The audit authority is a national, regional, or local authority or equivalent body established for each operational program and responsible for ensuring the effective functioning of the management and control system. It also monitors whether projects comply with national and European regulations.
Member States shall designate an audit authority (as well as an administrative and a certifying authority) for each operational programme.
The audit authority's tasks include verifying the effective functioning of administrative and control systems (system audits). It is also responsible for conducting audits specifically related to claimed expenditure (operational audits). An important part of these control measures is ensuring the appropriate separation of responsibilities between the key authorities (administrative and certifying authorities, intermediary bodies).
Under the principle of automatic decommitment, sums allocated to a program that have not been disbursed by the end of the second year after the program's adoption are no longer available to that program. This mechanism is intended to accelerate program development and improve monitoring of the flow of funds for a program.
A certifying authority is responsible for ensuring the accuracy and reliability of expenditure declarations and payment requests before they are forwarded to the European Commission. The European Regional Development Fund, the European Social Fund, and the Cohesion Fund are managed jointly with the Member States, regions, and other intermediate bodies. For each operational program co-financed by these funds, one or more of the above-mentioned groups shall designate a certifying authority.
The specific tasks of the certifying authorities include the following:
- Certify that expenditure complies with national and EU rules and criteria
- Ensure that sufficient information is received from the relevant managing authorities to support their declarations.
- Take account of audit reports.
- Keep electronic records.
- Record unused/recovered funds that must be returned to the Commission.
A European Grouping of Territorial Cooperation aims to promote and facilitate cross-border, transnational, and interregional cooperation in the EU. The grouping's tasks include implementing programs that are co-financed by the EU or within the framework of other European cross-border projects.
An EGTC has legal personality and may consist of members from the following categories: EU Member States, regional or local authorities, associations, or other bodies governed by public law. An EGTC consists of members from at least two EU Member States.
In the period 2014-2020, cohesion policy will be financed under the European Structural and Investment Funds (ESIF). The ESIF are five separate funds, all of which fall under Regulation (EU) No. 1303/2013 of the European Parliament and of the Council—the so-called “Common Provisions Regulation.”
The Structural Funds have two components: the European Regional Development Fund (ERDF), which since 1975 has provided financial support for the development and structural adjustment of regional economies, economic transformation, improving competitiveness and territorial cooperation throughout the EU, and the European Social Fund (ESF), established in 1958, which aims to support the adaptability of workers and entrepreneurs, access to employment and participation in the labor market, the social integration of disadvantaged groups, the fight against all forms of discrimination and the creation of partnerships to implement employment reforms.
The other three funds that are part of the ESIF are the Cohesion Fund, which exclusively supports less developed Member States, the European Agricultural Fund for Rural Development, and the European Maritime and Fisheries Fund.
For the 2014-2020 programming period, three evaluation methods were defined: ex-ante evaluation, ongoing evaluation, and ex-post evaluation. Cohesion policy is evaluated on a partnership basis. Member States are responsible for the ex-ante evaluation, while the European Commission conducts the ex-post evaluation.
Ongoing evaluations are primarily the responsibility of the Member States, but the Commission can also conduct them on its own initiative, together with the Member States. One of the main tasks of the European Commission is to provide guidelines for evaluation and to facilitate the exchange of experience between Member States.
The ERDF was established in 1975 and provides financial support for the development and structural adjustment of regional economies, as well as for economic transformation, improving competitiveness, and territorial cooperation across the EU. Together with the European Social Fund (ESF), the Cohesion Fund, the European Agricultural Fund for Rural Development (EAFRD), and the European Maritime and Fisheries Fund (EMFF), the ERDF forms the five EU Structural and Investment Funds (ESIF).
The ERDF budget for the period 2014-2020 amounted to over EUR 250 billion. The fund supports projects within the framework of the eleven thematic objectives of cohesion policy and focuses in particular on four main priorities:
- Expanding research, technical development, and innovation
- Expanding access to, use of, and quality of ICT
- Improving the competitiveness of SMEs
- Supporting the transition to a low-carbon economy in all sectors
- The ERDF also finances cross-border, interregional, and transnational projects under the European Territorial Cooperation objective.
Ex-ante conditionalities are one of the central elements of the cohesion policy reform for the period 2014-2020. They were introduced for the European Structural and Investment Funds (ESIF) to ensure the necessary conditions for the effective and efficient use of the EIF.
These conditions apply to:
- political and strategic frameworks to ensure that the strategy documents underlying investments under the ESI Funds are of high quality at national and regional level and are in line with the standards agreed at EU level by the Member States;
- regulatory frameworks to ensure that the implementation of projects co-financed by the ESI Funds is in accordance with EU acquis;
- sufficient administrative and institutional capacity on the part of the public administrations and stakeholders involved in the implementation of the ESI funds.
In total, there are seven general ex-ante conditionalities related to horizontal aspects of program implementation and 29 thematic ex-ante conditionalities. These conditionalities define sector-specific conditions for eligible investment areas (investment priorities) under cohesion policy.
If the ex-ante conditionalities were not yet met at the time of program adoption, action plans were established within the framework of operational programs, which were to be implemented by the end of 2016.
The EU wants to help Europe maintain its leading position in the global economy and create the conditions for achieving the Europe 2020 strategy goals (smart, sustainable, and inclusive growth).
The driving force behind the Europe 2020 strategy and the complementary European Employment Strategy is the fight against unemployment. The EU is aware that unemployment destroys many livelihoods. Furthermore, European society can cope more easily with demographic change if more people find work. The taxes paid by the working population are needed to finance rising pension and healthcare costs.
The Europe 2020 strategy therefore aims to achieve an employment rate (the proportion of the European working-age population that is actually in employment) of 75% by 2020. The problem of youth unemployment poses a particular challenge, which is being addressed through a series of measures such as the Youth Guarantee, the Youth Employment Initiative, and the Youth Employment Package.
As one of the largest items in the EU budget, cohesion policy is an important financing instrument that contributes to the achievement of the Europe 2020 objectives. To ensure that investments are properly targeted, the Commission and the Member States have set eleven thematic objectives for the Structural Funds and the Cohesion Fund that support the Europe 2020 objectives.
Equality and non-discrimination are cornerstones of EU legislation and policy-making.
The EU is committed to developing measures to ensure equal opportunities and equal treatment for all people, regardless of their gender. This applies to all areas of economic, social, cultural, and family life. In addition, the EU pursues a gender mainstreaming approach to strengthen equality and combat gender discrimination.
The principle of non-discrimination was strengthened in the Treaty of Amsterdam. The EU now has the power to combat not only discrimination based on gender, but also discrimination based on race and ethnic origin, religious beliefs, disability, age, and sexual orientation.
The EU's commitment to equal opportunities and non-discrimination is reflected in all areas of its policy, including those aimed at promoting regional development.
The eligibility criteria for expenditure determine whether expenditure can be financed from the European Structural and Investment Funds (ESIF) – i.e. the European Regional Development Fund (ERDF), the European Social Fund (ESF), the Cohesion Fund, the European Agricultural Fund for Rural Development, or the European Maritime and Fisheries Fund.
The Regulation laying down common provisions (1303/2013) sets out the main principles governing the eligibility of expenditure at European level. This is to ensure that uniform rules apply in the Member States. The criteria are specified at national level.
A prerequisite for the eligibility of an expenditure item is that it must have been paid between the date of submission of the operational program to the Commission or between January 1, 2014 (whichever is earlier) and December 31, 2023.
The costs eligible for funding from the European Regional Development Fund under a program aimed at European territorial cooperation also include financing and guarantee costs as well as expenditure by public authorities in connection with the implementation of the measures. The Commission has also adopted a list of expenditure items that are not eligible for funding from the ERDF, ESF, or Cohesion Fund, such as interest on debt and recoverable VAT.
The Europe 2020 strategy is the EU's ten-year strategy for smart, sustainable and inclusive growth. To achieve this goal, five ambitious targets have been set in the areas of employment, research and development, climate change and sustainable energy supply, education, and combating poverty and social exclusion.
Within the framework of cohesion policy, funds are provided for the implementation of the Europe 2020 strategy. Therefore, funding for the 2014-2020 programming period is focused on eleven thematic objectives linked to the Europe 2020 strategy. A specific percentage of investments must be allocated to these thematic objectives. Thanks to this thematic focus, cohesion policy funds are invested in a way that makes Europe more innovative, efficient, sustainable, and competitive.
Financial corrections involve the cancellation of funds in cases where payments for EU-supported projects have been made incorrectly due to irregularities (e.g., fraud).
The Commission is obliged to recover funds that have been fraudulently obtained or used, and uses all legal means at its disposal to track down such payments. Financial corrections may take the form of, among other things, a total or partial cancellation of EU funding for an operational program.
The Commission has a range of control measures at its disposal to ensure that EU funds are spent properly. Anti-fraud measures include regular monitoring procedures, confirmation of expenditure, and strict audit measures.
Financial instruments are a resource-efficient way of supporting the Europe 2020 strategy with cohesion policy funding. They target projects that have the potential to become self-sustaining at some point and support them in the form of loans, guarantees, or equity investments. These mechanisms can be combined with non-monetary support such as technical assistance or interest rate subsidies.
The use of financial instruments makes financing under cohesion policy more efficient and sustainable, as the funds are repaid and can therefore be "reused." At the same time, financial instruments also create incentives for private investors to participate in projects and encourage them to improve project performance and exercise greater financial discipline.
Compared to the 2007-13 programming period, the scope of the financial instruments has been broadened. They can now be used for all thematic objectives and can be more easily combined with other forms of support. In addition, co-financing arrangements are now more flexible and clearer rules for management have been introduced.
Small non-governmental organizations such as volunteer groups and civic organizations can apply for smaller grants in the form of global grants from the European Social Fund (ESF) and the European Regional Development Fund.
Without these grants, it would be difficult for these groups to access ESF funds. Global grants enable them to apply for smaller amounts (around EUR 15,000) for projects that help disadvantaged people re-enter the labor market. The application procedure is simplified and involves only minimal administrative effort.
Global grants are managed and awarded by intermediary bodies such as local authorities, regional development agencies, and non-governmental organizations. These bodies are designated by the Member State or regional authority concerned, in consultation with the European Commission.
The INTERREG EUROPE interregional cooperation program includes all EU member states as well as Norway and Switzerland. It is co-financed by the European Regional Development Fund (ERDF) under the European Territorial Cooperation objective. It is the successor to the INTERREG IV C program. Its main objective for the period 2014-2020 is to improve regional development policy through the exchange of experiences and best practices. Furthermore, it aims to utilize regional expertise and best practices identified at the European level.
The INTERREG EUROPE program offers co-financing to regional and local institutions (e.g., public administrations, regional development agencies, or educational institutions) for building networks and exchanging experiences on various topics, thereby contributing to the development of best regional practices at the European level. Some more experienced networks wish to leverage already identified best practices to positively influence the direct development of their region in the relevant area. INTERREG EUROPE has four thematic priorities:
- Research, technical development and innovation
- Competitiveness of SMEs
- Low-carbon economy
- Environmental protection and resource efficiency
With a budget of €359 million from the ERDF, INTERREG EUROPE funds two types of activities. Cooperation projects allow organizations from different countries to work together for three to five years, exchanging best practices on specific policy issues. Policy learning platforms are forums for continuous learning accessible to organizations involved in regional development in Europe.
Innovation—whether it involves the development of new products, processes, or organizational techniques—can help give economic actors a competitive advantage. The European Union is well aware of this and has placed the promotion of innovation at the heart of its Europe 2020 strategy with the flagship initiative Innovation Union.
To complement this strategy, EU cohesion policy for the period 2014-2020 gives high priority to innovation: research and innovation are one of the thematic objectives of the reformed cohesion policy, which aims to encourage innovation, entrepreneurship, and the expansion of the knowledge-based economy in all EU regions. An important goal is to help less developed regions strengthen their innovative capacity.
To achieve these goals, more EU regional policy funds than ever before are being allocated to innovation. Innovation is also a key element of the smart specialization strategies that each region must submit in order to receive EU funding.
The INTERACT program supports actors implementing EU-funded programs under the "European Territorial Cooperation" objective of EU cohesion policy.
INTERACT's services include consulting on administration and implementation, support for thematic seminars, and the dissemination of best practices.
INTERACT supports institutions and organizations across Europe responsible for managing programs that promote territorial cooperation. These include managing authorities, joint technical secretariats, national contact points, and certification and auditing bodies. All EU Member States, as well as Norway and Switzerland, participate in the program.
The aim of interregional cooperation is to promote regional development in the EU through the transfer of know-how and the exchange of experience between regions.
The interregional cooperation program INTERREG EUROPE is part of the "European Territorial Cooperation" objective within the framework of the 2014-2020 cohesion policy. The program aims to improve the effectiveness of regional development policy and contribute to the economic modernization and improved competitiveness of Europe.
It provides a framework for cooperation between regional and local actors in the EU-28 countries, as well as in Norway and Switzerland.
The programs are co-financed by the ERDF within the framework of the "Interregional Cooperation" orientation of the "European Territorial Cooperation" objective:
INTERACT – Support and exchange of best practices between authorities responsible for implementing cooperation programs
ESPON – Observation Network for Spatial Planning
URBACT – Building and supporting city networks and urban development
The European Commission and EU member states must keep the public constantly informed about cohesion policy and the projects it supports. Since billions of euros are spent through the European Structural and Investment Funds, it is essential that people on the ground receive clear, detailed information about how they benefit and how European taxpayers' money is being spent.
The EU rules applicable to the 2014-2020 cohesion policy explicitly require Member States and managing authorities to publish a list of projects co-financed by the EU, including the amounts received and details of the recipients.
Member States must also submit a communication plan to the Commission for each operational programme (OP) co-financed in the latest cohesion policy programming period. Furthermore, managing authorities must organize at least one major event annually to publicize their programmes, their results, and the role the EU plays in them.
Member States are required to appoint monitoring committees to check that operational programs (OPs) using funds from the European Structural and Investment Funds (ESIF) are being implemented properly. These committees are chaired by the Member State concerned (or the managing authority). The committees are made up of regional partners and economic and social partners.
A monitoring committee has the following core tasks:
- Assessment of the effectiveness and quality of surgical procedures
- Approval of funding criteria for individual OPs
- Conducting regular reviews of OPs and their progress toward specific goals
- Reviewing the results of implementation in order to assess whether these objectives have been achieved
- Where appropriate, submission of proposals for revisions to OPs, including changes relating to financial management
N+2 refers to financing rules for the annual allocation of funds from the European Structural and Investment Funds.
If the corresponding funds have not been spent by this time, the Commission may "revoke" future commitments. Automatic revocations of commitments occur if funds are not spent by the end of the second year or if no disbursement request is submitted by then (n+2).
Operational programs are detailed plans in which Member States outline how they will spend the funds from the individual European Structural and Investment Funds (ESIF) during the programming period. Operational programs can be drawn up for specific regions or for a national thematic objective (e.g., the environment). For the objective of European Territorial Cooperation, cross-border or interregional operational programs are developed.
Member States submit their operational programmes on the basis of their partnership agreements. Each operational programme specifies which of the eleven thematic objectives, which guide cohesion policy in the 2014-2020 programming period, the funds available under the operational programme are to be used for.
The term "programming" refers to the management mechanism used to achieve the objectives of the European Structural and Investment Funds. Multiannual programs—known as operational programs—ensure consistency and continuity over a seven-year period. These programs cover specific geographical areas at the international, national, or subnational level, depending on the applicable regulatory agreements. The objectives of programming include identifying strategic priorities and indicative actions, determining the allocation of funds, and consolidating the management and control systems. The current programming period runs from 2014 to 2020.
Throughout its history, the European Union has developed a partnership process for its regional policy activities and the provision of cohesion policy resources, in which the Member States participate fully.
The collaborative partnership extends to the entire program planning process, from preparation to implementation and evaluation of the results. This approach should lead to better program outcomes and ensure that funds from the European Structural and Investment Funds (ESIF) are used efficiently.
During the 2014-2020 programming period, the partnership principle was further developed to include not only Member States but also other stakeholders such as trade unions, employers, non-governmental organizations (NGOs), and other bodies working on issues such as social inclusion, gender equality, and non-discrimination. The Commission has developed a European Code of Practice on Partnership, which Member States must adhere to when preparing and implementing their operational programs. In addition, each Member State has concluded a partnership agreement with the European Commission, outlining how national authorities expect to use and allocate ESIF funds during the 2014-2020 programming period.
For the 2014-2020 programming period, each Member State, in cooperation with the European Commission, drew up a Partnership Agreement (PA). This serves as a reference document for planning activities under the Structural and Investment Funds and for linking these activities to the objectives of the Europe 2020 growth strategy. The document sets out the strategy and investment priorities chosen by the Member State. It also includes a list of the national and regional operational programs (OPs) the country intends to implement, as well as an estimate of the annual allocation for each OP.
The RegioStars awards are intended to promote the exchange of experiences and best practices between EU regions in order to strengthen innovation.
This award is presented annually to recognize regional development projects supported by EU regional policy. The award highlights original and innovative projects that could inspire other regions in areas as diverse as SME innovation, the bioeconomy, and sustainable urban transport.
Projects nominated for the award must be innovative in every case. In addition, their sustainability must be proven and it must be demonstrated that they make a positive contribution to the economy in their region. Furthermore, they must deliver results that could help strengthen local, regional, and interregional partnerships.
The European Union's rules on state aid were established to ensure that the use of state resources does not lead to distortion of competition or unfair advantages in the European single market.
State aid is a benefit granted by the state that may give a company an unfair competitive advantage over its economic rivals. State aid can take many different forms, including subsidies, interest and tax breaks, and the acquisition of goods and services at preferential rates.
EU rules generally prohibit state aid unless it can be justified under specific circumstances related to overall economic development. The Commission is responsible for ensuring that state aid rules are applied and respected equally by all Member States. The EU's operational programmes for regional development are subject to these state aid rules.
There are two main types of EU funds: funds that are managed centrally and directly by the European Commission (e.g., research funds) and funds that are managed jointly by the EU and the member states (e.g., the Structural Funds and the Cohesion Fund). The EU entrusts the management of the latter to the Member States. The majority of EU expenditure comprises funds that fall under shared management by the EU Member States.
For funds under "shared management," the Commission currently entrusts Member States with the implementation of programs at the national level. Member States then allocate these funds to the final recipients (e.g., businesses, farmers, municipalities, etc.). Member States are primarily responsible for setting up a management and control system that meets the requirements of the regulations. They must also ensure that this system functions effectively and prevent, detect, and correct irregularities. The Commission has a supervisory role, which means that it verifies that the rules governing the management and control system are being complied with. To this end, it checks that the system is functioning effectively and, where necessary, makes financial corrections.
The concept of sustainable development represents a form of development policy that, in the context of satisfying a society's economic, social, and environmental needs, focuses on short-, medium-, and, above all, long-term well-being. It is based on the premise that development must meet present needs without compromising the well-being of future generations. In practice, this means that the foundations for long-term economic development must be laid while simultaneously taking environmental concerns into account.
Sustainable development is one of the EU's overarching goals, and the EU has published a dedicated strategy for sustainable development. Sustainable development is one of the key principles outlined in the regulation containing common provisions related to cohesion policy. This regulation provides the framework for all programs co-financed by the European Structural and Investment Funds.
Trans-European Networks (TENs) consist of cross-border transport and energy infrastructures. They are intended to facilitate the free movement of goods, people, and services, thereby contributing to a more effective European single market. Measures within the framework of TENs must promote the interoperability of national networks and facilitate access to them.
The new regulations on cohesion policy for the period 2014-2020 specifically identify projects for trans-European transport networks (TEN-T) as a priority within the seventh thematic objective (sustainability in transport and the elimination of bottlenecks in key network infrastructures). Projects aimed at creating a single European transport area can be financed from both the ERDF and the Cohesion Fund.
Technical assistance refers to financial support for participating actors in the implementation of programmes and projects funded by the Commission. Under the European Union's cohesion policy, such financial support can be used to finance preparation, management, evaluation, monitoring, auditing and control.
Funding for such measures is provided by the European Regional Development Fund (ERDF), the European Social Fund (ESF) and the Cohesion Fund.
EU rules set a ceiling for the share of funds from an operational program that can be allocated to technical assistance. If the technical assistance is initiated by or on behalf of the Commission, the ceiling is 0.35% of the annual amount for each fund. If the technical assistance comes from the Member States, the ceiling is 4%.
Transnational cooperation fosters highly integrated partnerships that operate across national borders within a transnational cooperation area. Such partnerships encompass and represent various levels of government and administration, involving public and private sector institutions as well as diverse policy areas.
There are a total of 15 transnational cooperation areas within the EU. Under certain conditions, territories in neighboring third countries can also belong to a transnational cooperation area and benefit from cohesion policy funds.
Thanks to these partnerships, joint solutions to shared problems and challenges affecting a large part of the respective transnational cooperation area can be developed, prepared, and implemented within the framework of transnational cooperation projects. Great emphasis is placed on the transnational work organization of the projects and the transnational dimension of the desired results.
The projects should normally contribute to a long-term vision, a big idea as a basis for strategic action, e.g. in the areas of flood protection, maritime transport policy, intermodal transport corridors, urban and rural networks, networked transnational innovation systems.
Transitional cooperation programs are financed by the European Regional Development Fund (ERDF) under the European Territorial Cooperation objective of cohesion policy. For the 2014-2020 programming period, over €2.1 billion is available for transnational cooperation in the form of Interreg VB funding.
The URBACT network is a European exchange and learning program funded by the Commission under the territorial cooperation objective as part of its interregional cooperation programs. The network aims to promote innovation in urban renewal by encouraging cities and metropolitan areas to identify, share, and disseminate best practices.
In the 2014-2020 programming period, the initiative will continue as URBACT III. All Member States, as well as Norway and Switzerland, participate in the program. It is jointly financed by the EU and the Member States, with the European Regional Development Fund (ERDF) contributing €74.3 million to its budget, which has been significantly increased compared to the previous programming period.
The projects funded under URBACT III focus on four main objectives:
- Improving the capacity of cities to implement a sustainable urban development policy
- Better-planned urban development policy
- Better policy implementation in cities
- Knowledge building and exchange