Commission Decision
of 18 December 2001
laying down detailed rules for the implementation of Council Decision 2000/596/EC as regards management and control systems and procedures for making financial corrections in the context of actions co-financed by the European Refugee Fund
(notified under document number C(2001) 4372)
(2002/307/EC)
THE COMMISSION OF THE EUROPEAN COMMUNITIES,
Having regard to the Treaty establishing the European Community,
Having regard to Council Decision 2000/596/EC of 28 September 2000 establishing a European Refugee Fund(1), and in particular Article 24 thereof,
Having consulted the Committee set up under Article 21(1) of Decision 2000/596/EC,
Whereas:
(1) To ensure sound financial management of the assistance granted from the European Refugee Fund (the Fund), the Member States need to establish guidelines for the organisation of the tasks of the authority responsible for implementing co-financed actions.
(2) To ensure that Community funds are utilised in accordance with the principles of sound financial management, the Member States need to introduce management and control systems that provide a sufficient audit trail, and to lend the Commission any assistance it requires to carry out checks, especially sample checks.
(3) To ensure that Community funds are used efficiently and appropriately, uniform criteria should be established for the checks carried out by the Member States under Article 18 of Decision 2000/596/EC.
(4) To ensure uniform treatment of the declarations of expenditure for which assistance is requested from the Fund under Article 17(2) of Decision 2000/596/EC, a model declaration of expenditure should be produced.
(5) To allow recovery, pursuant to Article 18(1) of Decision 2000/596/EC, of amounts unduly paid, Member States need to inform the Commission of cases of irregularities detected and the progress of administrative or legal proceedings.
(6) Article 19(1) of Decision 2000/596/EC lays down that Member States must make the financial corrections required in connection with the individual or systemic irregularity by cancelling all or part of the Community contribution. To ensure that this provision is applied uniformly throughout the Community, it is necessary to lay down rules for determining the corrections to be made and to provide for the Commission to be informed.
(7) If a Member State fails to comply with its obligations under Article 19(1) of Decision 2000/596/EC or under Article 18, the Commission may itself make the financial corrections under Article 18(4) of the same Decision. Whenever this is possible and feasible, the amount of the correction must be assessed on the basis of individual files and must be equal to the amount of expenditure wrongly charged to the Fund in accordance with the principle of proportionality. Where it is not possible or feasible to quantify the financial impact of the irregularity accurately, or where it would be disproportionate to cancel all the expenditure concerned, the Commission should determine its corrections by extrapolation or at a flat rate based on the extent and financial impact of the irregularity that the Member State has failed to prevent, detect or correct.
(8) Certain detailed rules for making the financial corrections laid down in Article 19(1) of Decision 2000/596/EC should be specified, and the same rules should be made applicable in cases that fall under Article 18(4)(b) of the same Decision.
(9) Interest rates must be set for interest on account of late payment in respect of any sum received unduly and to be recovered that must be repaid to the Commission under Article 19(3) of Decision 2000/596/EC.
(10) This Decision is to be applied without prejudice to the provisions on recovery of State aid under Article 14 of Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for the application of Article 93 of the EC Treaty(2).
(11) This Decision is to be applied without prejudice to the provisions of Council Regulation (Euratom, EC) No 2185/96 of 11 November 1996 concerning on-the-spot checks and inspections carried out by the Commission in order to protect the European Communities' financial interests against fraud and other irregularities(3),
HAS ADOPTED THIS DECISION:
CHAPTER I
SCOPE AND DEFINITIONS
Article 1
This Decision lays down the detailed rules for implementing Council Decision 2000/596/EC as regards management and control systems for funding granted from the European Refugee Fund (the Fund) and managed by the Member States, and the procedure for making the financial corrections applicable to such funding.
Article 2
For the purposes of this Decision the following definition shall be used:
(a) "responsible authority": any authority appointed by a Member State under Article 7 of Decision 2000/596/EC;
(b) "intermediary organisation": any public administration or non-governmental organisation to which the responsible authority delegates responsibility for implementation under Article 7 of Decision 2000/596/EC.
CHAPTER II
MANAGEMENT AND CONTROL SYSTEMS
Article 3
1. In application of Article 18(1)(c) of Decision 2000/596/EC, Member States shall address guidelines to the responsible authority and intermediary organisations to which responsibility for implementation has been delegated.
Without prejudice to Article 18(1) of Decision 2000/596/EC, the guidelines shall cover the organisation of the management and control systems necessary to ensure the accuracy, regularity and eligibility of requests for Community funding and shall refer to the generally recognised standards of good administrative practice set out in Annex I.
2. Where all or some of the responsible authority's tasks are delegated to intermediary organisations, the guidelines referred to in paragraph 1 shall lay down detailed rules concerning:
(a) the clear definition and allocation of tasks, especially as regards management, payment, and checks on and verification of compliance with:
(i) the conditions laid down in the Commission decisions approving the requests for co-financing referred to in Article 8 of Decision 2000/596/EC,
(ii) the rules on eligibility of expenditure set out in Annex 1 to Commission Decision 2001/275/EC(4), and
(iii) Community policies and action, especially those relating to the competition rules, public procurement, protecting and enhancing the environment, removing inequalities and promoting equality between men and women;
(b) the introduction of effective systems ensuring that the intermediary organisations exercise their powers satisfactorily; and
(c) supplying the responsible authority with information on the effective performance of their tasks and a description of the means deployed.
3. Pursuant to Article 18(1)(b) of Decision 2000/596/EC, Member States shall, no later than two months after this Decision takes effect, send the Commission, in addition to the information contained in the first request for co-financing, a description of the management and control systems they have set in place and of any improvements planned, taking particular account of the generally recognised standards of good administrative practice set out in Annex I.
This description shall include the following information about each responsible authority:
(a) the tasks assigned to it;
(b) the distribution of these tasks within the responsible authority or intermediary organisation in such a way as to ensure that management, payment, and control tasks are sufficiently separate as to ensure sound financial management;
(c) information on any intermediary organisations;
(d) the procedures for receiving, verifying and endorsing requests for payment and for authorising and paying expenses and entering them in the accounts;
(e) the provisions governing internal audits or equivalent.
4. The Commission shall examine the management and control systems in cooperation with the Member States and point out any shortcomings as regards the transparency of checks on the operation of the Fund and the performance of the Commission's duties under Article 274 of the EC Treaty.
Article 4
1. Member States' management and control systems shall provide an adequate audit trail.
2. An audit trail shall be considered sufficient where it permits:
(a) reconciliation of the summary accounts certified to the Commission with the individual expenditure records and supporting documents kept at the various administrative levels and by the final beneficiaries, including the organisations or firms responsible for implementing projects; and
(b) verification of the allocation and transfers of the available Community and national funds.
An indicative description of the information requirements for a sufficient audit trail is given in Annex II.
3. The responsible authority shall introduce procedures to ensure that a record is kept of the location of all documents relating to particular payments made under the national implementation programme in question and that the documents can be produced for inspection if requested by:
(a) the staff of the authority responsible for handling requests for payment,
(b) the national audit authorities who will carry out the checks required under Article 5(1) of this Decision,
(c) the department or body of the responsible authority entrusted with certifying requests for interim and final payment provided for in Article 17 of Decision 2000/596/EC, and
(d) the officials and authorised representatives of the Commission and the European Court of Auditors.
The officials and agents responsible for controls or those empowered for that purpose may request copies of documents referred to in this paragraph.
4. For a period of five years following the payment by the Commission of the final balance in respect of any project, the responsible authorities shall keep available for the Commission all the supporting documents, i.e. the originals or versions certified to be in conformity with the originals on commonly accepted data carriers, regarding expenditure and checks on the project concerned. This period shall be interrupted in the case of legal proceedings or at the duly motivated request of the Commission.
Article 5
1. Member States shall organise checks on projects on an appropriate sampling basis, designed in particular to:
(a) verify the proper operation of the management and control systems in place;
(b) verify selectively, on the basis of risk analysis, expenditure declarations made at the various levels concerned.
2. The checks shall cover at least 20 % of the total eligible expenditure for each national implementation programme and a representative sample of the projects approved, taking account of the requirements of paragraph 3. Member States shall ensure an appropriate separation between checks and implementation or payment procedures concerning projects.
3. The projects selected shall be identified, the sampling method described and a report produced of the results of all inspections and the action taken with regard to the anomalies or irregularities discovered.
4. The sample of projects to be checked shall:
(a) include an appropriate mix of types and sizes of projects;
(b) take account of any risk factors which have been identified by national or Community controls;
(c) reflect the concentration of projects under certain recipients of grants, so that the main recipients are subject to at least one check before the closure of each form of national implementation programme.
Article 6
When carrying out checks, the Member States shall verify the following:
(a) the effective application of the management and control systems;
(b) for an adequate number of accounting records, the correspondence of those records with the supporting documents kept by the intermediary organisations to which the responsible authority has delegated certain responsibilities for implementation, the recipients of grants and, where appropriate, the other organisations or firms involved in project implementation;
(c) the presence of a sufficient audit trail;
(d) that the nature and date of the expenditure items corresponds to Community requirements, to the requirements specified during the national selection procedure, to the terms of the contract or instrument granting the subsidy and to the works actually executed;
(e) that the use or intended use of the project is consistent with the objectives set out in the national implementation programme referred to in Article 8 of Decision 2000/596/EC;
(f) that the Community financial contributions are within the limits provided for in Article 13 of Decision 2000/596/EC or in any other applicable Community provisions and are paid to recipients without any reductions or delays;
(g) that the appropriate national co-financing has in fact been made available, and
(h) that the co-financed projects have been implemented in accordance with the requirements of Article 4 and Article 9(1) of Decision 2000/596/EC.
Article 7
The checks shall establish whether any problems encountered are of a systemic character, carrying a risk for other projects carried out by the same grant recipient or administered by the same management authority. They shall also identify the causes of such situations, any further examination which may be required and the necessary corrective and preventive action.
Article 8
Member States shall inform the Commission each year in the report referred to in Article 20(2) of Decision 2000/596/EC of how they have applied Articles 5, 6 and 7 of this Decision during the preceding year, completing or updating if necessary the description referred to in Article 4(2).
Article 9
In the case of forms of assistance in which more than one Member State participates or where there are beneficiaries in more than one Member State, the Member States concerned and the Commission shall agree on the administrative assistance necessary for ensuring proper control.
CHAPTER III
DECLARATIONS OF EXPENDITURE
Article 10
1. Declarations of expenditure shall be certified following the model provided in Annex IV by an individual or department within the payment authority operating independently of all authorising departments.
2. For all expenditure it declares to the Commission, the responsible authority shall provide assurance that the national implementation programmes are managed in accordance with all the applicable Community regulations and that the funds are used in accordance with the principles of sound financial management. This assurance shall certify that the request for co-financing covers only expenditure:
(a) that was actually incurred by the grant recipients, as defined in Article 2(d) of Decision 2001/275/EC, during the period of eligibility of the programme, as defined in the decisions approving the requests for co-financing, and
(b) that relates to projects which were selected for co-financing by the national implementation programme in question according to the established selection criteria and procedures and which complied with Community rules throughout the period in which the expenditure was incurred.
3. At the end of the programme, the final declaration laid down in Annex IV shall be presented by the Member State within six months. Failing this, the Commission shall automatically close the programme and decommit the relevant appropriations.
4. Before submitting a request to the Commission, the responsible authority shall verify the adequacy of the checks carried out. The work performed shall be described in detail in the final report referred to in Article 20(3) of Decision 2000/596/EC. Checks shall cover the physical aspects and effectiveness of projects, as well as their financial and accounting aspects.
CHAPTER IV
FINANCIAL CORRECTIONS BY MEMBER STATES
Article 11
1. In the case of systemic irregularities, investigations under Article 19(1) of Decision 2000/596/EC shall cover all the projects liable to be affected.
2. When cancelling all or part of the Community contribution, Member States shall take into account the nature and gravity of the irregularities and the financial loss to the Fund.
3. Member States shall inform the Commission, in a list annexed to the report referred to in Article 20(2) of Decision 2000/596/EC, of any proceedings to cancel assistance initiated in the course of the preceding year.
Article 12
1. Where amounts need to be recovered following the cancellation of the Community contribution under Article 18(1)(g) of Decision 2000/596/EC, the department or organisation responsible shall initiate the recovery procedure and inform the responsible authority. Information on recovery shall be passed on to the Commission and the accounts shall be kept in accordance with Article 13 of this Decision.
2. Member States shall inform the Commission in the report referred to in Article 20(2) of Decision 2000/596/EC how they have decided or propose to re-use the funds cancelled.
Article 13
The responsible authority shall keep an account of amounts recoverable from payments of Community assistance that have already been made and shall ensure that the amounts are recovered without delay. After recovery, the responsible authority shall reduce its next declaration of expenditure to the Commission by an amount equal to the sums recovered, or, if this amount is insufficient, it shall reimburse the Community. The amounts to be recovered shall accrue interest from their due date at the rate laid down in Article 94 of Commission Regulation (Euratom, ECSC, EC) No 3418/93 of 9 December 1993 laying down detailed rules for the implementation of certain provisions of the Financial Regulation(5) of 21 December 1977, as last amended by Regulation (EC) No 1687/2001(6), for the first working day of the month in which the debt is due.
When submitting the report referred to in Article 20(2) of Decision 2000/596/EC, Member States shall send the Commission a list of irregularities detected, indicating the amounts recovered or awaiting recovery and, if appropriate, any administrative or judicial proceedings launched with a view to recovering amounts unduly paid.
CHAPTER V
FINANCIAL CORRECTIONS BY THE COMMISSION
Article 14
1. The amount of financial corrections made by the Commission under Article 18(4)(b) of Decision 2000/596/EC for individual or systemic irregularities shall be assessed wherever possible and practicable on the basis of individual files and be equal to the amount of expenditure wrongly charged to the Fund, having regard to the principle of proportionality.
2. Where it is not possible or practicable to quantify precisely the amount of irregular expenditure or where it would be disproportionate to cancel all the expenditure concerned, the Commission shall base its financial corrections on:
(a) extrapolation, using a representative sample of transactions that are homogeneous in nature; or
(b) a flat rate, in which case it shall assess the seriousness of the infringement of the rules and the extent and financial implications of the irregularity established.
3. Where the Commission bases its position on facts established by auditors from outside its own departments, it shall draw its own conclusions on the financial implications after examining the measures taken by the Member State concerned under Article 18(1) of Decision 2000/596/EC.
4. The period of time within which the Member State concerned may respond to a request under Article 18(3) of Decision 2000/596/EC shall be two months. In duly justified cases, a longer period may be agreed by the Commission.
5. Where the Commission proposes financial corrections determined by extrapolation or at a flat rate, the Member State shall be given the opportunity to demonstrate, on the basis of an examination of the files concerned, that the actual extent of irregularity was less than the Commission's assessment. In agreement with the Commission, the Member State may limit the scope of this examination to an appropriate proportion or sample of the files concerned. Except in duly justified cases, the time allowed for this examination shall not exceed a further period of two months after the two-month period referred to in paragraph 4. The Commission shall take account of any evidence supplied by the Member State within the time limits.
6. Where the Commission suspends payments under Article 19(2) of Decision 2000/596/EC, or where, after expiry of the period referred to in paragraph 4, the reasons for the suspension remain or the Member State concerned has not notified the Commission of the measures taken to correct the irregularities, Article 18(4) of Decision 2000/596/EC shall apply.
7. Guidelines on the principles, criteria and indicative scales to be applied by Commission departments in determining the flat-rate corrections are set out in Annex III to this Decision.
Article 15
1. Any repayment to the Commission under Article 19(3) of Decision 2000/596/EC shall be made by the deadline set in the recovery order drawn up in accordance with Article 28 of the Financial Regulation of 21 December 1977(7). This due date shall be the last day of the second month following the issuing of the order.
2. Any delay in effecting repayment shall give rise to interest on account of late payment, starting on the due date referred to in paragraph 1 and ending on the date of actual repayment. The applicable rate of interest shall be that referred to in Article 13 of this Decision.
3. A financial correction under Article 19(2) of Decision 2000/596/EC shall not prejudice the Member State's obligation to pursue recoveries under Article 18(1)(g) of Decision 2000/596/EC and Article 12(1) of this Decision and to recover State aid under Article 14 of Regulation (EC) No 659/1999.
CHAPTER VI
FINAL PROVISIONS
Article 16
Nothing in this Decision shall prevent Member States from applying national rules on control that are more rigorous than those prescribed here.
Article 17
This Decision is addressed to the Member States.
Done at Brussels, 18 December 2001.