37 th Conference of the Directors of Paying Agencies Riga, 6-8 May 2015

1. 37th Conference of the Directors of Paying AgenciesRiga, 6-8 May 2015 Christina Borchmann Director Directorate J: Audit of Agricultural Expenditure Directorate General for Agriculture & Rural Development

2. Annual Activity Report for 2014

3. Corrective Capacity • Corrective capacity is an essential element to give the Director General assurance. • DG AGRI objective is NOT to increase financial corrections. • The objective is to get the error rate down.

5. Reservation methodology Reservation necessary if error rate above 5% - unless amount at risk is below de minimis. Reservation necessary if error rate between 2 and 5% unless de minimis or mitigating factors apply: Deficiencies remedied, 2014 expenditure covered by conformity clearance procedure No reservation if error rate for 2014 is below 2%. Where the amount of EU expenditure at risk is below the 1 million EUR de minimis threshold established in DG AGRI's materiality criteria, no reservation applies.

6. 2014 financial clearance • 30/04/2015: 81 letters to Paying Agencies • 5 disjoined accounts for EAGF • 7 disjoined accounts for EAFRD • Reasons: • Late submission of accounts and of additional work requested • Material error • Qualification of accounts by CB

7. Certification Bodies – Legality & Regularity • 15 dedicated missions by DG AGRI • Combination audits: include in the control sample some of the Certification Body checks carried out as well as those carried out by the Paying Agency.

8. Conformity Clearance – new deadlines • Reg. 908/2014 includes a number of new mandatory legal deadlines for the Commission and for the MS at each stage of the procedure; • Commission will need to apply the Regulation strictly to be able to meet the legal deadlines; • A monitoring system is in place to ensure Commission meets deadlines; • MS must request and justify deadline extensions where needed.

9. Conformity Clearance: new MS possibilities • MS will be invited (in letter of findings) to calculate the risk to the EU budget. • They are required to do this work at the beginning of the contradictory procedure. • New information should come at the very latest at the time of commenting on the bilateral minutes (Reg. 908/2014, Art 34(3).

10. New financial correction guidelines Why are new guidelines necessary? Adapt existing rules to the new legal provisions (Art.52 of R. 1306/2013 and Art.12 of R. 907/2014) Improve clarity and transparency of the rules Take stock of experience gained/lessons learned New elements introduced: Calculated/Extrapolated corrections: more detailed instruction Additional levels of flat-rate financial corrections Entry into force of the new rules from 1.1.2015.

11. Key & ancillary controls • Definitions clarified, harmonised content & layout. • Lists finalised (20) • Future lists • Application date: for conformity clearance procedures launched as from 1.1.2015 • Intention is to increase transparency - not to increase financial corrections

12. Cost of Control • 4 billion EUR • New information gathering exercise: • Cost of control for how many controls • Keeping LPIS up to date • CAP reform implementation • IT systems • CB work • Starts Autumn 2015.