Recoveries and financial corrections
he recovery of undue payments is the last stage in the operation of control systems, and the evaluation of these recoveries is essential in order to demonstrate sound financial management. The objective of this annex is to present a best estimate of the total amounts for 2012. More details can be found in note 6 to the annual accounts (25).
The table below gives the amount of financial corrections and recoveries implemented during 2012 and resulting from Commission audit work and controls, audit work by the Court of Auditors and the closure process for programme periods. These amounts are a mix of financial corrections decided in previous years but only implemented in 2012 and amounts decided on and implemented during 2012. The tables do not include the results of the Member States’ own checks of structural actions’ expenditure.
There are a variety of ways by which undue payments are recovered by the European Commission when there is a clear case of a financial error or irregularity, which are explained below.
In the area of agriculture, the European Agricultural Guarantee Fund (EAGF) and the European Agricultural Fund for Rural Development (EAFRD) have replaced the European Agricultural Guidance and Guarantee Fund (EAGGF). In the case of the EAFRD, financial corrections are always implemented by means of a recovery order. For the EAGF, financial corrections are implemented by deductions in the monthly declarations.
Financial corrections under cohesion policy are implemented as follows.
- The Member State accepts the correction required or proposed by the Commission. The Member State itself applies the financial correction, either through withdrawal or through recovery. The amount may then be reused for other eligible operations which have incurred regular expenditure. In these cases there is no impact on the Commission’s accounts, as the level of EU funding to a specific programme is not reduced. The EU’s financial interests are thus protected against irregularities and fraud.
- The Member State disagrees with the correction required or proposed by the Commission, following a formal contradictory procedure with the Member State. In this case, the Commission adopts a formal financial correction decision and issues a recovery order to obtain repayment from the Member State. These cases lead to a net reduction of the EU contribution to the specific operational programme affected by the financial correction.