Protecting the EU budget from irregular spending: The Commission made increasing use of preventive measures and financial corrections in Cohesion during the 2007-2013 period

Executive summary

About cohesion policy

I

Cohesion policy aims to reduce development disparities between regions, restructure declining industrial areas and encourage cross-border, transnational and interregional cooperation in the European Union. It is the EU’s main source of funding for investments, making up some 37 % of overall spending from the EU budget. The funds allocated to cohesion policy were around 230 billion euro in the 2000-2006 programme period, 346 billion euro in 2007-2013 and 349 billion euro in 2014-2020.

II

Cohesion policy comprises two main parts: regional and urban policy and employment and social affairs. Regional and urban policy is mostly implemented through the European Regional Development Fund and the Cohesion Fund. Employment and social affairs are mainly financed through the European Social Fund.

III

Cohesion policy is implemented under shared management, which means that responsibility is shared between the Commission and the Member States. Although the Commission remains responsible for the implementation of the EU budget, the actual management and control of EU funds and programmes is delegated to Member State authorities, which select beneficiaries and distribute funds.

IV

It is the Member States’ responsibility to detect, correct and prevent errors in the first instance. If the Commission finds that irregular expenditure was co-financed or likely to be co-financed, it can intervene and correct expenditure already co-financed or can prevent its future co-financing.

V

The Commission can apply preventive measures and/or financial corrections on the basis of irregularities or serious deficiencies identified by Member State authorities, on the basis of its own verifications and audits, OLAF investigations and as a result of audits by the European Court of Auditors.

How we conducted our audit

VI

We assessed whether the Commission’s preventive measures and financial corrections were effective in protecting the EU budget from co-financing irregular expenditure in Cohesion. We focussed on the 2007-2013 programme period. In addition, we also made a comparison with the 2000-2006 programme period and assessed the likely impact of the changes in the regulations for 2014-2020. Our audit included:

• a review of relevant Commission guidelines, publications and reports and an assessment of the Commission’s internal procedures for the 2007-2013 period;
• a comparative analysis of preventive measures and financial corrections for the 2000-2006 and 2007-2013 periods and an assessment of the impact of financial corrections after closure of the 2000-2006 programme period;
• an examination of a sample of 72 individual cases closed by the end of 2016. These accounted for 29 % of financial corrections during the 2007-2013 period. Our field work was carried out from January 2016 to November 2016.

What we found

VII

Overall, we found that the Commission made effective use of the measures at its disposal during the 2007-2013 programme period to protect the EU budget from irregular expenditure.

VIII

Financial corrections for the 2000-2006 period amounted to 8 616 million euro or 3.8 % of the total budget. For the 2007-2013 period, the Commission used the measures at its disposal to protect the EU budget more extensively.

IX

For the 2007-2013 period, we found that the Commission imposed its preventive measures and financial corrections in a proportionate manner and we confirmed that the Commission’s measures for the 2007-2013 period focused on those Member States with the riskiest programmes. We also found that the Commission’s assessment of weaknesses and the related financial corrections were in substance confirmed by the European Court of Justice.

X

The Commission’s corrective measures put pressure on Member States to address weaknesses in their management and control systems. However, preventive measures and financial corrections both generally deal with complex issues which take a considerable time to resolve. The resulting payment interruptions and suspensions represent a significant financial risk for Member States. During the 2007-2013 period, the Commission therefore aimed to gradually lift measures to ensure that reimbursement could be resumed as soon as the necessary conditions are met.

XI

We also found that the Commission faced difficulties in monitoring the implementation of financial corrections. The information provided by the Member States on implementation in the 2007-2013 period did not yet allow for robust monitoring. We found mixed evidence of the long-term impact of preventive measures and financial corrections for the 2007-2013 period.

XII

The Commission’s reporting on preventive measures and financial corrections makes it difficult to get a comprehensive overview of the situation, largely because the information is presented in several reports and documents. At the same time, not one of the Commission reports for the 2007-2013 period provides an analytical overview of preventive measures and financial corrections. Representatives from the European Parliament and the Council also considered that the Commission reports do not provide enough Member State comparisons and ‘good practice’ examples on how to prevent, detect or correct recurrent problems.

XIII

The regulatory provisions for the 2014-2020 period significantly strengthen the Commission’s position on protecting the EU budget from irregular expenditure in particular through net financial corrections. This is mainly due to the fact that the Member State’s reporting on financial corrections is now integrated into the annual assurance package and examined by the respective audit authorities. Moreover, the legal provisions introduced for the 2014-2020 period give more power to the Commission to ensure that irregular expenditure is no longer reimbursed from the EU budget. Finally, there is increased legal certainty for Member States due to the rules being set as regulations rather than guidance.

XIV

We consider that these arrangements are a significant improvement in the design of the system.

What we recommend

XV

The Commission should:

• apply a strict approach to financial corrections at the closure of the 2007-2013 period (from March 2017) to ensure that the total amounts reimbursed by the EU budget are free from material levels of irregular expenditure.
• issue an ad-hoc report on the financial corrections and status of closure of the ERDF/CF and ESF programmes (at latest by mid-2019) similar to the report prepared in 2013 for the 2000-2006 period. This report should present and compare all information on preventive and corrective measures by fund and Member State and display the impact of financial corrections and the residual risk rate.
• set up an integrated monitoring system for the 2014-2020 period covering both preventive measures and financial corrections by 2019.
• make effective use of the significantly strengthened provision for the 2014-2020 period with immediate effect and impose net financial corrections wherever necessary on the basis of its own checks and/or the audits we carry out.

Introduction

Cohesion policy is the EU’s main source of funding for investments

Policy objectives, budget and funds

01

Cohesion policy aims to reduce development disparities between regions, restructure declining industrial areas and encourage cross-border, transnational and interregional cooperation in the European Union (EU).

02

Cohesion expenditure makes up around 37 % of the overall spending from the EU budget. The funds allocated to cohesion policy, the EU’s main investment policy, were around 230 billion euro in the 2000-2006 programme period; around 346 billion euro in the 2007-2013 programme period and around 349 billion euro in the 2014-2020 period

03

Cohesion policy comprises two main parts: regional and urban policy and employment and social affairs. The regional and urban policy is mostly implemented through the European Regional Development Funds (ERDF) and the Cohesion Fund (CF); while the employment and social affairs are mainly financed through the European Social Fund (ESF). The ERDF, CF and ESF are governed by common rules, subject to exceptions in the specific regulation of each fund.

Cohesion policy management and control system

04

Cohesion policy is implemented under shared management¹, which means that responsibility for implementing the policy and the related funds, including the control activities, is shared between the Commission and the Member States. Although the Commission remains responsible for the implementation of the EU budget, the actual management and control of EU funds and programmes is delegated to the Member State authorities.

05

The tasks of these authorities are defined in sectoral regulations:

1. managing authorities (whose tasks can be delegated to intermediate bodies) carry out the day-to-day management of projects co-financed under the respective operational programme (OP),
2. certifying authorities aggregate cost declarations prepared by project beneficiaries into statements of expenditure and declare them to the Commission for reimbursement, and
3. audit authorities perform a yearly independent audit of the costs declared to the Commission and of the functioning of the management and control system.

06

In particular, these authorities select projects, distribute and control funds. Member States are also responsible for ensuring that the expenditure subject to reimbursement from the EU budget is free from irregularities through the prevention, detection and correction of irregularities². At the same time the Commission may take actions to recover funds that have been unduly paid.

07

Project beneficiaries incur expenditure and declare them in payment claims to managing authorities (or intermediate bodies). These are then aggregated and sent through the certifying authority to the Commission. The Commission then pays the amount equalling the co-financed part of the declared expenditure into the Member State’s budget, from where the funds are transferred to respective beneficiaries (see Figure 1).

08

The Commission negotiates and approves operational programmes with Member States, provides guidance and instructions to Member State authorities on carrying out their tasks and performs Member State level or desk checks to control the implementation of the policy.

09

Overall, there were 618 OPs and 1119 CF projects for the 2000-2006 programme period³, 440 OPs for the 2007-2013 period and 391 OPs (ERDF, CF, ESF or multi-fund) for the 2014-2020 period.

The Commission’s measures to protect the EU budget in Cohesion

10

The Commission’s measures to protect the EU budget aim to ensure that only regular spending (i.e. expenditure which is spent in accordance with the applicable EU and national/regional legislation) is co-financed from the EU budget.

11

It is the Member States’ responsibility to detect, correct and prevent errors in the first instance⁴. If the Commission finds out that irregular expenditure was co-financed or likely to be co-financed, the Commission can intervene and correct already co-financed expenditure or can prevent the future co-financing of irregular expenditure in future statements of expenditure.

12

The regulations for the 2000-2006⁵, as well as those for the 2007-2013⁶ and 2014-2020⁷ periods, enable the Commission to apply preventive measures, i.e. payment interruptions and suspensions, and financial corrections. For the 2000-2006 period, the regulations did not provide for interruptions as part of the Commission’s preventive measures. The Directorates-General for Regional and Urban Policy and for Employment, Social Affairs and Inclusion are responsible for the application of these corrective measures in cohesion policy.

13

The Commission can apply preventive measures and/or financial corrections on the basis of irregularities or serious deficiencies identified by Member State authorities (e.g. the managing or audit authority) or on the basis of its own verifications and audits. This also includes OLAF investigations. They can also be the result of audits by the European Court of Auditors (see Annex I).

Preventive measures: payment interruptions and suspensions

14

Preventive measures result in a deferral of payments from the EU budget. This puts additional pressure on the Member State to take the necessary corrective action. The main types of preventive measures are interruptions and suspensions (see Box 1).

15

Payment interruptions were introduced in the 2007-2013 regulation (see Annex II). The main advantage of interruptions is that they can be applied immediately without a long administrative procedure if the Commission has evidence suggesting significant deficiencies¹². To apply a suspension, however, a serious deficiency needs to be established resulting in prior longer procedure (see Box 1).

16

If there is no payment claim pending (i.e. there is no payment deadline to be interrupted), the Commission may also issue a warning. The Commission warns the Member State that if a payment application has been submitted, its payment deadline will be interrupted. This procedure is, however, not set out in the regulations.

17

Suspensions are applied by a legally binding Commission decision addressed to the Member State concerned. All other preventive measures (warning, interruption, pre-suspension) take the form of a letter signed by a director-general of the Commission (acting in its capacity as Authorising Officer by Delegation) and addressed to Member State authorities.

Financial corrections by the Commission

18

Where serious deficiencies in the Member State management and control systems have led to systemic errors or the Commission has identified an individual irregularity, the Commission can also apply financial corrections (see Annex I)¹³. The purpose of financial corrections is to restore a situation where all of the expenditure declared for co-financing from the ERDF, CF or ESF and reimbursed by the Commission is in line with the applicable rules¹⁴.

19

During the 2000-2006 and 2007-2013 programme periods, Member States were able to replace irregular expenditure with new expenditure if they took the necessary corrective actions and applied the related financial correction (confirmed financial correction)¹⁵. This possibility is also set out for the 2014-2020 programme period¹⁶. Whether this happened in practice depended, however, on the Member State’s ability to declare additional (regular) expenditure. If the Member State did not have such additional expenditure to declare, the financial correction resulted in a net correction (loss of funding). In contrast, a Commission financial correction decision had always a direct and net impact on the Member State: it had to pay the amount back and its envelope was reduced (i.e. the Member State could spend less money throughout the programme period).

20

The Commission does not address financial corrections to beneficiaries directly, but to Member State authorities managing the OPs. Should a financial correction relate to individual projects implemented by beneficiaries, it is the Member State authorities who must process the financial correction towards the beneficiary.

21

Annex III provides an overview of the different scenarios concerning the impact of the financial corrections on Member States up to the end of the 2007-2013 programme period.

Determining the amount of financial corrections

22

The Commission can determine the amount of a financial correction in different ways (see Box 2).

23

If the irregular expenditure leading to the financial correction has already been claimed for reimbursement from the EU budget, the financial correction corrects the past (ex-post financial correction). However, if the irregular expenditure had not yet been claimed for reimbursement from the EU budget, the financial correction addresses the future (ex-ante financial correction). This latter means that already when declaring expenditure to the Commission, Member States deduct from eligible expenditure the financial correction. Ex-ante and ex-post financial corrections can occur simultaneously within the same case ensuring the correction of the past and the future.

24

Annex I describes the process leading to a preventive measure and/or financial correction and its resolution.

No preventive measures or financial corrections for underachievement of results

25

During the 2000-2006 and 2007-2013 programme periods, there was no legal provision which would have permitted the Commission to initiate suspension procedures and impose financial corrections in the case of underachievement of results at the level of a programme or a priority axis. There were also limited possibilities to do so at the level of individual projects. We have criticised this deficiency in the regulations in several reports¹⁸.

Recovery of unduly paid amounts by Member States

26

Under shared management, Member States are responsible for detecting, correcting and preventing errors so that only regular expenditure is reimbursed from the EU budget. Member States are also required to recover unduly paid (from the EU budget) amounts from beneficiaries¹⁹. However, this is not possible if:

1. the error was not committed by the beneficiary, but it concerns issues linked to the functioning of the management and control system (e.g. issues related to the selection of operations to be co-financed); or
2. the amount is irrecoverable from the beneficiary (e.g. the beneficiary went bankrupt).

In these cases the Member State budget bears the financial burden of the financial corrections unless it can be shared with the EU budget.

27

According to the information provided by Member States to the Commission as of the end of 2015, the publicly (EU and national) financed amount irrecoverable from beneficiaries is 57 million euro (corresponding to total (private and public) eligible expenditure amounting to 115 million euro) for all OPs for the entire 2007-2013 period²⁰.

28

Moreover, when an unduly paid amount is recovered from a public body acting as beneficiary, the financial correction is de facto still borne by a national, regional or local public budget.

Financial corrections are a key input to establishing the residual risk for payments from the EU budget in Cohesion

29

Since 2000, specific regulatory requirements have been added to reinforce the responsibility of Member States to detect, correct and prevent errors and the OPs’ management and control systems have been changed accordingly.

Annual error rates per programme for a representative sample of operations validated by the Commission

30

For the 2000-2006 period, dedicated national authorities needed to check 5 % of eligible expenditure before the winding up of OPs, taking into account their own assessment of the risks that irregularities could occur and aiming at a representative coverage of the OPs’ spending²¹. The Member States also needed to report on amounts awaiting recovery on a yearly basis²². There was however no requirement to calculate annually an overall error rate or to issue any annual audit opinion.

31

For the 2007-2013 period, the regulation introduced Member State audit authorities who should issue an annual control report (ACR) together with an audit opinion on the legality and regularity of underlying transactions²³. The ACR contained an error rate based on a representative sample of audits of operations, which was checked, i.e. validated by the Commission.

Calculation of a cumulative residual risk rate by the Commission

32

The Member States also provide the Commission with more extensive information on financial corrections made during the year, which is used by the Commission to calculate a cumulative residual risk rate²⁴. Since 2012, in its annual activity reports (AAR), the Commission calculates and publishes an indicator called cumulative residual risk (CRR). The CRR is the Commission’s estimate of the remaining part which is not legal and regular of the expenditure paid for each OP (or group of OPs) during the programme period. The CRR is updated each year. From its first calculation in 2012 the overall CRRs for ERDF/CF and ESF for the 2007-2013 period were below the 2 % materiality threshold²⁵ (see Figure 2).

33

In calculating the CRR, the Commission takes into account the annual error rates reported by Member State audit authorities as validated by the Commission. On top, it also uses all financial corrections implemented since the start of the programme period at Member State level (through withdrawals and recoveries as reported by Member States) and EU level (through formal Commission decisions)²⁶.

The previous special report by the European Court of Auditors on the Commission’s measures to protect the EU budget

34

In 2012, in a previous special report, we assessed the Commission’s measures to protect the EU budget for 2000-2006 programme period. Our audit showed that the Commission generally took appropriate action when deficiencies were identified, but that the process was lengthy and that it obtained varying degrees of assurance that deficiencies in national management and control systems had been adequately addressed as a result of its corrective actions²⁷.

Audit scope and approach

35

Through this audit we assessed whether the Commission’s preventive measures and financial corrections in Cohesion are effective in protecting the EU budget from co-financing irregular expenditure.

36

Our audit focussed on the 2007-2013 programme period; but we also made a comparison of the Commission’s preventive measures and financial corrections during this period with those of the 2000-2006 programme period. We also assessed the likely impact of the relevant changes made in the regulations for the 2014-2020 programme period.

37

In particular we examined whether:

1. the Commission’ s financial corrections had sufficient net impact for ERDF and ESF programmes during the 2000-2006 period;
2. the Commission made effective use of the preventive measures and financial corrections during the 2007-2013 period as provided for in the regulations;
3. whether the Commission, made effective use of the lessons it had learnt when devising the arrangements for 2014-2020 in order to better protect the EU budget in Cohesion.

38

Our audit work consisted of:

• a review of relevant EU legislation and Commission guidelines (both internal and those addressed to the Member States) for the periods 2000-2006, 2007-2013 and 2014-2020;
• a review of the different Commission publications and reports in relation to measures to protect the EU budget (such as annual activity reports, annual accounts and the Communication on the protection of the EU budget) for the 2007-2013 period;
• a comparative analysis of the distribution over several years of preventive measures and financial corrections applied by the Commission in the 2000-2006 and 2007-2013 periods and an assessment of the impact of financial corrections on total programme spending after closure in the 2000-2006 programme period;
• a review of all European Court of Justice (ECJ) judgments on Commission financial correction decisions in the 1994-1999 and 2000-2006 periods which were challenged before the ECJ;
• an assessment of the Commission internal procedures for the 2007-2013 period and a verification of how these work in practice through desk review. This included an analysis of the different information sources kept by the Commission and a validation and reconstruction of the audit trail for the specific cases examined;
• an examination of a sample of 72 individual cases that had been closed by the end of 2016 related to 20 ERDF/CF and ESF operational programmes for the 2007-2013 period. For these 20 OPs we have examined all preventive measures and financial corrections. These programmes cover around 21 % of the total budget and were randomly selected. The 72 cases examined account for up to 29 % of all financial corrections for the period;
• a comparison of programme risk per Member State and the level of financial corrections as well as an analysis of the Commission’s validated error rates and preventive measures and financial corrections during the 2007-2013 period; and
• interviews with members of the European Parliament’s Budgetary Control and Regional Development committees and with representatives of Member States of the Council of the European Union’s Structural Actions Working Party.

39

The audit covers the period until 31 December 2015 unless indicated otherwise. The audit field work was carried out from January 2016 to November 2016. Our examination of the preventive measures and financial corrections was based on errors accepted by Member States. Unless indicated otherwise, the figures presented in this report refer to ex-post financial corrections imposed by the Commission and accepted by Member States.

Observations

Financial corrections already resulted in net corrections for a number of ERDF and ESF programmes as well as CF projects during the 2000-2006 period

Financial corrections for the 2000-2006 period amounted to 8 616 million euro or 3.8 % of the total budget for ERDF, CF and ESF

40

In our assessment of the Commission’s effectiveness in protecting the EU budget from irregular spending we first looked at the 2000-2006 programme period. For this period we were able to assess the total impact of the financial corrections on Member States since nearly all OPs were closed by the end of 2015²⁸.

41

We found that that the Commission imposed a total of 8 616 million euro in financial corrections during the 2000-2006 period. This corresponded to 3.8 % of the total budget envelope (Table 1).

42

According to the Commission at the closure of the 2000-2006 programme period all OPs had been closed with sufficient financial corrections having been imposed to ensure that no material irregular expenditure had been paid from the EU budget.

Table 1

Main figures for the implementation of the Commission’s measures to protect the EU budget in Cohesion

	2000-2006				2007-2013
	ERDF	CF	ESF	TOTAL	ERDF/CF	ESF	TOTAL
Allocated envelope (million euro)	129 607	30 215	68 521	228 344	269 879	76 617	346 496
Confirmed/decided financial corrections (million euro)	5 794	832	1 990	8 616	2 317	1 009	3 326
Confirmed/decided financial corrections /allocated envelope (%)	4.5 %	2.8 %	2.9 %	3.8 %	0.9 %	1.3 %	1.0 %
Interrupted amount (million euro)					23 364	5 082	28 446
Interrupted amount / allocated envelope (%)					9 %	7 %	8 %
Total number of OPs	379		239	618	322	118	440
Number of suspended OPs	45		11	56	32	32	64
Number of suspended OPs / Total number of OPs (%)	12 %		5 %	9 %	10 %	27 %	15 %
Total number of projects		1 119		1 119
Number of suspended projects		2		2
Suspended projects / Total number of projects (%)		0 %		0 %

Source: European Court of Auditors based on information provided by the Commission.

43

The Commission did not, however, publish an indicator for the whole policy area, similar to the CRR for the 2007-2013 programme period, to assess if the impact of the above corrections brought the residual risk rate for the policy area under the materiality threshold of 2 %.

44

In the context of our compliance audits we examined the closure payment to 12 ERDF or ESF OPs and to 15 CF projects (altogether 101 projects). Of the 101 projects, 20 were affected by errors with financial impact, of which at least in 13 projects the Commission applied financial corrections after the closure procedure has been finalised by the Member State. This illustrates that the Commission needs to remain vigilant when examining the closure declaration submitted by Member States.

45

Table 1 summarises our analysis of the Commission’s measures to protect the EU budget in Cohesion policy for the 2000-2006 and 2007-2013 programme periods.

Net financial corrections for the 2000-2006 period account for an overall amount of 2 423 million euro (or 1.1 % of the total budget)

46

Net financial corrections originate from both Commission decisions, which by default are net, and confirmed financial corrections which can become net if the Member States do not introduce new expenditure.

47

Financial corrections were decided by the Commission in seven Member States for the ERDF (Belgium, Greece, Spain, France, Germany, Italy and the United Kingdom), six Member States for the CF (Spain, Greece, Ireland, Lithuania, Portugal and Slovakia) and one Member State for the ESF (France). The corrections decided by the Commission amount to 1 037 million euro or around 0.5 % of the total ERDF, CF, ESF budget (see Figure 3).

48

As for confirmed financial corrections, we found that, for the ERDF,five of the 25 Member States (Ireland, Latvia, Lithuania, Luxembourg and Hungary) were able to replace the whole amount of the confirmed financial correction with new expenditure (indicated in green on Figure 4). This was also the case for the ESF in five of the 25 Member States (Ireland, Latvia, Lithuania, Portugal and Slovakia) and for CF in four of 16 Member States (Latvia, Lithuania, Hungary and Slovenia) (indicated in green on Figures 5 and 6). Taken together, these Member States accounted for 3 % of the ERDF, 10 % of the ESF and 10 % of the CF budget. These Member States were able to declare enough additional expenditure to compensate for the effect of confirmed financial corrections, so the confirmed financial corrections had no impact on the use of their budget envelope.

49

In the case of 17 Member States for the ERDF, 16 Member States for the ESF and ten Member States for CF confirmed financial corrections had an impact on the use of the allocated budget envelope (indicated in red on Figures 4, 5 and 6). Taken together, these Member States accounted for 96 % of the ERDF, 88 % of the ESF and 89 % of the CF funding.

50

These Member States were not able to use replacement in full and the confirmed financial correction thus became at least in part a net financial correction. We calculated that this net financial correction amounts to 1 386 million euro. This corresponds to around 0.6 % of the total ERDF, CF and ESF budget for all 25 Member States.

51

For the ERDF there were three Member States (Cyprus, Malta and Slovenia), for the ESF there were four (Czech Republic, Cyprus, Malta and Finland) and for the CF there were two (Cyprus and Malta) where no confirmed financial corrections were applied in the 2000-2006 programme period.

The Commission’s assessment of weaknesses and financial corrections were in substance confirmed by the European Court of Justice

52

Where the Commission enforces suspensions or financial corrections by way of a Commission decision, the Member State is entitled to challenge this decision before the European Court of Justice (ECJ). We therefore looked at whether the Commission decisions for previous programme periods were upheld in substance by the ECJ.

Table 2

Commission decisions on financial corrections (1994-1999 and 2000-2006 programme periods)

Programme period	Member State	Financial correction decisions			Number of cases challenged in front of ECJ	Status		Judgement for the closed cases)
		DG REGIO	DG EMPL	Total		Closed	Open	Commission decision
								confirmed	annulled
1994-1999	Belgium	1	3	4
	Germany	16	1	17	11	11		10	1
	Ireland	5	1	6
	Greece	7		7	2	2		2
	Spain	14	2	16	5	5		1	4
	France	4	4	8
	Italy	7		7	4	4		4
	Luxembourg		5	5
	Netherlands	3		3	1	1		1
	Austria	3		3
	Portugal	5		5	2	2		1	1
	Finland	1	1	2
	United Kingdom	7	2	9
	Interreg1	4		4	1	1		1
Subtotal for 1994-1999:		77	19	96	26	26	0	20	6
2000-2006	Belgium	1		1
	Germany	1		1
	Ireland	1		1
	Greece	2		2
	Spain	21		21	11	8	3	6	2
	France	1	2	3	1	1		1
	Italy	3	1	4	2	1	1	1
	Lithuania	1		1
	Portugal	4		4	1	1			1
	Slovakia	1		1
	United Kingdom	1		1
	Interreg1	1		1
Subtotal for 2000-2006:		38	3	41	15	11	4	8	3
TOTAL:		115	22	137	41	37	4	28	9
		137				41		37

1 Interregional programmes are implemented by more than one Member State.

Source: Information provided by the Commission.

53

Up to the end of 2015, from a total of 137 financial correction decisions, 41 cases were brought to the ECJ in relation to the 2000-2006 and the 1994-1999 periods (see Table 2). Of the 41 cases, 37 were closed by the end of 2016.

54

Around half of the ECJ cases covered by our analysis concern issues linked to non-compliance with public procurement rules. Some other issues include submission of costs incurred outside the eligibility period, switching of funds between operational programmes and identification of weaknesses in management and control procedures.

55

In nine of the 37 closed cases, the ECJ annulled the Commission’s financial correction decision. In all nine cases the annulment was due to procedural issues without any conclusions on the substance of the case. Three of the four open cases with the same issues are under appeal. In all other cases, the Commission decision was confirmed by the ECJ both on form and on substance.

56

This suggests that the Commission has generally made robust interpretations of the articles governing the application of financial corrections and had applied proportionate financial corrections during the 1994-1999 and 2000-2006 periods.

57

So far there were no Commission decisions on financial correction for the 2007-2013 programme period. There was only one case where a Member State challenged a Commission decision in relation to a payment suspension for the 2007-2013 period, but this case is still on-going and thus not covered by our analysis.

The Commission makes increasing use of preventive measures and financial corrections during the 2007-2013 period

58

For the 2007-2013 period no final assessment is possible at this stage since the closure process for ERDF/CF and ESF OPs will be initiated only in 2017. We therefore looked at the way in which the Commission has made use of the regulatory provisions which were available during this period to protect the EU budget from irregular spending. Where appropriate, we also made a comparison with the 2000-2006 period.

During the 2007-2013 period the Commission used the measures at its disposal to protect the EU budget more extensively than in the past

59

The Commission should make use of the measures to protect the EU budget set out in the regulations as soon as significant weaknesses are detected in the management and control system and these may result in irregular expenditure being claimed by Member States. This is necessary so that Member States can improve their systems and avoid claiming additional irregular expenditure from the EU budget. We have therefore compared the use made by the Commission of preventive measures and financial corrections for the 2007-2013 period with that for the previous period.

60

For the 2007-2013 period, financial corrections of around 3 326 million euro had been imposed by the end of 2015 (see Table 1). This corresponds to 1.0 % of the total budget envelope. In addition, payments for around 28 446 million euro had been interrupted (8 % of the total allocated envelope).

Preventive measures were applied earlier and more extensively in the 2007-2013 programme period than in the previous period

61

Our analysis shows that the Commission started to use preventive measures in 2010, i.e. the 4th year of the 2007-2013 programme period. This was two years earlier than for the 2000-2006 programme period and five years before the eligibility period finished (see Figure 7 and Table 1).

62

Moreover, the preventive measures covered a larger share of the OPs earlier and the Commission also imposed more serious measures earlier. For example, for the 2000-2006 period, payment suspensions were applied to the first OPs in 2007 (the 8th year of the 2000-2006 period). For the 2007-2013 period, this was already the case in 2010 (the 4th year of the 2007-2013 period. In addition, while for the previous programme period around 20 % of all OPs with a payment suspension had been suspended in year 2007 (the 8th year of the period), for the 2007-2013 period this was the case for 68 % of such OPs.

63

This earlier, more comprehensive and stricter application of preventive measures by the Commission allows for more timely improvements to a larger number of management and control systems, and also increases the incentives for Member States to make the necessary improvements.

Relative increase in financial corrections during the 2007-2013 period when compared to the level of irregular spending detected

64

Our analysis also shows that in the 2007-2013 period the level of financial corrections and the implementation rate of the imposed financial corrections were similar to those observed during the previous 2000-2006 period (see Figure 8). The levels of financial corrections in the two periods need, however, to be put into perspective and must be compared with the underlying level of irregular expenditure. Our audits since 2009 have shown that the level of error for the 2007-2013 period is significantly lower than for the 2000-2006 programme period²⁹. This means that there was significantly more irregular expenditure during the 2000-2006 than during the 2007-2013 period. In turn, this implies that the level of financial corrections has increased in relative terms.

Final impact of financial corrections for the 2007-2013 period can be determined only at closure

65

The final impact of the confirmed financial corrections on the 2007-2013 OPs (i.e. whether the financial corrections lead to loss of funds) can however be assessed only once the final payment claim has been submitted by the Member State and assessed by the Commission. As for the 2007-2013 programme period, submission of final payment claims must be done by 31 March 2017³⁰, so it is too early to assess at the time of drafting this report the impact on Member States of financial corrections for the 2007-2013 programme period.

66

Annex IV provides more detailed information per Member State related to the implementation by the end of 2015 of the Commission’s measures for the 2007-2013 period.

The Commission applied its preventive measures and financial corrections in a proportionate manner in the 2007-2013 period

The Commission’s measures in the 2007-2013 period focussed on the Member States with the riskiest programmes

67

Since the 2007-2013 programme period the Commission has calculated the ‘amount at risk’ for each programme. These amounts are then aggregated at Member State level and published in the AAR. These indicators present the programmes’ risk for the given year and they show the potential amount of ineligible expenditure co-financed for each programme or Member State on the basis of the information available to the Commission.

68

As the Commission’s measures should mostly affect the riskiest programmes, there is likely to be a correlation between the distribution of the amount at risk and the distribution of financial corrections imposed by the Commission. We therefore analysed whether such a correlation exists.

Programme risk indicator by Member State correlated with confirmed/decided financial corrections

69

The difference between the ‘amount at risk’ and the Commission’s and Member State’s financial corrections is the cumulative residual risk (CRR) (see paragraphs 32 to 33). When assessing the OPs, the Commission requires that financial corrections imposed by Member States and by the Commission are high enough to ensure that this indicator is below a 2 % materiality threshold³¹.

70

Figure 9 shows the programme risk level by Member State as indicated by the Commission’s amount at risk and the level of Commission’s financial corrections per Member State for the 2007-2013 period. The correlation analysis also displays the trend line (the overall relation for the Member States between the programme risk and the financial corrections imposed by the Commission) as well as the 45 line (points where financial corrections would equal the programme risk level).

71

Our correlation analysis shows that the trend line is below the 45 line (see
Figure 9). This indicates that financial corrections imposed by the Commission are generally at a lower level than the amount at risk. This can be explained by two factors:

• the risk of co-financing ineligible expenditure (amount at risk) is partly addressed by the financial corrections already imposed as a result of Member State controls without the issue reaching the Commission; and
• the Commission requires that financial corrections bring the CRR below the 2 % materiality threshold (and not to zero).

72

Most of the Member States are close to the trend line. This indicates that the level of financial corrections imposed by the Commission overall correlates with the Commission’s assessment of the amount at risk³².

73

Where Member States are significantly above the trend line, the level of financial corrections is higher than the potential amount at risk indicated for the Member State’s programmes. This is, for example, the case for Slovakia, Romania and Ireland.

74

Where Member States are significantly below the trend line, the level of financial corrections imposed by the Commission is lower than the potential amount at risk indicated for the Member State’s programmes. This is, for example, the case for France and Spain, which both applied financial corrections on their own initiative. By doing this, they avoided additional financial corrections being imposed by the Commission.

75

The relation between the level of financial correction and the amount at risk is also influenced by ongoing cases. Cases which have not yet reached the final stage of the procedure are included in the amount at risk, while the possible future financial corrections resulting from these cases are not yet reflected in the numbers. This is particularly the case for Spain where 20 operational programmes were under suspension and for a further seven programmes, payment claims were interrupted as of the end of 2015 (representing 70 % of all on-going preventive measures).

The Commission’s internal procedures for the 2007-2013 period aim to ensure harmonised treatment of cases across programmes and Member States

76

The Commission should ensure harmonised treatment of cases across programmes and Member States and that preventive measures and financial corrections are implemented before payments are resumed. We therefore analysed the Commission’s internal procedures for imposing preventive measures and financial corrections, for accepting preventive measures and financial corrections as implemented and verified how these procedures work in practice.

Decisions on payment interruptions and suspensions and financial corrections are discussed and agreed upon by senior management committees.

77

For the 2007-2013 programme period, the Directorate-General for Regional and Urban Policy and the Directorate-General for Employment, Social Affairs and Inclusion set up their own Interruptions, Suspensions and Financial Corrections Committees (ISFCC). These committees provide a forum within each directorate-general to discuss matters and take decisions related to warnings, interruptions, suspensions and financial corrections (see also Annex I). Both committees meet on a regular basis and consist of the director-general, the deputy director-general(s), relevant directors and representatives of the legal units.

78

The meetings of the ISFCC ensured a better overview and discussion of all cases and procedures related to preventive measures and financial corrections within the Directorate-General to help to harmonise treatment of cases and inform senior management of the ongoing issues.

The management and follow-up of preventive measures and financial corrections required a significant commitment in terms of time and staff resources

79

In order to lift preventive measures and resume payments Member State authorities must generally propose measures aimed at correcting systems so as to prevent errors occurring in the future. These are called remedial action plans (see Annex I). Within our sample of 20 programmes, the Commission requested a remedial action plan to be set up in 44 of the 72 cases examined (see paragraph 38).

80

Member States then need to inform the Commission that a remedial action plan has been implemented. The Commission has several ways of assessing whether the conditions for lifting have been fulfilled:

1. first, the Commission systematically reviews the information sent by Member State authorities (generally by the managing authorities of the OPs concerned).
2. second, the Commission may also ask the audit authority to confirm the information provided by the managing authority. Of these 44, the audit authority’s validation was requested in 31 cases for 18 of the 20 programmes. In these cases, the Commission obtained additional assurance regarding the appropriateness of the actions proposed by the Member State authorities.
3. third, the Commission can perform its own follow-up of cases in the Member States. Cases for follow up audits are selected on a risk basis: where the Commission cannot rely on the work of the audit authority or where additional information is needed. Overall, the Commission carried out 62 follow-up audits of action plans in relation to 70 OPs in the 2007-2013 programme period.

81

The management and follow-up of preventive measures and financial corrections required a significant commitment in terms of time and staff resources from the Directorates-General. Holding back large payments from the EU budget to Member States is also politically sensitive and the Commission is in close contact with Member States to ensure that the conditions for lifting measures are in place. Some cases are even discussed between ministers or heads of state and Directors-General and Commissioners.

The Commission’s corrective measures put pressure on Member States to address weaknesses in their management and control systems

Preventive measures and financial corrections generally deal with complex issues which take a considerable time to resolve

82

Commission procedures related to preventive measures and financial corrections should be as quick as possible, while taking account of the complexity of the issues. We therefore analysed the 72 cases in our sample to determine the total duration and the length of the different phases of the procedures.

83

The duration of the Commission’s procedures does not equal the length of the payment blockage (see paragraph 93). The Commission’s procedure starts with the triggering event and lasts either until the preventive measure is lifted or until the financial correction is implemented. It is therefore longer than the payment blockage which starts with the first preventive measure and lasts until the lifting of the preventive measure (see Annex I).

Procedures resulting in financial corrections took up to 21 months in the 2007-2013 period

84

Figure 10 presents the results of our analysis of the cases in our sample as regards the time taken to carry out preventive measures and financial correction procedures. The average length of the procedures from the triggering event until the preventive measure was lifted or the financial correction was implemented varied from 10 to 21 months. The longest was when both preventive measures and financial corrections were involved and the shortest was when there were only preventive measures.

Procedures resulting in preventive measures were mostly triggered by Member State’s own audits and take half the time

85

According to the Commission, two thirds of preventive measures were triggered by national audit results³³. This is also the case for 12 of the 16 cases in our sample. The duration of these procedures is significantly shorter: there is no need to spend time on establishing the problems; the time is spent on finding ways of resolving them.

86

Most of the remaining financial corrections are triggered by Commission audits. In our sample, 17 of the 28 cases involving only financial corrections and 13 of the 28 mixed cases were triggered by Commission audits. These cases take much longer to resolve, in particular if the Commission imposes financial corrections. One reason for the lengthy procedures involving financial corrections is that these usually relate to complex problems and Member States almost always initially contest the Commission’s findings. In order to establish an error, the issues found need to go through a fact clearing procedure between the Member State and the Commission, which takes time.

87

The regulation specifies deadlines for Member States’ replies to the Commission’s information requests. However, in 34 % of our sampled cases the Commission did not accept the first Member State reply in which the detailed actions taken by the Member State to address the shortcomings were laid down, as Member States did not provide the Commission with information sufficient in volume and in quality. This means that in these cases the reply provided by the Member State is such that these procedures need to be repeated.

88

We also examined whether another reason for the long procedure could be that the Commission does not formulate its requirements specifically enough. However, our analysis showed that in nine out of ten cases, the Commission requests were specific enough for the Member State to undertake the required actions.

89

In addition, when financial corrections are set up, time is needed to determine the appropriate level of correction once the error has been accepted by the Member State. In many cases the Commission agrees with the Member State concerned that additional checks should be carried out to establish the seriousness of the errors and the appropriate correction.

Payment interruptions and suspensions represent a significant financial risk for Member States

90

The Commission’s actions should make the OP’s management and control system more effective in preventing, detecting and correcting errors. Such improvements are often made faster if there is a financial cost associated with not acting swiftly. We therefore assessed the impact of the preventive measures at Member State and Commission level.

Payments interrupted or suspended for a significant share of programmes for between three and nine months

91

Until the end of 2015 the Commission interrupted the payment deadline for the amount corresponding to 10 % of all payments made for ERDF/CF and ESF³⁴. Suspension decisions were issued for 15 % of all programmes. Moreover, payments to programmes or part of the programmes for the 2007-2013 period were stopped due to interruptions and/or suspensions for more than eight months on average. There were only five Member States (Croatia, Cyprus, Denmark, Finland and Ireland) where no OPs were interrupted or suspended.

92

For the vast majority of Member States the average period when payments to at least one of their programmes were withheld by the Commission due to interruptions and/or suspensions was between three and nine months. We calculated an overall median of 146 days for payment blockages. In Italy and Spain, however, the average length was almost one year (see Table 3).

Table 3

Ageing table by Member State of average length of payment blockage to OPs in the 2007-2013 programme period

	< 3 months	3-6 months	6-9 months	> 9 months
Member States	Estonia Greece Lithuania Poland Sweden	France Latvia Luxembourg Malta Netherlands Portugal Romania Slovenia United Kingdom Cross border cooperation	Belgium Bulgaria Czech Republic Germany Hungary Austria Slovakia	Spain Italy
TOTAL	5	10	7	2

Note: The table shows the payment blockage per OP averaged for each Member State. Nor does it mean that all OPs for a given Member State were blocked, or that all blockages happened at the same time.

Source: European Court of Auditors based on information provided by the Commission.

Preventive measures also incentivise Member States to improve their systems

93

Assuming an even payment rhythm and taking all expenditure in all 28 Member States together, for the 2007-2013 programme period the Commission paid on average 110 million euros each day from the ERDF, CF and ESF³⁵. This illustrates the potential monetary impact of delaying payments from the EU budget to the Member States, and in particular those countries receiving the bulk of the Cohesion spending.

94

When a payment deadline for a payment claim is interrupted or the interim payments or parts of them are suspended, Member States are not reimbursed by the Commission even if they submit payment claims. During this period, Member States need to finance projects through their own budgets or payments to projects are stopped.

95

This does not necessarily mean that the EU funds are lost for the Member State, as the Commission will pay out the expenditure accumulated during the blocked period once the preventive measure is lifted. However, if the Member State needs to finance projects from the national budget, it is still likely to cause cash flow problems due to the reduced volume of funds coming in. The situation can be aggravated if the volume of projects to be financed is significant and/or if the reasons for interruption or suspension are complex, resulting in lengthy remedial actions. Moreover, towards the end of the programme period the risk increases that the blocked expenditure may actually be lost.

96

Uncertainty about calls for payments can also lead to difficulties for the Commission in its budgetary management. On the one hand, the Commission may not be able to use the allocated payment appropriations. On the other hand, if several payment interruptions or suspensions are simultaneously lifted, it might have problems with fulfilling all its payment obligations, i.e. it would face a cash-flow problem. In addition, the Commission might face difficulties in planning payments and setting up the budget. We examined whether to avoid such uncertainties, there could be a risk that a payment blockage was lifted before year end in order to avoid loss of funds by a Member State. However, this was not the case for any of the cases examined.

Gradual lifting of measures by the Commission to ensure that expenditure can be reimbursed as soon as possible

97

Blocking of payments usually affects either the whole programme or a part of it (e.g. a priority or several measures). This also may lead to withholding payments of expenditure related to projects which may not be affected by the problems triggering the preventive measures but for which there is lack of assurance on the legality and regularity of the spending pending the Member State reply.

98

During our file review we found several cases where the Commission, based on the information provided by Member States to ring-fence problems applied a proportionate approach and gradually lifted its preventive measures so that the reimbursement of expenditure from the EU budget could be resumed as soon as possible for the part of the programme not affected by the shortcomings which initially led to the interruption or suspension (Box 3). During the 2014-2020 programme period, the Commission is required to follow this proportionate approach³⁶.

The Commission faced difficulties in monitoring the Member States’ implementation of financial corrections and assessing the long-term effects of the Commission’s corrective measures

Information provided by the Member States on their implementation of financial corrections for the 2007-2013 period did not allow for robust monitoring

The Commission should ensure that the financial corrections imposed have been implemented by the Member States in full in all cases

99

For the 2007-2013 period, the Commission relies on certificates or letters sent by certifying authorities to ascertain that the agreed amount of financial correction has been deducted by the Member State from its payment claim so that the subsequent interim payment can be authorised. The format and the content of these documents are not governed by any rules or guidelines, they contain information that the given certifying authority considers relevant. In some of the cases examined, the information received by the Commission was insufficient for it to check the execution of financial corrections.

100

Moreover, the 2007-2013 regulations do not require audit authorities to check the content of these certificates and to assess whether the financial corrections imposed have been deducted in full. So far, the Commission has also not systematically asked them to do so. Thus, the Commission did not have an independent confirmation of how financial corrections were implemented on the ground. This was particularly the case in the early years of the programme period.

Shortcomings in the Member States’ reporting on withdrawals and recoveries during the 2007-2013 period identified by the Commission

101

In the 2007-2013 programme period, Member States were required to send a statement to the Commission each year identifying the amounts withdrawn, recovered, to be recovered and irrecoverable³⁷. This report covers financial corrections imposed by the Commission and those imposed by the Member States themselves. In 2010, the European Parliament and the Council asked the Commission to provide information on the Member States’ corrective capacity for the 2007-2013 programme period³⁸.

102

Between 2011 and 2015 the Commission conducted 47 audits on recoveries covering 19 Member States and 113 OPs selected on the basis of risk. For 72 of these 113 OPs the Commission detected important shortcomings.

103

Our analysis of all reports related to these audits showed that the shortcomings were in particular related to

1. the management of irregularities by the national authorities (60 %). In several Member States the time periods between the detection of an irregularity and its registration in the management information system, and/or the registration of an irregularity and the decision to withdraw or recover the related amounts were considered too long;
2. the completeness and correctness of the Article 20 reports submitted by the Member States (40 %). In these cases the Member States either did not report all relevant amounts of withdrawals, recoveries, pending recoveries and irrecoverable amounts or reported amounts which had never been certified and declared to the Commission or which did not relate to irregularities, but to administrative/clerical mistakes or to projects which were no longer (or had never been) part of the OP; and
3. inadequate recovery procedures (15 %). Cases were observed where irregular amounts were not recovered from the beneficiaries, or the certifying authority did not ensure the proper follow-up of the recovery measures taken by the managing authority.

104

We note that the Directorates-General for Regional and Urban Policy and for Employment, Social Affairs and Inclusion apply similar methodologies to account for unreliable data on financial corrections reported by the Member States. Overall, for 2015, the Commission estimates that around 9 % of the amounts reported for ERDF/CF and 4 % reported for ESF are unreliable.

105

Overall, the Commission audits indicated that significant improvements need to be made by Member States to improve their reporting on the amounts withdrawn, recovered, to be recovered and irrecoverable during the 2007-2013 period. Our own work also indicates that Member State reporting on financial corrections is not sufficiently reliable³⁹. This risk will however be mitigated in the 2014-2020 programme period (see paragraphs 124 to 126).

Mixed evidence on the long-term impact of preventive measures and financial corrections on the error level of a programme during the 2007-2013 period

106

The error rates reported by audit authorities in the Member States for each OP (or group of OPs) and validated each year by the Commission can be considered as an indicator of the effectiveness of the Member States’ management and control systems to prevent and detect errors. If these systems work effectively, the level of irregular expenditure should be below materiality. These validated error rates are reported in the Directorate-Generals’ annual activity reports and are a key element in the Commission’s assessment of the management and control systems.

107

If the Commission’s preventive measures and financial corrections are effective, the validated error rates of an OP (or group of OPs) should in general decrease in the long term subsequent to the Commission’s action.

108

For the 20 OPs selected, we therefore examined the relationship between the evolution of validated error rates and the Commission’s preventive measures and confirmed financial corrections (see Table 4).

109

Our analysis showed that preventive measures and financial corrections have a mixed long term impact on the error levels of an OP (or group of OPs). Based on our analysis, we grouped the OPs examined into three categories:

1. for around one third of the programmes, the OPs (or group of OPs) had validated error rates below the Commission’s 2 % materiality level (seven out of 20);
2. for one fifth the error level was significantly lower than before the Commission took action (four out of 20); and
3. for nearly half of the programmes, there was no evidence that the Commission’s actions had resulted in a decrease in the validated error rates (nine out of 20).

Table 4

Impact of the Commission’s action on the programmes’ error rates in subsequent years

Category	Number of OPs
1. Number of OPs which represent no particular risk as the most recent error rate < 2 %	7
2. Error rate shows a clear decreasing trend after preventive measures and/or financial corrections have been initiated	4
3. Error rate increased/fluctuated despite the preventive measures and/or financial corrections initiated	9
Total	20

Source: European Court of Auditors based on information provided by the Commission.

110

From our point of view however the validated error rates are not a perfect indicator of the long-term effectiveness of the Commission’s preventive measures and financial corrections, in particular since they relate to the whole OP (or group of OPs). As the rules for implementation (e.g. eligibility rules, rules for public procurement, rules for state aid) are quite complex, many different types of errors may occur within an OP. Moreover, the Commission’s measures usually address specific priorities or intermediate bodies, groups of projects or certain calls for proposals within an OP. Finally, the measures address particular types of errors (e.g. specific restrictive selection criteria or problems with the method of selecting projects to be co-financed). Therefore, the Commission’s measures in many cases correct/prevent errors related to a part of an OP and are related to certain specific types of errors.

111

The Commission made efforts to increase the effect of its preventive measures and financial corrections by extending these measures to other programmes where similar weaknesses have been noted. This led to an increased impact (see Box 4).

The Commission’s reporting on preventive measures and financial corrections made it difficult to get a comprehensive and analytical overview

Information on preventive measures and financial corrections is presented in several reports and documents

112

The Commission should report on preventive measures and financial corrections in a comprehensive and coherent way to ensure that relevant information is accessible and easy for the stakeholders to understand. In this context, we therefore reviewed all publications for the 2007-2013 programme period containing information in relation to measures protecting the EU budget.

113

The Commission reported information concerning its measures to protect the EU budget in several publications. The main ones were the annual activity reports of the operational directorates-general, the consolidated annual accounts of the EU, and the yearly ‘Communication on the protection of the EU budget’. These were complemented by the quarterly reports on financial corrections and the ‘Annual Management and Performance Report’ (until 2014 the ‘Annual Synthesis Report on the Commission’s management achievements’) (see Table 5).

Table 5

Commission publications in relation to preventive measures and financial corrections

Title	To whom	Presented by	Coverage	Content	Published since
Annual activity reports	European Parliament and the Council	31 March1	specific policy area	The annual activity report details the achievements and initiatives taken during the year and provided for in the management plan, as well as the resources used. It also contains detailed Member State level information concerning the Commission’s control activities and related preventive measures and financial corrections.	2007
Annual accounts	European Parliament, the Council and the Court of Auditors	31 July	whole budget	The EU’s annual accounts consist of the financial statements (and its notes) and the consolidated reports on the implementation of the budget. It contains aggregate information per fund on financial corrections. Concerning preventive measures till 2012 (incl.) the information was provided per Member State, from 2013 however, only aggregated figures per fund are published. As of 2015 the information on preventive measures is no longer reported in the annual accounts, but only in the Communication.	2007
Communication	European Parliament, the Council and the Court of Auditors	31 October2	whole budget	The Communication describes the functioning of the preventive and corrective mechanisms used to protect the EU budget from illegal or irregular expenditure, and to provide a best estimate of the figures resulting from their use. On preventive measures it contains aggregated information and on financial corrections it contains aggregated information as well as information at Member State level.	2012
Quarterly report	European Parliament	End of each quarter	specific policy area	The quarterly reports provide regular information on the financial corrections per fund under the cohesion policy.	2008
Synthesis report3	European Parliament and the Council	15 June	whole budget	The synthesis reports detail the previous year’s management achievements based on the annual activity reports presented by the different Directors-General.	2007

1 As of financial year 2015 the annual activity reports are presented by 30 April.

2 As of financial year 2015 the Communication document is presented as part of the so-called ‘integrated financial reporting package’ together with the consolidated annual accounts by 31 July.

3 From financial year 2015 the Synthesis Report is part of the Annual Management and Performance Report.

Source: European Court of Auditors.

114

All reports, except for the annual activity reports, were compiled by the Commission’s Directorate-General for Budget, based on the information provided by the Directorate-General for Regional and Urban Policy and the Directorate-General for Employment, Social Affairs and Inclusion according to the instructions or guidelines (for the annual activity reports of the Directorates-General) issued by the Directorate-General for Budget.

So far, none of the Commission reports have provided an analytical overview of preventive measures and financial corrections for the 2007-2013 programme period

115

Cohesion spending is based on multi-annual programming. We consider therefore that the Commission should provide the European Parliament and the Council with a consolidated report containing key information on preventive measures and financial corrections relating to the programme period to date⁴⁰.

116

The analysis of the relevant reports listed in Table 5, however, showed that collectively they present preventive measures and financial corrections in relation to a number of years. However, no specific report providing an analytical overview was envisaged for the programme period as a whole.

117

As regards the 2000-2006 period, we note that the Commission issued an ad hoc report on the financial corrections and status of closure of the ERDF and ESF programmes and CF projects in 2013. So far, no such report is planned for 2007-2013 programme period.

Commission reports did not provide enough Member State comparisons and ‘good practice’ examples on how to prevent, detect or correct recurrent problems

118

The Commission reports should provide relevant information which improves understanding of the situation regarding preventive measures and financial corrections, so that appropriate action can be taken to improve management and control systems. We therefore asked members of the European Parliament’s Budgetary Control and Regional Development committees and representatives of Member States of the Council of the European Union’s Structural Actions Working Party about their perception of the usefulness of the available reports.

119

Most of the interviewees found the information provided by the Commission to be sufficient, or even too much, in volume. Interviewees from Member States found the annual activity reports the most useful source of information as they contain information which can be used to benchmark their own programmes against those of other Member States. Finally, very few of the interviewees were aware of the quarterly reports.

120

While most of the interviewees considered that the Commission clearly communicates the system and set-up of the measures to protect the EU budget, half of them would like to have more information on the actual application of the measures and their practical implications. During our interviews the following issues were raised: explanations of recurrent problems in relation to declaring irregular expenditure, causes of typical or repetitive errors and ‘best practices’ on how to prevent, detect or correct them. Such information would help Member States to improve their own management and control systems.

The Commission’s information systems do not provide a consolidated overview of preventive measures and financial corrections

121

The Commission’s Directorates-General record the information necessary for monitoring and reporting on preventive measures and financial corrections in its accounting system and in different electronic spreadsheets. We found that the latter suffered from various shortcomings which made it difficult to get an easy overview and to perform in-depth analyses:

1. the different systems are not integrated and data needs to be entered manually;
2. there is no overview for individual cases of all measures taken by the Commission to protect the EU budget. Instead, information is kept separately for preventive measures and financial corrections. As there is no link between the two, it is difficult to see how cases evolve from the triggering event to the lifting of preventive measures or the implementation of financial corrections; and
3. the databases do not always contain the necessary information for a comparative analysis between cases. This would facilitate the work of the ISFC Committee to ensure that similar cases are treated in a similar way.

Regulatory provisions for the 2014-2020 period significantly strengthened the Commission’s position in protecting the EU budget from irregular expenditure

122

When setting up and designing the system of preventive measures and financial corrections for a new programme period the Commission should build on the lessons learnt and should mitigate the weaknesses identified during the implementation of the programmes in previous periods. We therefore reviewed relevant EU legislation and compared it with the shortcomings found, to assess to what extent this has been done for the 2014-2020 programme period.

Reporting on financial corrections integrated in the annual assurance package and examined by the audit authority

123

For 2007-2013 programme period, the Commission itself identified shortcomings in relation to the correctness and completeness of information provided in the Article 20 reports and our own audits also identified risks in relation to the Member States’ reported financial corrections that were used by the Commission to calculate the CRR (see paragraphs 103 to 106).

124

The regulations for the 2014-2020 period introduced an annual examination and acceptance of accounts by the Commission. Each year Member States need to submit an assurance package as part of the annual clearance procedure for each OP (or group of OPs). This package consists of the annual accounts, including information on amounts withdrawn and recovered⁴¹; the management declaration and annual summary of the controls carried out. The audit authorities issue an audit opinion and provide an annual control report. The first assurance packages were produced in the first half of 2016.

125

Unlike in previous periods, the information on withdrawn and recovered amounts is now required to be reported in the annual accounts and included in the Member State’s calculation of the CRR for the OP (or group of OPs). The completeness and reliability of this information is now also subject to verifications by the Member State’s audit authorities⁴².

126

On the basis of these documents the Commission is required to perform an annual examination of the operational programme, in the course of which it determines the amount of expenditure eligible for the given year. Member States will be required to correct all irregularities before the annual clearance procedure (i.e. withdraw or recover irregular expenditure with the possibility of replacing it with new expenditure). If this is not done the Commission can launch a financial correction procedure.

Legal provisions introduced for the 2014-2020 period give more power to the Commission to protect the EU budget

10 % retention from all interim payments during the 2014-2020 period

127

The 2014-2020 legislative framework established the instrument of 10 % retention from interim payments⁴³. This means that during the accounting year the Commission pays only 90 % of the declared interim expenditure. The remaining 10 % is cleared after the submission and acceptance of the assurance package. This 10 % retention by the Commission can be compared to a general conditional precautionary measure, which can be paid to the Member State if everything is found to be in order at the annual clearance.

128

Given the error levels observed during the 2007-2013 period, we consider that this has the potential to ensure better protection of the EU budget since this creates an adequate buffer for the Commission to take corrective action even in a situation where the Member State fails to implement any financial corrections at all.

Net financial corrections possible each year if serious weaknesses are detected that were not identified by the Member State

129

For the 2007-2013 programme period, the criteria for applying a net financial correction depended on whether the Member State accepted the observation (i.e. the error) and confirmed the related impact (i.e. applied the amount of financial correction) or not⁴⁴. If this was not the case, the Commission needed to adopt a financial correction decision. Only the Commission decision had a direct net effect (see paragraph 19).

130

This arrangement has been replaced by a self-correcting system, where the Member State needs to apply the financial correction up front. During the 2014-2020 programme period, if serious system deficiencies are found that have not been detected by the Member State in the context of its verifications or audits before the annual acceptance of accounts (either by the Commission or through our audits), the Commission will apply a net financial correction leading to loss of funding for the Member State⁴⁵.

131

This system aims to further incentivise Member States, and in particular their audit authorities, to ensure that EU funds are spent in a legal and regular manner and that all necessary financial corrections have been applied at national level to protect the EU budget from irregular expenditure. This responsibility lies primarily with the managing authorities. The audit authorities will, however, act as a last line of defence to avoid part of the national envelopes already being lost during programme implementation. Moreover, the financial corrections will be applied on an annual basis and be clearly linked to the release of the subsequent interim payment. A comparison between the arrangements for the 2007-2013 and 2014-2020 period is provided in Annex V.

132

We also observed that procedures resulting in financial corrections during the 2007-2013 period took a long time to resolve (see paragraph 87). Similar issues were identified for the 2000-2006 programme period in one of the Court’s previous special reports⁴⁶.

133

We consider that the duration of these procedures will be significantly shortened by the requirement to close the accounts and submit the assurance package by a set deadline (15 February of the following year). This will incentivise the Member States to remedy problems faster in order to be able to include related expenditure in the accounts, and is likely to contribute to a significant speeding-up of the process compared to the 2007-2013 period.

Payment suspensions and financial corrections at closure are also possible for non-achievement of performance targets

134

During the 2014-2020 programme period it will also be possible to initiate suspension procedures and impose financial corrections if the performance indicators set are not achieved. This under-performance must, however, be due to clearly identified implementation weaknesses and the Commission is required to communicate these weaknesses to the Member State⁴⁷. If the Member State has failed to take corrective action to address these weaknesses, the Commission may suspend payments to the Member State. At the end of the programme period, if the Member State has still failed to take corrective action to address the weaknesses, the Commission may apply financial corrections.

135

We consider that this is a first step towards addressing our long-standing criticism that there were no adequate legal provisions to impose financial corrections for under-performance during the 2007-2013 programme period (see paragraph 25). However there are still no real financial incentives or sanctions in the 2014-2020 framework relating to the results achieved with EU funding⁴⁸.

Measures linked to sound economic governance issues introduced, but difficult to apply in practice

136

Moreover, in 2014-2020 programme period, the Commission can also apply suspensions for issues related to wider sound economic governance issues⁴⁹. In particular, the Commission may propose that the Council suspend payments or commitments if the Member State has not taken appropriate action to amend its Partnership Agreement⁵⁰ or if the Member State has not taken effective action to correct its excessive deficit.

137

However, in situations linked to economic governance, the decision to suspend payments does not lie entirely with the Commission. The Commission must keep the European Parliament (EP) informed whenever such a situation arises and must enter into a structured dialogue with the EP if asked to do so. Following this, the Commission needs to make a proposal to the Council to suspend the payment, and the Council then takes its decision in an implementing act. For suspensions linked to economic governance, the maximum levels of suspension as a percentage of payments or commitments is also set in the regulation.

138

The Commission envisaged proposing payment suspensions linked to economic governance (and in particular the excessive deficit) issues for the first time in the case of Spain and Portugal in 2016⁵¹. In November 2016, the Commission decided not to propose a suspension in the above cases, in view of the challenging economic and fiscal situation. Instead, the Commission recommended that Portugal put an end to its excessive deficit by 2016 and that Spain did so by 2018. On this basis it may be difficult to apply this provision in practice during the 2014-2020 programme period.

Increased legal certainty due to setting rules as regulations rather than guidance

139

During the 2014-2020 period, the rules applicable for financial corrections have a different legal form (and, as a result, corresponding stricter legal value). For example,

1. the method of determining financial corrections and the indicative rates of corrections to be applied for public procurement errors have, since the 2000-2006 programme period, been set out in Commission guidelines⁵². These guidelines describe the method used by the Commission in the relevant cases and their use was recommended to Member States. The 2013 update of these rules to be used by the Commission was issued as a Commission Decision⁵³;
2. The Commission’s methodology for applying flat rate corrections for the 2007-2013 programme period was set in a 2011 Commission Decision⁵⁴. Similar rules for the 2014-2020 programme period were included in a Commission Delegated Regulation⁵⁵.

140

This puts the Commission into a stronger position to enforce those provisions and to ensure a more consistent approach across Member States during the 2014-2020 period. Setting out the applicable rules as a Regulation or Commission Decision rather than guidance also leaves less discretion to the Commission when deciding on the level of correction and thus increases legal certainty for Member States.

Conclusions and recommendations

141

Overall, until end 2015 (i.e. before the closure of the 2007-2013 programme period) the Commission has made effective use of the measures at its disposal for the 2007-2013 programming period to protect the EU budget from irregular expenditure.

142

Our audit showed that financial corrections for the 2000-2006 period amounted to 8.616 million euro or 3.8 % of the total ERDF, CF and ESF budget. At closure there were net financial corrections for a number of ERDF and ESF programmes and CF projects in 17 Member States for the ERDF, 16 Member States for the ESF and eleven Member States for CF. The overall amount of these net corrections was 2 423 million euro (or 1.1 % of the total budget). We also found that the Commission’s assessment of weaknesses and financial corrections was in substance confirmed by the European Court of Justice. While we expect the situation to be similar for the 2007-2013 period, the final impact of financial corrections can be determined only at closure. Based on our examination of the 2000-2006 closure payments, we also consider that the Commission needs to remain vigilant when checking the closure declaration submitted by the Member States.

143

For the 2007-2013 period the Commission used payment suspension more extensively than in the past and the newly introduced payment interruptions were a helpful additional tool. Preventive measures were also applied earlier than in the previous period. In relative terms, we expect that more financial corrections will be implemented for the 2007-2013 period than in the previous period.

144

We also found that the Commission imposed its preventive measures and financial corrections in a proportionate manner. The Commission’s internal procedures for the 2007-2013 period aimed at ensuring harmonised treatment of cases between programmes and Member States. Our analysis also confirmed that the Commission’s measures for 2007-2013 period focussed on those Member States with the riskiest programmes.

145

The Commission’s corrective measures put pressure on Member States to address weaknesses in their management and control systems. However, preventive measures and financial corrections both generally deal with complex issues which take a considerable time to resolve. The resulting payment interruptions and suspensions represent a significant financial risk for Member States. For the 2007-2013 period the Commission therefore aimed to gradually lift measures to ensure that the reimbursement of expenditure could be resumed as soon as possible for the part of the programme not affected by the shortcomings which initially led to the interruption or suspension.

146

We also found, however, that the Commission faces difficulties in monitoring the implementation of financial corrections. The information provided by the Member States on their implementation of financial corrections in the 2007-2013 period does not yet allow for robust monitoring. We also found mixed evidence of the long-term impact of preventive measures and financial corrections on programme error levels in the 2007-2013 period.

Recommendation 1

The Commission should apply a strict approach to financial corrections at the closure of the 2007-2013 period to ensure that the total amounts reimbursed from the EU budget are free from material levels of irregular expenditure.

Target implementation date: from March 2017 (start of closure exercise).

147

The Commission’s reporting on preventive measures and financial corrections makes it difficult to get a comprehensive and analytical overview. This is mainly due to the fact that the information on preventive measures and financial corrections is presented in several reports and documents, one of which was not even known by stakeholders. At the same time, none of the Commission reports provides an analytical overview of preventive measures and financial corrections for the 2007-2013 programme period as a whole. Representatives from the European Parliament and the Council also considered that the Commission reports do not provide enough Member State comparisons and ‘good practice’ examples on how to prevent, detect or correct recurrent problems.

Recommendation 2

The Commission should issue an ad-hoc report on the financial corrections and status of closure of the ERDF/CF and ESF programmes similar to the report prepared in 2013 for the 2000-2006 period. This report should present and compare all information on preventive and corrective measures by fund and Member State and display the impact of financial corrections and the residual risk rate.

Target implementation date: at the latest mid-2019.

148

We noted shortcomings in information systems used by the Commission to monitor and report on preventive measures and financial corrections for 2007-2013 programmes. In particular, the information systems are not integrated and they do not provide an overview for individual cases of all preventive measures and financial corrections.

Recommendation 3

For the 2014-2020 period, the Commission should set up an integrated monitoring system covering both preventive measures and financial corrections.

Target implementation date: 2019.

149

The regulatory provisions for the 2014-2020 period significantly strengthen the Commission’s position on protecting the EU budget from irregular expenditure. This is mainly due to the fact that the Member State’s reporting on financial corrections is now integrated into the annual assurance package and examined by the audit authority. Moreover the legal provisions introduced for the 2014-2020 period give more power to the Commission to ensure that irregular expenditure is no longer reimbursed from the EU budget. Finally, there is also increased legal certainty for Member States due to the rules being set as regulations rather than guidance.

150

Overall, we consider that these arrangements for the 2014-2020 period are a significant improvement in the design of the system

Recommendation 4

The Commission should make effective use of the significantly strengthened provisions for the 2014-2020 period and impose net financial corrections wherever necessary on the basis of its own checks and/or the audits carried out by the European Court of Auditors.

Target implementation date: immediately.

This Report was adopted by Chamber II, headed by Mrs Iliana IVANOVA, Member of the Court of Auditors, in Luxembourg at its meeting of 8 March 2017.

Glossary and abbreviations

Action plan: Action plans are documents drawn up by Member States after systemic irregularities or serious deficiencies in the Member State’s systems were identified. They describe remedial actions through which these irregularities and/or system deficiencies will be addressed.

Allocated envelope: Allocated envelope is the total amount assigned to a Member State or to an Operational Programme in a programme period, which is the theoretical maximum that can be paid.

Annual activity report (AAR): Annual activity reports indicate the results of operations by reference to objectives set, associated risks and the form of internal control, inter alia. Since the 2001 budget exercise for the Commission and since 2003 for all European Union (EU) institutions, the ‘authorising officer by delegation’ must submit an AAR to his/her institution on the performance of his/her duties, together with financial and management information.

Article 20 report: An annual statement on withdrawals, recoveries, pending recoveries and irrecoverable amounts under the provisions of Article 20(2) of Regulation (EC) No 1828/2006 for the 2007-2013 programmes. It reflects the overall corrective capacity of the management and control system for each programme, aggregated at priority axis level, independently from the source of the correction.

Audit authority: Audit authorities provide assurance to the Commission regarding the effective functioning of the management systems and internal controls for an OP (and, as a consequence, the legality and regularity of the expenditure certified). They must be functionally independent from the bodies managing the funds. An audit authority reports the findings of its systems audits and audits of operations to the managing and certifying authorities for the OP concerned. Once a year, they report their annual work in their annual control report to the Commission. If the audit authority considers that the managing authority has not taken appropriate corrective action, it must draw the Commission’s attention to the matter.

Case: The full path of events which links the preventive measures and financial corrections with the same triggering event.

Certifying authority: Certifying authorities carry out first level checks on the expenditure declared by managing authorities and certify that this expenditure is legal and regular.

Cohesion Fund (CF): The Cohesion Fund aims at strengthening economic and social cohesion within the European Union by financing environment and transport projects in Member States with a per capita GNP of less than 90 % of the EU average.

Commitment: Legal pledge to provide finance subject to certain conditions. The EU commits itself to reimbursing its share of the costs of an EU-funded project when the project is completed. Today’s commitments are tomorrow’s payments. Today’s payments are yesterday’s commitments.

Cumulative residual risk rate (CRR): An estimate of the part of the expenditure declared, for each programme during the entire programme period, which is not legal and regular. The CRR takes account of all financial corrections implemented since the start of the period and the total expenditure declared at closure.

Decommitment: An act whereby a previous commitment (or part of it) is cancelled.

European Regional Development Fund (ERDF): The European Regional Development Fund aims to reinforce economic and social cohesion within the European Union by redressing the main regional imbalances through financial support for the creation of infrastructure and productive job-creating investment, mainly for businesses.

European Social Fund (ESF): The European Social Fund aims to strengthen economic and social cohesion within the European Union by improving employment and job opportunities (mainly through training measures), encouraging a high level of employment and the creation of more and better jobs.

Financial correction (FC): The purpose of financial corrections is to protect the EU budget from the burden of erroneous or irregular expenditure. For expenditure under shared management, the task of recovering incorrectly made payments is primarily the responsibility of the Member State.

Financial corrections can be implemented by the Member State through deducting irregular expenditure from the Member State’s payment claim, by the payment of a recovery order issued by the Commission, or by decommitment. The deduction can take two forms: withdrawal or recovery from beneficiaries.

Financial correction: confirmed, decided or implemented: A ‘confirmed’ financial correction has been accepted by the Member State concerned.

A ‘decided’ financial correction has been adopted by a Commission decision and is always a net correction, where the Member State is required to reimburse irregular funds to the EU budget, thus leading to a definitive reduction of the allocated envelope to the Member State concerned.

An ‘implemented’ financial correction once confirmed or decided has corrected the observed irregularity (i.e. withdrawn or recovered).

Financial correction: ex ante or ex post: Ex ante financial corrections are carried out before the irregular expenditure is declared to the Commission.

Ex post financial corrections are carried out after the irregular expenditure is declared to the Commission.

Intermediate body: An intermediate body is any public or private body or service which acts under the responsibility of a managing authority, or which carries out duties on behalf of such an authority vis-à-vis beneficiaries implementing operations.

Interruption: The Commission may interrupt the payment deadline of a given statement of expenditure for a maximum of six months (see Article 91 of Regulation 1083/2006) if evidence suggests a significant deficiency in the functioning of the management and control systems of the Member States or uncorrected irregular expenditure is certified in a statement of expenditure.

If the Commission finds, based on its own work or the information reported by audit authorities, that a Member State has failed to remedy serious shortcomings in the management and control systems and/or to correct irregular expenditure which had been declared and certified, it may interrupt or suspend payments. If the Member State does not remedy detected system failures or withdraw the irregular expenditure (which may be replaced by expenditure which is eligible), the Commission itself may apply financial corrections, leading to a net reduction in EU funding for the OP.

Irregularity: An irregularity is an act which does not comply with EU rules and which has a potentially negative impact on EU financial interests, but which may be the result of genuine errors committed either by beneficiaries claiming funds or by the authorities responsible for making payments. If an irregularity is committed deliberately, it constitutes fraud.

Interruptions, Suspensions and Financial Corrections Committee (ISFCC): A specific internal committee, which provides a forum within Commission Directorates-General to discuss matters and take decisions related to warnings, interruptions, suspensions and financial corrections

Managing authority: A managing authority is a national, regional or local public authority (or any other public or private body), which has been designated by a Member State to manage an operational programme. Its tasks include selecting projects to be funded, monitoring how projects are implemented and reporting to the Commission on financial aspects and results achieved. The managing authority is also the body which imposes financial corrections on beneficiaries following audits carried out by the Commission, the European Court of Auditors (ECA) or any authority in the Member State.

Management and control system: The management and control system is a structure which implements and performs the control activities of an operational programme. In cohesion policy it consists of the managing authority (and the intermediate bodies), certifying authority and audit authority at the Member State level and the Commission.

Measures to protect the EU budget: The measures to protect the EU budget comprise preventive measures (interruption, suspensions) and financial corrections (having monetary impact). These measures are complemented by action plans agreed between the Commission and the Member State.

Operational programme (OP): An OP sets out a Member State’s priorities and specific objectives and describes how funding (EU and national public and private co-financing) will be used during a given period (currently 7 years) to finance projects. The projects within an OP must contribute to a certain number of objectives. OP funding may come from the ERDF, CF and/or ESF. The OP is prepared by the Member State and has to be approved by the Commission before any payments can be made from the EU budget. OPs can only be modified during the programme period if both parties agree.

Preventive measure: Preventive measures, which are at the Commission’s disposal to protect the EU budget when it is aware of potential deficiencies, comprise suspensions and interruptions of payments from the EU budget to the OP.

Priority axis: One of the priorities of the strategy in an Operational Programme comprising a group of operations which are related and have specific measurable goals.

Programme period: The multi–annual framework within which ERDF, ESF and CF expenditure is planned and implemented.

Projected error rate: An audit authority’s estimate of the part of the annual expenditure for each OP (or group of OPs) which is not legal and regular. This rate should be established on the basis of a statistical sampling approach. Projected error rates must be representative for the expenditure incurred for the OP (or group of OPs). This may also be the case for error rates established on the basis of specific non-statistical sampling methods (in particular for small populations), as long as they are representative of the population as a whole.

Recovery: The Member State leaves the expenditure in the programme until the unduly paid amount is recovered from the beneficiary and deducts it from the next payment claim once recovery has been carried out. One of the ways to implement a financial (see also withdrawal) correction.

Suspension: The Commission may suspend all or part of an interim payment (see Article 92 of Regulation 1083/2006) if a significant deficiency exists in the functioning of the management and control system of the Member State or uncorrected irregular expenditure have been certified in a statement of expenditure or a serious breach by the Member State of its management and control obligations occurred.

Triggering event: Irregularities or serious deficiencies identified by Member State authorities, by the Commission or by the ECA in the course of carrying out their verifications and giving rise to preventive measures and financial corrections.

Withdrawal: The Member State withdraws the irregular expenditure from the programme immediately when the irregularity is detected, by deducting it from the next statement of expenditure and thereby releases EU funds for other operations. One of the ways to implement a financial correction (see also recovery).

Audit team

The ECA’s special reports set out the results of its performance and compliance audits of specific budgetary areas or management topics. The ECA selects and designs these audit tasks to be of maximum impact by considering the risks to performance or compliance, the level of income or spending involved, forthcoming developments and political and public interest.

This performance audit was produced by Audit Chamber II - headed by ECA Member Iliana Ivanova - which specialises in investment for cohesion, growth and inclusion spending areas. The audit was led by the Reporting Member Henri
Grethen, supported by Ildikó Preiss, Head of Task and Attaché of Private Office; Niels-Erik Brokopp, Principal Manager; Marcel Bode, Nicholas Edwards, Johan Adriaan Lok and Ágota Marczinkó, Auditors.

Contact

EUROPEAN COURT OF AUDITORS
12, rue Alcide De Gasperi
1615 Luxembourg
LUXEMBOURG

Tel. +352 4398-1
Enquiries: eca.europa.eu/en/Pages/ContactForm.aspx
Website: eca.europa.eu
Twitter: @EUAuditors

Protecting the EU budget from irregular spending: The Commission made increasing use of preventive measures and financial corrections in Cohesion during the 2007-2013 period
(pursuant to Article 287(4), second subparagraph, TFEU)

More information on the European Union is available on the internet (http://europa.eu).

Luxembourg: Publications Office of the European Union, 2017

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© European Union, 2017

Reproduction is authorised provided the source is acknowledged.

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