2013/537/EU, Euratom: Decision of the European Parliament of 17 April 2013 on discharge in respect of the implementation of the general budget of the European Union for the financial year 2011, Section III — Commission and executive agencies
Date: 2013-04-17
Institutions: European Parliament
Subjects: European Commission, budgetary discharge, executive agency, financial year, general budget (EU)




L_2013308EN.01002501.xml










16.11.2013   


EN


Official Journal of the European Union


L 308/25








            DECISION OF THE EUROPEAN PARLIAMENT
         
of 17 April 2013
         
on discharge in respect of the implementation of the general budget of the European Union for the financial year 2011, Section III — Commission and executive agencies
(2013/537/EU, Euratom)


THE EUROPEAN PARLIAMENT,






—


having regard to the general budget of the European Union for the financial year 2011 (1),










—


having regard to the consolidated annual accounts of the European Union for the financial year 2011 (COM(2012) 436 – C7-0224/2012) (2),










—


having regard to the Commission’s report on the follow-up to the discharge for the 2010 financial year (COM(2012) 585), and to the Commission staff working documents accompanying that report (SWD(2012) 340 and SWD(2012) 330),










—


having regard to the Commission communication of 6 June 2012 entitled ‘Synthesis of the Commission’s management achievements in 2011’ (COM(2012) 281),










—


having regard to the Commission’s annual report to the discharge authority on internal audits carried out in 2011 (COM(2012) 563), and to the Commission staff working document accompanying that report (SWD(2012) 283),










—


having regard to the Annual Report of the Court of Auditors on the implementation of the budget concerning the financial year 2011, together with the institutions’ replies (3), and to the Court of Auditors’ special reports,










—


having regard to the statement of assurance (4) as to the reliability of the accounts and the legality and regularity of the underlying transactions provided by the Court of Auditors for the financial year 2011 pursuant to Article 287 of the Treaty on the Functioning of the European Union,










—


having regard to the Council’s recommendation of 12 February 2013 on discharge to be given to the Commission in respect of the implementation of the budget for the financial year 2011 (05752/2013 – C7-0038/2013),










—


having regard to Articles 317, 318 and 319 of the Treaty on the Functioning of the European Union and Article 106a of the Euratom Treaty,










—


having regard to Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities (5), and in particular Articles 55, 145, 146 and 147 thereof,










—


having regard to Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council of 25 October 2012 on the financial rules applicable to the general budget of the Union and repealing Council Regulation (EC, Euratom) No 1605/2002 (6), and in particular Articles 62, 164, 165 and 166 thereof,










—


having regard to Rule 76 of, and Annex VI to, its Rules of Procedure,










—


having regard to the report of the Committee on Budgetary Control and the opinions of the other committees concerned (A7-0116/2013),










A.


whereas under Article 17(1) of the Treaty on European Union the Commission shall execute the budget and manage programmes and shall do so, under Article 317 of the Treaty on the Functioning of the European Union in cooperation with the Member States on its own responsibility, having regard to the principle of sound financial management,






1.   

Grants the Commission discharge in respect of the implementation of the general budget of the European Union for the financial year 2011;



2.   

Sets out its observations in the resolution that forms an integral part of its Decisions on discharge in respect of the implementation of the general budget of the European Union for the financial year 2011, Section III – Commission and executive agencies, and in its Resolution of 17 April 2013 on the Court of Auditors’ special reports in the context of the 2011 Commission discharge (7);



3.   

Instructs its President to forward this Decision, and the resolution that forms an integral part of it, to the Council, the Commission, the Court of Justice of the European Union, the Court of Auditors, and the European Investment Bank, and to arrange for their publication in the Official Journal of the European Union (L series).






The President

Martin SCHULZ
            



The Secretary-General

Klaus WELLE
            





(1)  
            OJ L 68, 15.3.2011.

(2)  
            OJ C 348, 14.11.2012, p. 1.

(3)  
            OJ C 344, 12.11.2012, p. 1.

(4)  
            OJ C 348, 14.11.2012, p. 130.

(5)  
            OJ L 248, 16.9.2002, p. 1.

(6)  
            OJ L 298, 26.10.2012, p. 1.

(7)  Texts adopted, P7_TA(2013)0123 (see page 68 of this Official Journal).






            RESOLUTION OF THE EUROPEAN PARLIAMENT
         
of 17 April 2013
         
with observations forming an integral part of its Decisions on discharge in respect of the implementation of the general budget of the European Union for the financial year 2011, Section III — Commission and executive agencies


THE EUROPEAN PARLIAMENT,






—


having regard to the general budget of the European Union for the financial year 2011 (1),










—


having regard to the consolidated annual accounts of the European Union for the financial year 2011 (COM(2012) 436 – C7-0224/2012) (2),










—


having regard to the Commission’s report on the follow-up to the discharge for the 2010 financial year (COM(2012) 585), and to the Commission staff working documents accompanying that report (SWD(2012) 340 and SWD(2012) 330),










—


having regard to the Commission communication of 6 June 2012 entitled ‘Synthesis of the Commission’s management achievements in 2011’ (COM(2012) 281),










—


having regard to the Commission’s annual report to the discharge authority on internal audits carried out in 2011 (COM(2012) 563), and to the Commission staff working document accompanying that report (SWD(2012) 283),










—


having regard to the Annual Report of the Court of Auditors on the implementation of the budget concerning the financial year 2011, together with the institutions’ replies (3) (Annual Report), and to the Court of Auditors’ special reports,










—


having regard to the statement of assurance (4) as to the reliability of the accounts and the legality and regularity of the underlying transactions provided by the Court of Auditors for the financial year 2011 pursuant to Article 287 of the Treaty on the Functioning of the European Union,










—


having regard to the Council’s recommendation of 12 February 2013 on discharge to be given to the Commission in respect of the implementation of the budget for the financial year 2011 (05752/2013 – C7-0038/2013),










—


having regard to the Council’s recommendation of 12 February 2013 on discharge to be given to the executive agencies in respect of the implementation of the budget for the financial year 2011 (05754/2013 – C7-0039/2013),










—


having regard to Articles 317, 318 and 319 of the Treaty on the Functioning of the European Union and Article 106a of the Euratom Treaty,










—


having regard to Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities (5), and in particular Articles 55, 145, 146 and 147 thereof,










—


having regard to Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council of 25 October 2012 on the financial rules applicable to the general budget of the Union and repealing Council Regulation (EC, Euratom) No 1605/2002 (6), and in particular Articles 62, 164, 165 and 166 thereof,










—


having regard to Council Regulation (EC) No 58/2003 of 19 December 2002 laying down the statute for executive agencies to be entrusted with certain tasks in the management of Community programmes (7), and in particular Article 14(2) and (3) thereof,










—


having regard to Rule 76 of, and Annex VI to, its Rules of Procedure,










—


having regard to the report of the Committee on Budgetary Control and the opinions of the other committees concerned (A7-0116/2013),










A.


whereas Europe is facing an economic and financial crisis in addition to a crisis of confidence in its institutions, a situation which requires Parliament to be particularly rigorous when scrutinising the accounts of the Commission,










B.


whereas the Court of Auditors was, for the 18th time in a row, unable to grant a positive statement of assurance regarding the legality and regularity of the payments,










C.


whereas Member States are currently negotiating the new Multiannual Financial Framework (MFF) 2014-2020,










D.


whereas in a situation of limitation of resources, caused by the economic and financial crisis, considers the need for the so-called ‘Intelligent solidarity’ - the use of Union funds to implement reforms, observe financial discipline and ensure political and economic stability,










E.


whereas, according to the Treaty on the Functioning of the European Union (TFEU), the Commission bears the ultimate responsibility for the implementation of the Union budget, while Member States are required to sincerely cooperate with the Commission to ensure that the appropriations are used in accordance with the principles of sound financial management,










F.


whereas Article 287 TFEU provides that ‘[t]he Court of Auditors shall provide the European Parliament and the Council with a statement of assurance as to the reliability of the accounts and the legality and regularity of the underlying transactions …’,










G.


whereas performance audits measuring the extent to which spending has achieved the objectives pursued become ever more important,










H.


whereas the deficiencies in the customs system call for a better balance between reduced controls and an increase in ex post controls,










I.


whereas the Commission’s management should be presented fairly with a view to reinforcing public trust in the institutions,










J.


whereas the Europe 2020 strategy for growth and jobs is an overarching strategy covering the activities of almost all the Commission services in charge of the internal policies, and whereas 2011 was the first full year during which the strategy was implemented,










K.


whereas the interinstitutional dialogue provided for in Article 318 TFEU should be the opportunity to stimulate a new culture of performance inside the Commission,










L.


whereas the Committee on Budgetary Control should be more closely involved in monitoring Commission spending in future; looks forward to closer cooperation with the Court of Auditors in order to produce wide-ranging proposals on improving efficiency in audit procedures,










M.


whereas the powers and resources of the Committee on Budgetary Control in the discharge procedure should be examined and set out in detail in an own-initiative report,






Priority actions for the Commission









1.


Calls on the Commission, with a view to granting of the discharge, to present to Parliament an action plan for the achievement of the following priority actions:

Communication of the Commission on the protection of the Union budget







(a)


The Commission should adopt annually, and for the first time in September 2013, a communication to Parliament, the Council and the Court of Auditors with a view to making the impact of its preventive and corrective actions as regards the protection of the Union budget public; notes that it should, in particular, disclose in due time all suspensions, interruptions and retentions which aimed to prevent errors and all the amounts (in nominal terms) recovered per Member State, international organisation or third country in the course of the preceding year through financial corrections and recoveries for all management modes at the level of the Union and broken down by Member States; the Commission should demonstrate as far as possible that the financial corrections adequately compensated for errors made, and that they contributed to lasting improvements of the management and control systems;










(b)


Financial corrections should be made by the Commission for the total amount of the Union’s contribution of a programme if, due to errors or mismanagement of funds by national or regional authorities, the programme fails largely to achieve its aims, even when a part of the programme has been financed and funds have already been dispersed;










(c)


The Commission should provide the relevant data covering all the policies managed by the Commission in Note 6 ‘Financial corrections and recoveries’, attached to the accounts of the Union;










(d)


As regards the policies managed by multiannual programmes, the Commission should specify, upon the closure of the programming period, the impact of the recoveries and financial corrections made during that period on the error rate; notes, moreover, that the Commission should demonstrate that the financial corrections adequately compensated for errors made, and that they contributed to lasting improvements of the management and control systems;










(e)


The Commission should shoulder greater responsibility for national audit authorities and for control systems in those Member States in which most errors were detected; is of the opinion that the Commission should draw up a proposal in how far the certification and work of audit authorities in those Member States could be further improved; believes that the Commission should publish its findings, and integrate them into the midterm-review of relevant regulations and the MFF;





Error rate in shared management

Calls on the Commission to:






(f)


harmonise the practice of its services concerning the interruption/suspension of payments when significant deficiencies are detected at the level of the supervisory and control systems of Member States;










(g)


urge Member States to communicate to its services the draft eligibility rules in order to adapt national eligibility rules which are not compatible with the relevant Union rules and to intensify the controls on the declaration of costs and the effectiveness of the first-level checks;










(h)


collect information from Member States concerning the degree to which national rules render Union legislation on budget management terms unnecessarily complicated (‘gold-plating’) and report to Parliament by October 2013; recalls that an infringement of those national rules represents an error in budget management and that the Commission is ultimately responsible for errors in implementing the Union budget (Article 317 TFEU); requests that this information is sent to the national parliaments once a year and that Parliament’s Committee on Budgetary Control is duly informed;










(i)


support the management and control authorities of the Member States in identifying the systemic sources of errors and in particular in ensuring compliant implementation of public procurement rules and give guidance in the form of motivated opinions to those authorities in their simplification efforts; those opinions will be made public;










(j)


apply the principle of proportionality, without underestimating the rules to reduce administrative burdens and facilitate streamlining of procedures; notes that an additional step towards simplification is the obligatory use of the electronic project application and reporting, as well as the unification and standardisation of documents and procedures for management and implementation of the operational programmes;










(k)


harmonise the criteria used by its services for making reservations in its annual activity report and the different methodologies used to quantify public procurement errors in the two policy areas of agriculture and cohesion policy;










(l)


speed up the audit and financial correction procedures followed by its own services and in particular, consider merging the different stages of the ‘contradictory’ procedure leading to a financial correction;










(m)


evaluate the progress made in the financial management under the policy groups of the budget of the Union with a view to arriving at a positive statement of assurance and to report about this evaluation by March 2014 in the context of the annual activity reports drafted by the Directors-General and the Synthesis report on the Commission’s management achievements for 2013;





DG AGRI







(n)


DG AGRI should align its practices for the interruption of payments with the best practices of other directorates-general or services as well as put forward proposals for enhanced application and use of suspensions in the policy area of agriculture and rural development;










(o)


Taking into account the legal framework, DG AGRI should systematically interrupt and suspend payments when the prime level controls reveal that they are materially affected by error; the payments should be resumed only if sufficient appropriate evidence gathered on the spot proves that the weaknesses have been remedied;










(p)


The Commission should report by the end of June 2013 on the progress made by the working group set up by DG AGRI to assess the root causes of Rural Development errors and develop corrective action for the current and future programming periods; that report should be sent to the Member States, national parliaments and Parliament’s Committee on Agriculture and Rural Development so that they can analyse the causes of errors, deliver non-binding opinions and submit proposals for countering those errors;










(q)


DG AGRI should take all necessary measures to support the Member States’ efforts to eliminate from their programmes those conditions that are intrinsically prone to creating implementation and control difficulties;





DG REGIO







(r)


The Commission should maintain its original proposals for the general provisions of the 2014-2020 programming period in cohesion policy and should insist, vis-à-vis the Member States, on the absolute need to introduce in the new legislation the principles of net financial corrections (8) as well as streamlined procedures and conditions under which payments can be interrupted or suspended;










(s)


The Commission should also use, as far as possible, net financial corrections to correct serious errors in the current programming period pursuant to Article 99 et seq. of Council Regulation (EC) No 1083/2006 (9); in particular net financial corrections should be applied at the closure of the programming period;










(t)


In addition, the Commission should defend its initial position not to allow the secondary selection of projects physically completed or fully implemented before the funding application (so-called ‘retrospective projects’) for the funding period 2014-2020 (10);










(u)


DG REGIO should fully align its payment practices with the best practices of other directorates-general or services, and continue making direct and full use of the legal instruments provided for by the regulations, especially the interruption of payments or whenever necessary by the suspension of operational programmes;










(v)


Calls for more stringent monitoring and conditions in the case of Member States which manifestly breach Union provisions on budgetary and competition law (particularly with regard to the award of public contracts); calls for systematic suspension of payments for the relevant Structural Fund programmes where Union law is breached until rules are complied with, so that use of the funds in accordance with Union rules is guaranteed;










(w)


Calls for a tougher suspension policy for the European Regional Development Fund (ERDF) and Cohesion Fund (CF), like that already successfully applied to European Social Fund payments, thus enabling early action to prevent any improper use of Structural Fund monies and underpinning, from the outset, the zero-tolerance approach by the Commission;










(x)


In particular, DG REGIO should systematically interrupt the payments and suspend the programmes when the prime level controls reveal that they are materially affected by error; the payments should be resumed only if there is sufficient and reliable evidence that weaknesses have been remedied;





Error rate in centralised management


DG Research







(y)


By the end of June 2013, the Commission should present a report to Parliament assessing the impact of the simplification measures introduced in 2011;










(z)


That report should also assess the improvements announced by the Commission in respect of the ex ante control and the ex post audit strategies and of the improvement in the guidance on the most common errors given to participants in the seventh framework research programme and to auditors;










(aa)


In that report, the Commission should explain whether the measures taken to reduce the audit burden, generated by the fact that seven Authorising Officers by Delegation are responsible for the Research budget, have been effective and, if not, propose other solutions;





Evaluation report (Article 318 TFEU) and enhanced use of performance audits







(ab)


The Commission services should develop a new culture of performance, defining in their management plan a number of targets and indicators meeting the requirements of the Court of Auditors in terms of relevance, comparability and reliability; furthermore performance indicators and targets should be fully integrated in all proposals for new policies and programmes;










(ac)


Asks the Commission to take full account of the remarks and requests formulated in the ‘Response of the European Court of Auditors to the Commission’s second Article 318 evaluation report’;










(ad)


Calls on the Commission, until the midterm review in the various areas of policy and programmes, to propose a clear definition of European added value; calls for a review of the programmes with the aim of avoiding national and regional displacement effects and genuinely only financing measures which could not be carried out without impetus from the Union;










(ae)


In their annual activity reports, the services should measure their performance in summarising the results achieved when contributing to the main policies pursued by the Commission; this ‘departmental’ performance will be complemented by a global evaluation of the performance of the Commission in the evaluation report provided for by Article 318 TFEU;










(af)


The Commission should modify the structure of the abovementioned evaluation report, distinguishing the internal policies from the external ones and focussing, within the section relating to internal policies, on the Europe 2020 strategy as being the economic and social policy of the Union; the Commission should place the emphasis on the progress made in the achievement of the flagship initiatives;










(ag)


Expects that in the framework of a new and enhanced policy on performance, all evaluation reports done or paid for by the Commission will be made available in full to Parliament, which may decide to make them available on its website for consultation;





Revenues and traditional own resources

In order to ensure proper protection of the Union’s financial interests, and with a view to equipping the Union with sufficient own resources for growth, the Commission should:






(ah)


provide Parliament, in time for the 2012 discharge procedure with an evaluation of the cost of postponing the full application of the Modernised Customs Code (MCC), which would quantify the budgetary consequences of such postponement;










(ai)


collect reliable data on the customs and VAT gap in the Member States and report every six months to Parliament in this regard;










(aj)


identify and implement actions which would increase the effectiveness and efficiency of the collection of customs duties and VAT in the Member States; the Commission and the Member States should implement the Court of Auditors’ recommendation in the Special Report No 13/2011 (11);










(ak)


identify the channels and schemes allowing for tax evasion and tax avoidance, in particular by multinationals and through post box companies, and promote appropriate countermeasures; welcomes in this context the OECD report on tax base erosion and profit shifting and calls on the Commission to cooperate with the OECD who will establish an action plan on how to address this problem by July 2013;










(al)


raise the Member States’ and public awareness, in the context of the negotiations on the Multiannual Financial Framework, that effective revenue collection remains an essential feature of sound management of public finances, including the fact that uncollected revenue aspects have an impact on the availability of the Union’s own resources, the economic situation of the Member States and the internal market and commission a study which would calculate the potential financial benefits for the Member States in tax revenue terms if an equal level playing field against tax evasion and tax avoidance throughout the Union should be created;
















2.


Is alarmed by the magnitude of offshore financial activities, as revealed in the recent offshore leaks; calls on the Commission to take urgent measures to eliminate these possibilities of diverting thousands of billions of euro away from the normal financial circuit in order primarily to avoid tax and to hide illegal funds from the tax authorities in the Member States;












3.


Strongly suggests that the Commission should take measures to ensure that all banking activities related to advising on, and setting up, offshore structures are made illegal and that no bank within the European Union involved in such activities will or can receive European funding under any scheme or benefit from national support measures;












4.


Expects to receive, within two months, draft legislative proposals from the Commission to end the practice of the use of tax havens by individuals, companies and even public institutions;





Follow-up to the 2010 discharge resolution
                   (12)


Monitoring of financial engineering instruments









5.


Welcomes the follow-up given by the Commission to Parliament’s request for greater transparency as regards the Financial Engineering Instruments (FEIs), in particular by making the reporting by Member States on financial and implementation issues in the relevant legislation a compulsory procedure (13), and notes that the Summary report on the progress made in financing and implementing FEIs announced by the Commission in its report on the follow-up to the discharge for the 2010 financial year (COM(2012) 585) was transmitted in due time to Parliament; further notes that the latter provides data on the description of the FEIs and their implementation arrangements, identification of the implementing entities and amounts of assistance paid to and by the FEIs;












6.


Notes that the amount of structural funds implemented through FEIs has continued to increase over the period 2007-2013, in particular for instruments targeting enterprises; points out that more than 90 % of the amounts actually disbursed to final recipients went to enterprises; asks the Commission to clarify what percentage of the amounts actually dispersed went to truly private enterprises, as opposed to majority publicly owned enterprises;












7.


Notes with concern that FEIs for urban development and energy efficiency/renewable energies account for only 17 % of the amount paid to all FEIs at the end of 2011 and, moreover, that the flow into concrete urban projects remained slow;












8.


Endorses the lessons learned by the Commission pursuant to the abovementioned summary report as to the Member States’ reporting, as follows:






—


the process of the collection of data by managing authorities and their transmission to the Commission should start as early as possible,










—


Member States should be encouraged to provide input covering more than just the amounts committed to the funds and the number and type of final recipients,










—


the Commission should provide more guidance to the Member States;
















9.


Notes that the Commission has charged a group of experts (14) to draft a report on the use of the ERDF in support of FEIs; considers this to be a first step and is worried that the expert evaluation network’s analysis reveals a number of serious problems, for example, the lack of evidence to determine whether the scale of support matches the size of the gaps in the market for loans and equity finance; the lack of evidence from which to assess whether the size of venture capital funds set up with ERDF support is large enough to be viable; the paucity of data on the costs of setting up and operating FEIs relative to non-repayable grants; and the complexity of the regulations and uncertainty surrounding their interpretation;












10.


Calls on the Commission to take concrete steps to significantly improve the use of the FEIs with a view to better protecting the Union’s financial interests;












11.


Reiterates that Parliament invited the Commission to evaluate objectively and critically the experiences with FEIs in the Cohesion policy for the programming period 2007-2013, to provide a risk assessment considering different FEIs separately, as well as taking into account the risk structure of beneficiaries of the FEIs, and to report annually to Parliament, in time for the respective discharge procedure, on the use of FEIs in Member States, including comparable indicators on the effectiveness, efficiency and economy of FEIs, and also on how the Commission coordinates, ensures consistency and mitigates the risk of overlapping across the policy areas;





Accountability chain/cascade









12.


Regrets that the Commission constantly ignores Parliament’s long standing request to add the responsible Commissioner’s signature to the annual activity reports of his/her related Directorate-General; notes, however, that the Synthesis report is adopted by the College of Commissioners and contains a specific statement emphasising the Commission’s final responsibility for the management of its authorising officers on the basis of assurances and reservations made by them in their annual activity reports; is therefore of the opinion that the College, when adopting the Synthesis report, took note of the problems in the respective directorates-general and can be held responsible;












13.


Calls on the Commission to further improve the quality and comparability of the annual activity reports;












14.


Welcomes the fact that the Commission has given Parliament access to Member States’ annual summaries; deplores the fact, however, that only 17 Member States gave the Commission permission to do so; asks the Commission to communicate which steps and measures it will take to ensure that the remaining 10 Member States will also grant their permission;





The use of pre-financing









15.


Welcomes the new rules introduced in Financial Regulation (EU, Euratom) No 966/2012 about the regular clearing of pre-financing and encourages the Commission to continue its efforts to follow the recommendations of the Court of Auditors as regards the relevant accounting data and methods;





The imposition of effective sanctions in the big spending areas









16.


Recognises that the Commission’s proposals for the 2014-2020 programming period largely met Parliament’s concerns expressed in its resolution accompanying the discharge decision for the budget execution in 2008 (15), with the proposed introduction of net financial corrections to Member States as well as streamlined procedures and conditions under which payments can be interrupted or suspended; notes that those proposals also clarify certain eligibility rules and clearly prohibit the possibility for managing authorities to select projects physically completed or fully implemented before the funding application (so-called ‘retrospective projects’);












17.


Calls on the Commission to investigate the possibilities of setting up a correctional system for error prone spending areas, in which the total material value of errors in year n will be partially or entirely deducted from the yearly reimbursement requests made by accrediting organisations depending on the severity of the irregularities;





The audit work of the Court of Auditors









18.


Recalls that Article 287 TFEU provides: ‘The Court of Auditors shall provide the European Parliament and the Council with a statement of assurance as to the reliability of the accounts and the legality and regularity of the underlying transactions (…)’;












19.


Points out that in addition to delivering one opinion on the reliability of the accounts, the Court of Auditors delivers three on the legality and regularity of the underlying operations; takes the view that this plethora of opinions makes it more difficult for Members of the European Parliament to assess the Commission’s implementation of the budget;












20.


Points out that the Court of Auditors establishes, on the basis of its audits, the most likely error rate, which in 2011 stood at 3,9 % for payments; points out that on the basis of international auditing standards, the Court of Auditors takes 2 % as the materiality threshold as regards the generally acceptable rate of errors and that, if the most likely error rate is above this threshold, the Court of Auditors will give an adverse opinion;












21.


Points out that in accordance with international audit standards, the external auditor should set the materiality threshold for errors independently;












22.


Emphasises that a distinction must be drawn between errors and fraud and considers that in the vast majority of cases, errors stem from administrative mistakes, many of which are linked to the complexity of the Union and national rules, which can be corrected; reminds the Commission, however, that the current error rate is still unacceptably high and that Parliament has a zero-tolerance approach to errors;












23.


Highlights the fact that an error rate as such does not give a comprehensive view of the effectiveness of Union policies; is of the opinion, therefore, that compliance audits should be supplemented by performance audits evaluating the economy, efficiency and effectiveness of Union policy instruments; points to the fact that the U.S. Government Accountability Office concentrates more on performance than on compliance audits;












24.


Observes that there are some differences of views between the Court of Auditors and the Commission with regard to the way in which errors should be calculated, in particular as to whether pre-financing should be included or excluded, as to the handling of quantifiable and non-quantifiable errors and as to the way in which recoveries and financial corrections should be considered in the overall assessment of the financial impact of errors and the corrective capacity of systems; is of the opinion that the different approaches mirror the different roles respectively played by the institutions, namely the role of auditor on the one hand and manager on the other; requests that the Court of Auditors consider the possibility of separating these contested different categories of error rates in its next annual report and to qualify the recovery and financial corrections policies/results per sector;












25.


Understands that in the course of time, expertise and methodology can change; insists, however, that audit results need to remain comparable in order to enable Parliament to make a political assessment over a longer period of time;












26.


Calls, therefore, for closer cooperation between national audit institutions and the European Court of Auditors in connection with the auditing of shared-management arrangements, pursuant to Article 287(3) TFEU;












27.


Proposes that consideration should be given to having the national audit institutions deliver, in a capacity as independent external auditors and in accordance with international audit standards, national audit certificates in respect of the management of Union funds; these certificates would be submitted to the Member State governments with a view to their being produced as part of the discharge process, on the basis of an appropriate interinstitutional procedure to be established;





The Court of Auditors’ statement of assurance


Accounts – clean opinion









28.


Welcomes the fact that the annual accounts of the Union for the financial year 2011 present fairly, and in all material respects, the position of the Union as at 31 December 2011, and the results of its operations and its cash flows for the then completed year;





Legality and regularity of revenue – clean opinion









29.


Notes with satisfaction that revenue underlying the accounts for the year ended 31 December 2011 is legal and regular in all material respects;





Legality and regularity of commitments – clean opinion









30.


Notes with satisfaction that commitments underlying the accounts for the year ended 31 December 2011 are legal and regular in all material respects;





Legality and regularity of payments – adverse opinion









31.


Deeply regrets that payments remain materially affected by error;












32.


Understands that the basis for the adverse opinion of the Court of Auditors is the observation that the supervisory and control systems are only partially effective and that, as a result, payments are affected by a most likely error rate of 3,9 %;












33.


Notes with concern that the policy groups agriculture; market and direct support; rural development, environment, fisheries and health; regional policy, energy and transport; employment and social affairs, as well as research and other internal policies, are materially affected by error;












34.


Recalls that the most likely error rate for payments in the financial year 2010 was estimated at 3,7 % and in the financial year 2009 at 3,3 %; is dismayed about this increase because it reverses the positive trend observed in the years 2007, 2008 and 2009; calls on the Commission, therefore, to take the necessary steps to achieve a trend that shows a consistent decrease in the error rate; emphasises that Parliament is of the opinion that [r]eaching this target is an essential part of getting full value for EU expenditure in the future and progressing towards a positive DAS’ (16);












35.


Attributes this development mainly to the increase of the most likely error rate in the area of agriculture, and is concerned in particular about the high level of error in the rural development where the most likely error rate reported was 7,7 %;












36.


Calls on the Court of Auditors to adapt its special reports on specific fields of policy more than previously to facilitating comparisons with past periods;





Council recommendation









37.


Regrets that the Council continues to refuse to cooperate with Parliament with regards to the Council discharge; believes that this leaves the Committee on Budgetary Control with very few instruments and that eventually, the Committee is forced to introduce its questions and requests for information about the budget of the Council to the Commission;












38.


Notes that the Council recommends to give discharge to the Commission in respect of the implementation of the general budget of the Union for the financial year 2011; notes that the Netherlands, Sweden and the United Kingdom have voted against granting discharge to the Commission for the execution of the Union’s budget for the financial year 2011; takes notice of these countries’ observations:






—


for the 18th consecutive time, the Court of Auditors was unable to grant a positive unqualified statement of assurance,










—


emphasising the fact that the credibility of Union spending depends on sound financial management at all levels, orderly accounting and transparent accountability of all relevant actors,










—


pointing out that 80 % of the Union budget is spent under the system of shared management by Member States,










—


regretting that only four out of seven Member States’ audit authorities, assessed by the Court of Auditors, were considered effective,










—


calling on all Member States to provide full, transparent and accurate data as part of their annual summaries,










—


encouraging the Commission to continue driving better financial management by all Member States, including strict application of sanctions such as suspensions and interruptions;
















39.


Notes in this context the high number of the Commission’s reservations concerning the ERDF/CF management and control systems for the period 2007-2013 amongst others in the Netherlands and the United Kingdom; encourages the Council to draw conclusions from the observations by the Netherlands, Sweden and the United Kingdom by conducting a peer review of each of the Member States’ financial management and quality of performance;





Horizontal issues


Responsibilities of the Commission and the Member States in shared management









40.


Emphasises that in accordance with Article 317 TFEU, the Commission is ultimately responsible for the implementation of the Union’s budget; points out that where the Commission implements the budget under shared management, implementation tasks are delegated to Member States pursuant to Article 53b of the Financial Regulation (EC, Euratom) No 1605/2002;












41.


Stresses that in this respect, the responsibility of the Directors-General is a cornerstone of the Commission’s present system for managing Union funds and emphasises the importance of fairly representing the management performances in their annual activity report;












42.


Recalls Parliament’s proposal, contained in its 2010 discharge resolution, for a full-time Commissioner for Budgetary Control in the 2014-2019 Commission;












43.


Expects that Member States are fully aware of their obligations, pursuant to Article 4(3) of the Treaty on European Union and pursuant to the principle of sincere cooperation, to assist in an active and effective way the Union in carrying out tasks which flow from the Treaties;












44.


Insists in this context on the importance of Article 53b of the Financial Regulation (EC, Euratom) No 1605/2002, which provides that, when implementing the budget, the Member States are to take all necessary measures, including legislative, regulatory and administrative measures, to protect the Union’s financial interests; stresses in this respect that Article 59(2) of the new Financial Regulation (EU, Euratom) No 966/2012 even specifies that these measures should include the following:(a) ensuring that actions financed from the budget are implemented correctly and effectively and in accordance with the applicable sector-specific rules for that purpose and (b) preventing, detecting and correcting irregularities and fraud;












45.


Notes that the current system does not ensure a full transparency of the beneficiaries of ERDF/CF support; in the current framework, the Commission provides a portal with access to lists of beneficiaries available on national websites, which are only in the respective national language and without following common criteria; expects the future regulation covering the structural instruments to ensure that Member States provide the data on the final beneficiaries of ERDF/CF funds to be published on the Commission’s official website in one of the three working languages of the Union and based on a set of common criteria to allow comparison and detection of errors;












46.


Points to the existence of significant differences in Member States’ administrative performance in the field of revenue and expenditure in shared management, especially related to detecting irregularities, fraud and errors and financial follow-up in both the customs field and spending of Union funds; notes that the Commission so far monitors administrative performance in a reactive way and on case level and thus, does not perform sufficient trend analysis to identify fields of risk; calls on the Commission to apply the method of trend analysis to identify financial risks and to take measures to improve Member States’ administrative performance;












47.


Welcomes the fact that, in accordance with Article 59(3), (4) and (5) of the new Financial Regulation (EU, Euratom) No 966/2012, Member States management authorities are in future to be required annually to provide the Commission with their accounts accompanied by a management declaration, an annual summary of their final audit report and of controls and an opinion from an independent audit body;












48.


Is convinced that the above mentioned declarations, in combination with the introduction of self-critical deliberation in the Council, which is lacking until now, and an even-handed and honest and open peer review among Member States would result in better and more effective budget execution, increase the performance of policies, programmes and projects and which will help to reinforce the solidarity between Member-States and replace mutual distrust, a result which is preferable to budget cuts to the detriment of economic recovery and the trust of the Union citizens in a common Europe;












49.


Welcomes the fact that Member States may, at the appropriate level, publish the above information, and – in addition – provide declarations signed at an appropriate level based on that information; calls on the Commission to assist the Member States in providing those voluntary management declarations as referred to in Article 59(5) of the new Financial Regulation (EU, Euratom) No 966/2012 by promoting best practices; insists that Parliament should receive both the management declarations and the voluntary declarations;












50.


Notes that the Commission should give guidance to Member States to draft meaningful annual summaries; notes that for this purpose, information given on operational programmes under shared management should be standardised as regards form and content; annual summaries should be put at the disposal of Parliament and should not only be made available in the language of the Member State, thus increasing transparency and accountability;












51.


Notes, however, that neither the Court of Auditors nor the Commission considers the annual summaries to be a valuable source of information at this stage for the purposes of assessing compliance by, or the performance of, beneficiaries; reiterates its request that the Commission should analyse the strengths and weaknesses of national control systems on the basis of the annual summaries received; considers that this situation is unacceptable and demands that the Commission take immediate action to ensure that the next annual summaries are useful for assessing the performance of beneficiaries;












52.


Points out that the annual summaries provided by the Member States ‘in [their] current form [have] been seen to provide little added value’ and that ‘the compliance elements of the current annual summary simply duplicate information readily available from other sources’ (17); urges, therefore, all Member States to increase the usefulness of their annual summaries by including an overall analysis of the results and an overall level of assurance statement to demonstrate their commitment to the sound financial management of Union funds and transparency; urges Austria, Belgium, Germany, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland and Spain in particular to follow without delay the example of the 15 Member States that have included an ‘overall level of assurance statement’ in their annual summaries for structural actions in the European Social Fund (ESF) and the ERDF (18) in order for the Committee on Budgetary Control to benefit from this information during the 2012 discharge procedure; expects that those Member-States who will not submit such a statement in time will submit a comprehensive statement explaining the reasons why;












53.


Calls on the Member States to issue national management declarations at the appropriate political level and asks the Commission to establish a template for such a declaration;












54.


Calls on the Commission to establish in the short term, in cooperation with Member States, a model for national management declarations which will make them meaningful and comparable; calls on the Commission to openly provide its opinion on those declarations; takes the view that such declarations should, inter alia, certify criteria (such as true and fair accounts, the effectiveness of management and control systems and the legality and regularity of underlying transactions) and specify the scope of assurance reservations and disclaimers; asks the Commission to present proposals for decreasing the burden of controls for those Member States or regions that perform consistently well, according to the annual reports of the Court of Auditors and to their own national management declarations; is of the opinion that the Court of Auditors and the Commission should be able to take account of the substance of national management declarations in their audit work;












55.


Notes the details set out on the following scoreboard regarding the two initiatives relating to the contributions of Member States in improving the effectiveness of shared management:

Scoreboard








 


National management Declarations


‘Overall level of assurance statement’ in the Annual Summaries for structural actions




Austria


No


No




Belgium


No


No




Bulgaria


No


Yes




Cyprus


No


Yes




Czech Republic


No


Yes




Denmark


Yes


Yes




Estonia


No


Yes




Finland


No


Yes




France


No


Yes




Germany


No


No




Greece


No


Yes




Hungary


No


Yes




Ireland


No


No




Italy


No


No




Latvia


No


No




Lithuania


No


No




Luxembourg


No


No




Malta


No


No




Netherlands


Yes


No




Poland


No


No




Portugal


No


Yes




Romania


No


Yes




Slovakia


No


Yes




Slovenia


No


Yes




Spain


No


No




Sweden


Yes


Yes




United Kingdom


Yes


Yes









Reliability of Commission management representations









56.


Notes that the total number of reservations included by the Directors-General of the Commission in their annual activity reports increased to 27 in 2011 from 17 in 2010 and that the estimated total financial impact of reservations increased to EUR 1 959 million or 1,5 % of the payments made in 2011 (2010: EUR 423 million, corresponding to 0,3 %);












57.


Is concerned that those developments reflect a high risk of errors in some areas, such as rural development, cohesion or the seventh framework programme as recognised by the Directors-General of the Commission, and corroborated by the audit results of the Court of Auditors;












58.


Takes note of the guidance given by the Secretary-General of the Commission and the Director-General of DG Budget to the Directors-General and heads of services of the Commission on how to calculate the residual error rate, which led to an improvement in some annual activity reports as pointed out by the Court of Auditors;












59.


Regrets, nevertheless, that the Court of Auditors found weaknesses in those instructions and their implementation, in particular as regards the residual error rate; urges the Commission, as a result of this, to adapt its guidance as an immediate priority;












60.


Recognises the progress made by the Commission in determining the extent to which transactions remain affected by error, but notes with disappointment that the Court of Auditors concluded that the residual error rate is not yet a reliable indicator;












61.


Encourages the Commission to make progress in disclosing more precise and reliable data concerning recoveries and financial corrections and to present information reconciling as far as possible the year in which payment is made, the year in which the related error is detected and the year in which recoveries or financial corrections are disclosed in the notes to the accounts (19);












62.


Welcomes the report by the Commission on financial corrections, including the amount actually recovered which was returned to the budget at closure 2000-2006 in regional policy which shows the impact of the financial corrections made during the programming period and at closure on the overall error rate of the 2000-2006 programming period;












63.


Calls on the Commission to extend this practice of reporting to the other policies managed by multiannual programmes;












64.


Recommends, in accordance with the view expressed by the Court of Auditors, that a clear link be established between amounts included in annual activity reports, in particular for establishing the residual error rate, and information on recoveries/financial corrections presented in the accounts;












65.


Notes that the Commission is able to provide an overview of the corrections of errors and irregularities made in 2011, in particular in that part of the budget that is implemented under the shared management mode (20);












66.


Suggests to the Commission that it should request its Directors-General to systematically gather those data and publish them in their annual activity reports;












67.


Calls on the Commission to issue in time for the respective discharge procedure annual communications to Parliament, the Council and the Court of Auditors listing, by country and programme, financial corrections and recoveries collected, in order to demonstrate its performance in the protection of the Union’s budget; calls on the Commission, on this basis, to draw up a performance ranking;












68.


Notes with concern that the abovementioned Note 6 attached to the consolidated accounts covers only financial corrections and recoveries performed at Union level, and that information on withdrawals, recoveries and pending recoveries of structural funds made by the Member States is not disclosed for reliability reasons ‘since doubts remain as to the quality and completeness of data submitted by some Member States and/or for some programmes’; calls on the Commission to make annually public in a communication all the amounts corrected the preceding year through financial corrections and recoveries for all management modes at the level of the Union and by the Member States;












69.


Is worried that the Commission itself confirms in the said Note 6 the assessment made by the Court of Auditors on the lack of reliability of supervisory and control systems of the Member States, and deeply regrets that this could affect the reliability of Commission management representations; calls on the Commission to ensure that data communicated by Member States are complete and fully reliable;












70.


Recalls in this context that, by adopting the Synthesis report on the basis of the assurances and reservations made by its Directors-General and heads of services in their annual activity reports, the Commission takes overall political responsibility for management of the Union budget (21);












71.


Welcomes the improvements brought to the overall opinion issued by the Commission’s Internal Auditor, which also underpin the Synthesis report, but notes that the positive opinion given by the Internal Auditor is based in particular on the assurance given in the annual activity reports by senior management of the Commission;












72.


Consequently, reiterates its previous demand that the Commission establish reliable and objective annual activity reports;





Responsibility of Member States









73.


Notes that the two policy areas prone to the highest error rates (rural development, environment, fisheries and health as well as regional policy, energy and transport) are mainly implemented under shared management, and regrets that the estimated most likely error rates amount to 7,7 % and 6 % respectively;












74.


Emphasises that the President of the Court of Auditors observed that ‘national authorities operate the first – and most important – line of defence in protecting the financial interests of EU citizens and that there needs to be a greater degree of commitment on the part of national authorities to the management and control of EU money’ (22); underlines in this context the co-responsibility of the Member States for better spending; considers, in addition, that the active involvement of the national parliaments, through respective committees for oversight the use of Union taxpayer’s money in the Member States (following the example of the Parliament’s Committee on Budgetary Control), not only at the level of the political and expert monitoring but also in the programming process of the new cohesion policy, would lead to a lower error rate level, better transparency and democratic legitimacy of the process of Union funds absorption;












75.


Deplores the fact that in 62 % of the audited regional policy transactions affected by error and in 76 % of the ESF audited transactions, sufficient information was available for the Member State authorities to have detected and corrected at least some of these errors before claiming reimbursement from the Commission and that in rural development, the Court of Auditors found that on-the-spot checks had not always been carried out properly; therefore calls on the Member States and the Commission to urgently reinforce first-level checks to address this unacceptably high level of mismanagement;












76.


Calls on the Council and the Coreper to see to it that on a regular basis, national control systems, in particular, and the co-responsibility of the Member States for better spending, in general, are put as specific points on the agenda of the competent Council meetings of ministers and discussed in the presence of the Commission;












77.


Calls, pursuant to the second subparagraph of Article 287(4) TFEU, for the Court of Auditors to deliver an opinion on the independence of the national audit authorities in the context of shared management;





Public procurement, eligibility criteria









78.


Notes that numerous errors derive from the incorrect application of national rules (in particular, as regards the ESF errors in 2011, breaches of national rules have contributed 86 % of the error rate), and that eligibility error (especially for grant beneficiaries) and breaches of public procurement rules (in particular for shared and indirectly managed funds) are the two main sources of errors;












79.


Welcomes, for this reason, the proposal for a directive of the European Parliament and of the Council on public procurement adopted by the Commission on 20 December 2011 (COM(2011) 896), as it aims at simplifying the rules and making them more flexible in order to increase the efficiency of public spending; notes nevertheless that the national rules on public procurement should also be simplified in accordance with Union legislation;












80.


Deplores the fact that errors can also derive from the addition to Union rules of national rules which are unnecessarily complex and therefore difficult to implement and verify by the Member States themselves, while creating an additional and artificial burden for the beneficiaries (‘gold plating’);












81.


Points out that such rules not only increase error rates unnecessarily, as all infringements will be considered an error in Union budget management even though it is the Member States that are responsible for these pointlessly complex rules, but could also lead to the Commission issuing recovery claims;












82.


Urges the Member States to identify and report to Parliament, in coordination with the Commission and in consultation with the Court of Auditors, those unnecessarily complex national rules in order to simplify them; notes that in this regard, the potential for elaboration of standard tender documentation on the public procurement procedures should be further explored;












83.


Calls on the Commission, where breaches of budgetary and competition law are known to have occurred in the Member States (particularly in the award of public contracts), to apply more stringent monitoring and conditions and, in case of doubt, to suspend financing from the Structural Funds immediately until compliance with the rules and hence a use of the funds which accords with Union law are guaranteed;












84.


Encourages the services of the Commission to launch a pilot action plan, as DG Employment did in policy sectors with a high error risk, aiming at identifying key areas where simplification could help to reduce the error rate at beneficiary level;












85.


Urges the Commission to develop additional instruments to facilitate the process of consultation with beneficiaries and to strengthen their direct feedback to the national authorities, in line with the efforts to simplify the national rules and to reduce the error rate;












86.


Once again requires the Commission to name the Member States responsible for the cumulative quantifiable errors identified; rejects the argument that the constraints imposed on the Court of Auditors by its statistical sample method, which effectively prevents the Court of Auditors from naming Member States with the highest error rate; calls on the Court of Auditors to compare its audit findings with those of the Commission in order to identify those Member States or regions most affected by the level and/or occurrence of errors;





European Stability Mechanism









87.


Notes the entry into force of the European Stability Mechanism but regrets that this mechanism was set up outside the Union’s institutional framework, as this precludes any democratic, political and budgetary control by the Union institutions and in particular by Parliament; emphasises the fact that the creation outside the institutions of the Union represents a setback in the evolution of the Union, essentially at the expense of Parliament, the Court of Auditors and the Court of Justice of the European Union; deems it essential that the ESM will be discussed at least once a year in a plenary debate in the presence of the Council and the Commission on the basis on the annual report from the ESM Board of Auditors;





Anti-fraud Strategy









88.


Calls on the Commission to report on and evaluate the anti-fraud strategies established within each directorate-general following the adoption of the Commission’s new Anti-Fraud Strategy (COM(2011) 376) and the Internal Action Plan (SEC(2011) 787) for its implementation in June 2011;





Tobacco Industry









89.


Calls on the Commission to report how it intends to improve as soon as possible its provision to introduce a pro-active management of potential conflict of interests and ‘revolving doors’;












90.


Calls on the Commission to report how it has implemented Article 5(3) of the WHO Framework Convention on Tobacco Control and how it intends to improve and clarify existing rules;












91.


Calls on the Commission to provide Parliament as soon as possible with an overview about all (public and non-public) documents and all persons involved in the negotiations of the four cooperation agreements with the tobacco industry;












92.


Notes that the Union is a under signatory to the WHO Framework Convention on Tobacco Control (FCTC); deems the implementation of Article 5(3) as a legally binding obligation to the Union; calls on the Commission to report on how the provisions of Article 5(3) have been implemented in the Union and its institutions, especially considering the following question: how far does implementation follow guidelines set by the WHO to Article 5(3); questions how and why the Commission has deviated from those guidelines;





Budgetary management


Implementation rates, budgetary surplus, outstanding budgetary commitments









93.


Welcomes the high level of budget implementation, namely 99,3 % of commitment appropriations (the same as in 2010) and 98,6 % of payment appropriations (2010: 96,6 %) and the reduction of the overall surplus from EUR 4,5 billion in 2010 to EUR 1,5 billion in 2011;












94.


Is concerned by the acceleration in the rate of payment requests by the Member States towards the end of the year as regards the ESF, the ERDF and the Cohesion fund, because this prevents the Commission from requesting an amending budget from the budgetary authority in due time in order to increase the payment appropriations with a view to honouring the claims received; therefore asks the Commission to urge the Member States to transmit most of the claims as early as possible;












95.


Warns against the concentration of a significant proportion of payments in the month of December, which could affect the effectiveness of supervisory and control systems and increase the risk of error;












96.


Expresses concern about the significant increase in outstanding budgetary commitments from EUR 13 billion in 2010 to EUR 207 billion, mostly in cohesion policy, for the programming period 2007-2013;












97.


Insists that sufficient payment appropriations need to be made available in future years from the outset;





Revenue


Traditional own resources and VAT









98.


Notes that the Court of Auditors, in its annual report, found that the revenue calculation was free from material error; is concerned, however, that as far as traditional own resources (TOR) are concerned, the Court of Auditors’ audit cannot cover undeclared imports or those that have escaped customs surveillance and that the annual report does not, therefore, provide an estimation of losses to the Union budget in that respect; suggests that the Court of Auditors issue a special report on undeclared imports based on a survey in at least 10 Member States and to adjust its working programme for 2013 accordingly;












99.


Is of the opinion that the Court of Auditors’ performance audit in the area of revenue is of particular value and encourages the Court of Auditors to concentrate more of its resources in this area; regrets that the annual report, around which much of the Court of Auditors’ work is centred, nevertheless provides little information as to the real situation as far as efficient collection of revenue is concerned; calls on the Court of Auditors to place greater emphasis in its annual report on the revenue audit, in order to present a comprehensive picture of the effectiveness of the revenue collection system in the Member States, and of the consequences of its inadequate functioning;












100.


Recalls that Parliament monitors the situation with regard to the collection of own resources in its own-initiative report on the protection of the Union’s financial interests, which is drafted annually on the basis of a Commission report;












101.


Is deeply concerned by the Court of Auditors’ conclusion that there are continuing weaknesses in national customs supervision and that it cannot, therefore, be ensured that the TOR recorded are complete and correct; finds it unacceptable that the control of customs procedures in Member States is not functioning properly; recalls that the correct operation of customs procedures has direct consequences in terms of the calculation of the value added tax; is deeply worried by the Court of Auditors’ finding in Special Report No 13/2011 that the application of customs procedure 42 (23) alone accounted for extrapolated losses of approximately EUR 2 200 million (24) in 2009 with regard to the seven Member States which were audited, representing 29 % of the VAT theoretically applicable on the taxable amount of all the imports made under customs procedure 42 in 2009 in those seven Member States;












102.


Stresses the Court of Auditors’ conclusion in Special Report No 13/2011 that ‘VAT evasion affects the financial interests of Member States; notes that it has an impact on the Union budget as it leads to lower VAT-based own resources. notes that this loss is compensated by the GNI-based own resource, distorting individual Member States’ contributions to the EU budget and that tax fraud undermines the functioning of the internal market and prevents fair competition’ (25);












103.


Emphasises that the Court of Auditors’ findings in Special Report No 13/2011 were corroborated by the conclusions of the fact-finding mission of Parliament’s Committee on Budgetary Control to the ports of Rotterdam and Antwerp, which took place on 19 and 20 September 2012; points out that the Union is a major trading block and that large European ports handle many ships; notes that as a result of logistical pressures, those ports rely on the procedures provided for in the customs regulation and that authorised economic operators gain in importance; notes, however, that Rotterdam, for example, the largest European port granted a high-level of simplified custom procedures to importers compared with other major ports in the Union; stresses that the simplification of customs procedures must include a proper and effective risk based policy approach leading to effective control systems avoiding the distortion of competition and that simplified procedures should be effectively monitored regularly by the Commission and Member States; notes that reduced controls could translate into major economic advantages for a port; stresses that any unjustified reduced control may seriously harm the Union’s financial interests and that of the Member States;












104.


Takes note of the initiatives taken by the Commission by way of follow-up to the Court of Auditors’ Special Report No 13/2011; regrets, however, that according to the First Eurofisc Activity Report for 2011 issued in May 2012, the main findings and observations of that Special Report are still outstanding; requests information before September 2013 on progress made;












105.


Is seriously concerned, in particular, by the finding of the Working Field 3 that in most Member States, tax administrations have no direct access to customs data and that automated cross-checking with tax data is, therefore, not possible;












106.


Regrets that Recommendation No 6 of Special Report No 13/2011, calling for the amendment of the VAT Directive in order to identify separately the intra-community supplies following imports under the procedure in question in the trader’s VAT recapitulative statement, has not been implemented by the Commission; notes that this would allow an effective reconciliation between the customs and tax data in the Member State of importation; requests information as to the reasons why this was not done;












107.


Deplores the fact that the Council has not acted upon the Court of Auditors’ recommendation to amend the VAT Directive in order to hold the importer (or his tax representative) jointly and severally liable for the VAT loss in the Member State of destination in cases where a complete and timely VAT recapitulative statement is not submitted by him;












108.


Calls on the Commission to intensify its efforts to remedy the situation with regard to the state of implementation of the Court of Auditors’ recommendations contained in its Special Report No 13/2011;












109.


Deplores the fact that the Commission and the Member States have been unable to ensure timely implementation of the Modernised Customs Code (MCC), which was supposed to become applicable on 24 June 2013 at the latest; stresses that any further delays will impede adequate protection of the Member States’ financial interests and, consequently, those of the Union itself; emphasises the fact that according to the Commission, this situation is due, to a considerable extent, to the fact that the Member States cannot agree on the most appropriate IT development methodology and that they are facing limitations in human and financial resources; is concerned that the Commission and the Member States are lagging behind this very important reform in the situation where the collection of own resources is less than satisfactory;












110.


Calls on the Commission to make an evaluation of the cost of postponing full application of the MCC, quantifying the budgetary consequences of such postponement;












111.


Points to a study commissioned by Parliament on the ‘Implementation of the Modernised Customs Code’ (26), from which it results that, in the best-case scenario, the entry into force of the MCC (which will be called the Union’s Customs Code if the recast proposal by the Commission is adopted) could take place in December 2017; reminds the Commission that the Union has exclusive competence in the area of the customs union and that it should, therefore, ensure compliance by the Member States; calls on the Commission, as a consequence, to step up its efforts to ensure that the MCC is implemented at the earliest possible date, and in any event to avoid the worst-case scenario indicated in the study for March 2033;












112.


Deplores the fact that two important initiatives aimed at combating VAT fraud, namely the proposal for a Council Directive amending Directive 2006/112/EC on the common system of value added tax as regards a quick reaction mechanism against VAT fraud (COM(2012) 428) and the proposal for a Council Directive amending Directive 2006/112/EC as regards an optional and temporary application of the reverse charge mechanism in relation to supplies of certain goods and services susceptible to fraud (COM(2009) 511), are blocked in the Council;












113.


Welcomes the fact that EUROFISC, a common operational structure allowing Member States to react rapidly to cross-border VAT fraud, became fully operational; notes that a specific working field was created in February 2011 in order to exchange targeted information on fraudulent transactions using the customs procedure 42;












114.


Calls on the Commission to strengthen its coordination with the Member States in order to collect reliable data on the customs and VAT gap in the respective countries and to report on a regular basis to Parliament in that regard;





GNI-based revenue – the volume of tax evasion and avoidance and its impact on the Union budget and the economies of the Member States









115.


Welcomes the Commission’s Action Plan to strengthen the fight against tax fraud and tax evasion (COM(2012) 722); commends, in particular, the Commission’s proposal to set up a Quick Reaction Mechanism and insists that this would enable Member States to respond more swiftly and efficiently to VAT fraud; stresses that the potential cost of tax evasion and avoidance for Member States is estimated to amount to EUR 1 trillion every year while in comparison, the Union budget for 2011 in terms of appropriations for commitments amounted only to EUR 142,5 billion;





Agriculture









116.


Deplores the increase of the error rate to 4,0 % in the policy area ‘Agriculture and rural development’ covering the expenditures of the European Agricultural Guarantee Fund (EAGF) and the European Agricultural Fund for Rural Development (EAFRD) and of the policy groups environment, fisheries and health;












117.


Recalls that the deterioration of the state of play in agriculture and, in particular, in rural development, is the main cause of the increase of the most likely error rate for all payments in the financial year 2011;












118.


Notes that even though 0,2 % of this error rate has been generated by a change in the Court of Auditors’ methodology concerning the cross compliance infringements the error rate for the entire agriculture policy area increased between 2010 and 2011 in real terms by 1,5 %: from 2,3 % in 2010 to 3,8 % in 2011 (27);












119.


Takes note of the Court of Auditors’ approach which for the first time included cross compliance infringements in the calculation of the error rate as ‘cross- compliance obligations are substantive legal requirements that must be met by all recipients of direct aid and are the basic and in many cases the only conditions to be respected in order to justify the payments of full amount of direct payments’ (28); asks the Court of Auditors in this context to further explain and justify its changes of methodology; calls on the Commission and the Court of Auditors to agree on a consistent methodology with a view to rendering the yearly budget implementation figures more comparable;












120.


Takes note that the Court of Auditors restricts its audit only to certain Statutory Management Requirements and to the Good Agricultural and Environmental Condition requirements and that ‘the error rate must be used with great care and not be treated as an overall assessment of the respect of the cross compliance obligations by farmers’ (29);












121.


Notes that it is up to the Member States to define ‘good agricultural and ecological condition’ and to which acreage it will be applied; criticises strongly the fact that beneficiaries who very often are not farmers will receive direct payments; considers this to be an incorrect allocation of funds which could be saved;












122.


Takes note that Member States recovered EUR 172,7 million from the beneficiaries during the 2011 financial year and that the overall outstanding amount still to be recovered from the beneficiaries at year-end was EUR 1 206,9 million, of which EUR 458 million has been charged to the Member States for EAGF expenditure in line with the 50/50 rule; acknowledges that around EUR 25,7 million will be borne by the Union budget for cases reported irrecoverable during financial year 2011; points out that DG AGRI cleared all pending non-recovered cases dating from 2006 or 2002 by Decision 2011/272/EU (30) of 29 April 2011 and that following the application of the 50/50 rule, EUR 27,8 million was charged to the Member States while EUR 29,2 million was borne by the Union budget for reasons of irrecoverability;












123.


Welcomes the fact that for the first time, the Court of Auditors provides two specific assessments: on the market and direct support on the one hand, and on rural development on the other hand and considers that it provides a better insight into each policy area; calls on the Court of Auditors, however, to present the error rate for rural development separately from environment, fisheries and health and not on an aggregate basis;












124.


Welcomes the register providing information on beneficiaries of the Common Agricultural Policy payments in the Member States; considers this tool to be an important step towards more transparency in the agricultural sector; recalls, nevertheless, that in accordance with the ruling of the European Court of Justice of 9 November 2010 invalidating the legislation as regards natural persons (31), Commission Regulation (EC) No 259/2008 (32) has been modified limiting the obligation to publish information on the beneficiaries of CAP payments to legal persons; notes the Commission’s proposal for new transparency rules, adopted on 25 September 2012, to make it obligatory for Member States to disclose data of all beneficiaries including natural persons, except for beneficiaries whose annual aid does not exceed a certain de minimis threshold, taking into consideration the objections made in the judgment of the Court of Justice, in particular on data protection concerns;












125.


Takes note of the current practice in the management of Sapard funds, namely that funds are only exceptionally recovered in full if the fraudulent behaviour for a part of the project has artificially created the conditions without which the beneficiary would not have obtained support for the project at all; expresses concern about the current practice, recommended by the Commission to the Sapard agency, that a project of which a part has been affected by fraudulent behaviour can be deemed eligible for funding if the project is not deemed to be of an artificial nature, i.e. the percentage of the costs of all the affected elements does not exceed 50 % of the total costs of the entire project; is especially concerned about the lack of deterrence from fraudulent behaviour this practice exhibits;





Market and direct support









126.


Regrets that the EAGF payments are not free from material error in 2011, the most likely error rate being estimated by the Court of Auditors at 2,9 %, and that the control systems audited by the Court of Auditors in Austria, Finland, Hungary, Italy and Spain were found to be only partially effective in assuring the legality and regularity of payments;












127.


Notes that the most frequent accuracy error relates to area over-declarations, most of which amount individually to less than 5 % and deplores that the larger error rates relate to cases where eligibility of permanent pasture was incorrectly assessed and recorded by Member States’ authorities in the Land and Parcel Identification System (LPIS);












128.


Endorses the recommendation of the Court of Auditors that the correct assessment of eligibility of permanent pasture should be ensured (33);












129.


Notes with disappointment that the Court of Auditors found that the effectiveness of the Integrated Administration and Control System (IACS) is adversely affected by inaccurate data in the various databases and also by an incorrect administrative treatment of claims by the paying agencies in certain Member States; reminds the Commission that the introduction of IACS led to a decrease in errors and calls on the Commission to remedy the situation without any delays using suspensions and interruptions of funding when necessary;












130.


Is concerned that the Commission, in its annual activity report, maintained its reservations concerning the IACS systems in Bulgaria and Portugal due to serious deficiencies; emphasises the fact that, given the importance of IACS for the management and control of agricultural expenditure, serious deficiencies in its set-up and operation exposes the Commission to reputational risk, even if the financial impact does not exceed the materiality threshold;












131.


Regrets that some systematic failures in the management and controls systems observed and reported already in previous years have not been remedied: incorrect classification of land use, overstatement of eligible land in LPIS or incorrect application of the obvious error concept;












132.


Deplores the fact that deficiencies were found by the Court of Auditors in on-the-spot measurements; insists that on-the-spot inspections should be of the quality necessary to identify the eligible area in a reliable manner (34).












133.


Regrets that the quality of the work performed by the certifying bodies audited by the Court of Auditors under the new voluntary procedure for the reinforcement of assurance is insufficient;












134.


Calls on the Commission to take all necessary actions so that paying agencies remedy weaknesses detected in their administration and control system; insists that the design and quality of the work to be performed by certifying bodies must be improved in order to provide reliable assessment of legality and regularity of operations in the paying agencies; asks the Commission to investigate if it is possible to cooperate with private individuals to verify cross compliance standards and reduce administrative burden;





Rural development









135.


Regrets that payments in the policy sector ‘rural development, environment, fisheries and health’ are not free from material error in 2011, the most likely error being estimated by the Court of Auditors at 7,7 %, and that the examined supervisory and control systems were partially effective;












136.


Notes that the major part of the most likely error rate concern the eligibility of non-area-related measures such as modernisation of agricultural holdings and the setting up of basic services for the economy and rural population, partly due to the often complex rules and eligibility conditions;












137.


Expresses concern about the fact that many errors were detected when beneficiaries were public bodies, such as municipalities or the paying agency itself (35) and that those errors concerned issues such as declaring ineligible VAT or not complying with public procurement; calls, therefore, on the Commission and the Member States to ensure that the existing rules are better enforced;












138.


Reiterates its regrets that the Commission follows different methodologies to quantify public procurement errors in the two policy areas agriculture and cohesion both of which being furthermore not in line with the Court of Auditors’ methodology and calls on the Commission and the Court of Auditors to harmonise the treatment of public procurement errors in these two policy areas urgently (36);












139.


Notes that the Court of Auditors identifies significant problems concerning the implementation of cross-compliance requirements for the identification and registration of animals (37); calls on the Member States to improve the quality of checks throughout the year without imposing an additional administrative load on the beneficiaries;












140.


Regrets that weaknesses were identified by the Court of Auditors in the supervisory and control systems of the Member States for rural development and that the three elements audited were affected by deficiencies: i.e. the administrative and controls systems to ensure correct payment, the control systems based on physical on-the-spot checks and systems to ensure implementation and control of cross compliance;












141.


Calls on the Commission to take account of findings identified by the Court of Auditors when establishing the audit strategy of DG AGRI’s clearance of accounts;












142.


Is particularly worried about DG AGRI management representation as the Annual Activity report does not provide for an explanation of why the residual error rate for rural development had ‘increased significantly compared to the previous year’ (38);












143.


Notes that according to the Court of Auditors the DG AGRI residual error rate is much lower than the Court of Auditors’ finding because it is ‘based on figures reported by the Member States for 2010, and as identified in the Courts audit, Member States do no detect or report all ineligible expenditure due to weaknesses in their checks of paying agencies’ (39);












144.


Is particularly concerned by the fact that DG AGRI considers that ‘in general Member States are improving their management and control systems for rural expenditure’ (40) while the audit of the Court of Auditors shows that the supervisory and control systems in Denmark, Finland, Hungary, Italy and Spain were not effective or only partially effective (41); is of the opinion that such a big divergence between the assessments of the Commission and the Court of Auditors makes it difficult for the discharge authority to reach objective conclusions; insists on data exchange between the Court of Auditors and the Commission to facilitate coordinated back casting for past periods in order to ensure a reliable database for future comparisons; is convinced of the usefulness of tripartite meetings between the Court of Auditors, the Commission and representatives from Member States concerned when looking for common analysis;












145.


Calls, therefore, on the Commission to take the necessary measures in order to reduce the error rate in rural development and welcomes the fact that DG AGRI has set up a working group to assess the root causes of rural development errors and develop corrective actions for the current and future programming periods;












146.


Calls on the Commission, nevertheless, to set up an action plan to reduce the error rate not only by providing guidance and assistance to the Member States by means of best practice examples but also by increasing monitoring on the implementation of programmes and using sanctions such as interruptions and suspensions of payments in particular in rural development more effectively where needed;












147.


Calls on the Commission to further improve the quality control of accreditation criteria for paying agencies and certifying bodies;












148.


Fully supports the Court of Auditors’ recommendations that the rules and conditions for rural development should be further simplified and that Member States should ensure that existing rules are better enforced;





Environment, public health and food safety









149.


Is concerned, in this context, about the presentation of environment and health policy areas together with rural development and fisheries in the annual report of the Court of Auditors on the implementation of the Union budget, as it is stated that the payments by year-end were affected by material errors; takes careful note that this conclusion concerns solely the area of rural development; requests that the Court of Auditors explore a different presentation in the future, which takes into account the good performance of the policy areas in the remit of the Parliament’s Committee on the Environment, Public Health and Food Safety;












150.


Considers the overall implementation rates of the budgetary headings for environment, climate action, public health and food safety as satisfactory; emphasises the fact that 2011 is the first budget year under the complete budget procedure laid down in TFEU; recalls, again, that only 0,76 % of the Union budget is dedicated to those policy instruments falling under the responsibility of the Committee on the Environment, Public Health and Food Safety, bearing in mind the clear Union added value in these fields and the support from Union citizens for the environmental and climate policies of the Union;












151.


Emphasises the fact that the overall rate of execution amounted to 99,92 % in the field of environment and climate action; notes, furthermore, that the implementation of payments was at a level of 88,05 %; takes note that for the first year, the implementation of budget lines for environment and climate action has been done by the Directorate-General ENV and the newly created Directorate-General CLIMA, becoming budgetary self-responsible in 2011;












152.


Is satisfied with the achievement of 99,82 % of the implementation of the LIFE+ operational budget showing the necessity and acceptance as single instrument promoting solely environmental protection; notes that in 2011, EUR 267 179 828 was dedicated to projects in Member States, EUR 8 997 284 supported the operational activities of NGOs, EUR 46 817 919 was used for measures intended to support the Commission’s role of initiating and monitoring policy and legislation development and EUR 17 589 277 was used for administrative support; intends further monitor the allocation of the LIFE+ funds among the three strands of its effective use;












153.


Is aware that the payment rate of LIFE+ actions under the responsibility of DG CLIMA in the first year reached only 58,23 %; takes note that this low consumption is due to the fact that the preparation of the 2011 budget was too optimistic and the requested amounts were too high; notes, furthermore, that final payment settlements were only requested in 2012; emphasises the fact that unused payment appropriations have been transferred to other budget lines in the context of the global transfer exercise taking place each year in November; is aware that in 2011, those payment appropriations have been used for the shortfalls for Cohesion budget lines;












154.


Considers the progress in the implementation of five Pilot Projects (PPs) and two Preparatory Actions (PAs), amounting all together to EUR 11 765 508, as satisfactory; is aware that the execution of those actions can be burdensome for the Commission, due to the small amounts available in relation to the necessary procedures for execution (e.g. action plan, call for proposals); encourages the Commission to focus in the future on PPs and PAs with true added value for the Union;












155.


Takes note of the implementation level of 95,1 % for budget chapter 17 04 — Food and feed safety, animal health, animal welfare and plant health; is aware that full implementation was not necessary due to lower costs for bluetongue vaccination compared to the forecasts by Member States, due to the shift of some Member States to voluntary, farmer financed programmes and due to a decrease in BSE cases; observes the increase in payment execution to 98,1 % compared to 90,5 % in 2010; encourages the Commission to strengthen the cooperation with Member States in order to receive the best and most accurate data for the forecasts in this policy area;





Fisheries









156.


Takes note of the communication from the Commission to Parliament, the Council and the Court of Auditors on the annual accounts of the European Union for the financial year 2011; takes note of the Annual Report of the Court of Auditors concerning the financial year 2011; believes that the area of maritime affairs and fisheries does not figure prominently in those documents;












157.


Expresses its satisfaction that the implementation for Title 11 of the budget was globally satisfactory with an implementation rate of 97 % for commitment appropriations and 95 % for payment appropriations; notes, furthermore, that the Court of Auditors had no major observations on DG MARE’s Annual Activity Report;












158.


Calls on the Court of Auditors to present the error rate for fisheries separately from environment, rural development and health, and not on an aggregate basis;












159.


Recalls that in 2010, there was insufficient monitoring of catches under fisheries partnership agreements which resulted in additional payments to cover catches in excess of the negotiated quota; welcomes, therefore, the action taken by DG MARE to improve the monitoring of catches under fisheries partnership agreements, which will hopefully prevent a recurrence of this issue highlighted by the Court of Auditors; notes that the overfished amounts in 2010 were deducted from the 2011 quota;












160.


Urges the Court of Auditors once again to include an audit on the external dimension of the common fisheries policy in its work programme;












161.


Notes the reservations made in DG MARE’s Annual Activity Report in respect of the European Fisheries Fund (EFF) following the Court of Auditors’ special report 12/2011 regarding investments on board funded under Article 25(2) of Regulation (EC) No 1198/2006 (42) which increased the ability of vessels to catch fish; understands that DG MARE has been working with Member States to address the identified problems by reviewing the projects funded under this provision of the EFF with the aim of eliminating ineligible expenditure;












162.


Questions the technical assessment methods that led to certain expenditure under Article 25(2) of Regulation (EC) No 1198/2006 being declared ineligible on the grounds that it would increase capacity when the expenditure concerned were, in fact, designed to modernise fishing activity; calls on the Commission to propose a fresh definition of capacity, in particular in order to avoid this kind of re-interpretation in the future;












163.


Expresses its deep concern that public aid has been used to increase the vessels’ ability to catch fish and thus increased overcapacity in the Union fisheries sector;












164.


Notes the second reservation in DG MARE’s Annual Activity Report regarding the management and control of the implementation of the EFF in the Czech Republic, Finland, Italy, the Netherlands, Romania, Slovakia, Spain and in Sweden;












165.


Considers that in the future, the Annual Report of the Court of Auditors should have a separate breakdown for the figures relating to DG MARE in order to increase transparency and that the number of tests should be increased in order to ensure higher general accuracy from the sample;












166.


Urges the Member States to take all necessary action to address the identified problems and thereby, make it possible to lift the existing reservations;





Regional policy; energy and transport


Error rate compared to effectiveness









167.


Deplores the fact that the Court of Auditors estimated the most likely error rate in this spending area at 6 %, which is unacceptably high; notes that this error rate remains below those reported by the Court of Auditors for the period 2006-2008 due to reinforced control provisions and a strict policy of interruptions and suspensions when deficiencies were detected, in line with the Commission’s 2008 Action Plan;












168.


Is concerned about the fact that for 62 % of the regional policy transactions affected by error, sufficient information was available to Member States’ authorities to have detected and corrected at least some of the errors prior to certifying the expenditure to the Commission; calls, therefore, on the Commission to urge the Member States to improve their management and control systems in order to detect and correct errors at national level; considers this to be a command imposed by the principle of sound financial management (‘better spending’); emphasises that deficient national management and control systems must have net corrections as a consequence;












169.


Notes that the Court of Auditors assessed the work of seven national and regional audit authorities, each from different Member States, and concluded that the audit authorities in Greece, Hungary, Latvia and Portugal were effective, that the audit authorities in Italy-Sicily and Romania were partially effective and that the audit authority in the Czech Republic was ineffective;












170.


Calls on the Commission to use all available instruments over the next programming period 2014-2020, as outlined in the Commission proposal (COM(2011) 615/2), in particular by means of delegated acts and implementing acts, with a view to setting out conditions which the national audit authorities shall fulfil and to adopting models for the audit strategy, the audit opinion and the annual control report, as well as the methodology for the sampling method;












171.


Regrets the fact that according to the 2011 Annual Activity Report of DG REGIO, the countries with the highest risk of incorrect payments for the 2007-2013 programming period are the Czech Republic (11,4 %), Romania (11,2 %) and Italy (8,6 %);












172.


Takes note that in 2011, the DG REGIO found serious deficiencies in five Member States: France, Austria, Italy, Romania and the Czech Republic; notes that whereas the difficulties in France and Austria have been identified by the national audit authorities themselves, the deficiencies in Italy, Romania and the Czech Republic were primarily linked to the architecture of the management and control systems;












173.


Welcomes the initiative taken by its responsible committee to invite the responsible ministers from the Member States with the weakest control system to Parliament with the view to explaining which measures the respective country has taken to remedy the situation; in this context, expresses its appreciation for the contribution made by the Czech Deputy Finance Minister in discussions with the responsible committee; considers his presence in the committee to be a first step towards the Member States assuming a more responsible role in managing Union funds; welcomes in this context first contacts with the Romanian authorities and the Italian Parliament;












174.


Takes note of the number of reservations (121 programmes) made by the Commission’s directorates-general and amounts at risk representing, according to the Commissioner, EUR 1 600 million; welcomes, at the same time, the fact that the increase is mainly due to a stricter approach followed by the Commission, including a general rule that an accumulated residual risk of 2 % would lead to a reservation for the programme concerned;












175.


Notes the high number of the Commission’s reservations concerning the ERDF/CF management and control systems for identified operational programmes for the period 2007-2013 in the following Member States: Austria, Bulgaria, the Czech Republic, Estonia, France, Germany, Greece, Hungary, Italy, Latvia, Lithuania, the Netherlands, Poland, Romania, Slovenia, Slovakia, Spain and United Kingdom due to significant issues regarding the effective functioning of management and control systems;












176.


Notes the Commission’s reservations for the 2000-2006 period concerning the CF management and control systems in Hungary and Spain, and concerning the ERDF linked to outstanding issues at closure stage in Spain, Germany, Ireland, Italy and Cross-Border programmes, all due to reputational reasons;












177.


Notes with concern that SMEs are underrepresented in receiving funds compared to large companies; invites the Commission and Member States to ensure that the eligibility rules, accounting obligations and their practical implementation do not prohibitively rule out the participation of SMEs;












178.


Is of the opinion that a swift implementation of workable FOI (Freedom of Information) laws across the Union is imperative, as is the systematic, proactive and centralised disclosure of data and documents, especially in relation to regional policy;





Sources of errors









179.


Emphasises the fact that public procurement procedures and eligibility rules are particularly prone to error;












180.


Acknowledges the importance of managing authorities being adequately staffed; calls on Member States to pay attention to this requirement; in order to comply with their obligations pursuant to Article 53b(2) of the Financial Regulation (EC, Euratom) No 1605/2002 to take all necessary measures to protect the Union’s financial interests when implementing the budget;












181.


Points to the fact that the quantification of errors could give rise to a difference of treatment: notes that whereas the Court of Auditors looks at compliance, according to which rules were either adhered to or not, the Commission takes into consideration the financial impact of an error and financial corrections may vary accordingly;












182.


Emphasises the fact that a complex body of rules is often at the origin of errors; shares, therefore, the Commission’s approach to strive for simplification; warns against the risk which could stem from additional national regulations increasing the administrative burden (i.e. ‘gold plating’, complicated eligibility rules);





Reporting and financial corrections









183.


Welcomes the Commission’s correction mechanisms which appropriately address errors and deficiencies detected over a multiannual period and at closure; notes that one third of ERDF programmes had payments blocked in the course of 2012 and following 121 reservations pronounced in 2011, DG REGIO has interrupted payment deadlines for 63 programmes, issued 115 warning letters and initiated suspension procedures for 60 of those programmes;












184.


Recalls that the financial corrections should not merely serve as a fine and that their application should have a positive impact on the long-term improvements of the management and control systems as well as on the recurrence of errors;












185.


Is concerned about the findings of the Court of Auditors that there is no assurance that financial correction mechanisms compensate for all operational programmes in an adequate manner and that all material issues are resolved; moreover the Court of Auditors found no evidence that financial correction mechanisms translate into lasting improvements to systems which would prevent recurrence of the errors uncovered; refers in this respect specifically to the Special Report No 3/2012 (43) (points 83 and 84); calls, therefore, on the Commission to provide a comprehensive assessment of the financial corrections made and their impact on the systems in respect of preventing the recurrence of the same errors (specifically of a systemic nature) in the future; calls on the Commission to inform Parliament about its conclusions by the end of 2013; invites the Commission to use all relevant findings during the next programming period 2014-2020 and to put forward proposals for amending regulations, as appropriate;












186.


Observes with satisfaction the continuous efforts of the Commission to reinforce and, at the same time, simplify the control provisions for cohesion policy; is of the opinion that the proposed measures for the 2014-2020 programming period such as specific ex-ante conditionalities, annual management declarations, certification of annual accounts, audit opinions or stricter rules for the substitution of ineligible expenditure should further contribute to the reduction of the level of error; supports the growing result orientation and the thematic concentration of cohesion policy that should assure high added value of the co-financed operations;












187.


Calls for payments from the Structural Funds to be subject to increased conditionality monitoring so as to ensure that the rules on the proper use of Structural Funds are complied with in all Member States;





Recommendations









188.


Calls on the Commission to assist Member States in drafting comprehensive, meaningful and comparable audit control reports, including a chapter on the contributions Union funds have made in the respective countries to attain the Europe 2020 objectives, both at national and regional level, considering each region’s individual potential for development and its possible transformation in an economic growth centre;












189.


In this context, draws the attention of the Commission and the Member States to the fact that under the Europe 2020 objectives operational programmes should increasingly be designed in such a way that its sub-objectives are specific, measurable, attainable, relevant and timely and, consequently, the programme lends itself to performance audits; notes that the establishment of a common system of result and impact indicators would contribute to the evaluation of the progress achieved under the different programmes in the context of their effectiveness and efficiency and not only in terms of their financial implementation;












190.


Reminds the Member States that due to the strict time limits for project execution, a mature project pipeline is required, especially for major infrastructure projects, in order to start their implementation at the beginning of the next programming period 2014-2020;












191.


Shares the Court of Auditors’ view that the Commission should further reinforce the present sanction system (interruption, suspension, financial corrections) by reducing the possibility of replacing ineligible expenditure with other expenditure during the next programming period thereby creating an additional incentive for Member States to detect and correct errors at an early stage;












192.


Calls on the Commission, in consultation with the Court of Auditors, to establish a transparent system which allows, on the one hand, taking into consideration annual financial corrections but also, on the other, financial corrections during the life span of a programming period;












193.


Calls on the Commission to assist Member States in rendering first-level controls and national audit authorities more effective by exchange of best practice and closer cooperation between the Commission, the Court of Auditors and national authorities (‘tripartite meetings’); considers, in addition, that the national audit authorities could put extra emphasis on the follow-up of the achieved results and effectiveness of Union funds absorption, rather than applying only a quantitative approach, regardless of the final project goals;












194.


Calls on the Commission to start the preparation of a ‘best practices’ manual from the current programming period, incorporating practical results, achieved effect and lessons learnt in order to optimise the absorption process and to decrease the level of error rates; notes that in this regard, the potential future beneficiaries for the next programming period 2014-2020, including Croatia, as well as potential candidate countries, would profit;





Transport and tourism









195.


Notes that in considering the implementation of the budget for the 2011 financial year, as in the previous year, the Court of Auditors focused mainly on cohesion and energy policies rather than on transport policy; stresses that transport policies are concerned with the development of the internal market, increased competition, innovation and the integration of transport networks;












196.


Notes that the EUR 51 million decrease in appropriations made in 2011 to the cooperation in Transport to the Clean Sky Joint Undertaking was due to the review of industrial policy approach and the decrease in payment appropriations of EUR 60 million for projects of common interests in the trans-European transport networks was made for timing reasons and to allow full use of the carryover from 2010; acknowledges that the reduction in cash-flow for Sesar Joint Undertaking was in line with the recommendation of the Court of Auditors;












197.


Is disappointed that following the low uptake of payment appropriations for transport safety in 2010 and the request to receive an explanation of this underspending from the Commission, no detailed information about the level of appropriations and their uptake in 2011 was provided;












198.


Notes that the characteristics of transport-related projects often leads to the concentration of a significant proportion of payments in a limited period, especially towards the end of the year and is concerned by the negative impact this can possibly have on the auditing exercise;





Employment and social affairs


Error rate compared to effectiveness









199.


Notes that the Court of Auditors estimated that the most likely error rate in this spending area was 2,2 % and that the Court of Auditors’ audit indicate weaknesses in particular in the ‘first level checks’ of the expenditures, which are the responsibility of the managing authorities and intermediate bodies in the Member States;












200.


Notes that in 2011, the Director-General issued reservations in his annual activity report with regard to operational programmes in Belgium, the Czech Republic, Germany, Italy, Spain, Latvia, Lithuania, Romania, Slovakia and the United Kingdom;












201.


Notes with satisfaction that the most likely error rate is close to the materiality threshold demonstrating that a consistent application of interruption, suspension and financial corrections has had a positive effect on the overall error rate;












202.


Is concerned about the fact that for 76 % of the regional policy transactions affected by error sufficient information was available to the Member States’ authorities to have detected and corrected at least some of the errors prior to certifying the expenditure to the Commission;












203.


Emphasises that it is the task of the national audit authorities to develop the necessary ‘internal self-control’ of rules and measures in order to detect and correct errors committed at the ‘first level’;












204.


Takes note of the number of reservations (24 programmes) made by the Commission’s DG ‘Employment’ (EMPL) in 2011 corresponding to EUR 57,7 million; notes, furthermore, that payments for 21 programmes were temporarily interrupted, valued at EUR 911 million; welcomes the strict approach followed by the Commission, including a general rule that an accumulated residual risk of 2 % would lead to a reservation for the programme concerned;












205.


Welcomes the fact that for the first time in 2011, the area of Employment and Social Affairs has been sampled and appraised separately from the Cohesion Policy chapter; welcomes the decreased error rate for this policy field, which stands at 2,2 %, compared to 3,9 % average for all policy fields; notes, however, that ineligible costs were reimbursed;












206.


Recalls the need to monitor and measure the performance of financial instruments against policy goals — Europe 2020 objectives — in order to be able to identify shortcomings and to make progress; calls for performance information and data be available on annual basis; is of the opinion that in context of the current economic and financial crisis the need for multi-criteria performance data on ESF interventions is crucial;












207.


Regrets that despite reinforcements of ESF budget lines by means of transfers between budget lines and via the Amending Budget, EUR 2,7 billion of outstanding payments to the beneficiaries could not be paid due to insufficient payments appropriations; calls on the Commission to propose, and on the Council to agree on, accurate payment appropriations in annual budgetary procedure in order to avoid uncertainty and unnecessary procedural burden on the budgetary authority and provide beneficiaries with timely payments;












208.


Welcomes the fact that for the ESF, an amount of EUR 3,25 million was added to the Operational Technical Assistance line in order to mobilise specific expertise and directly support the implementation of a Greek ESF Operational Programme;












209.


Stresses that the effectiveness and quality of work of ESF audit institutions needs to be improved;












210.


Notes that the share of spending on employment strand within the Progress programme is slightly lower than the share it has in the programme; following the conclusions of the evaluation report (44) considers that spending on policy advice, research and analysis and policy debate on employment should be increased;












211.


Reiterates its call to ensure, in the light of implementation, an orderly progression of the total appropriations for payments in relation to the appropriations for commitments, so as to avoid any abnormal evolution of outstanding commitments (RAL) (65 % of the total volume of the Cohesion Funds at the end of 2011);





Sources of errors









212.


Notes that the Court of Auditors detected the reimbursement of ineligible costs in 13 % of the 180 transactions audited in the ESF and that such errors account for 77 % of all quantifiable errors and make up approximately 73 % of the estimated error rate for this policy group;












213.


Is deeply worried that 86 % of the error rate calculated by the Court of Auditors at Union level for the ESF derives from the incorrect application of national rules, varying from clerical mistakes to unnecessarily complex rules (‘gold plating’) to insufficient first level controls;





Reporting and financial corrections









214.


Is of the opinion that the Commission’s correction mechanisms addresses appropriately errors and deficiencies detected over a multi-annual period and at closure; notes that up to November 2012, the Commission adopted, in addition to measures taken in 2011, two suspension decisions and 34 interruptions; the latter represent a value of EUR 153 million; notes, furthermore, that the Commission imposed EUR 153 million of financial corrections until November 2012;





Progress on the closure of the 2000-2006 programming period









215.


Recognises that Member States have to submit three closure documents: a certified statement of final expenditure, including final payment application, a final report on implementation, and a declaration on winding-up of the assistance; for the programming period 239 operational programmes are concerned;












216.


Takes note that 149 programmes (62 %) have been closed by the end of October 2012; notes that commitment appropriations amounting to EUR 1 889 million were still open;





Fraud Prevention









217.


Welcomes the development by DG EMPL and REGIO of smart IT tools for the prevention, detection and investigation of fraud such as ARACHNE Risk Scoring Tool; points out that a pilot exercise was carried out in Belgium, Portugal and Hungary which led to the further development of the initial risk scoring tool with modules capable of enriching the data with external publicly available information; understands that the ARACHNE tool will be ready in Spring 2013 while by the end of 2013, all Member States will be able to use the tool on a voluntary basis;





Recommendations









218.


Calls on the Commission to assist Member States in drafting comprehensive, meaningful and comparable audit control reports, including a chapter on the contribution Union funds made in the respective Member State to attain the Europe 2020 objectives;












219.


Draws the attention, in this context, of the Commission and the Member States to the fact that under the Europe 2020 objectives operational programmes should increasingly be designed in such a way that their sub-objectives are specific, measurable, attainable, relevant and timely and, consequently, the programme lends itself to performance audits;












220.


Shares the Court of Auditors’ view that the Commission should further reinforce the present sanction system (interruption, suspension, financial corrections) by reducing the possibility of replacing ineligible expenditure with other expenditure during the next programming period thereby creating an additional incentive for Member States to detect and correct errors at an early stage;












221.


Calls on the Commission and the Court of Auditors to establish a transparent system which allows, on the one hand, to take into consideration annual financial corrections but also, on the other, financial corrections during the life span of a programming period;












222.


Calls on the Commission to assist Member States in rendering first-level controls and national audit authorities more effective by exchange of best practice and closer cooperation between the Commission, the Court and national authorities (‘tripartite meetings’); welcomes tripartite meetings as an important part in the contradictory process aiming at enhanced cooperation among the parties resulting in a more effective detection and correction of errors, in particular with regard to the ESF;












223.


Agrees with the Commission that particular emphasis should be given to:






—


improving the declaration of costs and their verification at national/regional level,










—


supporting the management and control authorities in identifying the main sources of errors in the most critical operational programmes,










—


using increasingly the ‘Simplified Cost Options’ providing for reimbursements based on standard scales of unit costs, indirect costs according to a predefined flat rate percentage of direct project costs, as well as lump sum payments;









Bulgaria and Romania









224.


Notes with concern the interim Commission’s report on the progress made by Romania under the Cooperation and Verification Mechanism, especially in the light of Romania’s capability to protect the financial interest of the Union; is concerned by the reports assessment that only limited progress has been achieved in the prevention and sanctioning of corruption related to public procurement; stresses the importance of the report’s suggestion that the Government materialises the appointment of a new leadership for the prosecution and the National Anti-corruption Agency (DNA); calls on the Commission to steadfastly and determinedly insist, as far as the Romanian Government is concerned, that the Commission’s recommendations are complied with and clarified; expects, finally, a series of measures from the Commission, in cooperation with the Romanian government, aimed at improving the integrity of the Romanian legal system;












225.


Notes with concern the Commission’s Report on the progress made by Bulgaria under the Cooperation and Verification Mechanism with a view to further efforts needed in order to demonstrate tangible results in the monitored sectors; calls upon the effective implementation of the established legislative and institutional framework; notes with concern the Report’s statement that the Supreme Judicial Council (SJC) has not used the new powers given to it accordingly, aimed at effectively managing and leading the judiciary through a comprehensive reform process; welcomes the efforts by the Bulgarian government to renew the SJC with a mandate able of implementing fundamental reform through the following new rules: public hearings of the candidates for SJC, clear criteria for their professional and educational qualification and vision for the efficiency, accountability and integrity of the judiciary; acknowledges the fact that the new specialised structures put in place illustrate a commitment to adapting the current structures to tackle organised crime more effectively; takes note, however, that the Report suggests that these new instruments have not yet delivered the expected results regarding important cases; notes with great concern that investigations into alleged corruption and abuse of office by magistrates have received a particular weak response from the judiciary; is fearful, furthermore, that a weak implementation of Public Procurement legislation could result in an important source of corruption, serious violations of Union procurement rules as well as a poor delivery of public goods with a European added value and waste of Union public money; welcomes the amended public procurement law, establishing the ex-ante control on tender procedures to guarantee the proper spending of the public resources; calls on the Commission steadfastly and determinedly to insist, as far as the Bulgarian institutions are concerned, that the Commission’s recommendations are complied with; expects, finally, a series of measures from the Commission, in cooperation with the Bulgarian judiciary, to improve the integrity of the Bulgarian legal system;





Control of Structural Funds in the Czech Republic









226.


Takes note that an Action plan has been implemented by the Czech government in 2012; notes with concern the centralisation of the audit activities under the main audit authority in the Czech Ministry of Finance since the Court of Auditors reported that this audit authority was ineffective; calls on the Commission to report to the discharge authority on adjustments concerning the staff of the audit authority, based on the Czech Government’s analysis, as requested in the Action Plan;












227.


Takes note that the Commission has not applied any corrections due to the ineffectiveness of the audit system in the Czech Republic; notes, however, that the Commission applied corrections for some of the operational programmes, mainly due to shortcomings in the functioning of the management and control systems (errors in public procurement and the selection of operations); notes that the corrections applied can be allocated to other projects; is worried about information reported initially by the Court of Auditors which suggested that the Czech Ministry of Finance used its role as an audit authority and certification authority to influence the final error rate; requests that the Commission report back to Parliament in detail on the matter; calls on the Commission to elaborate in cooperation with the Czech Government and to follow up on the implementation of an existing Action plan that tackles the shortcomings in the Audit system at the core;





Gender issues









228.


Stresses that under Article 8 TFEU, the promotion of equality between men and women is a fundamental principle of the Union; reiterates its demand for the implementation of gender budgeting by all stakeholders in the Union budgetary procedure; calls, therefore, on the Court of Auditors to assess the implementation of the Union budget from the gender perspective, where applicable;












229.


Regrets that the annual report contains no observations from the Court of Auditors or any replies from the Commission regarding spending related to the promotion of equality between women and men;












230.


Notes the Court of Auditors’ numerous observations, as well as the Commission’s replies on the chapter of employment and social affairs, the policy area primarily covering gender equality; asks the Court of Auditors to provide specific details if any of the observations concerning spending related to gender equality;












231.


Reiterates its call for further efforts to develop gender-specific data, which allow proper monitoring of how budgetary allocations affect the economic and social opportunities of women and men, that can be included in the reports on the implementation of the budget; underlines that the new Multiannual Financial Framework provides an opportunity to develop and introduce such data, and implement gender budgeting as a tool for good governance;





External relations, aid and enlargement









232.


Stresses that the Union’s resources must be managed in line with the principles of transparency and good governance; notes the Court of Auditors’ finding that payments for the 2011 financial year are free from material error under heading 4 of the budget but that interim and final payments are affected by material error; further notes that not all errors were quantifiable;












233.


Points out the specific nature of the financing of the Union’s external assistance, which, although it must be subject to the same rules and oversight requirements as the rest of the Union budget, is put in place partly by persons and entities external to the Union under sometimes difficult conditions, while needing to remain reactive and adaptable to crises and requirements;












234.


Supports all the Court of Auditors’ recommendations in respect of the chapter on ‘External relations, aid and enlargement’, in particular the recommendations concerning the Directorate-General of the Service for Foreign Policy Instruments (FPI) and the necessary improvements it needs to make to the management of the budget for the common foreign and security policy;












235.


Stresses the need for greater transparency in the management of funds allocated to election observation missions; calls on the Commission to send a report to the budgetary authority for each financial year on the costs incurred for each mission, detailing all the budget items, including costs associated with external service providers;












236.


Draws attention to the need to re-use election observation mission materials (furniture, computers, etc.) in other electoral missions or by Union delegations in order to maximise their use;












237.


Welcomes the development of an improved budget support risk management framework by the Commission (in full application from 1 January 2013) as part of the new budget support guidelines in response to a key recommendation from the Court of Auditors;












238.


Notes, however, in respect of budget support, the reservations and warnings issued by the Court of Auditors concerning the inherent risks of irregularity, fraud and corruption; reiterates its very firm belief that budget support, while remaining an important channel for external aid, must be subject to robust political, legal and audit-related preconditions;












239.


Welcomes the results of the evaluation report of the effectiveness of the Union aid channelled through civil society organisations (CSO-s); draws attention to one of the main recommendations of the report to reduce the negative impact of cumbersome procedures on the effectiveness of the programmes implemented by CSO-s and welcomes the fact that new options are put in place to simplify access to funding;












240.


Welcomes the fact that the Commission regards the visibility of Union’s projects as a key element in good project implementation and that it has been made obligatory to prepare a communication plan for each project;












241.


Notes with satisfaction that the Court of Auditors’ estimated error rate for external aid under the Union’s budget has been below materiality for two consecutive years; is concerned, however, that interim and final payments were affected by material error and that the overall frequency of errors in payments detected by the Court was higher than in the two previous years (33 % in 2011, up from 23 % in 2010 and 22 % in 2009);












242.


Is concerned that EuropeAid’s and DG ECHO’s supervisory and control systems were again found to be only partially effective; points, in particular, to the need to improve those systems in delegations; calls on the Commission to set aside sufficient resources for delegation staff to perform monitoring and supervision activities in a timely and satisfactory manner; welcomes the introduction of the new version of the six-monthly External Assistance Management Report in July 2011, which aims to strengthen the accountability links between delegations and EuropeAid headquarters;












243.


Reiterates its concerns about the high frequency of encoding errors in the external aid management information system (CRIS), which may compromise the reliability of the data used for the preparation of the annual accounts; calls on the Commission to continue investing in the improvement of data quality and the development of CRIS functionalities, in particular linking audit findings to the recovery of funds (45);












244.


Looks forward to seeing the first results of the Commission’s new methodology for calculating the residual error rate, to be applied for the first time across the external relations directorates in the financial year 2012;












245.


Joins the Court of Auditors in its strong concerns about the inadequacy of staff resources for aid management, in particular in EuropeAid’s Internal Audit Unit and delegations, and the potential detrimental effects of the high turnover rate of contractual staff in headquarters and the Commission reorganisation of mid-2011 on aid management; appeals to Council, as the other arm of the budgetary authority, to take its responsibility in ensuring that aid can continue to be managed in accordance with the highest standards in future years;












246.


Notes that in 2011, the first full year of operation of the European External Action Service (EEAS), EEAS and Commission staff in delegations were separated in terms of their allocation and funding; is concerned that in 2011, at least 43 person-years allocated to EuropeAid were used by the EEAS, over and above the agreed flexibility limits defined in the Working Arrangements negotiated between both organisations; urges the EEAS and the Commission to fully respect the Working Arrangements, seeing in particular to the fact that EuropeAid staff focus on ensuring appropriate aid management, in order to avoid putting the sound financial management of Union’s assistance at risk;












247.


Emphasises the fact that the envisaged reinforcement of EuropeAid staffing in the Neighbourhood region should not be achieved by a reduction and transfer to the neighbourhood of staff managing Union’s aid to Least Developed Countries and other Low Income Countries in other regions; is of the opinion that if additional needs arise, they must be met with additional staff;












248.


Urges the Commission and the EEAS to focus more on results and impact measurement in the design of the new spending programmes under the next Multiannual Financial Framework (MFF) for the period 2014-2020, inter alia, by using pre-defined, country-specific, clear, transparent and measurable indicators adapted to the specificities and objectives of each instrument; supports the Court of Auditors’ recommendation that the Commission should define policy objectives to demonstrate better how it secures Union added value during the next programming period; reiterates its call for associating all relevant stakeholders, including civil society and local authorities in partner countries, in the evaluation phase of Union’s assistance;












249.


Is concerned by the difference in the methodologies applied by the Court of Auditors for the calculation of the error rate for transactions for external relations, aid and enlargement in the general budget on the one hand and for the level of error for payments from the EDFs on the other hand; takes note that the Court of Auditors has decided to align its methodology from 2012 onwards in order to provide Parliament with a uniform picture of the activities in the area of the external action of the Union;












250.


Following the creation of the EEAS, requests a clear allocation and coordination of roles and responsibilities of the Commission and the EEAS as regards programming and implementation of the budget in third countries;












251.


Asks the Commission to report before July 2013 on the number of NGOs to which the Union contributes but which do not generate any revenue other than funding from government agencies;












252.


Calls for a detailed summary of the allocation of funding in Libya; calls for clarification as to whether the subdelegation of the Union ambassador in Libya has been revoked;












253.


Calls on the Commission to use a ‘traffic light’ system in the progress reports, for ease of reference, in order to show what has improved or deteriorated from one year to the next;





Aid to Haiti









254.


Is concerned to find that the performance indicators for the budget support to the Republic of Haiti have not been made public; urges the Commission to make public those indicators and the respective assessments of the Government of Haiti’s performance in order to qualify for budget support;












255.


Notes that new criteria for budget support are set out in the Commission’s policy ‘The future approach to EU budget support to third countries’; calls on the Commission to apply these criteria from 2013 onwards in a transparent way to the budget support for the Government of Haiti;












256.


Deeply regrets that, in spite of what was promised, the Commission has still not published a list of Union funded projects in Haiti; calls on the Commission to publish this list without delay and to provide an assessment of the sustainability of these projects in a five-year perspective;












257.


Urges the Commission to carry out the postponed first ever overall impact evaluation of the Union’s aid programme for Haiti in 2013 and to produce a report on this for the discharge authority;












258.


Is concerned about the findings of the Court of Auditors, contained in its Special Reports Nos 1/2012 and 13/2012 on the Effectiveness of European Union Development Aid for Food security in Sub-Saharan Africa and on the European Union Development Assistance for Drinking Water Supply and Basic Sanitation in Sub-Saharan Countries respectively, which raise concerns about sustainability of the Union aid; welcomes the Court of Auditors’ recommendations contained in those reports and urges the Commission to take those recommendations on board in order to maximise the benefits from Union’s development expenditure;












259.


Welcomes the creation, under the new Financial Regulation (EU, Euratom) No 966/2012, of Union Trust Funds, which will increase the visibility of Union action and allow for stricter control over the delivery chain of Union funds; asks the Commission to report to Parliament on the effectiveness of those funds;





Research and other internal policies









260.


Is concerned that the research framework programmes are implemented under centralised direct and centralised indirect management involving six Commission directorates-general and two executive agencies; notes that in addition, parts of the budget are implemented under indirect centralised management by joint undertakings and the European Investment Bank;












261.


Regrets that the large number of Commission services involved in that policy area renders decision-making and the lines of responsibilities opaque; calls on the Commission to review the distribution of Commissioners’ portfolios in order to better reflect competences distribution of the committees of Parliament and, as it is, wide spread practice in Member States;












262.


Is concerned about the delay in dismantling the Ignalina Nuclear Power Plant (INPP) in Lithuania, due to conflicts between the authorities and the contractors; welcomes and supports the fact that the Commission and the international donor community decided to suspend financial support for the project, in line with the recommendations of Parliament’s Committee on Budgetary Control, until the conflict has been solved;












263.


Is deeply concerned by the current deficiency in viable knowledge on the amounts necessary to complete the whole decommissioning process; acknowledges that considerable amounts are still needed in this process and deplores the fact that Member States have failed to set up the necessary mechanisms to ensure this additional funding; reiterates and stresses that the final responsibility for the safe closure of nuclear power plants lies with the Member State in which the power plant is situated; notes that failure to comply with this obligation puts Union citizens at risk;












264.


Notes that the European Bank for Reconstruction and Development (EBRD) commissioned expert reports from Swedish experts (SKB), among others, which confirmed that GNS fuel elements containers are safe; notes with concern that this documentation for the fuel element containers, which has long been available, was not forwarded to the Lithuanian Approval Authority; notes that as long as the fuel elements are not stored in the containers, the Ignalina power station must be administered as if it were in operation, which means that the 2 000 or so employees must continue to be financed by the Union; calls on the Commission to accept no excuses from the Lithuanian Government which would cause the authorisation and the project to be further delayed; asks that the Commission set down a rigid timetable and threaten to impose sanctions if it is not adhered to;












265.


Calls on Bulgaria, Lithuania and Slovakia to establish decommissioning plans, including detailed financial envelopes, explaining how the closure of the nuclear power plants will be financed;





Error rate compared to effectiveness









266.


Notes that the Court of Auditors estimated the most likely error rate in a spending area that is mainly under centralised management at 3 % in 2011, which is more than twice as high as in 2010 with 1,4 %;





Sources of errors









267.


Notes that the principle risk of irregularity is that beneficiaries may overstate eligible costs; such a risk is exacerbated by the complexity of rules for calculating eligible costs; in addition in certain areas the implementing bodies apply rules differently; ineligible personnel costs and costs linked to commercial activities represent additional sources of error; regrets that the Commission did not react in time;












268.


Finds it unacceptable that the Court of Auditors also found weaknesses in the work of independent auditors certifying cost claims of beneficiaries: in 25 out of 31 cases where auditors had issued an unqualified opinion the Court of Auditors detected errors; is worried by such a manifest lack of professionalism;












269.


Is satisfied, however, that the Court of Auditors considers the ex-post audits to be effective;












270.


Deplores the fact that the Court of Auditors found the supervisory and control systems under the Competitiveness and Innovation Framework Programme (CIP) — ICT Policy Support programme (ICT-PSP) to be ineffective; calls on the Commission to bring these supervisory and control systems up to speed without delay;












271.


Takes note of the Court of Auditors’ conclusions that the payments for the year ended 31 December 2011 for research and other internal policies were affected by material error and that the examined supervisory and control systems for research and other internal policies were partially effective; regrets that the Court of Auditors’ report provides no detailed information on the expenditure for the area of freedom, security and justice;












272.


Emphasises the high importance of chapter 18 02 – Solidarity – External borders, return, visa policy and free movement of people for the security and economy of the Union; calls on the Commission to improve its budgetary planning;












273.


Takes note of the reservations made by the Commission’s Directorate-General for Home Affairs in its annual activity report of 2011 regarding the reputational risks due to delays in implementing SIS II; takes note of the financial risk resulting from the residual error rate in the non-audited population of grants of the financial programmes ‘Prevention, preparedness and consequence management of terrorism and other security related risks’ and ‘Prevention of and fight against crime’; calls on the Commission to pursue the corrective measures announced;





Reporting and financial corrections









274.


Recognises that the number of participants in the seventh framework programme (FP7) has significantly increased to almost 20 000 and that inexperience, in combination with a complex set of rules, could lead to errors; encourages the Commission to continue to provide guidance and feedback to participants;












275.


Finds it incomprehensible that auditors of beneficiaries submit erroneous certificates on the financial statements; believes that the Commission must focus on giving guidance on the professional qualifications of private auditors and providing additional expertise;












276.


Notes the examples given by the Court of Auditors on errors in declarations of personnel and indirect costs; notes that the Horizon 2020 programme proposal introduced significant simplifications of the rules for these cost categories; considers that these simplifications are essential if there is to be a significant reduction in the error rate;












277.


Acknowledges that the Commission, when reviewing the ex ante control procedures, undertakes to strike a balance between early approval and control;












278.


Notes furthermore that under the FP7 audit strategy beneficiaries receiving 48 % of the FP7 budget have been audited;












279.


Also takes note of the fact that the Commission uses the simplified extrapolation procedure, based on flat rates, for corrections, which could speed up the recovery process if the beneficiaries cooperate fully;





Recommendations









280.


Urges the Commission to improve cooperation among all the directorates-general and other bodies involved, and render the division of labour, decision-making procedures and lines of responsibility between them more transparent;












281.


Fully supports the Court of Auditors’ recommendations






—


to raise awareness among beneficiaries and external auditors,










—


to familiarise external audit firms with the Commission guidelines, and










—


to put in place an audit strategy for the ICT-PSP programme;









Education and culture









282.


Calls on the Education, Audiovisual and Culture Executive Agency (EACEA) to revise the one-sided and inadequate financial ratios established in order to evaluate the financial situation of beneficiaries and to decide upon the level of grant instalments, even jeopardising projects selected by not granting the usual payment of first instalments and waiting till the project is finished and reported back; reminds the EACEA that the efficient monitoring and control of projects includes a realistic assessment of the environment of small and medium enterprises and very small organisations;












283.


Is concerned by the significant errors in the underlying transactions by the EACEA in the context of the Lifelong Learning Programme (2007–2013) that were found through ex-post controls; notes that these errors are mainly due to the lack of adequate justifying documents from beneficiaries and the non-respect of eligibility rules; encourages the EACEA to further improve its control systems, to adapt them to the different kinds of beneficiaries, and to raise awareness of their financial obligations and controls;












284.


Welcomes the improvements to the management and control systems of the National Agencies and National Authorities and the fact that the error rate for the implementation of the programmes through National Agencies in 2011 has dropped down to 1 %, significantly lower than in previous years;












285.


Regrets that for the fourth consecutive year, the Commission’s Directorate-General for Communication still has a reservation in the Annual Activity Report regarding the non-compliance with copyright legislation despite the action plan adopted in 2009;












286.


Notes the successful actions that the Commission has undertaken in the field of sport; nevertheless calls upon the Commission to be more ambitious with the tools and budget it has, in order to prepare for the sports programme in 2014;





Administrative and other expenditure









287.


Calls on the Commission not to reimburse any more travel costs of advisors to Commissioners whose work has not produced any tangible findings until an added value of their work can be proven;












288.


Notes with concern the finding of the Court of Auditors that in 15 out of 28 audited cases, the information available in the Office for Administration and Payment of Individual entitlements (PMO) on the personal and family situation of the staff members was not up to date; recommends that the Commission follow up the recommendation of the Court of Auditors to request staff to deliver at appropriate intervals documents confirming their personal situation and that it implements a system for the timely monitoring of these documents;












289.


Calls on the Commission to execute an in-depth study on the differences in required qualifications and the granted privileges, working conditions, allowances, entitled vacation days as well as pay levels for positions for civil servants and foreign services between Union and Member States located in the same working place and on the question of whether these differences legitimise the differences in remuneration of delegated national compared with Union civil servants, taking into account the relevant applicable tax system by comparing cases with standardised family situations;












290.


Notes with concern that the Commission is unable to give a full overview of the costs incurred for hiring external staff and temporary agents on a yearly basis; requests that those costs are systematically monitored and requests that they are made publically available;












291.


Calls on the Commission to make more use of the available technologies such as teleconferences and teleworking in order to reduce the costs of buildings and travel; requests the Commission to estimate possible financial savings which could be achieved with the increased use of these technologies and to submit the results to Parliament by September 2013;












292.


Demands the establishment of an interinstitutional database for studies, so as to avoid multiple financing of the same issues and to achieve an exchange of results;





OLAF









293.


Has been informed by the OLAF Supervisory Committee about breaches of fundamental rights during OLAF investigations; is very concerned about the information received in this regard and calls for full transparency concerning these incidents, regardless of the identity of the person(s) involved;












294.


Notes the numerous attempts made to obscure clarification of the allegations made about OLAF’s investigation methods; regards this as inappropriate and demands full clarification of these allegations;





Eurobarometer









295.


Is concerned about the criticisms, mainly voiced in scientific publications, of the Eurobarometer’s survey methods and calls on the Commission to give a detailed opinion of those criticisms;





Getting results from the Union budget









296.


Welcomes the fact that the Court of Auditors presents a report on ‘getting results from the budget’ for the second time; asks the Court of Auditors to extend its assessment to other services of the Commission, in particular DG EMPL, DG MARE and to the Secretariat general of the Commission;





Evaluation report on the Union’s finances based on results achieved









297.


Notes that the report on the evaluation of the Union’s finances based on the results achieved (COM(2012) 675) has been adopted by the Commission on 21 November 2012, thus giving both Parliament and the Court of Auditors only a limited time to review and reply; reiterates its previous request to the Commission to present the evaluation report in the competent committee and plenary when the Court of Auditors’ Annual Report is presented;












298.


Considers that progress concerning the evaluation report relating to the financial year 2011 has been made as that report provides certain performance-related information which became available in 2011 for funding under all of the main budget headings and summarises evaluation results on certain financial programmes for each budget heading;












299.


Regrets, nevertheless, that this report provides only summaries of various evaluations relating to different programmes and covering divergent timeframe, without any comprehensive assessment of the results achieved in 2011 by the Commission when pursuing its policies;












300.


Shares the view of the Court of Auditors (46) that the evaluation report does not yet provide sufficient evidence and reliable information on achievements resulting from the policies of the Union and, therefore, can not fulfil the role which it should play in the context of the discharge procedure;












301.


Notes with satisfaction that some evaluations contributed to improve final impact of the programmes; encourages the Commission to take on board the main findings of those evaluations when shaping its policies;












302.


Calls on the Commission to inform the budgetary authority on an annual basis about the development of accounts outside the Union budget, including their cash-flow development as well as the purpose of each account;












303.


Points out that the presentation of those summaries by budget headings following the structure of the 2007-2013 Multiannual Financial Framework does not constitute as such an evaluation on Union’s finances;












304.


Considers that the structure of the report consisting of a variety of summary assessments presented, comprising interim, mid-term, ex post, and final evaluation, makes it difficult to draw consistent conclusions in terms of performance;












305.


Notes that according to the Commission itself, impact evaluations on the programmes usually refer to funds committed at least three to five years previously; insists on receiving an evaluation focussing on the performance observed in the preceding financial year, i.e. measures taken to accomplish the Europe 2020 objectives annually, in full accordance with Article 318 TFEU;












306.


Calls on the Commission to broaden the coverage of its assessment and to develop a real cost effectiveness approach aiming at measuring the results obtained in pursuing its political objectives on the basis of the finances and staff devoted to the realisation of those objectives;












307.


Calls on the Commission to ensure that evaluations are conducted independently; notes that the resulting reports should be shared as soon as possible with the relevant committees of Parliament;












308.


Asks the Commission to outline in time for the discharge procedure 2012 a new system of management and performance information including the design and the role of the evaluation report taking on board the recommendations of Parliament as developed in paragraphs 327 and 328 of this resolution and to present it to the discharge authority;












309.


Asks the Commission for this purpose to establish a reliable system of data collection on the performance to identify outcomes and impacts when they arise (47);





Commission’s management reporting on the achievements of the year









310.


Welcomes the improvements noted by the Court of Auditors in the Commission’s self-assessment of performance in its annual activity reports, in particular as regards reporting on policy achievements in the first part of those reports;












311.


Regrets, nevertheless, that the limited number of general objectives and impact indicators that the Directions General are requested to define remain affected by weaknesses limiting their usefulness (48);












312.


Also regrets that most indicators and targets related to the entire 2007-2013 period do not use interim indicators or milestones; insists in this context that impact indicators should have deadlines and quantified targets associated;












313.


Is worried that the directorates-general of the Commission did not set nor report on objectives for operational activities relating to economy including the cost of inputs or efficiency and the relation between inputs, outputs and results;












314.


Reminds the Commission of the rules concerning the rotation of senior staff in the Commission administration; confirms the need for those requirements in order to create transparency and avoid taking information hostage; calls on the Commission to implement this principle across the board and underlines the importance of leading by example and the taking of responsibility at the highest levels;












315.


Regrets also that the description of the policy achievements in part 1 of the annual activity reports is not sufficiently results-oriented and that the Court of Auditors’ examination of management plan and annual activity reports did not reveal any significant progress in this area;












316.


Insists on the need to ensure the consistency between the objectives, indicators and targets foreseen in the management plan and reported on in the annual activity reports;












317.


Insists also on the need to explain why the performance achieved did not meet the relevant objective or target in the annual activity report;












318.


Points out that according to points 10.17 and 10.18 of the Court of Auditors’ Annual Report, the accuracy of the evaluation performed by DG AGRI and DG REGIO is largely reliant on the quality of data supplied by the Member States; encourages the Commission services to issue guidelines on data input and to envisage to provide Member States with incentives to supply high quality performance data;












319.


Notes that according to the annual activity reports of the Commission Secretary-General, the Directors-General of the Commission have ‘aligned’ the general and specific objectives in their management plans with the Europe 2020 strategy for Growths and Jobs;





Europe 2020 strategy









320.


Reiterates the fact that Europe 2020 (49), launched by President Barroso in 2010, is the main project of the Commission, aimed at delivering growth that is smart, sustainable and inclusive; points out that this strategy is focused on five ambitious goals, measured by quantified targets in the areas of employment, innovation, education, poverty and climate/energy;












321.


Notes that Eurostat is responsible for ensuring the statistical support for the strategy in particular in producing and supplying the relevant statistical data and ensuring high quality standards for data;












322.


Notes that Eurostat again failed to deal properly with sensitive information, for example in the case of the data on Greece; calls on the Commission to undertake more stringent quality reviews and ensure that Eurostat guarantees that it will be accurate in its presentation of statistical data; calls for a report on this matter to be produced by March 2014;












323.


Insists on the need to strengthen the credibility of the European statistical system; welcomes the recommendations made in this regard by the Court of Auditors in its Special Report No 12/2012 to move ‘towards a system of European Statistics which guarantees professional independence, sufficient resources and strong supervision including sanctions for cases where quality standards are not respected’ (50);












324.


Underlines that the Union growth and jobs strategy is not based on activities led by each individual DG but encompasses seven cross-cutting flagships initiatives which are implemented each time by several directorates-general resulting into challenges concerning coordination and cooperation within the Commission;












325.


Notes that the coordination between the services of the Commission in the framework of the flagship initiatives has taken various forms of inter services consultation, sometimes informal ones (51); deplores, nevertheless, that the nine groups of Commissioners set up by President Barroso in April 2010 met only on rare occasions (52), resulting in an insufficient use of this new mode of coordination in 2011; deplores the fact that no specific mechanism has been installed to ensure a satisfactory coordination of the implementation of all the flagships initiatives;












326.


Regrets that the launching of the Europe 2020 Strategy in 2010 did not coincide with the time frame of the new programming period 2014-2020 and deplores that this will cause some delay in the achievement of the strategy, in those cases where the Member States have not managed to adapt their national and Union funded programmes for sustainable, smart and inclusive growth;












327.


Asks all the services of the Commission involved in the Europe 2020 Strategy to define in their management plan a limited number of simple targets, meeting the requirements of the Court of Auditors in terms of relevance, comparability and reliability in order to annually measure in their annual activity reports the performance of the Commission in the achievement of the Strategy;












328.


Asks the Commission to fundamentally modify the structure of its evaluation report foreseen by Article 318 TFEU, distinguishing the internal policies from the external ones and focussing inside the ‘internal policies part’ of this report on the Europe 2020 strategy as being the growth and jobs, the economic and social policy of the Union; insists that the emphasis should be put on the progress made in the achievement of the flagships initiatives;












329.


Endorses the main conclusions drawn by the Court of Auditors as regards the results of its audits on performance:






—


in order to produce good results, it is important to clearly identify the needs that the programmes are intended to fulfil,










—


good design (establishing a link between activities, outputs, results and impacts) of both programmes and of the individual projects within the programmes is essential for sound financial management,










—


in time for the 2012 discharge procedure, the Commission should report on how it intends to secure the added value of Union spending, in accordance with the principles set out by the Court of Auditors in point 10.31 of its Annual Report 2011 (scale and effects of the expenditure, trans-frontier effects, reasonable concentration and selective approach to expenditure outside the Union) and to develop corresponding, meaningful performance indicators;
















330.


Notes with satisfaction that the Commission has a system in place to follow-up all recommendations of the Court of Auditors’ special reports on performance audit (see Special Report No 19/2012 (53)); requests that the Commission strengthen the follow-up in order to respond in a timely efficient and effective manner to the recommendations of the Court of Auditors and the discharge authority;





The 2011 special reports of the Court of Auditors









331.


Welcomes the fact that its Committee on Budgetary Control drew up separate working documents or reports on the Court of Auditors’ individual special reports, the findings of which can be consulted in a separate document (54);












332.


Is of the opinion that the political appreciation of findings in the special reports should be an integral part of the discharge procedure;












333.


Welcomes, therefore, the ongoing consultations among its Committee on Budgetary Control, the Conference of Committee Chairs and the Conference of Presidents with a view to identifying the most appropriate way of taking the findings of the special reports into consideration, thereby benefitting to the fullest from the audit work of the Court of Auditors;












334.


Calls on its bodies to find a viable and lasting solution in time for the 2012 discharge procedure.






(1)  
            OJ L 68, 15.3.2011.

(2)  
            OJ C 348, 14.11.2012, p. 1.

(3)  
            OJ C 344, 12.11.2012, p. 1.

(4)  
            OJ C 348, 14.11.2012, p. 130.

(5)  
            OJ L 248, 16.9.2002, p. 1.

(6)  
            OJ L 298, 26.10.2012, p. 1.

(7)  
            OJ L 11, 16.1.2003, p. 1.

(8)  Proposal for a Regulation of the European Parliament and of the Council laying down common provisions on the European Regional Development Fund, the European Social Fund, the Cohesion Fund, the European Agricultural Fund for Rural Development and the European Maritime and Fisheries Fund covered by the Common Strategic Framework and laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund and repealing Council Regulation (EC) No 1083/2006 (COM(2011) 615/2), Article 136 et seq.

(9)  Council Regulation (EC) No 1083/2006 of 11 July 2006 laying down general provisions on the European Development Fund, the European Social Fund and the Cohesion Fund and repealing Regulation (EC) No 1260/1999 (OJ L 210, 31.7.2006, p. 25).

(10)  COM(2011) 615/2, Article 55(4).

(11)  Special Report No 13/2011 of the Court of Auditors entitled ‘Does the control of customs procedure 42 prevent and detect VAT evasion?’
         

(12)  Resolution of the European Parliament of 10 May 2012 with observations forming an integral part of its Decision on discharge in respect of the implementation of the general budget of the European Union for the financial year 2010, Section III — Commission and executive agencies (OJ L 286, 17.10.2012, p. 31).

(13)  Revision of Council Regulation (EC) No 1083/2006, Commission Regulation (EC) No 1974/2006 as to rural development; see also Commission proposal COM(2011) 615/2 concerning Common provisions of the structural instruments for 2014-2020.

(14)  See the synthesis report made by Terry Ward and Applica sprl on the Use of the ERDF to support financial engineering instruments with the contribution of the expert evaluation network delivering policy analysis on the performance of Cohesion policy 2007-2013.

(15)  Resolution of the European Parliament of 5 May 2010 with observations forming an integral part of its Decisions on discharge in respect of the implementation of the European Union general budget for the financial year 2008, Section III – Commission and executive agencies (OJ L 252, 25.9.2010, p. 39).

(16)  Paragraph 4 of Parliament’s abovementioned Resolution of 5 May 2010.

(17)  See the reply given by Commissioner Andor to the written question 18 in preparation of the hearing in the Committee on Budgetary Control on 26 November 2012 together with the 2011 Annual Activity Report — Directorate-General Regional Policy, page 84.

(18)  See the Commission’s Synthesis report, point 3.3, in footnote 9 on page 11 of COM(2012) 281.

(19)  See the Court of Auditors’ Annual report 2011, Annex 1.2, point 2.

(20)  See Note 6 in the consolidated annual accounts of the European Union 2011.

(21)  COM(2012) 281, point 1, page 2.

(22)  Introductory remarks made by Mr Caldeira on 6 November 2012 when presenting the Annual report of the European Court of Auditors concerning the financial year 2011 to the European Parliament’s Committee on Budgetary Control.

(23)  Regime used by an importer in order to obtain a VAT exemption when the imported goods will be transported to another Member State and where the VAT is due in the Member State of destination.

(24)  Of which EUR 1 800 million were incurred in the seven selected Member States and EUR 400 million in the 21 Member States of destination of the imported goods in the sample.

(25)  Special Report No 13/2011, p. 11, point 5.

(26)  PE 475.094.

(27)  Data communicated by Mr Kubyk on behalf of the Court of Auditors on 6 December 2012 during the hearing with Dacian Cioloș in the Parliament’s Committee on Budgetary Control.

(28)  The Court of Auditors’ Annual report 2011, point 3.9, footnote 11.

(29)  Data communicated by Mr Kubyk on behalf of the Court of Auditors on 6 December 2012 during the hearing with Dacian Cioloș in the Parliament’s Committee on Budgetary Control.

(30)  Commission Implementing Decision 2011/272/EU of 29 April 2011 on the clearance of the accounts of the paying agencies of Member States concerning expenditure financed by the European Agricultural Guarantee Fund (EAGF) for the 2010 financial year (OJ L 119, 7.5.2011, p. 70).

(31)  Joined cases C-92/09 and C-93/09, ECR 2010, p. I-11063.

(32)  Commission Regulation (EC) No 259/2008 of 18 March 2008 laying down detailed rules for the application of Council Regulation (EC) No 1290/2005 as regards the publication of information on the beneficiaries of fund deriving from the European Agricultural Guarantee Fund (EAGF) and the European Agricultural Fund for Rural Development (EAFRD) (OJ L 76, 19.3.2008, p. 28).

(33)  The Court of Auditors’ Annual report 2011, point 3.45.

(34)  The Court of Auditors’ Annual report 2011, point 3.23.

(35)  The Court of Auditors’ Annual report 2011, point 4.12.

(36)  See paragraph 86 of the abovementioned Parliament’s Resolution of 10 May 2012.

(37)  The Court of Auditors’ Annual report 2011, point 4.18.

(38)  DG AGRI annual activity report, point 3.1.1.1.6, p. 58.

(39)  Intervention of Ms Budbergyte on behalf of the Court of Auditors on 6 December 2012 during the hearing of Commissioner Dacian Cioloș in the Parliament’s Committee on Budgetary Control.

(40)  DG AGRI, annual activity report, p. 79.

(41)  The Court of Auditors’ Annual report 2011, Annex 4.2.

(42)  Council Regulation (EC) No 1198/2006 of 27 July 2006 on the European Fisheries Fund (OJ L 223, 15.8.2006, p. 1).

(43)  Special Report No 3/2012 of the court of Auditors – Structural Funds: Did the Commission successfully deal with deficiencies identified in the Member States’ management and control systems?

(44)  The Mid-term Evaluation of Progress — Final Report, Ecorys, 22 December 2011.

(45)  See also Special Report No 5/2012 of the Court of Auditors, ‘The Common External Relations Information System (CRIS)’.

(46)  Letter of Mr Caldeira to President Barroso, 20 December 2012 with the reply of the European Court of Auditors to the second European Commission evaluation report provided for in Article 318 TFEU.

(47)  Letter of Mr Caldeira to President Barroso, 20 December 2012 with the reply of the European Court of Auditors to the second European Commission evaluation report provided for in Article 318 TFEU.

(48)  The Court of Auditors’ Annual Report 2011, examples in point 10.18 et seq.

(49)  Communication from the Commission of 3 March 2010 entitled ‘Europe 2020 — A strategy for smart, sustainable and inclusive growth’ (COM(2010) 2020).

(50)  Special Report No 12/2012 of the Court of Auditors entitled Did the Commission and Eurostat improve the process for producing reliable and credible European statistics?, p. 6.

(51)  See for instance the replies given by Commissioner Andor to the written questions 46 and 47 in preparation of the hearing in the Committee on Budgetary Control on 26 November 2012.

(52)  In 2011, there were altogether 24 meetings of the 9 dedicated Commissioners groups with 7 meetings of the MFF group (see replies given by Commissioner Oettinger).

(53)  Special Report No 19/2012 of the Court of Auditors entitled ‘2011 report on the follow-up of the European Court of Auditors’ special reports’.

(54)  Texts adopted, P7_TA(2013)0123 (see page 68 of this Official Journal).







            RESOLUTION OF THE EUROPEAN PARLIAMENT
         
of 17 April 2013
         
on the Court of Auditors’ special reports in the context of the 2011 Commission discharge


THE EUROPEAN PARLIAMENT,






—


having regard to the general budget of the European Union for the financial year 2011 (1),










—


having regard to the consolidated annual accounts of the European Union for the financial year 2011 (COM(2012) 436 – C7-0224/2012) (2),










—


having regard to the Annual Report of the Court of Auditors on the implementation of the budget concerning the financial year 2011, together with the institutions’ replies (3), and to the Court of Auditors’ special reports,










—


having regard to the statement of assurance (4) as to the reliability of the accounts and the legality and regularity of the underlying transactions provided by the Court of Auditors for the financial year 2011 pursuant to Article 287 of the Treaty on the Functioning of the European Union,










—


having regard to its Decision of 17 April 2013 on discharge in respect of the implementation of the general budget of the European Union for the financial year 2011, Section III – Commission (5) and to its resolution with observations that forms an integral part of that Decision,










—


having regard to the special reports of the Court of Auditors drawn up pursuant to second subparagraph of Article 287(4) of the Treaty on the Functioning of the European Union,










—


having regard to the Council’s recommendation of 12 February 2013 on discharge to be given to the Commission in respect of the implementation of the general budget of the European Union for the financial year 2011 (05752/2013 – C7-0038/2013),










—


having regard to Articles 317, 318 and 319 of the Treaty on the Functioning of the European Union and Article 106a of the Euratom Treaty,










—


having regard to Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities (6), and in particular Articles 55, 145, 146 and 147 thereof,










—


having regard to Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council of 25 October 2012 on the financial rules applicable to the general budget of the Union and repealing Council Regulation (EC, Euratom) No 1605/2002 (7), and in particular Articles 62, 164, 165 and 166 thereof,










—


having regard to Rule 76 of, and Annex VI to, its Rules of Procedure,










—


having regard to the report of the Committee on Budgetary Control (A7-0096/2013),










A.


whereas, pursuant to Article 17(1) of the Treaty on European Union, the Commission shall execute the budget and manage programmes and shall do so, pursuant to Article 317 of the Treaty on the Functioning of the European Union, in cooperation with the Member States, on its own responsibility, having regard to the principle of sound financial management,










B.


whereas the special reports of the Court of Auditors provide information on issues of concern related to the implementation of funds, which are thus useful for Parliament in exercising its role of discharge authority,










C.


whereas its observations on the special reports of the Court of Auditors form an integral part of Parliament’s abovementioned Decision of 17 April 2013 on discharge in respect of the implementation of the general budget of the European Union for the financial year 2011, Section III – Commission,






Part I   Special Report No 12/2011 of the Court of Auditors entitled ‘Have EU measures contributed to adapting the capacity of the fishing fleets to available fishing opportunities?’
                     









1.


Welcomes the Court of Auditors’ report and notes its damning appraisal of the measures undertaken by both the Commission and Member States;












2.


Emphasises the fact that the Common Fisheries Policy (CFP) claims to promote sustainable fishing, which implies the long-term viability of the fishing sector and a balance between fishing resources and the capacity of the fishing fleet in order to avoid overexploitation of fish stocks;












3.


Takes note that although the reduction of fishing overcapacity has been a recurrent theme in previous reforms of the CFP and has been addressed in the Court of Auditors’ Special Reports No 3/1993 and No 7/2007, the expensive measures taken to date to reduce fishing overcapacity by adapting the fishing fleet to fishing resources have been unsuccessful;












4.


Recognises that from 1995, the trend for Union fish catches has been declining and that, according to the Commission’s Green Paper on reform of the CFP of 22 April 2009 (COM(2009) 163), this decline is largely due to overfishing and forms part of a vicious circle involving fishing overcapacity and low economic performance of the fishing fleets;












5.


Is concerned that since the last reform of the CFP in 2002, fish catches have declined by 1 000 000 tonnes and jobs in the fishing sector have declined from 421 000 to 351 000;












6.


Notes that although there is no official definition of overcapacity, declining catches and lost jobs caused by overfished fish stocks demonstrate de facto overcapacity; calls on the Commission to therefore define overcapacity and consider more relevant and robust measures to facilitate actions to balance fishing capacity with fishing opportunities;












7.


Believes that it is essential that the Commission urgently draft a report containing the data on existing overcapacity in the Union, broken down by fishery and country;












8.


Is concerned, furthermore, that fleet capacity ceilings, as a measure to restrict the size of the fishing fleet, have become irrelevant since the actual fleet size is well under the ceilings and could even be 200 000 tonnes bigger, while still complying with the rules; stresses that at the same time, due to technological advances, the fishing capacity of the fleets has increased with an average of 3 % per year during the last decade;












9.


Notes that the CFP measures vessel capacity in terms of power (kilowatt) and size (gross tonnage) and that, however, these measures do not take into account technological progress in fishing methods, which complicates the task of setting appropriate targets for its reduction; notes that the Commission wants to maintain these static parameters until the end of 2015;












10.


Calls on the Commission to enforce the Member States’ obligation to correctly update their fleet register, and to establish the obligation to report on their efforts to balance fishing capacity with fishing opportunities;












11.


Notes that in terms of reducing fishing capacity, the Commission’s new proposal for the CFP is founded on a new, market-based approach (schemes for granting transferable fishing rights) since the Commission has reached the conclusion that these schemes have a positive role to play in reducing fishing overcapacity;












12.


Expresses its concern at the shortcomings encountered in the rules for the treatment of fishing rights when fishing vessels are scrapped with public aid, and at the failure to define clear and effective criteria for selecting vessels; considers that the scrapping schemes have, in part, been poorly implemented, with examples of taxpayers’ money being used for the scrapping of already inactive vessels or even being used indirectly for building new vessels; notes, however, that some Member States have had scrapping schemes that have fulfilled their purpose; stresses, therefore, the need of strict safeguards when using scrapping schemes, as a way of reducing overcapacity in order to avoid abuse;












13.


Regrets that investment on board fishing vessels, funded by the European Fisheries Fund (EFF), could increase the ability of individual vessels to catch fish; considers that the interpretative note, prepared by the Commission and sent to Member States following the Court of Auditors’ Special Report on the ability of the vessels to catch fish in which the Court of Auditors called for national authorities to enforce stricter checks before deciding on the funding of projects of investments on board, is insufficient;












14.


Notes that whereas point 36 of Special Report No 12/2011 says that, by the end of 2010, implementation of the EFF, in terms of expenditure certified by Member States, amounted to EUR 645 million, or 15 % of the amount available from 2007 to 2013, most of this amount was declared in 2010 and EUR 292 million had still not been paid by the Commission as at 31 December 2010, owing to the Council’s late adoption of Council Regulation (EC) No 1198/2006 of 27 July 2006 on the European Fisheries Fund (8) and the complexity involved in the initial setting-up of management and control systems by the Member States; notes that certified interim payments sent by Member States by the end of December 2011 amounted to 28 % (EUR 1 188 million) of the overall EFF allocation and welcomes the fact that the pace of absorption of the EFF is now picking up;












15.


Recommends that the Member States take measures to:






—


adapt their fishing fleets to the existing fishing opportunities,










—


ensure that selection criteria for fishing vessel decommissioning schemes are designed to have a positive impact on the sustainability of the targeted fish stocks and avoid providing public aid for decommissioning inactive fishing vessels;
















16.


Calls on the Commission to set effective fishing fleet capacity ceilings;












17.


Considers that a reform of the CFP is needed to regionalise its implementation and the management of its programmes and measures;












18.


Endorses the Court of Auditors’ recommendations that:






—


actions should be developed to effectively reduce overcapacity of the fishing fleet and to better define and measure fishing capacity and fishing overcapacity, while at the same time not disregarding that the remaining jobs in the fishing sector should be maintained,










—


the aid scheme for modernising vessels should be reconsidered and the role of fishing right transfer schemes clarified,










—


clear selection rules should be established for fishing vessel decommissioning schemes,










—


Member States should implement the EFF on time and any publicly funded investments on board should not have an increased fishing ability as a result,










—


the fleet register should be correctly updated, and Member State reports should contain the required information and be of suitable quality,
















19.


Considers, moreover, that in the light of the Court of Auditors’ criticism, it has become clear that the EFF and CFP are currently an ineffective use of our common resources, and therefore welcomes the fact that the scheme will be reviewed in its entirety in the near future; highlights the importance, when re-structuring these schemes, of focusing on the areas within fisheries policy that can best be dealt with at Union level, such as the environmental aspects, rather than on various types of ineffective subsidy scheme;





Part II   Special Report No 13/2011 of the Court of Auditors entitled ‘Does the control of customs procedure 42 prevent and detect VAT evasion?’
                     









20.


Welcomes the Court of Auditors’ Special Report No 13/2011;












21.


Recalls that the proper collection of value added tax (VAT) directly affects both the economies of Member States and the Union budget, as tax fraud, in particular VAT fraud, leads to exorbitant losses for the Union budget and the economies of Member States, thus exacerbating the debt crisis; points out that VAT fraud estimates amount to annual figures of around EUR 1 400 million;












22.


Believes that particularly in the current economic climate, the emphasis should move to more efficient and fairer revenue collection systems; emphasises that the improvement of such systems should be of the utmost priority for the Union and all Member States, in particular those facing the biggest economic difficulties;












23.


Recalls that according to a study carried out on behalf of the Commission, the estimated average VAT gap in the Union is 12 %; draws special attention to the fact that this VAT gap has been at an alarming level of 30 % and 22 % in Greece and Italy respectively, the Member States which are experiencing the most difficult debt crisis;












24.


Stresses that besides tax avoidance and losses due to insolvencies, the VAT gap is also attributable to fraud, non-transparent rules, incoherent control systems and non or partial implementation of Union law in Member States, and that VAT losses, translating into billions of euro, are largely compensated for by means of austerity measures, affecting citizens of the Union, and borne by citizens whose income is well documented and traceable;












25.


Is profoundly concerned about the Court of Auditors’ findings, in particular that the application of customs procedure 42 (9) alone accounted for the extrapolated losses of approximately EUR 2 200 million in the seven Member States audited by the Court of Auditors in 2009, representing 29 % of the VAT theoretically applicable on the taxable amount of all the imports made under customs procedure 42 in 2009 in those Member States;












26.


Notes with concern that the Court of Auditors found that the Union’s regulatory framework does not ensure the uniform and sound management of this VAT exemption by Member States’ customs authorities and that the regulatory framework does not ensure that the information concerning those transactions is always made available to the tax authorities in the Member State of destination, leaving the system vulnerable to misuse by organised crime and individual fraudsters, creating huge competition disadvantages for bona fide traders;












27.


Draws attention to the Court of Auditors’ finding that customs authorities in the audited Member States do not ensure the validity and completeness of data and the fulfilment of other exemption conditions;












28.


Is concerned that the Court of Auditors found serious deficiencies in the control of simplified customs procedures, which account for 70 % of all customs procedures, in particular, poor-quality or poorly documented audits and automated data-processing techniques for carrying out checks during the processing of simplified procedures which are of little use; points out that those deficiencies have led to unjustified losses to the Union budget and that the correct operation of customs has a direct impact on the calculation of VAT; deplores the fact that the Commission did not take appropriate measures to remedy this over the last 10 years but was hiding behind the rules, which seemed quite adequate on paper;












29.


Notes with regret that since its introduction, the VAT collection model has remained unchanged; believes that it is outdated, given the many changes to the technological and economic environment that have occurred;












30.


Urges the Commission and Member States to monitor and effectively respond to both existing and new trends in fraud, and requests that the Commission inform the Committee on Budgetary Control by September 2013 which temporary and permanent measures were taken on the basis of customs procedure 42, not only by the Union, but also at national level and their effect on the number of fraud cases; takes note of the Commission’s Green Paper on the future of VAT – Towards a simpler, more robust and efficient VAT system (COM(2010) 695), and calls for concrete proposals to be made on VAT reform;












31.


Calls on the Commission to urge Member States to simplify their law on VAT, introduce a standard form for the notification of the implementation of VAT to tax authorities and establish uniform and proper management of cases of exemption from VAT by the customs authorities of the Member States and to ensure the improved availability of those legislative texts translated into English, French and German as a minimum requirement;












32.


Deplores the postponement of the entry into force of the Modernised Customs Code (MCC) as provided for in the Commission’s proposal for a regulation of the European Parliament and of the Council laying down the Union Customs Code (COM(2012) 64), and considers the proposed new date of 31 December 2020 to be unacceptable; recalls that Regulation (EC) No 450/2008 of the European Parliament and of the Council of 23 April 2008 laying down the Community Customs Code (Modernised Customs Code) (10) provided that the MCC would enter into force by 24 June 2013 and urges the Commission and Member States to take the necessary steps in order to speed up the preparation process;












33.


Strongly suggests to all Member States to take part in Working Field 3 of Eurofisc on fraudulent transactions using customs procedure 4200;












34.


Endorses the Commission’s proposal for a Council Directive amending Directive 2006/112/EC on the common system of value added tax as regards tax evasion linked to import and other cross-border transactions (COM(2008) 805), which aims to introduce joint liability of traders in intra-Union transactions, holding importers jointly and severally liable in cases where false, late or incomplete reporting of the transaction to the VAT authority has resulted in VAT loss and subjecting them to appropriate penalties;












35.


Stresses the importance of more intensive and rapid cooperation between Member States, better monitoring of exchanges of information and more direct contacts between local tax and customs offices, including by means of the online VAT Information Exchange System (VIES), so as to ensure that Member States provide efficient assistance to each other;












36.


Recommends to Member States that they give customs authorities online access to the VAT identification numbers contained in VIES without further delay, in order to enable the latter to fulfil their obligations to verify the VAT numbers collected in customs declarations; requests that the Commission keep Parliament’s competent committees and the Court of Auditors informed on a monthly basis on the developments in all Member States on preventing fraud under customs procedure 42;












37.


Calls on the Commission to create a system that would combine assistance in the customs area and administrative cooperation in the area of VAT to ensure effective information flows, so that the relevant authorities in one field are routinely informed about action in the other field; considers that this would make the cooperation between the competent authorities and the charging of VAT in the Member State of destination more effective and rapid;












38.


Stresses the role of e-government in increasing transparency and combating fraud and corruption, thereby safeguarding public funds; stresses that the Union is lagging behind its industrial partners, inter alia, due to a lack of interoperability of systems (11); stresses that the Union must step up its efforts to achieve a new generation of e-government;












39.


Points out that documented, electronic, non-cash transactions make participating in the black economy more difficult, and that a strong correlation appears to exist between the proportion of electronic payments in a country and its black economy (12); encourages the Member States to lower their thresholds for compulsory non-cash payments;












40.


Endorses the Court of Auditors’ recommendations, in particular:






—


the recommendation to amend the Customs Code Implementing Provisions, implementing compulsory communication of the relevant VAT ID numbers,










—


the recommendation to amend the VAT Directive in order to hold importers jointly and severally liable for the VAT loss,










—


the recommendation to the Commission to provide guidance to Member States on assistance and administrative cooperation,










—


the recommendation to provide for automatic verification of VAT ID numbers and creation of EU risk profile under customs procedure 42,










—


the recommendation for amending the VAT Directive allowing for reconciliation between customs and tax data,










—


the recommendation to provide for exchange of information necessary for correct charging of VAT,










—


the recommendation to set up a direct automatic data exchange concerning risk-prone transactions under customs procedure 42,




calls on the Commission to report on a six-monthly basis on how and when it will implement those recommendations;





Part III   Special Report No 14/2011 of the Court of Auditors entitled ‘Has EU assistance improved Croatia’s capacity to manage post-accession funding?’
                     









41.


Welcomes the Court of Auditors’ Special Report No 14/2011, and endorses the Court of Auditors’ conclusions, in particular its finding that ‘overall EU pre-accession assistance to Croatia is making a significant contribution to Croatia’s progress in building up its administrative capacity for managing increased EU funding post accession’; welcomes the significant and positive role of pre-accession assistance in preparing Croatian authorities for the management of cohesion and rural policies in the post-accession period;












42.


Regrets that the Court of Auditors’ report does not include sufficient information on levels of error or fraud and on the follow up, including judicial where necessary, as well as on the performance evaluation;












43.


Stresses, however, that the Court of Auditors concludes that ‘the assistance has only been partially successful so far in achieving its objectives and further progress in capacity building has to be supported in a number of key areas both before and after accession’; notes the Court of Auditors’ finding that ‘in most areas of pre-accession assistance, the Commission has not yet assessed Croatia’s capacity to be sufficient for it to authorise Croatia to implement the assistance without the Commission’s ex ante checks’ and that ‘despite recent progress made, procurement capacity and anti-corruption are two areas where there is a particular need to reinforce support to the Croatian authorities’;












44.


Is concerned, in view of some instances of lack of preparedness of administrations and institutions, and transition from accession to structural fund financing in previous accessions to the Union, how similar risks for Croatia could be avoided;












45.


Is concerned that, in addition to the Court of Auditors' significant focus on aligning legislation, continuous monitoring will be needed and measures need to be put in place to address:






—


inadequate absorption levels on a number of recent programmes,










—


adequacy of external audit and internal control capacity,










—


stability of the procedures in programmes for funding,










—


transparency issues and the need to improve the awareness of stakeholders and the general public,










—


questions of efficiency, effectiveness and economy in use of funds, through performance evaluations;
















46.


Endorses the Court of Auditors’ recommendations, and in particular invites the Commission and the Croatian authorities to work closely together so as to increase the priority given to building up procurement capacity by implementing plans for on- and off-the-job training, to take greater steps to meet capacity-building needs at regional and local level, and to develop further the assessment of project effectiveness, as well as to build up a portfolio of mature projects to be able to fully absorb the increased post-accession funding available, and also to take action in relation to rural development programmes, and to strengthen anti-corruption measures;












47.


Endorses the Court of Auditors’ recommendation to the Commission to take into account the lessons learned from its pre-accession assistance to Croatia in its pre-accession assistance to other countries wherever applicable;












48.


Welcomes the Commissions assessment in its Monitoring report on Croatia’s accession preparations of 24 April 2012 stating that ‘Overall, Croatia’s preparations for EU membership are on track. Croatia has reached a considerable degree of alignment with the acquis. Further progress has been achieved since the 2011 progress report and the last update of the monitoring tables in autumn 2011. Nevertheless the Commission has identified a limited number of issues requiring further efforts’ (13);












49.


Notes that a number of outstanding issues still remain to be addressed in several of the acquis chapters; in particular, attention is to be paid to legislative alignment in secondary legislation concerning public procurement, especially in the field of defence procurement, and also to the proper implementation of the newly adopted legislation, especially at local level, also with a view to the future management of the Structural Funds;












50.


Notes also that continued efforts are needed in the field of financial control in order to improve the overall functioning of the public internal financial control and external audit at central and local level, as well as in the field of financial and budgetary provisions, where it is necessary to continue building up capacity to coordinate the overall system of own resources efficiently after accession, and to step up modernisation of the customs control strategy focusing more on post-clearance controls;












51.


Emphasises that increased efforts are needed in some areas, in particular, agriculture and rural development, where attention must be given to further legislative alignment and strengthening of administrative capacity in the areas of direct payments and rural development;












52.


Is concerned of the low absorption of Sapard and IPARD funding — some sectors were particularly under-represented in the implementation of Measure 1 (Investment in agricultural holdings), notably the milk sector, greenhouses sector and fruits and vegetable sector; considers that this points to serious weaknesses in the capacity and preparedness of these sectors to absorb future Union funds;












53.


Notes the delays in the implementation of pre-accession assistance; welcomes the progress achieved in addressing the issue and urges the Commission and Croatia’s authorities to continue improving the speed of implementing assistance, especially by strengthening capacity-building; stresses that capacity-building in the framework of pre-accession assistance should target central institutions as well as regional and local structures; is concerned that, in the case of Croatia, insufficient attention to the latter may result in them lacking adequate administrative capacity and experience to implement Union assistance;












54.


Reiterates that the purpose of pre-accession assistance is, inter alia, to bolster the candidate states’ capacity to absorb future Union funding in an efficient and transparent manner; welcomes, therefore, the new approaches used by the Commission in planning pre-accession assistance to Croatia, such as linking specific capacity-building projects to accession negotiations, allowing for multiannual operational programmes;












55.


Calls on the Commission to maximise the potential for institutional learning and capacity-building in candidate and potential candidate states, notably by further aligning the procedures of pre-accession assistance with those used under the Structural Fund, the European Social Fund, and the European Agricultural Fund for Rural Development;












56.


Also notes that with regard to regional policy and coordination of structural instruments, further sustained efforts need to focus on effectively implementing the plans to increase administrative capacity for future cohesion policy implementation and to develop a mature project pipeline;












57.


Invites the Croatian authorities to take measures addressing the abovementioned concerns, and calls on the Commission to report on Croatia’s progress in tackling these and other outstanding issues;












58.


Commends the progress made by Croatia in reinforcing its institutional and administrative capacity and consolidating the management of pre-accession assistance;












59.


Welcomes the establishment of the Croatian Ministry of Regional Development and EU Funds in December 2011 and the fact that the Minister of Regional Development and EU Funds has also been appointed to serve as a Deputy Prime Minister, which shows the commitment of the new government to the issues of regional development and utilisation of the Union funds;












60.


Notes that Croatia has put considerable effort into the establishment of a sound financial management and control system, which should result in the expected waiver of ex ante controls in the second half of 2012; stresses, however, that further sustained action is needed, given that, in most areas, the Commission has not yet authorised Croatia to implement pre-accession assistance without ex ante checks;












61.


Welcomes the fact that as of January 2012, the new Act on Public Procurement has entered into force, ensuring increased transparency, and that 2011 saw the realisation of the IPA 2008 Twinning Light facility project ‘Strengthening Capacities to Remedy Irregularities in Public Procurement Procedures’, which included, inter alia, efforts with regard to awareness-raising;












62.


Urges the Commission and the Croatian authorities to prioritise the build-up of robust public procurement capacities; emphasises, in this context, that the fight against corruption plays a central role in the entire accession process, and failure to implement preventive anti-corruption measures will impede the future absorption of Union assistance;





Part IV   Special Report No 16/2011 of the Court of Auditors entitled ‘EU Financial assistance for the decommissioning of nuclear plants in Bulgaria, Lithuania and Slovakia: Achievements and Future Challenges’
                     









63.


Stresses that decommissioning will be an increasingly important issue in the coming years because one third of the 133 nuclear reactors operating in 14 Member States are to be shut down by 2025 (14);












64.


Calls on its Committee on Budgets and on the Committee on Industry, Research and Energy to take into consideration the findings of the Committee on Budgetary Control for the negotiations of the new Multiannual Financial Framework (2014-2020);





The findings of the Court of Auditors









65.


Considers that the Court of Auditors’ findings can be summarised as follows:






‘(a)


As a result of a relatively loose policy framework, the programmes do not benefit from a comprehensive needs assessment, prioritisation, the setting of specific objectives and results to be achieved. Responsibilities are diffused, in particular with regard to monitoring and the achievement of programme objectives a whole. The Commission’s supervision focuses on the budgetary execution and project implementation.










(b)


There is no comprehensive assessment concerning the progress of the decommissioning and mitigation process. Delays and cost overruns were noted for key infrastructure projects.










(c)


Al though the reactors were shut down between 2002 and 2009, the programmes have not yet triggered the required organisational changes to allow the operators to turn into effective decommissioning organisations.










(d)


Currently available financial resources (including an EU contribution until 2013 worth 2,85 billion euro) will be insufficient and the funding shortfall is significant (around 2,5 billion euro).’ (15);
















66.


Notes, furthermore, that the funding scheme put forward by the Commission was not the subject of a comprehensive ex-ante evaluation;





Parliament’s conclusions









67.


Acknowledges that the situation described in the Court of Auditors’ report refers to the period until the end of 2010 and that subsequently, the Commission has taken a number of initiatives;












68.


Notes that the Union’s overall objective in the nuclear field is to maximise nuclear safety;












69.


Notes the Commission’s opinion that it has put in place a procedural framework that sets specific objectives, defines roles and responsibilities and clearly defines the reporting and supervision requirements (16);












70.


Notes the Commission’s reply explaining that the needs assessment was part of the impact assessment (SEC(2011) 1387) conducted in 2011; notes that the impact assessment covered progress achieved so far, remaining challenges and an overview of the funding situation;












71.


Recalls that the Accession Treaties of Bulgaria and Slovakia establish the limits for providing Union financial assistance to 2009 and 2006 respectively;












72.


Welcomes the proposal for a Council Regulation on Union support for the nuclear decommissioning assistance programme in Bulgaria, Lithuania and Slovakia (COM(2011) 783) that draws on extensive consultation with stakeholders, the Member States concerned — Bulgaria, Lithuania and Slovakia — and expert groups in decommissioning; welcomes the fact that the findings of Parliament’s Resolution of 5 April 2011 (17) and the conclusion and recommendations from the Court of Auditors’ decommissioning performance audit of 2011 were used as input;












73.


Observes that experts called for a solid and complete detailed decommissioning plan as the basis for the implementation of further Union support, including full costing estimates up to the completion date for decommissioning; considers that a clear indication of national co-financing and the way to secure this national funding in the long term should be provided;












74.


Notes with satisfaction that the key milestones, as defined in the Commission’s abovementioned impact assessment (18), were explicitly supported by stakeholders, as well as targeting Union support on the accomplishment of concrete milestones with the highest Union added value; notes that compliance procedures and close cost monitoring should be considered from the outset;












75.


Reiterates and stresses mutual commitments taken by the Union and Bulgaria, Slovakia and Lithuania with regard to decommissioning of, respectively, four units of Kozloduy Nuclear Power Plant, Unit 1 and Unit 2 of Bohunice V1 Nuclear Power Plant and Units 1 and 2 of the Ignalina Nuclear Power Plant;












76.


Deplores the fact that in the case of Ignalina nuclear power plant, highly relevant projects such as B1 and B234 have encountered serious delays due to technical and commercial disputes, which have generated extensive economical damage, as well as discontinuity in the decommissioning process;












77.


Believes the roadmap with agreed technical solutions decided upon in July 2012 by Ignalina nuclear power plant and NUKEM/GNS to be an important step forward in the process of overcoming the stalemate related to the B1 interim spent fuel storage facility;












78.


Deplores the fact that the detailed progress report on the implementation of the roadmap, expected on 5 October 2012, has not met the deadline;












79.


Welcomes the progress achieved on some of the issues covered by the roadmap, such as the validation of casks and enhancement measures related to the cranes;












80.


Remains concerned, however, that outstanding issues such as the shock absorbers problem and the handling of leaking and damaged fuel have not yet been agreed upon, and therefore hinder the swift implementation of the above-mentioned roadmap;












81.


Urges both parties involved to conclude a swift and timely agreement on all remaining issues;












82.


Supports the findings of the fact-finding mission of the Committee on Budgetary Control to Lithuania on 10 to 12 July 2012 and in that respect, believes that the Union’s financial assistance should be suspended until a settlement is reached in the case of the B1 and B234 projects;












83.


Supports the Commission’s proposal on allocating an additional EUR 230 million for the Ignalina nuclear power plant for the 2014 to 2017 period; reiterates that money should only be allocated if the ex-ante conditionalities as set out in the aforementioned proposal for a Council regulation have been fulfilled; believes that financial assistance from the Union should be concluded after that date;












84.


Insists that the decommissioning activity should be planned in a safe and efficient way that would enable a swift release of the decommissioning licence, according to the timetables set in the respective decommissioning plans;












85.


Calls on the Commission to send Parliament an estimate of the funding required for the irreversible and complete dismantling of the three nuclear power plants;












86.


Recalls that only national nuclear regulatory authorities can issue decommissioning licences to legal persons in strict compliance with the corresponding national legislation;












87.


Calls on the Government of Lithuania to establish an independent project management team for projects B1 and B234; notes that the independent management of projects implemented by the Ignalina nuclear power plant should also be established, as proposed by the Lithuanian National Audit Office;












88.


Requests that a clear, unequivocal deadline for acquiring the decommissioning licences be set, if not yet done;












89.


Notes with concern that there are delays in building and completing interim facilities to store used fuel and unless such facilities are available, nuclear fuel rods cannot be removed; notes that as regards the Ignalina power plant, the removal and safe interim storage of nuclear rods from Unit 2 must be a priority;












90.


Requests that disagreements on the interpretation of treaties, the awarding of contracts and the ongoing technical and commercial disputes between the Ignalina nuclear power plant and the main contractor for the two projects be submitted to an arbitration procedure; notes that any additional Union financial assistance should be suspended until the dispute is settled; calls on the Commission to report annually to Parliament on the state of play;












91.


Is deeply concerned that the Court of Auditors estimated the financial shortfall for the completion of the decommissioning projects at EUR 2 500 million, thus creating a considerable funding gap;












92.


Calls on the Commission to cooperate with the governments of Bulgaria, Lithuania and Slovakia and to maximise progress in the decommissioning of nuclear power stations by making available sufficient funding by 2017 or, where appropriate, by 2020; calls on the Commission, furthermore, to set ambitious implementation targets and monitor progress towards those targets; takes the view that penalties must be applied in the case of failure to meet those targets; calls for an annual report on the progress made to be submitted to Parliament;












93.


Notes that since the decommissioning of nuclear power stations in Lithuania, Slovakia and Bulgaria began, the responsibility and obligations of the participating Member States in the decommissioning process has not been clearly defined; notes that the burden arising from responsibility for the whole decommissioning process which close their nuclear power stations has been disproportionate on Member States;












94.


Welcomes the fact that the abovementioned proposal for a Council regulation (COM(2011) 783) not only sets general objectives but also sets specific, measurable, attainable, relevant and timed objectives for the three Member States; notes that further objectives and performance indicators will be defined on the project level, in the implementing measures and the annual work programmes;












95.


Takes the view that in the proposal for a Council regulation, the legal basis for the granting of additional funding to the Ignalina programme should be Protocol No 4 of the Act of Accession and not Article 203 of the Treaty establishing the European Atomic Energy Community;












96.


Welcomes the fact that no later than the end of 2015, an evaluation report shall be established by the Commission on the achievement of the objectives of all the measures, at the level of results and impacts, the efficient use of resources and its Union added value, in view of a decision amending or suspending the measures; asks the Commission to provide it with a copy of the evaluation report;












97.


Calls on the European Bank for Reconstruction and Development (EBRD) to make its reports on project implementation in Bulgaria, Lithuania and Slovakia available to Parliament;












98.


Asks the Commission and the Court of Auditors to assess the added-value of the cooperation with the EBRD, and its capacity to act as administrator of funds, given that the Union supplies 96 % of funding;












99.


Calls on the Commission to draw up a report on the decommissioning processes in those three countries; calls on the Commission to also draw up a report on the decommissioning of the nuclear power plant in Greifswald, with a view to establishing technical and organisational best practice, thereby creating a reference base for future decommissioning projects;





Part V   Special Report No 1/2012 of the Court of Auditors entitled ‘Effectiveness of European Union development aid for food security in sub-Saharan Africa’
                     









100.


Welcomes the Court of Auditors’ report and its overall conclusion that Union development aid for food security in sub-Saharan Africa is, for the most part, effective and that it makes an important contribution towards achieving food security in partner countries which do not yet have a sustainable and secure agricultural sector; notes, however, that according to the Court of Auditors, there is scope for significant improvement in a number of areas;












101.


Notes with satisfaction the Court of Auditors’ finding that where food security is part of the European Development Fund (EDF) strategy, Union development aid is highly relevant to the needs and priorities of sub-Saharan Africa and that the Commission focused Union development aid on countries with the highest number of undernourished people;












102.


Agrees with the Court of Auditors that a greater focus on food security is necessary in the Union’s development assistance;












103.


Deplores that for the tenth EDF, food security, agriculture and rural development have been selected for fewer partner countries as a focal sector than for the ninth EDF and that several food-insecure countries have received little or no Union development aid in this area; agrees with the Court of Auditors that this is inconsistent with the critical situation as regards Millennium Development Goal 1: Eradicate extreme poverty and hunger and the increased priority that the EDF was expected to give to food security; calls on the Commission and Member States to give more attention to this area when drawing up the EDF country strategy papers and to allocate more funding for this purpose;












104.


Supports the Court of Auditors’ recommendation for a structured assessment of the food security situation in each country and a systematic consideration of the potential scope for relevant Union support by the European External Action Service (EEAS) and the Commission’s programming of Union development aid; calls on the Commission’s Directorate-General for Development and Cooperation – EuropeAid to ensure the incorporation of data and analyses by the field offices of the Directorate-General for Humanitarian Aid and Civil Protection and from other sources and to help ensure that effective early warning systems for food insecurity are in place; also calls on the EEAS to help ensure that corresponding government capacity is built to run those systems in a sustainable manner, and that prevention strategies are implemented, fostering the resilience of the most vulnerable;












105.


Notes that after the 2008 food crisis, which severely affected many sub-Saharan African countries, food prices have gradually returned to previous levels and that volatility and speculation is likely to continue; calls on the Commission to elaborate upon response strategies for different contingencies, making any relevant proposals; calls on the Commission to also take note of the fact that gradually rising food prices is part of a marked, long-term upward trend, rather than a short-term issue and consequently, it requires a long-term holistic strategy, directly linked to broader development goals; calls for the inclusion of a new Food Facility or a comparable mechanism in the multi-annual financial framework for the years 2014 to 2020 to ensure the Union’s ability to respond swiftly to new food crises using similar funds, given the unpredictability of new food crises and the increased volatility of food prices; believes that financial speculation exacerbates food price volatility and that it is, therefore, also necessary to take effective action against such speculation, including the regulation and control of derivative markets;












106.


Deplores the fact that, despite strong economic growth, one quarter of the population of sub-Saharan Africa still suffers from malnutrition; points out that the region has the technology, the knowledge and the natural resources to change this; stresses that peace, democracy and political stability is essential since access to land and markets, property rights and education will allow for the increased influence and accountability of governments and of public authorities;












107.


Notes the shortcomings highlighted by the Court of Auditors in the coordination of the use of resources allocated under the EDF and the ‘food security’ budget line for the period 1996 to 2006; calls on the Commission to harmonise the objectives of the two instruments, with a view to ensuring that they complement one another and that the funds in question are used as effectively as possible;












108.


Considers that the Commission should take systematic account of the food security situation and chronic food insecurity, in particular when implementing Union development policy;












109.


Stresses the importance of strengthening the link between relief, rehabilitation and development in order to ensure the effectiveness of aid; reiterates the importance of allocating an appropriate share of Union overseas development assistance (ODA) to the agriculture sector; regrets that there has been a dramatic reduction in the level of development aid allocated to agriculture since the 1980s and calls on the Commission to prioritise agriculture in its development aid, including assistance to farmers in accessing markets; points out that development assistance is part of a larger scheme where trade, remittances and other sources of income are today more important than the total ODA payments for most developing countries, and that the common agricultural policy hinders a free and fair trade with emerging markets;












110.


Stresses that the whole food chain, from farm to fork, must be addressed in order to enhance the resilience of the agricultural sector; believes that long-term political commitments by governments in sub-Saharan Africa are necessary to reduce the vulnerability of the agricultural sector; points out that temporary subsidies, in the form of seeds that withstand extreme weather conditions, can serve as an important safety net for small-scale farmers and families who would otherwise be severely affected; stresses the importance of early warnings and preventive work on sanitation, seed and feed for animals; deplores that violence and insecurity is an obstacle to a food secure future;












111.


Stresses the need to refocus on food policy beyond food aid, inter-donor and donor-recipient cooperation with enhanced local partnership at European and global level, as well as the crucial role of partner countries in providing the basic requirements for any significant progress in this sector, such as internal peace and investment in rural infrastructure; further stresses that long-term social and economic development requires sustainable sources of income other than aid; considers that free and fair trade relations between Europe and developing countries, in line with World Trade Organisation principles, are key to strengthening food security and accelerating human development in sub-Saharan Africa;












112.


Agrees with the Court of Auditors that a longer implementation period for the Food Facility (2008 to 2010) would have been more appropriate, given its objectives and the existing financing gap between the end of its programming period and the next EDF programming period (from 2014); stresses the importance of ensuring the continuity of aid given the continuous volatility and high level of commodity prices; stresses the need to seek, in close coordination with the World Food Programme, the Food and Agriculture Organisation of the United Nations and the International Fund for Agricultural Development, complementarity and synergy between the Union food security programmes and programmes of those and other international donors;












113.


Is deeply concerned at the Court of Auditors’ finding that nutrition has been neglected and finds this worrying as malnutrition has extremely harmful consequences, in particular if it occurs during pregnancy or during the first two years of life, and may lead to irreversible damage; points out that malnutrition is an obstacle to human development, inflicting irreversible damage on individuals and imposing large economic and social losses on countries; welcomes the resolve of the Commission expressed in its communication on an EU policy framework to assist developing countries in addressing food security challenges (COM(2010) 127) to integrate the nutritional dimension into Union programmes; reiterates its call on the Commission to draw up a specific communication on this dimension and to integrate sound and multi-sectoral nutrition strategies into its development policy; points out that one of the most crucial and cost-effective interventions is the empowerment of women, which is a far-reaching way to help households prioritise healthcare and child nutrition;












114.


Notes the Court of Auditors’ finding that Union interventions have generally been well designed and achieve most of their intended results, but regrets that the quality of objectives were variable and difficult to measure, due to the absence of performance indicators, and the sustainability of results were questionable in half of the audited interventions; calls on the Commission to set more realistic and measurable objectives for the interventions and to improve their definition in the general budget support programmes, where special attention should be given to encouraging entrepreneurship among the growing young population and addressing the discrimination against women in the agricultural sector;












115.


Remains convinced of the importance of scaling up the nutritional aspect of development aid for food security and requests that the Commission provide a written report on its progress on this by the spring of 2013;












116.


Notes that the overall impact of Union action on food security is also determined by the Union’s policies on agriculture, fisheries, energy and trade; stresses the need to ensure policy coherence for development, in accordance with Article 208 of the Treaty on the Functioning of the European Union, and that those policies should embody and comply with the ‘do no harm’ principle;












117.


Agrees with the Court of Auditors that the Commission should strive to better support the financial sustainability of agriculture and social transfer programmes;





Part VI   Special Report No 2/2012 of the Court of Auditors entitled ‘Financial instruments for SMEs co-financed by the European Regional Development Fund’
                     









118.


Welcomes Special Report No 2/2012 that focuses on the financial engineering measures co-financed by the European Regional Development Fund (ERDF) during the 2000-2006 and the 2007-2013 programming periods; acknowledges that Special Report No 2/2012 informs on the efficiency and effectiveness of the financial engineering measures co-financed by the ERDF and is based on an audit sample of projects in the United Kingdom, Germany, Slovakia, Hungary and Portugal;












119.


Is of the opinion that such an audit report would be of great value also at the end of the 2007-2013 programming period, enabling further conclusions regarding performance of financial instruments (FIs) for small and medium-sized enterprises (SMEs) co-financed by the ERDF; considers also that the drafting of such a report at the end of that period will make it possible to avoid repeating errors, while at the same time increasing the effectiveness and efficiency of future financial engineering measures co-funded by the ERDF;












120.


Stresses that SMEs are the backbone of the Union’s economy, generating employment, innovation and wealth; notes, however, that SMEs may suffer from financing gaps, in that they cannot obtain access to the type and the amount of finance they need at a given time;












121.


Recognises that at the time of fiscal constraint and reduced lending capacity of the private sector, SMEs and in particular micro-enterprises have been the most affected and should accordingly be targeted with strengthened Union support to continue generating employment, innovation and growth; notes that particular attention must be given to SMEs generating sustainable development at local level and that cohesion policy, as the major investment instrument for convergence and sustainable development of the whole Union, is one of the two main Union support channels for SMEs; stresses, therefore, that the use of FIs in cohesion policy in relation to the SMEs should be reinforced in the future as it can guarantee revolving funds, foster public-private partnerships and achieve a multiplier effect with the Union budget;












122.


Recalls that to support entrepreneurship, the Union implements its enterprise policy and its cohesion policy mainly using grants but progressively more through FIs in the ERDF framework; notes that the FIs are repayable and revolving thereby ensuring that successive waves of SMEs can benefit;












123.


Recognises that the implementation of access to finance programmes requires the active involvement of financial intermediaries, which transform public funds into FIs for SMEs; notes that additional funds provided by the private sector may be added to the public funding, increasing the total amount available for investments in SMEs; notes that this action is commonly defined as the leverage effect or the multiplier effect;












124.


Stresses that lack of access to finance has led to a fall in the number of start-ups, which means that the role of FIs co-funded by the ERDF in stimulating entrepreneurship is assuming ever increasing importance;












125.


Recalls that the Court of Auditors’ audit focused on the financial engineering measures co-financed by the ERDF during the 2000-2006 and the 2007-2013 programming periods and that the audit findings are based on a direct review of a sample of projects and on an examination of the Commission and Member States’ management, monitoring and information systems;












126.


Notes that the Court of Auditors focused its audit in three main types of FIs: equity, loan and guarantee instruments; notes that they are all eligible instruments for ERDF co-financing, but must comply with Union and national eligibility rules; reiterates that the main objective of the audit was to assess whether ERDF spending on financial engineering measures for SMEs had been effective and efficient;












127.


Welcomes the Court of Auditors’ findings and recommendations regarding financing gap assessment; notices that in the legislative proposal (19) for the next programming period such assessment is made obligatory in the form of an ex ante assessment; calls on the Commission to introduce relevant requirements, including quantified benchmarks, regarding the role and application of the ex ante assessment into the relevant regulation as part of the basic act; considers that the issue of revolving provisions should also be tackled in the legislative proposal for the next programming period;












128.


Notes that Structural Funds regulations allow establishing a preference for the private sector compared to the public; invites the Commission to find appropriate justification for this privileged position, inasmuch as this treatment could limit the ability to repossess the excess funds and the possibility to allocate them to other SMEs;












129.


Is concerned that the Court of Auditors found that the effectiveness and efficiency of measures were hampered by the following important shortcomings:






—


the SME financing gap assessments, if available, suffered from significant shortcomings and such gap assessments were not systematically made public,










—


the Structural Funds regulations, originally designed for grants, contain important weaknesses, as they do not address the specificities of FIs,










—


before funds reach SMEs, delays were significant and, compared with other Union programmes for SMEs, the ERDF’s ability to leverage in private investments was poor;
















130.


Recalls also that in its opinion on innovative financial instruments in the context of the next Multiannual Financial Framework (20), Parliament’s Committee on Regional Development called for guaranteeing immediate clarity, simplicity and transparency of the FI legal framework and coherent legal reference to definitions of FIs;












131.


Notes with concern that the previous annual implementation reports, monitoring committees and operational program indicators have been considered as inadequate or inappropriate to the targets and purposes of FIs; welcomes the developments in the reporting and monitoring activity registered with JEREMIE;












132.


Regrets that at the level of the holding funds, the Court of Auditors did not come across significant leverage from the private sector for both the 2000-2006 and 2007-2013 programming periods; is surprised that there are typically no explicit leverage requirements in the funding agreements between the Managing Authorities and the financial intermediaries, except for certain equity funds, which had binding leverage requirements for private co-investors;












133.


Supports the Court of Auditors’ call for a clearer definition of the concept of leverage in FIs; stresses, none the less, that in the light of the pressure to deliver higher leverage, it is important to recall that FIs in cohesion policy are generally financing projects in less developed regions and regions with economic difficulties, with the aim of improving situations of market failure and sub-optimal investment, thus FIs in cohesion policy do not only focus on short-term profitability but also on high socioeconomic benefits, especially at regional and local level; points at multi-level governance and shared management in design and delivery of the programmes as the fundamental concepts behind cohesion policy that enable regional and national authorities to partake in planning and implementation of programmes; stresses, therefore, that the legislative framework needs to maintain a certain level of flexibility also when it comes to definitions and requirements of leverage effect;












134.


Recognises the potential of innovative financial engineering instruments to build up capital and enhance investments, as opposed to grants consistently perceived to be excessively cumbersome and bureaucratic by their beneficiaries; stresses that financial engineering instruments could play an important role in achieving the Europe 2020 Strategy’s objectives by attracting funding from other investors in areas of strong Union’s interest;












135.


Further notes that for equity and loan instruments, the Court of Auditors found that the leverage achieved has not been significant and lower than comparator benchmarks; notes with satisfaction that for guarantee instruments, in contrast, leverage was higher;












136.


Calls on the Commission to take action, without delay, regarding the findings of the Court of Auditors; considers particularly important that, in the future, the ERDF’s ability to leverage in private investments that match public contributions is increased;












137.


Is concerned at the widespread delays in Member States in SMEs obtaining access to finance; calls on the Commission and Managing Authorities to avoid delays in delivering SME access to finance mainly with origin in administrative, legal, organisational or strategic reasons; regrets that for Managing Authorities this entails that the alternative, using grants for SMEs, becomes more attractive;












138.


Urges the Commission to submit an integrated, clarifying proposal as soon as possible on the problems caused by the current range of definitions of SMEs, which vary in the Union according to the different purposes or objectives, and to propose possible ways of remedying the situation;












139.


Deplores that, in some cases, information on management costs borne by the SMEs was not available or was not reliable; invites the competent authorities to improve the current situation and to provide for the future all the relevant information; recognises that a distinction should be made in relation to costs of the financial engineering instruments (management cost of the JEREMIE holding fund and management cost of financial intermediaries) and the cost to SMEs;












140.


Deplores the fact that in a number of cases, financial intermediaries appointed by the respective Managing Authorities charged individual SMEs for the refinancing and processing costs; stresses that refinancing and processing costs should be items of ordinary operating expenditures for financial intermediaries;












141.


Stresses the importance of simplifying administrative procedures as regards access to financing and of reducing co-financing requirements;












142.


Is concerned by the fact that Commission guidance does not set the terms and conditions which would prevent SMEs being charged costs that are not based on actual SME risk taken or service provided by the financial intermediaries;












143.


Recommends that in light of the combined complexity of FIs, shared management and the State aid and Structural Funds rules, the Commission should improve the communication and monitoring systems between the Commission, the Managing Authorities and the beneficiaries (the financial intermediaries) and provide for, given the new provisions of the 2007-2013 regulatory framework, better guidance and advice;












144.


Endorses the Court of Auditors’ recommendation that the Commission should provide a reliable and technically robust monitoring and evaluation system specific to FIs; invites the Commission to also follow the Court of Auditors’ recommendation regarding agreement with Member States on a small number of measurable, relevant, specific and uniform result indicators for FIs, which would strengthen both monitoring and auditing processes;












145.


Notes that the territorial fragmentation and insufficient critical mass have impact on the attractiveness of the FIs and impose certain financial conditions and possible relatively high management cost; notes that those characteristics of the ERDF hampered the sound financial management of the FIs throughout the different programming periods underpinning ERDF support to SMEs;












146.


Regrets that, during the operational programme funding allocation process, public authorities typically not acquainted with SME financing, allocated public contributions to funds in such a fashion that their size often reached below critical mass; insists that different thematic operational programmes with multiple economic, environmental, social and territorial objectives were at the origin of this situation;












147.


Is of the opinion that when proposing financial engineering measures, the Managing Authorities should make sure that their proposal is duly justified by an SME gap assessment of high quality, based on a standardised and commonly agreed methodology; supports the Commission verifying their consistency with the SME gap assessment and ensure the quality of the latter, before approving the operational programmes, including financial engineering measures;












148.


Is worried about the lack of information in the Member States on access for SMEs to sources of finance; supports the recommendation by the Court of Auditors that, in order to optimise the size of the supply of SME finance, it is necessary to raise as much as possible the stakeholders’ awareness of the specific SME financing needs;












149.


Is of the opinion that the multiplier effect should illustrate the extent to which private funding has been attracted by both the Union’s and Member States’ initial financial contributions; considers that Member States’ co-financing of FIs should be seen, together with the Union contribution, as a part of public funding;












150.


Believes that matters to be covered by delegated acts, which are meant to cover non-essential elements of Union legislation, should not deal in reality with key elements of the future Cohesion scheme (21);












151.


Strongly recommends that the Council and the Commission, when designing proposals for the Structural Funds regulations, should provide for a more adequate regulatory framework so that the design and the implementation of financial engineering measures do not suffer from the deficiencies of the Structural Funds‘ regulatory framework, geographical constraints and scattering effects; asks that lessons learnt from the current programming period be reflected when designing the proposals for the Structural Funds regulation; considers in particular that proposals should be oriented towards performance and results rather than mere compliance;












152.


Endorses that the Commission should provide a reliable and technically robust monitoring and evaluation system specific to FIs including that FIs should be segregated from pure grants in the Commission’s monitoring, reporting and auditing processes and the amount of money actually paid to the SMEs should be transparent; encourages the Commission and the Member States, in particular, to agree on a small number of measurable, relevant, specific and uniform result indicators for FIs;












153.


Shares the opinion that the Commission should explore the possibility of supplying to the Member States off-the-shelf financial engineering structures and instruments for SMEs (e.g. grants with royalties, dedicated investment vehicles) only where these would result in speeding up implementation and in reducing management costs, though in such a way that this precondition does not excessively impair SMEs’ opportunities of making use of those funding schemes; stresses the importance of ensuring that financial engineering continues to remain flexible in order to adapt to both regional disparities and market changes;












154.


Notes that Member States, with the support of the Commission, should aim at the inclusion of all ERDF co-financed FIs for SMEs into a single operational programme per Member State, or into a single priority axis in the national operational programme within a Member State, with the aim to rationalise the planning process and remove one of the key delaying factors found;












155.


Takes the view that the Commission should propose a common definition of multiplier effect, standard concepts of recycling in the Structural Funds regulations, depending on the type of holding fund or fund as well as require contractually binding minimum leverage ratios and minimum revolving periods and data for the calculation of leverage indicators; considers that the concept of added value should be regarded as a relevant component in the calculation of leverage ratios in order to achieve relevant policy objectives as well as take market conditions into account; considers that to this end it would be advisable to articulate the concept of European added value in the legal framework for the 2014-2020 period;












156.


Asks the Council and the Commission to consider alternative ways of pursuing SME support through financial engineering instruments if the cohesion policy framework were to be considered unsuitable; notes that such instruments should either be supported by programmes centrally managed by the Commission, dedicated investment vehicles in cooperation with the Commission and the Member States or by the Member States directly;












157.


Recalls that the above-mentioned opinion of the Committee on Regional Development on innovative FIs in the context of the next MFF welcomed the application of FIs being extended under cohesion policy to all thematic objectives and all common strategic framework funds in the next programming period;





Part VII   Special Report No 3/2012 of the Court of Auditors entitled ‘Structural Funds: Did the Commission successfully deal with deficiencies identified in the Member States’ management and control systems?’
                     









158.


Welcomes the Court of Auditors’ Special Report No 3/2012; endorses all recommendations made by the Court and calls on the Commission to implement them effectively and as soon as possible;












159.


Is pleased that the Commission systematically initiated corrective actions and that the actions requested were an appropriate response for the deficiencies in 90 % of cases (point (27);












160.


Notes that around 75 % of the requests based on annual reports as referred to in Article 13 of Commission Regulation (EC) No 438/2001 (22) were not followed by financial corrections; calls on the Commission, therefore, to provide information on the reasons for the absence of financial corrections in this context;












161.


Is concerned about the Commission’s different requirements in the 2000-2006 programming period with regard to the implementation of first-level checks as this can potentially result in the non-detection of irregular expenses; asks the Commission to apply a coherent approach to demands for first-level checks and to provide information for the programming periods after 2000-2006; notes that the legal basis for the 2007-2013 period requires managing authorities to verify administratively all applications for reimbursements by beneficiaries in accordance with Article 13(2) of Commission Regulation (EC) No 1828/2006 (23);












162.


Asks the Commission to disseminate even more extensively elaborated checklists and best practice manuals (with special focus on eligibility rules) to be followed by the Member States and to strengthen its supervision on how these elements are taken into account;












163.


Believes first-level checks to be of utmost importance in ensuring a robust error rate from the onset of the implementation process; believes therefore, that the management authority should either be accredited by the Commission or the Commission should assist and supervise the management authority in exercising the aforementioned first-level checks;












164.


Is concerned, however, in particular about the following observations:






—


corrective actions took 30 months on average (point (32) and delays were mainly attributable to the Member States concerned although the Commission was partially responsible for 39 % of cases and fully responsible for 5 % of cases (point (35),










—


in only 67 % of cases the Commission obtained a high degree of assurance that financial corrections were accurate (point (55),










—


in only 28 % of cases the Commission obtained a high degree of assurance that the Member States’ management and control systems improved following corrective actions (point (64), which means that considerable effort will need to be undertaken in the closure process;
















165.


Is furthermore concerned about the Court of Auditors’ finding that Commission’s follow-up audits aiming to scrutinise the reliability of Member States‘ statements required further corrective actions by the Member States in 78 % of cases (point (45); is therefore worried that the Commission sometimes relied on potentially unreliable information by not sufficiently questioning information submitted by Member States (for example point 57, boxes 9 and 12) and that the Commission did not adequately scrutinise the reliability of the information; points out that the lack of reliability of Member States’ statements requires further audit resources by the Commission; acknowledges also the need to balance appropriately cost and benefits of such follow-up audits (point (46);












166.


Believes that a substantially higher degree of efficiency can stem from reinforcing the role of the Commission in ex ante checks, rather than in ex post checks;












167.


Reminds the Commission that the error rate in the policy area Cohesion has increased, according to the Court of Auditors’ Annual Report 2010, which reverses the positive trend observed in previous years and is contrary to an accelerated reduction of error rates, as called for by Parliament in the context of the 2008 discharge (24);












168.


Reiterates the importance of the supervisory role the Commission exercises in order to be able to bear the ultimate responsibility for the implementation of the budget including the areas of shared management; recalls the action plan to strengthen the Commission’s supervisory role under shared management of structural actions (COM(2008) 97) and the improved legal framework for the 2007-2013 programming period which aimed at reducing the level of error in structural actions and thus to protect the Union budget; notes, however, that the action plan of 2008 came only into force at the end of the programming period 2000-2006 and could therefore cover the closure process of that period only; calls on the Commission therefore to fully enforce measures as stated in the action plan for the 2007-2013 programming period and beyond; expects in this context from the Commission a considerable and steady decrease in error rates, in particular of programmes that are expected to have the highest error rates; proposes that the Court of Auditors carry out a regular assessment of the technical and ethical quality of national audit authorities, with particular regard to their independence, and that it report its findings and conclusions to Parliament and the Council;












169.


Emphasises that speed is of the essence in the process of controls to ensure that the financial interests of Union taxpayers are protected; calls on the Commission to prioritise the earliest possible scrutiny, assessment and follow-up action in its future management oversight of these funds;












170.


Believes that improving the Commission’s supervisory role is an ongoing process; underlines in this context the Court of Auditors’ remark that although management and control systems were effective at a certain time this does not necessarily mean that they continue to be effective, as systems, personnel and entities in charge of management of structural actions may change; calls on the Commission to endorse fully the Court of Auditors’ recommendations; considers enhancements of the action plan to be necessary if the expectations with regard to the improvement of the Commission’s financial management are not met;












171.


Asks the Commission to make efforts to ensure that Member States do not affect the continuity of programmes by changing entities, systems and personnel responsible for Structural Funds control, that had already been certified as effective by the Commission;












172.


Notes with satisfaction the high number of preventive actions including financial corrections enforced by the Commission following the adoption of the action plan in 2008; asks the Commission therefore to provide information on the impact of those corrections on the overall error rate for the 2000-2006 programming period;












173.


Reiterates the idea of a ‘single audit’ that was pronounced by the Court of Auditors in its Opinion No 2/2004; believes that in an effective and efficient internal control system common principles and standards should be the basis for the administration at all levels (25);












174.


Is convinced that the Commission should continue to aim at implementing the single audit principle; emphasises that it is of utmost importance to ensure the quality of the work of audit authorities in the current and upcoming periods and to ensure that their independence is guaranteed and that to achieve this end it is essential to establish clear and transparent common standards for these audits; notes that — provided that the audit authorities produce reliable results — the Union budget could be adequately protected even if high error rates are present as the Commission could apply financial corrections to counter those error rates; reiterates, however, the fact that in such cases the national taxpayer has to pay twice which is why preventing errors from happening is always more efficient than correcting it later on, for both the Commission and the Member States concerned; stresses in this context specifically indent 2 of the Court of Auditors’ recommendation 1 and urges the Commission to implement this recommendation;












175.


Calls on the Commission to finalise the closure of the 2000-2006 programming period duly taking into account the Court of Auditors’ observations and to report to Parliament on how the Commission will ensure legality and regularity in the process;












176.


Calls on the Commission, furthermore, to take into account the lessons learned from the Court of Auditor’s report and to monitor the implementation of structural actions for the 2007-2013 period and to bear in mind the Court of Auditors’ observations in the discussions on the future structural actions for the period 2014-2020;












177.


Believes strongly that the Commission should deepen its involvement in the Structural Funds scrutiny process by further assisting and supervising Member States’ management and certifying authorities as well as the winding-up bodies, throughout all phases of implementation and verification, in order to ensure an even more efficient and less time and resource consuming process;





Part VIII   Special Report No 4/2012 of the Court of Auditors entitled ‘Using Structural and Cohesion Funds to co-finance transport infrastructures in seaports: an effective investment?’
                     


Introduction









178.


Welcomes the Court of Auditors’ report and notes its deprecatory appraisal of the performance of both the Commission and the Member States with regard to the effectiveness and cost-efficiency of fund spending in the field of co-financed seaport projects;












179.


Welcomes the Commission’s endorsement of the majority of the Court of Auditors’ recommendations;












180.


Considers the majority of actions undertaken by the Commission in order to prevent future shortcomings of the sort revealed by the report to be capable of achieving the goal of more effective and more cost-efficient spending;












181.


Considers, however, that further action by the Commission is necessary;





Findings









182.


Is concerned about the fact that:






—


out of 27 projects examined, four were not completed by the time the report was concluded, with two projects still unfinished by January 2012,










—


administrative procedures for the delivery of building authorisations and permits were often long and burdensome and in some cases caused delays and additional expenditure,










—


two projects had objectives that were in line with neither transport policy nor the description in the operational programme under which they had been funded;
















183.


Notes that:






—


by the time the report was concluded, four projects were not in use despite completion, but are in use now,










—


none of the regions had a long-term port development plan; however, such plans were not a condition of funding;
















184.


Agrees with the Commission that the results and impact of investment in transport infrastructure is not always tangible immediately after construction work has been finished, since they take some time to materialise;












185.


Concludes that:






—


the Commission does not receive enough information on the progress of projects, since the information available did not lead to action to remedy the projects’ weaknesses,










—


the guidance notes and training seminars provided by the Commission were not in themselves enough to raise awareness of the principles of sound financial management sufficiently,










—


the legal provisions outlining the Commission’s advisory role in monitoring committees may be too limiting, and its ‘other tools’ intended to influence effective spending may be ineffective, since the Court of Auditors found there was little evidence of the Commission having intervened with the committees in order to ensure effective spending or to set result and impact indicators,










—


since marinas provide access only to a minority of the population, they cannot be considered an improvement to the accessibility of islands, and therefore their construction is not in line with transport policy, with the exception of those cases where small vessels are commonly used as a means of regular transport between islands and the construction of a marina would provide improved connectivity for the population as a whole,










—


dry-dock facilities for special constructions are not in line with the objectives of the TEN-T guidelines even if they can be used for maintenance, since they do not fulfil any of the ‘Specifications for projects of common interest relating to the seaport network’ as defined under Section 5(2)(III) of Annex II of Decision No 1692/96/EC of the European Parliament and of the Council (26), as amended by Decision No 1346/2001/EC of the European Parliament and the Council (27);









Recommendations of the Court of Auditors









186.


Endorses the Court of Auditors’ recommendations that the Commission should:






—


work towards making the existence of a comprehensive long-term port development strategy a condition of cohesion policy aid for seaport infrastructures,










—


carry out on-the-spot visits on effectiveness issues during construction,










—


carry out ex post checks on the use and performance of co-financed infrastructures on a risk basis,










—


strengthen the assessment procedure for major projects and Cohesion Fund projects in order to improve the detection of serious weaknesses and the taking of appropriate action to remedy them,










—


work towards the introduction of the principle that Union funding is conditional upon results,










—


encourage the use of result and impact indicators by the managing authorities;
















187.


Acknowledges favourably that the Commission has:






—


proposed an ex ante conditionality to ensure the existence of long-term strategic planning prior to any funding decision for the 2014–2020 cohesion policy framework,










—


introduced on-the-spot project visits and organised technical meetings with the relevant authorities,










—


started implementing closure audits for projects co-financed by the ERDF and the Cohesion Fund during the 2000-2006 programming period, selected on a risk basis,










—


strengthened the decision-making procedure in the 2007-2012 period by introducing standardisation of the decision-making procedure for major projects, standardised application forms, and compulsory consultation of the relevant departments in the Commission, and by establishing the JASPERS initiative (Joint Assistance to Support Projects in European Regions), which should enable Member States to submit better applications,










—


developed a performance audit framework which is intended to form the basis for a first set of targeted audits to be carried out from 2012 on, and called for a performance framework in its proposal for the 2014-2020 cohesion policy framework, which would include the Commission’s right to suspend payments in cases where the shortfall from achievement of set milestones or targets is significant;









Further recommendations









188.


Calls on the Commission to:






—


fully endorse the Court of Auditors’ recommendations to use result and impact indicators not only at priority level, but – with a scope appropriate to the possible impact of a single project – also at project level,










—


introduce an arrangement whereby assessment of the results and impact of investment in transport infrastructure is carried out after completion of the construction work, at a time when its results and impact can be expected to have become apparent,










—


carry out an analysis comparing the average completion time and the quality of administrative procedures across the Member States in cases of comparable co-funded projects, in order to recommend the implementation of best practice,










—


take into consideration the fact that shortfalls from the achievement of set milestones are not always the result of mismanagement, and exclude in its proposal for a performance framework the refusal of funds in cases where the failure of investments to produce the desired results could not have been prevented and/or could not have been foreseen from an ex ante perspective,










—


increase the amount of information available about the progress of projects, and demand remedies for discovered shortcomings as a prerequisite for further funding; notes that a lack of information on project implementation is intolerable,










—


carry out analyses of the effectiveness of the training seminars and guidance notes intended to raise awareness of the principles of sound financial management,










—


propose changes to the legal provisions to allow a more effective advisory role in monitoring committees, and carry out an analysis investigating the efficacy of the aforementioned ‘other tools’ intended to influence effective spending;









Part IX   Special Report No 5/2012 of the Court of Auditors entitled ‘The Common External Relations Information System (CRIS)’
                     









189.


Welcomes the Court of Auditors’ Special Report No 5/2012 as it provides Parliament, as the supervisory and discharge authority, with information about the execution of the budget;












190.


Is pleased with the Court of Auditors’ overall opinion that ‘CRIS is mostly effective in responding to the Commission’s information needs in the field of external actions’ (point (75); is concerned, however, about some critical shortcomings detected in the report;












191.


Calls on the Commission to define the role of CRIS and its objectives, as they have not been updated since the system became operational in 2002, in spite of the numerous changes to its content;












192.


Endorses all recommendations of the Court of Auditors; calls on the Commission to implement them as soon as possible in order to remedy persisting weaknesses;












193.


Stresses that any change in the role and modification of CRIS should reflect the new challenges of the Union’s external policy introduced by the Treaty on Functioning of the European Union, resulting in better quality and improved coherence of data;












194.


Emphasises the need to adapt the reporting functions of CRIS to the competences of Parliament in the fields of external policy and budgetary control;












195.


Considers Recommendation 1, namely that the intended role of CRIS as an information system should be set out, notably with regard to the Commission’s accrual based accounting system (ABAC), to be of prime importance;












196.


Considers that an improvement in data integrity between CRIS and ABAC is imperative in order to report on the Union’s external activities in a coherent, transparent, updated and reliable manner; stresses that a duplication of ABAC functions in CRIS should be avoided;












197.


Is worried about the following observations by the Court of Auditors with regard to the efficiency and effectiveness of CRIS:






—


CRIS’s role with regard to ABAC was not adequately defined, which has caused duplication of functions (points 34 and 35) and calls into doubt the added value of encoding financial transactions in CRIS in general (point (35),










—


information coming from CRIS can be unreliable (points 39 to 41, 49 to 52 and 54 to 56) and sometimes require additional manual adjustments (Commission’s reply to point (52) because of data coding weaknesses (points 38 to 41) or missing and invalid data records (points 49 to 51, 54 and 55),










—


substantive delays in recording information (invoices and audit reports) in CRIS occurred (point (57),










—


the user-friendliness of CRIS remains the most urgent shortcoming (point 43 and figure 3);
















198.


Is concerned that because of those weaknesses, information provided to Parliament as discharge authority may be unreliable (e.g. point 39 concerns expenditure broken down by country); acknowledges the Commission’s efforts undertaken so far (in particular, the Commission’s replies to points 35, 52 and 54); calls, nevertheless, on the Commission to remedy those weaknesses as quickly as possible to ensure the sound financial management of CRIS; suggests that particular attention be paid to avoiding duplication of functions as this is inefficient and risks erroneous data entries;












199.


Notes, furthermore, that the functionality of CRIS should be updated in order to provide aggregated information on beneficiary countries, policy areas and financial instruments, which is currently difficult or even impossible; underlines the need to improve the efficiency and effectiveness of the system for the operators through the rationalisation and consolidation of data coding;












200.


Notes the Court of Auditors’ explanations regarding the lack of any cost analysis for CRIS, which is due to an audit being carried out to analyse CRIS’s ability to provide the Commission with the information needed and not to study its administrative expenditure; regrets, however, the lack of information on CRIS’s cost-effectiveness;












201.


Regrets the lack of a clear long-term strategy establishing CRIS’s objectives and functioning at its inception, which has ultimately led to a proliferation of tasks without any coherent vision;












202.


Stresses that CRIS should have a standard mechanism for layering the confidentiality of data and users’ access rights; believes that such a mechanism should be established in order to ensure adequate confidentiality and data integrity;












203.


Is concerned about the insufficient security of the system; notes, furthermore, that the definition of responsibilities in the sphere of security remains undefined and unclear, resulting in serious risk to the safety of data; emphasises that data must be fully compliant with Development Assistance Committee (DAC) criteria;












204.


Reminds the Commission of the importance of complying with data protection rules; criticises the fact that notifications to the Data Protection Officer did not explicitly cover CVs attached to records in CRIS (point (74);












205.


Calls on the Commission to address all shortcomings and recommendations presented by Parliament and the Court of Auditors without further delay;





Part X   Special Report No 6/2012 of the Court of Auditors entitled ‘European Union Assistance to the Turkish Cypriot Community’
                     









206.


Recalls that the audit addressed the overall question ‘Is the Commission managing the Union instrument of financial support to the Turkish Cypriot community effectively?’;












207.


Calls on its Committee on Budgets and the Committee on Budgetary Control to take the findings of this resolution into consideration when negotiating the new Multiannual Financial Framework (2014-2020) and without prejudice to its final outcome in order to take into account the Court of Auditor’s recommendation to ensure improved planning, implementation and sustainability, in line with Council Regulation (EC) No 389/2006 (28), in a way that does not imply an external territory;












208.


Expresses its agreement with the conclusions of the Special Report of the Court of Auditors that ‘the programme has already achieved some positive results but their sustainability is often in doubt, particularly given the uncertainty over future EU funding’, and that the Commission ‘has been able to develop a programme which addresses and appropriately prioritises all sectors referred to in the Regulation’s objective’ and has ‘also found a way in the face of significant constraints to quickly set up a programme management office in the northern part of Cyprus and use largely suitable implementation methods and risk mitigation measures. The main weaknesses in the management of the programme resulted from the local support office not operating under more devolved procedures in the same way as Union delegations and from the staff contracts being too short for them to manage the projects financed from start to finish. In addition, monitoring in the framework of joint management with the UN was not sufficient’;












209.


Notes that the programme has assisted multiple beneficiaries across the Turkish Cypriot community; regrets, nevertheless, that it has not been possible to implement the single largest project, the construction of a seawater desalination plant (EUR 27,5 million), due to restrictions imposed by the Turkish army; notes that this represents a significant setback for the programme;












210.


Stresses the importance of continuing to provide assistance to the Turkish Cypriot community according to the provisions of Regulation (EC) No 389/2006, as also noted by the Commission in its reply to the Court of Auditor’s Special Report; stresses the importance of bringing the Turkish Cypriot community closer to the Union in order to facilitate the process of reunification; takes the view, therefore, that in future, the resources allocated to (i) the promotion of social and economic development, (ii) the development and restructuring of infrastructure, (iii) reconciliation, confidence-building measures and support to civil society, (iv) bringing the Turkish Cypriot community closer to the Union, (v) the preparation of legal texts aligned with the acquis communautaire, (vi) preparation for the implementation of the acquis communautaire, as well as to fostering economic integration as a matter of priority, should be increased and the related bi-communal programmes should be intensified;












211.


Points out, in particular, the fundamental role of bi-communal projects such as the Committee on Missing Persons in order to determine the fate of missing persons and contribute to inter-communal reconciliation; stresses the importance of securing the necessary funds for the operation of the Committee on Missing Persons and asks the Commission, in supporting the Committee on Missing Persons, to call upon the Turkish military forces to facilitate access to military zones; stresses the necessity to fund bi-communal infrastructure projects and cooperate in a more efficient way with the United Nations Agencies and Programmes;












212.


Also points out the importance of continuing to support the work of the Technical Committee on Cultural Heritage in order to ensure the restoration and preservation of historical and religious sites which constitute an integral part of the cultural heritage of Cyprus and an inseparable part of world cultural heritage as a whole;












213.


Notices that, more generally, the sustainability of projects is often in doubt due to the limited administrative capacity, the delayed adoption of relevant texts and the uncertainties over the future funding on the part of the beneficiaries;












214.


Considers it also useful to recall that, at the time of the audit, it was still unclear whether or not significant further funding for the Union assistance programme would be made available; notes that this uncertainty makes the programme management more difficult and has a negative impact on its effectiveness and sustainability;












215.


Takes note of the Court of Auditor’s recommendations which cover different scenarios, based both on developments in the reunification process and the level of the future Union assistance;












216.


Agrees with the Commission that until a settlement of the Cyprus problem is achieved, support to the Turkish Cypriot community should continue to be based on Regulation (EC) No 389/2006;












217.


Notes with satisfaction that the interventions reflect the programme’s objectives despite the wide range of sectors to be covered, the delayed adoption of Regulation (EC) No 389/2006 and the absence of a multiannual approach;












218.


Notes with concern, nevertheless, that the Commission is faced with significant constraints in the establishment and implementation of the programme, that the effectiveness of the Commission’s local support office has been undermined by several factors, that the programme implementation procedures are not always effective and that the sustainability of projects remains risky, despite some results;












219.


Acknowledges the situation described in the Court of Auditors’ Special Report; notes that the Commission has taken a number of initiatives and that since the audit, further efficiency improvements have been achieved;












220.


Also welcomes the successful conclusion of operations through joint management with the United Nations Development Programme (UNDP);












221.


Regrets the loss of the seawater desalination plant project, which was an unfortunate setback; recalls that this project was not only the main project in the water sector but also the largest project (amounting to approximately 10 % of total contracted funding) funded under the instrument and that the plant was intended to provide 23 000 m3 of clean drinking water per day, covering the needs of an estimated 100 000 people and recalls that water supply is becoming an increasingly critical issue for the island following a 40 % decrease in the mean annual rainfall in the past 30 years; is deeply concerned by the cancellation of the project, due to restrictions imposed on the Greek Cypriot contractor by the Turkish army, and once these restrictions were lifted in March 2010, the contractor was unwilling to continue, claiming adverse conditions, meaning that this serious environmental issue is not addressed; calls on the Commission to consider the possibility of renewing the project;












222.


Insists, however, that the Commission’s financial interests have been protected with the cancellation of the desalination plant project; notes that no payments have been made under the construction contract;












223.


Deeply regrets that delays have affected most of the actions on local and urban infrastructures, although in most cases, the delays were due to political difficulties and verification of land ownership, which are largely outside the control the Commission and the UNDP;












224.


Endorses the conclusions of the Court of Auditors that the programme has already achieved some positive results and assisted many beneficiaries across the Turkish Cypriot community, including farmers, students and those using the new crossing points; notes that its sustainability is often in doubt, particularly given the uncertainty over the future Union funding;












225.


Welcomes the conclusion of the Court of Auditors that despite the difficult political context and a compressed timetable, the Commission managed to establish a programme which reflected the objectives of Regulation (EC) No 389/2006 and managed to quickly set up a programme management office and introduce suitable implementing mechanisms;












226.


Stresses the transitional and exceptional character of Union aid to the Turkish Cypriot community, pending the reunification of Cyprus; notes that the Commission supports the continuation of assistance to the Turkish Cypriot community until there is a comprehensive settlement of the Cyprus problem in the framework of Regulation (EC) No 389/2006;












227.


Takes note of the conclusions and recommendations of Special Report No 6/2012; recommends to the Commission to take into consideration the accumulated experience in the implementation of the programme and, if necessary, propose measures for its further improvement and inform Parliament accordingly; proposes that Union financial aid for the economic development of the Turkish Cypriot community takes into account not only new projects but also the need to help secure the sustainability of existing projects when deciding on the allocation of any future funding, based on the existing legal framework and in line with the objectives of Regulation (EC) No 389/2006;












228.


Considers that Union aid should continue to support the reunification process in Cyprus; in this regard, recommends to the Commission to keep pursuing the five objectives of Regulation (EC) No 389/2006, supporting among others, bi-communal measures, confidence building projects, missing persons related activities, civil society (including the Armenian and Maronite minorities), the preservation and restoration of historical sites, environmental protection as well as the economic and social development and the implementation of the acquis communautaire;












229.


Asks the Commission to maximise the circulation of information on tenders for reconciliation and civil society strengthening programmes; points out, in particular, the need to support programmes on the socioeconomic integration and empowerment of women in the Turkish Cypriot community;





Part XI   Special Report No 7/2012 of the Court of Auditors entitled ‘The reform of the common organisation of the market in wine: Progress to date’
                     









230.


Welcomes Special Report No 7/2012 of the Court of Auditors entitled ‘The reform of the common organisation of the market in wine: Progress to date’ that focuses on the progress achieved by the reform of the common organisation of the market in wine introduced by the Council in 2008; acknowledges that the main objective of the audit was to assess the progress regarding one of the main objectives of the reform, namely improving the balance between supply and demand;












231.


Recalls that the reform of the common organisation of the market in wine was aimed at balancing supply and demand, and that the main financial instruments of this reform included a temporary grubbing-up scheme and the setting up of national support programmes, allowing each Member State to choose the measures (among 11 available) best adapted to its particular situation;












232.


Emphasises that the audit focussed on the two measures representing the largest areas of spending: ‘grubbing-up’ and ‘restructuring and conversion of vineyards’ with EUR 1 074 million made available for the grubbing-up measure in the three-year application period from 2008-2009 to 2010-2011 and EUR 4 200 million allocated for restructuring and conversion measure for the ten-year period from 2001 to 2010;












233.


Takes note that the Union is the world’s biggest wine producer with 3,5 million hectares (ha) of vines; recalls that the Union produced approximately 160 million hectolitres (hl) during the wine year 2007-08, accounting for around 60 % of the world’s wine production; furthermore, notes that there was a downward pressure on wine prices at producer level, compounded by the overall decrease in wine consumption in the Union in the 20 years leading to 2009;












234.


Notes that Special Report No 7/2012 indicates that although demand for grubbing-up exceeded 350 000 ha, its impact was limited by the fixed target of 175 000 ha and ultimately, only 160 550 ha were grubbed-up with the help of Union aid; the Court of Auditors estimates that the grubbing-up scheme finally reduced the vineyard inventory area by around 5 %, corresponding to approximately 10,2 million hl of wine withdrawn or 6 % of the usable wine production; points out, however, that far more land – 300 000 ha in all – has been grubbed-up since the reform, and that no such aid was provided in respect of around 140 000 ha of that land, a figure that does not appear in Special Report No 7/2012;












235.


Notes that the Court of Auditors concludes that for the grubbing-up measure, the scheme could have been more efficient and less expensive since the aid rates were increased to levels that were too high in the first and second year, while the demand for the measure exceeded the target, even when the rates were reduced to their original level in the third and final year of the scheme;












236.


Notes that the Court of Auditors considers that grubbing-up did not always target the less competitive or less viable vineyards and that the scheme financed the grubbing-up of some vineyards that had already been restructured and were, in principle, competitive; regretfully notes that such cases are at odds with the policy objectives of the reform;












237.


Notes that Special Report No 7/2012 stresses that the expected reduction of the production did not materialise as a consequence of the insufficient use of some common market organisation instruments such as green harvesting and promotion, and the rejection by the Council of the Commission proposal to ban enrichment with sucrose;












238.


Notes that Special Report No 7/2012 recognises that restructuring measures have contributed to the improvement of competitiveness in the sector but they have also provoked an increase of yields in certain Member States offsetting efforts to reduce the market supply;












239.


Takes note that the Court of Auditors notes that the Commission has not made an in depth assessment on the potential impact of the liberalisation of planting rights scheduled for 2018 at the latest, and considers that such an assessment is necessary to establish an estimate of the balance between supply and demand in the wine sector;












240.


Takes note of the Court of Auditors’ concerns that the Union financed the grubbing-up measure in order to reduce the surplus of wine, while in certain cases, the restructuring and conversion measure led to some increases in vineyard yields; takes the view, however, that greater yields may make the wines more competitive, but strongly encourages the Commission to ensure that an appropriate strategy is in place to avoid unbalances;












241.


Fully endorses that the grubbing-up of some modernised vineyards should have been avoided by clarifying existing provisions, so that the vast possibilities of interpretation would have been avoided and established additional eligibility criteria linked to the vineyard itself and not only to the farmer;












242.


Is of the opinion that the Commission should review the restructuring measures to reinforce their effectiveness and maintain measures from the previous programme that proved successful in order to boost the sector competitiveness; expects the Commission to ensure that the Member States’ national programmes and the restructuring and conversion measures are in line with the objective of the reform, especially the Single Payment Scheme; furthermore, asks the Commission to improve the current provisions to enable farmers to better adapt to market signals and better match the supply to the products demanded;












243.


Calls on the Commission to promote measures to safeguard the Union’s best winemaking traditions, which essentially entails ensuring socioeconomic cohesion and protecting the environment and landscape in many of the rural areas in which they operate;












244.


Considers that the Commission should establish a regularly updated estimate of the balance between supply and demand in the wine sector based on statistical analysis of the sector variables, taking into account positive output effects of restructuring and conversion measures; believes that on the basis of that estimate, it should have determined the targeted area for the grubbing-up measure and is of the opinion that in the future, it should evaluate whether the improvement of any other measures is necessary to address possible imbalances on the basis of that estimate;












245.


Insists on the need to realise an in-depth impact study assessment of the planting rights liberalisation, according to the Court of Auditors’ recommendation; asks the Commission to evaluate the potential consequences of the elimination of this regime in order to adopt the most convenient decisions to guarantee the balance of the wine market; notes the opinion of a majority of Members States against the decision to end up with that system, a view shared by Parliament in its Resolution of 23 June 2011 on the CAP towards 2020: meeting the food, natural resources and territorial challenges of the future (29);












246.


Stresses that although demand for wine in the Union has been decreasing over the last decades, there has been a tangible increase in exports to third countries during the last few years, which was not addressed in Special Report No 7/2012; believes that the implementation of measures to promote the export of quality wines would help reduce production surpluses;












247.


Urges the Commission to take measures ensuring that Member States that use flat rates per ha to calculate payments install proper control mechanisms for paying agencies guaranteeing that farmers are not overcompensated, standardise the estimation of costs so that variations in estimated costs for comparable measures are reduced to a minimum;












248.


Urges the Commission to take adequate action to establish comparability and an acceptable level of standardisation for measures based on Article 103q of Council Regulation (EC) No 1234/2007 of 22 October 2007 establishing a common organisation of agricultural markets and on specific provisions for certain agricultural products (Single CMO Regulation) (30);












249.


Believes that, in addition to the export of quality wines to third countries, greater support for consumption of European wines within the Union would also help to reduce the production surpluses;












250.


Asks the Commission to relaunch a policy to promote the wine sector and improve its competitiveness in the internal market, including information campaigns for adults on responsible consumption of wine, and on its specific qualities and features, which highlights the cultural roots of European wines; calls, furthermore, on the Commission to study an European strategy to increase exports to third countries;





Part XII   Special Report No 9/2012 of the Court of Auditors entitled ‘Audit of the control system governing the production, processing, distribution and imports of organic products’
                     









251.


Welcomes the Court of Auditors’ Special Report No 9/2012, and endorses the Court of Auditors’ conclusions; finds it regrettable, however, that audit visits were made to only six Member States, even allowing for the fact that these were the countries most directly concerned;












252.


Endorses the Court of Auditors’ recommendations, in particular regarding traceability and the cross-border trade in organic products;












253.


Notes that consumption of organic food constitutes less that 2 % of the entire food market, though the trend is likely to be rising;












254.


Highlights the fact that the importance of organic production goes beyond healthy nutrition; organic farming is an innovative, knowledge-based approach to agricultural production with efficient use of resources, which can be an engine of rural development and employment; increasing use of biotechnologies and organic production could provide a ‘European added value’ for agriculture, which could result in a stronger role for Europe in global competition; notes, furthermore, that it contributes to long-term environmental, economic and social sustainability, such as climate change mitigation and adaptation, slowing reduction in biodiversity and improving animal welfare standards;












255.


Recalls that Parliament has always supported organic farming and will continue to do so and has actively participated in creating legislation for production and labelling rules of organic food;












256.


Believes that in the context of the next Multiannual Financial Framework greater attention and more support should be directed to the production of organic products;












257.


Expresses its concern that many organic products are more costly than non-organic products; as a result, price-sensitive consumers and people living on lower incomes are not able or are less able to afford these healthier products;












258.


Recognises that an effective system of controls for organic production sets a number of hurdles for operators (including producers, importers and processors) to overcome but at the same time, validates their quality, giving operators credibility whilst allowing the consumer to have confidence in products labelled as organic;












259.


Draws attention to the growth of the organic food market from Union-grown and imported organic goods, which may also create the potential for unfair commercial practice, and points out that this requires stronger control systems at Union and Member State level; emphasises that controls should provide a guarantee that products labelled as organic are really organic;












260.


Recalls that the Commission is responsible for the supervision of control systems and calls on the Commission to undertake a joint evaluation of the Court of Auditors’ main findings with the Member States, who bear the significant responsibility for operating the control system;












261.


Stresses the importance of providing sufficient assurance that the system is operating effectively and that it ensures that consumer confidence is not undermined;












262.


Asks the Commission, therefore, to bring forward initiatives and regulatory proposals aiming to ensure that all the weaknesses pointed out by Special Report No 9/2012 are remedied by the end of 2013;












263.


Welcomes the Commission’s forthcoming review of the control legislation and current preparation of accreditation guidelines by the European cooperation for Accreditation as a valuable contribution to improving implementation in future;












264.


Stresses that a level playing field in applying procedures for approving and supervising control bodies is fundamental; notes that failures lead to differences in organic labelling control, which increase the risk of fraud or organic labelling shopping and therefore have a negative impact on consumer confidence in the organic label;












265.


Expresses its surprise and disquiet at the Court of Auditors’ finding that Member States’ competent authorities have been failing to document, or have not sufficiently documented, the approval and supervision procedures applied to control bodies in order to ensure compliance with regulatory requirements; calls for the national parliaments, whose task it is to exercise control over the Member States’ governments, to be informed of this finding;












266.


Emphasises that the independence of the control bodies, public authorities included, is crucial to maintaining the reputation of the organic label;












267.


Welcomes the improvements in IT systems already at hand and sees these as essential components of effective controls in the future;












268.


Emphasises Member States’ responsibilities in this, as in other domains, and regards the regular meetings of the Standing Committee on Organic Farming (SCOF) as highly valuable in terms of exchange of best practice and information between Member States, the Commission, and third country staff involved in the control systems; notes, nevertheless, the Court of Auditors’ comment (point (75) that this body needs to improve its capacity to exchange information on the functioning of the import authorisation regime;












269.


Emphasises the importance of the exchange of information within Member States and between Member States and the Commission; therefore, asks the Commission to introduce appropriate measures to make sure the flow of information is relevant, reliable and timely; in particular, asks the Commission to take appropriate measures to speed up and to increase the reliability of the communications relating to organics certification issues such as those communicated through the ‘Organic Farming Information System’;












270.


Calls on the Member States to cease, before the cut-off date, to grant the transitional import authorisations established by Council Regulation (EEC) No 2083/92 (31), an arrangement which has been extended several times but is to end under the current Commission Implementing Regulation (EU) No 1267/2011 (32) of 6 December 2011, which stipulates that Member States may not issue authorisations of this type after 1 July 2014;












271.


Observes the comment in the 2011 Annual Activity Report of the Commission’s Directorate-General for Agriculture and Rural Development indicating that organic products were erroneously suggested as the potential source of contamination of the E. Coli outbreak casting some doubts over organic farming supervision and that the year was marked by extensive media coverage of supervision and control weaknesses in the organic sector (33), notably in the wake of a fraud uncovered at the end of the year, with falsified data and products falsely labelled as organic;












272.


Notes the reservation in that 2011 Annual Activity Report regarding possible reputational risk to the organic control system if it is not implemented properly across the Union and at its external borders;












273.


Is waiting for the follow-up of the Court of Auditors in three years in order to get a picture of the remedial measures put in place and their results;





Part XIII   Special Report No 12/2012 of the Court of Auditors entitled ‘Did the Commission and Eurostat improve the process for producing reliable and credible European statistics?’
                     









274.


Points out that:






(a)


the European statistical system consists in a partnership between the Union statistical authority, Eurostat, and the national statistical institutes which are responsible for coordinating all activities at national level for the development, production and dissemination of European statistics and may receive grants from the Union budget without prior call for proposals;










(b)


the European Statistical System Committee provides professional guidance to the European Statistical system;
















275.


Notes that:






(a)


the overall objective of the audit was to assess whether the Commission and Eurostat have improved the process for producing reliable and credible European statistics;










(b)


for this purpose the Court of Auditors addressed two issues: the implementation of the European Statistics Code of Practice (ESCP) and the management by Eurostat of the multiannual European statistical programme;










(c)


the audit also covered the contribution of the European Statistical Governance Advisory Board (ESGAB) and the European Statistical Advisory Committee;
















276.


Broadly endorses the three main recommendations made by the Court of Auditors:






(a)


since the statistical authorities of the Union and the Member States share a common responsibility for maintaining trust in Europe’s democratic process, they should strengthen the system of European statistics in ensuring professional independence, sufficient resources, effective supervision with sanctions and swift improvement of measures for cases where quality standards are not respected;










(b)


in order to fully implement the ESCP, the Commission should:






—


propose amendments to the regulatory framework for the production of European statistics that provide a sound basis for review, enforcement and in appropriate cases, verification and inspection covering the institutional environment of statistical production, the statistical processes and the statistical output both at Union and national level,










—


take the necessary steps to ensure legal certainty of the nature of the obligation to adhere to the ESCP,










—


develop a supervisory function to oversee reviews, verifications, and inspections, for example by extending the current remit of the ESGAB,










—


enhance the professional independence of the Chief Statistician of the European Union,










—


bring its internal decision in Eurostat’s role in line with the requirements of the ESCP, enable Eurostat to apply its protocol on impartial access to data without the restriction (and phase out the mechanism of sub-delegated operational credits for statistical production which makes Eurostat, in part, financially dependent on other Commission service),










—


launch a new round of peer reviews envisaged by the Commission for 2013 covering compliance with all principles of the ESCP including a strong element of external element to allow independent assessments and comparable results,










—


consider introducing rolling peer review for the most important statistical domains covering the entire production chain including providers of administrative data;














(c)


Eurostat should fully exploit the potential of the upcoming European statistical programme for the years 2013-2017 and, in particular:






—


define precise targets and milestones each year in the annual statistical programmes and organise an adequate follow-up,










—


consider to revise the programme if needed during its implementation and to synchronise it with the Multiannual Financial Framework,










—


systematically review the statistical priorities taking into account the relevance of the statistical outputs and the cost and burdens for the European statistical system, its members and respondents and encourage statistical innovation when defining new priorities,










—


improve its support to European Statistical Advisory Committee’s functioning through more and better tailored information on the budgetary and financial implications of statistical programming choices and on the implementation of statistical programmes,










—


simplify and improve the efficiency of the financial management of grants by resorting to standard scales of unit costs for staff and to lump sums for data sets provided through surveys,










—


explore the option of a performance-based system of grant management which relies on agreed indicators and objectives,










—


enhance competition in procurement procedures notably by giving more weight to price criterion in best value for money procedures and avoiding minimum thresholds that weaken price competition;




















277.


Welcomes the generally constructive replies made by the Commission and notes, in particular, that the Commission agrees with the Court of Auditors that the Union, the Member States and their statistical authorities share a common responsibility for maintaining trust in Europe’s democratic process;












278.


Points out that, as requested by the Court of Auditors, the Commission:






(a)


tabled a proposal for a regulation amending Regulation (EC) No 223/2009 (COM(2012) 167);










(b)


adopted a new internal decision on Eurostat on 17 September 2012; and










(c)


approved in September 2011 a revision of the ESCP;
















279.


Points out that the coordinating role of the national statistical institutes and Eurostat in the production of European statistics must be enforced and supported by further legislative changes, where necessary; calls for the ESGAB to be transformed into an independent supervisory body which should be tasked with overseeing reviews, verifications and inspections in the European Statistical System; to that end, invites the Commission to draw up a proposal for a regulation which should replace Decision No 235/2008/EC of the European Parliament and of the Council of 11 March 2008 establishing the European Statistical Governance Advisory Board (34) currently in force;












280.


Stresses that the European statistical system itself must be a driver of systemic improvement in order to adapt its structures and resources to the new challenges; notes that, as there is increasing demand for statistics in the face of decreasing resources, there is need for systemic change in the ways statistics are produced in order to further improve efficiency; underlines that implementing the vision for the next decade and the associated joint European statistical system strategy can no longer be postponed;












281.


Emphasises the need to further strengthen the governance of the European statistical system and stresses that the on-going revision of the European statistical system’s governance structure must be completed swiftly in order to streamline the decision-making channels and transfer the comitology competences to the European Statistical System Committee; asks the Commission to clarify the position of the ESGAB in the European statistical system’s governance structure;












282.


Welcomes the Commission’s commitment to fully implement the ESCP; notes, however, that the ESCP still represents a challenge for the European statistical system as a whole and there is a need to support the Eurostat and the national statistical institutes in their efforts to fully implement the ESCP;












283.


Regrets that out of the 677 improvement actions originally identified for the European statistical system during the external peer reviews carried out in 2006-2008, only 71 % were completed by 2012; notes that part of the remaining improvement actions are already outdated and that the speed of their implementation is stalling; therefore welcomes the plans for a new set of peer reviews to start in 2013, including the publication of the full list of the remaining actions and the schedule for their implementation; emphasises the importance of including external verification processes while implementing the new round of peer reviews;












284.


Welcomes the fact that the Commission accepts in principle the recommendations on peer reviews, the introduction of precise targets and milestones in annual statistical programmes, reprioritisation and revision of the 2013-2017 programme, encouragement to innovation, a better involvement of the European Statistical Advisory Committee, simplification and improvement in the efficiency of financial management of grants; notes that the Commission also agrees to avoid a weakening of price competition in procurement procedures and to adapt the existing threshold and ratio for selecting the economically most advantageous tender and is satisfied that provisions of the proposal for a regulation amending Regulation (EC) No 223/2009 as tabled by the Commission specify the use of lump sums and agreement for using standards scales of unit costs;












285.


Notes that a provision of the Commission proposal for a regulation amending Regulation (EC) No 223/2009 reinforces the principle of the independence of the Chief Statistician of the European Union but does not foresee the same mechanisms for its appointment as recommended by the Court of Auditors; points out that the modified Regulation must define the ESGAB’s role in the selection procedure of the Chief Statistician applied by the Commission and that clear and publicly accessible appointment and dismissal rules for the Chief Statistician should be ensured by means of open competitions and fixed terms in line with the ESCP;












286.


Takes note of the position of the Commission as to the phasing out of the sub-delegation of credits for statistical production;












287.


Instructs its President to forward this resolution to the Council, the Commission, the Court of Justice of the European Union, and the Court of Auditors, and to arrange for its publication in the Official Journal of the European Union (L series).






(1)  
            OJ L 68, 15.3.2011.

(2)  
            OJ C 348, 14.11.2012, p. 1.

(3)  
            OJ C 344, 12.11.2012, p. 1.

(4)  
            OJ C 348, 14.11.2012, p. 130.

(5)  Texts adopted, P7_TA(2013)0122 (see page 25 of this Official Journal).

(6)  
            OJ L 248, 16.9.2002, p. 1.

(7)  
            OJ L 298, 26.10.2012, p. 1.

(8)  
            OJ L 223, 15.8.2006, p. 1.

(9)  Regime used by an importer in order to obtain a VAT exemption when the imported goods will be transported to another Member State and where the VAT is due in the Member State of destination.

(10)  
            OJ L 145, 4.6.2008, p. 1.

(11)  Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions of 19 May 2010: A Digital Agenda for Europe (COM(2010) 245).

(12)  The Shadow Economy in Europe, 2010: Using Electronic Payment Systems to Combat the Shadow Economy/Friedrich Schneider, A.T. Kearney, 2010.

(13)  Communication from the Commission to the European Parliament and the Council of 24 April 2012: Monitoring report on Croatia’s accession preparations, p. 12.

(14)  Cf. Communication from the Commission to the European Parliament and the Council of 12 December 2007: Second Report on the use of financial resources earmarked for the decommissioning of nuclear installations, spent fuel and radioactive waste (COM(2007) 794), p. 10.

(15)  Special Report No 16/2011, p. 7.

(16)  Cf. Report from the Commission to the European Parliament and the Council of 13 July 2011: On the use of financial resources during 2004-2009 provided to Lithuania, Slovakia and Bulgaria to support the decommissioning of early shut-down nuclear power-plants under the Acts of Accession (COM(2011) 432).

(17)  European Parliament Resolution of 5 April 2011 on the efficiency and effectiveness of EU funding in the area of decommissioning nuclear power plants in the new Member States (OJ C 296 E, 2.10.2012, p. 19).

(18)  SEC(2011) 1387, p. 34, see Annex 1.

(19)  Proposal for a Regulation of the European Parliament and of the Council laying down common provisions on the European Regional Development Fund, the European Social Fund, the Cohesion Fund, the European Agricultural Fund for Rural Development and the European Maritime and Fisheries Fund covered by the Common Strategic Framework and laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund and repealing Council Regulation (EC) No 1083/2006 (COM(2011) 615/2).

(20)  Opinion annexed to the report A7-0270/2012.

(21)  Such as the adoption of a Common Strategic Framework; the adoption of detailed rules on FIs; the responsibilities of Member States concerning the procedure for reporting irregularities and recovery of sums unduly paid; the conditions of national audits; the accreditation criteria for managing authorities and certifying authorities.

(22)  Commission Regulation (EC) No 438/2001 of 2 March 2001 laying down detailed rules for the implementation of Council Regulation (EC) No 1260/1999 as regards the management and control systems for assistance granted under the Structural Funds (OJ L 63, 3.3.2001, p. 21).

(23)  Commission Regulation (EC) No 1828/2006 of 8 December 2006 setting out rules for the implementation of Council Regulation (EC) No 1083/2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund and of Regulation (EC) No 1080/2006 of the European Parliament and of the Council on the European Regional Development Fund (OJ L 371, 27.12.2006, p. 1).

(24)  See paragraph 4 of the Resolution of the European Parliament of 5 May 2010 with observations forming an integral part of its Decisions on discharge in respect of the implementation of the European Union general budget for the financial year 2008, Section III — Commission and executive agencies (OJ L 252, 25.9.2010, p. 39).

(25)  See paragraph 61 of the Resolution of the European Parliament of 10 May 2011 with observations forming an integral part of its Decisions on discharge in respect of the implementation of the general budget of the European Union for the financial year 2009, Section III — Commission and executive agencies (OJ L 250, 27.9.2011, p. 33).

(26)  
            OJ L 228, 9.9.1996, p. 1.

(27)  
            OJ L 185, 6.7.2001, p. 1.

(28)  Council Regulation (EC) No 389/2006 of 27 February 2006 establishing an instrument of financial support for encouraging the economic development of the Turkish Cypriot community and amending Council Regulation (EC) No 2667/2000 on the European Agency for Reconstruction (OJ L 65, 7.3.2006, p. 5).

(29)  
            OJ C 390 E, 18.12.2012, p. 49.

(30)  
            OJ L 299, 16.11.2007, p. 1.

(31)  Council Regulation (EEC) No 2083/92 of 14 July 1992 amending Regulation (EEC) No 2092/91 on organic production of agricultural products and indications referring thereto on agricultural products and foodstuffs (OJ L 208, 24.7.1992, p. 15).

(32)  Commission Implementing Regulation (EU) No 1267/2011 of 6 December 2011 amending Regulation (EC) No 1235/2008 laying down detailed rules for implementation of Council Regulation (EC) No 834/2007 as regards the arrangements for imports of organic products from third countries (OJ L 324, 7.12.2011, p. 9).

(33)  See the 2011 Annual Activity Report of the Commission’s Directorate-General for Agriculture and Rural Development, p. 25.

(34)  
            OJ L 73, 15.3.2008, p. 17.