Transcript Document

CONTROL & AUDIT REQUIREMENTS
What project promoters cannot ignore
about INTERREG IVB NWE project
management
Audit Requirements
The Basics
Table of contents
 First level control – the basics
Who will/can be your first level controller?
 Role of the LP controller
 The Audit Trail
 Control of the Payment Claim – what and when?
 Summary of the checks to be made
Other controls
Public procurement – the basics
Audit Requirements
The Basics
First Level Control – the basics
What?
Audits
of the
all project
expenditure
Compulsory
For
2007-2013
programming period
It entails:
verification of the delivery of the products and services cofinanced = it has been paid and received
verification of the traceability of the expenditure declared = there
is an invoice or other document with probative value
verification of the compliance of such expenditure with
Programme, Community and national rules as well as with Subsidy
contract and Application Form = it is eligible
When?
During
project
submitting a payment claim
implementation;
each
time
before
Audit Requirements
The Basics
Who will/can be your controller?
Two possible systems: centralised or decentralised
Differences:
Who proposes the controller
Who bears the costs
Time pressure
Responsibility to inform about the project and Programme; EU
rules
Audit Requirements
The Basics
Who will/can be your controller?
Member
State
Who’s doing the
centralised control?
Who’s doing the Who’s approving
decentralised
controller in
Compulsory For the 2007-2013 programming
period
control?
decentralised
system?
Ireland
Southern & Eastern
Regional Assembly
Luxembour
g
Ministère des
Finances, direction du
Contrôle financier
Belgium –
Wallonia
Ministère de la
Région Wallonne,
DRI, Service
comptabilité
Switzerland
Staatssekretariat für
Wirtschaft SECO
Audit Requirements
The Basics
Who will/can be your controller?
Member
Who’s doing the
Who’s doing the
Who’s approving
Compulsory
For the
programming
period
State
control
in a2007-2013
control
in a
controller in
centralised
decentralised
decentralised
system?
system?
system?
Netherlands
Internal or external;
public or private
Exceptions
VROM
Belgium –
Flanders
Internal or external;
public or private
Agency for Economy
– Division Europe
Belgium –
Brussels
Region
Internal or external;
public or private
Ministry of the
Brussels Capital
Region, Secrétariat
Général
Audit Requirements
The Basics
Who will/can be your controller?
Who’s doing the
Who’s doing the
Who’s approving
control in a
control in a
controller in
Compulsory For the 2007-2013 programming period
centralised
decentralised
decentralised
system?
system?
system?
Member
State
France
Internal or external; Région Nord-Pas-dePublic or private
Calais, Direction
(public procurement) Europe
Germany
Internal or external;
Public or private
responding to MS
regulation
Ministry of Finance
Baden-Wuerttemberg
(UBS)
UK
To be chosen on a
shortlist provided by
Communities and
Local Government
Communities and
Local Government European Policy and
Programmes Division
Audit Requirements
The Basics
Who will/can be your controller?
The main requirement is independency from project
management,
finance
and activities.
Compulsory
For
the 2007-2013
programming period
Other requirements are set by MS:
Background
Experience
Language skills
Knowledge in Structural funds regulations
(…)
These requirements are listed per Member State in the Project
Handbook (guidance note n°19)
Audit Requirements
The Basics
Who will/can be your controller?
For the decentralised systems, the approval of the controller will in
most cases be
using a form
to be filled period
in by the partners and
Compulsory
Formade
the 2007-2013
programming
the controller.
Professional skills and experiences in audit and EU funded projects
Sufficiency of the controller’s knowledge in the English language
Independence of the controller:
If external: what is the basis for the work (contract); is the
controller registered; is the controller obliged to a professional code
of conduct or other rules?
If internal: is their independence regulated by law or other rules;
to which person does he answer? Independence of mind,…
Knowledge of Programme documents, audit trail, timeframe.
Audit Requirements
The Basics
Role of the Lead Partner controller
Regulation (EC) 1080/2006 (Article 20):
The Lead Partner shall:
 lay down the arrangements for its relation with the partners
participating in the project in an agreement (i.e. sound financial
management)
 be responsible for ensuring the implementation of the entire project
 ensure that all the project expenditure presented has been
incurred for the purpose of implementing the project and corresponds
to the Application Form
 verify that all project expenditure presented has been validated by
the controllers
 be responsible for transferring the ERDF contribution to the
partners
Audit Requirements
The Basics
Role of the Lead Partner controller
Implications:
The LP controller:
 checks the expenditure of all partners against the approved
Application From.
 checks whether it fits with the budget planning (avoid exceeding
120%)
 verifies that the partners’ expenditure is in line with what was agreed
within the partnership (importance for the controller to read the
partnership agreement, the subsidy contract; to know the internal
procedures,…)
 verifies the validations by the controller
 verifies that the controllers are those approved by the MS
 verifies that the controllers’ signature is backed by checklists,…
 checks that all copies are available at Lead Partner premises
 verifies that the ERDF contribution has been paid to the partners
Audit Requirements
The Basics
The Audit trail
What? All accounting documents related to the Project.
Approved Application Form, Subsidy Contract, Partnership
Agreement
Relevant project correspondence (financial and contractual)
Progress Reports, Payment Claims, Partners controllers’
confirmations (and checklists/control reports)
Bank account statements proving the reception and the transfer of
ERDF
Invoices of all expenditure declared in the Payment claims
Bank account statements / proof of payment for each invoice
Method used by all partners outside the EURO-zone for converting
national currency into EUR
Staff costs: information on actual annual working hours, labour
contracts, payroll documents and time records of personnel working for
the project
Audit Requirements
The Basics
The Audit trail
What?
List of subcontracts and copies of all contracts with external experts
and/or service providers
Calculation of administrative costs, proof and records of costs
included in overheads
Documents relating to public procurement, information and publicity
Public procurement notes, terms of reference, offers/quotes,
evaluation, order forms, contracts
Proof of delivery of services and goods: studies, brochures,
newsletters, minutes of meetings, translated letters, participant lists,
travel tickets, etc.),
Record of assets, physical availability of equipment purchased in the
context of the project.
Audit Requirements
The Basics
The Audit trail
In what form? Original documents (at partner level), but also
photocopies (at Lead Partner level), microfiches or electronic
versions of original documents.
Where? The Lead Partner is responsible for storing all relevant
documentation for all partners and all sub-partners. They must be
filed separately, even if this leads to a dual treatment of accounts.
Importance of Partnership Agreement !
How long? It is essential that all documents and accounting
records be kept available for a period of three years following the
closure of the Programme, that is 31st December 2021. Projects
that cannot provide sufficient documentation risk losing their ERDF
grant.
Audit Requirements
The Basics
Control of the Payment claim
• What?
•One sheet per partner + Summary + Investment sheet
•One controller declaration per partner
•On the summary sheet, LP controller signs for the whole claim, on
the basis of all received declarations
•When to control? Example:
Closure of accounts at partner level: end July
Documents to the project controller: end August
Documents to the LP (controller): end September
Documents to the JTS: end October
-> Maximum for the whole process : 3 months (Article 16 of 1080/2006)
Audit Requirements
The Basics
Summary of the checks to be made
The financial information in the claim is accurately stated
That all claimed costs are eligible; they have been incurred for the
purpose of implementing the project and correspond to the activities
agreed between the partners (in line with Article 20 of Regulation (EC)
1080/2006), they are necessary for the implementation of the action
plan and incurred and paid after the start date of the project. They
comply with applicable national eligibility rules (e.g. national budgetary
law), the provisions in the Subsidy Contract, the eligible costs section of
the NWE Project Handbook, the NWE Project Control and Audit
Guidelines.
Audit Requirements
The Basics
Summary of the checks to be made
The maintenance of an adequate and reliable accounting system
and the maintenance of the audit trail within the project. All claimed
expenditure has been actually paid out, is supported by invoices or
accounting documents of equivalent probative value. In case of staff
costs, direct costs, overheads and in-kind contributions, the necessary
evidence exists in the form of timesheets, listings of costs or formula
descriptions and costs calculation. This expenditure (except in-kind
contributions) includes only actually paid out costs (for staff costs: gross
salary, employers costs). The partner maintains either a separate
accounting system or an adequate accounting code for all transactions
related to the project.
Audit Requirements
The Basics
Summary of the checks to be made
The reality of "deliverables" (services, works, supplies, etc.) against
plans, invoices, acceptance documents, experts' reports, and, where
appropriate, on the spot. The controller is asked to report on these onthe-spot checks. Where these on-site controls for physical investments
are not exhaustive, but performed on a sample basis, the report shall
identify the controls carried out and describe the sampling method.
Audit Requirements
The Basics
Summary of the checks to be made
That the Community rules have been applied with, including all
applicable procurement rules (the implementation of all stages of the
relevant procurement procedure is properly documented), the
applicable publicity and information requirements, the rules on equal
opportunities and protection of the environment.
That all inputs for the partner’s individual Payment Claims were
certified by an independent controller who has been approved by the
relevant national/regional approbation or control body. All
national/regional specific control and audit requirements have been
respected.
Audit Requirements
The Basics
Other controls
1) Site visits by the JTS
Fulfils the Managing Authority obligation to verify the operations
on-the-spot (Article 13 of Regulation (EC) 1828/2006).
What ?
When ?
Who?
Outcome:
to learn from the project
to verify the management system (incl audit trail)
to see deliverables
once during the project lifetime
Visited: Lead Partner + other partners
Visitors: JTS staff (Project Dvpt + Finance + Com)
National Auditor and National Authority
Site visit report
Audit Requirements
The Basics
Other controls
2) Second Level Control
What? Audits organised at Programme level by the Member States
under direction of the Audit Authority.
Who will audit? The audits will be performed by an external audit
firm, under supervision of the Audit Authority and the national
auditors.
Who will be audited? A sample will be defined each year. The sample
will be based on partners’ claimed expenditure on a yearly basis.
The sample will represent 10-15% of the total expenditure claimed
at Programme level. The Lead partners of the partners selected
will be audited as well.
-> the chances for a project to be controled is higher than under IIIB!
Audit Requirements
The Basics
Other controls
When?
January (each year)
Sample is defined
February
Partners selected are informed
March – April
Controls take place
May – June
Contradictory phase
Audit Requirements
The Basics
Other controls
3)
Certifying Authority’s quality controls
The Certifying Authority will perform audits, normally once a year,
on a different Member State each time.
4)
Commission and Member States checks
 The Commission, in cooperation with the Member States, can
perform on-the-spot checks on projects cofinanced by the
ERDF, with a minimum of one day’s notice.
IIIB Experience: one Commission audit during the Programme
lifetime, with two phases.
 The National Authorities can also perform on-the-spot checks
at partner level on demand of either the JTS/MA or on its own
initiative
Audit Requirements
The Basics
Most frequent control errors under IIIB
• Public procurement !
• Claiming of costs not attributable to project
• Double financing
• Overheads miscalculations
• No invoices/supporting documents
• Claiming of recoverable VAT and other recoverable charges
• Publicity
• Revenues not declared
Audit Requirements
The Basics
Most frequent control errors under IIIB
• Public procurement !
• Claiming of costs not attributable to project
• Double financing
• Overheads miscalculations
• No invoices/supporting documents
• Claiming of recoverable VAT and other recoverable charges
• Publicity
• Revenues not declared
Audit Requirements
The Basics
Most frequent control errors under IIIB
• Public procurement !
• Claiming of costs not attributable to project
• Double financing
• Overheads miscalculations
• No invoices/supporting documents
• Claiming of recoverable VAT and other recoverable charges
• Publicity
• Revenues not declared
Audit Requirements
The Basics
Most frequent control errors under IIIB
• Public procurement !
• Claiming of costs not attributable to project
• Double financing
• Overheads miscalculations
• No invoices/supporting documents
• Claiming of recoverable VAT and other recoverable charges
• Publicity
• Revenues not declared
Audit Requirements
The Basics
Most frequent control errors under IIIB
• Public procurement !
• Claiming of costs not attributable to project
• Double financing
• Overheads miscalculations
• No invoices/supporting documents
• Claiming of recoverable VAT and other recoverable charges
• Publicity
• Revenues not declared
Audit Requirements
The Basics
Most frequent control errors under IIIB
• Public procurement !
• Claiming of costs not attributable to project
• Double financing
• Overheads miscalculations
• No invoices/supporting documents
• Claiming of recoverable VAT and other recoverable charges
• Publicity
• Revenues not declared
Audit Requirements
The Basics
Most frequent control errors under IIIB
• Public procurement !
• Claiming of costs not attributable to project
• Double financing
• Overheads miscalculations
• No invoices/supporting documents
• Claiming of recoverable VAT and other recoverable charges
• Publicity
• Revenues not declared
Audit Requirements
The Basics
Most frequent control errors under IIIB
• Public procurement !
• Claiming of costs not attributable to project
• Double financing
• Overheads miscalculations
• No invoices/supporting documents
• Claiming of recoverable VAT and other recoverable charges
• Publicity
• Revenues not declared
Audit Requirements
The Basics
Most frequent control errors under IIIB
• Public procurement !
• Claiming of costs not attributable to project
• Double financing
• Overheads miscalculations
• No invoices/supporting documents
• Claiming of recoverable VAT and other recoverable charges
• Publicity
• Revenues not declared
Audit Requirements
The Basics
Public Procurement
•Procurement rules are COMPLEX!
•If you have DOUBTS about the application of
procurement rules, get in touch with a LEGAL ADVISOR.
Audit Requirements
The Basics
Public Procurement: lessons learnt
•One of the main findings in the IIIB period was lack of
compliance with public procurement (lack of evidence, not
respecting procedure, no evaluation grids…).
•During DG Regio audit, 53% of the findings were related
to breech of public procurement rules.
•The Commission applies a flat rate correction to any
breech – up to 100% of the total cost of the contract.
Audit Requirements
The Basics
Public Procurement: IVB basics
• National Rules apply – rules vary significantly from one
Member State to another
• European threshold applies for ALL tenders above
€206,000
• Lead Partner is responsible for ensuring that public
procurement is respected by the entire partnership
•All documents must be retained (publication of tender,
evaluation grid)
•Selection procedure must be retained
•The procedure cannot be changed in mid-course
Audit Requirements
The Basics
Public Procurement: EU rules
EU Directives apply to contracts to the following types of
contracts:
•Works
•Services
•Supply Contracts
Audit Requirements
The Basics
Public Procurement: EU rules
•From €133,000 for service/supplies contracts except for
research and development contracts as specified Annex
IIA of European Directive 2004/18.
•From €206,000 for service/supply contracts in category 8
of Annex IIA of European Directive 2004/18.
Audit Requirements
The Basics
Public Procurement: EU rules
•For contracts valued less than the above mentioned
thresholds, other procedures may apply according to
national legislation. National rules have to be closely
consulted as they may vary from country to country and
decisions may be made on a case-by-case basis.
Audit Requirements
The Basics
Public Procurement: National rules
•For ALL contracts, other procedures may apply according
to national legislation. The correct procedure is often
decided on a case-by-case basis in each country.
Therefore, national rules have to be closely consulted as
they vary from country to country.
Audit Requirements
The Basics
Public Procurement: Regulations (1)
EU regulations that apply are :
Directive 2004/17/EC of the European Parliament and of the
Council of 31 March 2004 coordinating the procurement procedures
of entities operating in the water, energy, transport and postal services
sectors
Directive 2004/18/EC of the European Parliament and of the
Council of 31 March 2004 on the coordination of procedures for the
award of public works contracts, public supply contracts and public
service contracts
Commission Directive 2005/51/EC of 7 September 2005 amending
Annex XX to Directive 2004/17/EC and Annex VIII to Directive
2004/18/EC of the European Parliament and the Council on public
procurement (Text with EEA relevance)
Audit Requirements
The Basics
Public Procurement: Regulations (2)
EU regulations that apply are :
Directive 2005/75/EC of the European Parliament and of the
Council of 16 November 2005 correcting Directive 2004/18/EC on
the coordination of procedures for the award of public works contracts,
public supply contracts and public service contracts
Commission Regulation (EC) No 1564/2005 of 7 September 2005
establishing standard forms for the publication of notices in the
framework of public procurement procedures pursuant to Directives
2004/17/EC and 2004/18/EC of the European Parliament and of the
Council
New thresholds enter into force from 1st January 2008. These
thresholds are laid out in Regulation (EC) 1422/2007 of 4 December
2007.
Audit Requirements
The Basics
Public Procurement: National rules
•Germany:
http://www.bmwi.de/BMWi/Navigation/Wirtschaft/Wirtschaft
spolitik/oeffentliche-auftraege.html
•France: http://djo.journal-officiel.gouv.fr/MarchesPublics/
•Ireland: http://www.fpp.ie/
•Luxembourg: http://www.mtp.etat.lu/
•United Kingdom: http://www.ogc.gov.uk/procurement.asp
•Belgium : http://www.belgium.be/fr/
•The Netherlands:
http://www.minez.nl/content.jsp?objectid=140472
Public procurement
The Basics
THANK YOU FOR YOUR ATTENTION