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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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