The clearance of accounts procedure consists of regular audits to control how the EU countries make all the payments, charge all the levies and recover all undue payments under the European agricultural guarantee fund (EAGF) and the European agricultural fund for rural development (EAFRD).
The procedure allows the European Commission to verify, primarily by means of on-the-spot inspections, whether the EU countries:
- made correct use of the available funds;
- paid in conformity with EU rules;
- have well functioning management and control systems ensuring that payments to beneficiaries are regular.
The Commission carries out over 100 audits each year.
The EU countries have to ensure that their national paying agencies thoroughly check all claims before the payment is paid.
They also have to put in place an integrated administration and control system (IACS) for most of the EU agricultural payments, sometimes using the most advanced techniques to check fields by aerial or satellite photography, and to cross-check claims in computer databases.
For payments not falling under this system, other types of controls apply.
Recovery of funds
Where anomalies or systematic failings are found, the Commission claws back the amount misspent from the country concerned (financial corrections). The financial corrections may include payments affected within a period of 24 months before the start of the procedure.
If the losses for the EU budget cannot be calculated precisely, the correction may be set at 2%, 5%, 10% or 25% of the payment in question, or even more. There is thus a strong incentive for the EU countries to improve the quality of their control systems.
Since 1996, when the system was modified to take its present form, a total of 37 decisions have been adopted, excluding from EU financing a sum of close to EUR 8 billion. The average correction rate per financial year has been 1.5%.
EU countries' right of reply
The Commission addresses its observations to the concerned EU country. There is an exchange of information between the EU country and the Commission, followed by a bilateral meeting.
Before the conformity clearance decision is taken, the procedure allows the EU country to have all the significant corrections examined by a panel of independent experts (conciliation body) to reconcile the two positions.
The Commission can accept or reject the proposals formulated by the conciliation body. The procedure is closed by a formal Commission decision which can be appealed by the EU country. Currently, it is the general court of the EU that is competent for these matters.
The fact sheet "Managing the agriculture budget wisely" provides an overview of the systems for the management and checking of agricultural expenditure, both at national and EU level, and describes the roles and responsibilities of the different actors.