12 May 2017
Leader
ECA audit findings and
possible simplification
Robert Markus
Estonian Leader Visit
Topics:
- Special Report on Leader
- Findings on legality and regularity
- Findings on performance
- Simplified Cost Options (SCOs)
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Estonian Leader Visit
Special Report on Leader (5/2010)
Some of our recommendations:
- Exclude projects which started before the grant decision
to eliminate a major risk of inefficiency (deadweight)
- LAGs’ selection of projects to be based on documented
assessments that demonstrate the soundness and
fairness of the decision in terms of consistent and
relevant criteria
- rules to ensure that the partnerships are not dominated
by the local authorities at project selection meetings
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Estonian Leader Visit
Special Report on Leader (5/2010)
Some of our recommendations:
Avoid any conflict of interests:
written declaration of the personal, political,
professional or business interest by LAG
Members for project assessment or decisionmaking
absence from any discussion, assessment or
decision on the project and the matter should be
referred to the managing authority in accordance
with the financial regulation
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Estonian Leader Visit
Special Report on Leader (5/2010)
Some of our recommendations:
LAGs should set measurable objectives, specific to
their local area, that can be achieved by the Leader
programme
Member States should then require LAGs to account
for achieving their local strategy objectives, for
achieving added value through the Leader approach,
and for the efficiency of the grant expenditure and the
operating costs.
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Estonian Leader Visit
Findings on legality and regularity:
Leader
projects
random
sample
error?
Y
N
10
15
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Estonian Leader Visit
Findings on legality and regularity:
Reasons for over-payment (4 cases):
Ineligible expenditure: expenditure declared w as not in line w ith the
approved project application.
Double financing of expenditure: the beneficiary had already received
30 % support from the local financing programme
Payment above real expenditure: the acquisition value given to each
asset w as established by the beneficiary w ith no supporting document
justifying the declared allocation of costs
Ineligible expenditure not subject of the approved project. Weakness in
selection procedure of architect services
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Estonian Leader Visit
Findings on legality and regularity:
Reasons for other non-compliances (6 cases):
Weakness in administrative checks (reasonableness of costs) and lack of
publication of aw ard notice
Weaknesses in administrative checks: the authorities did no check a/
thresholds on salaries of LAG's staff b/ the reasonableness of costs
Weaknesses in the verification of reasonableness of costs
Weaknesses in the verification of reasonableness of costs
Weaknesses in administrative checks: Insufficient system to verify the
reasonableness of general costs; Incorrect calculation of the selection
score
Weaknesses in administrative checks: Insufficient systems for verification
of the reasonableness of general costs and for project selection
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Estonian Leader Visit
Findings on performance:
General ECA finding
Member States focus first on the
need to spend the EU money
available, second on the need
to comply with the rules and
only third, and to a limited
extent, on their expected
performance
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Estonian Leader Visit
Findings on performance:
General ECA finding
Member States focus first on
the need to spend the EU
money available, second on
the need to comply with the
rules and only third, and to a
limited extent, on their
expected performance
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Estonian Leader Visit
Findings on performance:
This also applied to RD
We found insufficient targeting and selection procedures:
half of the projects not selected on the basis of a
transparent procedure, based on comparative merits with
relevant selection criteria
Typical example
selection criteria were defined, but not used to target the
support, as the available budget was sufficient to finance all
eligible projects – because budgets exceeded actual needs
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Estonian Leader Visit
Findings on performance:
Reasonableness of costs
For around half of the projects we found insufficient
evidence that the costs were reasonable:
- no competitive tendering procedure with selection on the
basis of the lowest price or best value for money or
- no reliable reference costs were used.
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APM “Simplified Cost Options”
General ECA issues
- Focus on conformity versus focus on
performance
- Focus on costs versus focus on results
- Complexity versus simplicity
- “Costs reimbursement schemes” versus
“entitlement based schemes for financing” or
“predefined methods based on results”
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Estonian Leader Visit
Simplified Cost Options (SCOs)
The 2007-2013 period
Rural development projects were typically based on a
system of cost reimbursement
The expenditure found eligible in invoices presented
by beneficiaries, multiplied by the aid rate, constitutes
the amount paid
Simplified Cost Options were already used in the
European Regional Development Fund and the
European Social Fund
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Estonian Leader Visit
SCOs - possibilities
 Standard scales of unit costs
Eligible costs calculated on the basis of quantified activities
(outputs or results) multiplied by a standard scale of unit costs
 Lump sums
A predetermined financial amount, not exceeding 100 000 euro,
paid for achieving the agreed output or results, not tied to a quantity
 Flat rate financing
Eligible expenditure is determined as a percentage of some other
costs, often used for indirect costs
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Estonian Leader Visit
SCOs – why use them
Possible advantages
-
Focus on conformity versus focus on performance
-
Focus on costs versus focus on results
-
Complexity versus simplicity
-
“Costs reimbursement schemes” versus “entitlement
based schemes for financing” or “predefined methods
based on results”
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Estonian Leader Visit
Use of SCOs for Leader in Estonia
Flat rate financing
M19.1 Indirect costs: 15% of eligible direct personnel costs. No supporting
documents.
M19.2, 19.3 19.4 Indirect costs: 20% of eligible direct costs. No supporting
documents required.
LEADER project support – Indirect costs: 15 % of the project management’s
eligible direct personnel costs. No supporting documents required.
Based on analyzing operating costs of 26 LAGs
Standard scales of unit costs and Lump sums
Not used
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Estonian Leader Visit
ECA audit on SCOs
We are now doing an audit on how to:
- increase the simplification and efficiency during
implementation further by using the potential of SCOs
- remove barriers and increase the uptake of SCOs
- improve the methodology to ensure economy of the EU
budget
- take output and results more into account for the
calculation of SCOs
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Estonian Leader Visit
Simplified Cost Options (SCOs)
We would like ask your opinion on:
Can SCOs be used for Leader?
- Lump sums?
- Standard scales of unit costs?
What are the constraints?
What are the possibilities?
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Thank you for your attention.
Any questions?
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