1. Financial Management and Control of an Objective 1 in Transition Regional Programme Stephen Blair, Director D.G. Regio & Committee of the Regions Open Days September 2004

2. Overview Presentation will focus on the structures which been put in place in Ireland to ensure sound and efficient financial management & control systems Presentation will focus on the structures which been put in place in Ireland to ensure sound and efficient financial management & control systems Firstly I will briefly outline the regional structures in Ireland and give some facts about the region to put the presentation in context. Firstly I will briefly outline the regional structures in Ireland and give some facts about the region to put the presentation in context. This will be followed by a description of the systems which have been developed and an outline of various organisation’s respective responsibilities. This will be followed by a description of the systems which have been developed and an outline of various organisation’s respective responsibilities. The final section examines our experience of operating the systems over the last four years and outlines some lessons learned. The final section examines our experience of operating the systems over the last four years and outlines some lessons learned.

3. INTRODUCTION TO REGIONAL ASSEMBLIES The Regionalisation arrangements negotiated by Ireland in the context of the Agenda 2000 Agreement resulted in the designation of two regions in Ireland for Structural Funds Purposes: The Southern and Eastern Region (S&E Region) which qualifies for a six year phasing out regime for Objective 1 Structural Funds up to the end of 2005, and The Southern and Eastern Region (S&E Region) which qualifies for a six year phasing out regime for Objective 1 Structural Funds up to the end of 2005, and The Border, Midland and Western Region (BMW) Region which has retained Objective 1 status for Structural Funds for the full period to 2006. The Border, Midland and Western Region (BMW) Region which has retained Objective 1 status for Structural Funds for the full period to 2006.

4. REGIONAL ASSEMBLIES - ESTABLISHMENT To administer these two new super regions and to fulfill the E.U. Commissions requirements for some level of devolved administration, the Government created Regional Assemblies To administer these two new super regions and to fulfill the E.U. Commissions requirements for some level of devolved administration, the Government created Regional Assemblies the two new Regional Assemblies were established and came into effect on the 21st July 1999 under the local Government Act, 1991 (Regional Authorities) (Establishment) Order, 1999. the two new Regional Assemblies were established and came into effect on the 21st July 1999 under the local Government Act, 1991 (Regional Authorities) (Establishment) Order, 1999. Assemblies comprise of nominated elected representatives of the Regional/ Local Authorities within their regions Assemblies comprise of nominated elected representatives of the Regional/ Local Authorities within their regions Assemblies first met in Oct. 1999 Assemblies first met in Oct. 1999

5. Regional Assembly - Principal Functions Promote co-ordination of public services in region Promote co-ordination of public services in region manage the Regional Operational Programme manage the Regional Operational Programme monitor and make proposals in relation to general impact in region of all E.U. Programmes of Assistance monitor and make proposals in relation to general impact in region of all E.U. Programmes of Assistance promote consideration by Public Authorities of the implication for, or the effects of their decisions, and activities on the region promote consideration by Public Authorities of the implication for, or the effects of their decisions, and activities on the region

6. Southern and Eastern Region - Profile Population: circa 3 million (approx. 75% of population of the state) Population: circa 3 million (approx. 75% of population of the state) Area: circa 69,000 sq.km. (approx. 53% of state) Area: circa 69,000 sq.km. (approx. 53% of state) Population density: 73 per sq.km. Population density: 73 per sq.km. Urban : Rural ratio: 68%:32% Urban : Rural ratio: 68%:32% Contains 4 of the 5 cities in the state, including Dublin Contains 4 of the 5 cities in the state, including Dublin Economic profile: GVA at basic prices (2001) Economic profile: GVA at basic prices (2001) EU (15) = 100 S&E 128.6 State 118.0 GVA for region (per capita): €29,164GVA for region (per capita): €29,164 GVA for State (per capita) : €26,767GVA for State (per capita) : €26,767 Unemployment rate for region: 4.3%Unemployment rate for region: 4.3%

7. Southern and Eastern Regional Operational Programme Outline Under the National Development Plan there are three National and two Regional Operational Programmes Under the National Development Plan there are three National and two Regional Operational Programmes Southern and Eastern Regional O.P. has total budget of €5.2 billion; of which CSF component accounts for €1.7 billion Southern and Eastern Regional O.P. has total budget of €5.2 billion; of which CSF component accounts for €1.7 billion Very complex programmes (mini NDPs) containing: Very complex programmes (mini NDPs) containing: 4 Priorities4 Priorities 65 Measures/Sub-measures65 Measures/Sub-measures All four sources of EU Structural FundsAll four sources of EU Structural Funds Involving 10 Government Departments and 30+ Implementing BodiesInvolving 10 Government Departments and 30+ Implementing Bodies Delegated tasksDelegated tasks New Regional Bodies to manage these new Regional Programmes in Ireland. New Regional Bodies to manage these new Regional Programmes in Ireland.

8. Outline of Financial Management and Control System Financial Management & control system is based on a series of interlocking certification and verification operations across the different tiers of management in the cascade from final beneficiary (public body) through intermediary body to Managing Authority and Paying Authority. Financial Management & control system is based on a series of interlocking certification and verification operations across the different tiers of management in the cascade from final beneficiary (public body) through intermediary body to Managing Authority and Paying Authority. The specific roles and responsibilities of these different tiers in the cascade are set out in the attached flowchart. The specific roles and responsibilities of these different tiers in the cascade are set out in the attached flowchart. Designation of Authorities: Designation of Authorities: Paying Authority – Have four different Government depts. for each of the funds.Paying Authority – Have four different Government depts. for each of the funds. Managing Authority – S&E Regional AssemblyManaging Authority – S&E Regional Assembly Intermediary/Implementing Bodies – Government Depts. and State AgenciesIntermediary/Implementing Bodies – Government Depts. and State Agencies Final Beneficiaries – Variety of state and local public bodies.Final Beneficiaries – Variety of state and local public bodies. Managing Authority functions delegated to relevant Paying Authorities for EAGGF and FIFG in respect of certification procedures. Managing Authority functions delegated to relevant Paying Authorities for EAGGF and FIFG in respect of certification procedures.

9. Flowchart on Financial Management and Control Arrangement for Drawdown of ERDF Funds Pays ERDF funds to the Paying Authority for the Purpose of reimbursing ERDF expenditure actually incurred Examines ERDF expenditure declaration from Managing Authorities and certifies payment claim to EU commission for drawdown of ERDF funds. Co- ordinates irregularity reports for all funds made by Managing Authorities. Disbursement of receipts. Co-ordinates and examines expenditure reports from implementing Departments/Agencies and submits certified expenditure declarations to Paying Authority. Carries out Article 4 spot checks on expenditure returns made by Implementing Departments/Agencies. Co-ordinates irregularity reports for Transmission to Paying Authority. Co-ordinates & examines expenditure reports from Implementing Agencies & submits certified expenditure returns to Managing Authorities. Carries out Article 4 spot checks on expenditure returns made by Implementing Agencies. Certifies payment claims from final beneficiaries & pays out grants. Reports on ERDF expenditure to Implementing Departments. Retains back-up documentation for payment claims. Carries out work & submits claims for payment to the Implementing agency. All payment claims are backed with receipted invoices & accounting documentation Implementing Departments Verification check by Implementing Departments & Systems Audit by Internal Audit Unit Final Beneficiaries EU Commission Audits carried out by EU Commission control Units Managing Authorities for OP Verification check by Managing Authority and Systems Audit by Internal Audit Unit Implementing Agencies Validation of claims & Systems Audit by Internal Audit Unit ERDF & Cohesion Fund Control Unit Carries out 5% verification checks on declared ERDF expenditure & systems audits Paying Authority Department of Finance Financial control check by Paying Authority & Systems Audit by Internal Audit Unit

10. National Requirements Various circulars issued by the relevant Paying Authorities set out how the Commission implementing regulations are to be applied in Ireland Various circulars issued by the relevant Paying Authorities set out how the Commission implementing regulations are to be applied in Ireland Three elements to certification system: Three elements to certification system: Form A: Over-arching certification of compliance with regulations – signed by Intermediary Bodies and Managing Authority annually.Form A: Over-arching certification of compliance with regulations – signed by Intermediary Bodies and Managing Authority annually. Form B: Ex-ante expenditure certification at each level in cascade to confirm actuality and eligibility of expenditure declared.Form B: Ex-ante expenditure certification at each level in cascade to confirm actuality and eligibility of expenditure declared. Form C: Formal statement of expenditure declared to CommissionForm C: Formal statement of expenditure declared to Commission System Audits: To be undertaken by independent internal audit units within organisations at each level in cascade from Intermediary Body to Paying Authority System Audits: To be undertaken by independent internal audit units within organisations at each level in cascade from Intermediary Body to Paying Authority

11. Ex-Ante Certification – Form B’s B1 Level: Final Beneficiary/Grant Approving Body is expected to do 100% checking of all expenditure (or on a sample basis) and to certify that 14 specific controls have been performed before certifying expenditure. B1 Level: Final Beneficiary/Grant Approving Body is expected to do 100% checking of all expenditure (or on a sample basis) and to certify that 14 specific controls have been performed before certifying expenditure. B2 Level: Intermediary Body (generally government dept or state agency) required to confirm that management and control procedures are in place (procedures manual) and that steps have been taken (include sample checking) to give reasonable assurances on the declaration. B2 Level: Intermediary Body (generally government dept or state agency) required to confirm that management and control procedures are in place (procedures manual) and that steps have been taken (include sample checking) to give reasonable assurances on the declaration. B3 Level: Managing Authority. In addition to the confirmation listed above for Level 2, it is obliged to confirm that such other matters are consistent with Measure Financial tables, Programme Complement, Annual Implementing Report has been submitted and debtors ledger is maintained. B3 Level: Managing Authority. In addition to the confirmation listed above for Level 2, it is obliged to confirm that such other matters are consistent with Measure Financial tables, Programme Complement, Annual Implementing Report has been submitted and debtors ledger is maintained.

12. Major Issues and Lessons Learned Cascade system relies very heavily on systems in organisations. Cascade system relies very heavily on systems in organisations.  Therefore need for systems to be well documented i.e. procedures manuals are very important and to have systems regularly tested i.e. systems audits. Cascade system requires that organisations at each level of the cascade and the employees which work within them are familiar and competent with both the certification procedures and the governing regulations Cascade system requires that organisations at each level of the cascade and the employees which work within them are familiar and competent with both the certification procedures and the governing regulations  Hence the need for regular training for all personnel involved in the certification process.  Even with good systems, human error will always remain a feature. Hence the “four eyes” principle is strongly recommended.

13. Contact Details Southern & Eastern Regional Assembly Assembly House O’Connell Street Waterford Tel: 051 - 860700 Fax: 051- 8798877 Email : info@seregassembly.ie info@seregassembly.ie Web: www.seregassembly.ie www.seregassembly.ie