COMMISSION STAFF WORKING PAPER […]
Date: 2011-10-21
Institutions: European Commission
Subjects: aid to agriculture, draft budget, fund (EU), implementation of the budget, rural development

EUROPEAN COMMISSION 

Brussels, 21.10.2011 
SEC(2011) 1259 final 

COMMISSION STAFF WORKING PAPER 

[…] 

Accompanying the document 

REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND 
THE COUNCIL 

4th FINANCIAL REPORT FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT AND THE COUNCIL 
on the EUROPEAN AGRICULTURAL FUND FOR RURAL DEVELOPMENT 
(EAFRD) 
2010 FINANCIAL YEAR 

{COM(2011) 672 final} 

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TABLE OF CONTENTS 

1. 

1.1. 

1.2. 

1.3. 

1.4. 

1.5. 

2. 

Budget procedure ......................................................................................................... 4 

Financial framework .................................................................................................... 4 

Preliminary Draft Budget (PDB) 2010 ........................................................................ 5 

Draft Budget (DB) 2010............................................................................................... 5 

Amending Letter (AL) 2010 ........................................................................................ 5 

The adoption of the 2010 Budget................................................................................. 5 

Management of appropriations .................................................................................... 6 

2.1. 

Management of Commitment appropriations .............................................................. 6 

2.1.1.  EAFRD operational programmes................................................................................. 6 

2.1.2.  Technical assistance ..................................................................................................... 6 

2.2. 

Management of payment appropriations...................................................................... 6 

2.2.1.  EAFRD operational programmes................................................................................. 6 

2.2.2.  Technical assistance ..................................................................................................... 7 

3. 

3.1. 

3.2. 

The implementation of the 2010 EAFRD budget ........................................................ 7 

Introduction .................................................................................................................. 7 

Implementation of commitment appropriations........................................................... 8 

3.2.1.  EAFRD operational programmes................................................................................. 8 

3.2.2.  Technical assistance ..................................................................................................... 9 

3.3. 

Implementation of payment appropriations ................................................................. 9 

3.3.1.  EAFRD operational programmes................................................................................. 9 

3.3.2.  Technical assistance ................................................................................................... 13 

3.4. 

3.5. 

4. 

4.1. 

4.2. 

5. 

Analysis of expenditure declared by axis and by measure ........................................ 13 

Implementation of EAFRD programmes ................................................................... 15 

Control measures........................................................................................................ 18 

Introduction ................................................................................................................ 18 

Integrated Administration and Control System (IACS)............................................. 19 

Clearance of accounts ................................................................................................ 20 

5.1. 

Financial clearance..................................................................................................... 20 

5.1.1. 

Introduction ................................................................................................................ 20 

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5.1.2 

Financial clearance for financial year 2009 ............................................................... 20 

5.1.3 

Financial clearance for financial year 2008 ............................................................... 20 

5.2. 

Conformity clearance – audits and decisions adopted in 2010 .................................. 21 

5.2.1 

 Introduction ............................................................................................................... 21 

5.2.2  Conformity clearance – audits and decisions adopted in 2010 .................................. 21 

5.3. 

5.4. 

6. 

7. 

7.1. 

7.2. 

7.3. 

7.4. 

7.5. 

Recoveries .................................................................................................................. 22 

Appeals brought before the Court of Justice against clearance decisions ................. 22 

Relations with Parliament and the European Court of Auditors................................ 23 

Basic rules governing the EAFRD and amendments made in 2010 .......................... 23 

General ....................................................................................................................... 23 

Recent modifications.................................................................................................. 23 

Declarations................................................................................................................ 24 

Checks ........................................................................................................................ 24 

Clearance of accounts ................................................................................................ 25 

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1. 

BUDGET PROCEDURE 

1.1. 

Financial framework  

CAP expenditure is funded within the current financial framework as agreed in 
the  Inter-institutional  Agreement  between  the  European  Parliament  and  the 
Council in May 2006, amended to take into account the Galileo-programme in 
2007,  the  reprogramming  of  rural  development  in  2008  and  the  European 
Economic  Recovery  Package  (EERP)  in  2009.  CAP  expenditure  is  part  of 
Heading 2: Preservation and management of natural resources. A specific sub-
ceiling  has  been  decided  for  market  related  expenditure  and  direct  aids  within 
this heading. 

To  take  account  of  the  transfer  of  amounts  to  rural  development  due  to 
compulsory modulation (including the increase from the CAP Health Check), to 
the  reform  of  the  cotton,  tobacco  and  wine  sectors  as  well  as  to  the  voluntary 
modulation decided for the UK, the expenditure ceiling for market measures and 
direct aids had to be reduced accordingly. 

The  CAP  amounts  included  in  heading  2  of  the  financial  framework  (2007-
2013) are: 

HEADING 2. Preservation and 
Management of Natural 
resources 

TOTAL a), b) 

of which : 

- Rural development a), c), d) 

- Market related expenditure and 
direct aids, c) 

2007 

2008 

2009 

2010 

2011 

2012 

2013 

(In EUR million current prices

55 143 

59 193 

56 333 

59 955 

60 338 

60 810 

61 289 

10 902 

13 303 

14 002 

14 364 

14 436 

14 617 

14 817 

44 753 

44 592 

44 887 

44 276 

44 467 

44 710 

44 939 

a) After reprogramming of rural development (1 469 Mio €).  

b)  After  transfer  of  EUR 1 600 million  to  Galileo  in  2007  and  of  EUR 2 000 million  to  the  European  Economic 
Recovery Package in 2009. 

c)  After  transfer  into  Rural  Development  of  the  lower  expected  expenditure  resulting  from  the  reforms  of  the 
tobacco, cotton and  wine  CMOs  and  from  the  compulsory  and voluntary  modulation  (UK),  art 136  of  regulation 
73/2009 and reduction due to financing of the EERP (D 237/2010 EU).  

d)  Including  the  reinforcement  of  Rural  Development by  EUR 1 020 million  included  in  the European  Economic 
Recovery  Package,  of  which  EUR 600 million  is  financed  in  2009  within  heading  2  while,  for  2010, 
EUR 420 million has been allocated to Rural Development on the basis of Commission Decision 2006/636/EC. 

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1.2. 

Preliminary Draft Budget (PDB) 2010 

The 2010 Preliminary Draft Budget (PDB) was adopted by the Commission and 
proposed to the Budgetary Authority on 29 April 2009. 

The  proposal  for  the  European  Agricultural  Fund  for  Rural  Development 
(EAFRD)  under  heading  2  of  the  Financial  Framework  2007-2013  totalled  
EUR  13 970 million in commitment appropriations and EUR 12 648 million in 
payment  appropriations  (of  which  EUR  300  million  entered  in  reserve  for  the 
European Economic Recovery Package -EERP). 

Budget Item 

Commitment 
appropriations  
(in €)  

Payment 
appropriations  
(in €)  

05.040501 (Rural dev. programmes) 

 13 947 136 182

 * 12 639 000 000

05.040502 (Technical assistance) 

 22 548 451

 9 000 000

*EUR 300 000 000 entered in reserve for the EERP 

1.3. 

Draft Budget (DB) 2010 

The  Council  adopted  the  2010  Draft  Budget  in  July  2009.  The  payments 
appropriations  for  EAFRD  programmes  were  reduced  by  EUR  98.0 million  as 
compared to the PDB. 

1.4. 

Amending Letter (AL) 2010 

In  October 2009  the  Commission  adopted  Amending  Letter  No  2  to  the  2010 
PDB.  Even  though  the  Amending  Letter  exercise  mainly  concerns  the  EAGF, 
the  commitment  appropriations  for  EAFRD  programmes  were  modified  to 
reflect an additional funding for a total net amount of EUR 388.4 million. This 
net  amount  relates  to  the  second  part  of  the  EERP,  the  non  application  of 
voluntary  modulation  in  Portugal  and  a  minor  adjustment  of  compulsory 
modulation in Spain. Payment appropriations decreased by EUR 32.8 million to 
take account of the non application of volontary modulatin in Portugal. 

1.5. 

The adoption of the 2010 Budget 

The  Council  second  reading,  adopted  on  20.11.2009,  did  not  involve  any 
modification of the EAFRD appropriations proposed in the Amending Letter. 

The  European  Parliament  adopted  the  2010  budget  in  its  plenary  session  of 
December 2009. 

The  voted  EAFRD  budget  amounted  to  EUR  14  358  million  in  commitment 
appropriations and EUR 12 615 million in payment appropriations. 

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Budget Item 

Commitment 
appropriations   
(in €)  

Payment 
appropriations   
(in €)  

05.040501 (Rural dev. programmes) 

14 335 536 182

12 606 200 000

05.040502 (Technical assistance) 

22 548 451

9 000 000

2. 

MANAGEMENT OF APPROPRIATIONS 

2.1.  Management of Commitment appropriations 

2.1.1.  EAFRD operational programmes 

In  2010  the  available  commitment  appropriations  amounted  in  total  to  EUR 
14.59 billion. Of this amount, EUR 14.34 billion corresponded to the approved 
budget and EUR 252 million were appropriations carried over from 2009. The 
carryover  decision,  adopted  in  February  2010,  concerned  part  of  the  EERP 
appropriations that could not be committed in 2009 due to the late submission of 
some revised rural development programmes from the Member States.  

The total amount of appropriaitons available  for EAFRD programmes in 2010 
was committed (EUR 14.59 billion). 

Management of commitment appropriations in  2010 – 
EAFRD 

Appropriations at the beginning of 2010 

Carry-over from 2009 

Appropriations available in 2010 

Appropriations used  in 2010 

Budget Item 
05.040501 
(amounts in €)  

14 335 536 182

252 029 757

14 587 656 939

14 587 565 939

2.1.2.  Technical assistance 

Article  69,  2nd  paragraph  of  Council  regulation  (EC)  No  1698/2005  stipulates 
that 0.25% of the resources for Community support to rural development shall 
be devoted to technical assistance for the Commission. In the 2010 budget, the 
amount available for this purpose was EUR 22.5 million. At the end of 2010, the 
total amount committed was EUR 4.9 million.  

2.2.  Management of payment appropriations 

2.2.1.  EAFRD operational programmes 

In  2010  the  initial  payment  appropriations  amounted  to  EUR  12.6  billion.  In 
view  of  the  revised  payment  forecast  submitted  by  the  Member  States  in 
September  2010,  the  appropriations  were  reduced  by  EUR  1  160  million 

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through the global transfer procedure. Once the Member States submitted their 
declarations  of  expenditure  for  the  third  quarter,  an  additional  surplus  of  
EUR 330 million was identified and proposed for reduction in a draft Amending 
Budget.  However,  as  this  Amending  Budget  was  finally  not  adopted,  those 
payment  appropriations  remained  unused  at  the  end  of  the  year.  The  unused 
amount  reflects  the  fact  that  declarations  of  expenditure  for  the  third  quarter 
were slightly below the revised forecasts; and the fact that part of the payment 
requests for the thrid quarter submitted by several Member States could not be 
the  available  commitment 
reimbursed  because  of 
appropriations. The unused appropriations were carried over to 2011. 

the  exhaustion  of 

The  total  amount  paid  to  Member  States  for  EAFRD  programmes  in  2010 
reached EUR 11.1 billion. 

Management of payment appropriations in   2010 – 
EAFRD 

Appropriations at the beginning of 2010 

Global transfer 

Appropriations available in 2010 

Appropriations used in 2010 

Unused amounts and carry over at the end of 2010  

Budget Item 

05.040501 
(amounts in €)  

12 606 200 000

-1 160 000 000

11 446 200 000

11 116 180 326

330 019 674

2.2.2.  Technical assistance 

In the 2010 budget, the amount for payment appropriations was EUR 9 million. 
This amount was reduced by EUR 2.5 million through the global transfer. At the 
end  of  the  year,  the  total  amount  of  payments  was  EUR  4.4  million,  leaving 
EUR 2.1 million unused. 

3. 

IMPLEMENTATION OF THE 2010 EAFRD BUDGET 

3.1. 

Introduction 

Financial year 2010 mostly represented a consolidation period where many rural 
development  programmes  attained  their  cruising  speed.  However,  this  was  an 
uneven  situation  as  several  programmes  showed  significant  implementation 
difficulties because of the economic and financial crisis which had an effect on 
the Member States' ability to provide the national co-financing and might have 
caused beneficiaries to hesitate to enter into any commitments; the late approval 
of  certain  programmes;  and  the  lack  of  sufficient  previous  experience  of  some 
Member States in the implementation of Rural Development programmes. 

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3.2. 

Implementation of commitment appropriations 

3.2.1.  EAFRD operational programmes 

The table below shows the amounts committed per Member State in 2010 and 
the  allocation  established  by  Commission  decision  2006/636/EC  (modification 
of April 2010 still in force at the end of the year). 

In  2010,  the  commitment  appropriations  available  for  EAFRD  programmes 
amounted  to  EUR  14.59  billion.  This  amount  included  EUR  14.34  billion 
corresponding  to  the  2010  allocation  as  established  in  Decision  2006/636/EC 
and  EUR  252  million  carried  over  from  2009.  All  the  available  appropriations 
were committed during the year (EUR 14.34 billion). 

Commission Decision 2006/636/EC (last version in force end of 2009) vs. 
the amounts committed end of 2010: 

Budget item: 05.040501 

(in €) 

Commission Decision 
2006/636/EC – EU 

Amounts carried 
over for commitment 

Amounts committed 
in the budget year 

MS 

AT 
BE 
BG 
CY 
CZ 
DE 
DK 
EE 
ES 
FI 
FR 
GR 
HU 
IE 
IT 
LT 
LU 
LV 
MT 
NL 
PL 
PT 
RO 
SE 
SI 
SK 
UK 
Total 

funds 2010            

in 2010         

(a) 

586 983 505 
70 637 509 
412 748 664 
23 911 507 
415 632 774 
1 311 256 553 
85 052 762 
104 667 353 
1 400 090 047 
313 973 134 
1 091 752 155 
492 922 509 
529 160 494 
363 518 252 
1 256 577 236 
253 855 536 
13 838 190 
153 226 381 
10 964 212 
87 111 293 
1 935 872 838 
592 619 895 
1 401 644 651 
280 491 463 
134 100 946 
266 600 239 
746 326 084 
14 335 536 182 

(b) 

0 
1 110 000 
19 500 000 
0 
21 000 000 
14 229 104 
0 
0 
49 871 207 
126 846 
165 200 
28 720 000 
28 440 000 
17 680 000 
38 596 000 
0 
0 
0 
0 
0 
0 
0 
0 
13 820 000 
0 
14 700 000 
4 071 400 
252 029 757 

2010      

(c=a+b) 

586 983 505 
71 747 509 
432 248 664 
23 911 507 
436 632 774 
1 325 485 657 
85 052 762 
104 667 353 
1 449 961 254 
314 099 980 
1 091 917 355 
521 642 509 
557 600 494 
381 198 252 
1 295 173 236 
253 855 536 
13 838 190 
153 226 381 
10 964 212 
87 111 293 
1 935 872 838 
592 619 895 
1 401 644 651 
294 311 463 
134 100 946 
281 300 239 
750 397 484 
14 587 565 939 

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3.2.2.  Technical assistance 

The table below shows the commitment appropriations for technical assistance 
consumed in 2010. The most important part is related to European Network for 
Rural Development. 

Technical assistance – Implementation of commitment 
appropriations 

Budget Item: 05.040502 

 (in €)  

Description 

 Amount committed  

Contact point of the European Network for 
Rural Development (ENRD) 

Information technology 

                        4 061 754    

                           219 730    

Thematic working groups ENRD 

                           350 754    

Experts committee on the evaluation of 
rural development programmes 

Publications 

Total 

                           200 000    

                           100 387    

                         4 932 625 

3.3. 

Implementation of payment appropriations 

3.3.1.  EAFRD operational programmes 

the  2010  budget 

for  payment  appropriations  was  
In 
EUR  12.61  billion.  The  global 
this  amount  by  
EUR  -1.16  billion  so  that  the  appropriations  of  the  year  finally  amounted  to 
EUR 11.45 billion. 

the  amount 

reduced 

transfer 

At  the  end  of  2010,  the  total  amount  paid  for  EAFRD  programmes  was  
EUR  11.12  billion.  The  difference  between  the  appropriations  of  the  year  
(EUR  11.45  billion)  and  the  total  amount  paid  is  EUR  330  million,  which 
represents  an  under-execution  of  2.88%.  It  should  be  noted  that  the  payments 
made in 2010 increased more than 35% compared to 2009. 

The table below shows the breakdown of payments made in 2010 by declaration 
period : 

Payments 2010 – EAFRD operational programmes                  million € 

Reimbursement of payment claims Q3 2009 
Reimbursement of payment claims Q4 2009 
Reimbursement of payment claims Q1 2010 
Reimbursement of payment claims Q2 2010 
Reimbursement of payment claims Q3 2010 
Advances 

127.31 
2 947.20 
2 124.25 
2 073.00 
3 443.28 
401.15 

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Total 2010 

11 116.18 

The reimbursement of 3rd quarter 2010 for 5 EAFRD programmes was totally or 
partiality  on  hold  at  the  end  of  the  year  because  the  outstanding  commitment 
appropriations  for  these  programmes  were  fully  exhausted  by  the  payment  of 
previous  claims.  The  table  below  shows  the  5  EAFRD  programmes  and  the 
corresponding amounts. The payment had to wait until the annual commitments 
for 2011 were made. 

EAFRD Programs– Nº CCI 

Q3 2010 (in€) 

Vlaanderen (2007BE06RPO001) 
Bayern  (2007DE06RPO004) 
Ireland National (2007IE06RPO001) 
Bolzano  (2007IT06RPO002) 
Luxembourg  (2007LU06RPO001) 
Total 

6 655 665 
29 517 043 
32 730 873 
990 232 
262 045 
70 155 858 

The  monthly  consumption  of  payment  appropriations  during  the  year  (January 
to  December  2010)  is  represented  in  the  graph  below.  The  rhythm  of 
consumption is linked to the calendar for sending the four payment declarations 
(31  January,  30  April,  31  July  and  10  November  for  the  payment  claims 
corresponding respectively to Q4 2009, Q1 2010, Q2 2010 and Q3 2010). 

Amounts paid (in Million €)

EAFRD - Monthly consumption of payment appropriations during 2010 
(in millions €)

3500

3000

2500

2000

1500

1000

500

0

2881

3005

1829

1631

7

187

35

260

21

385

37

01-2010

02-2010

03-2010

04-2010

05-2010

06-2010

07-2010

08-2010

09-2010

10-2010

11-2010

12-2010

838

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The  breakdown  per  Member  State  and  per  declaration  period  of  the  amounts 
paid  by  the  Commission  in  budget  year  2010  is  shown  in  the  following  table. 
The  amounts  from  column  Q3  2009  relate  to  the  EAFRD  programmes  that 
exhausted their commitment appropriations for 2009 and had to wait until 2010 
to have their amounts reimbursed with the 2010 commitment appropriations. 

Payments effectively made between 01/01/2010 and 31/12/2010 

(in €) 

MS 
AT 
BE 
BG 
CY 
CZ 
DE 
DK 
EE 
ES 
FI 
FR 
GR 
HU 
IE 
IT 
LT 
LU 
 LV 
MT 
NL 
PL 
PT 
RO 
SE 
SI 
SK 
UK 
Total 

Q3 2009 

6 425 513 

10 634 843 

2 506 310 
98 743 

107 643 643 

127 309 052 

Q4 2009 
455 569 614 
5 218 982 
10 833 902 
5 844 859 
71 116 190 
449 653 563 
22 509 479 
11 014 279 
219 017 075 
79 327 737 
186 049 035 
39 973 082 
146 605 566 
87 587 253 
175 925 287 
60 891 489 
5 362 753 
33 969 622 
1 937 682 
17 739 157 
329 716 307 
43 519 546 
60 250 707 
114 003 289 
43 330 855 
154 336 375 
115 891 789 
2 947 195 476 

Q1 2010 
43 672 108 
10 904 604 
99 737 836 
4 092 969 
219 606 417 
137 650 080 
11 031 696 
52 150 110 
146 477 779 
13 676 425 
130 073 442 
12 150 331 
114 137 436 
55 583 262 
77 580 985 
73 440 397 
5 090 031 
45 596 012 
1 439 925 
17 108 137 
477 616 176 
33 409 884 
64 728 636 
37 089 368 
12 979 172 
75 990 280 
151 235 571 
2 124 249 066 

Q2 2010 
44 906 450 
26 499 701 
109 667 733 
3 006 340 
92 176 063 
90 433 394 
8 301 380 
12 978 492 
148 788 488 
12 679 542 
92 283 874 
119 315 280 
112 972 138 
38 086 416 
126 397 795 
56 368 010 
1 385 947 
25 735 665 
2 877 517 
13 801 790 
283 114 658 
137 575 894 
279 349 875 
21 201 521 
36 286 031 
72 653 554 
104 153 251 
2 072 996 797 

Q3 2010 
37 674 070 
16 734 243 
55 280 536 
3 221 705 
55 446 653 
374 027 292 
9 257 104 
16 374 090 
290 719 234 
181 220 600 
382 352 635 
233 200 744 
77 779 633 
81 473 859 
235 683 411 
49 387 045 
3 765 284 
51 538 859 
10 853 260 
16 761 310 
337 768 509 
232 644 503 
349 034 410 
112 977 181 
18 819 694 
72 766 745 
136 518 327 
3 443 280 935 

Advances 

Grand Total 

7 987 420 
4 821 180 
2 320 500 
142 800 
2 940 000 
67 702 460 
9 328 060 
635 460 
58 741 200 
5 256 020 
79 977 240 
13 924 680 
3 797 360 
10 823 820 
48 564 040 
1 570 380 
344 400 
928 200 
71 400 
7 467 320 
11 822 300 
9 078 860 
7 118 580 
8 918 980 
1 100 820 
1 924 300 
33 841 220 
401 149 000 

589 809 662 
70 604 223 
277 840 508 
16 308 673 
441 285 322 
1 130 101 633 
60 427 719 
93 152 431 
866 250 086 
292 259 068 
870 736 226 
418 564 116 
455 292 132 
381 198 252 
664 151 518 
241 657 321 
15 948 416 
157 768 358 
17 179 784 
72 877 714 
1 440 037 950 
456 228 687 
760 482 207 
294 190 338 
112 516 573 
377 671 253 
541 640 158 
11 116 180 326 

Of the total amount paid in 2010 EUR 10.72 billion, relates to reimbursements 
and EUR 401 million to advances.  

The  table  in  the  next  page  compares,  for  each  Member  State,  the  EAFRD 
payments made in 2010 with the payments in 2009. While interim payments in 
2010 increased by 30.5% compared to 2009 (EUR 10.72 billion vs. 8.21 billion), 
total payments increased by 35.4%  (EUR 11.12 billion vs. 8.21 billion) due to 
the impact of the supplementary advances paid during the year. 

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Payments made to Member States - Comparison 2010 vs 2009  

(in  €) 

MS 

AT 
BE 
BG 
CY 
CZ 
DE 
DK 
EE 
ES 
FI 
FR 
GR 
HU 
IE 
IT 
LT 
LU 
LV 
MT 
NL 
PL 
PT 
RO 
SE 
SI 
SK 

UK 
Total 

Interim payments 

Prefinancing 

Total 

Interim payments 

Prefinancing 

Total 

( in €) 

( in %) 

2009 

2010 

Difference 2010 vs. 2009 

550 352 330 
57 909 148 
127 052 991 
16 161 768 
340 175 929 
930 186 410 
53 861 495 
95 121 150 
618 592 973 
191 126 077 
779 806 772 
174 132 448 
497 184 388 
329 171 422 
356 692 296 
247 493 642 
12 910 511 
104 463 393 
3 357 534 
36 071 974 
1 043 825 682 
235 563 950 
565 927 879 
105 868 407 
100 732 462 
289 286 329 

346 343 895 
8 209 373 256 

550 352 330 
57 909 148 
127 052 991 
16 161 768 
340 175 929 
930 186 410 
53 861 495 
95 121 150 
618 592 973 
191 126 077 
779 806 772 
174 132 448 
497 184 388 
329 171 422 
356 692 296 
247 493 642 
12 910 511 
104 463 393 
3 357 534 
36 071 974 
1 043 825 682 
235 563 950 
565 927 879 
105 868 407 
100 732 462 
289 286 329 

346 343 895 
8 209 373 256 

581 822 242 
65 783 043 
275 520 008 
16 165 873 
438 345 322 
1 062 399 173 
51 099 659 
92 516 971 
807 508 885 
287 003 048 
790 758 986 
404 639 436 
451 494 772 
370 374 432 
615 587 478 
240 086 941 
15 604 016 
156 840 158 
17 108 384 
65 410 394 
1 428 215 650 
447 149 827 
753 363 627 
285 271 358 
111 415 753 
375 746 953 

7 987 420 
4 821 180 
2 320 500 
142 800 
2 940 000 
67 702 460 
9 328 060 
635 460 
58 741 200 
5 256 020 
79 977 240 
13 924 680 
3 797 360 
10 823 820 
48 564 040 
1 570 380 
344 400 
928 200 
71 400 
7 467 320 
11 822 300 
9 078 860 
7 118 580 
8 918 980 
1 100 820 
1 924 300 

589 809 662 
70 604 223 
277 840 508 
16 308 673 
441 285 322 
1 130 101 633 
60 427 719 
93 152 431 
866 250 086 
292 259 068 
870 736 226 
418 564 116 
455 292 132 
381 198 252 
664 151 518 
241 657 321 
15 948 416 
157 768 358 
17 179 784 
72 877 714 
1 440 037 950 
456 228 687 
760 482 207 
294 190 338 
112 516 573 
377 671 253 

39 457 332 
12 695 075 
150 787 517 
146 904 
101 109 393 
199 915 223 
6 566 224 
-1 968 719 
247 657 113 
101 132 991 
90 929 454 
244 431 667 
-41 892 256 
52 026 830 
307 459 221 
-5 836 321 
3 037 905 
53 304 965 
13 822 250 
36 805 741 
396 212 268 
220 664 737 
194 554 328 
188 321 932 
11 784 110 
88 384 924 

507 798 938 
10 715 031 326 

33 841 220 
401 149 000 

541 640 158 
11 116 180 326 

195 296 263 
2 906 807 070 

7.2% 
21.9% 
118.7% 
0.9% 
29.7% 
21.5% 
12.2% 
-2.1% 
40.0% 
52.9% 
11.7% 
140.4% 
-8.4% 
15.8% 
86.2% 
-2.4% 
23.5% 
51.0% 
411.7% 
102.0% 
38.0% 
93.7% 
34.4% 
177.9% 
11.7% 
30.6% 

56.4% 
35.4% 

0.00 

EN 

12 

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3.3.2.  Technical assistance 

In the 2010 budget the amount for payment appropriations was € 9 million. The 
table hereafter presents the payments for technical assistance for a total amount 
of EUR 4.4 million. The most important part is related to European Network for 
Rural Development. 

Technical assistance – Implementation of payment 
appropriations 

Budget Item: 05.040502 

 (in €)  

Description 

 Amount  paid  

Seminar on the implementation of rural 
development programmes 

                           107 687 

Contact point of the European Network for 
Rural Development (ENRD) 

                        3 928 213 

Thematic working groups ENRD 

                           205 202    

Experts committee on the evaluation of 
rural development programmes 

Publications 

Total 

                             76 784    

                             88 516    

                        4 406 402 

3.4. 

Analysis of expenditure declared by axis and by measure 

The  table  below  shows  the  payment  claims  declared  by  Member  state  and  by 
axis/measure  for  rural  development  in  2010  (Q4  2009  to  Q3  2010),  the 
cumulative declared expenditure from 2007 to 2010 (Q4 2006 to Q3 2010) and 
also the financial plans of EAFRD programmes (2007-2013; EU27). 

In  2010,  the  expenditure  continues  to  be  concentrated  in  axis  2  (50.9%), 
followed by axis 1 with  35.4%, axis 3 with  9.10% and axis 4 with  2.5%. This 
repartition  of  expenditure  still  significantly  diverges  with  the  repartition  in  the 
financial  plans  for  the  2007-2013  programming  period  (33.6%,  44.4%,  13.3% 
and  6% for axis 1 to 4 respectively).  

Axis  2  measures  mainly  involve  annual  payments  (e.g.  agro-environmental 
measures) whilst Axis 1, 3 and, to a lesser extent, Axis 4 mainly relate to multi-
annual  measures  that  require  longer  proceedings  for  their  approval  and 
implementation (e.g. investment projects).  

EN 

13 

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Compared with the average for the first 3 years (2007-2009), the expenditure in  
2010 is more balanced among axes and the share of each axis tends to get closer 
to the share in the financial plans. For instance, Axis 2 decreases from  57.8% in 
2009 to 50.0% in 2010 while Axis 1 increases from 32.0% in 2009 to 35.4% in 
2010. 

EAFRD declared expenditure 2010 (Q4 2009-Q3 2010) & Total cumulative expenditure (Q4 2006 to Q3 2010)  
compared with Financial Plans 

Declared expenditure 
2010 (Q4 2009 to Q3 2010) 

Cumulative declared 
expenditure (Q4 2006 to 
Q3 2010) 

Financial Plans 2007-2013 

EAFRD Axis / Measure 

111 Vocational training and information actions  
112 Setting up of young farmers 
113 Early retirement  
114 Use of advisory services 
115 Setting up of management, relief and .... 
121 Modernisation of agricultural holdings 
122 Improvement of  the economic value of forest 
123 Adding value to agricultural and forestry... 
124 Cooperation for development of new products 
125 Infrastructure related to the development … 
126 Restoring agricultural production potential  
131 Meeting standards based on Community... 
132 Participation of farmers in food quality… 
133 Information and promotion activities  
141 Semi-subsistence farming  
142 Producer groups 
143 Direct Payment (BG + RO) 
144 Holdings undergoing restructuring  

Axis 1 
211 Natural handicap payments to farmers in ... 
212 Payments to farmers in areas with handicaps... 
213 Natura 2000 payments and payments linked .. 
214 Agri-environment payments 
215 Animal welfare payments 
216 Non-productive investments 
221 First afforestation of agricultural land 
222 First establishment of agroforestry systems... 
223 First afforestation of non-agricultural land 
224 Natura 2000 payments 
225 Forest-environment payments 
226 Restoring forestry potential and … 
227 Non-productive investments 

Axis 2 
311 Diversification into non-agricultural activities 
312 Business creation and development  
313 Encouragement of tourism activities 
321 Basic services for the economy and rural … 
322 Village renewal and development  
323 Conservation and upgrading of the rural.... 
331 Training and information  
341 Skills acquisition, animation and implement...  

Axis 3 
411 Implementing local development strategies... 
412 Implementing local development strategies... 
413 Implementing local development strategies.... 
421 Implementing cooperation projects  
431 Running the local action group, acquiring ... 

Axis 4 
511 Technical Assistance 
611 BG RO Direct Payments 
Grand total 

 (million €) 

               78.9  
             345.9  
             351.7  
               11.0  
                 2.5  
          1 728.3  
               32.5  
             585.3  
               12.4  
             406.3  
               49.1  
                 2.9  
                 9.5  
                 8.0  
             130.9  
               23.2  
                 1.1  
                   -   

          3 779.3  
          1 003.8  
          1 026.7  
               23.0  
          2 897.4  
               62.4  
               34.6  
             179.9  
                   -   
               18.9  
                 3.7  
                 4.9  
             132.4  
               49.4  

          5 437.2  
             100.1  
             107.2  
               78.6  
             219.9  
             330.0  
             104.7  
                 9.6  
               17.4  

             967.4  
               16.8  
                 1.5  
             155.5  
                 2.6  
               93.3  

             269.8  
             124.6  
               98.7  
        10 677.0  

(%) 

0.7% 
3.2% 
3.3% 
0.1% 
0.0% 
16.2% 
0.3% 
5.5% 
0.1% 
3.8% 
0.5% 
0.0% 
0.1% 
0.1% 
1.2% 
0.2% 
0.0% 
0.0% 

35.4% 
9.4% 
9.6% 
0.2% 
27.1% 
0.6% 
0.3% 
1.7% 
0.0% 
0.2% 
0.0% 
0.0% 
1.2% 
0.5% 

50.9% 
0.9% 
1.0% 
0.7% 
2.1% 
3.1% 
1.0% 
0.1% 
0.2% 

9.1% 
0.2% 
0.0% 
1.5% 
0.0% 
0.9% 

2.5% 
1.2% 
0.9% 
100.0% 

 (million €) 

             156.5  
             838.1  
          1 040.1  
               19.7  
                 4.0  
          3 537.9  
               80.1  
          1 016.0  
               18.0  
             753.9  
             104.9  
               45.0  
               16.5  
               12.9  
             391.0  
               56.2  
                 1.7  
                   -   

          8 092.6  
          3 163.9  
          3 269.3  
               55.7  
          8 960.3  
             143.1  
               54.7  
             636.6  
                   -   
               37.2  
                 7.0  
               13.1  
             323.6  
             113.5  

        16 778.0  
             165.2  
             149.8  
             127.5  
             320.4  
             487.3  
             194.8  
               16.9  
               35.2  

          1 497.2  
               26.4  
                 2.3  
             212.5  
                 3.3  
             121.5  

             366.0  
             288.0  
             438.2  
        27 460.0  

(%) 

0.6% 
3.1% 
3.8% 
0.1% 
0.0% 
12.9% 
0.3% 
3.7% 
0.1% 
2.7% 
0.4% 
0.2% 
0.1% 
0.0% 
1.4% 
0.2% 
0.0% 
0.0% 

29.5% 
11.5% 
11.9% 
0.2% 
32.6% 
0.5% 
0.2% 
2.3% 
0.0% 
0.1% 
0.0% 
0.0% 
1.2% 
0.4% 

61.1% 
0.6% 
0.5% 
0.5% 
1.2% 
1.8% 
0.7% 
0.1% 
0.1% 

5.5% 
0.1% 
0.0% 
0.8% 
0.0% 
0.4% 

1.3% 
1.0% 
1.6% 
100.0% 

 (million €) 

          1 089.2  
          2 887.5  
          2 853.0  
             440.1  
               93.5  
        10 667.0  
             653.7  
          5 647.3  
             349.3  
          5 129.4  
             477.5  
             103.9  
             294.1  
             206.4  
             993.9  
             327.9  
             131.8  
               17.0  

        32 362.5  
          6 240.9  
          7 241.4  
             476.7  
        22 231.3  
             543.0  
             591.1  
          2 295.0  
               16.4  
             347.8  
             102.0  
             271.4  
          1 609.7  
             808.9  

        42 775.5  
          1 488.9  
          2 208.8  
          1 291.0  
          3 120.2  
          3 107.9  
          1 314.6  
             147.5  
             150.0  

        12 829.0  
             471.9  
             167.0  
          3 877.5  
             278.6  
             959.8  

          5 754.7  
          1 876.9  
             645.6  
        96 244.2  

(%) 

1.1% 
3.0% 
3.0% 
0.5% 
0.1% 
11.1% 
0.7% 
5.9% 
0.4% 
5.3% 
0.5% 
0.1% 
0.3% 
0.2% 
1.0% 
0.3% 
0.1% 
0.0% 

33.6% 
6.5% 
7.5% 
0.5% 
23.1% 
0.6% 
0.6% 
2.4% 
0.0% 
0.4% 
0.1% 
0.3% 
1.7% 
0.8% 

44.4% 
1.5% 
2.3% 
1.3% 
3.2% 
3.2% 
1.4% 
0.2% 
0.2% 

13.3% 
0.5% 
0.2% 
4.0% 
0.3% 
1.0% 

6.0% 
2.0% 
0.7% 
100.0% 

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3.5. 

Implementation of EAFRD programmes 

Graph  1  on  the  next  page  presents  the  financial  implementation  rate  of  rural 
development  programmes  (from  the  beginning  to  2010,  including  Q4  2010) 
compared  with  the  2007-2010  appropriations.  The  average  EAFRD  financial 
implementation rate for all EAFRD programmes is 72.4%. 

Graph 1 shows that most Member States have absorbed more than 60% of the 
2007-2010 appropriations. 

The ranking would be sligtly different in terms of absortion rate, i.e. payments 
made from the beginning to 2010 (including Q4 2010) compared with the 2007-
2013 allocation to be paid until end of 2015. The average absortion rate for all 
EAFRD programmes is 39.5%. 

Graph 2 reflects the absortion rate per Member State. Up to 2010, most Member 
States have absorbed more than 30% of their 2007-2013 allocation.  

.

EN 

15 

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Graph 1- Financial implementation rate of RD programmes by Member State *
 (% of the EAFRD 2007-2010 payments, including payment claims Q4 2010, compared with 2007-2010 commitments)

100%

50%

49%

47%

55% 57% 58%

61% 62%

66%

68% 69% 70% 71% 72% 74% 76% 78%

0
1
0
2
-
7
0
0
2

n
o
i
t
u
b
i
r
t
n
o
c
D
R
F
A
E

f
o
%

111%

108%

104%

99%

86% 86% 86%

82%

92% 93%

89%

0%

G
B

O
R

Y
C

T
I

T
M

L
P

T
P

S
E

U
H

L
N

E
E

K
U

V
L

R
G

T
L

I
S

Z
C

K
D

E
D

E
S

I
F

K
S

R
F

T
A

E
B

U
L

E
I

* - Payment claims Q4 2010 are included in the graph as they are paid in early 2011.

EN 

16 

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Graph 2 - Absortion rate of RD programmes by Member State *
 (% of the EAFRD 2007-2010 payments, including payment claims Q4 2010, compared with 2007-2013 allocation)

33% 34% 35% 35% 35% 36% 36% 37% 38% 38%

30%

25% 26%

41% 42% 43%

46% 46% 47% 48% 49%

63% 64%

59%

56%

52% 53%

0
1
0
2
-
7
0
0
2
n
o
i
t
u
b

i
r
t
n
o
c
D
R
F
A
E

f
o
%

100%

50%

0%

O
R

G
B

T
I

Y
C

T
M

T
P

S
E

L
N

L
P

R
G

K
U

U
H

E
E

V
L

K
D

T
L

E
D

Z
C

I
S

R
F

E
S

K
S

I
F

E
B

T
A

U
L

E
I

* - Payment claims Q4 2010 are included in the graph as they are paid in early 2011.

EN 

17 

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4. 

CONTROL MEASURES 

4.1. 

Introduction 

The  EU  legislation  provides  for  a  comprehensive  system  of  management  and 
controls which relies on four levels: 

(a) 

(b) 

(c) 

compulsory  administrative  structure  at  the  level  of  Member  States,  centred 
around the establishment of paying agencies and an accreditation authority at 
high  level  which  is  competent  for  issuing  and  withdrawing  the  agency’s 
accreditation. The decision for issuing the accreditation is based on a detailed 
review by an external audit body; 

detailed  systems  for  controls  and  dissuasive  sanctions  to  be  applied  by  those 
paying agencies.  Article 9(1) of Regulation (EC) No 1290/20051 provides for 
the general obligation of Member States to ensure that transactions financed by 
the  EAGF  and  the  EAFRD  are  carried  out  and  executed  correctly,  to  prevent 
and  deal  with  irregularities  and  to  recover  amounts  unduly  paid.    In 
complement to this general obligation, for each aid scheme there is a system of 
controls  and  dissuasive  sanctions  of  final  beneficiaries  which  reflects  the 
specific features of the scheme and the risk involved in its administration. 

ex-post  controls  by  independent  audit  bodies  on  the  paying  agencies'  annual 
accounts  and  the  functioning  of  their  internal  control  procedures  (under 
Regulation  (EC) No 885/20062)  and  by  special  departments  on  aid  measures 
other than direct payments covered by the IACS (checks based on Regulation 
(EC) No 485/20083); 

(d) 

clearance of accounts through the Commission (both annual financial clearance 
and multi-annual conformity clearance). 

These four levels establish a comprehensive system for the management and control 
of  agricultural  expenditure.  It  includes,  on  the  one  hand,  all  the  necessary  building 
blocks  to  guarantee  a  sound  administration  of  the  expenditure  at  Member  States’ 
level and, on the other hand, allows the Commission to counter the risk of financial 
losses  as  a  result  of  any  deficiencies  in  the  set-up  and  operation  of  those  building 
blocks through the clearance of accounts procedure.  

Council Regulation (EC) No 1698/20054, as amended, contains the rules on support 
for  rural  development  by  EAFRD;  Commission  Regulations  (EC)  No  1974/20065 
and  (EC)  No  1975/20066,  as  amended,  lay  down  the  rules  for  the  application  and 
control of rural development support measures. 

1 
2 
3 
4 
5 
6 

OJ L 209, 11.08.2005, p. 1. 
OJ L 171, 23.6.2006, p. 90–110. 
OJ L 143, 3.6.2008, p. 1–9. 
OJ L277, 21.102005, p 1 
OJ L368, 23.12.2006, p.15 
OJ L 368, 23.12.2006 p.74 

EN 

18 

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The control rules provided by Regulation (EC) No 1975/2006 take into account the 
characteristics  of  the  measures  under  Axis  2  i.e.  timing  for  the  submission  of  the 
payment claims aligned with the deadline set for the first pillar, payments made after 
the  finalization  of  the  controls,  cross-compliance  respect,  and  a  detailed  sanction 
system.   As of 1/01/2011, the rules are laid down in Regulation (EC) No 65/2011. 

4.2. 

Integrated Administration and Control System (IACS) 

EAFRD : Axis II - Council Regulations and (EC) No. 1122/20097 which contain the 
rules on the IACS are also applicable to rural development support under Axis 2 as 
far as area - and animal - related measures are concerned. 

A  fully  operational  IACS  consists  of:  a  computerised  database,  an  identification 
system for agricultural parcels and farmers claiming aid, a system for identification 
and  registration  payment  entitlements,  aid  applications  and  integrated  controls 
system  (claim  processing,  on-the-spot  checks  and  sanctioning  mechanisms)  and  a 
system  for  identifying  and  registering  animals  where  applicable.  The  IACS  is  fully 
automated  and  provides  highly  efficient  controls  by  maximising  the  use  of 
computerised and remote controls. 

This  system  foresees  a  100%  administrative  control  covering  the  eligibility  of  the 
claim,  complemented  by  administrative  cross-controls  with  standing  databases 
ensuring  that  only  areas  or  animals  that  fulfil  all  eligible  requirements  are  paid 
premium  and  by  a  minimum  5%  of  on-the-spot  checks  to  check  the  existence  and 
eligibility of the area or the animals claimed. If the on-the-spot controls reveal a high 
number  of  irregularities,  additional  controls  must  be  carried  out.  The  sample  of 
transactions is determined on a risk and/or random basis. 

The  use  of  standing  databases,  which  are  appropriately  updated,  is  well  adapted  to 
the schemes whereby aids are directly paid to the farmers and based on the surfaces 
or on the number of animals, in that the risk can be reduced to the lowest levels. 

For  the  financial  year  2010,  the  IACS  covers    around    49.8%  of  payments  made 
under  the  EAFRD    for  mesures  including  inter  alia,  agri-environment  and  animal 
welfare  mesures,  less-favoured  areas  and  areas  with  environmental  restrictions  and 
afforestation of agricultural land. The Commission services verify the effectiveness 
of Member States' IACS and homogenous implementation by means of both on-the-
spot  auditing  and  general  supervision  based  on  annually  supplied  financial  and 
statistical data. The Commission continues to consider that the IACS is generally an 
effective  control  system  for  limiting  the  risk  of  error  or  irregular  expenditure, 
provided that it is properly applied.  

7 

OJ L 316, 2.12.2009, p.65 

EN 

19 

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5. 

CLEARANCE OF ACCOUNTS 

5.1. 

 Financial clearance  

5.1.1. 

Introduction 

The financial clearance covers the accounts and control systems set up by the paying 
agencies.  Within  this  framework,  DG  AGRI  pays  particular  attention  to  the 
certification  bodies’  conclusions  and  recommendations  (where  weaknesses  are 
found),  following  their  reviews  of  the  paying  agencies’  management  and  control 
systems.  As  part  of  this  review,  the  DG  AGRI  departments  also  cover  aspects 
relating  to  the  accreditation  criteria  for  the  paying  agencies  and  protecting  the 
financial  interests  of  the  EU  as  regards  the  advances  paid,  securities  obtained  and 
intervention stocks. 

The Commission adopts an annual clearance of accounts decision clearing the paying 
agencies'  annual  accounts  on  the  basis  of  the  certificates  and  reports  from  the 
certification  bodies,  but  without  prejudice  to  any  subsequent  decisions  to  recover 
expenditure  which  proves  not  to  have  been  in  accordance  with  the  EU  rules.  The 
Commission must clear the accounts and adopt its clearance decision by 30 April of 
the year following the financial year in question.  

5.1.2.  Financial clearance for financial year 2009 

At  the  end  of  November  2010,  the  Commission  adopted  three  further  decisions 
clearing  the  2009  annual  accounts  of  8  Paying  Agencies,  which  had  been  initially 
disjoined,  in  respect  of  their  expenditure  funded  by  the  European  Agricultural 
Guarantee  Fund  (EAGF),  the  European  Agricultural  Fund  for  Rural  Development 
(EAFRD) and the Temporary Rural Development Instrument (TRDI).  

The  outstanding  accounts  of  4  paying  agencies  (EAFRD)  were  cleared  by  a 
Commission Decision adopted in April 2011. 

By  means  of  these  decisions,  it  cleared  amounts  of  EUR  1  121  million  for  the 
EAFRD (around 14% of total annual expenditure) and EUR 3 million for the TRDI 
(around  7%).  Consequently,  all  the  accounts  have  now  been  cleared  for  financial 
year 2009.   

5.1.3.  Financial clearance for financial year 2008 

The two remaining paying agencies for which the 2008 accounts are still outstanding 
are  Bayern  (Germany)  for  EAFRD  and  OPEKEPE  (Greece)  for  both  EAGF  and 
EAFRD. The total amount concerned is 351 EUR million for EAFRD (5.8% of total 
expenditure for the financial year in question). 

These accounts will be cleared in the course of 2011. 

EN 

20 

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5.2. 

Conformity clearance – audits and decisions adopted in 2010 

5.2.1. 

 Introduction 

It  is  primarily  the  Member  States'  responsibility  to  satisfy  themselves  that 
transactions  are  carried  out  and  executed  correctly.  Where  Member  States  fail  to 
meet  this  requirement,  the  Commission  applies  financial  corrections  to  protect  the 
financial interests of the EU. 

The  conformity  clearance  relates  to  the  legality  and  regularity  of  transactions.  It  is 
designed to exclude expenditure from EU financing which has not been effected in 
compliance  with  EU  rules,  thus  shielding  the  EU  budget  from  expenditure  that 
should not be charged to it (financial corrections). In contrast, it is not a mechanism 
by which  irregular payments  to beneficiaries are recovered, which according to the 
principle of shared management is the sole responsibility of Member States. 

Financial  corrections  are  determined  on  the  basis  of  the  nature  and  gravity  of  the 
infringement and the financial damage caused to the EU. Where possible, the amount 
is  calculated  on  the  basis  of  the  loss  actually  caused  or  on  the  basis  of  an 
extrapolation. Where this is not possible, flat-rates are used which take account of the 
severity  of  the  deficiencies  in  the  national  control  systems  in  order  to  reflect  the 
financial risk for the EU. 

Where  undue  payments  are  or  can  be  identified  as  a  result  of  the  conformity 
clearance  procedures,  Member  States  are  required  to  follow  them  up  by  recovery 
actions  against  the  final  beneficiaries.  However,  even  where  this  is  not  possible 
because  the  financial  corrections  only  relate  to  deficiencies  in  the  Member  States' 
management  and  control  systems,  financial  corrections  are  an  important  means  to 
improve these systems and thus to prevent or detect and recover irregular payments 
to  final  beneficiaries.  The  conformity  clearance  thereby  contributes  to  the  legality 
and regularity of the transactions at the level of the final beneficiaries. 

5.2.2.  Conformity clearance – audits and decisions adopted in 2010 

Audits 

In 2010, 37 conformity missions were carried out in respect of the EAFRD of which 
all enquiries for Axis 2 in EU 27 included the agri-environment measures. 

Conformity decisions 

During the financial year 2010, three conformity decisions were adopted which had a 
financial  impact  in  the  year.  These  decisions  resulted  in  the  exclusion  from  EU 
financing of EAFRD expenditure:  

•  Decision  2009/721/EC  of  24  September  2009  –  31st  Decision  excluding  EUR 

350 800. 

•  Decision  2010/152/EC  of  11  March  2010  –  32nd  Decision  excluding  

EUR 39 244. 

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•  Decision  2010/399/EC  of  15  July  2010  –  33rd  Decision  excluding  

EUR 69 466.32. 

5.3. 

 Recoveries 

Regarding  financial  year  2010,  Member  States  reported  the  information  about 
irregularity  cases  by  1  February  2011.  The  Member  States  recovered  EUR  21.7 
million during financial year 2010, and the outstanding amount still to be recovered 
from  beneficiaries  at  the  end  of  that  financial  year  was  EUR  31.6  million.  The 
amounts  recovered  can  be  reused  by  the  Member  States  under  the  same  rural 
development  programme.    Regulation  (EC)  No 1290/2005  introduced  an  automatic 
clearing mechanism for non recovered irregular payments after 4 years or, in case the 
recovery  is  challenged  in  national  courts,  8  years  after  the  establishment  of  the 
irregularity. The financial consequences of non recovery are shared by the Member 
State  concerned  and  the  EU  on  a  50 %-50 %  basis.  Since  under  EAFRD,  these 
provisions are applicable only after the closure of the rural development programme, 
this  automatic  clearance  mechanism  did  not  apply  on  the  cases  reported  by  the 
Member States for financial year 2010. 

5.4. 

Appeals brought before the Court of Justice against clearance decisions 

Judgments handed down 

In  the  financial  year  2010  no  judgements  have  been  handed  down  by  the  Court  in 
appeals  brought  by  the  Member  States  against  clearance  decisions  with  regard  to 
EAFRD. 

New appeals 

In the financial year 2010 3 new appeals were brought by the Member States against 
clearance decisions: 

• T-486/09 brought by Republic of Poland on 4 December 2009. 

• T-215/10 brought by Hellenic Republic on 11 May 2010. 

•  T-453/10  brought  by  Northern  Ireland  Department  of  Agriculture  and  Rural 
Development on 24 September 2010. 

Appeals pending 

The  situation  as  at  31  December  2010  with  regard  to  appeals  pending  is  shown, 
together with the amounts concerned, in the table below: 

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Appeals  against  clearance  of  accounts  decisions  pending  on  31  December 
2010 (for EAFRD) 

Case number 

Member State 

Challenged amount (EUR) 

T-214/07 

T-86/08 

T-232/08 

T-486/09 

T-215/10 

T-453/10 

TOTAL 

GR 

GR 

LU 

PL 

GR 

GB 

-67 732.00

-1 331 047.00

-964 488.00

-11 077 828.30

-18 523 716.00

-1 230 832.24

-33 195 643.54

6. 

RELATIONS WITH PARLIAMENT AND THE EUROPEAN COURT OF AUDITORS 

The  relevant  information  about  the  relations  with  the  Parliament  and  the  European 
Court  of  Auditors  is  available  in  "section  11"  of  the  Commission  staff  working 
document accompanying the 2010 financial report on the EAGF. 

7. 

BASIC RULES GOVERNING THE EAFRD AND AMENDMENTS MADE IN 2010  

7.1. 

General 

Basic legislation 

–  Council  Regulation  (EC)  No  1698/2005  of  20  September  2005  on  support  for 
rural  development  by  the  European  Agricultural  Fund  for  Rural  Development 
(EAFRD) (OJ L 277, 21.10.2005, p.1.); as last amended by Regulation (EC) No 
473/2009 of 25 May 2009 (OJ L 144, 9.6.2009, p.3.). 

–  Commission Regulation (EC) No 1974/2006  of  15  December  2006  laying  down 
detailed  rules  for  the  application  of  Council  Regulation  (EC)  No  1698/2005  on 
support  for  rural  development  by  the  European  Agricultural  Fund  for  Rural 
Development  (EAFRD)  (OJ  L  368,  23.12.2009,  p.15);  as  last  amended  by 
Regulation 482/2009 of 8 June 2009 (OJ L 145, 10.6.2009, p.17.). 

–  Commission  Regulation  (EC)  No  1975/2006  of  7  December  2006  laying  down 
detailed rules for the implementation of Council Regulation (EC) No 1698/2005, 
as regards the implementation of control procedures as well as cross-compliance 
in  respect  of  rural  development support  measures  (OJ  L  368,  23.12.2006,  p.74); 
recasted by Regulation (EC) No 65/2009 of 27 January 2011 (OJ L 25, 28.1.2011, 
p.8). 

7.2. 

Recent modifications 

The  Treaty  on  the  Functioning  of  the  European  Union  (TFEU)  makes  a  clear 
distinction between the powers delegated to the Commission to adopt non-legislative 
acts  (delegated  acts)  of  general  application  to  supplement  or  amend  certain  non-

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essential elements of the legislative act as laid down in Article 290 on one hand, and 
the  powers  conferred  on  the  Commission  to  adopt  implementing  acts  under  Article 
291, on the other. 

The alignment exercise of Regulation (EC) No 1698/2005 on new rules of the Treaty 
was based on a classification on the basis of the new philosophy- a sorting between 
measures  of  implementing  nature  and  measures  of  delegated  nature-  of  the  current 
Commission implementing powers which were adopted on the basis of Regulations 
(EC) No 1974/2006 and No 1975/2006. 

Following this exercise, a proposal for amendment of Regulation (EC) No 1698/2005 
has  been  presented  to  the  European  Parliament  and  to  the  Council.  In  the  same 
context  some  simplification  proposals  like  the  reduction  of  the  strategic  reporting 
requirements,  facilitating  more  tailor-made  use  of  advisory  services  and  the  lighter 
follow-up of non-compliances of cross-compliance were introduced, as well as other 
elements  like  the  extension  of  the  coverage  of  producer  groups,  enlarging  the 
eligibility  of  Natura  2000  to  the  stepping  stones  areas  and  the  introduction  of  the 
incentive element for agricultural aid schemes. 

Commission  Regulation  (EC)  No  1975/2006  laying  down  detailed  rules  for  the 
implementation  of  Council  Regulation  (EC)  No  1698/2005,  as  regards  the 
implementation of control procedures as well as cross-compliance in respect of rural 
development  support  measures,  lays  down  the  detailed  control  rules  for  rural 
development. 

Regulation  (EC)  No  1975/2006  had  many  cross-references  to  Regulation  (EC)  No 
796/2004  laying  down  the  control  rules  for  direct  payment  schemes.  As  this 
regulation had been recast and replaced by Regulation (EC) No 1122/2009, there was 
a need to update these cross-references. Furthermore, as part of the Commission Staff 
Working Paper on Simplification it was indicated that the rural development control 
regulation would be recast and the rules laid down would be clarified and simplified. 
Therefore  a  total  recast  of  this  regulation  was  carried  out  resulting  to  Commission 
Regulation (EC) No 65/2011. 

7.3. 

Declarations 

–  Commission Regulation (EC) No 883/2006 of 21 June 2006 laying down detailed 
rules for the application of Council Regulation (EC) No 1290/2005 as regards the 
keeping  of  accounts  by  the  paying  agencies,  declarations  of  expenditure  and 
revenue and the conditions for reimbursing expenditure under EAGF and EAFRD 
(OJ L 171, 23.6.2006, p. 1); 
 as  last  amended  by  Commission  Regulation 
(EC) No 482/2009 of 8 June (OJ L145, 10.6.2009, p. 17). 

7.4. 

Checks 

–  Council Regulation (EC) No 73/2009 of 19 January 2009 (OJ L30, 31.1.2009, p. 
16)  establishing  common  rules  for  direct  support  schemes  for  farmers  under  the 
common agricultural policy and establishing certain support schemes for farmers, 
amending Regulations (EC) No 1290/2005, (EC) No 247/2006, (EC) No 378/2007 

EN 

24 

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and repealing Regulation (EC) No 1782/2003      as last amended by Regulation 
(EU) No 360/2010 of 27 April 2010 (OJ L 106, 28.4.2010, p. 1). 

–  Commission  Regulation  (EC)  No  1122/2009  of  30 November  2009  (OJ  L  316, 
2.12.2009,  p.  65)  laying  down  detailed  rules  for  the  implementation  of  Council 
Regulation  (EC)  No 73/2009  as  regards  cross-compliance,  modulation  and  the 
integrated administration and control system, under the direct support schemes for 
farmers provided for that Regulation, as well as for the implementation of Council 
Regulation  (EC)  No 1234/2007  as  regards  cross-compliance  under  the  support 
scheme provided for the wine sector and repealing Commission Regulation (EC) 
No 796/2004  of  21  April  2004  (OJ L 141,  p. 18);  as  last  amended  by  Regulation 
(EU) No 173/2011 of 23 February 2011 (OJ L 49, 24.2.2011, p. 16). 

–  Council  Regulation  (EC)  No  1698/2005  of  20  September  2005  (OJ  L  277, 
21.10.2005, p. 1) on support for rural development by the European Agricultural 
Fund for Rural Development (EAFRD); as last amended by Regulation (EC) No 
473/2009 of 25 May 2009 (OJ  L 144, 9.6.2009, p. 3). 

–  Commission  Regulation  (EC)  No  1974/2006  of  15  December  2006  (OJ  L  368, 
23.12.2006,  p.  15)  laying  down  detailed  rules  for  the  application  of  Council 
Regulation (EC) No 1698/2005 on support for rural development by the European 
Agricultural  Fund  for  Rural  Development  (EAFRD);  as  last  amended  by 
Regulation (EC) No 108/2010  of 8 February 2010 (OJ L 36, 9.2.2010, p.4). 

–  Commission  Regulation  (EC)  No  1975/2006  of  7  December  2006  (OJ  L  368, 
23.12.2006, p. 74) laying down detailed rules for the implementation of Council 
Regulation  (EC)  No  1698/2005,  as  regards  the  implementation  of  control 
procedures  as  well  as  cross-compliance  in  respect  of  rural  development  support 
measures; as last amended by Regulation (EC) No484/2009 of 9 June 2009 (OJ L 
145,  10.6.2009, p. 25). 

7.5. 

Clearance of accounts 

–  Council Regulation (EC) No 1290/2005 of 21 June 2005 on the financing of the 
common  agricultural  policy  (OJ  L 209,  11.8.2005,  p. 1);  as  last  amended  by 
Regulation (EC) No 473/2009 of 25 May 2009 (OJ L 144, 9.6.2009, p. 3). 

–  Commission Regulation (EC) No 885/2006 of 21 June 2006 laying down detailed 
rules for the application of Council Regulation (EC) No 1290/2005 as regards the 
accreditation  of  paying  agencies  and  other  bodies  and  the  clearance  of  the 
accounts  of  the  EAGF  and  of  the  EAFRD  (OJ  L 171,  23.6.2006,  p. 90);  as  last 
amended  by  Regulation  (EC)  No  1034/2008  of  21  October  2008  (OJ  L  279, 
22.10.2008, p. 13). 

EN 

25 

   EN