How to Prepare the Winding-Up Declaration

Transcription

1 How to Prepare the Winding-Up Declaration This presentation is a summarisation of a presentation prepared by Marianna Miklós- Molnár, Director of Strategy and Methodology, Directorate General for Audit of European Funds, Hungary. It is used with her permission and she asks that her intellectual rights be recognised should delegates chose to use any part of it in future. Barry North (May 2014)

2 Presentation Outline 1. Regulatory and methodological framework 2. Closure Methodology 3. Results of the audits & Lessons learnt 2

3 1. Regulatory and methodological framework 3

4 Regulatory framework Community legislation Council Regulation No 1083/2006/EC of 11 July 2006 (Article 62(1)(e)) Commission Regulation No. 1828/2006/EC of 8 December 2006 (Article 18 (3), Annex VIII) National legislation Government Decree No. 4/2011. (II. 28.) Methodological regulations Commission Decision C(2013) 1573 ( ) Q&A AA s Audit Manual 4

5 Directorate General for Audit of European Funds Government Decree No. 210/2010. (VI. 30.) on the Directorate General for Audit of European Funds Legal successor of the Government Audit Office with respect to the audit tasks related to projects financed from EU and other international funds Acts as the audit authority for the period of Performs the audit tasks for assistance received from EU and other international funds 5

6 Basic methodological principles Member states shall guarantee the implementation of projects at an adequate quality; the results and evaluation of activities; sound financial management and controlling it. Audit is primarily a member state function Member states shall set up their management and control systems in such a way that the efficient and regular use of Community resources is ensured The report presenting the management and control systems shall be submitted to the EC 6

7 Verifying the efficiency of the management and control systems The EC shall ensure the smooth functioning of the management and control systems. For this reason it may perform on-the-spot checks or ask the Member State to do so. At least once a year the EC and the MS jointly examine: the results of audits performed; the financial impact of irregularities revealed; the corrective measures taken or to be taken; the changes in the management and control systems (if any). 7

8 Audit functions: programming period Performance of compliance audit; Elaboration and revision of audit strategy; Preparation of annual audit plan; Performance of system audits and audits on operation; Compilation of annual control report, issuance of annual opinion; Issuance of closure declarations related to partial and final closures; Follow-up of the implementation of measures; Communication with the European Commission; Participation in the work of monitoring committees; Participation in the work of groups of auditors (ETC); Organisation/ chairing of GoA meetings (where Hungary provides the MA). 8

9 Primary Community legislation - structural funds - Commission Regulation (EC) No. 1828/2006 Detailed rules for the implementation of Regulation (EC) No. 1083/2006 requirements for management and control systems in member states; detailed functions of managing authorities; certification activity of the certifying authority; system audits and audit on operation; rules on the closure declaration; 9

10 2 Closure methodology 10

11 Common objective Closure of operational programmes financed from the Structural Funds as well as Cohesion Fund projects successfully and in due time, while promoting cooperation and partnership. 11

12 Preparation for closure: Institutional actors I. Managing authority/ibs 1. complete management verifications 2. reconcile claim with accounting records 3. verify amount of public contribution paid or due to be paid 4. verify that errors/irregularities were corrected stemming from the results of all available audits (management checks, system audits or audits on operations, other national bodies, EU bodies audits) 5. verify correspondence of the all financial information with final implementation report NB: Most of these tasks should be carried out on an ongoing basis during implementation, to avoid problems at closure. 12

13 Preparation for closure: Institutional actors II. Certifying authority 1. Draw up the application for final balance and the statement of expenditure 2. Ensure that it receives all necessary information from MA and on all audit results 3. Satisfy itself that all errors/irregularities were corrected either by withdrawal or by a deduction 4. Draw up the final statement on withdrawn/recovered/pending recoveries/irrecoverable amounts Important: CA should submit its work to AA on time to allow sufficient time for the AA to carry out its work for the closure declaration 13

14 Preparation for closure: Institutional actors III. Audit authority Complete audit work on system audits and audits on operations on the expenditure declared during the programming period (Last ACR will cover expenditure declared until 2014) Verify if MA, IBs work for closure is complete and reliable in particular on management verifications, errors/irregularities, information on the way treated audit results. 14

15 The closure process Definition: The closure of an operational programme is the financial settlement of any outstanding EU budgetary commitments towards the programme, through payment of the final balance due to the Member State, by cancellation of the remaining budgetary commitments relating to any unused balance (decommitment), or by recovery of any amount unduly paid. (ECA) 3 documents to be submitted to EC for each OP: final implementation report (MA); application for payment of the final balance and a statement of expenditure (CA) closure declaration supported by a final control report (conclusions of audit carried out during the programming period and assessing the validity of the application for final payment and the regularity of the transactions) 15

16 Closure declaration I. The declaration shall be submitted by the audit authority independent from - the managing authority; - the unit responsible for certification of the certifying authority; - the intermediate bodies; Audits shall be carried out in accordance with approved international audit standards. All necessary information and access to evidences and records necessary for issuing the declaration to be provided 16

17 Closure declaration II. The declaration shall be based on the following: examination of the management and control systems; findings of performed audits; results of additional audits based on a sample of operations if necessary. The AA shall examine whether statements of expenditure are correct, and the underlying transactions legal and regular. The declaration shall be accompanied by a report including all relevant information needed for justifying the declaration; the findings of national and Community audits to which the AA has had access. 17

18 Closure declaration III. The AA shall perform all examinations necessary to obtain reasonable assurance that the statement of certified expenditure is adequate and that the underlying transactions are legal and regular, and the projects have been implemented in line with the OPs and project objectives. Issuance: OPINION Cohesion Fund-after the closure of each project structural funds-in respect of each operational programme at the end of the programming period (in the period, the issuance of partial closure declarations is allowed) 18

19 Closure declaration IV. 3 possible conclusions: Unqualified opinion: the examination did not reveal hindering factors, low frequency of errors, each problem has been adequately addressed or Qualified opinion (except): some hindering factors found, however, the frequency of errors is not significant, some problem have not been adequately addressed or No opinion can be stated: significant obstacles have arisen, significant frequency of errors (regardless of how these have been addressed) 19

20 Methodology The closure methodology gives an overview of the institutional system, and the closure tasks of each institutional unit, determines the types of closure documents to be prepared by the various organisations, and their content and the relevant deadlines defines the detailed closure tasks of the AA deadlines for closure tasks focus and criteria of audits prior to closure Detailed checklist for all criteria mentioned in the EU Commission Guidelines regarding the issuance of closure declarations for the operational programmes financed from the structural funds. 20

21 Additional audits Scope and findings of previous audits Implementation of recommendations Criteria for selecting a Representative Sample 21

22 Previous audits Operational Programme Checking of findings at previous audits and the formal requirements and figures in the documentation of actions taken Closure Declarations Actions upon irregularity reports Documentation for the application for the payment of the final balance Single error Additional audits Determination of the error rate Sample checks of projects Systemic error Audit of final certificate of expenditure and closure declaration 22

23 Audits preceding closure in Hungary ( ) System audit- phase 1: preparation for programme closure by all institutions concerned, monitoring system for audits, follow-up of previous audits and the implementation of action plans, regularity of the records and handling of irregularities, and the handling of claims 23

24 Audits preceding closure I. Documents audited in Phase 1: rules of procedure, internal rules and audit trails; reports on all system audits and project audits carried out earlier in respect of the given programme; documents related to previous audits carried out by other audit bodies (European Court of Auditors, European Commission, State Audit Office), such as : audit reports action plans internal audits reports on the implementation of actions and supporting documents; irregularity reports sent to OLAF 24

25 Audits preceding closure II. System audit Phase 2: testing of the adequate operation of the management and control system reasonable assurance about the validity of the final statement of expenditure and the legality and regularity of the underlying transactions, implementation of the audited programme in accordance with the provisions of legal regulations, internal rules of procedure and the audit trail, fulfilment of objectives and indicators defined in the OPs, repeat check of the monitoring system and the handling of irregularities 25

26 Audits preceding closure III. Documents audited in phase 2: description of the management and control systems; annual and final implementation reports prepared by the managing authorities, and related lists of projects and irregularities; documentation connected to the application for the payment of the final balance; documents related to financial corrections, if any; supporting documents needed to check the implementation of recommendations formulated during the system audit in phase 1. 26

27 Timetable : annually performed system audits and sample checks of projects : phase 1 of system audit preceding closure : phase 2 of system audit preceding closure and supplementary sample checks 4. August September 2010: preparation and issuance of the winding-up declaration and the final audit report 5. Deadlines met (ROP: 31 March 2010, ARDOP, ECOP, EPIOP, HRDOP, EQUAL: 30 Sept 2010) 27

28 3. Lessons and results of audits 28

29 General lessons I. documentation for the final implementation report and the application for the payment of the final balance was prepared with delay the content of documents changed constantly, follow-up, several checks to ensure consistency of data audit work vs. time pressure significant amount of additional audit capacity needed risk in terms of closure tasks significant additional workload on the institutional system issuance of closure declarations simultaneously for all OPs 29

30 General lessons II. IT only for Hungary schedule: detailed but modified several times AA and CA are the end of the closure process payment deadlines of IB to beneficiaries and suppliers were also included absorption, cost overrun irregularities, reporting withdrawal, recoveries, pending recoveries continuous update of already submitted data special reports on irrecoverable amounts (bad debts) corrections needed 30

31 General lessons III. Organisational changes Turnover of staff Timing Planning activities-float time reconciliation among Member States correction of errors necessary actions coordination tasks, harmonisation of the closure tasks of various OPs closure working groups consultation, communication, cooperation among organisations, motivation 31

32 General lessons IV. preparation (methodology, trainings) resource planning review of closure processes in advance provision of precise and detailed methodological guidelines avoidance of delays compared to the planned timetable incorporation of float time coordination and strengthening of closure working groups strengthening of consultation, communication and cooperation among organisations ongoing cooperation and consultation with the audit authority and the Commission 32

33 Specific lessons of audits (OPs) testing of eligibility technical assistance follow-up of earlier recommendations and actions delay in the completion of irregularity procedures (failing to meet deadlines) application for the payment of the final balance (correction of statements of expenditure) correction of data in the monitoring system deficiencies of the documentation (separate accounting records) 33

34 The Future (Closure of ) Challenges: The new programming period is already running during the closure period Simultaneous workload and need for human resources : excessive workload on a yearly basis 34

35 General Time Schedule Source: Partick Wamper, Homologue Group meeting Bucharest 30/09 01/10/

36 Closure of Challenges: The new programming period is already running during the closure period Simultaneous workload and need for human resources : excessive workload on a yearly basis Opportunities: Exchange of experiences, knowledge Publication of case studies Joint audit work (among MSs, between MS and COM, etc.) 36

37 Challenges faced Management of workload and time Methodological issues ECA, COM and MS sometimes get to different conclusions; Quality and availability of data Overlapping programming periods new framework set up before the old one could have been assessed; Programming periods relatively long (10 years) programmes and regulations need to be adopted several times changes affect institutions + organisational changes and turnover of staff 37

38 Good practices and conclusions Good communication with the COM, feedback for questions; Good cooperation between actors Institutions within MS; MS and COM Focus should be laid on results instead of procedures;. Clear methodology provided in due time (March 2013) Adequate preparations for closure start with smooth programme implementation! 38

39 QUESTIONS? Barry North +44(0)