Report on the parallel audit on the Performance of the Structural Funds programmes of the EU in the areas of employment and or environment

Report ID: 70

In 2006 the Contact Committee gave a mandate to the Working Group on Structural Funds to continue its reviews of Structural Funds issues and specifically to carry out a focused review on “Performance (output/effectiveness) of the Structural Funds programmes in the areas of employment and/or environment″. The Working Group agreed an Audit Plan which provided a framework for carrying out the review. Each SAI examined their respective national administration’s work on the planning, monitoring and evaluation of projects, measures, sub programmes or programmes (as appropriate) co-financed by the Structural Funds.

The SAIs of Austria, Finland, Germany, Hungary, Italy, Latvia, Malta, The Netherlands, Poland, Portugal, Slovak Republik, Slovenia, Spain and the United Kingdom participated in the audit. The SAIs of Bulgaria, the Czech Republic and Lithuania and the ECA were observers. The aim was to identify potential improvements in the Structural Funds’ programmes, especially in their planning and in their administrative management.

The review involved each SAI in an examination of the Structural Funds (objectives 1 and 2) in the areas of employment and/or environment, and concluding on the following:

• if and how national authorities monitored the sustainable success of the funded measures;

• to what extent aid measures (sub programmes, major projects and other projects) provided an effective and sustainable contribution to the strategic goals of the Structural Funds.

The subject of the audit was an important topic of relevance to both the 2000-2006 and 2007- 2013 Structural Funds’ programmes. The audit was concerned with the two Key Areas of the strategic planning and the evaluation of aid measures. Based on the examination of measures from the period 2000-2006 each of the SAIs aimed to conclude on the extent to which Member States have contributed to the realisation of the respective OP’s strategic goals. As the goals of the Structural Funds have continued from the 2000-2006 period to the programme period 2007-2013, the findings from the audit of measures from the period 2000- 2006 have been used to inform the recommendations for the improvement of the new period 2007-2013.

The report sets out good practice identified by individual SAIs, relevant for both programme periods 2000-2006 and 2007-2013. As a general matter of good practice, many of the lessons learned from the 2000-2006 programme period have been incorporated into Member States’ administrative arrangements for 2007-2013.

Source:https://www.eca.europa.eu/sites/cc/Lists/CCDocuments/1959901/1959901_EN.PDF

Audit of the Internal Control System of the Structural Funds

Report ID: 72

All SAIs have expressed that the organisational set-ups of the internal management and control system installed for the audited programmes were found to be in line with Community regulations and generally capable of ensuring an efficient internal control.

All the participating countries have made the necessary steps for the implementation of a proper and adequate internal control system required by the Community legislation.
Depending on the individual programming processes the National Strategic Reference Frameworks (NSRFs) have been developed, submitted to and approved by the European Commission. The programs and the priority axes selected for audit have the necessary consistency with the NSRFs.

The organisational structure in the participating countries has been established in line with Community regulations. The segregation of duties of the different authorities gives sufficient evidence for the separation of management, disbursement and audit functions.

National legislation was, however, not always able to implement national rules together with the programming and implementation of the individual projects. The experiences in this field differ from country to country depending on their federal or central administration structure.

The requirements of the partnership were considered in the audited programs. Based on the documentation available at the authorities (minutes, communication efforts, interviews with partners involved) no signs were identified that would question the adherence to Community rules in this field.

Parallel Audit of costs of controls of Structural Funds

Report ID: 84

In 2000, the Contact Committee of the heads of the SAIs of the EU Member States and the ECA (Contact Committee) set up a Working Group to carry out an exploratory survey on EU Structural Funds. In 2008, the Contact Committee of the heads of  SAIs of the EU and the EC mandated the Working Group on Structural Funds to follow up on previous audits of the EU Structural Funds and to carry out an audit on “costs of controls (this could include utilisation of Technical Assistance for the controls of Structural Funds)”.

The aim of the audit was to identify the level of costs incurred by internal control activities in the Member States and to examine whether the costs of controls are appropriate (e. g. relation to expenditures; cost-benefit; output, redundancy).

The Working Group developed and agreed on a common Audit Plan (see Annex) which provided a framework for carrying out the review. Each SAI examined their respective national administration concerning the costs of the internal national controls for the years 2007, 2008 and 2009 prescribed by EU law for the Structural Funds for the 2007-2013 programming period. The costs of controls have been measured using two methods: cost centre accounting and cost unit accounting.

General observation and main conclusions

• The system of implementation of Structural Funds is organized differently in individual Member State. The different ways of implementation can influence the costs of controls.
• The cost unit accounting generally indicates lower costs of controls than the cost centre accounting.

- In relation to three sevenths of the budget5 of the audited operational programmes, the highest costs of controls expressed as a percentage amounted to 4.02 per cent and the lowest to 0.36 per cent. This percentage may be affected by the level of implementation in each Member State. Corrected for wage differences between the Member States the highest costs of controls expressed as a percentage was 2.79 per cent and the lowest 0.41 per cent.
- The average percentage of total costs of controls in relation to three sevenths of the budget of all audited operational programmes amounts to 0.97 per cent.
- In each Member State the costs of controls started out relatively low in 2007, and then increased year after year. A further increase in control activities and thus of their costs can reasonably be expected in the following years.
-The vast majority of all costs of controls made so far in the Member States can be attributed to the managing authorities. The costs of controls for the certifying authority and audit authority are comparatively low because the involvement of these authorities in control activities was limited in the years 2007-2009.

The lack of availability of data in the Member States does not allow for accurate calculating the costs of controls.

- A relatively high amount of controls was outsourced. This entails risks of loss of knowledge for the governmental bodies and higher costs.

- Whereas only some control activities result in monetary outputs, all of them can bring non-monetary benefits

- Some auditees argued that both the purpose of individual controls and the outputs and benefits of individual control activities are predetermined by EU law.

Source: https://www.eca.europa.eu/sites/cc/Lists/CCDocuments/8729516/8729516_EN.PDF

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.

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.