Financial management and control 2014-2020 Interreg programmes Esch-sur-Alzette 15 September 2015

Financial management and control 2014-2020 1) Payments 2) Accounts 3) Management declaration

New provisions in the 2014-2020 period : Financial management and control Introduction of 12-month accounting year running from 1 July to 30 June (except for first acc year) Submission to the Commission of assurance package by 15 February 2016 till 2025 (may be exceptionally extended to 1 March) Commission proceeds with examination of the accounts and provide its conclusion as for the acceptance by 31 May (except if for reasons attributable to MS, Commission is unable to accept the accounts by this deadline) Commission calculates the balance of the accounts and reimburses/recovers amount due

Timing

Impact on payment modalities Payment of annual pre-financing by 1 July from 2016 till 2023, to be cleared when calculating the balance Retention of 10% on eligible expenditure from each interim payment Final interim payment claim between 1 and 31 July following the accounting year Payment applications are cumulative per accounting year and not over the entire period Automatic decommitment : n+3 for all; pre-financing and 10 % retention is taken into account for calculation of the target

Accounts- main principles The accounts mirrors the final interim payment application No new expenditure can be declared in the accounts

Main principles The preparation of the accounts is full responsibility of the certifying authority The responsibility of the Commission is to examine and accept the accounts ( when possible) Issues relating to legality and regularity of the underlying transactions shall not be taken into account for the purposes of acceptance of accounts

Main principles Programme authorities should ensure that only legal and regular expenditure is certified in the accounts submitted to the Commission. No irregular amounts can be certified in the accounts Amounts under ongoing assessment cannot be certified

Amounts to be entered in the accounts (Appendix 1 of Annex VII to CIR 2011/2014) (1) Total amount of eligible expenditure entered into the accounting systems of CA and which has been included in payment applications to Commission (Column A) and the corresponding public expenditure (Column B) To be excluded from the accounts: Amounts subject to ongoing assessment of its legality and regularity Irregular/ineligible expenditure resulting from audit work and/or from adjustments made by MA and/or CA

Amounts to be entered in the accounts (Appendix 1 of Annex VII to CIR 2011/2014) (2) Amount of corresponding payments made to beneficiaries under Art. 132(1) CPR (will not be used for the purpose of the calculation of the balance of the accounts) (Column C)

Amounts of programme contributions paid to Financial Instruments and Advances paid in the context of state aid (Appendices 6 and 7 of Annex VII to CIR 2011/2014) Adjustments of amounts compared to final interim payment application should be reflected in this Appendix Will be used by the Commission for the preparation of the annual accounts of the Commission

Reconciliation of expenditure (Appendix 8 of Annex VII to CIR 2011/2014) Compares expenditure declared in final interim payment application and expenditure certified in accounts Detailed explanations, justifications and comments in case of differences

Examination and acceptance of accounts (1) By 31 May the Commission applies procedures for examination and acceptance of accounts and shall inform the MS as to whether it is able to accept the accounts If the Commission is unable to accept the accounts: notification to MS specifying the reasons and the actions to be undertaken. After the completion period of these actions, the Commission informs the MS as to whether it is able to accept the accounts

Examination and acceptance of accounts (2) Where the Commission is at that moment still unable to accept the accounts, it determines amount chargeable to the Funds and informs the MS: If the MS agrees: Commission calculates the annual balance In absence of agreement: the Commission adopts a decision setting out amount chargeable to the Funds and calculates the annual balance on the basis of this decision

Calculation of the annual balance Calculation of annual balance by deducting from the amount chargeable to the Funds the EU support paid (as calculated in the final interim payment application) and the annual pre-financing paid Financial consequences: payment of any additional amount due or establishment of recovery order Recoveries are considered as assigned revenue, they will not constitute a financial correction and will not reduce support from the Funds to the OP

First submission of the annual accounts Programme adopted and designation < 31 July 2015 : Final interim + all elements of assurance package Programme adopted and designation > 31 July 2015 and < 15 February 2016 : No final interim -> '0' accounts automatically generated; other documents of assurance package need to be transmitted 3) Programme adopted and designation > 15 February 2016 No final interim, annual accounts, management declaration and annual summary; ACR and Audit opinion is required

Withdrawals and recoveries Legal basis Article 59 of Financial Regulation CPR 1303/2013 ETC Regulation 1299/2013 Implementing Regulation 1011/2014, model for accounts in Annex VII ( appendices 2 to 5) Delegated Act on irrecoverable amounts ( to be adopted soon)

Main principles Only amounts already certified in previous accounts can be claimed as irrecoverable based on the obligation of the MS to certify legal and regular expenditure The accounting systems to put in place by the MS should reflect the significant swift from multiannual payment flow to annual process Audit trail by accounting year is very important

Withdrawal vs Recovery Programme authorities have two choices for irregular amounts detected in relation to expenditure certified in previous accounts: withdrawal or recovery Withdrawal: release amount to be used immediately in other operation but Member State or third country where the beneficiary is located assumes the risk of no recovery Recovery: Deferring withdrawal until recovery has been effected from the beneficiary leaves less time for re-using the EU funding to other eligible operation(s), but may protect the Member State financially should it be unable to recover

Recoveries For the first time the General Regulation introduces a minimum threshold of EUR 250 to apply the obligation of recover amounts unduly paid. For ETC, the Member States and third countries participating in a given programme can decide that neither the lead beneficiary nor the MA is obliged to recover irregular amounts below EUR 250

Audit of accounts The Audit authority shall carry out the audit of accounts in respect of each accounting year The Audit authority takes into account results of existing audit work, in particular the results of system audits on the CA procedures and the audits of operations The Audit authority should carry out final verifications on the draft certified accounts in order to be able to provide an audit opinion on the accounts Commission will reach its conclusion on the acceptance of accounts on the basis of the audit opinion issued by AA, therefore the ACR should discloses the information of audit work carried out

Internal Deadlines No deadline set up in CPR for CA to provide draft accounts to AA But……………….. Such deadlines are recommended to be established to enable a soundly-based audit opinion Due to the specific nature of the cooperation programmes, these deadlines are very important for the ETC programmes

Management declaration (MD) Annual Summary (AS) Legal basis For both management declaration and annual summary Articles 125(4)(e) of CPR and Article 23 of the ETC Regulation Possibility of conferring responsibilities of MA to a EGTC ( Article 22 of ETC Regulation) Implementing Regulation 2015/207, model of MD in Annex VI. No model for AS

Management declaration- General To be presented for each OP To be based on the annual summary Documentation of the work carried out to prepare it Internal deadlines to be set between authorities (MA/CA/AA). More important for ETC due to the nature of the programmes with the specific role of controllers, group of auditors etc. Joint secretariat to assist the MA in this regard

Management declaration- Content MA confirms that: Information in the accounts is properly presented, complete and accurate Expenditure is used for its intended purpose and according to sound financial management MCS gives guarantees on legality and regularity of underlying transactions

Management declaration- Content It shall also provide confirmation that: Irregularities are treated / follow-up is ensured Expenditure is excluded when legality / regularity assessment is pending Data on indicators and milestones are reliable / progress of OP Effective and proportionate anti-fraud measures in place No undisclosed matter

Management declaration (MD)-Annual Summary (AS) Timing and Planning By 15 February (1 March exceptionally) from 2016 (if notification of designation has taken place by 15 February 2016) to 2025 Accounts (accompanied by the MD) and AS together with audit documents (ACR and AAO by the AA) MS to agree appropriate deadlines between authorities (MA, CA, AA) MA to assign clear responsibilities for preparing the AS (its own services, IBs, controllers) MD issued on the basis of the AS

Guidance from Commission Guidance notes have been prepared and discussed with Member States and will be published in the next months. When relevant, they refer to ETC particular circumstances 3 Guidance on accounts Preparation, examination and acceptance of accounts (EGESIF_15-0018) Withdrawals and recoveries (EGESIF_15-0017) Audit on accounts (EGESIF_15-0016) Management Declaration and Annual Summary (EGESIF_15-0008)

Thank you for your attention ! Questions?!