1. EN EUROPEAN COMMISSION Budgetary Control Committee of European Parliament Budgetary Control Committee of European Parliament Brian Gray DG BUDGET Workshop on role and functioning of supervisory and control systems for structural operations Workshop on role and functioning of supervisory and control systems for structural operations

2. EUROPEAN COMMISSION EN 2 Audit opinion at closure Commission audits Annual opinion based on national audits Certification of expenditure + first level verification Compliance assessment Guarantees in programme negotiations How assurance will be built up 2007-2013 Ex ante Ex post During implementation

3. EUROPEAN COMMISSION EN 3 Division of responsibility (1/2)  Commission supervisory role –Satisfies itself that “set up” is compliant –Verifying effective functioning –Using powers of interrupting and suspension of payments –Making financial corrections

4. EUROPEAN COMMISSION EN 4 Division of responsibility (2/2)  Member State responsible for: –Set up of a management and control system which complies with requirements of regulations –Ensuring that systems function effectively - i.e. certification reliable –Preventing, detecting, correcting irregularities

5. EUROPEAN COMMISSION EN 5  For each programme: –Managing Authority (MA) –Certifying Authority (CA) –Audit Authority (AA) –Intermediate Bodies to carry out tasks delegated by MA or CA Authorities designated (1/2)

6. EUROPEAN COMMISSION EN 6 Managing Authority (1/2)  Responsibility for implementing the programme, in particular for: –Selection of operations –Desk and on-spot verifications of operations –Compliance with information and publicity requirements –Ensuring the audit trail (levels: MA/intermediate body and beneficiary) Art. 60 Council Regulation

7. EUROPEAN COMMISSION EN 7 Managing Authority (2/2)  Other responsibilities –To inform beneficiaries of all conditions for funding, including the time limit for execution –To satisfy itself (before grant approval) that beneficiary has capacity to fulfil conditions –Administrative verifications on ALL payment requests –On-spot verifications, possibly on a sample basis –Written standards and proper recording of checks Art. 13 Implementation Regulation

8. EUROPEAN COMMISSION EN 8 Certifying authority (1/4)  Responsibilities of CA practically unchanged compared to 2000-06.  Function: to draw up and submit to Commission certified expenditure statements and payment requests Art. 61 of C.R. and 20 Implementation Regulation

9. EUROPEAN COMMISSION EN 9 Certifying authority (2/4)  Formal designation by MS  Certification of expenditure with regard to: –accuracy of data; must be based on reliable accounting system and verifiable supporting documents –compliance with EU and national rules

10. EUROPEAN COMMISSION EN 10 Certifying authority (3/4)  How does CA satisfy itself that data are accurate and that all conditions for certification are fulfilled? –Examination of information received from MA on verifications carried out to expenditure –CA’s own checks at level of MA/intermediate body –Audit reports of AA for systems audits and project audits and Annual Control Report and opinion

11. EUROPEAN COMMISSION EN 11 Certifying authority (4/4)  Maintaining computerized accounting records  Keeping accounts of amounts recoverable and amounts recovered  Sending to Commission annual reports on financial corrections (amounts recoverable, recovered and withdrawn following cancellation)

12. EUROPEAN COMMISSION EN 12 Audit Authority (1)  For each programme designated AA has overall responsibility for all audit work Ensures execution of systems audits  Ensures execution of audits of sample of operations  Presentation of audit strategy within 9 months of approval of programme  Submits an annual control report and opinion by 31 December from 2008  Ensuring that bodies undertaking audit work are independent and perform to international audit standards

13. EUROPEAN COMMISSION EN 13 Audit Authority (2)  Audit strategy following model fixed in Commission Regulation  Sample of operations selected following method fixed in Commission Regulation: –separate random and risk-based samples –confidence and materiality levels fixed for random sample

14. EUROPEAN COMMISSION EN 14 Audit Authority (3)  Report –Implementation of audit strategy –Audit findings –Systems weaknesses  Opinion –Based on audit work carried out in conformity with strategy –Whether system has functioned effectively so as to provide reasonable assurance on correctness of statements of expenditure and as a consequence on legality/regularity of underlying transactions  Closure declaration for partial and final closure of programmes Annual report and opinion

15. EUROPEAN COMMISSION EN 15 Preventive actions by the Commission (1)  Verification before adoption of Ops that control architecture is compliant  Detailed guidance given in 2007 on key processes: –Audit strategy of AAs –Compliance assessment procedure  Training workshops in 2007 for AAs in 24 Member States  Guidance documents issued in 2008 –Management verifications –Functions of certifying authority –Sampling of audits –Evaluation methodology for systems

16. EUROPEAN COMMISSION EN 16 Preventive actions by the Commission (2)  Compliance assessment procedure –Detailed check on reliability of opinion provided by Commission –Compliance assessment reports received for 21 programmes of which: 7 accepted 9 rejected 5 under examination

17. EUROPEAN COMMISSION EN 17 Preventive actions by the Commission (3)  Audit strategy procedure –Detailed examination by Commission of each strategy to verify if satisfactory –Audit strategies received for 69 programmes of which: 8 accepted 7 rejected 54 under examination

18. EUROPEAN COMMISSION EN 18 Corrective actions by the Commission  Commission audits will start in 2009 to verify the reliability of the work of the AAs  Where deficiencies are detected in national systems the Commission can and will: –Interrupt payments without formal decision for up to 6 months –Suspend interim payments by decision –Apply financial corrections to reduce the EU funding for a programme