EU-Funds (EFRE): simplification of provisions (Working Group on the Structural Funds)

Report ID: 15

Prüfungsziel

Ziel der Überprüfung im BKA sowie in den Ländern Burgenland, Salzburg und Vorarlberg war es, insbesondere zu beurteilen, in welchem Ausmaß unter den geltenden Rahmenbedingungen ausgewählte, in den Jahren 2008 bis 2011 in Kraft getretene EU–Maßnahmen zur vereinfachten Abwicklung von EU–Förderungen im Rahmen des Europäischen Fonds für Regionale Entwicklung (EFRE) in Österreich umgesetzt und ob die von der EU angestrebten Vereinfachungen auch auf Ebene der Förderungsempfänger wirksam wurden.

Report on the parallel audit on the simplification of regulations in Structural Funds

Report ID: 66

In 2011, the Contact Committee of the heads of Supreme Audit Institutions (SAI) of the Member States of the European Union (EU) and the European Court of Auditors (ECA) 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 ‘Simplification of the Regulations in Structural Funds.’
The Working Group consisted of 12 EU Member State SAIs and audited the impact of nine simplification measures. The following are the key conclusions:

 In general, the simplification measures were infrequently used and affected only a small proportion of all projects, largely due to a number of factors relating to the management of Structural Funds at national and supranational level, including:
• Introduction at a late stage by amendatory regulations;
• Not all measures were suitable for all Operational Programmes (OP) and/or projects;
• Limitations relating to the resources required for the implementation of measures; and
• A lack of clarity and legal certainty experienced by national authorities.

 Whenever the measures were used, most of them were considered to represent genuine simplification. Factors relating to why national authorities chose not to use the measures differed considerably, depending on the European system1, the national legal system, the organisation of Structural Funds in each Member State, as well as the specific features of each OP. These conditions influenced the potential scope of application of measures and their respective benefit.

The key findings of the report were the following:
 Measures 1, 2 and 3 (flat-rate for indirect costs, flat-rate costs based on standard scales of unit cost, lump sums):
In the case of national authorities, the process of establishing the methodology relating to the application of the above-indicated measures led to administrative burdens and was regarded as difficult and involving an element of risk; furthermore, developing the methodology and acquiring the Commission’s approval were often lengthy processes. The lump sum was perceived as too low and the ‘all or nothing-principle’ led to a reluctance of the measure’s use. Whenever these three measures were used, they constituted genuine simplification.
 Measure 4 (in-kind contributions to financial engineering schemes):
This was the only measure that was not used in any of the audited OPs within the participating Member States.

Parallel audit on disaster rehabilitation and reconstruction phase

Report ID: 86

The objective of the parallel audit is to test out the draft ISSAI 5520. Therefore, it is expected to provide a list of feedback to enhance the draft ISSAI 5520 on Audit of Disaster-related Aid: Guidance for Supreme Audit Institutions.

Based on their experiences during the parallel audit program, the participating SAIs found that the following matters might need to be considered so as to help improve ISSAI 5520:

a. Risk evaluation associated with disaster management and disaster-related aid management. Post-disaster management, as described in ISSAI 5520, may need to include planning and housing recovery activities.

b. An audit process should be divided into three main activities, namely, planning, execution, and reporting. Furthermore, the details and expected output of each activity should be explained.

c. An audit design matrix is a very useful audit tool and serves as a platform for the conducting of audit work in the field. It can be applied to both performance and compliance audits.

d. Audit case studies should be updated to include more disaster-related audits.

Parallel international audit on disaster Risk Reduction

Report ID: 87

The current accountability framework covers the accountability of the government, bureaucracy and politicians to the public and parliament. In this framework, participation of parliament and particularly citizens in this process remains limited. On the other hand, private sector, citizens, and even international community are directly interested in disaster risk reduction’s (DRR) concerns. It is obvious that the existing accountability framework in this field does not cover all parties. In the global matters such as DRR and climate change,we believe that the accountability has to be expanded beyond the basic structure in order to respond to the needs of the national and international communities. In this paper, with the goal of overcoming the limitations attached to current accountability framework for DRR.

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.