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1. The Commission shall take appropriate measures ensuring that, when actions financed under this Regulation and the Specific Regulations are implemented, the financial interests of the Union are protected by the application of preventive measures against fraud, corruption and any other illegal activities, by effective checks, by the recovery of the amounts wrongly paid if irregularities are detected, and, where appropriate, by effective, proportionate and dissuasive administrative and financial penalties.

2. Member States shall prevent, detect and correct irregularities and shall recover amounts unduly paid together with any interest on late payments. They shall notify those to the Commission and shall keep it informed of any significant progress in the related administrative and legal proceedings.

3. When amounts unduly paid to a beneficiary, as a result of fault or negligence on the part of a Member State cannot be recovered, that Member State shall be responsible for reimbursing the relevant amounts to the Union budget.

4. Member States shall offer effective prevention against fraud, especially as regards areas with a higher level of risk. Such prevention shall act as a deterrent, having regard to the benefits as well as the proportionality of the measures.

5. The Commission shall be empowered to adopt delegated acts in accordance with Article 58 concerning the obligations of Member States specified in paragraphs 2 and 3 of this Article.

6. The Commission shall set out, by way of implementing acts, the frequency of the reporting of irregularities and the reporting format to be used. Those implementing acts shall be adopted in accordance with the advisory procedure referred to in Article 59(2).

7. The Commission or its representatives and the Court of Auditors shall have the power of audit, on the basis of documents and on the spot, over all grant beneficiaries, contractors and subcontractors who have received Union funds in accordance with this Regulation and the Specific Regulations.

8. OLAF may carry out investigations, including on-the-spot checks and inspections, in accordance with the provisions and procedures laid down in Regulation (EU, Euratom) No 883/2013 of the European Parliament and of the Council () and Council Regulation (Euratom, EC) No 2185/96 (), with a view to establishing whether there has been fraud, corruption or any other illegal activity affecting the financial interests of the Union in connection with a grant agreement, grant decision or a contract funded in accordance with this Regulation and the Specific Regulations.

9. Without prejudice to paragraphs 1, 7 and 8, cooperation agreements with third countries and international organisations, contracts, grant agreements and grant decisions resulting from the implementation of this Regulation and the Specific Regulations shall contain provisions expressly empowering the Commission, the Court of Auditors and OLAF to conduct such audits and investigations, in accordance with their respective competences.