EN DG Regional Policy EUROPEAN COMMISSION Brussels, 11 October 2007 Management and control arrangements OPEN DAYS 2007 Financial Control : New Requirements Workshop 11E33 Andrea Mairate Head of Unit, Control and Audit II DG Regional Policy Andrea Mairate Head of Unit, Control and Audit II DG Regional Policy

EUROPEAN COMMISSION EN Management and control arrangements 2 Brussels, 11 October 2007 Approach Learn from experiences of (and ) Maintain architecture of system All essential elements in Council Regulation Commission Regulation to set clear and complete detailed rules

DG Regional Policy EUROPEAN COMMISSION EN Management and control arrangements 3 Brussels, 11 October 2007 Lessons learned Ex-ante assurance on compliance of set up of systems cannot be provided by Commission assessment The Budget Discharge process and Annual Declaration by DGs make essential an Annual Assurance from Member States The national audit effort for each programme should be under one defined body Disadvantages of "Big Bang" closure Control obligations must be clear and precise

DG Regional Policy EUROPEAN COMMISSION EN Management and control arrangements 4 Brussels, 11 October 2007 Audit opinion at closure Commission audits Annual opinion based on national audits Certification of expenditure + first level verification Compliance assessment Guarantees in programme negotiations How assurance will be built up Ex ante Ex post During implementation

DG Regional Policy EUROPEAN COMMISSION EN Management and control arrangements 5 Brussels, 11 October 2007 Legal framework Council Regulation –Art : Management and control systems –Art : Responsibilities of Member States and Commission, compliance assessment procedure, proportionality –Art : Financial correction procedures Commission Regulation –Art Management and control systems –Art Reporting of irregularities

DG Regional Policy EUROPEAN COMMISSION EN Management and control arrangements 6 Brussels, 11 October 2007 Division of responsibility (1/2) Commission supervisory role –Satisfies itself that set up is compliant –Verifying effective functioning –Using powers of interrupting and suspension of payments –Making financial corrections

DG Regional Policy EUROPEAN COMMISSION EN Management and control arrangements 7 Brussels, 11 October 2007 Division of responsibility (2/2) Member State responsible for: –Set up of a management and control system which complies with requirements of regulations –Ensuring that systems function effectively - i.e. certification reliable –Preventing, detecting, correcting irregularities

DG Regional Policy EUROPEAN COMMISSION EN Management and control arrangements 8 Brussels, 11 October 2007 For each programme: –Managing Authority (MA) –Certifying Authority (CA) –Audit Authority (AA) –Body to receive payments from Commission and disburse to beneficiaries (can be MA or CA) Authorities designated (1/2)

DG Regional Policy EUROPEAN COMMISSION EN Management and control arrangements 9 Brussels, 11 October 2007 Authorities designated (2/2) General provisions: –Same authorities can be designated for more than one OP –Member State can designate IB(s) to carry out some or all the tasks of the MA or CA –Some or all authorities may be part of the same body (e.g. Ministry), subject to sufficient segregation of functions

DG Regional Policy EUROPEAN COMMISSION EN Management and control arrangements 10 Brussels, 11 October 2007 Managing Authority (1/2) Responsibility for implementing the programme, in particular for: –Selection of operations –Desk and on-spot verifications of operations –Compliance with information and publicity requirements –Ensuring the audit trail (levels: MA/intermediate body and beneficiary) Art. 60 Council Regulation

DG Regional Policy EUROPEAN COMMISSION EN Management and control arrangements 11 Brussels, 11 October 2007 Managing Authority (2/2) Other responsibilities –To inform beneficiaries of all conditions for funding, including the time limit for execution –To satisfy itself (before grant approval) that beneficiary has capacity to fulfil conditions –Administrative verifications on ALL payment requests –On-spot verifications, possibly on a sample basis –Written standards and proper recording of checks Art. 13 Implementation Regulation

DG Regional Policy EUROPEAN COMMISSION EN Management and control arrangements 12 Brussels, 11 October 2007 Certifying authority (1/4) Responsibilities of CA practically unchanged compared to Function: to draw up and submit to Commission certified expenditure statements and payment requests Art. 61 of C.R. and 20 Implementation Regulation

DG Regional Policy EUROPEAN COMMISSION EN Management and control arrangements 13 Brussels, 11 October 2007 Certifying authority (2/4) Formal designation by MS CA and Managing Authority (MA) can be part of the same body (e.g. Ministry); but segregation of duties Certification of expenditure with regard to: –accuracy of data; must be based on reliable accounting system and verifiable supporting documents –compliance with EU and national rules information from MA about MAs verifications (active role of CA to obtain adequate data and to satisfy itself about its reliability)

DG Regional Policy EUROPEAN COMMISSION EN Management and control arrangements 14 Brussels, 11 October 2007 Certifying authority (3/4) How does CA satisfy itself that data are accurate and that all conditions for certification are fulfilled? –Examination of information received from MA on verifications carried out to expenditure –CAs own checks, including audit trail at level MA/intermediate body and possible sample checks of project files –Audit reports of AA for systems audits and project audits and Annual Control Report and opinion –Working document concerning good practice of the Paying Authority (period ) of January 2006 should also be applied for period

DG Regional Policy EUROPEAN COMMISSION EN Management and control arrangements 15 Brussels, 11 October 2007 Certifying authority (4/4) Maintaining computerized accounting records Keeping accounts of amounts recoverable and amounts recovered Art. 61 of C.R. Sending to Commission annual reports on amounts recoverable, recovered and withdrawn following cancellation Art. 20 Implementation Regulation

DG Regional Policy EUROPEAN COMMISSION EN Management and control arrangements 16 Brussels, 11 October 2007 Summary MA & PA No essential changes for the MA & CA compared to Details already recommended by Commission as good practice now included in Council and Commission Regulations. Commissions guidance notes concerning verifications by MA/intermediate bodies and certification function by PA should still be applied

DG Regional Policy EUROPEAN COMMISSION EN Management and control arrangements 17 Brussels, 11 October 2007 Eligibility & exceptions (1/3) General: –National rules subject to exceptions, specified in Fund regulations Exceptions –ERDF & CF (1080/2006, Art.7 & 1084/2006, Art. 3) Recoverable VAT, interest on debt, land costs over 10%, decommissioning nuclear power stations, housing (CF) –ESF (1081/2006, Art.3) Recoverable VAT, interest on debt, various physical assets

DG Regional Policy EUROPEAN COMMISSION EN Management and control arrangements 18 Brussels, 11 October 2007 Eligibility & exceptions (2/3) Housing (1828/2006, Art.47) Territorial cooperation –1080/2006, Art. 7 applicable –1828/2006, Art specific rules for: Financial charges, legal, audit cots, guarantees Cost of public authorities implementing operations In-kind contributions Overheads Depreciation

DG Regional Policy EUROPEAN COMMISSION EN Management and control arrangements 19 Brussels, 11 October 2007 Eligibility & exceptions (3/3) Specific rules on: –Revenue generating projects (1083/2006, Art.55) –In-kind contributions, depreciation, overheads (1083/2006, Art. 56.2) –Financial engineering and urban development funds (1083/2006, Art. 44 & 1828/2006, Art ) –Advances on state aid payments (1083/2006, Article 78.2) –Financial engineering expenditure at closure (1083/2006, Art. 78.6) –ESF : salaries and allowances paid by third parties, overheads, depreciation)

DG Regional Policy EUROPEAN COMMISSION EN Management and control arrangements 20 Brussels, 11 October 2007 Scope of national eligibility rules and communication to Commission Other comments –National = at the appropriate national level, i.e. not necessarily central level, can be regional or programme-specific –To be communicated with description of management and control system, at latest within 12 months of approval of programme –Commission will examine rules and may make observations