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Commissioner responsible for Taxation
Response to the EP Rapporteur's draft report on the budget discharge
Brussels, 28 February 2011
Dear Chairman, Dear Rapporteur, Honourable Members,
Since the presentation of the Court of Auditors Annual Report in November 2010, an intensive and fruitful dialogue between this Committee and the Commission took place.
I would like to present the measures outlined in my letter sent last Thursday to the Chairman and the Rapporteur. These measures concern the six issues listed in paragraph one hundred thirteen  of the draft report.
The first issue concerns the introduction of mandatory national management declarations. The Commission services have issued an evaluation of the existing national declarations. The main conclusion is that, at this stage, the national declarations do not provide or provide only partially the information needed for the Commission's own assurance process.
This document also provides technical guidance for the attention of the responsible public authorities on how to add value to the assurance process in shared management. This guidance refers in particular to essential elements included in the proposal made in the review of the Financial regulation requiring the national accredited bodies to issue an annual management declaration supported by an exhaustive management report and subject to an independent audit.
Therefore, I would like to ask you to support this new accountability instrument in the negotiation on the Financial regulation. Once up and running, this new process will be assessed and on this basis, Commission and Parliament would make pressure on the member Member States so that they consider seriously endorsing politically this new accountability tool.
The second issue covers the Commission's governance structure, more precisely the Director's-General Annual Activity Report and the Synthesis report. The rapporteur Rapporteur has indicated in his draft report that "ideally" these reports should be signed at political level, meaning co-signed by the Commissioner in charge and the synthesis report by the President of the Commission.
The Commission bases its assurance process on a clear division of responsibility between the managerial and the political levels. Directors-General sign their activity reports and the Commission of Commissioners assume its political responsibility by adopting collegially the Synthesis report on all activity reports.
However, I agree that these two pillars support the same edifice: this is why I have asked the central services to update their instructions. The Directors-General will from this year certify in their Annual activity report that they have fully informed their Commissioner of the main issues and in particular the reservations envisaged in their activity report.
This instruction has been widely advertised in the Services. Moreover, the President and myself insisted at the last week's College meeting on the importance of this information for each of them and for the College as a whole (which will be disclosed in the official minutes of the College meeting).
The third issue concerns the introduction of automatic interruption and suspension of payments of programmes under shared management.
For the 2007-2013 period, the Commission has in place a clear legal basis for applying interruptions and suspensions. And the Commission actually uses actively these tools as demonstrated by the list of all interruption and suspension activities in 2010.
Fifteen key requirements, defined by the Structural Funds DGs in consultation with the Court of auditorsAuditors, are used by the Commission services for assessing the functioning of Member States management and control systems under cohesion policy.
As a further step, the instructions on the preparation of the Annual Activity Reports have been complemented with new obligations to provide more detailed information on their decisions to either interrupt or suspend payments.
The fourth issue is about corrective mechanisms. The Commission can only agree with the rapporteur Rapporteur that the correct application of rules is of paramount importance for the protection of the EU budget.
In cohesion policy, Member States have the obligation to recover all unduly paid amounts. This covers the financial corrections decided by the Member States but also the recovery from the final beneficiaries. Therefore, the set up of the adequate recovery systems was part of the compulsory verifications carried out under the compliance assessment exercise at the start of the programming period. Now, the actual implementation of these systems is subject to regular assessment and from this year, a special focus will be given to the recovery performance of the Member States.
The Commission services have planned various meetings with the Member States' Authorities and they also intend to develop a specific module to audit the most risky national systems for recoveries as from 2011. The Commission will sum up these activities in a memorandum, which will also look into the previous programming period. I will send this memorandum to this House before the end of April.
I would like to move now to the fifth issue raised by the rapporteur Rapporteur which concerns the evaluation report introduced by Article 318 of the Lisbon Treaty. I agree that this new reporting instrument will provide a perfect opportunity to further improve the assessment of the effectiveness and of the value-added of European programmes and actions, notably with the introduction of key performance indicators.
The Commission will present before the end of March an outline of the future evaluation report based on Article 318 of TFEU.
In the sixth and last issue raised in the draft report, the rapporteur Rapporteur calls for the introduction of a new spending logic ensuring, among other things, that "schemes and programmes are realistic and as simple as possible".
As you know, "simplification" is a key commitment that the Commission has reiterated several times, most recently in its Budget Review Communication and for which it has also tabled ambitious proposals in the review of the current Financial Regulation.
Simplification will be an extremely important part of our work in the preparation and negotiation of the future programmes. The Commission is already working on options for simplified rules with the aim of significantly easing the participation of all actors in the implementation of the next generation of programmes.
Before concluding, I would like to inform you that our analysis already shows that a limited number of Member States account for a relatively high proportion of the reservations made by the Directors General in their Activity Reports, as well as for a significant number of the interruptions, suspensions, financial corrections and recoveries made.
We need to draw conclusions from this fact and concentrate our efforts on the weakest authorities first with enhanced assistance but also, where needed, with preventive (interruption/suspension of payments) and curative (financial correction and recovery at closure) measures. And the Commission will do so.
Finally, let me say few words about your new report which deals with the findings and recommendations included in the special reports of the Court of Auditors.
I believe this new element in the discharge procedure is very appropriate indeed.
The Court's audits on particular management issues give a highly valuable input in order to improve the effectiveness and the efficiency of Commission's work in the audited policy areas.
The implementation of the Parliament's requests regarding the Special Reports are an integral part of the Commission's follow-up of the annual budgetary discharge procedure.
I have presented to you the concrete actions and measures that the Commission is committed to take in reply to the main concerns expressed in the draft report.
I hope that this will help you make the good decision since there are two scenarios on the table.
Thank you for you attention.