Criteria and methodology for applying reductions in the framework of the performance clearance
1. For the purpose of adopting the decision pursuant to Article 54(1) of Regulation (EU) 2021/2116 on the amounts to be reduced from Union financing, the Commission shall assess the annual expenditure declared by the Member State for the intervention against its corresponding output as reported in the annual performance report referred to in Article 54(1) of Regulation (EU) 2021/2116, submitted pursuant to Article 9(3), first subparagraph, point (b), and Article 10(1), point (b), of that Regulation, and Article 134 of Regulation (EU) 2021/2115.
2. Where the declared expenditure does not have a corresponding output for the relevant financial year and where such deviations as regards the outputs and the realised unit amounts have not been previously explained by the Member State in accordance with Article 134(5) to (9) of Regulation (EU) 2021/2115 in the annual performance report or where the justifications for the deviations are insufficient, the Member State shall provide further justifications within the time-periods set by the Commission. The justifications shall cover the expenditure declared that does not have a corresponding output in the relevant budgetary year.
3. The justifications to be provided by the Member State shall contain relevant information explaining the deviation at unit amount level and the period concerned. It shall contain quantitative information, as well as, qualitative explanations, where necessary.
The Member State shall also provide explanations regarding the extent and effect of the corrective actions already taken to remedy the deviation and to prevent it from reoccurring.
Where the Member State cannot provide justifications for the deviations in accordance with paragraph 2, it may provide justifications for a part of the deviations.
4. Where the Member State fails to provide duly justified reasons for the deviations or where those are considered insufficient by the Commission in accordance with paragraphs 2 and 3, or cover only part of the deviations, the Commission shall reduce the relevant amounts from Union financing. The Commission shall notify the Member State of its opinion in a separate communication
5. The reductions referred to in this Article shall be applied without prejudice to the subsequent decision on conformity clearance referred to in Article 55 of Regulation (EU) 2021/2116.
Criteria and methodology for applying corrections in the framework of the conformity procedure for the expenditure outside the scope of Regulation (EU) 2021/2115 or for the crop-specific payment for cotton and support for early retirement
1. For the purpose of adopting the decision on the amounts to be excluded from Union financing pursuant to Article 55(1) of Regulation (EU) 2021/2116, the Commission shall distinguish between those amounts or parts of the amounts identified as amounts unduly spent and those determined by applying extrapolated or flat rate corrections.
In order to determine the amounts that may be excluded from Union financing, when finding that expenditure outside the scope of Regulation (EU) 2021/2115, for the crop-specific payment for cotton or support for early retirement under Title III, Chapter II, Section 3, Subsection 2, and Article 155(2) of that Regulation, respectively, has not been incurred in conformity with Union law, the Commission shall use its own findings and shall take into account the information made available by the Member States during the conformity clearance procedure carried out in accordance with Article 55 of Regulation (EU) 2021/2116.
2. The Commission shall base the exclusion on the identification of the amounts unduly spent only if those amounts may be identified with proportionate effort. Where the amounts unduly spent cannot be identified by the Commission with proportionate effort, Member States may, within the time-periods set by the Commission during the conformity clearance procedure, submit data concerning the verification of those amounts on the basis of an examination of all individual cases potentially affected by the non-conformity. The verification shall cover the entire expenditure incurred in breach of applicable law and charged to the Union budget. The data submitted shall include all individual amounts which are ineligible due to that non-conformity.
3. Where the amounts unduly spent cannot be identified in accordance with paragraph 2, the Commission may determine the amounts to be excluded by applying extrapolated corrections. To enable the Commission to determine the relevant amounts, Member States may, within the time-periods set by the Commission during the conformity clearance procedure, submit a calculation of the amount to be excluded from Union financing by extrapolating through statistical means the results of checks carried out on a representative sample of those cases. The sample shall be drawn from the population for which the identified non-conformity is reasonably expected to occur.
4. In order to take into consideration the results submitted by Member States as referred to in paragraphs 2 and 3, the Commission shall be in a position to:
(a)
assess the methods used for identifying or extrapolating, which shall be clearly described by the Member States;
(b)
check the representativeness of the sample referred to in paragraph 3;
(c)
check the content and results of the identification or extrapolation submitted to it;
(d)
obtain sufficient and relevant audit evidence regarding the underlying data.
5. When applying extrapolated corrections as foreseen in paragraph 3, the Member States may use the paying agencies’ control statistics as confirmed by the certification body, or such body’s assessment of the level of error in the context of its audit referred to in Article 12 of Regulation (EU) 2021/2116, provided that:
(a)
the Commission is satisfied with the work carried out by the certification bodies, both in terms of audit strategy and concerning the content, extent and quality of the actual audit work;
(b)
the scope of the certification bodies’ work is consistent with the scope of the conformity clearance enquiry in question, in particular with regard to the measures or schemes;
(c)
the amount of the penalties that should have been applied was taken into account in the assessments.
6. Where the conditions for determining the amounts to be excluded from Union financing as referred to in paragraphs 2 and 3 are not met or the nature of the case is such that the amounts to be excluded cannot be determined on the basis of those paragraphs, the Commission shall apply the appropriate flat-rate corrections, taking into account the nature and gravity of the infringement and its own estimation of the risk of financial damage caused to the Union budget.
The level of flat-rate correction shall be established by taking into consideration in particular the type of non-conformity identified. To this effect, control deficiencies shall be divided between those relating to key and ancillary controls as follows:
(a)
key controls shall be the administrative and on-the-spot checks necessary to determine the eligibility of the aid and the relevant application of reductions and penalties;
(b)
ancillary controls shall be all other administrative operations required to correctly process claims.
If, in the framework of the same conformity clearance procedure, different non-conformities which would individually lead to distinct flat-rate corrections are established, then only the highest flat-rate correction shall apply.
7. When establishing the level of flat-rate corrections, the Commission shall specifically take into account one or more of the following circumstances demonstrating a higher gravity of the deficiencies revealing a greater risk of loss for the Union budget:
(a)
one or more key controls are not applied or are applied so poorly or so infrequently that they are deemed ineffective in determining the eligibility of the claim or in preventing irregularities;
(b)
three or more deficiencies are detected with respect to the same control system;
(c)
the Member State’s application of a control system is found to be absent or gravely deficient, and there is evidence of wide-spread irregularity and negligence in countering irregular or fraudulent practices;
(d)
similar deficiencies in the same sector are detected in a Member State in an enquiry that follows an enquiry in which they have been first detected and communicated to the Member State, account taken however of the corrective or compensating measures already taken by the Member State.
8. Where a Member State submits certain objective elements, which do not fulfil the requirements laid down in paragraphs 2 and 3 of this Article, but which demonstrate that the maximum loss for the EAGF and the EAFRD is limited to a sum lower than what would derive from the application of the flat-rate proposed, the Commission shall use that lower flat rate to decide on the amounts to be excluded from Union financing pursuant to Article 55 of Regulation (EU) 2021/2116.
9. Amounts effectively recovered from the beneficiaries and credited to the EAGF and the EAFRD before a relevant date, to be established by the Commission in the course of the conformity clearance procedure, shall be deducted from the amount that the Commission decides to exclude from Union financing pursuant to Article 55 of Regulation (EU) 2021/2116.
Criteria and methodology for applying corrections in the framework of the conformity procedure for expenditure within the scope of Regulation (EU) 2021/2115
1. For the purpose of adopting the decision on the amounts to be excluded from Union financing pursuant to Article 55(1) of Regulation (EU) 2021/2116, the Commission shall use its own findings and shall take into account the information made available by the Member States during the conformity procedure carried out in accordance with Article 55(3) of that Regulation. The amount to be excluded from Union financing shall as much as possible correspond to the actual financial loss or risk for the Union budget.
2. Where the Commission finds that the expenditure has not been effected in conformity with Union law, the Commission may determine the amounts to be excluded by applying flat-rate corrections, taking into account the nature and gravity of the infringement and its own estimation of the risk of financial damage caused to the Union.
The level of flat-rate correction shall be established by taking into consideration in particular the type of serious deficiency identified. To this effect, account shall be taken of the elements of the governance systems affected by the serious deficiencies.
If, in the framework of the same conformity procedure, different serious deficiencies which would individually lead to distinct flat-rate corrections are established, then only the highest flat-rate correction shall apply.
3. When establishing the level of flat-rate corrections, the Commission shall specifically take into account one or more of the following circumstances demonstrating a higher gravity of the deficiencies, revealing a greater risk of loss for the Union budget:
(a)
serious deficiencies in one or more elements of the governance systems;
(b)
the Member State’s application of an element of the governance system is found to be absent, and there is evidence of wide-spread irregularity and negligence in countering irregular or fraudulent practices;
(c)
similar deficiencies in the same sector are detected in a Member State in an enquiry that follows an enquiry in which they have been first detected and communicated to the Member State, account taken however of the corrective or compensating measures already taken by the Member State.
4. Where a Member State demonstrates that the maximum loss for the EAGF and the EAFRD is limited to a sum lower than what would derive from the application of the flat-rate proposed, the lower flat-rate may be applied or the certification body’s assessment of the governance systems in the context of its audit referred to in Article 12 of Regulation (EU) 2021/2116 may be used by the Commission in order to determine the amounts to be excluded from Union financing during the conformity procedure referred to in Article 55 of that Regulation.
5. Where appropriate, Member States may, within the time-periods set by the Commission during the conformity procedure, submit data concerning the verification of those amounts on the basis of an examination of all individual cases potentially affected by the deficiency. The verification shall cover the entire expenditure incurred in breach of Union law and charged to the Union budget. The data submitted shall include all amounts, which are ineligible due to that non-conformity with Union law. Alternatively, Member States may provide an assessment of the risk, based on a statistically valid and representative sample of the population affected by the deficiency, provided the Member States cannot calculate the amounts unduly spent with proportionate effort. The certification body shall confirm the Member State’s assessment of the deficiency.
6. In order to take into consideration the results submitted by Member States as referred to in paragraph 5, the Commission shall assess the method, content and results of the verification or extrapolation submitted. Where the Commission is satisfied with the method, content and results of the verification or extrapolation submitted, it shall use the results submitted by Member States pursuant to paragraph 5, in order to determine the amounts to be excluded from Union financing pursuant to Article 55 of Regulation (EU) 2021/2116.
7. Amounts effectively recovered from the beneficiaries and credited to the EAGF and the EAFRD before a relevant date, to be established by the Commission in the course of the conformity procedure, shall be deducted from the amount that the Commission decides to exclude from Union financing pursuant to Article 55 of Regulation (EU) 2021/2116.
