Q. Should all detected ineligible expenses be considered as an irregularity? Which of the following approaches concerning when ineligible expenditure could be classified as irregularity is correct?

• a) after they are included in the statement of expenditure that is submitted to the European Commission;
• b) after they are accepted by the Managing Authority and the related payment claim has reimbursed?
• c) all ineligible expenditure are irregularities irrespectively at which stage they are detected and corrected.

A. According to the ENI CBC IR, irregularity is “any infringement of a financing agreement, a contract or of applicable law resulting from an act or omission by an economic operator involved in the implementation of the programme, which has, or would have, the effect of prejudicing the budget of the Union by charging an unjustified item of expenditure to the budget of the Union”.  Therefore, ineligible expenses will constitute an irregularity only if this infringement has or would have effect of prejudicing the EU budget.

Irregularities are possible even before the costs are included in the statement of expenditure that is submitted to the European Commission, i.e., if detected by any programme body when costs are already approved by the Managing Authority, the related payment claim has been reimbursed, even if the expenses have not yet been declared to the European Commission. According to Article 71 of the ENI CBC IR, at that stage the MA should be responsible for taking the appropriate measures in order to prevent any possible irregularity.

On the contrary, if the ineligible expenses are detected during the expenditure verification or the administrative verification during the reporting process and before they are accepted by the Managing Authority, such ineligible expenses cannot be classified as irregularities, as at that stage there is no possibility of the effect of prejudicing the budget of the Union.

In conclusion, the effect of prejudicing the EU budget is only possible when the expenses in the payment claim are received and accepted by the programme bodies and the claimed amount has been reimbursed to the lead beneficiary, that is, OPTION b) in the question.