Financial Implementation of the Assistance from the Structural Funds and the Cohesion Fund of the EU Sylvia Indjova Head of Certifying Authority Director of National Fund Directorate Ministry of Finance Operational Programme “Technical Assistance” European Regional Development Fund NSRF MONITORING COMMITTEE THIRD MEETING 28 NOVEMBER 2008

CONTENT  Role of the National Fund in the management of Structural and Cohesion Funds of the EU (SCF):  Role and responsibilities  Administrative capacity  Management and control system of the NF  Certification of expenditure and funds received from the EC  Cashflow and payments  Financial Implementation – general information  Financial Implementation by OPs  Irregularities  Forecasts and Reporting to the EC

ROLE OF THE NFD IN THE MANAGEMENT OF STRUCTURAL AND COHESION FUNDS  Single Certifying Authority (CA) for all Operational programmes under the Structural and Cohesion Funds  Certifying Authority for:  Schengen Facility  European Economic Area Financial Mechanism  IPA Cross-Border Programs on EU external borders (Turkey, Serbia, FYROM)  Intermediate body of the Certifying Authority for the OP Fisheries Sector Development;  Body responsible for receiving funds under SCF from the EC and transferring them to the MAs/IBs

KEY RESPONSIBILITIES  Certification of expenditure to the European Commission  Requesting and receiving funds from EU and the state budget  Transferring the funds for project implementation

ADMINISTRATIVE CAPACITY  The Certifying Authority has a clear structure, regulated with an approved functional characteristic, based on division of responsibilities  CA has one of the lowest rates of staff turnover in the sector while leading a determined policy of keeping the experience and expertise gained during the pre-accessional period  The number of personnel of the directorate has been increased to 75 persons, with a Council of Ministers’ Decree № 152 dated Some of the recruitment competitions have concluded successfully, while others are still running  Staff recruitment is based on detailed staff-needs analysis  A high level of staff competence is being kept as the staff training is based on training needs analysis  The CA is a Beneficiary on projects under OP “Technical Assistance” in order to support the implementation of its functions, provision of consultations, documents preparation, staff training, etc.

ESTABLISHED FINANCIAL MANAGEMENT AND CONTROL SYSTEM OF THE NATIONAL FUND  The procedures applied are based on risk management and COSO principles  Use of a clear, detailed procedures manual incl. a procedure for its modification  Use of detailed checklists with several levels of control, four-eyes principle  Applying a double signature system of the bank accounts  Single SAP - based accounting system has been used for a long time as a basis for certification of expenditure to the Commission  The IT systems are secure with a well regulated access

CERTIFICATION OF EXPENDITURE  Until now the Certifying Authority has not certified any expenditure to the EC, because a prerequisite for certification is the presence of a positive audit opinion on the compliance of the systems with the requirements of art of Regulation 1083/2006, which must be accepted by the European Commission.

AND FUNDS RECEIVED FROM THE EC  Until now only pre-financing payments have been received from the EC amounting to euro under all Operational Programmes financed under EU Structural Funds (ERDF and ESF) and Cohesion Fund

PRE-FINANCING PAYMENTS RECEIVED FROM THE EC Fund I Advance (2007) II Advance (2008) Funds received by OP (euro) Funds received (euro) % % European regional Development Fund OP Competitiveness of the Bulgarian Economy % % OP Regional development % % OP Technical Assistance % % OP Transport % % OP Environment % % European Social Fund OP Human resources Development % % OP Administrative capacity % % Cohesion fund OP Environment ,5% % OP Transport ,5% % Total received

ORGANISATION OF PAYMENTS  The funds are kept at the Bulgarian National Bank (BNB) and the payment process is effected through the single account system of BNB.  The System for Electronic Budgetary Payments (SEBRA) is used for monitoring the cashflow and managing the limits for payment.  The actual payments are effected through the automated system for electronic banking of BNB.

PAYMENT PROCESS SCF Flow of funds Account Ten digit code in SEBRA + account MA OP SCF EURO NF EC SCF BGN NF SCF BGN transit NF SCF co-fin BGN transit NF SCF BGN NF (limits) 100 % Account ЕС % Co-fin % Beneficiary Limit without approval of payments Limit without approval of payments Co- financing BGN NF Limit with approval of payments Account MA OP Account Beneficiary Limit without approval of payments MA OP Limit with approval of payments Beneficiary

ORGANISATION OF THE PAYMENT PROCESS Main principles:  Sufficiency and effectiveness of controls (limits for payment, double signature)  Minimizing the number of transactions  Optimizing the reporting between the parties involved in compliance with the current legal framework

GENERAL FINANCIAL IMPLEMENTATION OP / Fund Budget - EC Budget – nat. cofin. Received from EC Paid as per 14 Nov 2008* ЕС Nat. cofin. Total mil. euro OP “Transport” / ERDF and CF1 624,5379,0100,10,60,10,7 OP “Environment” / ERDF and CF1 466,4334,388,7000 OP “Regional Development” / ERDF1 361,1240,268,10,80,10,9 OP “Competitiveness” / ERDF987,9174,349,4000 OP “Technical Assistance” / ERDF48,38,52,40,60,10,7 OP “Human resources” / ESF1 031,8182,151,63,20,63,8 OP “Administrative capacity” / ESF153,727,17,78,71,510,3 TOTAL6 673,61 345,6367,913,92,416,3 *With EC and national budget sources through NF

OP “TRANSPORT”  Budget – mil. euro, of which  Community assistance – mil. euro (CF and ERDF)  National co-financing – 379 mil. euro  Approved 2 Requests for funds from MA to NF for  euro as advance payments  euro as final payments  Total – euro  Paid by MA:  euro (ERDF)  euro national co-financing  Total – euro

OP “ENVIRONMENT”  Budget – mil. euro, of which  Community assistance – mil. euro (CF and ERDF)  National co-financing – mil. euro  Approved 1 Request for funds from MA to NF for  euro as advance payments  евро as final payments  Total – euro  As per no payments have been effected by the MA under the programme

OP “REGIONAL DEVELOPMENT”  Budget – mil. euro, of which  Community assistance – mil. euro (ERDF)  National co-financing – mil. euro  Approved 2 Requests for funds from MA to NF for euro as advance payments  Paid by MA :  euro (ERDF)  euro national co-financing  Total – euro

OP “COMPETETIVENESS”  Budget – mil. euro, of which  Community assistance – mil. euro (ERDF)  National co-financing – mil. Euro  As per no requests for funds have been received from the MA under the programme in the NF  As per no payments have been effected under the programme by MA

OP “TECHNICAL ASSISTANCE”  Budget – 56.8 mil. euro, of which  Community assistance – 48.3 mil. euro (ERDF)  National co-financing – 8.5 mil. euro  Approved 3 Requests for funds from MA to NF for  euro as advance payments  euro as interim payments  euro as final payments  Total – euro  Paid by MA:  euro (ERDF)  euro national co-financing  Total – euro

OP “HUMAN RESOURCES DEVELOPMENT”  Budget – mil. euro, of which  Community assistance – mil. euro (ESF)  National co-financing – mil. euro  Approved 4 Requests for funds from MA to NF for  euro as advance payments  euro as interim payments  Total – euro  Paid by MA:  euro (ESF)  euro national co-financing  Total – euro

OP “ADMINISTRATIVE CAPACITY”  Budget – mil. euro, of which  Community assistance – mil. euro (ESF)  National co-financing – 27.1 mil. euro  Approved 9 Requests for funds from MA to NF for  euro as advance payments  евро as interim payments  Total – euro  Paid by MA:  euro (ESF)  euro national co-financing  Total – euro

IRREGULARITIES  The Certifying Authority reports regularly to OLAF, AFCOS and the EC on the cases of irregularities which have been subject to administrative or judiciary follow-up, or lack of irregularities, as per the requirements of Section 4 of regulation 1828/2006.  Based on the information received from the MAs for the last quarter of 2007 and for the first two quarters of 2008, the Certifying Authority has informed OLAF, AFCOS and the EC that no irregularities have been detected for the said period for all OPs. The information for the third quarter of 2008 was received in October – November and is being processed as per the relevant procedures and deadlines.

REPORTING FORECASTS AND REPORTING TO THE EC  In compliance with art. 76, p.3 of regulation 1083/2006, the Certifying Authority has prepared and transmitted to the Central co- ordination unit of the SCF (MEUF Directorate, MF) for transmission to the EC a forecast for the expected payment applications for the current and following financial year for all OPs.  In compliance with art. 20 of Regulation 1828/2006, the Certifying Authority has sent to the EC Annual statements on withdrawn and recovered amounts and pending recoveries for all OPs.

THANK YOU FOR YOUR ATTENTION! FINANCIAL IMPLEMENTATION OF THE ASSISTANCE FROM THE STRUCTURAL FUNDS AND THE COHESION FUND OF THE EU