Regional Policy Management and control systems Franck Sébert, DG Regional and Urban Policy, Head of Unit C1 NINETEENTH MEETING OF THE EXPERT GROUP ON DELEGATED AND IMPLEMENTING ACTS FOR THE EUROPEAN STRUCTURAL AND INVESTMENT FUNDS – 30 October

Regional Policy Outline Draft Implementing Acts Designation of Managing and Certifying Authorities (Article 113 bis of CPR; Fiche 17 C): Model for description of functions and procedures in place for the MA and CA Model for the report and the opinion of the Audit Authority Model for the management declaration (Article 114 of CPR; Fiche 17 A) Models for the audit strategy, control report and audit opinion (Article 116 of CPR; Fiche 17 A) 2

Regional Policy Model for description of functions and procedures in place for the MA and CA Main changes to Fiche 17 C (version of 4 October): - clarification of point (verifications of operations) – merged with point ; - deletion of point (ex-ante conditionalities); - clarification of point 4 (Information system). 3

Regional Policy Model for the AA opinion and report on the designation of MA and CA Main changes to Fiche 17 C (version of 4 October): Opinion: New paragraph to cover the cases where the MCS is the same as in Report: No changes. 4

Regional Policy Model for the management declaration Main changes to Fiche 17 A (version of 4 October): - internal deadlines for transmission to AA; - MD to be presented for each OP; - Annual summary: guidance by EC; - alignment to text of Article 59 for the MCS part; - follow-up actions: concluded and ongoing; - clarification to performance framework, replaced by reliability of data on indicators; 5

Regional Policy Model for the audit strategy Main changes to Fiche 17 A (version of 4 October): - clarification of point 3 (audit opinion in accordance with audit standards); - no reference to sound financial management; - clarification on horizontal issue covered by thematic audits; - confirmation on the reliability of data on indicators and milestones (Art.115(2)a); - clarification of the audits of accounts. 6

Regional Policy Models for the audit opinion Main changes to Fiche 17 A (version of 4 October): - clarification on required audit procedures on the management declaration and the possible conclusions drawn by the AA; - need to quote the audit standards followed; - clarifications on the possible scope limitations; - clarification of the adverse opinion. 7

Regional Policy Models for the annual control report Main changes to Fiche 17 A (version of 4 October): - clarifications to point 2 (significant changes of the MCS); - clarifications on fraud and suspicions of fraud that came to the attention of the AA should be disclosed in the ACR; - reference to the accounts in the overall level of assurance; - distinction made between analysis of error rate, analysis of corrective measures and residual error. 8

Regional Policy Outline Draft Delegated Acts - Financial corrections (Article 136 of CPR; Fiche 17G); - Scope and content of audits of operations and audits of accounts and the methodology for the selection of the sample of operations (Article 116(7)new of CPR; Fiche 17 F); - Adequate audit trail (Article 114(9) of CPR; Fiche 17 B); -Use of data collected during audits carried out by the Commission (Article 116(7) of CPR; Fiche 17B); 9

Regional Policy Financial corrections (Fiche 17G) Based on the agreements reached at the Trilogues meeting of 10 and 24 September 2013, the delegated act under Article 136(6) of the CPR should define:  detailed rules concerning the criteria for determining serious deficiencies,  the main types of serious deficiencies, the criteria for establishing the level of financial correction to be applied and the criteria for applying flat rates or extrapolated financial corrections by the Commission. 10

Regional Policy Financial corrections (Fiche 17G) The level of the flat rate correction shall be proportionate to the seriousness of the irregularity or deficiency identified and, where possible, will take into account the following criteria: - the relative importance of the serious deficiency in the context of the entire MCS, and in particular the number of key requirements assessed in category 3 or 4; 11

Regional Policy Financial corrections (Fiche 17G) - the degree of risk of loss to which the Union budget was exposed due to the irregularity or system deficiency; in particular the assessment of any of key requirements 3, 4, 8, 11 and 12 in category 3 or 4 is sufficient to constitute a serious deficiency in the management and control system; - the frequency of the particular type of irregularity and whether it is an individual case or if there are multiple cases; 12

Regional Policy Financial corrections (Fiche 17G) - the extent of the serious deficiency and whether it relates to the overall management and control system or only to a particular part / particular parts of the programme or to specific aspects of expenditure declared; - the vulnerability of the systems to fraud due to the irregularity or system deficiency. 13

Regional Policy Scope and content of audits of operations and audits of accounts and the methodology for the selection of the sample of operations - Main changes to Fiche 17 F (version of 4 October): - internal deadlines for transmission to AA; - clarifications to the scope of the audits of operations; - sampling unit to be defined by AA; - clarifications on the complementary sample. 14

Regional Policy Adequate audit trail Main changes to Fiche 17 B (version of 4 October): - clarifications of the criteria related with audit trail for simplified cost options; [Use of data collected during audits carried out by the Commission (Article 116(7) of CPR; Fiche 17 B): No changes.] 15