1. Legal Basis for Management and Control Systems in INTERREG III programmes BSR INTERREG III B Joint Secretariat Matthias Heinicke Seminar on Financial Management and Auditing Rostock, 12 November 2004

2. Table of contents 1.Legal framework for the programme in general 2.Legal framework for management and control mechanisms 3.First level control 4.Second level control 5.Reporting duties

3. Programme Documents Community Initiative Programme (CIP) + Programme Complement EU MEMBER STATES EU COMMISSION LEAD PARTNER PROJECT PARTNERS Memorandum of Understanding MANAGING AUTHORITY PAYING AUTHORITY JOINT SECRETARIAT Rules of Procedure MONITORING COMMITTEE (MC) Rules of Procedure STEERING COMMITTEE (SC) Rules of Procedure Agreements MS – MA/PA Subsidy Contract / Grant Offering Letter Seed Money Partnership Contract

4. 1. Legal Framework for the programme in general Main documents: Provisions on structural funds Programme documents - CIP - PC Contracts and Agreements - Memorandum of Understanding (BSR INTERREG III B) - Agreements between IB and Member States - Rules of Procedures - Subsidy Contract …

5. Agreement IB-Member States Memorandum of Understanding Article 5 Communication Subsidy Contract Grant offer letter Seed Money Rules of Procedure of the Joint Secretariat Agreement IB-Baltic Institute Rules of Procedure of the SC Rules of Procedure of the MC Annex to the MoU Norwegian Declaration of Consent... Provisions on the Structural Funds, INTERREG III guidelines, CIP, PC

6. Main provisions on structural funds relevant for INTERREG III programmes: Council Regulation (EC) No 1260/1999 – on Structural Funds Regulation (EC) No 1783/1999 – on aims and use of ERDF Commission Regulations (EC): >No 1685/2000+No 448/2004 – Eligibility of expenditure >No 438/2001, No 448/2001, No 2355/2002 – Management and control systems, Financial corrections >No 1159/2000 – on information and publicity measure C(2001) 1101 - INTERREG III guidelines … Binding for all programme actors!

7. Main provisions on structural funds Regulation (EC) No 1783/1999 of the European Parliament and of the Council: (…) The ERDF shall (…) contribute to promoting sustainable development and the creation of sustainable jobs. Article 1

8. Programme documents Community Initiative Programme (CIP) Main programme document Content: programme area, strategy, priorities, measures, finances, eligibility, implementation, evaluations, … Status:- revised due to Neighbourhood Progr. transformation - approved by MC - approved by COM in October 2004 - includes new INTERREG III A priorities

9. Programme documents Programme Complement (PC) Content: -Detailed description of measures (final beneficiaries, expected results/effects/impacts, fields of intervention, ex-ante evaluation of measures, monitoring and impact indicators) -Project selection criteria -Financial table by priorities and measures -Information and communication plan Status: - amended due to revised CIP this summer - approved by MC in September 2004 - COM approval expected soon

10. 2. Legal framework for management and control mechanisms Council Regulation (EC) No 1260/1999 Commission Regulation (EC) No 438/2001 Commission Regulation (EC) No 448/2004 EU Audit Manual INTERREG Audit Guidelines (III B, IIIC) Memorandum of Understanding (BSR INTERREG III B) Art. 5 Communication

11. 1260/1999: Member States shall take responsibility (...) for the financial control of assistance. 438/2001: Member States management and control systems shall provide a sufficient audit trail. Member States shall organize checks on operations. 448/2004: Eligibility rules Memorandum of Understanding (MoU): In cases of [irregularities] Germany (...) shall be liable to the Commission. Art. 5 Communication: procedure for sample checks on operations Legal framework for management and control mechanisms – example provisions

12. 3. First level control Project Partner/ PP-or central* auditor Lead Partner (LP)/ LP-or central* auditor Joint Secretariat/ Managing Authority Paying Authority (PA) Project Partner/ PP-or central* auditor Project Partner/ PP-or central* auditor Expenditure audited by PP-or central* auditor Expenditure audited by LP-or central* auditor and collection of PP cost statements Progress Reports checked by Project Manager and Financial Manager in JS PA checks + compilation of all data into Payment Request * in PL, LT, LV: centralized system of auditing, LP/PP cannot choose auditor

13. Purpose: (...) to ensure the sound financial management of the Structural Funds (...), and in particular to provide adequate assurance of the correctness, regularity and elegibility of claims on Community assistance. (EC Reg. 438/2001, Art. 2) Responsibility: Member States shall take responsibility in the first instance for the financial control of assistance. (EC Reg. 1260/1999, Art. 38 (1) The management and control systems of managing and paying authorities (...) shall provide for:... (EC Reg. 438/2001, Art. 3) Coverage: Management and control systems shall include procedures to verify the delivery of products and services co-financed and the reality of expenditure claimed, the compliance with the applicable rules, and the maintainance of the audit trail. (EC Reg. 438/2001, Art 4 & 9(3)) The imposed obligations

14. Task Force Financial Control 4. Second level control (5% checks) selection of projects based on certain criteria sum of checked total eligible expenditure 5% of programme budget for 2001-2003: 5 projects selected, checks in autumn 04 Lead Partner Project Partner National Auditors checks audit reports

15. Purpose: The checks shall establish whether any problems encountered are of systematic character, entailing a risk for other operations (with) the same final beneficiary (...). They shall also identify the causes of such situations (...). (EC Reg. 438/2001, Art. 12) Responsibility: Member States shall organise checks on operations on an appropriate sampling basis (...). (EC Reg. 438/2001, Art. 10, § 1) Coverage: The checks carried out (...) shall cover at least 5 % of the total eligible expenditure (...). (EC Reg. 438/2001, Art 10, § 2) The imposed obligations

16. First level control (Project auditors, JS, PA) Second level control (Task Force Financial Control) Third level control (winding-up body) acc. to Art. 4 and 9 of Reg. 438/2001 5% checks (sample checks on operations) Winding-up acc. to Art. 15 of Reg. 438/2001 The levels of financial control

17. 5. Reporting duties Article 5 communication (Art. 5 of Reg. 438/2001) Article 13 communication (Art. 13 of Reg. 438/2001) Annual Report Payment Forecast Payment Request Direct link between project activity and programme performance reported to COM!

18. Thank you very much! www.bsrinterreg.net BSR INTERREG III B Joint Secretariat Matthias Heinicke