This is a procedure, operated by the Commission, to ensure that the member states carry out, in a proper manner, their responsibilities concerning payments made under the Common Agricultural Policy. The procedure includes an annual financial clearance of the accounts of each paying agency and a multi-annual conformity clearance regarding the conformity of the transactions with European Union rules.
If, through its system of audits, the Commission finds that a member state has not managed funds correctly – in terms of administration and controls (including the response of a member state when controls have identified shortcomings) – then the Commission has the right to clawback funds from member states on the grounds of poor management. The amounts are frequently fixed on a flat-rate basis, e.g. 2% of the amount that the member state has spent on the policy tool in question. In recent years, the Commission has claimed back roughly EUR 1 billion a year from member states. The funds remain available under the Common Agricultural Policy and are known as assigned revenue.