Management and monitoring of structural programmes

D. The process for allocating European funds

Content - D / E

Financing of the programmes is based on a system of budgetary commitments and payments. The commitments actually correspond to a "financial contract" between the Commission and the Member State, for the allocation of European funds to the programmes. At this stage, there is therefore no "physical movement" of funds. The commitments are paid in annual instalments, and the first instalment is made when the Commission approves the assistance. Subsequent instalments are made, at the latest, on 30 April of each year.

The beneficiaries of assistance receive no funds directly from the Commission. They deal with a "payment authority" designated by the Member State. A three-tier system is therefore established, between the Commission, the payment authority and the ultimate beneficiaries.

In practice, as soon as a programme is adopted, the Commission makes a payment on account, amounting to 7% of the total contribution from the Funds, to the payment authority. This "advance payment" is designed to enable the programme to get under way (but must be repaid if no expenditure has been declared within 18 months). Subsequent payments are made in the form of a reimbursement of actual expenditure certified by invoices. In principle, the payment authority forwards the evidence of expenditure to the Commission in batches, three times a year. The Commission makes the corresponding payments within two months of the request being received.

Expenditure declarations to the Commission must be submitted in euro (2). In the countries outside the euro zone, the amounts must therefore be converted by using the exchange rate on the penultimate working day of the month preceding that in which the expenditure was calculated by the payment authority.

The role of the "payment authorities"

The tasks of the payment authorities or bodies are distinct from those of the managing authorities. Their role is to check that the expenditure complies with Community rules, to submit requests for payment to the European Commission, and to receive those payments. They carry out their operations in batches, three times a year. In practice, the managing and payment authorities can be part of the same governmental body, but the principle of separating functions implies that they must belong to distinct departments.

The payment authorities play a central role in the new financial procedure, which is based on reimbursing expenditure carried out and on checking the eligibility of this expenditure, before payment is made. In this respect, the payment authorities are an essential component of the new mechanism set up to ensure sound financial management of the assistance. To the extent that they must certify all expenditure included in requests for payment, they assume a large part of the State's responsibility to ensure that the payments are legal and correct. They should therefore even be empowered to undertake whatever verification measures may be necessary vis-à-vis the managing authority. Similarly, they must keep accounts of expenditure and verifiable evidence. The Commission will not normally approve expenditure to reimburse operations that have not been declared eligible for Community assistance since they began, as it is difficult in such cases to check the accuracy of the request.

In order for assistance to proceed effectively, the payment authorities must ensure that the ultimate beneficiary receives the Community funds as quickly as possible.

2. See the Commission Regulation: (EC) No 643/2000.