Commission Regulation (EC) No 2222/2000 of 7 June 2000 laying down financial rules for the application of Council Regulation (EC) No 1268/1999 on Community support for pre-accession measures for agriculture and rural development in the applicant countries of central and eastern Europe in the pre-accession period

CHAPTER 1

GENERAL PROVISIONS

Article 1

Scope of the present Regulation

Article 2

Definitions

For the purposes of this Regulation:

(a) ‘applicant countries’ means the countries listed in Article 1(1) of Regulation (EC) No 1268/1999;

(b) ‘national fund’ means the body appointed by the applicant country and placed under the responsibility of the national authorising officer bearing the full financial responsibility and liability for the funds, which acts as the competent authority. The national authorising officer is the contact point for financial information sent between the Commission and the applicant country;

(c) ‘competent authority’ means the body, in the applicant country, (i) issuing, monitoring and withdrawing accreditation of the Sapard agency for the purposes of Article 1(2) of Regulation (EC) No 1663/95; and (ii) appointing a certifying body;

(d) ‘Sapard agency’ means the body established by the applicant country and operating under its responsibility which discharges two functions: an implementing function and a paying function. Only one Sapard agency may be accredited at any time in each applicant country;

(e) ‘certifying Body’ means the body which is operationally independent of the Sapard agency and establishes the attestation of the accounts, reports on the management and control systems and verifies the co-financing elements;

(f) ‘multiannual financing agreement’ means the agreement setting out the relevant provisions to be respected for Sapard co-financing;

(g) ‘annual financing agreement’ means the agreement setting out the financial allocation for the year in question on the basis of the appropriations entered in the Community budget and supplementing and amending, as appropriate, provisions laid down either in the multiannual financing agreement or in a prior annual financing agreement;

(h) ‘Sapard euro account’ means the account opened by the national authorising officer under their responsibility in a financial or treasury institution bearing interest under normal commercial conditions to receive payments referred to in Article 8 and used exclusively for Sapard transactions and maintained in euro;

(i) ‘financial year’ means the calendar year 1 January to 31 December;

(j) ‘exceptional natural disaster’ means a natural disaster on an unusually large scale and causing intense damage and destruction.

CHAPTER 2

CONFERRAL OF MANAGEMENT

Article 3

Conferral of management of aid

For the establishment of compliance with the conditions and with the provisions mentioned in the first subparagraph, the Commission shall:

— examine the national fund procedures and structures related to the implementation of the Sapard programme and Sapard agency procedures and structures and, where appropriate, procedures and structures of other bodies to which tasks may have been delegated in accordance with Articles 4(4), 5(3) and 6(2),

— carry out verifications on-the-spot.

The Commission shall monitor continued compliance with the conditions and provisions of this Regulation including the Annex. If, at any stage, they are found to be no longer fulfilled, the Commission shall immediately revoke the decision and shall:

— cease to undertake any new financial obligations on the part of the Community,

— cease to transfer monies to the applicant country and

— if appropriate, make financial corrections against the applicant country.

Article 4

Tasks of the competent authority

Article 5

Tasks of the Sapard agency

The implementation task of the Sapard agency shall comprise:

— call for applications,

— project selection, except where for the measure in question in the approved Sapard agriculture and rural development programme (hereinafter referred to as the programme), there is only one designated beneficiary or the task of project selection has been granted to a designated body or bodies,

— checking of applications for approval of projects against terms and conditions, eligibility and against the content of the programme, including, where appropriate, public procurement provisions,

— laying down contractual obligations between the agency and potential beneficiaries and the issue of approval to commence work,

— execution of on-the-spot checks both prior to and following project approval,

— follow-up action to ensure progress of projects being implemented,

— reporting of progress of measures being implemented against indicators.

The payment task of the Sapard agency shall comprise:

— checking of payment claims,

— execution of on-the-spot checks to establish eligibility for payment,

— authorisation of payment,

— execution of payment,

— accounting of commitment and payment,

— where applicable, controls on beneficiaries after payment of aid to establish whether the terms and conditions of the grants continue to be respected.

Article 6

Tasks of the certifying body

The tasks of the certifying body shall include

— delivery of an attestation on the annual account of the Sapard agency as well as the Sapard euro account,

— reporting on an annual basis on the adequacy of management and control systems of the Sapard agency as regards their capability to ensure conformity of expenditure with the provisions of Article 8(1),

— verification of the existence and correctness of the national co-financing element referred to in Article 9(1).

CHAPTER 3

PAYMENT AND CONTROL

Article 7

Budget commitments

The first annual financing agreement may only be signed on behalf of the Commission when the following conditions have been met:

— the programme has been approved by the Commission, and,

— the multiannual financing agreement has been signed by both parties.

Taking account of the requirements of Article 10, the Commission shall de-commit any part of a commitment which has not been settled by the payment on account or for which it has not received an acceptable payment application by the following dates:

(a) for appropriations corresponding to the 2000 annual allocation: 31 December 2004;

(b) for appropriations corresponding to the annual allocation for 2001: 31 December 2005;

(c) for appropriations corresponding to the annual allocation for 2002: 31 December 2006;

(d) for appropriations corresponding to the annual allocation for 2003: 31 December 2006;

(e) for appropriations corresponding to the annual allocation for 2004: 31 December 2007;

(f) for appropriations corresponding to the annual allocation for 2005: 31 December 2008;

(g) for appropriations corresponding to the annual allocation for 2006: 31 December 2008.

Article 8

Payments from the Commission

Article 9

Payments from the Sapard agency

Payments from the Sapard agency to the beneficiary shall:

— be made in national currency and debited as appropriate against the Sapard euro account. The payable order(s) to the beneficiary(ies) shall as a general rule be issued within five days of this debit,

— be based on declarations of expenditure incurred by the beneficiary. Such declarations shall include only projects selected and expenditure paid from the date of the Commission decision referred to in Article 3(1), except for feasibility and related studies concerning the selected projects and for technical assistance. However, where the Commission determines that an exceptional natural disaster has occurred, payments to beneficiaries for projects related to that disaster may benefit from a derogation replacing the requirement concerning declarations of expenditure by the possibility of payment of advances.

The Community contribution shall be made simultaneously with the national contribution. However, in the case of beneficiaries in the public sector, the national contribution may precede that of the Community.

The Sapard agency shall maintain records of each payment which shall include at least the following information:

— amount in national currency,

— the corresponding amount in euro.

Article 10

Application for payment from the Community

The Commission shall take into consideration only payment applications drawn up by the Sapard agency on a quarterly basis, presented in accordance with a form established by the Commission and transmitted by the national authorizing officer to the Commission within one month of the end of each quarter. However, supplementary applications may be submitted if justified on the basis of the risk of:

— the net balance in the Sapard euro account being exhausted before the next quarterly application has been processed, or

— decommitment being invoked as set out in Article 7(3).

The applications shall include at least the following information:

— the amount of expenditure paid by the Sapard agency to beneficiaries in the previous quarter, broken down in both national currency and euro by measure and the national and Community contribution,

— the balance of Community funds in the Sapard euro account following the most recent debit,

— details of debts to be collected.

Article 11

Exchange rate and interest

The conversion rate between euro and national currency shall be the exchange rate published by the European Central Bank:

— for payments by the Sapard agency, on the last but one working day at the Commission in the month preceding the month during which the expenditure was recorded in the accounts of the Sapard agency. The date the payment order is issued to the beneficiary shall be the date shown in the accounts,

— for overpayments by the Sapard agency, on the last but one working day at the Commission in the month preceding the month during which the overpayment was first noted,

— for amounts fixed by the clearance of accounts and conformity clearance decisions, on the last but one working day at the Commission in the month preceding the month during which the decision was taken.

Article 12

Commission initiative measures

In cases where the Commission does not allocate all the annual allocation provided for in Article 7(4) of Regulation (EC) No 1268/1999 to the applicant country, use of the amount not so allocated shall be decided by the Commission on the basis of ad-hoc decisions.

Article 13

Clearance of accounts decision

The provisions fixed in the first and second last sentence of Article 7(1), Article 7(2)(c), and Article 7(3) and (4) of Regulation (EC) No 296/96 are applicable. For the financial year ‘n’, all transactions recorded in the accounts of the Sapard agency in the financial year ‘n’ are taken into consideration.

Article 14

Conformity clearance decision

Article 15

Recording and control provision

This Regulation shall be binding in its entirety and directly applicable in all Member States.

ANNEX

1. FUNCTIONS

The Sapard agency shall execute the following principal functions in respect of Sapard expenditure:

1.1. authorisation of commitments and payments: the objective of this function is the establishment of the amount that shall be paid to a claimant or supplier in conformity with the financing agreement rules, in particular those concerning the eligibility of applications for approval and claims for payment, compliance with commitments entered into concerning project approvals, tendering and contracting procedures, and verification of the work carried out or services supplied;

1.2. execution of payments: the objective of this function is the issuing of an instruction to the agency's bankers, or, in appropriate cases, a governmental payments office, to pay the authorised amount to the claimant or supplier (or their assignee);

1.3. accounting for commitments and payments: the objective of this function is the recording of the commitment and payment in the agency's separate books of accounts of Sapard expenditure, which will normally be in the form of an electronic data processing system, and the preparation of periodic summaries of expenditure, including the periodic and annual declarations to the Commission. The books of account shall also record details of debts to be recovered;

1.4. control: the objective of this function is to verify the facts on which applications and claims are based in order to review their compliance with the financing agreement rules and the terms and conditions of the commitment. this control shall, where appropriate, include pre-project selection checks, remeasurement, checks on quantity and quality of goods or services delivered, an analysis or a sample control, pre-payment checks and any special provisions mentioned in the financing agreement rules as to the eligibility of the expenditure etc. In order to establish eligibility, these controls shall require, where appropriate, examinations of a technical nature, which can involve economic financial assessments and checks of a specific agricultural, technical or scientific nature;

1.5. reporting: the objective of this function is to ensure that progress of the individual projects and measures is reported in a way which ensure the effective and efficient implementation of the measure.

2. CRITERIA

2.1. The Sapard agency's administrative structure shall provide for the separation of the three functions of authorisation, execution and accounting, each of which shall be the responsibility of a separate administrative sub-unit, the responsibilities of which are defined in an organisation chart.

2.2. The Sapard agency shall adopt the following procedures or those offering equivalent guarantees:

2.3. part or all of the authorisation and the control function may be delegated to other bodies provided that the following conditions are fulfilled:

2.4. Accounting procedures shall ensure that declarations of expenditure to the Commission are complete, accurate (correct project or account heading) and timely, and that any errors or omissions are detected and corrected, in particular through cheks and reconciliation performed at intervals not exceeding three months. The Sapard agency's accounting procedure shall ensure that the accounting system can produce, in euro and national currency, for each regional office, per project, contract or measure/sub-measure, the total cost, the committed expenditure, part payments and balance payments. Deadlines shall be set for the cancellation of commitments where work has not been completed within an agreed timetable. These cancellations shall be appropriately recorded in the accounting system.

2.5. The Sapard agency shall dispose of an internal audit service. The objective of this service or equivalent procedure is to ensure that the agency's system of internal control operates effectively; the internal audit service shall be independent of the agency's other departments and shall report directly to the agency's top management. The internal audit service shall verify that procedures adopted by the agency are adequate to ensure that compliance with the programme and financing agreement is verified, and that accounts are accurate, complete and timely. Verifications may be limited to selected measures/sub-measures and to samples of transactions provided that an audit plan ensures that all significant areas, including the departments/bodies responsible for authorisation and those departments to which functions have been delegated, are covered over a period not exceeding three years. The service's work shall be performed according to internationally accepted auditing standards, shall be recorded in working papers and shall result in reports and recommendations addressed to the agency's top management. The audit plans and reports shall be made available to the certifying body and to officials of the European Union mandated to undertake financial audits and for the sole purpose of appraising the effectiveness of the internal audit function.

2.6. The rules for the procurement by public bodies of services, works and supplies in the applicant country shall be in accordance with the rules set out in the Commission annual (¹³) entitled ‘Service, supply and work contracts concluded within the framework of Community cooperation for the third countries’ with the exception of the requirement for ex ante approval by the Commission.

2.7. Services, works, machinery and supplies procured by private undertakings must originate in the Community or in the countries referred to in Article 1(1) of Regulation (EC) No 1268/1999. The same goes for supplies and equipment purchased by a contractor for works or service contracts if the supplies and equipment are destined to become the property of the project once the contract has been completed.

2.8. As regards in particular forfeited guarantees, reimbursed payments, etc., the agency shall set up a system for the recognition of all amounts due to the Sapard euro acocunt and for the recording in a debtors ledger of all such debst prior to their receipt. The debtors ledger shall be inspected at regular intervals with the aim of taking action to collect debts that are overdue.

2.9. The Sapard agency shall publicise the availability of support to all potential project managers/operators so that they obtain as wide as possible selection of potential project managers/operators. Standard application forms with clear guidelines for completion and conditions for eligibity shall be drawn up in advance of the launch of the scheme.

2.10. Timely processing of applications from beneficiaries.

2.11. The Sapard agency will install an appropriate system to report progress of each project and measure towards pre-defined indicators. Where appropriate these indicators shall, with the approval of the monitoring committee, be revised. Action is to be taken in instances where delays in meeting pre-defined targets arise. Proper records shall be kept of all action taken. An appropriate management information system shall be used for the speedy generation of appropriate reports on the projects and measures. These reports shall be made available to the managing authority, the monitoring committee and the Commission on request.