1

FINANCIAL MANAGEMENT OF THE EUROPEAN

AGRICULTURAL GUARANTEE FUND (EAGF)

Owen Jones DG AGRI I.4

2

Directorate-General for Agriculture and Rural Development (DG AGRI)

AGRI I.1 Budget management

AGRI I.4 - Financial management of EAGF

AGRI F.2 Financial management of EAFRD

AGRI J Audit of agriculture expenditure(clearance of accounts, X-tables, debtors’ ledger, accreditation, controls)

3

Council Regulation (EC) No 1290/2005

Commission Regulation (EC) No 883/2006 of 21/06/2006:

keeping of accounts by the paying agencies, declarations of expenditure and revenue and the conditions for reimbursing expenditure under EAGF and the EAFRD;

Commission Regulation (EC) No 884/2006 of 21/06/2006:

financing of EAGF intervention and accounting of public storage operations by the paying agencies of the Member States;

Commission Regulation (EC) No 885/2006 of 21/06/2006:

as regards the accreditation of paying agencies and other bodies and the clearance of accounts of the EAGF and the EAFRD.

4

•Export refunds•Intervention•Direct payments•Sugar restructuring Fund•Promotion of Agricultural Products

… and direct management (Commission responsibility)

Shared management

5

Monthly payments (for payments effected minus revenue received by the paying agencies) to the Member States;

Ensures budgetary discipline (respect of budget appropriations, payment deadlines, financial ceilings);

Check management and control systems in the Member States (e.g. missions in the Member States, clearance of accounts procedure) (Directorate J).

Responsibilities of the Commission

6

Budget management tasks

• Prepare and maintain budget nomenclature;• Control ceilings, deadlines;• Eligibility control of expenditure;• Importation of MS declarations;• Correction of expenditure;• Reimbursement of monthly payments to the MS;• Accounting for monthly payments;• Follow-up of consumption of credits;• Management of payment reductions due to non-

respect of payment deadlines;• The Early Warning System (forecasts).

7

Budget and detailed budget nomenclature

8

The detailed budget nomenclature

Is a more detailed specification of articles and items defined in the “General Budget” (there are around 140 items and around 2000 sub-items);

Is the compulsory level of declaration of EAGF expenditure in the monthly detailed declaration table (T 104) that has to be sent from the Member States to the Commission (Reg.883/06, Art.4 2(a)).

9

Why a detailed nomenclature?

Marketing/calendar year

Product/Measure

Deadline for the payments

Financial ceiling of the expenditure

10

The detailed budget nomenclature The detailed nomenclature changes each year

because it has to be adapted to the nomenclature of the EU Budget;

The detailed nomenclature changes also throughout the year (e.g. budget amendments, new measures);

After the start of the exercise, amendments are made in form of revisions & addenda;

Changes are presented in the monthly “Agricultural funds committee” and on the website “CIRCA”;

All languages

11

Budgetary discipline

12

FINANCIAL and BUDGETARY DISCIPLINE

Respect of the global ceiling FEAGA - Multiannual Financial Perspectives;

Possible adjustment of direct aids (Art. 11 (1) Council Regulation (EC) No 73/093) (Financial Discipline) when risk of exceeding the global ceiling;

If the budget is exceeded then payments to Member States are reduced proportionally for the month in question and corrected next year to ensure that all Member States get the same global financing rate;

13

BUDGETARY DISCIPLINE

The Early Warning System is a forecast system of the Commission to ensure, that the budget ceiling will not be exceeded. It is based on monthly expenditure profiles;

Monthly early warning reports are presented in the Committee of Agricultural Funds and to the Budget Authority (= European Parliament and Council AGRIFIN Working Group) on a monthly basis.

Budgetary Discipline

Reductions

14

15

Reduction of payments by the CommissionArt. 17 Council Regulation (EC) No 1290/2005

Payment deadlines in EU legislation must be respected in order to respect the budgetary discipline and treat beneficiaries equally

A Working document is distributed to the Member States in the EAGF Committees indicating the earliest and latest payment deadlines per sub-item

16

Reduction of payments by the CommissionArt. 17 Council Regulation (EC) No 1290/2005

With the exception of direct payments, if expenditure

effected after the (payment) deadlines is equal to 5% or less of the expenditure paid in time: No reduction;

Above the 5 % threshold, all further expenditure effected shall be reduced for a delay of:

• Up to one month: by 10%,• Up to two months: by 25%,• Up to three months: by 45%,• Up to four months: by 70%,• For a delay of 5 months or more: by 100%.

17

Reduction of payments by the CommissionArt. 17 Council Regulation (EC) No 1290/2005

Procedure for reductions:Article 17 (1)Reduction due to late paymentsOther reasons for non-eligibility

The MS is asked to submit explanations and the Commission may subsequently reduce the monthly payments

Article 17 (2)Overrun of financial ceilings

The MS is informed about the Commission’s intention and has the opportunity to submit its comments before reduction

18

Recoveries

19

Recoveries• Irregularities

• Administrative error

20

Information to be transmitted to the Commission

21

Transmission of data by the Member States

i) declaration of expenditure = payment request ;to DG AGRI I.4

ii) forecasts of expenditure;

to DG AGRI I.4

iii) annual accounts of the accredited paying agencies

- to DG AGRI J.5

22

Transmission of data by the Member States

The global expenditure (Declaration of the 3rd day);

Declaration of expenditure (Declaration

of the 10th day): Transmitted by the 10th day of each month;

Set of documents (T104 +…):Transmitted by the 20th day of each month. At sub-item level including forecasts

23

Set of documents (T101, 103, 104…)

Table 104 : monthly detailed declaration of expenditure and revenue for each paying agency, including forecasts;

Table 103 : a summary of table 104 for all the Member State’s paying agencies;

Table 101 : difference between the monthly expenditure declaration (= Fax of the 10th) and table 104;

e-FAUDIT tables : accounts relating to public storage operations.

24

Public Storage e-FAUDIT

An IT application, using Internet facilities, which enables Member States to calculate in a uniform manner the amounts reimbursed for public intervention storage operations;

A new IT system is being developed with your help.

25

•Based on Declaration of the 10th ;•Cover expenditure less assigned revenue;•Without prejudice to future corrections;•Paid on the 3rd working day of the month following the declaration;•Funds committee consulted;•Document made available beforehand.

Payment decision by the Commission

26

Calculation of the monthly payments

Monthly payments concerning the payments made by

Member states in the month ‘n’ (September)

Month ‘n’ (September ) Month ‘n +1’ (October) Month ‘n+2’ (November )

10th 20th 3rd working day 10th of the

month declaration : expenditure ‘n’

Monthly detailed declaration of expenditure ‘n’

Monthly paymentup to the 3 rd wor king

day

EAGF Committee: consultation of Member States

Decision of the Commission concerning the amounts of the

monthly payment to transfer

27

Forecasts

With the monthly detailed declaration (T104) MS also have to communicate the forecasts for the following months.

The declaration of forecasts varies from item to item.

(A) = Forecasts have to be made until the end of the exercise;

(B) = Forecasts have to be made for a three-month period;

(C) = Forecasts have to be made: • at the beginning of the exercise for a three-month

period, • from the declaration for the expenditure of February

until the end of the exercise.

28

Why do good forecasts matter?

• Reduces the risk of the Commission requesting excessive new funds in future budget proposal;

• Budget authority: Improves the credibility of the Commission and the Member State;

• Commission can reallocate appropriations without having to call on for extra own resources.

*Compulsory expenditure is reimbursed whatever the forecast;

29

Financial management of the FEAGA

• Shared Management• Conform to legislation• Consistent with sound budgetary management• A minimum of discipline and procedure to cope

efficiently with all the transactions and exceptions.

30

Financial management of the FEAGA

Workshop

Shared Management

Please give us your views

Workshop - Q1

• Q.1. Concerning the expenditure declarations (10, T104, … declaration), can you suggest improvements concerning the form of these tables and the way to  communicate these expenditure statements to the Commission?  Do you have remarks on how any subsequent correspondence with the Commission is conducted regarding the eligibility of the declared expenditure.

31

Workshop – Q2

• Q.2. Concerning the EAGF/EAFRD forecasts, can you explain how they are calculated? What difficulties have you encountered in developing these expenditure forecasts?

32