1. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Working Group for Chapter 11 – Agriculture and rural development Financial controls of agricultural expenditure Brussels, 11. 12. 2012 Jovo Duborija jovo.duborija@mpr.gov.me

2. National legal framework Law on Agriculture and Rural Development (“Official Gazette of Montenegro", No. 56/09 from 14.08.2009, 18/11 from 01.04.2011, 40/11 from 08.08.2011) Decree on conditions, method and the pace of implementation of measures of agricultural policy (per year) – Agro-budget Law on Public Internal Financial Control System (“Official Gazette of Montenegro ", No. 73/08 from 02.12.2008, 20/11 from 15.04.2011 and 30/12 from 08.06.2012) Law on State Audit Institution(“Official Gazette of the Republic of Montenegro", No. 28/04 and 27/06 from 27.04.2006, 78/06 from 22.12.2006, “Official Gazette of Montenegro", No. 17/07 from 31.12.2007, 73/10 from 10.12.2010, 40/11 from 08.08.2011) M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 11 Agriculture and Rural Development

3. Agro-budget 2012 Market-price policy measures Rural development measures Support to general services in agriculture Social transfers to rural population Fishery M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 11 Agriculture and Rural Development

4. Procedure of granting the funds for direct support measures Submission of farmers’s applications in the period defined by the Agro-budget for the current year Reception of applications is delegated to the Livestock Selection Service, Extension Service for Plant Production Administrative control – cross-checking the data stated in the application with the data from the registers M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 11 Agriculture and Rural Development

5. Procedure of granting the funds for direct support measures On-the-spot control – Livestock Selection Service (min. 30% for cows and heifers and 50% for goats and sheep), Extension Service for Plant Production (100% of the received payment claims for field crops and vegetable sectors) Submission of reports on eligible supports to the responsible person in the Ministry in charge of the sector in question Control of reports by the Ministry of Agriculture and Rural Development Payment by the Ministry to the beneficiaries via National Treasury M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 11 Agriculture and Rural Development

6. Procedure of granting the funds for rural development measures Measure: Investments in agricultural holdings – MIDAS Project (Montenegro Institutional Development and Agriculture Strengthening) Reception of project applications in the period defined by public call Applications are received by the Ministry of Agriculture and Rural Development – Sector for Payments (future IPARD Agency) Administrative control of the received applications On-the-spot control before approval of projects – 100% (all the applications approved during administrative control) Contracting with applicants meeting the eligibility conditions in accordance with the public call M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 11 Agriculture and Rural Development

7. Procedure of granting the funds for rural development measures Measure: Investments in agricultural holdings – MIDAS World Bank Project Accomplishment of the investment in accordance with the public call procedures and within the deadline stated in the signed grant agreement between the Ministry and the beneficiary Administrative control of the received payment claims – Sector for Payments On-the-spot control of the payment claims – 100% (all the claims approved during administrative control) Decision on support payment by the Sector for Payments Ex-post control for every supported project during next five years Rotation among on-the-spot controllers M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 11 Agriculture and Rural Development

8. Penalty provisions The support is implemented in accordance with the Agro- budget for the current year Law on Agriculture and Rural Development envisages fines for cases of inappropriate use of the funds (Article 33) The incentive beneficiary who exercised the right to an incentive based on fraudulent activities or who used the incentive funds for an unauthorized purpose shall pay back the funds received together with an interest. Shall not be entitled to incentives for the period of two years from the day of the valid decision Shall not be entitled to use of funds granted based on other incentive measures M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 11 Agriculture and Rural Development

9. Control Improvement Plans The Project “Strengthening the management and control systems for EU financial assistance in Montenegro” supports establishing financial control in the public sector Establishment of FMC – Finance Management Control Internal Audit The Rulebook on Internal Organization and Job Classification of the Ministry of Agriculture and Rural Development – Internal Audit Division Employment of Internal Audit staff is currently in progress M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 11 Agriculture and Rural Development

10. Accession Until the accession of Montenegro to the EU, national legislation in the area of expenditure control in agriculture will be fully harmonized with the EU acquis M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 11 Agriculture and Rural Development

11. Thank you for your attention! QUESTIONS