AUDITING COHESION AND STRUCTURAL FUNDS IN SLOVENIA Nataša Prah Ljubljana, 20.11.2014

AUDITING COHESION AND STRUCTURAL FUNDS IN SLOVENIA

Nataša PrahLjubljana, 20.11.2014

1. Audit Authority

2. Auditing Cohesion and Structural Funds

3. Frequent findings

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INTRODUCTION

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Audit Authority

Basis: Legal framework (EC Regulations, National Regulations) Guidelines EC (methodology, content of report, financial

corrections,…) Audit Strategy for the whole period and its confirmation by EC

Work of AA: System Audits Audits of operations

Results of AA work: Audit Opinion, accompanied by Annual Control Report

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Auditing Cohesion and Structural Funds

System Audits:

Selection of the bodies who will be the subject of system audit review, on the basis of risk assessment

Evaluation of audited bodies for each financial year, using the methodology with key requirements

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Auditing Cohesion and Structural Funds

Key requirements (MA/IB):1. Clear definition, allocation and separation of functions

between and within the managing authority / intermediate body/ies

2. Adequate procedures for the 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 computerized form

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

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Auditing Cohesion and Structural Funds

Key requirements for CA:

1. Clear definition, allocation and separation of functions between and within the certifying authority / intermediate body/ies

2. Adequate audit trail and computerized system

3. Adequate arrangements for the certification of expenditure to be reliable and soundly based

4. Satisfactory arrangements for keeping an account of amounts recoverable and for recovery of undue payments

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Auditing Cohesion and Structural Funds

System audits results:

Brief report on the system audit performed (no opinion): draft report, replay of the auditee, final report,

Findings and recommendations, Evaluation of the system as a whole and definition of the

assurance gained from the system influencing the sample size.

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Auditing Cohesion and Structural Funds

Audits of operations:

Statistical sampling, Selection of the operations (cca 70 to 80 per

financial year), Performing audits of operations.

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Auditing Cohesion and Structural Funds

Audit of operation (areas covered):1. Selection of the operation;

2. Operation performance;

3. Eligibility of expenditures;

4. Public Procurement;

5. Audit trail and keeping the documents;

6. Irregularities and reimbursements;

7. Information and publicity rules;

8. Compliance with the Community policies.

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Auditing Cohesion and Structural Funds

Audits of operations results: Brief report of each audit of operation (no opinion) :

Draft report, Auditee reply, Final report.

Possible findings on irregular expenditure.

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Auditing Cohesion and Structural Funds

Audit opinion and Annual Control Report: Summary of findings from system audits and audits of operations, Error evaluation in accordance with the sampling method, Comparison of the Most likely error with the materiality (tolerable

error), Expressing an audit opinion, taking into account overall

conclusions Submitting an opinion and ACR to EC till 31.12.N+1 for the year

N, Acceptance and confirmation of the ACR by EC.

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Auditing Cohesion and Structural Funds

Audits of operations:

1.Fraud suspicions2.Public Procurement irregularities3.Irregularities related to selection of operation4.Irregularities related to performance5.Ineligible expenditure6.Insufficient audit trail7.Incompliance with information and publicity rules8.Incompliance with Community policies

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Frequent findings

Fraud suspicions: Double financing of the same equipment – related

parties Issuing fictive invoices (equipment prices!) Purchase of the old equipment instead of the new

one (equipment prices!) Non-existence of the investment

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Frequent findings

Public Procurement irregularities: Improper procurement procedure Non-respecting the rules related to submission

deadlines and types of publicity Annexes for additional work

Irregularities related to selection of operation: Non-respecting the entrance criteria from the tender

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Frequent findings

Irregularities related to performance: Improper selection of the supplier Equipment foreseen was not delivered Relevant changes of investments approved

Ineligible expenditure: Wrong calculation of labour costs Wrong calculation of depreciation

Frequent findings

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Reimbursements of discounts not paid Reimbursements of invoices which are not in

compliance with the contract Reimbursements of invoices already reimbursed in

other projects Reimbursements of invoices for advance payments Reimbursements of invoices after the expiring period Reimbursements of ineligible costs Non-economic use of assets

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Frequent findings

Insufficient audit trail No proofs of payment execution No proofs of services implemented Offsetting: not sufficient proofs

Incompliance with information and publicity rules

No signs on the investments or tangible assets of EC co-financing

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Frequent findings

Incompliance with Community policies Incompliance with the State Aid Rules

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Frequent findings

Reactions in case of irregularities found: Who finds irregularities Who is responsible for corrective measures

Withdrawal of the funds requested from the Statement of expenditure

Debtors ledger

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Frequent findings

QUESTIONS COMMENTS

? THANK YOU FOR YOUR ATTENTION

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