Process of clearance
The process of clearance allows the Commission to verify, where necessary, through on-the-spot audits, whether EU countries:
- made correct use of the available funds;
- paid in conformity with EU rules;
- have well-functioning systems ensuring that payments to beneficiaries are regular.
Under the single audit approach, the Commission relies on the audit work of national auditors to check the correct use of EU funds.
However, without prejudice to the checks carried out by EU countries under national laws, the Commission may still organise checks in EU countries.
The audits undertaken by the Commission as part of the clearance procedure serve a number of purposes. The audits:
- protect the EU budget from irregular payments by recovering amounts unduly spent by EU countries as a result of deficiencies detected in their systems;
- have a remedial and preventive role by revealing deficiencies to be remedied, leading to financial corrections;
- check whether the work of the EU countries’ certification bodies meets standards or needs improvement;
- used to provide assurance to the Director-General for Agriculture and Rural Development about the quality of EU countries' systems.
The results of the clearance procedures are published in the annual activity report of the Commission’s Directorate-General for Agriculture and Rural Development.
Annual financial clearance
The rules on the financing of the CAP provide for an annual financial clearance exercise covering the completeness, accuracy and veracity of the paying agencies' accounts.
The annual financial clearance solely concerns the completeness, accuracy, and veracity of the accounts in financial terms.
By 15 February (with possible justified extension to 1 March), following the end of the financial year, EU countries are required to send the annual accounts of their paying agencies to the Commission. The annual accounts must be accompanied by an audit opinion from the certification body of each paying agency, stating whether it has obtained reasonable assurance that:
- the paying agencies’ accounts are complete, accurate and true.
- that the internal control procedures have operated satisfactorily.
The Commission reviews this information and communicates its findings to the EU countries. Where the information provided by the EU countries is considered acceptable, the Commission has until 31 May to adopt a decision clearing the accounts of the paying agencies.
Performance clearance
The performance reporting framework is one of the main building blocks of the of the new common agricultural policy. EU countries will report annually on the performance in their country.
The performance clearance involves checking that for each realised output with declared expenditure, the realised unit amount does not exceed the planned and approved unit amount in the CAP strategic plan.
Every year, by 15 February, EU countries will send to the Commission their Annual Performance Report (APR) that is drawn up by the paying agencies and transmitted to the Commission.
Upon receipt and after the admissibility check, if the Commission considers that expenditure does not have a corresponding output (i.e. the realised unit amount paid for the output exceeds the planned and approved unit amount in the CAP strategic plan), it shall communicate its findings to the EU country concerned to obtain justifications.
Where the justifications cannot be accepted, the Commission will reduce with a Commission decision the Union financing for expenditures without a corresponding output.
If the realised unit amount paid for the output exceeds the planned amount in the CAP strategic plan by 50% or more, and there are no acceptable justifications, the Commission may suspend future payments for the intervention.
Conformity procedure
The conformity procedure is designed to exclude the expenditure that has not been affected in conformity with EU rules or in case of serious deficiencies in the proper functioning of the governance systems of the EU countries.
The exclusion takes the form of financial corrections which are determined based on the nature and gravity of the deficiencies found and of the financial damage incurred by the Union.
In the framework of this procedure, 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 in these matters.
Recovery of funds
Where non-compliances or systemic deficiencies are found, the Commission recovers 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.
The conformity procedure is not a mechanism by which irregular payments are recovered from beneficiaries, which, according to the principle of shared management, is the sole responsibility of the EU countries.
Where undue payments are or can be identified as a result of the conformity procedures, EU countries are required to follow up with recovery actions against the final beneficiaries.
Legal bases
Regulation (EU) 2021/2116 – on the financing, management and monitoring of the common agricultural policy.
Commission Implementing Regulation (EU) 2022/128 – laying down rules for the application of Regulation (EU) 2021/2116 on paying agencies and other bodies, financial management, clearance of accounts, checks, securities, and transparency.
Commission Delegated Regulation (EU) 2022/127 – supplementing Regulation (EU) 2021/2116 with rules on paying agencies and other bodies, financial management, clearance of accounts, securities, and use of euro.
