COMMISSION STAFF WORKING DOCUMENT Accompanying the document REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL 5th FINANCIAL REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on the EUROPEAN AGRICULTURAL FUND FOR RURAL DEVELOPMENT (EAFRD) 2011 FINANCIAL YEAR
Date: 2012-09-26
Institutions: European Commission
Subjects: agricultural expenditure, aid to agriculture, budgetary control, commitment of expenditure, fund (EU), payment appropriation, rural development

EUROPEAN COMMISSION 

Brussels, 26.9.2012  
SWD(2012) 275 final 

COMMISSION STAFF WORKING DOCUMENT 
Accompanying the document 

REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND 
THE COUNCIL 

5th FINANCIAL REPORT FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT AND THE COUNCIL 
on the EUROPEAN AGRICULTURAL FUND FOR RURAL DEVELOPMENT 
(EAFRD) 
2011 FINANCIAL YEAR 

{COM(2012) 549 final} 

EN 

   EN 

 
 
 
  
 
TABLE OF CONTENTS 

COMMISSION STAFF WORKING DOCUMENT ................................................................. 4 

1. 

1.1. 

1.2. 

1.3. 

1.4. 

2. 

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

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

Draft Budget (DB) 2011............................................................................................... 5 

New Draft Budget (DB) 2011 ...................................................................................... 6 

The adoption of the 2011 Budget................................................................................. 6 

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

2.1. 

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

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

2.1.2.  Technical assistance ..................................................................................................... 7 

2.2. 

Management of payment appropriations...................................................................... 7 

2.2.1.  EAFRD operational programmes................................................................................. 7 

2.2.2.  Technical assistance ..................................................................................................... 8 

3. 

3.1. 

3.2. 

implementation of the 2011 EAFRD budget ............................................................... 8 

Introduction .................................................................................................................. 8 

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

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

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

3.3. 

Implementation of payment appropriations ............................................................... 10 

3.3.1.  EAFRD operational programmes............................................................................... 10 

3.3.2.  Technical assistance ................................................................................................... 15 

3.4. 

3.5. 

4. 

4.1. 

4.2. 

5. 

Analysis of expenditure declared by axis and by measure ........................................ 15 

Implementation of EAFRD programmes ................................................................... 17 

Control Measures ....................................................................................................... 20 

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

Integrated Administration and Control System (IACS)............................................. 21 

Clearance of accounts ................................................................................................ 22 

5.1. 

Financial clearance..................................................................................................... 22 

5.1.1. 

Introduction ................................................................................................................ 22 

EN 

2 

   EN 

 
5.1.2.  Financial clearance for financial year 2011 ............................................................... 22 

5.1.3.  Financial clearance for financial year 2010 ............................................................... 22 

5.1.4.  Financial clearance for financial year 2009 and before ............................................. 23 

5.2. 

Conformity clearance – audits and decisions adopted in 2011 .................................. 23 

5.2.1. 

Introduction ................................................................................................................ 23 

5.2.2.  Conformity clearance – audits and decisions adopted in 2010 .................................. 23 

5.3. 

5.4. 

6. 

6.1. 

6.2. 

6.3. 

6.4. 

Recoveries .................................................................................................................. 24 

Appeals brought before the Court of Justice against clearance decisions ................. 24 

Basic rules governing the EAFRD and amendments made in 2011 .......................... 25 

General ....................................................................................................................... 25 

Recent modifications.................................................................................................. 25 

Checks ........................................................................................................................ 26 

Clearance of accounts ................................................................................................ 27 

EN 

3 

   EN 

 
COMMISSION STAFF WORKING DOCUMENT 
Accompanying the document 

REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND 
THE COUNCIL 

5th FINANCIAL REPORT FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT AND THE COUNCIL 
on the EUROPEAN AGRICULTURAL FUND FOR RURAL DEVELOPMENT 
(EAFRD) 
2011 FINANCIAL YEAR 

1. 

BUDGET PROCEDURE 

1.1. 

Financial framework  

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

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

EN 

4 

   EN 

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

Table 1 

HEADING 2.  
Preservation and Management 
of Natural resources 

TOTAL a), b) 

of which : 

- Rural development a), c), d) 

- Market related expenditure and 
direct aids, c) 

2007 

2008 

2009 

2010 

2011 

2012 

2013 

(In EUR million current prices) 

55 143 

59 193 

56 333 

59 955 

60 338 

60 810 

61 289 

10 902 

13 303 

14 002 

14 364 

14 436 

14 617 

14 817 

44 753 

44 592 

44 887 

44 276 

44 467 

44 710 

44 939 

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

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

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

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

1.2. 

Draft Budget (DB) 2011 

The 2011 Draft Budget (DB) was adopted by the Commission and  proposed  to  the 
Budgetary Authority on 27 April 2010. 

The  Draft  Budget  for  the  European  Agricultural  Fund  for  Rural  Development 
(EAFRD) under heading 2 of the Financial Framework 2007-2013 totalled EUR 14 
431 million  in  commitment  appropriations  and  EUR  12  709  million  in  payment 
appropriations. 

Table 2 

Budget Item 

Commitment 
appropriations 
(in €)  

Payment 
appropriations 
(in €)  

05.040501 (Rural dev. programmes) 

14 408 211 311

12 700 000 000 

05.040502 (Technical assistance) 

22 440 241

8 900 000 

The Council adopted its position on the 2011 Draft Budget on 08.07.2010. Payment 
appropriations  for  EAFRD  programmes  were  reduced  by  EUR  98.0 million  as 

EN 

5 

   EN 

 
 
 
compared  to  the  Commission's  DB  while  commitmens  remained  unchanged.  The 
European  Parliament  adopted  its  position  on  13.10.2010  whereby  it  restored  the 
Commission's proposal by increasing payment appropriations by EUR 98.0 million. 
The  Conciliation  procedure  did  not  permit  to  reach  an  agreement  between  the  two 
institutions. 

1.3. 

New Draft Budget (DB) 2011 

2011 was the first time that the new annual budgetary procedure provided for by the 
Lisbon Treaty was applied. As a result of the divergent positions of the Council and 
the  European  Parliament  on  the  Commission's  draft  budget,  a  21-day  conciliation 
period  was  open.  Following  the  failure  of  the  Conciliation  Committee  to  reach  an 
agreement  by  15.11.2010  on  the  Budget  2011,  the  Commission  made  a  new  Draft 
Budget proposal on 26.11.2010. 

The  new  proposal  reduced  EAFRD  payment  appropriations  by  EUR  772.8  million 
compared to the intitial DB. 

1.4. 

The adoption of the 2011 Budget 

The  Budgetary  Authority  accepted  the  Commission's  new  Draft  Budget  which  was 
approved by the Parliament in a vote on 15 December 2010. The voted budget for the 
EAFRD amounted to EUR 14 431 million in commitment appropriations and EUR 
11 909 million in payment appropriations. 

Table 3 

Budget Item 

Commitment 
appropriations 
(in €)  

Payment 
appropriations 
(in €)  

05.040501 (Rural dev. programmes) 

14 408 211 311 

11 900 560 364 

05.040502 (Technical assistance) 

22 440 241 

8 339 763 

2. 

MANAGEMENT OF APPROPRIATIONS 

2.1.  Management of Commitment appropriations 

2.1.1.  EAFRD operational programmes 

In  2011  the  available  commitment  appropriations  amounted  in  total  to  EUR  14.41 
billion.  

The  total  amount  of  appropriaitons  available  for  EAFRD  programmes  in  2011  was 
committed (EUR 14.41 billion). 

EN 

6 

   EN 

 
Table 4 

Management of commitment appropriations in 2011 – 
EAFRD 

Appropriations at the beginning of 2011 

Carry-over from 2010 

Appropriations available in 2011 

Appropriations used in 2011 

2.1.2.  Technical assistance 

Budget Item 
05.040501 
(amounts in €)  

14 408 211 311 

- 

14 408 211 311 

14 408 211 311 

Article 69(2) of Council regulation (EC) No 1698/2005 stipulates that 0.25% of the 
resources for Community support to rural development shall be devoted to technical 
assistance  for  the  Commission.  In  the  2011  budget,  the  amount  available  for  this 
purpose was EUR 22.4 million. At the end of 2011, the total amount committed was 
EUR 5.4 million.  

2.2.  Management of payment appropriations 

2.2.1.  EAFRD operational programmes 

In 2011 payment appropriations amounted to EUR 11.9 billion of the voted Budget 
plus EUR 330 million of unused appropriations carried over from 2010. In view of 
the last declaration of expenditure submitted by Membe States in 2011, a surplus of 
EUR 433 million was identified in November. This amount was made available for 
other policies through Amending Budgets 6 and 7 (EUR 395 million and 38 million 
respectively). At the year end, the unused appropriations were EUR 34.4 million, of 
which EUR 30.5 million in relation to recoveries were automatically carried over to 
2012. 

The  total  amount  paid  to  Member  States  for  EAFRD  programmes  in  2011  reached 
EUR 11.8 billion. 

EN 

7 

   EN 

 
 
Table 5 

Management of payment appropriations in 2011 – 
EAFRD 

Appropriations at the beginning of 2011 

Carryover from 2010 

Amending budgets 6 and 7 

Recoveries (assigned revenue)  

Appropriations available in 2011 

Appropriations used in 2011 

Unused amounts at the end of 2011 

Automatic carry over (recoveries) at the end of 2011 

2.2.2.  Technical assistance 

Budget Item 

05.040501 
(amounts in €)  

11 900 560 364 

330 019 674 

-432 979 875 

30 866 483 

11 828 466 646 

11 794 000 249 

34 466 397 

30 544 548 

In  the  2011  budget,  the  amount  for  payment  appropriations  was  EUR  8.3  million. 
This amount was reduced by EUR 2.3 million through the global transfer. At the end 
of  the  year,  the  total  amount  of  payments  was  EUR  3.9  million,  leaving  EUR  2.1 
million unused. 

3. 

IMPLEMENTATION OF THE 2011 EAFRD BUDGET 

3.1. 

Introduction 

Financial year 2011 mostly represented a consolidation period with almost all rural 
development programmes at cruising speed. However, this was an uneven situation 
as several programmes showed implementation difficulties apparently because of the 
impact of the economic and financial crisis.. 

3.2. 

Implementation of commitment appropriations 

3.2.1.  EAFRD operational programmes 

Table 6 shows the amounts committed per Member State in 2011 and the allocation 
established  by  Commission  decision  2006/636/EC  (modification  of  April  2010  still 
in force in 2011). 

In  2011,  the  commitment  appropriations  available  for  EAFRD  programmes,  EUR 
14.41 billion, coincide with the annual allocation as there was no carryover from the 
previous year. All the available appropriations were committed (EUR 14.41 billion). 

EN 

8 

   EN 

 
 
Table 6 

Commission Decision 2006/636/EC (version in force) vs. the amounts 
committed end of 2011: 

Budget item: 05.040501 

(in €) 

Commission Decision 
2006/636/EC – EU 
funds 2011 
(a) 

Amounts carried 
over for commitment 
in 2011  
(b) 

Amounts committed 
in the budget year 
2011  
(c=a+b) 

556 070 574 
73 167 519 
398 058 913 
22 402 714 
406 640 636 
1 365 559 200 
91 231 467 
104 639 066 
1 227 613 000 
298 490 092 
1 169 090 147 
665 568 186 
547 603 625 
351 698 528 
1 403 606 589 
248 002 433 
13 287 289 
148 781 700 
10 347 884 
90 406 648 
1 860 573 543 
582 642 601 
1 357 854 634 
278 775 513 
124 076 091 
263 028 387 
748 994 332 
14 408 211 311 

- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 

556 070 574 
73 167 519 
398 058 913 
22 402 714 
406 640 636 
1 365 559 200 
91 231 467 
104 639 066 
1 227 613 000 
298 490 092 
1 169 090 147 
665 568 186 
547 603 625 
351 698 528 
1 403 606 589 
248 002 433 
13 287 289 
148 781 700 
10 347 884 
90 406 648 
1 860 573 543 
582 642 601 
1 357 854 634 
278 775 513 
124 076 091 
263 028 387 
748 994 332 
14 408 211 311 

MS 

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

3.2.2.  Technical assistance 

Table 7 shows the commitment appropriations for technical assistance consumed in 
2011.  The  most  important  part  is  related  to  European  Network  for  Rural 
Development. 

EN 

9 

   EN 

 
  
  
 
Table 7 

Technical assistance – Implementation of commitment 
appropriations 

Budget Item: 05.040502 

 (in €) 

Description 

 Amount committed  

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

Thematic working groups ENRD 

Information technology 

Studies 

Experts committee on the evaluation of 
rural development programmes 

Publications 

Total 

4 201 627 

360 000 

302 940 

188 300 

200 000 

97 844 

5 350 711 

3.3. 

Implementation of payment appropriations 

3.3.1.  EAFRD operational programmes 

the 

the 

2011 

budget 

In 
appropriations  was  
EUR  11.9  billion.  This  initial  amount  increased  with  a  carryover  and  assigned 
revenue from recoveries by respectively EUR 330 million and EUR 31 million, while 
Amending  Budgets  6  and  7  reduced  it  by  EUR  433  million.  Hence,  the 
appropriations of the year finally amounted to EUR 11.8 billion. 

payment 

amount 

for 

At  the  end  of  2011,  the  total  amount  paid  for  EAFRD  programmes  was  
EUR  11.79  billion.  Payments  made  in  2011  increased  more  than  6%  compared  to 
2010. 

EN 

10 

   EN 

 
 
The  table  below  shows  the  breakdown  of  payments  made  in  2011  by  declaration 
period : 

Table 8 

Payments 2010 – EAFRD operational programmes million € 

Reimbursement of payment claims Q3 2010 
Reimbursement of payment claims Q4 2010 
Reimbursement of payment claims Q1 2011 
Reimbursement of payment claims Q2 2011 
Reimbursement of payment claims Q3 2011 
Total 2010 

72.44 
3 969.73 
2 270.04 
2 184.26 
3 297.53 
11 794.00 

The  reimbursement  of  3rd  quarter  2011  for  4  EAFRD  programmes  was  totally  or 
partiality  on  hold  at  the  end  of  the  year  because  the  outstanding  commitment 
appropriations  for  these  programmes  were  fully  exhausted  by  the  payment  of 
previous  claims.  The  payment  had  to  wait  until  the  annual  commitments  for  2012 
were  made.  Table  9  shows  the  4  EAFRD  programmes  concerned  and  the 
corresponding amounts.  

Table 9 

EAFRD Programs– Nº CCI 

Q2 2011
(in €) 

Q3 2011
(in €) 

Total 

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

238 128 14 772 928 15 011 056
1 870 550
1 870 550
3 625 235
3 625 235
1 000 617
1 000 617
238 128 21 269 330 21 319 620

EN 

11 

   EN 

 
 
 
The  monthly  consumption  of  payment  appropriations  during  the  year  (January  to 
December  2011)  is  represented  in  the  graph  below.  The  rhythm  of  consumption  is 
linked  to  the  calendar  for  sending  the  four  payment  declarations  (31  January,  30 
April, 31 July and 10 November for the payment claims corresponding respectively 
to  Q4  2010,  Q1  2011,  Q2  2011  and  Q3  2011)  in  accordance  to  article  16(2)  of 
Regulation (EC) No 883/2006. 

Graph 1 

Amounts paid (in Million €)

EAFRD - Monthly consumption of payment appropriations during 2011 
(in millions €)

4 000,0

3 500,0

3 000,0

2 500,0

2 000,0

1 500,0

1 000,0

500,0

0,0

3644

1829

1935

2191

1114

90

305

0

441

190

54

0

01-2011

02-2011

03-2011

04-2011

05-2011

06-2011

07-2011

08-2011

09-2011

10-2011

11-2011

12-2011

The breakdown per Member State and per declaration period of the amounts paid by 
the Commission in budget year 2011 is shown in table 10. The amounts from column 
Q3  2010  relate  to  the  EAFRD  programmes  that  exhausted  their  commitment 
appropriations for 2010 and had to wait until 2011 to have their amounts reimbursed 
with the 2011 commitment appropriations. 

EN 

12 

   EN 

 
Table 10 

Payments effectively made between 01/01/2011 and 31/12/2011 

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

Q3 2010 

6 655 665 

29 517 043 

32 730 873 
990 232 

262 045 

2 280 860 

72 436 718 

Q4 2010 
415 520 171 
20 205 051 
31 127 912 
808 015 
134 278 841 
499 934 389 
18 495 694 
14 950 290 
351 338 439 
71 295 302 
191 982 200 
135 376 823 
101 803 302 
127 976 742 
544 420 549 
95 153 270 
4 422 746 
50 597 292 
814 311 
25 772 466 
501 922 071 
105 970 964 
117 074 704 
82 331 109 
40 363 416 
145 712 107 
140 080 274 
3 969 728 448 

Q1 2011 
79 421 389 
9 304 872 
36 560 060 
4 586 345 
183 214 787 
148 213 403 
11 236 246 
55 551 590 
168 599 414 
17 200 587 
106 491 239 
40 730 996 
153 963 033 
57 099 836 
176 085 598 
57 452 452 
5 452 242 
33 825 961 
3 045 772 
3 367 208 
423 762 728 
81 218 413 
113 205 528 
36 841 843 
17 279 226 
62 562 117 
183 770 831 
2 270 043 718 

Q2 2011 
37 383 559 
28 334 942 
27 906 988 
7 789 936 
80 002 343 
92 909 203 
10 317 646 
16 363 799 
191 438 702 
12 689 302 
122 960 384 
169 596 687 
112 292 708 
24 422 704 
167 769 673 
49 102 237 
1 953 947 
35 182 165 
1 277 842 
11 878 089 
464 420 777 
82 631 901 
134 899 503 
25 829 260 
38 024 200 
82 828 784 
154 052 762 
2 184 260 043 

Q3 2011 
28 180 052 
10 408 934 
27 667 619 
4 777 720 
50 653 503 
382 397 129 
9 944 567 
20 034 250 
269 634 563 
181 292 899 
319 238 557 
68 627 549 
64 626 120 
105 860 433 
213 875 222 
47 008 321 
1 196 309 
40 239 987 
2 234 075 
14 764 135 
362 996 136 
218 386 715 
529 743 309 
131 257 713 
13 864 277 
54 794 821 
123 826 408 
3 297 531 322 

(in €) 

Grand Total 

560 505 171 
74 909 464 
123 262 579 
17 962 016 
448 149 474 
1 152 971 166 
49 994 154 
106 899 928 
981 011 118 
282 478 090 
740 672 381 
414 332 054 
432 685 163 
348 090 588 
1 103 141 274 
248 716 280 
13 287 289 
159 845 406 
7 372 000 
55 781 898 
1 753 101 711 
488 207 992 
894 923 044 
276 259 926 
111 811 978 
345 897 828 
601 730 275 
11 794 000 249 

The total amount paid in 2011 EUR 11.79 billion relates to reimbursements only. No 
advances were paid in 2011.  

Table 11 in the next page compares, for each Member State, the EAFRD payments 
made in 2011 with the payments in 2010. The total payments increased by 6% (EUR 
11.79 billion vs. 11.12 billion). 

EN 

13 

   EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table 11 

Payments made to Member States - Comparison 2011 vs 2010  

(in €) 

Difference 2011 vs. 2010 

(in €) 

(in %) 

MS 

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

UK 
Total 

2010 

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

581 822 242 
65 783 043 
275 520 008 
16 165 873 
438 345 322 
1 062 399 173 
51 099 659 
92 516 971 
807 508 885 
287 003 048 
790 758 986 
404 639 436 
451 494 772 
370 374 432 
615 587 478 
240 086 941 
15 604 016 
156 840 158 
17 108 384 
65 410 394 
1 428 215 650 
447 149 827 
753 363 627 
285 271 358 
111 415 753 
375 746 953 
507 798 938 

Total 
589 809 662 
70 604 223 
277 840 508 
16 308 673 
441 285 322 
1 130 101 633 
60 427 719 
93 152 431 
866 250 085 
292 259 068 
870 736 226 
418 564 116 
455 292 132 
381 198 252 
664 151 518 
241 657 321 
15 948 416 
157 768 358 
17 179 784 
72 877 714 
1 440 037 950 
456 228 687 
760 482 207 
294 190 338 
112 516 573 
377 671 253 
541 640 158 

Interim payments 

560 505 171 
74 909 464 
123 262 579 
17 962 016 
448 149 474 
1 152 971 166 
49 994 154 
106 899 928 
981 011 118 
282 478 090 
740 672 381 
414 332 054 
432 685 163 
348 090 588 
1 103 141 274 
248 716 280 
13 287 289 
159 845 406 
7 372 000 
55 781 898 
1 753 101 711 
488 207 992 
894 923 044 
276 259 926 
111 811 978 
345 897 828 
601 730 275 

2011 

Prefinancing 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 

Total 
560 505 171 
74 909 464 
123 262 579 
17 962 016 
448 149 474 
1 152 971 166 
49 994 154 
106 899 928 
981 011 118 
282 478 090 
740 672 381 
414 332 054 
432 685 163 
348 090 588 
1 103 141 274 
248 716 280 
13 287 289 
159 845 406 
7 372 000 
55 781 898 
1 753 101 711 
488 207 992 
894 923 044 
276 259 926 
111 811 978 
345 897 828 
601 730 275 

-29 304 491 
4 305 241 
-154 577 929 
1 653 343 
6 864 152 
22 869 533 
-10 433 565 
13 747 497 
114 761 033 
-9 780 978 
-130 063 845 
-4 232 062 
-22 606 969 
-33 107 664 
438 989 756 
7 058 959 
-2 661 127 
2 077 048 
-9 807 784 
-17 095 816 
313 063 761 
31 979 305 
134 440 837 
-17 930 412 
-704 595 
-31 773 425 
60 090 117 

10 715 031 327 

401 149 000 

11 116 180 327 

11 794 000 249 

- 

11 794 000 249 

677 819 922 

-5,0% 
6,1% 
-55,6% 
10,1% 
1,6% 
2,0% 
-17,3% 
14,8% 
13,2% 
-3,3% 
-14,9% 
-1,0% 
-5,0% 
-8,7% 
66,1% 
2,9% 
-16,7% 
1,3% 
-57,1% 
-23,5% 
21,7% 
7,0% 
17,7% 
-6,1% 
-0,6% 
-8,4% 
11,1% 

6,1% 

EN 

14 

EN 

 
  
 
  
  
  
3.3.2.  Technical assistance 

In  the  2011  budget  the  amount  for  payment  appropriations  was  €  8.3  million.  The 
table  hereafter  presents  the  payments  for  technical  assistance  for  a  total  amount  of 
EUR 3.9 million. The most important part is related to European Network for Rural 
Development. 

Table 12 

Technical assistance – Implementation of payment 
appropriations 

Budget Item: 05.040502 

(in €) 

Description 

Amount paid  

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

Thematic working groups ENRD 

Information technology 

Experts committee on the evaluation of 
rural development programmes 

Publications 

Total 

3 449 516 

166 690 

159 739 

37 009 

100 809 

3 913 763 

3.4. 

Analysis of expenditure declared by axis and by measure 

Table 13 shows the payment claims declared by Member state and by axis/measure 
for  rural  development  in  2011  (Q4  2010  to  Q3  2011),  the  cumulative  declared 
expenditure from 2007 to 2011 (Q4 2006 to Q3 2011) and also the financial plans of 
EAFRD programmes (2007-2013; EU27). 

In 2011, the expenditure continues to be concentrated in axis 2 (47.9%), followed by 
axis  1  with  31.7%,  axis  3  with  14.6%  and  axis  4  with  4.3%.  This  repartition  of 
expenditure still diverges somewhat with the repartition in the financial plans for the 
2007-2013  programming  period  (33.6%,  44.4%,  13.3%  and  6%  for  axis  1  to  4 
respectively).  

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

longer  proceedings  for 

that  require 

Compared with the average for the first 4 years (2007-2010), the expenditure in 2011 
is  more  balanced  among  axes  and  the  share  of  each  axis  tends  to  get  closer  to  the 
share  in  the  financial  plans.  For  instance,  Axis  2  decreases  from  50.9%  in  2010  to 
47.9% in 2011 while Axis 3 and 4 increase from 9.1% and 2.5% in 2010 to 14.6% 
and 4.3% in 2011 respectively. 

EN 

15 

   EN 

 
 
Table 13 

EAFRD declared expenditure 2011 (Q4 2010-Q3 2011) & Total cumulative expenditure (Q4 2006 to Q3 2011)  
compared with Financial Plans* 

Declared expenditure 
2011 (Q4 2010 to Q3 
2011) 

Cumulative declared 
expenditure (Q4 2006 to 
Q3 2011) 

(%) 

 (million €) 

(%) 

Financial Plans 2007-2013 
 (million 
€) 

(%) 

EAFRD Axis / Measure 

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

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

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

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

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

 (million 
€) 
105,3 
474,3 
331,6 
18,6 
6,6 
1 502,4 
41,2 
634,0 
21,7 
435,4 
79,1 
5,0 
15,4 
13,9 
81,1 
25,1 
0,6 
68,4 
3 859,5 
997,0 
1 056,2 
29,8 
3 077,0 
64,8 
69,3 
192,5 
0,0 
28,3 
4,9 
7,3 
235,5 
72,0 
5 834,5 
173,8 
223,9 
97,7 
451,1 
661,6 
144,9 
13,0 
16,4 
1 782,4 
27,0 
3,5 
340,3 
9,1 
143,9 
523,8 

175,1  
-0,3 
12 175,0 

0,9% 
3,9% 
2,7% 
0,2% 
0,1% 
12,3% 
0,3% 
5,2% 
0,2% 
3,6% 
0,6% 
0,0% 
0,1% 
0,1% 
0,7% 
0,2% 
0,0% 
0,6% 
31,7% 
8,2% 
8,7% 
0,2% 
25,3% 
0,5% 
0,6% 
1,6% 
0,0% 
0,2% 
0,0% 
0,1% 
1,9% 
0,6% 
47,9% 
1,4% 
1,8% 
0,8% 
3,7% 
5,4% 
1,2% 
0,1% 
0,1% 
14,6% 
0,2% 
0,0% 
2,8% 
0,1% 
1,2% 
4,3% 
1,4% 
0,0% 
100,0% 

261,8  
1 312,4  
1 371,7  
38,3  
10,6  
5 040,4  
121,3  
1 649,9  
39,6  
1 189,3  
184,0  
49,9  
31,9  
26,9  
472,0  
81,3  
2,3  
68,4  
11 952,1 
4 160,9  
4 325,5  
85,5  
12 030,1  
207,9  
124,0  
829,1  
0,0  
65,5  
11,9  
20,3  
559,1  
185,5  
22 605,4  
339,0  
373,7  
225,3  
771,5  
1 148,8  
339,7  
29,9  
51,7  
3 279,6  
53,4  
5,8  
552,8  
12,4  
265,4  
889,8  

463,0  
437,8  
39 627,8  

0,7% 
3,3% 
3,5% 
0,1% 
0,0% 
12,7% 
0,3% 
4,2% 
0,1% 
3,0% 
0,5% 
0,1% 
0,1% 
0,1% 
1,2% 
0,2% 
0,0% 
0,2% 
30,2% 

10,5% 
10,9% 
0,2% 
30,4% 
0,5% 
0,3% 
2,1% 
0,0% 
0,2% 
0,0% 
0,1% 
1,4% 
0,5% 
57,0% 
0,9% 
0,9% 
0,6% 
1,9% 
2,9% 
0,9% 
0,1% 
0,1% 
8,3% 
0,1% 
0,0% 
1,4% 
0,0% 
0,7% 
2,2% 
1,2% 
1,1% 
100,0% 

1 023,3 
2 809,5 
2 600,7 
355,5 
94,5 
11 117,4 
596,7 
5 634,5 
333,5 
4 999,6 
477,6 
81,0 
237,4 
192,7 
966,1 
323,5 
131,8 
186,7 
32 162,1 
6 247,3  
7 242,9  
456,7  
22 537,0  
547,4  
576,1  
2 194,8  
18,7  
330,6  
98,4  
227,0  
1 660,2  
758,4  
42 895,5 
1 388,5  
2 070,1  
1 222,4  
3 210,4  
3 252,1  
1 375,4  
131,7  
147,5  
12 798,1 
500,8 
162,3 
3 927,1 
278,0 
970,2 
5 838,3 
1 904,1  
645,6  
96 243,8 

1,1% 
2,9% 
2,7% 
0,4% 
0,1% 
11,6% 
0,6% 
5,9% 
0,3% 
5,2% 
0,5% 
0,1% 
0,2% 
0,2% 
1,0% 
0,3% 
0,1% 
0,2% 

33,4% 

6,5% 
7,5% 
0,5% 
23,4% 
0,6% 
0,6% 
2,3% 
0,0% 
0,3% 
0,1% 
0,2% 
1,7% 
0,8% 
44,6% 
1,4% 
2,2% 
1,3% 
3,3% 
3,4% 
1,4% 
0,1% 
0,2% 
13,3% 
0,5% 
0,2% 
4,1% 
0,3% 
1,0% 
6,1% 
2,0% 
0,7% 
100,0% 

* Amount of 419 228,61 € was effectively decommitted for Portugal end of 2011 . 

EN 

16 

   EN 

 
  
3.5. 

Implementation of EAFRD programmes 

Graph  1  on  the  next  page  presents  the  financial  implementation  rate  of  rural 
development  programmes  (from  the  beginning  to  2011,  including  Q4  2011) 
compared  with  the  2007-2011  appropriations.  The  average  EAFRD  financial 
implementation rate for all EAFRD programmes is 74.7%. 

Graph 1 shows that most Member States have absorbed more than 65% of the 2007-
2011 appropriations. 

The ranking would be sligtly different in terms of absortion rate, i.e. payments made 
from the beginning to 2011 (including Q4 2011) compared with the total 2007-2013 
allocation  to  be  paid  until  end  of  2015.  The  average  absortion  rate  for  all  EAFRD 
programmes is 51.9%. 

Graph  2  reflects  the  absortion  rate  per  Member  State.  Up  to  2011,  most  Member 
States have absorbed more than 45% of their 2007-2013 allocation. 

EN 

17 

   EN 

 
Graph 1- Financial implementation rate of RD programmes by Member State *
 (% of the EAFRD 2007-2011 payments, including payment claims Q4 2011, compared with 2007-2011 commitments)

60% 61%

64%

66% 67% 68% 68% 69% 69% 70%

77% 77% 78% 78% 79%

73%

107% 107%

103%

98%

88% 89% 89%

84%

92%

94%

1
1
0
2
-
7
0
0
2
n
o
i
t
u
b
i
r
t
n
o
c
D
R
F
A
E

f
o

%

100%

50%

46%

0%

G
B

O
R

T
I

Y
C

T
M

R
G

S
E

L
P

L
N

T
P

U
H

K
U

E
E

I

K S
D

T
L

V
L

E
D

R
F

Z
C

E
S

I
F

T
A

K
S

E
B

U
L

E
I

* - Payment claims Q4 2011 are included in the graph as they are paid in early 2012.

EN 

18 

EN 

 
  
 
 
 
 
 
Graph 2- Absorption rate of RD programmes by Member State *
 (% of the EAFRD 2007-2011 payments, including payment claims Q4 2011, compared with 2007-2013 allocation)

1
1
0
2
-
7
0
0
2
n
o
i
t
u
b
i
r
t
n
o
c
D
R
F
A
E

f
o
%

100%

50%

0%

46% 47% 47% 48% 49% 49% 49% 50% 50%

56% 57% 58% 58% 59%

53%

40% 42%

44%

32%

67% 69% 69% 70%

63% 64%

77% 77%

G
B

O
R

T
I

R
G

L
N

S
E

Y
C

T
M

U
H

T
P

L
P

K
U

K
D

E
E

T
L

V
L

E
D

I
S

R
F

Z
C

E
S

I
F

T
A

K
S

E
B

E
I

U
L

* - Payment claims Q4 2011 are included in the graph as they are paid in early 2012.

EN 

19 

EN 

 
  
 
 
 
 
4. 

CONTROL MEASURES 

4.1. 

Introduction 

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

(a) 

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

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

(c) 

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

(d) 

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

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

Council Regulation (EC) No 1698/20054, as amended, contains the rules on support 
for  rural  development  by  EAFRD;  Commission  Regulations  (EC)  No  1974/20065 
and  (EU)  No  65/20116,  as  amended,  lay  down  the  rules  for  the  application  and 
control of rural development support measures. 

1 
2 
3 
4 
5 
6 

OJ L 209, 11.08.2005, p. 1 
OJ L 171, 23.6.2006, p. 90–110 
OJ L 143, 3.6.2008, p. 1–9 
OJ L277, 21.10.2005, p.1 
OJ L368, 23.12.2006, p.15 
OJ L 25, 28.01.2011 p.8-23 

EN 

20 

   EN 

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

4.2. 

Integrated Administration and Control System (IACS) 

Council  Regulation  (EC)  No  73/20097  and  Commission  Regulation  (EC)  No 
1122/20098  which  contain  the  rules  on  the  IACS  are  also  applicable  to  rural 
development  support  under  Axis  2  as  far  as  area-  and  animal-related  measures  are 
concerned. 

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

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

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

For the financial year 2011, the IACS covers around 44.9% of payments made under 
the EAFRD for measures including inter alia, agri-environment and animal welfare 
measures,  less-favoured  areas  and  areas  with  environmental  restrictions  and 
afforestation of agricultural land. 

The Commission services verify the effectiveness of Member States' IACS by means 
of  both  on-the-spot  auditing  and  general  supervision  based  on  annually  supplied 
financial and statistical data. The Commission continues to consider that the IACS is 
generally  an  effective  control  system  for  limiting  the  risk  of  error  or  irregular 
expenditure, provided that it is properly applied. 

7 
8 

OJ L30, 31.1.2009, p. 16 
OJ L 316, 2.12.2009, p.65 

EN 

21 

   EN 

 
                                                 
5. 

CLEARANCE OF ACCOUNTS 

5.1. 

Financial clearance  

5.1.1. 

Introduction 

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

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

5.1.2.  Financial clearance for financial year 2011 

In April 2012, the Commission adopted a decision clearing the 2011 annual accounts 
for EAFRD. In this decision, the accounts of 9 paying agencies have been excluded 
and will be subject to a further review, and a subsequent clearance decision when the 
specific  issues  communicated  by  the  Commission  services  in  the  letter  sent  to  the 
Member  States  (according  to  Article  10(3)  of  Regulation  (EC)  No  885/2006)  have 
been resolved. The paying agencies for which the accounts are disjoined are: Baden-
Württemberg, Bayern, Rheinland-Pfalz and Thüringen (Germany), ODARC and ASP 
(France), PARDF (Romania), Andalucia (Spain) and SGRPID (United Kingdom). 

This decision cleared an amount of EUR 9.627 million and disjoined an amount of 
EUR  2.551  million  until  a  later  Decision.  The  net  financial  impact  resulted  in  a 
payment of EUR 4,3 million to the Member States.  

5.1.3.  Financial clearance for financial year 2010 

In  January  2012,  the  Commission  adopted  one  further  decision  clearing  the  2010 
annual accounts of 4 Paying Agencies, which had were initially disjoined, in respect 
of  their  expenditure  funded  by  the  European  Agricultural  Fund  for  Rural 
Development (EAFRD).  

By  means  of  this  decision,  a  total  amount  of  EUR  370  million  was  cleared  for  the 
EAFRD financial year 2010. (3% of the total annual expenditure) The net financial 
impact  of  this  decision  resulted  in  a  payment  of  EUR  0,5  million  to  the  Member 
State. 

The  four  remaining  paying  agencies  for  which  the  2010  EAFRD  accounts  are  still 
outstanding  are  Région  Wallonne  (Belgium),  ARBEA  (Italy),  Ministry  of 
Agriculture (Luxembourg) and APA (Slovakia). Corresponding conformity enquiries 

EN 

22 

   EN 

 
are being further pursued. The total amount concerned is EUR 439 million (4 % of 
total expenditure for the financial year in question). 

5.1.4.  Financial clearance for financial year 2009 and before 

In April 2011, the Commission adopted one further decision clearing the remaining 
disjoined accounts for the financial year 2009. 

Concerning  the  financial  year  2008,  further  clearance  decisions  were  adopted  in 
February  2011  and  in  February  2012  clearing  all  remaining  disjoined  accounts  for 
the financial year, except of one. The remaining paying agency for which the 2008 
EAFRD  accounts  are  currently  still  outstanding  is  OPEKEPE  (Greece).  The  total 
amount concerned is EUR 224 million for EAFRD (3,7% of the total expenditure for 
the financial year in question). 

These accounts will be cleared in the course of 2012. 

5.2. 

Conformity clearance – audits and decisions adopted in 2011 

5.2.1. 

Introduction 

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

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

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

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

5.2.2.  Conformity clearance – audits and decisions adopted in 2010 

Audits 

EN 

23 

   EN 

 
In 2011, 7 desk audits and 28 conformity missions were carried out in respect of the 
EAFRD  of  which  all  enquiries  for  Axis  2  in  EU  27  included  the  agri-environment 
measures. 

Conformity decisions 

During the financial year 2011, two conformity decisions were adopted which had a 
financial  impact  in  the  year.  These  decisions  resulted  in  the  exclusion  from  EU 
financing of EAFRD expenditure: 

•  Decision  2010/668/EU  of  4  November  2010  –  34th  Decision  excluding  EUR 

20,266,856.96. 

•  Decision  2011/244/EC  of  15  April  2011  –  35th  Decision  excluding 

EUR 51,481,168.98. 

5.3. 

Recoveries 

Regarding  financial  year  2011,  the  Member  States  reported  the  information  about 
irregularity  cases  by  1  February  2012.  The  Member  States  recovered  EUR  37,9 
million during financial year 2011, and the outstanding amount still to be recovered 
from  beneficiaries  at  the  end  of  that  financial  year  was  EUR  63,2  million.  The 
amounts  recovered  can  be  reused  by  the  Member  States  under  the  same  rural 
development  programme.  Regulation  (EC)  No 1290/2005  introduced  an  automatic 
clearing mechanism for non recovered irregular payments after 4 years or, in case the 
recovery  is  challenged  in  national  courts,  8  years  after  the  establishment  of  the 
irregularity. The financial consequences of non recovery are shared by the Member 
State  concerned  and  the  EU  on  a  50 %-50 %  basis.  Since  under  EAFRD,  these 
provisions are applicable only after the closure of the rural development programme, 
this  automatic  clearance  mechanism  did  not  apply  on  the  cases  reported  by  the 
Member States for financial year 2011. 

5.4. 

Appeals brought before the Court of Justice against clearance decisions 

Judgments handed down 

In 2011, no judgements have been handed down by the Court in appeals brought by 
the Member States against clearance decisions with regard to EAFRD. 

New appeals 

In  2011  three  new  appeals  were  brought  by  the  Member  States  against  clearance 
decisions: 

• T-3/11 brought by Portuguese Republic on 4 January 2011 

• T-294/11 brought by Hellenic Republic on 9 June 2011 

• T-335/11 brought by Republic of Bulgaria on 23 June 2011 

EN 

24 

   EN 

 
 
Appeals pending 

The  situation  as  at  31  December  2011  with  regard  to  appeals  pending  is  shown, 
together with the amounts concerned, in the annex. 

Table14 

Appeals  against  clearance  of  accounts  decisions  pending  on  31  December 
2011 (for EAFRD) 

Case number 

Member State 

Challenged amount (EUR) 

T-294/11 

T-3/11 

T-335/11 

T-588/10 

TOTAL 

GR 

PT 

BG 

GR 

-12,165,835.99

-213,224.74

-3,694,870.08

-16,480,990.57

-32,554,921.38

6. 

BASIC RULES GOVERNING THE EAFRD AND AMENDMENTS MADE IN 2011  

6.1. 

General 

Basic legislation 

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

–  Commission  Regulation  (EC)  No  1974/2006  of  15  December  2006  laying  down 
detailed  rules  for  the  application  of  Council  Regulation  (EC)  No  1698/2005  on 
support  for  rural  development  by  the  European  Agricultural  Fund  for  Rural 
Development  (EAFRD)  (OJ  L  368,  23.12.2009,  p.15);  as  last  amended  by 
Regulation 679/211 of 14 July 2011 (OJ L 185, 15.7.2011, p.57.). 

–  Commission  Regulation  (EU)  No  65/2011  of  27  January  2006  laying  down 
detailed rules for the implementation of Council Regulation (EC) No 1698/2005, 
as regards the implementation of control procedures as well as cross-compliance 
in respect of rural development support measures (OJ L 25, 28.01.2011, p.8); as 
last  amended  by  Regulation  (EU)  No  147/2011  of  20  February  2012  (OJL  48, 
21.2.2012, p. 7.). 

6.2. 

Recent modifications 

Commission  had  made  its  proposal  in  2010  (COM(2010)  537)  to  align  Council 
Regulation  (EC)  No  1698/2005  on  support  for  rural  development  by  the  European 
Agricultural  Fund  for  Rural  Development  (EAFRD)  to  the  Lisbon  Treaty.  This 
proposal also included some simplification aspects and minor policy changes. Inter-
institutional  negotiations  at  the  horizontal  level  on  the  alignment  of  agricultural 

EN 

25 

   EN 

 
 
legislation became in halt by the end of 2011, so the proposal for rural development 
was not adopted. 

Implementing  regulation  for  rural  development,  Commission  Regulation  (EC)  No 
1974/2006  was  amended  by  Commission  Implementing  Regulation  (EU)  No 
679/2011.  This  amendment  introduced  demarcation  lines  for  the  support  for 
renewable  energy  production,  introduced  a  new  revision  clause  for  multiannual 
commitments to adapt their content to post-2013 legislative framework and restricted 
the extension of these commitments to end 2013 in order to avoid overlapping with 
the  new  programming  period,  clarified  the  decision  making  in  Leader  approach, 
enlarged the scope of advances for Local Action Groups, clarified the minor changes 
in  the  situation  of  holdings  in  case  of  transfer  of  land  and  clarified  the  rules  for 
financial engineering and for advances to investment operations. 

Commission  Regulation  (EC)  No  1975/2006  laying  down  detailed  rules  for  the 
implementation  of  Council  Regulation  (EC)  No  1698/2005,  as  regards  the 
implementation of control procedures as well as cross-compliance in respect of rural 
development  support  measures,  was  recast  by  Commission  Regulation  (EU)  No 
65/2011.  This  recast  clarified  and  simplified  the  text  of  the  regulation  and  took 
onboard certain amendments deemed necessary on the basis of practical experience. 

6.3. 

Checks 

–  Council Regulation (EC) No 73/2009 of 19 January 2009 (OJ L30, 31.1.2009, p. 
16)  establishing  common  rules  for  direct  support  schemes  for  farmers  under  the 
common agricultural policy and establishing certain support schemes for farmers, 
amending Regulations (EC) No 1290/2005, (EC) No 247/2006, (EC) No 378/2007 
and  repealing  Regulation  (EC)  No  1782/2003;  as  last  amended  by  Commission 
Implementing  Regulation  (EU)  No 313/2012  of  12 April  2012  (OJ  L  203, 
09.08.2011, p. 10 ), OJ L 103, 13.4.2012, p. 17–20. 

–  Commission  Regulation  (EC)  No  1122/2009  of  30 November  2009  (OJ  L  316, 
2.12.2009,  p.  65)  laying  down  detailed  rules  for  the  implementation  of  Council 
Regulation  (EC)  No 73/2009  as  regards  cross-compliance,  modulation  and  the 
integrated administration and control system, under the direct support schemes for 
farmers provided for that Regulation, as well as for the implementation of Council 
Regulation  (EC)  No 1234/2007  as  regards  cross-compliance  under  the  support 
scheme provided for the wine sector and repealing Commission Regulation (EC) 
No 796/2004 of 21 April 2004 (OJ L 141, p. 18); as last amended by Commission 
Implementing  Regulation  (EU)  No 1368/2011  of  21 December  2011  (OJ  L  341, 
22.12.2011, p. 33-37). 

–  Council  Regulation  (EC)  No  1698/2005  of  20  September  2005  (OJ  L  277, 
21.10.2005, p. 1) on support for rural development by the European Agricultural 
Fund  for  Rural  Development  (EAFRD)  as  last  amended  by  Regulation  (EU) 
No 1312/2011  of  the  European  Parliament  and  of  the  Council  of  19 December 
2011 (OJ L 339, 21.12.2011, p. 1–3). 

–  Commission  Regulation  (EC)  No  1974/2006  of  15  December  2006  (OJ  L  368, 
23.12.2006,  p.  15)  laying  down  detailed  rules  for  the  application  of  Council 
Regulation (EC) No 1698/2005 on support for rural development by the European 

EN 

26 

   EN 

 
Agricultural Fund for Rural Development (EAFRD) 
by 
Commission  Implementing  Regulation  (EU)  No 679/2011  of  14 July  2011(OJ  L 
185, 15.7.2011, p. 57–61 ). 

amended 

last 

as 

–  Commission  Regulation  (EU)  No 65/2011  of  27 January  2011  (OJ  L  25, 
28.1.2011, p. 8–23 ) laying down detailed rules for the implementation of Council 
Regulation  (EC)  No 1698/2005,  as  regards  the  implementation  of  control 
procedures  as  well  as  cross-compliance  in  respect  of  rural  development  support 
measures. 

6.4. 

Clearance of accounts 

–  Council Regulation (EC) No 1290/2005 of 21 June 2005 on the financing of the 
common  agricultural  policy  (OJ  L 209,  11.8.2005,  p. 1),  as  last  amended  by 
Regulation (EU) No 121/2012 of the European Parliament and of the Council of 
15 February 2012 (OJ L 44, 16.2.2012, p. 1–3 ). 

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

EN 

27 

   EN