{
  "url": "https://openlegislation.uk/eu-decision-2006-400/annex/division-1",
  "json_url": "https://openlegislation.uk/eu-decision-2006-400/annex/division-1.json",
  "legislation": "eudn/2006/400",
  "legislation_title": "Commission Decision of 20 January 2006 laying down detailed rules for the implementation of Council Decision 2004/904/EC as regards procedures for making financial corrections in the context of actions co-financed by the European Refugee Fund (notified under document number C(2006) 51/2) (Only the Czech, Dutch, English, Estonian, Finnish, French, German, Greek, Hungarian, Italian, Swedish, Latvian, Lithuanian, Polish, Portuguese, Slovakian, Slovenian and Spanish texts are authentic) (2006/400/EC)",
  "legislation_url": "https://openlegislation.uk/eu-decision-2006-400",
  "path": "annex/division/1",
  "kind": "division",
  "number": "1",
  "heading": "PRINCIPLES",
  "text": "The purpose of financial corrections is to restore a situation where 100 % of the expenditure declared for co-financing from the Fund is in line with the applicable national and Community rules and regulations. This allows the establishment of a number of key principles for the Commission departments to apply in determining financial corrections:\n(a) Irregularity is defined in Article 1(2) of Regulation (EC) No 2988/95. Irregularities can be one-off or systemic;\n(b) A systemic irregularity is a recurrent error due to serious failings in management and control systems designed to ensure correct accounting and compliance with the rules and regulations in force.\nIf the applicable rules and regulations are respected, and all reasonable measures are taken to prevent, detect and correct fraud and irregularity, no financial corrections will be required.\nIf the applicable rules and regulations are respected, but the management and control systems need to be improved, pertinent recommendations should be made to the Member State, but no financial corrections need be envisaged.\nWhere only errors relating to sums of less than 4 000 euro are found, the Member State should be urged to correct the errors without opening financial correction proceedings under Article 25(2) of Council Decision 2004/904/EC.\nIf there are serious failings in the management or control systems which could lead to systemic irregularities, in particular failures to respect the applicable rules and regulations, financial corrections should always be made.\n(c) The amount of the financial correction will be assessed wherever possible on the basis of individual files and be equal to the amount of expenditure wrongly charged to the Fund in the cases concerned. Specifically quantified corrections for each individual project concerned are not always possible or practicable, however, or it may be disproportionate to cancel the entire expenditure in question. In such cases, the Commission has to determine corrections on the basis of extrapolation or at flat-rates.\n(d) Where there is evidence that individual quantifiable irregularities of the same type have occurred in a great number of other operations, or throughout a measure or programme, but it is not cost-effective to determine the irregular expenditure for each project individually, the financial correction may be based on extrapolation.\nExtrapolation can be used only where a homogeneous population or subset of projects sharing similar characteristics can be identified and shown to have been affected by the deficiency. In this case, the results of a thorough examination of a representative sample of the individual files concerned selected at random are extrapolated to all the files making up the population identified, in accordance with generally accepted auditing standards.\n(e) In the case of individual breaches or systemic irregularities whose financial impact is not precisely quantifiable because it is subject to too many variables or is diffuse in its effects, such as those resulting from a failure to undertake checks effectively in order to prevent or detect the irregularity or to comply with a condition of the assistance or a Community rule, but where it would be disproportionate to refuse all the assistance concerned, flat rates should be applied.\nFlat rate corrections are determined in accordance with the seriousness of the deficiency in the management and control system or the individual breach and the financial implications of the irregularity. A list of what the Commission considers to be key and ancillary elements of systems for the purpose of assessing the seriousness of deficiencies is given in section 2.2 and an indicative scale of flat rates for corrections in section 2.3. Flat-rate corrections are applied to all expenditure under the measure or measures concerned unless the deficiencies were limited to certain areas of expenditure (individual projects or types of project), in which case they are applied to those areas of expenditure only. The same expenditure will not normally be subject to more than one correction.\n(f) In areas where there is a margin for discretion in evaluating the gravity of the infringement, as in cases of disregard of environmental conditions, corrections shall be subject to the following conditions: a significant failure to respect the rules and a clearly identifiable link with the action receiving Community funding.\n(g) Irrespective of the kind of corrections proposed by the Commission, the Member State is always given the opportunity to demonstrate that the real loss or risk to the Fund and the extent or gravity of the irregularity was less than that assessed by the Commission services. The procedure and time-limits are set out in Article 13(4) to (6) of this Decision.\n(h) Unlike the case with corrections made by the Member State under Article 25 (2) of Decision 2004/904/EC, financial corrections decided by the Commission under Article 26(3) always involve a net reduction to the Community funding committed to the programme concerned.\n(i) Where the Member State's audit system — Court of Auditors, internal or external audits — has detected the irregularities and the Member State takes appropriate corrective action under Article 25(2) of Decision 2004/904/EC within a reasonable period of time, no financial corrections can be imposed by the Commission under Article 26(2) of Decision 2004/904/EC and the Member State is free to re-use the funds. In other cases the Commission may make corrections on the basis of the findings of national audit bodies, as where an EU audit body establishes the irregularity. When the Commission bases its position on the facts established and fully documented by other EU audit bodies, it will form its own conclusions regarding their financial consequences, after examining any replies from the Member State.",
  "extent": "E+W+S+N.I.",
  "status": null,
  "version": "current",
  "annotations": [
    {
      "type": "footnote",
      "label": "f1",
      "text": "OJ L 312, 23.12.1995, p. 1."
    }
  ],
  "outstanding_effects": [],
  "provenance": {
    "source": "legislation.gov.uk",
    "source_url": "https://www.legislation.gov.uk/eudn/2006/400/annex/division/1",
    "retrieved_at": "2026-11-01T15:17:34.772628+00:00"
  },
  "licence": "Open Government Licence v3.0",
  "licence_url": "https://www.nationalarchives.gov.uk/doc/open-government-licence/version/3/",
  "attribution": "Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives."
}