Anthoula Charalambous SavvidesSenior Coordination Officer, Planning Bureau

Structural and Cohesion Funds Directorate Managing Authority

Budapest 5 October 2012

Setting Up the New Cohesion Policy Implementation System

Objectives and Challenges Lessons Learnt from PP 2007-2013

Overview

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Management and Control System (MCS) 2014-2020 Legal Basis (not final)

MCS Key Objectives Good Governance Internal Controls Institutional Framework Tools for Effective Operation of the MCS E-Cohesion Policy Strengths and Weaknesses - Cyprus case

Cohesion Policy Implementation SystemPP 2014-2020

Objective: Simplification of the cohesion policy delivery system, aiming at the reduction of administrative burden for beneficiaries

Challenge: Balance the accountability of designated bodies to the complex regulatory environment, with the public interest, by bringing about positive outcomes and added value

Distinction between the soundness of the management and control procedures and processes and the goals that

they are meant to achieve remains very important

(Goal: efficient and effective allocation of resources, consistent with policy priorities)

Management and Control SystemPP 2014-2020, Legal Basis (not final)

Common Provisions Regulation, Part 2-Common Provisions Applicable to CSF Funds, Title VIII

Management and Control, Chapter III, Article 65

Commission Powers and Responsibilities

Common Provisions Regulation, Part 3- General Provisions Applicable to the ERDF, the ESF and

the CF, Title VI, Chapter I, Management and Control Systems, Articles 113-116

Designation and functions of MA, CA and AA

Financial Rules Regulation, Article 56

Shared Management with Member States

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Common Provisions Regulation (CPR), Management and Control,

Commission Powers and Responsibilities (not final)

satisfies itself that MS have set up management and control systems which function effectively and in compliance with the CPR and the Fund-specific rules

may carry out on-the spot audits or checks respecting the principle of proportionality, by taking into account the need to avoid duplication of audits, the level of risk to the Union Budget and the need to minimize administrative burden to beneficiaries

Scope of Commission’s audits, verification of effective functioning of systems and assessment of the sound financial management of

programs5

The Commission,

Financial Rules Regulation, Article 56 Shared Management with Member States

• respect the principles of sound financial management, transparency and non-discrimination

The Commission and Member States

• ensure correct and effective implementation in accordance with applicable rules

• designate and supervise bodies responsible for the management and control • carry out controls respecting the principle of proportionality and prevent, detect

and correct irregularities

Member States

• monitors the Management and Control Systems set in MS • respects the principle of proportionality and level of assessed risk in its audit

work

Commission

• provide the Commission by 15 February, annual accounts, annual summary of final audit reports and of controls (accompanied by an opinion of an independent audit body)

Designated Bodies

Member States Designate MAs (public or private body) and CAs (public body). MA

which is public body may carry out the functions of CA Designate AA functionally independent from MA & CA May designate IBs to carry out certain tasks of MA & CA

(arrangements between IBs and MA&CA formally recorded in writing)

MA, CA & AA may be part of the same public body for the investment for growth and jobs goal, for programs EU contribution<€250 mln

Notification of formal designation of MA and CA prior to submission of 1st application for payment

Designation based on a report & an opinion of independent audit body. Audit work may not be carried out where the MCS essentially the same as for 2007-2013 & evidence of effective functioning. (Report and opinion of audit body may be requested by Commission for OPs exceeding €250 mln and for which there are significant changes)

Common Provisions Regulation, Provisions Applicable to ERDF, ESF and CF

Management and Control Systems (not final) (1)

Managing Authority, responsible for managing the OP in accordance with the principle of sound financial management (management of OP, selection of operations, financial management & control, verifications)

Certifying Authority, responsible for payment applications, for drawing up accounts (Art 56 of FR) and certifying their accuracy, completeness & veracity, for amounts recoverable and withdrawn, for maintaining accounting records

Audit Authority, carries out audits on the proper functioning of the MCS and responsible, for audit opinion according to Article 56 of FR and control report

Common Provisions Regulation, Provisions Applicable to ERDF, ESF and CF

Management and Control Systems (not final) (2)

MCS Key Objectives

To view the management and control system only through the regulatory and technical prism would distort the picture

Design a system based on the key objectives it is supposed to achieve

Key Objectives: Allocation of resources consistent with policy priorities (requires

good planning) Expenditure control (requires effective internal controls system) Good operational management to promote efficiency and

effectiveness – (requires good coordination among involved Authorities)

Basic Requirement: good governance

Good Governance

Accountability• Officials

answerable and have consequences for acts of commission or omission

Predictability• clear laws

and regulations enforced uniformly and effectively

Transparency• clear roles

and responsibilities, access to information, open program preparation, execution and reporting

Participation• by all

stakeholders for feedback and reality check

Internal Controls

appropriate cost effective functioning consistently as

planned

promote orderly, economical, efficient and

effective operations

safeguard resources and adhereance to

laws and regulations

develop and maintain reliable

data

Institutional Framework Poor efficiency and effectiveness is partly rooted in institutional

issues. Institutions comprise both formal and informal rules (“established practices”). Three basic points:

Failure to take into account key informal rules is likely to lead to a failure of the system (it was the unexposed part of the iceberg that sank the Titanic). Improvements may fail if in conflict with the less visible informal rules.

Total stock of institutions is always larger than is visible on the formal surface.

Organizations and units can be merged, restructured, recombined and new created, but no change in outcomes will result unless the basic processes and procedures change as well.

Build the management and control system based on the new legal framework and taking into consideration the existing institutional framework

E-cohesion

The E-cohesion initiative stemmed from the need to,

simplify implementation by reducing the administrative burden on beneficiaries, so the ‘only once’ principle may be applied and

to increase transparency and openness

To comply with the e-Cohesion initiative MS are expected to have in place, for the PP 2014-2020, an IT environment enabling the secure exchange of information in an electronic way.

Consider reengineering processes to maximize efficiency (to apply advanced IT to inefficient processes means to computerize inefficiency)

IT cannot substitute for good management and internal controls

IT system should meet the following criteria, fit real objectives and user requirementsgo hand in hand with improved rules and processesprotect data and systems integrityaim at an integrated strategy and avoid piecemeal approach

Management and Control System2007-2013- Cyprus case

Tools for Effective Operation of the MCS

MCS

Circulars(common

procedures)

MIS(tools and reports)

Support(continuous)

Seminars and

Workshops

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Management and Control System 2007-2013 Lessons Learnt

Strengths - Cyprus case

Common/Single system of monitoring and controls (and MIS) enforced through MA circulars, enhanced efficiency

Emphasis on internal system of controls, ex-ante verifications (administrative and on-the-spot , timing and

content controlled by MA and inbuilt in MIS) ensured correctness of operations

Emphasis on capacity building/strong IBs (staff / training / support) promoted effectiveness

Close communication and coordination between responsible bodies ensured better planning and

coordination of activities, financial management and control

Help Desk (provision of continuous support to Beneficiaries and IBs)

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Management and Control System 2007-2013 Lessons Learnt Weaknesses - Cyprus case

Extensive controls at Beneficiary and IB level delaying submission and verification of

expenditure

Management Information System not integrated with national accounting system and/or other IT

systems

Different financial flow system for different kinds of beneficiaries (effort not to create parallel structures, but designed number of financial flows systems)

MIS does not support electronic submission of data from aid schemes’ Beneficiaries (mainly

private sector)

IBs performing extensive controls on Beneficiaries that are Government Departments (expend. already well

controlled because of national procedures)16

Conclusions

Implementation systems should be more efficient and effective, reconsider procedures, processes and specific roles rethink what we do and what we can do differentlygather, process and store information and transform it to knowledge

and wisdom give more emphasis on Beneficiaries’ needs and improve accessibility face bureaucracy built in our systems and challenge the structures learn from our experiences

Management should be more than administration. Care should be taken so that we are not reduced to systems and controls. To achieve efficiency and effectiveness we should a) simplifyb) simplify andc) simplify more

Thank you

for your attention

http://www.structuralfunds.org.cy