Committee on Budgetary Control22 January 2008

DAS 2006DAS 2006

European Court of European Court of AuditorsAuditors

Specific assessments of the 2006 Annual Report

Functioning of supervisory and control systems

Error range

Own Resources

Common Agricultural Policy

IACS Overall for CAP

IACS

non-IACS non-IACS

Structural operations

Internal policies

External actionsHeadquarters and Delegations

Implementing organisations

Pre-accession strategy

Phare/ ISPA

SAPARD

Administrative expenditure

DAS 2006 - Specific assessments concerning legality and DAS 2006 - Specific assessments concerning legality and regularity of underlying transactionsregularity of underlying transactions

Satisfactory

Functioning of supervisory and control systems

Partially satisfactory

Unsatisfactory

Less than 2% (below materiality threshold)

Error range

Between 2% and 5%

Greater than 5%

Functioning of supervisory and control systems

SatisfactoryPartially satisfactory

Unsatisfactory

Erro

r rang

e

Less than 2%

(not material)

Between 2% - 5%

More than 5%

Agriculture IACSAgriculture IACS

RevenueRevenue

AdministrationAdministration

Pre-accessionPre-accessionPHARE/ISPAPHARE/ISPA

External Actions ECExternal Actions EC

AgricultureAgriculture non-IACSnon-IACS

External ActionsExternal ActionsImpl. org.Impl. org.

Pre-accessionPre-accessionSAPARDSAPARD

Structural Structural ActionsActions

AgricultureAgriculture

DAS 2006 – Legality and regularity of underlying DAS 2006 – Legality and regularity of underlying transactionstransactions

What can the Commission do to improve the What can the Commission do to improve the situation?situation?

• ensure that supervisory and control systems address the risks effectively, both at the level of the Commission and of the Member States;

• strengthen in particular the Commission’s ability to mitigate the risk that the control systems in the Member States fail to prevent reimbursement of overstated or ineligible expenditure;

• improve mechanisms for recoveries;

• improve the quality of DGs’ Activity Reports and the Commission’s Synthesis Report; address the detected deficiencies adequately and ensure continuity in the way information is presented;

What can the Commission do to improve the What can the Commission do to improve the situation?situation?

• implement the Commission’s Action Plan;

• ensure suitable indicators assisting the management and helping to gauge improvements over time;

• ensure that rules and regulations are clear and sufficient enough to meet Community objectives, while avoiding

unnecessary complexity.

””80% of EU-funds in shared management: 80% of EU-funds in shared management: what can Member States do to improve the what can Member States do to improve the

situation?”situation?”

Structural FundsStructural Funds:

• improvement of the day to day management and implementation of sound closure procedures for the programming period 2000 –

2006;

• implementation of the legal framework with respect to the new programming period 2007 – 2013.

CAP expenditureCAP expenditure:

• specific attention to Cross Compliance requirements;

• due consideration to the pertinence of eligibility conditions with the objective of reducing the error rate in the field of Rural

Development .

• The Court’s revised DAS approach provides clear recognition of improvements in supervisory and control systems. As these improve, more of the assurance is derived from them.

• The new definition and treatment of errors updates the methodology so as to take into consideration the latest developments in the legal framework (cross compliance, financial corrections).

• The Court’s conclusions and audit results have become more robust and provide a clearer assessment of where weaknesses exist and what is contributing to any error found.

The Court’s contributionThe Court’s contribution

Conclusion:Conclusion:

What will make the crucial difference is whether the management’s control mechanisms will be shown to have improved sufficiently and rules simplified enough to bring about a reduction in errors found.