Brussels, 28 April 2006
This regular audit procedure is a vital instrument for controlling Common Agriculture Policy (CAP) expenditure, permitting the recovery of sums paid out to Member States where these payments are not in conformity with Community rules or where weaknesses in the control and verification system of the Member State exist.
Member States are responsible for payments and recoveries in agriculture
The Member States are responsible for making practically all the payments, charging all the levies and recovering all undue payments within the framework of the EAGGF (European Agricultural Guidance and Guarantee Fund) Guarantee Section.
The conformity clearance procedure allows the Commission to verify, primarily by means of on-the-spot inspections, whether the Member States have made correct use of the funds placed at their disposal by the EAGGF. The Commission carries out over 200 audits each year.
The Member States have to ensure that their national paying agencies thoroughly check all claims before the aid is paid. The Member States have to have put in place an integrated administration and control system for most of the Community agricultural spending, sometimes using the most advanced techniques to check fields by aerial or satellite photography, and to cross-check claims in computer data bases. For expenditure not falling under this system, other types of controls apply.
Recovery of funds
Where, despite these efforts, the Commission finds that the control procedures in a Member State do not conform to the Community rules, it recovers the amount misspent from the Member State concerned. This recovery may include expenditure affected within a period of 24 months before the start of the recovery procedure.
Amounts may be recovered where anomalies or systematic failings are found. If the losses for the Community budget cannot be calculated precisely, the recovery may be set at 2%, 5%, 10% or 25% of the expenditure in question, or even more. There is thus a strong incentive for the Member States to improve the quality of their control systems.
Since 1996, when the system was modified to take its present form, a total of 21 decisions have been adopted, excluding from Community financing a sum of EUR 3.4 billion. The average correction rate per financial year has been 1.13%.
Member States' right of reply and the Conciliation Body
In most cases, the Commission services go on-the-spot to verify the functioning of the administration and control systems.
The Commission then addresses its observations to the Member State concerned. There is an exchange of information between the Member State and the Commission, followed by a bilateral meeting.
Before the conformity clearance decision is taken, the procedure allows Member States to have all the significant corrections examined by a panel of independent experts (the Conciliation Body) which tries to reconcile the positions of both the Member State and the Commission.
The Commission can accept or reject the proposals formulated by the Conciliation Body. The procedure is closed by a formal Commission Decision which can be appealed by the Member State. Nowadays, it is the Court of First Instance that is competent for these matters.