Date: 2019-07-04Category: Not ApplicableState: Union GovernmentCountry: Europe
Commission Implementing Regulation (EU) 2019/1140 of 3 July 2019 establishing models for the control reports and annual audit reports concerning financial instruments implemented by the EIB and other international financial institutions in which a Member State is a shareholder in accordance with Regulation (EU) No 1303/2013 of the European Parliament and of the Council
Issued by European Commission
· Directorate-General for Regional and Urban Policy
Executive Summary:
This regulation establishes models for control reports and annual audit reports concerning financial instruments implemented by the EIB and other international financial institutions with Member State shareholders, as per Regulation EU No 1303/2013. It aims to ensure consistency, quality, and timely submission of information. The regulation entered into force on the day following its publication in the Official Journal of the European Union. The annual audit report must be submitted by December 31 following the end of the reference accounting year.
Key Points / Main Content:
Control Report Model:
The control report, as per Article 40(1) of Regulation EU No 1303/2013, must follow the model in Annex I.
Annual Audit Report Model:
The annual audit report, as per Article 40(1) of Regulation EU No 1303/2013, must follow the model in Annex II.
It must be submitted to designated authorities and the Commission by December 31 following the end of the reference accounting year.
Documents for Verification and Audits:
The EIB and other international financial institutions with Member State shareholders must provide all necessary documents to designated authorities for obligations under Article 125 and 127 of Regulation EU No 1303/2013 and Articles 9 and 59(1) of Regulation EU No 1306/2013.
Impact Analysis:
European Investment Bank (EIB) and other International Financial Institutions (IFIs) with Member State shareholders:
Impact: These institutions must now use the specified models for their control reports (Annex I) and annual audit reports (Annex II). They must also provide necessary documents to designated authorities for verification and audits.
Action Required: Implement the new reporting formats and ensure timely submission of the annual audit report by December 31. Furthermore, be prepared to provide all required documents to designated authorities.
Designated Authorities (as per Article 124 of Regulation EU No 1303/2013 and Article 65 of Regulation EU No 1305/2013):
Impact: The designated authorities will receive control reports and annual audit reports in a standardized format, facilitating their verification, checks, and audit obligations.
Action Required: Familiarize themselves with the new reporting formats and utilize the provided documents from the EIB/IFIs to carry out their verification and audit duties effectively.
European Commission:
Impact: The Commission will receive standardized annual audit reports, ensuring consistency and quality of information received.
Action Required: Review the annual audit reports submitted by the EIB/IFIs by December 31 to ensure compliance with the regulation.
Member States:
Impact: This regulation is binding and directly applicable in all Member States, ensuring uniform implementation of reporting requirements for financial instruments.
Action Required: Ensure compliance with the regulation and its requirements for financial instruments implemented by the EIB and other relevant institutions.
Key Entities Referenced
European Investment Bank (EIB): A financial institution that may implement financial instruments and in which a Member State is a shareholder.
European Commission: The executive branch of the European Union, responsible for implementing decisions and overseeing regulations.
Regulation (EU) No 1303/2013: A regulation of the European Parliament and of the Council laying down common provisions on various European funds.
European Parliament: One of the legislative branches of the European Union.
Council of the European Union: One of the legislative branch of the European Union, where representatives of each member state meet.
European Regional Development Fund: A fund that aims to strengthen economic and social cohesion in the European Union by correcting imbalances between its regions.
European Social Fund: A fund that aims to support employment and social inclusion in the European Union.
Cohesion Fund: A fund that aims to reduce economic and social disparities between Member States of the European Union.
4.7.2019 EN Official Journal of the European Union L 180/15
COMMISSION IMPLEMENTING REGULATION (EU) 2019/1140
of 3 July 2019
establishing models for the control reports and annual audit reports concerning financial
instruments implemented by the EIB and other international financial institutions in which
a Member State is a shareholder in accordance with Regulation (EU) No 1303/2013 of the
European Parliament and of the Council
THE EUROPEAN COMMISSION,
Having regard to the Treaty on the Functioning of the European Union,
Having regard to Regulation (EU) No 1303/2013 of the European Parliament and of the Council of 17 December 2013
laying down common provisions on the European Regional Development Fund, the European Social Fund, the Cohesion
Fund, the European Agricultural Fund for Rural Development and the European Maritime and Fisheries Fund and laying
down general provisions on the European Regional Development Fund, the European Social Fund, the Cohesion Fund
and the European Maritime and Fisheries Fund and repealing Council Regulation (EC) No 1083/2006 (1), as amended by
Regulation (EU, Euratom) 2018/1046 (2), and in particular the fourth subparagraph of Article 40(1), thereof,
After consulting the Coordination Committee for the European Structural and Investment Funds,
Whereas:
(1) The third subparagraph of Article 40(1) of Regulation (EU) No 1303/2013, as amended by Regulation (EU,
Euratom) 2018/1046, sets out the requirement that the EIB and other international financial institutions in which
a Member State is a shareholder are to provide to the authorities designated in accordance with Article 124 of
that Regulation and with Article 65 of Regulation (EU) No 1305/2013 of the European Parliament and of the
Council (3) a control report with each application for payment, on the one hand, and to the Commission and to
the designated authorities an annual audit report drawn up by their external auditors, on the other hand.
(2) In order to ensure consistency, quality and timely submission of the information to be provided by the EIB or
other international financial institutions in which a Member State is a shareholder to the designated authorities
and to the Commission, especially in view of the deadline for the submission of the report referred to in
Article 127(5) of Regulation (EU) No 1303/2013 and in Article 9(2) of Regulation (EU) No 1306/2013 of the
European Parliament and of the Council (4), a standard format laying down uniform requirements for the
structure, the timing and the content of the information should be established for both the control report and
the annual audit report.
(3) In order to enable the designated authorities to carry out their obligations with regard to verifications, checks and
audits, it is appropriate that the EIB or other international financial institutions in which a Member State is
a shareholder provide necessary documents to the designated authorities.
(4) In order to ensure that the designated authorities can effectively make use of the new provisions which apply
from 2 August 2018 in accordance with Article 282 of Regulation (EU, Euratom) 2018/1046, this Regulation
should enter into force on the day following that of its publication in the Official Journal of the European Union,
(1) OJ L 347, 20.12.2013, p. 320.
(2) Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council of 18 July 2018 on the financial rules applicable to
the general budget of the Union, amending Regulations (EU) No 1296/2013, (EU) No 1301/2013, (EU) No 1303/2013, (EU)
No 1304/2013, (EU) No 1309/2013, (EU) No 1316/2013, (EU) No 223/2014, (EU) No 283/2014, and Decision No 541/2014/EU and
repealing Regulation (EU, Euratom) No 966/2012 (OJ L 193, 30.7.2018, p. 1).
(3) Regulation (EU) No 1305/2013 of the European Parliament and of the Council of 17 December 2013 on support for rural development
by the European Agricultural Fund for Rural Development (EAFRD) and repealing Council Regulation (EC) No 1698/2005 (OJ L 347,
20.12.2013, p. 487).
(4) Regulation (EU) No 1306/2013 of the European Parliament and of the Council of 17 December 2013 on the financing, management
and monitoring of the common agricultural policy and repealing Council Regulations (EEC) No 352/78, (EC) No 165/94, (EC)
No 2799/98, (EC) No 814/2000, (EC) No 1290/2005 and (EC) No 485/2008 (OJ L 347, 20.12.2013, p. 549).L 180/16 EN Official Journal of the European Union 4.7.2019
HAS ADOPTED THIS REGULATION:
Article 1
Model for the control report
The control report referred to in the third subparagraph of Article 40(1) of Regulation (EU) No 1303/2013 shall be
drawn up in accordance with the model set out in Annex I to this Regulation.
Article 2
Model for the annual audit report
The annual audit report referred to in the third subparagraph of Article 40(1) of Regulation (EU) No 1303/2013 shall be
drawn up in accordance with the model set out in Annex II to this Regulation and submitted to the designated
authorities and the Commission by 31 December following the end of the reference accounting year.
Article 3
Documents necessary for verifications and audits
The EIB or other international financial institutions in which a Member State is a shareholder shall provide all available
documents to the designated authorities that are necessary for these authorities to carry out the obligations set out in
Article 125(5) and Article 127 of Regulation (EU) No 1303/2013 and in Articles 9 and 59(1) of Regulation (EU)
No 1306/2013.
Article 4
Entry in force
This Regulation shall enter into force on the day following that of its publication in the Official Journal of the European
Union.
This Regulation shall be binding in its entirety and directly applicable in all Member States.
Done at Brussels, 3 July 2019.
For the Commission
The President
Jean-Claude JUNCKER4.7.2019 EN Official Journal of the European Union L 180/17
ANNEX I
Model for the control report
A. Control report related to application for payment to the Commission: [reference] [planned date]
B. Date of the Member State's request for control report (at least two months before the planned date in point A.
above): [date]
C. Reference period:
1. Total amount of payments to final recipients and, in the cases referred to in Article 37(7) of Regulation (EU)
No 1303/2013, of payments to the benefit of final recipients, indicating separately ESI Funds, national public and
private contributions.
2. Total amount of resources committed for guarantee contracts, whether outstanding or already come to maturity,
in order to honour possible guarantee calls for losses, calculated on the basis of a prudent ex ante risk assessment,
covering a multiple amount of underlying new loans or other risk-bearing instruments for new investments in
final recipients, indicating separately ESI Funds, national public and private contributions.
3. Total amount of management costs incurred and/or management fees paid by the financial instrument, indicating
separately ESI Funds, national public and private contributions.
4. State of implementation of the investment strategy or equivalent documents as defined in the funding agreement.
5. Progress analysis: volume of committed amounts from the operational programme and disbursements to financial
intermediaries.
6. Monitoring activities and resulting follow-up.
7. Level of interest and other gains attributable to support from the ESI Funds paid to financial instruments as
referred to in Article 43 of Regulation (EU) No 1303/2013.
8. Level of resources paid back to financial instruments from investments or from the release of resources
committed for guarantee contracts including capital repayments and gains and other earnings or yields, such as
interest, guarantee fees, dividends, capital gains or any other income generated by investments, which are
attributable to the support from the ESI Funds, as referred to in Article 44 of Regulation (EU) No 1303/2013.
Attachment: list of transactions to final recipients who received support by the financial instrument, the sum of which
should correspond to the amounts referred to in points 1 and 2 above, and detailed breakdown by financial instrument
of the amounts referred to in point 3 above.L 180/18 EN Official Journal of the European Union 4.7.2019
ANNEX II
Model for the annual audit report
1. INTRODUCTION
1.1. Identification of the external audit firm that has been involved in preparing the report.
1.2. Reference period (e.g. 01 July N-1 to 30 June N).
1.3. Identification of the financial instrument(s)/mandate(s) and operational programme(s) or rural development
programme(s) covered by the audit report. Identification of the funding agreement to which the report relates to
(the ‘Funding agreement’).
2. AUDIT OF INTERNAL CONTROL SYSTEMS APPLIED BY THE EIB/EIF OR OTHER INTERNATIONAL FINANCIAL
INSTITUTIONS
Results of the external audit of the internal control system of the EIB or other international financial institutions
(IFIs), in which a Member State is a shareholder, assessing the set-up and effectiveness of this internal control
system and covering the following elements:
2.1. Mandate acceptance process.
2.2. Process for the appraisal and selection of financial intermediaries: formal and quality assessment.
2.3. Process for the approval of transactions with financial intermediaries and signature of relevant funding
agreements.
2.4. In case of financial contribution to financial instruments set up at Union level, including SME Initiative
instruments and in case of ESI Funds/EFSI combination under Article 39a of Regulation (EU) No 1303/2013,
process for the set-up of the instrument in line with the rules defined in the relevant Articles (e.g. Article 39,
Article 39a of Regulation (EU) No 1303/2013).
2.5. Processes for the monitoring of financial intermediaries relating to:
2.5.1. reporting by financial intermediaries;
2.5.2. maintenance of records;
2.5.3. disbursements to final recipients;
2.5.4. eligibility of support to final recipients;
2.5.5. management fees and costs charged by the financial intermediaries;
2.5.6. visibility requirements;
2.5.7. implementation of State aid requirements by the financial intermediaries, and in the case of EAFRD (partly
exempted from State aid rules) the implementation of Fund-specific requirements, including rules on cumulation
of aid, when applicable;
2.5.8. differentiated treatment of investors, where relevant;
2.5.9. compliance with tax-related requirements of Article 38 of Regulation (EU) No 1303/2013 as updated in
Regulation (EU, Euratom) 2018/1046.
2.6. Systems for the processing of payments received from the managing authority.
2.7. Systems for the calculation and payment of amounts related to management costs and fees.
2.8. Systems for the processing of payments to financial intermediaries.4.7.2019 EN Official Journal of the European Union L 180/19
2.9. Systems for the processing of interest and other gains generated by support from the ESI Funds to financial
instruments.
In relation to points 2.1 to 2.4 above following the submission of the first annual audit report: information
only on the updates or changes to the procedures or arrangements in place and their assessment for subsequent
annual reports.
In relation to points 2.5 to 2.9 above: results of the audit testing covering the relevant internal applicable
systems and processes.
2.10. At closure, the following elements shall be covered in the last annual audit report in addition to the elements
mentioned in points 2.1 to 2.9 above:
2.10.1. Use of differentiated treatment of investors.
2.10.2. Achieved multiplier ratio compared to the agreed multiplier ratio in the guarantee agreements for financial
instruments delivering guarantees.
2.10.3. Amount of capitalised interest rate subsidies or guarantee fee subsidies in line with Article 42(1)(c) of
Regulation (EU) No 1303/2013.
2.10.4. Amount of capitalised management costs and fees in line with Article 42(2) of Regulation (EU) No 1303/2013.
2.10.5. Amount of programme contribution paid into an escrow account in line with Article 42(3) of Regulation (EU)
No 1303/2013.
2.10.6. Use of interest and other gains attributable to the support from the ESI Funds paid to financial instruments in
line with Article 43 of Regulation (EU) No 1303/2013.
2.10.7. Use of resources paid back to financial instruments, which are attributable to the support from the ESI Funds,
until the end of the eligibility period and arrangements put in place for the use of those resources after the end
of the eligibility period in line with Articles 44 and 45 of Regulation (EU) No 1303/2013.
3. AUDIT CONCLUSIONS
3.1. Conclusion as to whether the external audit firm can provide reasonable assurance on the set-up and
effectiveness of the internal control system put in place by the EIB or other IFIs, in which a Member State is
a shareholder, in accordance with the applicable rules, as per the elements referred to in section 2.
3.2. Findings and recommendations resulting from the audit work carried out
Points 3.1 and 3.2 shall be based on the results of the audit work referred to in section 2 and where relevant,
take account of the results of other national or Union audit work carried out in relation to the same body
implementing financial instruments and/or to the same mandate for financial instruments.