REPORT FROM THE COMMISSION TO THE COUNCIL AND THE EUROPEAN PARLIAMENT Member States' Replies to the Court of Auditors' 2012 Annual Report
Date: 2014-02-28
Institutions: European Commission
Subjects: EU Member State, European Court of Auditors, audit, disclosure of information, eligibility criteria, implementation of the budget, management audit













EUR-Lex - 52014DC0120 - EN











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52014DC0120

REPORT FROM THE COMMISSION TO THE COUNCIL AND THE EUROPEAN PARLIAMENT Member States' Replies to the Court of Auditors' 2012 Annual Report /* COM/2014/0120 final */









TABLE
OF CONTENTS
Member States'
Replies to the Court of Auditors' 2012 Annual Report 3
Executive summary. 3
Member States' Replies to the Court of Auditors' 2012
Annual Report 5
1.     Scope of the Report 5
2      Key features of the ECA 2012 report 5
3      Summary of the Member States' replies. 7
3.1       Performance-getting results from the EU budget 7
3.2        Eligibility
and Accuracy errors. 9
3.3        Improving controls and systems. 11
4.       Conclusion. 15

REPORT FROM THE COMMISSION
Member States' Replies to the Court of
Auditors' 2012 Annual Report
Executive summary
This report is an analysis of the Member
States' replies to the European Court of Auditors' (the Court) annual report
for budgetary year 2012 and fulfils the obligations defined in article162 (5)
of the Financial Regulation.
The Court’s audit results showed that for 2012
the consolidated accounts presented the financial position of the Union fairly and that they were free from any material misstatements. However, for expensed
payments the Court’s conclusion was that they were materially affected by error
and the related control systems examined were partially effective for all
expenditure areas except administrative expenditure, which was free from errors.
For the budget as a whole, the most likely error rate had increased from 3,9%
in 2011 to 4,8% in 2012. The Court identified that eligibility errors accounted
for a significant proportion of the estimated overall error rate. Finally, the
Court highlighted that shared management expenditure, which represents 80% of
EU expenditure, contributed significantly to the estimated overall error rates
and that many of the errors found could have been detected by better first-line
controls at the level of the Member States.
This report analyses the replies provided by
Member States under three main thematic headings – (1) Performance – Getting
results from the EU budget (2) Eligibility and accuracy errors and (3) Improving
controls and systems.
With regards to performance the Court
criticized the existing performance measurement and reporting framework. Member
States were therefore requested to reply to questions on performance
measurement, evaluation and reporting for co-financed programmes. Twenty three Member States indicated that they use SMART
objectives and RACER indicators; Member States also detailed
various aspects of their national performance measurement processes. If the
Member States' positive view is confirmed, it would allow the Commission to
improve its global performance measurement and reporting on the basis of Member
States’ data.
 In the area of expensed payments, the Court
identified recurrent eligibility errors with a financial impact concerning
ineligible VAT in cost claims. In the area of Agriculture it also indicated
that there were significant deficiencies related to three  Land Parcel Identification
Systems (LPIS)  audited resulting in eligibility and accuracy errors. All
Member States concerned indicated that they had made efforts to rectify VAT
errors and to update and improve LPIS databases. The Court highlighted the
positive impact of simplified cost options (SCOs) in the area of Employment and
Cohesion and its opinion was shared by a majority of Member States. This is
extremely important because the use of SCOs could be a key element in the
prevention of errors in programmes under the new MFF.
In shared management the Commission applies the
concept of single audit whenever possible, meaning that it may rely on audit
and controls performed by national audit authorities, if they are proven to be
reliable and if the management and control systems are fully effective. In its
report, the Court referred to the risk of frequently unreliable information
provided by the audit authorities (AAs). Ten Member States replied that they
had no plans for improvements as they considered their AAs to be reliable.
Member States all expressed overall satisfaction with the guidance on the
treatment of errors provided and the seminars organised by the Commission in
2012 and 2013. The majority of Member States indicated that they were willing
to establish effective and proportionate anti-fraud measures. Although, the Commission
acknowledges the advantages of the single audit concept, it has to ensure the
reliability of the data reported by the Member States and it therefore performs
reviews and audits of the systems of national audit authorities and the
national bodies responsible for the implementation of EU programmes.
REPORT FROM THE COMMISSION
Member
States' Replies to the Court of Auditors' 2012 Annual Report
1.           Scope
of the Report
Article 162.5 of the Financial Regulation states
that as soon as the Court has transmitted its annual report, the Commission
shall inform the Member States concerned immediately of the details of that
report which relate to management of the funds for which they are responsible.
Member States should reply within sixty days and the Commission then transmits
a summary of the replies to the Court of Auditors, the European Parliament and
the Council before 28 February of the following year.
Following publication of the Court's annual report
for the budgetary year 2012, the Commission duly informed Member States of
details of the report. This information was presented in the form of a letter
and three annexes to be completed by each Member State. Annex I was a
questionnaire on the paragraphs referring to the individual Member States;
Annex II was a questionnaire on audit findings which refer to each Member State
and Annex III was a questionnaire on topical findings related to shared
management for DAS 2012.
This report is an analysis of the Member
States' replies under three main thematic headings – (1) Performance – Getting
results from the EU budget (2) Eligibility and accuracy errors (3) Improving
controls and systems, and is accompanied by a Staff Working Document (SWD)
which comprises the Member States' replies to Annexes I and III.
2            Key features of the ECA 2012 report
The Court’s audit results showed that for 2012
the consolidated accounts presented the financial position of the Union fairly and that they were free from any material misstatements. Commitments in all
spending areas were also free of material error. However, for expensed payments
the Court’s conclusion was that they were materially affected by error and the
related control systems examined were generally partially effective. The Court
also concluded that for 2012 there had been an increase in the most likely
error rate for all policy areas. Consequently for the budget as a whole, the
rate had also increased from 3,9% in 2011 to 4,8% in 2012.The most error prone
spending areas were Rural development, environment, fisheries and health
(Chapter 4) 7,9% and Regional policy, energy and transport (Chapter 5) 6,8%.
In terms of the types of errors which the Court
identified in 2012, eligibility errors accounted for a significant proportion
of the estimated overall error rate, followed by procurement errors. The graph
below gives a breakdown of the contribution of each type of error to the
overall estimated error rate.[1]
The Court also highlighted the fact that taken
as a whole, it estimated that shared management expenditure contributed significantly
to the estimated overall error rates. (see Graph 1.3 below).[2]
Finally, the Court noted that for a large proportion
of transactions affected by errors in shared management, Member States’
authorities had sufficient information available to have detected and prevented
those errors.[3]
3            Summary of
the Member States' replies
3.1           Performance-getting results
from the eu budget
Since 2010, the Court has been reporting
specifically on performance issues. In its 2012 report, the Court emphasized
some of the main themes arising and the lessons that can be learned from its
2012 special reports. According to the Court "performance is assessed
on the basis of the sound financial management principles (economy, efficiency
and effectiveness)”. Its measurement is key throughout the public
intervention process, covering inputs, outputs, results and impacts.[4]
However, the Court also indicated, that "for many areas of the EU
budget the legislative framework is complex and there is a lack of focus on
performance."[5]
With regards to the results of the audit on
performance the Court stated in its report that it "focused on three
themes which are important for obtaining the desired results and impacts of the
next generation of spending programmes."[6]  It focused,
firstly, on SMART objectives and suitable indicators for programmes, secondly,
on reliable and timely data on the performance of programmes and finally, on
the sustainability of EU funded projects.
The same issues are also covered in the Court's
special reports. For instance in its special report on integration of
third-country nationals the Court "concluded that although the
Commission provided extensive guidance on indicators, four out of the five
Member States showed significant weaknesses in the inclusion of SMART
objectives in programmes, setting up appropriate IT collection systems and/or
reporting on the achievement of targets. Consequently, the ability of Member States and the Commission to monitor and steer the programmes has been hampered."[7]
In the questionnaire (Annex III) sent to the
Member States they were requested to reply to questions on performance
measurement, evaluation and reporting. Member States had the opportunity to
explain their national performance measurement systems for co-financed
programmes.
In their replies to the
question on objectives and indicators used for performance measurement, 23
Member States indicated that they use SMART objectives and RACER indicators
(see graph below).
23 out of the 27 responding Member States also
stated that they discuss the definition of objectives and indicators for
co-financed programmes with their counterparts at the European Commission.
In their replies Member States detailed various
aspects of their performance measurement processes for co-financed programmes.
The answers focused on four main elements: a general process overview,
performance monitoring, evaluation and reporting.
Member States gave a general overview and
description of the process as well as the entities responsible. The replies described
the monitoring, evaluation and reporting of indicators, most commonly in the
Annual Implementation Reports. The procedure as a whole is mostly coordinated
by the managing authorities or monitoring committees. However, in certain cases
the evaluation and reporting is not systematically undertaken by the managing
authorities. As stated by Estonia and Hungary respectively "evaluations
are usually carried out by external experts”[8]
and "evaluation projects are outsourced, generally for half a year to a
year."[9]
With regards to monitoring, the Member States
described the indicators used. Austria, Cyprus, the Czech Republic and Poland indicated that they measured performance based on indicators which have been
specified in the Operational Programmes (OP).[10]
 Bulgaria, Cyprus and the Czech Republic stated that, next to OP level
indicators, they also used indicators defined at project level.[11] Bulgaria, the Czech Republic and Slovakia further detailed that they measured performance by
specifying starting and target values, while Cyprus and Greece stated that they used economic, output and outcome indicators.[12] Denmark said that aside from indicators in the OPs or the specific projects, they also used
supporting information from statistical sources, such as data from the Danish
Statistical Office.[13]
For measuring and evaluating the indicators the
Member States used various methods. Six Member States stated that the
indicators are monitored continuously or through ongoing assessment. It was also noted by Bulgaria and the Czech Republic that based on
the starting and target values, the commitments and values achieved are
compared.[14]
Finally, evaluation studies, surveys and reviews are also being used for measurement
as indicated for example by Hungary, Poland and Romania.[15]
With regards to reporting, the Member States
focused on the form and timing of their reporting procedures. Reporting takes
place most commonly on an annual basis through the Annual Implementation
Report. Malta and Poland indicated that they also use bi-annual reports, while
the Czech Republic stated that "the outputs are regularly reported on
in the Monthly monitoring report".[16]
Reports are also published on the web and communicated through sectorial
networks to target publics as, for example, in Hungary, Spain and Portugal and/or discussed in public hearings as is the case in Slovenia.[17] Bulgaria stated that furthermore, they have developed an electronic system called SIBILA
"to assess the impact on the Bulgarian economy of the resources
allocated from the Structural and Cohesion Funds."[18]
Austria underlined the
importance of performance by stating that "to ensure the operation of
the directives and regulations, the supervision architecture must be constantly
developed. That is why the ECA conducts performance audits (see Chapter 10 of
the ECA Annual Report concerning the financial year 2012), which the ACA
welcomes and affirms it will make greater use of."[19] In a similar
vein Denmark noted that "great importance is also attached to the
chapter in the annual report on ‘Getting results from the EU budget’. That
chapter confirms that there is a continued need to focus on building a robust
system for results-oriented reporting and impact measurement."[20]
In general the Member States' replies to these
questions were very positive. The challenge for the Commission will be to
improve its overall performance measurement and reporting on the basis of
Member States' data.
3.2          Eligibility and Accuracy errors
As mentioned previously, overall across the
different policy groups, eligibility errors accounted for a significant
proportion-more than two thirds- of the estimated error rate for the budget as
a whole.[21]
In Chapter 3 and 4[22]
- of its annual report, the Court provided examples of such errors in various
Member States. For instance in Chapter 3, eligibility and accuracy errors were
identified in the context of LPIS. In Chapter 4 non-respect of eligibility
requirements for investment projects was highlighted by the Court.
The Court also identified recurrent eligibility
errors with a financial impact concerning ineligible VAT in France, Spain, Italy, Poland, Portugal and Romania. Each Member State concerned was asked whether
paying agencies were familiar with the applicable legal basis when reimbursing
VAT and each one responded in the affirmative.
For Chapter 3, the results of the Court’s report
indicated that there were significant deficiencies related to three LPIS  audited[23] which resulted in eligibility
and accuracy errors. Four countries-Spain, Austria, Portugal, UK (Northern Ireland)-were mentioned in the Court’s report as having deficiencies in their LPIS databases[24] and each one indicated
that efforts had been made to update and improve its respective LPIS databases.
According to the Austrian authorities:
“The Austrian LPIS is updated properly and
at regular intervals. Since 2009 and especially from 2012, great efforts have
been made to improve the area of aerial photography.”[25]
In addition, the authorities also stated that
there will be a “reorganisation of the procurement of images from 2013”
which will allow more regular and accurate photography.[26]
Spain gave an extensive
account of how it is implementing means to address these deficiencies:
“In
response to the request made by the Commission to implement measures to correct
these issues, in 2010 we drafted an Action Plan, incorporating the corrective
measures that have been deemed necessary, as well as a specific timetable for
their implementation.
The measures contained in this Plan are
applied on the basis of a land parcel identification system, the LPIS, fully
consolidated and operational, fruit of a high level of investment sustained
over time, which is both transparent and of quality. The implementation of these
measures therefore leads to an improvement in the quality of the existing
system.”
With reference to
its situation, Portugal stated that” the completion of the LPIS Action Plan
in January 2013 will certainly help to reduce the impact of these cases.”[27]
The UK with specific reference to Northern Ireland, stated: “the NI Authorities consider that the
on-going work on the LPIS Improvement Project has reduced the risk to the Fund.”[28]
One other area in which the Court found serious
cases of non-respect of eligibility requirements was investment projects in the
area of rural development.  Member States concerned were asked to provide an
opinion on eligibility requirements for investment projects and the majority
stated that eligibility requirements were too complex. Nonetheless, most
respondents indicated that despite complex rules all measures were taken to
ensure correct implementation.  Poland for example stated:
“the eligibility requirements for investment
projects are relatively complex, and therefore their control is not easy.
However, Poland makes all efforts to ensure that the control is carried out in
a comprehensive manner, using all available tools.”[29]
Lithuania also
indicated that in its particular case “a corrected payment request was
submitted regarding the repayment into the European Agricultural Fund for Rural
Development (EAFRD) of misused Fund finances.”[30]
Spain too asserted that
it had made the necessary corrections and that “the deficiencies detected in
the audited case do not affect any other case, and the error is therefore not
systematic in nature.”[31]
Similarly Italy stated that it had provided
supplementary justifying information in its particular case and that “paying
agencies scrupulously apply the EU rules on the matter.”[32]
The Member States' positive replies concerning
their actions and intentions are monitored by the Commission services in order
to ensure that they are effective in mitigating the risks identified by the
Court.
              3.3
    Improving controls and systems
In the Court’s 2012 report it highlighted the
positive impact of simplified cost options (SCOs). Previously in 2006 the Court
recommended that the Commission extend its use of lump sums and flat rate
payments instead of reimbursing “real costs”.
In the sample of transactions for the 2012
audit for Chapter 6, the Court did not detect any quantifiable or non-
quantifiable errors related to the specific use of SCOs. The conclusion was
therefore that projects whose costs are declared using SCOs are less error
prone and therefore a more extensive use of SCOs would have a positive impact
on the error rate.
Member States were questioned about whether
they agreed with the Court’s opinion on SCOs as defined above. All Member
States replied to the question in the affirmative. 
Member States were also requested to indicate whether they envisaged
introducing SCOs and if they were already using SCOs, whether usage would be
further extended. There was again unanimity among Member States with regard to the
reply to this question. Luxembourg underlined the support which it provided to its
beneficiaries at the start of the programme or project by stating:
“The Managing
Authority of the ESF has established a relatively simple presentation which is
made available to applicants at the beginning of the procedure. The MA also
actively supports beneficiaries who request assistance with matters related to
budgetary management, thereby eliminating all likely causes of errors and
simplifying administration for the beneficiary.”[33]
Finally, Member
States were requested to give an opinion on whether the Commission sufficiently
and adequately promoted the use of SCOs. Nearly all 27 respondents stated that
more could be done by the Commission. Germany and Hungary pointed to the fact
that for the previous programming period, 2007-2013 the authorisation
procedures and discussions were long and drawn out.[34] The UK also stated that “active encouragement by the Commission at an earlier state in the
2007-2013 programming period would have been welcome.”[35] Austria elaborated on this idea by stating that on the one hand the Commission had tried to
promote the use of SCOs, but that on the other hand:
“The past has
shown, however, that the key factor for the successful use of SCOs by the
Member State can be 100 % confident that when using SCOs the costs are
accepted by the Commission and/or the audit authority. This is precisely where
the main problem lay in the Structural Funds period 2007-13. Although the
flat-rate schemes laid down in law offered a theoretically wide latitude in implementation,
in practice a series of interpretations restricted this scope again and
increased the risk for the implementing agencies that in the context of SCOs
the costs charged would not be accepted by the Commission or the audit
authority.”[36]
Romania and Malta both called for “more guidelines” to be provided
by the Commission and Romania stated further that “from the standpoint of
applying the provisions of the European regulations from 2014 to 2020 further
appropriate guidelines and training would have been required.”[37]
Cyprus and Latvia both detailed the type of assistance and guidance which
the Commission could provide. Cyprus stated that there should be:
“Increased use
of workshops and seminars for exchanges of experience between Member States”
while Latvia called for the dissemination of information and examples of:
“best practice
in the application of various types of simplified costs….information on
specific areas in which these costs can be applied and standard methodology for
specific areas and costs.”[38]
 Sweden supported the Court’s recommendation that “the Commission should continue with
and develop ex ante approval of the flat rates developed within the framework
of the simplified cost options”. According to Sweden in order to achieve
this objective:
“the Commission must set aside more
resources for developing  simplified cost options with a view to increasing
support to the Member States with regard to the approval of flat rates.
Cooperation must also be developed with the Commission's auditors in order to
clarify how the overall legal framework should be interpreted with regard to
the simplified cost options. To that end, there must be an increase in the
supply of information to and cooperation with the geographic desks in order to
simplify the process of introducing the simplification measures into the Member
States' operational programmes.”[39]
The Member States' interest in expanding their
use of SCOs is very important, as it is one of the key elements for reducing
the risk of error in programmes under the new MFF.
On the subject of controls, the Court makes
several references in Chapter 5, - Regional policy, energy and transport- and
Chapter 6 –Employment and social affairs- of its report to the risk of
frequently unreliable information provided by the audit authorities (AAs). As a
result, the Court has recommended that “the Commission should seek
improvement in the work done by audit authorities and the quality and
reliability of the information provided in ACRs and audit opinions.”[40]
Member States were requested to indicate
whether they planned to introduce arrangements to improve the situation. A
total of ten Member States replied that they had no plans for improvements as
they considered their AAs to be reliable and in certain cases they had even received
endorsement from the Commission. According to Portugal for example:
“The information provided in the ACRs and
audit opinions is felt to be of good quality and sufficiently reliable.”[41]
Cyprus underlined that
“the EU has
expressed satisfaction with the level of annual audit reports of the
Supervisory Authority.”[42]
Luxembourg stated that
in addition to not having AAs which were part of the Court’s audit sample for
2012, in general its reports were always “accepted by the Commission”
and that “the management systems in Luxembourg had a simple and transparent
structure.”[43]
Finally Ireland pointed out that:
“The audit authority
does not carry out specific risk assessment in relation to fraud. It is
considered that the programme of management verifications (both desk checks and
on-the-spot checks) is adequate to provide reasonable assurance that the risk
of fraud is mitigated.”[44]
The more popular measures which Member States requested with regard
to improving the situation included more guidance and training from the Commission.
Additionally, an improvement in the quality control measures within AAs was
also cited by some Member States as being necessary. External evaluation and
monitoring of AAs although somewhat less popular, were also deemed necessary for
the AAs of some Member States.
The Czech Republic provided in depth information on actions already
being undertaken to address the Court’s recommendation on AAs. It detailed its
Action Plan (implemented in 2012) and the intention to improve management and
control systems for Structural Funds, including centralisation of audit activities.
It further underlined the establishment of a manual of audit activities and
internal and external training being made available to staff. The Czechs
concluded:
“The above changes were communicated to the ECA by
representatives of the audit authority (Ministry of Finance) in person. The
Czech Republic has adopted all measures proposed by the Commission, intends to
continue to communicate with the Commission services in order to increase the
quality and reliability of information and would welcome further seminars
organised by the Commission with a view to improving the work of the audit
authority.”[45]
Finally, with regard to AAs, Member States all expressed overall
satisfaction with the guidance on the treatment of errors provided and the
seminars organised by the Commission in 2012 and 2013 and concluded that “further
guidance/training is always welcome”[46]Among
the initiatives cited as particularly useful and providing added value were the
various seminars and guidelines on sampling in Italy, Latvia Slovenia, Slovakia
and Greece.[47]
 Lithuania, Malta and Poland[48]
all mentioned the usefulness of meetings and conferences organised by OLAF
while Latvia and Bulgaria[49]
highlighted the benefits of the Homologues Group meeting for Auditors. Germany noted positively that “in addition to seminars, contact persons from the EC are
readily available to provide detailed answers to individual questions.”[50]
In order to further strengthen systems, the new legislative
framework for the Cohesion Policy requires managing authorities to put in place
effective and proportionate anti-fraud measures. When questioned about whether
they carried out fraud risk assessment of their management and control systems,
more than 60% of Member States replied that they did. In addition, a similar percentage
of Member States indicated that they ensured effective and proportionate
anti-fraud measures were in place to mitigate fraud risks. Finally, fewer
Member States- just over 50%- reported that they had defined indicators showing
the results of the controls aimed to detect and prevent fraud (see table below).
In the area of shared management the Commission
has to be able to rely on the systems and controls of Member States in its
supervision of the EU budget. The Commission acknowledges the advantages of the
single audit concept, but is aware of the risk signalled by the Court that
unreliable data might be delivered by AAs. Therefore, it will continue to perform
reviews and audits of the systems of national audit authorities and the
national bodies in charge of the implementation of EU programmes.
4.           Conclusion
The Court’s 2012 annual
report indicates that the focus still needs to be on reducing errors in the
area of shared management. The Court noted that for the majority of
transactions in shared management, Member States had sufficient information
available to have detected and corrected errors. Further, the Court is also
critical of the lack of efficiency of some AAs and has also indicated that the
focus on performance is insufficient.
Member States in their
replies this year have outlined in detail some of their efforts to address the
Court’s recommendations.
Measures such as the
use of SCOs, actively supported by the Court, have already become an integral
part of the financial management of programmes and projects in some Member
States.  Further, Member States have called on the Commission to support and
encourage more widespread use of SCOs.
Many Member States do
not share the Court’s opinion on the lack of efficiency of AAs and some have
highlighted the fact that in certain cases the Commission fully relies on the
work of audit authorities (by granting Article 73 status)[51]. Nonetheless, there
seems to be ongoing action at Member State level, with the assistance of the
Commission, to contribute to the capacity building of AAs.
With regard to
performance, Member States in their replies have indicated that they currently
place great emphasis on performance issues and are committed to creating and
promoting a performance oriented culture.
At the start of this
new programming period, the efforts of Member States, in close cooperation with
the Commission indicate that there are already several concrete measures in
place. These measures will aim at further improvements and help promote and
sustain sound financial management, thereby reducing the risks of error.
[1] ECA AR 2012 1.17
[2] Annex A of this report
[3] ECA AR 2012- 5.27, 6.12
[4] ECA AR 2012 10.2
[5] ECA AR 2012 10.3
[6]ECA AR 2012 10.26 
[7] ECA AR 2012 10.29
[8] SWDp164
[9] SWDp189
[10] SWDp131,p152,p154,p239
[11] SWDp140,p152,p154
[12] SWDp140,p152,p264,p152,p185
[13] SWDp158
[14] SWDp140,p155
[15] SWDp186-7,p242,p263
[16] SWDp156
[17] SWDp191,p272,p258,p268
[18] SWDp147
[19] SWDp302
[20] SWDp303
[21] ECA AR 2012 – 1.17
[22] Chapter 3 - Agriculture, market and direct support and Chapter 4 - Rural
development, environment, fisheries and health.
[23] ECA AR 2012-3.22
[24] ECA AR 2012 Boxes 3.1 and 3.3
[25] SWDp130
[26] SWDp130
[27] SWDp50
[28] SWDp56
[29] SWDp238
[30] SWDp78
[31] SWDp77
[32] SWDp201
[33] SWDp208
[34] SWDp175,p186
[35] SWDp299
[36] SWDp130
[37] SWDp214,p263
[38] SWDp152,p203
[39] SWDp296
[40] SWDECA AR 201 6.24
[41] SWDp256
[42] SWDp152
[43] SWDp208
[44] SWDp195
[45] SWDp155-156
[46] SWDp299
[47] SWDp201,p202,p267,p264,p185
[48] SWDp205, p214, p238
[49] SWDp202, p140
[50] SWDp175
[51] Article 73 of Council Regulation No 1083/2006