1. The Managing Authority –Keystone of the Control System
Lena Andersson Pench
European Commission
DG Regional Policy

2. Main themes Key elements of an effective internal control system
Preventive actions
Management verifications
Audit trail and financial reporting
Managing Authority- Keystone of the Control System

3. How assurance will be built up 2007-2013
Ex post
Managing Authority- Keystone of the Control System
During
implementation
Ex ante

4. Legal Framework
Legal base: Art. 60 of 1083/06 and Art. 13 of 1828/06 to ensure clear and precise control obligations.
Commission guidance notes:
- Guidance document on common methodology for assessment of management and control systems
- Guidance document on management verifications
Managing Authority- Keystone of the Control System

5. Effective internal control system
Fundamental role of Managing Authorities in financial management/control
What applies to MA, applies also to IB: training and guidance is necessary
Relations between MA/IB/beneficiaries are essential for effective internal control systems
Preventive actions –based on risk assessment
Comprehensive management verifications
Managing Authority- Keystone of the Control System

6. Effective internal control system
Commission guidance note – “system assessment”
Sets out key requirements for Managing Authorities, Certifying Authorities and Audit Authorities
Contains assessment criteria to be used by auditors when evaluating the systems
Can serve as a basis for self-assessment for all actors
Managing Authority- Keystone of the Control System

7. Effective internal control system
These key requirements are designed as being essential to ensure legality and regularity as well as reality of operations supported by the Structural Funds.
Need for a common understanding of both requirements and criteria for assessing them, between all actors in the management and control systems.
Managing Authority- Keystone of the Control System

8. Effective internal control system
Key requirements: Managing Authorities/Intermediate bodies
Works well
Works but
Works partially
Doesn’t Work
1) Clear definition, allocation and separation of functions between and within managing authorities/ intermediate bodies
2) Adequate procedures for selection of operations
3) Adequate information and strategy to provide guidance to beneficiaries
4) Adequate management verifications
5) Adequate audit trail
6) Reliable accounting, monitoring and financial reporting systems in computerised form
7) Necessary preventive and corrective actions in case of systemic errors detected by the audit authority
Managing Authority- Keystone of the Control System

9. Key elements of internal control system for MA
Clear definition, allocation and separation of functions between and within the Managing Authority/Intermediate bodies
Procedures to supervise effective implementation of delegated tasks
Formal written agreement setting out any delegated tasks
Managing Authority- Keystone of the Control System

10. Key elements of internal control system for MA
2. Adequate procedures for selection of operations
Publishing calls for applications
Recording received applications
Evaluating applications according to defined criteria
Decision and communication of decisions to applicants
Managing Authority- Keystone of the Control System

11. Key elements of internal control system for MA
3. Adequate information and guidance to beneficiaries
Communication of rights and obligations: National and Community eligibility rules, specific programme conditions, financing plan, information and publicity requirements
Guidance (workshops, training actions, seminars, web sites…)
Managing Authority- Keystone of the Control System

12. Key elements of internal control system for MA
4. Adequate management verifications
Existence of written procedures and checklists
Administrative verifications completed before certification (ex-ante)
All applications for reimbursement should be checked
On-the-spot verifications when the project is well under way
Managing Authority- Keystone of the Control System

13. Key elements of internal control system for MA
4. Adequate management verifications
Evidence of verifications and follow-up are kept
On-the-spot verifications based on risk assessment
Procedures to ensure that the CA receives all information
Managing Authority- Keystone of the Control System

14. Key elements of internal control system for MA
5. Adequate audit trail
Keep accounting system at appropriate levels to provide information on incurred expenditure by beneficiary
Keep technical specifications, financial plan, progress and monitoring reports, documents in relation to selection, evaluation, tendering and contracting procedures at appropriate levels
Managing Authority- Keystone of the Control System

15. Key elements of internal control system for MA
5. Adequate audit trail
All documents should be kept in accordance with the rules on availability of documents
Verification whether beneficiaries keep separate accounting systems or accounting codes
Managing Authority- Keystone of the Control System

16. Key elements of internal control system for MA
6. Reliable accounting, monitoring and financial reporting systems
Computerised systems capable of providing reliable and relevant information
Managing Authority- Keystone of the Control System

17. Key elements of internal control system for MA
7. Necessary preventive and corrective action where systemic errors are detected by audits
Procedures to review and follow-up results of audits carried out by the relevant audit bodies
Procedures should be in place to ensure implementation of preventive and corrective action
Managing Authority- Keystone of the Control System

18. Key elements of an effective internal control system
Preventive actions
Managing Authority- Keystone of the Control System

19. Preventive actions
If the design of management and control systems (compliance assessment report) is right,
The functioning of the systems will most likely be right…
…but it is not enough
Managing Authority- Keystone of the Control System

20. Preventive actions
Ensure that the key requirements MA of the management and control systems “work well”
Need to make a proper risk assessment per programme to reduce the risk of error and the risks
-of not absorbing funds
-of having to pay back funds
Develop a strategy to manage the risks
- by preventive and
- proactive measures
Managing Authority- Keystone of the Control System

21. Preventive actions Procedures to select operations
- Publish calls for applications
- Record received applications
- Evaluate applications
- Decide and communicate decisions to applicants
Managing Authority- Keystone of the Control System

22. Preventive actions: Publish and record
Are the calls published in accordance with programme conditions ?
Did the publication contain a clear description of the selection criteria ?
Have the calls been advertised in all relevant media to reach all potential applicants?
Are applications registered on receipt?
Are records kept of status of each application?
Managing Authority- Keystone of the Control System

23. Preventive actions: Evaluate and communicate
Are project evaluation responsibilities clearly allocated ?
Have the administrative and financial capacity of the beneficiaries been evaluated?
Have the applications been evaluated according to the agreed criteria and are the results documented?
Is the decision taken by appropriate person or body?
Is there an appeal procedure in place?
Managing Authority- Keystone of the Control System

24. Preventive actions: Information and guidance
Managing Authorities should seek to prevent errors by working with beneficiaries from the start of each operation/project
Risk assessment: Identify the types of beneficiaries relevant for your organisation and develop a guidance strategy to meet their needs
Assess administrative structure, qualifications and experience of staff etc. of beneficiaries
Assist them with training and guidance to set up systems to meet Community requirements
Managing Authority- Keystone of the Control System

25. Preventive actions –Information
Have the national eligibility rules and the Community rules been given to the beneficiary?
Have specific conditions concerning the products or services to be delivered been clarified ?
Have the requirements of the publicity obligation been communicated?
Have criteria been established to assess the capacity of beneficiaries?
Managing Authority- Keystone of the Control System

26. Preventive actions –Guidance
Is there a documented strategy to ensure that beneficiaries have the necessary access to information and receive sufficient guidance?
Which means of communication are the most effective for the types of beneficiaries that your organisation deals with?
Websites, leaflets, booklets, seminars, workshops?
Managing Authority- Keystone of the Control System

27. Key messages
Focus on actions to prevent errors-information and advice to beneficiaries, access to information, capacity-building for beneficiaries, clear defined operations and financing plans
Carry out a programme risk assessment and develop a strategy to address the risks
Focus on outputs and not just procedures – monitor and review results of control system – is there evidence of good management of risk?
Managing Authority- Keystone of the Control System

28. Key messages
Carry out regular self-assessment based on the “key requirements” for Managing Authorities
Provide information and guidance to Intermediate bodies – standardised manuals and checklists - training of staff – information networks – technical support and advice
Review regularly the work of Intermediate bodies (quality review)
Managing Authority- Keystone of the Control System