Closure of the Programming Period

2007-2013

ESF TWG Luxemburg2nd December 2015

2. PREPARATION TOWARDS CLOSURE – KEY CHALLENGES

Closure - Key principles for Audit authorities By 31 March 2017, AAs will have to prepare a final control report and a closure declaration

which will cover : Information of the audit activity of last period (2015-2016) as no ACR required in

December 2016 Disclose error rate on the expenditure certified in last period (2015-2016) and corrective

measures taken in case of an error rate above materiality Disclose the residual risk rate Wrap up of the AA's work for entire period Issue an audit opinion at closure on the final statement of expenditure

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Good practices 2000-2006 Timely preparation and common methodology for the AAs Sufficient, properly trained staff Analysis of system audits Review of first and second level checks Action plans launched Analysis of irregularities and their follow-up Correctness of debtors' ledger and recoveries

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Main difficulties 2000-2006 In certain MS

closure documents were prepared at the last moment Insufficient number or delays in execution of checks/staffing

Incomplete documents and long "ping-pong" between the Commission and the various programming authorities to obtain additional information

Weaknesses in communication between the paying authority and the winding-up body;

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Main difficulties 2000-2006 Weaknesses in second level checks Unjustified reduction of final error rates Winding-up declarations not in line with programme error rates Disagreements with the Commission over the extent and application of

financial corrections

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Lessons learnt

Launch preparation phase as early as possible, including training Plan all activities of all actors in time to prepare for closure Plan adequate resources Ensure consistency of the closure package

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Main differences period 2007-2013 Audit authority designated by OP ACR, annual audit opinion and error rates validated Reporting withdrawals and recoveries Preventive measures: interruptions, suspensions Corrective measures: remedial Action Plans, self-corrections

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Key challenges for 2007-2013 closure Scope of audit work Time schedule Sufficient audit assurance Residual risk rate Closure of financial instruments Impact of measures on better implementation Other ?

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Scope of audit work Complete audit work on system audits and operations on expenditure

declared in 2015-2016 Verify if MA and IBs work for closure is complete and reliable Verify if CA work in adequate Correctness of calculations Verification of correctness annex XI withdrawals and recoveries

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Sufficient audit assurance Coverage per Fund – impact of common sample Art 17 (5) Decision on the need for a complementary sample

System audits and audit of operations Specific risk factors Different types of operation, beneficiaries, IBs, priority axes Analysis of significance of detected irregularities (high number, systemic)

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• Article 17(5)(1) of Regulation (EC) N° 1828/2006• "The audit authority shall regularly review the coverage provided

by the random sample, having regard in particular to the need to have sufficient audit assurance for the declarations to be provided at partial and final closure for each operational programme.

• It shall decide on the basis of professional judgment whether it is necessary to audit a complementary sample of additional operations in order to take account of specific risk factors identified and to guarantee for each programme sufficient coverage of different types of operation, beneficiaries, intermediate bodies and priority axes"

Residual risk rate Common understanding of the calculation method

expenditure declared error rates to be reported, …

Verification of correctness – Annex XI withdrawals and recoveries

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Closure of financial instruments Possibility to justify eligible expenditure for FEI operations to final recipients

until 31/03/2017 Planning of audit work Complexity of auditing financial instruments Instruments managed by EIB/EIF ?

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Impact of measures of better implementation

Eligibility of expenditure Operations corrected ex-ante Contractural arrangements: advances and guarantees

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• Questions?

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