EUROPEAN COMMISSION Budget

EUROPEAN COMMISSION Budget The Accounting Officer of the Commission FINANCIAL CORRECTIONS UNDER THE COHESION POLICY 2015 REPORT AS AT 30th JUNE 2015 ...
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EUROPEAN COMMISSION Budget The Accounting Officer of the Commission

FINANCIAL CORRECTIONS UNDER THE COHESION POLICY 2015 REPORT AS AT 30th JUNE 2015

PROVISIONAL FIGURES

Commission européenne/Europese Commissie, 1049 Bruxelles/Brussel, BELGIQUE/BELGIË - Tel. +32 22991111 Office: BRE2 09/533 - Tel. direct line +32 229-95440

INDEX

1.

INTRODUCTION ..................................................................................................... 3

2.

FINANCIAL CORRECTIONS UNDER COHESION POLICY ........................ 3

3.

ANALYSIS OF 2015 FINANCIAL CORRECTIONS ....................................... 3

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1.

INTRODUCTION

During the 2006 discharge exercise the Budget Authority asked the European Commission (EC) to provide regular information on the financial corrections made to programmes under the Cohesion policy. This report gives information on the 2015 financial corrections at the end of June 2015.

2.

FINANCIAL CORRECTIONS UNDER COHESION POLICY

Financial corrections are the main tool used for the correction of errors and irregularities in the context of shared management. They are made by the EC so as to exclude from EU funding expenditure that is not in accordance with applicable rules and regulations. The term "financial correction" is used to cover a wide range of corrective measures, which apply both before and after the EC makes (or reimburses) expenditure. They can result from controls and audits at any level of the control system in the Member States or from audits by the EC or the European Court of Auditors (ECA) or OLAF investigations. Member States are primarily responsible for making financial corrections in relation to irregularities committed by beneficiaries. Where the Member State agrees to make a correction as a result of its own or EU control and audit activity, so as to implement the financial correction, it may withdraw the amount of irregular expenditure in the following declaration of expenditure or deduct the irregular amount from a next payment claim, and thus re-use the EU funding released for other eligible expenditure under the programme concerned (but not related to the operation or operations that were the subject of the correction). The Commission may take a formal decision to apply financial corrections to the Member State where the Member State has failed to make the required corrections or where there are serious failings in the management and control systems which could lead to systemic irregularities. A financial correction applied by a Commission decision involves a net reduction of EU funding to the programme concerned.

3.

ANALYSIS OF 2015 FINANCIAL CORRECTIONS

The financial corrections reported below result from audit work performed at EU level (i.e. by the EC, the ECA and OLAF). These financial corrections were either confirmed or implemented in the period from 1 January 2015 to 30 June 2015 for: – the programming period 2007-2013; – the programming period 2000-2006, for which the closure process is on-going; – and for the last phase of the closure of the programming period 1994-1999. The following tables1 do not include the results of the Member States' own checks of Structural Funds expenditure. It should be noticed that during 2015, Court of Justice judgements were issued annulling a number of regional policy financial corrections' decisions taken between 2008 and 2010. These corrections totalled almost EUR 0.5 billion and related to the programming period 1994-1999. The judgements received reflect procedural issues arising from Regulation 1083/2006. The Commission is analysing the impact. The financial corrections are shown per fund, per programming period and per classification of financial correction:

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All figures are rounded two digits after the decimal. It should be noted that due to rounding of figures, some figures in the tables may not add up.

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COHESION POLICY 2015 FINANCIAL CORRECTIONS CONFIRMED AT 30th JUNE 2015 ACCRUAL BASIS EUR millions ERDF

Financial Corrections 1994-99 period: With recovery order Decommitment/deduction at closure Not yet implemented Sub-total 1994-99 period*

CF

ESF

FIFG /EFF

EAGGF Guidan ce

TOTAL

3.6 3.6

-

-

-

-

3.6 3.6

Financial Corrections 2000-2006: With recovery order Deduction by Member States Decommitment/deduction at closure Not yet implemented Sub-total 2000-2006 period

24.6 92.3 65.7 182.6

1.8 20.1 21.8

179.3 179.3

0.5 0.5

95.0 95.0

206.2 112.3 160.6 479.2

Financial Corrections 2007-2013: With recovery order Deduction by Member States Decommitment/deduction at closure Not yet implemented Sub-total 2007-2013 period

168.9 85.4 254.3

22.7 22.7

45.7 67.3 113.1

0.7 3.8 4.5

-

238.0 156.5 394.6

Total financial corrections per category: With recovery order Deduction by Member States Decommitment/deduction at closure Not yet implemented

28.3 168.9 92.3 151.1

1.8 22.7 20.1 -

179.3 45.7 67.3

0.5 0.7 3.8

95.0

209.8 238.0 112.3 317.2

440.5

44.6

292.4

5.0

95.0

877.4

Total financial corrections accepted or decided at 30th June 2015

* In 2015 the Court of Justice decided in favour of the beneficiary Member States for a number of legal cases (EUR 0.5 billion) relating to ERDF financial corrections implemented in 2008/10.

The figures are presented on an accrual basis, which means that financial corrections confirmed during the reporting period from 1 January 2015 to 30 June 2015 are included, even if those corrections have not been implemented during that period. In the reporting period, out of a total of EUR 877.4 million of financial corrections confirmed, EUR 447.8 million were implemented via recovery order or deduction by Member State. For the ERDF and the Cohesion Fund the amount of financial corrections confirmed totalled EUR 485.1 million. Of this amount, EUR 204.4 million relate to the 2000-2006 programming period and its on-going closure procedure. EUR 277 million are the result of irregularities during implementation of the 2007-2013 programming period. The Member States with the highest level of corrections confirmed for both programming periods were Greece (EUR 157.1 million), Italy (EUR 121.5 million), Spain (EUR 83.9 million) and the Czech Republic (EUR 78.6 million). For ESF, the total amount of financial corrections confirmed for the reporting period stands at EUR 292.4 million for the two programming periods concerned. For the programming period 2000-2006, the increase in the reported financial corrections compared to the previous quarter results from the acceptance by Spain of the closure proposal for one programme, accounting for EUR 30.3 million. For the programming period 2007-2013 the reported financial corrections result from the on-going contradictory procedures between the EC and Member States following DG EMPL policy on interruption and suspension of payments resulting in the acceptance of EUR 53.3 million of new financial corrections in that quarter. The 4

Member States with the highest level of corrections confirmed during the second quarter 2015 were Italy (EUR 42 million), Slovakia (EUR 6.5 million) and Spain (EUR 3 million).

COHESION POLICY 2015 FINANCIAL CORRECTIONS IMPLEMENTED AT 30th JUNE 2015 CASH BASIS EUR millions ERDF

Financial Corrections 1994-99 period: With recovery order Decommitment/deduction at closure Sub-total 1994-99 period*

CF

ESF

FIFG /EFF

EAGGF Guidan ce

TOTAL

3.6 3.6

-

-

-

-

3.6 3.6

Financial Corrections 2000-2006: With recovery order Deduction by Member States Decommitment/deduction at closure Sub-total 2000-2006 period

27.9 161.4 189.3

1.8 52.1 53.9

179.6 179.6

0.5 0.4 0.9

-

209.7 213.9 423.6

Financial Corrections 2007-2013 With recovery order Deduction by Member States Decommitment/deduction at closure Sub-total 2007-2013 period

535.6 535.6

146.6 146.6

97.9 97.9

5.0 5.0

-

785.1 785.1 213.3

Total financial correction per category: With recovery order

31.5

1.8

179.6

0.5

-

Deduction by Member States

535.6

146.6

97.9

5.0

-

785.1

Decommitment/deduction at closure

161.4

52.1

-

0.4

-

213.9

Total financial corrections implemented at 30th June 2015

728.5

200.5

277.5

5.8

-

1 212.3

* In 2015 the Court of Justice decided in favour of the beneficiary Member States for a number of legal cases (EUR 0.5 billion) relating to ERDF financial corrections implemented in 2008/10.

The figures are presented on a cash basis, which means that financial corrections implemented during the reporting period from 1 January 2015 to 30 June 2015 are included, whether they were confirmed in that period, or in previous years. In the reporting period, EUR 785.1 million or 65 % of the total of EUR 1 212.3 million of financial corrections implemented, were implemented by deduction by Member States. For ERDF and the Cohesion Fund together, the corrections implemented totalled EUR 929 million. Out of this amount, EUR 243.2 million relates to the 2000-2006 programming period and EUR 682.2 million to the 2007-2013 programming period, out of which EUR 336.6 million of corrections were applied by Member States before or at the time of the declaration of expenditure to the EC. The Member States with the highest level of corrections implemented were the Czech Republic (EUR 279 million), Italy (EUR 185 million), Hungary (EUR 129 million), and Greece (EUR 94 million). For ESF, the total amount of financial corrections implemented for the reporting period stands at EUR 277.5 million for the two programming periods concerned. For the programming period 2000-2006, all financial corrections confirmed were also implemented in the same quarter via recovery order, keeping the implementation rate at 100 %. 5

For the programming period 2007-2013, EUR 35.5 million has been implemented in the second quarter of 2015 reflecting the deduction from the payment claims of financial corrections accepted and implemented by the following countries: Italy (EUR 30 million), Poland (EUR 3 million) and Spain (EUR 2.5 million). The processing of payment transactions in the second quarter 2015 brings the implementation ratio to 87 %.

COHESION POLICY FINANCIAL CORRECTIONS CONFIRMED CUMULATIVE FIGURES AT 30th JUNE 2015 ACCRUAL BASIS EUR millions ERDF

CF

ESF

FIFG /EFF

TOTAL

EAGGF Guidance

1994-99 period* 2000-2006 period

1 797.2

268.2

559.7

99.7

1.8

2 726.6

5 821.1

801.8

1 990.1

125.6

177.7

8 916.3

2007-2013 period

1 794.9

470.6

1 142.1

29.3

-

3 436.8

Total financial corrections confirmed at end Q2 2015

9 413.2

1 540.6

3 691.9

254.6

179.5

15 079.7

Total financial corrections confirmed as at end 2014

8 972.6

1 496.0

3 399.5

249.7

84.5

14 202.4

* In 2015 the Court of Justice decided in favour of the beneficiary Member States for a number of legal cases (EUR 0.5 billion) relating to ERDF financial corrections implemented in 2008/10.

The figures presented report the cumulative financial corrections confirmed at 30 June 2015, which means all financial corrections confirmed since the first report in 2008.

COHESION POLICY FINANCIAL CORRECTIONS IMPLEMENTED CUMULATIVE FIGURES AT 30th JUNE 2015 EUR millions ERDF 1994-99 period* 2000-2006 period 2007-2013 period

CF

ESF

FIFG /EFF

EAGGF Guidance

TOTAL

1 797.2 5 560.4 1 620.5

269.3 788.1 470.6

559.7 1 990.1 1 008.8

99.7 32.9 23.9

1.8 82.7 -

2 727.8 8 454.3 3 123.8

Total financial corrections implemented at end Q2 2015

8 978.2

1 528.0

3 558.6

156.5

84.5

14 305.9

Total financial corrections implemented as at end 2014

8 249.6

1 327.6

3 281.1

150.7

84.5

13 093.5

* In 2015 the Court of Justice decided in favour of the beneficiary Member States for a number of legal cases (EUR 0.5 billion) relating to ERDF financial corrections implemented in 2008/10.

The above table illustrates the cumulative total of financial corrections implemented as at 30 June 2015, regardless of the year when the financial correction was confirmed. It shows that by the end of the first half of 2015, 95 % (EUR 14 305.9 million) of confirmed financial corrections have been implemented.

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COHESION POLICY FINANCIAL CORRECTIONS CONFIRMED NOT YET IMPLEMENTED CUMULATIVE FIGURES AT 30th JUNE 2015 EUR millions ERDF

260.6 174.4

(1.2) 13.7 -

133.3

92.7 5.4

EAGGF Guidanc e 95.0 -

Total financial corrections not yet implemented at end Q2 2015

435.0

12.5

133.3

98.1

95.0

773.9

Total financial corrections not yet implemented as at end 2014

723.0

168.5

118.4

98.9

-

1 108.8

1994-99 period* 2000-2006 period 2007-2013 period

CF

ESF

FIFG /EFF

TOTAL

(1.2) 462.0 313.1

* In 2015 the Court of Justice decided in favour of the beneficiary Member States for a number of legal cases (EUR 0.5 billion) relating to ERDF financial corrections implemented in 2008/10.

The above table gives information on the cumulative financial corrections not yet implemented at 30 June 2015 per programming period and per fund. EUR 773.9 million remain to be implemented. Concerning the ERDF and the Cohesion Fund, EUR 447.5 million are financial corrections confirmed but not yet implemented at end June. An amount of EUR 274.3 million relates to 2000-2006 programing period and is the result of long discussions with the Member States on the financial corrections to be deducted from final expenditure declaration as part of the on-going closure procedure. The Member States with the highest level of corrections pending, irrespective of the programming period, are Greece (EUR 107.8 million), Italy (EUR 82 million) and United Kingdom (EUR 76.1 million). For ESF, all financial corrections for the programming period 2000-2006 have been implemented. For the programming period 2007-2013, the cumulative amount of financial corrections not yet implemented stands at EUR 133.3 million and represents mostly financial corrections accepted in 2015 for which financial transactions are not yet validated or payment claim not yet submitted by the Member State. The Member States with the highest amount of financial corrections not yet implemented are Spain (EUR 60 million) and Italy (EUR 42 million).

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