Annual Activity Report

Transcription

1 2011 Annual Activity Report Directorate General for Agriculture and Rural Development Annexes agri_aar_2011_final_annexes Page 1 of 121

2 Table of Contents ANNEX 1: STATEMENT OF THE INTERNAL CONTROL COORDINATOR...3 ANNEX 2: HUMAN AND FINANCIAL RESOURCES BY ABB ACTIVITY...4 ANNEX 3: DRAFT ANNUAL ACCOUNTS AND FINANCIAL REPORTS...8 ANNEX 4: MATERIALITY CRITERIA...30 ANNEX 5: INTERNAL CONTROL TEMPLATE FOR BUDGET IMPLEMENTATION (ICT)...31 ANNEX 6: DG ADDITIONAL INFORMATION ON OVERALL IMPACT OF THE POLICY AND MAIN RESULTS ACHIEVED BY ABB ACTIVITY...37 ANNEX 7: CONTROL STATISTICS...83 ANNEX 8: BACKGROUND TO ACCREDITATION UNDER EAGF/EAFRD - SUMMARY OF FINDING REGARDING PAYING AGENCIES UNDER PROBATION OR LIMITED ACCREDITATION OR FOR WHICH SERIOUS DEFICIENCIES HAVE BEEN REVEALED ANNEX 9: ABBREVIATIONS agri_aar_2011_final_annexes Page 2 of 121

3 ANNEX 1: STATEMENT OF THE INTERNAL CONTROL COORDINATOR I declare that in accordance with the Commission s communication on clarification of the responsibilities of the key actors in the domain of internal audit and internal control in the Commission 1, I have reported my advice and recommendations to the Director- General on the overall state of internal control in the DG. I hereby certify that the information provided in Parts 2 and 3.1 of the present AAR and in its annexes 2 to 9 is, to the best of my knowledge, accurate and exhaustive. [signed] Rudolf MOEGELE Deputy Director General Internal Control Coordinator 1 SEC(2003)59 of agri_aar_2011_final_annexes Page 3 of 121

4 ANNEX 2: HUMAN AND FINANCIAL RESOURCES BY ABB ACTIVITY DG Code ABB Activity ABB Activity Establishment Plan posts External Personnel Total Interventions agricultural markets in Direct aids Rural development Pre-accession measures in the field of agriculture and rural development AGRI International aspects of Agriculture and rural development policy area Audit agricultural expenditure of Policy strategy and coordination of Agriculture and rural development policy area AWBL- 01 Administrative support Agriculture Directorate- General for AWBL- 03 External service 1 1 AGRI Total Grand Total agri_aar_2011_final_annexes Page 4 of 121

5 IMPLEMENTATION OF THE GLOBAL ENVELOPE BUDGET LINES CONCERNED: TO (IN EUROS) APPROPRIATIONS 2011 (C1) APPROPRIATIONS carried over (C8) % BUDGET LINE* AMOUNTS OF IMPLEMENTATION AVAILABLE BUDGET LINE COMMITMENTS PAYMENTS APPROPRIATIONS PAIEMENTS ON APPROPRIATIONS DESCRIPTION CARRIED OVER C8 APPROPRIATIONS 2011 FROM 2010 CARRIED OVER FROM % Mission expenses Representation expenses Meeting costs Conference costs Meetings of committees Studies and consultations Development of management and information systems Further training and management training * Where 05 represents the policy area TOTAL agri_aar_2011_final_annexes Page 5 of 121

6 IMPLEMENTATION OF THE GLOBAL ENVELOPE BUDGET LINES CONCERNED: TO (based on information received from BUDG services following the Budget circular) (IN EUROS) APPROPRIATIONS 2011 C4 APPROPRIATIONS 2011 C5 BUDGET LINE* BUDGET LINE DESCRIPTION AVAILABLE APPROPRIATIONS 2011 COMMITMENTS 2011 PAYMENTS 2011 AVAILABLE APPROPRIATIONS 2011 COMMITMENTS 2011 PAYMENTS Mission expenses Representation expenses Meeting costs Conference costs Meetings of committees Studies and consultations Development of manag inform systems Further training - manag training TOTAL *: Where 05 represents the policy area agri_aar_2011_final_annexes Page 6 of 121

7 Cross delegations Crossed subdeleg. JRC ESTAT EMPL SANCO PMO To: Budget Line (CD) * (CD) (CD) (CD) (CP) Transferred Credit (CE***) Transferred Credit (CP****) Consumed Credit (CE) Consumed Credit (CP) Budget Line (CND) ** (CND) (CND) Transferred Credit Consumed Credit *CD Crédit dissocié ** CND Crédit non dissocié *** CE Crédit d'engagement **** CP Crédit de paiement agri_aar_2011_final_annexes Page 7 of 121

8 ANNEX 3: DRAFT ANNUAL ACCOUNTS AND FINANCIAL REPORTS PART 1: Financial reports Commitments and payments (tables 1 and 2 of this annex) Overall, in 2011, execution rates of commitments and payments appropriations of DG AGRI have both increased in relation to In 2011, 98 % of both commitment and payment appropriations have been executed (97 % for commitments and 95 % payments in 2010). The total amount committed of million continues to decrease (by 0.5 % compared to 2010, by 2.5 % compared to 2009) and the total amount paid of million increased (by 1.3 % compared to 2010, by 2 % compared to 2009). With regard to «direct management expenditure», the amount committed was 69.2 million (81.1 million in 2010, 79.7 million in 2009), i.e. 76 % of the available appropriations. The amount paid was 61.3 million (71.1 million in 2010, 78.2 million in 2009), i.e. 64 % of the available appropriations. With regard to «shared management expenditure» for rural development, the amount committed was million ( million in 2010, million in 2009), i.e % of the available appropriations and the amount paid was million ( million in 2010, million in 2009), i.e % of the available appropriations. For pre-accession aid, the amount committed was million (169.8 million in 2010, million in 2009), i.e. 100 % of the available appropriations, and the amount paid was million (only 14.4 million in 2010, million in 2009), i.e. 100 % of the available appropriations. With regard to «shared management expenditure» for EAGF, the amount committed and paid was million ( million in 2010, million in 2009), i.e. 97 % of the available appropriations. The unused balance on commitments, commonly known as budgetary RAL (Reste à liquider), was million at the end of 2011 ( million in 2010, million in 2009), of which million relates to rural development, million to pre-accession aid and 65.9 million to direct management expenditure. The increase in recent years is manly linked to EAFRD programmes 2. Payment time limits (table 6a/b of this annex) As far as payment time limits are concerned, there was a consolidation of the progress of last years: For «direct management expenditure» (see table 6a), 13 payments were made beyond the allowed payment time limit (only 7 payments in 2010), which represents 1.3 % of the total number of payments (0.7 % in 2010). The number and duration of suspensions has increased (in 2011 respectively by 30 % and 70 %). For «rural development» (see table 6b), 4 payments were made beyond the allowed payment time limit (none in 2010). The average delay was further reduced from to 22.7 (2010) to 20.6 days. There is however no information available on suspensions. 2 For which the RAL at the end of 2011 includes the RAL of previous years since agri_aar_2011_final_annexes Page 8 of 121

9 Revenue and income For EAGF, a total amount of million was recovered off-budget on a monthly basis in 2011 ( million in 2010). Of this amount, million was still to be cashed on ( million on ). The budgetary regularised income continues to decrease at a rapid pace and corresponds to a total amount of million ( million in 2010, million in 2009) of assigned revenue under EAGF linked to milk levies, irregularities, conformity clearance and restructuring amount of the sugar sector 3. Only income from 'irregularities' (from Member States) remains stable compared to earlier years. At the end of 2011, -41 million is still owed to DG AGRI (-220 million at the end 2010) 4. With regard to the «ageing balance of recovery orders» at , no significant movement was registered for old recovery orders issued between 1998 and 2005 (-5 % mainly due to renunciations). Finally, with regard to the 'Recovery context' (table 8 of this annex), it is useful to mention that the amounts recovered under EAGF for a total amount of are not included in the annex 3 report of DG BUDG. Annexes: Table 1a: Commitments Table 1b: Payments Table 2: Financial circuits (commitments/ payments) Table 3 : Commitments to be settled (RAL) Table 4: Balance sheet Table 5: Economic Outturn Account Table 6a/b: Average Payment Time Limits (RD and Direct expenses) Table 7: Income Table 8: Recovery context Table 9: Ageing balance of Recovery Orders Table 10: Waivers of Recovery Orders Table 11: Negotiated Procedures Table 12: Summary of Contracts 3 This amount includes million for income line 6701 (clearance), million for income line 6702 (irregularities), million for income line 6703 (milk) and for the sugar restructuring fund (680). Only income from irregularities remains stable. 4 Instead of million as reported in 'AAR_2011 annex3' of DG BUDG. agri_aar_2011_final_annexes Page 9 of 121

10 PART 2: Draft annual accounts Accounting principles and methods The annual accounts of DG AGRI have been prepared in accordance with the generally accepted accounting principles. Estimates have been made, where necessary, in accordance with the methodology agreed upon with the services of the Accountant of the European Commission. It should be noted that the balance sheet and economic outturn account of Directorate General, presented in Annex 3 to this Annual Activity Report, represent only the assets, liabilities, expenses and revenues that are under the control of this Directorate General. Significant amounts such as own resource revenues and cash held in Commission bank accounts are not included in this Directorate General's accounts since they are managed centrally by DG Budget, on whose balance sheet and economic outturn account they appear. Other items not included are: the intangible assets (IT software bought externally) or the tangible fixed assets (hardware, technical equipment, office furniture, buildings) declared/recorded by DG DIGIT and by OIB respectively; personnel and management expenses which are managed centrally; the appropriation of the net result of the year and of prior years, except for the opening balance in As the accumulated result of the Commission is not split amongst the various Directorates-General, the balance sheet presented here is not in equilibrium. Additionally, the figures included in table 4 of this annex are, at this date, still subject to audit by the Court of Auditors. It is thus possible that amounts included in these tables may have to be adjusted following this audit. Balance Sheet TABLE 4 : BALANCE SHEET AGRI BALANCE SHEET A.I. NON CURRENT ASSETS A.I.1. Intangible Assets A.I.5. LT Pre-Financing A.II. CURRENT ASSETS A.II.2. Short-term Pre-Financing A.II.3. Short-term Receivables ASSETS P.II. NON CURRENT LIABILITIES P.II.2. Long-term provisions P.III. CURRENT LIABILITIES P.III.4. Accounts Payable LIABILITIES NET ASSETS (ASSETS less LIABILITIES) agri_aar_2011_final_annexes Page 10 of 121

11 Assets o non current assets Long term pre-financing: it concerns shared management expenditure exclusively and it relates mainly to the pre-financing paid between 2007 and 2010 to Member States for the financing period (EAFRD and IPARD). The period of settlement exceeds one year as the pre-financing payments are settled at the end of the financing period. Additionally, it also concerns long term 'prepaid expenses' under EAFRD ( 362 million). o current assets Short-term pre-financing: the increase (+61 % vs 2010) is mainly due to short term 'prepaid expenses' which represents 93 % of the total amount 5. More than 99 % of the amount in this item relates to shared management and decentralised management expenditure. With regard to shared management, modulation pre-financing payments made to Member States for accompanying measures under rural development (EAGF) strongly diminished. Due to the closure of the programming period, also the non cleared stock of pre-financing paid to Member States for rural development and preaccession programmes under the EAGGF Guidance section, strongly diminished. In principle, the period of settlement does not exceed one year. Short-term receivables 6 : million are owed to DG AGRI by Member States (99 %) and by private organisations (1 %). The amount owed by Member States mostly concerns the amounts to be recovered under EAGF and EAGGF Guidance section, TRDI and Sapard (financing period ) of which an important part concerns receivables established further to irregularities committed by final beneficiaries and detected by the Member States under EAGF. A value reduction of 788 million has been applied to outstanding receivables, equivalent to 100% of the value of old receivables from private organisations and 65% of those from Member States. Liabilities o Non current liabilities Long-term provisions: this amount mainly relates to the estimate of potential future expenses resulting from court cases awaiting judgement. The increase (+17 %) in 2011 was due for legal cases. o Current liabilities Accounts payable: this item concerns amounts payable to private firms and to Members States % of accounts payable relates to amounts payable to Member States under EAGF, EAGGF Guidance section ( ) and EAFRD. It includes amounts already requested by Member States but not yet paid as well as an estimate of the amounts which Member States and beneficiaries are entitled to claim. 5 In particular due to short term advances paid under EAFRD which were not booked in The total amount of ST receivables in the BO DWH reporting of DG BUDG had to be corrected for ,00 (correct figure from SAP). agri_aar_2011_final_annexes Page 11 of 121

12 Economic Outturn Account TABLE 5 : ECONOMIC OUTTURN ACCOUNT AGRI ECONOMIC OUTTURN ACCOUNT II.1 SURPLUS/ DEF. FROM OPERATING ACTIVT II.1.1. OPERATING REVENUES II Other operating revenue II.1.2. OPERATING EXPENSES II Administrative Expenses II Operating Expenses II.2. SURPLUS/DEF. NON OPERATING ACTIVIT II.2. FINANCIAL OPERATIONS II.2.1. Financial revenue II.2.2. Financial expenses ECONOMIC OUTTURN ACCOUNT Surplus/Deficit from operating activities o Operating Revenue Other operating revenue: this amount corresponds to the revenue generated mainly by agricultural levies (milk and sugar levies), and amounts recovered due to irregularities, conformity clearance and financial corrections, representing 7 % and 81 % of the total operating revenue respectively. 8 % of recovery of expenses under shared management is due to financial corrections under EAGF-Guidance and EAFRD. Finally, 3 % is caused by positive reversal of non used provisions for legal cases and 9 % to a reduction of the value reduction of the EAGF receivables. There was a limited increase of revenue from levies. However, this could not balance the strong reduction of operating revenues in 2011 which was mainly due to a lesser recovery of expenses due to irregularities under EAGF 7. o Operating expenses Administrative expenses: these expenses represent only 0,02% of all operating expenses and they mainly relate to amounts concerning the purchase of IT and non IT services (94 %). Operating expenses: 99 % of the operating expenses relates to shared management expenditure comprising EAGF, EAFRD, EAGGF Guidance section, Sapard and TRDI. The EAGF amount corresponds to million 8 ( million in 2010) and the amount for Sapard-TRDI-EAGGF Guidance section and EAFRD under shared management 9 corresponds to million ( million in 2010). 7 In order to have a more correct image of the execution, the positive correction for TRDI PL of 46 million should not be taken into account. This correction however only has a limited impact and does not change the global negative tendency. 8 Contrary to 2010, there is also a positive cut-off which shows an expected increase of expenses in Expenses for Decentralised management expenditure (Sapard programmes in favour of Croatia), amount to 4.8 million. agri_aar_2011_final_annexes Page 12 of 121

13 0.05 % of the operating expenses relate to direct management expenditure (Farm Accountancy Data Network, action grants awarded to NGOs, contribution to international organisations, purchase of services ) 10. Surplus/Deficit from non operating activities o Financial Operations Financial Revenue: financial revenue resulting from interest on pre-financing paid to beneficiaries of the SAPARD programmes which will have to be reimbursed to DG AGRI % in agri_aar_2011_final_annexes Page 13 of 121

14 Annex 3 Financial Reports - DG AGRI - Financial Year 2011 Table 1a : Commitments Table 1b : Payments Table 2 : Financial circuits (commitments - payments) Table 3 : Commitments to be settled Table 4 : Balance sheet AGRI Table 5 : Economic outturn account AGRI Table 6a : Average Payment Times (Direct expense) Table 6b : Average Payment Times (Rural development) Table 7 : Income Table 8 : Recovery of undue Payments Table 9 : Ageing Balance of Recovery Orders Table 10 : Waivers of Recovery Orders Table 11 : Negotiated Procedures (excluding Building Contracts) Table 12 : Summary of Negotiated procedures (excluding Building Contracts) agri_aar_2011_final_annexes Page 14 of 121

15 TABLE 1a: OUTTURN ON COMMITMENT APPROPRIATIONS IN 2011 (in Million ) Chapter Commitment Commitments appropriations % made authorised * 1 2 3=2/ Title 05 : Agriculture and rural development Administrative expenditure of 'Agriculture and rural development' policy area ,59 % Interventions in agricultural markets ,20 % Direct aids ,92 % Rural development ,57 % Pre-accession measures in the field of agriculture and rural development International aspects of 'Agriculture and rural development' policy area ,00 % ,22 % Audit of agricultural expenditure ,67 % Policy strategy and coordination of 'Agriculture and rural development' policy area ,51 % Total Title % Total DG AGRI % * Commitment appropriations authorised include, in addition to the budget voted by the legislative authority, appropriations carried over from the previous exercise, budget amendments as well as miscellaneous commitment appropriations for the period (e.g. internal and external assigned revenue). agri_aar_2011_final_annexes Page 15 of 121

16 TABLE 1b: OUTTURN ON PAYMENT APPROPRIATIONS IN 2011 (in Million ) Chapter Payment Payments appropriations made authorised * % 1 2 3=2/1 Title 05 : Agriculture and rural development Administrative expenditure of `Agriculture and rural development' policy area ,55 % Interventions in agricultural markets ,24 % Direct aids ,92 % Rural development ,24 % Pre-accession measures in the field of agriculture and rural development ,00 % International aspects of `Agriculture and rural development' policy area ,25 % Audit of agricultural expenditure ,44 % Policy strategy and coordination of `Agriculture and rural development' policy area ,86 % Total Title % Total DG AGRI % * Payment appropriations authorised include, in addition to the budget voted by the legislative authority, appropriations carried over from the previous exercise, budget amendments as well as miscellaneous payment appropriations for the period (e.g. internal and external assigned revenue). agri_aar_2011_final_annexes Page 16 of 121

17 TABLE 2: FINANCIAL CIRCUITS (commitments / payments) Execution 2011 Expenditure Commitments Payments Crédits Exécution Crédits Exécution Direct expenses % % FEAGA % % Shared Management Rural Development % % Shared Management Pre-accession % % Shared/decentralised Management TOTAL % % agri_aar_2011_final_annexes Page 17 of 121

18 TABLE 3 : BREAKDOWN OF COMMITMENTS TO BE SETTLED AT 31/12/2011 (in Million ) Chapter 2011 Commitments to be settled Commitments to be settled from Total of Commitments to be settled at end Total of Commitments to be settled at end financial of financial year of financial year Commitments Payments % to be years RAL settled previous to (incl.corrections) (incl.corrections) =1-2 4=1-2//1 5 6= Administrative expenditure of `Agriculture and rural development' policy area Title 05 : Agriculture and rural development % , Interventions in agricultural markets % , Direct aids % , Rural development % , Pre-accession measures in the field of agriculture and rural development International aspects of `Agriculture and rural development' policy area % , % , Audit of agricultural expenditure % ,49 Policy strategy and coordination of `Agriculture and rural development' policy area % ,82 Total Title % Total DG AGRI % agri_aar_2011_final_annexes Page 18 of 121

19 agri_aar_2011_final_annexes Page 19 of 121

20 TABLE 4 : BALANCE SHEET AGRI BALANCE SHEET A.I. NON CURRENT ASSETS A.I.1. Intangible Assets A.I.5. LT Pre-Financing A.II. CURRENT ASSETS A.II.2. Short-term Pre-Financing A.II.3. Short-term Receivables ASSETS P.II. NON CURRENT LIABILITIES P.II.2. Long-term provisions P.III. CURRENT LIABILITIES P.III.4. Accounts Payable LIABILITIES NET ASSETS (ASSETS less LIABILITIES) P.I.2. Accumulated Surplus / Deficit Non-allocated central (surplus)/deficit* TOTAL * This figure is a balancing amount presented here so as to reflect the fact that the accumulated result of the Commission is not attributed to each DG agri_aar_2011_final_annexes Page 20 of 121

21 TABLE 5 : ECONOMIC OUTTURN ACCOUNT AGRI ECONOMIC OUTTURN ACCOUNT II.1 SURPLUS/ DEF. FROM OPERATING ACTIVT II.1.1. OPERATING REVENUES II Other operating revenue II.1.2. OPERATING EXPENSES II Administrative Expenses II Operating Expenses II.2. SURPLUS/DEF. NON OPERATING ACTIVIT II.2. FINANCIAL OPERATIONS II.2.1. Financial revenue II.2.2. Financial expenses ECONOMIC OUTTURN ACCOUNT It should be noted that the balance sheet and economic outturn account presented in Annex 3 to this Annual Activity Report, represent only the (contingent) assets, (contingent) liabilities, expenses and revenues that are under the control of this Directorate General. Significant amounts such as own resource revenues and cash held in Commission bank accounts are not included in this Directorate General's accounts since they are managed centrally by DG Budget, on whose balance sheet and economic outturn account they appear. Furthermore, since the accumulated result of the Commission is not split amongst the various Directorates General, it can be seen that the balance sheet presented here is not in equilibrium. Additionally, the figures included in tables 4 and 5 are provisional since they are, at this date, still subject to audit by the Court of Auditors. It is thus possible that amounts included in these tables may have to be adjusted following this audit. agri_aar_2011_final_annexes Page 21 of 121

22 TABLE 6a: AVERAGE PAYMENT TIME LIMITS (direct expenditure) Exercice 2011 Délais de paiement et suspensions au 31/12/2011 Trans. clôtur. > délai autorisé Suspensions délai de paiement Nombre Ligne budgétaire Libellé NB paiements Délai moyen % sur total Nombre trans. Total jours trans. > délai trans. suspendues suspendus autor External staff Frais de mission et de réception Pers. interimaire & assist. techn. et administrative Frais de conférences Etudes et consultations Développement systèmes d'information Perfectionnement professionnel Actions de contrôle IPARD administrative expense Feoga: ass. techn. non opérationnelle Projet pilote Fond de sécur. dép. adm Dép. adm. Agriculture durable, conservation des sols Dépenses analyse et inspection ,12 % Fonds comm. rech. et inform ,67 % Support farmers cooperatives FEOGA orient. Leader - AT Completion innovative measures FEOGA Orient. AT (non opérat.) Sylviculture Ress. génétiques vég. & anim agri_aar_2011_final_annexes Page 22 of 121

23 Assist. techn. opérationnelle Pilot exchange young farmers Accords Int. en mat. Agric Actions contr. et prév. - CE Contrôles application Rég. Agric RICA Restructuring surveys Restruct. systèmes enquêtes Actions information PAC ,94 % EAGF operat technical assistance Pilot EU legislation Réseau échange données (IDABC) Réseau échange données (IDABC) DG AGRI ,31 % agri_aar_2011_final_annexes Page 23 of 121

24 TABLE 6b: AVERAGE PAYMENT TIME LIMITS (rural development) Exercice 2011 Délais de paiement et suspensions au 31/12/2011 Ligne budgétaire Libellé Trans.clôtur.>délai autorisé (60 jours) NB Délai paiements moyen % sut Nombre trans. total >délai autor. trans FEOGA-Orientation: Objectif % FEOGA-Orientation: Peace n/a n/a (10) FEOGA-Orientation: Leader % IFDR: Programmes n/a n/a / 02 SAPARD: Programmes n/a n/a Total système local GFO (1) 79 0,0 0 0,00 % FEADER: Programmes (avec plus de 45) 1.10 % Total système local RDS (2) (avec plus de 45) 1.10 % Suspensions délai de paiement Nombre trans. Total jours suspensdues suspendus / Total Développement rural + SAPARD % (1) Système local GFO: concerne la clôture des programmes FEOGA - Orientation En 2011, 88 programmes ont été clôturés, dont 79 par paiement d'un solde final positif et 9 par ordre de recouvrement par un solde final négatif. (2 Système local FEADER: concerne la programmation FEADER En 2011, 403 "Cost claims" ont été payés, dont 365 concernant des demandes de paiement présentées par les EM et 38 des "Cost claim techniques" créés par le système pour régler les apurements positifs agri_aar_2011_final_annexes Page 24 of 121

25 TABLE 7 : SITUATION ON REVENUE AND INCOME IN 2011 Revenue and income recognized Revenue and income cashed from Outstanding Chapter Current year RO Carried over RO Total Current Year RO Carried over RO Total balance 1 2 3= =4+5 7=3-6 Title 5: REVENUE ACCRUING FROM THE ADMINISTRATIVE OPERATION OF THE INSTITUTIONS 52 REVENUE FROM INVESTMENTS OR LOANS GRANTED. BANK AND OTHER INTEREST Total Title Title 6: CONTRIBUTIONS AND REFUNDS IN CONNECTION WITH UNION/COMMUNITY AGREEMENTS AND PROGRAMMES 61 REPAYMENT OF MISCELLANEOUS EXPENDITURE FINANCIAL CORRECTIONS REVENUE CONCERNING THE EUROPEAN AGRICULTURAL GUARANTEE FUND AND THE EUROPEAN AGRICULTURAL FUND FOR RURAL DEVELOPMENT TEMPORARY RESTRUCTURING AMOUNTS Total Title Title 9: MISCELLANEOUS REVENUE 90 MISCELLANEOUS REVENUE Total Title Total DG AGRI agri_aar_2011_final_annexes Page 25 of 121

26 TABLE 8 : RECOVERY OF UNDUE PAYMENTS (Number of Recovery Contexts and corresponding Transaction Amount) RECOVERY ORDERS No error / Irregularity ISSUED IN 2011 irregularity TOTALS Year of Origin (commitment) Nbr RO Amount Nbr RO Amount Nbr RO Amount No Link EXPENSES No error / irregularity Nbr Amount INCOME LINES IN INVOICES Error Irregularity No error / irregularity Nbr Non-Eligible Amount Nbr Non-Eligible Amount Nbr Non-Eligible Amount NON ELIGIBLE AMOUNT IN COST CLAIMS Error Irregularity No error / irregularity Nbr Credit Note Amount Nbr Credit Note Amount Nbr Credit Note Amount CREDIT NOTES agri_aar_2011_final_annexes Page 26 of 121

27 TABLE 9: AGEING BALANCE OF RECOVERY ORDERS AT 31/12/2011 FOR AGRI Year of Origin Number at 01/01/2011 Number at 31/12/2011 Evolution Open Amount ( ) at 01/01/2011 Open Amount ( ) at 31/12/2011 Evolution % % % % % % % % % % % % % % % % % % Totals % % TABLE 10 : RECOVERY ORDER WAIVERS IN 2011 >= Waiver Central Key Linked RO Central Key RO Accepted Amount (Eur) LE Account Group Commission Decision Comments Private Companies Private Companies Total DG AGRI Number of RO waivers 2 agri_aar_2011_final_annexes Page 27 of 121

28 TABLE 11 : CENSUS OF NEGOTIATED PROCEDURES - DG AGRI - YEAR 2011 Contracts > Negotiated Procedure Legal base Number of Procedures Amount ( ) Art b Art c Art a Total N.B In 2011, a significant increase in the number and in the amount of the negotiated procedures used by DG AGRI has been observed in comparison with the previous year. Every negotiated procedure in DG AGRI for an amount higher than requires the preliminary approval of the Director-General, further to a thorough verification of the relevant conditions. The use of the negotiated procedures in 2011 was duly justified and strictly in line with the requirements of the Financial regulation. In detail: Two Article 126 1b procedures concern a data purchase, vital for DG AGRI' international negotiations. Following an unsuccessful open procedure in which the only offer did not correspond to the established cost criteria, a negotiated procedure was launched, for efficiency reasons, with the unsuccessful tenderer of the open procedure. It resulted in a first contract and two renewals (Total amount: ). Two Article 126 1c procedures were launched following the E-Coli crisis, which gravely impacted the fruit and vegetables market in Given the state of urgency and the unforeseeable nature of this crisis, a special audiovisual campaign was organised to re-establish consumer's confidence in this sector following the Commissioner's announcement in this sense (Total Amount: ). One Article 127 1a procedure concerns a study for which initially an open procedure was launched but the received offers were discarded as not in line with the established criteria, in particular as regards the technical specifications. A negotiated procedure was opened with the tenderers. The preparation of the study is under way (Total Amount: ). agri_aar_2011_final_annexes Page 28 of 121

29 TABLE 12 : SUMMARY OF PROCEDURES OF DG AGRI EXCLUDING BUILDING CONTRACTS Internal procedures > Contract Class Count Amount ( ) Count Amount ( ) Service TOTAL Internal procedures > Procedure Type Count Amount ( ) Count Amount ( ) Negotiated Procedure after publication of a contract notice Art 127 IR Negotiated Procedure without publication of a contract notice Art 126 IR Open Procedure (Art IR) TOTAL External procedures > Contract Class TOTAL External procedures > Procedure Type TOTAL agri_aar_2011_final_annexes Page 29 of 121

30 ANNEX 4: MATERIALITY CRITERIA The criteria used in DG AGRI for making reservations are based on the Standing Instructions for the preparation of Annual Activity Reports for the year In the analysis leading to the decision whether to issue reservations or not, DG AGRI used the following criteria: for financial cases, standard quantitative materiality threshold of 2 %, i.e. when the value of the transactions affected by the deficiency represents more than 2 % of the budget of the ABB activity; for other cases, whether the Commission's reputation was at stake. agri_aar_2011_final_annexes Page 30 of 121

31 ANNEX 5: INTERNAL CONTROL TEMPLATE FOR BUDGET IMPLEMENTATION (ICT) CHARACTERISTICS OF DG AGRI POLICY ENVIRONMENT Summary : DG AGRI funds, through the EAGF, the EAFRD, SAPARD and IPARD, direct payments to farmers, market support and rural development measures. Key inherent risks in this environment : More than seven million beneficiaries, receiving support under a large variety of different aid schemes, each of which having detailed eligibility criteria. Management mode Shared management for the vast majority of the Funds, meaning that the implementation of the aid measures is delegated to Member States which, in turn, essentially operate through accredited paying agencies. The Commission verifies through the conformity clearance procedure that Member States respect the relevant EU rules. MANAGEMENT AND CONTROL SYSTEMS: STAGES AND MAIN ACTORS Preventive measures Communication information measures and to improve the quality of financial management and provision of supporting data by beneficiaries, contractors and intermediaries Compulsory administrative structure at the level of Member States, centred around the establishment of paying agencies and an authority at high level which is competent for issuing and withdrawing the agency s accreditation, based on a detailed review by an external audit body. Moreover, the heads of the paying agencies are required to provide an annual statement of assurance which covers the completeness, accuracy and veracity of the accounts and the functioning of the management and control system. If the Member State has more than one paying agency, it is further required to produce an annual summary (synthesis report) of all statements of assurance and of all certificates from the certification bodies The substantive rules governing the granting of agricultural support under both the EAGF and the EAFRD have over the past years been consolidated and simplified. Direct payments presently account for some 91.4 % of total EAGF expenditure, most of which under the Single Payment Scheme (SPS) and the Single Area Payment Scheme (SAPS), and are managed and controlled by the IACS. For rural development, the legislation applicable as of financial year 2007 explicitly requires the measures set up by Member States to be verifiable and controllable and establishes a comprehensive control framework for this sector. agri_aar_2011_final_annexes Page 31 of 121

32 Detective and corrective controls Detailed systems for controls and dissuasive sanctions to be applied by those paying agencies, with common basis features and special rules tailored to the specificities of each aid regime. The systems generally provide for exhaustive administrative controls of 100 % of the aid applications, cross-checks with other databases where this is considered appropriate as well as pre-payment on-the-spot controls of a sample of transactions ranging between 1 % and 100 %, depending on the risk associated with the regime in question. If the on-the-spot controls reveal a high number of irregularities, additional controls must be carried out. Member States are required to recover any undue payments and, in case of irregularities, to impose effective, dissuasive and proportionate sanctions on the beneficiaries which are provided for in the respective sector-specific regulations. In this context, the by far most important system is the IACS (Integrated Administration and Control System), which in financial year 2011 covered 91.4 % of EAGF expenditure (89 % in 2010). To the extent possible, the IACS is also used to manage and control rural development measures relating to parcels or livestock, which in 2011 accounted for 44.9 % of payments under the EAFRD (49.8 % in 2010, the difference being essentially due to the fact that expenditure under Axis 1 and 3 has increased as compared to last year). For both Funds together, the IACS covered 81.6 % of total expenditure. Member States are obliged to provide the Commission with detailed reports on the checks carried out by them and on the sanctions applied is foreseen in the legislation. These reports allow both the Member States and the Commission to analyse the efficiency of the management and control systems and provide for a quantification of sums not paid to beneficiaries as a result of the paying agencies' on-the-spot checks, thus allowing DG AGRI to calculate for the measures concerned, the residual error rate at the level of the final beneficiaries. In financial year 2011, the accuracy of the statistical information reported and the quality of the underlying on-the-spot checks had to be verified and validated by independent certification bodies for direct aids and rural development measures. Statement of assurance The directors of the paying agencies are required to sign a statement of assurance (DAS), including the possibility of making reservations which have to be quantified as to their financial impact and followed up by an appropriate action plan, mirroring in shared management the declaration of assurance issued by the Directors General of the Commission. If a Member State has accredited more than one paying agency, the co- agri_aar_2011_final_annexes Page 32 of 121

33 ordinating bodies is required to draw up an annual summary (synthesis report) on the statements of assurance of the paying agencies and the certificates of the certification bodies. For both instruments, DG AGRI has established detailed guidelines designed to assist the national authorities in their application, which are applications, which is updated on an annual basis to take account of the experience gained. Supervision of the functioning of the first level controls at national level All aid measures other than direct payments covered by the IACS are subject to ex-post controls under Regulation (EC) No 485/2008 or, for rural development measures, Regulation No 65/2011, carried out in accordance with an annual audit plan established on the basis of a pre-determined audit strategy. The system therefore constitutes an extra layer of control that provides assurance that transactions have been carried out in conformity with the rules or that unduly paid amounts are recovered. For rural development, these checks cover at least 1 % of eligible expenditure for investment operations, including those that are either detailed in the rural development programme, or still subject to the commitment not to undergo a substantial modification within five years after the funding decision. The ex-post scrutiny is to be carried out by controllers which have not been involved in pre-payment checks of the same investment operation. These ex-post checks form an important additional instrument to detect irregularities, and do have an important deterrent effect. Given the ex-post nature of these checks, results of scrutinies have an impact only after the year of expenditure. Supervision of the functioning of the paying agencies at national level Supervisory and corrective action at EU level by the Commission The paying agencies' accounts and the functioning of their internal control procedures are verified and certified on an ex-post basis by the certification bodies. Moreover, the certification bodies are required to provide an opinion on the annual statement of assurance of the heads of the paying agencies. The clearance of accounts through the Commission consists of both an annual financial clearance and a multi-annual conformity clearance. The financial clearance covers the integrality, accuracy and veracity of the paying agencies' accounts. Moreover, it includes a mechanism under which 50% of any undue payments which the Member States have not recovered from the beneficiaries within 4 or, in the case of legal proceedings, 8 years will be charged to their respective national budgets. If the undue payments are the result of administrative errors committed by the national authorities, the entire amount involved is deducted from the annual accounts and, thus, excluded agri_aar_2011_final_annexes Page 33 of 121

34 from EU financing. Even after the application of this mechanism, Member States are, however, obliged to pursue their recovery procedures and, if they fail to do so with the necessary diligence, the Commission may decide to charge the entire outstanding amounts to the Member States concerned. The conformity clearance, for its part, relates to the legality and regularity of the underlying transactions. It is designed to exclude expenditure from EU financing which has not been executed in compliance with EU rules, thus shielding the EU budget from expenditure that should not be charged to it (financial corrections). In contrast, it is not a mechanism by which irregular payments to beneficiaries are recovered, which according to the principle of shared management is the sole responsibility of Member States. Financial corrections are determined on the basis of the nature and gravity of the infringement and the financial damage caused to the EU. Where possible, the amount is calculated on the basis of the loss actually caused or on the basis of an extrapolation. Where this is not possible, flat-rates are used which take account of the severity of the deficiencies in the national control systems in order to reflect the financial risk for the EU. Where undue payments are or can be identified as a result of the conformity clearance procedures, Member States are required to follow them up by recovery actions against the final beneficiaries. However, even where this is not possible because the financial corrections only relate to deficiencies in the Member States' management and control systems, financial corrections are an important means to improve these systems and, thus, to prevent or detect and recover irregular payments to final beneficiaries. The conformity clearance thereby contributes to the legality and regularity of the transactions at the level of the final beneficiaries. agri_aar_2011_final_annexes Page 34 of 121

35 FEEDBACK WHICH ENABLES CONTROL ACTIVITIES TO BE OPTIMISED The Internal Control Coordinator supervises closely compliance with the Internal Control Standards through a regular monitoring of the state of play on each requirement, on the basis of information provided by lead services ("chef-de-file") in the DG. This structured desk review complements other reporting tools and channels in place for a continuous supervision of the proper functioning of the DG. Information on DG AGRI compliance with requirements of the internal control standards is provided in section of the Annual Activity Report. Verification that processes are working as designed Verification that the internal control processes and arrangements work as intended is based in DG AGRI on several information channels: Formal reporting on management supervision: in DG AGRI, all Directors and Heads of unit report to the Director General on the way they have carried out their supervision on the financial and operational activities for which they are responsible; Annual review of internal control effectiveness: in addition to the desk review of compliance with the internal control standards, a yearly exercise is carried out in DG AGRI to assess the effective implementation of the prioritised standards and propose improvements; Risk management exercise. Risk management is the object of a structured review twice per year, when the DG Management Plan is prepared and updated. The exercise begins with meetings at Unit level, to provide for the highest possible level of staff involvement; proposals are assessed at Directorate level, to ensure coherence and management supervision as appropriate; the Internal Control Coordinator, on the basis of these contributions and other management information as appropriate, prepares the DG Risk Register which includes the most important risks from an overall DG perspective and the action plans to address them. The Register is discussed with senior management and validated by the Director General. High level management reporting A constant flow of information to the Director General is ensured in DG AGRI through different channels: A senior management meeting chaired by the Director-General takes place every week. The Deputy Directors-General and Directors bring up general coordination issues and any potential problem issues for DG AGRI; A number of management information tools are used. A regular reporting system on expenditure agri_aar_2011_final_annexes Page 35 of 121