Council Regulation (EC) No 485/2008 of 26 May 2008 on scrutiny by Member States of transactions forming part of the system of financing by the European Agricultural Guarantee Fund (Codified version)
Date: 2008-05-26
Institutions: Council of the European Union
Subjects: EAGGF Guarantee Section, EU control, EU financing, financial control, fraud, management audit

3.6.2008

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

I

REGULATIONS

COUNCIL REGULATION (EC) No 485/2008

of 26 May 2008

on scrutiny by Member States of transactions forming part of the system of financing by the
European Agricultural Guarantee Fund

(Codified version)

THE COUNCIL OF THE EUROPEAN UNION,

(3)

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

establishing the European

Having regard to the proposal from the Commission,

Having regard to the opinion of the European Parliament (1),

Whereas:

(1)

(2)

Council Regulation (EEC) No 4045/89 of 21 December
transactions
1989 on scrutiny by Member States of
forming part of
financing by the
the
European Agricultural
the
Guarantee
Guidance and Guarantee Fund and repealing Directive
77/435/EEC (2) has been substantially amended several
times (3). In the interests of clarity and rationality the
said Regulation should be codified.

system of

Section

of

Under Article 9 of Council Regulation (EC) No
1290/2005 of 21 June 2005 on the financing of the
common agricultural policy (4), the Member States are
to take the measures necessary to ensure effective
protection of the financial interests of the Community,
and particularly in order to check the genuineness and
compliance of operations financed by the European Agri-
cultural Guarantee Fund (EAGF) and by the European
Agricultural Fund for Rural Development (EAFRD), to
prevent and pursue irregularities and to recover sums
lost as a result of irregularities or negligence.

(1) Opinion of 19 June 2007 (not yet published in the Official Journal).
(2) OJ L 388, 30.12.1989, p. 18. Regulation as last amended by Regu-

lation (EC) No 2154/2002 (OJ L 328, 5.12.2002, p. 4).

(3) See Annex I.
(4) OJ L 209, 11.8.2005, p. 1. Regulation as last amended by Regu-

lation (EC) No 1437/2007 (OJ L 322, 7.12.2007, p. 1).

Scrutiny of the commercial documents of undertakings
receiving or making payments can be a very effective
means of surveillance of transactions forming part of
financing by the EAGF. This scrutiny
the system of
supplements other checks already carried out by the
Member
provisions
relating to scrutiny which are more extensive than
those provided for in this Regulation are not affected
by it.

Furthermore,

national

States.

(4)

(5)

(6)

(7)

The documents used as a basis for such scrutiny should
be determined in such a way as to enable a full scrutiny
to be carried out.

The undertakings to be scrutinised should be selected on
the basis of the nature of the transactions carried out on
their responsibility and the breakdown of
the under-
receiving or making payments according to
takings
their financial importance in the system of financing by
the EAGF.

Furthermore, it is necessary to provide for a minimum
number of inspections of commercial documents. This
number
should be determined by a method which
precludes substantial differences between the Member
States by virtue of differences in the structure of their
expenditure under the EAGF. This method may be estab-
lished by referring to the number of undertakings of a
certain financial
importance in the system of financing
by the EAGF.

The powers of the officials responsible for scrutiny and
the obligations on undertakings to make commercial
documents available to such officials for a specified
period and to supply such information as may be
requested by them should be defined. It should also be
stipulated that commercial documents may be seized in
certain cases.

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(8)

States

on account

is necessary to organise cooperation among the
It
Member
international
structure of agricultural trade and with a view to the
functioning of the internal market. It is also necessary
centralised documentation system concerning
for a
undertakings receiving or making payments established
in third countries to be set up at Community level.

the

of

(9) While it is the responsibility of the Member States in the
first instance to adopt their scrutiny programmes,
it is
necessary that these programmes be communicated to
the Commission so that it can assume its supervisory
and coordinating role and to ensure that the programmes
are adopted on the basis of appropriate criteria. Scrutiny
can thus be concentrated on sectors or undertakings
where the risk of fraud is high.

(10)

It is essential that each Member State have a special
department responsible for monitoring the application
this Regulation and for coordinating the scrutiny
of
carried out
in accordance with this Regulation. The
officials belonging to that department may make
inspections of undertakings
in accordance with this
Regulation.

This Regulation shall not apply to measures covered by
2.
the integrated administration and control system falling within
Council Regulation (EC) No 1782/2003 of 29 September 2003
establishing common rules for direct support schemes under the
common agricultural policy and establishing certain support
schemes for farmers (1). The Commission shall,
in accordance
with the procedure referred to in Article 41(2) of Regulation
(EC) No 1290/2005, establish a list of other measures to which
this Regulation does not apply.

For the purposes of this Regulation the following defi-

3.
nitions shall apply:

(a)

‘commercial documents’ means all books, registers, vouchers
and supporting documents,
accounts, production and
quality records, and correspondence relating to the under-
taking’s business activity, as well as commercial data,
in
whatever
including electronically
stored data,
in so far as these documents or data relate
directly or indirectly to the transactions referred to in
paragraph 1;

form they may take,

(11)

The departments carrying out scrutiny pursuant to this
Regulation should be organised independently of
the
departments carrying out scrutiny prior to payment.

(b) ‘third party’ means any natural or legal person directly or
indirectly connected with transactions carried out within the
financing system by the EAGF.

(12)

Information collected during the scrutiny of commercial
documents should be protected by professional secrecy.

Article 2

(13) Arrangements should be made for an exchange of infor-
mation at Community level so that the results of the
application of this Regulation can be used to greater
effect,

HAS ADOPTED THIS REGULATION:

1. Member States shall carry out systematic scrutiny of the
commercial documents of undertakings taking account of the
nature of the transactions to be scrutinised. Member States shall
ensure that the selection of undertakings for scrutiny gives the
best possible assurance of the effectiveness of the measures for
preventing and detecting irregularities under the system of
inter alia,
financing by the EAGF,
take
account of
the undertakings in
importance of
the financial
that system and other risk factors.

the selection shall

Article 1

This Regulation relates to scrutiny of

the commercial
1.
those entities receiving or making payments
documents of
financing by
relating directly or indirectly to the system of
the European Agricultural Guarantee Fund (EAGF), or their
representatives, hereinafter ‘undertakings’, in order to ascertain
whether transactions forming part of the system of financing by
the EAGF have actually been carried out and have been
executed correctly.

The scrutiny referred to in paragraph 1 shall apply, for
2.
each period of scrutiny referred to in paragraph 7, to a number
of undertakings which may not be less than half the under-
takings whose receipts or payments, or the sum thereof, under
the system of financing by the EAGF, amounted to more than
the EAGF financial year preceding the
EUR 150 000 for
beginning of the period of scrutiny in question.

(1) OJ L 270, 21.10.2003, p. 1. Regulation as last amended by
Commission Regulation (EC) No 293/2008 (OJ L 90, 2.4.2008,
p. 5).

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In relation to each current scrutiny period, Member States
3.
shall, without prejudice to their obligations defined in paragraph
1, select the undertakings to be scrutinised on the basis of risk
analysis in the export refunds sector, and for all other measures
where it is practicable to do so. The Member States shall submit
to the Commission their proposals for the use of risk analysis.
The proposals shall include all relevant information concerning
the approach to be followed, the techniques, the criteria and the
method of implementation. They shall be presented not later
than 1 December of the year prior to commencement of the
scrutiny period for which they are to be applied. The Member
States shall take account of the comments of the Commission
on the proposals, which shall be given within eight weeks of
their receipt.

4.
For measures for which a Member State considers the use
of risk analysis not to be practicable, it shall be compulsory for
undertakings the sum of whose receipts or payments or the
sum of those two amounts within the system of financing by
the EAGF was more than EUR 350 000 and which were not
scrutinised in accordance with this Regulation during either of
the two preceding scrutiny periods, to be scrutinised.

The scrutiny carried out pursuant to this Regulation shall
8.
not prejudice the checks undertaken pursuant to Articles 36 and
37 of Regulation (EC) No 1290/2005.

Article 3

1.
The accuracy of primary data under scrutiny shall be
including, where
verified by a number of
necessary, the commercial documents of third parties, appro-
priate to the degree of risk presented, including, inter alia:

cross-checks,

(a) comparisons with the commercial documents of suppliers,

customers, carriers and other third parties;

(b) physical checks, where appropriate, upon the quantity and

nature of stocks;

(c) comparison with the records of financial flows leading to or
consequent upon the transactions carried out within the
financing system by the EAGF; and

Undertakings the sum of whose receipts or payments
5.
amounted to less than EUR 40 000 shall be scrutinised in
accordance with this Regulation only for specific reasons to
be indicated by the Member States in their annual programme
as referred to in Article 10 or by the Commission in any
proposed amendment to that programme.

(d) checks, in relation to bookkeeping, or records of financial
movements showing, at the time of the scrutiny, that the
documents held by the paying agency as justification for the
payment of aid to the beneficiary are accurate.

cases,

In appropriate

6.
in
the
paragraph 1 shall be extended to natural and legal persons
with whom undertakings within the meaning of Article 1 are
associated and to such other natural or legal persons as may be
relevant for the pursuit of the objectives set out in Article 3.

scrutiny provided for

book

records

2.
In particular, where undertakings are required to keep
in accordance with
particular
Community or national provisions, scrutiny of these records
shall
include a comparison with the
commercial documents and, where appropriate, with the
actual quantities in stock.

in appropriate cases

stock

of

The scrutiny period shall run from 1 July to 30 June of

7.
the following year.

In the selection of transactions to be checked, full account

3.
shall be taken of the degree of risk presented.

Article 4

Undertakings shall keep the commercial documents for at least
three years, starting from the end of the year in which they
were drawn up.

Scrutiny shall cover a period of at least 12 months ending
during the previous scrutiny period;
it may be extended for
periods, to be determined by the Member State, preceding or
following the 12-month period.

The Member States may prescribe a longer period for the
retention of these documents.

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Article 5

Article 7

1.
The persons responsible for the undertaking, or a third
party, shall ensure that all commercial documents and addi-
tional information are supplied to the officials responsible for
the scrutiny or to the persons empowered for that purpose.
Electronically stored data shall be provided on an appropriate
data support medium.

1. Member States shall assist each other for the purposes of
carrying out the scrutiny provided for in Articles 2 and 3 in the
following cases:

2.
The officials responsible for the scrutiny or the persons
empowered for that purpose may require that extracts or copies
of the documents referred to in paragraph 1 be supplied to
them.

(a) where an undertaking or third party is established in a
Member State other than that in which payment of the
amount
in question has or should have been made or
received;

(b) where an undertaking or third party is established in a
in which the documents

Member State other than that
and information required for scrutiny are to be found.

3. Where, during scrutiny carried out pursuant to this Regu-
lation, the commercial documents maintained by the under-
taking are considered inadequate for scrutiny purposes,
the
undertaking shall be directed to maintain in future such
records as are required by the Member State responsible for
the scrutiny, without prejudice to obligations laid down in
other Regulations relating to the sector concerned.

The Commission may coordinate joint actions involving mutual
assistance between two or more Member States. Provisions for
such coordination shall be established in accordance with the
procedure referred to in Article 41(2) of Regulation (EC) No
1290/2005.

Member States shall determine the date as of which such
records are to be established.

Where all or part of the commercial documents required to be
scrutinised pursuant
to this Regulation are located with an
undertaking in the same commercial group, partnership or asso-
ciation of undertakings managed on a unified basis as the
located inside or outside
undertaking scrutinised, whether
Community territory,
the undertaking shall make available
these commercial documents to officials responsible for the
scrutiny, at a place and time to be determined by the
Member States responsible for carrying out the scrutiny.

Article 6

1. Member States shall ensure that officials responsible for
scrutiny are entitled to seize commercial documents, or have
them seized. This right shall be exercised with due regard for
relevant national provisions and shall not affect the application
of rules governing proceedings in criminal matters concerning
the seizure of documents.

Where two or more Member States include in the programme
sent in under Article 10(2) a proposal for joint action involving
extensive mutual assistance, the Commission may, on request,
the
allow a reduction of up to a maximum of 25 % of
minimum number
under
Article 2(2) to (5) for the Member States concerned.

determined

scrutinise

of

as

During the first

2.
following the EAGF
three months
financial year of payment, Member States shall send a list of
the undertakings referred to in paragraph 1(a) to each Member
State in which such an undertaking is established. The list shall
contain all the details necessary to enable the Member State of
destination to identify the undertakings and to undertake its
scrutiny obligations. The Member State of destination shall be
responsible for the scrutiny of such undertakings in accordance
with Article 2. A copy of each list shall be sent
to the
Commission.

The Member State receiving or making the payment may ask
the Member State in which the undertaking is established to
scrutinise some of the undertakings on that list in accordance
with Article 2, indicating why it is necessary to make such a
request and in particular the risks associated with it.

2. Member States
to
penalise natural or legal persons who fail to fulfil their obli-
gations under this Regulation.

shall adopt appropriate measures

The Member State receiving the request shall take due account
of the risks associated with the undertaking, which shall be
communicated by the requesting Member State.

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inform the requesting
The requested Member State shall
Member State of
the follow-up accorded to the request.
Where scrutiny of an undertaking on the list takes place, the
the scrutiny shall
requested Member State that carried out
that
inform the requesting Member State of
scrutiny at
the
scrutiny period.

the results of
the end of

three months after

the latest

This Article shall not prejudice national provisions relating

2.
to legal proceedings.

Article 9

1.
Before 1 January following the scrutiny period Member
States shall send the Commission a detailed report on the appli-
cation of this Regulation.

An overview of such requests shall be sent to the Commission
on a quarterly basis, within one month after the end of each
quarter. The Commission may demand that a copy of individual
requests be provided.

The report must set out any difficulties encountered and the
measures taken to overcome them and put
forward, where
appropriate, suggestions for improvements.

three months

During the first

following the EAGF
3.
financial year of payment, Member States
send the
Commission a list of undertakings established in a third
country for which payment of the amount in question has or
should have been made or received in that Member State.

shall

If additional information is required in another Member
4.
State as part of the scrutiny of an undertaking in accordance
with Article 2, and in particular cross-checks in accordance with
Article 3, specific scrutiny requests may be made indicating the
reasons for the request. An overview of such specific requests
shall be sent to the Commission on a quarterly basis within one
month after the end of each quarter. The Commission may
demand that a copy of individual requests be provided.

The scrutiny request shall be met not later than six months after
its receipt; the results of the scrutiny shall be communicated
without delay to the requesting Member State and to the
Commission. The communication to the Commission shall be
on a quarterly basis within one month after the end of each
quarter.

In accordance with the procedure

referred to in
5.
the
Article 41(2) of Regulation (EC) No 1290/2005,
Commission shall determine minimum requirements regarding
the contents of the requests referred to in paragraphs 2 and 4 of
this Article.

Article 8

Information collected in the course of scrutiny as provided
1.
for in this Regulation shall be protected by professional secrecy.
It may not be communicated to any persons other than those
who, by reason of their duties in the Member States or in the
institutions of the Communities, are required to have knowledge
thereof for the purposes of performing those duties.

The Member States and the Commission shall have regular

2.
exchanges of views on the application of this Regulation.

The Commission shall evaluate annually the progress
the
in its annual report on the administration of
referred to in Article 43 of Regulation (EC) No

3.
achieved,
funds
1290/2005.

Article 10

1. Member States shall draw up programmes for scrutinies to
be carried out pursuant to Article 2 during the subsequent
scrutiny period.

2.
Each year, before 15 April, the Member States shall send
the Commission their programme as referred to in paragraph 1
and shall specify:

(a)

the number of undertakings to be scrutinised and their
breakdown by sector on the basis of the amounts relating
to them;

(b) the criteria adopted for drawing up the programme.

3.
The programmes established by the Member States and
forwarded to the Commission shall be implemented by the
Member States,
the Commission has
not made known its comments.

if, within eight weeks,

4.
Amendments made by the Member States
programmes shall be subject to the same procedure.

to the

5.
Exceptionally, at any stage, the Commission may request
the inclusion of a particular category of undertaking in the
programme of one or more Member States.

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Article 11

1.
In each Member State a special department shall be
responsible for monitoring the application of this Regulation
and for:

It shall consist of a sufficient number of officials who are
suitably trained to carry out those tasks.

(a)

the performance of
officials employed directly by that special department; or

the scrutiny provided for herein by

6.
This Article shall not apply when the minimum number
of undertakings to control, in accordance with Article 2(2) to
(5), is less than 10.

(b) the coordination and general surveillance of the scrutiny
carried out by officials belonging to other departments.

Article 12

Member States may also provide that scrutinies to be carried
to this Regulation are allocated between the
out pursuant
special department and other national departments, provided
that the former is responsible for their coordination.

The amounts in euro appearing in this Regulation shall be
converted, where appropriate,
into national currencies by
applying the rate of exchange operating on the first working
date of the year when the scrutiny period begins and published
in the C series of the Official Journal of the European Union.

2.
The department or departments responsible for the appli-
cation of this Regulation must be organised in such a way as to
be independent of the departments or branches of departments
responsible for the payments and the scrutiny carried out prior
to payment.

Article 13

Detailed rules for the application of this Regulation shall be
adopted where necessary,
in accordance with the procedure
referred to in Article 41(2) of Regulation (EC) No 1290/2005.

In order to ensure that this Regulation is properly applied,
3.
the special department referred to in paragraph 1 shall take all
the measures necessary.

Article 14

Articles 36 and 37 of Regulation (EC) No 1290/2005 shall
apply to the scrutiny of specific expenditure financed by the
Community under this Regulation.

4.
for:

(a)

The special department shall be responsible in addition

training the national officials responsible for carrying out
the scrutiny referred to in this Regulation, in order to enable
them to acquire sufficient knowledge for performing their
duties;

(b) administering the scrutiny reports and any other documents
relating to the scrutinies carried out and provided for under
this Regulation;

(c)

the preparation and communication of the reports referred
to in Article 9(1) and the programmes referred to in
Article 10.

Article 15

In

relevant

national

accordance with

the
shall have access

1.
laws,
Commission officials
to all documents
prepared either with a view to or
following the scrutiny
this Regulation and to the data held,
organised under
including those stored in the data-processing systems. Those
data shall be provided upon request on an appropriate data
support medium.

The scrutinies referred to in Article 2 shall be carried out

2.
by the officials of the Member States.

5.
The special department shall be entrusted by the Member
State concerned with all the powers necessary to perform the
tasks referred to in paragraphs 3 and 4.

Officials of the Commission may participate in these scrutinies.
They may not
themselves exercise the powers of scrutiny
accorded to national officials; however, they shall have access
to the same premises and to the same documents as the officials
of the Member States.

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In the case of scrutinies taking place under Article 7,
3.
officials of the requesting Member State may be present, with
the agreement of the requested Member State, at the scrutiny in
the requested Member State and have access to the same
that
premises and the same documents as the officials of
Member State.

Officials of the requesting Member State present at scrutinies in
the requested Member State must at all times be able to furnish
proof of their official capacity. The scrutinies shall at all times
be carried out by officials of the requested Member State.

4. Where national provisions concerning criminal procedure
reserve certain acts for officials specifically designated by the
national law, neither the officials of the Commission, nor the
officials of the Member State referred to in paragraph 3, shall
take part in these acts. In any event, they shall not take part in,

in particular, visits to the home or the formal interrogation of
persons in the context of the criminal law of the Member State.
They shall, however, have access to information thus obtained.

Article 16

Regulation (EEC) No 4045/89, as amended by the Regulations
listed in Annex I, is repealed.

References to the repealed Regulation shall be construed as
references to this Regulation and shall be read in accordance
with the correlation table in Annex II.

Article 17

This Regulation shall enter into force on the 20th day following
its publication in the Official Journal of the European Union.

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

Done at Brussels, 26 May 2008.

For the Council
The President

D. RUPEL

ANNEX I

REPEALED REGULATION WITH ITS SUCCESSIVE AMENDMENTS

Council Regulation (EEC) No 4045/89
(OJ L 388, 30.12.1989, p. 18).

Council Regulation (EC) No 3094/94
(OJ L 328, 20.12.1994, p. 1).

Council Regulation (EC) No 3235/94
(OJ L 338, 28.12.1994, p. 16).

Council Regulation (EC) No 2154/2002
(OJ L 328, 5.12.2002, p. 4).

Article 1(1) only

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ANNEX II

CORRELATION TABLE

Regulation (EEC) No 4045/89

This Regulation

Article 1(1)

Article 1(3), introductory wording, and Article 1(3)(a)

Article 1(1)

Article 1(2)

Article 1(3)

Article 1(4)

Article 1(5)

Article 2(1)

Article 2(2), first subparagraph

Article 2(2), second subparagraph

Article 2(2), third subparagraph

Article 2(2), fourth subparagraph

Article 2(2), fifth subparagraph

Article 2(3)

Article 2(4)

Article 2(5)

Article 1(3)(b)

Article 1(2)

—

Article 2(1)

Article 2(2)

Article 2(3)

—

Article 2(4)

Article 2(5)

Article 2(6)

Article 2(7)

Article 2(8)

Article 3(1), introductory wording

Article 3(1), introductory wording

Article 3(1), first indent

Article 3(1), second indent

Article 3(1), third indent

Article 3(1), fourth indent

Article 3(2)

Article 3(3)

Article 4

Article 5

Article 6

Article 3(1)(a)

Article 3(1)(b)

Article 3(1)(c)

Article 3(1)(d)

Article 3(2)

Article 3(3)

Article 4

Article 5

Article 6

Article 7(1), first subparagraph, introductory wording

Article 7(1), first subparagraph, introductory wording

Article 7(1), first subparagraph, first indent

Article 7(1), first subparagraph, (a)

Article 7(1), first subparagraph, second indent

Article 7(1), first subparagraph, (b)

Article 7(1), second subparagraph

Article 7(1), second subparagraph

Article 7(1), third subparagraph

Article 7(1), third subparagraph

Article 7(2), (3), (4) and (5)

Article 8

Article 9(1)

Article 9(2)

Article 9(3)

Article 7(2) to (5)

Article 8

Article 9(1), first subparagraph

Article 9(1), second subparagraph

Article 9(2)

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Regulation (EEC) No 4045/89

This Regulation

Article 9(4)

Article 9(5)

Article 10(1)

Article 9(3)

—

Article 10(1)

Article 10(2), introductory wording

Article 10(2), introductory wording

Article 10(2), first indent

Article 10(2), second indent

Article 10(3), (4) and (5)

Article 10(2)(a)

Article 10(2)(b)

Article 10(3), (4) and (5)

Article 11(1), first subparagraph, introductory wording

Article 11(1), first subparagraph, introductory wording

Article 11(1), first subparagraph, first indent

Article 11(1), first subparagraph, (a)

Article 11(1), first subparagraph, second indent

Article 11(1), first subparagraph, (b)

Article 11(1), second subparagraph

Article 11(1), second subparagraph

Article 11(2) and (3)

Article 11(2) and (3)

Article 11(4), introductory wording

Article 11(4), introductory wording

Article 11(4), first indent

Article 11(4), second indent

Article 11(4), third indent

Article 11(5) and (6)

Article 18

Article 19

Article 20

Article 21

Article 22

—

Article 23

—

—

Article 11(4)(a)

Article 11(4)(b)

Article 11(4)(c)

Article 11(5) and (6)

Article 12

Article 13

Article 14

Article 15

—

Article 16

Article 17

Annex I

Annex II