REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on the follow-up to the discharge for the 2009 financial year (Summary)
Date: 2011-11-14
Institutions: European Commission
Subjects: budgetary discharge, financial year, general budget (EU), management audit

EUROPEAN COMMISSION 

Brussels, 14.11.2011 
COM(2011) 736 final 

REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND 
THE COUNCIL 

on the follow-up to the discharge for the 2009 financial year (Summary)  

{SEC(2011) 1350 final} 
{SEC(2011) 1351 final} 

EN 

   EN 

 
 
 
 
  
 
 
PREAMBLE 

This is the Commission's report to the European Parliament (EP) and the Council on the follow-up 
to  the  discharge  for  the  2009  financial  year1,  pursuant  to  Article  319(3)  of  the  Treaty  on  the 
Functioning of the European Union, Article 147 of the Financial Regulation and Article 119(5) of 
the European Development Funds (EDF) Financial Regulation. 

The report summarises the Commission replies to the key requests from the EP and the Council and 
is  accompanied  by  two  Commission  Staff  Working  Documents  (CSWD)  which  contain  the 
Commission  replies  to  each  specific  request  from  Parliament  and  Council  (298  all  in  all).  In  the 
Commission  staff  working  documents  there  is  for  each  request  a  cross-reference  to  the  relevant 
paragraph(s) in the documents from either the European Parliament or the Council. 

In the EP discharge resolutions the Commission has identified a total of 213 requests addressed to it 
by the European Parliament2. For 89 of these the Commission agrees to take the action requested by 
Parliament.  The  Commission  considers  that  for  112  requests  the  required  action  has  already  been 
taken or is ongoing, though in some cases the results of the actions will need to be assessed. Finally, 
for reasons related to the existing legal framework or its institutional prerogatives, the Commission 
cannot accept 12 requests3. 

The  Commission  has  also  identified  85  requests  addressed  to  it  by  the  Council  in  its 
recommendation  to  the  Parliament4.  For  43  of  these  the  Commission  agrees  to  take  the  action 
requested  by  the  Council.  The  Commission  considers  that  for  42  requests  the  required  action  has 
already  been  taken  or  is  ongoing,  though  in  some  cases  the  results  of  the  actions  will  need  to  be 
assessed.  There  are  no  requests  that  the  Commission  cannot  accept  for  reasons  related  to  the 
existing legal framework or its institutional prerogatives. 

1 

2 

3 
4 

2009  General  Budget  Discharge,  European  Court  of  Auditors'  Special  Reports  in  the  context  of  the 
Commission Discharge, EDF Discharge, Agencies Discharge. 
Document references P7_TA(2011)0194 and P7_TA(2011)0195 
, respectively available at the following Web addresses: 
http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT+TA+P7-TA-2011-
0194+0+DOC+XML+V0//EN&language=EN#BKMD-87 
See requests 1, 18, 25, 71, 82, 86, 117, 156, 175, 179, 192 and 206. 
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=CONT 

EN 

2 

   EN 

 
                                                 
 
 
SUMMARY OF COMMISSION REPLIES TO THE REQUESTS MADE BY THE 
EUROPEAN PARLIAMENT AND THE COUNCIL IN THE 2009 DISCHARGE 

1. 

PRIORITY ACTIONS 

In its resolution, the Parliament specifically highlighted seven priority actions of institutional 
and  organisational  nature.  These  requests  have  been  extensively  discussed  during  the 
discharge procedure and the Commission had the opportunity to present its views in various 
exchanges  with  the  Members  of  the  budgetary  control  committee  (CONT)  and  in  particular 
with the rapporteur for the discharge 2009. During these discussions, evidence was given of 
the Commission's strong commitment vis-à-vis these concerns. 

1.1. 

Reform of the current discharge procedure 

The rules applicable to the discharge procedure, and in particular the time limits, are set out in 
the Financial Regulation (FR). The shortening of the whole procedure is part of the discussion 
on the current review of the Financial Regulation. 

The Commission has already invited the Discharge Authority, the Council and the European 
Court of Auditors to set up a working group in order to elaborate on a comprehensive reform 
of  the  discharge  procedure,  aiming  at  a  shorter  timetable  that  leaves  sufficient  time  for  the 
institutions involved to prepare and present their respective contributions. A conference could 
be organised to discuss the conclusions of this working group. 

1.2. 

National management declarations 

To  further  reinforce  Member  States’  accountability  under  Article  317  of  the  TFEU,  the 
Commission  included  in  its  proposal  for  the  triennial  revision  of  the  FR  (Article  56)  the 
requirement  for  the  responsible  bodies  accredited  in  the  Member  States  to  provide  annual 
management  declarations  covering  all  funds  in  shared  management5,  following  an  approach 
similar to that successfully applied in the agricultural sector. 

Such  management  declarations  would  provide  the  Commission  with  substantial  additional 
assurance  as  to  the  use  of  EU  funds  by  Member  States.  In  the  Commission's  view 
management declarations, audited by an independent auditor, are more appropriate to obtain 
assurance  from  Member  States  than  the  present  national  declarations,  and  would  reinforce 
cooperation with Member States in the implementation of the budget. 

After a reasonable period of implementation, the Commission will assess the added-value of 
these management declarations and could envisage proposing the political endorsement of the 
reporting and accountability process including the managerial declaration of assurance. 

1.3. 

Completion of the Commission's governance structure 

The College delegates budget implementation to the Directors-General and Heads of Service, 
who  are  responsible  for  the  sound  and  efficient  management  of  resources  and  for  ensuring 

5 

A  working  document  providing  an  analysis  of  the  assurance  process  in  shared  management,  an 
evaluation of the national declarations issued by four Member States and guidance on how to add value 
to this assurance process was sent to the Budgetary Control Committee in February 2011 

EN 

3 

   EN 

 
                                                 
effective control systems in their services. They report on the performance of their duties in 
the Annual Activity Reports (AAR), which include a signed declaration of assurance covering 
the  legality  and  regularity  of  financial  transactions.  Assurance  is  obtained  through  the 
objective examination of evidence for the purpose of providing a thorough assessment of the 
effectiveness  of  risk  management,  control  and  governance  processes.  This  examination  is 
carried out by management, who monitor the functioning of the internal control systems on a 
continuous  basis,  and  by  internal  and  external  auditors.  The  AAR  is  the  main  vehicle  for 
Directors-General to document their accountability to the College. 

The Commission considers that the management responsibility assigned to Directors-General 
should not be diluted by adding signatures of Commissioners or the President. 

However, the standing instructions on the preparation of the AARs were updated so that the 
Director-General  clearly  confirms  that  the  main  elements  of  his/her  report  and  assurance 
declaration, including the reservations envisaged, have been brought to the attention of his/her 
Commissioner.  All  Directors-General  complied  with  these  standing  instructions  in  2011  for 
the 2010 AARs. 

Moreover,  the  Commissioners'  attention  has  been  drawn  at  the  College  meeting  of  23 
February  2011  on  the  importance  of  the  dialogue  between  DGs  and  Commissioners  on  the 
draft  AAR  and  reservations,  in  accordance  with  the  standing  instructions  and  the  working 
arrangements on the relations between cabinets and services. 

1.4. 

Systematic activation of interruption and suspension of payments 

For the period 2007-2013 the Cohesion Funds operate within the framework set in Regulation 
1083/20066  which  contains  a  legal  basis  (Article  91)  for  applying  interruptions  of  payment 
deadlines at operational level for up to 6 months, decided by the Director-General, as a first 
step to the suspension of payments decided by the Commission (Article 92). Interruptions of 
payment  deadlines  are  a  more  flexible  instrument  to  have  Member  States  to  correct 
weaknesses, as they are immediate and do not require a formal decision by the College. The 
Commission has taken steps to ensure that this instrument is used more systematically, such 
as common guidelines used by DG EMPL, DG REGIO and many national Audit Authorities 
including key requirements to assess the effectiveness of the management and control systems 
in the Member States. The services have reported on all interruption/suspensions decisions in 
their AAR. 

The systematic policy on interruption and suspension of payments has been illustrated in the 
examples  brought  to  the  Committee  on  Budgetary  Control7,  which  clearly  show  that  the 
sequence  in  the  procedural  and  legal  steps  triggering  interruptions  and  suspensions  is 
followed systematically and without disruption by the Commission. 

As regards transmitting copies of recovery letters and letters announcing financial corrections 
to the National Parliaments and the National Supreme Audit Institutions of the Member States 

6 

7 

Regulation  (EC)  No  1083/2006  of  11  July  2006  laying  down  general  provisions  on  the  European 
Regional  Development  Fund,  the  European  Social  Fund  and  the  Cohesion  Fund  and  repealing 
Regulation (EC) No 1260/1999 
See  memo  sent  on  02  May  2011  "DG  REGIO  memorandum  on  financial  corrections  and  recoveries, 
interruptions  and  suspensions"  and  memo  sent  on  18  March  2011,  annex  3  (list  of  interruptions  / 
suspensions ERDF/CF and ESF 

EN 

4 

   EN 

 
                                                 
concerned,  the  Commission  considers  that  it  is  up  to  these  bodies  themselves  to  obtain  the 
information from their national management and control authorities. 

1.5. 

Improvement of corrective mechanisms 

For a number of years already, financial corrections have been imposed when necessary, the 
quality of the Member States' data on financial corrections and recoveries has been improved 
and  the  Commission  has  made  efforts  to  promote  the  use  of  best  practices  so  to  ensure  an 
improved recovery mechanism at Member State and EU level. 

The  Commission  services  operating  shared  management  report  on  financial  corrections  in 
their AARs since 2007 and provide a clear split by Member State, programming period and 
fund.  Note  N°6  to  the  accounts  was  equally  complemented  with  the  inclusion  of  detailed 
information on the implementation of financial corrections. 

The Commission underlines that in the Cohesion domain all amounts which have been agreed 
upon by Member States as financial corrections will be implemented. In case the Commission 
does not have sufficient assurance that all corrections have been effectively implemented, it 
will suspend the closure process and request appropriate actions by the Member State. 

Commission services are carrying out a specific audit inquiry on the Member States' systems 
for  recoveries8,  in  order  to  gain  assurance  on  the  quality  of  data  submitted  in  the  annual 
statements  on  recoveries  and  withdrawals.  The  first  results  of  this  audit  are  expected  to  be 
reported in the AARs of 2011. 

The  Commission  has  transmitted  to  the  Parliament's  Committee  detailed  information  on  all 
decisions on interruptions, suspensions and financial corrections, and has satisfied all requests 
for information9. 

Specifically as regards Agriculture, where undue payments are or can be identified as a result 
of  the  conformity  clearance  procedures,  Member  States  are  required  to  follow  them  up  by 
recovery  actions  against  the  final  beneficiaries.  However,  even  where  this  is  not  possible 
because  the  financial  corrections  only  relate  to  deficiencies  in  the  Member  States' 
management  and  control  systems,  financial  corrections  are  an  important  means  to  improve 
these  systems  and,  thus,  to  prevent  or  detect  and  recover  irregular  payments  to  final 
beneficiaries.  The  conformity  clearance  thereby  contributes  to  the  legality  and  regularity  of 
the  transactions  at  the  level  of  the  final  beneficiaries.  The  current  regulatory  framework 
considers  financial  corrections  as  measures  to  restore  the  regularity  of  expenditures  and  to 
protect  the  EU  budget.  The  possibility  to  interrupt  payment  deadlines  and  impose  financial 
corrections  also  acts  as  an  incentive  for  the  Member  State  to  improve  the  management  and 
control systems and implement the necessary financial corrections themselves. The proposals 
for  the  next  generation  of  programmes10  include  proposals  aiming  at  compelling  Member 
States  to  recover  financial  corrections  from  final  beneficiaries  each  time  this  is  possible.  In 
addition,  it  includes  a  new  possibility  for  the  Commission  to  cancel  all  or  part  of  the  EU 
budget contribution to a programme and effect recovery from Member States. The aim is to 
allow  the  Commission  to  exclude  from  EU  funding  any  expenditure  which  is  in  breach  of 

8 
9 
10 

Control missions started in September 2011 
See footnote 7 
Proposal for a Regulation of the European Parliament and Council laying down common provisions for 
all Structural Funds (COM(2011)615) 

EN 

5 

   EN 

 
                                                 
applicable  Union  and  national  law,  including  in  relation  to  deficiencies  in  the  management 
and control systems of Member States which have been detected either by the Commission or 
the European Court of Auditors. 

1.6. 

Performance evaluator 

The Commission will present, before the end of 2011 the first evaluation report under Article 
318 of the TFEU. The Commission will use its established working methods for publishing 
and  transmitting  to  the  EP  the  report  and  notes  that  the  Commission  Internal  Audit  Service 
(IAS) exercises its own independent authority in programming its audit work. 

1.7. 

Introduction of a new spending logic 

As outlined in 'A Budget for Europe 2020'11, the Commission will work with the legislative 
authority  to  ensure  that  the  principles  of  simplification,  sound  financial  management  and 
accountability  are  fully  integrated  in  future  programming  activity.  In  this  context,  the 
Commission has already proposed simplification measures in the proposed revision of the FR. 
The Commission will issue a dedicated Communication on simplification at the end of 2011 
once all of its sector specific proposals have been tabled. 

The  Commission  considers  that  obtaining  an  overall  statement  of  assurance  for  each 
Multiannual  Financial  Framework  would  not  add  value  to  the  existing  annual  governance 
structure  under  which  a  full  and  agreed  accountability  process  for  spending  is  already  in 
place. 

Ex-post  controls  aim  at  detecting  and  subsequently  correcting  errors  that  could  not  be 
identified  at  the  time  of  the  payment.  For  multi-annual  programmes,  the  Commission 
monitors the resulting residual error rate after corrections, i.e. at the end of the control cycle. 
A  number  of  Directorate-Generals,  namely  in  the  Research  area,  have  defined  their  internal 
control  objective  multiannualy,  in  terms  of  the  residual  error  rate.  Also,  in  Cohesion  policy 
the Commission is foreseeing to perform an analysis of the residual error rate for the 2000-
2006 ERDF programming period based on audits to be carried out in 2012 and report results 
thereafter. 

2. 

OVERALL FINDINGS 

2.1. 

Accounts  

The  Commission  has  put  in  place  a  robust  accounting  system  that  has  for  the  last  3  years 
resulted  in  an  unqualified  opinion  on  the  reliability  of  the  accounts.  The  Commission 
continues to improve its methods, through actions such as the Accounting Quality project, so 
as to address the remarks of the Court and thus reduce the risk of mis-statements further. 

The existence of negative net assets is a consequence of the application of accrual accounting 
to an institution that is funded by an annual budget. Liabilities (such as pension entitlements 
and  amounts  due  under  the  EAGF)  are  recorded  in  the  accounts,  while,  under  the  EU 
accounting  rules,  guarantees  such  as  those  given  by  Member  States  to  meet  these  liabilities 
with appropriations in annual budgets, do not meet the definition of an asset and are therefore 

11 

COM(2011) 500 

EN 

6 

   EN 

 
                                                 
not recorded in the accounts as such, rather they are disclosed in the notes to the accounts. EU 
accounting  standards  follow  international  standards.  Departing  from  these  standards  would 
entail a qualification of the accounts by the Court. 

A thorough analysis was done in 2004 as regards the possibility to create a pension fund and 
the current solution was finally chosen and imbedded in the Staff Regulations. 

2.2. 

Legality and regularity 

The  Commission  considers  that  the  accountability  of  the  Member  States  and  the  assurance 
they provide to the Commission have been strengthened in the current legislation, through the 
establishment of an ex-ante approval procedure of the management and control systems and 
the  setting  up  of  programme  audit  authorities. The current Structural Fund Regulations also 
provide the Commission with tools to perform its supervisory role in case Member States do 
not respect their obligations. 

The  Commission's  proposal  for  the  triennial  revision  of  the  FR  includes  a  requirement  for 
annual management declarations of assurance, accompanied by an independent audit opinion 
thereon. The audit body will apply international standards and a methodology agreed by the 
Commission, be subject to controls from the Commission, and to the scrutiny of the European 
Court of Auditors later on. 

2.3.  Member State responsibility and transparency 

The  Commission  services  provide  in  their  AARs  their  assessment  of  the  Member  States' 
management and control systems and take into consideration the information provided by the 
Member  States  (including  among  others  in  the  Annual  Control  Reports  and  the  Annual 
Summaries)  when  issuing  their  management  declarations.  Under  the  existing  legislation  on 
access  to  documents,  the  decision  to  make  Annual  Summaries  public  lies  however  with  the 
Member States concerned as they are the authors of these documents. 

The  AARs  provide  for  2010  extensive  information  per  Member  State,  per  policy  area  and 
programming  period.  The  Commission  sets  up  in  the  Synthesis  Report  the  measures  it 
considers necessary to resolve substantial weaknesses identified. 

The cooperation between OLAF and the Structural Funds DGs has been reinforced12 and the 
Strategy document at this regard is assessed twice a year. The objective is to reinforce fraud 
risk  assessment,  to  provide  more  guidance  for  Member  States  in  fraud  prevention  and 
detection and to raise the level of fraud awareness in the services and in the Member States. 

2.4. 

Tolerable risk of error 

In the framework of the preparation of the new sectoral legislation for the 2014-2020 period, 
the Commission will provide in the legislative financial statements a description of the control 
system set up, an estimation on the cost and benefits of controls and the expected risk of non-
compliance with applicable rules. 

12 

with the updated 'Joint Fraud Prevention Strategy' adopted in July 2010 

EN 

7 

   EN 

 
                                                 
The concept of tolerable risk of error is meant as a managerial tool to measure effectiveness 
of controls. The Commission does however pursue a zero-tolerance approach to all cases of 
mismanagement and fraud. 

2.5. 

Commission's Internal Audit Service 

As part of its audit programme for 2011, the IAS has developed its practice of carrying out a 
certain number of performance audits, focussing on the effectiveness, efficiency and economy 
of  use  of  EU  resources.  The  Commission  agrees  to  invite  the  IAS  to  further  develop  these 
aspects in its future audit programmes 

2.6. 

Single audit 

The  Commission's  framework  fulfils  the  requirement  of  the  Court  that  there  is  'a  chain  of 
control procedures, with each level having specific defined objectives which take into account 
the work of the others'. The structures in place aim at avoiding unnecessary duplication, and 
do  not  put  into  question  the  Court's  role  as  external  auditor,  or  the  independence  of  other 
bodies outside the internal control framework such as SAIs reporting to national parliaments. 

2.7. 

Transparency 

The Commission considers that it is fulfilling the requirements of transparency as defined in 
Article  30  of  the  FR  and  the  Court  of  Justice  did  not  question  the  validity  of  the  FR.  The 
Commission  will  however  analyse  the  related  Court  judgements13  and  propose  to  the 
legislative  authority  the  provisions  considered  necessary  to  maintain  the  requested  level  of 
transparency. 

The  Commission  is  of  the  opinion  that  the  Synthesis  Report  is  not  the  right  instrument  to 
report  on  the  monitoring  of  the  follow-up  by  Member  States  of  their  obligations  to  publish 
data on beneficiaries in a timely manner. Such follow-up would best be annexed to the DG's 
AARs. 

2.8. 

Staff Regulations 

In  2011,  the  Commission  took  note  of  a  draft  proposal  amending  the  Staff  Regulations  that 
strikes a balance between the necessary drive for efficiency and the ability of the institutions 
to deliver their policies. This proposal complements the 2004 civil service reform. 

These  draft  proposals  provide  the  basis  for  discussions  with  staff  representatives.  A  formal 
Commission proposal should be submitted to the Council and the Parliament before the end of 
2011. 

3. 

SPECIFIC FINDINGS 

3.1. 

Agriculture and natural resources  

The  Commission  considers  that  the  reduction  in  the  error  rate  in  the  domain  of  Agriculture 
can already be considered as a trend. In this sense, an error rate which over the recent years is 

13 

Cases C-92/09 and C-93/09 

EN 

8 

   EN 

 
                                                 
close to 2% confirms the overall positive assessment of previous years. The Commission will 
of  course  continue  its  efforts  to  reduce  the  error  rate  for  agriculture  expenditure  below 
materiality,  in  particular  by  concentrating  efforts  in  areas  of  expenditure  with  a  higher 
incidence of errors, such as certain rural development measures. 

The Commission is on a continuing basis working, together with Member States, on further 
improving the functioning of the Integrated Administration and Control System (IACS) and 
the reliability of the Land Parcel Identification System (LPIS) therein. As of claim year 2010, 
Member States are required to perform an annual quality assessment of the LPIS and to report 
on the results. Whilst 2010 was the first year of application, this exercise has proved useful 
for  Member  States  as  regards  the  identification  of  areas  requiring  attention.  Any  remaining 
weaknesses  are  followed  up  through  conformity  clearance  procedures  to  protect  the  EU's 
financial interests. 

In  the  framework  of  the  reform  of  the  common  agricultural  policy  (CAP)  post-2013  the 
Commission will continue its efforts to further reduce the administrative burden and simplify 
the policy14. The issue of the active farmer definition will also be looked into in this context.  

For  the  DAS  2011  exercise,  the  Commission  will  propose  tripartite  meetings  with  the 
European  Court  of  Auditors  and  national  authorities  also  for  the  domain  of  Agriculture  and 
natural resources, when they are expected to facilitate the handling of individual DAS cases.  

3.2. 

Cohesion 

Multiannual  programmes  in  Cohesion  are  subject  to  different  layers  of  controls,  which  take 
effect  over  a  period  of  several  years.  An  annual  estimation  of  error,  though,  based  on 
payments related to a given financial year, may therefore reveal higher figures, since not all 
layers  of  control  have  yet  been  effective.  The  Commission  will  continue  to  rigorously 
exercise its supervisory role by ensuring that Member States address the deficiencies detected 
in their management and control systems and also by applying interruptions and suspensions 
of  payments,  as  well  as  financial  corrections  whenever  necessary.  The  Commission  is 
building on the annual audit opinions issued by the audit authorities and its own audit work. 
The Commission audits are focused on high risk programmes. 

The  AARs  and  figures  provided  to  the  European  Parliament  show  that  the  majority  of 
weaknesses  are  concentrated  on  few  Member  States.  Following  the  recommendation  of  and 
after  approval  by  the  Commission,  the  Member  States  put  in  place  national  remedial  action 
plans  aiming  at  improving  the  effectiveness  of  systems  and  remedying  the  causes  of  low 
performance for the programmes and Member States concerned. 

Regional  policy  has  been  particularly  concerned  by  irregularities  linked  to  incorrect 
application  of  public  procurement  rules.  The  Commission  is  taking  action  to  overcome 
identified  difficulties.  Under  the  Single  Market  Act  the  Commission  has  undertaken  to  put 
forward proposals for revision of the Directives by 2012 and simplification will be one of the 
principal drivers. Stakeholders will have opportunity to contribute to this process. 

For the 2007-2013 period the Commission has made a significant upfront investment in terms 
of  guidance,  training  and  support  to  the  Member  States.  It  will  maintain  its  efforts  in  this 

14 

See detailed reply number 15 in the attached Commission Staff Working Document regarding Council 
recommendations 

EN 

9 

   EN 

 
                                                 
respect,  and  best  practices  are  being  exchanged.  Technical  assistance  monies  are  also 
provided to Member States to develop their administrative capacity. 

The  Commission  calls  on  the  Member  States  to  already  demonstrate  their  commitment  to 
improving  accountability  by  reinforcing  where  necessary  control  measures,  in  particular  as 
regards  management  verifications  before  certifying  expenditure  to  the  Commission  and  by 
following  its  guidance  on  annual  summaries  to  make  them  a  valuable  additional  source  of 
assurance.  While  the  legal  base  for  the  annual  summaries  does  not  require  an  overall 
assurance statement, the Commission encourages all Member States to follow the example of 
those that in 2010 included assurance statements. 

The Commission has also detailed the measures taken in 2010-2011 for the detected high risk 
areas  and  programmes  and  envisaged  for  the  future  legal  framework,  in  reply  to  the  errors 
detected by the European Court of Auditors and by its own audits15. 

3.3. 

Research, energy, transport, economic and financial affairs and education and 
citizenship 

The  provisions  on  the  costs  eligible  for  funding  are  complex  and  the  audits  revealed  that 
differences of interpretation of these povisions caused most of the errors detected. 

The  impact  of  the  proposed  future  simplification  options  will  be  felt  mainly  in  the  next 
Framework Programme (FP). Until such proposals are implemented, for FP7 the Commission 
has addressed the problems caused by complex eligibility rules by adopting a Decision on 24 
January 201116 on three measures for simplifying the implementation of the FP, also related to 
research  funding  for  SMEs.  The  use  of  average  personnel  costs  by  beneficiaries  has  been 
facilitated  within  the  exisiting  legal  framework.  The  simplification  measures  introduced  are 
expected to further reduce the error rate. 

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. 

The Commission has devised a control strategy aimed to ensure the legality and regularity of 
expenditure on a multiannual basis for the detection of any errors that could not be identified 
before  making  the  payment.  This  is  achieved by  ex-post  auditing  and  rigorously  recovering 
any amount found to be overpaid to the audited beneficiaries, even for non-audited contracts 
whenever the extrapolation procedure is relevant and applicable. Further, the communication 
on the simplification of the recovery process in the framework of the implementation of the 
audit  strategy  adopted  on  15  December  2009  will  contribute  to  a  better  management  of 
outstanding recoverable amounts and to clarify eligibility criteria for taxes or charges related 
to  personnel  costs,  which  gave  rise  to  errors.  Also,  the  Commission  has  evaluated  the 
accountability and organisational structures of the community bodies set up to implement the 
FP7 in December 2010. 

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

15 
16 

SEC(2011)1179 final, 6.10.2011 
C(2011) 174 final, 24.1.2011 

EN 

10 

   EN 

 
                                                 
3.4. 

External  aid,  Development  and  Enlargement, 
Development Funds 

including  the  European 

As  regards  enlargement,  the  Commission  has  addressed  the  Court's  main  observations 
concerning  ex-ante  controls  and  cooperates  with  (potential)  candidate  countries  in  order  to 
improve management and control systems and to ensure that their practices are in conformity 
with Union standards. The Commission has compiled a coherent set of instructions providing 
guidance for the process of conferral of management. 

The efforts of the Commission for providing assistance in institutional knowledge are going 
on. It can be considered that there is steady progress to address corruption, conflicts of interest 
and  other  bad  practices  but  these  must  still  be  considered  to  be  a  problem.  The  legal 
framework  has  progressively  been  put  in  place  and  the  renewed  institutions  and  systems 
becoming operational. A culture of political accountability is emerging through recent judicial 
initiatives taken in the beneficiary countries. 

Concerning  humanitarian  aid,  the  Commission  is  increasing  the  monitoring  of  the  use  of 
humanitarian  procurement  centres  and  has  launched  a  working  group  on  the  assessment  of 
humanitarian  aid  proposals  in  February  2011.  It  is  harmonising  and  streamlining  the 
documentation of the assessment process and conclusions will be validated and implemented 
as from 1 January 2012. 

The methodology for ex-post controls has been completed by the Service for Foreign Policy 
Instruments (FPI) -successor of DG RELEX- for operational expenditure and will be further 
improved throughout 2011 based on experience gained. 

Finally, the issue of environmental integration will be given a high priority. 

As  regards  the  European  Development  Fund,  the  Commission  will  continue  to  provide 
extensive reporting on the results achieved and problems encountered in the implementation 
of its budget support operations. 

3.5. 

Comprehensive spending review 

In  the  context  of  the  preparation  of  the  2012  Budget,  the  Commission  proceeded  to  an 
exhaustive  examination  of  spending  programmes  to  identify  areas  for  redeployment.  As  a 
result, the Commission proposed substantial margins within the various expenditure ceilings 
in view of serving new political priorities. 

3.6. 

Requests to the Commission concerning the agencies 

The discussions within the Inter-Institutional Working Group on Agencies aim at improving 
agencies'  efficiency  and  effectiveness  overall  and  streamlining  the  general  governance 
structure within the agencies and in relation with the EU institutions. Its work is expected to 
be finalised by the end of 2011. Concerning a possible merging of the College of European 
Police  (CEPOL)  with  Europol,  the  Commission  will  present  the  outcome  of  its  impact 
assessment  in  the  course  of  2012,  in  accordance  with  the  principles  agreed  in  the  Working 
Group as regards considerations for merging. 

EN 

* * * 

11 

   EN