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1 Who I am Wolfgang Kahlenborn European Commission DG Agriculture - Unit J.2 Audit of expenditure on market measures Tel.: Fax: Wolfgang.Kahlenborn@cec.eu.int Seminar Madrid
2 Introduction Who we are + what we do Our formal procedures + Financial corrections What we look for + and what we found How to deal with our missions
3 Who we are Directorate J: Audit of agricultural expenditure Director [Wolfgang BURTSCHER] J.1: Horizontal questions [Michael NIEJAHR] J.2: Audit of expenditure on market measures [Hans-Erwin BARTH] J.3: IACS and audit of direct aid [Richard ETIEVANT] J.4: Audit of rural development expenditure [Paul WEBB] J.5: Financial Audit [Michele OTTATI]
4 What we do Audit of Fruit and Vegetables expenditure [Unit J.2] Are expenditure paid in conformity with the rules? Are control systems good enough to protect EU resources and prevent fraud? Are corrective measures needed? Can systems and procedures be improved?
5 What we do Audit approach Analytical review Risk analysis and work programme Desk audits Missions to Member States Evaluate systems, especially the key and ancillary controls Substantive testing, e.g. systems walk through and transaction testing Observe controls
6 What we do Missions of the FV-team in 2005 Operational programs: Spain (2), France, Italy and United Kingdom Citrus processing Bananas (Spain and France) Withdrawals of products from the market (Spain) Dried grapes
7 Our Formal Procedures Before the mission EAGGF Committee quarterly mission programme Letter announcing the mission Information requests Detailed mission programme
8 Our Formal Procedures After the mission Mission report Letter of observation Article 8-letter Bilateral meeting Conciliation letter Conciliation hearing and report Final letter and Summary report Decision of the Commission Appeal to European Court of Justice
9 Financial corrections What is Clearance of accounts about and what is it not? Instrument ensuring effective budget execution by excluding expenditure not carried out in conformity with Community rules (shared management of expenditure). 24 month rule Clearance is not a sanctioning or penalty mechanism
10 How is exclusion of expenditure determined? Guidelines for the calculation of financial corrections VI/5330/97 Evaluation based on errors of individual files Based on risk of financial losses: flat rate corrections depending on gravity of non respect: Key controls (substantive elements of a claim (area, weight, nature of crop or product) : 5, 10 or 25 % or totality Ancillary checks (adminstrative control, such as an application of risk analysis) : 2 % Increase of correction in the event of recurrence
11 Fruits and Vegetables: Financial corrections decided in 2004 and 2005 What we corrected Ad hoc -decisions No15 20 For all Member States: 188 Mio EUR For Spain: 52 Mio EUR Spain on operational programs: 2.9 Mio EUR (ad hoc 19)
12 What we look for Key Points Clear instructions to staff Reliable procedures Secure systems Relevant risk analysis A fully documented audit trail
13 What we found Our main findings on operational programs Value of marketed production Contribution of members Risk of double founding Expenditure
14 What we found Our main findings on... expenditure Actions of the operational programme not balanced Personnal costs for the Commercial department any improvement of the situation? General Costs not eligible Expenditure on processing not eligible Residual value of replaced investment Investments financed over several years
15 What we found Our main findings on... recognition Members and Voting rights Producers commercialise directly (not via PO) Technical installing: storage, handling of products An artificially created producer organisation
16 What we found Our main findings on controls Third party checks are rare Bodies to check in other Member States Drawing up of reports takes often too much time! Information between 4045 and scheme managers
17 How to deal with our missions Contacts between us and Member States via the Coordinating Body) During the mission: Documents needed on the spot (if necessary, ask before!) Statistics available? Staff with experience of the measure should be present Person accompanying us Take also copies
18 Thanks for your attention!
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