Replies of the Commission

• Author: European Court of Auditors
• Pages: 55-71

1

REPLIES OF THE COMMISSION TO THE SPECIAL REPORT OF THE EUROPEAN

COURT OF AUDITORS

“TACKLING FRAUD IN EU COHESION SPENDING: MANAGING AUTHORITIES

NEED TO STRENGTHEN DETECTION, RESPONSE AND COORDINATION”

EXECUTIVE SUMMARY

III. The Commission has ordered an external study: "Pr eventing fraud and corruption in the

European Structural a nd Investment Funds – taking stock of pra ctices in the EU Member States

1" to

assess the set-up of effective and proportionate anti-fraud measures. It was published in November

2018.

This study, based on the analysis of 50 programmes, concluded that the anti-fraud efforts were more

formalised and systematic in 2014-2020. A vast majority of managing authorities used the risk

assessment tool provided by the Commission in its 2014 Guidance. The fraud risk assessment

process is one example showing anti-fraud efforts became more formalised. The study mentions

that going through this process with a list of Commission recommended controls contributed to

some authorities adopting new detection controls or improving existing ones. For example,

- Existence of a “Commission of Tender Experts” giving the possibility to tenderers to revert to this

Commission in case the procedure is perceived as flawed;

- Pre-defined budgets via market research, which are not disclosed (manipulation of public

procurement).

- Use of IT tools for identification of double claims (manipulation of costs and quality)

- Collaboration with public procurement or competition authorities (collusive bidding)

- Complaint mechanism for beneficiaries

The Commission has designed and actively promotes a data-mining tool, Arachne, and provides it

to the Member States free of charge. It is currently used by 165 programmes to improve detection of

fraud red flags.

IV. The Commission pointed out several times in its Annual Reports on the protection of the EU’s

financial interests (PIF Reports) the concrete possibility of under-reporting by some Member States.

The Commission is continuously developing IMS and provides guidance on reporting to Member

States in order to mitigate such risks. Furthermore, the fraud detection rates and their related

multiannual analysis have been designed taking into account such shortcomings.

The Commission is aiming, in the framework of its revised Commission Anti-Fraud Strategy

(CAFS), at enhancing its analysis based on additional elements, in particular by developing country

profiles to better understand differences in detection and reporting among Member States.

V.

First indent: The Commission fully supports the adoption of national anti-fraud strategies by

Member States and has for this purpose developed, under the auspices of the Advisory Committee

for Coordination for Fraud Prevention (COCOLAF), guidelines for national anti-fraud strategies.

The Commission welcomes the fact that ten Member States have already done so. Through its

guidance the Commission has also recommended managing authorities to adopt anti-fraud policy

statements.

1 Link to the study: https://ec.europa.eu/regional_policy/en/information/publications/studies/2018/study-on-the-implementation-of-

article-125-4-c-of-the-regulation-eu-no-1303-2013-laying-down-the-common-provisions-on-the-european-structural-and-investment-

fund-in-member-states

2

The Commission will continue to encourage the adoption of the national anti-fraud strategies

(NAFS) by Member States and to provide them assistance accordingly. However, it has no legal

basis to require each of the managing authorities to adopt a formal, stand-alone anti-fraud policy at

OP level. Notwithstanding this,the Commission has recommended managing authorities to publish

an anti-fraud policy statement and proposed the guidance for this.

Second indent: The Commission supports and promotes cooperation between Cohesion funds

authorities and other key national anti-fraud players in general, and will continue to do so, in

particular for programmes presenting particularly high risks, or involving high financial volumes, in

accordance with the principle of proportionality.

Third indent: The Commission has already produced extensive guidance for Member States on

fraud prevention and detection measures. The Commission supports and will continue to actively

promote the use of any datamining tool, including in particular Arachne, by programme authorities.

The Commission has designed Arachne specifically for the needs of programme authorities under

Cohesion policy and provides it to Member States free of charge.

Fourth indent: In line with the provisions of the Common Provisions Regulation (CPR), the

Commission will monitor the implementation of the anti-fraud measures to be adopted by the

Member States at the level of operational programmes (OP). Moreover, the Commission, in the

framework of its revised Anti-Fraud Strategy, is developing country profiles on the anti-fraud

capabilities of Member States in relation to, inter alia, prevention and detection. These country

profiles will help to better assess the implementation of fraud prevention and detection measures.

However, measuring the effectiveness of fraud prevention and detection methods is a highly

complex and challenging task, as fraud is influenced by a great variety of exogenous factors, of

which not all are policy domain -specific.

Fifth indent: The Commission will continue encouraging the Member States to strengthen the

coordination role of Anti-Fraud Coordination Services (AFCOS), in particular through expanding

their network.

VI.

The Commission will carefully assess any amendment of this kind put forward by the co-legislators.

VII. The Commission agrees with the ECA on the importance of ensuring the effectiveness of

AFCOSs and could support a clearer definition of their functions. The Commission's proposal to

amend the OLAF Regulation represents already a significant improvement over the current situation

as the AFCOSs would need to ensure that the assistance to OLAF is provided regardless of the way

it is provided (i.e. directly by the AFCOS, or by a different authority acting on the AFCOS’

request).

INTRODUCTION

05. The 2014-2020 Common Provisions Regulation introduced for the first time a requirement to

have a risk-based approach and to put proportionate and effective anti-fraud measures in place at

operational programme level. This is an important step towards better financial management and the

protection of the EU budget.

07. The anti-fraud information platform referred to by the ECA is OLAF's Anti-Fraud Information

System (AFIS).

Common Commission reply to paragraphs 08 and 09:

The proportion of both fraud suspicion and non-fraudulent irregularities reported by Member States'

authorities under Cohesion policy can be interpreted as the growing capacity of Member States to

detect and report irregularities, including potential fraud cases, to the Commission. The financial

impact fluctuates greatly between Member States and between the years.