seminar for beneficiaries on the closure of 2011 annual
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Seminar for Beneficiaries on the Closure of 2011 Annual Programmes - PowerPoint PPT Presentation

Seminar for Beneficiaries on the Closure of 2011 Annual Programmes Programmes Venue: Westin Dragonara Resort, St. Julians Date: 18 th July 2014 Time: 8.30am


  1. European Refugee Fund Enhancing security within open centres � ERF-2013-05 AWAS Improving the safety and living conditions of Peace Laboratory Residents � ERF 2013-08 PeaceLab Provision of support services to residents of the Marsa Open Centre 2 (PSSR 2) � ERF 2013-10 FSM Provision of Food supplies (Breakfast, Lunch and Dinner) to Asylum seekers residing at Safi and Hal-Far Detention Centres � ERF 2013-01 Detention ERF 2013-01 Detention � Provision of service by medical doctors and qualified nurses to workork with irregular immigrants held at detention centres. ERF 2013-02 Detention Language Learning and Parerntal Support for Integration (LLaPSI 3) � ERF 2013-15 DQSE Info Sessions to residents of open centres � ERF 2013-04 AWAS Enhancing structural and material facilities of the Office of the Refugee Commissioner � ERF 2013-07 REFCOM Setting up a database for the electronic management of documentation during the asylum process and the insurance of new � protection certificates ERF 2013-06 REFCOM

  2. � In order for EU funds to be absorbed and made available to organisation in the field: 53 Calls for applications have been issued throughout the 7 year period throughout the 7 year period External European Refugee European Return European Borders Fund Fund Fund Integration Fund 9 Calls 14 Calls 15 Calls 15 Calls

  3. Thank you for your attention attention ������������������������������������������������������ ����������������������������������������������������������������������������� �������������� �������������������������������� ��������� ������������ �����!�������"��������������"��� ������������"�����#������������#���$���������������%���� ��&�����#��������' ())*���#���#���+�������#������������������� �����������������������������������������

  4. Internal Internal Audit and Audit and Investigations Department Investigations Department Ms Maria Camilleri Cabinet Office, Office of the Prime Minister ������������������������������������������������������ ����������������������������������������������������������������������������� �������������� �������������������������������� ��������� ������������ �����!�������"��������������"��� ������������"�����#������������#���$���������������%���� ��&�����#��������' ())*���#���#���+�������#������������������� �����������������������������������������

  5. Contents : The IAID 1. Functions of the Audit Authority 2. Roles and Responsibilities 3. Auditing Process 4. Sample checks 5. Audit trail 6. Recommendations 7.

  6. 1. Internal Audit and Investigations Department (IAID) has been designated as the Audit Authority in relation to the • four Funds under the SOLID Programme; is a self-contained independent Unit within the Office of the • Prime Minister and its work is overseen by the Internal Audit Prime Minister and its work is overseen by the Internal Audit and Investigations Board whose Chairman is the Secretary to the Cabinet; is functionally independent both of the Responsible Authority • and of the Certifying Authority; is regulated by the Internal Audit and Financial Investigations • Act (Chapter 461 of the Laws of Malta).

  7. 2. Functions of the Audit Authority... • As per articles in the basic acts, the Audit Authority is responsible for verifying in accordance with internationally accepted accordance with internationally accepted audit standards the effective functioning of the Management and Control Systems for the implementation of the four Funds. • The IAID carries out audits to this effect

  8. 2. Functions of the Audit Authority... • Draws up the audit strategy relevant to the four funds and presents it to the Commission; Commission; • Performs systems audits on the systems, procedures and controls in place; • Performs audits on the actions (and expenditure).

  9. 2. Functions of the Audit Authority... • The IAID carries out audits on actions on the basis of an appropriate sample to verify basis of an appropriate sample to verify sample expenditure declared; the represents at least 10% of the total eligible expenditure for each Annual Programme per Fund.

  10. 2. Functions of the Audit Authority... For each Annual Programme, the IAID drafts a report per Fund comprising: • an annual audit report setting out the findings of the audits carried and reporting any shortcomings found in the systems for the management and control; • an opinion , on the basis as to whether the functioning an opinion , on the basis as to whether the functioning of the management and control system provides reasonable assurance that declarations of expenditure presented to the Commission are correct and that the underlying transactions are legal and regular; • A declaration assessing the validity of the request for payment or statement of reimbursement of the final balance and the legality and regularity of the expenditure concerned.

  11. 3. Roles and responsibilities The Responsible Authority and Beneficiaries in • the role of Management maintain responsibility; • for the systems and controls and expenditure incurred; and • to establish and maintain proper control systems. The Audit Authority in the role of the Auditor ; • • recommends and provides an opinion on the control environment for the actions and systems assessed; and • reports to the Responsible Authority and the Commission.

  12. 4.Auditing process… Planning Fieldwork Reporting

  13. 4. Auditing process… PLANNING a) Risk assessment exercise is performed to determine the sample checks and systems reviews; The annual audit plan is formulated and The annual audit plan is formulated and b) b) communicated to the Responsible Authority and the Commission, by 15 th February; c) Audit Notification letter sent to the beneficiary and the Responsible Authority; d) Review of documentation; e) Initial meeting.

  14. 4. Auditing process… FIELDWORK a) Interviews with the officials concerned; b) Testing of the internal control systems ; c) Testing of transactions ; d) Review and examination of documentary evidence; e) Site visits / On the spot checks .

  15. 4.Auditing process… REPORTING a) Issue the draft report of all issues and opinions and communicates it to management = Contradictory procedure; management = Contradictory procedure; b) Receipt and review of feedback from management; c) Exit meeting ; a) Final report.

  16. 5. Sample checks… There are two different types of checks; Monitoring and verification visits carried out A. by management i.e. Responsible Authority; by management i.e. Responsible Authority; and In depth audit checks of at least 10% of the B. total eligible expenditure per programme performed by the Audit Authority.

  17. 5. Sample checks… The Regulation stipulates that the sampling method adopted by the Audit Authority shall: a) Include an appropriate mix of types and sizes of actions; and sizes of actions; and b) Take account of any risk factors which have been identified by National or Community controls (including own previous audits).

  18. 5. Sample checks… Through Sample Checks the Audit Authority will be verifying that: the project meets the selection criteria for the i. annual programme and has been implemented in accordance with the grant agreement; the expenditure declared corresponds to the ii. accounting records and supporting documents; the use or intended use of the project is iii. consistent with the objectives, actions and measures set out in the basic act; the public or private contribution has been paid iv. to the final beneficiary;

  19. 5.Sample checks… the items of expenditure correspond to: v. the eligibility requirements, a. the requirements specified during the b. national selection procedure, the terms of the grant agreement and the terms of the grant agreement and c. c. to the actual works carried out. d. there is an adequate audit trail vi. good value for money has been achieved. vii. Commission representatives may also carry out audits on the effective functioning of the management and control systems.

  20. 6. Audit trail… Both the Responsible Authority and the Project • leader within the beneficiary organisation / office shall ensure that all related evidence is kept sequentially and adequately. Thus all information and evidence directly • pertaining to and resulting from the implementation of the project must be recorded and made available to the auditor in a timely manner.

  21. 6. Audit trail… A proper Audit Trail shall: permit reconciliation of amounts certified to a) the Commission with the detailed accounting records and supporting documents; records and supporting documents; permit verification of payment of the public b) contribution to the final beneficiary, of allocation and transfer of the Community funding and of the sources of co-financing of the project;

  22. 6.Audit trail… A proper Audit Trail shall: permit verification of the application of the c) selection criteria; contain in respect of each project, as d) appropriate, the technical specifications and financing plan, documents concerning grant approval, documents relating to public procurement procedures and reports on the verifications and audits carried out.

  23. 7. Recommendations… The following needs to be ensured: all relevant documentation is complete and dated in a) an adequate manner to reflect the actual sequence of events; events; adherence to the Public Procurement Regulations; b) staff costs adhere to national legislation; c) expenditure is being backed up by adequate d) supporting evidence and audit trail; four eyes principle is present in all claims raised; e)

  24. 7. Recommendations… inventory sheets are kept and updated accordingly; f) Grant agreements need to provide detailed information g) on the eligible expenditure; adherence to the provisions of the contract agreement; adherence to the provisions of the contract agreement; h) proof of delivery and acceptance of the items procured i) is maintained; time sheets need to be adequately and sufficiently j) compiled; required documentation is made available in a timely k) manner.

  25. Contact details Internal Audit and Investigations Department Lower Ground Floor, Valletta Buildings, South Street, South Street, Valletta Malta Telephone no.: 21 237737 Fax no.: 21 237681 Email: info.iaid@gov.mt

  26. Thank you for your attention attention ������������������������������������������������������ ����������������������������������������������������������������������������� �������������� �������������������������������� ��������� ������������ �����!�������"��������������"��� ������������"�����#������������#���$���������������%���� ��&�����#��������' ())*���#���#���+�������#������������������� �����������������������������������������

  27. The Certifying Authority - AP 2011 Findings Mr Emanuel Borg ������������������������������������������������������ ����������������������������������������������������������������������������� �������������� �������������������������������� ��������� ������������ �����!�������"��������������"��� ������������"�����#������������#���$���������������%���� ��&�����#��������' ())*���#���#���+�������#������������������� �����������������������������������������

  28. Finding no.1: the Certifying who ? � Common questions from some beneficiaries � “Who are these guys?” � “ My project ended in June 2013…. What do they want from us now in January 2014?” � “What is your role please, sir? ” � “I am fed up of audits!!”

  29. First Answer � THE CA IS NOT AN AUDIT BODY � CA role is to declare expenditure (applicable to � CA role is to declare expenditure (applicable to Community and national rules) to the Commission. All EU co-financing under SOLID has been paid with government pre-financing. Our role is to claim that share.

  30. Does CA rely on auditors only? � NO!! � The Certifying Authority relies on the level of � The Certifying Authority relies on the level of assurance provided by every stakeholder in the system: � Treasury � IAID � Responsible Authority

  31. Beneficiary: “You never contacted us” � You are right! � Any CA Clarifications are issued to the RA because any expenditure forwarded for certification was verified at RA level

  32. Beneficiary: “So do you check every single invoice?” � Absolutely NOT!! � CA performs expenditure testing on a sample basis but everything depends on the nature of the project

  33. When should the beneficiary expect any requests for clarifications from RA? � It is the CA which closes Annual Programme through certification Programme through certification � Therefore, any clarification can be made until 9 months after end of project implementation date � Ex. AP 2012: Tuesday 31 st March, 2015

  34. Beneficiary: “We have plenty of time to submit invoices” � Definitely not the case!!! � Finding no.2: TIME FACTOR � AP not closed by Commission deadline = risk of loss of funds

  35. More projects, more expenditure � AP 2011 had double the number of projects from AP 2010 � Late forwarding of payments to Treasury means clogging at Treasury level

  36. Late Payments at Treasury � Consequences derived from such delay results in: � Delays for RA to perform its OTS checks � Delays for RA to perform its OTS checks � Delays for CA to review RA’s OTS � Delays for IAID to perform audits � Delays for CA to review IAID reviews � Delays for CA to perform expenditure testing

  37. To this effect....please note � Circular 2/14 of RA dated 16 th April, 2014 � Circular 1/14 of CA dated 16 th June, 2014 � All documentation on SIS and hardcopies � All documentation on SIS and hardcopies submitted to RA not later than 18 July 2014 � “Explanations will have to be provided to the Certifying Authority – Ministry for Finance – for any unjustified delays”- Circular 1/14

  38. Finding no.3: Project Indicators � Some beneficiaries did not reach project indicators as declared in application � Ex. 1000 leaflets published instead of 3000 � Ex. 50 TCNs trained instead of 150

  39. Finding no.4: Project visibility � All project leaders are reminded that publicity is an absolute requirement � Art. 34 & Art. 35 of Implementing Rules explain the obligations and technical requirements on the beneficiaries

  40. Problems with project visibility � Art.34(3) – “Where a project receives funding under an annual programme co- financed by the Fund, the final beneficiary financed by the Fund, the final beneficiary shall ensure that those taking part in the project have been informed of that funding” � Expenditure on consumables ex. food or clothes is not exempted from requirement

  41. Problems with project visibility � Example: � Project application indicated that publicity � Project application indicated that publicity would be carried out specifically on TV, newspapers, magazines and press release

  42. Problems with project visibility � 1. OTS reveals that publicity was done once on Sunday magazines only. � Therefore, a narrower public was informed � Therefore, a narrower public was informed � 2. Publicity was published a couple of months after project termination � Required publicity obtained but suspicion of invalid expenditure (i.e.post-deadline of 30 June) unless already declared irregular.

  43. Conclusion � CA recommends that particular attention is dedicated to procurement procedures � Court of Auditors is very sensible to this � Court of Auditors is very sensible to this area of project implementation � Don’t leave it up to bilateral meetings to update situation with regards to procurement.

  44. Thank you for your attention attention ������������������������������������������������������ ����������������������������������������������������������������������������� �������������� �������������������������������� ��������� ������������ �����!�������"��������������"��� ������������"�����#������������#���$���������������%���� ��&�����#��������' ())*���#���#���+�������#������������������� �����������������������������������������

  45. EU Funds Management unit (EUFM) Treasury Department Ms Letizia Mintoff ������������������������������������������������������ ����������������������������������������������������������������������������� �������������� �������������������������������� ��������� ������������ �����!�������"��������������"��� ������������"�����#������������#���$���������������%���� ��&�����#��������' ())*���#���#���+�������#������������������� �����������������������������������������

  46. Overview � EUFM’s role � Main improvements in relation to 2011 � Main improvements in relation to 2011 � Main problems encountered � Recent initiatives � Way forward

  47. EUFM’s role

  48. EUFM’s role Once the Responsible Authority has finalised the verifications, the necessary documents are � forwarded to the Treasury for the necessary payment The Treasury conducts its own checks and in cases where the Treasury has some � reservations, it will return the documentation to the RA, indicating the reasons. The Responsible Authority may need to consult back with the Beneficiary Once Treasury is satisfied with the documentation, payment is executed � VERY IMPORTANT: Payments will not be processed until all issues relating to the documentation have been cleared

  49. Main improvements in relation to 2011 New system – Solid Information System, formerly FO2 doc system � SIS is similar to other databases of other EU funds � SIS is a common system - Beneficiaries can have access to database � and check status of payments Introduction of an ISC based system of payment more straight forward � against the FO2 doc system

  50. Main problems encountered Missing documentation/not original/printed on Government paper � Invoice payable under different projects/funds � No proof of payment in case of claims for reimbursement � Incorrect data inputting � Date of certification on ISC before date of certification on SIS �

  51. Main problems encountered Reimbursement of salaries not submitted consecutively per month � Several payments of a very small value to the same contractor � processed separately CBM exchange rate not used for payments in a foreign currency � Checklist not marked properly �

  52. Recent Initiatives Treasury Circular no 6 Whenever a payment is found to be missing supporting documentation, the � beneficiary shall be notified and granted five working days to rectify issues beneficiary shall be notified and granted five working days to rectify issues and submit missing documentation after which documents shall be sent back Once all the requested documentation is in order, the EUFM shall proceed � with payment and the bank transfer shall be authorised within nine working days

  53. Way forward Payment process: � SIS electronic checklist � SEPA payments - reduction of bank charges � Automatic updating – reduction of errors, no need for manual updating

  54. Way forward Manual of Procedures – EUFM Outline the payment process in general for all EU funds � Include a list of required documentation for every payment type � Expected to be finalised by end of September � Provides reference to both Beneficiary and Responsible Authority � Envisaged to improve the payment process �

  55. Thank you for your attention attention ������������������������������������������������������ ����������������������������������������������������������������������������� �������������� �������������������������������� ��������� ������������ �����!�������"��������������"��� ������������"�����#������������#���$���������������%���� ��&�����#��������' ())*���#���#���+�������#������������������� �����������������������������������������

  56. Procurement Irregularities and how to avoid them Mr Christopher Magri Funds and Programmes Division ������������������������������������������������������ ����������������������������������������������������������������������������� �������������� �������������������������������� ��������� ������������ �����!�������"��������������"��� ������������"�����#������������#���$���������������%���� ��&�����#��������' ())*���#���#���+�������#������������������� �����������������������������������������

  57. Member States Obligations – Article 317 of the Treaty on the European Union � Implementation of the Budget and Discharge � ...MS shall cooperate with the Commission to ensure � ...MS shall cooperate with the Commission to ensure that the appropriations are used in accordance with the principles of sound financial management � The regulations shall lay down the control and audit obligations of the MS in the implementation of the budget and the resulting responsibilities...

  58. Member States Obligations – Article 325 of the Treaty on the European Union � Combating Fraud � The Union and the MS shall counter fraud and any other illegal activities affecting the financial interests of the Union illegal activities affecting the financial interests of the Union through measures to be taken in accordance with this Article, through measures to be taken in accordance with this Article, which shall act as a deterrent and be such as to afford effective protection in the MS, and in all the Unions' institutions, bodies, offices and agencies. � ...MS shall coordinate their action aimed at protecting the financial interests of the Union against fraud...

  59. Financial Rules applicable to the general budget of the Union (Ref 1605/2002) Article 59 � Where the Commission implements the budget under shared management, � implementation tasks shall be delegated to the MS. The Commission and the MS shall respect the principles of sound financial management, transparency and non-discrimination... and non-discrimination... ...the Commission and the MS shall fulfil their respective control and audit � obligations and assume the resulting responsibilities laid down in this regulation... ...MS shall take all the necessary measures, including legislative, regulatory � and administrative measures, to protect the Union‘s financial interests, namely by... ...preventing, detecting and correcting irregularities and fraud �

  60. Financial Rules applicable to the general budget of the Union (Ref 1605/2002) � Article 59...cont � In order to protect the Union‘s financial interests, MS shall, respecting the principle of proportionality, and in compliance with this article, and the relevant sector-specific rules, carry out ex ante and ex post controls including, where appropriate, on the spot checks on representative and/or risk based samples of transactions. They shall also recover funds unduly plaid risk based samples of transactions. They shall also recover funds unduly plaid and bring legal proceedings where necessary in this regard � MS shall impose effective, dissuasive and proportionate penalties on recipients where provided for in sector specific and in specific provisions in national legislation � Bodies designated pursuant to paragraph 3 shall...set up and ensure the functioning of an effective and efficient internal control system

  61. Definition of irregularities (Common Provisions Regulation – 1303/2013) � Irregularity – means any breach of Union law, or of national law relating to its application, resulting from an act or omission by an economic operator from an act or omission by an economic operator involved in the implementation of the ESI Funds, which has, or would have, the effect of prejudicing the budget of the Union by charging an unjustified item of expenditure to the budget of the Union

  62. Definition of Fraud – Convention on Financial Interests � For the purposes of this Convention, fraud affecting the European Communities’ financial interests shall consist of: � In respect of expenditure, any intentional act or omission relating to � The use or presentation of false, incorrect or incomplete statements or documents, which has as its effect the misappropriation or wrongful documents, which has as its effect the misappropriation or wrongful retention of funds from the general budget of the European Communities or budgets managed by, or on behalf of, the European Communities � Non-disclosure of information in violation of a specific obligation, with the same effect � The misapplication of such funds for purposes other than those for which they were originally granted

  63. Definition of Fraud – Convention on Financial Interests ...cont � For the purposes of this Convention, fraud affecting the European Communities’ financial interests shall consist of: � In respect of revenue, any intentional act or omission relating to : � The use or presentation of false, incorrect or incomplete statements or documents, which has as its effect the illegal diminution of the resources documents, which has as its effect the illegal diminution of the resources of the general budget of the European Communities or budgets managed by, or on behalf of, the European Communities � Non disclosure of information in violation of a specific obligation, with the same effect � Misapplication of a legally obtained benefit, with the same effect

  64. SOLID Regulations – Basic Acts � General principles of management and control systems - the management and control systems of multiannual programmes set up by MS shall provide for: � (d) procedures for ensuring the correctness and regularity of the � (d) procedures for ensuring the correctness and regularity of the expenditure declared under the annual programmes � (j) procedures for reporting and monitoring irregularities and for the recovery of amounts unduly paid

  65. SOLID Regulations – Basic Acts � Responsibilities of the Member States: � (1) MS shall be responsible for ensuring sound financial management of multiannual programmes and the legality and regularity of underlying transactions and regularity of underlying transactions � (3) MS shall prevent, detect and correct irregularities. They shall notify these to the Commission, and keep the Commission informed of the progress in the administrative and legal proceedings

  66. SOLID Regulations – Basic Acts � Suspension of payments: � All or part of the pre-financing and payments of the balance may be suspended by the Commission when: when: � (b) expenditure in a certified declaration of expenditure is linked to a serious irregularity which has not been corrected

  67. SOLID Regulations – Basic Acts � Financial corrections: � MS shall bear the responsibility for investigating irregularities � MS shall make the financial corrections required in connection with the individual or systematic irregularities connection with the individual or systematic irregularities detected in actions or annual programmes � Corrections made by MS shall consist in cancelling and if applicable recovering all or part of the Community contribution

  68. Types of irregularities and frauds typical to procurement • Conflicts of interests • Non respect of tender rules • Setting up/designing tenders for particular bidders • Fake tender documents • Bribery of public officials • Altering specifications in favour of one bidder • Repetitive solicitation of the same vendors, which seem to win numerous bidding exercises • Splitting of contracts in order to allow easier tendering under a lower threshold • Lack of segregation of functions in tendering process • Unclear award and selection criteria

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