Assistance under this component shall be granted through centralised, decentralised or joint management, in accordance with Articles 53 of Regulation (EC, Euratom) No 1605/2002.

The objective shall be decentralised management where national programmes are concerned.

Regional and horizontal programmes shall be implemented by the Commission on a centralised basis or by joint management with international organisations as defined by Article 53d of Regulation (EC, Euratom) No 1605/2002.

F1With reference to Article 28, the operating structure shall include one or more implementing agencies, which shall be established within the national administration of the beneficiary country or under its direct control.

The national authorising officer shall, after consulting the national IPA coordinator, designate programme authorising officers to head the implementing agencies.

The programme authorising officers shall be officials within the state administration of the beneficiary country. They shall be responsible for the activities carried out by the implementing agencies in accordance with Article 28.

Where Community funds have been managed by existing national bodies in the beneficiary countries under Regulation (EEC) No 3906/89 or Regulation (EC) No 2500/2001 prior to the date of entry into force of this Regulation, those bodies (hereinafter referred to as the ‘existing national bodies’) shall manage funds under the transition assistance and institution building component, until the Commission adopts a Decision on conferral of management powers.

In no case the existing national bodies can manage funds under the transition assistance and institution building component without a conferral of management powers under this Regulation for more than one year from the entry into force of this Regulation.

The Commission shall decide whether to confer management powers on the existing national bodies in particular having regard to the list of deviations submitted in accordance with paragraph 4 and the decision taken by the national authorising officer in accordance with paragraph 5.

The national authorising officer shall carry out an assessment of the operating structure, which include the existing national bodies, with regard to the requirements referred to in Article 11. In particular, he shall establish a list of any requirements under this Regulation, as set out in Article 11, which the operating structure does not comply with, based on an opinion of an external auditor functionally independent from all actors in the management and control system.

The list of deviations shall be sent to the Commission at the latest four months after the entry into force of this Regulation.

Where the non-compliance referred to in paragraph 4 is deemed to be compatible with the efficient and effective functioning of the operating structures, the national authorising officer may decide to accredit the bodies concerned under this Regulation.

At the latest five months after the entry into force of this Regulation, he shall send to the Commission a decision relating to the accreditation of the bodies concerned. This decision shall include a roadmap, with time bound objectives, laying down the steps to be taken to remedy the non-compliance as set out in the list referred to in paragraph 4. The roadmap shall be agreed with the Commission.

Where the non-compliance referred to in paragraph 4 is not deemed to be compatible with the efficient and effective functioning of an operating structure, the national authorising officer shall proceed to establish an accreditation for the operating structure concerned, in accordance with the provisions of Article 13.

In the event the Commission decides to confer management powers on the existing national bodies under this Regulation, the Commission Decision may lay down further conditions on the national authorities. In the event of further conditions, the Commission shall set a time limit for compliance by the national authorities for the conferral of management powers to remain effective. The Commission Decision shall also lay down the list of ex ante controls as referred to in Articles 14(3).

Irrespective of the national authorising officer's decision, the Commission may decide to maintain, suspend, or withdraw the conferral of management powers on any of the bodies concerned at any time.

At all stages, the national authorising officer shall ensure that all the information required by the Commission is provided by the beneficiary country.

Twinning projects shall be set up in the form of a grant, whereby the selected Member State administrations agree to provide the requested public sector expertise against the reimbursement of the expenses thus incurred.

The grant may in particular provide for the long term secondment of an official assigned to provide full time counsel to the administration of the beneficiary country as resident twinning advisor.

The twinning grant shall be established in accordance with relevant provisions of Part One, Title VI on grants of Regulation (EC, Euratom) No 1605/2002 and Commission Regulation (EC, Euratom) No 2342/2002.

A twinning manual including notably a system of fixed rates and prices for the reimbursement of the provided public sector expertise by the selected Member State administrations shall be established by the Commission and updated regularly.

By way of derogation from Article 40(6), when the ceiling of 95 % is reached, the national authorising officer shall only submit a new certified statement of expenditure and information about the amounts recovered when he requests the payment of the final balance.

Pre-financing shall in principle represent 50 % of the Community contribution to the programme concerned. It may be paid in yearly instalments. The rate of 50 % may be raised if the national authorising officer demonstrates that the resulting amount will not cover the pre-financing of the contracts and grants signed at national level.

The amount to be pre-financed shall be calculated as the sum of the estimate of the amount to be contracted by year, and the actual amount for which contractual obligations have been entered into in the previous years. With the exception of that concerning participation in Community programmes and agencies, pre-financing shall only be paid once the first call for tender or call for proposals is launched.

The payments for the participation in Community programmes and agencies may amount to 100 % of the Community contribution relating to this participation.

Programmes under the transition assistance and institution building component shall be subject to ex-ante as well as interim and/or ex-post evaluation, in accordance with Article 57.

Prior to the conferral of management powers on the beneficiary country, all evaluations shall be carried out by the Commission.

After the conferral of management powers, the beneficiary country shall be responsible for carrying out interim evaluation, as appropriate, without prejudice to the Commission’s rights to perform any ad-hoc evaluations it deems necessary.

Responsibility for ex-ante and ex-post evaluations shall remain with the Commission even after the conferral of management powers, without prejudice to the beneficiary country’s right to carry out any such evaluations as it deems necessary.

In line with Article 22 of the IPA Regulation, the relevant evaluation reports shall be sent to the IPA Committee for discussion.

In the event of decentralised management, in accordance with Article 59, the national IPA coordinator shall establish a sectoral monitoring committee for the transition assistance and institution building component, hereinafter referred to as the ‘TAIB committee’.

The TAIB committee shall meet at least twice a year, at the initiative of the beneficiary country or the Commission. It shall draw up its rules of procedure, in compliance with a sectoral monitoring committee mandate set out by the Commission, and within the institutional, legal and financial framework of the beneficiary country concerned. It shall adopt these rules of procedure in agreement with the national IPA coordinator, the national authorising officer and the IPA monitoring committee.

The TAIB committee shall be chaired by the national IPA coordinator. Its members shall include the national authorising officer, the programme authorising officers and, where appropriate, other representatives of the operating structure, representatives of the Commission, as well as, where appropriate, representatives of international financial institutions and civil society, designated by the beneficiary country in agreement with the Commission.

The TAIB committee shall monitor all ongoing programmes under this component. In the case of, inter alia, investment operations, transfer of assets or privatisations, the beneficiary country shall monitor the programmes until their closure and shall notify the TAIB committee of any changes to the results of these programmes that significantly affect their impact, sustainability and ownership.

The TAIB committee may be assisted by sectoral monitoring sub-committees, set up by the beneficiary country to monitor programmes and operations of this component, grouped by monitoring sectors. Sub-committees shall report to the TAIB committee. They shall draw up and adopt their internal rules of procedure, in compliance with a mandate to be set out by the Commission.

In the event of decentralised management, the operating structure shall send the Commission, the national IPA coordinator and the national authorising officer a sectoral annual report by 30 June each year.

A sectoral final report shall be submitted to the Commission, the national IPA coordinator and the national authorising officer at the latest 6 months after the closure of the programme. The sectoral final report shall cover the whole period of implementation and include the last sectoral annual report.

The sectoral reports shall be examined by the TAIB committee prior to their transmission to the Commission, the national IPA coordinator and the national authorising officer.

Assistance to the cross-border cooperation referred to in Article 86(1) shall in principle be granted within the framework of multi-annual programmes for cross-border cooperation, hereinafter referred to as the ‘cross-border programmes’.

Cross-border programmes shall be drawn up for each border or group of borders by an appropriate grouping at NUTS level 3 regions or, in the absence of NUTS classification, equivalent areas.

Each cross-border programme shall be jointly drawn up by the participating countries, in cooperation with the partners referred to in Article 11 of Regulation (EC) No 1083/2006.

The participating countries shall jointly submit a proposal for a cross-border programme to the Commission, containing all the elements referred to in Article 94.

The Commission shall appraise the proposed cross-border programme to determine whether it contains all the elements referred to in Article 94 and whether it contributes to the goals and priorities of the relevant multi-annual indicative planning document(s) referred to in Article 5.

Where the Commission considers that a cross-border programme does not contain all the elements referred to in Article 94 or is not in line with the goals and priorities of the multi-annual indicative planning document(s), it may invite the participating countries to provide all necessary additional information and, where appropriate, to revise the proposed programme accordingly.

The Commission shall adopt the cross-border programme by decision.

For cross-border programmes concerning the cooperation referred to in Article 86(1)(a), multi-annual financing agreements shall be concluded between the Commission and each of the beneficiary countries participating in the programme, on the basis of the decision referred to in Article 91(6).

F1Where the cross-border programme is implemented under the transitional arrangements referred to in Article 99, annual or multiannual financing agreements shall be concluded between the Commission and each of the beneficiary countries participating in the programme. Each such financing agreement shall cover the Community contribution for the beneficiary country and the year(s) concerned, as specified in the financing plan referred to in Article 99(2).

For cross-border programmes concerning the cooperation referred to in Article 86(1)(b), annual or multiannual financing agreements shall be concluded between the Commission and each of the beneficiary countries participating in the programme on the basis of the decision referred to in Article 91(6). Each such financing agreement shall cover the Community contribution for the beneficiary country and the year(s) concerned, as specified in the financing plan referred to in Article 94(2), second subparagraph.

The Commission shall adopt the revised cross-border programme by decision and a new financing agreement(s) as mentioned in Article 92 shall be concluded accordingly. Where relevant, the provisions of Article 9(3) of the IPA Regulation shall apply.

Furthermore, the cross-border programmes concerning cooperation referred to under Article 86(1)(a), shall contain a single financing plan based on the multi-annual indicative financial framework with no breakdown by participating countries, comprising a table specifying for each year covered by the multi-annual indicative financial framework and for each priority axis, the amount of the Community contribution and its rate, as well as the amount financed by the national counterparts.

The cross-border programmes concerning cooperation referred to under Article 86(1)(b) shall contain a financing plan based on the multi-annual indicative financial framework comprising a table for each participating country specifying for each year covered by the multi-annual indicative financial framework and for each priority axis, the amount of the Community contribution and its rate, as well as, where appropriate, the amount financed by the national counterparts.

Cross-border programmes shall finance joint operations which have been jointly selected by the participating countries through a single call for proposals covering the whole eligible area.

F1Participating countries may also identify joint operations outside calls for proposals. In that event, the joint operation shall be specifically mentioned in the cross-border programme or, if it is coherent with the priorities or measures of the cross-border programme, shall be identified any time after the adoption of the programme in a decision taken by the joint monitoring committee referred to in Article 110 or in Article 142.

Operations selected for cross-border programmes shall include final beneficiaries from at least two participating countries which shall cooperate in at least one of the following ways for each operation: joint development, joint implementation, joint staffing and joint financing.

For cross-border programmes concerning cooperation referred to under Article 86(1)(a), operations selected shall include final beneficiaries from at least one of the participating Member States and one of the participating beneficiary countries.

The selected operations fulfilling the above-mentioned conditions may be implemented in a single country provided that they deliver a clear cross-border benefit.

Each programme shall establish eligibility rules for the selection of operations which prevent a duplication of efforts among different cross-border programmes, being under the IPA or other Community instruments.

For cross-border programmes concerning cooperation referred to under Article 86(1)(b), the final beneficiaries of an operation in each participating beneficiary country shall appoint a lead beneficiary among themselves prior to the submission of the proposal for an operation. The lead beneficiaries shall be established in the respective participating beneficiary country and shall assume the responsibilities listed under points (a) to (d) of paragraph 1 for the part of the operation taking place in the respective country.

The lead beneficiaries of the participating beneficiary countries shall ensure a close coordination of the implementation of the operation.

Each final beneficiary participating in the operation is responsible for irregularities in the expenditure which it has declared.

In duly justified cases, Community funding may finance expenditure incurred in implementing operations or parts of operations up to a limit of 20 % of the amount of the Community contribution to the cross-border programme in NUTS level 3 regions or, in the absence of NUTS classification, equivalent areas, adjacent to the eligible areas for that programme. In exceptional cases as agreed between the Commission and the participating countries, this flexibility may be extended to the NUTS level 2 regions or, in the absence of NUTS classification, equivalent areas in which the eligible areas are located.

F1At project level, in exceptional cases, expenditure incurred outside the programme area as defined in the first subparagraph, may be eligible, if the project could only achieve its objectives with that expenditure.

For cross-border cooperation referred to under Article 86(1)(a), the programmes shall in principle be implemented through shared management with Member States by the authorities referred to in Article 102 bearing responsibility for the implementation of the cross-border programme in the participating Member States and beneficiary countries.

To this end, the Member States and beneficiary countries participating in a cross-border programme must be able to implement the whole of the programme in the entire eligible territory according to the provisions referred to in Section 2 of this Chapter.

Prior to the adoption of the cross-border programme in accordance with Article 91(6), the Commission may request from the participating countries any information it deems necessary to ascertain the capacity of the authorities referred to in Article 102 to comply with the obligations set under Section 2 of this Chapter.

Where Member States and beneficiary countries participating in a cross-border programme are not yet ready to implement the entire programme according to these modalities, the transitional arrangements laid down in Article 99 shall apply.

For cross-border cooperation referred to under Article 86(1)(b), the programmes shall be implemented under centralised or decentralised management in accordance with Article 53 of Regulation (EC, Euratom) No 1605/2002, with respectively the Commission or the national authorising officer and the operating structures in each participating country bearing responsibility for the implementation of the programme in the respective country.

In this context, the cross-border programmes shall be implemented according to the provisions referred to in Section 3 of this Chapter.

For cross-border cooperation referred to under Article 86(1)(b), for all beneficiary countries the objective shall be decentralised management.

For cross-border cooperation referred to under Article 86(1)(a) where the participating countries are not yet ready to implement the entire cross-border programme in shared management with Member States according to the provisions laid down in Section 2 of this Chapter, the programme shall be implemented according to the transitional arrangements laid down in this Article.

The part of the cross-border programme concerning the participating Member States shall be implemented according to the provisions referred to in Section 2 of this Chapter.

The part of the cross-border programme concerning the participating beneficiary countries shall be implemented according to the provisions referred to in Section 3 of this Chapter, with the exception of Article 142. The provisions concerning the joint monitoring committee of Article 110 shall apply.

The implementing provisions contained in the cross-border programme as referred to in Article 94(1)(h) shall differentiate between the modalities applying to participating Member States and those applying to participating beneficiary countries.

Following the selection of joint operations in accordance with the provisions of Article 95, the managing authority shall issue a grant to the lead beneficiary of the participating Member States.

In the event of decentralised management, the operating structures in the participating beneficiary countries shall issue grants to the lead beneficiaries of their respective countries.

In the event of centralised management, the Commission shall issue a grant to the lead beneficiary in each participating beneficiary country.

When the participating countries are ready to switch to implementation through shared management in accordance with paragraph 1 of Article 98, they shall submit to the Commission a revised cross-border programme which shall include a single financing plan based on the multi-annual indicative financial framework for the following three years, together with a revised description of the management and control systems accompanied by a revised report and opinion in accordance with Article 117.

The Commission shall re-examine the cross-border programme and appraise the documents submitted in accordance with Article 117. It shall decide whether to adopt a new decision amending the programme so that it may be implemented under the arrangements referred to in Article 98(1).

The budgetary commitments for the part of the programme concerning the participating beneficiary countries which were taken during the transitional arrangements shall continue to be implemented according to the provisions referred to in Article 99.

Under this component, technical assistance may be granted for preliminary studies and technical support related to eligible activities, including those necessary for their implementation.

Technical assistance may also finance preparatory, management, monitoring, evaluation, information and control activities and activities to reinforce the administrative capacity for implementing the assistance under the IPA Regulation provided through this component.

Expenditure under this component shall be eligible if it has actually been paid after the signature of the financing agreement following the adoption of the relevant programme. In the case of major projects as referred to in Article 157, expenditure shall not be eligible before the Commission Decision approving the major project has been adopted, as referred to in Article 157(3).

In addition to the rules set out in Article 34(3), depreciation costs for the infrastructures shall not be eligible.

By way of derogation from Article 34(3), operating costs, including rental costs, exclusively related to the period of co-financing of the operation, may be eligible.

For the purposes of this component, the eligible expenditure as referred to in Article 38(1) shall be based on the public expenditure.

The Community contribution shall not exceed the ceiling of 85 % of the eligible expenditure at the level of the priority axis.

No operation shall benefit from a higher co-financing rate than the one relating to the priority axis concerned.

For the purposes of this component, a revenue-generating project means any operation proposed for pre-accession assistance involving an investment in infrastructure, the use of which is subject to charges borne directly by users and which generates revenues, or any operation involving the sale or rent of land or buildings or any other provision of services against payments.

Eligible expenditure for revenue-generating projects, used for calculating the Community contribution in accordance with Article 149, shall not exceed the current value of the investment cost minus the current value of the net revenue from the investment over a specific reference period for (a) investments in infrastructure; or (b) other projects where it is possible to objectively estimate the revenues in advance.

Where not all the investment cost is eligible for co-financing the net revenue shall be allocated pro rata to the eligible and non-eligible parts of the investment cost.

In the calculation, the operating structure shall take account of the reference period appropriate to the category of investment concerned, the category of project, the profitability normally expected of the category of investment concerned and of the application of the polluter-pays principle, and, if appropriate, of considerations of affordability, in particular in the environment sector.

The human resources development component shall contribute to strengthening economic and social cohesion as well as to the priorities of the European Employment Strategy in the field of employment, education and training and social inclusion.

At the initiative of the beneficiary country, technical assistance may be granted under this component to support the preparatory, management, monitoring, administrative support, information, evaluation and control activities of the programme, and preparatory activities with a view to the future management of European Structural Funds.

Assistance shall focus on those policies and activities which have the potential to act as catalyst for policy change and which enhance good governance and partnership.

For the purposes of this component, the eligible expenditure as referred to in Article 38(1) shall be based either on the public expenditure or on the total expenditure, the choice applying to the entirety of the programme concerned.

The Community contribution shall not exceed the ceiling of 85 % of the eligible expenditure at the level of the priority axis.

No operation shall benefit from a higher co-financing rate than the one relating to the priority axis concerned.

All operations which are not major projects and which are implemented by final beneficiaries other than national public bodies shall be selected through calls for proposals. The selection criteria shall be drawn up by the operating structure and shall be published with the call for proposals.

The operating structure shall set up a selection committee for each call for proposals, which shall analyse and select proposals, and recommend results to the operating structure.

The operating structure shall decide whether to approve the results of the selection procedure and state the reasons for its decision.

The composition of the selection committee and its functioning modalities are defined in the relevant financing agreement.

As part of an operational programme, the Community contribution may finance expenditure related to an operation comprising contributions to support financial engineering instruments for enterprises, such as venture capital funds, guarantee funds and loan funds. Preference shall be given to small and medium-sized enterprises.

Detailed implementing rules shall be set out in the financing agreement following the adoption of an operational programme providing for Community contribution to financial engineering instruments.

Under the regional development and human resources development components, in pursuing the objectives set out in the relevant operational programme within the respective programme area, operations may be implemented through contributions to EU trust funds.

Articles 150 and 157 shall not apply to trust fund contributions.

The trust fund contribution shall not be subject to ex ante controls pursuant to Article 14; to monitoring by the sectoral monitoring committee pursuant to Articles 59, 167 and 169; to the procedure to select operations provided for in Article 158; and to evaluations pursuant to Article 166.

Expenditure with regard to a trust fund contribution shall be eligible from the date of establishing that trust fund.

At closure, the certified statement of expenditure shall present the total amount of the contribution for which a decision on the allocation of funds to individual actions has been taken by the operational board of the trust fund up to 31 December 2017 in pursuing the objectives set out in the relevant programme and within the respective programme area.

For a payment application for an interim payment on a trust fund contribution from budget commitments made up to 31 December 2012, the last sentence of the third subparagraph of Article 161(1) shall not apply.

The national authorising officer shall certify in the certified statement of expenditure to be submitted by 31 December 2015 that the contribution was paid to the trust fund identified in the relevant programme.

Notwithstanding Article 40(5), the combined total of pre-financing and interim payments shall not exceed 90 % of the Community contribution, as set out in the financial table of the operational programmes.

All exchanges concerning financial transactions between the Commission and the authorities and bodies referred to in Article 21 shall be made by electronic means, as provided for in the financing agreement.

In addition to the provisions of Article 42, payments for the pre-financing may amount to 30 % of the European Union contribution for the three most recent years of the programme concerned. Where necessary, with regard to the availability of budgetary commitment, the pre-financing may be paid in two instalments.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

In the case of a payment application for the payment of the final balance, in addition to the provisions laid down in Article 45(1), the provisions of this paragraph shall apply under the regional development and the human resources development components.

For a payment application to be acceptable, the Community contribution, by priority axis, shall be consistent with the financial table of the operational programme.

The certified statement of expenditure referred to in Article 45(1) shall be drawn up by the national authorising officer and sent to the Commission in accordance with the requirements of paragraph 1 of this Article.

The Commission shall inform the beneficiary country of its conclusions on the content of the audit authority opinion referred to in Article 45(1)(c). This opinion shall be deemed accepted in the absence of observations by the Commission within five months from the date of its receipt.

The national fund shall ensure that requests for interim payments for each operational programme are sent to the Commission three times a year. For a payment to be made by the Commission in a given year, the application for payment shall be submitted by 31 October that year.

Subject to available funding, the Commission shall make the interim payment no later than two months after the date on which an application for payment meeting the conditions referred to in Articles 43(1) and 161(1) is registered with the Commission.

The operational programme shall be closed according to the provisions of Article 47(1), the payment of the final balance being determined by the Commission on the basis of the documents referred to in Article 45(1) and Article 161(2).

The Commission shall inform the beneficiary country about the date of the closure of the operational programme.

Notwithstanding the results of any audits performed by the Commission or the European Court of Auditors, the final balance paid by the Commission for the operational programme may be amended within nine months of the date on which it is paid or, where there is a negative balance to be reimbursed by the beneficiary country, within nine months of the date on which the recovery order is issued. Such amendment of the balance shall not affect the date of the closure of the operational programme as set out in paragraph 1.

Beneficiary countries shall carry out an ex ante evaluation for each operational programme separately. However, in duly justified cases, and in agreement with the Commission, beneficiary countries may carry out a single ex ante evaluation covering more than one operational programme.

Ex ante evaluations shall be carried out under the responsibility of the operating structure.

Ex ante evaluations shall aim to optimise the allocation of budgetary resources under operational programmes and improve programming quality. They shall identify and appraise the disparities, gaps and potential for development, the goals to be achieved, the results expected, the quantified targets, the coherence, if necessary, of the strategy proposed and the quality of the procedures for implementation, monitoring, evaluation and financial management.

The ex ante evaluation shall be annexed to the operational programme(s) it relates to.

During the programming period, beneficiary countries shall carry out evaluations linked to the monitoring of operational programmes, in particular where this monitoring reveals a significant departure from the goals initially set or where proposals are made for the revision of operational programmes, as referred to in Article 156. The results shall be sent to the sectoral monitoring committee for the operational programme and to the Commission.

Evaluations shall be carried out by experts or bodies, internal or external, functionally independent of the authorities referred to in Article 21. The results shall be published according to the applicable rules on access to documents.

In accordance with Article 59, the operating structure shall establish a sectoral monitoring committee for each programme. A single sectoral monitoring committee may be set up for several programmes within the same component. This committee shall meet at least twice a year, at the initiative of the beneficiary country or the Commission.

Each sectoral monitoring committee shall draw up its rules of procedure in compliance with a sectoral monitoring committee mandate set out by the Commission, and within the institutional, legal and financial framework of the beneficiary country concerned. It shall adopt these rules of procedure in agreement with the operating structure and the IPA monitoring committee, in order to exercise its missions in accordance with this Regulation.

The sectoral monitoring committee shall be co-chaired by the head of the operating structure and the Commission. Its composition shall be decided by the operating structure, in agreement with the Commission.

The sectoral monitoring committee shall include the Commission, the national IPA coordinator, the strategic coordinator for the regional development and the human resources development components, the operating structure of the programme. Where appropriate, it shall also include representatives from the civil society and socio-economic partners. A representative of the European Investment Bank may participate in an advisory capacity for those operational programmes to which the European Investment Bank makes a contribution.

The sectoral monitoring committee may also propose to the operating structure any revision or examination of the programme likely to make possible the attainment of the programmes' objectives referred to in Article 155(2)(a) or to improve its management, including its financial management.

By 30 June each year and for the first time by 30 June 2008, the operating structure shall submit a sectoral annual report to the Commission and the national IPA coordinator.

A sectoral final report shall be submitted to the Commission and the national IPA coordinator at the latest six months after the final date of eligibility of expenditure. The sectoral final report shall refer to the whole period of implementation and include the last sectoral annual report.

The sectoral reports shall be established in relation to the programmes concerned.

Sectoral reports shall be examined by the sectoral monitoring committee prior to their transmission to the Commission and the national IPA coordinator.

The sectoral reports shall be considered admissible if they contain all the appropriate information listed in paragraph 3. The national IPA coordinator and the operating structure shall be informed by the Commission of the admissibility of the sectoral annual report within 10 working days from the date of its receipt.

The national IPA coordinator and the operating structure shall also be informed of the Commission's opinion on the content of an admissible sectoral annual report within two months from the date of receipt. For the sectoral final report on an operational programme, this information shall be provided within a maximum of five months from the date of receipt of the admissible report.

In addition to the costs mentioned in Article 34(2), the costs referred to in paragraph 3(c) shall be considered eligible under this component.

The technical assistance measures eligible under Article 34(2) are those referred to in Article 182.

Investment projects shall remain eligible for Community financing provided they do not, within five years from the final payment by the operating structure, undergo a substantial modification.

For the purposes of this component, the eligible expenditure as referred to in Article 38(1) shall be calculated on the basis of the public expenditure as defined in Article 2.

In determining the rate of public expenditure for the purposes of paragraph 2, account shall not be taken of national aid to facilitate access to loans granted without any Community contribution provided under the IPA Regulation.

Assistance referred to in Article 171(2)(a) shall be granted for tangible or intangible investments in agricultural holdings to upgrade them to Community standards and to improve their overall performance.

By derogation from point (b) of paragraph 2, where national minimum standards based on Community standards have been newly introduced at the time the application is received, assistance may be granted regardless of non-compliance with those standard on the condition that the holding shall meet the new standards by the end of the realisation of the investment.

Furthermore, the Commission may, on the basis of duly substantiated request from the beneficiary country, allow derogation from point (b) of paragraph 2 in respect of non-compliance with national minimum standards based on Community standards introduced in the national law up to one year prior to date of submission of the application.

Assistance shall be granted on the condition that the investments comply with the relevant Community standards at the end of their realisation.

Beneficiary countries shall set limits for the total investment eligible for assistance. They shall lay down appropriate standards regarding farmers' occupational skill and competence which the farmers shall be required to comply with in order to be eligible for assistance.

Assistance under this measure shall not be granted to producer groups which have been officially recognised by the relevant national authority of the beneficiary country before 1 January 2007 and/or before the approval of the programme referred to in Article 184.

Professional and/or inter-professional organisations representing one or more sectors do not qualify as producer groups.

Assistance referred to in Article 171(2)(c) shall be granted for tangible and intangible investments in processing and marketing of agricultural and fishery products, covered by Annex I to the Treaty. Such assistance shall be aimed at assisting enterprises in upgrading to Community standards and to improve their overall performance. Investments must contribute to improving the situation of the basic agricultural production sector in question.

Investments at retail level shall be excluded from support.

By derogation from point (b) of paragraph 2, where national minimum standards based on Community standards have been newly introduced at the time the application is received, assistance may be granted regardless of non-compliance with those standard on the condition that the enterprise shall meet the new standards by the end of the realisation of the investment.

Furthermore, the Commission may, on the basis of a duly substantiated request from the beneficiary country, allow derogation from point (b) of paragraph 2 in respect of non-compliance with national minimum standards based on Community standards introduced in the national law up to one year prior to date of submission of the application.

The Commission may, on the basis of a duly substantiated request from the beneficiary country, decide that assistance can also be granted to enterprises not covered by paragraph 4 for investments necessary to meet specific Community standards which involves especially costly investments. Such support may be granted only to enterprises identified in the national plan for upgrading to Community standards specifically intended to make the establishment compliant with the relevant Community standards in its entirety. In such cases assistance shall be granted at half of the aid rate available for the enterprises covered by paragraph 4.

Beneficiary countries shall set limits for total investment eligible for support under this measure.

Assistance to investments in the enterprises referred to in point (a) of paragraph 4 shall be granted on the condition that such investments will comply with the relevant Community standards at the end of their realisation.

In order to prepare the beneficiary countries for the implementation of actions referred to in Axis 2 of Council Regulation (EC) No 1698/2005, assistance referred to in Article 171(3)(a), shall be granted to pilot projects covered by Articles 39 and 40 of Council Regulation (EC) No 1698/2005.

Such actions shall aim at developing practical experience of the implementation of actions to improve the environment and the countryside, at both the administrative and farm levels.

Assistance as referred to in Article 171(3)(b) shall be granted in accordance with Article 61 of Council Regulation (EC) No 1698/2005.

Detailed provisions for the implementation of this measure shall be agreed with the beneficiary country. They shall be consistent with the relevant rules applicable to the European Agricultural Fund for Rural Development as set out in Council Regulation (EC) No 1698/2005.

Priority shall be given to investments in water and energy supply, waste management, local access to information and communication technologies, local access to roads of particular importance for local economic development, and, fire protection infrastructures where justified by the risk of forest fires.

Where local rural development strategies as referred to in Article 171(3)(b) have been established, the investments supported under this Article must be in line with those strategies.

Priority shall be given to investments for the creation and development of micro and small enterprises, crafts and rural tourism, with a view to promoting entrepreneurship and developing the economic fabric.

Where local rural development strategies as referred to in Article 171(3)(b) have been established, the investments supported under this Article must be in line with those strategies.

Assistance may be granted to contribute to the improvement of the occupational skills and competence of persons engaged in the agricultural, food, and forestry sectors and other economic actors operating in the fields covered by this component.

Assistance shall not be granted to courses of instruction or training which form part of normal programmes or systems of education at secondary or higher levels.

Beneficiary countries shall elaborate a training strategy for the implementation of the operations envisaged under paragraph 1. The strategy shall include a critical assessment of the existing training structures, an analysis of the training needs and objectives. It shall also establish a set of criteria for the selection of training providers. A description of the training strategy shall be included in the programme.

The sectoral monitoring committee for this component shall be consulted on the technical assistance activities. It shall approve each year an annual action plan for the implementation of technical assistance activities.

Each visit and seminar referred to in paragraph 1(d) not made at the initiative of the Commission shall require the submission of a written report to the sectoral monitoring committee for this component.

Implementation of this component shall be carried out by the beneficiary countries on the basis of decentralised management without ex ante controls as referred to in Article 18.

Further provisions may be set out in the sectoral and financing agreements, referred to in Articles 7 and 8.

The provisions shall be consistent with the relevant rules applicable to rural development programmes in the Member States.

For the purposes of this component, pre-financing payments may amount to 30 % of the European Union contribution for the three most recent years of the programme concerned. Subject to the availability of budgetary appropriations, pre-financing may be paid in two or more instalments.

In cases where the amounts paid for pre-financing referred to in paragraph 1 are not sufficient to ensure timely payment of claims from final beneficiaries, these amounts may be increased according to the provisions laid down in the sectoral or financing agreements during the period of implementation to cover such needs, provided that the cumulative amount of payments for pre-financing does not exceed 30 % of the Community contribution for the three most recent years as established in the financing decision adopting the multi-annual programmes.

The first instalment of pre-financing shall be paid by the Commission when the conditions laid down in Article 42(1) are fulfilled. Additional instalments may be paid following a request of the beneficiary country in accordance with the requirements provided for in paragraphs 1 and 2.

In accordance with Article 57, the programme shall be subject to ex ante, ex post and, where appropriate, interim evaluations carried out by independent evaluators under the responsibility of the beneficiary country.

The evaluations shall assess the implementation of the programme towards the achievement of objectives set out in Article 12 of the IPA Regulation.

Detailed modalities of these evaluations may be set out in the sectoral or financing agreements, respectively referred to in Articles 7 and 8. These modalities shall be consistent with the relevant rules applicable to rural development programmes in the Member States.

In accordance with the provisions of Article 59, a sectoral monitoring committee shall be set up by the beneficiary country.

The sectoral monitoring committee shall be composed of representatives of relevant authorities and bodies, and appropriate economic, social and environmental partners. The sectoral monitoring committee shall draw up and approve its rules of procedure.

The sectoral monitoring committee shall be chaired by a representative of the beneficiary country. The Commission shall participate in the work of the sectoral monitoring committee.

The progress, efficiency and effectiveness of the programme in relation to its objectives shall be measured by means of indicators relating to the baseline situation as well as to the financial execution, outputs, results and impact of the programmes.

A sectoral final report shall, after examination by the sectoral monitoring committee, be submitted to the Commission and the national IPA coordinator, at the latest six months after the final date of eligibility of expenditure under the programme.