Structural Funds Financial management and Control, Romania 1.1 Introductions Structural Funds Financial management and Control, Romania SF Financial Management Regulatory Framework Mgr. Danka Kovaľová kovalova@ca-slovakia.sk June 2006

EU FM Regulatory Framework I Council Regulation (EC, Euratom) n°1605/2002 of 25 June 2002. New Financial Regulation – the current Proposal for a COUNCIL REGULATION amending Regulation (EC, Euratom) No 1605/2002 on the Financial Regulation applicable to the general budget of the European Communities 15-16 December 2005: the European Council reached a political agreement on the Financial Perspective 2007-2013.

EU FM Regulatory Framework II Draft European Parliament, Council, Commission Interinstitutional Agreement of […] between the European Parliament, the Council and the Commission on budgetary discipline and improvement of the budgetary procedures – the proposal for renewal of IIA of 1999 This Agreement is in two parts: Part I contains a definition and implementing provisions for the multiannual financial framework (which replaces the term ‘financial perspective’) 2007 to 2013 and applies for the duration of that financial framework, Part II relates to improvement of interinstitutional collaboration during the budgetary procedure. This Agreement enters into force on 1 January 2007.

2007-2013 EU FM Regulatory Framework Council Regulation on the ERDF, ESF and CF Commission regulation setting out rules for the implementation of Council Regulation laying down general provisions on ERDF, ESF and CF Regulation on ERDF Regulation on ESF Regulation on CF Regulation on European grouping of territorial cooperation (EGTC)

National Regulatory Framework National Strategic Reference Framework OPs (under development) FISCAL CODE OF ROMANIA (Law no. 571/2003) as published in Part I of the Official Gazette of Romania No. 927 of December 23, 2003 Law on Public Internal audit Strategic Development Plan for Public Financial Management Reform 2005-2007 Government Ordinance No. 119/1999 regarding the internal control and the preventive financial control, republished (Romania's Official Gazette No. 799/November 12, 2003) ORDER no. 946/2005, approving the Internal Control Code, comprising the management/internal control standards at the public entities and the development of the managerial control systems (Romania's Official Gazette No. 675/July 28,2005) Internal Control Code, comprising the management/internal control standards at the public entities Order no.139/2006 regarding the constitution of the monitoring, co-ordination and methodological guidance of the managerial control system Commission of the Ministry of Public Finance, with the subsequent modifications and completions To be prepared: Manuals on Management and Control Systems (obligatory) others

Principles of Sound FM Budget appropriations shall be used in accordance with the principle of sound financial management, namely in accordance with the principles of economy, efficiency and effectiveness. (Chapter 7 of the FR 1605/2002) The principle of economy requires that the resources used by the institution for the performance of its activities shall be made available in due time, in appropriate quantity and quality and at the best price. The principle of efficiency is concerned with the best relationship between resources employed and results achieved. The principle of effectiveness is concerned with attaining the specific objectives set and achieving the intended results. Achievement of those objectives shall be monitored by performance indicators for each activity Tools: ex ante and ex post evaluations applied to all programmes and activities which entail significant spending.

2007-2013 objectives to be supported Convergence (ERDF, ESF, CF), Regional Competitiveness and Employment (ERDF, ESF) European Territorial Cooperation (ERDF)

EU Financial Instruments Funds: SFs: ERDF, ESF CF EAFRD, EFF EIB and EIF

Key Features I Shared Management among the Commission and the Member States (implementation tasks delegated to Member States, see Financial Regulation art. 53) Programming period – 7 years SFs may not replace public expenditure by MSs (MSs maintain the agreed level of public expenditure in all the regions concerned during the programming period) Limitation of annual appropriations to a ceiling fixed with regard to the MS capacity absorption Option: 3% of the SF appropriations (2 objectives) to a national performance reserve for rewarding the performance of OPs

Key Features II OPs to be financed by either the ERDF or the ESF and shall cover only 1 of 3 objectives National co-financing: National public contribution to an OP Modulation of the participation of the Funds to the OPs – establishment of the maximum ceilings which cannot be exceeded by contribution from Funds on the basis of the type of Fund and objective Option for MSs: starting date for the eligibility of expenditure prior to 1 January 2007 (if the MS submits an OP before that date)

Key Features III Eligibility of Expenditure – to establish national rules respecting exceptions foreseen in the Regulations on the ERDF, on the ESF, on the CF – the principle of subsidiarity National adequate measures for the proper functioning of management and control system (obligatory) – certification of expenditure, and the prevention, detection and correction of irregularities and infringements of Community law - shared management principle A single MA for each OP: clarification of its responsibility as well as of the audit authority. Providing the qualitative certification of expenditure (establishing the functions of the certification authority)

Key Features IV Financial management and control: to improve level of assurance obtained from national audit bodies Payment on account at the start of Ops (SF 5% & 7%, CF 7.5% & 10.5%) Suspension of payments in case of serious deficiency in the management and control system (to interrupt payment by the AO or to make deduction from payments by the Commission) Automatic de-commitment rule Closure of OPs in respect of the operations completed

FM - national level Governed by the EC rules and national rules Financial planning, allocations, setting up commitments for operations, budgeting FM system of operations financed under the SFs and CF Systems of national accounts for financing operations Account for exchange rate differences, payment bank charges, penalties Financial flows (types of payments, certification of expenditures, request for payments, closure of the assistance) Irregularities and refund of sums wrongly paid The use of currencies and exchange rate differences Accounting, financial reporting, archiving Reporting connected with the payments, monitoring of spending and operations, irregularities Financial control (ex-ante, ongoing, ex-post) Internal Audit