1. European Commission DG Agriculture (Unit I.4) 1 FINANCIAL MANAGEMENT OF THE COMMON AGRICULTURAL POLICY e-Farmer Conference Budapest 31 January-1 February 2007

2. European Commission DG Agriculture (Unit I.4) 2 Agenda  Principles of EAGF Financial Management  Budget and detailed budget nomenclature  Information to be transmitted to the Commission  Electronic transmission of data  Figures

3. European Commission DG Agriculture (Unit I.4) 3 Principles of EAGF financial management

4. 4 Financing the CAP via: European Agricultural Guarantee Fund (EAGF) - Formerly EAGGF Guarantee; European Agricultural Fund for Rural Development (EAFRD) - Formerly EAGGF Guidance form part of the general budget of the European Communities European Commission DG Agriculture (Unit I.4)

5. 5  Council Regulation (EC) No 1290/2005 on the financing of the CAP;  Commission Regulation (EC) No 883/2006 laying down detailed rules as regards the keeping of accounts by the paying agencies, declarations of expenditure and revenue and the conditions for reimbursing expenditure under EAGF and the EAFRD;  Commission Regulation (EC) No 884/2006 laying down detailed rules as regards the financing of EAGF intervention and accounting of public storage operations by the paying agencies of the Member States;  Commission Regulation (EC) No 885/2006 laying down detailed rules as regards the accreditation of paying agencies and other bodies and the clearance of accounts of the EAGF and the EAFRD. Key regulations

6. European Commission DG Agriculture (Unit I.4) 6 Participation of the European Agricultural Guidance and Guarantee Fund in the Budget of the European Community (Financial report 2005)

7. European Commission DG Agriculture (Unit I.4) 7  The presentation focuses on EAGF;  Represents the highest part of the budget of the European Community;  Includes direct payments to farmers;  Managed by DG AGRI Unit I/4. EAGF

8. European Commission DG Agriculture (Unit I.4) 8 WHAT is financed by the EAGF? Art. 3 (1) Reg. 1290/2005 Shared management (MS pays the beneficiary, the Commission reimburses the MS)  Refunds on exports to third countries;  Intervention (storage and other measures) to stabilise the agricultural market;  Direct payments to farmers;  Sugar Restructuring Fund (restructuring aid, aid for diversification, additional aid for diversification and transitional aid for the sugar industry);  Promotion of agricultural products.

9. European Commission DG Agriculture (Unit I.4) 9 WHAT is financed by the EAGF? Art. 3 (2) Reg. 1290/2005 Direct management by the Commission/centralised management (the Commission pays the beneficiary directly):  Certain veterinary measures and plant health measures;  Establishment of an agricultural accounting and survey system;  Fisheries markets.

10. Art. 1 (2) Reg.1258/1999 (old system) European Commission DG Agriculture (Unit I.4) 10 EAGGF-Guarantee expenditure by measure type (Economic nature of expenditure, based on decimal nomenclature)

11. European Commission DG Agriculture (Unit I.4) 11 WHO is responsible for EAGF expenditure administration?  The Commission is responsible for the administration in co-operation with the Member States (=shared management), Art. 3 (1) Reg.1290/2005;  Consultation of the Member States in the monthly meetings of the “Committee on the Agricultural Funds” (written procedure in August), Art. 41 (1) Reg.1290/2005.

12. European Commission DG Agriculture (Unit I.4) 12 What does shared management mean? Responsibilities of the Commission:  Monthly payments (for payments effected minus revenue received by the paying agencies) to the Member States;  Ensures budgetary discipline (respect of budget appropriations, payment deadlines, financial ceilings);  Checks management and control systems in the Member States (e.g. missions in the Member States, clearance of accounts procedure).

13. European Commission DG Agriculture (Unit I.4) 13 What does shared management mean? Responsibilities of the Member State (ministerial level):  Accredits or withdraws the accreditation of the paying agencies and the coordinating body (Art. 6 (2-4) Reg.1290/2005);  Defines the number of paying agencies (Art. 6 (2) Reg.1290/2005);  Informs the Commission of its decisions (Art. 8 Reg.1290/2005).

14. European Commission DG Agriculture (Unit I.4) 14 What does shared management mean? Paying agencies:  Make payments to beneficiaries (ensures eligibility, controls, etc.);  Provide guarantee for proper accounting, archives, control systems, etc.;  Present the requisite documents within the time limits to the coordinating body or to the Commission (Art. 6 (1) Reg.1290/2005)  Adopt all necessary measures to prevent and pursue irregularities, recover sums lost and ensure certification of accounts (Art. 9 Reg. 1290/2005).

15. European Commission DG Agriculture (Unit I.4) 15 What does shared management mean? coordinating body (if more than one paying agency)  Acts as intermediary between the paying agencies and the Commission;  Disseminates Community texts and guidelines to paying agencies;  Makes available to the Commission all necessary accounting information;  Promotes harmonised application of Community law;  Communicates all necessary information collected from the paying agencies to the Commission. Art. 6 (3) Reg. 1290/2005, Art. 4 (1) Reg. 885/2005  Sends to the Commission the annual accounts (Art. 8 (1) c (iii) Reg.1290/2005, Art. 6, 7 (1-2) Reg. 885/2006)

16. CERTIFICATION OF ACCOUNTS BY AN INDEPENDENT BODY  Designated by the Member State;  Private or public institution, operationally independent of the paying agency (Art. 5 (1) Reg.885/2006);  Audits the paying agencies’ procedures;  Controls the financial reports;  Certifies the accounts. Art. 7 Reg. 1290/2005, Art. 5 Reg.885/2006: European Commission DG Agriculture (Unit I.4) 16 Certification Body

17. European Commission DG Agriculture (Unit I.4) 17 Example Certification body 1Certification body 2

18. European Commission DG Agriculture (Unit I.4) 18 Particularities  The “EAGF–year” = “budget exercise” (e.g. for 2007) covers the Member States expenditure from 16 October 2006 to 15 October 2007(Art. 5 Reg.883/2006);  The month November covers 46 days (16.10 – 30.11), (Art. 15 (4) Reg.1290/2005);  The month October covers only 15 days (1.10 – 15.10), (Art. 15 (4) Reg.1290/2005);  Monthly payments are made to the Member State on the 3 rd working day of the second month following that in which the expenditure was effected (i.e. the month after declaration), (Art. 15 (3) Reg.1290/2005);  At the end of the calendar year (in December), an additional (13 th ) payment is made (to cover outstanding rounding and possible corrections).

19. European Commission DG Agriculture (Unit I.4) 19 Financial Flow M= calendar month MPaying agency pays beneficiary with funds mobilised by the Member State, Art.14 (2) Council Regulation (EC) No 1290/2005; M+1Member State sends declaration of expenditure and revenue to the Commission; M+2 (3 rd working day) Commission reimburses Member State based on the payment declaration of the Member State.  MS shall open a (bank) account to receive the monthly payments (Art. 11 (1) Reg.883/2006), name and number of this account shall be notified to the Commission;  EU budget resources that are not spent within the financial year are “lost” and can not be used in the following year.

20. European Commission DG Agriculture (Unit I.4) 20 Reduction of payments by the Commission Art. 17 Reg.1290/2005 Reduction due to:  late payments to the beneficiary by the MS  Overrun of financial ceilings MS has the opportunity to submit its comments before reduction.

21. European Commission DG Agriculture (Unit I.4) 21 Contact units in the Commission Directorate-General for Agriculture and Rural Development (DG AGRI)  AGRI I.1Budget management  AGRI I.4 Financial management of EAGF  AGRI F.2 Financial management of EAFRD  AGRI JAudit of agriculture expenditure (Clearance of accounts, X-tables, debtors’ ledger)

22. European Commission DG Agriculture (Unit I.4) 22 Budget and detailed budget nomenclature

23. European Commission DG Agriculture (Unit I.4) 23 Topics  Financial framework;  Activity Based Budgeting;  Budget nomenclature;  Detailed budget nomenclature.

24. European Commission DG Agriculture (Unit I.4) 24 Financial perspectives  Parliament, Council and Commission agree in advance on the main budgetary priorities for the following period  and establish a framework for Community expenditure in the shape of a financial perspective.  The Financial perspectives show the maximum amount and the composition of foreseeable Community expenditure for a given period  The amounts entered are expenditure ceilings  Are laid down in Interinstitutional Agreements.

25. European Commission DG Agriculture (Unit I.4) 25 Financial Framework 2007-2013  For 2007-2013: Interinstitutional Agreement between the European Parliament, Council, Commission on budgetary discipline and sound financial management (2006/C 139/01))

26. European Commission DG Agriculture (Unit I.4) 26 Activity Based Budgeting (ABB)  The budget is the instrument which, for each year, forecasts and authorises all revenue and expenditure considered necessary  The budget shall be established on the basis of Activity Based Budgeting (ABB)  Financial resources are allocated to policy areas and activities  The ABB nomenclature is a common budget structure for planning, budgeting and management of expenditure

27. European Commission DG Agriculture (Unit I.4) 27 Budget Nomenclature Budget is adopted by the Budgetary Authority (Council and Parliament) at the level of:  Title  Chapter  Article  Item The text in the Budget refers to the legal base of expenditure for every budget line. All payments must have a legal base!

28. European Commission DG Agriculture (Unit I.4) 28 Structure of Budget Nomenclature (expenditure) Title = policy area 05 – Agriculture and rural development Chapter 05 03 – Direct aids Article05 03 01 – Decoupled direct aids Item05 03 01 02 – SAPS (Single Area Payment Scheme) Sub-item05 03 01 02 0000 003 – Single Area Payment Scheme – new Member States – R.1782/03, Art.143b) – calendar year 2006 – CY, CZ, EE, HU, LU, LT, PL, SK

29. There is a need for planning, management, control and follow-up of measures by: European Commission DG Agriculture (Unit I.4) 29 Why a detailed nomenclature?  Marketing year;  Product;  Deadline for the payments;  Financial ceiling of the expenditure.

30. European Commission DG Agriculture (Unit I.4) 30 Legal base Item 05 03 01 02 — SAPS (Single Area Payment Scheme) Appropriations 2006 Appropriations 2005 Outturn 2004 1 740 000 000 1 394 000 000 Remarks Former Item 05 02 12 02 This appropriation is intended to cover expenditure under the single area payment scheme for the new Member States, in accordance with the Act of Accession and in accordance with Title IVA of Council Regulation (EC) No 1782/2003. Legal basis Council Regulation (EC) No 1782/2003 of 29 September 2003 establishing common rules for direct support schemes under the common agricultural policy and establishing certain support schemes for farmers and amending Regulations (EEC) No 2019/93, (EC) No 1452/2001, (EC) No 1453/2001, (EC) No 1454/2001, (EC) No 1868/94, (EC) No 1251/1999, (EC) No 1254/1999, (EC) No 1673/2000, (EEC) No 2358/71 and (EC) No 2529/2001 (OJ L 270, 21.10.2003, p. 1), as last amended by Regulation (EC) No 2217/2004 (OJ L 375, 23.12.2004, p. 1).

31. European Commission DG Agriculture (Unit I.4) 31 Legal base Item 05 03 01 02 — SAPS (Single Area Payment Scheme) Legal basis cont. Act concerning the conditions of accession of the Czech Republic, the Republic of Estonia, the Republic of Cyprus, the Republic of Latvia, the Republic of Lithuania, the Republic of Hungary, the Republic of Malta, the Republic of Poland, the Republic of Slovenia and the Slovak Republic and the adjustments to the treaties on which the European Union is founded (OJ L 236, 23.9.2003, p. 33), and in particular Annex II thereto ‘List referred to in Article 20 of the Act of Accession‚ 6A as amended by Decision 2004/281/EC (OJ L 93, 30.3.2004, p. 1). Reference acts Commission Regulation (EC) No 118/2005 of 26 January 2005 modifying Annex VIII to Council Regulation (EC) No 1782/2003 and establishing budgetary ceilings for partial or optional implementation of the Single Payment Scheme and annual financial envelopes for Single Area Payment Scheme provided for in that Regulation (OJ L 24, 27.1.2005, p. 15).

32. European Commission DG Agriculture (Unit I.4) 32 The detailed budget nomenclature  Is a more detailed specification of articles and items defined in the “General Budget” (there are around 150 items and 2500 sub-items);  Is the compulsory level of declaration of EAGF expenditure in the monthly detailed declaration table (T 104) that has to be sent from the Member States to the Commission (Reg.883/06, Art.4 2(a)).

33. European Commission DG Agriculture (Unit I.4) 33 The detailed budget nomenclature To identify the budget sub-item under the expenditure has to be declared:  examine legal base for the support measure  examine the budget (legal basis, remarks)  study the detailed nomenclature  if necessary, contact the Commission.

34. European Commission DG Agriculture (Unit I.4) 34 Information to be transmitted to the Commission

35. European Commission DG Agriculture (Unit I.4) 35 Transmission of data by the Member States Throughout the exercise:  declaration of expenditure = payment request  forecasts of expenditure Following the exercise:  annual accounts of the accredited paying agencies Art. 8 (1) c) Reg.1290/2005

36. European Commission DG Agriculture (Unit I.4) 36 Transmission of data by the Member States Art. 4 (1) Reg.883/2006  The global expenditure declaration;  Declaration of expenditure (Fax of the 10 th ): Transmitted by the 10 th day of each month;  Set of documents (T104 +…): Transmitted by the 20 th day of each month.

37. European Commission DG Agriculture (Unit I.4) 37 Calculation of the monthly payments Monthly payments concerning the payments made by Member states in the month ‘n’ (January) Month ‘n’ (January ) Month ‘n +1’ ( February ) Month ‘n+2’ ( March ) 10th 20th 3 rd working day 10 th of the month declaration : expenditure ‘n’ Monthly detailed declaration of expenditure ‘n’ Monthly payment up to the 3 rd wor king day EAGF Committee: consultation of Member States Decision of the Commission concerning the amounts of the monthly payment to transfer

38. European Commission DG Agriculture (Unit I.4) 38 Global Expenditure Declaration Art. 8 (1) (c) (i) Reg.1290/2005, Art. 4 (1) (a) Reg.883/2006 WHEN(By the third working day of each week: keep available information = situation until the end of the previous week), Transmission: by the third working day of each month; WHATTotal expenditure effected and assigned revenue received during the preceding month (n); + Any information explaining any substantial difference between the forecasts given for this month and the expenditure effected and assigned revenue received. FORMAnnex I of Commission Regulation (EC) No 883/2006

39. European Commission DG Agriculture (Unit I.4) 39 Declaration of expenditure (Declaration (Fax) of the 10 th ) Art. 15 (2) Reg.1290/2005, Art. 4 (1) (b) Reg.883/2006 WHENBy the 10 th of the month “n+1” (for the period from 1 st to 15 th of October by October 25 th ); WHATThe total amount of expenditure incurred and assigned revenue received during the preceding month “n” and relating to public storage during the month “n-1” according to Reg.884/2006; BYArticles or items; FORMAnnex II of Commission Regulation (EC) No 883/2006.

40. Art.8 (1) Reg.883/2006  On the basis of the Fax of the 10 th declaration the Commission shall adopt decisions and make monthly payments (without prejudice to corrections and reductions);  Monthly payments cover the expenditure less the corresponding amount of assigned revenue;  Paid on the 3 rd working day of the month following the declaration. European Commission DG Agriculture (Unit I.4) 40 Payment decision by Commission

41. European Commission DG Agriculture (Unit I.4) 41 Set of documents (T104 + …) Art. 4 (1) (c) Reg.883/2006 WHENBy the 20 th of the month “n+1” (for the period from the 1 to 15 October by 10 November); WHATA set of documents permitting the booking to the Community Budget of expenditure effected and assigned revenue received by the paying agency during the preceding month.

42. European Commission DG Agriculture (Unit I.4) 42 Set of documents (T104 +…) Art. 4 (2) Reg.883/2006  Table 104 : monthly detailed declaration for each paying agency;  Table 103 : a summary of table 104 for all paying agency in a MS;  Table 101 : difference between the monthly expenditure declaration (= Fax of the 10th) and table 104;  e-FAUDIT tables : accounts relating to public storage operations.

43. European Commission DG Agriculture (Unit I.4) 43 Monthly detailed declaration (Table 104) Art. 4 (2) (a) Reg.883/2006 This is a detailed declaration for a month “n” based on the ABB nomenclature of the EAGF at the level of sub-item.  Expenditure effected and assigned revenue received in month “n”;  Total expenditure effected and assigned revenue received from the beginning of the EAGF-year until the end of the month “n” = cumulative amounts  Estimates of expenditure and assigned revenue (forecasts) FORM: Statement in form of a message in IDES, Annex V of Reg.883/2006.

44. European Commission DG Agriculture (Unit I.4) 44 Table 103 Art. 4 (2) (b) Reg.883/2006:  Summary of the data in Table 104 for all paying agencies (by Member State): expenditure / assigned revenue / net amount  Electronically and on paper (signed) Art. 4 (3) Reg.883/2006;  Form: Annex IV of Reg.883/2006.

45. Art. 4 (2) (c) Reg.883/2006 Table 101 is a statement of any difference (with the reasons for such differences) between: The total expenditure effected and assigned revenue received communicated by the Fax of the 10th and Table 104. Differences will be included in the next monthly payment. Form: Annex III of Reg.883/2006. European Commission DG Agriculture (Unit I.4) 45 Table 101

46. Art. 4 (2) (d) Reg.883/2006 A declaration of tables (15 in total) drawn up each month in the form shown in Annex III of Reg.884/2006, that relate to the possible public storage operations for the following products:  Bread making wheat, barley, maize and sorghum;  Paddy rice;  White sugar and raw sugar;  Butter and skimmed milk powder;  Alcohol. European Commission DG Agriculture (Unit I.4) 46 e-FAUDIT tables

47. European Commission DG Agriculture (Unit I.4) 47 Example – Global amount, Fax of the 10 th and T 104 deadlines for transmission  01/01/2007 – 31/01/2007 Global amount→ 05/02/2007 Fax of the 10 th → 12/02/2007 Table 104 → 20/02/2007  01/02/2007 – 28/02/2007 Global amount → 05/03/2007 Fax of the 10 th → 12/03/2007 Table 104 → 20/03/2007  ……  last period: 01/10/2007 – 15/10/2007 Global amount → 18/10/2007 Fax of the 10 th → 25/10/2007 Table 104 → 05/11/2007

48. European Commission DG Agriculture (Unit I.4) 48 Electronic transmission of data

49. European Commission DG Agriculture (Unit I.3) Access to DG AGRI Web systems Transmission of electronic declarations CAP-ED assistance tool CIRCA dissemination tool Topics 49

50. European Commission DG Agriculture (Unit I.3) AWAI (Agriculture Web Applications Interface) is a “single sign-on” Portal, used by Member States to access all the Web applications of DG AGRI by using a unique userid / password. AWAI is accessible via the Internet or via TESTA (*) (*) Trans European Services for Telematics between Administrations 50 Access to DG AGRI Web systems

51. European Commission DG Agriculture (Unit I.3) Transmission of declarations NewIDES is a software package which allows the processing of data files that are sent by the Member States to the various services of the DG AGRI. The Web Upload Secure Interface (WUSI) is an Internet application, which allows the easy and safe transfer of these data files to NewIDES. 51

52. European Commission DG Agriculture (Unit I.3) AWAI Portal Upload report Acknowledgement Email transmission (only for TEST) NewIDES Treats the messages. Sends data to DG AGRI applications. Sends acknowledgements to message originators. DG AGRI Applications (AMIS, AGREX etc) WUSI Message(s) in an e-mail Notification Internal notification Notification Public Domain EU Domain Member States File transfer overview 52

53. European Commission DG Agriculture (Unit I.3) What is CAPED CAP-ED (Common Agriculture Policy - Electronic Dictionary) is a system aiming to simplify and facilitate the data exchanges between the actors involved in the CAP, by defining a common electronic dictionary available electronically. CAP-ED contains the definitions of the codes to be used for the data exchanges (e.g., the EAGF Detailed Nomenclature, Codes to be used for T104 declaration) 53

54. European Commission DG Agriculture (Unit I.3) DG AGRI Applications CAP Electronic Dictionary Ministries Public Bodies Other EU Institutions International Organisations CAP-ED overview AWAI Portal Member States 54

55. European Commission DG Agriculture (Unit I.4) 55 Example

56. European Commission DG Agriculture (Unit I.4) 56 Example

57. European Commission DG Agriculture (Unit I.3) What is CIRCA CIRCA (Communication & Information Resource Centre For Administrations) is an information dissemination tool, fine-tuned to EU and Public Administrations needs. It enables a given community to maintain a private space on the Internet, where they can share information, documents. Library of EAGF related documents 57

58. European Commission DG Agriculture (Unit I.4) 58 Example

59. European Commission DG Agriculture (Unit I.4) 59 Example

60. European Commission DG Agriculture (Unit I.4) 60 Example

61. 61 Figures (financial exercise 2005) European Commission DG Agriculture (Unit I.4)

62. 62 EAGGF TOTAL EXPENDITURE - 2005

63. 63 DIRECT PAYMENTS - 2005

64. 64 EXPORT REFUNDS - 2005

65. 65 INTERVENTION - 2005

66. 66 RURAL DEVELOPMENT - 2005

67. 67 OTHERS - 2005

68. 68 HUNGARY - 2005

69. 69 CZECH REPUBLIC - 2005

70. 70 POLAND - 2005

71. 71 SLOVAKIA - 2005

72. European Commission DG Agriculture (Unit I.3) Questions and Answers 72

73. . European Commission DG Agriculture (Unit I.4) 73 Athéné NESZMÉLYI Ph.D. European Commission DG Agriculture and Rural Development EAGF Financial Management (I.4) 1049 Brussels, 130 Rue de la Loi, 10/03 Tel: +32 2 29 69450 Fax: +32 2 29 66446 THANK YOU FOR YOUR ATTENTION! e-mail: athene.neszmelyi@ec.europa.eu