1. CONTROL & AUDIT REQUIREMENTS What project promoters cannot ignore about INTERREG IVB NWE project management

2. Table of contents First level control – the basics Who will/can be your first level controller? The Audit Trail Control of the Payment Claim – what and when? Other controls: JTS Site Visits Second Level Control Commission Audits Public procurement – the basics Audit Requirements The Basics

3. Who will/can be your controller? Audit Requirements The Basics 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

4. Who will/can be your controller? For the centralised Member States: Ireland - Southern & Eastern Regional Assembly Luxembourg - 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

5. Who will/can be your controller? For the decentralised Member States: The Netherlands, France, Belgium Flanders and Brussels Capital, Germany, UK usually the First Level Controllers can be internal or external, public or private, there are some differences from Member State to Member State. For the UK, the job title has to be mentioned on a shortlist, for France public procurement documents have to be provided. For further information and addresses see Guidance Note 20 Audit Requirements The Basics

6. Who will/can be your controller? Compulsory For the 2007-2013 programming period Audit Requirements The Basics The main requirement is independency from project management, finance and activities. 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°20)

7. Who will/can be your controller? Compulsory For the 2007-2013 programming period Audit Requirements The Basics For the decentralised systems, the approval of the controller will in most cases be made using a form to be filled in by the partners and 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.

8. Please note that: Compulsory For the 2007-2013 programming period Audit Requirements The Basics at least one on the spot check is mandatory throughout the project lifetime. the controller‘s declaration must not be changed findings from the FLC should be deducted prior to submission to the JTS the LP controller needs to get reasonable assurance of the quality of the partner claims, but should not re-do the whole partner audit

9. Compulsory For the 2007-2013 programming period Audit Requirements The Basics Who has already declared their first level controllers? Who has received an answer from the approbation bodies? Was any proposal rejected? Poll: first level control

10. The Audit trail Audit Requirements The Basics What is the audit trail? The audit trail is a comprehensive set of documents which provide a complete history of a project and provide evidence that proper procedures were applied and outcomes achieved. The audit trail permits to: Reconcile the total amount of funding with detailed accounting records and supporting documents. Verification of compliance with all EC Regulations, National legislation So, what documents do you think are part of the audit trail?

11. The Audit trail Audit Requirements The Basics 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 last payment to the Programme, that is 31st December 2021. Projects that cannot provide sufficient documentation risk losing their ERDF grant.

12. Control of the Payment claim Audit Requirements The Basics 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)

13. Other controls – JTS Site visits Audit Requirements The Basics Fulfils the Managing Authority obligation to verify the operations on-the-spot (Article 13 of Regulation (EC) 1828/2006). What ?to learn from the project to verify the management system (incl audit trail) to see deliverables When ?once during the project lifetime Who? Visited: Lead Partner + other partners Visitors: JTS staff (Project Dvpt + Finance + Com) National Auditor and National Authority Outcome:Site visit report

14. Other controls – Second level controls Audit Requirements The Basics 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 controlled is higher than under IIIB!

15. Other controls – Second level controls Audit Requirements The Basics When? January (each year)Sample is defined January - FebruaryPartners selected are informed February – AprilControls take place May – JuneContradictory phase

16. Other controls – Third level controls Audit Requirements The Basics Certifying Authority’s quality controls The Certifying Authority will perform audits, normally once a year, on a different Member State each time. Commission and Member States checks The Commission, in cooperation with the Member States, can perform on-the-spot checks on projects co-financed 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

17. First mistakes from Second level control: Audit Requirements The Basics Mistakes in timesheets Usage of wrong budget line Missing original documents and bad quality No project relation Breach of public procurement Administration costs had no project relation FLC comments in checklist did not correspond to payment claim

18. Findings of DG Regio in Germany: Audit Requirements The Basics Staff cost calculation was based on average hours worked, time sheets did not exist. Controllers did not document their work sufficiently (checklist and controller‘s declaration are the minimum requirements). Public procurement procedures for contracts below 21.000€ were not documented transparently.  The conclusion was an interruption of payment to all German partners as of August 2012.

19. Public Procurement Audit Requirements The Basics Procurement rules are COMPLEX! If you have doubts about the application of procurement rules, get help from within your organization or from outside.

20. Public Procurement: lessons learnt Audit Requirements The Basics 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 in IIIB, 53% of the findings were related to breach of public procurement rules. The Commission applies a flat rate correction to any breach – up to 100% of the total cost of the contract.

21. Public Procurement: IVB basics Audit Requirements The Basics National Rules apply from the first euro – rules vary significantly from one Member State to another and even from region to region. European threshold applies for all services above €200,000 and €5,000,000 for public works. Lead Partner is responsible for ensuring that public procurement is respected by the entire partnership Pay attention to the procurement for project management. direct tenders have been rejected quite often by the auditors. And keep in mind that you project might get a time extension.

22. Public Procurement: IVB basics Audit Requirements The Basics All documents must be kept by the partners (publication of tender, evaluation grid). We would advise that a short summary document explaining the procedure that was used and the conclusions that let to awarding the tender should be drafted for all costs above €5,000. The Lead Partner has the possibility to set a limit for the whole partnership. Ask your partners what rules they have to apply, get an overview.

23. Thank you for your attention! Any questions? The Basics Public procurement