European Court of Auditors

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European Court of Auditors
Internet http//www.eca.eu.int
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Integrated Administration and Control System
IACSSR4/2001
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Content

• Audit Subject
• Audit Background
• Audit Objectives
• Extent of the audit
• Audit Approach
• Main audit findings

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The audit subject

• What does IACS do ?
• Why was IACS introduced ?
• How does IACS work ?
• What are the main features ?

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IACSWhat does it do ?

• IACS is the main control system over payments to
  farmers
• Over 6 million aid applications are processed at
  Member state level under IACS throughout the EU,
  for over 25 billion in 2000, representing about
  64 of CAP payments
• By 2004, over 80 of CAP payments will be
  covered, as more schemes are included under IACS
  and as direct payments increase after the Agenda
  2000 reform
• Arable crops is the biggest scheme (16 billion)
  followed by premiums for beef (4 billion)
• EAGGF payments to farmers
• Over 6 million aid applications are processed at
  Member state level under IACS throughout the EU,
  for over 25 billion in 2000, representing about
  64 of CAP payments
• By 2004, over 80 of CAP payments will be
  covered, as more schemes are included under IACS
  and as direct payments increase after the Agenda
  2000 reform
• Arable crops is the biggest scheme (16 billion)
  followed by premiums for beef (4 billion)

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EAGGF expenditure covered by IACS in
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IACSMember States Shares
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IACSHow does it work ?

• a computerised database
• a land parcel identification system
• an animal identification and registration system
• aid applications
• an integrated control system.

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Aid applications

• One area aid application per farmer.
• Several animal premium applications possible.
• Basic information on the area / animal claimed,
  the claimant, relevant supporting information.
• Aid applications are essential for providing
  the basic information on aids claimed...

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The integratedcontrol system

• An integrated system of administrative checks and
  on the spot inspections
• Administrative checks
• cross checks between farmers claims and parcel /
  animal identification databases
• cross checks between individual farmers claims
• checks on eligibility of claimed areas / animals
  (e.g. eligible for area aid, surface area,
  eligible age of animal, validity of tag number)
• checks to avoid overpayment in case of quota /
  base area overshoots.
• On the spot inspections
• Risk based
• Minimum 5 for areas 10 for animals (5 with
  fully operational database)
• May use aerial / satellite photography.
• Sanctions
• Complicated sliding scale, depending on rate of
  over-declaration found
• Serious negligence zero aid
• Fraud zero aid next year too.

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Weaknesses found at Member State Level - Area Aid
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Weaknesses found at Member State Level - Bovine
Premiums
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Suckler Cow premium error rates
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Reliabilityof IACS Inspections

• Audit Objective
• Audit Scope
• Sampling

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General Audit Objective

• The audit should assess the reliability of
  inspections or on the spot controls and the use
  made by the Commission of the information on
  these controls made available by the Member
  States.

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Specific Audit Objectives(1/2)

• Do IACS inspections provide to the Commission the
  necessary reliable information on legality and
  regularity of EU expenditure covered by IACS and
  on the adequate implementation of IACS management
  procedures?
• Does EU legislation provide for efficient IACS
  inspections and uniform application of sanctions
  provided for under EU legislation?

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Specific Audit Objectives(2/2)

• Do PAs , when selecting holdings, comply with EU
  legislation and Commission instructions?
• Are risk analyses efficient?
• Are the statistics on area aids or animal
  premiums forwarded to the Commission reliable?
• Do national control instructions comply with EU
  legislation?
• Do national administrative procedures, before
  payment of EU aid, integrate inspection findings
  and sanctions as applicable?
• Do 2001 IACS inspection findings comply with EU
  legislation and are they reliable?

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Audit scope

• Commission legislation, reports (clearance of
  accounts, certifying bodies, aerial photography
  or satellite imaging, specific IACS, intrenal
  evaluation...), consolidated statistics
• 15 Paying Agencies in 10 Member States (Belgium,
  Denmark, Germany, Spain, France, Ireland, Italy,
  The Netherlands, Portugal, Sweden) systems
  analysis, internal audit reports, sampling,
  national instructions, administrative procedures
  before payment
• 90 inspection re-performances 45 for area aid
  and 45 for animal premiums

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Sampling

• Sampling requirements random and risk based
• area aid 5 (min 4 risk based min 1
  random)
• animal premiums
• if 10 (min 8 risk based min 2 random)
• if 5 (min 4 risk based min 1 random)
• Reference population
• aid applications - random sample in 16 Paying
  Agencies in 10 Member States as selected by MUS
  for SOA EAGGF excluding Greece (reliability of
  administrative controls) and United Kingdom (foot
  and mouth disease)
• 45 inspections on area aid and 45 inspections on
  animal premiums MUS sampled

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Main findings

• Reliability of on the spot inspections
• Adequacy of reporting of findings (for SOA or
  clearance of accounts)
• Systems weaknesses
• Interpretation guidelines
• Commission use of findings

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