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Revised Financial Regulation: Strengthening Accountability in Cohesion Policy

This proposal aims to reinforce accountability in Cohesion policy by clarifying responsibilities and introducing controls adjusted to the level of risks and costs. Key changes include an accreditation process, management declaration of assurance, and timely clearance of accounts/irregularities.

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Revised Financial Regulation: Strengthening Accountability in Cohesion Policy

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  1. Triennal revision of the Financial Regulation : - Commission proposal on the revision of the financial regulation COM (2010) 260 of 28 May 2010 - Followed by a consolidation of the proposed modifications to be brought into the Financial Regulation in COM (2010) 815 of 22 December 2010 Context

  2. Background of the changes affecting Cohesion policy Accountability of Member States will be reinforced in line with Art. 317 TFEU: • Member States shall cooperate with the Commission to ensure that the appropriations are used in accordance with the principles of sound financial management. • The Financial Regulations shall lay down the control and audit obligations of the Member States in the implementation of the budget and the resulting responsibilities. Context

  3. Purpose of the changes affecting Cohesion policy • Clarifying and reinforcing the respective responsibilities of the Commission and of the Member states in shared management • Reinforcing the chain of accountability between the Member states and the Commission under shared management • Introduction of a tolerable risk of error to have controls adjusted to the level of risks and costs Context

  4. Key changes proposed for shared management 2014+ • Accreditation process • Management declaration of assurance • Timely clearance of accounts/irregularities Proposal

  5. Timing • Timing of the revision of the FR • June 2010 - 2011: Negotiations with Council and EP. Adoption of the Financial Regulation subject to ordinary legislative procedure • End 2011: Planned adoption of FR • January 2012 : Planned entry into force of FR • Entry into force of the modifications : • New provisions on shared management will apply from the date of entry into application of the rules applicable to Structural Funds after 2013 • For 2007-2013 programmes current rules will continue to apply Timing

  6. HOW DOES THE REVISED FINANCIAL REGULATION AFFECT COHESION POLICY AND ETC PROGRAMMES?

  7. Accreditation • National accreditation of the MA/CA on the basis of criteria fixed in sector specific rules • No supervision by the Commission of OPs below 250 Meuros • No ex-ante compulsory validation of the audit strategy • Continuous supervision of activities of the accredited body by the accrediting authority. Possibility of withdrawal of accreditation • Accreditation of the MA by the hosting MS AccreditationETC specificities

  8. Certification and assurance system • MA can exercise the functions of CA • Certification of expenditure to the Commission once a year (1st February) • Management declaration; • Independent audit opinion. • Annual accounts; • Annual summaries. • Basis for Commission assurance • Assurance shall be given by the MA located in a given MS for expenditure incurred in another MS • MA exercises the functions of CA Certification and assuranceETC specificities

  9. ETC specificities • 1rst level checks by MA or controllers in each participating MS • By principle the MA is responsible for the controls on the whole territority of the OP • If not possible designation of controllers, unless an EGTC is MA • The controlers should be the same than those of Investment for growth programmes or external programmes • AA in the MS hosting MA • AA assisted by a Group of Auditors ETC specificities in Management and control structures

  10. Managing Authority Audit Authority • First level controls • Payments to beneficiaries • Declaration of expenditure to the EC • Submission of annual accounts and management • Declarations to EC • Independent audit of the management control systems • Expenditure and accounts • Annual audit opinion prepared for the EC 2014-2020 Management and Control ECT Management and control structures

  11. Clearance of accounts and closure • Timely clearance of accounts strengthening the discharge exercise • Rolling closure of operations starting of the related 3 years period of retention of documents • Simplified closure of programmes Clearanceof accounts and closureETC specificities • No specificities.

  12. Accounting year and clearance of accounts Compulsory interim payment application Accounting year Clearance of accounts 31 Jul N 1 Feb N+1 Dec N 1 July N-1 Dec N-1 30 Jun N 30 Apr N+1 30 Jun N+1 Preparation of the annual accounts, management declaration, summary audit report, audit opinion Audit reference period

  13. Resulting financial flows for 2014-2020 • Annual pre-financing paid at the beginning of each year from 2016: 2% in 2016 2.5% from 2017 till 2022 • Regular submission of payment claims with a compulsory statement of expenditure at the end of accounting year • Interim payment by Commission limited annually to 90% of amount calculated • Remaining 10% to be released after clearance of accounts • N+3 decommitment rule (except first commitment) Financial flowsETC specificities

  14. Thank you for your attention

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