1. 37 th Conference of the Directors of Paying Agencies Riga, 6-8 May 2015 Christina Borchmann Director Directorate J: Audit of Agricultural Expenditure Directorate General for Agriculture & Rural Development

2. Annual Activity Report for 2014 Adjusted Error Rate Market Intervention 3.87% Direct Payments 2.54% EAGF2.61% EAFRD5.09% IPARD3.19% CAP3.10%

3. Corrective Capacity Corrective capacity is an essential element to give the Director General assurance. DG AGRI objective is NOT to increase financial corrections. The objective is to get the error rate down.

5. Reservation methodology Reservation necessary if error rate above 5% - unless amount at risk is below de minimis. Reservation necessary if error rate between 2 and 5% unless de minimis or mitigating factors apply: Deficiencies remedied, 2014 expenditure covered by conformity clearance procedure No reservation if error rate for 2014 is below 2%. Where the amount of EU expenditure at risk is below the 1 million EUR de minimis threshold established in DG AGRI's materiality criteria, no reservation applies.

6. 2014 financial clearance 30/04/2015: 81 letters to Paying Agencies 5 disjoined accounts for EAGF 7 disjoined accounts for EAFRD Reasons: Late submission of accounts and of additional work requested Material error Qualification of accounts by CB

7. Certification Bodies – Legality & Regularity 15 dedicated missions by DG AGRI Combination audits: include in the control sample some of the Certification Body checks carried out as well as those carried out by the Paying Agency.

8. Conformity Clearance – new deadlines Reg. 908/2014 includes a number of new mandatory legal deadlines for the Commission and for the MS at each stage of the procedure; Commission will need to apply the Regulation strictly to be able to meet the legal deadlines; A monitoring system is in place to ensure Commission meets deadlines; MS must request and justify deadline extensions where needed.

9. Conformity Clearance: new MS possibilities MS will be invited (in letter of findings) to calculate the risk to the EU budget. They are required to do this work at the beginning of the contradictory procedure. New information should come at the very latest at the time of commenting on the bilateral minutes (Reg. 908/2014, Art 34(3).

10. New financial correction guidelines Why are new guidelines necessary? Adapt existing rules to the new legal provisions (Art.52 of R. 1306/2013 and Art.12 of R. 907/2014) Improve clarity and transparency of the rules Take stock of experience gained/lessons learned New elements introduced: Calculated/Extrapolated corrections: more detailed instruction Additional levels of flat-rate financial corrections Entry into force of the new rules from 1.1.2015.

11. Key & ancillary controls Definitions clarified, harmonised content & layout. Lists finalised (20) Future lists Application date: for conformity clearance procedures launched as from 1.1.2015 Intention is to increase transparency - not to increase financial corrections

12. Cost of Control 4 billion EUR New information gathering exercise: Cost of control for how many controls Keeping LPIS up to date CAP reform implementation IT systems CB work Starts Autumn 2015.