, in accordance with Article 62.

TITLE II

CROSS–BORDER COOPERATION COMPONENT

CHAPTER I

Object of assistance and eligibility

Article 85

Additional definitions for the cross-border cooperation
component

in addition to the definitions
For the purpose of this Title,
provided in Article 2,
'participating countries' shall mean
Member States and/or beneficiary countries which participate
in a cross–border programme under this component.

Article 86

Areas and forms of assistance

1. The cross-border cooperation component shall provide
assistance to the following:

(a)

(b)

cross–border cooperation between one or more Member
States and one or more beneficiary countries;

cross-border cooperation between two or more beneficiary
countries.

2. The Community assistance under paragraph 1 shall be
aimed at strengthening cross-border cooperation through joint
local and regional initiatives, combining both external aid and
the
economic and social cohesion objectives.

In particular,

(a)

promoting sustainable economic and social development in
the border areas;

(b) working together to address common challenges in fields
such as environment, natural and cultural heritage, public
health and the prevention of and fight against organised
crime;

(c)

ensuring efficient and secure borders;

(d)

promoting joint small scale actions involving local actors
from the border regions.

3. The objectives referred to in paragraph 2 may in particular
be pursued by:

(a)

(b)

encouraging entrepreneurship, in particular, the develop-
ment of small and medium-sized enterprises,
tourism,
culture, and cross-border trade;

encouraging and improving the joint protection and
management of natural and cultural resources as well as
the prevention of natural and technological risks;

(c)

supporting links between urban and rural areas;

(d)

(e)

reducing isolation through improved access to transport,
information and communication networks and services,
and cross-border water, waste and energy systems and
facilities;

developing collaboration,
infrastructures,
culture, tourism and education;

capacity and joint use of
in particular in sectors such as health,

(f)

promoting legal and administrative cooperation;

(g)

(h)

(i)

(j)

ensuring efficient border management,
facilitating legal
trade and passage while securing borders against smuggling,
trafficking, organised crime, communicable diseases and
illegal migration, including transit migration;

encouraging cross-border contact at regional and local
level, enhancing exchanges and deepening economic, social,
cultural and educational cooperation between local com-
munities;

promoting the integration of cross-border labour markets,
local employment initiatives, gender equality and equal
opportunities, training and social inclusion;

promoting the sharing of human resources and facilities for
research and technology development.

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4. The cross-border cooperation component may also support,
where appropriate, the participation of eligible regions of the
beneficiary countries in transnational and interregional pro-
grammes under the European territorial cooperation objective of
the Structural Funds and in multilateral sea basin programmes
the European
under Regulation (EC) No 1638/2006 of
the Council (1). The rules governing the
Parliament and of
participation of beneficiary countries in the above programmes
shall be established in the relevant financing agreements.

The list of eligible regions shall be included in the relevant cross-
border programmes referred to in Article 94.

For

3.
the purposes of participation in the programmes
referred to in Article 86(4), the eligible regions of the beneficiary
countries shall be established in the relevant programming
document, as appropriate.

Article 87

Partnership

The provisions of Article 11(1) and (2) of Council Regulation
(EC) No 1083/2006 (2) shall apply mutatis mutandis to Member
States and to beneficiary countries in the context of the cross-
border cooperation referred to in Article 86(1).

Article 88

Territorial eligibility

Article 89

Eligibility of expenditure

1.
Expenditure under this component shall be eligible if it has
actually been paid between 1 January 2007 and 31 December of
the third year following the last budgetary commitment, for
operations or part of operations implemented within Member
States, and incurred after
the financing
agreement for operations or part of operations implemented
within beneficiary countries.

the signature of

In addition to the rules set out in Article 34(3), the following

2.
expenditure shall not be eligible:

1.
For the purposes of cross-border cooperation as referred to
in Article 86(1)(a), the eligible areas for financing shall be as
follows:

(a)

interest on debt;

(a) NUTS level 3 regions or,

in the absence of NUTS
classification, equivalent areas along land borders between
the Community and the beneficiary countries;

(b) NUTS level 3 regions or,

in the absence of NUTS
classification, equivalent areas along maritime borders
between the Community and the beneficiary countries
separated, as a general rule, by a maximum of 150
taking into account potential adjustments
kilometres,
needed to ensure the coherence and continuity of
the
cooperation action.

Immediately following the entry into force of this Regulation, the
Commission shall adopt the list of the eligible regions in the
Community and in the beneficiary countries. This list shall be
valid from 1 January 2007 to 31 December 2013.

2.
For the purposes of cross-border cooperation as referred to
in Article 86(1)(b), the eligible areas for financing shall be as
follows:

(a) NUTS level 3 regions or,

in the absence of NUTS
classification, equivalent areas along land borders between
beneficiary countries;

(b) NUTS level 3 regions or,

in the absence of NUTS
classification, equivalent areas along maritime borders
between beneficiary countries separated, as a general rule,
by a maximum of 150 kilometres, taking into account
potential adjustments needed to ensure the coherence and
continuity of the cooperation action.

(b)

the purchase of land for an amount exceeding 10 % of the
eligible expenditure of the operation concerned.

3. By way of derogation from Article 34(3), the following
expenditure shall be eligible:

(a)

value added taxes, if the following conditions are fulfilled:

(i)

they are not recoverable by any means;

(ii)

it is established that they are borne by the final
beneficiary; and

(iii)

they are clearly identified in the project proposal.

(b)

charges for transnational financial transactions;

(c) where the implementation of an operation requires a
the bank

separate account or accounts to be opened,
charges for opening and administering the accounts;

(d)

(e)

legal consultancy fees, notarial fees, costs of technical or
financial experts, and accountancy or audit costs, if they are
directly linked to the co-financed operation and are
necessary for its preparation or implementation;

the cost of guarantees provided by a bank or other financial
institutions, to the extent that the guarantees are required
by national or Community legislation;

(1) OJ L 310, 9.11.2006, p. 1.
(2) OJ L 210, 31.7.2006, p. 25.

(f)

overheads, provided they are based on real costs attribut-
able to the implementation of the operation concerned.

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Flat-rates based on average costs may not exceed 25 % of
those direct costs of an operation that can affect the level of
overheads. The calculation shall be properly documented
and periodically reviewed.

4.
In addition to the technical assistance for the cross-border
programme referred to Article 94, the following expenditure
paid by public authorities in the preparation or implementation
of an operation shall be eligible:

(a)

(b)

the costs of professional services provided by a public
authority other than the final beneficiary in the preparation
or implementation of an operation;

the costs of
the provision of services relating to the
preparation and implementation of an operation provided
by a public authority that is itself the final beneficiary and
which is executing an operation for its own account
without recourse to other outside service providers if they
are additional costs and relate either to expenditure actually
and directly paid for the co-financed operation.

The public authority concerned shall either invoice the costs
referred to in point (a) of this paragraph to the final beneficiary
or certify those costs on the basis of documents of equivalent
probative value which permit the identification of real costs paid
by that authority for that operation.

The costs referred to in point (b) of this paragraph must be
certified by means of documents which permit the identification
of real costs paid by the public authority concerned for that
operation.

5. Without prejudice to the provisions of paragraphs 1 to 4,
further rules on eligibility of expenditure may be laid down by
the participating countries in the cross-border programme.

Article 90

Aid intensities and rate of Community contribution

1.
For the purposes of this component, the eligible expenditure
as referred to in Article 38(1) shall be based either on the public
expenditure or on the total expenditure, as agreed by the
participating countries and laid down in the cross-border
programme.

2. The Community contribution for cross-border programmes
at the level of priority axis shall not exceed the ceiling of 85 % of
the eligible expenditure.

3. The Community contribution for each priority axis shall not
be less than 20 % of the eligible expenditure.

5. During the period of eligibility referred to in paragraph 1 of
Article 89, in addition to the provisions of Article 34(4):

(a)

(b)

an operation may receive Community assistance under only
one cross-border programme at a time;

an operation shall not receive assistance to a value greater
than the total allocated public expenditure.

6.
For State aid to enterprises in the meaning of Article 87 of
the Treaty, public aid granted under cross-border programmes
shall observe the ceilings on State aid.

CHAPTER II

Programming

S e c t i o n 1

P r o g r a m m e s

Article 91

Preparation and approval of cross-border programmes

1. Assistance to the cross-border cooperation referred to in
Article 86(1) shall in principle be granted within the framework
of multi-annual programmes
for cross-border cooperation,
hereinafter referred to as the ‘cross-border programmes’.

2. Cross-border programmes shall be drawn up for each border
or group of borders by an appropriate grouping at NUTS level 3
in the absence of NUTS classification, equivalent
regions or,
areas.

Each cross-border programme shall be jointly drawn up by
in cooperation with the partners

3.
the participating countries,
referred to in Article 11 of Regulation (EC) No 1083/2006.

4. The participating countries shall jointly submit a proposal
for a cross-border programme to the Commission, containing all
the elements referred to in Article 94.

5. The Commission shall appraise the proposed cross-border
programme to determine whether it contains all the elements
referred to in Article 94 and whether it contributes to the goals
and priorities of the relevant multi-annual indicative planning
document(s) referred to in Article 5.

Where the Commission considers that a cross-border pro-
gramme does not contain all
the elements referred to in
Article 94 or is not in line with the goals and priorities of the
multi-annual indicative planning document(s), it may invite the
to provide all necessary additional
participating countries
information and, where appropriate, to revise the proposed
programme accordingly.

4. No operation shall benefit from a higher co-financing rate
than the one relating to the priority axis concerned.

6. The Commission shall adopt the cross-border programme
by decision.

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Article 92

Financing agreements

mentioned in Article 92 shall be concluded accordingly. Where
relevant, the provisions of Article 9(3) of the IPA Regulation shall
apply.

1.
For cross-border programmes concerning the cooperation
referred to in Article 86(1)(a), multi-annual financing agreements
shall be concluded between the Commission and each of the
beneficiary countries participating in the programme, on the
basis of the decision referred to in Article 91(6).

Where the cross-border programme is implemented under the
transitional arrangements referred to in Article 99, annual
financing agreements shall be concluded between the Commis-
sion and each of the beneficiary countries participating in the
programme. Each such financing agreement shall cover the
Community contribution for the beneficiary country and the
year concerned, as specified in the financing plan referred to in
Article 99(2).

2.
For cross-border programmes concerning the cooperation
referred to in Article 86(1)(b), annual financing agreements shall
be concluded between the Commission and each of
the
beneficiary countries participating in the programme on the
basis of the decision referred to in Article 91(6). Each such
financing agreement shall cover the Community contribution for
the beneficiary country and the year concerned, as specified in
the financing plan referred to in Article 94(2),
second
subparagraph.

Article 93

Revision of cross-border programmes

1. At the initiative of the participating countries or that of the
Commission in agreement with the participating countries,
cross-border programmes may be re-examined and, if necessary,
the remainder of the programme revised, in one or more of the
following cases:

(a)

in order to update the financing plan, according to the
revision of the multi-annual indicative financial framework
referred to in Article 5 of the IPA Regulation;

(b)

following significant socio-economic changes;

(c)

(d)

in order to take greater or different account of major
changes in Community, national or regional priorities;

in the light of the evaluation referred to in Article 109 or
Article 141;

(e)

following implementation difficulties;

(f)

following the termination of
transitional arrangements
referred to in Article 100 or any other modification of the
including the transition in the
implementing provisions,
beneficiary countries from centralised to decentralised
management.

Article 94

Content of cross-border programmes

Each cross-border programme shall contain the following

1.
information:

(a)

(b)

(c)

(d)

(e)

(f)

a list of the eligible areas covered by the programme in
accordance with Article 88, including the flexibility areas as
referred to in Article 97;

an analysis of the situation of the eligible cooperation areas
in terms of strengths and weaknesses and the medium term
needs and objective deriving from that analysis;

a description of the cooperation strategy and the priorities
and measures chosen for assistance, having regard to the
relevant multi-annual indicative planning document(s) of
the beneficiary country(ies) and other relevant national and
regional strategic documents, as well as the results from the
in
ex ante evaluation referred to in Article 109 or
Article 141;

information on the priority axes, the related measures and
their specific targets. Those targets shall be quantified using
indicators for output and results,
a limited number of
taking into account
the proportionality principle. The
indicators shall make it possible to measure the progress in
relation to the baseline situation and the effectiveness of the
targets implementing the priorities;

the rules on eligibility of expenditure referred to in
Article 89;

a specific technical assistance priority axis covering the
preparatory, management, monitoring, evaluation,
infor-
mation and control activities related to the implementation
of the programme, together with activities to reinforce the
administrative capacity for implementing the programme,
up to a maximum of 10 % of the Community contribution
allocated to the programme. In exceptional cases, as agreed
by the Commission and the participating countries, an
amount above 10 % of the Community contribution for the
programme may be allocated to this priority;

(g)

information on complementarity with measures financed
by other IPA components or other Community instru-
ments, where relevant;

(h)

the implementing provisions for the cross-border pro-
gramme, including:

the revised cross-border
2. The Commission shall adopt
programme by decision and a new financing agreement(s) as

(i)

designation by the participating countries of
the
structures and authorities stipulated in Article 102
and, where applicable, Article 139;

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(ii)

a description of
systems;

the monitoring and evaluation

(iii) as applicable, information about the competent body
for receiving the payments made by the Commission
and the body or bodies responsible for making
payments to the beneficiaries;

(iv)

as applicable, a definition of the procedures for the
mobilisation and circulation of
flows in
order to ensure their transparency;

financial

(v)

the elements aimed at ensuring the publicity and the
information of
cross-border programme as
referred to in Article 62;

the

2. Operations selected for cross-border programmes shall
include final beneficiaries
two participating
countries which shall cooperate in at least one of the following
ways for each operation: joint development, joint implementa-
tion, joint staffing and joint financing.

from at

least

For

cross-border programmes

3.
concerning cooperation
referred to under Article 86(1)(a), operations selected shall
include beneficiaries for at least one of the participating Member
States and one of the participating beneficiary countries.

4. The selected operations
fulfilling the above-mentioned
conditions may be implemented in a single country provided
that they deliver a clear cross-border benefit.

(vi)

as applicable, a description of the procedures agreed
between the Commission and the participating
countries for the exchange of computerised data.

Each programme shall establish eligibility rules for the
5.
selection of operations which prevent a duplication of efforts
among different cross-border programmes, being under the IPA
or other Community instruments.

Furthermore,

2.
the cross-border programmes concerning
cooperation referred to under Article 86(1)(a), shall contain a
single financing plan based on the multi-annual
indicative
framework with no breakdown by participating
financial
countries, comprising a table specifying for each year covered
by the multi-annual indicative financial framework and for each
priority axis, the amount of the Community contribution and its
rate, as well as the amount financed by the national counterparts.

The cross-border programmes concerning cooperation referred
to under Article 86(1)(b) shall contain a financing plan based on
the multi-annual
indicative financial framework comprising a
table for each participating country specifying for each year
covered by the multi-annual indicative financial framework and
for each priority axis, the amount of the Community contribu-
tion and its rate, as well as, where appropriate, the amount
financed by the national counterparts.

S e c t i o n 2

O p e r a t i o n s

Article 95

Selection of operations

1. Cross-border programmes shall
finance joint operations
which have been jointly selected by the participating countries
through a single call for proposals covering the whole eligible
area.

Participating countries may also identify joint operations outside
calls for proposals. In that event, the joint operation shall be
specifically mentioned in the cross-border programme or, if it is
coherent with the priority or measures of
the cross-border
programme, shall be identified any time after the adoption of the
programme in a decision taken by the joint monitoring
committee referred to in Article 110 or in Article 142.

Article 96

Responsibilities of the lead beneficiary and the other
beneficiaries

1.
For cross-border programmes concerning the cooperation
referred to under Article 86(1)(a), the final beneficiaries of an
operation shall appoint a lead beneficiary among themselves
prior to the submission of the proposal for the operation. The
lead beneficiary shall assume the following responsibilities:

(a)

it shall lay down the arrangements for its relations with the
final beneficiaries participating in the operation in an
agreement comprising,
inter alia, provisions guaranteeing
the sound financial management of the funds allocated to
the operation, including the arrangements for recovering
amounts unduly paid;

(b)

it shall be responsible for ensuring the implementation of
the entire operation;

(c)

(d)

it shall be responsible for transferring the Community
contribution to the final beneficiaries participating in the
operation;

it shall ensure that the expenditure presented by the final
beneficiaries participating in the operation has been paid
for
implementing the operation and
corresponds to the activities agreed between the final
beneficiaries participating in the operation;

the purpose of

(e)

it shall verify that the expenditure presented by the final
beneficiaries participating in the operation has been
validated by the controllers referred to in Article 108.

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For

cross-border programmes
2.
referred to under Article 86(1)(a)
transitional arrangements laid down in Article 99:

concerning cooperation
the
implemented under

(a)

(b)

the final beneficiaries of an operation in the participating
Member States shall appoint a lead beneficiary among
themselves prior to the submission of the proposal for the
operation. The lead beneficiary shall assume the responsi-
bilities under points (a) to (e) of paragraph 1 for the part of
the operation taking place in the Member States;

the final beneficiaries of an operation in each participating
beneficiary country shall appoint a lead beneficiary among
themselves prior to the submission of the proposal for the
operation. The lead beneficiary shall assume the responsi-
bilities listed under points (a) to (d) of paragraph 1 for the
part of the operation taking place in the respective country.

The lead beneficiaries of the participating Member States and
beneficiary countries shall ensure a close coordination of the
implementation of the operation.

For

cross-border programmes

3.
concerning cooperation
referred to under Article 86(1)(b), the final beneficiaries of an
operation in each participating beneficiary country shall appoint
a lead beneficiary among themselves prior to the submission of
the proposal for an operation. The lead beneficiary shall assume
the responsibilities listed under points (a) to (d) of paragraph 1
for the part of the operation taking place in the respective
country.

The lead beneficiaries of the participating beneficiary countries
shall ensure a close coordination of the implementation of the
operation.

4.
Each final beneficiary participating in the operation is
responsible for irregularities in the expenditure which it has
declared.

Article 97

Special conditions governing the location of operations

the amount of

1.
In duly justified cases, Community funding may finance
expenditure incurred in implementing operations or parts of
operations up to a limit of 20 % of
the
Community contribution to the cross-border programme in
NUTS level 3 regions or, in the absence of NUTS classification,
equivalent areas, adjacent
that
In exceptional cases as agreed between the
programme.
Commission and the participating countries,
this flexibility
may be extended to the NUTS level 2 regions or, in the absence
of NUTS classification, equivalent areas in which the eligible
areas are located.

eligible areas

to the

for

The selection of operations outside the eligible area as referred to
under paragraph 1 shall be confirmed:

(a)

(b)

(c)

by the managing authority referred to in Article 102 for
programmes or part of programmes implemented in shared
management with Member States;

by the operating structures referred to in Article 28 for
programmes or part of programmes implemented in
beneficiary countries under decentralised management;

by the Commission for programmes or part of pro-
implemented in beneficiary countries under
grammes
centralised management.

CHAPTER III

Implementation

S e c t i o n 1

G e n e r a l p r o v i s i o n s

Article 98

Implementing modalities

1.
For cross-border cooperation referred to under Article 86(1)
(a), the programmes shall in principle be implemented through
shared management with Member States by the authorities
referred to in Article 102 bearing responsibility for
the
implementation of the cross-border programme in the partici-
pating Member States and beneficiary countries.

To this end,
the Member States and beneficiary countries
participating in a cross-border programme must be able to
implement the whole of the programme in the entire eligible
territory according to the provisions referred to in Section 2 of
this Chapter.

to the adoption of

Prior
the cross-border programme in
accordance with Article 91(6), the Commission may request
from the participating countries any information it deems
necessary to ascertain the capacity of the authorities referred to
in Article 102 to comply with the obligations set under Section 2
of this Chapter.

Where Member States and beneficiary countries participating in
a cross-border programme are not yet ready to implement the
entire programme according to these modalities, the transitional
arrangements laid down in Article 99 shall apply.

At project level, in exceptional cases, expenditure incurred by
partners located outside the programme area as defined in the
first sub-paragraph may be eligible,
if the project could only
achieve its objectives with that partner's participation.

2. The participating countries of each programme shall ensure
the legality and regularity of these expenditures.

2.
For cross-border cooperation referred to under Article 86(1)
(b), the programmes shall be implemented under centralised or
decentralised management in accordance with Article 53 of
Regulation (EC, Euratom) No 1605/2002, with respectively the
the national authorising officer and the
Commission or
operating structures
in each participating country bearing
responsibility for the implementation of the programme in the
respective country.

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In this context, the cross-border programmes shall be imple-
mented according to the provisions referred to in Section 3 of
this Chapter.

For cross-border cooperation referred to under Article 86(1)(b),
for all beneficiary countries the objective shall be decentralised
management.

paragraph 1 of Article 98, they shall submit to the Commission a
include a single
revised cross-border programme which shall
financing plan based on the multi-annual
indicative financial
framework for the following three years, together with a revised
description of the management and control systems accom-
panied by a revised report and opinion in accordance with
Article 117.

Article 99

Transitional arrangements

1.
For cross-border cooperation referred to under Article 86(1)
(a) where the participating countries are not yet ready to
implement
the entire cross-border programme in shared
management with Member States according to the provisions
laid down in Section 2 of this Chapter, the programme shall be
implemented according to the transitional arrangements laid
down in this Article.

2. The financing plan included in the cross-border programme
referred to in the first subparagraph of Article 94(2) shall
contain:

(a)

a table covering all participating Member States, and

The Commission shall re-examine the cross-border programme
and appraise the documents submitted in accordance with
Article 117. It shall decide whether to adopt a new decision
amending the programme so that it may be implemented under
the arrangements referred to in Article 98(1).

2. The budgetary commitments for the part of the programme
concerning the participating beneficiary countries which were
taken during the transitional arrangements shall continue to be
implemented according to the provisions
referred to in
Article 99.

S e c t i o n 2

C r o s s - b o r d e r p r o g r a m m e s b e t w e e n
b e n e f i c i a r y c o u n t r i e s a n d M e m b e r S t a t e s

(b)

a table for each of the participating beneficiary countries.

S u b - s e c t i o n 1

3. The part of the cross-border programme concerning the
participating Member States shall be implemented according to
the provisions referred to in Section 2 of this Chapter.

The part of
the cross-border programme concerning the
participating beneficiary countries shall be implemented accord-
ing to the provisions referred to in Section 3 of this Chapter, with
the exception of Article 142. The provisions concerning the joint
monitoring committee of Article 110 shall apply.

4. The implementing provisions contained in the cross-border
programme as referred to in Article 94(1)(h) shall differentiate
between the modalities applying to participating Member States
and those applying to participating beneficiary countries.

Following the selection of joint operations in accordance
5.
with the provisions of Article 95, the managing authority shall
issue a grant to the lead beneficiary of the participating Member
States.

In the event of decentralised management,
the operating
structures in the participating beneficiary countries shall issue
grants to the lead beneficiaries of their respective countries.

In the event of centralised management, the Commission shall
issue a grant
to the lead beneficiary in each participating
beneficiary country.

Article 100

Termination of transitional arrangements

M a n a g e m e n t a n d c o n t r o l s y s t e m s

Article 101

General principles

The management and control systems of cross-border pro-
grammes set up by participating countries shall provide for:

(a)

(b)

(c)

(d)

(e)

the definition of the functions of the bodies concerned in
management and control and the allocation of functions
within each body;

compliance with the principle of separation of functions
between and within such bodies;

procedures for ensuring the correctness and regularity of
expenditure declared under the cross-border programme;

reliable accounting, monitoring and financial reporting
systems in computerised form;

a system of reporting and monitoring where the respon-
sible body entrusts the execution of tasks to another body;

(f)

arrangements for auditing the functioning of the systems;

(g)

systems and procedures to ensure an adequate audit trail;

1. When the participating countries are ready to switch to
implementation through shared management in accordance with

(h)

reporting and monitoring procedures for irregularities and
for the recovery of amounts unduly paid.

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Article 102

Designation of authorities

with the principle of sound financial management and in
particular for:

1. The countries participating in a cross-border programme
shall appoint a single managing authority, a single certifying
authority and a single audit authority, all to be located in one of
the Member States participating in the cross-border programme.
The certifying authority shall receive the payments made by the
Commission and, as a general rule, shall make the payments to
the lead beneficiary, in accordance with the provisions laid down
in Article 104.

The managing authority, after consultation with the countries
participating in the programme, shall set up a joint technical
secretariat. The joint
the
managing authority and the joint monitoring committee referred
to in Article 110 and, where appropriate, the audit authority and
the certifying authority, in carrying out their respective duties.

shall assist

secretariat

technical

The joint technical secretariat may have antennae established in
other participating countries.

2. The audit authority for the cross-border programme shall be
assisted by a group of auditors comprising a representative of
each country participating in the cross-border programme
carrying out the duties provided for in Article 105. The group
of auditors shall be set up within three months of the decision
approving the cross-border programme at the latest. It shall draw
up its own rules of procedure. It shall be chaired by the audit
authority for the cross-border programme.

The participating countries may decide by unanimity that the
audit authority is authorised to carry out directly the duties
provide for in Article 105 in the whole of the territory covered
by the programme without the need for a group of auditors as
defined in the first subparagraph.

(a)

(b)

(c)

(d)

(e)

ensuring that operations are selected for
funding in
accordance with the criteria applicable to the cross-border
programme and that they comply with applicable Com-
munity and national
their
implementation period;

the whole of

rules

for

ensuring that there is a system for recording and storing in
computerised form accounting records of each operation
under the cross-border programme and that the data on
financial management,
implementation necessary
monitoring, verifications, audits and evaluation are col-
lected;

for

verifying the regularity of expenditure. To this end, it shall
satisfy itself that the expenditure of each final beneficiary
participating in an operation has been validated by the
controller referred in Article 108;

ensuring that the operations are implemented according to
the public procurement provisions referred to in Arti-
cle 121;

ensuring that final beneficiaries and other bodies involved
in the implementation of operations maintain either a
separate accounting system or an adequate accounting code
for all
transactions relating to the operation without
prejudice to national accounting rules;

(f)

ensuring that the evaluations of cross-border programmes
are carried out in accordance with Article 109;

The auditors shall be independent of the control system referred
to in Article 108.

(g)

to ensure that all documents
setting up procedures
regarding expenditure and audits required to ensure an
adequate audit
trail are held in accordance with the
requirements of Article 134;

Each country participating in the cross-border programme
3.
shall appoint representatives to sit on the joint monitoring
committee referred to in Article 110.

4. Where one or more of the tasks of a managing authority or
certifying authority are performed by an intermediate body, the
relevant arrangements shall be formally recorded in writing.

this Regulation concerning the managing
The provisions of
authority, the audit authority and the certifying authority shall
apply to that intermediate body.

Article 103

Functions of the managing authority

(h)

ensuring that the certifying authority receives all necessary
information on the procedures and verifications carried out
in relation to expenditure for the purpose of certification;

(i)

(j)

guiding the work of the joint monitoring committee and
providing it with the documents required to permit the
quality of the implementation of the cross-border pro-
gramme to be monitored in the light of its specific goals;

drawing up and, after approval by the joint monitoring
committee, submitting to the Commission the annual and
final reports on implementation referred to in Article 112;

1. The managing authority shall be responsible for managing
and implementing the cross-border programme in accordance

(k)

ensuring compliance with the information and publicity
requirements laid down in Article 62.

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2. The managing authority shall lay down the implementing
arrangements for each operation, where appropriate in agree-
ment with the lead beneficiary.

cancellation of all or part of the public contribution
for an operation;

Article 104

Functions of the certifying authority

(ii)

the amounts recovered which have been deducted
from these statements of expenditure;

The certifying authority of a cross-border programme shall be
responsible in particular for:

(iii) a statement of amounts

to be recovered as at
31 December of the preceding year classified by the
year in which recovery orders were issued.

(a)

drawing up and submitting to the Commission certified
statements of expenditure and applications for payment;

Article 105

(b)

certifying that:

Functions of the audit authority

the statement of expenditure is accurate, results from
reliable accounting systems and is based on verifiable
supporting documents;

1. The audit authority of a cross-border programme shall be
functionally independent of the managing authority and the
certifying authority and shall be responsible in particular for:

the expenditure declared complies with applicable
Community and national rules and has been incurred
funding in
in respect of operations selected for
accordance with the
to the
programme and complying with Community and
national rules;

applicable

criteria

(c)

the purposes of certification that

ensuring for
it has
received adequate information from the managing author-
ity on the procedures and verifications carried out
in
relation to expenditure included in statements of expendi-
ture;

(a)

(b)

(c)

ensuring that audits are carried out to verify the effective
functioning of the management and control system of the
cross-border programme;

ensuring that audits are carried out on operations on the
basis of an appropriate sample to verify expenditure
declared;

by 31 December each year from the year following the
adoption of the cross-border programme to the fourth year
following the last budgetary commitment:

(i)

(ii)

(d)

taking account for certification purposes of the results of all
audits carried out by or under the responsibility of the audit
authority;

(i)

(e) maintaining accounting records in computerised form of
expenditure declared to the Commission. The managing
authorities and the audit authorities shall have access to this
information. At the written request of the Commission, the
certifying authority shall provide the Commission with this
information, within ten working days of receipt of the
request or any other agreed period for the purpose of
carrying out documentary and on the spot checks;

(f)

keeping an account of amounts recoverable and of amounts
withdrawn following cancellation of all or part of
the
contribution for an operation. Amounts recovered shall be
repaid to the general budget of the European Union prior to
the closure of the cross-border programme by deducting
them from the next statement of expenditure;

(g)

sending the Commission, by 28 February each year, a
statement, identifying the following for each priority axis of
the cross-border programme:

(i)

the amounts withdrawn from statements of expendi-
ture submitted during the preceding year following

submitting to the Commission an annual control
report setting out the findings of the audits carried out
during the previous twelve month period ending on
30 June of the year concerned and reporting any
shortcomings found in the systems for the manage-
ment and control of the programme. The first report,
to be submitted by 31 December of the year following
the adoption of the programme, shall cover the period
from 1 January of the year of adoption to 30 June of
the year following the adoption of the programme.
The information concerning the audits carried out
after 1 July of
the fourth year following the last
budgetary commitment shall be included in the final
control report supporting the closure declaration
referred to in point (d) of this paragraph. This report
shall be based on the systems audits and audits of
operations carried out under points (a) and (b) of this
paragraph;

(ii)

issuing an opinion, on the basis of the controls and
audits that have been carried out under its responsi-
bility, as to whether the management and control
system functions effectively, so as to provide a
reasonable assurance that statements of expenditure
presented to the Commission are correct and as a
consequence reasonable assurance that the underlying
transactions are legal and regular.

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When a common system applies to several IPA cross-border
programmes, the information referred to in point (i) may be
grouped in a single report, and the opinion and declaration
issued under point
the cross-border
programmes concerned;

(ii) may cover all

(d)

in respect of each operation, the technical
it contains,
specifications and financing plan, documents concerning
the grant approval, documents relating to public procure-
ment procedures, progress reports and reports on verifica-
tions and audits carried out.

(d)

submitting to the Commission at the latest by 31 December
of the fifth year following the last budgetary commitment a
closure declaration assessing the validity of the application
for payment of
the final balance and the legality and
regularity of the underlying transactions covered by the
final statement of expenditure, which shall be supported by
a final control report. This closure declaration shall be
based on all the audit work carried out by or under the
responsibility of the audit authority.

Article 107

Audits of operations

1. The audits referred to in Article 105(1)(b) shall be carried
out each twelve-month period from 1 July of the year following
the adoption of the cross-border programme on a sample of
operations selected by a method established or approved by the
audit authority in agreement with the Commission.

2. The audit authority shall ensure that the audit work takes
account of internationally accepted audit standards.

The audits shall be carried out on the spot on the basis of
documentation and records held by the final beneficiary.

3. Where the audits and controls referred to in paragraph 1
points (a) and (b) are carried out by a body other than the audit
authority, the audit authority shall ensure that such bodies have
the necessary functional independence.

The participating countries shall ensure the appropriate reparti-
tion of those audits over the implementation period.

4.
If weaknesses in management or control systems or the level
of irregular expenditure detected do not allow the provision of an
the annual opinion referred to in
unqualified opinion for
paragraph 1 point (c) or in the closure declaration referred to in
paragraph 1 point (d), the audit authority shall give the reasons
and estimate the scale of the problem and its financial impact.

Article 106

Audit trail

2. The audits shall verify that the following conditions are
fulfilled:

(a)

the operation meets the selection criteria for the cross-
border programme and has been implemented in accord-
ance with the approval decision and fulfils any applicable
conditions concerning its functionality and use or the
objectives to be attained;

(b)

the expenditure declared corresponds to the accounting
records and supporting documents held by the final
beneficiary;

For the purposes of the audits referred to in Article 105(1)(b), an
audit trail shall be considered adequate where, for the cross-
border programme concerned, it complies with the following
criteria:

(c)

the expenditure declared by the final beneficiary is in
compliance with Community and national rules;

(a)

it permits the aggregate amounts certified to the Commis-
sion to be reconciled with the detailed accounting records
and supporting documents held by the certifying authority,
managing authority,
intermediate bodies and lead bene-
ficiaries as regards operations co-financed under the cross-
border programme;

(b)

it permits verification of payment of the public contribu-
tion to the lead beneficiary and each final beneficiary;

(d)

the public contribution has been paid to the final
beneficiary in accordance with Article 40(9).

3. Where problems detected appear to be systemic in nature
and therefore entail a risk for other operations under the cross-
border programme, the audit authority shall ensure that further
examination is carried out,
including additional audits where
necessary, to establish the scale of such problems. The necessary
preventive and corrective action shall be taken by the relevant
authorities.

(c)

it permits verification of application of the selection criteria
established by the joint monitoring committee for the
cross-border programme;

4. No less than 5 % of the total expenditure declared by lead
beneficiaries and certified to the Commission in the final
statement of expenditure shall be audited in accordance with
paragraph 2 before the closure of a cross-border programme.

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Article 108

Control system

the products and services co-financed,

In order to validate the expenditure, each participating
1.
country shall set up a control system making it possible to verify
the delivery of
the
soundness of the expenditure declared for operations or parts of
operations implemented on its territory, and the compliance of
such expenditure and of related operations, or parts of those
operations, with Community, when relevant, and its national
rules.

3. During the programming period, participating countries
shall carry out evaluations linked to the monitoring of the cross-
border programme in particular where that monitoring reveals a
significant departure from the goals initially set or where
proposals are made for the revision of cross-border programme.
The results shall be sent to the joint monitoring committee for
the cross-border programme and to the Commission.

Where the results are conducive to a revision of the reminder of
they shall be
the programme as referred to in Article 93,
discussed within the IPA Committee at
the
submission of the revised cross-border programme.

the time of

For this purpose each participating country shall designate the
controllers responsible for verifying the legality and regularity of
the expenditure declared by each final beneficiary participating in
the operation. Participating countries may decide to designate a
single controller for the whole programme area.

Evaluations shall be carried out by experts or bodies,
4.
internal or external, functionally independent of the certifying
and audit authorities referred to in Article 102. The results shall
be published according to the applicable rules on access to
documents.

the delivery of

Where the verification of
the products and
services co-financed can be carried out only in respect of the
entire operation, such verification shall be performed by the
controller of the participating country where the lead beneficiary
is located or by the managing authority.

2.
Each participating country shall ensure that the expenditure
can be validated by the controllers within a period of three
months from the date of its submission by the lead beneficiary to
the controllers.

S u b - s e c t i o n 2

E v a l u a t i o n a n d m o n i t o r i n g

Article 109

Evaluation

Evaluation shall aim to improve the quality, effectiveness and
1.
consistency of the assistance from the Community funds and the
strategy and implementation of cross-border programmes while
taking account of the objective of sustainable development and
of the relevant Community legislation concerning environmental
impact and strategic environmental assessment.

Participating countries shall

2.
evaluation covering each cross-border programme.

jointly carry out an ex ante

cross-border programmes

Ex ante evaluations shall aim to optimise the allocation of
budgetary resources under
and
improve programming quality. They shall identify and appraise
the disparities, gaps and potential for development, the goal to be
achieved,
the
the results expected,
coherence with the relevant multi-annual
indicative planning
documents(s), the Community value-added, the lessons drawn
the
from the previous programming and the quality of
procedures for
implementation, monitoring, evaluation and
financial management.

the quantified targets,

Evaluation shall be financed from the budget for technical

5.
assistance referred to in Article 94(1)(f).

Article 110

Joint monitoring committee

1. The participating countries shall set up a joint monitoring
committee for each cross-border programme within three
months from the date of the notification to the participating
countries of
the decision approving the cross-border pro-
gramme.

The joint monitoring committees shall meet at least twice a year,
at
the
Commission.

the participating countries or of

the initiative of

In the event of a cross-border programme implemented
according to the transitional arrangements
referred to in
Article 99, for the beneficiary countries where the assistance is
implemented on a decentralised basis, the joint monitoring
committee fulfils the role of the sectoral monitoring committee
referred to in Article 59.

2.
Each joint monitoring committee shall draw up its rules of
procedure within the institutional, legal and financial framework
of the participating countries and in compliance with a joint
monitoring committee mandate set out by the Commission, in
order to exercise its missions in accordance with the present
Regulation. It shall adopt them in agreement with the managing
in the case of a programme implemented
authority and,
according to the transitional arrangements
referred to in
Article 99, in agreement with the national IPA coordinator(s)
of the participating beneficiary country(ies).

3. The joint monitoring committee shall be chaired by a
the participating countries or the
representative of one of
managing authority.

The ex ante evaluation shall be annexed to the cross-border
programme.

In deciding its composition in accordance with Article 102(3),
the
the participating countries shall
provisions of Article 87.

take due account of

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4. The Commission shall participate in the work of the joint
monitoring committee in an advisory capacity. A representative
of the European Investment Bank and the European Investment
Fund may participate in an advisory capacity for those cross-
border programmes to which the European Investment Bank or
the European Investment Fund makes a contribution.

5. The joint monitoring committee shall satisfy itself as to the
effectiveness and quality of the implementation of the cross-
border programme, in accordance with the following provisions:

Article 111

Arrangements for monitoring

1. The managing authority and the joint monitoring commit-
tee shall ensure the quality of the implementation of the cross-
border programme.

2. The managing authority and the joint monitoring commit-
tee shall carry out monitoring by reference to financial
indicators, as well as the indicators referred to in Article 94(1)(d).

(a)

(b)

(c)

(d)

(e)

(f)

(g)

it shall consider and approve the criteria for selecting the
operations financed by the cross-border programme and
approve any revision of those criteria in accordance with
programming needs;

3. Data exchange between the Commission and the authorities
referred to in Article 102 for the purpose of monitoring shall be
carried out electronically.

it shall periodically review progress made towards achieving
the specific targets of the cross-border programme on the
basis of documents submitted by the managing authority
and, in the case of a programmes implemented according to
the transitional arrangements referred to in Article 99, by
the operating structures in the participating beneficiary
countries;

it shall examine the results of implementation, particularly
achievement of the targets set for each priority axis and the
evaluations referred to in Article 57(4) and Article 109;

it shall consider and approve the annual and final reports
on implementation referred to in Article 112 and, in the
case of a programme implemented according to the
transitional arrangements referred to in Article 99, it shall
examine the reports referred to in Article 144;

it shall be informed of the annual control report, referred to
in Article 105(1)(c) and, as applicable in the case of a
programme implemented according to the transitional
arrangements referred to in Article 99, of the annual audit
activity report(s) referred to in Article 29(2)(b) first indent,
and of any relevant comments the Commission may make
after examining those reports;

it shall be responsible for selecting operations but may
delegate this function to a steering committee reporting to
it;

it may propose any revision or examination of the cross-
border programme likely to make possible the attainment
of the objectives referred to in Article 86(2) or to improve
its management, including its financial management;

Article 112

Annual report and final report on implementation

1. By 30 June each year at the latest, the managing authority
shall submit
to the Commission an annual report on the
implementation of the cross-border programme approved by the
joint monitoring committee. The first annual report shall be
submitted in the second year following the adoption of the
programme.

The managing authority shall submit a final report on the
implementation of the cross border programme by 31 December
of the fourth year following the last budgetary commitment at
the latest.

2. The reports referred to in paragraph 1 shall
following information:

include the

(a)

(b)

the progress made in implementing the cross-border
programme and priorities in relation to their specific,
verifiable targets, with a quantification, wherever and
whenever they lend themselves to quantification, using
the indicators referred to in Article 94(1)(d) at the level of
the priority axis;

the financial
gramme, detailing for each priority axis:

implementation of

the cross-border pro-

(i)

(ii)

the expenditure paid out by the beneficiary included
in application for payments sent to the managing
authority and the corresponding public contribution;

the total payments received from the Commission and
quantification of the financial indicators referred to in
Article 111(2); and

(h)

it shall consider and approve any proposal to amend the
content of the cross-border programme.

(iii)

the expenditure paid out by the body responsible for
making payments to the beneficiaries;

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(c)

the steps taken by the managing authority or the joint
monitoring committee to ensure the quality and effective-
ness of implementation, in particular:

Any aspects of the operation of the management and control
system raised in the last annual control report, referred to in
Article 105(1)(c)(i), may also be examined.

(i) monitoring and evaluation measures, including data

collection arrangements;

(ii)

a summary of any significant problems encountered
in implementing the cross-border programme and any
measures taken, including the response to comments
made under Article 113 where appropriate;

(iii)

the use made of technical assistance;

the measures taken to provide information on and publicise
the cross-border programme;

information about significant problems relating to the
compliance with Community rules which have been
encountered in the implementation of the cross-border
programme and the measures taken to deal with them;

Following the examination referred to in paragraph 1, the
2.
Commission may make comments to the participating countries
and the managing authority, which shall
inform the joint
monitoring committee thereof. The participating countries shall
inform the Commission of the action taken in response to those
comments.

S u b - s e c t i o n 3

R e s p o n s i b i l i t y o f p a r t i c i p a t i n g c o u n t r i e s a n d o f
t h e C o m m i s s i o n

Article 114

Management and control

1.
Participating countries shall be responsible for the manage-
ment and control of cross-border programmes in particular
through the following measures:

the use made of assistance which,
following financial
corrections as referred to in Article 138, has been made
available to the managing authority or to another public
authority during the period of implementation of the cross-
border programme;

(a)

(b)

in case of programmes implemented under the transitional
arrangements referred to in Article 99, the progress made
towards the implementation under shared management in
the whole territory of the cross-border programme.

ensuring that management and control systems for cross-
border programmes are set up in accordance with
Articles 101 and 105 and function effectively;

preventing, detecting and correcting irregularities and
recovering amounts unduly paid together with interest on
late payments where appropriate. They shall notify these to
the Commission, and keep the Commission informed of
the progress of administrative and legal proceedings.

(d)

(e)

(f)

(g)

Where appropriate, the information referred to in points (a) to
(g) of this paragraph may be provided in summary form.

Information referred to in points (c) and (f) need not be included
if there has been no significant modification since the previous
report.

3. The Commission shall inform the participating countries of
its opinion on the content of an annual report on implementa-
tion submitted by the managing authority within three months
from the date of receipt. For the final report on a cross-border
programme, the time limit shall be a maximum of five months
from the date of receipt of the report. If the Commission does
not respond within the time limit laid down, the report shall be
deemed to be accepted.

Article 113

Annual examination of programmes

2. Without prejudice to the participating countries' responsi-
bility for detecting and correcting irregularities
and for
recovering amounts unduly paid, the certifying authority shall
ensure that any amount paid as a result of an irregularity is
recovered from the lead beneficiary. The final beneficiaries shall
repay the lead beneficiary the amounts unduly paid in
accordance with the agreement existing between them. If the
lead beneficiary does not succeed in securing repayment from a
final beneficiary, the participating country on whose territory the
relevant final beneficiary is located shall reimburse the certifying
authority the amount unduly paid to that final beneficiary.

Article 115

Description of management and control systems

1. Before the payment of
the pre-financing referred to in
Article 128, the Member State on whose territory the managing
authority is located shall submit to the Commission a description
of the management and control systems, covering in particular
the organisation and procedures of:

1.
Every year, when the annual report on implementation
referred to in Article 112 is submitted, the Commission and the
managing authority shall examine the progress made in
implementing the cross-border programme, the principal results
achieved over the previous year, the financial implementation
and other factors with a view to improving implementation.

(a)

(b)

the managing and certifying authorities and intermediate
bodies referred to in Article 102;

the audit authority and any other bodies carrying out audits
under its responsibility as referred to in Article 102.

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2. As regards the managing authority, the certifying authority
and each intermediate body, the Member State referred to in
paragraph 1 shall provide the Commission with the following
information:

(a)

the description of the tasks entrusted to them;

(b)

the organisation chart of the body, the allocation of tasks
between or within their departments, and the indicative
number of posts allocated;

(c)

the procedures for selecting and approving operations;

the procedures by which beneficiaries' applications for
reimbursement are received, verified and validated, and the
procedures by which payments
are
authorised, executed and entered in the accounts;

to beneficiaries

the procedures by which statements of expenditure are
drawn up, certified and submitted to the Commission;

reference to the written procedures established for the
purposes of points (c), (d) and (e);

of the systems set up and giving an opinion on their compliance
with Articles 101 and 105. If the opinion contains reservations,
the report shall indicate the seriousness of the shortcomings. The
participating country concerned shall inform the Commission of
the corrective measures to be taken and the timetable for their
implementation, and subsequently provide confirmation of the
implementation of the measures and the withdrawal of the
corresponding reservations.

2. The report and the opinion referred to in paragraph 1 are
established by the audit authority or by a public or private body
functionally independent of
the managing and certifying
authorities which shall carry out its work taking account of
internationally accepted audit standards.

3. Where the management and control system concerned is
essentially the same as that in place for assistance approved
under Regulation (EC) No 1083/2006, account may be taken of
the results of audits carried out by national and Community
auditors
the purposes of
establishing the report and opinion referred to in paragraph 1.

in relation to that

system for

eligibility rules laid down by participating countries and
applicable to the cross-border programme;

4. The report referred to in paragraph 1 shall be deemed to be
accepted, and the pre-financing payment shall be made, in the
following circumstances:

the system for keeping the detailed accounting records of
operations under the cross-border programme.

3. As regards the audit authority and other bodies, the Member
State referred to in paragraph 1 shall provide to the Commission
the following information:

the description of
interrelationship;

their

respective

tasks

and their

the organisation chart of the audit authority and of each of
the bodies involved in carrying out audits concerning the
cross-border programme, describing how their indepen-
dence is ensured, the indicative number of posts attributed
and the qualifications of the staff;

(a) within two months of the date of receipt of the report when
the opinion referred to above is without reservations and in
the absence of observations by the Commission;

(b)

if the opinion contains reservations, upon confirmation to
the Commission that corrective measures concerning key
elements of the systems have been implemented, and the
corresponding reservations withdrawn, and in the absence
of observations by the Commission within two months of
the date of confirmation.

Article 117

the procedures for monitoring the implementation of
recommendations and corrective measures resulting from
audit reports;

Requirements at change over from transitional
arrangements

the procedure, where appropriate, for the supervision of the
work of bodies involved in carrying out audits concerning
the cross-border programme by the audit authority;

(e)

the procedures for the preparation of the annual control
report and the closure declarations.

In the case of a cross-border programme implemented
1.
according to the transitional arrangements
referred to in
Article 99, when the participating countries are ready to switch
to implementing modalities referred to in Article 98(1), they
shall submit to the Commission a revised description of the
management and control systems, accompanied by a revised
report and opinion in accordance with Article 116(1).

Article 116

Assessment of management and control systems

1. The description referred to in Article 115 shall be
accompanied by a report setting out the results of an assessment

2. Where the opinion contains reservations, the decision from
the Commission modifying the programme may only be taken if
the Commission has received confirmation that corrective
measures concerning key elements of the systems have been
implemented and the corresponding reservation withdrawn.

(d)

(e)

(f)

(g)

(h)

(a)

(b)

(c)

(d)

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Article 118

Article 120

Conclusion and communication of arrangements between
participating countries

In addition to the information listed in Article 115(2) and (3),
the description of the management and control system shall
include the arrangements agreed between participating countries
to allow the managing authority, the certifying authority and the
audit authority to exercise their duties arising from this
Regulation and to ensure compliance by the participating
countries with their obligations as regards the recovery of undue
payments as set out in Article 114(2).

Those arrangements, together with the provisions concerning the
rules and procedures for public procurements as referred to in
Article 121, shall be included in a written agreement concluded
between the participating countries and annexed to the
description of the management and control systems referred to
in Article 115.

Article 119

Responsibilities of the Commission

that

1. The Commission shall satisfy itself, in accordance with the
procedure laid down in Article 116,
the participating
countries have set up management and control systems that
comply with Articles 101 and 105 and, on the basis of the
annual control reports and the annual opinion of the audit
authority as referred to in Article 105(1)(c) and its own audits,
that
the systems function effectively during the period of
implementation of the cross-border programmes.

2. Without prejudice to audits carried out by participating
countries, Commission officials or authorised Commission
representatives may carry out on the spot audits to verify the
effective functioning of the management and control systems,
which may include audits on operations included in cross-border
programmes, with a minimum of ten working days' notice,
except in urgent cases. Officials or authorised representatives of
the participating countries may take part in such audits.

to the books and all other documents,

Commission officials or authorised Commission representatives,
duly empowered to carry out on-the-spot audits, shall have
including
access
documents and metadata drawn up or received and recorded
on an electronic medium, relating to expenditure financed by
Community funds.

Those powers of audit shall not affect the application of national
provisions which reserve certain acts for agents specifically
designated by national legislation.

3. The Commission may require a participating country to
carry out an on-the-spot audit to verify the effective functioning
of the systems or the correctness of one or more transactions.
Commission officials or authorised Commission representatives
may take part in such audits.

Cooperation with the audit authorities

The Commission and the audit authorities of cross-border
programmes shall cooperate to coordinate their respective audit
plans and audit methods and shall immediately exchange the
results of audits carried out on management and control systems
in order to make the best possible use of resources and to avoid
unjustified duplication of work.

The Commission and the audit authorities shall meet on a
regular basis, and at least once a year unless otherwise agreed
between them, in order to examine together the annual control
report and opinion presented under Article 105 and to exchange
views on other issues relating to the improvement of
the
management and control of the cross-border programmes.

Article 121

Procurement

For the award of service, supply and work contracts, the
1.
procurement procedures shall follow the provisions of Chapter 3
of Part 2, Title IV of Regulation (EC, Euratom) No 1605/2002
and Chapter 3 of Part 2, Title III of Regulation (EC, Euratom)
No 2342/2002, as well as Commission Decision C (2006) 117
of 24 January 2006 on the rules and procedures applicable to
service, supply and work contracts financed by the general
budget of
the European Communities for the purposes of
cooperation with third countries.

Those provisions shall apply in the whole area of the cross-
border programme, both on the Member States' and on the
beneficiary countries' territory.

2. The provisions under paragraph 1 shall be included in the
written agreement concluded between the participating countries
as referred to in Article 118.

3.
In the case of cross-border programmes implemented under
transitional arrangements referred to in Article 99, paragraph 1
shall not apply to the part of programme implemented in the
territory unless otherwise decided by the
Member States'
participating Member States.

S u b - s e c t i o n 4

F i n a n c i a l m a n a g e m e n t

Article 122

Common rules for payments

1.
Payments by the Commission of the contribution from the
Community funds shall be made in accordance with the budget
appropriations. Each payment shall be posted to the earliest open
budget commitments.

Payments shall

2.
interim
payments and payment of the final balance. They shall be made
to the body designated by the participating countries.

take the form of pre-financing,

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3. At the latest by 30 April each year, the certifying authority
shall send the Commission a provisional forecast of its likely
payment applications for the current financial year and the
subsequent financial year.

4. All exchanges concerning financial transactions between the
Commission and the authorities and bodies designated by the
participating countries shall be made by electronic means. In
cases of force majeure, and in particular of malfunction of the
common computerised system or a lack of a lasting connection,
the certifying authority may forward the statement of expendi-
ture and the payment application in hard copy.

Article 123

Common rules for calculating interim payments and
payments of the final balance

Interim payments and payments of the final balance shall be
calculated by applying the co-financing rate for each priority axis
to the eligible expenditure mentioned under that priority axis in
each statement of expenditure certified by the certifying
authority.

However,
the Community contribution through the interim
payments and payments of the final balance shall not be greater
than the public contribution and the maximum amount of
assistance from the Community funds for each priority axis as
laid down in the decision of the Commission approving the
cross-border programme.

Article 124

Statement of expenditure

1. All statements of expenditure shall include, for each priority
axis, the total amount of eligible expenditure, in accordance with
Article 89 paid by final beneficiaries in implementing the
operations and the corresponding public expenditure paid or due
to be paid to the final beneficiaries according to the conditions
governing the public expenditure. Expenditure paid by final
beneficiaries shall be justified by receipted invoices or accounting
documents of equivalent probative value.

2. Where the contribution from the Community funds is
calculated in reference to Article 90(2), any information on
expenditure other than public expenditure does not affect the
amount due as calculated on the basis of the payment request.

Article 125

Accumulation of pre-financing and of interim payments

The provisions laid down in Article 40(5) apply mutatis mutandis.

Article 127

Use of the euro

1. Amounts set out in the submitted cross-border programmes
of the participating countries, certified statements of expendi-
ture, payment application and expenditure mentioned in the
annual and final report on implementation shall be denominated
in euro.

2. Commission decisions on cross-border programmes, Com-
mission commitments and payments, shall be denominated and
carried out in euro.

3.
Lead beneficiaries for projects involving final beneficiaries in
participating countries which have not adopted the euro as their
currency on the date of the payment application shall convert
into euro the amounts of expenditure incurred in national
currency.

That amount shall be converted into euro using the monthly
accounting exchange rate of the Commission in the month
during which the payment application is submitted to the
managing authority by the lead beneficiary. This rate shall be
published electronically by the Commission each month.

4. When the euro becomes the currency of a participating
country, the conversion procedure set out in paragraph 3 shall
continue to apply to all expenditure recorded in the accounts by
the certifying authority before the date of entry into force of the
fixed conversion rate between the national currency and the
euro.

Article 128

Pre-financing

1.
Following the Commission decision approving the cross-
border programme, and upon acceptance of the report referred
to in Article 116, a single pre-financing amount shall be paid by
the Commission to the body designated by the participating
countries.

The pre-financing amount shall amount to 25 % of the first three
budgetary commitments to the programme.

The pre-financing amount may be paid in two instalments,
where necessary with regard to the availability of budgetary
commitment.

2. The total amount paid as pre-financing shall be reimbursed
to the Commission by the body designated by the participating
countries if no payment application under the cross-border
programme is sent within twenty-four months of the date on
which the Commission pays the first instalment of the pre-
financing amount.

Article 126

Wholeness of payment to beneficiaries

Article 129

Interest

The provisions laid down in Article 40(9) apply mutatis mutandis.

The provisions laid down in Article 36 apply mutatis mutandis.

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Article 130

Clearance

The amount paid as pre-financing shall be totally cleared from
the Commission accounts when the cross-border programme is
closed in accordance with Article 133.

Article 131

Acceptability of applications for interim payments

Each interim payment made by the Commission shall be

1.
subject to the following conditions being met:

(a)

(b)

(c)

(d)

the Commission must have been sent a payment applica-
tion and a statement of expenditure in accordance with
Article 124;

no more than the maximum amount of assistance from the
Community funds as laid down in the decision of the
Commission approving the cross-border programme has
been paid by the Commission during the whole period for
each priority axis;

the managing authority must have sent the Commission the
most recent annual implementation report in accordance
with Article 112;

the absence of a reasoned opinion by the Commission in
respect of an infringement under Article 226 of the Treaty,
as regards the operation(s) for which the expenditure is
declared in the payment application in question.

If one or more of the conditions referred to in paragraph 1
2.
the participating countries and the certifying
are not met,
authority shall be informed by the Commission within a deadline
of one month so that the necessary steps can be taken to remedy
the situation.

Article 133

Conditions for the payment of the final balance

1. The Commission shall pay the final balance provided that:

(a)

the certifying authority has sent a payment application
comprising the following documents by 31 March of the
fifth year following the last budgetary commitment:

(i)

(ii)

an application for payment of the final balance and a
statement of expenditure in accordance with Arti-
cle 124;

the final implementation report for the cross-border
programme,
in
Article 112;

including the information set out

(iii) a closure declaration referred to in Article 105(1)(d);

and

(b)

there is no reasoned opinion by the Commission in respect
of an infringement under Article 226 of the Treaty, as
for which the expenditure is
regards the operation(s)
declared in the payment application in question.

Failure to send any of

2.
the documents referred to in
paragraph 1 to the Commission shall automatically result in
the de-commitment of the final balance,
in accordance with
Article 137.

3. The Commission shall inform the participating countries of
its opinion on the content of the closure declaration within five
months of the date of its receipt.

The closure declaration shall be deemed to be accepted in the
absence of observations by the Commission within a deadline of
five months.

Subject to available funding, the Commission shall pay the
the

4.
final balance within forty-five days from the later of
following dates:

(a)

the date on which it accepts the final report in accordance
with Article 112; and

Article 132

(b)

the date on which it accepts the closure declaration.

Date of presentation of applications for interim payment
and payment delays

1. The certifying authority shall send requests for interim
payments for each cross-border programme to the Commission,
as far as possible, on three separate occasions a year. For a
payment to be made by the Commission in the current year, the
latest date on which a payment application shall be submitted is
31 October.

2.
Subject to available funding, and the absence of a suspension
of payments in accordance with Article 136, the Commission
shall make the interim payment no later than two months after
the date on which a payment application meeting the above
conditions referred to in Article 131 is registered with the
Commission.

5. Without prejudice to paragraph 6,
the
budgetary commitment shall be de-committed twelve months
following the payment of the final balance. The cross-border
programme is considered closed as soon as one of the following
events occurs:

the balance of

(a)

(b)

the payment of
the final balance determined by the
Commission on the basis of the documents referred to in
paragraph 1;

the sending of a debit note for sums unduly paid by the
Commission to the participating countries in respect of the
cross-border programme;

(c)

the de-commitment of the final balance of the budgetary
commitment.

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The Commission shall inform the participating countries about
the date of the closure of the cross-border programme within a
deadline of two months.

(b) microfiches of original documents;

(c)

electronic versions of original documents;

6. Notwithstanding the results of any audits performed by the
Commission or the European Court of Auditors,
the final
balance paid by the Commission for the cross-border pro-
gramme can be amended within nine months of the date on
which it is paid or, where there is a negative balance to be
reimbursed by the participating countries, within nine months of
the date on which the debit note is issued. Such amendment of
the balance shall not affect the date of the closure of the cross-
border programme as set out in paragraph 5.

Article 134

Availability of documents

1. Without prejudice to the rules governing State aid under
Article 87 of the Treaty, the managing authority shall ensure that
all the supporting documents regarding expenditure and audits
on the cross-border programme concerned are kept available for
the Commission and the Court of Auditors for a period of three
years following the closure of a cross-border programme as
defined in Article 133(5).

(d)

documents existing in electronic version only.

6. The procedure for certification of conformity of documents
held on commonly accepted data carriers with the original
document shall be laid down by the national authorities and shall
ensure that
legal
requirements and can be relied on for audit purposes.

the versions held comply with national

the
7. Where documents exist
computer systems used must meet accepted security standards
that ensure that the documents held comply with national legal
requirements and can be relied on for audit purposes.

in electronic version only,

Article 135

Interruption of the payment deadline

1. The payment deadline may be interrupted by the authorising
officer by delegation within the meaning of Regulation (EC,
Euratom) No 1605/2002 for a maximum period of six months
if:

This period shall be interrupted either in the case of
legal
proceedings or at the duly motivated request of the Commission.

2. The documents shall be kept either in the form of the
originals or in versions certified to be in conformity with the
originals on commonly accepted data carriers.

(a)

(b)

3. The managing authority shall keep a record of the bodies
holding the original supporting documents relating to expendi-
ture and checks, comprising:

(a)

documents relating to specific expenditure incurred and
declared payments made under the assistance and required
for a sufficient audit trail including documents constituting
proof of the actual delivery of products or services co-
financed;

(b)

reports and documents relating to checks carried out by the
bodies referred to in Article 102.

4. The managing authority shall ensure that the documents
referred to in paragraph 1 are made available for inspection by,
and extracts or copies thereof are supplied to, persons and bodies
entitled thereto,
the
managing authority, certifying authority,
intermediate bodies
and audit authority and authorised officials of the Community
and their authorised representatives.

least authorised staff of

including at

5. The following at least shall be considered as commonly
accepted data carriers as referred to in paragraph 2:

(a)

photocopies of original documents;

in a report of a national or Community audit body there is
evidence
significant deficiency in the
functioning of the management and control systems;

to suggest

a

the authorising officer by delegation has to carry out
additional verifications following information coming to
his attention alerting him that expenditure in a certified
statement of expenditure is linked to a serious irregularity
which has not been corrected.

2. The participating countries and the certifying authority shall
be informed immediately of the reasons for the interruption. The
interruption shall be ended as soon as the necessary measures
have been taken by the participating countries.

Article 136

Suspension of payments

1. All or part of the interim payments at the level of priority
axes or programmes may be suspended by the Commission
where:

(a)

(b)

(c)

there is a serious deficiency in the management and control
system of the programme which affects the reliability of the
procedure for certification of payments and for which
corrective measures have not been taken; or

expenditure in a certified statement of expenditure is linked
to a serious irregularity which has not been corrected; or

there is a serious breach by participating countries of their
obligations under Article 114.

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2. The Commission may decide to suspend all or part of
interim payments after having given the participating countries
the opportunity to present their observations within a period of
two months.

3. The Commission shall end suspension of all or part of
interim payments when the participating countries have taken
the necessary measures to enable the suspension to be lifted.
Where the required measures have not been taken by the
participating countries, the Commission may adopt the decision
to cancel all or part of the Community contribution to the cross-
border programme, in accordance with Article 138.

Article 137

Automatic de-commitment

the
Automatic and final de-commitment of any portion of
budgetary commitment
for a cross-border programme shall
follow the rules laid down in paragraph 3 of Article 166 of
Regulation (EC, Euratom) No 1605/2002.

Article 138

Financial corrections and irregularities

For

the purpose of

1.
the relevant
provisions contained in Articles 98, 99, 100, 101 and 102 of
Regulation (EC) No 1083/2006 shall apply mutatis mutandis.

financial corrections,

2.
For the purposes of irregularities, the relevant provisions
contained in Articles 27 to 34 of Commission Regulation (EC)
No 1828/2006 (1) setting out the rules for the implementation
of Regulation (EC) No 1083/2006 and of Regulation (EC)
No 1080/2006 of the European Parliament and of the Council
shall apply mutatis mutandis.

S e c t i o n 3

C r o s s - b o r d e r p r o g r a m m e s a m o n g
b e n e f i c i a r y c o u n t r i e s

S u b - s e c t i o n 1

M a n a g e m e n t a n d c o n t r o l s y s t e m s

Article 139

Structures and authorities

For

each cross-border programme,

1.
each participating
beneficiary country shall establish an operating structure for
the part of the programme relating to the country concerned.

2. The duties of the operating structures shall
include the
preparation of the cross-border programmes in accordance with
Article 91.

3. The operating structures of the participating beneficiary
countries shall cooperate closely in the programming and
implementation of the relevant cross-border programme.

4.
For each cross-border programme among beneficiary
countries, the relevant operating structures shall set up a joint
technical secretariat to assist the operating structures and the

(1) OJ L 371, 27.12.2006, p. 1.

joint monitoring committee referred to in Article 142 in
carrying out their respective duties.

The joint technical secretariat may have antennae established in
each participating countries.

In the event of decentralised management, the functions and
5.
responsibilities of
the operating structures shall be, mutatis
mutandis, those listed in Article 28. In addition, the following
provisions shall apply:

(a)

The operating structures in each participating beneficiary
country shall include one implementing agency which shall
be established within the national administration or under
its direct control.

(b) The national authorising officer

in each participating
beneficiary country shall, after consulting the national IPA
coordinator, designate a programme authorising officer to
head the implementing agency.

The programme authorising officers shall be officials of the
State administration of the beneficiary countries. He shall
be responsible for
the activities carried out by the
implementing agency.

(c)

The implementing agencies shall be responsible for the
tendering and contracting, payments accounting and
financial reporting aspects of the procurement of services,
supplies, works and grants for the part the cross-border
programme concerning the respective country.

Where relevant, the provisions laid down in Article 76 shall
apply mutatis mutandis.

In the event of centralised management,

6.
functions and
responsibilities of the operating structures shall be defined in the
relevant cross-border programmes, to the exclusion of tendering,
contracting and payments, which are the responsibility of the
Commission.

Article 140

Role of the Commission in the selection of operations

In the event of centralised management, the Commission

1.
shall:

(a)

(b)

approve the criteria for selecting the operations financed by
the cross-border programme;

endorse the calls for proposals and their application packs
(Guidelines for applicants) prior to publication;

(c) where relevant, endorse the composition of a steering
committee entrusted with the selection of operations;

(d)

formally confirm the operations selected by the joint
monitoring committee referred to in Article 142. In all
final
the Commission shall retain the right of
cases,
approval of an operation selected for financing.

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In the event of decentralised management, the Commissions'
2.
right to exercise ex ante control of the selection of operations
shall be defined in the Commission decision on conferral of
management in accordance with Article 14(3).

for the programme, to sit on the joint monitoring committee.
With regards to the composition of
the joint monitoring
committee, due account shall be taken of provisions of Article 87.

S u b - s e c t i o n 2

E v a l u a t i o n a n d m o n i t o r i n g

Article 141

Evaluation

4. The Commission shall participate in the work of the joint
monitoring committee in an advisory capacity.

5. The joint monitoring committee shall satisfy itself as to the
effectiveness and quality of the implementation of the cross-
border programme, in accordance with the following provisions:

Article 109 shall apply mutatis mutandis. However, in the event of
centralised management, the evaluations referred to in Arti-
cle 109(3) shall be carried out under the responsibility of the
Commission.
referred to in
the provisions
Article 109(4) and Article 109(5) do not apply.

In that event,

In the case of cross-border programmes among beneficiary
countries, the need to carry out the ex ante evaluation referred to
in Article 109(2) shall be decided by the Commission in
agreement with the participating beneficiary countries, taking
into consideration the Community funds allocated to the
programme
and in accordance with the proportionality
principle. The ex ante evaluation may be carried out with the
support of the Commission.

In the event of decentralised management, the Commission may
perform any ad hoc interim evaluations of
the cross-border
programmes it deems necessary.

Article 142

Joint monitoring committee

1.
In the case of cross–border programmes among themselves,
the participating beneficiary countries shall set up a joint
monitoring committee for each cross-border programme. This
joint monitoring committee fulfils the role of
the sectoral
monitoring committee referred to in Article 59. By way of
derogation from Article 59(1), the joint monitoring committee
shall be set up within three months after the entry into force of
the first financing agreement relating to the programme.

(a)

(b)

(c)

(d)

(e)

(f)

(g)

it shall consider and approve the criteria for selecting the
operations financed by the cross-border programme and
approve any revision of those criteria in accordance with
programming needs;

it shall periodically review progress made towards achieving
the specific targets of the cross-border programme on the
basis of documents submitted by the operating structures
of participating beneficiary countries;

it shall examine the results of implementation, particularly
achievement of the targets set for each priority axis and the
evaluations referred to in Article 57(4) and Article 141;

shall

it
the
implementation referred to in Article 144;

examine

annual

and final

reports on

it shall be informed, as applicable of the annual audit
activity report(s) referred to in Article 29(2)(b) first indent,
and of any relevant comments the Commission may make
after examining that report;

it shall be responsible for selecting operations, but may
delegate this function to a steering committee;

it may propose any revision or examination of the cross-
border programme likely to make possible the attainment
of the objectives referred to in Article 86(2) or to improve
its management, including its financial management;

The joint monitoring committees shall meet at least twice a year,
at
the
Commission.

the participating countries or of

the initiative of

2.
Each joint monitoring committee shall draw up its rules of
procedures in compliance with a joint monitoring committee
mandate set out by the Commission and within the institutional,
legal and financing framework of the participating countries
concerned, in order to exercise its mission in accordance with the
present Regulation. It shall adopt these rules of procedures.

3. The joint monitoring committee shall be chaired by a
representative of one of the participating countries.

its representatives,
Each participating country shall appoint
including representatives of the operating structure responsible

(h)

it shall consider and approve any proposal to amend the
content of the cross-border programme.

Article 143

Shared tasks of the operating structures and the joint
monitoring committee

the participating beneficiary
The operating structures of
countries and the joint monitoring committee shall ensure the
quality of the implementation of the cross-border programme.
They shall carry out monitoring by reference to the indicators
referred to in Article 94(1)(d) and, in the event of decentralised
indicators specified in the cross-
management, the financial
border programme.

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Article 144

S u b - s e c t i o n 3

Annual report and final report on implementation

F i n a n c i a l m a n a g e m e n t

1. The operating structures of
the beneficiary countries
participating in a cross-border programme shall send the
Commission and the respective national IPA coordinators an
annual report and a final report on the implementation of the
cross-border programme
joint
monitoring committee.

examination by the

after

In the case of decentralised management, the reports shall also be
sent to the respective national authorising officers.

The annual report shall be submitted by 30 June each year and
for the first time in the second year following the adoption of the
cross-border programme.

The final report shall be submitted at the latest 6 months after
the closure of the cross-border programme.

Article 145

Grants

Following the selection of joint operations in accordance with
Article 95, the operating structures in the event of decentralised
management and the Commission in the event of centralised
management, shall issue a grant to the lead beneficiary of the
participating beneficiary country concerned.

Article 146

Applicable rules

In the event of decentralised management, the provisions of
Articles 79 paragraphs (1), (2) and (3), and 80 shall apply.

TITLE III

2. The reports referred to in paragraph 1 shall
following information:

include the

REGIONAL DEVELOPMENT AND HUMAN RESOURCES
DEVELOPMENT COMPONENTS

(a)

(b)

(c)

the progress made in implementing the cross-border
programme and priorities in relation to their specific,
verifiable targets, with a quantification, wherever and
whenever they lend themselves to quantification, using
the indicators referred to in Article 94(1)(d) at the level of
the priority axis;

detailed information about the financial implementation of
the cross-border programme;

the steps taken by the operating structures and/or the joint
monitoring committee to ensure the quality and effective-
ness of implementation, in particular:

(i) monitoring and evaluation measures, including data

collection arrangements;

(ii)

a summary of any significant problems encountered
in implementing the cross-border programme and any
measures taken;

(iii)

the use made of technical assistance;

(d)

the measures taken to provide information on and publicise
the cross-border programme.

Where appropriate, the information referred to in points (a) to
(d) of this paragraph may be provided in summary form.

CHAPTER I

Object of assistance and eligibility

S e c t i o n 1

R e g i o n a l d e v e l o p m e n t c o m p o n e n t

Article 147

Areas and forms of assistance

1. The regional development component may support opera-
tions under the following priorities:

(a)

(b)

(c)

transport infrastructure, in particular interconnection and
interoperability between national networks, and between
national and trans-European networks;

environment measures related to waste management, water
supply, urban waste water and air quality; rehabilitation of
contaminated sites and land; areas related to sustainable
development which present environmental benefits, namely
energy efficiency and renewable energy;

operations which enhance regional competitiveness and a
productive environment, and encourage creation and
safeguarding of
involving in
particular:

sustainable employment,

The information referred to in point (b) shall be included in the
reports only in the case of decentralised management.

(i)

provision of business and technology services for
enterprises, particularly in the fields of management,
market research and development and networking;

Information referred to in point (c) need not be included if there
has been no significant modification since the previous report.

(ii)

access and use of information and communication
technologies;

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(iii) promotion of

technological development, research
and innovation including through cooperation with
tertiary education and research institutions and
research and technology centres;

(iv) development of business networks and clusters;

(v)

creation and development of financing instruments
which facilitate access to revolving financing through
venture capital, loan and guarantee funds;

(vi) provision of local infrastructure and services which
contribute to facilitate establishment, development
and expansion of new and existing business;

(vii) education and training infrastructures, where neces-
sary for regional development and in close coordina-
development
tion with
component.

human resources

the

Article 150

Revenue-generating projects

For the purposes of this component, a revenue-generating
1.
project means any operation proposed for pre-accession
assistance involving an investment in infrastructure, the use of
which is subject to charges borne directly by users and which
generates revenues, or any operation involving the sale or rent of
land or buildings.

2.
Public expenditure for revenue-generating projects, used for
calculating the Community contribution in accordance with
the
Article 149, shall be equal to the discounted value of
investment cost of the proposed project less the discounted value
of the net revenue, calculated by deducting the operating costs
from the global
the
appropriate reference period, depending on the project's financial
features.

from the investment over

revenues

2. Under this component, technical assistance may be granted
for preliminary studies and technical support related to eligible
activities, including those necessary for their implementation.

3. Where not all the investment cost is eligible for co-financing
the net revenue shall be allocated pro rata to the eligible and
non-eligible parts of the investment cost.

Technical assistance may also finance preparatory, management,
monitoring, evaluation, information and control activities and
activities to reinforce the administrative capacity for implement-
ing the assistance under the IPA Regulation provided through
this component.

Article 148

Eligibility of expenditure

1.
Expenditure under this component shall be eligible if it has
actually been paid after the signature of the financing agreement
following the adoption of the relevant programme. In the case of
major projects as referred to in Article 157, expenditure shall not
be eligible before the Commission Decision approving the major
project has been adopted, as referred to in Article 157(3).

In addition to rules set out in Article 34(3), the following

2.
expenditure shall not be eligible:

(a) maintenance and rental costs;

(b)

depreciation costs for the infrastructures.

Article 149

Aid intensities and rate of Community contribution

For the purposes of this component, the eligible expenditure
1.
as referred to in Article 38(1) shall be based on the public
expenditure.

2. The Community contribution shall not exceed the ceiling of
75 % of the eligible expenditure at the level at the priority axis. In
exceptional and duly justified cases, with regard to the scope of
the priority axis, this ceiling may reach 85 %.

4.
In the calculation, the operating structure shall take account
of the reference period appropriate to the category of investment
concerned, the category of project, the profitability normally
expected of the category of investment concerned and of the
application of the polluter-pays principle, and, if appropriate, of
considerations of affordability, in particular in the environment
sector.

S e c t i o n 2

H u m a n r e s o u r c e s d e v e l o p m e n t c o m p o n e n t

Article 151

Areas and forms of assistance

1. The human resources development component shall con-
tribute to strengthening economic and social cohesion as well as
to the priorities of the European Employment Strategy in the
field of employment, education and training and social inclusion.

In particular,

the scope of

2.
this component shall cover
assistance to persons and focus on the following priorities, the
precise mix and concentration of which shall depend on the
economic and social specificities of each beneficiary country:

(a)

increase adaptability of workers, enterprises and entrepre-
neurs, with a view to improving the anticipation and
positive management of economic change, in particular by
promoting:

(i)

life long learning and increased investment in human
resources by enterprises and workers;

3. No operation shall benefit from a higher co-financing rate
than the one relating to the priority axis concerned.

(ii)

design and dissemination of
productive forms of work organisation;

innovative and more

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(b)

enhance access to employment and sustainable inclusion in
the labour market of
job seekers and inactive people,
prevent unemployment, in particular long term and youth
unemployment, encourage active aging and prolong work-
ing lives,
increase participation in the labour market
notably by promoting:

(i)

(ii)

(iii)

creation, modernisation and strengthening of labour
market institutions;

implementation of active and preventive measures
ensuring early identification of needs;

improvement of access to employment and increase of
sustainable participation and progress of women in
employment;

(iv)

increase in migrants’ participation in employment,
thereby strengthening their social integration;

(v)

facilitation of geographic and occupational mobility of
workers and integration of
labour
markets;

cross-border

(c)

reinforce social inclusion and integration of people at a
disadvantage, with a view to their sustainable integration in
employment, and combat all forms of discrimination in the
labour market, in particular by promoting:

(i)

(ii)

pathways to integration and re-entry into employment
for disadvantaged people;

acceptance of diversity in the workplace and non
discrimination;

(d)

and initiatives

promote partnerships, pacts
through
networking of relevant stakeholders, such as social partners
and non-governmental organisations, at national, regional,
local level, in order to mobilise for reforms in the field of
employment and labour market inclusiveness;

(e)

expand and enhance investment
particular by promoting:

in human capital,

in

(i)

the design,
introduction and implementation of
reforms in education and training systems, in order
to develop employability and labour market relevance;

(ii)

increased participation in education and training
throughout the life-cycle;

(iii)

the development of human potential in research and
innovation;

(iv) networking activities between higher education insti-
and
research and technological

centres

tutions,
enterprises;

and good governance in the employment, education and
training, as well as social fields.

the initiative of

the beneficiary country,

3. At
technical
assistance may be granted under this component to support
the preparatory, management, monitoring, administrative sup-
port,
the
information, evaluation and control activities of
programme, and preparatory activities with a view to the future
management of European Structural Funds.

4. Assistance shall focus on those policies and activities which
have the potential to act as catalyst for policy change and which
enhance good governance and partnership.

Article 152

Eligibility of expenditure

1. The following expenditure may be eligible for operations
falling under the scope of Article 151:

(a)

depreciation costs under the following cumulative condi-
tions:

(i)

(ii)

no national or Community grants have contributed to
the purchase of the related investment;

depreciation costs are calculated with the relevant
applicable national accountancy rules;

(iii)

costs relate exclusively to the period of co-financing of
the operation concerned;

(b)

in the case of grants, the indirect costs declared on a flat
rate basis up to 20 % of the direct costs of an operation,
provided they are incurred in accordance with national
rules, including accountancy rules;

(c)

purchase of furniture, equipment, adaptation and moder-
nisation of existing infrastructures, provided that:

(i)

(ii)

the amount concerned for the related operations is
subject to a limit of 15 % of the funding under the IPA
Regulation for each priority axis of the programme(s)
under this component;

investments are necessary for the satisfactory imple-
mentation of the programme(s) under this component
and contribute to increasing the impact of assistance;

(iii) assessment, carried out under the responsibility of the
operating structure, has demonstrated that purchase is
preferable to other solutions in terms of the best value
for money.

2. By way of derogation from Article 34(3), the following
expenditure may also be eligible:

(f)

strengthen institutional capacity and the efficiency of public
administrations and public services at national, regional
and local level and, where relevant, the social partners and
non-governmental organisations with a view to reforms

(a)

including value added taxes,

taxes,
they are not
recoverable by any means and it is established that they
are borne by the final beneficiary.

if

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(b)

(c)

operating costs, including rental costs, exclusively related to
the period of co-financing of the operation,

In addition, the strategic coherence framework shall contain,

3.
where relevant, provisions about :

rent or leasing, provided that it is exclusively related to the
period of co-financing of the operation, and that it is
preferable to other solutions in terms of the best value for
money.

(a)

coordination with other national programmes supported
institutions, or other relevant
by international financial
external assistance;

Article 153

(b)

coordination with other IPA components, in particular the
rural development component.

Aid intensities and rate of Community contribution

1.
For the purposes of this component, the eligible expenditure
as referred to in Article 38(1) shall be based either on the public
expenditure or on the total expenditure, the choice applying to
the entirety of the programme concerned.

2. The Community contribution shall not exceed the ceiling of
85 % of the eligible expenditure at the level of the priority axis.

3. No operation shall benefit from a higher co-financing rate
than the one relating to the priority axis concerned.

CHAPTER II

Programming

Article 154

Strategic coherence framework

1. Beneficiary countries shall establish, based on the multi-
annual
indicative planning document, a strategic coherence
framework to be discussed with the Commission. The strategic
coherence framework shall constitute a reference document for
the programming of the regional development component and
the human resources development component.

2. The strategic coherence framework shall include:

(a)

(b)

(c)

(d)

a brief analysis, highlighting the strengths, weaknesses,
opportunities and threats
in the eligible sectors and
thematic priorities, under the regional development and
human resources development components, where the
beneficiary country intends to concentrate its assistance;

a description of the objectives pursued under the regional
development and human resources development compo-
nents,
in accordance with the relevant national and
Community priorities, as set up in the first multi-annual
indicative planning document;

a list of programmes, with a brief description of the main
priority axes under each programme;

the financial allocations
an indicative breakdown of
between the underlying programmes, covering a three
years period, in accordance with the multi-annual indicative
financial
indicative
framework and the multi-annual
planning document, and the indicative budgetary balance
between the underlying programmes for the following
years, within each component.

4. The strategic coherence framework shall be a prerequisite for
the approval of the programmes under the regional development
It shall be
and human resources development components.
submitted to the Commission prior to, or, at the latest, together
with the submission for approval of the first programme under
those components.

5. The strategic coherence framework shall be drafted by the
strategic coordinator, under the overall responsibility of
the
national IPA coordinator.

Article 155

Operational programmes

1. Assistance shall be implemented through multi-annual
operational programmes. These operational programmes shall
be drafted by the operating structures. They shall be established
in close consultation with the Commission and the relevant
stakeholders, and approved through a Commission Decision, in
accordance with Article 8(1).

2. Operational programmes shall contain:

(a)

(b)

(c)

(d)

an assessment of medium term needs and objectives,
highlighting the strengths, weaknesses, opportunities and
threats in the relevant sectors, themes and regions;

an overview of the consultation of the relevant socio-
economic partners and, where relevant, civil
society
representatives;

a description of
the chosen strategic priorities, having
regard to the strategic coherence framework and the
thematic and/or geographical mechanisms of
sectoral,
concentration of assistance, as well as the results from the
ex ante evaluation referred to in Article 57(4) and 166;

information on the priority axis, the related measures and
their specific targets. Such targets shall be quantified, when
appropriate, using a limited number of result indicators.
These indicators shall make it possible to determine the
progress for implementing the selected measures, including
the effectiveness of the targets attached to the priority axis
and measures;

(e) when some measures are intended to be implemented
through aid schemes for enterprises, related modalities shall
be described;

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(f)

(g)

(h)

(i)

(j)

(k)

a

a description of the technical assistance operations, which
shall be undertaken under
specific priority axis.
Community support for this priority axis can be up to a
ceiling of 6 % of the Community contribution allocated to
the operational programme. In exceptional cases and when
duly justified with regard to the scope of the programme,
this ceiling may reach 10 %;

an identification, for each measure, of the intended final
beneficiaries, the expected selection modalities and possible
related specific selection criteria;

a financial table specifying, for each year covered by the
applicable multi-annual indicative financial frameworks, for
each priority axis and, in an indicative way, for each related
measure:

(i)

the total amount of the Community contribution;

(ii)

contribution, under

the national contribution, where applicable identify-
ing other external contributions. Where the Commu-
the human resources
nity
development component, is calculated with reference
the table shall give the
to the total expenditure,
indicative breakdown of
the national contribution
between its public and private components;

(iii)

the resulting rate of Community contribution;

the proposed evaluation and monitoring indicators and
modalities,
including indicative evaluation activities and
timing;

for the regional development component, an indicative list
of major projects, accompanied with their technical and
financial features, including the expected financing sources,
as well as indicative timetables for their implementation;

a description of the relevant structures and authorities for
the management and control of
the operational pro-
gramme, in accordance with Articles 21 to 26, 28, 29 and
31.

Article 156

Revision of operational programmes

the

initiative of

the beneficiary country or

1. At
the
Commission, operational programmes may be re-examined
and, where appropriate,
the programme
revised. This review may in particular take place in the following
cases:

the remainder of

(a)

following significant socio-economic changes;

in order to take greater or different account of major
changes in Community or national priorities;

(b)

(c)

(d)

in the light of the evaluations referred to in Article 166(2);

(e)

following implementation difficulties.

2. The Commission Decision on a request for the revision of
any operational programme shall be adopted as soon as possible
after its formal submission by the strategic coordinator in
coordination with the national IPA coordinator.

3. Where the revision of an operational programme, as referred
to in paragraph 1, extends the eligible scope under
this
programme, any additional expenditure related thereto shall be
the Commission
eligible from the date of
Decision.

the adoption of

Article 157

Major projects under the regional development component

1. As part of an operational programme, assistance under the
regional development component may finance major projects.

2. A major project comprises a series of works, activities or
services and is intended, in itself, to accomplish a definite and
indivisible task of a precise economic or technical nature, which
has clearly identified goals and whose total cost exceeds
€ 10 million.

3. Major projects shall be submitted to the Commission for
approval by the relevant operating structure. The Decision
approving the project shall define the physical object and the
eligible expenditure to which the co-financing rate for the
priority axis applies. It shall be followed by a bilateral agreement
with the beneficiary country, laying down those elements.

4. When submitting a major project to the Commission, the
operating structure shall provide the following information:

(a)

(b)

information on the body to be responsible for implementa-
tion;

information on the nature of
description of its financial volume and location;

the investment and a

(c)

results of feasibility studies;

(d)

(e)

a timetable for the implementation of the project before the
closure of the related operational programme;

an assessment of the overall socio-economic balance of the
operation, based on a cost-benefit analysis and including a
risk assessment, and an assessment of the expected impact
on the sector concerned, on the socio-economic situation
of
the beneficiary country and, where the operation
involves the transfer of activities from a region in a
Member State, the socio-economic impact on that region;

following the annual revision of the multi-annual indicative
planning document;

(f)

an analysis of the environmental impact;

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(g)

the financing plan, showing the total financial contribu-
tions expected and the planned contribution under the IPA
Regulation, as well as other Community and other external
funding. The financing plan shall substantiate the required
IPA grant contribution through a financial viability analysis.

CHAPTER III

Implementation

S e c t i o n 1

G e n e r a l r u l e s

Article 158

Selection of operations

1. All operations which are not major projects and which are
implemented by final beneficiaries other than national public
bodies shall be selected through calls for proposals. The selection
criteria shall be drawn up by the operating structure and shall be
published with the call for proposals.

2. The operating structure shall set up a selection committee
for each call
for proposals, which shall analyse and select
proposals, and recommend results to the operating structure.

Article 21 shall be made by electronic means, as provided for in
the financing agreement.

3.
In addition to the provisions of Article 42, payments for the
pre-financing payments for the pre-financing shall amount to
30 % of the Community contribution for the first three years of
the programme concerned, and shall be made once the
conditions laid down in Article 42(1) are met. Where necessary,
with regard to the availability of budgetary commitment, the pre-
financing may be made in two instalments.

Article 161

Acceptability of applications for payment

1.
In the case of a payment application for an interim payment,
in addition to the provisions laid down in Article 43(1), the
this paragraph shall apply under the regional
provisions of
development and the human resources development compo-
nents.

A payment application cannot be accepted if payments have
been suspended in accordance with Article 163. The payment
application shall certify that all requirements laid down in
Article 43(1) and in this paragraph are fulfilled.

The operating structure shall decide whether to approve the
results of the selection procedure and state the reasons for its
decision.

The composition of the selection committee and its functioning
modalities are defined in the relevant financing agreement.

The certified statement of expenditure referred to in Article 43(1)
shall be drawn up by priority axis and measures. The national
authorising officer shall certify that the statement of expenditure
is accurate, results from reliable accounting systems and is based
on verifiable documents. The national authorising officer shall
send this document to the Commission together with:

Article 159

Financial engineering instruments

1. As part of an operational programme, the Community
contribution may finance expenditure related to an operation
financial engineering
comprising contributions
instruments for enterprises, such as venture capital
funds,
guarantee funds and loan funds. Preference shall be given to
small and medium-sized enterprises.

to support

2. Detailed implementing rules shall be set out in the financing
agreement following the adoption of an operational programme
providing for Community contribution to financial engineering
instruments.

S e c t i o n 2

F i n a n c i a l m a n a g e m e n t

Article 160

Payments

1. Notwithstanding Article 40(5), the combined total of pre-
financing and interim payments shall not exceed 90 % of the
Community contribution, as set out in the financial table of the
operational programmes.

(a)

(b)

(c)

(d)

a certificate of expenditure, certifying that the expenditure
declared complies with applicable Community and national
rules and has been incurred in respect of operations
selected for
funding in accordance with the criteria
applicable to the programme and complying with relevant
applicable Community and national rules;

the computerised listing of operations by measure and the
corresponding expenditure,
including contribution under
the IPA Regulation, national public and, when applicable,
private contributions;

the details of amounts recoverable following cancellation of
all or part of the Community contribution for an operation;

the volume of Community funds in the component-specific
euro account at the date of the last debit to which this
statement refers and the interest earned.

In the case of a payment application for the payment of the
2.
final balance,
in addition to the provisions laid down in
Article 45(1), the provisions of this paragraph shall apply under
the regional development and the human resources development
components.

2. All exchanges concerning financial transactions between the
Commission and the authorities and bodies referred to in

For a payment application to be acceptable, the Community
contribution, by priority axis, shall be consistent with the
financial table of the operational programme.

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The certified statement of expenditure referred to in Article 45(1)
shall be drawn up by the national authorising officer and sent to
the Commission in accordance with the requirements of
paragraph 1 of this Article.

inform the beneficiary country of its
The Commission shall
conclusions on the content of
the audit authority opinion
referred to in Article 45(1)(c). This opinion shall be deemed
accepted in the absence of observations by the Commission
within five months from the date of its receipt.

Article 162

Deadlines for payments

1. The national fund shall ensure that requests for interim
payments for each operational programme are sent
to the
Commission three times a year. For a payment to be made by the
Commission in a given year, the application for payment shall be
submitted by 31 October that year.

2.
Subject to available funding, the Commission shall make the
interim payment no later than two months after the date on
which an application for payment meeting the conditions
referred to in Articles 43(1) and 161(1) is registered with the
Commission.

3.
Subject to available funding, the Commission shall make the
payment of the final balance once the following conditions are
fulfilled:

(a)

(b)

the Commission has accepted the sectoral final report on
implementation in accordance with the provisions of
Article 169(4) and (5);

the Commission has accepted the opinion issued by the
audit authority as referred to in Article 45(1)(c) and the
related activity report set out in Article 29(2)(b) first indent.

4. The payment deadline may be interrupted by the authorising
officer by delegation of the Commission, with the meaning of
Regulation (EC, Euratom) No 1605/2002, for a maximum of six
months if:

(a)

(b)

in a report of a national or Community audit body there is
evidence
significant deficiency in the
functioning of the management and control systems; or

to suggest

a

the authorising officer by delegation in the Commission has
to carry out additional verifications following information
coming to his attention alerting him that expenditure in a
certified statement of expenditure is linked to a serious
irregularity which has not been corrected; or

Article 163

Suspension of payments

The provisions laid down in Article 46 shall apply to all or part
the level of priority axes or
of
programmes.

the interim payments at

Article 164

Closure of a programme

1. The operational programme shall be closed according to the
provisions of Article 47(1), the payment of the final balance
the
being determined by the Commission on the basis of
documents referred to in Article 45(1) and Article 161(2).

The Commission shall inform the beneficiary country about the
date of the closure of the operational programme.

2. Notwithstanding the results of any audits performed by the
Commission or the European Court of Auditors,
the final
balance paid by the Commission for the operational programme
may be amended within nine months of the date on which it is
paid or, where there is a negative balance to be reimbursed by the
beneficiary country, within nine months of the date on which the
recovery order is issued. Such amendment of the balance shall
not affect the date of the closure of the operational programme
as set out in paragraph 1.

Article 165

Re-use of Community contribution

The beneficiary country shall inform the Commission of how it
proposes to re-use the funds cancelled in accordance with
Article 54 and, where appropriate, to amend the financial plan
for assistance, in accordance with the provisions of Article 156.

S e c t i o n 3

E v a l u a t i o n a n d m o n i t o r i n g

Article 166

Evaluation

1. Beneficiary countries shall carry out an ex ante evaluation for
each operational programme separately. However,
in duly
justified cases, and in agreement with the Commission,
beneficiary countries may carry out a single ex ante evaluation
covering more than one operational programme.

Ex ante evaluations shall be carried out under the responsibility
of the operating structure.

(c)

clarifications are needed regarding the information con-
tained in the statement of expenditure.

The national IPA coordinator and the national authorising officer
shall be informed immediately of the reasons for the interrup-
tion. The interruption shall be ended as soon as the necessary
measures have been taken by the beneficiary country.

Ex ante evaluations shall aim to optimise the allocation of
budgetary resources under operational programmes and improve
programming quality. They shall
identify and appraise the
disparities, gaps and potential for development, the goals to be
achieved,
the
coherence, if necessary, of the strategy proposed and the quality
of the procedures for implementation, monitoring, evaluation
and financial management.

the quantified targets,

the results expected,

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The ex ante evaluation shall be annexed to the operational
programme(s) it relates to.

2. During the programming period, beneficiary countries shall
carry out evaluations linked to the monitoring of operational
programmes,
in particular where this monitoring reveals a
significant departure from the goals initially set or where
proposals are made for the revision of operational programmes,
as referred to in Article 156. The results shall be sent to the
sectoral monitoring committee for the operational programme
and to the Commission.

3.
Evaluations shall be carried out by experts or bodies,
internal or external, functionally independent of the authorities
referred to in Article 21. The results shall be published according
to the applicable rules on access to documents.

(b)

(c)

(d)

(e)

review at each meeting progress made towards achieving
the specific targets of the operational programme on the
basis of documents submitted by the operating structure;

examine at each meeting the results of implementation,
particularly the achievement of the targets set for each
priority axis and measures and interim evaluations referred
to in Article 57(5); it shall carry out this monitoring by
reference to the indicators referred to in Article 155(2)(d);

examine
implementation referred to in Article 169;

sectoral

annual

and final

the

reports on

be informed of the annual activity report referred to in the
first indent of Article 29(2)(b), or of the part of the report
referring to the operational programme concerned, and of
any relevant comments the Commission may make after
examining that report or relating to that part of the report;

Article 167

Sectoral monitoring committee

1.
In accordance with Article 59, the operating structure shall
establish a sectoral monitoring committee for each programme.
A single sectoral monitoring committee may be set up for several
programmes within the same component. This committee shall
meet at least twice a year, at the initiative of the beneficiary
country or the Commission.

2.
Each sectoral monitoring committee shall draw up its rules
in compliance with a sectoral monitoring
of procedure
committee mandate set out by the Commission, and within
the institutional, legal and financial framework of the beneficiary
country concerned. It shall adopt these rules of procedure in
agreement with the operating structure and the IPA monitoring
committee, in order to exercise its missions in accordance with
this Regulation.

3. The sectoral monitoring committee shall be co-chaired by
the head of the operating structure and the Commission. Its
composition shall be decided by the operating structure,
in
agreement with the Commission.

The sectoral monitoring committee shall include the Commis-
sion, the national IPA coordinator, the strategic coordinator for
the regional development and the human resources development
components, the operating structure of the programme. Where
appropriate, it shall also include representatives from the civil
society and socio-economic partners. A representative of the
European Investment Bank may participate in an advisory
capacity for
to which the
those operational programmes
European Investment Bank makes a contribution.

4. The sectoral monitoring committee shall:

(f)

examine any proposal to amend the financing agreement of
the programme.

5. The sectoral monitoring committee may also propose to the
the
operating structure
examination of
any revision or
programme likely to make possible the attainment of
the
programmes' objectives referred to in Article 155(2)(a) or to
improve its management, including its financial management.

Article 168

Arrangements for monitoring

Data exchange between the Commission and the beneficiary
countries for the purpose of monitoring shall be carried out
electronically, as provided for in the financing agreements.

Article 169

Sectoral annual and final reports on implementation

1. By 30 June each year and for the first time by 30 June 2008,
the operating structure shall submit a sectoral annual report to
the Commission and the national IPA coordinator.

A sectoral final report shall be submitted to the Commission and
the national IPA coordinator at the latest six months after the
final date of eligibility of expenditure. The sectoral final report
shall refer to the whole period of implementation and include
the last sectoral annual report.

The sectoral reports shall be established in relation to the
programmes concerned.

Sectoral reports shall be examined by the sectoral monitor-
2.
ing committee prior to their transmission to the Commission
and the national IPA coordinator.

3.

Sectoral reports shall include the following:

(a)

in

consider and approve the general criteria for selecting the
operations,
relevant, with
accordance, where
Article 155(2)(g) within six months of the entry into force
of the financing agreement on the programme and approve
any revision of those criteria in accordance with program-
ming needs;

(a)

the quantitative and qualitative progress made in imple-
menting the operational programme, priority axes, mea-
sures and, where
relevant, operations or group of
operations, in relation to their specific, verifiable targets,
with a quantification, when possible, using the indicators

(b)

(c)

(d)

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referred to in Article 155(2)(d) at the appropriate level.
Where relevant under the human resources development
component, the statistics shall be broken down by sex;

(iii) action to strengthen integration in employment and

thereby improve the social inclusion of minorities;

the financial
gramme, detailing for each priority axis and measure:

implementation of

the operational pro-

(iv)

action to strengthen integration in employment and
inclusion of other disadvantaged groups,
social
including people with disabilities.

(i)

(ii)

the total expenditure paid out by the final beneficiaries
and included in payment applications sent to the
Commission by the national fund;

Information referred to in points (d), (g) of this paragraph shall
not be included if there has been no significant modification
since the previous report.

the total expenditure actually committed and paid out
by the national fund with the corresponding public or
public and private contribution; this shall be accom-
panied by computerised forms listing the operations,
so that they can be followed through from budgetary
commitment by the beneficiary country to final
payments;

4. The sectoral reports shall be considered admissible if they
contain all the appropriate information listed in paragraph 3. The
national IPA coordinator and the operating structure shall be
informed by the Commission of the admissibility of the sectoral
annual report within 10 working days from the date of its
receipt.

(iii)

the total payments received from the Commission.

financial

implementation may be
Where appropriate,
presented through the major areas of intervention, referred
to in Article 5(3)(f), and the regions where assistance is
concentrated;

for information purposes, the indicative breakdown of the
allocation under
the regional
the IPA Regulation,
development component, by categories, in accordance with
the detailed list included in the financing agreement;

for

the steps taken by the operating structure or the sectoral
monitoring committee to ensure the quality and effective-
ness of implementation, in particular:

(i)

(ii)

the monitoring and evaluation measures,
data collection arrangements;

including

a summary of any significant problems encountered
in implementing the operational programme and any
subsequent measures taken;

(iii)

the use made of technical assistance;

(e)

the activities to provide information on and publicise the
programme, in accordance with Article 62;

(f) where appropriate for the regional development compo-
nent, the progress and financing of major projects;

(g) where appropriate under the human resources develop-

ment component, a synthesis of the implementation of:

(i)

(ii)

gender mainstreaming as well as of any gender-
specific action;

action to increase participation of migrants
employment and thereby strengthen their
integration;

in
social

5. The national IPA coordinator and the operating structure
shall also be informed of the Commission's opinion on the
content of an admissible sectoral annual report within two
months from the date of receipt. For the sectoral final report on
an operational programme, this information shall be provided
within a maximum of five months from the date of receipt of the
admissible report.

TITLE IV

RURAL DEVELOPMENT COMPONENT

CHAPTER I

Object of assistance and eligibility

S e c t i o n 1

O b j e c t o f a s s i s t a n c e

Article 170

Additional definitions for the rural development
component

For the purposes of this Title, in addition to the definitions laid
down in Article 2, the following definitions shall apply:

1.

2.

3.

‘Community standards’: the standards laid down by the
Community in the fields of environmental protection,
public health, animal and plant health, animal welfare and
occupational safety;

‘Mountain areas’:
referred to in the first
subparagraph of Article 50(2) of Council Regulation (EC)
No 1698/2005 (1);

the areas

‘Young farmer’: a farmer under 40 years of age at the time
when the decision to grant support is taken, possessing
adequate occupational skills and competence.

(1) OJ L 277, 21.10.2005, p. 1.

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Article 171

Areas and forms of assistance

In addition to the provisions of Article 34(3), the following

2.
expenditure shall not be eligible under this component:

1. Assistance under
achieving the following objectives:

this component

shall contribute to

(a)

the purchase of agricultural production rights, animals,
annual plants and their planting;

improving market
Community standards;

efficiency and implementation of

(b)

any maintenance, depreciation and rental costs;

(a)

(b)

preparatory actions
environmental measures and local
strategies;

for

implementation of

the agri-
rural development

(c)

development of the rural economy.

2. Assistance covering the objective set out in point (a) of
paragraph 1, hereinafter referred to as ‘priority axis 1’, shall be
granted through the following measures:

(a)

investments in agricultural holdings to restructure and to
upgrade to Community standards;

(b)

support for the setting-up of producer groups;

(c)

investments in the processing and marketing of agriculture
and fishery products to restructure those activities and to
upgrade them to Community standards.

3. Assistance covering the objective set out in point (b) of
paragraph 1, hereinafter referred to as ‘priority axis 2’, shall be
granted through the following measures:

(a)

actions to improve the environment and the countryside;

(b)

preparation and implementation of local rural development
strategies.

4. Assistance covering the objective set out in point (c) of
paragraph 1, hereinafter referred to as ‘priority axis 3’, shall be
granted through the following measures:

(c)

any cost incurred by public administration in managing and
implementing assistance.

3. Notwithstanding the provisions of Article 34(3), in the case
of investment:

(a)

(b)

(c)

eligible expenditure shall be limited to the construction or
improvement of immovable property;

the purchase or lease-purchase of new machinery and
equipment, including computer software up to the market
value of the asset shall be considered as eligible; other costs
connected with the leasing contract, such as lessor's margin,
interest refinancing costs, overheads and insurance charges,
shall not be eligible;

general costs linked to expenditure referred to in points (a)
and (b), such as architects’, engineers’ and other consult-
ation fees, feasibility studies, the acquisition of patent rights
and licences shall be eligible up to a ceiling of 12 % of the
costs referred to in points (a) and (b).

Detailed provisions for the implementation of this paragraph
shall be set out in sectoral agreements as defined in Article 7 or
financing agreements as defined in Article 8.

4.
Investment projects shall remain eligible for Community
financing provided they do not, within five years from the final
payment by the operating structure, undergo a substantial
modification.

(a)

improvement and development of rural infrastructure;

Article 173

(b)

diversification and development of rural economic activ-
ities;

(c)

improvement of training.

S e c t i o n 2

Aid intensities and rate of Community contribution

1.
For the purposes of this component, the eligible expenditure
as referred to in Article 38(1) shall be calculated on the basis of
the public expenditure as defined in Article 2.

G e n e r a l r e q u i r e m e n t s o n e l i g i b i l i t y a n d a i d
i n t e n s i t i e s

2.
Public expenditure shall in principle not exceed a ceiling of
50 % of the total eligible cost of the investment. However, that
ceiling shall be raised up to:

Article 172

Eligibility of expenditure

(a)

55 % for investments in agricultural holdings made by
young farmers;

1.
In addition to the costs mentioned in Article 34(2), the costs
referred to in paragraph 3(c) shall be considered eligible under
this component.

(b) 60 % for investments in agricultural holdings in mountain

areas;

The technical assistance measures eligible under Article 34(2) are
those referred to in Article 182.

(c)

65 % for investments in agricultural holdings in mountain
areas made by young farmers;

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(d) 75 % for investments referred to in paragraph 4(d) and for
investments in agricultural holdings to implement
the
Council Directive 91/676/EEC (1), subject to the existence
of a national strategy for its implementation;

assistance may be granted regardless of non-compliance with
those standard on the condition that the holding shall meet the
new standards by the end of the realisation of the investment.

(e)

100 % for investments in infrastructure not of a nature to
generate substantial net revenue;

(f)

100 % for measures referred to under in Article 182.

3.
the
In determining the rate of public expenditure for
purposes of paragraph 2, account shall not be taken of national
aid to facilitate access to loans granted without any Community
contribution provided under the IPA Regulation.

4. The Community contribution shall in principle not exceed a
ceiling of 75 % of the eligible expenditure. However, that ceiling
shall be raised up to:

(a)

80 % for the measures covered by priority axis 2 referred to
in Article 171(3);

(b) 80 % in the case of activities covered by Article 182, where
the

the initiative of

taken at

those activities are not
Commission;

the Commission may, on the basis of duly
Furthermore,
substantiated request
from the beneficiary country, allow
derogation from point (b) of paragraph 2 in respect of non-
compliance with national minimum standards based on
Community standards introduced in the national
law up to
one year prior to date of submission of the application.

4. Assistance shall be granted on the condition that
the
investments comply with the relevant Community standards at
the end of their realisation.

5. Beneficiary countries shall set limits for the total investment
eligible for assistance. They shall lay down appropriate standards
regarding farmers' occupational skill and competence which the
farmers shall be required to comply with in order to be eligible
for assistance.

Article 175

Support for the setting-up of producer groups

(c)

100 % in the case of activities covered by Article 182,
where those activities are taken at the initiative of the
Commission;

1. Assistance referred to in Article 171(2)(b) may be granted to
facilitate the setting-up and administrative operation of producer
groups, for the purposes of:

(d) 85 % in the case of investment projects carried out in
regions where the Commission determines that exceptional
natural disasters have occurred.

S e c t i o n 3

E l i g i b i l i t y a n d s p e c i f i c r e q u i r e m e n t s f o r
a s s i s t a n c e u n d e r P r i o r i t y A x i s 1

Article 174

Investments in agricultural holdings

1. Assistance referred to in Article 171(2)(a) shall be granted
for tangible or intangible investments in agricultural holdings to
upgrade them to Community standards and to improve their
overall performance.

2. Assistance under this measure may be granted to agricul-
tural holdings:

(a)

for which a prospect of economic viability at the end of the
realisation of the investment can be demonstrated;

(b) which comply with national minimum standards regarding
environmental protection, public health, animal and plant
health, animal welfare and occupational safety at the time
when the decision to grant support is taken.

3. By derogation from point (b) of paragraph 2, where national
minimum standards based on Community standards have been
the time the application is received,
newly introduced at

(1) OJ L 375, 31.12.1991, p. 1.

(a)

(b)

(c)

adapting the production and output of the members of
producer groups to market requirements;

jointly placing goods on the market, including preparation
for sale, centralisation of sale, and supply to bulk buyers;

establishing common rules on production information,
with particular regard to harvesting and availability.

2. Assistance under this measure shall not be granted to
producer groups which have been officially recognised by the
relevant national authority of the beneficiary country before
1 January 2007 and/or before the approval of the programme
referred to in Article 184.

Professional and/or inter-professional organisations representing
one or more sectors do not qualify as producer groups.

3. Assistance shall be granted as a flat-rate aid in annual
instalments for the first five years following the date on which
the producer group was recognised. It shall be calculated on the
basis of the group's annual marketed production and shall fulfil
the following requirements:

(a)

(b)

amount for the first, second, third, fourth and fifth years to
5 %, 5 %, 4 %, 3 % and 2 % respectively of the value of
marketed production up to 1 million euros,

amount for the first, second, third, fourth and fifth years, to
2,5 %, 2,5 %, 2,0 %, 1,5 % and 1,5 % respectively of the
values of marketed production exceeding 1 million euros,

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(c)

be subject to a ceiling for each producer organisation of:

— EUR 100 000 for the first year

— EUR 100 000 for the second year

— EUR 80 000 for the third year

— EUR 60 000 for the fourth year

— EUR 50 000 for the fifth year.

Article 176

Investments in processing and marketing of agriculture and
fishery products

1. Assistance referred to in Article 171(2)(c) shall be granted
for
tangible and intangible investments in processing and
marketing of agricultural and fishery products, covered by
Annex I to the Treaty. Such assistance shall be aimed at assisting
enterprises in upgrading to Community standards and to
improve their overall performance. Investments must contribute
to improving the situation of the basic agricultural production
sector in question.

Investments at retail level shall be excluded from support.

2. Assistance under this measure may be granted for invest-
ments in enterprises:

(b) which employ fewer than 750 persons or have an annual
turnover not exceeding EUR 200 million, where the
purpose of the investments is to make the establishment
comply with the relevant Community standards.

5. The Commission may, on the basis of a duly substantiated
request from the beneficiary country, decide that assistance can
also be granted to enterprises not covered by paragraph 4 for
investments necessary to meet specific Community standards
which involves especially costly investments. Such support may
be granted only to enterprises identified in the national plan for
upgrading to Community standards specifically intended to make
the establishment compliant with the relevant Community
standards in its entirety. In such cases assistance shall be granted
at half of the aid rate available for the enterprises covered by
paragraph 4.

6. Beneficiary countries shall set limits for total
eligible for support under this measure.

investment

7. Assistance to investments in the enterprises referred to in
point (a) of paragraph 4 shall be granted on the condition that
such investments will comply with the relevant Community
standards at the end of their realisation.

S e c t i o n 4

E l i g i b i l i t y a n d s p e c i f i c r e q u i r e m e n t s u n d e r
P r i o r i t y A x i s 2

Article 177

(a)

for which the prospect of economic viability at the end of
the realisation of the investment can be demonstrated, and

Preparation for implementation of actions relating to
environment and the countryside

(b) which comply with the national minimum standards
regarding environmental protection, public health, animal
and plant health, animal welfare and occupational safety at
the time when the decision to grant support is taken.

3. By derogation from point (b) of paragraph 2, where national
minimum standards based on Community standards have been
newly introduced at
the time the application is received,
assistance may be granted regardless of non-compliance with
those standard on the condition that the enterprise shall meet the
new standards by the end of the realisation of the investment.

Furthermore, the Commission may, on the basis of a duly
substantiated request
from the beneficiary country, allow
derogation from point (b) of paragraph 2 in respect of non-
compliance with national minimum standards based on
law up to
Community standards introduced in the national
one year prior to date of submission of the application.

4. Assistance maybe granted to investments in establishments
which are part of enterprises:

In order

to prepare the beneficiary countries for

1.
the
implementation of actions referred to in Axis 2 of Council
Regulation (EC) No 1698/2005, assistance referred to in
Article 171(3)(a), shall be granted to pilot projects covered by
Articles 39 and 40 of Council Regulation (EC) No 1698/2005.

2.
Such actions shall aim at developing practical experience of
the implementation of actions to improve the environment and
the countryside, at both the administrative and farm levels.

Article 178

Preparation and implementation of local rural development
strategies

1. Assistance as referred to in Article 171(3)(b) shall be granted
in accordance with Article 61 of Council Regulation (EC)
No 1698/2005.

2. Assistance shall support:

(a) which employ fewer than 250 persons and which have an
annual turnover not exceeding EUR 50 million, and/or an
annual balance sheet total not exceeding EUR 43 million,
giving priority to investments aiming to align the establish-
ment with all the relevant Community standards; or

(a)

the implementation of cooperation projects in accordance
with the priorities as referred to in Article 171(1) and
within the meaning of Article 65 of Council Regulation
(EC) No 1698/2005;

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(b)

the running of the local private-public partnerships, also
referred as ‘local action groups’, acquisition of skills,
awareness raising activities and promotional events in a
view to achieving the objectives as referred to in Arti-
cle 171(1).

3. Detailed provisions for the implementation of this measure
shall be agreed with the beneficiary country. They shall be
consistent with the relevant rules applicable to the European
Agricultural Fund for Rural Development as set out in Council
Regulation (EC) No 1698/2005.

3. Where local rural development strategies as referred to in
Article 171(3)(b) have been established,
investments
supported under this Article must be in line with those strategies.

the

Article 181

Improvement of training

1. Assistance may be granted to contribute to the improvement
of the occupational skills and competence of persons engaged in
the agricultural, food, and forestry sectors and other economic
actors operating in the fields covered by this component.

S e c t i o n 5

E l i g i b i l i t y a n d s p e c i f i c r e q u i r e m e n t s u n d e r
P r i o r i t y A x i s 3

Assistance shall not be granted to courses of instruction or
training which form part of normal programmes or systems of
education at secondary or higher levels.

Article 179

Improvement and development of rural infrastructure

1. Assistance referred to in Article 171(4)(a), may be provided
improving and developing rural
to investments aimed at
infrastructure by:

2. Beneficiary countries shall elaborate a training strategy for
the implementation of the operations envisaged under para-
graph 1. The strategy shall include a critical assessment of the
existing training structures, an analysis of the training needs and
objectives. It shall also establish a set of criteria for the selection
of training providers.

(a)

addressing regional disparities and increasing the attrac-
and
tiveness of
entrepreneurial activity;

for private

individuals

areas

rural

(b)

providing conditions for the development of
economies.

the rural

Priority shall be given to investments in water and energy
2.
supply, waste management,
local access to information and
communication technologies, local access to roads of particular
importance for local economic development, and, fire protection
infrastructures where justified by the risk of forest fires.

3. Where local rural development strategies as referred to in
investments
Article 171(3)(b) have been established,
supported under this Article must be in line with those strategies.

the

S e c t i o n 6

Te c h n i c a l a s s i s t a n c e

Article 182

Scope and implementation

1. Assistance may be granted for activities related to the
preparation, monitoring, evaluation,
information and control
activities which are necessary for the implementation of the
programme. These activities shall include in particular:

(a) meetings and other activities necessary to discharge the
responsibilities of the sectoral monitoring committee for
this component, such as studies contracted and realised via
expert assistance;

Article 180

(b)

information and publicity campaigns;

Diversification and development of rural economic
activities

(c)

1. Assistance referred to in Article 171(4)(b), may be provided
to investments aimed at diversification and development of rural
economic activities by:

the
translation and interpretation at
Commission, not
to
the application of the framework, sectoral and financing
agreements;

including those required pursuant

the request of

(d)

visits and seminars;

(a)

raising of the economic activity;

(b)

creation of employment opportunities;

(e)

activities related to the preparation of measures in the
programme to ensure their effectiveness, including those
measures whose application is foreseen at a later stage;

(c)

diversification into non-agricultural activities.

(f)

the interim evaluation of the programme;

2.
Priority shall be given to investments for the creation and
development of micro and small enterprises, crafts and rural
tourism, with a view to promoting entrepreneurship and
developing the economic fabric.

(g)

the establishment and operation of a national network to
coordinate activities developed under Article 178 as well as
of a future national rural development network consistent
with Article 68 of Council Regulation (EC) No 1698/2005.

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2. The sectoral monitoring committee for this component shall
be consulted on the technical assistance activities. Each activity
shall be approved by the chair of
the sectoral monitoring
committee before its implementation.

(d)

table summarizing the
financial
an indicative overall
national, Community and, where appropriate, the private
financial resources provided for and corresponding to each
rural development measure, as well as the EU co-financing
rate by axis;

Each visit and seminar referred to in paragraph 1(d) not
the Commission shall require the
to the sectoral monitoring

3.
made at the initiative of
submission of a written report
committee for this component.

Article 183

European Network for Rural Development

Beneficiary countries and organisations established in the
beneficiary countries and administrations of beneficiary coun-
tries active in the field of rural development shall have access to
the European Network for Rural Development established by
Article 67 of Council Regulation (CE) No 1698/2005. Relevant
detailed provisions shall be agreed with beneficiary countries.

CHAPTER II

Programming

Article 184

Programmes

1. Measures under the rural development component shall be
the subject of a programme to be drawn up at national level for
agriculture and rural development (hereinafter referred to as ‘the
programme’) covering the entire period of IPA implementation.
The programme shall be prepared by the relevant authorities
designated by the beneficiary country and shall be submitted to
the Commission after consulting the appropriated interested
parties.

2.

Each programme shall include:

(a)

(b)

a quantified description of the current situation showing
disparities, shortcomings and potential for development,
the main results of previous operations undertaken with
Community and other bilateral or multilateral assistance,
the financial resources deployed and the evaluation of
results available;

the

a description of the national rural development strategy
proposed, based on an analysis of the current situation in
the rural areas and on an in-depth analysis of the sectors
concerned, involving independent expertise. A description
of
existing training strategy referred to under
Article 181(2) should be presented. The national rural
development strategy shall also include quantified objec-
tives, indicating for each of the priority axis set out under
Article 171(1) the appropriated monitoring and evaluation
indicators;

(e)

a description of the measures chosen from Article 171
including:

— the definition of final beneficiaries,

— the geographic scope,

— the eligibility criteria,

— the ranking criteria for selecting projects,

— monitoring indicators,

— quantified target indicators;

(f)

(g)

(h)

(i)

a description of the operating structure for the implemen-
tation of
including monitoring and
evaluation;

the programme,

the names of the authorities and bodies responsible for
carrying out the programme;

the results of consultations and provisions adopted for
associating the relevant authorities and bodies as well as
appropriate economic, social and environmental partners;

the results and recommendations of the ex ante evaluation
of the programme, including the description of the follow-
up undertaken by the beneficiary countries on recommen-
dations.

3.
In their programme, beneficiary countries shall ensure that
priority is given to measures to implement the Community
standards and to improve market efficiency, and measures to
create new employment opportunities in rural areas.

4.
In their programme, beneficiary countries shall ensure
compliance with the provisions of the multi-annual indicative
planning document.

5. Unless otherwise agreed with the Commission, beneficiary
countries shall submit their programme proposals no later than
six months after the entry into force of this Regulation.

Article 185

Adoption and amendments of programmes

(c)

an explanation of how the overall strategic approach and
sectoral strategies identified in the multi-annual indicative
planning document of
the beneficiary country are
translated into specific actions within the rural develop-
ment component;

1. The programmes under the rural development component
shall be adopted by the Commission within six months of
submission of the proposal of the programme, provided that all
relevant information is available. In particular, the Commission
shall appraise the proposed programme to determine whether it
is consistent with this Regulation.

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2. The programme may, if necessary, be amended to take due
account of:

the maximum Community contribution attached to each priority
axis.

(a)

(b)

relevant new information and results relating to the
implementation of the actions concerned,
including the
results of monitoring and evaluation, as well as the need to
adjust the amounts of aid available,

the beneficiary country's progress towards accession as
indicated in the main accession documents, including the
multi-annual indicative planning document.

3. Any proposal for amendments shall be submitted to the
Commission by the beneficiary country and shall be duly
substantiated, and shall include the following information:

(a)

the reasons for the proposed amendment;

(b)

the expected effects of the amendment;

(c)

amended financial and measure tables, where the proposed
amendments are of a financial nature.

4.
Substantial changes with the meaning of Article 14(4) of the
IPA Regulation include amendments which involve changes of
financial breakdowns among priority axes as
referred in
Article 171(1) or the co-financing rate by axis or the inclusion
of new measures.

5. The Commission may request beneficiary countries to
present a proposal for amending the programme where relevant
Community legislation has been amended.

CHAPTER III

Implementation

S e c t i o n 1

P r i n c i p l e s a n d f i n a n c i a l m a n a g e m e n t

Article 186

Implementing principles

Implementation of this component shall be carried out by
1.
the beneficiary countries on the basis of decentralised manage-
ment without ex ante controls as referred to in Article 18.

Further provisions may be set out

2.
financing agreements, referred to in Articles 7 and 8.

in the sectoral and

The provisions shall be consistent with the relevant rules
applicable to rural development programmes in the Member
States.

Article 187

Calculation of payments

By way of derogation from Article 44,
the Community
contribution to the programmes under this component shall
be calculated by applying the co-financing rate laid down for
each priority axis in the financing decision to the eligible
expenditure certified in each expenditure declaration, subject to

Article 188

Pre-financing

1.
For the purposes of this component, pre-financing pay-
ments may amount to 30 % of the Community contribution for
the first three years of the programme concerned. Subject to the
availability of budgetary appropriations, pre-financing may be
paid in two or more instalments.

In cases where the amounts paid for pre-financing referred
2.
to in paragraph 1 are not sufficient to ensure timely payment of
claims from final beneficiaries, these amounts may be increased
according to the provisions laid down in the sectoral or financing
agreements during the period of implementation to cover such
needs, provided that the cumulative amount of payments for pre-
financing does not exceed 30 % of the Community contribution
for the three most recent years as established in the financing
decision adopting the multi-annual programmes.

3. The first instalment of pre-financing shall be paid by the
Commission when the conditions laid down in Article 42(1) are
fulfilled. Additional instalments may be paid following a request
of the beneficiary country in accordance with the requirements
provided for in paragraphs 1 and 2.

Article 189

Clearance of accounts

Detailed provisions for the clearance of accounts shall be set out
in the sectoral and financing agreements, respectively referred to
in Articles 7 and 8. They shall be consistent with the relevant
rules applicable to the European Agricultural Fund for Rural
Development as set out in Council Regulation (EC) No 1290/
2005 (1) and the regulations laying down detailed rules for its
application. They may in particular provide for consultation of
the Committee on the Agricultural Funds.

Article 190

Criteria for financial corrections

By way of derogation from Article 51(2), the Commission shall
apply, depending on the findings, either flat-rate corrections, or
punctual corrections or corrections based on an extrapolation of
the findings.

S e c t i o n 2

E v a l u a t i o n a n d m o n i t o r i n g

Article 191

Ex ante, interim and ex post evaluations

In accordance with Article 57, the programme shall be
1.
subject
interim
to ex ante, ex post and, where appropriate,
evaluations carried out by independent evaluators under the
responsibility of the beneficiary country.

(1) OJ L 209, 11.8.2005, p. 1.

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the
2. The evaluations shall assess the implementation of
programme towards the achievement of objectives set out in
Article 12 of the IPA Regulation.

the national IPA coordinator within six months of the end of
each full calendar year of programme implementation.

3. Detailed modalities of these evaluations may be set out in
the sectoral or financing agreements, respectively referred to in
Articles 7 and 8. These modalities shall be consistent with the
relevant rules applicable to rural development programmes in
the Member States.

Article 192

Sectoral monitoring committee

In accordance with the provisions of Article 59, a sectoral
1.
monitoring committee shall be set up by the beneficiary country.

2. The sectoral monitoring committee shall be composed of
representatives of relevant authorities and bodies, and appro-
priate economic, social and environmental partners. The sectoral
monitoring committee shall draw up and approve its rules of
procedure.

3. The sectoral monitoring committee shall be chaired by a
representative of the beneficiary country. The Commission shall
participate in the work of the sectoral monitoring committee.

4. The progress, efficiency and effectiveness of the programme
in relation to its objectives shall be measured by means of
indicators relating to the baseline situation as well as to the
financial execution, outputs, results and impact of
the pro-
grammes.

Article 193

Sectoral annual reports

(a)

Such reports shall contain information regarding the
implementation progress,
the
attainment of set objectives, the problems encountered in
managing the programme, and the measures
taken,
financial execution, as well as monitoring and evaluation
activities carried out.

covering in particular,

(b) The sectoral annual reports shall be examined by the
sectoral monitoring committee prior to their submission.

2. A sectoral
final report shall, after examination by the
sectoral monitoring committee, be submitted to the Commission
and the national IPA coordinator, at the latest six months after
the final date of eligibility of expenditure under the programme.

Article 194

Further provisions for monitoring and reporting

Further provisions for monitoring and reporting may be set out
in the sectoral and financing agreements referred to in Articles 7
and 8. They shall be consistent with the relevant rules applicable
to the rural development programmes in the Member States.

PART III

FINAL PROVISIONS

Article 195

Entry into force

This Regulation shall enter into force on the first day following
that of its publication in the Official Journal of the European Union.

1. Under this component, the sectoral annual reports referred
to in Article 61(1) shall be submitted to the Commission and to

It shall apply from 1 January 2007.

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

Done at Brussels, 12 June 2007.

For the Commission

Olli REHN

Member of the Commission

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ANNEX

ACCREDITATION CRITERIA

Standard list of areas and related requirements as referred to in Article 11(2)

1.

Control environment (establishment and management of the organisation and the staff)

(a)

Ethics and integrity policies

— ensuring the culture for the organisation required by top management is understood throughout the

organisation

(b)

Irregularity management and reporting

— ensuring possible irregularities noted lower down the organisation are reported appropriately and

followed-up, including protection for 'whistle-blowers'

(c)

Staff planning, recruitment, training and appraisal (including sensitive post management)

— ensuring adequate numbers and quality of staff are in place at all levels

(d)

Sensitive functions and conflicts of interest

— ensuring that staff in 'sensitive posts' are identified (i.e. those where the staff may become vulnerable to
undue influence by the nature of their contacts with third parties or the information they have);

— ensuring that appropriate controls (including, where appropriate, rotation policies) are applied to sensitive

posts;

— ensuring that procedures exist to identify and avoid conflicts of interests.

(e)

Establishment of legal bases for bodies and individuals

— ensuring bodies and individuals have full legal authority to fulfil their functions.

(f)

Formal establishment of accountability, responsibility, delegated responsibility, and any necessary related
authority for all tasks and positions throughout the organisation:

— ensuring that no member of staff is in doubt as to the extent of their responsibilities. For commitments or
payments engaged to third parties, a single manager should be accountable for all aspects of the
transaction;

— mission statements, job descriptions etc are up to date and known.

2.

Planning/risk management (planning of interventions)

(a)

Risk identification, assessment and management

— ensuring that risks are identified and management, in particular that adequate control resources are

applied in all areas, in function of the significance of different risks they mitigate.

(b) Objective setting and allocation of resources against objectives

— ensuring that appropriate (and measurable) objectives at output and impact level are established at all

levels and understood throughout the organisation;

— ensuring that resources are appropriately allocated against those objectives respecting transparent sound

financial management principles;

— ensuring that responsibility for those objectives is clear.

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(c)

Planning of the implementation process

— ensuring clear planning of steps needed to deliver objectives — including timing and responsibility for

each step, and critical path analyses where necessary.

3.

Control activities (implementation of interventions)

(a)

Verification procedures

— ensuring double-check of all steps in a transaction (ex-ante and, where appropriate, ex-post).

(b)

Procedures for supervision by accountable management of tasks delegated to subordinates (including annual
statements of assurance from subordinate actors)

— ensuring that responsibility is supported by active supervision — and not merely considered a passive or

theoretical concept.

(c)

Rules for each type of procurement and grant calls

— ensuring appropriate legal framework for all such commitment processes.

(d)

Procedures (including checklists) for each step of procurement and grant calls (e.g. technical specifications,
evaluation committees, reporting of exceptions etc)

— ensuring each member of staff is clear as to their task responsibilities in these areas.

(e)

Publicity rules and procedures

— ensuring that these Commission requirements are fulfilled.

(f)

Payment procedures (including procedures for confirmation of output delivery, and/or eligibility conditions, ‘on-
the-spot’ where necessary).

— ensuring that payments are made only for justified payment applications which fulfil all contractual

requirements.

(g)

Procedures for monitoring delivery of co-financing

— ensuring that these Commission requirements are fulfilled.

(h)

Budgetary procedures to ensure availability of funds (including funds necessary to maintain implementation if
Commission funding is delayed or refused)

— ensuring that the National Authority can fulfil its local contractual commitments regardless of delays or

interruptions in funding from Commission.

(i)

Procedures for continuity of operations

— ensuring that significant risks to continuity (e.g. concerning loss of data, absence of individuals etc) are

identified and contingency plans put in place where possible.

(j)

Accounting procedures

— ensuring full and transparent accounting following accepted accounting principles.

(k)

Reconciliation procedures

— ensuring that wherever possible accounting balances are reconciled against third-party information.

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(l)

Reporting of exceptions, inter alia, exceptions to normal procedures approved at appropriate level, unapproved
exceptions and control failures whenever identified

— ensuring variations to normal practices are always recorded and logged and reviewed at appropriate levels.

(m)

Security procedures (IT and otherwise)

— ensuring that assets and data are kept secure from interference or physical damage.

(n) Archiving procedures

— ensuring that documents will be available — at least for Commission review throughout the required

periods for which they much be kept.

(o)

Segregation of duties

— ensuring that where different tasks in the life of the same transaction are allocated to different staff to

ensure some automatic cross-checking controls.

(p)

Reporting of internal control weaknesses

— ensuring that the registration of any internal control weakness identified from any source and that

management responses are recorded and followed-up.

4. Monitoring activities (supervision of interventions)

(a)

Internal audit including handling of audit reports and recommendations (NB: distinct from control activities and
management supervision)

— ensuring that top managers are provided with some independent reviews of the functioning of their
systems at subordinate levels. May involve some ex-post transaction checking but should be more focussed
on effectiveness and efficiency of system and organisation design.

(b)

Evaluation

— ensuring that top managers are provided with information concerning the assessment of impacts of
interventions (in addition to the other information they receive about legality, regularity and operational
procedures).

5.

Communication (ensuring all actors receive information necessary to fulfil their role)

Regular coordination meetings between different bodies to exchange information on all aspects of planning and
implementation e.g.:

(i)

Regular reporting on status of planning of programmes and projects

(ii)

Regular reporting on project implementation compared to implementation plan

— Contracting processes (inter alia)

— Progress of each tendering process against plan

— Systematic analysis of errors reported at any level (e.g. by verifiers, ex-ante controllers, auditors etc)

— Implementation of contracts

— Costs of controls against benefits

(iii) Regular reporting at all appropriate levels on efficiency and effectiveness of internal control

— ensuring all staff at all levels receive adequate regular information in order to fulfil their accountabilities.