1. EUROPEAN COMMISSION Social and economic cohesion OPEN DAYS 2006 The European Week of Regions and Cities Brussels, 9 – 12 October 2006 _________________________ Workshop 11E18: Structural Funds 2007 – 13: The New Control and Audit Requirements Franck Sébert Directorate-General Employment, Social Affairs and Equal Opportunities Directorate I- Unit EMPL/I/3 – ESF Audit

2. EUROPEAN COMMISSION Social and economic cohesion Topics: Detailed requirements Duties of the Audit Authority Relations with Commission - an institutional dialogue with stricter deadlines - single audit clause Introduction to the role and functions of the Audit Authority (AA)

3. Social and economic cohesion EUROPEAN COMMISSION 3 Commission Audit Audit Authority Certifying Authority Managing Authority (and Intermediate Bodies) The main elements of the control and audit framework 2007-13:

4. Social and economic cohesion EUROPEAN COMMISSION 4 A new authority, above MA / PA foreseen in current period – improved importance from the start of programs Formal designation by Member State MA may be located within same body as Managing Authority (MA) / Certifying Authority (CA) (article 59 (4) ) But principle of separation of functions between and within all bodies and authorities (article 58 (b) ) Detailed requirements

5. Social and economic cohesion EUROPEAN COMMISSION 5 Unique AA for a program Not obliged to DO the work but to have the audit work done properly : (article 62(1)(a & b)) systems audits to assess effective functionning of systems Audits on appropriate sample of operations to verify expenditure declared (random statistical sampling method compulsory) (article 62(1)(b) and 16 of Implementing regulation) audit work takes account of internationally accepted standards (article 62(2)) performed by bodies with functional independence (article 62(3)) Detailed requirements

6. Social and economic cohesion EUROPEAN COMMISSION 6 No need to designate Intermediate bodies but co-ordinate / guide existing audit bodies Can be the same for more than one OP or for all OPs (article 59(1)) If several AAs, Member State may designate a coordination body (article 73(1)) Detailed requirements

7. Social and economic cohesion EUROPEAN COMMISSION 7 Duties of the Audit Authority Provides audit information and opinions to the Commission so as to help Commission to build its assurance level on all OPs – formatted information Audit strategy within 9 months of OP adoption (article 62(1)(c) and annex V of Implementing Regulation) Report and opinion on the compliance of the systems – before 1st interim payment or 12 months after adoption (article 71(2) and annex XIII of Implementing Regulation) By 31 December each year, as from 2008 –Annual control report presenting the findings of the audits carried out for a period of 12 months ending on 30 June of the year (July n-1 to June n) –Annual audit opinion based on these audits (article 62(1)(d) and annexes VI and VII of Implementing Regulation) By 31 March 2017 closure declaration (article 62(1)(e), annex VIII.B) or a declaration for partial closure (article 62(1)(d.iii), annex IX)

8. Social and economic cohesion EUROPEAN COMMISSION 8 Duties of the Audit Authority Initial compliance assessment (by AA or other independent body) : opinion and report based on written description and procedures / manuals, and on interviews Annual control report : report on audit activity effectively carried out, in implementation of communicated and agreed audit strategy compulsory model, to obtain same type and level of information for all OP report on results from systems audits (systemic errors) and from sample checks (error rates)

9. Social and economic cohesion EUROPEAN COMMISSION 9 Duties of the Audit Authority Annual audit opinion compulsory model based on audit work for previous period of 12 months (July n-1 to June n) wether the management and control systems functions effectively => reasonable assurance that expenditure presented is correct => reasonable assurance that underlying transactions are legal and regular an important source for Commission to draw assurance level on payments made in the year coherent deadlines with annual activity reports by AOD (DG): integrated control framework

10. Social and economic cohesion EUROPEAN COMMISSION 10 Duties of the Audit Authority Closure declaration (or partial closure at intervals decided by Member State) compulsory model assess the validity of the final payment application (cumulative declaration of expenditure) assess the legality and regularity of underlying transactions

11. Social and economic cohesion EUROPEAN COMMISSION 11 Relations with Commission : an institutional dialogue with stricter deadlines Audit strategy : comments by Commission within 3 months (article 62(4)) Compliance assessment : comments by Commission within 2 months (article 71(1)) Coordination of audit methodology and audit plans and immediate exchange of audit results (article 73(4)), without need for additional administrative arrangement At least annual meeting of the AA with the Commission to examine the annual control report and audit opinion Commission may ask AA to perform audits (article 72(3))

12. Social and economic cohesion EUROPEAN COMMISSION 12 Relations with Commission : Single audit clause (articles 73(2&3) and 74(1)(b)) Commission may decide to rely principally on annual audit opinion of the AA (and therefore not to carry out its own audits unless exceptional circumstances) Conditions : Compliance assessment unqualified or after shifting reservations Audit strategy satisfactory Reasonable assurance obtained from Commission and national audits that systems function effectively

13. Social and economic cohesion EUROPEAN COMMISSION 13 Thank you for your attention

14. EUROPEAN COMMISSION Social and economic cohesion OPEN DAYS 2006 The European Week of Regions and Cities Brussels, 9 – 12 October 2006 _________________________ Workshop 11E18: Structural Funds 2007 – 13: The New Control and Audit Requirements Franck Sébert Directorate-General Employment, Social Affairs and Equal Opportunities Directorate I- Unit EMPL/I/3 – ESF Audit