COMMISSION STAFF WORKING DOCUMENT Accompanying the document REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND TO THE COUNCIL on the follow-up to 2014 discharge - Replies to requests from the Council
Date: 2016-10-17
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, 17.10.2016  SWD(2016) 339 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 2014 discharge - Replies to requests from the Council {COM(2016) 674 final} {SWD(2016) 338 final}  
 
 
Table of Contents 

INTRODUCTION ...................................................................................................................... 3 

Council Recommendation on the 2014 discharge ...................................................................... 4 

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

Chapter 1 - The statement of assurance and supporting information ............................... 4 

Chapter 2 - Budgetary and financial management ............................................................ 8 

Chapter 3 - Getting Results from the EU budget ............................................................ 10 

Chapter 4 - Revenue ....................................................................................................... 11 

Chapter 5 - Competitiveness for growth and jobs .......................................................... 11 

Chapter 6 - Economic, social and territorial cohesion .................................................... 13 

Chapter 7 - Natural Resources ........................................................................................ 19 

Eighth, ninth, tenth and eleventh European Development Funds ................................... 22 

SR 13/2014 EU support for rehabilitation following the earthquake in Haiti ................ 26 

SR 16/2014 Effectiveness of blending regional investment facility grants with financial 
institution loans to support EU external policies .............................................. 27 

SR 18/2014 EuropeAid’s evaluation and results oriented monitoring ........................... 28 

SR 19/2014 EU Pre-accession Assistance to Serbia ....................................................... 29 

SR 20/2014 Has ERDF support to SMEs in the area of e-commerce been effective? ... 30 

SR 21/2014 EU-funded airport infrastructures: poor value for money .......................... 31 

SR 2/2015 EU-funding of Urban Waste Water Treatment plants in the Danube river 
basin: further efforts needed in helping Member States to achieve EU waste 
water policy objectives ..................................................................................... 32 

SR 5/2015 Are financial instruments a successful and promising tool in the rural 

development area? ............................................................................................ 33 

SR 8/2015 Is EU financial support adequately addressing the needs of micro-

entrepreneurs? ................................................................................................... 34 

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INTRODUCTION 

This Commission Staff Working Document completes the Report from the Commission to the 
European Parliament and the Council on the Follow-up to the 2014 discharge. It presents in 
detail  the  answers  to  57  specific  requests  made  by  the  Council  in  the  comments 
accompanying its Recommendation on the 2014 Discharge. 

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COUNCIL RECOMMENDATION ON THE 2014 DISCHARGE 

Introduction 

1. 

(Nr 3 - 2014/COU/0181) The Council welcomes the findings of the Court and invites 
the Commission to take them into consideration, where appropriate and possible also 
in  the  ongoing  work  on  the  preparation  of  the  mid-term  review  of  the  multiannual 
financial  framework  (MFF),  in  line  with  Article  2  of  Council  Regulation  No 
1311/20132, as well as in the preparation of the next MFF. 

Commission's response: 

The Commission welcomes the Court's findings and recommendations, which was 
as  far  as  possible  taken  into  consideration  in  the  preparation  of  the  mid-term 
review of the Multiannual Financial Framework (MFF). 

The mid-term review adopted on 14 September 2016 examines the functioning of 
the current MFF, and includes proposals to improve the delivery on EU priorities, 
including on its ability to respond to the major challenges facing the EU. 

The  review  also  deals  with  the  qualitative  aspects:  In  2016,  the  Commission 
continues to work in all areas covered by its strategy for Budget focused on results 
(BFOR).  The  BFOR  aims  at  making  the  budget  more  results-  and  performance-
oriented  by,  inter  alia,  strengthening  its  alignment  on  our  policy  priorities  and 
European added value, increasing its leverage effect, improving our indicators and 
the  way  we  report  and  communicate  on  the  budget's  impact,  simplifying  delivery 
and continuing our efforts to reduce further the level of errors while ensuring and 
enhancing the cost-effectiveness of controls. 

Chapter 1 - The statement of assurance and supporting information 

2. 

(Nr  4,  §2  -  2014/COU/0182)  The  Council  calls  upon  the  Commission  to  take  the 
appropriate  actions  in  line  with  Article  32(5)  of  the  Financial  Regulation  and  to 
provide the budgetary authority, in 2016, with a  comprehensive report on the areas 
where the level of error identified is persistently high and their root causes. 

More  specifically  the  Council  requests  the  Commission  to  present in  this  context a 
timely overview, where appropriate on an aggregated level, based on systematic data 
that  is  already  available  such  as  control  reports  by  audit  authorities,  the 
Commission's own controls, and audit results of the Court. 

Commission's response: 

The Commission will provide the budgetary authority, in 2016, with the results of 
its analyses of the areas where the level of error identified is persistently high and 
the root causes. 

3. 

(Nr  5,  §1  -  2014/COU/0183)  The  Council  invites  the  Commission  and  Member 
States  to  take  full  advantage  of  the  existing  options  when  implementing  the 
programmes under the new legislative framework  for the period  2014-2020, by the 
appropriate use of the variety of simplification measures available. 

4 

 
 
 
 
 
 
 
 
Commission's response: 

The  Commission  notes  that  the  Council  Recommendation  is  partly  referred  to 
Member  States,  who  are  responsible  for  the  implementation  of  about  80%  of  the 
Union  budget.  The  Commission  accepts  the  Recommendation  insofar  as  it  is 
directly  responsible  for  the  implementation  of  the  Union  budget  under  the 
programming period 2014-2020, and will make its best efforts to maximise the use 
of  simplification  tools.  The  Commission  will  also  monitor  the  uptake  of 
simplification  options  by  both  the  Commission  and  Member  States  through  an 
Administrative Simplification Scoreboard, latest published on 14 September 2016. 

4. 

(Nr  5,  §2  -  2014/COU/0184)  The  Council  calls  on  the  Commission  to  continue  to 
apply both representative sampling and risk-based checks. 

Commission's response: 

The Financial Regulation requires that all financial operations should be subject 
to control before payment, but that the extent in terms of frequency and intensity of 
these shall be determined based on the risks and the costs involved. Any controls 
after payment (ex-post, corrective controls) may be carried out on a sample basis 
according to risk (Article 66 (5) and (6) FR). 

All  Commission  departments  have been  invited  to  review  their  control  systems  in 
order  to  ensure  that  they  are  risk-differentiated,  taking  into  account  their  cost-
effectiveness  and  having  due  regard  to  the  management  environment  and  the 
nature of the actions financed. By the end of 2015, 25 departments had done so; 
half had taken measures to improve cost-efficiency while the others concluded that 
no  changes  were  needed.  The  remaining  departments  are  expected  to  carry  out 
their review in 2016. 

5. 

(Nr 6, §1 - 2014/COU/0185) The Council calls upon the Commission and Member 
States  to  undertake  further  actions  aiming  at  strengthening  the  quality  of 
management  and  control  systems  and  making  them  more  efficient,  with  special 
emphasis on first level checks. 

Commission's response: 

The Commission has taken and is continuously taking the recommended actions. 

Management  and  control  systems  can  only  work  if  Member  States  do  their  work 
properly. Therefore the Commission has a role to supervise the good functioning 
of  Member  States  systems.  In  that  context,  DG  Regional  and  Urban  policy  has 
carried  out  between  2010  and  end  2015  a  total  of  143  targeted  audits  on 
management  verifications of  88 high risk programmes in 19 Member  States; DG 
Employment, Inclusion and Social Affairs carried out between 2013 and 2015 26 
audit  missions  on  the  specific  issue  of  management  verifications  in  15  Member 
States. These audits include visits at the level of the beneficiaries, on the spot (62 
operations audited on the spot in 2014 under such audits). For 66% of these audits 

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the  Commission  identified  significant  deficiencies  in  the  first  level  controls.  In 
58% of the audits the deficiencies concerned public procurement. DG Agriculture 
and Rural Development in financial years 2013 – 2015 carried out 402 conformity 
audit missions, which covered all the Member States and all areas of the Common 
Agricultural Policy. 

When  the  Commission  identifies  deficiencies  in  the  management  verifications  it 
stops  the  payments.  Interruptions  and  suspensions  are  incentives  for  Member 
States to have good systems in place and to timely take remedial actions, including 
financial  corrections.  The  Commission  uses  these  legal  tools  consistently  and  as 
soon  as  serious  deficiencies  in  management  verifications  are  identified.  In  case 
identified deficiencies have not been mitigated at the end of the reporting year, the 
Commission issues a reservation for the concerned operational programme in the 
AAR. The implementation of preventive and corrective measures, such as remedial 
actions  plans,  interruptions,  suspensions  and  financial  corrections,  has  led  to 
improvements in the systems of programmes put under reservation. EU payments 
are  resumed  only  where  there  is  sufficient  and  reliable  evidence  that  weaknesses 
have been remedied. 

The  Commission  carries  out  a  continuous  supervision  of  high  risk  programmes 
after  the  implementation  of  the  remedial  actions.  This  supervision  is  meant  to 
ensure that the management and control systems of programmes do not deteriorate 
again,  due  for  example  to  staff  turnover  and  staff  restrictions  in  public 
administrations. 

On the  preventive  side, the  Commission  provides  the  programme  authorities with 
the  necessary  guidance  (updated  guidance  for  2014-2020  provided  in  September 
2015)  and  targeted  trainings  for  each  of  the  implementation  phases  of  the 
programmes,  and  on  the  verification  of  public  procurement  or  State  aid  issues. 
Commission  checklists  are  shared  with  managing  and  audit  authorities.  Sharing 
good practices between programmes is promoted. The new Peer 2 Peer instrument 
available  to  managing  authorities  for  exchange  of  expertise  will  further  help  on 
this. 

Reinforced procedures are foreseen in the regulatory framework for the 2014-2020 
programming  period.  Management  verifications  and  controls  (including  on-the-
spot  checks)  will  have  to  be  carried  out  before  the  annual  certification  to  the 
Commission of programme accounts and submission of management declarations 
and the annual summary of controls and audits by the managing authorities. Audit 
authorities will provide an audit opinion and a control report, which will include 
the  residual  level  of  error  after  correction.  The  Commission  may  impose  net 
financial  corrections  to  the  programme  if  serious  deficiencies  in  management 
verifications  remain  undetected  or  uncorrected  by  the  Member  State  before 
submission  of  the  accounts.  The  Commission  considers  that  these  reinforced 
control procedures will result in lasting reductions of the error rate. 

The  Commission  has  simplified  the  rules  for  the  2014-2020  period.  The 
Commission  has  reviewed  the  public  procurement  rules  and  has  issued  new  and 
clearer rules for State aid.  Member States are required to take up simplifications 
offered  for  the  new  programmes:  i)  avoiding  'gold  plating'  (adding  national 
complexity in the  eligibility rules); ii) ensuring efficient  –  not  necessarily more  – 

6 

 
 
controls through continuous training; iii) ensuring that expertise is retained in the 
administration, avoiding unnecessary staff turnover. 

All these measures have the potential to enhance the quality and reliability of first-
level checks. 

6. 

(Nr  6,  §1  -  2014/COU/0186)  Preventive  measures  by  the  Commission,  such  as 
interruption  and  suspension  of  payments  should  be  applied  strictly  in  line  with  the 
relevant rules. 

Commission's response: 

The Commission has continued to apply strictly interruptions and suspensions in 
order to safeguard the EU financial interest. 

Under the new Common Agricultural Policy (CAP) Horizontal Regulation, a new 
legal framework for interruptions and suspensions of CAP funds entered into force 
in  2014,  which  has  strengthened  the  Commission’s  powers  to  suspend  EU 
financing  in  cases  where  risks  of  irregular  payments  have  been  identified.  For 
EAFRD,  the  Regulation  1303/2013  also  provides  for  the  interruption  of  interim 
payments by the Director-General as an additional, quick preventive measure. 

In the area of Cohesion, under Regulation 1303/2013: payment deadlines can be 
interrupted for a maximum period of six months by the Director-General and  all 
or  part  of  an  interim  payment  to  a  Member  State  can  be  suspended  by  the  
Commission.  Interruptions  and  suspensions  are  only  terminated  on  the  basis  of 
reasonable assurance on the implementation of an action plan including corrective 
measures and/or after financial corrections have been implemented. 

The  shared  management  DGs  report  on  the  implementation  of  the  interruptions 
and suspension in the respective AAR each year, as required by Article 59(6) of the 
Financial  Regulation.  An  overview  and  further  details  on  the  suspensions  and 
interruptions can also be found in the annual Commission Communication on the 
protection of the EU budget. 

7. 

(Nr  7,  §1  -  2014/COU/0187)  The  Council  calls  upon  the  Commission  to  continue, 
where  appropriate,  the  implementation  of  all  available  corrective  measures,  whilst 
acknowledging the multiannual nature of EU funding and of the corrective capacity 
of the Commission. 

Commission's response: 

to  apply  financial  corrections  and  recoveries 
The  Commission  continues 
rigorously.  In  2015,  the  total  financial  corrections  and  recoveries  confirmed 
amounted to EUR 3 403 million (2014: EUR 4 728 million). This amount contains 
all corrections and recoveries confirmed during 2015 regardless of the year during 
which the initial expenditure had been made. Financial corrections and recoveries 
are confirmed when they have been either agreed by the Member State concerned 
or  adopted  by  a  Commission  decision.  More  details  on  these  figures  and  on  the 
preventive and corrective mechanisms can be found in the annual Communication 
on the protection of the EU budget 2015(COM(2016) 486 final). 

7 

 
 
 
 
In its 2015 Annual Management and Performance Report of the EU Budget, the 
Commission has assessed the  performance of  its multi-annual  control systems  by 
providing best and conservative estimates of the overall amount at risk at payment, 
the expected future corrections and the resulting amount at risk at closure, i.e. the 
level  of  error  after  all  corrective  measures  will  have  been  implemented  at  the 
closure of the programmes. The results of this estimation provide evidence that the 
multi-annual  corrective  mechanisms  will  adequately  protect  the  EU  budget  from 
expenditure  in  breach  of  law.  More  details  can  be  found  in  the  Commission 
Annual Management and Performance Report for the 2015 EU Budget. 

8. 

(Nr 8, §2 - 2014/COU/0188) The Council calls on the Commission to ensure that its 
information  on  financial  instruments  under  shared  management  is  adequate  and 
transparent. 

Commission's response: 

The Commission has taken the recommended action. 

For  the  2014-2020  programming  period  requirements  on  reporting  on  financial 
instruments  are  provided  in  Article  46  CPR,  and  Annex  I  of  the  Commission 
Implementing  Regulation  821/2014.  The  latter  sets  out  a  model  for  reporting  on 
financial  instruments.  In  section  VIII  of  the  reporting  model  the  Member  States 
have  to  provide  information  on  the  amount  of  other  contributions,  outside  ESI 
Funds  raised  by  financial 
including  public  and/or  private 
contributions, both committed in the  funding agreements  and paid  at  the  level of 
final recipients. 

instruments, 

See also reply to 2014/COU/0203. 

Chapter 2 - Budgetary and financial management 

9. 

(Nr  2,  §2  -  2014/COU/0189)  The  Council  calls  on  the  Commission  to  continue 
monitoring  the  evolution  of  the  amounts  of  outstanding  commitments,  by  heading 
and  by  programme  on  a  regular  basis,  and  to  settle  or  decommit  them  in  a  timely 
manner and in line with the relevant rules. 

Commission's response: 

The evolution of the RAL is reported on a weekly base in the weekly report sent to 
the Council and the European Parliament which gives the current RAL for each 
budget line. The RAL is further reported in working document V associated with 
the  draft  budget  and  in  report  on  budgetary  and  financial  management. 
Decommitting  is  an  action  where  the  Commission  cancels  its  commitment  to  pay 
for some action in the future and is done in accordance with the relevant rules and 
regulations. 

10. 

(Nr 3 - 2014/COU/0190) The Council calls upon the Commission to consider in its 
budgetary and financial management the capacity constraints in some Member States 
in order to avoid the underutilisation of funds, while acknowledging the actions taken 

8 

 
 
 
 
 
so  far,  such  as  the  set  up  of  the  Task  Force  for  Better  Implementation,  which  has 
already generated improvements. 

Commission's response: 

The Commission is taking the recommended actions and has taken the following 
measures: 

— the temporary 10 % top-up of the co-financing rate for programme countries, 

— a specific support for the authorities of the Member States concerned, 

—  revision  of  the  Closure  Guidelines  to  ensure  the  proper  use  of  the  flexibility 
arrangements available to Member States (in particular the use of phased projects 
and Financial Engineering Instruments). 

In  addition  DG  Regional  and  Urban  Policy  established  in  2013  a  Competence 
Centre  ‘Administrative  Capacity  Building’,  responsible  for  defining  and 
implementing 
targeted  actions  addressing  administrative  bottlenecks  and 
weaknesses hindering effective and efficient use of ESI Funds in MS and regions. 
The Commission's administrative capacity building initiatives (public procurement 
action plan, state aid  action plan) and assistance  already adopted  will need to  be 
fully  exploited,  including  the  TAIEX  REGIO  Peer  to  Peer  initiative,  the 
Competency Gap analysis framework and the Integrity Pacts. 

The  intense  work  undertaken  in  the  framework  of  the  Task  Force  for  Better 
Implementation over 2015 has brought results. It pushed authorities to accelerate 
implementation and make full use of available flexibilities and manage actively the 
programmes including close monitoring. The experience sharing the Commission 
ensured was highly exploited by the Member States. In terms of decommitment at 
closure  the  overall  figure  for  the  8  countries  covered  is  expected  not  to  exceed 
significantly EUR 5 billion while at the  end of 2014this figure was considered to 
reach easily the aggregate level of EUR 10 billion. 

For 2014-2020, all national authorities (in particular those having participated in 
the work under the Task Force) are strongly encouraged to kick-start programme 
implementation. Efficient national mechanisms will need to be in place to support 
beneficiaries in implementing the funds and undertake regularly capacity building 
actions both for the beneficiaries and the authorities administering the funds. To 
this end a number of measures have been included in the programmes both under 
technical  assistance  financed  measures  and  under  the  Thematic  Objective  11 
aiming at enhancing the institutional capacity of public authorities. 

11. 

(Nr  4,  §2  -  2014/COU/0191)  The  Council  calls  on  the  Commission  to  prepare  and 
publish  annually  a  long  term  forecast  covering  budgetary  ceilings,  estimated 
payments  obligations  and  needs  until  the  end  of  the  current  MFF,  capacity 
constraints and potential decommitments. 

9 

 
 
 
 
Commission's response: 

In  its  communication  on  the  mid-term  review  of  the  MFF,  the  Commission  has 
presented  a  payment  forecast  assessing  the  sustainability  of  the  current  ceilings 
and including the estimate of de-commitments and the evolution of RAL until the 
end of the current MFF. 

The Commission will then continuously monitor the implementation and update its 
forecast accordingly in the following years. In 2017, the Commission shall update 
the  forecast  for  payment  appropriations  after  2020  (according  to  point  9  of  the 
Inter-institutional Agreement on budgetary discipline, on cooperation in budgetary 
matters and on sound financial management). 

12. 

(Nr  4,  §3  -  2014/COU/0192)  Moreover,  the  Council  stresses  its  request  to  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. 

In  this  context,  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: 

Report on the needs of payment appropriations is done in the report called "active 
monitoring and forecast of  budget implementation" (AMFBI)  which is presented 
to the Council and the Parliament. Availability of fund is transmitted every week in 
the  weekly  report.  When  the  Commission  proposes  modification  of  commitments 
(as  it  has  been  the  case  for  the  migration  in  2015),  it  presents  the  estimates 
schedule of payments related to these actions. It is also the case when it requests 
the mobilisation of the flexibility instrument. 

Chapter 3 - Getting Results from the EU budget 

13. 

(§7 - 2014/COU/0193) The Council will engage constructively in discussions on how 
to improve the performance framework of the EU budget and to ensure that the EU 
budget delivers more and better results, where appropriate, in view of the MFF mid-
term  review  and  of  the  next  MFF.  It  invites  the  Court  to  provide  its  input  for  this 
review in a timely manner and calls upon the Commission and Member States to take 
advantage  of  this  opportunity  to  analyse  possibilities  for  reinforcing  a  results-
oriented approach within the EU. 

Commission's response: 

This  recommendation  is  addressed  to  the  Court,  the  Member  States  and  the 
Commission.  Therefore, 
this 
recommendation. As regards the request to the Commission to use the opportunity 
of  the  MFF  review  to  analyse  possibilities  for  reinforcing  a  results-oriented 
approach  within  the  EU,  it  refers  to  its  reply  provided  to  recommendation 
2014/COU/0181. 

the  Commission  can  only  partially  accept 

10 

 
 
 
 
 
 
Chapter 4 - Revenue 

14. 

(§3  -  2014/COU/0194)  The  Council  also  calls  upon  the  Commission  and,  where 
appropriate,  Member  States  to  increase  the  predictability  and  transparency  by 
improving the comparability of data between Member States and by providing early 
information on upcoming revisions and their financial impact. 

Commission's response: 

In April 2016 the Commission laid down the principles of the forthcoming 2016-19 
verification round of GNI with the aim of improving the "reliability, comparability 
and  exhaustiveness"  of  GNI,  as  required  in  the  GNI  Regulation  (Council 
Regulation  No.  1287/2003).  Each  year,  Member  States  are  reminded  of  the 
accepted guidelines on communication of major revisions of national accounts and 
then  requested  to  signal  forthcoming  revisions  to  their  data  three  months  before 
the deadline for data transmission. 

Chapter 5 - Competitiveness for growth and jobs 

15. 

(§2  -  2014/COU/0195)  The  Council  calls  upon  the  Commission  to  strengthen  its 
efforts  to  analyse  and  address  the  causes  of  persistently  high  error  levels  with  a 
particular focus on the programmes that are subject to such error levels. 

Commission's response: 

The  Commission  is  taken  appropriate  actions  and  will  provide  the  budgetary 
authority  with  the  result  of  its  analyses  of  the  areas  where  the  level  of  error 
identified is persistently high and the root causes. 

16. 

(Nr 1, §2 - 2014/COU/0196) The Council fully supports the Court's recommendation 
that  the  Commission,  other  authorities  and  contracted  auditors  should  use  all  the 
relevant  information  to  prevent,  detect  and  correct  errors  before  the  reimbursement 
of cost claims. 

Commission's response: 

The Commission has already addressed this recommendation as follows: 

First, the Commission has sent a letter to all beneficiaries of the Horizon 2020 and 
FP7 asking them to pay especial attention  – and furthermore, to implement  – all 
the  observations  that  stem  from  their  certifying  auditors  or  from  the  Court  of 
Auditors and Commission auditors. 

Second, the Commission continues providing advice and information related to the 
legal  aspects  of  the  Framework  programmes  to  all  the  beneficiaries  –  and  their 
certifying  auditors  -  that  are  addressing  specific  questions  associated  with  their 
particular projects they are handling. 

The  Commission  has  organized  a  series  of  meetings  targeting  beneficiaries  and 
independent  certifying  auditors  (>300)  to  raise  awareness  of  the  most  common 
errors.  In  addition,  feedback  has  been  provided  to  certifying  auditors  who  have 

11 

 
 
 
 
 
 
 
made errors, and a more didactic template for audit certificates has been provided 
in Horizon 2020. 

The Commission will continue to provide guidance to these auditors, and to try to 
improve the overall process. 

In  addition,  the  Commission  is  currently  providing  ad-hoc  training  to  their  own 
staff on the most relevant findings reported by the Court of Auditors. 

17. 

(Nr 1, §4 - 2014/COU/0197) The Council, therefore, calls upon the Commission to 
provide  adequate  support  to  such  beneficiaries  and  bodies  through  guidance,  in 
particular  through  the  Commission's  Common  Support  Centre,  which  has  already 
yielded highly appreciated positive results and which the Council supports fully. 

Commission's response: 

The principal source of recurrent errors is that beneficiaries include ineligible or 
unsubstantiated  costs  in  their  cost  statements.  This  is  “exacerbated”  by  the 
complexity of the FP7 rules for calculating eligible costs. It cannot be "corrected", 
only mitigated. That is why radical simplification has been introduced for Horizon 
2020. 

In its opinion on the  Horizon 2020 rules (Opinion 6/2012), the  Court  considered 
that "the radically simplified cost-funding model will improve the reliability of the 
model, decrease the risk of irregularities in beneficiaries’ cost claims [and] make 
project accounting less complex". 

Therefore  Horizon  2020  includes  a  number  of  radical  simplifications  that  would 
reduce  the  inherent  risk  of  error.  For  instance  the  simplification  in  productive 
hours, a common source of error and of great complexity in FP7, should eliminate 
such misunderstandings. 

Comprehensive  guidance  and  clearer  templates  have  been,  and  are  also  being 
prepared.  They  are  published  on  the  Participant  Portal.  The  Commission  will 
continue  to  provide  guidance  to  the  auditors  and  to  try  to  improve  the  overall 
process. 

As  far  as  FP7  is  concerned  the  Commission  has  been  running  a  communication 
campaign  to  remind  beneficiaries  and  their  certifying  auditors  of  the  eligibility 
rules.  In  addition  the  Commission  has  published  a  note  addressing  the  most 
frequently recurring errors including some explanations and how to remedy them. 
Participants may also address questions to a help desk. 

The  Guide  to  Financial  Issues  for  FP7,  available  to  all  beneficiaries  on  the 
Participant Portal has been improved throughout the program. 

18. 

(Nr  3,  §1  -  2014/COU/0198)  The  Council  notes  the  Court's  recommendation  and 
calls  upon  the  Commission  to  follow  a  consistent  approach  on  the  calculation  of 
weighted average error rates and the resulting assessment of the amounts at risk. 

12 

 
 
 
 
Commission's response: 

The  Commission  has  further  clarified  the  key  concepts  and  definitions  for  better 
estimating error rates, amounts at risk and corrections in the 2015 AAR guidance. 
The  various  concepts  and  indicators  have  been  defined  in  a  sufficiently  flexible 
manner to enable taking account of the specific circumstances of the various DGs 
and yet, ensure a sufficient degree of consistency to consolidate data. The Central 
Services have reviewed the draft 2015 AARs of the DGs, in particular as regards 
the  conservativeness  of  the  estimations  of  the  error  rates,  amounts  at  risks  and 
future corrections, and provided comments where needed to ensure alignment with 
the AAR guidance and to avoid any underestimation of the amount at risk or the 
overestimation of the corrective capacity. 

As  regards  the  AAR  2014  exercise  and  the  specific  case  concerning  the  Trans-
European Networks-Transport programme and the EEPR, reference is made to the 
written replies by Commissioner Carlos Moedas, responsible for Research, Science 
and  Innovation  to  the  written  question  from  the  CONT  Committee  (Nr  38),  
available on the EP website: 

https://polcms.secure.europarl.europa.eu/cmsdata/upload/5f355fb3-580c-43c5-
bb70-1087342afad3/Updated_2015-12-02%20Questionnaire%20Moedas%20-
%20CONT%20-%20CLEAN.pdf) 

Chapter 6 - Economic, social and territorial cohesion 

19. 

(§3  -  2014/COU/0199)  The Council invites  the Commission  to  continue to  provide 
appropriate  and  consistent  training  and  guidance  to  assist  in  the  implementation  of 
new programmes. 

Commission's response: 

The Commission has taken and is continuously taking the recommended actions. 

DG Regional and Urban Policy together with DG Employment, Social Affairs and 
Inclusion  will  continue  to  support  Member  States'  administrations  in  managing 
EU funds in particular through the following actions: 

- in the areas of public procurement and state aid, actions plans will continue to be 
implemented.  Key  actions  under  the  public  procurement  action  plan  will  include 
monitoring  of  the  ex-ante  conditionality  action  plans  on  public  procurement; 
cooperation  with  external  experts  like  OECD  on  pilot  projects  in  SK  and  BG; 
promotion  of  transparency  and  open  data  on  public  procurement.  In  addition, 
integrity  Pacts  will  be  set  up  as  from  2016  in  11  Member  States  to  help 
governments,  businesses  and  civil  society  to  make  procurement  procedures  more 
transparent and efficient and reduce  the risk of  fraud and corruption. Under  the 
state aid action plan actions will focus on monitoring of the ex-ante conditionality 
action plans; organisation of expert seminars and webinars in specific sectors; and 
further knowledge development on administrative capacity. 

-  Actions  to  support  further  professionalization  of  the  management  of  the  funds 
include a study on an "EU Competency Framework for efficient management and 
implementation of ERDF/ Cohesion Fund" which includes a self-assessment tool 

13 

 
 
 
 
to  help  Member  States'  administrations  to  identify  competency  gaps  among  their 
staff  and  define  training  and  recruitment  needs.  Implementation  of  a  strategic 
training  programme  on  the  new  regulatory  requirements  for  the  2014-2020 
programming period will continue. Exchanges of expertise in the framework of the 
TAIEX-REGIO PEER2PEER instrument will be subject to an evaluation in 2016, 
which will enable to decide on the scope of its continuation. 

-  A  training  programme  for  managing,  certifying  and  audit  authorities  and 
intermediate bodies on the implementation of the new Regulation have continued 
to  be  implemented,  including  a  specific  module  on  “Management  and  Control; 
Management  Verifications”.  This  module  attracted  high  interest  from  Member 
State  experts,  6  modules  of  2  day  trainings  were  organized  with  on  average  35 
participants  per  module  from  different  Member  States  and  working  with  ERDF, 
ESF  and  CF.  Trainings  were  given  by  European  Institute  for  Public 
Administration  and  participation  from  REGIO  and  EMPL  experts  for  Q&A 
sessions. 

See also reply to 2014/COU/0185. 

20. 

(Nr  1.1,  §3  -  2014/COU/0200)  The  Council  is  concerned  that  the  major  source  of 
errors  for  this  policy  area  remains  non-compliance  with  public  procurement  rules, 
followed  by  errors  caused  by  breaches  of  eligibility  rules,  and  errors  related  to  the 
infringement of state aid rules. 

It urges the Commission to follow up the cases identified by the Court and to propose 
corrective  measures  where  necessary  and  to  strengthen  cooperation  within  the 
Commission, as well as with Member States, including improvement of the guidance 
for national authorities. 

Commission's response: 

The Commission is taking the recommended actions. 

Due  to  the  type  of  investments  co-financed  within  regional  and  urban  policy, 
public procurement and state aid remain complex areas of potential difficulty. In 
order  to  address  the  identified  main  sources  of  errors  the  Commission  has 
intensified  its  work  with  the  national  authorities,  among  others  as  part  of  the 
targeted action plans on public procurement and state aid. 

A  public  procurement  action  plan  was  established  and  is  under  implementation 
including: 

ESI- funded projects was published. 

have prepared and are implementing national action plans. 

-compliant with the Public procurement ex-ante conditionality 

procurement strategies. 

grity Pacts for an ethical behaviour in public procurement procedures are in 

pilot phase (in cooperation with Transparency International). 

14 

 
 
 
 
Assessment  of  current  practices  and  need  for  professional 
qualifications in public procurement. 

training  and 

As  regards  State  aid,  a  State  aid  action  plan  was  adopted  in  March  2015  and  is 
currently implemented. It includes measures for: 

on state aid, 

ing, 

-ante conditionality 

In  parallel,  the  Commission  continues  cooperating  with  national  authorities  to 
encourage  them  to  identify  and  report  eligibility  rules  that  can  be  simplified 
without putting at risk the legality and regularity of the expenditure. 

However, the Commission carefully considers the types of errors identified by the 
Court  and  takes  actions  aiming  to  prevent  those  errors  from  occurring.  It  will 
follow  up  all  errors  reported  by  the  Court  and  will  apply  financial  corrections 
where appropriate and legally possible. 

The  Commission  has  also  initiated  targeted  measures  in  administrative  capacity 
and audit capacity. 

A  general  administrative  capacity  initiative  has  been  launched  with  as  main 
activities: 

-to-peer exchange of expertise between national authorities; 

Regulations (2014-2020); 

proportionate  anti-fraud/anti-corruption  measures 
measures). 

(risks  and  preventive 

Audit  capacity  initiatives  are  also  in  place  for  the  audit  authorities  which  do  not 
work up to standards.  Regular administrative capacity building actions (technical 
meetings, methodology discussions, exchange of audit tools and checklists etc.) are 
in place for all to ensure  a robust joint audit  framework. There is  furthermore a 
tailor  made  approach  through  a  delivery  of  specific  training  sessions  to  audit 
authorities  on  request  concerning  statistical  tools,  audit  methodology  for  public 
procurement and state aid, etc. There are specific remedial action plans for those 
audit authorities not up to standards. 

21. 

(Nr 1.1, §4 - 2014/COU/0201) The Council reiterates the paramount importance of 
first  level  checks  in  containing  the  risk  of  error.  It  invites  the  Commission  and 
Member  States  to  intensify  their  efforts  in  addressing  those  weaknesses  by  taking 
into  account  all  available  information,  including  peer  review  and  sharing  of  best 
practices, and undertaking possible corrective measures and actions. 

15 

 
 
 
 
 
Commission's response: 

See reply to 2014/COU/0185. 

22. 

(Nr 1.1, §6 - 2014/COU/0202) The Council calls upon the Commission to continue 
interruptions  of  payments  whenever  significant 
applying  suspensions  and 
deficiencies  in  the  functioning  of  management  and  control  systems  are  identified, 
including, where appropriate, the use of net-financial corrections, in accordance with 
the relevant rules. 

Commission's response: 

See reply to 2014/COU/0185. 

23. 

(Nr  1.1,  §7  -  2014/COU/0203)  The  Council  asks  the  Commission  to  analyse  the 
reasons for the delays in the disbursement of EU funds through financial instruments 
and to take appropriate actions. 

Commission's response: 

The Commission has taken the recommended action. 

On  1  October  2015, 
the 
the  Commission  reported  on 
implementation  of  financial  instruments  at  the  end  of  2014  which  shows  further 
progress  in  implementation  with  the  absorption  rate  of  57%.  This  represents  a 
significant increase in the payments to final recipients compared to 2013 (+40%). 
This  percentage  covers  instruments  established  in  2008,  some  of  which  have 
already  achieved  100%  absorption  and  are  now  re-investing  revolving  funds,  as 
well as instruments newly established in 2013 and 2014 for which implementation 
only started recently. 

the  situation  of 

The  use  of  financial  instruments  was  considerably  promoted  for  2007-2013 
programmes and it is undeniable that the implementation of such new instruments 
represented  a  steep 
learning  curve  for  managing  authorities.  The  slow 
implementation is the result of three factors: 

-complexity  of  the  setup  and  need  to  establish  the  necessary  know-how  by  the 
managing authorities; 

-in some cases over-allocation of resources as compared to the real market need, to 
avoid automatic decommitment, 

-implementation  in  a  time  of  financial  crisis,  and  risk  aversion  by  banks  and 
economic operators. 

The  Commission  services  followed  up  with  the  managing  authorities  for  those 
programmes most concerned by slower implementation to help ensure action was 
taken. Regarding the weaknesses identified in the reporting by the Member States, 
the  Commission  presented  in  May  2015  an  updated  guidance  note  on  reporting 
about 
instruments 
http://ec.europa.eu/regional_policy/sources/thefunds/fin_inst/pdf/guidance_reporti
ng_instruction_air2014.pdf. 

financial 

16 

 
 
 
 
For the period 2014-2020, in order to improve the functioning and implementation 
of  the  use  of  financial  instruments,  the  legal  basis    introduced  more  flexible  co-
financing  modalities  as  well  the  possibility  to  contribute  to  financial  instruments 
set  up  at  Union  level,  to  implement  financial  instruments  under  all  the  thematic 
objectives and to use available standardised instruments (off-the-shelf), for which 
the  terms  and  conditions  have  been  pre-defined  and  laid  down  in  a  Commission 
Implementing 
http://eur-lex.europa.eu/legal-
content/EN/TXT/PDF/?uri=CELEX:32014R0964&from=EN.: 

Act 

The Commission provides also assistance and advisory services to the programmes 
and other stakeholders on the use of financial instruments. A dedicated technical 
advisory platform (fi-compass) was established early in 2015 in partnership of the 
four European Structural and Investment Funds DGs with the EIB. Fi-compass is 
designed to support ESIF managing authorities, EaSI microfinance providers and 
other  interested  parties,  by  providing  practical  know-how  and  learning  tools  on 
financial  instruments.  These  include  “how-to”  manuals,  factsheets  for  quick 
reference, e-learning modules, face-to-face seminars and networking events for the 
exchange of good practice and networking across Member States. 

24. 

(Nr 1.2, §4 - 2014/COU/0204) The Council calls upon the Commission to continue 
providing appropriate and consistent training and guidance to the beneficiaries and to 
further reduce the administrative burden by promoting the use of the simplified cost 
options that are less prone to error, as assessed by the Court. 

Commission's response: 

In  order  to  support  the  take-up  of  Simplified  Costs  Options  (SCOs)  by  Member 
States,  the  Commission  developed  guidance  documents  on  SCOs.  The  first 
reference  document  was  finalised  in  January  2010:  the  COCOF  note  on  SCOs 
setting  out  examples  on  how  to  develop,  introduce  and  make  use  of  the  different 
types of SCOs. This guidance was updated by the EGESIF guidance note on SCOs 
in  September  2014.  Both  of  these  notes  were  translated  in  all  EU  languages. 
Moreover, two  specific  guidance  notes  were  developed for  Article  14(1)  ESF  and 
Joint  Action  Plans  in  June  2015.  In  order  to  illustrate  some  good  practices  of 
SCOs,  a  case  study  on  the  implementation  of  SCOs  in  the  ESF  in  Italy  was 
published in February 2014. 

DG EMPL has been promoting the use of SCOs since several years. These efforts 
have recently been summarized in a "Report on the implementation of SCOs in the 
ESF"  which  was  sent  to  the  ECA,  the  European  Parliament  and  the  Council  in 
November 2015. The report shows that there was a relatively low uptake of the use 
of  SCOs  in  the  2007-2013  programming  period,  but  that  Member  States  expect 
their use of SCOs to significantly increase in the 2014-2020 period building on the 
new  possibilities  offered  by  the  2014-2020  regulatory  framework  and  the 
experience acquired. 

DG EMPL will continue to strongly support Member States in their efforts. This in 
particular  includes  the  involvement  of  the  auditors  in  the  hands  on  support  (as 
requested  by  the  Parliament)  during  the  development  of  SCO-methodologies 
ultimately leading to the proposal of a delegated act (in accordance with Art. 14(1) 

17 

 
 
 
of  the  ESF-Regulation);  currently  4  Member  States  are  covered  by  such  a 
delegated  act  (Sweden,  France,  Czech  Republic  and  Belgium).  Other  Member 
States (Slovakia, Italy, Malta, Germany (Bremen), Romania are in the process of 
developing their SCO or have submitted a proposal for an Art 14.1 application. 

Additionally, the DG EMPL is participating in specific seminars and workshops in 
Member  States.  In  2016,  a  seminar  has  already  taken  place  in  Germany 
(February) and Romania (April) and further events have to date been scheduled in 
Croatia and Malta. 

25. 

(Nr 2, §1 - 2014/COU/0205) The Council, while acknowledging the efforts already 
made by the Commission and Member States, calls upon them to continue improving 
their supervisory and control systems. 

Commission's response: 

See reply to 2014/COU/0185. 

26. 

(Nr  2,  §2  -  2014/COU/0206)  The  Council  urges  the  Commission  to  continue  close 
cooperation with national audit authorities, to assess their level of reliance, to enable 
improvements in terms of capacity building or methodology used, and to ensure that 
the same standards are applied for all audit authorities. 

Commission's response: 

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

Over  the  years  DG  Regional  and  Urban  Policy  and  DG  Employment,  Social 
Affairs  and  Inclusion  have  reviewed  the  work  of  the  most  important  audit 
authorities  covering  over  98%  of  ERDF,  CF  and  ESF  allocations.  The 
Commission is continuously monitoring the situation where the single audit status 
has  been  granted.  On-the-spot  re-performance  of  audits  including  at  the  level  of 
beneficiaries,  associated  with  the  issuance  of  continuous  advice,  audit  guidelines 
and methodological tools by the Commission services, has enabled comprehensive 
capacity-building  for  audit  authorities  since  2009.  As  a  result,  most  audit 
authorities  are  now  up  to  standards  and  provide  the  Directorates-General  with 
reliable  audit  results.  In  2016  DG  Regional  and  Urban  Policy  and  DG 
Employment,  Social  Affairs  and  Inclusion  will  continue  to  monitor  the  work  of 
audit authorities through desk and on-the-spot audit work. This remains particular 
useful  in  view  of  the  audit  opinion  for  the  closure  of  2007-2013  programmes 
expected  to  be  received  in  March  2017,  and  taking  into  account  that  most  audit 
authorities  will  continue  carrying  out  their  functions  for  the  2014-2020 
programmes. 

The  Directorates-General  pursued  during  2015  and  will  continue  to  pursue  the 
organisation  of  fora  for  exchanges  on  audit  issues  and  capacity  building  actions 
for  the  benefit  of  all  audit  authorities  through  targeted  training  on  request,  on 
issues  such  as  audit  of  public  procurement  or  State  aid,  recommended  sampling 
technics  for  conclusive  and  reliable  audit  results  and 
to  ensure  good 
implementation  of  2014-2020  new  features  such  as  audit  of  performance 

18 

 
 
 
 
indicators,  e-cohesion,  simplified  cost  options  etc..  Continuous  feedback  will  be 
given to the audit authorities based on the assessment of the 2015 annual control 
reports  and  audit  results  for  better  understanding  of  the  main  weaknesses 
identified and dissemination of good practices within the audit community. 

Capacity building actions at the level of audit authorities, but also managing and 
certifying  authorities  are  also  carried  out,  which  contribute  to  preventing  and 
correcting  errors  and  therefore  contribute  to  the  assurance  process:  there  is  a 
structured  cooperation  with  audit  authorities  on  methodology  and  reported  audit 
results  through  multilateral  and  bilateral  meetings.  Also,  multilateral  meetings 
included three technical meetings in Brussels in 2015, covering the discussion on 
various  guidance  notes  and  methodological  issues  for  the  period  2014-2020.  The 
Homologues Group annual meeting of European Auditors for ESI Funds in Riga 
in  September  2015  covered  issues  linked  mainly  to  the  closure  of  the  2007-2013 
programming period. 

Chapter 7 - Natural Resources 

27. 

(§2  -  2014/COU/0207)  The  Council  acknowledges  the  efforts  already  made  by  the 
Commission  and  Member  States,  and  calls  upon  them  to  continue  improving  their 
supervisory and control systems. 

Commission's response: 

Under  shared  management  it  is  for  the  Member  States  to  organise  their 
management  and  control  systems.  Therefore,  the  Commission  understands  this 
recommendation is addressed mainly to the Member States. 

The Commission carries out audits to ensure that the control systems put in place 
by  the  Member  States  effectively  protect  the  EU  budget.  If  deficiencies  are 
detected, the Commission may impose financial corrections, while indicating to the 
Member State concerned necessary corrective actions to rectify the weaknesses. 

28. 

(Nr  1.1,  §4  -  2014/COU/0208)  The  Council  underlines  the  high  level  of  error 
detected by the Court in the administrative processing of aid applications by national 
authorities, contributing for 0.7 percentage points to the estimated level of error. 

It  calls  upon  the  Commission  to  continue  to  systematically  request  and  closely 
monitor action plans by the Member States aiming at remedying the situation and to 
continue to apply financial  corrections when necessary, in  line with  the conformity 
clearance procedures. 

Commission's response: 

The  Commission  is  empowered  to  disallow  operations  executed  in  breach  of  EU 
law or to reduce or suspend payments in order to prevent irregular spending when 
action plans are not properly implemented. 

These two measures aimed at ensuring sound financial management are provided 
for in Articles 52 and 41 of Regulation 1306/2013, respectively. 

19 

 
 
 
 
 
 
The  Commission  will  continue  to  fulfil  its  obligations,  in  accordance  with  the 
above  mentioned  provisions.  Thus,  in  all  cases  it  is  deemed  justified,  the 
Commission will continue to impose financial corrections or request and monitor 
action plans established to remedy deficiencies in the Member States' management 
systems. 

29. 

(Nr 1.2, §4 - 2014/COU/0209) The Council takes note of the errors detected by the 
Court  made  by  national  authorities,  contributing  for  0.6  percentage  points  to  the 
estimated level of error. 

It calls upon the Commission and Member States to remedy the situation and for the 
Commission to continue to apply financial corrections when necessary, in line with 
the conformity clearance procedures. 

Commission's response: 

The  Commission  is  empowered  to  disallow  operations  executed  in  breach  of  EU 
law or to reduce or suspend payments in order to prevent irregular spending when 
action plans are not properly implemented. 

These two measures aimed at ensuring sound financial management are provided 
for in Articles 52 and 41 of Regulation 1306/2013, respectively. 

The  Commission  will  continue  to  fulfil  its  obligations,  in  accordance  with  the 
above  mentioned  provisions.  Thus,  in  all  cases  it  is  deemed  justified,  the 
Commission will continue to impose financial corrections or request and monitor 
action plans established to remedy deficiencies in the Member States' management 
systems. 

30. 

(Nr  2.1,  §1  -  2014/COU/0210)  The  Council  urges  the  Commission  and  Member 
States  to  pursue  their  efforts  to  ensure  that  IACS  remains  an  effective  and 
functioning system. 

Commission's response: 

In  order  to  assist  the  Member  States,  a  dedicated  unit  was  established  in  DG 
Agriculture  and  Rural  Development  to  support  the  policy  implementation  by 
working  with  the  Member  States  on  ensuring  that  IACS  remain  an  effective  and 
functioning system. Besides, as explained in the reply to Recommendation no 1, it 
is  for  the  Member  States  to  organise  their  management  and  control  system,  of 
which IACS is an important part. 

31. 

(Nr  2.2,  §2  -  2014/COU/0211)  The  Council  notes  that  the  system  weaknesses 
detected  by  the  Court  in  its  sample  for  2014  were  very  similar  to  those  found  and 
reported  in  the  previous  years:  deficiencies  in  administrative  checks  related  to 
eligibility  conditions  and  persistent  weaknesses  in  checking  public  procurement 
procedures. 

It calls  on the Commission  to  continue  to  work with  the Member States  to  remedy 
the causes of errors, including through the action plans. 

20 

 
 
 
 
 
 
Commission's response: 

Firstly,  it  should  be  emphasized  that  the  Court  of  Auditors  uses  only  a  limited 
number of categories to report on the typology of errors. Hence, the fact that the 
same  categories  appear  in  consecutive  years  should  not  be  automatically 
understood as demonstrating that the same weaknesses persist. 

Besides, the Commission keeps working with the Member States on identifying and 
addressing  the  most  common  causes  of  errors.  The  Commission  continuously 
provides  guidance  to  the  Member  States  by  providing  guidelines,  replying  to 
questions  received  in  writing  or  by  discussing  different  issues  at  management 
committee meetings or dedicated seminars or conferences. 

32. 

(Nr  2.2,  §3  -  2014/COU/0212)  The  Council  underlines  that  the  action  plans  are 
designed to implement targeted corrective actions to remedy the causes of errors and 
recognises  the efforts from Member States  to  further reinforce  their action plans in 
order to address any shortcomings detected during the audits. 

Therefore  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: 

The process of establishing and implementing action plans is carried out in close 
cooperation between the Commission and the national authorities. 

Each  action  plan  is  devoted  to  a  particular  Member  State  or  Paying  Agency 
concerned,  so  it  targets  specific  issues  related  to  the  deficiencies  identified.  In 
accordance  with  Article  41(2)(b)  of  Regulation  1306/2013,  action  plans  are 
established in consultation with the Commission, which can comment or guide the 
Member  State  as  to  the  expected  content.  In  this  process,  the  Commission  is,  in 
particular,  focussing  on  the  most  relevant  remedial  actions  and  the  reasonable 
time-line for the implementation. 

Subsequently,  when  monitoring  action  plans,  the  Commission  checks  the  results 
achieved  against  concrete  remedial  measures  described  and  progress  indicators 
included in these plans. 

Finally,  the  Commission  continuously  provides  guidance  and  explanations 
through  its  services  dedicated  to  the  management  of  direct  payments  and  rural 
development  programmes  who are  at  the  disposal of  every Member  State to  offer 
clarifications or guidance. 

33. 

(Nr 2.2, §4 - 2014/COU/0213) The Council calls upon the Commission and Member 
States to improve the quality of the audits carried out by national audit authorities in 
the field of fisheries. 

21 

 
 
 
 
 
 
Commission's response: 

DG  MARE  will  continue  to  monitor  developments  in  Italy  -  the  source  of  these 
findings - and will be following these issues up again during the course of 2016. 
The Commission holds annual meetings with all Member States audit authorities 
to discuss audit issues and the associated necessary work. Key issues have already 
been  addressed  in  the  Annual  Co-ordination  Meeting  with  the  Italian  Audit 
Authority and via bilateral contacts. 

Eighth, ninth, tenth and eleventh European Development Funds 

34. 

(Nr 1 - 2014/COU/0214) The Council notes with concern, however, that the Court's 
Annual Report concerning EDF activities for the financial year 2014 shows that the 
error rate has increased again compared to the previous year and that this error rate is 
still  too  high.  It  also  notes  that  this  error  rate  is  substantially  higher  than  the  one 
observed in heading 4 of the general budget. 

The Council urges the Commission to work within the agreed target of 2% error rate. 

Commission's response: 

The requested action has been taken. 

The  Commission  remains  fully  committed  to  working  towards  the  2%  materiality 
threshold for the error rate concerning both the implementation of the EDF and of 
the EU general budget: 

A  new  Action  Plan  to  further  address  the  weaknesses  in  DG  DEVCO's  internal 
control system is being implemented from September 2015 and encompasses both 
targeted  measures  addressing  the  two  high-risk  areas  of  expenditure  identified  – 
i.e.  direct  management 
indirect  management  with 
international  organisations  –  and  general  ones  aiming  at  reinforcing  the 
effectiveness  of  the  control  system  (for  instance  the  active  promotion  of  good 
practices  in  financial  management  with  partners  and  beneficiaries).  It  will  be 
adjusted as a result of the new reservations made in DG DEVCO's AAR 2015, and 
in the light of the findings of the 2015 Residual Error Rate (RER) study, in order 
to better differentiate the controls put in place. 

through  grants  and 

35. 

(Nr 2 - 2014/COU/0215) The Council invites the Commission to sustain its efforts in 
these matters (reduce old prefinancing and old RAL; expired contracts). 

Commission's response: 

The requested action has been taken. 

The  Commission  has  put  in  place  a  quarterly  KPI  analysis,  made  a  new 
monitoring  tool  (Portfolio  Management  Dashboard)  available  and  carried  out 
specific monitoring campaigns on old pre-financing and old RAL, and on expired 
contracts.  Moreover,  guidelines  on  the  clearing  of  pre-financing  have  been 
updated.  The  KPI  reduction  of  the  old  pre-financing  consistently  exceeds  the 
benchmark and the amount was reduced by 40% from 1,431M€ at the beginning of 

22 

 
 
 
 
 
 
2013 to  857M€ at the  end of  2015. Results are similar for the  KPI "reduction of 
old RAL" with the amount reduced by 51% from 1,107M€ at the beginning of 2013 
to  538M€  at  the  end  of  2015.  Considerable  progress  has  been  made  with  a 
reduction in the number of expired contracts by 46% (from 2013 at the beginning 
of 2013 to 1091 at the end of 2015). 

36. 

(Nr  4  -  2014/COU/0216)  The  Council  invites  the  Commission  to  report  on  the 
implementation of that monitoring system by December 2016 (recovery of interests 
on prefinancing and the putting in place of the monitoring system to that respect). 

Commission's response: 

The Commission is taking the requested action. 

DG  DEVCO  has  implemented  in  the  Common  External  Relations  Information 
System (CRIS) the necessary functionality for the proper encoding of recovery of 
interests on prefinancings equal or below €750,000. The monitoring of the proper 
encoding  of  recovery  orders  for  the  reimbursement  of  interest  on  prefinancings 
will be included in the data quality dashboard. 

37. 

(Nr  5,  §1  - 2014/COU/0217)  The Council invites the  Commission  to  further  refine 
the RER study in accordance with the  Court's suggestions, so that its finding could 
be efficiently used to improve the implementation of the control systems. 

Commission's response: 

The requested action has been taken. 

Following  discussions  with  the  contractor  currently  in  charge  of  DG  DEVCO's 
RER  study,  new  versions  of  the  RER  methodology  and  manual  were  issued  that 
the  European  Court  of  Auditors.  Further 
address 
improvements are always possible in the future. 

the  points  raised  by 

38. 

(Nr  5,  §2  -  2014/COU/0218)  The  Council  calls  on  the  Commission  to  pay  more 
attention  to  ex-ante  checks  given  the  high-risk  operational  environment  of  the 
Commission. 

The Council urges the Commission to implement all necessary measures to address 
existing  weaknesses,  and  invites  the  Commission  to  engage  with  the  Court  of 
Auditors to clarify differences in approach regarding procurement. 

Commission's response: 

The requested action has been taken. 

The vast majority of the actions contained in the Action Plan adopted in May 2013 
in order to correct the weaknesses in the implementation of DG DEVCO's control 
system  are  considered  as  being  implemented,  including  the  ones  aiming  at 
addressing the weaknesses in ex-ante checks. 

23 

 
 
 
 
 
 
As  a  result  of  the  reservation  issued  within  DG  DEVCO's  AAR  for  2014,  an 
upgraded Action Plan was drawn up in the light of the findings of the 2013 RER 
study (and the in-depth analysis of the errors identified by the RER studies 2012-
2014) and of the ECA's 2014 Annual Report. More focused measures - taking into 
consideration  the  Court's  observations  in  terms  of  deficiencies  in  the  ex-ante 
controls - have been defined, in addition to the actions of the previous Action Plan 
that are not fully completed and thus integrated into the new one. It will be further 
adjusted as a result of the new reservations made in DG DEVCO's AAR 2015, and 
in the light of the findings of the 2015 RER study, in order to better differentiate 
the controls put in place. 

(Nr  6  -  2014/COU/0219)  The  Council  invites  the  Commission  to  inform  on  its 
implementation (quality grids for audits and expenditure verification managed by the 
Commission  itself, by the end of 2015, and, planning  to  adapt them to  expenditure 
verifications  managed  by  beneficiaries  in  the  coming  year).  It  further  invites  the 
Commission  to  address  weaknesses  identified  by  the  Court  in  respect  of  the 
implementation of control systems and inform the ACP Working Party on its actions 
taken in this respect. 

39. 

Commission's response: 

The requested action has been taken. 

As part of the Action Plan adopted in May 2013 in order to correct the weaknesses 
in the implementation of DG DEVCO's control system, the quality grid (intended 
for  assessing  the  quality  and  reliability  of  the  external  audits  and  verifications 
reports and providing guidance in the event of non-compliance) has been finalised 
and endorsed in October 2015, following a long process of discussion and testing. 
It  is  being  applied  to  all  verification  missions  to  International  Organisations, 
expenditure  verifications  of  programme  estimates  and  audits  contracted  by  the 
Commission concluded from 1 January 2016, and has been integrated into the new 
IT Audit application launched in 2015 (having replaced the CRIS audit module). 
The  application  of  the  grid  to  expenditure  verifications  managed  by  contractors 
and beneficiaries of grants will also be discussed in 2016. 

An  upgraded  Action  Plan  was  drawn  up  in  October  2015,  in  the  light  of  the 
findings of the 2013 RER study and of the ECA's 2014 Annual Report, that takes 
over the measures of the previous Action Plan which completion have not yet been 
fully  achieved  (including  the  quality  grid).  The  ACP  working  party  will  be  kept 
duly  informed  by  the  Commission  of  the  progress  in  the  implementation  of  the 
actions through progress reports. 

40. 

(Nr  7  -  2014/COU/0220)  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: 

–  improving  internal  control  procedures  regarding  the  clearance  of  prefinancing, 
especially with regards to prefinancing paid to international organisations; 

– further refining the RER study and implementing the 2015 Action Plan; 

24 

 
 
 
 
 
– improving indicators of target values for the assessment of the efficiency and cost-
effectiveness of controls; 

–  continuing  attention  to  the  budget  support  transactions,  including  the  systematic 
verification of the exchange rate used by partner countries. 

Commission's response: 

The Commission is taking the requested action. 

Appropriate  measures  have  been  taken  by  DG  DEVCO  addressing  the  particular 
issues highlighted by the Court of Auditors: 

- The Commission has clarified in the Companion the rules for the clearing of pre-
financings  paid  to  International  Organisations  in  the  framework  of  contribution 
agreements.  Furthermore,  a  specific  campaign  was  carried  out  in  order  to 
to 
accelerate  whenever  possible 
International Organisations; 

the  clearing  of  old  pre-financings  paid 

- following discussions with the contractor currently in charge of the RER study, 
new  versions  of  the  RER  methodology  and  manual  were  issued  that  address  the 
points raised by the European Court of Auditors; 

- the implementation of the new Action Plan set up in September 2015 to further 
correct the  weaknesses  in  DG  DEVCO's  control  system  is on  schedule.  It  will  be 
further  adjusted  as  a  result  of  the  new  reservations  made  in  DG  DEVCO's  AAR 
2015,  and  in  the  light  of  the  findings  of  the  2015  RER  study,  in  order  to  better 
differentiate the controls put in place; 

- the specific guidance set by the Commission's central services for the assessment 
of the cost effectiveness of controls  has been duly  applied by DG DEVCO in the 
preparation of the AAR 2015; 

-  updated  and  reinforced  instructions  on  the  exchange  rate  issue  have  been 
integrated into the updated guidelines on Budget Support. The finalization of the 
guidelines is expected for the summer 2016. 

41. 

(Nr  9  -  2014/COU/0221)  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 requested action has been taken. 

As  an  on-going  requirement,  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. 

25 

 
 
 
 
 
 
SR 13/2014 EU support for rehabilitation following the earthquake in Haiti 

42. 

(Annex,  Nr  7  -  2014/COU/0222)  The  Council  calls  on  the  Commission  and  the 
EEAS to underline the importance of public financial management (PFM) reforms in 
their  dialogue  with  the  Haitian  government  and  to  provide  adequate  capacity-
building support and focus to key PFM functions. 

Commission's response: 

The requested action has been taken. 

The  Commission,  together  with  other  international  partners  (FMI,  WB,  PNUD, 
BID, USAID, Canada), supports PFM reforms  - notably in the framework of the 
State  Building  Contract  -  supporting  the  "Stratégie  de  Réforme  des  Finances 
Publiques"  (SRFP)  adopted  in  2014.  Progress  has  been  achieved  in  the  past  two 
years  and  a  specific  dialogue  with  the  Haitian government  on  PFM  continues  to 
reach  further  key  results  (the  last  policy  dialogue  on  PFM  was  actually  held  in 
May  2016).  In  addition,  a  technical  assistance  package  is  being  provided  to  the 
Haitian government in order to keep the momentum in the PFM reform process. 

(Annex,  Nr  9  -  2014/COU/0223)  The  Council  calls  on  the  Commission  and  the 
EEAS  together  and  in  coordination  with  EU  Member  States,  as  well  as  with  other 
donors,  and  in  full  respect  of  the  humanitarian  principles,  while  recognising  the 
central  role  of  the  UN  in  providing  leadership  and  coordination  of  international 
humanitarian engagement, to keep working towards a joint analysis of humanitarian 
and  development  issues,  a  joint  identification  of  solutions  and  burden-sharing, 
including  in  the  context  of  joint  programming  where  appropriate,  to  help  build  the 
resilience of the most vulnerable populations in Haiti. 

43. 

Commission's response: 

The requested action has been taken. 

A  joint  analysis  of  humanitarian  and  development  risks  and  needs  has  been 
undertaken  in  October  2015,  as  well  as  a  joint  identification  of  solutions  and 
burden-sharing in the context of joint programming, to help building the resilience 
of the most vulnerable populations in Haiti. 

The Commission is already implementing a LRRD (Linking Relief, Rehabilitation 
and  Development)  strategy,  in  close  collaboration  between  ECHO,  DEVCO  and 
EU Member States, and will continue to do so in the framework of the resilience 
agenda.  We  are  currently  integrating  the  resilience-building  approach  into  our 
bilateral cooperation programmes. 

In order to improve coherence and in view of a gradual reduction of humanitarian 
aid, DEVCO and ECHO have developed a joint approach of integrating resilience 
in  all  activities  (Joint  Humanitarian  Development  Framework)  so  as  to  ensure  a 
smooth eventual exiting of humanitarian aid. The orientations emerging from the 
JHDF work in Haiti are expected to lead to operational priorities for coordinated 
humanitarian  and  development  interventions.  The  Commission  also  participates 
and follows closely the UN calls for international humanitarian engagement. 

26 

 
 
 
 
 
SR  16/2014  Effectiveness  of  blending  regional  investment  facility  grants  with 
financial institution loans to support EU external policies 

44. 

(Annex, Nr 8 - 2014/COU/0224) The Council further calls upon the Commission to 
fully capitalise on the potential of blending operations for a wider impact on sector 
policy. 

Commission's response: 

The requested action has been taken. 

Following the issue raised by the Court of Auditors, a special attention is given to 
the policy dialogue aspects with the beneficiary country as well as to the promotion 
of sector reform aspects linked to blending projects. The inclusion of both aspects 
is pursued from the preparation of such projects. In particular, a reinforced role of 
the  EU  Delegations,  the  consultation  with  the  European  External  Action  Service 
(EEAS)  and  the  involvement  of  all  the  services  concerned  during  the  analysis  of 
the  projects  has  allowed  to  further  capitalise  on  the  potential  of  blending 
operations  to  influence  sector  policies  and  to  enhance  policy  dialogue  with  the 
beneficiary countries. 

45. 

(Annex, Nr 12 - 2014/COU/0225) The Council calls upon the Commission to ensure 
appropriate  follow-up  and  implementation  as  well  as  effective  monitoring  of  the 
recommendations of the Special Report, and to continue improving the management 
of  blending  facilities  and  demonstrating  the  added  value  of  the  grant  element, 
including in financial terms, and avoiding market distortions in blending operations. 

Commission's response: 

The requested action has been taken. 

An appropriate follow-up of the recommendations from the Special Report of the 
Court of Auditors has been regularly carried out by the Commission through the 
adoption  of  the  "Guidelines  on  EU  Blending  Operations"  issued  in  November 
2015 and taking into account almost all the recommendations made by the Court 
of Auditors (the only outstanding recommendation concerns the adaptation of the 
Results-Oriented  Methodology  (ROM)  to  the  characteristics  of  blending  and  is 
currently  being  examined  by  the  Commission  services).  Moreover,  a  regular 
monitoring  and  follow-up  of  all  the  recommendations  is  regularly  done  in  the 
framework  of  the  EU  Platform  for  Blending  in  External  Cooperation  (EUBEC 
Platform). The EUBEC was set up as a Commission expert group and its overall 
objective is to improve the quality and efficiency of EU development and external 
cooperation  blending  mechanisms.  The  annual  report  on  the  activities  of  the 
EUBEC Platform, which is published at the end of each year, takes stock of those 
aspects. 

As  for  the  added  value  of  the  EU  grant  element  in  all  the  blending  projects,  a 
specific  chapter  has  been  included  in  the  revised  application  form  in  force  since 
2014  that  the  Financial  Institutions  should  submit  to  the  relevant  Blending 
Framework secretariat for discussion at the technical assessment meeting prior to 

27 

 
 
 
 
 
submitting the proposal for the opinion of the Board of Member States (Blending 
Framework Board). The avoidance of market distortions in blending operations is 
systematically included in the analysis of projects proposals. 

SR 18/2014 EuropeAid’s evaluation and results oriented monitoring 

46. 

(Annex, Nr 6 - 2014/COU/0226) The Council requests that the Commission reports 
to  the  Council  on  the  measures  taken  to  implement  the  Court’s  recommendations 
within the framework of its Annual Activity Report. 

Commission's response: 

The requested action has been taken. 

The Commission has provided a feed-back on the ECA performance audit (on DG 
DEVCO’s  evaluation  and  results-oriented  monitoring  systems)  in  DG  DEVCO's 
2014 AAR (section 2.3.3: EUROPEAN COURT OF AUDITORS). The progress in 
the  implementation  of  the  related  recommendations  is  regularly  monitored  and 
reported by the Commission (the last update in the RAD IT database was done in 
May 2016). 

47. 

(Annex,  Nr  6  -  2014/COU/0227)  The  Council  takes  note  of  and  acknowledges  the 
measures  taken  so  far  by  the  Commission  to  improve  EuropeAid’s  capacity  to 
monitor, report and evaluate policy achievements. The Council calls the Commission 
to ensure that these activities and the sequence of project, programme and strategic 
evaluations are adequately supervised and resourced. 

Commission's response: 

The Commission is taking the requested action. 

In  2014,  DG  DEVCO  completed  workload  assessments  which  took  into  account 
monitoring  and  evaluation  activities.  On  financial  resources,  the  IT  evaluation 
('EVAL') module put in production on 11 May 2016 will be used for each project 
evaluation and will provide all required information. 

Strengthened  guidance  combined  with  strengthened  monitoring  and  reporting  is 
being  implemented.  A  Network  of  Evaluation  Correspondents  in  EU  Delegations 
and Headquarters is in place to exchange on good practices. 

Regarding ROM, a quality control and assurance system has been put in place and 
the new IT ROM module provides the additional information management tool to 
support  the  monitoring  of  quality.  The  IT  evaluation  module  has  been  put  in 
production; in addition to ROM reports, it will allow better evaluation of projects, 
both to serve as basis for strategic evaluations. 

The  establishment  of  a  system  to  support  task  managers  in  carrying  out 
programme  evaluations  is  in  the  making:  the  call  for  tender  for  an  Evaluation 
Support Service Team (Helpdesk) has first to be relaunched after an unsuccessful 
tender procedure; the contract is planned to be signed in October 2016. 

28 

 
 
 
 
 
48. 

(Annex, Nr 11 - 2014/COU/0228) The Council invites the EU and its Member States 
to  conduct more  joint  evaluations at  country level,  with  the  involvement  of  partner 
countries,  notably  in  those  countries  where  Joint  Programming  creates  such 
opportunities. The Council also invites the Commission to reflect on ways to further 
enhance  monitoring  and  evaluation  mechanisms,  including  strengthening  partner 
countries’ statistical systems, and calls on the EU and its Member States 

to  continue  working  together  to  share  lessons  learnt  and  good  practices  among 
themselves and with others, particularly promoting the evaluation function in partner 
countries,  as  well  as  engaging  in  international  efforts  to  make  development 
cooperation policies more effective and sustainable. 

Commission's response: 

The requested action has been taken. 

The  EU  and  its  Member  States  continue  to  conduct  joint  evaluations.  One  joint 
evaluation of Budget Support in Burkina Faso has been successfully conducted at 
country  level,  with  strong  involvement  of  the  partner  country  (published  in  May 
2016). Six joint evaluations linked to Joint Programming are planned in the 2016-
2020 Evaluation work programme. 

Following  the  2014  Guidance  note,  Delegations'  evaluation  plans  have  been 
monitored; Monitoring of the next evaluation plans will be done through the new 
MEP (Monitoring and Evaluation Plan) in use since end 2015 for the 2016 plan. 

Support  to  partner  countries'  statistical  systems  are  provided  through  specific 
interventions or included in Budget Support operations. Support is also provided to 
the  African  Union  to  strengthening  the  African  Statistical  System  to  make 
available  reliable  and  comparable  statistics  at  Continental  level  to  facilitate 
decision-making and policy monitoring. 

DG  DEVCO's  Evaluation  Unit  belongs  to  several  networks  where  lessons  learnt 
and  good  practices  are  shared  and  improved:  Expert  Group  of  Member  States; 
European  Evaluation  Society;  OECD/DAC  EVALNET.  In  2014,  the  latter  has 
actually  launched  an  initiative  to  improve  the  evaluation  function  in  partner 
countries (Collaborative Partner-Donor Evaluation, CPDE). 

SR 19/2014 EU Pre-accession Assistance to Serbia 

49. 

(Annex, Nr 4 - 2014/COU/0229) The Council invites the Commission to inform the 
IPA Management Committee regularly on the issues raised by the Court of Auditors’ 
Special  Report  and  to  ensure  that  they  are  addressed  systematically,  including 
through  EU-Serbia  Stabilisation  and  Association  Committee  meetings,  as 
appropriate. 

Commission's response: 

The Commission will transmit for information the report of the Court of Auditors 
to  the  IPA  Committee.  However,  the  Commission  points  out  that  it  cannot 
implement  fully  the  recommendation  of  the  Council  as  the  role  of  the  IPA 

29 

 
 
 
 
 
 
Committee  and  of  the  Association  Committees  is  not  to  monitor  progress  in 
implementation  on  findings  of  the  Court  of  Auditors.  Discussion  on  such  issues 
should be part of the exchanges between the Commission and the Council in the 
context of the discharge procedure. 

SR  20/2014  Has  ERDF  support  to  SMEs  in  the  area  of  e-commerce  been 
effective? 

50. 

(Annex,  Nr  9  -  2014/COU/0230)  The  Council  calls  on  Member  States  and  the 
Commission  to  build  on  lessons  learned  from  experiences  of  investments  in  e-
commerce and ICT technologies from the programming period 2007-2013. 

Commission's response: 

The reform of  Cohesion Policy for 2014-2020 has provided a better  performance 
and  result  orientation  framework.  The  monitoring  committee  of  the  respective 
operational  programme  has  the  necessary  incentives  to  approve  selection  criteria 
ensuring maximum impact for this type of investments. Countries and regions will 
have  to  decide  upfront  what  objectives  they  intend  to  achieve  with  the  available 
resources  and  identify  precisely  how  they  will  measure  progress  towards  those 
goals for each priority axis. This will allow regular monitoring and debate on how 
financial  resources  are  used.  The  indicators  chosen  for  tracking  progress  and 
impact will not be standard and will depend on the specific objectives of each OP. 
The  indicators  to  be  used  reflect  the  variety  of  needs  and  political  responses  of 
regions and Member States. 

Thematic, priority-linked ex-ante conditionality on Digital Growth was established 
in Part I of Regulation (EU) No 1303/2013. It includes as one of the criteria’s for 
fulfilment the establishment of a strategic policy framework for digital growth with 
standard  indicators to measure  progress of interventions in ICT areas such as e-
commerce  (foreseen  in  ex-ante  conditionality  2.1  of  Annex  XI  of  the  Common 
Provision Regulation.) 

51. 

(Annex, Nr 10  - 2014/COU/0231)  The Council calls  upon the Commission,  within 
the existing legal framework, to strengthen the monitoring and information gathering 
systems  in  such  a  way  that  it  becomes  possible  to  assess  the  effectiveness  of 
programmes  and  projects  put  forward  by  beneficiaries  of  support  given,  while 
keeping  the  administrative  burden  as  minimal  as  possible,  and  using  simple  and 
measurable indicators, in accordance with the cost-benefit principle. 

Commission's response: 

For  the  2007–13  period,  the  Commission  requires  the  Managing  Authorities  to 
report on the implementation of the programmes in line with the applicable ERDF 
regulations. 

However, the 2014–20 ESIF programmes put a stronger emphasis on results based 
on targets. At priority axis level the indicators will capture the overall performance 
in the axis, but not the individual performances of all types of action that might be 
included in that axis. 

30 

 
 
 
 
 
In  the  period  2014–20,  as  part  of  the  reinforcement  of  the  result  orientation, 
programmes are asked to clearly identify common and programme specific output 
indicators (with target values), and result indicators that will measure the progress 
towards the change sought through investment (with baselines and target values). 
A  strategic  policy  framework  for  digital  growth  includes  standard  indicators  to 
measure  progress  of  interventions  in  ICT  areas,  as  foreseen  in  ex  ante 
conditionality 2.1 of Annex XI of the common provision regulation. 

Information on the progress in programme implementation will be shared with the 
Commission on an annual basis (from 2016 onwards) allowing tracking over time. 
This 
information  will  be  structured,  allowing  analysis,  comparison  and 
aggregation and it is also the Commission’s intention to publish these data. 

The 2014–20 legal framework requires result indicators in the programmes at the 
priority  axis 
the 
programming period. 

indicators  at  operations 

level  and  output 

level  during 

The Commission will require Member States to put in place the necessary checks 
and  controls  ensuring  that  the  data  entered  into  the  monitoring  systems  are 
reliable  and  consistent.  The  data  will  be  subject  to  audits  by  the  national 
authorities and by the EU auditors. 

SR 21/2014 EU-funded airport infrastructures: poor value for money 

52. 

(Annex,  Nr  7  -  2014/COU/0232)  The  Council  calls  on  Member  States  and  the 
Commission to build on lessons learned from previous experiences of investments in 
airport infrastructure. 

Commission's response: 

The Commission has taken the recommended action. 

During the negotiations on operational programmes for the period 2014-2020, the 
approach  of  the  Commission's  services  was  that  EU  funding  to  airport 
infrastructure  had  to  be  focused  in  particular  to  airports  belonging  to  the  core 
TEN-T network. The Commission also required that the Comprehensive Transport 
Master  Plans  should  serve  as  a  basis  for  the  choice  of  transport  investment 
priorities.  All  investments  should  contribute  to  delivering  the  objectives  for  the 
priority  axis.  For  investment  in  any  airport,  economic  viability  and  needs 
assessments are ensured through ex-ante assessments, plausible feasibility studies 
and positive cost benefit analyses. 

53. 

(Annex, Nr 8, § 8.2 - 2014/COU/0233) The Council calls upon the Commission to 
ensure  that  Member  States  only  allocate  EU  funding  to  airport  infrastructures  in 
those  airports  for  which  investment  needs  have  been  properly  assessed  and 
demonstrated. 

Commission's response: 

See reply to 2014/COU/0232. 

31 

 
 
 
 
 
SR 2/2015 EU-funding of Urban Waste Water Treatment plants in the Danube 
river  basin:  further  efforts  needed  in  helping  Member  States  to  achieve  EU 
waste water policy objectives 

54. 

(Annex,  Nr  24  -  2014/COU/0234)  The  Council  calls  on  Member  States  and  the 
Commission to build on lessons learned from previous experiences of investments in 
similar infrastructure. 

Commission's response: 

Evaluation  culture  is  strongly  built-in  in  cohesion  policy  cycle  with  various 
evaluation techniques required at different stages of the programming process. For 
instance there is a requirement of ex ante evaluation of programmes (which builds 
on lessons learned from the past), evaluation plans during the implementation, and 
ex  post  evaluation  that  always  serves  as  a  starting  point  for  improving  the  next 
programming period. 

The experience from projects is being exchanged and lessons learnt based on it in 
a  number  of  ways.  For  example,  the  Commission  has  established  an  informal 
network  of  environmental  and  managing  authorities  where  Member  States' 
representatives meet regularly to exchange, learn and share information. The past 
experiences  are  also  usually  informing  the  preparation  of  the  river  basin 
management plans which are a precondition for Cohesion policy funding for the 
2014-2020 period. 

Furthermore, the Commission and JASPERS work closely together to provide the 
MS the  necessary advice and forum for exchanges of  experiences to improve the 
quality of major  projects  in preparation at  MS level and intended for submission 
for  Commission  approval.  This  extends  to  the  possibilities  given  to  the  MS  to 
reinforcement  their  administrative  capacities  as  mature  major  projects  and 
appropriate  administrative  capacities  are  a  requisite  for  timely  and  qualitative 
implementation.    In  this  context  DG  REGIO  runs  a  PEER-to-PEER  technical 
assistance service for the Member States, by which they can exchange their good 
experiences  on  the  matter  of  their  particular  interest.  In  addition  DG  REGIO 
regularly  reviews  its  training  programme,  partly  implemented  together  with 
JASPERS,  in  light  of  the  needs  of  the  MS.  Water  and  wastewater  subject  are 
regular on the list of trainings and workshops. 

55. 

(Annex, Nr 24 - 2014/COU/0235) The Council invites the Member States concerned 
and  the  Commission  to  make  use  of  the  EU  Strategy  for  the  Danube  Region  to 
promote  exchange  of  experiences, 
investments,  synergies  and 
effectiveness in the system of urban waste water management. 

leverage  of 

Commission's response: 

Water management is one of the priority topics of the EUSDR Priority Area 4 'To 
restore and maintain the quality of waters', coordinated by Hungary and Slovakia. 
Representatives of the 14 countries participating in the strategy gather together in 
the  Steering  Group  of  this  Priority  Area,  where  several  project  proposals  in  the 
area of sanitation, wastewater treatment facilities and urban wastewater treatment 

32 

 
 
 
 
 
plants  have  recently  been  discussed  and  given  support.  The  projects  concern 
Member  States  but  also  transfer  of  good  practices  to  non-EU  participating 
countries. 

See 
region.eu/component/edocman/action-plan-eusdr-pdf) 

action 

plan 

the 

for 

EUSDR 

(http://www.danube-

SR 5/2015 Are financial instruments a successful and promising tool in the rural 
development area? 

56. 

(Annex, Nr 7 - 2014/COU/0236) The Council asks the Commission to consider the 
Court's  recommendation  that,  in  order  to  increase  the  effectiveness  of  the  financial 
instruments,  appropriate  standards  and  targets  for  leverage  and  revolving  effects 
should be set. 

Commission's response: 

- With regard to leverage ratios and data for calculation of the leverage ratios: 

Article  37(2)c)  of  Regulation  (EU)  No  1303/2013  requires  an  estimation  of  the 
expected leverage effect  during the performance of the ex-ante assessment for FIs 
which  is  required  before  any  decision  by  a  managing  authority  to  make 
programme contributions to a financial instrument . However, achieving leverage 
ratios must be balanced with public policy objectives. 

As provided for in Article 46(2)(h) of Regulation (EU) No 1303/2013 and Article 2 
and  annex  1  of  Commission  Implementing  Regulation  (EU)  No  821/2014  of  28 
July  2014    managing  authorities  will  report  to  the  Commission  the  progress  in 
achieving the expected leverage effect. 

Moreover, the Commission Implementing Regulation (EU) 964/2014 laying down 
rules  for  the  application  of  Regulation  (EU)  No  1303/2013  of  the  European 
Parliament  and  of  the  Council  as  regards  standard  terms  and  conditions  for 
financial instruments (also known as off-the shelf financial instruments), provides 
for  ready-to-use  financial 
instruments  which  require  minimum  financial 
contributions  to  the  financial  instruments  from  other  sources  other  than  the 
programme contribution which is a key element in achieving a higher leverage. 

The  Commission  has  issued  together  with  the  European  Investment  Bank  a 
General methodology for ex-ante assessment for financial instruments in the 2014-
2020 programming period which contains the required steps for the assessment of 
the  expected  leverage  effects  of  the  instruments  when  carrying  out  the  ex-ante 
assessment: 

http://ec.europa.eu/regional_policy/sources/thefunds/fin_inst/pdf/ex_ante_vol1.pdf 

The Commission provides assistance and advisory services to the programmes and 
other  stakeholders  on  the  use  of  financial  instruments.  A  dedicated  technical 
advisory platform (fi-compass) was established early in 2015 in partnership of the 
four European Structural and Investment Funds DGs with the EIB. Fi-compass is 
designed  to  support  ESIF  managing  authorities  and  other  interested  parties,  by 
providing practical know-how and learning tools on financial instruments. These 
include  “how-to”  manuals,  factsheets  for  quick  reference,  e-learning  modules, 

33 

 
 
 
 
face-to-face  training  seminars  and  networking  events  for  the  exchange  of  good 
practice and networking across Member States 

- With regard to minimum revolving periods 

This topic is treated in Article 45 of the Regulation (EU) 1303/2013 which requests 
the  minimum  revolving  period  to  be  at  least  eight  years  after  the  end  of  the 
eligibility period. 

SR  8/2015  Is  EU  financial  support  adequately  addressing  the  needs  of  micro-
entrepreneurs? 

57. 

(Annex, Nr 17 - 2014/COU/0237) The Council reiterates its call on the Commission 
to provide guidance on the use of financial instruments and on the synergies between 
different  instruments  in  a  timely,  coherent,  consistent  and  clear  manner  and  to 
explore all opportunities to provide more clarity. 

Commission's response: 

The Commission has taken the recommended actions. 

The  Commission  services  clarified 
the  2014-2020 
programming  period  in  relation  to  financial  instruments  the  following  guidance 
notes: 

the  main  aspects  of 

•  "Financial  Instruments  in  2014-2020.  Short  reference  guide  to  managing 
authorities (EGESIF_14_0038-03  of 10/12/2014), 

•  "Guidance  for  Member  States  on  Article  37(2)  CPR  –  Ex-ante  assessment 
(EGESIF_14_0039-1 of 27/03/2015)", "Guidance for Member States on Article on 
Article 41 CPR - Requests for payment (EGESIF_15-0006-01 of 08/06/2015)", 

•  "Guidance  for  Member  States  on  the  combination  of  support  from  a  financial 
instruments with other forms of support (EGESIF_15_0012-02 of 10/08/2015", 

•  "Guidance  for  Member  States  on  Article  42(1)(d)  CPR  –  Eligible  management 
costs and fees (EGESIF_15-0021-01 of 26/11/2015)", 

•  "Guidance  for  Member  States  on  Interest  and  Other  Gains  Generated  by  ESI 
Funds  support  paid  to  FI  -  Article  43  CPR  (EGESIF_15-0031-01  Final  of 
17/02/2016)", 

• "EC Guidance Note on selection of bodies implementing FIs, including funds of 
funds (EGESIF_15-0033-01 of 18/02/2016)" under finalisation, 

The following guidance notes were already presented to Member States on 28 April 
2016 and are under finalisation: 

•  Guidance  for  Member  States  on  CPR  eligibility  rules  for  ESI  Funds  Financial 
Instruments (EGESIF EGESIF_16-0006-00), 

• Guidance for Member States on Article 38(4) CPR - Implementation options for 
FIs  managed  by  or  under  the  responsibility  of  the  managing  authority 
(EGESIF_16-0007-00) 

34 

 
 
 
 
•  and  Guidance  for  Member  States  on  Article  46  -  reporting  on  financial 
instruments and on Article 37(2)(c) - leverage effect (EGESIF_16-0008-00). 

The Commission has also published on 22 February 2016 a guidance brochure on 
EFSI,: 
complementarities 
http://ec.europa.eu/regional_policy/sources/thefunds/fin_inst/pdf/efsi_esif_compl_
en.pdf 

between 

ESIF 

and 

The  brochure  is  designed  to  help  local  authorities  and  project  promoters  ensure 
complementary  use  of  EFSI  and  ESI  Funds.  It  provides  an  overview  of  the 
possible combinations of EFSI and ESI Funds, either at project level or through a 
financial instrument such as an investment platform. 

35