Cohesion Policy 2014-2020 Financial Management TWG 25-26 October Brussels

Financial system 2014-2020 3 Key objectives Tools Improved assurance Reduced error rate Maintain flexibility Tools Annual clearance of accounts & rolling closure 90% interim payment capping & annual pre financing Net corrections, 3 years retention of documents As now, EU reimbursement calculated at the level of priority axis

Reduced error rate: Clearance of accounts – annual cycle Accounting year Clearance of accounts 1 July N-1 Dec N-1 30 Jun N Dec N 1 Feb N+1 30 Apr N+1 30 Jun N+1 Preparation of the annual accounts, management declaration, summary audit report, audit opinion

Annual clearance of accounts MS by 1 Februrary: Certified annual accounts by CA Report on results of management controls, weaknesses, corrective actions / Declaration of assurance (on accounts, management and control system, legality & regularity of transactions, sound financial management) by MA Summary audit report and audit Opinion on declaration of assurance by AA Commission by 30 April: amount chargeable to the Funds. Payment (recovery) of annual balance with next interim payment claim.  Net corrections if errors detected by EU bodies.

Content of certified annual accounts Total eligible expenditure entered in CA accounts – paid by beneficiaries Corresponding public support paid and public support incurred in implementing operations Amounts withdrawn or recovered ERDF/CF operations completed / ESF expenditure included in accounts Possible provision of maximum 5% for open audit issues

Rolling closure Clearance of accounts => all the elements for closure are available For ESF, annual closure of expenditure (different for ERDF/CF) Retention of documents : 3 years from 31 December of the year accounts are cleared. No big bang at closure of OPs

INTERIM PAYMENTS Regular submission of payment claims with a compulsory statement of expenditure 1 month after the end of accounting year (31 July) Payments of the public contribution to beneficiaries before expenditure declared to Commission Payment by Commission limited to 90% of amount calculated Remaining 10% released after clearance of accounts

Change in interim payment claims Identify public payments made to beneficiaries (even to public beneficiaries) => 3 columns Total amount paid by beneficiaries Total amount of public support incurred in implementing operations Corresponding eligible public support which has been paid to the beneficiary

Calculating payments No major change: rate of the priority axis applied to eligible expenditure, capped by priority axis to: Public support in the payment application Contribution of the fund in the decision Art 118: at the latest by closure of the OP, amount of public support paid to beneficiaries shall be at least equal to the Funds paid by the Commission to the Member State. Reminder: maximum co-financing rate now assessed by priority axis.

PRE-FINANCING Initial pre-financing 4% paid in 3 instalments (2+1+1) Annual pre-financing (2.5%) paid by 1 July from 2016 to 2022 Annual pre-financing cleared with the clearance of accounts

Financial reporting 4 / year (Jan-Apr-Jul-Oct), by priority axis : total & public eligible cost + number of operations selected; total & public eligible cost of contracts or other legal commitments total eligible expenditure declared by beneficiaries to MA 1 / year (Jan) Same data broken down by categories of intervention 2 / year (Jan-Jul) Forecast of payment applications for the current and subsequent financial years  Monitoring purpose

AUTOMATIC DECOMMITMENT N+2 rule for all Exception for the first year (“Greek proposal”) no automatic decommitment exercise for the first year first year commitment spread over the following years (1/6) Exceptions for force majeure or legal proceedings and administrative appeals No exceptions for major projects and state aid schemes

Improved assurance Greater responsibility of MS Accreditation of MA/CA by Accrediting body Annual management declaration by MA Better alignment of MS’ assurance through ACR/AO with COM’s AAR in order to reduce the current year gap Interim payments capped at 90%

CHANGES COMPARED TO 2007-2013 Annual system focused on annual clearance of accounts Closure on annual basis Payments to beneficiaries before expenditure declared to Commission, payment application Annual pre-financing on top of a reduced initial pre-financing No more « m+24 » rule Capping of interim payments N+2 for all Member States Financial reporting 4 x year