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.

Parallel Audit of Assurance of Epizootic Safety in the Republic of Poland, the Republic of Lithuania and the Slovak Republic after Accession to the Schengen Area

Report ID: 117

Once Lithuania, Poland and Slovakia entered the Schengen Area, their eastern borders became the external border of the European Union and, simultaneously, the first stage of the transfer of animals from the east to the Community. The three states are obliged to protect their borders properly also with regard to epizootic safety, defined as the prevention of and protection against hazards caused by infectious animal diseases transmissible to humans.

The national border protection system has been adapted to EU requirements in terms of legal and operational regulations for border services, including for preventing epizootic hazards from spreading across the EU. These responsibilities result from the EU Treaty and the Convention implementing the Schengen Agreement.

Since epizootic safety is an issue of high importance, in 2010 the NIK and the SAIs of Lithuania and Slovakia decided to check whether the borders of their countries were protected appropriately through a parallel audit. The audit was conducted between 1st April 2010 and 15th September 2010, and covered the period between 1st January 2007 and 31st December 2009.

The agreement to conduct such joint audit was made pursuant to the exchange of Letters of Intent among the heads of the three SAIs as well as previous bilateral agreements signed among them.

The audit topics covered included the following areas:

- whether national legislation had been adapted to EU regulations in the audited area,

 - whether the recommendations issued following the audit conducted by the Food and Veterinary Office, Directorate General of Health and Consumer Affairs (DG SANCO), European Commission had been implemented in national regulations, within the audited areas,

- whether the applicable procedures had been adapted to current epizootic risks and for the event of emergency situations, including those related to controlled, uncontrolled or illegal movement of animals from non-EU countries,

 - whether the institutions responsible for epizootic safety were able to cope with emergency on the local and national levels,

 - whether the epizootic safety system has been adapted to make information on epizootic hazard available to the public, on the national and local levels.

Source: https://www.nik.gov.pl/plik/id,2240,vp,2790.pdf

Programmes measures aimed at increasing the employment of disabled persons

Report ID: 123

Problems connected with the issue of the programmes supporting employment of disabled people was the subject of discussion at the VII the EUROSAI Congress in 2008 in Kraków. It inspired the handling of this theme within the parallel audit coordinated by the NIK. It was participated by 12 SAI. The Common Position on Cooperation was signed at the meeting in Warszawa held on 15. January 2010 and the framework programme to be taken into account by all SAI in their audit research was agreed upon.

In many countries, the significant share of disabled persons in the society in connection with their insufficient economic activeness constitutes a considerable problem.

The population of these persons is characterized by low employment ratio, which is significantly lower than in the case of people without disability. Disabled people are also occupational passive, often do not seek job and point to their disease and disability as the cause.

In some member states the education level of disabled people is low and makes it even more difficult for them to find a job. For example, in Poland in 2010 only 6.7% disabled persons had university education, while this percentage in the whole population was 17.8%.

In some countries, the situation of disabled depends also on the gender. The Spanish SAI dealt with this aspect in the course of its audit and it was found that among the disabled job seekers, the rate of men was higher than the rate for women - 53% and 47%, respectively.

These data suggest a lower interest or bigger difficulties for women to join the labour market.

Furthermore, out of the total of disabled people that were employed in the period 2006-2009, men with disabilities accounted for an average of 62.9%, while disabled women represented only the remaining 37,1%. Also in Turkey, looking into gender distribution of the disabled that sit for

State Personnel Selection Examination, a precondition to be employed as blue collar worker in public sector, it is observed that women with disabilities has lower educational level and hence, are disadvantaged in terms of employment. And also when the disabled registered in TEA are analyzed in respect of gender, it is obvious that rate of active participation of women in work force is lower.

The basis for the system of support for disabled persons can be the compensation-oriented approach (providing financial support which is an alternative to work) or integration approach (aimed at assisting disabled people in finding and retaining employment) or their combination.

Work gives disabled persons a number of benefits, among which one should mention not only obtaining a source of income but also developing the sense of self-confidence and acquisition of new skills. This is why governments of the member states of EUROSAI allocate considerable resources to the measures supporting disabled persons in the labour market. Auditing how the governments spend funds to this end and whether it was in accordance with the principles of effectiveness, efficiency and economy constitutes an important task of the Supreme Audit Institutions – SAI.

Audit parallel on Intra Community VAT Fraud

Report ID: 133

1.1 Background to the joint audit

The current vat system in the European Union provides opportunities for intra Community fraud that all Member States have to deal with. In a resolution of 12 December 2006, the Contact Committee expressed support for its vat Working Group’s recommendation to encourage Supreme Audit Institutions (SAIs) to exercise bi and multilateral cooperation in this area. In response to this recommendation, in March 2007 the Netherlands Court of Audit invited Germany’s Supreme Audit Institution (Bundesrechnungshof) and the Belgian Court of Audit (Rekenhof) to participate in an investigation into intra-Community vat fraud.

This trilateral audit resulted in national reports for each of the three participating countries and in this joint report presenting the overall conclusions and recommendations supported by relevant audit observations. Institutions involved in tackling intra-Community vat fraud, at European level and in the Member States, may benefit from this report.

1.2 Explanation of intra-Community vat fraud

The EU Member States have a common vat system. Since the European internal market has been created in 1993, goods within the internal market can be traded freely and border controls have ceased to exist. A ‘temporary’ system was introduced for vat, whereby the zero rate applies to the supply of goods to another Member State. To be eligible for this zero rate, an entrepreneur must have a valid vat identification number and must be able to verify that its trading partner also has a valid vat identification number. In addition to the vat return, entrepreneurs must file a quarterly return of their intra-Community supplies so that they can be monitored.

The temporary vat system appears to be vulnerable to intra-Community fraud.

A simple form of fraud is the wrongful use of the zero rate by presenting a domestic supply as an intra-Community supply. The most common and widespread form of intra-Community vat fraud is ‘Missing Trader Intra-Community Fraud’ (mtic Fraud) or ‘Carousel fraud’. In the typical form of this fraud, a trader acquires goods from a trader in another EU Member State at the zero rate of vat. The trader sells on the goods within his own country and charges vat to the purchaser. The trader, however, does not remit this vat to the tax authorities and makes sure that he cannot be traced (‘missing trader’) if he is investigated. The receiver of the goods sells them on and reclaims the vat he has paid. The goods can then return to their country of origin via an intra-Community supply at the zero rate, so that the cycle can be repeated one or more times. This is why it is called carousel fraud.

1.3 Anti-vat fraud initiatives at EU level

For a number of years, the eu Member States, the Economic and Financial Affairs Council of the EU (Ecofin) and the European Commission (EC) have been discussing ways to counteract intra-Community vat fraud more effectively.6 The Commission has explored avenues for a coordinated strategy against tax fraud. In its meeting of 28 November 2006, Ecofin invited the Commission to prepare the elements of such a strategy in close cooperation with the Member States. In 2007, the Commission made an inventory of possible measures consisting of conventional measures within the existing VAT framework and more far-reaching measures, implying a change in the current system.