Cost Effectiveness and Compliance with Legal Enactments of the European Union Structural Funds Administration System under the parallel audit "On Costs of Controls

Report ID: 102

Summary
Although the Ministry of Finance has, in accordance with the regulatory enactment, ensured establishment of EU Funds administration system, yet implementation of EU Funds administration is not ensured in the most effective way, as the audit has disclosed deficiencies in the following areas:
1. EU Funds administration system;
2. Planning and implementation of EU Funds technical assistance, including utilisation of
financial resources of EU Funds technical assistance project at the Ministry of Finance;
3. Deficiencies in regulatory enactments.

Activity of the Ministry of Agriculture and Institutions Subordinated There to in Relation to Supervision of the Handling of Food and Administration of Food Products Export to the Russian Federation

Report ID: 103

The audit is conducted in accordance with international auditing standards recognised in the Republic of Latvia. The audit was planned and performed to obtain reasonable assurance on compliance with the requirements of regulatory enactments of activity of the following institutions and efficient utilisation of the State budget funds:
1. Organisational structure and activity of the Ministry of Agriculture, developing and implementing the State and the European Union aid policy in the field of agriculture and fishery;
2. Activity of Rural Support Service, administering export compensations;
3. Activity of Latvian State Institute of Agrarian Economics related to market and export promotion;
4. Activity of Food and Veterinary Service:
    4.1. Administering food products export to the Russian Federation;
    4.2. In the area of State supervision and control on the handling of food.
5. The audit was conducted on the period from 1 January 2008 to 30 June 2009.
6. Examination, assessment and documents analysis was performed for obtaining audit evidence, as well as the interviews of management and responsible officials of the Ministry of Agriculture, Food and Veterinary Service, Rural Support Service and Latvian State Institute of Agrarian Economics were conducted.
7. The audit provided sufficient and according audit evidence for drawing up the audit report.

Analysis (of types) of errors in EU and National public procurement within the Structural Funds programmes

Report ID: 107

In 2013, the Contact Committee of the heads of Supreme Audit Institutions (SAIs) of the Member States of the European Union and the European Court of Auditors mandated the Working Group on Structural Funds to continue its review of issues relating to Structural Funds, more specifically, to carry out a parallel audit on the ‘Analysis (of types) of errors in EU and national public procurement within the structural funds programmes’.

The Working Group consisted of nine SAIs, while a further five SAIs and the European Court of Auditors acted as observers. The parallel audit was carried out in order to understand the reasons why beneficiaries fail to comply with public procurement rules. The comparison of the national results was intended to reveal differences or similar causes in the Member States. Most SAIs based their audit on errors already detected by their national management and control system.

Although this parallel audit was not designed to provide a full and accurate picture of the situation, the findings suggest a rather large number of errors in public procurement under Structural Funds. The following are the main conclusions and recommendations:

 Most authorities of the management and control systems do not systematically record the types of errors in public procurement procedures. They place focus on individual errors only. It is not always assured that all authorities, especially intermediate bodies, report every error detected.

We recommend national authorities to systematically record the types of errors detected in public procurement procedures. This is the only way to obtain a full picture of these errors and address them.

 In 2007, the Coordination Committee of the Funds (COCOF) issued guidelines for determining financial corrections with regard to irregularities in the application of public procurement regulations to contracts co-financed by the Structural Funds. Although the description of the categories is rather ambiguous and vague, most Member States used the COCOF guidelines in their original version without further developing them.

We recommend that national authorities refine the description of the categories and when needed elaborate categories and rates of the COCOF guidelines further in order to ensure a uniform and just application at national level. In addition to that, it would be helpful if the European Commission distributed good practices on how the guidelines are applied in the Member States.

 The national management and control systems detected more public procurement errors in contracts with values below the EU thresholds than above the EU thresholds. However, the average financial impact of errors was higher in procedures above the EU thresholds than below the EU thresholds.
Although most authorities already strive to prevent errors in public procurement procedures, we recommend national authorities to take more targeted action in order to reduce the most common errors in public procurement procedures and those with the highest financial impact.

 According to the findings of the Working Group “lack of knowledge” is the most common reason for errors in public procurement, followed by ‘interpretation difficulties’.
We recommend the Member States to request the European Commission to further clarify the legal framework and reduce the administrative burden for the contracting authorities and the bidders, but without resulting in limitation of the equal access, fair competition and efficient use of public funds. Further to that, we recommend Member States to take the following steps in order to prevent or reduce errors in the area of public procurement:

 They should keep public procurement rules as simple as possible and not change them too radically or too frequently.

 Some Member States should improve the knowledge of the staff of the national authorities in the field of public procurement in order that they are equipped to support beneficiaries and prevent errors.

 Member States should improve their communication policy and provide better information to beneficiaries.

They should try to ensure that beneficiaries exert due diligence at all stages of public procurement.

Efficiency of the process of issuing of biometric passports and supporting information systems

Report ID: 108

A. In the Republic of Latvia the EU funds administration and control system is established at several levels, which during the audit period enabled detection of public procurement errors in the indicative amount of 1%from the total amount declared to the EC, however:
A1. There is a risk that the actions of institutions involved in management of the EU funds in clarifying of the principles and legal framework of public procurement, as well as the impact of the detected errors on procurement procedure are insufficient and ineffective, since:
1.1. The biggest part of the errors or 57% from the total number of errors detected by institutions involved in management of the EU funds, which were subject to proportional financial corrections during the audit period, in all operational programmes were pertaining to unlawful restrictions for selection of tenderers (for example setting specific requirements that favour a single businessman) or unequal treatment of tenderers in awarding of the contract (for example, unjustified preferential treatment given to one of candidates invited to negotiate), indicating that the beneficiaries are not completely aware of the procurement procedures;
1.2. In 45% of the cases the reasons of errors indicated by the beneficiaries do not correspond to the reasons indicated by the audit authority, the responsible and cooperation authorities; for example, in cases when beneficiaries have not selected any of the six reasons of errors, they have indicated to “other reason of error” and in 50% of cases they described these errors as differences in opinion with the institution which had detected the error;
A2. The procedure for data entering and classification of errors in the EU funds management information system is inaccurate — information on public procurement errors is entered without specifying the type of error, as well as the EU funds management information system does not aggregate information on procurement contracts in order to enable determining whether the contracts are subject, not fully or not subject to EU Public Procurement Directives and to apply a respective financial correction.

B. At the result of the audit three recommendations were issued to the Ministry of Finance as the managing authority aimed at:
B.1. Ensuring that detailed information is being entered and accumulated within the EU funds management information system on public procurement errors, so that institutions involved in management of the EU funds can analyse this information and perform sufficient actions to eliminate the errors;
B.2. Ensuring that institutions involved in management of the EU funds provide purposeful support to the beneficiaries in respect to procurement procedures and detailed explanation of the substance of the detected errors in order to reduce the number of public procurement errors within projects financed by the EU funds;
B.3. Reduction of the number of unclassified errors by ensuring accurate classification and evaluation of errors according to their type.

Rapport sur le contrôle coordonné des subventions fiscales

Report ID: 113

Le VIe Congrès de l'EUROSAI, qui s'est tenu à Bonn du 30 mai au 2 juin 2005, a traité du contrôle des recettes publiques par les Institutions supérieures de contrôle (ISC). L'analyse des documents nationaux soumis par les membres de l'EUROSAI avant le congrès a montré, entre autres, que les connaissances sur l'efficacité des subventions fiscales sont encore insuffisantes, a noté l'étendue et la complexité de la législation fiscale qui peut conduire à des insuffisances et à des exceptions fiscales et a conclu que les ISC devraient élaborer des conclusions plus fiables sur le volume et la réalisation des objectifs de ces subventions fiscales.

Le Congrès a donc préconisé la réalisation d'un audit coordonné des subventions fiscales, ouvert à tous les membres de l'EUROSAI. A cet effet, un groupe de travail a été créé afin de coordonner la planification de l'audit et d'en établir le contenu et les rubriques. Les Institutions supérieures de contrôle d'Allemagne, de Chypre, du Danemark, de France, de Finlande, de Hongrie, d'Islande, d'Italie, de Lettonie, de Lituanie, de Pologne, de Roumanie, de la Fédération de Russie, de Suède, de Suisse, de la République slovaque, du Royaume-Uni et des Pays-Bas (observateur) ont participé à l'audit.

Les objectifs de l'audit coordonné étaient les suivants
- Améliorer le partage des connaissances,
- Améliorer la communication entre les membres de l'EUROSAI dans des domaines d'intérêt particulier,
- Obtenir des informations sur les meilleures pratiques,
- Renforcer les réseaux informels,

Afin d'obtenir des résultats comparables, une liste de contrôle a été rédigée, portant sur toutes les étapes d'une subvention fiscale, depuis la législation jusqu'au rapport, en passant par la mise en œuvre. En même temps, cette liste de contrôle a constitué le cadre non contraignant d'un audit de la transparence et des rapports. En outre, trois sous-groupes de travail ont été créés pour traiter des subventions fiscales spécifiques : l'impôt sur le revenu des sociétés, la taxe sur la valeur ajoutée et le rapport sur la transparence et les subventions.

A l'issue des travaux d'audit, le groupe de travail est arrivé à la conclusion que, concernant les subventions fiscales, des améliorations étaient nécessaires dans les domaines de la législation, de l'évaluation et de l'établissement de rapports dans tous les Etats participants, afin de créer la transparence globale qu'il juge nécessaire tant pour le législateur que pour le grand public.

Source:https://www.eurosai.org/en/working-groups/historic-working-groups-committees/coordinated-audit-on-tax-subsidies-working-group/index.html