EUROPEAN COMMISSION
EN
Budgetary Control Committee
of
European Parliament
Workshop on role and functioning of
supervisory and control systems
for structural operations
Brian Gray
DG BUDGET
EUROPEAN COMMISSION
EN
How assurance will be built up
2007-2013
Audit opinion
at closure
Ex post
Commission audits
Annual opinion based
on national audits
During
implementation
Certification of expenditure
+ first level verification
Compliance assessment
Ex ante
Guarantees in programme negotiations
2
EUROPEAN COMMISSION
EN
Division of responsibility (1/2)
Commission supervisory role
– Satisfies itself that “set up” is compliant
– Verifying effective functioning
– Using powers of interrupting and suspension
of payments
– Making financial corrections
3
EUROPEAN COMMISSION
EN
Division of responsibility (2/2)
Member State responsible for:
– Set up of a management and control
system which complies with requirements
of regulations
– Ensuring that systems function effectively
- i.e. certification reliable
– Preventing, detecting, correcting
irregularities
4
EUROPEAN COMMISSION
EN
Authorities designated (1/2)
For each programme:
– Managing Authority (MA)
– Certifying Authority (CA)
– Audit Authority (AA)
– Intermediate Bodies to carry out tasks
delegated by MA or CA
5
EUROPEAN COMMISSION
EN
Managing Authority (1/2)
Responsibility for implementing the
programme, in particular for:
– Selection of operations
– Desk and on-spot verifications of
operations
– Compliance with information and publicity
requirements
– Ensuring the audit trail (levels:
MA/intermediate body and beneficiary)
Art. 60 Council Regulation
6
EUROPEAN COMMISSION
EN
Managing Authority (2/2)
 Other responsibilities
– To inform beneficiaries of all conditions for
funding, including the time limit for execution
– To satisfy itself (before grant approval) that
beneficiary has capacity to fulfil conditions
– Administrative verifications on ALL payment
requests
– On-spot verifications, possibly on a sample basis
– Written standards and proper recording of checks
Art. 13 Implementation Regulation
7
EUROPEAN COMMISSION
EN
Certifying authority (1/4)
Responsibilities of CA practically
unchanged compared to 2000-06.
Function: to draw up and submit to
Commission certified expenditure
statements and payment requests
Art. 61 of C.R. and 20 Implementation Regulation
8
EUROPEAN COMMISSION
EN
Certifying authority (2/4)
Formal designation by MS
Certification of expenditure with regard
to:
– accuracy of data; must be based on
reliable accounting system and verifiable
supporting documents
– compliance with EU and national rules
9
EUROPEAN COMMISSION
EN
Certifying authority (3/4)
How does CA satisfy itself that data are
accurate and that all conditions for
certification are fulfilled?
– Examination of information received from
MA on verifications carried out to
expenditure
– CA’s own checks at level of
MA/intermediate body
– Audit reports of AA for systems audits and
project audits and Annual Control Report
and opinion
10
EUROPEAN COMMISSION
EN
Certifying authority (4/4)
Maintaining computerized accounting
records
Keeping accounts of amounts
recoverable and amounts recovered
Sending to Commission annual reports
on financial corrections (amounts
recoverable, recovered and withdrawn
following cancellation)
11
EUROPEAN COMMISSION
EN
Audit Authority
(1)
 For each programme designated AA has overall
responsibility for all audit work Ensures execution of
systems audits
 Ensures execution of audits of sample of operations
 Presentation of audit strategy within 9 months of
approval of programme
 Submits an annual control report and opinion by 31
December from 2008
 Ensuring that bodies undertaking audit work are
independent and perform to international audit
standards
12
EUROPEAN COMMISSION
EN
Audit Authority
(2)
 Audit strategy following model fixed in Commission
Regulation
 Sample of operations selected following method fixed
in Commission Regulation:
– separate random and risk-based samples
– confidence and materiality levels fixed for random
sample
13
EUROPEAN COMMISSION
EN
Audit Authority
(3)
Annual report and opinion
 Report
– Implementation of audit strategy
– Audit findings
– Systems weaknesses
 Opinion
– Based on audit work carried out in conformity with strategy
– Whether system has functioned effectively so as to provide
reasonable assurance on correctness of statements of
expenditure and as a consequence on legality/regularity of
underlying transactions
 Closure declaration for partial and final closure of
programmes
14
EUROPEAN COMMISSION
EN
Preventive actions by the Commission (1)
 Verification before adoption of Ops that control
architecture is compliant
 Detailed guidance given in 2007 on key
processes:
– Audit strategy of AAs
– Compliance assessment procedure
 Training workshops in 2007 for AAs in 24
Member States
 Guidance documents issued in 2008
–
–
–
–
Management verifications
Functions of certifying authority
Sampling of audits
Evaluation methodology for systems
15
EUROPEAN COMMISSION
EN
Preventive actions by the Commission (2)
Compliance assessment procedure
– Detailed check on reliability of opinion
provided by Commission
– Compliance assessment reports received
for 21 programmes of which:
• 7 accepted
• 9 rejected
• 5 under examination
16
EUROPEAN COMMISSION
EN
Preventive actions by the Commission (3)
Audit strategy procedure
– Detailed examination by Commission of
each strategy to verify if satisfactory
– Audit strategies received for 69
programmes of which:
• 8 accepted
• 7 rejected
• 54 under examination
17
EUROPEAN COMMISSION
EN
Corrective actions by the Commission
Commission audits will start in 2009 to
verify the reliability of the work of the
AAs
Where deficiencies are detected in
national systems the Commission can
and will:
– Interrupt payments without formal decision
for up to 6 months
– Suspend interim payments by decision
– Apply financial corrections to reduce the
EU funding for a programme
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