1 Technical Meeting 11.12.2009 Closure 2000-06: Winding-up declaration and Commission procedures Elina Hakonen-Meddings DG REGIO J4 Technical Meeting on

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Technical Meeting 11.12.2009

Closure 2000-06:Winding-up declaration

and Commission procedures

Elina Hakonen-MeddingsDG REGIO J4

Technical Meeting on Closure 2000-2006, 11 December 2009European UnionCohesion Policy

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Commission procedures

1. WUD and Commission procedures (E. Hakonen-Meddings)- Experiences 1994-99- Legal requirements + guidance- Preparation- Content of WUD + report- Commission procedures for analysing WUD- Possible financial corrections

2. Reporting data on irregularities (L. Högnäs)

3. The planned audit approach (M. Schelfhout)

Technical Meeting on Closure 2000-2006, 11 December 2009• European Union• Cohesion Policy

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Experiences from 1994-99 closure• Lengthy process resulting in long delays in final

payment/closure

• Main problems with WUD– Insufficient coverage of sample checks – Checks not of sufficient quality – Insufficient information on spread, coverage and sampling method– High error rates not analysed– Irregularities/errors not treated satisfactorily– No quantification of impact of irregularities– No clear opinions given– Inconsistency between documents/conclusions– Final statements of expenditure changed after WUD– Delays in receiving additional information requested from MS– Key personnel changed

• Number of flat rate corrections applied


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How to learn from past to ensure successful closure of 2000-06• Plan, prepare in time, sufficient resources• Coordinate with all relevant parties• Ensure continuity also after submission• Close/treat irregularities before closure• Be aware of riskier expenditure declared at the end

of the period and of large "replacements" of irregular expenditure

• Allow time for additional checks/work needed• Submit before deadline to avoid risk of

inadmissibility• Ensure consistency of documents/conclusions• Follow regulations and guidelines

Important: Last opportunity to ensure low error rates


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Legal requirements and Guidance for WUD• Art. 38.1f) of Reg. 1260/1999, + Art. 32. 4 (final payment) • Art. 15-17 + Annex III of Regulation 438/2001 • Guidelines on closure of Assistance (2000-06) from the SF

(COM(2006)3424 of 1/08/2006) : 4.3, annex 2 • Guidance note on closure of INTERREG III programmes

2000-2006 (COCOF Ref. 2008 07/0078/02 ) • Register of Questions and Answers

http://ec.europa.eu/regional_policy/conferences/closure/qa_en.htm

• EC Internal: Manual of Procedures (checklists + standard notes)

• In preparation: Internal guidance for corrections to be applied at closure to ensure equal treatment and proportionality at closure

• Audit enquiry (EPM) for closure


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Submission deadlines

• DG REGIO to receive 368 WUD for ERDF OPs• Submission deadlines for all three closure

documents (final report, final expenditure declaration and WUD): 15 months after final date for eligibility of expenditure (Art. 105.3 of Reg. 1083/2006)End of eligibility date Deadline for

submission of WUDNo of ERDF OPs

31.12.08/ 30.4.09 31.3.10/ 31.7.10 104

With extension to 30.6.09 30.9.10 246

With extension to 31.12.09 31.3.11 18


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Preparatory work in MS

MA + IB: • Receive expenditure claims from

beneficiaries• Complete remaining issues for Art 4 checks• Compile final expenditure declaration for PA• Ensure audit trail• Ensure that all errors have been treated

satisfactorily and all recommendations followed


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Preparatory work in MS

PA:• Prepare certificate of final expenditure• Satisfy itself that all errors have been

treated satisfactorily and all recommendations followed

• Request more information or do own verifications where necessary

• Summary table on irregularities


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Preparatory work in MSBodies responsible for Art. 10 checks:• Complete final sample checks• Ensure sufficient coverage (5%, even spread over

period, mix of types and sizes of operations, all main IBs or beneficiaries)

• Identify systemic errors, carry out further checks to determine/quantify problem

• If error rate above 2%, take appropriate measures (corrections, or further checks to determine/quantify problem)

• Ensure that recommendations (own/EU/ECA) fully implemented


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Work by independent body

• Analyse quality of system audits• Analyse quality of sample checks• Analyse sufficiency of coverage • Analyse frequency of errors, systemic

character, error rate• Analyse sufficiency of treatment of

irregularities/ errors (by national auditors/EU/ECA)

• Analyse closure procedures by MA and PA• Additional work if necessary


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Winding-up declaration

• Provided for each programme (also for Interreg)– Multi-fund OPs may submit WUD by fund– Very exceptional cases multiple declaration may be

accepted

• An indicative model of the WUD in Annex III to Regulation 438/2001. (Prior agreement should be sought from EC if model not followed)

• That declaration should be prepared in accordance with Article 38(1)(f) of Regulation 1260/1999 and Chapter V of Regulation 438/2001.

• Specific guidance on the preparation and contents of the winding-up declaration in Annex 2 to closure guidelines (and Interreg closure guidance).


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Winding-up declaration• Summarises conclusions of the checks carried out during all

previous years and assesses validity of the application for payment of the final balance as well as the legality and regularity of the transactions concerned (Art 38(1)(f) of 1260/1999)

• Includes a summary on all irregularities: MS requested to attach a table in an electronic format with the list of irregularity cases to their WUD, clarifying amounts recovered, waiting for recovery or irrecoverable (Art 8 of 438/2001)

• Is accompanied by a report which shall include all relevant information to justify the declaration including a summary of the findings of all checks carried out by national and Community bodies to which the independent body has had access. (Art. 16 of 438/2001)

• MS may attach their own opinion to WUD if they consider it necessary (Art 38(1)(f) of 1260/1999)


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Content of WUDModel of Annex III to Reg. 438/2001: • Introduction: person and intervention• Scope of the examination

- Report attached (details on procedure, info used, conclusions of checks, i.e. all relevant information to justify the declaration)

• Observations– limitations – Frequency of errors/irregularities, systemic nature,

satisfactory treatment (Table on irregularities)

• Conclusion: unqualified, qualified, no opinion• Date and signature


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WUD Report (closure guidelines annex 2)

• Details of independent body• Details of programme• Summary of controls carried out under

Article 10• Work undertaken by independent body• Limitations to the scope of examination • Treatment of errors and irregularities• Frequency of errors and irregularities


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Commission procedure for WUD

No regulatory deadline for assessment of WUD. To be realised within a "reasonable period".

• Reminder to MS sent 2 months prior to the submission deadline (final eligibility date + 13 months)

• Non-submission or late submission of the WUD (final eligibility date + 15 months + 14 calendar days): If WUD is not received, closure will be carried out on the basis of certified statement of final expenditure and final report + automatic decommitment of unpaid balance + correction.


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Admissibility Check of WUD

• Internal delay of 5 days• Checklist (is WUD signed, dated and prepared by WUB,

is there an opinion, a report, a table of irregularities, does it follow model?)

• MS will be informed if further information is to be provided or if WUD is not admissible

• OLAF is consulted on all fraud cases and all irregularity cases are checked in the OLAF database.


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Quality Checks of WUD

• Analysis based on a checklist

• Results of all previous audit work carried out and EC assessment of residual risk taken into account

• Internal delay 30-120 days in DG REGIO

• Inter-service consultation on draft conclusions for multi-fund programmes or when joint authorities with other funds


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Checklist

Sections:• Basic requirements• Art. 10 System audits• Art. 10 Sample checks• Work carried out by WUB• Audits by other national or Community bodies• Frequency of errors and irregularities• Observations and conclusion of WUD


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Checklist

Overall conclusion of the auditor:– Accept WUD without additional action needed– Accept WUD under condition that a deduction to

payment claim is made (correction)– Interruption requesting for information or additional

audit work from MS (Art 17 of Reg. 438/2001) – Interruption due to additional audit work by EC (EPM

for closure)

Assessment of residual risk of WUD and residual risk estimated on the basis of all audit work done over the programming period => Is further EC audit on-the-spot necessary


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Financial corrections may be applied when:

• Lack of submission or late submission of WUD -> Automatic de-commitment of balance and a financial correction

• WUD not submitted and signed by the designated person or department: WUD considered non-admissible -> non-submission

• Minimum percentage of obligatory sample checks not achieved

• Insufficient quality of controls: cannot be included in 5% -> above case

• Non-representativeness of sample• High level of irregularities • Insufficient treatment of errors/irregularities


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Financial corrections may be applied when:

• WUD does not come to a conclusion about validity of final balance application or legality and regularity of transactions

• WUB does not conclude on frequency of irregularities or does not estimate extent of the problem and financial impact

• WUB issues reservations related to systemic weaknesses but does not estimate the financial impact of these weaknesses, or if it makes a general reservation or declares itself incapable of giving an opinion

• Insufficient quality of other information in WUD or report -> Additional information requested to MS. If not submitted a correction


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Thank you for your attention.

Questions, comments?


Documents

1 Technical Meeting 11.12.2009 Closure 2000-06: Winding-up declaration and Commission procedures Elina Hakonen-Meddings DG REGIO J4 Technical Meeting on