Year Number of transactions tested
2008 204 2007 196
1.2 — Structure of the sample
Percentage of transactions tested which were
2008
2007
EAGF RD SANCO, ENV, MARE Total
Final/interim payments 74 % 21 % 5 % 100 % 100 %
Advances 0 % 0 % 0 % 0 % 0 %
Total 74 % 21 % 5 % 100 % 100 %
1.3 — Frequency and estimated impact of errors
Errors
2008
2007
EAGF RD SANCO, ENV, MARE Total
Frequency of transactions tested which
were affected by errors 28 % {42} 40 % {17} 64 % {7} 32 % {66} 31 % {61} Frequency of errors which are quan
tifiable 54 % {30} 55 % {11} 24 % {4} 48 % {45} 49 % {39} Impact of quantifiable errors:
Most likely error rate falls in the range (*)
Below 2 % between 2 % and 5 %
(*) The Court distinguishes three ranges for most likely error rate: below 2 %, between 2 % and 5 %, above 5 %. The figures in the { } brackets are absolute numbers.
1.4 — Types of errors in the sample
Percentage of errors in transactions tested which concern
2008
2007
EAGF RD SANCO, ENV, MARE Total
Eligibility 5 % 15 % 18 % 10 % 18 %
Occurrence 0 % 5 % 0 % 1 % 1 %
Accuracy 50 % 35 % 12 % 40 % 31 %
Other with no financial impact 45 % 45 % 70 % 49 % 50 %
Total 100 % 100 % 100 % 100 % 100 %
EN
2.1 — Assessment of selected supervisory and control systems — IACS Monitoring elements — SPS/SAPS
Member State Scheme (million euro) Expenditure
Administrative procedures and controls to ensure correct payment including
quality of databases
On-the-spot inspection methodology, selection, execution, quality control and reporting of individual
results Implementation and control of GAEC/ Cross-compliance (*) Overall assessment (**) Belgium Wallonia SPS 230 1, 2 UK Scotland SPS 579 1, 2, 3, 4 a Spain Catalunia SPS 178 1, 2, 5 b Slovenia SPS 49 1 Estonia SAPS 40 Bulgaria SAPS 166 6, 7, 8 A, B, C b Roumania SAPS 421 8, 9, 10 b Poland SAPS 1 123 11, 12 c
(*) In accordance with the provisions of Article 143b(6) of Regulation (EC) No 1782/2003 new Member States have no obligation to implement statutory management requirements (Cross Compliance) until 31 December 2008 (for Bulgaria and Romania until 31 December 2011). Therefore only GAEC compliance has been audited in the New Member States.
(**) The overall assessment cannot be any better than the assessment of the administrative procedures and controls. Effective
Partially effective Not effective
1 Incorrect aid calculation in cases where area determined is insufficient for activation of all entitlements claimed or where the farmer did not declare all set aside entitlements held.
2 Incorrect determination of entitlements to be surrendered to the national reserve.
3 Scottish sub-ceiling overshot by 25,4 million euro, respect of UK national ceiling impossible to assess due to unreliable English database. 4 LPIS contains more than 12 000 overlapping reference parcels, which have led for claim year 2007 to double payments for around 15 000 ha. 5 Discrepancies between regional and central database of entitlements.
6 No precise eligible area recorded in LPIS.
7 Eligible area recorded in LPIS found unreliable and had no capping effect on area admitted and paid. 8 Claims submitted by a natural person or a municipality for land actually farmed by other people. 9 Substantial number of corrections of claims without application of penalties.
10 Double and overpayments for 5 500 farmers. 11 Payment of areas in excess of eligible areas recorded in LPIS. 12 Vectorisation not completed for all reference parcels.
A Unverified remote sensing results accepted for payment. B Obligatory inspection rate not achieved.
C Ineligible land accepted for SAPS.
a No agricultural activity and no GAEC maintenance required for substantial rough grazing areas admitted under SPS. b Insufficient national GAEC/CC requirements for grassland.
2.2 — Assessment of selected supervisory and control systems — Rural Development
Member State
Administrative procedures and controls to ensure correct
payment including quality of databases
On-the-spot inspection methodology, selection, execution, quality control and reporting of individual results
Implementation and control
of GAEC/Cross-compliance Overall assessment
Czech Republic N/A
Greece Hungary N/A Ireland N/A Italy N/A Portugal N/A Spain Effective Partially effective Not effective
N/A Not applicable (Payments audited not subject to cross compliance)
2.3 — Overall assessment of supervisory and control systems
Overall assessment 2008 2007
Effective Partially effective Not effective
EN
Court observation Action taken Court analysis Commission reply
Rural development
Interest rate subsidies: the procedures in place do not ensure an adequate audit trail with the result that the regularity of the payment of the EU subsidies to the final beneficiaries cannot be verified (France) (paragraph 5.15 (*)).
France recognises that the existing system is imperfect and intends to set up a new system allowing to reconcile the administration’s databases with the banks’. Once in operation, this system will make it easier to track the loan from the bank to the final beneficiary.
The problem noted by the Court will persist at
least as long as the new system is not fully oper
ational.
This issue has been followed up by the Commission. The Member State has introduced a new administrative system which from 2008 onwards makes it easier to track the loan from the bank to the final beneficiary. Furthermore, the Commission analyzed the results of recent audits carried out by the Member State to determine the financial impact for the previous programming periods.
Rural development
The imprecise definitions in national legislation of some eligibility conditions and the often complex
rules, particularly those related to agri-environ
mental measures, adversely affect the quality of the controls carried out to verify the farmers’ compliance with the relevant requirements (paragraph 5.32 (*)).
No noticeable action was taken in 2008 in order to simplify the rules governing rural development expenditure. The Commission considers that ‘since agri-environmental measures are complex by nature, there is only very limited scope for simplification without jeopardising their objectives’ (Annual Activity Report 2008 of Directorate General for Agriculture and Rural Development, page 117).
Simplification of complex rules, in particular those applying to agri-environmental measures, is still desirable.
Concrete actions started and/or envisaged are:
— a modification of Regulation (EC) No 1975/2006 in order to further clarify certain issues and to better align its rules to those applicable in the first pillar;
— the ongoing simplification exercise, which has resulted in a number of proposals for simplification also for the second pillar;
— the setting up of an enhanced procedure to discuss difficulties encountered by Member States in imple
menting and controlling rural development measures with the aim to foster the exchange and sharing of experience and expertise between Member States. The outcome of these meetings could then be used to further improve and update the existing guidelines, which in turn could help to improve the design, implementation and controls of the measures concerned.
EN icial Jour nal of the European Union 117
Court observation Action taken Court analysis Commission reply
IACS
The LPIS in Greece is incomplete and contains errors in the referencing of parcels. Furthermore, in some countries the graphical layer of the LPIS (GIS) contains only aerial photos that are more than five (France, and Sweden) years old. In Portugal the update is carried out with significant delays (5.30(b), 5.30(c) (*)).
The 2007 Annual Activity Report of the Director General for Agriculture contains again a reservation in respect of insufficient implementation of the IACS in Greece.
According to the 2008 Annual Activity Report of the Director General for Agriculture, as of the 2009 claim procedure, all the elements of the IACS in Greece are in place and operational and the reservation can be lifted.
This is without prejudice to the ongoing conformity clearance procedures covering the financial risks which result from the deficiencies in the IACS for the years 2006 — 2008. In the framework of these procedures, the consequences of, in particular, the persistent deficiencies in the LPIS-GIS need to be assessed.
The Court will audit the SPS and IACS/LPIS in
Greece in 2009. The Commission closely monitors the situation in Greece. A new Commission audit mission is scheduled
for autumn 2009.
SPS
The audit found systematic shortcomings in calcu
lation of the entitlements (5.22 (*) to 5.26 (*)). The re-performances of controls carried out by the Court found a number of specific weaknesses in the quality of the on-the-spot controls and identified ineligible areas or parcels that should have been excluded by the national inspectors (Greece, Italy, Spain, Portugal) (5.28 (*)).
The issues named in the Annual Report 2006 and 2007 are generally already followed up through conformity procedures.
The Court found cases of different data held nationally and regionally on the national ceiling (Spain) and incomplete, inaccurate and outdated database of entitlements (UK) (5.37 (**)).
The court also found errors of systematic incorrect calculation of aid when claimants declare less area than entitlements held and have entitlements of different values (5.38 (**)).
As regards the potential overshoot of the UK ceiling for attributing entitlements, action is taken under the conformity clearance procedure.
On the calculation of the payments, the Commission is aware of the situation in Spain, Slovenia and the UK and action has already been taken under the conformity clearance procedure.
For Belgium, information received indicates that the procedure applied for the calculation of aid in the cases referred to by the Court led to differences in the amount of aid granted that did not cause any loss to the Community budget.
Olive oil
The impact of the accuracy of the olive oil GIS on the integration of the production aid scheme into the SPS has been confirmed in Greece and Italiy where four out of five olive oil SPS transactions audited contained errors, some of which led to significant over payments (5.14(c) (*)).
According to the Commission. further financial corrections on olive oil production aid have been applied in 2007 and 2008.
The Court found again errors resulting from inap
propriate calculation of entitlements from olive oil production (Greece).
The Commission confirms that the deficiencies referred to by the Court are subject to conformity clearance procedures. EN 118 Off icial Jour nal of the European Union 10.11.2009
The Court's analysis of the certifying bodies' reports has shown a need for improvements in the verification and reporting by the Paying
Agencies on the follow up of the potential irregu
larities reported (5.36 (*)).
With regard to the verification and reporting by paying agencies on the follow-up of potential
irregularities, an assessment was made by certifi
cation bodies in 90 % of the cases (although the
work carried out was not always as compre
hensive as requested by the Commission) and in 74 % of them the statement on the follow-up given by the paying agencies is a positive one.
The corrections applied by the Commission indicate that a risk of material error at the overall level of the debtors accounts exists. Therefore, the Court reiterates its doubts as regards the reliability of the debtors’accounts.
The Commission obtained enough information on debtors for clearance and accounting purposes. In no case was the financial impact found to be material at the overall account level (and thus as regards the Decision). The financial errors found are recovered through the ordinary conformity clearance procedures.
(*) Paragraph number in the ECA 2007 Annual Report. (**) Paragraph number in the ECA 2008 Annual Report.
EN icial Jour nal of the European Union 119
ANNEX 5.3
PAYING AGENCY ACCOUNTS DISJOINED FOR 2008
(million euro)
Member State Paying agency Accounts disjoined ( 1 )
EAGF EAFRD TRDI