1. Protection of the EU budget
3 December 2014

2. Protection of the EU budget
Corrective actions, i.e. financial corrections and recoveries, arise following the supervision and checks made by both the Commission and, in the case of shared management, Member States on the eligibility of expenditure funded by the EU budget.
The primary objective of financial corrections and recoveries is to ensure that EU funds are used in accordance with the legal framework.

3. Various types of Financial Corrections
Financial Corrections on individual irregularities
in case of specific identified findings
Extrapolated Financial Corrections
On the basis of a sampling of projects
Flat rate Financial Corrections
If non quantifiable findings or if not cost/efficient to identify findings for each project

4. Protection of the EU budget
Financial corrections follow a defined and logical process:
An on-the-spot audit is made, or a desk assessment is carried out by the Commission of another EU body (OLAF, ECA) or a national audit report;
The audit or desk assessment results in the identification of possible system weaknesses and/or an estimate of ineligible expenditure is communicated by the Commission to the Member State concerned as part of a formal contradictory process (financial corrections "in progress");
Following these discussions and the possible receipt of additional audit evidence from Member States, a financial correction is confirmed, i.e. accepted by the Member State or decided (adopted by a Commission decision);
The last step is for the observed situation of undue expenditure to be definitively corrected (financial corrections "implemented"), by means of different mechanisms foreseen in the sector-based regulatory frameworks.

5. Protection of the EU budget
Guidelines provided:
Guidelines on the principles, criteria and indicative scales to be applied in respect of FC (C(2011)7321 – )
Update of the guidelines for determining FC for non-compliance with the rules on public procurement (C(2013)9527 – )
Guidelines for determining FC for non-compliance with the rules applicable to Financial Engineering Instruments for the programming period (EGESIF_ – )

6. Protection of the EU budget
Cumulative financial corrections confirmed & implementation percentage to end 2013
EUR millions
Expenditure
Programming Period
Cumulated EAGF decisions
Total financial corrections confirmed at end 2013
Financial corrections not yet implemented at end 2013
Implemented/ confirmed at end 2013
Financial corrections confirmed at end 2012
Period
Period
Period
Agriculture
112
374
9 148
9 634
1 001
89.6%
8 525
EAGF -
920
90.0%
8 286
Rural Development
N/A
486 82
83.2%
239
Cohesion Policy
2 719
7 729
1 741
12 189
756
93.8%
10 786
ERDF
1 788
5 188
667
7 643
477
7 305
Cohesion Fund
271
688
245
1 204
113
90.7%
984
ESF
560
1 678
820
3 057 65
97.9%
2 224
FIFG/EFF
100
102 9
211
51.8%
201
EAGGF Guidance 73
100.0% 72
Other 4 2
Total
7 840
2 116
21 827
1 757
91.9%
19 313

7. Protection of the EU budget

8. Protection of the EU budget

9. Protection of the EU budget
Cumulative corrections at end 2013 reported by Member States for Cohesion Policy period
EUR millions
Member State
ERDF/CF
ESF
EFF
Total 2013
Belgium 3 9 12
Bulgaria 13 16
Czech Republic
201
Denmark 1
Germany
458
100
558
Estonia -
Ireland 5
Greece
115 14
130
Spain
256 91 20
367
France 84 57
142
Croatia
Italy
208 36
247
Cyprus
Latvia 33 2 37
Lithuania 11
Luxembourg
Hungary 55
Malta
Netherlands 6
Austria 8
Poland
392
Portugal 85 38
124
Romania
111 4
Slovenia 7
Slovakia 54 59
Finland
Sweden
United Kingdom 76 21 99
Cross-border
TOTAL IMPLEMENTED
2 191
396 35
2 622

10. Protection of the EU budget
programming period
Financial corrections for irregularities/deficiencies identified and corrected by MS before 15 February each year:
The rules concerning financial corrections for irregularities identified and corrected by MS before 15 February each year are similar to those of the programming period.
Incentive for MS to ensure accounts only include regular expenditure!
Identification by EU audits of irregularities indicating a serious deficiency after 15 February each year:
If EU (Commission, OLAF and ECA) audits carried out after 15 February each year detect irregularities demonstrating a serious deficiency affecting the corresponding accounting year, the Commission has the obligation to take a formal decision applying a financial correction, if the conditions defined in the regulation are fulfilled. The resulting financial correction will always be net.