Article 174 of the Treaty on the Functioning of the European Union (TFEU) provides that, in order to strengthen its economic, social and territorial cohesion, the Union is to aim at reducing disparities between the levels of development of the various regions and the backwardness of the least favoured regions or islands, and that particular attention is to be paid to rural areas, areas affected by industrial transition, and regions which suffer from severe and permanent natural or demographic handicaps. Article 175 TFEU requires that the Union is to support the achievement of these objectives by the action it takes through the European Agricultural Guidance and Guarantee Fund, Guidance Section, the European Social Fund, the European Regional Development Fund, the European Investment Bank and other instruments.

In order to improve coordination and harmonise implementation of the Funds providing support under cohesion policy, namely the European Regional Development Fund (ERDF), the European Social Fund (ESF) and the Cohesion Fund, with the Fund for rural development, namely the European Agricultural Fund for Rural Development (EAFRD), and for the maritime and fisheries sector, namely measures financed under shared management in the European Maritime and Fisheries Fund (EMFF), common provisions should be established for all these Funds (the 'European Structural and Investment Funds' - 'ESI Funds'). In addition this Regulation contains general provisions which apply to the ERDF, the ESF and the Cohesion Fund, but do not apply to the EAFRD and the EMFF as well as general provisions applicable to the ERDF, the ESF, the Cohesion Fund and the EMFF, but do not apply to the EAFRD. Due to the particularities that exist for each ESI Fund, specific rules applicable to each ESI Fund and to the European territorial cooperation goal under the ERDF should be specified in separate Regulations.

In line with the conclusions of the European Council of 17 June 2010, whereby the Union strategy for smart, sustainable and inclusive growth was adopted, the Union and Member States should implement the delivery of smart, sustainable and inclusive growth, while promoting harmonious development of the Union and reducing regional disparities. The ESI Funds should play a significant role in the achievement of the objectives of the Union strategy for smart, sustainable and inclusive growth.

As regards the Common Agricultural Policy (CAP), significant synergies have already been obtained by harmonising and aligning management and control rules for the first pillar (European Agricultural Guarantee Fund - EAGF) and the second pillar (EAFRD) of the CAP. The strong link between the EAGF and the EAFRD should therefore be maintained and the structures already in place in the Member States preserved.

The outermost regions should benefit from specific measures and from additional funding to offset their structural social and economic situation together with the handicaps resulting from the factors referred to in Article 349 TFEU.

The northern sparsely populated regions should benefit from specific measures and additional funding to offset the severe and natural or demographic handicaps referred to in Article 2 of Protocol No 6 to the 1994 Act of Accession.

To ensure the correct and consistent interpretation of provisions and to contribute to legal certainty for Member States and beneficiaries, it is necessary to define certain terms that are used in this Regulation.

Where a time limit is set for the Commission to adopt or amend a decision, in accordance with this Regulation, the time limit for the adoption or amendment of such a decision should not include the period starting on the date on which the Commission has sent its observations to the Member State and lasting until the Member State has responded to those observations.

This Regulation consists of five parts, of which the first sets out the subject-matter and definitions, the second contains rules applicable to all ESI Funds, the third includes provisions applicable only to the ERDF, the ESF and the Cohesion Fund (the 'Funds'), the fourth includes provisions applicable only to the Funds and to the EMFF and the fifth includes the final provisions. In order to ensure consistency in the interpretation of the different parts of this Regulation and between this Regulation and the Fund-specific Regulations, it is important to set out clearly the relationships between them. In addition, specific rules established in the Fund-specific rules can be complementary but should derogate from the corresponding provisions in this Regulation only where such derogation is specifically provided for in this Regulation.

Under Article 317 TFEU, and in the context of shared management, the conditions allowing the Commission to exercise its responsibilities for implementation of the budget of the Union should be specified and the responsibilities of cooperation with the Member States clarified. Those conditions should enable the Commission to obtain assurance that Member States are using the ESI Funds in a legal and regular manner and in accordance with the principle of sound financial management within the meaning of Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council4 (the 'Financial Regulation'). Member States at the appropriate territorial level, in accordance with their institutional, legal and financial framework and the bodies designated by them for that purpose should be responsible for preparing and implementing programmes. Those conditions should also ensure that attention is drawn to the need to ensure complementarity and consistency of relevant Union intervention, to respect the principle of proportionality and take into account the overall aim of reducing administrative burden.

The Commission should be empowered to adopt a delegated act providing for a European code of conduct on partnership in order to support and facilitate Member States in the organisation of partnership with regard to ensuring the involvement of relevant partners in the preparation, implementation, monitoring and evaluation of Partnership Agreements and programmes in a consistent manner. That adopted delegated act should have under no circumstances and in no way of its interpretation retroactive effect or be the basis for establishing irregularities leading to financial corrections. The adopted delegated act should not specify a date of application that is earlier than the date of its adoption. The adopted delegated act should allow Member States to decide on the most appropriate detailed arrangements for implementing the partnership in accordance with their institutional and legal framework as well as their national and regional competences, provided that its objectives, as laid down in this Regulation, are achieved.

The activities of the ESI Funds and the operations which they support should comply with applicable Union and the related national law which directly or indirectly implements this Regulation and the Fund-specific rules.

In the context of its effort to increase economic, territorial and social cohesion, the Union should, at all stages of implementation of the ESI Funds, aim at eliminating inequalities and at promoting equality between men and women and integrating the gender perspective, as well as at combating discrimination based on sex, racial or ethnic origin, religion or belief, disability, age or sexual orientation as set out in Article 2 of the Treaty on the European Union (TEU), Article 10 TFEU and Article 21 of the Charter of Fundamental Rights of the European Union, taking into account in particular accessibility for persons with disabilities, as well as Article 5(2) of the Charter of Fundamental Rights stating that no one is to be required to perform forced or compulsory labour.

The objectives of the ESI Funds should be pursued in the framework of sustainable development and the Union's promotion of the aim of preserving, protecting and improving the quality of the environment as set out in Articles 11 and 191(1) TFEU, taking into account the polluter pays principle. To this end, the Member States should provide information on the support for climate change objectives, in line with the ambition to devote at least 20 % of the budget of the Union to those objectives, using a methodology based on the categories of intervention, focus areas or measures adopted by the Commission by means of an implementing act reflecting the principle of proportionality.

In order to contribute to the Union strategy for smart, sustainable and inclusive growth and to the Fund-specific missions pursuant to their Treaty-based objectives, including economic, social and territorial cohesion, the ESI Funds should focus their support on a limited number of common thematic objectives. The precise scope of each of the ESI Funds should be set out in Fund-specific rules. It should be possible to limit that scope to only some of the thematic objectives defined in this Regulation.

In order to maximise the contribution of the ESI Funds and to establish strategic guiding principles to facilitate the programming process at the level of Member States and the regions, a Common Strategic Framework ('CSF') should be established. The CSF should facilitate the sectoral and territorial coordination of Union intervention under the ESI Funds and with other relevant Union policies and instruments, in line with the targets and objectives of the Union strategy for smart, sustainable and inclusive growth, taking into account the key territorial challenges of the various types of territories.

The CSF should set out how the ESI Funds are to contribute to the Union strategy for smart, sustainable and inclusive growth, the arrangements to promote an integrated use of the ESI Funds, the arrangements for coordination between the ESI Funds and other relevant Union policies and instruments, horizontal principles and cross-cutting policy objectives for the implementation of the ESI Funds, the arrangements to address key territorial challenges and priority areas for cooperation activities under the ESI Funds.

Member States and regions increasingly face challenges that relate to the impact of globalisation, environmental and energy concerns, population ageing and demographic shifts, technological transformation and innovation demands, and social inequality. Due to the complex and interrelated nature of such challenges, the solutions supported by the ESI Funds should be of an integrated nature, multi-sectoral and multi-dimensional. In this context, and in order to increase the effectiveness and efficiency of the policies, it should be possible for the ESI Funds to be combined into integrated packages which are tailor-made to fit the specific territorial needs.

The combination of a shrinking working population and an increasing proportion of retired people in the general population as well as the problems associated with population dispersion, are expected to continue to place strains, inter alia, on Member States' education and social support structures and thus on the Union's economic competitiveness. Adapting to such demographic changes constitutes one of the core challenges that Member States and regions are to face in the years to come, and as such should be given a particularly high level of consideration for the regions most affected by demographic change.

On the basis of the CSF, each Member State should prepare, in cooperation with its partners, and in dialogue with the Commission, a Partnership Agreement. The Partnership Agreement should translate the elements set out in the CSF into the national context and set out firm commitments to the achievement of Union objectives through the programming of the ESI Funds. The Partnership Agreement should set out arrangements to ensure alignment with the Union strategy for smart, sustainable and inclusive growth as well as with the Fund-specific missions pursuant to their Treaty-based objectives, arrangements to ensure effective and efficient implementation of the ESI Funds and arrangements for the partnership principle and an integrated approach to territorial development. A distinction should be made between the essential elements of the Partnership Agreement which are subject to a Commission decision and other elements which are not subject to the Commission decision and can be amended by the Member State. It is necessary to envisage specific arrangements for the submission and adoption of the Partnership Agreement and the programmes should the entry into force of one or more Fund-specific Regulations be delayed or be expected to be delayed. This entails establishing provisions which allow for the submission and adoption of the Partnership Agreement even in the absence of certain elements in relation to the ESI Fund or Funds affected by the delay, and the later submission of a revised Partnership Agreement after the entry into force of the delayed Fund-specific Regulation or Regulations. Since the programmes co-financed by the ESI Fund affected by the delay should in this case be submitted and adopted only after the entry into force of the Fund-specific Regulation concerned, appropriate deadlines for the submission of the affected programmes should also be laid down.

Member States should concentrate support to ensure a significant contribution to the achievement of Union objectives in line with their specific national and regional development needs. Ex ante conditionalities, as well as a concise and exhaustive set of objective criteria for their assessment, should be defined to ensure that the necessary prerequisites for the effective and efficient use of Union support are in place. To this end, an ex ante conditionality should apply to a priority of a given programme only when it has a direct and genuine link to, and a direct impact on, the effective and efficient achievement of a specific objective for an investment priority or a Union priority, given that not every specific objective is necessarily linked to an ex ante conditionality laid down in the Fund-specific rules. The assessment of applicability of an ex ante conditionality should take account of the principle of proportionality having regard to the level of support allocated, where appropriate. The fulfilment of the applicable ex ante conditionalities should be assessed by the Member State in the framework of its preparation of the programmes and, where appropriate, the Partnership Agreement. The Commission should assess the consistency and adequacy of the information provided by the Member State. In cases where there is a failure to fulfil an applicable ex ante conditionality within the deadline laid down, the Commission should have the power to suspend interim payments to the relevant priorities of the programme under precisely defined conditions.

The Commission should undertake a performance review based on a performance framework and in cooperation with the Member States, in 2019. The performance framework should be defined for each programme with a view to monitoring progress towards the objectives and targets set for each priority over the course of the 2014 - 2020 programming period (the 'programming period'). In order to ensure that the budget of the Union is not used in a wasteful or inefficient way, where there is evidence that a priority has seriously failed to achieve the milestones that relate only to financial indicators, output indicators and key implementation steps, set out in the performance framework, due to clearly identified implementation weaknesses previously communicated by the Commission, and the Member State has failed to take the necessary corrective action, the Commission should be able to suspend payments to the programme or, at the end of the programming period, to apply financial corrections. The application of financial corrections should take into account, with due respect for the principle of proportionality, the absorption level and external factors contributing to the failure. Financial corrections should not be applied where targets are not achieved because of the impact of socio-economic or environmental factors, significant changes in the economic or environmental conditions in a Member State or because of reasons of force majeure seriously affecting the implementation of the priorities concerned. Result indicators should not be taken into account for the purposes of suspensions or financial corrections.

In order to facilitate the focus on performance and attainment of the objectives of the Union strategy for smart, sustainable and inclusive growth, a performance reserve consisting of 6 % of the total allocation for the Investment for growth and jobs goal, as well as for the EARDF and for measures financed under shared management in accordance with a future Union legal act establishing the conditions for the financial support for maritime and fisheries policy for the 2014-2020 programming period (the 'EMFF Regulation'), should be established for each Member State. Due to their diversity and multi-country character, there should be no performance reserve for programmes under the European territorial cooperation goal. The resources allocated to the Youth Employment Initiative (YEI) as defined in the operational programme in accordance with Regulation (EU) No 1304/2013 of the European Parliament and of the Council5 (the 'ESF Regulation'); to technical assistance at the initiative of the Commission; transfers from the first pillar of the CAP to the EAFRD under Regulation (EU) No 1307/2013 of the European Parliament and of the Council6; transfers to the EAFRD pursuant to the provisions on voluntary adjustment of direct payments in 2013 and on transfers to the EAFRD, laid down in Council Regulation (EC) No 73/20097 in respect of calendar years 2013 and 2014; transfers to the Connecting Europe Facility from the Cohesion Fund; transfers to the Fund for European Aid for the Most Deprived, as defined in a future Union legal act; and innovative actions for sustainable urban development should be excluded for the purpose of calculating the performance reserve.

The scope and level of a suspension should be proportionate and effective, and respect equality of treatment between Member States. Furthermore, a suspension should take into account the economic and social circumstances of the Member State concerned as well as the possible overall economic impact on a Member State resulting from the different steps of the excessive deficit procedure (EDP) and excessive imbalances procedure (EIP).

By virtue of Protocol No 15 on certain provisions relating to the United Kingdom of Great Britain and Northern Ireland, annexed to the TEU and to the TFEU, certain provisions on the excessive deficit and related procedures are not to apply to the United Kingdom. Provisions on suspension of all or part of payments and commitments should therefore not apply to the United Kingdom.

Due to the paramount importance of the principle of co-financing for the implementation of the ESI Funds, in order to ensure the ownership of the policies on the ground, and in line with the proportional application of suspensions, any decisions on suspensions triggered under the second strand of measures linking effectiveness of ESI Funds to sound economic governance should be made taking into account the specific requirements applicable to the Member State concerned to provide co-financing for the programmes financed from the ESI Funds. The suspensions should be lifted and the funds made available again to the Member State concerned as soon as the Member State takes the necessary action.

The ESI Funds should be implemented through programmes covering the programming period in accordance with the Partnership Agreement. Programmes should be drawn up by Member States based on procedures that are transparent, in accordance with their institutional and legal framework. Member States and the Commission should cooperate to ensure coordination and consistency of programming arrangements for the ESI Funds. As the content of programmes is closely interlinked with that of the Partnership Agreement, the programmes should be submitted within three months of the submission of the Partnership Agreement. A deadline of nine months from the date of entry into force of this Regulation should be provided for in relation to the submission of programmes under the European territorial cooperation goal in order to take into account the multi-country character of those programmes. In particular, a distinction should be made between the core elements of the Partnership Agreement and programmes which should be subject to a Commission decision and other elements which are not covered by the Commission decision and can be amended under the responsibility of the Member State. Programming should ensure consistency with the CSF and Partnership Agreement, coordination between the ESI Funds and with the other existing funding instruments and the input of the European Investment Bank if relevant.

With a view to ensuring consistency between programmes supported under different ESI Funds, particularly in the context of ensuring a contribution to the Union strategy for smart, sustainable and inclusive growth, it is necessary to set out common minimum requirements as regards the content of the programmes, which may be complemented by Fund-specific rules to take into account the specific nature of each ESI Fund.

It is necessary to lay down clear procedures for the assessment, adoption and amendment of programmes by the Commission. In order to ensure consistency between the Partnership Agreement and programmes, it should be specified that programmes, with the exception of programmes under the European territorial cooperation goal, cannot be approved before the adoption by the Commission of a decision approving the Partnership Agreement. To reduce the administrative burden on Member States, any approval of an amendment of certain parts of a programme by the Commission should result automatically in an amendment of the relevant parts of the Partnership Agreement. Furthermore, the immediate mobilisation of the resources allocated to the YEI should also be ensured by establishing special rules for the submission and the approval procedure of the dedicated operational programmes for the YEI referred to in the ESF Regulation.

In order to optimise the added value from investments funded wholly or in part through the budget of the Union in the field of research and innovation, synergies should be sought in particular between the operation of the ESI Funds and Horizon 2020, as set up in Regulation (EU) No 1291/2013 of the European Parliament and of the Council8, whilst respecting their distinct objectives. Key mechanisms for achieving those synergies should be the recognition of flat rates for eligible costs from Horizon 2020 for a similar operation and beneficiary and the possibility of combining funding from different Union instruments, including ESI Funds and Horizon 2020, in the same operation while avoiding double financing. In order to strengthen the research and innovation capacities of national and regional actors and to achieve the goal of building a "Stairway to excellence" in less developed regions and low-performing Research, Development and Innovation (RDI) Member States and regions, close synergies should be developed between the ESI Funds and Horizon 2020 in all relevant programme priorities.

Territorial cohesion has been added to the goals of economic and social cohesion by the TFEU, and it is necessary to address the role of cities, functional geographies and sub-regional areas facing specific geographical or demographic problems. To this end, and to better mobilise potential at a local level, it is necessary to strengthen and facilitate community-led local development by laying down common rules and ensuring close coordination for all relevant ESI Funds. Community-led local development should take into account local needs and potential, as well as relevant socio-cultural characteristics. Responsibility for the design and implementation of community-led local development strategies should be given to local action groups representing the interests of the community, as an essential principle. The detailed arrangements concerning the definition of the area and population covered by the community-led local development strategies should be set out in the relevant programmes in accordance with the Fund-specific rules.

In order to facilitate a manageable approach to its integration into the programming process, the community-led local development can be carried out under a single thematic objective, either to promote social inclusion and combat poverty, or to promote employment and labour mobility, notwithstanding that actions financed as part of community-led local development could contribute to all other thematic objectives.

Where an urban or territorial development strategy requires an integrated approach because it involves investments under more than one priority axis of one or more operational programmes, it should be possible for action supported by the Funds, that can be complemented with financial support from the EAFRD or the EMFF, to be carried out as an integrated territorial investment within an operational programme or programmes.

Financial instruments are increasingly important due to their leverage effect on the ESI Funds, their capacity to combine different forms of public and private resources to support public policy objectives, and because revolving forms of finance make such support more sustainable over the longer term.

Financial instruments supported by the ESI Funds should be used to address specific market needs in a cost effective way, in accordance with the objectives of the programmes, and should not crowd out private financing. The decision to finance support measures through financial instruments should be determined therefore on the basis of an ex ante assessment which has established evidence of market failures or sub-optimal investment situations and the estimated level and scope of public investment needs. The essential elements of the ex ante assessments should be clearly defined in this Regulation. Given the detailed nature of the ex ante assessment, provisions should be made allowing for the performance of the ex ante assessment in stages and also for reviewing and updating the ex ante assessment during implementation.

Financial instruments should be designed and implemented so as to promote substantial participation by private sector investors and financial institutions on an appropriate risk-sharing basis. To be sufficiently attractive to the private sector, it is essential that financial instruments are designed and implemented in a flexible manner. Managing authorities should therefore decide on the most appropriate forms for implementing financial instruments in order to address the specific needs of the target regions, in accordance with the objectives of the relevant programme, the results of the ex ante assessment and applicable State aid rules. Where applicable, such flexibility should also include the possibility to reuse part of the resources paid back during the eligibility period in order to provide for the preferential remuneration of private investors or public investors operating under the market economy principle. Such preferential remuneration should take into account market standards and ensure that any State aid complies with applicable Union and national law and is limited to the minimum amount necessary to compensate for the lack of private capital available, taking into account market failures or suboptimal investment situations.

In order to take account of the repayable character of support provided through financial instruments and to align with market practices, support from the ESI Funds provided to final recipients in the form of equity or quasi-equity investments, loans or guarantees, or other risk-sharing instruments should be able to cover the entirety of the investments made by final recipients, without distinction of VAT related costs. Accordingly it should only be in cases where financial instruments are combined with grants that the way in which VAT is taken into account at the level of the final recipient should be relevant for the purposes of determining eligibility of expenditure related to the grant.

It could be justified where certain parts of an investment do not generate sufficient direct financial returns, to combine financial instruments with grant support, to the extent allowed under the applicable State aid rules, in order for the projects to be economically sustainable. Specific conditions preventing double financing in such a case should be set out.

In order to ensure that resources allocated to financial instruments in favour of SMEs achieve an effective and efficient critical mass of new SME debt finance, it should be possible to use those resources in the entire territory of the Member State concerned regardless of the categories of region therein. However, it should also be possible for negotiation of the funding agreement between the Member State and the EIB to allow for a pro-rata return to a region or group of regions within the same Member State, as part of a single dedicated national programme per financial contribution by the ERDF and EAFRD.

The contributions by Member States to joint uncapped guarantee and securitisation financial instruments in favour of SMEs should be phased over the years 2014, 2015 and 2016 and the amounts to be paid by the Member States to the EIB should be scheduled accordingly in the funding agreement, in line with standard banking practice and with a view to spreading the effects on payment appropriations in any individual year.

In the case of securitisation transactions it should be ensured at programme closure that at least the amount corresponding to the Union contribution has been used for the objective of supporting SMEs, in line with the principles relating to financial instruments set out in the Financial Regulation.

Managing authorities should have the flexibility to contribute resources from programmes to financial instruments set up at Union level and managed directly or indirectly by the Commission, or to instruments set up at national, regional, transnational or cross-border level and managed by or under the responsibility of the managing authority. Managing authorities should also have the possibility of implementing financial instruments directly, through existing or newly created funds or through funds of funds.

In the interests of ensuring proportionate control arrangements and of safeguarding the added value of financial instruments, intended final recipients should not be deterred by there being an excessive administrative burden. The bodies responsible for the audits of programmes should in the first instance carry out audits at the level of managing authorities and the bodies implementing financial instruments including funds of funds. However, there may be specific circumstances where the necessary documents to complete such audits are not available at the level of the managing authorities or at the level of the bodies implementing financial instruments or where such documents do not represent a true and accurate record of support provided. In such specific cases, it is necessary to lay down certain provisions to also allow for audits at the level of final recipients.

The amount of the resources paid at any time from the ESI Funds to financial instruments should correspond to the amount necessary to implement planned investments and payments to final recipients, including management costs and fees. Accordingly, applications for interim payments should be phased. The amount to be paid as an interim payment should be subject to a maximum ceiling of 25 % of the total amount of programme contributions committed to the financial instrument under the relevant funding agreement, with subsequent interim payments conditional on a minimum percentage of the actual amounts included in previous applications having been spent as eligible expenditure.

It is necessary to lay down specific rules regarding the amounts to be accepted as eligible expenditure at closure of a programme, to ensure that the amounts, including the management costs and fees, paid from the ESI Funds to financial instruments are effectively used for investments in final recipients. The rules should be sufficiently flexible to make it possible to support equity-based instruments for the benefit of targeted enterprises and should, therefore, take into account certain characteristics specific to equity-based instruments for enterprises, such as market practices in relation to the provision of follow-on finance in the field of venture capital funds. Subject to the conditions laid down in this Regulation, targeted enterprises should be able to benefit from continued support from the ESI Funds to such instruments after the end of the eligibility period.

It is also necessary to lay down specific rules regarding the reuse of resources attributable to support from the ESI Funds until the end of the eligibility period and to lay down further rules regarding the use of resources after the end of the eligibility period.

As a general rule, support from the ESI Funds should not be used to finance investments which have already been physically completed or fully implemented at the date of the investment decision. However, in respect of infrastructure investments with the objective of supporting urban development or urban regeneration or similar infrastructure investments with the objective of diversifying non-agricultural activities in rural areas, a certain amount of support could be necessary for the re-organisation of a debt portfolio regarding infrastructure forming part of a new investment. In such cases it should be possible to use the support from the ESI Funds to reorganise a debt portfolio up to a maximum of 20 % of the total amount of programme support from the financial instrument to the investment.

Member States should monitor programmes in order to review implementation and progress towards achieving the programme's objectives. To this end, monitoring committees should be set up by the Member State, in accordance with its institutional, legal and financial framework and their composition and functions defined for the ESI Funds. Given the special nature of programmes under the European territorial cooperation goal, specific rules should be laid down for monitoring committees for those programmes. Joint monitoring committees could be set up to facilitate coordination between the ESI Funds. In order to ensure effectiveness, a monitoring committee should be able to make observations to managing authorities regarding implementation and evaluation of the programme, including actions related to the reduction of the administrative burden on beneficiaries and should monitor actions taken as a result of its observations.

Alignment of the monitoring and reporting arrangements of the ESI Funds is necessary to simplify management arrangements at all levels. It is important to ensure proportionate reporting requirements but also the availability of comprehensive information on progress made at key review points. Therefore it is necessary that reporting requirements reflect information needs in given years and are aligned with the timing of the performance review.

With a view to monitoring progress of programmes, an annual review meeting should take place between each Member State and the Commission. The Member State and the Commission should however be able to agree not to organise the meeting in years other than 2017 and 2019 in order to avoid an unnecessary administrative burden.

In order for the Commission to monitor progress made towards achieving Union objectives as well as Fund-specific missions pursuant to their Treaty-based objectives, Member States should submit progress reports on the implementation of their Partnership Agreements. On the basis of such reports, the Commission should prepare a strategic report on progress in 2017 and 2019. In order to provide for a regular strategic policy debate on the contribution of the ESI Funds to the achievement of the Union strategy on smart sustainable and inclusive growth, and to improve the quality of spending and the effectiveness of the policy in line with the European Semester, the strategic reports should be debated in the Council. On the basis of that debate the Council should be able to provide input to the assessment made at the spring meeting of the European Council on the role of all Union policies and instruments in delivering sustainable job-creating growth across the Union.

It is necessary to evaluate the effectiveness, efficiency and impact of assistance from the ESI Funds in order to improve the quality of design and implementation of programmes, and to determine the impact of programmes in relation to the targets under the Union strategy for smart, sustainable and inclusive growth and, having regard to the size of the programme, in relation to gross domestic product (GDP) and unemployment in the programme area concerned, where appropriate. The responsibilities of Member States and the Commission in this regard should be specified.

In order to improve the quality of the design of each programme, and verify whether its objectives and targets can be reached, an ex ante evaluation of each programme should be carried out.

An evaluation plan should be drawn up by the managing authority or Member State. It should be possible for that evaluation plan to cover more than one programme. During the programming period managing authorities should ensure that evaluations are carried out to assess the effectiveness, efficiency and impact of a programme. The monitoring committee and the Commission should be informed about the results of evaluations to facilitate management decisions.

Ex post evaluations should be carried out in order to assess the effectiveness and efficiency of the ESI Funds and their impact on the overall goals of the ESI Funds and the Union strategy for smart, sustainable and inclusive growth, taking account of the targets established for that Union strategy. For each of the ESI Funds, the Commission should prepare a synthesis report outlining the main conclusions of the ex-post evaluations.

The types of action that can be undertaken at the initiative of the Commission and of the Member States as technical assistance with support from the ESI Funds should be specified.

In order to ensure an effective use of Union resources, and avoid the over-financing of operations generating net revenue after completion, different methods should be used to determine the net revenue generated by such operations, including a simplified approach based on flat rates for sectors or subsectors. The flat rates should be based on historical data available to the Commission, the potential for cost recovery and the polluter-pays principle, where applicable. There should also be provision to extend flat rates to new sectors, introduce subsectors or review the rates for future operations when new data becomes available, by means of a delegated act. The use of flat rates could be particularly suitable for operations in the fields of information and communication technologies (ICT), RDI and energy efficiency. In addition, to ensure the application of the principle of proportionality and to take account of other regulatory and contractual provisions that could apply, it is necessary to set out the exemptions from those rules.

It is important to ensure a proportionate approach and avoid a duplication of the verification of financing needs in the case of operations which generate net revenue after completion which are also subject to State aid rules, given that such rules also establish limits on support which can be granted. Consequently, where there is de minimis aid, compatible State aid to SMEs with an aid intensity or an aid amount limit applied, or compatible State aid to large enterprises where an individual verification of financing needs in accordance with applicable State aid rules has been carried out, the provisions requiring the calculation of net revenue should not apply. Nevertheless, it should be open to a Member State to apply the methods for calculating net revenue where this is provided for in national rules.

Public Private Partnerships ("PPPs") can be an effective means of delivering operations which ensure the achievement of public policy objectives by bringing together different forms of public and private resources. In order to facilitate the use of ESI Funds to support operations structured as PPPs this Regulation should take account of certain characteristics specific to PPPs by adapting some of the common provisions on the ESI Funds.

The starting and closing dates for the eligibility of expenditure should be defined so as to provide for a uniform and equitable rule applying to the implementation of the ESI Funds across the Union. In order to facilitate the execution of programmes, it is appropriate to specify that the starting date for the eligibility of expenditure can be prior to 1 January 2014 if the Member State concerned submits a programme before that date. Taking into account the urgent need to mobilise the resources allocated to the YEI to support its immediate implementation, exceptionally the starting date for the eligibility of expenditure should be 1 September 2013. With a view to ensuring an effective use of ESI Funds and reducing the risk to the budget of the Union, it is necessary to put in place restrictions on support for completed operations.

In accordance with the principle of subsidiarity and subject to exceptions provided for in Regulation (EU) No 1301/2013 of the European Parliament and of the Council9, the ESF Regulation, Regulation (EU) No 1300/2013 of the European Parliament and of the Council10, Regulation (EU) No 1299/2013 of the European Parliament and of the Council11, Regulation (EU) No 1305/2013 of the European Parliament and of the Council12 and in the EMFF Regulation, Member States should adopt national rules on the eligibility of expenditure.

With a view to simplifying the use of the ESI Funds and reducing the risk of error, while providing for differentiation where needed to reflect the specificities of policy, it is appropriate to define the forms of support, harmonised conditions for the reimbursement of grants and repayable assistance, flat rate financing, specific eligibility rules for grants and repayable assistance and specific conditions on the eligibility of operations depending on location.

It should be possible to provide support from the ESI Funds in the form of grants, prizes, repayable assistance or financial instruments, or a combination thereof, in order to provide the bodies responsible with a choice of the most appropriate form of support to address identified needs.

To ensure the effectiveness, fairness and sustainable impact of the intervention of the ESI Funds, provisions guaranteeing that investments in businesses and infrastructures are long-lasting and prevent the ESI Funds from being used to undue advantage should be in place. Experience has shown that a period of five years is an appropriate minimum period to be applied, except where State aid rules provide for a different period. Nevertheless, and in line with the principle of proportionality, it is possible that a more limited period of three years would be justified where the investment concerns the maintenance of investments or jobs created by SMEs. In the case of an operation comprising investment in infrastructure or productive investment, and where the beneficiary is not an SME, such an operation should repay the contribution from the ESI Funds if, within 10 years of the final payment to the beneficiary, the productive activity is subject to relocation outside the Union. It is appropriate to exclude actions supported by the ESF and those not entailing productive investment or investment in infrastructure from the general requirement of durability, unless such requirements are derived from applicable State aid rules, and to exclude contributions to or from financial instruments. Sums unduly paid should be recovered and be subject to procedures applicable to irregularities.

Member States should adopt adequate measures to guarantee the proper set up and functioning of their management and control systems to give assurance on the legal and regular use of the ESI Funds. The obligations of Member States as regards the management and control systems of programmes, and in relation to the prevention, detection and correction of irregularities and infringements of Union law should therefore be specified.

In accordance with the principles of shared management, Member States and the Commission should be responsible for the management and control of programmes. Member States should have the primary responsibility, through their management and control systems, for the implementation and control of the operations in programmes. In order to strengthen the effectiveness of the control over the selection and implementation of operations and the functioning of the management and control system, the functions of the managing authority should be specified.

Member States should fulfil the management, control and audit obligations and assume the responsibilities as laid down in the rules on shared management set out in this Regulation, the Financial Regulation and in the Fund-specific rules. Member States should ensure that, in accordance with the conditions set out in this Regulation, effective arrangements for the examination of complaints in relation to the ESI Funds are in place. In accordance with the principle of subsidiarity, Member States should, upon request of the Commission, examine complaints submitted to the Commission falling within the scope of their arrangements and should inform the Commission of the results of examinations upon request.

The powers and responsibilities of the Commission with regard to verifying the effective functioning of the management and control systems, and to require Member State action, should be laid down. The Commission should also have the power to carry out on-the-spot audits and checks focused on issues relating to sound financial management in order to be able to draw conclusions concerning the performance of the ESI Funds.

Budget commitments of the Union should be effected annually. In order to ensure effective programme management, it is necessary to lay down common rules for pre-financing, interim requests for payment and the final balance, without prejudice to specific rules that are required for each of the ESI Funds.

The pre-financing payment at the start of programmes ensures that a Member State has the means to provide support to beneficiaries from the start of the implementation of the programme, so that those beneficiaries receive advances where necessary to make the planned investments and are reimbursed quickly following the submission of payment claims. Therefore, provisions should be made for initial pre-financing amounts from the ESI Funds. Initial pre-financing should be totally cleared at closure of the programme.

In order to safeguard the Union's financial interests, measures should be provided for that are limited in time and that allow the authorising officer by delegation to interrupt payments where there is clear evidence to suggest a significant deficiency in the functioning of the management and control system, evidence of irregularities linked to a request for payment, or a failure to submit documents for the purpose of examination and acceptance of accounts. The duration of the interruption period should be for a period of up to six months, with a possible extension of that period up to nine months with the agreement of the Member State, to allow sufficient time to resolve the causes of the interruption thereby avoiding the application of suspensions.

In order to safeguard the budget of the Union, it is possible that it would be necessary for the Commission to make financial corrections. To ensure legal certainty for the Member States, it is important to define the circumstances under which breaches of applicable Union law, or national law related to its application, can lead to financial corrections by the Commission. In order to ensure that any financial corrections which the Commission imposes on Member States are related to the protection of the Union's financial interests, such corrections should be confined to cases where the breach of applicable Union law or national law related to applying relevant Union law concerns the eligibility, regularity, management or control of operations and the corresponding expenditure declared to the Commission. To ensure proportionality it is important that the Commission consider the nature and the gravity of the breach and the related financial implications for the budget of the Union when deciding on a financial correction.

In order to encourage financial discipline, it is appropriate to define the arrangements for decommitment of any part of the budgetary commitment in a programme, in particular where an amount can be excluded from decommitment, in particular where delays in implementation result from circumstances which are independent of the party concerned, abnormal or unforeseeable and the consequences of which cannot be avoided despite the diligence shown, as well as in a situation in which a request for payment has been made but for which the payment deadline has been interrupted or the payment suspended.

The decommitment procedure is also a necessary part of the mechanism for the allocation of the performance reserve and in such cases it should be possible to reconstitute the appropriations for their subsequent commitment to other programmes and priorities. In addition, in the implementation of certain specific financial instruments in favour of SMEs where decommitments result from the discontinuance of participation by a Member State in such financial instruments, the subsequent reconstitution of the appropriations for commitment in other programmes should be provided for. Given that the introduction of additional provisions in the Financial Regulation will be necessary in order to allow for such reconstitution of appropriations, such procedures should only apply with effect from the date of entry into force of the corresponding amendment to the Financial Regulation.

Additional general provisions are necessary in relation to the specific functioning of the Funds. In particular, in order to increase their added value, and to enhance their contribution to the priorities of the Union strategy for smart, sustainable and inclusive growth and the Fund-specific missions pursuant to their Treaty-based objectives, the functioning of the Funds should be simplified and concentrated on the Investment for growth and jobs goal and European territorial cooperation goal.

Additional provisions for the specific functioning of the EAFRD and the EMFF are set out in the relevant sector-specific legislation.

In order to promote the TFEU objectives of economic, social and territorial cohesion, the Investment for growth and jobs goal should support all regions. To provide balanced and gradual support and reflect the level of economic and social development, resources under that goal should be allocated from the ERDF and the ESF among the less developed regions, the transition regions and the more developed regions according to their GDP per capita in relation to the EU-27 average. In order to ensure the long-term sustainability of investment from the Structural Funds, to consolidate the development achieved and to encourage the economic growth and social cohesion of the Union's regions, regions whose GDP per capita for the 2007-2013 programming period was less than 75 % of the average of the EU-25 for the reference period but whose GDP per capita has grown to more than 75 % of the EU-27 average should receive at least 60 % of their indicative average annual 2007-2013 allocation. The total allocation from the ERDF, the ESF and the Cohesion Fund for a Member State should be at least 55 % of its individual 2007-2013 total allocation. Member States whose per capita gross national income (GNI) is less than 90 % of that of the Union average should benefit under the Investment for growth and jobs goal from the Cohesion Fund.

Objective criteria should be fixed for designating eligible regions and areas for support from the Funds. To this end, the identification of the regions and areas at Union level should be based on the common system of classification of the regions established by Regulation (EC) No 1059/2003 of the European Parliament and the Council13, amended by Commission Regulation (EC) No 105/200714.

In order to set out an appropriate financial framework for the Funds, the Commission should establish, by means of implementing acts, the annual breakdown of available commitment appropriations using an objective and transparent method with a view to targeting the regions whose development is lagging behind, including those receiving transitional support. In order to take account of the particularly difficult situation of Member States suffering from the crisis, and in accordance with Council Regulation (EU, Euratom) No 1311/201315, the Commission should review the total allocations of all Member States in 2016 on the basis of the then available most recent statistics and, where there is a cumulative divergence of more than +/- 5 %, adjust those allocations. The required adjustment should be spread in equal proportions over the years 2017-2020.

In order to encourage the necessary acceleration of development of infrastructure in transport and energy as well as ICT across the Union, a Connecting Europe Facility (CEF) is created, in accordance with Regulation (EU) 1316/2013 of the European Parliament and of the Council16. Support should be provided from the Cohesion Fund to projects implementing core networks or for projects and horizontal activities identified in Part I of the Annex to that Regulation.

The allocation of the annual appropriations from the Funds to a Member State should be limited to a ceiling that would be fixed taking into account the GDP of that particular Member State.

It is necessary to fix the limits of resources for the Investment for growth and jobs goal and to adopt objective criteria for their allocation to regions and Member States. Member States should concentrate support to ensure sufficient investment is targeted at youth employment, labour mobility, knowledge, social inclusion and combating poverty, thus ensuring that the share of the ESF as a percentage of total combined resources for the Structural Funds and the Cohesion Fund at Union level, excluding the support from the Cohesion Fund for transport infrastructure under the CEF and support from the Structural Funds for aid for the most deprived, in Member States is not less than 23,1 %.

Given the urgent priority of addressing youth unemployment in the Union's most affected regions, as well as in the Union as a whole, a YEI is created and funded from a specific allocation and from targeted investment from the ESF to add to and reinforce the considerable support already provided through the ESI Funds. The YEI should aim to support young people, in particular those not in employment, education or training residing in the eligible regions. The YEI should be implemented as a part of the Investment for growth and jobs goal.

In addition, in line with the headline target on poverty reduction, it is necessary to reorient the Fund for European Aid for the Most Deprived to promote social inclusion. A mechanism should be envisaged which transfers resources to this instrument from the Structural Funds' allocations of each Member State.

Taking into account the present economic circumstances, the maximum level of transfer (capping) from the Funds to each individual Member State should not result in allocations per Member State higher than 110 % of their level in real terms for the 2007–2013 programming period.

With a view to ensuring an appropriate allocation to each category of regions, resources from the Funds should not be transferred between less developed, transition and more developed regions except in duly justified circumstances linked to the delivery of one or more thematic objectives. Such transfers should involve no more than 3 % of the total appropriation for that category of region.

In order to ensure a genuine economic impact, support from the Funds should not replace public or equivalent structural expenditure by Member States under the terms of this Regulation. In addition, so that the support from the Funds takes into account a broader economic context, the level of public expenditure should be determined with reference to the general macroeconomic conditions in which the financing takes place based on the indicators provided in the stability and convergence programmes submitted annually by Member States in accordance with Council Regulation (EC) No 1466/199717. Verification by the Commission of the principle of additionality should concentrate on the Member States in which less developed regions cover at least 15 % of the population because of the scale of the financial resources allocated to them.

It is necessary to lay down additional provisions concerning the programming, management, monitoring and control of operational programmes supported by the Funds in order to strengthen the focus on results. In particular, it is necessary to set out detailed requirements for the content of the operational programmes. This should facilitate the presentation of a consistent intervention logic to tackle the development needs identified, to set out the framework for performance assessment and to underpin the effective and efficient implementation of the Funds. As a general principle a priority axis should cover one thematic objective, one Fund and one category of region. Where appropriate and in order to increase the effectiveness in a thematically coherent integrated approach, it should be possible for a priority axis to relate to more than one category of region and combine one or more complementary investment priorities from the ERDF, ESF and the Cohesion Fund under one or more thematic objectives.

In circumstances where a Member State prepares a maximum of one operational programme for each Fund, so that both the programmes and the Partnership Agreement are prepared at national level, specific arrangements should be set out to ensure the complementarity of such documents.

In order to reconcile the need for concise operational programmes setting out clear commitments by the Member States and the need to allow for flexibility for adjustment to changing circumstances, a distinction should be made between the essential elements of the operational programme which are subject to a Commission decision and other elements which are not subject to a Commission decision and can be amended by a Member State. Consequently provision should be made for procedures that allow for the amendment of those non-essential elements at national level without a decision by the Commission.

With a view to improving complementarities and simplifying implementation, it should be possible to combine support from the Cohesion Fund and the ERDF with support from the ESF in joint operational programmes under the Investment for growth and jobs goal.

Major projects represent a substantial share of Union spending and are frequently of strategic importance with respect to the achievement of the Union strategy for smart, sustainable and inclusive growth. Therefore it is justified that operations above certain thresholds continue to be subject to specific approval procedures under this Regulation. The threshold should be established in relation to total eligible cost after taking account of expected net revenues with a higher threshold for transport projects due to the typically larger size of investments in that sector. To ensure clarity, it is appropriate to define the content of a major project application for this purpose. The application should contain the necessary information to provide assurance that the financial contribution from the Funds does not result in a substantial loss of jobs in existing locations within the Union.

In order to promote the preparation and implementation of major projects on a sound, economic and technical basis and to encourage the use of expert advice at an early stage, where independent experts supported by technical assistance of the Commission or, in agreement with the Commission, other independent experts, are able to provide clear statements on a major project's feasibility and economic viability, the Commission approval procedure should be streamlined. The Commission should be able to refuse approval of the financial contribution only where it establishes a significant weakness in the independent quality review.

In cases where an independent quality review of a major project has not been undertaken, the Member State should submit all required information and the Commission should appraise the major project to determine whether the requested financial contribution is justified.

For the sake of continuity of implementation, in order to avoid an unnecessary administrative burden as well as for the purposes of alignment with the Commission Decision on guidelines on closure of the 2007-2013 programming period, phasing provisions are established for major projects approved under Council Regulation (EC) No 1083/200618 whose implementation period is expected to extend over the programming period covered by this Regulation. Subject to certain conditions, there should be a fast track procedure for the notification and approval of a second or subsequent phase of a major project for which the preceding phase or phases were approved by the Commission under the 2007-2013 programming period. Each individual phase of the phased operation, which serves the same overall objective, should be implemented in accordance with the rules of the relevant programming period.

In order to give Member States the option of implementing part of an operational programme using a result-based approach, it is useful to provide for a joint action plan comprising a project or group of projects to be carried out by a beneficiary to contribute to the objectives of the operational programme. In order to simplify and reinforce the result orientation of the Funds, the management of the joint action plan should be exclusively based on jointly agreed milestones, outputs and results as defined in the Commission decision adopting the joint action plan. Control and audit of a joint action plan should also be limited to whether it achieves its milestones, outputs and results. Consequently, it is necessary to lay down rules on its preparation, content, adoption, financial management and control of joint action plans.

It is necessary to adopt specific rules in relation to the functions of the monitoring committee and the annual reports on implementation of operational programmes supported by the Funds. Additional provisions for the specific functioning of the EAFRD are set out in the relevant sector specific legislation.

To ensure the availability of essential and up to date information on programme implementation, it is necessary that Member States provide the Commission with the key data on a regular basis. In order to avoid an additional burden on Member States, this should be limited to data collected continuously, and the transmission should be performed by way of electronic data exchange.

In order to reinforce the monitoring of the progress with regard to the implementation of the Funds and to facilitate financial management, it is necessary to ensure the availability of basic financial data on the progress of implementation in a timely manner.

In accordance with Article 175 TFEU, the Commission is to submit Cohesion Reports to the European Parliament, the Council, the Economic and Social Committee and the Committee of the Regions every three years on the progress made towards achieving the Union's economic, social and territorial cohesion. It is necessary to lay down provisions concerning the content of this report.

It is important to bring the achievements of the Funds to the attention of the general public and to raise awareness of the objectives of cohesion policy. Citizens should have the right to know how the Union's financial resources are invested. The responsibility to ensure that the appropriate information is communicated to the public should lie with both the managing authorities and the beneficiaries as well as with Union institutions and advisory bodies. To ensure more efficiency in communication to the public at large and stronger synergies between the communication activities undertaken at the initiative of the Commission, the resources allocated to communication actions under this Regulation should also contribute to covering the corporate communication of the political priorities of the Union in so far as they are related to the general objectives of this Regulation.

With a view to strengthening accessibility and transparency of information about funding opportunities and project beneficiaries, in each Member State a single website or website portal providing information on all the operational programmes, including the lists of operations supported under each operational programme, should be made available.

For the purpose of ensuring wide dissemination of information about the achievements of the Funds and the role of the Union therein and to inform potential beneficiaries about funding opportunities, detailed rules taking account of the size of the operational programmes in accordance with the principle of proportionality about information and communication measures, as well as certain technical characteristics of such measures, should be defined in this Regulation.

In order to ensure that the allocation for each Fund is concentrated on the Union strategy for smart, sustainable and inclusive growth and the Fund-specific missions pursuant to their Treaty-based objectives, it is necessary to establish ceilings for the allocation to technical assistance of the Member State. It is also necessary to ensure that the legal framework for the programming of technical assistance facilitates the creation of streamlined delivery arrangements in a context where Member States implement multiple Funds in parallel and it should be possible for that framework to comprise several categories of regions.

It is necessary to determine the elements for modulating the co-financing rate from the Funds to priority axes, in particular, to increase the multiplier effect of Union resources. It is also necessary to establish the maximum rates of co-financing by category of region in order to ensure that the principle of co-financing is respected through an appropriate level of public or private national support.

It is necessary for Member States to designate a managing authority, a certifying authority and a functionally independent auditing authority for each operational programme. To provide flexibility for Member States in setting up control systems, it is appropriate to provide for the option for the functions of the certifying authority to be carried out by the managing authority. Member States should also be allowed to designate intermediate bodies to carry out certain tasks of the managing authority or the certifying authority. Member States should in that case lay down clearly their respective responsibilities and functions.

In order to take account of the specific organisation of the management and control systems for the Funds and the EMFF and the need to ensure a proportionate approach, specific provisions should be laid down in relation to the designation of the managing authority and the certifying authority. In order to avoid an unnecessary administrative burden, the ex ante verification of compliance with the designation criteria indicated in this Regulation should be limited to the managing and certifying authority, and, in accordance with the conditions laid down in this Regulation, no additional audit work should be required when the system is essentially the same as in the 2007-2013 programming period. There should be no requirement to approve the designation by the Commission. However, in order to increase legal certainty, Member States should have the option to submit the documents concerning the designation to the Commission subject to certain conditions laid down in this Regulation. The monitoring of compliance with the designation criteria carried out on the basis of audit and control arrangements should, where results show non-compliance with the criteria, give rise to remedial actions, and possibly to the ending of the designation.

The managing authority bears the main responsibility for the effective and efficient implementation of the Funds and the EMFF and thus fulfils a substantial number of functions related to programme management and monitoring, financial management and controls as well as project selection. Accordingly, the managing authority's responsibilities and functions should be set out.

The certifying authority should draw up and submit to the Commission payment applications. It should draw up the accounts, certifying their completeness, accuracy and veracity and that the expenditure entered in them complies with applicable Union and national rules. The certifying authority's responsibilities and functions should be set out.

The audit authority should ensure that audits are carried out on the management and control systems, on an appropriate sample of operations and on the accounts. The audit authority's responsibilities and functions should be set out. Audits of declared expenditure should be carried out on a representative sample of operations in order to enable the results to be extrapolated. As a general rule, a statistical sampling method should be used in order to provide a reliable representative sample. Nevertheless, audit authorities should be able to use in duly justified circumstances a non-statistical sampling method provided that the conditions laid down in this Regulation are complied with.

Without prejudice to the Commission's powers as regards financial control, cooperation between the Member States and the Commission in this field should be increased and criteria should be established which allow the Commission to determine, in the context of its strategy of control of national systems, the level of assurance it should obtain from national audit bodies.

In addition to common rules on financial management for the ESI Funds, additional provisions for the Funds and the EMFF should be laid down. In particular, with a view to ensuring reasonable assurance for the Commission prior to the acceptance of accounts, applications for interim payments should be reimbursed, at a rate of 90 % of the amount resulting from applying the co-financing rate for each priority, laid down in the decision adopting the operational programme, to the eligible expenditure for the priority. The outstanding amounts due should be paid to the Member States upon acceptance of accounts, provided that the Commission is able to conclude that the accounts are complete, accurate and true.

Beneficiaries should receive the support in full no later than 90 days from the date of submission of the payment claim by the beneficiary, subject to the availability of funding from initial and annual pre-financing and interim payments. The managing authority should be able to interrupt the deadline where supporting documents are incomplete or there is evidence of irregularity requiring further investigation. Initial and annual pre-financing should be provided for to ensure that Member States have sufficient means to implement programmes under such arrangements. Annual pre-financing should be cleared each year with the acceptance of accounts.

To reduce the risk of irregular expenditure being declared, it should be possible for a certifying authority, without any need for additional justification, to include the amounts which require further verification in an interim payment application after the accounting year in which they were entered into its accounting system.

To ensure the appropriate application of the general rules on decommitment, the rules established for the Funds and the EMFF should detail how the deadlines for decommitment are established.

In order to apply the requirements of the Financial Regulation to the financial management of the Funds and the EMFF, it is necessary to set out procedures for the preparation, examination and acceptance of accounts which should ensure a clear basis and legal certainty for these arrangements. In addition, in order to allow a Member State properly to fulfil its responsibilities, it should be possible for the Member State to exclude amounts which are the subject of an ongoing assessment of legality and regularity.

In order to reduce the administrative burden on beneficiaries, specific time limits should be set out during which the managing authorities are obliged to ensure the availability of documents for operations following submission of expenditure or completion of an operation. In accordance with the principle of proportionality, the period for keeping the documents should be differentiated depending on the total eligible expenditure of an operation.

As accounts are verified and accepted every year, a significant simplification of the closure procedure should be introduced. The final closure of the programme should therefore be based only on the documents relating to the final accounting year and the final implementation report or the last annual implementation report, without any need to provide any additional documents.

In order to safeguard the Union's financial interests and provide the means to ensure effective programme implementation, provisions should be laid down allowing for the suspension by the Commission of payments at the level of priorities or operational programmes.

In order to provide legal certainty for Member States, it is appropriate to lay down the specific arrangements and procedures for financial corrections by Member States and by the Commission in respect of the Funds and the EMFF respecting the principle of proportionality.

It is necessary to establish a legal framework which provides robust management and control systems at national and regional level and an appropriate division of roles and responsibilities in the context of shared management. The role of the Commission should therefore be specified and clarified and proportionate rules set out for the application of financial corrections by the Commission.

The frequency of audits on operations should be proportionate to the extent of the Union's support from the Funds and the EMFF. In particular, the number of audits carried out should be reduced where the total eligible expenditure for an operation does not exceed EUR 200 000 for the ERDF and the Cohesion Fund, and EUR 150 000 for the ESF, and EUR 100 000 for the EMFF. Nevertheless, it should be possible to carry out audits at any time where there is evidence of an irregularity or fraud, or, following closure of a completed operation, as part of an audit sample. The Commission should be able to review the audit trail of the audit authority or take part in on-the-spot audits of the audit authority. Where the Commission does not obtain the necessary assurance as to the effective functioning of the audit authority by those means, the Commission should be able to carry out a re-performance of the audit activity where this is in accordance with internationally accepted audit standards. In order that the level of auditing by the Commission is proportionate to the risk, the Commission should be able to reduce its audit work in relation to operational programmes where there are no significant deficiencies or where the audit authority can be relied on. In order to reduce the administrative burden on beneficiaries, specific rules should be introduced to reduce the risk of overlap between audits of the same operations by various institutions, namely the European Court of Auditors, the Commission and the audit authority.

development and innovation and energy efficiency and adding sectors or subsectors, the methodology for the calculation of the discounted net revenue for net revenue-generating operations, additional rules on the replacement of a beneficiary under PPP operations, minimum requirements to be included in PPP agreements which are necessary for the application of a derogation concerning eligibility of expenditure, the definition of the flat rate applied to indirect costs for grants based on existing methods and corresponding rates applicable in Union policies, the methodology to be used in carrying out the quality review of a major project, the criteria for determining the cases of irregularity to be reported, the data to be provided and the conditions and procedures to be applied to determine whether amounts which are irrecoverable shall be reimbursed by the responsibilities of Member States, the data to be recorded and stored in computerised form within monitoring systems established by managing authorities, the minimum requirements for audit trails, the scope and content of audits and the methodology for sampling, the use of data collected during audits, and the criteria for determining serious deficiencies in the effective functioning of management and control systems, for establishing the level of financial correction to be applied and for applying flat rates or extrapolated financial corrections. It is of particular importance that the Commission carry out appropriate consultations during its preparatory work, including at expert level. The Commission, when preparing and drawing up delegated acts, should ensure a simultaneous, timely and appropriate transmission of relevant documents to the European Parliament and to the Council.

non-compliance with additionality, decisions adopting and amending operational programmes, decisions refusing the financial contribution to a major project, decisions on the approval of a financial contribution to a selected major project and the extension of the period for the realisation of the condition related to the approval of major projects and decisions on joint action plans; and as regards the ERDF, the ESF, the Cohesion Fund and the EMFF, decisions on non-acceptance of the accounts and the amount chargeable if the accounts were not accepted, decisions suspending interim payments and decisions on financial corrections.

In order to ensure uniform conditions for the implementation of this Regulation, implementing powers should be conferred on the Commission in respect of the model to be used when submitting the progress report, the model of operational programme for the Funds, methodology to be used in carrying out the cost-benefit analysis on major projects, the format for information on major projects, the model for the joint action plan, the model of the annual and final implementation reports, the frequency of the reporting of irregularities and the reporting format to be used, the model for the management declaration, and the models for the audit strategy, opinion and annual control report. Those powers should be exercised in accordance with Regulation (EU) No 182/2011 of the European Parliament and of the Council19.

the priority axis in operational programmes, the format for notification of the selected major project, the technical characteristics of information and communication measures for the operation and instructions for creating the emblem and the definition of its standard colours, the model to be used when submitting financial data to the Commission for monitoring purposes, detailed rules on the exchange of information between beneficiaries and managing authorities, certifying authorities, audit authorities and intermediate bodies, the model for the report and the opinion of the independent audit body and the description of the functions and procedures in place for the managing authorities and, where appropriate, of the certifying authorities, the technical specifications of the management and control system, the model for payment applications and the model for the accounts should be adopted in accordance with the examination procedure as established in Article 5 of Regulation (EU) No 182/2011.

For certain implementing acts to be adopted in accordance with the examination procedure laid down in Article 5 of Regulation (EU) No 182/2011 the potential impact and implications are of such high significance to Member States that an exception from the general rule is justified. Accordingly, where no opinion is delivered by the committee, the Commission should not adopt the draft implementing act. Those implementing acts relate to setting out the methodology for providing information on the support for climate change objectives; determining the methodology for milestones and targets with regard to the performance framework; establishing the standard terms and conditions in relation to financial instruments; laying down the detailed arrangements for the transfer and management of programme contributions with regard to certain financial instruments; adopting a model of the funding agreement concerning the joint uncapped guarantee and securitisation financial instruments in favour of SMEs; establishing the model to be used when reporting on financial instruments to the Commission; determining the nomenclature, based on which the categories of intervention can be defined concerning the priority axis in operational programmes; concerning the technical characteristics of information and communication measures for the operation and instructions for creating the emblem and a definition of the standard colours; laying down the technical specifications of recording and data-storing in relation to the management and control system. The third subparagraph of Article 5(4) of Regulation (EU) No 182/2011 should therefore apply to those implementing acts.

Since this Regulation replaces Regulation (EC) No 1083/2006, that Regulation should therefore be repealed. Nevertheless, this Regulation should not affect either the continuation or modification of assistance approved by the Commission on the basis of Regulation (EC) No 1083/2006 or any other legislation applying to that assistance on 31 December 2013. Applications made or approved under Regulation (EC) No 1083/2006 should therefore remain valid. Special transitional rules should be also laid down by way of derogation from point (b) of Article 59(1) of Regulation (EC) No 1083/2006 as to when a managing authority can carry out the functions of the certifying authority for operational programmes, implemented under the previous legislative framework, for the purposes of the Commission assessment in accordance with Article 73(3) of the Regulation (EC) No 1083/2006 when applying Article 123(5) of this Regulation and concerning the approval procedure of major projects under point (a) of Article 102(1) of this Regulation.

Since the objective of this Regulation, namely to strengthen economic, social and territorial cohesion cannot be sufficiently achieved by the Member States by reason of the extent of the disparities between the levels of development of the various regions and the backwardness of the least favoured regions and the limit on the financial resources of the Member States and regions, but can rather be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 TEU. In accordance with the principle of proportionality, as set out in that Article, this Regulation does not go beyond what is necessary in order to achieve that objective.

In order to allow for the prompt application of the measures provided for in this Regulation, this Regulation should enter into force on the day following that of its publication in the Official Journal of the European Union,