1.The Commission shall decide on the expenditure to be excluded from Community cofinancing where it finds that expenditure has not been effected in compliance with the rules referred to in Article 8(1) hereinafter referred to as the ‘conformity clearance decision’.
2.The conformity clearance procedures shall be executed in accordance with the mechanisms and procedures in force for the application of Article 7(4) of Regulation (EC) No 1258/1999 and Article 8 of Regulation (EC) No 1663/95.
3.A financial correction may include application of flat rate corrections in cases where controls have not correctly been established or executed by the Sapard agency and refusal of compensation of the foreseen financial correction with expenditure for other projects.
4.The amount to be recovered in accordance with the conformity clearance decision under paragraph 1, shall be communicated to the national authorising officer who ensures that the amount is credited to the Commission in euro within two months of notification of the decision. The amount in the decision shall not be reallocated to the Sapard programme. The Commission may however, on a case-by-case basis, decide that any amount to be credited to it shall be offset against payments due to be made by the Commission to the applicant country under any Community instrument.