1. Closure ESF programs
Last year in September, we gave you an overview of the state of play of the closure of the ESF programs.
Now, some 9 months later, new briefing as to where we stand at present with this exercise.

2. Closure file : 4 documents
Closure programs
Closure file : 4 documents
Final payment application
Final report ( )
Annual report 1999
Statement on controls (art.8 Reg. 2064/97)
submitted before 31 March 2003
Just as a reminder:
the closure files existed of these 4 main documents.
the MS authorities had clearly their hands full in order to put together all these documents, which led to the fact that for the vast majority of programs, the documents were sent in really at the last minute..
In the further presentation (closure procedure at the Commission) it will become very clear that the closure is a difficult exercise also for the Commission, and that it is really an exercise done in partnership.

3. analysis/verification closure documents
Closure programs
Closure procedure :
analysis/verification closure documents
verification with OLAF database
if necessary, request for additional info
analysis additional information
calculation of final payment
flexibility / maximum intervention rate vis-à-vis financial plan
exchange rate / corrections on previous years
- Analysis of reports : special attention to financial information, coherence between the 4 main documents. Article 8 statement examined as to independence of the controller, 5% rule (proportionally reduced), the distribution of controls over years/measures, whether appropriate action has been taken for errors/irregularities found, etc.
- Verification with OLAF database : art.8 statement coherent with cases reported to OLAF, recuperation of amounts unlawfully paid, etc.
- Requests for additional info : in the case of incomplete or missing info necessary for closure, clarification for essential elements, etc. Requests suspend the term of payment.
- Analysis additional info transmitted by designated authorities : in several cases, additional information led to new questions, etc.
Calculation final payment :
the payment declaration has to be in line with the last financial plan of the program :
- - Flexibility, only at the level of measures (additional budget per measure of max. 10% of the budget for the priority, and max. 20% of the initial budget for the measure).
- - Maximum intervention rate : rates can not be higher than rates in last financial plan
- - exchange rate : especially for non EMU countries
- - corrections on previous years : check whether corrections have been integrated correctly in the payment claim, and their possible impact on respecting the financial plan. In principle no positive corrections on previous years.

4. Closure procedure (cont.) :
Closure programs
Closure procedure (cont.) :
Financial cell : verification and execution final payment
Closure letter to MS
Reply from MS
De-commitment of remaining budget
In certain cases : article 24 procedure
- Once the geographical desks have completed these checks, a proposal for final payment is transmitted to the financial cell.
financial cell : verification and execution of final payments
- once final payment is processed, letter to MS to inform them of the calculation, the amount that is paid, and the remaining budget to decommit.
MS are expected to reply on this letter within 2 months, either agreeing with the amounts, or explaining their arguments when contesting the amounts. Please send response as soon as possible, will allow rapid definitive closure.
When the MS contests the final payment amount, this will be further investigated. The remaining budget is only decommitted when the MS agrees with the closure or when there are no valid arguments to change the calculation.
- for certain files: partial closure in the case of pending litigations, or when a file is ready for closure except for a separate part of the programme where pending issues remain.
In certain cases, when the MS has not withheld the necessary financial corrections, or for example the requirements for controls have not been met, the Commission will launch an article 24 procedure to reduce the assistance (contradictory procedure followed by a decision of the Commission).

5. Mainstream programs : Progress report 15/09/2003 – 31/05/2004
Closure programs
Mainstream programs :
Progress report 15/09/2003 – 31/05/2004
First : the mainstream programs (Obj.1, 2, 3, 4, 5b, 6 programs).
This table shows the progress on the number of files treated since the previous presentation in September last year.
251 programs have been closed at the level of the country desks. Since September last year, we went from 23% to now 74% of the programs closed.
Payments have been actually carried out for 130 programs, which corresponds to 38% of all files.
You will notice the big difference between files that are finalized by the country desks but have not yet been treated by the financial cell (some 120 files).
First, checked yesterday with colleagues of financial cell : at this moment 30 payments in the pipeline (processed but not yet in the table).
- Secondly, to defend colleagues of Financial cell : files sent to them are sometimes incomplete, additional information is then requested, delaying treatment in financial cell.
Finally, there is a recognized backlog in the financial cell of circa 70 files.
In the past few months, the financial cell represented a bottle-neck, because all files came together and had to be treated by only a few people. Also other urgent financial files were treated by this cell (commitmenst and payments for current programs, the launch of the programs for the new MS)
In recent weeks, special attention has been given to this situation and resources have been added, so this situation should improve in the near future.
This backlog should gradually be reduced but it could take a few months to absorb it.

6. Mainstream programs : Progress report 15/09/2003 – 31/05/2004
Closure programs
Mainstream programs :
Progress report 15/09/2003 – 31/05/2004
Same table but this time progress achieved money-wise.
Compared to the 38% in number of files that have received a payment, these payments absorbed only 24% of the remaining budget.
With regard to decommitments, decommitments are made
- when the MS has approved the closure of its files,
but also started to decommit budgets that were not claimed by the MS (so when the final claim of the MS was lower than the available budget, this unused budget was already decommitted).

7. Mainstream programs : Progress report
Closure programs
Mainstream programs : Progress report
This graph shows the evolution of the number of files that were suspended, in process, and finalized.
We see that the number of suspended files reached a peak in Octobre of approximately 50% of all files. Furthermore, these files are not always the same. It is possible that one month a file is no longer suspended, but is again suspended the next month. We can therefore say that for more than half of the files, additional information had to be requested.

8. State of play as per 31 May 2004 : in number of files
Closure programs
Mainstream programs :
State of play as per 31 May 2004 :
in number of files
in financial volume
Where do we stand at present?

9. Mainstream programs : status of the files as per 31 May 2004
Closure programs
Mainstream programs : status of the files as per 31 May 2004
Overview per country.
Not possible to comment on the situation of the individual countries or files. For questions on particular files or countries, suggest to contact the country desk officers.
41 files remain suspended, awaiting additional information from the MS.
48 files are currently still in process. In most cases these have been subject to earlier suspension, but the information has been received and is now in examination;
252 files have been finalized by the country desks.
131 files have received a payment (for 120 this was a complete final payment, for 11 a partial one).

10. Mainstream programs : financial overview as per 31 May 2004
Closure programs
Mainstream programs : financial overview as per 31 May 2004
Same table per country, but this time on financial volume.
This table shows payments and remaining budget. Recovery orders have not been integrated in this table, files closed with a recovery order are presented as files giving rise to a zero payment.

11. Community Initiatives : State of play as per 15 June 2004
Closure programs
Community Initiatives :
State of play as per 15 June 2004
in number of files
in financial volume
Now for the Community Initiatives

12. Closure 1994-99 programs Community Initiatives
Closed files per country.
Questions on the situation per country : desks can be contacted.
Certain inconsistencies in this table with regard to remaining budget.
Clearly, for some countries, the initial remaining budget which was downloaded from the accounting database did not include all programs. Therefore the presently remaining budget for these countries shows negative amounts.
These figures should therefore only be read as indicative, the elements with regard to total numbers and the closed files should however be correct.

13. Community Initiatives :
Closure programs
Community Initiatives :
Progress report 15/09/2003 – 15/06/2004
Community Initiatives include mainly the Employment and Adapt programs, but also a great number of programs for Leader, Interreg etc. where there were sometimes small ESF budgets.
Here 85% of the files have been treated by the desk.
We do not have exact figures on the number of files actually paid by the financial cell.
Because of the sometimes very small amounts, the financial cell gives priority to more important main stream programs.

14. Community Initiatives :
Closure programs
Community Initiatives :
Progress report 15/09/2003 – 15/06/2004
In financial volume :
With 85% of the files treated by the desks, the proposed payments only represent 20% of the remaining budget.
This shows that available budgets have not been absorbed at 100%.
Reporting different from reporting for mainstream programs :
paid out and decommitted = amounts treated by desk, not necessarilly by financial unit.

15. Main raisons for suspension / delays :
Closure programs
Main raisons for suspension / delays :
bottle-necks, internal procedures, informal requests for clarification/additional info
incoherences in financial information payment claim / final report / article 8 statement
corrections on previous years
controls :
inappropriate distribution
incomplete vis-à-vis OLAF database
inconclusive / limitations to control examinations
qualified opinion
Without going into the situation per country or program, the main reasons that can be distinguished for delays and suspensions in the closure :
- admit that bottle-necks, many files arriving at the same moment, etc. have caused delays in the process, both internally at DG EMPL, as in OLAF where the statements of all the programs had to be checked with the database on reported irregularities.
In some cases, additional clarifications and information have been asked informally, in order to be able to analyse the reports and statements.
- incoherences between final report, payment application and article 8 statement have led to the suspension of files, asking the MS authorities to explain or give additional information.
- corrections on previous years could be integrated into the payment claim for the last year, but report should give detail per year and per priority and measure, to check flexibility rules. In a number of files, this information was absent.
- controls : main problems encountered
-- Art. 3 of Reg. 2064/97 on financial controls by MS asks that controls should be spread evenly over the period. Even though the total control percentage could be reduced proportianally, controls should also cover years prior to 1998.
-- In a number of cases, the errors and irregularities reported in art.8 statement did not correspond to the cases present in the OLAF data base.
-- In certain cases, the conclusions or limitations expressed in the art.8 statement did not allow to form an opinion on the correct amount of expenditure to take into account.
-- in some cases, the art.8 statementsexpressed a qualified opnion, but did not give sufficient information as to allow the Commission to define the impact on the amount to be paid.