The verification of public investments

Certification of expenditures Self control Final Beneficiaries responsibility First level control Managing Authority responsibility Certification of expenditures Certifying Authority responsibility Second level control Audit Authority responsibility

First level control Article 60 COUNCIL REGULATION (EC) No 1083/2006 of 11 July 2006 Article 13 COMMISSION REGULATION (EC) No 1828/2006 of 8 December 2006

First level control First level control activities shall include: administrative check regarding 100% of applications for payment on the spot check on a sample basis

Sequence of activities First level control Sequence of activities Tipology control Administrative Checks Art. 13 par 2 lett. A 1828/06 On the Spot check Art 13 par. 12 lett. B Reg 1828/06 activities Control Self control Administrative check Risk analysis Sampling operations On the Spot check representativeness Contol Sample check All operations All operations

Second level control (audit) Article 62 COUNCIL REGULATION (EC) No 1083/2006 of 11 July 2006 Article 16 COMMISSION REGULATION (EC) No 1828/2006 of 8 December 2006

Sequence of activities Second level control Evaluation of reliability Sequence of activities Management and control system check Sampling operations On the Spot check on Gathering documents Audit trail Previous audit First level control Control by CA Process analysis of Selection Implementation Reporting Desk control First level Relevant documentation Sample dimension Number and type of operation Risk analysis Inherent risks Control risks Confidence level Control report Check list Irregularities Relevant data On site control

Documents and information to support the audit activity Community Decisions; Documents for Monitoring Committees; The description of management and control systems; Annual Implementation Reports (RAE) of the MA; Audit trail ex art.15 Reg. EC 1828/06; Monitoring data; Updated list of the co-financed operations; Indications on the functions of Audit Authority in the agreements for delegating tasks to the IBs and/or to the Final beneficiaries

Documents and information to support the audit activity Updated list of referents/IBs/ priority responsible; Models and standards for expenditure justification; Circular letters from the Managing Authority; MA communications on the controls performed by Internal and national or Community bodies (CONTROL REGISTER); Final beneficiaries expenditure declarations; Certifying Authority expenditure certification

Documents and information to support the audit activity Annual questionnaire on controls development; Observations and actions performed after the controls results; Communication sent to the Commission (through the national body) regarding the irregularities found

Documents and Information sent by the Control Authority to the IBs Communication on the programme an audit strategy ex. Art. 62 (Reg. EC 1083/02); The audits shall be carried out each 12-month period from 1 July 2008 on a sample of operations: applied methodology for selecting the sample; list of the operations selected; period for performing the controls; indication of the names of the civil servants responsible in this sense. For knowledge, the communications sent to the final beneficiaries which are subject to the controls; Photocopy of the control reports; Synthesis report on the results of the controls.

Process of audit activities Input Output Operative Program Audit trail System of Management and control 1 Process of audit activities Identification of the strategy Risk Assessment 2 Identification of the methodology of sampling Methodology of sampling Audit’s strategy Normative 3 Sampling Methodology of sampling List of the operations to be audited 4 Audit trail Documentation and records held by the CA, beneficiary Normative Audit of operations Control’s report

Process of audit activities Input Output Process of audit activities Documentation and records held by the beneficiary Irregularities Control’s report Supplementary request documentation 5 Additional audits 6 Documentation object of the control and this case of irregularities Control’s report Competent organs irregularities report Identification irregularities 7 Measures corrective and estimates Singles irregularities verified or system’s irregularities Annual report and opinion

The contents of the system audit The structure and the organization of the MA, of the CA and of the IB; The connections between the functions of the MA, CA, the IB and the functions of control, as well as the informative obligations towards the European Commission; The formal procedure with are managed under the administrative profile-accountant the funds; Methodology for the identification of the objectives that want to reach themselves The controls directed to ensure that the execution of the interventions is as the respect of the initial objectives The existence of adequate internal audit The appropriateness the procedures of the system of monitoring The organizational formal procedure and the general procedures across that come carried out the functions of management and payment

The contents of the system audit The responsibility of the activity of management and control The suitability of the human resources and technologies with respect to the requirement of the ordinary control The procedures that regulate the activity of management and payment and the skills delimit of it The spread of the relevant indications to the correct capacity of the documentation of expenditure The completeness of the d information in the declarations of expenditure The criteria utilized from the Authorities to verify if the declarations of expenditure received respect the requirement of the rules established for the structural Funds about of contracts, competition, equal opportunity, environment, publicity The existence of a procedure so that the payments come emitted for their total amount and without unjustified deductions The existence of measures for the return of the sums unduly distributed The procedures for a separate bookkeeping destined to the record of the operations founded with the structural founds-

The sample of operations to be audited art. 17 and annex IV Reg The sample of operations to be audited art. 17 and annex IV Reg. (EC) 18282006 Based on a random statistical sampling method; Additional operations may be selected as a complementary sample Internationally accepted audit standards and be documented; Having regard to the amount of expenditure, the number and type of operations and other relevant factors, the audit authority shall determine the appropriate statistical sampling method to apply The sample to be audited each twelve-month period shall be selected; The audit authority shall draw conclusions on the basis of the results of the audits relating to expenditure declared to the Commission during the year; The audit authority shall regularly review the coverage provided by the random sample, having regard in particular to the need to have sufficient audit assurance for the declarations to be provided at partial and final closure for each operational programme.

Article 16 COMMISSION REGULATION (EC) No 1828/2006 The audits shall verify that the following conditions are fulfilled: the operation meets the selection criteria for the Operational Programme, has been implemented in accordance with the approval decision and fulfils any applicable conditions concerning its functionality and use or the objectives to be attained; the expenditure declared corresponds to the accounting records and supporting documents held by the beneficiary; the expenditure declared by the beneficiary is in compliance with Community and National rules; the public contribution has been paid to the beneficiary in accordance with Article 80 of Regulation (EC) No 1083/2006.

Audits of operations Phase of deepening and reporting Phase desk Phase of the check on-the-spot Phase of deepening and reporting

Acquisition of the Audit trail PHASE DESK Acquisition of the Audit trail Acquisition of the records by a certifying authority and 1 st level audit report Predisposition of the check list for the control

Phase of the check on-the-spot Acquisition of the documentation on the final Beneficiary of the operation Economical financial control Control of conformity Control of regularity of the execution Regularity of the execution Par condicio Concerning Effectiveness Administrative transparency Realized/Approved Project Respect of technical prescriptions Legality Legal certainty

Economical financial control Typologies Concerning Effectiveness Legality Absence of violations of law and of the normative on the acceptable expenditure Contents Connection between sustained expenditure and activity funded Correspondence between monetary disburse and documentation of expenditure

The control of conformity Typologies Equality of treatment Administrative transparency The legal certainty in the management of the public resources Respect of the National and European laws about public resources Contents Respect of the normative concerning public contracts, information and equal opportunities Respect of the administrative procedures of engagement, payment and account and access to the documents

Control of regularity of the execution Typologies Regularity of the execution Regularity between project approved and activities Respect technical prescriptions Respect technical prescriptions Contents Check correct: procurements of goods and services; training; constuction of pubblic works. Effctiveness of operations with respect to final results

The costs of the operations and projects Typologies Direct Indirect Overheads Indirect in the limit established with fair and verifiable criteria Reporting of expenditure Direct and total to the operation or to the project Indirect and partial to the operation or to the project with technical and physical criteria

Deepening with final beneficiary Phase of deepening and reporting Deepening with final beneficiary Determination of eventual irregularity Reporting REPORTING European Commission National Organisms