1. Structural Funds in Ireland Structural Funds in Ireland Financial management, Financial management, control & audit - Ireland Dermot Byrne Head of Unit ERDF (& Cohesion Fund) Financial Control Unit, Ministry of Finance, Ireland OPEN DAYS – Brussels, 13 October 2005

2. Overview Overview  Background to Structural Funds in Ireland 2000/06  Current financial control and audit model in Ireland  Contrast Interreg and ERDF structures  Changes & challenges for future

3. Ireland 1985-2005 Ireland 1985-2005 19852005 Debt/GNP ratio: 131%30% Unemployment: 18%4.4%  Population 4.04m – most rapidly expanding population in Europe annual increase of 1.6% / EU average 0.3%  Average GDP growth 1997-2003 = 7.6%  GDP growth of 5% per annum in 2004, 2005  Average EU 15 growth < 2.5%  Per capita GDP second highest in Europe after Luxembourg

4. National Development Plan 2000-2006 Border, Midland & Western Region (OBECTIVE 1) Southern & Eastern Region (OBJECTIVE 1 in transition)

5. National Development Plan 2000/06 Operational Programmes EU Total €m €m Economic and Social Infrastructure 1,491* 26,020 Employment and Human Resources 901 14,200 (no ERDF) Productive Sector 282 7,340 Southern & Eastern Region 572 5,380 Border, Midlands & Western Region 400 4,094 PEACE 106 141 Technical Assistance 5 10 3,757 57,185 * Includes approx. €570m from Cohesion Fund

6. Paying Authority ERDF Cascade Structure Intermediate Body Ireland Managing Authority Final BeneficiaryFinal Recipient Ministry of Finance Regional Assembly or Government Ministry Government Ministry or Agency Local Authority or State Agency Private firm receiving grant aid

7. Regulation 438/2001 Regulation 438/2001 Audit function (Article 10) Independent verification of (a) Management & Control Systems (b) Expenditure declarations in order to give an opinion/assurance on the effectiveness of (a) M&C Systems and (b) accuracy of expenditure declarations & supporting records. ex-post: (a) Systems audits (b) Minimum 5% verification (audit) Management & Control Systems (Article 4) Systems (structures & procedures) to ensure the delivery of products and services co-financed by EU, ensure compliance with national and Community rules (eligibility, public procurement etc). Systems should include on-the-spot checks. ex-ante: authorisation, segregation of duties, accounting, physical, Including written procedures

8. DG Regio Audit Paying Authority ERDF Financial management, control and audit structure Intermediate Body ERDF Financial Control Unit Internal Audit Managing Authority Internal Audit Final Beneficiary Internal Audit Systems audits M5% verifications Final Recipient (ERDF grant)

9. DG Regio Audit Paying Authority Key reporting relationships ERDF Financial Control Unit Managing Authority Management of programme Certification of expenditure to the Commission Sponsor - Audit Partnership

10. Summary - audit objectives  Audit trail – complete and accurate supporting documentation at all levels  Compliance with Eligibility Rules  Compliance with Procurement rules  Ensure adequate monitoring / cost control (Article 4 spot checks)  Ensure that publicity / information requirements are met  Comprehensive Procedures Manuals (including EU regulatory requirements)

11.  Functionally independent of Paying Authority  Legally supported by Statutory Instrument (Ministerial Directive)  Co-funded by the European Union – 50% Technical Assistance  Carries out sample checks – minimum 5% (ERDF)  Responsible for planning, coordination & review of Systems Audits (ERDF)  Body designated to issue declarations on winding up of assistance  Administrative Agreement with DG Regio Audit / Internal audit units  New development - “Contract of Confidence” with DG Regio Financial Control Unit Structure and Key Activities

12.  Single audit – “partnership” concept  Audit strategy submitted to DG Regio (for Programme period, not just a year)  Assurance on methodology and quality of audit in MS (e.g. risk assessment)  Exchange of audit reports  Annual report by MS Audit Authority  Annual certification / Declaration of assurance  Systematic feedback by the European Commission  Facilitate reduced audit effort by EU audit services in Member State Contract of Confidence

13. Paying Authority Contrast: Interreg IIIB (NWE) v ERDF Interreg IIIB (North West Europe)ERDF Ireland Managing Authority Paying Authority (Min. of Finance) Intermediate Body ERDF Financial Control Unit Internal Audit Managing Authority (S&E Reg. Ass) Internal Audit Final Beneficiary Internal Audit European Commission Lead Partner Irish Partner European Commission Joint Secretariat (Lille)

14. Interreg audit arrangements  Member State is responsible for minimum 5% verifications …  Expenditure declarations do not go through cascade structure (as ERDF)  FCU has no direct access to Paying Authority / Managing Authority records  Relies on information from PA / MA to facilitate audit of Partner in Ireland  Southern & Eastern (S&E) Regional Assembly is liaison body in Ireland, but  S&E Regional Assembly have no financial function (e.g. no Article 4 checks)

15. 2007/13 – Challenges?  Member State Audit Authority likely to be FCU  Compliance Assessment Body likely to be FCU – review of proposed structures and procedures at beginning of round + opinion as to adequacy  If Structural Funds proportion is low, only national rules apply  National audit strategy – basis for mutual confidence  Adequate methodology  Coordination of audit activity at central level in each MS (by who?)

16. Contact the FCU at: ERDF Financial Control Unit 15 Lower Hatch Street, Dublin 2 Ireland. Phone:353 1 639 6217 Fax:353 1 639 6201 E-mail:eucontrol@finance.gov.ieeucontrol@finance.gov.ie Annual Reports (1999 - 2004) www.csfinfo.comwww.csfinfo.com (publications/annual reports)