A National Evaluation Strategy for Romania First Step – Review of the Legal Framework for Evaluation Niall McCann, Technical Assistance Project for Programming, Monitoring and Evaluation

Where does the idea of a National Evaluation Strategy come from? Action Area 6 of the Ministry of Public Finance’s 2005 Single Action Plan aimed at improving the management systems for the operation of the EU funds in Romania (pre-accession funds and structural instruments) is “Establishing the National Evaluation System.” One of the 5 measures to be achieved under this Action Area is “Elaboration of a National Evaluation Strategy and subsequent actions plans” (by September 2006)

Objectives of the National Evaluation Strategy To establish a common approach to evaluation of publicly-funded socio-economic development programmes in Romania To adapt EU evaluation standards to nationally-funded programmes To embed within all Romanian public bodies standard evaluation systems and procedures

Role of the Evaluation Working Group in the drafting of the National Evaluation Strategy? Oversee the drafting of the NES. This will be achieved by: Commenting on draft chapters of the NES document; Proposing revisions to the draft chapters; Presenting Strategy concepts and suggestions for inclusion in the draft NES document to the meetings of the EWG; Approving the draft of the Strategy document to be forwarded to wider stakeholders in Summer 2006; Incorporating comments received from the wider stakeholders; Participate in the launching of the NES document and Action Plan, including regional trips to promote the Strategy with senior local government officials in the Romanian regions

First step in the NES process? A legal review of the relevant legislation on evaluation in Romania. Conducted Jan 25 – Feb 17 by a Short-Term Legal Expert to the MACSF’s TA Project on Programming, Monitoring and Evaluation 5 tasks: 1. Analysis of relevant legal framework regulating management of EU funds in Romania. 2. Analysis of the relevant legal framework regulating evaluation of budget funds in Romania. 3. The role of the Romanian Parliament regarding evaluation. 4. A comparison between the Romanian legislation and the European legislation to identify potential gaps and recommendations to fill those gaps. 5. Recommendations of ways to strengthen the legal framework regarding evaluation.

1. Legal framework regulating management of EU funds The Ministry of Public Finance coordinates the non-reimbursable financial assistance provided to Romania by the EU and the member states. Some of its tasks in this regard include: programmes, coordinates, administrates, monitors and evaluates the use of the financial assistance provided to Romania by the European Union and the state members; coordinates the elaboration of the National Development Plan, which forms the basis of the funds allocated by the EU; coordinates the planning and implementation of the legal, institutional and procedural framework for the management of EU Structural Instruments; opens and administrates the necessary accounts for the financial transactions with the EU and communicates to the EU the records of those accounts. (according to Emergency Government Ordnance 49/2005)

1. Legal framework regulating management of EU funds (contd.) The Guarantor protecting the financial interests of the EU is the Minister delegated for controlling the implementation of the programmes with international funding and monitoring the application of the community acquis from the Prime-Minister’s Office, under whose authority function: The Government’s Control Authority; The Anti-Fraud Office; The Department for Programme Implementation and Structural Adjusting. (according to Emergency Government Ordnance 49/2005)

1. Legal framework regulating management of EU funds (contd.) Some of the main functions of the Government Control Authority are: exerting internal administrative control over the Government’s work apparatus, in Ministries, etc; verifying the appliance of the community acquis; making proposals for regulating and harmonising the legal framework regarding entities with control responsibilities, according to EU regulations.

1. Legal framework regulating management of EU funds (contd.) Some of the main functions of the Anti-Fraud Office (as contact office for the European Anti-Fraud Office) are: coordinating the effective and equivalent protection of the financial interests of the EU in Romania; Controlling the use of the funds that came through EU programmes, in order to identify irregularities; receives notifications from the European Anti-Fraud Office or any other sources or initiates own seizure regarding the possible irregularities affecting the financial interests of the European Union.

1. Legal framework regulating management of EU funds (contd.) The Minister of European Integration chairs the Transparency Committee for the Use of Community Funds (according to Government Decision 38/2004), which, among other tasks: analyses the eligibility criteria for the programmes and projects that are to be financed through community funds; makes proposals for financial allocations to specific programmes and components; evaluates the degree of achievement of the objectives of the programmes and projects. The Committee consists of representatives of the public authorities involved in the administration of community funds, academic and scientific society, civil society and media.

1. Legal framework regulating management of EU funds (contd.) The procedural system According to Law no. 500/2002 regarding public finance, and Government Emergency Ordinance 45/2003 referring to local public finance: External, non-reimbursable funds will be accumulated in a distinct account and will be spent…for the purpose that they were granted.

1. Legal framework regulating management of EU funds (contd.) Government Emergency Ordinance 63/1999 regulates the non-reimbursable funds management allocated to Romania by the European Union and the corresponding co-financing funds, as detailed herein. The Ministry of Public Finance is authorised to manage the financial contributions of the European Union. The government of Romania, through the Ministry of Public Finance, guarantees the integrity of the financial contribution of the European Union and ensures the proper use of it.

1. Legal framework regulating management of EU funds (contd.) The control and recovery of the community funds and of the corresponding co-financing funds, inadequately used, are made in accordance with the terms of Government Ordinance 79/2003, in cases where: irregularities and/or fraud have occurred; implementation agencies within PHARE, ISPA and SAPARD establish, through title of debt, undue amounts from community funds and/or the corresponding co-financing; In cases where parties do not return funds, the issue is transferred to the National Agency for Fiscal Administration, which applies a procedure for forced execution, according to Government Ordinance 92/2003.

1. Legal framework regulating management of EU funds (contd.) Emergency Government Ordnance 43/2004, approved by Law no. 357/2004, annex A, states, with regards to inspection and evaluation activity: The European Commission has the right to send its own agents or representatives, authorised accordingly, in order to fulfil any technical, financial or audit mission that they consider necessary. Romania will provide all information and documents required and will take all measures in order to facilitate the work of the people delegated to fulfil the evaluations or inspections.

1. Legal framework regulating management of EU funds (contd.) Romania: will keep adequate accounting records and documents in order to identify the activities, deliveries or services financed on the basis of the Financing Memorandum; will ensure that the Commission agents and representatives mentioned above have the right to inspect all the accounting documentation and records relevant to those that were financed on the basis of the Financing Memorandum and will assist the European Commission Court of Accounts in performing an accounting evaluation. The Commission will also be able to perform a subsequent evaluation and a final accounting evaluation of the programme. The subsequent evaluation will analyse the achievement of the programmes’ objectives/aims and the impact on the development and restructuring of the specific sector involved. The accounting evaluation will establish the balance of the funds not used and/or not spent which will be reimbursed to the Commission. The Commission can, if necessary, proceed to the official closure of the programme.

2. The legal framework regulating Romanian budget funds evaluation. According to Law no. 500/2002 regarding public finance, the Ministry of Public Finance: sets the necessary measures for the administration and monitoring of the use of public funds; provides the monitoring of the budget execution; sets the measures that are necessary for administrating and monitoring the use of public funds destined for cash co-financing, resulted from the external financial contribution granted to the Government of Romania.

2. The legal framework regulating Romanian budget funds evaluation There are, however, no regulations referring to the evaluation of public funds expenditure through the Law of Public Finance. Government Emergency Ordinance no. 45/2003 regarding public local finance also does not specifically refer to the evaluation of public funds. The Ordnance does, however, allude to evaluation when it says that programmes are “designed to carry out an objective or a defined set of objectives for which program indicators are established that should evaluate the results to be obtained, within the limits of the approved financing.”.

2. The legal framework regulating Romanian budget funds evaluation The Ordnance says that public managers are to “organise the programme evidence, including the corresponding indicators” without saying how this is to be achieved The “principle loan managers” also have the obligation to draw up annual performance reports, “in which they should present, for each programme, the objectives, forecasted and actual results, associated indicators and costs...”

2. The legal framework regulating Romanian budget funds evaluation According to the Government Decision 208/2005, the Ministry of Finance carries out, in addition to the functions related to the management of EU funds, the following functions: elaboration of the strategy for the implementation of the Government programme in the public finance domain; elaboration of the regulative and institutional framework necessary to achieve the strategic objectives within its scope; In the absence of a legislative definition of “assessment” activity, Law no. 672/2002 regulates the public internal audit of public entities with regards to the development and use of public funds and to the management of public patrimony. It makes reference to “assessment” as follows: “…internal public audit…supports the public entity in the fullfillment of its objectives through a systematic and methodic approach, that assesses and improves the…efficiency of the system based on risk management and on control and administration process management...”

2. The legal framework regulating Romanian budget funds evaluation Government Decision 775/2005 on the approval of the Regulation on the drafting, monitoring and assessing public policies at central level stresses the assessment of public policies only, as they are defined in the law, without reference to assessment of public programmes/projects. PPUs will be set up within Ministries and central specialised Bodies. The PPUs will not extend their assessment to public programmes. There is no reference to the ex-ante, interim and ex-post assessment cycle from the EU documentation in the body of the law. It is only stated that “The monitoring and assessment of public policies represent activities developed during and after the implementation of public policies…” Assessment and monitoring activities will be developed by the responsible structures within the respective institution, but can be subcontracted by other private, nongovernmental or university institutions. The government decision on PPUs applies only to Ministries and other specialised Bodies of central public administration. It does not apply to authorities and institutions at local level and it makes no reference to public programmes.

3. The role of the Romanian Parliament regarding evaluation According to the Romanian Constitution and to the provisions of Law no. 94/1992 on the organisation and functioning of the Romanian Court of Accounts, the Court of Accounts is the supreme institution for external subsequent financial control on the development, management and use of the state and public sector financial resources. The Court of Accounts is an independent body under the Romanian Parliament. Evaluation or Assessment does not fall under the Court of Accounts responsibilities. Nevertheless, in order to achieve Romanian obligations during the European integration process, through the law regulating the functioning of the Court of Accounts, an Audit Authority for EU funds granted Romania through ISPA and SAPARD programmes and for the funds that are to be granted during the post-adhesion period has been established under the Court of Accounts.. The Audit Authority is not a legal entity, and it operates independently of the Court of Accounts. The attributions of the Audit Authority are mainly: system audit, sample check and final audit; check of eligible expenses declared, based on representative sample; performance of adequate checks in view of having statements issued when measures and programmes are finalised.

The regulation of the Senate and the Chamber of Deputies does not clearly specify the Parliament’s right to audit or assess, but does stipulate the possibility to initiate parliamentary investigations by a permanent commission or by a parliamentary investigation commission set up for this purpose, under the following terms: when necessary to clarify the causes and circumstances that led to events and actions with negative impact, and to draft conclusions, assign liability and set up measures; The Chamber of Deputies can decide on setting up an investigation commission upon the request of at least 50 deputies members of two parliamentary groups, while the Senate upon the request of one third of the Senators.

4. Romanian and EU evaluation legislation – gap filling? In Romanian legislation “assessment” of the spending of public funds is stipulated under certain specific situations, such as co-financing the financial contributions of EU, other international bodies or other states. It is necessary that this assessment activity be regulated according to European law, in order to be efficiently implemented with all authorities and public institutions, as a management tool of the public administration. The assessment must be correlated with the multi-annual budget scheduling, with the increase of budget flexibility, as well as with the increase in the institutional capacity of central and local public administration to develop programmes/projects. Extending the budgeting process based on programmes/projects will be a decisive element to make the evaluation of public funds spending a general activity.

5. Recommendations The experience acquired from evaluating EU funds should be extended to the assessment activity of all public fund spending. The legal framework for the assessment of public fund spending, both European and from the state budget, should be based on fundamental public policies, at law level and detailed at the level of methodology norms approved by Government Decisions. It is necessary that a very precise limit be set at legislative level between the monitoring, audit, control, check and evaluation activities for the public fund spending, aiming to get aligned with the corresponding EU regulations.