Accreditation of Paying

Agencies

Controlling Agricultural
Expenditure

Screening Serbia
Chapter 11
Agriculture and Rural Developement
 I. Accreditation of Paying Agencies
 Legislation

 Institutional framework

 Accreditation process

 Accreditation criteria

 Review of accreditation

 Statement of assurance

 Certification

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 Legislation
• Council Regulation (EU) No 1306/2013 on the
financing, management and monitoring of the common
agricultural policy

• Commission Regulation (EC) No 885/2006

laying down detailed rules for the application of Council
Regulation (EC) No 1290/2005 as regards the accreditation
of paying agencies & other bodies and the clearance of the
accounts of the EAGF and of the EAFRD

• Commission guidelines
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 Institutional framework

• Competent Authority

• Accredited Paying Agency (administrative organisation

and system of internal control)

• Coordinating Body (if applicable)

• Certification Body

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 Accreditation process

• Based on pre-accreditation audit by independent body

• Criteria as listed in Annex I of Reg (EC) 885/2006

(more on next slide)

• Issued by competent authority at Ministerial level

• Granted provisionally or definitively

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 Accreditation criteria

• Internal environment (organisational structure,

human resource standard, delegation)
• Control activities (procedures for authorising claims,
for payments, for accounting, for advances and
securities, for debts, audit trail)
• Information and communication (communication,
information systems security)
• Monitoring (ongoing monitoring via internal control
activities, separate evaluations via an internal audit
service)

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 Review of Accreditation

• By competent authority (constant supervision), certification

body (annual report) and Commission (ex-post audits)

• All deficiencies have to be remedied

• Serious deficiencies lead to probation

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 Probation of Paying Agency

• Failure to comply with accreditation criteria and failure to

implement the necessary corrective measures during a
probation period may lead to financial corrections

• Failure to comply with the accreditation criteria leads to

withdrawal of accreditation for the Paying Agency unless
the necessary changes are made

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 Management declaration

• Annual statement by director of paying agency

• Based on effective supervision throughout the year

• Covers (1) completeness, accuracy and veracity of the

annual accounts, (2) proper functioning of internal control
systems (3) legality and regularity of the underlying
transactions

• Possibility of reservations, to be quantified and accompanied

by a remedial action plan and a timetable for its
implementation 9
 Certification
• Annual exercise by independent audit body (CB)

• Covers completeness, accuracy and veracity of the annual

accounts, operation of the internal control procedures and
legality and regularity of expenditure

• Detailed Commission guidelines on work to be done and on

reporting

• Includes opinion on the Director’s Management Declaration

• Forms the basis for the financial clearance decision

• Very important to give assurance to DG AGRI 10

 Certification Body
• Designated by competent authority

• Public or private entity with the necessary technical

expertise

• Operationally independent from paying agency,

coordinating body and competent authority

• Certifies whether the accounts are true, complete and

accurate

• internationally accepted audit standards, taking into

account Community guidelines on application of these 11
standards
 II. Controlling Agricultural
Expenditure

 Management and control system

 Systems for control and sanctions

 Clearance of accounts

 Conformity clearance

 Reduction and suspension of payments to MS

 Conclusions
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 Management and control system

 Compulsory administrative structure, centred

around accredited paying agencies

 Detailed systems for controls of beneficiaries

and sanctions in case of irregularities

 Ex-post controls of paying agencies’ annual

accounts and internal control procedures and of
support under certain aid schemes

 Financial and conformity clearance of accounts

by the Commission 13
Systems for control and sanctions
- Common Features –

• Administrative control of all aid applications

• Cross-check with other databases, where appropriate
• On-the-spot checks of a sample of transactions before
payment (normally 5%, but may be up to 100%, depending
on the risk of the aid scheme in question)
• Sample selected through a risk analysis based on relevant
criteria
• Increase of on-the-spot checks in case of a high number of
irregularities
• Possibility to reduce the minumum level of on-the-spot checks
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• Sanctions which are dissuasive, effective and proportionate
Clearance of Accounts - Overview

•
Clearance of accounts
•Financial clearance
•Annual
•(latest on 30.04.n+1)
•Conformity clearance
•Multiannual
•(2 to 3 decisions per year)

•On the basis of certification by

certification bodies •On the basis of audits by DG AGRI

•Exclusion of expenditure which has not

•Completeness, accuracy and veracity of
the annual accounts •been paid in conformity with EU
•Satisfactory operation of the internal •rules (as a result of deficiencies in the
control procedures
•management and control systems
•Legality and regularity of expenditure
•Financial corrections applied to
•Possible consequences
Member States
•under conformity clearance
 Conformity clearance
Legal Rules -

• Correct expenditure not effected in compliance with EU

rules
• Determine correction on the basis of:
- nature and gravity of infringements
- financial loss to the EU budget
- Article 12 of Regulation (EU) No [HZ Delegated Act]
- Commission Guideline VI/5330/97
• Cover period up to 24 months prior to Commission’s
written notification (24-month rule)
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 Conformity clearance
- Practice -

• Annual audit programme based on a central risk analysis

• On-the-spot audit, normally for one week
• System audit covering Member States’ management and
control systems (proper documentation of procedures,
quality of administrative and on-the-spot checks, quality of
control reports etc)
• Financial corrections for deficiencies in key or ancillary
controls (calculated, extrapolated or flat rates of 2, 5, 10,
25 or 100%)
• Strong incentive for Member States to improve their
management and control systems

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•
Key and Ancillary controls
Key controls •Ancillary controls

•Administrative and on-the-spot

•Administrative operations
•checks necessary to determine
•required to correctly
•the eligibility of the aid and the
•process claims
•relevant application of
•reductions and penalties

- Respect of time limit for their submission

- Existence of the subject of the claim
- Identification of duplicate claims
- Quantity
- Risk analysis
- Qualitative conditions
- Calculation of sanctions
- Application of reductions and penalties
- Appropriate supervision of the procedures
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 Conformity Clearance - Procedure
• Written notification with findings and recommendations

• Bilateral meeting in Brussels

• Formal communication with conclusions and evaluation of

amount of financial correction

• Possibility of review by Conciliation Body with the aim of

reconciling the divergent views of both sides

• Final letter by Commission

• Consultation of Agricultural Funds Committee

• Commission decision (executed in month n+2) 19

Reduction and suspension of payments
to MS (Article 41 of Regulation 1306/2013)

• For non-respect of ceilings and payment deadlines

• For cases of serious and persistent deficiencies concerning

one or more key components of the national control
system, where:

- the deficiencies are of a continuous nature; or

- the Member States cannot implement the necessary

remedial measures in the immediate future.

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 Conclusions
• Comprehensive system with control mechanisms to be
applied at both Member State and EU level

• Constant improvement of Member States’ management and

control systems over recent years

• Errors at final beneficiary level are, according to the Court

of Auditors, close to an acceptable level

• Conformity clearance proven to be an effective mechanism

to protect the EU’s financial interests and a strong incentive
for Member States to remedy any deficiencies in their
systems

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 Questions?

Margaret Bateson - AGRI J.1

Coordination of horizontal questions relating to clearance of

accounts

margaret.bateson-missen@ec.europa.eu

•Bart Strojwas – AGRI J.5

•Financial Audit
•bart.strojwas@ec.europa.eu

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