2000-2006

Structural Funds

Management

Mr. Kjell PETERSON

Director,West Sweden Office

20 June 2000

2000-2006

Structural Funds

Management

Mr. Thierry DAMAN

Head of Information and Communications Unit, DG Regional Policy

European Commission

20 June 2000

2000-2006

Structural Funds

Management Mr. Brian GRAY

Director of Finance, DG Regional Policy

European Commission

20 June 2000

2000-2006

Structural Funds

Management

Mr. Luis BORIS

Deputy Head of Unit, Finance, DG Regional Policy

European Commission

20 June 2000

2000-2006

Structural Funds

Management

Mr. Joergen GREN STIG

Coordination of Evaluation, DG Regional Policy

European Commission

20 June 2000

2000-2006

Structural Funds

Management

Principles for Programming and Financial Management

• further decentralisation– reporting procedures– monitoring procedures

• partnership

• subsidiarity

> sound financial management

2000-2006

Structural Funds

Management

Partnership arrangements (1)A more decentralised cohesion policy

Within the Member States:

• a wider definition of the partnerships:

* regional and local authorities and other competent authorities

* economic and social partners

* other competent bodies including NGOs, environmental sector etc.

• active involvement of partners in all stages of programming

2000-2006

Structural Funds

Management

Partnership arrangements (2)A more decentralised cohesion policy

Between the Commission and the Member States

• a clear definition of responsibilities with 3 key players

* the Commission

* the programme Management Authority

* the Monitoring Committee

2000-2006

Structural Funds

Management

Programming: who does what? (1)

Commission:

• determines eligible regions and indicative financial allocations

• establishes programme guidance

• adopts (modifies) programmes only at the level of strategic priorities

• monitoring at strategic level

• approves large-scale projects (>EURO 50 million)

2000-2006

Structural Funds

Management

Programming: who does what? (2)

Member State - Management Authority:

• prepares plans

• prepares and adopts the programming complement

• sub-delegates responsibilities as necessary - global grants

• selects projects

• prepares annual report

• implements the mid-term evaluation

• ensures that information and publicity rules are adhered to

2000-2006

Structural Funds

Management

Programming: who does what? (3)

Member State - Monitoring Committee

• agrees on programming complement

• lays down project selection criteria

• monitors programme implementation:–proposes programme changes to Management Authority–agrees on proposals to change programming complement

• approves mid-term evaluation

• agrees annual report

2000-2006

Structural Funds

Management

Monitoring arrangementsA more transparent implementation

• Key annual encounters:–Commission and Management Authority for management questions–Commission and control authorities for control questions

• Monitoring of targets for quantified indicators

• Mid-term review of implementation

• Improved information and publicity system

2000-2006

Structural Funds

Management

Programming: 4 main steps

1. Programme guidance issued by the Commission

2. Development plans submitted by Member States after consultation with partners

3. Adoption of strategy by the Commission:– quantified strategic targets– priorities– funding allocations

4. Detailed programming of measures by Management Authority and Monitoring Committees

2000-2006

Structural Funds

Management

Planning and programming timetable

• Plans and programmes to cover 7 years (except transition areas)

• Plans submitted by Member States within 4 months of list of eligible regions concluded

• Commission decision within 5 months of receiving plans: CSF or SPD

• Commission decision within 5 months of receiving proposed OPs

• Member States to submit Programme Complement within 3 months of approval of SPD or OP

2000-2006

Structural Funds

Management

Enhancing cost-effectiveness

• additionality

• monitoring

• evaluation

• financial management

• financial control

• performance reserve

2000-2006

Structural Funds

Management

Sound financial management

Article 274 of Treaty

Article 2 Financial regulation

• adequacy of sytems

• prompt exchange of all necessary information

2000-2006

Structural Funds

Management

Accounting Data

Council Regulation (EC) No 1260/1999

• transparent financial flows

• data necessary to fulfil the management, monitoring and evaluation requirements

• data necessary for the pursuit and correction of irregularities and infringements

2000-2006

Structural Funds

Management

Financial Information

• Financial Plans

• Payments

– separate accounting systems

– or adequate accounting code

• computer files

• communicated electronically

2000-2006

Structural Funds

Management

Monitoring Information

• quantified targets

• stage of physical implementation

• assessment of the impact of the operation

2000-2006

Structural Funds

Management

Common Format for data

Provide audit trail required by National and Community audit bodies as per Reg 2064/97

• detailed information

• common methodology for recording and encoding data

• common methodology for electronic exchange of information

• common rules for Commission access to project information

2000-2006

Structural Funds

Management

Provision of Information to the Commission

• aggregate financial data sent 3 times per year

– justify payment claims

• aggregate data on progress of measures

– performance indicators

• detailed data to be held by MS authorities

– for evaluation, audit, management reviews

2000-2006

Structural Funds

Management

Responsibilities of Managing Authorities

Article 34, General Reg. 1260/1999

• gathering reliable information

• ensuring proper accounts

• operations are correct

• Community Rules compliance–eg state aids, environment, equality of treatment...

2000-2006

Structural Funds

Management

The Managing Authority checks and authorises claims

• all final beneficiaries and promoters are fully informed of the rules

• ensure their application when tenders are published

• applied when contracts awarded

• applied when claims on Community co-finance

2000-2006

Structural Funds

Management

One programme, one Managing Authority

• one per CSF/CCA

• one per SPD/DOCUP

• one per Programme

• but not for global grants

2000-2006

Structural Funds

Management

The Annual Implementation Report

• financial implementation of assistance for each measure

– expenditure, payments received

• progress in relation to targets

• relevant changes in socio-economic conditions

• steps on effectiveness– monitoring, finance, evaluation, management, use of technical assistance etc

• steps on compatibility with Community policies

2000-2006

Structural Funds

Management

Adjusting a programme

1. Managing Authority

– modify programme complement

2. Commission

– in agreement with MS

• Decisions taken at PMC

• Can change priority targets

• Mid-term evaluation

• Allocation of performance reserve

2000-2006

Structural Funds

Management

Responsibilitiesof Paying Authorities

See Doc.REGIO/0051/2000

• Certify the claim sent to the Commission

• Ensure only eligible expenditure is charged to EU co-finance

2000-2006

Structural Funds

Management

Compliance with Community Rules

Assurance from Managing Authority that a clearly designated department has verified the respect of:

• procurement rules

• eligibility rules

• information and publicity requirements

• environment, equality of treatment etc

• separate accounts, or account codes, on computer file

2000-2006

Structural Funds

Management

The Member State and the Paying Authority

The Paying Authority must have a clear mandate from the National Authorities, with explicit instructions on how to:

• obtain assurances from the Managing Authority

• compile the claim on Community co-finance from the accounting records

Must be competent to undertake checks.

2000-2006

Structural Funds

Management

Payment and expenditure sequence

COMMISSION

PAYING AUTHORITY

NATIONAL BUDGET

MANAGING AUTHORITY

FINAL BENEFICIARY

RECIPIENT

ADVANCE

CLAIM

CHECK

CLAIM REFUND

CHECK

€

€

€

2a 2b

2000-2006

Structural Funds

Management

Other responsibilities of the Paying Authority

• Keep a record of recovery orders

• repay recoveries (and interest) to the Commission

• ensure final beneficiary is paid as soon as possible

• make available to the Commission the detailed (computer) records on payments to final beneficiaries

• supply expenditure forecasts to the Commission

2000-2006

Structural Funds

Management

Division of duties

- between the Paying and Managing Authorities- within each authority

Separation of responsibilities for:

• checking claims

• paying aids

• compiling claim on Community funds

• certifying claim on Community funds

• internal audit or equivalent procedures

2000-2006

Structural Funds

Management

Delegation of Responsibilities

COMMISSION

MEMBER STATE

MANAGING AUTHORITY

PAYING AUTHORITY

INTERMEDIATE BODIES

FINAL BENEFICIARY

Clear definition of responsibility under Reg.

1260/99

Information on payment, control

systems and checks done

Audit of information and

systems

2000-2006

Structural Funds

Management

Financial ManagementCombining simplification and efficiency

• automatic annual commitments

• automatic de-commitment of unused resources

• payment on account of 7% on the adoption of the programme

• new system of reimbursements against expenditure incurred

• final payment of 5% at closure of programme

• flat-rate indexation of 2% built into budget with review for 2004-2006

2000-2006

Structural Funds

Management

Financial ControlA clearer division of responsibilities

• Member States responsible for:– efficient systems for financial control– prevention of irregularities– correction of irregularities– ensuring compliance with Community law

• Commission responsible for:– checks on efficiency of financial control systems– consequences: possible suspension or cancellation of payments–organisation of annual meetings

2000-2006

Structural Funds

Management

Financial Control: role of Member State

Giving the Commission assurance through….

• Managing and Paying authorities

• Internal Audit departments or equivalent

• Independent Auditors

– assess validity of payment request– keep all supporting documents for 3 years– comprehensive and readily available

2000-2006

Structural Funds

Management

Financial Control: role of Commission

To verify effectiveness of the control systems….

• carry out on-the-spot checks, or request that MS do it

• examination of checks

• finnacial impact of irregularities

• corrective measures

• changes to management and control systems

2000-2006

Structural Funds

Management

Financial Control: Financial corrections

1. MS should correct financial irregularities

• Re-use released funds

2. If MS fails to do this, or Commission unhappy with management and control systems:

• impose financial corrections on MS

3. Amount of any correction will correspond to principle of proportionality and risk to Funds

2000-2006

Structural Funds

Management

The performance reserveA new tool to encourage improved performance

• 4% of national resources allocated before 31.3.2004

• assessment of programme performance based on:– realisation of aims decided ex-ante– the quality of the programme management– the absorption of EU resources and their leverage effect

• choice of indicators by Member State, based on proposals by Commission

• Member State proposes successful programmes

• allocation of Funds by the Commission

2000-2006

Structural Funds

Management

Evaluation: a tool for better programming

• ex-ante evaluation submitted by Member State with plans; new emphasis on

– employment situation

– environmental impact

– equality between men and women

• mid-term evaluation implemented by Managing authority using an independent expert: consequences for reprogramming

• ex-post evaluation implemented by European Commission by 2009