FIRST LEVEL CONTROL: PRINCIPLES AND PRACTICE

Transcription

1 CENTRAL EUROPE PROGRAMME Project financial management and controls Vienna, 7 th April 2011 FIRST LEVEL CONTROL: PRINCIPLES AND PRACTICE 1. Validation of expenditure: the FLC 2. General principles of eligibility Helga DEPASQUALE JTS CENTRAL EUROPE Programme

2 CENTRAL EUROPE PROGRAMME Contents 1. Structure of the First Level Control in CE 2. First Level Control in practice 3. General principles of eligibility

3 1. Structure of the First Level Control in CE The FLC system within CE Member States are responsible for setting up and implementing a FLC system on their territories [Regulation (EC) 1080/2006, art. 16]. Each Member State of the CENTRAL EUROPE area has nominated a FLC Responsible Body for its national system. The description of the national FLC systems is subject to the approval of the EU COM prior triggering the reimbursement process.

4 1. Structure of the First Level Control in CE The FLC system within CE The list of FLC responsible bodies can be found in the Programme website: (Contact section)

5 1. Structure of the First Level Control in CE Centralized FLC The validation of expenditure is performed by one centralized body for all Partners. The validation is free of charge. Countries with a centralized FLC system are: the Czech Republic, Hungary, Poland*, Slovakia, Slovenia. Decentralized FLC The validation of expenditure is performed by an internal or external controller appointed by the Partner. The selection of the controller can be subject to restrictions. Countries with a decentralized system are: Austria (with restrictions), Germany, Italy, Poland* (with restrictions) More info in: - Country specific section

6 CENTRAL EUROPE PROGRAMME Contents 1. Structure of the First Level Control in CE 2. First Level Control in practice 3. General principles of eligibility

7 2. First Level Control in practice Checks performed by the controllers: What? The delivery of the products and services co-financed; The reality of the expenditure claimed; The eligibility of the expenditure according to Community, Programme and National rules; The compliance of the expenditure with Community rules; The adequacy to the purpose of implementing the operation; The existence and effective functioning of an accounting system on the level of each partner FLC is based on originals of the documents supporting the expenditure, which must be voided

8 2. First Level Control in practice Checks performed by the controllers: How and Where? FLC checks are performed as: Desk checks of the documents foreseen for each budget line, according to the Control & Audit Guidelines and to the national specific audit requirements; On-the-spot checks performed by the controllers at the premises of the Partners. For decentralized systems, at least two on-the-spot checks are mandatory for each Partner (1 st Progress Report and at least once more before project closure).

9 2. First Level Control in practice Checks performed by the controllers: How and Where? The procedure for the reporting of expenditure to the controllers (including specific templates), as well as the submission and voiding of the documents, is set up at the level of each Member State. Read carefully the available documents set at the level of each Member State (manuals, procedures, templates, etc.)

10 2. First Level Control in practice Documentation of the FLC work (audit trail) At the end of the validation process, the controllers deliver to the partners the following documents: Confirmation of control in original, including a table with a breakdown of the validated expenditure Internal control report Control checklist The templates of these documents are provided by the Programme as annexes to the Control & Audit Guidelines (please verify the use of the latest version of the templates available on Document center section).

11 CENTRAL EUROPE PROGRAMME Contents 1. Structure of the First Level Control in CE 2. First Level Control in practice 3. General principles of eligibility

12 3. General principles of eligibility General eligibility principles 1. The expenditure is actually paid (proof of payment); 2. It refers to activities implemented within the scope of the project as approved by the Monitoring Committee; 3. Its amount is adequate for achieving the purpose of the project; 4. It has been incurred as from the eligibility starting date set in the subsidy contract; 5. It is not in contradiction to specific eligibility requirements as set by EU, Programme and national rules. General principles of sound financial management (i.e., economy, efficiency and effectiveness) are respected

13 3. General principles of eligibility Legal basis for eligibility Three levels of rules must be regarded when considering an expenditure as eligible: EU rules as set in the Structural Funds Regulations, and also including the horizontal principles of eligibility; Programme rules as described in the Implementation Manual and in the Control & Audit Guidelines; National rules set specifically at the level of each Member State (manuals, etc. ) and including also internal rules. The stricter rule applies!

14 3. General principles of eligibility Legal basis for eligibility: EU rules Regulation (EC) No 1083/2006 General Regulation (Art. 56) and its amendments; Regulation (EC) No 1080/2006 ERDF Regulation (Art. 7) and its amendments; Regulation (EC) No 1828/2006 Implementing Regulation (Art. 48 to 53) and its amendments. Horizontal principles of eligibility: Public procurement Equality between men and women and non-discrimination Environment protection and sustainable development State Aid Publicity rules

15 3. General principles of eligibility Focus on Public Procurement

16 3. General principles of eligibility Focus on Public Procurement Irrespective of thresholds, transparent and fair conditions for competing on the common market have always to be ensured in all cases of purchase of goods and services, as well as the ordering of public works. In the framework of the CENTRAL EUROPE Programme, rules on public procurement are mandatory and have to be respected also by private bodies and international organizations.

17 3. General principles of eligibility Focus on Public Procurement: in-house subcontracting The following requirements must be fulfilled: The public body awarding the contract must exert on the in house society an analogous control to that exercised upon its own internal services (no participation of a private enterprise to the society, even if in a minority share) The in house society must carry out the main part of its tasks for the awarding public body. Costs of the contracted company must always be charged on a real-costs basis, thus without any profit margin!

18 3. General principles of eligibility Focus on expenditure borne by public bodies According to the last revision [Regulation (EC) 846/2009] of art. 50 of the Regulation (EC) 1828/2006: Internal costs (e.g. staff) incurred by public authorities and subjected to reimbursement within a project shall be eligible only if these costs do not arise from their statutory responsibilities or day-to-day management, monitoring and control tasks. Check carefully especially in case of permanent internal staff involved in project activities

19 3. General principles of eligibility Focus on in-kind contribution In-kind contribution shall be eligible upon following conditions: It is eligible according to national eligibility rules; It consists of the provision of land or real state, equipment or raw materials, research or professional work or unpaid voluntary work whose values can be independently assessed and audited; It is below 5% of the total partner s budget and do not exceed per partner.

20 3. General principles of eligibility Not eligible expenditure VAT which is recoverable by whatever means, even if it is not actually recovered by the partner; Interest on debt, fines, financial penalties, expenditure on legal disputes and foreign exchange losses; Costs for bank guarantees; Acquisition of land.

21 3. General principles of eligibility Periods of eligibility Three different periods of eligibility: 1. Project preparation: eligibleuntilthedateofsubmissionof the Application Form (payments might occur also later). 2. Project implementation: eligible from the start date to the end date of the project as in the Application Form (payments not later than the end date). 3. Project closure: eligible until the deadline set in the Subsidy Contract for the submission of final reports (including costs of audit of the last reporting period)

22 CENTRAL EUROPE PROGRAMME THANK YOU!