1 Bölgesel Rekabet Edebilirlik Operasyonel Programı’nın Uygulanması için Kurumsal Kapasitenin Oluşturulmasına Yönelik Teknik Yardım Technical Assistance on Institutional Building for the Implementation of RCOP in Turkey This project is co-financed by the European Union and the Republic of Turkey

2 Contents This project is co-financed by the European Union and the Republic of Turkey A.Functions of the Finance Division B.Budget Allocations in IPA Structure C.Flow of Funds C.1. Request of Funds from the Commission by the NF C.2. Request of Funds from the line Ministries by the NF- National co-financing C.3. Request of funds from NF by the Contracting Authority D. Plenary Discussions

3 This project is co-financed by the European Union and the Republic of Turkey A. Responsibilities of the Finance Division Sound Financial Management

4 This project is co-financed by the European Union and the Republic of Turkey A. Responsibilities of the Finance Division Clear segregation of duties – Two functions: Finance Function Accounting Function

5 This project is co-financed by the European Union and the Republic of Turkey 1) Request for Funds from the National Fund 2) Payment Authorization and Execution 3) Financial Reporting 4) Accounting

6 This project is co-financed by the European Union and the Republic of Turkey A. Finance Division Finance Function Staff Chief of Finance Division IPA Expert- Payment 1 IPA Expert- Payment 2 Responsibilities Preparation of Request for Funds Execution of payments for service, framework, supply and works contracts Provision of assistance to VAT exemption and other tax related issues Financial Reportin g

7 This project is co-financed by the European Union and the Republic of Turkey A.Finance Division Accounting Function Staff Chief of Finance Division IPA Expert- Senior Accountant IPA Expert- Accounting Responsibilities Organising book-keeping activities Presto

8 This project is co-financed by the European Union and the Republic of Turkey 1. Request of Funds from NF Request of Funds from NF Verification of availability of funds and checking if the funds are available under the relevant sub-account to execute the payment Checking if the amount requested in the Request of Funds are adequate for the reimbursements, in order to avoid a surplus balance of the funds and late payments.

9 This project is co-financed by the European Union and the Republic of Turkey Receiving requests for payment from contractors, checking legitimacy of request Checking and verifying the payment dossier in accordance with the contract dossier and standard EU procedures in force at the time Double-checking of the Payment Dossier; Checking and verifying the “Good for Payment” amount proposed by the IPA Expert- Payment 1 Checking the Transfer and Payment Order Form prepared by the IPA Expert- Payment 1 and make sure the sub-accounts, payment accounts, bank details of the Contractor and the payment amounts are correct

10 This project is co-financed by the European Union and the Republic of Turkey 3.Reporting This function describes the activity of financial reporting performed through OS Accounting program, OS database - MIS and reports prepared manually based on supporting information from these systems. Reports submitted by the OS are the basis for the NF further reporting to the EC. All reports are provided in the standard format agreed by the NF Monthly Financial Report, providing to the National Fund, for distribution to the NAC and EC Representation in Ankara, monthly reports covering the status of projects being implemented and the financial status of each programme

11 This project is co-financed by the European Union and the Republic of Turkey Establishing and maintaining the accounting system Registration of the contracts with all necessary details; such as Contract Number, Contractor, Contract Amount, Estimated Payment Amounts, Bank Details of the Contractor, bank guarantees, payment requests; Organises the book-keeping activity; Ensures appropriate book-keeping and registration for each programme, objective, component, contract; Making records of payments under signed contracts Reconciliation

12 This project is co-financed by the European Union and the Republic of Turkey B. Instrument for Pre-Accession Assistance (IPA) The Instrument for Pre-Accession Assistance (IPA) offers assistance to countries engaged in the accession process to the European Union (EU) for the period The aim of the IPA is therefore to enhance the efficiency and coherence of aid by means of a single framework in order to strengthen institutional capacity, cross-border cooperation, economic and social development and rural development

13 This project is co-financed by the European Union and the Republic of Turkey Budget Allocation (IPA) Instrument for Pre- Accession Assistance Potential candidate status Albania, Bosnia& Herzegovina (Arnavutluk, Bosna Hersek) Iceand (İzlanda) Serbia and Montenegro including Kosovo according to UNSCR 1244 (Sırbistan, Karadağ ve Kosova) Candidate Status Croatia (Hırvatistan) the former Yugoslav Republic of Macedonia (Makedonya) Turkey (Türkiye) Total Budget: 11,468 billion euros

5 This project is co-financed by the European Union and the Republic of Turkey Allocation of IPA funds per component for Turkey Source: Instrument for pre- accession assistance (IPA) revised multi- annual indicative financial framework for Component : Support for transition and institution building (Kurumsal Kapasite Geliştirme) : Cross-border cooperation(Bölgesel ve Sınır Ötesi İşbirliği) : Regional development (Bölgesel Kalkınma) : Human resource development (İnsan Kaynaklarının Gelişimi) : Rural development (Kırsal Kalkınma) Total in million EUROS

15 This project is co-financed by the European Union and the Republic of Turkey Total Budget allocation for Turkey under all IPA Components : 4,874 billion euros Total Budget allocation for Component 3, Regional Development: 1,800 billion euros

16 This project is co-financed by the European Union and the Republic of Turkey

17 This project is co-financed by the European Union and the Republic of Turkey C. Flow of Funds(Logical Framework) Please see Annex 1- Flow of Funds

18 This project is co-financed by the European Union and the Republic of Turkey C. Flow of Funds EU Contribution: 1)Payments from the Commission to the NF National Co- Financing: 2) Payments from the Line Ministries to the NF For Both: 3) Payments from the NF to Contracting Authority

19 TR Line Ministries NF EU Sub-Accounts TR Sub-Accounts Programme/Project Sub Accounts Contracting Authority Payment Accounts/Contractor Rof from NF to EC Rof from NF to TR Rof from OS to NF EC Brussels FLOW OF FUNDS

20 This project is co-financed by the European Union and the Republic of Turkey Request of Funds from the Commission (Brussels)by the NF (Turkey ) Payments, transfer of funds from the Commission(Brussels) to the NF(Turkey)

21 This project is co-financed by the European Union and the Republic of Turkey National Authorising Officer (NAO) and National Fund (NF) National Authorising Officer (NAO): is the head of the National Fund (NF) has the full responsibility for the financial management of EU funds responsible from the legality and regularity of transactions responsible from the effective functioning of management and control systems under IPA regulation

22 This project is co-financed by the European Union and the Republic of Turkey requesting funds from the Commission; organising the bank accounts; authorising the transfer of funds received from the Commission to the Contracting Authority/Operating Structures the financial reporting to the Commission (Article 26 of the IPA regulation) Responsibility of NF& NAO

23 This project is co-financed by the European Union and the Republic of Turkey Request of Funds from the Commission by the NF In relation to each IPA component&programme, each year by the 28 February, each Beneficiary country shall send to the commission a forecast of its likely payment applications for the financial year concerned and for the subdequent financial year. (Article 40 of IPA Regulation) Responsibility of NAO

24 This project is co-financed by the European Union and the Republic of Turkey signature of the Financing Agreement, the Contracting Authority in close cooperation with the OS shall, on the basis of: The Procurement Plan and Commitment and Disbursement forecasts provided to the NAO / NF with their forecasts for payment to Contractors.

25 This project is co-financed by the European Union and the Republic of Turkey Payments from the Commission to the NF Payments from the Commission to NF-Turkey shall take the form of: pre-financing interim payments and payment of the balance

26 This project is co-financed by the European Union and the Republic of Turkey Pre-financing (= advance)Interim payments / Ceiling = advance + interim payments 30% of the Community contribution for the recent 3 years (Art. 160 (3)) For multi-annual programmes, the pre- financing may be split between several financial years. Advance + Interim payment = Maximum 90% of the EC contribution (IPA IR Art.160) When ceiling is reached: NAO shall continue to send to the EC statement of expenditures Pre-financing shall be reimbursed to the EC if no payment application for the programme concerned is sent within 15 months of the date on which the EC pays the first pre-financing amount. If it appears that the rules applicable have not been complied with or that Community funds have been improperly used, the Commission may reduce interim payments or temporarily suspend them

27 This project is co-financed by the European Union and the Republic of Turkey RoF for interim payments and payment of the final balance shall be based on the certified statements of expenditure and payment applications, drawn up and submitted to the Commission by the NAO FINAL INTERIM

28 This project is co-financed by the European Union and the Republic of Turkey Requirements of Commission for Interim Payments The minimum requirements for Commission approval of the payment application for an interim payment are (Art 43): NAO has sent to the Commission a payment application and a statement of expenditure relating to the payment in question; the statement of expenditure shall be certified by the NAO the OS has sent to the Commission the sectoral annual implementation reports including the most recent one the audit authority has sent to the Commission the most recent annual audit activity report and opinion on the conformity of the management and control systems in place with the requirements of IPA Regulation and/or those of any agreement between the Commission and the beneficiary country the accreditations delivered by the CAO and the NAO are in force, and the conferral of management by the Commission remains valid

29 This project is co-financed by the European Union and the Republic of Turkey Requirements of Commission for Final Payments The minimum requirements for Commission approval of the payment application for the payment of final balance are (Art 45): NAO has sent to the Commission a final payment application and a final statement of expenditure; the final statement of expenditure shall be certified by NAO OS has sent to the Commission the sectoral final reports for the programme concerned the audit authority has sent to the Commission an opinion on any final statement of expenditure, supported by a final activity report the accreditations delivered by the CAO and the NAO are in force and the conferral of management by the Commission

30 This project is co-financed by the European Union and the Republic of Turkey Following the Payments!!! After an application for final payment has been received by the Commission, a programme is considered closed as soon as the payment of the final balance due by the Commission The closure of a programme does not prejudice the Commission’s right to undertake a financial correction at a Later stage. The closure of a programme does not affect the obligations of the beneficiary country to continue to retain related documents(for at least 3 years after the closure of the programme)

31 This project is co-financed by the European Union and the Republic of Turkey Opening the bank accounts The NAO shall open one euro main account for each of the IPA programmes concerned, or, as appropriate, IPA components in the Central Bank of Turkey.These accounts, denominated in EURO, are intended for receipt of EU funds Payments from the Commission to NF shall be made to the EURO account, in accordance with articles laid down in 41 and 44 of IPA regulation This bank account may have sub-accounts (as many as required in the applicable Financing Agreement from which the Contracting Authority shall be entitled to execute payments

32 This project is co-financed by the European Union and the Republic of Turkey Prerequisite for Requesting funds from the Commission (Accreditation) Beneficiary Country can receive the funds after the following have taken place: 1) Accreditation of NAO, NF and OS 2) Decision on the conferral of management powers has been issued by the Commission

33 This project is co-financed by the European Union and the Republic of Turkey Competent Authorising Officer (CAO) has accredited the National Authorising Officer (NAO) both as a head of National Fund and with regard to his capacity to fulfill the responsibilities laid down in Article 25(2)(b) of IPA Regulation. The accreditation of NAO shall cover the National Fund (NF) NAO has accredited the operating structures (OS) as referred to in Article 28 of IPA Regulation

34 This project is co-financed by the European Union and the Republic of Turkey Accreditation Criteria Annex to the IPA Implementing Regulation 718 Control Environment Planning and Risk Management Control Activities Monitoring Activities (supervision of interventions) Communication (ensuring all actors receive information necessary to fulfill their role)

35 This project is co-financed by the European Union and the Republic of Turkey Remember the COSO Model? Control Activities mainly related with the financial management of IPA funds

36 This project is co-financed by the European Union and the Republic of Turkey Request of Funds from the Line Ministries by the NF (Turkey) Payments, transfer of funds from the Line Ministres to the NF(Turkey)

37 This project is co-financed by the European Union and the Republic of Turkey The OS / Contracting Authority is responsible for: The request for funds from the National Fund Ensuring the national co-financing The payment to Contractor Responsibility of OS/Contracting Authority

38 This project is co-financed by the European Union and the Republic of Turkey As a general rule and unless otherwise agreed with the EC: Investment projects require national co-financing equivalent to at least 15% of total eligible expenditure under the relevant project Technical assistance projects require national co-financing equivalent to at least 10% of total eligible expenditure under the relevant project

39 This project is co-financed by the European Union and the Republic of Turkey National co-financing (1) Investment Plan from each Ministry goes to SPO Budget line – the Ministry is negotiating at expert level with the Ministry of Finance A separate budget line is ensured under the budget of the ministry – project by project co-financing

40 This project is co-financed by the European Union and the Republic of Turkey National Co-Financing (2) NAO receives confirmation from the Ministry of Finance that all necessary co-financing has been included in the Budget. Presentation of the Central Government Budget Bill - No less than 75 days before commencement of the fiscal year Council of Ministers submits the Bill to the Turkish Grand National Assembly

41 This project is co-financed by the European Union and the Republic of Turkey National Co-financing (3) The National Assembly negotiates the Central Government Budget Bill article by article, and the revenue and expenditure schedules by each public administration. Voting is carried out on the basis of sections. Definition of section is given in the Central Government Budget Law. Central Government Budget Law is published in Official Gazette

42 This project is co-financed by the European Union and the Republic of Turkey Ministry of Finance - Issues a Circular to all spending agencies stating main principals of commitments, gives visa for detailed expenditure programs which cover maximum percentage of appropriations to be released for the next 12 months. Line Ministries - Receive Ministry of Finance Circular confirming commitments to respect in spending programs The NAO receives final confirmation of the inclusion in the Budget of all necessary co-financing

43 This project is co-financed by the European Union and the Republic of Turkey the line ministries must prepare, on a quarterly basis, detailed spending programs The detailed spending programs must be approved by the Ministry of Finance for the cash management purposes.

44 This project is co-financed by the European Union and the Republic of Turkey Bank Accounts for National co- financing The bank accounts are opened for the National Co- Financing also by the NAO The sub-accounts shall be opened in the name of the National Fund – Contracting Authority The Contracting Authority shall be entitled to execute payments from the sub-accounts only. Payments shall be made within the limits approved by the NF for the relevant project on the respective sub-account The NF shall determine the limits of Contracting Authority according to the request submitted by the Contracting Authority and approved by the NAO

45 This project is co-financed by the European Union and the Republic of Turkey Request of Funds from the NF (Turkey) by the Contracting Authority/OS Payments, transfer of funds from the NF to the Contracting Authority/OS

46 This project is co-financed by the European Union and the Republic of Turkey Request of Funds from the NF by the Contracting Authority / OS (1) The amounts of the Requests for Funds are established on the basis of detailed disbursement forecasts based on the invoices already checked and approved by the OS/Contracting Authority and end-recipients, derived from detailed commitment forecasts developed by the OS and payment schedules under signed contracts

47 This project is co-financed by the European Union and the Republic of Turkey Request of Funds from the NF by the OS/Contracting Authority (2) Finance Division is preparing the Requests for Funds on a regular basis (generally quarterly basis), based on the invoices checked and approved by the Contracting Authority Finance Division is responsible to check the approved limit and if there is a difference between the requested and approved amount to clarify the issue with the National Fund Template of the Requests for Funds – Please see Annex 2, 3, 4

48 This project is co-financed by the European Union and the Republic of Turkey D. Plenary Discussion

49 This project is co-financed by the European Union and the Republic of Turkey Thank you!