1. Single Audit Strategy 2007-2015 LATVIA

2. Audit System The Audit Authority functions are carried out by the Internal Audit Department of the Ministry of Finance, that: -Is directly subordinated to the State secretary of the Ministry of Finance -Is independent in its planning of activities, auditing and review work along with preparation of reports/statements -Does not get involved in administration processes of the EU funds in the Management Authority, Certification Authority, responsible and co-operation institutions as well as in payment processes in the Paying Authority

3. Audit System Ministry of Finance Minister of Finance State Secretary Deputy state secretary on foreign finance aid coordination issues Head of the Managing Authority European Union funds strategy department Managing Authority European Union funds management system department Managing Authority European Union funds supervision department Managing Authority Internal Audit Department Audit Authority

4. Audit System Audit Authority Audit Bodies Financial Control Department of the Ministry of Finance Internal audit units of responsible institutions Internal audit units of co- operation institutions Internal Audit Department of the State Treasure Preparation of Audit Strategy Preparation of Annual / Final Control Report and Closure declaration Carrying out of Management and control system’s audits Co-ordination of the Compliance Assessment Carrying out of audits of operations Carrying out of audits of statements of final expenditure Carrying out of Management and control system audits

5. Audit Strategy Audit Strategy was developed based on: EC regulations No 1083/2006 Article 62 EC guidelines on Audit Strategy Cabinet Regulation No 455 „Procedures for Ensuring of the Functions of the Audit Authority in the Management of European Union Funds” of 17 June 2008 The Audit Authority has developed internal procedure “Procedure on how to prepare EU funds Audit Strategy for planning period 2007 to 2013” of 11 July 2008

6. Audit Strategy Audit Strategy was developed and submitted to EC on 29.09.2008 via SFC 2007 information system Submitted Audit Strategy was refused and returned back to Latvia on 25.11.2008 Audit Strategy was updated based on EC comments and resubmitted to EC on 05.01.2009 and on 05.03.2009

7. Audit Strategy In order to develop Audit Strategy, the Audit Authority evaluated: –The State Treasury’s, responsible and co-operation institutions’ internal audit units submitted information on: Priorities of system audits set out in stategic plans and based on performed risk assessment Planned and closed system audits for period 01.01.2007 to 30.06.2008 Planned system audits for period 01.07.2008 to 30.06.2009 Applicable methodology for carrying out of system audits

8. Audit Strategy In order to develop Audit Strategy, the Audit Authority evaluated: –Financial Control Department audit plan and methodology for carrying out of audits of operations: Audits of operations strategy for period from 2007 to 2015 and the applicable methodology Financial Control Department’s applicable methodology for audits of operations

9. Audit Strategy The audit Strategy also includes horizontal audits identified by Audit Authority: publicity and information rules; project application assessment and selection; verification and confirmation of payment claims; identification and registration of irregularities; monitoring of Programme implementation; quality and security of information (including IT systems); preparation of planning documents; communication with beneficiary; adequate certification procedures; preparation and confirmation of declaration of expenditure; recovery procedures; public procurement; audit trail; verification of expenditures; adequacy of system audits; adequacy of audits of operations