COMMISSION STAFF WORKING PAPER
Date: 2011-11-14
Institutions: European Commission
Subjects: Resolution of the Council of the European Union, budgetary discharge, financial year, general budget (EU), management audit

EUROPEAN COMMISSION 

Brussels, 14.11.2011 
SEC(2011) 1350 final 

COMMISSION STAFF WORKING PAPER 

Accompanying the document 

REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT and 
THE COUNCIL  

on the follow-up to 2009 discharge - Replies to requests from the  Council 

{COM(2011) 736 final} 
{SEC(2011) 1351 final} 

 
 
  
  
 
 
TABLE OF CONTENTS 

GENERAL INTRODUCTION .................................................................................................. 3 

Council Recommendation on the 2009 discharge...................................................................... 4 

Introduction....................................................................................................................... 5 

Chapter 1 - The Statement of Assurance (DAS) and supporting information.................. 7 

Chapter 2 - Revenue ......................................................................................................... 8 

Chapter 3 - Agriculture and Natural Resources.............................................................. 10 

Chapter 4 - Cohesion ...................................................................................................... 15 

Chapter 5 - Research, Energy and Transport.................................................................. 19 

Chapter 6 - External aid, Development and Enlargement .............................................. 22 

Chapter 7 - Education and Citizenship ........................................................................... 27 

Chapter 8 - Economic and Financial Affairs .................................................................. 29 

Chapter 9 - Administrative and other expenditure.......................................................... 31 

Special Report No. 8/2009 "Networks of excellence and Integrated projects in 

Community Research policy: did they achieve their objectives?" ................... 33 

Special Report No. 15/2009 "EU assistance implemented through United Nations 

organisations: decision making and monitoring" ............................................. 36 

Special Report No. 16/2009 "The European Commission's management of pre-

accession assistance to Turkey"........................................................................ 40 

Special Report No. 17/2009 concerning vocational training actions for women co-

financed by the European Social Fund ............................................................. 42 

Special Report No. 18/2009 "Effectiveness of EDF support for Regional Economic 

Integration in East Africa and West Africa"..................................................... 43 

Special Report No. 1/2010 "Are simplified customs procedures for imports effectively 

controlled?"....................................................................................................... 46 

Special Report No. 2/2010 "The effectiveness of the Design Studies and Construction of 

New Infrastructures support schemes under the Sixth Framework Programme 
for Research" .................................................................................................... 47 

Special Report No. 4/2010 "Is the design and management of the mobility scheme of the 
Leonardo da Vinci programme likely to lead to effective results?" ................. 48 

Special Report No. 7/2010 "Audit of the clearance of accounts procedure".................. 51 

Requests concerning agencies/bodies............................................................................. 53 

Requests concerning executive agencies ........................................................................ 54 

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Requests concerning joint undertakings ......................................................................... 55 

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GENERAL INTRODUCTION 

This Commission Staff Working Paper completes the Report from the Commission to the 
European Parliament and the Council on the Follow-up to 2009 Discharge. It presents in 
detail the answers to the 85 specific requests made by the Council in the comments 
accompanying its Recommendations on the 2009 Discharges.1 

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For  each  specific  recommendation  a  reference  is  given  to  the  relevant  Council  document:  document 
references  5891/11  ADD  1  and  2,  5892/11  ADD  1,  5893/11  ADD  1,  5469/11  and  5894/11  ADD  1, 
published 
on 
http://www.europarl.europa.eu/activities/committees/editoDisplay.do?language=EN&id=2&body=CON
T 

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Council Recommendation on the 2009 discharge 

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Introduction 

1. 

(Council  Doc.  5891/11  ADD  1,  §2  page  5,  §4,  page  6)  The  Council  urges  the 
Commission and Member States to continue to improve the financial management of 
EU funds. 

The  Council  draws  attention  to  the  necessity  to  continue  monitoring  closely  the 
management  and  control  of  funds,  in  particular  concerning  the  policy  group 
"Agriculture  and  natural  resources"  for  which  the  Court's  audit  results  show  an 
increase in the estimate of most likely error, compared to 2008. 

For  shared  management,  the  Council  recalls  the  principle  of  sound  financial 
management  and  the  Commission's  final  responsibility,  within  the  existing  legal 
framework,  for  EU  budget  implementation  and  for  appropriate  corrective  action. 
Moreover,  the  Council  encourages  the  Commission  to  continue  to  contribute  to  a 
common  understanding  of  rules  and  regulations  by  supporting  Member  States 
through better and more targeted guidelines and trainings, if necessary. 

Commission's response: 

In the area of Structural funds the Commission will continue providing additional 
guidance and support to national audit authorities, especially on the coverage and 
quality of the audits and on drawing up annual control reports and audit opinions 
to  maximise  the  added  value  of  these.  The  Commission  will  concentrate  control 
efforts,  but  also  guidance  and  administrative  capacity  building  activities,  on  the 
eligibility of costs and on the application of public procurement rules, areas where 
the majority of the estimated errors have occurred in 2008 and 2009. Furthermore, 
the Commission is taking initiatives to further streamline the public procurement 
processes. 

(Council  Doc.  5891/11  ADD  1,  §6,  par  1,  page  6)  The  Council  invites  the 
Commission  to  propose,  where  appropriate,  measures  aiming  at  reducing  the 
complexity of rules, in particular of those governing  the practical administration of 
programmes. The Council suggests that elements for further simplification and more 
effective  delivery  mechanisms  for  EU  policies  should  also  be  included  in  the 
Commission's  upcoming  proposals  for  new  sectoral  legislation  relating  to  the  next 
multiannual programming period. 

Commission's response: 

The  Commission  will  propose  elements  for  simplification  and  for  improving 
effectiveness of EU policies' instruments in the new sectoral legislation related to 
the next multiannual financial framework. 

(Council  Doc.  5891/11  ADD  1,  §6,  par  2,  page  6)  A  thorough  scrutiny  of  the 
inherently  complex  EU  legislation  on  public  procurement  would  be  of  particular 
importance.  The  Council  considers  that  more  coherence  and  clarity  could  be 
achieved in the estimation of the impact of errors in public procurement on the basis 
of a consistent and transparent method. 

2. 

3. 

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Commission's response: 

The  Commission  has  carried  out  a  thorough  ex-post  evaluation  of  the  existing 
procurement  rules  (Directives  2004/17/EC  and  2004/18/EC).  Drawing  from  the 
results of this evaluation and the public consultation on the modernisation of EU 
public  procurement  policy  the  Commission  is  presently  engaged  in  a  major 
revision  of  the  legal  framework  with  a  view  of  simplifying  the  rules  in  order  to 
ensure a clear and unambiguous EU level playing field that can be efficiently used 
by  both  buyers  and  suppliers  in  the  changing  economic  environment  and  policy 
context. 

4. 

(Council  Doc.  5891/11  ADD  1,  §7,  par  2,  page  7)  The  Council  encourages  the 
Commission to immediately interrupt and suspend payments when it is duly justified, 
and to strictly follow up all corrective action. 

Commission's response: 

The  Commission  is  taking  the  requested  action.  It  intends  to  report  on  measures 
taken to that effect in the last Annual Activity Reports of the Directors General. 

The Commission exercised rigorously this supervisory role in 2010 by interrupting 
63  (49  ERDF  and  14  ESF)  payment  deadlines  and  adopting  six  suspension 
decisions  for  2000-2006  and  2007-2013  ESF  operational  programmes,  where 
serious  deficiencies  or  irregularities  have  been  detected  in  the  management  of 
Structural Funds. The Commission is pursuing this strict policy in 2011, with 54 
interruptions of payment deadlines decided (40 for ERDF and 14 for ESF) by 30 
June 2011. 

5. 

(Council  Doc.  5891/11  ADD  1,  §7,  par  3,  page  7)  Clear  evidence  should  also  be 
provided  by  the  Commission  and  Member  States  on  the  impact  resulting  from  the 
different corrective mechanisms. 

Commission's response: 

The  Commission  has  provided  separate  information  in  the  2010  EU  annual 
accounts  (note  6)  on  interruptions  and  suspended  payments  to  Member  States. 
This  is  in  addition  to  the  information  on  financial  corrections  and  recoveries 
already disclosed since a number of years. 

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Chapter 1 - The Statement of Assurance (DAS) and supporting information 

6. 

(Council  Doc.  5891/11  ADD  1,  §2,  par  5,  page  9)  The  Council  encourages  the 
Commission  to  increase  transparency  and  to  take  the  information  provided  by 
Member States in their annual summaries into account in its annual activity reports 
and  management  declarations  by  its  Directors-General,  as  well  as  in  its  synthesis 
report, in order to draw the appropriate added value from the Member States' efforts 
to  provide  these  summaries,  in  addition  to  the  set  of  annual  certifications  and 
declarations foreseen in sectoral regulations of EU policies. 

Commission's response: 

The  Commission  services  already  provide  in  their  Annual  Activity  Reports  their 
assessment  of  the  Member  States'  management  and  control  systems  and  take  in 
consideration the information provided by the Member States (through statements 
their  management 
of  assurance  and  annual  summaries)  when 
declarations.  The  Commission  sets  up  in  the  Synthesis  Report  the  measures  it 
considers necessary to resolve substantial weaknesses identified. 

issuing 

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Chapter 2 - Revenue 

7. 

(Council Doc. 5891/11 ADD 1, par 2, page 12) The Council reiterates its request to 
the Commission for a qualitative assessment of the administration, management and 
control of the traditional own resources and VAT own resources systems. 

8. 

9. 

Commission's response: 

The conclusions from the earlier examinations of the quantitative and qualitative 
assessments  made  as  a  result  of  the  Council's  earlier  requests  were  first  fed  into 
the still ongoing budget review and those concerning VAT have since been taken 
forward into the new proposals the Commission is currently preparing concerning 
the future of the own resources system. 

(Council Doc. 5891/11 ADD 1, §1, par 1, page 12) The Council notes that problems 
relating  to  the  management  of  B-accounts  persisted.  It  calls  on  the  Commission  to 
continue its surveillance and guidance activities in order to ensure correct accounting 
of established customs duties. 

Commission's response: 

In  the  course  of  its  regular  inspections  of  Traditional  Own  Resources  the 
Commission examines the B-accounts in order to ensure the correct establishment 
and  recovery  of  duties.  This  examination  is  an  ongoing  feature  of  its  inspections 
and has been completed up to 2010. The Commission will continue to examine the 
B-accounts in the course of its future inspections. 

(Council  Doc.  5891/11  ADD  1,  §1,  par  2,  page  12)  For  transparency  and  equality 
reasons,  the  Council  invites  the  Commission  and  the  Court  to  follow  up  closely 
possible  losses  of  traditional  own  resources also  in  such  cases,  including  providing 
information on the estimated overall amount of lost or endangered own resources. 

Commission's response: 

The Commission is following up the losses of Traditional Own Resources arising 
from the Court's report on Simplified Procedures and will supply a final report on 
the  estimated  losses  to  the  Parliament  by  the  end  of  2011.  The  final  error  rate 
seems  to  be  limited  and  over  two  thirds  of  the  cases  have  already  been  closed 
without  financial  consequences.  An  interim  report  on  this  follow  up  has  already 
been supplied to the Parliament. 

10. 

(Council  Doc.  5891/11  ADD  1,  §2,  page  13)  The  Council  encourages  the 
Commission  to  continue  its  pro-active  approach  to  improve  the  management  of 
reservations and the meetings that are organised in this context, in order to speed up 
the lifting of VAT reservations. 

Commission's response: 

Proactive  measures  to  lift  long-outstanding  reservations  continue  using  the  risk 
criteria  adopted  in  2008.  Twenty  six  long-outstanding  reservations  have  been 

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lifted. Action is continuing to deal with other long-outstanding reservations (where 
these are not dependent upon the outcome of ECJ proceedings) including the use 
of management meetings where appropriate. 

11. 

(Council  Doc.  5891/11  ADD  1,  §3,  page  13)  The  Council  encourages  the 
Commission  to  pursue  its  activities  aimed  at  developing  and  sharing  best  practices 
between  Member  States  on  supervisory  and  control  systems  in  the  National 
Statistical Institutes. 

It  also  urges  the  Commission  to  complete  its  verification  of  Member  States'  GNI 
inventories and produce assessment reports as early as possible during 2011. 

Commission's response: 

The  Commission  has  already  taken  action.  Out  of  the  four  existing  specific 
reservations on the GNP data for 1995-2001 that were in place at the end of 2010, 
two had been solved by early July 2011. Eurostat will continue its cooperation with 
the  two  national  statistical  institutes  (NSIs)  concerned  so  that  the  remaining  two 
specific  GNP  reservations  (one  for  each  of  these  NSIs)  can  be  solved.  Following 
the  workshop  it  organised  in  December  2009  on  supervisory  and  control  systems 
(SCS) in  National  Statistical Institutes, the Commission has pursued  its activities 
on developing and sharing best practices on SCS  with a further discussion on the 
issue by the GNI Committee on 27 October 2010. These efforts will be continued in 
2012.  Further  to  the  completion  of  GNI  inventories'  verification,  the  assessment 
reports for 13 Member States were presented by the Commission and discussed by 
the GNI Committee on 5-6 July 2011. The assessment reports for 12 other Member 
States will be presented at the next GNI Committee meeting in October 2011. The 
assessment reports for Bulgaria and Romania will be presented in 2012. 

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Chapter 3 - Agriculture and Natural Resources 

12. 

(Council Doc. 5891/11 ADD 1, par 3, page 14) Efforts should be stepped up in order 
to find adequate solutions to the weaknesses of the supervisory and control systems, 
most of which the Court assessed as partially effective. 

Commission's response: 

The requested action has been taken. 

The  Commission  works  with  the  Member  States  to  ensure  a  continuous 
improvement of the supervisory and control systems. Recommendations are made 
in  this  respect  as  part  of  the  normal  audits  and  action  plans  are  developed  and 
implemented by Member States with serious problems. 

Any  remaining  weaknesses  are  followed  up  through  conformity  clearance 
procedures to protect the EU's financial interests. 

13. 

(Council  Doc.  5891/11  ADD  1,  §1,  par  2,  page  14-15)  The  Council  urges  the 
Commission  and  Member  States  to  continue  working  together  on  the  specific 
deficiencies identified in the IACS. 

Commission's response: 

The requested action has been taken. 

The Commission works with the Member States to ensure the proper functioning 
of  the  IACS.  Recommendations  are  made  in  this  respect  as  part  of  the  normal 
audits  and  action  plans  are  developed  and  implemented  by  Member  States  with 
serious  problems.  The  Commission  considers  that  these  plans  have  been 
successful. 

Moreover, as of claim year 2010, Member States are obliged to assess the quality of 
their LPIS. Whilst 2010 is the first year, this exercise has already been helpful for 
Member States as regards identification of areas requiring attention. 

Any  remaining  weaknesses  are  followed  up  through  conformity  clearance 
procedures to protect the EU's financial interests. 

14. 

(Council Doc. 5891/11 ADD 1, §1, par 4, page 15) With respect to the observation 
reiterated by the Court on the definition of farming activity, the Council invites the 
Commission to effectively enforce current rules in order to prevent and correct any 
abuses, without however introducing further conditions which would result into even 
more complex and expensive controls, going in a direction opposite to simplification, 
which remains a priority. 

Commission's response: 

The Commission is taking the requested action. 

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The  issue  of  the  farming  activity  has  been  addressed  in  the  framework  of  the 
Health Check by giving Member States the possibility to exclude natural or legal 
persons from the direct payment schemes whose principal business objects do not 
consist  of  exercising  an  agricultural  activity  or  whose  agricultural  activities  are 
insignificant (Article 28(2) of Regulation (EC) No 73/2009). 

The Commission has committed to further examine the rules on the definition of 
the active farmer in the Communication from the Commission to the Council, the 
European  Parliament,  the  European  Economic  and  Social  Committee  and  the 
Committee  of  the  Regions  "The  CAP  towards  2020:  meeting  the  food,  natural 
resources and territorial challenges of the future". 

15. 

(Council  Doc.  5891/11  ADD  1,  §1,  par  5,  page  15)  Further  efforts  are  required  to 
continue simplifying rules and conditions, focussing particularly on defining clearer 
eligibility  criteria  and  better  guidance  to  beneficiaries.  Therefore,  the  Council 
encourages the Commission  to work along the lines identified with  respect  to rural 
development in its report on the follow-up to the 2008 discharge and to aim at better 
controls, addressing the major causes of error, in order to improve the efficiency of 
the systems and, consequently, the effectiveness of the expenditure. 

Commission's response: 

The requested action has been taken. 

In  response  to  the  list  of  39  simplification  suggestions,  put  forward  by  Member 
States during the Council meeting of April 2009, the Commission carried out the 
following simplification related activities: 

First,  in  October  2010  the  Commission  adopted  a  proposal  to  amend  Council 
Regulation (EC) No 1698/2005 in order to: 

• Reduce the number of Rural Development Strategic Monitoring reports from 3 to 
2; 

• Facilitate tailor made advice of farm advisory services; 

• Allow Member States to apply follow-up checks for minor infringements and the 
"de-minimis"  rule  only  on  the  basis  of  a risk  sample  instead  of  100%  systematic 
checks. 

The proposal is currently pending before the EP and the Council. 

Secondly,  also  in  response  to  the  list  of  39  simplification  suggestions,  the 
provisions  on  control  procedures  and  cross-compliance  have  been  clarified  and 
precise obligations have been spelled out in the implementing rules, in the context 
of a recast (Regulation (EC) No 65/2011). 

Moreover,  significant  simplification  efforts  in  the  area  of  rural  development  are 
being made with regard to the next programming period. In that context, there are 
ongoing  reflections  on  how  to  clarify  eligibility  and  selection  criteria  by  for 
instance capacity building, seminars and better guidance to Member States. 

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There  are  also  ongoing  reflections  on  how  to  ensure  coherence  of  the  sectoral 
rules  of  the  EU  funding  schemes  with  the  overall  framework  provided  by  the 
revised Financial Regulation. This concerns for example rules on the eligibility of 
expenditure. 

A  Thematic  Working  Group,  set  up  in  the  context  of  the  European  Network  for 
Rural  Development,  has  studied  the  current  policy  delivery  mechanisms  with  the 
objective  to  provide  advice  on  how  to  improve  the  design  and  implementation  of 
EU rural development policy and to achieve a more efficient and effective delivery. 

Finally, a study on the administrative burden associated with the implementation 
of certain rural development measures is about to be completed. The results of the 
study could be taken into account by the Commission and Member States in order 
to further reduce the level of red tape for beneficiaries. 

16. 

(Council Doc. 5891/11 ADD 1, §2, par 2, page 16) The Council highlights the role of 
the  Commission's  conformity  clearance  mechanism  and  of  the  corrections  imposed 
thereby in covering the financial risk borne by the EU budget. However, with respect 
to the  method  of  calculating  conformity adjustments,  the  Council  strongly  supports 
the Court in asking the Commission to continue its effort to limit flat-rate corrections 
to  exceptional  cases,  and  to  base  recoveries  to  the  maximum  possible  extent,  and 
particularly  when  large  sums  are  at  stake,  on  the  actual  amounts  of  irregular 
payments,  subject  to  appropriate  information  being  provided  by  Member  States  on 
the actual losses. 

Commission's response: 

The requested action has been taken. 

The  principles  for  the  calculation  of  financial  corrections  recommended  by  the 
Council are already included in the Commission guidelines from December 1997 
(Doc. VI/5330/97). 

The Commission has indicated to Member States that if their certification bodies 
fully re-perform a representative sample of transactions which the paying agency 
has  checked  on-the-spot  and,  on  this  basis,  confirm  the  reliability  of  a  Member 
State's control  statistics, then  the Commission will accept that the resulting error 
rate  represents  the  maximum  risk  possible  and  that  any  financial  corrections  for 
the year in question will not exceed that level. 

17. 

(Council  Doc.  5891/11  ADD  1,  §2,  par  4,  page  16)  The  Council  shares  the 
Commission's  view  on  the  cost-effectiveness  of  accompanied  inspections  when 
assessing the quality of on-the-spot checks. At the same time, it notes with interest 
that  a  number  of  Member  States  asked  certification  bodies  to  re-perform  a 
representative  sample  of  these  checks  and  extended  the  scope  of  such  work  as  to 
cover  the  entire  handling  of  the  files,  thus  reinforcing  the  overall  framework  for 
gaining reasonable assurance on the legality and regularity of payments at the level 
of  final  beneficiaries.  The  Council  encourages  the  Commission  to  report  on  the 
results  of  the  implementation  of  this  initiative  in  those  Member  States  already 
applying it, with a view to extending it. 

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Commission's response: 

The Commission is taking the requested action. 

The Commission will report on the results in its Annual  Activity reports, starting 
with next year's report on the Financial Year 2011. 

18. 

(Council  Doc.  5891/11  ADD  1,  §3,  par  1,  page  17)  As  regards  the  internal  control 
system  relating  to  the  animal  disease  eradication  and  monitoring  programmes  the 
Council  calls  on  the  Commission  to  take  the  necessary  measures  to  correct  the 
deficiencies  identified  in  the  procedures,  and  to  provide  higher  assurance  that 
payments are free from material error. 

Commission's response: 

The  Commission  started  to  take  the  requested  action  and  will  continue  with  the 
measures to that effect in the coming years. DG SANCO clarified the segregation 
of functions and started a project to simplify the legal base for the programmes. To 
this  end,  clarifications  and  simplifications  were  already 
into 
Commission  Decision  2010/712/EU  on  the  financial  contribution  for  the 
eradication programmes. In 2012, the Commission will also propose modifications 
to Council Decision 1990/424 which is the legal base for reimbursing eligible costs 
under the eradication programmes. 

introduced 

19. 

(Council  Doc.  5891/11  ADD  1,  §3,  par  2,  page  17)  With  respect  to  the  cases  of 
fisheries  projects  completed  outside  the  eligibility  period  found  by  the  Court,  the 
Council expects that all corrections be completed during the closure exercise. 

Commission's response: 

The  Commission  duly  follows-up  on  all  errors  identified  by  the  Court  and  will 
proceed, when needed, to financial corrections. 

The Commission has put in place a control strategy and carries out ex-post audit 
activity  to  verify  that  management  and  control  systems  of  the  Member  States 
function effectively to prevent such errors. 

20. 

(Council  Doc.  5891/11  ADD  1,  §3,  par  3,  page  17)  Further  efforts  towards  the 
objective  of  a  fully  functioning  control  strategy  in  these  policy  areas  are  expected. 
(Policy areas: Environment, Fisheries, Health and Consumer protection.) 

Commission's response: 

DG  ENV  expects  to  reach  its  objectives  of  more  than  40  ex-post  audit  reports 
issued  in  2011.  On  30  June  2011,  15  reports  have  been  issued.  The  ex-post 
methodology  and  audit  plan  have  been  revised  in  order  to  optimise  control. 
Examples  of  the  foregoing  are  the  introduction  of  desk  reviews  and  the 
introduction of new contradictory procedures with the operational unit and/or the 
beneficiaries before issuing the final report. 

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Since  2010,  DG  SANCO  increased  its  ex-ante  on-site  control  visits  while 
maintaining  a  high  average  ex-post  audit  coverage.  Desk  controls  will  be 
intensified, e.g. by enlarging the scope of the centralised ex-ante desk controls that 
are carried out in addition to the desk controls of the operational units. 

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Chapter 4 - Cohesion 

21. 

(Council  Doc.  5891/11  ADD  1,  par  2,  page  18)  The  Council  is  concerned  that 
interim  and  final  payments  in  2009  were  still  affected  by  material  error  and  that, 
although most systems audited in the "Cohesion" area are qualified as compliant by 
the  Court,  system  weaknesses  were  still  noted  as  regards  the  regularity  of 
transactions or recoveries and financial corrections. It calls on the Commission and 
Member States to continue their efforts in close cooperation to improve the situation. 

Commission's response: 

The  Commission  is  continuously  taking  the  requested  action.  It  intends  to  report 
on  measures  taken  to  that  effect  in  the  next  Annual  Activity  Reports  of  the 
Directors General. 

The Commission focuses its audits on high risk programmes and takes appropriate 
actions, including interruptions and, if necessary, suspension of payments and/or 
financial corrections. Furthermore, it puts in place national remedial action plans 
aiming at improving the effectiveness of systems and remedying the causes of low 
performance for those programmes and Member States which are concerned. 

22. 

(Council  Doc.  5891/11  ADD  1,  §1,  par  4,  page  19)  The  Council  notes  that  a  large 
part of quantifiable errors were linked to the non-respect of public procurement rules. 
Even  if  those  rules  are  not  strictly  related  to  the  implementation  of  Cohesion 
projects,  it  urges  the  Commission  to  monitor  their  correct  application  and  to  draw 
conclusions from its evaluation of their cost-effectiveness. The Council is convinced 
that  training  and  simplification  measures  in  this  area  could  reduce  the  risk  of 
misinterpretation  and  consequently  the  risk  of  error  and  invites  the  Commission  to 
refer to best practices in other policy areas. 

Commission's response: 

The Commission is taking the requested action. It intends to report measures taken 
to that effect before 31/12//2012. 

The Commission has recently initiated a retrospective evaluation of the relevance, 
effectiveness  and  efficiency  of  the  basis  EU  public  procurement  legislative 
framework. The evaluation will focus primarily on analyzing the cost-effectiveness 
of  public  procurement  procedures  and  rules.  The  evaluation  will  also  include  a 
description  of  Member  States’  implementation  and  administrative  structure  to 
implement  public  procurement  policy,  including  EU  legislation  in  this  area.  In 
addition,  a  Commission  inter-service  task  force  is  examining  the  most  common 
public  procurement  issues  arising  in  the  context  of  implementation  of  cohesion 
projects.  The  Commission  will  continue  training  actions  to  Member  States 
the  correct  application  of  public  procurement  rules.  The 
authorities  on 
Commission  will,  where  applicable  continue  to  audit  the  application  of  the  EU 
directives on public procurement by carrying out its own enquiries in some cases 
or by asking the Member States' audit authorities to perform such enquiries on its 
behalf. 

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In  addition,  in  the  Single  Market  Act  the  Commission  has  undertaken  to  put 
forward proposals, by 2011. 

Simplification  will  be  one  of  the  main  drivers  of  the  forthcoming  revision  of  the 
Directives.  The  Commission  is  planning  to  issue  its  proposal  by  end-2011. 
Stakeholders  and  interested  parties  have  had  opportunity  to  contribute  to  this 
process  through  the  consultation  process  launched  with  the  Green  Paper  on  the 
modernization of EU public procurement policy. 

Moreover, the Commission has issued and discussed with the Member States in the 
Advisory Committee  on Public Procurement a report on more frequent errors on 
public procurement, identified through EC audits and reasons for taking financial 
correction decisions linked to public procurement procedures (May 2011). Member 
States  were  alerted  about  these  recurrent  audit  findings  and  asked  to  share  good 
practices  and  proposals  to  overcome  such  recurrent  deficiencies.  This  initiative 
intends also to feed the ongoing consultation on the simplification/revision of the 
Directives. 

23. 

(Council Doc. 5891/11 ADD 1, §2, par 1, page 19) The Council notes that in 2009 
Member  States'  management  and  control  systems  for  the  2007-2013  programming 
period  were  only  partially  in  compliance  with  the  regulatory  requirements,  notably 
regarding  managing  authorities  and  intermediate  bodies.  It  encourages  Member 
States  to  pursue  their  efforts  to  improve  them,  and  the  Commission  to  strictly 
supervise them. 

Commission's response: 

The Commission is taking the requested action. It intends to report measures taken 
to that effect in the next Annual Activity Reports by the Directors General. 

The Commission will pursue the efforts undertaken under its 2008 Action Plan to 
improve the management and control systems in the Member States. It will follow 
up the Court's findings and will continue to verify the functioning of the Member 
States'  management  and  control  systems,  building  on  the  annual  audit  opinions 
issued by the audit authorities and its own audit work. It will also continue its strict 
policy  of  interruption  and  suspension  when  problems  are  detected  so  that 
appropriate remedial action plans are implemented, and its support and guidance 
to authorities that require it in order to improve systems where necessary. 

24. 

(Council Doc. 5891/11 ADD 1, §2, par 3, page 19) Even if it is convinced that no in-
depth  change  should  be  made  to  the  systems  before  evaluation,  the  Council  invites 
the  Commission  and  Member  States  to  examine  in  due  time  further  measures  for 
simplification. 

Commission's response: 

The Commission is taking the requested action. It intends to take measures to that 
effect before 31/12/2012. 

The  Commission  intends  to  pursue  its  simplification  efforts  when  preparing  its 
proposal for  the  next regulatory framework applying to Structural Funds.  It also 

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recalls the simplification brought initially and in 2008-2009 to the current delivery 
mechanism in the 2007-2013 regulations, including on simplified costs. 

25. 

(Council  Doc.  5891/11  ADD  1,  §2,  par  4,  page  20)  The  Council  encourages  the 
Commission  and  Member  States  to  pursue  their  efforts  to  improve  the  systems  for 
reporting recoveries and withdrawals. 

Commission's response: 

The Commission is taking the requested action. It intends to report measures taken 
to  that  effect  in  the  2011  and  2012  Annual  Activity  Reports  of  the  Directors 
General. 

Information  on  withdrawals  and  recoveries  for  the  period  2000-2006  have 
improved over the last years, a fact which is recognised by the Court of Auditors. 
The  Commission  carried  out  audits  in  all  Member  States  and  provided 
recommendations to Member States that allowed to improve the reported data for 
the 2000-2006 programmes. 

For  the  period  2007-2013  the  reporting  provisions  have  been  enhanced  and 
provide that the certifying authority maintains a debtor's ledger with information 
on  all  irregularities  and  recoveries,  it  reports  annually  according  to  a  clear  and 
standardised  template  and  the  reporting  is  done  via  the  common  IT  system 
SFC2007.  Member  States  are  also  requested  by  the  Commission  to  separately 
identify corrections resulting from Community audit work from the ones resulting 
from  their  own  audit  and  control  work,  in  order  to  show  the  impact  of  the 
Community  and  national  audits  separately  and  to  avoid  duplication  of  figures. 
This  is  expected  to  improve  the  completeness  and  quality  of  reporting  and  to 
simplify  procedures,  reducing  thus  errors  in  reporting.  The  process  will  also  be 
more easily auditable by the Commission and the Court. 

Following  an  analysis  of  data  to  be  reported  at  31  March  each  year,  the 
Commission  will  also  carry  out  as  from    the  second  semester  of  2011  a  specific 
audit  enquiry  on  the  Member  States'  systems  for  recoveries,  in  order  to  gain 
assurance on the quality of data submitted in the annual statements on recoveries 
and withdrawals. This audit will be risk based and will continue in 2012 onwards. 

26. 

(Council Doc. 5891/11 ADD 1, §2, par 4, page 20) The Council also calls for more 
transparency and invites the Commission to make the data related to corrections and 
recoveries easily accessible to the public. 

Commission's response: 

The Commission has taken the requested action. 

Data on recoveries and corrections are published in: 

- the Annual Activity Reports of the Structural Funds DGs (see detailed disclosure 
in the 2010 Annual Activity Reports); 

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- note 6 to the Commission's annual accounts, the content of which has been much 
developed  and  clarified  to  take  into  account  the  various  requests  by  the  Court  of 
Auditors, the European Parliament and the Council; 

- the annual report on the implementation of the structural funds. 

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Chapter 5 - Research, Energy and Transport 

27. 

(Council  Doc.  5891/11  ADD  1,  par  2,  page  21)  The  Council  stresses  that  the 
diversity of research projects does not justify a diversity of financial rules and control 
systems  and  expects  this  issue  to  be  resolved  in  the  next  multiannual  framework 
programmes. 

Commission's response: 

The  Commission  is  currently  working  in  the  preparation  of  the  next  Framework 
Programme  for  Research  and  Innovation.  In  this  context,  the  Commission  will 
present  to  the  European  Parliament  and  to  the  Council  a  proposal  where  the 
aspects highlighted by the Council will be addressed. 

28. 

(Council  Doc.  5891/11  ADD  1,  §2,  par  1,  page  22)  The  Council  regrets  that  the 
supervisory  and  control  systems  were  still  only  partially  effective  in  ensuring  the 
regularity  of  payments,  but  welcomes  the  improvements  noted  by  the  Court.  It 
encourages the Commission to continue to reinforce its internal control systems. 

Commission's response: 

The Commission is committed to ensuring the legality and regularity of payments. 

The  Commission's  internal  control  system  in  place  for  the  management  of  the 
Framework Programmes covers all steps from the evaluation of proposals until the 
closure of the project. The Commission is monitoring how it operates in order to 
improve its effectiveness and reporting on the results of the controls. 

In  this  context,  DG  RTD,  as  example,  has  designed  and  approved  an  anti-fraud 
strategy  for  the  prevention  and  detection  of  fraud  in  the  research  area  (DG 
Research Anti-Fraud control strategy -Ares(2010)485725-03/082010). DG INFSO 
has  also  available  a  similar  internal  document  (adopted  on  10th  March  2010), 
which  is  about  to  be  updated  in  order  to  take  into  account  experiences.  This 
strategy  is  part  of  a  broad  initiative  on  fraud  prevention  at  the  Commission  level 
and  is  in  line  with  analogous  developments  in  other  DGs  managing  Research 
funds.  Moreover,  the  strategy  has  been  designed  bearing  in  mind  the  current 
simplification  initiatives  proposed  by  the  Commission.  Therefore,  the  additional 
measures avoid creating an additional administrative burden on beneficiaries and 
have to be balanced from a cost-benefit point of view. 

29. 

(Council Doc. 5891/11 ADD 1, §2, par 2, page 22) The Council also notes that parts 
of this area are managed in indirect centralised management by Executive Agencies 
and Joint Undertakings, and asks the Commission to evaluate the functioning of this 
type of management. 

Commission's response: 

DG  RTD  has  evaluated  the  accountability  and  organisational  structures  of  the 
community  bodies  set  up  to  implement  the  FP7  (including  the  article  185 
initiatives)  shortly  after  their  autonomy.  This  exercise  has  been  carried  out  in 

EN 

19 

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December  2010.  As  a  result  of  this  exercise,  the  Commission  has  drawn  several 
conclusions as follows: 

a) For the Joint Undertakings (and article 185 initiatives) the existing monitoring 
and reporting arrangements are considered to be adequate except for F4E. In this 
case, the current monitoring arrangements are sufficient but it would be desirable 
to  align  them  with  the  other  JUs.  DG  Research  is  seeking  a  revision  of  the 
Administrative  Agreement  regulating  the  relationships  between  the  Commission 
and this JU. In addition DG RTD will follow up on the recommendations given in 
the interim evaluations reports of the Joint Technology Initiatives released during 
the period mid 2010 to mid 2011. 

b)  With  regard  to  the  functioning  of  the  two  executive  Agencies  –  REA  and 
ERCEA - the evaluation and monitoring is an ongoing and stable process defined 
in  the  Memoranda  of  Understanding  agreed  between  the  parent  DGs  and  the 
Agencies.  In  the  light  of  the  accumulated  experiences  and  in  preparation  of  the 
CSF a review, steered by DG RTD, of the MoU is expected finalized by end 2011.  
In  addition,  the  conclusions  of  the  first  3  year  external  evaluation  of  the  two 
executive agencies are expected by 2012. 

30. 

(Council Doc. 5891/11 ADD 1, §2, par 4 and 5, page 22) The Council is concerned 
that the Court again in 2009 found errors in cost statements which had received an 
unqualified  opinion  from  the  certifying  auditor  under  FP6.  It  expects  the 
Commission to pursue its measures to remedy this problem. 

It  also  regrets  that  the  efforts  of  the  Commission  to  simplify  the  audit  certification 
under FP7 by the ex-ante certification of beneficiaries' costing methodologies did not 
lead to the expected results and suffered from consequent delays. 

Commission's response: 

Although  FP6  audit  certificates  did  not  provide  the  assurance  initially  expected, 
this  ex-ante  control  made  a  substantial  contribution  in  reducing  FP6  error  rates 
compared  with  FP5  as  it  was  recognised  by  the  Court  in  previous  reports.  It  is 
recalled that the qualified auditor who certifies the financial statements is selected 
by  the  beneficiary  and  that  the  auditor  is  deemed  to  have  read  carefully  the 
contract  and  the  guidelines  available  (addressing  financial  and  audit  certificates 
related issues). For FP7 the Commission has established that the audit certificates 
are  based  on  "agreed  upon  procedures",  which  require  the  certifying  auditor  to 
perform  pre-defined  procedures  and  report  on  that  basis  factual  findings.  This 
approach  is  expected  to  lead  to  a  reduction  in  errors  of  interpretation  of  the 
eligibility rules by the auditors compared to the FP6 certification approach. 

As regards the certification of the average costing methodologies the Commission 
recognises that the acceptability criteria were too stringent for most beneficiaries. 

However,  substantial  simplification  has  been  already 
the 
Commission to facilitate the use of average personnel costs by beneficiaries within 
the overall existing legal framework. In this respect, following the Communication 
on  simplifying  the  implementation  of  the  Research  Framework  Programmes 
(COM  (2010)  187  final  of  29.04.2010)  the  Commission  adopted  a  Decision  of  24 

introduced  by 

EN 

20 

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January  2011  (C(2011)  174  final)  on  three  measures  for  simplifying  the 
implementation of the framework programme. This decision allows beneficiaries to 
apply their usual accounting methods when requesting reimbursement for average 
personnel  costs.  The  ex-ante  costing  methodology  certification  becomes 
consequently  more  attractive.  This  has  a  direct  impact  on  the  way  ex-ante  cost 
the  financial 
methodology  certification  and 
statements  link  together.  First  of  all,  the  obligation  to  submit  a  certificate  on 
financial  statement  for  interim  payment  is  waived  for  beneficiaries  whose 
methodology  is  certified  (certification  covering  both  average  personnel  costs  and  
calculation of indirect costs). Further, even if this obligation is not waived (cases 
whereby certification covers only average personnel costs methodology), the audit 
work to be done is really simplified because the auditor will refer to the approved 
methodology. 

the  certificates  accompanying 

Furthermore,  the  experience  with  ex-ante  certification  of  cost  methodologies  will 
be  taken  into  account  in  the  preparation  of  the  rules  for  the  next  funding 
programme. 

31. 

(Council Doc. 5891/11 ADD 1, §2, par 7, page 22) Regarding the systems related to 
recoveries  and  financial  corrections,  the  Council  notes  with  concern  the  significant 
increase  of  outstanding  recoverable  amounts.  It  urges  the  Commission  to  make 
additional efforts to improve the timely implementation of audit results, notably by 
simplification  measures,  even  if  it  notes  that  the  Commission  has  already  taken 
remedial action and imposed sanctions. 

Commission's response: 

The Commission is continuously monitoring the procedures for recovering undue 
amounts  paid.  In  this  respect,  the  Commission  has  considerably  improved  this 
aspect of the FP management. For example concerning FP6 in DG RTD - despite 
the completion of audits which added €13 millio n to the amount to be recovered in 
2010 - the percentage of total adjustments in favour of the EU effectively recovered 
has grown from 30,40% in 2008 to 55,61% in 2009 and to 67,87% by the end of 
2010. 

The communication on the simplification of the recovery process in the framework 
of  the  implementation  of  the  audit  strategy  adopted  on  15th  December  2009  will 
contribute to a better management of outstanding recoverable amounts. 

The  Commission  has  continued  to  systematically  apply  liquidated  damages  on 
beneficiaries  which  had  over  declared  their  costs.  As  an  example,  by  the  end  of 
2010, DG RTD had considered the application of liquidated damages in a total of 
584 cases and had applied liquidated damages for a total of € 0,7 million. 

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Chapter 6 - External aid, Development and Enlargement 

32. 

(Council Doc. 5891/11 ADD 1, par 2, page 23) Special attention should be given by 
the Commission on how to remedy the problem of errors found by the Court at the 
level of Union Delegations. 

Commission's response: 

The  numerous  training  sessions  organised  for  national  and  regional  authorising 
officers, specific training on contractual and financial procedures, training in the 
handling of the CRIS data base and a specific seminar for finance, contract and 
audit  sectors  in  delegations  in  March  2011  should  all  contribute  to  a  better 
handling of procedures in delegations. The new electronic standard reporting tool 
for the delegations' EAMR (external assistance management reports) should also 
improve  consistency  in  procedures.  The  so-called  companion  to  financial  and 
contractual procedures which is regularly updated provides a valuable instruction 
tool  that  helps  staff  in  delegations  avoiding  errors.  Many  of  the  errors  usually 
found  on  interim  and  final  payments  could  or  would  have  been  corrected  by 
subsequent  controls.  It  has  to  be  kept  in  mind  that  controls  can  only  reduce  the 
risk of financial error, not eliminate it entirely. 

33. 

(Council  Doc.  5891/11  ADD  1,  §1,  par  2,  page  24)  Concerning  DG  ELARG,  the 
Council  asks  the  Commission  to  take  the  necessary  measures  to  correct  the 
shortcomings identified by the Court concerning tendering procedures, the setting up 
and  operation  of  the  decentralised  implementation  system  for  Croatia  and  Turkey, 
the  centralised  management  at  Commission  level,  and  the  closure  and  clearance  of 
the PHARE and CARDS programmes. Sufficient resources should be devoted to the 
analysis  of  the  outstanding  final  declarations  submitted  under  PHARE  and  the 
Transition Facility in the new Member States. 

Commission's response: 

The  Commission  has  addressed  the  Court's  main  observations  regarding  ex-ante 
controls, both at headquarters and in the EU Delegations. As acknowledged by the 
Court, DG ELARG accepted its recommendations made in its 2009 annual report 
and swiftly adopted a set of measures and instructions. Theses measures started to 
become operational in 2010 and full impact is expected to be reached in 2011. 

Closures  of  the  PHARE  and  CARDS  programmes  have  been  a  priority  for  DG 
ELARG  since  2007.  The  effort  is  being  pursued  in  spite  of  the  fact  that 
supplementary  Human  Resources  could  not  be  allocated  to  this  task.  The  Court 
has  welcomed  meanwhile  the  efforts  of  DG  ELARG  and  the  backlog  has  been 
further  considerably  reduced  in  2010,  more  than  compensating  the  slight 
slowdown observed in 2009. 

DG  ELARG  also  continued  to  ensure  compliance  by  the  national  authorities  in 
Croatia and Turkey with the conditions of the (partial) conferral of management 
powers. It maintained the ex- ante controls by the Delegation in order to mitigate 
the risks. Moreover the substantive transaction testing of the Court did not reveal 

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any  significant  shortcomings  beyond  some  lack  of  audit  trail  to  explain  fully  the 
decisions taken by delegations. 

34. 

(Council Doc. 5891/11 ADD 1, §1, par 3, page 24) As regards DG ECHO, and while 
welcoming the Court's assessment that the ex-ante controls were generally effective, 
the  Council  invites  the  Commission  to  address  the  comments  made  by  the  Court, 
notably those concerning partners' control systems. 

Commission's response: 

The Commission is taking the requested actions. It intends to take measures to that 
effect before the 31 December 2011. 

launched  a  working  group  on 

The  Commission  has 
the  assessment  of 
humanitarian  aid  proposals  in  early  February  2011.  It  is  harmonising  and 
streamlining  the  documentation  of  the  assessment  process  by  giving  a  better 
overview  of  the  entire  process  throughout  a  dashboard  and  establishing  common 
assessment  criterion.  Its  conclusions  will  be  validated  by  the  management  and 
implemented as from 1 January 2012. 

DG  ECHO  ensures  a  systematic  follow  up  of the audit recommendations at each 
next audit visit of a partner be it at field or HQ level (every 2 to 4 years). A further 
reinforcement of this  follow-up procedure will be a burdensome for our partners 
and of limited value. 

35. 

(Council  Doc.  5891/11  ADD  1,  §2,  par  1,  page  24)  The  Council  requests  the 
Commission  to  correct  the  continued  weaknesses  identified  by  the  Court  in  the 
internal  control  system  of  DG  RELEX.  It  should  devote  sufficient  resources  to  the 
analysis and closure of the old Rapid Reaction Mechanism and the Common Foreign 
and  Security  Policy  (CFSP)  contracts  for  which  the  implementation  deadlines  have 
already expired. 

Commission's response: 

As  recommended  by  the  Court,  the  Commission  has  already  taken  action  to 
improve  the  ex-post  control  methodology  in  DG  RELEX.  Part  of  the  foreseen 
mitigating  measures  is  implemented  in  2011  under  the  management  of  the  new 
Service for Foreign Policy Instruments (FPI). 

The request to correct the weaknesses in the internal control system is based on a 
recommendation of the Court linked to the lack of Art. 56 FR ex-ante assessments 
of  CFSP  missions.  The  new  proposal  for  the  revision  of  the  FR  includes  the 
acknowledgment  that  Art.  56  assessments  can  only  be  undertaken  progressively 
due to the specific nature of these missions which are created ad hoc and ex nihilo. 

Regarding the closure of old contracts, the situation of all old and ended contracts 
is  reviewed  on  a  regular  basis  and  appropriate  action  is  taken  in  order  to  close 
projects which have ended. 

Significant  progress  was  achieved  both  in  2009  and  2010  for  the  closure  of  old 
files.  For  old  Rapid  Reaction  Mechanism  (the  predecessor  of  IFS)  files,  the 
number of files to be closed decreased from 97 at the beginning of 2008 to 6 at the 

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end of 2010. It is estimated these remaining files will also be closed by the end of 
2011. 

For CFSP, 25 old projects were closed in 2010. The number of CFSP projects has 
been increasing steadily together with the substantial increase of the CFSP budget 
over the last years (e.g. there were 51 new contracts in 2010) and this might give 
the false impression that the situation is not improving. 

36. 

(Council Doc. 5891/11 ADD 1, §2, par 2, page 24) Concerning DG ELARG and DG 
ECHO, the Council, while acknowledging that the Court considered their monitoring 
and supervision systems as generally effective, underlines for the former the need to 
continue to remedy the weaknesses already identified in previous years, including the 
sufficient verification of the data entered in the management information systems. 

Commission's response: 

information  for 

There  are  regular  checks  on  the  quality  of  data  in  CRIS,  in  particular  ahead  of 
extracting  relevant 
the  Annual  Activity  Report.  The  IT 
management  tool  where  data  is  entered  also  contains  embedded  controls  of  data 
quality. Moreover, the Commission is putting great emphasis on training of CRIS 
users.  DG  ELARG  verifies  data  encoded  in  CRIS  by  a)  the  financial  circuits  (8 
eyes review), based on the manuals of procedures, checklists and regular trainings 
provided to staff, b) automatic data controls embedded in CRIS and c) accounting 
data quality checks performed by the Accounting Correspondent of DG ELARG. 

Staff  within  HQ  and  Delegations  has  hence  been  motivated  to  ensure  proper 
encoding of the data, but some of the problems noted go beyond the scope of the 
ELARG-  or  ECHO-owned  information  systems,  so  that  further  solutions  need  to 
be sought at a Commission-wide level. 

37. 

(Council  Doc.  5891/11  ADD  1,  §2,  par  2,  page  24)  The  Council  invites  the 
Commission to monitor better the use of the "Humanitarian Procurement Centres" as 
recommended by the Court. 

Commission's response: 

The Commission is taking the requested action in respect of: 

On the use of the Humanitarian Procurement Centres (HPC): The HPC is just a 
tool  offered  to  DG  ECHO  partners  to  ease  their  procurement.  For  the  2010 
reporting exercise, launched  in  November 2010, the letter to  HPC  requesting  the 
annual documentation also requested statistical information on the orders invoiced 
to  DG  ECHO  Partners  in  the  course  of  2009.  In  addition,  the  HPCs  have  been 
informed  of  the  Commission's  commitment  to  increase  monitoring  of  the  use  of 
HPCs  by  DG  ECHO's  Partners.  Finally,  DG  ECHO  has  initiated  measures  to 
better inform partners of the need to ensure that the reference number of the DG 
ECHO-funded Action appears on the invoice issued by the HPC and will continue 
enhancing  the  information  provided  to  partners  on  their  working  relations  with 
HPC, with an emphasis on early procurement planning. These actions will permit 
end  of  2011  to  have  first  indications,  quantitative  and  qualitative,  for  further 
follow-up. 

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38. 

(Council  Doc.  5891/11  ADD  1,  §3,  par  1,  page  25)  While  taking  note  of  the 
significant reservations contained in the Director General's declaration regarding the 
effectiveness  of  ex-post  controls  over  the  operational  budgets  for  CFSP  and  the 
Stability  Instrument,  the  Council  welcomes  the  general  improvements  made  in  the 
operation  of  the  ex-post  control  system  of  DG  RELEX  identified  by  the  Court.  It 
invites  DG  RELEX  to  consolidate  its  ex-post  control  methodology  and  promptly 
address the recommendations made by the internal auditor in that respect. 

Commission's response: 

The  methodology  for  ex-post  controls  has  been  completed  and  will  be  further 
improved  throughout  2011  based  on  experience  gained  from  carrying  out  the 
controls.  All  related  recommendations  made  by  the  internal  auditor  are  
implemented. 

39. 

(Council  Doc.  5891/11  ADD  1,  §3,  par  2,  page  25)  As  regards  DG  ECHO,  the 
Council invites the Commission to further improve the follow up of audit findings, 
and in particular of those giving rise to the recovery of ineligible expenditure. 

Commission's response: 

The requested action has been taken. The Commission ensures a systematic follow 
up of the audit recommendations at each next DG ECHO audit visit of a partner be 
it at field or HQ level (every 2 to 4 years) and critical observations are used for the 
partner's annual evaluation. 

40. 

(Council Doc. 5891/11 ADD 1, §4, page 25) The Council invites the Commission to 
finalise the improvements to the monitoring system as suggested by the Court. 

Commission's response: 

The Commission is taking the requested actions. 

1. As far as the mid-term review is concerned, this action has been taken. The mid-
term  review  of  the  Consensus  Action  Plan  consists  of  a  Communication 
(COM(2010) 722) and accompanying Staff Working Document (SEC(2010) 1505). 
The  Communication  was  adopted  on  8  December  2010.  The  mid-term  review 
outlines progress  in the  EU's  implementation of the Consensus  Action Plan over 
the past three years. The review also highlights those areas of the Action Plan that 
to  ensure 
require  enhanced  efforts  by 
its  comprehensive 
the  Union 
implementation.  Suggestions  are  proposed 
for  enhancing  coordination, 
effectiveness and leadership of EU humanitarian aid. 

2.  The  integration  of  the  Monitoring  and  Information  Centre  (MIC)  has  already 
given rise to synergies such as the availability of real-time information at the onset 
of  natural  and  other  disasters  and  closer  cooperation  between  DG  ECHO’s 
technical  experts  on  the  ground  and  Member  State  experts  despatched  for  Civil 
Protection activities. This action has therefore been taken. 

3.  To  reinforce  its  efforts  regarding  the  Linking  Relief,  Rehabilitation  and 
Development  (LRRD)  challenge,  the  Commission  has  established  an  interservice 

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group on transition in order to foster a common view, coordinated approaches and 
common  positions  on  policies  for  ‘transition  situations’  where  humanitarian, 
development and stabilisation instruments are present. The aim is to improve both 
policy and implementation of programmes on the ground and to contribute to the 
international policy debate on transition situations. 

4.  The  Commission  goes  on  developing  the  Cost  Observed  for  Results'  system 
(COR)  and  will  establish  a  prototype  database  before  launching  a  restricted  pilot 
phase  and  perform  finally  a  cost  benefit  analysis.  This  action  should  be 
implemented by 31 December 2012. 

41. 

(Council Doc. 5891/11 ADD 1, §4, page 25) The Council invites the Commission to 
pursue its work in order to take into account the remaining remarks presented by the 
Court,  notably  concerning  the  implementation  of  some  of  the  new  environmental 
mainstreaming  procedures,  the  introduction  of  new  environmental  performance 
indicators,  an  evaluation  of  the  effectiveness  of  environmental  mainstreaming  and 
programmes, and a new comprehensive environment strategy. 

Commission's response: 

The  Commission  agrees  that  the  issue  of  environmental  integration  should  be 
given  high  priority.  Work  in  this  area  will  continue  in  close  coordination  and 
harmonisation with EU Member States, in support of the aid effectiveness agenda. 
It shall include in particular the following steps as mentioned in EuropeAid's 2010 
Annual Report: 

-  further  work  on  indicators  to  monitor  the  effectiveness  of  a  new  environment 
strategy and to assess environmental integration in the Commission's operations; 

- overall evaluation of environmental mainstreaming in development cooperation; 

- new Budget Support guidelines including new guidance on cross-cutting issues; 

- adoption of an environment strategy integrating all the above elements. 

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Chapter 7 - Education and Citizenship 

42. 

(Council  Doc.  5891/11  ADD  1,  par  2  and  3,  page  26)  The  Council  regrets  that  a 
significant  number  of  errors  in  the  closures  made  during  the  year  were  left 
undetected  and  uncorrected.  It  takes  note  of  the  fact  that  those  closures  concerned 
actions undertaken in a previous programming period and calls on the Commission 
to reinforce the checks with regard to closure payments to prevent the reoccurrence 
of errors. 

The Council calls on the Commission to continue its efforts in ensuring the regularity 
of  payments  and  in  improving  supervisory  and  control  systems.  It  notes  with 
satisfaction the measures taken by the Commission to improve the systems such as 
updated guidance and support for national authorities, regular meetings and trainings 
and  reinforced on the spot audit visits. The Council encourages the Commission to 
continue its efforts in this direction. 

Commission's response: 

The  Commission's  reply  in  the  2009  Annual  Report:  The  Commission  considers 
that  the  supervisory  and  control  systems  put  in  place  for  the  2007-2013  period 
provide for a sound framework. 

The  improvements  of  the  systems  in  the  area  of  Education  and  Culture  made  in 
2009  (updated  guidance  for  the  National  Authorities  and  reinforced  on  the  spot 
audit visits) are not reflected as the Court focussed on closure payments related to 
actions  from  the  previous  programme  generation  that  were  not  covered  by  the 
current  system  (notably  the  audited  actions  related  to  the  2004/5  and  2005/6 
academic years). 

The  Commission  emphasises  that  its  closure  in  2009  of  projects  from  2004/05  is 
normal procedure. The longest of these projects ended in 2008 and were submitted 
for  closure  by  the  National  Agencies  in  the  annual  report  2008,  which  the 
Commission received in 2009. 

43. 

(Council Doc. 5891/11 ADD 1, par 4, page 26) Simplified rules and extensive use of 
lump-sum  financing,  used  in  the  current  generation  of  programmes,  should  lead  to 
reducing the risks linked to final payments in the future. The Council strongly invites 
the Commission to pursue all possible actions of simplification. 

Commission's response: 

The  Commission  accepts  the  recommendation  which  is  being  implemented  (see 
COM(2011)500, part II, of 29.06.2011). 

Implementation of the new programmes will be greatly simplified. 

The  new  Education  Europe  programme  will  bring  about  a  significant 
simplification of actions and rules through the elimination of sub-programmes, a 
reduction in the overall number of activities and an increased use of lump sums. 

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The Creative Europe programme will be managed centrally through the Education 
Audiovisual and Communication Executive Agency (EACEA), as is currently the 
case  for  both  Culture  and  MEDIA.  A  small  number  of  actions  will  be  managed 
directly by the Commission (e.g. European Capitals of Culture, EU cultural prizes, 
joint actions with international institutions). 

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Chapter 8 - Economic and Financial Affairs 

44. 

(Council  Doc.  5891/11  ADD  1,  par  2,  page  27)  As  regards  research  framework 
programmes  in  this  policy  group,  the  Council  notes  with  satisfaction  that  the 
Commission  has  taken  significant  measures  to  simplify  the  cost  reimbursement 
system.  The  Council  encourages  the  Commission  to  continue  this  approach,  to 
further simplify the application of eligibility  rules  and  to  increase the  awareness of 
beneficiaries. 

Commission's response: 

to 

its  predecessors  FP7  brought  about  a  number  of  widely 
Compared 
acknowledged simplifications. This had already led to a reduction of time-to-grant 
and  of  the  administrative  effort  for  managing  projects.  The  feedback  received  in 
stakeholder  consultations  convinced  the  Commission  to  analyse  further  progress 
as it was reflected in the Communication on simplifying the implementation of the 
Research Framework Programmes (COM (2010) 187 final of 29.04.2010). In this 
context  the  Commission  adopted  a  Decision  of  24  January  2011  (C(2011)  174 
final)    on  three  measures  for  simplifying  the  implementation  of  the  framework 
programme.  These  are  as  follows:  a)  use  of  average  personnel  costs,  allowing 
beneficiaries to use their usual accounting practices under the sole condition that 
it is based on the payroll costs registered in the statutory accounts. Personnel cost 
is one of the most recurrent source of errors as has been pointed out by the Court 
of Auditors; b) flat-rate financing of  SME owners  and other natural persons not 
receiving a salary (with significant impact on SMEs) clarifying how they should be 
remunerated  for  their  work  where  SME  owners  and  other  natural  persons  have 
worked in a project as beneficiaries and have performed tasks in accordance with 
the  grant  agreement;  and  finally,  c)  the  research  clearing  committee,  in  order  to 
enhance legal certainty and equal treatment of beneficiaries and their reliance on 
legitimate expectations when they relate with the Commission services. 

The  Commission  is  now  preparing  the  proposal  for  the  next  Framework 
Programme where further measures for the simplification are being analysed. 

Furthermore,  the  Commission  is  constantly  working  on  the  improvement  of  the 
clarity  and  accessibility  of  guidance  documents  by  streamlining  the  guides, 
removing unnecessary jargon and using consistent terminology for the awareness 
of  beneficiaries  and  for  reducing  the  entrance  barriers  for  newcomers,  in 
particular SMEs (see, http://cordis.europa.eu/fp7/home_en.html). 

45. 

(Council Doc. 5891/11 ADD 1, par 3, page 27) The introduction, within FP7, of the 
system  of  ex-ante  certification  of  beneficiaries'  costing  methodologies  should  be 
further exploited. 

Commission's response: 

FP7 initially provided two types of cost methodology certification: the mandatory 
certificate  on  the  methodology  on  average  personnel  costs  (CoMAv)  and  the 
certificate on the methodology for personnel and indirect costs (CoM), optional for 
any  beneficiary  of  multiple  grants  fulfilling  the  eligibility  criteria  set  by  the 

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Commission.  The  Commission  Decision  C(2009)4705  adopted  on  23  June  2009 
settled ex-ante acceptability criteria specific to average personnel costs. 

the 

implementation  of 

the  Communication  Simplifying 

In 
the  Research 
Framework  Programmes  (COM  (2010)  187  of  24  April  2010)  the  Commission 
recognised  that  'the  current  acceptability  criteria  can  be  met  only  by  very  few 
beneficiaries  thereby  limiting  the  intended  simplification  impact  of  certifying 
average  costs'.  Duly  recognising  the  needed  simplification,  the  Commission 
adopted a Decision on 24 January 2011 (C(2011) 174 final)  on three measures for 
simplifying the implementation of the framework programme. One of them on the 
'use  of  average  personnel  costs',  allowing  beneficiaries  to  use  any  average 
personnel  cost  methodologies  applied  as  usual  accounting  practice  by  the 
beneficiary could be accepted, as long as they are based on actual personnel costs 
registered  in  the  accounts  and  any  double  funding  of  costs  under  other  cost 
categories 
the 
beneficiaries'  accounting  methods.  In  this  regard,  the  Commission  will  also  take 
further  measures  in  this  sense  for  the  preparation  of  the  next  framework 
programme. 

is  excluded.  This  hence  allows  a  broader  acceptance  of 

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Chapter 9 - Administrative and other expenditure 

46. 

(Council  Doc.  5891/11  ADD  1,  §2,  page  28)  The  Council  supports  the  Court's 
recommendation  that  administrative  systems  should  be  improved  to  timely  monitor 
and  control  the  documents  proving  the  staff's  personal  situation.  It  notes  that  the 
institutions  and  bodies  addressed  by  the  Court  have  already  taken  action  and 
encourages them to pursue it. 

Commission's response: 

The  Office  for  Administration  and  Payment  of  Individual  Entitlements  (PMO) 
pursues  to  improve  its  administrative  system  SYSPER2/Rights  to  timely  monitor 
and control the documents proving the staff's personal situation. All the actions in 
question  (for  example:  automatic  indexation  of  allowances  paid  elsewhere 
(ongoing),  the  possibility  to  integrate  proving  documents  for  school  allowances, 
child  declaration  (ongoing)  are  followed  up  by  the  IT  Steering  Committee  of  the 
Office. 

47. 

(Council Doc. 5891/11 ADD 1, §3, par 2, page 29) While recognising the complex 
financing structure and the multiannual character of the tasks of many agencies and 
Joint  Undertakings,  the  Council  insists  on  improvements  in  their  financial 
programming, as it has already requested in its recommendations for previous years, 
and  on  a  timely  implementation  of  the  annual  budget  in  line  with  the  annuality 
principle.  In  this  context  the  Council also  asks  the  Commission  to  continue  to  take 
the agencies' unused appropriations into account when establishing the draft budget 
and to carefully check - and if appropriate continue to revise - the agencies' requests 
for funds and posts, in order to present a realistic budget proposal corresponding to 
the agencies' real needs. 

Commission's response: 

The Commission has taken the recommended action. 

Improved  planning  and  follow-up  of  budgetary  requirements  in  agencies  should 
lead  to  a  reduction  of  carry-over  and  cancellation  rates  in  agency  budgets,  in 
accordance with the principle of annuality. In addition, accurate cash forecasting 
and  rigorous  cash  management  are  required  to  avoid  large  agency  surpluses  at 
year-end. 

As  recognised  by  the  Council,  the  Commission  already  takes  agencies'  unused 
appropriations into account when establishing the draft budget: agency surpluses 
2010  will  be  recovered  as  assigned  revenue  in  2011  and  have  been  taken  into 
account when calculating the EU contribution for 2012. 

The  draft  budget  2012  has  been  established  after  a  careful  examination  of 
agencies'  requests  for  funds  and  human  resources  based  on  the  analysis  of  the 
implementation  in  2010  and  the  evolution  of  establishment  plans.  As  deemed 
necessary  the  Commission  has  proposed  modifications  to  agencies'  requests  for 
financial  and/or  human  resources.  The  Commission  will  continue  to  propose, 

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where  necessary,  adjustments  to  agency  requests  in  future  exercises,  in  line  with 
the Council Recommendation. 

The  analysis  referred  to  above  is  presented  in  detail  in  the  working  document  of 
the Draft Budget 2012 "Bodies set up by the Union and having legal personality" 
[COM (2011) 300 – May 2011]. 

48. 

(Council  Doc.  5891/11  ADD  1,  §3,  7  par,  page  30)  The  Council  looks  forward  to 
receiving detailed information about the progress and results of the inter-institutional 
working group on agencies. 

Commission's response: 

The  Commission  will  provide  the  other  Institutions  with  the  results  of  the  inter-
institutional working group on agencies, which work is expected to be finalised by 
the end of 2011. 

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Special Report No. 8/2009 "Networks of excellence and Integrated projects in 
Community Research policy: did they achieve their objectives?" 

49. 

(Council  Doc.  5891/11  ADD  2,  Annex  1,  §4,  par  1,  page  4)  Future  spending 
programs should be based upon an explicit intervention logic as well as "SMART" 
objectives and performance indicators linking the instruments to realistic objectives 
as  far  as  possible.  In  this  context,  the  possibility  of  setting  a  limited  set  of  clear 
objectives for each instrument should be considered in order to ensure clarity of the 
instruments  specific  role.  For  each  programme  there  should  be  appropriate 
performance indicators to monitor the expected outputs, outcomes and impacts. 

Commission's response: 

The  Commission  is  currently  working  in  the  preparation  of  the  next  Framework 
Programme  for  Research  and  Innovation.  In  this  context,  the  Commission  will 
present  to  the  European  Parliament  and  to  the  Council  a  proposal  where  the 
aspects highlighted by the Council will be addressed. 

The  Commission  considers  that  the  FPs  have  always  been  based  on  a  sound 
intervention logic which has allowed effective evaluation and monitoring. In FP7 
this is made more explicit, together with the objectives and performance measures 
that  will  help  further  strengthen  the  evaluation  and  monitoring  system.  Under 
FP7,  instead  of  being  encapsulated  in  the  “instruments”,  research  goals  and 
research  policy objectives, including those aiming at  structuring research efforts, 
are  clearly  and  explicitly  set  in  the  work  programmes.  For  each  topic  on  which 
proposals are invited, the scientific goals, the scope of activities and indications on 
the results expected are defined. 

50. 

(Council Doc. 5891/11 ADD 2, Annex 1, §4, par 2, page 4) The Commission should 
consider  whether  NoEs  and  IP-like  collaborative  projects  have  realistic  objectives 
and provide significant advantages as compared with other instruments for research 
collaboration. Concerning NoEs financed under FP6, the Commission should assess 
on  a  case-by-case  basis  whether  past  achievements,  potential  EU  added  value  and 
prospects of self-sustainability justify further funding under FP7. 

Commission's response: 

a) The Commission is currently working in the preparation of the next Framework 
Programme  for  Research  and  Innovation.  In  this  context,  the  Commission  will 
present  to  the  European  Parliament  and  to  the  Council  a  proposal  where  the 
aspects highlighted by the Council will be addressed. 

b)  The  possibility  of  continuing  the  financing  of  certain  promising  NoEs  under 
FP7 is addressed on a case-by-case basis. In fact, an FP6 NoE's duration may be 
prolonged  under  FP7  to  achieve  its  objectives  but  without  new  funding  (cases  of 
these currently exist). 

51. 

(Council  Doc.  5891/11  ADD  2,  Annex  1,  §4,  par  3,  page  4)  On  the  basis  of  the 
Court's  recommendations,  the  Commission  should  examine  the  strengths  and 
weaknesses  of  IP  type  instruments  and  take  specific  measures.  Appropriate  data 

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should  be  made  available  to  monitor  the  catalytic  effect  of  EU  RTD  funding.  The 
realism of expected targets, in particular for SMEs and the private sector, should be 
re-assessed. 

Commission's response: 

The Commission is currently working on the preparation of the next Framework 
Programme  for  Research  and  Innovation.  In  this  context,  the  Commission  will 
present  to  the  European  Parliament  and  to  the  Council  a  proposal  where  the 
aspects highlighted by the Council will be addressed. 

Nevertheless,  regarding 
the  SMEs  participation,  several  measures  where 
introduced in FP7 to simplify SME participation. The reimbursement rates and the 
flat  rates  for  indirect  costs  for  SMEs  were  considerably  increased  in  FP7  in 
comparison  to  FP6.  The  introduction  of  thresholds  for  ex-ante  verification  of 
financial  capacity  and  the  introduction  of  the  guarantee  fund  echoed  by  the 
revised set of protective measures for financially weak participants (no more bank 
guarantees,  blocked  accounts  or  reduced  pre-financing)  took  some  financial  and 
administrative burden from SMEs and are particularly helpful for young start-ups. 
The  introduction  of  thresholds  for  providing  certificates  on  financial  statements 
reduces the administrative burden for financial reporting. In some thematic areas 
under the specific programme "Cooperation" calls with specific topics for projects 
with  obligatory  SME  participation  were  implemented.  As  foreseen  in  the  Small 
Business Act (COM(2008) 394), SMEs participating in an FP7 project keep their 
SME status (and the 75 % funding rate) during the lifetime of the project, even if 
they grow during the project above the thresholds in the SME definition. Finally, 
the simplification measures adopted in January 2011 also target the participation 
of  SMEs  in  FP7  since  the  possibility  to  charge  costs  of  a  basis  of  flat-rate 
financing is offered to SME-owners not receiving a salary. The possibility to get a 
fair retribution of the work performed on the FP7 projects for SME-owners should 
contribute to the attractiveness of FP7. 

52. 

(Council Doc. 5891/11 ADD 2, Annex 1, §4, par 4, page 4) In view of improving in 
particular  the  manageability  of  projects,  their  adequate  implementation  and 
appropriate  evaluation,  the  Commission  should  ensure  clear  and  timely  guidance, 
speedier contracting process and better project monitoring. 

Commission's response: 

The  Commission  agrees  that  clear  and  timely  guidance,  speedier  contracting 
process  and  better  project  monitoring  are  very  important  elements  for  the 
implementation of a European Framework programme for research. 

In  this  context,  the  Commission  is  constantly  updating  guidance  available  for 
beneficiaries  and  potential  beneficiaries  as  well  as  for  auditors  providing 
certificates in the Cordis website (http://cordis.europa.eu/fp7/home_en.html). 

The Commission is also paying attention to the aspects pointed out by the Council 
(contracting process and project monitoring). In the Annual Activity Reports, a set 
of indicators have been established in order to report on the progress achieved in 
the management of the Framework Programmes. This information is provided by 

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each  Director  General  dealing  with  the  Framework  Programmes.  Furthermore, 
Monitoring Reports for FP7 are being issued on annual basis addressing the most 
relevant aspects of its implementation. 

53. 

(Council  Doc.  5891/11  ADD  2,  Annex  1,  §6  and  §7,  page  5)  The  Council  stresses 
that  further  efforts  need  to  be  undertaken  to  improve  the  functioning  of  the 
instruments concerned and therefore invites the Commission to pay utmost attention 
to the Court's recommendations, also with a view to the instruments it will propose 
for  the  next  RTD  Framework  Programme  and  which  should  be  based  on  a  sound 
intervention  logic  and,  as  far  as  possible,  on  SMART  objectives,  linking  the 
instruments to realistic objectives, and that any "new" instruments provide significant 
advantages as compared with existing ones for research collaboration. 

The  Council  looks  forward  to  the  Commission  communication  on  simplification 
expected  in  spring  2010  and  intends  to  examine  the  matters  concerned  in  detail  in 
that  context,  taking  also  into  consideration  the  Court's  findings  and  these 
conclusions. 

Commission's response: 

a) The Commission is currently working in the preparation of the next Framework 
Programme  for  Research  and  Innovation.  In  this  context,  the  Commission 
presents  to  the  European  Parliament  and  to  the  Council  a  proposal  where  the 
aspects highlighted by the Council will be addressed. 

b)  In  the  Communication  on  simplifying  the  implementation  of  the  Research 
Framework Programmes (COM (2010) 187 final of 29.04.2010) referred to by the 
Council, the Commission explored several options to further simplify the rules and 
procedures  for  research  funding.  A  set  of  proposals  were  made  in  particular  in 
view  of  FP8.  However,  the  Commission  proposed  a  set  of  measures  too  to  be 
implemented under  the  current legal  framework. In this respect, the Commission 
adopted a Decision of 24 January 2011 (C(2011) 174 final) on three measures for 
simplifying  the  implementation  of  the  FP7  framework  programme.  This  decision 
allows  beneficiaries  to  apply  their  usual  accounting  methods  when  requesting 
reimbursement  for  average  personnel  costs  –  one  of  the  most  recurrent  errors 
reported  by  the  Court  of  Auditors  –  and  the  possibility  to  reimburse  owner-
managers of SMEs and other natural persons not receiving a salary through flat-
rate payments. 

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Special Report No. 15/2009 "EU assistance implemented through United Nations 
organisations: decision making and monitoring" 

54. 

(Council  Doc.  5891/11  ADD  2,  Annex  2,  §5,  par  1,  page  7)  The  Commission  is 
invited  to  issue  and  ensure  the  implementation  of  practical  guidelines  in  order  to 
improve the decision-making process for selecting the implementing channel for the 
proposed task. The guidelines should lead to a transparent, objective and systematic 
demonstration  in  the  financing  proposals  of  the  economic/technical  and/or  political 
reasons  why  the  chosen  implementing  channel  was  chosen  over  other  aid  delivery 
mechanisms. 

Commission's response: 

DEVCO  is  currently  updating  and  consolidating  its  three  core  operational 
guidance  (PCM,  SPSP  and  BS)  into  one  overall  guidance  for  Project  and 
Programme  Cycle  Management  which  will  include  more  structured  guidance  for 
context  analysis  at  the  country  and  sector  level  that  will  feed  into  a  risk 
management  framework  allowing  authorising  officers  to  take  more  informed 
decisions  on  the  most  appropriate  aid  implementation  modalities  to  achieve 
objectives. 

55. 

(Council  Doc.  5891/11  ADD  2,  Annex  2,  §5,  par  2,  page  7)  The  Commission  is 
invited to continue to co-operate with the UN bodies as far as possible, taking into 
consideration  the  UN  rules  and  regulations,  to  ensure  access  to  UN  implemented 
audits;  and  continue  to  ensure  that  the  Financial  and  Administrative  Framework 
Agreement (FAFA) is applied so that any issues of access to information are rapidly 
resolved. 

Commission's response: 

The EC succeeded in obtaining further assurance  through audit  work  performed 
by the UN. At the last FAFA Working Group (8 April 2011) it was concluded that, 
in future the UN would inform the EC of internal and external audits undertaken 
or planned by the UN for the projects listed. During the meeting, UN entities were 
encouraged by their own members to share summaries of the internal audit reports 
with  the  donors.  The  actual  policy  of  the  UN  organisations  as  to  whether  such 
summaries  could  be  shared  with  the  donors  differs  widely  and  is  ultimately  a 
decision for their respective Governing Boards. UNDP's Excecutive Board recently 
took a decision in this direction, opening up internal audits to donors and not only 
to UNDP Member States. The Commission believes that the example of the largest 
EC partner may be followed by other UN entities in the future. Some audit reports 
have already been received. 

56. 

(Council  Doc.  5891/11  ADD  2,  Annex  2,  §5,  par  3,  page  7)  The  Commission  is 
invited  to  ensure  that  the  UN  reports  provide  adequate  information  on  project 
performance  and  the  achievement  of  results  including  the  achievement  of  longer-
term  impact  not  measurable  within  the  existing  reporting  timeframe,  in  order  to 
respond to the aid effectiveness agenda. 

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Commission's response: 

The 2011 Working Group endorsed joint Reporting Guidelines for a trial period of 
a year. The use of these guidelines will improve the quality of reporting, ensuring 
that  reports  are  submitted  on  time  and  focus  more  on  the  results  achieved.  The 
reporting guidelines are also expected to result in improved project design and that 
the Commission has sufficient information to assess the necessity and eligibility of 
all costs proposed and claimed. 

57. 

(Council  Doc.  5891/11  ADD  2,  Annex  2,  §5,  par  4,  page  8)  The  Commission  is 
invited  to  ensure,  through  EuropeAid,  that  its  field  monitoring  provides  adequate 
coverage  of  projects  implemented  through  UN  organisations  to  supplement  and 
confirm the information on results obtained from UN reports. 

58. 

59. 

Commission's response: 

Discussions on joint monitoring have taken place with a number of UN agencies 
and this work will continue in the future. 

(Council  Doc.  5891/11  ADD  2,  Annex  2,  §5,  par  5,  page  8)  The  Commission  is 
invited  to  consider  whether  it  can  build  on  its  experience  with  one  UN  agency  by 
contributing  in  a  less  fragmented  way,  for  example  at  country  level,  to  other  UN 
organisations with a view to engaging in a similar high-level dialogue enhancing the 
focus on their performance in achieving objectives. 

Commission's response: 

The Commission will explore ways of enhancing the focus on UN performance to 
better achieve objectives, using existing possibilities under the FR. 

(Council  Doc.  5891/11  ADD  2,  Annex  2,  §6,  page  8  -  9)  The  Council  calls  on  the 
Commission to report to the Council in the framework of the Commission's annual 
report on its experience with implementation through UN organisations with special 
regard  to  the  issue  of  added  value,  comparative  advantage,  effectiveness  and 
efficiency  and  on  the  improvement  made  to  the  Commission's  own  decision 
mechanisms. 

The  Council  agrees  with  the  Court  that  monitoring  of  EU-funded  activities 
undertaken by the UN should take place in a coherent and transparent manner. It is 
noted that the Commission has initiated the development of joint monitoring methods 
which could be carried out with the UN agencies, should the UN decide to participate 
in this endeavour. It urges the Commission to encourage the UN to take part in these 
activities. 

The Council notes that there is considerable goodwill on the part of the UN to ensure 
that  the  Court  receives  access  to  UN  systems  and  documents  in  the  course  of  the 
performance of its duties and encourages the Commission to continue to support the 
Court's requests in case of any difficulties encountered. 

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Commission's response: 

The  Commission  reports  on  its  experience  with  the  UN  through,  inter  alia, 
EuropeAid's annual activity report. In addition, in accordance with Article 30.3 of 
the  FR,  contracts  concluded  by  the  UN  with  EU  funds  are  published,  thus 
ensuring  transparency  of  the  activities  undertaken.  For  the  UN,  external  audit 
reports  issued  by  the  UN  Board  of  Auditors,  which  certify  a  given  UN 
organisation's  accounts  for  a  given  biennium, are  public  documents.  In  April 
2010,  the  UN  committed  itself  to  making  available  extracts  from  external  audit 
reports  and  summaries  of  available  internal  audit  reports  related  to  Actions 
financed  by  Commission  in  advance  of  a  verification  mission.  In  April  2011, 
commitments were taken by the UN to further streamline this process. 

60. 

(Council  Doc.  5891/11  ADD  2,  Annex  2,  §7,  par  2  and  3,  page  9-10)  The  Council 
encourages  ECHO  and  Member  States  to  continue  to  fully  support  all  efforts  that 
bolster  the  central  role  of  the  UN  in  humanitarian  coordination.  The  Council 
identifies areas of coordinated/joint action by the Commission and Member States in 
support  of  the  UN  system  and  OCHA,  that  could  include:  (i)  support  to  the 
strengthening of UN/NGO partnerships and mutual accountability, (ii) establishment 
of time based targets for smooth disbursement of funds from the UN agencies to their 
implementing partners, (iii) dialogue on humanitarian issues in the governing bodies 
of the relevant UN funds, programmes and agencies, (iv) aiming at regular and more 
standardised result-based reporting by the UN agencies to the donors (including Inter 
Agency Standing Committee's role in this respect). 

Commission's response: 

The requested action has been taken. 

The  Commission  provides  strong  support  to  the  leading  role  of  the  UN  in 
humanitarian  coordination.  On  a  political  level,  DG  ECHO  promotes  the  role  of 
UN  OCHA  at  every  possible  occasion  and  in  various  locations,  and  requests  its 
partner organisations to take part in coordination work. DG ECHO's funding for 
UN  OCHA's  coordination  activities  reached  a  total  of  €  14.8  M  in  2010  -  an 
increase in comparison to the total contributions of €12.7 for 2009 and € 7.1 M for 
2008. 

In  2010,  DG  ECHO  implemented  its  operations  through  UN  agencies  for  about 
39% of its total funding. Of the top 25 partners working with DG ECHO, 8 are UN 
agencies,  representing  a  total  of  €403  million,  or  38%  of  the  total  amount 
contracted during the year.  

The Commission provides political and financial support to the ongoing efforts to 
strengthen  the  humanitarian  system  that  were  initiated  in  the  2005  UN-led 
humanitarian system reform. As an example, DG ECHO has contributed over €27 
M  towards  the  cluster  system  which  has  been  established  to  ensure  a  designated 
lead  humanitarian  organisation  in  each  sector  and  country,  with  the  objective  of 
ensuring  a  more  predictable  response  to  emergencies.  DG  ECHO  also  promotes 
stronger  partnership  between  UN  and  non-UN  humanitarian  actors  (NGOs  and 
others), notably in the context of the Good Humanitarian Donorship Initiative. 

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UN Emergency Relief Coordinator is currently leading efforts of the Inter Agency 
Standing  Committee  to  further  improve  the  international  humanitarian  response 
system in the areas of advocacy; leadership and coordination; accountability and 
emergency  preparedness.  DG  ECHO  strongly  supports  these  efforts  and  uses  its 
dialogues  with  the  relevant  UN  funds,  programmes  and  agencies  to  push  for  an 
effective  humanitarian  response  system  and  the  importance  of  the  collective 
performance of the system as a whole. 

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39 

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Special Report No. 16/2009 "The European Commission's management of pre-accession 
assistance to Turkey" 

61. 

(Council Doc. 5891/11 ADD 2, Annex 3, §5, page 13) An effective management of 
this  assistance  is  of  utmost  importance.  In  this  context,  the  Council  -  while  noting 
that the Commission considers that it had established a satisfactory project appraisal 
system already during the period from 2002 to 2006 and that compliance with the AP 
priorities  was  one  of  the  selection  criteria  during  this  period  -  encourages  the 
Commission to continue and further develop this system under the IPA instrument. 
In  this  regard,  effective  implementation  of  the  new  project  assessment  procedure, 
which  includes  from  an  early  stage  a  systematic  verification  of  the  relevance  of  a 
project for AP priorities, is of particular importance. In this context, the Commission 
should  give  consideration  to  the  Court's  recommendation  to  encourage  the  Turkish 
authorities  to  develop  project  proposals  such  that  the  strategic  objectives  for  EU 
funding can be achieved within realistic timescales. The role of the recipient country 
is essential for the successful implementation of projects. 

Commission's response: 

The Commission addressed this weakness identified by the Court and highlighted 
by the Council by complementing the current programming practice with a more 
sectoral  approach  where  appropriate,  with  sector  strategies  aiming  at  both 
improved ownership and impact. 

62. 

(Council Doc. 5891/11 ADD 2, Annex 3, §6, page 13) The Council stresses the need 
for  close  coordination  between  donors,  including  bilateral  assistance  provided  by 
Member  States  and  twinning  projects.  It  welcomes  the  recent  Conferences  to 
improve  donor  coordination  and  the  effectiveness  of  financial  assistance.  The 
Council encourages the follow-up of their conclusions as well as the preparation of 
joint projects. It also calls upon the Turkish authorities to enhance their capacity to 
contribute to donor coordination activities. 

Commission's response: 

The Commission addressed the weaknesses identified by the Court and highlighted 
by the Council by taking steps to follow up the recommendations of last year’s IPA 
conference  and  the  December  2010  Council  conclusions  on  IPA  to  better  link 
financial  assistance  to  political  priorities.  Turkey  has  been  encouraged  to  take  a 
stronger role in donor coordination and has taken first steps in this direction. 

63. 

(Council  Doc.  5891/11  ADD  2,  Annex  3,  §7,  page  13)  In  conclusion,  the  Council 
strongly  encourages  the  Commission  to  carefully  consider  the  recommendations 
made  by  the  Court  and  to  build  upon  the  measures  it  has  already  taken  to  further 
improve the management of the programmes. On its part, the Council will continue 
its efforts in defining the priorities on the basis of realistic expectations, while noting 
the need to cover all priority areas for Turkey's preparations. 

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Commission's response: 

The  Commission  set  up  the  following  action  plan  in  2010  to  address  the 
weaknesses identified by the Court and highlighted by the Council: 

1.  The  Commission  complements  the  current  programming  practice  with  a  more 
sectoral  approach  where  appropriate,  with  sector  strategies  aiming  at  both 
improved ownership and impact. 

2. The Commission is taking steps to follow up the recommendations of last year’s 
IPA conference and the December 2010 Council conclusions on IPA to better link 
financial assistance to political priorities. 

3. The Commission ensures that future projects have clearer objectives that result 
in  an  improved  intervention  logic  through  more  relevant  and  measurable 
indicators and benchmarks. 

4. Where necessary, clearly defined conditionalities are used to ensure the Turkish 
beneficiaries implement commitments necessary for financial assistance to achieve 
results and impacts. 

5. Together with the Turkish authorities, monitoring systems are further improved 
to increase the focus on results and impact of projects under implementation. 

6. Further actions are taken to address outstanding recommendations from audits 
and  evaluations  to  strengthen  the  management  and  control  systems  for  DIS 
(Decentralised Implementation System). 

7. Audits, evaluations and close monitoring ensure that improvements are effective 
and further adjustments are brought under way to the system if necessary. 

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41 

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Special Report No. 17/2009 concerning vocational training actions for women co-
financed by the European Social Fund 

64. 

(Council  Doc.  5891/11  ADD  2,  Annex  4,  §5,  page  15)  Future  programmes  need  to 
take account of all individual needs of job seekers rather than focus solely on gender, 
and  the  Council  also  recalls  the  relevance  of  an  integrated  approach  and  of  actions 
aiming at conciliation of work and life. 

Commission's response: 

For the next programming period the Commission intends to propose a scope for 
the  European  Social  fund  closely  linked  to  the  Employment  Guidelines.  In  this 
framework,  individualised  job  seeker  support  will  be  part  of  ESF  activities.  The 
Commission will also propose the introduction of ex-ante conditionality provisions. 
This could for instance include that Member States will be required to deliver their 
ESF programmes in accordance with the employment guidelines. This would imply 
that  job  seekers  can  benefit  from  personalised  assistance  tailored  to  their  needs, 
including as regards training. 

Ex-ante  conditionality  related  to  reconciliation  could  stimulate  an  integrated 
approach  by  requiring  that  EU  support  is  conditional  upon  the  existence  of  an 
enabling  environment  for  flexible  working  arrangements  and  that  the  Member 
State has put in place measures for achieving the Barcelona targets on childcare. 

65. 

(Council Doc. 5891/11 ADD 2, Annex 4, §10, page 16 ) The Council encourages the 
Commission  to  continue  its  efforts  to  obtain  further  improvements  of  the 
management  of  the  current  programme  and  its  implementation,  with  a  view  of  the 
next programming period, starting in 2014. 

Commission's response: 

The  Commission  monitors  and  advises  on  programme  implementation  on  a 
permanent basis (via its participation in the Monitoring Committee meetings, the 
Annual Review meeting, where, inter alia, the Annual Implementation Reports are 
discussed) and stimulates the exchange of good practices amongst Member States 
in different fora (e.g. ESF Technical Working Group, seminars and conferences). 
The  Commission  has  also  promoted  the  use  of  simplified  costs  options  which 
should facilitate management. 

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42 

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Special Report No. 18/2009 "Effectiveness of EDF support for Regional Economic 
Integration in East Africa and West Africa" 

66. 

(Council Doc. 5891/11 ADD 2, Annex 5, §5, page 18) The  Council  recognises that 
multiple  Regional  Organisations  with  overlapping  membership  and  mandates 
complicates the effectiveness of EDF support. Therefore, the Council calls upon the 
Commission  to,  where  appropriate, promote through policy dialogue the conditions 
for a smooth convergence of Regional Organisations. 

Commission's response: 

The  Commission  recognises  the  challenges  of  the  institutional  complexity  for 
effective  regional  integration  and  is  supporting  convergence  of  Regional 
Organisations  through  political  and  policy  dialogue  and  assistance  for  the 
convergence of regionally-led policies, in line with the Cotonou Agreement and the 
Paris  Declaration  on  aid  effectiveness  regarding  ownership,  harmonisation  and 
alignment. 

67. 

(Council  Doc.  5891/11  ADD  2,  Annex  5,  §6,  page  18)  The  Council  welcomes  the 
Court's appeal for clearer guidelines for regional programming and, in particular, for 
improved  coherence  between 
the 
Commission's respective regional and national strategies. In this context, the Council 
encourages  the  Commission  to  seek  more  systematic  complementarity  between 
support activities at the regional and national level. 

the  programming  and 

implementation  of 

Commission's response: 

The  Commission  has  already  taken  a  number  of  steps  to  further  improve 
coherence and consistency between regional and national strategies, in particular 
through regional seminars. Complementarity will be a key element in the mid-term 
reviews of the 10th EDF national strategies that are taking place in 2011, in which 
special attention will be given to ensuring that the regional integration objectives 
supported by the Regional Indicative Programmes (RIP) will be integrated in the 
analysis of the National Indicative Programmes (NIP). 

68. 

(Council  Doc.  5891/11  ADD  2,  Annex  5,  §7,  page  18)  The  Council  calls  upon  the 
Commission to define more clearly the responsibilities of the different Delegations in 
the  region  concerned  and  to  review  the  resources  allocated  to  Delegations  for  the 
programming  and  implementation  of  its  regional  programmes.  Furthermore,  the 
Council  welcomes  the  Court's  call  to  establish,  where  appropriate,  a  coordination 
mechanism between Delegations. 

Commission's response: 

The  Commission  is  aware  of  the  need  for  more  effective  management  and 
coordination  instruments:  redeployment  and  reinforcement  of  staff  are  being 
implemented  but  also  specific  operational  guidelines  have  been  developed  and 
issued for a more effective management and coordination of regional programmes 
by  the  regional  delegations.  In  addition,  a  more  formal  cooperation  mechanism 
between the regional delegations has been introduced since the beginning of 2009. 

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43 

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Improved  coordination  modalities  have  been  agreed  which  include  two  meetings 
per year at Heads of Delegations level. 

69. 

(Council  Doc.  5891/11  ADD  2,  Annex  5,  §8,  page  18)  The  Council  invites  the 
Commission to facilitate wherever possible improved coordination between Regional 
Organisations and among them and their Members States, including for monitoring 
the overall progress and challenges of the regional integration process in individual 
countries. 

Commission's response: 

The  quality  of  the  coordination  among  regional  organisations  and  between  the 
regional  organisations  and  their  Member  States  is  primarily  of  their  own 
responsibility  and  largely  depends  on  the  degree  of  ownership.  However,  the 
Commission  facilitates  this  coordination  wherever  possible,  emphasising  its 
importance in the political dialogue with the regions and its States and stimulating 
the set up of coordination mechanisms in the framework of the regional financial 
assistance. 

70. 

(Council  Doc.  5891/11  ADD  2,  Annex  5,  §9,  page  18)  Furthermore,  recalling  the 
foremost  role  of  individual  projects  and  the  critical  importance  of  assessing  them 
effectively,  the  Council  recommends  the  establishment  of  an  adequate  system  for 
effective and timely reporting, monitoring and evaluation of EDF regional projects. 

Commission's response: 

Actions  that  have  been  taken  so  far  include  a  reviewed  format  of  the  External 
to  regional 
Action  Management  Report  (EAMR)  with  sections  dedicated 
programmes,  a  specific  methodology  for  the  Results  Oriented  Monitoring  (ROM) 
of  regional  programmes,  Quality  Support  Group  (QSG)  checklists  incorporating 
specific sections for assessing the quality of proposed regional programmes. Also 
specific  annual  regional  meetings  are  being  held  where  the  progress  of  regional 
programmes  is  being  discussed.  The  reform  of  the  Project  Cycle  Management 
System  (PPCM) 
the  regional 
programmes. 

the  specificities  of 

into  account 

taking 

is 

71. 

(Council Doc. 5891/11 ADD 2, Annex 5, §11-13, page 19)  The  Council  invites  the 
Commission  to  dedicate  special  attention  to  ensure  that,  in  the  framework  of  the 
Mid-Term  and  End  of  Term  Reviews,  regional  integration  objectives  supported  by 
both the Regional and National Indicative Programmes will be taken into account.  

The Council strongly encourages the Commission to assess the reciprocal impact of 
national  and  regional  programmes  on  each  other  and 
to  ensure  overall 
complementarity between national and regional programmes.  

Finally,  the  Council  underlines  the  importance  of  close  collaboration  between  the 
EU,  the  African  Development  Bank,  the  World  Bank  and  other  bilateral  donors  in 
order to effectively encourage regional integration. 

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44 

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Commission's response: 

Complementarity  between  the  regional  and  national  strategies  will  be  a  key 
element  in  the  mid-term  reviews  of  the  10th  EDF  national  strategies  that  are 
taking place in 2011, in which special attention will be given to ensuring that the 
regional  integration  objectives  supported  by  the  Regional  Indicative  Programmes 
(RIP)  will  be  integrated  in  the  analysis  of  the  National  Indicative  Programmes 
(NIP). 

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45 

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Special Report No. 1/2010 "Are simplified customs procedures for imports effectively 
controlled?" 

72. 

(Council  Doc.  5891/11  ADD  2,  Annex  6,  §3,  page  21)  The  Council  takes  the  view 
that  in  further  improving  the  regulatory  framework  for  simplified  customs 
procedures, a solid environment for companies to apply these procedures should be 
ensured both by Member States and the Commission, taking into account the practice 
which has emerged. 

Commission's response: 

The improved regulatory framework and solid environment for companies should 
be  achieved  via  the  implementation  of  the  Modernised  Customs  Code  (MCC). 
Implementation of the MCC was envisaged for 24 June 2013. However, in order to 
ensure the development and deployment of electronic systems and the alignment of 
the MCC with the provisions of the Lisbon Treaty, the Commission intends to table 
a proposal suggesting postponement of the date of application and implementation. 

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46 

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Special Report No. 2/2010 "The effectiveness of the Design Studies and Construction of 
New Infrastructures support schemes under the Sixth Framework Programme for 
Research" 

73. 

(Council Doc. 5891/11 ADD 2, Annex 7, §5, page 25) The  Council  encourages the 
Commission,  together  with  Member  States  and  ESFRI,  to  continue  its  efforts  to 
improve the approaches to supporting European research infrastructures in line with 
the  Court's  recommendations  and  the  Council  conclusions  relating  to  research 
infrastructures, also with a view to future EU funding instruments related to R&D. 

Commission's response: 

Drawing on the lessons learnt from the CNI projects as a pilot experience, support 
for the construction of new infrastructures has been further developed in FP7 and 
put on a different footing. The support under FP7 is provided through a strategic 
top-down approach based on the list of projects identified in the ESFRI European 
roadmap for new research infrastructures. This support is intended mainly for the 
preparatory phase. 

The  added  value  and  catalytic  impact  of  the  support  thereby  provided  for  the 
construction of new infrastructures is acknowledged by Member States, in Council 
Conclusions relating to research infrastructures and the ERA. 

relevance  of  world-class 

Future  support  will  build  on  the  FP7  achievements  and  also  consider  Council 
infrastructures.  The  Innovation  Union  Flagship 
Conclusions  on  research 
Initiative  highlights 
research 
increasing 
the 
infrastructures to enable ground-breaking research and innovation. It stresses the 
need  of  pooling  resources  across  Europe  and  in  some  cases  globally.  It  commits 
Member  States  together  with  the  Commission  to  sustained  coherence  and 
consistency  in  the  EU  and  national  strategies,  to  open  Member  State  operated 
research  infrastructures  to  the  full  European  user  community,  to  complete  or 
launch  by  2015  the  construction  of  60%  of  the  priority  European  research 
infrastructures  currently  identified  by  ESFRI,  and  to  increase  their  innovation 
potential. 

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47 

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Special Report No. 4/2010 "Is the design and management of the mobility scheme of the 
Leonardo da Vinci programme likely to lead to effective results?" 

74. 

(Council  Doc.  5891/11  ADD  2,  Annex  9,  §4,  page  29)  The  Council  invites  the 
Commission  to  improve  the  system  for  reporting  on  the  results  of  the  Leonardo  da 
Vinci  programme,  and  establish  a  comprehensive  system  for  measuring  its  impact 
whilst  minimising  the  overall  administrative  burden,  notably  by  finalising  the 
relevant  applications  and  tools  without  further  delay  -  Inform  the  Council  no  later 
than June 2012 of the progress made in implementing these recommendations. 

Commission's response: 

The Commission accepts the recommendation and is taking action on these issues. 

The  Commission  informs  the  Council  about  the  progress  in  implementing  this 
request no later than end of June 2012. 

75. 

(Council  Doc.  5891/11  ADD  2,  Annex  9,  §4,  page  29)  The  Council  invites  the 
Commission to provide the national authorities with more qualitative feedback aimed 
at  providing  a  concise  view  of  national  implementation  and  highlighting  strengths 
and weaknesses - Inform the Council no later than June 2012 of the progress made in 
implementing these recommendations. 

Commission's response: 

The  Commission  accepts  the  request  which  is  already  being  implemented.  The 
Commission  has  provided  National  Agencies  with  qualitative  feedback  since  the 
2008 annual reporting. Furthermore, as the Court recognised, it has also provided 
feedback on annual work programmes for those cases where revision was needed 
in order to reach the expected quality standards. 

The Commission will inform the Council about the progress in implementing the 
recommendation no later than end of June 2012. 

76. 

(Council  Doc.  5891/11  ADD  2,  Annex  9,  §4,  page  29)  The  Council  invites  the 
Commission to improve the application assessment procedure, for instance by further 
developing  the  assessment  handbook  for  evaluators,  and  by  evaluating  the  cost 
effectiveness of assessment checks on applications when conducting its quality and 
impact monitoring visits to participating countries - Inform the Council no later than 
June 2012 of the progress made in implementing these recommendations. 

Commission's response: 

The  Commission  accepts  the  request.  The  Commission  is  working  on  further 
developing the assessment handbook for evaluators in connection with the new on-
line application and revised assessment form. 

The Commission will inform the Council about the progress in implementing this 
recommendation no later than end of June 2012. 

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77. 

(Council  Doc.  5891/11  ADD  2,  Annex  9,  §4,  page  29)  The  Council  invites  the 
Commission  to  improve  its  quality  and  impact  monitoring  system,  and  coordinate 
this with the annual activity reporting currently carried out by the national agencies, 
whilst endeavouring to avoid any increase in their workload - Inform the Council no 
later than June 2012 of the progress made in implementing these recommendations. 

Commission's response: 

The  Commission  accepts  the  request.  The  principles  for  quality  and  impact 
monitoring  visits,  including  visit  checklists  and  model  feedback  letters,  are 
currently  being  reviewed.  One  element  of  this  review  is  the  need  to  integrate 
follow-up of Yearly NA reporting into the visits and, when necessary, the feedback 
letters. 

The Commission will inform the Council about the progress in implementing this 
recommendation no later than end of June 2012. 

78. 

(Council  Doc.  5891/11  ADD  2,  Annex  9,  §4,  page  29)  The  Council  invites  the 
Commission to align the structure of the work programme and the annual report, so 
as  to  enable  a  comparison  of  results  against  planned  performance  -  Inform  the 
Council  no  later  than  June  2012  of  the  progress  made  in  implementing  these 
recommendations. 

Commission's response: 

The Commission accepts the request. An internal working group of DG Education 
and  Culture  revised  the  requirements  and  form  of  the  Yearly  National  Agency 
Report  in  the  second  quarter  of  2011.  The  revised  report  is  now  in  line  with  the 
structure  and  content  of  the  National  Agency  work  programme  revised  for  2011. 
As  a  consequence  the  Yearly  NA  Report  on  the  year  2011  (to  be  received  by  the 
Commission in 2012) will allow meaningful comparison of results against planned 
performance. 

The Commission will inform the Council of the progress no later than end of June 
2012. 

79. 

(Council  Doc.  5891/11  ADD  2,  Annex  9,  §4,  page  29)  The  Council  invites  the 
Commission  to  explore  options  for  ensuring  a  user-friendly  and  effective  partner-
search  tool  designed  to  facilitate  the  placement  of  foreign  participants  -  Inform  the 
Council  no  later  than  June  2012  of  the  progress  made  in  implementing  these 
recommendations. 

Commission's response: 

The  Commission  partly  accepts  the  request.  The  Commission  discontinued  its 
previous  partner  finding  database  due  to  quality  assurance  problems.  While 
alternative  solutions  to  partner  search  mechanisms  are  currently  being  analysed, 
the  Commission  emphasises  that  the  lack  of  a  partner  search  database,  for 
instance, does not interfere with the successful implementation of the programme, 
as  the  demand  by  far  exceeds  the  budget  available  to  support  Leonardo  mobility 
projects. 

EN 

49 

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No tool will be developed for the current programme generation but the possibility 
will be considered as part of the preparation of the new programme generation. 

The Commission will inform the Council about the progress in implementing this 
recommendation no later than end of June 2012. 

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50 

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Special Report No. 7/2010 "Audit of the clearance of accounts procedure" 

80. 

(Council Doc. 5891/11 ADD 2, Annex 11, §4, page 32) The Council underlines that 
the  respective  roles  and  responsibilities  of  the  different  parties  involved  should, 
where  needed,  be  more  clearly  defined  in  the  relevant  regulations,  rather  than  in 
guidelines. 

Commission's response: 

The Commission is taking the requested action. 

The  respective  roles  and  responsibilities  of  the  different  parties  involved  will, 
where needed, be more clearly defined in the post 2013 COM Regulation. 

81. 

(Council Doc. 5891/11 ADD 2, Annex 11, §5, page 32) The Council stresses that flat-
rate  corrections,  based  on  an  estimation  of  the  real  financial  risk  to  the  European 
Agricultural  Guarantee  Fund  and  the  European  Agricultural  Fund  for  Rural 
Development,  based  on  categories  of  weakness  in  the  controls,  should  only  be 
applied  as  the  third  and  last  option,  where  calculating  the  amount  of  the  financial 
correction  on  the  basis  of  individual  irregular  payments  or  on  the  basis  of  an 
extrapolation of the results of examination of a representative sample of transactions 
is impossible or not cost-effective. 

Commission's response: 

The requested action has been taken. 

The  principles  for  the  calculation  of  financial  corrections  recommended  by  the 
Council are already included in the Commission guidelines from December 1997 
(Doc. VI/5330/97). 

The Commission has indicated to Member States that if their certification bodies 
fully re-perform a representative sample of transactions which the paying agency 
has  checked  on-the-spot  and,  on  this  basis,  confirm  the  reliability  of  a  Member 
State's control  statistics, then  the Commission will accept that the resulting error 
rate  represents  the  maximum  risk  possible  and  that  any  financial  corrections  for 
the year in question will not exceed that level. 

82. 

(Council Doc. 5891/11 ADD 2, Annex 11, §6, page 32) The Council encourages the 
Member States as well as the Commission to continue to work together in order to 
obtain  a  reduction  in  the  time  needed  to  complete  conformity  clearance  procedures 
and with a view to establishing the real financial risk to the Funds. 

Commission's response: 

As to the first part of the recommendation, the Commission is taking the requested 
action. 

DG AGRI's Annual Management Plan 2011 includes targets for the reduction in 
the  time  needed  to  complete  conformity  clearance  procedures.  In  particular,  all 
audits carried out in 2008 and before should be closed by 31 December 2011.  

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As  to  the  second  part  of  the  recommendation,  the  Commission  has  taken  the 
requested action. 

The Commission has indicated to Member States that if their certification bodies 
fully re-perform a representative sample of transactions which the paying agency 
has  checked  on-the-spot  and,  on  this  basis,  confirm  the  reliability  of  a  Member 
State's control  statistics, then  the Commission will accept that the resulting error 
rate  represents  the  maximum  risk  possible  and  that  any  financial  corrections  for 
the year in question will not exceed that level. 

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Requests concerning agencies/bodies 

83. 

(Council  Doc.  5892/11  ADD  1,  Annex  1,  par  2,  page  5)  The  Council  notes  the 
Court's observation that the Agency has not received a budget since 2008, whereas, 
according  to  the  Treaty  establishing  the  European  Atomic  Energy  Community,  it 
should  have  financial  autonomy,  and  the  Court's  opinion  that  the  Commission  and 
the Agency should take measures to regularise this situation. 

Commission's response: 

In April 2011 the Commission adopted its proposal for the 2012 draft budget. This 
included a contribution of €98000 for the Euratom Supply Agency. 

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Requests concerning executive agencies 

84. 

(Council  Doc.  5893/11  ADD  1,  Annex  2,  par  2,  page  7)  The  Council  notes  with 
concern  that,  similarly  to  previous  years,  the  Executive  Agency's  initial  budget  for 
2009 was reduced by almost 11 % in the fourth quarter mainly due to overestimated 
staff  needs.  It  invites  both  the  Executive  Agency  and  the  Commission  to  adopt  a 
more realistic and effective approach when planning activities and related resources. 

Commission's response: 

The  initial  2009  budget  was  based  on  estimated  staff  numbers  for  the  full  year 
indicated  in  the  financial  statement  of  the  Commission  decision  to  extend  the 
Agency's tasks. Staff was recruited according to the successively expanding needs 
to cover the tasks handed over from the parent Directorates-General. 

The  Agency  informed  the  Commission  that  it  has  improved  their  forecasts.  The 
Commission will closely monitor the progress made. 

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Requests concerning joint undertakings 

85. 

(Council Doc. 5894/11 ADD 1, Annex 3, par 4 and 5, page 10) "The Council takes 
note of the Joint Undertaking's intention to put in place an internal auditing function 
and encourages it to clarify roles and tasks within its internal control system. Finally, 
in line with the Court's comment in this respect, the Council calls on the Commission 
to provide clear guidance to the Joint Undertaking on  harmonising the presentation 
of members' contributions in the accounts". 

Commission's response: 

According to art. 185 (3) of the Financial Regulation, in 2010 the Internal Audit 
Service (IAS) of the Commission has declared itself as the internal auditor of the 
ARTEMIS JU (ref. Ares 2010/826290). 

The Governing Board of ARTEMIS has adopted in 2010 the internal audit service 
charter  of  the  IAS  (Artemis  GB-2010-D.24).  The  IAS  has  started  a  risk  analysis 
process together with ARTEMIS.  

ARTEMIS has changed the presentation of the members' contributions in the 2010 
accounts (accounting rule number 1), taking into account all the recommendations 
of the Court of Auditors. 

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