COMMISSION DECISION. of on technical provisions necessary for the operation of the transition facility in the Republic of Croatia

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1 EUROPEAN COMMISSION Brussels, C(2013) 3463 final COMMISSION DECISION of on technical provisions necessary for the operation of the transition facility in the Republic of Croatia EN EN

2 COMMISSION DECISION of on technical provisions necessary for the operation of the transition facility in the Republic of Croatia THE EUROPEAN COMMISSION, Having regard to the Treaty of Accession of the Republic of Croatia, in particular Article 3(4) thereof, Having regard to the Act of Accession of the Republic of Croatia, in particular Article 30(5) thereof. Whereas: (1) Article 30 of the Act of Accession establishes the Transition Facility with commitment appropriations of EUR 29 million in total in 2013 to address national and horizontal priorities. (2) The Transition Facility is intended to continue the assistance to the Republic of Croatia in its efforts to develop and strengthen its administrative and judicial capacity to implement and enforce EU law and to foster the exchange of best practice amongst peers through action which cannot be financed by the Structural Funds or by the Rural Development Funds. (3) It is important to maintain stability, continuity and simplicity as regards the implementation structures and systems. Article 30 (5) of the Act of Accession establishes that assistance under the Transition Facility shall be decided and implemented in accordance with Council Regulation (EC) No 1085/2006, or on the basis of other technical provisions necessary for the operation of the Transition Facility, to be adopted by the Commission. (4) It is necessary to lay down the conditions and implementing rules necessary for the management of the Transition Facility. (5) The conferral of management granted to the Republic of Croatia for IPA Component I under the conditions laid down in the Commission Decision C(2008)6002 of 28 October 2008, and amended by the Commission Implementing Decision C(2013)642 of 12 February 2013 shall apply for the management of the Transition Facility. (6) The Financing Decision for the Transition Facility shall be adopted separately by 31 December HAS ADOPTED THIS DECISION: EN 2 EN

3 CHAPTER I GENERAL PROVISIONS Article 1 Purpose 1. The assistance activities under the Transition Facility shall be financed and implemented within the legal, administrative and technical framework laid down in this Implementing Decision, in addition to the IPA Framework Regulation and the IPA Implementing Regulation, in particular the provisions applicable to IPA Component I. 2. The Republic of Croatia takes all necessary steps in order to ensure the proper execution of all assistance activities and to facilitate the implementation of the Transition Facility programme. CHAPTER II GENERAL RULES ON EU FINANCIAL ASSISTANCE Article 2 General rules on financial assistance 1. The following principles shall apply to financial assistance by the EU under the Transition Facility: (a) (b) (c) (d) (e) (f) (g) Assistance shall respect the principles of coherence, complementarity, coordination, partnership and concentration; Assistance shall be coherent with EU policies and shall support the completion of alignment to the EU acquis; Assistance shall comply with the budgetary principles laid down in the Financial Regulation and its Rules of Application; In accordance with Articles 212(a) and 214 of the Financial Regulation, Articles 53 to 57 of Council Regulation (EC, Euratom) No 1605/ will continue to apply for budgetary commitments made in 2013; Assistance shall be consistent with the needs identified in the monitoring process. It shall also take account of lessons learned; The Commission and the Republic of Croatia shall ensure coordination of their respective assistance programmes to increase effectiveness and efficiency in the delivery of assistance and to prevent double funding. Operations shall have clear and verifiable objectives, which are to be achieved within a given period; the results obtained should be assessed through measurable indicators; 1 OJ L 248, , p.1. EN 3 EN

4 (h) Any discrimination based on sex, racial or ethnic origin, religion or belief, disability, age or sexual orientation shall be prevented during the various stages of the implementation of assistance; 2. All operations receiving assistance under the Transition Facility shall in principle require joint co-financing by the Republic of Croatia and the EU. 3. Where the execution of activities depends on financial commitments from the Republic of Croatia's own resources or from other sources of funds, the funding of the EU shall become available at such time as the financial commitments of the Republic of Croatia and/or the other sources of funds themselves become available. 4. The provision of EU financing under the Transition Facility shall be subject to the fulfilment by the Republic of Croatia's obligations under this Implementing Decision. Article 3 Eligibility of expenditure 1. Expenditure financed under the Transition Facility shall not be subject to any other financing under the EU budget. 2. Taxes, customs and import duties or other charges having equivalent effect are not eligible under the Transition Facility. The detailed provisions laid down by Article 66 of the IPA Implementing Regulation continue to apply. Article 4 Aid intensities and rate of EU contribution The EU contribution shall be calculated in relation to the eligible expenditure, as defined in Article 67 of the IPA Implementing Regulation. CHAPTER III MANAGEMENT AUTHORITIES Article 5 Definitions For the purposes of this Implementing Decision the following definitions shall apply: (1) National IPA Co-ordinator (NIPAC) is a representative of the national administration who is responsible for the overall coordination of assistance under the Transition Facility, as well as the functions detailed in Article 22 of the IPA Implementing Regulation. S/he shall ensure partnership between the Commission and the Republic of Croatia. S/he shall, in particular, bear responsibility for: (a) The coherence and coordination of the Transition Facility programme (b) The programming for the Transition Facility (c) The preparation of the annual and final implementation reports for the Transition Facility EN 4 EN

5 (2) Competent Accrediting Officer (CAO) is a representative of the national administration who shall be responsible for issuing, monitoring and suspending or withdrawing the accreditation of the National Authorising Officer and the National Fund, in accordance with Articles 12 and 15 of the IPA Implementing Regulation. (3) National Authorising Officer (NAO) is a representative of the national administration who shall fulfil the following functions and assume the following responsibilities: (a) As the head of the National Fund, is bearing overall responsibility for the financial management of EU funds in the Republic of Croatia and is responsible for the legality and regularity of the underlying transactions. For this purpose the NAO shall particularly fulfil the tasks laid down in Article 25(3) of the IPA Implementing Regulation. (b) Is responsible for the effective functioning of management and control systems for the Transition Facility. The NAO shall make an annual management declaration, which shall take the form of a statement of assurance to be presented to the Commission by 28 February each year in accordance with Article 27 of the IPA Implementing Regulation. He shall forward a copy of the statement of assurance to the CAO. (4) National Fund (NF) is a body located in a State level Ministry of the Republic of Croatia and shall have central budgetary competence and act as central treasury entity. The NF shall be in charge of tasks of financial management of assistance under the Transition Facility, under the responsibility of the NAO. The NF shall, in particular, be in charge of organising the bank accounts, requesting funds from the Commission, authorising the transfer of funds from the Commission to the operating structures, and the financial reporting to the Commission. (5) The Audit Authority is an authority which shall be responsible for the verification of the effective and sound functioning of the management and control systems. The audit authority shall be functionally independent from all actors in the management and control system and comply with internationally accepted audit standards. (6) The Operating Structure: Central Finance and Contracting Agency (CFCA) is a body within the national administration responsible for the management and implementation of assistance under IPA Component I. It shall assume the management and implementation of assistance under the Transition Facility and it shall be responsible for managing and implementing the Transition Facility programme concerned in accordance with the principle of sound financial management. (7) iperseus is the current financial reporting system of the European Commission used in decentralised implementation of EU financial assistance. Article 6 Functions and responsibilities The functions and responsibilities of the bodies and authorities defined in the Article 5 shall comply with the functions and responsibilities set out for them in the IPA Implementing Regulation. EN 5 EN

6 Article 7 Staff, location and operational costs of the National Fund and the other bodies and authorities 1. The Republic of Croatia shall ensure at its own cost the availability of the necessary human resources for the timely and correct implementation of the tasks entrusted to the bodies and authorities referred to in above Article 5 related to the implementation of the Transition Facility. 2. The Republic of Croatia shall provide at its own costs the necessary premises, office furniture and other facilities for the aforementioned bodies and authorities. 3. The operational costs of those bodies and authorities shall be borne by the Republic of Croatia. CHAPTER IV GENERAL RULES FOR IMPLEMENTATION Article 8 Implementation Methods 1. The implementation of assistance under the Transition Facility in the Republic of Croatia, will be done in decentralised management, whereby the Commission confers the management of certain actions to the Republic of Croatia, while retaining overall final responsibility for general budget implementation in accordance with Articles 212(a) and 214 of the Financial Regulation as referring to Article 53c of Regulation (EC, Euratom) No 1605/2002, and the relevant provisions of the EU Treaties shall apply as a rule. Decentralised management shall cover at least tendering, contracting and payments by the national administration of the Republic of Croatia. Operations shall be implemented in accordance with the provisions laid down in Articles 212(a) and 214 of the Financial Regulation as referring to Article 53(c) of Regulation (EC, Euratom) No 1605/2002 and the ones referred to in this Article. 2. The national structures designed and accredited for the management of assistance provided under IPA Component I conferred to the Republic of Croatia under the conditions laid down in the Commission Decision C(2008)6002 of 28 October 2008, as amended by the Amending Commission Decision C(2013)642 of 12 February 2013 shall also be applicable to the implementation of the Transition Facility. 3. The Commission may withdraw or suspend its conferral of management at any time, if it is found not to comply with the requirements laid down in Articles 212(a) and 214 of the Financial Regulation as referring to Article 56(2) of Regulation (EC, Euratom) No 1605/2002 and in Article 11 of the IPA Implementing Regulation. EN 6 EN

7 Article 9 Procurement 1. Public procurement procedures will be carried out in accordance with the relevant EU Directives and national procurement rules. 2. For twinning projects, the Twinning Manual as applied to IPA continues to apply, in accordance with the provision of Article 30(3) of the Act of Accession. 3. Grant award procedures shall follow the provisions of Part One, Title VI of the Financial Regulation and Part One, Title VI of its Rules of Application. Article 10 Bank accounts 1. The National Fund shall open up for the Transition Facility a separate euro bank account in the Central Bank or in a Government guaranteed bank account. The account shall, in principle, be interest-generating. 2. Any interest earned remains the property of the Republic of Croatia. Interest generated by EU financing of a programme shall be posted exclusively to that programme, being regarded as a resource for the Republic of Croatia in the form of a national public contribution, and shall be declared to the Commission whenever a payment application is submitted to the Commission. 3. The bank account shall be operated on the basis of a double signature system, requiring the signatures of the NAO and a senior accounting officer. 4. The National Fund shall communicate to the Commission all relevant information on the accounts at the National Fund, as well as on all other accounts of the CFCA and others to which Transition Facility funds have been transferred. Relevant information encompasses the name and address of the bank, the account number, the names of the account holders, the interest rates and any other information that the Commission deems appropriate. Article 11 Payments by the Commission 1. Payments by the Commission of the EU contribution for the Transition Facility programme shall be done following the rules established by Article 40 of the IPA Implementing Regulation. 2. In addition to the rules under paragraph 1, the certified statements of expenditure submitted by the NAO shall also include information distinguishing between cost incurred and pre-financing. Article 12 Request for funds from the Commission 1. Requests for payments, to be certified and approved by the NAO, are submitted to the Commission for approval and transfer of funds. EN 7 EN

8 2. Requests for payments shall be supported by: (a) A declaration of expenditure showing the cumulative amount of national (for co-financing) and Transition Facility funds contracted and paid distinguishing between cost incurred and pre-financing broken down by priority axis and measure and operations (where appropriate) - so demonstrating the link between the indicative budget (i.e. National Programme) and the expenditure and payments actually made based on the financial reporting as presented by the CFCA. To this end, a table displaying the operations/projects managed and the relevant contracts and payments should be enclosed. (b) Appropriate regular financial reporting (iperseus) indicating signed contracts and payments made. (c) Bank reconciliation, including interest earned, corresponding to the bank accounts opened by the National Fund and CFCA. (d) Progress reports on the implementation of the programme. (e) A written declaration by the NAO stating that the information contained in the request for payment is correct and that the implementation of the Transition Facility assistance is progressing at a satisfactory rate and according to the objectives laid down in the Transition Facility Programme. The Commission retains the right to request additional information in support of transfers of funds. 3. In order for the Commission to approve a payment application, the minimum requirements set out in Articles 42(1), 43(1), and 45(1) of the IPA Implementing Regulation must be fulfilled. 4. If it appears that the rules applicable have not been complied with or that EU funds have been improperly used, the Commission may reduce interim payments to the Republic of Croatia, or temporarily suspend them, in accordance with the provisions of Article 46 of the IPA Implementing Regulation. It shall inform the Republic of Croatia accordingly. The suspension or reduction of interim payments shall comply with the principle of proportionality and shall be without prejudice to the decisions of conformity and clearance-of-account decisions and financial corrections. In the case of the final payment, failure to meet the conditions laid down in Article 45(1) of the IPA Implementing Regulation shall immediately result in the decommitment of the final balance. Article 13 Modalities for the approval of a payment application by the National Fund 1. A first payment of up to 50% of the funds, representing pre-financing will be sent to the National Fund upon the submission of a request for funds application when the conditions specified in Article 42(1) if the IPA Implementing Regulation have been met. 2. One further interim payment up to the threshold of 95% of the funds will be made. The second transfer will be triggered when 35% of the budget has been disbursed by the CFCA. EN 8 EN

9 3. The final payment application for up to 100% of the budget allocation in force has to be submitted within 4 months as from the end of the disbursement period. The following documentation has to be attached to this payment application: (a) A final payment application and a final statement of expenditure. (b) The sectoral final reports for the Transition Facility programme. (c) (d) An opinion from the Audit Authority on any final statement of expenditure supported by a final audit activity report. The accreditation delivered by the Competent Accrediting Officer and the NAO are in force and the conferral of management by the Commission remains valid. Even if no final payment application is made, the National Fund needs to submit a final statement of expenditure to the Commission within 4 months from the end of disbursement period. If the payments received from the Commission exceed the final certified expenditure then the National Fund should return the excess to the Commission at the time of submitting the final statement of expenditure. If there are any outstanding payments (with the exception of any contractual retention money), the National Fund should provide an explanation and a forecast, when payment will be finalized. The National Fund shall report on progress on contractual retention money and outstanding payments on a quarterly basis. If they are not paid to the contractor, they should also be returned to the Commission. Article 14 Clearance of Accounts In order to ensure that the funds are used in accordance with applicable rules, the Commission shall apply Clearance of Accounts procedure or financial corrections mechanisms in accordance with Article 53c (2) of the of Council Regulation (EC, Euratom) No 1605/2002 and as detailed in the Framework Agreement between the Government of the Republic of Croatia and the Commission of the European Communities on the Rules for Co-operation concerning EC-financial Assistance to the Republic of Croatia in the Framework of the Implementation of the Assistance under the Instrument for Pre-accession Assistance (IPA) signed on 27th August Article 15 Changes to the Programme 1. The NIPAC may request to the Commission changes to the Transition Facility or reallocation of funds. 2. The contracting deadline of the Transition Facility will be 3 years from the date of adoption of the Financing Decision. No extensions shall be granted for the contracting period of the programme. Exceptionally, and in duly justified cases, limited extensions in terms of duration may be granted for the execution of contracts. Article 16 Monitoring EN 9 EN

10 1. The Commission may undertake any actions it deems necessary to monitor the programmes concerned. 2. The IPA Transition Assistance and Institution Building component sectoral monitoring committee shall be responsible to ensure coherence and coordination of assistance under the Transition Facility. 3. The IPA sectoral monitoring meeting shall be co-chaired by a representative of the Commission and the NIPAC. Article 17 Reporting 1. The operating structure shall draw up an annual report and a final report on the implementation of the programme, in compliance with the procedures defined for IPA Transition Assistance and Institution Building component in Part II of the IPA Implementing Regulation. 2. The annual report on implementation shall cover the financial year. The final report on implementation shall cover the whole period of implementation and may include the last annual report. 3. The reports referred to in paragraph 1 shall be sent to the NIPAC, the NAO and to the Commission, after examination by the sectoral monitoring committee. 4. The annual and final reports for the Transition Facility referred to in paragraph 1 shall be prepared and transmitted as part of the annual and final reports on the implementation of assistance under the IPA Regulation prepared by the NIPAC. Article 18 Visibility/Publicity 1. The Republic of Croatia, in particular the NIPAC, shall provide information on and publicise programmes and operations. The information shall be addressed to the citizens and beneficiaries, with the aim of highlighting the role of the EU and ensuring transparency. 2. The operating structure shall be responsible for organising the publication of the list of the final beneficiaries, the names of the operations and the amount of EU funding allocated to the operations by means of the award of grants in the following way: (a) (b) (c) The publication shall be made according to a standard presentation, in a dedicated and easily accessible internet site. If such internet publication is impossible, the information shall be published by any other appropriate means, including the national official journal. Publication shall take place during the first half of the year following the closure of the budget year in respect of which the funds were attributed to the Republic of Croatia. The Republic of Croatia shall communicate to the Commission the address of the place of publication. If the information is published otherwise, the Republic of Croatia shall give the Commission full details of the means used. EN 10 EN

11 (d) The operating structure shall ensure that the final beneficiary is informed that acceptance of funding is also an acceptance of their inclusion in this list of beneficiaries published. Any personal data included in this list shall nevertheless be processed in accordance with the requirements of Regulation (EC) No 45/2001 of the European Parliament and the Council of 18 December 2000 on the protection of individuals with regard to the processing of personal data by the Community institutions and bodies and on the free movement of such data 2, and with due observance of the requirements of security. Article 19 Closure of the programme 1. After an application for final payment has been received by the Commission from the Republic of Croatia, a programme is considered closed as soon as one of the following occurs: (a) payment of the final balance due by the Commission; (b) issuance of a recovery order by the Commission; (c) de-commitment of appropriations by the Commission. 2. The closure of a programme does not prejudice the right of the Commission to undertake a financial correction at a later stage. 3. The closure of a programme does not affect the obligations of the Republic of Croatia to continue to retain related documents. Article 20 Supervision, control and audit by the Commission and the European Court of Auditors 1. The Transition Facility and subsequent contracts shall be subject to supervision and financial control by the Commission including the European Anti-Fraud Office (OLAF) and audits by the European Court of Auditors. The duly authorised agents or representatives of the Commission and of OLAF shall have the right to carry out any technical and financial verification that the Commission or OLAF consider necessary to follow the implementation of a programme including visits of sites and premises at which EU financed activities are implemented. The Commission shall give the national authorities concerned advance notice of such missions. 2. The Republic of Croatia shall supply all requested information and documents including any computerised data and take all suitable measures to facilitate the work of the persons instructed to carry out audits or inspections. 3. The Republic of Croatia shall maintain records and accounts adequate to identify the services, supplies, works and grants financed under the related Financing Decision in accordance with sound accounting procedures. The Republic of Croatia shall also ensure that the agents or representatives of the Commission including OLAF have the right to inspect all relevant documentation and accounts pertaining to items financed under the Transition Facility and assist the European Court of Auditors to carry out audits relating to the use of EU funds. 2 OJ L 8, , p. 1. EN 11 EN

12 4. In order to ensure the efficient protection of the financial interests of the EU, the Commission including OLAF may also conduct documentary and on-the-spot checks and inspections in accordance with the procedural provisions of Council Regulation (EC, Euratom) No 2185/1996 of 11 November These checks and inspections shall be prepared and conducted in close collaboration with the competent authorities designated by the Republic of Croatia, which shall be notified in good time of the object, purpose and legal basis of the checks and inspections, so that they can provide all the requisite help. The Republic of Croatia shall identify a service which will assist at OLAF s request in conducting investigations in accordance with Council Regulation (EC, Euratom) No 2185/1996. If the Republic of Croatia wishes, the on-the-spot checks and inspections may be carried out jointly with them. Where the participants in EU financed activities resist an on-the-spot check or inspection, the Republic of Croatia, acting in accordance with national rules, shall give Commission/OLAF inspectors such assistance as they need to allow them to discharge their duty in carrying out an on-the-spot check or inspection. The Commission/OLAF shall report as soon as possible to the Republic of Croatia any fact or suspicion relating to an irregularity which has come to its notice in the course of the on-the-spot check or inspection. In any event, the Commission/OLAF shall be required to inform the above-mentioned authority of the result of such checks and inspections. 5. The controls and audits described above are applicable to all contractors and subcontractors who have received EU funds including all related information to be found in the documents of the National Fund of the Republic of Croatia concerning the national contribution. 6. Without prejudice to the responsibilities of the Commission and the European Court of Auditors, the accounts and operations of the National Fund and, where applicable, operating structures may be checked at the discretion of the Commission by the Commission itself or by an external auditor assigned by the Commission. Article 21 Prevention of irregularity and fraud, measures against corruption 1. The Republic of Croatia shall ensure investigation and effective treatment of suspected cases of fraud and irregularities and shall ensure the functioning of a control and reporting mechanism equivalent to that foreseen in the Commission Regulation (E(C) No 1828/2006 of 8 December In the case of suspected fraud or irregularity, the Commission shall be informed without delay. 2. Furthermore, the Republic of Croatia shall take any appropriate measure to prevent and counter any active or passive corruption practices at any stage of the procurement procedure or grant award procedure or during the implementation of corresponding contracts. 3. The Republic of Croatia, including the personnel responsible for the implementation tasks of the EU financed activities, undertakes to take whatever precautions are necessary to avoid any risk of conflict of interests and shall inform the Commission 3 4 OJ L 292, , p. 2. OJ L 371, , p. 4. EN 12 EN

13 immediately of any such conflict of interest or any situation likely to give rise to any such conflict. 4. The following definitions shall apply: (a) (b) (c) (d) Irregularity shall mean any infringement of a provision of applicable rules and contracts resulting from an act or an omission by an economic operator which has, or would have, the effect of prejudicing the general budget of the European Union by charging an unjustified item of expenditure to the general budget. Fraud shall mean any intentional act or omission relating to: the use or presentation of false, incorrect or incomplete statements or documents, which has as its effect the misappropriation or wrongful retention of funds from the general budget of the European Union or budgets managed by, or on behalf of, the European Union; non-disclosure of information in violation of a specific obligation with the same effect; the misapplication of such funds for purposes other than those for which they are originally granted. Active corruption is defined as the deliberate action of whosoever promises or gives, directly or through an intermediary, an advantage of any kind whatsoever to an official for himself or for a third party for him to act or to refrain from acting in accordance with his duty or in the exercise of his functions in breach of his official duties in a way which damages or is likely to damage the financial interests of the European Union. Passive corruption is defined as the deliberate action of an official, who, directly or through an intermediary, requests or receives advantages of any kind whatsoever, for himself or a third party, or accepts a promise of such advantage, to act or to refrain from acting in accordance with his duty or in the exercise of his functions in breach of his official duties in a way which damages or is likely to damage the financial interests of the European Union. Article 22 Recovery of funds in case of irregularity or fraud 1. Any proven case of irregularity or fraud discovered at any time during the implementation of assistance under the Transition Facility or as the result of an audit will lead to the recovery of the funds by the Commission from the Republic of Croatia. 2. The NAO shall recover the EU contribution paid to the Republic of Croatia from those who committed the irregularity, fraud or corruption or benefited from it, in accordance with national recovery procedures. The fact that the NAO does not succeed in recovering all or part of the funds shall not prevent the Commission from recovering the funds from The Republic of Croatia. Article 23 Financial corrections (1) A financial correction may arise following either: (a) identification of a specific irregularity, including fraud; EN 13 EN

14 (b) identification of a weakness or deficiency in the management and control systems of the Republic of Croatia; (2) If the Commission finds that expenditure under the programmes covered by the Transition Facility has been incurred in a way that has infringed applicable rules, it shall decide what amounts are to be excluded from EU financing. Article 24 Financial adjustments The NAO, who bears in the first instance the responsibility for investigating irregularities, shall make the financial adjustments where irregularities or negligence are detected in operations, by cancelling all or part of the EU contribution to the operations concerned. The NAO shall take into account the nature and gravity of the irregularities and the financial loss to the EU contribution. Article 25 Entry into force This Implementing Decision shall apply subject to and as of the date of the entry into force of the Accession Treaty of the Republic of Croatia. Done at Brussels, For the Commission Štefan FÜLE Member of the Commission EN 14 EN