Commission staff working document - Annex to the communication to the commission - Communication from Commissioners Hübner and Špidla to the Commission giving an interim progress report on the action plan to strengthen the Commission's supervisory role under shared management of structural actions {SEC(2008) 2756}
Date: 2008-11-05
Institutions: European Commission
Subjects: European Commission, Structural Funds, action programme, audit, financial control, financial management, report

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 5.11.2008 
SEC(2008) 2755 

COMMISSION STAFF WORKING DOCUMENT 

Annex to the 

COMMUNICATION TO THE COMMISSION 

Communication from Commissioners Hübner and Špidla to the Commission giving an 
interim progress report on the action plan to strengthen the Commission's supervisory 
role under shared management of structural actions 

{SEC(2008) 2756} 

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Action 

Output/Indicator 

Deadline 

Status 

Result 

Reference / Comments 

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

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

Execution of 55 planned audit missions 
(ERDF/CF 40/ESF 15) 

31.12.2008  in-progress 38 audit missions 

carried out (ERDF/CF 
28 / ESF 10)  

Table 1.1 Audits high-risk 
management bodies  

 1.2 Complete the follow-up of Member 
States' implementation of 27 current action 
plans  

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

31.12.2008  in-progress 10 action plans 

concluded (ERDF 2 / 
ESF 8)  

Table 1.2 Remedial action plans 
by MS 

 1.3 (a) Bring to conclusion the 20 suspension 
and financial correction procedures currently 
underway for 2000-2006  

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

31.12.2008  in-progress 8 procedures 

concluded (ERDF/CF 4 
/ ESF4) and 6 
suspension decisions 
taken (ERDF 3/ESF3) 

 1.3 (b) Bring to conclusion the 34 financial 
correction procedures from closure audits for 
1994-1999 

Financial correction procedures 
concluded by corrections agreed by the 
Member State or a Commission 
decision  

31.12.2008  in-progress 7 financial correction 

procedures from 
closure audits 
concluded (ERDF) 

Table 1.3 (a) Suspension/financial 
correction procedures (2000-06) - 
a procedure is considered 
complete when decisions are 
taken for all projects/programmes 
eg 12 projects have been closed 
(Either by Commission decision or 
acceptance by the MS) for CF 
Spain, but the procedure has not 
yet been completed for all projects 

Table 1.3 (b) Financial corrections 
-Closure audits (1994-99) 

 1.4 Follow up the individual substantive error 
cases for DAS 2006 toegether with any 
systemic implications  

Final position taken by DGs on 741 
cases. Where MS has not made 
required correction, a financial 
correction procedure has been 
launched. 
1 Corrected from figure quoted originally in the 
Action Plan of 73 cases. 

30.09.2008  in-progress Final position taken on 

Table 1.4 DAS 2006 

47 DAS cases 
(ERDF/CF 22 / ESF 
25) 

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 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 

Sharing of audit results under enquiry to 
review work of winding-up bodies 

31.12.2008  in-progress on-going action  

 2.2 Action 10 - Conduct an initial estimation 
and analysis of the cost of controls for the 
ERDF 

Report on analysis of data received 
from Member States 

31.05.2008  completed  Report sent to DG 

BUDG to incorporate in 
Communication on 
tolerable risk due 
autumn, 2008. 

 2.3 Action 11N - examine the reliability of 
national monitoring and reporting systems for 
recoveries and financial corrections 

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) 

31.12.2008  in-progress To be monitored under 

6.2 

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

 Updated guidance notes on 
management verifications and 
certification function (see 5.2 below)  

30.06.2008  completed  To be monitored under 

5.2 

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

Target - Signing of contracts of 
confidence with 2 more Member States 
which demonstrate their suitability  

30.09.2008  partially 

 in progress 

completed 

 2.6 Action 16 - coordinate audit standards, 
error rate reporting, etc. for Structural Funds 

Sampling guide 

30.04.2008  partially 

completed 

Presented in COCOF 
23 April and finalised in 
COCOF 21 May. 

COCOF #08/0021/01 

Systems assessment methodology 

30.04.2008 

Finalised in COCOF 23 
April. 

COCOF #08/0019/00 

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Completion of revised structural funds 
audit manual 

31.12.2008 

 in progress 

  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) 

Execution of 36 planned audit missions 
(ERDF/CF 30 / ESF 6) 

31.12.2008  in-progress 22 audit missions 

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

New procedures finalised 

30.6.2008  partially 

completed 

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

Seminar for managing authorities 

30.6.2008 

completed  A presentation on 

carried out (ERDF/CF 
22) 

The internal 
procedures for the 
closure process have 
been finalised in DG 
REGIO, and serve as a 
basis for other DGs to 
complete and align 
their own internal 
procedures.  

closure was made at 
10 June seminar (see 
5.1). A closure seminar 
for all authorities was 
held in Brussels on 15 
September (700 
participants); closure 
seminars are also 
coorganised by the 
Commission with 
certain Member States.
25 annual meetings 
(ERDF/CF 11 / ESF 
14) 

 Table 3.1 Audits of winding-up 
bodies 2008 

Closure manual for SF issued in 
July - to be adapted to each DG's 
internal procedures - in parallel a 
CF manual is being produced. 

Closure seminars have already 
been held in HU, FR, DK, LT, IT, 
CY, SK, GR, BE, PL and a 
common one for Interreg 
authorities, coorganised with 
INTERACT.  

Table 3.3 Annual meetings  

Agenda point for annual meetings with 
managing authorities 

31.12.2008 

 4. Preventive actions for the 2007-13 
programming period  

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 4.1Review of compliance assessment reports 
and opinions  

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

 4.2 Review of national audit strategies  

Desk review of approximately 200 audit 
strategies 

31.12.2008  in-progress No. of reports received: 

103 / no. interrrupted: 
22 /no. positive 
assessments: 20 /no. 
rejected: 32; 
Remainder under 
analysis 

31.12.2008  in-progress No. of strategies 

received:296 / no. 
interrupted: 24 / no. 
positive assessments: 
50 /no. rejected: 89; 
Remainder under 
analysis  

 4.3 Actions on simplification 

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

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

Guidance note and follow up meetings  31.12.2008  in-progress Guidance note in 

preparation 

Guidance note and follow up meetings  31.12.2008  partially 

completed 

Table 3.3 Annual meetings 

ESF only: Discussed in 
4 annual meetings with 
MS - specific meeting 
held with CZ Republic -
received 17 requests 
for Commission's 
opinion on national 
rules on flat rate 
indirect costs. 
(Note finalised in 
9.2007) 

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

 4.4 Review and provide clarification on 
eligibility issues for 2007-13:  

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 4.4 (a) Compilation of Community eligibility 
rules for 2007-13 period  

Brochure 

30.9.2008 

in-progress

Brochure in 
preparation - to be 
issued in November 
2008 

 4.4 (b) Note on application of Article 55 of 
Regulation (EC) No 1083/2006 – revenue-
generating projects 

Guidance note  

30.06.2008  completed  Presented in 27 

COCOF # 07/0074/03 

February COCOF and 
21 May COCOF. 
Finalised on 18 June. 

 4.4 (c) Note on application of State aid rules 
(Article 55(6)) 

Guidance note  

30.06.2008  completed  Presented in COCOF 

COCOF # 08/0012/01 

25 June and 25 
September. 

 4.5 Raise awareness of public procurement 
rules 

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

31.12.2008  completed  Commission co-organised public procurement seminars in 
Budapest, HU 4 April 2008; in Sofia, BU 26 June 2008 and 
exchange of national good practices during technical 
working group of ESF Committee 6 May 2008. 

 5. Actions to improve primary controls at 
national level 

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

Seminar for approximately 300 national 
participants 

30.06.2008  completed  Seminar held 10 June 

2008 (515 national 
representatives were 
present) 

see website: 
http://ec.europa.eu/regional_policy
/conferences/manauth/index_en.ht
m  

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

Guidance documents finalised and 
distributed  

30.06.2008  completed  Guidance notes on 

management 
verifications finalised in 
COCOF 21 May and 
certification function 
finalised in COCOF 25 

COCOF #08/0020/03; COCOF 
#08/0014/01 

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 5.3 Provide self-assessment tools for 
managing authorities on compliance 

Self-assessment application distributed  30.06.2008  completed  Presented in seminar 

of 10 June 2008. 

Two national authorities 
volunteered to test the tool and 
provide feedback to the 
Commission. 

June. Both notes were 
presented in 10 June 
seminar. 

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

 6.1 Follow up on data reported to complete 
gaps and correct inaccuracies 

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

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

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) (see 2.3. above)  

30.06.2008  completed  All the data received 
from Member States 
has been aggregated 
and letters have been 
sent to concerned 
Member States for 
missing or incomplete 
information. The data 
will be included in the 
Annual Report of the 
Structural Funds to be 
published in Autumn 
2008. 

31.12.2008  in-progress An external firm has 

been contracted to 
perform verifications on 
data submitted by 
Member States. On the 
spot visits have been 
performed for 3 MS. 
Visits for the other 7 
MS are planned for 
October and November 

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2008.  

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

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

Modification of IT applications and 
procedures: SYSAUDIT in DG REGIO; 

31.09.2008  completed  Completed 3rd quarter. Improvements to monitoring tables 

full implementation of A-REP in DG 
EMPL 

31.03.2008 

Completed 1st quarter. Minutes of ESF Directors meeting 
of 5 March 

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

Modification of IT applications and 
procedures Quarterly reporting to DG 
BUDG  

30.09.2008  partially 

completed 

Internal procedures for 
reporting to DG BUDG 
have been finalised. 
For DG REGIO they 
are incorporated in the 
revised manual on 
financial corrections 
(see 8.2 below). 

 8. Actions to increase impact of 
Commission audit activity 

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

Instructions from Directors-General, 
revised procedures and monitoring 
report. Effective result: target of 
suspension decision within 6 months of 
final position on audit findings 

30.04.2008  completed  Policy established 

(meeting DG REGIO-
DG EMPL Directors-
General and Directors 
on 17/4/08). DG 
REGIO - Revised 
procedure incorporated 
in manual; DG EMPL -
to be incorporated in 
revised manual by end 

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 8.2 Modify internal procedures for suspension 
and financial corrections to speed up 
application 

Revised procedures and monitoring 
report. Effective result – achievement of 
target 24 months from audit to financial 
correction decision where decision 
required 

30.04.2008  partially 

completed 

of year. 

DG REGIO - revised 
manual on financial 
corrections issued on 
30/04/2008 DG EMPL -
revised internal 
procedure issued on 
16/4/2008; 
consolidated revised 
manual in progress. 

DG REGIO - D(2008) 960021 DG 
EMPL - D(2008)7483 / D(2008) 
5227  

 9. Actions to improve assurance provided 
by AAR 

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

AAR 2007  

31.03.2008 

Completed 1st quarter.   

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

completed  Pages 32-35, sections 

2.3.4 and 2.3.5. 

DG REGIO AAR 

DG EMPL AAR 
Pages 38-48, sections 2.3.2. 

 9.1 (b) Report on the execution of action plans implemented by Member States to 
correct deficiencies 

completed  Pages 30-33, sections 

Pages 38-48, sections 2.3.2. 

2.3.3 and 2.3.4. 

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

completed  Pages 46-48. 

Pages 32-34. 

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

completed  Pages 57-58, section 

Pages 60-62 (table). 

2.5.2. 

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

completed  Pages 36-38, section 

Pages 49-52, section 2.3.3. 

2.3.6. 

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

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

Results reported in AAR 

31.3.2008 

completed  Completed 1st quarter. AARs 2007  

Effective measures against non-
compliant Member States 

31.12.2008 

Letter of formal notice 
sent to Germany in 
September. 

Table 10.1 Annual Summaries 
(included in 1st quarter report); 
Infringement procedure launched 
on one Member State only. 

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