Communication from the Commission to the European Parliament, the Council and the Court of Auditors - An action plan to strengthen the Commission's supervisory role under shared management of structural actions
Date: 2008-02-19
Institutions: European Commission
Subjects: European Commission, Structural Funds, action programme, competence of the Member States, financial management, powers of the institutions (EU)

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 19.2.2008 
COM(2008) 97 final 

COMMUNICATION FROM THE COMMISSION 
TO THE EUROPEAN PARLIAMENT, THE COUNCIL AND THE COURT OF 
AUDITORS 

An action plan to strengthen the Commission's supervisory role 
under shared management of structural actions 

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COMMUNICATION FROM THE COMMISSION 
TO THE EUROPEAN PARLIAMENT, THE COUNCIL AND THE COURT OF 
AUDITORS 

An action plan to strengthen the Commission's supervisory role 
under shared management of structural actions 

1. 

The Commission gives the highest priority to the exercise of its responsibilities 
for  implementing  the  budget  under  Article  274  of  the  EC  Treaty.  In  January 
2005,  it  made  it  a  strategic  objective  to  strive  for  a  positive  statement  of 
assurance  (DAS)  from  the  European  Court  of  Auditors  (“the  Court”)  and  in 
January 2006, it adopted an Action Plan towards an Integrated Internal Control 
Framework in order to make progress toward this objective. The conclusions of 
the Court for 2006 show that the percentage of the Community budget subject to 
a positive assurance is growing. However, the Court also found that the area of 
structural actions has not shown improvements. This is an area subject to shared 
management between the Commission and the Member States. 

Structural  actions  represent  one  of  the  core  policies  of  the  Union.  They 
symbolise the central place of solidarity amongst the values of the Union. They 
promote economic development and social cohesion, boosting prosperity in the 
Union  as  a  whole.  The  new  programming  period  has  shown  how  they  can  be 
adapted  to  the  new  demands  of  the  Lisbon  strategy  for  growth  and  jobs.  It  is 
therefore essential that the resources devoted to structural actions should be used 
to  best  effect,  and  that  the  principles  of  sound  financial  management  are 
rigorously applied. 

2. 

In accordance with Article 53b of the Financial Regulation1, the Member States 
have the primary responsibility to take all measures necessary to ensure that the 
funds  are  used  in  accordance  with  the  applicable  rules  and  principles  and  to 
protect the Communities' financial interests. 

In particular, they are required to put in place an effective and efficient internal 
control  system  according  to  the  provisions  of  Article  28a  of  the  Financial 
Regulation.  In  addition,  sector-specific  legislation  makes  the  Member  States 
responsible  for  preventing,  detecting  and  correcting  irregularities,  as  well  as 
setting  out  detailed  requirements  in  relation  to  the  management  and  control 
systems. 

The Commission's responsibilities for the Community budget are not limited to 
expenditure under its direct authority. It must also verify that the Member States 
are  carrying  out  the  tasks  entrusted  to  them  correctly.  Where  it  concludes  that 
this is not the case, it must use the available mechanisms to suspend payments 
and apply financial corrections. 

1 

Council  Regulation  (EC,  Euratom)  No  1605/2002  of  25  June  2002  on  the  Financial  Regulation 
applicable to the general budget of the European Communities (OJ L 248, 16.9.2002, p. 1). 

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3. 

The European Court of Auditors in its Annual report for 2006 concluded that:  

–  there was a high level of errors in expenditure declared by the Member States 

and reimbursed by the Commission in 2006;  

–  that the management and control systems of Member States are ineffective or 

moderately effective; and  

–  that  the  systems  of  the  Commission  to  mitigate  these  weaknesses  are  only 

moderately effective.  

4. 

Over the last five years, the Commission has put in place a series of steps with 
the  goal  of  improving  its  supervisory  role  for  structural  actions.  The  measures 
taken include: 

–  an  increased  number  and  coverage  of  audits,  reaching  61%  of  programmes 
expenditure  for  ERDF  and  83%  for  ESF,  as  well  as  the  establishment  of  a 
joint audit strategy document every year since 2005;  

–  the  application  of  "action  plan"  procedures  to  monitor  the  remedial  actions 
for  systemic  weaknesses  and  execution  of  financial  corrections  by  Member 
States;  

–  the suspension of interim payments; and  

–  the adoption of financial correction decisions. 

However, the findings of the Court show that these measures have not yet been 
sufficient  to  have  a  measurable  impact  on  the  reliability  of  the  certification  of 
expenditure by Member States to the Commission. The Court has continued to 
find  high  error  rates  concerning  expenditure  at  project  level  and  systems 
deficiencies, especially at the primary control level in the Member States. 

Some of the errors identified by the Court may be remedied by recoveries and 
other  measures  taken  downstream  in  the  course  of  programme  or  project 
implementation  and  at  closure.  The  Commission  is  stepping  up  its  action  to 
secure  reliable  information  from  Member  States  on  financial  corrections  and 
recoveries.  It  is  ready  to  use  not  only  suspensions  of  payments,  but  also  other 
measures  such  as  infringement  proceedings  if  progress  is  not  made.  However, 
the application of recoveries does not diminish the importance of the "ex ante" 
controls in Member States. This is why the Commission is also working with the 
Member  States  to  improve  the  primary  controls  at  national  level.  It  is  indeed 
unacceptable that interim reimbursements are subject to the high level of error 
identified by the Court. 

The  Commission  has  also  taken  steps  to  apply  the  lessons  learned  from  the 
financial management of past structural actions to the 2007-2013 programming 
period.  This  includes  strengthened  control  and  audit  arrangements  in  the  new 
legislation, substantial efforts to give guidance to national authorities, and action 
to  confirm  that  the  set-up  of  the  systems  for  the  new  programmes  is  fully 
compliant  with  requirements  on  internal  control.  This  will  provide  a  more 

5. 

6. 

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7. 

8. 

reliable  basis  for  obtaining  assurance  on  the  effectiveness  of  the  national 
systems.  

While these new arrangements come on stream, the Commission is determined 
to continue efforts to ensure that the remaining payments up to the closure of the 
2000-06 programmes in 2010 are legal and regular. The process for the closure 
of  the  programmes  must  provide  assurance  on  the  legality  and  regularity  of 
expenditure for the whole period. 

The Court has made recommendations in the 2006 Annual Report for improving 
the  effectiveness  of  the  Commission's  supervisory  role  for  structural  actions. 
The  Commission  is  adopting  the  attached  Action  Plan  to  address  these 
recommendations, in order to:  

–  improve 

the  effectiveness  of 

the  Commission’s  supervision  of 

the 

management and control systems in the Member States; 

–  increase the impact of the audit activity; 

–  ensure that there is complete, transparent, reliable and consistent reporting on 

financial corrections and recoveries;  

–  take  the  necessary  decisions  on  suspension  of  payments  and  financial 

corrections within a clear timeframe. 

9. 

The  Action  Plan  is  designed  to  complement  the  current  high  level  of  audit 
activity  under  the  joint  audit  strategy  for  structural  actions  and  continuing 
relevant  actions  under  the  Commission  Action  Plan  toward  the  Integrated 
Internal Control Framework. 

The  Action  Plan  sets  out  specific  actions  to  be  taken  in  2008  in  10  areas  to 
implement the recommendations of the Court and increase the effectiveness and 
impact of the Commission’s supervision of the management and control systems 
in the Member States. For each action there is an identified output and deadline 
so  that  implementation  can  be  monitored.  The  Commission  will  monitor  the 
progress of the Action Plan during the course of 2008 and be ready to report on 
its progress. 

the  Member  States 

the  Commission  and 

A  reduction  in  the  level  of  error  found  by  the  Court  depends  on  a  partnership 
to  make  consistent 
between 
improvements  in  the  capacity  of  Member  States'  internal  control  systems  to 
prevent errors. The Action Plan will mean that the Commission will contribute 
to  these  efforts  through  stronger  supervision,  more  efficient  correction 
mechanisms,  and  improved  information.  The  Commission  considers  that  the 
result  should  be  a  real  step  forward  in  efforts  to  achieve  improvements  and 
mitigate the risk of continued failures in some Member States. 

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ANNEX 

ACTION PLAN to strengthen the Commission’s supervisory role for structural 
actions 

1. 

Object of the Action Plan 

1.1. 

The object of the action plan is to strengthen the Commission's supervisory role 
and  thus  bring  the  Member  States  to  reduce  the  level  of  error  in  expenditure 
claims certified to the Commission for co-financing under structural actions or, 
where they fail to do so, to prevent loss to the Community budget by financial 
corrections. 

1.2.  Whilst  the  initial  deadlines  are  not  later  than  end  2008,  certain  actions  will  be 
ongoing. It will therefore be necessary to review and update the action plan at 
the  end  of  2008.  The  execution  of  the  action  plan  will  be  monitored  quarterly 
during the year. 

1.3. 

The  Commission  will  report  to  the  European  Parliament  on  a  quarterly  basis 
starting end March 2008.  

2. 

Implementing the recommendations of the Court 

2.1. 

The  object  will  be  achieved  by  implementing  the  recommendations  of  the 
European  Court  of  Auditors  as  set  out  in  its  2006  Annual  Report  (AR),  its 
Opinion No 6/2007, and during the discharge procedure. The recommendations 
of the Court are: 

(a) 

to  ensure  provision  of  complete  transparent  and  reliable  information  on 
financial corrections and recoveries (AR § 2.24 and 2.26), 

(b) 

to improve the quality of the DGs' Annual Activity Reports (AR § 2.37a), 

(c) 

(d) 

(e) 

(f) 

(g) 

(h) 

to  implement  the  Commission's  Action  Plan  on  the  Integrated  Internal 
Control Framework (AR § 2.37b), 

to improve the effectiveness of the Commission's supervisory controls to 
mitigate the risk of failure in Member States' systems (AR § 2.37c), 

to  ensure  sound  closure  procedures  for  the  2000-2006  programming 
period (AR § 3.18), 

to  focus  on  improving  the  primary  controls  at  management  level  in  the 
Member States (AR § 6.43), 

to  reinforce  the  feedback  mechanisms  in  the  control  system  in  the 
Structural Funds (AR § 6.44), 

to  encourage  and  facilitate  the  use  of  simplifications  for  the  2007-2013 
period (AR § 6.45), 

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(i) 

(j) 

to ensure full implementation of the legal framework for the programming 
period 2007-2013 (Discharge hearing COCOBU 22.1.2008), 

to  increase  the  impact  of  Commission  audit  activity  by  better  use  of 
suspensions  and  financial  corrections  (Meeting  ECA  and  Commission 
1.2.2008), 

(k) 

to undertake adequate supervision of the annual summaries to ensure that 
they are consistent, comparable and useful (Opinion No 6/2007 § III). 

2.2. 

The Commission will also follow up every substantive error found by the Court 
in order to ensure that appropriate financial corrections have been effected. 

3. 

Actions to correct system deficiencies under the DGs' audit strategies 

The  audit  work  of  the  Commission  is  a  key  element  in  the  exercise  of  its 
supervisory role. DG REGIO and DG EMPL carry out their audit activity in the 
framework of a 3 year audit strategy which is updated annually and sets out the 
objectives  and  priorities  on  the  basis  of  the  risks  identified,  and  presents  the 
audit work planned. 

For the 2000-2006 programming period, by the end of 2007 audit coverage for 
the  ERDF  was  approximately  61%  of the  total  amount  of  Community  funding 
decided for the programmes, and for the ESF 83%. 

The  two  DGs  have  planned  audit  work  for  2008  relating  to  the  2000-2006 
programming period which focuses on: 

–  audits of high risk management bodies (40 ERDF; 15 ESF), 

–  review  of  winding-up  bodies  in  preparation  for  programme  closure  (30 

ERDF; 6 ESF). 

Serious  system  deficiencies  detected  by  audits  in  previous  years  are  being 
followed  up  through  action  plans  to  be  implemented  by  the  Member  States 
concerned. For the ERDF there are 10 action plans covering 80 programmes and 
for the ESF 17 action plans covering 20 programmes. By the end of 2008, either 
the Commission's services will have concluded that those Member States have 
successfully  completed  the  actions,  or  a  procedure  leading  to  financial 
corrections will have been launched. 

As  regards  on-going  procedures,  the  one  outstanding  procedure  for  financial 
corrections for the 2000-2006 programming period will be concluded in the first 
quarter  of  2008.  19  further  procedures  for  suspension  of  interim  payments 
leading  to  financial  correction  have  been  launched  (6  ERDF,  8  ESF,  5  CF). 
These procedures shall be finalised by the end of 2008. 

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4. 

Preparation for programme closure 

The follow up of the ex post audits on the closure of programmes of the 1994-
1999  programming  period2  is  being  concluded,  and  financial  correction 
decisions will be adopted for an amount estimated at not less than € 500 million. 
The  Commission's  services  have  already  begun  preparation  for  the  closure  of 
2000-2006 programmes. Guidelines for the Member States were adopted by the 
Commission in 2006. The DGs launched an audit enquiry targeting the winding-
up  bodies  responsible  for  issuing  declarations  on  legality  and  regularity  of 
expenditure in 2007. Audits of 19 winding  up bodies have been completed. In 
addition, the DGs plan to:  

–  draw up internal procedures to ensure a rigorous examination of the closure 
documents  submitted  by  Member  States  and  the  correct  treatment  of 
irregularities;  

–  conclude  the  audit  enquiry  on  winding-up  bodies  through  the  36  additional 

audits referred to above;  

–  raise awareness of the Member States on preparation for closure. 

5. 

Completion of the Commission's Action Plan toward an Integrated Internal 
Control Framework 

The  two  DGs  have  been  actively  involved  in  the  implementation  of  the 
Commission Action Plan toward an Integrated Internal Control Framework. 

In 2008 the following actions will be completed. 

Action  10  –  estimating  the  cost  of  controls  for  the  ERDF  –  on-the-spot  visits 
have taken place in 10 Member States to verify the  reasonableness of the  data 
submitted.  The  analysis  is  underway  and  will  be  finalised  by  May  2008.  A 
Communication will be prepared for October 2008 to bring together the results 
of  this  evaluation  of  the  costs  and  benefits  and  the  analysis  of  residual  risk, 
which DGs for whose policy areas the Court's assessment is "red" are required 
to include in their 2007 annual activity reports.  

Action 11N - reliability of national monitoring and reporting systems - an annex 
on  financial  corrections  and  recoveries  was  included  for  the  first  time  in  the 
2006  Annual  Report  on  the  Structural  Funds  issued  on  October  2007  which 
presented  a  summary  of  the  data  received  from  Member  States  on  recoveries 
and  withdrawals.  Audits  of  a  sample  of  Member  States  will  be  undertaken  to 
verify the completeness and accuracy of the data.  

Action 15- contracts of confidence – contracts of confidence have been signed 
with  Denmark,  Portugal,  Slovenia  and  Estonia  in  2008,  to  add  to  those  signed 
previously with UK, (Wales) and Austria. Additional efforts will be made by the 

2 

The deadline for the submission of final payment claims was 31 March 2003. 

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DGs  to  conclude  further  such  contracts  where  the  Member  States  fulfil  the 
conditions. For example, two further contracts are in preparation for decision in 
the  autumn.  The  contracts  relate  to  the  2000-2006  programming  period.  The 
fundamental  concept  of  the  contract  of  confidence  is  integrated  into  the 
Community legislation for the Structural Funds programming period 2007-2013. 

In  addition  the  following  actions  are  seen  as  ongoing  and  will  give  rise  to 
additional outputs: 

Action 9 – coordination and sharing of audit and control results – the database 
of common bodies responsible for the management and controls systems of the 
Structural  Funds  was  completed  in  2007  with  the  winding-up  bodies.  This 
database will be used to share results of the audit enquiry on the review of the 
work of the winding up bodies in 2008. 

Action  14b  –  guidance  to  Member  States  -  six  guidance  notes  were  discussed 
with  Member  States  during  2007.  The  two  guidance  notes  for  the  audit 
authorities  will  be  finalised  in  2008  and  a  further  two  guidance  notes,  on 
management verifications and the certification function, will be revised to take 
into account the provisions of the new regulations. 

Action 16 – coordinating audit standards – the Structural Funds audit manual is 
currently  being  updated  and  will  be  completed  in  2008,  and  the  guidance 
documents on sampling and systems assessment methodology will be finalised.  

6. 

Preventive actions for the Structural Funds programming period 2007-2013 

For  the  programming  period  2007-2013,  the  Commission's  services  undertook 
actions in 2007 to ensure that detailed guidance was given to the Member States 
on the key procedures of the compliance assessment process, and the approval 
of  the  audit  strategy.  The  Commission's  services  gave  additional  guidance  and 
training  to  audit  authorities  in  relation  to  systems  audits  and  project  audits.  In 
2008 the Commission's services will ensure effective scrutiny of the compliance 
assessment  documents  and  the  audit  strategy  documents  applying  the  common 
procedures  and  checklists  which  have  been  put  in  place  in  order  to  obtain 
assurance  that  Member  States  have  set  up  compliant  management  and  control 
systems. The Commission's services will complete further guidance documents 
as mentioned in point 5, namely: 

–  audit manual for Structural Funds, 

–  guidance on first-level verifications by managing authorities, 

–  guidance on the certification function. 

They  will  also  take  actions  to  promote  use  of  the  simplified  procedures  made 
possible  by  the  Community  regulations,  and  to  provide  clear  guidance  on 
eligibility issues. 

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7. 

Additional new actions 

The  Commission's  services  have  since  the  publication  of  the  Court's  Annual 
Report for 2006 launched a series of additional actions in response to the Court's 
recommendations which will be completed in 2008. They concern in particular 
measures to ensure more rapid adoption of decisions for suspension of payments 
and  financial  corrections  when  serious  systems  weaknesses  are  detected, 
measures  to  improve  the  quality  of  reporting  on  recoveries  and  financial 
corrections  both  at  the  initiative  of  Member  States  and  of  the  Commission, 
measures  to  improve  further  the  reporting  in  the  Annual  Activity  Reports,  and 
measures  to  maximise  the  value  which  can  be  obtained  from  the  annual 
summaries required from Member States under Article 53b(3) of the Financial 
Regulation. 

8. 

Impact of the action plan 

8.1. 

8.2. 

The  Commission  has  established  this  action  plan  in  order  to  address 
systematically the 11 recommendations of the Court. It incorporates the relevant 
actions  referred  to  above  including  the  additional  new  actions  mentioned,  and 
its 
specifies  outputs  and 
implementation can be monitored.  

together  with  deadlines,  so 

indicators, 

that 

Achieving  a  reduction  in  the  error  rate  at  the  level  of  interim  reimbursements 
will be a steady but lengthy process. It is only when the Member States' systems 
are  consistently  effective  in  preventing  errors  in  the  first  place,  prior  to 
certification  of  expenditure  to  the  Commission,  that  the  errors  found  by  the 
Court will reduce. For the 2000-2006 programming period, errors already made 
will continue to affect payments which will be made up to 2010. Correction of 
these errors will depend on the effectiveness of the post-payment controls which 
the Member States are required to undertake, and on the control and audit work 
of the Commission. Actions in the action plan should increase the effectiveness 
of  these  ex  post  controls,  in  particular  in  relation  to  those  Member  States' 
systems  already  identified  as  failing,  and  provide  better  monitoring  indicators. 
For the 2007-2013 programming period, the action plan should ensure that the 
Member States' systems function effectively from the beginning of programme 
implementation, or, if not, that deficiencies are detected early so that corrective 
measures can be applied. 

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. 

Action 

ECA 
addressed 

recommendation 

Objective 

Chef 
file 

de 

Output/Indicator 

Deadline 

1. Actions under the Structural Actions joint audit strategy for 2000-2006 

Action Plan  

1.1.  Carry  out  targeted  audits  on  high-
risk management bodies (2000-06)  

Focus  on 
primary 
management 
Member States  

improving 
controls 
level 

in 

the 
at 
the 

resources  on 
Focus  audit 
high-risk  bodies  so  as 
to 
reduce potential residual risk  

DG 
REGIO 
DG EMPL 

Improve  effectiveness  of 
Commission's 
supervisory 
controls  to  mitigate  the  risk 
of  failure  in  Member  States 
systems 

Execution  of  planned 
audit missions: 

31.12.2008 

ERDF/CF  40:  BE,  BG, 
CZ,  ES  (2),  F  (3),  FI, 
GR (3), IRL (2), IT (6), 
LT,  LV,  NL,  PL  (2), 
PT  (2),  RO,  SK  (2), 
UK  (2),  INTERREG 
(8) 

ESF  15:  AT,  DE,  ES 
(3),  HU,  IT,  LV,  PT 
(3), SI, SK, UK (2) 

Audit  results  within  3 
months 
audit 
of 
mission. 

Effective result – sound 
corrective 
basis 
for 
reasonable 
action  or 
that  action 
assurance 

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1.2.  Complete  the  follow-up  of  the 
Member  States'  implementation  of 
27  current  action  plans  to  remedy 
those 
serious  deficiencies 
Member  States'  management  and 
control systems 

in 

Focus  on 
primary 
management 
Member States  

improving 
controls 
level 

in 

the 
at 
the 

Improve  effectiveness  of 
Commission's 
supervisory 
controls  to  mitigate  the  risk 
of  failure  in  Member  States 
systems 

Obtain  reasonable  assurance 
the  management  and 
that 
in 
systems 
control 
the 
function 
States 
Member 
effectively  and  safeguard  the 
Community budget 

DG 
REGIO 
DG EMPL 

1.3. 

to 

Bring 
the  20 
conclusion 
suspension and financial correction 
procedures  currently  underway  for 
2000-2006  and  the  34  financial 
correction procedures from closure 
audits for 1994-1999 

the 

Increase 
impact  of 
Commission  audit  activity 
through  more  effective  use 
of  suspension  and  financial 
correction procedures  

Obtain  reasonable  assurance 
the  management  and 
that 
in 
systems 
control 
the 
Member 
function 
States 
effectively  and  safeguard  the 
Community budget 

DG 
REGIO 
DG EMPL 

31.12.2008 

31.12.2008 

not needed 

27  action  plans  (ERDF 
in  16 
10/ESF  17) 
States 
Member 
with 
concluded 
effective result 

ERDF:  ES,  FI,  IT,  NL, 
(2), 
PL,  PT,  UK 
INTERREG (2) 

ESF:  AT  (2),  BE,  DE 
(3),  ES  (2),  F  (3),  IT 
(2), LV, NL, SK, UK  

Suspension/financial 
correction  procedures 
concluded 
by 
corrections  agreed  by 
the  Member  State  or  a 
Commission  decision 
24-month 
within 
deadline 
8.2 
below) 

(see 

ERDF  32  programmes: 
ES  (23),  IT,  PT  (3), 
INTERREG  (3),  UK 
(2) 

ESF  12  programmes: 

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1.4.  Follow 

up 

the 

individual 
substantive  error  cases  for  DAS 
2006  together  with  any  systemic 
implications 

Improve  effectiveness  of 
Commission's 
supervisory 
controls  to  mitigate  the  risk 
of  failure  in  Member  States 
systems 

Obtain 
required 
been  made 
Community budget 

that 
assurance 
corrections  have 
the 
to  protect 

DG 
REGIO 
DG EMPL 

2. Main ongoing actions under the Action Plan towards an Integrated Internal Control Framework 

2.1.  Action  9  –  Construct  effective 
tools  for  sharing  audit  and  control 
results  and  promote 
the  single 
audit approach 

Reinforce 
feedback 
the 
mechanisms  in  the  control 
systems 
the  Structural 
Funds 

in 

Coordinate  audit  and  control 
work in order to maximise its 
effectiveness 

DG  REGIO
DG EMPL 

DE,  ES  (2),  F  (2),  IT 
(2),  LU  (2),  LV,  NL, 
UK 

CF 60 projects: BG (3), 
ES  (14),  GR  (37),  PT 
(3), LT (3) 

Final  position  taken  by 
DGs on 73 cases 

30.9.2008 

Where  Member  State 
has  not  made  required 
correction,  a  financial 
correction 
procedure 
has been launched 

31.12.2008 

of 

Sharing 
audit 
results  under  enquiry 
to  review  work  of 
winding-up 
bodies 
(see 3.1 below) 

2.2.  Action  10  -  Conduct  an  initial 
estimation  and  analysis  of  in  the 
costs of controls for the ERDF 

Integrated 

Implement 
the 
Commission's action plan on 
the 
Internal 
in 
Control 
accordance  with  Court 
Opinion No 2/2004 

Framework 

basis 
a 

a 

Provide 
establishing 
between 
benefits of controls 

the 

costs 

for 
balance 
and 

DG REGIO  Report  on  analysis  of 
from 

data 
received 
Member States 

31.5.2008 

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. 

2.3.  Action  11N 

examine 

the 
- 
reliability  of  national  monitoring 
for 
and 
recoveries 
financial 
corrections 

reporting 

systems 

and 

provision 
of 
Ensure 
transparent  and 
complete, 
on 
information 
reliable 
financial  corrections  and 
recoveries 

Improve 
financial 
action 6 below) 

reporting 
corrections 

on 
(see 

DG  REGIO 
DG EMPL 

31.12.2008 

Verifications 
in  10 
Member  States  to  be 
selected  after  analysis 
of  data  to  be  supplied 
by 31.3.2008 (5 MS in 
first half year) 

result 

Effective 
– 
improved  assessment 
by Court 

2.4.  Action 14b - provide guidelines for 
beneficiaries  and/or  intermediate 
levels 
and 
responsibilities in the control chain 

controls 

on 

Encourage  and  facilitate  the 
use of simplifications for the 
2007-13 period 

To  prevent  errors  and  reduce 
the  risk  to  the  Community 
budget (see actions 4 and 5.2 
below) 

initiative 

2.5.  Action 15 - promote the ‘Contracts 
for 
of  Confidence’ 
Structural 
(enabling 
Funds 
Commission  to  place  reliance  on 
national  audit  work  for  2000-06 
period  and  creating  basis 
for 
similar cooperation in 2007-13)  

Improve the effectiveness of 
Commission's 
the 
supervisory 
to 
controls 
mitigate the risk of failure in 
Member States' systems 

Improve  the  coordination  of 
audit work so as to be able to 
place reliance on the work of 
the national audit bodies  

30.6.2008 

30.9.2008 

DG  REGIO 
DG EMPL 

Updated 
notes on: 

guidance 

management 
verifications 

certification function 

DG REGIO   Target  -  Signing  of 
contracts 
of 
confidence  with  2 
more  Member  States 
demonstrate 
which 
(6 
suitability 
their 
19 
signed 
at 
for 
February  2008 
ERDF  and  Cohesion 
Fund) 

as 

EN 

13 

EN 

 
  
 
 
 
. 

2.6.  Action  16 

-  coordinate  audit 
standards,  error  rate  reporting,  etc. 
for Structural Funds 

Improve the effectiveness of 
Commission's 
the 
to 
controls 
supervisory 
mitigate the risk of failure in 
Member States' systems 

Improve 
integrated 
the 
internal control framework by 
standardising audit methods 

DG REGIO 
DG EMPL 

3. Preventive actions for closure of 2000-2006 programmes and projects 

3.1.  Complete  the  audit  enquiry  on  the 
review of the work of the winding-
up bodies (2000-06) 

Ensure 
procedures 

sound 

closure 

Preventive  control  to  ensure 
the  closure  process  will  be 
effective 
detecting 
in 
irregular expenditure 

DG 
REGIO 
DG EMPL 

Sampling guide 

30.4.2008 

Systems 
methodology 

assessment 

30.4.2008 

Completion of revised 
Structural  Funds  audit 
manual 

31.12.2008 

Execution  of  planned 
audit missions: 

31.12.2008 

ERDF/CF  30:  BE,  BG, 
CY, CZ (2), DE (5), ES 
(2), FI, GR (2), HU, IT 
(6),  LT,  NL,  PL  (2), 
RO, UK (3)3 

ESF  6:  EE,  FI,  HU, 
IRL, PT, SV 

Effective result – sound 
corrective 
basis 
for 
reasonable 
action  or 
that  action 
assurance 
not needed 

3 

8 missions are combined with missions under action 1.1. 

EN 

14 

EN 

 
  
 
 
 
 
                                                 
3.2.  Finalise  the  internal  procedures  to 
ensure  rigorous  examination  of 
closure documents 

Ensure 
procedures 

sound 

closure 

3.3.  Raise awareness of Member States 
of the closure guidelines issued by 
the Commission in 2006 

Ensure 
procedures 

sound 

closure 

Ensure proper preparation for 
the  closure  of  programmes 
within 
Commission 
services 

the 

Ensure proper preparation for 
the  closure  of  programmes 
within the Member States 

DG 
REGIO 
DG EMPL 

New 
finalised 

procedures 

30.6.2008 

DG 
REGIO 

Seminar  for  managing 
authorities 

30.6.2008 

point 

Agenda 
for 
annual  meetings  with 
managing authorities 

31.12.2008 

4. Preventive actions for the 2007-13 programming period  

4.1.  Review  of  compliance  assessment 

reports and opinions  

Ensure  full  implementation 
of  the  legal  framework  for 
the  programming  period 
2007-13 

that  effective 
To  ensure 
management 
control 
and 
systems  are  in  place  early  on 
in the period 

DG 
REGIO 
DG EMPL 

31.12.2008 

review 

for 
Desk 
250 
approximately 
systems,  with 
fact-
finding  missions  where 
necessary 

Effective  result  –  low 
interim 
error  rate 
payment 
claims 
subsequently declared 

in 

4.2.  Review of national audit strategies   Ensure  full  implementation 
of  the  legal  framework  for 
the  programming  period 
2007-13 

To  ensure  national  audit 
strategies  compliant  with  the 
regulations 

DG 
REGIO 
DG EMPL 

review 

Desk 
approximately 
audit strategies 

of 
200 

31.12.2008 

EN 

15 

EN 

 
  
 
Encourage  and  facilitate  the 
use of simplifications for the 
programming  period  2007-
13 

To  prevent  errors  and  reduce 
the  risk  to  the  Community 
budget 

. 

4.3.  Actions on simplification: 

a)  Note  on  partial  closure  under 
Article  88  of  Regulation  (EC)  No 
1083/2006  followed  up  in  annual 
meetings 
managing 
with 
authorities 

b)  Note  on  use  of  flat  rates  for 
indirect  costs  (ESF  only)  followed 
up 
in  annual  meetings  with 
managing authorities 

4.4.  Review  and  provide  clarification 

on eligibility issues for 2007-13:  

Ensure  full  implementation 
of  the  legal  framework  for 
the  programming  period 
2007-13 

Ensure  that  the  regulations 
the  national 
are  clear 
authorities applying them and 
to the beneficiaries 

to 

a)  Compilation  of  Community 
eligibility rules for 2007-13 period 
as single brochure 

b)  Note  on  application  of  Article 

DG 
REGIO 
DG EMPL 

Guidance 
follow up meetings 

note 

and 

31.12.2008 

result 

Effective 
– 
majority  of  Member 
partial 
use 
States 
closure 

DG EMPL  Guidance 

note 

and 

31.12.2008 

follow up meetings 

result 

Effective 
– 
majority  of  Member 
States  (18/27)  use  flat 
rates – reduced errors 

(Note 
finalised  in 
9.2007) 

Brochure 

30.9.2008 

DG 
REGIO 
DG EMPL 

DG 

Guidance note 

30.6.2008 

EN 

16 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
55  of  Regulation 
(EC)  No 
1083/2006  –  revenue-generating 
projects 

c) Note on application of State aid 
rules 

4.5.  Raise 

awareness 

of 

public 

procurement rules 

Focus  on 
primary 
management 
Member States 

improving 
controls 
level 

in 

5. Actions to improve primary controls at national level 

5.1.  Organise  seminar  for  managing 
authorities 
certifying 
and 
authorities and follow up in annual 
meetings 
managing 
with 
authorities 

Focus  on 
primary 
management 
Member States 

improving 
controls 
level 

in 

REGIO 
DG EMPL 

DG 
REGIO 
DG EMPL 

the 
at 
the 

To reduce the errors from this 
the 
the  use  of 
in 
source 
Structural 
and  Cohesion 
Funds 

DG 
REGIO 
DG EMPL 

result 

Effective 
reduced 
concerning 
generating projects 

– 
errors 
revenue–

Guidance note 

30.6.2008 

result 

– 
Effective 
reduced 
errors 
concerning  State  aid 
rules 

Organise  2  workshops 
State 
for  Member 
raise 
authorities 
to 
awareness 
of 
application  of  public 
procurement  rules 
to 
Structural Actions 

31.12.2008 

Address  the  risk  of  weak 
primary controls  

the 
at 
the 

DG 
REGIO 
DG EMPL 

Seminar 
approximately 
national participants 

for 
300 

30.6.2008 

EN 

17 

EN 

 
  
 
 
 
. 

5.2.  Update  guidance  on  good  practice 
for  primary  controls  and 
the 
certification  function  for  2007-
2013 

5.3.  Provide  self-assessment  tools  for 
on 

authorities 

managing 
compliance 

Focus  on 
primary 
management 
Member States 

improving 
controls 
level 

in 

the 
at 
the 

Address  the  risk  of  weak 
primary 
and 
controls 
certification function 

DG 
REGIO 
DG EMPL 

Guidance 
finalised 
distributed 
above) 

documents 
and 
(see  2.4 

30.6.2008 

Reinforce 
feedback 
mechanisms  in  the  control 
system 

Focus  on 
primary 
management 
Member States 

improving 
controls 
level 

in 

Address  the  risk  of  weak 
primary controls  

the 
at 
the 

DG 
REGIO 
DG EMPL 

Self-assessment 
application distributed 

30.6.2008 

6. Actions to improve reporting on financial corrections by Member States 

6.1.  Follow  up  on  data  reported  to 
correct 
gaps 

and 

complete 
inaccuracies 

6.2.  Carry  out  on  the  spot  verifications 
of a sample of Member States' data  

provision 
of 
Improve 
transparent  and 
complete, 
on 
information 
reliable 
financial  corrections  and 
recoveries 

provision 
of 
Improve 
transparent  and 
complete, 
on 
information 
reliable 
financial  corrections  and 
recoveries 

Improve 
financial 
recoveries 

reporting 
corrections 

on 
and 

DG 
REGIO 
DG EMPL 

Verify 
reported 

accuracy  of  data 

DG 
REGIO 
DG EMPL 

30.6.2008 

31.12.2008 

Analysis of information 
received  by  31  March 
2008  and  follow  up 
letter sent 

Improved 
by Court 

assessment 

in 

Verifications 
10 
Member  States  to  be 
selected  after  analysis 
of  data  to  be  supplied 
by  31.3.2008  (5  MS  in 
first half year) (see 2.3. 
above) 

EN 

18 

EN 

 
  
7. Actions to improve reporting by Commission on impact of audit activity 

Improved 
by Court 

assessment 

7.1. 

Improve systems for recording and 
reporting  on  follow  up  of  audit 
recommendations 

Improve  effectiveness  of 
Commission's 
supervisory 
controls  to  mitigate  the  risk 
of  failure  in  Member  States' 
systems 

Reinforce 
feedback 
mechanisms  in  the  control 
system 

7.2. 

Improve systems for recording and 
reporting  on  corrections  resulting 
from  Commission  control  and 
audit activity 

provision 
of 
Improve 
transparent  and 
complete, 
reliable 
on 
information 
financial  corrections  and 
recoveries 

Improve 
processes 
sharing of audit results 

and 

monitoring 
facilitate 

DG 
REGIO 
DG EMPL 

of 

IT 
and 

Modification 
applications 
procedures: 
SYSAUDIT 
in  DG 
full 
REGIO; 
implementation  of  A-
REP in DG EMPL  

30.9.2008 

31.3.2008 

information 

on 
Improve 
financial 
and 
recoveries 
corrections 
partial 
as 
indicator of the impact of the 
Commission's audit activity 

a 

Improved 
by Court 

assessment 

DG 
REGIO 
DG EMPL 

Modification 
applications 
procedures 

of 

IT 
and 

30.9.2008 

Quarterly  reporting  to 
DG BUDG 

Improved 
by Court 

assessment 

EN 

19 

EN 

 
  
 
 
 
. 

8. Actions to increase impact of Commission audit activity 

payments 

8.1.  Establish  and  implement  policy  of 
by 
suspending 
Commission  decision  as  soon  as 
possible  following  detection  of 
in  national 
serious  weakness 
systems 

Increase  the  impact  of  the 
Commission's  audit  activity 
through  more  effective  use 
of  suspension  and  financial 
correction procedures 

Obtain  reasonable  assurance 
the  management  and 
that 
in 
systems 
control 
the 
Member 
function 
States 
effectively  and  safeguard  the 
Community budget 

DG 
REGIO 
DG EMPL 

8.2.  Modify 

internal  procedures  for 
financial 
suspension 
corrections to speed up application 

and 

Increase  the  impact  of  the 
Commission's  audit  activity 
through  more  effective  use 
of  suspension  and  financial 
correction procedures 

Obtain  reasonable  assurance 
the  management  and 
that 
in 
systems 
control 
the 
Member 
function 
States 
effectively  and  safeguard  the 
Community budget 

DG 
REGIO 
DG EMPL 

30.4.2008 

from 

Instructions 
Directors-General, 
revised  procedures  and 
monitoring report 

Effective  result:  target 
of  suspension  decision 
within  6  months  of 
final  position  on  audit 
findings 

Revised procedures and 
monitoring report 

30.4.2008 

result 

Effective 
–
achievement  of  target 
24  months  from  audit 
to  financial  correction 
decision 
where 
decision required 

9. Actions to improve assurance provided by AAR 

9.1.  Carry  out  the  following  actions  in 
relation  to  preparation  of  Annual 
Activity Reports: 

Improve the quality of DGs' 
AAR 

Improve the transparency and 
continuity of reporting on the 
assessment of Member States' 
systems  in  order  to  better 
monitor progress 

DG 
REGIO 
DG EMPL 

AAR 2007 

Improved 
by Court 

assessment 

31.3.2008 

EN 

20 

EN 

 
  
a)  Provide  information  on  follow-
for  which 
up  of  all  systems 
material 
deficiencies 
were detected in 2006 

systemic 

b)  Report  on  the  execution  of 
implemented  by 
action  plans 
Member 
correct 
deficiencies 

States 

to 

c)  Report  on  decisions  to  suspend 
interim 
other 
payments, 
precautionary actions by AOSD in 
respect  of 
interim  payments, 
financial  corrections  made  by 
Member  States  at 
request  of 
financial 
and 
Commission, 
correction decisions adopted by the 
Commission 

d) Provide detailed justification for 
absence  of 
reservation  where 
material  systemic  weaknesses  are 
identified 

e) Report on follow-up of previous 
recommendations of Court 

EN 

21 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
10.  Actions to maximise value of annual summaries under Article 53b of the Financial Regulation 

Analyse 
received, 
summaries 
include  results  in  AAR,  and  take 
action in respect of Member States 
not complying with obligations 

undertake 

To 
adequate 
supervision  of  the  annual 
summaries  to  ensure  that 
consistent, 
are 
they 
comparable and useful 

Improve  level  of  assurance 
obtained from Member States 

DG 
REGIO 
DG EMPL 

Results 
AAR 

reported 

in 

31.3.2008 

measures 
Effective 
against  non-compliant 
Member States 

31.12.2008 

EN 

22 

EN