COMMISSION STAFF WORKING DOCUMENT Accompanying the document REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND TO THE COUNCIL on the follow-up to 2013 discharge - Requests from the Council
Date: 2015-10-08
Institutions: Directorate-General for Budget, European Commission
Subjects: EU control, EU expenditure, audit, budgetary control, budgetary discharge, financial control, financial year, general budget (EU), management audit

EN 

   EN 

   EUROPEAN COMMISSION  Brussels, 8.10.2015  SWD(2015) 194 final   COMMISSION STAFF WORKING DOCUMENT Accompanying the document REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND TO THE COUNCIL on the follow-up to 2013 discharge - Requests from the Council {COM(2015) 505 final} {SWD(2015) 195 final}  
 
 
TABLE OF CONTENTS 

INTRODUCTION ...................................................................................................................... 2 

Council Recommendation on the 2013 discharge ...................................................................... 3 

Introduction ....................................................................................................................... 4 

Chapter 3 - Agriculture: Market and Direct Support ...................................................... 13 

Chapter 4 - Rural Development, Environment, Fisheries and Health ............................ 14 

Chapter 5 - Regional Policy, Energy and Transport ....................................................... 16 

Chapter 6 - Employment and Social Affairs ................................................................... 23 

Chapter 7 - External Relations, Aid and Enlargement .................................................... 26 

Chapter 8 - Research and Other Internal Policies ........................................................... 27 

Chapter 9 - Administrative and Other Expenditure ........................................................ 30 

Chapter 10 - Getting Results from the EU Budget ......................................................... 31 

Eighth, ninth and tenth European Development Funds .................................................. 33 

Bodies set up under the TFEU and the Euratom Treaty ................................................. 35 

SR 09/2013 EU Support for Governance in the Democratic Republic of the Congo .... 36 

SR 11/2013 Getting the Gross National Income (GNI) data right - A more structured 
and better-focussed approach would improve the effectiveness of the 
Commission’s verification ................................................................................ 38 

SR 13/2013 EU Development Assistance to Central Asia ............................................. 39 

SR 15/2013 Has the Environment component of the LIFE programme been effective? 40 

SR 02/2014 Are preferential trade arrangements appropriately managed? .................... 42 

SR 06/2014 Cohesion policy funds support to renewable energy generation — has it 

achieved good results? ...................................................................................... 43 

SR 07/2014 Has the ERDF successfully supported the development of business 

incubators? ........................................................................................................ 44 

SR 08/2014 Has the Commission effectively managed the integration of coupled 

support into the single payment scheme? ......................................................... 46 

SR 09/2014 Is the EU investment and promotion support to the wine sector well 

managed and are its results on the competitiveness of EU wines demonstrated?
 .......................................................................................................................... 47 

SR 10/2014 The effectiveness of European Fisheries Fund support for aquaculture ..... 48 

SR 12/2014 Is the ERDF effective in funding projects that directly promote biodiversity 
under the EU biodiversity strategy to 2020? .................................................... 49 

1 

 
INTRODUCTION 

This  Commission  Staff  Working  Paper  completes  the  Report  from  the  Commission  to  the 
European Parliament and the Council on the Follow-up to the 2013 Discharge. It presents in 
detail  the  answers  to  75  specific  requests  made  by  the  Council  in  the  comments 
accompanying its Recommendation on the 2013 Discharge1. 

1 http://www.europarl.europa.eu/committees/en/cont/discharge-2013.html 

2 

 
 
 
                                                            
 
Council Recommendation on the 2013 discharge 

3 

 
Introduction 

1. 

(§  5  - 2013/COU/0177)  The Council calls on the Commission  to  continue  to  apply 
both representative testing and risk-based checks, and to take the appropriate actions 
in line with Article 32(5) of the Financial Regulation if the level of error identified is 
persistently high. 

Commission's response: 

The Commission intends to continue to apply both representative testing and risk-
based checks. 

If  during  implementation  the  level  of  error  is  persistently  high,  the  Commission 
will,  in  line  with  art  32.5  of  the  FR,  explore  the  scope  for  further  simplification 
and  additional  (or  alternative)  cost-effective  controls  so  as  to  reduce  the  level  of 
error. Alternatively, the Commission will propose a redesign of the programmes or 
delivery  systems.  Yet,  since  the  Commission  has  only  recently  revised  the  control 
systems  for  the  implementation  of  the  new  programmes  for  the  2014-2020 
programming  period,  it  is  necessary  to  assess  the  effectiveness  of  these  revised 
control  systems  during  a  reasonable  period  of  time  first  before  reaching 
conclusions. 

Indeed,  the  Commission  introduced  new  requirements  in  the  Common  Provision 
Regulation  for  the  2014-2020  programming  period  aiming  at  strengthening  the 
quality  of  management  and  control  systems.  For  further  details,  the  Commission 
also refers to its reply to 2012/PAR/02982  and 2013/COU/0178. 

2. 

(§ 6 - 2013/COU/0178) The Council calls upon the Commission and Member States 
to  undertake  further  actions  aiming  at  strengthening  the  quality  of  the management 
and  control  systems  and  making  them  more  efficient,  including  the  first  level 
verifications. 

Commission's response: 

The Commission has taken and is continuously taking the requested action.  

Under  shared  management,  it  is  the  Member  States'  responsibility  to  set  up  the 
management and control systems in accordance with the EU legislation and their 
own  particular  national  administration  systems.  The  Commission  provides 
guidance  and  assistance  to  Member  States  in  this  respect.  Furthermore,  the 
Commission has made and continues to make considerable efforts to supervise the 
functioning  of  the  management  and  control  systems  and  to  ensure  strict 
compliance  with  eligibility  requirements  and  the  correct  application  of  rules.  It 
provides  training  and  guidance  on  eligibility  rules  to  programme  managing 
authorities  to  ensure  they  transmit  this  knowledge  to  all  bodies  in  charge  of 
managing  the  funds.  Moreover,  when  it  identifies  complex  rules  at  programme 
level, the Commission makes recommendations to simplify them. 

The  Commission's  supervisory  role  is  implemented  through  audits  on  high  risk 
programmes and on appropriate actions, including interruptions and, if necessary, 
suspension of payments and/or financial corrections. Furthermore, it puts in place 
national  remedial  action  plans  aiming  at  improving  the  effectiveness  of  systems 
and remedying the causes of low performance for those programmes and Member 
States which are concerned. 

2 SWD(2014)286final, page 6. 

4 

 
                                                            
in 

the  regulatory  framework  at 

For  the  2007-2013  programming  period,  the  control  strategy  contributing  to  the 
assurance  building  is  implemented  through  the  various  strands  of  controls 
foreseen 
the  beginning  of  programme 
implementation,  during  programme  implementation  and  at  the  end  of  the 
programming  periods.  The  audit  strategy  is  systematically  being  revised  on  the 
basis  of  the  new  information  for  the  update  of  risk-assessments  for  2007-2013 
programmes.  

With a view to first level verifications, the Commission carries out since 2010 risk-
based audits that focus mainly on the reliability of management verifications at the 
level  of  the  managing  authorities/intermediary  bodies.  In  2014,  DG  REGIO 
carried out 29 audits under this enquiry (33% of all the on-the-spot audit missions 
in 2014). A total of 108 audit missions have been carried out since 2010 covering 
18  Members  States,  including  7  Italian  regions,  and  76  operational  programmes 
(audited one or more times under this enquiry). These audits included 62 on-the-
spot  audits  on  operations  at  the  level  of  beneficiaries.  These  risk-based  audits 
contributed to: 

-  the  implementation  of  preventive  and  corrective  measures  such  as  remedial 
actions plans, interruptions and financial corrections, and 

- improvements in the management and control systems for programmes put under 
reservation, ensuring that past and future expenditure declared to the Commission 
is legal and regular. 

For  the  2007-2013  period,  the  main  system  deficiencies  in  the  functioning  of  the 
systems were: 

-  deficiencies 
authorities/intermediate bodies; 

in  management  verifications  at 

the 

level  of  managing 

- some cases of deficiencies at the level of audit authorities; 

- to a lesser extent, some individual cases of fraud suspicion. 

Root causes of errors are complex management structures in some Member States 
(federal  or  regionalised  Member  States),  high  staff  turnover  in  some  authorities 
leading  to  a  loss  of  expertise  or  insufficient  staff  allocation  (explained  by  the 
budgetary  situation)  as  well  as  public  procurement  irregularities,  non-compliant 
implementation of State aid rules and eligibility issues.  

The Commission assists Member States to overcome the deficiencies. DG REGIO 
has  established  a  competence  centre  on  administrative  capacity  building 
(beginning of 2013) to assist Member States. The actions already implemented or 
ongoing include notably: 

-  Administrative  capacity  initiative:  the  creation  of  a  platform  for  peer  to  peer 
exchange  of  best  practices  and  experience  between  Member  States/regions:  The 
demand  analysis  is  completed  and  a  pilot  exchange  was  launched  in  early  2015; 
the initiative was presented during the 2014 Open Days; the organisation of 8 two-
day  training  sessions  on  ‘programme  implementation  –  greater  focus  on  results’ 
and ‘management and control for 2014-2020’ for the programme authorities in the 
Member  States:  sessions  on  programme  implementation  and  audit/financial 
management  were  held  in  2014;  a  State  aid  action  plan  was  elaborated  in 
cooperation with DG COMP. Its aim is to increase awareness and understanding 
of  this  complex  and  technical  subject;  Anti-fraud/  anti-corruption  measures  to 
improve  the  overall  governance  of  the  Funds:    10  anti-fraud  /anti-corruption 
seminars  have  been  held  with  approx.  1000  participants.  These  allowed  raising 

5 

 
awareness on good governance; reminding the Commission zero tolerance to fraud 
and  underlining  the  new  requirement  for  proportionate  and  effective  anti-fraud 
measures now embedded in the 2014-2020 management and control systems as an 
additional requirement. Work is ongoing to support the setting up of pilot Integrity 
Pact  projects  bringing  together  governments,  businesses  and  civil  society  to  fight 
corruption in public contracting. 

- Public procurement initiative: A public procurement action plan was established. 
The  actions  under  way  include:  a  Guidance  for  Practitioners  on  "How  to  avoid 
common public procurement errors" which was presented at the 2014 Open Days 
and is also scheduled in the Member States where it is most needed. Development 
of  an expert  exchange  system  for managing authorities to share  experiences  and 
expertise in public procurement capacity building. This will be part of the platform 
for  exchanging  expertise  and  experience  referred  to  further  above,  definition  of 
country-specific  action  plans  to  address  identified  weaknesses  in  Romania, 
Bulgaria, Greece and Italy. 

For  the  2014-2020  programming  period  a  joint  audit  strategy  is  being  developed 
jointly  with  other  services  in  charge  of  ESI  Funds.  This  single  strategy  takes 
account  of  the  requirement  to  draw  up  annual  accounts  for  each  programme 
following completion of controls at national level, and submission of a complete set 
of assurance documents by 15 February each year as from 2016. This will include 
a management declaration by the managing authority accompanied by an annual 
summary  of  all  management  verifications  and  audits  carried  out,  certified 
accounts  by  the  certifying  authority  and  an  annual  audit  opinion  and  control 
report by the audit authority encompassing the accounts, the effective functioning 
of  the  management  and  control  system  and  the  legality  and  regularity  of 
transactions. 

3. 

(§ 6 - 2013/COU/0179) The Council reiterates the need to apply financial corrections 
and recoveries rigorously. 

4. 

5. 

Commission's response: 

The Commission continues to apply financial corrections and recoveries rigorously 
- this is evidenced by the increase in decided amounts for 2014 which were 37.6% 
higher than in 2013. 

(§  6  -  2013/COU/0180)  The  Council  calls  upon  the  Commission  to  continue 
executing  in  full  its  supervisory  role  in  order to  ensure the  maximum  protection  of 
the EU budget and to provide continuous guidance to Member States. 

Commission's response: 

The Commission has taken and is continuously taking the requested action. 

See reply 2013/COU/0178 

(§ 7 - 2013/COU/0181) The Council urges the Commission to continue improving its 
control  systems,  in  particular  the  desk  checks,  while  keeping  the  right  balance 
between the costs of controls and achieving the policy objectives. 

Commission's response: 

The Commission has taken and is continuously taking the requested action.  

Under  shared  management,  it  is  the  Member  States'  responsibility  to  set  up  the 
management and control systems in accordance with the EU legislation and their 
own  particular  national  administration  systems.  The  Commission  has  made  and 

6 

 
continues  to  make  considerable  efforts  to  supervise  the  functioning  of  the 
management  and  control  systems  and  to  ensure  strict  compliance  with  eligibility 
requirements and the correct application of rules. 

The  Commission's  approach  to  improve  the  control  system  and  to  carry  out  its 
supervisory role is laid down in its audit strategy that covers all structural action 
instruments.  It  is  updated  annually  based  on  its  risk-assessments  reviewed 
annually to take into account new audit results and other information and to set up 
the  18-month  rolling  audit  plan  of  the  Commission  services.  This  audit  strategy 
covers the Commission's desk review  

The Commission's audit work is a combination of desk audit work and on-the-spot 
audit missions: 

a)  Commission desk  review of  the work of  the national  audit authorities through 
the continuous analysis of their systems audit reports (including consistency with 
Commission  audits  results;  541  reports  were  received  in  2014),  the  analysis  of 
annual control reports and audit opinions issued for all programmes by year end, 
annual bilateral control coordination meetings with all Member States and ad hoc 
technical meetings and contacts with the audit authorities to monitor the progress 
and results of all audit work in line with the approved national audit strategies; 

b)  Commission  on-the-spot  audits  to  conclude,  including  through  the  re-
performance  of  samples  of  audits  on  systems  and  on  operations  carried  out  by 
audit  authorities,  on  the  reliability  of  the  work  carried  out  and  reported  by  the 
audit authorities; 

c)  Commission  on-the-spot  risk-based  audits  on  national  bodies,  parts  of 
management  and  control  systems  or  horizontal  issues  identified  at  risk  (such  as 
public  procurement,  State  aid,  financial  engineering  or  the  national  systems  for 
recording and reporting irregularities and recoveries), in order to complement the 
assurance  obtained  from  the  national  audit  authorities.  On-the-spot  risk-based 
audits  are  usually  at  the  level  of  programmes  authorities  and/or  intermediate 
bodies, and can include verifications down to the primary source of audit evidence 
at  the  level  of  beneficiaries  (in  2013,  this  was  the  case  for  24  out  of  28  audit 
missions carried out on the spot). 

Concerning the cost of controls, DG REGIO's 2013 AAR provides an analysis of 
the control efficiency and economy (p. 62-64). This section outlines the indicators 
used  to  monitor  the  efficiency  of  the  control  systems,  including  an  overall 
assessment  of  the  costs  and  benefits  of  controls.  In  case  of  shared  management 
(99.3%  of  DG  REGIO's  budget),  DG  Regional  and  Urban  Policy  quantifies  the 
costs of the resources and inputs required for carrying out the controls described 
in annex 5 of the AAR 2013 and estimates, in so far as possible, their benefits in 
terms of the amount of errors and irregularities prevented, detected and corrected 
by  these  controls.  The  estimated  annual  overall  Commission  cost  is  estimated  at 
0.14%  of  total  payments  of  the  year.  When  added  to  the  cost  at  the  level  of  the 
Member States assessed to be around 2.1% of the ERDF/CF 2007-13 programme 
budgets, the total estimated cost for the management and control of the ERDF/CF 
corresponds to 2.2% of the total annual budget. The quantifiable benefits mainly 
relate to the corrections implemented by DG Regional and Urban Policy following 
(Directorate-General)  audit  work.  In  addition,  there  are  a  number  of  non-
quantifiable  benefits  resulting  from  the  controls  operated  throughout  the  various 
control  stages.  This  includes  notably  (but  not  exclusively)  an  increased  level  of 
assurance  and  the  negotiation  procedures  on  the  content  of  Partnership 
Agreements  and  future  Operational  Programmes.    In  2013,  for  the  2007-2013 

7 

 
6. 

7. 

programming period, the entire control system ultimately allowed that 87% of the 
credits were paid to programmes with a cumulative residual error rate below 2%. 

(§  8  -  2013/COU/0182)  The  Council  urges  the  Commission  to  identify  the  root 
causes  of  the  reported  irregularities,  to  focus  on  preventive  measures,  and  to 
implement corrective actions where necessary. 

Commission's response: 

The Commission has taken the requested action. See reply 2013/COU/178. 

(§  8  -  2013/COU/0183)  The  Council  invites  the  Commission  to  ensure  through  its 
technical  assistance  that  the  recently  updated  guidelines  on  public  procurement  are 
disseminated and understood by all relevant actors. 

Commission's response: 

The  Commission  has  taken  the  requested  action.  It  is  providing  the  programme 
authorities guidance and targeted trainings for each of the implementation phases 
of the programmes. This includes sharing good practices. DG Regional and Urban 
policy  has  set-up  a  specialised  competence  centre  to  improve  the  administrative 
capacity in Member States with difficulties. The competence centre has launched 
three initiatives to improve the managing authorities' administrative capacity and 
to  improve  enforcement  of  public  procurement  rules  and  State  aid  rules  namely 
during first level verifications through: targeted action plans to address the causes 
of weak administration; additional guidance targeted to common errors, including 
for public procurement procedures; set-up of a Common Expert Exchange System 
for  better  sharing  the  existing  expertise  and  good  practices  in  the  programme 
authorities. 

The Commission carries out targeted audits in Member States and for programmes 
where  it  identified  risks  or  difficulties  with  public  procurement  procedures.  In 
particular  it  verifies  whether  management  verifications  by  managing  authorities 
allow  detecting  problems  with  public  contracts.  In  half  of  its  targeted,  risk-based 
audits  the  Commission  has  found  that  management  verifications  of  public 
procurement  procedures  were  not  appropriate.  As  a  result  of  its  audits  the 
Commission  imposes  financial  corrections  for  past  expenditure  and  requires 
Member  States  to  fix  the  system  for  the  future.  The  Commission  has  carried  out 
important financial corrections for public procurement deficiencies for ERDF and 
CF, both in the past (namely in Spain and Greece) and more recently (Romania, 
Czech Republic and Slovakia) to ensure that the EU budget was protected. 

The  Commission  also  provides  assistance  and  help  to  programme  authorities  to 
improve  their  understanding  of  public  procurement  and  to  prevent  errors  in  this 
area.  Numerous  seminars,  workshops,  presentations  and  training  sessions  have 
been  and  will  continue  to  be  organised  with  programme  authorities  to  increase 
their  knowledge  and  administrative  capacity  in  this  area.  This  includes  targeted 
actions on a bilateral basis to assist Member States to tackle specific issues. 

DG  Regional  and  Urban  Policy's  competence  centre  for  administrative  capacity 
building  has  launched  a  public  procurement  initiative  and  action  plan,  in  close 
cooperation  with  DG  Internal  Market  and  Services  and  DG  Employment,  Social 
Affairs and Inclusion. The actions under way include: 

-  A  Guidance  for  Practitioners  on  "How  to  avoid  common  public  procurement 
errors", based on an assessment of the most frequent types of errors identified in 
the last years; presented to Member States' representatives at the 2014 Open Days. 
The guidance will now be disseminated across Europe for programme managers. 

8 

 
A  presentation  /  explanation  of  this  new  guidance  for  practitioners  is  also 
scheduled in the Member States where it is most needed; 

-  Development  of  an  expert  exchange  system  for  managing  authorities  to  share 
expertise in public procurement capacity building. This will be part of a platform 
for exchanging expertise and experience between managing authorities; 

-  Definition  of  country-specific  action  plans  to  address  identified  weaknesses  in 
Romania, Bulgaria, Greece and Italy; 

-  Presentation  of  the  new  public  procurement  directives  and  the  related 
simplification  and  increased  transparency,  including  through  e-procurement,  in 
seminars across Europe. 

The  EU  public  procurement  directives  have  been  revised  in  2014.  Public 
procurement  procedures  will  be  simpler  more  flexible  in  the  future.  This  will 
benefit  both  public  purchasers  and  businesses,  particularly  small  and  medium-
sized  companies.  It  will  reduce  the  risk  of  errors.  However  the  revised  public 
procurement directives will not have immediate effect as the Member States have 
until April 2016 to transpose the new rules into their national law. 

8. 

(§ 9 - 2013/COU/0184) The Council invites the Commission and Member States to 
take  full  advantage  of  this  opportunity  (to  achieve  major  progress  towards 
simplification)  when  implementing  newly  adopted  programmes  by  using  more 
extensively the variety of simplification measures that they offer and that were given 
a positive assessment by the Court. 

Commission's response: 

A  number  of  events  giving  practical  guidance  on  simplification  have  been 
organised  in  Member  States  in  2012  and  2013.  These  capacity  building  activities 
have been continued in 2014 and 2015 to optimize the use of SCOs in the current 
programming period. 

An updated Guidance note for the Member States on SCOs was issued in October 
2014 and has been translated in all EU languages early 2015.  

DG EMPL  also  set-up an internal Task Force for SCOs and Joint Action Plans. 
The aim of the task force is to promote the use of SCOs, in particular 14(1) ESF 
and JAP, and provide support to the MS in order to meet the objective of having 
50% of ESF expenditure claimed under a Simplified Cost Option by 2017.  

Important novelty: approval of simplified costs by DG EMPL 

DG  EMPL  is  currently  working  with  Member  States  on  the  implementation  of 
Article 14(1) of the ESF Regulation. This Article allows the Commission to adopt 
(by delegated act) standard scales of unit costs and lump sums. This provides legal 
certainty  for  the  Member  State,  and  thus  offers  a  major  opportunity  for 
simplification.  Also,  the  scope  of  audit  will  be  reduced  compared  to  "classical" 
simplified cost options. 

9. 

(§  9  -  2013/COU/0185)  The  Council  reiterates  the  need  for  the  Commission  to 
provide appropriate guidance and training to  Member States and to  beneficiaries in 
applying such measures (focussing on the balance between risk of error and cost of 
control and audit, as well as the potential additional burden), while helping them to 
fulfil their role in pursuing the policy objectives. 

9 

 
Commission's response: 

As in the past, the Commission continues to work closely with the Member States 
for the development of guidance and delivery of training to the Member States and 
beneficiaries  as  needed.  The  Commission  intends  to  continue  its  efforts,  with  the 
aim to ensure the full implementation of the simplification opportunities offered in 
the adopted legislative framework for the period 2014-2020. 

10. 

(§  10  -  2013/COU/0186)  The  Council  calls  on  the  Commission  to  continue,  where 
appropriate, the implementation of all available corrective measures. 

Commission's response: 

The Commission has taken the requested action and reported in its AARs. In order 
to  exercise  its  supervisory  role  when  management  and  control  systems  are  not 
effective, the Commission has at its disposal a range of preventive and corrective 
legal tools. They serve to ensure that the funds are implemented according to the 
rules  and  to  protect  the  EU  budget  in  case  irregularities  appear.  On  the  basis  of 
audit  results,  the  Commission  can  interrupt  or  suspend  payments  to  Member 
States,  require  from  Member  States  the  implementation  of  appropriate  remedial 
action  plans  and  implement  financial  corrections  to  protect  the  EU  budget.  The 
Commission  considers  that  these  legal  tools,  including  the  possibility  to  replace 
irregular  expenditure  detected  by  national  audits  and  controls,  have  already 
provided incentives so far for Member States to implement controls efficiently and 
effectively under shared management.  

that 

lose 

the  Member  States  and  programmes  will 

Furthermore,  the  regulation  for  the  2014-2020  programming  period  provides  the 
Commission with  additional tools to protect the  EU budget  and to  strengthen the 
incentive  effects  for  Member  States.  The  Commission  will  have  to  apply  net 
financial  corrections  in  case  EU  audits  detect  serious  deficiencies  that  have  not 
been detected and reported by the Member State authorities before. Net corrections 
mean 
the  corrected 
appropriations. This will have an increased incentive effect for Member States to 
do  their  utmost  to  timely  detect  and  correct  errors  before  they  provide  the 
Commission  with  the  programme  annual  accounts.  In  addition  the  Commission 
will  have  the  possibility  to  increase  the  rates  of  financial  corrections  in  case  the 
same  type  of  deficiency  is  repeated  in  a  programme.  The  Commission  will  also 
withhold  10%  of  each  EU  reimbursement  during  the  accounting  year,  until  the 
programme  authorities  submit  each  year  the  programme  annual  accounts 
accompanied  by  a  management  declaration  that  all  required  verifications  have 
been implemented, an annual summary presenting the results of such verifications 
and  follow-up  given  and  an  annual  control  report  and  audit  opinion  confirming 
based  on  audit  evidence  that  the  accounts  are  complete  and  accurate,  that  all 
expenditure  included  in  the  accounts  is  indeed  legal  and  regular  and  that  the 
management  and  control  systems  has  functioned  effectively.  Failure  by  any 
programme  authority  to  apply  these  reinforced  control  provisions  will  provide  a 
basis to apply financial corrections, including net ones under the conditions fixed 
in the regulation 

11. 

(§  10  -  2013/COU/0187)  The  Council  invites  the  Commission  and  the  Court  to 
reflect  on  how  to  provide  comparable  data  in  the  future,  including  as  regards 
corrective mechanisms. 

10 

 
Commission's response: 

The  Commission  provides  comparative  data  on  financial  corrections  in  both  the 
EU annual accounts and in its annual Communication on the protection of the EU 
budget.  Furthermore,  historic  data  over  5  years  and  more  is  also  provided,  as  is 
cumulative data. 

12. 

(§  11  -  2013/COU/0188)  The  Council  calls  upon  the  Commission  to  analyse  the 
added  value  of  such  instruments  (Financial  Engineering  Instruments)  and  to  make 
available the results of this analysis. 

Commission's response: 

In  article  49  (3)  of  Regulation  (EC)  1083/2006  an  ex-post  evaluation  of  all  the 
Structural Funds is foreseen. Within this ex-post evaluation one work-package is 
specifically addressing the efficiency and effectiveness of the financial engineering 
instruments  for  SMEs  in  the  2007-2013  programming  period.  The  ex-post 
evaluation shall be completed by 31 December 2015. 

13. 

(§  11  -  2013/COU/0189)  The  Council  calls  on  the  Commission  to  continue 
monitoring the evolution of the amounts of RAL, and to settle or decommit them in a 
timely manner and in line with the relevant rules. 

Commission's response: 
A reference is made to the response 2012/COU/02273. 

Beside  these  actions  the  Commission  will  provide  from  2015  a  payment  plan 
document together with the Draft budget (see response 2013/COU/0190) 

14. 

(§ 11 - 2013/COU/0190) The Council urges the Commission to provide, on a regular 
basis,  clear,  exhaustive,  transparent  and  timely  information  about  the  needs  for 
payment appropriations and the availability of funds in the annual budget, as well as 
to  prepare  a  reliable  forecast  of  the  future  payment  requirements  and  budgetary 
priorities. 

Commission's response: 

The Commission is taking the recommended action. 

Along  with  the  conclusions  of  the  three  institutions  on  Budget  2015,  the 
Commission  sent  on  23  March  2015  to  Parliament  and  the  Council  a  document 
entitled  "Elements  for  a  payment  plan  to  bring  the  EU  budget  back  onto  a 
sustainable  track"  analysing  the  backlog  of  unpaid  claims  at  end-2014,  the 
evolution during 2015 and conditions to return to the usual level of unpaid claims 
at end-2016. 

The Commission will also in future draft budgets provide a document showing the 
level of unpaid bills and making a suggestion to reduce this level. 

15. 

(§  11  -  2013/COU/0191)  The  Council  invites  the  Commission  to  accompany  any 
proposal modifying the agreed level of commitment appropriations with information 
on  the  corresponding  impact  on  payment  appropriations  over  the  programming 
period. 

Commission's response: 

The Commission is taking the recommended action. 

3 SWD(2014)285final, page 13. 

11 

 
                                                            
In the Draft Amending Budget 2/2015 it has clearly stated that the reprogramming 
of unused commitments appropriations of 2014 by transferring them to 2015-2017 
will have no impact on the level of payments appropriations in 2015. 

16. 

(§  12  -  2013/COU/0192)  The  Council  calls  on  the  Commission  to  examine  further 
possibilities  for  improving  the  Synthesis  Report,  in  particular  concerning  the 
amounts at risk. 

Commission's response: 

The Commission further clarified the methodology for its calculation in the 2014 
Synthesis  report4,  ensuring  consistency  in  the  terms  and  concepts  applied  by  the 
DGs  in  their  annual  activity  reports.  The  Synthesis  report  included  for  the  first 
time a consolidated estimation of the amount at risk for the entire budget under its 
responsibility (so not only for the part of the expenditure under reservations as it 
was the case in previous years) alongside its best estimate of the volume of errors 
and irregularities that could be corrected in the future. 

4 COM(2015)279final 

12 

 
                                                            
Chapter 3 - Agriculture: Market and Direct Support 

17. 

(Nr  1,  §  3  -  2013/COU/0193)  The  Council  calls  on  the  Commission  to  further 
enhance its work in terms of guidance and training at Member States' level in order 
to help them maintain the most accurate information in the database (LPIS). 

Commission's response: 

Since  the  start  of  the  arrangements  governing  the  functioning  of  the  Common 
Agricultural Policy (CAP), the Member States have been responsible for executing 
the  rules  of  the  CAP  including  payments  to  beneficiaries.  As  a  consequence  of 
their responsibility to protect the financial interests of the EU budget, it is for the 
Member  States  to  take  all  the  measures  (including  guidance  and  training) 
necessary to satisfy themselves that subsidies are granted correctly and to prevent 
and deal with irregularities.  

Nevertheless, in order to assist Member States in their implementation of the new 
rules  on  direct  payments  in  the  CAP  reform,  a  new  unit  has  been  specifically 
created within DG AGRI. It provides Member States with implementation support 
and  assistance  activities  including  drafting  of  guidance  documents,  having 
bilateral  contacts  with  national  authorities,  organising  workshops  and  promoting 
exchange of experience.  

In addition, shortcomings in Member States’ management and control systems are 
addressed through targeted and comprehensive action plans where necessary.  

When  the  Commission  services  detect  such  problems  during  the  course  of  their 
audits, they request the Member State to take remedial actions. Where the problem 
is particularly acute, the Member State is required to implement a remedial action 
plan which is closely followed by the services. 

18. 

(Nr  1,  §  6  -  2013/COU/0194)  The  Council  urges  the  Commission  to  ensure  an 
appropriate follow-up of the errors detected by the Court and to put in place, when 
necessary, the appropriate action plans or to proceed with the clearance of accounts. 

Commission's response: 

Action plans put in place at MS level address the deficiencies identified in both the 
Commission's and the Court's audits. When the necessary corrective action is not 
taken  in  a  timely  manner,  the  Commission  investigates  the  situation  and,  where, 
appropriate may decide to reduce or suspend payments. 

Clearance of accounts procedures take place independently of the implementation 
of  action  plans.  They  are  systematically  launched  where  deficiencies  in  the 
management and control systems are identified, in order to adequately protect the 
EU financial interest. 

19. 

(Nr 2, § 1 - 2013/COU/0195) The Council urges the Commission and Member States 
to  continue  their  efforts  to  ensure  that  IACS  remains  an  effective  and  functioning 
system. 

Commission's response: 

See reply to 2013/COU/0193 and 2013/COU/0194. 

13 

 
Chapter 4 - Rural Development, Environment, Fisheries and Health 

20. 

(§  4  -  2013/COU/0196)  The  Council  urges  the  Commission  to  further  enhance  its 
work  towards  simplification,  guidance  and  training  activities  to  address  the 
shortcomings identified by the Court. 

Commission's response: 

To  make  the  control  system  more  efficient,  EAFRD  rules  have  been  simplified 
through  the  CAP  reform,  in  particular  the  eligibility  requirements  in  the  rural 
development  programme;  nevertheless,  EAFRD  rules  will  always  have  a  certain 
level of complexity because of the diversity of European agriculture, notably in the 
rural development area.  

The  Commission  recommended  the  application  of  simplified  costs  (flat  rate 
financing, standard costs, lump sums) in order to reduce the administrative burden 
on  both  beneficiaries  and  management  bodies.  Specific  guidance  material  and 
seminars have been provided to facilitate the application of simplified costs. 

In  addition,  the  responsibilities  of  the  Member  States  have  been  enhanced  by 
requiring  both  Managing  Authorities  and  Paying  Agencies  to  assess  the 
verifiability  and  controllability  of  the  measures  in  their  new  Programmes  before 
they  were  submitted  to  the  Commission.  During  the  adoption  phase  of  the  rural 
development programmes, the Commission services have intensively discussed the 
verifiability and controllability of measures with the Member States authorities and 
agreed the simplification of certain eligibility conditions. 

The Commission services are currently carrying out a comprehensive screening of 
the  entire  agricultural  acquis  with  a  view  to  identifying  simplification  and 
subsidiarity  possibilities.  Both  the  European  Parliament  and  the  Council  have 
been invited to submit their ideas on simplification. 

Continuous  guidance  has  been  offered  by  the  Commission  services  through 
seminars  on  the  identification  of  cause  roots  of  errors.  In  addition,  the 
Commission  discusses  measures  to  improve  the  quality  of  administration  and 
control systems with the Member States in meetings with the learning network, in 
DG  AGRI's  simplification  working  groups,  and  also  in  the  conferences  with  the 
Directors of the Paying Agencies. 

21. 

(Nr  2,  §  1  -  2013/COU/0197)  The  Council  calls  on  the  Commission  to  pursue  its 
efforts  in  providing  targeted  guidance  and  in  increasing  the  mutual  understanding 
with the national administrations involved. 

Commission's response: 

In addition to the seminars on cause root of errors, the Commission has issued and 
discussed with the Member States in the Rural Development Committees (RDC) a 
large number of guidelines, including specific guidelines for controls and penalties 
under  rural  development  measures,  including  comprehensive  sections  on  on-the-
spot checks for both area and animal related measures, as well as for investment 
measures. Of  other  issues  covered  by  the  numerous  guidelines  can  be  mentioned 
public  procurement  as  an  important  topic,  covered  in  the  above  mentioned 
seminars  on  error  rates  with  Managing  Authorities  and  Paying  Agencies  in 
addition to the RDC (see replies to 2013/COU/0196). 

The Commission is closely working with the Member States in order to avoid that 
complex  and  unnecessary  rules  make  the  control  system  more  prone  to  errors. 

14 

 
"Gold  platting"  has  to  be  avoided.  This  has,  together  with  the  issue  of 
controllability and verifiability, been central in the approval process for the rural 
development programmes. 

15 

 
Chapter 5 - Regional Policy, Energy and Transport 

22. 

(Nr  1,  §  5  -  2013/COU/0198)  The  Council  invites  the  Commission  and  Member 
States to examine the weaknesses identified by the Court in the existing verification 
systems, to analyse the costs and benefits of possible corrective measures and to take 
appropriate action. 

Commission's response: 

The  Commission  has  taken  the  requested  action.  The  fact  that  for  a  third  of  the 
transactions examined by the Court in 2013 for regional policy errors found could 
and  should  have  been  detected  by  the  Member  States  before  certifying  the 
expenditure  is  a  cause  of  serious  concern  for  the  Commission.  First  level 
verifications  are  the  first  line  of  defence  against  errors  in  multilevel  and 
multiannual  management  and  control  systems.  The  Commission  takes  fully 
account of this in exercising its supervisory role and continuously takes action to 
identify and remedy problems. The Commission has a role to supervise the systems, 
but it agrees with the Court that control systems can only work if Member States do 
their work properly. The Commission is carrying out since 2010 targeted audits on 
management  verifications  of  high  risk  programmes  where  it  has  identified  that 
deficiencies  could  remain  undetected  or  not  timely  detected  by  the  programme 
audit  authority.  The  Commission  will  continue  to  carry  out  a  close  supervision 
after  the  implementation  of  the  remedial  actions  to  ensure  that  the  management 
and  control  systems  of  programmes  do  not  deteriorate  again.  In  2014,  29  audits 
were carried out under this enquiry (33% of all the on-the-spot audit missions in 
2014). A total of 108 audit missions have been carried out since 2010 covering 18 
Members  States,  including  7  Italian  regions,  and  76  operational  programmes 
(audited one or more times under this enquiry). These audits included 62 on-the-
spot audits on operations at the level of beneficiaries. One of the main conclusions 
from the work under this enquiry from 2010-2014 is that for 66% of these missions 
significant  deficiencies  have  been  identified  in  the  first  level  controls,  and  as 
regards  more  than  half  of  the  missions  (58%),  these  deficiencies  specifically 
concern the area of public procurement verifications. As a result, continued focus 
will be given in the mission plan for 2015-June 2016 to the audit of management 
verifications, in particular in the area of public procurement.  

Concerning the cost of controls, DG REGIO's 2013 AAR provides an analysis of 
the control efficiency and economy (p. 62-64). This section outlines the indicators 
used  to  monitor  the  efficiency  of  the  control  systems,  including  an  overall 
assessment  of  the  costs  and  benefits  of  controls.  In  case  of  shared  management 
(99.3%  of  DG  REGIO's  budget),  DG  Regional  and  Urban  Policy  quantifies  the 
costs of the resources and inputs required for carrying out the controls described 
in annex 5 of the AAR 2013 and estimates, in so far as possible, their benefits in 
terms of the amount of errors and irregularities prevented, detected and corrected 
by  these  controls.  The  estimated  annual  overall  Commission  cost  is  estimated  at 
0.14%  of  total  payments  of  the  year.  When  added  to  the  cost  at  the  level  of  the 
Member States assessed to be around 2.1% of the ERDF/CF 2007-13 programme 
budgets, the total estimated cost for the management and control of the ERDF/CF 
corresponds to 2.2% of the total annual budget. The quantifiable benefits mainly 
relate to the corrections implemented by DG Regional and Urban Policy following 
(Directorate-General)  audit  work.  In  addition,  there  are  a  number  of  non-
quantifiable  benefits  resulting  from  the  controls  operated  throughout  the  various 
control  stages.  This  includes  notably  (but  not  exclusively)  an  increased  level  of 
assurance  and  the  negotiation  procedures  on  the  content  of  Partnership 

16 

 
Agreements  and  future  Operational  Programmes.    In  2013,  for  the  2007-2013 
programming period, the entire control system ultimately allowed that 87% of the 
credits were paid to programmes with a cumulative residual error rate below 2%. 

23. 

(Nr  1,  §  6  -  2013/COU/0199)  The  Council  calls  on  the  Commission  and  Member 
States  to  continue  their  efforts  to  ensure  compliance  with  EU  and  national  public 
procurement  rules  and  eligibility  requirements,  to  take  their  responsibilities  for 
enhanced guidance and supervision, and to provide targeted training and guidelines 
to the relevant authorities and to beneficiaries. 

Commission's response: 

The Commission has taken and is continuously taking the requested action.  

Under  shared  management,  it  is  the  Member  States'  responsibility  to  set  up  the 
management and control systems in accordance with the EU legislation and their 
own  particular  national  administration  systems.  The  Commission  provides 
guidance  and  assistance  to  Member  States  in  this  respect.  Furthermore,  the 
Commission has made and continues to make considerable efforts to supervise the 
functioning  of  the  management  and  control  systems  and  to  ensure  strict 
compliance  with  eligibility  requirements  and  the  correct  application  of  rules.  It 
provides  training  and  guidance  on  eligibility  rules  to  programme  managing 
authorities  to  ensure  they  transmit  this  knowledge  to  all  bodies  in  charge  of 
managing  the  funds.  Moreover,  when  it  identifies  complex  rules  at  programme 
level, the Commission makes recommendations to simplify them.  

The  Commission's  supervisory  role  is  implemented  through  audits  on  high  risk 
programmes and on appropriate actions, including interruptions and, if necessary, 
suspension of payments and/or financial corrections. Furthermore, it puts in place 
national  remedial  action  plans  aiming  at  improving  the  effectiveness  of  systems 
and remedying the causes of low performance for those programmes and Member 
States which are concerned. 

in 

the  regulatory  framework  at 

For  the  2007-2013  programming  period,  the  control  strategy  contributing  to  the 
assurance  building  is  implemented  through  the  various  strands  of  controls 
foreseen 
the  beginning  of  programme 
implementation,  during  programme  implementation  and  at  the  end  of  the 
programming  periods.  The  audit  strategy  is  systematically  being  revised  on  the 
basis  of  the  new  information  for  the  update  of  risk-assessments  for  2007-2013 
programmes.  

For  the  2007-2013  period,  the  main  system  deficiencies  in  the  functioning  of  the 
systems were: 

-  deficiencies 
authorities/intermediate bodies; 

in  management  verifications  at 

the 

level  of  managing 

- some cases of deficiencies at the level of audit authorities; 

- to a lesser extent, some individual cases of fraud suspicion. 

Root causes of errors are complex management structures in some Member States 
(federal  or  regionalised  Member  States),  high  staff  turnover  in  some  authorities 
leading  to  a  loss  of  expertise  or  insufficient  staff  allocation  (explained  by  the 
budgetary  situation)  as  well  as  public  procurement  irregularities,  non-compliant 
implementation of State aid rules and eligibility issues.  

The Commission assists Member States to overcome the deficiencies. DG REGIO 
has  established  a  competence  centre  on  administrative  capacity  building 

17 

 
(beginning of 2013) to assist Member States. The actions already implemented or 
ongoing include notably:  

-  Administrative  capacity  initiative:  the  creation  of  a  platform  for  peer  to  peer 
exchange  of  best  practices  and  experience  between  Member  States/regions:  The 
demand  analysis  is  completed  and  a  pilot  exchange  was  launched  in  early  2015; 
the initiative was presented during the 2014 Open Days; the organisation of 8 two-
day  training  sessions  on  ‘programme  implementation  –  greater  focus  on  results’ 
and ‘management and control for 2014-2020’ for the programme authorities in the 
Member  States:  sessions  on  programme  implementation  and  audit/financial 
management  were  held  in  2014;  a  State  aid  action  plan  was  elaborated  in 
cooperation with DG COMP. Its aim is to increase awareness and understanding 
of  this  complex  and  technical  subject;  Anti-fraud/  anti-corruption  measures  to 
improve  the  overall  governance  of  the  Funds:    10  anti-fraud  /anti-corruption 
seminars  have  been  held  with  approx.  1000  participants.  These  allowed  raising 
awareness on good governance; reminding the Commission zero tolerance to fraud 
and  underlining  the  new  requirement  for  proportionate  and  effective  anti-fraud 
measures now embedded in the 2014-2020 management and control systems as an 
additional requirement. Work is ongoing to support the setting up of pilot Integrity 
Pact  projects  bringing  together  governments,  businesses  and  civil  society  to  fight 
corruption in public contracting. 

Public procurement initiative: A public procurement action plan was established. 
The  actions  under  way  include:  a  Guidance  for  Practitioners  on  "How  to  avoid 
common public procurement errors" which was presented at the 2014 Open Days 
and is also scheduled in the Member States where it is most needed. Development 
of  an expert  exchange  system  for managing authorities to share  experiences  and 
expertise in public procurement capacity building. This will be part of the platform 
for  exchanging  expertise  and  experience  referred  to  further  above,  definition  of 
country-specific  action  plans  to  address  identified  weaknesses  in  Romania, 
Bulgaria, Greece and Italy. 

For  the  2014-2020  programming  period  a  joint  audit  strategy  is  being  developed 
jointly  with  other  services  in  charge  of  ESI  Funds.  This  single  strategy  takes 
account  of  the  requirement  to  draw  up  annual  accounts  for  each  programme 
following completion of controls at national level, and submission of a complete set 
of assurance documents by 15 February each year as from 2016. This will include 
a management declaration by the managing authority accompanied by an annual 
summary  of  all  management  verifications  and  audits  carried  out,  certified 
accounts  by  the  certifying  authority  and  an  annual  audit  opinion  and  control 
report by the audit authority encompassing the accounts, the effective functioning 
of  the  management  and  control  system  and  the  legality  and  regularity  of 
transactions. 

24. 

(Nr  1,  §  7  -  2013/COU/0200)  The  Council  urges  the  Commission  to  proceed  in  a 
timely  manner  with  its  action  plan  aiming  at  raising  awareness  and  improving 
administrative capacity in national authorities. 

Commission's response: 

The  Commission  has  taken  the  requested  action.  For  the  2007-2013  period,  the 
main system deficiencies in the functioning of the systems were: 

-  deficiencies 
authorities/intermediate bodies; 

in  management  verifications  at 

the 

level  of  managing 

- some cases of deficiencies at the level of audit authorities; 

18 

 
- to a lesser extent, some individual cases of fraud suspicion. 

Root causes of errors are complex management structures in some Member States 
(federal  or  regionalised  Member  States),  high  staff  turnover  in  some  authorities 
leading  to  a  loss  of  expertise  or  insufficient  staff  allocation  (explained  by  the 
budgetary  situation)  as  well  as  public  procurement  irregularities,  non-compliant 
implementation of State aid rules and eligibility issues.  

The Commission assists Member States to overcome the deficiencies. DG REGIO 
has  established  a  competence  centre  on  administrative  capacity  building 
(beginning of 2013) to assist Member States. The actions already implemented or 
ongoing include notably:  

-  Administrative  capacity  initiative:  the  creation  of  a  platform  for  peer  to  peer 
exchange  of  best  practices  and  experience  between  Member  States/regions:  The 
demand  analysis  is  completed  and  a  pilot  exchange  was  launched  in  early  2015; 
the initiative was presented during the 2014 Open Days; the organisation of 8 two-
day  training  sessions  on  ‘programme  implementation  –  greater  focus  on  results’ 
and ‘management and control for 2014-2020’ for the programme authorities in the 
Member  States:  sessions  on  programme  implementation  and  audit/financial 
management  were  held  in  2014;  a  State  aid  action  plan  was  elaborated  in 
cooperation with DG COMP. Its aim is to increase awareness and understanding 
of  this  complex  and  technical  subject;  Anti-fraud/  anti-corruption  measures  to 
improve  the  overall  governance  of  the  Funds:    10  anti-fraud  /anti-corruption 
seminars  have  been  held  with  approx.  1000  participants.  These  allowed  raising 
awareness on good governance; reminding the Commission zero tolerance to fraud 
and  underlining  the  new  requirement  for  proportionate  and  effective  anti-fraud 
measures now embedded in the 2014-2020 management and control systems as an 
additional requirement. Work is ongoing to support the setting up of pilot Integrity 
Pact  projects  bringing  together  governments,  businesses  and  civil  society  to  fight 
corruption in public contracting. 

Public procurement initiative: A public procurement action plan was established. 
The  actions  under  way  include:  a  Guidance  for  Practitioners  on  "How  to  avoid 
common public procurement errors" which was presented at the 2014 Open Days 
and is also scheduled in the Member States where it is most needed. Development 
of  an expert  exchange  system  for managing authorities to share  experiences  and 
expertise in public procurement capacity building. This will be part of the platform 
for  exchanging  expertise  and  experience  referred  to  further  above,  definition  of 
country-specific  action  plans  to  address  identified  weaknesses  in  Romania, 
Bulgaria, Greece and Italy. 

For  the  2014-2020  programming  period  a  joint  audit  strategy  is  being  developed 
jointly  with  other  services  in  charge  of  ESI  Funds.  This  single  strategy  takes 
account  of  the  requirement  to  draw  up  annual  accounts  for  each  programme 
following completion of controls at national level, and submission of a complete set 
of assurance documents by 15 February each year as from 2016. This will include 
a management declaration by the managing authority accompanied by an annual 
summary  of  all  management  verifications  and  audits  carried  out,  certified 
accounts  by  the  certifying  authority  and  an  annual  audit  opinion  and  control 
report by the audit authority encompassing the accounts, the effective functioning 
of  the  management  and  control  system  and  the  legality  and  regularity  of 
transactions. 

19 

 
25. 

(Nr  1,  §  8  -  2013/COU/0201)  The  Council  asks  the  Commission  to  analyse  the 
reasons  for  the  delays  in  the  disbursement  of  EU  funds  through  Financial 
Engineering Instruments and to take appropriate corrective measures. 

Commission's response: 

The  Commission  has  taken  the  requested  action.  The  information  on  the  use  of 
financial  instruments  (FI)  was  indeed  very  limited  until  the  end  of  2011  when  a 
modification  of  the  Regulation  introduced  a  requirement  for  Member  States  to 
annually report on the implementation of FI. The reporting is comprehensive as it 
concerns not only the programme amounts invested in FI but also the programme 
amounts spent for investments in final recipients. DG REGIO publishes synoptical 
reports  by  1  October  of  each  year.  DG  REGIO  published  the  latest  available 
situation end September 2014. The average implementation rate at the end of 2013 
was 47% (compared to 37% end 2012 as quoted by ECA in its annual report; this 
was  the  only  data  checked  and  available  at  the  time  of  the  ECA  audit).  Average 
disbursement  covers  all  funds:  those  established  already  in  2008  as  well  those 
newly  established  in  2013  for  which  implementation  was  only  starting.  The 
average  47%  is  also  an  average  for  900  instruments  all  over  Europe.  Amongst 
them there are instruments which invest already revolving funds (100% absorption 
achieved already). Indeed there are persistent delays observed in specific financial 
instruments.  For the majority implementation is progressing, some are already in 
a second cycle of investment. As we are approaching the end of implementation, by 
which  programme resources  have to  be  disbursed  to  final  recipients  (enterprises) 
there  are  indeed  some  actions  needed  to  speed  up  delivery  of  underperforming 
funds.  These  actions  can  cover  both  active  follow  up  through  monitoring 
committees,  on-the–spot  visit,  more  active  promotional  campaign,  but  also  in 
certain  cases  reprogramming  i.e.  a  reallocation  of  unused  resources  to  another 
operation under the programmes. By programme closure (March 2017) resources 
from  FI  not  transferred  to  final  recipients  (for  the  first  cycle  of  investments  or 
guarantees) will not be eligible, therefore funds will be lost for the programme and 
Member  States.  Member  States  thus  have  an  incentive  to  take  actions  ahead  of 
closure to boost the use of financial instruments or timely reprogram them. 

26. 

(Nr  3,  §  2  -  2013/COU/0202)  The  Council  invites  the  Commission  and  all  other 
relevant actors to do their utmost to provide accurate, complete and reliable data on 
financial corrections, resulting in the robustness of the annual activity reports. 

Commission's response: 

The Commission has taken the requested action. 

For  the  2000-2006  programming  period,  it  has  verified  the  reliability  of  Member 
States'  reporting  systems  in  the  area  of  financial  corrections  by  carrying  out  on-
the-spot  verifications  of  the  quality  of  the  Member  States'  systems  for  recoveries 
linked  to  structural  actions.  The  results  showed  that  Member  States'  authorities 
generally  followed  the  requirements,  although  as  confirmed  by  the  Court  of 
Auditors, some weaknesses existed in respect of the completeness of data and the 
systems  for  recording  and  reporting  irregularities.  Taking  into  account  the 
findings, the Commission revised its guidance note on withdrawals and recoveries, 
which was presented to Member States in January 2010, in time for the last annual 
report  for  2000-2006  programmes  and  the  first  report  for  the  2007-2013 
programmes.  

For  the  2007-2013  programming  period,  the  Member  State  reporting  was 
substantially improved and standardised. Member States provide under Article 20 

20 

 
of  Regulation  (EC)  No.  1828/2006,  until  31  March  each  year  information  about 
corrections  made  (amounts  withdrawn  from  statements  of  expenditure  submitted 
during  the  preceding  year  following  cancellation  of  all  or  part  of  the  public 
contribution for an operation, amounts recovered which have been deducted from 
those  statements  of  expenditure  a  statement  of  amounts  to  be  recovered  as  at  31 
December  of  the  preceding  year,  classified  by  the  year  in  which  recovery  orders 
were issued).  

While the Commission monitors and reports financial corrections stemming from 
its  own  supervisory  role  in  note  6  to  the  accounts  and  in  the  report  on  the 
protection of the EU budget, it has less assurance on the reliability of amounts of 
financial  corrections  reported  by  the  national  authorities.  That  is  why  the 
Commission  is  taking  increasing  actions  to  reduce  the  risks  involved  in  the 
Member State's reporting on financial corrections: 

performance  of  an  annual  risk  assessment  on  data  reported  by  Member 

• 
States 

contacts  with  the  certifying  authorities  to  clarify  the  reported  data  when 

• 
inconsistencies are found 

performance  of  on-the-spot  audits  to  verify  the  accounting  system  of  the 
• 
certifying  authorities  and  the  reliability  of  data  reported  on  financial  corrections 
based on the risk assessment results 

prudent  reporting  of  figures  on  national  financial  corrections  that  are 

• 
clearly additional to the Commission reporting. 

First  of  all  the  Commission  services  perform  an  annual  risk  assessment  on  the 
data  on  financial  corrections  reported  each  year  by  Member  States.  This  risk 
assessment  considers  several  factors,  such  as  data  gathered  from  other  sources 
(e.g.  errors  reported  in  annual  control  reports,  data  on  financial  corrections 
imposed  by  the  Commission)  and  the  Commission  own  conclusions  on  the 
functioning  of  the  certifying  authorities  responsible  to  draw  up  the  reporting  on 
corrections  (assessment  of  the  key  requirements  of  management  and  control 
systems linked to the work of certifying authorities). 

As a result, the Commission services obtain an indication of possible discrepancies, 
inconsistencies or risk of incomplete data on corrections. This leads to clarification 
requests  to  the  concerned  certifying  authorities  and  to  the  selection  of  certifying 
authorities / operational programmes / Member States for Commission on-the-spot 
audits  on  the  completeness  and  accuracy  of  data  and  on  the  reliability  of  the 
reporting on financial corrections.  

Such  Commission  audits  are  performed  since  2011  as  a  response  to  a  discharge 
recommendation  to  increase  the  assurance  of  such  data,  as  reported  in  the  DG 
REGIO's  2013  AAR  on  page  41  and  in  annex  8  on  pages  47-48.  In  2014,  the 
enquiry has covered additional programmes and Member States, to take account of 
the  increased  risk  on  the  reliability  of  data.  This  audit  is  focusing  on  the 
verification  of  the  accuracy,  completeness  and  reliability  of  the  data  reported  by 
the  Member  States,  in  view  of  the  Commission's  calculation  of  the  cumulative 
residual risk. 

As reported in DG REGIO's AAR for 2013, the Commission's audits have revealed 
that in some well-identified cases and programmes, the Member States' reporting 
on corrections was not reliable or complete. This was for example the case of the 
reporting  from  the  Czech  Republic  (leading  to  the  correction  of  previous  years’ 

21 

 
over-reporting,  implemented  by  end  2013)  and  some  Italian  programmes  which 
underreported withdrawals and recoveries due to administrative delays.  

The  finding  from  the  Czech  programmes  led  the  Commission  services  to  issue 
additional  horizontal  recommendations  and  guidance  to  all  certifying  authorities 
to ensure an improved reporting exercise for 2013 due by end March 2014 and to 
request correction of past reporting where necessary. 

27. 

(Nr 3, § 3 - 2013/COU/0203) The Council asks the Commission to disclose further 
details in its annual activity reports in order to increase transparency on the reasons 
for issuing reservations and on the method for quantifying the amounts at stake. 

Commission's response: 

The Commission has taken the requested action. In its reply to recommendation 6 
of Chapter 5 of the 2013 annual report of the Court of Auditors, the Commission 
agreed to disclose further details in annex to the annual activity reports for those 
individual  cases  where  its  takes  a  reasoned  decision  not  to  make  reservations  or 
not  to  include  the  issue  in  the  quantification  of  the  reservation,  based  on  its 
assessment of the specific situations. DG REGIO has done so in the 2014 AAR. 

22 

 
Chapter 6 - Employment and Social Affairs 

28. 

(Nr  1,  §  2  -  2013/COU/0204)  The  Council  calls  on  the  Commission  and  Member 
States  to  further  strengthen  the  checks  at  all  levels  and  to  provide  increased  and 
comprehensive guidance to beneficiaries. 

Commission's response: 

The Commission is further strengthening its checks, notably through the thematic 
audit on management verifications.  

In  addition  through  the  system  audits  carried  out  at  the  level  of  the  Managing 
Authorities,  the  Commission  checks  the  guidance  to  beneficiaries  issued  by 
Member States authorities. 

29. 

(Nr  1,  §  5  -  2013/COU/0205)  The  Council  calls  on  the  Commission  and  Member 
States  to  continue  addressing  the  major  weaknesses  which  were  identified  by  the 
Court  in  first-level  checks  carried  out  by  national  managing  authorities  and 
intermediate bodies. 

Commission's response: 

As reported by the Court in its report, the Commission carried out in 2013 thematic 
audits on the effectiveness of first level checks in order to evaluate and verify, on a 
risk  based  approach,  the  extent  to  which  the  verification  process  functions 
effectively  to  prevent,  detect  and  correct  errors.  The  Commission  published  in 
November 2013 an overview report of the results. Based on an in-depth analysis of 
the  root  causes  of  this  problem,  DG  EMPL  committed  itself  to  continuing  its 
capacity building actions (simplifications seminars and action plans) together with 
a  stringent  interruptions  and  suspensions  policy.  The  thematic  audit  on 
management  verifications,  initiated  in  2013,  has  been  pursued  in  2014  with  9 
additional missions.  

Recommendations and, where applicable, interruption and suspension procedures 
have  been  initiated  for  those  programmes  showing  areas  of  non-compliance  or 
weak verifications. In the DG EMPL's audit plan for 2015, the thematic audits on 
management verifications are pursued (5 missions planned). 

A  comprehensive  guidance  note  on  management  verifications  for  the  2014-2020 
programming  period,  drawing  on 
the  2007-2013 
the 
programming period and the Court’s findings, has been drafted in January 2015 
and will be adopted in the second semester 2015. 

learned 

lessons 

in 

30. 

(Nr 1, § 7 - 2013/COU/0206) The Council also invites the Commission and Member 
States  to  consider  and  take  advantage  of  all  other  existing  simplification 
opportunities, whenever possible and appropriate. 

Commission's response: 

A  number  of  events  giving  practical  guidance  on  simplification  have  been 
organised  in  Member  States  in  2012  and  2013.  These  capacity  building  activities 
have been continued in 2014 and 2015 to optimize the use of SCOs in the current 
programming period. 

An updated Guidance note for the Member States on SCOs was issued in October 
2014 and has been translated in all EU languages early 2015.  

DG EMPL  also  set-up an internal Task Force for SCOs and Joint Action Plans. 
The aim of the task force is to promote the use of SCOs, in particular 14(1) ESF 

23 

 
and JAP, and provide support to the MS in order to meet the objective of having 
50% of ESF expenditure claimed under a Simplified Cost Option by 2017.  

Important novelty: approval of simplified costs by DG EMPL 

DG  EMPL  is  currently  working  with  Member  States  on  the  implementation  of 
Article 14(1) of the ESF Regulation. This Article allows the Commission to adopt 
(by delegated act) standard scales of unit costs and lump sums. Member States can 
also suggest standard scales of unit costs and lump sums  to the Commission that 
may  adopt  them.  This  provides  legal  certainty  for  the  Member  State,  and  thus 
offers  a  major  opportunity  for  simplification.  Also,  the  scope  of  audit  will  be 
reduced compared to "classical" simplified cost options. 

31. 

(Nr  2,  §  2  -  2013/COU/0207)  The  Council  invites  the  Commission  and  Member 
States to seek improvement in the quality and reliability of the information provided 
by national audit authorities, notably through better guidance on flat rate corrections 
and the audit sampling methodology to be applied. 

Commission's response: 

Following the update of the Guidance on sampling methods for audit authorities 
and  on  the  basis  of  the  analysis  by  the  Commission  of  the  2013  ACRs,  further 
clarifications have been provided on sampling issues and treatment of errors at the 
Homologues Group meeting in September 2014 and in a note to the AAs issued in 
the beginning of 2015.  

The  Commission  Decision  C(2011)7321  of  19/10/2001  defines  the  guidelines  on 
the  principles,  criteria  and  indicative  scales  to  be  applied  in  respect  of  financial 
corrections made by the Commission. 

32. 

(Nr 3, § 1 - 2013/COU/0208) The Council invites the Commission to reflect on the 
possibility  of 
the  accuracy, 
involving  national  audit  authorities 
completeness and reliability of the data reported on financial corrections. 

to  ensure 

Commission's response: 

As  financial  corrections  (withdrawals  and  recoveries)  are  an  important  element 
taken  into  account  to  calculate  the  residual  risk  of  error  of  each  operational 
programme.  The  Commission  has  carried  out  since  2011  audits  on  the  Member 
State's  reporting  on  financial  corrections.  In  2014,  the  number  of  these  audits 
were increased substantially,  

DG  Employment,  Social  Affairs  and  Inclusion  carried  out  14  audit  missions  in 
2014  to  check  the  reliability  of  the  information  reported  by  the  certifying 
authorities in view of the preparation for the closure of the programming period.  

In view of the assurance in the 2014 AAR, DG Regional and Urban Policy carried 
out 12 audits (6 in 2014 and another 6 in January-February 2015), compared to 4 
audits  in  2013.  Four  of  these  were  joint  audits  with  DG  Employment,  Social 
Affairs and Inclusion. Since 2011, the Directorate-General's audits on recoveries 
have  covered  16  Member  States  and  20%  of  the  ERDF/Cohesion  Fund 
programmes (63 out of 322). 

An overview of the conclusions is provided each year in the AAR of the DG. 

An audit report summarising the main findings of these missions, has been issued 
in  April  2015.  Generally,  the  work  undertaken  by  the  Certifying  Authorities  in 
relation  to  the  withdrawals  and  recoveries  is  deemed  acceptable  and  the  DG  can 
take the results into account when determining the residual level of error. Where 

24 

 
this is not the case, the Commission takes the necessary actions to mitigate the risk 
and  follows-up  with  the  Member  State  the  improvements  required  in  their 
reporting on financial corrections. 

25 

 
Chapter 7 - External Relations, Aid and Enlargement 

33. 

(§  5  -  2013/COU/0209)  The  Council  urges  the  Commission  to  take  the  necessary 
measures  to  correct  the  weaknesses  identified  in  its  control  mechanism,  namely  in 
relation to the clearance procedure. 

Commission's response: 

DG Enlargement has already informed its staff that clearings should no longer be 
made on the basis of estimates. 

DG  Enlargement  has  adopted  and  is  implementing  an  action  plan  which  will 
enable the DG to introduce cost-based reporting by the beneficiary countries (i.e. 
Croatia, fYRoM and Turkey). This will ensure conformity with the accrual-based 
accounting rules of the Commission and make it possible to recognise cost in the 
accounting  system 
legality  and  regularity 
requirements  established  under  the  Financial  Regulation.  The  action  plan  was 
approved in the IPA Steering Committee of DG ELARG in September 2014. 

in  strict  compliance  with 

the 

Implementing  actions  to  date  include  audit  missions  to  Turkey,  Croatia  and 
fYRoM  to  test  the  systems  in  place  in  these  Beneficiary  Countries  and  to  discuss 
the cost reporting requirements. The results are now being followed up. 

A  temporary  policy  has  been  adopted  permitting  cost  recognition  on  the  basis  of 
local  contracts  where  the  beneficiary  country  has  approved  the  final  cost  and 
closed the contract. 

34. 

(§  5  -  2013/COU/0251)  The  Council  urges  the  Commission  to  take  the  necessary 
measures to improve its supervisory role and to ensure that the quality checks carried 
out by external auditors are more efficient. 

Commission's response: 

Actions are already being taken to this end in the frame of the existing Action Plan 
to correct the weaknesses in the implementation of DEVCO's control system (to be 
upgraded in the light of the new findings of the 2013 RER study and the Annual 
Report of the ECA). In particular, quality review grids intended for assessment of 
the reliability of external auditors' audits and verifications reports are expected to 
be completed by the 4th quarter of 2015, to be then integrated into the new IT audit 
tool (replacing the current CRIS audit module) following final endorsement by DG 
DEVCO management. 

26 

 
Chapter 8 - Research and Other Internal Policies 

35. 

(§  3  -  2013/COU/0210)  The  Council  urges  the  Commission  to  address  the 
deficiencies  identified  by  the  Court  and  to  give  priority  to  risk-based  checks  in  its 
approach, and to provide well-targeted guidance to the beneficiaries. 

Commission's response: 

In  the  research  area,  awareness-raising  activities  alert  Commission  staff  to  the 
particular risks of different types of beneficiary. This relates both to the payment 
stage (FP7) and the contracting stage (Horizon 2020). For Horizon 2020 this type 
of information will be built more systematically into the information systems used 
by  the  Commission.  It  is  expected  that  83%  of  the  ex-post  audits  for  the  period 
2012-2016 will be selected using different risk factors.  

The  research  anti-fraud  strategy  is  another  important  component  of  the 
Commission risk driven and risk based targeted controls.  

The Commission recognises its obligation to provide timely and effective guidance 
to  the  beneficiaries.  For  Horizon  2020  guidance  has  already  been  offered  at  a 
much earlier stage than for any earlier programme. The Commission continues its 
efforts  to  provide  better  and  more  tailored  guidance  to  beneficiaries  and 
independent auditors. This has been based on a document on the 10 most common 
errors identified and how to remedy them. 

36. 

(Nr 1, § 2 - 2013/COU/0211) The Council calls upon the Commission to continue its 
efforts  in  providing  clear  guidance  and  information  on  the  eligibility  criteria  to  all 
beneficiaries of EU funds in this policy group, including education and culture. 

Commission's response: 

The  Commission  accepts  this  request.  In  the  research  area,  awareness-raising 
activities  alert  Commission  staff  to  the  particular  risks  of  different  types  of 
beneficiary. This relates both to the payment stage (FP7) and the contracting stage 
(Horizon  2020).  For  Horizon  2020  this  type  of  information  will  be  built  more 
systematically into the information systems used by the Commission. It is expected 
that  83%  of  the  ex-post  audits  for  the  period  2012-2016  will  be  selected  using 
different risk factors.  

The  research  anti-fraud  strategy  is  another  important  component  of  our  risk 
driven and risk based targeted controls.  

As  regards  the  guidance  to  the  beneficiaries,  the  Commission  recognises  its 
obligation  to  provide  timely  and  effective  guidance  to  the  beneficiaries.  For 
Horizon 2020 guidance has already been offered at a much earlier stage than for 
any earlier programme. The Commission continues its efforts to provide better and 
more  tailored  guidance  to  beneficiaries  and  independent  auditors.  This  has  been 
based on a document on the 10 most common errors identified and how to remedy 
them.  

In  the  education  and  culture  policy  area  the  Commission  applies  risk-driven 
activities in the following areas:  

a)  The  yearly  cycle  of  supervisory  visits  performed  by  EAC  staff  at  National 
Authorities and National Agencies;  

b)  The  minimum  percentages  and  minimum  absolute  numbers  of  checks  on 
beneficiaries  (primary  checks)  to  be  carried  out  every  year  by  National  Agencies 
(type of funding scheme, complexity of rules, beneficiary structure, etc.)  
27 

 
c) National Agencies risk management for performing targeted additional checks 
on beneficiaries on top of the minimum required checks imposed by DG EAC.  

Well-targeted guidance to beneficiaries:  

For the new programmes 2014-2020 guidance was offered at an earlier stage than 
for  the  predecessor  programme.  The  Commission  continues  its  efforts  to  provide 
better  and  more  tailored  guidance  to  beneficiaries,  National  Agencies  and 
independent auditors. 

37. 

(Nr 1, § 3 - 2013/COU/0212) The Council invites the Commission to remain vigilant 
in ensuring that these rules (public procurement procedures) are applied correctly. 

Commission's response: 

In  the  field  of  education  and  culture,  it  is  mainly  the  National  Agencies  (NA)  in 
the Member States that undertake procurement in their capacity of beneficiaries of 
EU funds.  

The Commission is raising awareness about the importance of complying with the 
public procurement rules among the NAs and National Authorities (NAU), mainly 
by  discussing  audit  findings  and  recurring  errors  in  meetings  with  the  NA  and 
NAU,  as  well  as  during  supervisory,  monitoring  and  financial  audit  visits  to 
individual NAs and NAUs. The Commission has, moreover, reinforced the written 
guidance  to  NAs  on  consequences  of  errors  that  occur  due  to  weaknesses  in 
procurement  procedures,  as  well  as  to  NAs,  NAUs  and  auditors  as  to  the 
importance and requirements related to checks on procurement. 

38. 

(Nr 2, § 1 - 2013/COU/0213) The Council calls upon the Commission to continue to 
provide  guidance  to  external  auditors  in  order  to  ensure  full  compliance  of  such 
controls with EU rules. 

Commission's response: 

The  Commission  is  continuing  its  efforts  to  provide  better  and  more  tailored 
guidance to beneficiaries and independent auditors. This is based on a document 
on the 10 most common errors identified and how to remedy them for one part. 

For another part the Commission has been running a communication campaign to 
remind  beneficiaries  and  external  auditors  of  the  FP7  eligibility  rules.  In  total, 
there  have  been  organized  22  events  covering  22  Member  States  and  associated 
countries.  These  seminars  have  been  attended  by  3500  participants,  including  at 
least  300  certifying  auditors,  and  this  number  will  increase  since  this  campaign 
will  continue  in  2015.  National  Contact  Points  have  highly  contributed  to  the 
organization of these events.  

The  Commission  services  also  contact  the  certifying  external  auditors  when  the 
Commission's ex-post audits identify material differences between the certified cost 
statements and the ex-post audits' findings.  

Finally,  the  "Research  Enquiry  Service"  replies  to  any  questions  raised  by  the 
auditors. 

For Horizon 2020 eligibility rules have been simplified in order to decrease the risk 
of errors. This would also contribute to facilitate the work of the external auditors. 

39. 

(Nr  2,  §  2  -  2013/COU/0214)  The  Council  urges  the  Commission  to  improve  its 
verifications 
ineligible 
expenditure,  whilst  being  mindful  of  the  necessity  not  to  impose  unnecessary 

the  reimbursement  of 

inconsistencies  and 

to  avoid 

28 

 
administrative  burden  and  to  find  the  right  balance  between  costs  and  benefits  of 
controls. 

Commission's response: 

The  Commission  remains  committed  to  a  sound  financial  management  of  the 
public  funds.  The  Commission  has  already  redesigned  some  ex-ante  controls  in 
order  to  make  them  better  focused  on  risky  areas  and  on  anti-fraud  work.  This 
means  that,  to  avoid  unnecessary  bureaucracy,  the  controls  will  be  reduced  in 
some cases. This will be balanced by more in-depth controls and more audits for 
risky  projects  and  beneficiaries  combined  with  more  anti-fraud  work.  This  will 
continue,  and  assists  in  the  fight  against  fraud.  The  Commission  underlines  that 
the  Horizon  2020  legislation  was  proposed  with  the  balance  between  costs  and 
benefits of control, the reduction of administrative burden and the reduction of the 
risk of error as a central concern. 

40. 

(Nr 2, § 3 - 2013/COU/0215) The Council calls upon the Commission to increase the 
efficiency of its audit work and to recover the undue amounts without delay. 

Commission's response: 

The  Commission  is  continuing  its  program  of  ex  post  controls  and  making 
recovery  where  ineligible  expenditure  is  uncovered.  Around  500  audits  per  year 
are carried out, and these have covered beneficiaries receiving around 65% of FP7 
grants.  It  will  complete  all  audits  and  recover  all  undue  amounts  as  quickly  as 
possible,  taking  into  account  the  inherent  limitations  such  as  the  contradictory 
process, recoveries by offsetting from the next payment, etc. 

29 

 
Chapter 9 - Administrative and Other Expenditure 

41. 

(Nr 2, § 1 - 2013/COU/0216) The Council invites the institutions concerned, in close 
collaboration  with  the  Office  for  the  Administration  and  Payment  of  Individual 
Entitlements,  to  address  the  weaknesses  detected  by  the  Court  in  relation  to  the 
accurate  calculation  and  payment  of  salaries,  pensions  and  the  reimbursement  of 
travel costs. 

Commission's response: 

The Court of Auditors has carried out a follow-up of the 2013 DAS observations, 
and concluded in its SPF6945 that progress has been made. For two items, further 
progress is required: 

1.Updating of the personal and family situation of the staff members. 

2.Updating of family situations and allowances received from other sources using 
a self-declaration.  

The PMO action plan consists of: 

Since  February  2013  (updated  in  August  2014)  a  new  procedure  has  been 
implemented by the PMO: rights are granted on a provisional basis (in the year n) 
for a limited time span (n+2). A new Sysper declaration is requested annually for 
those cases where the allowance depends on the revenue of the spouse of the agent. 
As  additional  measure,  further  improvement  of  the  monitoring  system  has  been 
included by the PMO amongst needs for development of Sysper IT system in 2015-
2016.  Following  up  agents'  family  situation  is  expected to  be  done  systematically 
by  the  system  on  a  regular  basis  (periodicity  to  be  decided),  also  via  proactive 
notification sent to the agent automatically. 

42. 

(Nr  3,  §  2  -  2013/COU/0217)  The  Council  invites  the  Commission,  when  making 
budget proposals, to strictly scrutinise the level of carry-overs of agencies at the end 
of the financial year with a view to avoid over-budgeting. 

Commission's response: 

The Commission has taken the recommended action. 
A  reference  is  made  to  the  reply  given  both  for  2011  discharge  (2011/COU/1665) 
and 2012 discharge (2012/COU/02666). 

5 SWD(2013)348final, page 23. 
6 SWD(2014)285final, page 39 

30 

 
                                                            
Chapter 10 - Getting Results from the EU Budget 

43. 

(§ 2 - 2013/COU/0218) The Council calls on the Commission and Member States to 
take advantage of the opportunities provided by the 2014-2020 multiannual financial 
framework (MFF) to make efforts towards a more result-oriented approach, based on 
an  objective  assessment  of  the  needs,  and  to  develop  a  performance  framework  in 
order  to  achieve  the  results  and  impacts  that  were  laid  down  in  the  sector-specific 
regulations. 

Commission's response: 

As indicated in the Synthesis reports on the years 2013 and 2014 as well as in its 
replies  to    the  Court  of  Auditor's  annual  reports,  the  Commission  has  gradually  
further  developed    the  performance  framework  and  has  taken  several  measures 
with  a  view  to  demonstrating  the  importance  of  the  quality  of  spending  and  the 
added value of the EU budget. Starting from the legal framework of the new MFF 
which  is  designed  to  contribute  to  EU  2020  and  includes  stronger  monitoring, 
evaluation and reporting arrangements thereto, the Commission has taken already 
the  necessary  actions  to  improve  the  reporting  on  performance  in  its  strategic 
planning and programing cycle. 

44. 

(§ 6 - 2013/COU/0219) The Council considers, however, that further progress needs 
to be made, particularly as regards reporting on the "Europe 2020" Strategy targets. 
The achievements of the EU policies should be presented clearly, including actions 
that did not yield the expected results. 

Commission's response: 

The Art. 318 Evaluation Report on the year 2014 includes a summary account on 
progress towards Europe 2020 targets. Where possible, the chapters of the report 
are  structured  around  the  Europe  2020  priorities  of  smart,  sustainable  and 
inclusive growth and results of EU programmes are linked to Europe 2020 aims. 
However, there are  various factors that need to be  taken into  account as to  what 
the EU budget can reasonably be expected to deliver or what the evaluation report 
can be expected to confirm. The Art. 318 Evaluation Report on the year 2014 takes 
a position on how the EU budget can realistically contribute to the achievements of 
EU  policy  goals  and  what  cannot  be  expected  from  the  Commission.  The  report 
mentions the limited size of the EU budget compared with total public spending in 
the EU, the variety of external factors involved (private sector decision-taking, the 
role of the EU institutions in adopting the programmes including monitoring and 
reporting  arrangements  and  Member  State  responsibility  to  implement  the  major 
part of the budget) and the time lags between spending the money and measuring 
the impact of financed actions. 

45. 

(§ 6 - 2013/COU/0220) The Council invites the Commission to pursue its efforts in 
fine-tuning a timely presentation of its performance-related reporting in order to be 
able to contribute to the discussions on the next MFF. 

Commission's response: 

The Commission makes sure that the timing of its performance-related reporting is 
in line with the monitoring, reporting and evaluation arrangements included in the 
legal basis that has been adopted by the co-legislators. 

46. 

(§ 7 - 2013/COU/0221) The Council invites the Commission, the Court and Member 
States, as well as other interested parties, to further exploit the concept of EU added 
value as part of the EU performance framework. 

31 

 
Commission's response: 

This recommendation is not only addressed to the Commission but equally to the 
Court of Auditors and the Member States. The Commission agrees on the need to 
develop  a  common  understanding  on  the  concept  of  EU  added  value  between  all 
interested parties involved in the performance framework. As part of its enhanced 
focus  on  performance,  the  Commission  is  putting  strong  emphasis  on  analysing 
EU added value. In its new Better Regulation Guidelines, adopted on 19 May 2015, 
the  Commission  has  included  EU  added  value  as  one  of  the  key  criteria  to  be 
systematically assessed in Commission evaluations. 

Furthermore,  the  Art.  318  Evaluation  Report  on  year  2014  includes  examples  of 
the added value created by the EU budget and is accompanied by a Staff Working 
the  efficiency  and  effectiveness  of  EU 
Document  (SWD1)  dedicated 
interventions and the synergies they create, contributing to EU added-value. 

to 

32 

 
Eighth, ninth and tenth European Development Funds 

47. 

(Nr  4  -  2013/COU/0222)  The  Council  invites  the  Commission  to  implement  all 
necessary  measures  to  address  existing  weaknesses  (The  examined  systems  are 
partially  effective.  Particular  attention  should  be  given  to  ex-ante  checks  given  the 
high-risk operational environment of the Commission.). 

Commission's response: 

Actions are already being implemented to this end and measures have already been 
taken. The existing Action Plan (to correct the weaknesses in the implementation 
of  DEVCO's  control  system)  will  be  upgraded  in  the  light of  the  new  findings  of 
the 2013 RER study and the Annual Report of the ECA. 

48. 

(Nr  6  -  2013/COU/0223)  The  Commission  should  demonstrate  how 
this 
(improvements to be continued to be made in certain important areas) has been done 
in  the  context  of  the  Annual  Report  of  the  Court  of  Auditors.  Areas  of  particular 
importance are: 

– endorsing compliance with procurement rules by beneficiaries; 

–  promoting  better  document  management  among  implementing  partners  and 
beneficiaries; 

– enhancing the quality of expenditure verifications carried out by external auditors; 

–  making sure that recovery orders in  respect of interest on pre-financing over 750 
000 euro are issued annually; 

– continued attention to the budget support transactions; 

– completing the development of the CRIS system; 

– continuing the implementation of the Acton Plan. 

Commission's response: 

As regards those particular issues, actions have been implemented to this end and 
appropriate measures already taken: 

-  Concrete  measures  aiming  at  improved  document  management  and  record 
keeping  by  implementing  partners  and  beneficiaries  were  put  in  place  in  2013, 
notably  with 
in  DG  DEVCO's 
clear 
financing/contracting  guides  and  manuals  (grants  contracts,  Programmes 
Estimates, etc.). 

information  and 

instructions 

-  Quality  review  grids  intended  for  assessment  of  the  reliability  of  external 
auditors' audits and verifications reports are being finalised to be then integrated 
into  the  new  IT  audit  tool  (replacing  the  current  CRIS  audit  module)  following 
final endorsement by DG DEVCO Management. 

- Several reminders of the rules concerning the annual recovery of interest on pre-
financing above 750.000 euro were sent to the sub-delegated Authorising officers 
(notably  the  latest  one  with  the  note  for  the  annual  pre-closing  of  accounts 
exercise).  A  list  of  all  the  open  pre-financings  was  drawn  up  thus  making  it 
possible to see the outcome achieved. 

-  The  correct  application  of  specific  conditions  for  Budget  Support  is  being  duly 
ensured through the use of the new guidelines issued in 2012. 

33 

 
 
 
 
 
 
 
 
-  The  development  of  the  CRIS  system  (to  allow  interest  on  prefinancing  of 
between 250 000 and 750 000 euro to be recognised as financial revenue) has been 
delayed due to the implementation of the new Financial Regulation and the ABAC 
release, but was completed in July 2014. 

- The implementation of the existing Action Plan (to correct the weaknesses in DG 
DEVCO's control system) is on schedule. It will be upgraded in the light of the new 
findings of the 2013 RER study and the Annual Report of the ECA. 

49. 

(Nr 7 - 2013/COU/0224) The Council invites the Commission to continue regularly 
updating the ACP Working Party in the course of 2015 on the implementation of the 
Action Plan (DG DEVCO action plan received in September 2014 that addresses a 
number of recommendations made by the Court in the previous annual reports.). 

Commission's response: 

A  comprehensive  progress  report  on  the  implementation  of  the  Action  Plan  was 
circulated  to  the  Council  in  September  2014.  The  Commission  will  continue  to 
update the ACP working party on a regular basis (with an updated progress report 
to be provided before the summer break) concerning the implementation status of 
the Action Plan and any potential upgrade. 

50. 

(Nr  9  -  2013/COU/0225)  The  Council  invites  the  Commission  to  fully  implement 
these  recommendations  (outstanding  recommendations  and  some  which  have  been 
partially implemented) at the earliest opportunity. 

Commission's response: 

The  Commission  always  strives  to  implement  the  recommendations  made  by  the 
Court  of  Auditors  within  the  timeframes  it  sets  in  its  replies  to  those 
recommendations.  Progress  is  reported,  every  year,  in  the  Annual  Reports  of  the 
Court of Auditors. The Commission rejects this recommendation. 

34 

 
Bodies set up under the TFEU and the Euratom Treaty 

51. 

(Euratom, Annex to Annex 1, § 2 - 2013/COU/0226) The Council notes the Court's 
observation that no details are provided in the Agency's 2013 annual accounts for the 
administrative services paid directly by the Commission. It invites the Commission 
and the Agency to take the appropriate remedial measures. 

Commission's response: 

This  action  is  now  considered  completed  as  the  Euratom  Supply  Agency's 
Provisional Annual accounts 2014 (Ref. Ares(2015)863201) provide the details on 
administrative  services  paid  directly  by  the  Commission  for  the  Euratom  Supply 
Agency. 

35 

 
SR 09/2013 EU Support for Governance in the Democratic Republic of the Congo 

52. 

(Annex,  Nr  8  -  2013/COU/0227)  The  Council  calls  on  the  Commission  and  the 
EEAS to ensure, in close coordination with EU Member States and other partners, an 
appropriate policy  dialogue with  the DRC as  well as  context-specific programming 
within a results-based framework. 

Commission's response: 

The Commission has taken the requested action. 

The Commission/EEAS and Member  States have  succeeded during  the last years 
to present, in the context of the policy dialogue with national authorities, common 
positions on key policy issues. They have issued common statements and presented 
common  arguments  in  their  policy  dialogue  that  have  produced  visible  results. 
Highlights among these were the protection of the Virunga National Park and the 
dialogue on the constitutional and political framework surrounding elections.  

The Commission and the EEAS will continue to pursue this coordinated approach 
to  policy  dialogue  with  national  authorities.  The  programming  process  was 
concluded in 2014 (National Indicative Programme adopted by the EDF committee 
in April 2014, and signed by Commission and DRC authorities on 26 June 2014): 
specific  sectors  of  concentration  have  been  defined  and  a  set  of  well  defined 
indicators  will guide  the formulation  of  projects in order to  reinforce monitoring 
and ensure the achievement of the expected results. 

53. 

(Annex,  Nr  8  -  2013/COU/0228)  The  Council  calls  on  the  Commission  and  the 
EEAS  to  encourage  and  assist  the  Government  of  the  DRC  in  improving  sector 
policies and accountability, including through capacity-building of national oversight 
institutions, and facilitating civil society space. 

Commission's response: 

The Commission has taken the requested action. 

The  development  policy  of  the  Commission  in  DRC  is  focused  on  the  alignment 
with  national  sector  policies  and  its  strengthening  and  rationalisation.  The 
approval  of  the  11th  EDF  National  Indicative  Programme  for  DRC  in  2014  has 
endorsed  this  approach.  In  the  11th  EDF,  special  attention  is  given  to  the 
improvement of public finance management systems, especially in our main focal 
sectors.  The  Commission  and  the  EEAS  will  continue  to  strengthen  and  possibly 
increase  the  capacity  of  national  oversight  institutions,  in  the  context  of  work 
sharing  arrangements  with  other  donors.  This  approach  will  be  implemented 
during all the duration of the 11th EDF. 

54. 

(Annex,  Nr  9  -  2013/COU/0229)  In  implementing  the  Busan  aid  effectiveness 
agenda and the New Deal for Engagement in Fragile States, the Council calls on the 
Commission  and  the  EEAS  to  strive  to  align  their  engagement  with  the  New  Deal 
fragility  assessment  for  the  DRC,  which  should  be  country-led,  and  to  further 
the  DRC,  performance 
strengthen 
measurement and the sustainability of development results. 

the  effectiveness  of 

their  assistance 

to 

Commission's response: 

The  Commission  is  organising,  jointly  with  the  Belgian  Cooperation  and  the 
Belgian Ministry of Foreign Affairs, a workshop in Kinshasa on how to work in a 
fragile country like DRC following the New Deal principles. A thorough analysis 
of  the  Fragility Assessment will  take place. All  EU Member  States  present in  the 

36 

 
country  have  been  consulted  during  the  organisation  of  the  workshop  and  have 
been invited to attend. 

55. 

(Annex,  Nr  9  -  2013/COU/0230)  The  Council  calls  on  the  Commission  and  the 
EEAS  to  underline,  in  their  sector  policy  and  political  dialogue  with  the  DRC 
government,  the  importance  of  securing  concrete  engagements  on  Security  Sector 
Reform, which are conducive to stability and sustainable development. 

Commission's response: 

One  of  the  sectors  of  concentration  for  the  11th  EDF  (Strengthening  of 
Governance  and  Rule  of  Law)  directly  focuses  on  Security  Sector  Reform.  A 
project on support to the reform of the defence sector has been approved in 2014 
which  has  given  the  EU  the  opportunity  to  reinforce  its  dialogue  line  with  the 
Ministry of Defence. Reform of the army and internal and external accountability 
of  the  defence  forces are  key  issues in this  project.  At the  same time  the  EU  will 
work with key actors in SSR, notably MONUSCO (in line with its UN mandate), to 
encourage a high-level political dialogue encompassing SSR. 

37 

 
SR 11/2013 Getting the Gross National Income (GNI) data right - A more structured 
and better-focussed approach would improve the effectiveness of the Commission’s 
verification 

56. 

(Annex,  Nr  2  -  2013/COU/0231)  The  Council  urges  the  Commission  to  maintain 
these elements (the verification of Own Resources data to be undertaken in the spirit 
of  mutual  trust  and  transparency)  whilst  implementing  the  Court  of  Auditors’ 
recommendations. Special attention should be given to the reliability of the GNI data 
compiled within the ESA 2010 framework under the new own resources Decision. 

Commission's response: 

The  Commission  has  always  undertaken  its  activities  in  GNI  verification  in  the 
spirit of mutual trust and transparency. The specific issue of the reliability of ESA 
2010 data will be examined during the forthcoming verification cycle, 2016-9. 

57. 

(Annex, Nr 3 - 2013/COU/0232) The Council urges the Commission to take a risk-
based and proportionate approach to its verification strategy for European Statistics. 

Commission's response: 

In preparation of the next verification cycle, the Commission will review its control 
framework. In that process it will take into consideration the points raised by the 
Court. 

38 

 
SR 13/2013 EU Development Assistance to Central Asia 

58. 

(Annex,  Nr  7,  1st  indent  -  2013/COU/0233)  The  Commission  and  the  EEAS,  in 
coordination with other development partners, including the Member States, should 

-  design  future  regional  programmes  so  that  they  are  likely  to  achieve  a  genuine 
regional dimension. 

Commission's response: 

The Commission and the EEAS will implement the recommendation to the extent 
possible in Central Asia, provided that the individual countries can agree on joint 
objectives  and  programmes  (e.g.  BOMCA,  CADAP).  Regional  funds  remain  also 
useful to support multi-country activities in a more efficient way, e.g. for blending 
purposes or academic mobility. 

59. 

(Annex,  Nr  7,  2nd  indent  -  2013/COU/0234)  The  Commission  and  the  EEAS,  in 
coordination with other development partners, including the Member States, should 

- continue to concentrate EU assistance on a small number of sectors. 

Commission's response: 

The  Commission  and  the  EEAS  are  already  concentrating  assistance  for  each 
country  programme  and  the  regional  programmes  under  the  Development 
Cooperation Instrument (DCI). This is without prejudice to the specific nature of 
thematic  instruments,  which  have  been  designed  with  specific  objectives  by  the 
budgetary authority. 

60. 

(Annex,  Nr  7,  3rd  indent  -  2013/COU/0235)  The  Commission  and  the  EEAS,  in 
coordination with other development partners, including the Member States, should 

-  further  define  and  apply  robust  and  objectively  verifiable  conditions  for  budget 
support  programmes,  and  give  sufficient  attention  to  support  for  anti-corruption 
mechanisms. 

Commission's response: 

The  Commission  and  the  EEAS  are  already  applying  robust  and  objectively 
verifiable  conditions  for  all  ongoing  and  pipelined  Budget  Support  operations  as 
foreseen in the new 2012 Budget support Guidelines, while sufficient attention to 
support for anti-corruption mechanisms is given. 

61. 

(Annex,  Nr  7,  4th  indent  -  2013/COU/0236)  The  Commission  and  the  EEAS,  in 
coordination with other development partners, including the Member States, should 

- improve programme design and delivery in the light of lessons learnt and changing 
circumstances and report on results and impact in a way that allows comparison with 
plans and objectives. 

Commission's response: 

The  Commission  and  the  EEAS  take  into  account  experience  to  improve 
programme design and delivery on a continuing basis through the Quality Support 
Group  reviews  and  on  the  basis  of  the  feedback  received  from  Monitoring  and 
Evaluation results. 

39 

 
 
 
 
 
SR 15/2013 Has the Environment component of the LIFE programme been effective? 

62. 

(Annex, Nr 7 (a) - 2013/COU/0237) The Council calls upon the Commission to take 
into account the Court of Auditors' recommendations in its future management and 
implementation of the LIFE programme, and in particular to: 

a) improve the quality and transparency of the selection process. 

Commission's response: 

Opportunity  is  being  given  to  the  Commission  to  improve  the  quality  and  the 
transparency  of  the  selection  process  under  the  new  LIFE  Regulation.    The 
eligibility criteria mentioned in the first Multi Annual Work Programme (MAWP) 
foresees  specific  and  transparent  criteria  for  assessing  the  innovative  or 
demonstrative character as well as the replicability and transferability potential of 
each proposal. The content of the MAWP is binding for the forthcoming calls and 
has  been  translated  into  the  application  packages  of  the  call  as  well  as  into  the 
instructions for the external evaluators. In addition applicant are being requested 
to  provide  data  concerning  the  performance  of  their  project  in  terms  of 
contribution 
the  environment,  replicability  and 
dissemination potential as well as to continue to report their costs incurred on the 
basis of constantly updated standard templates . 

improvement  of 

the 

to 

The  completion  date  is  expected  by  June  2015  –  date  of  completion  of  the 
evaluation of the first call for proposals under the new LIFE Regulation 

63. 

(Annex, Nr 7 (b) - 2013/COU/0238) The Council calls upon the Commission to take 
into account the Court of Auditors' recommendations in its future management and 
implementation of the LIFE programme, and in particular to: 

b) provide better feedback to applicants on significant shortcomings in their project 
application  which  led  to  an  insufficient  score  and  on  the  key  project  aspects 
identified  in  the  Court's  Special  report,  such  as  dissemination,  sustainability  and 
replication,  so  as  to  contribute  to  the  enhanced  effectiveness  of  the  overall 
programme. 

Commission's response: 

The  Commission  agrees  with  the  Court  concerning  the  sometimes  insufficient 
explanations provided to applicants to justify the scores given to projects. Even if 
there is a serious time pressure to evaluate an ever-growing number of proposals 
each  year  the  Commission  is  concentrating  more  on  the  strong  points  of  each 
proposal than only on the negative aspects when providing systematic feedback to 
applicants. 

the  Court 

The  Commission  agrees  with 
that  a  critical  analysis  of 
the 
the 
disseminations,  sustainability  and  replication  measures  proposed  by 
beneficiaries should be a more visible part of all assessments, not only at the end of 
the project but all through its duration. This is particularly the case for projects in 
which  the  beneficiaries  are  private  commercial  companies,  in  which  a  good 
balance  must  be  found,  in  each  case,  between  the  legitimate  concerns  of  the 
beneficiaries (who remain, in all cases, owners of the project results) and the need 
for dissemination of results that justified the EU funding of the project. 

The  completion  date  is  expected  by  June  2015  –  date  of  completion  of  the 
evaluation of the first call for proposals under the new LIFE Regulation 

40 

 
 
 
64. 

(Annex, Nr 7 (c) - 2013/COU/0239) The Council calls upon the Commission to take 
into account the Court of Auditors' recommendations in its future management and 
implementation of the LIFE programme, and in particular to: 

c) enhance the opportunity for the applicants of eligible projects to respond. 

Commission's response: 

Opportunity for the applicants of eligible projects to respond to specific concerns 
from  the  Commission  is  being  enhanced  under  the  new  LIFE  Regulation  at  the 
following stages of the evaluation: technical selection, award phase, revision phase 
and instruction phase.  

The  completion  date  is  expected  by  June  2015  –  date  of  completion  of  the 
evaluation of the first call for proposals under the new LIFE Regulation 

41 

 
 
SR 02/2014 Are preferential trade arrangements appropriately managed? 

65. 

(Annex to doc. 13205/2/14 REV 2 UD 210 WTO 263, Nr 9 - 2013/COU/0240) The 
Council takes the view that Customs’ opinions and inputs should be duly taken into 
account by the Commission when devising and/or (re)negotiating the PTAs and that 
the  assessment  of  the  control  strategy  applied  by  national  Customs  authorities  to 
preferential  trade  arrangements  and  of  the  management  of  the  administrative 
cooperation should also take due account of the impact on Member States resources, 
in the light of their budgetary constraints. 

Commission's response: 

When  preparing  for  the  negotiation  or  renegotiation  of  a  trade  agreement  the 
Commission  duly  considers  all  options  and  inputs.  Moreover,  all  major  trade 
negotiations  for  which  the  Commission  will  adopt  a  recommendation  for  a 
negotiating directive are subject to an impact assessment. 

66. 

(Annex to doc. 13205/2/14 REV 2 UD 210 WTO 263, Nr 11 - 2013/COU/0241) The 
Council invites the Commission and the Member States to do their utmost to follow 
up  on  the  recommendations  of  the  Court  of  Auditors’  Special  Report,  while  also 
bearing in mind also the reply of the Commission annexed to the Special Report. 

Commission's response: 

The Commission would like to reaffirm its commitment to adequately address the 
Court’s  recommendations  and  that  doing  better  and  more  will  contribute  to 
successfully achieve the ambitious trade agenda. 

42 

 
SR 06/2014 Cohesion policy funds support to renewable energy generation — has it 
achieved good results? 

67. 

(Annex,  Nr  9  -  2013/COU/0242)  The  Council  invites  the  Commission  to  facilitate 
exchange of knowledge, experience and good practice among the Member States in 
that domain. 

Commission's response: 

The  Commission  has  launched  in  March  2015  the  Energy  and  Managing 
Authorities  (EMA)  Network  which  brings  together  representatives  of  national 
energy  authorities  with  representatives  of  Cohesion  Policy  Managing  Authorities 
dealing with energy. It aims to help Member States make optimal use of Cohesion 
Policy  funding  to  promote  energy  efficiency,  renewable  energy  and  smart  energy 
infrastructure, as well as energy-related research and innovation. Meeting twice a 
year,  the  network  acts  as  an  informal  platform  of  exchange  of  information, 
sharing  of  good  practices,  experiences  and  latest  developments.  Working  groups 
will also be convened to work on specific issues, where needed and relevant. 

DG  Energy,  DG  Regional  and  Urban  Policy,  and  the  Joint  Research  Centre, 
launched in May 2015 an initiative of a Smart Specialisation Platform on Energy 
hosted by JRC-IPTS in Seville. It will look particularly into energy innovation and 
the  broader  uptake  of  Cohesion  funds  for  sustainable  energy  in  the  EU  regions 
and cities. It will support interested countries and regions to (i) analyse investment 
priorities  and  needs  of  the  regions  in  the  field  of  sustainable  energy  and  smart 
specialisation,  and  (ii)  identify  good  practices  for  a  better,  coordinated  and  more 
strategic uptake of Cohesion Policy Funds. 

68. 

(Annex,  Nr  11  -  2013/COU/0243)  The  Council  invites  the  Court,  the  Commission 
and the Member States to ensure adequate collaboration in this field (collection and 
availability,  communication  and  use  of  reliable  and  updated  data  relevant  for  the 
analysis, like energy generating costs). 

Commission's response: 

Regarding energy costs, the European Commission, in response to a request from 
the  European  Council,  released  in  January  2014  a  first  Communication  with  an 
in-depth analysis of energy prices and costs in Europe. The Communication aims 
to help policy makers to better understand the background context of the evolution 
of prices and their impact on the affordability of energy for consumers and on the 
industry's competitiveness. It provides extensive data drawn from a wide range of 
sources. It also assesses trends in energy prices and energy costs and explores their 
possible drivers. Finally it presents policy actions to reduce energy costs. 

A second Communication on energy prices and costs is expected to be presented by 
the Commission in 2016. The Communication is one of the initiatives mentioned as 
part of the 15 action points included in the Framework Strategy for the creation of 
an  Energy  Union.  It  will  contribute  to  ensure  greater  transparency  in  the 
composition  of  energy  costs  and  prices  by  developing  regular  and  detailed 
monitoring  and  reporting,  including  on  impacts  of  energy  costs  and  prices  on 
competitiveness. 

DG Energy has also released a study to quantify the extent of public interventions 
in energy markets in all 28 Member States for all energy use excluding transport. 
The  study  also  gives  an  indication  of  energy  costs  and  prices,  which  is  useful  to 
provide context to the quantifications of interventions and external costs. 
43 

 
SR 07/2014 Has the ERDF successfully supported the development of business 
incubators? 

69. 

(Annex,  Nr  7  -  2013/COU/0244)  The  Council  calls  on  Member  States  and  the 
Commission  to  improve  the  programmes  and  procedures  followed  with  the  aim  to 
enhance the effectiveness of newly founded incubators. 

Commission's response: 

The Commission already provided analysis and guidance to Managing Authorities 
on  how  to  enhance  the  effectiveness  of  science  and  technology  parks  and 
incubators. The respective documents are available at: 

Guide  on  "Setting  up,  managing  and  evaluating  EU  Science  and  Technology 
Parks", EC, October 2013. 

http://ec.europa.eu/regional_policy/sources/docgener/studies/pdf/stp_report_en.pdf 

"The smart guide to innovation-based incubators", EC, October 2010. 

http://ec.europa.eu/regional_policy/sources/docoffic/2007/working/innovation_inc
ubator.pdf 

70. 

(Annex, Nr 12 - 2013/COU/0245) The Council invites the Commission to continue 
updating  the  knowledge  concerning  the  effectiveness  and  efficiency  of  business 
incubation  and  to  reinforce  its  efforts  to  support  the  community  of  business 
incubators and in particular those in receipt of EU support, for instance by organising 
the  promotion  and  dissemination  of  good  practices  and  experience  exchanges  with 
the responsible bodies in Member States. 

Commission's response: 

The Commission already provided analysis and guidance to Managing Authorities 
on  how  to  enhance  the  effectiveness  of  science  and  technology  parks  and 
incubators. The respective documents are available at: 

Guide  on  "Setting  up,  managing  and  evaluating  EU  Science  and  Technology 
Parks", EC, October 2013. 

http://ec.europa.eu/regional_policy/sources/docgener/studies/pdf/stp_report_en.pdf 

"The smart guide to innovation-based incubators", EC, October 2010. 

http://ec.europa.eu/regional_policy/sources/docoffic/2007/working/innovation_inc
ubator.pdf 

This guidance  includes good practice examples. For exchange of  experience and 
policy learning,  including the  promotion and dissemination of  good practices the 
INTERREG  family  of  programmes provides  ample  opportunities.  Innovation  is  a 
key priority in the new generation of cross-border, transnational and interregional 
programmes  which  are  managed  in  a  decentralised  way  by  Member  States  and 
regions  (shared  management).  Interested  and  eligible  stakeholders  such  as 
Member States, regions and their incubators are free to submit relevant projects to 
their own programme bodies. For more information: 

http://ec.europa.eu/regional_policy/en/policy/cooperation/european-territorial 

The  new  Enterprise  Europe  Network  supported  under  the  COSME  programme 
(DG  GROW)  provides  advice  and  support  to  SMEs  for  doing  cross-border 
business.  This  network  also  has  a  new  task  of  helping  transfer  European  best 
practice  to  the  regions  (which  may  also  include  transferring  good  practice  to 

44 

 
incubators).  DG  GROW  also  continues  to  participate  in  the  Business  and 
Innovation  Centres'  Quality  Mark  Committee,  contributing  to  the  quality 
management  of  Business  and  Innovation  Centres  which  belong  to  European 
Business Network. 

45 

 
SR 08/2014 Has the Commission effectively managed the integration of coupled support 
into the single payment scheme? 

71. 

(Annex, Nr 5 - 2013/COU/0246) The Council invites the Commission to continue its 
efforts to provide Member States with clear guidelines contributing to clear rules and 
a reliable administration of all new direct payments schemes. 

Commission's response: 

The Commission services are available for consultations and assistance if there is 
a need and upon request from the Member State interested. 

By 1 August 2014 and 31 January 2015, Member States had to notify most of their 
decisions  regarding  the  implementation  of  the  new  system  of  direct  support 
applicable from 2015. The Commission services had numerous exchanges with all 
Member  States  to  ensure  completeness  of  the  notifications  and  highlight,  where 
possible,  possible  inconsistencies  with  the  regulatory  framework.  Member  States 
remain ultimately responsible of the decisions taken in view of the fact that, except 
for the Member States deciding to allocate more than a certain percentage of their 
financial envelope to the voluntary coupled support, the Commission has no power 
to approve the decisions taken by the Member States. 

the  Commission  services  are  proactively  supporting 

More  generally, 
the 
implementation  of  the  reformed  CAP,  in  particular  for  direct  payments,  through 
e.g.  guidance  documents,  numerous  and  regular  exchanges  of  correspondence 
with  national  authorities,  experts  group  meetings,  bilateral  meetings  and 
missions/visits  to  MS  to  discuss  implementation  issues.  Resources  have  been 
dedicated  in  particular  to  implementation  support  and  assistance  to  all  Member 
States. 

Support  to  Member  States  is  an  ongoing  process  and  there  is  no  clear  cut  date 
when such support would stop being provided. However, it is expected that by the 
end of 2015 any possible outstanding issues of general interest would be clarified 
and for the period after 2015 guidance would be provided on some more particular 
cases (specific situations faced by national administrations). 

46 

 
SR 09/2014 Is the EU investment and promotion support to the wine sector well 
managed and are its results on the competitiveness of EU wines demonstrated? 

72. 

(Annex, Nr 4 - 2013/COU/0247) The Council invites the Commission to ensure that 
the  combined  effect  of  all  common  agricultural  policy  (CAP)  instruments  is 
measured  and  assessed  in  relation  to  the  common  objectives  of  the  CAP  and  to 
improve  the  quality  of  checks,  in  particular  through  a  possible  adaptation  of  the 
guidelines and rules as soon as possible. 

Commission's response: 

In  accordance  with  Article  110  of  the  horizontal  Regulation  1306/2013,  the 
Commission  will  ensure  that  the  combined  impact  of  all  CAP  instruments  is 
measured  and  assessed  in  relation  to  the  common  objectives  of  the  CAP.  This 
includes  an  evaluation  of  the  efficiency  of  the  CAP  instruments  by  2018  (first 
results). In this context, the Commission will examine in 2018 how to include an 
assessment of the use of the budget allocated to the wine support scheme and of its 
impacts. It should be noted that information on the impact of a policy can only be 
obtained after a sufficiently long period of time has elapsed. 

Concerning the quality of checks, the provisions of Commission Regulation (EC) 
No  555/2008  have  been  amended  to  improve  clarity  and  the  guidelines  produced 
on the promotion, restructuring and investments measure have further detailed the 
checks  that  Member  States  are  expected  to  implement.  Furthermore,  in  the 
framework of  the  recast  of  Regulation 555/2008 a thorough work is  taking place 
based, among others, on the principles of clarification of rules and the reduction of 
error  rate,  so  that  the  new  Implementing  and  Delegated  Act  concerning  the 
National  Support  Programmes  in  the  wine  sector  will  provide  more  clear  and 
precise rules on controls. The entry into force of these Regulations is scheduled for 
mid-2016 at the latest. If necessary, the guidelines that will be produced after the 
publication of those Regulations will further detail rules on controls. 

47 

 
SR 10/2014 The effectiveness of European Fisheries Fund support for aquaculture 

73. 

(Annex,  Nr  10  -  2013/COU/0248)  The  Council  calls  for,  where  appropriate, 
continued efforts at Union and national levels to overcome other significant barriers 
to  aquaculture  development,  such  as  those  related  to  the  management  of  predator 
populations. 

Commission's response: 

Under  the  voluntary  process  for  cooperation  for  the  promotion  of  sustainable 
aquaculture  set  up  with  the  new  CFP,  the  Commission  will  take  stock  of  the 
multiannual  national  plans  submitted  by  the  Member  States  and  closely  monitor 
their implementation. Efforts will continue to analyse existing barriers that prevent 
aquaculture growth. At EU level, in addition to Commission guidance documents 
aiming at clarifying the key concepts of some of the main environmental pieces of 
legislation having an impact on aquaculture (Birds and Habitats Directives, Water 
Framework  Directive  and  Marine  Strategy  Framework  Directive),  the  recent 
revision  of  the  Environmental  Impact  Assessment  Directive  explicitly  allows  for 
streamlined  environmental  assessment  procedures  and  time  limits  to  reduce 
burden  and  improve  effectiveness.  The  Commission  has  identified  the  need  for 
reducing  red  tape  amongst  the  main  objectives  to  be  pursued  in  the  Strategic 
Guidelines  for  aquaculture  (COM(2013)  229).  The  Commission  will  organise  a 
first  best  practice  exchange  seminar  on 
to  administrative 
simplification during the 4th quarter of 2015.  

topics  related 

The Commission's objective is to ensure that funds are well spent, producing high 
added value and that spending programmes, including the European Maritime and 
Fisheries  Fund  (EMFF),  are  simplified  in  order  to  reduce  the  administrative 
burden  and  costs  for  beneficiaries  and  for  all  actors  involved.  Under  shared 
management, implementation tasks are delegated to Member States.   

to  overcome  other  significant  barriers 

Regarding  efforts 
to  aquaculture 
development, such as those related to the management of predator populations, the 
adoption  of  multiannual  plans  by  the  Member  States  will  facilitate  project 
submission for aquaculture development by setting up a supportive administrative 
framework within which to conceive, and implement projects. Member States will 
be able to provide support to project promoters by informing potential beneficiaries 
about  funding  opportunities,  and  by  supporting  advisory  services  to  aquaculture 
operators  to  comply  with  relevant  legislative  requirements,  and  if  appropriate  to 
elaborate their project taking advantage of all the funding opportunities available 
to  them  under  the  relevant  section  of  the  EMFF  (e.g.  identification  of  suitable 
aquaculture sites, aquaculture stock insurance, etc.). 

48 

 
SR 12/2014 Is the ERDF effective in funding projects that directly promote biodiversity 
under the EU biodiversity strategy to 2020? 

74. 

(Annex, Nr 13 - 2013/COU/0249) The Council invites the Commission to take into 
account  the  relevant  Partnership  Agreement  and  the  specific  development  needs 
identified  in  the  operational  programmes  as  well  as  the  starting  positions  of  the 
Member  States  and  to  refrain  from  imposing  further  obligations  beyond  legal 
requirements and/or unnecessary administrative burden on Member States. 

Commission's response: 

The  specific  development  needs  as  identified  by  the  Member  States  are  duly 
reflected  in  the  operational  programmes,  which  together  with  the  overall 
provisions of the regulations form the framework that conditions implementation. 
The Commission is actively engaged in an ongoing process of simplification which 
aims  to  ease  the  administrative  burden  on  the  Managing  Authorities  and 
beneficiaries without jeopardising the quest for measurable results. 

75. 

(Annex,  Nr  13  -  2013/COU/0250)  The  Council  invites  the  Commission  and  the 
Member  States  to  monitor  the  actual  implementation  of  operational  programmes  in 
view of an early and proactive identification of difficulties. 

Commission's response: 

Through its participation in monitoring committees and its analysis of the annual 
implementation reports the Commission will closely follow and assess the progress 
of  the  operational  programmes,  including  within  the  area  of  biodiversity.  In  the 
period  2014-20  detailed  performance  indicators  will  help  the  Commission  to 
closely monitor if the programmes are on track. In case of underperformance, the 
Commission will proactively take actions together with the managing authority in 
charge. 

49