Commission Implementing Regulation (EU) 2022/128 of 21 December 2021 laying down rules for the application of Regulation (EU) 2021/2116 of the European Parliament and of the Council on paying agencies and other bodies, financial management, clearance of accounts, checks, securities and transparency

CHAPTER I

Paying agencies and other bodies

Article 1

Procedure for the accreditation of paying agencies

Member States shall designate an authority at ministerial level responsible for:

(a) the issuing, reviewing and withdrawing of accreditation of paying agencies;

(b) carrying out the tasks assigned to the competent authority pursuant to this Chapter.

The examination (pre-accreditation review) to be carried out by the audit body shall cover, in particular:

(a) the procedures and systems in place for the authorisation and execution of payments and for the execution of the annual performance reporting;

(b) the division of duties and the adequacy of internal and external control in respect of transactions financed by the European Agricultural Guarantee Fund (EAGF) and the European Agricultural Fund for Rural Development (EAFRD), hereinafter together referred to as ‘the Funds’;

(c) the extent to which the procedures and systems put in place are apt to safeguard the Union budget including risk-based anti-fraud measures;

(d) the security of information systems;

(e) the maintenance of accounting records.

The audit body shall prepare a report detailing the audit work carried out, the results of that work and its assessment as to whether the paying agency complies with the accreditation criteria. The report shall be provided to the competent authority which shall then assess the results and issue the accreditation act where it is satisfied that the paying agency complies with the accreditation criteria.

Pending the implementation of any necessary changes in order to fulfil such specific conditions, accreditation may be issued provisionally for a period to be determined taking into account the severity of the problems identified, which shall not exceed 12 months. In duly justified cases, the Commission may, upon request of the Member State concerned, grant an extension of that period.

The information provided for in Article 90(1), first subparagraph, point (a), of Regulation (EU) 2021/2116 shall be communicated immediately after the paying agency is first accredited and in any case before any expenditure effected by it is charged to the Funds. That information shall be accompanied by declarations and documents concerning:

(a) the responsibilities vested in the paying agency;

(b) the allocation of responsibilities between the departments of the paying agency;

(c) the relationship of the paying agency with other bodies, public or private, which are responsible for implementing any measures under which the paying agency charges expenditure to the Funds;

(d) the procedures by which claims by beneficiaries are received, verified, and validated, and by which expenditure is authorised, paid and accounted for;

(e) the provisions concerning the security of information systems;

(f) the report of the pre-accreditation review carried out by the audit body referred to in paragraph 3.

Article 2

Review and withdrawal of accreditation of paying agencies

Every 3 years, the competent authority shall report in writing to the Commission on its supervision of paying agencies and monitoring of their activities. The report shall include a review of the paying agencies’ continuous compliance with the accreditation criteria, together with a summary of the actions taken to remedy the deficiencies. The competent authority shall confirm whether a paying agency for which it is responsible continues to comply with the accreditation criteria.

Article 3

Procedure for issuing, reviewing and withdrawing the accreditation of the coordinating body

The communication of information provided for in Article 90, first subparagraph, point (a), of Regulation (EU) 2021/2116 shall be made immediately after the coordinating body is first accredited and, in any case, before any expenditure for which it is responsible is charged to the Funds. That information shall be accompanied by declarations and documents concerning:

(a) the responsibilities vested in the coordinating body;

(b) the allocation of responsibilities within the coordinating body;

(c) the relationship of the coordinating body with other bodies, public or private, which are responsible to collaborate with it on the performance of its tasks;

(d) the procedures and systems in place in place to ensure the performance of its tasks;

(e) the provisions concerning the security of information systems;

(f) the result of the examination on the compliance with the accreditation criteria referred to in paragraph 2.

Pending the implementation of any necessary changes in order to meet the accreditation criteria, accreditation may be:

(a) issued provisionally for a new coordinating body;

(b) put under probation for an existing coordinating body provided that an action plan is followed to remedy the situation.

The accreditation shall be withdrawn if the accreditation criteria have not been fulfilled and the competent authority considers that the coordinating body cannot fulfil its tasks.

Article 4

Management declarations

The management declarations shall be in the forms set out in Annexes I and II respectively to this Regulation and may be qualified by reservations quantifying the potential financial impact. In the event that reservations are expressed, the declaration shall include a remedial action plan and a precise a time frame for its implementation.

Article 5

Certification

Where there is more than one certification body in a Member State, that Member State may designate a public certification body at the national level to be responsible for coordination.

That opinion shall be based on the audit work to be carried out in accordance with Articles 6 and 7 of this Regulation.

The certification body shall draw up a report of its findings. The report shall also cover the delegated functions of the paying agency in accordance with Section 1.(D) of Annex I to Delegated Regulation (EU) 2022/127. The report shall state whether, for the period covered by the report:

(a) the paying agency complied with the accreditation criteria;

(b) the paying agency’s procedures were such as to give reasonable assurance that the expenditure charged to the Funds was effected in compliance with Union rules, thus ensuring that: (i) as regards the types of intervention referred to in Regulation (EU) 2021/2115, the expenditure has corresponding reported output and that it has been effected in accordance with the applicable governance systems, and that recommendations for improvements, if any, have been followed up; (ii) the underlying transactions were legal and regular, as regards the measures laid down in Regulations (EU) No 228/2013, (EU) No 229/2013, (EU) No 1308/2013 and Regulation (EU) No 1144/2014 of the European Parliament and of the Council (¹), as well as for the crop-specific payment for cotton and support for early retirement under Title III, Chapter II, Section 3, Subsection 2, and Article 155(2), respectively, of Regulation (EU) 2021/2115, and that recommendations for improvements, if any, have been followed up;

(c) the performance reporting on output indicators and the performance reporting on result indicators for the multiannual performance monitoring referred to in Article 134 of Regulation (EU) 2021/2115, demonstrating that Article 37 of Regulation (EU) 2021/2116 is complied with, was correct;

(d) the annual accounts referred to in Article 33 of this Regulation were kept in accordance with the books and records of the paying agency;

(e) the statements of expenditure and of public intervention operations were a materially true, complete and accurate record of the operations charged to the Funds;

(f) the financial interests of the Union were properly protected as regards advances paid, guarantees obtained, intervention stocks and amounts to be collected.

The report shall include information on the number and qualifications of staff conducting the audit, the work done, the systems examined, the level of materiality and confidence obtained where applicable, any weaknesses found and recommendations made for improvement and the operations of both the certification body and other audit bodies, internal and external to the paying agency, from which all or part of the certification body’s assurance on the matters reported was gained.

Article 6

Audit principles

This shall be done through system audit and compliance testing as regards the functioning of governance system, completeness and accuracy testing and analytical procedures for the performance reporting system.

As regards the audit of annual accounts substantive testing of expenditure shall be applied, including test of details. As regards the audit of the legality and regularity of the underlying transactions as referred to in the first subparagraph, the testing shall include verification on-the-spot.

The Commission shall establish guidelines, which contain, in particular:

(a) further clarification and guidance in respect of the certification audit to be performed;

(b) the determination of the reasonable level of audit assurance to be achieved from auditing.

Article 7

Audit methods

In the context of guarantee funds, the certification body may conduct audits of the bodies providing new underlying loans only when either one or both of the following situations occur:

(a) supporting documents, providing evidence of the support from the financial instrument to final recipients, are not available at the level of the managing authority or at the level of the bodies implementing the financial instrument;

(b) there is evidence that the documents available at the level of the managing authority or at the level of the bodies implementing the financial instrument do not represent a true and accurate record of the support provided.

The Member State shall define the arrangements to ensure the audit trail for financial instruments in accordance with the template set out in Annex III, demonstrating the fulfilment of conditions or achievement of results.

CHAPTER II

Financial management of the Funds

Section 1

General provisions

Article 8

Paying agencies’ accounts

Member States shall make available for the Commission the information of the expenditure effected and assigned revenue received on its request.

As regards the EAFRD, each paying agency shall keep accounts enabling all the operations for each plan and each intervention to be identified. Such accounts shall include in particular:

(a) the amount of public expenditure and the amount of the Union contribution paid for each operation;

(b) the amounts to be recovered from beneficiaries for irregularities or negligence found;

(c) the amounts recovered, with an indication of the original operation.

Section 2

EAGF accounts

Article 9

Establishment of the declaration of expenditure

Article 10

Communication of information by Member States

However, the communication on expenditure effected and assigned revenue received between 1 and 15 October shall be sent by 25 October at the latest.

All relevant information shall be provided on the basis of the model made available by the Commission to Member States through information systems.

The declaration of expenditure referred to in paragraph 1 shall consist of at least:

(a) a statement, drawn up by each paying agency, broken down according to the nomenclature of the Union budget and by expenditure and assigned revenue, based on a detailed nomenclature made available within the information systems to the Member States covering: (i) the expenditure effected and assigned revenue received during the preceding month; (ii) total expenditure effected and assigned revenue received from the beginning of the financial year until the end of the preceding month; (iii) estimates of expenditure and assigned revenue covering separately the next three months and, as appropriate, the total of estimates of expenditure and assigned revenue to the end of the financial year. Where the estimates for the next three months, as referred to in the first subparagraph, point (iii), fall in the next financial year, only the total per month needs to be provided;

(b) the accounts evidencing expenditure and revenue relating to public intervention.

Article 11

General rules on the declaration of expenditure and on assigned revenue

That expenditure and assigned revenue shall be entered in the accounts of the EAGF budget in respect of the corresponding financial year.

However:

(a) expenditure which may be paid prior to the implementation of the provision permitting it to be wholly or partially borne by the EAGF may be declared only: (i) in respect of the month during which the provision in question was implemented; or (ii) in respect of the month following implementation of that provision;

(b) revenue assigned to the EAGF shall be declared in respect of the month during which the time limit for payment of the corresponding amounts, laid down in Union legislation, expires. Where corrections to assigned revenue lead, at paying agency level, to the declaration of negative revenue assigned for a budget line, surplus corrections shall be carried over to the following month.

Where payments due under the EAGF are encumbered by claims, they shall be deemed to have been effected in their entirety for the purpose of applying paragraph 1:

(a) on the date of the payment of the sum due to the beneficiary, if the claim is less than the expenditure settled;

(b) on the date of set-off, if the expenditure is less than or equal to the claim.

Article 12

Special rules on declarations of expenditure relating to public storage

However:

(a) in the case of operations carried out in the course of September, the values and amounts shall be entered in the accounts by paying agencies by 15 October at the latest;

(b) in the case of the overall depreciation amounts referred to in Article 3(1), point (e), of Delegated Regulation (EU) No 906/2014, the amounts shall be entered in the accounts on the date laid down in the decision providing for them.

Article 13

Payment decision by the Commission

Article 14

Making resources available to Member States

By deciding to make the monthly payments, the Commission shall place at the disposal of the Member States, within the framework of the budget appropriations, the resources needed to cover expenditure to be financed by the EAGF, less the corresponding amount of assigned revenue, in the account opened by each Member State.

When the amount established by the Commission for the application of Article 13(1) is negative for a Member State in total or for a given budget line, the effective offsetting may be deferred to the following months.

Article 15

Communication under public intervention

Paying agencies shall transmit to the Commission:

(a) at the Commission’s request, the documents and information referred to in Article 3(7) of Delegated Regulation (EU) 2022/127 and the additional national administrative provisions adopted for the application and management of intervention measures;

(b) by the day provided for in Article 10(1), of this Regulation, the information on public storage, on the basis of the models made available by the Commission to Member States through information systems.

Article 16

Content of the public storage accounts to be kept by paying agencies

The stock accounts provided for in Article 3(3), first subparagraph, point (a), of Delegated Regulation (EU) 2022/127 shall contain the following categories of elements, shown separately:

(a) the quantities of products recorded on entry into and removal from storage, with or without physical movement;

(b) the quantities used for free distribution to the most deprived persons under the Fund for European Aid to the Most Deprived, and accounted for under Article 4(3) of Delegated Regulation (EU) No 906/2014, distinguishing those which are the subject of a transfer to another Member State;

(c) quantities taken as samples, distinguishing samples taken by purchasers;

(d) the quantities which, after checking by visual examination in the context of the annual stock-taking or during the inspection after taking into intervention, may no longer be repackaged and are the subject of direct sales;

(e) quantities missing, for identifiable or unidentifiable reasons, including those corresponding to the legal tolerance limits;

(f) quantities which have deteriorated;

(g) surplus quantities;

(h) missing quantities exceeding the tolerance limits;

(i) quantities which have entered into storage and been found not to meet the requirements and for which taking-over has therefore been refused;

(j) net quantities in storage at the end of each month or accounting year, which are carried forward to the next month or accounting year.

The financial accounts provided for in Article 3(3), first subparagraph, point (a), of Delegated Regulation (EU) 2022/127 shall contain:

(a) the value of the quantities referred to in paragraph 1, point (a), of this Article, showing separately the value of the quantities bought in and of the quantities sold;

(b) the book value of the quantities used or taken into account under the free distribution arrangements referred to in paragraph 1, point (b), of this Article;

(c) the financing costs referred to in Article 3(1), point (a), of Delegated Regulation (EU) No 906/2014;

(d) expenditure on physical operations as referred to in Article 3(1), points (b) and (c), of Delegated Regulation (EU) No 906/2014;

(e) amounts resulting from depreciation as referred to in Article 3(1), point (e), of Delegated Regulation (EU) No 906/2014;

(f) the amounts collected or recovered from sellers, purchasers and storers, other than those referred to in Article 21 of this Regulation;

(g) the amount from direct sales carried out after the annual stock-taking or following checks after products are taken into intervention storage;

(h) losses and gains on removals of products, taking account of depreciation as referred to in point (e) of this paragraph;

(i) other debits and credits, in particular those corresponding to the quantities referred to in paragraph 1, points (c) to (g), of this Article;

(j) the average book value, expressed per tonne.

Article 17

Accounting related to public intervention

The records and calculations referred to in paragraph 1 shall be made subject to the application of the following rules:

(a) the removal costs relating to quantities for which quantitative losses or deterioration have been recorded, in accordance with the rules laid down in Annexes VI and VII to Delegated Regulation (EU) No 906/2014, shall be entered in the accounts only for the quantities actually sold and removed from storage;