CELEX: 52012PC0617
Language: en
Date: 2012-10-24
Title: Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on the Fund for European Aid to the Most Deprived

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		52012PC0617
		
			Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on the Fund for European Aid to the Most Deprived /* COM/2012/0617 final - 2012/0295 (COD) */
			
				
		
		
			
			   	EXPLANATORY MEMORANDUM
1.           CONTEXT OF THE PROPOSAL
1.1.        Poverty and material
deprivation in the Union
Within the framework of its Europe 2020 strategy,
the European Union has set itself the objective of reducing by at least 20
million the number of people in or at risk of poverty or social exclusion by 2020.
Yet the economic crisis has exacerbated poverty and social exclusion, raising
concerns over the social consequences for individuals and society at large. 
In 2010, nearly one quarter of Europeans
(116 million) were at risk of poverty or social exclusion. This is about 2
million more than in the previous year and the first figures available for 2011
confirm this trend. 
While the needs of those who are at the
margins of the society keep growing, the ability of Member States to support them
has in many cases diminished. Social cohesion is threatened by fiscal
constraints more than ever before. In many Member States it is felt that policies
decided at European level are in some ways responsible for these developments.
The increasing levels of poverty impact negatively
on the living conditions of European citizens, about 40 million of whom suffer
from severe material deprivation. While this figure dropped markedly between
2005 and 2008, it began to rise again between 2009 and 2010, with 342 000
additional people encountering severe material deprivation in just one year. 
One of the main features of material
deprivation is the inability to access appropriate quantities and quality of
food. The share of the Union population unable to afford a meal with meat,
chicken or fish (or vegetarian equivalent) every second day – something which
is defined as a basic need by the World Health Organisation – was 8.7%
in 2010, i.e. more than 43 million persons and the first figures available for
2011 indicate a worsening trend. 
A particularly severe form of material
deprivation going well beyond food deprivation is homelessness. The extent of
homelessness is difficult to quantify, but, estimations indicate that there were
4.1 million homeless people in Europe in 2009/2010. A recent increase in homelessness
is due to the social impact of low and uneven growth and rising unemployment.
Even more worryingly, a new profile of homeless people is emerging which
consists of families with children, young people and people with a migrant
background. 
There are 25.4 million children at risk of
poverty or social exclusion in the Union. Overall, children are at greater risk
of poverty or social exclusion than the rest of the population (27 %
against 23 %). This exposes them to material deprivation going beyond (poor)
nutrition. For example, 5.7 million children have to go without new (not-second
hand) clothes and 4.7 million do not have two pairs
of properly fitting shoes (including a pair of all-weather shoes). Children
suffering from these forms of material deprivation are less likely than their
better-off peers to do well at school, enjoy good health and realise their full
potential as adults. 
1.2.        The
Union's response to poverty and material deprivation
The main Union's
instrument for supporting employability, fighting poverty and promoting social inclusion
is and will remain the European Social Fund (ESF). This
structural instrument invests directly in people and their skills and aims at
improving their labour market opportunities. Yet some of the most vulnerable
citizens who suffer from extreme forms of poverty are too far removed from the
labour market to benefit from the social inclusion measures of the ESF.
The EU's Food Distribution programme for the Most Deprived People (MDP)
has for more than two decades provided food aid for those persons. It was
created in 1987 to make meaningful use of agricultural surpluses, which might
otherwise have been destroyed, by making them available to Member States
wishing to use them. Over the years, the scheme became an important source of
provisions for organisations working in direct contact with the least fortunate
members of society, providing them with food. The expected depletion and high
unpredictability of intervention stocks over the period 2011-2020, as a
consequence of successive reforms of the Common Agricultural Policy, has
deprived the MDP of the original rationale underpinning it and it will be
discontinued at the end of 2013. 
However, material deprivation still causes
serious problems and there continues to be a need for EU assistance to the society’s
most deprived persons. In its proposal for the next multiannual financial
framework the Commission has reflected this and reserved a budget of € 2.5
billion for a new instrument designed to fight extreme forms of poverty and
exclusion. 
Against this background, the proposed Regulation
establishes for the period 2014-2020 a new instrument that will complement the
existing cohesion instruments and notably the European Social Fund, by
addressing the worst and most socially corrosive forms of poverty, food
deprivation as well as homelessness and material deprivation of children while
supporting accompanying measures aiming at the social reintegration of the most
deprived persons of the Union. 
2.           RESULTS OF CONSULTATIONS WITH THE
INTERESTED PARTIES AND IMPACT ASSESSMENTS
2.1.        Position of interested
parties
Discussions in the Council and the European
Parliament and with civil society and local authorities on the current forms of
aid for the most deprived under the MDP programme have provided meaningful
insights and ideas for the future. Moreover, the Commission has been open to
stakeholders' views and consulted EU-level umbrella organisations representing
both deliverers of food aid and the end recipients.
The potential significant cut in the
support provided under the MDP scheme in 2012 was heavily criticized by civil
society organisations, with regional and local authorities' representatives
stressing the importance of this support and pleading for its continuation at a
time when needs are increasing. 
Large charities and civil society
organisations representing food banks, as well as organisations working with
children and homeless people have expressed repeatedly the need for public and
specifically EU support. 
Two meetings with umbrella associations of
organisations representing not only the beneficiaries but also the actual end recipients
were held. In general the organisations welcomed the possible broadening of the
scope of the instrument beyond food aid and the idea of a people-centred
approach. 
Member States views about such an
instrument are divided: seven Member States have expressed their opposition to
continuation of the MDP beyond 2013. Other Member States have argued strongly
in support of the scheme. Thirteen Member States issued a statement in December
2011, in which they requested continuation of the MDP post-2013. 
The European Parliament has repeatedly
expressed strong support for the continuation of the food aid programme in the
interest of better social cohesion in Europe. 
In December 2011, eleven umbrella
organisations wrote to Commissioner Andor and the Director General for
Employment, Social Affairs and Inclusion asking for progress to be made towards
an EU Homelessness Strategy. In addition, the European Parliament called for such
a strategy - first in a Written Declaration (2010) and then in a Resolution
(2011).
The Compact for Growth and Jobs adopted by
the European Council on 29 June 2012 notes that "in the implementation of
the country-specific recommendations, Member States will put particular
emphasis on tackling unemployment and addressing the social consequences of the
crisis effectively […and] developing and implementing effective policies to
combat poverty and support vulnerable groups".
2.2.        Impact assessment
The core issue examined by the impact
assessment concerned the scope of the new instrument. The options considered
were (0) no funding, (1) a successor instrument to the current MDP limited to
dispensing food aid, (2) an instrument which would complement the distribution
of food aid with support for accompanying measures aiming at the social
inclusion of the food aid recipients, and (3) a comprehensive instrument
supporting material relief in terms of food, goods for homeless people and
goods for materially deprived children, combined with accompanying measures
aiming at the social reintegration of the most deprived persons. 
The net impact of option zero depends on
how the funds made available are reallocated. But it would certainly be seen as
attesting to an erosion of solidarity in Europe at a time when poverty is
increasing. Compared to option one, option two and even more so option three
entail a reduction of the food aid distributed as some resources are allocated
to other types of actions. However, the accompanying measures should also
ensure greater sustainability of the results achieved. Option three is
preferred because it best allows tailoring the supported interventions to local
needs. 
3.           LEGAL ELEMENTS OF THE PROPOSAL
EU action is justified on the grounds of
Article 174 (TFEU) which provides for the Union to "promote its overall
harmonious development" by "developing and pursuing its actions
leading to the strengthening of its economic, social and territorial
cohesion", and on Article 175 (TFEU) which specifies the role of the EU
structural funds in achieving this objective and makes provisions for the
adoption of specific actions outside the Structural Funds. 
EU-level action is necessary given the
level of poverty and social exclusion in the Union and the unacceptable
diversity of the situation among individual Member States, further aggravated
by the economic and fiscal crisis, which has led to a deterioration of social
cohesion and lessened the chances of achieving the Europe 2020 strategy's
objective in relation to the fight against poverty and social exclusion. 
European financial support helps to
catalyse action at national level, coordinate efforts and to develop and
introduce instruments to promote social inclusion. It allows the Union to lead
by example.
4.           BUDGETARY IMPLICATION 
The Commission proposal for a multi-annual
framework envisages an amount of EUR 2.5 billion, within cohesion policy, for
the period 2014-2020.
In accordance with article 84(3) of
Regulation EU Nº … (CPR), the support to a Member State through the Fund shall
be considered as part of the share of the Structural Funds allocated to the
European Social Fund.
 Proposed budget 2014-2020 || EUR billion 
 Cohesion Policy (Structural Funds) Of which Fund for European Aid to the Most Deprived || 339 2.5 
*All figures are in constant 2011 prices
5.           Content of the regulation 
5.1.        Objectives and scope
The general objective of the Fund for European
Aid to the Most Deprived (the Fund) is to promote social cohesion in the Union by
contributing to the achievement of the Europe 2020 strategy's objective of
reducing by at least 20 million of the number of people in or at risk of
poverty and social exclusion. 
This translates into the specific objective
of supporting national schemes which provide non-financial assistance to the
most deprived persons through partner organisations.
In terms of scope, the Fund addresses food
deprivation, homelessness and material deprivation of children. Each Member
State may choose to address one or more of these forms of deprivation. It may
also support accompanying measures, complementing material support, to
contribute to the social reintegration of the most deprived persons.
5.2.        Eligible population and
targeting
The population eligible to receive material
assistance are the most deprived persons of the Union. Definition of the criteria
for identifying the most deprived persons to be assisted will be the
responsibility of the Member States or the partner organisations since they are
best placed to target the assistance taking local needs into account. 
By defining the type of goods that will be
distributed, namely food or basic consumer goods for personal use of homeless
persons or of children, the Regulation also contains an indirect targeting
mechanism. 
5.3.        Partner organisations
The partner organisations are the ones that
deliver directly or indirectly the food or goods to the most deprived persons.
In order to ensure that the Fund will contribute to sustainable reduction of
poverty and to improvement of social cohesion, the partner organisations that
deliver directly the food or goods will themselves have to undertake activities
complementing the provision of material assistance, aiming at the social
integration of the most deprived persons. The Fund itself may support such
accompanying measures. 
The national authorities may either
purchase the food or goods or make them available to partner organisations or
provide the partner organisation with funding for the purchase of the food or
goods. If the purchase of food or goods is undertaken by a partner
organisation, it can either distribute the items itself or entrust the
distribution to other partner organisations. 
5.4.        Implementation provisions
The Fund will be implemented following the
model of cohesion policy, i.e. through shared management on the basis of one 7-years
operational programme per Member State covering the period 2014 to 2020. 
The Regulation follows the approach of the
structural funds in terms of implementation arrangements, allowing notably the
Member States to use, if they so wish, the structures, designated authorities
and procedures set up for the European Social Fund, in order to minimize the
administrative burden related to the transition from the current scheme for
distribution of food to the most deprived persons to the new Fund for European
Aid to the Most Deprived. The provisions relating to programming, monitoring,
evaluation and information and communication are, however, streamlined and
simplified in order to be commensurate to the specificity of the objectives and
target populations of the Fund. 
The eligibility rules are also designed to
take into account the nature of the Fund and of the various actors that will be
involved in its implementation. In particular, the Regulation provides for
simplified cost methods for the majority of categories of expenditure and opens
options for the others categories. 
The financial management and control system
equally derives from the structural funds logic. Also, some provisions have
been adapted and simplified to be fully adequate to the types of operations
that will be supported by the Fund, notably in terms of pre-financing, content
of the payments applications to the Commission as well as proportional control.

The partner organisations have a limited
capacity to advance the funds necessary. Equally, the Member States may have
difficulties to mobilise the resources necessary to pre-finance the operations.
In addition, the Member States facing the greatest fiscal constraints are
likely to be those with the highest number of most deprived people. In order to
address this situation, that could put at risk the achievement of the Fund's
objective,   the level of pre-financing is set at 11% of the total allocation
to a Member State.  This will allow covering up to 90% of the costs of the
first year's aid campaign not counting technical assistance, transport,
administrative costs and the accompanying measures. 
2012/0295 (COD)
Proposal for a
REGULATION OF THE EUROPEAN PARLIAMENT
AND OF THE COUNCIL
on the Fund for European Aid to the Most
Deprived
THE EUROPEAN PARLIAMENT AND THE
COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty on the
Functioning of the European Union, and in particular Article175 (3) thereof,
Having regard to the proposal from the
European Commission,
After transmission of the draft legislative
act to the national Parliaments,
Having regard to the opinion of the
European Economic and Social Committee[1],

Having regard to the opinion of the
Committee of the Regions[2],

Acting in accordance with the ordinary
legislative procedure,
Whereas:
(1)       In line with the
conclusions of the European Council of 17 June 2010, whereby the Union strategy
for smart, sustainable and inclusive growth was adopted, the Union and the
Member States have set themselves the objective of having at least 20 million
fewer people at risk of poverty and social exclusion by 2020.
(2)       The number of persons
suffering from material or even severe material deprivation in the Union is
increasing and those persons are often too excluded to benefit from the
activation measures of Regulation (EU) No […CPR], and, in particular of
Regulation (EU) No […ESF].
(3)       Article 174 of the Treaty
provides that in order to promote its overall harmonious development, the Union
shall develop and pursue actions leading to the strengthening of its economic,
social and territorial cohesion. 
(4)       The Fund for European Aid
to the Most Deprived (hereinafter the 'Fund') should strengthen social cohesion
by contributing to the reduction of poverty in the Union by supporting national
schemes that provide non-financial assistance to the most deprived persons to alleviate
food deprivation, homelessness and material deprivation of children. 
(5)       Under Article 317 of the
Treaty, and in the context of shared management, the conditions allowing the
Commission to exercise its responsibilities for implementation of the general
budget of the Union should be specified and the responsibilities in terms of
cooperation by the Member States clarified. Those conditions should enable the
Commission to obtain assurance that Member States are using the Fund in a legal
and regular manner and in accordance with the principle of sound financial
management within the meaning of Council Regulation No […] on the Financial
Regulation applicable to the general budget of the European Communities
(hereinafter ‘the Financial Regulation')[3].

(6)       Those provisions also
ensure that the operations supported shall comply with applicable Union and
national laws, notably in regard to the safety of the goods that are
distributed to the most deprived persons.
(7)       In order to set out an
appropriate financial framework, the Commission should establish, by means of
implementing acts, an annual breakdown of global resources by Member State
using an objective and transparent method reflecting disparities in terms of
poverty and material deprivation.
(8)       The operational programme
of each Member State should identify and justify the forms of material
deprivation to be addressed, and describe the objectives and features of the
assistance to the most deprived persons that will be provided through the
support of national schemes. It should also include elements necessary to ensure
effective and efficient implementation of the operational programme.
(9)       In order to maximise
effectiveness of the Fund, in particular as regards the national circumstances,
it is appropriate to set out a procedure for potential amendment of the
operational programme.
(10)     Exchanges of experience and
best practices have a significant added value and the Commission should
facilitate such dissemination.
(11)     In order to monitor the
progress of operational programmes implementation, the Member States should
draw up and provide to the Commission annual and final implementation reports thus
ensuring the availability of essential and up-to-date date information. For the
same purposes, Commission and each Member State should meet every year for a
bilateral review, except if they agree otherwise.
(12)     In order to improve the
quality and design of each operational programme and evaluate the effectiveness
and efficiency of the Fund, ex ante and ex post evaluations should be
conducted. Those evaluations should be supplemented by surveys on the most
deprived persons who have benefited from the operational programme and, if
necessary, by evaluations during the programming period. The responsibilities
of Member States and the Commission in this respect should be specified.
(13)     Citizens have the right to
know how the Union’s financial resources are invested and to what effects. For
the purpose of ensuring wide dissemination of information about the
achievements of the Fund and to ensure accessibility and transparency of funding
opportunities, detailed rules about information and communication, especially in
relation to the responsibilities of the Member States and the beneficiaries,
should be set out.
(14)     Union legislation
concerning the protection of individuals with regard to the processing of
personal data and on the free movement of such data, in particular Directive
95/46/EC of the European Parliament and of the Council of 24 October 1995 on
the protection of individuals with regard to the processing of personal data
and on the free movement[4]
of such data is applicable.
(15)     It is necessary to
establish a maximum level of co-financing from the Fund to the operational
programmes to provide for a multiplier effect of Union resources, while the
situation of Member States facing temporary budget difficulties should be
addressed.
(16)     Uniform and equitable rules
on the eligibility period, operations and expenditures for the Fund should be
applied across the Union. The conditions of eligibility should reflect the specific
nature of the Fund’s objectives and target populations, notably through
adequate conditions of eligibility of the operations as well as forms of
support and rules and conditions of reimbursement.
(17)     [Proposal for a] Regulation
of the European Parliament and of the Council establishing a common
organisation of the markets in agricultural products (Single CMO Regulation)[5] provides that products bought
under public intervention may be disposed of by making them available for the
scheme for food distribution to the most deprived in the Union if that scheme
so provides. Given that, depending on the circumstances, obtaining of food from
the use, processing or sale of such stocks might be economically the most
favourable option, it is appropriate to provide for such a possibility in this
Regulation. The amounts derived from a transaction concerning the stocks should
be used for the benefit of the most deprived, and should not be applied so as
to diminish the obligation of the Member States to co-finance the programme. In
order to ensure the most efficient possible use of the intervention stocks and
the proceeds thereof, the Commission should in accordance with Article 19(e) of
the Regulation (EU) No [CMO] adopt implementing acts establishing procedures by
which the products in intervention stocks may be used, processed or sold for
the purposes of the most deprived programme.
(18)     It is necessary to specify
the types of actions that can be undertaken at the initiative of the Commission
and of the Member States as technical assistance supported by the Fund.
(19)     In accordance with the
principle of shared management, Member States should have the primary
responsibility, through their management and control system, for the
implementation and control of their operational programme.
(20)     Member States should adopt
adequate measures to guarantee the proper set up and functioning of their
management and control systems to give assurance on the legal and regular use
of the Fund. The obligations of Member States as regards the management and
control systems of their operational programme, and in relation to the
prevention, detection and correction of irregularities and breaches of Union
law should therefore be specified.
(21)     Member States should
designate a managing authority, a certifying authority and a functionally
independent auditing authority for their operational programme. To provide
flexibility for Member States in the set-up of control systems, it is
appropriate to provide the option for the functions of the certifying authority
to be carried out by the managing authority. The Member States should also be
allowed to designate intermediate bodies to carry out certain tasks of the
managing authority or the certifying authority. The Member States should in
that case lay down clearly their respective responsibilities and functions.
(22)     The managing authority
bears the main responsibility for the effective and efficient implementation of
the Fund and thus fulfils a substantial number of functions related to operational
programme management and monitoring, financial management and controls as well
as project selection. Its responsibilities and functions should be set out.
(23)     The certifying authority
should draw up and submit to the Commission payment applications. It should
draw up the annual accounts, certifying the completeness, accuracy and veracity
of the annual accounts and that the expenditure entered in the accounts
complies with applicable Union and national rules. Its responsibilities and
functions should be set out.
(24)     The audit authority should
ensure that audits are carried out on the management and control systems, on an
appropriate sample of operations and on the annual accounts. Its
responsibilities and functions should be set out.
(25)     Without
prejudice to the Commission's powers as regards financial control, cooperation
between the Member States and the Commission in the framework of this
Regulation should be ensured and criteria should be established which allow the
Commission to determine, in the context of its strategy of control of national
systems, the level of assurance it should obtain from national audit bodies.
(26)     The
powers and responsibilities of the Commission to verify the effective
functioning of the management and control systems, and to require Member State
action, should be laid down. The Commission should also have the power to carry
out audits focused on issues relating to sound financial management in order to
draw conclusions on the performance of the Fund.
(27)     Union
budget commitments should be effected annually. In order to ensure effective
programme management, it is necessary to lay down common rules for interim
payment requests, the payment of the annual balance and the final balance.
(28)     In
view of ensuring reasonable assurance for the Commission, the application for
interim payment should be reimbursed at a rate of 90% of the eligible
expenditures included in the payment application.
(29)     A
pre-financing at the start of the operational programme should ensure that the
Member State has the means to provide support to the beneficiaries in the
implementation of the operations from the adoption of the operational
programme. This pre-financing should be used exclusively for this purpose and
beneficiaries should receive enough funding to start up an operation upon its
selection.
(30)     In
order to safeguard the Union's financial interests, there should be measures
limited in time that allow the authorising officer by delegation to interrupt
payments where there is evidence to suggest a significant deficiency in the
functioning of the management and control system, evidence of irregularities
linked to a payment application, or a failure to submit documents for the
purpose of the examination and acceptance of accounts.
(31)     In order
to safeguard the Union's financial interests and provide the means to ensure
effective programme implementation, there should be measures allowing for the
suspension by the Commission of payments.
(32)     In
order to ensure that expenditure financed by the Union budget in any given
financial year is used in accordance with the applicable rules, an appropriate
framework should be created for the annual examination and acceptance of
accounts. Under this framework, the designated bodies should submit to the
Commission, in respect of the operational programme, a management declaration
accompanied by the certified annual accounts, an annual summary of the final
audit reports and of controls carried out and an independent audit opinion and
control report.
(33)     It
is necessary to specify the detailed procedure for the annual examination and
acceptance of accounts applicable to the Fund to ensure a clear basis and legal
certainty for those arrangements. It is important to envisage a limited
possibility for the Member State to define a provision in its annual accounts
for an amount, which is subject to an on-going procedure with the audit
authority.
(34)     In
order to safeguard the Union budget, and to provide legal certainty to the
Member States, it is appropriate to lay down the specific arrangements and
procedures for financial corrections by Member States and by the Commission,
and in particular define the circumstances under which breaches of the
applicable Union or national law can lead to financial correction.
(35)     The
frequency of audits on operations should be proportionate to the extent of the
Union's support from the Fund. In particular, the number of audits carried out
should be reduced where the total eligible expenditure for an operation does
not exceed EUR 100 000. Nevertheless, it should be possible to carry out audits
at any time where there is evidence of an irregularity or fraud, or as part of
an audit sample. In order that the level of auditing by the Commission is
proportionate to the risk, the Commission should be able to reduce its audit
work in relation to operational programmes where there are no significant
deficiencies or where the audit authority can be relied on. In addition, the
scope of audits should take fully into account the objective and the features
of the target populations of the Fund.
(36)     In
order to ensure financial discipline, it is appropriate to define the
arrangements for de-commitment of any part of the budget commitment in an
operational programme, in particular where an amount may be excluded from
de-commitment, notably when delays in implementation result from circumstances
which are independent of the party concerned, abnormal or unforeseeable and
whose consequences cannot be avoided despite the diligence shown.
(37)     In
order to supplement and amend certain non-essential elements of this
Regulation, the power to adopt acts in accordance with Article 290 of the
Treaty should be delegated to the Commission in respect of the responsibilities of Member States concerning the procedure for
reporting irregularities and recovery of sums unduly paid, the modalities of
exchange of information of operations, the arrangements for the adequate audit
trail, the conditions of national audits, the designation criteria for managing
authorities and certifying authorities, the identification of commonly accepted
data carriers, and the criteria for establishing the level of financial
correction to be applied. It is of particular importance that the Commission
carry out appropriate consultations during its preparatory work, including at
expert level.
(38)     The
Commission, when preparing and drawing up delegated acts, should ensure a
simultaneous, timely and appropriate transmission of relevant documents to the
European Parliament and Council.
(39)     The
Commission should be empowered to adopt, by means of implementing acts
decisions setting out the annual breakdown of the
global resources by Member State, decisions setting out annual financial
allocations for each Member State, decisions adopting operational
programmes, decisions suspending payments, decisions on financial corrections and,
in the case of decommitment, decisions to amend decisions adopting programmes.
(40)     In
order to ensure uniform conditions for the implementation of this Regulation,
the implementing powers relating to the template for
the annual and final implementation reports and the list of common indicators,
the template for the structured survey on end recipients, the electronic data
exchange system between the Member State and the Commission, the template for
the management declaration, the models for the audit strategy, opinion and
annual control report and methodology for the sampling method, the rules
concerning use of data collected during audits, and the template for payment applications
should be exercised in accordance with Regulation (EU)
No 182/2011 of the European Parliament and of the Council of 16 February 2011
laying down the rules and general principles concerning mechanisms for control
by Member States of the Commission's exercise of implementing powers[6].
(41)     This Regulation respects
fundamental rights and observes the principles recognised in particular by the
Charter of Fundamental Rights of the European Union, including respect for
human dignity and for private and family life, the right to the protection of
personal data, the rights of the child, the rights of the elderly, equality
between men and women, and the prohibition of discrimination. This Regulation
must be applied according to these rights and principles.
(42)     Since
the objective of this Regulation, namely to improve social cohesion in the
Union and contribute to the fight against poverty and social exclusion, cannot
be sufficiently achieved by Member States but can be better achieved at Union
level, the Union may adopt measures, in accordance with the principle of
subsidiarity as set out in Article 5 of the Treaty on European Union. In
accordance with the principle of proportionality, as set out in that Article,
this Regulation does not go beyond what is necessary to achieve that objective,
HAVE ADOPTED THIS REGULATION:
TITLE I. GENERAL PROVISIONS
Article 1
Subject
matter 
1.           This Regulation
establishes the Fund for European Aid to the Most Deprived (hereinafter ‘the
Fund’) for the period from 1 January 2014 to 31 December 2020 and determines
the objectives of the Fund, the scope of its support, the financial resources
available and the criteria for their allocation and lays down the rules necessary
to ensure the effectiveness of the Fund. 
Article 2
Definitions

The following definitions shall apply:
(1)                   
'most deprived persons' means physical persons,
whether individuals, families, households or groups composed of such persons,
whose need for assistance has been established according to the objective criteria
adopted by the national competent authorities, or defined by the partner
organisations and which are approved by those competent authorities;
(2)                   
'partner organisations' means public bodies or non-for-profit
organisations that deliver the food or goods directly or through other partner organisations
to the most deprived persons, and whose operations have been selected by the
managing authority in accordance with Article 29(3)(b);
(3)                   
'national schemes' means any scheme having, at
least partly, the same objectives as the Fund and which is being implemented at
national, regional or local level by public bodies or non-for-profit organisations;
(4)                   
'operation' means a project, contract or action
selected by the managing authority of the operational programme concerned, or
under its responsibility, contributing to the objectives of the operational
programme to which it relates; 
(5)                   
'completed operation' means an operation that
has been physically completed or fully implemented and in respect of which all
related payments have been made by beneficiaries and the support from the
corresponding operational programme has been paid to the beneficiaries;
(6)                   
'beneficiary' means a public or private body
responsible for initiating or initiating and implementing operations;
(7)                   
'end recipient' means the most deprived persons
receiving the food or goods and/or benefiting from the accompanying measures; 
(8)                   
‘public support' means any financial support given
to an operation that originates from the budget of national, regional or local
public authorities, the budget of the Union related to the Fund, the budget of
public law bodies or the budget of associations of public authorities or any
body governed by public law within the meaning of Article 1(9) of Directive
2004/18/EC of the European Parliament and of the Council; 
(9)                   
'intermediate body' means any public or private
body which acts under the responsibility of a managing or certifying authority,
or which carries out duties on behalf of such an authority in relation to beneficiaries'
implementing operations;
(10)               
'accounting year’ means the period from 1 July
to 30 June, except for the first accounting year, in respect of which it means
the period from the starting date for eligibility of expenditure until 30 June
2015, the final accounting year being from 1 July 2022 to 30 June 2023;
(11)               
'financial year' means the period from 1 January
to 31 December.
Article 3
Objectives
The Fund shall promote social cohesion in the
Union by contributing to achieving the poverty reduction target of at least 20
million of the number of persons at risk of poverty and social exclusion in
accordance with the Europe 2020 strategy. The Fund shall contribute to
achieving the specific objective of alleviating the worst forms of poverty in
the Union by providing non-financial assistance to the most deprived persons. This
objective shall be measured by the number of persons receiving assistance from
the Fund.
Article 4
Scope of
support
1.           The Fund shall support
national schemes whereby food products and basic consumer goods for the
personal use of homeless persons or of children are distributed to the most
deprived persons through partner organisations selected by Member States.
2.           The Fund may support
accompanying measures, complementing the provision of food and goods, contributing
to the social inclusion of the most deprived persons.
3.           The Fund shall promote
mutual learning, networking and dissemination of good practices in the area of
non-financial assistance to the most deprived persons. 
Article 5
Principles
(12)               
The part of the Union budget allocated to the
Fund shall be implemented within the framework of shared management between the
Member States and the Commission, in accordance with Article 55(1)(b) of the
Financial Regulation, with the exception of technical assistance at the
initiative of the Commission, which shall be implemented in the framework of
direct management in accordance with Article 55(1) (a) of the Financial
Regulation. 
(13)               
The Commission and the Member States shall
ensure that support from the Fund is consistent with the policies and
priorities of the Union and complementary to other instruments of the Union.
(14)               
Support from the Fund shall be implemented in
close cooperation between the Commission and the Member States.
(15)               
Member States and the bodies designated by them
for that purpose shall be responsible for implementing the operational
programmes and carrying out their tasks under this Regulation in accordance
with the institutional, legal and financial framework of the Member State and
subject to compliance with this Regulation.
(16)               
Arrangements for the implementation and use of
the Fund, and in particular the financial and administrative resources required
in relation to reporting, evaluation, management and control shall take into
account the principle of proportionality having regard to the level of support
allocated.
(17)               
In accordance with their respective
responsibilities, the Commission and the Member States shall ensure
coordination with the European Social Fund, and with other Union policies and
instruments. 
(18)               
The Commission and the Member States and the
beneficiaries shall apply the principle of sound financial management in
accordance with Article 26 of the Financial Regulation.
(19)               
The Commission and the Member States shall
ensure the effectiveness of the Fund, in particular through monitoring,
reporting and evaluation.
(20)               
The Commission and the Member States shall carry
out their respective roles in relation to the Fund with the aim of reducing the
administrative burden for beneficiaries.
(21)               
The Commission and the Member States shall
ensure that equality between men and women and the integration of the gender
perspective are promoted during the various stages of the implementation of the
Fund. The Commission and the Member States shall take appropriate steps to
prevent any discrimination based on sex, racial or ethnic origin, religion or
belief, disability, age or sexual orientation in obtaining access to the Fund. 
(22)               
Operations financed by the Fund shall comply
with applicable Union and national law. In particular, the Fund may only be
used to support distribution of food or goods that are in conformity with the
Union legislation on consumer product safety. 
(23)               
Member States and beneficiaries shall choose the
food products and the goods on the basis of objective criteria. The selection
criteria for the food products, and where appropriate for goods, shall also
take into consideration climatic and environmental aspects, in particular with
a view to reduction of food waste. 
TITLE II RESOURCES AND PROGRAMMING
Article 6
Global resources
1.           The global resources
available for budgetary commitment from the Fund for the period 2014-2020 shall
be EUR 2 500 000 000 at 2011 prices, in accordance with the annual breakdown set
out in Annex II. 
2.           For the purpose of
programming and subsequent inclusion in the general budget of the Union, the
amount of resources shall be indexed at 2% per year. 
3.           The Commission shall adopt
a decision, by means of implementing acts, setting out the annual breakdown of
the global resources by Member State, in accordance with Article 84(5) of
Regulation (EU) No… (CPR), without prejudice to paragraph 4 of this Article, taking
into account the following indicators established by
Eurostat:
(a)         
the population suffering from severe material
deprivation;
(b)         
the population living in households with very
low work intensity.
4.           0.35% of the global
resources shall be allocated to technical assistance at the initiative of the
Commission.
Article 7
Operational
programme
1.           Each Member State shall
submit to the Commission one operational programme covering the period between 1
January 2014 and 31 December 2020 within three months of the entry into force
of this Regulation, containing the following items:
(a)          
an identification of and a justification for selecting
the type(s) of material deprivation to be addressed under the operational
programme and a description for each type of material deprivation addressed of
the main characteristics and the objectives of the distribution of food or
goods and the accompanying measures to be provided, having regard to the results
of the ex ante evaluation carried out in accordance with Article 14; 
(b)         
a description of the corresponding national
scheme(s) for each type of material deprivation addressed;
(c)          
a description of the mechanism setting the eligibility
criteria for the most deprived persons, differentiated if necessary by type of
material deprivation addressed;
(d)         
the criteria for the selection of operations and
a description of the selection mechanism differentiated if necessary by type of
material deprivation addressed;
(e)          
the criteria for the selection of the partner
organisations differentiated if necessary by type of material deprivation
addressed; 
(f)           
a description of the mechanism used to ensure
complementarity with the European Social Fund;
(g)          
a description of the provisions for implementing
the operational programme containing the identification of the managing
authority, the certifying authority where applicable, the audit authority and
the body to which payments are to be made by the Commission and a description
of the monitoring procedure;
(h)          
a description of the measures taken to involve the
competent regional, local and other public authorities as well as bodies
representing civil society and bodies responsible for promoting equality and
non-discrimination in the preparation of the operational programme;
(i)            
a description of the planned use of technical
assistance in accordance with Article 25(2), including actions to reinforce the
administrative capacity of the beneficiaries in relation to the implementation
of the operational programme;
(j)           
a financing plan containing following tables:
(i)      a table specifying for each year in
accordance with Article 18 the amount of the financial appropriation envisaged
for support from the Fund and the co-financing in accordance with Article 18;
(ii)      a table specifying, for the whole
programming period, the amount of the total financial appropriation in respect of
support from the operational programme for each type of material deprivation
addressed as well as the corresponding accompanying measures.
The partner organisations referred to in point
(e) that deliver directly the food or goods shall themselves undertake
activities complementing the provision of material assistance, aiming at the
social inclusion of the most deprived persons, whether or not these activities
are supported by the Fund.
2.           Operational programmes
shall be drawn up by Member States or any authority designated by them in
cooperation with the competent regional, local and other public authorities as
well as bodies representing civil society and bodies responsible for promoting
equality and non-discrimination.
3.           The Member States shall
draft their operational programmes in accordance with the template set out in
Annex I.
Article 8
Adoption of
the operational programme
1.           The Commission shall
assess the consistency of the operational programme with this Regulation and
its contribution to the objectives of the Fund, taking into account the ex
ante evaluation carried out in accordance with Article 14. 
2.           The Commission may make
observations within three months of the date of submission of the operational
programme. The Member State shall provide to the Commission all necessary
additional information and, where appropriate, revise the proposed operational
programme.
3.           Provided that any observations made by the Commission in accordance
with paragraph 2 have been satisfactorily taken into account, the
Commission shall, by means of implementing acts, approve the operational
programme no later than six months after its formal submission by the Member State, but not before 1 January
2014.
Article 9
Amendments
of the operational programme
1.           Member State may submit a
request for amendment of the operational programme. It shall be accompanied by
the revised operational programme and the justification for the amendment.
2.           The Commission shall
assess the information provided in accordance with paragraph 1, taking account
of the justification provided by the Member State. The Commission may make
observations and the Member State shall provide to the Commission all necessary
additional information. 
3.           The Commission shall, by
means of implementing acts, approve the amendment of an operational programme
no later than five months after their formal submission by the Member State
provided that any observations made by the Commission have been satisfactorily
taken into account. 
Article 10
Platform
The Commission shall set up a Union level
platform to facilitate the exchange of experience, capacity building and
networking, as well as dissemination of relevant outcomes in the area of
non-financial assistance to the most deprived persons. 
In addition, the Commission shall consult,
at least once a year, the organisations which represent the partner
organisations at Union level on the implementation of support from the Fund.
TITLE III
MONITORING AND EVALUATION, INFORMATION AND COMMUNICATION
Article 11
Implementation
reports and indicators
1.           From 2015 to 2022, the
Member States shall submit to the Commission, by 30 June of each year, an
annual implementation report for the operational programme in the previous
financial year.
2.           The Member States shall
draft the annual implementation report in accordance with the template adopted
by the Commission, including the list of common input and outcome indicators. 
3.           The annual implementation
reports shall be admissible where they contain all the information required in accordance
with the template referred in paragraph 2, including the common indicators. The
Commission shall inform the Member State concerned within 15 working days from
the date of receipt of the annual implementation report if it is not admissible.
Where the Commission has not sent that information within the time limit, the
report shall be deemed admissible.
4.           The Commission shall
examine the annual implementation report and inform the Member State of its
observations within two months of the receipt of the annual implementation
report. 
Where the Commission does not provide
observations within this time limit, the reports shall be deemed to be accepted.
5.           The Member State shall
submit a final report on implementation of the operational programme by 30
September 2023. 
The Member States shall draft the final
implementation report in accordance with the template adopted by the
Commission.
The Commission shall examine the final
implementation report and inform the Member State of its observations within five
months of receipt of the final report. 
Where the Commission does not provide
observations within this time limit, the reports shall be deemed to be accepted.
6.           The Commission shall adopt
the template for the annual implementation report, including the list of common
indicators and for the final implementation report by means of implementing act.
This implementing act shall be adopted in accordance with the advisory
procedure referred to in Article 60(2).
7.           The Commission may address
observations to a Member State concerning the implementation of the operational
programme. The managing authority shall within three months inform the
Commission of the corrective measures taken.
8.           The managing authority
shall make public a summary of the contents of each annual and final
implementation report.
Article 12
Bilateral review
meeting
1.           The Commission and each Member
State shall meet every year from 2014 to 2022, unless otherwise agreed, to
examine the progress in implementing the operational programme, taking account
of the annual implementation report and the Commission's observations referred
to in Article 11(7), where applicable.
2.           The bilateral review meeting
shall be chaired by the Commission.
3.           The
Member State shall ensure that appropriate follow-up is given to any comments
of the Commission following the meeting.
Article 13
General
provisions on evaluation
1.           Member States shall
provide the resources necessary for carrying out evaluations, and shall ensure
that procedures are in place to produce and collect the data necessary for
evaluations, including data related to the common indicators referred to in
Article 11.
2.           Evaluations shall be
carried out by experts that are functionally independent of the authorities
responsible for operational programme implementation. All evaluations shall be
made public in their entirety.
Article 14
Ex ante
evaluation
1.           Member States shall carry
out an ex ante evaluation of the operational programme.
2.           The ex ante
evaluation shall be carried out under the responsibility of the authority
responsible for preparing the operational programmes. It shall be submitted to
the Commission at the same time as the operational programme, together with an
executive summary. 
3.           Ex ante evaluations shall
appraise the following elements: 
(c)         
the contribution to the Union objective of at
least 20 million fewer people at risk of poverty and social exclusion by 2020,
having regard to the selected type of material deprivation to be addressed,
taking into account national circumstances in terms of poverty and social
exclusion and material deprivation;
(d)         
the internal coherence of the proposed operational
programme and its relation with other relevant financial instruments;
(e)         
the consistency of the allocation of budgetary
resources with the objectives of the operational programme;
(f)           
contribution of the expected outputs to the results;
(g)         
the suitability of the procedures for monitoring
the operational programme and for collecting the data necessary to carry out
evaluations.
Article 15
Evaluation
during the programming period
1.           During the programming
period, the managing authority may carry out evaluations for assessing the
effectiveness and efficiency of the operational programme. 
2.           The managing authority
shall carry out a structured survey on end recipients in 2017 and 2021, in
accordance with the template provided by the Commission. The Commission shall
adopt the template by means of an implementing act. This implementing act shall
be adopted in accordance with the advisory procedure referred to in Article 60(2).
3.           The Commission may carry
out, at its own initiative, evaluation of operational programmes. 
Article
16
Ex
post evaluation
At its own initiative and in close cooperation
with the Member States, the Commission shall carry out, with the assistance of
external experts, an ex-post evaluation, to assess the effectiveness and
sustainability of results obtained as well as to measure the added value of the
Fund. This ex post evaluation shall be completed by 31 December 2023. 
Article 17
Information
and communication 
1.           The Member States shall
provide information on and promote the actions supported by the Fund. The
information shall be addressed to the most deprived persons, the media and the
wider public. It shall highlight the role of the Union and ensure that the
contribution from the Fund is visible.
2.           The managing authority
shall, in order to ensure transparency in the support of the Fund, maintain a
list of operations supported by the Fund in CSV or XML format which shall be
accessible through a website. The list shall include at least information on
the beneficiary name, its address and allocated amount of Union funding as well
as the type of material deprivation addressed. 
The list of operations shall be updated at
least every twelve months. 
3.           During the implementation of
an operation, the beneficiaries and partner organisations shall inform the
public about the support obtained from the Fund by placing at least one poster with
information about the operation (minimum size A3), including about the
financial support from the Union, at a location readily visible to the public, at
each place of provision of the food, goods and any accompanying measure, except
if this is not possible due to the circumstances of the distribution.
Those beneficiaries and partner organisations
which have websites shall also provide a short description of the operation,
including its aims and results, and highlighting the financial support from the
Union.
4.           All information and
communication measures undertaken by the beneficiary and the partner
organisations shall acknowledge support from the Fund to the operation by
displaying the emblem of the Union together with a reference to the Union and
the Fund.
5.           The managing authority
shall inform beneficiaries of publication of the list of operations in
accordance with paragraph 2. The managing authority shall provide information
and publicity kits, including templates in electronic format, to help
beneficiaries and partner organisations to meet their obligations as set out in
paragraph 3.
6.           In processing personal
data pursuant to this Article, the managing authority as well as the beneficiaries
and partner organisations shall comply with Directive 95/46/EC. 
TITLE IV FINANCIAL SUPPORT FROM THE FUND
Article 18
Co-financing
1.           The co-financing rate at
the level of the operational programme shall not be higher than 85% of the
public eligible expenditure.
2.           The Commission decision
adopting an operational programme shall fix the co-financing rate applicable to
the operational programme and the maximum amount of support from the Fund. 
3.           The technical assistance
measures implemented at the initiative of, or on behalf of, the Commission may
be financed at the rate of 100%.
Article 19
Increase in
payments for Member States with temporary budgetary difficulties 
1.           At the request of a Member
State, interim payments and payments of the final balance may be increased by
10 percentage points above the co-financing rate applicable to the operational
programme. The increased rate, which can not exceed 100%, shall apply to
requests for payment relating to the accounting period in which the Member
State has submitted its request and subsequent accounting periods during which
the Member State meets one of the following conditions:
(h)         
where the Member State concerned has adopted the
euro, it receives macro-financial assistance from the Union in accordance with Council
Regulation (EU) No 407/2010[7];
(i)           
where the Member State concerned has not adopted
the euro, it receives medium-term financial assistance in accordance with
Council Regulation (EC) No 332/2002[8];
(j)           
financial assistance is made available to it in
accordance with the Treaty establishing the European Stability Mechanism.
2.           Notwithstanding paragraph
1, Union support through interim payments and payments of the final balance
shall not be higher than the public support and the maximum amount of support
from the Fund, as laid down in the Commission decision approving the operational
programme.
Article 20
Eligibility
period
1.           Expenditure shall be
eligible for a support from the operational programme if it is incurred and
paid by a beneficiary between 1 January 2014 and 31 December 2022. 
2.           Operations shall not be
selected for support by the operational programme where they have been
physically completed or fully implemented before the application for funding
under the operational programme is submitted by the beneficiary to the managing
authority, irrespective of whether all related payments have been made by the
beneficiary.
3.           This Article shall be
without prejudice to the rules on eligibility of technical assistance at the
initiative of the Commission as set out in Article 25.
4.           In
the case of amendment of an operational programme, expenditure becoming
eligible because of the amendment to the operational programme shall only be
eligible from the date of submission to the Commission of the request for
amendment.
Article 21
Eligibility
of operations
1.           Operations
supported by the operational programme shall be located in the Member State
covered by the operational programme.
2.           Operations
may receive support from the operation programme provided that they have been
selected in accordance with a fair and transparent procedure, on the basis of
the criteria laid down in the operational programme.
3.           The food and the goods for
homeless persons or for children may be purchased by the partner organisations
themselves. 
They may also be purchased by a public body and
made available free of charge to the partner organisations. In that case, the
food may be obtained from the use, processing or sale of the products in
intervention stocks made available in accordance with Article 15 of the
Regulation (EU) No [CMO], provided that this is economically the most
favourable option and does not unduly delay the delivery of the food products
to the partner organisations. Any amount derived from a transaction concerning
those stocks shall be used for the benefit of the most deprived persons, and
shall not be applied so as to diminish the obligation of the Member States,
provided in Article 18 of this Regulation, to co-finance the programme.
The Commission shall apply the procedures
adopted pursuant to Article 19(e) of the Regulation (EU) No [CMO] by which the
products in intervention stocks may be used, processed or sold for the purposes
of this Regulation, in order to ensure the most efficient possible use of the
intervention stocks and the proceeds thereof.
4.           That material assistance
shall be distributed free of charge to the most deprived persons. 
5.           An
operation supported by the Fund shall not receive support from another Union
instrument. 
Article 22
Forms of support
The Fund shall be used by Member States to
provide support in the forms of grants, procurement or a combination thereof.
Article 23
Forms of
grants
1.           Grants
may take the following forms:
(k)         
reimbursement of eligible costs actually
incurred and paid;
(l)           
reimbursement on the basis of unit costs;
(m)       
lump sums not exceeding EUR 100 000 of public
support;
(n)         
flat-rate financing, determined by the
application of a percentage to one or several defined categories of costs.
2.           The options referred to in
paragraph 1 may be combined only where each is applied to different categories
of costs or where they are used for successive phases of an operation.
3.           The
amounts referred to in paragraph 1(b), (c) and (d) shall be established on the
basis of:
(a)          
a fair, equitable and verifiable calculation
method based on one of the following:
(i) statistical data or other objective
information; or
(ii) the verified historical data of
individual beneficiaries or the application of their usual cost accounting
practices;
(b)         
methods and corresponding unit costs, lump sums
and flat-rate financing applied under schemes for grants funded entirely by the
Member State concerned for a similar type of operation and beneficiary;
(c)          
rates established by this Regulation;
(d)         
a case-by-case basis by reference to a draft
budget agreed ex ante by the managing authority, where public support does not
exceed EUR 100 000.
4.           The
amounts calculated in the forms referred to in paragraph 1(b), (c) and (d)
shall be regarded as eligible expenditure incurred and paid by the beneficiary for
the purpose of applying Title VI.
5.           The document setting out
the conditions for support for each operation shall set out the method to be
applied for determining the costs of the operation and the conditions for
payment of the grant.
Article 24
Eligibility
of expenditure 
1.           The costs eligible for a support
from the operational programme shall be:
(o)         
the costs of purchasing food and basic consumer
goods for personal use of homeless persons or of children;
(p)         
where a public body purchases the food or basic
consumer goods for personal use of homeless persons or of children and provide
them to partner organisations, the costs of transporting of food or goods to
the storage depots of the partner organisations at a flat rate of 1 % of the
costs referred to in point (a); 
(q)         
the administrative, transport and storage costs borned
by the partner organisations at a flat rate of 5% of the costs referred to in
point (a); 
(r)          
the costs of social inclusion activities
undertaken and declared by the partner organisations delivering directly the material
assistance to the most deprived persons at a flat rate of 5% of the costs
referred to in point (a);
(s)          
costs incurred pursuant to Article 25.
2.           The
following costs shall not be eligible for a support from the operational
programme:
(t)           
interest on debt;
(u)         
costs of second-hand goods;
(v)         
value added tax. However, VAT amounts shall be
eligible where they are not recoverable under national VAT legislation and are
paid by a beneficiary other than a non-taxable person as defined in the first
subparagraph of Article 13(1) of Council Directive 2006/112/EC[9].
Article 25
Technical assistance
1.           At the initiative of, or
on behalf of the Commission, subject to a ceiling of 0,35 % of its annual
allocation, the Fund may finance preparation, monitoring, administrative and
technical assistance, audit, information, control and evaluation measures
necessary for implementing this Regulation as well as activities related to the
platform, pursuant to Article 10. 
2.           At the initiative of the
Member States, subject to a ceiling of 4 % of the Fund allocation, the operational
programme may finance preparation, management, monitoring, administrative and
technical assistance, audit, information, control and evaluation measures
necessary for implementing this Regulation. It may also finance technical
assistance and capacity building of partner organisations. 
TITLE V MANAGEMENT
AND CONTROL
Article 26
General
principles of Member State management and control systems
Management and control systems shall
provide for:
(b)                   
a description of the functions of each body
concerned in management and control, and the allocation of functions within
each body;
(c)                   
compliance with the principle of separation of
functions between and within such bodies;
(d)                   
procedures for ensuring the correctness and
regularity of expenditure declared;
(e)                   
computerised systems for accounting, for the
storage and transmission of financial data and data on indicators, for
monitoring and for reporting;
(f)                     
systems for reporting and monitoring where the
responsible body entrusts execution of tasks to another body;
(g)                   
arrangements for auditing the functioning of the
management and control systems;
(h)                   
systems and procedures to ensure an adequate
audit trail;
(i)                     
the prevention, detection and correction of
irregularities, including fraud, and the recovery of amounts unduly paid,
together with any interest;
Article 27
Responsibilities
of Member States
1.           Member States shall fulfil
the management, control and audit obligations and assume the resulting
responsibilities laid down in the rules on shared management set out in the
Financial Regulation and this Regulation. In accordance with the principle of
shared management, Member States shall be responsible for the management and
control of operational programmes.
2.           Member States shall
prevent, detect and correct irregularities and shall recover amounts unduly
paid, together with any interest on late payments. They shall notify these
irregularities to the Commission and shall keep the Commission informed of the
progress of related administrative and legal proceedings.
When amounts unduly paid to a beneficiary
cannot be recovered and this is as a result of fault or negligence on the part
of a Member State, the Member State shall be responsible for reimbursing the
amounts concerned to the general budget of the Union.
The Commission shall be empowered to adopt delegated
acts in accordance with Article 59 laying down detailed rules concerning the
obligations of the Member States specified in this paragraph.
3.           Member States shall
establish and implement a procedure for the independent examination and resolution
of complaints concerning the selection or implementation of operations co-financed
by the Fund. Member States shall report the results of such examinations to the
Commission upon request.
4.           All official exchanges of
information between the Member State and the Commission shall be carried out
using an electronic data exchange system established in compliance with the
terms and conditions laid down by the Commission by means of implementing acts.
Those implementing acts shall be adopted in accordance with the examination
procedure referred to in Article 60(3).
Article 28
Designation
and organisation of management and control bodies
1.           The Member State shall
designate a national public authority or body as managing authority. 
2.           The Member State shall designate
a national public authority or body as a certifying authority, without
prejudice to paragraph 3. 
3.           The Member State may
designate a managing authority which carries out in addition the functions of
the certifying authority.
4.           The Member State shall
designate a national public authority or body, functionally independent from
the managing authority and the certifying authority, as audit authority. 
5.           Provided that the
principle of separation of functions is respected, the managing authority, the certifying
authority, where applicable, and the audit authority may be part of the same
public authority or body.
6.           The Member State may
designate one or more intermediate bodies to carry out certain tasks of the
managing or the certifying authority under the responsibility of that
authority. The relevant arrangements between the managing authority or
certifying authority and the intermediate bodies shall be formally recorded in
writing.
7.           The Member State or the
managing authority may entrust the management of part of the operational
programme to an intermediate body by way of an agreement in writing between the
intermediate body and the Member State or managing authority. The intermediate
body shall provide guarantees of its solvency and competence in the domain
concerned, as well as its administrative and financial management.
8.           The Member State shall lay
down in writing rules governing its relations with the managing authority,
certifying authority and audit authority, the relations between such authorities,
and the relations of such authorities with the Commission.
Article 29
Functions
of the managing authority
1.           The managing authority
shall be responsible for managing the operational programme in accordance with
the principle of sound financial management.
2.           As regards the management
of the operational programme, the managing authority shall:
(a)         
draw up and submit to the Commission annual and
final implementation reports;
(b)         
make available to intermediate bodies and
beneficiaries information that is relevant to the execution of their tasks and
the implementation of operations respectively;
(c)         
establish a system to record and store in
computerised form data necessary for monitoring, evaluation, financial management,
verification and audit;
(d)         
ensure that the data referred to in point (c) is
collected, entered and stored in the system, in compliance with the provisions
Directive 95/46/CE.
3.           As regards the selection of
operations, the managing authority shall:
(e)         
Draw up and apply appropriate selection
procedures and criteria that are non-discriminatory and transparent;
(f)           
ensure that the selected operation:
(i)      falls within the scope of the Fund
and the operational programme;
(ii)      fulfils the criteria set out in the
operational programme and in Articles 20, 21 and 24;
(iii)     takes into account the principles
set out in Article 5(10), (11) and (12).
(g)         
provide to the beneficiary a document setting
out the conditions for support of each operation including the specific
requirements concerning the products or services to be delivered under the
operation, the financing plan, and the time-limit for execution;
(h)         
satisfy itself that the beneficiary has the
administrative, financial and operational capacity to fulfil the conditions
defined in point (c) before approval of the operation;
(i)           
satisfy itself that, where the operation has
started before the submission of an application for funding to the managing
authority, Union and national rules relevant for the operation have been
complied with;
(j)           
determine the type of material assistance to which
the expenditure of an operation shall be attributed.
4.           As regards the financial
management and control of the operational programme, the managing authority
shall:
(k)         
verify that the co-financed products and
services have been delivered and that expenditure declared by the beneficiaries
has been paid by them and that it complies with applicable Union and national
law, the operational programme and the conditions for support of the operation;
(l)           
ensure that beneficiaries involved in the
implementation of operations reimbursed pursuant to Article 23(1)(a) maintain
either a separate accounting system or an adequate accounting code for all
transactions relating to an operation;
(m)       
put in place effective and proportionate
anti-fraud measures taking into account the risks identified;
(n)         
set up procedures to ensure that all documents
regarding expenditure and audits required to ensure an adequate audit trail are
held in accordance with the requirements of Article 26(g);
(o)         
draw up the management declaration and annual summary referred to in Article 56 (5) (a) and (b) of the
Financial Regulation.
5.           Verifications pursuant to
paragraph 4(a) shall include the following procedures:
(p)         
administrative verifications in respect of each
application for reimbursement by beneficiaries;
(q)         
on-the-spot verifications of operations.
The frequency and coverage of the on-the-spot
verifications shall be proportionate to the amount of public support to an
operation and the level of risk identified by these verifications and audits by
the audit authority for the management and control system as a whole.
6.           On-the-spot verifications
of individual operations pursuant to paragraph (5)(b) may be carried out on a
sample basis.
7.           Where the managing
authority is also a beneficiary under the operational programme, arrangements
for the verifications referred to in paragraph 4(a) shall ensure adequate
separation of functions.
8.           The Commission shall adopt
delegated acts, in accordance with Article 59, laying down the modalities of
the exchange of information in paragraph 2(c).
9.           The Commission shall adopt
delegated acts, in accordance with Article 59, laying down rules concerning
arrangements for the audit trail referred to in paragraph 4(d).
10.         The Commission shall adopt,
by means of implementing acts, the template for the management declaration
referred to in paragraph 4(e). Those implementing acts shall be adopted in
accordance with the advisory procedure referred to in Article 60(2).
Article 30
Functions
of the certifying authority
The certifying authority shall be
responsible in particular for the following:
1.           drawing up and submitting
to the Commission payment applications and certifying that these result from
reliable accounting systems, are based on verifiable supporting documents and
have been subject to verifications by the managing authority;
2.           drawing up the annual
accounts referred to in Article 56 (5) (a) of the
Financial Regulation;
3.           certifying the
completeness, accuracy and veracity of the annual accounts and that the
expenditure entered in the accounts complies with applicable Union and national
rules and has been incurred in respect of operations selected for funding in
accordance to the criteria applicable to the operational programme and
complying with Union and national rules;
4.           ensuring that there is a
system which records and stores, in computerised form, accounting records for
each operation, and which supports all the data required for drawing up payment
applications and annual accounts, including records of amounts recoverable,
amounts recovered and amounts withdrawn following cancellation of all or part
of the contribution for an operation or the operational programme;
5.           ensuring for the purposes
of drawing up and submission of payment applications that it has received
adequate information from the managing authority on the procedures and
verifications carried out in relation to expenditure;
6.           taking into account when
drawing up and submitting payment applications the results of all audits
carried out by or under the responsibility of the audit authority;
7.           maintaining accounting
records in a computerised form of expenditure declared to the Commission and the
corresponding public contribution paid to the beneficiaries;
8.           keeping an account of
amounts recoverable and of amounts withdrawn following cancellation of all or
part of the contribution for an operation. Amounts recovered shall be repaid to
the general budget of the Union prior to the closure of the operational
programme by deducting them from the next statement of expenditure.
Article 31
Functions
of the audit authority
1.           The audit authority shall
ensure that audits are carried out on the management and control systems, on an
appropriate sample of operations and on the annual accounts.
The Commission shall be empowered to adopt delegated
acts in accordance with Article 59 to set out the conditions which those audits
shall fulfil.
2.           Where audits are carried
out by a body other than the audit authority, the audit authority shall ensure
that any such body has the necessary functional independence.
3.           The audit authority shall
ensure that audit work takes account of internationally accepted audit
standards.
4.           The audit authority shall,
within six months of adoption of the operational programme, prepare an audit
strategy for performance of audits. The audit strategy shall set out the audit
methodology, the sampling method for audits on operations and the planning of
audits in relation to the current accounting year and the two subsequent
accounting years. The audit strategy shall be updated annually from 2016 until
and including 2022. The audit authority shall submit the audit strategy to the
Commission upon request.
5.           The audit authority shall
draw up the following:
(r)          
an audit opinion in accordance with Article 56 (5) of the Financial Regulation;
(s)          
an annual control report setting out the
findings of the audits carried out during the preceding accounting year.
The report under point (b) shall set out any
deficiencies found in the management and control system and any corrective
measures taken or proposed to be taken.
6.           The Commission shall
adopt, by means of implementing acts, models for the audit strategy, the audit
opinion and the annual control report, as well as the methodology for the
sampling method referred to in paragraph 4. Those implementing acts shall be
adopted in accordance with the examination procedure referred to in Article 60(3).
7.           Implementing rules
concerning the use of data collected during audits carried out by Commission
officials or authorised Commission representatives shall be adopted by the
Commission in accordance with the examination procedure referred to in Article 60(3).
Article 32
Procedure
for designation of the managing and the certifying authorities
1.           Member states shall notify
to the Commission the date and form of the designation of the managing
authority and, where appropriate the certifying authority, within six months of
the adoption of decision adopting the operational programme.
2.           The designation referred
to in paragraph 1 shall be based on a report and an opinion of an independent
audit body that assesses the management and control system, including the role
of intermediate bodies therein, and its compliance with Articles 26, 27, 29 and
30, in accordance with criteria on internal environment, control activities,
information and communication, and monitoring established by the Commission by
means of delegated act in accordance with Article 59.
3.           The independent body shall
carry out its work in accordance with internationally accepted audit standards.

4.           Member States may decide
that a managing authority or a certifying authority which has been designated
in relation to an ESF co-financed operational programme pursuant to Regulation
(EU) No [CPR] is deemed to be designated for the purposes of this Regulation.
The Commission may request, within two months
of receipt of the notification referred to in paragraph 1, the report and the
opinion of the independent audit body and the description of the management and
control system.
The Commission may make observations within two
months of receipt of those documents.
5.           The Member State shall
supervise the designated body and withdraw its designation by formal decision
if one or more of the criteria referred to in paragraph 2 are no longer met,
unless the body takes the necessary remedial actions within a period of
probation to be determined by the Member State according to the severity of the
problem. The Member State shall notify the Commission immediately of the
setting of any probation period for a designated body and of any withdrawal
decision.
Article 33
Commission
powers and responsibilities
1.           The Commission shall
satisfy itself on the basis of available information, including the information
on the designation of the managing authority and the certifying authority,
annual management declaration, annual control reports, annual audit opinion,
annual implementation report and audits carried out by national and Union
bodies, that the Member States have set up management and control systems that
comply with this Regulation and that these systems function effectively during
the implementation of operational programme.
2.           Without prejudice to
audits carried out by Member States, Commission officials or authorised
Commission representatives may carry out on-the-spot audits or checks upon
giving adequate prior notice. The scope of such audits or checks may include,
in particular, verification of the effective functioning of management and
control systems in an operational programme or a part thereof, operations and
assessment of the sound financial management of operations or operational
programme. Officials or authorised representatives of the Member State may take
part in such audits.
Commission officials or authorised Commission
representatives, duly empowered to carry out on-the-spot audits, shall have
access to all records, documents and metadata, irrespective of the medium in
which they are stored, relating to operations supported by the Fund or to
management and control systems. Member States shall provide copies of such
records, documents and metadata to the Commission upon request.
The powers set out in this paragraph shall not
affect the application of national provisions which reserve certain acts for
agents specifically designated by national legislation. Commission officials
and authorised representatives shall not take part, inter alia, in home visits
or the formal questioning of persons within the framework of national
legislation. However, they shall have access to the information thus obtained.
3.           The Commission may require
a Member State to take the actions necessary to ensure the effective
functioning of their management and control systems or the correctness of expenditure
in accordance with this Regulation.
4.           The Commission may require
a Member State to examine a complaint submitted to the Commission concerning
the implementation of operations co-financed by the Fund or the functioning of
the management and control system.
Article 34
Cooperation
with audit authority
1.           The Commission shall
cooperate with audit authorities to coordinate their audit plans and methods
and shall immediately exchange the results of audits carried out on management
and control systems.
2.           The Commission and the
audit authority shall meet on a regular basis and at least once a year, unless
otherwise agreed, to examine the annual control report, the opinion and the
audit strategy, and to exchange views on issues relating to improvement of the
management and control systems.
Title VI Financial management, examination and acceptance
of accounts, financial corrections, decommitments
Chapter 1. Financial management
Article 35
Budget
commitments
The budget commitments of the Union in
respect of each operational programme shall be made in annual instalments
during the period between 1 January 2014 and 31 December 2020. The decision of
the Commission adopting the operational programme shall constitute the
financing decision within the meaning of Article 81(2) of the Financial
Regulation and once notified to the Member State concerned, a legal commitment
within the meaning of that Regulation.
The budget commitment for the first
instalment shall follow the adoption of the operational programme by the
Commission.
The budget commitments for subsequent
instalments shall be made by the Commission before 1 May of each year, on the
basis of the decision referred to in the second subparagraph, except where
Article 13 of the Financial Regulation applies.
Article 36
Payments
by the Commission
1.           Payments by the Commission
of the contribution from the Fund to each operational programme shall be made
in accordance with budget appropriations and subject to available funding. Each
payment shall be posted to the earliest open budget commitment of the Fund.
2.           Payments shall take the
form of pre-financing, interim payments and payment of the annual balance,
where applicable, and of the final balance.
Article 37
Interim
payments, payment of the annual balance and payment of the final balance by the
Commission
1.           The Commission shall
reimburse as interim payments 90% of the amount resulting from applying the
co-financing rate laid down in the decision adopting the operational programme
corresponding to the public eligible expenditure included in the payment
application. It shall determine the annual balance in accordance with Article 47(2).
2.           Notwithstanding Article
19, the Union support through the interim payments and the payment of the final
balance shall not be higher than the maximum amount of support from the Fund as
laid down in the decision of the Commission approving the operational
programme. 
3.           The cumulative total of
pre-financing and interim payments and the annual balance by the Commission
shall not exceed 95 % of the contribution from the Fund to the operational
programme.
4.           When the ceiling of 95 %
is reached, the Member States shall continue transmitting requests for payment
to the Commission.
Article 38
Payment
applications to the Commission
1.           The payment application to
be submitted to the Commission shall provide all the information necessary for
the Commission to produce accounts in accordance with Article 65(1) of the
Financial Regulation.
2.           Payment applications shall
include for the  operational programme as a whole and for technical assistance
referred to in article 25.2:
(t)           
the total amount of eligible expenditure
incurred and paid by beneficiaries for implementing the operations, as entered
into the accounts of the certifying authority; 
(u)         
the total amount of public eligible expenditure
incurred in implementing operations as entered into the accounts of the
certifying authority;
(v)         
the corresponding public eligible contribution which
has been paid to the beneficiaries, as entered in the accounts of the
certifying authority.
3.           Expenditure included in a
payment application shall be supported by receipted invoices or accounting
documents of equivalent probative value. For the forms of grants referred to in
Article 23(1)(b) and (c) and (d), the amounts included in a payment application
shall be the amounts paid to the beneficiaries by the managing authority. 
4.           The Commission shall
adopt, by means of implementing acts, the template for payment applications.
Those implementing acts shall be adopted in accordance with the advisory
procedure referred to in Article 60(2).
Article 39
Payments to
beneficiaries 
1.           Managing authority shall
ensure that, in the case of grants to partner organisations, beneficiaries are
provided with a flow sufficient to ensure proper implementation of the
operations. 
2.           Managing authority shall
ensure that the beneficiaries receive the total amount of public support as
quickly as possible and in full and in any event before the inclusion of the
corresponding expenditure in the payment application. No amount shall be
deducted or withheld and no specific charge or other charge with equivalent
effect shall be levied that would reduce these amounts for the beneficiaries. 
Article 40
Use
of the Euro
1.           Amounts set out in operational
programme submitted by Member States, statements of expenditure, requests for
payment, annual accounts and expenditure mentioned in the annual and final
implementation reports shall be denominated in euro.
2.           Member States which have
not adopted the euro as their currency on the date of an application for
payment shall convert the amounts of expenditure incurred in national currency
into euro. This amount shall be converted into euro using the monthly
accounting exchange rate of the Commission in the month during which the
expenditure was registered in the accounts of the managing authority. This rate
shall be published electronically by the Commission each month.
3.           When the euro becomes the
currency of a Member State, the conversion procedure set out in paragraph 1
shall continue to apply to all expenditure recorded in the accounts by the
managing authority before the date of entry into force of the fixed conversion
rate between the national currency and the euro.
Article 41
Payment
and clearance of pre-financing
1.           Following the Commission
decision adopting the operational programme, a pre­-financing amounting 11% of
the Fund overall contribution to the operational programme concerned shall be
paid by the Commission. 
2.           Pre-financing shall be
used only for making payments to beneficiaries in the implementation of the operational
programme. It shall be made available without delay to the responsible body for
this purpose.
3.           The total amount paid as
pre-financing shall be reimbursed to the Commission if no payment application
for the operational programme concerned is sent within 24 months of the date on
which the Commission pays the first pre-financing amount. The Community
contribution to the operational programme concerned shall not be affected by
such reimbursement.
4.           The amount paid as pre-financing
shall be totally cleared from the Commission accounts at the latest when the
operational programme is closed. 
Article 42
Time
limit for presentation of interim payment applications and for their payment
1.           The certifying authority
shall submit on a regular basis an application for interim payment covering
amounts entered in its accounts as public support paid to beneficiaries in the
accounting year ending 30 June.
2.           The certifying authority
shall submit the final application for interim payment by 31 July following the
end of the previous accounting year and, in any event, before the first
application for interim payment for the next accounting year.
3.           The first application for
interim payment shall not be made before the notification to the Commission of
the designation of the managing authority and the certifying authority in
accordance to Article 32(1).
4.           Interim payments shall not
be made for an operational programme where the annual implementation report has
not been sent to the Commission in accordance with Article 11.
5.           Subject to available funding,
the Commission shall make the interim payment no later than 60 days after the
date on which a payment application is registered with the Commission.
Article 43
Interruption
of the time limit payment 
1.           The time limit for the payment
of an interim payment claim may be interrupted by the authorising officer by
delegation within the meaning of the Financial Regulation for a maximum period
of nine months when the following conditions are met:
(w)       
on the basis of the information provided by a
national or Union audit body, there is evidence to suggest a significant
deficiency in the functioning of the management and control system;
(x)         
the authorising officer by delegation has to
carry out additional verifications following information coming to his
attention alerting him that expenditure in a request for payment is linked to
an irregularity having serious financial consequences;
(y)         
there is a failure to submit one of the
documents required under Article 45(1).
2.           The authorising officer by
delegation may limit the interruption to the part of the expenditure covered by
the payment claim affected by the elements referred to in paragraph 1. The
authorising officer by delegation shall inform the Member State and the
managing authority immediately of the reason for interruption and shall ask
them to remedy the situation. The interruption shall be ended by the
authorising officer by delegation as soon as the necessary measures have been
taken.
Article 44
Suspension
of payments
1.           All or part of the interim
payments may be suspended by the Commission where:
(z)          
there is a serious deficiency in the management
and control system of the operational programme for which corrective measures
have not been taken;
(aa)      
expenditure in a statement of expenditure is
linked to an irregularity having serious financial consequences which has not
been corrected;
(bb)     
the Member State has failed to take the
necessary action to remedy the situation giving rise to an interruption under
Article 43;
(cc)      
there is a serious deficiency in the quality and
reliability of the monitoring system or of the data on indicators.
2.           The Commission may decide,
by means of implementing acts, to suspend all or part of interim payments,
after having given the Member State the opportunity to present its
observations.
3.           The Commission shall end
suspension of all or part of interim payments where the Member State has taken
the necessary measures to enable the suspension to be lifted.
Chapter 2 Examination and acceptance of
accounts
Article 45
Submission of information
1.           For each year from 2015
until and including 2022, by 15 February of the year following the end of the
accounting period, the designated bodies shall submit to the Commission the
following documents and information in accordance with Article 56 of the
Financial Regulation:
(dd)     
the certified annual accounts of the relevant
bodies designated pursuant to Article 32 as referred to in Article 56(5) of the
Financial Regulation;
(ee)      
the management declaration as referred to in
Article 56(5) of the Financial Regulation;
(ff)         
an annual summary of the final audit reports and
of controls carried out, including an analysis of the nature and extent of errors
and of weaknesses, as well as corrective actions taken or planned;
(gg)      
an audit opinion by the designated independent
audit body as referred in Article 56(5) of the Financial Regulation,
accompanied by a control report setting out the findings of the audits carried
out relating to the accounting year covered by the opinion.
2.           Upon request by the
Commission, the Member State shall provide further information to the
Commission. If a Member State does not provide the requested information by the
deadline for its submission set by the Commission, the Commission may take its
decision on the acceptance of the accounts on the basis of the information in
its possession.
Article 46
Content
of accounts
1.           The certified accounts for
each operational programme shall cover the
accounting year and shall include the following as a whole and for technical
assistance expenditure referred to in article 25.2:
(hh)      
the total amount of eligible expenditure entered
into the accounts of the certifying authority as having been incurred and paid
by beneficiaries in implementing operations, the total amount of public
eligible expenditure incurred in implementing operations and the corresponding eligible
public contribution which has been paid to beneficiaries; 
(ii)          
the amounts withdrawn and recovered during the
accounting year, the amounts to be recovered as at the end of the accounting
year and the irrecoverable amounts;
(jj)         
a reconciliation between the expenditure stated
pursuant to point (a) and the expenditure declared in respect of the same
accounting year in payment applications, accompanied by an explanation of any
differences.
2.           The certifying authority
may specify in the accounts a provision,
which shall not exceed 5 % of the total expenditure in payment applications presented
for a given accounting year, where the assessment of the legality and regularity
of the expenditure is subject to an on-going procedure with the audit authority.
The amount covered shall be excluded from the total amount of eligible
expenditure referred to in paragraph 1(a). These amounts shall be definitively
included in, or excluded from, the annual accounts of the following year.
Article 47
Examination
and acceptance of accounts
1.           By 30 April of the year
following the end of the accounting period, the Commission shall decide on the acceptance
of the accounts of the relevant bodies designated pursuant to Article 28 for
the operational programme. The acceptance decision shall cover the
completeness, accuracy and veracity of the accounts submitted and shall be
without prejudice to any subsequent financial corrections.
2.           For the purposes of
calculating the amount chargeable to the Fund for an accounting year, the Commission
shall take into account:
(kk)     
the public eligible expenditure incurred in
implementing operations entered into the accounts referred to in Article
46(1)(a), to which shall be applied the co-financing rate defined in Article
18; 
(ll)          
the total amount of payments made by the
Commission during that accounting year, consisting of the amount of interim payments
paid by the Commission in accordance with Article 37(1) and Article 19.
3.           The annual balance which,
as a result of the acceptance of accounts, is recoverable from the Member State
shall be subject to a recovery order of the Commission. The annual balance
payable to the Member State shall be added to the next interim payment made by
the Commission following the examination and acceptance of accounts.
4.           If, for reasons
attributable to a Member State, the Commission is not in a position to accept the
accounts by 30 April of the year following the end of an accounting year, the
Commission shall notify the Member State of the actions that must be undertaken
by the managing authority or audit authority, or of the additional enquiries
the Commission proposes to undertake pursuant to Article 33(2) and (3).
5.           Payment of the annual
balance by the Commission shall be based on the expenditure declared in the
accounts, net of any provision made in respect of expenditure declared to the
Commission which is subject to a contradictory procedure with the audit
authority.
Article 48
Availability
of documents
1.           The managing authority
shall ensure that all supporting documents on operations are made available to
the Commission and the European Court of Auditors upon request for a period of three
years. This three year period shall run from 31 December of the year of the
decision on acceptance of accounts by the Commission pursuant to Article 47 or,
at the latest, from the date of payment of the final balance.
This three year period shall be interrupted
either in the case of legal or administrative proceedings or by a duly
justified request of the Commission.
2.           The documents shall be
kept either in the form of the originals, or certified true copies of the
originals, or on commonly accepted data carriers including electronic versions
of original documents or documents existing in electronic version only.
3.           The documents shall be
kept in a form which permits identification of data subjects for no longer than
is necessary for the purposes for which the data were collected or for which
they are further processed.
4.           The Commission shall be
empowered to adopt delegated acts in accordance with Article 59 to set out
which data carriers can be considered as commonly accepted.
5.           The procedure for
certification of conformity of documents held on commonly accepted data
carriers with the original document shall be laid down by the national
authorities and shall ensure that the versions held comply with national legal
requirements and can be relied on for audit purposes.
6.           Where documents exist in
electronic version only, the computer systems used must meet accepted security
standards that ensure that the documents held comply with national legal
requirements and can be relied on for audit purposes.
Article 49
Submission
of closure documents and payment of the final balance
1.           Member States shall submit
the following documents by 30 September 2023:
(mm)  
an application for payment of the final balance;
(nn)      
a final implementation report for the operational
programme; and
(oo)     
the documents referred to in Article 45(1) for
the final accounting year, from 1 July 2022 to 30 June 2023.
2.           The final balance shall be
paid no later than three months after the date of acceptance of accounts of the
final accounting year or one month after the date of acceptance of the final
implementation report, whichever date is later. 
Chapter 3 Financial corrections and
recoveries
Article 50
Financial
corrections by Member States
1.           The Member States shall in
the first instance be responsible for investigating irregularities and for
making the financial corrections required and pursuing recoveries. In the case
of a systemic irregularity, the Member State shall extend its investigation to
cover all operations potentially affected.
2.           The Member State shall
make the financial corrections required in connection with individual or
systemic irregularities detected in operations or the operational programme.
Financial corrections shall consist of cancelling all or part of the public
contribution to an operation or the operational programme. The Member State
shall take into account the nature and gravity of the irregularities and the
financial loss to the Fund and shall apply a proportionate correction.
Financial corrections shall be recorded in the annual accounts by the managing
authority for the accounting year in which the cancellation is decided
3.           The contribution from the
Fund cancelled in accordance with paragraph 2 may be reused by the Member State
within the operational programme concerned, subject to paragraph 4.
4.           The contribution cancelled
in accordance with paragraph 2 may not be reused for any operation that was the
subject of the correction or, where a financial correction is made for a
systemic irregularity, for any operation affected by the systemic irregularity.
5.           A financial correction by
the Commission shall not prejudice the Member State's obligation to pursue
recoveries under the present Article. 
Article 51
Financial
corrections by the Commission
1.           The Commission shall make
financial corrections, by means of implementing act, by cancelling all or part
of the Union contribution to an operational programme and effecting recovery
from the Member State in order to exclude from Union financing expenditure
which is in breach of applicable Union and national law, including in relation
to deficiencies in the management and control systems of Member States which
have been detected by the Commission or the European Court of Auditors.
2.           A breach of applicable
Union or national law shall lead to a financial correction only when one of the
following conditions is met:
(pp)     
the breach has or could have affected the
selection of an operation by the managing authority for support by the Fund;
(qq)     
the breach has or could have affected the amount
of expenditure declared for reimbursement by the Union budget.
Article 52
Criteria
for financial correction by the Commission
1.           The Commission shall make
financial corrections after carrying out the necessary examination, it
concludes that:
(rr)        
there is a serious deficiency in the management
and control system of the operational programme which has put at risk the Union
contribution already paid to the operational programme;
(ss)       
the Member State has not complied with its
obligations under Article 50 prior to the opening of the correction procedure
under this paragraph;
(tt)         
expenditure contained in a payment application
is irregular and has not been corrected by the Member State prior to the
opening of the correction procedure under this paragraph.
The Commission shall base its financial
corrections on individual cases of irregularity identified and shall take
account of whether an irregularity is systemic. When it is not possible to
quantify precisely the amount of irregular expenditure charged to the Fund, the
Commission shall apply a flat rate or extrapolated financial correction.
2.           The Commission shall, when
deciding the amount of a correction under paragraph 1, take account of the
nature and gravity of the irregularity and the extent and financial
implications of the deficiencies in management and control systems found in the
operational programme.
3.           Where the Commission bases
its position on reports of auditors other than those of its own services, it
shall draw its own conclusions regarding the financial consequences after
examining the measures taken by the Member State concerned under Article 50(2),
the notifications sent under Article 27(2), and any replies from the Member
State.
4.           The Commission shall be
empowered to adopt delegated acts in accordance with Article 59 establishing
the criteria for establishing the level of financial correction to be applied.
Article 53
Procedure
for financial corrections by the Commission
1.           Before taking a decision
on a financial correction, the Commission shall launch the procedure by
informing the Member State of the provisional conclusions of its examination
and requesting the Member State to submit its comments within two months.
2.           Where the Commission
proposes a financial correction on the basis of extrapolation or a flat rate,
the Member State shall be given the opportunity to demonstrate, through an
examination of the documentation concerned, that the actual extent of
irregularity is less than the Commission's assessment. In agreement with the
Commission, the Member State may limit the scope of this examination to an
appropriate proportion or sample of the documentation concerned. Except in duly
justified cases, the time allowed for this examination shall not exceed a
further period of two months after the two-month period referred to in
paragraph 1.
3.           The Commission shall take
account of any evidence supplied by the Member State within the time limits set
out in paragraphs 1 and 2.
4.           Where the Member State
does not accept the provisional conclusions of the Commission, the Member State
shall be invited to a hearing by the Commission, in order to ensure that all
relevant information and observations are available as a basis for conclusions
by the Commission on the application of the financial correction.
5.           In order to apply
financial corrections the Commission shall take a decision, by means of
implementing acts, within six months of the date of the hearing, or of the date
of receipt of additional information where the Member State agrees to submit
such additional information following the hearing. The Commission shall take
account of all information and observations submitted during the course of the
procedure. If no hearing takes place, the six month period shall begin to run
two months after the date of the letter of invitation to the hearing sent by
the Commission.
6.           Where irregularities
affecting annual accounts sent to the Commission are detected by the Commission
or by the European Court of Auditors, the resulting financial correction shall
reduce support from the Fund to the operational programme.
Article 54
Repayments to the Union Budget - Recoveries
1.           Any repayment due to be
made to the general budget of the Union shall be effected before the due date
indicated in the order for recovery drawn up in accordance with Article 77 of
the Financial Regulation. The due date shall be the last day of the second
month following the issuing of the order.
2.           Any delay in effecting
repayment shall give rise to interest on account of late payment, starting on
the due date and ending on the date of actual payment. The rate of such
interest shall be one-and-a-half percentage points above the rate applied by
the European Central Bank in its main refinancing operations on the first
working day of the month in which the due date falls.
Article 55
Proportional
control of operational programmes
1.           Operations for which the
total eligible expenditure does not exceed EUR 100 000 shall not be subject to
more than one audit by either the audit authority or the Commission prior to
the examination of all the expenditure concerned under Article 47. Other
operations shall not be subject to more than one audit per accounting year by
the audit authority and the Commission prior to the examination of all the expenditure
concerned under Article 47. Those provisions are without prejudice to paragraphs
5 and 6.
2.           Audit of an operation may
cover all stages of its implementation and all levels of the distribution
chain, with the exception of control of the actual end recipients, unless a
risk assessment establishes a specific risk of irregularity or fraud. 
3.           When the most recent audit
opinion on the operational programme indicates that there are no significant
deficiencies, the Commission may agree with the audit authority in the
subsequent meeting referred to in Article 34(2) that the level of audit work
required may be reduced so that it is proportionate to the risk established. In
such cases, the Commission will not carry out its own on-the-spot audits unless
there is evidence suggesting deficiencies in the management and control system
affecting expenditure declared to the Commission in an accounting year for
which the accounts have been accepted.
4.           If the Commission
concludes that it can rely on the opinion of the audit authority for the operational
programme, it may agree with the audit authority to limit its own on the spot
audits to audit the work of the audit authority unless there is evidence of
deficiencies in the work of the audit authority work for an accounting year for
which the accounts have been accepted.
5.           The audit authority and
the Commission may carry out audits of operations at any time where a risk
assessment establishes a specific risk of irregularity or fraud, in case of
evidence of serious deficiencies in the management and control system of the
operational programme, and, during the 3 years following acceptance of all the
expenditure of an operation under Article 47, as part of an audit sample. 
6.           The Commission may at any
time carry out audits of operations for the purpose of assessing the work of an
audit authority by re-performance of its audit activity.
Chapter 4 Decommitment
Article 56
Rules
on decommitment
1.           The Commission shall
decommit any part of the amount calculated in accordance with the second
subparagraph in an operational programme that has not been used for payment of
the pre-financing, interim payments and annual balance by 31 December of the
second financial year following the year of budget commitment under the
operational programme or for which a payment application drawn up in accordance
with Article 38 has not been sent in accordance with Article 42.
For the purposes of the decommitment, the
Commission shall calculate the amount by adding one sixth of the annual budget
commitment related to the 2014 total annual contribution to each of the 2015 to
2020 budget commitments.
2.           By way of derogation from
the first subparagraph of paragraph 1, the deadlines for decommitment shall not
apply to the annual budget commitment related to the 2014 total annual
contribution.
3.           If the first annual budget
commitment is related to the 2015 total annual contribution, by way of
derogation from paragraph 1, the deadlines for decommitment shall not apply to
the annual budget commitment related to the total annual contribution of 2015.
In such cases, the Commission shall calculate the amount under the first
sub-paragraph of paragraph 1 by adding one fifth of the annual budget commitment
related to the 2015 total amount contribution to each of the 2016 to 2020
budget commitments.
4.           That part of commitments
still open on 31 December 2022 shall be decommitted if any of the documents
required under Article 47(2) has not been submitted to the Commission by 30
September 2023.
Article 57
Exception
to the decommitment
1.           The amount concerned by
decommitment shall be reduced by the amounts that the responsible body has not
been able to declare to the Commission because of:
(uu)      
operations suspended by a legal proceeding or by
an administrative appeal having suspensory effect; or
(vv)      
reasons of force majeure seriously affecting
implementation of all or part of the operational programme. The national
authorities claiming force majeure shall demonstrate the direct consequences of
the force majeure on the implementation of all or part of the operational
programme;
(ww)  
The reduction may be requested once if the
suspension or force majeure lasted up to one year, or several times
corresponding to the duration of the force majeure or the number of years
between the date of the legal or administrative decision suspending the
implementation of the operation and the date of the final legal or
administrative decision.
2.           By 31 January, the Member
State shall send to the Commission information on the exceptions referred to in
paragraph 1 for the amount to be declared by the end of the preceding year.
Article 58
Procedure
for decommitments
1.           The Commission shall
inform the Member State and the managing authority in good time whenever there
is a risk of application of decommitment under Article 56.
2.           On the basis of the
information it has on 31 January, the Commission shall inform the Member State
and the managing authority of the amount of the decommitment resulting from the
information in its possession.
3.           The Member State shall
have two months to agree to the amount to be decommitted or to submit its
observations.
4.           By 30 June, the Member
State shall submit to the Commission a revised financing plan reflecting for the
financial year concerned the reduced amount of support of the operational
programme. Failing such submission, the Commission shall revise the financing
plan by reducing the contribution from the Fund for the financial year
concerned. 
5.           The Commission shall amend
the decision adopting the operational programme, by means of implementing act,
no later than 30 September.
Title
VII. DELEGATION OF POWERS, IMPLEMENTING AND FINAL PROVISIONS
Article 59
Exercise of
the delegation
1.           The power to adopt
delegated acts is conferred on the Commission subject to the conditions laid
down in this Article. 
2.           The delegations of power
referred to in this Regulation shall be conferred for an indeterminate period
of time from the date of entry into force of this Regulation.
3.           As soon as it adopts a
delegated act, the Commission shall notify it simultaneously to the European
Parliament and to the Council.
4.           The delegated acts shall
enter into force only if no objection has been expressed either by the European
Parliament or the Council within a period of 2 months of notification of that
act to the European Parliament and the Council or if, before the expiry of that
period, the European Parliament and the Council have both informed the
Commission that they will not object. That period shall be extended by 2 months
at the initiative of the European Parliament or the Council. 
If, on expiry of that period, neither the
European Parliament nor the Council has objected to the delegated act, it shall
be published in the Official Journal of the European Union and shall
enter into force at the date stated therein.
The delegated act may be published in the Official
Journal of the European Union and enter into force before the expiry of
that period if the European Parliament and the Council have both informed the
Commission of their intention not to raise objections.
If the European Parliament or the Council
objects to a delegated act, the act shall not enter into force. The institution
that objects to the delegated act shall state the reasons for its objections.
Article 60
Committee
Procedure
1.           The Commission shall be
assisted by a Committee within the meaning of Regulation (EU) No 182/2011.
2.           Where reference is made to
this paragraph, Article 4 of Regulation (EU) No 182/2011 shall apply.
3.           Where reference is made to
this paragraph, Article 5 of Regulation (EU) No 182/2011 shall apply.
Where the opinion of the committee under
paragraphs 2 and 3 is to be obtained by written procedure, that procedure shall
be terminated without result when, within the time-limit for delivery of the
opinion, the chair of the committee so decides or (…) [number of members] (a …
majority of) [majority to be specified: simple, two-thirds, etc.] committee
members so request.
Where the committee delivers no opinion, the
Commission shall not adopt the draft implementing act and the third
subparagraph of Article 5(4) of Regulation (EU) No 182/2011 shall apply.
Article 61
Entry into
force
This Regulation shall enter into force on
the twentieth day after publication following that of its publication in the Official
Journal of the European Union.
This Regulation shall be binding
in its entirety and directly applicable in all Member States.
Done at Brussels, 
For the European Parliament                       For
the Council
The President                                                 The
President
Annex I Operational Programme Template
 Chapter Section Sub-section || Description / Observations || Size (characters) 
 1 Identification || The purpose of this section is only to identify the programme concerned. This section should clearly state the following: Member State Name of the Operational Programme CCI || 200 
 2 Programme formulation ||   ||   
 2.1 Situation   || An identification and a justification of the material deprivation(s) to be addressed || 4000 
   || Indication of the type of material deprivation(s) retained for the OP. || 200 
 2.x.Material deprivation addressed X || One section (and the corresponding sub-sections) should be provided for each type of material deprivation to be addressed. ||   
 2.x.1 Description || Description of the main characteristics and objectives of the material assistance to be provided and the corresponding accompanying measures. || 4000 
 2.x.2. National Schemes   || Description of the national schemes to be supported || 2000 
 2.4 Others || Any other information deemed necessary || 4000 
 3 Implementation ||   ||   
 3.1. Identification of Most Deprived || Description of the mechanism setting the eligible criteria of the most deprived persons, differentiated if necessary by type of material deprivation addressed. || 2000 
 3.2 Selection of operations || Criteria for the selection of operations and the description of the selection mechanism, differentiated if necessary by type of material deprivation addressed. || 2000 
 3.3. Selection of partner organisations || Criteria for the selection of partner organisations, differentiated if necessary by type of material deprivation addressed. || 2000 
 3.4. Complementarity with ESF || Description of the mechanism to ensure complementarity with the ESF || 4000 
 3.4. Institutional set-up || Description of implementing provisions of the operational programme containing the identification of the managing authority, the certifying authority where applicable, the audit authority and the body to which payments will be made by the Commission || 4000 
 3.5. Monitoring and evaluation || This sub-section should describe how the programme implementation will be monitored. There is, in particular, a need to explain how indicators will be used to track programme implementation. The indicators shall include financial indicators relating to expenditures allocated and output indicators relating to the operations supported. || 4000 
 3.6. Technical Assistance || The description of the planned use of technical assistance pursuant to Article X(2), including actions to reinforce the administrative capacity of the beneficiaries in relation to sound financial management of operations || 4000 
 4. FINANCIAL PLAN || This section should contain: (1)        a table specifying for each year in accordance with Article 18 the amount of the financial appropriation envisaged for support from the Fund and the co-financing. (2)        a table specifying, for the whole programming period, the amount of the total financial appropriation of the support from the operational programme per type of material deprivation addressed as well as the corresponding accompanying measures. || Text: 1000 Data in CSV or XLS format 
   ||     ||   
   ||   ||   
Format
for financial data (section 4):
4.1 .1. Financing plan of the operational
programme giving the annual commitment of the Fund and corresponding national
co-financing in the operational programme (in EUR)
   || Total || 2014 || 2015 || …. || 2020 
 Fund (a) ||   ||   ||   ||   ||   
 National co-financing (b) ||   ||   ||   ||   ||   
 Public eligible expenditure (c) = (a) + (b) ||   ||   ||   ||   ||   
 Co financing rate* (d) = (a) / (c) ||   || 
* This rate may be rounded to the nearest
whole number in the table. The precise rate used to reimburse expenditure is
the ratio (d).
4.1.2. Financing plan
giving the amount of the total financial
appropriations of the support from the Operational programme per type of
material deprivation addressed as well as the corresponding accompanying
measures (in EUR)
 Intervention area || Public eligible expenditure ||   ||   ||   ||   
 Total ||   ||   ||   ||   ||   
 Technical Assistance ||   ||   ||   ||   ||   
 Food deprivation ||   ||   ||   ||   ||   
 of which, accompanying measures ||   ||   ||   ||   ||   
 Homelessness ||   ||   ||   ||   ||   
 of which, accompanying measures ||   ||   ||   ||   ||   
 Child material deprivation ||   ||   ||   ||   ||   
 of which, accompanying measures ||   ||   ||   ||   ||   
ANNEX II
Annual breakdown of commitment
appropriation for 2014 to 20020
LEGISLATIVE FINANCIAL STATEMENT
1.           FRAMEWORK OF THE PROPOSAL/INITIATIVE 
              1.1.    Title of the proposal/initiative 
              1.2.    Policy
area(s) concerned in the ABM/ABB structure
              1.3.    Nature
of the proposal/initiative 
              1.4.    Objective(s)

              1.5.    Grounds
for the proposal/initiative 
              1.6.    Duration
and financial impact 
              1.7.    Management
method(s) envisaged 
2.           MANAGEMENT MEASURES 
              2.1.    Monitoring
and reporting rules 
              2.2.    Management
and control system 
              2.3.    Measures
to prevent fraud and irregularities 
3.           ESTIMATED FINANCIAL IMPACT OF THE
PROPOSAL/INITIATIVE 
              3.1.    Heading(s)
of the multiannual financial framework and expenditure budget line(s) affected 
              3.2.    Estimated
impact on expenditure 
              3.2.1. Summary of
estimated impact on expenditure 
              3.2.2. Estimated impact
on operational appropriations 
              3.2.3. Estimated impact
on appropriations of an administrative nature
              3.2.4. Compatibility
with the current multiannual financial framework
              3.2.5. Third-party
participation in financing 
              3.3.    Estimated impact on revenue
LEGISLATIVE FINANCIAL STATEMENT
1.           FRAMEWORK OF THE PROPOSAL/INITIATIVE 
1.1.        Title of the
proposal/initiative 
Proposal for a Regulation of the European Parliament and of the
Council on the Fund for European Aid to the Most Deprived 
1.2.        Policy area(s) concerned
in the ABM/ABB structure[10] 
4 Employment and social affairs
0406 Most Deprived People
1.3.        Nature of the
proposal/initiative 
§ The
proposal/initiative relates to a new action 
¨ The
proposal/initiative relates to a new action following a pilot
project/preparatory action[11]

¨ The proposal/initiative relates to the
extension of an existing action 
¨ The
proposal/initiative relates to an action redirected towards a new action 
1.4.        Objectives
1.4.1.     The Commission's
multiannual strategic objective(s) targeted by the proposal/initiative 
The Fund shall promote social cohesion in the Union by contributing
to achieving the poverty reduction targets of the Europe 2020 strategy. . 
1.4.2.     Specific objective(s) and
ABM/ABB activity(ies) concerned 
Specific objective No.1
Further to the general objective, the Programme shall contribute to
achieving the specific objective of alleviating the worst forms of poverty in
the Union by providing assistance other than financial support to the most
deprived persons. 
ABM/ABB activity(ies) concerned
0406 Most Deprived People
1.4.3.     Expected result(s) and
impact
Specify the effects
which the proposal/initiative should have on the beneficiaries/groups targeted.
The new instrument will allow Member States to assist approximately
two million most deprived persons more per year with positive impacts on the
health status of these people, social inclusion, employment and labour market.
However, the social impact of the Fund for European Aid to the Most Deprived is
expected to go far beyond. 
1.       By providing a platform around which practitioners will be
able to exchange information and experiences it will bring significant benefits
for many stakeholders in terms of processes. 
2.       The evidence-based and mid- to long-term oriented
implementation of the Fund for European Aid to the Most Deprived by means of
operational programmes will also encourage a dialogue between various stakeholder
groups and support a strategic approach in the future. Improvements of the
delivery mechanisms (notably simplification and reductions of the
administrative burden) should ensure the continued relevance of process
effects. The Fund for European Aid to the Most Deprived will be an instrument
to facilitate a practical dialogue between European priorities and social
cohesion policies.
1.4.4.     Indicators of results and
impact 
Specify the
indicators for monitoring implementation of the proposal/initiative.
The institutions actually distributing the material assistance rely
to a large extent on volunteer work and donations. Therefore putting heavy
reporting obligations on such organisations should be avoided as much as
possible. Still it can be expected that these organisations will need to inform
not only the Commission about their work but also other donors and the
volunteers so to keep up their motivation. The indicators proposed were
discussed with European level umbrella organisations and deemed adequate and
realistic. 
The first set of indicators regard the volume of resources deployed
being:
(1) In kind contributions from the programme;
(2) Financial resources broken down according to their origin (EU
and other sources).
The second set of common indicators informs about the volume of aid
delivered and regards the number of packages distributed; of meals
prepared/distributed and the number of most deprived people assisted.
These data will be transmitted to the Commission by the managing
authorities in an annual implementation report.
This basic annual reporting will be accompanied by structured
surveys. These surveys will be mandated by the Commission itself at least twice
during the implementation period. They will provide insights on the recipients,
i.e. whether there is dominance of a certain age group or minorities etc.,
assess the importance of in-kind contributions other than goods for instance
voluntary labour and services, and on the impacts of the programme on them. It
is expected that this information will only be provided on the basis of
informed guesses, as in several cases anonymity might be a precondition for a
client to be able to accept the support. 
1.5.        Grounds for the
proposal/initiative 
1.5.1.     Requirement(s) to be met in
the short or long term 
The envisaged programme would contribute to the social cohesion
objective of the Union. The legal basis of the proposed new instrument is
Article 175 third paragraph of the TFEU which makes provisions for specific
actions outside the Structural Funds. 
In 2010, nearly one quarter of all Europeans (116 million) were at
risk of poverty or social exclusion. Poverty and social exclusion are not
uniform across the EU. In general, problems are more acute in eastern and
southern Member States. Besides aggravating the pre-existing levels of poverty
and social exclusion, the economic crisis (associated with fiscal consolidation
pressures related to sovereign debt dynamics) has also reduced the ability of a
number of Member States to sustain social expenditure and investment at levels
sufficient to reverse this negative trend.
1.5.2.     Added value of EU
involvement
The Europe 2020 strategy for smart, sustainable and inclusive growth
is based on a balanced vision of economic growth and social progress based on ambitious
targets for employment, education and for poverty reduction. Poverty and social
exclusion are major obstacles to the achievement of the Europe 2020 objectives.

By addressing basic needs, the proposed instrument will help to
moderate poverty and social exclusion of people who find themselves in
situations of severe deprivation. By enabling the most deprived members of the
society to maintain their dignity and human capital it will contribute to
strengthening of social capital and social cohesion within their communities. 
EU-level action in this respect is necessary given the level and
nature of poverty and social exclusion in the Union, further aggravated by the
economic crisis, and uncertainty about the ability of all Member States to
sustain social expenditure at levels sufficient to ensure that social cohesion
does not deteriorate further and that the objectives and targets of the Europe
2020 strategy are achieved. 
1.5.3.     Lessons learned from
similar experiences in the past
This is a new instrument. Experience from the programme of aid for
the most deprived people (MDP) is however relevant. With the expected absence
of intervention stocks, the MDP has thus lost the rationale underpinning it and
will be discontinued with the completion of the 2013 annual plan. Yet over the
years, the scheme had become an important source of provisions for
organisations working in direct contact with the least fortunate people of our
society providing them food. A summary of the lessons learned can be found in
the Impact Assessment accompanying the proposal.
1.5.4.     Coherence and possible
synergy with other relevant instruments
The proposed European Fund for Aid for the Most Deprived will be
supported with EUR 2 500 000 000 from the Structural Funds under the Investment
for Growth and Jobs goal with global resources of EUR 327 115 655 850. The Fund
for European Aid to the Most Deprived shall be considered as part of the share
of Structural Funds allocated to the ESF. It will complement and not overlap
with the already existing cohesion policy tools by offering temporary remedial
actions, enabling most deprived members of society to start on a recovery path.

The proposed instrument can, in conjunction with other types of
support that can be co-financed notably from the ESF, also help improve the
employability of the end-beneficiaries, enabling them to make a contribution to
the economy. 
1.6.        Duration and financial
impact 
§ Proposal/initiative of limited
duration 
–     
§   Proposal/initiative in effect from 01/01/2014 to 31/12/2020 
–     
§   Financial impact from 2014 to 2022 
¨ Proposal/initiative of unlimited
duration
–     
Implementation with a start-up period from YYYY
to YYYY,
–     
followed by full-scale operation.
1.7.        Management mode(s)
envisaged[12] 
¨ Centralised direct management by the Commission 
¨ Centralised indirect management with the delegation of implementation tasks to:
–     
¨  executive agencies 
–     
¨  bodies set up by the Communities[13]

–     
¨  national public-sector bodies/bodies with public-service mission 
–     
¨  persons entrusted with the implementation of specific actions
pursuant to Title V of the Treaty on European Union and identified in the
relevant basic act within the meaning of Article 49 of the Financial Regulation

§ Shared management with the Member States 
¨ Decentralised management with third countries 
¨ Joint management with international organisations (to be specified)
If more than one
management mode is indicated, please provide details in the
"Comments" section.
Comments 
2.           MANAGEMENT MEASURES 
2.1.        Monitoring and reporting
rules 
Specify frequency
and conditions.
The Managing Authorities will submit Annual Implementation Reports.
These reports will be data driven and contain the common indicators identified
under section 1.4.4. This reporting will be accompanied by structured surveys
and evaluations mandated by the Commission at mid-term and at the end of the
programming period. Bilateral review meetings will examine the progress in
implementation of each programme. 
2.2.        Management and control
system 
2.2.1.     Risk(s) identified 
The management and control system are largely taken over from
Cohesion Policy. Although this spending scheme is different compared to
Cohesion Policy in terms of end recipients and implementing partners, it is
expected that the risk factors will be similar, in particular to the ESF. The
major source of errors in the ESF in the on-going programming period regards
eligibility. (58 % of all cumulative quantifiable errors), accuracy issues (7%)
and audit trail issues (35%). It is to address these issues that the
eligibility rules are fully laid down in the draft regulation and a bigger use
is made of flat rates set in the regulation itself. A factor that increases the
risks is however, that the delivery of the aid to the final recipients will
depend mostly on NGOs and civil society organisations some of which with weak
administrations and relying largely on voluntary labour. The Court of Auditors
has already raised this issue in relation to the MDP in its 2009 report. For
such organisations it will remain possible to limit the resources allocated to
material assistance purchased centrally by the managing authorities and the
payments of flat rates.
2.2.2.     Control method(s) envisaged

In accordance with the principle of the shared management, Member
States have the primary responsibility, through their management and control
system, for the implementation and control of their operational programme.
Member States will designate a managing authority, a certifying authority and a
functionally independent auditing authority for their operational programme.
The Commission has the power to carry out audits focused on issues relating to
sound financial management in order to draw conclusions on the performance of
Fund, along the possibility for interruptions, suspensions ad financial
corrections.
In Cohesion Policy the costs of tasks relate to control (at national
and regional level and excluding the costs to the Commission) are estimated at
around 2% of the total funding. These costs are related to the following areas
of control: 1% is derived from national coordination and programme preparation,
82% relates to programme management, 4% to certification and 13% to audits.
Compared to cohesion policy however, a number of factors should help
to reduce error levels and control costs. The new programme will be
concentrated on only three domains of action. A great recourse is made of
simplified costs options. Because of the nature of the operations and of the
target groups, the end recipients will not be subject to audit, unless the risk
assessment established a specific risk of irregularity or fraud. Together these
factors should reduce the administrative burden for beneficiaries, lower the
error levels, increase inherent assurance and thereby contribute to reduce
control costs. 
The current DG EMPL error rate (the ECA's error rate) is 2.2%. It is
estimated that the factors described above should lead to a reduction of 1%
yielding a final expected programme error level of 1.2%.
2.3.        Measures to prevent fraud
and irregularities 
Specify existing or
envisaged prevention and protection measures.
The Structural Funds services together with OLAF have put into place
a joint Fraud Prevention Strategy which foresees a series of actions to be
carried out by the Commission and the Member States to prevent fraud in
structural actions under shares management. This Joint Fraud Strategy will also
be applicable to the Fund for European Aid to the Most Deprived. 
In addition the proposal includes an explicit requirement to put
into place such measures under article 32(4). This should reinforce fraud
awareness in member Sates among all bodies involved in the management and
control of Fund for European Aid to the Most Deprived and thus reduce the risk
of fraud.
3.           ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE

3.1.        Heading(s) of the
multiannual financial framework and expenditure budget line(s) affected 
·      Existing expenditure budget lines 
In order of
multiannual financial framework headings and budget lines.
 Heading of multiannual financial framework || Budget line || Type of expenditure || Contribution 
 Number [Description………………………...……….] || Diff./non-diff. ([14]) || from EFTA[15] countries || from candidate countries[16] || from third countries || within the meaning of Article 18(1)(aa) of the Financial Regulation 
 1 Smart and Inclusive Growth New heading for 2014-2020 || 04.06.00.00 Most Deprived People || Diff. || /NO || NO || NO || NO 
·      New budget lines requested 
In order of multiannual financial framework
headings and budget lines.
 Heading of multiannual financial framework || Budget line || Type of expenditure || Contribution 
 Number [Heading……………………………………..] || Diff./non-diff. || from EFTA countries || from candidate countries || from third countries || within the meaning of Article 18(1)(aa) of the Financial Regulation 
   || [XX.YY.YY.YY]   ||   || YES/NO || YES/NO || YES/NO || YES/NO 
3.2.        Estimated impact on
expenditure 
3.2.1.     Summary of estimated impact
on expenditure 
EUR million (to 3 decimal places)
 Heading of multiannual financial framework: || Number 1 || Smart and Inclusive Growth 
 DG: EMPL ||   ||   || 2014 || 2015 || 2016 || 2017 || 2018 || 2019 || 2020 || TOTAL 
  Operational appropriations ||   ||   ||   ||   ||   ||   ||   ||   
 Number of budget line || Commitments || (1) || 343.957 || 349.166 || 353.425 || 356.742 || 359.925 || 362.704 || 365.331 || 2,491.250 
 Payments || (2) || 274.038 || 277.152 || 277.152 || 277.152 || 277.152 || 277.152 || 277.152 || 1,936.950 
 Number of budget line || Commitments || (1a) ||   ||   ||   ||   ||   ||   ||   ||   
 Payments || (2a) ||   ||   ||   ||   ||   ||   ||   ||   
 Appropriations of an administrative nature financed  from the envelope for specific programmes[17] ||   ||   ||   ||   ||   ||   ||   ||   
 Number of budget line ||   || (3) || 1.250 || 1.250 || 1.250 || 1.250 || 1.250 || 1.250 || 1.250 || 8.750 
 TOTAL appropriations for DG EMPL[18] || Commitments || =1+1a +3 || 345.207 || 350.416 || 354.675 || 357.992 || 361.175 || 363.954 || 366.581 || 2,500.000 
 Payments || =2+2a +3 || 275.288 || 278.402 || 278.402 || 278.402 || 278.402 || 278.402 || 278.402 || 1,945.700 
  TOTAL operational appropriations || Commitments || (4) ||   ||   ||   ||   ||   ||   ||   ||   
 Payments || (5) ||   ||   ||   ||   ||   ||   ||   ||   
  TOTAL appropriations of an administrative nature financed from the envelope for specific programmes || (6) ||   ||   ||   ||   ||   ||   ||   ||   
 TOTAL appropriations under HEADING <….> of the multiannual financial framework || Commitments || =4+ 6 ||   ||   ||   ||   ||   ||   ||   ||   
 Payments || =5+ 6 ||   ||   ||   ||   ||   ||   ||   ||   
If more than one heading is affected by the proposal /
initiative:
  TOTAL operational appropriations || Commitments || (4) ||   ||   ||   ||   ||   ||   ||   ||   
 Payments || (5) ||   ||   ||   ||   ||   ||   ||   ||   
  TOTAL appropriations of an administrative nature financed from the envelope for specific programmes || (6) ||   ||   ||   ||   ||   ||   ||   ||   
 TOTAL appropriations under HEADINGS 1 to 4 of the multiannual financial framework (Reference amount) || Commitments || =4+ 6 ||   ||   ||   ||   ||   ||   ||   ||   
 Payments || =5+ 6 ||   ||   ||   ||   ||   ||   ||   ||   
 Heading of multiannual financial framework: || 5 || " Administrative expenditure " 
EUR million (to 3 decimal places)
   ||   ||   || Year 2014 || Year 2015 || Year 2016 || Year 2017 || Year 2018 || Year 2019 || Year 2020 || TOTAL 
 DG: EMPL || 
  Human resources || 1,016 || 1,016 || 1,016 || 1,016 || 1,016 || 1,016 || 1,016 || 7,112 
  Other administrative expenditure ||   ||   ||   ||   ||   ||   ||   ||   
 TOTAL DG EMPL || Appropriations || 1,016 || 1,016 || 1,016 || 1,016 || 1,016 || 1,016 || 1,016 || 7,112 
 TOTAL appropriations under HEADING 5 of the multiannual financial framework || (Total commitments = Total payments) || 1,016 || 1,016 || 1,016 || 1,016 || 1,016 || 1,016 || 1,016 || 7,112 
EUR million (to 3 decimal places)
   ||   ||   || Year N[19] || Year N+1 || Year N+2 || Year N+3 || … enter as many years as necessary to show the duration of the impact (see point 1.6) || TOTAL 
 TOTAL appropriations under HEADINGS 1 to 5 of the multiannual financial framework || Commitments ||   ||   ||   ||   ||   ||   ||   ||   
 Payments ||   ||   ||   ||   ||   ||   ||   ||   
3.2.2.     Estimated impact on
operational appropriations 
–     
¨  The proposal/initiative does not require the use of operational
appropriations 
–     
¨  The proposal/initiative requires the use of operational
appropriations, as explained below. The Fund will be implemented in shared
management. While the strategic priorities are set at EU level by the
regulation, actual day-to-day management is vested in Managing Authorities.
While common indicators are suggested by the Commission, actual targets will be
proposed at the level of operational programmes by the Member States and agreed
by the Commission. It is therefore not possible to indicate targets for outputs
until the programmes are drafted, negotiated and agreed in 2013/2014. 
Commitment appropriations in EUR million (to 3 decimal
places)
 Indicate objectives and outputs   ò ||   ||   || Year N || Year N+1 || Year N+2 || Year N+3 || … enter as many years as necessary to show the duration of the impact (see point 1.6) || TOTAL 
 OUTPUTS 
 Type of output[20] || Average cost of the output || Number of outputs || Cost || Number of outputs || Cost || Number of outputs || Cost || Number of outputs || Cost || Number of outputs || Cost || Number of outputs || Cost || Number of outputs || Cost || Total number of outputs || Total cost 
 SPECIFIC OBJECTIVE No 1[21]… ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   
 - Output ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   
 - Output ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   
 - Output ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   
 Sub-total for specific objective N°1 ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   
 SPECIFIC OBJECTIVE No 2… ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   
 - Output ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   
 Sub-total for specific objective N°2 ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   
 TOTAL COST ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   
3.2.3.     Estimated impact on
appropriations of an administrative nature
3.2.3.1.  Summary 
–     
¨  The proposal/initiative does not require the use of administrative
appropriations 
–     
þ  The proposal/initiative requires the use of administrative appropriations,
as explained below:
EUR million (to 3
decimal places)
   || 2014 || 2015 || 2016 || 2017 || 2018 || 2019 || 2020 || TOTAL 
 HEADING 5 of the multiannual financial framework ||   ||   ||   ||   ||   ||   ||   ||   
 Human resources || 1,016 || 1,016 || 1,016 || 1,016 || 1,016 || 1,016 || 1,016 || 7,112 
 Other administrative expenditure ||   ||   ||   ||   ||   ||   ||   ||   
 Subtotal HEADING 5 of the multiannual financial framework || 1,016 || 1,016 || 1,016 || 1,016 || 1,016 || 1,016 || 1,016 || 7,112 
 Outside HEADING 5[22] of the multiannual financial framework ||   ||   ||   ||   ||   ||   ||   ||   
 Human resources || 0,128 || 0,128 || 0,128 || 0,128 || 0,128 || 0,128 || 0,128 || 0,896 
 Other expenditure of an administrative nature || 1,122 || 1,122 || 1,122 || 1,122 || 1,122 || 1,122 || 1,122 || 7,854 
 Subtotal outside HEADING 5 of the multiannual financial framework || 1,250 || 1,250 || 1,250 || 1,250 || 1,250 || 1,250 || 1,250 || 8,750 
 TOTAL || 2,266 || 2,266 || 2,266 || 2,266 || 2,266 || 2,266 || 2,266 || 15,862 
3.2.3.2.   Estimated requirements of
human resources 
–     
¨  The proposal/initiative does not require the use of human
resources 
–     
þ  The proposal/initiative requires the use of human resources, as
explained below:
Estimate to be expressed in full amounts
(or at most to one decimal place)
   || 2014 || 2015 || 2016 || 2017 || 2018 || 2019 || 2020 
  Establishment plan posts (officials and temporary agents) 
 04 01 01 01 (Headquarters and Commission’s Representation Offices) || 8 || 8 || 8 || 8 || 8 || 8 || 8 
 XX 01 01 02 (Delegations) ||   ||   ||   ||   ||   ||   ||   
 XX 01 05 01 (Indirect research) ||   ||   ||   ||   ||   ||   ||   
 10 01 05 01 (Direct research) ||   ||   ||   ||   ||   ||   ||   
  External personnel (in Full Time Equivalent unit: FTE)[23] 
 XX 01 02 01 (CA, INT, SNE from the "global envelope") ||   ||   ||   ||   ||   ||   ||   
 XX 01 02 02 (CA, INT, JED, LA and SNE in the delegations) ||   ||   ||   ||   ||   ||   ||   
 04 01 04 01 [24] || - at Headquarters[25] || 2 || 2 || 2 || 2 || 2 || 2 || 2 
 - in delegations ||   ||   ||   ||   ||   ||   ||   
 XX 01 05 02 (CA, INT, SNE - Indirect research) ||   ||   ||   ||   ||   ||   ||   
 10 01 05 02 (CA, INT, SNE - Direct research) ||   ||   ||   ||   ||   ||   ||   
 Other budget lines (specify) ||   ||   ||   ||   ||   ||   ||   
 TOTAL || 10 || 10 || 10 || 10 || 10 || 10 || 10 
XX is the
policy area or budget title concerned.
The human resources required
will be met by staff from the DG who are already assigned to management of the action
and/or have been redeployed within the DG, together if necessary with any
additional allocation which may be granted to the managing DG under the annual
allocation procedure and in the light of budgetary constraints.
Description of
tasks to be carried out:
 Officials and temporary agents || To contribute to the analysis, negotiations, modification and preparation for approval proposals for programmes and projects in Member States. To contribute to manage, monitor and evaluate the implementation of programmes and projects approved. TO ensure compliance with the rules governing the programmes. 
 External personnel || Idem and/or administrative support 
3.2.4.     Compatibility with the
current multiannual financial framework 
–     
¨  Proposal/initiative is compatible the current multiannual
financial framework.
–     
¨  Proposal/initiative will entail reprogramming of the relevant
heading in the multiannual financial framework.
Explain what reprogramming is required,
specifying the budget lines concerned and the corresponding amounts.
–     
¨  Proposal/initiative requires application of the flexibility
instrument or revision of the multiannual financial framework[26].
Explain what is required, specifying the
headings and budget lines concerned and the corresponding amounts.
3.2.5.     Third-party contributions 
–     
The proposal/initiative does not provide for
co-financing by third parties 
–     
The proposal/initiative provides for the
co-financing estimated below:
Appropriations in EUR million (to 3 decimal places)
   || Year N || Year N+1 || Year N+2 || Year N+3 || … enter as many years as necessary to show the duration of the impact (see point 1.6) || Total 
 Specify the co-financing body ||   ||   ||   ||   ||   ||   ||   ||   
 TOTAL appropriations cofinanced ||   ||   ||   ||   ||   ||   ||   ||   
3.3.        Estimated impact on
revenue 
–     
¨  Proposal/initiative has no financial impact on revenue.
–     
¨  Proposal/initiative has the following financial impact:
–                   
¨         on own resources 
–                   
¨         on miscellaneous revenue 
EUR million (to 3 decimal places)
 Budget revenue line: || Appropriations available for the ongoing budget year || Impact of the proposal/initiative[27] 
 Year N || Year N+1 || Year N+2 || Year N+3 || … insert as many columns as necessary in order to reflect the duration of the impact (see point 1.6) 
 Article …………. ||   ||   ||   ||   ||   ||   ||   ||   
For miscellaneous
assigned revenue, specify the budget expenditure line(s) affected.
Specify the method for
calculating the impact on revenue. 
[1]               OJ L , , p. .
[2]               OJ L , , p. .
[3]               OJ L , , p. .. 
[4]               OJ L 281, 23.11.1995, p. 31
[5]             OJ L , , p.
[6]               OJ L 55, 28.2.2011, p.13.
[7]               OJ L 118, 12.5.2010, p.1.
[8]               OJ L 53, 23.2.2002, p. 1.
[9]               OJ L347, 11.12.2006, p.1.
[10]             ABM: Activity-Based Management –
ABB: Activity-Based Budgeting.
[11]             As referred to in Article 51(2)(a) or (b) of the
Financial Regulation.
[12]             Details of management modes and references to the
Financial Regulation may be found on the BudgWeb site: http://www.cc.cec/budg/man/budgmanag/budgmanag_en.html
[13]             As referred to in Article 200 of the Financial
Regulation.
[14]             Diff. = Differentiated appropriations / Non-diff. =
Non-Differentiated Appropriations
[15]             EFTA: European Free Trade Association. 
[16]             Candidate countries and, where applicable, potential
candidate countries from the Western Balkans.
[17]             Technical and/or administrative assistance and
expenditure in support of the implementation of EU programmes and/or actions
(former "BA" lines), indirect research, direct research.
[18]             These appropriations are part of the Structural Funds
under the Investment for Growth and Jobs goal with global comittments of
EUR 327 115 655 850.
The Fund for European Aid to the Most Deprived shall be
considered as part of the share of Structural Funds allocated to the ESF.
[19]             Year N is the year in which implementation of the
proposal/initiative starts.
[20]             Outputs are products and services to be supplied (e.g.:
number of student exchanges financed, number of km of roads built, etc.).
[21]             As described in Section 1.4.2. "Specific
objective(s)…"
[22]             Technical and/or administrative assistance and
expenditure in support of the implementation of EU programmes and/or actions
(former "BA" lines), indirect research, direct research.
[23]             CA= Contract Agent; INT= agency staff ("Intérimaire");
JED= "Jeune Expert en Délégation" (Young Experts in
Delegations); LA= Local Agent; SNE= Seconded National Expert; 
[24]             Under
the ceiling for external personnel from operational
appropriations (former "BA" lines).
[25]             Essentially for Structural Funds, European Agricultural
Fund for Rural Development (EAFRD) and European Fisheries Fund (EFF).
[26]             See points 19 and 24 of the Interinstitutional
Agreement.
[27]             As regards traditional own resources (customs duties,
sugar levies), the amounts indicated must be net amounts, i.e. gross amounts
after deduction of 25% for collection costs.