1 the managing authority – keystone of the control system lena andersson pench european commission...

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The Managing Authority –Keystone of the Control System

Lena Andersson Pench

European Commission

DG Regional Policy

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Main themes

Managing Authority- Keystone of the Control System

Key elements of an effective internal control system

Preventive actions

Management verifications

Audit trail and financial reporting

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How assurance will be built up 2007-2013


Audit opinion at closure

Commission audits

Annual opinion basedon national audits

Certification of expenditure, Management verifications

Compliance assessment

Guarantees in programme negotiations

Ex post

During

implementation

Ex ante

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Legal Framework


Legal base: Art. 60 of 1083/06 and Art. 13 of 1828/06 to ensure clear and precise control obligations.

Commission guidance notes:

- Guidance document on common methodology for assessment of management and control systems

- Guidance document on management verifications

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Effective internal control system


Fundamental role of Managing Authorities in financial management/control

What applies to MA, applies also to IB: training and guidance is necessary

Relations between MA/IB/beneficiaries are essential for effective internal control systems

Preventive actions –based on risk assessment Comprehensive management verifications

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Commission guidance note – “system assessment”

Sets out key requirements for Managing Authorities,

Certifying Authorities and Audit Authorities

Contains assessment criteria to be used by auditors

when evaluating the systems

Can serve as a basis for self-assessment for all actors

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These key requirements are designed as being essential to ensure legality and regularity as well as reality of operations supported by the Structural Funds.

Need for a common understanding of both requirements and criteria for assessing them, between all actors in the management and control systems.

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Key requirements: Managing Authorities/Intermediate bodies

Works well

Works but

Works partially

Doesn’t Work

1) Clear definition, allocation and separation of functions between and within managing authorities/ intermediate bodies

2) Adequate procedures for selection of operations

3) Adequate information and strategy to provide guidance to beneficiaries

4) Adequate management verifications

5) Adequate audit trail

6) Reliable accounting, monitoring and financial reporting systems in computerised form

7) Necessary preventive and corrective actions in case of systemic errors detected by the audit authority

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Key elements of internal control system for MA


1. Clear definition, allocation and separation of functions between and within the Managing Authority/Intermediate bodies

Procedures to supervise effective implementation of delegated tasks

Formal written agreement setting out any delegated tasks

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2. Adequate procedures for selection of operations

Publishing calls for applications

Recording received applications

Evaluating applications according to defined criteria

Decision and communication of decisions to applicants

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3. Adequate information and guidance to beneficiaries

Communication of rights and obligations: National and Community eligibility rules, specific programme conditions, financing plan, information and publicity requirements

Guidance (workshops, training actions, seminars, web sites…)

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4. Adequate management verifications

Existence of written procedures and checklists

Administrative verifications completed before certification (ex-ante)

All applications for reimbursement should be checked

On-the-spot verifications when the project is well under way

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4. Adequate management verifications

Evidence of verifications and follow-up are kept

On-the-spot verifications based on risk assessment

Procedures to ensure that the CA receives all information

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5. Adequate audit trail

Keep accounting system at appropriate levels to provide information on incurred expenditure by beneficiary

Keep technical specifications, financial plan, progress and monitoring reports, documents in relation to selection, evaluation, tendering and contracting procedures at appropriate levels

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5. Adequate audit trail

All documents should be kept in accordance with the rules on availability of documents

Verification whether beneficiaries keep separate accounting systems or accounting codes

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6. Reliable accounting, monitoring and financial reporting systems

Computerised systems capable of providing reliable and relevant information

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7. Necessary preventive and corrective action where systemic errors are detected by audits

Procedures to review and follow-up results of audits carried out by the relevant audit bodies

Procedures should be in place to ensure implementation of preventive and corrective action

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Key elements of an effective internal control system

Preventive actions

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Preventive actions


If the design of management and control systems (compliance assessment report) is right,

The functioning of the systems will most likely be right…

…but it is not enough

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Preventive actions


Ensure that the key requirements MA of the management and control systems “work well”

Need to make a proper risk assessment per programme to reduce the risk of error and the risks

-of not absorbing funds

-of having to pay back funds

Develop a strategy to manage the risks

- by preventive and

- proactive measures

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Preventive actions


Procedures to select operations

- Publish calls for applications

- Record received applications

- Evaluate applications

- Decide and communicate decisions to applicants

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Preventive actions: Publish and record


Are the calls published in accordance with programme conditions ?

Did the publication contain a clear description of the selection criteria ?

Have the calls been advertised in all relevant media to reach all potential applicants?

Are applications registered on receipt? Are records kept of status of each application?

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Preventive actions:Evaluate and communicate


Are project evaluation responsibilities clearly allocated ?

Have the administrative and financial capacity of the beneficiaries been evaluated?

Have the applications been evaluated according to the agreed criteria and are the results documented?

Is the decision taken by appropriate person or body?

Is there an appeal procedure in place?

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Preventive actions:Information and guidance


Managing Authorities should seek to prevent errors by working with beneficiaries from the start of each operation/project

Risk assessment: Identify the types of beneficiaries relevant for your organisation and develop a guidance strategy to meet their needs

Assess administrative structure, qualifications and experience of staff etc. of beneficiaries

Assist them with training and guidance to set up systems to meet Community requirements

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Preventive actions –Information


Have the national eligibility rules and the Community rules been given to the beneficiary?

Have specific conditions concerning the products or services to be delivered been clarified ?

Have the requirements of the publicity obligation been communicated?

Have criteria been established to assess the capacity of beneficiaries?

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Preventive actions –Guidance


Is there a documented strategy to ensure that beneficiaries have the necessary access to information and receive sufficient guidance?

Which means of communication are the most effective for the types of beneficiaries that your organisation deals with?

Websites, leaflets, booklets, seminars, workshops?

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Key messages


Focus on actions to prevent errors-information and advice to beneficiaries, access to information, capacity-building for beneficiaries, clear defined operations and financing plans

Carry out a programme risk assessment and develop a strategy to address the risks

Focus on outputs and not just procedures – monitor and review results of control system – is there evidence of good management of risk?

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Key messages


Carry out regular self-assessment based on the “key requirements” for Managing Authorities

Provide information and guidance to Intermediate bodies – standardised manuals and checklists - training of staff – information networks – technical support and advice

Review regularly the work of Intermediate bodies (quality review)

1 the managing authority – keystone of the control system lena andersson pench european commission...

Documents

control system key elements

control system audit

managing authority keystone

control system legal

accounting system

system assessment sets

precise control obligations

audit authority