Philippe Le Guen [email protected] Riga, 5 th and 6 th December 2006 RESEAU D’APPUI ET DE CAPITALISATION DES INNOVATIONS EUROPEENNES 73 rue Pascal 75013

Philippe Le Guen

[email protected]

Riga, 5th and 6th December 2006

RESEAU D’APPUI ET DE CAPITALISATION DES INNOVATIONS EUROPEENNES73 rue Pascal 75013 Paris France Tel. 33 (0)1 4408 6510 Fax 33 (0)1 4408 6511 www.racine.fr

Structural Funds management Selection of projects & general hints

Monitoring Use of Indicators

Requirements on the audit trail

Philippe Le Guen

[email protected]



Selection of projects

The Managing Authority usually undertake project appraisal in 3

stages:

eligibility assessment scoring using the selection

criteria qualitative appraisal

Philippe Le Guen

[email protected]



Eligibility assessment

Need to ensure that the project:

is in an area eligible for support contributes to one or more of the Programme

objectives corresponds to one or more of the Programme

activities defined in the Operational Programme contains quantifiable outputs and provides details of

clear and attainable targets demonstrates an additional and sustainable benefit to the socio-economic development of the area

Philippe Le Guen

[email protected]



Eligibility assessment

is eligible for Structural Funds assistance has a sound funding package in place, identifying

the recipient of the funds and the sources of match funding

does not duplicate existing activity does not substitute for existing or planned

expenditure

Projects that fail the eligibility checks cannot be supported.

Philippe Le Guen

[email protected]



Scoring the application

All project applications will be scored against selection criteria. The approach is designed to ensure a transparent system, where all applicants are aware of the criteria on which their application will be scored.

The scoring process will provide an objective assessment of the project. However, experience has shown that a mechanistic scoring process does not always highlight the best projects.

A qualitative analysis should therefore be undertaken by the authority in charge of granting the support.

Philippe Le Guen

[email protected]



Monitoring is …

…an on-going observation of the implementation process of a programme and of its components.

For this purpose, appropriate data and indicators are needed…

… that will be used for reportingon the implementation.

Philippe Le Guen

[email protected]



but Monitoring is not…

… Audit & Control – but of course it should support audit procedures and many data collected for monitoring are directly related to these issues.

… Evaluation – but it prepares evaluation by the delivery of relevant and reliable standardised data.

Philippe Le Guen

[email protected]



Reminder of the EU rule: Under articles 70 & 71 of the Structural Funds

regulation 1083/2006, the Member States are fully responsible for setting up reliable management & control systems

The monitoring of projects is carried out through the collection of financial and physical indicators :– specific targets, quantified [where applicable];– the stage reached in terms of physical

implementation, results and impact at the appropriate level (priority or project)

Philippe Le Guen

[email protected]



What type of information is needed?

Monitoring is primarily concerned with monitoring quantitative data – facts and figures.

However, qualitative indicators must also be defined, concerned with less tangible aspects that cannot be easily counted.

For example, to monitor beneficiary progress it is essential to develop “soft indicators” as well as monitoring hard data, such as qualifications achieved or type and sustainability of job created.

Progress should be monitored against objectives and contents of each OP priority.

Philippe Le Guen

[email protected]



Types of Indicators

BOTTOM-UP:A clear explanation of how inputs relate to outputs, and subsequently to results (or initial effects) and impacts

TOP-DOWN: A Hierarchy of Objectives– Operational Objectives = Outputs Indicators

(eg. provision of road infrastructure)

– Specific Objectives = Results Indicators(eg. time/cost savings)

– Global Objectives = Impacts Indicators(eg. increase of traffic flows, improved competitiveness)

Philippe Le Guen

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A Hierarchy of Objectives

Philippe Le Guen

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Quality of Indicators

Implementation data should be collected according to following criteria.

Relevant

Available

Reliable

Elementary

Philippe Le Guen

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Core Indicators

An instrument for Benchmarking.– They should be limited in number, appropriate

and manageable with regard to programme monitoring and thematic analyses.

– They may apply to different levels of assistance as well as types of indicators (outputs, results or impacts)

Philippe Le Guen

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Example of Core Indicators:Aid to SMEs

Philippe Le Guen

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Core Indicators for Human Resources Programmes

Philippe Le Guen

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(Physical) Data on Beneficiaries

It is essential to monitor data on final beneficiaries and/or recipients or target groups.

- They may differ according to the different programmes:

- Unemployed persons- Employees - Companies

- Some particular requirements for the programme (for example, if it is for beneficiaries aged over 50 or persons with disabilities…).

Philippe Le Guen

[email protected]



Financial Data

Report on financial implementation is to be supplied in the form of standardised tables, at measure, priority and programme level, including:

Finances AND expenditures, covering the whole of the Programme’s costs – funded through the Structural funds as well as the match funding– and must be detailed enough to monitor the following:- The nature of the costs

- The methodology for calculating costs

- The level of costs

Philippe Le Guen

[email protected]



Monitoring the Programme Implementation

Financial Monitoring

Monitoring of the Programme Implementation

Physical Monitoring

Contracts Liquidity Budgets implementing bodies /contractors /final recipients

target recipients

Projects

individual participants

Organisations /Enterprises

Commitments

Payments

Verified expenditures

Content /Objectives

Systems

Achievements

Philippe Le Guen

[email protected]



Data needed for Audit & Control

Monitoring the programme activities is of crucial importance, not only to produce the different Reports or Claim Forms, but also to be able to demonstrate the work carried out to an auditor.And the auditor will be particularly interested in verifying that:

- Expenditure has been incurred in a proper manner- Financial management has been sound- The project actually ran and was delivered in line with the approved programme application- Interim or closure reports are supported by evidence of activity and expenditure- The project represented (added) value for money

Philippe Le Guen

[email protected]



The “Audit Trail” = Traceability

Refers to a chain of procedures for managing the European programmes and funds.

Is required by the EU regulations for the “reconciliation of the summary accounts certified to the Commission with the individual expenditure records and supporting documents held at the various administrative levels and by final beneficiaries.”

In other words, the audit trail is carried out to identify what has been done with every single euro of European money.

The whole chain must be clear and strictly adhered to. All those who manage European Funds are asked to guarantee and maintain this chain of procedures.

Philippe Le Guen

[email protected]



The audit trail can be listed here in order of chronology of implementation. Several institutions work towards the different phases, but some are performed exclusively by one institution.

– Programming – Selection of actions – Contracting with final recipients – Monitoring the activities– Payment– Verification the validity of expenditure claims /

certification – Control

Philippe Le Guen

[email protected]



Requirements

Audit trail must be clear and transparent (= reconciliation of accountancy possible)

enrolment of participants is clear (who is benefiting of European money and who do not)

activities and expenses well identified, eligible expenses understood and isolated (to control them)

Selection procedure clear (how the project was selected) contract signed including the forecasted amount and main physical

indicators (how many participants, gender, status) Clear path of invoices (difference between forecasted or provisional

expenses and REAL expenses) monitoring system installed (financial and physical) = capacity to

check the stage of development of the actions and programme at all levels

Philippe Le Guen

[email protected]



The Auditors: European, National, Regional/local

Applications internal & external auditors Managing Authority / Financing Authority Certification Unit

National Audit office Auditor Commission auditors European Commission auditors European Court auditors (EUC Luxembourg)

OLAF (European Anti-Fraud Office)

Philippe Le Guen

[email protected]



What is the purpose of the audit visit?

To check that:

• Expenditure has been incurred in a proper manner

• Financial management has been sound

• The project actually ran and was delivered in line with the approved programme application and project closure report

• Interim / project closure report entries are supported by evidence of activity and expenditure

• The project represented value for money

Philippe Le Guen

[email protected]



What do beneficiaries need to do before the audit?

Identify key staff and ensure they are available to answer questions:

– who compiled the claim/final report – where the source documentation is held – who managed the project – who was in charge of the finance – Where records are computerised ensure an operator will be on

hand Any item may be subject to review therefore the organisation

needs to: – Ensure all invoices are available and clearly labelled – Be prepared to explain and demonstrate with source

documentation how staffing costs are attributed to the project – If organisation / firm costs methodology has been used provide

information used in the construction of the claim – Give explanation and provide source documentation of

apportionment and allocation of indirect and overhead costs

Philippe Le Guen

[email protected]



What documents will be inspected? The following documentation should be available for each project

dossier:Original programme application form Letter of approval / contract Advance and interim claim formsExternal evaluator's report (if any)Project Closure Report forms General Statements of ExpenditureSub-contract Arrangements

Project Records:Project timetable and programme of activitiesApplication / eligibility assessment formsList of beneficiaries on the project (if any) and individual attendance

recordsProject register and attendance recordsProject start and finish datesRecords of achievementFollow-up information

Philippe Le Guen

[email protected]



Financial records

All items on the interim claim and project closure report must be supported by source documentation:

– working papers which show how the claim was compiled – staff costs - detailed salary records – beneficiary costs– other costs – match funding (if any) – Invoices and payment receipts – Accounts and bank statements – Organisation / firm based unit cost calculation– Apportionment methodology

Philippe Le Guen

[email protected]



• Significant changes not reported to the authority i.e. project not meeting its original objectives as outlined on approved application form

• Added value not transparent

• Actual detail not recorded on claim, i.e. includes notional or estimated items

• Lack of supporting evidence or substantiate entries, e.g. vague headings, unjustifiably high or low costs

• Unjustified central overhead costs

• Inconsistencies in the methodologies used in calculations

• Full costs of project not included

• Revenue not declared or included in calculations

• More EU money received than actually paid out

• Nil or inadequate publicity

• Inappropriate use of consultants

What are the main areas of concern from previous audits?

Philippe Le Guen

[email protected]



– The organisation may be asked to recalculate and resubmit project closure report

– Project closure report may be reduced if items claimed cannot be substantiated

– Internal system changes may be requested in line with audit recommendations

– If expenditures are not eligible: claw back of money

– No action

Results of an inspection visit

Philippe Le Guen

[email protected]



Thank you for your attention

Philippe Le GuenResponsable de mission / Head of Department

RACINE – Fonds social européen en France

73, rue Pascal F-75013 ParisTél. : +33 1 44 08 65 10 - Fax : +33 1 44 08 65 11

www.racine.frwww.equal-france.com

Documents

Philippe Le Guen [email protected] Riga, 5 th and 6 th December 2006 RESEAU D’APPUI ET DE CAPITALISATION DES INNOVATIONS EUROPEENNES 73 rue Pascal 75013