Special Report No 21/98 concerning the accreditation and certification procedure as applied to the 1996 clearance of accounts for EAGGF-Guarantee expenditure, together with the replies of the Commission (submitted pursuant to Article 188c (4) (2) of the EC Treaty)
14. 12. 98 EN Official Journal of the European Communities C 389/1 I (Information) COURT OF AUDITORS SPECIAL REPORT No 21/98 concerning the accreditation and certification procedure as applied to the 1996 clearance of accounts for EAGGF-Guarantee expenditure, together with the replies of the Commission (submitted pursuant to Article 188c (4) (2) of the EC Treaty) (98/C 389/01) TABLE OF CONTENTS Paragraph(s) Page EXECUTIVE SUMMARY. 1. INTRODUCTION. 1. 1 — 1. 6 The regulatory context. 1. 1 — 1. 5 The Court’s audit scope. 1. 6 2. ACCREDITATION OF PAYING AGENCIES. 2. 1 — 2. 11 Structural development of paying agencies. 2. 1 — 2. 5 Significant accreditation criteria. 2. 6 — 2. 7 Weaknesses affecting accreditation. 2. 8 — 2. 11 3. CERTIFICATION OF ACCOUNTS. 3. 1 — 3. 19 The certifying bodies. 3. 1 — 3. 2 The Commission’s guidelines. 3. 3 Problems and delays in obtaining certified accounts. 3. 4 — 3. 17 Problems in obtaining data on the amounts to be recovered. 3. 18 — 3. 19 4. THE DECISIONS CONCERNING CLEARANCE OF ACCOUNTS FOR 1996. 4. 1 — 4. 17 The Commission’s first clearance decision. 4. 1 — 4. 2 The Commission’s second clearance decision. 4. 3 — 4. 4 Modification of the amounts declared. 4. 5 — 4. 6 Adjustment to the annual declaration. 4. 7 Financial corrections made by the responsible finance division. 4. 8 — 4. 17 Corrections in respect of late payments. 4. 8 — 4. 11 Corrections for various items of ineligible expenditure. 4. 12 — 4. 17 5. CONCLUSION. 5. 1 — 5. 11 TABLES 1 — 7. Replies of the Commission. 2 3 3 4 4 4 5 5 6 6 6 6 8 8 8 8 9 9 9 9 10 10 12 38 C 389/2 EN Official Journal of the European Communities 14. 12. 98 EXECUTIVE SUMMARY New procedures were applicable for the first time to the accreditation of paying agencies and the clearance of accounts concerning EAGGF-Guarantee expenditure for the budget year 1996. The Court reviewed and evaluated the work carried out by the Commission’s services and checked whether the new rules had been applied properly. The new procedures should be evaluated not only on their results for the first year, but also on the initiatives taken in the meantime by the Commission and Member States to improve the situation. Although Member States were required to accredit their paying agencies by 16 October 1995, at the beginning of the 1996 financial year only 50 out of 66 paying agencies had been accredited. 90 paying agencies were finally accredited in 1997, some of them being responsible for very little expenditure. Greater efforts should be made by some Member States to limit the number of paying agencies. The Court’s audit in 1997 revealed weaknesses at many of the paying agencies visited. Weaknesses in internal control, lack of security for EDP systems and shortcomings in the monitoring of delegated services by the paying agencies, as well as in the accounting, were identified, shortcomings that should have led the Member States concerned to take appropriate action. Certified accounts were supposed to be forwarded by 10 February 1997, but in many cases the Commission found that the certified accounts were submitted late or were unsatisfactory. Two Member States, (United Kingdom and Greece), did not present any certified account on time. In the case of Spain the certifying body did not manage to express an opinion concerning most expenditure incurred at regional level on time, and it was later audited by private external auditors. To assist certifying bodies with their work the Commission made guidelines concerning certification of the accounts available to the certifying bodies, but that was done too late (in September 1996, when most of their audit work should have commenced). If they had been communicated in time, a number of misunderstandings and delays could have been avoided. Because of the weaknesses and delays in some Member States, the clearance decision of 5 May 1997, which should have been taken by 30 April 1997, according to the Regulation, covered only 33 % of the expenditure. The rest was cleared under the decision of 30 July 1997, after supplementary auditing work had been carried out by the various certifying bodies. In the end all of the certified accounts were cleared by the Commission, in spite of the varying quality of the accounts presented. However, in this decision, the Commission did not take into account most of the qualifications in the certificates totalling a minimum of ECU 43,3 million. Furthermore financial corrections of ECU 77,3 million previously made by the Commission’s finance division in the context of its daily management of EAGGF-Guarantee expenditure were reduced to ECU 55,1 million in the clearance decision. The decisions of clearance of accounts taken by the Commission on 1996 expenditures do not prevent the Commission from disallowing amounts at a later date on the basis of subsequent compliance audits. Appropriate internal control procedures at the Commission must ensure that corrections are adequately documented and that weaknesses identified will be systematically followed up during the subsequent compliance audit. 14. 12. 98 EN Official Journal of the European Communities C 389/3 1. INTRODUCTION The regulatory context 1. 1. 1996 was the first year of the implementation of the new procedures for the certification of accounts of EAGGF expenditures and the accreditation of paying agencies. It required, both from the Member States and the Commission, great efforts to adapt themselves to the new legal aspects. The new procedures should not be evaluated only on the results for the first year. The Commission has pursued its efforts to get better certificates, especially by organising meetings with certifying bodies and by issuing new practical guidelines. This should have a positive impact in the years to come. 1. 2. Paying agencies are the designated authorities of the Member States which administer EAGGF-Guarantee measures and make the relevant payments to the beneficiaries. Under Regulation (EEC) No 729/70 of 21 April 1970 (1) the Commission reimburses, on a monthly basis, the amounts spent and declared by the agencies, which totalled ECU 39 010,9 million in 1996. 1. 3. A clearance-of-accounts decision determines the amount of each Member State’s expenditure that is recognised as being chargeable to the EAGGF-Guarantee Section. It also takes into account any reductions and suspensions of advances for the year in question (2), including reductions for late payments, as referred to in the second subparagraph of Article 4(3) of Regulation (EC) No 296/96 (3). clearance-of-accounts procedures were 1. 4. The modified for the first time for the EAGGF financial year 1996 (4). Council Regulation (EC) No 1287/95 of 22 May 1995 (5) (amending Council Regulation (EEC) No 729/70) and Commission Regulation (EC) No 1663/95 of 7 July 1995 (6) introduced the following new rules (7): (a) only expenditure incurred by accredited paying agencies was to be eligible for Community financing; (b) the number of paying agencies within each Member State was to be kept to a minimum; where more than one paying agency was accredited, a coordinating body had to be established; (c) the competent Member State authorities (8) were required to accredit their paying agencies by the beginning of the EAGGF budget year 1996; before accreditation was granted, the competent authority was to verify that the paying agency fulfilled the stipulated requirements (9); sufficient assurance as (d) the administrative structure, internal controls and organisational principles of the paying agency must its proper provide functioning; an internal audit department must ensure that its system of internal control works effectively, and a technical department has to verify the facts on which the payments to beneficiaries are based; to it has to carry out (e) a certifying body, operationally independent of the paying and coordinating agencies, had to be appointed; this certifying body must certify that the annual accounts of the paying agency are true, complete and accurate; its examinations internationally in accordance with accepted auditing standards. According to Article 3 of Commission Regulation the certificate has to be based on an examination of procedures and of a sample of transactions. It is to cover compliance of payments with Community rules only as regards the capability of the paying agencies’ such administrative compliance has been verified before a payment is made; (EC) No 1663/95, structures ensure that to (f) the clearance-of-accounts decision does not prevent the Commission from disallowing expenditure at a later date whenever it finds that expenditure has not been effected in accordance with Community rules. Such disallowances are in principle the subject of separate Commission decision to exclude expenditure which does not comply with Community rules (compliance decision). However, this kind of decision cannot apply to expenditure incurred more than 24 months prior the Commission’s written communication to Member States in this regard. to to annual 1. 5. According EAGGF-Guarantee accounts and the certificates and reports of the certifying bodies were to be sent to the Commission by 10 February of the following year. The the Regulation, the (1) OJ L 94, 28. 4. 1970, p. 13. (2) See Commission Regulation (EC) No 896/97 of 20 June 1997 amending Commission Regulation (EC) No 1663/95 (OJ L 182, 21. 5. 1997, p. 8). (3) OJ L 39, 17. 2. 1996, p. 5. (4) 16. 10. 1995 to 15. 10. 1996. (5) OJ L 125, 8. 6. 1995, p. 1. (6) OJ L 158, 8. 7. 1995, p. 6. (7) See also opinion of the Court of Auditors No 5/94 of 15 December 1994, OJ C 383, 31. 12. 1994. (8) The authority responsible is the authority granting the accreditation, which is the Ministry of Agriculture in most Member States. In Germany and Spain the authorities responsible included the authorities of the Länder or autonomous regions. (9) Provisional accreditation is possible in cases where problems arise fulfilling accreditation criteria. The authority responsible has to fix a time limit for improvement in the light of the seriousness of the problem(s) detected. in C 389/4 EN Official Journal of the European Communities 14. 12. 98 Commission had to communicate to the Member States the results of its verification of the information submitted by 31 March and to take its decision concerning the clearance of the accounts by 30 April. However, two decisions concerning the clearance of accounts for 1996 were adopted by the Commission, on 5 May 1997 (10) and on 30 July 1997 (11), owing to the fact that some paying agencies and certifying bodies could not meet the deadlines for the presentation of their certified accounts and that the Commission asked for some extra work to be done by certain certifying bodies. Such an evaluation of the work of certifying bodies is inevitable if reliance has to be put on the work of other auditors. No decision to disallow expenditure incurred in contravention of Community rules has yet been taken under the new system. The Court’s audit scope 1. 6. The Court checked whether the new rules on the accreditation of paying agencies and the certification of accounts had been applied properly. Particular attention was paid to the respect of accredition criteria by the Member States, the functioning of the internal audit unit of the paying agencies as well as the certificates issued by the certifying bodies. Furthermore, the Court reviewed and evaluated the work done by the Commission services in the context of its two clearance of accounts decisions on 1996. 2. 2. One of the objectives of the new regulation was to limit the number of paying agencies. However, the number of accredited paying agencies stood at 90 in 1997. The Court considers that greater efforts should have been made to comply with this objective, in particular as concerns the accreditation of additional regional paying agencies in a number of Member States. 2. 3. In some cases, the Ministries of Agriculture granted accreditation to units within the Ministry (Belgium, some German Länder, in most of the Spanish regions, Ireland, Austria and Finland). France (with the exception of the services de´concentre´s) and the Netherlands maintained centralised paying agencies for the various agricultural sectors. Germany established paying agencies in each of the Länder and some Länder even established several paying agencies (14). In 1996 Spain accredited 17 additional regional paying agencies (15). The United Kingdom accredited for England, Wales (2 agencies), Scotland and Northern Ireland. Some Member States including Belgium and Austria (see Table 1) regionalised only a small portion of the Guarantee expenditure. In nearly all Member States, although payments may be effected at central level, regional authorities play an important role in the control and administration of the various aid schemes. separate paying agencies 2. ACCREDITATION OF PAYING AGENCIES Structural development of paying agencies 2. 1. All paying agencies should have been accredited by 16 October 1995, but at that date only 50 out of 66 paying agencies had ben accredited, and most of them on a provisional basis. With regard to the 1996 payments, 80 agencies were finally accredited, even though some of them were responsible for very limited expenditure. One paying agency did not declare any expenditure at all in 1996 and two declared less than ECU 100 000 (12). Five paying agencies accounted for nearly half of the total expenditure (13) and 25 agencies accounted for more than 90 % of the expenditure (see Table 1). 2. 4. Council Regulation (EC) No 1287/95 (amending Regulation (EEC) No 729/70) stipulates that the paying agency shall execute the payments to final beneficiaries. No delegation is provided for. Although five German Länder (Baden-Württemberg, Brandenburg, Hessen, Lower Saxony and Saxony) accredited their Ministries of Agriculture as paying agencies, most of the payments were made by other public bodies within the administration of the Länder. In Spain, the paying agency FEGA claimed for payments which had actually been made directly by a number of regional authorities that had not been accredited paying agencies in 1996. The French central paying agency, services de´concentre´s du Tre´sor et du Ministe`re de l’agriculture, de la peˆche et de l’alimentation, does not make any payments centrally (10) Commission Decision 97/316/EC of 5 May 1997 (OJ L 138, 29. 5. 1997, p. 24). (11) Commission decision 97/609/EC of 30 July 1997 (OJ L 245, 9. 9. 1997, p. 25). (12) Germany — Bavaria: StMLU; Austria — Vorarlberg: Landesamt; Netherlands: MVO. (13) The largest agencies in terms of expenditure claimed during 1996 were AIMA (Italy), FEGA (Spain), ONIC (France), IBEA (United Kingdom) and GEDIDAGEP (Greece). (14) The authorities of the German Länder are also the authorities responsible for granting accreditation to their paying agencies (Annex II to Council document 4427/95 on the Coreper meeting of 18. 1. 1995 concerning declarations). (15) Three of the 17 new agencies had already started operating as paying agencies in 1996 (Catalonia and Basque Country Navarre), whereas the remainder started operating as of the budget year 1997. 14. 12. 98 EN Official Journal of the European Communities C 389/5 since they are made at regional level by each of the De´partements, which are not accredited. (f) inadequate computer security; 2. 5. The minutes of the Council of Ministers meeting of 26 January 1995, Annex II (16), allows paying agencies in the German Länder to delegate the execution of certain payments, notably to (Vorschuß- imprest-account managers additional verwalter). Commission Regulation (EEC) No 1663/95 does not provide for the delegation of the payment function to other bodies. for accompanying measures, Significant accreditation criteria by for authorities responsible 2. 6. The granting accreditation are decided by the Member States. Neither the authority responsible nor the paying agency has to be the Commission (17). Commission approved Regulation (EC) No 1663/95 stipulates that Article 4(4) of Council Regulation (EEC) No 729/70 shall be applied in case of non-respect of any criteria of significant relevance to the paying agency’s operation. According to this Article responsible authorities may not grant or maintain accreditation when one or more of the conditions for accreditation are not, or are no longer, fulfilled, unless the paying agency makes adjustments within a time limit. Its duration, as well as the length of the provisional accreditation, has to be decided by the authority responsible in the light of the problems found. The Regulation does not specify a time limit. in a 2. 7. These significant criteria are described Commission working document, to assist certifying bodies and accreditation authorities to evaluate the seriousness of deficiencies found, (18) as: intended (a) lack of written procedures; (b) inadequate or absence of segregation of duties; (c) failure to implement pre-payment checks; (d) lack of satisfactory payment and accountancy procedures; (e) unsatisfactory accounting procedures, such as the lack of audit trail, weaknesses in debtors ledgers and accounting for intervention stocks; (16) The Council, Agrifin 12, Fin 30, 4427/95 of 26 January 1995: Results of the Committee of Permanent Representative Work on 18 January 1995. (17) The Court’s suggestion was not taken into account (see Opinion No 5/94 of 15 December 1994, OJ C 383, 31. 12. 1994). (18) Working Document VI/5168/96 (rev. 1), ACC 83 c. (g) non-functioning of internal audit; (h) lack of agreements governing functions and/or technical services. the authorisation Weaknesses affecting accreditation 2. 8. The act of accreditation does not require formal approval by the Commission. However, to check whether the applicable conditions were met in respect of 1996, the Commission visited 36 paying agencies, concentrating on the most important ones (more than 80 % of the expenditure was covered). The visits revealed weaknesses which should have prevented the granting of full accreditation. Typical weaknesses (19) reported concerned the accounting and EDP systems, which were either inadequate or insecure, as well as deficiencies in the internal procedures and controls. Table 2 indicates the weaknesses reported in this respect. 2. 9. Criteria of significant relevance were not officially communicated to the Member States until September and October 1996, one year after the initial deadline for accreditation, when the EAGGF financial year had nearly ended and paying agencies had already been accredited. However, this does not excuse the authorities responsible in the Member States from not having carried out their responsibilities properly. 2. 10. Even in 1997 many of the reported problems remained unsolved. Up to the end of 1997 only Italy had withdrawn the accreditation of one paying agency (20) which was only responsible for one particular measure. The responsibility for this measure has been transferred to the central paying agency AIMA in order to meet the organisational requirements. 2. 11. The Court audit, carried out in 1997, confirmed the Commission’s findings (see Table 3). Although paying agencies’ systems had generally improved, there were still major shortcomings at nearly all of the agencies visited. lack of EDP security and Weak inadequate monitoring by the paying agencies of delegated services, as well as accounting problems, were internal control, (19) Working Document VI/8950/96 of 19 November 1996: Report on the application of Regulation (EC) No 1663/95 in respect of the accreditation of paying agencies. (20) The responsibilities of the paying agency IGFOR (Ministero del Tesoro) have been transferred to AIMA. C 389/6 EN Official Journal of the European Communities 14. 12. 98 identified. These ought to have led to the application, by the Member States concerned, of Article 4(4) of Regulation (EEC) No 729/70, i. e. the withdrawal of accreditation by the authorities concerned or immediate remedial action. 3. CERTIFICATION OF ACCOUNTS The certifying bodies 3. 1. The legal status of the certifying bodies in the Member States varies significantly. National audit institutions, other public bodies, internal audit units and also private external auditors were appointed for this purpose (see Table 1). 3. 2. The independence of certifying auditors is a basic requirement of international audit standards. According to Regulation (EC) No 1663/95 the certifying body must be operationally independent of the paying agency. However, the internal audit unit of the Danish paying agency was appointed as the certifying body. This approach was also taken in the case of several German and Austrian paying agencies. Internal audit units are not by definition independent vis-à-vis the paying agencies to which they belong, particularly when they form part of its hierarchical structure. However, the Commission accepted this situation. The Commission’s guidelines 3. 3. Commission Regulation (EC) No 1663/95 provides criteria of a very general nature as regards the certificate and the related audit report. The Commission only these communicated detailed guidelines concerning criteria for an experts group meeting in September 1996. However, the final version was distributed in all languages to the certifying bodies only in December 1996, at a time when part of the audit work had already been carried out (21). Accordingly, these guidelines — which are seen as very useful by the certifying bodies — had only a limited impact on the 1996 certificates, which provides a part of the explanation for the weaknesses found in many audit reports and the unsatisfactory certification work carried out in connection with the 1996 accounts which are described below. (21) According to the Commission’s guidelines on the certificate concerning expenditure, materiality should be in the range of 0,5 to 1 % with a confidence level of 95 %. The minimum materiality reporting level was fixed at ECU 50 000. agencies’ 1996 the paying Problems and delays in obtaining certified accounts to be submitted (EC) No 1663/95 stipulates to that 3. 4. Regulation certified accounts have the Commission by 10 February 1997. The deadline was respected by most paying agencies, but in many cases the information was incomplete or the extent of the audit insufficient. The Commission was consequently not in a position to accept the certificates and/or the audit reports as the basis for the clearance-of-accounts decision. It therefore requested that supplementary work be carried out, which many paying agencies and their certifying bodies were unable to perform in time for the first clearance-of-accounts decision on 5 May 1997. The Commission fixed a later deadline, towards the end of June 1997. A second clearance-of-accounts decision was taken on 30 July 1997. 3. 5. The internal German guideline for the certification audit in the German Länder allowed the sample to be limited to covering only certain categories of expenditure. Although this guideline had been sent to the Commission early in 1996, the Commission did not react at that time. The accounts and certificates were finally accepted by the Commission because additional audit work had been carried out at its request and finalised in time for the first clearance decision, with the exception of the accounts for Saxony and Rheinland-Pfalz, which were cleared under the second clearance decision. 3. 6. In October 1997, the Court’s audit of the accounts of three German Länder (Lower Saxony, Saxony-Anhalt and Schleswig-Holstein) revealed reconciliation problems in the area of co-financed measures. In addition, in the case of the Land of Saxony-Anhalt, an unqualified certificate was issued even though the certifying body had questioned the eligibily of an amount of DEM 13,8 million (approximately ECU 6,8 million) in its report. 3. 7. The certified accounts for Greece were not delivered until the middle of April 1997, hence the corresponding expenditure could not be taken into account in the first clearance decision of 5 May. The accounts did not reflect the results of the certification audit, so the Commission corrected them and they were cleared under the second decision of 30 July 1997. 3. 8. With regard to Spain, the certification reports revealed serious problems and the Commission asked for additional audit work to be carried out: (a) in the case of the paying agency FEGA (declared expenditure ECU 4 196,4 million), substantive amounts were not certified because the certifying 14. 12. 98 EN Official Journal of the European Communities C 389/7 body had not been able to examine the procedures for payments of ESP 507 000 million (approximately ECU 3 165 million) made at regional level on behalf of the paying agency. Furthermore, no information was available concerning checks on export refunds and technical services; that additional audit work be carried out by the certifying bodies. The revised reports issued in June 1997 revealed two main problems: (a) with regard to AIMA, the correctness of the alcohol stocks; (b) with regard to the paying agencies DGDR (declared expenditure ECU 43,6 million) and FROM (declared expenditure ECU 2,0 million), the certifying body could not express an opinion on expenditure incurred by the regions on the paying agencies’ behalf; (c) as for the region of Catalonia (declared expenditure ECU 71,2 million), the Commission requested that supplementary audit work be carried out and the sample size increased (22). 3. 9. After additional confirmation had been provided by the Spanish authorities, all of the amounts were finally cleared under the second clearance decision. 3. 10. To cope with the problems connected with expenditure claimed by FEGA, FROM and DGDR, but managed and/or paid at regional level, the Spanish authorities had appointed a private auditing firm to audit additional samples at regional level in June 1997. On the basis of its final report, dated 7 July 1997, all of the expenditure claimed was certified by the Spanish authorities on 11 July 1997 and 15 July 1997. However, the Court’s audit of September 1997 revealed that there was no evidence of reconciliation between final payments by autonomous regions, the data in the accounts of FEGA and the amounts claimed from the Commission on the basis of funds transferred to regions. In France the certifying body only became 3. 11. operational in October 1996, but even then was under-staffed. The first certificate issued was based solely on a review of reports concerning the systems and not samples of transactions, as required under Regulation (EC) No 1663/95. This situation was brought to the attention of the Commission by the French authorities. Complementary audit work based on the testing of transactions was therefore requested by the Commission, and the corresponding reports were made available in time for the second clearance decision. 3. 12. In the case of three paying agencies in Italy (AIMA, DCCC and IGFOR) the Commission requested (22) The initial certificate was based on 40 samples. The second document, following supplementary audit work, was based on 1 661 samples. (by (b) in the case of DCCC, the revised audit report mentions that the sample size — determined on the basis of a confidence level of 95 % — amounted to 1 112 transactions. This initial sample size had been reduced the following grounds: 20 % for existing routines, 20 % for the staff’s lengthy experience, 20 % for the staff’s professionalism, 20 % because of existing internal controls and 12 % because of the EDP support) to 93. The Commission did not question these calculations and cleared the certified accounts; following percentages on the 3. 13. Furthermore, Italy claimed expenditure on behalf of the Ministry of Agriculture, which was not an accredited paying agency. The Commission nevertheless accepted the claimed amount of ITL 1 895 331 293 (ECU 997 977,43) in its second decision concerning the clearance of the accounts. 3. 14. The accounts presented by the Austrian paying agency AMA were cleared after additional audit work had been carried out. However, the Court’s audit in October 1997 revealed weaknesses and problems with the reconciliation of the amounts claimed from the EAGGF-Guarantee and the bank accounts, owing to the various amounts that had been recovered by off-setting. These latter amounts need to be distinguished from recoveries made by off-setting in the national accounts. 3. 15. The Commission also asked the certifying body in Portugal to carry out additional audit work because only 30 % of the sample transactions had been audited by the certifying body, owing to a lack of time. The amounts were finally cleared following supplementary audit work by the certifying body. 3. 16. The paying agencies in the United Kingdom could not deliver reconciled annual accounts and, as a consequence, the certifying body could not issue any certificate on time. The corresponding documents were sent to the Commission in June 1997, followed by some supplementary information in July 1997. The necessary adjustments to the accounts, identified by the certifying body, had not been made by the paying agencies, hence the Commission corrected the latter’s accounts in its clearance decision. C 389/8 EN Official Journal of the European Communities 14. 12. 98 3. 17. The audit by the Court in September 1997 (23) confirmed the persistent weaknesses in the accounting systems of the paying agencies mentioned by the certifying body : (a) the failure to keep separate accounts in respect of EAGGF expenditure; (b) the non-submission by each paying agency of periodic summaries of expenditure, including the monthly declaration to the Commission (24); (c) the absence of debtors’ ledgers and the lack of effective procedures to ensure that all payments for which transfers are not executed or cheques are not cashed and amounts recovered are promptly re-credited to the Commission. The Scottish paying agency did not reallocate the amounts for uncashed cheques to the Commission’s accounts. Since there were no specific accounting records available, the amounts in question could not be quantified. Problems in obtaining data on the amounts to be recovered 3. 18. The guideline annexed to Commission Regulation (EC) No 1663/95 stipulates that the accounts are to record debtors. This is a criteria for accreditation. However, in 1996 most paying agencies were not able to identify the total of the amounts to be recovered, either because a debtors ledger did not exist or information was not held centrally. 3. 19. The Commission then asked Member States to submit, with the April 1997 declaration of expenditure, a table (Table 105) indicating the amounts to be recovered. No information was submitted by Germany, Finland and Portugal. Incomplete information was submitted by the Netherlands (one paying agency was missing) and by the United Kingdom (the data for the five largest paying agencies were missing) (25). The Austrian paying agency AMA was able to quantify the amounts recovered, but not the amounts outstanding. The largest amount to be recovered was notified by the Italian paying agency DCCC: ITL 443 150 254 004 (about ECU 220 million), 98 % of which is accounted for by cases subject to legal proceedings. (23) The Court’s audit concerned the paying agencies SOAFD (Scotland), MAFF (England) and the International Board (United Kingdom). (24) A statement has been issued to the effect that separate claims may only be submitted from the EAGGF budget year 1998 onwards. (25) The total debtors figure for the paying agencies that submitted their records amounted to ECU 489 million. 4. THE CLEARANCE-OF-ACCOUNTS DECISIONS FOR 1996 The Commission’s first clearance decision In the first clearance-of-accounts decision (26) the 4. 1. Commission accepted all expenditure claimed by Belgium, Denmark, Luxembourg, The Ireland, Netherlands, Austria, Finland and Sweden, and most of the expenditure for Germany. In Italy’s case, only the expenditure claimed by one small paying agency (Ente Risi) was accepted, whereas for Spain only the claims for the regions of Navarre and Basque Country were cleared. For the remaining paying agencies either additional audit work, requested by the Commission, was pending or the accounts were not sent in time. 4. 2. The Commission’s first decision concerning the integrality, exactitude and veracity of the accounts therefore covered only ECU 12 931,9 million, or some 33 % of the total expenditure of paying agencies for the financial year 1996. The Commission’s second clearance decision to regard the other paying agencies 4. 3. With (representing 67 % of the total expenditure declared), the clearance-of-accounts decision was taken on 30 July 1997 (27). With the exception of certain adjustments and corrections indicated below, all certified accounts were cleared by the Commission. However, the Commission did not include in the amounts disallowed most of the qualifications in the certificates totalling a minimum of ECU 43,3 million. The analysis of the weaknesses detected by the certifying bodies in the paying agencies is shown in Table 4. 4. 4. The two decisions do not prevent the Commission from disallowing expenditure at a later date on the basis of subsequent compliance audits. Such a disallowance may not involve expenditure effected prior to 24 months preceding the Commission’s written communication of the results of its checks. To date, no clearance of accounts decision based on this compliance audit has been taken by the Commission. (26) Commission Decision 97/316/EC of 5 May 1997 (OJ L 138, 29. 5. 1997, p. 24). (27) Commission Decision 97/609/EC of 30 July 1997 (OJ L 245, 9. 9. 1997, p. 25). 14. 12. 98 EN Official Journal of the European Communities C 389/9 Modification of the amounts declared 4. 5. The sole amendments that were made to amounts claimed into account by the Commission were: in the annual declarations and taken (a) adjustments to the annual declarations, in order to adapt the declared amounts to the amounts certified; (b) financial corrections made by the Commission finance division responsible in respect of: (e) as regards the United Kingdom, negative adjustments of GBP 7 411 866,51 (approximately ECU 10,9 million) were made in order to reconcile the paying agencies’s data with the certified accounts and to take into account various amounts previously considered ineligible by the Commission. Financial corrections made by the finance division responsible (i) late payments; Corrections in respect of late payments (ii) various items of ineligible expenditure in the monthly declarations. in the cases 4. 6. Moreover, financial some corrections (28) were sometimes amended again by the Commission department responsible for the clearance of accounts (29). The absence of a clear-cut procedure in a system involving several Commission departments for successive corrections has led to confusion and a lack of transparency. Adjustment to the annual declarations 4. 7. Member States’ accounts were adjusted by the Commission as follows: (a) with an regard amount to Greece, of GRD 148 393 325 (approximately ECU 480 000) was deducted by the Commission, mainly because of discrepancies storage. This concerning public deduction by the Commission is far greater than the corrections suggested by the certifying body - GRD 21 202 319 (approximately ECU 68 000); (b) In Spain’s case, an amount of ESP 10 219 598 (approximately ECU 60 000) was added to take into account an amount declared as a correction to the annual declaration by the Spanish authorities; (c) in the case of the Netherlands, NLG 411 675 (approximately ECU 190 000) were deducted to adjust the amounts certified; the amounts declared to (d) as for Portugal, the Commission did not accept a claim for interest of PTE 294 990 678 (approximately ECU 1,5 million) under Regulation (EC) No 2975/95, as the legal basis was no longer valid; 4. 8. Commission Regulation (EC) No 296/96 stipulates that advances to Member States for expenditure made after the deadlines laid down in the corresponding regulations shall be reduced by between 10 % and 100 %, depending on the delays involved. There is a 4 % threshold up to which no reduction is made. The Commission can, however, apply smaller reductions in exceptional circumstances or for justified reasons. Checks on compliance with the deadlines are made three times a year (31 January, 30 April and 31 August) on the basis of the Member States’ declarations. However, late payments in September and during the first half of October are to be included in the clearance-of-accounts decision, except where they are noted before the final decision concerning to advances is issued (30) and therefore booked only in the accounts of year ‘n+1’. This procedure conflicts with the principle of budget annuality. The amount involved is ECU 4,5 million. financial year relating the 4. 9. Table 5 shows the financial corrections for late payments for 1996 that were included in the second clearance-of-accounts decision. in a 4. 10. With regard to Italy, letter dated 23 December 1996, the Commission made a commitment not to impose penalties in respect of late payments connected with all per-hectare subsidies, which totalled ITL 66 634 270 561 (approximately ECU 33,5 million), because the delays were due mainly to additional controls being carried out at the Commission’s request (31). In the case of the United Kingdom, 4. 11. the Commission applied a negative correction of GBP 177 683,03 (approximately ECU 0,3 million) for late payments. It should be noted that this calculation might be affected by the fact that the United Kingdom declared its expenditure on the basis of fundings and not on the actual payments which are made later. (28) Division DGVI/G/2: Management of agricultural expenditure. (29) Division DGVI/A1/3: Clearance of accounts. (30) Article 4(3) of Commission Regulation (EC) No 296/95. (31) No provision was made in the accounts for this Commission commitment (observed by the Court in the context of the DAS 1996). C 389/10 EN Official Journal of the European Communities 14. 12. 98 Corrections for various items of ineligible expenditure 4. 12. Some ECU 27,3 million was rejected as late as 14 July 1997, although a corresponding decision could have been taken earlier, and at least before the first clearance of accounts decision (32). Other amounts were rejected during 1996. Although the clearance decision should reflect these amounts, the Court’s audit revealed that this was not always the case. Table 6 provides an overview of the financial corrections made in the context of the clearance-of-accounts decision. 4. 13. With regard to Denmark, a negative correction of (aproximately ECU 380 000) DKK 2 873 870,96 established on 14 July 1997 in respect of public storage of bread-making wheat was not deducted under the clearance decision because the Danish accounts had already been cleared under the first decision of 5 May 1997. The Commission therefore omitted to make a correction under the second clearance decision. 4. 14. For public storage in Italy, there were uncertainties as to the exact amounts to take into account in the clearance decision. Total expenditure may be around finally ECU 0,4 million reimbursed by the Commission. A compliance audit should be carried out the correct amount (33). to establish the amount lower than by finally covered that were 4. 15. The evaluation of the various calculations and amounts the clearance-of-accounts decision revealed that the approach applied prior to the decision being taken was not always consistent. Furthermore, there was an apparent lack of documentation justifying the second clearance decision, partly due to extreme time pressure and the limited number of staff assigned to this task. Lastly, the amounts declared were cleared, despite the existence of qualified certificates or the weaknesses described in the audit reports. (32) The amounts in question concern corrections for Denmark (-DKK 2 873 870,96, approximately ECU 0,4 million), France (- FRF 2 540 376,36, approximately ECU 0,4 million), Greece (- GRD 1 577 481 460, approximately ECU 5,1 million) and Italy (- ITL 41 350 131 560, approximately ECU 21,4 million), totalling approximately - ECU 27,3 million. (33) If there were doubts concerning the necessary corrections that were already partly or fully anticipated in respect of the annual claim, no accounts clearance decision should have been taken until additional clarification had been obtained. Alternatively, the final judgement could have been made in the context of the compliance audit. of expenditure 4. 16. Disallowances (‘financial corrections’) were based mainly on previous decisions taken by the finance division in the context of its daily management of EAGGF-Guarantee expenditure. Their negative and positive corrections for 1996 totalled ECU 77,3 million out of which, however, only ECU 55,1 million was taken into account in the clearance decision (see Table 6). 4. 17. Table 7 details by paying agency and by amount the clearance-of-accounts decision of 5 May 1997 and that of 30 July 1997. 5. CONCLUSION 5. 1. Both the Member States and the Commission made significant efforts to comply with the new Regulation. However, the Court’s audit revealed the existence of major shortcomings in a number of paying agencies to which accreditation had been granted (see paragraph 2. 11). to regard 5. 2. With the compliance of EAGGF expenditure to Community rules, no decision to disallow expenditure incurred in contravention of community the new system rules has yet been (paragraph 1. 5). Such a decision cannot be made in respect of expenditure effected more than 24 months prior the Commission’s written communication (paragraph 1. 4 (f)). At this moment, a final judgement of the financial consequences cannot be made. taken under to 5. 3. The clearance-of-accounts decision of 5 May 1997 covered only 33 % of the expenditure, because some certified accounts were communicated late or were considered unsatisfactory (see paragraph 4. 2). In some cases the certificate and accompanying report were unsatisfactory, which meant the Commission had to ask that additional audit work be carried out (see paragraphs 3. 4 — 3. 17). The regulation should be amended in order to stipulate the possibility of applying penalties when certificates or the certified accounts are presented late or are incomplete. 5. 4. With regard to the second clearance decision of 30 July 1997, some of the information only arrived during the course of July, so that the Commission had little time to examine it in depth and to document it properly (see paragraphs 3. 10, 3. 16 and 4. 14). 14. 12. 98 EN Official Journal of the European Communities C 389/11 5. 5. The evaluation of the various calculations and amounts that were finally included in the clearance-of- accounts decisions revealed that the approach applied to the decisions being taken was not always consistent (see paragraphs 4. 10, 4. 11 and 4. 13). It is important that weaknesses identified are the compliance 5. 6. systematically clearance procedure (see paragraphs 4. 6 and 4. 15). followed up under for 1996, despite 5. 9. While the certified accounts submitted by the paying agencies were of varying quality, the Commission accepted all of the accounts presented by the Member States the certificates. The Commission claims that the compliance of expenditure may be subject to subsequent clearance decisions, in accordance with Article 5 (2) (c) of Regulation (EEC) No 729/70. To date no decision of this type based on compliance audit has been taken by the Commission (see paragraph 4. 3 — 4. 4). the qualifications in communicated communicated 5. 7. The Commission important documents to the Member States late. If the documents had been earlier, a number of misunderstandings and problems connected with the certification of accounts could had been avoided (see paragraphs 2. 9 and 3. 3). Decisions on the basis of Regulation (EC) No 296/96 must be taken earlier, so that they may be accounted for in the clearance-of-accounts decision (see paragraph 4. 12). 5. 10. The aim of Council Regulation (EC) No 1287/95 (amending Council Regulation (EC) No 729/70) was to minimise the number of paying agencies. However, sometimes even very small units that could not possibly meet the requirements of the Regulation were set up. Greater effort should be made to reduce the number of paying agencies (see paragraphs 2. 1 — 2. 3). 5. 8. In a number of cases the certification is carried out by the paying agency’s internal auditors who are by definition not independent, which they are required to be, both under the Regulation (see paragraph 3. 2) and the internationally accepted auditing standards. 5. 11. As regards the corrections for late payments (Commission Regulation (EC) No 296/96), the system of having separate procedures for corrections in the advance payments up to August, on the one hand, and for September and October corrections under the clearance decision, on the other, breaches the rule of annuality (see paragraph 4. 8). This report was adopted by the Court of Auditors in Luxembourg at its meeting of 14 and 15 October 1998. For the Court of Auditors Bernhard FRIEDMANN President Table 1 Situation by Member State Member State Paying agency Competent authority granting accreditation Responsibility Regional (1) Sectorial Expenditure paid (monthly advances) 1996 (million ECU) Certifying body Nature of certifying body BELGIUM BIRB DG 3 Region Wallonne Vlaamse Gemeenschap Ministry of Agriculture Ministry of Agriculture Walloon Government Minister-President van de Vlaamse regering Export refunds 828,4 Ernst & Young New CAP and other intervention 316,7 Ernst & Young Wallonia Flanders Environment Environment (2) 0,5 Dir. Budget 0,0 Afdeling Accounting Total 1 145,6 DENMARK EU Direktoratet Ministry of Agriculture All 1 355,7 Internal audit GERMANY BLE HH-Jonas MLR - Baden-Württemberg STMELF - Bayern STMELU - Bayern SEN-WIRT - Berlin MELF - Brandenburg SEN-WIRT - Bremen Ministry of Agriculture Ministry of Finance Ministry of Agriculture of the Land Ministry of Agriculture of the Land Ministry of Environment of the Land Senator for Economy of the Land Ministry of Agriculture of the Land Senator for Economy of the Land Public storage Export refunds 840,4 Unit for certification 1 012,9 Unit for certification Baden-Württemberg New CAP and other intervention 326,1 Internal audit Bayern Bayern Berlin New CAP and other intervention 769,0 Internal audit Environment 0,0 Internal audit New CAP and other intervention 2,1 Internal audit Brandenburg New CAP and other intervention 324,0 Internal audit Bremen New CAP and other intervention 1,5 Internal audit BEH-WIRT - Hamburg The Senat of the Land MILFN - Hessen Ministry of the Interior and Agriculture of the Land Hamburg Hessen New CAP and other intervention 3,2 Internal audit New CAP and other intervention 180,4 Internal audit MELF - Mecklenburg-West Pomerania Ministry of Agriculture of the Land Mecklenburg-West Pomerania New CAP and other intervention 393,4 Internal audit LÖBF - Lower Saxony LEJ - NRW (Land) LÖBF - NRW (Land) LWK Münst. - NRW (Westphalia) Ministry of Agriculture of the Land Ministry of Environment and Agriculture of the Land Ministry of Environment and Agriculture of the Land Ministry of Environment and Agriculture of the Land Lower Saxony New CAP and other intervention 576,2 Internal audit NRW (Land) Environment (4) 0,0 Ministry Ref. IB2 NRW (Land) Milk (4) 0,0 Ministry Ref. IB2 NRW (Westphalia) New CAP and other intervention 370,7 Ministry Ref. IB2 LWK Bonn - NRW (Rheinland) Ministry of Environment and NRW (Rheinland) MWVLW - Rheinland-Pfalz MIUEV - Saarland Agriculture of the Land Ministry of Economy and Agriculture of the Land Ministry of Environment and Transport of the Land Rheinland and Pfalz New CAP and other intervention (4) New CAP and other intervention 0,0 Ministry Ref. IB2 135,0 Internal audit Saarland New CAP and other intervention 14,0 Internal audit 1 1 4 4 3 4 4 3 3 3 3 3 3 3 3 3 3 4 4 4 4 3 3 C 3 8 9 1 2 / E N O f f i c i a l J o u r n a l o f t h e E u r o p e a n C o m m u n i t i e s. 1 4 1 2 9 8. STMELF - Saxony MELF - Saxony-Anhalt MELFF - Schleswig-Holstein M. N. +UMW. - Schleswig-Holstein LAND. VAMT - Thuringia Previous years’ clearance of accounts Ministry of Agriculture of the Land Ministry of Agriculture of the Land Ministry of Finance of the Land Ministry of Finace of the Land Ministry of Agriculture of the Land Saxony New CAP and other intervention 281,7 Prüfdienst Sachsen-Anhalt New CAP and other intervention 355,9 Ref. 13 of the Ministry Schleswig-Holstein Schleswig-Holstein New CAP and other intervention Environment 256,6 Internal audit MELFF 1,1 Innenrev. MNU Thuringia New CAP and other intervention 248,6 Ministry of Agriculture Total GREECE GE-DIDAGEP Ministry of Agriculture SPAIN FEGA DGDR (activity ceased during 1996) FROM Dep. Agr. - Catalonia Dep. Agr. - Basque Country Dir. Agr. - Navarre Dep. Agr. - Aragon Con. Agr. - Balearic Islands Con. Agr. - Valencia Con. Agr. - Canary Islands Dir. Agri. - Cantabria Con. Agr. - Galicia Con. Agr. - Murcia Con. Agr. - La Rioja Con. Agr. - Castile-La Mancha Con. Agr. - Extremadura Con. Agr. - Asturias Con. Agr. - Andalusia Con. Agr. - Castile-Leon Ministry of Agriculture Ministry of Agriculture Ministry of Agriculture Consejero of Agriculture of the Region Consejero of Agriculture of the Region Comunidad Autónoma de Navarre Consejero of Agriculture of the Region Consejero of Agriculture of the Region Consejero of Agriculture of the Region Consejero of Agriculture of the Region Consejero of Agriculture of the Region Consejero of Agriculture of the Region Gobierno Regional Murcia Consejero of Agriculture of the Region Consejo de Gobierno de Castilla - La Mancha Consejero of Agriculture of the Region Consejero of Agriculture of the Region Consejero of Agriculture of the Region Consejero of Agriculture of the Region Con. Agr. - Madrid Consejero de Economia y Empleo Madrid Previous years’ clearance of accounts Total All All −45,4 6 047,5 2 787,6 Moore Stephens New CAP and other intervention accompanying measures 4 196,4 Ministerio de Economía 43,6 Catalonia fish + aquaculture New CAP and other intervention 2,0 Ministerio de Economia 71,2 Adm. de la Diputación Basque Country New CAP and other intervention 11,1 Oficina de Control Navarre Aragon Balearic Islands Valencia Canary Islands Cantabria Galicia Murcia La Rioja Castile-La Mancha Extremadura Asturias Andalusia Castile-Leon New CAP and other intervention 11,1 Servicio Interno New CAP and other intervention (2) New CAP and other intervention (2) New CAP and other intervention (2) New CAP and other intervention (2) New CAP and other intervention (2) New CAP and other intervention (2) New CAP and other intervention (2) New CAP and other intervention (2) New CAP and other intervention (2) New CAP and other intervention (2) New CAP and other intervention (2) New CAP and other intervention (2) New CAP and other intervention (2) New CAP and other intervention (2) All 0,0 Dep. de Aragón 0,0 Int. Gov. Baleares 0,0 Int. Gen. Valenciana 0,0 Consej. de Economía 0,0 Adm. de la Diputacion 0,0 Int. Com. Galicia 0,0 Int. Gen. Murcia 0,0 Int. Gen. La Rioja 0,0 Int. Gen. Castilla-La Mancha 0,0 Int. Gen. Extremadura 0,0 Int. Gen. Asturias 0,0 Int. Gen. Andalucia 0,0 Int. Gen. Castilla y Leon 0,0 Int. Gen. Madrid −288,5 4 046,9 3 3 3 3 4 1 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4. 1 4 1 2 9 8. E N O f f i c i a l J o u r n a l o f t h e E u r o p e a n C o m m u n i t i e s C 3 8 9 / 1 3 Member State Paying agency Competent authority granting accreditation Responsibility Regional (1) Sectorial Expenditure paid (monthly advances) 1996 (million ECU) Certifying body Nature of certifying body FRANCE CNASEA FIOM FIRS Ministry of Agriculture Ministry of Agriculture Ministry of Agriculture Services de´concentre´s Ministry of Agriculture ODEADOM OFIVAL ONIC ONIFLOHR ONILAIT ONIVINS SAV SIDO Previous years’ clearance of accounts Ministry of Agriculture Ministry of Agriculture Ministry of Agriculture Ministry of Agriculture Ministry of Agriculture Ministry of Agriculture Ministry of Agriculture Ministry of Agriculture Total IRELAND DAFF ITALY AIMA DCCC/Dog. Min. Tres - IGFOR ENR Previous years’ clearance of accounts The Minister for Agriculture, Food and Forestry Ministerio delle Risorse Agricole, Alimentari e Forestali Ministero delle Finanze Ministerio delle Risorse Agricole, Alimentari e Forestali Ministero delle Risorse Agricole, Alimentari e Forestali Structural aid Fish Sugar Suckler cows Bananas Meat/animals Cereals, per hectare aids Fruit and vegetables Milk Wine Alcohol 222,3 Certifying body 10,7 Certifying body 521,9 Certifying body 880,0 Certifying body 73,8 Certifying body 1 248,0 Certifying body 3 849,9 Certifying body 295,8 Certifying body 863,6 Certifying body 97,1 Certifying body 90,1 Certifying body Oil seeds including hectare aids 1 478,3 Certifying body All All −74,0 9 557,6 1 699,5 Arthur Andersen All, except those listed below 4 291,6 Reconta Ernst & Young Export refunds Grubbing up of wine (2) 340,8 Ragioneria dello Stato 171,8 Ragioneria dello Stato Rice 8,8 Coopers & Lybrand All – Apurement −593,2 Total 4 219,9 LUXEMBOURG Min. Agric. Ministry of Finance All 19,7 Min. Fin. – inspec. gen. THE NEDERLANDS DLB HPA LASER MVO PGF PPE Ministry of Agriculture (LLB/LBL) structural exp 5,3 Acountantsdienst ministerie Ministry of Agriculture Ministry of Agriculture Ministry of Agriculture Ministry of Agriculture Ministry of Agriculture Agricultural and vegetable products 377,4 Acountantsdienst ministerie New CAP and other intervention 389,2 Acountantsdienst ministerie Fat and oil Fruit and vegetables 0,1 Acountantsdienst ministerie 11,5 Acountantsdienst ministerie Merged with PVV to PVE 0,0 Acountantsdienst ministerie 4 4 4 4 4 4 4 4 4 4 4 4 1 1 4 4 1 4 4 4 4 4 4 4 C 3 8 9 1 4 / E N O f f i c i a l J o u r n a l o f t h e E u r o p e a n C o m m u n i t i e s. 1 4 1 2 9 8. PVE (ex PVV) Ministry of Agriculture Meat, poultry and eggs 210,3 Acountantsdienst ministerie PVI PZ STOAS Previous years’ Clearance of Accounts Ministry of Agriculture Ministry of Agriculture Ministry of Agriculture Fish Milk Training All Total AUSTRIA AMA BMLF-wine ZA Salzb. Ministry of Agriculture Ministry of Agriculture Ministry of Finance Landesamt — Land Salzburg Ministry of Agriculture Land Salzburg Forestry Landesamt — Land Tyrol Ministry of Agriculture Land Tyrol Forestry Landesamt — Land Vorarlberg Ministry of Agriculture Land Vorarlberg Forestry Total All except those listed below 1 139,1 Internal audit of Ministry Wine Export refunds 0,1 Acountantsdienst ministerie 536,8 Acountantsdienst ministerie 2,6 Acountantsdienst ministerie 2,1 1 535,4 2,7 Internal audit of Ministry 69,8 Ministry of Finance 0,3 Internal audit 0,4 Prüf Buchhaltung 0,0 Gebarungskontrolle 1 212,2 PORTUGAL IFADAP INGA Ministry of Finance Ministry of Finance Fish and accompanying measures 70,4 Inspeçao Geral Finanças All except above 575,0 Inspeçao Geral Finanças Total FINLAND Ministry of Agriculture Ministry of Agriculture and Forestry SWEDEN SJV The Government All All 645,4 647,5 Coopers & Lybrand 622,2 Court of auditors (RRV) UNITED KINGDOM Countryside Commission (CC) Minister of Agriculture, Fisheries and Food and Secretaries of State England Environment (3) (4) National audit Office Contryside Commission for Wales Minister of Agriculture, Fisheries and Food and Secretaries of State Wales Environment (4) National audit Office Forestry Commission IBEA MAFF DANI SOAD Minister of Agriculture, Fisheries and Food and Secretaries of State Minister of Agriculture, Fisheries and Food and Secretaries of State Forestation and environment (4) 0,0 National audit Office Export refunds and public storage 3 468,2 National audit Office Minister of Agriculture, Fisheries and Food and Secretaries of State England New CAP and accompanying measures (4) Minister of Agriculture, Fisheries and Food and Secretaries of State Northern Ireland New CAP and accompanying measures (4) Minister of Agriculture, Fisheries and Food and Secretaries of State Scotland New CAP and accompanying measures (4) 0,0 National audit Office 0,0 National audit Office 0,0 National audit Office 4 4 4 4 4 4 4 3 4 3 4 4 1 2 2 2 2 2 2 2 2. 1 4 1 2 9 8. E N O f f i c i a l J o u r n a l o f t h e E u r o p e a n C o m m u n i t i e s C 3 8 9 / 1 5 Member State Paying agency Competent authority granting accreditation Responsibility Regional (1) Sectorial Expenditure paid (monthly advances) 1996 (million ECU) Certifying body Nature of certifying body WOAD Minister of Agriculture, Fisheries and Food and Secretaries of State Wales New CAP and accompanying measures (4) 0,0 National audit Office 2 Total TOTAL — COMMUNITY (5) 3 468,2 39 010,9 (1) Unless otherwise indicated, the paying agency is responsible for the whole country. (2) New paying agency 1997. No financial claim in 1996. (3) Paying agency ceased its activity. (4) No separate financial claim made in 1996. (5) The amount paid ECU 39 010,8 million is lower than the amount declared and committed (ECU 39 040,8 million) due to a suspension of ECU 29,2 million for Greece). Key to ‘Nature of certifying body’: 1 — External auditor. 2 — National audit Institution. 3 — Internal audit division of the paying agency. 4 — Other public body, e. g. accountancy service of the Ministry of Agriculture Source: Court of Auditors, based on miscellaneous documents of the Commission C 3 8 9 1 6 / E N O f f i c i a l J o u r n a l o f t h e E u r o p e a n C o m m u n i t i e s. 1 4 1 2 9 8. 14. 12. 98 EN Official Journal of the European Communities C 389/17 Main weakneses idenfied by the Commission in the visited paying agencies during 1996 Table 2 Member State Paying agency BELGIUM BIRB DG 3 DENMARK EU Direktoratet GERMANY GREECE SPAIN FRANCE HH-Jonas BLE Bayern Brandenburg Lower Saxony Schleswig-Holstein GE-DIDAGEP FEGA FROM ONIFLOHR ONILAIT ONIVINS FIRS OFIVAL SIDO ONIC IRELAND DAFF ITALY AIMA DCCC/Dog. LUXEMBOURG Min. Agric. THE NETHERLANDS AUSTRIA PORTUGAL FINLAND SWEDEN UNITED KINGDOM PGF PZ HPA LASER AMA BMLF-wine INGA IFADAP Ministry of Agriculture SJV IBEA SOAEFD MAFF Areas of weaknesses identified (1) Written procedures Segre- gation of duties Payment checks and procedures Accoun- ting procedures and reconcil- iation Debtors ledger (2) EDP security Internal audit Technical service × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × (1) In relation to the criteria of significant relevance as outlined in the Commission’s document VI/5168/96 rev. 1. (2) Observations concerning weaknesses of debtors ledgers are reported separately because of the number of problems found. In the criteria of significant relevance, this is a subpoint of accounting procedures. Source: Reports and working documents of the Commission C 389/18 EN Official Journal of the European Communities 14. 12. 98 Summary of weaknesses of paying agencies reported by the Court during 1997 Table 3 Member State/Paying agency General remarks Observations on points of significant relevance BELGIUM BIRB The paying agency was granted provisional accreditation during 1997 (audit visit by the Court: February 1997). Technical services: the paying agency had no influence on inspections made by other units (customs, veterinary services); an agreement with technical services was only concluded during 1997. EDP: new system only operational from 1998, old systems are not designed for the structure of the paying agency. No efficient follow up of securities and guarantees. Debtors: improved. follow up of debtors need to be DG 3 The paying agency was granted provisional accreditation during 1997 (audit visit by the Court: February 1997). EDP: new system scheduled for 1996 but for budgetary reasons not operational. Not compatible with existing systems. Security weaknesses, such as absence of individual passwords. Checklists: must be be adapted to the various measures. Debtors: no periodic follow up. DENMARK EU DIREKTORATET sole paying EU Directoratet was accredited on 13. 10. 1995 as agency. Although Denmark’s accreditation letter contained a number of conditions which are expected to be satisfied within a limit, no provisional accreditation was granted. These conditions include new export refund system by 16. 10. 1997, the implementation of check lists by 16. 10. 1996 and improvement of the system of guarantees. fixed time Internal audit/certifying body: the combination of the two functions is not adequate. Functions should be kept separate. Internal audit only reached its planned staffing level around the end of 1996. Payment system: customs and tax administration was not accredited as paying agency but deals with sugar payments and revenue. Taking this into consideration in the context of accreditation was forgotten. Delegated (authorisation and technical) services: seven agreements with delegated services were signed, eight were still outstanding during the audit of the Court (although they were in force from 16. 10. 1995). Debtors: different treatment of debtors according to the sectors concerned, a considerable number of debtors due to wrong payments of export refunds. Per hectare aids: weakness of monitoring, some 100 cases were paid although initially planned for inspection. The selection was left to the technical service although this should had been done by the paying agency. The system was, furthermore, not updated. computer 14. 12. 98 EN Official Journal of the European Communities C 389/19 Member State/Paying agency General remarks Observations on points of significant relevance GERMANY Land Lower Saxony Ministry of Agriculture (Ministerium für Ernährung Landwirtschaft und Forster) is the The Land’s Ministry of Agriculture accredited paying agency from 16. 10. 1995. However, the unit of the Ministry which is the paying agency consists of only 2 persons. Administration of the agricultural measures is Bezirksregierungen decentralised (chambers für Agrarstruktur (offices for agricultural structures). Payments are executed by a separate unit and there is furthermore one unit acting as imprest account manager (audit visit by the Court: October 1997). Relatively high error rate for IACS measures. for agriculture) and Ämter through Paying agency its structure is not adequate (the unit does not pay and does not make the declaration table 104), the monitoring of the many delegated services needs to be improved, EDP: security needs improvement (notably access rights), Financial aspects: The claim for 1996 included amounts already paid in 1995 by units that are not accredited or delegated for this purpose from 1996, claim is based partly on amounts that were not fully paid (beneficiaries were charged for administrative costs). Reconciliation problems during the audit for the expenditure claimed for co-financed measures in 1996. Debtors: follow up to be improved, co-financed measures are only registered after recoveries are cashed. the various weaknesses Given identified only provisional accreditation should have been granted to this paying agency. Certifying body: independence to be improved. Land Saxony-Anhalt Ministry of Agriculture (Ministerium für Raumordnung, Landwirtschaft und Umwelt) Provisional accreditation for 1996 budget year, fully accredited for 1997 budget year. (audit visit by the Court: October 1997) For per hectare aid need to follow up also old claims (prior to 1996) in case of irregularities found. EDP: internal controls of decentralised data for payment to be formalised. Delegated services: monitoring by the paying agency to be improved. Financial aspects: expenditure measures. claimed reconciliation problems 1996 for co-financed for Debtors ledger: until August 1997 co-financed measures were only registered after the recovery has been cashed. Certifying body/internal audit: independence to be improved. Land Schleswig-Holstein Ministry of Agriculture (Ministerium für ländliche Räume, Landwirtschaft, Ernährung und Tourismus) Accredited paying agency from 1996 budget year (audit visit by the Court: October 1997). the various measures Administration of is decentralised (local Ämter) but payments are finally authorised by the paying agency, except certain co-financed measures paid through the Chambers for Agriculture which is considered also as imprest account manager (Vorschußverwalter), but there was no respect. Monitoring of delegated services to be improved. formal convention this in C 389/20 EN Official Journal of the European Communities 14. 12. 98 Member State/Paying agency General remarks Observations on points of significant relevance Ministry for the environment (Ministerium für Natur und Umwelt) Small paying agency (annual payments some ECU 1,1 million), accredited from 1996 budget year (audit visit by the Court: October 1997). Debtors ledger: new procedures from July 1997 to ensure completeness. EDP security: decentralised EDP approach requires intensified monitoring approach planned for 1998). (centralised Suspense accounts: routine for follow up needed. Certifying body/internal audit: independence to be improved. The paying agency itself does not execute payments, measures are executed by one delegated local Amt (Husum) and by one company under private law (SHL) that acts also as imprest account manager (Vorschußverwalter). Administrative principles (Halligprogramm) were accreditation procedures from 1997). for one programme line with not (improved in criteria during 1996 General observation for all the paying agencies of German Länder Monitoring of delegated improved and better documented. services should be General observation for all Länder: Payments are carried out via the Federal Treasury (Bundeskasse) in Frankfurt. They issue extracts indicating the execution of payment. A control system should allow an annual certified statement as to the respect of payment criteria and the reliability of the extracts issued by the Bundeskasse. GREECE GEDIDAGEP Gedidagep is the sole paying agency in Greece. After provisional accreditation for 1996 budget year it was granted full accreditation from 1997 budget year. Written procedures: were fully completed only in 1997. Definition of responsibilities as well as detailed check lists were only in some cases in use and not laid down in writing. Pre-payment checks: are delegated to other bodies but Gedidagep has practically not exercised any review and control on the delegated organisation (lack of monitoring). Payments: Contrary (EC) No 1633/95 amounts up to GRD 100 000 are paid in cash to the claimants. to Regulation EDP system lacks essential features for ensuring reliable results and information. The internal control procedures as a whole did not have all the characteristics of an efficient internal control system. Internal audit: not operational during 1996. 14. 12. 98 EN Official Journal of the European Communities C 389/21 Member State/Paying agency General remarks Observations on points of significant relevance SPAIN FEGA (Fondo Espana de Garantia Agraria/Spanish Agricultural Guarantee Fund) (Fondo de FROM Regulación y Organización del Mercado de Productos de la Pesca y Cultivos Marinos) Central paying agency for most measures during 1996 for non-regionalised expenditure such as second category intervention) responsible (now Date of visit of the Court: September 1997. There is an apparent lack of coordination between the autonomous regions on one side and FEGA on the other, even during 1996 when FEGA was the responsible paying agency and should have monitored activities by delegated services. Weaknesses of IACS cattle registration system (no feed back from regions). the fish sector, date of accreditation For 7. 12. 1995 Date of visit of the Court’s visit: September 1997. Internal audit: only operational from 1997, lack of coordination with internal audit units at regional level. Separation of functions: person who prepares payment orders is also responsible for reconciliation of bank accounts, no full reconciliation of accounts, data base, bank statements. differences Accounting weaknesses: between accounts and computer data base, differences mainly due to repayments which are not corrected in the database and payments mistakenly charged. Although FEGA was accredited paying agency, payments were made by a number of autonomous regions that were not paying agencies, on the basis of specific contracts. There is no reconciliation between final payments by ARs, the data in the accounts of FEGA and the data declared in Table 104. Technical services: cooperation agreements with regional inspection units were still outstanding for some regions. Control weaknesses for intervention stocks. Certification of accounts: not sufficient for 1996, two different control steps at central and at regional level, regional amounts were not reconciled with the transfers from the central level to the regions. Lack of coordination between certifying body and internal audit. Certification of accounts: there was no certificate issued for regional payment, finally audited by an external private auditor. But as in the case of FEGA there is no trace of reconciliation between the amounts claimed from the Commission (Table 104) on the basis of fundings (transfers to the regions) and the amounts audited at regional level. The same remark concerns also DGDR, paying agency from 16. 10. 1995 to 31. 12. 1995. CASTILE-LEON Consejeria de Agricultura y Ganaderia de la CA de Castilla León Regional paying agency from 1997, provisionally accredited from 16. 10. 1996. From 16. 4. 1997 (expiry of provisional accreditation) to 11. 9. 1997 (date of definitive accreditation) the paying agency operated without valid accreditation. Date of the Court’s visit: September 1997. some EDP weaknesses: despite improvements during 1997 there are still problems concerning separation of programmes, integration of databases and the need to update contingency plans. harmonisation functions, of Pre-payment checks/Payment security: payments were made despite on-the-spot inspection revealed that no payment should be made. C 389/22 EN Official Journal of the European Communities 14. 12. 98 Member State/Paying agency General remarks Observations on points of significant relevance FAGA (ANDALUSIA) Fondo Garantia Agraria Andaluz de Regional paying agency from 1997, accredited from 16. 10. 1996. Date of the Court’s visit: September 1997. FRANCE General remarks French paying agencies to all Services de´concentre´s du tre´sor et du ministe`re de l’agriculture, de la peˆche de l’alimentation CNASEA, SIDO, FIRS, ONILAIT, OFIVAL All paying agencies except ONIC IRELAND Reconciliation of accounts: Table 104 is based on information obtained from the Department for Economic and Financial Affairs but not on information contained in the accounts. Repayments are monitored by another unit, DAFA. Debtors ledger: incomplete. Internal audit: the auditors work on temporary contracts, their professional independence is not guaranteed. EDP security: contingency plan still not available. In total 10 of the 12 paying agencies were fully accredited from 16 October 1996. Accreditation for FIOM and ODEADOM was still provisional during 1997 because of ongoing systems and organisational weaknesses. Technical services: there were no written delegations for the control services undertaken by French customs on behalf of the paying agencies. For this paying agency the payments and accounting are carried out through 94 French departments which in fact can each be considered as a (non-accredited) paying agency because they carry out functions which, according to Regulation (EC) No 1663/95, cannot be delegated. According to the internal reports of the French inspection body (corps de contrôle du ministe`re de l’agriculture et du tre´sor) these paying agencies did not meet the accreditation criteria in full, they were nevertheless fully accredited from October 1996. None of the internal audit services except ONIC was operational in 1996, notably risk analysis and annual and five-year audit planning was missing. DAFF Agriculture, Forestry) (Department Food of and Sole paying agency for Ireland. Court’s audit: November 1997. Reconciliation of expenditure: at the moment of the Court’s audit visit in November 1997 the accounts reconciliation for expenditure procedure for public storage had only been carried out in respect of the first quarter of the EAGGF year. Weaknesses of procedures are notably reported in the context of beef intervention and related to the land parcel identification system. 14. 12. 98 EN Official Journal of the European Communities C 389/23 Member State/Paying agency General remarks Observations on points of significant relevance ITALY AIMA (Azienda di Stato per interventi nel gli mercato agricola) The paying agency is responsible for nearly all first and second category intervention and have been granted provisional accreditation since 28. 11. 1995. Date of the Court’s audit: March 1997. Payment system: improved system from July 1996, only from this date does it allow the verification of individual payments made to beneficiaries and the follow-up of cheques cashed. Internal audit was only operational in the middle of 1997. Check lists for pre payment checks: were not in use in 1996 and announced for July 1997. Delegated services: need to improve the monitoring of these services. Public storage: major weaknesses and absence of adequate controls on stocks, non respect of accreditation criteria in this area (in the meantime the Court has been informed about new procedures and improvements applicable from 1998 budget year). DCCC compartimentale per contabilità centralizzate) (Direzione le The agency is responsible for the management of export refunds. The paying agency was granted provisional accreditation from 16. 10. 1995 and was fully accredited from 1. 3. 1996. Date of the Court’s audit: March 1997. The paying agency did not take adequate action to improve the system during 1996. Export documents and laboratory documents were sent to the paying agencies by the exporters and not by the local customs offices. The internal audit service limited its activities to the follow up of payments at the level of DCCC but was not allowed to verify the activities of customs and laboratories. EDP: The new system was not operational for cereals and non-annex II products, there were also considerable payment delays. Check lists for pre-payment checks were still to be improved. Debtors ledger was not up to date (in the meantime the Court has been informed about new procedures and improvements applicable from 1998 budget year). LUXEMBOURG Ministry of Agriculture (Ministe`re de l’Agriculture de la viticulture et du de´veloppemtn rural) sole paying agency The in Luxembourg. Provisional accreditation for 1996, from 1997 full accreditation was granted. Court’s visit in May 1997. Check lists for pre payment checks: were not yet available, Debtors ledger incomplete (pending cases missing) Technical services: the EDP system does not register the results of inspections carried out. C 389/24 EN Official Journal of the European Communities 14. 12. 98 Member State/Paying agency General remarks Observations on points of significant relevance AUSTRIA AMA Austria) (Agrarmarkt The paying agency is responsible for most of the EAGGF measures in Austria. From 1996 the agency was full accreditation has been granted since July 1997. Audit visit of the Court: October 1997. provisionally accredited, of Regulation Debtors’ ledger: there is no debtors’ ledger in the sense 1663/95, quantification of outstanding recoveries for the FEOGA system being possible. New implemented and will be operational during 1998. (EC) No not Financial aspects: reconciliation problems between amounts claimed from EAGGF and the bank accounts. Delegated and technical services: monitoring by the paying agency shall be improved. EDP security (other than IACS measures) to be improved. Ministry of Agriculture, paying agency for wine (Bundesministerium für Land- und Forstwirtschaft, Abteilung VI/B/8, Zahlstelle Wein) Small paying agency dealing with measures in the wine sector. Fully accredited since February 1997. Court’s audit visit: October 1997. Certifying body: improvement of its organisational independence should be considered. Zollamt Salzburg Paying agency responsible for export refunds. Fully accredited since November 1995. Court’s audit visit: October 1997 Land Salzburg: Amt der Salzburger Landesregierung agency Paying co-financed responsible measures (forestation) in the Land of Salzburg. Provisional fully accredited on 20. 2. 1997. accreditation 21. 2. 1996, for Full accreditation was granted too early given the various weaknesses that existed at the time of the accreditation. The following points still need to be improved: Internal audit was operational only from 1997. Its task is limited to the verification at the level of the paying agency but does not include audit of technical services, such as customs offices. The organisation of the certifying body is not in line with the requirements of Regulation (EC) No 1663/95. Its organisational independence is not assured. The paying agency cannot directly monitor the quality of the delegated services, such as the technical services carried out by local customs stations. Internal audit: no activity during 1997 Separation of functions not assured. No separate pre-payment check by a second person (the check by the cashier is only a formal, not a material one). No permanent reconciliation of expenditure claimed with bank accounts. Dossiers on the aid cases sent back to the beneficiaries, but no copies kept and no proof of the sending back of the files available. Application of Article 4(4) of Regulation (EC) No 729/70 required. 14. 12. 98 EN Official Journal of the European Communities C 389/25 Member State/Paying agency General remarks Observations on points of significant relevance FINLAND Ministry of Agriculture and Forestry ja (Maa- metsätalousministeriö) SWEDEN The Ministry of Agriculture is the sole paying agency in Finland. Provisional accreditation was granted up to 15. 10. 1997 by a decision of the Ministry of Agriculture dated 12. 10. 1995. However, by a decision dated 29. 8. 1997 full accreditation was granted from 1. 9. 1997. Delegated services: the paying agency acts as paying agency although the 450 municipalities perform most of the administrative and control functions in respect of EAGGF aid schemes. The Court’s audit showed that control procedures at local level were not satisfactory to meet the requirements for payments in the context of EAGGF Guarantee. (Efforts have been undertaken during 1997 to improve the situation. ) Board Swedish Agriculture Jordbrugsverket - SJV) of (Svenska SJV is the sole Swedish paying agency. After provisional accreditation for 1996 budget year full accreditation was granted in October 1996, for the 1997 budget year. UNITED KINGDOM Intervention Board MAFF (Ministry of Agriculture) SOAD (Scotland) Three paying agencies were visited in the context of a specific audit of the Court in September 1997. For the paying agencies in the UK, the Intervention Board, acting also as coordinating body, provides statements of the monthly expenditure (Table 104) on the basis of undings. reconciliation problems with actual Severe expenditure exist. The observations on the accounting system concern therefore all paying agencies in the UK and not only the three units visited. Accreditation and the related audit by the national authorities was carried out in compliance with Regulation (EC) No 1663/95. Reconciliation of annual accounts 1996 was difficult (although possible), but the system should be more transparent. Major work is carried out at the level of the County councils. SJV should improve the monitoring of these units in the context of the per hectare aid for arable crops. The principal problems in the UK are problems of the accounting system: — failure to keep separate books of account, — the non-submission on the part of each paying agency of periodic summaries of expenditure including the Commission, the monthly declarations to — the lack of books of accounts recording the assets financed concerning debtors and the lack that all of effective procedures payments for which transfers are not executed, or cheques not cashed, or recoveries taken in are re-credited to the Commisison. to ensure As regards the paying agency SOAD the payments are carried out by the finance group (SOAFD) which does not have a separate book of accounts. The audit revealed, furthermore, weaknesses of monitoring administrative weaknesses in application of the IACS system. local offices and Note: The DAS missions to the Netherlands did not lead to specific remarks as regards accreditation and accounting with the exception of the paying agency LASER (weaknesses in the accounting system which did not allow the allocation of expenditure to sub-headings on a monthly basis. Global reconcilation was possible. System improved from 1997). Source: Post-audit letters of the Court of Auditors. Table 4 Analysis of the products of the certifying bodies C 3 8 9 2 6 / Member State Paying agency Certifying body Certification unqualified First certificate accepted Additional work requested Nature Reservation raised by the certifying body Segregation of duties Pre-payment checks Reconcilia- tion Debtors ledger EDP Internal audit Technical services Intervention stocks E N Yes No × BELGIUM BIRB DG 3 Wallonia Flanders Ernst & Young Ernst & Young Directorate budget No expenditure 1996 DENMARK EU Direktoratet Internal audit GERMANY BLE HH-Jonas MLR - Baden-Württemberg Internal audit Internal audit Internal audit STMELF - Bayern Internal audit STMELU - Bayern No expenditure claimed 1996 SEN-WIRT - Berlin Internal audit MELF - Brandenburg Internal audit SEN-WIRT - Bremen Internal audit BEH-WIRT - Hamburg Internal audit MILFN - Hessen Internal audit MELF - Mecklenburg-West Pomerania Internal audit LÖBF - Lower Saxony Internal audit LEJ - NRW (Land) LÖBF - NRW (Land) Ministry of Agriculture Ref. IB2 Ministry of Agriculture Ref. IB2 LWK Münster - NRW Ministry of Agriculture Ref. IB2 LWK Bonn - NRW Ministry of Agriculture Ref. IB2 MWVLW - Rheinland and Pfalz Internal audit MIUEV - Saarland Internal audit 2 2 5 4 4 4 4 4 4 4 4 4 4 4 4 4 5 5 5 5 4 4 No (6) Yes (9) No No Yes Yes Yes Yes Yes Yes Yes No Yes Yes (9) Yes Yes No Yes Yes (9) Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes (9) Yes (9) Yes (9) Yes (9) Yes (9) Yes (9) Yes Yes No Yes Yes Yes Yes Yes Yes No No Yes Yes (9) Yes Yes Yes Yes Yes (9) Yes (9) Yes (9) Yes Yes Yes × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × O f f i c i a l J o u r n a l o f t h e E u r o p e a n C o m m u n i t i e s × × × × ×. 1 4 1 2 9 8. Yes Yes Yes Yes Yes Yes No No No No Yes Yes Yes (9) Yes Yes (9) Yes Yes Yes Yes No Yes (9) Yes No No No No No Yes Yes Yes Yes Yes Yes Yes No No × × × × × × (1) × × × × × × × × × × × × × × × × STMELF - Saxony Prüfdienst MELF - Saxony-Anhalt Ref. 13 of the Ministry MELFF - Schleswig-Holstein M. N. +UMW. - Schleswig-Holstein LAND. VAMT - Thuringia Internal audit MELFF Innerev. MNU Ministry Agriculture GREECE: GE-DIDAGEP Moore Stephens SPAIN: FEGA DGDR FROM Ministerio de Economía Ministerio de Economía Ministerio de Economía Dep. Agr. - Catalonia Adm. de la Diputación Dep. Agr. - Basque Country Oficina de Control Dir. Agr. - Navarre Servicio Interno Dep. Agr. - Aragon No payment claimed 1996 Con. Agr. - Balearic Islands No payment claimed 1996 Con. Agr. - Valencia No payment claimed 1996 Con. Agr. - Canary Islands No payment claimed 1996 Dir. Agri. - Cantabria Con. Agr. - Galicia Con. Agr. - Murcia Con. Agr. - La Rioja No payment claimed 1996 No payment claimed 1996 No payment claimed 1996 No payment claimed 1996 Con. Agr. - Castile-La Mancha No payment claimed 1996 Con. Agr. - Extremadura Con. Agr. - Asturias Con. Agr. - Andalusia Con. Agr. - Castile-Leon Con. Agr. - Madrid No payment claimed 1996 No payment claimed 1996 No payment claimed 1996 No payment claimed 1996 No payment claimed 1996 4 4 4 4 5 2 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5. 1 4 1 2 9 8. E N O f f i c i a l J o u r n a l o f t h e E u r o p e a n C o m m u n i t i e s C 3 8 9 / 2 7 Member State Paying agency Certifying body Certification unqualified First certificate accepted Additional work requested Nature Reservation raised by the certifying body Segregation of duties Pre-payment checks Reconcilia- tion Debtors ledger EDP Internal audit Technical services Intervention stocks FRANCE: CNASEA FIOM FIRS Certifying body Certifying body Certifying body Services de´concentre´s Certifying body ODEADOM OFIVAL ONIC ONIFLOHR ONILAIT ONIVINS SAV SIDO Certifying body Certifying body Certifying body Certifying body Certifying body Certifying body Certifying body Certifying body IRELAND: DAFF Arthur Andersen ITALY: AIMA DCCC/Dog. IGFOR ENR LUXEMBOURG: Min. Agric. THE NETHERLANDS: DLB HPA LASER MVO PGF PPE (2) PVE (exPVV) PVI PZ STOAS Reconta Ernst & Young Raggioneria del Stato Raggioneria del Stato Coopers & Lybrand Ministry of Finance — inspectorate general Accountantsdienst ministerie Accountantsdienst ministerie Accountantsdienst ministerie Accountantsdienst ministerie Accountantsdienst ministerie Merged with PVE Accountantsdienst ministerie Accountantsdienst ministerie Accountantsdienst ministerie Accountantsdienst ministerie 5 5 5 5 5 5 5 5 5 5 5 5 2 2 5 5 2 5 5 5 5 5 5 5 5 5 5 5 Yes Yes Yes Yes Yes Yes Yes Yes Yes No Yes No No No No No No No No No No No No No No (6) Yes No Yes No Yes No No No No Yes No No No No Yes Yes Yes (9) Yes Yes (8) Yes Yes (9) No Yes No (7) Yes (8) Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes No Yes Yes Yes No No Yes No Yes No No Yes Yes No No × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × C 3 8 9 2 8 / E N O f f i c i a l J o u r n a l o f t h e E u r o p e a n C o m m u n i t i e s. 1 4 1 2 9 8. AUSTRIA: AMA BMLF-wine Internal audit of Ministry Internal audit of Ministry Ministry of finance Internal audit Prüf Buchhaltung ZA Salzburg Landesamt - Salzburg Landesamt - Tyrol Landesamt - Vorarlberg Gebarungskontrolle PORTUGAL: IFADAP INGA Inspeçao Geral Finanças Inspeçao Geral Finanças FINLAND: Ministry og Agriculture Coopers & Lybrand SWEDEN: SJV Court of auditors (RRV) UNITED KINGDOM: Countryside Commission Countryside Commission for Wales Forestry Commission IBEA MAFF DANI SOAD WOAD National Audit Office National Audit Office National Audit Office National Audit Office National Audit Office National Audit Office National Audit Office National Audit Office 5 5 5 4 5 4 5 5 2 3 3 3 3 3 3 3 3 3 Yes Yes Yes Yes Yes Yes No No Yes Yes Yes Yes Yes No No Yes No Yes No Yes Yes Yes Yes Yes Yes Yes Yes Yes n. d. n. d. n. d. n. d. n. d. n. d. n. d. n. d. Yes No No No Yes No Yes Yes Yes Yes No No No No No No No No × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × (1) Observation revised during on the spot audit, but not mentioned in the certificate. Key to ‘Nature of certifying body’: (2) External auditor. (3) National audit institution. (4) Internal audit division of the paying agency. (5) Other public body, e. g. accountancy service of the Ministry of Agriculture. Key to ‘Qualified’ certification: (6) Qualified-limitation on scope. (7) Adverse. Key to ‘Accepted certificate’: (8) Audit certificate accepted but financial consequences. (9) Audit certificate accepted but reserves. Source: Court of Auditors, based on assessment of supporting documents of the Commission. 1 4 1 2 9 8. E N O f f i c i a l J o u r n a l o f t h e E u r o p e a n C o m m u n i t i e s C 3 8 9 / 2 9 Financial corrections for the non-respect of payment deadlines 1996 Table 5 Budget item Belgium national currency Denmark national currency Germany national currency Greece national currency Spain national currency France national currency Ireland national currency Italy national currency Portugal national currency United Kingdom national currency Total (1) ECU B01-1 0 2 9-041 Other interventions - special aid to Portugal B01-1 0 4 0-003 Small products, maize, 1995/1996 B01-1 0 4 1-002 Small products, cereals, 1994/1995 B01-1 0 4 1-003 Small products, cereals, 1995/1996 B01-1 0 4 2-012 Small products, oil seeds 1994/1995 B01-1 0 5 1-001 Cereals, 1993/1994 B01-1 0 5 1-002 Cereals, 1994/1995 B01-1 0 5 2-003 Oil seeds, 1995/1996 B01-1 0 5 2-012 Oil seeds, 1994/1995 B01-1 0 5 3-002 Peas, beans, lupins, 1994/1995 B01-1 0 5 5-001 Durum wheat, 1993/1994 B01-1 0 5 5-002 Durum wheat, 1994/1995 B01-1 0 6 0-001 Set aside, 1993/1994 B01-1 0 6 0-002 Set aside, 1994/1995 B01-1 2 1 0-061 Products, aid olive oil, 1994/1995 B01-1 2 1 0-070 Products, aid olive oil, 1993/1994 B01-1 2 1 0-071 Products, aid olive oil, 1994/1995 B01-1 2 1 0-114 Products, aid olive oil, 1993/1994 B01-1 2 1 0-134 Products, aid olive oil, 1993/1994 B01-1 2 1 0-144 Products, aid olive oil, 1994/1995 21 675 941,00 31 134 395,00 294 708,02 4 469 108,00 22 841,43 25 211,51 30 235,79 24 038 232,00 3 363 927,00 52 310 851,00 565 382 379,00 2 902 766,92 150 357,36 21 039,48 133 308,57 487 401,53 1 184 215,45 141 661 209,00 76 179 738,00 1 437 527,52 87 693 128,00 448 195,97 5 664 759,00 10 356 687,00 78 184 726,00 1 964 905,00 46 237 735,00 35 425,83 64 780,31 488 978,67 12 284,93 289 213,60 79 918 681,00 106 078 664,00 402 298 735,00 1 127 353,61 5 576 199,00 3 866 238,00 3 527 162,00 114 628 395,00 2 735 426 935,00 34 870,08 18 027,18 57 675,82 1 376 343,14 12 570,11 C 3 8 9 3 0 / E N O f f i c i a l J o u r n a l o f t h e E u r o p e a n C o m m u n i t i e s. 1 4 1 2 9 8. B01-1 6 1 0-008 Priv. storage wine, 1994/1995 B01-1 6 1 0-017 Priv. storage grape must, 1993/1994 B01-1 6 1 0-018 Priv. storage grape must, 1994/1995 B01-1 8 0 0-014 Seeds, legumes, 1995 B01-2 0 6 7-002 Milk quotas, temp. susp. , 1988/1989 B01-2 1 2 0-010 Suckler cows, 1993 5 193 131,00 5 731 932,00 129 941 962,00 4 105 671,00 105 000,78 153 277 095,00 361 443 635,00 261 262 473,00 77 122,10 181 862,09 131 460,27 53 460,19 24 282 936,00 573 377,33 8 546 894,00 50 656 449,00 B01-2 1 2 0-011 Suckler cows, 1994 B01-2 1 2 0-012 Suckler cows, 1995 B01-2 1 2 1-110 Suckler cows, supplementary, 1993 B01-2 1 2 1-111 Suckler cows, supplementary, 1994 B01-2 1 2 1-112 Suckler cows, supplementary, 1995 B01-2 1 2 2-007 Special beef premiums, 1993 B01-2 1 2 2-008 Special beef premiums, 1994 B01-2 1 2 5-001 Extensive premiums, 1993 B01-2 1 2 5-002 Extensive premiums, 1994 B01-2 1 2 5-003 Extensive premiums, 1994 B01-2 1 2 7-001 Complementary premiums, Portugal, 1993 B01-2 1 2 7-003 Complementary premiums, Portugal, 1994 B01-2 2 2 0-020 Ewe and goat premiums, 1994 B01-3 8 0 2-006 Cotton, small producers, 1994/1995 B01-3 8 0 4-003 Suckler cows, mixed h. , 1992/1993 747 008,46 11 255 550,00 380 411 386,00 1 275 279 338,00 3 163 185,55 70 851 799,00 363 015,77 28 781 609,00 119 101 688,00 145 813,85 338 601 050,00 143 650,19 180 026,83 939 719,02 22 038,83 124 642,27 45 767 060,00 8 514 280,00 395 403,45 6 710 725,00 371 185 885,00 210 461,69 68 077 657,00 201 090,30 3 995 184,00 694 321,63 258 274,20 171 099,84 13 424 888,00 167 661 204,00 1 058 450,04 752 406 813,00 2 905 342,18 13 417 190,00 68 735,85 2 924 931,00 14 955,12 8 415 172,00 43 107,84 20 636,93 87 499,89 20 358,81 6 347 383,00 13 988 957,00 3 254 844,00. 1 4 1 2 9 8. E N O f f i c i a l J o u r n a l o f t h e E u r o p e a n C o m m u n i t i e s C 3 8 9 / 3 1 Budget item Belgium national currency Denmark national currency Germany national currency Greece national currency Spain national currency France national currency Ireland national currency Italy national currency Portugal national currency United Kingdom national currency Total (1) ECU B01-3 8 0 4-004 Suckler cows, mixed h. , 1993 B01-3 8 0 4-005 Suckler cows, mixed h. , 1994 B01-3 8 0 4-006 Suckler cows, mixed h. , 1995 B01-3 8 0 5-020 Ewe premiums, disadvantaged regions, 1994 53 944 048,00 13 208,06 353 788,03 106 639 494,00 2 020 935 311,00 19 162,95 1 729 509,55 34 703 050,00 4 040 764,00 8 147 139,00 214 497,02 63 742,20 Total 5 193 131,00 2 189 498,11 295 742,11 131 296 161,00 1 586 795 314,00 289 464,04 1 272 748,40 8 916 687 627,00 904 893 073,00 177 683,03 21 925 226,26 of which to be refused 1/9-15/10/1996 1 758 745,00 19 248,17 12 416,81 339 541,00 53 961 111,00 74 301,19 29 171,35 2 317 922 416,00 568 338 320,00 5 894,02 ECU per Member State 132 382,14 299 672,89 155 917,01 426 893,11 9 920 908,82 44 423,07 1 569 165,74 4 523 147,22 4 639 208,82 213 507,43 21 925 226,26 (1) No corrections were made for Luxembourg, the Netherlands, Austria, Sweden and Finland. Source: Working document of the Commission. C 3 8 9 3 2 / E N O f f i c i a l J o u r n a l o f t h e E u r o p e a n C o m m u n i t i e s. 1 4 1 2 9 8. Table 6 Overview of the financial corrections Member State Correction for late payment, (see Table 5) (*) Correction following decision of 14/7/1997, DG VI G2 (*) Other correction (*) Total Total included in the clearance decision National currency million ECU (4) National currency million ECU (4) Belgium Denmark Germany Greece Spain France Ireland Italy Luxembourg The Netherlands Austria Portugal Finland Sweden − 5 193 131,00 0,00 − 2 189 498,11 − 2 873 870,96 (1) 0,00 0,00 − 5 193 131,00 − 5 063 369,07 − 295 742,11 0,00 545,82 − 295 196,29 − 0,13 − 0,68 − 0,16 − 5 193 131,00 − 2 189 498,11 − 295 196,29 − 131 296 161,00 − 1 577 481 460,00 − 8 802 781 904,00 − 10 511 559 525,00 − 33,94 − 10 511 559 525,00 − 1 586 795 314,00 0,00 − 289 464,04 − 2 540 376,36 − 1 272 748,40 0,00 − 8 916 687 627,00 − 41 350 131 560,00 (2) 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 − 1 586 795 314,00 − 2 829 840,40 − 1 272 748,40 − 9,92 − 0,43 − 1,57 − 1 586 795 314,00 − 2 829 840,00 − 1 272 748,00 − 50 266 819 187,00 − 26,00 − 8 083 763 077,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 − 904 893 073,00 − 2 241 439,00 − 495 713 712,00 − 1 402 848 224,00 (3) − 7,13 − 1 402 848 224,00 0,00 0,00 United Kingdom − 177 583,03 TOTAL 0,00 0,00 0,00 0,00 0,00 0,00 0,00 2 383 253,79 2 205 670,76 0,00 0,00 2 205 670,76 0,00 0,00 2,63 − 77,33 (1) The financial correction of 14. 7. 1997 for Denmark was not included in the accounts clearance decision. (2) Only JTL 8 083 763 077 were included in the clearance decision beacause of a modification made by the division DGVIA1. (3) Furthermore, a claim for interest of PTE 294 990 678 was not accepted. (4) Exchange rates for the advance payments during 1996 (if appropriate) and rates applicable for the clearance decision. (*) Amounts in national currency. Source: Court of Auditors and working documents of the Commission. − 0,13 − 0,30 − 0,16 − 33,94 − 9,92 − 0,43 − 1,57 − 4,10 0,00 0,00 0,00 − 7,13 0,00 0,00 2,63 − 55,05. 1 4 1 2 9 8. E N O f f i c i a l J o u r n a l o f t h e E u r o p e a n C o m m u n i t i e s C 3 8 9 / 3 3 Expenditure claimed for 1996 per paying agency and approved by the Commission Table 7 Member State Paying agency Annual declaration Expenditure cleared in Decision of 5 May 1997 (*) Decision of 30 July 1997 (*) Adjustments (1) (*) Adjusted cleared expenditure (*) Financial correction (2) (*) Total, including reductions and suspensions (*) Advances paid Amounts to be recovered from (−) or paid to (+) Member States National currency ECU National currency ECU 1 2 3 4 (= 1 + 2 + 3) 5 6 (= 4 + 5) 7 8 9 (= 6 − 7) 10 BELGIUM BIRB DG 3 32 341 253 774,00 12 346 613 231,00 Region Wallone 17 571 955,00 Waamse Gemeenschap 0,00 Total - Belgium 44 705 438 960,00 DENMARK EU Direkt. GERMANY BLE HH-Jonas MLR - Baden-Württemberg 9 908 565 701,48 1 599 644 495,25 1 923 631 859,40 616 078 966,66 STMELF - Bayern 1 453 144 674,77 STMELU - Bayern 0,00 SEN-WIRT - Berlin 4 015 368,83 MELF - Brandenburg 612 067 461,18 SEN-WIRT - Bremen BEH-WIRT - Hamburg 2 859 580,76 6 091 492,28 MILFN - Hessen 341 100 538,40 MELF - Mecklenburg-West Pomerancia 743 462 197,40 LÖBF - Lower Saxony 1 088 116 097,90 17 998 116,45 240 189,75 170 281 130,98 510 619 278,95 LEJ - NRW (Land) LÖBF - NRW (Land) LWK Münst - NRW (Westphalia) LWK Bonn - NRW (Rheinland) MWVLW - Rheinland and Pfalz MIUEV - Saarland STMELF - Saxony 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 32 341 253 774,00 −5 193 131,00 32 336 060 643,00 32 337 819 388,00 828 376 095,52 −1 758 745,00 −43 534,91 12 346 613 231,00 0,00 12 346 613 231,00 12 346 613 231,00 316 736 007,51 0,00 0,00 17 571 955,00 18 860 494,00 480 081,98 −1 288 539,00 −31 895,71 0,00 0,00 0,00 0,00 0,00 0,00 0,00 44 705 438 960,00 −5 193 131,00 44 682 673 874,00 44 703 293 113,00 1 145 592 185,00 −3 047 284,00 −75 430,62 9 908 565 701,48 −2 189 498,11 9 906 376 203,37 9 906 470 474,62 1 355 749 397,61 −94 271,25 −12 647,80 1 599 644 495,25 −12 416,81 1 599 632 078,44 1 600 319 235,49 840 382 971,70 −687 157,05 −351 025,53 1 923 631 859,40 545,82 1 923 632 405,22 1 923 551 363,87 1 012 927 084,49 81 041,35 41 398,95 616 078 966,66 −26 187,34 616 052 779,32 616 052 779,32 326 109 639,67 1 453 144 674,77 0,00 4 015 368,83 612 067 461,18 2 859 580,76 0,00 0,00 0,00 0,00 0,00 1 453 144 674,77 1 453 144 674,77 769 036 218,05 0,00 0,00 0,00 4 015 368,83 4 015 368,83 2 110 863,08 612 067 461,18 612 067 461,18 323 996 866,62 2 859 580,76 2 859 580,76 1 508 047,94 6 091 492,28 −2 754,57 6 088 737,71 6 088 737,71 3 204 302,54 341 100 538,40 −52 671,32 341 047 867,08 341 047 867,08 180 395 853,00 743 462 197,40 0,00 743 462 197,40 743 462 197,40 393 379 678,84 1 088 116 097,90 −93 669,95 1 088 022 427,95 1 088 022 427,95 576 182 020,59 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 17 998 116,45 240 189,75 0,00 0,00 17 998 116,45 240 189,75 0,00 0,00 0,00 0,00 17 998 116,45 9 194 111,30 240 189,75 122 697,91 170 281 130,98 −26 854,52 170 254 276,46 699 158 885,98 370 740 820,54 −528 904 609,52 −270 184 263,92 510 619 278,95 0,00 510 619 278,95 0,00 0,00 510 619 278,95 260 843 432,90 0,00 255 448 030,59 255 448 030,59 −9 376,39 255 438 654,20 255 438 654,20 135 025 110,58 26 601 332,68 0,00 26 601 332,68 −1 372,17 26 599 960,51 26 599 960,51 14 035 002,95 0,00 531 839 110,29 531 839 110,29 −4 449,42 531 834 660,87 531 834 660,87 281 684 755,12 MELF - Saxony-Anhalt 671 235 554,96 MELFF - Schleswig- Holstein M. N. +UMW - Schleswig-Holstein 484 657 952,66 2 121 469,83 0,00 0,00 0,00 671 235 554,96 −1 412,60 671 234 142,36 671 234 142,36 355 855 695,64 484 657 952,66 −50 937,44 484 607 015,22 484 607 015,22 256 593 462,00 2 121 469,83 0,00 2 121 469,83 2 121 469,83 1 125 008,52 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 C 3 8 9 3 4 / E N O f f i c i a l J o u r n a l o f t h e E u r o p e a n C o m m u n i t i e s. 1 4 1 2 9 8. LAND. VAMT - Thuringia Previous years’ clearance of accounts 469 769 255,27 −86 937 734,08 0,00 0,00 469 769 255,27 −13 639,58 469 755 615,69 469 755 615,69 248 606 352,24 −86 937 734,08 0,00 −86 937 734,08 −86 937 734,08 −45 417 505,10 0,00 0,00 0,00 0,00 Total - Germany 10 656 799 280,28 787 287 140,88 11 444 086 421,16 −295 196,29 11 443 791 224,87 11 444 444 364,94 6 047 482 249,02 −653 140,07 −333 648,39. 1 4 1 2 9 8. 0,00 865 918 604 800,00 −148 393 325,00 865 770 211 475,00 −10 511 559 525,00 855 258 651 950,00 856 984 866 276,00 2 787 533 983,47 −1 726 214 326,00 −5 556 728,69 0,00 0,00 0,00 673 384 888 619,00 10 219 598,00 673 395 108 217,00 −1 585 066 308,00 671 810 041 909,00 672 068 754 580,00 4 196 401 817,77 −258 712 671,00 6 941 503 608,00 316 100 610,00 6 941 503 608,00 316 100 610,00 0,00 0,00 6 941 503 608,00 6 936 621 636,00 43 560 735,80 4 881 972,00 316 100 610,00 316 100 610,00 1 952 757,37 −354 809,84 29 437,13 E N −46 636 438 601,00 0,00 −46 636 438 601,00 0,00 −46 636 438 601,00 −46 636 438 601,00 −288 489 982,79 0,00 11 525 459 389,00 11 525 459 389,00 −1 729 006,00 11 523 730 383,00 11 523 730 383,00 71 228 586,97 1 797 547 846,00 1 792 738 680,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 1 797 547 846,00 1 792 738 680,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 1 797 547 846,00 1 797 547 846,00 11 138 581,70 1 792 738 680,00 1 792 738 680,00 11 097 431,72 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 GREECE GE-DIDAGEP SPAIN: FEGA DGDR FROM Previous years’ clearance of accounts Dep. Agr. - Catalonia (3) Dep. Agr. Country Dir. Agr. Dep. Agr. Con. Agr. Islands (3) - Basque - Navarre - Aragon (3) - Balearic Con. Agr. - Valencia (3) Con. Agr. Islands (3) - Canary Dir Agri Con. Agr. Con. Agr. Con. Agr. - Cantabria (3) - Galicia (3) - Murcia (1) - La Rioja (3) Con. Agr. Mancha (3) - Castile-La Con. Agr. Extremadura (3) - Con. Agr. - Asturias (3) Con. Agr. - Andalusia (3) Con. Agr. Castile-Leon (3) - Con. Agr. - Madrid (3) Total - Spain −43 046 152 075,00 692 167 952 226,00 10 219 598,00 649 132 019 749,00 −1 586 795 314,00 647 545 224 435,00 647 799 055 134,00 4 046 889 928,54 −253 830 699,00 −325 372,71 FRANCE: CNASEA FIOM FIRS Services de´concentre´s ODEADOM OFIVAL ONIC ONIFLOHR ONILAIT ONIVINS SAV SIDO 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 1 442 996 452,21 69 368 968,46 3 385 949 767,33 5 710 637 098,07 478 793 340,93 8 098 706 668,68 24 949 681 613,01 1 919 404 772,25 5 599 248 432,57 630 326 015,17 584 106 726,12 9 594 423 526,29 Previous years’ clearance of accounts. −479 811 600,91 0,00 1 442 996 452,21 69 368 968,46 3 385 949 767,33 0,00 0,00 0,00 1 442 996 452,21 1 443 852 716,85 222 326 433,16 −856 264,64 −130 128,87 69 368 968,46 69 368 968,46 10 690 704,68 3 385 949 767,33 3 385 949 767,33 521 911 256,00 0,00 0,00 0,00 0,00 5 710 637 098,07 −289 464,04 5 710 347 634,03 5 703 068 009,55 880 062 886,06 7 279 624,48 1 106 304,39 478 793 340,93 8 098 706 668,68 24 949 681 613,01 1 919 404 772,25 0,00 0,00 0,00 0,00 478 793 340,93 478 793 340,93 73 808 467,95 0,00 0,00 8 098 706 668,68 8 098 491 505,83 1 247 927 025,91 215 162,85 32 698,89 24 949 681 613,01 24 949 681 613,01 3 849 947 377,15 1 919 404 772,25 1 919 404 772,25 295 847 651,96 0,00 0,00 0,00 0,00 5 599 248 432,57 −2 540 376,36 5 596 708 056,21 5 599 248 432,57 863 611 543,30 −2 540 376,36 −386 067,92 630 326 015,17 584 106 726,12 9 594 423 526,29 −479 811 600,91 0,00 0,00 0,00 0,00 630 326 015,17 630 324 137,41 97 142 627,53 1 877,76 285,37 584 106 726,12 584 106 726,12 90 067 907,95 9 594 423 526,29 9 594 423 526,29 1 478 292 033,08 −479 811 600,91 −479 811 600,91 −74 008 224,45 0,00 0,00 0,00 0,00 0,00 0,00 Total - France −479 811 600,91 62 463 643 381,09 61 983 831 780,18 −2 829 840,40 61 981 001 939,78 61 976 901 915,69 9 557 627 690,27 4 100 024,09 623 091,84 O f f i c i a l J o u r n a l o f t h e E u r o p e a n C o m m u n i t i e s C 3 8 9 / 3 5 Member State Paying agency Annual declaration Expenditure cleared in Decision of 5 May 1997 (*) Decision of 30 July 1997 (*) Adjustments (1) (*) Adjusted cleared expenditure (*) Financial correction (2) (*) Total, including reductions and suspensions (*) Advances paid Amounts to be recovered from (−) or paid to (+) Member States National currency ECU National currency ECU 1 2 3 4 (= 1 + 2 + 3) 5 6 (= 4 + 5) 7 8 9 (= 6 − 7) 10 IRELAND: DAFF ITALY: AIMA DCCC/Dog. Ministry of Agric. - other (4) ENR IGFOR Previous years’ clearance of accounts 1 357 589 858,65 0,00 1 357 589 858,65 −1 272 748,40 1 356 317 110,25 1 364 455 544,68 1 699 515 507,34 −8 138 434,43 −10 774 103,33 0,00 8 681 647 954 929,00 8 681 647 954 929,00 −8 083 763 077,00 8 673 564 191 852,00 8 637 884 829 507,00 4 291 612 634,47 35 679 362 345,00 18 356 877,05 0,00 675 602 631 178,00 675 602 631 178,00 0,00 675 602 631 178,00 675 602 946 398,00 340 803 499,03 −315 220,00 −162,64 0,00 1 895 331 293,00 1 895 331 293,00 17 215 685 525,00 0,00 0,00 352 434 367 507,00 17 215 685 525,00 352 434 367 507,00 0,00 0,00 0,00 1 895 331 293,00 1 895 331 293,00 977 907,43 17 215 685 525,00 17 215 685 525,00 8 824 348,14 352 434 367 507,00 352 434 367 507,00 171 810 740,59 0,00 0,00 0,00 0,00 −1 149 369 727 187,00 0,00 −1 149 369 727 187,00 0,00 −1 149 369 727 187,00 −1 148 426 860 350,00 −593 189 481,34 −942 866 837,00 −487 012,90 Total - Italy −1 132 154 041 662,00 9 711 580 284 907,00 8 579 426 243 245,00 −8 083 763 077,00 8 571 342 480 168,00 8 534 710 968 587,00 4 219 861 740,89 36 631 511 581,00 18 847 608,94 LUXEMBOURG: Min. Agric. THE NETHERLANDS: DLB (LLB/LBL) HPA LASER MVO PGF PPE (2) PVE (exPVV) PVI PZ STOAS LEF - Clearance 767 426 497,00 10 968 098,16 802 434 672,00 828 715 021,70 161 026,52 24 457 208,21 0,00 447 624 251,84 320 777,49 1 141 416 566,58 5 664 614,50 4 503 695,10 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 767 426 497,00 0,00 767 426 497,00 767 426 497,00 19 706 980,78 0,00 0,00 10 968 098,16 802 434 672,00 −387 953,00 828 327 068,70 −23 722,00 24 433 486,21 161 026,52 0,00 447 624 251,84 320 777,49 1 141 416 566,58 5 664 614,50 4 503 695,10 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 10 968 098,16 11 224 859,61 5 253 378,42 −256 761,45 −116 587,33 802 434 672,00 802 434 672,00 377 445 801,03 0,00 0,00 828 327 068,70 828 743 332,10 389 174 142,59 −416 263,40 −189 012,17 161 026,52 161 026,52 75 706,91 0,00 0,00 24 433 486,21 24 467 809,60 11 513 536,96 −34 323,39 −15 585,18 0,00 0,00 0,00 447 624 251,84 447 624 251,84 210 292 540,96 320 777,49 320 777,49 149 912,94 0,00 0,00 0,00 0,00 0,00 0,00 1 141 416 566,58 1 141 427 352,14 536 759 933,29 −10 785,56 −4 897,39 5 664 614,50 4 503 695,10 5 664 614,50 2 633 424,61 4 503 695,10 2 102 388,73 0,00 0,00 0,00 0,00 Total - Netherlands 3 266 265 932,10 0,00 −411 675,00 3 265 854 257,10 0,00 3 265 854 257,10 3 266 572 390,90 1 535 400 766,44 −718 133,80 −326 082,07 AUSTRIA: AMA BMLF-wine ZA Salzb. Landesamt - Land Salzb. Landesamt - Land Tirol Landesamt- Land Vorarlberg 15 263 275 084,19 36 579 740,69 935 145 372,00 3 839 076,75 4 840 106,00 2 029,00 Total - Austria 16 243 681 408,63 0,00 0,00 0,00 0,00 0,00 0,00 0,00 15 263 275 084,19 36 579 740,69 935 145 372,00 3 839 076,75 4 840 106,00 2 029,00 0,00 0,00 0,00 0,00 0,00 0,00 15 263 275 084,19 15 250 943 164,42 1 139 064 104,87 12 331 919,77 895 102,73 36 579 740,69 36 579 740,69 2 727 937,07 935 145 372,00 935 145 372,00 69 795 783,59 0,00 0,00 0,00 0,00 3 839 076,75 4 840 106,00 4 007 274,50 4 840 106,00 295 414,97 357 169,51 2 029,00 2 029,00 149,58 −168 197,75 −12 208,50 0,00 0,00 0,00 0,00 16 243 681 408,63 0,00 16 243 681 408,63 16 231 517 686,61 1 212 240 559,59 12 163 722,02 882 894,23 PORTUGAL: IFADAP INGA Declaration interest 0,00 0,00 0,00 13 771 836 169,00 113 665 949 104,00 13 771 836 169,00 0,00 13 771 836 169,00 13 771 836 169,00 70 352 867,90 0,00 0,00 113 665 949 104,00 −1 402 848 224,00 112 263 100 880,00 112 833 680 639,00 575 040 733,77 −570 579 759,00 −2 877 223,23 294 990 678,00 −294 990 678,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 Total - Portugal 0,00 127 732 775 951,00 −294 990 678,00 127 437 785 273,00 −1 402 848 224,00 126 034 937 049,00 126 605 516 808,00 645 393 601,67 −570 579 759,00 −2 877 223,23 C 3 8 9 3 6 / E N O f f i c i a l J o u r n a l o f t h e E u r o p e a n C o m m u n i t i e s. 1 4 1 2 9 8. FINLAND: Ministry of Agriculture 3 704 810 041,77 SWEDEN: SJV 5 355 212 599,94 0,00 0,00 3 704 810 041,77 0,00 3 704 810 041,77 3 704 831 777,93 647 495 805,87 −21 736,16 −3 688,94 5 355 212 599,94 0,00 5 355 212 599,94 5 355 212 599,94 622 209 998,04 0,00 0,00. 1 4 1 2 9 8. UNITED KINGDOM: Countryside Commission (5) Countryside Commission for Wales (5) Forestry Commission (5) Intervention Board (5) MAFF - England (5) DANI - North. Ireland (5) SOAFD - Scotland (5) WOAD - Wales (5) 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 2 154 248,54 −4 488,00 2 149 760,54 964 112,04 0,00 964 112,04 15 666 652,45 −234 773,00 15 431 879,45 0,00 0,00 0,00 2 149 760,54 964 112,04 15 431 879,45 0,00 0,00 0,00 0,00 0,00 0,00 2 149 760,54 3 123 889,59 964 112,04 1 400 983,74 E N 15 431 879,45 22 424 584,83 612 597 345,29 −2 552 006,73 610 045 338,56 2 205 570,76 612 250 909,32 2 878 415 943,20 3 468 153 594,18 −2 266 165 033,88 −3 293 040 889,99 1 545 410 049,64 −451 313,28 1 544 958 736,36 149 086 524,95 −129 536,83 148 956 988,12 366 567 011,60 −3 775 302,92 362 791 708,68 180 132 777,16 −264 445,75 179 868 331,41 0,00 0,00 0,00 0,00 1 544 958 736,36 148 956 988,12 362 791 708,68 179 868 331,41 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 1 544 958 736,36 2 245 031 679,57 148 956 988,12 216 454 426,49 362 791 708,68 527 184 875,49 179 868 331,41 261 372 742,63 Total - UK 0,00 2 872 578 721,67 −7 411 866,51 2 865 166 855,16 2 205 570,76 2 867 372 425,92 2 878 415 943,20 3 468 153 594,18 −11 043 517,28 −16 047 707,66 TOTAL - COMMUNITY 39 010 853 988,73 −15 979 038,42 (1) Adjustments for accounting corrections. (2) Modifications, reductions and suspensions for the whole financial year. (3) No paying agency in 1996, corresponding amounts included in claim of FEGA. (4) (5) Monthly advances cannot be allocated to individual paying agencies because there were only golbal declarations / payments made. Italian Ministry of Agriculture is not accredited as paying agency. Note: For amounts to be recovered the ecu values are partly approximate because the rates applicable for the last instalment are not yet fixed. (*) Amounts in national currency. Source: Work of the Court of Auditors from miscellaneous documents of the Commission. O f f i c i a l J o u r n a l o f t h e E u r o p e a n C o m m u n i t i e s C 3 8 9 / 3 7 C 389/38 EN Official Journal of the European Communities 14. 12. 98 COMMISSION’S REPLIES GENERAL COMMENTS The Court’s report concerns the clearance of accounts in the first year of the reform of the clearance of accounts procedure (1). Inevitably, difficulties were experienced in the first year of a major reform. Certain paying agencies took a long time to make the changes required to meet the accreditation criteria listed in the Annex to Regulation (EC) No 1663/95. A very small number failed to prepare their accounts in time for the deadlines. Certain certifying bodies failed to complete their audits by the deadlines or performed audit work which was insufficient in volume or scope. During most of this first year, the Commission monitored the Member States’ accreditation procedures particularly closely. They ensured that the criteria were being uniformly applied, and that paying agencies were putting the requisite, often very substantial, improvements in place within reasonable time limits, as laid down by Article 4(4) of Regulation No 729/70. From the end of the first year, the Commission concentrated more on monitoring the work of the certification bodies. They ensured that all worked to high professional standards, that a uniform level of audit work was being performed, and that the financial effect of the auditors’ findings was being evaluated. They insisted that the required audit work be completed before agreeing to propose that the accounts concerned be cleared, with the result that the accounts of many paying agencies could not be cleared until three months after the Regulation time limit. The very considerable efforts made by all concerned in the Member States, and by the Commission, bore fruit in 1997, when virtually all paying agencies were fully accredited, all accounts and reports were received in good time and all accounts were cleared within the time limit. In 1998, the Commission continues to give the highest priority to ensuring the continued success of the reform, in the expectation that the improved controls will result in a high level of compliance with Community rules, and in as low a rate of irregularity as can be expected in the complex environment of the CAP. EXECUTIVE SUMMARY The reformed procedure requires each paying agency to assume full responsibility for the payments it executes and to ensure that claims are properly checked before authorisation. If, for reasons peculiar to the Member State concerned, a paying agency cannot discharge this responsibility in respect of any category of expenditure, then the department which can discharge it must be designated as paying agency and must satisfy the accreditation criteria. As a result of the reform, the control structures in each Member State are less fragmented and far more transparent, and the responsibilities of each department concerned are now clearly defined. This does not mean that there is no further scope for reduction in the number of paying agencies, and the Commission will encourage Member States to keep to the lowest possible number. (1) Regulation (EC) No 1287/95 of 22 May 1995 (OJ L 125, 8. 6. 1995) amending Council Regulation (EEC) No 729/70, and Commission Regulation (EC) No 1663/95 of 7 July 1995 (OJ L 158, 8. 7. 1995). 14. 12. 98 EN Official Journal of the European Communities C 389/39 The Commission insists that in their subsequent year’s audit report the certification bodies follow up the corrective measures required of each paying agency and, if a risk of loss to the Fund persists, it will take an appropriate decision under the compliance procedure. In the audits of the 1997 accounts, many of the shortcomings were found to have been remedied. The Member States showed a much higher level of compliance with the legal requirements in the procedure for clearing the 1997 financial year, and the accounts of virtually all the paying agencies were cleared within the time limits. The guidelines to which the Court refers were discussed with representatives of each Member State in September 1996, in reasonably good time to assist the auditors. The Commission’s close monitoring of the accreditation procedures had until then prevented attention being devoted to the certification procedure. Shortcomings detected in relation to compliance with the accreditation criteria do not, in themselves, prevent the Commission from clearing the paying agencies’ accounts. Deadlines must be set by which each paying agency concerned must take corrective action, any irregularities occasioned by the failures must be recovered and any financial consequences will be drawn in a later compliance decision under Article 5(2)(c) of Regulation (EEC) No 729/70. The Member States continuously submit new information which leads to adjustments in the amounts of correction applied at each stage of the various procedures. The Commission closely monitors the effectiveness of the corrective measures required of each paying agency and recovery of any undue payments occasioned by the shortcomings. If a risk of loss to the Fund persists, it will take an appropriate decision under the compliance procedure. Many of the shortcomings have been found to have been remedied. 2. ACCREDITATION OF PAYING AGENCIES Structural development of paying agencies 2. 1 to 2. 3. The Commission regrets that not all paying agencies had been accredited by the Member States by 16 October 1995, the day on which the reform took effect. To refuse payments to paying agencies that had not met this deadline would, however, have been disproportionate to the desired effect. The Commission considered that it was more important that the review of procedures prior to accreditation was properly carried out, even if it meant that formal accreditation was granted later than strictly required. received accounting Before the reform, many paying agencies merely from centralised information departments or bodies over which they had no powers of control or enquiry (those in Greece, Spain, Italy and the UK in particular). The Court itself reported on this (AR 1990). The reformed unsatisfactory situation procedure requires each paying agency to assume full responsibility for the payments it executes and to ensure that claims are properly checked before authorisation. If for reasons peculiar to the Member State concerned, a paying agency cannot discharge this responsibility in respect of any category of expenditure, then a department which can discharge it must be designated as paying agency and must satisfy the accreditation criteria. In Germany and Spain, for example, the constitution gives the regional governments autonomous powers which must be respected by national government departments. The paying agencies established at national level cannot assume responsibility for claims administered by the regional authorities, so these regions are required to designate departments which this responsibility. They must ensure that the departments concerned comply with the accreditation criteria and that their annual accounts are certified. In order to meet the objective of keeping the number of paying agencies down to a strict minimum, each Member State is, however, encouraged to designate only one paying agency in each independent region. take on can As a result of the reform, the control structures in each Member State are now less fragmented and far more transparent and the responsibilities of each department concerned are now clearly defined. This does not mean that there is no further scope for reduction in the number of paying agencies, and the Commission will encourage Member States to keep to the lowest possible number. C 389/40 EN Official Journal of the European Communities 14. 12. 98 2. 4. Each Member State has developed different structures for the implementation and control of EAGGF Guarantee schemes. As far as possible, the Commission has attempted to accommodate these different structures, provided the objectives laid down in the accreditation guidelines are met. allow agencies which 2. 5. The Commission accepted the accreditation of the by paying imprest-account holders only on condition that the amounts concerned are limited, and that the central department could issue binding instructions, would keep detailed central accounts and was in a position to supervise its technical departments and by internal audit. implementation both through payments separate departments be created to undertake internal audits and the certification of accounts. In all such cases, the Commission required additional assurances from the Member States as to the independence of the departments certifying the accounts. So far, there has been no evidence of certifying bodies, in their reports, giving a biased view of the situation as regards the accounts and the proper functioning of such paying agencies. The Commission has followed the work of these certifying bodies closely and, is evidence of certifying bodies behaving if there improperly (in not disclosing problems in their reports to the Commission, for example), then a change of auditors will be required. To date, and despite a large number of on-the-spot inspections, no evidence of this sort has emerged. Significant accreditation criteria and weaknesses affecting accreditation The Commission’s guidelines to 2. 11. The Commission will give detailed 2. 6 consideration to the Court’s findings as presented in its Table 3. As some of the comments on that table indicate, significant improvements have been made throughout 1997 and 1998. The Commission stresses that the is based on the clearance of accounts for 1996 to meet all certification of accounts. Failure the accreditation criteria does not, itself, prevent a clearance certificate being issued. in inform (EEC) No 729/70 and The Commission found that during 1996 there were still major shortcomings at a number of paying agencies. In each case where such shortcomings were established, the Commission sent letters to the Member States requesting to apply Article 4(4) of them, where necessary, Regulation the to Commission of the remedial measures decided on and the deadlines fixed for each of them. Some of the action required, such as concluding protocols with other bodies in the case of delegation of duties, the recruitment and training of additional internal audit staff and the development of new accounting systems, cannot be completed in a very short space of time. In many such cases, only provisional accreditation was granted, and the Commission has continued to monitor the paying agencies to ensure that progress is being made and deadlines are respected. A much improved situation prevailed when the 1997 accounts were cleared. 3. CERTIFICATION OF ACCOUNTS The certifying bodies 3. 3. Regulation (EC) No 1663/95, together with its Annex, provides the framework for the auditing of EAGGF accounts. The many missions carried out by the Commission in respect of the accreditation procedure were used as an occasion to discuss audit issues with the certifying bodies appointed by the Member States. On the basis of the experience gained from the accreditation missions, the Commission found it useful to supply the certifying bodies with further information as to what was expected of them. This was particularly relevant for smaller and newer paying agencies which had not yet been audited by the Commission. An expert group meeting for the certifying bodies was therefore held on 9 September 1996, before most of the audit work for the certification of the accounts was done. At the meeting the detailed guidelines to which the Court is referring were made available to, and discussed with, the representatives of the certifying bodies. The Commission is constantly evaluating how the certification process can be improved. Problems and delays in obtaining certified accounts 3. 4. The Commission insisted on receiving reliable accounts and evidence of satisfactory audit work before clearing the accounts, even though this meant delaying a decision on a number of paying agencies. The deadlines for clearance of the 1997 accounts were met, and only one decision was taken (on 29 April 1998) to clear all the paying agencies’ accounts materially. in principle the 3. 2. The Commission agrees that certifying body should be fully independent of the paying agency. However, the Commission accepted that the administrative burden should be kept to the minimum, and did not insist that for small paying agencies, 3. 5 to 3. 17. The Commission stresses that the accounts of all paying agencies were cleared only after sufficient evidence was obtained, where necessary by means of 14. 12. 98 EN Official Journal of the European Communities C 389/41 further audit missions, and that these accounts were materially true, complete and accurate. As regards the comments on Italy at point 3. 13, the Commission, after carrying out its checks, included the amount concerned in the negative expenditure declared by the Ministry of Agriculture and considers this a reasonable solution. In 1997 this expenditure was no longer declared by the Ministry but by a properly registered paying agency. 3. 18 to 3. 19. The Member States are not yet legally obliged to supply the table referred to by the Court at point 3. 19. After a trial period, the Commission intends to draw up legislation to make the reporting of debts compulsory, so that it has figures for the sums owing to the Community. The situation regarding the recording and recovery of debts remains unsatisfactory in many paying agencies. The Commission has now issued a further guideline on this subject, and has begun internal discussions on the respect of possibility of applying corrections long-outstanding cases. Audit missions during 1998 are concentrating further on this matter. in 4. THE DECISIONS CONCERNING CLEARANCE OF ACCOUNTS FOR 1996 The Commission’s first clearance decision 4. 1 to 4. 2. The delays experienced in respect of 1996 did not occur in the clearance of 1997, on which, in the case of virtually all paying agencies, the decisions were taken within the statutory time limit. The Commission’s second clearance decision 4. 3. Only expenditure that has clearly been committed in breach of the rules can be excluded from clearance under the budgetary discipline provisions. The qualifications referred to by the Court have been or will be followed up by the Commission and, where necessary, financial corrections will be proposed under the compliance procedure provided for in Article 5(2)(c) of Regulation (EEC) No 729/70. 4. 4. The 24-month time limit for applying corrections in cases of non-compliance is reckoned as from the date of notification of the Commission’s findings. In respect of all relevant cases, letters have been sent to the Member States. These are being followed by bilateral discussions and then, if necessary, by a report from the conciliation body. This procedure, which is designed to ensure that corrections proposed by the Commission are fair and equitable and to allow the Member States a proper right of reply, takes a considerable amount of time. Modification of the amounts declared 4. 5 to 4. 6. The Commission accepts that there were some difficulties due to this being the first year of application, where the new procedures overlapped with the old. The situation has been and continues to be improved. Furthermore, the Member States continuously submit new information which leads to adjustments in the amounts of correction applied at each stage in the various procedures. Adjustment to the annual declaration 4. 7(a) Following a control mission, the Commission was unhappy with some of the evidence presented. A further reduction was therefore made to the accounts. 4. 7(b) The amount added to the Spanish declaration was part of the amount certified by the certifying body and the Commission was therefore able to accept it. 4. 7(e) The Commission very carefully examined the many adjustments made to the accounts of the paying in the United Kingdom, and refused the agencies expenditure wherever the explanation given was inadequate. Financial corrections made by the responsible finance division 4. 8. The legal requirements laid down in the rules for budgetary discipline mean that reductions following late payments in September and during the first half of October cannot be decided on in time to be booked in the same financial year. In realities, recognition of accounting 4. 11. the accreditation criteria allow paying agencies to book expenditure up to five days before it is executed. If these five days are at the end of a month, then this practice may have the effect of changing the reference month for the calculation of corrections in respect of late payments. The United Kingdom should not exceed this limit. 4. 12 to 4. 13. The corrections effected pursuant to Article 7(6) of Regulation (EC) No 296/96 relate to the public storage accounts sent to the Commission as 13th declarations on 20 December pursuant to Article 5(2) of the same Regulation and drawn up for the whole financial year. C 389/42 EN Official Journal of the European Communities 14. 12. 98 Article 7 of Regulation (EC) No 1663/95 requires corrections to the Member States’ accounts such as those mentioned by the Court to be notified to them by 31 March of the following year and charged by the in a decision before 30 April. The Commission notifications regarding 1996 expenditure were late, but the deadlines were met in the 1997 clearance procedure. Such corrections may relate both to the accounting aspects and to questions of conformity detected in the course of the year or on inspection of the 13th declaration and incorporated by the Member States or not incorporated in the account clearance declaration. Where a Member State’s clearance declaration does not incorporate these corrections, they are confirmed during the accounts clearance if this takes place after the decision taken under Regulation (EC) No 296/96. This was done with Greece, France and Portugal. If, on the other hand, a Member State has not incorporated the corrections but the accounts clearance decision has already been taken, the financial effects are in any case shown in the accounts for the same year but against the budgetary heading concerned rather than the heading for clearance. This happened with Denmark (see point 4. 13). The deduction of advances was made in August 1997, and will be confirmed under the compliance conformity clearance procedure. 4. 14. The Commission will follow up the case in the context of the compliance audits. 4. 15. All qualifications in the accounts were carefully examined in the short time available (see reply to point 4. 3) and, where evidence of there was non-compliance, corrections were or will be made. Where the qualifications were either based on an incorrect evaluation by certifying bodies, or where more evidence was needed, no correction was made in this clearance decision, but this is without prejudice to subsequent compliance decisions. clear 4. 16. The Member States continuously present new information which leads to adjustments in the amounts of correction applied at each stage in the various procedures. The Member States mainly concerned by the in the monthly reduction advances and the annual decision were Denmark and Italy. A reply regarding Denmark is given in point 4. 13. The Italian case is explained in the Court’s text in point 4. 10 (a refund of ECU 33,5 million) and by the many in the corrections made adjustments required to Italy’s declarations of public storage expenditure. 5. CONCLUSION 5. 1. All major shortcomings identified in 1996 have been thoroughly analysed in respect of undue payments, follow-up has been closely monitored. and Significant improvements were noted when clearing the 1997 accounts. their 5. 2. As explained in the reply to 4. 4, the procedure for applying conformity corrections takes the time necessary to allow for the exercise of the Member States’ rights of reply and appeal to the conciliation body. It is expected that the total corrections for 1996 will be of the same order of magnitude as in previous years. If the clearance reform is successful, the level of corrections should fall in later years, as Member States improve their level of compliance with Community rules. 5. 3 to 5. 4. Two clearance decisions had to be taken for 1996. However, in view of the radical reform of the rules for the clearance procedure, of the fact that certification audits had to be conducted for the first time, and of the findings resulting from the analysis of both certification reports and accounts, it was necessary, in the case of a number of paying agencies, to require that supplementary audit work be carried out. Since a proposal for clearance of the accounts can only be made on the basis of satisfactory evidence they are accurate, all information received needed time to be examined carefully before conclusions were drawn. that The clearance decision for the 1997 financial year was taken on 29 April 1998 and covered expenditure by virtually all the paying agencies. A regulation allowing the application of penalties where clearance documents are late or incomplete is currently being prepared. 5. 5. The Commission considers that each case was dealt with correctly information available at the time of each decision, and refers to the replies to the relevant paragraphs. in accordance with the 5. 6. The Commission insists that in their subsequent year’s audit report the certification bodies follow up the corrective measures required of each paying agency, and, if a risk of loss to the Fund persists, it will take an appropriate decision under the compliance procedure. 14. 12. 98 EN Official Journal of the European Communities C 389/43 5. 7. The documents to which the Court refers were guidelines for the certification bodies and accreditation authorities which were discussed with representatives of each in September 1996, in reasonably good time to assist the auditors. The Commission’s close monitoring of the accreditation procedures had until then prevented attention being devoted to the certification procedure. followed by bilateral discussions and then, if necessary, by a report from the conciliation body. This procedure, which is designed to ensure that corrections proposed by the Commission are fair and equitable and to allow the takes a Member States a proper right of reply, considerable amount of time. 5. 8. The Commission accepts that the same body undertakes internal audits and certifies paying agencies’ accounts only on the strict condition that the certification audits are carried out in a professional and independent manner, that such audits have the required scope, and that the reporting is complete. The Commission has monitored the work of these certifying bodies closely and, if there is evidence of certifying bodies behaving improperly (in not disclosing problems in their reports to the Commission, for example), then a change of auditors will be required. To date, and despite a large number of on-the-spot inspections, no evidence of this sort has emerged. 5. 10. The reformed procedure requires each paying agency to assume full responsibility for the payments it executes, and to ensure that claims are properly checked before authorisation. If for reasons peculiar to the Member State concerned, a paying agency cannot discharge this responsibility in respect of any category of expenditure, then the department which can discharge it must be designated as paying agency and must satisfy the accreditation criteria. As a result of the reform, the less control structures fragmented and the responsibilities of each department concerned are now clearly defined. This does not mean that there is no further scope for reduction in the number of paying agencies, and the Commission will encourage Member States to keep to the lowest possible number. in each Member State are transparent, and far more 5. 9. Where necessary, financial corrections will be proposed under the conformity procedure provided for in Article 5(2)(c) of Regulation (EEC) No 729/70. The 24-month time limit for applying corrections in cases of non-conformity is reckoned from the date of notification of the Commission’s findings. For all relevant cases letters have been sent to the Member States. These are 5. 11. The legal requirements laid down in the rules for budgetary discipline mean that reductions following late payments in September and during the first half of October cannot be decided on in time to be booked in the same financial year