Presentation on theme: "Management verifications Franck Sébert European Commission DG Employment, Social Affairs and Equal Opportunities."— Presentation transcript:
1 Management verifications Franck Sébert European Commission DG Employment, Social Affairs and Equal Opportunities
2 Commission guidance note Issued in April/May 2008 and finalised 21 May in COCOFTo assist managing authorities (MA) and their intermediate bodies (IB)Key control requirement to prevent errors and fraud
3 Legal basis - Council regulation Article 60 of Regulation (EC) N°1083/2006 details the functions of the managing authorityArt. 60 (b) part 1: “The managing authority (MA) shall be responsible (…) for verifying that the co-financed products and services are delivered and that the expenditure declared by the beneficiaries for operations has actually been incurred and complies with Community and national rules (…).”
4 Legal basis-Implementing rules Article 13 (2) of Regulation (EC) N° 1828/2006:The verifications (…) shall cover administrative, financial, technical and physical aspects of operations, as appropriate.
5 Legal basis-Implementing rules Article 13 (2) of Regulation (EC) N° 1828/2006:Verifications shall ensure that the expenditure declared is real, that the products or services have been delivered in accordance with the approval decision, that the applications for reimbursement by the beneficiary are correct and that the operations and expenditure comply with Community and national rules. They shall include procedures to avoid double-financing of expenditure with other Community or national schemes and with other programming periods.
6 Legal basis-Implementing rules Article 13 (2) of Regulation (EC) N°1828/2006:Verifications shall include the following procedures:(a) administrative verifications in respect of each application for reimbursement by beneficiaries(b) on-the-spot verifications of individual operations
7 Legal basis-Implementing rules Article 13(3) of Regulation (EC) N°1828/2006:Where on-the-spot verifications (…) are carried out on a sample basis (…) the managing authority shall keep records describing and justifying the sampling method and identifying the operations or transactions selected for verification.
8 Main themesGeneral observations on the objective, scope and organisation of management verificationsAdministrative verificationsOn-the-spot verificationsEuropean Territorial Cooperation (ETC)
9 Main themesGeneral observations on the objectives, scope and organisation of management verificationsAdministrative verificationsOn-the-spot verificationsEuropean Territorial Cooperation (ETC)
10 Scope of management verifications Should cover administrative, financial, technical and physical aspects of operationsInclude verifications on the reality, substance and effectiveness of projects: - products or services delivered in accordance with approval decision, - outputs are checked against specifications…Verification of compliance with Community and national rules
11 Scope of management verifications Specific issues including respect of compliance with Community policies detailed in section 3 of guidance note3.1 Public Procurement3.2 Environment3.3 State aid schemes3.4 State aid3.5 Financial engineering instruments3.6 Revenue generating projects3.7 Durability of operations3.8 Equality and non-discrimination
12 Organisational aspects Management verifications vs- selection of operations- implementation of operation as beneficiaryDistinct from audits under/by Audit AuthorityRequire appropriate staff level and expertise for both administrative and on-the-spot verificationsMay be outsourced but with strict supervision
13 A strategy to manage risks Strategy for controlsPREVENTIVE ACTIONSDOCUMENTARY VERIFICATIONSON THE SPOT VERIFICATIONS4 aspects covered as appropriateNOT ZERO ERROR BUT RISKS UNDER CONTROL
14 Main themesGeneral observations on the objective, scope and organisation of management verificationsAdministrative verifications in respect of each application for reimbursement by beneficiariesOn-the-spot verificationsEuropean Territorial Cooperation (ETC)
15 Administrative verifications Desk-based, documentary verificationsAll payment applications (interim / final) have to be verifiedBefore declaring expenditure to level above and before certification of expenditure to Commission by CASome horizontal aspects checked once for all (in first claims or at closure of operation)
16 Administrative verifications Examination of progress reportExamination of expenditure claimExamination of requested supporting documentation :(lists of) receipts / invoiceslists of outputslists of participants and timesheetsetc.
17 Administrative verifications Aim to verify (inter alia):Correctness of claimNo double fundingEligibility period of expenditure declaredCompliance with grant decision / contractExistence of adequate audit trailCompliance with eligibility rules, publicity requirements, EC policies…
18 Efficient & effective verifications Efficient only if grant decision / contract absolutely clear : clear definition of operation, expected outputs, financing plan, eligibility rules, administrative (reporting) obligations of beneficiary…Training for verification staff on risk factors, methodology, legal and accounting principles, eligibility rules…Verifications should be documented in each operation file : checklists duly completed and signed by staff
19 Efficient & effective verifications All claims / all key documents to be verifiedHuge volume of supporting documents held by beneficiary? Possibility to focus verifications on samples of items, based on risk factors:type of beneficiary / of operationvalue / type of expenditure itemstype of physical progress indicatorspast experience …Can be complemented by random sampleGood practice to register risk factors and methodology in writing (can be part of checklist)
20 Efficient & effective verifications MA may also modulate the extent of its own administrative verifications by taking into account control procedures in place at beneficiary level(public organisations / audit certificates)BUTdoes not replace / substitute MA/IB verifications
21 Main themes On-the-spot verifications of individual operations General observations on the objective, scope and organisation of management verificationsAdministrative verifications in respect of each application for reimbursement by beneficiariesOn-the-spot verifications of individual operationsEuropean Territorial Cooperation (ETC)
22 Objectives of on-the-spot verifications Reality of operations, delivery of products or services in accordance with terms of reference, physical progress as reportedTechnical and physical aspects of operationAdministrative capacity of beneficiary and/or project infrastructure (eg training infrastructure)
23 Objectives of on-the-spot verifications Compliance with publicity requirementsExpenditure declarations against accounting reality (but not a complete financial audit)Existence of adequate audit trail
24 Organisation of on-the-spot verifications Sampling - risk oriented, complemented by randomSampling method documented and records of selected operations and transactions kept(Short) written report in the operation file
25 Timing of on-the-spot verifications Normally when project well under way (physical and financial progress)Operations of intangible nature (ESF type): during project implementation to attest reality of activityMultiannual operations : at various occasions, with initial visit to ensure preventive effect; final visit after completion of investmentWith / without prior notice to beneficiary
26 Main themes European Territorial Cooperation (ETC) General observations on the objective, scope and organisation of management verificationsAdministrative verifications in respect of each application for reimbursement by beneficiariesOn-the-spot verifications of individual operationsEuropean Territorial Cooperation (ETC)
27 European Territorial Cooperation Complex structure involving combinations of Member States / Regions and / or non-Member StatesControllers appointed in each MS to carry out verifications / each MS responsibleGood practice - sharing results with lead beneficiary controller
28 Management verifications, Audit Trail and link with certification of expenditure
29 Provide adequate information to CA for purpose of certification MA basic source of information for certificationMA to keep a complete audit trail for each operation, as defined in article 15 of regulation No1828/2006Single file per operation reflecting this full audit trailFiles ready at any moment for verifications by CA or audits by AA, EC, ECA
30 Provide adequate information to CA for purpose of certification At start upMA to inform CA on description of control systems, procedures, manuals and check lists used; strategy to monitor risk, risk analysis, methodology for sampling (on the spot verifications )
31 Provide adequate information to CA for purpose of ceritification ThenPeriodical report to CA on procedures effectively operated by MA and IBReport may include list of checks, coverage, detected irregularities and types, corrections made through administrative and on-the-spot verificationsKeep lists of operations declared for partial closure
32 Relations MA / CAGood practice: formal declaration by MA to CA at each expenditure claimNeed for full cooperation and transparency with CA; respect decision of CA not to certify expenditure at this stageAccompany each claim of expenditure by information requested by CAIf claim sent back in full or partially, provide timely information requested by CA
34 KEY POINTSCarry out programme risk assessment, develop a strategy for managing risks. This is the reference point for intensity of verifications, sampling...Focus on actions to prevent errors – information and advice to beneficiaries, access to information, capacity-building and training for beneficiaries, clear defined operations and financing plans, training...Focus on outputs and not just procedures – monitor and review results of control system – is there evidence of good management of risk?
35 KEY POINTSProvide guidance, information, technical support and advice to staff in charge of management verifications – standardised manuals and checklists - training – create information networksDo the same for intermediate bodiesCarry out regular self-assessment and regularly review work performed by IB (quality review)Document all control activity in individual files for perfect audit trail