natgillin/translations-raw huggingface dataset:
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Ex-post controls at DG EAC 9.26.
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The2008AnnualActivityReportofDGEACreports that the results of the financial audits of projects, carried out by a private audit firm on behalf of the Commission, show an average error in the audited contracts of 0,01 % for LLP.
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However, an error rate calculated on the projects closed during the year would be much higher.
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Furthermore, as these audits were mainly carried out at the level of the NA, which does not normally receive all justifying documents, they do not cover all eligibility criteria.
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External Borders Fund 9.27.
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The framework programme ‘Solidarity and Management of Migration Flows’, foreseen for the period 2007/2008 to 2013, represents around 50 % of DG JLS oper­ ational expenditure and is implemented under shared management with Member States.
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It consists of four financial instruments(10), the largest being the External Borders Fund (EBF), representing over 50 % of the expenditure within the programme.
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9.28.
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Although the EBF was established for the period beginning 1 January 2007, the legal base was adopted only on 23 May 2007 and the implementing rules on 5 March 2008.
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In addition, some Member States have submitted the initial versions of Descriptions of Management and Control Systems (MCS) as well as of the programming documents with substantial delays or insufficient quality.
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Consequently the first prefinancing payments to MS could not be made by the Commission until the final months of 2008. _____________ (10) The four instruments are: the External Borders Fund, the Inte­ THE COMMISSION’S REPLIES 9.25.
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The audit plan 2009 reinforces the monitoring visits that focus on the existence and implementation of management procedures and checks as described by Member States. gration Fund, the Return Fund, the European Refugee Fund.
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9.26.
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The Commission’s Annual Activity Report covers the financial activity for the year and therefore analyses payments made during the year (advances and final payments alike).
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The Commission will re-examine its approach to the calculation of the error rate disclosed in the Annual Activity Report.
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Given the fact that beneficiaries receive generally small grants, the right balance between the number of controls and their costs has to be taken into account.
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EN 186 OfficialJournaloftheEuropeanUnion 10.11.2009 THE COURT’S OBSERVATIONS 9.29. In the context of the 2008 DAS, therefore, the Court’s audit was restricted to DG JLS’s review of Descriptions of Management and Control Systems (MCS) submitted by Member States in relation to the EBF.
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No significant weak­ nesses were identified in this review; but it will only be possible to assess the actual effectiveness of the MCS once these systems are operational.
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DG Communication 9.30.
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TheCourtexaminedDGCommunication’sAnnual Activity Report for 2008, which showed (see also Annex 9.2) an error rate of 0,05 % detected by the DG’s second level ex-ante checks.
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This could indicate that the regular ex-ante checks have improved since last year.
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CONCLUSIONS AND RECOMMENDATIONS 9.31.
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Based on its audit work, the Court concludes that the payments for the year ended 31 December 2008 for policy group Education and Citizenship were free from material error.
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However, the Court’s testing suggests that the interim and final payments were affected by material error.
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9.32.
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TheCourtconcludesthatthesupervisoryandcontrol systems for the policy group Education and Citizenship are partially effective in ensuring the regularity of payments.
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9.33.
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There is, however, no such guidance for the national authorities and it is recommended that the Commission introduce a more prescriptive framework showing the specific actions to be taken.
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The Commission notes that the Court has found quantifiable errors in 4 out of 21 interim and final payments examined.
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The Commission will follow up the errors found by the Court, and where appropriate, funds will be recovered.
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The supervisory and control system put in place for the 2007-2013 period provides for a sound framework.
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In 2008, for DG EAC, significant progress was made in its implementation through the analysis of ex-post declarations of assurance and inten­ sified monitoring visits and audits.
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EN 10.11.2009 OfficialJournaloftheEuropeanUnion 187 THE COURT’S OBSERVATIONS 9.34. Asstatedinparagraphs9.22to9.25,theCourt considers that the NAU LLP declaration procedure, and control system which should underpin it, could provide an adequate basis for assurance in the future.
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However, although progress has been made, the current implementation of the supervisory and control system does not yet give satis­ factory assurance that errors of regularity will be prevented or detected and corrected.
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Therefore, it is recommended that the Commission engage in closer supervision of the annual ex-post declaration process, with more thorough monitoring visits and direct verification that the controls described are adequate and fully applied.
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THE COMMISSION’S REPLIES 9.34.
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The Commission welcomes the statement of the Court on the adequacy of the integrated control and supervision system in place.
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The Commission agrees with the need for closer supervision of the yearly ex-post declarations.
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Therefore, the audit plan 2009 reinforces the monitoring visits that focus on the existence and implementation of management procedures and checks as described by Member States.
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Year Number of transactions tested 2008 2007 15 Education and Culture 16 Communication 18 Freedom, Justice and Security Total 6,7 66,7 4,0 0,0 3,3 19,3 14,0 86,0 37 63 73,3 4,0 22,7 100,0 100 2008 2007 15 16 18 Total 7 % {8} 18 % {2} 17 % {1} 0 % {0} 18 % {6} 25 % {2} 10 % {15} 20 % {4} 21 % {31} 26 % {10} Below 2 % Below 2 % Between 2 % and 5%
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EN 10.11.2009 OfficialJournaloftheEuropeanUnion 189 PART 2: OVERALL ASSESSMENT OF SUPERVISORY AND CONTROL SYSTEMS 2.1 — Assessment of selected supervisory and control systems National Authority National Agency Commission LLP system concerned Belgium (EPOS) Germany (DAAD) Spain (OAPEE) Ireland (Léargas) Italy (ISFOL) Poland (FRSE) Overall assessment Legend: Overall assessment 2008 Effective Partially effective Not effective Not applicable: does not apply or not assessed 2007 N/A N/A
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EN 190 OfficialJournaloftheEuropeanUnion 10.11.2009 Court observation Action taken Observation 1: Weaknesses in the ex-ante declaration procedure for LLP Court analysis Commission reply The Court noted the following weaknesses in the ex-ante declaration procedure for the LLP reducing the value of the procedure as an element of the supervisory and control system: DG EAC notes that the ex-ante declaration was a — new requirement and a ‘one-shot-operation’ at the start of the new programmes.
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In the meantime, DG EAC has undertaken the following actions in order to remedy this weakness: Although the Commission did indeed issue some guidelines in March 2009, the Court’s on-the-spot visits showed that National Authorities still have different interpretations on how to carry out secondary controls.
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Guidelines were already issued in February 2008 and updated in 2009.
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Control objectives are set but the way to reach them is up to the NAU taking into account the specific situation in the Member States. — varying approaches taken by the National Authorities to obtain a basis for the ex-ante declaration of assurance and differences in the degree of disclosure of the procedures has led to differences in the scope of reliance placed by the Commission on the declarations; — More precise guidelines for the yearly declar­ — ations have been issued and specific meetings with the National Authorities have been organised in March and in November 2008. In 2008, on-the-spot visits to National Agencies and Authorities were carried out in 11 countries.
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Even for the countries visited on-the-spot, the Commission did not check the reality of the primary and secondary controls referred to in the yearly declarations.
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Checks of the reality and quality of the primary and secondary controls were part of the systems monitoring visits and sometimes resulted in qualifications. — the effective operation of systems and controls was not verified by the Commission as its assessment was limited to a desk review; — More on-the spot visits have been organised (including financial audits and the start of the programme for supervisory controls).
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In line with the process-oriented supervisory strategy qualifications can be lifted or added during a year.
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This shows that the work is done continuously and that the qualifications are systematically followed up. — the Commission approved declarations from Member States with various qualifications to be remedied by the end of 2007 without including a precautionary measure in its contractual relationship with the agencies.
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Additionally, rigorous follow-up of corrective actions was missing, deadlines were frequently not respected and number of qualifications had not yet been lifted by the end of 2007; — An enhanced follow-up of corrective actions has been ensured by using a rating method. — certaincriteriausedbytheCommissionwithin the assessment procedure were not adequately defined causing uncertainty about the meaning of completion of the assessment process and precautionary measures.
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(Annual Report concerning the financial year 2007, paragraphs 9.16 and 9.17) — A clear link between the rating and the precautionary measures to take has been established.
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The average number of open qualifications was around 4 per national agency at the end of 2008. EN 10.11.2009 OfficialJournaloftheEuropeanUnion 191 Court observation Action taken Observation 2: Partially effective supervisory checks carried out by the Commission for ERF II Court analysis Commission reply The preliminary assessment of the supervisory and control systems for ERF II carried out by the Commission has not been fully effective.
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The Court has noted the following: there are short­ comings in the descriptions of management and control procedures provided by Member States; only a limited number of monitoring visits to Member States have been performed and often not respecting the 12-month rule; follow-up procedure to monitor the progress made by Member States is not systematic.
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According to the AAR 2008 of DG JLS: ‘the monitoring visits to the 14 MS (i.e. those not yet visited) were all carried out in 2008.
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These visits provide a generally clear and satisfactory view of the situation, even if there are weaknesses in the management and control systems of some MS. Following these monitoring visits, DG JLS judges that reasonable assurance has been provided in 4 cases, acceptable assurance in 7 cases, and limited assurance in 3 cases.
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As regards the latter 3, the main issue was the lack of independence on the part of the certification authority, and JLS has put in place a suitable action plan: 2 will be checked ex-post and the contradictory procedure is being carried out. The third MS is currently reviewing its control system on the basis of comments from JLS.’ No issues noted.
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(Annual Report concerning the financial year 2007, paragraphs 9.20 and 9.21) Observation 3: Ineffective system for ex-ante checks for Communication expenditure Most of the errors detected by the Court (7 out of 12) concerning Communication expenditure had not been identified by the Commission’s ex-ante checks.
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According to the AAR 2008 of DG COMM, the DG: ‘... uses check-lists.
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In order to use them more consistently and improve the quality of their checks before initiating a payment, more training will be provided for the authorising officers by sub-delegation, the heads of adminis­ tration and the operational staff.’
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An action plan for improving the quality of transactions actions are on-going.
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EN 10.11.2009 OfficialJournaloftheEuropeanUnion 193 CHAPTER 10 Economic and Financial Affairs TABLE OF CONTENTS Overview 10.1 Specific assessment in the context of the Statement of Assurance 10.2-10.31 Introduction 10.2-10.11 Audit scope Main risk to regularity Regularity of transactions Effectiveness of systems Ex-ante desk checks on payment requests Audit certification of project cost statements Ex-post controls Conclusions and recommendations Conclusions Recommendations Results of the Audit of the Guarantee Fund for External Actions Results of the Audit of the ECSC in Liquidation Follow-up of previous observations 10.7-10.10 10.11 10.12-10.14 10.15-10.26 10.17-10.21 10.22-10.23 10.24-10.26 10.27-10.31 10.27-10.28 10.29-10.31 10.32-10.36 10.37-10.41 10.42 Paragraph
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Chapter10consistsoffourparts.Firstitcontainsthe specific assessment of policy group Economic and Financial Affairs in the context of the Statement of Assurance (see paragraphs 10.2 to 10.31).
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This is followed by the results of the recurrent audits on the Guarantee Fund for External Actions (see paragraphs 10.32 to 10.36) and the European Coal and Steel Community in Liquidation (see paragraphs 10.37 to 10.41).
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The chapter concludes with a follow-up of previous years’ observations.
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SPECIFIC ASSESSMENT IN THE CONTEXT OF THE STATEMENT OF ASSURANCE Introduction 10.2.
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ThispartpresentstheCourt’sspecificassessmentof the policy group Economic and Financial Affairs, which comprises the following policy areas: 01-Economic and Financial Affairs, 02-Enterprise, 03-Competition, 12-Internal Market, and 20-Trade.
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Detailed information is provided in Table 10.1 on the activities covered, the spending for the year and the management type involved.
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EN 10.11.2009 OfficialJournaloftheEuropeanUnion 195 Table 10.1 — 2008 payment and commitment appropriations (million euro) Budget Title Policy area Administrative expenditure (1) Economic and monetary union International economic and financial affairs Financial operations and instruments Description Administrative expenditure (1) Competitiveness, industrial policy, innovation and entrepre­ neurship Internal market for goods and sectoral policies Cooperation — space and security Payments made in 2008 59 13 42 172 286 Budget Management Mode Economic and Financial Affairs Enterprise 110 94 142 131 477 Competition Administrative expenditure (1) Cartels, anti-trust and liberalisation Administrative expenditure (1) Policy strategy and coordination for the Directorate-General for the Internal Market Internal market for services 79 8 87 Internal Market 52 6 0 58 Trade Administrative expenditure (1) Trade policy 63 13 76 984 1 Centralised Centralised Centralised Centralised indirect or 2 Centralised Centralised Centralised Centralised 3 Centralised Centralised 12 Centralised Centralised Centralised 20 Centralised direct direct direct joint direct direct direct direct direct direct direct direct direct direct Total Total administrative expenditure 363 Total operational expenditure 621 Total payments for the year 984 Total commitments for the year 1 131 (1) The audit of administrative expenditure is reported on in Chapter 11.
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EN 196 OfficialJournaloftheEuropeanUnion 10.11.2009 THE COURT’S OBSERVATIONS 10.3. The main programmes in this policy group, accounting for almost 80 % (or 493 million euro) of the group’s total operational expenditure, are financed by 01-Economic and Financial Affairs and 02-Enterprise policy areas.
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These programmes are presented in Table 10.2.
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Table 10.2 — Main programmes of the policy group Economic and Financial Affairs 01 THE COMMISSION’S REPLIES Budget Title Programmes Payments 2008 (million euro) % of the total oper­ ational expenditure Financial instruments under Competitiveness and Innovation Framework Programme (CIP) and Multiannual Programme for Enterprise and Entrepreneurship (MAP) 139 Macroeconomic assistance 41 Funding of EU Agencies1 (1) 111 Seventh Framework Programme for research and technological development (FP7) 77 Competitiveness and Innovation Framework Programme (CIP) — Entrepreneurship and Innovation Programme (EIP) 76 Sixth Framework Programme for research and technological development (FP6) 49 Total 493 79 % 22 % 01 7% 02 18 % 02 12 % 02 12 % 02 8% (1) The two EU agencies are the European Chemicals agency (ECHA) and the European Medicines agency (EMEA).
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The Court issues annual audit reports concerning both agencies.
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10.4.
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The CIP and MAP programmes financed by the 01-Economic and Financial Affairs policy area aim to support small and medium-sized enterprises (SMEs) with access to equity, venture capital and loan finance, through Community financial instruments operated on behalf of the Commission by the European Investment Fund (EIF) (1).
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The Macroeconomic assistance is a financial instrument for balance-of-payments support to third countries.
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It takes the form of medium/long term loans and/or grants.
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The assistance is granted, provided that economic and financial policy conditions are complied with.
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10.5.
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The aim of the Entrepreneurship and Innovation Programme (EIP), which is financed by 02-Enterprise policy area, is to foster the competitiveness of enterprises, and in particular SMEs, so as to promote innovation, including eco-innovation, and to support enterprise and administrative reform. _____________ (1) The EIF is the Community’s specialised institution for providing venture capital and guarantee instruments for SMEs.
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These programmes are managed by the EIF under ‘fiduciary and management agreements’.
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TheaimoftheactionscarriedoutundertheSeventh Community Framework Programme (2007-2013) is to support a European space programme and to develop technologies and knowledge for the protection of citizens from threats such as terrorism as well as from the impact and consequences of incidents such as natural disasters or industrial accidents.
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Besides support to European space projects, the Sixth Community Framework Programme (2002-2006) also financed specific actions to promote technological innovation, the exploitation of research results and the setting-up of tech­ nology businesses within the Community and all its regions.
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Audit scope 10.7.
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Thisspecificassessmentisbasedon: (a) substantive testing of a representative statistical sample of 80 payments made by the Commission in 2008; (b) an assessment of the effectiveness of the following super­ visory and control systems: — ex-ante desk checks for payments of grants and procurement contracts by the Commission, mainly through an examination of a sample of 120 payments; — audit certification of project cost statements provided by independent auditors; — ex-post controls, notably in the context of the FP6 audit strategy.
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10.8.
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Paymentsexaminedincludedgrantstofinalbene­ ficiaries (2), transfers to the fiduciary accounts (3) under the MAP and the CIP programmes, the EIF capital increase, transfers to the two EU Agencies and payments related to procurement or service contracts.
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10.9.
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The audit was carried out at the level of the final beneficiary for 10 out of the 80 payments.
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The remaining transactions, including the payments to the fiduciary accounts under MAP and CIP and to the two EU agencies, were audited at the level of the Commission. _____________ (2) Mostly advances for FP7 and interim and final payments for FP6.
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(3) For the execution of the programmes, funds are transferred form the General Budget to fiduciary accounts held by the EIF to cover possible future payments. THE COMMISSION’S REPLIES
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EN 198 OfficialJournaloftheEuropeanUnion 10.11.2009 THE COURT’S OBSERVATIONS 10.10. Thesampleofpaymentsmentionedinparagraph 10.7(a) also included one payment made to the OECD under a grant agreement(4).
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The Commission on behalf of the European Communities entered into an agreement with OECD to set up the administrative matters for Community projects implemented by the OECD.
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The OECD is interpreting this agreement in a way which limits the Court’s audit powers.
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In this specific case, the audit was performed by the OECD’s internal auditor.
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The Court assessed the results of this audit by examining the audit working papers and all available supporting documentation.
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Main risk to regularity 10.11.
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Themajorityofthegrantsunderthepolicygroup are paid out on the basis of cost statements presented by the beneficiaries.
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The main risk to legality and regularity is that eligible costs in the cost statements are overstated and that this is not detected by the Commission’s supervisory and control systems.
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In view of the significant number of cost statements, the Commission is not in a position to check each one on the spot at the level of the beneficiary.
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The risk to regularity of payments made on the basis of cost statements is therefore assessed by the Court as high.
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Regularity of transactions 10.12.
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The Court found that 14 % of the payments (11 out of 80) were affected by 13 errors.
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46 % of these errors (6 out of 13) concerned the eligibility of declared expenditure.
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The most likely error rate identified by the Court lies slightly above 2 %.
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Most of these errors related to projects financed by the Sixth Framework Programme for research and tech­ nological development (FP6).
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This outcome confirms the risk assessment mentioned in paragraph 10.11 and is corroborated by the findings of the Commission’s ex-post controls (5), the Court’s conclusion in Chapter 10 of the 2007 Annual Report and the Court’s audit results reported in Chapter 7. _____________ (4) This grant agreement provides Community support to the project ‘better regulation in Europe and OECD assessment of the regulatory capacity in 15 Member States’.
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(5) See reservation concerning the rate of residual errors with regard to the accuracy of cost claims in FP6 grants in the Declaration of the Authorising Officer by Delegation in the 2008 Annual Activity Report of the Directorate General Enterprise and Industry.
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THE COMMISSION’S REPLIES 10.10.
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In the Commission’s view, the ‘best endeavours’ clause contained in the cover note to the interpretative letter dated 17 November 1994 does not limit the Court’s powers to proceed with checks, as laid down by the Treaty.
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The Commission will contact the OECD to ensure the Court’s audit powers are not limited.
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10.11.
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The risk that beneficiaries could overstate costs is largely due to the inherent complexity of the funding mechanisms provided by the applicable regulatory framework which are based on reim­ bursement of the actual costs.
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This complexity also limits the scope of the desk reviews that can be conducted before reimbursement of expenditure.