Irregularity management and statistics Ministry of Finance of the Republic of Lithuania

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1 Irregularity management and statistics Ministry of Finance of the Republic of Lithuania October 23, 2014 Jurmala, Latvia

2 Responsibility of the institutions in irregularity investigation, detection, correction and prevention Managing authority (MA) Ministry responsible or other institution (Invega) (MR) Implementing agency (IA) Regulates the rules and procedures on irregularity investigation, detection and correction; Reports the irregularities to OLAF and Audit authority; Monitors the functions, delegated to the institutions; In the field of its responsibility, carries the prevention of the irregularities. Takes the decision regarding the irregularities (in the light of the proposal of the IB); Carries out recoveries; In the field of its responsibility, carries the prevention of the irregularities. Carries out the irregularity investigation, detects and corrects the irregularities; Reports about the detected irregularities to MA and CA; In the field of its responsibility, carries the prevention of the irregularities.

3 Structure of the irregularity management and reporting ( ) (1) In case, the irregularity is suspected, IA caries out the irregularity investigation; The detected irregularity is reported to MR together with the proposal to take the decision on the further actions Irregularity investigation and detection Decision via the irregularity MR takes the decision in accordance to the proposal of the IA Recoveries (MR); Termination/ reduction of the funding (IA). (no exceptions for public institutions) Implementation of the decision Reporting about the irregularity and suspected fraud

4 Structure of the irregularity management and reporting ( ) (2) Irregularity investigation and detection (IA) in the case of the suspected fraud, the FCIS (FNTT) is informed; when the public procurement irregularity is detected, the PPO (VPT) is informed. Reporting about the suspected fraud and irregularities in public procurement Reporting on the irregularity (MA) IA reports every quarter via SFMIS to MA about the detected irregularities MA verifies the reports and sends them to OLAF and AA Reporting on the irregularities (OLAF and AA)

5 Statistics on irregularities ( ) (1) During the programming period (SFMIS data): 1860 irregularity investigations have been carried out and 1267 irregularities were detected in 1020 projects (out of 8370 projects); Recoverable amounts - 28,5 mln. EUR. It covers 0,46 % from paid amounts to all of the projects (6,153 mln. EUR); 18,28 mln. EUR are already recovered (64,1 %); 19 irregularities are qualified as suspected fraud (recoverable amounts - 0,9 mln. EUR, already recovered 0,51 mln. EUR (57 %); 0 cases of established fraud yet.

6 Statistics on irregularities ( ) (2) Irregularities by year 409 Irregularities by program VP (Human resources) 2 VP (Economic growth) 3 VP (Cohesion promotion) 4 VP (Technical assistance)

7 Statistics on irregularities ( ) (3) Suspected fraud by program Suspected fraud by year VP (Human resources) 2 VP (Economic growth) 3 VP (Cohesion promotion) 4 VP (Technical assistance)

8 Statistics on irregularities ( ) (4) Most frequent types of irregularities: a) 723 cases (48 %) irregularities related to public procurement (code 614); b) 483 cases (32 %) irregular expenditure (code 325); c) 48 cases (3 %) failure to comply with time limits (code 601); d) 37 cases (2 %) bankruptcy (code 1000). IA have sent 1860 reports to MA and 479 of them were sent to OLAF.

9 Irregularity management in Aim Clearer responsibility of institutions Simplification and administrative burden reduction Strengthening the administrative system and risk management Development Decision, that there is an irregularity, and decision to recover irregular amounts, are taken by one institution IA; Cooperation of IA in the cases, when the irregularity is related to public procurement in several projects and in different IA (is also being introduced to ). One legal act for irregularity investigation, detection and correction The rules on project management and funding (order of MoF); Standardized forms (decision on the irregularity); broader use of ITtools (SFMIS); A more explicit order of the correction of the irregularities; The requirement to make full recovery of unlawfully gained in the case of the established fraud; Principles of how to apply the financial corrections for non-compliance with the rules on public procurement (is also being introduced to ). Involvement of competent institutions: - Competition Council - when the irregularities in competition policy are suspected; - Public Procurement Office when the irregular public procurement is suspected; - Financial Crime Investigation Service in the cases of suspected fraud and their prevention; - Methodical Assistance Centers to provide consultations and methodical assistance for institutions and beneficiaries.

10 Findings of Audit Authority (AA) The findings of AA correspond to the most frequent types of irregularities: - breeches of public procurement: a. unlawful qualification criteria; b. breeches in the procedures of public procurement; c. inappropriate procurement procedure for additional works (unpublished negotiations). - irregular expenditures; - Publicity and other; According to the findings of the AA, IA starts the irregularity investigation. If the finding of AA is based on the irregularity investigation, that was already carried out, the irregularity investigation is opened again and new decision (if need be) is met.

11 THANK YOU!