workshop 3 audit of state aids ljubljana, 12-13 october 2009

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Ljubljana, 12-13 October 2009

Homologues Group Meeting

Slovenia, October 2009

Republika SlovenijaEuropean Union

Workshop 3

Audit of State Aids


Workshop 3

Audit of State Aids


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Introductory RemarksIntroductory Remarks

1. State Aids are a complex topic

2. Auditing state aids is of high importance due to the danger of cumulation or of artificial division

3. The workshop is meant to share experiences

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Presentation on State Aid rules by Ms Presentation on State Aid rules by Ms Annette Matthias-WernerAnnette Matthias-Werner

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Concept of State Aid is clearly definedConcept of State Aid is clearly defined

Key elements are:- Must be granted by the state/through state resources- Must confer a benefit or advantage on the recipient

which it would not otherwise have received- Must favour certain undertakings or the production of

certain goods- Must distort or threaten to distort competition

- Must affect trade between member states

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Exemptions IExemptions I

De Minimis• De minimis aid is not considered to be state aid, because the

effect on trade is considered not to be sufficient to provoke a distortion of competition. Therefore the question of cumulation with other state aid rules is sometimes difficult. Regulation 1998/2006 tries to clarify: no cumulation possible, if the other aid instrument relates to the same eligible costs.

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Exemptions IIExemptions II

General Block Exemption Rule • and the coordination of the State Aid Schemes.

Regulation n° 800/2008 of 6/8/2008 (OJ L 214 of 9/8/2008, p. 3)• Chapter I: Horizontal provisions• Standardised conditions and definitions• Harmonisation & simplification• Chapter II: Different exempted aid types, employment aid, SME aid,

investment aid, aid for environment, R&D&I etc. • Chapter III:Transitional provisions• Chapter III:Transitional provisions• Annexes: Summary information form for measures under the GBER

- Definition of SME (cf Commission Recommendation 2003)- Summary information sheets for R&D and large regional projects (specific

information for large individual aid measures within an aid regime, which are below the notification threshold)

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Help offered by DG CompetionHelp offered by DG Competion•If state aid is involved, it can be declared compatible with the Treaty.•legal instruments on http://ec.europa.eu/competition/state_aid/legislation/legislation.html•Procedural conditions: state aid project must be notified •In case of use of GBER only summary information must be send to the Commission

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Presentation on Cohesion Policy and Presentation on Cohesion Policy and state aid by Dr Johannes Sollgruberstate aid by Dr Johannes Sollgruber

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Standard clause in Operational Standard clause in Operational ProgrammesProgrammes

Any aid granted under an operational programme must comply with the State aid rules that are in force.

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Definition, allocation and separation of functionsDefinition, allocation and separation of functionswithin the Intermediate Bodieswithin the Intermediate Bodies

In order to avoid risks arising from the fact that the IB is responsible for the selection and approval of operations and for the management verifications, adequate segregation of duties should be ensured between these two functions, either by:– ensuring different units within the IB are responsible for each

function, or– ensuring different persons carry out the specific procedures.

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Regional Aid guidelinesRegional Aid guidelinesRegional state aid guidelines. They give substance to the articles 87(3)(a) and 87(3)(c) of the Treaty. In essence they indicate the maximum grant rates allowed for certain specifically designated regions. Under the Regional Aid Guidelines 2007-2013, Member States were invited to notify a single regional aid map for 2007-2013 covering their entire territory as soon as possible after the publication of the Guidelines. The provisions for "statistical effected regions" to be revised in 2010 and their financial envelope as well as degressive state aid intensities are similar and prove coherence between both policies.

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Regional aid guidelinesRegional aid guidelinesRegional aid may be approved:• Article 87(3)(a) : economic cohesion at Community

level • Article 87(3)(c): national disparities• Award maxima under the Regional Aid Guidelines• Large firms-Medium-firms-Small firms• ‘a’ regions GDP per head <45% EU25 average• ‘a’ regions GDP per head <60% EU25 average • ‘a’ regions GDP per head <75% EU25 average• ‘c’ areas (general case)

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State aid mapsState aid maps

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Assessment of compatibility-Assessment of compatibility-a risk-a risk-based approach to State aid based approach to State aid

assessmentassessmentLarge regional aidLarge regional aid

eg risk capitaleg risk capital

RDI RDI

Specified aid categoriesSpecified aid categories

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Management & Control procedures for Management & Control procedures for state aid operations in Operational state aid operations in Operational Programmes 2007 – 2013 in GreeceProgrammes 2007 – 2013 in Greece

by Ms Matthoula Triantafyllouby Ms Matthoula Triantafyllou

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Specific characteristics of the state aid Specific characteristics of the state aid operations in OPs 2007-2013operations in OPs 2007-2013

Intermediate bodies responsible for the management of state aid operations:• public administration bodies which have the responsibility to select the

recipients, to allocate the individual grants according to national law provisions

• private bodies which have been selected through open call for proposals (e.g. financial institutions)

Different categories of state aid actions: • aid schemes covered by the block exception and concern SMEs

investment and employment aid, aid for research and development and innovation in the form of non-repayable aid, loans, guarantees, interest subsidies or/and state aid through financial engineering instruments

• de minimis support• measures which require notification

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Criteria used to assess the effective functioning of Criteria used to assess the effective functioning of systemssystems

Designing the management & control procedures, we took into account the assessment criteria for each key requirement, which are used when the system is audited.

The key requirements include:1. Definitions of functions between and within MA / IB2. Adequate procedures for the selection of projects3. Adequate information and guidance to beneficiaries4. Adequate Management Verifications5. Adequate audit trail 6. Reliable accounting, and financial reporting system7. Necessary preventive and corrective actions

workshop 3 audit of state aids ljubljana, 12-13 october 2009

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