REPORT FROM THE COMMISSION Member States' Replies to the Court of Auditors' 2010 Annual Report
Date: 2012-02-27
Institutions: European Commission
Subjects: EU research policy, administrative expenditure (EU), common agricultural policy, common transport policy, development aid, economic and social cohesion, energy policy, financial management, fund (EU), implementation of the budget

EUROPEAN COMMISSION 

Brussels, 27.2.2012  
COM(2012) 80 final 

REPORT FROM THE COMMISSION 

Member States' Replies to the Court of Auditors' 2010 Annual Report 

{SWD(2012) 24 final} 

 
 
 
 
  
 
 TABLE OF CONTENTS 

1.  Scope of the Report .......................................................................................................... 2 

2.  Presentation of the Report and DAS 2010 Findings ..................................................... 2 

2.1 

 Presentation of the Court's 2010 report........................................................................ 2 

2.2  DAS 2010 findings for the policy groups........................................................................ 3 

3. 

Improvements  made    in  Shared  management  by  Member  States  -  Revenue    and 
Agriculture and Natural Resources................................................................................ 4 

3.1   Revenue ............................................................................................................................. 5 

3.2   Agriculture and natural resources.................................................................................. 5 

4. 

Improvements  made by Member States in shared management - Cohesion, energy 
and transport .................................................................................................................... 7 

4.1   Reinforced guidance and trainings................................................................................. 7 

4.2   Simplification.................................................................................................................... 9 

5.  Conclusion....................................................................................................................... 10 

 
 
REPORT FROM THE COMMISSION 

MEMBER STATES' REPLIES TO THE COURT OF AUDITORS' 2010 ANNUAL REPORT 

1. 

SCOPE OF THE REPORT 

The  Financial  Regulation  applicable  to  the  General  Budget  of  the  European  Union  
states  in  article  143(6)  that  as  soon  as  the  Court  of  Auditors  (the  Court)  has 
transmitted  the  Annual  Report,  the  Commission  shall  inform  the  Member  States 
concerned  immediately  of  the  details  of  that  report  which  relate  to  management  of 
the funds for which they are responsible, under the rules applicable. Member States 
should  reply  to  the  Commission  within  sixty  days  and  the  Commission  transmits  a 
summary  of  the  replies  to  the  Court  of  Auditors,  the  European  Parliament  and  the 
Council before 28 February1of the following year. 

Following  publication  on  10  November  2011  of  the  Court's  Annual  Report  for  the 
budgetary year 2010, the Commission duly informed Member States of details of the 
report.  This  information  was  presented  in  the  form  of  a  letter  and  three 
questionnaires  (presented  as  annexes)  which  Member  States  were  required  to 
complete : Annex I was a questionnaire on the paragraphs in the report referring to  
individual Member States; Annex II was a questionnaire on the audit findings which 
refer to each individual Member State and Annex III was a questionnaire on general 
findings related to the policies and programmes under shared management. 

This report is an analysis of the Member States' replies and is accompanied by a Staff 
Working Document (SWD) which comprises the Member States' replies to Annex I 
and Annex III. 

2. 

PRESENTATION OF THE REPORT AND DAS 2010 FINDINGS 

2.1 

PRESENTATION OF THE COURT'S 2010 REPORT 

In its 2010 report, the Court made further changes to the presentation. Firstly, there 
have been modifications to the policy groups and corresponding chapters, and a new 
chapter  on  performance  issues  (Chapter  8)  which  reflects  the  importance  of  the 
economy, efficiency and effectiveness of EU spending, has also been introduced. 

Secondly, the Court has further highlighted recommendations, by reporting in detail 
on the follow up to its previous recommendations for each policy group. Finally, the 
results of transaction testing have been reported with greater clarity and the estimated 
error  rates  for  each  policy  group,  as  well  as  for  the  budget  as  a  whole  have  been 
provided by the Court. 

Concerning  the  error  rates,  in  its  audit  methodology  for  DAS  year  2010,  the  Court 
has provided a clear definition of the terminology used: 

"The MLE (most likely error rate) is the weighted average of the percentage error 
rates found in the sample. The Court also estimates, again using standard statistical 

1 

   OJ L 390, 30/12/2006 - Financial Régulation Article 143.6 

2

 
 
                                                 
techniques, the range within which it is 95 % confident that the rate of error for the 
population lies in each specific assessment (and for spending as whole). This is the 
range between the lower error limit (LEL) and the upper error limit (UEL)2". 

Table 1 below provides details of the MLE, LEL, and UEL per chapter for the DAS 
year 2010. 

Table 1.2 - 2010 Summary of findings on regularity of transactions

Policy Group

Payments 
(million euro)

Most likely 
error (MLE)
(%)

Confidence interval
(%)

Lower error limit 
(LEL)

Upper error limit 
(UEL)

Frequency of 
errors(1)
(%)

Assessment of supervisory and 
control systems(2)

Agriculture and Natural Resources
Cohesion, Energy and Transport
External Aid, Development and Enlargement
Research and other Internal Policies
Administrative and other expenditure
Overall audited population

Revenue

55 990(3)
37 556(4)
6.543
8.953
9.264
118 306(5)

127.795

2,3
7,7
1,7
1,4
0,4
3,7

0,0

0,8

4,7
0,1
0,6
0,0
2,6

N/A

3,8

10,7
3,3
2,1
1,1
4,8

N/A

37
49
23
39
7
36

N/A

Partially effective
Partially effective
Partially effective
Partially effective
Effective
Partially effective

Effective

(1) The frequency of errors represents the proportion of the sample affected by quantifiable and non-quantifiable errors;
(2)

Systems are classified as 'partially effective' where some control arrangements have been judged to work adequately whilst others have not. Consequently, taken as a 
whole, they might not succeed in restricting errors in the underlying transactions to an acceptable level. For details see the section "Audit scope and approach" in Chapters 
2 to 7.

(3) Reimbursed expenditure (see paragraph 3.16). 
(4) Reimbursed expenditure (see paragraph 4.23).
(5) The difference between the payments in 2010 (122 231 million euro - see Table 1.1 ) and the total amount of the overall audited population in the context of the regularity 
of transactions corresponds to advances paid for the policy groups Agriculture and Natural Resources (851 million euro) and Cohesion, Energy and Transport (3 074 
million euro) (see paragraphs 3.16 and 4.23).

Source: ECA Report 2010 - Table 1. 2 Summary of findings on regularity of transactions p 18 

2.2 

DAS 2010 FINDINGS FOR THE POLICY GROUPS 

For  the  DAS  year  2010,  the  Court  found  that  the  accounts  presented  fairly  the 
financial  position  of  the  European  Union,  the  results  of  its  operations  and  its  cash 
flows and that they were free from material error. With regard to Revenue (Chapter 
2),  the  Court  also  noted  that  transactions  were  free  of  material  error  and  control 
systems  were  effective.  Commitments  in  all  policy  groups  were  also  free  from 
material error.3The Court concluded that payments for the policy area Administration 
and other expenditure (Chapter 7) were on the whole free of material error and that 
the systems were effective in ensuring the regularity of payments. 

For Research and internal policies (Chapter 6), as well as External aid, development 
and enlargement (Chapter 5), the Court's audit stated that the two policy areas were 
overall  free  of  material  error  and  that  control  systems  were  partially  effective  in 
ensuring  the  regularity  of  payments.  However,  for  Chapter  6,  the  Court  noted  that 
interim and final payments for the research FPs were subject to material error. Also 
in Chapter 5, interim and final payments were subject to material error4. 

In Cohesion, energy and transport (Chapter 4) and Agriculture and natural resources 
(Chapter  3),  the  Court  concluded  that  payments  were  materially  affected  by  error, 
although in the case of policy area Agriculture and natural resources, direct payments 
to farmers covered by the IACS5, were free from material error. In both policy areas 
the systems were partially effective6. 

    Annex 1.1, PART 2.13 

2  
3                 ECA Report 2010 1.11 p 17  
4                 ECA Report 2010 5.35 p 149 and 6.48 p 183  
5                 Integrated Administration and Control System 
6                 ECA Report 2010 1.13 p 17 

3

 
 
 
                                                 
Overall, as demonstrated in the Court's graph below, in the past five years the trend 
for the most likely error rate for the budget as a whole has been steadily downwards. 
However,  for  2010,  progress  in  a  number  of  domains  has  not  compensated  for  a 
moderate increase in Cohesion, thereby resulting in a small overall increase for the 
budget as a whole7.  

Graph 1.1 - Evolution of the Court's estimate of the most likely error rate for the 
audited population of payments (2006-2010)

10%

9%

8%

7%

6%

5%

4%

3%

2%

1%

0%

LEL

MLE

UEL

1

2

3

4

5

Source: ECA Report 2010 - Graph 1.1 Evolution of the Court's estimate of the most likely error rate 
for the audited population of payments (2006-2010) 

3. 

IMPROVEMENTS MADE  IN SHARED MANAGEMENT BY MEMBER STATES- REVENUE  
AND AGRICULTURE AND NATURAL RESOURCES. 

As  mentioned  in  the  introduction,  in  addition  to  the  letter,  the  Commission  duly 
provided each Member State with three annexes: Annex I was a questionnaire on the 
paragraphs in the report  referring to  the individual Member States; Annex II was a 
questionnaire  on  audit  findings  which  refer  to  the  individual  Member  State  and 
Annex III was a questionnaire on general findings related to shared management for 
DAS  2010.  For  Annexes  I  and  II,  the  Member  States  were  requested,  where 
necessary,  to  provide  details  of  actions  taken  to  rectify  the  errors  as  well  as  the 
timing, content and expected outcome. 

This section of the report provides an analysis of the replies given by Member States 
to Annex I and Annex II and also question 1 in Annex III which refers to policy area 
Agriculture and natural resources (Chapter 3). 

Generally  all  replies  from  Member  States  were  received  within  the  scheduled 
timeline,  and  although  the  quality  varied  considerably  from  one  Member  State  to 
another, in some cases replies were of a very high standard. In their replies this year, 
overall,  nearly  all  Member  States  reported  on  and  described  initiatives  for 
improvement  already  taken  or  to  be  taken  in  the  future.  They  also  indicated  their 

7                 ECA Report 2010 1.15-1.16 p 19 

4

 
 
 
                                                 
commitment  to  ensuring  sound  financial  management8.  Member  States  recognize 
their  responsibility  for  improvement  in  EU  fund  management  and  there  were 
proposals  for  a  more  transparent  discharge  procedure  suggesting,  for  instance,  that 
comprehensive  information  on  best  practices  at  Member  States'  level  could  be 
exchanged9. 

3.1  

REVENUE 

In  their  replies  to  the  Court's  specific  findings  in  policy  area  Revenue  (Chapter  2), 
Member States indicated that remedial actions had been taken when necessary. For 
example,  the  Court  identified  certain  weaknesses  in  the  procedures  and  systems 
which  affect  the  amounts  included  in  the  B  accounts  statements  in  three  countries-
UK, Italy and the Netherlands10.  The UK stated that its authorities had accepted the 
Court's  findings  and  that  each  specific  finding  had  been  addressed  and  the  Court 
informed accordingly. The UK authorities stated further that they have rectified the B 
Account  balance  and  established  new  procedures  and  guidance  to  prevent  a 
recurrence11. 

With  regard  to  VAT  based  own  resources,  according  to  the  Court's  report: 
"longstanding  reservations  still  exist  but  the  backlog  is  being  cleared12".  As  of 
31/12/2010  there  were  152  reservations  for  all  Member  States  compared  to  167  a 
year previously.  

Seventeen Member States summarised in varying levels of detail the actions they and 
the Commission were undertaking to lift reservations. Eight of these Member States13 
(Cyprus, Finland, Austria, the Czech Republic, Poland, Spain, Lithuania and Latvia) 
noted that as a result of the activity undertaken since 2010, at least one reservation 
has been dropped for their Member State. Denmark, Malta, Poland, Lithuania, Italy, 
Greece, France and Finland all looked forward to the lifting of further reservations, 
either as a result of inspections during 2011 or from those scheduled for 2012.  

3.2  

AGRICULTURE AND NATURAL RESOURCES 

In  policy  area  Agriculture  and  natural  resources  (Chapter  3),  the  Court  highlighted 
weaknesses  of  and  reported  findings  on  the  Land  Parcel  Identification  Scheme- 
(LPIS)14  -  a  database  in  which  all  the  agricultural  area  (reference  parcels)  of  the 
Member  State  is  recorded,  including  the  optional  use  of  ortho-photos15.  In  Spain 
(Castilla-La-Mancha  and  Extremadura)  Greece  and  Romania  the  Court  observed 
cases of permanent pasture land recorded in the LPIS as 100% eligible although they 
were only partially eligible. 

   SWD p 6-7 

   SWD Annex III Part B p 89 
   SWD Annex III Part B p 90 

8  
9  
10              SWD p 6 
11  
12              ECA Report 2010 2.22 p 49 
13              SWD p 11-21 
14              The Commission notes that most of the quantifiable errors found by the Court were relatively small in    
                financial terms and mainly concerned small differences in the re-measurement of parcels carried out by  
                 the Court (ECA Report 2010 3.19 p 78). 
15              ECA Report 2010 3.31 p 83 

5

 
 
                                                 
In all three cases the Member States concerned provided replies. Spain reported that 
there was currently an action plan in place to improve LPIS-GIS updating including a 
new methodology for establishing the eligibility coefficient of pasture land16. Greece 
indicated  that  there  were  measures  in  place  to  ensure  that  only  permanent  pasture 
land  was  eligible  for  payments17.  In  response  to  the  Court's  observations,  Romania 
replied  that  it  had  completed  an  action  plan  on  the  quality  of  LPIS.  In  addition,  it 
stated  that  APIA  -  Agricultural  Payments  and  Interventions  Agency  –  now  ensures 
that  non  agricultural  areas  are  not  included  in  the  LPIS  reference  area  and  the 
isolated cases identified are the result of errors in photo interpretation. According to 
APIA, "where payments are made unduly they are recovered using the procedure in 
force18". 

In  five  Member  States  -  Bulgaria,  Netherlands,  Greece,  Romania  and  Spain  -  the 
Court also identified specific weaknesses in keeping the LPIS up to date19.  Four of 
the five mentioned by the Court reported that updating the database was an integral 
part  of  their  maintenance  programme,  with  Greece  and  Romania  reporting  regular 
annual  updates20.  In  reply  to  a  question  in  Annex  III  of  the  questionnaire  on 
initiatives  taken  to  improve  the  management  and  control  systems  for  agricultural 
expenditure,  notably  in  the  area  of  Rural  Development,  other  Member  States 
highlighted  the  fact  that  improvements  in  LPIS  remained  a  priority.  Out  of  the  22 
countries which replied to the question, 13  outlined concrete examples of initiatives 
taken for LPIS improvements. These countries included Ireland, Italy, UK, Portugal, 
Luxembourg and Poland. 

In addition to improvements in the LPIS in several Member States, the majority of 
Member  States  replied  that  they  had  taken  initiatives  in  the  last  year  to  further 
improve  the  management  and  control  systems  for  agricultural  expenditure  and  to 
enhance  the  effectiveness  of  checks  carried  out,  notably  in  Rural  Development. 
These improvements included development and enhancement of various IT systems 
in many countries. Slovenia  for example stated that the Managing Authority for its 
Rural  Development  Programme  for  the  period  2007-2013  devised  the  electronic 
filing "e-PRP" pilot project for measure 121 - Modernisation of agricultural holdings 
in  2010  aimed  at  speeding  up  and  making  more  effective  the  management  of 
applications. Applicants now make fewer mistakes when preparing their applications 
electronically and consequently less time is spent carrying out administrative checks, 
which  in  turn  reduces  the  workload  of  the  paying  agency  while  ensuring  effective 
controls21.  Latvia  also  reported  improvements  in  IT  systems,  for  example  a  price 
catalogue  was  established  within  the  Rural  Development  Programme  Information 
System  in  order  to  help  compare  and  assess  prices  between  project  applications 
submitted22. 

   SWD p 31 

16  
17               SWD p 31-32 
18               SWD p 29 
19               ECA Report 2010 3.32 p 84 
20               SWD p 31-32 
21               SWD Annex III p 83-84 
22               SWD Annex III p 71-72 

6

 
 
                                                 
4. 

IMPROVEMENTS  MADE BY MEMBER STATES IN SHARED MANAGEMENT- COHESION, 
ENERGY AND TRANSPORT 

4.1  

REINFORCED GUIDANCE AND TRAINING 

Annex III of the questionnaire comprised mostly questions on Cohesion, energy and 
transport (Chapter 4) and this sub section of the report provides a detailed analysis of 
the Member States' replies to these questions. 

The  Court  noted  in  its  report  that  for  Policy  area  Cohesion,  energy  and  transport, 
Member States could have detected and corrected at least some of the errors (prior to 
certifying  the  expenditure  to  the  Commission)  for  58%  of  the  transactions  affected 
by error23. Member States were requested in Annex III to comment on this finding. 
Nearly  all  Member  States  commented  and  63%  of  Member  States  replied  that  the 
most efficient means of preventing irregularities from occurring was with reinforced 
guidance  to  beneficiaries.  Other  means  of  improvement  included  reinforced 
documentary  checks  and  increased  on  the  spot  verifications.  Further  suggestions 
offered  by  Member  States  included  simplification  and  clarification  of  rules  and 
regulations  at  both  national  and  EU  level  (see  section  4.1  on  Simplification  for  
further  analysis  of  simplification  as  proposed  by  Member  States).  The  table  below 
provides details of the number of Member States selecting a particular option. Some 
Member States chose more than one option and there was a majority preference for a 
combination  of  (a)  reinforced  guidance  to  beneficiaries  and  (b)  reinforced 
documentary checks. 

Q2 - Cohesion, Energy and Transport 

In  the  Cohesion  chapter  (§4.25),  the  Court  considers  that  sufficient  information  was 
available for the Member State authorities to have detected and corrected at least some 
of  the  errors  (prior  to  certifying  the  expenditure  to  the  Commission)  for  58%  of  the 
transaction affected by error. 

No.  of 
Member 
States 

% 
of 
Member 
States 

In your opinion, what can be done to improve the situation? 

(a) reinforce guidance to beneficiaries to prevent irregularities from occurring 

(b) reinforce documentary checks on claims submitted by beneficiaries 

(c) increase on-the-spot verifications on operations before certification 

(d) any other suggestions 

18 

15 

11 

7 

67% 

56% 

41% 

26% 

In Cohesion the Court also found that wholly ineligible projects and ineligible costs 
accounted for 35% and 33 % respectively of the estimated error rate for the Chapter. 
In  addition,  the  Court  also  noted  that  there  had  been  serious  failures  to  respect  EU 
and  national  procurement  rules  and  that  these  failures  accounted  for  22%  of  the 
estimated error rate24. 

23               ECA report 2010 Chapter 4.25 p 109 
24               ECA Report 2010 Chapter 4.20, 4.29, 4.26 p 107-109 

7

 
 
 
 
                                                 
Member  States  cited  training  programmes  as  the  single  best  means  of  addressing 
these key issues. In the case of wholly ineligible projects, 78% of the Member States 
stated  that  more  training  for  staff  in  national/regional/managing  authorities  and 
intermediate bodies was required and 56% of them underlined the necessity for the 
training to be targeted. 

In its reply, Ireland further highlighted the importance of the issue  by stating that the 
most efficient way to benefit from these training programmes would be by ensuring 
that  they  were:  ''targeted/tailored  at  the  various  levels  in  the  financial  management 
and  control  cascade  with  regular  follow-up  refresher  courses25".  In  addition, 
Germany underlined the challenges of the training issue by stating that ''covering all 
areas  in  training  and  guidance  where  infringements  are  possible  may  create 
considerable difficulties26". 

Similarly  for  ineligible  costs,  a  majority  of  Member  States  (78%)  highlighted  as  a 
solution, guidance and training at the level of beneficiaries. For public procurement, 
an  even  greater  number  of  countries  (81%)  selected  training  for  staff  of 
national/regional/managing authorities and intermediate bodies as the most effective 
means of improving the situation. 

Both Latvia and France stated that they are currently taking initiatives to complement 
the training already provided. 

Latvia stated in its reply that: ''the institutions involved in the administration of EU 
funds  work  with  the  Public  Procurement  Bureau  (PPB)  and  the  State  Treasury  in 
order to arrange regular training for the beneficiaries on procurement matters. From 
2012  on,  pre-procurement  verifications,  apart  from  the  PPB,  will  be  carried  out  by 
institution  (RI/CI),  reducing/preventing 
the  responsible 
infringements in the area of public procurement27". 

institution/cooperation 

France  proposed  that  starting  from  the  first  trimester  of  2012  training  programmes 
with  specific  themes  (e.g.  eligibility  and  expenditure)  will  be  organised  by  the 
French Interior Ministry. These training programmes will be made available to staff 
from both national and regional managing authorities28. 

In the Cohesion chapter the Court also highlights several weaknesses found in Audit 
Authorities in the Member States29. 

Member  States  demonstrated  a  clear  preference  for  two  improvement  measures  (1) 
the  use  of  detailed  checklists  which  cover  all  risks  to  the  regularity  of  expenditure 
and  (2)  specific  guidance  by the  Commission  on  the  scope  of  verifications  and  the 
extent of the audit checks to be undertaken, as well as the reporting of findings. The 
use  of  standard  sampling  methodology  and  re-structuring  of  training  for  the  audit 
authorities were welcomed by only 7% of Member States. 

Apart from the measures suggested in the questionnaire (Annex III) some additional 
comments  on  the  subject  were  also  provided  by  Member  States.  Some  Member 
States  expressed  concerns  with  regard  to  the  functioning  of  audit  authorities.  For 

25               SWD Annex III p 70-71 
26               SWD Annex III p 65-66 
27  
   SWD Annex III p 71-72 
28  
   SWD Annex III p 65 
29              ECA Report 4.38 p 115 

8

 
 
                                                 
example  in  its  reply,  Germany  highlighted  the  "exacting  requirements"  for  audit 
authorities, but stated that at the same time there were some areas of uncertainty e.g.: 
sampling for small populations. The German authorities concluded that:  

"the Commission should in particular work in partnership (with the audit authorities) 
and consider in more detail specific experiences of the audit authorities in terms of 
practice and context30". 

Lithuanian authorities highlighted the staffing issue as an area of weakness for their 
audit authorities and stated that what was required was the ''improvement of the level 
of  qualifications  of  the  audit  institution  and  application  of  appropriate  measures  to 
ensure lower staff turnover31''.  

France,  however,  confirmed  that  weakness  in  its  Audit  Authorities  was  not  a 
problematic issue32. 

4.2  

   SIMPLIFICATION 

initiatives  addressed  at  simplifying 

On the subject of simplification, a significant number of Member States has already 
introduced 
implementation  of  EU 
programmes  during  the  current  programming  period  2007-2013.  Estonia  and 
Portugal have both acknowledged the importance of simplification in the context of 
the  European  Social  Fund  (ESF).  Estonia  stated  that  ''twelve  different  rates  for  the 
reimbursement of expenditure from the ESF on the basis of standardised unit prices 
have  been  implemented  in  Estonia33".  Portugal  also  pointed  out  that  ''the  ESF 
Information System (SIIFSE) was a key instrument of simplification implemented in 
Portugal in this programming period34". 

the 

Most  countries  (20  in  total)  stated  that  the  greatest  potential  for  simplification  lay 
with EU rules rather than with national rules. Nonetheless, a significant number (11 
in  total)  agreed  that  there  was  also  potential  for  simplification  of  national  rules  as 
well.  Also,  as  indicated  in  their  replies  and  illustrated  in  the  graph  which  follows, 
most Member States would make at least minimal use of flat rates and lump sums. 

30  
   SWD Annex III p 65-66 
31              SWD Annex III p 76-77 
32              SWD Annex III p 65 
33  
   SWD Annex III p 64 
34              SWD Annex III p 79-81 

9

 
 
                                                 
Annex III (Question 7): Simplification - use of 
flat rates and lump sums

39%

c

11%

a

b

a - No

b - Yes, but
with
minimal
use
c - Yes,
extensive
or exclusive
use

50%

The  challenges  of  simplification  were  outlined  by  some  Member  States  in  their 
replies. For example, Ireland stated that: 

"A  main  part  of  any  simplification  for  management  and  beneficiaries  is  allowing 
the 
flexibility  where  possible.  Therefore,  all  simplification  proposals  from 
Commission rules should be optional and not mandatory. However, at Member State 
level a balance is required, as a more flexible approach to specific operations could 
be  a  simplification  to  the  beneficiaries  but,  potentially,  not  a  simplification  for 
management  because  a  higher  staff  management  resource  would  be  required  than 
setting general national rules35". 

5. 

CONCLUSION 

The results of the Court's 2010 Annual Report indicate encouragingly that the overall 
most likely error rate for all EU spending is below 4%. The results are particularly 
positive  for  policies  directly  managed  by  the  Commission.  Policy  areas  such  as 
Research and other internal policies, External Aid, development and enlargement as 
well as Administrative and other expenditure indicate continuous improvement. 

In  policy  area  Agriculture  and  natural  resources,  the  situation  remained  relatively 
stable  with  a  level  of  error  close  to  the  materiality  threshold  of  2%.  In  policy  area 
Cohesion, energy and transport, it is important to emphasise that the error rate was 
still  below  the  rates  for  DAS  years  2006  -  2008.  This  is  an  indication  that  the 
management and control systems in the policy area, although still partially effective, 
are working more efficiently for the current programming period, as compared to the 
previous period. 

Member States replies to the report indicate that there is a continuing trend towards 
improvement in the management of EU funds. They outlined several initiatives taken 

35             SWD Annex III p 70-71 

10

 
 
 
 
 
                                                 
and also stated their commitment to even further improvements. Simplification and 
training at all levels remain a top priority.  In addition, some Member States provided 
some  complementary  suggestions  with  regard  to  ensuring  efficient  management  of 
EU funds and a more transparent discharge procedure. 

11