Compliance Assessment of the Certifying Authority Kaur Siruli Ministry of Finance of the Republic of Estonia Financial Control Department 20.03.2013
Estonian Ministry of Finance Certifying Authority Auditing Authority Managing Authority
Structure of the Ministry of Finance
General System for Structural Funds in Estonia Ministry of Finance Managing Authority Certifying Authority Auditing Authority 1 st level Intermediate Bodies ( 5 ministries) 2 nd level Intermediate Bodies ( 11 ) (National boards and inspectorates, state foundations, state companies etc) Final recipients: incl. local authorities, entrepreneurs, NGOs, state authorities etc
Compliance assessment in Estonia • All the bodies went under compliance assessment by the AA • Assessments were done between spring 2007 to July 2008 • In spring 2008 re-assessment of the bodies assessed in spring 2007 (systems were already changed) • Assessment was on the MCS level, in addition procedures were reviewed where possible. • All the bodies got the separate report about them • Commission got one overall assessment report
Legal requirements for Certifying Authority – mission impossible?!
Certifying Authority in reg 1083/2006 Article 59 For each operational programme the Member State shall designate the following: (b) a certifying authority: a national, regional or local public authority or body designated by the Member State to certify statement of expenditure and applications for payment before they are sent to the Commission;
Article 61 – Functions of the CA The certifying authority of an operational programme shall be responsible in particular for: (a) drawing up and submitting to the Commission certified statements of expenditure and applications for payment;
Article 61 Functions of the CA (b) certifying that: (i) the statement of expenditure is accurate, results from reliable accounting systems and is based on verifiable supporting documents; (ii) the expenditure declared complies with applicable Community and national rules and has been incurred in respect of operations selected for funding in accordance with the criteria applicable to the programme and complying with Community and national rules;
Article 61 Functions of the CA (c) ensuring for the purposes of certification that it has received adequate information from the managing authority on the procedures and verifications carried out in relation to expenditure included in statements of expenditure; (d) taking account for certification purposes of the results of all audits carried out by or under the responsibility of the audit authority;
Article 61 Functions of the CA • (e) maintaining accounting records in computerised form of expenditure declared to the Commission; • (f) keeping an account of amounts recoverable and of amounts withdrawn following cancellation of all or part of the contribution for an operation.
1828/2006 Article 20 By 31 March each year the certifying authority shall send to the Commission a statement identifying: (a) the amounts withdrawn from statements of expenditure submitted during the preceding year following cancellation of all or part of the public contribution for an operation; (b) the amounts recovered which have been deducted from those statements of expenditure; (c) a statement of amounts to be recovered as at 31 December of the preceding year, classified by the year in which recovery orders were issued.
Key requirements
Key requirement 1 Clear definition, allocation and separation of functions between and within the certifying authority / intermediate body/ies
KR 1 assessment criteria, separation of functions 24 . separation of functions between the certifying authority and the managing authority and intermediate bodies. – Independence especially from implementing bodies – Needed to ensure possibility to exercise control over implementing bodies – Needed to have to possibility to refuse certification of expenditure that has not been controlled with sufficient quality.
KR 1 assessment criteria, delegated tasks 25. Procedures in the certifying authority to monitor the effective implementation of any delegated tasks. – Implementing Bodies have to compose their expenditure declarations – Besides that it is not advisable to delegate CA tasks – In case tasks are delegated CA remains responsible and has to control the execution of delegated tasks.
KR 1 assessment criteria, setup 26. A clear definition and allocation of functions (organisation chart, indicative number of posts, documented procedures and manuals), including the existence of a formal documented agreement setting out any tasks that are delegated by the certifying authority to the intermediate body/ies.
Questions in the checklist • Is CA designated, how • How CA is authorized to carry out the tasks • Are the tasks listed/specified • Are any tasks delegated and if so, to whom, and are those tasks listed • How are the tasks delegated • System for monitoring over delegated tasks
Questions in the checklist • Organizational chart, division of functions between sub-units, number of posts • Posts with clearly defined responsibilities • Manual of procedures – know to staff • Procedure for updating the manual of procedures • Date and reference to the manual • Is the manual used by implementing bodies
Key requirement 2 Key requirement 2: Adequate audit trail and computerised system
KR 2 assessment criteria, accounting records 27. Adequate accounting records should be maintained in computerised form of expenditure declared to the Commission – Managing authority responsible for IT system – It would be reasonable to have ONE system for all bodies – System must allow CA to reconcile data of certifications with declarations from IB-s
IT system should include the following • Claims and documents from beneficiary • Checks, audits and their results • Reports, checklists etc of management verifications • Irregularities • CA has access to all data in system • System should produce the declaration to EC (with a push of a button) • Amounts recovered, pending recoveries, withdrawals, deductions • Automatically updated debtors ledger
KR 2 assessment criteria, audit trail 28. The audit trail within the certifying authority should allow reconciliation of the expenditure declared to the Commission with the expenditure statements received from the managing authority/bodies MA/IBs. – Audit trail is considered sufficient when it permits reconciliation of the summary amounts certified to the Commission with the individual expenditure records and supporting documents
KR2 Assessment criteria Audit trail – Location of the documents – Verification of the payment to the beneficiary – For each operation the selection criteria – Project documentation from grant approval to procurements and audits – Chronological order of the project transactions
Questions in the checklist • Description of the accounting system; is it centralised or decentralised • In case decentralised then how data is sent to the CA • Are accounting system and information system one and the same or two separate systems • If separate, how the data is linked, is the data identical • Is the system operational, if not, when it will be
Questions in the checklist • Does the system show total expenditure per fund and priority • Verification of the allocations and the transfer of the the public funds • Allows to split payments made to beneficiaries to the year concerned • Is it only SF system or also used for other funds • If not separate does it identify SF trancations
Key requirement 3 Adequate arrangements for the certification of expenditure to be reliable and soundly based
Key requirement 3 For the purpose of certification the certifying authority has received adequate information concerning: • the procedures operated by the managing authority and by intermediate bodies to verify the delivery of the co-financed products and services, • the reality of the expenditure claimed, • compliance with the applicable Community and national rules, • that the expenditure declared has been incurred in respect of operations properly selected for funding adequate audit trail has been maintained.
KR 3 assessment criteria - procedures 29. The certifying authority should specify the information it requires on the procedures operated by the managing authority and by the intermediate bodies for the verification of expenditure and has put in place agreed procedures with the managing authority to ensure that it receives it on a regular and timely basis.
KR 3 assessment criteria - procedures The assurance should be based on evidence that the systems of the managing authority and intermediate bodies are functioning effectively to prevent, detect and correct irregularities. • The description of the control systems, procedures applied, and checklists used; • The methodology for sampling for verifications on the spot; • Management verification procedures and checklists • The results of the risk analysis carried out • The risk mitigation activities
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