Simplification of the Regulations in Structural Funds

Report ID: 127

1. The administration and management of funds acquired from the European Union (EU) to support Operational Programmes are governed by cohesion policies (the current one being Cohesion Policy 2007-2013). In this regard, Malta has adopted two Operational Programmes, one for the European Regional Development Fund (ERDF) and another for the European Social Fund (ESF). The Operational Programme co-financed by ERDF and the Cohesion Fund (CF) is commonly referred to as Operational Programme I (OPI), whereas the Operational Programme co-financed by ESF is referred to as Operational Programme II (OPII). These two programmes, OPI and OPII, were developed according to the strategic priorities identified in the National Strategic Reference Framework. This latter document sets out Malta’s strategic priorities for the Cohesion Policy 2007-2013. In this context, OPI is geared towards investing in competitiveness for a better quality of life, while OPII focuses primarily on employment, education, training and social inclusion.

2. The various roles and responsibilities associated with the implementation of the Cohesion Policy 2007-2013 programme is entrusted to a number of governmental authorities. The Planning and Priorities Co-ordination Division within the Office of the Prime Minister is the designated Managing Authority (MA). The role of Certifying Authority (CA) is fulfilled by the EU Paying Authority Directorate within the then Ministry of Finance, the Economy and Investment, while the duties associated with the Audit Authority (AA) are carried out by the Internal Audit & Investigations Department.

3. The Cohesion Policy is based on a shared management system between the European Commission and Member States, with the principal aim of ensuring that the principles of regularity, legality and sound financial management are complied with. Nonetheless, the regulatory requirements, which govern the use of EU funds across Member States, are often seen as complex and administratively burdensome, prompting regular calls for simplification from the EU and national actors as well as stakeholders. To this effect, amendments were made to the General Regulation (EC) No 1083/2006, with the twin objectives of accelerating payments from the Structural and Cohesion Funds, while simultaneously reducing the administrative burdens associated with policy implementation.

4. The simplification measures being reviewed for the purposes of this performance audit are listed hereunder, with the first seven being optional and the rest being non-optional.

a. Indirect costs (declared on a flat-rate basis of up to 20 per cent of direct costs);

b. Flat-rate standard scales of unit cost;

c. Lump sums;

d. Permitted in-kind contributions to be declared as eligible expenditure in relation to financial engineering schemes;

e. Advanced payments;

f. Increased flexibility for major projects;

g. Co-financed repayable assistance;

h. Raising of threshold of revenue generating projects; and

i. Single threshold for major projects.

5. The Contact Committee of the Supreme Audit Institutions mandated the Working Group on Structural Funds to carry out an audit on “Simplification of the regulations in Structural Funds”. In this regard, the National Audit Office (NAO) agreed to undertake a performance audit that evaluated nine simplification measures related to Operational Programmes funded by the EU. This parallel audit was carried out in conjunction with 13 other Member States.

6. The principal objectives of this performance audit were to:

a. Examine whether simplification measures have been implemented in Malta;

b. Elicit feedback from the relevant authorities and beneficiaries on their experiences so far;

c. Determine why certain simplification measures were not implemented (if applicable); and

d. Gather feedback of the involved authorities with regard to future simplification measures.

Costs of control

Report ID: 166

Background

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. A questionnaire was sent to the SAIs to gain an understanding of how these funds were controlled and managed by the various Member States and to identify possible risk areas. The Working Group reported its findings from this work to the Contact Committee in November 2002.

The Contact Committee subsequently approved three parallel audits. The first of these examined the application of the regulations to ensure that all Member States implement independent checks on 5 per cent of expenditure and had established appropriate audit trails to support transactions. The final report on the review was presented to the December 2004 Contact Committee.

The second parallel audit involved a review of the processes in place for identifying, reporting and following up on Irregularities. The final report on that review was presented to the December 2006 Contact Committee.

As third parallel audit the Working Group carried out a review focused on “Performance (output/effectiveness) of the Structural Funds programmes in the areas of employment and/or environment”. The final report on that review was presented to Contact Committee in December 2008.

Control of structural funds (RiR 2004:29)

Report ID: 203

Under programperioden 2000–2006 gör EU-kommissionen en översyn av strukturfondernas regelverk. Flertalet av de nationella revisionsmyndigheterna inom EU har genomfört en samordnad granskning under 2003–2004 av kontrollen och styrningen av strukturfonderna. Sverige har valt att granska Växtkraft Mål 3 och Mål 2 Öarna. Denna rapport redovisar de viktigaste slutsatserna som Riksrevisionen dragit för svenskt vidkommande utifrån den gjorda granskningen.

Riksrevisionens slutsatser bygger på en bedömning av kontrollverksamheten vad gäller följsamheten till gällande regelverk samt visa effektivitetsaspekter. En slutsats är att kontrollverksamheten fungerar I förhållande till de regelverk som finns. Den granskade kontrollverksamheten fokuserar på följsamhet avseende lagstiftning och regelverk samt tillförlitligheten i projektens ekonomiska redovisningar. Däremot är den i dag inte utformad så att det är möjligt att fånga upp effektiviteten I förhållande till programmens konkreta mål.

Riksrevisionen bedömer också att de valda organisatoriska lösningarna är komplexa, vilket skapar en risk för såväl ineffektiva controller som dålig kostnadseffektivitet. Riksrevisionen vill även peka på behovet av att kontrollverksamheten och ansvarsfördelningen mellan ansvariga myndigheter läggs fast redan vid programperiodens början.

Riksrevisionen rekommenderar att regeringen införlivar dessa slutsatser i arbetet med att utforma den svenska förvaltningsorganisationen inför kommande programperiod.

Administration in Structural Funds projects (RiR 2012:22) (Swedish contribution to the report) Simplification of the Regulations in Structural Funds (Report published by the EU Contact Committee)

Report ID: 207

Audit background

Motive: The purpose of European Cohesion Policy is to reduce economic and social disparities within the EU. The policy is also intended to contribute to the achievement of the Europe 2020 targets, which relate to making the EU more competitive. Within the framework of Cohesion Policy, Sweden is receiving approximately SEK 15 billion from the Structural Funds – the European Social Fund (ESF) and the European Regional Development Fund (ERDF) – in the programming period 2007–2013. The resources from the Structural Funds are matched by national public co-financing of about the same amount as the EU funds.

The objectives of the Structural Funds in Sweden are, among other things, to strengthen skills development, increase labour supply and foster innovative environments and entrepreneurship. Structural Funds resources finance projects that, for example, aim to provide support to jobseekers and to create new jobs. In total, it is estimated that just over 2000 national projects with at least 315,000 participants will receive support from the ESF during the programming period 2007–2013. About 1400 projects have been granted funds from the ERDF since 2007.

At present, negotiations are in progress on the EU budget and the Structural Funds Regulations for the programming period 2014–2020. In these negotiations, Sweden has pursued a more restrictive EU long-term budget and a realignment of priorities. In this context, Sweden is also acting for simplification of the rules for Cohesion Policy.

If the objectives of the Structural Funds in Sweden are to be achieved, it is important that the resources are used efficiently. The Riksdag has also expressed that it is of interest that Structural Funds resources going to Swedish projects shall be used in as efficient a manner as possible. Both at the national and the EU level, it has been established that there is a need for simplification in order to reduce the administrative burden and the risk of errors. According to the Swedish NAO, simplifying the administration in Structural Funds projects is an important precondition for an efficient use of Structural Funds resources in Sweden. It should be pointed out that a reduction of the administration should take place while maintaining sound financial reporting and control.

Parallel Audit on the processes for identifying reporting and following up on Irregularities by the Working Group on Structural Funds II

Report ID: 33

The 2004 Contact Committee gave the Working Group on Structural Funds a mandate to continue its reviews of Structural Funds issues and specifically; to carry out a review of the processes in place for identifying, reporting and following up on irregularities. Irregularities are defined by EU Council Regulation 2988/1995 as “any infringement of a provision of Community law resulting from an act or omission, intentional or not, by an economic operator, which has, or would have, the effect of prejudicing the general budget of the Communities".

In order to undertake this review the Working Group developed an Audit Plan to be used by the participating Supreme Audit Institutions (SAIs) in carrying out their respective national audits. The audit plan covered six specific Key Areas:

1. Guidance
2. Identification and recording of potential irregularities
3. Examination and decision making on recorded irregularities
4. Reporting to the Commission
5. Follow up/investigation of the reported irregularities
6. Financial Corrections

The Working Group, as guided by the Core Group of Germany (Chair), the Netherlands, Poland and the United Kingdom, summarised the key findings and recommendations from those country reports, and produced the consolidated report which includes good practices. The findings are presented in the report for every Key Area.

The objective of the work  was to capture the SAIs judgements in identifying examples of both good practice and weaknesses in the systems and procedures in place within Member States. This was the first parallel audit involving the full participation of some of the new EU Member States.

Source:https://www.eca.europa.eu/sites/cc/Lists/CCDocuments/1959834/1959834_EN.PDF