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Brussels, July 12, 2000

Structural funds : Commission proposes new detailed rules for financial management, control and financial corrections

The European Commission today presented two draft regulations for detailed rules on financial management and control of structural funds' expenditure and on financial corrections if Member States fail to manage properly the funds entrusted to them. These rules are to be applied for the new programmes in the years 2000 to 2006. The Commission also adopted a set of guidelines on how to evaluate the effect of financial failures on community funds. The objective of this package of measures is to make sure that each actor at regional and local level clearly knows his or her responsibilities in a largely decentralised management of the structural funds.

In presenting these draft regulations, Commissioner Michel Barnier, responsible for regional policy, said : "When Member States adopted Agenda 2000, they agreed to tighter financial control over the structural funds, which represent 30% of the Community's budget. Proper management and control is a must for all of us. I expect that the measures proposed today will over time strengthen the financial management of the structural funds. If any Member State, or region, should fail to properly manage or control the structural funds, then the Commission will suspend payments and recover the money spent irregularly".

Commissioners Anna Diamantopoulou for the social fund and Franz Fischler for the agricultural guidance and fisheries funds contributed to the proposals, as did Commissioner Michaele Schreyer in charge of the Community budget and financial control.

Better control in decentralised management of the funds

For the 2000-2006 programming period, the financial management of the structural funds has been largely decentralised. Instead of receiving annual advances from the Commission, which did not need to be accounted for in any detail until some years later, Member States will in future receive only one initial advance for each structural fund programme. After that, co-finance will only be accepted against claims for specific payments. Member States are required to set up Managing Authorities which have the responsibility for running the programmes agreed with the Commission. They also have to set up Paying Authorities. These must ensure that all the payments declared to the Commission comply with Community rules regarding eligibility and with Community policies concerning for example the environment, equal opportunities and state aids.

The detailed rules now presented by the Commission, in application of the general Regulation on structural funds of June 1999, define the way in which the Member States, and their regions - taking account of their individual administrative systems and practices - must establish a clear lines of responsibility. Each actor concerned will know clearly their role in the management and control of the funds entrusted to them. This is necessary because a very large number of bodies actually implement the thousands of individual projects financed under the different measures in each structural fund programme. In particular, the rules define the nature of the work that must be undertaken before a Paying Authority can certify the claims it makes on Community funding. They also describe the work to be undertaken by the auditors of the programmes in each Member State.

All these measures will contribute to reduce the leveI of errors and mis-declarations found by the European Court of Auditors in the claims made by the Member States on Community funds for the previous programming period 1994-1999.

As part of the package approved today, the Commission has established guidelines on how to evaluate the financial effect of failures to properly check payments and to correctly declare them to the Commission. The Commission has made clear that any significant failure to make proper checks can justify a Commission decision to recover 5% or 10% of the aids paid, or, in particularly serious cases, even 25% or 100%. Commissioner Barnier stressed that these rules and guidelines are to reassure Member States as to the consistency of practice and equality of treatment by the Commission.

The draft Commission regulations adopted today are still provisional. They will be finalised in the last quarter of this year, once the opinions of the Member States are obtained in the Fund Committees.

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