“Serious deficiency in the effective functioning of a management and control system” means, for the purposes of implementation of the ESIF funds under the CPR Regulation, a deficiency for which substantial improvements in the system are required, which exposes the Funds and the EMFF to a significant risk of irregularities, and the existence of which is incompatible with an unqualified audit opinion on the functioning of the management and control system.
Source: Art. 2 (39) of CPR Regulation 1303/2013
A shell company is a legal entity that exists only on paper and has no economic activity in the country of registration; no office and no employees but may have a bank account or may hold passive investments or be the registered owner of assets.
There are different types of shell companies, such as anonymous shell companies, letterbox shell companies, special purpose entities (SPE’s), but the common feature between the is the absence of real economic activity in the country of registration.
Shell companies may be legal but often their use is related to fraud with EU funds and circumvention of tax law.
See also: Ar. 30 (1) of the Anti-Money Laundering Directive 2015/849
“Sound financial management” means implementation of the budget in accordance with the principles of economy, efficiency and effectiveness. The budget shall be implemented in compliance with the effective and efficient internal control appropriate to each method of implementation, and in accordance with the relevant sector-specific rules
Source: Art. 2 (59) of Regulation 2018/1046
“Suspected fraud” means an irregularity that gives rise to the initiation of administrative or judicial proceedings at national level in order to establish the presence of intentional behaviour, in particular fraud, as referred to in Article 1(1)(a) of the Convention drawn up on the basis of Article K.3 of the Treaty on European Union, on the protection of the European Communities' financial interests (now substituted by the PIF Directive). Definitions of suspected fraud may be found in the different reporting regulations, according to the sector concerned.
Source: Art. 2 (a) of Regulation 2015/1970
Source: Art. 2 (a) of Regulation 2015/1971
Source: Art. 2 (a) of Regulation 2015/1972
Source: Art. 2 (a) of Regulation 2015/1973
“Suspicion of irregularity” or “Irregularity signal” is to be understood as “any information received from any source about the existence of an irregularity before the assessment of this information” (e.g. an allegation of irregularity).
Source: Annex II – The Concept of an Irregularity signal Handbook on “Reporting of irregularities in shared management” 2017 by OLAF
“Systemic irregularity” means any irregularity, which may be of a recurring nature, with a high probability of occurrence in similar types of operations, which results from a serious deficiency in the effective functioning of a management and control system, including a failure to establish appropriate procedures in accordance with the general rules and fund-specific rules.
Source: Art. 2 (38) of CPR Regulation 1303/2013